Annual Report 2020 Annual Report
Whatever www.pos.com.my It Takes Annual Report 2020
Pos Malaysia Berhad 199101019653 (229990-M) Level 8, Pos Malaysia Headquarters Dayabumi Complex, 50670 Kuala Lumpur Tel: +603 2267 2267 Come Rain Or Shine
Across Challenging Terrain
Against All Odds
In Any Situation We Are There For You
And that’s what really matters. We Deliver. Whatever It Takes. OVERVIEW
About This Report
Pos Malaysia Berhad (Pos Malaysia) OUR REPORTING SUITE
is honoured to present this Annual Report Pos Malaysia’s Annual Report has been produced with the primary as the primary source of information of objective of providing our stakeholders a comprehensive overview and a balanced assessment of our financial and non-financial the Group’s financial and non-financial performance. performance for Financial Year ended Reading the report, our stakeholders are informed of our strategy, businesses and performance, our approach to governance and 31 December 2020 (FY2020). The report risks as well as our business outlook. The report demonstrates our accountability and strengthens the trust of our stakeholders. will also include the outlook and plans across our business for 2021.
SCOPE AND BOUNDARY OF REPORTING COVER RATIONALE The report covers the primary activities of the Group and our subsidiaries. It presents information relevant for long-term investments as well as provide insights on how we create value through our business model.
The Financial Year ended 31 December 2020 will be referred to as “FY2020” throughout this report.
MAJOR REGULATIONS COMPLIED
• Main Market Listing Requirements of Bursa Malaysia Securities Berhad • Companies Act 2016 • Malaysian Financial Reporting Standards At Pos Malaysia, we do more than just deliver. We build trust. • International Financial Reporting Standards We bridge relationships. We are at the heart of our communities, connecting them to each other and the world. In a year of unprecedented challenges brought on by the global pandemic, we remained firmly committed to serving the needs of all Malaysians and businesses. Despite the lockdown, we leveraged on our vast Further information can also be found on our website: network and worked around the clock to ensure timely delivery of essential services were met at all times.
Our workforce comprising 22,000 employees played a vital role in delivering end-to-end mail and parcel services, financial services and supply chain solutions. We were at the frontlines, delivering medicine, essential supplies and important mails and parcels that every family counts on. The increased demand in e-commerce saw a growth in our courier business. We introduced the Pos Rider initiative which led to job opportunities for those who lost their source of income during the Movement Control Order (MCO).
As we go on our journey of modernisation and transformation, focusing on our customers and improving our services remain to https://www.pos.com.my be our top priorities. We will keep delivering essential services that support and connect businesses and consumers. And we will always keep sight of what matters most to us-YOU. We will do Whatever It Takes.
012 POS MALAYSIA BERHAD ANNUAL REPORT 2020
REPORT NAVIGATION
Our Capitals
Financial Capital
Manufactured Capital
Intellectual Capital
Human Capital
Social & Relationship Capital
Natural Capital
Material Matters
Digitalisation
Customer Experience
Operational Efficiency
ASSURANCE STATEMENT Government and Regulatory Policies
The credibility of this report is supported by strong governance practices. COVID-19 Assurance for this report is provided by our Board of Directors (Board), Socio-Economic Empowerment supported by external verification by KPMG PLT, our auditors for financial information and providers of limited assurance on selected non-financial Employee Development & Welfare information. Emissions Management
Stakeholders Employees MATERIALITY AND MATERIAL MATTERS Customers
We apply the principle of materiality in assessing which information is to be Government & Regulators included in our Annual Report. For a balanced and coherent report, we Shareholders & Investors focus particularly on issues, opportunities and challenges that materially Suppliers, Business Partners & Industry Groups impact Pos Malaysia and its ability to be a sustainable business that consistently delivers value to our key stakeholders. Local Communities
Strategy
AC Courier Automation & Capacity
FORWARD LOOKING STATEMENTS OE Optimise Delivery & Entrepreneurship DT Diversify Touchpoints This report contains certain forward-looking statements relating to future performance. These statements and forecasts are based on current assumptions D Digitalisation and circumstances, which could change, hence necessarily involve uncertainty. ER Engage in Regulatory Reforms Various factors could cause actual results to differ materially from those SS Strengthen Logistics & Sustain Aviation Businesses expressed or implied by these forward-looking statements. United Nation’s Sustainable Development Goals (SDGs)
Futher details on Pos Malaysia Berhad can be found at https://www.pos.com.my
The coloured goals represent Pos Malaysia’s priority SDGs. 013 OVERVIEW
Inside This Report
OVERVIEW MANAGEMENT DISCUSSION AND ANALYSIS 012 About This Report 018 Who We Are STRATEGIC REVIEW 019 Our Businesses 064 Operating Enviroment 020 Our Vision | Our Mission | Our Core Values 064 Key Market Trends 022 Our Presence 068 Material Matters 024 Key Highlights 072 Risk Overview 028 How We Are Structured 072 Key Risks and Mitigation 031 What We Do: Our Core Business Segments & Highlights 075 Our Strategic Blueprint 032 Postal Segment 076 Strategic Performance Review 034 Logistics Segment 035 Aviation Segment PERFORMANCE REVIEW 036 Other Segments 078 Group Financial Review 038 Our Logistic Assets 080 5-Year Group Financial Summary 040 Integrated Product Value Chain 081 5-Year Group Financial Highlights 042 What We Need To Do: 082 Simplified Statement of Financial Position 042 Our Growth Strategies 083 Segmental Analysis 043 Our Competitive Strengths 084 Statement of Value Added and Distribution 044 Our 2020 Digital Accomplishments 085 Financial Calendar 045 What We Hope To Achieve 086 Investor Relations Report 087 Share Price Movement
BUSINESS REVIEW KEY MESSAGES 090 Postal Segment 092 Mail 048 Chairman’s Statement 093 Courier 051 Group Chief Executive Officer’s Statement 095 Retail 096 International 098 Logistics Segment VALUE CREATION 102 Aviation Segment 108 Other Segments 054 Our Business Model 110 Pos ArRahnu 056 Our Key Capitals 111 Datapos 060 Stakeholder Engagement 113 Pos Digicert
ENSURING SUSTAINABLE VALUE CREATION
118 Sustainability Statement 122 Our Approach to Sustainability 123 Sustainability Framework 124 Our Response to COVID-19 126 Sustainability Governance 127 Sustainability Related Guidelines 130 Sustainability Scorecard 132 Economic Impact 138 Environmental Stewardship 140 Social Equity
014 POS MALAYSIA BERHAD ANNUAL REPORT 2020
OUR LEADERSHIP OTHER INFORMATION
144 Corporate Information 302 Analysis of Shareholdings 146 Board at A Glance 305 List of Top 10 Properties 148 Profile of Board of Directors 307 Glossary 157 Profile of Senior Management 309 Notice of 29th Annual General Meeting 160 Organisation Structure 314 Statement Accompanying the Notice of Annual General Meeting
• Proxy Form
GOVERNANCE FRAMEWORK
162 Corporate Governance Overview Statement 176 Audit Committee Report 180 Statement on Risk Management and Internal Control 186 Corporate Integrity and Ethical Business Conduct 187 Additional Compliance Information 195 Directors’ Responsibility Statement
FINANCIAL STATEMENTS
197 Directors’ Report 200 Statements of Comprehensive Income 201 Statements of Financial Position 202 Consolidated Statement of Changes in Equity 203 Statement of Changes in Equity 204 Statements of Cash Flows 208 Notes to the Financial Statements 296 Statement by Directors 296 Statutory Declaration 297 Independent Auditors’ Report
015 Making life easier for you We are doing all we can to make things easier for our customers. Through Pay via Pos Online, you can pay your utilities, phone and internet bills, quit rent and a host of other bills conveniently and securely from the comfort of your home.
OVERVIEW
Who We Are
MARKET CAPITALISATION RM0.95 Billion*
REVENUE RM2.33 Billion
* as of 31 December 2020
Pos Malaysia Berhad (Pos Malaysia) has a track record of over 200 years. Today, Pos Malaysia is a dynamic postal, logistics, aviation, financial services and supply chain solutions provider in Malaysia, with the largest delivery and touchpoint network in the country.
Through its postal segment, Pos Malaysia currently delivers to over nine million addresses nationwide, with a network of more than 3,500 touchpoints and over 350 self-service terminals. Pos Malaysia connects the nation with over 200 postal operators globally and extended its capability to support South East Asia’s rapidly expanding cross-border e-commerce businesses.
Pos Malaysia was listed on Bursa Malaysia in September 2001, and has a Market Capitalisation of RM0.95 Billion as of 31 December 2020.
018 POS MALAYSIA BERHAD ANNUAL REPORT 2020
Our Businesses
• Domestic mail and parcel delivery service REVENUE • International mailing and cross-border shipping 75% RM1,737 Group • Bill payments, financial services, postal services Revenue POSTAL and government services in post offices Million
REVENUE • Multi-modal logistics service provider, offering 13% total logistics and inventory solutions RM314 Group Revenue LOGISTICS Million
REVENUE • A licensed independent ground handler that offers 7% a comprehensive range of services for commercial RM163 Group passenger and cargo airlines Revenue AVIATION Million
• Pos ArRahnu – One-stop gold centre and Islamic microfinancing services • Pos Digicert – Licensed digital certificate authority, REVENUE offering creation of digital identities using digital 5% certificates RM118 Group OTHER • Datapos – A dynamic mailing solutions unit Revenue SEGMENTS Million offering a range of services including data processing, enveloping, bulk mail services, delivery and a suite of other services
019 OVERVIEW
Our Vision Connecting Malaysia and Beyond – For Today and Tomorrow
We connect the people and businesses of Malaysia, at work and at home, both online and offline.
We are the channel that connects the Malaysian society, the network that glues it together yet open up new opportunities for the future.
Malaysia is, and always will be, our home and the centre of our business.
However, we go beyond our shores by connecting Malaysians with the outside world and the world with Malaysians through our vast network and touchpoints.
Our horizons are global, and so are the opportunities, as we reach for an even more exciting future.
We began life as a mail delivery service – connecting people and enterprises, but have diversified our offerings to cater to courier, logistics, aviation, and financial solutions.
We continue to evolve alongside our customers and technology, innovating to stay relevant for the future, delivering convenient new products and services with a strong emphasis on the booming e-commerce market.
020 POS MALAYSIA BERHAD ANNUAL REPORT 2020
Our Mission Build and Deliver the Network of Choice
Our Core Values
EMPATHY We need to understand our customers and do more than just hear them. Our business delivers what they need, and when they need it.
INTEGRITY In everything that we do, we act in an open and honest manner, beyond reproach and with utmost sincerity.
ACCOUNTABILITY We hold ourselves accountable, and expect to be held accountable individually and as a team, at all levels of the organisation, for our actions and decisions.
INNOVATION We constantly search for new and better ways to meet our customers’ requirements, willing to question and unafraid to try.
021 OVERVIEW
Our Presence
PERLIS
AN AR
LAN A I OTA BHARU Delivers to
ALOR SETAR more than EDAH 9 million OTA INABALU
EOR E TO N addresses UALA TEREN ANU nationwide LABUAN SABAH I TORIA PENAN ELANTAN UALA AN SAR TEREN ANU
PERA
PAHAN UANTAN
SELAN OR PE AN UALA LUMPUR
SHAH ALAM
NE ERI SARA A SEMBILAN PUTRA AYA
MALA A OHOR
U HIN
OHOR BAHRU
PENINSULAR MALAYSIA
571 107 45 15 Post Pos Pos Laju Pos Laju Offices Mini Branches Service Centres
35 71 Pos Laju Pos 161 100 EziBox EziDrop Kiosks ArRahnu
94 19 11 2 Pos Automated Ezi-Drive Mail Processing Integrated Processing Machines Thru Centres Centres
022 POS MALAYSIA BERHAD ANNUAL REPORT 2020
PERLIS
AN AR
LAN A I OTA BHARU
ALOR SETAR EDAH OTA INABALU
EOR E TO N
UALA TEREN ANU LABUAN SABAH
I TORIA PENAN ELANTAN UALA AN SAR TEREN ANU
PERA
PAHAN UANTAN
SELAN OR PE AN UALA LUMPUR
SHAH ALAM
NE ERI SARA A SEMBILAN PUTRA AYA More than 13,600 frontliners MALA A OHOR nationwide
U HIN Over 8,000 postmen
OHOR BAHRU nationwide including Posmen Komuniti in SABAH/SARAWAK Sabah and Sarawak 674 Post Offices 103 29 4 Post Pos Mini Pos Laju Offices outlets Branches 136 Pos Mini outlets
1 1 9 120 Pos Laju touchpoints Pos Laju Pos Laju Pos Service Centre Kiosk ArRahnu 95,049 P.O. Boxes
7 568 million parcels and 4 Mail Processing EziBox mail annually Centres
023 OVERVIEW
Key Highlights
FINANCIAL HIGHLIGHTS
REVENUE RM2.3 Billion REVENUE BY SEGMENT RM107,845 REVENUE PER EMPLOYEE REVENUE RM1,737 Million
POSTAL RM1.33 Per Share NET TANGIBLE ASSET REVENUE RM314 Million LOGISTICS RM1.1 Billion TOTAL SHAREHOLDERS EQUITY
REVENUE RM163 Million AVIATION RM3.2 Billion TOTAL ASSETS
REVENUE RM118 0.85* Times Million GEARING RATIO OTHER SEGMENTS * (Total borrowings + Total lease liabilities)/Total equity
024 POS MALAYSIA BERHAD ANNUAL REPORT 2020
NON-FINANCIAL HIGHLIGHTS
POS LOGISTICS 2.4 Million TONNAGE OF COAL SHIPMENTS Male Female 79% 21% POS AVIATION 0.7 Million IN-FLIGHT CATERING MEALS SERVED 22,000 3,331 EMPLOYEES POS ARRAHNU STREET 80 LETTER BRANCHES BOX 457 Million MAIL DELIVERED
111 Million COURIER ITEMS INSURANCE AGENTS FOR: 14 2 INSURANCE LIFE INSURANCE Open 7 COMPANIES COMPANIES Days a Week AT 77 POST OFFICES GENERATED RM522 Million 708 OF INSURANCE PREMIUM COMMUNITY POSTMEN DURING THE YEAR AND AGENTS IN SABAH AND SARAWAK
025 OVERVIEW
Key Highlights
SUSTAINABILITY HIGHLIGHTS
1,792 VILLAGES COMPRISING 159,447 ADDRESSES-FOR-ALL INITIATIVES
AVERAGE TRAINING HOURS Invested RM31 Million PER EMPLOYEE FOR GROUP for Posmen Komuniti and Wakil Posmen Komuniti reaching 4,286 villages in FP2019 FY2020 both Sabah and Sarawak 10.9 6.9 Hours Hours
TOTAL LOST DAY DUE TO ACCIDENT RATIO PER 1,000 MAJOR ACCIDENTS WORKERS FOR GROUP
FP2019 FY2020 FP2019 FY2020 849 1,061 14.1 14.7
026 POS MALAYSIA BERHAD ANNUAL REPORT 2020
AWARDS & ACHIEVEMENTS
2020 Frost & Sullivan, Malaysia Excellence Awards
Pos Laju • 2020 Malaysia E-Commerce Logistics Service Provider of the Year • 2020 Malaysia Express Logistics Service Provider of the Year
027 OVERVIEW
How We Are Structured
POSTAL GROUP
Datapos (M) Sdn Bhd 100%
Pos Digicert Sdn Bhd 100%
Effivation Sdn Bhd 100%
Pos Ar-Rahnu Sdn Bhd 100%
Poslaju (M) Sdn Bhd 100%
Pos Malaysia & Services Holdings Berhad 100%
PMB Properties Sdn Bhd 100%
Pejabat Pos Sdn Bhd 100% Prestige Future Sdn Bhd 100% (Formerly known as PSH Capital Partners Sdn Bhd)
Posmen Sdn Bhd 100% PSH Express Sdn Bhd 100% (Formerly known as PSH Venture Capital Sdn Bhd)
PSH Properties Sdn Bhd 100% Real Rivera Sdn Bhd 100%
ASSOCIATES
PosPay Exchange Sdn Bhd 50%
CEN Sdn Bhd 42.5% CEN Worldwide Sdn Bhd 100%
Elpos Print Sdn Bhd 40% (In the process of winding up)
028 POS MALAYSIA BERHAD ANNUAL REPORT 2020
AVIATION & LOGISTICS GROUP
Pos Aviation Sdn Bhd 100%
Pos Aviation Engineering Services Sdn Bhd 100%
Pos Logistics Berhad 100%
Aman Freight Services Sdn Bhd Aman Freight (Malaysia) Sdn Bhd 100% 100% (In the process of winding up)
Diperdana Kontena Sdn Bhd 100%
KP Asia Auto Logistics Sdn Bhd 100%
KP Distribution Services Sdn Bhd 100%
Malaysian Shipping Agencies Sdn Bhd 100% Konsortium Logistik (Sabah) Sdn Bhd 100%
PNSL Berhad 100% Konsortium Logistik (Sarawak) Sdn Bhd 100%
Westport Distripark (M) Sdn Bhd 100% PNSL Risk Management Sdn Bhd 100%
Kaypi Southern Terminal Sdn Bhd 100% Parcel Tankers Malaysia Sdn Bhd 100% (In the process of winding up)
Cougar Logistics (Malaysia) Sdn Bhd 100% (In the process of winding up)
Pengangkutan Aspacs Sdn Bhd 100% (In the process of winding up)
Diperdana Utara Sdn Bhd 100% (In the process of winding up)
North Terminal Sdn Bhd 100% (In the process of winding up)
K.P.B. Sadao I.C.D. Co., Ltd. 49% ASSOCIATES
World Cargo Airline Sdn Bhd 49% (Formerly known as Pos Asia Cargo Express Sdn Bhd)
Gading Sari Aviation Services Ltd. 100%
029 OVERVIEW
030 POS MALAYSIA BERHAD ANNUAL REPORT 2020
WhatOur Core Business We Segments Do: & Highlights
Pos Malaysia’s core business segments operate as independent entities, but report directly to the Group with regards to the status of their operations.
With a track record of over 200 years, Pos Malaysia is embarking on new terrains, adapting to the changing landscape of digitalisation, technology and innovation in an increasingly thriving e-commerce market.
031 OVERVIEW What We Do: Our Core Business Segments & Highlights
A
Postal Segment SEGMENTAL REVENUE PRODUCTS/SERVICES RM1,737 1. Mail Domestic mail delivery service Million
2. Courier 75% Contribution to Domestic parcel delivery service Group Revenue 3. Retail Postal, financial, bill payment and government services in our touchpoints
4. International International mailing and cross-border shipping
MAIL COURIER Our mail business provides domestic mail Our courier business, under the Pos Laju delivery services throughout Malaysia. As the brand, offers express parcel delivery sole licensee for universal postal services, service across the nation. We serve we deliver standard mail, registered mail, individual customers, SMEs and large RETAIL Advertising Mail (AdMail) and others to more businesses through our post offices, Pusat Our retail business offers postal-related than nine million addresses nationwide. Pos Laju, SendParcel online shipping portal, financial services such as money and dedicated account managers. Our • 457 Million total mail volume as of FY2020 transfer and non-postal services such extensive courier network which includes as bill payment, motor vehicle insurance, two fully-automated Integrated Parcel driving license renewal, road tax Centres (IPCs) helps us meet customers’ renewals, life insurance and financial expectation for on-time delivery. services. The business manages Pos • 111 Million in courier volume as of Malaysia’s touchpoints, namely our post FY2020 offices, agents and automated machines such as parcel lockers as well as Pos Automated Machines. These touchpoints are also leveraged by our mail and courier businesses as points of sale.
• 44.3 Million retail transactions as of FY2020
032 POS MALAYSIA BERHAD ANNUAL REPORT 2020 Our Story
“During the pandemic, there was extra demand for blood supplies (for patients requiring transfusions) and deliveries of COVID-19 samples from hospitals and other testing centres to labs. There is a special team at Pos Malaysia that manages these deliveries, which are considered urgent because many lives depend on them.
I belong to this team, and what we do is transfer blood from Pos Laju INTERNATIONAL Brickfields to the KLIA IPC for onward shipment to East Malaysia. The blood is sent to Pos Laju by the National Blood Centre (PDN). The challenge is to Pos Malaysia provides international mail and parcel be efficientServing and ready at all times so that the deliveries are made within 24 delivery as well as cross-border e-commerce delivery hours. The blood supplies are packaged in special sealed boxes and it is solutions via our international gateway in KLIA and compulsory for us to wear the PPE (face mask and gloves) throughout the through our global postal network. Our clients include pick-upFrontliners and delivery process, to avoid any contamination. and regional e-commerce players that deliver into Malaysia and to various destinations across the globe. Pos Malaysia ApartPatients from blood supplies, we also during deliver COVID-19 blood samples to is also an active member of the Asian Pacific Postal laboratories around Klang Valley since the early phase of the pandemic. In Union, Asia Pacific Post Cooperative and ASEAN Post. a day,the we deliver approximatelyPandemic 70 to 100 boxes of samples. • 1,825 tonnes of outbound shipments We recognise the responsibilities we hold for the job, and how critical it is to observe the SOPs required in handling those samples and blood supplies so thatThroughout we neither contaminate the pandemic, the blood nordemand get infected for by deliveries any sample that is positive. Not everyone would want to handle the COVID-19 samples, but this isof part essential of the country’s medical efforts items in fighting and thelife-saving pandemic andblood we feel honouredsupplies to play havea role increasedin this battle. tremendously.At times like this, weA canspecial truly take pride in what we do. We’re not just postmen, but important soldiers in the nation’steam fight hasagainst been COVID-19.” established within Pos Malaysia to ensure timely and successful deliveries of Mohd Kamarulhafaris Kamarudin Deliverythese of Blood essentials. Supplies & COVID-19 Samples
033 Our Story
“I deliver PPEs to frontliners in hospitals, police stations and government clinics which include face masks, face shields, gloves and clinical woven aprons donated by various companies, non-profit organisations (NGOs) and charitable organisations. In a day, I am able to deliver to 10 different destinations nationwide including Sabah and Sarawak. As frontliners ourselves, I understand the risks and challenges faced by other frontliners in the field and salute them for their commitment and sacrifices. I am honoured and proud to do my part in keeping them safe and protected.”
“During the pandemic, there was extra demand for blood supplies (for patients Mohd Fariz bin Kamaruzaman requiring transfusions) and deliveries of COVID-19 samples from hospitals and Personal Protective Equipment (PPE) Delivery other testing centres to labs. There is a special team at Pos Malaysia that manages these deliveries, which are considered urgent because many lives depend on them. “When the COVID-19 pandemic started, many patients opted for the UMP service I belong to this team, and what we do is transfer blood from Pos Laju as it offers a safe option to obtain Brickfields to the KLIA IPC for onward shipment to East Malaysia. The blood medicine. I am assigned to pick up is sent to Pos Laju by the National Blood Centre (PDN). The challenge is to prescribed medication from hospitals and be efficient and ready at all times so that the deliveries are made within 24 deliver them to patients around Klang hours. The blood supplies are packaged in special sealed boxes and it is Valley. I also handle deliveries for patients compulsory for us to wear the PPE (face mask and gloves) throughout the in East Malaysia, where I pick up these pick-up and delivery process, to avoid any contamination. consignments from our Pos Laju centre in Brickfields and deliver them to KLIA, Apart from blood supplies, we also deliver COVID-19 blood samples to where they are loaded onto planes and laboratories around Klang Valley since the early phase of the pandemic. In flown to various destinations. a day, we deliver approximately 70 to 100 boxes of samples. I have received comments from customers We recognise the responsibilities we hold for the job, and how critical it is who praised the UMP service, as not to observe the SOPs required in handling those samples and blood supplies many people can make the trip to hospitals so that we neither contaminate the blood nor get infected by any sample that easily, especially now with the pandemic. is positive. Not everyone would want to handle the COVID-19 samples, but While carrying out UMP deliveries, I get this is part of the country’s efforts in fighting the pandemic and we feel to meet many patients and learn about honoured to play a role in this battle. At times like this, we can truly take their pain and sufferings. I am proud to pride in what we do. We’re not just postmen, but important soldiers in the be at their service and I pray for their nation’s fight against COVID-19.” recovery and health.”
Mohd Kamarulhafaris Kamarudin Mohd Jabarul Hisham Johar Delivery of Blood Supplies & COVID-19 Samples Ubat Melalui Pos (UMP) OVERVIEW What We Do: Our Core Business Segments & Highlights
B Logistics Segment
Pos Logistics Berhad (Pos Logistics) provides end-to- end logistics services for the business-to-business (B2B) segment. Operating mainly in Peninsular Malaysia, Pos Logistics offers multiple logistics services which includes freight forwarding, customs clearance, haulage, warehousing, distribution and more.
SEGMENTAL REVENUE RM314 Million
13% CContributionontribution ttoo GrouGroupp Revenue Stock Keeping Units Handled: FY2020: 1.31 Million FP2019: 1.09 Million FY2019: 0.80 Million
Tonnage of Coal Shipments: FY2020: 2.47 Million Tonnes FP2019: 1.65 Million Tonnes FY2019: 2.44 Million Tonnes
034 POS MALAYSIA BERHAD ANNUAL REPORT 2020
C
SEGMENTAL REVENUE RM163 Million
7% Contribution to Aviation Segment Group Revenue
Pos Aviation Sdn Bhd (Pos Aviation) offers ground handling services tailored to customers’ needs, delivered by knowledgeable customer-centric teams. It is the only independent licensed ground handling service provider for commercial airlines in Malaysia, operating out of eight airports in the country. The company also provides air cargo handling, in-flight catering, e-commerce warehousing as well as aircraft maintenance and engineering services. *This picture was taken prior to COVID-19 and MCO
Total Air Cargo Handled: FY2020: 162,961 Tonnes FP2019: 174,912 Tonnes FY2019: 343,883 Tonnes
Total Number of In-flight Meals Catered: FY2020: 0.43 Million FP2019: 1.66 Million FY2019: 2.49 Million
035 OVERVIEW What We Do: Our Core Business Segments & Highlights
D
Other Segments SEGMENTAL REVENUE Pos ArRahnu Pos ArRahnu is a one-stop gold centre that provides RM118 Islamic micro-financing services, buying and selling of Million physical gold, retailing of gold jewelry and safe-keeping of gold. The company operates 80 outlets located within 5% Contribution to selected post offices nationwide. Group Revenue
Total Weight of Total Weight of Investment Buy-Back Used Gold: Precious Metals Sold: FY2020: 106.3 kg FY2020: 28.5 kg FP2019: 157.9 kg FP2019: 23.8 kg FY2019: 158.9 kg FY2019: 31.9 kg
Datapos Datapos is Pos Malaysia’s mailing solutions unit, which provides data processing, bulk printing, envelope inserting, ePresentment, record repository, mailing as well as hybrid mail services.
Total Printed Pages: Total Mail Lodgment: FY2020: 104.2 Million FY2020: 63.2 Million FP2019: 172.8 Million FP2019: 108.4 Million FY2019: 170.1 Million FY2019: 99.4 Million
036 POS MALAYSIA BERHAD ANNUAL REPORT 2020
Pos Digicert Pos Digicert, Malaysia’s first Certification Authority (CA), is responsible for the issuance and management of legally binding digital certificates as well as other security solutions. Certified by WebTrust Total Active Subscribers: for Certification Authorities, ISO 9001:2015 FY2020: 5.6 Million Quality Management Systems (QMS), FP2019: 5.1 Million ISO 27001:2013 Information Security FY2019: 4.8 Million Management Systems (ISMS) and Adobe Approved Trust List (AATL) standards, it is currently the only organisation in Malaysia to provide recognised Date Time Stamping service.
037 OVERVIEW
Our Logistic Assets
PRIME MOVERS LORRIES
QUANTITY: 336 QUANTITY: 320
VANS
QUANTITY: 2,261
038 POS MALAYSIA BERHAD ANNUAL REPORT 2020
FREIGHTER MOTORCYCLES AIRCRAFT* QUANTITY: 6,212 QUANTITY: 3
BULK CARRIER VESSELS QUANTITY: 2
* leased via an associate of the Group
Pictures Are For Illustration Purposes Only 039 OVERVIEW
Integrated Product Value Chain
POSTAL MAIL & RETAIL
SYSTEM COURIER CLOUD COMPUTING &
CUSTOMERS BIG DATA INTEGRATION WALK-IN CUSTOMER LOGISTICS
INTERNATIONAL
ONLINE CUSTOMER AVIATION
POS ARRAHNU OUR SERVICES
OTHERS SERVICES DATAPOS INVESTMENT & DIGITAL & INVESTMENT
CUSTOMER
TECHNOLOGY DRIVEN SOLUTION
POS DIGICERT
040 POS MALAYSIA BERHAD ANNUAL REPORT 2020
POSTAL MAIL & RETAIL
SYSTEM COURIER CLOUD COMPUTING &
CUSTOMERS BIG DATA INTEGRATION WALK-IN CUSTOMER LOGISTICS
INTERNATIONAL
ONLINE CUSTOMER AVIATION
POS ARRAHNU OUR SERVICES
OTHERS SERVICES DATAPOS INVESTMENT & DIGITAL & INVESTMENT
CUSTOMER
TECHNOLOGY DRIVEN SOLUTION
POS DIGICERT
Pictures Are For Illustration Purposes Only 041 OVERVIEW
What We Need To Do:
Our Growth Strategies
SUMMARY OF OUR STRATEGY
Pos Malaysia is directing its efforts towards becoming a customer centric organisation that provides a positive customer experience through the offering of excellent products and services.
Optimise Delivery & Entrepreneurship Diversify Touchpoints
Key Growth Courier Automation & Strategies Capacity
Digitalisation
Strengthen Logistics & Sustain Aviation Businesses Engage in Regulatory Reforms
CUSTOMER-CENTRIC ORGANISATION Customer experience excellence as top priority and main objective in our business operations
2020-2023 Strategic Goals & Objectives
2020 2021-2022 2023 ONWARDS Modernisation and Margin Improvement Sustainable Growth Transformation
• Sustainable mail business • Become a “parcel-first” postal • #1 courier of choice for • Establish strong foothold in operator e-commerce businesses e-commerce • Leader in service quality • Fully automated primary parcel • Efficient parcel processing and • Leaner operations and reduced sorting centres distribution network reliance on fixed costs • Full recovery of Aviation segment • Ease day-to-day task for • Operate in a sustainable courier • Sustainably profitable Logistics employees and customers industry segment
042 POS MALAYSIA BERHAD ANNUAL REPORT 2020
Our Competitive Strengths
01 Pos Malaysia is the largest postal and courier operator in the country with unparalleled nationwide reach, sizeable logistic assets and end-to- end logistics capability.
02 03 Our 13,600 We continuously invest “frontliners” serve in digitalisation, Malaysians across enabling us to constantly the country and improve the level of have forged strong service we provide to partnerships and trust our customers. with local communities.
Pictures Are For Illustration Purposes Only
043 OVERVIEW
What We Need To Do:
Our 2020 Digital Accomplishments
Easing deliveries for online SMEs with SendParcel
Our online shipping platform SendParcel is now integrated with three major e-commerce platforms and offers domestic and international courier services to over 180,000 registered customers.
Customer service at your fingertips with AskPos
We introduced a new chat-based customer servicing channel AskPos to keep up with evolving customer needs. Our customers can now reach us through web or mobile app for any enquiries that will be attended by our agents or resolved by a chatbot.
Convenient deliveries with e-consignment notes
Sending parcels have been made easier with e-consignment notes, which frees customers from the hassle of manually filling up paper forms. Customers can print their e-connotes in Post Offices and Pos Laju Centres.
Pay bills and more on posonline.com.my and Pos Malaysia mobile app
More of our previously post office-exclusive services are now online. Posonline.com.my and Pos Malaysia mobile app today feature bill payment and insurance renewal services, providing even more convenience to our customers.
044 POS MALAYSIA BERHAD ANNUAL REPORT 2020
What We Hope To Achieve
Aspiring to create solutions for today’s business challenges requires Pos Malaysia to invest in building our core capabilities and transform our business that enables us to design solutions that involve:
Creating a robust delivery network Improve efficiency of existing infrastructure and invest in automation to scale up capacity and enable faster deliveries.
Provide a seamless multi-channel customer experience Provide all our available services through any channel of choice, be it physical or digital.
Improve back office processes and workflows to improve business efficiency Redesign processes and leverage on technology to simplify and automate day-to-day tasks.
045 Extending a Helping Hand to You
The Pos Rider programme was introduced to enhance our last-mile delivery capabilities as more consumers and businesses turn to e-commerce, leading to bigger demand for courier services. We created work opportunities through this programme during the Movement Control Order (MCO), by offering 1,400 new jobs to Malaysians impacted by the pandemic.
KEY MESSAGES Chairman’s Statement Moving Ahead, Whatever It Takes
Dear Stakeholders, As I write this message, the world is still in the grips of the COVID-19 pandemic, yet with glimmers of hope that we will be able to resume some semblance of our lives pre-COVID-19 very soon. This is premised on Malaysia’s National Vaccination Programme and that of many other nations, the first step towards creating herd immunity which will open up trade, tourism and a chance to resume everyday activity. The promise of a return to norm, albeit a new norm, is positive news for everyone, including the postal industry which has been severely tested in these trying times.
Like other businesses globally, our efforts in 2020 to ensure Our Three-year Transformation plan in modernisation and improved business performance for the year was dampened by transformation outlined robust strategies to navigate through the the pandemic. It has also been a setback to Pos Malaysia Berhad increasingly complex and changing market. By any measure, 2020 (Pos Malaysia) Three-year Transformation plan, with key initiatives was a challenging year, but the plans that were set out prior to delayed. the pandemic has allowed us to remain competitive and credible. We remained vigilant through the year, continuously improving our While the need for our services has been even more pronounced processes, products and services to drive operational and cultural than ever – in order to ensure essential items reach their intended changes that enabled efficiency, productivity and customer destinations – the Group has been constrained by restricted border responsiveness, while ensuring that our employees’ well-being were access, suspension of commercial flights and closure of airports protected. as well as seaports. These have effectively blocked our international postal lanes and supply chains, disrupting the ability to carry out With the significant growth in e-commerce and rapid change in our functions. At the same time, the exponential increase in the postal landscape, digitalisation is a core component and an e-commerce resulting from movement restriction orders has stretched on-going focus of our transformation journey for a more customer our capacity to manage parcel delivery. centric organisation. Thus, we accelerated the digitalisation of our retail platform, meeting greatly enhanced demand for online Pos Malaysia has been true to the values and principles it has transactions and engagement. Among others, we introduced a held dear from the start. We have done Whatever It Takes to refreshed website and mobile application that allows for cashless continue to serve our key stakeholders, namely our customers, payments, automated our workflow and enabled better track and employees and shareholders, creating value for them amidst the trace capabilities. adversity of a crisis in the magnitude that is COVID-19.
048 POS MALAYSIA BERHAD ANNUAL REPORT 2020
ENSURING THE SAFETY OF OUR EMPLOYEES DEVELOPING & CARING FOR OUR PEOPLE
While striving to do our best to meet our service commitment, we Pos Malaysia employees have truly shone during the year, going have placed the utmost priority on ensuring the safety and well- beyond the call of duty to work longer hours, sorting and even being of our people as well as customers. Soon after Malaysia delivering mail and parcels. In addition to shouldering the additional declared the first movement control order (MCO) in March 2020, pressures of performing their jobs during the pandemic, some were Pos Malaysia formed a COVID-19 Special Task Force to monitor also impacted by the floods. As a token of appreciation for their issues related to the pandemic and updated Group employees on dedication, and to help them overcome their losses, we presented safety guidelines as well as procedures. Based on the task force’s each Pos Malaysia’s frontliner and flood victims with a reasonable recommendation, a Work-From-Home (WFH) policy was established monetary reward. for all our support departments and units, enabling a safer working environment for this group of employees. Our people are without doubt our most valuable assets; they determine our current as well as future performance. To help them Our frontliners were provided personal hygiene kits such as face realise their true potential, and ensure they have the competencies masks, face shields and hand sanitisers in ensuring customer-facing to drive our corporate strategies, we provide continuous training employees are duly protected. Regular cleaning and sanitisation and development programmes aligned with our goals. In recent of our workplaces and business premises were undertaken – years, our focus has been to ensure our employees have the skills especially at branches or offices where positive cases were reported required to leverage digital technologies being introduced in the – to mitigate the risk and spread of infection. Going a step further, workplace to be more agile and address issues quickly. we have been promoting our pickup service so that customers need not make the trip to our outlets, and initiated contactless delivery. In addition to managing our own SUPPORTING THE NATIONAL WAR AGAINST THE PANDEMIC operations, Pos Malaysia took on In addition to managing our own operations, Pos Malaysia took extra responsibilities during the year on extra responsibilities during the year to support national efforts to contain the virus and mitigate its impact. We were happy to to support national efforts to contain assist local agencies and authorities in moving essential and relief items nationwide. We stepped up our Ubat Melalui Pos service as the virus and mitigate its impact. well as the delivery of blood samples, extending the latter to include delivery of COVID-19 samples. As part of our national service, during MCO 1.0, we also delivered personal protection equipment (PPE), face masks and sanitisers to Sabah, Sarawak and Labuan free of charge.
Leveraging our reach, we took on the role of advocates, disseminating safety and health messages on mail envelopes provided to our customers.
049 KEY MESSAGES
Chairman’s Statement
In Q2, FY20, we made a leap towards profitability and by Q3, FY20, we had achieved an operating profit. If not for the closure of our IPCs due to COVID-19 prevention measures in the last quarter, we would have managed to cushion our losses in FY2020.
CREATING SHAREHOLDER VALUE ACKNOWLEDGEMENTS
The sustainable growth of Pos Malaysia is important for us to At this point, I would like to acknowledge all the stakeholders who continue to create value for our stakeholders, key among whom have collectively shaped what Pos Malaysia is today. are our shareholders. In this regard, I’m pleased to share that in 2020, we proved the effectiveness of our current transformation First and foremost, a special thank you to Datuk Yasmin binti programme in strengthening our financial performance. Mahmood, and Dato’ Ibrahim Mahaludin bin Puteh, both of whom, have since left the Board. Their invaluable contribution and guidance In Q2, FY20, we made a leap towards profitability and by Q3, with the Group have unlocked value and we are grateful. Additionally, FY20, we had achieved an operating profit. If not for the closure my warmest welcome to Dato’ Dr. Mohd Ali bin Mohamad Nor, of our IPCs due to COVID-19 prevention measures in the last Dato’ Jezilee bin Mohamad Ramli, and Dato’ Mohamed Sharil bin quarter, we would have managed to cushion our losses in FY2020. Mohamed Tarmizi our new Board members, to the Pos Malaysia family. Despite registering another year of financial losses, we will continue to carry out measures toward effective and efficient capital I would also like to acknowledge the Government’s contribution to management, engage the Government and regulators to reform a healthy postal and logistics ecosystem. Special thanks to the the industry, while following through our transformation plan to Malaysian Communications and Multimedia Commission (MCMC) better serve the people and help us turn around our financial and the Ministry for the postal tariff rationalisation in February performance. As an established service provider, with a strong 2020, which has since then better support our mail segment during track record, we will do Whatever It Takes to ensure business the year. sustainability to better serve the people. I would also like to note my appreciation for the constant support Further enhancing our shareholder value, we continue to strengthen of our shareholders, partners, suppliers, and customers. To fellow our governance framework in line with regulatory requirements. members of the Board, thank you for your time and counsel – it Following the amendment to Section 17A of the MACC Act 2009, is always a pleasure to work with you. Most of all, I would like to which introduces corporate liability in cases of corruption, we acknowledge the leadership of our management and the dedication established an Integrity & Governance Unit (IGU) in the third quarter of all 22,000 employees. I have been very heartened to see the of the year. IGU is tasked with managing all internal investigations ethos of service demonstrated by everyone. This, more than anything, related to whistle-blowing as well as with instilling a culture of differentiates Pos Malaysia and will ensure our long-term sustainability. integrity throughout Pos Malaysia. It reports directly to the Board to keep us updated on integrity-related matters. Meanwhile, we will continue to review and enhance our existing code of ethics SYED FAISAL ALBAR and integrity to establish a culture of zero tolerance for corruption. Chairman
050 POS MALAYSIA BERHAD ANNUAL REPORT 2020 Group Chief Executive Officer’s Statement Ensuring Business Sustainability, Whatever It Takes
Dear Stakeholders, 2020 was a year that brought with it many challenges and opportunities across all industries. It was a year where Pos Malaysia had to quickly respond and adapt to ensure that we continue to operate as an essential service provider.
The rapid rise of COVID-19 cases required us to take swift proactive Moreover, our transformation initiatives met its delivery milestones, measures in protecting our workforce and customers. In doing so, despite facing multiple challenges with domestic and international we ran our operations under strict SOPs, provided our workforce movement restrictions. Some of the initiatives, such as crowdsourcing with personal protective equipment, initiated contactless delivery and SendParcel, were continuations of 2019 projects and significantly for our postal service, and deflected most of our customer traffic helped us in managing the impact of COVID-19. to our online channels. This was extremely important as the MCO resulted in a double to triple spike in parcel volume within a short Our International business, which is highly dependent on commercial period of time, something that we have not seen in our history. cargo space, was impacted due to the reduced number of incoming Protecting our workforce was essential to keep our operations flights into Malaysia. afloat. Despite our best efforts in enforcing the SOPs and reducing the The high number of parcel volume also required us to accelerate risk of COVID-19 infections, our main processing centres unfortunately our crowdsourcing programme to increase our delivery capacity. suffered an outbreak in Q4, FY20. The emergence of the Kaya At its peak in April 2020, we recorded 13 million parcels, the Cluster required us to temporarily shut down our KLIA IPC, which highest ever volume ever accepted in our history. We had close processes 80,000 parcels per day. Our IPC in Shah Alam, with a to 1,400 crowdsourced riders to support our 3,000 courier delivery capacity of processing 220,000 parcels per day, also had a small personnel, including headquarter employees and postmen who also outbreak which was identified and contained early but did have assisted in parcel deliveries. an impact to our operations. To mitigate this, we had to reroute parcel processing to other distribution centres. It was a major shift Despite the challenges early on, the rise of online shopping in our operations which unfortunately impacted our courier capacity. increased demand for courier services and significantly boosted our revenues in Q2 and Q3, FY20. After the first wave of the Due to this, our Service Level Agreements (SLAs) declined, which pandemic came under control and businesses reopened, segments resulted in reduced customer confidence, hence lower revenue in that were initially impacted by the MCO saw an immediate recovery. Q4, FY20. The rerouting of processing required additional transport, The mail tariff increase that took place on 1 February 2020 also which increased our overall cost. Adding to that, we also saw a provided a significant lift to our top line figures, amounting to an change in consumer behaviour where more large-sized and bulky additional RM150 million in revenue for the full year of 2020. Our items being shipped, resulting in higher transportation costs. revenue and profitability levels were on a positive trajectory, where we also recorded two months of operational profitability in June As for our subsidiaries, none were affected as much as our Aviation and July. segment. Anticipating a long-term recovery, we swiftly took measures to reduce cost and downscaled our operations to reflect the decline in air travel forecasted over the next one to two years. Our Logistics segment was not greatly impacted by the pandemic but benefited from the higher demand in shipment services for the automotive industry.
051 KEY MESSAGES
Group Chief Executive Officer’s Statement
Pos Aviation will continue to be prudent in managing costs while Pos Logistics will proceed with its transformation initiatives by scaling down haulage operations, growing automotive logistics while improving its service quality and reliability.
CONNECTING WITH OUR CUSTOMERS THROUGH MANAGING COSTS THROUGH AUTOMATION AND DIGITALISATION RATIONALISATION
Online marketplaces have been crucial in promoting e-commerce As I had promised last year, we expanded the deployment of adoption in Malaysia with social commerce gaining traction driven parcel automation to 19 distribution centres, bringing the total of by local micro, small and medium enterprises (MSME). Our upgraded distribution centres to 37 to date. This has allowed us SendParcel shipping platform provides the right features to meet to improve processing speed and delivery of parcels, saving their requirements and today we have over 180,000 accounts operational costs. registered with us, and we have shipped close to nine million packages generating RM60 million in revenue. Additionally, due to the continuous decline in mail volume, we initiated a rationalisation exercise of our mail infrastructure, where To further improve customer experience, we have also launched the Melaka mail processing centre was the first centre to be our e-consignment notes which simplify parcel drop off for online consolidated with our National Mail Centre (NMC) in Shah Alam. marketplace merchants, replacing the hardcopy forms that was In 2021, this initiative will be replicated across the country where once synonymous with parcel delivery. As part of ensuring that feasible, but we will ensure that our capability to fulfil our postal our reach remained dominant, we have, via partnerships, established obligations will not be impacted. an additional 2,000 touchpoints. A manpower rightsizing exercise was implemented and we expect We also improved how our customers interact with us by launching to reduce our manpower costs by over RM20 million a year. our chatbot, AskPos, which replaced our traditional customer care hotline. AskPos is able to handle between 40,000 to 60,000 customer conversations weekly, greatly enhancing our capacity to WHATEVER IT TAKES FOR A SUSTAINABLE FUTURE manage customer enquiries and requests. Our over-the-counter We have been actively engaging with the regulators through the retail services have been digitalised and we now have SendParcel, National Postal and Courier Industry Laboratory (NPCIL) on creating bill payments, online insurance purchase and other services in our a framework for a sustainable courier industry. The regulator has mobile app and website. Moreover, payments now can be made been receptive towards our proposal and we are optimistic in via e-wallets, FPX and credit cards for our mobile app transactions. seeing a change in pricing regulations soon. Given the convenience afforded, the app has attracted close to 400,000 active users to date. Our focus now is to carry on the good momentum we had seen in Q3, FY20. Courier operations are back to normal, allowing us We completed the deployment of our new Track and Trace system to win back lost market share in the e-commerce segment. Our in Peninsular Malaysia, plus initiated the revamp and modernisation completed transformation initiatives will also provide a solid foundation of our ICT systems, including improvements in security and in our efforts to transform the company. We will continue to scale operational efficiency. up our parcel delivery network and further leverage on automation. We aim to accelerate our digitalisation of retail services, while we In order to track how customers experience our services, we rationalise our postal touchpoints and processing centres, transforming introduced our Net Promoter Score (NPS) platform, via QR code, our ICT infrastructure and applications. at selected locations. This will enable us to ascertain a baseline and improve our services to ensure customers’ future needs and Pos Aviation will continue to be prudent in managing costs while expectations are met. Pos Logistics will proceed with its transformation initiatives by scaling down haulage operations, growing automotive logistics while improving its service quality and reliability. Our logistics segment should benefit from the Government’s extension of the sales tax exemption on cars until June 2021.
052 POS MALAYSIA BERHAD ANNUAL REPORT 2020
On top of that, the positive sentiment brought about by Our the National Immunisation Programme should see more sectors of the economy reopening, boding well for the economy overall, as well as for Pos Malaysia. Story AWARDS AND RECOGNITION
Despite the challenges and struggles we faced in 2020, I am honoured to announce that we were awarded with various notable recognitions which include the 2020 Malaysia E-Commerce Logistics Service Provider of the Year and 2020 Malaysia Express Logistics Service Provider of the Year award from Frost & Sullivan. We were also recognised as the Best Company for Investor Relations (Small Cap) by the Malaysian Investor Relations Association (MIRA). We also clinched a Gold Award for Digital Marketing at the Malaysian CMO Awards 2020.
ACKNOWLEDGEMENTS
On behalf of the management, I would like to convey my sincerest appreciation to our Board of Directors who have been a source of great strength and wisdom, especially in guiding us through our transformation journey. “I established my online business selling and distributing shampoo in 2010, A special thank you to Datuk Yasmin binti Mahmood, where I used to deliver orders by dropping off parcels at the post office and Dato’ Ibrahim Mahaludin bin Puteh, both of whom, counter. I started using the Pos Laju SendParcel service during the first MCO, have since left the Board. Both have contributed as it was difficult to leave home to deliver orders due to the restrictions. immensely to the Company. I was relieved as SendParcel is easy to use. Everything from registration to Additionally, my warmest welcome to Dato’ Sri Syed pick-upServing can be carried out online. SMEsI just need to schedule and the pick-up time Faisal Albar bin Syed A.R Albar, Pos Malaysia’s new and date, and Pos Laju will come and collect the parcels from my home. Chairman, Dato’ Jezilee bin Mohamad Ramli and Dato’ Entrepreneurs Mohamed Sharil bin Mohamed Tarmizi, our new members Best of all, all payments can be done online and the e-consignment note has of the Board. With their wealth of experience, we look made the process easier, as compared to filling up forms manually. What’s forward to exchanging insights during our tenure together. more, with the track and trace service, you are able to monitor the items and know Fromexactly whereoffering the parcels mail are and through parcel the system. deliveries, SendParcel Poscontinues To our shareholders and customers, I would like to to be Malaysiamy choice, as hasthe service made is reliable, it easier convenient, for and SMEs reasonably and priced, thank you for your continued support. To the Government and best of all, I can process my orders online anywhere.” and particularly our regulator, thank you for maintaining entrepreneurs to deliver items to their customers close and collaborative engagements with us. Pamelathrough Grace Anakthe VincentPos Laju Sikem SendParcel platform. Online Entrepreneur I would also like to acknowledge my colleagues on the management team for their invaluable perspectives and able leadership. But most of all, my heartfelt gratitude goes to all our employees who have continued to work tirelessly throughout the year, serving not just Pos Malaysia but the nation. You truly embody the ethos of serving, Whatever It Takes.
Thank you, and please stay safe.
SYED MD NAJIB Group Chief Executive Officer
053 Our Story
“I’m an agent for Young Living essential oils, and have been delivering products (Young Living and other products prior to this) to customers around Malaysia by post for the last “I established my online business selling and distributing shampoo in 2010, 28 years. I find Pos Malaysia’s where I used to deliver orders by dropping off parcels at the post office charges very reasonable and counter. I started using the Pos Laju SendParcel service during the first MCO, their service very reliable, as it was difficult to leave home to deliver orders due to the restrictions. which is why I’ve never switched to any other service I was relieved as SendParcel is easy to use. Everything from registration to provider. pick-up can be carried out online. I just need to schedule the pick-up time and date, and Pos Laju will come and collect the parcels from my home. During MCO 1.0, I didn’t feel safe going out and was initially Best of all, all payments can be done online and the e-consignment note has concerned about how I was made the process easier, as compared to filling up forms manually. What’s going to deliver my products. more, with the track and trace service, you are able to monitor the items and Then, I found out about know exactly where the parcels are through the system. SendParcel continues SendParcel and immediately to be my choice, as the service is reliable, convenient, and reasonably priced, signed up for it. It’s so and best of all, I can process my orders online anywhere.” convenient, all I have to do is process my orders online and Pamela Grace Anak Vincent Sikem a postman comes to the house to pick up the parcels. They also have a Online Entrepreneur digital consignment form which is very convenient and reduces errors, which could happen when addresses are not written clearly, resulting in parcels being delivered to the wrong place. This is not the Pos Malaysia I know from 28 years ago! It has really transformed into a digital company and is making lives much more convenient. I’m a great fan – keep it up!”
Siti Zarimah binti Zamhari Young Living Agent VALUE CREATION
Our Business Model
VISION MISSION Connecting Malaysia and Beyond For Today and Tomorrow Build and Deliver the Network of Choice
OUR CAPITALS... ..ENABLE VALUE-ADDING ACTIVITIES
Capital Inputs
Financial Capital Courier Optimise Diversify Digitalisation Engage in Strengthen Automation Delivery & Touchpoints Regulatory Logistics & • Market Capitalisation of RM0.95 & Capacity Entrepreneurship Reforms Sustain Billion as of 31 December 2020 Aviation • RM78 Million CAPEX Businesses
Manufactured Capital • Nationwide mail and parcel delivery network • 810 post offices and mini post offices • Facilities in eight Malaysian OUR BUSINESS SEGMENTS airports • Six logistics warehouses
A OUR STRATEGYE G Y C Intellectual Capital POSTAL AVIATION • Sole licensee for universal SEGMENT SEGMENT postal service provider in Malaysia • Pos Laju brand as the leading courier service provider D OTHER • Largest insurance agency via SEGMENTS post offices B • POS ARRAHNU LOGISTICS • DATAPOS SEGMENT Human Capital • POS DIGICERT • 22,000 employees • RM1.6 Million invested in training and development
• Social & Relationship Capital C E O R V • S U I C M S • Postal services in rural D OM E O -1 P K E K ST CL 9 ET Y R I S SY S communities via Posmen Komuniti OU ITIO CT R TB N • U ST • I DE & Wakil Posmen Komuniti RE SO CO OR AK • AL B • New digital platforms for customers INTERNATION to interact and transact with Pos Malaysia MATERIAL MATTERS • COVID-19 • Operational & cost efficiency • Employee development • Customer experience • Government & regulatory policies & welfare Natural Capital • Digitalisation • Socio-economic empowerment • Emissions management • 43.3 million litres of fuel consumption MARKET TRENDS • 62.89 GWh of electricity • COVID-19 pandemic • Increasing courier competition consumption • Decline in mail • Digitalisation of society • 686,148m3 of water consumption • Growing e-commerce
Supported by Robust Governance Framework Corporate Governance and Business Ethics Risk and Crisis Management 054 POS MALAYSIA BERHAD ANNUAL REPORT 2020
MISSION OUR VALUES Build and Deliver the Network of Choice • INTEGRITY • EFFICIENCY • ACCOUNTABILITY •
...VALUE FOR OUR STAKEHOLDERS
Outputs Outcomes Stakeholders
Customers Financial Capital We always strive to deliver reliable and high- • Revenue of RM2.3 Billion quality customer experience for all our services.
Manufactured Capital Delivery Network • Mail delivered: 457 Million Improved parcel delivery capacity and speed • Parcels delivered: 111 Million through investments in our infrastructure. • Retail transactions: 44 Million • Air cargo handled: 162,961 Tonnes • Logistics’ SKU handled: 1.3 Million People Highly dedicated and dynamic workforce which Intellectual Capital thrives under a healthy working environment. • Frost & Sullivan’s 2020 Malaysia E-commerce Logistics Service Provider of the Year and 2020 Malaysia Express Logistics Service Partnerships Provider of the Year • The Malaysian CMO Awards 2020 Gold Award Collaborative and mutually valuable partnerships for Digital Marketing that contributes to the company’s growth. • Malaysia Investor Relations Association (MIRA) Best company for Investor Relations (Small Cap) Environment Strive to lower carbon emissions and waste in Human Capital our operations and services in line with staying • 6.9 hours of training per employee sustainable. • 545 training programmes conducted
Social & Relationship Capital • 4,286 rural villages in Sabah & Sarawak reached • Added convenience for customer service with new digital platforms
Natural Capital • Zero fines and penalties for environmental non-compliance • RM109,000 saved through energy-saving initiatives in 6 touchpoints • Solar project initiative scheduled to kick-off in March 2021 at National Mail Centre
055 VALUE CREATION
Our Key Capitals
FINANCIAL CAPITAL
The pool of funds that is available to our organisation for use in the production of goods or the provision of services. These funds are obtained through financing, such as debt, equity or grants, or generated through operations or investments.
MARKET CAPITALISATION RM0.95 Billion (as of 31 December 2020)
CAPEX RM78 Million
ROE (26.9)%
SHAREHOLDERS' EQUITY RM1.1 Billion
056 POS MALAYSIA BERHAD ANNUAL REPORT 2020
MANUFACTURED CAPITAL
Manufactured physical objects (as distinct from natural physical objects) that are available to an organisation for use in the production of goods or the provision of services, including buildings, equipment and infrastructure. Manufactured capital is often created by other organisations, but includes assets manufactured by the reporting organisation for sale or when they are retained for its own use.
NATIONWIDE MAIL AND PARCEL DELIVERY NETWORK 810 POST OFFICES AND MINI POST OFFICES
FACILITIES IN 8 MALAYSIAN AIRPORTS
6 LOGISTICS WAREHOUSES
INTELLECTUAL CAPITAL
Organisational, knowledge-based intangibles, including intellectual property, such as patents, copyrights, software, rights and licences as well as “Organisational capital” such as tacit knowledge, systems, procedures and protocols.
SOLE LICENSEE FOR UNIVERSAL POSTAL SERVICE PROVIDER IN MALAYSIA
POS LAJU BRAND AS THE LEADING COURIER SERVICE PROVIDER
LARGEST INSURANCE AGENCY VIA POST OFFICES
057 VALUE CREATION
Our Key Capitals
HUMAN CAPITAL
People’s competencies, capabilities and experience, and their motivations to innovate, including their alignment with and support for our organisation’s governance framework, risk management approach, and ethical values. Their ability to understand, develop and implement our organisation’s strategy. Also including loyalties and motivations for improving processes, goods and services, including their ability to lead, manage and collaborate.
22,000 EMPLOYEES
RM1.6 Million INVESTED IN TRAINING AND DEVELOPMENT
SOCIAL & RELATIONSHIP CAPITAL
The institutions and the relationships within and between communities, groups of stakeholders and other networks, and the ability to share information to enhance individual and collective well-being. Social and relationship capital includes shared norms, common values and behaviours. Key stakeholder relationships, and the trust and willingness to engage that our organisation has developed and strives to build and protect with external stakeholders. 4,286 RURAL VILLAGES IN SABAH & SARAWAK REACHED
ADDED CONVENIENCE FOR CUSTOMER SERVICE WITH NEW DIGITAL PLATFORMS
058 POS MALAYSIA BERHAD ANNUAL REPORT 2020
"I am a regular user of Pos Malaysia services, mostly to send important documents or parcels through Pos Laju. Until about a year ago, it was quite challengingOur to lodge a report or enquiry using the customer hotline. But then NATURAL CAPITAL Pos Malaysia introduced AskPos, an online customer chat service, and everything is so much better. I no longer have to wait long to get answers All renewable and non-renewable environmental to my enquiries, as the response time is excellent. If I’m unable to get the resources and processes that provide goods or answers that I’m searchingStory for, there’s an option to get connected to a live services that support the past, current or future agent who will help. prosperity of our organisation. It includes air, water, land, minerals, forests biodiversity and eco-system Best of all, I can also use AskPos to track the whereabouts of my parcel health. easily and use it to quickly calculate delivery costs for my parcels. I think it’s great that Pos Malaysia is embracing innovation and digitalisation to create a better experience for customers like myself."
Adryan Andy AskPos user
Great Customer "My family has been paying our utility bills, renew our car insurance and road Servicetax over the Pos Malaysia post office counter for many years. When the pandemic started last year and the MCO which followed, we were unable to leave home to pay our bills as usual.
Fortunately,Our customers a family friend are told our me priority.that all my Over bills canthe be years, paid using Zero the Poswe Malaysiahave beenmobile app.listening I downloaded to their the feedbackapp and started and using FINES AND PENALTIES it. Surprisingly,innovating the mobile on app our is very services user friendly especiallyto provide for a senior FOR ENVIRONMENTAL citizen like myself. Besides paying utility bills, I can also use the app to NON-COMPLIANCE track greatmy parcels customer and locate experience. the nearest post This office. has seen us launch a number of new products and services. Now,More I can alsothan use that, the appit has to renew seen my our car peopleinsurance. goWith out all my needs covered by the mobile app, I don’t need to go to the post office. But Iof still their do occasionally,way to provide to chat serviceand say hellofrom to the the heart.friendly Pos RM109,000 Malaysia staff." SAVED THROUGH ENERGY- Agatha Aham Suni SAVING INITIATIVES IN 6 Pos Malaysia Mobile App user TOUCHPOINTS
059 Our Story
"I am a regular user of Pos Malaysia services, mostly to send important documents or parcels through Pos Laju. Until about a year ago, it was quite challenging to lodge a report or enquiry using the customer hotline. But then Pos Malaysia introduced AskPos, an online customer chat service, and everything is so much better. I no longer have to wait long to get answers to my enquiries, as the response time is excellent. If I’m unable to get the answers that I’m searching for, there’s an option to get connected to a live agent who will help.
Best of all, I can also use AskPos to track the whereabouts of my parcel easily and use it to quickly calculate delivery costs for my parcels. I think it’s great that Pos Malaysia is embracing innovation and digitalisation to create a better experience for customers like myself."
Adryan Andy AskPos user
"My family has been paying our utility bills, renew our car insurance and "I always do my shopping online, as I find it convenient and safer to have road tax over the Pos Malaysia post office counter for many years. When my purchases delivered instead of going out to the shops. Pos Laju is my the pandemic started last year and the MCO which followed, we were preferred courier service as it provides reliable and fast delivery. unable to leave home to pay our bills as usual. Once, there was some confusion because the delivery man couldn’t find my parcel in his van. Although that was a little frustrating, his response was so Fortunately, a family friend told me that all my bills can be paid using genuinely apologetic that I was immediately placated. First, he offered to the Pos Malaysia mobile app. I downloaded the app and started using reimburse me for the item. When I declined the offer, he said he would go it. Surprisingly, the mobile app is very user friendly especially for a senior back to the parcel sorting centre, look for the item, and bring it back that very citizen like myself. Besides paying utility bills, I can also use the app to day. This was already late in the evening, and I did not think he would return, track my parcels and locate the nearest post office. but he did! As promised, he found my parcel and came back at night to deliver it to me. Now, I can also use the app to renew my car insurance. With all my needs covered by the mobile app, I don’t need to go to the post office. It is only human to make mistakes, but what the delivery man proved is But I still do occasionally, to chat and say hello to the friendly Pos that the way you behave makes all the difference. Because of his dedication Malaysia staff." and honesty, I have even more faith in Pos Laju services. Thank you Pos Malaysia!" Agatha Aham Suni Farena Jane Tahir Pos Malaysia Mobile App user Kudos for the excellent customer service! VALUE CREATION
Stakeholder Engagement
Our long-lasting organisational growth and achievements are due to the constant trust and support of our diverse stakeholders. The work we do is focused on enriching the lives of each of them, which is why we actively engage with our stakeholders to aptly capture their material concerns and expectations. Our strategies and decisions are guided by their feedback, which allows us to enhance stakeholder value creation. The table below describes our efforts and approach to strengthening Pos Malaysia’s stakeholder relationships.
EMPLOYEES
Why we engage Engagement Platforms Key Concerns Raised
Communicate transformation strategy & • Employee dialogue sessions with • Career development GCEO progress, new initiatives, governance and • Health & safety concerns integrity matters, etc. • Email & printed communication due to COVID-19
CUSTOMERS
Why we engage Engagement Platforms Key Concerns Raised
Communicate product offerings, service changes • Website & social media platform • Service levels issues updates and service customer complaints. • Marketing events & sales meetings • Email, hotlines and surveys
GOVERNMENT & REGULATORS
Why we engage Engagement Platforms Key Concerns Raised
Obtain approval for regulated matters, participate • Meetings with government & • Responsible and sustainable in policy-making exercises, reporting regulated regulators personnel business practices services performance. • Working groups • Awareness to compliance, • Emailing of reports governance and integrity amongst staff
060 POS MALAYSIA BERHAD ANNUAL REPORT 2020
Frequency of Engagement: Daily Quarterly Monthly Weekly Annualy As and when
SHAREHOLDERS & INVESTORS
Why we engage Engagement Platforms Key Concerns Raised
Communicate transformation strategy & • Annual General Meeting • Performance of the progress, financial results, business performance. • Integrated Annual Report company • Analyst briefings on financial • Dividends performance • Responsible & sustainable • Website practices • Press release
SUPPLIERS, BUSINESS PARTNERS & INDUSTRY GROUPS
Why we engage Engagement Platforms Key Concerns Raised
Ensure sustainable commercial relationship • Meetings & site visits • Service turnaround and with partners. deliverables
LOCAL COMMUNITIES
Why we engage Engagement Platforms Key Concerns Raised
Contribute to development and well-being of • Charitable contributions to local • Contributions to specific communities. community programs local issues
061
Evolving with you With an efficient courier delivery network, we are able to meet the increase in customer demand, especially with the recent e-commerce boom in the country. We have a total of 120 Pos Laju touchpoints and 674 post offices nationwide. We have also introduced self-service parcel lockers at strategic locations for customers to collect and drop-off items. MANAGEMENT DISCUSSION AND ANALYSIS
STRATEGIC REVIEW Operating Environment – Key Market Trends
How We Have Responded COVID-19 PANDEMIC • Enforced Standard Operating Procedures (SOP) as required by Ministry of Health (MOH) in all post offices and distribution COVID-19 was declared a pandemic on 11 March centres 2020 and had multiple impact to the global • Enforced Work From Home policy economy and society, leading to closed borders, • Initiated contactless delivery to maintain social distancing movement restrictions and strained healthcare systems across the globe. • Cost-cutting measures to minimise the impact of loss revenue on aviation segment • Suspended international mail delivery and rerouted customers to use AsiaXpress service, offered by PSH Express Sdn Bhd, a subsidiary of Pos Malaysia
Actual/Potential Impact Outlook • Restricted business operations during the first MCO imposed in March caused a significant loss in revenue Many countries have embarked on their respective COVID-19 • Heightened health risks for our employees that are immunisation programmes which will be key to bringing this customer-facing or are required to work within close pandemic under control. The Malaysian Government expects proximity of each other to achieve herd immunity in the country, with 70% of the population inoculated, before end 2021. The success of the • Reduced international air travel has severely impacted programmes would allow Pos Malaysia’s operation to resume Pos Malaysia’s aviation segment and international mail without restrictions. services
064 POS MALAYSIA BERHAD ANNUAL REPORT 2020
How We Have Responded DECLINE IN TRADITIONAL MAIL • Obtained approval for commercial postal rate revision w.e.f. 1 February 2020, which has resulted in improved operational Increasing adoption of digital communication such margins for mail segment as email and mobile chat apps have resulted in • Improve cost efficiency by initiating the consolidation of mail the further decline in demand for mail delivery processing centres services. The number of mail items delivered by Pos Malaysia’s has been declining at a rate of 13% CAGR over the past 5 years.
