1. The South African Post Office Group Strategic Business Plan 2007/8 to 2009/10 Presentation to Communications Portfolio Committee 2 March 2007

2. Agenda  Strategy 2006-2010: Reminder  Strategic focus 2007  Financial outlook 2007  Conclusion

3. Recap 5 Strategic Plan 2006 -2010

4. Background information

5. Strategic Choices

6. Financial targets as per original strategic plan

7. Business environment

8. Challenges facing the postal services industry

11. Legislative environment Acts  Postal Act  Financial Services Acts: FAIS, FICA and NPS  Electronic and communications Act: Preferred Authenticated Service Provider  PFMA  Occupational Safety Acts Current Bills  Credit Bill Regulations Postal and Courier - ICASA Financial Regulations – FSB, PASA and Savings Bank Regulations International Universal Postal Regulations Kyoto convention World Customs standards & convention

12. South African Post Office Mandate  Compliance to license agreements  Equitable access  Address expansion  Delivery standards  Retail network  Customer care standards (Bathe Pele)  Complaint handling procedure  Customer service levels  Letter posting boxes  Code of practice  Compliance with international commitments  Maintain adequate facilities and trained staff  Refrain from financing unreserved services from reserved services  Prepare cost account for reserved versus non reserved services to Regulator  Take all precautions to prevent theft or unauthorized destruction or violation of items

13. Support Government Projects  Broadening the Participation in the Economy  Facilitation of access to financial services  Participation in the National Savings Drive  Improving Capacity of the State to Deliver  IT Infrastructure  Contribution to a better world  Contribution to SADC development  Participation in the Universal Postal Union (UPU) activities South African Post Office Mandate

14. Strategic roadmap

15. Strategic Focus 2007

16. Strategic roadmap 2007

17. Strategic Objectives  Achieving top-line growth through diversification of non traditional revenue  Continuing the focus on operational excellence  Re-establishing SAPO as a trusted brand and therefore becoming government’s preferred partner in providing access to government services  Building a high-performance organisation through skilled and motivated staff.

18. Key Business Unit priorities  Mail (Click)

19. Key Business Unit priorities  Retail (Click)

20. Key Business Unit priorities  Postbank (Click)

21. Key Business Unit priorities  Logistics

22. Key Business Unit Priorities  Shared Services

23. Key Business Unit – Support Services (Click)

24. Key Focus Areas Technology Properties Other 50% 12% 33%

25. Financial focus 2007

26. Outlook for 2007  Interest rates increased in 2006 to contain inflation.  Thereafter interest rates to remain stable in 2007.  Continued acceleration of CPIX in 2006, peak on December 2006 and thereafter decline. forecasted4.9% for December 2006, actual 5%4.7% for 2007.  CPIX forecasted 4.9% for December 2006, actual 5% and 4.7% for 2007.  Crude oil $65.  Salary increase 6.8%.  GDP 4.4%.

27. Revenue  CPIX forecast for December 4,9%, actual 5%.  Postal service  4,1% tariff increase  GDP forecast 4,4%.  Volume growth required 4.0%.  Retail revenue growth of 13%.  Growth on Postbank depositors book of R430m

28. Revenue (R‘b)

29. Revenue split (%)

30. Expenses  Staff costs should not increase by more than 6%  Transport costs – group consolidation and synergies  All other operational costs should not increase by more than 6%  Unless higher increase in revenue is shown.

31. Expenses (R’b)

32. Capital investment

33. Investment funding

34. Operational profit margin

35. Operational profit margin benchmark

36. Operating surplus

37. Financial Ratio analysis

39. Subsidiaries

43. Contribution to Government Programmes  World Cup 2010 World Cup 2010  Stamp launch  Mail & Courier services  ASGISA ASGISA  Retail Infrastructure  Mail Centre Upgrades  SMME Development Programme  Address Expansion

44. Conclusion  Continue to navigate a dynamic market environment and communications landscape successfully  Innovation, ease of use and accessibility must be synonymous to our product offerings  Continue to reduce cost & increase productivity  Service performance & customer satisfaction to reach new records  Continue to stay focus on core activities whilst diversifying rapidly  We will continue to use technology to achieve our goals  We will achieve all of this with an energized, customer-focused workforce We deliver whatever it takes!

45. Thank you