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Financial performance

Australia Post recorded a full-year profit before tax of $41.1 million this year, down from $125.7 million in 2017/18. This result was impacted by continuing losses in the letters business but offset in part by strong growth in parcel volumes, additional funding from the Bank@Post Community Representation Fee (CRF) and our focus on efficiency programs.

We earned total revenue of $6.99 billion in 2018/19, up 1.6 per cent on the previous year. Revenue in the parcels and services business was up 7.7 per cent to $4.8 billion, driven by strong performance in the domestic parcels business.

However, revenue from the addressed letters business declined by 8.9 per cent this year, as the volume of addressed letters fell by a further 9.0 per cent.

Compared to 2016, the annual volume of letters mailed in Australia is down 28.4 per cent, or 822.1 million fewer letters per year. Meanwhile, over this three year period, population growth has added the cost of approximately 700,000 new delivery points to the nationwide network, which now totals 12.1 million delivery points.

Revenue from international parcels was up 15.7 per cent, driven by the impact of the APG acquisition in December 2018. After a couple of years of strong growth, total international parcel volumes declined by 24.9 per cent this year due to several factors, including the fall in the value of the Australian Dollar and the introduction of the GST on low-value imported goods.

We signed the historic Bank@Post community agreements this year, first with Commonwealth Bank, NAB and Westpac and then others to cover a total of 74 financial institutions. The community Representation Fee paid by these institutions will enable their customers to continue to conduct banking transactions in 3,500 Post Offices across Australia using the Bank@Post service.

In February 2019 we reached an agreement with our incredibly important post office licensees – increasing their total annual payments by $34 million.

We continued to invest in transforming the business this year spending $423.9 million across our strategic projects, asset replacement and acquisitions. A major focus of this investment is in network automation and expanding our processing and delivery capacity to efficiently handle future growth in parcel volumes.

Total expenditure of $6.95 billion was up 2.8 per cent on last year, driven by the additional expense involved in delivering record volumes in our growing parcels business; the costs associated with the APG acquisition; and the boost in LPO payments. Our strong focus on cost efficiency programs contributed more than $250 million in cost savings this year. During the financial year, we paid $42.2 million in dividends to our Shareholder, the Commonwealth Government. Based on this year’s result, our declared dividend payment will be $25.3 million.

Our award workforce received a 2.0 per cent annual wage increase, together with a 1.0 per cent One Team bonus payment.

Our balance sheet remains healthy, with a closing cash balance of $628.0 million. Once again, this year, we either met or exceeded all of the prescribed performance standards that underpin the community service obligations, including maintaining 4,343 post offices and delivering 98.9 per cent of letters on time or early.

Five-year trends

Five-year trends

2015

2016

2017

2018

2019

Volumes1

(m)

4,314.2

4,023.5

3,634.1

3,342.4

3,123.4

Revenue

($m)

6,373.8

6,562.2

6,807.2

6,877.0

6,989.8

Expenditure

($m)

6,726.2

6,520.9

6,687.6

6,757.6

6,950.3

Profit/(loss) before tax

($m)

(352.1)

41.0

126.1

125.7

41.1

Profit/(loss) after tax

($m)

(221.7)

36.4

95.4

134.2

40.6

Total assets

($m)

5,094.4

5,043.2

5,537.3

5,589.1

5,535.6

Return on equity2

(%)

(14.9)

2.3

5.9

7.8

2.3

Return on average operating assets

(%)

(8.2)

1.8

4.0

3.3

1.6

Debt to debt plus equity

(%)

27.2

27.8

24.9

22.9

23.6

Dividends declared

($m)

20.0

63.3

83.1

25.3

Dividends paid

($m)

50.1

78.5

42.2

Community service obligations

($m)

211.6

183.6

389.9

403.5

392.2

Total taxes and government charges

($m)

433.9

399.3

469.5

540.2

529.4

Interest cover

(times)

(10.2)

2.2

3.6

4.9

2.2

Capital expenditure

($m)

342.0

298.1

295.6

310.2

423.9

1 Volumes reflect the total number of letters and parcels processed and distributed within our network.

2 Return on equity is calculated as profit after tax as a percentage of equity. Equity has been adjusted to remove the impact of the group’s net superannuation liability / asset.