1. Status Of Company

The Company is a limited liability company, incorporated under the Companies Acts, 1963 to 2009. Under the Postal and Telecommunications Services Act, 1983, the Company is entitled to omit the word 'Limited' from its name.

2. Turnover

Turnover above excludes the Group’s share of joint venture’s turnover of €6,443,000 (2009: €15,081,000). In the opinion of the directors, fuller compliance with the disclosure requirements of SSAP 25 ‘Segmental Reporting’ would be prejudicial to the Group’s interests.

3. Operating Costs

4. Exceptional Items

The Company’s strategic plan includes an intention to reduce the number of full time equivalents working in the Company by 1,375 by the end of 2012. This fundamental restructuring arises from the need to reduce the organisation’s capacity to meet the declining mails market. Reflecting the level of progress made to date with regards to these planned reductions, a charge of €20,000,000 was recognised in 2010 in respect of relatedfundamental restructuring costs which consist primarily of anticipated voluntary severance and voluntary early retirement costs. The scale of the decline in the core business will be reviewed on an annual basis and if further restructuring is required, assessment of the provision will be made then.

5. Loss on ordinary activities before taxation

The amounts shown above as directors' emoluments include only the amounts paid to the directors in the execution of their duties as directors and the salary of the Chief Executive who is also a director. Other than this, they do not include the salaries of the employee and postmaster directors.

In accordance with the Government Guidelines on Remuneration and Other Conditions of Chief Executives, the Company operates a performance related pay scheme which provides for a maximum possible annual award of 35% of basic pay. Under this scheme, up to 25% is applied to annual objectives (the 25% short term scheme) and up to 10% is applied to multi-annual (three year) objectives (the 10% long term scheme). The Chief Executive has voluntarily waived his entitlement under the 25% short term scheme in the current year and in the previous two years. Amounts earned under the 10% long term scheme are not finalised and do not become payable until the end of the three year term. However, it is estimated that an amount of €97,000 has been earned by the Chief Executive under the 10% long term scheme since the date of his appointment, 14 August, 2006, up to 31 December, 2009. No determination has been made yet in relation to amounts earned by the Chief Executive in 2010 under the 10% long term scheme.

6. Tax on Loss on Ordinary Activities

The current tax charge is lower than the standard rate of corporation tax in Ireland.

Given the uncertainty over the existence of future taxable profits, a potential deferred tax asset of €49,991,000 (2009: €55,060,000) has not been recognised in the consolidated balance sheet at 31 December, 2010. This deferred tax asset not recognised comprises a deferred tax asset in relation to the net pension deficit recognised of €46,062,000 (2009: €50,407,000), timing differences on business restructuring, €2,381,000 (2009: €2,381,000), tax losses forward not utilised,€6,540,000 (2009: €6,353,000), offset by other timing differences of €4,992,000 (2009: €4,081,000).

7. Loss for the Financial Year

A separate profit and loss account for An Post has not been prepared because the conditions laid down in Section 148(8) of the Companies Act, 1963 have been satisfied.

8. Staff Numbers and Costs

9. Intangible Fixed Assets - Goodwill Group

The directors have considered the carrying value of goodwill at 31 December 2010 and have concluded that no impairment arises.

10. Tangible Fixed Assets

Group

Company

Group and Company

The depreciable element of freehold & long leasehold land & buildings amounts to:
Group €188,448,000 (2009:€170,744,000), Company €195,977,000 (2009: €178,531,000).

11. Financial Fixed Assets

During the year, the shareholders in Postbank Ireland Limited, BGL BNP Paribas Fortis and An Post, agreed to convert loans into ordinary shares in Postbank Ireland Limited as well as making an additional capital contribution. The total value of An Post’s contributions was €6,500,000. The shareholders decided not to continue the joint venture beyond the calendar year 2010 and accordingly, the company accounts for An Post recognise this and have reduced the carrying value of the investment to €nil.

12. Debtors

13. Cash at Bank and In Hand

14. Creditors: Amounts falling due within one year

The bank overdraft is repayable on demand.

