Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1697805886308.pdf (Ireland)
A n P o s t A n n u a l R e p o r t 2 0 1 8 For Ireland.

For generations to come.
An Post Annual Report 2018 Contents Year in Review Chairperson’s Introduction Board of Directors CEO’s Statement Financial Review Retail Review Mails and Parcels Review Sustainability Report of the Directors Independent Auditor’s Report to the Members of An Post Consolidated Income Statement Consolidated Statement of Other Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Changes In Equity Consolidated Statement of Cash Flows Company Statement of Financial Position Company Statement of Changes in Equity Index to Notes to the Financial Statements Notes to the Financial Statements Financial and Operational Statistics Universal Service Corporate Information 02 04 05 08 10 12 13 18 20 29 32 33 34 35 36 37 38 39 40 84 86 88 M11839 - AN POST_Annual-Report-2018_Front_AW.indd 1 01 26/04/2019 13:41 Bold moves are rewarded 2018 €41.2m €897m €41.2m Revenue Proﬁt €115m Balance Sheet Cash 40% Parcels Volume Up 99% Funded Pension Scheme 96.4% Quality of Service 2017 €8.4m 2016 -€12.4m 02 02 M11839 - AN POST_Annual-Report-2018_Front_AW.indd 2 26/04/2019 13:41 Bold moves are rewarded 2018 €41.2m €897m €41.2m Revenue Proﬁt €115m Balance Sheet Cash 40% Parcels Volume Up 99% Funded Pension Scheme 96.4% Quality of Service M11839 - AN POST_Annual-Report-2018_Front_AW.indd 3 03 26/04/2019 13:41 Chairperson’s Introduction An Post has developed a strategy to meet the well documented challenges facing the postal sector worldwide.
We are now well into implementing this strategy and I am very pleased with the results to date.

We now have two very focussed businesses led by talented management teams delivering change under the strategic leadership of the CEO, David McRedmond.

The details of the achievements are set out in the Report and these achievements manifest themselves in the excellent results being reported in this Annual Report.
It is satisfactory to report a proﬁ t before transformation costs, pension interest and taxation, excluding one-off items, for 2018 of €41.2m.

In 2019 the impact of signiﬁ cant research and design for the brand and its new positioning will emerge and I am particularly pleased and supportive of this important development.

One of the real tangible achievements is the signiﬁ cant improvement in the Group cash position which stands at €115m at 31 December 2018.
The January, 2019 Balance Sheet was further boosted by the disposal of shares in our former subsidiary, The Gift Voucher Shop.

There’s no doubt that challenging and testing times remain ahead for An Post but I have every conﬁ dence that the Strategy as set out will continue to transform the Company.

I want to thank the CEO and his management team, the staff and unions and my fellow Board members who serve the Company so well.
I want also to acknowledge the contributions of Mr Tom O’Brien and Ms Lorraine Tormey who completed their terms of offi ce in 2018 and Mr Ed Murray and Ms Jennifer Loftus who completed their terms of offi ce in March 2019.

I welcome to the Board Ms Mary O’Donovan, Mr Peter Coyne and Mr Padraig McNamara who have all joined the Board recently and I look forward to their contributions.
Finally, I wish to thank the Minister for Communications, Climate Action and Environment, Richard Bruton T.D., and the offi cials from the Department and NewERA for their assistance and support during 2018.

Dermot Divilly Chairperson 04 M11839 - AN POST_Annual-Report-2018_Front_AW.indd 4 26/04/2019 13:41 Board of Directors 1 5 9 2 6 3 7 4 8 1.

Dermot Divilly 2.

Noel Adamson 3.

Carol Bolger 4.

Deirdre Burns 5.

Peter Coyne 6.

Thomas Devlin 7.

Pádraig McNamara 8.

David McRedmond 9.


William Mooney 10.

Martina O’Connell 11.

Mary O’Donovan 12.

Niall Phelan 13.

James Wrynn Secretary 14.
Brian Fay M11839 - AN POST_Annual-Report-2018_Front_AW.indd 5 05 26/04/2019 13:42 Two ambitious businesses achieve commercial and operational successes Recurring Revenue Mails & Parcels €580.4m €38.1m Retail €159.6m €1.3m Des Morley Chief Digital Officer Pat Knight Human Resources Director Aoife Beirne Chief of Staff David McRedmond Chief Executive Officer Garrett Bridgeman Managing Director – An Post Mails & Parcels Debbie Byrne Managing Director – An Post Retail Peter Quinn Chief Financial Officer 0606 M11839 - AN POST_Annual-Report-2018_Front_AW.indd 6 26/04/2019 13:42 Two ambitious businesses achieve commercial and operational successes Recurring Revenue Mails & Parcels €580.4m €38.1m Retail €159.6m €1.3m Des Morley Chief Digital Officer Pat Knight Human Resources Director Aoife Beirne Chief of Staff David McRedmond Chief Executive Officer Garrett Bridgeman Managing Director – An Post Mails & Parcels Debbie Byrne Managing Director – An Post Retail Peter Quinn Chief Financial Officer M11839 - AN POST_Annual-Report-2018_Front_AW.indd 7 0707 26/04/2019 13:42 CEO’s Statement In last year’s report I said it was my aim to restore An Post’s centrality to Irish life and the economy, transitioning from an old mails world to a new world of e-commerce.
My team, An Post’s stakeholders and all of our great staff have delivered beyond any expectation to achieve this transformation: > Revenue grew by 7%, placing An Post amongst the best performing postal services in Europe in 2018 > Operating proﬁ t grew from €8m in 2017 to €41m, a strong return to commerciality > The core economics continue to improve with appropriate pricing and new international agreements > The split into two core businesses has seen the emergence of two talented, energetic management teams > An Post has moved from being an also-ran into being the leader in parcels market with 40% year-on-year growth (I acknowledge the critical role of the CWU and its General Secretary Steve Fitzpatrick who identiﬁ ed the potential for An Post’s future) > The post offi ce network has rebuilt its foundation with a breakthrough national deal agreed between postmasters and An Post > We have achieved real effi ciencies in the Mails & Parcel network, and downsized our central overhead > The sale of GVS for over €100m was a standout M&A deal > And we accelerate the change as we enter 2019 with a completely refreshed brand, putting digital transformation and the customer at the heart of our business.
We need to be excellent because the headwinds are only getting stronger: mail decline from e-substitution is accelerating, and the development of a cashless society threatens the viability of the post offi ce network.

The old world is disappearing.

But this is the sweet spot for An Post: a trusted intermediary for all citizens and businesses to navigate the potential and beneﬁ ts of the new world.

While all the time remembering the importance of human connections.
All e-commerce ends in a physical transaction, and the best money services and government interactions have a real human dimension.

The challenge now for the Company is to move from recovery to sustainability.

We must maintain the pressure to improve the core economics: ﬁ nd growth where we can, and become more effi cient elsewhere.

Our investment, both capital and operating expenditure needs to be switched to the new world.

Sustainability is deeper still.


Our brand promise is clear: to improve the lives of people in Ireland now and for generations to come.

We express our commitment by focusing on the UN Sustainable Development Goals which are core to our industry: Decent work No to zero hour contracts, the excesses of the gig economy and rigid hierarchical structures; yes to great employment, and an effi cient and ﬂ exible organisation, which is inclusive and diverse.
A strategy to transform for the new world we operate in requires a contemporary culture reﬂ ecting our customer base and societal change.

Sustainable communities Being clear about our nationwide footprint, present in every community and delivering to every home.

In the new world this means someone in Ballina has the same access to goods as someone in Boston or Berlin.

And it is expressed in our commitment to have a post offi ce in every community of over 500 people.
An Post aims to be a force for good, expressed through our programmes from literacy to addresses for homeless citizens.

08 M11839 - AN POST_Annual-Report-2018_Front_AW.indd 8 26/04/2019 13:42 Climate change As the operator of the largest nationwide ﬂeet we have made a leading commitment to reducing carbon emissions and switch to renewable electric delivery vehicles.

From the end of this year we will have only electric vehicles in the City Centre of Dublin, and from the end of 2020 in all our cities.
We aim to reduce carbon emissions by 50% by 2030, and completely by 2050.
Innovation and Partnerships Partnership is the ingredient for An Post’s recovery: with our Board, skilfully led by An Post’s Chairman Dermot Divilly; with our unions, especially the CWU, even through difficult negotiations; with the IPU following the breakthrough agreement in 2018; with our unique shareholder Government (a core of civil servants work assiduously to support the Company); and with the best technology and strategy partners, who innovate and bring world class skills to our Company.
All work has a personal dimension.
My own highlights of the year include the centenary commemoration of the sinking of the RMS Leinster as we remembered postal workers killed in service, our deepest heritage; the relaunch of our graduate programme after a ten year hiatus which brings fresh talent and ideas into the Company; the brilliance of my management team, downsized from 11 to 6 people (but now with 33% female participation) expert and collaborative; the launch of anpost.com as the digital bridge to our new world; and our inaugural sponsorship of the Irish Book Awards celebrating our commitment to literacy and the written word.
Not all was good news.

The consolidation of the post office network has assured the widest possible distribution across the State with an ever-improving network but I have to acknowledge the challenge for some small communities which lost their post office: a case of the right strategy, the right national solution but sometimes a difficult local outcome.

Our own restructuring at the centre was too slow and difficult and as management we will have to learn the lessons.
While we are rolling out more ﬁnancial services and e-commerce across the post office network, we need to match this progress with a full range of Government services.

Citizens should be able to conduct most of their government interactions through the post office.

And Brexit fundamentally threatens our core business of international trade.
Despite these, our optimism is strong for the future, and the agenda for 2019 is every bit as ambitious as 2018: > A white hot focus on delivering our brand promise for customers > A revitalised post office network, and the launch of An Post Money > The best e-commerce service, in and out of home, backed by automation > A transformed HQ: Corporate Centre 2.0 > Digital transformation not only making our products and services more accessible but also improving our efficiency > A third year of proﬁt growth and a further strengthened balance sheet > Buy-in amongst stakeholders to a long-term strategy and culture change An Post is not out of the woods yet.
The global forces of digitalisation have shaken the business to its core.

Postal organisations like An Post were not designed for change.

It has taken a superhuman effort to deliver the recovery and it will take more again to develop sustainability.

But no one will fault us for effort and imagination… to deliver now and for generations to come.
David McRedmond Chief Executive Officer M11839 - AN POST_Annual-Report-2018_Front_AW.indd 9 09 26/04/2019 13:42 Financial Review The trading results for the ﬁ nancial year 2018 are signiﬁ cantly ahead of those achieved in 2017.
Proﬁ t before transformation costs, pension interest and taxation, excluding one off items Transformation costs Proﬁ t on disposal of properties Premier Lotteries Ireland equity dividend Proﬁ t before pension interest and taxation as per Income Statement Revenue Net assets (before pension liability) 2018 €m 41.2 (14.0) - - 27.2 897.0 251.9 2017 €m 8.4 - 36.8 9.0 54.2 840.0 230.4 The proﬁ t before transformation costs, pension interest and taxation, excluding one off items of €41.2m compares very favourably with a proﬁ t of €8.4m in 2017.
This represents the second year of solid ﬁ nancial improvement bringing the Group out of its loss making position of €12.4m in 2016.

Revenue Group revenue in the year was €897m, up €57m, 6.8%, on the 2017 level.
This strong performance in the revenue line was driven by the full year impact of the price adjustments made in 2017, signiﬁ cantly increased packets and parcel volumes, the volumes generated from the presidential election and referendum, a small increase in retail revenue and continued strong performance in our subsidiary companies.

Traditional mail volume continued to decline over the year.

The full year decline in 2018 versus 2017 was 7.6%.
Similar rates of decline are being recorded across the postal sector internationally (Royal Mail reported a decline rate of 7% in their latest reports).

In the absence of remedial action the ﬁ nancial cost of this was €31m in the ﬁ nancial year 2018.

The basic price of the stamp was retained at €1 and is now in its second year at the same price whilst other mail product service prices were increased.
Costs Group operating costs before transformation costs of €859.3m were up €24.1m on the prior year ﬁ gure of €835.2m.

The increase is made up of increased payroll and postmaster costs of €6.7m and additional non pay costs of €17.4m.
This increase in payroll costs was driven by labour inﬂ ation costs of €7.0m in the year with a 1.5% increase having been implemented in May 2018 and additional costs of servicing the presidential election and referendum, off set by a reduction in the annual usage of Full Time Equivalents (FTEs) due to the re-alignment of labour hours to adjust to the decline in traditional mails volumes.
The increases in non pay costs reﬂ ect costs of additional activity in both the Company and its subsidiaries, costs associated with the 10 M11839 - AN POST_Annual-Report-2018_Front_AW.indd 10 26/04/2019 13:42 implementation of the Strategic Plan, investment in the brand, as well as some general price inﬂ ation.
Transformation Costs A large investment is being made in redeﬁ ning the post offi ce network including reducing the number of post offi ces, modernising the Postmaster contract and updating the brand.

The long term one-off costs associated with the post offi ce change, i.e.

payments to sign up to new contracts and severance for Postmasters have been classiﬁ ed as Transformation Costs and recorded below the operating proﬁ t line.

This amounted to €14.0m for the ﬁ nancial year.


Subsidiaries The main trading subsidiaries, Post Insurance, Air Business in the UK, and the Gift Voucher Shop (GVS) all performed strongly during the year.

At the end of January 2019, GVS was sold to Blackhawk Network, a global ﬁ nancial technology company in a deal which valued the An Post shareholding in GVS at €54m.
As An Post was the majority shareholder throughout the 2018 ﬁ nancial year, the results of GVS are included in the consolidated ﬁ nancial statements.

The sale of Precision Marketing Information Limited, a relatively small subsidiary, which provided marketing data, database services and business directories was completed in March 2019.

Balance Sheet The Group owned cash at December, 2018 is €115.1m.

This balance was €83.9m in December, 2017.


The January, 2019 Balance Sheet was further boosted by the disposal of shares in GVS, yielding additional cash for investing in the future of An Post.

Lottery licence for a period of 20 years up to 2034.

The investment is currently valued at €34.5m and it continues to generate results and cash ﬂ ow in line with our expectations.

The deﬁ cit on the Pension Fund at 31 December 2018 is €47.9m.

This compares with €55.1m at the end of 2017.


There are 17,300 members of the pension scheme and in value terms the scheme is very signiﬁ cant, being the fourth largest company scheme in Ireland.

The Pension Fund had assets under its control of €3,063m at 31 December 2018 with associated actuarially valued liabilities of €3,111m at the same date.

The assumptions used at the balance sheet date are reviewed by both the scheme actuary and the auditor.
These are reasonable and reﬂ ect similar assumptions made elsewhere for such schemes.

There is a Government Loan of €30m on the balance sheet as there was at the prior year end.

There are balances on ﬁ nance leases of €14.9m (largely for the automated letter machines).

Conclusion The ﬁ nancial results for 2018 are extremely positive and have built on the encouraging return to proﬁ tability in 2017.
This, along, with the disposal of assets, has enabled the Group to accumulate suffi cient resources to execute the new strategic direction and rationalisation programme.

These are core to the continued success of the business in the medium term.
An Post continues to hold its 10.7% shareholding in Premier Lotteries Ireland, the operator of the National Peter Quinn Chief Financial Offi cer M11839 - AN POST_Annual-Report-2018_Front_AW.indd 11 11 26/04/2019 13:42 Retail Review The Retail division returned to growth in 2018 with turnover up to €159.6m from €158.3m in 2017.

2018 was about formulating a renewal programme for post offi ces to build a great service that can be sustained in the long-term in the communities they serve.
The scale and reach of the network is highly signiﬁ cant with 1.3 million customers visiting a post offi ce every week and €14 billion transacted each year across post offi ce counters.
Developing a strategy to drive sustainability of the network against a backdrop of core business decline, reduced footfall and usage of services was built around ﬁ ve key principles: Consolidate around communities Our social commitment is to have a post offi ce in every community of over 500 and 95% of the population will be within 15km of at least one post offi ce in rural areas and within 3km in urban areas.
Customer focused Delivering new products and services to drive Postmaster income and new footfall into post offi ces, while also better serving customers online and digitally.

Co-locate for convenience Added convenience for customers with more customer-friendly opening hours including lunchtimes and evenings and some services being made available outside of core post offi ce opening hours.
Commercial contract for Postmasters Agreement between Postmasters and An Post allows the business to develop a customer-oriented service off ering and provides an opportunity for Postmasters to participate fully in the growth of the business.

Capital investment Investing in the look and feel and technology over three years to create a better customer experience in both Postmaster and Company offi ces.
New products and services Based on three distinct pillars: Financial Services Foreign Exchange and our Current Account achieved signiﬁ cant year-on-year growth.

Three signiﬁ cant new products were launched early 2019: An Post Multi-Currency card, Credit Cards and Consumer Loans.

The launch of the An Post Money brand brings our ﬁ nancial services under one umbrella as we move forward to compete strongly in the ﬁ nancial services space.
Government Services The Company is engaging with Government in a bid to provide a greater number of government services.

We agreed a new three year contract with the NTMA including service enhancements.

A Digital Assist pilot in post offi ces is bringing some government services closer to rural communities.
While there was consolidation of the network through the voluntary closure of 152 smaller offi ces in communities of less than 500 people, with 950+ post offi ces it remains by far the largest retail network in Ireland, providing vital services to local communities.
Our strategy commits to ongoing investment in both infrastructure and training and development, ensuring the transition from the old world of cash payments to a new world of e-commerce and community banking, meeting the needs of a broader range of customers, both face-to-face and online.

As a major Irish company, we aim to ensure that the post offi ce remains at the heart of communities and that we play a deeply-connected, community-conscious role, being a force for good, wherever we can.
We have the expertise and the national reach to make a real diff erence in communities as evidenced by recent initiatives around Organ Donation Awareness and our new Address Point initiative for people who are homeless or in temporary accommodation.

Out-of-home eCommerce Backbone Off ering consumers convenience for parcel collections, returns and other value-added e-commerce services enabled by a retail network of 950+ post offi ces and 1,600 PostPoint outlets.
Debbie Byrne Managing Director An Post Retail 12 M11839 - AN POST_Annual-Report-2018_Front_AW.indd 12 26/04/2019 13:43 Mails and Parcels Review The Mails and Parcels business had a recurring revenue of €580.4m in 2018 compared with €542.3m in 2017.

In addition, further revenue of €15.4m was earned from the Presidential election and constitutional referenda.

Growing in parcels 2018 saw greater than expected growth in the parcels business.
The strategy of targeting increased market share in this sector has been a success with the business experiencing signiﬁ cant revenue growth from new and existing, Irish and international customers.

For example, contract parcel revenues increased by 35%.

Volume grew steadily during the year culminating in record-breaking Black Friday, Cyber Monday and Christmas volumes.
The peak November/December period far exceeded expectations with volumes 60% ahead of 2017, making it our busiest ever Christmas for parcels The fall in traditional letter mail volumes continued in 2018, with a 7.6% rate of decline broadly in line with that of 2017 (8%).

Special occasion mailings like our Christmas campaign, and some special ‘mail moments’ such as Valentine’s Day and the World Meeting of Families were very well supported as a result of successful consumer marketing and PR activity.
Investing and consolidating A new Dublin Parcel Hub opened in late 2018, close to the Dublin Mails Centre in Clondalkin, Co Dublin.

Several custom-ﬁ tted new delivery units opened around the country, replacing outdated premises and consolidating previously dispersed rural delivery operations under one roof, with ample truck docking and processing space to ensure top quality mail and parcels deliveries as volumes continue to grow.
Increasing automation and right-sizing operations A number of important plans initiated in 2018 will manifest in the operation during 2019.

Firstly, the implementation of the parcel automation programme which will signiﬁ cantly increase processing capabilities.

Secondly, our ﬁ nal mile delivery effi ciencies which will allow the business to continue to grow the parcel business while at the same time right-sizing the operations in line with traditional mail volume decline.
An engine of growth for businesses We also unveiled a new dedicated business-to-business brand, An Post Commerce during the ﬁ rst quarter of 2019.

This brand will provide the Mails and Parcels business with a platform for growth in our key markets of parcels, mails and mail media, most particularly for the Irish SME sector.
As leaders in logistics and an engine of growth for business customers of all sizes, through mail media, customised solutions and world-class quality of service we can unlock consumer demand for our customers.
Garrett Bridgeman Managing Director An Post Mails & Parcels M11839 - AN POST_Annual-Report-2018_Front_AW.indd 13 13 26/04/2019 13:43 Retail Transforming the customer experience nationwide and online Customer visits to post offices every week Electronic transactions across post office counters 1.3m 108m Government services transactions Value of transactions across post office counters 45m+ €14bn Strategy-led actions > A post office in every community of over 500 > Breakthrough agreement with the Irish Postmasters’ Union > €9.5m capital investment fund > Expanded range of ﬁnancial services 141414 M11839 - AN POST_Annual-Report-2018_Front_AW.indd 14 26/04/2019 13:44 Retail Transforming the customer experience nationwide and online Customer visits to post Electronic transactions offices every week across post office counters 1.3m 108m Government services Value of transactions transactions 45m+ across post office counters €14bn Strategy-led actions > A post office in every community of over 500 > Breakthrough agreement with the Irish Postmasters’ Union > €9.5m capital investment fund > Expanded range of ﬁnancial services M11839 - AN POST_Annual-Report-2018_Front_AW.indd 15 1515 26/04/2019 13:44 Mails & Parcels Growing market share in commercial markets Parcels Parcels delivered Traditional Mails 40% 42m+ 7.6% Strategy-led actions > Extended delivery services > Parcel automation investment > Fair pricing 16 M11839 - AN POST_Annual-Report-2018_Front_AW.indd 16 26/04/2019 13:44 Mails & Parcels Growing market share in commercial markets Parcels Parcels delivered Traditional Mails 40% 42m+ 7.6% Strategy-led actions > Extended delivery services > Parcel automation investment > Fair pricing M11839 - AN POST_Annual-Report-2018_Front_AW.indd 17 17 26/04/2019 13:44 An Post Sustainability at Our Core An Post’s core purpose — to act for the common good, improving the lives of people in Ireland, now and for generations to come — demands sustainability.
Our commitment is beyond politics: it is a practical and real framework to ensure the delivery of high quality and aff ordable services, supporting communities across the State and respecting the environment.

