Mr. John Daly:

I thank the joint committee for the invitation to attend. I am retail operations director of An Post. I am accompanied by my colleague, Mr. Liam Sheehan, director of sales and marketing. Our appearance is timely and welcome, given the debate of recent weeks on the future of the national post office network.

In recent years we have had a number of interactions with the committee and much of what I will outline in my opening remarks will be familiar to members. Let me start by saying An Post does not have a plan or proposal to close post offices, nor is it part of our business strategy to allow post offices to close by stealth. In fact, the opposite is actually true. We continue to invest heavily in the retail business.

As Mr. Connell, the chief executive, previously told the committee, the size of the post office network is crucial to our commercial agenda and its very scale allows us to service our customers’ needs across the country. Scale is a key factor in our retaining and winning more business. It is worth repeating that the reach of our network has attracted business as diverse as bill payment and banking services for major organisations, the provision of social welfare payments, savings, foreign exchange and retail products such as PostFone and gift vouchers. Our analysis, using our geodirectory data, shows that 99% of addresses in the country are within 10 km of a post office and that 93% are within 5 km. In the recent contract we signed with the Department of Social Protection the Department specified that outlets must be available within 3 km of 95% of customers in an urban area and within 15 km of 95% of customers in a rural area. The post office network comfortably exceeds these requirements.

The post office network is the largest retail network in Ireland. We handle some 1.7 million customer visits to post offices nationwide each week. We have 1,147 offices nationwide, 57 of which are operated directly by An Post, with the remainder run by independent retailers - postmasters - as contractors. Postmasters are largely paid based on the level of business they perform and they have benefitted well from the increase in business in the last number of years.

We run this network in a business environment that is tough both for us and, perhaps most importantly, for all of our customers. We trade in difficult conditions, not least of which has been a sharp decline in mail volumes.

In the past few years, we have introduced a number of new products, some of which, such as our foreign exchange, FX, business, are very successful. We started with foreign exchange cash and last year enhanced the service through the introduction of sterling and US dollar PostFX cards. We are actively looking at introducing further currencies based on feedback from our customers. We estimate that we have more than 30% of the consumer foreign exchange market after only three years in the business. This is an illustration of the type of sustainable business we are seeking to introduce in the post office network.

We have continued to expand our banking business with AIB and Danske Bank, the latter of which, unfortunately, is withdrawing from personal banking this year, and we are talking to other financial institutions about extending the service.

In 2013, we grew the State savings funds, on behalf of NTMA, by another €1.9 billion. This demonstrates the trust our customers have in these products and in the An Post brand and the post office network. We have also introduced dedicated insurance zones in a number of larger post offices where customers can get quotes for their motor, home and travel insurance needs or for life assurance. In post offices where these zones are not present, customers can provide their details and our call centre will contact them directly to discuss their insurance needs.

The provision of Government services is a key part of what we do. The breakdown of retail income is as follows: mail services, 15%; Department of Social Protection services, 29%; the successful State savings products, 27%; bill payments on behalf of local authorities and energy and other utilities, 10%; licence services, 6%; money transmission, including foreign exchange, 7%; and the remaining 6% is accounted for by banking and other services, such as gift vouchers. It can be clearly seen from these figures that the network is dependent on revenue from the two key Government contracts, the Department of Social Protection and the NTMA, which together directly account for 56% of revenues in the retail business of An Post.

We were recently successful in retaining the Department of Social Protection cash payments business by winning the tender for these services. This contract is for two years and can be extended for up to another four years. Retaining this contract was critical because, as we have previously told the committee, the DSP business is a significant part of our activity and our revenue. DSP clients, as well as collecting their welfare payments, are major users of other services at post offices, such as bill payments, savings, mobile top-up and money transmission. The winning of this contract provides certainty for the foreseeable future to welfare clients who receive their payments in cash at their local post offices.

We are aware that the Department of Social Protection is moving through a phase of significant transformation aimed at delivering more modern and efficient services to their clients and providing value for taxpayers and the economy. This transformation includes moving to electronic payments and bank accounts over the coming years.

An Post is determined, within the context of a workable business model, to further develop products in order to compete for any future tenders. We believe that An Post and post offices can play a major part in the area of financial inclusiveness in the future. As leaders in the development and application of post office counter technology, we will continue to innovate and invest in next-generation systems and products to ensure we can continue to meet the needs of the Department and our other current and future corporate customers. We have demonstrated, through our links to the AIB and Danske Bank systems among others, our ability to perform efficient transaction processing on behalf of many clients. We note the publication by the financial inclusion working group of the report on the standard bank account, which lists, in the group's view, the key elements required for a successful national roll-out of this type of bank account. One of these listed elements is that there must be greater involvement by the credit unions and An Post to have the best possible channel for reaching the target cohorts, in particular, making the standard bank account available through the credit unions or An Post. We welcome the opportunity to discuss the potential business in this area that can be undertaken in post offices nationwide.

