Australia Post 2020 Annual Report

1 1 PROTECT | SERVE | SAFEGUARD 2020 Annual ReportProtectServeSafeguard2 Australia post Annual Report 2020 Our full Corporate Governance Statement and Corporate Responsibility Index, including Global Reporting Initiative (GRI) Content Index, are available online at: cover: Effie, Docks Operation Support from Melbourne Parcel FacilityAustralia post acknowledges the Traditional Custodians of the land on which we operate, live and gather as employees, and recognises their continuing connection to land, water and community. We pay respect to Elders past, present and of contentsAUSTRALIA post Annual Report 2020 Performance highlights1 About Australia Post2 About this report3 Chair s message4 Strategic direction5 Group Chief Executive Officer and Managing Director s message6 Corporate responsibility8 Network overview9 Value creation10 Our business performance12 Our people18 Our customers and communities28 Our network38 Our innovation and expertise42 Our environment46 Addressing our key risks54 Materiality assessment 202057 Our Board58 Our Executive Team60 Corporate governance statement62 Remuneration report64 Financial and statutory reports841 PROTECT | SERVE | SAFEGUARD Performance highlights Our business performance Record revenue of $ billion, up 7 per cent Profit before tax of $ million.

2 Up 30 per cent Business efficiency savings of $ million 80 per cent growth in eCommerce during the first eight weeks of the COVID-19 pandemic Non-letter revenue was up 15 per cent, constituting 73 per cent of total revenue Delivered approximately 400 million parcels, including 118 million during the last quarter Our network $ million capital investment Opened the Brisbane Parcel Facility in Redbank, Queensland - the largest parcel facility and delivery centre in the southern hemisphere - and rolled out automation at six other sites Made significant adjustments to support communities through COVID-19, with 16 pop-up facilities and up to 17 planes chartered per day Partnered with supermarkets and pharmacies to deliver essential items during COVID-19 $50 million investment in security including X-ray equipment, explosive trace detection units and automated conveyer systems Performance against targets Performance indicator Our people Introduced measures to protect and support our people during the challenges of bushfires and COVID-19 Reduced manual handling touchpoints by 520,000 per day across six sites Achieved record attendance and productivity through the first COVID-19 quarter Invested $20 million in PPE to keep our people safe Provided security for more than 33,000 postal employees by signing a Memorandum of Understanding to protect employee conditions Used new ways such as SMS and video to connect with our workforce and keep them informed about COVID-19 Celebrated our diversity with workplace initiatives, community activities and online forums Our innovation and expertise Launched Sending Made Easy.

3 Introducing national flat rate retail pricing for parcels up to 5 kilograms Secured new agreement with the Universal Postal Union Supported businesses to work remotely and adapt to eCommerce during COVID-19 Launched Workforce Verification, providing a streamlined and efficient verification solution to employers Supported small business growth through our Local Business Partner program Standard/Target Our customers and communities Supported 10,802 jobs in regional and remote Australia through our delivery and post Office network An increase of 57 per cent in visits to our digital channels, with 495 million visits Facilitated an estimated $ billion eCommerce boom during the height of the COVID-19 crisis, helping create local jobs 230 million SMS messages sent to customers between April and June 2020, advising them of their parcel s status. Supported fire-ravaged communities with free mail redirection, over-the-counter donations in post Offices and the disaster relief stamp pack Launched our Community Strategy including partnerships with Beyond Blue, the Australian Red Cross and the Indigenous Literacy Foundation Our environment Achieved our 2020 emissions target to reduce CO2e (Carbon Dioxide equivalent) by 25 per cent, equivalent to 100,000 tonnes of CO2e since 2010 Achieved our 2020 reuse and recycling target to divert 100,000 tonnes of material from landfill between 2016 and 2020 Introduced best in market plastic satchels with 80 per cent recycled content, and mailing boxes that are 100 per cent certified by the Forest Stewardship Council (FSC)

4 Implemented carbon neutral delivery for all parcel products sent through the Retail and MyPost business channels, offsetting the emissions of 62 million parcel deliveries annually Performance PERFORMANCE HIGHLIGHTS Profit before tax $ million $ million Shareholder return on equity Dividend declared for 2019/20 $ million $ million Dividend paid in 2019/20 $ million $ million Street posting boxes 10,000 15,036 On-time letter delivery Retail outlets In total 4,000 4,330 In rural and remote areas 2,500 2,520 In metropolitan areas* In non-metropolitan ( rural and remote) areas# Delivery frequency per delivery point at least 5 days per week no less than 2 days per week * Residences to be located within kms of an outlet # Residences to be located within kms of an outlet 2 Australia post Annual Report 2020 Today, more than ever, Australia post is at the heart of Australian communities, connecting them to each other and the world.