Postal is a global industry.

An Post works with the International Postal Corporation to deliver the ﬁ ve UN Sustainable Development Goals most relevant to the postal sector.
Decent Work > ‘No’ to zero hour contracts, Sustainable Communities > A post offi ce in every community Climate Action > Ireland’s largest ﬂ eet leads the of over 500 people way with electric vehicles rigidity, hierarchy; ‘Yes’ to great jobs, effi ciency and ﬂ exibility > High quality, sustainable employment > Fair pricing ensures delivery to every address every day — and collection too > Training and equipping our people for the future > Giving Ballina the same access to ecommerce as Boston or Berlin > Carbon-free deliveries between Dublin’s canals by year-end 2019 > Eco-drive training for all An Post drivers > Carbon-free deliveries in all Irish > Communicating directly and > Being a force-for-good, cities by year-end 2020 clearly with staff > Championing Equality and Diversity > Working with the Trinity Centre for People with Intellectual Disabilities supporting Literacy, Education and Community programmes which make a longterm diff erence to people’s lives > Taking big steps to achieve a 50% reduction in carbon emissions by 2030 18 18 M11839 - AN POST_Annual-Report-2018_Front_AW.indd 18 26/04/2019 13:44 An Post Sustainability at Our Core Innovation and Partnerships > Making Partnership the key ingredient in our recovery and achievement of results > A break-through agreement with the IPU for Responsible Consumption and Production > As a major Irish company, minimising environmental and social impact of activities and supply chain a sustainable post offi ce network > Training staff to ensure responsible buying > Collaboration with CWU for best-in-class and tender procedures parcel services > Including Sustainability in evaluation > Encouraging Irish Tech sector help accelerate An Post’s Digital Strategy > Deeper engagement with Government stakeholders and the An Post Board scoring for all tenders M11839 - AN POST_Annual-Report-2018_Front_AW.indd 19 19 19 26/04/2019 13:44 Report of the Directors The Directors have pleasure in presenting the Directors’ Report together with the audited ﬁnancial statements of the
 Group for the year ended 31 December 2018.
1.

The Group and its Principal Activities The Group’s principal activity is to operate the national postal service and the network of post offices.

It also manages a number of commercial enterprises and has an investment in Premier Lotteries Ireland, the National Lottery operator.

2.

Results Details of the results for the year are set out in the consolidated income statement on page 32 and in the related notes to the ﬁnancial statements.
The directors did not pay an interim dividend (2017: Nil), and do not propose the payment of a ﬁnal dividend for the year (2017: Nil).

3. Business Review The trading results for the ﬁnancial year 2018 are signiﬁcantly ahead of those achieved in 2017 which itself had been a major turnaround in the results over the the prior year.

The proﬁt before transformation costs, pension interest and taxation, excluding one off items of €41.2m compares very favourably with a proﬁt of €8.4m in 2017.
The review of business for the year is dealt with in greater detail in the CEO’s Statement (page 8) and the Financial Review (page 10).
In monitoring performance, the directors and management have regard to a range of key performance indicators (KPIs), including the following: KPI Operating result Proﬁt before transformation costs, pension interest and taxation, excluding one off items Staff costs as a percentage of total operating costs Postmasters’ costs as a percentage of total operating costs Other operating costs as a percentage of total operating costs Staff – Average Full Time Equivalents (FTE) Company Subsidiaries Group Mails and parcel business Mails and parcel revenue (excluding elections/referenda) Performance in 2018 Performance in 2017 4.6% 1.0% 58.1% 58.9% 8.1% 8.4% 33.8% 32.7% 8,930 793 9,723 9,127 778 9,905 €580.4m €542.3m Core mail volumes decline (7.6%) (8.0%) Retail business Social welfare transactions BillPay transactions TV licence sales Investment Products – net fund outﬂow Post Office Savings Bank – net fund inﬂow Prize Bonds – net fund inﬂow Customer Service Written complaints Telephone enquiries 31.2m 17.0m 1.48m 33.1m 18.0m 1.46m (€189.8m) (€181.5m) €186.2m €200.3m €245.1m €275.8m 30,214 746,614 25,628 684,572 20 M11839 - An-Post_Annual-Report-2018_Financials_AW.indd 20 26/04/2019 11:34 4.
Principal Risks and Uncertainties 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: • Difficulties arising from the eventual outcome of Brexit • • • Insufficient Funding for Strategy Inﬂexible and Inefficient Cost Structure Industrial Relations not delivering sufficient pace of change • Post Office Network Sustainability • Sustainability of the Mails Universal Service Obligation • Poor IT Security, Continuity and Business Support Capability • Stakeholder buy-in to Strategy • International Mails Pricing Agreements • Loss of a single signiﬁcant customer • • Inadequate Change including talent management Insufficient Packets and Parcels Operational Capability The directors have analysed these and other risks and appropriate programmes are in place to manage and control these risks.
The Corporate Governance Statement which is incorporated into the Directors’ Report, sets out the policies and approach to risks and the related internal control procedures and responsibilities.

The directors have also considered going concern as set out in note 1 to the ﬁnancial statements.

5.

Directors, Secretary and their Interests Mr Tom O’Brien and Ms Lorraine Tormey completed their terms of office in June and December 2018 respectively.
Mr Ed Murray and Ms Jennifer Loftus completed their terms of office in March 2019.

Ms Mary O’Donovan, Mr Peter Coyne and Mr Padraig McNamara were appointed by the Minister to the Board.

There were no other changes in the composition of the Board since the date of the previous report of the directors.

The directors and secretary who held office at 31 December 2018 had no interests in the shares, or the debentures of the Company or any Group company at any time during the ﬁnancial year 2018.

6.
6.

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, through the prevention of injury, ill health and by applying the high standards which are detailed in the company’s Safety Management System.
This commitment is achieved through our compliance with the requirements of the Safety, Health and Welfare at Work Act 2005, the Safety Health and Welfare at Work (General Application) Regulations, 2007 (as amended) and all other relevant statutory provisions and codes of practice.

In 2018, there were 2.7 lost time accidents per 100,000 hours worked.
An Post successfully maintained its accreditation to the Occupational Health and Safety Management System Standard, OHSAS 18001:2007, and are positioned to transition to the new ISO 45001 safety standard during 2019.

2,654 employees attended speciﬁc safety training courses in 2018.

In addition, 1,402 ﬂeet drivers participated in the risk-based ‘Professional Driver’ programme, and a further 515 HGV drivers completed professional driver CPC modules during the year.
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.

7.

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 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.

M11839 - An-Post_Annual-Report-2018_Financials_AW.indd 21 21 26/04/2019 11:34 Report of the Directors continued 8.
Treasury Risk Management The Group’s treasury operations are managed in accordance with policies approved by the Board.

The Group’s ﬁnancial instruments are limited to cash, term deposits and bank loans/overdrafts and as such the Group’s operational exposure to ﬁnancial risks are limited.

The Group’s treasury risk management policy allows for limited foreign exchange hedge positions to be taken but does not include the use of derivatives.

9.
9.

Accounting Records The directors believe that they have complied with the requirements of Section 281 to 285 of the Companies Act, 2014 with regard to adequate accounting records by employing personnel with appropriate expertise and by providing adequate resources to the ﬁnancial function.

The accounting records of the Company are maintained at the Company’s premises at the General Post Office, O’Connell Street Lower, Dublin 1, D01 F5P2.

10.
10.

Directors’ Compliance Statement The directors acknowledge that they are responsible for securing the Company’s compliance with its relevant obligations.
In addition the directors conﬁrm that a compliance policy document has been drawn up that sets out policies that are appropriate to the Company, respecting compliance by the Company with its relevant obligations and that appropriate arrangements or structures are in place that are, in our opinion, designed to secure material compliance with the Company’s relevant obligations, and during the ﬁnancial year, the arrangements or structures referred to above have been reviewed.

11.
11.

Political Donations During the ﬁnancial year ended 31 December 2018, the Group made no political contributions which would require disclosure under the Electoral Act 1997.

12.

Subsequent Events At the end of January 2019, An Post completed the disposal of the GVS group of companies.

Details of the transaction are included in note 31 to the ﬁnancial statements.

There have been no other events subsequent to the year end that require disclosure.

13.
13.

Going Concern The Board of Directors have a reasonable expectation that the Group will have adequate resources to continue in business for a period of at least 12 months from the date of approval of these ﬁnancial statements.

For this reason, they continue to adopt the ‘going concern’ basis for the preparation of the ﬁnancial statements.

Details are set out in note 1 to the ﬁnancial statements.

14.
14.

Corporate Governance 14.1 Code of Practice for the Governance of State Bodies (2016) The Board is responsible for ensuring that An Post has complied with the requirements of the Code of Practice for the Governance of State Bodies (“the Code”), as published by the Department of Public Expenditure and Reform in August 2016.
The Board has adopted the Code of Practice for the Governance of State Bodies (2016) and has put procedures in place to ensure compliance with the Code and was in full compliance with the Code of Practice for the Governance of State Bodies for 2018.

14.2 Board Responsibilities The work and responsibilities of the Board are set out in the Terms of Reference for the Board.

The Company also has a schedule of matters speciﬁcally reserved for Board decision.
Standing items considered by the Board include; declaration of interests, reports from committees, ﬁnancial reports/management accounts, performance reports, and reserved matters.
In addition to being responsible for the Company keeping adequate accounting records, as required by the Companies Act 2014, Section 32 of the Postal and Telecommunication Services Act 1983 (‘the Act’) requires the Board to keep, in such form as may be approved by the Minister with consent of the Minister for Public Expenditure and Reform, all proper and usual accounts of money received and expended by it.
In preparing these ﬁnancial statements, the Board is required to; select suitable accounting policies and apply them consistently, make judgements and estimates that are reasonable and prudent, prepare the ﬁnancial statements on the going concern basis unless it is inappropriate to presume that it will continue in operation, and state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the ﬁnancial statements.
22 M11839 - An-Post_Annual-Report-2018_Financials_AW.indd 22 26/04/2019 11:34 The Board is responsible for keeping adequate accounting records which disclose, with reasonable accuracy at any time, its ﬁnancial position and enables it to ensure that the ﬁnancial statements comply with Section 32 of the Act.

The maintenance and integrity of the corporate and ﬁnancial information on An Post’s website is the responsibility of the Board.

The Board is responsible for approving the annual plan and budget.
An evaluation of the performance of An Post by reference to the annual plan and budget is carried out at each Board meeting.The Board is also responsible for safeguarding its assets and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Board considers that the ﬁnancial statements give a true and fair view of the ﬁnancial performance and the ﬁnancial position of An Post at 31 December 2018.
14.3 Board Structure The Group is controlled through its Board of directors.

The Board’s main roles are to oversee the operation of the Group, to provide leadership, to approve strategic objectives and to ensure that the necessary ﬁnancial and other resources are made available to enable those objectives to be met.

Certain matters are speciﬁcally reserved to the Board for its decision.
The speciﬁc responsibilities reserved to the Board include; setting Group strategy and approving an annual budget and medium-term projections; reviewing operational and ﬁnancial performance; approving major capital expenditure; reviewing the Group’s systems of ﬁnancial control and risk management; ensuring that appropriate management development and succession plans are in place; reviewing the environmental, health and safety performance of the Group; approving the appointment of the Company Secretary; and maintaining satisfactory communication with shareholders.
The Board has delegated the following responsibilities to management; the development and recommendation of strategic plans for consideration by the Board that reﬂect the longer-term objectives and priorities established by the Board; implementation of the strategies and policies of the Group as determined by the Board; monitoring of the operating and ﬁnancial results against plans and budgets; prioritising the allocation of technical and human resources; and developing and implementing risk management systems.
14.4 Board Membership The Board consists of thirteen directors including, the Chairperson, the CEO, ﬁve employee directors, one postmaster director and ﬁve non-executive directors.
The table below details the date of appointment by the Minister and the appointment period for current members: Board member Dermot Divilly Role Date Appointed by Minister Term Chairperson 01/12/2015 5 years Noel Adamson Employee director 01/11/2016 (2nd Term) 4 years Carol Bolger Deirdre Burns Peter Coyne Thomas Devlin Non-executive director Non-executive director Non-executive director 11/05/2017 5 years 11/05/2017 5 years 31/10/2018 5 Years Employee director 01/11/2016 (4th Term) 4 years Padraig McNamara Postmaster director 01/01/2019 3 Years Group CEO 03/10/2016 7 years David McRedmond William Mooney Martina O’Connell Employee director Employee director Mary O’Donovan Non-executive director 01/11/2016 (2nd Term) 01/11/2016 (2nd Term) 4 years 4 years 31/10/2018 5 Years Niall Phelan James Wrynn Employee director 01/11/2016 4 years Non-executive director 15/09/2016 (2nd Term) 5 years All directors are appointed to the Board by the Minister for Communications, Climate Action and Environment and their conditions of appointment and fees are set out in writing.
M11839 - An-Post_Annual-Report-2018_Financials_AW.indd 23 23 26/04/2019 11:34 Report of the Directors continued 14.

Corporate Governance continued 14.4 Board Membership continued Employee directors are elected in accordance with the Worker Participation (State Enterprises) Acts, 1977 to 1993, for a term of four years.

The postmaster director is elected in accordance with Section 81 of the Postal and Telecommunications Services Act, 1983 for a term of three years.
All other directors are appointed for a ﬁxed term, usually ﬁve years.

As An Post does not appoint any member of the Board, it does not have a diversity policy in relation to its Board of Directors as would be required under Regulation 6 of the European Union (Disclosure of Non-Financial and Diversity Information by Certain Large Undertakings and Groups) Regulations 2017.
14.5 Key Personnel Changes Mr Tom O’Brien and Ms Lorraine Tormey competed their terms of office during 2018 and Mr Ed Murray and Ms Jennifer Loftus’ terms expired in 2019.

In accordance with the Act and following a process undertaken by the Public Appointments Service, the Minister appointed two non-executive members, Ms Mary O’Donovan and Mr Peter Coyne.
In addition, in accordance with Section 81 of the Postal and Telecommunications Services Act 1983, Mr Padraig McNamara was elected and appointed as the postmaster director from 1 January 2019.

Given its legal status as a State Company and the responsibility of its principal shareholder in the appointment of directors, the Board believes that it has fulﬁlled all of the obligations that are required in respect of the appointment of directors.
14.6 Induction and Ongoing Training On appointment, all new directors take part in an induction programme when they receive information about the Group, the role of the Board and the matters reserved for its decision, the terms of reference and membership of the Board and principal Board Committees, the Group’s corporate governance practices and procedures, including the responsibilities delegated to Group senior management, and the latest ﬁnancial information about the Group.
This will typically be supplemented by meetings with key senior executives.

Throughout their period in office, the directors are continually updated on the Group’s business, the competitive and regulatory environments in which it operates, corporate social responsibility matters and other changes affecting the Group and the postal industry as a whole, by written brieﬁngs and meetings with senior executives.
Directors are also advised on appointment of their legal and other duties and obligations as a director, both in writing and in face-to-face meetings with the Company Secretary.

They are also updated on changes to the legal and governance requirements of the Group and upon themselves as directors.

All directors have access to the advice and services of the Company Secretary.

14.7 The Roles of the Chairperson and Group CEO The positions of Chairperson and Group CEO are held by different people.
The Chairperson leads the Board in the determination of its strategy and in the achievement of its objectives.

The Chairperson is responsible for organising the business of the Board, ensuring its effectiveness and setting its agenda.
The Chairperson facilitates the effective contribution of all directors and constructive relations between the executive director and the other directors, ensures that directors receive relevant, accurate and timely information and manages effective communication with shareholders.

The Chief Executive Officer has direct charge of the Group on a day to day basis and is accountable to the Board for the ﬁnancial and operational performance of the Group.
The Board through the Chairperson and management, maintain an ongoing dialogue with the Company’s shareholders on strategic issues.

The Chairperson and the Chief Executive Officer give feedback to the Board on issues raised with them by the shareholders.

All directors normally attend the Annual General Meeting and shareholders are invited to ask questions during the meeting and to meet directors after the formal proceedings have ended.
The Board has formal procedures in place whereby the Chairperson meets with the non-executive directors without the executive director being present.

14.8 Directors’ Independence Directors have the right to ensure that any unresolved concerns they may have about the running of the Group or about a particular course of action are recorded in the Board minutes.

If they have any such concerns, they may, on resignation, provide a written statement to the Chairperson, for circulation to the Board.
The directors are given access to independent professional advice at the Group’s expense where they deem it necessary to discharge their responsibilities as directors.

24 M11839 - An-Post_Annual-Report-2018_Financials_AW.indd 24 26/04/2019 11:34 14.9 Performance Evaluation The Board has adopted and performed a formal process for the annual evaluation of its own performance and that of its principal Committees.

This includes periodic external performance evaluation.
The Board considers that the introduction of any further evaluation of individual directors would be inappropriate given the manner of appointment of directors, the shareholding structure and existing Board procedures.

14.10 Board Committees The Board has established the following committees: 1.

Audit and Risk Committee (‘ARC’): comprises three Board members.
Under its terms of reference, the Committee is to assist the Board in fulﬁlling its responsibilities by the monitoring of: • The ﬁnancial reporting process; • The effectiveness of the company’s system of internal control, internal audit and risk management; and • The statutory audit of the company’s statutory ﬁnancial statements.

• The effectiveness of the external audit process and making recommendations to the Board in relation to the appointment, re-appointment and remuneration of the external auditor.
It is responsible for ensuring that an appropriate relationship between the Group and the external auditor is maintained, including reviewing non-audit services and fees.

• The review and monitoring of the independence of the statutory auditor and in particular the provision of additional services to An Post.
In order to maintain the independence of the external auditor, the Audit and Risk Committee has determined policies as to what audit related and non-audit services can be provided by the Group’s external auditors and the approval process related to these services.
Under these policies, work of a consultancy nature will not be offered to the external auditor unless there are clear efficiencies and value-added beneﬁts to the Group while ensuring that the objectivity and independence of the external auditor is maintained.

The current members of the ARC are Deirdre Burns (Chairperson), Peter Coyne and Mary O’Donovan.

There were seven meetings of the ARC in 2018.

2.

Remuneration Committee comprises three Board members.
The Committee acts on behalf of the Board and takes all signiﬁcant decisions on matters such as remuneration policy, beneﬁts, third party recommendations and related issues.

The current members of this Committee are; Dermot Divilly (Chairperson), David McRedmond and Carol Bolger.

The Chief Executive Officer absents himself from meetings when matters relating to his own remuneration are being considered.

There were three meetings of the Committee in 2018.

3.
3.

Health and Safety and Security Committee comprises three Board members.

The Committee’s principal responsibilities are to monitor the effectiveness of the Company’s Safety Management and Security Systems, satisfy itself as to Company compliance with applicable health and safety and security legislation and regulations, and ensure incidents are reduced to as low as reasonably practicable.
The Committee also monitors the development, implementation and continual improvement of strategies, management systems and processes to ensure that adequate health and safety and security regulations and procedures (including emergency response planning) are in place.

The current members of this committee are Carol Bolger (Chairperson), Martina O’Connell and Noel Adamson.

There were three meetings of the Committee in 2018.

4.

Strategy Committee comprises three Board members.


The Committee’s Terms of Reference are to consider and make recommendations to the Board on strategic issues, including recommending the strategic plan to the Board for adoption.

In addition, the Committee monitors the implementation by management of the agreed strategic plan, and to propose corrective actions or prioritisation of elements of the plan, if required, during the life of the plan.
The current members of this committee are Dermot Divilly (Chairperson), David McRedmond and Deirdre Burns.

The Committee met twice in 2018.

M11839 - An-Post_Annual-Report-2018_Financials_AW.indd 25 25 26/04/2019 11:34 Report of the Directors continued 14.

Corporate Governance continued 14.11 Schedule of Attendance, Fees and Expenses A schedule of attendance at the Board and Committee meetings for 2018 is set out below including the fees and expenses received by each member: Member No.
of meetings during year Dermot Divilly Noel Adamson Carol Bolger Deirdre Burns Peter Coyne Thomas Devlin Jennifer Loftus David McRedmond William Mooney Ed Murray Tom O’Brien Martina O’Connell Mary O’Donovan Niall Phelan William Scally Lorraine Tormey James Wrynn Total Audit & Risk Committee 7 2/2 - - 7/7 - - 7/7 - - - 5/5 - - - - - 1/1 Remuneration Committee 3 3/3 - 3/3 - - - - 3/3 - 3/3 - - - - - - - Health & Safety & Security Committee 3 - 2/3 3/3 - - - - - - - - 3/3 - - - - - Strategy Committee 2 2/2 - - 2/2 - - - 2/2 - - 2/2 - - - - - - Board 8 8/8 7/8 7/8 6/8 1/1 8/8 7/8 8/8 8/8 7/8 4/4 7/8 1/1 7/8 - 8/8 7/8 Fees 2018 €’000 - 31 16 16 16 3 16 16 - 16 16 7 16 3 16 - 16 16 220 Fees 2017 €’000 - 31 16 10 10 - 16 16 - 16 16 16 16 - 16 15 16 16 226 Expenses paid to Directors in 2018 were €3k (2017: €5k).
14.12 Statement on Internal Control Scope of Responsibility The Board of An Post is responsible for ensuring that an effective system of internal control is maintained and operated.

