Part Of Tomorrow - Australia Post

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Part ofTomorrowAnnual Report 2016

2016 performancehighlightsOur business performance Joint venture with Aramex Qantas airfreight network Majority investment in Mailplus 36 millionProfit after taxOur innovation and expertiseOur customers and communitiesAustralia Post Accelerator: 20 million investmentCommunity ServiceObligationGovernment innovationpartnership: digitisingWA Police NationalPolice Check processExceeded our 94% on timetarget in delivering letters,with a result of 96.2%Community Investment 7.05 millionOur peopleOur customer networkGender pay gap1.4%Safety6.6 LTIFR3.8 million MyPost registrations11 new superstores249 million annual customer visitsOur environmentReduced carbon emissionsby 17% since the year 2000We’re on track to achieveour target of 25% by 2020Our purpose and valuesAustralia Post’s purpose is: Helping our people,customers and communities deliver a better future.Everyone, everywhere, everyday.Our strategy is informed by, and focused on, servicesthat meet customers’ contemporary needs. We lovedelivering eCommerce through our people byembracing our shared values:Improving everyday: A better tomorrow starts withthe changes we make today.Being safe everywhere: There’s nothing more importantthan our safety, health and wellbeing.Respecting everyone: We care about people andvalue diversity.Delighting our customers: A great customer experiencecreates a better future.Helping each other: We’re at our best when we worktogether.

Annual Report 20161YourAustralia PostAustralia Post has a rich history dating backto 1809 when a former convict, Isaac Nichols,was appointed to the role of Postmaster forNew South Wales – using his own home tosort mail that was collected from sailingships arriving in Sydney Harbour. The firstPost Office, opened by Nichols soon after,was in George Street, Sydney.In 2008, after 200 years of growth, Australian lettervolumes reached an all-time peak. In the eight yearssince, addressed letter volumes have declined by43 per cent per letterbox.This shows how rapidly our traditional core businesshas shifted due to the emergence of digitalcommunication and transactions.The internet, while devastating for our letters service,has created new opportunities for eCommerce, whichrequires parcel delivery and secure online transactioncapability. As a result, we have moved fromoperating a monopoly – the domestic letters business– to competing in the global parcels and trustedeCommerce solutions markets.Headquartered in Melbourne, Australian PostalCorporation largely operates in Australia, with officesacross the country. The Australia Post Group is one ofthe most trusted brands in Australia, employing morethan 36,000 people across our integrated delivery,logistics, retail and eCommerce network.A self-funded government business enterprise,Australia Post has the Australian Government as itssole shareholder. The corporation does not receive anytaxpayer funding and pays dividends to the AustralianGovernment – more than 1.7 billion over the past decade.As required under the Australian Postal Corporation Act1989, we continue to balance our commercial objectiveswith delivering our community service obligations. Anyprofit we earn is either used to pay a dividend to ourshareholder or is reinvested in our assets and servicesso that we are equipped to meet the changing needsof our customers and the community. The red highlights on this map denote the location of our 11.5 million delivery points.

2Annual Report 2016Aboutthis reportThis is the sixth year that we have incorporated sustainability reporting in our annualreport. Prepared in accordance with legislative requirements, the Global ReportingInitiative (GRI) G4 Guidelines, Integrated Reporting IR and the principles set out inthe United Nations Global Compact, our annual report includes our financial, socialand environmental activities each year.Integrated reporting is aimed at facilitating integratedthinking into mainstream business practices. It is moreforward-looking than traditional annual reporting,while not as specifically detailed as comprehensivesustainability reports. In actively considering therelationships between our enterprise and how we createvalue in our areas of impact – organised as ‘capitals’– we can move towards publicly reporting the way weintegrate our thinking and decision-making.The International Integrated Reporting IR CouncilFramework provides guiding principles that align withthe GRI, the well-established global best practicesustainability framework. The content of this report hasbeen guided by the annual report Steering Committee.The approach was endorsed by the Executive GeneralManager, Group Services, with final approval of theannual report by the Board.This year our annual report is framed around thesix integrated reporting capitals to align with the IR Framework:Our six integrated reporting capitalsOur businessperformanceFinancial CapitalOur customersOur communitiesSocial CapitalOur customernetworkPhysical CapitalOur innovationOur expertiseIntellectual CapitalOur peopleHuman CapitalOur environmentNatural CapitalDetermining what matters most – the materiality processThis report provides information for our four primarystakeholders:annual materiality assessment. This process is explainedon page 49. our shareholder (the Australian Government)The material sustainability issues nominated by ourinternal and external stakeholders are: our people our customers the broader community.Top 10 material issues 20161. Customer experience6. eCommerce expertiseThe information in this report applies to Australia Postwithin the reporting period, unless otherwise stated.Australia Post did not issue restatements of informationprovided in previous reports and there are no significantchanges in the boundary or scope of this report in 2015/16.2. Community relations7. Support for the vulnerable3. Innovate/co-create8. Digital access4. Operatingprofitability9. Greenhouse gasemissionsTo determine the content and ensure we are reporting onwhat matters most to our stakeholders, we conduct an5. Transparency anddisclosure10. Fair labour practices

