Anda di halaman 1dari 195

40 POS MALAYSIA ANNUAL REPORT 2017

CORPORATE
INFORMATION

BOARD OF DIRECTORS BOARD COMMITTEES

Brigadier General (K) Tan Sri Dato’ Sri


BOARD RISK MANAGEMENT AND
(Dr) Haji Mohd Khamil bin Jamil
BOARD AUDIT COMMITTEE COMPLIANCE COMMITTEE
Non-Independent Non-Executive Chairman

Dato’ Ibrahim Mahaludin bin Puteh Dato’ Abdul Hamid bin Sh Mohamed Dato’ Ibrahim Mahaludin bin Puteh
Senior Independent Non-Executive Director Chairman/Independent Non-Executive Chairman/Senior Independent
Director Non-Executive Director
Dato’ Sri Syed Faisal Albar bin Syed
A.R Albar Dato’ Ibrahim Mahaludin bin Puteh Dato’ Eshah binti Meor Suleiman
Non-Independent Non-Executive Director Senior Independent Non-Executive Independent Non-Executive Director
Director
Lim Hwa Yu
Datuk Mohamed Razeek bin Md
Datuk Mohamed Razeek bin Md Independent Non-Executive Director
Hussain Maricar
Hussain Maricar
Non-Independent Non-Executive Director Non-Independent Non-Executive Director

Datuk Puteh Rukiah binti Abd. Majid Datuk Puteh Rukiah binti Abd. Majid
Independent Non-Executive Director Independent Non-Executive Director

Dato’ Eshah binti Meor Suleiman BOARD NOMINATION AND


Independent Non-Executive Director REMUNERATION COMMITTEE BOARD TENDER COMMITTEE

Dato’ Sri Dr. Mohmad Isa bin Hussain


Brigadier General (K) Tan Sri Dato’ Sri Dato’ Eshah binti Meor Suleiman
Non-Independent Non-Executive Director
(Dr) Haji Mohd Khamil bin Jamil Chairperson/Independent Non-Executive
Chairman/Non-Independent Director
Dato’ Abdul Hamid bin Sh Mohamed Non-Executive Chairman
Independent Non-Executive Director Datuk Mohamed Razeek bin Md
Dato’ Ibrahim Mahaludin bin Puteh Hussain Maricar
Lim Hwa Yu Senior Independent Non-Executive Non-Independent Non-Executive Director
Independent Non-Executive Director Director
Lim Hwa Yu
Datuk Puteh Rukiah binti Abd. Majid Independent Non-Executive Director
Ahmad Suhaimi bin Endut
Independent Non-Executive Director
(Alternate Director to
Dato’ Sri Dr. Mohmad Isa bin Hussain)
Dato’ Abdul Hamid bin Sh Mohamed
Non-Independent Non-Executive Alternate
Independent Non-Executive Director
Director
ANNUAL REPORT 2017 POS MALAYSIA 41

COMPANY SECRETARY SHARE REGISTRAR


Dato’ Carol Chan Choy Lin
(MIA 3930)
Symphony Share Registrars Sdn Bhd
Level 6, Symphony House
Pusat Dagangan Dana 1
REGISTERED OFFICE Jalan PJU 1A/46
47301 Petaling Jaya
Selangor Darul Ehsan
Tingkat 8, Ibu Pejabat Pos
Kompleks Dayabumi
50670 Kuala Lumpur +603-7849 0777

+603-2267 2267 +603-7841 8151/8152

+603-2267 2266
AUDITORS

INVESTOR RELATIONS KPMG PLT (LLP 0010081-LCA & AF 0758)


Chartered Accountants
Contact person : Level 10, KPMG Tower
8, First Avenue, Bandar Utama
Elias bin Effendy
47800 Petaling Jaya
Chief Corporate Services
Selangor Darul Ehsan

+603-2267 2295
+603-7721 3388

elias.effendy@pos.com.my
+603-7721 3399

WEBSITE
BANKERS

www.pos.com.my
Alliance Islamic Bank Malaysia Berhad
Bank Muamalat Malaysia Berhad
Bank Pertanian Malaysia Berhad
STOCK EXCHANGE LISTING CIMB Bank Berhad
HSBC Amanah Malaysia Berhad
Malayan Banking Berhad
OCBC Bank (Malaysia) Berhad
Main Market of Bursa Malaysia RHB Islamic Bank Berhad
Securities Berhad

Stock Name : POS


Stock Code : 4634
42 POS MALAYSIA ANNUAL REPORT 2017

GROUP Datapos (M) Sdn Bhd

STRUCTURE [ 100% ]

Effivation Sdn Bhd


[ 100% ]

Pos Ar-Rahnu Sdn Bhd


[ 100% ]

Pos Digicert Sdn Bhd


(Formerly known as Digicert Sdn Bhd)
[ 100% ]

PMB Properties Sdn Bhd


[ 100% ] Gading Sari Aviation Services Ltd
[ 100% ]

Pos Takaful Agency Sdn Bhd


[ 100% ]

PSH Allied Berhad PosLaju (M) Sdn Bhd


[ 100% ] [ 100% ]
Pos Malaysia
Pos Malaysia & Services
Holdings Berhad Berhad
[ 100% ] PSH Investment Holding (BVI) Ltd
[ 100% ]
PSH Capital Partners Sdn Bhd
[ 100% ] Prestige Future Sdn Bhd
[ 100% ]
PSH Properties Sdn Bhd
[ 100% ] Real Riviera Sdn Bhd
[ 100% ]
PSH Venture Capital Sdn Bhd
[ 100% ] PSH Express Sdn Bhd
[ 100% ]
PosPay Exchange Sdn Bhd
[ 50% ]

CEN Sdn Bhd


[ 42.5% ] CEN Worldwide Sdn Bhd
[ 100% ]
Elpos Print Sdn Bhd
[ 40% ] CEN Technology Sdn Bhd
[ 50% ]
ANNUAL REPORT 2017 POS MALAYSIA 43

Aman Freight (Malaysia) Sdn Bhd Aman Freight Services Sdn Bhd
[ 100% ] [ 100% ]

Cougar Logistics (Malaysia) Sdn Bhd Maya Perkasa (M) Sdn Bhd
[ 100% ] [ 100% ]

Diperdana Kontena Sdn Bhd


[ 100% ]

KP Asia Auto Logistics Sdn Bhd


[ 100% ]
Pos Logistics Berhad
(Formerly known as
Konsortium Logistik Berhad)
[ 100% ] KP Distribution Services Sdn Bhd
[ 100% ]
Pos Asia Cargo Express Sdn Bhd
(Formerly known as DRB-HICOM
Asia Cargo Express Sdn Bhd)
[ 100% ] Malaysian Shipping Agencies Sdn Bhd Konsortium Logistik (Sabah) Sdn Bhd
[ 100% ] [ 100% ]
Pos Aviation Engineering Services
Sdn Bhd
(Formerly known as KLAS Engineering Services
Sdn Bhd) Pos Aviation Sdn Bhd
Pengangkutan Aspacs Sdn Bhd Konsortium(Formerly
Logistikknown
(Sarawak)
as Sdn Bhd
[ 100% ] KL Airport Services Sdn Bhd)
[ 100% ] [ 100% ]
[ 100% ]

Pos Aviation Sdn Bhd


(Formerly known as PNSL Berhad PNSL Risk Management Sdn Bhd
KL Airport Services Sdn Bhd)
[ 100% ] [ 100% ]
[ 100% ]

Pos Aviation Sdn Bhd


Westport Distripark (M) Sdn Bhd Parcel Tankers Malaysia
(Formerly known asSdn Bhd
KL Airport Services Sdn Bhd)
[ 100% ] [ 100% ]
[ 100% ]
Diperdana Utara Sdn Bhd
[ 100% ] Asia Pacific Freight System Sdn Bhd
[ 100% ]

Diperdana Terminal Services Sdn Bhd


[ 100% ] Diperdana Selatan Sdn Bhd
[ 100% ]

Kaypi Logistics Depot Sdn Bhd


[ 100% ]

Kaypi Southern Terminal Sdn Bhd


[ 100% ]

North Terminal Sdn Bhd


[ 100% ]

K.P.B. Sadao I.C.D. Co. Ltd


[ 49% ]
46 Board of Directors
48 Directors’ Profile
55 Group CEO’s Profile
56 Our Chiefs
60 Corporate Responsibility
63 Corporate Governance Statement
80 Statement on Risk Management and Internal Control
85 Directors’ Responsibility Statement
86 Additional Compliance Information
92 Audit Committee Report
46 POS MALAYSIA ANNUAL REPORT 2017

BOARD OF
DIRECTORS

BRIGADIER GENERAL (K) TAN SRI DATO’ SRI (DR)


HAJI MOHD KHAMIL BIN JAMIL
Non-Independent Non-Executive Chairman
ANNUAL REPORT 2017 POS MALAYSIA 47

DATO’ IBRAHIM MAHALUDIN BIN PUTEH DATO’ SRI SYED FAISAL ALBAR BIN SYED DATUK MOHAMED RAZEEK BIN MD
Senior Independent Non-Executive Director A.R ALBAR HUSSAIN MARICAR
Non-Independent Non-Executive Director Non-Independent Non-Executive Director

DATUK PUTEH RUKIAH BINTI ABD. MAJID DATO’ ESHAH BINTI MEOR SULEIMAN DATO’ SRI DR. MOHMAD ISA BIN HUSSAIN
Independent Non-Executive Director Independent Non-Executive Director Non-Independent Non-Executive Director

DATO’ ABDUL HAMID BIN SH MOHAMED LIM HWA YU AHMAD SUHAIMI BIN ENDUT
(Alternate Director to Dato’ Sri Dr. Mohmad Isa
Independent Non-Executive Director Independent Non-Executive Director
bin Hussain)
Non-Independent Non-Executive Alternate
Director
48 POS MALAYSIA ANNUAL REPORT 2017

DIRECTORS’
PROFILE
BRIGADIER GENERAL (K) TAN SRI DATO’ SRI (DR) HAJI MOHD KHAMIL BIN JAMIL
Non-Independent Non-Executive Chairman
Brigadier General (K) Tan Sri Dato’ Sri (Dr) Haji Mohd Khamil bin (“DRB-HICOM”) following his retirement as Group Managing
Jamil, a Malaysian, male, aged 61, was appointed to the Board on Director of DRB-HICOM on 29 February 2016. He holds
4 July 2011 as a Non-Independent Non-Executive Director and re- directorships in several subsidiaries of DRB-HICOM in addition
designated as Non-Independent Non-Executive Chairman on 15 to other private limited companies. He is also a Director of Etika
July 2011. He is also the Chairman of the Board Nomination and Strategi Sdn Bhd, the holding company of DRB-HICOM, in which
Remuneration Committee. he has a 10% shareholding.

He holds a Bachelor of Laws (Honours) degree from the University Brigadier General (K) Tan Sri Dato’ Sri (Dr) Haji Mohd Khamil does
of London. He is a Barrister-at-Law at Gray’s Inn, England, and was not have any family relationship with any Director and/or major
called to the English Bar in 1983. shareholder of the Company and has no conflict of interest with
the Company. He has had no convictions for offences within the
He began his executive career at Bank Bumiputra Malaysia Berhad past five (5) years and has had no public sanction or penalty
in August 1980, where he served until December 1989. He was imposed by the relevant regulatory bodies during the financial
called to the Malaysian Bar in September 1990, following which year.
he became a practising partner of several legal firms before
venturing into business in 2001. Brigadier General (K) Tan Sri Dato’ Sri (Dr) Haji Mohd Khamil
attended all six (6) Board meetings held during the financial year
He is an Honorary Brigadier General of The Malaysian Territorial under review.
Army and a Chartered Fellow of The Chartered Institute of
Logistics & Transport, United Kingdom. He was also awarded the He holds directorship in the following listed and non-listed public
Justice of Peace (JP) from His Excellency Yang Di-Pertua Negeri companies:-
Melaka in 2012. - DRB-HICOM Berhad (Chairman) (listed company)
- HICOM Berhad (Chairman)
Brigadier General (K) Tan Sri Dato’ Sri (Dr) Haji Mohd Khamil is - HICOM Holdings Berhad (Chairman)
currently the Non-Executive Chairman of DRB-HICOM Berhad

DATO’ IBRAHIM MAHALUDIN BIN PUTEH


Senior Independent Non-Executive Director
Dato’ Ibrahim Mahaludin bin Puteh, a Malaysian, male, aged Water Konsortium Sdn Bhd. Prior to that, Dato’ Ibrahim served in
65, was appointed to the Board on 22 August 2007 as a Non- various divisions at the Ministry of Finance from 1974 onwards,
Independent Non-Executive Director. On 25 February 2009, he including as Senior Adviser to the Executive Director for South
was re-designated as an Independent Non-Executive Director East Asia at the World Bank Group in Washington D.C. His last
and thereafter, on 19 June 2013, he was further re-designated as post prior to retirement in 2008 was as the Deputy Secretary
Senior Independent Non-Executive Director. General (Policy) in the Ministry of Finance.

Dato’ Ibrahim is the Chairman of the Board Risk Management He does not have any family relationship with any Director and/or
and Compliance Committee. He is also a member of the Board major shareholder of the Company and has no conflict of interest
Nomination and Remuneration Committee and Board Audit with the Company. He has had no convictions for offences within
Committee. the past five (5) years and has had no public sanction or penalty
imposed by the relevant regulatory bodies during the financial
He holds a Bachelor of Arts (Honours) degree from the University year.
of Malaya and a Master of Business Administration from the
Manchester Business School, University of Manchester, United Dato’ Ibrahim attended all six (6) Board meetings held during the
Kingdom. financial year under review.

Dato’ Ibrahim has been the Chairman of Computer Forms He holds directorship in Computer Forms (Malaysia) Berhad, a
(Malaysia) Berhad since 1 December 2008. He was also the listed public company.
former Chairman of Syarikat Prasarana Negara Berhad and Indah
ANNUAL REPORT 2017 POS MALAYSIA 49

DATO’ SRI SYED FAISAL ALBAR BIN SYED A.R ALBAR


Non-Independent Non-Executive Director
Dato’ Sri Syed Faisal Albar bin Syed A.R Albar, a Malaysian, male, Dato’ Sri Syed Faisal’s career spans across various executive
aged 51, was appointed to the Board on 14 January 2016 as a positions. Apart from GMB and Pos Logistics, from 2008 to 2011,
Non-Independent Non-Executive Director. he was the Group Managing Director of Pos Malaysia, which was a
Government-Linked Company by virtue of the 32% shareholding
He is a member of Malaysian Institute of Certified Public held by Khazanah then. During his time at Pos Malaysia, he was
Accountants (“MICPA”) and American Institute of Certified Public also the Chairman of ASEAN Postal Business Union where postal
Accountants (“AICPA”). He holds a Bachelor of Arts (Accountancy) organisations of each of the ASEAN countries are members. Prior
degree from Barat College of DePaul University, United States to his stint at Pos Malaysia, Dato’ Sri Syed Faisal was appointed
of America (“U.S.A”) and AIPCA Professional Certification from in 2003 as CEO of The New Straits Times Press (Malaysia) Berhad
University of Illinois, Urbana Champaign, U.S.A. He had attended (“NSTP”), a position he held until 2008. He started his career by
the Advanced Programme at Harvard Business School, Boston, spending almost a decade with PricewaterhouseCoopers Kuala
U.S.A and he was also a Council Member of MICPA from 2010 to Lumpur since 1991. He had also served Pricewaterhouse, San
2013. Francisco, California in 1995 before returning to Kuala Lumpur
in 1997 and subsequently joined NSTP in May 2000 as its Chief
Dato’ Sri Syed Faisal is currently the Group Managing Director of Financial Officer.
DRB-HICOM Berhad (“DRB-HICOM”). Prior to joining DRB-HICOM,
he was the Chief Executive Officer (“CEO”) of Malakoff Corporation Dato’ Sri Syed Faisal does not have any family relationship with
Berhad from 1 July 2014 to December 2015. He was appointed any Director and/or major shareholder of the Company and has no
as CEO of Gas Malaysia Berhad (“GMB”) from January 2014 to conflict of interest with the Company. He has had no convictions
June 2014 and also an Executive Director of Pos Logistics Berhad for offences within the past five (5) years and has had no public
(formerly known as Konsortium Logistik Berhad) (“Pos Logistics”) sanction or penalty imposed by the relevant regulatory bodies
for a short span of time to assist Ekuiti Nasional Berhad, the during the financial year.
majority owner of Pos Logistics, in its disposal of that business.
Dato’ Sri Syed Faisal attended all six (6) of Board meetings held
From 2011 to 2014, Dato’ Sri Syed Faisal served on various during the financial year under review.
boards in a non-executive capacity. He was on the Board of
Malaysia Airports Holdings Berhad as a nominee Director for He holds directorship in the following listed and non-listed public
Khazanah Nasional Berhad (“Khazanah”) and was also a Director companies:-
of Hong Leong Bank Berhad. Within this period, he also sat on - DRB-HICOM (Group managing Director) (listed company)
the Board of Kwasa Land Sdn Bhd, a wholly-owned subsidiary - Edaran Otomobil Nasional Berhad (Chairman)
of Employees Provident Fund tasked to develop a township in - HICOM Berhad
Sungai Buloh, Selangor over the parcel of land previously owned - HICOM Holdings Berhad
by Rubber Research Institute. As part of his effort to contribute - Horsedale Development Berhad (Chairman)
to society, Dato’ Sri Syed Faisal served on the Board of Yayasan - Pos Logistics Berhad (formerly known as Konsortium Logistik
Kelana Ehsan, a public trust entity providing funds for charitable Berhad) (Chairman)
activities with the intention to improve the livelihood of residents - Proton Holdings Berhad (Chairman)
in the State of Selangor.
50 POS MALAYSIA ANNUAL REPORT 2017

DATUK MOHAMED RAZEEK BIN MD HUSSAIN MARICAR


Non-Independent Non-Executive Director
Datuk Mohamed Razeek bin Md Hussain Maricar, a Malaysian, its Senior Vice President in August 2008. Datuk Mohamed Razeek
male, aged 59, was appointed to the Board on 24 April 2013 as a subsequently joined Malaysian Resources Corporation Berhad as
Non-Independent Non-Executive Director. He is a member of the its Chief Operating Officer in June 2009 and was promoted to
Board Audit Committee and Board Tender Committee. the post of Chief Executive Officer on 1 December 2009. He was
appointed DRB-HICOM Berhad’s Chief Operating Officer, Services
He holds a Bachelor of Science (Civil Engineering) degree from the & Properties on 1 September 2012 and re-designated as Chief
University of The South Bank, United Kingdom and is a member of Operating Officer, Services, Education and Defence on 15 July
the Institute of Engineers, Malaysia. 2016.

Datuk Mohamed Razeek began his career in an engineering He does not have any family relationship with any Director and/or
consulting firm in London in the late 1970s. Upon returning major shareholder of the Company and has no conflict of interest
to Kuala Lumpur in the 1980s, he joined a local engineering with the Company. He has had no convictions for offences within
consulting firm and was involved in the construction of the UBN the past five (5) years and has had no public sanction or penalty
Towers, a development by Peremba-Kuok Brothers. In 1985, he imposed by the relevant regulatory bodies during the financial
joined Sime UEP Berhad before moving on to the Land & General year.
Group of Companies in 1991.
Datuk Mohamed Razeek attended all six (6) Board meetings held
Various achievements led to his appointment as an Executive during the financial year under review.
Director of Land & General Berhad in 1999. He joined Eastern &
Oriental Property Development Berhad as a Project Director in He holds directorship in Pos Logistics Berhad (formerly known as
September 2003 prior to joining Damac Properties in Dubai as Konsortium Logistik Berhad), a non-listed public company.

DATUK PUTEH RUKIAH BINTI ABD. MAJID


Independent Non-Executive Director
Datuk Puteh Rukiah binti Abd. Majid, a Malaysian, female, aged She does not have any family relationship with any Director
64, was appointed to the Board on 7 June 2013 as an Independent and/or major shareholder of the Company and has no conflict
Non-Executive Director. She is a member of the Board Audit of interest with the Company. She has had no convictions for
Committee and Board Nomination and Remuneration Committee. offences within the past five (5) years and has had no public
sanction or penalty imposed by the relevant regulatory bodies
She holds a Bachelor of Economics (Honours) degree from the during the financial year.
University of Malaya and a Master of Economics from the Western
Michigan University, United States of America. Datuk Puteh Rukiah attended all six (6) Board meetings held
during the financial year under review.
Datuk Puteh Rukiah start her career with the Government of
Malaysia in 1976 and has held various positions in the Economic She holds directorship in the following listed and non-listed
Planning Unit, Prime Minister’s Department, the Implementation public companies:-
and Coordination Unit, Prime Minister’s Department and the - Gas Malaysia Berhad (listed company)
Ministry of Finance. From 2006 until March 2011, she was the - MIMOS Berhad
Deputy Secretary General (Systems and Controls) at the Ministry - Pelaburan Hartanah Berhad
of Finance. - Zelan Berhad (listed company)
ANNUAL REPORT 2017 POS MALAYSIA 51

DATO’ ESHAH BINTI MEOR SULEIMAN


Independent Non-Executive Director
Dato’ Eshah binti Meor Suleiman, a Malaysian, female, aged the Ministry of Finance where she was promoted to the post of the
62, was appointed to the Board on 25 February 2009 as a Under Secretary of Investment, Minister of Finance Incorporated
Non-Independent Non-Executive Director. On 1 November and Privatisation Division of the Ministry of Finance Malaysia
2014, she was re-designated as an Independent Non-Executive in September 2006. Then in January 2014, she was assigned
Director following her cessation as an Appointed Director and as Under Secretary of Statutory Bodies Strategic Management
representative of Minister of Finance (Incorporated) i.e. the Division of the Ministry of Finance Malaysia. She retired from
Special Shareholder of Pos Malaysia Berhad (“Pos Malaysia”) on Public Service on 1 November 2014.
the Board of Pos Malaysia.
She does not have any family relationship with any Director
Dato’ Eshah is the Chairperson of the Board Tender Committee and/or major shareholder of the Company and has no conflict
and a member of the Board Risk Management and Compliance of interest with the Company. She has had no convictions for
Committee. offences within the past five (5) years and has had no public
sanction or penalty imposed by the relevant regulatory bodies
She holds a Bachelor of Economics (Honours) degree from the during the financial year.
University of Malaya and a Master of Business Administration
(Finance) from the Oklahoma City University, United States of Dato’ Eshah attended five (5) out of six (6) Board meetings held
America. during the financial year under review.