This responsibility takes account of the requirements of the Code of Practice for the Governance of State Bodies (2016).

Purpose of the System of Internal Control The system of internal control is designed to manage risk to a tolerable level rather than to eliminate it.
The system can therefore only provide reasonable and not absolute assurance that assets are safeguarded, transactions authorised and properly recorded and that material errors or irregularities are either prevented or detected in a timely way.

The system of internal control, which accords with guidance issued by the Department of Public Expenditure and Reform has been in place in An Post for the year ended 31 December 2018 and up to the date of approval of the ﬁnancial statements.
Capacity to Handle Risk An Post has an Audit and Risk Committee (ARC) comprising Board members with ﬁnancial and audit expertise.

The ARC met seven times in 2018.

26 An Post has also established an internal audit function which is adequately resourced and conducts a programme of work agreed with the ARC.

The ARC has developed a risk management policy which sets out its risk appetite, the risk management processes in place and details the roles and responsibilities of staff in relation to risk.
The policy has been issued to all staff who are expected to work within An Post’s risk management policies, to alert management on emerging risks and control weaknesses and assume responsibility for risks and controls within their own area of work.

Risk and Control Framework An Post has implemented a risk management system which identiﬁes and reports key risks and the management actions being taken to address and, to the extent possible, to mitigate those risks.
A risk register is in place which identiﬁes the key risks facing An Post and these have been identiﬁed, evaluated and graded according to their signiﬁcance.

The register is reviewed and updated by the ARC on a six monthly basis.

The outcome of these assessments is used to plan and allocate resources to ensure risks are managed to an acceptable level.
M11839 - An-Post_Annual-Report-2018_Financials_AW.indd 26 26/04/2019 11:34 The risk register details the controls and actions needed to mitigate risks and responsibility for operation of controls assigned to speciﬁc staff.
We conﬁrm that a control environment containing the following elements is in place: • procedures for all key business processes have been documented, • ﬁnancial responsibilities have been assigned at management level with corresponding accountability, 14.13 Raising Matters of Concern The Group operates procedures to ensure that appropriate arrangements are in place for employees to be able to raise, in conﬁdence, matters of possible impropriety, with suitable subsequent follow-up action including a review by the Audit and Risk Committee.
Reporting channels have been created whereby perceived wrongdoing may be reported via post, telephone and email.

• there is an appropriate budgeting system with an annual budget which is kept under review by senior management, • there are systems aimed at ensuring the security of the information and communication technology systems, and • there are systems in place to safeguard the assets.
Ongoing Monitoring and Review Formal procedures have been established for monitoring control processes and control deﬁciencies are communicated to those responsible for taking corrective action and to management and the Board, where relevant, in a timely way.
We conﬁrm that the following ongoing monitoring systems are in place: • key risks and related controls have been identiﬁed and processes have been put in place to monitor the operation of those key controls and report any identiﬁed deﬁciencies, • reporting arrangements have been established at all levels where responsibility for ﬁnancial management has been assigned, and • there are regular reviews by senior management of periodic and annual performance and ﬁnancial reports which indicate performance against budgets/forecasts.
Procurement Documented policies are in place in relation to procurement.

These policies are in line with European Union and Irish Government guidelines.

Adherence to these guidelines is monitored throughout the year.

Review of Effectiveness An Post has procedures to monitor the effectiveness of its risk management and control procedures.
An Post’s monitoring and review of the effectiveness of the system of internal ﬁnancial control is informed by the work of the internal and external auditors, the Audit and Risk Committee which oversees their work, and the senior management within An Post responsible for the development and maintenance of the internal ﬁnancial control framework.

The Board has conducted an annual review of the effectiveness of the internal controls for 2018.
Internal Control Issues No weaknesses in internal control were identiﬁed in relation to 2018 that require disclosure in the ﬁnancial statements.

14.14 Disclosures required under the Code of Practice for the Governance of State Bodies An Post is compliant with the reporting guidelines of the Revised Code of Practice for the Governance of State Bodies (2016).

The following statistics relate to the An Post Group for the ﬁnancial year ended 31 December 2018.
The Chairman has written to the Minister for Communications, Climate Action and Environment with further detailed information.

Employee beneﬁts Employees’ short-term beneﬁts for the Group are categorised into the following bands: 2018 No.

of employees 2017 No.


of employees Less than €50,000 Between €50,000 and €74,999 Between €75,000 and €100,000 Over €100,000 10,387 1,427 206 94 10,368 1,179 185 95 Travel and official entertainment Costs in respect of travel and official expenditure incurred in the year amounted to €3.819m (2017: €3.436m).

This includes travel and subsistence of €3,000 paid directly to Board members in 2018 (2017: €5,000).

15.
15.

Statement of the Directors on compliance with the Regulator’s Direction on the Accounting Systems of An Post as required by the Communications Regulation (Postal Services) Act 2011 Under the Communications Regulation (Postal Services) Act 2011, the accounting procedures of An Post are required to be conducted in accordance with directions laid down by ComReg and with certain provisions in the Act.
The directors acknowledge their responsibility for compliance with the accounting provisions of the Act and the following statement describes how An Post applied the relevant provisions of the Act and the Direction for the accounting year beginning on 1 January 2018.
M11839 - An-Post_Annual-Report-2018_Financials_AW.indd 27 27 26/04/2019 11:34 Report of the Directors continued Financial Records and Accounting Systems The ﬁnancial records and accounting systems maintained by An Post contain sufficient detail to enable management to ensure that they comply with the accounting provisions of the Direction.

Separate accounts are maintained for each of the services within the Universal Service.
Separated Accounts Segmental proﬁt and loss accounts and statements of net assets will be submitted to ComReg for the year ended 31 December 2018.

In compliance with the Direction, a competent body is reviewing these accounts and will issue an opinion on their compliance with the Direction.
Accounting Manual A detailed accounting manual has been prepared showing the range and scope of data to be collected for the purpose of complying with the Direction and the basis on which the data is to be allocated/apportioned between services.
Statement of Compliance Based on the above steps and actions, the directors believe that An Post has complied with the relevant provisions of the Act and with the Direction of ComReg in relation to the Accounting Systems of An Post for the year ended 31 December 2018.

16.
16.

Directors’ Responsibilities Statement in respect of the Directors’ Report and the Financial Statements The directors are responsible for preparing the directors’ report and the ﬁnancial statements in accordance with the Companies Act 2014.

Irish company law requires the directors to prepare ﬁnancial statements for each ﬁnancial year.
Under the law, the directors have elected to prepare the Group ﬁnancial statements in accordance with International Financial Reporting Standards as adopted by the European Union (“relevant ﬁnancial reporting framework”) and the Company ﬁnancial statements in accordance with FRS 101 Reduced Disclosure Framework.
Under company law, the directors must not approve the ﬁnancial statements unless they are satisﬁed that they give a true and fair view of the assets, liabilities and ﬁnancial position of the company as at the ﬁnancial year end date and of the proﬁt or loss of the company for the ﬁnancial year and otherwise comply with the Companies Act 2014.
In preparing the group ﬁnancial statements, International Accounting Standard 1 requires that directors: • properly select and accounting policies; transactions, other events and conditions on the entity’s ﬁnancial position and ﬁnancial performance; and • make an assessment of the company’s ability to continue as a going concern.
In preparing the parent company ﬁnancial statements, the directors are required to: • select suitable accounting policies and then apply them consistently; • make judgements and accounting estimates that are reasonable and prudent; • state whether Financial Reporting Standard 101 Reduced Disclosure Framework has been followed, subject to any material departures disclosed and explained in the ﬁnancial statements; and • prepare the ﬁnancial statements on a going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for ensuring that the company keeps or causes to be kept adequate accounting records which correctly explain and record the transactions of the company, enable at any time the assets, liabilities, ﬁnancial position and proﬁt or loss of the company to be determined with reasonable accuracy, enable them to ensure that the ﬁnancial statements and directors’ report comply with the Companies Act 2014 and enable the ﬁnancial statements to be audited.
They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The directors are responsible for the maintenance and integrity of the corporate and ﬁnancial information included on the company’s website.

Legislation in Ireland governing the preparation and dissemination of ﬁnancial statements may differ from legislation in other jurisdictions.

17.
17.

Relevant Audit Information The directors believe that they have taken all steps necessary to make themselves aware of any relevant audit information and have established that the Company’s statutory auditors are aware of that information.

In so far as they are aware, there is no relevant audit information of which the Company’s statutory auditors are unaware.

18.
18.

Auditors The auditors, Deloitte Ireland LLP, Chartered Accountants and Statutory Audit Firm, continue in office in accordance with Section 383(2) of the Companies Act 2014.
• present information, including accounting policies, On behalf of the Board in a manner that provides relevant, reliable, comparable and understandable information; • provide additional disclosures when compliance with the speciﬁc requirements with IFRSs are insufficient to enable users to understand the impact of particular Dermot Divilly, Chairperson David McRedmond, Director 29 March 2019 28 M11839 - An-Post_Annual-Report-2018_Financials_AW.indd 28 26/04/2019 11:34 Independent Auditor’s Report to the members of An Post Report on the audit of the ﬁnancial statements Opinion on the ﬁnancial statements of An Post (the ‘company’) In our opinion, the group and parent company ﬁnancial statements: • give a true and fair view of the assets, liabilities and ﬁnancial position of the group and parent company as at 31 December 2018 and of the proﬁt of the group and parent company for the ﬁnancial year then ended; and • Have been properly prepared in accordance with the relevant ﬁnancial reporting framework and, in particular, with the requirements of the Companies Act 2014.
The ﬁnancial statements we have audited comprise: The Group Financial Statements: • The Consolidated Income Statement; • The Consolidated Statement of Other Comprehensive Income; • The Consolidated Statement of Financial Position; • The Consolidated Statement of Changes in Equity; • The Consolidated Statement of Cash Flows; and • The related notes 1 to 32, including a summary of signiﬁcant accounting policies as set out in note 1.
The Parent Company Financial Statements: • The Company Statement of Financial Position; • The Company Statement of Changes in Equity; • The related notes 1 to 32, including a summary of signiﬁcant accounting policies as set out in note 1.
The relevant ﬁnancial reporting framework that has been applied in the preparation of the group ﬁnancial statements is the Companies Act 2014 and International Financial Reporting Standards (IFRS) as adopted by the European Union (“the relevant ﬁnancial reporting framework”).
The relevant ﬁnancial reporting framework that has been applied in the preparation of the parent company ﬁnancial statements is the Companies Act 2014 and FRS 101 “Reduced Disclosure Framework” (“the relevant ﬁnancial reporting framework”).

Basis for opinion We conducted our audit in accordance with International Standards on Auditing (Ireland) (ISAs (Ireland)) and applicable law.
Our responsibilities under those standards are described below in the “Auditor’s responsibilities for the audit of the ﬁnancial statements” section of our report.
We are independent of the group and parent company in accordance with the ethical requirements that are relevant to our audit of the ﬁnancial statements in Ireland, including the Ethical Standard issued by the Irish Accounting and Auditing Supervisory Authority, and we have fulﬁlled our other ethical responsibilities in accordance with these requirements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern We have nothing to report in respect of the following matters in relation to which ISAs (Ireland) require us to report to you where: • the directors’ use of the going concern basis of accounting in preparation of the ﬁnancial statements is not appropriate; or • the directors have not disclosed in the ﬁnancial statements any identiﬁed material uncertainties that may cast signiﬁcant doubt about the group or parent company’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the ﬁnancial statements are authorised for issue.
Other information The directors are responsible for the other information.

The other information comprises the information included in the Annual Report, other than the ﬁnancial statements and our auditor’s report thereon.

Our opinion on the ﬁnancial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the ﬁnancial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the ﬁnancial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the ﬁnancial statements or a material misstatement of the other information.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.
M11839 - An-Post_Annual-Report-2018_Financials_AW.indd 29 29 26/04/2019 11:34 Independent Auditor’s Report to the members of An Post continued Responsibilities of directors As explained in the Directors’ Responsibilities Statement, the directors are responsible for the preparation of the ﬁnancial statements and along with being satisﬁed that they give a true and fair view and otherwise comply with the Companies Act 2014, and for such internal control as the directors determine is necessary to enable the preparation of ﬁnancial statements that are free from material misstatement, whether due to fraud or error.
In preparing the ﬁnancial statements, the directors are responsible for assessing the group and parent company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group and parent company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the ﬁnancial statements Our objectives are to obtain reasonable assurance about whether the ﬁnancial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (Ireland) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to inﬂuence the economic decisions of users taken on the basis of these ﬁnancial statements.

As part of an audit in accordance with ISAs (Ireland), we exercise professional judgment and maintain professional scepticism throughout the audit.
We also: • Identify and assess the risks of material misstatement of the ﬁnancial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the group and parent company’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.

• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast signiﬁcant doubt on the group and parent company’s ability to continue as a going concern.
If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the ﬁnancial statements or, if such disclosures are inadequate, to modify our opinion.

Our conclusions are based on the audit evidence obtained up to the date of the auditor’s report.

However, future events or conditions may cause the entity (or where relevant, the group) to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the ﬁnancial statements, including the disclosures, and whether the ﬁnancial statements represent the underlying transactions and events in a manner that achieves fair presentation.

• Obtain sufficient appropriate audit evidence regarding the ﬁnancial information of the business activities within the group to express an opinion on the (consolidated) ﬁnancial statements.
The group auditor is responsible for the direction, supervision and performance of the group audit.

The group auditor remains solely responsible for the audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and signiﬁcant audit ﬁndings, including any signiﬁcant deﬁciencies in internal control that the auditor identiﬁes during the audit.
This report is made solely to the company’s members, as a body, in accordance with Section 391 of the Companies Act 2014.

Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no other purpose.
To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
30 M11839 - An-Post_Annual-Report-2018_Financials_AW.indd 30 26/04/2019 11:34 Under the Code of Practice for the Governance of State Bodies (August 2016) (the “Code of Practice”), we are required to report to you if the statement regarding the system of internal ﬁnancial control required under the Code of Practice as included in the Corporate Governance Statement in the Directors Report does not reﬂect the group’s compliance with paragraph 1.9(iv) of the Code of Practice or if it is not consistent with the information of which we are aware from our audit work on the ﬁnancial statements.
We have nothing to report in this respect.
Emer O’Shaughnessy for and on behalf of Deloitte Ireland LLP Chartered Accountants and Statutory Audit Firm Deloitte & Touche House Earlsfort Terrace Dublin 2 29 March 2019 Report on other legal and regulatory requirements Opinion on other matters prescribed by the Companies Act 2014 Based solely on the work undertaken in the course of the audit, we report that: • We have obtained all the information and explanations which we consider necessary for the purposes of our audit.
• In our opinion the accounting records of the parent company were sufficient to permit the ﬁnancial statements to be readily and properly audited.

• The parent company statement of ﬁnancial position is in agreement with the accounting records.

• In our opinion the information given in the report of the directors is consistent with the ﬁnancial statements and the directors’ report has been prepared in accordance with the Companies Act 2014.
Matters on which we are required to report by exception Based on the knowledge and understanding of the group and the parent company and its environment obtained in the course of the audit, we have not identiﬁed material misstatements in the directors’ report.

We have nothing to report in respect of the provisions in the Companies Act 2014 which require us to report to you if, in our opinion, the disclosures of directors’ remuneration and transactions speciﬁed by law are not made.
M11839 - An-Post_Annual-Report-2018_Financials_AW.indd 31 31 26/04/2019 11:34 Consolidated Income Statement for the year ended 31 December 2018 Notes 2 3 5 6 4 5 23 7 8 2018 €’000 Total 896,954 (859,306) 4,577 (979) 2017 €’000 Total 840,002 (835,210) 4,136 (521) 41,246 (13,974) - - 27,272 (500) 26,772 (1,508) 25,264 20,689 4,575 25,264 8,407 - 36,811 9,013 54,231 (4,630) 49,601 (12,327) 37,274 33,189 4,085 37,274 Revenue Operating costs Finance income (excluding pension interest) Finance costs (excluding pension interest) Proﬁt before transformation costs, pension interest and taxation, excluding one off items Transformation costs Other income – Property Disposal Other ﬁnance income – Equity Dividend Proﬁt before pension interest and taxation Pension interest Proﬁt before taxation Taxation Proﬁt for the year Proﬁt for the year attributable to Owners of the Company Non-controlling interests On behalf of the Board Dermot Divilly, Chairperson David McRedmond, Director 29 March 2019 32 M11839 - An-Post_Annual-Report-2018_Financials_AW.indd 32 26/04/2019 11:34 Consolidated Statement of other Comprehensive Income for the year ended 31 December 2018 Proﬁt for the year Other comprehensive income Items that will not be reclassiﬁed subsequently to proﬁt or loss: Remeasurements of deﬁned beneﬁt pension liability – net Items that may be reclassiﬁed subsequently to proﬁt or loss: Translation of foreign operations – subsidiaries Available for sale ﬁnancial assets – change in fair value Tax effect of change in fair value Total comprehensive income Total comprehensive income attributable to Owners of the Company Non-controlling interests Notes 2018 €’000 25,264 2017 €’000 37,274 23 5,901 235,500 (170) - - (966) (6) 2 30,995 271,804 26,420 4,575 267,721 4,083 30,995 271,804 M11839 - An-Post_Annual-Report-2018_Financials_AW.indd 33 33 26/04/2019 11:34 Consolidated Statement of Financial Position at 31 December 2018 Assets Non-current assets Intangible assets and goodwill Investment property Property, plant and equipment
 Investments Available for sale investment Deferred tax asset Total non-current assets Current assets Trade and other receivables Inventories Cash at bank and in hand Restricted cash Assets classiﬁed as held for sale Total current assets Total assets Equity and reserves Called up share capital Other reserves Retained earnings Equity attributable to the company Non-controlling interests Total equity Non-current liabilities Capital grants Leases and borrowings Provisions Pension liability Total non-current liabilities Current liabilities Trade and other payables Leases and borrowings Provisions Amounts held in trust Liabilities classiﬁed as held for sale Total current liabilities Total liabilities Total equity and liabilities On behalf of the Board Dermot Divilly, Chairperson David McRedmond, Director 29 March 2019 Notes 2018 €’000 2017 €’000 10 11 12 13 13 14 14 15 16 16 17 24 21 19 22 23 18 19 22 16 17 13,717 715 223,509 34,481 - 1,793 18,768 715 230,720 32,661 167 1,391 274,215 284,422 105,324 2,878 512,541 - 206,249 124,944 3,531 410,241 154,733 - 826,992 693,449 1,101,207 977,871 (68,239) 2,321 (134,200) (200,118) (3,889) (68,239) 494 (105,953) (173,698) (1,634) (204,007) (175,332) (8,447) (33,289) (10,373) (47,880) (8,896) (43,736) (10,352) (55,066) (99,989) (118,050) (176,367) (11,593) (16,405) (403,045) (189,801) (173,353) (4,895) (25,250) (480,991) - (797,211) (684,489) (897,200) (802,539) (1,101,207) (977,871) 34 M11839 - An-Post_Annual-Report-2018_Financials_AW.indd 34 26/04/2019 11:34 Consolidated Statement of Changes in Equity for the year ended 31 December 2018 Called up share capital €’000 Capital conversion reserve fund €’000 Foreign currency translation reserve €’000 Fair value reserve €’000 Retained earnings €’000 Non- controlling interests €’000 Total €’000 Total equity €’000 Balance at 1 January 2017 (68,239) (877) 2,062 (1,659) 162,736 94,023 2,299 96,322 Proﬁt for the year Other comprehensive income: Available for sale ﬁnancial assets – net
 change in fair value Remeasurements of deﬁned beneﬁt pension liability Translation of foreign operations Dividends - - - - - - - - - - - - - 966 - - 2 - - - (33,189) (33,189) (4,085) (37,274) - 2 (235,500) (235,500) - - 966 - 2 - - 150 4 (235,500) 966 150 Balance at 31 December 2017 (68,239) (877) 3,028 (1,657) (105,953) (173,698) (1,634) (175,332) Proﬁt for the year Other comprehensive income: Transfer between fair value and retained earnings reserve Remeasurements of deﬁned beneﬁt pension liability – net Translation of foreign operations Dividends - - - - - - - - - - - - - 170 - Balance at 31 December 2018 (68,239) (877) 3,198 - (20,689) (20,689) (4,575) (25,264) 1,657 (1,657) - (5,901) (5,901) - - 170 - - - - - - - - 2,320 - (5,901) 170 2,320 (134,200) (200,118) (3,889) (204,007) Other reserves per the Statement of Financial Position includes the capital conversion reserve fund, the foreign currency translation reserve and the fair value reserve.
M11839 - An-Post_Annual-Report-2018_Financials_AW.indd 35 35 26/04/2019 11:34 Consolidated Statement of Cash Flows for the year ended 31 December 2018 Cash ﬂows from operating activities Proﬁt for the year Adjustments for Depreciation Impairment loss Amortisation Net ﬁnance income Gain on sale of property, plant and equipment Tax expense Cash paid (in excess)/less than pension income statement charge Capital grant amortised Payments made in relation to provisions, excess over cost Changes in: Trade and other receivables Inventories Trade and other payables Cash generated from operating activities Taxes paid Net cash from/(used in) operating activities Cash ﬂows from investing activities Proceeds from sale of property, plant and equipment Acquisition of property, plant and equipment Acquisition of intangible assets Decrease in term deposits Amounts held in trust Net inﬂow of restricted cash Increase in creditor in respect of restricted cash Proceeds from investment in Premier Lotteries Ireland Net cash generated from investing activities Cash ﬂows from ﬁnancing activities Finance lease payments Government loan drawn down Government loan and other interest payments Dividends paid Term loan repaid Net cash (used in)/from ﬁnancing activities Net increase in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year 2018 €’000 2017 €’000 25,264 37,274 18,245 2,726 2,508 (3,098) (14) 1,508 (942) (449) (8,824) 36,924 7,675 253 8,756 53,608 (1,070) 52,538 131 (14,096) (2,927) - 76,787 26,058 (26,058) 2,500 62,395 (4,030) - (698) (2,320) - (7,048) 18,008 - 2,452 (7,998) (37,031) 12,327 2,555 (449) (4,165) 22,973 (25,544) 2,029 10,618 10,076 (11,931) (1,855) 35,314 (10,855) (2,995) 13,000 90,880 16,344 (16,344) 14,232 139,576 (5,868) 30,000 - - (4,000) 20,132 107,885 157,853 410,241 252,388 518,126 410,241 36 M11839 - An-Post_Annual-Report-2018_Financials_AW.indd 36 26/04/2019 11:34 Company Statement of Financial Position at 31 December 2018 Assets Non-current assets
 Intangible assets Investment property Property, plant and equipment Investments Deferred tax asset Total non-current assets Current assets Trade and other receivables Cash at bank and in hand Total current assets Total assets Equity and reserves Called up share capital Other reserves Retained earnings Total equity Non-current liabilities Capital grants Leases and borrowings Provisions Pension liability Total non-current liabilities Current liabilities Trade and other payables Leases and borrowings Provisions Amounts held in trust Total current liabilities Total liabilities Total equity and liabilities Notes 2018 €’000 2017 €’000 4,227 715 215,448 43,700 1,613 4,179 715 223,110 41,630 533 265,703 270,167 14 16 498,584 100,358 100,826 396,748 598,942 497,574 864,645 767,741 24 (68,239) (877) (98,818) (68,239) (2,474) (79,306) (167,934) (150,019) 21 19 22 23 (2,748) (33,265) (10,373) (47,880) (2,850) (43,690) (10,352) (55,066) (94,266) (111,958) (171,412) 18 (11,583) 19 22 (16,405) 16 (403,045) (149,446) (4,810) (25,250) (326,258) (602,445) (505,764) (696,711) (617,722) (864,645) (767,741) In accordance with section 304 of the Companies Acts 2014, the company is availing of the exemption from presenting its individual income statement.
The result for the company is a proﬁt of €12.014m (2017: €19.671m).
On behalf of the Board Dermot Divilly, Chairperson David McRedmond, Director 29 March 2019 M11839 - An-Post_Annual-Report-2018_Financials_AW.indd 37 37 26/04/2019 11:34 Company Statement of Changes in Equity for the year ended 31 December 2018 Called up share capital €’000 Capital conversion reserve fund €’000 Balance at 1 January 2017 Proﬁt for the year Remeasurements of deﬁned beneﬁt pension liability Balance at 31 December 2017 (68,239) - - (68,239) Proﬁt for the year Transfer between fair value and retained earnings reserve Remeasurements of deﬁned beneﬁt pension liability – net - - - (877) - - (877) - - - Fair value reserve €’000 (1,597) - - Retained earnings €’000 175,865 (19,671) (235,500) Total equity €’000 105,152 (19,671) (235,500) (1,597) (79,306) (150,019) - 1,597 (12,014) (1,597) (5,901) (12,014) - (5,901) Balance at 31 December 2018 (68,239) (877) - (98,818) (167,934) Included in proﬁt for the period were dividends received from group companies of €2,680k (2017: €156k).
38 M11839 - An-Post_Annual-Report-2018_Financials_AW.indd 38 26/04/2019 11:34 Index to notes to the Financial Statements for the year ended 31 December 2018 1 2 Signiﬁcant Accounting Policies Revenue 3 Operating Costs Transformation Costs Finance Income Finance Costs Proﬁt before Taxation Income Tax Staff and Postmaster Numbers and Costs 10 Intangible Assets and Goodwill Investment Property Property, Plant and Equipment Investments Trade and Other Receivables Inventories 16 Cash at Bank and In Hand 17 Disposal Group classiﬁed as Held for Sale 18 19 Trade and Other Payables Leases and Borrowings 20 Taxation and Social Welfare 21 Capital Grants 22 Provisions 23 Pensions 24 Share Capital and Reserves 25 Subsidiaries and Joint Ventures 26 Lease Commitments 27 Capital Commitments 28 Related Parties 29 Contingencies 30 Financial Instruments – Fair Value and Risk Management 31 Subsequent Events 32 Board Approval M11839 - An-Post_Annual-Report-2018_Financials_AW.indd 39 39 26/04/2019 11:34 Notes to the Financial Statements for the year ended 31 December 2018 1.
Signiﬁcant Accounting Policies The accounting policies set out below have been consistently applied to all years presented in these ﬁnancial statements, and have for the purposes of the Group ﬁnancial statements, been applied consistently throughout all Companies in the Group.