Annual Report 2016ContentsYour Australia Post1About this report2Our strategy and focus4Chairman and Managing Director& Group CEO’s messages6–7Our businessperformance10Our customersOur communities16Our customernetwork26Our innovationOur expertise32Ourpeople36Ourenvironment44Assurance statement 51Corporate governance statement 52Financial and statutory reports 64Community service obligations 1093

4Annual Report 2016Our strategyand focusAs the world changes through the growth of digital technology, the way we live, learnand work has transformed. In looking to the long-term sustainability of our business,our future clearly depends on reshaping our business and continuing to createleading customer solutions.Satisfying our customers and anticipating what peopleneed and expect from Australia Post will ensure that ourbusiness continues to grow and remain relevant and“Part of Tomorrow”.For our business, digital disruption means:Our purpose is to help our people, customers andcommunities to deliver a better future. We know weachieve this most effectively when we have happy andengaged people working to design and deliver innovativesolutions. the opportunity to build eCommerce partnerships tohelp our customers buy and sell online, both in Australiaand internationallyWe’ve worked hard to reform our letters services and tokeep pace with everyone’s increasingly digital lives andthe outlook is for an increase in social, mobile and onlinetransformation. Our future, alongside our customers, isa story of growth and opportunity. a decline in letter volumes but, at the same time, anincrease in online shopping that is powering the growthof parcel deliveries maintaining our track record as a trusted serviceprovider and responding to customer needs for identity,verification, banking, passport and payment services.

Annual Report 2016 Our customer network: A modernand competitive network deliversquality service to our customersAustralia Post’s operations and ourPart of Tomorrow strategy, in particular,create value for our customers anddiverse stakeholders by drawing onall the six capitals outlined on page 2and discussed throughout this report.Ultimately, being proudly Australianowned, we contribute to Australia’seconomic growth and reinvest into thecommunity to advance our enterprisepurpose: Helping our people, customers,and communities deliver a better future. Our environment: Reducing theenvironmental footprint of ouroperations Our people: Working with over 50,000employees, licensees and contractorsnationally, empowering a skilled,diverse and engaged workforce.Being true to purposeOur Part of Tomorrow strategy outlineshow we advance our purpose, act andgrow to deliver eCommerce experiencesthat customers value, differentiateourselves from competitors, and makecustomers our greatest advocates.We know that global megatrends areimpacting our operating environment:globalisation, digitisation, changingcustomer behaviours, changingexpectations of the community andemployees, and the effects of climatechange to list a few.At a top-line, we create value through: Our business performance:Contributing to Australia’s economicgrowth and prosperity Our customers, Our communities:Being a trusted and reliable partnerfor our stakeholders Our innovation: An agile and competitiveorganisation that meets the needsand expectations of customersndly ansEIVDELIVERANCHPeopleec ti ngChampioning diversity, living ourpurpose and shared values andconsidering the social and environmentalimpacts in all we do.is in gEnvironmentUnderstanding andvaluing the use ofnatural resourcesand enabling lowcarbon and wastesolutions.min gYourbusinorlde s s for t h e d i g i ta l weverydayEPnorATREC-COctCAaTrCustomersRemaining accessible, relevantand placing our customers at thecentre of everything we do.paILDBUABILITe v e r y w h e reDelivering moreinclusive andprosperouscommunities bycreating sustainableeconomic,environmental andsocial value.our environmentalimDelivering abetter future.Everyone,Everywhere,EverydayCommunitysfSUSn imCo nnl lyMiAuCHAstMPraIONli aPOSITevneysicaloyer ph GEdigita“Everyone, Everywhere, Everyday” isall about being true to our enterprisepurpose, and bringing it to life. It isAustralia Post’s roadmap to increasesocial and economic inclusion andwellbeing by connecting all Australiansphysically and digitally, to minimise ourenvironmental impact throughout ourvalue chain and to transform our ownorganisation so we meet the changingexpectations of our customers andcommunities and help them prosperin a digital world.LYABINTAAustralia PostCorporateResponsibilityStrategyIncreasingly, our value is founded oncreating eCommerce solutions thatmeet the varying needs of customers.But we recognise the importanceof measuring and monitoring ourimpacts in more than financial termsand of our role in creating social andenvironmental value. That’s why, in2016, we refreshed our approachto Corporate Responsibility andlaunched our new strategy, “Everyone,Everywhere, Everyday”. Our approachis inspired by the notion of CreatingShared Value.SOLUTIONSHow we create value5

