OUR VISION TO BE the reputable regional partner in mail, express delivery, logistics services and related financial solutions.

OUR MISSION

DEVELOP and provide quality, reliable, timely and innovative services to all our customers and partners.

PROVIDE logistics and related business solutions through our competencies, systems and networks.

NURTURE and sustain conducive working and learning environment for our people through teamwork and shared values.

SAFEGUARD and maximize shareholders’ value through prudent business decisions and sound financial management.

CONSTANTLY STRIVE to be a caring corporate citizen by supporting nation building and community services.

COVER RATIONALE Accelerating the momentum The cover design depicts the need to accelerate Pos Malaysia’s momentum in its transformation journey. Just like the caterpillar’s transformation to a beautiful butterfly, Pos Malaysia’s increased momentum in changing will also results in exciting outcomes eventually. In 2006, the Company focused on various efforts to accelerate the change momentum. These efforts are covered in the 2006 Annual Report. Contents Notice of the 75th 02 Corporate Structure 28 Directors’ Responsibility Statement 66 Annual General Meeting Pos Malaysia Berhad Additional Compliance Information 67 Group Structure 05 2006 State Managers 29 Audit Committee Report 69 Pos Malaysia Berhad Corporate Information 06 Financial Statements 73 Calendar of Events 2006 30 Board of Directors 08 Top 10 Properties Owned 124 Corporate Highlights 38 Profile of Directors 10 Analysis of Shareholdings 126 Operations Review 44 Senior Management 20 • Form of Proxy Chairman’s Statement 22 2006 Stamp Issues 54 Board of Directors 27 Corporate Governance Statement 56 Pos Malaysia Berhad Statement of Internal Control 64 POS MALAYSIA & SERVICES HOLDINGS BERHAD ANNUAL REPORT 2006 2

NOTICE OF THE 75TH ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN THAT the 75th Annual General Meeting of Pos Malaysia & Services Holdings Berhad will be held at the Manhattan Ballroom, Berjaya Times Square Hotel & Convention Center, No. 1 Jalan Imbi, 55100 Kuala Lumpur on Thursday, 28 June 2007 at 10.00 a.m. for the following purposes:

AS ORDINARY BUSINESS:

1. To receive the Directors’ Report and Statement of Directors, the Audited Financial Statements and the Report of the Auditors for the financial year ended 31 December 2006. (Ordinary Resolution 1)

2. To re-elect the following Directors who retire in accordance with Article 102 of the Company’s Articles of Association, and being eligible, offered themselves for re-election:

(a) Tan Sri Adam Kadir (Ordinary Resolution 2)

(b) Mr. Segarajah Ratnalingam (Ordinary Resolution 3)

3. To re-elect the following Directors who retire in accordance with Article 109 of the Company’s Articles of Association, and being eligible, offered themselves for re-election:

(a) Puan Salmah binti Sharif (Ordinary Resolution 4)

(b) Encik Faisal bin Ismail (Ordinary Resolution 5)

(c) Dato’ Idrose bin Mohamed (Ordinary Resolution 6)

4. To re-appoint Messrs KPMG as Auditors of the Company for the ensuing year and to authorise the Directors to fix their fees. (Ordinary Resolution 7)

AS SPECIAL BUSINESS:

To consider and, if thought fit, pass the following resolutions, with or without modifications, as ordinary resolutions:

5. Directors’ Fees

“That the payment of the Directors’ fees of RM252,000 for the financial year ended 31 December 2006 be approved.” (Ordinary Resolution 8) POS MALAYSIA & SERVICES HOLDINGS BERHAD ANNUAL REPORT 2006 3

NOTICE OF THE 75TH ANNUAL GENERAL MEETING continued

6. Power to allot and issue shares pursuant to Section 132D of the Companies Act, 1965

“That the Directors of the Company, pursuant to Section 132D of the Companies Act, 1965 be authorised, to allot and issue shares in the Company at such time until the conclusion of the next Annual General Meeting and for such consideration and such terms and conditions as they shall in their absolute discretion deem fit in accordance with the provisions of the Articles of Association of the Company provided always that the aggregate number of new shares to be issued shall not exceed ten per centum (10%) of the issued and paid-up share capital of the Company for the time being, subject always to the approvals of the regulatory authorities.” (Ordinary Resolution 9)

7. To transact any other business of which due notice has been given.

By Order of the Board,

Sabrina Albakri Abu Bakar (LS8508) Company Secretary

Kuala Lumpur 6 June 2007 POS MALAYSIA & SERVICES HOLDINGS BERHAD ANNUAL REPORT 2006 4

NOTICE OF THE 75TH ANNUAL GENERAL MEETING continued

Notes:

1. A member entitled to attend and vote is entitled to appoint one or more proxies to attend and vote in his stead. Where a member appoints two or more proxies to attend the Meeting, the member shall specify the proportion of his shareholdings to be represented by each proxy. A proxy may but need not be a member of the Company and a member may appoint any person to be his proxy without limitation and the provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company.

2. The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing or, if the appointor is a corporation, either under the corporation’s seal or under the hand of an officer or attorney duly authorised.

3. The instrument appointing a proxy must be deposited at the Company’s Share Registrar’s office at Tenaga Koperat Sdn Bhd, 20th Floor, Plaza Permata (formerly known as IGB Plaza), Jalan Kampar, Off Jalan Tun Razak, 50400 Kuala Lumpur not less than forty eight (48) hours before the time set for the Meeting or any adjournment thereof.

4. Additional Notes on Special Business:

4.1 Resolution on Directors’ Fees

The proposed Ordinary Resolution No. 8 is in accordance with the Company’s Articles of Association and if passed, will authorise the payment of Director’s fees to Directors of the Company for their services during the financial year ended 31 December 2006.

4.2 Resolution pursuant to Section 132D of the Companies Act, 1965

The proposed Ordinary Resolution No. 9 if passed, is to give the Directors of the Company flexibility to issue and allot shares for such purposes as the Directors in their absolute discretion consider to be in the interest of the Company, without having to convene a general meeting. This authority will expire at the next Annual General Meeting of the Company. POS MALAYSIA & SERVICES HOLDINGS BERHAD ANNUAL REPORT 2006 5

GROUP STRUCTURE as at 31 March 2007

POS MALAYSIA & SERVICES HOLDINGS BERHAD (491-K)

100% POS MALAYSIA BERHAD 100% Datapos (M) Sdn Bhd 100% PosLaju (M) Sdn Bhd 100% Virtual Pos Sdn Bhd 100% Pos Logistics-Fulserve Sdn Bhd 100% Pos Takaful Agency Sdn Bhd 100% PMB Properties Sdn Bhd 100% Philately Pos Malaysia Sdn Bhd 55% Digicert Sdn Bhd

100% PSH INVESTMENT HOLDING (BVI) LTD

100% PSH CAPITAL PARTNERS SDN BHD 100% Prestige Future Sdn Bhd

100% PSH VENTURE CAPITAL SDN BHD 100% PSH Express Sdn Bhd

100% Effivation Sdn Bhd 100% PSH PROPERTIES SDN BHD 100% Real Riviera Sdn Bhd

100% PSH ALLIED BERHAD

100% PSH MERCHANDISE SDN BHD

100% PSH MANAGEMENT SDN BHD

ASSOCIATE OF POS MALAYSIA & SERVICES ASSOCIATES OF POS MALAYSIA BERHAD (PMB) Wholly-owned Subsidiaries HOLDINGS BERHAD Elpos Print Sdn Bhd (40%) PSH Aviation Sdn Bhd (49%) CEN Sdn Bhd (42.5%) Sub-Subsidiaries PosPay Exchange Sdn Bhd (50%) (Formerly known as RMEX Payment Services Sdn Bhd) POS MALAYSIA & SERVICES HOLDINGS BERHAD ANNUAL REPORT 2006 6

CORPORATE INFORMATION

BOARD OF DIRECTORS COMPANY SECRETARY Dato’ Ikmal Hijaz bin Hashim Sabrina Albakri binti Abu Bakar (Group Managing Director/Chief Executive Officer) Tan Sri Adam Kadir (LS 8508) (Resigned w.e.f. 23 February 2007) (Chairman/Independent Non-Executive Director) Dato’ Zukri bin Samat Puan Sri Datuk Nazariah binti Mohd Khalid AUDIT COMMITTEE (Independent Non-Executive Director) (Independent Non-Executive Director) (Ceased w.e.f. 12 June 2006) Mr. Wee Hoe Soon @ Gooi Hoe Soon Dato’ Zukri bin Samat (Chairman/Independent Non-Executive Director) (Independent Non-Executive Director) (Redesignated as Chairman w.e.f. 3 July 2006) NOMINATING COMMITTEE

Dato’ Idrose bin Mohamed Puan Sri Datuk Nazariah binti Mohd Khalid Puan Sri Datuk Nazariah binti Mohd Khalid (Group Managing Director/Chief Executive Officer) (Independent Non-Executive Director) (Chairperson/Independent Non-Executive Director) (Appointed w.e.f. 1 April 2007) (Appointed w.e.f. 8 March 2007) (Appointed w.e.f. 12 June 2006 as Member and subsequently redesignated as Chairman on 21 Datuk Abu Huraira bin Abu Yazid Mr. Segarajah Ratnalingam February 2007) (Executive Director/Group Chief Operating Officer) (Non-Independent Non-Executive Director) Mr. Wee Hoe Soon @ Gooi Hoe Soon Mr. Wee Hoe Soon @ Gooi Hoe Soon Datuk Abdul Majid bin Haji Hussein (Independent Non-Executive Director) (Independent Non-Executive Director) (Independent Non-Executive Director) (Resigned w.e.f. 31 October 2006) Puan Salmah binti Sharif Mr. Segarajah Ratnalingam (Non-Independent Non-Executive Director) (Non-Independent Non-Executive Director) Datuk Alias bin Ali (Appointed w.e.f. 8 March 2007) (Independent Non-Executive Director) Puan Salmah binti Sharif (Resigned w.e.f. 21 February 2007) Datuk Abdul Majid bin Haji Hussein (Non-Independent Non-Executive Director) (Independent Non-Executive Director) (Appointed w.e.f. 4 August 2006) Dato’ Ng Kam Cheung (Resigned w.e.f. 31 October 2006) (Independent Non-Executive Director) Encik Faisal bin Ismail (Resigned w.e.f. 1 March 2007) Datuk Alias bin Ali (Non-Independent Non-Executive Director) (Independent Non-Executive Director) (Appointed w.e.f. 27 September 2006) (Resigned w.e.f. 21 February 2007) REMUNERATION COMMITTEE Mr. Koshy Thomas (Non-Independent Non-Executive Director) Tan Sri Adam Kadir PERFORMANCE MANAGEMENT (Alternate Director to Mr. Segarajah Ratnalingam) (Chairman/Independent Non-Executive Director) COMMITTEE