Basis of Preparation Going concern The 2018 An Post ﬁnancial statements have been prepared on a going concern basis.
This assumes that the Group and Company will have adequate resources to continue in operational existence for the foreseeable future from the date of approval of these ﬁnancial statements.

Assessment The Board has given careful consideration to the going concern basis of preparation and is satisﬁed that it is appropriate for the 2018 ﬁnancial statements to be prepared on this basis.
Key factors considered in arriving at this determination include: Trading performance: The Group’s ﬁnancial performance improved during 2018.

Arising from changes in legislation in March 2017, the price cap mechanism was removed and this allowed the Group ﬂexibility over pricing.

Price increases were introduced in April 2017 and April 2018 that have yielded additional revenue.
At the same time, the programme of cost containment continued and signiﬁcant progress was made in the growing parcels and packets market.

As noted in section 3 of the Report of the Directors, the Group’s proﬁt before pension interest and taxation excluding one off items improved by €32.8m to €41.2m in 2018.

Cash: The cash resources available to the Group increased from €83.9m at December 2017 to €115.1m in December 2018.

This improvement was as a result of the continued improved trading performance.
The Group’s cash resources were further increased in early 2019 with the disposal of the GVS Group.

The accumulation of this cash ensures adequate resources are available to the Group, to execute the Strategic Plan developed.

The Group has access to a short term borrowing facility, should this be required for working capital purposes.

Budget and Strategic review: The Board and management has undertaken a robust strategic planning process covering 2019 to 2023.
Although mail volumes are still forecast to decline, the strategy shows the Group having a sustainable earnings level for period of at least 12 months from the date of approval of these ﬁnancial statements.

The assumptions used were subject to robust challenge and scrutiny and are considered to be realistic and achievable.
Conclusion Having made due enquiries and considering the matters described above, the Board members have a reasonable expectation that the Group will have adequate resources to continue in operational existence for a period of at least 12 months from the date of approval of these ﬁnancial statements.

Consequently, the Board Members have concluded that the circumstances described above do not represent a material uncertainty that casts doubt on the Group’s ability to continue as a going concern.
Reporting entity An Post (the ‘Company’) is a designated activity company limited by shares domiciled in Ireland with registered number 98788.

Under the Postal and Telecommunications Services Act, 1983, the Company is entitled to omit the words ‘designated activity company’ from its name.

The Company’s registered office is General Post Office, O’Connell Street, Dublin 1, D01 F5P2.
These consolidated ﬁnancial statements comprise the ﬁnancial statements of the Company and its subsidiaries (collectively the ‘Group’ and individually ‘Group companies’.

The Group is primarily involved in postal, distribution and ﬁnancial services.
In presenting the parent company’s ﬁnancial statements together with the group ﬁnancial statements, the Company has availed of the exemption in Section 304(2) of the Companies Act, 2014 not to present its individual Income statements and related notes that form part of the approved Company ﬁnancial statements.
Statement of compliance The consolidated ﬁnancial statements are prepared in accordance with International Financial Reporting Standards (IFRS), as adopted by European Union (EU IFRS) and the Companies Act 2014.

The ﬁnancial statements of the Company have been prepared in accordance with FRS 101 Reduced Disclosure Framework and the Companies Act 2014.
40 M11839 - An-Post_Annual-Report-2018_Financials_AW.indd 40 26/04/2019 11:34 New and amended IFRS Standards that are effective for the current year The following new standards and interpretations became effective for the Group as of 1 January 2018: • • • IFRS 9 – Financial Instruments IFRS 15 – Revenue from Contracts with Customers IFRIC 22 – Foreign Currency Transactions and Advanced Consideration While the new standards and interpretations did not result in a material impact on the Group’s results, the nature and effect of changes required by IFRS 9 and IFRS 15 are described below.
Impact of initial application of IFRS 9 Financial Instruments IFRS 9 replaces IAS 39 Financial Instruments Recognition and Measurement.

It addresses the classiﬁcation, measurement and derecognition of ﬁnancial assets and ﬁnancial liabilities, introduces a new impairment model for ﬁnancial assets and new rules for hedge accounting.

The Group has applied IFRS 9 retrospectively, but elected not to restate comparative information.
Additionally, the Group adopted consequential amendments to IFRS 7 Financial Instruments: Disclosures that were applied to the disclosures for 2018 and to the comparative period.

The Group has assessed the business models and contractual cash ﬂows which apply to its ﬁnancial assets and classiﬁed the assets into the appropriate IFRS 9 categories accordingly.
Original measurement category determined in accordance with IAS 39 at 31 December 2017 New measurement category determined in accordance with IFRS 9 at 1 January 2018 Carrying amount determined in accordance with IAS 39 at 31 December 2017 Carrying amount determined in accordance with IFRS 9 at 1 January 2018 Financial Assets Investment in PLI – equity shares FVOCI* Investment in PLI – preference shares FVOCI* FVTPL** FVTPL** €350k €8,779k €350k €8,779k Investment in PLI – shareholder loan Amortised Cost Amortised Cost €23,532k €23,532k Trade and other receivables Amortised Cost Amortised Cost €113,788k €113,788k Cash at bank and in hand Amortised Cost Amortised Cost €564,974k €564,974k Available for sale investment (VISA) FVOCI* FVTPL** €167k €167k * FVOCI refers to measurement at fair value through Other Comprehensive Income ** FVTPL refers to measurement at fair value through the Proﬁt and Loss Account M11839 - An-Post_Annual-Report-2018_Financials_AW.indd 41 41 26/04/2019 11:34 Notes to the Financial Statements for the year ended 31 December 2018 continued 1.
Signiﬁcant Accounting Policies continued New and amended IFRS Standards that are effective for the current year continued The Group’s ﬁnancial assets measured at amortised cost, the most signiﬁcant of which are trade and other receivables are subject to IFRS 9’s new expected credit loss model.

The Group’s impairment methodology has been revised in line with the requirements of IFRS 9.
The simpliﬁed approach to providing for exected credit losses has been applied to trade and other receivables, which requires the use of a lifetime expected loss provision.

As outlined above, the classiﬁcation requirements under IFRS 9 did not impact the measurement or carrying amount of ﬁnancial assets.

The application of the ECL model under IFRS 9 has not changed the carrying amounts of the Company’s ﬁnancial assets.
The carrying amounts of ﬁnancial assets continued to approximate their fair values on the date of transition to IFRS 9.

Financial liabilities continue to be classiﬁed and measured at amortised cost.

The Group does not have any hedge accounting positions at the date of initial application or the year end date.
Impact of application of IFRS 15 Revenue from Contracts with Customers In the current year, the Group has applied IFRS 15 Revenue from Contracts with Customers (as amended in April 2016) which is effective for an annual period that begins on or after 1 January 2018.

IFRS 15 introduced a 5-step approach to revenue recognition.

Far more prescriptive guidance has been added in IFRS 15 to deal with speciﬁc scenarios.
The Group has applied IFRS 15 in accordance with the fully retrospective transitional approach using the practical expedient for completed contracts in IFRS 15:C5(a) for all reporting periods presented before the date of initial application, i.e.

1 January 2018.

The Group’s accounting policies for its revenue streams are disclosed below.

The application of IFRS 15 has not had an impact on the ﬁnancial position or ﬁnancial performance of the Group.
New IFRS Standards, amendments and interpretations issued, but not yet effective IFRS 3 (Amendment) Deﬁnition of a Business IFRS 9 (Amendment) Prepayment Features with Negative Compensation 1 January 2020 1 January 2019 IFRS 16 Leases 1 January 2019 IFRS 17 Insurance Contracts 1 January 2021 IAS 1 (Amendment) Deﬁnition of Material IAS 8 (Amendment) Deﬁnition of Material IAS 19 (Amendment) Plan Amendment, Curtailment or Settlement 1 January 2020 1 January 2020 1 January 2019 IAS 28 (Amendment) Long-term Interests in Associates and Joint Arrangements 1 January 2019 Annual Improvements to IFRS Standards 2015–2017 Cycle (Amendment) 1 January 2019 IFRIC 23 Uncertainty over Income Tax Treatments 1 January 2019 Amendments to References to Conceptual Framework in IFRS Standards 1 January 2020 The Group is assessing the full impact on the ﬁnancial statements of these new Standards, Interpretations and Amendments to Published Standards.
The standards and interpretations addressed above will be applied for the purposes of the Group’s ﬁnancial statements with effect from the dates listed.

The changes arising from the implementation of IFRS 16 Leases will be the most signiﬁcant.
42 M11839 - An-Post_Annual-Report-2018_Financials_AW.indd 42 26/04/2019 11:34 Effective 1 January 2019, An Post has to bring many additional leases on-balance sheet as follows: Balance sheet 1 January 2019 Right-of-use assets Lease liabilities Impact on net assets An Post Property €’000 Vehicles €’000 Subsidiaries €’000 31,900 (31,900) - 13,300 (13,300) - 17,200 (17,200) - Total €’000 62,400 (62,400) - Operating lease payments previously included in ‘Operating costs’ of An Post’s income statement will be disclosed as ‘Depreciation’ (included in ‘Operating costs’) and ‘Finance costs (excluding pension interest)’ in 2019.
The amounts expected for 2019 are: Income Statement 2019 Operating Costs Depreciation Finance Costs Impact on proﬁt The negative impact on the proﬁt arises from the fact that at the beginning of the lease term, the interest charge is higher than towards the end of the lease term.

Over the life of the lease, there is no impact on the proﬁt.

The Group expects to apply the standard as of 1 January 2019 without restating its prior-period ﬁnancial information (so called ‘modiﬁed retrospective’ approach).
As part of the initial application, the following key judgements were made: • Only limited lease renewal options were taken into considerations • The standard will not be applied for low-value items A discount rate was not calculated on a lease-by-lease basis but on a portfolio of leases with similar characteristics.

The directors are currently assessing the impact in relation to the adoption of the other standards and interpretations for future periods.
While this work is in progress, no other material impacts on the Group have been identiﬁed at this point.
An Post Property €’000 Vehicles €’000 Subsidiaries €’000 5,100 (4,700) (600) (200) 5,500 (5,300) (200) - 600 (1,300) (400) (1,100) Total €’000 11,200 (11,300) (1,200) (1,300) Basis of measurement Group These ﬁnancial statements are prepared on a historical cost basis, except for: • The net deﬁned beneﬁt pension liability is measured at the fair value of plan assets less the present value of the deﬁned beneﬁt obligation; • Investment property is measured at fair value; and • Financial assets are measured at fair value.
Company In these ﬁnancial statements, the Company has applied the exemptions available under FRS 101 in respect of the following disclosures: • a Cash Flow Statement and related notes; • Comparative period reconciliations for share capital, tangible ﬁxed assets, intangible assets and investment properties; • Disclosures in respect of transactions with wholly owned subsidiaries; • Disclosures in respect of capital management; • The effects of new but not yet effective IFRSs; and • Disclosures in respect of the compensation of Key Management Personnel.
M11839 - An-Post_Annual-Report-2018_Financials_AW.indd 43 43 26/04/2019 11:34 Notes to the Financial Statements for the year ended 31 December 2018 continued 1.

Signiﬁcant Accounting Policies continued Basis of measurement continued Functional and presentation currency These consolidated and Company ﬁnancial statements are presented in Euro, which is the Company’s functional currency.

All amounts have been rounded to the nearest thousand, unless otherwise indicated.
Use of judgements and estimates In preparing these ﬁnancial statements, management has made judgements, estimates and assumptions that affect the application of the Group’s and Company’s accounting policies and the reported amount of assets, liabilities, income and expenses.

Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis.

Revisions to estimates are recognised prospectively.
The areas where judgement and estimate have the most signiﬁcant effects on amounts recognised are: • Note 23 – measurement of deﬁned beneﬁt obligations: key actuarial assumptions; • Note 8 – recognition of deferred tax assets: availability of future taxable proﬁts against which deferred tax assets can be used; • Note 13 – accounting for PLI investment; and • Note 18 – deferred revenue in relation to unused stamps/meter loadings.
Basis of Consolidation Business combinations The Group accounts for business combinations using the acquisition method when control is transferred to the Group.

The consideration transferred in the acquisition is generally measured at fair value, as are the identiﬁable net assets acquired.

Any goodwill that arises is tested annually for impairment.

Transaction costs are expensed in proﬁt or loss as incurred, except if related to the issue of debt or equity securities.
When the Group loses control over a subsidiary, it derecognises the assets and liabilities of the subsidiary, and any related non-controlling interests and other components of equity.

Any interest retained in the former subsidiary is measured at fair value when control is lost and together with the fair value of any consideration received is compared to the derecognised amounts.

Any resulting gain or loss is recognised in proﬁt or loss.

Subsidiaries Subsidiaries are entities controlled by the Group.
The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.

The ﬁnancial statements of subsidiaries are included in the consolidated ﬁnancial statements from the date on which control commences until the date on which control ceases.
Non-controlling interests (NCI) NCI are measured at their proportionate share of the acquiree’s identiﬁable net assets at the date of acquisition and subsequently, their share of changes in net assets.

Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.

Interests in equity-accounted investees The Group’s interests in equity-accounted investees comprise interests in joint ventures.
A joint venture is an arrangement in which the Group has joint control, whereby the Group has rights to the net assets of the arrangement, rather than rights to its individual assets and obligations for its individual liabilities.

Interests in joint ventures are accounted for using the equity method.

They are initially recognised at cost, which includes transaction costs.
Subsequent to initial recognition, the consolidated ﬁnancial statements include the Group’s share of the proﬁt or loss and other comprehensive income of equity-accounted investees, until the date on which signiﬁcant inﬂuence or joint control ceases.

Transactions eliminated on consolidation Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions are eliminated.
Unrealised gains arising from transactions with equity-accounted investees are eliminated against the investment to the extent of the Group’s interest in the investee.

Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.
44 M11839 - An-Post_Annual-Report-2018_Financials_AW.indd 44 26/04/2019 11:34 Accounting for non recurring transactions Transactions of a material sum that are non-recurring in nature are recorded in the Income Statement in the year they occur.

Examples of such transactions are the proﬁts on one-off large property disposals or the receipt of large but non recurring equity dividends.
This policy is designed so that the Financial Statements represent these transactions separately and the Financial Statements present the continuing operations of the Group’s business.

Revenue Revenue reported is net of value added tax.

Revenue consists of income from postage, agency services, poundage from remittance services, courier and logistic services, ﬁnancial services and interest income.
Income from agency services is in respect of services performed for Government Departments, the National Treasury Management Agency, Premier Lotteries Ireland and other bodies.

Amounts held in the performance of these agency services are included in amounts held in trust on the statement of ﬁnancial position.

The Group is entitled to interest income on funds held in relation to agency services and as such recognises this as part of revenue.
For postage revenue, there is only one performance obligation which is related to the sale of the stamps.

The stamps are a distinct good that is promised to be transferred to the customer within this performance obligation.

The performance obligation is satisﬁed when the stamps are used by the customer and is therefore satisﬁed at a point in time.
Commission income from the sale of gift vouchers, other cards and ﬁnancial services products and is recognised when the underlying performance obligations are satisiﬁed.

Non-redemption income from gift cards is recognised when the related non-redemption fee is received, at a point in time.

Other agency and service revenue is recognised when the the underlying performance obligations are satisiﬁed.
Where the Group acts in the capacity of an agent rather than as the principal in a transaction, then the revenue recognised is the net amount of commission made by the Group.

Grants Revenue based grants are recognised in proﬁt or loss on a systematic basis in the periods in which the expenses are recognised.
Capital grants are initially recognised as deferred income at fair value if there is reasonable assurance that they will be received and the Group will comply with the conditions associated with the grant; they are then recognised in proﬁt or loss as other income on a systematic basis over the useful life of the asset.

Property, Plant and Equipment Recognition and measurement Items of property, plant and equipment are measured at cost less accumulated depreciation and any accumulated impairment losses.
If signiﬁcant parts of an item of property, plant and equipment have different useful lives, then they are accounted for as separate items (major components) of property, plant and equipment.

Any gain or loss on disposal of an item of property, plant and equipment is recognised in proﬁt or loss.

Subsequent expenditure Subsequent expenditure is capitalised only if it is probable that the future economic beneﬁts associated with the expenditure will ﬂow to the Group.
Depreciation Depreciation is calculated to write off the cost of items of property, plant and equipment, other than land, less their estimated residual values using the straight-line method over their estimated useful lives, and is recognised in proﬁt or loss.

Leased assets are depreciated over the shorter of the lease term and their useful lives.

Land is not depreciated.


The estimated useful lives of property, plant and equipment for current and comparative periods are as follows: Freehold & long leasehold buildings Motor vehicles Operating & computer equipment Years or lease term if shorter 20–50 5 3–10 Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.
M11839 - An-Post_Annual-Report-2018_Financials_AW.indd 45 45 26/04/2019 11:34 Notes to the Financial Statements for the year ended 31 December 2018 continued 1.

Signiﬁcant Accounting Policies continued Leases Leased assets Assets held by the Group under leases that transfer to the Group substantially all of the risks and rewards of ownership are classiﬁed as ﬁnance leases.
The leased assets are measured initially at an amount equal to the lower of their fair value and the present value of the minimum lease payments.