Actual/Potential Impact Outlook • Revenue from mail business has, until recently, been declining in tandem with the decline in mail volume The decline in mail is set to continue as digital communication • Pos Malaysia’s Universal Service Obligation (USO) becomes more effective and pervasive. However, our continuous requires that we provide nationwide coverage of postal efforts to improve cost efficiencies and regularly revise postage services, which costs has grown due to inflation rates should allow us to sustain the business with a healthy profit margin.
065 MANAGEMENT DISCUSSION AND ANALYSIS
STRATEGIC REVIEW Operating Environment – Key Market Trends
How We Have Responded RAPID GROWTH OF E-COMMERCE • Upgraded 19 parcel distribution centres with semi-auto sorting machines to increase parcel processing speed and E-commerce in Malaysia has grown rapidly over capacity the past five years, with 2020 seeing accelerated • Recruited more delivery riders through our crowdsourcing growth due to movement restrictions caused by programme Pos Rider the pandemic. • Aggressive acquisition campaign targeting the SME segment via SendParcel online shipping platform
Actual/Potential Impact Outlook • Increase in online shopping resulted in higher parcel deliveries by Pos Malaysia in 2020 E-commerce in Malaysia is expected to grow at a rate of • However, the spike in demand for courier services 17% CAGR over the next five years*. Pos Malaysia is set to provided a number of challenges as the number of expand its parcel delivery capacity to fully capitalise on the parcels needed to be processed and delivered was above growth via leveraging on new technologies and improving our capacity efficiency. * E-Conomy SEA 2020 Report
How We Have Responded INCREASING COMPETITION IN COURIER MARKET • Improve customer experience for courier services to ensure the quality of our deliveries can match or exceed the The rapid rise of e-commerce has attracted more competition competition into the courier market, with Malaysia • Seek regulatory reforms to ensure the sustainability of our having over 120 courier licensees in 2020. industry
Competitors have also been aggressive in capturing market share by competing on price.
Actual/Potential Impact Outlook • Reducing average revenue per item due to competition has resulted in margins being compressed Continued investment into our courier infrastructure would allow • Increasing practice of price dumping may degrade the us to improve our service quality and at the same time increase overall quality of the industry as more companies will our courier capacity. The regulators have also been receptive be under financial pressure to sustain their business towards our proposal for regulatory reforms, which should lead into a more healthy industry in the near future.
066 POS MALAYSIA BERHAD ANNUAL REPORT 2020
How We Have Responded DIGITALISATION OF SOCIETY & BUSINESSES • Initiate the digitalisation of our retail services and availed multiple services on our digital channels High internet penetration, increasing smartphone • Embarked on a 3-year Information & Communications ownership and accessibility of technology has Technology (ICT) transformation journey to upgrade our resulted in a change of behaviour amongst digital capabilities consumers and businesses, leading more to migrate towards digital services.
Actual/Potential Impact Outlook • Footfall into post offices have reduced compared to several years ago as most services such as bill payment Enhancing Pos Malaysia’s digital capabilities allows us to and insurance purchase can be conducted online compete in new markets with more growth potential and • Business requirements from our clients requires more ensure that we implement the industry’s best practice when integration with our systems it comes to ICT, which can help us in achieving improved operational and cost efficiencies.
067 MANAGEMENT DISCUSSION AND ANALYSIS
STRATEGIC REVIEW Material Matters
IDENTIFY & ASSESS Analyse input from stakeholder engagement, business units, independent research and external environment to identify key issues.
PRIORITISE & RANK Review and narrow down the identified issues to the material topics that impact business and stakeholder relationships.
Material matters comprise economic, social and environmental factors that have the potential to impact an organisation’s performance as well as its ability to create stakeholder value, now and in the future. We VALIDATE & APPROVE Final approval of the scope and boundaries of the seek to understand what our material matters are in material topics by senior management. order to better define our strategies and develop plans that focus on our most important issues. Knowledge of our material matters would also enable us to allocate our resources more effectively in order to manage emerging issues and meet our stakeholders’ expectations.
In the table below, we outline our material matters and describe the risks as well as opportunities associated INTEGRATE & RESPOND with each, as well as our approach in managing the Integrate the material topics into our long-term matters to create value. strategy as well as short to medium-term business plans.
068 POS MALAYSIA BERHAD ANNUAL REPORT 2020
COVID-19
Risks Limitation in operations due to movement restrictions. Loss of revenue in international business and Aviation segment. Heightened health risk for our employees.
Description Opportunities The pandemic and movement Higher demand for courier services due to increase in online shopping. restrictions had a significant impact on our business. Response Shift in focus to courier business to capture spike in demand; Drastic cost-cutting to limit Aviation segment losses; Provision of PPE and enforced SOPs.
Strategy: OE SS Stakeholders:
CUSTOMER EXPERIENCE
Risks Inability to meet customer expectation may result in dissatisfied or loss of customers.
Opportunities Differentiating our services by improving end-to-end customer journey enables us to Description acquire new customers from the competition. Users of our services expect high standards of service, flexibility and competitive pricing. Response • Introduced new digital platforms for customers to interact and transact with Pos Malaysia • Continuous improvement of our parcel delivery network • Revamped sales & account management teams
Strategy: AC DT D Stakeholders:
069 MANAGEMENT DISCUSSION AND ANALYSIS
STRATEGIC REVIEW Material Matters
DIGITALISATION
Risks Outdated systems and practices risks Pos Malaysia of unable to meet market requirements and exposes us to security risks.
Description Opportunities Rapid digitalisation of businesses Leveraging new technologies can lead to improved cost efficiency and workflow. and consumers impacts the entire ecosystem in which we operate. Response Initiate our Digital & ICT transformation based on 3-year blueprint.
Strategy: D Stakeholders:
OPERATIONAL & COST EFFICIENCY
Risks Disruption to the delivery network requires additional resources to ensure service availability while incurring additional cost.
Description Opportunities Efficiency has a large bearing on Leveraging technology and innovating operational models can vastly improve efficiency. the Company’s profit margin and our ability to meet customer’s Response expectation. Invest in automation in our postal network as well as expand our delivery capabilities through a commissions-based employment model; organisation right-sizing, vendor management.
Strategy: AC OE Stakeholders:
GOVERNMENT & REGULATORY POLICIES
Risks Increased competition in the courier industry has led to price dumping and may result in service degradation impacting consumers and e-commerce industry as a whole. Description Regulatory frameworks and Opportunities policies for postal and courier The right policies by the regulators and government will allow courier operators to thrive services can determine the and continue to serve the market without disruption. sustainability of the industry and our business. Response Engage with regulators via the NPCIL to seek regulatory reforms.
Strategy: ER Stakeholders:
070 POS MALAYSIA BERHAD ANNUAL REPORT 2020
SOCIO-ECONOMIC EMPOWERMENT
Risks Maintaining a large number of touchpoints and an extensive delivery network leads to Pos Malaysia having a rigid fixed cost structure. Inability to maintain profitability will Description result in local communities being deprived of critical services. Pos Malaysia is a Universal Service Provider for postal services Opportunities and has a responsibility to provide Our presence and services can contribute to the development of local communities. access to postal touchpoints as well as delivery services Response indiscriminately across the nation. Maintain our network of Pos Mini, Posmen Komuniti & Posmen Kejiranan in rural and remote areas.
Strategy: DT Stakeholders:
EMPLOYEE DEVELOPMENT & WELFARE
Risks Insufficient employee engagement and development may result in dissatisfaction and turnover. Lack of key skills will hinder growth initiatives. Description Opportunities Our business is highly dependant A motivated and skilled group of employees working under a conducive and organised on our workforce. The development structure can improve productivity and accelerate our growth initiatives. and well-being of our employees are critical to ensuring business Response continuity and growth. Continuous investment in training and development as well as employee engagement through various channels to create a committed and engaged workforce.
Strategy: OE Stakeholders:
EMISSIONS MANAGEMENT
Risks Corporate reputation may suffer if we are not seen as upholding our environmental responsibility. Environmental impact can also lead to unforeseeable consequences. Description Opportunities The group has a role to play in New technologies can assist us in achieving better energy efficiency and reduce usage minimising our carbon footprint. of fossil fuels. Regulators, investors and local communities also expect Pos Response Malaysia to become more • Continuous investment in operational efficiency environmentally conscious. • Explore commercially-viable alternatives to current fossil fuel-powered fleet such as electric vehicles
Strategy: AC Stakeholders:
071 MANAGEMENT DISCUSSION AND ANALYSIS
STRATEGIC REVIEW Risk Overview – Key Risks and Mitigation
Risks are inherent to any organisation. By identifying our risks, however, we are able to take relevant actions to mitigate both the chances of their occurrence as well as the severity of impact should a particular risk materialise. Our top risks are broadly categorised as Regulatory, Operational, Competition and Technology & Reputation. In 2020, however, we added Health & Safety as one of our most critical risks, given the high possibility of infection in our workplace.
1. Risk Identification 2. Risk 3. Risk & Assessment Treatment Reporting Continuous risk assessment Four core response strategies: Key risks, mitigation actions at Fund and Operations level • Accept • Terminate or controls carried out and through its self-assessment • Reduce • Transfer residual rating are highlighted scorecard to the Risk Management Committee bi-yearly
072 POS MALAYSIA BERHAD ANNUAL REPORT 2020
A brief description of our current key risks, as well as our approach to managing them, is provided below.
Risk Trend: Increasing Stable Low
HEIGHTENED COMPETITION IN COURIER BUSINESS Risks Trend Stakeholders:
Description The courier industry is very competitive with industry players aggressively vying for market share, which leads to diminishing profit margins. This may also threaten the quality of service customers receive from courier operators.
Mitigation • Improve our service quality and provide better customer experience via digitalisation to differentiate ourselves against other industry players • Engaged with regulators to seek policy reforms in the courier market
INCREASING COSTS OF SERVING USO Risks Trend Stakeholders:
Description Maintaining nationwide coverage of mail delivery and postal touchpoints to fulfil our obligations as a USO licensee is resource intensive and costly.
Mitigation • Initiate mail infrastructure rationalisation and expand agent-run touchpoints to reduce fixed cost • Continuous engagement with regulators on subjects pertaining to USO
OUTDATED ICT SYSTEMS Risks Trend Stakeholders:
Description Our current ICT infrastructure and applications are not agile and will not be able to meet future business requirements or changing consumer trends. Some legacy systems are also more exposed to potential cyber security breaches.
Mitigation • Initiate a 3-year ICT transformation program to enable us to reach technological parity with the market • Strengthen our cyber security resilience to safeguard our organisation
073 MANAGEMENT DISCUSSION AND ANALYSIS
STRATEGIC REVIEW Risk Overview – Key Risks and Mitigation
Risk Trend: Increasing Stable Low
COVID-19 OUTBREAK RISK Risks Trend Stakeholders:
Description Fulfilment of our services requires our employees to work inside enclosed spaces and meet customers face-to-face, which heightens the risks of COVID-19 outbreak amongst our staff.
Mitigation • Adherence to SOPs as recommended by MOH • Provided PPE to employees and conduct regular sanitation of facilities • Initiated contactless delivery for parcel deliveries
CLOSURE OF INTERNATIONAL BORDERS AND AIR TRAVEL Risks Trend Stakeholders:
Description International mail and aviation businesses depends highly on international air travel, which has drastically declined since the pandemic outbreak.
Mitigation • Redirected customers to use AsiaXpress for international deliveries • Prudent cost management by our subsidiary Pos Aviation
074 POS MALAYSIA BERHAD ANNUAL REPORT 2020
STRATEGIC REVIEW Our Strategic Blueprint Modernisation & Transformation Plan 2020-2022
Pos Malaysia is directing its effort towards becoming a customer-centric organisation that provides a positive customer experience through the services we provide. To achieve this, the Group began its transformation in 2019 and have outlined several key strategies to achieve our objectives over the next several years. Successful execution of our strategies will create a robust, competitive and profitable company able of navigating through an increasingly dynamic and complex market for years to come.
Focus Areas
To be a Customer-Centric Organisation
POS MALAYSIA’S 2020-2023 STRATEGIC OBJECTIVES
2023 ONWARDS SUSTAINABLE GROWTH • #1 courier of choice for e-commerce businesses • Fully automated primary parcel sorting centres • Full recovery of Aviation segment • Sustainably profitable Logistics segment
2021-2022 MARGIN IMPROVEMENT • Become a “parcel-first” postal operator • Leader in service quality • Leaner operations and reduced reliance on fixed costs • Operate in a sustainable courier industry
2020 MODERNISATION AND TRANSFORMATION • Sustainable mail business • Establish strong foothold in e-commerce • Efficient parcel processing and distribution network • Ease day-to-day task for employees and customers
075 MANAGEMENT DISCUSSION AND ANALYSIS
STRATEGIC REVIEW Strategic Performance Review
KEY INITIATIVES
Improve parcel sorting capacity and speed in Courier Automation distribution centres. & Capacity Scale-up
Increase last-mile delivery capabilities through crowdsourcing of delivery personnel under the Pos Rider programme.
Launched Entrepreneurship Programme (EP) Optimise Delivery & which provides opportunities for salaried staff Entrepreneurship to become entrepreneurs.
Expand our agent outlets across Malaysia as parcel drop-off and bill payment points.
Enhanced Pos Malaysia mobile app and posonline.com.my with improved user interface Diversify and added services. Touchpoints
Grow SendParcel user base and enhance features on the platform.
Introduce new chat-based customer servicing Digitalisation channel AskPos.
Digitalise consignment notes for business clients and over-the-counter customers.
Pursue approval and gazettement of new postal rates for commercial domestic mail and international mail.
Engage in Seek regulatory reforms with the objective of Regulatory Reforms creating a sustainable courier industry.
Initiate turnaround of Pos Logistics with the aim of having a leaner operation and improved service quality.
Strengthen Logistics & • Minimise losses in Pos Aviation due to Sustain Aviation COVID-19 with broad cost-cutting and cost Businesses management measures • Exploit opportunities in e-commerce
076 POS MALAYSIA BERHAD ANNUAL REPORT 2020
RESULTS/ACHIEVEMENT 2021 OUTLOOK & PRIORITIES
Capital Impacted: Upgraded 19 distribution centres with semi- automatic sorting machines. A total of 37 • Initiate the building of fully automated parcel distribution centres have been upgraded in the sorting centres outside of Klang Valley Material Matters: past two years, which increases parcel processing • Continue to upgrade more distributions centres efficiency.
As of 31 December 2020, we have around 1,000 Pos Riders across Malaysia. Capital Impacted: • Continue recruitment of riders under Pos Rider and Entrepreneurship Programme Over 700 previously salaried employees have • Assign Pos Riders and Entrepreneurs to manage Material Matters: been converted to “Entrepreneurs” and are paid 100% of parcel deliveries in high-volume locations on commission basis. Pos Malaysia’s staff-related cost have reduced.
Over 2,000 agent outlets are within our parcel • Continue to expand our agent outlets Capital Impacted: collection and bill payment network. • Revamp current Pos Mini agent model App and portal now feature bill payment and • Explore new ownership models to improve post Material Matters: motor insurance purchase. office sustainability Pos Malaysia’s mobile app has 400,000 active • Onboard more insurance partners and billers onto users. mobile app and posonline.com.my
• Acquired 126,000 new accounts through the platform • Introduced international courier service Capital Impacted: • Integrated with 3 major e-commerce platforms • Continuous integration of SendParcel with more e-commerce platforms Askpos manages 40,000 - 60,000 customer • Enhancement of our overall digital capability based conversations on a weekly basis. on our 3-year ICT transformation plan Material Matters:
• Drastically reduce the use of physical forms • Full deployment of our new Track & Trace system • Speeds up parcel handover and improves data accuracy
Implemented new postal rates on the 1 February Capital Impacted: 2020. Continue pursuing regulatory reforms that encourage the sustainability of the courier Currently engaged in National Postal & Courier industry. Material Matters: Industry Laboratory (NPCIL) in developing a new framework for the courier industry.
Restructured organisation and recruited new • Further improve internal processes and service management team. quality to widen scope of services and clientele Capital Impacted: Increased revenue from automotive logistics and • Adopt advanced logistics management system freight forwarding businesses.
Material Matters: Reduced staff-related costs, vendors for ground Leverage opportunities to capitalise on existing handling. strategic partnerships. Secured new e-commerce client for warehousing and fulfilment services.
077 MANAGEMENT DISCUSSION AND ANALYSIS
PERFORMANCE REVIEW Group Financial Review
Analyst briefing dated 4 March 2020.
Despite various challenges brought about by the pandemic, Pos Malaysia’s financial performance had begun to steadily improve as a result of various initiatives under the Group’s transformation programme implemented in 2019, aided by an increase in parcel volume as well as revision of postal tariffs beginning February 2020. In Q2, FY20, loss before tax (LBT) contracted by a significant 70.1% from RM47.2 million to RM14.1 million. This further improved quarter by quarter to an LBT of RM10.4 million in Q3, FY20.
Closure of two main IPCs in Q4, FY20, however, reversed the
trend leading to dampening of overall revenue for the year. In addition, there were one-off expenses incurred which includes RM123.3 million goodwill impairment, RM16.2 million of property, plant and equipment impairment and RM41.6 million provision for
Mutual Separation Scheme (MSS), but offset with a gain of RM79.3 million from partial disposal of equity in World Cargo Airline Sdn. Bhd. The pandemic also caused a general increase in operating costs due to adherence to SOPs and the provision of PPE for employees. Although its impact was felt across all Pos Malaysia’s segments, Aviation took the worst hit as travel restrictions meant reduced flights into the airports we serve. Q1, FY20 Q2, FY20 Q3, FY20 Q4, FY20 A key positive development during the year was approval by the Ministry of Communications and Multimedia to increase postal Revenue Loss Before Tax tariffs for commercial mail.
This increase in commercial mail tariff, along with the increase in parcel volume helped to cushion a significant loss in revenue by the Aviation segment.
078 POS MALAYSIA BERHAD ANNUAL REPORT 2020
SEGMENTAL PERFORMANCE Logistics segment’s revenue is primarily contributed by freight management services (freight forwarding, haulage, warehousing) and automotive logistics services. During FY2020, the segment benefitted from higher demand for shipment services and higher automobile production volume from Proton. Logistics segment was largely unimpacted by COVID-19, apart from the months of March and April 2020 when strict movement restrictions were in place. Losses for the segment was contributed to impairments of multiple receivables.
Aviation segment’s revenue is primarily contributed by cargo handling REVENUE (33%) and ground handling (23%). The segment was negatively impacted by the COVID-19 pandemic which saw the number of commercial flights in Malaysian airports decline drastically in FY2020. This resulted in decline in demand for all services, except for e-commerce warehousing. Pos Aviation has executed various cost- cutting measures across the board to mitigate the loss in revenue. Despite this, the segment recorded losses before tax.
Other segments consist of printing and insertion, digital certificates and ArRahnu businesses. This segment benefitted from higher P L A O demand for gold pawning and increased certificate issuance from e-filing projects during FY2020.
Our Postal Segment continued to be the main revenue contributor to the Group, accounting for 75% of the total, followed by Logistics COST MANAGEMENT at 13%, Aviation at 7% and Others at 5%. Despite the high exceptional items incurred during the year being impairment of goodwill of RM123.3 million, impairment of property, Postal segment’s revenue is largely contributed by courier business plant and equipment of RM16.2 million and provision for mutual followed by mail business. Although, this segment was initially separation scheme (MSS) of RM41.6 million, the operating costs impacted by the first wave of COVID-19 and movement restrictions were generally managed to be contained and controlled as a result enforced in March 2020 due to temporary closure of businesses, of the various cost savings initiatives and cautious spending movement restrictions for the public and reduced number of implemented Group wide. commercial flights impacting our international business, the performance was generally much better in Q2, FY20 and Q3, FY20 from an increase in online shopping resulted in parcel volume STRONG CASH FLOW increasing by 24% compared to the same period last year. Mail Pos Malaysia registered a healthy cashflow during the year with volume and retail transactions also returned to pre-COVID-19 levels a net cash inflow of RM86.9 million. This is due to the increase at the end of Q2, FY20 as movement restrictions were eased. In in cash from operating activities of RM170.1 million. addition, mail business benefitted from the postage rate increase that was implemented in February 2020. This compensated the net cash outflow from investing activities of RM26.1 million mainly from acquisition of property, plant and In Q4, FY20, temporary shut down of the main parcel processing equipment and cash outflow from financing activities of RM57.1 centres which process up to 70% of the total parcel volume million. impacted our revenue and resulted in an increased cost from the redundancy plan and rerouting of the parcel processing. OUTLOOK Improvement of the financial performance of the Group is expected from the Group’s continuous effort in managing cost and the expected savings from the MSS. An increase in online shopping trend will continue to boost the revenue from courier business.
079 MANAGEMENT DISCUSSION AND ANALYSIS
PERFORMANCE REVIEW 5-Year Group Financial Summary
FY Mar 2017 FY Mar 2018 FY Mar 2019 FP Dec 2019 FY Dec 2020
Profit/(Loss) Before Tax (RM’million) 128.5 117.3 (158.4) (241.9) (303.5) Profit/(Loss) Before Tax Margin (%) 6.2 4.7 (6.7) (14.4) (13.0) EBITDA Margin (%) 11.9 11.7 1.5 (1.0) (0.1) Return on Assets (%) 2.5 2.8 (5.1) (6.4) (9.7) Return on Equity (%) 4.2 4.8 (9.7) (14.8) (26.9)
Balance Sheet Total Assets (RM’million) 3,284.4 3,374.6 3,281.9 3,345.2 3,169.5 Total Equity (RM’million) 1,936.5 1,947.4 1,715.4 1,451.9 1,143.4 Equity attributable to Owners of the Company 1,934.5 1,945.3 1,715.4 1,451.9 1,143.4 (RM’million) Current Ratio (Times) 1.3 1.2 1.1 1.0 0.9
Staff Information No. of staff (No.) 23,336 22,915 23,353 22,851 21,626 Revenue per employee (RM’000) 89.2 107.9 100.8 73.6 107.8
Analyst briefing dated 4 March 2020.
080 POS MALAYSIA BERHAD ANNUAL REPORT 2020
PERFORMANCE REVIEW 5-Year Group Financial Highlights
REVENUE PROFIT/(LOSS) AFTER TAX EARNINGS/(LOSS) PER SHARE (RM’million) (RM’million) (sen)
Y M P D FY Dec Y M P D FY Dec 20 20 2020 2 2 20 20 2020
Y M Y M Y M Y M 20 20 20 20 2 2 2 (39.3) 2 (308.0) 2 0 2 2 2 2 2 2,332.3
Y M Y M Y M P D FY Dec 20 20 20 20 2020
EBITDA PROFIT/(LOSS) BEFORE TAX NET TANGIBLE ASSET PER SHARE (RM’million) (RM’million) (RM)
2 Y M P D FY Dec 20 20 2020
Y M Y M 20 20 2 (303.5)
P D FY Dec 2 2 2 20 2020
Y M Y M Y M 2 0 2 0 1.33 20 20 20 (3.5) Y M Y M Y M P D FY Dec 20 20 20 20 2020
081 MANAGEMENT DISCUSSION AND ANALYSIS
PERFORMANCE REVIEW Simplified Statement of Financial Position
ASSETS LIABILITIES AND SHAREHOLDERS’ EQUITY 31.12.2020 31.12.2020
0 0 0 0
RM3.2 RM3.2 Billion Billion 2 2 2
2 2 2
P I R S I R I L O L T D D T O O P
ASSETS LIABILITIES AND SHAREHOLDERS’ EQUITY 31.12.2019 31.12.2019
0 0 2 0 2
RM3.3 RM3.3 2 Billion Billion 2
082 POS MALAYSIA BERHAD ANNUAL REPORT 2020
PERFORMANCE REVIEW Segmental Analysis
TOTAL REVENUE
P S RM2.3 A S FY2020 Billion L S (12 months) O S
P S A S FP2019 2 RM1.7 Billion L S (9 months) O S
0
083 MANAGEMENT DISCUSSION AND ANALYSIS
PERFORMANCE REVIEW Statement of Value Added and Distribution
VALUE ADDED
FP Dec 2019 FY Dec 2020 (9 months) (12 months) RM’million RM’million
Revenue 1,682.5 2,332.3 Purchase of goods and services (760.7) (1,007.8)
Value added by the Group 921.8 1,324.5 Other operating income/expense (net) (83.5) (150.3) Finance income 2.3 5.2 Finance cost (36.3) (50.2) Foreign exchange gain 2.4 6.8
Value added available for distribution 806.7 1,136.0
DISTRIBUTION
FP Dec 2019 FY Dec 2020 (9 months) (12 months) RM’million RM’million
To Employees Employment cost 773.9 1,043.7
To Government/Approved Agencies Tax and zakat (25.0) 6.0
To Shareholders Dividends 31.3 –
Retained for reinvestment and future growth Depreciation, impairment and amortisation 288.1 394.3 Net reduction in retained profits (261.6) (308.0)
Total distributed 806.7 1,136.0
084 POS MALAYSIA BERHAD ANNUAL REPORT 2020
PERFORMANCE REVIEW Financial Calendar
FY2020
15 JUNE 2020 Announcement of the unaudited consolidated results for the 1st quarter ended 31 March 2020.
25 AUGUST 2020 Announcement of the unaudited consolidated results for the 2nd quarter ended 30 June 2020.
24 NOVEMBER 2020 Announcement of the unaudited consolidated results for the 3rd quarter ended 30 September 2020.
22 FEBRUARY 2021 Announcement of the unaudited consolidated results for the 4th quarter ended 31 December 2020.
30 APRIL 2021 Issuance of the 29th AGM Notice and Circular to Shareholders.
17 JUNE 2021 29th AGM of the Company.
085 MANAGEMENT DISCUSSION AND ANALYSIS
PERFORMANCE REVIEW Investor Relations Report
Pos Malaysia recognises the importance in maintaining a strong, trust-based relationship with our shareholders and the broader investment community. Maintaining a credible communication channel with the investment community is integral to our commitment towards corporate governance. Towards this end, we have an experienced Investor Relations (IR) team who manage a structured IR programme through which we engage with analysts, investors and shareholders.
A key function of the IR team is to ensure timely and transparent disclosure of relevant and material information on the Company’s developments to our investors to keep them updated of our strategies and performance, thus enhance their understanding of the Company for more informed investment decisions. While enabling us to disseminate important updates, these sessions also enable us to gather valuable feedback from the investment community.
In addition to key events such as quarterly results announcements and our annual general meetings, the IR team, with or without key members of Management, also conduct one-on-one meetings and dialogue sessions with local institutions investors as well as analysts. As far as possible, the team will accommodate requests by analysis, the media or potential investors for information or a sharing session.
Further ensuring dissemination of relevant information on Pos Malaysia businesses and activities, we release media statements on corporate developments and achievements.
The Annual General Meeting in 2020 at which our Directors, Group CEO, Group CFO and other members of the Management Team presented the Company’s performance for the financial period 2019, and answered questions posed by shareholders. This AGM was held virtually due to the pandemic.
Quarterly results announcements made on 15 June 2020, KEY IR EVENTS 25 August 2020, 24 November 2020, 22 February 2021 • Announcements to Bursa Malaysia IN 2020: • Media release on Financial Results
GCEO Engagement Session with Analysts, 4 March 2020, Pos Malaysia’s Dayabumi Complex • Annual engagement session with analysts to share current performance, future plans, strategies and prospects of the Company • Attended by 30 analysts
All corporate communication, including our quarterly and annual results as well as announcements to Bursa Malaysia are updated on our corporate website at www.pos.com.my.
In recognition of the Company’s efforts to uphold best practices in IR and our commitment to good corporate responsibility, Pos Malaysia was named the Best Company for Investor Relations in the Small Cap Category at the Malaysia Investor Relations Awards 2020 organised by the Malaysia Investor Relations Association (MIRA), on 17 December 2020.
Moving into the new financial year, Pos Malaysia will continue to enhance our IR efforts and strive to communicate accurately and consistently material information on a timely basis, in line with IR best practices and Bursa Malaysia’s Listing Requirements.
086 POS MALAYSIA BERHAD ANNUAL REPORT 2020
PERFORMANCE REVIEW Share Price Movement
Share Price Performance Jan-Dec 2020 Our S M M Story
M A M A S O N D
M S M
2020 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total Monthly Volume 50,441,800 48,507,100 59,880,500 314,452,400 280,523,000 107,844,500 80,904,100 40,357,900 20,880,100 231,667,600 318,818,500 129,460,300 Monthly End Closing (RM) 1.44 1.14 0.71 0.87 1.1 0.93 0.985 0.9 0.81 0.94 0.99 1.21
Share Price vs KLCI Whatever It Takes
Our people prove time and again that they will
brave arduous journeys, work extra hours and even navigate crocodile-infested rivers to fulfil their service commitments. Whatever it takes, we will deliver.
M A M A S O N D
LCI C OS M C
087 Our Story
“I am required to access areas that are not connected with proper roads and cross dilapidated bridges on a daily basis. These bridges become slippery during the rainy season and pose a real danger because there’s only a flimsy wire separating me from the river. Working throughout the “Since the pandemic, more and more people are making purchases online which pandemic was not a problem for me and no less challenging than my means the volume of packages we must deliver has increased tremendously. normal routine. Whatever the situation is, what matters most is ensuring Therefore, line drivers like myself have been making more trips a day. Within that the local communities continue to receive their mail and parcels.” the city, we have to just stick it out when the traffic is congested at road blocks and inspection points. The big challenge, especially in the monsoon months of Devy Anak Julai November and December, was to deliver to the East Coast. Because so many Postman in Sri Aman, Sarawak roads were flooded, there were times when we had no choice but to sleep in the lorries and wait for the water to recede. Our journeys took much longer than usual, but it felt good knowing that we were serving people who were facing a really tough time and who may have lost a lot of their possessions due to the floods. Many take postal delivery for granted, but in fact we do a very essential job!” “Commuting by motorboat takes me about an hour from my Faizah Bin Fadil house to the nearest post office in Lingga, Sarawak to collect Line Haul Driver mail and items for delivery, and another hour on the return journey. I generally go to the post office twice a week. Within my delivery area there are 10 long houses, a Sarawak Energy Berhad’s office and a school.
The area is not big, enabling deliveries on foot. It usually takes about an hour-and-a-half to two hours to deliver all items to recipients. In 2020, I delivered a total of 2,546 letters, 36 registered mail and 33 parcels. The main challenges are walking on slippery wooden bridges and waiting for the correct tide to get to the post office safely by boat. Oh, and the river is full of crocodiles!”
Mines @ Pinih Anak Jawa Posmen Komuniti Lingga “During the MCO, parcel volume increased as customers turned to online purchases for essential and non-essential items. Before the MCO, we handled about 250,000 to 300,000 parcels daily but during MCO, the numbers more than doubled. And we had to make sure we cleared these parcels efficiently otherwise, with more and more coming in all the time, they would have been spilling out of the IPC!
The operating hours of the IPC were extended to 20 hours a day, seven days a week. Everyone was working longer hours. We had to bring in more contract staff and even our colleagues from the HQ came in to lend a hand. It was hard work, but it was also incredible to see how everyone supported each other and did their best to meet our delivery targets. The teamwork was something else! Some of us did not take leave or time off for months, but it was not an issue as we were all focused on accomplishing our goals, while the country was going through a challenging phase.”
Ab. Hadi Bin Mahat and Muhamad Radhuan bin Mohammed Nor Employee at Integrated Parcel Center (IPC) Shah Alam and KLIA MANAGEMENT DISCUSSION AND ANALYSIS Postal Segment
Mail Mail Volume FY Dec 2020: 457 Million FP Dec 2019: 421 Million FY Mar 2019: 655 Million Courier Parcel Volume FY Dec 2020: 111 Million FP Dec 2019: 71 Million FY Mar 2019: 100 Million Retail Transactions FY Dec 2020: 44.3 Million FP Dec 2019: 42.8 Million FY Mar 2019: 60.7 Million International Outbound Shipments FY2020: 1,825 Tonnes FP2019: 1,547 Tonnes FY2019: 2,701 Tonnes
090 Our Postal Segment encompasses the delivery of domestic and international mail, courier services as well as various retail services from money transfers to bill payments, insurance and renewal of driving licences as well as road tax.
091 MANAGEMENT DISCUSSION AND ANALYSIS
BUSINESS REVIEW Postal Segment – Mail
Our mail business provides domestic mail delivery services throughout Malaysia. As the sole licensee for universal postal services, we deliver standard mail, registered mail, Advertising Mail (AdMail) and others to more than nine million addresses nationwide.
BUSINESS OVERVIEW Most mail items delivered today comprises of business letters. Hence, the gazettement of new postal rates w.e.f. 1 February 2020 for commercial mail provided a significant boost to mail business’ revenue, while also contributing to an operating profit for the year. As businesses digitalise, however, mail volume is expected to continue to decline.
Focus Area Performance Highlights • Improve cost efficiency of the mail delivery network Total Mail Volume FY Mar 2019 FP Dec 2019 FY Dec 2020 Strategic Focus Drivers: 655 Million 421 Million 457 Million
KEY INITIATIVES & OUTCOMES
Key Initiatives/Strategies Outcomes/Expected Outcomes
Initiate the consolidation of mail processing centres. One mail processing centre in Melaka was shut down and its function was consolidated with the National Mail Centre in Shah Alam.
KEY RISKS & MITIGATION
Key Risk Risk Mitigation Results
Continuous decline in mail usage and • Implementation of new postal tariffs • Increased revenue for commercial increasing cost of serving our USO w.e.f. 1 February 2020 mail segment reduces the margins for mail business. • Rationalise resources and • Operational cost declined slightly by infrastructure to manage costs 1% • Continuous engagement with regulators on matters relating to USO sustainability
PROSPECTS/OUTLOOK As society and businesses continue to digitalise, mail volume will continue to decline. In response, Pos Malaysia will continuously review mail business’ needs in terms of manpower and infrastructure to ensure sustainability.
092 POS MALAYSIA BERHAD ANNUAL REPORT 2020
BUSINESS REVIEW Postal Segment – Courier
Our courier business, under the Pos Laju brand, offers express parcel delivery service across the nation. We serve individual customers, SMEs and large businesses through our post offices, Pusat Pos Laju, SendParcel online shipping portal, and dedicated account managers. Our extensive courier network, which includes two fully- automated Integrated Parcel Centres, helps us meet customers’ expectation for on-time delivery.
BUSINESS OVERVIEW The courier business has been a direct beneficiary of the acceleration of e-commerce adoption due to the pandemic and ensuing movement restrictions. The increase in online business-to-consumer (B2C) shopping saw Pos Malaysia deliver a record 111 million parcels in 2020.
Focus Area • Growing first, mid and last-mile capacity and capabilities Performance Highlights • Reduce fixed costs in operations Total Courier Volume FY Mar 2019 FP Dec 2019 FY Dec 2020 Strategic Focus Drivers: 100 Million 71 Million 111 Million
KEY INITIATIVES & OUTCOMES
Key Initiatives/Strategies Outcomes/Expected Outcomes
Improve parcel sorting efficiency and speed • Upgraded 19 distribution centres with semi-automatic sorting machines, bringing the in distribution centres. total number of upgraded centres over the last two years to 37 • Parcel processing capacity at each upgraded centre has increased by 60%
Increase last-mile delivery capabilities • As of 31 December 2020, we had approximately 1,000 Pos Riders across Malaysia through crowdsourcing of delivery personnel under the Pos Rider programme.
Launched Entrepreneurship Programme • Over 700 previously salaried employees have been converted to “Entrepreneurs” and (EP) which provides opportunities for salaried are currently paid on commissions basis. Pos Malaysia’s staff-related cost have staff to become entrepreneurs. reduced
Grow SendParcel user base and enhance • Acquired 126,000 new accounts through the platform features on the platform. • Introduced international courier service • Integrated with three major e-commerce platforms – OnPay, WooCommerce and SiteGiant
Digitalise consignment notes for business • Drastically reduced the use of physical consignment notes clients and over-the-counter customers. • Speed up parcel handover and improve data accuracy
093 MANAGEMENT DISCUSSION AND ANALYSIS
BUSINESS REVIEW Postal Segment – Courier
KEY RISKS & MITIGATION
Key Risk Risk Mitigation Results
Increasingly competitive market with Improve overall customer experience Digitalisation of services (from order multiple operators competing to differentiate Pos Malaysia against creation to servicing) has made aggressively for market share. competitors. transactions simpler and more convenient for customers.
Accelerate crowdsourcing of delivery Demand for courier services exceeding riders and reshuffle internal resources 111 million parcels delivered in 2020. current capacity to deliver. to boost capacity.
Loosely regulated courier industry Submitted joint proposal to regulators Engage with regulators to develop new leading to unhealthy competition with on courier regulatory framework via policies for the industry. adverse impact on profit margins. NPCIL.
Reshuffled working schedule and Impact on productivity from restrictions sought exemption allowing Pos Malaysia Courier operations continued to make in operations and working hours due to continue to operate with minimum deliveries during MCO. to MCO. restrictions.
Keeping employees safe from Provision of PPE for employees and Minimal COVID-19 infection amongst COVID-19. SOPs enforcement to curb outbreak. staff.
Inability to meet SLA due to closure Rerouted parcel processing to other Continued operations of courier of main parcel processing centres to distribution centres and Senai Airport. business but at lower capacity. curb COVID-19 outbreak.
PROSPECTS/OUTLOOK The courier business looks set to continue to grow as the e-commerce boom is far from reaching a plateau. Investments in automation made over the last two years should allow us to fully capitalise on this growth. Pos Malaysia will continue to invest in our courier business and expand our parcel delivery network to solidify our position as the nation’s largest courier company. Our initiatives to further manage cost and seek regulatory changes should benefit the profitability of our business in the long run.
094 POS MALAYSIA BERHAD ANNUAL REPORT 2020
BUSINESS REVIEW Postal Segment – Retail
Our retail business offers postal-related financial services such as money transfer and non-postal services such as bill payment, motor vehicle insurance, driving license renewal, road tax renewals, life insurance and financial services. The business manages Pos Malaysia’s touchpoints, namely our post offices, agents and automated machines such as parcel lockers as well as Pos Automated Machines. These touchpoints are also leveraged by our mail and courier businesses as points of sale.
BUSINESS OVERVIEW Our retail business continues to offer a multitude of services to walk-in customers. However, as consumers are shifting online, Pos Malaysia is offering more over-the-counter services on its web portal and mobile app. Courier competitors have also expanded their presence through the agent model allowing them to have extensive reach at a lower cost.
Focus Area • Digitalisation of retail services Performance Highlights • Expand Pos Malaysia network of touchpoints via agents Total Retail Transactions FY Mar 2019 FP Dec 2019 FY Dec 2020 Strategic Focus Drivers: 60.7 Million 42.8 Million 44.3 Million
KEY INITIATIVES & OUTCOMES
Key Initiatives/Strategies Outcomes/Expected Outcomes
Enhanced Pos Malaysia mobile app and posonline.com.my • App and portal now feature bill payment and motor insurance with improved user interface and added services. purchase • Pos Malaysia mobile app has 400,000 active users
Introduce new chat-based customer servicing channel, AskPos. • AskPos manages 40,000-60,000 customer conversations a week
Expand our agent outlets across Malaysia as parcel drop-off • Over 2,000 agent outlets are within our parcel collection and bill and bill payment points. payment network
KEY RISKS & MITIGATION
Key Risk Risk Mitigation Results
Ensuring safety of employees against Provision of PPE for employees; SOPs Minimised the spread of COVID-19 in COVID-19. enforcement to curb outbreak; closure impacted locations. of post offices with confirmed outbreaks.
Digital channels that provide similar Enabled bill payment and insurance Emulate services offered in post offices services as offered in post offices will purchase services on our mobile app on our digital platforms. dilute our market share. and posonline.com.my.
PROSPECTS/OUTLOOK Pos Malaysia Berhad aims to develop an omni-channel experience for our retail business, augmenting both our physical presence and digital platforms to provide customers with a seamless experience. We are in a good position to leverage over 400,000 active mobile app users to cross-sell and up-sell our services digitally. In terms of serving our courier business, we aim to continue expanding and enriching services provided in agent outlets to gain a competitive edge in the market. The expansion of agent outlets also allows Pos Malaysia to begin rationalising post offices without compromising its service reach.
095 MANAGEMENT DISCUSSION AND ANALYSIS
BUSINESS REVIEW Postal Segment – International
Pos Malaysia provides international mail and parcel delivery as well as cross-border e-commerce delivery solutions via our international gateway in KLIA and through our global postal network. Our clients include regional e-commerce players that deliver into Malaysia and to various destinations across the globe. Pos Malaysia is also an active member of the Asian Pacific Postal Union, Asia Pacific Post Cooperative and ASEAN Post.
BUSINESS OVERVIEW Our international business is highly reliant on the aviation industry. Decline in commercial passenger air travel in FY2020 caused disruption to our international postal network, which impacted mail delivery and cross- border shipments.
Focus Area Performance Highlights Outbound Shipments • Ensure continuation of international delivery services FY2019 FP2019 FY2020 Strategic Focus Drivers: 2,701 Tonnes 1,547 Tonnes 1,825 Tonnes
KEY INITIATIVES & OUTCOMES
Key Initiatives/Strategies Outcomes/Expected Outcomes
Extended international services to include • Acquired new niche market for our international business special handling shipment via Asia Express.
KEY RISKS & MITIGATION
Key Risk Risk Mitigation Results
Decline in commercial passenger air Redirected customers to Asia Express Customers are provided an alternative travel resulted in suspension of Express service, which leverages international service to deliver items overseas. Mail Service. courier’s dedicated delivery network.
PROSPECTS/OUTLOOK Globally, e-commerce adoption has grown throughout the pandemic. With the reopening of international borders on the back of mass vaccination programmes, we will be able to tap into the trend more to grow our international business.
096 POS MALAYSIA BERHAD ANNUAL REPORT 2020
BUSINESS REVIEW Postal Segment
OUR PERFORMANCE Financial Performance
Group Revenue FY2020 RM2,332 million Segmental Revenue (RM million)
POSTAL RM1,737 Million 75% 1,737
Y FY2020
Segmental Loss Segmental Loss Margin (RM million) (%)
Y FY2020 Y FY2020 (5) (95)
Non-Financial Performance
Total Courier Volume Total Mail Volume (million) (million) 457 111
Y FY2020 Y FY2020
Mail revenue continues to deteriorate following the continuous structural decline in traditional mail volume largely due to digital substitution (i.e. converting physical statements and bills to digital format). Courier services experienced a slight decrease in revenue due to the malware attack in October 2019. Retail revenue continues to grow due to higher revenue from the insurance commission. This is due to strong partnerships with 16 insurance companies in Malaysia, including life and general insurance, conventional and takaful insurance companies. However, mail revenue decline outweighs courier & retail performance, leading to a net decline in the postal business segment.
097 MANAGEMENT DISCUSSION AND ANALYSIS Logistics Segment
Stock Keeping Units Handled FY2020: 1.31 Million FP2019: 1.09 Million FY2019: 0.80 Million
Tonnage of Coal Shipments FY2020: 2.47 Million Tonnes FP2019: 1.65 Million Tonnes FY2019: 2.44 Million Tonnes
098 Pos Logistics Berhad (Pos Logistics) provides end-to-end logistics services for the business-to-business (B2B) segment. Operating mainly in Peninsular Malaysia, Pos Logistics offers multiple logistics services which includes freight forwarding, customs clearance, haulage, warehousing, distribution and more.
099 MANAGEMENT DISCUSSION AND ANALYSIS
BUSINESS REVIEW Logistics Segment
BUSINESS OVERVIEW The Automotive logistics business performed well as automotive players enjoyed healthy car sales volume in 2020. The Freight business was temporarily impacted by ports closure during the MCO, but recovered to pre-pandemic levels once ports were reopened. Project Logistics business was impacted by the economic slowdown with no new national development projects lined up. Marine Logistics was not impacted as Pos Logistics continued to carry coal for TNB Fuel Sdn Bhd.
Focus Area • Initiate transformation of Pos Logistics • Internal reorganisation of business units • Improve operational processes • Strengthen service quality and value proposition Performance Highlights Stock Keeping Units Handled Strategic Focus Drivers: FY2019 FP2019 FY2020 801,567 1,087,000 1,308,632
Tonnage of Coal Shipments FY2019 FP2019 FY2020 2.44 1.65 2.47 Million Million Million Tonnes Tonnes Tonnes
KEY INITIATIVES & OUTCOMES
Key Initiatives/Strategies Outcomes/Expected Outcomes
Continuously improve the quality and The strategy is expected to enhance customer satisfaction and trust, resulting in the reliability of services & our image. extension of contracts as well as wider scope of services.
Enhance & expand offerings to provide • Acquisition of new clients for cross-border freight forwarding, haulage services and integrated, end-to-end logistics services. warehousing
Embark into advanced logistics management • Initiate the development of a logistics control tower that enhances visibility and data system, technologies & automation. accuracy, which should translate to improved decision making and operational efficiency • Established system-based planning and monitoring for transportation services that eliminates manual transactions
Gear the organisation and human capital • Restructure organisation which includes reorganisation of business units, strengthening policies towards creating a high-performance the sales team and manpower rationalisation culture. • Strengthen talent management and employee development to improve competency and create a performance-driven environment
100 POS MALAYSIA BERHAD ANNUAL REPORT 2020
PERFORMANCE IN 2020 Financial Performance
Revenue Segmental Loss (RM million) (RM million)
Y FY2020 Pos Logistics recorded a revenue of RM314 million in FY2020,
which was largely contributed by freight forwarding and automotive (81) logistics businesses. The company benefitted from higher vehicle production volume from PROTON as well as being able to operate during MCO, albeit with certain restrictions. However, Pos Logistics recorded losses of RM80.5 million, contributed by impairments of 314 multiple receivables.
Y FY2020
Non-Financial Performance Stock-keeping units handled Total tonnage of coal shipment
FY2019 FP2019 FY2020 Year Tonnage (MT)
Total units handled 801,567 1,087,000 1,308,632 Year Ended March 2019 2.44 Million April – December 2019 1.65 Million Year Ended December 2020 2.47 Million
KEY RISKS & MITIGATION
Key Risk Risk Mitigation Results
• Ran safety campaign & safe driver • The accident rate reduced by 37%, Road accidents involving trucks training and safety awareness training from 107 incidents in 2019 to 67 in and prime movers. • Proposed installation of cameras in 2020 all logistics prime mover trucks
• Continuous monitoring and Ensuring safety of employees • Minimised the spread of COVID-19 enhancement of pandemic-related against COVID-19 infections. amongst employees SOPs
• Strengthen collection teams across all business units • Resolve disputes and service quality • Average collection improved by 24% Cash flow constraints due to issues to improve customer collection in the second half of 2020, placing delayed payment of debts. days Pos Logistics in a better cash position • Engage with debtors to discuss payment schedules
PROSPECTS/OUTLOOK Pos Logistics remained resilient in FY2020 despite the challenges brought about by the pandemic. The company have concluded the first phase of its turnaround program which should improve cost efficiency and reduce leakages. Continuation of our turnaround agenda, coupled with a favourable outlook on the economy rebounding, lend the company reason to believe that it can improve its business and profit margins in FY2021
101 MANAGEMENT DISCUSSION AND ANALYSIS Aviation Segment
Total Air Cargo Handled FY2020: 162,961 Tonnes FP2019: 174,912 Tonnes FY2019: 343,883 Tonnes
Total Number of In-flight Meals Catered FY2020: 0.43 Million FP2019: 1.66 Million FY2019: 2.49 Million
102 Pos Aviation Sdn Bhd (Pos Aviation) offers ground handling services tailored to customers’ needs, delivered by knowledgeable customer-centric teams. It is the only independent licensed ground handling service provider for commercial airlines in Malaysia, operating out of eight airports in the country. The company also provides air cargo handling, in-flight catering, e-commerce warehousing as well as aircraft maintenance and engineering services.
103 MANAGEMENT DISCUSSION AND ANALYSIS
BUSINESS REVIEW Aviation Segment
BUSINESS OVERVIEW The aviation industry was virtually grounded by COVID-19 with global airline capacity estimated to have declined by 66% in 2020, the largest since the Second World War. To mitigate its losses, Pos Aviation embarked on various cost saving measures while re-deploying resources to maximise utilisation. In the current environment, cargo handling and e-commerce warehousing are the main revenue contributors for the company while inflight catering, passenger handling and engineering continue to be impacted by the slow recovery of air travel.
Focus Area • Cost reduction & management • Shift focus towards cargo handling & e-commerce Performance Highlights warehousing Total Air Cargo Handled Strategic Focus Drivers: FY2019 FP2019 FY2020 343,883 174,912 162,961 Tonnes Tonnes Tonnes Total no. in-flight meals catered FY2019 FP2019 FY2020 2.49 1.66 0.43 Million Million Million
KEY INITIATIVES & OUTCOMES
Key Initiatives/Strategies Outcomes/Expected Outcomes
Executed cost reduction and cost • Mandatory unpaid leave and redeployment of staff to cargo and e-commerce services management initiatives. • Reduction in the number of vendors in cargo, aircraft handling and e-commerce; also reduced raw material consumption • Negotiated payment holiday for leased equipment
Maximise service package via strategic • Signed a Share Purchase Agreement (SPA) and Shareholders’ Agreement (SHA) partnership. with SIA Engineering Company Ltd (SIAEC) for joint venture on 13 February 2020 • Collaboration with MAS Awana, Malaysia Airlines and Tabung Haji for AMAL Umrah flights by offering attractive packages to customer airlines
Facilitate growing e-commerce market share • Secured contract with a new e-commerce client to provide warehousing and e-fulfilment via e-Stored Goods (eSG) & Group synergy. services with the benefit of eSG for fast Customs clearance
Improve efficiency via automation & digital • Implemented Robotic Process Automation (RPA) in ground handling, cargo, finance, transformation. procurement and e-Commerce • Conducted digital upskilling programme to re-train non-graded employees with relevant technologies
104 POS MALAYSIA BERHAD ANNUAL REPORT 2020
PERFORMANCE IN 2020 Revenue for the aviation segment declined significantly with the dramatic drop in demand for passenger air travel, which resulted in a steep decline in revenue for ground handling and in-flight catering services. E-commerce warehousing business saw growth for aviation segment in FY2020. Despite overall operating costs being reduced through various cost-cutting measures, the segment was unable to avoid losses in FY2020.
Financial Performance
Revenue Segmental Profit/(Loss) (RM million) (RM million)
Y (159) 163
Y FY2020
FY2020 Non-Financial Performance
FY Mar 2019 FP Dec 2019 FY Dec 2020
Total Air Cargo Handled (tonnes) 343,883 174,912 162,961
Total no. in-flight meals catered (million) 2.49 1.66 0.43
105 MANAGEMENT DISCUSSION AND ANALYSIS
BUSINESS REVIEW Aviation Segment
KEY RISKS & MITIGATION
Key Risk Risk Mitigation Results
Increase in rental cost by MAHB for • Marketing efforts to attract more • Secured new e-commerce clients for e-commerce facilities risks diminishing e-commerce players to operate in warehousing and fulfilment services profit margins. Pos Aviation’s warehousing facilities • Leased out unutilised space to agents • Seek to fully utilise warehousing and freight forwarders facilities by leasing out unutilised space
• Set up short-term debt collection • Existing debtors have continued to committee to reduce total debt Long overdue receivables. make payments as per agreed • Initiate legal proceedings against schedule identified bad debtors
106 POS MALAYSIA BERHAD ANNUAL REPORT 2020
KEY RISKS & MITIGATION (CONTINUED)
Lack of talent, succession planning • Initiatie Talent Management & • Online training is ongoing (extension and staff development and training. Development Programme of Team Building & Supervisor • Collaborate with colleges to train and Programme) place candidates in Ground Handling, • Obtained CAAM approval for technical Engineering & Cargo collaboration with our managed • Staff training via simulator service partner, Agriquip. Due to the pandemic, the training programme has been postponed
PROSPECTS/OUTLOOK Pos Aviation is confident of gradual market recovery towards the end of 2021 and will leverage opportunities to capitalise on its strategic partnerships as well as expanded and enhanced portfolio of service offerings.
107 MANAGEMENT DISCUSSION AND ANALYSIS Other Segments
Revenue FY2020: 118 Million FP2019: 72 Million FY2019: 96 Million
108 Other segments comprises Islamic pawnbroking, value-add mailing solutions and the issuance of legally binding digital certificates as well as other security solutions – all offered at Pos Malaysia’s retail outlets, enhancing the range of services offered to customers.
109 MANAGEMENT DISCUSSION AND ANALYSIS
BUSINESS REVIEW Other Segments – Pos ArRahnu
Pos ArRahnu is a one-stop gold centre that provides Focus Area Islamic micro-financing services, buying and selling Continuous efforts to optimise resources and enhance of physical gold, retailing of gold jewelry and safe- cost savings. keeping of gold. The company operates 80 outlets Strategic Focus Drivers: located within selected post offices nationwide.
BUSINESS OVERVIEW Despite temporary closures during the MCO, Pos ArRahnu saw higher revenue due to an increase in gold prices in FY2020 as well as higher pawning activities and gold buyback.
KEY INITIATIVES & OUTCOMES
Key Initiatives/Strategies Outcomes/Expected Outcomes
• Produce limited edition precious metals Positive contributions towards Pos ArRahnu’s revenue and profitability. for investment • Launch digital account for pawning gold
PERFORMANCE IN 2020 Non-Financial Performance
FY Mar 2019 FP Dec 2019 FY Dec 2020
Total weight of buy-back used gold (kg) 158.9 157.9 106.3
Total weight of precious metals sold under investment (kg) 31.9 23.8 28.5
KEY RISKS & MITIGATION
Key Risk Risk Mitigation Results
Pilferage of gold items. Enforcing stricter SOPs in all branches. Zero cases of pilferage since 2018.
PROSPECTS/OUTLOOK Pos ArRahnu stands to benefit from gold’s continued reputation as a safe and viable investment choice. Leveraging the precious metal’s popularity, the company will provide more transparent credit facilities to the public with better rates and service in line with Shariah requirements.
110 POS MALAYSIA BERHAD ANNUAL REPORT 2020
BUSINESS REVIEW Other Segments – Datapos
Datapos is Pos Malaysia’s mailing solutions unit, Focus Area which provides data processing, bulk printing, Seek opportunities to expand digital services such envelope inserting, ePresentment, record repository, as ePresentment, electronic document management and records management. mailing as well as hybrid mail services. Strategic Focus Drivers: BUSINESS OVERVIEW Datapos navigated through the challenges of the pandemic by working closely with the relevant authorities and our material suppliers, ensuring maximum output within reduced production hours and workforce. Despite the significant drop in physical mail volume, revenue was cushioned by a higher volume of notifications from financial institutions informing customers about changes in lending/financing rates as well as electronic notices on Bantuan Sara Hidup programme.
KEY INITIATIVES & OUTCOMES
Key Initiatives/Strategies Outcomes/Expected Outcomes
The company is on the lookout for suitable Datapos will be able to leverage its partners’ technology to better manage production partners in Variable Data Printing (VDP). costs.
Workforce rationalisation to create a leaner, Staff costs savings of RM1.5 million year-on-year as at December 2020. more efficient organisation.
111 MANAGEMENT DISCUSSION AND ANALYSIS
BUSINESS REVIEW Other Segments – Datapos
PERFORMANCE IN 2020 Non-Financial Performance
FY Mar 2019 FP Dec 2019 FY Dec 2020
Total Printed Pages (million) 170.1 172.8 104.2
Total Mail Lodgement (million) 99.4 108.4 63.2
KEY RISKS & MITIGATION
Key Risk Risk Mitigation Results
High operating fixed costs. • Manpower rationalisation for optimal • RM1.5 million savings in staff costs resource structure as at December 2020 • Implementation of energy-saving • 28% drop in spending on electricity initiatives as compared to the previous financial period
PROSPECTS/OUTLOOK Datapos is optimistic of its prospects as it continues to streamline its core operations. It seeks to continue to enhance its digital and record management services to include cloud digital storage, digital libraries and document/record scanning. More focus is to be given to revenue diversification efforts by promoting higher-yielding businesses such as digital solutions and record repository services.
112 POS MALAYSIA BERHAD ANNUAL REPORT 2020
BUSINESS REVIEW Other Segments – Pos Digicert
Pos Digicert, Malaysia’s first Certification Authority (CA), is responsible for the issuance and management of legally binding digital certificates as well as other security solutions. Certified to WebTrust for Certification Authorities, ISO 9001:2015 Quality Management Systems (QMS), ISO 27001:2013 Information Security Management Systems (ISMS) and Adobe Approved Trust List (AATL) standards.
BUSINESS OVERVIEW The COVID-19 pandemic, which forced many companies to enforce work-from-home policies and accelerate their digital transformation, presented Digicert with an opportunity to promote Focus Area its digital signing and digital certificate solutions. The company’s certificates, internationally recognised by AAPL, provided • Renewal of e-filing contract with LHDN organisations in both the public and private sectors the ideal • Develop Digital Signing Solutions and eKYC solution as part their digital transformation and resulted in Strategic Focus Drivers: Digicert securing multiple new projects in FY2020.
KEY INITIATIVES & OUTCOMES
Key Initiatives/Strategies Outcomes/Expected Outcomes
Launched a Digital Signing Solution that includes roaming Signed 5 contracts in 2020 with organisations from the public and digital signature, verification, timestamping and secured private sectors. archiving.
Launched Adobe Approved Trust List (AATL) certificates to Enhanced product offerings will improve the user experience for new sign PDF documents. AATL certificates eliminate the need to and existing clients. print and archive physical copies, vouch for the integrity of documents, and provide authenticity of the signer.
113 MANAGEMENT DISCUSSION AND ANALYSIS
BUSINESS REVIEW Other Segments – Pos Digicert
KEY RISKS & MITIGATION
Key Risk Risk Mitigation Results
Disruption of supply chain during the • Establish relationships with multiple • Pos Digicert has successfully pandemic. local suppliers established close contact with multiple • Document business continuity plans local and global suppliers for CA and test these regularly supply chain implementation • Business continuity plan was successfully tested in October 2020
Increased cyber security threats. • Ensure information protection policies • Information security policies have are in place and are effective been documented & audited by CA • Review the security posture of the Auditor. As a result of successful organisation with regard to global WebTrust for CA Audit, CA License security standards was renewed for 5 years • Protect CA infrastructure, hardware and software from malicious attacks
Employees’ physical and mental well- • Establish and implement SOPs and • Pos Digicert was successfully audited being. other fundamental measures by group regulatory (whats the recommended by the Ministry of relevance to physical and mental Health and WHO well-being) • Ensure active engagement with staff • Pos Digicert staff are motivated by via video or teleconference, regular having a safe work environment, check-ins either formally or informally regardless of working from home or in the office
114 POS MALAYSIA BERHAD ANNUAL REPORT 2020
PERFORMANCE IN 2020 Non-Financial Performance
Total active subscribers (million) 5.6
Y FY2020
Total number of certificates issued
Total Total Total 1,249,132 1,376,935 1,638,805
FY2019 FP2019 FY2020
PROSPECTS/OUTLOOK Moving forward, Pos Digicert seeks to expand its service portfolio by providing e-stamping and Smart Agreement services to LHDNM while promoting its digital signing and Secure Sockets Layer (SSL) certificate services more aggressively. Once its root CA digital certificate is recognised by all major browsers, Pos Digicert will become an aggregator, selling both partners’ and its own SSL certificates at competitive prices. Pos Digicert will further build its competitive advantage by introducing new products such as electronic Know Your Customer (eKYC) solutions and data analytics while tapping into opportunities for continuous business expansion locally and internationally.
115 Here For You Through a smart collaboration between the Ministry of Health and Pos Malaysia, we’ve launched a value-added service for patients to receive their medication through Pos Laju. If you’re a senior citizen, living in a remote place or facing time constraints, this medicine service by post is a convenient and time saving tool.
ENSURING SUSTAINABLE VALUE CREATION
Supporting the Sustainable Development Goals (SDGs):
The UN Sustainable Development Goals (SDGs) are a collection of 17 global goals set by the United Nations General Assembly in 2015. These goals form a blueprint for a better and more sustainable future for all. Nations are strongly encouraged to work towards the achievement of the SDGs by 2030.
118 POS MALAYSIA BERHAD ANNUAL REPORT 2020
Sustainability Statement
The need to operate sustainably has never been as evident as in 2020 when the pandemic caused severe disruptions to lives and businesses. At Pos Malaysia, it reaffirmed the values that we hold, and especially the ethos of service that permeates the entire organisation. Throughout the various iterations of the Movement Control Order (MCO), our people continued to sort and deliver mail & parcels, sustaining some normalcy in lives while providing immense support to businesses. Indeed, our two top priorities during the year were to deliver on our service obligations; and to do so in a manner that ensured the safety and well-being of our key stakeholders namely our employees, customers and partners.
REPORTING FRAMEWORK Our Sustainability Statement provides an account of our commitment to creating Economic, Environmental and Social (EES) value to serve the interests of our stakeholders. In the following pages, we describe the initiatives undertaken under these three pillars, providing quantitative data and targets where appropriate, and qualitative description of our efforts in instances where measurement is not possible.
In preparing the Statement we have made reference to the Global Reporting Initiative (GRI) Standards: Core Option; Bursa Malaysia’s Sustainability Reporting Guidelines; ISO 26000:2010 Guidance on Social Responsibility; and ACCA Malaysia Sustainability Reporting Guidelines for Malaysian Companies.
119 ENSURING SUSTAINABLE VALUE CREATION
Sustainability Statement
Our reporting is further guided by the principles of: • Stakeholder inclusivity – to address our stakeholders’ expectations and concerns • Sustainability context – to present our performance in the broader context of sustainability • Materiality – by identifying and prioritising matters that are important to the Group as well as to our stakeholders • Comparability – • –
Stakeholder inclusivity Sustainability context Materiality
To address our stakeholders’ To present our performance in the By identifying and prioritising matters expectations and concerns broader context of sustainability that are important to the Group as well as to our stakeholders
Comparability Completeness
By providing data to establish trends By reporting on all sustainability and progress on various topics relevant to the Group and our sustainability metrics stakeholders
120 POS MALAYSIA BERHAD ANNUAL REPORT 2020 Our Story
BOUNDARIES This report covers the sustainability initiatives and outcomes of Pos Malaysia Berhad (Pos Malaysia or the Company), Pos Logistics (Logistics) and Pos Aviation (Aviation), which are collectively known as the Group. Information disclosed covers the 12-month period from 1 January to 31 December 2020, or FY2020. Where possible, we have included data from “During the pandemic, there was a shortage of essential items such as PPE, the two previous financial years for comparison face masks and vitamins in Sabah and Sarawak. Many NGOs were happy purposes, providing stakeholders with a clearer picture to donate these items, but then had to find ways to get them flown over to of our sustainability progress. East Malaysia. They approached Pos Malaysia, and we offered the use of our cargo planes, in the name of national service.
FEEDBACK Nine flights were organised to deliver about 32,000 PPE sets, 250,000 face masks and 1,000 vitamin bottles, which were distributed to hospitals, district We seek continuously to enhance our sustainability health offices, homes for the underprivileged, schools, prisons and individuals programmes as well as the scope and depth of our affected by COVID-19. The supplies were contributed by NGOs such as the reporting. We therefore welcome comments and Malaysia Relief Agency (MRA) and Imam Respond and Relief Team (IMARET). suggestions from our stakeholders on how we can improve. Please direct your feedback to: Pos Malaysia is always there in times of need, and it was with pride to have played a critical support role throughout the most difficult periods of the Stakeholder Engagement, Liaison & pandemic.” Sustainability Unit, GCEO’s Office Ruslin bin Sapari e-mail: [email protected] DeliveryA of MedicalFriend Supplies in Need
Pos Malaysia is always there to lend our resources for good causes. During the pandemic, we have been working with NGOs to ensure essential supplies reach communities that require our support. Every year, we provide food, clothes and other forms of relief to flood victims. Not just because we can, but because we care.
121 Our Story
“During the pandemic, there was a shortage of essential items such as PPE, face masks and vitamins in Sabah and Sarawak. Many NGOs were happy to donate these items, but then had to find ways to get them flown over to East Malaysia. They approached Pos Malaysia, and we offered the use of our cargo planes, in the name of national service.
Nine flights were organised to deliver about 32,000 PPE sets, 250,000 face “I was part of a 14-man team that went to Maran, in Pahang, to deliver food masks and 1,000 vitamin bottles, which were distributed to hospitals, district aid and help to clean up houses that were affected by the flood. The houses health offices, homes for the underprivileged, schools, prisons and individuals were mostly damaged and some ruined, with some covered in thick layers of affected by COVID-19. The supplies were contributed by NGOs such as the mud. Almost everything inside these houses were damaged and many items Malaysia Relief Agency (MRA) and Imam Respond and Relief Team (IMARET). destroyed. It was indeed an emotionaI experience but I was glad that I was able to help. I truly understood how distressing it was to be a flood victim, as Pos Malaysia is always there in times of need, and it was with pride to have my family and I experienced the predicament in 2013, 2014 and 2018. It was played a critical support role throughout the most difficult periods of the good to be able to give back to others the way my family and I received pandemic.” support during those difficult times.”
Ruslin bin Sapari Delivery of Medical Supplies Mohd Najmi Mohamed Flood volunteer ENSURING SUSTAINABLE VALUE CREATION
Our Approach to Sustainability
Beyond playing a key role within the country’s marketplace, Pos Malaysia Berhad recognises our potential to make a significant difference to lives through the provision of employment, especially for those in rural or remote areas. In addition to 21,760 employees, we engage 518 Posmen Komuniti and 26 Posmen Kejiranan to help distribute mail/parcels in rural and remote areas, while providing additional income to 192 Wakil Posmen Komuniti for the use of their premises as collection points particularly in Sabah and Sarawak. In addition, we use our infrastructure and resources to deliver aid in times of need. To help in COVID-19 efforts, for example, we are offering our aircraft to transport hand sanitiser, facial masks and Personal Protective Equipments (PPE) as well as medical and other essential items to hospitals, frontliners and NGOs in Sabah and Sarawak. Every year, we also deploy teams to the flood- prone East Coast to help in flood relief missions.