There is much discussion about financial inclusiveness and the cashless society. An Post supports the Government's programmes, and in this regard we believe we can play a major part in ensuring their success. Many of those without bank accounts currently use the post office as their preferred location for the management of their finances, including collecting their social welfare entitlements; paying their bills, many on a part-payment basis; saving through the Post Office Savings Bank for important family events such as first communions and Christmas; topping up their mobile phones; buying gift vouchers as gifts; obtaining foreign currency when travelling abroad; and using our postal money order, sterling draft and Western Union services if they want to send money either nationally or abroad. Many citizens are nervous about banks, bank charges and direct debits, and by using our services they can manage their money efficiently in a cost-effective manner.

In addition to providing additional services to our customers, we continue to invest in the network in other ways. In recent years we have invested significantly in updating our security, with additional alarms, CCTV, etc. This is to ensure that staff, postmasters, their staff and our customers can conduct their business in a safe and secure environment. We also continue to invest in significant marketing of our post office network and the products we provide.

We are continually looking at our service standards and the standards of our post offices. I am sure many members will have seen significant improvements in many offices around the country. We have opened new offices in City West in Dublin and Glencar in Letterkenny, both of which are performing well. Recently, we reopened an office in Terenure in Dublin. In the past two years, we have renovated or relocated almost 80 post offices. These include offices such as Newcastle West in Limerick, Walkinstown and Malahide in Dublin, Gracedieu in Waterford and Ballisodare in Sligo. Customers all around the country are reacting favourably to these improvements and this is evidenced by increased sales and activity in these post offices.

A good example is our office in Blackpool in Cork, which was relocated about this time last year. Customers have reacted favourably, so much so that on Sunday last this office was named as the Customer Plus Post Office of the Year for 2013, based on the increase in sales and the improved customer service offering. I take this opportunity to again congratulate it and all of the other post offices which have invested in new or improved offices and have seen their business increase as a result.

We undertake mystery shopping on a monthly basis at 300 of our busiest offices. This is done on our behalf by an internationally recognised organisation in this field. In the last number of years, we have seen an increase in the scores given for customer service. Just as importantly, we have seen an increase in our net promoter score, which is measured by the mystery shopper's willingness to recommend the office to family and friends; this increased by 11 percentage points in 2013. This is further evidence of the strength of the post office network and the level of customers' trust and satisfaction in us.

Much of the network was developed at a time when Ireland was a very different place and, like so many organisations, it has not been immune to the considerable social and economic changes in the country. Over the years we have seen a reduction in the number of post offices, reflecting decisions by local contractors to leave the business. In many instances, this decision has been prompted by a belief that local levels of business are no longer sustainable as their customers choose to shop in other locations. In large part, we have worked to maintain the network at something approaching its current level of coverage. However, from time to time one of our contractors may decide to retire or pursue other business opportunities and terminate his or her contract with us. There are also circumstances in which contractors die, or in rare circumstances we terminate a contract as a result of irregularities in the running of an office.

In these cases we assess the need for the retention of the office in question, and if we are of the view that services should continue in that location we will advertise the contract as usual. In cases in which we determine that we can serve our customers just as effectively at our other post offices, we notify this to the local communities, we seek comments from interested parties and we then consider any inputs before making a decision. This was a process that we put in place following my last visit to this committee. During this process we take into account the following parameters: national network coverage, because we need to maintain the geographical national network spread; business levels; customer access; the requirements of our mail delivery service; and the capacity of neighbouring offices to satisfactorily handle the business that would be transferred to them. I stress that it is the viability of the overall network that is important to us in reaching any decision.

The drive for change and improvement must continue and we must have the flexibility to add new goods and services as we work to maintain the network. We must also continue to take decisions on a commercial basis so that our costs match our revenues.

As I outlined, there is much that we already do in acting as the trusted intermediary between the State and its citizens, who are our customers, and there is more that we can do. It is in no one's interest to talk down the future of post office network or talk up the challenges we face. We are very clear about the impact of change and the challenges we face but we are confident in our ability to deliver new services and adapt. All new business has to be done in a sustainable way.

We welcome the huge level of goodwill towards the post office network and our staff, as evidenced by the debate in recent weeks. We were also heartened by the level of support for the post office network during last week's Dáil debate. We particularly welcome the Government's motion, which endorses a whole-of-government consideration of the issue, proposes the post office network as a "front office of government", and encourages the maintenance of the post office network at the heart of national and local community life.

We have proven that we have the capacity, technology and flexibility to process multiple services for our customers. We have shown the ambition to grow our business. We are ready, as always, to work with the Government, postmasters and our customers and business partners to generate extra business for our post offices and ensure the success of the national post office network.