Subsequent to initial recognition, the assets are accounted for in accordance with the accounting policy applicable to that asset.

Assets held under other leases are classiﬁed as operating leases and are not recognised in the Group’s statement of ﬁnancial position.
Lease payments Payments made under operating leases are recognised in proﬁt or loss on a straight line basis over the term of the lease.

Lease incentives received are recognised as an integral part of the total lease expense, over the term of the lease.

Minimum lease payments made under ﬁnance leases are apportioned between the ﬁnance expense and the reduction of the outstanding liability.
The ﬁnance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.

Intangible assets and goodwill Recognition and measurement Goodwill Goodwill arising on the acquisition of subsidiaries is measured at cost less amortisation and impairment.

Software Software has a ﬁnite useful life and is measured at cost less accumulated amortisation and any accumulated impairment losses.
Subsequent expenditure Subsequent expenditure is capitalised only when it increases the future economic beneﬁts embodied in the speciﬁc asset to which it relates.

All other expenditure, including expenditure on internally generated goodwill and brands, is recognised in proﬁt or loss as incurred.
Amortisation Amortisation is calculated to write off the cost of intangible assets less their estimated residual values using the straight-line method over their estimated useful lives, and is recognised in proﬁt or loss.

Goodwill is not amortised but is tested for impairment annually at the year end.
The estimated useful lives for current and comparative periods are as follows: Software Years 5 Amortisation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

Provisions Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outﬂow of resources will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
If the effect of the time value of money is material, provisions are determined by discounting the expected future cash ﬂows at an appropriate pre-taxation rate.

Employee beneﬁts (i) Short-term employee beneﬁts Short-term employee beneﬁts are expensed as the related service is provided.
A liability is recognised for the amount expected to be paid if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

(ii) Deﬁned contribution plans Obligations for contributions to deﬁned contribution plans are expensed as the related service is provided.
(iii) Deﬁned beneﬁt plans The Group’s net obligation in respect of deﬁned beneﬁt plans is calculated separately for each plan by estimating the amount of future beneﬁt that employees have earned in the current and prior periods, discounting that amount and deducting the fair value of any plan assets.

The calculation of deﬁned beneﬁt obligations is performed annually by a qualiﬁed actuary using the projected unit credit method.
When the calculation results in a potential asset for the Group, the recognised asset is limited to the present value of economic beneﬁts available in the form of any future refunds from the plan or reductions in future contributions to the plan.

To calculate the present value of economic beneﬁts, consideration is given to any applicable minimum funding requirements.
46 M11839 - An-Post_Annual-Report-2018_Financials_AW.indd 46 26/04/2019 11:34 Remeasurements of the net deﬁned beneﬁt liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognised immediately in OCI.
The Group determines the net interest expense on the net deﬁned beneﬁt liability for the period by applying the discount rate used to measure the deﬁned beneﬁt obligation at the beginning of the annual period to the then-net deﬁned beneﬁt liability taking into account any changes in the net deﬁned beneﬁt liability during the period as a result of contributions and beneﬁt payments.

Net interest expense and other expenses related to deﬁned beneﬁt plans are recognised in proﬁt or loss.
When the beneﬁts of a plan are changed or when a plan is curtailed, the resulting change in beneﬁt that relates to past service or the gain or loss on curtailment is recognised immediately in proﬁt or loss.

The Group recognises gains and losses on the settlement of a deﬁned beneﬁt plan when the settlement occurs.
(iv) Termination beneﬁts Termination beneﬁts are expensed at the earlier of when the Group can no longer withdraw the offer of those beneﬁts and when the Group incurs costs for a related restructuring.

Income tax Income tax expense comprises current and deferred tax.

It is recognised in proﬁt or loss except to the extent that it relates to a business combination, or items recognised directly in equity or in OCI.
(i) Current tax Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years.

It is measured using tax rates enacted or substantively enacted at the reporting date.

Current tax also includes any tax arising from dividends.

Current tax assets and liabilities are offset only if certain criteria are met.
(ii) Deferred tax Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for ﬁnancial reporting purposes and the amounts used for taxation purposes.
Deferred tax is not recognised for: • temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable proﬁt or loss; • temporary differences related to investments in subsidiaries and joint arrangements to the extent that the Group is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and • taxable temporary differences arising on the initial recognition of goodwill.
Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary differences to the extent that it is probable that future taxable proﬁts will be available against which they can be used.

Deferred tax assets are reviewed at each reporting date and are derecognised to the extent that it is no longer probable that the related tax beneﬁt will be realised; such derecognised assets are reversed when the probability of future taxable proﬁts improves.
Unrecognised deferred tax assets are reassessed at each reporting date and recognised to the extent that it has become probable that future taxable proﬁts will be available against which they can be used.

Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse using tax rates enacted or substantively enacted at the reporting date.
Deferred tax has not been recognised in respect of withholding taxes and other taxes that would be payable on the unremitted earnings of foreign subsidiaries, as the Group is in a position to control the timing of reversal of the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future.
The deferred tax liabilities which have not been recognised in respect of these temporary differences are not material as the Group can rely on the availability of participation exemptions and tax credits in the context of the Group’s investments in subsidiaries.

The measurement of deferred tax reﬂects the tax consequences that would follow from the manner in which the Group expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.
Land is assessed at the sale rate.

For this purpose, the carrying amount of investment property measured at fair value is presumed to be recovered through sale, and the Group has not rebutted this presumption.

Deferred tax assets and liabilities are offset only if certain criteria are met.

M11839 - An-Post_Annual-Report-2018_Financials_AW.indd 47 47 26/04/2019 11:34 Notes to the Financial Statements for the year ended 31 December 2018 continued 1.
Signiﬁcant Accounting Policies continued Foreign currency (i) Foreign currency transactions Transactions in foreign currencies are translated into the respective functional currencies of Group companies at the exchange rates at the dates of the transactions.

Monetary assets and liabilities denominated in foreign currencies are translated into the functional currencies at the exchange rate at the reporting date.
Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated into the functional currency at the exchange rate when the fair value was determined.

Foreign currency differences are generally recognised in proﬁt or loss.

Non-monetary items that are measured based on historical cost in a foreign currency are not translated.
(ii) Foreign operations The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated into euro at the exchange rates at the reporting date.

The income and expenses of foreign operations are translated into euro at the exchange rates at the dates of the transactions.

Foreign currency differences are recognised in OCI and accumulated in the translation reserve, except to the extent that the translation difference is allocated to NCI.
When a foreign operation is disposed of in its entirety or partially such that control or joint control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassiﬁed to proﬁt or loss as part of the gain or loss on disposal.

If the Group disposes of part of its interest in a subsidiary but retains control, then the relevant proportion of the cumulative amount is reattributed to NCI.
When the Group disposes of only part of a joint venture while retaining joint control, the relevant proportion of the cumulative amount is reclassiﬁed to proﬁt or loss.

Financial instruments Financial assets and ﬁnancial liabilities are recognised in the Group’s statement of ﬁnancial position when the Group becomes a party to the contractual provisions of the instrument.

Financial assets and ﬁnancial liabilities are initially measured at fair value.
Transaction costs that are directly attributable to the acquisition or issue of ﬁnancial assets and ﬁnancial liabilities (other than ﬁnancial assets and ﬁnancial liabilities at fair value through proﬁt or loss) are added to or deducted from the fair value of the ﬁnancial assets or ﬁnancial liabilities, as appropriate, on initial recognition.
Transaction costs directly attributable to the acquisition of ﬁnancial assets or ﬁnancial liabilities at fair value through proﬁt or loss are recognised immediately in proﬁt or loss.

(i) Financial assets Financial assets are measured subsequently in their entirety at either fair value through other comprehensive income, fair value through the proﬁt and loss account or at amortised cost.
Financial assets subsequently measured at amortised cost Debt instruments that meet the following conditions are measured subsequently at amortised cost: • the ﬁnancial asset is held within a business model whose objective is to hold ﬁnancial assets in order to collect contractual cash ﬂows; and • the contractual terms of the ﬁnancial asset give rise on speciﬁed dates to cash ﬂows that are solely payments of principal and interest on the principal amount outstanding.
The Group includes in this category cash, trade receivables and other short-term receivables.

The Group subsequently measures all other ﬁnancial assets at fair value through proﬁt or loss (FVTPL).

Amortised cost and effective interest method The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period.
The amortised cost of a ﬁnancial asset is the amount at which the ﬁnancial asset is measured at initial recognition minus the principal repayments, plus the cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity amount, adjusted for any loss allowance.

The gross carrying amount of a ﬁnancial asset is the amortised cost of a ﬁnancial asset before adjusting for any loss allowance.
Interest income is recognised using the effective interest method for debt instruments measured subsequently at amortised cost.

Interest income is calculated by applying the effective interest rate to the gross carrying amount of a ﬁnancial asset.
Impairment of ﬁnancial assets The Group only holds trade and other receivables at amortised cost, with no signiﬁcant ﬁnancing component and which have maturities of less than 12 months and as such, has chosen to apply an approach similar to the simpliﬁed approach for expected credit losses (ECL) under IFRS 9 to all its receivables.

Therefore, the Group does not track changes in credit risk, but instead, recognises a loss allowance based on lifetime ECLs at each reporting date.
The carrying value of interest receivable, receivables on unsettled trades and other short-term receivables, measured at amortised cost less any expected loss, is an approximation of fair value given their short-term nature.

The Group did not recognise any impairment during the year ended 31 December 2018.
48 M11839 - An-Post_Annual-Report-2018_Financials_AW.indd 48 26/04/2019 11:34 Derecognition of ﬁnancial assets The Group derecognises a ﬁnancial asset only when the contractual rights to the cash ﬂows from the asset expire, or when it transfers the ﬁnancial asset and substantially all the risks and rewards of ownership of the asset to another entity.
If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset and an associated liability for amounts it may have to pay.

If the Group retains substantially all the risks and rewards of ownership of a transferred ﬁnancial asset, the Group continues to recognise the ﬁnancial asset and also recognises a collateralised borrowing for the proceeds received.
On derecognition of a ﬁnancial asset measured at amortised cost, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognised in proﬁt or loss.

(ii) Financial liabilities All ﬁnancial liabilities are measured subsequently at amortised cost using the effective interest method.
Financial liabilities measured subsequently at amortised cost Financial liabilities that are not (i) contingent consideration of an acquirer in a business combination, (ii) held-for-trading, or (iii) designated as at FVTPL, are measured subsequently at amortised cost using the effective interest method.

The Group includes in this category trade payables and other short-term payables.
The effective interest method is a method of calculating the amortised cost of a ﬁnancial liability and of allocating interest expense over the relevant period.
The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the ﬁnancial liability, or (where appropriate) a shorter period, to the amortised cost of a ﬁnancial liability.
Derecognition of ﬁnancial liabilities The Group derecognises ﬁnancial liabilities when, and only when, the Group’s obligations are discharged, cancelled or have expired.

The difference between the carrying amount of the ﬁnancial liability derecognised and the consideration paid and payable is recognised in proﬁt or loss.
When the Group exchanges with the existing lender one debt instrument into another one with the substantially different terms, such exchange is accounted for as an extinguishment of the original ﬁnancial liability and the recognition of a new ﬁnancial liability.

Similarly, the Group accounts for substantial modiﬁcation of terms of an existing liability or part of it as an extinguishment of the original ﬁnancial liability and the recognition of a new liability.
It is assumed that the terms are substantially different if the discounted present value of the cash ﬂows under the new terms, including any fees paid net of any fees received and discounted using the original effective rate is at least 10 per cent different from the discounted present value of the remaining cash ﬂows of the original ﬁnancial liability.
If the modiﬁcation is not substantial, the difference between: (1) the carrying amount of the liability before the modiﬁcation; and (2) the present value of the cash ﬂows after modiﬁcation should be recognised in proﬁt or loss as the modiﬁcation gain or loss within other gains and losses.
Impairment of Financial Assets The Group recognises a loss allowance for expected credit losses on investments in debt instruments that are measured at amortised cost or at FVTOCI, trade and other receivables and contract assets, as well as on ﬁnancial guarantee contracts.

The amount of expected credit losses is updated at each reporting date to reﬂect changes in credit risk since initial recognition of the respective ﬁnancial instrument.
The Group always recognises lifetime ECL for trade receivables, contract assets and other receivables.

The expected credit losses on these ﬁnancial assets are estimated using a provision matrix based on the Group’s historical credit loss experience, adjusted for factors that are speciﬁc to the debtors, general economic conditions and an assessment of both the current as well as the forecast direction of conditions at the reporting date, including time value of money where appropriate.
For all other ﬁnancial instruments, the Group recognises lifetime ECL when there has been a signiﬁcant increase in credit risk since initial recognition.

However, if the credit risk on the ﬁnancial instrument has not increased signiﬁcantly since initial recognition, the Group measures the loss allowance for that ﬁnancial instrument at an amount equal to 12 month ECL.
Lifetime ECL represents the expected credit losses that will result from all possible default events over the expected life of a ﬁnancial instrument.

In contrast, 12 month ECL represents the portion of lifetime ECL that is expected to result from default events on a ﬁnancial instrument that are possible within 12 months after the reporting date.

M11839 - An-Post_Annual-Report-2018_Financials_AW.indd 49 49 26/04/2019 11:34 Notes to the Financial Statements for the year ended 31 December 2018 continued 2.
Revenue The analysis of revenue is as follows: Republic of Ireland Postage: Letters and parcels Postage: Elections and referenda Post offices: Agency, remittance and related services Other services United Kingdom Mails distribution and related services 3.
Operating Costs The consolidated costs for the Group were as follows: Staff and postmasters’ costs Wages and salaries Postmasters’ costs Social insurance costs Pension costs Total payroll and postmasters’ costs Other costs: Distribution Facilities Operational Administration Depreciation Impairment Amortisation 2018 €’000 2017 €’000 580,448 15,386 159,558 57,470 542,346 - 158,252 60,345 812,862 760,943 84,092 79,059 896,654 840,002 2018 €’000 2017 €’000 413,250 69,659 38,162 521,071 47,667 405,557 70,063 36,302 511,922 50,124 568,738 562,046 92,665 26,769 83,729 63,926 18,245 2,726 2,508 88,579 25,675 82,487 55,963 18,008 - 2,452 290,568 273,164 859,306 835,210 50 M11839 - An-Post_Annual-Report-2018_Financials_AW.indd 50 26/04/2019 11:34 4.
Transformation Costs Costs associated with the implementation of the new Postmasters Contract and the resizing of the Post Office Network amounted to €13,974,000 (2017: €nil) during the year.

Of this total, the cost of Postmaster exits was €8,358,000 and amounts paid to Postmasters for signing up to the new Postmaster contract was €5,616,000.

5.
5.

Finance Income Interest on Premier Lotteries Ireland (PLI) loan receivable PLI preference share dividends Income from investments Interest on short term deposits Other ﬁnance income – PLI equity share dividends 6.
Finance Costs Finance lease interest Interest on Government loan Other interest costs 2018 €’000 2,190 2,130 243 14 4,577 - 2018 €’000 281 309 389 979 2017 €’000 2,004 2,130 - 2 4,136 9,013 2017 €’000 521 - - 521 M11839 - An-Post_Annual-Report-2018_Financials_AW.indd 51 51 26/04/2019 11:34 Notes to the Financial Statements for the year ended 31 December 2018 continued 7.
Proﬁt before Taxation The proﬁt before taxation is stated after charging: Operating lease rentals: Rental of buildings Other equipment and motor vehicles and after crediting to other services income: Capital grants amortised Proﬁt on sale of plant & equipment The proﬁt before taxation is stated after charging: Directors’ emoluments: Fees Emoluments – Chief Executive Expenses paid to Directors Travel Subsistence Auditor’s remuneration* – Group Audit of the group ﬁnancial statements Other assurance services Tax advisory services Other non-audit services Auditor’s remuneration* – An Post Company (included above) Audit of entity ﬁnancial statements Other assurance services Tax advisory services Other non-audit services 2018 €’000 2017 €’000 7,686 13,099 20,785 7,936 13,212 21,148 449 14 463 220 300 520 2 1 3 307 143 - - 450 165 143 - - 308 449 220 669 226 300 526 4 1 5 307 93 - 42 442 165 93 - 42 300 *Excluding VAT 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.
They do not include the salaries of the employee directors or the remuneration of the postmaster director.

52 M11839 - An-Post_Annual-Report-2018_Financials_AW.indd 52 26/04/2019 11:34 Remuneration of directors, including disclosures in accordance with the Code of Practice for the Governance of State Bodies (the ‘Code of Practice’) and the Companies Act 2014, is set out below.
The remuneration package of Mr David McRedmond, Chief Executive Officer, which is included in the amounts shown above as directors’ emoluments, is as follows.
Basic salary Other emoluments: Director’s fee Pension contributions paid 2018 €’000 240 - 60 300 2017 €’000 240 - 60 300 In accordance with the requirements of the Code of Practice, the fees paid to each director were as follows: Dermot Divilly (Chairperson) Noel Adamson Carol Bolger Deirdre Burns Peter Coyne* Thomas Devlin Jennifer Loftus David McRedmond (Chief Executive)** William Mooney Ed Murray Thomas O’Brien Martina O’Connell Mary O’Donovan* Niall Phelan William Scally Lorraine Tormey James Wrynn * Appointed to the Board by the Minister for Communications, Climate Action and Environment on 31 October 2018.
** Mr David McRedmond does not receive a director’s fee.

2018 €’000 2017 €’000 31 16 16 16 3 16 16 - 16 16 7 16 3 16 - 16 16 31 16 10 10 - 16 16 - 16 16 16 16 - 16 15 16 16 220 226 M11839 - An-Post_Annual-Report-2018_Financials_AW.indd 53 53 26/04/2019 11:34 Notes to the Financial Statements for the year ended 31 December 2018 continued 8.

Income Tax A.
Amounts recognised in proﬁt or loss Current tax Ireland – Corporation Tax Adjustment in respect of prior year UK – Corporation Tax Deferred Tax Origination and reversal of temporary differences Adjustment in respect of prior year Total tax charge B. Reconciliation of effective tax rate Proﬁt before taxation Tax using the Company’s domestic tax rate – 12.5% (2017: 12.5%) Tax effects of: Non-deductible expenses/income not taxable Tax withheld from payments made Income and gains taxed at higher rates Tax losses (not recognised)/recognised Movement in unrecognised deferred tax Prior year overprovision Total tax charge 2018 €’000 1,959 (455) 386 1,890 (456) 74 (382) 1,508 2018 €000 26,772 3,346 153 6 819 (1,650) (785) (381) 1,508 2017 €’000 11,587 (7) 463 12,043 318 (34) 284 12,327 2017 €000 49,601 6,200 (1,359) 7 6,775 149 596 (41) 12,327 54 M11839 - An-Post_Annual-Report-2018_Financials_AW.indd 54 26/04/2019 11:34 C. Movement in deferred tax balances Balance at 31 December 2018 Property, plant and equipment Employee beneﬁts Other provisions Carry forward tax loss (revenue recognition) Disclosed as Deferred tax assets Disclosed as Deferred tax liability Net Balance at 1 Jan 2018 €’000 Recognised in proﬁt or loss 2018 €’000 Recognised in Other Comprehensive Income 2018 €’000 Net Balance at 31 Dec 2018 €’000 (6,781) 6,040 817 728 804 (1,785) 1,633 (301) 835 382 - (843) - - (843) (8,566) 6,830 516 1,563 343 2,091 (1,748) At 31 December 2018, €298,000 of the deferred tax assets, and €135,000 of the deferred tax liability have been reclassiﬁed as an asset classiﬁed as held for sale, and as associated liabilities in respect of the assets classiﬁed as held for sale (note 17).
Balance at 31 December 2017 Property, plant and equipment Employee beneﬁts Other provisions Carry forward tax loss (revenue recognition) Disclosed as Deferred tax assets Disclosed as Deferred tax liability Net Balance at 1 Jan 2017 €’000 Recognised in proﬁt or loss 2017 €’000 Recognised in Other Comprehensive Income 2017 €’000 Net Balance at 31 Dec 2017 €’000 (6,514) 5,169 1,341 1,092 1,088 (267) 871 (524) (364) (284) - - - - - (6,781) 6,040 817 728 804 1,391 (587) Given the uncertainty over the existence of future taxable proﬁts, a potential deferred tax asset of €16,579,000 (2017: €20,664,000) arising from the deﬁned beneﬁt pension scheme liability and excess losses carried forward has not been recognised.
M11839 - An-Post_Annual-Report-2018_Financials_AW.indd 55 55 26/04/2019 11:34 Notes to the Financial Statements for the year ended 31 December 2018 continued 9.
Staff and Postmaster Numbers and Costs The average full time equivalent (FTE) number of persons, excluding postmasters, working in the Group during the year was: Operations Corporate Total Company employees (FTE) Subsidiaries Total Group employees (FTE) The average number of employees working in the Group during the year was: Operations Corporate Company employees Casual employees Total Company employees Subsidiaries Total Group employees The average number of postmasters engaged as agents was: Postmasters: Engaged as agents The aggregate payroll and postmasters’ costs were as follows: Wages and salaries Social insurance costs Pension costs Postmasters: Engaged as agents Total payroll and postmasters’ costs €’000 413,250 38,162 47,667 69,659 2017 €’000 405,557 36,302 50,124 70,063 568,738 562,046 In addition, see note 4 for details of Transfomation costs associated with Postmasters exiting and signing up to the new Postmaster contract.
56 M11839 - An-Post_Annual-Report-2018_Financials_AW.indd 56 26/04/2019 11:34 10.
Intangible Assets and Goodwill Group Cost At 1 January 2017 Additions Foreign exchange movement At 31 December 2017 Additions Transferred to disposal group held for sale Foreign exchange movement At 31 December 2018 Amortisation and impairment At 1 January 2017 Charge for year Foreign exchange movement At 31 December 2017 Charge for the year Transferred to disposal group held for sale Foreign exchange movement At 31 December 2018 Carrying amount At 31 December 2018 At 31 December 2017 Goodwill €’000 Software* €’000 Total €’000 98,898 2,995 (137) 57,549 2,995 (50) 60,494 101,756 3,269 (102) (79) 63,582 51,840 2,452 (17) 54,275 2,508 (102) (18) 56,663 6,919 6,219 3,269 (9,820) (98) 95,107 80,553 2,452 (17) 82,988 2,508 (4,088) (18) 81,390 13,717 18,768 41,349 - (87) 41,262 - (9,718) (19) 31,525 28,713 - - 28,713 - (3,986) - 24,727 6,798 12,549 * Intangible assets in the Company include software only.
The Company’s intangible assets at 31 December 2018 amounted to €4,227,000 : (2017 €4,179,000).