6Annual Report 2016Chairman’smessageWe implemented important reforms to the letters service in 2015/16, while continuingthe transformation of Australia Post into a customer-led eCommerce company.Reforming the letters serviceDelivering eCommerceWith the Australian community continuing to shift to usingdigital channels for communicating and transacting, theamount of addressed letters posted this year was down9.7 per cent on the previous year.We continued to adapt our networks, develop new capabilitiesand offer new services to support the growth of onlineshopping and eCommerce.This means that the volume of letters sent in Australia,annually, is now 43 per cent below our all-time “peak-mail”year, back in 2007/08.Given this rapid rate of digital disruption, one of our primaryresponsibilities involves managing the decline of letterscarefully, while maintaining reliable, community-wide accessto our services. To this end, we reached a landmark momentwith the introduction of letter service reforms at the mid-pointof this financial year.I would like to acknowledge the Federal Government forsupporting the regulatory changes that were required toimplement these vital reforms.In June, we announced a strategic alliance with theglobal express delivery and logistics company, Aramex.We expect that this alliance will develop into a globalbusiness partnership that enables us to offer seamlesscross-border logistics and delivery support for Australianbusinesses and consumers.Thank youFinally, I’d like to acknowledge the tremendous contributionmade by my fellow directors, our CEO Ahmed Fahour, themanagement team, our employees, licensees and contractors.It’s a pleasure to lead this motivated, nationwide team,because they are so committed to delighting our customers –everyone, everywhere and everyday.The importance of those reforms to the long-termsustainability of our services cannot be under-estimated.In the short-term, letters reform was an important factor inour return to profitability this financial year. But, the reformsalso give us the ability to maintain our nationwide services;the freedom to implement ongoing operational change;and the resources required to invest in our future as aneCommerce delivery company.John Stanhope AMChairmanCreating a customer-led cultureAs a service-based company that earns all of its profit fromoperating in fully competitive markets, our entire business ismobilising to put customers at the centre of everything we do.This was a particularly prominent theme in the second halfof this year, as we established the role of a Chief CustomerOfficer with the responsibility of advocating for the customer,creating customer-led services and instilling a more customercentric culture at Australia Post.As we seek to cement our position as Australia’s leadingprovider of eCommerce deliveries and services, our strategicinitiatives are now all focused on supporting the specific needsof our customer segments. That involves creating safe andeasy online shopping experiences for consumers; helpingsmall business to go online and grow; powering eCommercefor all businesses; and helping corporations and governmentto digitise to improve their customer service.John Stanhope AM – Chairman, andAhmed Fahour – Managing Director & Group CEO.

