2004-05 Annual Report - Australia Post

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CORPORATE
SUSTAINABILITY
ECONOMY
SHAREHOLDER
RELATIONS
AND VALUE
As a wholly owned government
business enterprise, our
relationship with our shareholder
is governed by the particular
requirements of the Australian
Postal Corporation and
Commonwealth Authorities
and Companies Acts. These
are detailed in the Corporate
Governance section of our
website (auspost.com.au).
The most significant element in
the relationship is the corporate
plan. Submitted in June each
year, the plan sets out the key
strategies and targets for the
following three-year period. The
shareholder has 60 days from
receipt of the plan to direct any
change to its financial targets or
its community service obligation
strategies and policies. Progress
against the plan is subject
to formal quarterly reporting
and subsequent review with
shareholder departments.
We also continuously disclose
to our shareholder any matters
relating to the proposed formation
of a company, trust or joint
venture, as well as any proposals
for significant acquisitions or
divestments.
Dividend recommendations are
made to shareholder ministers
twice each year, in February
(interim) and August (final). In
light of the corporation’s financial
position and consistent with
normal commercial practice,
the board decided this year to
increase the target dividend
ratio from 60 per cent to 75
per cent of after-tax profits. As
a result, dividends payable from
the 2004–05 result will be
$286.2 million (compared with
$220.9 million in 2003–04).
RETURN ON
INVESTMENT
All of our return-on-investment
outcomes were positive in
2004–05.
° Revenue per dollar of fixed
assets was maintained at
2.35 despite rises in property
asset valuations.
° Capital investment (including
business acquisitions) of
$225.1 million exceeded the
annual depreciation charge
of $185 million.
° Profit after tax increased by
1 per cent to $374.9 million
($371.1 million last year).
° Return on capital (pre-tax) was
26.6 per cent, well above the
comparable weighted average
cost of capital of 11 per cent.
INTEGRATION OF
SUSTAINABILITY
INTO COMMERCIAL
DECISIONS
All business cases involving
an outlay of over $250,000
must include an appraisal of
environmental, social, economic
and risk impacts (in addition to
the financial appraisal). All such
business cases also require
endorsement by representatives
from the ESD working party and
from the Risk Management Unit
prior to project approval.
CREDIT RATING
Every year, ratings agency
Standard & Poors conducts a
detailed review of our financials
to establish a credit rating.
We maintained our AAA rating
this year (which we have held
consistently since the initial rating
in 1994).
ASSET PROTECTION
Protection of assets – including
cash, long-term fixed assets,
intellectual property and the Post
brand – is crucial for sustainable
revenue generation and the
growth of our business.
Revenue protection in all three
business portfolios is supported
by a formal program overseen by
the Revenue Collection Steering
Committee and managed by the
Revenue Collection Group. We
introduced several key initiatives
this year to improve our revenue
collection processes, including
closer co-operation with industry
partners in the letters business,
implementing technology to
more effectively assess parcels
revenue and enhancing revenue
collection for mail lodged in street
posting boxes.
Fixed assets are protected by
an asset recording process at
each work centre as well as
an annual stocktake process.
Management of stock, cash and
related items in post outlets is the
responsibility of postal managers
and is carried out in accordance
with the Financial Integrity Control
system. In addition to normal
reconciliation processes, regular
stock checks are undertaken to
protect the business from highrisk
losses.
Intellectual property is protected
by a formal policy administered
by the Legal Services Unit and
the integrity of the Post brand is
protected by a brand management
system administered by Corporate
Public Affairs.