Dato’ Eshah started her career in 1981 as an Assistant Director She holds directorship in the following listed public companies:-
(Macro Economic Section) in the Economic Planning Unit of the - Bursa Malaysia Berhad
Prime Minister’s Department before serving as the Assistant - UMW Holdings Berhad
Secretary at the Government Procurement Division, Ministry of
Finance in the middle of 1991. She later held various positions in
52 POS MALAYSIA ANNUAL REPORT 2017

DATO’ SRI DR. MOHMAD ISA BIN HUSSAIN


Non-Independent Non-Executive Director
Dato’ Sri Dr. Mohmad Isa bin Hussain, a Malaysian, male, aged Ministry of Transport in 2008 and he became the Head of Interim
59, was appointed to the Board on 2 November 2015 as a Non- Team, Land Public Transport Commission, Economic Planning
Independent Non-Executive Director. He is an Appointed Director Unit at the Prime Minister’s Department in 2009.
and representative of the Minister of Finance (Incorporated) i.e
the Special Shareholder of Pos Malaysia Berhad (“Pos Malaysia”) He does not have any family relationship with any Director and/or
on the Board of Pos Malaysia. major shareholder of the Company and has no conflict of interest
with the Company. He has had no convictions for offences within
He holds a Post-Graduate Diploma in Public Management the past five (5) years and has had no public sanction or penalty
from Institut Tadbiran Awam Negara, a Bachelor of Economics imposed by the relevant regulatory bodies during the financial
(Honours) degree in Applied Statistics from University of Malaya, year.
a Master of Business Administration in Finance from Universiti
Kebangsaan Malaysia and a Philosophy Doctorate in Finance Dato’ Sri Dr. Mohmad Isa attended five (5) out of six (6) Board
from Universiti Putra Malaysia. meetings held during the financial year under review.

Dato’ Sri Dr. Mohmad Isa is currently the Deputy Secretary General He holds directorship in the following listed and non-listed public
(Investment) in the Ministry of Finance. He started his career in companies:-
1983 as the Assistant Director in the Implementation Coordination - Danainfra Nasional Berhad
Unit of the Prime Minister’s Department before serving as the - Destini Berhad (listed company)
Assistant Director in the Economic Planning Unit, Kuantan, - Export-Import Bank of Malaysia Berhad
Pahang in 1985. He held various other positions in the Ministry of - Felcra Bhd
Finance, namely within Government Procurement Management - Malaysia Airports Holdings Berhad (listed company)
Division, Budget Division, Investment and Privatisation Division, - MyHSR Bhd
and Government Investment Companies Division. In 2008, he - Pelaburan Hartanah Berhad
served as the Deputy Secretary General (Operations) in the - Telekom Malaysia Berhad (listed company)
ANNUAL REPORT 2017 POS MALAYSIA 53

DATO’ ABDUL HAMID BIN SH MOHAMED


Independent Non-Executive Director
Dato’ Abdul Hamid bin Sh Mohamed, a Malaysian, male, aged 52, Hamid is currently an Executive Director of Symphony House
was appointed to the Board on 1 March 2013 as an Independent Sdn Bhd (formerly known as Symphony House Berhad before
Non-Executive Director. He is the Chairman of the Board Audit delisting).
Committee and a member of the Board Nomination and
Remuneration Committee. He does not have any family relationship with any Director and/or
major shareholder of the Company and has no conflict of interest
He is a Fellow of the Association of Chartered Certified with the Company. He has had no convictions for offences within
Accountants. the past five (5) years and has had no public sanction or penalty
imposed by the relevant regulatory bodies during the financial
Dato’ Abdul Hamid began his career at the accounting firm year.
Messrs. Lim Ali & Co./Arthur Young before moving on to merchant
banking with Bumiputra Merchant Bankers Berhad. He then Dato’ Abdul Hamid attended five (5) out of six (6) Board meetings
joined the Amanah Capital Malaysia Berhad Group, an investment held during the financial year under review.
banking and finance group, where he eventually led the corporate
planning and finance functions. In 1998, he left for the Kuala He holds directorship in the following listed public companies:-
Lumpur Stock Exchange (now known as Bursa Malaysia Securities - MMC Corporation Berhad
Berhad) as Senior Vice President in charge of the Strategic - Scomi Group Berhad
Planning & International Affairs Division and was promoted to - Marine & General Berhad (formerly known as Silk Holdings
Deputy President (Strategy and Development) in 2002. He was Berhad)
then re-designated as Chief Financial Officer in 2003. Dato’ Abdul

LIM HWA YU
Independent Non-Executive Director
Mr. Lim Hwa Yu, a Malaysian, male, aged 61, was appointed to the He does not have any family relationship with any Director and/or
Board on 26 September 2013 as an Independent Non-Executive major shareholder of the Company and has no conflict of interest
Director. He is a member of the Board Risk Management and with the Company. He has had no convictions for offences within
Compliance Committee and Board Tender Committee. the past five (5) years and has had no public sanction or penalty
imposed by the relevant regulatory bodies during the financial
He is a Fellow of the Institute of Taxation, United Kingdom and year.
the Chartered Association of Certified Accountants, United
Kingdom. Mr. Lim is also a member of the Malaysian Institute of Mr. Lim attended all six (6) Board meetings held during the
Accountants. financial year under review.

Mr. Lim is a partner of a public accounting firm, Messrs H.Y. Lim He holds directorship in Oriental Food Industries Holdings Berhad,
& Co. and has been practising for the past 36 years. Mr. Lim a listed public company.
has extensive experience in the field of corporate planning and
management.
54 POS MALAYSIA ANNUAL REPORT 2017

AHMAD SUHAIMI BIN ENDUT


Non-Independent Non-Executive Alternate Director
Encik Ahmad Suhaimi bin Endut, a Malaysian, male, aged 49, Encik Ahmad Suhaimi is currently a Director of Port Tanjung
was appointed to the Board on 7 December 2016 as a Non- Pelepas Sdn Bhd, Syarikat Perumahan Pegawai Kerajaan Sdn Bhd
Independent Non-Executive Alternate Director to Dato’ Sri Dr. and AmanahRaya-REIT Managers Sdn Bhd.
Mohmad Isa bin Hussain, a Non-Independent Non-Executive
Director and an Appointed Director and representative of the Encik Ahmad Suhaimi does not have any family relationship with
Minister of Finance (Incorporated) on the Board of Pos Malaysia any Director and/or major shareholder of the Company and has no
Berhad. conflict of interest with the Company. He has had no convictions
for offences within the past five (5) years and has had no public
Encik Ahmad Suhaimi holds a Bachelor of Science in Business sanction or penalty imposed by the relevant regulatory bodies
Administration from the University of Missouri St. Louis, United during the financial year.
States of America. He also obtained a Master of Business
Administration (MBA) from the University of Sheffield, United Encik Ahmad Suhaimi has not attended any Board meeting held
Kingdom. during the financial year under review since his appointment
as his principal Director, Dato’ Sri Dr. Mohmad Isa bin Hussain,
He began his career with a private company in 1992 before attended all the Board Meetings.
joining the Diplomatic and Administrative Service in 1995 as
an Assistant Director of Industries Division in the Ministry of He holds directorship in the following non-listed public
International Trade and Industry (MITI). He continued his service companies:-
with the Ministry of Finance in 2003 and held various positions in - Amanah Raya Berhad
several departments/divisions including the Accountant General - Aset Tanah Nasional Berhad
Department, Strategic Financial Management Division, Office of
the Secretary General of Treasury, Investment, MOF (Inc.) and
Privatisation Division, Secretariat to the Tax Review Panel and
Housing Loan Division. He is currently the Deputy Undersecretary
of the Government Investment Company Division, Ministry of
Finance.
ANNUAL REPORT 2017 POS MALAYSIA 55

GROUP CEO’S
PROFILE

DATO’ MOHD SHUKRIE BIN MOHD SALLEH


Group Chief Executive Officer

Dato’ Mohd Shukrie bin Mohd Salleh, a Malaysian, male, aged 43, was On 1 July 2011, he joined Pos Malaysia as Group Chief Operating Officer
appointed Group Chief Executive Officer of Pos Malaysia Berhad (“Pos and was thereafter re-designated as Covering Group Chief Executive
Malaysia”) on 1 November 2015. Officer on 1 February 2013. Prior to his appointment as Group Chief
Executive Officer of Pos Malaysia, he was the Chief Executive Officer of
Dato’ Mohd Shukrie is a Chartered Accountant with the Chartered Pos Logistics Berhad (formerly known as Konsortium Logistik Berhad)
Institute of Management Accountants and the Malaysian Institute of (“Pos Logistics”).
Accountants. He began his career with Public Bank Securities Sdn Bhd
and thereafter with United Overseas Bank Berhad. He has had diverse Dato’ Mohd Shukrie does not hold any share in Pos Malaysia or its
experience throughout his career covering consumer and corporate subsidiaries.
banking, corporate finance and advisory, mergers and acquisitions,
financial services, risk management, human resources and procurement. He does not have any family relationship with any Director and/or
major shareholder of the Company and has no conflict of interest with
In 2005, he joined DRB-HICOM Berhad where he assumed several the Company. He has had no convictions for offences within the past
leadership roles including that of Principal Controller, Chief Financial five (5) years and has had no public sanction or penalty imposed by the
Officer, Chief Operating Officer and Chief Executive Officer in various relevant regulatory bodies during the financial year.
companies within the DRB-HICOM Group. He was the Group Chief
Executive Officer of Pos Aviation Sdn Bhd (formerly known as KL Airport Dato’ Mohd Shukrie is a Director of Pos Logistics and PNSL Berhad, both
Services Sdn Bhd) (“Pos Aviation”), the aircraft ground handling, cargo are non-listed public companies and wholly-owned subsidiaries of Pos
and logistics arm of DRB-HICOM Group before the acquisition of Pos Malaysia. He does not hold directorship in any listed public company.
Aviation by Pos Malaysia on 15 September 2016.
56 POS MALAYSIA ANNUAL REPORT 2017

OUR CHIEFS

DATO’ AZLAN BIN SHAHRIM


Group Chief Operating Officer, Postal & Courier

Dato’ Azlan bin Shahrim, a Malaysian, male, aged 47, was appointed Group Chief Operating Officer of Pos Malaysia Berhad (“Pos
Malaysia”) on 26 January 2015 and re-designated to the current position on 1 April 2016. Dato’ Azlan holds a Master’s degree
in International Business Law from the University of Exeter. He qualified as a Barrister-at-Law at Gray’s Inn and was admitted to
the Bar of England and Wales in 1992. He has also attended the Advanced Management Programme at the Wharton School,
University of Pennsylvania, United States of America. Dato’ Azlan began his career as a corporate lawyer at Shook Lin & Bok. He
then assumed several leadership positions in investment holding companies before being appointed Deputy Chief Executive
Officer of the Port of Tanjung Pelepas in 2009. Dato’ Azlan joined DRB-HICOM Berhad in 2014 as Group Director of Corporate
Strategy and Transformation and was assigned to Pos Malaysia in the following year. Dato’ Azlan does not hold any share in
the Company or its subsidiaries. He does not have any family relationship with any Director and/or major shareholder of the
Company and has no conflict of interest with the Company. He has had no convictions for offences within the past five (5) years
and has had no public sanction or penalty imposed by the relevant regulatory bodies during the financial year. Dato’ Azlan is also
a director in the following non-listed public companies, which are wholly-owned subsidiaries of Pos Malaysia:

- Pos Malaysia and Services Holdings Berhad


- PSH Allied Berhad
- Pos Malaysia Holdings Berhad
ANNUAL REPORT 2017 POS MALAYSIA 57

DATO’ MOHD SHUKRIE BIN MOHD SALLEH


Group Chief Executive Officer

Please refer to page 55

TUAN HAJI NOR AZIZAN BIN TARJA @ TARJO


Group Chief Commercial Officer

Tuan Haji Nor Azizan bin Tarja @ Tarjo, a Malaysian, male, aged 48, was appointed Chief Commercial Officer of Pos Malaysia
Berhad (“Pos Malaysia”) on 1 April 2016. He was subsequently promoted to Group Chief Commercial Officer on 1 April 2017.
Tuan Haji Nor Azizan holds a Degree in Business Administration from California State University, Fullerton, California, United
States of America. He started his career in 1992 with Malaysia Sheet Glass Berhad and joined PROTON Holdings Berhad in 1996.
In 2001, he began his career in courier industry by joining Federal Express (M) Sdn Bhd (“FedEx”), as Ground Operations Manager.
In 2006, he left FedEx to join Pos Laju as its Head of Operations and later promoted to Chief Operating Officer (“COO”) in 2011.
In December 2013, Tuan Haji Nor Azizan was seconded to Pos Logistics Berhad (formerly known as Konsortium Logistik Berhad)
as COO. This is where he started his career in Logistics and Supply Chain industry. Tuan Haji Nor Azizan does not hold any share
in Pos Malaysia or its subsidiaries. He does not have any family relationship with any Director and/or major shareholder of the
Company and has no conflict of interest with the Company. He has had no convictions for offences within the past five (5) years
and has had no public sanction or penalty imposed by the relevant regulatory bodies during the financial year. Tuan Haji Nor
Azizan does not hold directorship in any listed and non-listed public company.
58 POS MALAYSIA ANNUAL REPORT 2017

HASNUL BIN HANIFF


Chief Operating Officer, Postal & Courier

Encik Hasnul bin Haniff, a Malaysian, male, aged 53, is the Chief Operating Officer, Postal & Courier of Pos Malaysia Berhad
(“Pos Malaysia”). Encik Hasnul holds a Master of Business Administration from the Southern California University, United States
of America and a Bachelor of Engineering (Electrical) degree from the Chisholm Institute of Technology, Australia. He started
his career with Texas Instruments Malaysia Sdn Bhd, followed by a stint at Esso Production Malaysia Inc. and thereafter with
LIKOM Technology Sdn Bhd. He has had diverse experience throughout his career covering project management, operations
management, business process improvement and quality assurance. In 1995, he joined Pos Malaysia and assumed leadership
roles in his capacity as Head of National Mail Operations and Chief Executive Officer of Datapos (M) Sdn Bhd, a wholly owned
subsidiary of Pos Malaysia. On 1 April 2013, he was appointed Chief Operating Officer of one of the strategic business units and
was thereafter re-designated as Chief Operating Officer of Postal & Courier on 1 April 2016. Encik Hasnul does not hold any share
in Pos Malaysia or its subsidiaries. He does not have any family relationship with any Director and/or major shareholder of the
Company and has no conflict of interest with the Company. He has had no convictions for offences within the past five (5) years
and has had no public sanction or penalty imposed by the relevant regulatory bodies during the financial year. Encik Hasnul does
not hold directorship in any listed and non-listed public company.

MUHAMMAD NOOR BIN ABD AZIZ @ HASHIM


Chief Financial Officer

Encik Muhammad Noor bin Abd Aziz @ Hashim, a Malaysian, male, aged 45, was appointed Chief Financial Officer of Pos
Malaysia Berhad (“Pos Malaysia”) on 3 August 2015. Encik Muhammad Noor is a Chartered Management Accountant with the
Chartered Institute of Management Accountants and a member of the Malaysian Institute of Accountants. He started his career
with Dunlop Malaysia Berhad as a management trainee in 1997. In 2000, he joined Nestle Malaysia Berhad (“Nestle”). His diverse
experience throughout his career includes the full complement of corporate finance, cost accounting, management accounting,
budgeting, treasury, internal controls, mergers and acquisitions, as well as procurement and operation controls. During his 15-
year tenure with Nestle, he held various operational and leadership roles, among which were the positions of Regional Controller
for Africa and Middle East, Regional Cash and Corporate Finance Manager for Asia Pacific and Factory Operations Controller. Encik
Muhammad Noor does not hold any share in Pos Malaysia or its subsidiaries. He does not have any family relationship with any
Director and/or major shareholder of the Company and has no conflict of interest with the Company. He has had no convictions
for offences within the past five (5) years and has had no public sanction or penalty imposed by the relevant regulatory bodies
during the financial year. Encik Muhammad Noor holds directorship in the following non-listed public companies, which are
wholly-owned subsidiaries of Pos Malaysia:
- PNSL Berhad
- Pos Malaysia and Services Holdings Berhad
- PSH Allied Berhad
- Pos Malaysia Holdings Berhad
ANNUAL REPORT 2017 POS MALAYSIA 59

ELIAS BIN EFFENDY


Chief Corporate Services

Encik Elias bin Effendy, a Malaysian, male, aged 43, was appointed Chief Corporate Services of Pos Malaysia Berhad (“Pos
Malaysia”) on 7 September 2015. Encik Elias holds a Master of Business Administration from RMIT University, Australia, a
Bachelor of Accounting degree from Cardiff University, United Kingdom and a Bachelor of Jurisprudence degree from the
University of Malaya, Malaysia. He started his career as a management trainee with Renong Berhad upon completion of his
tertiary education under the Renong Group scholarship programme. Thereafter, he had been in operations and leadership
roles at several distinctive public listed companies such as Plus Expressways Berhad, Faber Group Berhad, UEM Group Berhad
and Pharmaniaga Berhad. His breadth of experience over 20 years includes the areas of audits, operations, risk management,
contracts management, procurement, investment appraisal, business development and strategic management. Encik Elias does
not hold any share in Pos Malaysia or its subsidiaries. He does not have any family relationship with any Director and/or major
shareholder of the Company and has no conflict of interest with the Company. He has had no convictions for offences within the
past five (5) years and has had no public sanction or penalty imposed by the relevant regulatory bodies during the financial year.
Encik Elias does not hold directorship in any listed and non-listed public company.
60 POS MALAYSIA ANNUAL REPORT 2017

CORPORATE
RESPONSIBILITY

As part of Pos Malaysia’s commitment


to be socially responsible to its various
stakeholders, a series of programmes guided
by the Four Quadrant of the CR Framework
set by DRB-HICOM Berhad namely the
Workplace, Community, Marketplace and
Environment were executed to foster closer
ties with our stakeholders. Thus, we are
proud to present Pos Malaysia’s CR progress
under each quadrant for the year in review.
ANNUAL REPORT 2017 POS MALAYSIA 61

WORKPLACE
A critical success factor to achieve the vision of becoming a front-liner
for Pos Malaysia is the supply of talents. In an environment of increasing
competitive logistics, postal and courier landscape which necessitates
among others, a human capital base with a more sophisticated skill
set. In this context, Pos Malaysia would continue to support talent
development initiatives, internally as well as within the industry, aimed
at ensuring the supply pool of a balanced and skillfull workforce to
drive Pos Malaysia to greater heights.

In addition, to further enhance the skills, knowledge and competencies


of our staff and to address developmental areas, Pos Malaysia continues
to provide opportunities for the staff to attend courses, seminars,
trainings and workshops, which were needed to equip them in facing
new challenges in the local and global logistics, postal and courier as
well as the emergence of the e-Commerce industry. Additionally, the
various programmes also could be used for personal development and
to build leadership skills among the staff.

For the year under review, Pos Malaysia continues its open policy Executive Officer (GCEO) and the rest of the senior management team
approach to ensure that all employees are aware of the future plans of Pos Malaysia. Through such avenue, both parties will benefit in
and decisions made by the management. As such, briefing and town terms of getting the correct messages across as well as addressing the
hall sessions were conducted quarterly, where employees will get employees’ concerns and questions on Pos Malaysia’s business and
the opportunity to have a ‘face-to-face’ time with the Group Chief transformational plans.

COMMUNITY
Pos Malaysia commits to charitable events and donations as part of The appointed Posmen Komuniti play vital roles in minimising the
our CR initiatives. We had organised several activities to reach out to development and communication gap between the rural folks and the
the underprivileged, orphanages, students and communities from all rest of the society. In the long run, the rural folk in Sabah and Sarawak
walks of life. will have unrestricted access to rapid development and infrastructure,
education and health, thanks to the contribution of the Posmen
The Back to School Programme with Adopted Orphanages aims Komuniti initiative.
to assist and lessen the burden of these orphans especially in their
preparation to face the new academic year. Two orphanages adopted
under this initiative are Rumah Jagaan Al-Faizin, Setapak, Kuala Lumpur
and Rumah Hikmah, Kajang, Selangor. Pos Malaysia contributed school
uniforms, shoes, school bags and stationaries, amongst others to 100
children from these two orphanages.

To further extend our services to the community, Pos Malaysia


introduced the Posmen Komuniti service in the East Malaysia region.
Posmen Komuniti is one of Pos Malaysia’s projects under the Postal
Transformation Plan for Sabah and Sarawak with the objective to
widen mail coverage and improve delivery services in the rural
areas. This initiative is a joint collaboration between the Ministry of
Communications and Multimedia Malaysia, Malaysian Communications
and Multimedia Commission and Pos Malaysia.

The Posmen Komuniti initiative serves as a catalyst of change to


elevate Pos Malaysia’s products and services for the betterment
of communities, especially in the rural areas of Sabah and Sarawak.
62 POS MALAYSIA ANNUAL REPORT 2017

During this Financial Year, Pos Laju had introduced the Pos Laju
EziDrive-Thru outlets as part of its new approach to assist and provide
convenience to our customers, in delivering their items without the
hassle of leaving and parking their vehicles. This service will enable
our customers to enjoy a higher level of convenience with the expanded
network of service points in the country.

These initiatives embody our continuous efforts to transform ourselves


while putting customers at the focal point of everything we do. It
underscores our commitment to overcome the challenges and up our
ante in service excellence.

ENVIRONMENT
Pos Malaysia supports initiatives in protecting and conserving the
green environment. Towards this aim, Pos Malaysia had organised and
participated in numerous projects to create awareness among our staff,
their families as well as our customers.
MARKETPLACE
We issued the Seven Wonders of Malaysia’s Flora & Fauna stamp
In order to remain relevant and maintain a long-term growth and series in August 2016 as part of our efforts in educating avid stamp
sustainable business, Pos Malaysia constantly challenges ourselves collectors and the general public on the importance of conserving the
to improve by elevating our products and services in order to meet environment. As we are aware, we are living in a concrete urban jungle
the evolving needs and demands of our stakeholders and customers. environment, thus, we need to convey a positive message to everyone
To date, we have a strong network of more than 1,000 touch points – by promoting the preservation of our ecosystem through our flora and
including 696 post offices and 86 Pos Laju centres nationwide. fauna stamp series.

As the premier forward-looking and customer-centric national Our world will be inherited by our younger generations, hence, it is
courier company, we constantly strive to bring a myriad of products important to preserve our green environment and instil the sense of
and services under one roof and introducing affordable and more responsibility and care for the environment to our younger generation.
convenient delivery solutions. Pos Malaysia seeks to stay close to its Pos Malaysia took the initiative to organise the Eksplorasi Alam
customers and meet their lifestyle needs, enabling them to enjoy one- Bersama Anak-Anak Pos Malaysia at the Forest Research Institute of
stop convenience 24/7. Malaysia (FRIM), Kepong. Its main goal is to expose the children to
the true nature of our tropical rainforest through activities such as tree
Thus, through our courier arm, Pos Laju, we had introduced services planting, jungle trekking and treasure hunting. Thus, it will create an
such as the Pos Laju Prepaid DropBox and the Pos Laju EziBox. The Pos awareness on the importance of conserving and preserving Mother
Laju Prepaid DropBox is an alternative to the present courier acceptance Nature to the younger generations.
services which allows customers to drop off their parcels from self-
service automated machine in a safe and convenient way.

Customers can now post prepaid parcels without having to queue


at post offices and Pos Laju outlets. Likewise, this helps Pos Laju to
generally improve its over-the-counter services as the automation
of prepaid acceptance machine allows the counter staff to focus on
entertaining normal posting.

On the other hand, the Pos Laju EziBox is a free 24/7 service and was
launched for the public to pick up parcels at 50 strategic and convenient
locations throughout Malaysia.
ANNUAL REPORT 2017 POS MALAYSIA 63

CORPORATE GOVERNANCE
STATEMENT

The Board of Directors (”Board”) and Management of Pos Malaysia Berhad (“Pos Malaysia” or “the Company”), remain committed to
upholding and continuously improving good corporate governance practices throughout the Pos Malaysia Group of Companies (“Group”)
for the protection and creation of greater shareholders and other stakeholders value as well as for maintaining integrity, trust and
confidence in the Company.