From the time Pos Malaysia was established, more than 200 years ago, we have been driven to fulfil our purpose, namely to keep people Meanwhile, we are acutely aware of the threats of climate change, and are ensuring connected – to each other and to the world – via we contribute positively towards efforts to mitigate and manage this global issue. mail. Simply by carrying out this function to the Various programmes have been initiated to lower our carbon footprint, both in our best of our ability, we have played a fundamental premises as well as in the use of our vehicles. role both in supporting economic growth and enhancing people’s lives. Before the advent of While, in the past, our sustainability efforts have been natural extensions of our core digital communication, mail was the prime means business as well as our values, today we are placing more emphasis on having a of communication between organisations, as well structured approach to sustainability, guided by EES principles. We also seek to as between individuals. ensure our efforts are in line with global movements to manage critical issues. Towards this end, we have reviewed the United Nations’ Sustainable Development Although this role is rapidly being replaced by Goals (UN SDGs) and identified seven SDGs in which we believe we can make electronic communication, our unparalleled network significant contributions. and reach means that we continue to have an edge over others in the delivery of “the new mail”, These are: ie packages. With e-commerce, demand for such delivery has been increasing exponentially and we are ensuring the ability to keep up with this trend by automating our processing centres and enhancing our last-mile capacity. As we deepen our sustainability engagement, we will continue to ensure that our efforts create positive outcomes in these seven important areas.
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Sustainability Framework
Our sustainability agenda is driven by our vision to Connect Malaysia and Beyond, for Today and Tomorrow. This objective is supported by EES considerations through which we will deliver innovative postal solutions that generate economic growth, while contributing to a healthy environment and playing our part in social development. This agenda is encapsulated by our Sustainability Framework, as depicted below.
Pos Malaysia’s Sustainability Framework
Economic Environmental Social Impact Stewardship Equity
Our Purpose Our Planet Our People
Group Sustainability Policy/Sustainability Risk Management Framework
Vision, Mission and Values
In FP2019, we integrated seven (7) United Nations Sustainable Development Goals (SDGs) that are relevant to our operations, which are addressed through the following material matters:
Economic Impact Environmental Stewardship Social Equity
• Digital Transformation • Emissions Management • Socio-economic empowerment • Customer Experience • Employee Development • Operational Efficiency • Government & Regulatory Policies
In addition to the seven material matters indicated in the framework above, which have been categorised according to the three EES pillars, an eighth material matter was identified in 2020, which had both a very strong economic as well as social impact on the nation. This was the pandemic, which caused significant disruption to the local economy, while also severely testing nation’s healthcare capacity and capabilities. Because COVID-19 is an exceptional material matter, we are accounting for the manner in which we responded to it separately.
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Our Response to COVID-19
COVID-19 truly has brought about a new norm – changing the way people work and live. When the MCO was first declared in March, Pos Malaysia was one of the few organisations that were required to keep operating as the service we provide is essential to the nation. While this was a boon for us financially, it made it critical that we applied all the relevant preventive measures to keep our people safe. This, indeed, was our topmost priority.
Given our resources and network, we were also in a position to lend support to national efforts to contain and manage the virus. We embraced the opportunity to contribute to the nation’s well-being; and our efforts in this regard formed the second key element of our response to the pandemic.
Finally, the pandemic posed certain exceptional operational challenges, which we also had to manage in order to be able to fulfil our service obligations.
Our response can therefore be categorised into three distinct areas: focus on our people’s safety; contributing to national pandemic efforts; and ensuring operational continuity.
FOCUS ON OUR PEOPLE • Formed a COVID-19 Special Task Force to monitor issues related to the pandemic and update all employees on safety guidelines as well as procedures
• Implemented work from home (WFH) for all staff working in support departments and units
• For those carrying out essential service – namely those sorting and delivering mail/parcels, ensured all SOPs were adhered to, such as: – Temperature screening before entry into premises – Use of face masks at all times on premises – Movement restrictions so that employees stayed within their designated zones
• Provided personal protective equipment (PPE) including face shields and full-body gowns to staff who needed it, for example those delivering to hospitals, laboratories or other red zones
• Carried out regular cleaning and sanitisation of our workplaces and business premises to mitigate the risk of infection
• Ensured hand sanitisers were available and placed in various locations in work premises
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CONTRIBUTION TO NATIONAL EFFORTS • To encourage patients to stay home, we have stepped up our Ubat Melalui Pos (medicines through the post) service through which our delivery team pick up medicines from hospitals and deliver them to patients’ homes
• We have extended our blood sample delivery service to include the delivery of COVID-19 samples
• We are also offering use of our aircraft to deliver personal protection equipment (PPE), face masks and sanitisers to Sabah, Sarawak and Labuan free of charge
• We deliver PPE to frontliners from NGOs
• We also disseminate safety and health messages on mail envelopes provided to our customers
MANAGING OPERATIONAL CHALLENGES • Closure of airports and seaports has made it difficult for us to carry out our International business. To ensure efficient delivery, we encourage our customers to utilise an alternative courier service provider as a temporary solution for international shipments
• We unfortunately were forced to close two key Integrated Parcel Centres (IPCs) due to the breakout of the virus – that in KLIA and Shah Alam. With these closures, parcels were diverted to alternative sorting centres
• To keep customers safe, we encourage them to stay home and to avail of our pickup service. We have also initiated contactless delivery
Our response to the specific business challenges posed by the pandemic is discussed in depth in the Management Discussion & Analysis of the IAR.
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Sustainability Governance
As sustainability at Pos Malaysia is closely linked with our day-to-day operations, and has a central role in the achievement of our vision to become a customer-centric organisation driven by digitalisation, it is overseen by the highest body within the organisation, namely our Board of Directors. The Board, through the Board Risk, Sustainability & Compliance Committee (BRSCC), approves our sustainability strategies and is kept apprised of programmes and progress by our Group CEO (GCEO).
In 2019, we embarked on the process of developing a robust sustainability governance structure by establishing a sustainability function that reports directly to the GCEO and the BRSCC. In FY2020, we created sustainability working committees and nominated sustainability champions from various divisions and subsidiaries across the Group to create a sustainability mindset and ensure sustainability considerations become part of the decision-making process.
Board of Directors & GCEO
Oversees the Group’s sustainability strategy, decisions and initiatives.
BRSCC
Ensures that risk management, compliance and sustainability efforts are aligned with the Group’s long-term business strategy.
Sustainability Steering Committee
Recommends direction that aligns the sustainability targets with the overall goals of the Group as well as prioritising key sustainability matters.
Sustainability Working Committee
Assesses and validates all sustainability-related information.
Business Units & Subsidiaries
Ensure the three EES pillars, and especially the seven material matters are managed so as to create value for stakeholders.
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Sustainability Related Guidelines
We have in place various policies and guidelines that support our focus on EES considerations. These policies reflect industry best practices while also ensuring we adhere to all relevant regulatory requirements. Together, they enable Pos Malaysia to maintain the highest level of integrity in the conduct of our business as we create value for our stakeholders.
Material Topic List of Policies/Guidelines
Digital Transformation • ICT Operations Management Policy • Incident Management Process Tool Design • Manual for Change Management
Customer Experience • Customer Service procedures & guidelines
Operational Efficiency • Service Level Agreement
Government & • Regulatory Compliance Policy Economic Regulatory Policies • Code of Conduct & Business Ethics • Universal Service Obligation (USO) • Vendor Code of Conduct
Material Topic List of Policies/Guidelines
Environmental Emissions Management • Safety, Health & Environment (SHE) Policy
Material Topic List of Policies/Guidelines
Socio-Economic • Universal Service Obligation (USO) Empowerment
Employee Development • Policy on Training and Development & Welfare • Safety, Health and Environmental (SHE) Policy Social • Code of Conduct and Business Ethics
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Sustainability Related Guidelines
POLICIES THAT GOVERN OUR SUSTAINABILITY
Material Matter Policy/Guidelines Description
ICT Operations This policy provides a holistic approach to the operation of infrastructure components, Management Policy applications and processes. It also guides our IT support services for better information management and security. It applies to all employees and external Digital parties that access our ICT premises, computers and/or data communication Transformation systems.
Incident Management This guides the Group to restore service operations quickly and with minimal Process Tool Design impact on business operations in the event of an incident. It enhances Pos Malaysia’s ability to detect and resolve incidents; to align IT to real-time business priorities; and to identify potential improvements to services as well as additional service/training requirements.
Manual for Change The manual applies best practices to ensure beneficial changes can be made Management with minimal disruption to IT services.
Policy for Customer The Customer Service policies and procedures are formulated as a guide for the Service employees of Pos Malaysia and Related Vendors to best serve the customer’s feedback. Customer Experience Quality customer service is a key priority for Pos Malaysia. All employees of Pos Malaysia and Related Vendors can influence customer perception on the quality of service they received. Thus, it is vital to emphasise the practices which are set out in this policy as relevant to everyone. Every employee can and must play their part with enthusiasm and commitment.
Service Level Agreement Under our SLA, we are required to deliver parcels within three days of customers (SLA) depositing the items at a post office/collection point for local destinations; and within five days for interstate deliveries in Peninsular Malaysia; and seven days Operational for interstate deliveries in East Malaysia. Efficiency
Regulatory Compliance The SOP on Closure of Post Offices guides us the necessary procedures when Policy the need to close post office(s) arises, seeking approval from the Malaysian Communication and Multimedia Commission (MCMC). Government & Regulatory Policies Code of Conduct and Through this code, we seek to establish a culture of transparency, accountability Business Ethics and inclusivity. The code applies to all levels of the workforce, with details on how the leadership team has an additional responsibility for governing the conduct of the workforce. Strict guidelines are included to eliminate any form of discrimination, harassment or abuse.
Universal Service The USO underlines our duty to all Malaysians across the country, even those Obligation (USO) living in remote areas. By doing so, we facilitate inclusivity, commercial activities and nation-building.
Vendor Code of Conduct While suppliers are independent entities, their practices and actions when conducting (VCOC) business on behalf of Pos Malaysia may affect and reflect the Group. Therefore, all suppliers are expected to abide by the environmental, social, governance and ethics standards described in the VCOC. These standards protect the integrity, social and worker rights across the supply chain while minimising the environmental impact of their activities.
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Material Matter Policy/Guidelines Description
Universal Service As a national postal operator, it is our duty to serve everyone. By adhering to Obligation (USO) the USO, we provide service to all states throughout the country, reaching even the most remote areas. By doing so, we are able to facilitate inclusivity, commercial Socio-Economic activities and nation-building. Empowerment
Policy on Training and This policy ensures continuous development of our employees’ capacities and Development competencies to enable them to realise their full potential while also enhancing their job performance. The policy reflects the Group’s commitment to developing Employee human capital, outlining the process for identifying and fulfilling training and Development & development needs. Welfare
Safety, Health & See below. Environment Policy
Code of Conduct and Through this code, we seek to establish a culture of transparency, accountability Business Ethics and inclusivity. The code applies to all levels of the workforce, with details on how the leadership team has an additional responsibility for governing the conduct of the workforce. Strict guidelines are included to eliminate any form of discrimination, harassment or abuse.
Safety, Health & This policy encompasses all statutory rules and regulations related to occupational Environment (SHE) safety and health, as well as environmental protection. It ensures appropriate Policy measures are in place to avoid injuries and fatalities and to meet the provisions Emissions of the Government’s Environmental Quality Act 1974. Management
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Sustainability Scorecard
ECONOMIC IMPACT ENVIRONMENTAL IMPACT 497,599,785 48.4% TRANSACTIONS AND INCREASE YEAR ON YEAR ITEMS PROCESSED IN TOTAL ENERGY USAGE 710 Zero JOBS CREATED IN FINES AND PENALTIES RURAL COMMUNITIES FOR ENVIRONMENTAL NON-COMPLIANCES
518 3 PK 686,148m WATER CONSUMPTION 92 WPK 55 NEW SUPPLIERS SCREENED ON 15,000 ENVIRONMENTAL CONTRACT CRITERIA CUSTOMERS
SOCIAL IMPACT GOVERNANCE 6.9 HOURS OF TRAINING PER EMPLOYEE RM1.6 Million INVESTED IN TRAINING & DEVELOPMENT 21.3% 96% OF EMPLOYEES ARE COMPLIANCE WITH WOMEN STANDARD OPERATING PROCEDURES BASED 1,792 ON AUDIT CONDUCTED VILLAGES REACHED FOR AT BRANCHES ADDRESS FOR ALL 4,286 VILLAGES REACHED UNDER PELAN TRANSFORMASI POS SABAH & SARAWAK (PTPSS)
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“I quit my job as a lecturer at a private college during the MCO to become a Pos Rider and have never looked back since. The college management cut our Oursalaries during the lockdown to make up for a loss in number of students. With this, my take-home pay was barely enough to make ends meet. For a while, I had to borrow money from my parents to survive. But the tide turned after I stumbled across a Pos Rider advertisement on Facebook. Story Thankfully, my application was accepted and I’ve never been happier! We’re paid on a commission basis, and because of the sheer number of parcels that have to be delivered every day, I’m now able to earn twice as much as I did as a lecturer (even before our pay cut). I’ve paid back all the money I took from my parents and even have enough to help a younger sibling facing financial difficulties. The best part of it all is that I get to spend more time with my family too.”
Muhammad Hafidz Ahmad Fadzil Pos Rider
Creating Opportunities and Improving Livelihoods
The launch of the Pos Rider and Entrepreneurship Programme have not only created new job opportunities for individuals affected during the pandemic but have improved their livelihoods and well-being.
131 Our Story
“I quit my job as a lecturer at a private college during the MCO to become a Pos Rider and have never looked back since. The college management cut our salaries during the lockdown to make up for a loss in number of students. With this, my take-home pay was barely enough to make ends meet. For a while, I had to borrow money from my parents to survive. But the tide turned after I stumbled across a Pos Rider advertisement on Facebook.
Thankfully, my application was accepted and I’ve never been happier! We’re paid on a commission basis, and because of the sheer number of parcels that have to be delivered every day, I’m now able to earn twice as much as I did as a lecturer (even before our pay cut). I’ve paid back all the money I took from my parents and even have enough to help a younger sibling facing financial difficulties. The best part of it all is that I get to spend more time with my family too.”
Muhammad Hafidz Ahmad Fadzil Pos Rider
“I served as a postman for 25 years and heard about the Entrepreneurship Programme (EP) from a colleague. I immediately signed up for the programme, knowing I would be able to earn a better income. I’ve been with the EP programme for three months now and it has really changed my life. I work six days a week, sometimes seven days, if I’m needed, and deliver about 150-200 packages a day.
I am now earning double the salary I used to earn as a postman. As my earnings are commission-based, I am more than happy to put the extra working hours when I can to earn more. As an entrepreneur rider, I am able to better provide for my family.”
Mohamad Repi bin Madeen Abdul Kadir Entrepreneurship Programme Postman ENSURING SUSTAINABLE VALUE CREATION
Economic Impact
#sustainability
We contribute to Economic Impact through:
Rapid digitalisation of our business operations and the manner in which we engage with consumers as well as business partners.
The provision of high standards of service, flexibility and competitive pricing.
Maintaining our profit margins while meeting customers’ expectations.
Helping to shape regulatory policies that contribute to sustainability of the industry.
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Economic Impact
DIGITAL TRANSFORMATION Digitalisation is central to Pos Malaysia’s ongoing transformation to modernise our operations, enhance efficiencies and offer the highest level of service delivery. Our legacy IT infrastructure was fragmented, with more than 100 different systems of different versions, creating unnecessary complexity as well an inefficiency. This inspired us to engage an external consultant to assess our needs and suggest the most appropriate response. Based on the consultant’s recommendations, we developed a three-year Technology Roadmap which will have positive repercussions operationally and in terms of our customer experience.
Under this roadmap, we are modernising and consolidating our business applications while migrating all our digital systems and processes onto the cloud. While building our digital capabilities, the Technology Roadmap will ensure strengthened cyber security, as well as a workforce that has the skillsets and competencies to fully capitalise on the new tools made available.
WHAT WE DID
• Human resource management: Implemented Resource Management System (RMS) for manpower rostering optimisation • Business development: Implemented an e-Business Service Platform (eBSP) to further strengthen our e-commerce business in the Digital Free Trade Zone (DFTZ) CUSTOMER EXPERIENCE Growing importance of the courier segment within our operations has made it essential that Pos Malaysia is able to offer parcel services on par with the best players. The need to differentiate ourselves and to gain customer loyalty is especially pertinent given increasing competition in the courier space, with the entry not only of established international players but also small digital start-ups.
Recognising the need to enhance the customer experience, we have set up a dedicated Customer Experience (CX) unit tasked with understanding our customers’ expectations and ensuring we continue to delight them with our service. Digitalisation will play a key role in this regard, as we shift more of our customer-facing interfaces online, and expand our portfolio of digital products and services that are easier and more convenient to use.
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WHAT WE DID
• Enhanced Pos Mobile App and posonline. com.my with improved user interface and added services such bill payment and motor insurance purchase • Introduced new chat-based customer servicing channel, AskPos, which manages 40,000-60,000 customer conversations a week • Expanded agent outlets to 2,000 for parcel drop-off and bill payment • Completed the deployment of Track and Trace in Peninsular Malaysia, enabling customers to track their parcels in real time • Launched e-consignment to make it even more hassle-free to use our parcel delivery service • Introduced international courier service • Introduced the Net Promoter Score (NPS) platform at selected locations where customers can scan a QR code and complete a survey to rate their experience with Pos Malaysia
WHAT WE ACHIEVED 35 165 100 PUSAT INTERNET EZIBOX EZIDROP PENINSULAR: 29 SABAH: 4 1,662,140 389,637 SARAWAK: 2 PARCELS DELIVERED PARCELS DROPPED VIA EZIBOX OFF AT EZIDROP
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Economic Impact
OPERATIONAL EFFICIENCY A key issue facing Pos Malaysia today is narrowing margins as the cost of fulfilling our USO keeps increasing while revenue is constrained by fixed postal rates and low courier rates due to heavy competition in the market. In addition to helping us bring down operational costs, operational efficiency is also essential to maintaining our Service Level Agreement (SLA), namely to deliver mail/ parcels within a stipulated timeframe. This is a particularly pressing challenge as the number of parcels going through our centres is increasing at an exponential rate.
Other than to digitalise our services, we have begun to outsource the last-mile delivery of mail/parcels, using the Pos Rider Crowdsourcing platforms as well as a new Entrepreneur Programme that was launched in mid 2019.
Entrepreneur Programme (EP) Under EP, we encourage our postmen and staff from Courier services to set up their own business to deliver parcels for Pos Malaysia. We help these entrepreneurs with discounted transport vehicles, and assure them of a minimum number of parcels to be delivered per day. As they are paid on a commission basis, they are motivated to put in the hours to deliver as many parcels as they can. This has seen productivity increase while helping to reduce our fixed costs. Over 900 salaried employees have been converted to the new employment model, and are now earning as much as four times more than they previously did.
WHAT WE DID WHAT WE ACHIEVED
• Upgraded 11 distribution centres with semi-automatic sorting machines, • Increased our average parcel sorting capacity from bringing the total number of upgraded centres over the last two years 350,000 in 2019 to 400,000 - 450,000 at to 31. The upgrades have enhanced our parcel processing capacity end 2020 at each centre by approximately 60% • Increased the number of Pos Riders from 95 • Increased the number of crowdsourcing Pos Riders, while launching in May 2019 to 1,029 as of December 2020 Entrepreneurship Programme • Implemented Robotic Process Automation (RPA) in Ground Handling, Cargo, Finance, Procurement and e-commerce • Integrated SendParcel with three major e-commerce platforms – OnPay, WooCommerce and SiteGiant
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GOVERNMENT REGULATORY POLICIES While postal rates are regulated by the Ministry of Communications and Multimedia, there is currently no control over courier rates. This has led both to an infiltration in number of players in the segment as well as unsustainable price dumping along with intense competition. Continued de-regulation could result in an overall degradation of service which would be detrimental to both consumers and service providers. To protect all affected stakeholders, there is therefore an urgent need for the market to be regulated to an extent.
WHAT WE DID WHAT WE ACHIEVED
• We engaged extensively with the relevant authorities • The Ministry of Communications and Multimedia has during the National Postal and Courier and Courier indicated that it will formulate an action plan to ensure Industry Laboratory (NPCIL) – held for three weeks from the viability of the industry, recognising that it serves as 16 November to 4 December 2020 – to stress the need the backbone of the e-economy for regulatory control of the market
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Environmental Stewardship
#sustainability
Our Environmental Stewardship is driven by:
Reduced carbon emissions across our operations, principally fleet operations and electricity consumption in our premises.
Efficient water consumption to avoid unnecessary waste.
Awareness creation among employees of important environmental issues.
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EMISSIONS MANAGEMENT We recognise the urgency for organisations to WHAT WE ACHIEVED collaborate with governments and non-governmental agencies as well as other stakeholders to manage and mitigate climate change, given the cataclysmic Scope 1 Emissions consequences should this not be achieved. Pressure Emissions from fuel consumption of vehicles from various quarters is also mounting for listed Fuel consumption Carbon emissions Emissions intensity companies to adopt a more proactive approach (litres) (tCO2e) (CO2e/per 1,000 parcels) towards global environmental issues, and particularly climate change.
We have therefore made it our mission to reduce our carbon emissions across all our operations, and strive to create greater awareness of environmental issues among employees as we believe every small action contributes towards the achievement of larger
goals. 43,315,660 155,968 1.41
In FY2019, we began the process of measuring Y FY2020 Y FY2020 FY2020 emissions for electricity usage, hence we are able to provide a two-year comparison for our Scope 1 Although total emissions from fuel consumption increased from FP2019 to emissions – namely direct emissions from fuel FY2020, this was partly due to the significantly increased number of parcels consumption of our fleet of vehicles; and Scope 2 that had to be delivered during the MCO period. Our emissions intensity, emissions – namely indirect emissions from electricity however, decreased year on year as a result of fuel reduction initiatives in consumption. place like management of fleet and strategic route optimisation efforts.
Additionally, we track and monitor our water usage, Scope 2 Emissions as water is becoming scarce, even in Malaysia where Emissions from electricity consumption in our premises we receive an abundance of rainfall. Although this Energy consumption Carbon emissions Emissions intensity is not related to emissions, responsible water use (kwh) (tCO e) (CO e/per 1,000 parcels) plays a significant role in overall environmental 2 2 stewardship.
WHAT WE DID
• We have invested in various energy-efficient 62,893,652 44,468 0.40 systems such as LED lighting, use of efficient refrigerant gas for airconditioning, and Y FY2020 FY2020 FY2020 installation of better compressor control in airconditioners. These have been implemented Although total emissions from electricity Water consumption in our post offices in Subang Jaya, Serahan consumption increased from FP2019 to in our premises Rawang, Rawang, Jinjang and Medan Tuanku; FY2020, this was partly due to increased (m3) as well as at the Pos Laju centre in Bangi number of operating hours of our parcel sorting • We reviewed the use of chillers and air centres. Our emissions intensity, however, handling units (AHUs) at the Integrated decreased year on year during the MCO Processing Centre 1 and reduced the usage period given the significant increase in parcels of two chillers and eight AHUs to one chiller received. and four AHUs during working hours • Organise regular environmental awareness Zero
programmes for employees to make fines for non-compliance with 686,148 responsible behaviour part of our culture and environmental law and regulations mindset Y FY2020
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Social Equity
#sustainability
We contribute to greater social equity through: Supporting the nation’s socio-economic development, and particularly the e-economy, through the delivery of mail & parcels
Providing stable employment and competitive remuneration to staff
Providing income opportunities to Pos Riders and enterprising staff through the Entrepreneurship Programme
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Social Equity
SOCIO-ECONOMIC EMPOWERMENT Pos Malaysia plays an essential role in the country’s socio-economic development through our core postal and courier activities. By delivering mail and parcels, we provide a critical service that enhances the quality of life for people across the nation. In addition, we employ locals from the different communities that we serve, providing employment opportunities especially in rural and remote areas. With the accelerated growth of e-commerce, we need to further boost our delivery capabilities and have been recruiting even more drivers to help us meet our SLA.
WHAT WE ACHIEVED
• In Sabah and Sarawak, we hire locals from rural and remote areas as Posmen Komuniti (PK) and Wakil Posmen Komuniti (WKP) to facilitate last-mile delivery. PK deliver postal items to recipients directly while WPK uses their premises as collection points. Through this programme, we support the livelihood of rural communities while enhancing our rural coverage to meet our USO • The same system is applied in Peninsular Malaysia, where the local residents appointed to deliver postal items are known as Posmen Kejiranan. These agents are paid a monthly allowance according to frequency of delivery and geographical considerations • To extend our coverage, we also leverage internet centres in rural areas to serve as postal agents. By supporting these rural internet centres, moreover, we are able to support e-commerce growth in rural communities • Since 2015, we have been providing official addresses for houses in isolated and rural areas to enhance the residents’ access to postal and other essential services such as banking. Having an address is a prerequisite for many basic services and is integral to inclusive development
WHAT WE ACHIEVED
Posmen Wakil Posmen Posmen Pusat Komuniti Komuniti Kejiranan Internet 518 192 26 35
Y FY2020 Y FY2020 Y FY2020 Y FY2020
EMPLOYEE DEVELOPMENT AND WELFARE A key measure in which we contribute to social upliftment in the country is through the opportunities we provide to our employees for career advancement, which has trickle down effects on their families and, by extension, their communities. We recognise how important our employees are to our everyday operations and the achievement of our ambitions, therefore seek to ensure that we attract the best talents and subsequently nurture these talents to help them realise their full potential.
142 POS MALAYSIA BERHAD ANNUAL REPORT 2020
EMPLOYEE TRAINING & DEVELOPMENT EMPLOYEE WELFARE Training programmes are based on organisational needs. Every The health and safety of our people has always been a key priority. year, our Human Resources analyses the competencies required As a responsible and caring organisation, we invest in training and to achieve Pos Malaysia’s objectives, identifies gaps through awareness programmes to equip our people with the skills to work performance appraisals, and then organises relevant training to fill safely while also reinforcing safety messages repeatedly. Our these gaps. Currently, much emphasis is being placed on digital objective is for everyone at Pos Malaysia’s to take responsibility training to support the Group’s digitalisation aspirations and efforts. for their own safety as well as that of their colleagues. Four types of training are conducted: in-house, public, overseas and project training. During the year, most of the training was During the year, keeping safe was paramount given the pandemic. conducted online to adhere to the MCO guidelines to ensure safety This required immediate action to enforce SOPs in the workplace and health of our employees. while transitioning non-essential staff to work from home. Every possible preventive measure to keep our employees safe from the virus was undertaken, as described in the section “Our Response WHAT WE DID to COVID-19” on pages 124 to 125 of this Sustainability Statement. • HR conducted training needs analysis to develop relevant At the same time, we continued to place emphasis on occupational training programmes to meet the organisation’s needs health & safety (OSH), and maintained ongoing programmes to • Enhanced the digital competencies of our people by reduce the number of accidents that take place in our premises channeling RM1.6 million in various fields particulary digital as well as on the roads. and ecommerce related training modules
• Continued with our Succession Training programme by WHAT WE DID nominating identified employees to attend the Executive Development Programme and Management Development • Conducted a mass swab testing involving all employees Programme conducted by @theAcademy DRB-HICOM under the PERKESO initiative to ensure safety of our employees and customers • Conducted second swab testing for staff with exposure to WHAT WE ACHIEVED COVID-19 cases particularly at HQ, Kuala Lumpur Staff and IPC
Average Training Hours Number of Employees • Strict SOPs at workplace – following MKN and MOH Per Employee Trained guidelines (e.g. physical distancing, facial mask, online (hours) meetings, work shift and limited working hours stipulated by government) • Adhered to strict client-facing SOPs
WHAT WE ACHIEVED 6.9 2,362
Number of Accident Y FY2020 Y FY2020 HSE Cases Ratio Number of Training Programmes Held 328 14.7 545
Y FY2020 Y FY2020 Y FY2020
143 OUR LEADERSHIP
Corporate Information
BOARD OF DIRECTORS
DATO’ SRI SYED FAISAL ALBAR BIN SYED A.R ALBAR AHMED FAIRUZ BIN ABDUL AZIZ Chairman/Non-Independent Non-Executive Director Independent Non-Executive Director
DATUK PUTEH RUKIAH BINTI ABD MAJID DATO’ DR. MOHD ALI BIN MOHAMAD NOR Independent Non-Executive Director Independent Non-Executive Director
DATUK IDRIS BIN ABDULLAH @ DAS MURTHY DATO’ JEZILEE BIN MOHAMAD RAMLI Independent Non-Executive Director Non-Independent Non-Executive Director
SHARIFAH SOFIA BINTI SYED MOKHTAR SHAH DATO’ MOHAMED SHARIL BIN MOHAMED TARMIZI Non-Independent Non-Executive Director Independent Non-Executive Director
AHMAD SUHAIMI BIN ENDUT Non-Independent Non-Executive Director
BOARD COMMITTEES
BOARD AUDIT COMMITTEE BOARD NOMINATION AND REMUNERATION COMMITTEE Ahmed Fairuz bin Abdul Aziz Chairman/Independent Non-Executive Director Datuk Idris bin Abdullah @ Das Murthy Chairman/Independent Non-Executive Director Datuk Puteh Rukiah binti Abd Majid Independent Non-Executive Director Dato’ Sri Syed Faisal Albar bin Syed A.R Albar Non-Independent Non-Executive Director Datuk Idris bin Abdullah @ Das Murthy Independent Non-Executive Director Datuk Puteh binti Rukiah Abd Majid Independent Non-Executive Director Dato’ Jezilee bin Mohamad Ramli Non-Independent Non-Executive Director
BOARD RISK, SUSTAINABILITY BOARD TENDER COMMITTEE AND COMPLIANCE COMMITTEE Datuk Puteh Rukiah binti Abd Majid Datuk Idris bin Abdullah @ Das Murthy Chairman/Independent Non-Executive Director Chairman/Independent Non-Executive Director Ahmad Suhaimi bin Endut Datuk Puteh Rukiah binti Abd Majid Non-Independent Non-Executive Director Independent Non-Executive Director Ahmed Fairuz bin Abdul Aziz Dato’ Dr. Mohd Ali bin Mohamad Nor Independent Non-Executive Director Independent Non-Executive Director
BOARD DIGITAL-FIRST COMMITTEE Dato’ Mohamed Sharil bin Mohamed Tarmizi Chairman/Independent Non-Executive Director
Sharifah Sofia binti Syed Mokhtar Shah Non-Independent Non-Executive Director
Dato’ Dr. Mohd Ali bin Mohamad Nor Independent Non-Executive Director
144 POS MALAYSIA BERHAD ANNUAL REPORT 2020
OTHER INFORMATION
COMPANY SECRETARIES SHARE REGISTRAR Sabarina Laila binti Mohd Hashim Boardroom Share Registrars Sdn Bhd (LS 0004324) Registration No. 199601006647 (378993-D) (Practising Certificate No. 201908001661) 11th Floor, Menara Symphony No. 5, Jalan Prof. Khoo Kay Kim Kamilia Nor binti Mohamad Kamal Seksyen 13, 46200 Petaling Jaya (LS 0008663) Selangor Darul Ehsan, Malaysia (Practising Certificate No. 201908003242) Tel : +603-7890 4700 Fax : +603-7890 4670 REGISTERED OFFICE Email : [email protected] Tingkat 8, Ibu Pejabat Pos Kompleks Dayabumi AUDITORS 50670 Kuala Lumpur, Malaysia KPMG PLT Tel : +603-2267 2267 LLP0010081-LCA & AF 0758 Fax : +603-2267 2266 Chartered Accountants Level 10, KPMG Tower, 8, First Avenue, Bandar Utama INVESTOR RELATIONS 47800 Petaling Jaya, Selangor Darul Ehsan Azahar bin Ariff Tel : +603-7721 3388 Tel : +603-2267 2267 Fax : +603-7721 3399 Email : [email protected] BANKERS WEBSITE Alliance Islamic Bank Malaysia Berhad www.pos.com.my AmBank Islamic Berhad Bank Muamalat Malaysia Berhad STOCK EXCHANGE LISTING Bank Pertanian Malaysia Berhad Bank Simpanan Nasional Main Market of Bursa Malaysia Securities Berhad CIMB Bank Berhad Stock Name : POS HSBC Amanah Malaysia Berhad Stock Code : 4634 Maybank Islamic Berhad OCBC Bank Malaysia Berhad RHB Islamic Bank Berhad
145 OUR LEADERSHIP
Board at A Glance
Tenure of Directors Board Composition
I E D I E D
146 POS MALAYSIA BERHAD ANNUAL REPORT 2020
Gender Range (Age) No. of Directors
20-29 1 2
40-49 1
M 50-59 4
60-69 3
Total 9
147 OUR LEADERSHIP
Profile of Board of Directors
DATO’ SRI SYED FAISAL ALBAR BIN SYED A.R ALBAR Chairman/Non-Independent Non-Executive Director
Academic/Professional Qualification • Member of the Malaysian Institute of Certified Public Accountants (MICPA) • Member of the American Institute of Certified Public Accountants (AICPA) • Bachelor of Arts (Accountancy), Barat College of DePaul University, Lake Forest, United States of America • AICPA Professional Certification, University of Illinois, Urbana Champaign, United States of America
Present Appointment • Group Managing Director, DRB-HICOM Berhad
Past Experience • Chief Executive Officer, Malakoff Corporation Berhad • Chief Executive Officer, Gas Malaysia Berhad • Executive Director, Pos Logistics Berhad • Director, Malaysia Airports Holdings Berhad • Director, Hong Leong Bank Berhad Age: 55 years • Director, Kwasa Land Sdn Bhd Nationality: Malaysian • Director, Yayasan Kelana Ehsan Gender: Male • Group Managing Director, Pos Malaysia • Chairman, ASEAN Postal Business Union • Chief Executive Officer, The New Straits Times (Malaysia) Berhad • Chief Financial Officer, The New Straits Times (Malaysia) Berhad Member: N • Various positions in PricewaterhouseCoopers (formerly known as Price Waterhouse), Kuala Lumpur and San Francisco, California, United States of America Date of re-designation as Chairman/Non-Independent Directorships Non-Executive Director: Listed Company: 2 April 2021 • DRB-HICOM Berhad (Group Managing Director)
Public Companies: Date of appointment as • PROTON Holdings Berhad Non-Independent Non-Executive • Edaran Otomobil Nasional Berhad Director: • HICOM Holdings Berhad • HICOM Berhad 14 January 2016
Declaration • No family relationship with any Director/Major Shareholder of Pos Malaysia • No conflict of interest with Pos Malaysia • No conviction for any offence within the past five years • No public sanction or penalty imposed by any relevant regulatory bodies during FY2020
Number of Board Meetings Attended seven out of eight Board meetings held during FY2020
Key to Membership of Board Committees: Nomination and Risk, Sustainability and Digital-First Audit Committee Tender Committee A N Remuneration Committee R Compliance Committee T D Committee
148 POS MALAYSIA BERHAD ANNUAL REPORT 2020
DATUK PUTEH RUKIAH BINTI ABD MAJID Independent Non-Executive Director
Academic/Professional Qualification • Bachelor of Economics (Honours), University of Malaya • Master of Economics, Western Michigan University, United States of America
Past Experience • Deputy Secretary General (Systems and Controls), Ministry of Finance • Various positions in the Economic Planning Unit, Prime Minister’s Department, Implementation and Coordination Unit, Prime Minister’s Department and the Ministry of Finance
Directorships Listed Companies: • Gas Malaysia Berhad • Zelan Berhad
Age: 68 years Public Companies: Nationality: Malaysian • MIF Investment Ltd • Pelaburan Hartanah Berhad Gender: Female
Declaration Chairman: T • No family relationship with any Director/Major Shareholder of Pos Malaysia • No conflict of interest with Pos Malaysia
Member: A N R • No conviction for any offence within the past five years • No public sanction or penalty imposed by any relevant regulatory bodies during Date of appointment as FY2020 Independent Non-Executive Director: Number of Board Meetings 7 June 2013 Attended all eight Board meetings held during FY2020
Key to Membership of Board Committees: Nomination and Risk, Sustainability and Digital-First Audit Committee Tender Committee A N Remuneration Committee R Compliance Committee T D Committee
149 OUR LEADERSHIP
Profile of Board of Directors
DATUK IDRIS BIN ABDULLAH @ DAS MURTHY Independent Non-Executive Director
Academic/Professional Qualification • LLB (Honours), University of Malaya
Present Appointments • Partner legal firm, Kuching, Sarawak • Member, Investment Panel, Pertubuhan Keselamatan Sosial Malaysia (PERKESO) • Director, Malaysia Bioeconomy Development Corporation Sdn Bhd
Past Experience • Director, Bank Pembangunan Malaysia Berhad (Malaysia Development Bank) • Commission Member, Malaysian Communications and Multimedia Commission • Commission Member, Companies Commission of Malaysia
Directorships Listed Companies: Age: 64 years • DRB-HICOM Berhad Nationality: Malaysian • Malakoff Corporation Berhad Gender: Male Public Company: • NCB Holdings Berhad
Chairman: N R Declaration Member: A • No family relationship with any Director/Major Shareholder of Pos Malaysia • No conflict of interest with Pos Malaysia Date of appointment as • No conviction for any offence within the past five years Independent Non-Executive • No public sanction or penalty imposed by any relevant regulatory bodies during Director: FY2020 1 November 2017
Number of Board Meetings Attended all eight Board meetings held during FY2020
Key to Membership of Board Committees: Nomination and Risk, Sustainability and Digital-First Audit Committee Tender Committee A N Remuneration Committee R Compliance Committee T D Committee
150 POS MALAYSIA BERHAD ANNUAL REPORT 2020
SHARIFAH SOFIA BINTI SYED MOKHTAR SHAH Non-Independent Non-Executive Director
Academic/Professional Qualification • Bachelor of Science in Economics, University of York, United Kingdom • Master of Science in Development Management, London School of Economics and Political Science, United Kingdom
Past Experience • Director, Gas Malaysia Berhad • Director, Malakoff Corporation Berhad • Special Officer to Group Chief Executive Officer, Pos Malaysia • External Consultant, Bill & Melinda Gates Foundation • Summer Analyst, Morgan Stanley, Singapore • Intern, Grameen Bank, Bangladesh
Directorships Listed Companies: Age: 27 years • DRB-HICOM Berhad Nationality: Malaysian • MMC Corporation Berhad Gender: Female Declaration • Daughter of Tan Sri Dato’ Seri Syed Mokhtar Shah bin Syed Nor, the Major Shareholder of Pos Malaysia through his 53.49% indirect shareholding in Member: D DRB-HICOM Berhad through Etika Strategi Sdn Bhd • No family relationship with any Director of Pos Malaysia Date of appointment as • No conviction for any offence within the past five years Non-Independent Non-Executive • No public sanction or penalty imposed by any relevant regulatory bodies during Director: FY2020 13 April 2018 Number of Board Meetings Attended all eight Board meetings held during FY2020
Key to Membership of Board Committees: Nomination and Risk, Sustainability and Digital-First Audit Committee Tender Committee A N Remuneration Committee R Compliance Committee T D Committee
151 OUR LEADERSHIP
Profile of Board of Directors
AHMAD SUHAIMI BIN ENDUT Non-Independent Non-Executive
Academic/Professional Qualification • Bachelor of Science in Business Administration, University of Missouri, St Louis, United States of America • Master of Business Administration, University of Sheffield, United Kingdom
Present Appointments • Undersecretary of the Corporate Strategy and Communication, Ministry of Finance • Director, Malaysia Rail Link Sdn Bhd • Director, Perbadanan Kemajuan Negeri Pahang
Past Experience • Non-Independent Non-Executive Alternate Director, Pos Malaysia • Various positions in the Ministry of Finance • Assistant Director, Industries Division, Ministry of International Trade and Industry
Age: 53 years Directorships Nationality: Malaysian Public Companies: Gender: Male • Amanah Raya Berhad • Aset Tanah Nasional Berhad • AmanahRaya Truestees Berhad
Member: T Declaration • No family relationship with any Director/Major Shareholder of Pos Malaysia Date of appointment as • No conflict of interest with Pos Malaysia Non-Independent Non-Executive • No conviction for any offence within the past five years Director: • No public sanction or penalty imposed by any relevant regulatory bodies during 27 September 2018 FY2020
Number of Board Meetings Attended five out of eight Board meetings held during FY2020
Key to Membership of Board Committees: Nomination and Risk, Sustainability and Digital-First Audit Committee Tender Committee A N Remuneration Committee R Compliance Committee T D Committee
152 POS MALAYSIA BERHAD ANNUAL REPORT 2020
AHMED FAIRUZ BIN ABDUL AZIZ Independent Non-Executive Director
Academic/Professional Qualification • Bachelor Degree of Accounting and Finance, London School of Economics and Political Science, United Kingdom • Fellow Member, Institute of Chartered Accountants, England and Wales (ICAEW) • Member of Malaysian Institute of Accountants (MIA)
Present Appointment • Group Managing Director, KUB Malaysia Berhad
Past Experience • Group Chief Executive Officer, KUB Malaysia Berhad • Group Chief Financial Officer, KUB Malaysia Berhad • Group Chief Financial Officer, Naza Corporation Group of Companies • Head, Group Corporate Finance, Naza Corporation Group of Companies • Manager, Group Corporate Finance, CIMB Investment Bank Berhad • Executive, Investment Banking Division, CIMB Investment Bank Berhad Age: 42 years • Senior Associate, Ernst & Young Nationality: Malaysian • Associate, Arthur Anderson & Co. Gender: Male Directorships Listed Company: Chairman: A • KUB Malaysia Berhad Member: T Declaration Date of appointment as • No family relationship with any Director/Major Shareholder of Pos Malaysia Independent Non-Executive • No conflict of interest with Pos Malaysia Director: • No conviction for any offence within the past five years 19 September 2019 • No public sanction or penalty imposed by any relevant regulatory bodies during FY2020
Number of Board Meetings Attended all eight Board meetings held during FY2020
Key to Membership of Board Committees: Nomination and Risk, Sustainability and Digital-First Audit Committee Tender Committee A N Remuneration Committee R Compliance Committee T D Committee
153 OUR LEADERSHIP
Profile of Board of Directors
DATO’ DR. MOHD ALI BIN MOHAMAD NOR Independent Non-Executive Director
Academic/Professional Qualification • Doctorate of Technology, Newcastle University, United Kingdom • Master of Information of Technology, Universiti Kebangsaan Malaysia (UKM), Malaysia • Bachelor of Geology, UKM, Malaysia
Past Experience • Secretary-General, Ministry of Communications and Multimedia Malaysia • Various positions in key Government Ministries
Directorships Nil
Declaration Age: 61 years • No family relationship with any Director/Major Shareholder of Pos Malaysia Nationality: Malaysian • No conflict of interest with Pos Malaysia • No conviction for any offence within the past five years Male Gender: • No public sanction or penalty imposed by any relevant regulatory bodies during FY2020
Member: R D Number of Board Meetings No attendance records for Dato’ Dr. Mohd Ali bin Mohamad Nor, as he was not Date of appointment as on the Board of Directors during FY2020 Independent Non-Executive Director: 1 January 2021
Key to Membership of Board Committees: Nomination and Risk, Sustainability and Digital-First Audit Committee Tender Committee A N Remuneration Committee R Compliance Committee T D Committee
154 POS MALAYSIA BERHAD ANNUAL REPORT 2020
DATO’ JEZILEE BIN MOHAMAD RAMLI Non-Independent Non-Executive Director
Academic/Professional Qualification • Member of the Malaysian Institute of Certified Public Accountants (MICPA) • Member of the American Institute of Certified Public Accountants (AICPA) • Member of the Malaysian Institute of Accountants (MIA) • Uniform AICPA Professional Examination, University of Missouri, Kansas City, United States of America • Bachelor of Science (Business), Emporia State University, Kansas, United States of America
Present Appointment • Chief Operating Officer, Corporate Services, DRB-HICOM Berhad
Past Experience • Chief Financial Officer, UEM Edgenta Berhad • Director of Operations, Khazanah Nasional Berhad Age: 57 years • Group Chief, Corporate Services, Pos Malaysia Nationality: Malaysian • Chief Financial Officer, The New Straits Times Press (Malaysia) Berhad • General Manager Finance, AMI Insurans Berhad Gender: Male (now known as Sun Life Malaysia Assurance) • Senior Manager, The New Straits Times Press (Malaysia) Berhad Member: A • Assistant Manager, Arab Malaysian Merchant Bank Berhad • Audit Senior, PricewaterhouseCoopers (formerly known as Price Waterhouse) • Accountant, Bank Bumiputra, New York, United States of America Date of appointment as Non-Independent Non-Executive Director: Directorships 2 April 2021 Public Company: • Edaran Otomobil Nasional Berhad
Declaration • No family relationship with any Director/Major Shareholder of Pos Malaysia • No conflict of interest with Pos Malaysia • No conviction for any offence within the past five years • No public sanction or penalty imposed by any relevant regulatory bodies during FY2020
Number of Board Meetings No attendance records for Dato’ Jezilee bin Mohamad Ramli, as he was not on the Board of Directors during FY2020
Key to Membership of Board Committees: Nomination and Risk, Sustainability and Digital-First Audit Committee Tender Committee A N Remuneration Committee R Compliance Committee T D Committee
155 OUR LEADERSHIP
Profile of Board of Directors
DATO’ MOHAMED SHARIL BIN MOHAMED TARMIZI Independent Non-Executive Director
Academic/Professional Qualification • LLB (Hons), University College of Wales, Aberystwyth • Barrister-at-Law, Gray’s Inn, London, United Kingdom
Present Appointments • Senior Advisor, Quantephi Sdn Bhd • Senior Advisor, Asean Advisory Pte Ltd, Singapore • Member, Advisory Board United Nations University Institute, Macau
Past Experience • Chairman and Chief Executive, Malaysian Communications and Multimedia Commission • Chief Operating Officer, Malaysian Communications and Multimedia Commission • Worked closely with international organisations such as the Internet Society (ISOC), International Telecommunications Union (ITU), the World Bank, the World Trade Organisation (WTO), Asia Pacific Telecommunity (APT), Pacific Islands Telecoms Association (PITA), Commonwealth Telecoms Organisation (CTO), International Institute of Communications (IIC), Universal Postal Union (UPU) and the United Nations International Children’s Emergency Fund (UNICEF), particularly in the Age: 51 years area of training and capacity building Nationality: Malaysian • Chairman of the Internet Corporation for Assigned Names and Numbers (ICANN)’s Gender: Male Government Advisory Committee (GAC) • Board Member, ICANN • Partner, BinaFikir Sdn Bhd • Advocate & Solicitor, Zaid Ibrahim & Co • Advocate & Solicitor, Azman Davidson & Co Chairman: D
Date of appointment as Directorships Independent Non-Executive Listed Companies: • Opcom Holdings Berhad (Independent Non-Executive Chairman) Director: • Bina Darulaman Berhad (Independent Non-Executive Chairman) 13 April 2021 • Privasia Technology Berhad (Independent Non-Executive Chairman)
Public Company: • Digital Nasional Berhad
Declaration • No family relationship with any Director/Major Shareholder of Pos Malaysia • No conflict of interest with Pos Malaysia • No conviction for any offence within the past five years • No public sanction or penalty imposed by any relevant regulatory bodies during FY2020
Number of Board Meetings No attendance records for Dato’ Mohamed Sharil bin Mohamed Tarmizi, as he was not on the Board of Directors during FY2020
Key to Membership of Board Committees: Nomination and Risk, Sustainability and Digital-First Audit Committee Tender Committee A N Remuneration Committee R Compliance Committee T D Committee
Save for the Group Chief Executive Officer, all the Non-Executive Directors satisfy the criteria of an independent director as defined under the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, which include being independent of management, free from any business or other relationship which could interfere with the exercise of independent judgement, objectivity or the ability to act in the best interests of the Company, and also being independent of its major shareholders. 156 POS MALAYSIA BERHAD ANNUAL REPORT 2020
Profile of Senior Management
PROFILE PROFILE PROFILE
Syed Md Najib bin Syed Md Noor Azlan bin Ash’ari Mohamed Rozaidi bin Md Sharif Group Chief Executive Officer Group Chief Financial Officer Chief Executive Officer, Postal Services
Date of appointment: Age: Date of appointment: Age: Date of appointment: Age: 1 October 2018 61 1 March 2020 46 1 February 2020 43
Academic/Professional Qualifications: Academic/Professional Qualifications: Academic/Professional Qualifications: • Bachelor of Science in Management • Bachelor of Economics, University of • Bachelor of Business Administration Science, California State University, Chico, Warwick, United Kingdom (Transportation), Universiti Teknologi United States of America • Fellow member of the Association of MARA, Shah Alam, Selangor, Malaysia • Master of Business Administration, National Chartered Certified Accountants University Sacramento, California, United Directorships: • Pos Logistics Berhad States of America Directorships: • PNSL Berhad • Pos Logistics Berhad Directorships: • Pos Malaysia & Services Holdings Berhad Past Experience: • Pos Logistics Berhad • Pos Malaysia Holdings Berhad • Group Head, Operation, Pos Malaysia • Group Managing Director, Past Experience: Past Experience: Altel Holdings Sdn Bhd • Group Chief Executive Officer, • Chief Financial Officer, Pos Malaysia • Chief Commercial Officer, Altel Holdings Sdn Bhd • General Manager, Operations & Strategy, Altel Communications Sdn Bhd • Country Head for Malaysia and Indonesia Automotive Distribution, DRB-HICOM • Director, Regional Enterprise Business for REACH, a joint-venture between • Chief Financial Officer, Solutions, Celcom Axiata Berhad Telstra, Australia and Hong Kong Telecoms Ahmad Zaki Resources Berhad • Director, Sales Management and Planning, • Senior Vice President, International • Associate Director, Investment, Celcom Axiata Berhad Business, Celcom Axiata Berhad Ekuiti Nasional Berhad • Vice President, Sales Operations and • Director, Regulatory, Legal & Corporate • Senior Manager, PricewaterhouseCoopers Distributions, Celcom Axiata Berhad Affairs, Celcom Axiata Berhad • Chief Executive Officer, C-Mobile Sdn Bhd • Chief Customer Experience, Services & Declaration: • Vice President, Sabah Region, Retail Officer, Celcom Axiata Berhad • No family relationship with any Director/ Celcom Axiata Berhad Major Shareholder of Pos Malaysia • General Manager, Retail Sales and Declaration: • No conflict of interest with Pos Malaysia Distribution, Celcom Axiata Berhad • No family relationship with any Director/ • No conviction for any offence within the Major Shareholder of Pos Malaysia past five years Declaration: • No family relationship with any Director/ • No conflict of interest with Pos Malaysia • No public sanction or penalty imposed Major Shareholder of Pos Malaysia • No conviction for any offence within the by any relevant regulatory bodies during • No conflict of interest with Pos Malaysia past five years FY2020 • No conviction for any offence within the • No public sanction or penalty imposed past five years by any relevant regulatory bodies during • No public sanction or penalty imposed FY2020 by any relevant regulatory bodies during FY2020
157 OUR LEADERSHIP
Profile of Senior Management
PROFILE PROFILE PROFILE
Azahar bin Ariff Mazri bin Abdul Rahim Che Akhma bin Ismail Group Head, Group Head, Chief Executive Officer, Corporate Planning & International Human Capital & Corporate Integrity Pos Logistics Berhad
Date of appointment: Age: Date of appointment: Age: Date of appointment: Age: 12 December 2018 51 1 November 2019 53 1 March 2020 58
Academic/Professional Qualifications: Academic/Professional Qualifications: Academic/Professional Qualifications: • Bachelor of Computer Engineering, • Bachelor of Business Administration, • Diploma of Business Management, Valparaiso University, United States of University of North Texas, United States Malaysia Institute of Management America of America • Bachelor in Business Administration (Management), RMIT University, Melbourne, Australia Directorships: Directorships: • Master in Business Administration • Nil • Pos Malaysia Holdings Berhad (Finance), University of Ballarat, Australia • Pos Malaysia & Services Holdings Berhad Other Appointment: Directorships: Past Experience: • Chief Integrity & Governance Officer, • Nil • Head, International Services Business Unit, Pos Malaysia Axiata Group Berhad Past Experience: • Senior Vice President, Enterprise Past Experience: • Chief Executive Officer, Sales-Government and GLC, • Chief Human Resources, Technology Park Malaysia Corporation Celcom Axiata Berhad FGV Holdings Berhad Sdn Bhd • Senior Vice President, Regulatory • Chief People Officer, Celcom Axiata Berhad • Chief Executive Officer, Kontena Nasional Berhad Management, Celcom Axiata Berhad • Chief of Segment Sales and MVNO • Chief Executive Officer, • Vice President, Product Marketing, Business, Celcom Axiata Berhad • Director Human Resources, QTD Aerostructures Sdn Bhd Celcom Axiata Berhad • Group Chief Executive Officer, • Vice President, International Wholesale Malaysia, Singapore and Hong Kong/ China, FrieslandCampina NV/ Composites Technology Research Malaysia and Roaming, Celcom Axiata Berhad Sdn Bhd Dutch Lady Milk Industries Berhad • Head, International Carrier Business, • Group Chief Operating Officer, • Various Senior Management roles for Maxis Berhad Composites Technology Research Malaysia Philip Morris International Inc. and Kraft Sdn Bhd Foods International Inc. in Malaysia, Declaration: • Chief Operating Officer, Switzerland, Singapore and Indonesia • No family relationship with any Director/ Alam Flora Sdn Bhd Major Shareholder of Pos Malaysia Declaration: • No conflict of interest with Pos Malaysia Declaration: • No family relationship with any Director/ • No family relationship with any Director/ • No conviction for any offence within the Major Shareholder of Pos Malaysia Major Shareholder of Pos Malaysia past five years • No conflict of interest with Pos Malaysia • No conflict of interest with Pos Malaysia • No public sanction or penalty imposed • No conviction for any offence within the • No conviction for any offence within the by any relevant regulatory bodies during past five years past five years FY2020 • No public sanction or penalty imposed • No public sanction or penalty imposed by any relevant regulatory bodies during by any relevant regulatory bodies during FY2020 FY2020
158 POS MALAYSIA BERHAD ANNUAL REPORT 2020
PROFILE PROFILE PROFILE
Mohamad Asif bin Abd Talib Mohd Yusri bin Dolah Amir Suhaimi bin Hassan Acting Chief Executive Officer, Chief Executive Officer, Chief Operating Officer, Pos Aviation Sdn Bhd Datapos (M) Sdn Bhd Pos Digicert Sdn Bhd
Date of appointment: Age: Date of appointment: Age: Date of appointment: Age: 1 January 2021 51 1 December 2020 54 5 September 2012 51
Academic/Professional Qualifications: Academic/Professional Qualifications: Academic/Professional Qualifications: • Diploma in Pulp and Paper Engineering, Georgia • Bachelor of Engineering (Mechanical/ • Diploma in Computer Science, Univerisiti Institute of Technology Atlanta, Georgia, United States of America System), Universiti Putra Malaysia, Teknologi Mara (UiTM), Shah Alam, • Bachelor of Science, Aerospace Engineering, Serdang, Selangor, Malaysia Selangor, Malaysia Georgia Institute of Technology Atlanta, Georgia, • Master of Science (Management), Universiti • Bachelor of Business Administration United States of America Utara Malaysia, Sintok, Kedah, Malaysia (Marketing), UiTM, Shah Alam, Selangor, Malaysia Directorships: • Nil Directorships: • Master of Business Administration • Nil (Leadership), DRB-HICOM University of Past Experience: Automotive Malaysia, Pekan, Pahang, • Head, Aircraft Services Operations, Past Experience: Malaysia AeroDarat Services Sdn Bhd • Head, Operations Improvement & • Vice President, Airport Services Support, Customer Services Division, Malaysia Airlines Berhad Excellence, Pos Malaysia Directorships: • Head, Customer Care, Customer Services • Group Head, Transformation Management • Nil Division, Malaysia Airlines Berhad Office, Pos Malaysia • Area Manager, Sarawak, Sales Malaysia, • Senior Manager, Transformation Past Experience: Malaysia Airlines Berhad • Business Analyst, Sales China & Hong Kong, Management Office, Pos Malaysia • Time Telekom Sdn Bhd Malaysia Airlines Berhad • Department Head, • Urusdaftar Automotif Berkomputer Sdn • Head, Business Support, Airport Operations, Sony TV Industries (M) Sdn Bhd Bhd (a subsidiary of DRB-HICOM) Operation Division, Malaysia Airlines Berhad • Manager, Ground Handling Management, Declaration: Declaration: Operation Division, Malaysia Airlines Berhad • Maintenance Planning Controller, Ground Support • No family relationship with any Director/ • No family relationship with any Director/ Equipment, Ground Services Division, Major Shareholder of Pos Malaysia Major Shareholder of Pos Malaysia Malaysia Airlines Berhad • No conflict of interest with Pos Malaysia • No conflict of interest with Pos Malaysia • Design Engineer, Design Department, Hitachi • No conviction for any offence within the • No conviction for any offence within the Electronics Product, Hitachi Electronic (M) Sdn Bhd past five years past five years Declaration: • No public sanction or penalty imposed • No public sanction or penalty imposed • No family relationship with any Director/Major by any relevant regulatory bodies during by any relevant regulatory bodies during Shareholder of Pos Malaysia FY2020 FY2020 • No conflict of interest with Pos Malaysia • No conviction for any offence within the past five years • No public sanction or penalty imposed by any relevant regulatory bodies during FY2020
159 OUR LEADERSHIP
Organisation Structure
Group Chief Executive Officer Syed Md Najib Syed Md Noor
Internal Audit Annas Bahari
Chief Executive Officer Chief Executive Officer Chief Operating Officer Postal Services Datapos Pos Digicert Mohamed Rozaidi Md Sharif Mohd Yusri Dolah Amir Suhaimi Hassan
Group Head Group Head Group Head Director of Group Head Marketing & Sales & Business Channel Management & Operations Digital Product Pricing Development Customer Experience Schrene Goh Mohd Faishal Kassim Azmil Merican Zaini Yahman Alwin Loh
Product & Sales Strategy & Retail Pos Transportation Branding Business IT Pricing Strategy Planning Operations ArRahnu Management
Product Digital Sales & Retail Digital Marketing Hub Operations Management Business Excellence Product Innovation
Digital Social Key Account & Channel State Operations IT Operations E-commerce Media Regional Sales Planning Development & Optimisation Government & Group Performance Improvement & Creative IT PMO Affiliated Sales & Business Excellence Excellence Strategies Account IT Cyber Management Customer 13 State Security Experience General Managers IT Office Cross-Border Digital Financial Management Strategic Sales Services
BUSINESS ENABLER
160 POS MALAYSIA BERHAD ANNUAL REPORT 2020 Secretarial & Control Corporate Integrity Mazri Abd Rahim
Corporate Secretarial Kamilia Nor Mohamad Kamal
Risk & Compliance Chief Executive Officer (Acting) Chief Executive Officer Roslina Ismail (Interim) Pos Aviation Pos Logistics Mohamad Asif Abd Talib Che Akhma Ismail
Group Head Group Chief Group Head Human Corporate Planning & Financial Officer Capital & Corporate CEO Office International Integrity Azahar Ariff Azlan Ash’ari Mazri Abd Rahim Legal, Contract Strategic Planning & Management & Regulatory Financial Controller Human Capital Operations Investor Relations Roslina Ismail
Business Planning Treasury Human Capital Development Communications Sherliza Zaharudin Compensation & Transformation Management Revenue Assurance Benefits Stakeholder Management Performance & & Sustainability System & Method Procurement Talent Management Mohd Afiq Hassan Mohd Ayub
International Asset & Facilities Security
ENABLER SUPPORT
161 GOVERNANCE FRAMEWORK
Corporate Governance Overview Statement
The Board of Directors (Board) of Pos Malaysia Berhad (Pos Pos Malaysia has complied with most of the recommendations of Malaysia or the Company) is committed to high standards of the MCCG 2017 for the FY2020. The status of Pos Malaysia’s integrity, accountability and ethics in the conduct of its business application of the MCCG 2017 is disclosed in our Corporate and in all aspects of the Pos Malaysia Group (Group)’s operations. Governance Report (CG Report), which is accessible to the public The Board adheres and places importance on corporate governance at www.pos.com.my. principles that uphold transparency and responsible business conduct. For Pos Malaysia, good governance is imperative to This CG Overview Statement is to be read together with the CG ensure sustainable long-term performance, creating long-term Report. economic value and growth for the Group as well as maximise returns for stakeholders. Corporate Governance Framework The Board is accountable to shareholders to create and deliver The cornerstone principles of corporate governance at the Pos sustainable value through oversight of the management of the Malaysia Group are guided by our Vision ‘Connecting Malaysia Group’s business, approving strategic plans, monitoring their and Beyond – For Today and Tomorrow’ whereby responsible and implementation and providing the necessary support for their balanced commercial success is to be achieved by addressing the successful execution. interests of all stakeholders. The Board promotes value-creating governance that embeds exemplary business practices and robust The Board performs its responsibilities within a clearly defined institutional governance and risk frameworks. Together with the governance framework and appropriate mechanisms in place. Management, the Board provides strategic guidance, executes Through this framework, the Board, without abdicating its strong effective governance and financial practices. responsibilities, delegates its governance responsibilities to key committees of the Board and other Management committees. The financial year under review (FY2020) has been characterised by unprecedented challenges. There is no doubt that the COVID-19 In discharging the Board’s duties and responsibilities effectively, pandemic has fundamentally changed the way businesses operate. the Board is guided by its Board Charter. The Board Charter sets The gravity of the pandemic impact is severely testing the economy out the respective roles, functions, composition, operations and and its resilience globally. processes of the Board, Chairman, Group Chief Executive Officer (GCEO) and Board Committees. The Board Charter describes From the perspective of corporate governance, the crisis reinforced those matters expressly reserved for the Board, and those matters the importance of a resilient Board leadership where focus is placed delegated to the Management. The Board Charter is reviewed and on facilitating recovery and adaptation in the aftermath of disruption. updated from time to time to reflect the relevant changes to the The year ahead will likely continue to be volatile and dynamic, policies, procedures and processes as well as amendments to and the Company must be equipped in addressing the challenges rules and regulations to ensure the document remains relevant and opportunities within the operating environment. and consistent with the applicable rules and regulations and
recommended best practices. The Board will continue to build a resilient organisation while also laying the foundations for our future success. The Board has a The Board Charter is available on the Company’s corporate website responsibility to drive long-term value across a broader group of at www.pos.com.my. stakeholders, consumers, society and shareholders, instilling a culture of continuous change to drive organisational transformation The Board is committed to ensuring that there is a strong and in a post-COVID-19 world. effective system of corporate governance in place to support the successful execution of the Group strategy. We will continue evaluating our governance practices in response to evolving best practices and the changing needs of the Group.
The Board is pleased to present the Corporate Governance Overview Statement (CG Overview Statement), which reports on the manner the Group has adopted and applied the statutory requirements, principles and best practices as set out in the Main Market Listing Requirements (Listing Requirements) of Bursa Malaysia Securities Berhad (Bursa Securities), Companies Act 2016 (the Act), Malaysian Code on Corporate Governance 2017 (MCCG 2017) and Corporate Governance Guide – 3rd Edition issued by Bursa Securities.
162 POS MALAYSIA BERHAD ANNUAL REPORT 2020
PRINCIPLE A: BOARD LEADERSHIP AND The Directors are aware of their collective and individual EFFECTIVENESS responsibilities to all shareholders for the manner in which the affairs of the Company are managed and operated. The Board is BOARD LEADERSHIP satisfied that it has fulfilled these duties and obligations during the The Board is responsible for the overall leadership of the Group FY2020. and for promoting its long-term sustainability and success by providing leadership within a framework of prudent and effective During the FY2020, the Board reviewed, deliberated and approved controls. key areas of focus and priorities, which included automation for operations improvement, digital security enhancement for data An effective Board is key to the establishment and delivery of a security risk management, adherence to higher standards of company’s strategy. The Board therefore, continually seeks to corporate integrity and rationalisation of operational expertise and improve its effectiveness by providing direction to the Management, optimisation of manpower. demonstrating ethical leadership and creating a performance culture that drives value creation, among others. Individual Roles of the Board Members Effective working of the Board is imperative to the sustainable, The Board commits itself and its Directors to ethical and lawful long-term prospects and execution of strategic aims of the Company conduct, including proper use of authority and appropriate decorum and the Group. The Board achieves this through strong, transparent when acting as Board members. and open working relationships between the Directors.
All Board members exercise their powers for a proper purpose Demarcation of Responsibilities between the Non-Executive and in good faith in the best interest of the Company. In directing Chairman, Group Chief Executive Officer and Non-Executive or managing the Company’s business and affairs, they exercise Directors reasonable care, skill and diligence by applying their knowledge, skill and experience. Non-Executive Chairman and Group Chief Executive Officer The roles and responsibilities of the Non-Executive Chairman and The Board ensures that key transactions or critical decisions are the GCEO are separated, clearly defined and documented in the deliberated and decided on by the Board in a meeting. The Board Board Charter. also ensures that decisions, including any dissenting views are made known and properly minuted. The positions of Non-Executive Chairman and GCEO are held by different individuals to ensure optimal balance, resulting in Principal Roles and Responsibility of the Board accountability and enhanced decision-making at the Board level. The Board is entrusted primarily with the responsibility to promote the success of the Group by directing and supervising the Group’s Role of the Non-Executive Chairman affairs in a responsible and effective manner. The general powers The Chairman is responsible for representing the Board to the of the Board and the Directors are conferred in the Company’s shareholders and is accountable for ensuring the integrity and Constitution, while the roles and responsibilities of the Board are effectiveness of the governance process of the Board. The Chairman clearly set out in the Board Charter. maintains regular dialogues with the GCEO over all operational matters and properly consults him with regard to any matter that In ensuring the long-term success of the Company and the Group gives the Chairman any cause for concern pertaining to the Group. and delivery of sustainable value to stakeholders, the Board provides effective leadership, promotes and protects the interests of The Chairman acts as a facilitator at meetings of the Board to shareholders, exercises reasonable and proper care of the Group’s ensure that no Director, whether Executive or Non-Executive, resources as well as safeguards its assets. dominates discussions at Board meetings. The Chairman ensures that appropriate discussions take place and relevant opinions among In discharging its collective responsibilities, the Board provides the Directors result in logical and understandable outcomes. Company and the Group stewardship, counsel and a broad range of expertise to the Management, champions good governance, The hierarchical structure and a distinct division of responsibilities high ethical standards and practices. ensure a balance of power and authority, such that no one individual has unfettered powers of decision-making. Separation in the role The Board safeguards stakeholder value-creation. Prudent and of the Chairman and the GCEO is also important as both roles effective controls make it possible for the Board to assess and have different expectations and serve distinct primary audiences. manage emerging risks and opportunities continuously, to ensure long-term sustainable development and growth.