15. Taxation and Social Welfare

16. Creditors: Amounts falling due after more than one year

A floating rate term loan of €2,000,000 was received during the year by the Gift Voucher Shop subsidiary and is secured by way of a debenture over the assets of the Gift Voucher Shop. It is repayable over two years with €1,000,000 becoming payable in 2011.

17. Provisions for Liabilities

The provision for business restructuring at 31 December, 2010 includes €27,774,000 (2009: €30,839,000) in relation to business restructuring redundancy costs, and €19,046,000 (2009: €19,046,000) in relation to the introduction of an Employee Share Ownership Plan (ESOP).

18. Pensions and Similar Obligations

Group and Company

The pension entitlements of employees arise under a number of defined benefit and defined contribution pension schemes, the assets of which are vested in independent trustees appointed by the Company for the sole benefit of employees and their dependents. Annual contributions are based on the advice of a professionally qualified actuary.

Past service costs of €14,762,000 (2009: €5,378,000) arose during the year. These were discharged through the utilisation of the restructuring provision (note 17) and had no impact on the profit and loss account for the year ended 31 December, 2010 or 2009. Contributions payable to pension schemes and included in creditors at 31 December, 2010 amounted to €nil (2009: €3,304,000).

The pension costs of the defined benefit schemes are assessed in accordance with the advice of an independent professionally qualified actuary. The most recent actuarial valuations were carried out at 1 January, 2008 using the attained age method and at that date were sufficient to cover 100% of the accrued liabilities. The principal actuarial assumption was that, over the long term, the annual rate of return on investments would be 2.0% higher than the annual increase in pensionable remuneration. The actuarial valuation of 1 January, 2008 recommended a contribution rate of 14.4% of pensionable remuneration. The actuarial valuations are not available for public inspection but the results of the valuations have been advised to the members of the schemes.

The valuations of the pension schemes used for the purpose of FRS 17 accounting entries and disclosures have been based on the most recent actuarial valuations as identified above and updated by the independent actuaries to 31 December, 2010. Scheme assets are stated at their market value at the balance sheet date.

The expected return on schemes assets is calculated based on the value of the schemes’ assets at the beginning of the financial year.

The actual return on schemes’ assets in 2010 was a gain of €209m (2009:gain of €221m). The cumulative actuarial gains and losses recognised in the statement of total recognised gains and losses at 31 December 2010 is a loss of €202m.

Employer contributions in 2011 excluding potential past service costs are expected to be €51m.

19. Share Capital

On 14 January, 2003, pursuant to Section 26 of the Economic and Monetary Union Act, 1998, the Company’s shares were renomalised from €1.269738 to €1.25 per share and an amount of €877,000 was transferred to a capital conversion reserve fund.

20. Profit And Loss Account

21. Reconciliation of Shareholders' Deficit

22. Minority Interest

23. Gross Cash Flows

Note a: Liquid resources comprise term deposits with a maturity notice period of more than one day.

24. Analysis of Net Funds

25. Subsidiary and associated undertakings

The Group acquired the net assets and business of Postpoint on 17 May, 2010 and One Direct Ireland on 3 June, 2010. The assets acquired and the consideration paid were as follows:

The directors believe that there was no material difference between the book value of the assets and liabilities acquired and their fair values at the date of acquisition.

Goodwill arising on acquisitions is being written off over periods of 10 to 20 years.

The results of the acquired businesses have been included in the consolidated profit and loss account from the respective dates of acquisition and amounted to turnover of €11.0m, operating costs of €9.9m and operating profits of €1.1m.

Air Business Limited, Jordan & Co International Limited and Gift Voucher Shop (UK) Limited are incorporated in and operate in England & Wales. An Post (NI) Limited is incorporated in and operates in Northern Ireland.

All other undertakings are incorporated in and operate in the Republic of Ireland. All shareholdings consist of ordinary share capital.

An Post National Lottery Company carries on the business of operating the National Lottery under licence from the Minister for Finance in accordance with the provisions of the National Lottery Act, 1986. 20% of the issued share capital is held by the Minister for Finance.

