Mr. David McRedmond:

I thank the Chair and the committee members, Deputies and Senators. I am very pleased to be with the committee this morning. I will give a brief overview of where An Post is right now and what we see as our challenges. Ms Byrne will then take the committee through where the post office network is, and its challenges.

As an overview of 2021 our annual report says that through the pandemic An Post in many ways discovered its soul, the soul of a public service. We showed social solidarity, we were imaginative in responding to citizens’ needs, and we were empathetic in every community. We were resourceful in self-sufficiency and we were industrious to scale the seismic logistical challenges we faced.

The transformation of An Post from 2017 to 2020 was the key for us in the pandemic. It meant that we built up our balance sheet to be strong enough to be able to invest the €50 million it cost us to get through Covid. This meant that unlike almost any other postal service in Europe, we managed to keep our post office network and our delivery networks open all the time.

We calculate that was the case for 99% of routes and 99% of post offices. That is a considerable of achievement by the people in the company I am lucky to lead.

Our infrastructure was invested in just in time to be able to deliver. Of course, none of us could have anticipated the surge in parcels as we kept Ireland trading. The only way to get anything other than groceries during the lockdowns was to have it delivered and most of that was delivered by An Post. We opened our parcel hub in October 2019. There are two major machines and the second only opened in October 2020. I am delighted that we managed to achieve that just in time to allow us to deliver over Christmas.

We showed solidarity with citizens. We stood up, in particular, for older and vulnerable customers in both of our networks. We supported SMEs with grants and discounts on parcels, postage and stamps, and with direct mail and expert advice. We also ensured the health and well-being of our employees.

Our transformation has accelerated all the time. The switch from an old letters business to a modern e-commerce and logistics business massively accelerated. The volume of parcels we had in 2020 was not anticipated until 2024 or 2025. The post office network had to show dexterity to get through this period. Sustainability was at our core and it will be something both Ms Byrne and I will emphasise in terms of how we build for the future. Sustainability is at the core of Government strategy.

Finally on this point, we were commercially successfully and self-sufficient. We had no access to, or call on, State subsidies, nor had we call on furlough payments or the pandemic unemployment, PUP, for any of our staff. We are proud that we managed to get through that.

There has been transformation in recent years and our revenue has increased by €90 million over the past five years. The reality is that there has been a decline in letter volumes of 30% and €120 million in real terms. With that in mind, we have added revenue of €210 million in five years, adding approximately 25% to our base. That is a massive turnaround for a company, particularly one as old as An Post.

We delivered revenue of €916 million before depreciation, which for us is the key metric as it is the closest proxy to earnings before interest, taxes, depreciation and amortisation, EBITDA, in 2020. There was a loss after depreciation of €10 million but that will turn around this year, as we will see. We have cash on our balance sheet. Our pension scheme is fully funded. In fact, it is over-funded at 102%. As I said, 99% of post office routes were open. Our financial performance was strong and would have been stronger if we had not decided to set aside €50 million as a response to Covid-19. That money included €10 million for personal protective equipment, PPE, and €8 million for staff cover because we had complicated arrangements with social distancing. We forfeited a price increase, and only introduced it in the past two weeks, because we did not want citizens to be hit with price increases when they were in lockdown. The impact of Covid on post offices, which Ms Byrne will cover, was quite severe because of a change in social welfare scheduling and the general effects of the pandemic, including, in particular, no foreign exchange, which is a big business line for us.

The good news is we have started 2021 very well. Trading has been very strong and our revenues are up 11% compared with the same period in 2020 on a like-for-like basis. Our operating profit is €4 million ahead. We are performing strongly in profit and growth. As the business normalises and price increases are reinstated, we expect this year to return to pre-pandemic levels of profitability. The strategy has been accelerated, with the switch to e-commerce, more banking services through post offices and the rapid development of digital infrastructure.

The second part of our submission related to our strategy, going forward. We outlined six big moves. We will increase profitability through a remodelled logistics network. We will provide an advanced digital platform. Digital is, in many ways, the key to the future of both of our networks because it provides a seamless way to have physical transactions with customers and conduct business online. The growth of An Post commerce, which is our delivery business for Irish businesses and consumers, and its expansion into international supply chains, will be important. Small businesses, in particular, now realise what an essential infrastructure An Post is. Ms Byrne will take the committee through the transformed and sustainable post office network and the expanded range of services under the better banking with An Post initiative. We will also have an expert, lean corporate centre for a post-Covid world.

The delivery service of the business will provide more choice and value for customers with future-proofed services. We will have the best delivery manager. If someone is getting a parcel delivered, and the same will soon apply to letters, he or she will be able to know when it is being delivered, when a delivery has been collected and will be able to choose a delivery time, etc. Some of that can be done now but we aim to have the best system available anywhere in the market.

We are going to rebuild our network for e-commerce. All committee members have delivery units in their constituencies, most of those which are sub-scale or in the wrong place for a parcel service because they were built out for letters. There will be a massive change in property. We will have to exit a number of properties, enter new ones and create a network that is future proof.

We will help businesses to thrive with integrated products. An Post commerce will launch in the next few weeks to deliver those. Our business bundle will allow us to clean small businesses's data, print and deliver letters, etc. We will then connect Irish businesses with the world, helping them scale up and connect with trade around the globe.

I will stop there and ask Ms Byrne to take the committee briefly through the post office network. I will then conclude with a few remarks before handing over to the committee.