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Corporate Governance Overview Statement
The Chairman’s overarching responsibilities are to provide appropriate The GCEO is responsible for ensuring that there is continuous leadership to the Board and the Group, to ensure its smooth improvement in the quality and value of the products and services functioning and the fulfilment of its obligations to the Group. provided by the Group and that the Group achieves and maintains a satisfactory competitive position within the industry. The Chairman who primarily presides over meetings of the Board, is responsible for instilling good corporate governance practices, Non-Executive Directors provides governance on matters requiring corporate justice and All Non-Executive Directors (NEDs) of the Company are independent integrity, manages effectiveness of the Board and oversight of the of the Management. The NEDs possess the necessary expertise Management. In this regard, the Chairman creates conditions for and experience to ensure that the strategies proposed by the sound decision-making of the Board and shareholders’ meetings, Management are fully deliberated and examined, taking into account ensures Board proceedings are in compliance with good conduct the interests of the shareholders and stakeholders. practices and that quality information to facilitate informed decision- making is delivered to the Board in a timely manner. Although they provide effective oversight over the Management, NEDs do not participate in the day-to-day management of the The Chairman also ensures that the relevant regulations and Group. legislation are complied with, that the interests of the various stakeholders are protected and where permissible, providing them NEDs do not engage in business dealings or other relationships with information that they may require. In addition, the Chairman with the Group (other than in situations permitted by applicable maintains good contact and effective working relationship with regulations) that could be reasonably perceived to materially interfere external parties, the investing public, regulatory agencies and trade with the exercise of their independent judgement or the ability to associations. act in the best interests of the Company. Group Chief Executive Officer All Directors must exercise their judgement independently at all The GCEO is accountable to the Board for the overall organisation, times, irrespective of their status on the Board. management and staffing of the Group, for its financial management and procedures for operational matters, including in the areas of Independent NEDs play a significant role in providing unbiased staff conduct and discipline and to promote leadership by example. and independent views, advice and judgement, thereby bringing In discharging his responsibility as the GCEO, he is assisted in objectivity and scrutiny to the Board’s deliberations and decision- the management of the Group’s business by the Management making as well as ensuring there are continued checks and balances team. In this regard, the GCEO ensures that the Group has an in the functioning of the Board. Their role is particularly critical for effective Management team with an active plan for development related party transactions as these require independence of and succession below the level of the GCEO. judgement and objective impartiality to protect the interests of minority shareholders. The Board links the Company’s governance and management functions through the Chairman and the GCEO. All Board authority The NEDs, either individually or collectively as a Board, are at conferred on the Management is delegated through the GCEO. liberty to seek independent professional advice on matters relating The GCEO’s authority is explicitly provided in the Limits of Authority to the fulfilment of their roles and responsibilities. The costs of (LOA). The Directors provide their support to the GCEO in procuring these professional services are borne by the Company. undertaking this responsibility. Board Committees The GCEO is responsible for developing and recommending to As part of its efforts to ensure the effective discharge of its duties, the Board, a long-term strategy and vision for the Group that leads the Board has delegated certain functions to Committees with their to the creation of shareholder value, the Group annual business own respective Terms of Reference. The Board is assisted by the plans and budget which support the Group’s long-term strategy following Board Committees in the discharge of their duties: and ensures that the objectives and goals set out in the strategic plan are achieved. 1. Board Audit Committee (BAC) 2. Board Nomination and Remuneration Committee (BNRC) The GCEO’s responsibility includes fostering a corporate culture 3. Board Risk, Sustainability and Compliance Committee (BRSCC) that promotes ethical practices, encourages individual integrity and fulfils the Group’s social responsibility. As GCEO, he leads the 4. Board Digital-First Committee (BDC) Company in maintaining a positive and ethical work climate that 5. Board Tender Committee (BTC) is conducive to attracting, retaining and motivating a diverse group of quality employees at all levels.
164 POS MALAYSIA BERHAD ANNUAL REPORT 2020
The Chairman of each Board Committee reports to the Board on Access by Board members to Board papers is carried out through deliberations, discussions and outcome of his/her Committee a collaborative software which allows the Directors to securely meetings. This permits the Board to raise any comments and access, read and review Board papers electronically at any time views, if any, on key areas of concern. or location. This software eases the process of distribution of Board papers, Circular Resolutions and minimises leakage of sensitive The Terms of Reference of the BAC, BNRC, BRSCC, BTC and BDC and confidential information. are available on the Company’s website at www.pos.com.my. Directors have direct access to the Management and have The Management is given certain powers to execute transactions unrestricted access to any information relating to the Group to under the LOA and the Management Delegated Authority (MDA) enable them to discharge their duties. adopted throughout the Group. The Directors are fully aware that such delegation does not absolve them from their responsibilities The Board meets at least quarterly with additional meetings as they remain responsible for the Management’s exercise of convened as and when necessary. Meeting dates are scheduled powers as if such powers have been exercised by the Directors in advance (before the commencement of each calendar year) to themselves. facilitate the Directors in planning ahead and incorporating the meetings into their respective schedules. Directors are expected Company Secretaries to allocate sufficient time to perform their responsibilities effectively, including adequate time to prepare for Board meetings. The Company Secretaries of Pos Malaysia are qualified to act as company secretary under Section 235 of the Act. Key decisions are always made at Board meetings while urgent matters may also be decided via written resolutions. Directors’ The Company Secretaries play an advisory role to the Board, Written Resolutions passed by the Board are tabled at the next particularly with regard to the Constitution, Board policies and Board meeting for notation. procedures as well as its compliance with regulatory requirements and legislation. The robust and vigorous deliberations at Board and Board Committee
meetings provide opportunities to all Directors to participate and The Company Secretaries are responsible for facilitating effective contribute to the decision-making process as well as to ensure information flows within the Board and Board Committees and that constructive and healthy dialogues are satisfactorily achieved. between the Senior Management and NEDs. All Directors have unrestricted direct access to the advice and services of the Company Relevant members of the Senior Management and external advisers Secretaries to facilitate the discharge of their duties. may be invited to attend Board meetings to report to and advise the Board when matters under their purview are being considered The Company Secretaries ensure that discussions and deliberations or as otherwise requested by the Board, to enable informed of the Board and Board Committees are properly documented and decision-making. recorded in a timely manner, and subsequently communicated to the Management for appropriate actions. Directors must immediately declare if they have any interest in transactions that are to be entered directly or indirectly with the The Company Secretaries keep themselves updated on the evolving Company or Group. They must disclose the extent and nature of regulatory changes and developments in corporate governance their interest at a Board meeting or as soon as practicable after through continuous training. they become aware of the potential conflict of interest. A Director must also abstain from participating in the deliberation and Board The roles and responsibilities of the Company Secretaries are set decision on the matter as he/she is an interested party. out in the Board Charter. Based on the Board evaluation conducted on Corporate Secretarial, the Board was satisfied with the The Directors’ commitment in carrying out their duties and performance and support rendered by the Company Secretaries responsibilities is reflected by their attendance at Board meetings to the Board in discharging their functions during the FY2020. held during the FY2020. Although some Directors hold multiple directorships, they managed to commit and devote their time for Board Meetings, Attendance and Access to Information the Board/Board Committee meetings. The Board is satisfied with Prior to each Board meeting, a formal agenda together with a set the level of commitment given by the Directors toward fulfilling of Board papers are forwarded to all Directors at least five working their roles and responsibilities. days to allow sufficient time for the Directors to review and analyse relevant information and if necessary, obtain further information on matters to be deliberated. Board meetings may also be called at shorter notice when critical or urgent decisions are required to be made or when the Board’s expeditious review or consideration is necessary.
165 GOVERNANCE FRAMEWORK
Corporate Governance Overview Statement
In compliance with Paragraph 15.06(1) of the Listing Requirements BOARD EFFECTIVENESS of Bursa Securities, each member of the Board holds not more Board Balance and Composition than five directorships in public listed companies. During the FY2020, the Directors notified the Company Secretaries as and The Board is diverse in demographics, skills and experience. when they were appointed to other Boards. The Board’s size ensures that the purpose, involvement and The COVID-19 crisis in 2020 significantly changed the manner in participation of the Directors are not jeopardised and that it achieves which the Board and the Management undertook their affairs. Most the correct balance to realise the Group’s strategic objectives. It of the Board and Board Committee meetings were conducted also ensures diversity and inclusiveness in views as well as online since 18 March 2020, after the announcement of Movement facilitating effective decision-making and constructive deliberation Control Order (MCO). The meetings were held virtually during MCO during its meetings. and on hybrid during the Conditional MCO (CMCO). During the FY2020, the Board comprised eight members, as follows: During the FY2020, the Board met eight times. • Five Independent NEDs including the Chairman; and • Three Non-Independent NEDs. All Directors complied with the minimum requirements on attendance of at least 50% at Board meetings pursuant to Paragraph 15.05(3) The composition of the Board during the FY2020 was in line with (c) of the Listing Requirements of Bursa Securities. the requirements of Paragraph 15.02 of the Listing Requirements of Bursa Securities and the MCCG 2017’s Practice 4.1 for Large Directors’ Attendance for the Financial Year 2020 Companies. Details of attendance of each Director at Board meetings held during the FY2020 are set out below: The Board saw changes in its composition in the second quarter of the new financial year with the resignation of the Chairman of the Board, Datuk Yasmin binti Mahmood on 1 April 2021, following No of Meetings completion of her two-year tenure on the Board and the re- Director Attended* designation of Dato’ Sri Syed Faisal Albar bin Syed A. R Albar as Non-Independent Non-Executive Chairman w.e.f 2 April 2021. Datuk Yasmin binti Mahmood 7/8 Chairman/Independent Non-Executive Director The Board also appointed Dato’ Jezilee bin Mohamad Ramli as a Dato’ Ibrahim Mahaludin bin Puteh Non-Independent NED and Dato’ Mohamed Sharil bin Mohamed 7/8 Senior Independent Non-Executive Director Tarmizi as Independent NED w.e.f 2 April 2021 and 13 April 2021 respectively. Dato’ Sri Syed Faisal Albar bin Syed A.R Albar 7/8 Following the change in the Board composition during the second Non-Independent Non-Executive Director quarter of the new financial year, the Board currently comprises five Independent NEDs and four Non-Independent NEDs, including Datuk Puteh Rukiah binti Abd Majid the Chairman. 8/8 Independent Non-Executive Director The Directors are persons of integrity and calibre who have sound Datuk Idris bin Abdullah @ Das Murthy 8/8 knowledge and understanding of the Company’s business and Independent Non-Executive Director provide a diversity of breadth in experience and knowledge, insights, perspectives and independent judgement. Sharifah Sofia binti Syed Mokhtar Shah 8/8 Non-Independent Non-Executive Director The balance on the Board with the presence of NEDs ensures that no individual or small group of Directors are able to dominate Ahmad Suhaimi bin Endut 5/8 the decision-making process and that the interests of shareholders Non-Independent Non-Executive Director are protected. Ahmad Fairuz bin Abdul Aziz 8/8 Independent Non-Executive Director The profile of each member of the Board is presented on pages 148 to 156 of this Annual Report. * Reflects the number of meetings held during the FY2020 and attended by them. The Board Charter specifies that the tenure of an Independent NED shall not exceed a cumulative term of nine years. If the Board intends to retain an Independent NED beyond nine years, it shall justify and seek shareholders’ approval annually.
166 POS MALAYSIA BERHAD ANNUAL REPORT 2020
During the FY2020, the BNRC reviewed the composition of the Board taking into consideration the mix of skills, competencies, experience, integrity, personal attributes and time commitment required of an individual Director to effectively fulfil his or her role as a Director on the Board. Diversity in terms of age, gender and ethnicity were also considered.
Board Diversity The Board manages its diversity by ensuring that the mix and profiles of its members provide the necessary range of perspectives, experience and expertise required to achieve effective stewardship and management of the Company.
Collectively, the Directors bring with them years of experience in managing sustainable business growth and represent a formidable leadership that supports effective decision-making. In today’s challenging and evolving business environment, diversity and inclusivity are important to ensure the Company remains relevant, resilient and sustainable.
The Board’s diversity during the FY2020 is depicted in the following matrix:
BOARD COMPOSITION AGE 2
2
2 20 2 NINED 0 INED 0 0
GENDER TENURE
2
2 2 M M M M M
2 0 0 0
The Board currently has two women Directors or 22% of the Board composition following the resignation of Datuk Yasmin binti Mahmood.
Board Nomination and Remuneration Committee During the FY2020, the Board strengthened its oversight role through the BNRC.
The BNRC assists the Board in fulfilling its responsibilities with regard to the appropriate size and balance of the Board, the required mix of skills, experience, knowledge and diversity of the Board to ensure sustainability of the Group.
The BNRC also screens, evaluates and recommends to the Board suitable candidates for appointment as Directors.
The BNRC ensures that there are sufficient succession planning and human capital development focus in the Group and recommends to the Board the remuneration framework for the NEDs and key critical positions of the Group.
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Corporate Governance Overview Statement
The BNRC currently comprises three NEDs, two of whom are Independence Assessment of Independent Non-Executive independent. They are: Directors The Board assesses the independence of its Independent NEDs 1. Datuk Idris bin Abdullah @ Das Murthy (Independent NED). annually. This is undertaken with reference to the key criteria developed by the BNRC and the Listing Requirements of Bursa 2. Dato’ Sri Syed Faisal Albar bin Syed A.R Albar (Non-Independent Securities, which include independence from the Management and NED); and absence of any business relationship which could materially interfere with or perceived to materially interfere with the Independent NED’s 3. Datuk Puteh Rukiah binti Abd Majid (Independent NED). judgement. The BNRC is chaired by an Independent NED, Datuk Idris bin All Directors, regardless of their independent status, are required Abdullah @ Das Murthy, consistent with Practice 4.7 of the MCCG to act in the best interests of the Company and to exercise 2017. unfettered and independent judgement. Datuk Idris bin Abdullah @ Das Murthy was appointed Chairman The Board performed an internal assessment on the independence of the BNRC to replace Dato’ Ibrahim Mahaludin bin Puteh who of the Independent NEDs in office for the FY2020. The Board resigned as Chairman on 1 January 2021. concluded that each Independent NED has met the independence criteria as set out in the Listing Requirements of Bursa Securities. During the FY2020, the BNRC met five times to discharge its The Board was generally satisfied that each Independent NED duties and functions as a Committee of the Board. remained independent in character and judgement and was free from any relationships or circumstance which were likely to affect The BNRC undertook the following key activities during the FY2020: or could appear to affect his/her judgement. The Board also agreed that their continuous contributions are beneficial to the Board and 1. Reviewed and recommended the appointment of the Chief the Company as a whole. Executive Officer (CEO) Postal Services of the Company, the CEOs of subsidiary companies and the appointment of the During the FY2020, each Independent NED also provided his/her Group Chief Financial Officer (GCFO) of the Company. declaration of independence to the Company in compliance with the criteria set out in the Listing Requirements of Bursa Securities. 2. Reviewed and recommended revision of staff benefits and standardisation of the benefits entitlement of Senior Leadership Board Appointment Process Teams. The Board believes orderly succession will be achieved through 3. Reviewed and recommended the appointment of the Chief careful planning. In its selection of Board candidates, the BNRC Integrity and Governance Officer (CIGO). takes into account the mix of skills, competencies, experience, integrity, personal attributes and time commitment required to 4. Reviewed and recommended the Corporate Key Performance effectively discharge his/her role as Director. Indicators for FY2021. The responsibility of achieving Board balance through diversity and 5. Reviewed the Board composition, evaluation of the Board inclusivity has been delegated to the BNRC. effectiveness and conducted an assessment on the independence of Independent NEDs. In its selection of suitable candidates, the BNRC identifies the gaps in the Board composition before sourcing, screening, conducting 6. Recommended the re-election of Directors and retention of the initial selection of potential candidates and assessing the ability Independent NEDs at the AGM of the Company. to perform effectively on those who have been identified. Once a potential candidate has been shortlisted for recommendation to the 7. Reviewed and recommended the proposed payment to the Board, the Company Secretaries will conduct comprehensive non-executive employees of Pos Malaysia through the ‘Pakej background checks, including checks on character integrity. Sejahtera Barisan Hadapan Kumpulan Bukan Eksekutif B40’.
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Board Evaluation and Effectiveness Assessment Continuing Development Programme for Directors The Board Evaluation and Effectiveness Assessment (BEEA) is to As at the date of this Statement, all the Directors, save for Dato’ evaluate the performance of the Board/Board Committees/Members Jezilee bin Mohamad Ramli who was appointed on 2 April 2021, of Board Committees as well as identifying any gaps or areas for have attended the Mandatory Accreditation Programme as required improvement where required. Every year, under the purview of the under the Listing Requirements of Bursa Securities. BNRC, a formal evaluation is undertaken to assess the effectiveness of the Board as a whole, the Board Committees, the performance In line with Paragraph 15.08 of the Listing Requirements of Bursa and contribution of individual Directors and Board Committee Securities, the Directors acknowledge the importance and value members. The evaluation is especially important in deciding whether of attending conferences, training programmes and seminars in a Director who is subject to re-election can be recommended to order to keep themselves abreast of the latest developments in be re-elected at the next AGM. areas related to their duties and to be equipped with the necessary skills and knowledge to meet the challenges faced by the Board. For the FY2020, the BEEA was conducted internally through self- assessment. The BEEA comprised a Board Evaluation, a Committee The Board has delegated the role of reviewing the training and Evaluation and a Directors’ Self Evaluation, designed to improve development needs of the Directors to the BNRC. the Board’s effectiveness as well as to bring to the Board’s attention, key areas that needed to be addressed in order to maintain Board All Directors are provided with ongoing professional development cohesion. and training opportunities to enable them to develop and maintain their skills and knowledge. The results of the BEEA were reviewed by the BNRC and its recommendations were presented to the Board on 22 February Notwithstanding the COVID-19 pandemic and the limitations on 2021. The Board noted the findings and areas that necessitated physical activities, the Directors continued attending external training further improvements and was satisfied with the BEEA results, programmes, workshops and seminars virtually. which indicated that there had been improvements across all areas since the BEEA conducted for the previous financial year. Details of the training events participated by Directors during the FY2020 are set out in the CG Report. There were also no apparent weaknesses or shortcomings identified that warranted specific action plans by the Board. Remuneration Policy A remuneration policy has been established for NEDs that aligns Re-Election and Re-Appointment of Directors remuneration with strategy to drive the long-term success of the Pursuant to Article 116 of the Company’s Constitution, one-third Company together with a fair remuneration package to continue (1/3) of the Directors, or if their number is not a multiple of three, to attract, retain and motivate Directors. the number nearest to 1/3, shall retire from office and may offer themselves for re-election at the next AGM. The BNRC is responsible for setting the principles, parameters and governance framework of the Group’s remuneration matters. Sharifah Sofia binti Syed Mokhtar Shah and Ahmad Suhaimi bin The BNRC is charged with formulating, developing and implementing Endut are due to retire at the 29th AGM to be held on 17 June formal and transparent procedures for the Group’s NEDs and the 2021 pursuant to Article 116 of the Company’s Constitution. The Senior Management, ensuring that their compensation is competitive Directors have expressed their intention to seek re-election at the and consistent with industry standards as well as commensurate 29th AGM. with their experience, skills and level of responsibilities.
Dato’ Dr. Mohd Ali bin Mohamad Nor, Dato’ Jezilee bin Mohamad The remuneration of the NEDs consists of fixed Directors’ fees Ramli and Dato’ Mohamed Sharil bin Mohamed Tarmizi who were and meeting allowance. In compliance with Section 230(1) of appointed on 1 January 2021, 2 April 2021 and 13 April 2021 the Act, the resolution on the payment of Directors’ fees is subject respectively, will retire at the 29th AGM pursuant to Article 111(2) to the approval of shareholders at the AGM. of the Company’s Constitution and have expressed their intention to seek re-election at the said AGM. The remuneration policy also puts in place a framework to ensure an appropriate balance between attracting, retaining and motivating Upon assessing the performance of Sharifah Sofia binti Syed employees. The policy is designed to ensure that reward is Mokhtar Shah and Ahmad Suhaimi bin Endut during the FY2020, measurably linked to the achievement of business and performance the BNRC recommended to the Board their re-election. objectives. The remuneration framework outlines the total compensation package of fixed remuneration and variable The Board agreed to recommend the proposed re-election of the remuneration payable to employees. four Directors to the shareholders for approval at the 29th AGM.
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Corporate Governance Overview Statement
Directors’ Remuneration The details of the remuneration of the individual Directors for the FY2020 are set out below:
2020 Fees (RM) Meeting Board Allowance Total No Director Board Committee Total (RM) (RM)
1 Datuk Yasmin binti Mahmood 87,000.00 6,000.00 93,000.00 7,000.00 100,000.00 2 Dato’ Ibrahim Mahaludin bin Puteh 76,000.00 26,000.00 102,000.00 40,500.00 142,500.00 3 Dato’ Sri Syed Faisal Albar bin Syed A.R Albar – – – – – 4 Datuk Puteh Rukiah binti Abd Majid 76,000.00 28,000.00 104,000.00 42,500.00 146,500.00 5 Datuk Idris bin Abdullah @ Das Murthy 76,000.00 30,000.00 106,000.00 38,000.00 144,000.00 6 Sharifah Sofia binti Syed Mokhtar Shah 20,000.00 1,500.00 21,500.00 4,000.00 25,500.00 7 Ahmad Suhaimi bin Endut 76,000.00 6,000.00 82,000.00 7,000.00 89,000.00 8 Ahmed Fairuz bin Abdul Aziz 76,000.00 15,000.00 91,000.00 32,500.00 123,500.00
TOTAL 487,000.00 112,500.00 599,500.00 171,500.00 771,000.00
Note: During the FY2020, the Directors waived part/all their fees and allowance. These waivers differ between Directors.
Remuneration Disclosure for Top Five Key Senior Management The aggregate remuneration of the top five Senior Management of Pos Malaysia, including salary, bonus, allowances, benefits-in-kind and other emoluments received from the Company for the FY2020 in bands of RM50,000.00 is as follows:
Range of Remuneration Number of Senior Management Personnel
RM700,001 to RM750,000 1 RM750,001 to RM800,000 1 RM800,001 to RM850,000 1 RM950,001 to RM1,000,000 1 RM1,000,001 to RM1,150,000 1
The performance of the Senior Management is evaluated on annual basis and measured against the Corporate KPIs set for the financial year. The Board will ensure that remuneration for the Senior Management commensurate with their performance in order to attract, retain and motivate talent in the Group.
Directors Indemnity Pos Malaysia continues to provide and maintain indemnification for the Directors throughout the financial year as allowed under the Act to the extent it is insurable under the Directors’ and Officers’ Liability Insurance procured by the Company. Directors and Officers are indemnified against any liability incurred by them in discharging their duties while holding office as Directors and Officers of the Company.
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Integrity and Ethics (c) Anti-Bribery and Corruption Policy The Board acknowledges its role in establishing a corporate culture The Group is committed to upholding the highest standards with uncompromising ethical conduct. In line with this principle, the of ethical conduct, integrity and accountability in all its business Group has in place the following policies to ensure the conduct activities and operations. The Group has a zero-tolerance of business of the Group and the employees are consistently policy towards any form of bribery and corruption by its carried out ethically and with integrity. employees or any persons or companies acting for or on behalf of the Company. The Policy reflects the Company’s Group Policies commitment to fight any corrupt and unethical practices while conducting business in the jurisdiction where the Company (a) Code of Conduct and Business Ethics is operating. The Code of Conduct and Business Ethics (CCBE) of the Group contains detailed policy statements on the standards Various engagement activities continue to be conducted to of behaviour and ethical conduct expected of employees/ spread awareness of the Anti-Bribery and Corruption Policy vendors/contractors/suppliers of the Group. The CCBE not and to address any concerns. only promotes legal and procedural compliance but also provides a moral compass to ensure that the individual’s (d) Corporate Liability behaviour is in line with the Group’s Core Values and business Taking cognisance of the newly enforced provision of Section objectives. All related parties are expected to understand the 17A of the Malaysian Anti-Corruption Commission Act 2009 principles and standards stipulated and must comply with (MACC Act 2009), which came into effect on 1 June 2020, them not only in their form but also the substance of the the Group has taken proactive actions and measures to put ethical principles and conduct stated in the CCBE. in place adequate procedures based on the T.R.U.S.T principles. Since the burden of proof of Section 17A offence lies on the The Group also expects parties performing work or services Company during the financial period/year under review, the for or on behalf of the Group to comply with the relevant Group has established a Corporate Integrity and Governance parts of the CCBE when performing such works or services. Unit (CIGU) and appointed the Company’s first Chief Integrity & Governance Officer (CIGO) who reports to the BRSCC. Further details on the CCBE are available on the Group’s The Company has also set up a Management Committee on corporate website at www.pos.com.my. Corporate Integrity (MCCI) to monitor and supervise the Company’s activities and initiatives on executing the Organisation (b) Whistle Blowing Policy Anti-Corruption Plan (OACP), Corruption Risk Management The Group’s Whistle Blowing (WB) Policy provides a transparent (CRM), Anti-Bribery and Corruption awareness/training mechanism and avenue for all stakeholders to report or raise programmes, prevention and enforcement initiatives etc. Within genuine concerns on any misconduct without fear of retaliation the near term, the Company will be embarking to establish and intimidation. Confidentiality and anonymity are assured Anti-Bribery Management System and obtaining ISO 37001 to stakeholders who disclose their concerns in good faith and Certification. All these initiatives are part of the adequate in doing so, had followed the appropriate disclosure procedures, procedures requirements to strengthen the Group’s responsibility accordingly. The WB Policy sets a clear procedural guide for to Corporate Liability. These initiatives shall foster growth and stakeholders to follow in raising their concerns to ensure that development of the Group’s business and to ensure the issues are addressed and definitive action can be taken. Group’s businesses and business activities do not involve acts of bribery and/or corruption. The WB Policy is published on the Company’s corporate website at www.pos.com.my.
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Corporate Governance Overview Statement
PRINCIPLE B: EFFECTIVE AUDIT AND RISK The BAC has in place policies and procedures to review and MANAGEMENT assess the appointment or re-appointment of the external auditors in respect of their suitability, objectivity and independence. The Board Audit Committee BAC assesses and reviews annually among others, the adequacy The BAC oversees the Group’s financial reporting process and of their experience and resources, their audit engagements and practices, reviews the Group’s business process and system of the experience of the engagement partners and staff in accordance internal controls across the Group to assess the suitability, objectivity with the requirements of the Group. and independence of both the external auditors and internal audit function. The BAC met with the external auditors once during the FY2020 without the presence of the Management to review the scope and During the FY2020, the BAC comprised four members, all of whom adequacy of the Group’s audit process, the annual financial were Independent NEDs. The Chairman of the BAC is appointed statements and their audit findings. At the meetings, the external by the Board and is not the Chairman of the Board. The member auditors highlighted to the BAC matters that warranted its attention. of the BAC have a wide range of relevant skills, knowledge and industry experience. They are capable of providing sound advice The external auditors also provide non-audit services to the to the Board not only in terms of financial reporting but also on Company. The proposed fees for the non-audit services are reviewed internal audit and the state of the Group’s risk and internal control by the BAC and approved by the Board. In its review, the BAC environment. The BAC is chaired by Ahmed Fairuz bin Abdul Aziz, ensures that the independence and objectivity of the external who is a Fellow Member of the Institute of Chartered Accountants auditors are not compromised. of England and Wales and a Member of the Malaysian Institute of Accountants. The BAC was satisfied with the quality of audit, performance, competency and sufficient resources provided to the Group by the The composition of the BAC is reviewed by the BNRC annually external auditors during the FY2020. The BAC was also satisfied and appropriate recommendations are made to the Board. that the provision of the non-audit services by the external auditors to the Company did not impair their objectivity and independence The Terms of Reference of the BAC are available on Pos Malaysia’s as external auditors of Pos Malaysia. corporate website at www.pos.com.my. Having considered the outcome of the annual assessment of the The BAC is also tasked with reviewing the appropriateness of the external auditors, the Board approved the recommendation for the accounting policies applied by the Group and the changes in these shareholders’ approval to be sought at the forthcoming AGM on policies. The Statement on Directors’ Responsibility in respect of their re-appointment as external auditors of the Company. the preparation of the audited financial statements of the Company is set out on page 195 of this Annual Report. The Company’s Internal Audit Function financial statements are included on pages 197 to 301 of this The BAC oversees the Internal Audit Department (IAD) function Annual Report. which operates under a charter mandated by the BAC, giving it unrestricted access to review all activities across the Group. The performance of the BAC for the FY2020 was evaluated as part of the BEEA. Based on the results of the BEEA, the Board The IAD is primarily responsible to provide an independent and was generally satisfied that the BAC collectively and its members objective assessment of the adequacy and effectiveness of the individually, had discharged their functions, duties and responsibilities Group’s risk management, internal control and governance processes. effectively in accordance with the Terms of Reference of the BAC. The IAD carries out its internal audit function independently of the Management. The overall duties and responsibilities of the BAC are set out in the Audit Committee Report on pages 177 to 178 of this Annual The BAC oversees the performance and effectiveness of the internal Report. audit function based on the approved key performance indicators, assesses the competency and experience of the IAD staff as well Relationship with External Auditors as the adequacy of the resources. Through the BAC, the Company maintains a professional and transparent relationship with its external auditors, Messrs. KPMG A summary of the activities of the IAD during the FY2020 is set out PLT. in the Audit Committee Report on page 179 of this Annual Report.
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Risk Management and Internal Control Framework 2. Compliance The Board is responsible for establishing and maintaining a sound • Reviewed the Compliance and Assessment Audit Report and risk management framework and system of internal control to recommended for approval by the Board for submission to provide reasonable assurance of the effectiveness of the Group’s Bank Negara Malaysia and the Malaysian Communications business operations and risk management, to safeguard shareholders’ and Multimedia Commission. investments and the Group’s assets and ensure sustainability of the Group. • Reviewed the Compliance Programme to ensure the Company manages regulatory requirements as set out by the authorities. Board Risk, Sustainability and Compliance Committee 3. Corporate Governance and Integrity Initiatives The Board fulfils its responsibilities in the risk governance and oversight functions through the BRSCC, which is composed solely • Established the CIGU and the Management Committee for of Independent NEDs. Corporate Integrity (MCCI).
The BRSSC ensures that risk management, compliance and • Conducted the Board and Senior Management corporate sustainability efforts are aligned with the Group’s long-term business training on Section 17A MACC Act 2009 (Amendment 2018) strategy. and Good Corporate Governance.
The BRSCC is committed to ensuring the deployment of a robust • Organised the Corporate Anti-Bribery and Anti-Corruption risk management framework enabling key risks to be adequately Pledge by the Board and the Senior Management witnessed identified, mitigated and reported in the pursuit of the Group’s by Senior MACC Directors. strategies and objectives while safeguarding stakeholders’ interests. • Participation by Company CIGU Officers in the Certified In this regard, the BRSCC ensures that the overall risk exposures Integrity Officers (CeIO) programme conducted by Malaysia and outcomes affecting the Group are effectively managed and Anti-Corruption Agency (MACA) of MACC. addressed by the Board. • Conducted the Executives Basic Corporate Integrity e-learning The BRSCC supports the Board by establishing and overseeing training programme (Certification) for all employees in Band the Group Risk Management Framework of the Group and regularly D and above. assessing the framework to ascertain its adequacy and effectiveness. • Conducted the Anti-Bribery and Corruption’s gap analysis on The BRSCC is supported by the Risk Management Department the Company’s ‘adequate procedures’. and Risk Management and Compliance Committee (RMCC). The RMCC assists the BRSCC and the Board in identifying, assessing • Undertook the CRM Assessment. and managing, monitoring and controlling the risks and compliance in areas that are applicable to the Group’s business and ensures 4. Sustainability that the risk management and compliance process is in place and • Reviewed and provided quarterly update on Sustainability functioning effectively. Reporting. During the FY2020, the BRSCC undertook the following key • Reviewed and updated the relevant Sustainable Development activities: Goals (SDG) and Global Reporting Initiatives (GRI) for Pos Malaysia’s sustainability initiatives and efforts. 1. Risk Management • Reviewed the top key risks and their action plans for • Aligned Pos Malaysia’s sustainability with United Nations improvement to ensure risks are properly addressed and Sustainability Development Goals and the Malaysia’s Shared mitigated. Prosperity Vision 2030.
• Reviewed the corruption risks and their action plans and • Reviewed and analysed the consultant for Pos Malaysia’s made recommendations for improvement to ensure risks are sustainability roadmap. properly managed and mitigated as well as adherence to the MACC Act 2009 (Amendment 2018). The Board is of the view that the system of internal control and risk management in place during the FY2020 is sound and sufficient • Reviewed the Statement on Risk Management and Internal to safeguard the Group’s assets as well as shareholders’ investments Control (SORMIC) and recommended the same for approval and the interests of stakeholders. by the Board.
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Corporate Governance Overview Statement
The Board is also satisfied with the performance of the BRSCC The GCEO and the Group Head Digital are permanent invitees to in discharging its responsibilities based on the results of the BEEA the meetings of the BDC. Other Directors, members of the for the FY2020. Management and consultants may be invited to participate in BDC meetings, as and when necessary. Board Tender Committee The BDC met three times during the FY2020. The BTC was established to assume the responsibility for reviewing and deliberating on key tenders, ensuring that tender exercises During the FY2020, the BDC undertook the following key activities: are conducted in a transparent and fair manner adopting the principle of good governance and delivering the best value to the 1. Reviewed the revamp of the pos.com.my website consolidations, Group. consumer mobile revamp, AskPos chatbot with live-chat and robotic processing automation (RPA). The approval limits of the BTC are as set out in the LOA of the 2. Reviewed Pos Malaysia 3-year ICT Blueprint from KPMG Company. The BTC approves contracts/purchases in accordance Management & Risk Consulting Sdn Bhd assessment. with the LOA. 3. Reviewed the Annual Management Plan 2020 for Digital. Meetings of the BTC are held as and when required. The BTC 4. Reviewed the progress of the New Core trace and track system did not meet during the FY2020 as there were no contracts/ deployment planning. purchases that required the attention or approval of the BTC. 5. Reviewed the Customers Touchpoint Omni Channel Retail Detailed Terms of Reference of the BTC are available at the System. Company’s corporate website www.pos.com.my. 6. Reviewed the Cybersecurity Framework and Governance. Board Digital-First Committee 7. Reviewed the proposed Digital Business Strategy and Retail. The BDC is responsible for reviewing, approving or recommending 8. Transformation for 2020 focusing on New Digital Retail Business to the Board for approval, proposals made by the Management Revenue. on the Group’s flagship Digital related projects in line with the 9. Reviewed the revamp Cashless initiatives on Pos Automated Company’s LOA. The BDC has the authority to carry out the Machine (PAM), e-Wallet for Mobile and overall new Payment functions as stated in its Terms of Reference. Gateway consolidations. During the FY2020, the BDC consisted of three members and was 10. Reviewed and streamlined the procurement process on Digital chaired by the Chairman of the Board. related projects. 11. Endorsed the establishment of the Management Digital Committee The BDC’s functions and duties include reviewing and assessing (MDC) to govern all digital related projects. the Group’s Digital strategy to ensure its alignment with the Group’s corporate strategy and direction, reviewing and approving Digital related policies or recommend such policies to the Board for approval; reviewing on an annual basis, key emerging Digital trends PRINCIPLE C: INTEGRITY IN CORPORATE that may affect the Group’s strategic plans, including potential REPORTING AND MEANINGFUL RELATIONSHIP significant changes to those trends; significant Digital issues affecting WITH STAKEHOLDERS delivery of the Group’s strategic projects together with Effective Communication with Stakeholders recommendations to the Board on action plans and all Digital related risks and the necessary risk assessment and risk mitigation Pos Malaysia is committed to and ensures that its communication plans proposed by the Management. with its shareholders and various stakeholders, both internally and externally is open, effective, clear, transparent, factual and timely. The Company discloses and disseminates comprehensive relevant and material information to the public through various channels to keep its stakeholders informed of its business activities, strategies and financial performance.
Pos Malaysia engages with its key institutional stakeholders and analysts and conducts briefings to further explain the Group’s quarterly financial results. These engagement programmes promote a better understanding of the Group’s financial performance and operations and keep them apprised on its business development.
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Information on the Group’s business activities and financial The Chairman and the Key Management Team i.e. GCEO, CEO performance is also disseminated through various platforms such and GCFO were present at the 28th AGM in order to provide as announcements to Bursa Securities on its financial results and responses to questions raised by the shareholders. The Directors disclosures on the Company’s corporate website. This helps to and external auditors joined the AGM online. promote accessibility of information to Pos Malaysia’s shareholders and other stakeholders. Questions raised by Minority Shareholders Watch Group and the Company’s responses were presented for the benefit of the Additionally, Pos Malaysia embraces social media, apart from the shareholders. The questions and responses were also uploaded Company’s corporate website, as an important communication onto the Company’s corporate website. A copy of the presentation channel with stakeholders as these channels allow immediate by the GCEO was made available on the Company’s corporate access to information and provide a platform for feedback from website upon the conclusion of the 28th AGM. stakeholders. All resolutions tabled at the 28th AGM were carried out by way of The Annual Report, the quarterly financial results announcement poll through electronic voting and the results were announced to and other corporate information are made available on the Company’s Bursa Securities on the same day. corporate website at www.pos.com.my. Investor Relations The Company’s Annual Report is the primary channel of Pos Malaysia’s Investor Relations is principally tasked with facilitating communication with the Group’s stakeholders. The contents of the effective communication channels between the Group and the Annual Report are extensive and meet the disclosure requirements investment community. of the Listing Requirements of Bursa Securities, the Act and the Malaysian Financial Reporting Standards. The Investor Relations has an extensive programme that involves the holding of regular meetings, conference calls and responding The Company has adopted the International Integrated Reporting to daily queries from investors, stakeholders and analysts. Framework issued by the International Integrated Reporting Council and has adopted the same framework in this Annual Report. The Any enquiries on investor related matters may be directed to Pos Board recognises that the integrated process is an ongoing journey Malaysia’s corporate website at www.pos.com.my or: to improve the quality of information disclosures to stakeholders of the Company in order to promote greater transparency and accountability. Investor Relations Contact Person : Azahar bin Ariff Conduct of General Meetings Contact number : +603 22672267 Email : [email protected] The AGM serves as the principal platform for open dialogue and direct two-way interaction between the widest range of shareholders, the Board and the Management. STATEMENT BY THE BOARD ON COMPLIANCE The Company held its 28th AGM in 2020 for the first time, virtually The Board has deliberated, reviewed and approved this Statement through live streaming and online voting using Remote Participation and is satisfied that Pos Malaysia has fulfilled its obligations under and Voting facilities. The 29th AGM will similarly be held virtually the relevant paragraphs of the Listing Requirements of Bursa on 17 June 2021. Securities, the Act, the MCCG 2017 and the Corporate Governance Guide – 3rd Edition issued by Bursa Securities and other applicable The notice of the 29th AGM will be issued to the shareholders on laws and regulations throughout FY2020. 30 April 2021 which is more than twenty-eight (28) days before the AGM. The notice of the 29th AGM will provide details of the This CG Overview Statement was approved by the Board of Pos resolutions proposed along with relevant information to enable the Malaysia on 12 April 2021. shareholders to evaluate and vote accordingly.
At the 28th AGM, active participation by the shareholders and investors at the AGM was encouraged. The Chairman also encouraged the shareholders to seek and clarify any issues they might have and to have a better understanding of the Group’s businesses.
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Audit Committee Report
The Board of Directors (the Board) of Pos Malaysia Berhad (Pos Malaysia) or (the Company) is pleased to present the Board Audit Committee (BAC) Report for the financial year ended 31 December 2020.
1.0 COMPOSITION AND ATTENDANCE AT MEETINGS 1.1 COMPOSITION During financial year ended 31 December 2020, nine BAC meetings were held. The composition of the BAC members as well as their attendance at the meetings is set out below:
Attendance at Director Status of Directorship Meetings
Ahmed Fairuz bin Abdul Aziz Chairman of the BAC 9 out of 9 Independent Non-Executive Director
Dato’ Ibrahim Mahaludin bin Puteh Member of the BAC 9 out of 9 (resigned w.e.f. 1 January 2021) Senior Independent Non-Executive Director
Member of the BAC Datuk Puteh Rukiah binti Abd. Majid 9 out of 9 Independent Non-Executive Director
Member of the BAC Datuk Idris bin Abdullah @ Das Murthy 8 out of 9 Independent Non-Executive Director
Ahmed Fairuz bin Abdul Aziz is a member of the Malaysian Institution of Accountants. In this respect, the BAC is in compliance with Paragraph 15.09(1)(c), of the Main Market Listing Requirements (Listing Requirements) of Bursa Malaysia Securities Berhad (Bursa Securities).
1.2 ATTENDANCE Attendance at all the meetings met the requisite quorum whereby the majority of members present were Independent Directors as stipulated in the BAC’s Terms of Reference. The Management of the Company was invited to brief the BAC on the Group’s financial performance and relevant corporate matters and to address any queries raised by the BAC.
The Head of Internal Audit Department (IAD) attended all the BAC meetings and presented the results of internal audits conducted to the BAC. Other than the results of internal audits, IAD also presented the progress of audit activities, status of audit issues and action plans, internal audit plan as well as audit staff strength. The external auditors were also invited to attend the BAC meetings to present their audit scope and plan, and the auditors’ report on the audited annual financial statements. Private session between the BAC and the external auditors without the presence of the Management is held at least once every year.
All issues discussed and deliberated during the BAC meetings were minuted by the Company Secretary who is also the secretary to the BAC. Any matters of significant concern raised by the internal and external auditors were duly conveyed by the BAC to the Board.
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2.0 TERMS OF REFERENCE OF BAC 3.2 RISKS AND CONTROLS The Terms of Reference of the BAC are aligned with the The BAC evaluated the overall adequacy and effectiveness Listing Requirements of Bursa Securities, recommendations of the system of internal controls through review of results of the Malaysian Code on Corporate Governance (MCCG) and of work performed by internal and external auditors and relevant best practices. discussions with the Management. The BAC also reviewed the Statement on Risk Management and Internal Control The Terms of Reference establishes the authorities, duties prior to inclusion in the Company’s Annual Report. and responsibilities of the BAC and incorporated in the Board Charter which is accessible on the Company’s official 3.3 INTERNAL AUDIT website at www.pos.com.my/corporate-governance/terms- a. Reviewed the 2021 Risk-Based Annual Audit Plan of-reference. to ensure adequacy of the scope and coverage of major risk areas of the Group; 3.0 SUMMARY OF WORK b. Reviewed the Key Performance Indicators of the IAD and appraised the department’s performance and The BAC’s work during the financial year ended 31 December competency level; 2020 comprised the following: c. Reviewed the effectiveness of the audit process and 3.1 FINANCIAL REPORTING resource requirements for the year; Reviewed quarterly and annual financial results of the d. Reviewed the internal audit reports presented by IAD Group and the Company prior to submission to the Board which were tabled during the year, the audit for approval. Details on sequence of reviews conducted recommendations made and Management’s responses are as follows: to these recommendations. Where appropriate, the a. Reviewed the third quarter unaudited financial result BAC has directed the Management to rectify and for financial period ended 31 December 2019 at improve internal controls and Standard Operating meeting on 19 February 2020; and Procedures based on the internal auditor’s recommendations for improvement; b. Reviewed the unaudited quarterly financial results for the first, second and third quarters for financial year e. Monitored the corrective actions on the outstanding ended 31 December 2020 at meetings on 5 June audit issues to ensure that all key risks and control 2020, 18 August 2020 and 17 November 2020 lapses had been addressed; and respectively. f. Monitored internal audit activities, the staffing requirements, skills and the core competency of the The review was to ensure that the financial reporting and internal auditors, and ensuring IAD has the necessary disclosure were in compliance with: authority to carry out its work. a. Provisions of the Companies Act 2016; 3.4 EXTERNAL AUDIT b. Listing Requirements of Bursa Securities; a. Reviewed the Financial Statements of Pos Malaysia c. Applicable approved accounting standards in Malaysia; for financial period ended 31 December 2019 on and 19 February 2020. d. Other legal and regulatory requirements. b. Reviewed the external auditors on: In the review of the annual audited financial statements, i. Their audit plan, audit strategy and scope of the BAC discussed with the Management and the external work for the year; and auditors, the accounting principles and standards that ii. The results of the annual audit, their audit reports were applied and their judgement of the items that may and management letter together with Management’s affect the financial statements. response to the findings of the external auditors.
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Audit Committee Report
c. Briefed by the external auditors on Key Audit Matters 4.0 STATEMENT ON INTERNAL AUDIT FUNCTION which provides a level platform for Management, BAC and external auditor to focus on. 4.1 ROLES AND RESPONSIBILITIES d. Reviewed and recommended for the Board’s approval, The IAD is a fundamental part of the assurance structure the quarterly reviews on 5 June 2020, 18 August of the Group. Its main responsibility is to provide an 2020 and 17 November 2020. independent and reasonable assurance on the adequacy, integrity and effectiveness of the Group’s overall system e. Reviewed the overall performance through online of internal control, risk management and governance evaluation questionnaires and, upon satisfactory process. assessment of the effectiveness of the external auditors, recommended their reappointment and fees The Head of IAD reports directly to the BAC on a payable in respect of the scope of work performed functional basis and to the Group Chief Executive Officer for the Board’s approval. Messrs. KPMG PLT, which administratively. The Head of IAD periodically reports on has been Pos Malaysia’s external auditors since the activities performed as well as key control issues 2004, was recommended to be appointed for the noted by the internal auditors to the BAC. The purpose, ensuing year. The financial year ended 31 December authority and responsibility of IAD are reflected in the 2020 marked its 17 years of engagement. Internal Audit Charter, which was endorsed by the BAC f. Reviewed the independence status of the external and approved by the Board. auditors and recommended that they be reappointed for the ensuing year. The Company conforms to the Annually, the IAD prepares a Risk-Based Audit Plan and requirements of the Malaysian Institute of Accountants presents to the BAC for approval. In view of the scarcity in ensuring that the Lead Engagement Partner and of resources, the Audit Plan gives priority and focuses Engagement Quality Control Reviewer of the external on the Company’s top risks identified by the Management. auditors are subjected to a period of seven cumulative years acting in the role of Engagement Partner, The audit scope includes performing audit reviews at Engagement Quality Control Reviewer or any other the business, enabler and support divisions as well as Key Audit Partner. subsidiaries. The audit covers the reviews on: g. Every year, the BAC has obtained written assurance a. The adequacy of internal controls; from the external auditors confirming their independence b. The effectiveness and efficiency of operations; throughout their term of engagement for the financial year. c. The accuracy of financial and operational information; d. The compliance with internal policies, procedures, regulatory and statutory requirements; 3.5 RELATED PARTY TRANSACTIONS The BAC reviewed the recurrent related party transactions e. The adequacy and effectiveness of IT systems in and related party transactions of the Group to ensure supporting operations; compliance with Listing Requirements of Bursa Securities f. The effectiveness of risk management processes and and that they were undertaken on an arm’s length basis, the implementation of controls by Management to fair, reasonable and on normal commercial terms, not mitigate company’s major risks; more favourable to the related party than those generally available to the public, not detrimental to the minority g. The effectiveness of ongoing key project implementation shareholders, and carried out in the best interest of the and deliverables; and Group. h. The levels of compliance with the MCCG 2017 and the Listing Requirements of Bursa Securities.
In order to maintain its independence and objectivity, IAD has no operational responsibility and authority over the activities it audits. In determining the adequacy of audit scope and coverage, IAD applies a comprehensive audit planning of the Group’s auditable entities and functions by performing risk analysis and ensuring adequate resources in performing the audit.
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4.2 AUDIT RESOURCES The IAD also provides consultancy services to the Management in evaluating the risk exposures of strategic As at 31 December 2020, IAD had a total of 24 internal initiatives, new business products and projects prior to auditors, comprising staff from various educational and implementation and ensures that controls are in place professional backgrounds. IAD invested in various training to mitigate risks identified. The IAD continues to assist programmes to enhance the knowledge and competency the Management in supporting the Whistle Blowing Policy level of the staff. The training programme, comprising and the Integrity Pact established in 2008 to ensure in-house and externally sourced training, focuses on transparency and integrity throughout the tender process. functional and developmental needs of the internal Whistle blowing programme was administered by the auditors. The total amount spent for the internal audit IAD whereby concerns received were directed to the function at Pos Malaysia in respect of financial year Special Audit Unit for necessary actions. ended 31 December 2020 was RM2.7 million covering mainly salaries and incidental costs such as travelling In ensuring effective communication of audit issues to and training. The BAC approves the IAD’s annual audit all operational areas and prompt closing of audit issues, plan, financial budget and manpower requirements to meetings were held with the Management on a regular ensure the function is adequately resourced with competent basis. Management is responsible for ensuring that and proficient internal auditors. corrective actions on reported weaknesses and suggested improvements as recommended are taken within the 4.3 AUDIT WORK required time frame. IAD adopts a risk and strategy-based approach as part of its audit planning and execution focusing on significant identified risks and effectiveness of the controls to mitigate the risks. Activities of the IAD include review of the adequacy and effectiveness of internal controls and risk management, compliance with applicable laws and regulations, reliability and integrity of information and adequacy of safeguarding of assets.
During financial year ended 31 December 2020, IAD executed a total of 62 audits which comprised scheduled and follow-up engagements. All findings from the internal audit reviews were reported to the BAC, Senior Management and the relevant Management of the operating units. None of the components of the internal audit functions were outsourced to external service providers.
179 GOVERNANCE FRAMEWORK Statement on Risk Management and Internal Control
Pursuant to Paragraph 15.26(b) of the Bursa Malaysia Securities Berhad (Bursa Securities) Main Market Listing Requirements (Listing Requirements), this Statement on Risk Management and Internal Control of the Board of Directors (Board) outlines the nature and state of risk management and internal control of Pos Malaysia Group of Companies (Group) for the financial year under review and up to the date of approval of this statement for inclusion in the Annual Report. The Malaysian Code on Corporate Governance 2017 (MCCG 2017) under Principle B: Effective Audit and Risk Management also states that the Board should establish an effective risk management and internal control system to ensure that the system of internal control manages risks and that such system forms part of the Group’s corporate culture.
RESPONSIBILITY RISK MANAGEMENT FRAMEWORK The Board is responsible for ensuring that a sound system of risk Policy management and internal control to safeguard shareholder’s interest The Board recognises the fact that an effective risk management and the Group’s assets are maintained. The Board affirms its practice is a critical component of a sound system of risk management overall responsibility for the Group’s system of risk management and internal control. In view of this, there is a systematic process and internal control which includes the establishment of an to identify, evaluate and manage significant risks faced by the appropriate control environment and framework and will also be Group that may impede the achievement of the Group’s objectives responsible for reviewing its adequacy and integrity. As there are for the financial year under review and up to the date of approval limitations that are inherent in any system of risk management and of this statement. internal control, this system is designed to manage the risk rather than eliminating such risks that may hinder the achievement of The Board has a stewardship responsibility to understand these the Group’s business objectives. Accordingly, it can only provide risks, communicate the requirements of this policy and to guide reasonable but not absolute assurance against material misstatement the Group in dealing with these risks. or loss. The system of internal control includes strategic, financial, operational, compliance controls and risk management procedures. The policies of the Board are: The Board receives and reviews reports on the system of internal • To manage risks proactively and in an integrated and transparent control in the Group on a quarterly basis and is of the view that way in accordance with good governance practices; and the system of internal control that has been instituted throughout • To ensure that an effective and formalised Enterprise Risk the Group is adequate to safeguard the shareholders’ investment Management (ERM) Policy/Framework are established and and the Group’s assets. maintained by the Group.
The oversight role on the risk management and internal controls The Group adopts ISO 31000 Risk Management Standards as a will be carried out on behalf of the Board by the Board Risk, primary foundation and reference to establish the ERM framework. Sustainability and Compliance Committee (BRSCC) and Board Under this standard, the Group aims to achieve a common Audit Committee (BAC). The BRSCC will identify and deliberate understanding of, consistent and effective ERM implementation on key risks and mitigation plans to ensure risks are properly across the Group. At the same time, the ERM framework facilitates managed and mitigated before subsequently communicating it to the Management in making sound business decisions with the the Board. The BRSCC is supported by the Risk Management aspiration to lead the Group towards a more proactive and inclusive Department (RMD) and Compliance Department, whilst the BAC risk management approach to mitigate threats and to capitalise on is supported by an Internal Audit Department (IAD) that reports opportunities. directly to the BAC.
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The key features of the ERM framework are depicted in the diagram below, with details of each activities described below:
COMMUNICATION & CONSULTATION
Establishing Risk Risk Risk Risk the Context Identification Analysis Evaluation Treatment
MONITORING & REVIEW
Source: ISO 31000 Risk Management Standards i. Establishing the Context: f. Financial Risk – exposure to risk related to loss of revenue resources or the incurring of unacceptable To identify strategic objective in both external and internal liabilities. environments in which these strategic objectives are being pursued. External environmental factors including the effects g. Organisational Risk – exposure to risk associated with of competition and regulations, while internal environmental the Group’s structure, management and employees (skills, factors consist of business processes, capabilities, organisational competencies, etc.). culture and strategic plans. h. Compliance Risk – exposure to risk arising from inadequacy in compliance with required mandatory or ii. Risk Identification: established regulations and policies. To identify and define the specific risks and sources of risks such as threat of substitution and/or digitalisation that will i. Sustainability Risk – exposure to risk related to impact the Group’s business performance. Risks that have environmental, economic and social impact to the Group’s been identified will be categorised into one of the following operations. categories: j. Corruption Risk – exposure to risk related to corruption including, the giving or offering, receiving and soliciting a. Strategic Risk – exposure to risk arising from long-term or short-term policy decisions based on current strategy bribes, abuse of power/position and intention to deceive of the Group. (false claim).
b. Market and Business Risk – exposure to risk due to iii. Risk Analysis: competition and/or fiscal policy changes which are external This involves due consideration of the causes of risk, their to the Group and beyond its control. positive and negative impact and the likelihood of occurrence. c. Operational Risk – exposure to risk arising from daily Risk is assessed by considering its impact and likelihood. tactical business activities related to business operations, processes and technology. iv. Risk Evaluation:
d. Reputational Risk – exposure to risk arising from brand Risk evaluation involves making decisions on appropriate or image of the Group. actions to be taken by the Group after the risk analysis has been conducted, including deciding on whether a risk needs e. Information/System Risk – exposure to risk arising from to be managed or mitigated and the priority to be given based cyber threats, loss or inaccuracy of data, non-functioning on the risk rating after considering the current state of internal or incorrectly functioning IT systems and reported controls and cost-benefit analysis. information.
181 GOVERNANCE FRAMEWORK
Statement on Risk Management and Internal Control
v. Risk Treatment: BRSCC Process of initiating responsive or pre-emptive actions for The Board has established the BRSCC comprising entirely of managing risks and restricting those to acceptable levels i.e. Independent Non-Executive Directors and this reflects the Group’s within the Group’s risk appetite. There are four risk treatment heightened emphasis on risk management, compliance with options as follows: sustainability matters, and protection of the shareholders’ interest.
• Terminate (Avoid): The BRSCC’s composition and their terms of reference are as Deciding not to pursue with the activities that will likely follows: generate the risks. Chairman: • Treat (Mitigate): • Dato’ Ibrahim Mahaludin bin Puteh Introducing controls or action plans to manage the risks. (resigned w.e.f. 1 January 2021) • Datuk Idris bin Abdullah @ Das Murthy • Transfer (Spread): (re-designated w.e.f. 1 January 2021) Transferring or sharing the risk with third parties e.g. insurance, hedging, joint ventures, outsourcing and smart Members: partnerships. • Datuk Idris bin Abdullah @ Das Murthy • Take (Accept): (re-designated as a Chairman w.e.f. 1 January 2021) Using the Group’s strength and capabilities to accept the • Datuk Puteh Rukiah binti Abd. Majid risks to build a competitive edge. • Dato’ Dr. Mohd Ali bin Mohamad Nor (appointed w.e.f. 1 January 2021) vi. Monitoring and Reviewing: This involves reviewing the risk events, the action plans, and Terms of reference: the outcomes of such events and providing the lesson learned • Provide oversight of the risk management processes and issue, derived therefrom. Furthermore, due to the dynamic nature guidance and direction to the Group’s risk management personnel; of risks, monitoring is required to ensure that new measures are introduced to manage these risks. • Recommend risk management policies, strategies and risk tolerance levels, and proposed changes for the Board’s vii. Communication and Consultation: consideration and approval; This takes place in each step of the risk management process • Ensure that the Management integrates the necessary risk to ensure that views of stakeholders/Management/Board are management processes into all business processes of the Group; considered. The communication flows vertically (both top-down and bottom-up approaches) and horizontally (across • Evaluate the effectiveness of ERM framework, risk management departments). Key risks are being communicated formally via processes and support systems to identify, assess, monitor and periodic risk reporting to Risk Management and Compliance manage the Group’s key risks; Committee (RMCC) as well as BRSCC. Any constraints/ • Review the risk identification and processes developed by the limitations in managing risks will be highlighted in such report Management to confirm that it is appropriate based on the for decision or approval. Group’s strategy and business plan; • Review Management’s assessment of risk and sustainability matters on a quarterly basis and provide quarterly updates to the Board; • Enquire from the Management and the external auditor about the exposure to such risks in relation to significant business, political, financial and control risks; • Assess the steps/actions the Management has implemented or will implement to manage and mitigate identifiable risks;
182 POS MALAYSIA BERHAD ANNUAL REPORT 2020
• Deliberate on compliance-related matters of the Group and review Roles and responsibilities of RMCC: the effectiveness of systems for monitoring compliance with laws • Formulate the ERM framework which include policies, processes, and regulations; structures and programs; and to monitor its implementation; • Review findings, material issues or instances of non-compliances • Formulate risk appetite and the required action plans to mitigate highlighted by the regulatory authorities in relation to the regulated identified risks; businesses of the Group; • Review and deliberate existing key risks and potential emerging • Deliberate, review and evaluate the existing compliance framework risks that may derail the achievement of business objectives and and recommend measures for improvement and the adoption of goals; best practices; • Evaluate the adequacy of existing controls and required action • Review and ensure sustainability efforts are aligned with the plans to manage and/or eliminate the risk exposure; Group’s long-term business and environmental strategy; • Deliberate findings, material issues or material non-compliances • Ensure the effective management of significant and material highlighted by Compliance Department with the relevant Senior economic, environmental and social risks which may impact the Management; principal businesses of the Group; • Deliberate the risk associated with the compliance matters, the • Ensure sustainability is integrated within key business strategies root cause of incidents, and formulate the implementation of towards the collective achievement of sustainability goals across appropriate controls; and the Group; • Ensure risk reports, compliance program reports, and non- • Provide a consolidated sustainability report and assurance on compliance program reports are submitted on a timely manner data collected to the Board in support of disclosures in the Pos to the BRSCC and Board of Directors. Malaysia Berhad’s Annual Report; and • Perform any other roles and responsibilities as may be required The RMCC is supported by the RMD and Compliance Department by the Board from time to time and/or which are related to the respectively. RMD’s roles are to monitor, analyse and report the objectives of the Committee. risks that have been identified enterprise-wide as well as facilitate in the risk assessment process. RMD also evaluates the risk policies and procedures, and initiates improvements from trends The BRSCC had its quarterly meetings to deliberate on key risks and developments in risk management that can significantly improve and mitigation plans to ensure risks are properly managed and risk management for the Group. mitigated as well as to safeguard the shareholders’ interest. Risk owners will ensure that the risk registers and risk profiles are updated on a quarterly basis, and the consolidated reports are RMCC tabled to the RMCC, BRSCC and the Board. The composition of RMCC and its principle roles and responsibilities are as follows:
Chairman: • Group Chief Executive Officer
Members: • Chief Executive Officer Postal Services • Group Chief Financial Officer • Group Head Corporate Planning & International • Group Head Human Capital & Corporate Integrity • Group Head Digital • Head Legal, Contract Management & Regulatory (Interim Head Risk & Compliance) • Head Compliance • Head Risk Management
183 GOVERNANCE FRAMEWORK
Statement on Risk Management and Internal Control
SYSTEM OF INTERNAL CONTROL • Defined operating policies and procedures, which incorporate regulatory and internal requirements, are prescribed in the The key elements of the Group’s internal control systems are Standard Operating Policy and Procedure (SOPP). The documents described below: are updated as and when necessary to meet the continually • The Board Committees, namely the BAC, BRSCC, Board changing operational needs. The updated SOPPs are available Nomination and Remuneration Committee, Board Tender on Pos Malaysia’s intranet for easy access by employees; Committee as well as Board Digital-First Committee (BDC) were • Defined level of authorities and lines of responsibilities from established by the Board to assist the Board in the execution business units and departments up to the Board level are of its responsibilities to provide oversight on the effectiveness formalised to ensure accountability for risk management and of the Group’s operations; control activities; • The BAC, comprising three Independent Non-Executive Directors, • Training and development programmes are established to ensure provides oversight of the internal and external audit processes. that staff are kept up to date with the necessary competencies The BAC together with the IAD provide assessments based on to carry out their responsibilities towards achieving the Group’s the approved audit plan on the adequacy, efficiency and objectives; effectiveness of the Group’s internal control system. The IAD adopts a risk and strategy-based approach in formulating the • In line with the digital transformation efforts, BDC was established annual audit plan and aligns its activities to the key risks identified to review, deliberate and thereafter either approve, or recommend across the Group. The IAD recommends improvements where to the Board for approval, proposals made by the Management necessary; on the Group’s flagship Digital-First related projects in line with the Group’s Limits of Authority; and • The BAC reviews the recurrent related party transactions and related party transactions of the Group to ensure compliance • The Board meets at least quarterly to review the Group’s with Listing Requirements of Bursa Securities, and that they are operational and financial performance against approved budgets, on an arm’s length basis and not detrimental to minority approves the quarterly report to Bursa Securities and deliberates shareholders; on issues that require the Board’s approval. In addition, the Board is also updated on the changes in the business environment • The BAC reviews the engagement of the external auditors, their that may adversely affect the business performance, the action scope, approach in the conduct of the audit examination and plans to improve business efficiency and strategic initiatives for reports on the financial statement of the Group. The BAC meets business development and growth. with the external auditors at least once a year without the presence of the Management. Please refer to pages 176 to 179 The monitoring, review and reporting arrangements in place give for details of works in the Audit Committee Report; reasonable assurance that the structure of controls and its operations • The roles and responsibilities of the Board, BRSCC, RMCC, are in line with the Group’s operations and that risks are at an Business, Operations and support functions in respect of Risk acceptable level throughout the Group. However, the arrangements Management are defined in the Risk Management Policy; do not eliminate the possibility of human error or deliberate circumvention of control procedures by employees. • The Group also has in place a Whistleblowing Policy (WB Policy) to provide an avenue for employees or members of the public The Board believes that the development of the system of to report any breach or suspected breach of any laws or internal control is an ongoing process and has taken steps throughout regulations, including business ethics and the Group’s policies the year to improve its internal control system and will continue and guidelines, in a safe and confidential manner. WB Policy to do so. and its disclosure procedure are accessible to the public from the Company’s website; • The Company has established Corporate Integrity and Governance Unit to be in line with the requirement under Section 17A of Malaysian Anti-Corruption Commission Act 2009 (Amendment 2018) to safeguard the Group against bribery and corruption risks, and impart good governance within the Group;
184 POS MALAYSIA BERHAD ANNUAL REPORT 2020
MONITORING AND REVIEW OF THE ADEQUACY AND ASSURANCE TO THE BOARD INTEGRITY OF THE SYSTEM OF INTERNAL CONTROL The Statement on Risk Management and Internal Control has been The processes adopted to monitor and review the adequacy and prepared in compliance with the Listing Requirements, MCCG integrity of the system of internal control include the following: 2017, and the Statement on Risk Management and Internal Control – Guidelines for Directors of Listed Issuers 2012. • The financial statements and the Group’s performance are reviewed quarterly by the BAC, who subsequently recommends The Board has received an assurance from the Group Chief them to the Board for their consideration and approval; Executive Officer, Group Chief Financial Officer and Head Legal, • Examination of business processes and the state of internal Contract Management & Regulatory (Interim Head Risk & Compliance) control is conducted by the IAD. The IAD adopts a risk and that the risk management and internal control systems are operating strategy-based approach in formulating the annual audit plan. adequately and effectively in all material aspects based on the The IAD aligns its activities to the key risks identified across the risk management and internal control systems of the Group. Group. This plan is reviewed and approved by the BAC; For the financial year under review and up to the date of approval • The reports on the reviews are submitted and presented to the of this statement, the Board is of the opinion that the system of BAC on a quarterly basis. Effective monitoring and tracking of risk management and internal control processes are adequate and audit issues are in place through deliberations in the BAC sound to provide reasonable assurance in safeguarding shareholders’ meetings to ensure the issues are resolved in a timely manner interest, the Group’s assets and other stakeholders’ interests as and recommendations are implemented effectively; well as to address key risks impacting the business operations of • Management action plans for the audit issues raised are tracked the Group. by means of a system which is accessible by the representatives of all departments, subsidiaries and also the Senior Leadership Team. The status of the management action plans is presented REVIEW OF THIS STATEMENT in the BAC meetings. Follow-up reviews on the audit issues are The external auditors have reviewed this Statement on Risk also conducted by the IAD to ensure effectiveness of the Management and Internal Control pursuant to the scope set out implemented action plans; and in Audit and Assurance Practice Guide (AAPG) 3, Guidance for • Investigations are carried out by the Special Audit Unit, an Auditors on Engagement to Report on the Statement on Risk independent unit under IAD as requested by the Management Management and Internal Control included in the Annual Report and the Board. Reports in relation to special review of fraud issued by the Malaysian Institute of Accountants (MIA) for inclusion and major control breakdown are reported to BAC on a quarterly in the Annual Report of the Group for the financial year ended 31 basis. December 2020, and reported to the Board that nothing has come to their attention that cause them to believe that this statement The monitoring, review and reporting arrangements are in place intended to be included in the Annual Report of the Group, in all to provide reasonable assurance that the structure of controls and material respects: its operations are in line with the Group’s operations and those a) has not been prepared in accordance with the disclosures risks are at an acceptable level throughout the Group’s business. required by paragraphs 41 and 42 of the Statement on Risk Management and Internal Control: Guidelines for Directors of Listed Issuers, or b) is factually inaccurate.