Datuk Abdul Majid bin Haji Hussein Dato’ Idrose bin Mohamed Tan Sri Adam Kadir (Independent Non-Executive Director) (Group Managing Director/Chief Executive Officer) (Chairman/Independent Non-Executive Director) (Resigned w.e.f. 31 October 2006) (Appointed w.e.f. 24 April 2007) Dato’ Idrose bin Mohamed Datuk Alias bin Ali Mr. Wee Hoe Soon @ Gooi Hoe Soon (Group Managing Director/Chief Executive Officer) (Independent Non-Executive Director) (Independent Non-Executive Director) (Appointed w.e.f. 24 April 2007) (Resigned w.e.f. 21 February 2007) Mr. Segarajah Ratnalingam Mr. Wee Hoe Soon @ Gooi Hoe Soon Dato’ Ikmal Hijaz bin Hashim (Non-Independent Non-Executive Director) (Independent Non-Executive Director) (Group Managing Director/Chief Executive Officer) (Resigned w.e.f. 23 February 2007) Puan Salmah binti Sharif Mr. Segarajah Ratnalingam (Non-Independent Non-Executive Director) (Non-Independent Non-Executive Director) Dato’ Ng Kam Cheung (Appointed w.e.f. 14 September 2006) (Independent Non-Executive Director) Dr. R. Hanafi bin Abdullah (Resigned w.e.f. 1 March 2007) Datuk Abdul Majid bin Haji Hussein (Head of Group Human Resource and Administration) (Independent Non-Executive Director) (Effective 1 March 2007) (Resigned w.e.f. 31 October 2006) Tuan Haji Nadza Abdul (Head of Corporate Planning and Strategic Business) POS MALAYSIA & SERVICES HOLDINGS BERHAD ANNUAL REPORT 2006 7

CORPORATE INFORMATION continued

Datuk Abdul Majid bin Haji Hussein OPTION COMMITTEE REGISTERED OFFICE (Independent Non-Executive Director) (Resigned w.e.f. 31 October 2006) Tan Sri Adam Kadir Level 33, Menara Dayabumi (Chairman/Independent Non-Executive Director) Jalan Sultan Hishamuddin Dato’ Ikmal Hijaz bin Hashim 50050 Kuala Lumpur (Group Managing Director/Chief Executive Officer) Dato’ Idrose bin Mohamed Tel: 603-22672267 (Resigned w.e.f. 23 February 2007) (Group Managing Director/Chief Executive Officer) Fax: 603-22672266 (Appointed w.e.f. 24 April 2007) Dato’ Zukri bin Samat (Independent Non-Executive Director) Mr. Wee Hoe Soon @ Gooi Hoe Soon SHARE REGISTRAR (Ceased w.e.f. 12 June 2006) (Independent Non-Executive Director) Tenaga Koperat Sdn Bhd Dato’ Ng Kam Cheung Mr. Segarajah Ratnalingam 20th Floor, Plaza Permata (Independent Non-Executive Director) (Non-Independent Non-Executive Director) Jalan Kampar, Off Jalan Tun Razak (Resigned w.e.f. 1 March 2007) 50400 Kuala Lumpur Dato’ Ikmal Hijaz bin Hashim Tel: 603-40416522 Puan Rugayah Yasmin binti Dato’ Ibrahim (Group Managing Director/Chief Executive Officer) Fax: 603-40426352 (Deputy General Manager, Human Resource (Resigned w.e.f. 23 February 2007) and Administration) (Ceased w.e.f. 1 March 2007) AUDITORS TENDER BOARD COMMITTEE KPMG TRANSFORMATION COMMITTEE Tan Sri Adam Kadir Chartered Accountants (Chairman/Independent Non-Executive Director) Tan Sri Adam Kadir (Chairman/Independent Non-Executive Director) Puan Sri Datuk Nazariah binti Mohd Khalid BANKERS (Independent Non-Executive Director) Puan Sri Datuk Nazariah binti Mohd Khalid (Appointed w.e.f. 12 June 2006) Malayan Banking Berhad (Independent Non-Executive Director) CIMB Bank Berhad (Appointed w.e.f. 12 June 2006) Dato’ Zukri bin Samat (Independent Non-Executive Director) Mr. Wee Hoe Soon @ Gooi Hoe Soon STOCK EXCHANGE LISTING (Independent Non-Executive Director) Encik Faisal bin Ismail (Appointed w.e.f. 8 March 2007) (Non-Independent Non-Executive Director) Bursa Malaysia Securities Berhad, Main (Appointed w.e.f. 8 March 2007) Board Mr. Segarajah Ratnalingam (Non-Independent Non-Executive Director) Datuk Abdul Majid bin Haji Hussein (Independent Non-Executive Director) Datuk Abdul Majid bin Haji Hussein (Resigned w.e.f. 31 October 2006) (Independent Non-Executive Director) (Resigned w.e.f. 31 October 2006) Datuk Alias bin Ali (Independent Non-Executive Director) Dato’ Ng Kam Cheung (Resigned w.e.f. 21 February 2007) (Independent Non-Executive Director) (Resigned w.e.f. 1 March 2007)

Dato’ Zukri bin Samat (Independent Non-Executive Director) (Ceased w.e.f. 12 June 2006) POS MALAYSIA & SERVICES HOLDINGS BERHAD ANNUAL REPORT 2006 8

BOARD OF DIRECTORS

From left to right

1 Encik Faisal bin Ismail 4 Tan Sri Adam Kadir Non-Independent Non-Executive Director Chairman/Independent Non-Executive Director

2 Datuk Abu Huraira bin Abu Yazid 5 Mr. Segarajah Ratnalingam Executive Director/Group Chief Operating Officer Non-Independent Non-Executive Director

3 Puan Salmah binti Sharif Non-Independent Non-Executive Director POS MALAYSIA & SERVICES HOLDINGS BERHAD ANNUAL REPORT 2006 9

6 Puan Sri Datuk Nazariah binti Mohd Khalid 10 Puan Sabrina Albakri binti Abu Bakar Independent Non-Executive Director Company Secretary

7 Mr. Wee Hoe Soon @ Gooi Hoe Soon Not in the picture: Independent Non-Executive Director Mr. Koshy Thomas Non-Independent Non-Executive Director 8 Dato’ Idrose bin Mohamed (Alternate Director to Mr. Segarajah Ratnalingam) Group Managing Director / Chief Executive Officer

9 Dato’ Zukri bin Samat Independent Non-Executive Director POS MALAYSIA & SERVICES HOLDINGS BERHAD ANNUAL REPORT 2006 10

PROFILE OF DIRECTORS

Tan Sri Adam Kadir

Chairman Independent Non-Executive Director

Tan Sri Adam Kadir, 64, a Malaysian, is He subsequently became a Senator Tan Sri Adam was the Chairman the Chairman of the Company and an and President of the Senate in of Jengka Sdn Bhd, a Pahang Independent Non-Executive Director. 1990. Between 1994 and 1996, comprehensive timber complex, He was appointed to the Board and he was President of both the Inter- from 1983 to 1987. He sat on the made Chairman on 1 March, 2005. national Parliamentary Union (IPU) Board of various companies whilst Tan Sri Adam is the Chairman of the and Commonwealth Parliamentary an entrepreneur including PBS Remuneration Committee, Trans- Association, Malaysia Chapter. In 1997, Multinational Merchant Bank, Malaysia formation Committee, Performance he returned to Wineka Group after the General Investments Corporation Management Committee, Option expiry of his term in the Senate. Berhad, Federal Agricultural Marketing Committee and Tender Board Authority (FAMA) and Lembaga Committee. Tan Sri Adam began his illustrious Perusahaan Pertanian Pahang. career as a Producer in the then Tan Sri Adam holds a Master of Laws Ministry of Broadcasting & Information Tan Sri Adam does not have any degree in Commercial and Corporate in 1967, after his graduation. He joined family relationship with any director Laws from the University of London. the Selangor Economic Development and/or substantial shareholders of the He had earlier obtained a Master of Corporation (PKNS) as Assistant Company or any conflict of interest Science from Ohio University, U.S.A., in Secretary in 1970. He left to join with the Company. He has not been 1973 after graduating with a Bachelor Aseambankers in 1973 as Manager, convicted of any offence within the of Arts degree from the University Project Development. He moved on past 10 years. of Malaya in 1967. He completed a to PERNAS Group of Companies as programme in Advanced Management General Manager and Director from Tan Sri Adam attended all twenty- in Harvard University Business School, 1975 to 1981. From 1982-1986, he seven (27) Board meetings held during U.S.A., in 1981. became an Entrepreneur with his own the financial year under review. business enterprise called Wineka Tan Sri Adam was elected a Member Group. of Parliament (MP) in 1986 and made a Parliamentary Secretary to the Ministry of Land and Regional Development in 1987. POS MALAYSIA & SERVICES HOLDINGS BERHAD ANNUAL REPORT 2006 11

PROFILE OF DIRECTORS continued

Puan Sri Datuk Nazariah binti Mohd Khalid

Independent Non-Executive Director

Puan Sri Datuk Nazariah binti University, U.S.A. She joined the She has not been convicted of any Mohd Khalid, 57, a Malaysian, is an Malaysian Civil Service in 1972 and offence within the past 10 years. Independent Non-Executive Director. served in various capacities prior to her She was appointed to the Board on 14 last position as the Director General Since the appointment of Puan Sri April, 2006. Puan Sri Datuk Nazariah of the Malaysian Administrative Datuk Nazariah, she attended sixteen is the Chairperson of the Nominating Modernisation and Management (16) out of seventeen (17) Board Committee, member of the Audit Planning Unit (MAMPU) in the Prime meetings held subsequent to her Committee, Transformation Committee Minister’s Department. appointment during the financial year and Tender Board Committee. under review. Puan Sri Datuk Nazariah does not have Puan Sri Datuk Nazariah graduated any family relationship with any director with a B.A. (Honours) from the and/or substantial shareholders of the University of Tasmania, Australia Company or any conflict of interest and holds a Master of Business with the Company. Administration from Michigan State POS MALAYSIA & SERVICES HOLDINGS BERHAD ANNUAL REPORT 2006 12