The Prize Bond Company Limited carries on the business of administering the Prize Bond Scheme under contract from the National Treasury Management Agency.

The following subsidiaries will avail of the filing exemption available under Section 17 of the Companies (Amendment) Act, 1986, whereby they will annex the financial statements of An Post to their annual returns:

Post Consult International Limited; Printpost Limited; Post.Trust Limited; Transpost Limited; Precision Marketing Information Limited; Prince’s Street Property Company Limited; An Post Billpost Processing Services Limited; An Post GeoDirectory Limited; Kompass Ireland Publishers Limited and Postpoint Services Limited.

26. Lease Commitments

There were no material finance lease commitments either at 31 December, 2010 or 2009 or which were due to commence after that date.

27. Capital Commitments

28. Related Party Disclosures And Controlling Party

The Group was controlled throughout the year by the Minister for Communications, Energy and Natural Resources who holds the entire issued share capital of An Post except for one ordinary share which is held by the Minister for Finance.

Transactions with related undertakings

The Group provides An Post National Lottery Company, an undertaking not consolidated, with management and delivery services. Such services are carried out on an arm’s length basis or, where required, in accordance with the terms of the licence granted by the Minister for Finance to operate the National Lottery. The Company also provides agency services to An Post National Lottery Company whereby the Company makes sales and pays prizes on behalf of An Post National Lottery Company in accordance with the standard terms and conditions and remuneration structure common to all of An Post National Lottery Company’s agents. Group turnover for the year includes €6,112,000 (2009: €6,346,000) in respect of services provided to An Post National Lottery Company. These amounts are inclusive of a management fee of €2,809,000 (2009: €2,993,000) payable to the Company in accordance with the terms of the licence to operate the National Lottery.

The costs of staff working in An Post National Lottery Company are recharged from An Post at cost and amounted to €8,134,000 for the year ended 31 December, 2010 (2009: €7,764,000).

The amount owed by An Post National Lottery Company to the Company was €751,000 at 31 December, 2010 2009: €1,040,000).

An Post has agreed to guarantee the performance by An Post National Lottery Company of its obligations under the licence for the holding of the National Lottery granted by the Minister for Finance. An Post has provided the guarantee, the maximum liability of which amounts to €10 million, for the duration of the licence to 31 December, 2011.

Under the terms of a contract with The Prize Bond Company Limited, the Company carries out certain aspects of the administration of the Prize Bond Scheme. Fees earned by the Company in respect of such services amounted to €3,430,000 for the year ended 31 December, 2010 (2009: €4,266,000). The amount owed by The Prize Bond Company Limited to the Company was €331,000 at 31 December, 2010 (2009: €799,000). At 31 December, 2010 the Group held €1,393,000 (2009: €100,000) of Prize Bonds.

The Company provided Postbank Ireland Limited ('Postbank'), with delivery services and agency services whereby the Company made sales and accepted deposits and withdrawals on behalf of Postbank. The Company also earned commissions from Postbank on the sale of mobile phone top ups. Other group companies supplied Postbank with computer related services. Such services were carried out on an arm’s length basis. Group turnover for the year includes €2,938,000 (2009: €5,683,000) in respect of services provided to Postbank and commissions earned. Postbank also provided certain management services to the Company, the value of which amounted to €496,000 (2009: €617,000). The amounts owed by Postbank to the Group in respect of these services at 31 December, 2010 was €nil (2009: €4,278,000). The amount owed to Postbank by the Company at 31 December 2010 was €nil (2009: €nil).

The Group provides, in the ordinary course of business, postage, agency, remittance and courier services to various Government departments and other State bodies on an arms length basis. The Group also conducts day to day banking services and treasury with banking institutions both owned and guaranteed by the State.

29. Contingencies

Group and Company

There were no contingent liabilities or guarantees at 31 December, 2010 or 2009 in respect of which material losses are expected other than as disclosed elsewhere in the financial statements.

30. Board Approval

The financial statements were approved by the Board of Directors on 24 March, 2011.