AAPG 3 does not require the external auditors to consider whether the Directors’ Statement on Risk Management and Internal Control covers all risks and controls, or to form an opinion on the adequacy and effectiveness of the Group’s risk management and internal control system including the assessment and opinion by the Board of Directors and management thereon. The auditors are also not required to consider whether the processes described to deal with material internal control aspects of any significant problems disclosed in the Annual Report will, in fact, remedy the problems.
This Statement on Risk Management and Internal Control was approved by the Board of Directors on 6 April 2021.
185 GOVERNANCE FRAMEWORK Corporate Integrity and Ethical Business Conduct
Pos Malaysia strives to uphold strong commitment to observe Moving forward, the following activities are in the pipeline: highest standards of integrity and personal ethics in conducting • Preparation and launch of Organisation Anti-Corruption Plan business on behalf of the company. At such, we do not tolerate (OACP). any form of misconduct and unethical principles under any • Establishment of ABC CoCo. circumstances. In relation to Anti-Bribery and Corruption (ABC), we are guided by the following requirements: • Preparation towards obtaining Anti-Bribery Management System (ABMS). • Development and enhancement on ABC related policy and The Malaysian Anti- The Guidelines on Adequate procedures. Corruption Commission Procedures issued by the (MACC) Act 2009; Prime Minister’s Department • CRM Periodic assessment. • Regular monitoring and assurance. • Continuous training and awareness programme. The Guideline for the Directive of the Prime Management of Integrity & Minister No.1 Series 1 The following are the existing internal control measures to curb Governance Unit issued by issued in October 2018. bribery and corruption in Pos Malaysia: the MACC; and
To steer the implementation of the above requirements, Corporate Whistleblowing Policy Integrity has been established under the Group Human Capital for Pos Malaysia Berhad and Chief Integrity & Governance Officer (CIGO) was officially appointed in August 2020. The main pillars Limit of Authority (LOA) for Corporate Integrity are as follows:
Group Procurement Policy
Complaint Detection & Kod Kelakuan dan Etika Perniagaan Management Verification
Anti-Money Laundering and Counter Financing Terrorism (AML/CFT) Policy
Communication Policy Training & Governance Awareness Risk Management Policy In 2020, the following initiatives were undertaken: • Formation of Management Committee for Corporate Integrity Apart from the above, continuous training and awareness programme (MCCI) to implement the main pillars of activities. with periodic monitoring and assurance programme are in place • Implementation of reporting channel Via Risk Management to ensure the integrity culture at the workplace are well embedded Compliance Committee (RMCC) to the Board Risk Sustainability for Pos Malaysia. Compliance Committee (BRSCC). • Corporate Integrity Pledge by the Board and management witnessed by the MACC officer. • Certification for Certified Integrity Officer (CeIO). • Training & awareness programs on integrity e.g. Corporate Governance and Integrity (CGI) e-learning and Supervisory Training programme. • Gap analysis on existing ABC practice vis-à-vis Adequate Procedures. • Corruption Risk Management (CRM) assessment. • Preparation of ABC Code of Conduct (ABC CoCo).
186 POS MALAYSIA BERHAD ANNUAL REPORT 2020
Additional Compliance Information
UTILISATION OF PROCEEDS During the FY2020, there were no proceeds raised by the Company from any corporate proposal.
MATERIAL CONTRACTS There were no material contracts entered into by Pos Malaysia nor its subsidiaries involving interests of the Directors, chief executive (who is not a Director) and/or Major Shareholders, subsisting as at 31 December 2020, or entered into since the end of 1 January 2020.
AUDIT AND NON-AUDIT FEES The particulars in relation to the audit and non-audit services rendered by the Company’s auditors to the Company or its subsidiaries for the FY2020 are as follows:-
Description Company Group Audit Fees (RM) 390,000 1,184,000
Under provision in prior year (RM) 85,000 85,000
Other Audit Fees (RM) 550,000 550,000
Non-Audit Fees (RM) 946,736 1,180,886
Total (RM) 1,971,736 2,999,886
The nature of the services rendered for the other audit fees incurred are review of Directors’ Statement on Risk Management and Internal Control, Quarterly Status Updates and Agreed Upon Procedures for Money Order/Postal Order.
The non-audit fees are the services for compliance tax fees and other engagements, which include Organisational and Manpower Review and the development of 3-year Information and Communications Technology Blueprints.
RECURRENT RELATED PARTY TRANSACTION OF A REVENUE OR TRADING NATURE Pursuant to Paragraph 10.09(2)(b) and Paragraph 3.1.5 of Practice Note 12 of the Listing Requirements of Bursa Securities, the details of the recurrent related party transactions of a revenue or trading nature entered into during the FY2020 pursuant to the shareholders’ mandate obtained at the Company’s 28th AGM held on 29 June 2020 are as follows:
Actual value transacted from the date the mandate was Pos obtained i.e. Malaysia 1 January 2020 and/or its Related parties and their relationship with to 31 December No. subsidiaries Transacting related party Nature of transaction Pos Malaysia Group 2020 (RM’000) 1. Pos Malaysia Honda Malaysia Sdn Bhd Provision of Direct Mail services by Pos 1) DRB-HICOM Berhad (DRB-HICOM) * 2 Group (Honda Malaysia) Malaysia Group – Honda Malaysia is an associate company of DRB-HICOM 2) TSSM #
2. Pos Malaysia Edaran Modenas Sdn Bhd Purchase of motorcycles and payment 1) DRB-HICOM * 1 Group (Edaran Modenas) for parts and maintenance of motorcycles – Edaran Modenas is a 100%-owned subsidiary by Pos Malaysia Group of Motosikal Dan Enjin Nasional Sdn Bhd, effectively 70%-jointly controlled entity of DRB-HICOM 2) TSSM #
187 GOVERNANCE FRAMEWORK
Additional Compliance Information
RECURRENT RELATED PARTY TRANSACTION OF A REVENUE OR TRADING NATURE (CONTINUED)
Actual value transacted from the date the mandate was Pos obtained i.e. Malaysia 1 January 2020 and/or its Related parties and their relationship with to 31 December No. subsidiaries Transacting related party Nature of transaction Pos Malaysia Group 2020 (RM’000)
3. Pos Malaysia Proton Edar Sdn Bhd Payment for parts and maintenance of 1) DRB-HICOM * 1 Group (Proton Edar) vehicles by Pos Malaysia Group – Proton Edar is a 100%-owned subsidiary of Proton Marketing Sdn Bhd, effectively 50.1%-owned subsidiary of DRB-HICOM Provision of Direct Mail services by Pos 2) TSSM # 1 Malaysia Group
4. Pos Malaysia Automotive Corporation Purchase of vehicles and payment for 1) DRB-HICOM * 157 Group (Malaysia) Sdn Bhd maintenance of vehicles by Pos Malaysia – ACMSB is a 100%-owned subsidiary of (ACMSB) Group Automotive Corporation Holdings Sdn Bhd, effectively a wholly-owned subsidiary of DRB-HICOM 2) TSSM #
5. Pos Malaysia DRB-HICOM Leasing Leasing of vehicles by Pos Malaysia 1) DRB-HICOM * 21,845 Group Sdn Bhd (DHLSB) Group – DHLSB is a 100%-owned subsidiary of DRB- HICOM EZ-Drive Sdn Bhd (DHZD), effectively a wholly-owned subsidiary of DRB-HICOM 2) TSSM #
6. Pos Malaysia Bank Muamalat Malaysia Provision of Corporate Postal Services 1) DRB-HICOM * 153 Group Berhad (BMMB) by Pos Malaysia Group^ – BMMB is a 70%-owned subsidiary of DRB- HICOM Provision of payment gateway by BMMB 2) TSSM # 1 for PosOnline
Renting of retail/advertisement space at 10 Pos Malaysia’s post offices/outlet, land, vehicles, equipment, merchandise, delivery workforce, website and portals
7. Pos Malaysia Alam Flora Environmental Provision of integrated facility 1) TSSM # 2,714 Group Services Sdn Bhd (AFES) management and maintenance services – AFES is a 100%-owned subsidiary of Alam (formerly known as by AFES Flora Sdn Bhd (Alam Flora), effectively a DRB-HICOM environmental 97.37%-owned subsidiary of Malakoff Services Sdn Bhd) Corporation Berhad (Malakoff)
8. Pos Malaysia Glenmarie Properties Provision of Corporate Postal Services 1) DRB-HICOM * 72 Group Sdn Bhd (Glenmarie by Pos Malaysia Group^ – Glenmarie Properties is a 100%-owned Properties) subsidiary of HICOM Berhad, effectively a wholly-owned subsidiary of DRB-HICOM 2) TSSM #
9. Pos Malaysia MPH Bookstores Sdn Bhd Provision of courier services by Pos 1) TSSM # 105 Group (MPH Bookstores) Malaysia Group – MPH Bookstores is a 100%-owned subsidiary of Sutera Bakti Sdn Bhd (Sutera Bakti), a company in which TSSM is an indirect Major Shareholder
188 POS MALAYSIA BERHAD ANNUAL REPORT 2020
Actual value transacted from the date the mandate was Pos obtained i.e. Malaysia 1 January 2020 and/or its Related parties and their relationship with to 31 December No. subsidiaries Transacting related party Nature of transaction Pos Malaysia Group 2020 (RM’000)
10. Pos Malaysia HICOM University College Provision of training and development 1) DRB-HICOM * 57 Group Sdn Bhd (HUC) services by HUC – HUC is a 100%-owned subsidiary company of DRB-HICOM 2) TSSM #
11. Pos Malaysia Gas Malaysia Berhad Commissions from bills payment collected 1) TSSM # 34 Group (GMB) at Pos Malaysia outlets/channels – GMB is 30.9%-associated company of MMC Corporation Berhad (MMC)
12. Pos Malaysia DRB-HICOM Commercial Purchase of vehicles and payment for 1) DRB-HICOM * 45 Group Vehicles Sdn Bhd maintenance of vehicles by Pos Malaysia – DHCV is a 100%-owned subsidiary of USF- (DHCV) Group HICOM Holdings Sdn Bhd (USF-HICOM), effectively a wholly-owned subsidiary of DRB-HICOM 2) TSSM #
13. Pos Malaysia DRB-HICOM Group of Provision of maintenance and other 1) DRB-HICOM * 29 Group companies involved in services related to the motor vehicles 2) TSSM # automotive products and to Pos Malaysia Group services and related businesses
14. Pos Malaysia DRB-HICOM subsidiaries Provision of distribution services by Pos 1) DRB-HICOM * 2,781 Group companies Malaysia Group 2) TSSM #
DRB-HICOM associates 607 companies
Malakoff Group of 1) TSSM # 19 companies – Malakoff is a 37.6%-owned associated company of MMC
MMC Group of companies 1) TSSM # 17 – MMC is a company in which TSSM is an indirect Major Shareholder
Bukhary Equity Sdn Bhd 1) TSSM # 47 (Bukhary Equity) Group of – Bukhari Equity is a company in which TSSM companies is a direct Major Shareholder
15. Pos Malaysia DHZD Leasing of vehicles by Pos Malaysia 1) DRB-HICOM * 532 Group Group – DHZD is a 100%-owned subsidiary of Edaran Otomobil Nasional Berhad (EON), effectively a wholly-owned subsidiary of DRB-HICOM 2) TSSM #
189 GOVERNANCE FRAMEWORK
Additional Compliance Information
RECURRENT RELATED PARTY TRANSACTION OF A REVENUE OR TRADING NATURE (CONTINUED)
Actual value transacted from the date the mandate was Pos obtained i.e. Malaysia 1 January 2020 and/or its Related parties and their relationship with to 31 December No. subsidiaries Transacting related party Nature of transaction Pos Malaysia Group 2020 (RM’000) 16. Pos Malaysia PUSPAKOM Sdn Bhd Provision of Corporate Postal Services 1) DRB-HICOM * 91 Group (PUSPAKOM) by Pos Malaysia Group ^ – PUSPAKOM is a 100%-owned subsidiary of DRB-HICOM 2) TSSM #
Alam Flora 1) TSSM # 73 – Alam Flora is a 97.37%-owned subsidiary of Tunas Pancar Sdn Bhd, effectively a wholly- owned subsidiary of Malakoff
DRB-HICOM Auto 1) DRB-HICOM * 8 Solutions Sdn Bhd (DHAS) – DHAS is a 100%-owned subsidiary of DRB- HICOM 2) TSSM #
HICOM HBPO Sdn Bhd 1) DRB-HICOM * 6 (HICOM HBPO) – HICOM HBPO is an associate company of HICOM Polymers Industry Sdn Bhd, effectively an associated company of DRB-HICOM 2) TSSM #
17. Pos Malaysia DRB-HICOM subsidiaries Provision of Direct Mail Services by Pos 1) DRB-HICOM * 45 Group companies Malaysia Group 2) TSSM #
18. Pos Malaysia DRB-HICOM Group of Provision of training programmes and 1) DRB-HICOM * 12 Group companies training venue to Pos Malaysia Group 2) TSSM #
Provision of courier services by Pos 125 Malaysia Group
19. Pos Malaysia DRB-HICOM Group of Provision of training facilities and 1) DRB-HICOM * 50 Group companies programmes by Pos Malaysia Group 2) TSSM #
MMC Group of Companies 1) TSSM # – MMC is a company in which TSSM is an indirect Major Shareholder
Tradewinds (M) Berhad 1) TSSM # (Tradewinds), Tradewinds – Tradewinds, Tradewinds Plantation and Plantation Berhad Tradewinds Corporation Group are companies (Tradewinds Plantation) in which TSSM is an indirect Major and Tradewinds Shareholder Corporation Berhad (Tradewinds Corporation) Group of companies
20. Pos Malaysia HICOM Holdings Berhad Provision of management services 1) DRB-HICOM * 840 Group (HICOM Holdings) – HICOM Holdings is a 100%-owned subsidiary Provision of Corporate Postal Services of DRB-HICOM 36 by Pos Malaysia Group^ 2) TSSM #
190 POS MALAYSIA BERHAD ANNUAL REPORT 2020
Actual value transacted from the date the mandate was Pos obtained i.e. Malaysia 1 January 2020 and/or its Related parties and their relationship with to 31 December No. subsidiaries Transacting related party Nature of transaction Pos Malaysia Group 2020 (RM’000)
21. Pos Malaysia Seek Executive Search Provision of recruitment search and 1) Tee Beng Thong (TBT) 64 Group Sdn Bhd (Seek Executive) placement services – Seek Executive is a company in which TBT is the Managing Director and owned 50% of interest. TBT formerly was an Independent Director of DRB-HICOM
22. Pos Malaysia Tradewinds, Tradewinds Provision of distribution services by Pos 1) TSSM # 5 Group Plantation and Tradewinds Malaysia Group – Tradewinds, Tradewinds Plantation and Corporation Group of Tradewinds Corporation Group are companies companies in which TSSM is an indirect Major Shareholder
23. Pos Malaysia Media Prima Berhad Media engagement due to tariff 1) TSSM # 110 Group (Media Prima) rebalancing and postage rate revision – Media Prima is a company in which TSSM is an indirect Major Shareholder
24. Pos Malaysia Altel Communications Purchase of telecommunication data line 1) TSSM # 7,061 Group Sdn Bhd (Altel) and handphone for operational – Altel is 100%-owned subsidiary of Sutera requirements Bakti, a company in which TSSM is an indirect Major Shareholder
25. Pos Digicert BMMB Provision and implementation of managed 1) DRB-HICOM * 123 Public Key Infrastructure Services by – BMMB is a 70%-owned subsidiary of DRB- Pos Digicert HICOM 2) TSSM #
Big Dataworks Sdn Bhd 1) TSSM # 415 (Big Dataworks) – Big Dataworks is a company ultimately owned by Puncak Semangat Sdn Bhd (Puncak Semangat), a company in which 70% is owned by a Person Connected to TSSM
26. Pos Digicert Commerce Dot Com Provision and implementation of managed 1) TSSM # 1,986 Sdn Bhd (Commerce Public Key Infrastructure Servces and – Commerce Dot Com is a company ultimately Dot Com) Log Radar by Pos Digicert for NextGen owned by Puncak Semangat, a company in E-Perolehan application which 70% is owned by a Person Connected to TSSM
27. Pos Digicert Honda Malaysia Provision and implementation of managed 1) DRB-HICOM * 5 Public Key Infrastructure Services by – Honda Malaysia is an associate company of Pos Digicert DRB-HICOM 2) TSSM #
28. Pos Digicert HUC Provision and implementation of “eScroll” 1) DRB-HICOM * 47 Solution, a digital scroll embedded with – HUC is a 100%-owned subsidiary company Public Key Infrastructure technology to of DRB-HICOM prevent and defect forgery 2) TSSM #
191 GOVERNANCE FRAMEWORK
Additional Compliance Information
RECURRENT RELATED PARTY TRANSACTION OF A REVENUE OR TRADING NATURE (CONTINUED)
Actual value transacted from the date the mandate was Pos obtained i.e. Malaysia 1 January 2020 and/or its Related parties and their relationship with to 31 December No. subsidiaries Transacting related party Nature of transaction Pos Malaysia Group 2020 (RM’000)
29. Datapos DRB-HICOM Group of Provision of printing, poly wrapping, 1) DRB-HICOM * 73 companies enveloping, inserting of pamphlets, annual 2) TSSM # reports and bank statements, supply of paper and plastic, return mail management services, other incidental services and provision of bulk mail services by Datapos
Provision of Digital Solutions Services 141 including subscription of Digital Library Solutions, Purchase, Install, Configure and Commission of hardware and software, Data Warehousing
30. Datapos Avon Cosmetics (M) Provision of printing, poly wrapping, 1) TSSM # 80 Sendirian Berhad (Avon enveloping, inserting of pamphlets, annual – Avon Cosmetics is a 30%-owned associated Cosmetics) reports and bank statements, supply of company of Tradewinds Corporation paper and plastic, return mail management services, other incidental services and provision of bulk mail services by Datapos
31. Datapos Padiberas Nasional Berhad Provision of Pos Solutions services by 1) TSSM # 43 (BERNAS) Datapos – BERNAS is a 100%-owned subsidiary of Perspective Lane (M) Sdn Bhd, in which TSSM is an indirect Major Shareholder
MMC 1) TSSM # 5 – MMC is a company in which TSSM is an indirect Major Shareholder
AMTEK Holding Berhad 1) TSSM # 5 (AMTEK) – AMTEK is a company owned by a Person Connected to TSSM
Puncak Semangat Group of 1) TSSM # 55 companies – Puncak Semangat is a company 70%-owned by a Person Connected to TSSM
Altel Group Sdn Bhd 1) TSSM # 4 (Altel Group) – Altel Group is 100%-owned subsidiary of Sutera Bakti, a company in which TSSM is an indirect Major Shareholder
192 POS MALAYSIA BERHAD ANNUAL REPORT 2020
Actual value transacted from the date the mandate was Pos obtained i.e. Malaysia 1 January 2020 and/or its Related parties and their relationship with to 31 December No. subsidiaries Transacting related party Nature of transaction Pos Malaysia Group 2020 (RM’000)
32. Datapos Puncak Hartanah Intelek Provision of Digital Solutions and other 1) TSSM# 544 Sdn Bhd (Puncak related services including digital library – Puncak Hartanah Intelek is a 100%-owned Hartanah Intelek) solution subscription, configuring and subsidiary of Commerce Dot Com commissioning of hardware and software, data warehousing and digital asset repository to Datapos
33. Pos Aviation Jasmine Food Corporation Supply of foodstuff for in-flight catering 1) TSSM # 1 Group Sdn Bhd (Jasmine Food) to Pos Aviation Group – Jasmine Food is a company in which TSSM is an indirect Major Shareholder
YHL Trading (KL) Sdn Bhd 1) TSSM # 12 (YHL Trading) – YHL Trading is a 33%-associated company of BERNAS, a company in which TSSM is an indirect Major Shareholder
Gardenia Bakeries (KL) Sdn 1) TSSM # 4 Bhd (Gardenia Bakeries) – Gardenia Bakeries is a company in which TSSM is an indirect Major Shareholder
34. Pos Aviation GMB Supply of gas for inflight catering to Pos 1) TSSM # 11 Group Aviation Group – GMB is 30.9%-associated company of MMC
35. Pos Aviation Tradewinds Travel Services Provision of travelling services 1) TSSM # 17 Group Sdn Bhd – Tradewinds Travel is an indirect 100%-owned (Tradewinds Travel) subsidiary of Tradewinds Corporation
36. Pos Aviation AFES Provision of garbage collection services 1) TSSM # 112 Group – AFES is a 100%-owned subsidiary of Alam Flora, effectively 97.37%-owned subsidiary of Malakoff
37. Pos Aviation HUC Provision of staff training services by 1) DRB-HICOM * 12 Group HUC – HUC is a 100%-owned subsidiary company of DRB-HICOM 2) TSSM #
38. Pos Aviation DHZD Renting of vehicles to Pos Aviation Group 1) DRB-HICOM * 685 Group – DHZD is a 100%-owned subsidiary of EON, effectively a wholly-owned subsidiary of DRB- HICOM 2) TSSM #
193 GOVERNANCE FRAMEWORK
Additional Compliance Information
RECURRENT RELATED PARTY TRANSACTION OF A REVENUE OR TRADING NATURE (CONTINUED)
Actual value transacted from the date the mandate was Pos obtained i.e. Malaysia 1 January 2020 and/or its Related parties and their relationship with to 31 December No. subsidiaries Transacting related party Nature of transaction Pos Malaysia Group 2020 (RM’000) 39. Pos Aviation HICOM-Teck See Supply and deliver of operation equipment 1) DRB-HICOM * 13 Group Manufacturing Malaysia to Pos Aviation Group – HICOM-Teck See is a 51%-owned subsidiary Sdn Bhd (HICOM-Teck of HICOM Holdings, effectively 51%-owned See) subsidiary of DRB-HICOM 2) TSSM #
40. Pos Logistics DRB-HICOM Group of Provision of logistics services by Pos 1) DRB-HICOM * 123,243 Group companies Logistics Group 2) TSSM #
Tradewinds Group of 1) TSSM # 26,665 companies – Tradewinds is company in which TSSM is an indirect Major Shareholder
MYTV Broadcasting Sdn 1) TSSM # 1,138 Bhd (MYTV) – MYTV is a 100%-owned subsidiary of Sutera Bakti, a company in which TSSM is a direct Major Shareholder
41. Pos Logistics MMC Group of companies Payment of port charges 1) TSSM # 10,981 Group – MMC is a company in which TSSM is an indirect Major Shareholder
42. Pos Logistics DRB-HICOM Group of Payment for rental of vehicles (4WD) 1) DRB-HICOM * 53 Group companies 2) TSSM #
43. Pos Logistics Tradewinds Corporation Purchase of marine insurance and other 1) TSSM # 1,091 Group Group of companies servies – Tradewinds Corporation is company in which TSSM is an indirect Major Shareholder
44. Pos Logistics ISUZU Service Centre Sdn Purchase of vehicles, services, repair 1) DRB-HICOM * 199 Group Bhd (ISUZU Service and maintenance – ISUZU Service Centre is a jointly controlled Centre) entity of DRB-HICOM 2) TSSM #
DHCV 1) DRB-HICOM * 185 – DHCV is a 100%-owned subsidiary of USF- HICOM, effectively a wholly-owned subsidiary of DRB-HICOM 2) TSSM #
205,704
Notes: * DRB-HICOM is the holding company of Pos Malaysia. # Tan Sri Dato’ Seri Syed Mokhtar Shah bin Syed Nor (TSSM) is an indirect Major Shareholder of Pos Malaysia and DRB-HICOM. ^ Corporate Postal Services was formerly known as Corporate Mail Management Services.
194 POS MALAYSIA BERHAD ANNUAL REPORT 2020
Directors’ Responsibility Statement
The Companies Act 2016 (the Act) requires the Directors to prepare financial statements for each financial year in accordance with the Malaysian Financial Reporting Standards issued by the Malaysian Accounting Standards Board, International Financial Reporting Standards, the provisions of the Act and the requirements of the Main Market Listing Requirements (Listing Requirements) of Bursa Malaysia Securities Berhad (Bursa Securities) and to lay these before the Company at its AGM.
Pursuant to Paragraph 15.26(a) of the Listing Requirements of Bursa Securities, the Directors are required to include a statement in the Company’s Annual Report explaining its responsibility for preparing the annual audited financial statements.
In preparing the financial statements of the Group and the Company for the FY2020, the Directors are satisfied that the Group and the Company have:-
• adopted appropriate accounting policies and applied them consistently; • made reasonable and prudent judgments and estimates; • ensured that all applicable approved accounting standards and provisions of the Act have been followed; and • prepared the financial statements on a going concern basis.
The Directors are responsible for ensuring that the Group and the Company keep accounting records which disclose with reasonable accuracy the financial position of the Group and the Company. In addition, the Directors are responsible for taking such steps as are reasonably open to them to safeguard the assets of the Group and the Company and to detect and prevent fraud and other irregularities.
This Statement is made in accordance with a resolution of the Board of Directors dated 6 April 2021.
195 Financial Statements 197 Directors’ Report 200 Statements of Comprehensive Income 201 Statements of Financial Position 202 Consolidated Statement of Changes in Equity 203 Statement of Changes in Equity 204 Statements of Cash Flows 208 Notes to the Financial Statements 296 Statement by Directors 296 Statutory Declaration 297 Independent Auditors’ Report POS MALAYSIA BERHAD ANNUAL REPORT 2020 Directors’ Report for the financial year ended 31 December 2020
The Directors of Pos Malaysia Berhad (the “Company”) hereby submit their report and the audited financial statements of the Group and of the Company for the financial year ended 31 December 2020.
PRINCIPAL ACTIVITIES The principal activities of the Company during the financial year are to provide postal and its related services which include receiving and dispatching of postal articles, postal financial services, dealing in philatelic products and sale of postage stamps. The principal activities of the subsidiaries are stated in Note 16 to the financial statements.
There has been no significant change in the nature of these activities during the financial year.
HOLDING COMPANIES The Directors regard DRB-HICOM Berhad and Etika Strategi Sdn. Bhd., companies incorporated in Malaysia as its immediate and ultimate holding companies respectively. DRB-HICOM Berhad is listed on the Main Market of Bursa Malaysia Securities Berhad.
SUBSIDIARIES The details of the Company’s subsidiaries are disclosed in Note 16 to the financial statements.
RESULTS
Group Company RM’000 RM’000
Loss for the year 308,018 377,938
RESERVES AND PROVISIONS There were no material transfers to or from reserves and provisions during the financial year under review except as disclosed in the financial statements.
DIVIDENDS No dividend was paid or declared during the year end. The Directors do not recommend any dividend to be paid for the financial year ended 31 December 2020.
DIRECTORS OF THE COMPANY AND ITS SUBSIDIARIES Directors who served during the financial year until the date of this report are:
Pos Malaysia Berhad Dato’ Sri Syed Faisal Albar bin Syed A.R Albar (Chairman) (Redesignated on 2 April 2021) Datuk Puteh Rukiah binti Abd. Majid Datuk Idris bin Abdullah @ Das Murthy Sharifah Sofia binti Syed Mokhtar Shah Ahmad Suhaimi bin Endut Ahmed Fairuz bin Abdul Aziz Dato’ Dr Mohd Ali bin Mohamad Nor (Appointed on 1 January 2021) Dato’ Jezilee bin Mohamad Ramli (Appointed on 2 April 2021) Datuk Yasmin binti Mahmood (Chairman) (Resigned on 1 April 2021) Dato’ Ibrahim Mahaludin bin Puteh (Resigned on 1 January 2021)
197 FINANCIAL STATEMENTS
Directors’ Report for the financial year ended 31 December 2020
DIRECTORS OF THE COMPANY AND ITS SUBSIDIARIES (CONTINUED) Subsidiaries Syed Md Najib bin Syed Md Noor Azlan bin Ash'ari Azahar bin Ariff Mohamed Rozaidi bin Md Sharif Mohd Faishal bin Kassim Woo Kam Weng (Resigned on 10 March 2021) Abd Aziz bin Miskon (Resigned on 23 December 2019) Elias bin Effendy (Resigned on 23 December 2019)
DIRECTORS’ INTERESTS IN SHARES None of the Directors holding office at 31 December 2020 had any interest in the ordinary shares of the Company and of its related corporations during the financial year.
DIRECTORS’ BENEFITS During and at the end of the financial year, no arrangements subsisted to which the Company is a party, being arrangements with the object or objects of enabling Directors of the Company to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate.
Since the end of the previous financial period, no Director of the Company has received nor become entitled to receive any benefit (other than remuneration disclosed in Note 6 to the financial statements or the fixed salary of a full time employee of a related corporation) by reason of a contract made by the Company or a related corporation with the Director or with a firm of which the Director is a member, or with a company in which the Director has a substantial financial interest.
ISSUE OF SHARES There were no changes in the issued and paid-up capital of the Company during the financial year.
OPTIONS GRANTED OVER UNISSUED SHARES No options were granted to any person to take up unissued shares of the Company during the financial year.
INDEMNITY AND INSURANCE COSTS During the financial year, the total amount of insurance premium effected for Directors and officers of the Group is RM37,933 limited to a coverage of RM30,000,000. There is no indemnity and insurance purchased for the auditors of the Group and of the Company.
OTHER STATUTORY INFORMATION Before the financial statements of the Group and of the Company were made out, the Directors took reasonable steps to ascertain that:
(i) all known bad debts have been written off and adequate provision made for doubtful debts, and
(ii) any current assets which were unlikely to be realised in the ordinary course of business have been written down to an amount which they might be expected so to realise.
198 POS MALAYSIA BERHAD ANNUAL REPORT 2020
OTHER STATUTORY INFORMATION (CONTINUED) At the date of this report, the Directors are not aware of any circumstances:
(i) that would render the amount written off for bad debts or the amount of the provision for doubtful debts in the Group and in the Company inadequate to any substantial extent, or
(ii) that would render the value attributed to the current assets in the financial statements of the Group and of the Company misleading, or
(iii) which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate, or
(iv) not otherwise dealt with in this report or the financial statements that would render any amount stated in the financial statements of the Group and of the Company misleading.
At the date of this report, there does not exist:
(i) any charge on the assets of the Group or of the Company that has arisen since the end of the financial year and which secures the liabilities of any other person, or
(ii) any contingent liability in respect of the Group or of the Company that has arisen since the end of the financial year.
No contingent liability or other liability of any company in the Group has become enforceable, or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the Directors, will or may substantially affect the ability of the Group and of the Company to meet their obligations as and when they fall due.
In the opinion of the Directors, except for the effect of the COVID-19 as disclosed in Note 37, the impairment of goodwill of RM123,263,000, provision for mutual separation scheme of RM41,556,000, gain on dilution of shareholding in a former subsidiary of RM79,282,000 and impairment of investment in subsidiaries of RM222,170,000, the financial performance of the Group and of the Company for the financial year ended 31 December 2020 have not been substantially affected by any item, transaction or event of a material and unusual nature nor has any such item, transaction or event occurred in the interval between the end of that financial year and the date of this report.
SIGNIFICANT EVENTS The significant events during the financial year are disclosed in Note 34 and 37 to the financial statements.
AUDITORS The auditors, KPMG PLT, have indicated their willingness to accept re-appointment.
The auditors’ remuneration is disclosed in Note 5 to the financial statements.
Signed on behalf of the Board of Directors in accordance with a resolution of the Directors:
Dato’ Sri Syed Faisal Albar bin Syed A.R Albar Ahmed Fairuz bin Abdul Aziz Director Director
Kuala Lumpur Date: 6 April 2021
199 FINANCIAL STATEMENTS Statements of Comprehensive Income for the financial year ended 31 December 2020
Group Company
Year ended 1.4.2019 to Year ended 1.4.2019 to 31.12.2020 31.12.2019 31.12.2020 31.12.2019 Note RM’000 RM’000 RM’000 RM’000
Revenue 4 2,332,262 1,682,534 1,747,849 1,171,445 Cost of sales (2,051,386) (1,513,524) (1,608,926) (1,124,041)
Gross profit 280,876 169,010 138,923 47,404 Other income 101,605 34,286 29,214 40,212 Selling and distribution expenses (11,909) (11,614) (3,063) (3,041) Administrative expenses (382,374) (282,800) (279,927) (200,150) Other expenses (191,717) (110,237) (246,891) (69,697) Net loss on impairment of financial instruments and contract assets 5 (53,406) (5,156) (7,091) (2,623)
Results from operating activities (256,925) (206,511) (368,835) (187,895)
Finance income 5 5,150 2,261 14,804 6,291 Finance costs 5 (50,237) (36,314) (23,907) (16,389)
Net finance costs (45,087) (34,053) (9,103) (10,098) Zakat (1,480) (1,316) – –
Loss before taxation 5 (303,492) (241,880) (377,938) (197,993) Taxation 7 (4,526) 26,301 – 27,507
Loss for the financial year/period (308,018) (215,579) (377,938) (170,486)
Other comprehensive expense (net of tax):
Item that will not be reclassified subsequently to profit or loss Remeasurement of post-employment benefit obligation 8 (586) – – –
Item that is or may be reclassified subsequently to profit or loss Currency translation differences for foreign operations 8 86 (1,891) – – Transfer of currency translation differences of a foreign operation upon dilution of shareholding in a former subsidiary 8 11 – – –
97 (1,891) – –
Other comprehensive expense for the financial year/period (net of tax) (489) (1,891) – –
Total comprehensive expense for the financial year/ period (net of tax) (308,507) (217,470) (377,938) (170,486)
Basic and diluted loss per share (sen) 9 (39.3) (27.5)
The notes on pages 208 to 295 are an integral part of these financial statements.
200 POS MALAYSIA BERHAD ANNUAL REPORT 2020 Statements of Financial Position as at 31 December 2020
Group Company 2020 2019 2020 2019 Note RM’000 RM’000 RM’000 RM’000
ASSETS Property, plant and equipment 11 1,011,944 1,127,558 588,989 643,675 Investment properties 12 39,050 39,050 – – Right-of-use assets 13 503,920 491,690 177,632 215,957 Intangible assets 14 144,353 276,809 – – Deferred tax assets 15 1,885 6,108 36 36 Investments in subsidiaries 16 – – 573,166 795,336 Investments in associates 17 38,000 – – – Other investments 18 10,271 501 – – Derivative financial asset 19 1,626 – – – Total non-current assets 1,751,049 1,941,716 1,339,823 1,655,004
Contract assets 20 3,128 3,510 – – Trade and other receivables 21 803,216 782,753 649,622 566,537 Other investments 18 72,817 117,843 29,713 52,839 Inventories 22 6,660 7,049 3,491 2,950 Prepayment 23 182,574 259,574 164,288 240,182 Current tax assets 21,033 19,138 11,429 13,429 Cash and cash equivalents 24 316,489 213,601 144,130 101,448 1,405,917 1,403,468 1,002,673 977,385 Assets classified as held for sale 25 12,559 – – –
Total current assets 1,418,476 1,403,468 1,002,673 977,385 Total assets 3,169,525 3,345,184 2,342,496 2,632,389
EQUITY Share capital 26 1,071,392 1,071,392 1,071,392 1,071,392 Reserves 26 72,014 380,521 (112,547) 265,391 Total equity 1,143,406 1,451,913 958,845 1,336,783
LIABILITIES Loans and borrowings 27 228,307 293,779 162,000 206,000 Lease liabilities 241,325 204,402 54,774 75,432 Post-employment benefit obligations 28 1,318 638 – – Deferred tax liabilities 15 41,986 46,482 – – Trade and other payables 29 – – 37,172 40,303 Total non-current liabilities 512,936 545,301 253,946 321,735
Loans and borrowings 27 445,501 318,748 120,000 113,000 Lease liabilities 58,611 60,456 35,820 38,104 Current tax liabilities 3,376 9,403 – – Trade and other payables 29 998,963 959,363 973,885 822,767 1,506,451 1,347,970 1,129,705 973,871 Liabilities classified as held for sale 25 6,732 – – – Total current liabilities 1,513,183 1,347,970 1,129,705 973,871 Total liabilities 2,026,119 1,893,271 1,383,651 1,295,606 Total equity and liabilities 3,169,525 3,345,184 2,342,496 2,632,389
The notes on pages 208 to 295 are an integral part of these financial statements.
201 FINANCIAL STATEMENTS Consolidated Statement of Changes in Equity for the financial year ended 31 December 2020
Attributable to owners of the Company
Non-distributable Distributable
Post- Foreign Share employment currency capital* Revaluation benefits translation Retained Total (Note 26) reserve reserve reserve earnings equity Group Note RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
At 1 April 2019 1,071,392 1,144 (639) 36 628,761 1,700,694
Currency translation differences for foreign operations 8 – – – (1,891) – (1,891) Total other comprehensive expense for the financial period – – – (1,891) – (1,891) Loss for the financial period – – – – (215,579) (215,579)
Loss and total comprehensive expense for the financial period – – – (1,891) (215,579) (217,470) Dividends to owners of the Company 10 – – – – (31,311) (31,311)
At 31 December 2019/1 January 2020 1,071,392 1,144 (639) (1,855) 381,871 1,451,913 Currency translation differences for foreign operations 8 – – – 97 – 97 Remeasurement of post-employment benefits obligation – – (586) – – (586)
Total other comprehensive expense for the financial year – – (586) 97 – (489) Loss for the financial year – – – – (308,018) (308,018)
Loss and total comprehensive expense for the financial year – – (586) 97 (308,018) (308,507)
At 31 December 2020 1,071,392 1,144 (1,225) (1,758) 73,853 1,143,406
* Share capital includes the Special Rights Redeemable Preference Share of RM1.00. Refer to Note 26(a) of the financial statements for details of the terms and rights attached to the Special Rights Redeemable Preference Share.
The notes on pages 208 to 295 are an integral part of these financial statements.
202 POS MALAYSIA BERHAD ANNUAL REPORT 2020 Statement of Changes in Equity for the financial year ended 31 December 2020
Attributable to owners of the Company
Non- distributable Distributable
Share capital* Retained (Note 26) earnings Total Company Note RM’000 RM’000 RM’000
At 1 April 2019 1,071,392 467,188 1,538,580 Loss and total comprehensive expense for the financial period – (170,486) (170,486) Dividends to owners of the Company 10 – (31,311) (31,311)
At 31 December 2019/1 January 2020 1,071,392 265,391 1,336,783 Loss and total comprehensive expense for the financial year – (377,938) (377,938)
At 31 December 2020 1,071,392 (112,547) 958,845
* Share capital includes the Special Rights Redeemable Preference Share of RM1.00. Refer to Note 26(a) of the financial statements for details of the terms and rights attached to the Special Rights Redeemable Preference Share.
The notes on pages 208 to 295 are an integral part of these financial statements.
203 FINANCIAL STATEMENTS Statements of Cash Flows for the financial year ended 31 December 2020
Group Company
Year ended 1.4.2019 to Year ended 1.4.2019 to 31.12.2020 31.12.2019 31.12.2020 31.12.2019 Note RM’000 RM’000 RM’000 RM’000
CASH FLOWS FROM OPERATING ACTIVITIES Loss before tax (303,492) (241,880) (377,938) (197,993)
Adjustments for: Amortisation of: – Government grant (2,198) (4,579) (2,198) (4,579) – Intangible assets 14 5,126 4,963 – – Defined benefit obligations 28 94 4 – – Depreciation of property, plant and equipment 11 162,615 125,448 119,059 92,082 Depreciation of right-of-use assets 13 89,275 66,816 60,311 45,913 Net loss on impairment of financial instruments: Financial assets at amortised cost 5 53,406 5,156 7,091 2,623 Net fair value gain of other investments: Financial assets at fair value through profit or loss 5 (1,350) (2,680) (563) (2,316) Finance costs 50,237 36,314 23,907 16,389 Finance income (5,150) (2,261) (14,804) (6,291) Net gain on disposal of property, plant, and equipment (30) (1,051) (39) (888) Gain on dilution of shareholding in a former subsidiary 34 (79,282) – – – Net inventories written down 22 704 949 – 572 Impairment loss of: – Property, plant and equipment 11 16,244 1,707 231 – – Goodwill 14 123,263 93,850 – – – Investments in subsidiaries 16 – – 222,170 61,448 Write off of property, plant and equipment 3,345 1,396 3,271 1,052 Derecognition of net right-of-use assets (1,466) 496 (1,643) 488 Zakat 1,480 1,316 – – Net unrealised foreign exchange loss/(gain) 7,922 (4,882) 1,468 (3,003)
Operating profit before changes in working capital 120,743 81,082 40,323 5,497 Change in inventories (360) 3,420 (541) 4,064 Change in trade and other receivables and prepayment (86,569) (82,736) (14,282) (143,726) Change in trade and other payables 167,932 (16,265) 153,059 6,938 Change in contract assets 382 (3,510) – –
Cash generated from/(used in) operations 202,128 (18,009) 178,559 (127,227) Defined benefits paid – (92) – – Tax paid (14,660) (12,127) – (3,512) Tax refund 3,324 27,473 2,000 21,144 Interest paid (18,851) (13,608) (5,463) (5,966) Zakat paid (1,848) – – – Grant received – 7,750 – 7,750
Net cash from/(used in) operating activities 170,093 (8,613) 175,096 (107,811)
204 POS MALAYSIA BERHAD ANNUAL REPORT 2020
Group Company
Year ended 1.4.2019 to Year ended 1.4.2019 to 31.12.2020 31.12.2019 31.12.2020 31.12.2019 Note RM’000 RM’000 RM’000 RM’000
CASH FLOWS FROM INVESTING ACTIVITIES Finance income of financial assets calculated using the effective interest method that are at amortised cost 5,150 2,261 14,804 6,291 Proceeds from disposal of property, plant and equipment 2,045 1,169 39 901 Acquisition of property, plant and equipment (78,265) (82,769) (67,875) (65,070) Net decrease/(increase) in deposits pledged 1,173 (85) – – Proceeds from redemption of fund investments 46,402 56,591 23,689 56,301 Increase in fund investments – (6,600) – (5,000) Net cash flow from dilution of shareholding in a former subsidiary 34 (2,581) – – –
Net cash used in investing activities (26,076) (29,433) (29,343) (6,577)
CASH FLOWS FROM FINANCING ACTIVITIES Drawdown on Islamic term loans – 150,000 – 150,000 Drawdown on revolving credits 140,000 17,102 – – Drawdown on invoice financing 18,459 12,160 – – Interest paid (31,386) (22,706) (18,444) (10,423) Repayment of hire purchase liabilities (5,787) (4,661) – – Repayment of Islamic term loans (21,508) (41,351) – – Repayment of revolving credits (44,500) (19,000) (37,000) (11,000) Repayment of invoice financing (24,221) (4,192) – – Repayment of lease liabilities (64,886) (53,592) (43,285) (37,635) Dividends paid to owners of the Company 10 – (31,311) – (31,311) Movement in restricted cash (23,315) (8) (22,249) –
Net cash (used in)/from financing activities (57,144) 2,441 (120,978) 59,631
Net increase/(decrease) in cash and cash equivalents 86,873 (35,605) 24,775 (54,757) Effects of foreign currency translation 936 56 – – Cash and cash equivalents at beginning of year/period 174,855 210,404 65,698 120,455
Cash and cash equivalents at end of year/period (i) 262,664 174,855 90,473 65,698
205 FINANCIAL STATEMENTS
Statements of Cash Flows for the financial year ended 31 December 2020
(i) CASH AND CASH EQUIVALENTS Cash and cash equivalents included in the statements of cash flows comprise the following statements of financial position amounts:
Group Company
2020 2019 2020 2019 Note RM’000 RM’000 RM’000 RM’000
Cash and bank balances 24 218,752 166,619 113,054 83,781 Deposits placed with licensed banks 24 97,737 46,982 31,076 17,667 Cash attributable to assets classified as held for sale 25 3,099 – – – Bank overdrafts 27 (1,623) (1,223) – –
317,965 212,378 144,130 101,448 Less: Collections on behalf of agency payables and money order payables 24 (24,428) (28,792) (24,406) (28,748) Restricted cash 24 (30,353) (7,038) (29,251) (7,002) Deposits pledged 24 (520) (1,693) – –
262,664 174,855 90,473 65,698
(ii) RECONCILIATION OF LIABILITIES ARISING FROM FINANCING ACTIVITIES The table below details changes in the Group’s and the Company’s liabilities arising from financing activities, including both cash and non-cash changes. Liabilities arising from financing activities are those for which cash flows were, or future cash flows will be, classified in the statements of cash flows as cash flows from financing activities.
Lease Hire Islamic Revolving Invoice liabilities purchase term loans credits financing Total Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
At 1 April 2019 312,965 10,179 238,659 238,698 5,007 805,508 Net changes from financing cash flows: Acquisition of new leases/hire purchase 5,838 4,998 – – – 10,836 Termination of leases (353) – – – – (353) Drawdown – – 150,000 17,102 12,160 179,262 Repayment (53,592) (4,661) (41,351) (19,000) (4,192) (122,796)
Total net changes from financing cash flows (48,107) 337 108,649 (1,898) 7,968 66,949 Effects of foreign currency translation – – 3,705 – – 3,705
At 31 December 2019/1 January 2020 264,858 10,516 351,013 236,800 12,975 876,162 Net changes from financing cash flows: Acquisition of new leases 32,871 – – – – 32,871 Remeasurement of lease liabilities 76,853 – – – – 76,853 Termination of leases (9,059) – – – – (9,059) Drawdown – – – 140,000 18,459 158,459 Repayment (64,886) (5,787) (21,508) (44,500) (24,221) (160,902) Dilution of shareholding in a former subsidiary (285) – – – – (285) Reclassified to liabilities held for sale (416) – – – – (416)
Total net changes from financing cash flows 35,078 (5,787) (21,508) 95,500 (5,762) 97,521 Effects of foreign currency translation – – (1,562) – – (1,562)
At 31 December 2020 299,936 4,729 327,943 332,300 7,213 972,121
206 POS MALAYSIA BERHAD ANNUAL REPORT 2020
(ii) RECONCILIATION OF LIABILITIES ARISING FROM FINANCING ACTIVITIES (CONTINUED)
Interest bearing debt Lease Islamic Revolving from a liabilities term loan credits subsidiary Total Company RM’000 RM’000 RM’000 RM’000 RM’000
At 1 April 2019 146,443 100,000 80,000 – 326,443 Net changes from financing cash flows: Acquisition of new leases 5,059 – – – 5,059 Termination of leases (331) – – – (331) Drawdown – 150,000 – – 150,000 Repayment (37,635) – (11,000) – (48,635)
Total net changes from financing cash flows (32,907) 150,000 (11,000) – 106,093
At 31 December 2019/1 January 2020 113,536 250,000 69,000 – 432,536 Net changes from financing cash flows: Acquisition of new leases 14,038 – – – 14,038 Remeasurement of lease liabilities 12,544 – – – 12,544 Termination of leases (6,239) – – – (6,239) Drawdown – – – 107,000 – Repayment (43,285) – (37,000) – (80,285)
Total net changes from financing cash flows (22,942) – (37,000) 107,000 (59,942)
At 31 December 2020 90,594 250,000 32,000 107,000 372,594
(iii) ACQUISITION OF PROPERTY, PLANT AND EQUIPMENT During the previous financial period, the Group acquired property, plant and equipment amounting to RM87,767,000 of which RM4,998,000 were acquired via hire purchase arrangements.
(iv) CASH OUTFLOWS FOR LEASES AS A LESSEE
Group Company
Year ended 1.4.2019 to Year ended 1.4.2019 to 31.12.2020 31.12.2019 31.12.2020 31.12.2019 Note RM’000 RM’000 RM’000 RM’000
Included in net cash from operating activities: Payment relating to short-term leases 5 13,045 8,937 9,645 9,581 Payment relating to low-value assets 5 11,884 8,693 10,390 8,056 Interest paid in relation to lease liabilities 5 18,851 13,608 5,463 5,966
Included in net cash from financing activities: Repayment of lease liabilities 64,886 53,592 43,285 37,635
Total cash outflows for leases 108,666 84,830 68,783 61,238
The notes on pages 208 to 295 are an integral part of these financial statements.
207 FINANCIAL STATEMENTS
Notes to the Financial Statements
Pos Malaysia Berhad is a public limited liability company, incorporated and domiciled in Malaysia and is listed on the Main Market of Bursa Malaysia Securities Berhad. The addresses of the principal place of business and registered office of the Company are as follows:
Principal place of business Registered office Tingkat 2, Ibu Pejabat Pos, Kompleks Dayabumi Tingkat 8, Ibu Pejabat Pos, Kompleks Dayabumi 50670 Kuala Lumpur 50670 Kuala Lumpur
The consolidated financial statements of the Company as at and for the financial year ended 31 December 2020 comprise of the Company and its subsidiaries (together referred to as the “Group” and individually referred to as “Group entities”) and the Group’s interest in associates. The financial statements of the Company as at and for the financial year ended 31 December 2020 do not include other entities.
The principal activities of the Company during the financial year are to provide postal and its related services which include receiving and dispatching of postal articles, postal financial services, dealing in philatelic products and sale of postage stamps.
The principal activities of the subsidiaries are stated in Note 16.
The Company regarded DRB-HICOM Berhad and Etika Strategi Sdn. Bhd. as its immediate and ultimate holding companies respectively.
DRB-HICOM Berhad and Etika Strategi Sdn. Bhd. were incorporated in Malaysia. DRB-HICOM Berhad is listed on the Main Market of Bursa Malaysia Securities Berhad.
These financial statements were authorised for issue by the Board of Directors on 6 April 2021.
1. BASIS OF PREPARATION (a) Statement of compliance The financial statements of the Group and the Company have been prepared in accordance with Malaysian Financial Reporting Standards (“MFRSs”), International Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia.
The following are accounting standards, interpretations and amendments that have been issued by the Malaysian Accounting Standards Board (“MASB”) but have not been adopted by the Group and the Company:
MFRSs, interpretations and amendments effective for annual periods beginning on or after 1 January 2021 • Amendments to MFRS 9, Financial Instruments, MFRS 139, Financial Instruments: Recognition and Measurement, MFRS 7, Financial Instruments: Disclosures, MFRS 4, Insurance Contracts and MFRS 16, Leases – Interest Rate Benchmark Reform – Phase 2 MFRSs, interpretations and amendments effective for annual periods beginning on or after 1 April 2021 • Amendment to MFRS 16, Leases – COVID-19-Related Rent Concessions beyond 30 June 2021 MFRSs, interpretations and amendments effective for annual periods beginning on or after 1 January 2022 • Amendments to MFRS 1, First-time Adoption of Malaysian Financial Reporting Standards (Annual Improvements to MFRS Standards 2018−2020) • Amendments to MFRS 3, Business Combinations – Reference to the Conceptual Framework • Amendments to MFRS 9, Financial Instruments (Annual Improvements to MFRS Standards 2018−2020) • Amendments to Illustrative Examples accompanying MFRS 16, Leases (Annual Improvements to MFRS Standards 2018−2020) • Amendments to MFRS 116, Property, Plant and Equipment − Proceeds before Intended Use • Amendments to MFRS 137, Provisions, Contingent Liabilities and Contingent Assets − Onerous Contracts − Cost of Fulfilling a Contract • Amendments to MFRS 141, Agriculture (Annual Improvements to MFRS Standards 2018−2020) MFRSs, interpretations and amendments effective for annual periods beginning on or after 1 January 2023 • MFRS 17, Insurance Contracts • Amendments to MFRS 101, Presentation of Financial Statements – Classification of Liabilities as Current or Non-current • Amendments to MFRS 108, Accounting Policies, Changes in Accounting Estimates and Errors – Definition of Accounting Estimates MFRSs, interpretations and amendments effective for annual periods beginning on or after a date yet to be confirmed • Amendments to MFRS 10, Consolidated Financial Statements and MFRS 128, Investments in Associates and Joint Ventures – Sale or Contribution of Assets between an Investor and its Associate or Joint Venture 208 POS MALAYSIA BERHAD ANNUAL REPORT 2020
1. BASIS OF PREPARATION (CONTINUED)
(a) Statement of compliance (continued)
The Group and the Company plan to apply the abovementioned relevant accounting standards and amendments, where applicable:
• from the annual period beginning on 1 January 2021 for those amendments that are effective for annual periods beginning on or after 1 January 2021 and 1 April 2021;
• from the annual period beginning on 1 January 2022 for those amendments that are effective for annual periods beginning on or after 1 January 2022, except for Amendments to MFRS 1 and Amendments to MFRS 141 which are not applicable to the Group and the Company; and
• from the annual period beginning on 1 January 2023 for the accounting standard and amendments that are effective for annual periods beginning on or after 1 January 2023, except for MFRS 17 which is not applicable to the Group and the Company.
The initial application of the abovementioned amendments are not expected to have any material financial impact to the current period and prior period financial statements of the Group and the Company.
During the financial year, the Group and the Company have early adopted the Amendment to MFRS 16, COVID-19-Related Rent Concessions issued on 5 June 2020. The amendment introduces an optional practical expedient for leases in which the Group is a lessee – i.e. for leases to which the Group and the Company apply the practical expedient, the Group and the Company are not required to assess whether eligible rent concessions that are a direct consequence of the COVID-19 pandemic are lease modifications.
(b) Basis of measurement
The financial statements have been prepared on the historical cost basis, except as disclosed in the notes to the financial statements, and on a going concern basis despite the Group’s and the Company’s losses incurred during the financial year ended 31 December 2020 and as of that date, their net current liabilities positions.
The Group and the Company have prepared and considered prospective financial information based on assumptions and events that may occur for the next 12 months from reporting date and the possible actions to be taken by the Group and the Company. Prospective financial information include the Group’s and the Company’s cash flow forecasts for its operations. In preparing the cash flow forecasts, the Directors have considered the availability of cash and fund investments, adequacy of unutilised banking facilities and the ability to roll over the revolving credit facilities of the Group and the Company.
The Group and the Company forecast to generate positive operating cash flows and to drawdown the available unutilised banking facilities for a period of 12 months from reporting date to meet its financial obligations as and when they fall due. These financial obligations includes current payables, committed expenditures, and borrowings due, other than certain revolving credits facilities which are expected to be rolled over.
Accordingly, the Directors believe that the preparation of the financial statements on a going concern basis is appropriate, based on the measures as disclosed above, to enable the Group and the Company to continue their operations and to meet their liabilities as they fall due for the next 12 months from reporting date.
(c) Functional and presentation currencies
These financial statements are presented in Ringgit Malaysia (“RM”), which is the Company’s functional currency. All financial information presented in RM and has been rounded to the nearest thousand, unless otherwise stated.
209 FINANCIAL STATEMENTS
Notes to the Financial Statements
1. BASIS OF PREPARATION (CONTINUED) (d) Use of estimates and judgements The preparation of the financial statements in conformity with MFRSs requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the year in which the estimates are revised and in any future years affected.
There are no significant areas of estimation uncertainty and critical judgements in applying accounting policies that have significant effect on the amounts recognised in the financial statements other than those disclosed in the following notes:
(i) Impairment of goodwill on consolidation The Group tests goodwill for impairment at least annually in accordance with its accounting policy as explained in Note 2(l)(ii).
For the purposes of assessing impairment, goodwill is allocated to cash-generating units that are expected to benefit from the synergies of the business combination in which the goodwill arose.
Significant judgement is required in the estimation of the present value of future cash flows generated by the cash- generating units, which involves uncertainties and are significantly affected by assumptions used and judgement made regarding estimates of future cash flows and discount rates. Changes in assumptions could significantly affect the results of the Group’s tests for impairment of goodwill.
(ii) Impairment of investments in subsidiaries The Company reviews the material investments in subsidiaries for impairment when there is an indication of impairment.
The recoverable amounts of the investments in subsidiaries are assessed by reference to the greater of value-in-use or fair value less costs of disposal of the respective subsidiaries.
The recoverable amount is the net present value of the projected future cash flows derived from the business operations of the respective subsidiaries discounted at an appropriate discount rate. The discounted cash flows method involves the use of estimated future results and a set of assumptions to reflect their income and cash flows. Judgement has been used to determine the discount rate for the cash flows and the future growth of the businesses of the subsidiaries.
(iii) Impairment of property, plant and equipment The Group and the Company review property, plant and equipment for impairment when there is an indication of impairment. The recoverable amounts were determined based on the greater of value-in-use or fair value less costs of disposal, where appropriate.
The recoverable amount is the net present value of the projected future cash flows derived from the economic useful life of the relevant property, plant and equipment discounted at an appropriate discount rate. The discounted cash flows method involves the use of estimated future results and a set of assumptions to reflect their income and cash flows. Judgement has been used to determine the discount rate for the cash flows and the future growth of the operations to which the assets are expected to be utilised.
(iv) Measurement of expected credit loss (“ECL”) The Group and the Company recognise loss allowances for expected credit losses on financial assets measured at amortised cost and contract assets. Expected credit losses are a probability-weighted estimate of credit losses. The expected credit losses are estimated using a provision matrix with reference to historical credit loss experience. Details of measurement of ECL are disclosed in Note 2(l)(i) to the financial statements.
210 POS MALAYSIA BERHAD ANNUAL REPORT 2020
1. BASIS OF PREPARATION (CONTINUED) (d) Use of estimates and judgements (continued) (v) Provisions for liabilities and claims The Group receives claims against it in the normal course of business. Management has made judgements as to the likelihood of any claim succeeding in making provisions. The time of concluding the claims is uncertain, as is the amount of possible outflow of economic benefits. Timing and cost ultimately depends on the due process. Any revision in assumptions and estimates that causes a material effect to the estimation would be adjusted prospectively in the financial statements.
(vi) Fair value of derivative financial assets and other financial instruments The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. The Group uses its judgement to select a variety of methods and make assumptions that are mainly based on market conditions existing at the end of each reporting date.
(vii) Determining the lease term of contracts with renewal and termination options The Group and the Company determine the lease term as the non-cancellable term of the lease, together with any years covered by an option to extend the lease if it is reasonably certain to be exercised, or any years covered by an option to terminate the lease, if it is reasonably certain not to be exercised.
The Group and the Company have several lease contracts that include extension and termination options. The Group and the Company apply judgement in evaluating whether it is reasonably certain whether or not to exercise the option to renew or terminate the lease. That is, it considers all relevant factors that create an economic incentive for it to exercise either the renewal or termination. After the commencement date, the Group and the Company reassess the lease term if there is a significant event or change in circumstances that is within its control and affects its ability to exercise or not to exercise the option to renew or to terminate.
The Group and the Company include the renewal year as part of the lease term for leases of land and buildings and motor vehicles with shorter non-cancellable year. The Group and the Company typically exercise its option to renew for the leases because there will be a significant negative effect on the business if a replacement location and asset is not readily available.
(viii) Determining the incremental borrowing rate of leases The Group and the Company apply judgement and assumptions in determining the incremental borrowing rate of its respective leases. The Group and the Company first determine the closest available borrowing rates before using judgement to determine the adjustments required to reflect the term, security, value or economic environment of the respective leases.
(ix) Valuation of investment properties The Group estimates the fair values of its investment properties using investment and market comparison methods. The fair value of investment properties is determined by external independent professional valuers, having appropriate recognised professional qualifications and recent experience in the location and category of property being valued. The independent professional valuers provide the fair value of the Group’s investment properties portfolio annually. The principal assumptions underlying these valuations are further explained in Note 12.
(x) Deferred tax assets Deferred tax assets are recognised for all deductible temporary differences to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised based on the likely timing and level of future taxable profits together with future tax planning strategies. Details of deferred tax assets are disclosed in Note 15.
211 FINANCIAL STATEMENTS
Notes to the Financial Statements
2. SIGNIFICANT ACCOUNTING POLICIES The accounting policies set out below have been applied consistently to the periods presented in these financial statements and have been applied consistently by Group entities, unless otherwise stated. Arising from the early adoption of Amendment to MFRS 16, Leases – COVID-19-Related Rent Concessions, there is a change to the accounting policy of leases as compared to those adopted in previous financial statements and elected not to assess rent concessions as lease modifications under the practical expedient, should the rent concessions meet the following conditions:
(a) the change in lease payments results in revised consideration for the lease that is substantially the same as, or less than, the consideration for the lease immediately preceding the change;
(b) any reduction in lease payments affects only payments due on or before 30 June 2021; and
(c) there is no substantive change to other terms and conditions of the lease.
With the application of practical expedient allowed under this MFRS standard, the Group and the Company have recognised the gain on qualifying rent concessions related to COVID-19 pandemic in profit or loss which did not give any material impact to the financial statements of the Group and of the Company as disclosed in Note 13.4 to the financial statements.
(a) Basis of consolidation (i) Subsidiaries Subsidiaries are entities, including structured entities, controlled by the Company. The financial statements of subsidiaries are included in the consolidated financial statement from the date that control commences until the date that control ceases.
The Group controls an entity when it is exposed, or has rights, to variable return from its involvement with the entity and has the ability to affect those returns through its power over the entity. Potential voting rights are considered when assessing control only when such rights are substantive. The Group also considers it has de facto power over an investee when, despite not having the majority of voting rights, it has the current ability to direct the activities of the investee that significantly affect the investee’s return.
Investments in subsidiaries are measured in the Company’s statement of financial position at cost less any impairment losses, unless the investment is classified as held for sale or distribution. The cost of investment includes transaction costs.
(ii) Business combinations Business combinations are accounted for using the acquisition method from the acquisition date, which is the date on which control is transferred to the Group.
For new acquisitions, the Group measures the cost of goodwill at the acquisition date as: • the fair value of the consideration transferred; plus • the recognised amount of any non-controlling interest in the acquiree; plus • if the business combination is achieved in stages, the fair value of the existing equity interest in the acquiree; less • the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed.
When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss.
For each business combination, the Group elects whether it measures the non-controlling interests in the acquiree either at fair value or at the proportionate share of the acquiree’s identifiable net assets at the acquisition date.
Transaction costs, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a business combination are expensed as incurred.
212 POS MALAYSIA BERHAD ANNUAL REPORT 2020
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (a) Basis of consolidation (continued) (iii) Acquisitions of non-controlling interests The Group accounts for all changes in its ownership interest in a subsidiary that do not result in a loss of control as equity transactions between the Group and its non-controlling interest holders. Any difference between the Group’s share of net assets before and after the change, and any consideration received or paid, is adjusted to or against Group reserves.
(iv) Loss of control Upon the loss of control of a subsidiary, the Group derecognises the assets and liabilities of the former subsidiary, any non-controlling interests and the other components of equity related to the former subsidiary from the consolidated statement of financial position. Any surplus or deficit arising on the loss of control is recognised in profit or loss. If the Group retains any interest in the former subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently, it is accounted for as an equity-accounted investee or as a financial asset depending on the level of influence retained.
(v) Associates Associates are entities, including unincorporated entities, in which the Group has significant influence, but not control, over the financial and operating policies.
Investments in associates are accounted for in the consolidated financial statements using the equity method less any impairment losses. The cost of the investment includes transaction costs. The consolidated financial statements include the Group’s share of the profit or loss and other comprehensive income of the associates, after adjustments if any, to align the accounting policies with those of the Group, from the date that significant influence commences until the date that significant influence ceases.
When the Group’s share of losses exceeds its interest in an associate, the carrying amount of that interest including any long-term investments is reduced to zero, and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the associate.
When the Group ceases to have significant influence over an associate, any retained interest in the former associate at the date when significant influence is lost is measured at fair value and this amount is regarded as the initial carrying amount of a financial asset. The difference between the fair value of any retained interest plus proceeds from the interest disposed of and the carrying amount of the investment at the date when equity method is discontinued is recognised in the profit or loss.
When the Group’s interest in an associate decreases but does not result in a loss of significant influence, any retained interest is not remeasured. Any gain or loss arising from the decrease in interest is recognised in profit or loss. Any gains or losses previously recognised in other comprehensive income are also reclassified proportionately to profit or loss if that gain or loss would be required to be reclassified to profit or loss on the disposal of the related assets or liabilities.
Investments in associates are measured in the Company’s statement of financial position at cost less any impairment losses. The cost of the investment includes transaction costs.
(vi) Non-controlling interests Non-controlling interests at the end of the reporting period, being the equity in a subsidiary not attributable directly or indirectly to the equity holders of the Company, are presented in the consolidated statement of financial position and statement of changes in equity within equity, separately from equity attributable to the owners of the Company. Non- controlling interests in the results of the Group is presented in the consolidated statement of profit or loss and other comprehensive income as an allocation of the profit or loss and the comprehensive income for the year between non- controlling interests and owners of the Company.
Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests even if doing so causes the non-controlling interests to have a deficit balance.
213 FINANCIAL STATEMENTS
Notes to the Financial Statements
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (a) Basis of consolidation (continued) (vii) Transactions eliminated on consolidation Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements.
Unrealised gains arising from transactions with equity-accounted associates are eliminated against the investment to the extent of the Group’s interest in the associates. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.
(b) Foreign currency (i) Foreign currency transactions Transactions in foreign currencies are translated to the respective functional currencies of Group entities at exchange rates at the dates of the transactions.