PROFILE OF DIRECTORS continued

Dato’ Zukri bin Samat

Independent Non-Executive Director

Dato’ Zukri bin Samat, 49, a Operations Division and was later Manager of the Capital Markets Malaysian, is an Independent Non- promoted to Director of Operations Department where he was responsible Executive Director. He was appointed on 1 August, 2001, assuming direct for transactions involving Private to the Board on 8 March, 2006. He line responsibility for all loan recovery Debt Securities, project finance, is a member of the Tender Board activities of Danaharta. corporatisation and privatisaton of Committee. state-owned companies. He was then appointed by the Minister Dato’ Zukri holds an MBA degree from of Finance as the Managing Director Dato’ Zukri does not have any family the University of Hull, United Kingdom. of Danaharta on 1 July, 2003 until relationship with any director and/ He is currently the Managing Director 31 December, 2005 when Danaharta or substantial shareholders of the of Bank Islam Malaysia Berhad. ceased its operations. Company or any conflict of interest He is a former Executive Director with the Company. He has not been of Investment, Khazanah Nasional Dato’ Zukri has extensive experience convicted of any offence within the Berhad (“Khazanah”), the investment in the banking sector having served in past 10 years. arm of the Government of Malaysia. both local and international financial He joined Khazanah on 13 February, institutions in various capacities. Prior Since the appointment of Dato’ Zukri, 2006. to joining Danaharta, he served in he attended nineteen (19) out of Credit Agricole Indosuez Labuan as twenty-three (23) Board meetings held Prior to that, he was the Managing the General Manager. He also worked subsequent to his appointment during Director of Pengurusan Danaharta in Commerce International Merchant the financial year under review. Nasional Berhad (“Danaharta”), Bankers Berhad (now known as a national asset management CIMB Investment Bank Berhad) company. He joined Danaharta in for a significant period of time, his October 1998 as General Manager, last position being Deputy General POS MALAYSIA & SERVICES HOLDINGS BERHAD ANNUAL REPORT 2006 13

PROFILE OF DIRECTORS continued

Dato’ Idrose bin Mohamed

Group Managing Director / Chief Executive Officer

Dato’ Idrose bin Mohamed, 51, a He was appointed as MHA’s Northern Dato’ Idrose does not have any family Malaysian, is the Group Managing Region Director in November 1991, relationship with any director and/ Director/Chief Executive Officer of the a position he held prior to leaving or substantial shareholders of the Company. He was appointed to the the Government service to join UEM Company or any conflict of interest Board on 1 April, 2007. Dato’ Idrose Group Berhad (formerly known as with the Company. He has not been is a member of the Remuneration United Engineers (Malaysia) Berhad) convicted of any offence within the Committee, Option Committee as Head of Engineering & Operations past 10 years. and Performance Management for the North-South Expressway Committee. Central Link project in August, 1994. Dato’ Idrose did not attend any Board He became the Managing Director meetings held during the financial year Dato’ Idrose holds a Bachelor degree of Projek Lebuhraya Utara-Selatan under review as he was not a Director in Civil Engineering from UiTM. He Berhad on 1 July, 1999. during the said period. started his career with the Public Works Department in 1978. In January Subsequently, Dato’ Idrose resigned Particulars of other directorships in 1983, he joined Malaysian Highway as Managing Director of PLUS public companies : Authority (MHA) as a Civil Engineer Expressways Berhad and Projek and then served in various positions Lebuhraya Utara-Selatan (PLUS) with *Pos Malaysia Berhad and was involved in the development effect from 1 April, 2007. of expressways. POS MALAYSIA & SERVICES HOLDINGS BERHAD ANNUAL REPORT 2006 14

PROFILE OF DIRECTORS continued

Datuk Abu Huraira bin Abu Yazid

Executive Director/Group Chief Operating Officer

Datuk Abu Huraira bin Abu Yazid, 54, – Credit Card Centre (1986), Citibank Datuk Abu attended twenty-six (26) out a Malaysian, was appointed to the Berhad–Bankcard Centre (1988), of twenty-seven (27) Board meetings Board as Non-Executive Director of Public Bank Card Services Division - held during the financial year under the Company on 9 August, 2001. On 8 last position was the General Manager review. October, 2001 he was redesignated as of Public Bank Card Services Division Executive Director of the Company. (1991). Particulars of other directorships in public companies: Datuk Abu is a Business Administration On 1 August, 2000, he was appointed Graduate of University Malaya and Chief Executive Officer of Bank *Pos Malaysia Berhad was in the card business for the past Simpanan Nasional and remained in *Transmile Group Berhad 20 years. He commenced his career that position until July, 2004. *Pos Malaysia Holdings Berhad in Maybank Berhad in 1976 and was responsible for establishing and Datuk Abu does not have any family managing its card business in 1980. relationship with any director and/ This was also the first full-fledged card or substantial shareholders of the centre in Malaysia. Company or any conflict of interest with the Company. He has not been Consequently, he was headhunted to convicted of any offence within the set up and manage other credit card past 10 years. centres: The Chase Manhattan Bank POS MALAYSIA & SERVICES HOLDINGS BERHAD ANNUAL REPORT 2006 15

PROFILE OF DIRECTORS continued

Mr. Wee Hoe Soon @ Gooi Hoe Soon

Independent Non-Executive Director

Mr. Gooi Hoe Soon, 47, a Malaysian, He has more than 20 years experience Mr. Gooi does not have any family is an Independent Non-Executive in the fi elds of accounting and relationship with any director and/ Director of the Company. He was corporate fi nance and was Finance or substantial shareholders of the appointed to the Board on 18 March, Director of several private and public Company or any confl ict of interest 2001 as a Non-Independent Non- listed companies. with the Company. He has not been Executive Director and redesignated convicted of any offence within the as an Independent Non-Executive He has been instrumental in the past 10 years. Director of the Company on 3 July, successful implementation of 2006. Mr. Gooi is the Chairman of several corporate exercises, which Mr Gooi attended twenty-four (24) out the Audit Committee and a member include merger and acquisition of twenty-seven (27) Board meetings of the Remuneration Committee, and corporate debt restructuring held during the fi nancial year under Nominating Committee, Per- exercises undertaken by public listed review. formance Management Committee, companies. Transformation Committee and Particulars of other directorships in Option Committee. He was appointed to the Board of public companies: Directors of Avenue Capital Resources Mr. Gooi is a member of the Berhad as a Non-Executive Director *Hup Seng Industries Berhad Malaysian Institute of Certifi ed Public in 1999 and subsequently appointed Accountants and the Malaysian as the Group Managing Director in Institute of Accountants. 2001 and Deputy Chairman in 2004, holding this last position until 2006. POS MALAYSIA & SERVICES HOLDINGS BERHAD ANNUAL REPORT 2006 16

PROFILE OF DIRECTORS continued

Mr. Segarajah Ratnalingam

Non-Independent Non-Executive Director

Mr. Segarajah Ratnalingam, 54, a Mr. Segarajah began his career in the with the Company. He has not been Malaysian, is a Non-Independent Ministry of Defence when he joined convicted of any offence within the Non-Executive Director. He was the Malaysian Administrative and past 10 years. appointed to the Board on 26 October, Diplomatic Service upon his graduation 2004. He is a member of the Audit in 1975. He served the Ministry of Mr. Segarajah attended all twenty- Committee, Remuneration Committee, Defence in various positions until 1995 seven (27) Board meetings held during Performance Management Committee, when he was posted to the Ministry the financial year under review. Transformation Committee and Option of Finance. He is currently the Under Committee. Secretary of the Financial Management Particulars of other directorships in Advisory Division, Ministry of Finance. public companies: Mr. Segarajah holds a Bachelor of Economics (Honours) degree from the Mr. Segarajah does not have any * Percetakan Nasional Malaysia University of Malaya. family relationship with any director Berhad and/or substantial shareholders of the Company or any conflict of interest POS MALAYSIA & SERVICES HOLDINGS BERHAD ANNUAL REPORT 2006 17

PROFILE OF DIRECTORS continued

Puan Salmah binti Sharif

Non-Independent Non-Executive Director

Puan Salmah binti Sharif, 46, a She became the Company Secretary Since the appointment of Puan Malaysian, is a Non-Independent Non- and Legal Adviser of Khazanah Salmah, she attended all ten (10) Executive Director. She was appointed Nasional Berhad in November, 1994 Board meetings held subsequent to to the Board on 4 August, 2006. She and in September, 2004 she was her appointment during the financial is a member of the Remuneration redesignated as the Director of Legal year under review. Committee and the Nominating and Support. Committee. Particulars of other directorships in Puan Salmah does not have any public companies: Puan Salmah holds a Bachelor of Law family relationship with any director from the Universiti Teknologi MARA and/or substantial shareholders of the *Time Engineering Berhad and was admitted as an Advocate and Company or any conflict of interest Solicitor at the High Court of Malaya with the Company. She has not been in 1990. She began her career as a convicted of any offence within the Legal Officer with Malaysian Industrial past 10 years. Estates Sdn Bhd (a subsidiary of the Malaysian Industrial Development Finance Berhad) from 1987 to 1988 and was promoted to Company Secretary in 1989. POS MALAYSIA & SERVICES HOLDINGS BERHAD ANNUAL REPORT 2006 18