The foundation for good governance lies in having an effective Board in place. The Board realises that to be effective, the Board and
its members must continuously perform and not just conform. The Board subscribes to the belief that the quest for standards of best
practice represents a continuous journey.

Pos Malaysia has considered the Recommendations made under each Principle set out in the Malaysian Code on Corporate Governance
2012 (“MCCG 2012”) and the Corporate Governance Guide issued by Bursa Malaysia Berhad (“CG Guide”).

The Board is now pleased to report to the shareholders in greater detail on the manner in which the Group has applied the Principles
and Recommendations of the MCCG 2012 and the CG Guide.

A. BOARD OF DIRECTORS i)
Ensure that the Group’s objectives are clearly established
and that strategic plans are in place to achieve those
Principal Responsibilities of the Board objectives.

The roles and responsibilities of the Board are clearly set out in the The Board is responsible for setting the Group’s strategic goals
Pos Malaysia Board Charter. The duties, responsibilities, powers and and direction, and overseeing the performance and management
functions of the Board are governed by the Constitution of the Company of the business and affairs of the Group.
(“Company Constitution”), the Companies Act 2016 (“Companies Act”),
the Main Market Listing Requirements of Bursa Malaysia Securities The Board established and endorsed a 5-year Strategic Plan
Berhad (“MMLR of Bursa Securities”), the MCCG 2012 and other (2012-2017) to define the path and direction of Pos Malaysia
relevant laws, rules and regulatory guidelines that are in force. The Pos for the said five (5) years. The 5-year Strategic Plan states the
Malaysia Board Charter assists the Directors to better appreciate their Company’s end-game model to become a one-stop provider of
roles and responsibilities, thus ensuring the long-term objectives of the communications, logistics, financial services and supply chain
Group are met. solutions. Premised on five (5) Strategic Trusts themed “SCORE”,
the Board has established broad based strategies to facilitate
The functions and power delegated by the Board to the Management business growth and achieve operational efficiency, supported
to manage the daily business and operations of the Group are spelt out by strong capabilities and customer driven strategies which are
in the Limits of Authority (“LOA”) adopted throughout the Group. The envisaged to transcend into a dynamic high performing and
LOA defines the type and limits of authority designated to specified modern Pos Malaysia. The 5-year Strategic Plan follows from an
positions of responsibility and the limits of authority vary according earlier Transformation Masterplan which focused primarily on
to the type of authority. The LOA would be reviewed, where necessary enhancing internal capabilities and processes.
from time to time according to the circumstances and operational
requirements of the Group. The schedule of matters reserved for the In March 2016, the Board established and endorsed an enhanced
collective decision of the Board is stipulated in the Board Charter. transformation programme with the objective to undertake an
aggressive transformation agenda and provision of end-to-end delivery
The Board is responsible for setting the Group’s strategic goals and services known as Strategic Blueprint - “SCORE 2.0”. SCORE 2.0 would
direction as well as overseeing the performance and management of chart the broad strategic direction of Pos Malaysia 5-year business
the business and affairs of the Group. plan from the financial year 2017 to 2021 with the aim of moving
beyond traditional last mile delivery, primarily via e-Commerce and
The principal responsibilities of the Board are set out in the Board Logistics environment in wake of the changing industry landscape into
Charter and the Board carries them out accordingly as follows:- digital media and mail volume reduction.
64 POS MALAYSIA ANNUAL REPORT 2017

(ii) Establish policies to strengthen the Group’s performance and (v) Ensure that the Group has appropriate business and enterprise-
ensure that Management proactively seeks to build the business wide risk management processes, including an adequate control
through innovation, initiative, technology, new products and environment based on internal control systems, management
development of business capital. information systems and systems for compliance with applicable
laws, rules and regulations.
As a fundamental part of discharging the Board’s responsibility to
strengthen the Group’s performance, the Board continuously improves The IAD also audits the internal control system of the Group and
and refines Management practices. For this purpose, the Board presents its Audit Reports to the BAC on a quarterly basis highlighting
ensures that the Company has adequate policies in place to ensure any breach of internal controls and other areas of weaknesses.
consistency in Management practices. The Board and Management
also periodically assess the adequacy of the existing policies within As for enterprise-wide risk management matters, Pos Malaysia has
the Group and adopt new ones and/or improve the existing policies in a dedicated Risk Management Department which is entrusted with
order to strengthen the Group’s performance. the task of monitoring the Group’s risk matters. Risk Management
Report(s) which highlight the Company’s Risk Register and Top Key
(iii) Adopt performance measures to monitor implementation and Corporate Risks are tabled quarterly to the Board Risk Management
performance of the Group’s objectives, strategies, action plans and Compliance Committee (“BRMCC”) for deliberation before the
and policies. report is escalated to the Board for further deliberation.

An Annual Management Plan (“AMP”) comprising the Group’s Business In reporting the Company’s Corporate Risks to the BRMCC, the
Plan and Annual Budget is formulated and approved by the Board on respective risk champions or risk owners are required to present
an annual basis to monitor the Group’s annual performance towards their respective Corporate Risks to the BRMCC in order to provide
achieving the 5-year Strategic Plan and the Strategic Blueprint : an avenue for a more granular reporting and deliberations on
SCORE 2.0. The AMP is reviewed by the Board through a Mid-Term a specific Corporate Risk. This enables the BRMCC to have a
Performance Review conducted at the end of the first half of the better insight on the said risk; hence, providing an opportunity
financial year to review the Company’s half-year performance and to the BRMCC to make recommendations for improvement, if
determine if there is a need for any revision to the AMP. necessary.

The Board also approves a set of Corporate Key Performance Indicators The BRMCC identified the Top Key Risks of the Group through
(“KPIs”) for the achievement of the other financial targets and evaluation of the consolidated key risks register. The selection
initiatives as set out in the AMP. The Corporate KPIs in turn becomes of Top Key Risks with its respective risk profile would enable the
the KPI of the Company’s Group Chief Executive Officer (“GCEO”). The Management to attend immediately and monitor closely on the
KPIs of the GCEO are then cascaded to the Senior Management team key risks that are deemed crucial and utmost concern to the
members and the rest of the employees accordingly. The Board also Group.
monitors the performance of the Company against the AMP through
a Management Status Report, which is tabled to the Board once every (vi) Appoint Board Committees to address specific issues,
quarter. After the closing of the financial year, the performance of the consider recommendations of the Board Committees and
Company against the Corporate KPIs is assessed and an appropriate discuss problems and reservations arising from the Board
performance rating is accorded. Committees’ deliberations.

(iv) Oversee the conduct of the Group’s business to evaluate whether During the financial year ended 31 March 2017 (“Period Under
the business is being properly managed. Review”), the Board delegated powers and authority to four
(4) Board Committees namely the BAC, Board Nomination and
In assisting the Board to evaluate whether the business of the Company Remuneration Committee (“BNRC”), Board Tender Committee
is being properly managed, the Board Audit Committee (“BAC”) is (“BTC”) and BRMCC, to carry out the respective responsibilities
tasked with assessing the Group’s current processes, determining assigned to them.
their adequacy and recommending improvements, if necessary. The
Company’s Internal Audit Department (“IAD”) assists and supports the The composition and Terms of Reference of these Board
BAC in undertaking this responsibility. Committees which had been approved by the Board are set out
in the later part of this Statement.
ANNUAL REPORT 2017 POS MALAYSIA 65

(vii) Ensure that the statutory accounts of the Group are fairly (ix) Ensure that the Group adheres to high standards of ethics and
stated and conform to the relevant regulations including corporate behaviour, including transparency in the conduct of
acceptable accounting policies. business.

The BAC is delegated with the responsibility to ensure that the In addition to the Corporate Values, Whistle Blowing Policy,
Group’s statutory accounts are fairly stated and conform to Integrity Pact under the Group Procurement Policy, Anti-
the relevant regulations and acceptable accounting policies. In Money Laundering and Counter Financing Terrorism Policy, and
carrying out such responsibility, the BAC focus particularly on Compliance Framework and Policy are in place to help inculcate
major accounting policy changes, significant and unusual events, good corporate and ethical behaviour in the conduct of the Group
significant adjustments resulting from audit, going concern and its employees.
assumptions, key audit matter (if any), and compliance with
accounting standards and other legal requirements. Whistle Blowing Policy (“WB Policy”)

(viii) Ensure that an appropriate succession planning mechanism is WB Policy was established in April 2008 with an objective to
in place for members of the Board and for Senior Management develop a culture of openness which requires the employees of
positions. the Group to observe high standards of business and personal
ethics in the conduct of their duties and responsibilities and
In determining succession planning for Board members, the comply with all applicable laws, regulations, procedures and
Board is guided by the recommendation made under the MCCG policies of Pos Malaysia.
2012 and the MMLR of Bursa Securities which stipulates that
each Director should have the character, experience, integrity, The WB Policy provides a confidential and secure means to enable
competence and time to effectively discharge his/her role as a the Board, employees of the Group and members of the public to
Director, taking into account the future needs and way forward raise concerns about the following instances of conducts that are
for the Company. When carrying out the annual assessment, the contrary to applicable laws, regulations, policies and procedures
BNRC would set out the criteria required for the Board in terms that could affect the Company’s business activities, especially
of the type of experience and competency required for Board where ethical behaviour is of particular importance:-
members to realise the Vision and Mission of the Company. The
BNRC would then determine if there are gaps within the Board, • Unethical practices in accounting, internal controls and
and if need be, propose the appointment of new Directors with financial reporting;
the required skills set. • Sexual harassment;
• Criminal offences or breaches of law i.e. money laundering,
Succession planning for the GCEO is determined by the Board fraud, bribery and corruption;
upon recommendation of the BNRC. • Conflict of interest;
• Other unethical conduct such as miscarriage of justice,
Succession planning for the Group Chief Operating Officer, Group deliberate concealment of any malpractice;
Chief Commercial Officer, Chief Operating Officers who are Heads • Breaches of the Company’s policy; and
of Business Clusters and/or active subsidiaries of Pos Malaysia, • Destruction of the Company’s assets.
the Chief Financial Officer and the Chief Corporate Services
(collectively (“Chief Level Officers”) is deliberated on by the BNRC In order to ensure a secured channel of communication for
which then makes the necessary recommendations to the Board whistleblowing, the Board has appointed the Head of Internal Audit,
for their consideration and approval. the GCEO, the Chairman of BAC and/or the Senior Independent
Director of Pos Malaysia (“Appointed Representative”) to receive
Succession planning for other Senior Management positions is whistleblowing report(s) made by the whistleblower. All concerns
determined by a structured process led by the Human Resource from the whistleblowing are treated as highly confidential
Department, which is then endorsed by the GCEO and the BNRC including safeguarding the identity of the whistleblower so as to
would also deliberate on matters relating thereto. offer protection to the whistleblower provided that the disclosure
made to the Appointed Representative is in good faith, factual,
accurate and genuine. IAD will investigate on the whistleblowing
report(s) and table the appropriate recommendation to the BAC
and/or the GCEO for decision.
66 POS MALAYSIA ANNUAL REPORT 2017

The WB Policy was last reviewed by the Board on 23 February (xi) Ensure that there is a schedule of matters reserved for
2017 to enhance its functionalities by benchmarking with other collective decision of the Board.
industry practices.
The schedule of matters reserved for the collective decision of
Integrity Pact under Group Procurement Policy the Board is set out in the Board Charter and the LOA.

Integrity Pact provides mandatory requirement for the vendor(s) The Board Charter was last reviewed in June 2016 and will be
for procurement involving consideration sum of RM500,000 and reviewed from time to time, when necessary, to update and
above to submit a Statutory Declaration (“SD”) on non-bribery streamline the necessary provisions in the Board Charter to be
commitment. All staff who are directly involved in the process in line with the regulatory changes and development and to
of evaluation and/or negotiation for procurement involving reflect the relevant changes made to the Terms of Reference of
consideration sum of RM500,000 and above must sign the SD on the Board Committees. The Board Charter is accessible on the
non-conflict of interest and confidentiality of information. website of the Company.

nti-Money Laundering and Counter Financing Terrorism


A Board Balance and Composition
Policy (“AML/CFT Policy”)
The Company Constitution stipulates that the Board shall not comprise
AML/CFT Policy was established in compliance with the Anti- of less than two (2) nor more than twelve (12) members. As at the date
Money Laundering and Anti-Terrorism Financing Act 2001 that of this Statement, the Board consists of ten (10) members, comprising
is governed by Bank Negara Malaysia specifically to prevent any a Non-Independent Non-Executive Chairman, four (4) Non-Independent
use of Pos Malaysia’s offerings for money laundering purposes. Non-Executive Directors including an Alternate Director and five (5)
Independent Non-Executive Directors. The Company has complied with
Compliance Framework and Policy the minimum compliance level set under the MMLR of Bursa Securities,
which requires one-third of the Board to comprise Independent Directors
Compliance Framework and Policy serves as guidance for the and also the recommendation under MCCG 2012, which stipulates that
Company to ensure the Company’s business activities are carried the Board should comprise a majority of Independent Directors where
out in compliance with the relevant Acts (Federal Laws, Common the Chairman of the Board is not an Independent Director.
Laws and State Laws), Ordinance, Rules and Regulations
(Administrative Code), and Guidelines. The Board values diversity as one of the considerations in selecting
candidates to serve on the Board and believes that the diversity which
All the abovementioned Policies are accessible on the website of exists in its composition provides significant benefits to the Board and
the Company. the Company.

The Board also adopted the Directors’ Code of Conduct which is The Board considers that diversity includes differences that relate
substantially premised on the Code of Ethics for Directors issued to gender, age, culture, ethnicity, skills, knowledge, qualification and
by the Companies Commission of Malaysia. experience to ensure that there is an appropriate mix of diversity, skills,
experience and expertise represented on the Board.
(x) Ensure that an appropriate public relations and
communications programme, and an investor relations The Board supports the Government of Malaysia’s effort to have
programme are in place. 30% women participation in decision making positions by 2016 and
the Company has complied with the MCCG 2012 recommendation
The Group adopted the Communications Policy and Investor on gender diversity. To-date, 22% of the total number of Directors
Relations Policy in line with the best practices laid down in the on the Board are lady Directors namely, Datuk Puteh Rukiah binti
Corporate Disclosure Guide issued by Bursa Malaysia Securities Abd. Majid and Dato’ Eshah binti Meor Suleiman. The BNRC and
Berhad (“Bursa Securities”) which governs the communications the Board take cognisance of the gender diversity by reviewing the
activities externally and internally. The Communications Policy is appropriate proportion of female to male Directors on the Board at
extended to cover the Media Policy (Press, Broadcast and Online), the time of considering new appointment of Directors to the Board.
Corporate Advertising Policy, Internal Communications Policy, Nevertheless, the normal selection criteria based on an effective
Email Communications Policy, Corporate Social Responsibility blend of competencies, skills, extensive experience and knowledge to
Policy, and Donation and Sponsorship Policy. strengthen the Board will remain a priority.
ANNUAL REPORT 2017 POS MALAYSIA 67

The Board through the BNRC, will also take into account the Directors’ A self-assessment on independence was carried out by all the
varied skills and breadth of experience to ensure they remain relevant Independent Directors, using the criteria of independence prescribed
and important for an effective management of the Group’s business. under the MMLR of Bursa Securities. All the Independent Directors
Details of the Directors’ skills and experience are outlined in the Board confirmed satisfaction of all the criteria of independence. The BNRC
of Directors’ profile contained in this Annual Report. reviewed the same and agreed that the Independent Directors are able
to exercise independent and objective judgement in carrying out their
There is a clear separation of responsibilities between the Chairman duty as Independent Directors. This pronouncement was subsequently
and the GCEO and a balance of power is maintained in the Company so endorsed by the Board. As at the date of reporting of this Statement,
that no one individual has unfettered powers of decision. all the Independent Non-Executive Directors also have not breached
the nine-year tenure for Independent Directors, as recommended under
The Chairman of the Board is responsible for representing the Board to the MCCG 2012. The current ratio of Independent Director to Non-
the shareholders. The Chairman is responsible for ensuring the integrity Independent Director on the Board is 56% : 44%.
and effectiveness of the governance process of the Board and consults
the Board promptly over any matter that gives him a cause for concern. Dato’ Abdul Hamid bin Sh Mohamed and Dato’ Ibrahim Mahaludin
The Chairman acts as a facilitator at Board meetings to ensure that bin Puteh will reach the nine-year tenure by 20 October 2017 and 25
no Board member, whether executive or non-executive, dominates the February 2018 respectively. Shareholders’ approval will be sought at
discussion. The Chairman also ensures that appropriate discussions the Company’s forthcoming Annual General Meeting (“AGM”) to retain
take place and that relevant opinions among Board members are them as Independent Directors of Pos Malaysia.
forthcoming. The Chairman further ensures that discussions result in
logical and understandable outcomes, which will lead to appropriate Brigadier General (K) Tan Sri Dato’ Sri (Dr) Haji Mohd Khamil bin Jamil,
and considered decisions by the Board. Dato’ Sri Syed Faisal Albar bin Syed A.R Albar and Datuk Mohamed
Razeek bin Md Hussain Maricar are the nominee Directors of DRB-
The overall business and day-to-day operations of the Group is managed HICOM Berhad (“DRB-HICOM”) on the Board of Pos Malaysia. DRB-
by the GCEO who is not a Board member. The GCEO is accountable to HICOM became the holding company of Pos Malaysia effective 15
the Board for the overall organisation, management and staffing of September 2016 following the completion of the acquisitions of the
the Group and for its procedures in financial and operational matters, entire equity share capital of Pos Aviation Sdn Bhd (formerly known as
including conduct and discipline. The authority limits of the GCEO are KL Airport Services Sdn Bhd) from a subsidiary of DRB-HICOM in return
stipulated in the Company’s LOA duly approved by the Board. for new shares issued by Pos Malaysia to a subsidiary of DRB-HICOM.

The five (5) Independent Non-Executive Directors of the Company Dato’ Sri Dr. Mohmad Isa bin Hussain is the representative of the
namely, Dato’ Ibrahim Mahaludin bin Puteh, Datuk Puteh Rukiah Company’s Special Shareholder i.e. the Minister of Finance Incorporated
binti Abd. Majid, Dato’ Abdul Hamid bin Sh Mohamed, Dato’ Eshah and he had on 7 December 2016, appointed Encik Ahmad Suhaimi bin
binti Meor Suleiman and Mr. Lim Hwa Yu, are independent from Endut as his Alternate Director on the Board of Pos Malaysia.
Management and are able to exercise independent judgement and
participate positively in all Board deliberations. They also play a pivotal Dato’ Ibrahim Mahaludin bin Puteh is the Senior Independent Non-
role in the provision of unbiased and independent views, advice and Executive Director of the Company, to whom concerns may be
judgement as well as safeguard the interests of other parties such conveyed to by shareholders and/or members of the public. The Senior
as the minority shareholders and other stakeholders. The Company Independent Non-Executive Director represents the interest of minority
adopts the tenure limit of nine-year for Independent Directors, as shareholders and the general public by exercising independent
recommended under the MCCG 2012. The nine-year tenure can either judgement as well as promoting good governance practices within the
be based on a consecutive service of nine years or a cumulative service Company and the Board.
of nine years with intervals. Upon completion of the nine years, an
Independent Director may continue to serve on the Board but subject
to re-designation as a Non-Independent Director. The Board based on
the recommendation by the BNRC, may seek shareholders’ approval in
a general meeting to retain the Independent Director who has reached
the tenure limit to continue as Independent Director with justification.
68 POS MALAYSIA ANNUAL REPORT 2017

Board Meetings and Supply of Information to the Board

During the Period Under Review, six (6) Board meetings were held. The Directors’ attendance at the Board meetings was as follows:-

Directors No of meetings attended Percentage


during
the Period Under Review
Brigadier General (K) Tan Sri Dato’ Sri (Dr) Haji Mohd Khamil bin Jamil 6 out of 6 100%

Dato’ Ibrahim Mahaludin bin Puteh 6 out of 6 100%

Dato’ Sri Syed Faisal Albar bin Syed A.R Albar 6 out of 6 100%

Datuk Mohamed Razeek bin Md Hussain Maricar 6 out of 6 100%

Datuk Puteh Rukiah binti Abd. Majid 6 out of 6 100%

Dato’ Eshah binti Meor Suleiman 5 out of 6 83.3%

Dato’ Sri Dr. Mohmad Isa bin Hussain 5 out of 6 83.3%

Dato’ Abdul Hamid bin Sh Mohamed 5 out of 6 83.3%

Lim Hwa Yu 6 out of 6 100%

Ahmad Suhaimi bin Endut -* -*


(appointed on 7 December 2016 as Alternate Director to
Dato’ Sri Dr. Mohmad Isa bin Hussain)

* No attendance recorded as the Principal Director attended all the Board meetings.