Monetary assets and liabilities denominated in foreign currencies at the end of the reporting period are retranslated to the functional currency at the exchange rate at that date.
Non-monetary assets and liabilities denominated in foreign currencies are not retranslated at the end of the reporting date, except for those that are measured at fair value which are retranslated to the functional currency at the exchange rate at the date that the fair value was determined.
Foreign currency differences arising on retranslation are recognised in profit or loss, except for differences arising on the retranslation of equity instruments which are recognised in other comprehensive income.
In the consolidated financial statements, when settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor likely to occur in the foreseeable future, foreign exchange gains and losses arising from such a monetary item are considered to form part of a net investment in a foreign operation and are recognised in other comprehensive income, and are presented in the foreign currency translation reserve (“FCTR”) in equity.
(ii) Operations denominated in functional currencies other than Ringgit Malaysia The assets and liabilities of operations denominated in functional currencies other than RM, including goodwill and fair value adjustments arising on acquisition, are translated to RM at exchange rates at the end of the reporting period. The income and expenses of foreign operations are translated to RM at exchange rates at the dates of the transactions.
Foreign currency differences are recognised in other comprehensive income and accumulated in the FCTR in equity. However, if the operation is a non-wholly owned subsidiary, then the relevant proportionate share of the translation difference is allocated to the non-controlling interests. When a foreign operation is disposed of such that control, significant influence or joint control is lost, the cumulative amount in the FCTR related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal.
When the Group disposes of only part of its interest in a subsidiary that includes a foreign operation, the relevant proportion of the cumulative amount is reattributed to non-controlling interests. When the Group disposes of only part of its investment in an associate that includes a foreign operation while retaining significant influence or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss.
214 POS MALAYSIA BERHAD ANNUAL REPORT 2020
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (c) Financial instruments (i) Recognition and initial measurement A financial asset or a financial liability is recognised in the statement of financial position when, and only when, the Group or the Company becomes a party to the contractual provisions of the instrument.
A financial asset (unless it is a trade receivable without significant financing component) or a financial liability is initially measured at fair value plus or minus, for an item not at fair value through profit or loss, transaction costs that are directly attributable to its acquisition or issuance. A trade receivable without a significant financing component is initially measured at the transaction price.
(ii) Financial instrument categories and subsequent measurement Financial assets Categories of financial assets are determined on initial recognition and are not reclassified subsequent to their initial recognition unless the Group or the Company changes its business model for managing financial assets in which case all affected financial assets are reclassified on the first day of the first reporting period following the change of the business model.
(a) Amortised cost Amortised cost category comprises financial assets that are held within a business model whose objective is to hold assets to collect contractual cash flows and its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. The financial assets are not designated as fair value through profit or loss. Subsequent to initial recognition, these financial assets are measured at amortised cost using the effective interest method. The amortised cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognised in profit or loss. Any gain or loss on derecognition is recognised in profit or loss.
Interest income is recognised by applying effective interest rate to the gross carrying amount except for credit impaired financial assets (see Note 2(l)(i)) where the effective interest rate is applied to the amortised cost.
(b) Fair value through profit or loss All financial assets not measured at amortised cost as described above are measured at fair value through profit or loss. This includes derivative financial assets. On initial recognition, the Group or the Company may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortised cost or at fair value through other comprehensive income as at fair value through profit or loss if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.
Financial assets categorised as fair value through profit or loss are subsequently measured at their fair value. Net gains or losses, including any interest or dividend income, are recognised in the profit or loss.
All financial assets, except for those measured at fair value through profit or loss, are subject to impairment assessment (see Note 2 (l)(i)).
Financial liabilities Financial liabilities of the Group and the Company are subsequently measured at amortised cost using the effective interest method.
Interest expense and foreign exchange gains and losses are recognised in the profit or loss. Any gains or losses on derecognition are also recognised in the profit or loss.
215 FINANCIAL STATEMENTS
Notes to the Financial Statements
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (c) Financial instruments (continued) (iii) Regular way purchase or sale of financial assets A regular way purchase or sale of financial assets is recognised and derecognised, as applicable, using trade date or settlement date accounting in the current year.
Trade date accounting refers to: (a) the recognition of an asset to be received and the liability to pay for it on the trade date, and
(b) derecognition of an asset that is sold, recognition of any gain or loss on disposal and the recognition of a receivable from the buyer for payment on the trade date.
Settlement date accounting refers to: (a) the recognition of an asset on the day it is received by the Group or the Company, and (b) derecognition of an asset and recognition of any gain or loss on disposal on the day that is delivered by the Group or the Company.
Any change in the fair value of the asset to be received during the year between the trade date and the settlement date is accounted in the same way as it accounts for the acquired asset.
Generally, the Group or the Company applies settlement date accounting unless otherwise stated for the specific class of asset.
(iv) Financial guarantee contracts A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument.
Financial guarantees issued are initially measured at fair value. Subsequently, they are measured at higher of: • the amount of the loss allowance; and • the amount initially recognised less, when appropriate, the cumulative amount of income recognised in accordance to the principles of MFRS 15, Revenue from Contracts with Customers.
Liabilities arising from financial guarantees are presented together with other provisions.
(v) Derecognition A financial asset or part of it is derecognised when, and only when, the contractual rights to the cash flows from the financial asset expire or transferred, or control of the asset is not retained or substantially all of the risks and rewards of ownership of the financial asset are transferred to another party. On derecognition of a financial asset, the difference between the carrying amount of the financial asset and the sum of consideration received (including any new asset obtained less any new liability assumed) is recognised in profit or loss.
A financial liability or a part of it is derecognised when, and only when, the obligation specified in the contract is discharged, cancelled or expires. A financial liability is also derecognised when its terms are modified and the cash flows of the modified liability are substantially different, in which case, a new financial liability based on modified terms is recognised at fair value. On derecognition of a financial liability, the difference between the carrying amount of the financial liability extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss.
216 POS MALAYSIA BERHAD ANNUAL REPORT 2020
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (d) Property, plant and equipment (i) Recognition and measurement Items of property, plant and equipment are measured at cost less any accumulated depreciation and any accumulated impairment losses.
Cost includes expenditures that are directly attributable to the acquisition of the asset and any other costs directly attributable to bringing the asset to working condition for its intended use, and the costs of dismantling and removing the items and restoring the site on which they are located. The cost of self-constructed assets also includes the cost of materials and direct labour. For qualifying assets, borrowing costs are capitalised in accordance with the accounting policy on borrowing costs.
Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment.
When significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.
The gain or loss on disposal of an item of property, plant and equipment is determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment and is recognised net within “other income” or “other expenses” respectively in profit or loss.
(ii) Subsequent costs The cost of replacing a component of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the component will flow to the Group or the Company, and its cost can be measured reliably. The carrying amount of the replaced component is derecognised to profit or loss. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred.
(iii) Depreciation Depreciation is based on the cost of an asset less its residual value. Significant components of individual assets are assessed, and if a component has a useful life that is different from the remainder of that asset, then that component is depreciated separately.
Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each component of an item of property, plant and equipment from the date that they are available for use. Freehold land is not depreciated. Property, plant and equipment under construction are not depreciated until the assets are ready for their intended use.
The estimated useful lives for the current and comparative periods are as follows:
Buildings 50 years Building improvements and renovations 2 – 50 years Plant and machinery, including ground handling equipment 10 – 20 years Motor vehicles 5 years Furniture and fittings, office and computer equipment 3 – 10 years Vessels 9 years
Depreciation methods, useful lives and residual values are reviewed at end of the reporting period, and adjusted as appropriate.
217 FINANCIAL STATEMENTS
Notes to the Financial Statements
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (e) Leases (i) Definition of lease A contract is, or contains, a lease if the contract conveys a right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Group assesses whether: • the contract involves the use of an identified asset – this may be specified explicitly or implicitly, and should be physically distinct or represent substantially all of the capacity of a physically distinct asset. If the supplier has a substantive substitution right, then the asset is not identified; • the customer has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use; and • the customer has the right to direct the use of the asset. The customer has this right when it has the decision-making rights that are most relevant to changing how and for what purpose the asset is used. In rare cases where the decision about how and for what purpose the asset is used is predetermined, the customer has the right to direct the use of the asset if either the customer has the right to operate the asset; or the customer designed the asset in a way that predetermines how and for what purpose it will be used.
At inception or on reassessment of a contract that contains a lease component, the Group allocates the consideration in the contract to each lease and non-lease component on the basis of their relative stand-alone prices. However, for leases of properties in which the Group is a lessee, it has elected not to separate non-lease components and will instead account for the lease and non-lease components as a single lease component.
(ii) Recognition and initial measurement (a) As a lessee The Group recognises a right-of-use asset and lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the respective Group entities’ incremental borrowing rate. Generally, the Group entities use their incremental borrowing rate as the discount rate.
Lease payments included in the measurement of the lease liability comprise the following: • fixed payments, including in-substance fixed payments less any incentives receivable; • variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date; • amounts expected to be payable under a residual value guarantee; • the exercise price under a purchase option that the Group is reasonably certain to exercise; and • penalties for early termination of a lease unless the Group is reasonably certain not to terminate early.
The Group excludes variable lease payments that linked to future performance or usage of the underlying asset from the lease liability. Instead, these payments are recognised in profit or loss in the period in which the performance or use occurs.
The Group has elected not to recognise right-of-use assets and lease liabilities for short-term leases that have a lease term of 12 months or less or leases of low-value assets. The Group recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term.
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2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (e) Leases (continued) (ii) Recognition and initial measurement (continued) (b) As a lessor When the Group acts as a lessor, it determines at lease inception whether each lease is a finance lease or an operating lease.
To classify each lease, the Group makes an overall assessment of whether the lease transfers substantially all the risks and rewards incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease; if not, it is an operating lease.
If an arrangement contains lease and non-lease components, the Group applies MFRS 15 to allocate the consideration in the contract based on the stand-alone selling prices.
When the Group is an intermediate lessor, it accounts for its interests in the head lease and the sublease separately. It assesses the lease classification of a sublease with reference to the right-of-use asset arising from the head lease, not with reference to the underlying asset. If a head lease is a short-term lease to which the Group applies the exemption described above, then it classifies the sublease as an operating lease.
(iii) Subsequent measurement (a) As a lessee The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of property, plant and equipment. In addition, the right- of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.
The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a revision of in-substance fixed lease payments, or if there is a change in the Group’s estimate of the amount expected to be payable under a residual value guarantee, or if the Group changes its assessment of whether it will exercise a purchase, extension or termination option.
When the lease liability is remeasured, a corresponding adjustment is made to the carrying amount of the right- of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.
Rent concession Based on the Amendment to MFRS 16, Leases – COVID-19-Related Rent Concessions, practical expedients can be applied to eligible rennt concessions where they need not be accounted for as a lease modification, if they occur as a direct consequence of the COVID-19 pandemic. The Group and the Company negotiated rent concessions with its landlords for the majority of its retail outlets leases as a result of the impact of the COVID-19 pandemic during the year. The Group and the Company applied the practical expedient for COVID-19 related rent concessions consistently to eligible rent concessions relating to its retail outlets leases.
(b) As a lessor The Group recognises lease payments received under operating leases as income on a straight-line basis over the lease term as part of “revenue”.
219 FINANCIAL STATEMENTS
Notes to the Financial Statements
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (f) Intangible assets (i) Goodwill Goodwill arises on business combinations is measured at cost less any accumulated impairment losses.
(ii) Contracts Contracts, that are acquired by the Group, which have finite useful lives, are measured at cost less any accumulated amortisation and any accumulated impairment losses.
(iii) Amortisation Goodwill is not amortised but is tested for impairment annually and whenever there is an indication that it may be impaired.
Contracts are amortised from the date that they are available for use. Amortisation is based on the cost of an asset less its residual value. Amortisation is recognised in profit or loss on a straight-line basis over the estimated useful lives of respective contracts.
Amortisation methods, useful lives and residual values are reviewed at the end of each reporting period and adjusted, if appropriate.
(g) Investment properties (i) Investment properties carried at fair value Investment properties are properties which are owned or right-of-use asset held under a lease contract to earn rental income or for capital appreciation or for both, but not for sale in the ordinary course of business, use in the production or supply of goods or services or for administrative purposes.
Investment properties which are owned are measured initially at cost. Cost includes expenditure that is directly attributable to the acquisition of the investment property. The cost of self-constructed investment property includes the cost of materials and direct labour, any other costs directly attributable to bringing the investment property to a working condition for their intended use and capitalised borrowing costs.
Right-of-use asset held under a lease contract that meets the definition of investment property is initially measured similarly as other right-of-use assets.
Subsequently, investment properties are measured at fair value with any changes therein recognised in profit or loss for the period in which they arise. Where the fair value of the investment property under construction is not reliably determinable, the investment property under construction is measured at cost until either its fair value becomes reliably determinable or construction is complete, whichever is earlier.
The fair value of investment properties held by the Group as a right-of-use asset reflects the expected cash flows. Accordingly, where valuation obtained for a property is net of all payments expected to be made, the Group added back any recognised lease liability to arrive at the carrying amount of the investment property using the fair value model.
An investment property is derecognised on its disposal, or when it is permanently withdrawn from use and no future economic benefits are expected from its disposal. The difference between the net disposal proceeds and the carrying amount is recognised in profit or loss in the period in which the item is derecognised.
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2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (g) Investment properties (ii) Reclassification to/from investment property When an item of property, plant and equipment is transferred to investment property following a change in its use, any difference arising at the date of transfer between the carrying amount of the item immediately prior to transfer and its fair value is recognised directly in equity as a revaluation of property, plant and equipment. However, if a fair value gain reverses a previous impairment loss, the gain is recognised in profit or loss. Upon disposal of an investment property, any surplus previously recorded in equity is transferred to retained earnings; the transfer is not made through profit or loss.
When the use of a property changes such that it is reclassified as property, plant and equipment or inventories, its fair value at the date of reclassification becomes its cost for subsequent accounting.
(h) Inventories Inventories are measured at the lower of cost and net realisable value.
The cost of inventories is calculated using the weighted average method, and includes expenditure incurred in acquiring the inventories and other costs incurred in bringing them to their existing location and condition.
Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale.
(i) Assets held for sale Assets and liabilities held for sale comprising assets and liabilities that are expected to be recovered primarily through sale, are classified as held for sale.
Immediately before classification as held for sale, the assets are remeasured in accordance with the Group’s accounting policies. Thereafter generally the assets are measured at the lower of their carrying amount and fair value less costs of disposal.
Any impairment loss on an asset held for sale is first allocated to goodwill, and then to remaining assets and liabilities on pro rata basis, except that no loss is allocated to inventories and, financial assets which continue to be measured in accordance with the Group’s accounting policies. Impairment losses on initial classification as held for sale and subsequent gains or losses on remeasurement are recognised in profit or loss. Gains are not recognised in excess of any cumulative impairment loss.
Property, plant and equipment once classified as held for sale are not amortised or depreciated.
(j) Contract asset/Contract liability A contract asset is recognised when the Group’s or the Company’s right to consideration is conditional on something other than the passage of time. A contract asset is subject to impairment in accordance to MFRS 9, Financial Instruments (see Note 2(l)(i)).
A contract liability is stated at cost and represents the obligation of the Group or the Company to transfer goods or services to a customer for which consideration has been received (or the amount is due) from the customers.
(k) Cash and cash equivalents Cash and cash equivalents consist of cash on hand, balances and deposits with banks and short term highly liquid investments which have an insignificant risk of changes in fair value with original maturities of three months or less, and are used by the Group and the Company in the management of their short term commitments.
For the purpose of the statements of cash flows, cash and cash equivalents are presented net of deposits pledged, bank overdrafts, restricted cash and cash held for the purpose of collections on behalf of agency payables and money order payables.
221 FINANCIAL STATEMENTS
Notes to the Financial Statements
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (l) Impairment (i) Financial assets The Group and the Company recognise loss allowances for expected credit losses on financial assets measured at amortised cost, contract assets and lease receivables. Expected credit losses are a probability-weighted estimate of credit losses.
The Group and the Company measure loss allowances at an amount equal to lifetime expected credit loss, except for debt securities that are determined to have low credit risk at the reporting date, cash and bank balance and other debt securities for which credit risk has not increased significantly since initial recognition, which are measured at 12-month expected credit loss. Loss allowances for trade receivables, contract assets and lease receivables are always measured at an amount equal to lifetime expected credit loss.
When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating expected credit loss, the Group and the Company consider reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Group’s historical experience and informed credit assessment and including forward-looking information, where available.
Lifetime expected credit losses are the expected credit losses that result from all possible default events over the expected life of the asset, while 12-month expected credit losses are the portion of expected credit losses that result from default events that are possible within the 12 months after the reporting date. The maximum period considered when estimating expected credit losses is the maximum contractual period over which the Group and the Company are exposed to credit risk.
The Group and the Company estimate the expected credit losses on trade receivables using a provision matrix with reference to historical credit loss experience.
An impairment loss in respect of financial assets measured at amortised cost is recognised in profit or loss and the carrying amount of the asset is reduced through the use of an allowance account.
At each reporting date, the Group and the Company assess whether financial assets carried at amortised cost are credit impaired. A financial asset is credit impaired when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.
The gross carrying amount of a financial asset is written off (either partially or full) to the extent that there is no realistic prospect of recovery. This is generally the case when the Group or the Company determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write- off. However, financial assets that are written off could still be subject to recovery activities in order to comply with the Group’s or the Company’s procedures for the recovery of amounts due.
(ii) Other assets The carrying amounts of other assets (except for inventories, contract assets, deferred tax assets and investment properties measured at fair value) are reviewed at the end of each reporting period to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. For goodwill that has indefinite useful lives, the recoverable amount is estimated each period at the same time.
For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or cash-generating units. Subject to an operating segment ceiling test, for the purpose of goodwill impairment testing, cash-generating units to which goodwill has been allocated are aggregated so that the level at which impairment testing is performed reflects the lowest level at which goodwill is monitored for internal reporting purposes. The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to a cash-generating unit or a group of cash-generating units that are expected to benefit from the synergies of the combination.
222 POS MALAYSIA BERHAD ANNUAL REPORT 2020
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (l) Impairment (continued) (ii) Other assets (continued) The recoverable amount of an asset or cash-generating unit is the greater of its value-in-use and its fair value less costs of disposal. In assessing value-in-use, the estimated future cash flows are discounted to their present value using a discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or cash-generating unit.
An impairment loss is recognised if the carrying amount of an asset or its related cash-generating unit exceeds its estimated recoverable amount.
Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the cash-generating unit (group of cash- generating units) and then to reduce the carrying amounts of the other assets in the cash-generating unit (groups of cash-generating units) on a pro rata basis.
An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at the end of each reporting period for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount since the last impairment loss was recognised. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. Reversals of impairment losses are credited to profit or loss in the financial year in which the reversals are recognised.
(m) Equity instruments Instruments classified as equity are measured at cost on initial recognition and are not remeasured subsequently.
(i) Issue expenses Costs directly attributable to the issue of instruments classified as equity are recognised as a deduction from equity.
(ii) Ordinary shares Ordinary shares are classified as equity.
(iii) Preference share capital Preference share capital is classified as equity if it is non-redeemable, or is redeemable but only at the Company’s option, and any dividends are discretionary. Dividends thereon are recognised as distributions within equity.
Preference share capital is classified as financial liability if it is redeemable on a specific date or at the option of the equity holders, or if dividend payments are not discretionary. Dividends thereon are recognised as interest expense in profit and loss as accrued.
(n) Employee benefits (i) Short-term employee benefits Short-term employee benefits obligations in respect of salaries, annual bonuses, paid annual leave and sick leave are measured on an undiscounted basis and are expensed as the related service is provided.
A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group and the Company have a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.
223 FINANCIAL STATEMENTS
Notes to the Financial Statements
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (n) Employee benefits (continued) (ii) State plans The Group’s and the Company’s contributions to Employees’ Provident Fund are charged to profit or loss in the financial year to which they relate. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is available.
(iii) Defined benefit plans The Group’s net obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in the current and prior periods, discounting that amount and deducting the fair value of any plan assets.
The calculation of defined benefit obligations is performed annually by a qualified actuary using the projected unit credit method. When the calculation result in a potential asset for the Group, the recognised asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. To calculate the present value of economic benefits, consideration is given to any applicable minimum funding requirements.
Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognised immediately in other comprehensive income. The Group determines the net interest expense or income on the net defined liability or asset for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then net defined liability or asset, taking into account any changes in the net defined benefit liability or asset during the period as a result of contributions and benefits payments.
Net interest expense and other expenses relating to defined benefit plans are recognised in profit or loss.
When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefits that relates to past service or the gain or loss on curtailment is recognised immediately in profit or loss. The Group recognises gains and losses on the settlement of a defined benefit plan when the settlement occurs.
(iv) Termination benefits Termination benefits are expensed at the earlier of when the Group or the Company can no longer withdraw the offer of those benefits and when the Group recognises costs for a restructuring. If benefits are not expected to be settled wholly within 12 months of the end of the reporting period, then they are discounted.
(o) Provisions A provision is recognised if, as a result of a past event, the Group or the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as finance cost.
(p) Revenue and other income (i) Revenue from contract with customers Revenue is measured based on the consideration specified in a contract with a customer in exchange for transferring goods or services to a customer, excluding amounts collected on behalf of third parties. The Group or the Company recognises revenue from services rendered such as postal services, courier, international business, cargo and ground handling, in-flight catering, aircraft maintenance and engineering services to inbound and outbound commercial airlines, air cargo transportation, provision of logistic services, inventory solutions and transportation and storage services when (or as) it transfers control over a product or service to customer. An asset is transferred when (or as) the customer obtains control of the asset.
224 POS MALAYSIA BERHAD ANNUAL REPORT 2020
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (p) Revenue and other income (continued) (i) Revenue from contract with customers (continued) The Group or the Company transfers control of a good or service at a point in time unless one of the following over time criteria is met: (a) the customer simultaneously receives and consumes the benefits provided as the Group or the Company performs; (b) the Group’s or the Company’s performance creates or enhances an asset that the customer controls as the asset is created or enhanced; or (c) the Group’s or the Company’s performance does not create an asset with an alternative use and the Group or the Company has an enforceable right to payment for performance completed to date.
(ii) Safekeeping fee income Safekeeping fee income of the Ar-Rahnu operations is recognised as it accrues using the effective interest method in profit or loss.
(iii) Rental income Rental income from investment properties is recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives granted are recognised as an integral part of the total rental income, over the term of the lease. Rental income from sub-leased property is recognised as other income.
(iv) Government grants Government grants are recognised initially as deferred income at fair value when there is reasonable assurance that they will be received and that the Group will comply with the conditions associated with the grant; they are then recognised in profit or loss as other income on a systematic basis over the useful life of the asset.
Grants that compensate the Group and the Company for expenses incurred are recognised in profit or loss as other income on a systematic basis in the same period in which the expenses are recognised.
(v) Dividend income Dividend income is recognised in profit or loss on the date that the Group’s or the Company’s right to receive payment is established, which in the case of quoted securities is the ex-dividend date.
(vi) Interest income Interest income is recognised as it accrues using the effective interest method in profit or loss.
(q) Borrowing costs Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in profit or loss using the effective interest method.
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalised as part of the cost of those assets.
The capitalisation of borrowing costs as part of the cost of a qualifying asset commences when expenditure for the asset is being incurred, borrowing costs are being incurred and activities that are necessary to prepare the asset for its intended use or sale are in progress. Capitalisation of borrowing costs is suspended or ceases when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are interrupted or completed.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.
225 FINANCIAL STATEMENTS
Notes to the Financial Statements
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (r) Zakat This represents business zakat. Zakat expense is calculated based on certain percentage of the net current asset. Zakat is recognised as other expenses in profit or loss.
(s) Tax expenses Tax expense comprises current and deferred tax. Current and deferred tax are recognised in profit or loss except to the extent that it relates to a business combination or items recognised directly in equity or other comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted by the end of the reporting period, and any adjustment to tax payable in respect of previous financial years.
Deferred tax is recognised using the liability method, providing for temporary differences between the carrying amounts of assets and liabilities in the statement of financial position and their tax bases. Deferred tax is not recognised for the following temporary differences: the initial recognition of goodwill, the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the end of the reporting period.
Where investment properties are carried at their fair value in accordance with the accounting policy set out in Note 2(g), the amount of deferred tax recognised is measured using the tax rates that would apply on sale of those assets at their carrying value at the reporting date unless the property is depreciable and is held with the objective to consume substantially all of the economic benefits embodied in the property over time, rather than through sale. In all other cases, the amount of deferred tax recognised is measured based on the expected manner of realisation or settlement of the carrying amount of the assets and liabilities, using tax rates enacted or substantively enacted at the reporting date. Deferred tax assets and liabilities are not discounted.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax assets and liabilities on a net basis or their tax assets and liabilities will be realised simultaneously.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax assets are reviewed at the end of each reporting period and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
(t) Earnings per ordinary share The Group presents basic and diluted earnings per share data for its ordinary shares (“EPS”).
Basic and diluted EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period.
(u) Operating segments An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other components. Operating segment results are reviewed regularly by the chief operating decision maker, which in this case is the Chief Executive Officer of the Group, to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available.
226 POS MALAYSIA BERHAD ANNUAL REPORT 2020
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (v) Contingencies (i) Contingent liabilities Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is not recognised in the statements of financial position and is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events, are also disclosed as contingent liabilities unless the probability of outflow of economic benefits is remote.
(ii) Contingent assets When an inflow of economic benefit of an asset is probable where it arises from past events and where existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity, the asset is not recognised in the statements of financial position but is being disclosed as a contingent asset. When the inflow of economic benefit is virtually certain, then the related asset is recognised.
(w) Fair value measurements Fair value of an asset or a liability, except for lease transactions, is determined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The measurement assumes that the transaction to sell the asset or transfer the liability takes place either in the principal market or in the absence of a principal market, in the most advantageous market.
For non-financial asset, the fair value measurement takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
When measuring the fair value of an asset or a liability, the Group uses observable market data as far as possible. Fair value is categorised into different levels in a fair value hierarchy based on the input used in the valuation technique as follows: Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities that the Group can access at the measurement date. Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3: unobservable inputs for the asset or liability.
The Group recognises transfers between levels of the fair value hierarchy as of the date of the event or change in circumstances that caused the transfers.
3. VESTING OF BUSINESS On 1 January 1992, all property, rights and liabilities, other than land and buildings and certain assets, to which Jabatan Perkhidmatan Pos Malaysia (“JPPM”) was entitled or subject to immediately before that vesting date, became the property, rights and liabilities of the Company by virtue of Section 3 of the Postal Services (Successor Company) Act 1991. The value of assets and the amount of liabilities of JPPM transferred to and vested in the Company were those stated in the financial statements of JPPM as at 31 December 1991. In accordance with Section 7(4) of the said Act, for the purposes of any statutory financial statements of the Group and of the Company, the amount to be included in respect of any item shall be determined as if anything done by JPPM whether by way of acquiring, revaluing or disposing of any assets or incurring, revaluing or discharging any liability, or by carrying any amount to any provision of reserve, or otherwise, had been done by the Company.
227 FINANCIAL STATEMENTS
Notes to the Financial Statements
4. REVENUE
Group Company
Year ended 1.4.2019 to Year ended 1.4.2019 to 31.12.2020 31.12.2019 31.12.2020 31.12.2019 RM’000 RM’000 RM’000 RM’000
Revenue from contracts with customers 2,276,134 1,643,362 1,747,849 1,171,445
Other revenue Ar-Rahnu financing 41,327 27,804 – – Rental income 14,801 11,368 – –
2,332,262 1,682,534 1,747,849 1,171,445
4.1 Disaggregation of revenue Revenue by service: Postal 1,737,337 1,174,374 1,747,849 1,171,445 Aviation 149,293 192,929 – – Logistics 313,925 232,104 – – Other services 75,579 43,955 – –
2,276,134 1,643,362 1,747,849 1,171,445
Revenue by major products: Mail products 581,103 294,528 588,981 295,666 Courier products 792,406 557,988 791,297 552,559 Retail business 149,505 125,436 151,096 126,798 Digital products and services 36,661 18,938 – – Ar-Rahnu business 22,760 1,919 – – Printing, insertion and office solutions 16,158 23,098 – – International business 214,323 196,422 216,475 196,422 Automotive and project logistics 204,205 126,244 – – Haulage and freight forwarding 109,720 105,860 – – In-flight catering and cargo handling 90,761 92,607 – – Airport services 58,532 100,322 – –
2,276,134 1,643,362 1,747,849 1,171,445
Timing of recognition At a point in time 1,962,835 1,405,859 1,747,849 1,171,445 Over time 313,299 237,503 – –
2,276,134 1,643,362 1,747,849 1,171,445
228 POS MALAYSIA BERHAD ANNUAL REPORT 2020
4. REVENUE (CONTINUED) 4.2 Nature of goods and services The following information reflects the typical transactions of the Group:
Nature of goods or services Timing of recognition or method used to Significant payment terms recognise revenue
Mail and courier products
Digital products Payment for the products sold Revenue is recognised net of discounts as and Printing, insertion and office solutions and services rendered should be when the services are rendered and goods are made by cash or within the International business delivered to customers. stipulated credit term. In-flight catering and cargo handling and airport services
Retail business Revenue is recognised net of discounts as and Payment for the products sold when the services are rendered and goods are and services rendered should be delivered to customers. made by cash.
Digital services Revenue is recognised over time when services are rendered to customers. Ar-Rahnu business Revenue is recognised at predetermined rates upon sale or purchase of gold items to or by customers. Payment for the services rendered Automotive and project logistics Revenue is recognised over time as and when should be made by cash or within the logistics services, storage and inventory the stipulated credit term. solutions services are rendered over the performance of the service.
Haulage and freight forwarding Revenue is recognised over time as and when the transportation services are rendered using the cost incurred method.
The revenue derived for the sales of goods and services are predominantly from the operations in Malaysia.
4.3 Transaction price allocated to the remaining performance obligations The following table shows revenue from performance obligations that are unsatisfied (or partially unsatisfied) at the reporting date. The disclosure is only providing information for contracts that have a duration of more than one year.
2021 2022 Total Group RM’000 RM’000 RM’000
Haulage and freight forwarding 6,485 3,388 9,873
The above revenue does not include variable consideration whereby price is based on fixed contracted rates as per contract terms.
There is no obligation for returns or refunds nor warranty in the provision of the goods and services by the Group and the Company.
229 FINANCIAL STATEMENTS
Notes to the Financial Statements
4. REVENUE (CONTINUED) 4.3 Transaction price allocated to the remaining performance obligations (continued) The Group applies the following practical expedients: • exemption on disclosure of information on remaining performance obligations that have original expected durations of one year or less. • exemption not to adjust the promised amount of consideration for the effects of a significant financing component when the period between the transfer of a promised good or service to a customer and when the customer pays for that good or service is one year or less.
5. LOSS BEFORE TAXATION
Group Company
Year ended 1.4.2019 to Year ended 1.4.2019 to 31.12.2020 31.12.2019 31.12.2020 31.12.2019 Note RM’000 RM’000 RM’000 RM’000
Loss before taxation is arrived at after charging/ (crediting): Auditors’ remuneration – Statutory audit fees KPMG Malaysia Current year 1,184 1,197 390 390 Under provision in prior period 85 – 85 – Other auditor 5 5 – – – Other audit fees KPMG Malaysia 550 390 550 390 – Non-audit fees KPMG Malaysia 1,181 138 947 34
Material expenses/(income) Depreciation of property, plant and equipment 11 162,615 125,448 119,059 92,082 Depreciation of right-of-use assets 13 89,275 66,816 60,311 45,913 Amortisation of intangible assets 14 5,126 4,963 – – Defined benefits obligation 28 94 4 – – Provision for claims and liabilities 29(g) 10,477 28,552 – – Finance costs 5.2 50,237 36,314 23,907 16,389 Impairment loss of: – property, plant and equipment 11 16,244 1,707 231 – – investments in subsidiaries 16 – – 222,170 61,448 – goodwill 14 123,263 93,850 – – Inventories written down 22 704 1,478 – 1,101 Net realised foreign exchange (gain)/loss (1,129) 2,515 2,352 2,084 Operating licence fee 9,399 6,219 8,744 5,882 Property, plant and equipment written off 3,345 1,396 3,271 1,052 Derecognition of net right-of-use assets (1,466) 496 (1,643) 488
230 POS MALAYSIA BERHAD ANNUAL REPORT 2020
5. LOSS BEFORE TAXATION (CONTINUED)
Group Company
Year ended 1.4.2019 to Year ended 1.4.2019 to 31.12.2020 31.12.2019 31.12.2020 31.12.2019 Note RM’000 RM’000 RM’000 RM’000
Loss before taxation is arrived at after charging/(crediting) (continued): Material expenses/(income) (continued) Staff costs (excluding key management personnel) – Provision for mutual separation scheme 41,556 – 41,556 – – Salaries, bonuses and allowances 852,431 659,640 696,641 526,488 – Contributions to Employees’ Provident Fund 140,078 106,830 117,574 89,000 Amortisation of government grants – related to operating expense 29(f) – (2,802) – (2,802) – related to assets 11 (2,198) (1,777) (2,198) (1,777) Net fair value gain of other investments: Financial assets at fair value through profit or loss (1,350) (2,680) (563) (2,316) Net gain on disposal of property, plant and equipment (30) (1,051) (39) (888) Gain on dilution of shareholding in a former subsidiary 34 (79,282) – – – Finance income of financial assets calculated using the effective interest method that are at amortised cost (5,150) (2,261) (14,804) (6,291) Net unrealised foreign exchange loss/(gain) 7,922 (4,882) 1,468 (3,003) Rent concession 13.4 (723) – (654) – Reversal of inventories written down 22 – (529) – (529) Rental income: – Investment properties 12 (1,056) (737) – – – Operating lease other than those relating to investment properties 11.3 (14,367) (10,944) (622) (87)
Expenses arising from leases Expenses relating to short-term leases 5.3 13,045 8,937 9,645 9,581 Expenses relating to low-value assets 5.3 11,884 8,693 10,390 8,056
Net loss/(gain) on impairment of financial instruments and contract assets: – Trade receivables and contract assets 53,230 8,016 6,915 2,516 – Other receivables 176 (2,860) 176 107
53,406 5,156 7,091 2,623
231 FINANCIAL STATEMENTS
Notes to the Financial Statements
5. LOSS BEFORE TAXATION (CONTINUED) 5.1 Included in loss for the year is zakat assessment as follows:
Group Company
Year ended 1.4.2019 to Year ended 1.4.2019 to 31.12.2020 31.12.2019 31.12.2020 31.12.2019 RM’000 RM’000 RM’000 RM’000
Zakat assessment based on net current assets 1,480 1,316 – –
5.2 Included in loss for the year is finance costs as follows:
Group Company
Year ended 1.4.2019 to Year ended 1.4.2019 to 31.12.2020 31.12.2019 31.12.2020 31.12.2019 RM’000 RM’000 RM’000 RM’000
Finance costs of financial liabilities that are measured at amortised cost 31,386 22,706 18,444 10,423 Interest expense on lease liabilities 18,851 13,608 5,463 5,966
50,237 36,314 23,907 16,389
5.3 Expenses arising from leases
The Group and the Company lease machineries and office equipment with contract terms of less than 1 year. These leases are short term in nature and the Group and the Company have elected not to recognise right-of-use assets and lease liabilities for these leases.
The Group and the Company lease computer and office equipment with contract terms of 1 to 3 years. These leases are low-value items in nature and the Group and the Company have elected not to recognise right-of-use assets and lease liabilities for these leases.
6. KEY MANAGEMENT PERSONNEL COMPENSATION The key management personnel compensations are as follows:
Group Company
Year ended 1.4.2019 to Year ended 1.4.2019 to 31.12.2020 31.12.2019 31.12.2020 31.12.2019 RM’000 RM’000 RM’000 RM’000
Directors – Fees 600 586 600 586 – Remuneration 172 123 172 123
772 709 772 709
Other key management personnel – Remuneration 9,587 7,450 6,847 5,332
232 POS MALAYSIA BERHAD ANNUAL REPORT 2020
6. KEY MANAGEMENT PERSONNEL COMPENSATION (CONTINUED) Other key management personnel comprise persons other than the Directors of Group entities, having authority and responsibility for planning, directing and controlling the activities of the entity either directly or indirectly. The persons are the Group Chief Executive Officer, Group Chief Financial Officer, Chief Executive Officer, Chief Executive Officers of subsidiaries, Group Heads and heads of division.
7. TAXATION Recognised in profit or loss
Group Company
Year ended 1.4.2019 to Year ended 1.4.2019 to 31.12.2020 31.12.2019 31.12.2020 31.12.2019 RM’000 RM’000 RM’000 RM’000
Income taxation Malaysian – current year 11,239 14,907 – – – prior years (6,580) (5,609) – (3,077)
Total current tax recognised in profit or loss 4,659 9,298 – (3,077)
Deferred taxation Reversal of temporary differences (418) (38,852) – (24,988) Under provision in prior years 285 3,253 – 558
Total deferred tax recognised in profit or loss (133) (35,599) – (24,430)
Total taxation 4,526 (26,301) – (27,507)
Reconciliation of taxation Loss before taxation (303,492) (241,880) (377,938) (197,993)
Income tax calculated using Malaysian tax rate of 24% (72,838) (58,051) (90,705) (47,518) Non-deductible expenses 66,716 25,612 74,131 25,870 Non-taxable income (20,678) (1,268) (4,115) (3,340) Net effect of unrecognised deferred tax assets 37,621 9,762 20,689 –
10,821 (23,945) – (24,988) Over provision in prior years (6,295) (2,356) – (2,519)
4,526 (26,301) – (27,507)
Included in non-deductible expenses of the Group and the Company are the tax effect of the impairment of goodwill of RM123,263,000 (2019: RM93,850,000) and impairment of investment in subsidiaries of RM222,170,000 (2019: RM61,448,000) respectively.
Included in non-taxable income of the Group in the current financial year is the tax effect of the gain of dilution of shareholding in World Cargo Airline Sdn. Bhd. of RM79,282,000.
233 FINANCIAL STATEMENTS
Notes to the Financial Statements
8. OTHER COMPREHENSIVE INCOME
Before tax Tax expense Net of tax Group RM’000 RM’000 RM’000
Year ended 31.12.2020 Item that will not be reclassified subsequently to profit or loss Remeasurement of post-employment benefit obligation (586) – (586)
Item that is or may be reclassified subsequently to profit or loss Currency translation differences for foreign operations 86 – 86 Transfer of currency translation differences of a foreign operation upon dilution of shareholding in a former subsidiary 11 – 11
97 – 97
(489) – (489)
1.4.2019 to 31.12.2019 Item that is or may be reclassified subsequently to profit or loss Currency translation differences for foreign operations (1,891) – (1,891)
9. LOSS PER ORDINARY SHARE Basic and diluted loss per ordinary share The calculation of basic and diluted loss per ordinary share was based on the attributable to ordinary shareholders and the weighted average number of ordinary shares in issue during the financial year/period, calculated as follows:
Group
Year ended 1.4.2019 to 31.12.2020 31.12.2019
Loss for the year/period attributable to ordinary shareholders (RM’000) (308,018) (215,579)
Weighted average number of ordinary shares at year/period end (‘000) 782,777 782,777
Basic and diluted loss per ordinary share (sen) (39.3) (27.5)
10. DIVIDENDS Dividends recognised by the Company:
Total Sen amount per share RM’000
2019 First and final dividend in respect of financial year ended 31 March 2019 (Single tier) 4.0 31,311
No dividend was paid or declared in the current and previous financial year/period. The Directors do not recommend any dividend to be paid for the financial year ended 31 December 2020.
234 POS MALAYSIA BERHAD ANNUAL REPORT 2020
11. PROPERTY, PLANT AND EQUIPMENT
Furniture Building and fittings, improvements office and Capital Freehold and Plant and Motor computer work-in- land Buildings renovations machinery vehicles equipment Vessels progress Total Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Cost At 1 April 2019 133,940 310,442 567,686 313,231 503,407 522,898 149,128 45,713 2,546,445 Additions – 457 7,088 6,530 6,992 17,219 – 49,481 87,767 Disposals – – (20) – (6,414) (575) – – (7,009) Written off – – (3,726) (6,865) (950) (328) – (95) (11,964) Transfers (4,701) (43,169) 14,194 60,402 4,761 22,120 – (53,607) – Effect of movements in exchange rates 1,709 5,240 1 – 37 115 603 – 7,705
At 31 December 2019 130,948 272,970 585,223 373,298 507,833 561,449 149,731 41,492 2,622,944 Additions – 85 9,372 3,923 556 13,780 5,329 45,220 78,265 Disposals – – (7) (3,592) (19,953) (877) – – (24,429) Derecognition of a former subsidiary – (1,581) (36) (1,953) (334) (1,003) – – (4,907) Written off – – (582) (2,269) (248) (126) – (3,271) (6,496) Transfer to assets held for sale – – (302) (36,001) (169) (561) – – (37,033) Transfers – – 6,067 4,622 – 42,049 – (52,738) – Effect of movements in exchange rates (262) (3,028) (3) – (21) (84) (3,347) – (6,745)
At 31 December 2020 130,686 268,446 599,732 338,028 487,664 614,627 151,713 30,703 2,621,599
Depreciation and impairment loss At 1 April 2019 Accumulated depreciation – 110,523 312,918 148,732 382,830 378,309 11,454 – 1,344,766 Accumulated impairment loss – 366 75 7,518 3,706 832 – 22,511 35,008
– 110,889 312,993 156,250 386,536 379,141 11,454 22,511 1,379,774 Depreciation for the period – 3,385 39,529 16,193 21,193 37,803 7,345 – 125,448 Disposals – – (17) – (6,309) (565) – – (6,891) Written off – – (2,612) (6,842) (948) (166) – – (10,568) Effect of movements in exchange rates – 5,830 – – 37 114 (65) – 5,916 Impairment loss for the period – – – 807 900 – – – 1,707 At 31 December 2019 Accumulated depreciation – 119,738 349,818 158,083 396,803 415,495 18,734 – 1,458,671 Accumulated impairment loss – 366 75 8,325 4,606 832 – 22,511 36,715
– 120,104 349,893 166,408 401,409 416,327 18,734 22,511 1,495,386
235 FINANCIAL STATEMENTS
Notes to the Financial Statements
11. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
Furniture Building and fittings, improvements office and Capital Freehold and Plant and Motor computer work-in- land Buildings renovations machinery vehicles equipment Vessels progress Total Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Depreciation and impairment loss (continued)
Depreciation for the year – 4,511 53,105 24,210 24,918 46,083 9,788 – 162,615 Disposals – – (7) (3,591) (17,941) (875) – – (22,414) Written off – – (535) (2,260) (248) (108) – – (3,151) Transfer to assets held for sale – – (251) (29,091) (165) (458) – – (29,965) Impairment loss for the year – 9,224 198 1,852 7 119 4,844 – 16,244
Derecognition of a former subsidiary: Accumulated depreciation – (1,143) (2) (1,752) (306) (858) – – (4,061) Accumulated impairment loss – (366) (70) (203) – – – – (639)
– (1,509) (72) (1,955) (306) (858) – – (4,700)
Effect of movements in exchange rates: Accumulated depreciation – (3,209) (1) – (21) (82) (829) – (4,142) Accumulated impairment loss – – – – – – (218) – (218)
– (3,209) (1) – (21) (82) (1,047) – (4,360) At 31 December 2020 Accumulated depreciation – 119,897 402,127 145,599 405,293 459,197 27,693 – 1,559,806 Accumulated impairment loss – 9,224 203 9,974 2,360 951 4,626 22,511 49,849
– 129,121 402,330 155,573 407,653 460,148 32,319 22,511 1,609,655
Carrying amounts At 1 April 2019 133,940 199,553 254,693 156,981 116,871 143,757 137,674 23,202 1,166,671
At 31 December 2019 130,948 152,866 235,330 206,890 106,424 145,122 130,997 18,981 1,127,558
At 31 December 2020 130,686 139,325 197,402 182,455 80,011 154,479 119,394 8,192 1,011,944
236 POS MALAYSIA BERHAD ANNUAL REPORT 2020
11. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
Furniture Building and fittings, improvements Plant office and Capital Freehold and and Motor computer work-in- land Buildings renovations machinery vehicles equipment progress Total Company RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Cost At 1 April 2019 72,528 63,910 502,391 152,959 275,890 426,603 41,558 1,535,839 Additions – – 5,177 614 – 11,841 47,438 65,070 Disposals – – (20) – (4,569) (575) – (5,164) Write off – – (3,186) – (5) (20) (95) (3,306) Transfers – – 9,469 17,233 4,761 22,119 (53,582) –
At 31 December 2019 72,528 63,910 513,831 170,806 276,077 459,968 35,319 1,592,439 Additions – – 8,481 2,561 – 11,697 45,136 67,875 Disposals – – (5) – (989) (75) – (1,069) Write off – – – – – (47) (3,272) (3,319) Transfers – – 6,067 4,622 – 42,049 (52,738) –
At 31 December 2020 72,528 63,910 528,374 177,989 275,088 513,592 24,445 1,655,926
Depreciation and impairment loss At 1 April 2019 Accumulated depreciation – 10,174 275,854 35,235 218,962 297,484 – 837,709 Accumulated impairment loss – – – 3,867 – – 22,511 26,378
– 10,174 275,854 39,102 218,962 297,484 22,511 864,087 Depreciation for the period – 409 35,276 9,265 14,941 32,191 – 92,082 Disposals – – (17) – (4,569) (565) – (5,151) Write off – – (2,229) – (4) (21) – (2,254) At 31 December 2019 Accumulated depreciation – 10,583 308,884 44,500 229,330 329,089 – 922,386 Accumulated impairment loss – – – 3,867 – – 22,511 26,378
– 10,583 308,884 48,367 229,330 329,089 22,511 948,764
Depreciation for the year – 534 46,328 14,793 17,860 39,544 – 119,059 Disposals – – (5) – (989) (75) – (1,069) Write off – – – – – (48) – (48) Impairment loss for the year – – 192 – – 39 – 231 At 31 December 2020 Accumulated depreciation – 11,117 355,207 59,293 246,201 368,510 – 1,040,328 Accumulated impairment loss – – 192 3,867 – 39 22,511 26,609
– 11,117 355,399 63,160 246,201 368,549 22,511 1,066,937
Carrying amounts At 1 April 2019 72,528 53,736 226,537 113,857 56,928 129,119 19,047 671,752
At 31 December 2019 72,528 53,327 204,947 122,439 46,747 130,879 12,808 643,675
At 31 December 2020 72,528 52,793 172,975 114,829 28,887 145,043 1,934 588,989
237 FINANCIAL STATEMENTS
Notes to the Financial Statements
11. PROPERTY, PLANT AND EQUIPMENT (CONTINUED) Depreciation for the financial year/period has been allocated as follows:
Group Company
Year ended 1.4.2019 to Year ended 1.4.2019 to 31.12.2020 31.12.2019 31.12.2020 31.12.2019 RM’000 RM’000 RM’000 RM’000
Depreciation of property, plant and equipment 160,417 123,671 116,861 90,305 Other income* 2,198 1,777 2,198 1,777
162,615 125,448 119,059 92,082
* Depreciation has been netted off against other income as the assets purchased were financed by government grant received by the Group and the Company.
11.1 Hire purchase and loan arrangements The net carrying amounts of plant and equipment under hire purchase and loan arrangements are as follows:
Group Company
2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000
Motor vehicles 19,489 21,311 – – Plant and machinery – 743 – – Vessels 113,153 129,362 – –
11.2 Pledged as banking facilities The net carrying amounts of plant and equipment of the Group pledged as security for banking facilities granted to the Group (as disclosed in Note 27 (b) and (c)) are as follows:
Group Company
2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000
Plant and machinery 3,199 3,658 – – Vessels 113,153 129,362 – –
238 POS MALAYSIA BERHAD ANNUAL REPORT 2020
11. PROPERTY, PLANT AND EQUIPMENT (CONTINUED) 11.3 Property, plant and equipment subject to operating lease The Group leases some of its property, plant and equipment to third parties. Lease contracts are typically made for fixed years of 1 to 3 years, but may have extension options. Subsequent renewals are negotiated with the lessee.
The following are recognised in profit or loss:
Year ended 1.4.2019 to 31.12.2020 31.12.2019 Group RM’000 RM’000
Lease income 14,367 10,944
The operating lease payments to be received are as follows:
2020 2019 Group RM’000 RM’000
Less than one year 5,871 7,677 One to two years 2,212 4,009 Two to three years – 1,458
Total undiscounted lease payments 8,083 13,144
Company The Company enters into short term leases of rental of space in its premises with income of RM622,000 (2019: RM87,000).
11.4 Impairment of property, plant and equipment As at 31 December 2020, the property, plant and equipment of postal, aviation and logistics segments were tested for impairment due to impairment indicators noted, where losses were recorded for the current financial year. The recoverable amounts of the postal, aviation and logistics segments’ property, plant and equipment were based on the higher of value-in- use or fair value less costs of disposal. Cash flow projections were prepared based on financial budgets which cover a period of 5 years (2019: 5 years), and applying a terminal value based on the remaining useful life of the respective property, plant and equipment.
The calculation of value-in-use for the property, plant and equipment of the Group and the Company are most sensitive to the following assumptions:
(i) Projected gross margins – projected gross margin reflects the average historical gross margin adjusted for projected market and economic conditions and internal resource efficiency.
(ii) Discount rate (approximately 10.5% - 12%) (2019: approximately 9.5% - 10%) – discount rate reflects management’s estimate of the risks specific to these segments. In determining the appropriate discount rate, consideration has been given to the applicable weighted average rate of return of the cash generating unit’s (“CGUs”) property, plant and equipment.
(iii) Growth rates (approximately 1% - 2%) (2019: approximately 2% - 3%) – the forecasted growth rates are based on published industry research and do not exceed the long-term average growth rate for the industries relevant to the CGUs.
(iv) Revenue growth – the bases used to determine the future earnings potential are historical sales and expected growth rates of the relevant industry.
239 FINANCIAL STATEMENTS
Notes to the Financial Statements
11. PROPERTY, PLANT AND EQUIPMENT (CONTINUED) 11.4 Impairment of property, plant and equipment (continued) The recoverable amounts of the property, plant and equipment were higher than the carrying amounts, other than the impairment losses made mainly in relation to vessels of logistics segment of RM4,938,000 (2019: RM900,000) and certain plant and machineries of aviation segment of RM11,075,000 (2019: nil), which were stated in excesss of their recoverable amounts.
Certain specific building improvements and office equipment of the postal segment of the Group and Company with a carrying amount of RM231,000 (2019: RM203,000) and RM231,000 (2019: nil) respectively were impaired as the carrying amounts were stated in excess of their recoverable amounts.
Other property, plant and equipment In the previous financial period, certain other property, plant and equipment of the Group were also tested for impairment due to impairment indications noted. The recoverable amounts of the property, plant and equipment were higher than the carrying amounts, other than the impairment losses made in relation to plant and machineries of RM604,000, which were stated in excesss of their recoverable amounts.
Sensitivity to changes in assumptions A 1% change in discount rate and terminal growth rate would decrease the recoverable amounts of the Group and the Company as follows:
Postal Aviation Logistics RM’000 RM’000 RM’000
Group Decrease in recoverable amounts Increase in discount rate (1% movement) 50,551 9,008 3,258 Decrease in terminal growth rate (1% movement) 25,263 3,389 879
Postal RM’000
Company Decrease in recoverable amounts Increase in discount rate (1% movement) 50,551 Decrease in terminal growth rate (1% movement) 25,263
240 POS MALAYSIA BERHAD ANNUAL REPORT 2020
12. INVESTMENT PROPERTIES
Group
2020 2019 RM’000 RM’000
At beginning/end of year/period 39,050 39,050
Included in the above are: At fair value Freehold land and buildings 14,860 14,860 Leasehold land and buildings with unexpired lease period of more than 50 years 24,190 24,190
39,050 39,050
Investment properties comprise a number of commercial properties that are leased to third parties and several pieces of vacant land.
The following are recognised in profit or loss in respect of investment properties:
Group
Year ended 1.4.2019 to 31.12.2020 31.12.2019 RM’000 RM’000
Lease income 1,056 737 Direct operating expenses: – income generating investment properties (317) (137) – non-income generating investment properties (27) (11)
12.1 Operating lease payments receivable The operating lease payments to be received are as follows:
Group
2020 2019 RM’000 RM’000
Less than one year 611 914 One to two years 43 669
Total undiscounted lease payments 654 1,583
241 FINANCIAL STATEMENTS
Notes to the Financial Statements
12. INVESTMENT PROPERTIES (CONTINUED) 12.2 Fair value information Fair value of investment properties are categorised as a Level 3 fair value based on inputs in the valuation techniques used.
Level 3 fair value Level 3 fair value is estimated using unobservable inputs for the investment properties.
The following table shows the valuation technique used in the determination of fair values within Level 3 as well as the significant unobservable inputs used in the valuation models.
Inter-relationship between significant Significant unobservable unobservable inputs and fair value Valuation technique inputs measurement
The Group estimates the fair value of all • Market price of property in • The estimated fair value would investment properties based on the following vicinity compared. increase/(decrease) if market prices key assumptions: of property were higher/(lower).
• Comparison of the Group’s investment properties with similar properties that were listed for sale within the same locality or other comparable localities; and
• Enquiries from relevant property valuers and real estate agents on market conditions and changing market trends.
Valuation processes applied by the Group for Level 3 fair value The fair value of investment properties is determined by external independent property valuers, having appropriate recognised professional qualifications and recent experience in the location and category of property being valued. The valuation company provides the fair value of the Group’s investment properties portfolio annually. Changes in Level 3 fair values are analysed by the management every year after obtaining valuation report from the valuation company.
13. RIGHT-OF-USE ASSETS The Group and the Company have leases for land, buildings, plant and machineries, motor vehicles and office equipment. Lease contracts are typically made for fixed years of 1 to 28 years, but may have extension options.
With the exception of short-term leases and leases of low-value underlying assets, leases are reflected on the statements of financial position as right-of-use assets and lease liabilities.
Leases are either non-cancellable or may only be cancelled by incurring a substantive termination fee. Some leases contain an option to extend the lease for a further term.
242 POS MALAYSIA BERHAD ANNUAL REPORT 2020
13. RIGHT-OF-USE ASSETS (CONTINUED) The carrying amounts of right-of-use assets are recognised and the movement during the year are shown as follows:
Land and Office Plant and Motor buildings equipment machinery vehicles Total Group RM’000 RM’000 RM’000 RM’000 RM’000
At 1 April 2019 489,360 17 19,786 44,354 553,517 Additions 2,702 5 – 3,131 5,838 Depreciation (45,821) (6) (2,627) (18,362) (66,816) Derecognition (828) – (21) – (849)
At 31 December 2019 445,413 16 17,138 29,123 491,690 Additions 32,606 – – 265 32,871 Remeasurement of lease liabilities 67,533 – – 9,320 76,853 Depreciation (65,125) (8) (3,426) (20,716) (89,275) Derecognition (7,513) (3) (43) (34) (7,593) Derecognition of a former subsidiary (261) – – – (261) Reclassified to assets held for sale (365) – – – (365)
At 31 December 2020 472,288 5 13,669 17,958 503,920
Land and Office Plant and Motor buildings equipment machinery vehicles Total Company RM’000 RM’000 RM’000 RM’000 RM’000
At 1 April 2019 213,523 17 916 43,174 257,630 Additions 2,195 5 – 2,859 5,059 Depreciation (27,585) (6) (272) (18,050) (45,913) Derecognition (819) – – – (819)
At 31 December 2019 187,314 16 644 27,983 215,957 Additions 14,038 – – – 14,038 Remeasurement of lease liabilities 3,225 – – 9,319 12,544 Depreciation (39,719) (8) (305) (20,279) (60,311) Derecognition (4,516) (3) (43) (34) (4,596)
At 31 December 2020 160,342 5 296 16,989 177,632
243 FINANCIAL STATEMENTS
Notes to the Financial Statements
13. RIGHT-OF-USE ASSETS (CONTINUED) 13.1 Land and buildings The title deeds for certain landed properties with net carrying amounts of RM1,245,000 (2019: RM1,298,000) have yet to be issued in the name of the Company as at 31 December 2020 by the relevant authorities.
The Government leasehold land and buildings of the Group and of the Company with net carrying amounts of RM7,653,000 (2019: RM17,905,000) are for a lease period of sixty (60) years commencing from 1 January 1992, with the vesting date as stated in Note 3 to the financial statements.
The cost capitalised is in respect of the lease for the first thirty (30) years as stipulated in the agreement signed between the Company and the Government. The cost in respect of the remaining thirty (30) years lease period has not been agreed. However, this cost will be agreed upon finalisation of the agreement with the authorities, no later than 31 December 2021, and thereafter will be recognised accordingly.
The Company is also in the process of finalising lease agreements with the authorities for additional Government leasehold land and buildings currently used by the Company, which are at present carried at nil value in the statement of financial position. These Government leasehold land and buildings will be recognised in the statements of financial position upon the valuations being finalised by the authorities.
13.2 Extension options Some lease contracts contain extension options exercisable only by the Group or the Company before the end of the non- cancellable contract period. Where practicable, the Group and the Company seek to include extension options in new leases to provide operational flexibility. The Group and the Company assess at lease commencement whether it is reasonably certain to exercise the extension options. The Group and the Company reassess whether it is reasonably certain to exercise the options if there is a significant event or significant change in circumstances within its control.
13.3 Significant judgements and assumptions in relation to lease The Group and the Company assess at lease commencement by applying significant judgement whether it is reasonably certain to exercise the extension options. The Group and the Company consider all facts and circumstances including their past practice and any cost that will be incurred to change the asset if an option to extend is not taken, to help them determine the lease term.
The Group and the Company also applied judgement and assumptions in determining the incremental borrowing rate of the respective leases. The Group and the Company first determine the closest available borrowing rates before using significant judgement to determine the adjustments required to reflect the term, security, value or economic environment of the respective leases.
13.4 Rent concession The Group and the Company negotiated rent concessions with its landlords for the majority of its retail outlet leases as a result of the impact of the COVID-19 pandemic during the year. The Group and the Company have applied the practical expedient for COVID-19-related rent concessions consistently to eligible rent concessions relating to its retail outlet leases. The amount recognised in profit or loss for the reporting period to reflect changes in lease payments arising from rent concessions to which the Group and the Company have applied the practical expedient for COVID-19-related rent concessions are RM723,000 and RM654,000 respectively (2019: nil).
244 POS MALAYSIA BERHAD ANNUAL REPORT 2020
14. INTANGIBLE ASSETS
Goodwill Contracts Total Group RM’000 RM’000 RM’000
Cost At 1 April 2019/31 December 2019/1 January 2020 318,576 120,227 438,803 Derecognition upon dilution of shareholding in a former subsidiary (4,067) – (4,067)
At 31 December 2020 314,509 120,227 434,736
Amortisation and impairment loss At 1 April 2019 (39,618) (23,563) (63,181) Amortisation charge for the financial period – (4,963) (4,963) Impairment loss for the financial period (93,850) – (93,850)
At 31 December 2019/1 January 2020 (133,468) (28,526) (161,994) Amortisation charge for the financial year – (5,126) (5,126) Impairment loss for the financial year (123,263) – (123,263)
At 31 December 2020 (256,731) (33,652) (290,383)
Carrying amount At 1 April 2019 278,958 96,664 375,622
At 31 December 2019/1 January 2020 185,108 91,701 276,809
At 31 December 2020 57,778 86,575 144,353
Impairment testing for goodwill is performed annually. The carrying amounts were allocated to the Group’s cash-generating units (“CGUs”), for impairment testing as follows:
Group
2020 2019 RM’000 RM’000
Licensed digital certificate authority 4,630 4,630 Aviation 53,148 153,034 Postal – 4,067 Logistics – 23,377
57,778 185,108
Impairment testing for goodwill Management has carried out impairment test review for goodwill based on the recoverable amount of each CGU. The recoverable amounts have been determined based on its value-in-use. Cash flow projections were prepared based on financial budgets which cover a period of 5 years (2019: 5 years) and applying a terminal value multiple using a terminal growth rate, except for aviation segment that applies a terminal value based on its remaining concession period.
Logistics segment During the financial year, the remaining goodwill of logistics segment of RM23,377,000 was fully impaired as its carrying amount exceeds its recoverable amount.
245 FINANCIAL STATEMENTS
Notes to the Financial Statements
14. INTANGIBLE ASSETS (CONTINUED) Aviation segment Key assumptions used in value-in-use calculations The calculation of value-in-use for goodwill is most sensitive to the following assumptions:
(i) Projected gross margins – projected gross margin reflects the average historical gross margin adjusted for projected market and economic conditions and internal resource efficiency.
(ii) Discount rates (approximately 12%) (2019: approximately 10%) – discount rates reflect management’s estimate of the risks specific to these entities. In determining appropriate discount rate for each unit, consideration has been given to the applicable weighted average cost of capital for each unit.
(iii) Growth rates (approximately 1%) (2019: approximately 3%) – the forecasted growth rates are based on published industry research and do not exceed the long-term average growth rate for the industries relevant to the CGUs.
(iv) Revenue growth – the bases used to determine the future earnings potential are historical sales and expected growth rates of the relevant industry.
(v) Extension of concession period – Pos Aviation Sdn. Bhd. has a concession with Malaysia Airport Holdings Berhad (“MAHB”) for ground and cargo handling services with anticipation that the concession period will be renewed from 2048 up to 2069.
Based on the management’s impairment review, impairment losses of RM99,886,000 (2019: RM3,250,000) in relation to the goodwill of aviation segment was recognised during the year.
Sensitivity to changes in assumptions (i) An increase of 1 percentage point in the discount rate used would have decreased the value-in-use by RM27,358,000; or
(ii) A decrease of 1 percentage point in the terminal growth rate used would have decreased the value-in-use by RM19,297,000; or
(iii) In the event that the extension of concession period is not being granted by MAHB, there would be a decrease in value-in- use by RM20,071,000.
Postal segment Goodwill of postal segment amounting to RM4,067,000 was derecognised during the financial year upon dilution of shareholding in a former subsidiary.
246 POS MALAYSIA BERHAD ANNUAL REPORT 2020
15. DEFERRED TAX ASSETS AND LIABILITIES Deferred tax assets and liabilities are attributable to the following:
Assets Liabilities Net
2020 2019 2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Group Property, plant and equipment – 13 (102,662) (110,660) (102,662) (110,647) Investment properties – – (971) (971) (971) (971) Right-of-use assets 743 4,461 – – 743 4,461 Intangible assets – – (20,778) (22,008) (20,778) (22,008) Provisions 10,831 14,518 – – 10,831 14,518 Tax loss carry-forwards – 21,429 – – – 21,429 Unabsorbed capital allowances 74,601 59,632 – – 74,601 59,632 Other temporary differences – – (1,865) (6,788) (1,865) (6,788)
Tax assets/(liabilities) 86,175 100,053 (126,276) (140,427) (40,101) (40,374) Set-off (84,290) (93,945) 84,290 93,945 – –
Net tax assets/(liabilities) 1,885 6,108 (41,986) (46,482) (40,101) (40,374)
Company Property, plant and equipment – – (45,220) (46,050) (45,220) (46,050) Right-of-use assets 1,386 2,200 – – 1,386 2,200 Provisions – 8,422 – – – 8,422 Tax loss carry-forwards – 13,402 – – – 13,402 Unabsorbed capital allowances 46,228 28,702 – – 46,228 28,702 Other temporary differences – – (2,358) (6,640) (2,358) (6,640)
Tax assets/(liabilities) 47,614 52,726 (47,578) (52,690) 36 36 Set-off (47,578) (52,690) 47,578 52,690 – –
Net tax assets/(liabilities) 36 36 – – 36 36
Deferred tax assets and liabilities are offset above when there is a legally enforceable right to set off current tax assets against current tax liabilities and when the deferred tax assets and liabilities relate to the same taxation authority.
247 FINANCIAL STATEMENTS
Notes to the Financial Statements
15. DEFERRED TAX ASSETS AND LIABILITIES (CONTINUED) Unrecognised deferred tax assets Deferred tax assets have not been recognised in respect of the following items (stated at gross):
Group Company
2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000
Property, plant and equipment (2) – – – Right-of-use assets 8 4 – – Provisions 91,843 45 71,699 – Tax loss carry-forwards 118,314 79,740 14,505 – Unabsorbed capital allowances 36,440 15,217 – – Other temporary differences – (5,157) – –
246,603 89,849 86,204 –
Pursuant to new law gazetted, the ability to carry forward unutilised tax losses is restricted to a maximum period of seven consecutive Year of Assessment (“YA”), effective YA 2019.
The deferred tax assets arising from property, plant and equipment, provision, tax loss carry-forwards, unabsorbed capital allowances and other temporary differences of the Group are available for offsetting against future taxable profits of the respective entities within the Group, subject to no substantial change in shareholdings of those entities under the Income Tax Act, 1967 and guidelines issued by the tax authority, as follows:
Group Company
2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000
Utilisation period Indefinite 128,289 10,109 71,699 – Within 5 years from recognition 68,521 – – – Within 6 years from recognition 8,024 70,963 – – Within 7 years from recognition 41,769 8,777 14,505 –
246,603 89,849 86,204 –
Deferred tax assets of the Group have not been recognised in respect of these items because it is not probable that they may be used to offset taxable profits of other subsidiaries of the Group.