PROFILE OF DIRECTORS continued

Encik Faisal bin Ismail

Non-Independent Non-Executive Director

Encik Faisal bin Ismail, 43, a Malaysian, Chairman. He then joined Landmarks Encik Faisal does not have any family is a Non-Independent Non-Executive Berhad (listed on Bursa Malaysia under relationship with any director and/ Director. He was appointed to the Hotels) in 1991 and was an Executive or substantial shareholders of the Board on 27 September, 2006. He Director in Landmarks Berhad from Company or any conflict of interest is a member of the Tender Board 2000 to 2005. In Encik Faisal’s 14- with the Company. He has not been Committee. year career in Landmarks Group, convicted of any offence within the Encik Faisal accumulated significant past 10 years. Encik Faisal is a Chartered Accountant experience in hotels, property with the Institute of Chartered investment, property development, Since the appointment of Encik Faisal, Accountants in England and Wales. IPP, healthcare and some experience he attended all six (6) Board meetings He is also a member of the Malaysian in banking. After Landmarks Berhad, held subsequent to his appointment Institute of Accountants. Encik Faisal Encik Faisal joined BinaFikir Sdn during the financial year under review. is the Group Managing Director Bhd as Executive Director and later of Pantai Holdings Berhad. Encik Khazanah Nasional Berhad as a Particulars of other directorships in Faisal started his career in 1983 with Director in the Investments Division. public companies: Touche Ross & Co, London (now He joined Pantai Holdings Berhad as Deloitte Touche & Tohmatsu) where he its Group Managing Director on 15 * Pos Malaysia Berhad articled for 4 years and qualified as a May 2007. * Pantai Holdings Berhad Chartered Accountant. He returned to Malaysia to work in Hanafiah Raslan & Mohammad for 2 years before joining Peremba at the invitation of Peremba’s POS MALAYSIA & SERVICES HOLDINGS BERHAD ANNUAL REPORT 2006 19

PROFILE OF DIRECTORS continued

Mr. Koshy Thomas

Non-Independent Non-Executive Director (Alternate Director to Mr. Segarajah Ratnalingam)

Mr. Koshy Thomas, 50, a Malaysian, Mr. Koshy began his career soon after Mr. Koshy does not have any family is a Non-Independent Non-Executive his graduation as Assistant Secretary relationship with any director and/ Director. He was appointed to the (Loans and Finance Division) in the or substantial shareholders of the Board as Alternate Director to Mr. Ministry of Finance to 1986. He joined Company or any conflict of interest Segarajah Ratnalingam on 4 February, the Ministry of Agriculture as Senior with the Company. He has not been 2005. Assistant Secretary (Monitoring and convicted of any offence within the Evaluation Division) in 1987. In 1996, past 10 years. Mr. Koshy graduated in 1979 with a he was posted to the Ministry of Bachelor of Economics Degree from Finance as Senior Assistant Secretary the University of Malaya. He later (Tax Analysis Division). He was then obtained a Post Graduate Diploma in appointed as the Principal Assistant Public Management from the National Secretary, Head of Program Evaluation Institute of Public Administration, Section of the Financial Management Kuala Lumpur in 1986. He also Advisory Division, Ministry of Finance. obtained a Post Graduate Certificate He is currently the Deputy Under in Human Services (Monitoring and Secretary, Tax Analysis Division, Evaluation) from RMIT University in Ministry of Finance. Melbourne, Australia in 2001. POS MALAYSIA & SERVICES HOLDINGS BERHAD ANNUAL REPORT 2006 20

SENIOR MANAGEMENT

Standing from left to right

1 Tuan Haji Nadza Abdul 5 YM Raja Shahreen bin Raja Othman Head, Corporate Planning & Strategic Business Head, Finance

2 Dr R. Hanafi bin Abdullah 6 Encik Bahaman bin Kamaruzzaman Head, Group Human Resource and Administration Chief Transformation Officer

3 Datin Rohaiza binti Hashim 7 Encik Muhd Firdaus bin Azharuddin Head, Corporate Communications Chief Operating Officer, PosLaju & PSH Express 4 Tuan Haji Ithnin bin Talib Head, Security & Investigation POS MALAYSIA & SERVICES HOLDINGS BERHAD ANNUAL REPORT 2006 21

8 Datuk Abu Huraira bin Abu Yazid 11 Encik Mohd. Zarif bin Hashim Executive Director / Group Chief Operating Officer Chief Operating Officer, PosMel & PosLogistik

9 Dato’ Idrose bin Mohamed 12 Encik Mohd. Rosdeen bin Hassan Group Managing Director / Chief Executive Officer Chief Information Officer

10 Tuan Haji Mohd. Derus bin Harun 13 Puan Sabrina Albakri binti Abu Bakar Chief Operating Officer, Datapos (M) Sdn Bhd Head, Legal and Secretarial POS MALAYSIA & SERVICES HOLDINGS BERHAD ANNUAL REPORT 2006 22 23

CHAIRMAN’S STATEMENT

DEAR SHAREHOLDERS, CUSTOMERS & EMPLOYEES, It gives me great pleasure to present the annual report of your Company for the financial year ended 31 December 2006.

Tan Sri Adam Kadir Chairman

The management and staff of your of reclassification of our shareholding through various competing channels, Company have delivered yet another in Transmile Group Berhad from an such as banks, online channels and year of commendable performance associate company to an investment. even mobile phones. in 2006. Revenue increased by 4% to RM822 million, Profit Before Tax Your Board and Management realise It is against this backdrop of increased by 44% to RM212 million, that sustaining the outstanding increasingly difficult industry setting Profit After Tax increased by 10% to financial performance will not be that your Company continues to RM160 million and finally Earnings easy. For years, the slowing down perform well and show strong results. Before Interest, Depreciation & of the postal industry, competition This outcome would probably have Amortisation increased by 5% to from alternative electronic services, not been possible had it not been for RM149 million. All these are record deregulation and critical public the way your Company has developed financial achievements that have perception of our services have the staff to face competition. never before been attained by your always been present. Company. EMPLOYEE DEVELOPMENT In our mail business, not even our Our group revenue increased mainly unparalleled reach and competitive Pos Malaysia aspires to be an because PosMel, our strategic price of our business can stop employer of choice. Since 2003, we business unit in the mail business alternative services such as email, have tried to inculcate new work which accounts for 69% of revenue, SMS and the internet from competing culture to employees, emphasizing chalked a 4% revenue increase due to for customers. In our courier business, competency, integrity, good customer its aggressive marketing efforts. PosLaju is facing competition from service and innovation of ideas. They foreign and local express delivery are constantly being reminded that The significant jump in the Group’s service providers. The post office how they do their work ultimately profit before tax is attributable to non- counter businesses have become has an impact on the company’s operational activities such as higher less attractive to some segments of profitability. interest income from cash deposits, society as bill payments and other reversal of impairment loss and effect transactions can now be conducted POS MALAYSIA & SERVICES HOLDINGS BERHAD ANNUAL REPORT 2006 22 23

CHAIRMAN’S STATEMENT continued

In 2006, your Company continued to relevant, the overall mail volume in PosNiaga has been increasing its appraise its senior management using 2006 actually increased in 2006 by product offerings such that now the Key Performance Indicators. 1.9% compared to the previous year. products or services of 128 agencies In 2007, the KPIs will be cascaded The bulk of this volume is driven by are available at its retail counters. further to all executives in the Group, business mail, rather than personal In 2006, the volume of transactions so that their performance will be letters. handled by PosNiaga increased by benchmarked against their own pre- 5% to 99 million. Now customers not agreed individual goals. In 2006, PosLaju began to practice only can pay various types of bills or yield management, wherein renew road tax and licences, but also To incentivise the employees, in 2006 Management shifted focus to high- buy unit trusts and insurance. Your we revised the salary structure of both value delivery items, rather than high- Company has even accepted credit the non-executives and executives quantity ones. As a result, PosLaju’s cards for customers to pay for certain and improved some of their benefits. revenue stabilised at RM130 million, transactions at our post offices. In addition, we will increase training even when the number of items programmes for employees so that handled declined by almost 15%. We Your Company also made further they will be equipped with the right hope that the yield management effort inroads in e-commerce. Last year, we skills and competency. will lead to fruition in 2007. acquired a stake in PosPay Exchange Sdn Bhd, an online micro payment BUSINESS PERFORMANCE The jewel in the Group which is not service provider, to complement our fully exploited yet is our extensive internet online portal, PosOnline. Three PosMel has been aggressively network of post offices and outlets. banks - namely Hong Leong Bank, marketing some of the value-added With 671 post offices and more than CIMB Bank and Bank Rakyat – have products such as Pos Ekspres (pre- 5,494 postal outlets (Pos Mini, postal collaborated with us and allowed their paid express-delivery envelope), agents, stamp vendors etc), our reach account holders to transact through parcels, admail (advertising mail) is wider than the largest bank in the PosOnline. and direct mail. As proof that mail country. as a communication medium is still POS MALAYSIA & SERVICES HOLDINGS BERHAD ANNUAL REPORT 2006 24 25

CHAIRMAN’S STATEMENT continued

We are glad to note that our online The completion of PITTIS enables Through increased automation, we payment transactions last year had centralised handling of data relating hope to minimise sorting errors while increased by fourfolds to an average to courier items. It also streamlines our customers will benefit from timely of 25,000 a month. the standard operating procedures so and more accurate delivery of letters as to make PosLaju more customer- and parcels. In February 2007, we launched our oriented. We are proud to share with online shopping mall called PosNiaga you that in 2006, PosLaju won the PANTAS (Pos Automated Network eShop where online customers could Readers Digest Gold Trust Award Transaction Acceptance System) is a purchase, among others, consumer under the air freight/courier category. project to replace the front-end (point products, gifts, computer accessories, This is in recognition of the high of sale) and back-end systems at all books and magazines. standard of service provided by our post offices including the increase PosLaju. of corporate network bandwidth. FLAGSHIP PROJECTS The new system will enable us to Last year, we invested RM69 million to consolidate and better manage data Central to our transformation plans are acquire a 22-acre land in Shah Alam from all the post offices, thus reducing the flagship projects. Their objective for our new mail processing centre overhead costs. is to enhance operational capabilities. (“MPC”). This is a significant milestone The capital expenditure for the various for the REMOSS (Reconfiguration of Upon completion of PANTAS project projects in 2007 alone is expected to Mail Operations and Systems Study) in mid-2008, PosNiaga will be able be around RM240 million. project. The new MPC, targeted to be to introduce new products and operational in 2009, will serve as the services at their counters quicker. The In May 2007, we rolled out an enhanced national hub for mail and parcel sorting customers will also experience shorter track and trace system for PosLaju by using advanced technologies and waiting time at our counters. under the PITTIS (Pos Integrated machines. Track and Trace Information System) project. POS MALAYSIA & SERVICES HOLDINGS BERHAD ANNUAL REPORT 2006 24 25

