New retail outlets

1. New retail outlets Key Achievements Before After

2. Key Achievements PostBank: Growth in deposit base

3. PostBank: Improvement in operating profit Key Achievements

4. Universal Service Obligations Address expansion programme • Target – 4018000 addresses • Actual to Date – 2161958 addresses • Planned Roll Out – 1857042 addresses

5. Rebalancing of the Network Universal Service Obligations

6. Sapo Contribution To Rural Development National Priority Programmes • Sapo Nodal Points Connectivity • Address Expansion Programme • PIT (Public Internet Terminals) • CPO (Citizens Post Office) • MPCC (Multi- Purpose community Centers)

7. Reintegrating SAPO into Society WSSD (World summit on sustainable development) A site at Ubuntu village and another at Sandton library were created for the duration of the Summit From nothing to ………a Post Office ………in only two weeks!!!!!!!!

8. SAPO’s HIV/AIDs Programme Reintegrating SAPO into Society • Conducted an HIV surveillance testing to determine prevalence rate ( not as high as we thought) • Trained peer educators • HIV/AIDS - Awareness campaigns • Provision of emotional care and support to infected and affected employees through EAP • Provision condoms through the help of the Dept of Health

9. SAPO’s Bursary Programme Reintegrating SAPO into Society • Internal bursary programme • Aimed at addressing skill gaps in the workplace • Creating a pool of candidates in scarce job categories • Tool to redress imbalances in education levels in line with EE Act • External bursaries • Two Categories: • Children of employees • External candidates from disadvantaged backgrounds

10. Reintegrating SAPO into Society Training and Development Program • Abet: Good Abet results - More than 3000 learners have been through to date • Through the learning institute, SAPO will be the leading training provider for SADC

11. Key Strategic Challenges facing SAPO • Declining market share (traditional mail) • Excess capacity (employees, hubs, trucks, building etc) • Re-skilling of employees • IT solution • Restructuring and refocusing the business • Medical aid liability • Pension fund conversion • Recapitalisation of the company

12. Major Sapo Liabilities

13. Strategic Direction

14. Strategies for the next 3 years Restructuring to improve operating and financial performance • Reduction in staff • With the decline in mail volumes there will be surplus staff within the organisation and this will lead to further voluntary retrenchments. • However certain staff could be re-skilled in areas that The Post Office may have a lack of skills e.g. Technological Skills. • Reduction in Transport costs • This will be achieved through consolidation of transport services to allow for better utilization of transport resources and cutting of transport costs.

15. Strategies for the next 3 years Restructuring to improve operating and financial performance • Shared Services • This entails the merging of common business functions e.g. HR across all subsidiaries and corporate. • The efficiencies and cost savings are achieved by removing the duplication within the Business function. • Rationalisation of hubs • The South African Post Office has many sorting centres focusing on the same thing. • Some centres are underutilized and by combining these centres the South African Post Office can greatly improve its efficiency and save costs.

16. Strategies for the next 3 years Diversifying to create new revenues from new markets and products • Focusing on Courier, Express and Parcels market • This market will grow and volumes are expected to increase in the foreseeable future. • Competition is usually strong in this market, however if the Post Office can improve its ability to deliver at a reasonable cost revenue potential will be enormous. • Electronic enabled services • With the growth of the internet and it’s related services the Post Office is diversifying into these areas to complement their current strengths and generate income from these “new” services. • The ECT Act provides us the platform to provide services on behalf of government and business and generate income by charging for these services

17. Strategies for the next 3 years Diversifying to create new revenues from new markets and products Increasing it’s Financial services portfolio • With the declining mail volumes the Post Office will be diversifying to provide a broad range of financial services. • The intention is to increase the percentage revenue of these services, thus becoming less dependant on mail income. • PostBank will launch more products relating to financial services and this will provide additional income to the South African Post Office.

18. Diversification into Financial services Percentage of TO carried out in the financial services in 1999 40% 37% 35% 30% 24% 25% 23% 20% 20% 18% 15% 11% Average 11% 10% 10% 10% 7% 5% 5% 4% 4% 5% 3% 1% 1% 0% Italy Sweeden Switzerland Irland France Austria Norway Portugal Belgium Finland Spain Netherlands Danemark Germany Luxembourg UK

19. Strategies for the next 3 years Envisaged Revenue Mix Current Revenue Split Envisaged Revenue Split in 3 Years

20. Re-inventing/Transforming The Post Office Traditionally Transforming Transformed Business Costs

21. Major Turnaround projects2003/2004

22. Major Turnaround projects

23. Major Turnaround projects

24. Major Turnaround projects

25. Current Process Mail House Capemail or SuperHub Bulkmailer Electronic data Transfer Transport Receiving Sorting Sorting Dispatch Printing Stuffing Sorting Witspos or SuperHub Home Sorting Receiving Transport Postman Postman Home Collections Collections GrannyMail Other Mail Postman Depot Transport Home

26. Hybrid Mail Process Small Business Bulkmailer Post Office Data Center Public Electronic data Transfer Collections Granny Mail e-Receiving e-sorting e-Sending Witspos or Superhub Electronic data Transfer Stuffing Sorting e-Receiving Printing Email Web Postman Fax Secure Email Postman Depot Transport

27. Savings Bulkmailer Mail House Capemail or SuperHub Electronic data Transfer Transport Receiving Sorting Sorting Dispatch Printing Stuffing Sorting Witspos or SuperHub Sorting Receiving Transport Postman Postman Collections Collections Granny Mail Other Mail Postman Depot Transport

28. Financial Plan

29. BUDGET 2004-2006

30. SAPO Total Group