The amortisation of software is included in operating costs.
Impairment testing for cash generating units (CGUs) containing goodwill For the purposes of impairment testing, goodwill has been allocated to the Group’s CGUs (operating divisions) as follows: Gift Voucher Shop Air Business & Jordans One Direct 2018 €’000 - 2,305 4,493 6,798 €’000 5,732 2,324 4,493 12,549 At 31 December 2018, the goodwill associated with the Gift Voucher Shop group of companies has been reclassiﬁed as part of the disposal group held for sale, see note 17.
The recoverable amounts of these CGUs were based on their value in use, determined by discounting the future cash ﬂows to be generated from the continuing use of the CGU.

A description of the activities of the CGUs is outlined in Note 25.

M11839 - An-Post_Annual-Report-2018_Financials_AW.indd 57 57 26/04/2019 11:34 Notes to the Financial Statements for the year ended 31 December 2018 continued 10.
Intangible Assets and Goodwill continued The key assumptions used in the estimation of value in use were as follows: Forecasted cash ﬂows Forecasted cash ﬂows are based on the budgeted future earnings.

The budgeted earnings are based on the 2019 budget approved by the board and projections for 2020 to 2023.

Discount rates A pre-tax discount rate of 8% (2017: 8%) is applied to the proﬁts of each of the CGUs in the impairment calculation.
Impairments The foregoing impairment tests did not result in any impairments being recognised for the year ended 2018 (2017: €nil).

Sensitivity The Group ran sensitivities based on reasonably possible changes in assumptions and these sensitivities would not result in the need to recognise an impairment in 2018 or 2017.

11.
11.

Investment Property Group and Company Reconciliation of carrying amount Balance at beginning of year Change in fair value Balance at end of year 2018 €’000 715 - 715 2017 €’000 715 - 715 Investment property comprises a commercial property which is leased to a third party.

No contingent rents are charged.

Changes in fair value are recognised as gains in proﬁt or loss and included in ‘other income’.

All gains are unrealised.


Measurement of fair values The fair value of the investment property was determined by external, independent property valuers, having appropriate recognised professional qualiﬁcations and recent experience in the location and category of the property being valued.

The fair value measurement for the investment property has been categorised as a Level 3 fair value based on the inputs to the valuation technique used.
Additional disclosures in relation to the fair value of the investment property have not been provided as they are not considered material.

58 M11839 - An-Post_Annual-Report-2018_Financials_AW.indd 58 26/04/2019 11:34 12.
Property, Plant and Equipment Group Cost At 1 January 2017 Additions Disposals Foreign exchange movement At 31 December 2017 Additions Disposals Reclassiﬁed to Assets classiﬁed as held for sale Foreign exchange movement Freehold & long leasehold land & buildings €’000 Motor vehicles €’000 Operating & computer equipment €’000 293,450 8,318 (7,451) - 294,317 3,038 - (86) - 14,916 8 (2,088) (9) 12,827 120 (397) (60) (10) 316,859 8,029 - (157) 324,731 11,799 (689) (3,495) (306) Total €’000 625,225 16,355 (9,539) (166) 631,875 14,957 (1,086) (3,641) (316) At 31 December 2018 297,269 12,480 332,040 641,789 Accumulated depreciation and impairment losses At 1 January 2017 Depreciation Impairment losses Eliminated on disposals Foreign exchange movement At 31 December 2017 Depreciation Impairment losses Eliminated on disposals Reclassiﬁed to Assets classiﬁed as held for sale Foreign exchange movement At 31 December 2018 Net Book Value At 31 December 2018 At 31 December 2017 99,595 6,955 - (2,045) - 104,505 7,093 - - (75) - 111,523 185,746 189,812 5,233 2,289 - (2,057) (7) 5,458 2,286 - (367) (60) (8) 7,309 5,171 7,369 282,528 8,764 - - (100) 291,192 8,866 2,726 (602) (2,418) (316) 387,356 18,008 - (4,102) (107) 401,155 18,245 2,726 (969) (2,553) (324) 229,448 418,280 32,592 33,539 223,509 230,720 Impairment loss In 2018, due to the continued decline in traditional mail volumes, the Group assessed the related mail sorting equipment for impairment, and recognised an impairment loss of €2,726,000 with respect to certain automated equipment.
The impairment loss is included within operating costs in the income statement.

Mortgage and Charge Under the terms of the plan to meet the Minimum Funding Standard requirements a mortgage and charge relating to certain property assets of the Company with a value of €72.5 million was put in place in favour of the An Post Pension Scheme (“the Scheme”) for use as a contingent asset of the Scheme.

Further details are set out in note 23.


M11839 - An-Post_Annual-Report-2018_Financials_AW.indd 59 59 26/04/2019 11:34 Notes to the Financial Statements for the year ended 31 December 2018 continued 12.
Property, Plant and Equipment continued Company Cost At 1 January 2017 Additions Disposals At 31 December 2017 Additions Disposals Freehold & long leasehold land & buildings €’000 288,492 6,678 (7,427) 287,743 3,038 - Motor vehicles €’000 Operating & computer equipment €’000 Total €’000 14,594 8 (2,088) 12,514 96 (339) 295,119 6,420 - 598,205 13,106 (9,515) 301,539 601,796 8,351 - 11,485 (339) At 31 December 2018 290,781 12,271 309,890 612,942 Accumulated depreciation and impairment losses At 1 January 2017 Depreciation Eliminated on disposals At 31 December 2017 Depreciation Impairment loss Eliminated on disposals At 31 December 2018 Net Book Value At 31 December 2018 At 31 December 2017 95,096 6,852 (2,045) 99,903 6,991 - - 106,894 183,887 187,840 5,093 2,235 (2,057) 5,271 2,237 - (322) 7,186 5,085 7,243 266,390 7,122 - 366,579 16,209 (4,102) 273,512 378,686 7,176 2,726 - 16,404 2,726 (322) 283,414 397,494 26,476 28,027 215,448 223,110 Group and Company At 31 December 2018 the net carrying amount of property, plant and equipment held under ﬁnance leases was €11,024,000 (2017: €13,592,000).
See note 26 for further information.

Impairment loss In 2018, due to the continued decline in traditional mail volumes, the Group assessed the related mail sorting equipment for impairment, and recognised an impairment loss of €2,726,000 with respect to certain automated equipment.

The impairment loss is included within operating costs in the income statement.
Mortgage and Charge Under the terms of the plan to meet the Minimum Funding Standard requirements a mortgage and charge relating to certain property assets of the Company with a value of €72.5 million was put in place in favour of the An Post Pension Scheme (“the Scheme”) for use as a contingent asset of the Scheme.

Further details are set out in note 23.

60 M11839 - An-Post_Annual-Report-2018_Financials_AW.indd 60 26/04/2019 11:34 13.
Investments Investment in Premier Lotteries Ireland (see A below) Shares in subsidiary undertakings (see note 25) Investment in joint venture (see B overleaf) Other investments Group 2018 €’000 34,481 - - - 34,481 Group 2017 €’000 32,661 - - 167 Company 2018 €’000 Company 2017 €’000 34,481 9,219 - - 32,661 8,969 - - 32,828 43,700 41,630 The other investments have been fair valued at €410k at 31 December 2018 but is part of the disposal group classiﬁed as held for sale, see note 17.
The increase in the value of shares held in subsidiary undertakings arises as a result of a capital contribution to Precision Marketing Information Limited.

A.
A.

Investment in Premier Lotteries Ireland (PLI) Group and Company The investment in PLI is comprised of: Investment in equity shares Investment in preference shares Loans and receivables Shareholder loans 2018 €’000 2017 €’000 350 8,409 25,722 34,481 350 8,779 23,532 32,661 In 2014, An Post invested €25m in PLI by way of equity investment, shareholder loans and preference shares.
Investment in equity shares The Company holds 10.7% of the equity in the entity, holds two of the eight Board positions and has certain contractual rights.

The majority shareholder is Ontario Teachers’ Pension Plan and it holds 78.6% of the equity.

This shareholder is an experienced Lottery operator.

In PLI, the majority shareholder is the primary inﬂuencer of the operating and ﬁnancial policies.
Preference shares The preference shares entitle the Company to an annual preferential dividend for a period of 20 years from 2014 up to 2034 Shareholder loans The shareholder loan is repayable in the period up to 2034 with a rate of interest of 9% per annum.

The value of the loans receivable has increased due to accrued interest.
Initial application of IFRS 9 – Financial Instruments The directors, having considered the rights of An Post and the nature of the involvement of An Post in PLI, determined that on initial application of IFRS 9, the appropriate accounting for this investment varies based on each distinct element of the investment, outlined above.

M11839 - An-Post_Annual-Report-2018_Financials_AW.indd 61 61 26/04/2019 11:34 Notes to the Financial Statements for the year ended 31 December 2018 continued 13.
Investments continued A.

Investment in Premier Lotteries Ireland (PLI) continued The investment in equity and preference shares is measured at fair value through the proﬁt and loss account.

The directors consider the fair value of these investments to equate to the amount carried at the date of initial application and at 31 December 2018 and as a result no fair value adjustment is recorded.

The investment in the form of a shareholder loan is measured at amortised cost.
After applying an expected credit loss model to this loan, the directors are satisiﬁed that there was no material difference at the date of initial application or 31 December 2018 and as a result no impairment is recognised.

B.

Investment in joint venture During the year, the Group’s share of its joint venture’s proﬁt amounted to €Nil (2017: €Nil).

The following table summarises the ﬁnancial information of The Prize Bond Company DAC as included in its own ﬁnancial statements.
Current assets Current liabilities Net assets (100%) Group’s share of net assets (50%) Revenue Proﬁt from continuing operations Total comprehensive income (100%) Group’s share of total comprehensive income (50%) C. Other investments Fair value at the start of the year Net change in fair value – recognised through Proﬁt or Loss Fair value at the end of the year Reclassiﬁed to assets classiﬁed as held for sale (note 17) 2018 €’000 20,508 (20,508) - - 2017 €’000 17,900 (17,900) - - 10,898 10,036 - - - 2018 €’000 167 243 410 (410) - - - - 2017 €’000 173 (6) 167 - 167 GVS Prepaid Limited holds an investment in VISA Inc.
This investment was fair valued at 31 December 2018 and 31 December 2017.

62 M11839 - An-Post_Annual-Report-2018_Financials_AW.indd 62 26/04/2019 11:34 14.
Trade and Other Receivables Current assets Trade receivables Amounts owed by subsidiary undertakings Amounts owed by joint venture (note 28) Other debtors Prize bonds held Prepayments Non-current assets Amounts owed by subsidiary undertakings Deferred tax asset Group 2018 €’000 97,139 - 254 417 812 6,702 Group 2017 €’000 112,164 - 244 568 812 11,156 105,324 124,944 - 1,793 1,793 - 1,391 1,391 Company 2018 €’000 Company 2017 €’000 67,167 20,855 254 411 625 4,627 93,939 6,419 1,613 8,032 69,842 15,822 244 327 625 6,540 93,400 7,426 533 7,959 107,117 126,335 101,971 101,359 Trade and other receivables are measured at amortised cost (less any loss allowance) as the Group’s business model is to “hold to collect” contractual cash ﬂows.
The Group applies the simpliﬁed approach to providing for expected credit losses (ECL) permitted by IFRS 9 Financial Instruments, which requires expected lifetime losses to be recognised from initial recognition of the receivables.

The carrying value of trade and other receivables also represents their fair value.

Trade receivables are non-interest bearing.

Amounts due from group undertakings are interest free, unsecured and payable on demand.

15.
15.

Inventories Finished goods Group 2018 €’000 2,878 Group 2017 €’000 3,531 Company 2018 €’000 Company 2017 €’000 - - Inventory is recorded at the lower of cost or net realisable value in accordance with IAS 2 and related primarily to the value of mobile top ups held by Postpoint Services Limited.

M11839 - An-Post_Annual-Report-2018_Financials_AW.indd 63 63 26/04/2019 11:34 Notes to the Financial Statements for the year ended 31 December 2018 continued 16.
Cash at Bank and In Hand Cash at bank Cash in hand Analysis of cash and cash equivalents Group Cash at bank and in hand Group 2018 €’000 335,068 177,473 Group 2017 €’000 241,735 168,506 Company 2018 €’000 321,111 177,473 Company 2017 €’000 228,242 168,506 512,541 410,241 498,584 396,748 At beginning of year €’000 Cash ﬂows €’000 At end of year €’000 410,241 102,300 512,541 Group 2018 €’000 Group 2017 €’000 Company 2018 €’000 Company 2017 €’000 Restricted cash balance held – unredeemed prepaid cards - 154,733 - - These amounts relate to the unredeemed balances held on One4all cards on issue.
The cash held is segregated in a separate client funds bank account.

The balance at 31 December 2018 of €180,791,000 has been reclassiﬁed as part of the assets classiﬁed as held for sale, see note 17.
Amounts held in trust Liability in relation to cash held – unredeemed prepaid cards 403,045 - Group 2018 €’000 Group 2017 €’000 326,258 154,733 Company 2018 €’000 403,045 - Company 2017 €’000 326,258 - 403,045 480,991 403,045 326,258 Included in current liabilities at 31 December 2018 was amounts held in trust of €403,045,000: (2017: €480,991,000).
The majority of the amounts held in trust relates to funds held on behalf of the Company’s clients including the Department of Employment Affairs and Social Protection.

The Company also operates, on an agency basis and for an agreed remuneration, the Post Office Savings Bank and other savings services for the NTMA, which acts on behalf of the Minister for Finance.

The funds are remitted regularly to the NTMA.


The assets and liabilities of such savings services vest in the Minister for Finance and accordingly, are not included in these ﬁnancial statements.

The liability in relation to cash held – unredeemed prepaid cards amounted to €180,791,000, and has been reclassiﬁed as part of the assets classiﬁed as held for sale at 31 December 2018, see note 17.

64 M11839 - An-Post_Annual-Report-2018_Financials_AW.indd 64 26/04/2019 11:34 17.
Disposal group classiﬁed as held for sale During the year, in line with the Strategic Plan, the Group started a process to dispose of certain non core subsidiaries.

At 31 December 2018 the sales process in relation to two subsidiaries, namely TSC Ventures DAC (The Gift Voucher Shop Group) and Precision Marketing Information Limited was at an advanced stage.

The sale of these subsidiaries was completed in January 2019 for TSC Ventures DAC and in March 2019 for Precision Marketing Information Limited.
The sales put a combined value on these entities at in excess of €100m.

An Post, at the balance sheet date held 53.6% of TSC Ventures DAC and 100% of Precision Marketing Information Limited.

The assets and liabilities associated with these transactions met the “held for sale” criteria set out in IFRS 5 Non-Current Assets Held for Sale and Discontinued Operations and were reclassiﬁed accordingly as assets or liabilities held for sale as at 31 December 2018.
Both assets held for sale are not considered a separate major line of business and therefore do not consistute discontinued operations as deﬁned in IFRS 5.

Assets and liabilities of disposal group held for sale At 31 December 2018, the disposal group comprised the following assets and liabilities.
Property, plant and equipment Other investments Goodwill Deferred tax asset Trade and other receivables Inventories Cash at bank and in hand Restricted cash Assets classiﬁed as held for sale Trade and other payables Liability in relation to cash held – unredeemed prepaid cards Deferred tax liability Liabilities associated with assets classiﬁed as held for sale 2018 €’000 1,088 410 5,732 298 11,945 400 5,585 180,791 206,249 2018 €’000 8,875 180,791 135 189,801 M11839 - An-Post_Annual-Report-2018_Financials_AW.indd 65 65 26/04/2019 11:34 Notes to the Financial Statements for the year ended 31 December 2018 continued 18.
Trade and Other Payables Trade creditors Amounts owed to subsidiary undertakings Other creditors Taxation and social welfare (note 20) Accruals Capital grants (note 21) Deferred revenue – agency commission Deferred revenue – unused stamps sold/other Group 2018 €’000 46,364 - 12,267 17,587 76,120 449 6,736 16,844 Group 2017 €’000 47,885 - 13,951 15,796 68,979 449 6,999 19,294 176,367 173,353 Company 2018 €’000 Company 2017 €’000 24,492 36,216 11,838 16,605 66,610 102 - 15,549 171,412 23,322 30,383 12,025 13,051 52,494 102 - 18,069 149,446 Amounts due to group undertakings are interest free, unsecured and payable on demand.
Deferred income in relation to unused stamps is based on a number of estimation and sampling methods which are reviewed by management in order to make a judgement of the carrying amount of the deferred revenue.

Revenue is deferred at the balance sheet date as certain performance obligations have not yet been met.

The directors consider that the carrying amount of trade payables approximates to their fair value.

19.
Leases and Borrowings Due within one year Finance lease Due after one year Finance lease Government Loan Group 2018 €’000 11,593 Group 2017 €’000 4,895 Company 2018 €’000 Company 2017 €’000 11,583 4,810 Group 2018 €’000 3,289 30,000 Group 2017 €’000 13,736 30,000 Company 2018 €’000 3,265 30,000 Company 2017 €’000 13,690 30,000 33,289 43,736 33,265 43,690 In December 2017, having regard to the Services of General Economic Interest it provides, An Post received a loan of €30m from the Department of Finance to assist in the restructuring of the Company.
The loan is for a 5 year term with the potential for an annual extension on two occasions.

It attracts an interest rate of 1% and was provided to execute the Strategic Plan.

66 M11839 - An-Post_Annual-Report-2018_Financials_AW.indd 66 26/04/2019 11:34 20.

Taxation and Social Welfare Corporation tax payable Deferred tax Income tax deducted under PAYE Pay related social insurance Value added tax Professional services withholding tax 21.
Capital Grants At beginning of year Grants received during the year Amortised to income statement At end of year Transferred to current liabilities Group 2018 €’000 1,128 1,613 6,502 5,514 2,280 550 17,587 Group 2018 €’000 9,345 - (449) 8,896 (449) 8,447 Group 2017 €’000 428 587 5,851 5,316 3,302 312 Company 2018 €’000 Company 2017 €’000 746 1,613 5,839 5,400 2,459 548 11 533 5,122 5,155 1,919 311 15,796 16,605 13,051 Group 2017 €’000 9,794 - (449) 9,345 (449) 8,896 Company 2018 €’000 Company 2017 €’000 2,952 - (102) 2,850 (102) 2,748 3,054 - (102) 2,952 (102) 2,850 22.
Provisions Group and Company The movements during the year were as follows At beginning of year Provisions made during the year Utilised during the year At end of year Current Non-Current Provision for business restructuring 2018 €’000 Provision for insurance claims 2018 €’000 Provision for business restructuring 2017 €’000 Provision for insurance claims 2017 €’000 Total 2018 €’000 23,180 12,422 35,602 28,580 11,187 - (8,850) 14,330 14,330 - 14,330 2,500 (2,474) 12,448 2,075 10,373 12,448 2,500 (11,324) 26,778 16,405 10,373 26,778 - (5,400) 23,180 23,180 - 23,180 2,298 (1,063) 12,422 2,070 10,352 12,422 Total 2017 €’000 39,767 2,298 (6,463) 35,602 25,250 10,352 35,602 The provision for business restructuring relates to the cost associated with the current change programme.
The Group expects to settle this liability by 31 December 2019.

The provision for insurance claims relates to claims under the Group’s self-insurance policy.

The provision is determined on completion of a case by case assessment.

The Group expects to settle the majority of the insurance liability over the next six years.

M11839 - An-Post_Annual-Report-2018_Financials_AW.indd 67 67 26/04/2019 11:34 Notes to the Financial Statements for the year ended 31 December 2018 continued 23.
Pensions Group and Company 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.

There were no contributions due to the Pension Schemes at 31 December 2018 (2017: €nil).

Employer contributions in 2019 are expected to be €44m.
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, which took account of the changes to the normal retirement age, were carried out at 1 January 2016 using the projected unit credit method and at that date were sufficient to cover 98% of the accrued liabilities.
The principal actuarial assumption was that, over the long term, the annual rate of return on investments would be 1.5% higher than the annual increase in pensionable remuneration.

The actuarial valuation of 1 January 2016 recommended a contribution rate of 14.4% of pensionable remuneration in line with the funding proposal currently in place.

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 next actuarial valuation will be completed within the year with an as at date of 1 January 2019.

The Company operates a Special Terminations Payments Scheme for Postmasters.

This provides a once-off gratuity to Postmasters (at the discretion of the Company), where their contract terminates at any age, or, where in the course of their contract, they pass away leaving a dependent relative or relatives.
The amount of the gratuity is one week’s remuneration for each year of service up to 15 years, plus two week’s remuneration for each subsequent year of service.