CHAIRMAN’S STATEMENT continued

CUSTOMER SATISFACTION We hope that with continuous This is one of the many initiatives improvement in our capabilities, this that we are putting into practice, as We are always keen to improve the service standard can be increased called for by the Government in their level of our service delivery to our to a world-class standard of 94% by various colour-coded books for GLCs. customers. In 2006, we engaged an 2010. As a testament to your Company’s independent researcher to conduct willingness to change, our rate of the second annual survey on our CORPORATE DEVELOPMENT implementation and compliance customer satisfaction, covering the to the colour-coded books is more entire country. The results show To the shareholders, the highlight advanced than some of our fellow that our customer satisfaction for 2006 must surely be the capital GLCs. has improved across all our major repayment exercise. We will return businesses: for our mail business, to you our surplus cash amounting PROSPECT 76% of the customers were satisfied to more than RM800 million. This with our services (2005: 75%); for exercise will also transfer our The next 3 years will be crucial and our courier business, 78% of our listing status to our main operating exciting. Crucial because this is when customers were satisfied (2005: 76%); company, Pos Malaysia Berhad all our transformation initiatives should and for our post office business, 78% (“PMB”). The boards of directors will come to fruition. Exciting because the (2005: 76%). Interestingly, the survey then be consolidated from two boards customers will enjoy the benefits of also revealed that our customers view presently to one. Having one board better services which we hope will the quality of service as the main of directors will simplify high-level lead to increased earnings. concern - not so much the price. decision making and help accelerate the implementation of our various So, we think that we are on the right Your Company also improved the transformation plans. Management path to face the challenges ahead, performance in one key area: letter targets the third quarter of 2007 for to remain relevant, to seek growth in delivery service standard. This figure completion of this exercise. new businesses and consequentially increased substantially from 85% in to create value for our shareholders. 2005 to 90% in 2006. POS MALAYSIA & SERVICES HOLDINGS BERHAD ANNUAL REPORT 2006 26 27

CHAIRMAN’S STATEMENT continued

The industry outlook does not appear easy, Logically, a succession took place. I believe but your Directors, management and staff the shareholders would like to welcome will remain committed to deliver what they Dato’ Idrose Mohamed who was appointed had promised. as the new GMD/CEO in April 2007. I am sure given his wealth of experience coming ACKNOWLEDGEMENT from another distinguished GLC, he will guide us and lead the Group to greater In October 2006, Datuk Abdul Majid heights. The board and management will Hussein stepped down from his position give him their full support. as the Chairman of Pos Malaysia Berhad. On behalf of the Board and management, I would like to thank the management and I would like to thank him for his invaluable staff for their hard work and loyalty. Finally, contributions. I would like to express my appreciation to the shareholders who have supported us I would also like to express utmost and I hope you will still be with us to enjoy appreciation to our previous Group the results of our transformation journey. Managing Director/Chief Executive Officer, Dato’ Ikmal Hijaz Hashim, who left us in Thank you. February 2007 upon his appointment as the first CEO of the Iskandar Regional Yours sincerely, Development Authority. During his tenure, he laid down the initiatives for our transformation plans and shaped our business plans and strategy, bringing your TAN SRI ADAM KADIR Company to where it is now. Chairman POS MALAYSIA & SERVICES HOLDINGS BERHAD ANNUAL REPORT 2006 26 27

BOARD OF DIRECTORS POS MALAYSIA BERHAD

From left to right

1 Dato’ Idrose bin Mohamed 3 Encik Faisal bin Ismail Managing Director Director (Appointed w.e.f. 18 April 2007) (Appointed w.e.f. 29 September 2006)

2 Datuk Abu Huraira bin Abu Yazid 4 Dato’ Krishnan a/l Chinapan Executive Director/Group Chief Operating Officer Director

5 Dr Azizah binti Arifin Director

6 Datuk Low Seng Kuan Director POS MALAYSIA & SERVICES HOLDINGS BERHAD ANNUAL REPORT 2006 28 29

CORPORATE STRUCTURE Pos Malaysia Berhad as at 31 March 2007

MANAGING DIRECTOR

ASSOCIATES SUBSIDIARIES STRATEGIC SUPPORT BUSINESS UNITS SERVICES

• 100% • PosMel • Human Resources & • 42.5% Administration CEN Sdn Bhd Datapos (M) Sdn Bhd Mail Business • Information & • 40% • 55% • PosNiaga Communication Technology Digicert Sdn Bhd Retail Business Elpos Print Sdn Bhd • Corporate Finance • 50% • 100% • PosLaju • Corporate Planning & Strategic Business PosPay Exchange Pos Takaful Courier Business Sdn Bhd Agency Sdn Bhd (formerly known as • Internal Audit RMEX Payment Sdn Bhd) • PosLogistik • Corporate Communications • 100% Logistics Business Pos Logistic - • Programme Fulserve Sdn Bhd • Philately Management Offi ce Philatellic Business • 100% • Customer Service PosLaju (M) Sdn Bhd • Security & Investigation • Property, Procurement • 100% & Contract Virtual Pos Sdn Bhd • Legal & Secretarial • 100% • Risk Management PMB Properties Sdn Bhd

• 100% Philately Pos Malaysia Sdn Bhd POS MALAYSIA & SERVICES HOLDINGS BERHAD ANNUAL REPORT 2006 28 29

2006 STATE MANAGERS POS MALAYSIA BERHAD

1. Encik Jaafar Abdul Rahman Kedah/Perlis

2. Tuan Haji Abdul Hadi Hamid Pulau Pinang

3. Encik Mohd Azizi Mohd Sanusi Perak

4. Encik Wan Sharpudin Wan Ramli Selangor

5. Tuan Haji Mohd Aziz Sulong WP Kuala Lumpur

6. Encik Lee Pow Choy 8. Encik Shahri Jikun Negeri Sembilan Johor

7. Tuan Haji Sazali Muhd Din 9. Encik Ahsim Jamat Melaka Pahang

10. Encik Quek Lim Tiong Terengganu

11. Encik Anuwar Md Akhir Kelantan

12. Encik Othman Abdullah Sarawak

13. Tuan Haji Othman Dari Sabah POS MALAYSIA & SERVICES HOLDINGS BERHAD ANNUAL REPORT 2006 30 31

CALENDAR OF EVENTS 2006

6 FEBRUARY 2006 POS MALAYSIA AND UNIVERSITI SAINS MALAYSIA reliable means for USM in organising and coordinating their FORMED STRATEGIC PARTNERSHIP daily mailing needs. Pos Malaysia and Universiti Sains Malaysia (USM) officially launched a strategic partnership on 6 February 2006 for During the signing ceremony, USM was represented by Pos Malaysia to provide Corporate Mail Management its Vice Chancellor, Prof. Datuk Dzulkifli Abdul Razak, Services to USM. Under this cooperation, the Corporate while Pos Malaysia was represented by its Chairman, Tan Mail Management service will provide more efficient and Sri Adam Kadir and its Executive Director/ Group Chief Operating Officer, Datuk Abu Huraira Abu Yazid.

14 FEBRUARY 2006 POS MALAYSIA ISSUED STAMPS TO COMMEMORATE the National Audit Institution 1906 - 2006” on Monday, THE 100TH ANNIVERSARY OF THE NATIONAL AUDIT February 14th 2006. These commemorative stamps and INSTITUTION First Day Cover were launched by Yang di Pertuan Agong Pos Malaysia issued a collection of stamps and First Tuanku Syed Sirajuddin ibni Almarhum Tuanku Syed Putra Day Cover to commemorate the “100th Anniversary of Jamalullail at Putrajaya Convention Centre, Putrajaya.

24 MARCH 2006 RAPIDKL’S MONTHLY TRAVEL CARD NOW SOLD AT 98 POST OFFICES Pos Malaysia and Rangkaian Pengangkutan Integrasi Deras Sdn. Bhd. (RAPID KL) officially launched a strategic partnership on 24 March 2006 to provide a convenient method and venue for the public to purchase RAPID KL’s Monthly Travel Card (MTC) at selected post offices.

RAPID KL was represented by its Chief Executive Officer, Mr. Rein Westra, while Pos Malaysia was represented by Dato’ Ikmal Hijaz Hashim, Managing Director/ Chief Executive Officer and Datuk Abu Huraira Abu Yazid, Executive Director/ Group Chief Operating Officer.

17 APRIL 2006 I-TALK AND RING RING CARD NOW AVAILABLE AT 61 POST OFFICES On 17 April 2006, Pos Malaysia and Telekom Malaysia launched a strategic partnership to provide a convenient method and venue for the public to purchase I-Talk Card and Ring Ring Card at selected post offices.

Telekom Malaysia was represented by Dato’ Adnan Rofiee, Chief Operating Officer of TM Retail, while Pos Malaysia was represented by Datuk Abu Huraira Abu Yazid, Executive Director/ Group Chief Operating Officer. POS MALAYSIA & SERVICES HOLDINGS BERHAD ANNUAL REPORT 2006 30 31

CALENDAR OF EVENTS 2006 continued

3 MAY 2006 ONLINE STRATEGIC BUSINESS PARTNERSHIP BETWEEN POS MALAYSIA BERHAD AND CIMB BANK Pos Malaysia and CIMB Bank launched a strategic partnership to provide a convenient method for customers to pay bills and other transactions online.

BCB-CIMB Bank was represented by Dato’ Nazir Razak, Chief Executive of CIMB Group, while Pos Malaysia Berhad was represented by Dato’ Ikmal Hijaz Hashim, Managing Director / Chief Executive Officer, and Datuk Abu Huraira Abu Yazid, Executive Director/ Group Chief Operating Officer.

9 – 12 MAY 2006 For the second time, Malaysia became the host for the MALAYSIA HOSTED THE ASIAN-PACIFIC POSTAL UNION Asian-Pacific Postal Union Meetings (APPU) 2006 that was MEETINGS (APPU) 2006 FROM MAY 9 TO 12 held at the Shangri-La Hotel, Kuala Lumpur from 9 May to 12 May 2006.