All the Directors had attended at least 50% of the total Board of Board papers are prepared based on a standard format to ensure
Directors’ meetings held during the Period Under Review in compliance consistency in the presentation of facts and to ensure the Board is
with the MMLR of Bursa Securities. Attendance of Alternate Director at provided with adequate and relevant information. Each Board paper
Board meeting will not be subject to this requirement. for approval contains the objective of the proposal, background
information, financial effects of the proposal, issues for consideration
A schedule for Board Meetings and Board Committees’ meetings set including risk factors, other options for consideration, disclosure of
for a whole financial year is prepared in advance and tabled to the interested Director or major shareholder (if applicable), Management’s
Board for approval before the commencement of a new financial year. recommendations and action/decision sought from the Board. Papers
Generally, the Board is scheduled to meet at least once in every quarter to the Board/Board Committee are presented by the GCEO and the
with additional meetings convened as and when necessary. relevant Management members to facilitate the Board in its decision-
making.
The agenda of each Board/Board Committee meeting together with
the Board/Board Committee meeting pack in hardcopy and e-copy The quality of information received by the Board has a direct impact on
containing Board/Board Committee papers are distributed to the the quality of the Board’s decisions. In order to maintain high standards
Board/Board Committee members at least five (5) business days prior of Board papers, at the end of every meeting, each Director provides his/
to the scheduled meeting to enable the Directors to better prepare her feedback to Management on the quality of information contained
themselves for the meeting. in the papers and the quality of Management presentations through a
Board Paper Evaluation Form. The feedback received helps Management
All Board decisions and deliberations including views of the Board in improving the quality of Board papers and presentations.
members, decision rationale and action items to be taken by
Management are clearly and accurately recorded in the minutes. Board/ All Directors have access to all information within the Group to the
Board Committee decisions and action items are also communicated to extent that the information required is pertinent to facilitate the
Management immediately after each meeting. Directors in discharging their duties and for the benefit of the Group.
ANNUAL REPORT 2017 POS MALAYSIA 69

In addition, all Directors have access to the advice and services of Board of Pos Malaysia. The appointment was tabled to the BNRC for
the Company Secretary. Any Director may seek for an independent review and recommendation to the Board for approval where the BNRC
professional advice in the event the need arises and this can be and the Board took into consideration his skills, knowledge, expertise,
done through the Board or the Management. The Company Secretary experience, professionalism, integrity and time commitment required
supports the Directors by advising the Directors of their duties under by him in discharging his duties and responsibilities. Encik Ahmad
the law, rules and regulations. The Company Secretary also supports Suhaimi had also declared his fulfillment of the “fit and proper” test as
the Directors on procedural and regulatory matters that affect the prescribed by BNM and MCMC.
Directors. In order to ensure that the Company Secretary maintains a
high quality of service to the Board, each Director provides feedback on Re-election of Directors
the Company Secretary’s services through an annual Internal Customer
Satisfaction Survey, which forms part of the Company Secretary’s KPIs. Article 110(2) of the Company Constitution (“Article 110(2)”) requires
any Director who is appointed to fill a casual vacancy or as an addition
Appointment of Board Members and GCEO to the existing Directors shall hold office only until the next following
AGM, and shall then be eligible for re-election by the shareholders.
One of the functions of the BNRC is to propose to the Board for its
consideration suitable candidates for appointment as Directors and Article 115 of the Company Constitution (“Article 115”) requires all
GCEO of Pos Malaysia. The Board will seek recommendation/referral Directors to retire from office at least once in every three (3) years at
from the existing Directors to source and nominate suitable candidates the Company’s AGM and at least one-third of the Directors are subject
for appointment as Directors. When considering new appointment(s), to retirement by rotation at each AGM where they are then eligible for
the BNRC takes into account the candidates’ skills, knowledge, re-election by the shareholders.
expertise, experience, professionalism and integrity. The BNRC also
considers gender diversity in reviewing the appropriate proportion of Directors who are retiring and seeking re-election would be tabled
female to male Directors on the Board for any new appointment(s). to the BNRC for assessment and recommendation to the Board for
In the case of a candidate for the position of an Independent Director, recommendation to the shareholders for approval on re-election of
the BNRC would consider the candidate’s ability to discharge such the retiring Directors. When assessing the suitability of the Directors
responsibilities/functions as expected of an Independent Director. The for re-election, the BNRC and the Board would take into consideration
Board will then make the final decision on the appointment of Director the requirements set out under Paragraph 2.20A of the MMLR of
upon recommendation of the BNRC. Bursa Securities namely the Directors’ character, experience, integrity,
competence and time to effectively discharge his/her role as a Director
When determining the extent of commitment each Director is able to through the annual assessment on the effectiveness and contribution
give in terms of time spent in discharging his/her responsibilities, the of the individual Director.
BNRC considers the number of directorships the Director holds. This
determination is made when the BNRC deliberates on a new Director’s If the retiring Directors are Independent Directors, the BNRC and the
appointment and when the BNRC conducts an annual assessment of Board would also take into consideration the annual assessment on
the Director’s performance. The Directors are also required to notify the independence carried out on the Independent Directors according
Chairman before accepting any new Board appointment and to share to the criteria of independence prescribed under the MMLR of Bursa
with the Chairman the time commitment he/she is expected to make Securities and the nine-year tenure limit for Independent Directors.
with regard to the new appointment.
Brigadier General (K) Tan Sri Dato’ Sri (Dr) Haji Mohd Khamil bin Jamil,
As Pos Malaysia is licensed by Bank Negara Malaysia (“BNM”) under the Dato’ Ibrahim Mahaludin bin Puteh and Mr. Lim Hwa Yu are retiring
Money Services Business Act 2011 (“MSBA”) for its remittance business pursuant to Article 115 at the forthcoming AGM. These retiring
and is also licensed by the Malaysian Communications and Multimedia Directors who are eligible for re-election, are seeking re-election at the
Commission (“MCMC”) under the Postal Act for its postal services, BNM forthcoming AGM. The profile of these retiring Directors and seeking for
and MCMC require Pos Malaysia to immediately notify them after any re-election are disclosed in the Board of Directors’ profile contained in
new appointment of Director and GCEO. All Directors and the GCEO are this Annual Report.
also subject to the fulfillment of a “fit and proper” test as prescribed by
BNM and MCMC. The BNRC and the Board had reviewed and recommended these
retiring Directors who are eligible for re-election to the shareholders
During the Period Under Review, Encik Ahmad Suhaimi bin Endut for approval at the forthcoming AGM based on the annual assessment
(“Encik Ahmad Suhaimi”) was appointed as Alternate Director to Dato’ carried out on them in relation to the effectiveness and contribution of
Sri Dr. Mohmad Isa bin Hussain, representative of the Company’s each individual Director, and annual assessment on independence for
Special Shareholder i.e. the Minister of Finance Incorporated, on the Independent Directors as mentioned above.
70 POS MALAYSIA ANNUAL REPORT 2017

Retention of Independent Directors Board Effectiveness Assessment (“BEA”)

The Company adopts the tenure limit of nine-year for Independent The BNRC is tasked under its Terms of Reference with carrying out
Directors, as recommended under the MCCG 2012. The nine-year the necessary evaluation of the effectiveness of the Board, Board
tenure can either be based on a consecutive service of nine years or a Committees and individual Directors on an annual basis. This
cumulative service of nine years with intervals. Upon completion of the includes ensuring that the Board has the appropriate mix of skills and
nine years, an Independent Director may continue to serve on the Board experiences and discharges its duties effectively.
subject to re-designation as a Non-Independent Director. The Board
based on the recommendation by the BNRC, may seek shareholders’ The evaluation on the effectiveness of the Board and Board Committees
approval in a general meeting to retain the Independent Director who is conducted through self-assessment methodologies whereby two (2)
has reached the tenure limit to continue as Independent Director with sets of Questionnaires namely, the “Evaluation of the Effectiveness of
justification. the Board Questionnaire” and the “Evaluation of the Effectiveness of
the Board Committees Questionnaire” are given to all members of the
The Independent Directors namely, Dato’ Abdul Hamid bin Sh Mohamed Board and the respective Board Committees for their completion.
and Dato’ Ibrahim Mahaludin bin Puteh will reach the nine-year tenure
by 20 October 2017 and 25 February 2018 respectively. Based on The criteria used in the assessment for the Board encompassed the
the evaluation result of the annual assessment on independence Board’s roles and responsibilities, mix of characteristics, experiences,
of the Independent Directors, the BNRC and the Board had reviewed skills, conduct of meetings, participation and contribution of Board
and recommended to the shareholders for approval at the Company’s members in meetings, Board diversity (including gender diversity)
forthcoming AGM to retain Dato’ Abdul Hamid bin Sh Mohamed and and the overall performance of the Board. Whilst the criteria used in
Dato’ Ibrahim Mahaludin bin Puteh as Independent Directors based on the assessment for the Board Committees encompassed the roles
the following justifications:- and responsibilities, skills and competencies, conduct of meetings,
participation and contribution of the Board Committees’ members in
(i) They fulfilled the criteria as Independent Directors as prescribed meetings and the overall performance of the Board Committees.
under the MMLR of Bursa Securities. Therefore, both are able to
exercise independent and objective judgement; For assessment of individual Director, each Director is required to carry
out a self-assessment on his/her capability, expertise, competency,
(ii) They have the relevant experience, possess in-depth knowledge experience, ethical standards and integrity. Each Director is also
of Pos Malaysia’s business operations, proven commitment, required to map his/her skills and experiences against the Company’s
and contribute actively and positively during Board and Board requirements to determine the skills and trainings required by each
Committees’ deliberation. They also display high level of Director (if necessary) for him/her to effectively discharge his/her
competency and integrity to effectively advise and oversight the duties and responsibilities as Director.
management of the Company;
The BNRC also carry out an assessment on the independence of each
(iii) They devote sufficient time and effort to attend all Board and Independent Director in accordance with the criteria of independence
Board Committees’ meetings for regular updates and balanced as stipulated under the MMLR of Bursa Securities in order to ensure that
decision making. They are still able to exercise independent the Independent Directors are capable of exercising their duties and
and balanced judgement, and demonstrate objectivity in their judgement independently.
deliberation in the best interest of the Company; and
The abovementioned assessments of the Board, Board Committees
(iv) They exercise due care as Independent Directors of Pos Malaysia and individual Directors as well as independence of Independent
and carry out their fiduciary duties in the interest of the Company, Directors were undertaken for the Period Under Review. The results of
shareholders as well as stakeholders. the assessments as well as comments and suggestions made thereon
were deliberated by the BNRC and the necessary action plans for
improvement were thereafter proposed for consideration and approval
by the Board. Based on the results of the assessment, generally, the
overall performance of the Board and Board Committees for the Period
Under Review was rated consistently good.
ANNUAL REPORT 2017 POS MALAYSIA 71

Directors’ Training

The Board recognises the importance of continuous training for the Directors to ensure they stay abreast of the latest developments and changes in
laws and regulations, business environment and challenges. The training also equips the Directors with the necessary knowledge and skills to enable
them to fulfill their responsibilities and to discharge their duties effectively.

All new Board members undergo a Board Induction programme to better understand the business of the Group and all the Directors have also attended
the Mandatory Accreditation Programme as required under the MMLR of Bursa Securities. Visit to the operations sites for the Board is also arranged,
as and when necessary. During the BEA process, each Director is encouraged to state the areas of training which he/she wishes to attend each year to
enhance his/her current skill sets as Director.

Training programmes, forums and educational visits attended by the Directors during the Period Under Review were as follows:-

No. Director Training attended Organiser

1 Brigadier General (K) Tan Sri Dato’ Sri (Dr) • Sustainability Reporting • Ernst & Young (“EY”)
Haji Mohd Khamil bin Jamil • Industry Workshop on Logistics and e-Commerce • Pos Malaysia
by A.T Kearney Pte Ltd
• Enhanced Auditor Report Standards • EY
• Companies Act 2016 • Naqiz & Partners (“Naqiz”)
2 Dato’ Ibrahim Mahaludin bin Puteh • Directors Duties, Business Ethnics & Governance • Malaysian Institute of
Seminar 2016 Corporate Governance
(“MICG”)
• CG Breakfast Series: The Strategy, the Leadership, • Malaysia Directors’
the Stakeholders and the Board Academy (“MINDA”)
• Industry Workshop on Logistics and e-Commerce • Pos Malaysia
by A.T Kearney Pte Ltd
• Fraud risk Management: Whose Responsibility Is • MICG
It?
• Role of the Chairman & Independent Directors • MICG
• Related Party Transactions – Their Implications • MICG
to the Board of Directors, Audit Committee &
Management

3 Dato’ Sri Syed Faisal Albar bin Syed A.R. • Trans Pacific Partnership Agreement (“TPPA”) • Ministry of International
Albar Briefing Session and Trade Industry (“MITI”)
• Sustainability Reporting • EY
• Enhanced Auditor Report Standards • EY
• Companies Act 2016 • Naqiz
4 Datuk Mohamed Razeek bin Md Hussain • Sustainability Engagement Series • Bursa Malaysia Berhad
Maricar (“Bursa Malaysia”)
• TPPA Briefing Session • MITI
• Sustainability Reporting • EY
• Industry Workshop on Logistics and e-Commerce • Pos Malaysia
by A.T Kearney Pte Ltd
• Enhanced Auditor Report Standards • EY
• Related Party Transactions – Their Implications • MICG
to the Board of Directors, Audit Committee &
Management
• Companies Act 2016 • Naqiz
• Audit Committee Seminar for the Public and • Federation of Public Listed
5 Datuk Puteh Rukiah binti Abd. Majid Private Sector 2016 Companies Berhad
• Industry Workshop on Logistics and e-Commerce • Pos Malaysia
by A.T Kearney Pte Ltd
• Related Party Transactions – Their implications • MICG
to the Board of Directors, Audit Committee &
Management
• Decoding Transaction and Related Party • CKM Advisory Sdn Bhd and
Transaction Rules Gas Malaysia Berhad
• Combatting Procurement Fraud in the Public & • Aram Global Sdn Bhd
Private Sectors Forum 2017

Organiser
72 POS MALAYSIA ANNUAL REPORT 2017

No. Director Training attended Organiser

• 6th Annual National Conference 2017 – Mitigating • MICG


Risk in Procurement
• Highlights of the Companies Act 2016 – Changes • Bursatra Sdn Bhd
& Implications (“Bursatra”)
• Raising the Bar in Board Performance & • Bursatra
Effectiveness

6 Dato’ Eshah binti Meor Suleiman • TPPA Briefing Session • MITI


• CG Breakfast Series: The Strategy, the Leadership, • Bursa Malaysia
the Stakeholders and the Board
• CG Statement Workshop: The Interplay between • Bursa Malaysia
CG, Non-Financial Information and Investment
Decisions
• Industry Workshop on Logistics and e-Commerce • Pos Malaysia
by A.T Kearney Pte Ltd
• Shariah Investing • Bursa Malaysia
• Independent Directors Program:The Essence of • Bursa Malaysia
Independence
• Issues and Challenges of the Malaysian Capital • Bursa Malaysia
Market’s Ecosystem
• Development of Exchanges and Clearing Houses • Bursa Malaysia
• Corporate Governance, Directors Duties and • Aram Global Sdn Bhd
Regulatory Updates Seminar 2017
• 28th Annual Palm & Lauric Oil Conference (2017 • Bursa Malaysia
POC)
• 6th Annual National Conference 2017 – Mitigating • MICG
Risk in Procurement
• Global Transformation Forum 2017 • Performance Management
and Delivery Unit

7 Dato’ Sri Dr. Mohmad Isa bin Hussain • Engagement session on Trans-Pacific Partnership • TM/Khazanah Nasional
Agreement at Telekom Malaysia Berhad (“TM’) Berhad
Board Meeting No. 1/2016
• Directors Forum (9/2016) “The Innovation Zone : • MINDA
Unleashing the Mindset”
• Executive Talk – Peranan Jawatankuasa Audit • Ministry Of Finance
Syarikat Menteri Kewangan Diperbadankan dalam
Memastikan Amalan Tadbir Urus Korporat
• Unveiling of Malaysia Airports Runway to Success • Malaysia Airports Holding
2020 Bhd

8 Dato’ Abdul Hamid bin Sh Mohamed • Industry Workshop on Logistics and e-Commerce • Pos Malaysia
by A.T Kearney Pte Ltd
• Competition Law Talk • MMC Corporations Berhad
• IIAM National Conference 2016 – Value of Internal • The Institute of Internal
Audit in an Organisation Auditors Malaysia
• Related Party Transactions – Their implications • MICG
to the Board of Directors, Audit Committee &
Management
• The New Companies Act 2016 – Raising the Bar for • Aram Global Sdn Bhd
Directors

9 Lim Hwa Yu • Preparation and Submission of Return Forms 2015 • Malaysian Institute of
Accountants (“MIA”)
• Industry Workshop on Logistics and e-Commerce • Pos Malaysia
by A.T Kearney Pte Ltd
• Tax Implication and Practical Application of • MIA
Intercompany Loan Transactions
• Seminar Percukaian • Inland Revenue Board of
Kebangsaan 2016 Malaysia

10 Ahmad Suhaimi bin Endut • Seminar on the Role of The Chairman & • MICG
(Alternate Director to Dato’ Sri Dr. Mohmad Independent Directors
Isa bin Hussain) • Companies Act 2016 • Wolters Kluwer
ANNUAL REPORT 2017 POS MALAYSIA 73

Board Committees • Assess the effectiveness of the Internal Audit functions and the
performance of the Chief Internal Auditor as well as set KPIs for
In accordance with the Company Constitution, the Board delegates the Chief Internal Auditor; and
certain responsibilities to the Board Committees with clear Terms of • Review and consider any related party transaction/recurrent
Reference and scope of responsibilities. During the Period Under Review, related party transaction and conflict of interest situation
the four (4) Board Committees are the BAC, BNRC, BTC and BRMCC. that may arise within the Company or Group including any
transaction, procedure or course of conduct that raises questions
(I) BAC of management integrity.

The BAC comprises four (4) Non-Executive Directors, three (3) of whom Further details of the BAC including its activities undertaken during the
are Independent Directors. The members are as follows:- Period Under Review are disclosed in the BAC Report contained in this
Annual Report.
1. Dato’ Abdul Hamid bin Sh Mohamed
(Chairman/Independent Non-Executive Director) (II) BNRC
2. Dato’ Ibrahim Mahaludin bin Puteh
(Senior Independent Non-Executive Director) The BNRC comprises four (4) Non-Executive Directors, three (3) of
3. Datuk Mohamed Razeek bin Md Hussain Maricar whom are Independent Directors. The members are as follows:-
(Non-Independent Non-Executive Director)
4. Datuk Puteh Rukiah binti Abd. Majid 1. Brigadier General (K) Tan Sri Dato’ Sri (Dr) Haji Mohd Khamil bin
(Independent Non-Executive Director) Jamil
(Chairman/Non-Independent Non-Executive Chairman)
During the Period Under Review, nine (9) meetings were held and 2. Dato’ Ibrahim Mahaludin bin Puteh
attended by all the members. A majority of the BAC members are (Senior Independent Non-Executive Director)
financially literate and/or have strong management experience. Dato’ 3. Datuk Puteh Rukiah binti Abd. Majid
Abdul Hamid bin Sh Mohamed, who is currently Executive Director (Independent Non-Executive Director)
of Symphony House Sdn Bhd, is the Chairman of the BAC. He is a 4. Dato’ Abdul Hamid bin Sh Mohamed
Chartered Certified Accountant with the Association of Chartered (Independent Non-Executive Director)
Certified Accountants and the former Chief Financial Officer of Bursa
Securities. Dato’ Ibrahim Mahaludin bin Puteh, on the other hand, has The MCCG 2012 recommends that the Senior Independent Director of
vast experience having served in various divisions at the Ministry of a company be the Chairman of the Nominating Committee. The Board
Finance including as Senior Advisor to the Executive Director for South had considered and deliberated on the recommendation and decided
East Asia at the World Bank Group in Washington D.C., the United to retain the BNRC chairmanship as status-quo until such time that the
States of America. Datuk Mohamed Razeek bin Md Hussain Maricar, an two functions of the BNRC, namely nomination and remuneration, are
engineer by qualification, has vast experience in management and in separated. Moreover, the Terms of Reference of the BNRC are already
the property industry. As for Datuk Puteh Rukiah binti Abd. Majid, she in line with the other best practices of the MCCG and duly adhered to
has vast experience having served in several senior positions at the by the BNRC.
Ministry of Finance with her last senior position prior to her retirement
in 2011 being the Deputy Secretary General (Systems and Controls). The principal functions and duties of the BNRC are as follows:-

The principal functions and duties of the BAC are as follows:- • Propose to the Board suitable candidates for appointment as
Directors in the Group including membership and chairmanship
• Review the quarterly results and annual financial statements of of Board Committees;
the Company and the Group prior to the Board’s approval; • Review on an annual basis the Board structure, size and
• Assess the quality and effectiveness of the systems of internal composition;
control and the efficiency of the Group’s operations, particularly • Propose succession planning for the GCEO, Executive Directors (if
those relating to areas of significant risk; any) and Chief Level Officers of the Company;
• Assess the internal process for determining and managing key • Assess on an annual basis the effectiveness of the Board as a
risks other than those that are dealt with by other specific Board whole, the Board Committees and the contribution of each
Committees; Director;
• Review the internal and external auditors’ evaluation of
the Group’s system of internal control and thereafter report the
evaluation to the Board;
74 POS MALAYSIA ANNUAL REPORT 2017

• Recommend to the Board the remuneration framework and the 12. Reviewed and recommended the proposed promotion of a Chief
remuneration package and terms of employment for the GCEO Level Officer.
and Chief Level Officers of the Company;
• Recommend to the Board for approval a set of KPIs for the GCEO 13. Reviewed and recommended the proposed Key Performance
and Chief Level Officers of the Company including its active Indicators of Chief Level Officers for the financial year 2017/2018.
subsidiaries and assess their respective performance against the
KPIs; and 14. Reviewed and recommended the proposed review of the salary
• Review on an annual basis the terms of office and performance package of GCEO.
of the BAC and each of the members for recommendation to the
Board. Nomination and Election of Directors

During the Period Under Review, four (4) meetings were held. All During the Period Under Review, the BNRC reviewed and recommended
members attended all the meetings except for Brigadier General (K) to the Board for approval the appointment of Encik Ahmad Suhaimi
Tan Sri Dato’ Sri (Dr) Haji Mohd Khamil Bin Jamil, who attended 3 out as Alternate Director to Dato’ Sri Dr. Mohmad Isa bin Hussain,
of 4 meetings. The activities undertaken by the BNRC during the Period representative of the Company’s Special Shareholder i.e. the Minister
Under Review were as follows:- of Finance Incorporated, on the Board of Pos Malaysia. In reviewing
the appointment, the BNRC considered his skills, knowledge, expertise,
1. Reviewed and recommended the annual assessment on the experience, professionalism, integrity and time commitment required
effectiveness of the Board of Directors, Board Committees and by him in discharging his duties and responsibilities as well as his
individual Director. declaration on fulfillment of the “fit and proper” test as prescribed by
BNM and MCMC.
2. Reviewed and recommended the annual assessment on
independence of Independent Directors, including independent The BNRC also reviewed and recommended to the Board for
Directors who will reach the nine-year tenure for retention as recommendation to the shareholder to re-elect the retiring Directors
Independent Directors. namely, Brigadier General (K) Tan Sri Dato’ Sri (Dr) Haji Mohd Khamil
bin Jamil, Dato’ Ibrahim Mahaludin bin Puteh and Mr. Lim Hwa Yu, who
3. Reviewed and recommended the re-election of Directors who are are eligible for re-election at the forthcoming AGM of the Company
due for retirement at the AGM. pursuant to Article 115 of the Company Constitution. When assessing
the suitability of the Directors for re-election, the BNRC took into
4. Annual Assessment of the term of office of the members of the consideration the requirements set out under Paragraph 2.20A of the
Board and Board Committees. MMLR of Bursa Securities namely the Directors’ character, experience,
integrity, competence and time to effectively discharge their role as
5. Reviewed and recommended the new appointment of an a Director through the annual assessment on the effectiveness and
Alternate Director and Chief Level Officers. contribution of the individual Director. For the retiring Directors who
are Independent Directors, the BNRC also took into consideration the
6. Reviewed and recommended the proposed payment of bonus for annual assessment on independence carried out on the Independent
the financial year 2015/2016 to employees. Directors according to the criteria of independence prescribed under
the MMLR of Bursa Securities and the nine-year tenure limit for
7. Reviewed and recommended the proposed payment of annual Independent Directors.
salary increment for the financial year 2016/2017 for executives.
Retention of Independent Directors
8. Reviewed and recommended the proposed Key Performance
Indicators of Chief Level Officers for the financial year 2016/2017. During the Period Under Review, the BNRC reviewed and recommended
to the Board for recommendation to the shareholders for approval at
9. Reviewed and recommended the performance rating of Chief the Company’s forthcoming AGM to retain Dato’ Abdul Hamid bin Sh
Level Officers for the financial year 2015/2016. Mohamed and Dato’ Ibrahim Mahaludin bin Puteh as Independent
Directors of the Company based on the justifications as set out in the
10. Reviewed and recommended the implementation of Minimum earlier page under the heading “Retention of Independent Directors”
Wage Order 2016. pursuant to the evaluation result of the annual assessment on
independence of the Independent Directors.
11. Reviewed and recommended the proposed revised Terms of
Reference of the BNRC.
ANNUAL REPORT 2017 POS MALAYSIA 75

Assessment of Board, Board Committees and Individual Directors • Review the selection for the appointment of successful tenderers
for both close and open tender applications;
The BNRC carried assessment on the Board, Board Committees and • Review and approve the Company’s procurement policies and
individual Directors on an annual basis to ensure that the Board has procedures including general evaluation criteria, anti-corruption
the appropriate mix of skills and experiences, and discharges its duties policy and codes of conduct and thereafter recommend the said
effectively. procurement policies and procedures to the Board for approval;
• Oversee and monitor the overall implementation of the
The BNRC assessed the Board based on the criteria which encompassed Company’s Procurement Policy Guidelines and review the
the Board’s roles and responsibilities, mix of characteristics, experiences, efficiency and effectiveness of the Company’s procurement
skills, conduct of meetings, participation and contribution of Board processes; and
members in meetings, Board diversity (including gender diversity) • Review any related party transaction/recurrent related party
and the overall performance of the Board. Whilst the criteria used transaction to be undertaken by the Company or the Group which
in the assessment of the Board Committees encompassed the roles involves tender exercise to ensure that the appropriate tender
and responsibilities, skills and competencies, conduct of meetings, evaluation is conducted by the Management before submission
participation and contribution of the Board Committees’ members in to the BAC.
meetings and the overall performance of the Board Committees.
(IV) BRMCC
For assessment of individual Director, the BNRC assessed based on
the self-assessment conducted by each Director on his/her capability, The BRMCC comprises three (3) Non-Executive Directors, all of whom
expertise, competency, experience, ethical standards and integrity are Independent Directors. The members are as follows:-
and map his/her skills and experiences against the Company’s
requirements to determine the skills and trainings required by each 1. Dato’ Ibrahim Mahaludin bin Puteh
Director (if necessary) for him/her to effectively discharge his/her (Chairman/Senior Independent Non-Executive Director)
duties and responsibilities as Director. 2. Dato’ Eshah binti Meor Suleiman
(Independent Non-Executive Director)
The BNRC carried out an assessment on the independence of each 3. Mr. Lim Hwa Yu
Independent Director in accordance with the criteria of independence (Independent Non-Executive Director)
as stipulated under the MMLR of Bursa Securities to measure the
Independent Directors’ capability of exercising their duties and During the Period Under Review, four (4) meetings were held and
judgement independently. attended by all the members.

