Click to edit Master subtitle style 1 Budget 2011 – 2012 FY

2 Market factors

3 Economic factors - CPI Forecast : Reserve Bank

4 Economic factors - PPI Source : Standard Bank

5 Economic factors – Prime rate Source : Standard Bank

6 Economic factors – Prime rate Source : Reserve Bank

7 Economic factors – GDP Source : Standard Bank

8 Economic factors – Fuel Price

Mass broadband adoption to drive a decline G F C G F C De-coupling due to internet substitution Growth traditionally matched GDP Digital substitution causing decline in letters GDP and mail volume index (1993 = 100) Disruptive scenario-6.0% Volume declines 2010–2020 CAGR Int'l comparison scenario-2.0% Midrange scenario-3.5% Forecast GDP Forecast mail volumes Real GDP Source: Australia Post letter volume data; ABS GDP data; Economist Intelligence Unit international GDP data; BCG analysis

1010 Mail volumes vs GDP Source Royal Mail & Pitney Bowes

1111 SA Mail volumes (’000)

1212 Year end estimate

1313

1414 Profit trend

1515 Operating profit trend

1616 Net profit trend

1717 Profit margin

1818 Revenue

Revenue

Revenue (R’000)

Mail revenue (R’000)  CPI forecast 2011 – 4.6%.  GDP forecast 2011 – 3.7%.  Tariff increase 4.5%, however effective increase for standard 4,2%.  Mail revenue increase %.

Mail revenue

Logistics revenue (R’000)  CPI forecast 2011 – 4.6%.  GDP forecast 2011 – 3.7%.  Market growth is 3 times that of GDP.  Logistics revenue increase - 8 %.

Financial Services revenue (R’000 )

Postbank non interest revenue (R’000)

Interest income (R’000)

Interest income (R’000)

2828 Expenses

Expenses analysis

Expenses (R’000)

Staff costs  Staff costs  Staff costs as a percentage of expenses 51%.  Staff costs as percentage of revenue 49%.  Staff increases above inflation not supported by productivity and revenue increase cannot be sustained.  CPI forecast for 2011 is 4.6%.  SAPO can only afford 5% and any higher increase will have to be supported by revenue increase and productivity increase.

Staff costs 2011/12

Transport costs  Transport costs  Transport expenses as a percentage of expenses is 11% and as percentage of revenue is 10%.  SSC and National line haul integration synergies.  Budget – 5% increase.

Property Expenses  Property Expenses  Accommodation costs as a percentage of expenses will increase by 1% to 10% and as percentage of revenue will be 10%.  Electricity costs will increase by 25% as a result of Eskom annual tariff increase.  New rental properties.  Budget – 13% increase.

PRMA

3636 Capex & subsidy

3737 Subsidy MTEF allocations  Subsidy allocation  2010/11 FY – R306,077 million,  2011/12 FY – R180,442 million ENE 2011,  2012/13 FY – R51,964 million ENE 2011,  2013/14 FY – R54,822 million ENE  Subsidy allocation required to fund USO costs  2010/11 FY – R306,077 million,  2011/12 FY – R354 million,  2012/13 FY – R372 million,  2013/14 FY – R392 million.

3838 Capex investment

3939 Capex investment

4040 Funding

4141 Budget 2011/12

4242 SA Post Office Group Budget 2011/12

4343 SA Post Office excl subsidiaries Budget 2011/12

4444 Logistics Budget 2011/12

4545 Budget 2011/12 – Business units

4646 Balance sheet 2011/12

Year Budget

4848 SA Post Office Group

4949 SA Post Office Group

5050 SA Post Office Group

5151 Post Office

5252 Post Office

5353 Post Office

5454 Logistics

5555 Logistics

5656 Logistics

5757 Postbank

5858 Financial ratios

5959 Financial ratios (R’000)

6060 Financial ratios

6161 Financial ratios

6262 Financial ratios

6363 Financial ratios

6464 Financial ratios

6565 Financial ratios ( R’ millions)

Click to edit the outline text format Second Outline Level  Third Outline Level Fourth Outline Level  Fifth Outline Level  Sixth Outline Level  Seventh Outline Level  Eighth Outline Level  Ninth Outline LevelClick to edit Master text styles  Second level  Third level  Fourth level » Fifth level 6666 End of presentation