Jointly organized by the Ministry of Energy, Water and Communications, Pos Malaysia, as well as the Malaysian Commission of Multimedia and Communications, the meeting witnessesed a gathering of more than 120 postal officials from twenty nine countries within the Asian Pacific rim focusing on ideas to step up cooperation among APPU members towards strengthening Asian Pacific capabilities for global leadership in postal and express services.

Deputy Minister of Energy, Water and Communications YB Dato’ Shaziman Abu Mansur, officiated the opening ceremony of the Asian-Pacific Postal Union Meetings (APPU) 2006.

5 JUNE 2006 POS MALAYSIA AND SINGPOST LAUNCHED JOINT PROMOTION TO BOOST CROSS-BORDER MAIL TRAFFIC Pos Malaysia and Singapore Post launched a joint promotion on cross border mail targeted at business customers in Malaysia and Singapore for a period of one year commencing 1st June 2006. Through this joint promotion, businesses from both sides of the causeway will enjoy attractive rates for selected classes of mail originating from both countries. POS MALAYSIA & SERVICES HOLDINGS BERHAD ANNUAL REPORT 2006 32 33

CALENDAR OF EVENTS 2006 continued

13 JUNE 2006 POS MALAYSIA & SERVICES HOLDINGS BERHAD’S ANNUAL GENERAL MEETING The 74th Annual General Meeting for Pos Malaysia & Services Holdings Berhad was held at Legend Hotel Kuala Lumpur on 13th June 2006.

5 JULY 2006 CELEBRATING FELDA’S 50TH ANNIVERSARY THROUGH COMMEMORATIVE STAMPS AND FIRST DAY COVER In conjunction with the 50th Year Celebration of the Federal Land Development Authority (FELDA), a set of commemorative stamps were issued and launched by YAB Dato’ Seri Najib Tun Razak, Deputy Prime Minister of Malaysia on 5th July 2006. Also present at the launch were Tan Sri Adam Kadir, Chairman of Pos Malaysia & Services Holdings Berhad and Datuk Abu Huraira Abu Yazid, Executive Director/ Group Chief Operating Officer.

11 JULY 2006 POS MALAYSIA AND NATIONWIDE EXPRESS FORMED STRATEGIC BUSINESS PARTNERSHIP Pos Malaysia and Nationwide Express Sdn. Bhd. officially launched a strategic partnership to provide a convenient method and venue for the customers to purchase stamps and philatelic items at Nationwide Express offices on 11th July 2006.

At the signing of agreement ceremony, Nationwide Express was represented by its Chief Executive Officer, Cik Rozilawati Haji Basir, while Pos Malaysia was represented by Datuk Abdul Majid Hj Hussein, Chairman of Pos Malaysia Berhad, Dato’ Ikmal Hijaz Hashim, Managing Director/ Chief Executive Officer, as well as Datuk Abu Huraira Abu Yazid, Executive Director/ Group Chief Operating Officer. POS MALAYSIA & SERVICES HOLDINGS BERHAD ANNUAL REPORT 2006 32 33

CALENDAR OF EVENTS 2006 continued

18 JULY 2006 COMMEMORATIVE STAMPS ON SULTAN AZLAN SHAH GALLERY ISSUED IN CONJUNCTION WITH HIS ROYAL HIGHNESS SULTAN AZLAN SHAH’S BIRTHDAY Pos Malaysia issued a set of commemorative stamps featuring the Sultan Azlan Shah Gallery in conjunction with the birthday of His Royal Highness DYMM Sultan Azlan Muhibbuddin Shah ibni Al-Marhum Sultan Yussuf Izzuddin Shah Ghafarullahu-lah, the Paduka Seri Sultan of Perak. His Royal Highness graciously launched the stamps at Istana Iskandariah in Kuala Kangsar.

The launch was also attended by DYMM Raja Permaisuri Perak, DYTM Raja Muda Perak, DYAM Raja DiHilir Perak, DYAM Raja Puan Muda Perak, Menteri Besar Perak and close friends of His Royal Highness. Also present were Tan Sri Adam Kadir, Chairman of Pos Malaysia & Services Holdings Berhad and Dato’ Ikmal Hijaz Hashim, Group Managing Director/Chief Executive Officer of Pos Malaysia.

10 AUGUST 2006 STRATEGIC ALLIANCE BETWEEN POS MALAYSIA AND E-PAY (M) TO PROVIDE BETTER CONVENIENCE FOR MOBILE PHONE USERS On 10 August 2006, Pos Malaysia and E-Pay (M) Sdn. Bhd. officially launched a strategic alliance to provide a convenient method and venue for the customers especially mobile phone users to purchase prepaid reloads at post offices and mini post offices.

Pos Malaysia was represented by Datuk Abu Huraira Abu Yazid, Executive Director/ Group Chief Operating Officer, while E-Pay (M) Sdn. Bhd. was represented by Mr. Simon Loh, Managing Director. Also present at the ceremony were Datuk Abdul Majid Haji Hussein, Chairman of Pos Malaysia Berhad and Dato’ Hassan Haji Said, Executive Director of E-Pay (M) Sdn. Bhd. POS MALAYSIA & SERVICES HOLDINGS BERHAD ANNUAL REPORT 2006 34 35

CALENDAR OF EVENTS 2006 continued

15 AUGUST 2006 SPECIAL STAMPS AND FIRST DAY COVER TO CELEBRATE MALAYSIA’S MYRIAD OF FESTIVALS On 15th August 2007, Pos Malaysia issued a set of special stamps and First Day Cover on “Malaysian Festivals”. The stamp was launched by YB Datuk Patinggi Tan Sri Dr George Chan Hong Nam, Deputy Chief Minister I, who is also the Minister of Industrial Development and Minister of Agriculture Modernization, Sarawak. The special stamps featured the original drawings by children during a Drawing Competition organised by Pos Malaysia Berhad earlier of the year.

Also present during the launching ceremony were Tan Sri Adam Kadir, Chairman of Pos Malaysia & Services Holdings Berhad, and Datuk Abu Huraira Abu Yazid, Executive Director/ Group Chief Operating Officer.

9 OCTOBER 2006 SPECIAL STAMPS ON EXOTIC SEMI-AQUATIC ANIMALS LAUNCHED DURING WORLD POSTAL DAY 2006 In conjunction with World Postal Day 2006, Pos Malaysia issued a set of special stamps and First Day Cover on Semi Aquatic Animals” on 9th October 2006. Launched by YAB Dato’ Haji Abdul Ghani Othman, the Menteri Besar of Johor, the special stamps and First Day Cover feature a collection of images on semi-aquatic animals.

Aso present at the launch were Datuk Abdul Majid Hj Hussein, Chairman of Pos Malaysia Berhad and Dato’ Ikmal Hijaz Hashim, Managing Director/ Chief Executive Officer of Pos Malaysia.

10 OCTOBER 2006 STRATEGIC COOPERATION LAUNCHED BETWEEN POS MALAYSIA AND YAYASAN RESTU Pos Malaysia and Yayasan Restu officially launched a strategic alliance to provide a convenient and efficient method for the delivery of the Holy Quran and Islamic art products to the customers across the country on 10th October 2006. The signing ceremony was witnessed by YAB Dato’ Seri Abdullah Ahmad Badawi, the Prime Minister of Malaysia and YAB Dato’ Seri Dr Mohd Khir Toyo, the Menteri Besar of Selangor. POS MALAYSIA & SERVICES HOLDINGS BERHAD ANNUAL REPORT 2006 34 35

CALENDAR OF EVENTS 2006 continued

2 NOVEMBER 2006 POS MALAYSIA CELEBRATED HARI RAYA AIDILFITRI AND DEEPAVALI WITH STAFF, CORPORATE CLIENTS AND MEDIA REPRESENTATIVES Pos Malaysia celebrated Hari Raya Aidilfitri and Deepavali with over 4,000 staff, corporate clients and media representatives at its headquarters in Dayabumi Complex. Organised on two consecutive days, the event was held on 2nd and 3rd November 2006 of which the former was for corporate clients and media representatives and the latter for the management and staff of Pos Malaysia.

4 DECEMBER 2006 DEPUTY PRIME MINISTER OF MALAYSIA LAUNCHED THE COMMEMORATIVE STAMPS ON THE 25th GENERAL ASSEMBLY OF THE WORLD VETERANS FEDERATION Pos Malaysia issued a set of commemorative stamps and First Day Cover on the “The 25th General Assembly of the World Veterans Federation” on 4 December 2006. The commemorative stamps and First Day Cover feature a collection of images related to the World Veterans Federation and was launched by YAB Dato’ Seri Najib Tun Razak, Deputy Prime Minister of Malaysia during the opening of the WVF General Assembly at Kuala Lumpur Convention Centre.

19 DECEMBER 2006 The signing ceremony was held on 19th December 2006 in POS MALAYSIA ESTABLISHED STRATEGIC Caracas in conjunction with the official visit of the Prime INTERNATIONAL COOPERATION WITH VENEZUELA Minister of Malaysia YAB Dato’ Seri Abdullah Ahmad POST (IPOSTEL) Badawi to Venezuela. The ceremony was also witnessed by the President of Venezuela, Mr Hugo Chavez. Pos Malaysia and Postal Telegraphic Institute of Venezuela (IPOSTEL) signed a Memorandum of Understanding (MOU) At the signing ceremony of the MOU, IPOSTEL was to establish feasibility study to step up bilateral cooperation represented by its Vice President, Mr. Daniel Guillermo in supporting trade and goods flow between Asian and while Pos Malaysia was represented by its Chairman, Tan Central/South America regions. Sri Adam Kadir.

28 DECEMBER 2006 POS MALAYSIA SUPPORTS MALAYSIA’S POLE-TO-POLE EXPEDITION 2006 / 2007 VIA SPECIAL EDITION STAMPS AND EXCLUSIVE POSTCARDS A set of special stamps and First Day Cover on the “Pole- to-Pole Expedition (The South Pole Experience)” as well as exclusive postcards on the “North Pole : Pole-to-Pole Mission 2006/2007” were issued on 28th December 2006. The stamps, First Day Cover and postcards were launched by YAB Dato’ Seri Mohd Najib Tun Abdul Razak, Deputy Prime Minister of Malaysia. POS MALAYSIA & SERVICES HOLDINGS BERHAD ANNUAL REPORT 2006 POS36 MALAYSIA IN THE NEWS 37 POS MALAYSIA & SERVICES HOLDINGS BERHAD ANNUAL REPORT 2006 36 37

POS MALAYSIA IN THE NEWS POS MALAYSIA & SERVICES HOLDINGS BERHAD ANNUAL REPORT 2006 38 39

CORPORATE HIGHLIGHTS

SHARE PRICE PRICE PER SHARE (RM) POS MALAYSIA & SERVICES HOLDINGS BERHAD ANNUAL REPORT 2006 38 39

CORPORATE HIGHLIGHTS continued

REVENUE

The Group recorded operating revenue of RM821.8 million in 2006, a growth of RM34.8 million or 4.4% over the previous year of RM787.0 million.