(III) BTC The principal functions and duties of the BRMCC are as follows:-

The BTC comprises three (3) Non-Executive Directors, two (2) of whom • Provide oversight, guidance and direction to the Group’s risk
are Independent Directors. The members are as follows:- management function and processes;
• Recommend the Group’s risk management policies, strategies
1. Dato’ Eshah binti Meor Suleiman and risk tolerance levels, and any proposed changes thereto for
(Chairperson/Independent Non-Executive Director) the Board’s consideration and approval;
2. Datuk Mohamed Razeek bin Md Hussain Maricar • Evaluate the effectiveness of the Enterprise Risk Management
(Non-Independent Non-Executive Director) framework, risk management processes and support system to
3. Mr. Lim Hwa Yu identify, assess, monitor and manage the Group’s key risks;
(Independent Non-Executive Director) • Review Management’s assessment of risk on a quarterly basis
and provide quarterly updates to the Board;
During the Period Under Review, four (4) meetings were held and • Deliberate on compliance related matters of the Group and
attended by all the members. review the effectiveness of systems for monitoring compliance
with laws and regulations;
The principal functions and duties of the BTC are as follows:- • Review findings, material issues or non-compliances highlighted
by the regulatory authorities in relation to the regulated
• Examine and where appropriate, approve awards of contracts businesses of the Group; and
for the supply of goods, works or services within the limits as • Deliberate, review and evaluate the existing compliance
authorised in the LOA; framework and recommend measures for improvement by
adopting the best practices.
76 POS MALAYSIA ANNUAL REPORT 2017

The Terms of Reference of the Board Committees are accessible on the The Board as a whole determines the fees and remuneration payable
Company’s corporate website. to Non-Executive Directors based on the level of responsibilities
undertaken by the particular Non-Executive Director. With the new
B. DIRECTORS’ AND GCEO’S REMUNERATION Companies Act came into force effective 31 January 2017, Directors’
fees and benefits shall be subject to shareholders’ approval at the
The Board through the BNRC ensures that the remuneration of the GCEO Company’s AGM pursuant to Section 230(1) of the Companies Act.
is fair to attract and retain the GCEO to manage the Group successfully. Directors’ benefits comprise meeting allowances and medical benefits.
The level and make-up of the remuneration are structured so as to
link rewards with corporate and individual performance. The BNRC The Non-Executive Directors are paid meeting allowances for every
determines the performance contracts and structures the rewards for Board and Board Committee meeting that they attend and the Company
the GCEO based on his performance against the Corporate KPIs set and also reimburse reasonable expenses incurred by the Directors in the
approved by the Board in the beginning of the financial year. course of their performance of duties as Directors.

The yearly Directors’ fees and meeting allowances for Non-Executive Directors are as follows:-

Directors’ Fees (RM)


Board/Board Committees
Chairman Members

Board 120,000 80,000

BAC 15,000 10,000

Other Board Committees 8,000 6,000

Amount of meeting
Type of meeting allowance per
meeting attended
(RM)

a. Board of Directors 1,000

b. Board Audit Committee 2,500

c. Board Nomination and Remuneration Committee 1,000

d. Board Risk Management and Compliance Committee 1,000

e. Board Tender Committee 1,000

f. General meeting 1,000


ANNUAL REPORT 2017 POS MALAYSIA 77

Details of the remuneration of the Directors of Pos Malaysia for the Period Under Review are as follows:-

Salaries
Category Fees & Bonus Allowance Total

(Director) (RM) (RM) (RM) (RM)


Executive - - - -
Non-Executive 871,000 - 196,000 1,067,000

Total 871,000 - 196,000 1,067,000

The remuneration band of the Directors of Pos Malaysia for the Period Under Review are as shown below:-

Number of Directors

Range of Remuneration Executive Non-Executive

Below RM50,000 - -

RM50,001 – RM100,000 - 2

RM100,001 – RM150,000 - 7

RM150,001 – RM200,000 - -

The remuneration of the individual Directors of Pos Malaysia for the Period Under Review are as shown below:-

Directors Total remuneration (RM)

Brigadier General (K) Tan Sri Dato’ Sri (Dr) Haji Mohd 139,000
Khamil bin Jamil

Dato’ Ibrahim Mahaludin bin Puteh 142,500

Dato’ Sri Syed Faisal Albar bin Syed A.R Albar 88,000

Datuk Mohamed Razeek bin Md Hussain Maricar 130,500

Datuk Puteh Rukiah binti Abd. Majid 130,500

Dato’ Eshah binti Meor Suleiman 109,000

Dato’ Sri Dr. Mohmad Isa bin Hussain 85,000

Dato’ Abdul Hamid bin Sh Mohamed 134,500

Lim Hwa Yu 108,000

Ahmad Suhaimi bin Endut Nil


(appointed on 7 December 2016 as Alternate Director
to Dato’ Sri Dr. Mohmad Isa bin Hussain)

Article 133 of the Company’s Constitution provides that fees payable to the Principal Director shall be shared with his/her Alternate Director.
78 POS MALAYSIA ANNUAL REPORT 2017

The Board remuneration review is carried out by the BNRC on a periodical Prior to the tabling of proposed resolutions at a general meeting, the
basis of every three (3) years for recommendation to the Board to reflect shareholders are presented with a summary of the Group’s performance
the complexity of the Company’s activities and added responsibility in respect of the financial year under review.
of the Board members. Remuneration of other companies of similar
industry and market capitalisation as the Company would be used as Effective 1 July 2016, voting on resolutions at general meetings is by
benchmarks in the review. The last Board remuneration review was way of poll in line with the MMLR of Bursa Securities for the purpose of
carried out in May 2015 and upon the recommendation of the BNRC, strengthening corporate governance practices.
the Board decided to maintain the existing remuneration package of D. ACCOUNTABILITY AND AUDIT
the Board as the existing remuneration package is comparable with
the remuneration offered by other companies of similar industry and Financial Reporting
market capitalisation of the Company.
The Company’s financial statements are drawn up in accordance
C. RELATIONSHIP AND COMMUNICATION WITH with the provisions of the Companies Act and applicable approved
INVESTORS AND SHAREHOLDERS accounting standards for entities other than private entities issued
by the Malaysian Accounting Standards Board. In presenting the
Investor Relations and Shareholder Communication annual financial statements and quarterly announcements of results
The Board acknowledges the importance of communication with to the shareholders, the Board aims to present a balanced and clear
investors and other stakeholders. The Group has been communicating assessment of the Group’s position and prospects. In this regard, the
with stakeholders and investors via quarterly financial reports, annual Board also ensures that the Group uses acceptable accounting policies
reports, announcements, circulars and press releases. In addition, the for its financial statements, consistently applied and supported by
Company conducts briefings and dialogues with financial analysts via reasonable and prudent judgement and estimates.
Investors’ Briefings on a quarterly basis to keep investors informed of The BAC assists the Board by first reviewing the financial statements to
the Group’s activities and developments. ensure its completeness, accuracy and validity prior to adoption of the
The Company’s corporate website, www.pos.com.my also provides an statements by the Board and subsequent release to Bursa Securities.
avenue for keeping the general public updated on the activities of the The Directors’ Responsibility Statement in respect of the Audited
Group. The website is a source of information on the Group’s financial Financial Statements as required under Paragraph 15.26(a) of the
results, services and products, annual reports, press releases, events, MMLR of Bursa Securities is contained in this Annual Report.
newsletters, media highlights and other relevant information. There
is a dedicated channel on Investor Relations as stated in the Annual Internal Control
Report and the corporate website where any inquiry from the investors
or stakeholders may be channelled. Any inquiry on Investor Relations The Board has the overall responsibility for establishing and maintaining
matters may be conveyed to:- a sound risk management framework and system of internal control
to provide reasonable assurance of the effectiveness of the Group’s
Elias bin Effendy business operations and risk management to safeguard shareholders’
Chief Corporate Services investments and the Group’s assets.
Tel : +603-2267 2295
Email : elias.effendy@pos.com.my A dedicated Risk Management Department and Risk Management
Committee at the Management level are entrusted to look into risk
General Meetings management matters of the Group while the BRMCC oversees risk
management and compliance matters at the Group level.
The Company’s general meetings serve as the principal forum for
communicating with the shareholders of the Company. At these As for matter on internal controls, the BAC has a responsibility to assess
meetings, shareholders have direct access to the Directors and are the quality and effectiveness of the systems of internal control and
given ample opportunity and time to raise questions or seek further efficiency of the Group operations. The BAC also evaluates the processes
information from the Directors regarding the Group’s activities, financial which the Group has in place for assessing and continuously improving
performance and prospects as well as raise any issues of concern internal controls. The Group’s Statement on Internal Control and Risk
regarding the Group. Besides the Directors, the Senior Management and Management which is in line with the new guideline on Statement
the Company’s external auditors are present at the general meetings to on Risk Management and Internal Control : Guidelines for Directors of
take questions from the shareholders. Listed Issuers issued by Bursa Securities is reported separately in this
Annual Report.
ANNUAL REPORT 2017 POS MALAYSIA 79

Compliance The external auditors also meet with the BAC members without the
presence of Management pursuant to the MMLR of Bursa Securities.
Pos Malaysia is licensed under the Postal Services Act 2012 (“Postal The BAC shares and discusses with Management and the Board all
Act”) to carry out postal services in Malaysia. By being the national comments raised by the external auditors including action plans to be
postal operator, apart from being subject to the provisions of the Postal implemented by Management following the comments. For the Period
Act and its subsidiary legislations, Pos Malaysia is also subject to Under Review, this requirement has been complied with.
compliance with other rules and regulations made under the Universal
Postal Union Conventions at the international level. The declaration of independence, integrity and objectivity made
by the external auditors in the status audit report for each financial
For being licensed under the MSBA for its remittance business, Pos year end serves as a written assurance from the external auditors on
Malaysia is subject to the provisions of the MSBA and other rules, its independence and integrity throughout the conduct of the audit
regulations, guidelines and circulars of BNM in relation thereof. Besides engagement in accordance with the terms of all relevant professional
the MSBA, Pos Malaysia is also subject to compliance with the Anti- and regulatory requirements. Nevertheless, the BAC also assesses the
Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful independence, performance and suitability of the external auditor by
Activities Act 2001 (“AMLATFPUAA”). the use of a set of questionnaires prescribed by the relevant standards
The Company Secretary assists the Board in ensuring compliance by for audit firms and as prescribed under the MMLR of Bursa Securities.
the Company of the Companies Act, MMLR of Bursa Securities, Capital Corporate Sustainability
Market Services Act 2007 and other applicable securities laws, rules and
regulations. The Board is apprised of the latest amendments to these In the Company’s effort to promote corporate sustainability from
laws, rules and regulations from time to time and their application to the environmental, social and governance aspects of the business
the Company and/or the Board. As and when necessary, the Company to enhance investor perception and public trust, the Company has a
also seeks clarification through professional opinions on the extent of Corporate Responsibility Programme which defines the model and
application of the said laws, rules and regulations especially when they approach of Pos Malaysia’s Corporate Responsibility programme and
concern the duties and responsibilities of the Directors. activities. The programme also ensures that the Company’s business
clusters, subsidiaries and support units embrace the principles of
The Company’s Compliance Department and the appointed compliance responsible and ethical business practices to build the Company’s
officers assist the Board, in particular the BRMCC, in monitoring the long-term sustainability by creating and enhancing shareholder value
Group’s compliance with the relevant laws, rules and regulations as well as managing their expectations in a responsible manner and
applicable to the operations of the Group especially those relating to giving careful consideration to the impact of our business on the
the MSBA and AMLATFPUAA. The Group Compliance Department also community and the environment.
serves as the contact point for the Company to engage with BNM as
the regulator on MSBA and AMLATFPUAA matters. The IAD on the other The Company also has in place a Customer Service Charter (Domestic
hand conducts regular and special audits as and when the need arises Delivery Standards) which sets out the performance standards for
on the level of compliance at the Company’s operations level with the postal services as regulated by MCMC. Other appropriate strategies
Company’s internal policies and procedures. The IAD tables all audit will also be enhanced and established from time to time as and when
reports to the BAC for deliberation. necessary to meet the Company’s business requirements.

The Regulatory Management function of the Company serves as the The policies adopted by the Group form part of the ethical standards
contact point for the Company to engage with the MCMC, the postal and code of conduct applied throughout the Group. The policies can
services regulator in Malaysia. The Regulatory Management function be assessed at the Company’s corporate website at www.pos.com.my.
also monitors compliance by the Company with the Postal Act and also
the relevant rules and regulations pertaining to the postal operations. (This Statement is made in accordance with a resolution of the Board of
Directors dated 21 June 2017)
Relationship with External Auditors

The Company, through the BAC, has an appropriate and transparent


relationship with the external auditors. In the course of auditing the
Group’s operations, the external auditors highlights to the BAC and
the Board on matters that require the Board’s attention. The external
auditors also reports to the BAC its findings following its annual audit.
80 POS MALAYSIA ANNUAL REPORT 2017

STATEMENT ON RISK MANAGEMENT


AND INTERNAL CONTROL

Pursuant to Paragraph 15.26(b) of the Bursa Malaysia Securities RISK MANAGEMENT FRAMEWORK
Berhad Main Market Listing Requirements (“MMLR”), set out below
is the Statement on Risk Management and Internal Control of the Policy
Board of Directors (“Board”) which outlines the nature and state of risk
management and internal control of Pos Malaysia Group of Companies The Board recognises the fact that an effective risk management
(“Group”) during the year under review, and up to the date of this Annual practice is a critical component of a sound system of risk management
Report. The Malaysian Code on Corporate Governance 2012 (“MCCG and internal control. In view of this, there is a systematic process to
2012”) under Principle 6 also states that the Board should establish identify, evaluate and manage significant risks faced by the Group that
effective risk management and internal control system. may impede the achievement of the Group’s objectives during the
period under review up to the date of approval of this statement.
RESPONSIBILITY
The Board has a stewardship responsibility to understand these risks,
The Board is responsible for ensuring that a sound system of risk communicate the requirements of this policy and guide the organisation
management and internal control to safeguard shareholder’s interest in dealing with these risks.
and Group’s assets is maintained. The Board affirms its overall The policies of the Board are:
responsibility for the Group’s system of risk management and internal
control which includes the establishment of an appropriate control • To manage risks proactively;
environment and framework as well as reviewing its adequacy and • To manage risks pragmatically to the acceptable
integrity. As there are limitations that are inherent in any system of risk levels given the particular circumstance of each
management and internal control, this system is designed to manage situation;
rather than eliminate risks that may hinder the achievement of the • To manage risk routinely and in an integrated and transparent
Group’s business objectives. Accordingly, it can only provide reasonable way in accordance with good governance practices; and
but not absolute assurance against material misstatement or loss. The • To ensure that a formalised Enterprise Risk Management (“ERM”)
system of internal control includes strategic, financial, operational, Policy and Procedure Manual (“Framework”) is established and
compliance controls and risk management procedures. maintained by the Group.

The Board receives and reviews reports on system of internal control The Group adopts ISO 31000 Risk Management Standards as a primary
in the Group at least quarterly and is of the view that the system foundation and reference for the ERM framework. Via this standard,
of internal control that has been instituted throughout the Group is the Group aims to achieve a common understanding, consistency and
adequate to safeguard the shareholders’ investment and the Group’s effective ERM implementation across the Group. At the same time,
assets. the framework facilitates the Management in making sound business
decisions with the aspiration to lead the Group towards a more
The oversight role on the risk management and internal controls will be proactive and inclusive risk management approach to mitigate threats
carried out by the Board Risk Management and Compliance Committee and capitalise on opportunities.
(“BRMCC”) and Board Audit Committee (“BAC”) on behalf of the Board.
The BRMCC will identify and deliberate on key risks and mitigation
plans to ensure risks are properly managed and mitigated before
subsequently communicate it to the Board. The BRMCC is supported by
Risk Management Department (“RMD”) whilst the BAC is supported by
an Internal Audit Department (“IAD”) that reports directly to the BAC.
ANNUAL REPORT 2017 POS MALAYSIA 81

The key features of the ERM framework are depicted in the diagram below, whilst the detail of the respective activity is accompanied herewith:

ERM FRAMEWORK

Communicate & Consultation

Establishing Risk Risk Risk Risk


the Context Identification Analysis Evaluation Treatment

Monitoring & Review


Source: ISO 31000 Risk Management Standards
Source: ISO 31000 Risk Management Standards

i. Establishing the Context: h. Compliance Risk – exposure to uncertainty arising from


To identify strategic objectives, both external and internal inadequacy of compliance to required mandatory or
environment in which these strategic objectives are being established regulations and policies.
pursued. External environmental factors include the effects
of competition, regulations, etc. while internal environmental iii. Risk Analysis:
factors consist of business processes, capabilities, organisational This involves due consideration of the causes of risk, their
culture, strategic plans, etc. positive and negative impact and the likelihood of occurrence.
Risk is assessed by considering its impact and likelihood.
ii. Risk Identification:
To identify and define the specific risks and sources of risks such iv. Risk Evaluation:
as threat of substitution and/or digitalisation that will impact To make decisions about further actions whether a risk needs
mail business performance. Risks that have been identified will to be managed or mitigated. Risk with high exposures will be
be categorised into one of the following categories: prioritised accordingly after considering cost-benefit analysis.

a. Market & Business Risk – exposure to uncertainty due to v. Risk Treatment:


competition and/or fiscal policy changes which are external Process of initiating responsive or pre-emptive actions for
to the Group and beyond the control of the organization. managing risks and restricting those to tolerable levels i.e. to
within Group’s risk appetite levels. There are a range of options
b. Strategic Risk – exposure to uncertainty arising from to response to risks listed as per below:
long-term or short-term policy decisions based on current
strategy of the Group. • Terminate (Avoid):
Deciding not to pursue with the activities that will likely
c. Operational Risk – exposure to uncertainty arising from generate the risks.
daily strategic business activities related to business
operation, process or technology. • Treat (Mitigate):
Introducing controls or action plans to manage the risks.
d. Reputational Risk – exposure to uncertainty arising from
brand or image of the Group. • Transfer (Spread):
Transferring or sharing with third parties e.g. insurance,
e. Information/System Risk – exposure to uncertainty arising hedging, joint ventures, outsourcing, smart partnerships,
from loss or inaccuracy of data, Information Technology and etc.
(“IT”) systems or reported information.
• Take (Accept):
f. Financial Risk – exposure related to loss of monetary Using the strength and capabilities of the Group to accept
resources or incurring unacceptable liabilities. the risks to build competitive edge over others.

g. Organisational Risk – exposure related to the


organisational structure, management, and employees
(skills, competencies, etc.).
82 POS MALAYSIA ANNUAL REPORT 2017

vi. Risk Monitoring & Reviewing: • Review Management’s assessment on key risk on a quarterly
Monitoring ensures that as risks change due to their dynamic basis and provide quarterly updates to the Board;
nature, new measures are introduced to manage these risks.
Monitoring and reviewing also involves learning lessons from the • Enquire Management and the independent auditor about the
risk management process by reviewing events, the action plans exposure to such risks in relation to significant business, political,
and their outcomes. financial and control risks;

vii. Risk Communication & Consultation: • Assess the steps / actions Management has implemented or
This takes place in each step of the risk management process in wish to implement to manage and mitigate identifiable risk;
order to ensure that views of stakeholder / management / Board
are taken into account. The communication flows vertically (both • Deliberate on compliance related matters of the Group and
top-down & bottom-up approaches) and horizontally (across review the effectiveness of systems for monitoring compliance
departments). Key risks are being communicated formally via with laws and regulations;
periodic risk reporting to Risk Management and Compliance
Committee as well as Board Risk Management and Compliance • Review findings, material issues or non-compliances highlighted
Committee. Any constraints / limitations in managing risks will by the regulatory authorities in relation to the regulated
be highlighted in such report for decision or consent. businesses of the Group;

Board Risk Management and Compliance Committee (“BRMCC”) • Deliberate, review and evaluate the existing compliance
framework and to recommend measures for improvement by
The Board has established the BRMCC comprising entirely of Independent adopting the best practices; and
Non-Executive Directors which reflects the Group heightened emphasis
on risk management and compliance to protect shareholders’ interest. • Perform any other roles and responsibilities as may be required
The BRMCC’S composition and their terms of reference are as follows: by the Board from time to time and / or which are related to the
objectives of the Committee.
Chairman:
During the period under review, the BRMCC had its quarterly meetings to
• Dato’ Ibrahim Mahaludin bin Puteh deliberate on key risks and mitigation plans to ensure risks are properly
managed and mitigated as well as to safeguard the shareholders’
Members: interest.