248 POS MALAYSIA BERHAD ANNUAL REPORT 2020
15. DEFERRED TAX ASSETS AND LIABILITIES (CONTINUED) Movement in temporary differences during the year
Effect of Recognised Effect of Recognised movements in profit movements in profit At in exchange or loss At in exchange or loss At 1.4.2019 rates (Note 7) 31.12.2019 rates (Note 7) 31.12.2020 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Group Property, plant and equipment (118,307) 13 7,647 (110,647) – 7,985 (102,662) Investment properties (11,229) – 10,258 (971) – – (971) Right-of-use assets 4,073 – 388 4,461 (1) (3,717) 743 Intangible assets (23,199) – 1,191 (22,008) – 1,230 (20,778) Provisions 16,509 – (1,991) 14,518 23 (3,710) 10,831 Tax loss carry-forwards 7,649 – 13,780 21,429 – (21,429) – Unabsorbed capital allowances 52,488 – 7,144 59,632 – 14,969 74,601 Other temporary differences (3,970) – (2,818) (6,788) 118 4,805 (1,865)
(75,986) 13 35,599 (40,374) 140 133 (40,101)
Company Property, plant and equipment (54,205) – 8,155 (46,050) – 830 (45,220) Right-of-use assets 2,382 – (182) 2,200 – (814) 1,386 Provisions 8,918 – (496) 8,422 – (8,422) – Tax loss carry-forwards – – 13,402 13,402 – (13,402) – Unabsorbed capital allowances 22,051 – 6,651 28,702 – 17,526 46,228 Other temporary differences (3,540) – (3,100) (6,640) – 4,282 (2,358)
(24,394) – 24,430 36 – – 36
16. INVESTMENTS IN SUBSIDIARIES
Company
2020 2019 Note RM’000 RM’000
Ordinary shares Unquoted shares, at cost 760,723 760,723 Less: Accumulated impairment losses 16.1 (388,703) (166,533)
372,020 594,190 Redeemable preference shares, at cost (a) 155,674 155,674 Redeemable convertible preference shares, at cost (b) 45,472 45,472
573,166 795,336
249 FINANCIAL STATEMENTS
Notes to the Financial Statements
16. INVESTMENTS IN SUBSIDIARIES (a) The Redeemable Preference Shares (“RPS”) held in the subsidiaries are redeemable at the discretion of the Directors of the subsidiary and any dividend payments are discretionary. The RPS does not carry any voting rights save for rights to vary the rights attached to the RPS or winding up of the subsidiary.
(b) The details of the Redeemable Convertible Preference Shares (“RCPS”) of a subsidiary are as follows: (i) Redeemable at a date that shall be at the option of the Directors of the subsidiary; (ii) The subsidiary may convert all or any part of the preference shares which have been fully paid up into ordinary shares. Such shares shall rank pari passu in all respects with the existing ordinary shares of the subsidiary; (iii) The preference shares carry the right to be repaid in priority to any payment to the holders of any class of shares; and (iv) The preference shares shall confer upon the holder the rights to receive notices of meetings, but not vote at such meetings of the subsidiary; except for the general meeting of the subsidiary held for holders of the preference shares.
Details of the subsidiaries are as follows:
Effective ownership interest and voting interest
Country of 2020 2019 Name of subsidiary incorporation Principal activities % %
Datapos (M) Sdn. Bhd. Malaysia Printing and insertion of documents for mailing 100 100
Pos Digicert Sdn. Bhd. Malaysia Licensed digital certification authority 100 100
Effivation Sdn. Bhd. Malaysia Property investment 100 100
Pos Ar-Rahnu Sdn. Bhd. Malaysia Ar-Rahnu (Islamic pawn broking) 100 100
Poslaju (M) Sdn. Bhd. Malaysia Dormant 100 100
Pos Malaysia & Services Malaysia Investment holding 100 100 Holdings Berhad
Pejabat Pos Sdn. Bhd. Malaysia Investment holding 100 100 (f.k.a. PSH Capital Partners Sdn. Bhd.)
Posmen Sdn. Bhd. Malaysia Investment holding 100 100 (f.k.a. PSH Venture Capital Sdn. Bhd.)
PSH Properties Sdn. Bhd. Malaysia Property investment 100 100
PMB Properties Sdn. Bhd. Malaysia Property investment 100 100
Pos Aviation Sdn. Bhd. Malaysia Provision of airport related ground handling, 100 100 in-flight catering, cargo handling, warehousing space and supply chain management including custom forwarding agent services
250 POS MALAYSIA BERHAD ANNUAL REPORT 2020
16. INVESTMENTS IN SUBSIDIARIES (CONTINUED) Details of the subsidiaries are as follows (continued):
Effective ownership interest and voting interest
Country of 2020 2019 Name of subsidiary incorporation Principal activities % %
Subsidiary of Pejabat Pos Sdn. Bhd. (f.k.a. PSH Capital Partners Sdn. Bhd.):
Prestige Future Sdn. Bhd. Malaysia Consultant and agent marketing services 100 100
Subsidiary of PSH Properties Sdn. Bhd.:
Real Riviera Sdn. Bhd. Malaysia Property investment 100 100
Subsidiary of Posmen Sdn. Bhd. (f.k.a. PSH Venture Capital Sdn. Bhd.):
PSH Express Sdn. Bhd. Malaysia Air courier services and fulfilment business 100 100
Subsidiaries of Pos Aviation Sdn. Bhd.:
World Cargo Airline Sdn. Bhd. Malaysia Provision of air cargo transport - ### 100 (f.k.a. Pos Asia Cargo Express Sdn. Bhd.)
Pos Aviation Engineering Services Malaysia Provision of aircraft maintenance and 100 100 Sdn. Bhd. engineering services
Pos Logistics Berhad Malaysia Provision of total logistics services and 100 100 inventory solution
Subsidiary of World Cargo Airline Sdn. Bhd. (f.k.a. Pos Asia Cargo Express Sdn. Bhd.):
Gading Sari Aviation Services Malaysia Provision of aircraft leasing services - ### 100 Limited Subsidiaries of Pos Logistics Berhad:
Aman Freight (Malaysia) Sdn. Bhd. Malaysia Dormant 100 100
Cougar Logistic (Malaysia) Sdn. Bhd. Malaysia Dormant 100 100
Diperdana Kontena Sdn. Bhd. Malaysia Property investment 100 100
KP Asia Auto Logistics Sdn. Bhd. Malaysia Warehousing, inventory solutions, forwarding, 100 100 shipping and transport agent
251 FINANCIAL STATEMENTS
Notes to the Financial Statements
16. INVESTMENTS IN SUBSIDIARIES (CONTINUED) Details of the subsidiaries are as follows (continued):
Effective ownership interest and voting interest
Country of 2020 2019 Name of subsidiary incorporation Principal activities % %
Subsidiaries of Pos Logistics Berhad (continued)
KP Distribution Services Sdn. Bhd. Malaysia Distribution services 100 100
Malaysian Shipping Agencies Malaysia Shipping agencies services, freight and 100 100 Sdn. Bhd. forwarding and other related services
Pengangkutan Aspacs Sdn. Bhd. Malaysia Dormant 100 100
PNSL Berhad Malaysia Shipping agency and chartering services 100 100
Westport Distripark (M) Sdn. Bhd. Malaysia Business of a distribution park 100 100
Diperdana Utara Sdn. Bhd. Malaysia Dormant 100 100
Kaypi Southern Terminal Sdn. Bhd. Malaysia Property investment 100 100
North Terminal Sdn. Bhd. Malaysia Dormant 100 100
K.P.B. Sadao I.C.D Company Thailand Dormant 49## 49## Limited #
Subsidiary of Aman Freight (Malaysia) Sdn. Bhd.:
Aman Freight Services Sdn. Bhd. Malaysia Dormant 100 100
Subsidiaries of Malaysian Shipping Agencies Sdn. Bhd.:
Konsortium Logistik (Sabah) Malaysia Forwarding and related services 100 100 Sdn. Bhd.
Konsortium Logistik (Sarawak) Malaysia Dormant 100 100 Sdn. Bhd.
Subsidiaries of PNSL Berhad:
PNSL Risk Management Sdn. Bhd. Malaysia Insurance agency service 100 100
Parcel Tankers Malaysia Sdn. Bhd. Malaysia Port custom clearance services 100 100
252 POS MALAYSIA BERHAD ANNUAL REPORT 2020
16. INVESTMENTS IN SUBSIDIARIES (CONTINUED) Details of the subsidiaries are as follows (continued):
# Not audited by member firms of KPMG International
## Although the Company has less than 50% of the ownership in the equity interest of K.P.B. Sadao I.C.D Company Limited (“K.P.B. Sadao”), the remaining 51% equity interest is held in trust by third party in accordance to a trust deed dated 16 March 2012. Consequently, the K.P.B. Sadao is regarded as a subsidiary of the Company.
### On 31 December 2020, World Cargo Airline Sdn. Bhd. (formerly known as Pos Asia Cargo Express Sdn. Bhd.) (“WCA”) and Gading Sari Aviation Services Limited ceased to be subsidiaries of the Group and are thereafter deemed to be associates of the Group upon dilution of shareholding in WCA from 100% to 49% (refer Note 34).
On 24 August 2020, the Group announced the proposed winding-up of the following dormant/inactive subsidiaries via members’ voluntary winding up (“MVWU”) and creditors’ voluntary winding up (“CVWU”):
Companies under MVWU Companies under CVWU 1. Diperdana Utara Sdn. Bhd. 1. North Terminal Sdn. Bhd. 2. Cougar Logistics (Malaysia) Sdn. Bhd. 2. Aman Freight Services Sdn. Bhd. 3. Parcel Tankers Malaysia Sdn. Bhd. 3. Pengangkutan Aspacs Sdn. Bhd.
Upon the completion of the winding up exercise, the above companies will cease to be subsidiaries of the Group. This exercise is not expected to have any material impact on the earnings and net assets of the Group.
16.1 Impairment testing for investments in subsidiaries At 31 December 2020, the Company’s investments in certain subsidiaries were tested for impairment due to impairment indicators noted where the carrying amount of investment costs are higher as compared to net assets of the related subsidiaries.
For the purpose of impairment testing, the recoverable amounts of certain subsidiaries were determined based on the greater of value-in-use or fair value less costs of disposal. The recoverable amounts were prepared based on financial budgets which cover a period of 5 years (2019: 5 years) and applying a terminal value multiple using a terminal growth rate, except for aviation segment that applies a terminal value based on its remaining concession period. The discount rate applied to the cash flow projections is approximately 11% – 12% (2019: 10%) per annum.
Key assumptions used in value-in-use calculations The calculation of value-in-use for investments in subsidiaries are most sensitive to the following assumptions: (i) Projected gross margins – projected gross margin reflects the average historical gross margin adjusted for projected market and economic conditions and internal resource efficiency. (ii) Discount rates (approximately 11% – 12%) (2019: approximately 10%) – discount rates reflect management’s estimate of the risks specific to these entities. In determining the appropriate discount rate for each unit, consideration has been given to the applicable weighted average cost of capital for each unit. (iii) Growth rates (approximately 1% – 2%) (2019: approximately 3%) – the forecasted growth rates are based on published industry research and do not exceed the long-term average growth rate for the industries relevant to each unit. (iv) Revenue growth – the bases used to determine the future earnings potential are historical sales and expected growth rates of the relevant industry. (v) Extension of concession period – Pos Aviation Sdn. Bhd. has a concession with Malaysia Airport Holdings Berhad (“MAHB”) for ground and cargo handling services with anticipation that the concession period will be renewed from 2048 up to 2069.
Based on the impairment testing, impairment losses on the cost of investments in subsidiaries amounting to RM222,170,000 (2019: RM61,448,000) was made during the year.
253 FINANCIAL STATEMENTS
Notes to the Financial Statements
16. INVESTMENTS IN SUBSIDIARIES (CONTINUED) 16.1 Impairment testing for investments in subsidiaries (continued) Sensitivity to changes in assumptions (i) An increase of 1 percentage point in the discount rate used would have decreased the value-in-use by RM41,208,000; or (ii) A decrease of 1 percentage point in the terminal growth rate used would have decreased the value-in-use by RM29,398,000; or (iii) In the event that the extension of concession period is not being granted by MAHB, there would be a decrease in value-in-use by RM20,071,000.
17. INVESTMENTS IN ASSOCIATES
Group
2020 2019 RM’000 RM’000
Unquoted shares, at cost 45,650 7,650 Less: Accumulated impairment losses (7,650) (7,650)
38,000 –
Company
2020 2019 RM’000 RM’000
Unquoted shares, at cost 7,650 7,650 Less: Accumulated impairment losses (7,650) (7,650)
– –
254 POS MALAYSIA BERHAD ANNUAL REPORT 2020
17. INVESTMENTS IN ASSOCIATES (CONTINUED)
Effective ownership interest and voting interest
Country of 2020 2019 Name of entity incorporation Principal activities % %
World Cargo Airline Sdn. Bhd. Malaysia Provision of air cargo transport 49.0 – (f.k.a. Pos Asia Cargo Express Sdn. Bhd.)
Elpos Print Sdn. Bhd. Malaysia General printing business and is one of the 40.0 40.0 suppliers of the Group providing printing services
CEN Sdn. Bhd. Malaysia Investment holding 42.5 42.5
Pospay Exchange Sdn. Bhd. Malaysia Dormant 50.0 50.0
Subsidiary of World Cargo Airline Sdn. Bhd.:
Gading Sari Aviation Services Ltd. Malaysia Provision of aircraft leasing services 49.0 –
Subsidiary of CEN Sdn. Bhd.:
CEN Worldwide Sdn. Bhd. Malaysia Dormant 42.5 42.5
Details of the associates are as follows:
Group
2020 2019 RM’000 RM’000
Non-current assets 742 274 Current assets 98,263 8,027 Current liabilities (197,543) (68,763)
Net liabilities (98,538) (60,462)
Loss and total comprehensive expense (132) (33)
Included in the total comprehensive expense is: Revenue – 2,042
Group’s share of results Group’s share of loss (53) (11)
255 FINANCIAL STATEMENTS
Notes to the Financial Statements
17. INVESTMENTS IN ASSOCIATES (CONTINUED) 17.1 World Cargo Airline Sdn. Bhd. On 31 December 2020, World Cargo Airline Sdn. Bhd. (formerly known as Pos Asia Cargo Express Sdn. Bhd.) (“WCA”) and Gading Sari Aviation Services Limited ceased to be subsidiaries of the Group and are thereafter deemed to be associates of the Group upon dilution of shareholding in WCA from 100% to 49% (see Note 34).
17.2 Elpos Print Sdn. Bhd. On 30 June 2020, Elpos Print Sdn. Bhd. (“Elpos”), an inactive associate of Pos Malaysia Berhad with 40% shareholding, was under winding up. Upon completion of the winding up exercise, Elpos will cease to be an associate of the Group.
Unrecognised share of losses The Group discontinued equity accounting for CEN Sdn. Bhd., Elpos Print Sdn. Bhd. and Pospay Exchange Sdn. Bhd. as the losses exceeded the carrying amount of its respective investments. The Group has not recognised loss of RM53,000 (2019: RM11,000) in the current financial year and losses of RM39,671,000 (2019: RM39,618,000) cumulatively, since the Group has no obligation in respect of these losses.
18. OTHER INVESTMENTS
Membership Other Shares, Fund in clubs, financial unquoted investments unquoted asset in Malaysia Total Group RM’000 RM’000 RM’000 RM’000 RM’000
2020 Non-current Fair value through profit or loss – 475 9,796 – 10,271
Current Fair value through profit or loss 72,817 – – – 72,817
72,817 475 9,796 – 83,088
2019 Non-current Fair value through profit or loss – 501 – – 501
Current Fair value through profit or loss 117,761 – – 82 117,843
117,761 501 – 82 118,344
256 POS MALAYSIA BERHAD ANNUAL REPORT 2020
18. OTHER INVESTMENTS (CONTINUED)
Fund investments Total Company RM’000 RM’000
2020 Current Fair value through profit or loss 29,713 29,713
2019 Current Fair value through profit or loss 52,839 52,839
Fund investments Investment in money market instruments meet the requirement of financial assets measured at fair value through profit or loss (“FVTPL”) as the holder of the funds does not seek to collect merely contractual cash flows and relevant interests but also to hold for appreciation in the value of the funds.
Membership in clubs, unquoted Investments made in club memberships meet the requirement of financial assets measured at fair value through profit or loss (“FVTPL”) as the holder of the memberships does not seek to collect merely contractual cash flows and relevant interests but also to hold for appreciation in the value of the memberships.
Other financial asset Other financial asset relates to capital contributions provided to an associate. The instrument meets the requirement of fair value through profit or loss (“FVTPL”) as the holder of the capital contribution does not seek to collect contractual cash flow and relevant interest.
19. DERIVATIVE FINANCIAL ASSETS Derivative financial asset refers to the fair value for an irrevocable and unconditional put option at any time in an associate of the Group.
20. CONTRACT ASSETS The contract assets primarily relate to the Group’s rights to consideration for work completed on chartering services but not yet billed at the reporting date. Typically, the amount will be billed within 30 days and payment is expected within 30 days.
257 FINANCIAL STATEMENTS
Notes to the Financial Statements
21. TRADE AND OTHER RECEIVABLES
Group Company
2020 2019 2020 2019 Note RM’000 RM’000 RM’000 RM’000
Trade Trade receivables a 208,545 288,094 143,735 108,721 Ar-Rahnu financing b 336,500 287,731 – – Amount due from an associate c 19,829 – 1,414 – Amounts due from subsidiaries d – – 170,109 160,954 Amounts due from related companies e 31,674 38,184 712 826
596,548 614,009 315,970 270,501 Accrued receivables f 131,547 105,092 85,118 95,892
728,095 719,101 401,088 366,393
Non-trade Other receivables 1,622 20,278 234 1,006 Amounts due from associates c 10,221 – – – Amounts due from subsidiaries d – – 216,542 171,198 Deposits g 54,722 32,037 28,124 22,027 Staff advances 2,235 2,029 1,970 1,722 Goods and Services Tax (“GST”) receivables h 6,321 9,308 1,664 4,191
75,121 63,652 248,534 200,144
803,216 782,753 649,622 566,537
(a) Trade receivables Concentration of credit risk with respect to trade receivables is limited due to the Group’s large number of customers whereby sufficient allowance has been made for debts that are doubtful in collection. In addition, the Group has adopted a credit evaluation policy for all trade receivables. Due to these factors, management believes that no additional credit risk beyond amounts provided for collection losses is inherent in the Group’s trade receivables.
Included in trade receivables of the Group and the Company are amounts due from companies subject to common significant influence of RM5,752,000 (2019: RM24,335,000) and RM1,957,000 (2019: RM18,036,000) respectively. The amounts due from companies subject to common significant influence are unsecured, interest free and subject to normal trade terms.
258 POS MALAYSIA BERHAD ANNUAL REPORT 2020
21. TRADE AND OTHER RECEIVABLES (CONTINUED) (b) Ar-Rahnu financing Included in Ar-Rahnu financing of the Group is RM12,170,000 (2019: RM9,478,000) and RM324,216,000 (2019: RM278,103,000) in relation to safekeeping fee receivables and collateral value receivables from customers.
(c) Amounts due from associates Trade The trade amount due from an associate is unsecured, interest free and subject to normal trade terms.
Non-trade The non-trade amounts due from associates are unsecured, interest free and repayable on demand.
(d) Amounts due from subsidiaries Trade The trade amounts due from subsidiaries are unsecured, interest free and subject to normal trade terms.
Non-trade Included in non-trade amounts due from subsidiaries are RM213,359,000 (2019: RM170,966,000) which are unsecured, bears interest at range of 4.72% to 6.13% (2019: 4.72% to 6.13%) per annum and repayable on demand.
The remaining non-trade amounts due from subsidiaries of RM3,183,000 (2019: RM232,000) are unsecured, interest free and repayable on demand.
(e) Amounts due from related companies The amounts due from related companies are trade in nature, unsecured, interest free and have credit terms that vary from 30 days to 45 days.
(f) Accrued receivables Accrued receivables represent revenue recognised for services rendered, but yet to be billed. Billing will be done in accordance with respective terms and conditions agreed with customers.
(g) Deposits Included in the Group and the Company’s deposits are deposits receivable from an associate for transportation services provided by the associate amounting to RM11,598,000 (2019: RM6,048,000).
(h) Goods and Services Tax (“GST”) receivables Goods and Services Tax (“GST”) receivables refer to the returns due from the Royal Malaysian Customs Department (“RMCD”) in relation to input tax to be received by the Group and the Company amounting to RM6,321,000 (2019: RM9,308,000) and RM1,664,000 (2019: RM4,191,000) respectively.
259 FINANCIAL STATEMENTS
Notes to the Financial Statements
22. INVENTORIES
Group Company
2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000
Postal uniforms and consumables 4,653 4,874 3,491 2,940 POS 2020 merchandise – 10 – 10 Insertion and mailing materials 1,966 1,637 – – Digital certificates, CD ROM and smart cards 41 528 – –
6,660 7,049 3,491 2,950
Recognised in profit or loss: Inventories recognised as cost of sales 36,599 23,182 19,976 14,873 Inventories written down 704 1,478 – 1,101 Reversal of inventories written down – (529) – (529)
23. PREPAYMENT
Group Company
2020 2019 2020 2019 Note RM’000 RM’000 RM’000 RM’000
Advance payment – terminal dues a 164,288 239,760 164,288 239,760 Others 18,286 19,814 – 422
182,574 259,574 164,288 240,182
(a) Advance payment – terminal dues Advance payment represents advances paid to counterparties as required by Universal Postal Union Guidelines. Advance payments are unsecured, interest free and expected to be utilised against billings issued on an annual basis.
260 POS MALAYSIA BERHAD ANNUAL REPORT 2020
24. CASH AND CASH EQUIVALENTS
Group Company
2020 2019 2020 2019 Note RM’000 RM’000 RM’000 RM’000
Deposits placed with licensed banks a 97,737 46,982 31,076 17,667 Cash and bank balances b 218,752 166,619 113,054 83,781
Cash and cash equivalents in the statements of financial position 316,489 213,601 144,130 101,448 Cash attributable to assets classified as held for sale 25 3,099 – – – Bank overdrafts 27(d) (1,623) (1,223) – – Collections on behalf of agency payables and money order payables (24,428) (28,792) (24,406) (28,748) Restricted cash a (30,353) (7,038) (29,251) (7,002) Deposits pledged a (520) (1,693) – –
Cash and cash equivalents in the statements of cash flows 262,664 174,855 90,473 65,698
(a) Deposits placed with licensed banks Included in the deposits placed with licensed banks of the Group is RM520,000 (2019: RM1,693,000) pledged as security for performance of contracts.
Included in the deposits placed with licensed banks of the Group and the Company is RM28,987,000 (2019: RM6,738,000) required to be maintained in a Shariah-compliant Finance Service Reserve Account with Maybank Islamic Bank in respect to the Commodity Murabahah Term Financing-i Facility (see Note 27(b)) and RM1,366,000 (2019: RM300,000) required to be maintained in a Shariah-compliant account with HSBC Amanah Malaysia Berhad to facilitate the trade finance facilities requirements of the Group.
The weighted average effective annual interest rates of short-term deposits at the end of the financial year are as follows:
Group Company
2020 2019 2020 2019 % % % %
Deposits placed with licensed banks 2.1 2.7 1.9 2.6
(b) Cash and bank balances Included in cash and bank balances of the Group and of the Company are collections on behalf of agency payables and money order payables amounting to RM24,428,000 (2019: RM28,792,000) and RM24,406,000 (2019: RM28,748,000) respectively.
261 FINANCIAL STATEMENTS
Notes to the Financial Statements
25. DISPOSAL GROUP HELD FOR SALE A subsidiary within the Aviation operating segment is presented as disposal group held for sale following the commitment of the Group’s management during the financial year to a plan to sell 49% equity interest in that subsidiary. Efforts to sell the disposal group has commenced, and of which the fulfilment of the Condition Precedents in the Share Purchase Agreement is expected within the next 12 months from reporting date. At 31 December 2020, the assets and liabilities of the disposal group are as follows:
Group 2020 RM’000
Assets classified as held for sale Property, plant and equipment 7,068 Right-of-use assets 365 Inventories 45 Trade and other receivables 1,982 Cash and cash equivalents 3,099
12,559
Liabilities classified as held for sale Lease liabilities 416 Current tax liabilities 1,313 Trade and other payables 5,003
6,732
The carrying value of property, plant and equipment of the disposal group is the same as its carrying value before it was being reclassified to current asset.
262 POS MALAYSIA BERHAD ANNUAL REPORT 2020
26. SHARE CAPITAL AND RESERVES
Group and Company
Number Number Amount of shares Amount of shares 2020 2020 2019 2019 Note RM’000 ’000 RM’000 ’000
Issued and fully paid: Ordinary shares 1,071,392 782,777 1,071,392 782,777 Special Rights Redeemable Preference Share a * * * *
1,071,392 782,777 1,071,392 782,777
* Share capital includes the Special Rights Redeemable Preference Share of RM1.00.
(a) The Special Rights Redeemable Preference Share confers the following rights: (i) The Special Rights Redeemable Preference Share issued to the Government of Malaysia would enable the Government of Malaysia through the Minister of Finance (Incorporated), or its successors or any Minister, representative or any person acting on behalf, to ensure that certain major decisions affecting the operation of the Company are consistent with the Government’s policy. The Special Rights Redeemable Preference shareholder is entitled to receive notices of meetings but does not carry any right to vote at such meetings of the Company. The shareholder also has the right to require the Company to redeem the Special Rights Redeemable Preference Share at par at any time;
(ii) Certain matters, in particular, the alteration of the Articles of Association of the Company relating to the rights of the Special Rights Redeemable Preference shareholder, the dissolution of the Company, any substantial acquisitions and disposal of assets, amalgamation, merger and takeover, appointment of foreign directors, creation or issue of any shares which when aggregated with all other existing issued shares, carry ten percent of total voting rights, require prior consent of the Special Rights Redeemable Preference shareholder; and
(iii) In a distribution of capital or a winding-up of the Company, the Special Rights Redeemable Preference shareholder is entitled to the repayment of the capital paid-up on the Special Rights Redeemable Preference Share in priority to any repayment of capital to any other member. The Special Rights Redeemable Preference Share does not confer any right to participate in the capital or profits of the Company.
(b) Revaluation reserve The revaluation reserve relates to the revaluation of property, plant and equipment immediately prior to its reclassification as investment property.
(c) Foreign currency translation reserve The foreign currency translation reserve comprises all foreign currency differences arising from the translation of the financial statements of foreign operations.
(d) Post-employment benefits reserve Post-employment benefits reserve represents actuarial gains and losses arising from experience adjustments and changes in actuarial assumption.
263 FINANCIAL STATEMENTS
Notes to the Financial Statements
27. LOANS AND BORROWINGS
Group Company
2020 2019 2020 2019 Note RM’000 RM’000 RM’000 RM’000
Non-current Secured Hire purchase liabilities a 3,114 4,733 – – Islamic term loans b 63,193 79,546 – –
66,307 84,279 – –
Unsecured Islamic term loans b 162,000 209,500 162,000 206,000
228,307 293,779 162,000 206,000
Current Secured Hire purchase liabilities a 1,615 5,783 – – Islamic term loans b 14,750 14,467 – – Revolving credits c 61,000 66,500 – –
77,365 86,750 – –
Unsecured Islamic term loans b 88,000 47,500 88,000 44,000 Revolving credits c 271,300 170,300 32,000 69,000 Bank overdraft d 1,623 1,223 – – Invoice financing e 7,213 12,975 – –
368,136 231,998 120,000 113,000
445,501 318,748 120,000 113,000
673,808 612,527 282,000 319,000
(a) Hire purchase liabilities
2020 2019
Present Present Future value of Future value of minimum minimum minimum minimum lease lease lease lease payments Interest payments payments Interest payments Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Less than one year 1,833 (218) 1,615 6,221 (438) 5,783 Between one and five years 3,384 (270) 3,114 5,221 (488) 4,733
5,217 (488) 4,729 11,442 (926) 10,516
264 POS MALAYSIA BERHAD ANNUAL REPORT 2020
27. LOANS AND BORROWINGS (CONTINUED) (b) Islamic term loans Secured The secured term loans of the Group are in respect of Islamic Term Loan Financing Facility of Term Financing-i of USD19,432,000 (2019: USD22,952,000) (“Term Loan 1”). Term loan 1 is secured by way of assignment over the contracts and all its charter proceeds executed or to be excuted by the Group and first party charge over the vessels as disclosed in Note 11.2. In addition, Term Loan 1 is secured by a corporate guarantee by the Company. The effective profit rate at the end of the financial year for Term Loan 1 is 4.00% (2019: 4.00%) per annum.
Unsecured The unsecured term loan of the Group is in respect of Commodity Murabahah Term Financing-i of RM250,000,000 (2019: RM250,000,000) (“Term Loan 2”). The effective profit rate at the end of the financial year for Term Loan 2 is 3.50% (2019: 5.00%) per annum.
In the previous financial period, the unsecured term loan of the Group in respect of Commodity Murabahah Term Financing-i Facility of RM7,000,000 (“Term Loan 3”) has been repaid in full during the financial period. The effective profit rate at the end of the previous financial period for Term Loan 3 ranged from 4.70% to 4.87% per annum.
(c) Revolving credits Secured The secured revolving credits of the Group bear interest at rates ranging from 2.96% to 5.15% (2019: 4.40% to 6.08%) per annum. They are secured by way of fixed charges over certain property, plant and equipment of the Group as disclosed in Note 11.2.
Unsecured The unsecured revolving credits of the Group and Company bear interest at rates ranging from 3.57% to 4.93% (2019: 5.78% to 5.87%) per annum.
(d) Bank overdraft The unsecured bank overdrafts of the Group in respect of overdraft facilities granted bear interest at rates of 6.90% to 7.10% (2019: 8.15% to 8.35%) per annum.
(e) Invoice financing Invoice financing in respect of facility for the purpose of financing invoices payable to foreign supplier with maturity period of 109 days (2019: 109 days) with interest rates ranging from 3.50% to 3.54% (2019: 4.81% to 5.10%) per annum.
Loan covenant Based on the terms of the bank loan agreement in respect of an unsecured revolving credit and bank overdrafts of a logistics subsidiary company of RM35,000,000 and RM771,000 respectively, the gearing ratio covenant has exceeded the maximum threshold of 1.50 times during the financial year. The Bank has subsequently revised the gearing ratio covenant (which includes its definition) of the logistics subsidiary company to not exceeding 1.75 times, which was negotiated with the bank prior to the financial year ended 31 December 2020. Based on the letter from the Bank in February 2021, the gearing ratio stands at 1.36 times as at 31 December 2020 which is in compliance with the revised gearing ratio covenant.
265 FINANCIAL STATEMENTS
Notes to the Financial Statements
28. POST-EMPLOYMENT BENEFIT OBLIGATIONS A subsidiary of the Group operates an unfunded defined benefit plan for its unionised employees in Malaysia under the terms and conditions of a Collective Agreement. An actuarial valuation of the plan was carried out on 26 January 2021.
The amount recognised in the statement of financial position is determined as follows:
Group
2020 2019 RM’000 RM’000
Present value of unfunded obligations 1,318 638
The total expenses recognised in profit or loss are analysed as follows:
Group
Year ended 1.4.2019 to 31.12.2020 31.12.2019 Note RM’000 RM’000
Current service cost 94 4
Expenses recognised in profit or loss 5 94 4
The movement during the financial year in the amount recognised in the statement of financial position in respect of the defined benefit plans are as follows:
Group
2020 2019 RM’000 RM’000
At beginning of year/period 638 726
Included in profit or loss Current service cost 23 4 Past service adjustment 46 – Interest cost 25 –
94 4
Included in other comprehensive income Remeasurement loss – Actuarial loss arising from: – Experience adjustments 464 – – Financial assumptions 122 –
586 –
Other Benefits paid – (92)
At end of year/period 1,318 638
266 POS MALAYSIA BERHAD ANNUAL REPORT 2020
28. POST-EMPLOYMENT BENEFIT OBLIGATIONS (CONTINUED) Actuarial assumptions The principal actuarial assumptions used in respect of the subsidiary’s defined benefit plans were as follows (expressed as weighted averages):
2020 2019 % %
Discount rate 2.9 – 3.2 4.9 Future salary growth 6.0 6.0
The retirement benefit scheme is a final salary defined benefit plan in respect of the subsidiary with a guaranteed lump sum payment at retirement, which remains open to new entrants. The subsidiary follows the Malaysian Minimum Retirement Age Act 2012 whereby the benefits shall be paid at age of 60 for retirement scheme in Malaysia. There will be no benefits payable for service earned from age 55 to 60.
The Projected Unit Credit Method is used to determine the present value of the defined benefit obligation and the related current service cost. Under this method, a “projected accrued benefit” is calculated based upon service as of the date of valuation, and the benefit formula is based on future compensation and social security levels, using assumptions about the growth of those amounts projected to the age at which the employee is assumed to leave active service.
Sensitivity analysis Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the unfunded defined benefit obligation by the amounts shown below:
2020 2019
Increase Decrease Increase Decrease Group RM’000 RM’000 RM’000 RM’000
Unfunded defined benefit obligation Discount rate (1% movement) (74) 74 (34) 34 Future salary growth (1% movement) 73 (73) 5 (5)
The sensitivity analysis is based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the benefit liability recognised within the statement of financial position.
The methods and types of assumptions used by the subsidiary in preparing the sensitivity analysis did not change compared to the previous financial period.
267 FINANCIAL STATEMENTS
Notes to the Financial Statements
28. POST-EMPLOYMENT BENEFIT OBLIGATIONS (CONTINUED) Sensitivity analysis (continued) The expected contributions to defined benefit obligations are as follows:
Group
2020 2019 RM’000 RM’000
Less than one year 75 79 Between 1 and 5 years 797 212 Between 5 and 10 years 410 443
1,282 734
29. TRADE AND OTHER PAYABLES
Group Company
2020 2019 2020 2019 Note RM’000 RM’000 RM’000 RM’000
Non-current Non-trade Amounts due to subsidiaries e – – 37,172 40,303
Current Trade Trade payables a 447,674 508,759 380,808 429,188 Amount due to an associate b 25,146 – 25,146 –
472,820 508,759 405,954 429,188
Non-trade Amount due to immediate holding company c 1,520 1,520 1,500 1,500 Amounts due to related companies d 20,346 16,596 6,673 4,290 Amounts due to associates b 1,486 – – – Amounts due to subsidiaries e – – 176,940 56,474 Other payables and accruals: Unpresented money orders 25,689 25,464 25,689 25,464 Unpresented postal orders 5,490 6,226 5,490 6,226 Agency payables 19,384 25,952 19,362 25,908 Money order payables 5,044 2,840 5,044 2,840 Service payables 49,364 72,462 27,883 48,379 Other accruals f 299,199 215,083 241,200 166,730 Provision for liabilities and claims g 35,228 23,980 – – Deposits received 63,393 60,481 58,150 55,768
526,143 450,604 567,931 393,579
998,963 959,363 973,885 822,767
998,963 959,363 1,011,057 863,070
268 POS MALAYSIA BERHAD ANNUAL REPORT 2020
29. TRADE AND OTHER PAYABLES (CONTINUED) (a) Trade payables Included in trade payables of the Group and the Company are amounts due to companies subject to common significant influence of RM749,000 (2019: RM1,908,000) and RM130,000 (2019: RM95,000) respectively. The amounts due to companies subject to common significant influence are unsecured, interest free and subject to normal trade terms.
(b) Amounts due to associates Trade The trade amount due to an associate is unsecured, interest free and subject to normal trade terms.
Non-trade The amounts due to associates are unsecured, interest free and repayable on demand.
(c) Amount due to immediate holding company Amount due to immediate holding company is unsecured, interest free and repayable on demand.
(d) Amounts due to related companies Amounts due to related companies are unsecured, interest free and repayable on demand.
(e) Amounts due to subsidiaries The non-current amounts due to certain subsidiaries are unsecured, interest free and repayable by the end of the agreed repayment terms.
The current amounts due to subsidiaries are unsecured, interest free and repayable on demand. Included in amounts due to subsidiaries is amount due to a subsidiary amounting to RM107,000,000 (2019: nil) which is unsecured, bears interest at 3.57% per annum and repayable on demand.
(f) Other accruals Included in other accruals of the Group and of the Company are provision for mutual separation scheme amounting to RM41,556,000 (2019: nil), deferred government grant received and deferred income in relation to prepaid mail amounting to RM12,795,000 (2019: RM14,993,000) and RM32,526,000 (2019: RM11,041,000) respectively.
The government grant related to assets is amortised over the useful lives of the assets. During the financial year, the Group and the Company had amortised government grant related to assets as other income in profit or loss amounting to RM2,198,000 (2019: RM1,777,000). In the previous financial period, the Group and the Company had amortised government grants against expenses incurred as other income in profit or loss amounting to RM2,802,000.
(g) Provision for liabilities and claims Provision for liabilities and claims relate to provision made for losses, damages, expenses, costs and/or liabiltiies sustained by the Group.
269 FINANCIAL STATEMENTS
Notes to the Financial Statements
30. OPERATING SEGMENTS The Group has three reportable segments, as described below, which are the Group’s strategic business units. The strategic business units offer different products and services and are managed separately because they require different business processes and attend to different customer needs. For each of the strategic business units, the Group’s Chief Executive Officer (the chief operating decision maker) and the Board of Directors review internal management reports at least on a quarterly basis. The following summary describes the operations in each of the Group’s reportable segments:
• Postal Includes the provision of basic mail services for corporate and individual customers, courier, parcel and logistic solutions by sea, air and land to both national and international destinations, direct entry and transhipment and customised solutions such as Mailroom Management and Direct Mail and over-the-counter services for payment of bills and certain financial products and services.
• Aviation Includes cargo and ground handling, in-flight catering, freight and forwarding and air cargo transport.
• Logistics Includes haulage services, freight and forwarding, shipping agency and chartering services, warehousing and distribution services.
Other segment include the hybrid mail which provides data and document processing services, business of internet security products, solutions and services, Ar-Rahnu business including storage and safekeeping fees, buying and selling of investment precious metals, namely gold bars and dinars and rental income from investment properties held by the Group. None of these segments meets any of the quantitative thresholds for determining reportable segments in the current reporting period.
The accounting policies of the reportable segments are the same as described in Note 2.
Information regarding the operations of each reportable segment are shown below. Performance is measured based on segment results. Segment results are used to measure performance as management believes that such information is the most relevant in evaluating the results of certain segments relative to other entities that operate within those industries. Inter-segment pricing is determined on a negotiated basis.
Segment assets The total of segment assets is measured based on all assets (including goodwill) of a segment, as included in the internal management reports that are reviewed by the Group’s Chief Executive Officer. Segment total assets is used to measure the return of assets of each segment.
Segment liabilities The total of segment liabilities is measured based on all liabilities of a segment, as included in the internal management reports that are reviewed by the Group’s Chief Executive Officer. Segment total liabilities is used to measure the gearing of each segment.
Geographical segments The Group are predominantly in Malaysia and the oversea segment, Thailand, does not contribute to more than 10% of the consolidated revenue and assets. Accordingly, information by geographical segment is not presented.
Segment capital expenditure Segment capital expenditure is the total cost incurred during the financial year to acquire property, plant and equipment.
Major customers The Group has a diversified range of customers. A major customer which contributes revenue 14% (2019: 9%) of the Group’s total revenue is an e-commerce market player contributing to the postal and aviation segments.
270 POS MALAYSIA BERHAD ANNUAL REPORT 2020
30. OPERATING SEGMENTS (CONTINUED)
Other Postal Aviation Logistics operations Elimination Group 2020 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Revenue Total external revenue 1,737,337 163,038 313,925 117,962 – 2,332,262 Intersegment revenue 221,662 23,148 10,028 88,340 (343,178) –
Total revenue for reportable segments 1,958,999 186,186 323,953 206,302 (343,178) 2,332,262
Reportable segment results (125,478) (31,851) (17,867) 32,017 – (143,179) Impairment loss on goodwill – (99,886) (23,377) – – (123,263) Amortisation of intangible assets – (2,652) (2,474) – – (5,126) Impairment of property, plant and equipment (231) (11,075) (4,938) – – (16,244) Provision for mutual separation scheme (41,556) – – – – (41,556) Net loss on impairment of financial instruments and contract assets (7,102) (13,867) (31,869) (568) – (53,406) Gain on dilution of shareholding in a former subsidiary 79,282 – – – – 79,282
(95,085) (159,331) (80,525) 31,449 – (303,492)
Reportable segments assets 1,988,552 590,758 491,638 757,164 (658,587) 3,169,525
Reportable segments liabilities 1,490,041 328,056 364,500 502,109 (658,587) 2,026,119
Other information Capital expenditure of property, plant and equipment 67,875 4,209 6,108 73 – 78,265 Depreciation of property, plant and equipment (119,197) (17,442) (19,741) (6,235) – (162,615) Depreciation of right-of-use assets (60,282) (15,179) (13,328) (486) – (89,275) Amortisation of government grant 2,198 – – – – 2,198 Finance income 15,398 732 29 3,575 (14,584) 5,150 Finance costs (24,587) (13,959) (12,290) (13,985) 14,584 (50,237) Net fair value gain of other investments: Financial assets at fair value through profit or loss 672 – (82) 760 – 1,350 Taxation (336) 9,751 (6,363) (7,578) – (4,526)
271 FINANCIAL STATEMENTS
Notes to the Financial Statements
30. OPERATING SEGMENTS (CONTINUED)
Other Postal Aviation Logistics operations Elimination Group 2019 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Revenue Total external revenue 1,174,374 203,560 232,104 72,496 – 1,682,534 Intersegment revenue 141,843 12,940 12,504 40,324 (207,611) –
Total revenue for reportable segments 1,316,217 216,500 244,608 112,820 (207,611) 1,682,534
Reportable segment results (175,453) 22,507 (5,183) 21,919 – (136,210) Impairment loss on goodwill – (3,250) (90,600) – – (93,850) Amortisation of intangible assets – (3,108) (1,855) – – (4,963) Impairment of property, plant and equipment (203) – (900) (604) – (1,707) Net loss on impairment of financial instruments and contract assets (3,439) 2,870 (4,446) (135) – (5,150)
(179,095) 19,019 (102,984) 21,180 – (241,880)
Reportable segments assets 1,908,431 631,141 617,421 653,816 (465,625) 3,345,184
Reportable segment liabilities 1,462,223 200,479 387,278 308,916 (465,625) 1,893,271
Other information Capital expenditure of property, plant and equipment 65,091 12,578 8,470 1,628 – 87,767 Depreciation of property, plant and equipment (92,271) (11,901) (16,309) (4,967) – (125,448) Depreciation of right-of-use assets (45,988) (11,214) (9,250) (301) – (66,753) Amortisation of government grant 4,579 – – – – 4,579 Finance income 6,302 330 94 310 (4,775) 2,261 Finance costs (16,582) (8,228) (10,711) (5,568) 4,775 (36,314) Net fair value gain of other investments: Financial assets at fair value through profit or loss 2,316 – – 364 – 2,680 Taxation 28,426 (7,461) 1,231 4,105 – 26,301
272 POS MALAYSIA BERHAD ANNUAL REPORT 2020
31. FINANCIAL INSTRUMENTS 31.1 Categories of financial instruments The table below provides an analysis of financial instruments categorised as follows: (a) Fair value through profit or loss (“FVTPL”); and (b) Amortised cost (“AC”).
Carrying amount AC FVTPL 2020 RM’000 RM’000 RM’000
Financial assets Group Other investments 83,088 – 83,088 Derivative financial asset 1,626 – 1,626 Trade and other receivables * 798,877 798,877 – Cash and cash equivalents 316,489 316,489 –
1,200,080 1,115,366 84,714
Company Other investments 29,713 – 29,713 Trade and other receivables 647,958 647,958 – Cash and cash equivalents 144,130 144,130 –
821,801 792,088 29,713
Financial liabilities Group Loans and borrowings (673,808) (673,808) – Trade and other payables * (958,645) (958,645) –
(1,632,453) (1,632,453) –
Company Loans and borrowings (282,000) (282,000) – Trade and other payables (965,736) (965,736) –
(1,247,736) (1,247,736) –
* includes trade and other receivables and trade and other payables classified as disposal group held for sale of RM1,982,000 and RM5,003,000 respectively
273 FINANCIAL STATEMENTS
Notes to the Financial Statements
31. FINANCIAL INSTRUMENTS (CONTINUED) 31.1 Categories of financial instruments (continued)
Carrying amount AC FVTPL 2019 RM’000 RM’000 RM’000
Financial assets Group Other investments 118,344 – 118,344 Trade and other receivables 773,445 773,445 – Cash and cash equivalents 213,601 213,601 –
1,105,390 987,046 118,344
Company Other investments 52,839 – 52,839 Trade and other receivables 562,346 562,346 – Cash and cash equivalents 101,448 101,448 –
716,633 663,794 52,839
Financial liabilities Group Loans and borrowings (612,527) (612,527) – Trade and other payables (933,329) (933,329) –
(1,545,856) (1,545,856) –
Company Loans and borrowings (319,000) (319,000) – Trade and other payables (837,036) (837,036) –
(1,156,036) (1,156,036) –
274 POS MALAYSIA BERHAD ANNUAL REPORT 2020
31. FINANCIAL INSTRUMENTS (CONTINUED) 31.2 Net gains and losses arising from financial instruments
Group Company
Year ended 1.4.2019 to Year ended 1.4.2019 to 31.12.2020 31.12.2019 31.12.2020 31.12.2019 Group RM’000 RM’000 RM’000 RM’000
Net gains/(losses) on: Financial assets at fair value through profit or loss 1,350 2,680 563 2,316 Financial assets at amortised cost (55,049) (528) 3,893 4,587 Financial liabilities at amortised cost (31,386) (22,706) (18,444) (10,423)
(85,085) (20,554) (13,988) (3,520)
31.3 Financial risk management The Group’s overall financial risk management objective is to ensure the continuous growth in profitability and enhance shareholders’ value in a competitive and changing environment. At the same time, the Group is focused in performing its Universal Service Obligation as a provider of postal service throughout the country and to international destinations in an efficient and effective manner.
The Group has exposure to the following risks from its financial instruments: • Credit risk • Liquidity risk • Market risk
31.4 Credit risk Credit risk is the risk of a financial loss to the Group or the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The Group’s exposure to credit risk arises principally from its receivables from customers, Ar-Rahnu financing and fund investments.
Receivables Risk management objectives, policies and processes for managing the risk Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. The Group and the Company seek to control credit risk by setting counterparty limits and ensuring that services are made to customers with an appropriate credit history. Any receivables having significant balances more than 120 days, which are deemed to have higher credit risk, are monitored individually.
In relation to Ar-Rahnu financing, financing is given up to 75% of the collateral value placed with the Group. Ar-Rahnu financing is monitored on an ongoing basis and action will be taken (such as auctioning of collateral held) for long outstanding financing. Any receivables having significant balances of more than 6 months are monitored individually.
The gross carrying amounts of credit impaired trade receivables and contract assets are written off (either partially or full) when there is no realistic prospect of recovery. This is generally the case when the Group or the Company determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off. Nevertheless, trade receivables and contract assets that are written off could still be subject to debt recovery process.
There are no significant changes as compared to previous periods.
275 FINANCIAL STATEMENTS
Notes to the Financial Statements
31. FINANCIAL INSTRUMENTS (CONTINUED) 31.4 Credit risk (continued) Receivables (continued) Exposure to credit risk, credit quality and collateral As at the end of the reporting period, the maximum exposure to credit risk arising from receivables and contract assets are represented by the carrying amounts in the statements of financial position.
Management has taken reasonable steps to ensure that receivables and contract assets that are neither past due nor impaired are stated at their realisable values. A significant portion of these receivables are regular customers that have been transacting with the Group and the Company. The Group and the Company use ageing analysis to monitor the credit quality of the receivables. Any receivables having significant balances past due more than 120 days, which are deemed to have higher credit risk, are monitored individually.
Concentration of credit risk with respect to receivables and contract assets are limited due to the Group’s and the Company’s large number of customers, except for one customer which approximate to 10% (2019: 5%) of the Group’s receivables and 19% (2019: 10%) of the Company’s receivables. The maximum exposure to credit risk is represented by the carrying amounts in the statements of financial position.
The disclosure of the credit risk with exposure for trade receivables and contract assets as at the reporting period by geographic region are not disclosed as the Group’s and the Company’s businesses are mainly operated in Malaysia.
Recognition and measurement of impairment losses In managing credit risk of trade receivables, the Group manages its debtors and takes appropriate actions (including but not limited to legal actions) to recover long overdue balances. Generally, trade receivables will pay within 60 days. The Group’s debt recovery process is as follows: (a) Above 1 day past due after credit term, the Group will start to initiate a structured debt recovery process which is monitored by the sales management team; and (b) Above 150 days past due, the Group will commence a debt recovery process against the debtors.
The Group uses an allowance matrix to measure ECLs of trade receivables for all segments, except for international mail post office customers and Ar-Rahnu financing receivables where the customers have lower risk of default.
Loss rates are calculated using a ‘roll rate’ method based on the probability of a receivable progressing through successive stages of delinquency.
Loss rates are based on actual credit loss experience over the past three years. The Group also considers differences between (a) economic conditions during the period over which the historic data has been collected, (b) current conditions and (c) the Group’s view of economic conditions over the expected lives of the receivables. Nevertheless, the Group believes that these factors are immaterial for the purpose of impairment calculation for the year, other than for aviation segment’s trade receivable balances.
For international mail post office customers, the Group assessed the risk of loss individually based on the past trend of payments and terminal dues payable. All these customers have low risk of default as these international post office customers are regulated by the Universal Postal Union and have low credit risk.
For Ar-Rahnu financing, the debts have low credit risk as the customers place collaterals as part of the financing arrangements.
276 POS MALAYSIA BERHAD ANNUAL REPORT 2020
31. FINANCIAL INSTRUMENTS (CONTINUED) 31.4 Credit risk (continued) Receivables (continued) Recognition and measurement of impairment losses (continued) The following table provides information about the Group’s exposure to credit risk and ECLs for trade receivables, Ar-Rahnu financing, contract assets, amounts due from associate and related companies and accrued receivables as at the end of the reporting period:
Gross carrying Loss Net amount allowances balance Group RM’000 RM’000 RM’000
2020 Current (not past due) 67,499 (1,442) 66,057 1 – 30 days past due 51,160 (472) 50,688 31 – 120 days past due 53,971 (748) 53,223 121 – 150 days past due 47,212 (543) 46,669 More than 150 days past due 109,218 (8,379) 100,839
329,060 (11,584) 317,476 Credit impaired Individually impaired 480,277 (64,638) 415,639
809,337 (76,222) 733,115
Trade receivables 467,600 (76,005) 391,595 Ar-Rahnu financing 336,500 – 336,500 Contract assets 3,128 – 3,128 Trade receivables classified as held for sale 2,109 (217) 1,892
809,337 (76,222) 733,115
2019 Current (not past due) 119,679 (1,088) 118,591 1 – 30 days past due 42,983 (361) 42,622 31 – 120 days past due 52,792 (1,190) 51,602 121 – 150 days past due 7,327 (4,559) 2,768 More than 150 days past due 54,136 (4,654) 49,482
276,917 (11,852) 265,065 Credit impaired Individually impaired 476,628 (19,082) 457,546
753,545 (30,934) 722,611
Trade receivables 462,304 (30,934) 431,370 Ar-Rahnu financing 287,731 – 287,731 Contract assets 3,510 – 3,510
753,545 (30,934) 722,611
277 FINANCIAL STATEMENTS
Notes to the Financial Statements
31. FINANCIAL INSTRUMENTS (CONTINUED) 31.4 Credit risk (continued) Receivables (continued) Recognition and measurement of impairment losses (continued) The following table provides information about the Company’s exposure to credit risk and ECLs for trade receivables, amounts due from subsidiaries and related companies and accrued receivables as at the end of the reporting period:
Gross carrying Loss Net amount allowances balance Company RM’000 RM’000 RM’000
2020 Current (not past due) 31,169 (136) 31,033 1 – 30 days past due 21,489 (144) 21,345 31 – 120 days past due 47,143 (291) 46,852 121 – 150 days past due 34,897 (120) 34,777 More than 150 days past due 180,500 (6,540) 173,960
315,198 (7,231) 307,967 Credit impaired Individually impaired 103,792 (10,671) 93,121
418,990 (17,902) 401,088
2019 Current (not past due) 24,882 (116) 24,766 1 – 30 days past due 6,073 (111) 5,962 31 – 120 days past due 3,276 (260) 3,016 121 – 150 days past due 1,762 (101) 1,661 More than 150 days past due 4,025 (3,806) 219
40,018 (4,394) 35,624 Credit impaired Individually impaired 337,362 (6,593) 330,769
377,380 (10,987) 366,393
278 POS MALAYSIA BERHAD ANNUAL REPORT 2020
31. FINANCIAL INSTRUMENTS (CONTINUED) 31.4 Credit risk (continued) Receivables (continued) Recognition and measurement of impairment losses (continued) The movements in the allowance for impairment losses in respect of trade receivables, contract assets and amounts due from associate and related companies during the financial year are shown below:
Lifetime Credit ECL impaired Total RM’000 RM’000 RM’000
Group
Balance at 1 April 2019 11,290 14,019 25,309 Amounts written off – (2,475) (2,475) Net remeasurement of loss allowance 478 7,538 8,016 Currency translation differences 84 – 84
Balance at 31 December 2019/1 January 2020 11,852 19,082 30,934 Amounts written off – (6,822) (6,822) Net remeasurement of loss allowance (254) 53,484 53,230 Effect of dilution of shareholding in a former subsidiary (3) (1,106) (1,109) Currency translation differences (11) – (11)
Balance at 31 December 2020 11,584 64,638 76,222
Company
Balance at 1 April 2019 5,164 3,307 8,471 Net remeasurement of loss allowance (770) 3,286 2,516
Balance at 31 December 2019/1 January 2020 4,394 6,593 10,987 Net remeasurement of loss allowance 2,837 4,078 6,915
Balance at 31 December 2020 7,231 10,671 17,902
279 FINANCIAL STATEMENTS
Notes to the Financial Statements
31. FINANCIAL INSTRUMENTS (CONTINUED) 31.4 Credit risk (continued) Financial guarantees Risk management objectives, policies and processes for managing the risk The Company provides unsecured financial guarantees to banks in respect of banking facilities granted to certain subsidiaries. The Company monitors on an ongoing basis the results of the subsidiaries and repayments made by the subsidiaries.
Exposure to credit risk, credit quality and collateral The maximum exposure to credit risk amounts to RM351,715,000 (2019: RM236,012,000) representing the outstanding banking facilities of the subsidiaries as at the end of the reporting period.
As at the end of the reporting period, there was no indication that the subsidiaries would default on repayment.
The financial guarantees have not been recognised since the fair value on initial recognition was not material.
Cash and cash equivalents Risk management objectives, policies and processes for managing the risk The Group and the Company manage their balances and deposits with banks and financial institutions by monitoring their credit ratings on an ongoing basis.
These banks and financial institutions have low credit risks. Consequently, the Group and the Company are of the view that the loss allowance is not material and hence, it is not provided for.
Exposure to credit risk, credit quality and collateral As at the end of the reporting period, the maximum exposure to credit risk is represented by their carrying amounts in the statements of financial position.
Fund investments Risk management objectives, policies and processes for managing the risk The Group and the Company are exposed to counterparty credit risk from financial institutions through fund investment activities which comprise primarily money market placement. These exposures are managed in accordance with existing policies and guidelines that define the parameters within which the investment activities shall be undertaken in order to achieve the Group’s investment objective of preserving capital and generating optimal returns above appropriate benchmarks within allowable risk parameters.
Investments are only made with approved counterparties who met the appropriate rating and other relevant criteria and within approved credit limits.
Exposure to credit risk, credit quality and collateral The maximum exposure to credit risk is represented by their carrying amounts in the statements of financial position.
As at the end of the reporting period, the Group and the Company have only invested in short term domestic money market instrument. In view of the sound credit rating of counterparties, the Group and the Company do not expect any counterparties to fail to meet its obligation and hence, loss allowance is not provided for.
280 POS MALAYSIA BERHAD ANNUAL REPORT 2020
31. FINANCIAL INSTRUMENTS (CONTINUED) 31.4 Credit risk (continued) Other financial asset Risk management objectives, policies and processes for managing the risk Other financial asset relates to capital contributions provided to an associate which the Group does not seek to collect contractual cash flow and relevant interest.
Exposure to credit risk, credit quality and collateral As at the end of the reporting period, the maximum exposure to credit risk is represented by its carrying amount in the statement of financial position. In view that the associate has low credit risk, the Group does not expect that the other financial asset is not recoverable. Accordingly, no loss allowance is provided for.
Amounts due from associates Risk management objectives, policies and processes for managing the risk The Group and the Company transact with its associates. The Group and the Company monitor the ability of the associates to repay its debts on an individual basis.
Exposure to credit risk, credit quality and collateral As at the end of the reporting period, the maximum exposure to credit risk is represented by their carrying amounts in the statements of financial position.
Recognition and measurement of impairment loss Generally, the Group and the Company consider debts from associates have low credit risk. The Group and the Company assume that there is a significant increase in credit risk when an associate’s financial position deteriorates significantly. The Group and the Company consider an associate’s debt to be credit impaired when: • The associate is unlikely to repay its debts to the Group in full; • The associate’s debt is overdue for more than 365 days; or • The associate is continuously loss making and is having a deficit shareholders’ fund.
The Group and the Company determine the probability of default for these debts individually using internal information available.
As at 31 December 2020, no impairment loss has been recognised in relation to the amounts due from associates.
Other receivables Risk management objectives, policies and processes for managing the risk Credit risks on other receivables are mainly arising from deposits paid for office buildings, fixtures, aircraft leasing and ground handling equipment rented. These deposits will be received at the end of each lease terms. The Group and the Company manage the credit risk together with the leasing arrangement.
Exposure to credit risk, credit quality and collateral As at the end of the reporting period, the maximum exposure to credit risk is represented by their carrying amounts in the statements of financial position.
As at the end of the reporting period, the Group and the Company did not recognise any allowance for impairment losses.
281 FINANCIAL STATEMENTS
Notes to the Financial Statements
31. FINANCIAL INSTRUMENTS (CONTINUED) 31.4 Credit risk (continued) Amounts due from subsidiares Risk management objectives, policies and processes for managing the risk The Company transacts with subsidiaries. The Company monitors the results of the subsidiaries regularly.
Exposure to credit risk, credit quality and collateral As at the end of the reporting period, the maximum exposure to credit risk is represented by their carrying amounts in the statement of financial position.
Recognition and measurement of impairment loss Generally, the Company considers debts from subsidiaries have low credit risk. The Company assumes that there is a significant increase in credit risk when a subsidiary’s financial position deteriorates significantly. As the Company is able to determine the timing of payments of the subsidiaries’ debts when they are payable, the Company considers these debts to be in default when the subsidiaries are not able to pay when demanded. The Company considers a subsidiary’s debts to be credit impaired when: • The subsidiary is unlikely to repay its debts to the Company in full; • The subsidiary’s debt is overdue for more than 365 days; or • The subsidiary is continuously loss making and is having a deficit shareholders’ fund.
The Company determines the probability of default for these debts individually using internal information available.
The following table provides information about the exposure to credit risk for subsidiaries’ debts as at the end of the reporting period.
Gross Impairment carrying loss Net amount allowances balance Company RM’000 RM’000 RM’000
2020 Low credit risk 262,261 (45,719) 216,542
2019 Low credit risk 216,974 (45,776) 171,198
282 POS MALAYSIA BERHAD ANNUAL REPORT 2020
31. FINANCIAL INSTRUMENTS (CONTINUED) 31.5 Liquidity risk Liquidity risk is the risk that the Group and the Company will not be able to meet their financial obligations as they fall due. The Group’s and the Company’s exposure to liquidity risk arises principally from its various payables, lease liabilities, loans and borrowings.
It is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or at significantly different amounts.
Maturity analysis The table below summarises the maturity profile of the Group’s and the Company’s financial liabilities as at the end of the reporting period based on undiscounted contractual payments.
Carrying Contractual Contractual Under 1 1 – 5 amount interest rate cash flows year years Group RM’000 RM’000 RM’000 RM’000
2020 Non-derivative financial liabilities Hire purchase liabilities 4,729 3.08% – 3.20% 5,217 1,833 3,384 Islamic term loans 327,943 3.50% – 4.00% 348,853 113,143 235,710 Revolving credits 332,300 2.96% – 5.15% 332,300 332,300 – Invoice financing 7,213 3.50% – 3.54% 7,213 7,213 – Bank overdrafts 1,623 6.90% – 7.10% 1,623 1,623 – Lease liabilities 299,936 3.87% – 6.89% 414,513 82,660 331,853 Trade and other payables 958,645 – 958,645 958,645 –
1,932,389 2,068,364 1,497,417 570,947
2019 Non-derivative financial liabilities Hire purchase liabilities 10,516 3.08% – 3.40% 11,442 6,221 5,221 Islamic term loans 351,013 4.00% – 5.00% 385,580 77,313 308,267 Revolving credits 236,800 4.40% – 6.08% 236,800 236,800 – Invoice financing 12,975 4.81% – 5.10% 12,975 12,975 – Bank overdrafts 1,223 8.15% – 8.35% 1,223 1,223 – Lease liabilities 264,858 5.11% – 6.68% 339,226 75,835 263,391 Trade and other payables 933,329 – 933,329 933,329 –
1,810,714 1,920,575 1,343,696 576,879
283 FINANCIAL STATEMENTS
Notes to the Financial Statements
31. FINANCIAL INSTRUMENTS (CONTINUED) 31.5 Liquidity risk (continued) Maturity analysis (continued)
Carrying Contractual Contractual Under 1 1 – 5 amount interest rate cash flows year years Company RM’000 RM’000 RM’000 RM’000
2020 Non-derivative financial liabilities Islamic term loan 250,000 3.50% 262,627 95,495 167,132 Revolving credit 32,000 4.93% 32,000 32,000 – Lease liabilities 90,594 3.87% – 5.89% 100,024 39,229 60,795 Amount due to a subsidiary – interest bearing 107,000 3.57% 107,000 107,000 – Trade and other payables 858,736 – 858,736 821,564 37,172 Financial guarantees – – 351,715 351,715 –
1,338,330 1,712,102 1,447,003 265,099
2019 Non-derivative financial liabilities Islamic term loan 250,000 5.00% 272,183 55,524 216,659 Revolving credit 69,000 4.60% 69,000 69,000 – Lease liabilities 113,536 5.11% – 5.89% 125,220 44,569 80,651 Trade and other payables 837,036 – 837,036 796,733 40,303 Financial guarantees – – 236,012 236,012 –
1,269,572 1,539,451 1,201,838 337,613
31.6 Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and other prices that will affect the Group’s and the Company’s financial position or cash flows.
31.6.1 Currency risk The Group and the Company are exposed to foreign currency risk on sales and purchases that are denominated in a currency other than the respective functional currencies of Group entities. The currency giving rise to this risk is primarily U.S. Dollar (“USD”).
Risk management objectives, policies and processes for managing the risk The Group and the Company do not use any forward contracts to hedge against its exposure to foreign currency. The Group and the Company ensure that the net exposure is kept to an acceptable level by monitoring the fluctuations of the foreign currency.
284 POS MALAYSIA BERHAD ANNUAL REPORT 2020
31. FINANCIAL INSTRUMENTS (CONTINUED) 31.6 Market risk (continued) 31.6.1 Currency risk (continued) Exposure to foreign currency risk The Group’s and the Company’s exposure to foreign currency (a currency which is other than the functional currency of the Group entities) risk, based on carrying amounts as at the end of the reporting period are as follows:
Denominated in USD
2020 2019 RM’000 RM’000
Group
Trade and other receivables 266,664 107,282 Cash and cash equivalents 12,751 5,641 Trade and other payables (390,854) (438,691)
Exposure in the statement of financial position (111,439) (325,768)
Company
Trade and other receivables 278,175 94,990 Cash and cash equivalents 11,345 3,342 Trade and other payables (390,848) (419,801)
Exposure in the statement of financial position (101,328) (321,469)
Currency risk sensitivity analysis Foreign currency risk arises from Group entities which have a USD functional currency. The exposure to currency risk of Group entities which do not have a USD functional currency is not material and hence, sensitivity analysis is not presented.
A 10% (2019: 10%) strengthening of RM against USD at the end of the reporting period would have increased equity and post-tax profit or loss by the amounts shown below. The analysis assumes that all other variables, in particular interest rates, remained constant and ignores any impact of forecasted sales and purchases.
Profit or loss
Year ended 1.4.2019 to 31.12.2020 31.12.2019 USD RM’000 RM’000
Group 8,469 24,758 Company 7,701 24,432
A 10% (2019: 10%) weakening of RM against the USD at the end of the reporting period would have had equal but opposite effect on the above currencies to the amounts shown above, on the basis that all other variables remained constant.
285 FINANCIAL STATEMENTS
Notes to the Financial Statements
31. FINANCIAL INSTRUMENTS (CONTINUED) 31.6 Market risk (continued) 31.6.2 Interest rate risk The Group’s and the Company’s primary interest rate risks relates to debt securities, deposits placed with licensed banks, lease liabilities and borrowings.
The Group’s and the Company’s investments in deposits placed with licensed banks and short term receivables and payables are not significantly exposed to interest rate risk.
The Group’s and the Company’s variable rate borrowings are exposed to a risk of change in cash flows due to changes in interest rates.
The Company provides advances to its subsidiaries at interest rates range from 4.72% to 6.13% (2019: 4.72% to 6.13%) per annum and are repayable on demand.
The Company only obtains advances from a subsidiary at interest rate of 3.57% per annum and is repayable on demand.
Risk management objectives, policies and processes for managing the risk The Group and the Company adopt a policy to manage interest cost using a mix of fixed and floating rate debts.
The Group’s and the Company’s variable rate short term borrowings are exposed to a risk of change in interest rate.
Exposure to interest rate risk The interest rate profile of the Group’s and the Company’s significant interest-bearing financial instruments, based on carrying amounts as at the end of the reporting period are as follows:
Group Company
2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000
Fixed rate instruments Financial assets Amounts due from subsidiaries – – 213,359 170,966 Deposits placed with licensed banks 97,737 46,982 31,076 17,667
Financial liabilities Hire purchase liabilities (4,729) (10,516) – – Islamic term loans (77,943) (94,013) – –
Lease liabilities (299,936) (264,858) (90,594) (113,536)
(284,871) (322,405) 153,841 75,097
Floating rate instruments Financial liabilities Bank overdrafts (1,623) (1,223) – – Invoice financing (7,213) (12,975) – – Revolving credits (332,300) (236,800) (32,000) (69,000) Islamic term loans (250,000) (257,000) (250,000) (250,000) Amount due to a subsidiary – – (107,000) –
(591,136) (507,998) (389,000) (319,000)
286 POS MALAYSIA BERHAD ANNUAL REPORT 2020
31. FINANCIAL INSTRUMENTS (CONTINUED) 31.6 Market risk (continued) 31.6.2 Interest rate risk (continued) Interest rate risk sensitivity analysis (a) Fair value sensitivity analysis for fixed rate instruments The Group and the Company do not account for any fixed rate financial assets at fair value through profit or loss. Therefore, a change in interest rates at the end of the reporting period would not affect profit or loss.
