2009-10 Annual Report - Australia Post

OUR BUSINESS
FINANCIAL
REPORT
Performance
Australia Post’s fi nancial results were impacted heavily by the ongoing
effects of the slowdown in global economic activity and the fall in mail
volumes both in Australia and internationally. These factors contributed
to the corporation’s statutory profi t before tax decline of $277.9 million
(from last year’s $380.9 million).
Also contributing to the reduced pre-tax profi t of $103.0 million for
2009–10 were $188.0 million of restructuring costs associated with
the Future Ready program, along with some impairment write-downs,
as presented in the table below.
Consolidated underlying performance
2009–10
$m
10 AUSTRALIA POST ANNUAL REPORT 2009–10 | REPORT OF OPERATIONS
Labour productivity
(illustrating five-year
cumulative growth) %
2008–09
$m
Underlying earnings 291 416
Items excluded from
underlying earnings
Impairment of goodwill/other restructuring costs 38 35
Separation and redundancy expenses 150 0
Statutory profit before tax 103 381
Our signifi cant restructuring expense will enable the transformation to
strategic business units, make administrative structures more effi cient
and establish more effective support services.
The key factors in the underlying performance decline of $125 million
are a revenue decline of $114.7 million and increasing superannuation
costs of $82.4 million. These impacts have been partially offset by cost
reductions across all categories.
Domestic letter volumes declined by 4.2 per cent this year, representing
200 million fewer items passing through our network. This decline
follows last year’s 4.1 per cent contraction in domestic letter volumes,
which refl ected depressed economic conditions. The decline of letter
volumes is fundamentally changing the economics of our business –
as it is affecting postal businesses across the globe.
One-off restructuring and provisioning costs associated with our
business renewal have affected headline profi tability in each of
our three core business portfolios.
2.8
06
4.2
07
6.9
08
3.6
09
3.6
10
Operating profit
before tax $m
515.6
561.7
592.2
06
07
08
380.9
09
103.0
10
Revenue $m
These portfolios either maintained volumes at last year’s level
or experienced declines. This refl ected continuing weakness in
consumer and small business activity and ongoing structural shifts
in communication towards digital channels, particularly relating to
transactional activity, such as bill payments and account statements.
Revenue from our letters & associated services portfolio declined by
3.4 per cent as a result of volume declines and a shift towards smaller
and unaddressed mail items. The fall of 5.5 per cent in addressed letter
volumes is most evident in our business customer segment, especially
among smaller businesses.
While we remain Australia’s largest retail store network, this year we
experienced declining numbers of daily store visits by our customers.
The introduction of penalty charges by some agency principals has been
detrimental to our bill payment business, with revenue declining by
6.7 per cent.
Online shopping is a source of revenue growth in our parcels & logistics
portfolio. Global expansion in e-tailing is behind increasing demand for
our domestic and international express parcels and courier services,
which provide a time-guaranteed delivery service at an affordable rate.
Dividends
At the half-year, the corporation declared an interim dividend of
$79.1 million, based on full-year profi t expectations and distribution
of 75 per cent of after-tax profi t for the period. This was paid to our
shareholder in April 2010. Due to the signifi cant restructuring provisions
made in the fi nal statutory accounts, dividends payable from the 2009–10
result are to remain at $79.1 million. Consequently, the dividend payout
ratio for the year is now approximately 97 per cent of the corporation’s
after-tax profi t.
Capital expenditure
Australia Post maintained a slightly more conservative approach to
capital investment during the year, as the slowing in the economy had a
material impact on letter volumes. Our capital expenditure for 2009–10
was $258.4 million, which was $11.7 million below the previous year’s.
While some of this investment continues to be directed towards
maintenance and replacement capital to maintain our integrated postal
network, major investment was directed at critical information technology
infrastructure assets. We completed the important investment in our
new HR systems and continue upgrading our point-of-sale system.
These investments will support the introduction of new services,
improve time-to-market and ensure a reliable platform for the future.
4,530.1
06
4,711.1
4,959.2
4,985.3
4,870.6
07
08
09
10