The overall cap on the gratuity is 1.5 times remuneration.
The obligation recognised for this Scheme as at 31 December 2018, included in the table overleaf, amounted to €14.7m (2017: €21.7m) Funding The Schemes are subject to an annual valuation under the Pensions Authority Minimum Funding Standard (MFS).The MFS valuation is a check that a scheme has sufficient funds to provide a minimum level of beneﬁts in the event that the scheme is wound-up.
In addition, the Schemes are obliged to hold sufficient additional resources to satisfy the funding standard reserve as provided in section 44(2) of the Act.

As at 1 January 2013 the Schemes did not satisfy the Minimum Funding Standard, with a deﬁcit of €311m.

Consequently an MFS funding proposal was agreed between the Company, the Trustees and the Staff.

This was approved by the Pensions Authority in May 2014.
An amendment to the Schemes was submitted to the Department of Public Expenditure and Reform and the Department of Communications, Energy and Natural Resources and was approved in January 2015.

The amendments included an adjustment to the normal retirement age for certain members and to the deﬁnition of pensionable pay.

The changes agreed to the Schemes have led to an improvement in the Schemes’ funding position under MFS.
The funding proposal is currently on schedule to satisfy the Pension Authority’s Minimum Funding Standard (including the funding standard reserve) by 31 December 2023.

At 31 December 2018, an estimated MFS position calculated a surplus of €90m (including the funding standard reserve).

The Scheme is very susceptible to equity and bond market movements and a relatively small adverse movement can result in a material change to the funding position.
As part of the Funding Proposal the Company pledged a contingent asset which is a portfolio of properties it owns and it signed a resolution assigning these properties, with the approval of the relevant Departments in February 2015, conﬁrming the funding agreement between the parties and the Trustees.
68 M11839 - An-Post_Annual-Report-2018_Financials_AW.indd 68 26/04/2019 11:34 Movement in the net deﬁned beneﬁt liability The following table shows a reconciliation from the opening balances to the closing balances for net deﬁned beneﬁt liability and its components.
Deﬁned beneﬁt obligation Fair value of plan assets Net deﬁned beneﬁt liability 2018 €’000 2017 €’000 2018 €’000 2017 €’000 2018 €’000 2017 €’000 Balance at 1 January (3,170,792) (3,252,381) 3,115,726 2,969,000 (55,066) (283,381) Included in proﬁt or loss Current service cost Interest (cost)/income Included in OCI Remeasurements - Actuarial (loss)/gain arising from: Demographic assumptions Financial assumptions Experience adjustment Return on plan assets less interest income Other Contributions paid by the employer Administrative expenses from plan Member contributions Beneﬁts paid-unfunded scheme Beneﬁts paid-funded scheme (46,600) (62,400) (49,100) (57,830) - 61,900 - 53,200 (46,600) (500) (49,100) (4,630) (109,100) (106,930) 61,900 53,200 (47,100) (53,730) - 49,700 31,736 - 99,400 (36,400) 46,441 - - - - (74,692) - - - 126,059 - 49,700 31,736 (74,692) 99,400 (36,400) 46,441 126,059 81,436 109,441 (74,692) 126,059 6,744 235,500 - 1,000 (4,097) 2,556 87,505 - 1,000 (4,141) 719 81,500 44,986 (1,000) 4,097 - (87,505) 45,826 (1,000) 4,141 - (81,500) 44,986 - - 2,556 - 45,826 - - 719 - 86,964 79,078 (39,422) (32,533) 47,542 46,545 Balance at 31 December (3,111,392) (3,170,792) 3,063,512 3,115,726 (47,880) (55,066) Plan assets Plan assets comprise the following: Equities: Global development markets Equities: Emerging markets Equities: Total Bonds: Euro Other: includes property, private equity and infrastructure Fair value of pension schemes’ assets M11839 - An-Post_Annual-Report-2018_Financials_AW.indd 69 2018 €’000 673,188 109,417 782,605 1,485,960 794,947 2017 €’000 1,334,242 167,572 1,501,814 1,009,106 604,806 3,063,512 3,115,726 69 26/04/2019 11:34 Notes to the Financial Statements for the year ended 31 December 2018 continued 23.
Pensions continued Plan assets continued Under the Trust Deed, the Trustees have full power to decide investment policy and to administer the funds at their disposal.

The monies for investment are allocated to a number of investment managers and they each invest according to guidelines set out in an Investment Management Agreement approved by the Trustees.

The investment managers provide detailed reports to the Trustees and investment performance is monitored on a regular basis by the Trustees.
The majority of the assets of the Schemes are invested in equities and bonds.

The remainder of the assets are invested in alternative asset classes, including property.
Five investment managers manage the following key mandates, which together account for 87% of the Schemes’ assets: • Passive global developed equity mandate – SSGA • Active ﬁxed interest mandate – PIMCO • Passive ﬁxed interest mandate – SSGA • Active global small cap equity mandate – Axa Rosenberg • Active emerging markets equity mandate – JP Morgan and • Active emerging markets equity mandate – Heptagon In addition, the Trustees have property investments with SSGA, IPUT plc, Fidelity Investments, Rockspring PIM (LLP) and forestry investments with Irish Forestry Unit Trust (IForUT) and North American Forestry Investment Trust (NAFIT).
The Trustees hold investments in a number of venture capital funds.

The Trustees continue to invest in a number of alternative investments – in some cases the investment amount is called down by the manager over a period of time rather than an upfront investment.

These investments include infrastructure, direct lending, private equity and currency.

The Trustees also hold an investment in Premier Lotteries Ireland Limited, the company operating the National Lottery.

Deﬁned beneﬁt obligation i.
Actuarial assumptions The following were the principal actuarial assumptions at the reporting date: Valuation method Discount rate Inﬂation – CPI Pensionable pay inﬂation Increase to pensions in payment Pensionable salary increases 2018 2017 Projected Unit Projected Unit 2.00% 1.75% 1.50% 1.50% 1.50% 2.10% 1.75% 1.50% 1.50% 1.50% The assumptions relating to longevity underlying the pension liabilities at the reporting 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 to the following ages: Life expectancy at 65 Current Pensioners – aged 65 Future Pensioners – aged 40 2018 Male 86.5 88.8 2018 Female 88.4 90.7 2017 Male 86.5 88.7 2017 Female 88.3 90.6 At 31 December 2018, the weighted average duration of the deﬁned beneﬁt obligation in the primary scheme was 16 years (2017: 17 years).

70 M11839 - An-Post_Annual-Report-2018_Financials_AW.indd 70 26/04/2019 11:34 ii.
Sensitivity analysis Reasonable possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the deﬁned beneﬁt obligation by the amounts shown below.
Discount rate (0.25% movement) Future salary growth (0.25% movement) Future pension growth (0.25% movement) 2018 €’m Increase (121.7) 123.9 123.9 €’m Decrease 126.7 (119.1) (119.1) 2017 €’m Increase (128.3) 130.7 130.7 €’m Decrease 133.7 (125.5) (125.5) Although the analysis does not take account of the full distribution of cash ﬂows expected under the plan, it does provide an approximation of the sensitivity of the assumptions shown.
An Post Pension Scheme Contingent Asset Under the terms of the plan to meet the Minimum Funding Standard requirements a mortgage and charge relating to certain property assets of the Company with a value of €72.5 million was put in place in favour of the An Post Pension Scheme (“the Scheme”) for use as a contingent asset of the Scheme.
Under the terms of the mortgage and charge, should a disposal of these property assets occur that meets the terms of the mortgage and charge, the Scheme is entitled to the sale proceeds, or for the assets sold to be replaced by other assets of an equal market value.

The maximum amount recoverable by the Trustees of the Scheme under the mortgage and charge is €100 million.

24.
24.

Share Capital and Reserves Group and Company Authorised: 80,000,000 Ordinary Shares of €1.25 each Allotted, called up and fully paid: 54,590,946 Ordinary Shares of €1.25 each 2018 €’000 2017 €’000 100,000 100,000 68,239 68,239 Nature and purpose of reserves Capital conversion reserve fund On 14 January 2003, 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.
Foreign currency translation reserve The translation reserve comprises all foreign currency differences arising from the translation of the ﬁnancial statements of foreign operations.

M11839 - An-Post_Annual-Report-2018_Financials_AW.indd 71 71 26/04/2019 11:34 Notes to the Financial Statements for the year ended 31 December 2018 continued 25.
Subsidiaries and Joint Ventures Subsidiary undertakings held directly by the Company1 Name Printpost Limited Nature of Business % Holding Registered Office High volume printing 100% An Post Billpost Processing Service Limited Bill payment processing 100% An Post GeoDirectory DAC Database services 51% Precision Marketing Information Limited trading as Data Ireland2 Arcade Property Company Limited Provision of marketing data, database services and business directories 100% Property development and letting 100% Prince’s Street Property Company Limited Dormant 100% Post Consult International Limited Post.Trust Limited Computer software services Digital certiﬁcation and security service 100% 100% Transpost Limited Courier and distribution 100% Kompass Ireland Publishers Limited Dormant 100% An Post (NI) Limited Holding Company 100% TSC Ventures DAC2 Holding Company 53.6% General Post Office O’Connell Street, Dublin 1 D01 F5P2 General Post Office O’Connell Street, Dublin 1 D01 F5P2 General Post Office O’Connell Street, Dublin 1 D01 F5P2 General Post Office O’Connell Street, Dublin 1 D01 F5P2 General Post Office O’Connell Street, Dublin 1 D01 F5P2 General Post Office O’Connell Street, Dublin 1 D01 F5P2 General Post Office O’Connell Street, Dublin 1 D01 F5P2 General Post Office O’Connell Street, Dublin 1 D01 F5P2 General Post Office O’Connell Street, Dublin 1 D01 F5P2 General Post Office O’Connell Street, Dublin 1 D01 F5P2 Stokes House , College Square East Belfast General Post Office O’Connell Street, Dublin 1 D01 F5P2 1 In each case, the shares held by An Post are ordinary shares.
2 These companies were disposed of post year end and are classiﬁed as assets held for sale at 31 December 2018.
72 M11839 - An-Post_Annual-Report-2018_Financials_AW.indd 72 26/04/2019 11:34 Subsidiary undertakings held indirectly through a subsidiary undertaking Name Air Business Limited Nature of Business % Holding Registered Office Distribution and magazine subscription services 100% 4, The Merlin Centre, Acrewood Way, St. Albans Herts, U.K. GVS Gift Voucher Shop DAC1 Retail gift vouchers 53.6% The Gift Voucher Shop Limited1 Retail gift vouchers 53.6% GVS Prepaid Limited1 Retail gift cards 53.6% One Direct (Ireland) Limited trading as Post Insurance Insurance Broker 100% Jordan & Co International Limited Distribution 100% Postpoint Services Limited Mobile top ups 100% GPO IEC Limited GPO Exhibition Centre 100% General Post Office O’Connell Street, Dublin 1 D01 F5P2 4, The Merlin Centre, Acrewood Way, St. Albans Herts, U.K. 4, The Merlin Centre, Acrewood Way, St. Albans Herts, U.K. General Post Office O’Connell Street, Dublin 1 D01 F5P2 4, The Merlin Centre, Acrewood Way, St. Albans Herts, U.K. General Post Office O’Connell Street, Dublin 1 D01 F5P2 General Post Office O’Connell Street, Dublin 1 D01 F5P2 Joint ventures held directly by the Company Name Nature of Business % Holding Registered Office The Prize Bond Company DAC Administration of the Prize Bond Scheme 50% General Post Office O’Connell Street, Dublin 1 D01 F5P2 Air Business Limited, Jordan & Co International Limited, The Gift Voucher Shop Limited and GVS Prepaid Limited are incorporated in and operate 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.

The Prize Bond Company DAC carries on the business of administering the Prize Bond Scheme under contract from the National Treasury Management Agency.
The Company has given a guarantee under Section 357 of the Companies Act, 2014 to the following entities in the current year: Post Consult International Limited; Printpost Limited; Post.Trust Limited; Transpost Limited; Prince’s Street Property Company Limited; An Post Billpost Processing Services Limited; Kompass Ireland Publishers Limited; One Direct (Ireland) Limited; GPO IEC Limited and Postpoint Services Limited.
1 These companies were disposed of post year end and are classiﬁed as assets held for sale at 31 December 2018.

M11839 - An-Post_Annual-Report-2018_Financials_AW.indd 73 73 26/04/2019 11:34 Notes to the Financial Statements for the year ended 31 December 2018 continued 26.
Lease Commitments Operating leases Total future commitments under operating leases are as follows: Group Less than one year Between one and ﬁve years More than ﬁve years Company Less than one year Between one and ﬁve years More than ﬁve years Land & buildings 2018 €’000 Equipment and motor vehicles 2018 €’000 5,837 21,375 35,198 62,410 5,071 15,175 15,322 35,568 5,759 7,939 560 14,258 5,679 7,750 560 13,989 Land & buildings 2017 €’000 Equipment and motor vehicles 2017 €’000 6,533 21,752 24,816 53,101 4,617 15,266 20,717 40,600 9,422 9,941 - 19,363 9,294 9,685 - 18,979 Total 2018 €’000 11,596 29,314 35,758 76,668 10,750 22,925 15,882 49,557 Total 2017 €’000 15,955 31,693 24,816 72,464 13,911 24,951 20,717 59,579 Finance leases Future payments under ﬁnance leases at year end for the Group and Company were as follows: Group Less than one year Between one and ﬁve years More than ﬁve years Company Less than one year Between one and ﬁve years More than ﬁve years Future minimum lease payments 2018 €’000 11,732 3,323 - 15,055 11,720 3,295 - 15,015 2017 €’000 5,183 13,905 - 19,088 5,092 13,856 - 18,948 Interest 2018 €’000 2017 €’000 139 34 - 173 137 30 - 167 288 169 - 457 282 166 - 448 Present value of minimum lease payments 2018 €’000 11,593 3,289 - 14,882 11,583 3,265 - 14,848 2017 €’000 4,895 13,736 - 18,631 4,810 13,690 - 18,500 27.
Capital Commitments Future capital expenditure approved by the directors but not provided for in the ﬁnancial statements was as follows: Contracted for Authorised but not contracted for 74 Group 2018 €’000 18,809 318 19,127 Group 2017 €’000 3,742 3,405 7,147 Company 2018 €’000 Company 2017 €’000 18,095 318 18,413 1,590 3,285 4,875 M11839 - An-Post_Annual-Report-2018_Financials_AW.indd 74 26/04/2019 11:34 28.
Related Parties Controlling party The Group was controlled throughout the year by the Minister for Communications, Climate Action and Environment who holds the entire issued share capital of An Post except for one ordinary share held by the Minister for Finance (which stands transferred to the Minister for Public Expenditure and Reform under the Ministers and Secretaries Act 2011).
Other related party transactions The Prize Bond Company DAC Under the terms of a contract with The Prize Bond Company DAC, 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 €4,114,000 for the year ended 31 December 2018 (2017: €4,038,000).

The amount owed by The Prize Bond Company DAC to the Group was €257,000 at 31 December 2018; (2017: €244,000).
At 31 December 2018 the Group held €812,000: (2017: €812,000) of Prize Bonds.

An Post GeoDirectory DAC An Post has a 51% shareholding in An Post GeoDirectory DAC, a company that sells and manages a national database of address and location information.

An Post GeoDirectory DAC purchased goods and services to the value of €1,500,000 for the year ended 31 December 2018 from An Post (2017: €1,500,000).
An Post purchased goods and services to the value of €20,000 for the year ended 31 December 2018 from An Post GeoDirectory DAC (2017: €20,000).

The amount owed by An Post GeoDirectory DAC to the Group was €413,000 at 31 December 2018; (2017: €285,000).

GVS Group of Companies In the ﬁnancial year ended 31 December 2018, An Post had a 53.6% shareholding in TSC Ventures DAC, the holding company for the Gift Voucher Shop group of companies.
These companies are engaged in the sale of retail gift cards in Ireland and the UK.

In 2018 An Post earned commission and sold postal services to the Gift Voucher Shop group of companies to the value of €3,867,000 (2017: €3,131,000).

An Post purchased services to the value of €101,000 for the year ended 31 December 2018 from the Gift Voucher group of companies (2017: €51,000).

The ﬁnancing structure for the acquisition of the 53.6% shareholding in 2009 involved the establishment of shareholders loans.
The amount owed by the Gift Voucher group of companies to the Group was €5,935,000 at 31 December 2018; (2017: €6,966,000).

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 on an arm’s length basis.

The Group also conducts day to day banking services and treasury with banking institutions owned by the State.
During 2018, An Post received a grant of €80,000 from the Department of Communications, Climate Action and Environment for the Digital Assist Pilot Scheme.

The purpose of the grant was to make available a visible smart tablet, keyboard and printer to the public in ten post offices located in rural areas to facilitate access to Government and An Post websites.

This Pilot Scheme is currently running to evaluate public take up of this service.

The grant received was included as revenue in 2018.
M11839 - An-Post_Annual-Report-2018_Financials_AW.indd 75 75 26/04/2019 11:34 Notes to the Financial Statements for the year ended 31 December 2018 continued 28.

Related Parties continued Transactions with key management personnel, comprising Executive Directors, Non-Executive Directors and other members of the Groups’ Executive Management Committee and connected persons.
Short-term employee beneﬁts Non executive directors’ fees Post-employment beneﬁts 2018 €’000 2,996 220 480 3,696 2017 €’000 2,854 226 421 3,501 In June 2018, Mr David McRedmond, the Group CEO was appointed Non-Executive Chairman of eircom Holdings (Ireland) Limited, a ﬁxed, mobile, and broadband telecommunications company operating in Ireland, that uses the trade name, eir.

During the year, eir provided services to the Group and An Post provided services to eir in the normal course of business.
Since June, the fees in respect of goods and services provided by eir to the Group to 31 December 2018 were €8,341,000.

The amount not yet paid by the Group at the year-end was €1,205,000.

During the same period, the Group provided services to eir of €3,117,000 and the amount not yet paid by eir to the Group at the year-end was €1,370,000.

29.
29.

Contingencies There were no contingent liabilities or guarantees at 31 December, 2018 or 2017 which could give rise to material losses other than as disclosed elsewhere in the ﬁnancial statements of the Group and Company.

30.

Financial Instruments – Fair Value and Risk Management Fair value A.
Accounting classiﬁcations and fair values The Group measures fair values using the following hierarchy of methods: • Level 1 – Inputs that are quoted market prices (unadjusted) in active markets for identical instruments.

• Level 2 – Inputs other than quoted prices included within Level 1 that are observable either directly (i.e.

as prices) or indirectly (i.e.

derived from prices).


This category includes instruments valued using: quoted market prices in active markets for similar instruments; quoted prices for identical or similar instruments in markets that are considered less than active; or other valuation techniques in which all signiﬁcant inputs are directly or indirectly observable from market data.

• Level 3 – Inputs that are unobservable.


This category includes all instruments for which the valuation technique includes inputs not based on observable data and the unobservable inputs have a signiﬁcant effect on the instrument’s valuation.

This category includes instruments that are valued based on quoted prices for similar instruments but for which signiﬁcant unobservable adjustments or assumptions are required to reﬂect differences between the instruments.
76 M11839 - An-Post_Annual-Report-2018_Financials_AW.indd 76 26/04/2019 11:34 Fair value is calculated as follows: (i) Freely traded securities shall be valued based on the closing price, or if no sales have occurred, at the last bid price thereon as of the last day of such ﬁscal quarter or year as applicable.

For all other ﬁnancial instruments the Group determines fair values using valuation techniques.
(ii) Investments may be classiﬁed as Level 2 when market information becomes available, yet the investment is not traded in an active market and/or the investment is subject to transfer restrictions, or the valuation is adjusted to reﬂect illiquidity and/or non-transferability.

(iii) The Group’s fair value measurement of the level 3 investments is based on a model which may contain signiﬁcant unobservable inputs.
The relevant model is a net present value technique, derived from the price of a similarinvestment and or similar market borrowing/lending rates, depending on management’s assessment of the most appropriate valuation methodology and inputs for that particular investment.

The table in note 30 part B summarises the quantitative inputs and assumptions used for the investments categorised in Level 3 of the fair value hierarchy as of 31 December 2018.
There were no transfers between the fair value hierarchy levels during the years ended 31 December 2018 and 31 December 2017.

The following table shows the carrying amounts and fair values of ﬁnancial assets and ﬁnancial liabilities, including their levels in the fair value hierarchy.

It does not include fair value information for ﬁnancial assets and ﬁnancial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value.
31 December 2018 Note Financial assets measured at fair value Interest in PLI – equity shares Interest in PLI – preference shares Interest in unquoted investment 13 13 13 Financial assets not measured at fair value Interest in PLI – shareholder loan Trade and other receivables Cash and cash equivalents Restricted cash (transferred to assets classiﬁed as held for sale) 13 14 16 Financial liabilities not measured at fair value Government loan Finance lease Trade and other payables 19 19 18 - - - Carrying amount Fair Value Loans and receivables €’000 Other investments €’000 Other ﬁnancial liabilities €’000 Total Level 1 Level 2 Level 3 Total €’000 €’000 €’000 €’000 €’000 - - - - 350 8,409 410 9,169 25,722 98,622 512,541 180,791 817,676 - - - - - - - 350 8,409 410 9,169 25,722 98,622 512,541 180,791 817,676 30,000 30,000 14,882 134,733 14,882 134,733 179,615 179,615 - - 410 - - - 350 8,409 - 350 8,409 410 - - - - - - - 25,722 25,722 - - - - - - - 30,000 30,000 14,882 14,882 - - - - - - - - - - M11839 - An-Post_Annual-Report-2018_Financials_AW.indd 77 77 26/04/2019 11:34 Notes to the Financial Statements for the year ended 31 December 2018 continued 30.
Financial Instruments – Fair Value and Risk Management continued Fair value continued A.

Accounting classiﬁcations and fair values continued The following table shows the carrying amounts and fair values of ﬁnancial assets and ﬁnancial liabilities, including their levels in the fair value hierarchy.