(b) Cash flow sensitivity analysis for variable rate instruments A change of 100 basis points (“bp”) in interest rates at the end of the reporting period would have increased/ (decreased) equity and post-tax profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates, remained constant.
Profit or loss
Year ended 1.4.2019 to 31.12.2020 31.12.2019 RM’000 RM’000
Group Floating rate instruments 4,493 3,861
Company Floating rate instruments 2,956 2,424
31.6.3 Other price risk The Group’s and the Company’s primary other price risk relate to investments in short term money market instruments.
Risk management objectives, policies and processes for managing the risk The Group’s and the Company’s short term money market instruments are mainly placed with reputable financial institutions.
Other price risk sensitivity analysis The Directors are of the opinion that the other price risk is not significant and hence, sensitivity analysis is not presented.
31.7 Fair value information The carrying amounts of cash and cash equivalents, other investments, short-term receivables and payables and short-term borrowings reasonably approximate their fair values due to the relatively short-term nature of these financial instruments.
It was not practicable to estimate the fair value of the Group’s and the Company’s investment in unquoted shares due to the lack of comparable quoted market prices in an active market and the fair value cannot be reliably measured.
287 FINANCIAL STATEMENTS
Notes to the Financial Statements
31. FINANCIAL INSTRUMENTS (CONTINUED) 31.7 Fair value information (continued) The table below analyses financial instruments carried at fair value and those not carried at fair value for which fair value is disclosed, together with their fair values and carrying amounts shown in the statements of financial position.
Fair value of financial instruments Fair value of financial instruments carried at fair value not carried at fair value Total fair Carrying Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total value amount Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
2020 Financial assets Other investments 72,817 – 10,271 83,088 – – – – 83,088 83,088 Derivative financial asset – – 1,626 1,626 – – – – 1,626 1,626
72,817 – 11,897 84,714 – – – – 84,714 84,714
Financial liabilities Islamic term loans – – – – – – 348,853 348,853 348,853 327,943 Hire purchase liabilities – – – – – – 5,217 5,217 5,217 4,729
– – – – – – 354,070 354,070 354,070 332,672
2019 Financial assets Other investments 117,761 – 583 118,344 – – – – 118,344 118,344
Financial liabilities Islamic term loans – – – – – – 385,580 385,580 385,580 351,013 Hire purchase liabilities – – – – – – 11,442 11,442 11,442 10,516
– – – – – – 397,022 397,022 397,022 361,529
288 POS MALAYSIA BERHAD ANNUAL REPORT 2020
31. FINANCIAL INSTRUMENTS (CONTINUED) 31.7 Fair value information (continued)
Fair value of financial instruments Fair value of financial instruments carried at fair value not carried at fair value Total fair Carrying Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total value amount Company RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
2020 Financial assets Other investments 29,713 – – 29,713 – – – – 29,713 29,713 Amount due from subsidiaries – – – – – – 226,544 226,544 226,544 213,359
29,713 – – 29,713 – – 226,544 226,544 256,257 243,072
Financial liabilities Islamic term loan – – – – – – 262,627 262,627 262,627 250,000 Amounts due to subsidiaries – – – – – – 41,165 41,165 41,165 37,172
– – – – – – 303,792 303,792 303,792 287,172
2019 Financial assets Other investments 52,839 – – 52,839 – – – – 52,839 52,839
Financial liabilities Islamic term loan – – – – – – 272,183 272,183 272,183 250,000 Amounts due to subsidiaries – – – – – – 42,476 42,476 42,476 40,303
– – – – – – 314,659 314,659 314,659 290,303
Policy on transfer between levels The fair value of an asset to be transferred between levels is determined as of the date of the event or change in circumstances that caused the transfer.
Level 1 fair value Level 1 fair value is derived from quoted price (unadjusted) in active markets for identical financial assets or liabilities that the entity can access at the measurement date.
Level 2 fair value Level 2 fair value is estimated using inputs other than quoted prices included within Level 1 that are observable for the financial assets or liabilities, either directly or indirectly.
Non-derivative financial liabilities Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the end of the reporting period.
289 FINANCIAL STATEMENTS
Notes to the Financial Statements
31. FINANCIAL INSTRUMENTS (CONTINUED) 31.7 Fair value information (continued) Policy on transfer between levels (continued) Transfers between Level 1 and Level 2 fair values There has been no transfer between Level 1 and Level 2 fair values during the financial year (2019: no transfer in either directions).
Level 3 fair value Level 3 fair value is estimated using unobservable inputs for the financial assets and liabilities.
The following table shows the valuation techniques used in the determination of fair values within Level 3, as well as the key unobservable inputs used in the valuation models.
Financial instruments not carried at fair value
Type Description of valuation technique and input used
Hire purchase Discounted cash flows using current market rate of borrowing Islamic term loans Discounted cash flows using current market rate of borrowing Unquoted shares The fair value of unquoted shares is based on market comparison technique Amounts due to subsidiaries Discounted cash flows using current market rate of borrowing Derivative financial asset The fair value of derivative financial asset is based on a valuation model Other financial asset Discounted cash flows using discount rate reflecting current market assessments of the time value of money and the risks specific to the financial asset
32. CAPITAL MANAGEMENT The Group’s objectives when managing capital is to maintain a strong capital base and safeguard the Group’s ability to continue as a going concern, so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Directors monitor and are determined to maintain an optimal debt-to-equity ratio that complies with regulatory requirements.
Group
2020 2019 RM’000 RM’000
Total borrowings (Note 27) 673,808 612,527 Less: Cash and cash equivalents (net of pledged deposits, restricted cash and collections on behalf of agency payables and money order payables) (Note 24) (262,664) (174,855) Less: Fund investments (Note 18) (72,817) (117,761)
Net debt 338,327 319,911
Total equity 1,143,406 1,451,913 Debt-to-equity ratio 0.30 0.22
There were no changes in the Group’s approach to capital management during the financial year.
Under the requirement of Bursa Malaysia Practice Note No. 17/2005, the Company is required to maintain a consolidated shareholders’ equity equal to or not less than the 25% of the issued and paid-up capital (excluding treasury shares) and such shareholders’ equity is not less than RM40 million. The Company has complied with this requirement.
290 POS MALAYSIA BERHAD ANNUAL REPORT 2020
33. COMMITMENTS Capital expenditure commitments
Group Company
2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000
Property, plant and equipment Contracted but not provided for 42,558 22,155 40,215 19,158
34. DILUTION OF SHAREHOLDING IN A SUBSIDIARY During the financial year, a subsidiary of the Group, Pos Aviation Sdn. Bhd., entered into Share Sale and Share Subscription Agreement and Shareholder’s Agreement with Asia Cargo Network Sdn. Bhd. (“ACN”), for the subscription of shares in World Cargo Airline Sdn. Bhd. (“WCA”), where ACN will subscribe for 15,612,240 shares in WCA for a consideration of RM40,000,000 and acquire 106,786 preference shares in WCA, for a consideration of RM1.
The completion of the subscription of shares of WCA by ACN was on 31 December 2020, upon the condition precedents being met. Accordingly, the Group’s interest in WCA was diluted to 49%, resulting in WCA ceasing as a subsidiary and thereafter deemed to be an associate of the Group.
Effect of the dilution in interest in WCA
Note RM’000
Property, plant and equipment 207 Right of use assets 261 Trade and other receivables 87,718 Tax recoverable 80 Cash and cash equivalents 2,581 Trade and other payables (124,500) Lease liabilities (285)
Net liabilities disposed (33,938) Fair value of consideration 34.1 (38,000) Other financial asset 34.2 (9,796) Derivative financial asset recognised 34.3 (1,626)
(83,360) Foreign currency translation differences in the gain on disposal 11 Derecognition of goodwill of postal segment 4,067
Gain on disposal (net) (79,282)
Cash and cash equivalents disposed off Net cash outflow from dilution of shareholding (2,581)
The gain on dilution of shareholding in World Cargo Airline Sdn. Bhd. of RM79,282,000 is included as part of the other income of the Group.
291 FINANCIAL STATEMENTS
Notes to the Financial Statements
34. DILUTION OF SHAREHOLDING IN A SUBSIDIARY (CONTINUED) 34.1 Fair value of consideration is determined based on the minimum selling price of the remaining shareholder in WCA as stated in a put option assigned to the Group.
34.2 Other financial asset is derived by the estimated future cash flows of the underlying financial asset, discounted to its present value using a discount rate that reflects current market assessments of the time value of money and the risks specific to the financial asset.
34.3 Derivative financial asset refers to a put option to the Group as explained in Note 34.1 above. Management has used the relevant option valuation model to determine the fair value of the put option at the reporting date.
35. LITIGATION The major litigations of the Group as of reporting period are as follows:
35.1 On 28 September 2020, Gading Sari Aviation Services Limited, a Labuan based company (“Gading Sari”) and World Cargo Airline Sdn. Bhd. (formerly known as Pos Asia Cargo Express Sdn. Bhd.) (“WCA”) (collectively referred to as “the Defendants”) were served with a Writ of Summons and Statement of Claim, filed at the Kuala Lumpur High Court by the Bank of Utah (“the Plaintiff”). The Bank of Utah is a corporation organised under the laws of State of Utah.
Gading Sari is a wholly owned subsidiary of WCA, and WCA is an associate of Pos Aviation Sdn. Bhd. (“PASB”), which in turn is an associate of the Group.
The Plaintiff is claiming for, inter alia, the sum of USD8,782,964.00 (equivalent to RM36,422,951.70) being the losses, damages, expenses, costs and/or liabilities sustained by the Plaintiff, as of 23 July 2020, from the Defendants as a result of alleged multiple breaches and/or defaults under relevant contracts, which include amongst others, a Lease Agreement dated 13 February 2013, executed between the Plaintiff and Gading Sari, for the lease of an aircraft by the Plaintiff to Gading Sari (“Lease Agreement”) and a Sublease Agreement dated 15 March 2013, executed between Gading Sari and WCA, for the sublease of the same aircraft by Gading Sari to WCA (“Sublease Agreement”). Contractually, the Plaintiff is the Lessor, while Gading Sari and WCA are the Lessee and Sub-Lessee respectively.
The Defendants and its legal advisors have reviewed the aforesaid claims; and will take all the necessary steps to defend against the claims and ensure the rights of the Defendants are protected. The Defendants have filed their Statement of Defence and Counterclaim on 25 November 2020. The case management has been fixed on 16 April 2021. The trial dates have been fixed on 26 July 2022 until 29 July 2022.
35.2 The Group is defending an action brought by a shipping agency due to termination of contract without notice. If defence against the action is unsuccessful, the claim on business loss and legal costs could amount to approximately RM14,970,000.
In the Directors’ opinion, disclosure of any further information about the above matters would be prejudicial to the interests of the Group.
292 POS MALAYSIA BERHAD ANNUAL REPORT 2020
36. RELATED PARTIES Identity of related parties For the purposes of these financial statements, parties are considered to be related to the Group if the Group or the Company has the ability, directly or indirectly, to control or jointly control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Group or the Company and the parties are subject to common control. Related parties may be individuals or other entities. Common significant influence is defined as an entity that directly, or indirectly, through one or more intermediaries, controls, or is controlled by, or is under common control with the Company.
Related parties also include key management personnel defined as those persons having authority and responsibility for planning, directing and controlling the activities of the Group either directly or indirectly. The key management personnel include all the Directors of the Group and certain members of senior management of the Group.
The Group and the Company has related party relationship with its immediate holding company – DRB-HICOM Berhad, subsidiaries, related companies within the DRB-HICOM group of companies (“related companies”), companies subject to common significant influence, associates and key management personnel.
Significant related party transactions Related party transactions have been entered into in the normal course of business under negotiated terms.
The significant related party transactions of the Group and the Company, other than key management personnel compensation (see Note 6) are shown below. Significant related parties’ balances related to the below transactions are disclosed in Notes 21 and 29 to the financial statements, other than lease liabilities balances as disclosed below:
Group Company
Year ended 1.4.2019 to Year ended 1.4.2019 to 31.12.2020 31.12.2019 31.12.2020 31.12.2019 RM’000 RM’000 RM’000 RM’000
Transactions A. Immediate holding company Sales of services 73 51 73 51 Purchase of services (1,520) (2,000) (1,500) (2,000)
B. Subsidiaries Sales of services – – 75,258 39,550 Rental income – – 1,643 3 Purchase of services – – (34,038) (28,484) Finance income – – 4,231 3,537 Rental expense * – – (7,280) (9,415)
C. Related companies Sales of services 120,226 74,014 3,529 1,866 Rental income 13 12 13 12 Purchase of services (4,086) (12,110) (2,643) (7,200) Payment of lease liabilities (24,824) (24,282) (24,322) (23,924) Purchase of capital expenditures – (4) – –
* relates to short-term leases and low-value assets
293 FINANCIAL STATEMENTS
Notes to the Financial Statements
36. RELATED PARTIES (CONTINUED) Significant related party transactions (continued)
Group Company
2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000
Transactions (continued) D. Associates # Sales of services – – 348 138 Transportation cost – – (202,886) (41,829)
E. Companies subject to common significant influence Sales of services 31,909 73,584 1,483 54,231 Purchase of services (19,278) (7,947) (5,327) (5,620) Rental expense * (607) (12) (106) (12) Purchase of capital expenditures – (129) – –
Balances Related companies Lease liabilities 17,530 30,177 16,988 29,182
# Comparatives have been represented to conform with the current year’s presentation with World Cargo Airline Sdn. Bhd. now being an associate of the Group effective 31 December 2020. * Relates to short-term leases and low value assets.
294 POS MALAYSIA BERHAD ANNUAL REPORT 2020
37. SIGNIFICANT EVENTS 37.1 Dilution of shareholding in Pos Aviation Engineering Services Sdn. Bhd. During the financial year, Pos Aviation Sdn. Bhd. (“PASB”), a wholly owned subsidiary of Pos Malaysia Berhad, entered into a Share Purchase Agreement (“SPA”) and a Shareholders’ Agreement (“SHA”) with SIA Engineering Company Limited (“SIAEC”), in relation to the proposed divestment of 49% equity interest in Pos Aviation Engineering Services Sdn. Bhd. (“PAESSB”). PAESSB is a wholly owned subsidiary of PASB.
Pursuant to the SPA, PASB shall transfer 7,840,000 ordinary shares representing 49% equity interest in PAESSB to SIAEC, for an indicative cash consideration of RM10,087,000. The final consideration will be determined based on the latest available management financial statements prior to the completion date.
Efforts to sell the disposal group has commenced, and of which the fulfilment of the Condition Precedents in the Share Purchase Agreement is expected in the next 12 months from reporting date.
The assets and liabilities of PAESSB are presented as a disposal group held for sale following the commitment of the Group’s management to dispose partial equity interest in PAESSB as disclosed in Note 25 to the financial statements.
37.2 Effect of COVID-19 On 11 March 2020, the World Health Organisation declared the Coronavirus (“COVID-19”) outbreak to be a global pandemic. On 16 March 2020, the Government imposed the Movement Control Order (“MCO”) starting from 18 March 2020 to curb the spread of the COVID-19 outbreak in the country. The COVID-19 outbreak also resulted in travel restrictions, quarantines, social distancing and closures of non-essential services which have triggered significant disruptions to businesses worldwide, resulting in an economic slowdown. This has also brought economic uncertainties in Malaysia within which the Group and the Company operate.
The effect of the above pandemic has affected the financial performance of the Group and the Company for the financial year ended 31 December 2020. The Group and the Company are continuously monitoring and managing the Group’s and the Company’s operations to minimise any impacts that may arise from COVID-19.
38. COMPARATIVE FIGURES In the previous financial period, the Company changed its financial year end from 31 March to 31 December. Accordingly, the comparatives for the statements of profit or loss and other comprehensive income, changes in equity and cash flows as well as the comparatives in the notes to the financial statements relating to the statements of profit or loss and other comprehensive income for the financial period ended 31 December 2019 are not comparable to the results for the current financial year ended 31 December 2020.
295 FINANCIAL STATEMENTS Statement by Directors pursuant to Section 251(2) of the Companies Act 2016
In the opinion of the Directors, the financial statements set out on pages 200 to 295 are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as of 31 December 2020 and of their financial performance and cash flows for the financial year then ended.
Signed on behalf of the Board of Directors in accordance with a resolution of the Directors:
Dato’ Sri Syed Faisal Albar bin Syed A.R Albar Director
Ahmed Fairuz bin Abdul Aziz Director
Kuala Lumpur
Date: 6 April 2021
Statutory Declaration pursuant to Section 251(1)(b) of the Companies Act 2016
I, Azlan bin Ash’ari, the officer primarily responsible for the financial management of Pos Malaysia Berhad, do solemnly and sincerely declare that the financial statements set out on pages 200 to 295 are, to the best of my knowledge and belief, correct and I make this solemn declaration conscientiously believing the declaration to be true, and by virtue of the Statutory Declarations Act, 1960.
Subscribed and solemnly declared by the abovenamed Azlan bin Ash’ari, NRIC: 740925-14-5863, MIA CA 47472, at Kuala Lumpur on 6 April 2021.
Azlan bin Ash’ari
Before me:
296 POS MALAYSIA BERHAD ANNUAL REPORT 2020 Independent Auditors’ Report to the Members of Pos Malaysia Berhad (Registration No. 199101019653 (229990-M)) (Incorporated in Malaysia)
REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS Opinion We have audited the financial statements of Pos Malaysia Berhad, which comprise the statements of financial position as at 31 December 2020 of the Group and of the Company, and the statements of profit or loss and other comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 200 to 295.
In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Group and of the Company as at 31 December 2020, and of their financial performance and their cash flows for the year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia.
Basis for Opinion We conducted our audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our auditors’ report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence and Other Ethical Responsibilities We are independent of the Group and of the Company in accordance with the By-Laws (on Professional Ethics, Conduct and Practice) of the Malaysian Institute of Accountants (“By-Laws”) and the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants (including International Independence Standards) (“IESBA Code”), and we have fulfilled our other ethical responsibilities in accordance with the By-Laws and the IESBA Code.
Key Audit Matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the Group and of the Company for the current year. These matters were addressed in the context of our audit of the financial statements of the Group and of the Company as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Group level Valuation of goodwill and intangible assets Refer to Note 14 to the financial statements
The key audit matter How the matter was addressed in our audit
The Group has significant goodwill and intangible assets balances amounting We performed the following audit procedures, amongst to RM57,778,000 and RM86,575,000 respectively. others: • We assessed the significant and highly sensitive The Group performs annual goodwill impairment assessment by comparing assumptions to determine if they are appropriate and the aggregated carrying amount of the allocated goodwill of each cash- supportable by comparing those assumptions with each generating unit (“CGUs”) against the respective discounted cash flow of the CGUs’ internally derived information and external projections to determine the amount of impairment loss which should be market data; recognised, if any. • We evaluated the estimation uncertainty and performed a sensitivity analysis on the key assumptions; We identified the potential impairment of goodwill and intangible assets as • We involved Corporate Finance specialists to assess a key audit matter due to the following factors: appropriateness of discount rate and terminal growth • significance of the assets to the Group’s consolidated statement of rates applied in the respective discounted cash flow financial position; projections; and • impairment assessments prepared by the Group are complex and contain • We considered the adequacy of the disclosures of the assumptions, particularly profit margins, growth rates, discount rates, assumptions applied, which are particularly sensitive, revenue growth and the anticipation of the extension in the concession uncertain or require significant judgment, in the period for aviation segment, that are inherently uncertain; and assessment of goodwill and intangible assets • key assumptions included in the impairment assessments are highly impairment. sensitive as disclosed in Note 14.
297 FINANCIAL STATEMENTS Independent Auditors’ Report to the Members of Pos Malaysia Berhad (Registration No. 199101019653 (229990-M)) (Incorporated in Malaysia)
Key Audit Matters (continued)
Group and Company level Valuation of property, plant and equipment Refer to Note 11 to the financial statements.
The key audit matter How the matter was addressed in our audit
The Group and the Company have significant property, plant and We performed the following audit procedures, amongst others: equipment amounting to RM1,011,944,000 and RM588,989,000 • We challenged the Group’s and the Company’s assessment respectively. in identifying property, plant and equipment that have impairment indicators by evaluating whether internal and The Group and the Company performs impairment assessment for external indicators had been considered; Group entities that were reporting operating losses by comparing the • We assessed the significant and highly sensitive assumptions carrying amount of the Group entities property, plant and equipment to determine if they are appropriate and supportable by against the respective discounted cash flow projections to determine comparing those assumptions with internally derived information the amount of impairment loss which should be recognised, if any. and external market data; • We evaluated the estimation uncertainty and performed a We identified the potential impairment of property, plant and equipment sensitivity analysis on the key assumptions; as a key audit matter due to the following factors: • We involved Corporate Finance specialists to assess • significance of the assets to the Group’s and the Company’s appropriateness of discount rate and terminal growth rates statements of financial position; applied in the respective discounted cash flow projections; • impairment assessments prepared by the Group and the Company and are complex and contain assumptions, particularly profit margin, • We considered the adequacy of the disclosures of the growth rates, discount rates, revenue growth and capital expenditure assumptions applied, which are particularly sensitive, uncertain for expansion that are inherently uncertain; and or require significant judgment, in the assessment of • key assumptions included in the impairment assessments are impairment of property, plant and equipment. highly sensitive as disclosed in Note 11.
Group and Company level Going concern basis of accounting Refer to Note 1(b) to the financial statements.
The key audit matter How the matter was addressed in our audit
The Group and the Company incurred net losses of RM308,018,000 We performed the following audit procedures, amongst others: and RM377,938,000 respectively during the financial year ended • We evaluated management’s assessment of the Group’s and 31 December 2020, and as of that date, the current liabilities of the Company’s ability to continue as going concern by the Group and of the Company exceeded their current assets by performing an analysis of the cash flow forecasts prepared RM94,707,000 and RM127,032,000 respectively. by management, for the next 12 months from reporting date, and assessed the reasonableness of assumptions used in Notwithstanding the above conditions, management has assessed developing these forecasts; that the use of the going concern assumption is appropriate as: • We assessed the significant and highly sensitive assumptions • the Group and the Company would be able to generate sufficient to determine if they are appropriate and supportable by operating cash flows; comparing those assumptions with management’s internally • the Group and the Company would be able to fulfil its obligations derived information and external market data; and liabilities as and when such obligations and liabilities fall • We assessed the availability of banking facilities during the due; and forecasted period by inspecting relevant bank facility • The Group and the Company have available banking facilities to agreements; and drawdown to meet the Group’s and the Company’s operational • We considered the appropriateness of the disclosures made and financial needs. in the financial statements in relation to the management’s assessment of the appropriateness of the use of going concern The assessment of the appropriateness of the Group’s and the assumption in their preparation of the Group’s and the Company’s going concern assumption requires significant management Company’s financial statements. judgement and estimates, including the management’s cash flow forecasts of the Group and the Company.
298 POS MALAYSIA BERHAD ANNUAL REPORT 2020
Key Audit Matters (continued)
Group and Company level Recoverability of trade receivables Refer to Note 21 to the financial statements.
The key audit matter How the matter was addressed in our audit
The Group and the Company have significant trade receivables We performed the following audit procedures, amongst others: amounting to RM728,095,000 and RM401,088,000 respectively. • We tested the accuracy of the underlying information of the trade receivables ageing used to assess the adequacy of We identified the valuation of trade receivables as a key audit impairment loss to the trade receivables; matter due to the following factors: • We assessed the policy on impairment loss on trade receivables • significance of the assets to the Group’s and the Company’s of the Group and the Company; statements of financial position; and • We challenged the Group’s and the Company’s basis and • significant judgment involved in the assessment of the assessment in determining whether there exists an objective recoverability of debtors evidence of impairment loss of trade receivables; • We assessed management’s expected loss rate assessment on trade receivables; and • We considered the adequacy of the Group’s and the Company’s disclosures about the degree of estimation involved in arriving at the impairment loss of trade receivables.
Company level Valuation of investments in subsidiaries Refer to Note 16 to the financial statements.
The key audit matter How the matter was addressed in our audit
The Company has significant investments in subsidiaries amounting We performed the following audit procedures, amongst others: to RM573,166,000. • We challenged the Company’s assessment in identifying investments that have impairment indicators by evaluating We identified the potential impairment of investments in subsidiaries whether internal and external indicators had been considered; as a key audit matter due to the following factors: • We assessed the significant and highly sensitive assumptions • significance of the assets to the Company’s statement of financial to determine if they are appropriate and supportable by position; comparing those assumptions with internally derived information • impairment assessments prepared by the Company are complex and external market data; and contain assumptions, particularly profit margin, growth rate, • We evaluated the estimation uncertainty and performed a discount rates, revenue growth and the anticipation of the sensitivity analysis on the key assumptions; extension in the concession period for aviation segment that • We involved Corporate Finance specialists to assess are inherently uncertain; and appropriateness of discount rate and terminal growth rates • key assumptions included in the impairment assessments are applied in the respective discounted cash flow projections; and highly sensitive as disclosed in Note 16. • We considered the adequacy of the disclosures of the assumptions applied, which are particularly sensitive, uncertain or require significant judgment, in the assessment of impairment of investments in subsidiaries.
299 FINANCIAL STATEMENTS Independent Auditors’ Report to the Members of Pos Malaysia Berhad (Registration No. 199101019653 (229990-M)) (Incorporated in Malaysia)
Information Other than the Financial Statements and Auditors’ Report Thereon The Directors of the Company are responsible for the other information. The other information comprises the information included in the Directors’ Report and Statement on Risk Management and Internal Control, but does not include the financial statements of the Group and of the Company and our auditors’ report thereon, which we obtained prior to the date of this auditors’ report, and the remaining parts of the annual report, which are expected to be made available to us after that date.
Our opinion on the financial statements of the Group and of the Company does not cover the other information and we do not and will not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements of the Group and of the Company, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements of the Group and of the Company or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed on the other information that we obtained prior to the date of this auditors’ report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
When we read the remaining parts of the annual report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to the Directors of the Company and take appropriate actions in accordance with approved standards on auditing in Malaysia and International Standards on Auditing.
Responsibilities of the Directors for the Financial Statements The Directors of the Company are responsible for the preparation of financial statements of the Group and of the Company that give a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia. The Directors are also responsible for such internal control as the Directors determine is necessary to enable the preparation of financial statements of the Group and of the Company that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements of the Group and of the Company, the Directors are responsible for assessing the ability of the Group and of the Company to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but to do so.
Auditors’ Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements of the Group and of the Company as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with approved standards on auditing in Malaysia and International Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the financial statements of the Group and of the Company, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal control of the Group and of the Company. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Directors.
300 POS MALAYSIA BERHAD ANNUAL REPORT 2020
Auditors’ Responsibilities for the Audit of the Financial Statements (continued) • Conclude on the appropriateness of the Directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the ability of the Group or of the Company to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements of the Group and of the Company or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Group or the Company to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the financial statements of the Group and of the Company, including the disclosures, and whether the financial statements of the Group and of the Company represent the underlying transactions and events in a manner that gives a true and fair view. • Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial statements of the Group. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with the Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the Directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.
From the matters communicated with the Directors, we determine those matters that were of most significance in the audit of the financial statements of the Group and of the Company for the current year and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our auditors’ report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements In accordance with the requirements of the Companies Act 2016 in Malaysia, we report that a subsidiary of which we have not acted as auditors is disclosed in Note 16 to the financial statements.
Other Matter This report is made solely to the members of the Company, as a body, in accordance with Section 266 of the Companies Act 2016 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.
KPMG PLT Vengadesh A/L Jogarajah (LLP0010081-LCA & AF 0758) Approval Number: 03337/12/2021 J Chartered Accountants Chartered Accountant
Petaling Jaya, Selangor
Date: 6 April 2021
301 OTHER INFORMATION Analysis of Shareholdings as at 31 March 2021
Total number of issued shares : 782,776,836 ordinary shares and 1 Special Rights Redeemable Preference Share Voting Rights : One vote for every ordinary share, on a poll voting (The Special Rights Redeemable Preference Share does not carry any voting right except in circumstances set out in the Company’s Constitution) No. Shareholders : 27,066
SUBSTANTIAL SHAREHOLDERS (Based on the Register of Substantial Shareholders)
Direct Indirect
Substantial Shareholders No. of shares % No. of shares %
1. DRB–HICOM Berhad 172,997,399 22.10 245,750,751* 31.39 2. HICOM Holdings Berhad 245,750,751 31.39 – – 3. Kumpulan Wang Persaraan (Diperbadankan) 43,562,400 5.57 138,800 0.02 4. Tan Sri Dato’ Seri Syed Mokhtar Shah bin Syed Nor – – 418,748,150# 53.49 5. Etika Strategi Sdn Bhd – – 418,748,150^ 53.49
Notes: * Deemed interested pursuant to Section 8 of the Companies Act 2016 by virtue of its interest in HICOM Holdings Berhad. # Deemed interested pursuant to Section 8 of the Companies Act 2016 by virtue of his interest in DRB-HICOM Berhad via Etika Strategi Sdn Bhd. ^ Deemed interested pursuant to Section 8 of the Companies Act 2016 by virtue of its interest in DRB-HICOM Berhad.
DISTRIBUTION OF SHAREHOLDINGS
No. of % of No. of % of Issued Shareholders/ Shareholders/ Holdings Shares Share Capital Depositors Depositors
Less than 100 185,584 0.02 4,828 17.84 100 to 1,000 4,666,904 0.60 7,391 27.30 1,001 to 10,000 49,375,086 6.31 11,029 40.75 10,001 to 100,000 105,289,874 13.45 3,464 12.80 100,001 to less than 5% of issued shares 164,489,838 21.01 351 1.30 5% and above of issued shares 458,769,550 58.61 3 0.01
Total 782,776,836 100.00 27,066 100.00
302 POS MALAYSIA BERHAD ANNUAL REPORT 2020
30 LARGEST REGISTERED SHAREHOLDERS
No. Name of Shareholders No. of Shares %
1. RHB NOMINEES (TEMPATAN) SDN BHD 245,750,751 31.39 MALAYSIAN TRUSTEES BERHAD PLEDGED SECURITIES ACCOUNT FOR HICOM HOLDINGS BERHAD
2. RHB NOMINEES (TEMPATAN) SDN BHD 172,997,399 22.10 MALAYSIAN TRUSTEES BERHAD PLEDGED SECURITIES ACCOUNT FOR DRB-HICOM BERHAD
3. KUMPULAN WANG PERSARAAN (DIPERBADANKAN) 40,021,400 5.11
4. AMANAHRAYA TRUSTEES BERHAD 10,000,000 1.28 AMANAH SAHAM BUMIPUTERA
5. CITIGROUP NOMINEES (TEMPATAN) SDN BHD 9,523,300 1.22 EMPLOYEES PROVIDENT FUND BOARD
6. AMSEC NOMINEES (TEMPATAN) SDN BHD 6,790,300 0.87 PLEDGED SECURITIES ACCOUNT FOR KOK CHIN SIANG
7. CARTABAN NOMINEES (ASING) SDN BHD 6,000,000 0.77 EXEMPT AN FOR UNION BANCAIRE PRIVEE, UBP SA, SINGAPORE BRANCH
8. HSBC NOMINEES (ASING) SDN BHD 4,869,000 0.62 JPMCB NA FOR VANGUARD EMERGING MARKETS STOCK INDEX FUND
9. CITIGROUP NOMINEES (TEMPATAN) SDN BHD 4,646,300 0.59 UNIVERSAL TRUSTEE (MALAYSIA) BERHAD FOR PRINCIPAL ISLAMIC SMALL CAP OPPORTUNITIES FUND
10. HSBC NOMINEES (ASING) SDN BHD 4,106,190 0.52 JPMCB NA FOR VANGUARD TOTAL INTERNATIONAL STOCK INDEX FUND
11. LIM BOON LIAT 3,000,000 0.38
12. ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHD 2,655,000 0.34 PLEDGED SECURITIES ACCOUNT FOR INBAMANAY A/P M J ARUMANAYAGAM (8061712)
13. MAYBANK NOMINEES (TEMPATAN) SDN BHD 2,319,000 0.30 MAYBANK TRUSTEES BERHAD FOR PRINCIPAL SMALL CAP OPPORTUNITIES FUND (240218)
14. CHANG YEE FONG 2,300,000 0.29
15. AMANAHRAYA TRUSTEES BERHAD 2,171,400 0.28 AC PRINCIPAL ISLAMIC MALAYSIA OPPORTUNITIES FUND
16. AMANAHRAYA TRUSTEES BERHAD 2,164,000 0.28 AC PRINCIPAL ISLAMIC ENHANCED OPPORTUNITIES FUND
17. ONG HUNG HOCK 2,000,000 0.26
18. UOB KAY HlAN NOMINEES (ASING) SDN BHD 1,979,450 0.25 EXEMPT AN FOR UOB KAY HIAN PTE LTD (A/C CLIENTS)
19. DEVA DASSAN SOLOMON 1,881,925 0.24
20. JAROD CHOO CHEE CHEONG 1,828,000 0.23
21. HSBC NOMINEES (ASING) SDN BHD 1,711,800 0.22 JPMCB NA FOR VANGUARD FIDUCIARY TRUST COMPANY INSTITUTIONAL TOTAL INTERNATIONAL STOCK MARKET INDEX TRUST II
303 OTHER INFORMATION
Analysis of Shareholdings as at 31 March 2021
No. Name of Shareholders No. of Shares %
22. CITIGROUP NOMINEES (TEMPATAN) SDN BHD 1,705,300 0.22 GREAT EASTERN LIFE ASSURANCE (MALAYSIA) BERHAD (LPF)
23. PUBLIC NOMINEES (TEMPATAN) SDN BHD 1,661,900 0.21 PLEDGED SECURITIES ACCOUNT FOR LIEW JUN KUAN (E-PDG)
24. CITIGROUP NOMINEES (ASING) SDN BHD 1,639,690 0.21 CBNY FOR DIMENSIONAL EMERGING MARKETS VALUE FUND
25. CGS-CIMB NOMINEES (TEMPATAN) SDN BHD 1,500,000 0.19 PLEDGED SECURITIES ACCOUNT FOR TEH SWEE HENG (MM1118)
26. PUBLIC INVEST NOMINEES (TEMPATAN) SDN BHD 1,500,000 0.19 PLEDGED SECURITIES ACCOUNT FOR DEVA DASSAN SOLOMON (M)
27. CITIGROUP NOMINEES (TEMPATAN) SDN BHD 1,494,400 0.19 GREAT EASTERN LIFE ASSURANCE (MALAYSlA) BERHAD (LGF)
28. CARTABAN NOMINEES (ASING) SDN BHD 1,372,800 0.18 SSBT FUND J724 FOR SPDR S&P EMERGING MARKETS ETF
29. ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHD 1,200,000 0.15 PLEDGED SECURITIES ACCOUNT FOR HELINA SHANTI SOLOMON (7001761)
30. DB (MALAYSIA) NOMINEE (TEMPATAN) SENDIRIAN BERHAD 1,104,200 0.14 DEUTSCHE TRUSTEES MALAYSIA BERHAD FOR EASTSPRING INVESTMENTSDANA DINAMIK
TOTAL 541,893,505 69.22
DIRECTORS’ DIRECT AND INDIRECT INTERESTS IN SHARES IN THE COMPANY AND ITS RELATED CORPORATION (Based on the Register of Directors’ Shareholdings)
None of the Directors in office as at 31 March 2021 held any interest in shares in the Company and its related companies.
304 POS MALAYSIA BERHAD ANNUAL REPORT 2020
List of Top 10 Properties
Net Book Value as at Land Area Gross Floor 31 Registered (square Area (square December Date of No Location Subject Property Owner metre) metre) 2020 (RM) revaluation
1 International Southern Support Zone, KL Pos Aviation 189,550 67,607 91,182,963 – Airport International Airport, 64000 Sdn Bhd Sepang, Selangor
2 Section 28, HS(D) 316566 PT 856 Section Pos 40,093 Not 71,065,687 – Shah Alam 28, Pekan Hicom, District of Malaysia applicable Petaling, State of Selangor Berhad
3 Shah Alam HS(D) 98478, PT 1, Section PMB 89,891 59,087 47,176,462 – 21, Town of Shah Alam, Properties District of Petaling, State of Sdn Bhd Selangor
4 Sadao, Title Deeds (“Chanode” in K.P.B. 325,391 Not 58,306,726 – Songkhla, Thailand) Nos, 36822 to Sadao I.C.D applicable Thailand 36828, Lot/Survey Nos. Company 104/1976, 24/1977, 25/1978, Limited 62/1979, 61/1980, 60/1981 and 59/1982, respectively, Sub-District of Samnak Kham, District of Sadao, Songkhla Province, Thailand
5 Pelabuhan HS(D) 116399, PT225, Town Pos 135,257 7,161 44,968,437 – Klang of Sultan Sulaiman, District of Logistics Klang, State of Selangor Berhad
6 Brickfields PN 27419, Lot 361, Section Pos 10,922 3,914 10,852,467 – 72, Town of Kuala Lumpur, Malaysia & District of Kuala Lumpur, Services Wilayah Persekutuan Kuala Holdings Lumpur Berhad
305 OTHER INFORMATION
List of Top 10 Properties
Net Book Value as at Land Area Gross Floor 31 Registered (square Area (square December Date of No Location Subject Property Owner metre) metre) 2020 (RM) revaluation
7 Greentown, PN 153721, Lot No. 2351N, 1,500 Not 24.09.2020 Ipoh Town of Ipoh (N), District of applicable Kinta, State of Perak
PN 155068, Lot 2436N, Town 1,310 Not 24.09.2020 of Ipoh (N), District of Kinta, applicable State of Perak
PN 155069, Lot 2437N, Town 1,424 Not 24.09.2020 of Ipoh (N), District of Kinta, applicable State of Perak
PN 155073, Lot No. 2740N, 1,507 Not 24.09.2020 Effivation Town of Ipoh (N), District of applicable 19,500,000 Sdn Bhd Kinta, State of Perak
PN 4738, Lot 31448, Town of 2,722 Not 24.09.2020 Ipoh (S), District of Kinta, applicable State of Perak
GRN 55283, Lot 31449, Town 3,010 Not 24.09.2020 of Ipoh (N), District of Kinta, applicable State of Perak
PN 153337, Lot 35120, Town 2,228 Not 24.09.2020 of Ipoh (N), District of Kinta, applicable State of Perak
8 Taman PN 10881, Lot 20023, Mukim Pos 12,348 7,718 18,552,033 – Perindustrian 13, District of Seberang Perai Malaysia Bukit Tengah, State of Pulau Pinang Berhad Minyak, Pulau Pinang
9 KLIA HS (D) 7443, PT27, Town of Pos 36,950 18,729 15,447,198 – Lapangan Terbang Malaysia Antarabangsa Sepang, District Berhad of Sepang, State of Selangor
10 Prai HS(D) 44443, PT 2789, Mukim Diperdana 40,485 9,955 11,819,223 – Industrial 01, District of Seberang Perai Kontena Estate Tengah, State of Pulau Pinang Sdn Bhd
306 POS MALAYSIA BERHAD ANNUAL REPORT 2020
Glossary
AAPG Audit and Assurance Practice Guide CX Customer Experience AATL Adobe Approved Trust List DHAS DRB-HICOM Auto Solutions Sdn Bhd ABC Anti-Bribery and Corruption DHCV DRB-HICOM Commercial Vehicles Sdn Bhd ABC CoCo ABC Code of Conduct DHLSB DRB-HICOM Leasing Sdn Bhd ABMS Anti-Bribery Management System DFTZ Digital Free Trade Zone AC Amortised Cost EBITDA Earnings Before Interest, Taxes, Depreciation and Amortisation ACMSB Automotive Corporation (Malaysia) Sdn Bhd ECL Expected Credit Loss ACN Asia Cargo Network Sdn Bhd EES Economic, Environmental and Social AFES Alam Flora Environmental Services Sdn Bhd EP Entrepreneurship Programme AGM Annual General Meeting EPS Earnings Per Share AHU Air Handling Unit ERM Enterprise Risk Management AI Artificial Intelligence eSG Electronic Stored Goods AICPA American Institute of Certified Public Accountants FCTR Financial Currency Translation Reserve AML Anti-Money Laundering FPX Financial Process Exchange APT Asia Pacific Telecommunity FVTPL Fair Value Through Profit or Loss ASEAN Association of Southeast Asian Nations FY2020 Financial Year 2020 B2B Business-to-Business GAC Government Advisory Committee BAC Board Audit Committee GCEO Group Chief Executive Officer BDC Board Digital-First Committee GCFO Group Chief Financial Officer BEEA Board Evaluation and Effectiveness Assessment GHESS Ground Handling & Engineering Service System BERNAS Padiberas Nasional Berhad GMB Gas Malaysia Berhad BMMB Bank Muamalat Malaysia Berhad GRI Global Reporting Initiative BNRC Board Nomination and Remuneration Committee GST Goods and Services Tax bp Basis Points HR Human Resources BRSCC Board Risk, Sustainability & Compliance Committee HUC HICOM University College Sdn Bhd BTC Board Tender Committee IAD Internal Audit Department CA Certification Authority IAR Integrated Annual Report CAGR Compound Annual Growth Rate ICAEW Institute of Chartered Accountants, England and CAPEX Capital Expenditure Wales CCBE Code of Conduct and Business Ethics ICANN International Corporation for Assigned Names and CFT Counter Financing Terrorism Numbers CG Corporate Governance ICT Information and Communications Technology CGI Corporate Governance and Integrity IGU Integrity and Governance Unit CGU Cash Generating Unit IIC International Institute of Communications CeIO Certified Integrity Officer IPC Integrated Parcel Centre CIGO Chief Integrity & Governance Officer IR Investor Relations CIGU Corporate Integrity and Governance Unit ISOC Internet Society CMCO Conditional Movement Control Order ISMS Information Security Management System CRM Corruption Risk Management IT Information Technology CRM Customer Relationship Management ITU International Telecommunications Union CSR Central Sugars Refinery Sdn Bhd JPPM Jabatan Perkhidmatan Pos Malaysia CTO Commonwealth Telecommunications Organisation KLCI Kuala Lumpur Composite Index CVWU Creditors’ Voluntary Winding Up KLIA Kuala Lumpur International Airport
307 OTHER INFORMATION
Glossary
KYC Know Your Customer PTPSS Pelan Transformasi Pos Sabah & Sarawak LOA Limits of Authority (Sabah & Sarawak Postal Transformation Plan) LBT Loss Before Tax QMS Quality Management System LED Light Emitting Diode RCPS Redeemable Convertible Preference Shares LHDN Lembaga Hasil Dalam Negeri (Inland Revenue ROE Return on Equity Board of Malaysia) RM Ringgit Malaysia MACA Malaysian Anti-Corruption Agency RMCC Risk Management and Compliance Committee MACC Malaysian Anti-Corruption Commission RMS Resource Management System MAHB Malaysia Airport Holdings Berhad RPA Robotic Process Automation MASB Malaysian Accounting Standards Board RPEV Remote Participation and Electronic Voting MCCG Malaysian Code on Corporate Governance RPS Redeemable Preference Shares MCCI Management Committee on Corporate Integrity SDG Sustainable Development Goal MCMC Malaysian Communications and Multimedia SHA Shareholders’ Agreement Commission SHE Safety, Health & Environment MCO Movement Control Order SIAEC SIA Engineering Company Ltd MDC Management Digital Committee SLA Service Level Agreement MFRS Malaysian Financial Reporting Standards SME Small and Medium-sized Enterprise MIA Malaysian Institute of Accountants SOP Standard Operating Procedure MICPA Malaysian Institute of Certified Public Accountants SOPP Standard Operating Policy and Procedure MIRA Malaysian Investor Relations Association SORMIC Statement on Risk Management and Internal MKN Majlis Keselamatan Negara (National Security Control Council) SPA Share Purchase Agreement MOH Ministry of Health SSC Sustainability Steering Committee MSME Micro, Small and Medium-sized Enterprise SSL Secure Sockets Layer MSS Mutual Separation Scheme SWC Sustainability Working Committee MVWU Members’ Voluntary Winding Up UKM Universiti Kebangsaan Malaysia NED Non-Executive Director UMP Ubat Melalui Pos (medicines through post) NGO Non-governmental organisation UN United Nations NMC National Mail Centre UNICEF United Nations International Children’s Emergency NPCIL National Postal and Courier Industry Laboratory Fund NPS Net Promoter Score UPSI Universiti Pendidikan Sultan Idris OACP Organisation Anti-Corruption Plan UPU Universal Postal Union PAESSB Pos Aviation Engineering Services Sdn Bhd USD US Dollar PAM Post Automated Machine USO Universal Service Obligation PBT Profit Before Tax VDP Variable Data Printing PDF Portable Document Format WB Whistleblowing Policy PDN National Blood Centre WCA World Cargo Airlines Sdn Bhd PDSB Pos Digicert Sdn Bhd w.e.f With Effect From PERKESO Pertubuhan Keselamatan Sosial Malaysia WFH Work From Home PITA Pacific Islands Telecoms Association WHO World Health Organization PK Posmen Komuniti (Community Postmen) WPK Wakil Posmen Komuniti PKI Public Key Infrastructure WTO World Trade Organization PLB Pos Logistics Berhad YA Year of Assessment PPE Personal Protection Equipment
308 POS MALAYSIA BERHAD ANNUAL REPORT 2020
Notice of 29th Annual General Meeting
NOTICE IS HEREBY GIVEN THAT THE 29TH ANNUAL GENERAL MEETING (AGM) OF POS MALAYSIA BERHAD (POS MALAYSIA OR THE COMPANY) WILL BE HELD ON A FULLY VIRTUAL BASIS AT THE BROADCAST VENUE, DEWAN SRI POS, LEVEL 3, DAYABUMI COMPLEX, 50670 KUALA LUMPUR, MALAYSIA ON THURSDAY, 17 JUNE 2021 AT 10.00 A.M. FOR THE PURPOSE OF TRANSACTING THE FOLLOWING BUSINESSES:
ORDINARY BUSINESS
1. To receive the Audited Financial Statements for the financial year ended 31 December 2020, together with the Reports of the Directors and Auditors thereon.
Please refer to Note A
2. To re-elect the following Directors, who retire in accordance with Article 111(2) of the Company’s Constitution and who being eligible, offer themselves for re-election: (a) Dato’ Dr. Mohd Ali bin Mohamad Nor (Resolution 1) (b) Dato’ Jezilee bin Mohamad Ramli (Resolution 2) (c) Dato’ Mohamed Sharil bin Mohamed Tarmizi (Resolution 3) Please refer to Note B
3 To re-elect the following Directors, who retire by rotation in accordance with Article 116 of the Company’s Constitution and who being eligible, offer themselves for re-election: (a) Sharifah Sofia binti Syed Mokhtar Shah (Resolution 4) (b) Ahmad Suhaimi bin Endut (Resolution 5) Please refer to Note C
4. To approve the payment of Directors’ fees up to an amount of RM965,000.00 to the Non-Executive Directors (Resolution 6) from 18 June 2021 until the next AGM.
Please refer to Note D
5. To approve the payment of benefits payable (excluding Directors’ fees) up to an amount of RM277,000.00 to (Resolution 7) the Non-Executive Directors from 18 June 2021 until the next AGM.
Please refer to Note E
6. To re-appoint KPMG PLT (KPMG) as Auditors of the Company for the ensuing year and to authorise the Board (Resolution 8) of Directors to determine their remuneration. Please refer to Note F
309 OTHER INFORMATION
Notice of 29th AGM
SPECIAL BUSINESS
To consider and, if thought fit, to pass the following Ordinary Resolutions, with or without any modifications:
7. Proposed Renewal of Shareholders’ Mandate for Existing Recurrent Related Party Transactions of a Revenue (Resolution 9) or Trading Nature (Proposed Renewal of Shareholders’ Mandate).
“THAT subject always to the provisions of the Companies Act 2016 (the Act), the Constitution of the Company and the Main Market Listing Requirements (Listing Requirements) of Bursa Malaysia Securities Berhad (Bursa Securities), approval be hereby given for the renewal of the mandate granted by the shareholders of the Company on 29 June 2020, authorising the Company and its subsidiary companies (Pos Malaysia Group) to enter into the existing recurrent related party transactions of a revenue or trading nature as set out in Section 2.2.3 of the Circular to Shareholders dated 30 April 2021 with the transacting related parties mentioned therein, which are necessary for the day-to-day operations of Pos Malaysia Group, PROVIDED THAT such transactions are entered into in the ordinary course of business and on normal commercial terms which are not more favourable to the related parties than those generally available to the public and are not to the detriment of the minority shareholders of the Company.
AND THAT the Proposed Renewal of Shareholders’ Mandate, shall continue to be in force until: (a) the conclusion of the next AGM of the Company, at which time the authority will lapse, unless the authority is renewed by a resolution passed at such general meeting; or (b) the expiration of the period within which the next AGM of the Company is required to be held pursuant to Section 340(1) and (2) of the Act (but shall not extend to such extension as may be allowed pursuant to Section 340(4) of the Act); or (c) revoked or varied by an ordinary resolution passed by the shareholders of the Company at a general meeting;
whichever is the earliest;
AND THAT the Directors of the Company be hereby empowered and authorised to complete and do all such acts (including executing such documents as may be required) as they may consider expedient or necessary to give effect to the Proposed Renewal of Shareholders’ Mandate. Please refer to Note G
8. Proposed New Shareholders’ Mandate for Additional Recurrent Related Party Transactions of a Revenue or (Resolution 10) Trading Nature (Proposed New Shareholders’ Mandate).
“THAT subject always to the provisions of the Act, the Constitution of the Company and the Listing Requirements of Bursa Securities, approval be hereby given to Pos Malaysia Group to enter into the additional recurrent related party transactions of a revenue or trading nature as set out in Section 2.2.3 of the Circular to Shareholders dated 30 April 2021 with the transacting related parties mentioned therein which are necessary for the day-to-day operations of Pos Malaysia Group, PROVIDED THAT such transactions are entered into in the ordinary course of business and on normal commercial terms which are not more favourable to the related parties than those generally available to the public and are not to the detriment of the minority shareholders of the Company.
310 POS MALAYSIA BERHAD ANNUAL REPORT 2020
AND THAT the Proposed New Shareholders’ Mandate, shall continue to be in force until: (a) the conclusion of the next AGM of the Company at which time the authority will lapse, unless the authority is renewed by a resolution passed at such general meeting; or (b) the expiration of the period within which the next AGM of the Company is required to be held pursuant to Section 340(1) and (2) of the Act (but shall not extend to such extension as may be allowed pursuant to Section 340(4) of the Act); or (c) revoked or varied by a resolution passed by the shareholders of the Company at a general meeting;
whichever is the earliest;
AND THAT the Directors of the Company be hereby empowered and authorised to complete and do all such acts (including executing such documents as may be required) as they may consider expedient or necessary to give effect to the Proposed New Shareholders’ Mandate. Please refer to Note H
9. To transact any other business of which due notice shall have been given in accordance with the Act and the Company’s Constitution.
BY ORDER OF THE BOARD
SABARINA LAILA BINTI MOHD HASHIM (LS 0004324) KAMILIA NOR BINTI MOHAMAD KAMAL (LS 0008663) SSM PC No.201908001661 SSM PC No. 201908003242
Company Secretaries
Kuala Lumpur Date: 30 April 2021
311 OTHER INFORMATION
Notice of 29th AGM
NOTES TO THE NOTICE OF 29TH AGM 1. Registration for Remote Participation and Electronic Voting (RPEV) Facilities (a) The fully virtual 29th AGM of the Company will be conducted online, without a physical meeting venue. Shareholders/proxy(ies) can attend, participate and vote remotely at the 29th AGM through live streaming and online remote voting using the RPEV facilities provided by the Company’s Share Registrar, Boardroom Share Registrars Sdn Bhd.
2. Proxy and/or Authorised Representative (a) Every member including Authorised Nominees as defined under the Securities Industry (Central Depositories) Act 1991 (SICDA), and Exempt Authorised Nominees who hold ordinary shares in the Company for multiple beneficial owners in one securities account (Omnibus Account), is entitled to appoint another person as his proxy to exercise all or any of his rights to attend, participate and vote instead of him at the AGM and that such proxy need not be a member. (b) Where a member appoints more than one proxy, the appointment shall be invalid unless he specifies the proportion of his shareholding to be represented by each proxy. (c) The instrument appointing a proxy shall be in writing under the hand of the member or his/her attorney duly appointed under a power of attorney or if such member is a corporation, either under its common seal or under the hand of two authorised officers, one of whom shall be a Director, or its attorney duly authorised in writing. Any alteration to the instrument appointing a proxy must be initialled. (d) The proxy forms and/or documents relating to the appointment of proxy for the 29th AGM shall be deposited or submitted in the following manner not less than 24 hours before the time for holding the 29th AGM or no later than Wednesday, 16 June 2021 at 10.00 a.m. in accordance with the Company’s Constitution:- (i) In hard copy form The Proxy Form, Corporate Representative, Power of Attorney or other authority, if any, under which it is signed or a notarially certified copy of that power of authority shall be deposited at the office of the Share Registrar of the Company, Boardroom Share Registrars Sdn Bhd, 11th Floor, Menara Symphony, No. 5, Jalan Prof. Khoo Kay Kim, Seksyen 13, 46200 Petaling Jaya, Selangor Darul Ehsan or by fax to +603-7890 4670. (ii) By Boardroom Smart Investor Portal Online via the Boardroom Smart Investor Portal at www.boardroomlimited.my, which is free and available to all individual Depositors. The detailed requirements and procedures for the submission of proxy forms are set out in the Administrative Details for the 29th AGM – Lodgement of Proxy Form.
3. Voting by Poll Pursuant to Paragraph 8.29A(1) of the Listing Requirements of Bursa Securities, all resolutions set out in this notice will be put to vote by way of a poll.
4. Members entitled to attend For the purpose of determining a member who shall be entitled to attend the 29th AGM, the Company shall be requesting Bursa Malaysia Depository Sdn Bhd to issue a General Meeting Record of Depositors as at 4 June 2021. Only a depositor whose name appears therein shall be entitled to attend the 29th AGM or appoint a proxy(ies) to attend, participate and vote on his/her behalf.
5. Explanatory Note A Audited Financial Statements This agenda item is meant for discussion only as the provision of Section 340(1)(a) of the Act does not require the Audited Financial Statements to be formally approved by the shareholders. Hence, this item will not be put for voting.
312 POS MALAYSIA BERHAD ANNUAL REPORT 2020
6. Explanatory Note B and C Resolutions 1, 2, 3, 4 and 5 – Re-election of Directors The Directors who are subject to re-election at the 29th AGM of the Company are as follows: (a) Article 111(2) – Retirement by casual vacancy (i) Dato’ Dr. Mohd Ali bin Mohamad Nor (ii) Dato’ Jezilee bin Mohamad Ramli (iii) Dato’ Mohamed Sharil bin Mohamed Tarmizi Article 111(2) of the Company’s Constitution provides that any newly appointed Director shall hold office only until the next AGM and shall then be eligible for re-election. (b) Article 116 – Retirement by rotation (i) Sharifah Sofia binti Syed Mokhtar Shah (ii) Ahmad Suhaimi bin Endut Article 116 of the Company’s Constitution provides that one-third (1/3) or the number nearest to one-third (1/3) of the Directors for the time being, shall retire from office in every subsequent AGM and shall then be eligible for re-election. All Directors standing for re-election as Directors and being eligible, have offered themselves for re-election at the 29th AGM of the Company. In line with Practice 5.1 of Malaysian Code on Corporate Governance, the Board through the Board Nomination and Remuneration Committee has conducted an assessment on the suitability of the Directors who are seeking re-election at the 29th AGM of the Company and agreed that the Directors meet the criteria of character, experience, integrity, competence and time commitment to effectively discharge their respective roles as Directors as prescribed in Paragraph 2.20A of the Listing Requirements of Bursa Securities.
7. Explanatory Note D and E Resolutions 6 and 7 – Directors’ Fees and Benefits Section 230(1)(b) of the Act provides that the fees of the directors and any benefits payable to the directors of a listed company and its subsidiaries shall be approved at a general meeting. For the financial year ended 31 December 2020, the Board decided that the Directors’ fees and benefits be maintained as the previous financial year for each Director. Accordingly, the Company is seeking the shareholders’ approval at the 29th AGM on the Directors’ fees and benefits payable with effect from 18 June 2021 until the conclusion of the next AGM. The amount of Directors’ fees and benefits payable to the Non-Executive Directors (NEDs) of the Company which includes fees and benefits payable to the NEDs as members of the Board and Board Committees of the Company, is estimated based on the following framework: (a) Directors’ Fees
Fee (per annum)
Board/Board Committees Chairman Member
Board RM120,000 RM80,000
Board Audit Committee RM15,000 RM10,000 Board Nomination and Remuneration Committee Board Risk, Sustainability and Compliance Committee RM8,000 RM6,000 Board Tender Committee Board Digital-First Committee
313 OTHER INFORMATION
Notice of 29th AGM
(b) Directors’ Meeting Allowance
Meeting Allowance per Meeting Type of Meeting (for Chairman and Members) Board Board Nomination and Remuneration Committee Board Risk, Sustainability and Compliance Committee RM1,000 Board Tender Committee Board Digital-First Committee General Meeting
Board Audit Committee RM2,500
In determining the estimated total amount of Directors’ fees and benefits for the NEDs, the Board has considered various factors, including the number of scheduled meetings for the Board, Board Committees and general meetings, based on the composition of NEDs, including a provisional sum as a contingency for future appointment of NED on the Board and increase in the number of Board and Committee meetings. The proposed Resolution 6 and 7, if passed, will give authority to the Company to pay the Directors’ fees and benefits on a quarterly/monthly basis and/or as and when incurred, since the NEDs have discharged their responsibilities and rendered their services to the Company throughout the period.
8. Explanatory Note F Resolution 8 – Re-appointment of Auditors The Board, through the Board Audit Committee, has conducted an annual assessment of the suitability and independence of the external auditors, KPMG and agreed that KPMG has met the relevant criteria as prescribed under Paragraph 15.21 of the Listing Requirements of Bursa Securities.
9. Explanatory Note G and H Resolutions 9 and 10 – Proposed Renewal of Shareholders’ Mandate and Proposed New Shareholders’ Mandate The proposed Ordinary Resolutions 9 and 10, if passed, will respectively renew the existing shareholders’ mandate and grant a new mandate to Pos Malaysia Group to enable Pos Malaysia Group to respectively enter into the recurrent related party transactions of a revenue or trading nature which are necessary for Pos Malaysia Group’s day-to-day operations as set out in Section 2.2.3 of the Circular to Shareholders dated 30 April 2021, subject to the transactions being in the ordinary course of business and on normal commercial terms which are not more favourable to the related parties than those generally available to the public and are not detrimental to the minority shareholders of the Company.
Statement Accompanying the Notice of Annual General Meeting (Pursuant to Paragraph 8.27(2) of the Listing Requirements of Bursa Securities)
The profiles of the Directors who are due for retirement and seeking for re-election pursuant to the Company’s Constitution as set out in the Notice of the 29th AGM, are as set out in the Profile of Board of Directors in the Annual Report 2020.
314 Proxy Form th 29 ANNUAL GENERAL MEETING POS MALAYSIA BERHAD Registration No: 199101019653 (229990-M)
CDS Account No. Total Number of Shares Held
I/We (Full Name as per NRIC/Passport/Certificate of Incorporation in Capital Letters)
NRIC/Passport/Company No.:
Address:
Email and Tel. No.: being a member/members of Pos Malaysia Berhad (Pos Malaysia or the Company), hereby appoint the following:
Name of Proxy NRIC/Passport/Company No. Proportion of Shareholdings (%)
and/or failing him/her
or failing him/her, the CHAIRMAN OF THE MEETING, as my/our proxy to attend and vote for me/us and on my/our behalf, at the 29th Annual General Meeting (AGM) of the Company, to be held on a fully virtual basis at the Broadcast Venue, Dewan Sri Pos, Level 3, Dayabumi Complex, 50670 Kuala Lumpur, Malaysia on Thursday, 17 June 2021 at 10.00 a.m. and at any adjournment thereof on the following resolutions as set out in the Notice of the 29th AGM:
No. Ordinary Resolution For Against 1. Re-election of Dato’ Dr. Mohd Ali bin Mohamad Nor as Director 2. Re-election of Dato’ Jezilee bin Mohamad Ramli as Director 3. Re-election of Dato’ Mohamed Sharil bin Mohamed Tarmizi as Director 4. Re-election of Sharifah Sofia binti Syed Mokhtar Shah as Director 5. Re-election of Ahmad Suhaimi bin Endut as Director 6. Approval of Directors’ fees from the conclusion of the 29th AGM until the next AGM Approval of Directors’ benefits (excluding Directors’ fees) from the conclusion of the 29th AGM until 7. the next AGM 8. Re-appointment of KPMG PLT as the Company’s Auditors for the ensuing year Proposed Renewal of Shareholders’ Mandate for Existing Recurrent Related Party Transactions of a 9. Revenue or Trading Nature Proposed New Shareholders’ Mandate for Additional Recurrent Related Party Transactions of a Revenue 10. or Trading Nature
Please indicate with an X in the appropriate space as to how you wish your votes to be cast. If you do not do so, the Proxy may vote or abstain from voting at his/her discretion.
Signed this day of 2021 Signature(s)/Common Seal of Shareholder
NOTES ON PROXY: 1. The fully virtual 29th AGM of the Company will be conducted online, without a physical meeting venue. Shareholders/proxy(ies) can attend, participate and vote remotely at the 29th AGM through live streaming and online remote voting using the Remote Participation and Electronic Voting (RPEV) facilities provided by the Company’s Share Registrar, Boardroom Share Registrars Sdn Bhd. 2. Every member including Authorised Nominees as defined under the Securities Industry (Central Depositories) Act 1991 (SICDA), and Exempt Authorised Nominees who hold ordinary shares in the Company for multiple beneficial owners in one securities account (Omnibus Account), is entitled to appoint another person as his proxy to exercise all or any of his rights to attend, participate and vote instead of him at the AGM and that such proxy need not be a member. 3. Where a member appoints more than one proxy, the appointment shall be invalid unless he/she specifies the proportion of his/her shareholding to be represented by each proxy. 4. The instrument appointing a proxy shall be in writing under the hand of the member or his/her attorney duly appointed under a power of attorney or if such member is a corporation, either under its common seal or under the hand of two authorised officers, one of whom shall be a Director, or its attorney duly authorised in writing. Any alteration to the instrument appointing a proxy must be initialled. 5. The proxy forms and/or documents relating to the appointment of proxy for the 29th AGM shall be deposited or submitted in the following manner not less than 24 hours before the time for holding the 29th AGM or no later than Wednesday, 16 June 2021 at 10.00 a.m. in accordance with the Company’s Constitution:- (i) In hard copy form The Proxy Form, Corporate Representative, Power of Attorney or other authority, if any, under which it is signed or a notarially certified copy of that power of authority shall be deposited at the office of the Share Registrar of the Company, Boardroom Share Registrars Sdn Bhd, 11th Floor, Menara Symphony, No. 5, Jalan Prof. Khoo Kay Kim, Seksyen 13, 46200 Petaling Jaya, Selangor Darul Ehsan or by fax to +603-7890 4670. (ii) By Boardroom Smart Investor Portal Online via the Boardroom Smart Investor Portal at www.boardroomlimited.my, which is free and available to all individual Depositors. The detailed requirements and procedures for the submission of proxy forms are set out in the Administrative Details for the 29th AGM – Lodgement of Proxy Form. 6. Pursuant to Paragraph 8.29A(1) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, all resolutions set out in this notice will be put to vote by way of a poll. 7. For the purpose of determining a member who shall be entitled to attend the 29th AGM, the Company shall be requesting Bursa Malaysia Depository Sdn Bhd to issue a General Meeting Record of Depositors as at 4 June 2021. Only a depositor whose name appears therein shall be entitled to attend the 29th AGM or appoint a proxy(ies) to attend, participate and vote on his/her behalf.
Complete this form where applicable and post to:-
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AFFIX STAMP
The Share Registrar
BOARDROOM SHARE REGISTRARS SDN BHD Registration No: 199601006647 (378993-D) 11th Floor, Menara Symphony No. 5, Prof. Khoo Kay Kim Seksyen 13, 46200 Petaling Jaya Selangor Darul Ehsan Malaysia
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PERSONAL DATA PRIVACY By submitting an instrument appointing a proxy(ies) and/or representative(s) to participate and vote at the live streaming of the 29th AGM and/or any adjournment thereof, a member of the Company: (i) consents to the processing of the member’s personal data by the Company for: • processing and administration of proxies and representatives appointed for the live streaming of the 29th AGM; • preparation and compilation of the attendance lists, minutes and other documents relating to the AGM (which includes any adjournments thereto); and • the Company’s compliance with any applicable laws, listing rules, regulations, codes and/or guidelines (collectively, the “Purposes”). (ii) undertakes and warrants that he or she has obtained such proxy(ies)’ and/or representative(s)’ prior consent for the Company’s processing of such proxy(ies)’ and/or representative(s)’ personal data for the Purposes.
(Note: the term “processing” and “personal data” shall have the meaning as defined in the Personal Data Protection Act 2010) Annual Report 2020 Annual Report
Whatever www.pos.com.my It Takes Annual Report 2020
Pos Malaysia Berhad 199101019653 (229990-M) Level 8, Pos Malaysia Headquarters Dayabumi Complex, 50670 Kuala Lumpur Tel: +603 2267 2267