Annual Report 20167Managing Director &Group CEO’s messageThis was an important turn-around year at Australia Post, as we reformed the letters service,continued to build our eCommerce offering for our customers – and returned to profit.Our 2015/16 performanceThis time last year, it was my grim duty to report thatAustralia Post had recorded its first full-year loss in morethan 30 years. Therefore, I am delighted to report that theAustralia Post Group returned to the black in 2015/16 –earning a modest profit before tax of 41 million.Total Group-wide revenue for the year was 6.56 billion(up 3.0 per cent on last year). The improvement in ourfinancial position in 2015/16 was achieved on the back oftwo key factors: (1) the reform of the letters service and(2) growth in our business-to-consumer parcel deliveries.Our commitment to maintaining accessible andreliable services, nationwide, is evident in that we againmet, or exceeded, all of the performance standardsrelated to our community service obligations. Mostsignificantly, we maintained 4,392 Post Offices acrossAustralia (against a target of 4,000 access points) andwe delivered 96.2 per cent of letters on time or early(well ahead of our 94 per cent target).Another pleasing aspect of this year’s performance was thatwe reduced our lost-time injury frequency rate (LTIFR) to 6.6,which equals our previous record low for the incidence ofinjuries in our workplaces. The reduction in injuries (our LTIFR isdown 43 per cent over the past four years), is the result of oursustained focus on safety culture at all levels of the business.Letters reform packageThe ongoing and accelerating decline in the community’s useof letters meant that we had to reform the service to ensureit remained sustainable – and to prevent it from underminingthe financial viability of the whole Group.We responded to this significant challenge by consultingwidely with our many stakeholders and, then, we implementeda carefully crafted package of reforms on 4 January 2016.The reforms include the introduction of a two-speedletters service for consumers and an increase to the basicpostage rate. But the broader reform package also involvesdiscounted 60-cent stamps for the 5.7 million Australians witha concession card; commitments to maintain 4,000-plus PostOffices and five-day-a-week delivery; as well as job transitionopportunities for our people, with no forced redundancies foranyone affected by the operational changes associated withletters service reforms.With these reforms in place, it means by next year we willhave boosted total annual payments to licensed Post Officeoperators by 125 million in the space of four years.Enabling eCommerce for our customersand the communityFor a number of years now, Australia Post has beentransforming into a parcel delivery and trusted serviceprovider that enables all Australians to participate ineCommerce.That transition continued this year, as we expanded thecapacity of our major parcel facilities and developed newsolutions that make it easier for businesses to lodge with us –and for consumers to control final delivery.We also established a new business unit this year, calledTrusted eCommerce Solutions, which is partnering withgovernment agencies and corporations to co-create solutionsfor the secure, omni-channel delivery of services.There are now 4.1 million Australians registered on the MyPostplatform. We added important new functionality to MyPostthis year, including the ability for parcel recipients to directus to “safe drop” their deliveries.Thank youThe operational, cultural and service changes that weimplemented this year will prove to be vital in setting upthis great brand to be part of tomorrow.Those changes have involved a genuine commitmentfrom everyone in our business – from my fellow directorsand the senior executive team, through to our operationaland customer-facing staff. I’d like to thank you all,and commend you on an incredible team effort.Ahmed FahourManaging Director& Group CEO

8Annual Report 2016Our Board and leadership teamOur BoardFrom left: Bruce McIver, Dominique Fisher, The Hon. Michael Ronaldson, Brendan Fleiter, Jan West AM, Ahmed Fahour,John Stanhope AM, Holly Kramer, Michael Byrne.John Stanhope AMBCom (Economics and Accounting),FCPA, FCA, FAICD, FAIM, FAHRIChairman (non-executive)John Stanhope was appointed chairman of Australia Postin November 2012 (current term expires in November 2019),and has extensive experience in finance, treasury, riskmanagement and assurance, investor relations and corporatesecurity and investigations. Mr Stanhope is currentlychairman of the Melbourne International Jazz Festival andthe Bionics Institute, a director of AGL Energy Limited and OurNeighbourhood and Chancellor of Deakin University. He waspreviously chief financial officer and group managing director,finance of Telstra and an executive director of Telstra.Ahmed FahourBEcon (Hons), MBA, FAICDManaging Director & Group CEOAhmed Fahour was appointed managing director and groupchief executive officer of Australia Post in February 2010. Hehas held a number of senior executive positions within thefinance and banking industries in Australia and overseas andwas previously CEO of Citigroup (Australia and New Zealand)and National Australia Bank (Australia) and is the formerchairman of Rip Curl Group. Mr Fahour is currently chairmanof LaunchVic, Pro-Pac Packaging and Our Neighbourh

Improving everyday: A better tomorrow starts with the changes we make today. Being safe everywhere: There’s nothing more important than our safety, health and wellbeing. Respecting everyone: We care about people and value diversity. Delighting our customers: A great customer experience creates a better future.

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