• Dato’ Eshah binti Meor Suleiman Risk Management and Compliance Committee (“RMCC”)
• Mr. Lim Hwa Yu
The RMCC composition and its principle roles and responsibilities are
Terms of reference: as follows:

• Provide oversight, guidance and direction to the Group’s risk Chairman:


management functions and processes;
• Group Chief Executive Officer
• Recommend the Group’s risk management policies, strategies
and risk tolerance levels, and any proposed changes thereto for Members:
the Board’s consideration and approval;
• Group Chief Operating Officer, Postal & Courier
• Ensure that Management integrates the necessary risk • Group Chief Commercial Officer
management processes into business processes of the Group; • Chief Operating Officer, Postal & Courier
• Chief Executive Officer, Pos Aviation
• Evaluate the effectiveness of ERM framework, risk management • Chief Executive Officer, Pos Logistics
processes and support system to identify, assess, monitor and • Chief Corporate Services
manage the Group’s key risks; • Chief Financial Officer
• Chief Corporate Affairs
• Review the risk identification and management process • Chief Information Officer
developed by Management to confirm the consistency with the • Head Human Resource
Group’s strategy and business plan; • Head Compliance
• Head Risk Management
ANNUAL REPORT 2017 POS MALAYSIA 83

Roles and responsibilities of RMCC: • The BAC, comprising three Independent Non-Executive Directors
and one Non-Independent Non-Executive Director, provides
• Formulate ERM framework which include policies, processes, oversight of the internal and external audit processes. The
structures and programs; and monitor its implementation; BAC together with the IAD provides assessments based on the
approved audit plan on the adequacy, efficiency and effectiveness
• Formulate risk appetite, key risk indicators (“KRI”) and its of the Group’s internal control system. The IAD adopts a risk and
threshold, and the required action plans to mitigate the identified strategy based approach in formulating the annual audit plan
risks; and aligns its activities to the key risks identified across the
Group. The IAD recommends improvements where necessary;
• Review and deliberate existing key risks and potential emerging
risks that may derail the achievement of the business objectives • The BAC reviews the engagement of the external auditors,
and goals; their scope, approach in the conduct of the audit examination
and reports on the financial statement of the Group. The BAC
• Evaluate the adequacy of existing controls and required action meets with the external auditors at least once a year without
plans to manage the aforementioned and/or eliminate the risk the presence of Management. Please refer to page 92 to 95 for
exposure; details of works in the Audit Committee Report;

• Deliberate findings, material issues or non-compliances • The roles and responsibilities of the Board, BRMCC, RMCC,
highlighted by Compliance Department with the relevant Senior Business, Operations, and support functions in respect of Risk
Management; Management are defined in the Risk Management Policy;

• Deliberate the risk associated with the compliance matters, • The lines of responsibility and frequency of reporting of risks are
the root cause of incidents, and subsequently formulate the also defined in the Risk Management Policy;
appropriate controls to be put in place; and
• The Group also has in place a Whistle Blowing Policy (“WB Policy”)
• Ensure quarterly risk reports, quarterly compliance program to provide an avenue for employees or members of the public to
reports, and quarterly non-compliance program reports are report any breach or suspected breach of any laws or regulations,
submitted accurately and in a timely manner to the BRMCC and including business principles and the Group’s policies and
Board of Directors. guidelines, in a safe and confidential manner. The management
in an effort to create better awareness had distributed the WB
RMCC is supported by the RMD and Compliance Department. RMD Policy posters to post offices, Pos Laju Centres and departments
roles are to monitor, analyse and report the risks that being identified as well as having it published on the company’s website;
enterprise-wide as well as facilitates in the risk assessment process.
RMD also evaluates the risk policies and procedures, and initiates • Defined operating policies and procedures, which incorporate
improvements by maintaining awareness of trends and developments regulatory and internal requirements, are prescribed in Standard
in risk management that may have significant impact to the Operating Policy and Procedure (“SOPP”). The documents
organisation. are updated as and when necessary to meet the continually
changing operational needs;
Risk owners will ensure that the risk registers and risk profiles are
updated accordingly. The risk registers and risk profiles are updated • Defined level of authorities and lines of responsibilities from
quarterly and the consolidated reports are tabled to the RMCC and business units and departments up to the Board level to ensure
BRMCC. accountability for risk management and control activities;

SYSTEM OF INTERNAL CONTROL • Compulsory personal and assets declaration by all employees
at the rank of Manager/Assistant Vice President and above as
The key elements of the Group’s internal control systems are described part of the effort to better promote transparency, professional
below: uprightness as well as to facilitate any assessment should
potential allegation arises on conflict of interest.
• The Board Committees, namely the BAC, BRMCC, Board
Nomination and Remuneration Committee as well as Board • Training and development programmes are established to ensure
Tender Committee, were established by the Board to assist the that staff are kept up to date with the necessary competencies
Board in the execution of its responsibilities to provide oversight to carry out their responsibilities towards achieving the Group’s
on the effectiveness of the Group’s operations; objectives; and
84 POS MALAYSIA ANNUAL REPORT 2017

• The Board meets at least quarterly to review the Group’s The monitoring, review and reporting arrangements are in place to
operational and financial performance against approved provide reasonable assurance that the structure of controls and its
budgets, approve the quarterly report to Bursa Malaysia operations are appropriate to the Group’s operations and those risks
Securities Berhad (“Bursa Securities”) and deliberate on issues are at an acceptable level throughout the Group’s business.
that require the Board’s approval. In addition, the Board is also
updated on the changes in the business environment following ASSURANCE TO THE BOARD
the 5 Year Strategic Initiative that may adversely affect business
performance and the relevant actions taken. The Statement on Risk Management and Internal Control has been
prepared in compliance with the MMLR and the Statement on Risk
The monitoring, review and reporting arrangements in place give Management and Internal Control – Guidance for Directors of Listed
reasonable assurance that the structure of controls and its operations Issuer 2012 (“Guidance 2012”). To the best of the Board’s knowledge,
are appropriate to the Group’s operations and that risks are at an there were no material losses incurred during the period under review
acceptable level throughout the Group. However, the arrangements do as a result of weaknesses in internal control. Management continues
not eliminate the possibility of human error or deliberate circumvention to take measures to improve and strengthen the internal control
of control procedures by employees. environment. The Board has received an assurance from the Group Chief
Executive Officer and Chief Financial Officer of the Group that the risk
The Board believes that the development of the system of internal management and internal control systems are operating adequately
control is an ongoing process and has taken steps throughout the year and effectively in all material aspects based on the risk management
to improve its internal control system and will continue to do so. and internal control systems of the Group.

MONITORING AND REVIEW OF THE ADEQUACY AND INTEGRITY OF For the financial year under review, the Board is of the opinion that
THE SYSTEM OF INTERNAL CONTROL the system of risk management and internal control processes are
adequate and sound to provide reasonable assurance in safeguarding
The processes adopted to monitor and review the adequacy and shareholders’ investments, the Group’s assets and other stakeholders’
integrity of the system of internal control include the following: interests as well as to address key risks impacting the business
operations of Pos Malaysia Berhad.
• The financial statements and the Group’s performance are
reviewed quarterly by the BAC, who subsequently recommends REVIEW OF THIS STATEMENT
to the Board for their consideration and approval;
The external auditors have reviewed this Statement on Risk Management
• Examination of business processes and the state of internal and Internal Control pursuant to the scope set out in Recommended
control are conducted by the IAD. The IAD adopts a risk and Practice Guide (“RPG”) 5 (Revised 2015), Guidance for Auditors on
strategy based approach in formulating the annual audit plan. Engagement to Report on the Statement on Risk Management and
The IAD aligns its activities to the key risks identified across the Internal Control included in the Annual Report issued by the Malaysian
Group. This plan is reviewed and approved by the BAC; Institute of Accountants (“MIA”) for inclusion in the annual report of
the Group for the financial year ended 31 March 2017, and reported to
• The reports on the review are submitted and presented to the the Board that nothing has come to their attention that cause them to
BAC on a quarterly basis. Effective monitoring and tracking believe that the statement intended to be included in the annual report
of audit issues are in place through deliberations in the BAC of the Group, in all material respects:
meetings to ensure the issues are resolved in a timely manner
and recommendation implemented effectively; a) has not been prepared in accordance with the disclosures
required by paragraphs 41 and 42 of the Statement on Risk
• Management action plans for the audit issues raised are tracked Management and Internal Control: Guidelines for Directors of
by means of a system which is accessible by the representatives Listed Issuers, or
of all departments, subsidiaries and also the Leadership Team. b) is factually inaccurate.
The status of the management action plans are presented in the
BAC meetings. Follow-up reviews on the audit issues are also (This Statement on Risk Management and Internal Control was
conducted by the IAD to ensure effectiveness of the implemented approved by the Board of Directors on 21 June 2017)
action plans; and

• Investigations are carried out by the Investigation Unit, an


independent unit under IAD as requested by the Management
and the Board. Reports in relation to special review of fraud and
major control breakdown are reported to BAC on a quarterly
basis.
ANNUAL REPORT 2017 POS MALAYSIA 85

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, the provisions of the Act and the
Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“MMLR”), and to lay the same before the Company at its Annual
General Meeting.

Pursuant to Paragraph 15.26(a) of the MMLR, 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 Company and the Group for the financial year ended 31 March 2017, the Directors are
satisfied that the Company and the Group have used appropriate accounting policies, consistently applied and supported by reasonable
and prudent judgements and estimates. The Directors are also satisfied that all applicable approved accounting standards for entities
other than private entities issued by the Malaysian Accounting Standards Board and the provisions of the Act have been complied.

The Directors are responsible for ensuring that the Company and companies within the Group keep accounting records which disclose
with reasonable accuracy the financial position of the Company and of the Group. In addition, the Directors are responsible to take such
steps as are reasonably open to them to safeguard the assets of the Group and to detect and prevent fraud and other irregularities.

(This Statement is made in accordance with a resolution of the Board of Directors dated 21 June 2017)
86 POS MALAYSIA ANNUAL REPORT 2017

ADDITIONAL
COMPLIANCE INFORMATION

1. Utilisation of Proceeds The Acquisitions were completed on 15 September 2016.

During the financial year ended 31 March 2017, there were no 3. Non-Audit Fees
proceeds raised by the Company from any corporate proposal.
The following particulars in relation to the audit and non-audit
2. Material Contracts services rendered by the Company’s auditors to the Company or
its subsidiaries for the financial year ended 31 March 2017:-
Save for the following contracts, there were no other material
contracts entered into by the Company and its subsidiaries
involving the Directors’ and/or major shareholders’ interests, Company Group
still subsisting at the end of the financial year ended 31 March
2017 or, if not then subsisting, entered into since the end of the Audit Fees (RM) 310,000 1,054,000
previous financial year:-
Non-Audit Fees (RM) 490,000 910,500

(i) a conditional Share Sale Agreement dated 14 March Total (RM) 800,000 1,964,500
2016 with HICOM Holdings Berhad (“HICOM Holdings”)
for the acquisition of the entire issued and paid-up share
capital of KL Airport Services Sdn Bhd (now known as
Pos Aviation Sdn Bhd) (“KLAS”), comprising 88,328,527 The nature of the services rendered for the non-audit fees incurred
ordinary shares of RM1.00 each in KLAS (“KLAS Shares”), are tax consultation services, review of interim quarterly results,
35,300,000 redeemable convertible preference shares of review of the Statement of Risk Management and Internal Control,
RM1.00 each in KLAS (“KLAS RCPS”) and such number of review of Statement of Realised and Unrealised Profit, Goods and
New KLAS Shares to be issued by KLAS to HICOM Holdings Service Tax technical review, counter system implementation
pursuant to the capitalisation of KLAS Loan Facility and review, Agreed Upon Procedure for Money Services Business, and
capitalisation of amount owing to DRB-HICOM Berhad review of information technology application controls.
(“DRB-HICOM“) for a total purchase consideration of
RM749.35 million; and

(ii) a conditional Sale and Purchase Agreement dated 14


March 2016 with HICOM Indungan Sdn Bhd and HICOM
Engineering Sdn Bhd, an indirect wholly-owned subsidiary
of DRB-HICOM, for the acquisition of part of a parcel of
freehold industrial land held under GRN 311546 Lot
62010, Pekan HICOM, District of Petaling, State of
Selangor Darul Ehsan located along Jalan Jijan 28/35,
Section 28, 40400 Shah Alam measuring 9.912 acres for
a purchase consideration of RM69 million.

(Items (i) and (ii) are collectively referred to as the “Acquisitions”)

The total purchase consideration of RM818.35 million in respect


of the Acquisitions was satisfied via the issuance of 245,750,751
new ordinary shares of RM0.50 each in the Company (“Pos
Malaysia Shares”) to HICOM Holdings at an issue price of RM3.33
per Pos Malaysia Share.
ANNUAL REPORT 2017 POS MALAYSIA 87

4. Recurrent Related Party Transaction of a Revenue or Trading Nature

The aggregate value of transactions conducted during the financial year ended 31 March 2017 pursuant to the shareholder mandate on
recurrent related party transactions of a revenue or trading nature obtained at the Company’s 24th Annual General Meeting held on 18 August
2016 was RM47,722,830 representing 2.46% of the percentage ratio which is above the threshold prescribed under Paragraph 10.09 (1) of the
Listing Requirements of Bursa Malaysia Securities Berhad. The breakdown of the aggregate value of transactions conducted during the financial
year ended 31 March 2017 pursuant thereto are as follows:-

Pos Aggregate value


Malaysia Transacting Related parties transacted from
and/or its related Nature of and their relationship 18 August 2016 to
No. subsidiaries party transaction with Pos Malaysia Group 31 March 2017
(RM)
1 Pos Malaysia Motosikal Dan Provision of logistics 1) DRB-HICOM * 53,000
Group Enjin Nasional Sdn services by Pos Malaysia - MODENAS is a 81%-owned
Bhd (“MODENAS”) Group subsidiary of DRB-HICOM

2) TSSM #

2 Pos Malaysia Honda Malaysia Provision of logistics 1) DRB-HICOM * 666,000


Group Sdn Bhd (“Honda”) services by Pos Malaysia - Honda is an associated
Group company of DRB-HICOM

2) TSSM #

3 Pos Malaysia Edaran Modenas Purchase of 1) DRB-HICOM * 73,000


Group Sdn Bhd (“Edaran motorcycles and - Edaran Modenas is a 81%-owned
Modenas”) payment for parts and subsidiary of
maintenance of MODENAS, effectively 81%-owned
motorcycles by Pos subsidiary of DRB-HICOM
Malaysia Group
2) TSSM #

4 Pos Malaysia Proton Edar Sdn Purchase of vehicles by 1) DRB-HICOM* 2,000


Group Bhd Pos Malaysia Group - Proton Edar is a 100%-owned
(“Proton Edar”) subsidiary of Proton Marketing
Payment of parts and Sdn Bhd, effectively a
maintenance of vehicles wholly-owned
by Pos Malaysia Group subsidiary of DRB-HICOM

2) TSSM #

5 Pos Malaysia Automotive Purchase of vehicles 1) DRB-HICOM * 1,483,000


Group Corporation and payment for - ACMSB is a 100%-owned
(Malaysia) Sdn maintenance of vehicles subsidiary of Automotive
Bhd (“ACMSB”) by Pos Malaysia Group Corporation Holdings Sdn Bhd,
effectively a wholly-owned
subsidiary of DRB-HICOM

2) TSSM #
88 POS MALAYSIA ANNUAL REPORT 2017

Pos Aggregate value


Malaysia Transacting Related parties transacted from
and/or its related Nature of and their relationship 18 August 2016 to
No. subsidiaries party transaction with Pos Malaysia Group 31 March 2017
(RM)
6 Pos Malaysia DRB-HICOM Leasing Leasing of vehicles by 1) DRB-HICOM* 24,336,000
Group Sdn Bhd (“DHLS”) Pos Malaysia Group - DHLS is a 100%-owned subsidiary
of Edaran Otomobil Nasional
Berhad (“EON”), effectively a
wholly-owned subsidiary of
DRB-HICOM

2) TSSM #

7 Pos Malaysia DRB-HICOM Group Provision of Pos 1) DRB-HICOM * 34,000


Group of companies and Solutions Services by
companies related Pos Malaysia Group 2) TSSM #
to TSSM

Renting of premise by 19,000


Pos Malaysia Group

Renting of retail/ 9,000


advertisement space
at Pos Malaysia’s post
offices/outlets, land,
vehicles, equipment,
merchandises, delivery
workforce, websites and
portals

8 Datapos (M) DRB-HICOM Provision of printing, 1) DRB-HICOM * 16,000


Sdn Bhd polywrapping,
(“Datapos”) enveloping, inserting of 2) TSSM #
pamphlet and
annual reports, supply
of paper and plastic, and
provision of bulk mail
services by Datapos

9 Datapos SOGO KL Sdn Bhd Provision of printing SOGO was disposed to a non-related 36,000
(“SOGO”) services by Datapos party on 12 January 2017

10 Pos Malaysia Horsedale Membership 1) DRB-HICOM* 1,690


Group Development subscription fees - HDB is effectively a
Berhad (“HDB”) 70.6%-owned subsidiary of
(Glenmarie Golf & DRB-HICOM
Country Club)
1) TSSM#

11 Pos Malaysia Synergycentric Sdn Enhancement, 1) TSSM# 15,660,000


Group Bhd Optimisation and - Synergycentric is a company
(“Synergycentric”) Monitoring of Pos owned by a Person Connected to
Malaysia Group’s Wide TSSM
Area Network
ANNUAL REPORT 2017 POS MALAYSIA 89

Pos Aggregate value


Malaysia Transacting Related parties transacted from
and/or its related Nature of and their relationship 18 August 2016 to
No. subsidiaries party transaction with Pos Malaysia Group 31 March 2017
(RM)
12 Pos Malaysia MYTV Broad- Provision of fulfilment 1) TSSM# 2,693,000
Group casting Sdn Bhd services for the distribution - MYTV is a company owned by a
(“MYTV”) of Digital Terrestrial Person Connected to TSSM
Television Broadcasting
Sets to MYTV.

13 Pos Malaysia Multi Automotive Pos Malaysia to participate MASA was disposed to a non-related 100,000
Group Service and Assist as a merchant in party on 31 January 2017.
Sdn Bhd (“MASA”) DRB-HICOM Elite card
loyalty program

14 Pos Digicert Synergycloud Sdn Purchase of new data 1) TSSM# 283,000


Sdn Bhd Bhd centre services for - Synergycloud is a company owned
(“Pos Digicert”) (“Synergycloud”) Pos Digicert by a Person Connected to TSSM

15 Pos Malaysia Bank Muamalat Provision of Corporate Mail 1) DRB-HICOM* 120,000


Group Malaysia Berhad services by Pos Malaysia - BMMB is a 70%-owned subsidiary
(“BMMB”) Group of DRB-HICOM

2) TSSM#

Provision of payment 140


gateway by BMMB for
PosOnline

16 Pos Malaysia SRT-EON Security Provision of cash in transit 1) DRB-HICOM* 85,000


Group Services Sdn Bhd and escort services to Pos - SRT-EON is an associate company
(“SRT-EON”) Malaysia Group of EON, a wholly-owned subsidiary
of DRB-HICOM

2) TSSM#

17 Pos Malaysia DRB-HICOM Provision of training 1) DRB-HICOM* 68,000


Group programs and training
venue to Pos Malaysia 2) TSSM#
Group

18 Pos Malaysia DRB-HICOM Group Provision of training 1) DRB-HICOM* 33,000


Group of Companies facilities and programs by
Pos Malaysia Group 2) TSSM#

19 Pos Malaysia HICOM Holdings Provision of Corporate Mail 1) DRB-HICOM* 23,000


Group Berhad (“HICOM Management Services by - HICOM Holdings is a 100% owned
Holdings”) Pos Malaysia Group subsidiary of DRB-HICOM

1) TSSM#
90 POS MALAYSIA ANNUAL REPORT 2017

Pos Aggregate value


Malaysia Transacting Related parties transacted from
and/or its related Nature of and their relationship 18 August 2016 to
No. subsidiaries party transaction with Pos Malaysia Group 31 March 2017
(RM)
19 Pos Malaysia Glenmarie Provision of Corporate 1) DRB-HICOM* 45,000
(continued) Group Properties Sdn Mail Management - Glenmarie Properties is a 100%
Bhd (“Glenmarie Services by Pos Malaysia owned subsidiary of HICOM
Properties”) Group Berhad, effectively a wholly-owned
subsidiary of DRB-HICOM

2) TSSM#

Alam Flora Sdn 1) DRB-HICOM* 46,000


Bhd (“Alam Flora”) - Alam Flora is a 97.37%-owned
subsidiary of HICOM Holdings,
effectively 97.37%-owned
subsidiary of DRB-HICOM

2) TSSM#

HICOM Builders 1) DRB-HICOM* 4,000


Sdn Bhd (“HICOM - HICOM Builders is a 100%-owned
Builders”) subsidiary of HICOM Berhad,
effectively a wholly-owned
subsidiary of DRB-HICOM

2) TSSM#

DRB-HICOM Auto 1) DRB-HICOM* 6,000


Solutions Sdn - DRB-HICOM Auto is a 100%-owned
Bhd (“DRB-HICOM subsidiary of DRB-HICOM
Auto”)
2) TSSM#

HICOM HBPO 1) DRB-HICOM* 4,000


Sdn Bhd (“HICOM - HICOM HBPO is a 60%-owned
HBPO”) subsidiary of HICOM Polymers
Industry Sdn Bhd, effectively
60%-owned subsidiary of
DRB-HICOM

2) TSSM#

PUSPAKOM Sdn 1) DRB-HICOM* 57,000


Bhd - PUSPAKOM is a 100%-owned
(“PUSPAKOM”) subsidiary of DRB-HICOM

2) TSSM#

HDB 1) DRB-HICOM* 21,000


- HDB is effectively a
70.6%-owned subsidiary of
DRB-HICOM

2) TSSM#
ANNUAL REPORT 2017 POS MALAYSIA 91

Pos Aggregate value


Malaysia Transacting Related parties transacted from
and/or its related Nature of and their relationship 18 August 2016 to
No. subsidiaries party transaction with Pos Malaysia Group 31 March 2017
(RM)
20 Pos Malaysia DRB-HICOM Provision of integrated 1) DRB-HICOM* 1,330,000
Group Environmental facility management and - DHES is a 97.37%-owned
Services Sdn Bhd maintenance services by subsidiary of Alam Flora,
(“DHES”) DHES effectively 97.37%-owned
subsidiary of DRB-HICOM
2) TSSM #

21 Pos Malaysia Gas Malaysia Commissions from bills 1) TSSM# 69,000


Group Berhad (“GMB”) payment collected at - GMB is an indirect associate
Pos Malaysia outlets/ company of MMC Corporation
channels Berhad, a company in which TSSM
is an indirect Major Shareholder

22 Datapos Avon Cosmetics Provision of printing and 1) TSSM# 219,000


(Malaysia) Sdn Bhd poly wrapping, inserting - Avon is a 30%-owned associate
(“Avon”) of pamphlets and of Tradewinds Corporation Berhad,
catalogues, and a company in which TSSM is an
provision of bulk mailing indirect Major Shareholder
services by Datapos

23 Datapos BMMB Provision of printing, 1) DRB-HICOM* 17,000


inserting of bank - BMMB is a 70%-owned subsidiary
statements, supply of of DRB-HICOM
paper and envelope, and
provision of bulk mailing 2) TSSM#
services by Datapos

24 Pos Malaysia DRB-HICOM EZ- Leasing of vehicles by 1) DRB-HICOM* 111,000


Group Drive Sdn Bhd Pos Malaysia Group - DRB-HICOM EZ-Drive is a
(“DRB-HICOM wholly-owned subsidiary of
EZ-Drive”) EON, effectively a wholly-owned
subsidiary of DRB-HICOM

2) TSSM#

TOTAL 47,722,830

Notes :-
* DRB-HICOM Berhad (“DRB-HICOM”) is a holding company of Pos Malaysia Berhad (“Pos Malaysia”).
# YBhg. Tan Sri Dato’ Seri Syed Mokhtar Shah bin Syed Nor (“TSSM”) is an indirect major shareholder of Pos Malaysia and DRB-HICOM.
92 POS MALAYSIA ANNUAL REPORT 2017

AUDIT COMMITTEE
REPORT

The Board of Directors (“the Board”) of Pos Malaysia Berhad (“Pos The Head of Internal Audit Department (“IAD”) attended all the BAC
Malaysia” or (“the Company”) is pleased to present the Board Audit meetings and presented the results of internal audits conducted to
Committee (“BAC”) Report for the financial year ended (“FYE”) 31 the BAC. Other than the results of internal audits, IAD also presented
March 2017. the progress of audit activities, status of audit issues and action plans,
internal audit plan as well as audit staff strength. The external auditors
1.0 COMPOSITION AND ATTENDANCE AT MEETINGS were also invited to attend the BAC meetings to present the audit
scope and plan, and the auditors’ report on the audited annual financial
1.1 COMPOSITION statements. Private session between the BAC and the external auditors
without the presence of the Management is held at least once every
During FYE 31 March 2017, nine (9) BAC meetings were held. The year.
composition of the BAC members as well as their attendance at the
meetings is set out below: 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
Director Status of Attendance external auditors were duly conveyed by the BAC to the Board.
Directorship at Meetings
1) YBhg Dato’ Abdul Independent 9 out of 9 2.0 TERMS OF REFERENCE OF BAC
Hamid bin Sh Mohamed Non-Executive
Chairman of the BAC Director
The Terms of Reference of the BAC are aligned with the MMLR of Bursa
2) YBhg Dato’ Ibrahim Senior 9 out of 9 Securities, recommendations of the Malaysian Code on Corporate
Mahaludin bin Puteh Independent Governance 2012 (“MCCG 2012”) and relevant best practices.
Member of the BAC Non-Executive
Director Necessary revisions were made during the financial year on the Terms
of Reference of the BAC to be in line with the amendments of the MMLR
3) YBhg Datuk Mohamed Non-Independent 9 out of 9 of Bursa Securities.
Razeek bin Md Hussain Non-Executive
Maricar Director
Member of the BAC The Terms of Reference establishes the authorities, duties and
responsibilities of the BAC and incorporated in the Board Charter which
4) YBhg Datuk Puteh Independent 9 out of 9
Rukiah binti Abd. Majid Non-Executive is accessible on the Company’s official website at www.pos.com.my/
Member of the BAC Director about-us/investor-relations/corporate-governance.