The increase in revenue was primarily due to higher contribution from PosMel being the major revenue contributor in the Group, by RM20.9 million or 4.0%, in line with the continuous growth in overall mail volume by 1.9% to 1.3 billion items.

Further increase was also attributed to higher revenue from PosLaju and PosNiaga by RM8.3 million or 6.8% and RM5.7 million or 6.0% respectively. This was consistent with higher contribution per courier item in PosLaju and the increase in no. of transaction by 4.5 million or 4.8%, handled by PosNiaga.

SHAREHOLDERS’ FUND

Shareholders’ fund grew by RM113.1 million or 7.2% to RM1,685.7 million mainly due to higher profit for the year of RM160.3 million which was mitigated by dividend paid during the year amounted to RM55.6 million. POS MALAYSIA & SERVICES HOLDINGS BERHAD ANNUAL REPORT 2006 40 41

CORPORATE HIGHLIGHTS continued

TOTAL TANGIBLE ASSET

Total tangible asset increased by RM68.1 million or 3.4% to RM2,074.0 million in 2006, mainly attributed to the increase in cash and cash equivalents and investments by RM20.9 million and RM36.9 million respectively.

Cash and cash equivalent improved on the back of positive results posted by the Group in 2006. Whilst investments grew by RM36.9 million mainly due to the one-off gain on dilution of an associate and the share of results of an associates amounted to RM22.8 million and RM21.5 million respectively.

EARNINGS PER SHARE (BASIC)

Earnings per share increased by 8.7% to 31.12 sen in 2006, consistent with the increase in profit after taxation by RM14.9 million or 10.2% to RM160.3 million in 2006. POS MALAYSIA & SERVICES HOLDINGS BERHAD ANNUAL REPORT 2006 40 41

CORPORATE HIGHLIGHTS continued

PROFITABILITY ANALYSIS

Profit before taxation for the financial year ended 2006 of RM211.8 million reflected a significant increase of RM64.9 million or 44.2% over the RM146.9 million recorded in 2005.

The growth in revenue by RM34.8 million or 4.4% over the previous year of RM787.0 million has facilitate the improvement in the Group’s pre-tax profit. However, operating profit has decreased slightly by RM3.6 million or 3.5% due to the increase in operating cost by RM38.5 million or 5.6%. This was primarily due to the effect of the revision in salary structure under the new Collective Agreement of RM30.9 million to the Group’s operating cost, offsetting the impact of the VSS exercise, which was completed during the year. Further increase in operating cost was also attributed to higher transportation cost by RM28.8 million or 34.7%, in line with the higher air transport charges and increase in fuel cost.

Excluding the impact of the new salary structure, the Group would have posted an operating profit of RM129.9 million, an improvement of RM27.3 million or 26.6% over the previous year of RM102.7 million.

In spite of the decrease in operating profit, the Group’s profit before taxation has continued to improve mainly due to the increase in interest income by RM11.0 million or 30.3% which was driven by higher placement and average interest rate in 2006 and the gain on dilution of an associate of RM22.8 million, resulted from the private placement exercise undertaken by the associate which diluted the Group’s equity interest in the associate.

Further increase in profit before taxation was also attributed to the reversal of impairment loss on investment of RM11.3 million as opposed to a provision made in the preceding year of RM18.4 million.

Profit after taxation of RM160.3 million for the financial year ended 2006 represents a lower increase of RM14.9 million or 10.2% compared to the significant increase in profit before taxation. This is consistent with higher effective tax rate in 2006 of 27.3% as opposed to only 5.0% in 2005, consistent with reversal of overprovision for tax of RM9.8 million and higher tax exempt income in 2005. POS MALAYSIA & SERVICES HOLDINGS BERHAD ANNUAL REPORT 2006 42 43

CORPORATE HIGHLIGHTS continued

NET TANGIBLE ASSETS PER SHARE

Net tangible assets per share improved by 5.9% to RM3.25 per share, in line with the increase in shareholders’ fund by RM113.1 million to RM1,685.7 million in 2006.

REVENUE PER EMPLOYEE & MANPOWER COST PER EMPLOYEE

Revenue per employee has improved by 4.9% on the back of higher operating revenue by 4.4% in 2006 as compared to previous year.

The manpower cost per employee in turn has increased by 1.4%, consistent with the impact from the revision in salary structure under the new Collective Agreement of RM30.9 million, offsetting the impact of the VSS exercise, which was completed during the year POS MALAYSIA & SERVICES HOLDINGS BERHAD ANNUAL REPORT 2006 42 43

CORPORATE HIGHLIGHTS continued

REVENUE PER SBU

PosMel remains as the highest revenue provider for the Group, contributing 69% of the Group’s total revenue.

BREAKDOWN OF COST

Staff related cost continues to be the biggest component of total operating cost, which constitutes 59.7% of total operating costs. This is however, lower than last year’s contribution of 62.5%, mainly attributed to higher transportation cost which currently contributes 15.4% of total operating costs compared to 12.1% in 2005, due to higher air transport charges and increase in fuel cost. POS MALAYSIA & SERVICES HOLDINGS BERHAD ANNUAL REPORT 2006 44 45

GROUP MANAGING DIRECTOR / CHIEF EXECUTIVE OFFICER’S OPERATIONS REVIEW

Dato’ Idrose bin Mohamed Group Managing Director / Chief Executive Officer

POSMEL Parcel Advertising Mail (Admail)

The mail division was still the main Parcel recorded a volume growth of Admail recorded a significant volume revenue driver accounting for 69% 2% in 2006. A track and trace system growth of 55% in 2006 compared to of the Group’s revenue for 2006. The was installed to enhance the reliability previous year. Despite the numerous overall mail volume continued its of this service. The investment proved competitors for this product, Admail increasing trend, growing by 1.9% to fruitful when we managed to form a continues to grow due to the reliability 1.3 billion items. strategic partnership with a Japanese and the countrywide coverage of our company to deliver business-to- advertising mail service. Letter Mail business (B2B) parcel in Malaysia. Corporate Mailroom Solution (CMS) Letter mail recorded volume growth Direct Mail Marketing/Creative Mail of 1.6% for the year of 2006. Even This is another service that has though electronic media is widely Creative Mail is one product that has been receiving positive interest and used today, mail remains relevant and great growth potential. During the year, feedback from major organisations. is still trusted and relied upon by the a number of interactive seminars were To date, there are more than 30 public. conducted to educate organisations mailrooms located across Malaysia and companies on the effectiveness serving campuses and high-rise PosEkspres of using Creative Mail as a marketing office buildings. PosMel also provides tool. Relatively new to the Malaysian dedicated personnel working in 2006 saw the volume for PosEkspres market, Creative Mail has received corporate mailrooms. There are already grew by 7%, the same growth rate as positive feedback from clients and is plans to set up more mailrooms with the year before. PosMel also made expected to grow in the future. ‘one-stop centre’ features that would a marketing breakthrough by selling cater to all the postal needs of specific prepaid PosEkspres envelopes at Shell organisations. Select stations in the Klang Valley. POS MALAYSIA & SERVICES HOLDINGS BERHAD ANNUAL REPORT 2006 44 45

GROUP MD / CEO’S OPERATIONS REVIEW continued

National Mail and Parcel Hub Future Focus

With the completion of the network With the infrastructure progressively reconfiguration study in 2005, being put in place, PosMel will continue Pos Malaysia entered into the to emphasize on our “last mile” implementation phase with the delivery to complete the improvements purchase of a 22-acre land and building on the entire mail value chain. The in Section 21, Shah Alam. This facility training and development of PosMel’s is being turned into the National Mail delivery team or postmen will have Processing Centre (MPC) that will our continued focus as we believe serve as the hub for sorting of mails in the development of human capital and parcels for the whole of Malaysia. to eventually benefit our customers. We will also continue to foster closer The National MPC is part of the effort relationship with the community as to transform our mail processing well as work closely with the Village activities to world class standards. Committees, Resident Groups and A few of our existing MPCs will be Development Committees. consolidated in order to achieve economies of scale especially in the utilisation of machines.

The MPC will help increase the automation level from the current 20% to an expected 70%. POS MALAYSIA & SERVICES HOLDINGS BERHAD ANNUAL REPORT 2006 46 47

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POSLAJU

Although 2006 was a challenging year, PosLaju remains the market leader for the domestic market with revenue recorded at RM130.1 million.

In line with our strategy to expand into ANNUAL REVENUE the Business to Business (B2B) and Business to Customers (B2C) market FOR POSLAJU segments, the revenue generated from corporate customers increased from RM68.6 million in 2005 to RM70.3 million in 2006. Our clients vary from automotive parts, manufacturing, banking and trading business.

However, the revenue generated from document deliveries declined from RM63.4 million in 2005 to RM59.9 million in 2006. This is due to lower volume of credit cards renewal handled for fi nancial institutions in 2006.

PosLaju’s strength lies in its 38-branch network and the support provided by 670 post offi ces countrywide. The number of PosLaju branches increased by 3 from 35 branches in 2005. The new PosLaju branches are located at Sitiawan, Klang and Rawang. POS MALAYSIA & SERVICES HOLDINGS BERHAD ANNUAL REPORT 2006 46 47

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PosLaju will continue to improve its operations and delivery services by expanding its fleet of vans and motorcycles. Its current fleet comprises 431 vans and 327 motorcycles operated by 944 delivery personnel. REVENUE FOR DOCUMENT AND In 2006, PosLaju increased its value added services by introducing MERCHANDISE ITEMS insurance coverage and better quality packaging products. These packaging materials include envelopes, boxes and tubes.