5 In a year that has been one of the most challenging in Australia post s more than 200-year history, as Australia s leading logistics and integrated services business, our objective has nevertheless remained the same: to support our customers to grow and communities to thrive, to create products that people value and trust, and to always deliver great service and value to our customers and the bushfires swept across our nation and isolated many communities, our post Offices stayed open and acted as a vital local hub for Australians, particularly in rural and regional helped communities stay connected, and at a time when cash was crucial, our Bank@ post service helped bushfire-affected communities access the essential goods they needed. Then, we moved on to the next challenge - the onset of a global pandemic - and again, our Posties, our drivers, and our facilities played an important role, helping deliver the essential items Australians a Government Business Enterprise (GBE) that operates under the Australian Postal Corporation Act 1989 (APC Act), Australia post is a completely self-funded business with both commercial and community service obligations.

6 It requires us to make the best use of our assets and resources, enabling us in turn to earn profits that can be reinvested in our business for the benefit of the Australian 27 of the APC Act prescribes our community service obligations (CSO), which require us to provide an accessible and reliable letters service, at a uniform price, for all Australians, regardless of where they live. But as we continue to transform and innovate our business to meet the changing needs and expectations of our customers, what we do is much more than just delivering on our community service continue to meet the growing demand for online shopping, exacerbated this year by the challenges of COVID-19. Our investment in our parcels business in recent years, ensured we were well placed to tackle the massive spike in parcel volumes as people were forced to stay home, and traditional bricks and mortar retail was required to adapt year, we make a direct contribution of over $3 billion to national GDP through our operations; and the indirect economic impacts that flow from our activities contribute almost as much workforce of more than 75,000 people is made up of 35,000 employees and an extended workforce of contractors, licensees and subcontractors.

7 We continue to place the safety of our people as our highest priority because we believe everyone should feel safe and well in the course of their are committed to enhancing our reputation and performance as a responsible business, and we are actively pursuing our goal of reducing our environmental Australia PostWe deliver to milliondelivery points across AustraliaHobart North post Office in Tasmania Street address3 PROTECT | SERVE | SAFEGUARD About this Report We use these symbols throughout the Report to signal content relating to the six capitals of the Integrated Reporting Framework. ABOUT Australia post AND ABOUT THIS Report Financial capital Our business performance Human capital Social capital Our people Our customers and communities Our Annual Report provides an overview of our business activities and our financial, environmental and social performance for the 2019/20 financial year in a single, integrated Report .

8 The Report is prepared in accordance with legislative requirements, the Integrated Reporting <IR> framework, the Global Reporting Initiative Standards (GRI) Core option and the 10 principles set out in the UN Global Compact. Our approach to value creation, governance, performance and future outlook are reported against the six capitals of the <IR> framework financial, human, social, manufactured, intellectual and natural capitals. The Report includes a detailed Remuneration Report . The Diversity and Inclusion section demonstrates how we are developing and implementing our Equal Employment Opportunity program, meeting the requirements of the Equal Employment Opportunity (Commonwealth Authorities) Act 1987. Further details can be found on our Carbon Disclosure Project submission via our website. The disclosures in this Report give consideration to the main principles outlined by the Task Force on Climate-related Financial Disclosures.

9 This Report is approved by the Australia post Board and presented to Australia post s Shareholder Ministers consistent with section 46 of the Public Governance, Performance and Accountability Act 2013. Unless otherwise stated, the information in this Report refers to the entire Australia post Group for the 2019/20 reporting period. Any restatements of information (due to changes in cost allocations or to allow like-for-like comparisons) are clearly noted and explained throughout this Report . There were no significant changes in the boundary or scope of this Report in 2019/20. Manufactured Intellectual Natural capital capital capital Our environment Our network Our innovation and expertise Identifying material issues Each year, we undertake a materiality review to identify those topics that have a direct or indirect impact on Australia post s ability to create, sustain or erode economic, environmental and social value for the enterprise, our stakeholders and society at large.

10 The top 10 material issues nominated by our internal and external stakeholders for 2020 were: Employee safety, health and wellbeing Contribution to the local economy post Office network viability Operating profitably Fair labour practices Viable parcel business Customer experience Workforce engagement Employer of choice Changing competitive landscape More information about our materiality review is included on page 57. Corporate Governance Statement and Corporate Responsibility Index This Report and supporting documentation, including the full Corporate Governance Statement and Corporate Responsibility Index, can be found on online at: news-media/publications. Our Corporate Responsibility Index comprises a summary of how we are addressing the UN Global Compact (UNGC) and the Sustainable Development Goals (SDGs), our GRI Content Index, our Independent Limited Assurance Statement and London Benchmarking Group verification statement.