It does not include fair value information for ﬁnancial assets and ﬁnancial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value.
Carrying amount Fair Value Loans and receivables €’000 Other investments €’000 Note Other ﬁnancial liabilities €’000 Total Level 1 Level 2 Level 3 Total €’000 €’000 €’000 €’000 €’000 31 December 2017 Financial assets measured at fair value Interest in PLI – equity shares Interest in PLI – preference shares Interest in unquoted investment 13 13 13 - - - - 350 8,779 167 9,296 Financial assets not measured at fair value Interest in PLI – shareholder loan 13 Trade and other receivables Cash and cash equivalents Restricted cash 14 16 23,532 113,788 410,241 154,733 702,294 Financial liabilities not measured at fair value Government loan Finance lease Trade and other payables 19 19 18 - - - - - - - - - - - - - - - - 350 8,779 167 9,296 23,532 113,788 - 410,241 - 154,733 702,294 30,000 30,000 18,631 18,631 130,815 130,815 179,446 179,446 - - 167 - - - - - - - - - - - - - - 350 350 8,779 8,779 - 167 23,532 23,532 - - - - - - - 30,000 30,000 - - 18,631 18,631 - - 78 M11839 - An-Post_Annual-Report-2018_Financials_AW.indd 78 26/04/2019 11:34 B. Valuation techniques and signiﬁcant unobservable inputs The following tables show the valuation techniques used in measuring Level 3 fair values, as well as the signiﬁcant unobservable inputs used.
Financial instruments measured at fair value Type Interest in PLI – equity shares Interest in PLI – preference shares Fair Value 2018 €’000 350 8,409 Financial instruments not measured at fair value Type Interest in PLI – shareholder loan 2018 €’000 25,722 Government loan 30,000 Financial lease liability 14,882 Valuation Technique Unobservable Inputs Discounted cash ﬂows technique referenced to third party transactions Discounted cash ﬂows technique referenced to third party transactions Discount rate Discount rate Valuation technique Unobservable Inputs Discounted cash ﬂows technique referenced to third party transactions Discount rate Discounted cash ﬂows technique referenced to market borrowing/lending rates Discount rate Discounted cash ﬂows technique referenced to market borrowing/lending rates Discount rate The shareholders loan to PLI has been measured at amortised cost.
Applying an expected credit loss model to this loan, did not result in a materially different balance as the expected credit loss on this loan, is, at this time, very low.

C. Level 3 fair values Reconciliation of Level 3 fair values The following table shows a reconciliation from the opening balances to the closing balances for Level 3 fair values.
PLI Balance at beginning of period Purchases Sales Transfers out Fair value movement Balance at end of period 2018 €’000 9,129 - - (2,500) 2,130 8,759 2017 €’000 12,218 - - (5,219) 2,130 9,129 Sensitivity analysis Where the value of ﬁnancial instruments is dependent on unobservable valuation models, appropriate models and inputs are chosen so that they are consistent with prevailing market evidence.
A 100bps increase or decrease in the discount rate of the ﬁnancial assets under Level 3 held by the Group would not have a signiﬁcant effect on the carrying value.

M11839 - An-Post_Annual-Report-2018_Financials_AW.indd 79 79 26/04/2019 11:34 Notes to the Financial Statements for the year ended 31 December 2018 continued 30.

Financial Instruments – Fair Value and Risk Management continued Financial risk management The Group’s ﬁnancial risks are managed within parameters deﬁned formally by the Board.
Treasury activity is reported to the Audit and Risk Committee and to the Board.

The main ﬁnancial risks faced by the Group relate to credit, interest, foreign exchange translation and liquidity.

The Board agrees policies for managing these risks as summarised below.
Credit risk Credit risk is the risk of ﬁnancial loss to the Group if a customer or counterparty to a ﬁnancial instrument fails to meet its contractual obligations, and arises principally from the Group’s receivables from customers and from cash and cash equivalents.

The carrying amount of ﬁnancial assets represents the maximum credit exposure.
Trade and other receivables The Group’s credit risk management policy in relation to trade receivables involves periodically assessing the ﬁnancial reliability of customers, taking into account ﬁnancial position, past experience and other factors.

The utilisation of credit limits is regularly monitored.

There is no concentration of credit risk with respect to trade receivables as the Group has a large number of customers.

Average credit terms, where given, range from 0 to 45 days.
Included in the Group’s trade and other receivables as at 31 December 2018 are balances of €25.4m (2017: €23.8m) which are past due at the reporting date but not impaired.
The aged analysis of these balances is as follows: Less than 1 month 1–3 months 3–6 months Over 6 months 2018 €’000 17,366 7,307 441 251 2017 €’000 16,375 5,992 1,011 447 25,365 23,825 The Group’s policy for the determination of the impairment allowance for bad debts is based on a line-by-line assessment of the credit risk attached to the individual debtors and an assessment of the resulting requirement for an impairment allowance.
In determining the recoverability of a trade receivable, the Group considers any change in the credit quality of the trade receivable, including any indicators for impairment (which may include evidence of ﬁnancial difficulty of the customer, payment default, breach of contract, etc.).

Subsequent recoveries of amounts previously impaired are credited to the Income Statement.
For the purpose of calculating the impairment allowance, the Group does not take into account the impact of discounting the trade receivables as it is considered not material given the age proﬁle of the Group’s trade receivable balances.
Movements in the impairment allowance of trade receivables during the year were as follows: Balance at beginning of period Impairment loss recognised Amounts written off Balance at end of period 80 2018 €’000 8,039 305 (148) 8,196 2017 €’000 5,631 2,557 (149) 8,039 M11839 - An-Post_Annual-Report-2018_Financials_AW.indd 80 26/04/2019 11:34 Cash and cash equivalents The Board establishes the policy in managing credit risk.
Exposure is managed by distributing the credit risk, where possible, across banks or other institutions meeting required standards as assessed normally by reference to the major credit rating agencies.

The Group held cash and cash equivalents of €518m at 31 December 2018 (2017: €410m).
The Group’s cash management policy is as follows: • Money is only placed on deposit with the institutions as approved by the Board; • The risk is spread so that there is no more than 40% with any one institution, subject to a maximum of the Board approved limit; and • Keep the risk proﬁle under review These policies are regularly monitored to ensure credit exposure to any one ﬁnancial institution is limited.

Guarantees The Group’s policy is to provide ﬁnancial guarantees only to subsidiaries.
At 31 December 2018, the Group has provided a guarantee under Section 357 of the Companies Act 2014 to a number of its subsidiaries as disclosed in the subsidiary and joint ventures note.

Liquidity risk Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its ﬁnancial liabilities that are settled by delivering cash or another ﬁnancial asset.
The Group’s approach to managing liquidity is to ensure that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation.

Exposure to liquidity risk The following are the remaining contractual maturities of ﬁnancial liabilities at the reporting date.
The amounts are gross and undiscounted, and include estimated interest payments and exclude the impact of netting agreements.
31 December 2018 Non-derivative ﬁnancial liabilities Government loan Finance lease liabilities Trade and other payables Carrying amount €’000 30,000 14,882 134,733 Total €’000 31,212 15,055 134,733 Contractual cash ﬂows 2 months or less €’000 2–12 months €’000 1–5 years €’000 More than 5 years €’000 - 1,223 134,733 306 10,509 - 30,906 3,323 - - - - - 179,615 181,000 135,956 10,815 34,229 Contractual cash ﬂows 2 months or less €’000 2–12 months €’000 1–5 years €’000 More than 5 years €’000 31 December 2017 Non-derivative ﬁnancial liabilities Government loan Finance lease liabilities Trade and other payables Carrying amount €’000 30,000 18,631 130,815 Total €’000 31,521 19,088 130,815 - 1,220 130,815 179,446 181,424 132,035 M11839 - An-Post_Annual-Report-2018_Financials_AW.indd 81 309 3,933 - 4,242 31,212 13,905 - 45,117 - - - - 81 26/04/2019 11:34 Notes to the Financial Statements for the year ended 31 December 2018 continued 30.
Financial Instruments – Fair Value and Risk Management continued Market risk Foreign exchange risk Foreign currency translation exposure arises from the retranslation of overseas subsidiaries’ income statements and statements of ﬁnancial position into Euro.

In addition, the Group are exposed to currency transaction risk to the extent that there is a mismatch between the currencies in which sales and purchases are denominated and the respective functional currencies of Group Companies.
This arises primarily on transactions with international postal operators.

The Group does not currently use derivatives to manage this risk.

The Group will continue to review this.

A reasonably possible change in foreign exchange rates would not have a material impact on the ﬁnancial statements.

Interest rate risk The Group’s interest rate risk arises from amounts held on deposit, term loans and the shareholder loan to Premier Lotteries Ireland.
The Group does not currently use derivatives to manage this risk.

The Group will continue to review this.

A reasonably possible change in interest rates would not have an impact on the ﬁnancial statements.
Exposure to interest rate risk The interest rate proﬁle of the Group’s interest-bearing ﬁnancial instruments is as follows: Nominal amount Fixed-rate instruments Financial assets Interest in PLI – shareholder loan Financial liabilities Government loan Variable rate instruments Financial assets Term deposits Financial liabilities Secured term loan 2018 €’000 2017 €’000 25,722 23,532 (30,000) (30,000) (4,278) (6,468) - - - - - - Fair value sensitivity analysis for ﬁxed-rate instruments The Group does not account for any ﬁxed-rate ﬁnancial assets or ﬁnancial liabilities at fair value through proﬁt or loss, and the Group does not designate derivatives (interest rate swaps) as hedging instruments under a fair value hedge accounting model.
Therefore, a change in interest rates at the reporting date would not affect proﬁt or loss.

82 M11839 - An-Post_Annual-Report-2018_Financials_AW.indd 82 26/04/2019 11:34 Interest rate risk Cash ﬂow sensitivity analysis for variable-rate instruments A reasonably possible change of 100 basis points in interest rates at the reporting date would have increased/(decreased) equity and proﬁt or loss by the amounts shown below in relation to the funds held by the Group.
This analysis assumes that all other variables remain constant.
31 December 2018 Financial assets Variable rate instruments Cash ﬂow sensitivity - net 31 December 2017 Financial assets Variable rate instruments Cash ﬂow sensitivity - net Proﬁt or loss 100bp increase €’000 100bp decrease €’000 3,289 3,289 2,214 2,214 (3,289) (3,289) (2,214) (2,214) The impact on equity net of tax of a reasonably possible change of 100 bases points in interest rates is not materially different from the proﬁt or loss impact shown above.

31.
31.

Subsequent events On 31st January 2019, the entire shareholding of TSC Ventures DAC (the company holding the shares in the One4all Gift Voucher group of companies) was sold to Blackhawk Network, a global ﬁnancial technology organisation.

The transaction value was €105m and An Post previously held 53.6% of the shares in TSC Ventures DAC.
The sale of Precision Marketing Information Limited, a relatively small subsidiary, which provided marketing data, database services and business directories was completed in March 2019.

There have been no other signiﬁcant events since the balance sheet date and the date of approval of these ﬁnancial statements that would require adjustment or disclosure in the ﬁnancial statements.

32.

Board approval The ﬁnancial statements were approved by the Board of Directors on 29 March 2019.
M11839 - An-Post_Annual-Report-2018_Financials_AW.indd 83 83 26/04/2019 11:34 Financial and Operational Statistics Consolidated Income Statement Revenue 896,954 840,002 825,237 826,069 815,448 2018 €’000 2017 €’000 2016 €’000 2015 €’000 2014 €’000 Operating costs Recurring net ﬁnance income excluding pension interest Proﬁt/(loss) before transformation costs, pension interest and taxation, excluding one off items Transformation costs One off items Pension interest (859,306) (835,210) (839,348) (820,907) (813,019) 3,598 3,615 1,668 3,395 827 41,246 (13,974) - (500) 8,407 - 45,824 (4,630) (12,443) - 415 (3,630) 8,557 - - (9,630) (1,073) 3,256 - - (7,620) (4,364) Proﬁt/(loss) before taxation 26,772 49,601 (15,658) Consolidated Statement of Financial Position Non-current assets Net current assets/(liabilities) Other non-current liabilities Net assets excluding pension liability Pension liability Net assets/(liabilities) including pension liability 2018 €’000 274,215 29,781 (52,109) 251,887 (47,880) 2017 €’000 284,422 8,960 (62,984) 230,398 (55,066) 2016 €’000 292,526 (48,463) (57,004) 187,059 (283,381) 2015 €’000 294,333 (33,074) (56,925) 2014 €’000 292,307 (39,693) (56,956) 204,334 (169,203) 195,658 (440,460) 204,007 175,322 (96,322) 35,131 (244,802) Capital and reserves 204,007 175,322 (96,322) 35,131 (244,802) Ratios Proﬁt/(loss) before transformation costs, pension interest and taxation, excluding one off items as % of revenue Staff and postmasters’ costs as % of operating costs Current assets as % of current liabilities 2018 2017 2016 2015 2014 4.60% 1.00% (1.51%) 1.04% 0.40% 65.95% 103.74% 67.29% 101.31% 66.91% 91.30% 67.36% 94.73% 67.94% 92.69% Pages 84 to 87 do not form parts of the Notes to the Financial Statements 84 M11839 - An-Post_Annual-Report-2018_Financials_AW.indd 84 26/04/2019 11:34 Mail Core mail volume index (2015=100) (note 1) 2018 80.6 2017 87.2 2016 94.8 2015 100.0 2014 103.0 Note 1: This index reﬂects changes in core mail revenue.
It excludes the impact of changes to published tariffs, income from foreign administrations, and variations arising from elections or referenda in each year.

System Size No.

of delivery points (millions) Post office network: Company post offices Contract post offices Postal agencies No.
of motor vehicles Savings Services (note 2) Value of Funds at 31 December Activity for year Post Office Savings Services Savings Bank deposits Savings Bank withdrawals Savings Certiﬁcates issued Savings Certiﬁcates repaid Instalment Savings issued Instalment Savings repaid Savings Bonds issued Savings Bonds repaid National Solidarity Bond issued National Solidarity Bond repaid Department of Employment Affairs and Social Protection Welfare beneﬁts paid during the year BillPay Volumes TV Licence Sales €m €m €m €m €m 20,657 20,416 20,119 19,453 19,055 1,079 (889) 1,780 (2,403) 100 (100) 886 (1,317) 921 (412) 1,064 (863) 1,023 (1,055) 96 (102) 714 (1,258) 598 (435) 1,060 (904) 1,168 (1,347) 97 (105) 1,116 (1,849) 991 (322) 1,018 (926) 1,132 (1,470) 97 (104) 1,345 (2,289) 1,054 (208) 1,054 (1,038) 1,177 (1,341) 97 (110) 1,227 (1,594) 869 (57) 7,380 7,615 7,997 8,418 8,814 2018 000’s 17,025 1,481 2017 000’s 17,977 1,463 2016 000’s 2015 000’s 2014 000’s 19,760 22,895 24,403 1,445 1,438 1,431 Pages 84 to 87 do not form parts of the Notes to the Financial Statements Note 2: The assets and liabilities of the Savings Services vest in the Minister for Finance and accordingly are not included in the ﬁnancial statements of the Company.
M11839 - An-Post_Annual-Report-2018_Financials_AW.indd 85 85 26/04/2019 11:34 Universal Service The Communications Regulation (Postal Services) Act 2011 (‘the Act’) was enacted in August 2011.

Requirements of the Universal Service Obligation (‘USO’) Under Section 17 of the Act, An Post is designated as the Universal Postal Service Provider for a period up until August 2023.
Under Section 16 of the Act, “Universal Postal Service” means that on every working day, except in such circumstances or geographical conditions deemed exceptional by ComReg, there is at least: (i) one clearance, and (ii) one delivery to the home or premises of every person in the State or, as ComReg considers appropriate, under such conditions as it may determine from time to time, to appropriate installations.
The following services are provided: Access to Universal Services An Post provides access to its services through its network of 45 Company post offices and 967 Contract post offices.

In addition, some 818 retail premises are authorised to sell postage stamps, as active agents.

To facilitate physical access to the service, approximately 5,717 post boxes, including meter post boxes and those located in Delivery Service Units, are distributed widely throughout the State.
There are 43 designated acceptance points for bulk mail services.

Tariffs The following is a summary of the prices for standard services weighing up to 100g which were applicable from 25 February 2019.

(a) the clearance, sorting, transport and distribution of postal packets up to 2kgs in weight; Letters (up to C5) (b) the clearance, sorting, transport and distribution of postal parcels to a weight limit to be speciﬁed by order of ComReg (or in the absence of this 20kg).
ComReg decided to use its power to reduce the maximum weight limit of 20kg to 10kg in 2019; Large Envelopes (c) the sorting, transportation and distribution of parcels from other Member States of the European Union up to 20kg in weight; Packets Ireland & NI Standard Post Registered Post* €8.00 €8.20 €8.20 €1.00 95c if item bears a franking impression € 2.00 €1.95 if item bears a franking impression €3.80 €3.70 if item bears a franking impression Parcels €8.00 €13.00 * The fee payable for the basic registered service covers compensation up to a maximum of €320.
Further compensation (non Universal Service) up to a limit of €1,500 is available for €4.50 and up to a limit of €2,000 for €5.50 based on declared value at time of posting.
(d) a registered items service; (e) an insured items service within the State and to and from all countries which, as signatories to the Universal Postal Convention of the Universal Postal Union, declare their willingness to admit such items whether reciprocally or in one direction only; and (f) postal services free of charge to blind and partially sighted persons.
As required by Section 16(9) of the Act, in July 2012 ComReg made regulations specifying the services to be provided by An Post relating to the provision of the universal postal service.

The Communication Regulation (Universal Postal Services) Regulations, S.I.
280 of 2012 which sets out these services is available on www.irishstatutebook.ie or www.comreg.ie The terms and conditions of Universal Services are available on www.anpost.com 86 M11839 - An-Post_Annual-Report-2018_Financials_AW.indd 86 26/04/2019 11:34 International Destinations Standard Post Registered Post* Written complaints received from customers 2018 2017 Letters (up to C5) €1.70 Large Envelopes €2.90 Packets GB EUR ROW Parcels GB EUR ROW €5.50 €6.00 €7.00 €22.00 €28.00 €29.00 €8.70 €9.90 €12.50 €13.00 €4.00 €29.00 €35.00 €36.00 *Availability of service dependent on postal administration in destination country.
Compensation up to €320 in GB; €150 in Europe; €100 for parcels and €35 for letters outside Europe.

A full list of current USO tariffs is available in the Guide to Postal Rates (see www.anpost.com).

Quality of Service International The quality performance standard for the delivery of intra-Community cross-border mail was laid down in the Postal Directives (97/67/EC as amended) and is included in Schedule 3 of the Act.
The quality standard for postal items of the fastest standard category is as follows: D+3: 85% of items; D+5: 97% of items, where D refers to the day of posting.

Domestic The Act requires ComReg to set quality-of-service standards for domestic universal service mail which must be compatible with those for intra-Community cross-border services.

ComReg have set a quality-of-service target for domestic single piece priority mail as follows: D+1: 94% D+3: 99.5%, where D refers to the day of posting.
Customer Complaints An Post is required to maintain records of customer complaints in compliance with European standard IS: EN 14012:2003.

The table provides, in relation to mail, a breakdown of written complaints received from customers during 2018.
Items lost or substantially delayed 24,551 20,399 Items damaged Items arriving late Mail collection or delivery: Failure to make daily delivery to home or premises Collection times/Collection failures Misdelivery Access to customer service information Tariffs for single piece mail/discount schemes and conditions 1,144 1,320 1,151 971 37 4 1,222 2 1 40 - 866 2 3 Change of address (Redirections) 387 485 Behaviour and competence of postal personnel How complaints are treated 34 1 41 - Other (not included in above) 1,511 1,670 Total 30,214 25,628 Included in the total ﬁgure are complaints about registered items, which number 7,879, (2017: 6,684).
In 2018, there were 746,614 telephone calls, (2017: 684,572) made to An Post Customer Services.

Most of these were routine or general enquiries rather than complaints.

ComReg has issued Guidelines for Postal Service Providers on Complaints and Redress Procedures (see ComReg document 14/06 on www.comreg.ie).

An Post Complaint and Dispute Resolution Procedures are set out in ‘Getting it Sorted’, which is available on our website, in larger post office outlets, and from our Customer Services Centre.
We also have a Customer Charter, containing speciﬁc pledges to customers regarding our services, which is available on our website; www.anpost.com Further Information Additional information in relation to services provided by An Post is available by phoning An Post Customer Services on 01-705 7600, by email at customer.services@ anpost.ie, by completing an online enquiry form at anpost.ie/enquiry at www.anpost.com, by writing to An Post Customer Services, General Post Office, O’Connell Street Lower, Freepost, Dublin 1, D01 F5P2 or by calling into any post office.
M11839 - An-Post_Annual-Report-2018_Financials_AW.indd 87 87 26/04/2019 11:34 Corporate Information Registered Office Solicitors Bankers Auditors General Post Office O’Connell Street Dublin 1 D01 F5P2 Matheson 70 Sir John Rogerson’s Quay Grand Canal Dock Dublin 2 D02 R296 McCann FitzGerald Riverside One Sir John Rogerson’s Quay Dublin 2 D02 X576 Bank of Ireland 2 College Green Dublin 2 D02 VR66 Deloitte Ireland LLP Chartered Accountants & Statutory Audit Firm Deloitte & Touche House Earlsfort Terrace Dublin 2 D02 AY28 Registered Number 98788 Company Type An Post is a Designated Activity Company 88 M11839 - An-Post_Annual-Report-2018_Financials_AW.indd 88 26/04/2019 11:34 A n P o s t A n n u a l R e p o r t 2 0 1 8 anpost.com