3.0 SUMMARY OF WORK


YBhg Dato’ Abdul Hamid bin Sh Mohamed is a Fellow of the Association
of Chartered Certified Accountants. In this respect, the BAC is in The BAC’s work during the FYE 31 March 2017 comprised the following:-
compliance with Paragraph 15.09(1)(c), of the Main Market Listing
Requirement of Bursa Malaysia Securities Berhad (“MMLR of Bursa 3.1 FINANCIAL REPORTING
Securities”).
Reviewed quarterly and annual financial results of the Group and the
1.2 ATTENDANCE Company prior to submission to the Board for approval. Details on
sequence of reviews conducted are as follows:
Attendance at all the meetings met the requisite quorum whereby the
majority of members present were Independent Directors as stipulated a. Reviewed the fourth quarter unaudited financial results for FYE
in the BAC’s Terms of Reference. The Management of the Company 31 March 2016 at meeting on 12 May 2016;
was invited to brief the BAC on the Group’s financial performance and b. Reviewed the annual audited financial statement for FYE 31
relevant corporate matters and to address any queries raised by the March 2016 at meeting on 23 June 2016; and
BAC. c. Reviewed the unaudited quarterly financial results for the first,
second and third quarters for FYE 31 March 2017 at meetings
on 19 August 2016, 17 November 2016 and 17 February 2017
respectively.
ANNUAL REPORT 2017 POS MALAYSIA 93

The review was to ensure that the financial reporting and disclosure 3.4 EXTERNAL AUDIT
were in compliance with:-
a. Reviewed the external auditors’ Financial Statements of Pos
a. Provisions of the Companies Act 1965; Malaysia for FYE 31 March 2016 on 23 June 2016.
b. MMLR of Bursa Securities; b. Reviewed the external auditors on:-
c. Applicable approved accounting standards in Malaysia; and i. Their audit plan, audit strategy and scope of work for the
d. Other legal and regulatory requirements. year; and
ii. The results of the annual audit, their audit reports and
In the review of the annual audited financial statements, the BAC management letter together with Management’s response
discussed with the Management and the external auditors, the to the findings of the external auditors.
accounting principles and standards that were applied and their c. Briefed by the external auditors on the inclusion of communicating
judgement of the items that may affect the financial statements. Key Audit Matters in the new format audit report which provides
a level platform for Management, BAC and external auditors to
3.2 RISKS AND CONTROLS focus on.
d. Reviewed and recommended for the Board’s approval, the
The BAC evaluated the overall adequacy and effectiveness of the system external auditors’ results of quarterly reviews on 19 August 2016,
of internal controls through review of results of work performed by 17 November 2016 and 17 February 2017.
internal and external auditors and discussions with the Management. e. Reviewed the overall performance through online evaluation
The BAC also reviewed the Statement on Risk Management and Internal questionnaires and, upon satisfactory assessment of the
Control prior to inclusion in the Company’s Annual Report. effectiveness of the external auditors, recommended their
reappointment and fees payable in respect of the scope of work
3.3 INTERNAL AUDIT performed for the Board’s approval. Messrs. KPMG, which has been
Pos Malaysia’s external auditors since 2004, was recommended
a. Reviewed the Risk-Based Annual Audit Plan to ensure adequacy to be appointed for the ensuing year. The financial year ended
of the scope and coverage of major risk areas of the Group. 2017 marked its 13 years of engagement.
b. Reviewed the Key Perfomance Indicators of the IAD and appraised f. Reviewed the independence status of the external auditors and
the department’s performance and competency level; recommended that they be reappointed for the ensuing year. The
c. Reviewed the effectiveness of the audit process and resource Company conforms to the requirements of the Malaysian Institute
requirements for the year; of Accountants in ensuring that the Lead Engagement Partner and
d. Reviewed the internal audit reports presented by IAD which Quality Review Partner of the external auditors are subjected to a
were tabled during the year, the audit recommendations made five-year rotation with a two-year cooling-off period.
and Management’s responses to these recommendations. g. Every year, the BAC has obtained written assurance from the
Where appropriate, the BAC has directed the Management to external auditors confirming their independence throughout their
rectify and improve internal controls and Standard Operating term of engagement for the financial year.
Procedures based on the internal auditor’s recommendations and
suggestions for improvement; 3.5 RELATED PARTY TRANSACTIONS
e. Monitored the corrective actions on the outstanding audit issues
to ensure that all key risks and control lapses had been addressed; The BAC reviewed the recurrent related party transactions and related
and party transactions of the Group to ensure compliance with MMLR of
f. Monitored internal audit activities, the staffing requirements, Bursa Securities and that they were not favourable to the related parties
skills and the core completency of the internal auditors. than those generally available to the public and were not detrimental
to minority shareholders.
94 POS MALAYSIA ANNUAL REPORT 2017

4.0 STATEMENT ON INTERNAL AUDIT FUNCTION In order to maintain its independence and objectivity, IAD has no
operational responsibility and authority over the activities it audits. In
4.1 ROLES AND RESPONSIBILITIES determining the adequacy of audit scope and coverage, IAD applies a
comprehensive audit planning of the Group’s auditable entities and
The IAD is a fundamental part of the assurance structure of the Group. functions by performing risk analysis and ensuring adequate resources
Its main responsibility is to provide an independent and reasonable in performing the audit.
assurance on the adequacy, integrity and effectiveness of the Group’s
overall system of internal control, risk management and governance 4.2 AUDIT RESOURCES
process.
As at 31 March 2017, IAD had a total of 26 internal auditors, comprising
The Head of IAD reports directly to the BAC on a functional basis and staff from various educational and professional backgrounds. IAD
to the Group Chief Executive Officer administratively. The Head of IAD invested in various training programmes to enhance the knowledge
periodically reports on the activities performed as well as key control and competency level of the staff. The training programme, comprising
issues noted by the internal auditors to the BAC. The purpose, authority in-house and externally sourced training, focuses on functional and
and responsibility of IAD are reflected in the Internal Audit Charter, developmental needs of the internal auditors.
which was endorsed by the BAC and approved by the Board.
The total amount spent for the internal audit function at Pos Malaysia
Annually, the IAD prepares a Risk-Based Audit Plan and presents to in respect of FYE 31 March 2017 was RM3 million covering mainly
the BAC for approval. In view of the scarcity of resources, the Risk- salaries and incidental costs such as travelling and training.
Based Audit Plan gives priority and focuses on the Company’s top risks
identified by the Management. The BAC approves the IAD’s annual audit plan, financial budget and
manpower requirements to ensure the function is adequately resourced
The audit scope includes performing audit reviews at Operations with competent and proficient internal auditors.
Department, States Management Offices, Support Services Departments
and subsidiaries. The audit covers the reviews on:- 4.3 AUDIT WORK

a. The adequacy of internal controls; IAD adopts a risk-based approach as part of its audit planning and
b. The effectiveness and efficiency of operations; execution focusing on significant identified risks and effectiveness
c. The accuracy of financial and operational information; of the controls to mitigate the risks. Activities of the IAD include
d. The compliance with internal policies, procedures, regulatory review of the adequacy and effectiveness of internal controls and
and statutory requirements; risk management, compliance with applicable laws and regulations,
e. The adequacy and effectiveness of IT systems in supporting reliability and integrity of information and adequacy of safeguarding
operations; of assets.
f. The effectiveness of risk management processes and the
implementation of controls by Management to mitigate During FYE 31 March 2017, IAD executed a total of 86 audits which
company’s major risks; comprised scheduled, follow-up and ad-hoc engagements. All findings
g. The effectiveness of ongoing key project implementation and from the internal audit reviews were reported to the BAC, Senior
deliverables; and Management and the relevant Management of the operating units.
h. The levels of compliance with the Code and the MMLR of Bursa None of the components of the internal audit functions were outsourced
Securities. to external service providers.
ANNUAL REPORT 2017 POS MALAYSIA 95

The IAD also provides consultancy services to the Management in evaluating the risk exposures of strategic initiatives, new business products and
projects prior to implementation and ensures that controls are in place to mitigate risks identified. The IAD continues to assist the Management in
supporting the Whistle Blowing Policy and the Integrity Pact established in 2008 to ensure transparency and integrity throughout the tender process.
Whistle blowing programme was administered by the IAD whereby concerns received were directed to the Investigation Unit for necessary actions.

In ensuring effective communication of audit issues to all operational areas and prompt closing of audit issues, meeting were held with the
Management on a regular basis. Management is responsible for ensuring that corrective actions on reported weaknesses and suggested improvements
as recommended are taken within the required time frame.
98 Financial Statements
217 Top 10 Properties
220 Analysis of Shareholdings
224 Notice of 25 th Annual General Meeting
231 Proxy Form
98 POS MALAYSIA ANNUAL REPORT 2017

DIRECTORS’ REPORT
The Directors of Pos Malaysia Berhad (“the Company”) have pleasure in submitting their report together with the audited financial statements of the
Group and of the Company for the financial year ended 31 March 2017.

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. There has been no significant change in the nature
of these activities during the financial year.

The principal activities of the subsidiaries are stated in Note 16 to the financial statements.

HOLDING COMPANIES

The Directors regard DRB-HICOM Berhad and Etika Strategi Sdn. Bhd., companies incorporated in Malaysia as its immediate holding company and
ultimate holding company 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
Profit for the financial year attributable to:
- Owners of the Company 84,059 45,154
- Non-controlling interest (92) -
83,967 45,154

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

Since the end of the previous financial year, the Company paid a first and final single tier dividend of 11.7 sen per ordinary share totalling RM62,832,000
on 7 October 2016 in respect of the financial year ended 31 March 2016.

The first and final single tier dividend recommended by the Directors in respect of the financial year ended 31 March 2017 is 10.7 sen per ordinary
share totalling RM83,757,000 subject to the approval of the shareholders at the forthcoming Annual General Meeting.
ANNUAL REPORT 2017 POS MALAYSIA 99

DIRECTORS OF THE COMPANY AND SUBSIDIARIES

Directors who served during the financial year until the date of this report are:-

POS MALAYSIA BERHAD

1. Brigadier General (K) Tan Sri Dato’ Sri (Dr) Haji Mohd Khamil bin Jamil (Chairman)
2. Dato’ Ibrahim Mahaludin bin Puteh
3. Dato’ Sri Syed Faisal Albar bin Syed A.R Albar
4. Datuk Mohamed Razeek bin Md Hussain Maricar
5. Datuk Puteh Rukiah binti Abd. Majid
6. Dato’ Eshah binti Meor Suleiman
7. Dato’ Sri Dr. Mohmad Isa bin Hussain
8. Dato’ Abdul Hamid bin Sh Mohamed
9. Lim Hwa Yu
10. Ahmad Suhaimi bin Endut (Alternate Director to Dato’ Sri Dr. Mohmad Isa bin Hussain appointed on 7 December 2016)

SUBSIDIARIES

Dato’ Mohd Shukrie bin Mohd Salleh


Dato’ Azlan bin Shahrim
Tuan Haji Nor Azizan bin Tarja @ Tarjo
Hasnul bin Haniff
Muhammad Noor bin Abd Aziz @ Hashim
Aminah binti Othman
Matsuo Hirokazu
Elias bin Effendy (appointed on 1 April 2016)
Abd Aziz bin Miskon (appointed on 13 January 2017)
Mohd Rani Hisham bin Samsudin (resigned on 25 April 2017)
Azhar bin Ahmad (resigned on 13 January 2017)
Dato’ Abdul Harith bin Abdullah (appointed on 6 April 2016 and resigned on 15 September 2016)
Dato’ Chan Choy Lin (resigned on 15 September 2016)
Ong Ie Cheong (resigned on 15 September 2016)
Dato’ Khalid bin Abdol Rahman (resigned on 15 September 2016)
Dato’ Ahmad Fuaad bin Mohd Kenali (resigned on 6 April 2016)
Dato’ Md Radzaif bin Mohamed (resigned on 6 April 2016)
Bahaman bin Kamaruzzaman (resigned on 2 April 2016)
100 POS MALAYSIA ANNUAL REPORT 2017

DIRECTORS’ INTERESTS IN SHARES

According to the Register of Director’s Shareholdings, particulars of interests and deemed interests of Directors who held office at the end of the
financial year, in shares of the Company and of its related corporations are as follows:

NUMBER OF ORDINARY SHARES


AT AT
1.4.2016 BOUGHT SOLD 31.3.2017

Interests in the Company:


Pos Malaysia Berhad

Direct interest
Brigadier General (K) Tan Sri Dato’ Sri (Dr)
Haji Mohd Khamil bin Jamil 57 - - 57

Interests in the immediate holding company:
DRB-HICOM Berhad

Direct interest
Datuk Mohamed Razeek bin
Md Hussain Maricar 3,100 - - 3,100

Interests in the ultimate holding company:
Etika Strategi Sdn. Bhd.

Direct interest
Brigadier General (K) Tan Sri Dato’ Sri (Dr)
Haji Mohd Khamil bin Jamil 30,000 - - 30,000

Other than as disclosed above, according to the Register of Directors, none of the other Directors in office at the end of the financial year held any
interest in the shares of the Company and of its related corporations during the financial year.
ANNUAL REPORT 2017 POS MALAYSIA 101

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 year, no Director has received nor become entitled to receive a benefit (other than remuneration disclosed in
Note 6 to the financial statements) 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
During the financial year, the Company issued 225,030,030 new ordinary shares at RM3.33 per ordinary share, pursuant to the acquisition of the entire
equity interest in Pos Aviation Sdn. Bhd. (formerly known as KL Airport Services Sdn. Bhd.) (“Pos Aviation”) from HICOM Holdings Berhad, a wholly-
owned subsidiary company of DRB-HICOM Berhad for a total consideration of RM749.35 million.

The Company also issued 20,720,721 new ordinary shares at RM3.33 per ordinary share, pursuant to the acquisition of part of a parcel of freehold
industrial land located in Section 28, Shah Alam from HICOM Indungan Sdn. Bhd., an indirect wholly-owned subsidiary company of DRB-HICOM Berhad,
for a total consideration of RM69.0 million.

There were no other 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 RM23,404 limited to a coverage of
RM15,000,000.

QUALIFICATION OF SUBSIDIARIES’ FINANCIAL STATEMENTS

The auditors’ report on the audit of the financial statements of the Company’s subsidiaries did not contain any qualifications.

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.

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.
102 POS MALAYSIA ANNUAL REPORT 2017

OTHER STATUTORY INFORMATION (Continued)

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, the financial performance of the Group and of the Company for the financial year ended 31 March 2017 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 are disclosed in Note 33 to the financial statements.

AUDITORS

The auditors, KPMG PLT (converted from a conventional partnership, KPMG, on 27 December 2016), 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:

Brigadier General (K) Tan Sri Dato’ Sri (Dr) Haji Mohd Khamil bin Jamil
Director

Dato’ Abdul Hamid bin Sh. Mohamed


Director

Kuala Lumpur,

Date: 23 June 2017


ANNUAL REPORT 2017 POS MALAYSIA 103

STATEMENTS OF COMPREHENSIVE INCOME


for the financial year ended 31 March 2017

GROUP COMPANY

2017 2016 2017 2016


NOTE RM’000 RM’000 RM’000 RM’000

Revenue 4
2,082,263 1,717,439 1,659,883 1,632,479
Cost of sales (1,685,668) (1,412,799) (1,397,268) (1,377,560)

Gross profit 396,595 304,640 262,615 254,919


Other income 38,605 13,703 29,234 19,200
Selling and distribution expenses (14,023) (19,422) (8,028) (18,078)
Administrative expenses (275,954) (199,423) (204,966) (179,372)
Other expenses (17,280) (17,521) (7,771) (13,600)

Results from operating activities 127,943 81,977 71,084 63,069


Interest income 15,001 17,365 8,567 11,489
Finance cost (8,999) (4,188) - -
Net finance income 6,002 13,177 8,567 11,489
(2,566)
Zakat (2,653) (1,777) (2,418)

Profit before taxation 5 131,379 92,501 77,874 72,140


Tax expenses 7 (47,412) (29,408) (32,720) (25,644)

Profit for the financial year


83,967 63,093 45,154 46,496

Other comprehensive loss (net of tax):
Item that will not be subsequently
reclassified profit or loss:
Remeasurement of defined benefit
plan liability 8 (639) - - -
Item that are or may be subsequently
reclassified to profit or loss:
Foreign currency translation
differences for foreign operations 8 (2,034) - - -

Other comprehensive loss for the
financial year (net of tax) (2,673) - - -

Total comprehensive income


for the financial year (net of tax) 81,294 63,093 45,154 46,496
104 POS MALAYSIA ANNUAL REPORT 2017

STATEMENTS OF COMPREHENSIVE INCOME


for the financial year ended 31 March 2017 (continued)


GROUP COMPANY

2017 2016 2017 2016


NOTE RM’000 RM’000 RM’000 RM’000

Profit for the financial


year attributable to:
- Owners of the Company 84,059 63,093 45,154 46,496
- Non-controlling interest (92) - - -
83,967 63,093
45,154 46,496

Total comprehensive income


for the financial year attributable to:
- Owners of the Company 81,386 63,093 45,154 46,496
- Non-controlling interest (92) - - -
81,294
63,093 45,154 46,496

Basic and diluted earnings per share (sen) 9 12.5 11.7

The notes on pages 113 to 207 are an integral part of these financial statements.
ANNUAL REPORT 2017 POS MALAYSIA 105

STATEMENTS OF FINANCIAL POSITION


as at 31 March 2017

GROUP COMPANY

2017 2016 2017 2016


NOTE RM’000 RM’000 RM’000 RM’000

Assets
Property, plant and equipment 11 1,088,728 665,193 637,444 573,059
Prepaid lease properties 12 41,818 - - -
Investment properties 13 34,890 31,100 - -
418,183
Goodwill 14 4,630 - -
Deferred tax assets 15 10,210 - - -
Investments in subsidiaries 16 - - 899,433 162,854
Investments in associates 17 - - - -
Other receivables 18 15,100 - - -
Other investment 19 468 - - -
Total non-current assets
1,609,397 700,923 1,536,877 735,913
15,109 10,924 8,473 7,497
Inventories 20
Other investments 19 8,331 84,672 8,175 84,446
Trade and other receivables 18 775,069 415,946 503,866 381,053
Prepayments and other assets 21 74,728 6,419 63,285 4,890
Current tax assets 5,738 11,150 - 9,890
Cash and cash equivalents 22 776,117 638,712 488,152 421,713
Total current assets 1,655,092 1,167,823 1,071,951 909,489
Total assets 3,264,489 1,868,746 2,608,828 1,645,402
Equity
Share capital 23 1,071,392 268,898 1,071,392 268,898
865,252 846,698 673,473
Reserves 23 691,151
Equity attributable to owners
of the Company 1,936,644 1,115,596 1,744,865 960,049
Non-controlling interest 2,047 - - -
Total equity
1,938,691 1,115,596 1,744,865 960,049
106 POS MALAYSIA ANNUAL REPORT 2017

STATEMENTS OF FINANCIAL POSITION


as at 31 March 2017 (continued)

GROUP COMPANY

2017 2016 2017 2016


NOTE RM’000 RM’000 RM’000 RM’000

Liabilities
Loans and borrowings 24 16,208 - - -
Post-employment benefit obligations 25 2,910 - - -
Deferred tax liabilities 15 61,224 36,169 28,903 36,087
Other payables 26 10,363 - - -
Total non-current liabilities 90,705 36,169 28,903 36,087

Loans and borrowings 24 223,835 98,798 - -
Current tax liabilities 9,459 470 9,275 -
Trade and other payables 26 1,001,799 617,713 825,785 649,266
Total current liabilities 1,235,093 716,981 835,060 649,266
Total liabilities 1,325,798 753,150 863,963 685,353
Total equity and liabilities 3,264,489 1,868,746 2,608,828 1,645,402

The notes on pages 113 to 207 are an integral part of these financial statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the financial year ended 31 March 2017

Attributable to owners of the Company


NON-DISTRIBUTABLE DISTRIBUTABLE
SHARE SHARE REVALUATION POST-EMPLOYMENT CURRENCY RETAINED TOTAL NON- TOTAL
CAPITAL* PREMIUM RESERVE BENEFIT RESERVES TRANSLATION EARNINGS CONTROLLING EQUITY
(NOTE 23) (NOTE 23) RESERVE INTEREST

GROUP NOTE RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 April 2015 268,513 385 1,144 - - 852,811 1,122,853 - 1,122,853


Profit and total comprehensive income
for the financial year - - - - - 63,093 63,093 - 63,093
Dividends to owners of the Company 10 - - - - - (70,350) (70,350) - (70,350)
At 31 March 2016/1 April 2016 268,513 385 1,144 - - 845,554 1,115,596 - 1,115,596
Remeasurement of defined benefit
plan liability 8 - - - (639) - - (639) - (639)
Foreign currency translation
differences for foreign operations 8 - - - - (2,034) - (2,034) - (2,034)
Total other comprehensive income
for the year - - - (639) (2,034) - (2,673) - (2,673)
Profit for the year 84,059 84,059 (92) 83,967
ANNUAL REPORT 2017