New Development and Initiatives in 2007

PosLaju is embarking on a major business process re-engineering which involves re-designing the entire operations process, introducing new scanners and track and trace system via the PITTIS project.

PosLaju will further expand its network and delivery coverage by opening about 5 more branches in 2007.

We will also introduce new uniforms for our courier staff and is in the process of upgrading the service counters at all PosLaju centres. POS MALAYSIA & SERVICES HOLDINGS BERHAD ANNUAL REPORT 2006 48 49

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POSNIAGA In the 2007 Budget speech, the Prime to further extend the services at post Minister acknowledged Pos Malaysia offices to include bill payment of other Through our retail network, PosNiaga as one of the main collection agents Government agencies, such as quit offers a wide range of postal, bill for Government agencies to facilitate rent, assessment rent and sewerage payment, remittance, renewal of road the payment of bills, such as electricity, charges. tax and driving licence as well as telephone and water bills and agreed purchase of unit trust and insurance products.

The number of transactions handled POSNIAGA’S TRANSACTION VOLUME by PosNiaga in 2006 increased by 5% from the previous year to 99 million. The increase is mainly from collection of bill payment.

In 2006, 15 new agencies subscribed to our counter services bringing the total number of agencies to 128.

PosNiaga is also reaping the benefit of internet as online payment transactions grew from 5,000 to 25,000 a month. During the year, 3 banks established payment collaboration with PosOnline and 34 new agencies subscribed to the online services.

“One stop” Payment Centre

PosNiaga’s key strategy is to continue to capitalise on its extensive network to offer postal and non-postal products and services as “one stop” payment centre for customers. POS MALAYSIA & SERVICES HOLDINGS BERHAD ANNUAL REPORT 2006 48 49

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In November 2006, Pos Malaysia Some of the post offices are now MAJOR DEVELOPMENTS obtained the approval from the Road located in shopping complexes at Transport Department to offer the the request of the establishments Online Payment road tax and driving license renewal themselves who see the advantage services at 96 more outlets, bringing of adding our postal products and Pos Malaysia’s internet transaction the total number of outlets that can services at these complexes. portal called PosOnline, established in offer this service to 584 outlets. July 2004, is available to all customers 24 hours a day, 7 days a week. This signifies the trust given by the POSNIAGA’S NETWORK REACH: Through PosOnline, customers can Government to Pos Malaysia as an perform transaction from anytime and important channel to improve the Post Offices 671 anywhere, as long as they have an public service delivery system. internet access. Pos Mini 298 Accessibility and Reachability of During the year, Pos Malaysia entered Postal Agents 291 Post Office Outlets into strategic partnerships with CIMB Bank, Bank Rakyat and PosPay to Stamp Vendors 4,902 In 2006, 7 new post offices and 64 Pos offer convenient payment options for Mini were opened. Pos Malaysia has customers to pay for their bills and Mobile Post Offices 3 the largest number of outlets, almost perform other transactions through double the number of outlets owned Post Offices that can handle PosOnline. by the largest local Bank in Malaysia. renewal of road tax/ driving 584 The collaboration allows the account A total of 298 or approximately 31% of license holders of the respective banks to the combined total of 969 outlets are gain access to PosOnline by linking Post Offices at shopping operated by third party entrepreneurs 34 their online payment engines to (known as “Pos Mini”). These complex PosOnline website. Customers of entrepreneurs sell postal products to the said banks can now have access complement their other business at Post Offices with extended 20 to over 60 “payee corporations” and their outlets. services until 10 pm make payment for their utility bills, telco postpaid bills, Astro bills, hire Apart from Pos Mini operators, there Post Offices which open on purchase installment payments, zakat are also 291 Postal Agents (“Wakil Sundays and opening/ topping-up of Standing Pos”) appointed by Pos Malaysia to 14 (excluding Kelantan, Order Deposit Account (SODA) for sell selected postal products, such as Terengganu and Kedah) members. stamps and postal order. POS MALAYSIA & SERVICES HOLDINGS BERHAD ANNUAL REPORT 2006 50 51

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CONTINUOUS PROCESS Revenue Generation Activities From Invest in New Process IMPROVEMENTS Current Business Improvements

Improved Mode of Payment at Post PosNiaga will continue to expand its PosNiaga is continuously looking at Offices fee based income activities. With the providing customer’s convenience by additional 96 post offices providing expanding our payment channels. We To enhance the mode of payment for JPJ services, PosNiaga is able to are currently evaluating the potential customers’ convenience, credit card expand revenue from handling more installation of Self Service Terminals at busy outlets and other areas with high payment for high value insurance road tax and driving license renewals traffic. transactions is now accepted at 12 and “cross sell” with motor insurance pilot outlets. The rollout of credit policies. In our efforts to support our revenue card terminals to other outlets will be growth initiatives, we are in the final implemented in stages in 2007. PosNiaga’s market share of stages of replacing a new counter international remittance is presently system that is robust and efficient at Improved Customer Service very minimal but has good growth all our post offices. potential. Recognising tremendous The result of a survey conducted by growth in international remittance, With revenue generation activities and an independent research company PosNiaga is enhancing its payment process improvements taking place, showed that 76% of PosNiaga’s system in order to compete with coupled with full support from our customers are generally satisfied with banks and other private operators to agencies and commitment from staff, its counter services, an improvement provide cheaper, faster and secured we believe this would provide a strong of 5% from the previous year. international remittance service for foundation for us to achieve greater customers. success. PosNiaga will use the feedback from this survey to improve on areas that Develop New Revenue Sources Outlook are most important to the customers. PosNiaga also embarked on “Mesra PosNiaga aims to cater to the Moving forward, PosNiaga’s focus Pelanggan” campaign at all post untapped customer segments to is to capitalize on our network reach offices to inculcate excellent service provide financial products and and achieve sustainable net income standards for our counter staff. services, including micro credit and growth through revenue generation other unit trust products. Our role activities, optimizing costs as well as will be to promote and market other broadening the range of products and banks/unit trust companies products service offerings at our post offices. and services at our post offices. PosNiaga is also evaluating the potential of offering other insurance and takaful products that is tailored for our “walk-in” customers. POS MALAYSIA & SERVICES HOLDINGS BERHAD ANNUAL REPORT 2006 50 51

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POSLOGISTIK Range of Services Offered Future Plans

2006 has been a challenging year for PosLogistik manages a fl eet of more The next steps for PosLogistik are to PosLogistik as it continues to mature. than 5 vans, 22 lorries and 4 aircrafts expand on its current network of line During the year, PosLogistik started to serve its internal and external haul and to serve other destinations, providing air transportation services customers in 28 destinations in and increase the effi ciency and service between Peninsula Malaysia and Malaysia. levels through an integrated systems selected destinations in East Malaysia approach. previously done through a third party. Its range of services include inbound and outbound logistics, For 2007 and beyond, PosLogistik’s With this niche capability, PosLogistik custom clearance, import and strategy is to continue to market air is committed to improve its service export documentations, land and air cargo space and distribution services levels and simultaneously increase transportation, distribution and break for the niche industries such as revenue due to the premium air bulk channel as well as warehousing. automotive, cosmetics and electronics, cargo space provided by the air PosLogistik’s hub at Pusat Mel dan with an additional involvement in halal transportation services to Sabah and Kurier, KLIA is a complete one-stop food logistic solutions. Sarawak sectors. center that encompasses all of the services offered. In 2006, PosLogistik delivered more than 7,600 tonnes of postal products Besides serving internal customers, to Sabah and Sarawak while about PosLogistik secured deals to service 1,500 tonnes of cargo were delivered 21 external customers - 14 are to its external customers at various customers of PMB and 7 others are destinations across the South China PosLogistik’s Customer’s Sales Agent Sea. (CSA) for air cargo. POS MALAYSIA & SERVICES HOLDINGS BERHAD ANNUAL REPORT 2006 52 53

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PSH EXPRESS SDN BHD In line with its strategy to focus on corporate customers, asiaXpressTM PSH Express is involved in international has a clientele base which comprises courier business, operating under the ministries and government agencies, brand name of “asiaXpressTM”. It offers law firms, oil and gas companies, a wide range of courier services such engineering and industrial chemical as Priority Xpress, Economy Xpress companies, and colleges. and Diplomatic Xpress to more than 232 international destination countries. In 2006, asiaXpressTM initiated It also offers domestic courier solutions the project to open asiaXpressTM and corporate mailing solutions. Worldwide Service Centres at selected post offices. Currently, asiaXpressTM Customers also enjoy “value-added” Worldwide Service Centres are services which include Customized available at the Kuala Lumpur General Web-Based Systems Solutions, Money Post Office, Subang Jaya Post Office Back Guarantee, Pro-active Tracking, and Kelana Jaya Post Office. These Customized Reporting, One-Point of service centres were opened to Contact and shipment advisory. extend the services of asiaXpressTM to walk-in customers to experience Financial Performance the asiaXpressTM service offerings and increase the number of asiaXpressTM For 2006, asiaXpressTM recorded touch points to its existing customers. revenue of RM2.4 million, an improvement from RM0.3 million in 2005. International shipment contributed 97% of the total revenue.

Profit from operations improved by 803% to RM0.6 million in FY 2006 as compared to the preceding year. POS MALAYSIA & SERVICES HOLDINGS BERHAD ANNUAL REPORT 2006 52 53

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HUMAN RESOURCE Key Human Capital Development Projects The total workforce in 2006 was 15,189 of which executives and non- In line with the Government’s effort to executives made up 2% and 98% tackle unemployment, Pos Malaysia respectively. undertook the Graduate Management Programme (GMP). Employee Relations 106 graduates went through a 5 day The Collective Agreement between evaluation at Institut Latihan Pos in Pos Malaysia and the seven in-house Bangi where they were assessed unions representing the non-executive on their skills, mental and physical staff was completed and approved abilities. 67 successful candidates were by the Ministry of Finance (MOF) in then selected to undergo a 4-month- November 2006. The main area of training programme with the various focus was the payment of a 5% salary SBUs and support departments. adjustment across the board and the adjustment of salary structure for In 2006, 291 training courses were various levels of non-executives staff. conducted at the Institut Latihan Pos, involving a total of 6,618 employees. Terms and conditions of service for The courses cover all areas such as the executive staff were also revised management skills, technical, service and approved by the MOF in 2006. quality, health, safety and computer applications.