Profit and total comprehensive


income for the financial year - - - (639) (2,034) 84,059 81,386 (92) 81,294
POS MALAYSIA

* Share capital includes the Special Rights Redeemable Preference Share of RM1.00. Refer to Note 23(c) of the financial statements for details of the terms and rights attached to the Special
Rights Redeemable Preference Share.
107
108

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY


for the financial year ended 31 March 2017 (continued)
POS MALAYSIA

Attributable to owners of the Company


NON-DISTRIBUTABLE DISTRIBUTABLE

SHARE SHARE REVALUATION POST-EMPLOYMENT CURRENCY RETAINED TOTAL NON- TOTAL


CAPITAL* PREMIUM RESERVE BENEFIT RESERVES TRANSLATION EARNINGS CONTROLLING EQUITY
(NOTE 23) (NOTE 23) RESERVE INTEREST
GROUP NOTE RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
ANNUAL REPORT 2017

Transaction with Owners


Issuance of shares in relation to
acquisition of subsidiaries 32 112,515 621,083 - - - - 733,598 - 733,598
Issuance of shares in relation to
acquisition of property, plant
and equipment 11.5 10,360 58,640 - - - - 69,000 - 69,000
Acquisition of subsidiaries 32 - - - - - - - 2,139 2,139
Issuance costs deducted against
share premium 32 - (104) - - - - (104) - (104)
Dividend to owners of the company 10 - - - - - (62,832) (62,832) - (62,832)
Transfer in accordance with Section
618(2) of the Companies Act
2016 ** 680,004 (680,004) - - - - - - -
At 31 March 2017 1,071,392 - 1,144 (639) (2,034) 866,781 1,936,644 2,047 1,938,691

* Share capital includes the Special Rights Redeemable Preference Share of RM1.00. Refer to Note 23(c) of the financial statements for details of the terms and rights attached to the Special Rights
Redeemable Preference Share.
** On 31 January 2017, pursuant to the transitional provisions relating to abolition of nominal value under Section 618(2) of Companies Act 2016, the amount standing to the credit of the Group’s and of
the Company’s share premium account shall become part of the Group’s and of the Company’s share capital. The transitional provisions were applied prospectively.
ANNUAL REPORT 2017 POS MALAYSIA 109

STATEMENTS OF CHANGES IN EQUITY


for the financial year ended 31 March 2017 (continued)

ATTRIBUTABLE TO OWNERS OF THE COMPANY


NON-DISTRIBUTABLE DISTRIBUTABLE
SHARE SHARE RETAINED TOTAL
CAPITAL* PREMIUM EARNINGS
(NOTE 23) (NOTE 23)
COMPANY NOTE RM’000 RM’000 RM’000 RM’000

At 1 April 2015 268,513 385 715,005 983,903


Profit and total comprehensive income for the
financial year - - 46,496 46,496
Dividends to owners of the Company 10 - - (70,350) (70,350)
At 31 March 2016/1 April 2016 268,513 385 691,151 960,049
Profit and total comprehensive income for the
financial year - - 45,154 45,154
Issuance of shares in relation to acquisition of
subsidiaries 32 112,515 621,083 - 733,598
Issuance of shares in relation to acquisition of
property, plant and equipment 11.5 10,360 58,640 - 69,000
Issuance costs deducted against share premium 32 - (104) - (104)
Transfer in accordance with Section 618(2) of the
Companies Act 2016 ** 680,004 (680,004) - -
Dividends to owners of the Company 10 - - (62,832) (62,832)
At 31 March 2017 1,071,392 - 673,473 1,744,865

* Share capital includes the Special Rights Redeemable Preference Share of RM1.00. Refer to Note 23(c) of the financial statements for
details of the terms and rights attached to the Special Rights Redeemable Preference Share.

** On 31 January 2017, pursuant to the transitional provisions relating to abolition of nominal value under Section 618(2) of Companies
Act 2016, the amount standing to the credit of the Group’s and of the Company’s share premium account shall become part of the Group’s
and of the Company’s share capital. The transitional provisions were applied prospectively.

The notes on pages 113 to 207 are an integral part of these financial statements.
110 POS MALAYSIA ANNUAL REPORT 2017

STATEMENTS OF CASH FLOWS


for the financial year ended 31 March 2017

GROUP COMPANY

2017 2016 2017 2016


NOTE RM’000 RM’000 RM’000 RM’000

Cash flows from operating activities


Profit before tax 131,379 92,501 77,874 72,140
Adjustments for:

Amortisation of government grant (3,832) (5,118) (3,832) (5,118)
Amortisation of prepaid lease properties 12 581 - - -
Retirement benefits obligations 25 10 - - -
Change in fair value of investment properties 13 (3,790) - - -
Depreciation of property, plant and equipment 11 127,148 102,762 103,964 97,537
Fair value through profit or loss:
Held for trading financial instruments 38 97 38 97
Finance costs 9,207 4,188 - -
Finance income (15,001) (17,365) (8,567) (11,489)
Gain on disposal of property,
plant and equipment (7,770) (557) (7,958) (557)
Inventories written down 20 554 579 255 579
Reversal of inventories written down 20 (443) (380) - -
Net (reversal of impairment loss) /
impairment loss of trade receivables (298) 14,328 2,091 10,076
Property, plant and equipment written off 778 188 776 185
2,566 2,653 1,777 2,418
Zakat
Unrealised foreign exchange gain (9,441) (6,079) (4,929) (6,079)
Gain on disposal of other investments (13) - - -
Unwinding of discounts - receivables (208) - - -
Operating profit before changes
in working capital 231,465 187,797 161,489 159,789
Change in inventories (2,501) (286) (1,231) (846)
Change in trade and other
receivables, prepayments and other assets (188,995) (70,794) (185,547) (38,768)
Change in trade and other payables 200,696 176,782 211,701 192,035
Cash generated from operations
240,665 293,499 186,412 312,210
ANNUAL REPORT 2017 POS MALAYSIA 111

STATEMENTS OF CASH FLOWS


for the financial year ended 31 March 2017 (continued)

GROUP COMPANY

2017 2016 2017 2016


NOTE RM’000 RM’000 RM’000 RM’000

Retirement benefits paid (46) - - -


Tax paid (28,855) (46,351) (20,739) (39,920)
Zakat paid (3,323) (2,653) (2,533) (2,418)
Tax refund - 59 - -
Net cash from operating activities 208,441 244,554 163,140 269,872

Cash flows from investing activities


Interest received 15,001 17,365 8,567 11,489
Net cash inflow acquisition of subsidiaries 32 18,791 - (3,085) -
Proceeds from disposal of investments and
redemption of held-to-maturity securities 84,471 5,026 84,233 5,027
Proceeds from disposal of property, plant and
equipment 10,753 557 10,565 557
Purchase of property, plant and equipment (ii),11 (120,706) (112,017) (96,678) (109,049)
Acquisition of other investments (8,000) - (8,000) -
Increased in deposit pledged (1,109) - - -
Net cash used in investing activities (799) (89,069) (4,398) (91,976)

Cash flows from financing activities


Drawdown on revolving credit 34,000 50,000 - -
Interest expense (9,207) (4,188) - -
Repayment of hire purchase (3,836) - - -
Dividend paid to owners of the Company 10 (62,832) (70,350) (62,832) (70,350)
Net cash used in financing activities (41,875) (24,538) (62,832) (70,350)

Net increase in cash and cash equivalents 165,767 130,947 95,910 107,546
Cash and cash equivalents at 1 April (i) 576,673 445,726 359,674 252,128
Cash and cash equivalents at 31 March (i) 742,440 576,673 455,584 359,674
112 POS MALAYSIA ANNUAL REPORT 2017

STATEMENTS OF CASH FLOWS


for the financial year ended 31 March 2017 (continued)

(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

2017 2016 2017 2016


NOTE RM’000 RM’000 RM’000 RM’000

Cash and bank balances 22 295,638 204,897 200,723 161,135


Money market instruments 22 254,398 407,617 83,187 249,211
Deposits placed with licensed banks 22 226,081 26,198 204,242 11,367
776,117 638,712 488,152 421,713
Less:
Collections on behalf of
agency payables, money
order and postal order payables (32,568) (62,039) (32,568) (62,039)
Deposit pledged 22 (1,109) - - -
742,440 576,673 455,584 359,674

(ii) Additions during the year

During the financial year, the Group and the Company acquired property, plant and equipment with an aggregate cost of RM195,760,000
(2016: RM112,017,000) and RM171,732,000 (2016: RM109,049,000) respectively of which RM69,000,000 (2016: Nil) was acquired by
means of issuance of shares as explained in Note 33 to the financial statements.

The notes on pages 113 to 207 are an integral part of these financial statements.
ANNUAL REPORT 2017 POS MALAYSIA 113

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 address of the registered office and principal place of business of the Company is as follows:

Tingkat 8, Ibu Pejabat Pos


Kompleks Dayabumi
50670 Kuala Lumpur

The consolidated financial statements of the Company as at and for the financial year ended 31 March 2017 comprise 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 March 2017 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. There has been no significant change in the nature
of these activities during the financial year.

The principal activities of the subsidiaries are stated in Note 16 to the financial statements.

During the financial year, the Company issued 225,030,030 new ordinary shares pursuant to the acquisition of the entire equity interest in Pos Aviation
Sdn. Bhd. (formerly known as KL Airport Services Sdn. Bhd.) (“Pos Aviation”) from HICOM Holdings Berhad, a wholly-owned subsidiary company of DRB-
HICOM Berhad and 20,720,721 new ordinary shares, pursuant to the acquisition of part of a parcel of freehold industrial land located in Section 28,
Shah Alam from HICOM Indungan Sdn. Bhd., an indirect wholly-owned subsidiary company of DRB-HICOM Berhad.

The issuance of new ordinary shares resulted in the company becoming a 53.5% subsidiary of DRB-HICOM Berhad. Accordingly, the Company regarded
DRB-HICOM Berhad and Etika Strategi Sdn. Bhd. as its immediate holding company and ultimate holding company respectively. The details of the
transaction are as disclosed in Note 33 to the financial statements.

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 23 June 2017.
114 POS MALAYSIA ANNUAL REPORT 2017

1. Basis of preparation

(a) Statement of compliance

T he financial statements of the Group and Company have been prepared in accordance with Malaysian Financial Reporting Standards
(“MFRS”), International Financial Reporting Standards and the requirements of the Companies Act, 2016 in Malaysia.

The following are accounting standards, amendments and interpretations that have been issued by the Malaysian Accounting
Standards Board (“MASB”) but have not been adopted by the Group and Company:

MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2017

• Amendments to MFRS 12, Disclosure of Interests in Other Entities (Annual Improvements to MFRS Standards 2014-2016 Cycle)
• Amendments to MFRS 107, Statement of Cash Flows – Disclosure Initiative
• Amendments to MFRS II2, Income Taxes – Recognition of Deferred Tax Assets for Unrealised Losses

MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2018

• MFRS 9, Financial Instruments (2014)


• MFRS 15, Revenue from Contracts with Customers
• Clarifications to MFRS 15, Revenue from Contracts with Customers
• IC Interpretation 22, Foreign Currency Transactions and Advance Consideration
• Amendments to MFRS 1, First-time Adoption of Malaysian Financial Reporting Standards (Annual Improvements to MFRS
Standards 2014-2016 Cycle)
• Amendments to MFRS 2, Share-based Payment – Classification and Measurement of Share-based Payment Transactions
• Amendments to MFRS 4, Insurance Contracts – Applying MFRS 9 Financial Instruments with MFRS 4 Insurance Contracts
• Amendments to MFRS 128, Investments in Associates and Joint Ventures (Annual Improvements to MFRS Standards 2014-
2016 Cycle)
• Amendments to MFRS 140, Investment Property – Transfers of Investment Property

MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2019

• MFRS 16, Leases

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
ANNUAL REPORT 2017 POS MALAYSIA 115

1. Basis of preparation (continued)


(a) Statement of compliance (continued)

The Group and the Company plan to apply the abovementioned accounting standards, amendments and interpretations:

• from the annual period beginning on 1 April 2017 for those amendments that are effective for annual periods beginning on or
after 1 January 2017.

• from the annual period beginning on 1 April 2018 for those accounting standards, amendments and interpretation that are
effective for annual periods beginning on or after 1 January 2018, except for Amendments to MFRS 2 and Amendments to
MFRS 4 which are not applicable to the Group and Company.

• from the annual period beginning on 1 April 2019 for the accounting standard that is effective for annual periods beginning on
or after 1 January 2019.


The initial application of the accounting standards, amendments or interpretations are not expected to have any material financial
impact to the current period and prior period financial statements of the Group and Company except as mentioned below:

(i) MFRS 15, Revenue from Contracts with Customers

MFRS 15 replaces the guidance in MFRS 111, Construction Contracts, MFRS 118, Revenue, IC Interpretation 13, Customer Loyalty
Programmes, IC Interpretation 15, Agreements for Construction of Real Estate, IC Interpretation 18, Transfers of Assets from
Customers and IC Interpretation 131, Revenue - Barter Transactions Involving Advertising Services.

The Group is currently assessing the financial impact that may arise from the adoption of MFRS 15.

(ii) MFRS 9, Financial Instruments

MFRS 9 replaces the guidance in MFRS 139, Financial Instruments: Recognition and Measurement on the classification and
measurement of financial assets and financial liabilities, and on hedge accounting.

The Group is currently assessing the financial impact that may arise from the adoption of MFRS 9.
116 POS MALAYSIA ANNUAL REPORT 2017

1. Basis of preparation (continued)


(a) Statement of compliance (continued)

(iii) MFRS 16, Leases

MFRS 16 replaces the guidance in MFRS 117, Leases, IC Interpretation 4, Determining whether an Arrangement contains a
Lease, IC Interpretation 115, Operating Leases – Incentives and IC Interpretation 127, Evaluating the Substance of Transactions
Involving the Legal Form of a Lease.

The Group is currently assessing the financial impact that may arise from the adoption of MFRS 16.

(b) Basis of measurement

The financial statements have been prepared on the historical cost basis other than as disclosed in Note 2.

(c) Functional and presentation currency

These financial statements are presented in Ringgit Malaysia (“RM”), which is the Company’s functional currency. All financial
information presented in RM has been rounded to the nearest thousand, unless otherwise stated.

(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
period in which the estimates are revised and in any future periods affected.

Information about critical judgements in applying accounting policies that have significant effect on the amounts recognised in the
financial statements is discussed below:

(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(f) to
the financial statements.

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.
ANNUAL REPORT 2017 POS MALAYSIA 117

1. Basis of preparation (continued)


(d) Use of estimates and judgements (continued)

(i) Impairment of goodwill on consolidation (continued)

Significant judgement is required in the estimation of the present value of future cash flows generated by the cash-generating
units, which involve 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 investment in subsidiaries and amount owing from 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 is assessed by reference to the value-in-use of the respective
subsidiaries.

The value-in-use 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 loans and receivables

The Group assesses at each reporting date whether there is any objective evidence that a financial asset is impaired. To
determine whether there is objective evidence of impairment, the Group considers factors such as the probability of insolvency
or significant financial difficulties of the debtor and default or significant delay in payments.

Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on historical
loss experience for assets with similar credit risk characteristics. The carrying amount of the Group’s loans and receivables at
the reporting date is disclosed in Note 18 to the financial statements.
118 POS MALAYSIA ANNUAL REPORT 2017

1. Basis of preparation (continued)


(d) Use of estimates and judgements (continued)

(iv) Deferred tax asset

Deferred tax assets are recognised for all deductible temporary differences to the extent that it is probable that future taxable
profit will be available against which the temporary difference 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 to the financial statements.

(v) Impairment of plant and equipment

The Group test plant and equipment for impairment if there are any indicators of impairments. The recoverable amounts were
determined based on value-in-use or fair value less costs to sell, where appropriate.

(vi) Aircraft maintenance and overhaul cost

Certain subsidiary companies are obligated to carry out heavy duty maintenance check on the airframe, engines, landing gears
and auxiliary power units, being part of the return conditions of its leased aircraft under contract. Heavy maintenance cost is
charged to the profit or loss in the financial statements based on the number of flight hours or cycles.

In arriving at the cost, assumptions are made on the estimated condition of the aircraft at the time of check, the material and
overhead costs to be incurred, and the timing of when the check is to be carried out. These assumptions are formed based on
current flight plan and long-term maintenance schedules, and are regularly reviewed to ensure they approximate to the actual.
Any revision in assumptions and estimations that causes a material effect to the estimation would be adjusted prospectively in
the financial statements.

(vii) 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 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 13.
ANNUAL REPORT 2017 POS MALAYSIA 119

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.

(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.

(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.
120 POS MALAYSIA ANNUAL REPORT 2017

2. Significant accounting policies (continued)


(a) Basis of consolidation (continued)

(iv) Loss of control (continued)

Subsequently, it is accounted for as an equity-accounted investee or as an available-for-sale 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 re-measured. 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,
unless the investment is classified as held for sale or distribution. The cost of the investment includes transaction costs.

(vi) Non-controlling interests

Non-controlling interests at the end of 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 interest 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.

(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.
ANNUAL REPORT 2017 POS MALAYSIA 121

2. Significant accounting policies (continued)


(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 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 available-for-sale equity instruments which are recognised in other comprehensive income.

The consolidated financial statements, when settlement of a monetary item receivables from or payables 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.
122 POS MALAYSIA ANNUAL REPORT 2017

2. Significant accounting policies (continued)



(c) Financial instruments

(i) Initial recognition and measurement

A financial asset or a financial liability is recognised in the statements of financial position when, and only when, the Group or
the Company becomes a party to the contractual provisions of the instrument.

A financial instrument is recognised initially, at its fair value plus, in the case of a financial instrument not at fair value through
profit or loss, transaction costs that are directly attributable to the acquisition or issue of the financial instrument.

(ii) Financial instrument categories and subsequent measurement

The Group and the Company categorise financial instruments as follows:

Financial assets

(a) Financial assets at fair value through profit or loss

Fair value through profit or loss category comprises financial assets that are held for trading, including derivatives (except
for a derivative that is a financial guarantee contract or a designated and effective hedging instrument) or financial
assets that are specifically designated into this category upon initial recognition.

Derivatives that are linked to and must be settled by delivery of unquoted equity instruments whose fair values cannot
be reliably measured are measured at cost.

Other financial assets categorised as fair value through profit or loss are subsequently measured at their fair values with
the gain or loss recognised in profit or loss.

(b) Held-to-maturity investments

Held-to-maturity investments category comprises debt instruments that are quoted in an active market and the Group or
the Company has the positive intention and ability to hold them to maturity.

Financial assets categorised as held-to-maturity investments are subsequently measured at amortised cost using the
effective interest method.

(c) Loans and receivables

Loans and receivables category comprises debts instruments that are not quoted in an active market.

Financial assets categorised as loans and receivables are subsequently measured at amortised cost using the effective
interest method.

(d) Available-for-sale financial assets

Available-for-sale category comprises investments in equity and debt securities instruments that are not held for trading.

Investments in equity instruments that do not have a quoted market price in an active market and whose fair value
cannot be reliably measured are measured at cost. Other financial assets categorised as available-for-sale are
subsequently measured at their fair values with the gain or loss recognised in other comprehensive income, except
for impairment losses, foreign exchange gains and losses arising from monetary items and gains and losses of hedged
items attributable to hedge risks of fair value hedges which are recognised in profit or loss.

On derecognition, the cumulative gain or loss recognised in other comprehensive income is reclassified from equity into
profit or loss. Interest calculated for a debt instrument using the effective interest method is recognised in profit or loss.
ANNUAL REPORT 2017 POS MALAYSIA 123

2. Significant accounting policies (continued)


(c) Financial instruments (continued)

(ii) Financial instrument categories and subsequent measurement (continued)



Financial asset (continued)

All financial assets, except for those measured at fair value through profit or loss, are subject to review for impairment (see
Note 2( j)(i)).

Financial liabilities

All financial liabilities are subsequently measured at amortised cost other than those categorised as fair value through profit
and loss.

Fair value through profit and loss category comprises financial liabilities that are derivatives (except for a derivative that is
a financial guarantee contract or a designated and effective hedging instrument) or financial liabilities that are specifically
designated into this category upon initial recognition.

Other financial liabilities categorised as fair value through profit or loss are subsequently measured at their fair values with the
gain or loss recognised in profit or loss.

(iii) 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.

Fair value arising from financial guarantee contracts are classified as deferred income and is amortised to profit or loss using
a straight-line method over the contractual period or, when there is no specified contractual period, recognised in profit or loss
upon discharge of the guarantee. When settlement of a financial guarantee contract becomes probable, an estimate of the
obligation is made. If the carrying value of the financial guarantee contract is lower than the obligation, the carrying value is
adjusted to the obligation amount and accounted for as a provision.

(iv) Regular way purchase or sale of financial assets

A regular way purchase or sale is a purchase or sale of a financial asset under a contract whose terms require delivery of the
asset within the time frame established generally by regulation or convention in the marketplace concerned.

A regular way purchase or sale of financial assets is recognised and derecognised, as applicable, using trade date accounting.
Trade date accounting refers to:
124 POS MALAYSIA ANNUAL REPORT 2017

2. Significant accounting policies (continued)


(c) Financial instruments (continued)

(iv) Regular way purchase or sale of financial assets (continued)

(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.

(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 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 and the sum
of the consideration received (including any new asset obtained less any new liability assumed) and any cumulative gain or loss
that had been recognised in equity 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 expired. 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.

(d) Property, plant and equipment

(i) Recognition and measurement

Freehold land and capital work in progress are measured at cost. Other 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.

The cost of property, plant and equipment recognised as a result of a business combination is based on fair value at acquisition
date. The fair value of property is the estimated amount for which a property could be exchanged between knowledgeable willing
parties in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and
without compulsion. The fair value of other items of property, plant and equipment is based on the quoted market prices for
similar items when available and replacement cost when appropriate.

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 operating
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.
ANNUAL REPORT 2017 POS MALAYSIA 125

2. Significant accounting policies (continued)


(d) Property, plant and equipment (continued)

(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. Leased assets are depreciated over the shorter of
the lease term and their useful lives unless it is reasonably certain that the Group will obtain ownership by the end of the lease
term. 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 years are as follows:

Leasehold land 30 - 99 years


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

Depreciation methods, useful lives and residual values are reviewed at end of the reporting period, and adjusted as appropriate.

(e) Leased assets

(i) Finance lease

Leases in terms of which the Group or the Company assumes substantially all the risks and rewards of ownership are classified
as finance leases. Upon initial recognition, the leased asset is measured at an amount equal to the lower of its fair value and
the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance
with the accounting policy applicable to that asset.

Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the
outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic
rate of interest on the remaining balance of the liability. Contingent lease payments are accounted for by revising the minimum
lease payments over the remaining term of the lease when the lease adjustment is confirmed.

Leasehold land which in substance is a finance lease is classified as property, plant and equipment, or as investment property
if held to earn rental income or for capital appreciation or for both.

(ii) Operating lease

Leases, where the Group or the Company does not assume substantially all the risks and rewards of ownership are classified
as operating leases and, except for property interest held under operating lease, the leased assets are not recognised on the
statement of financial position. Property interest held under an operating lease, which is held to earn rental income or for
capital appreciation or both, is classified as investment property and measured using fair value model.

Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease. Lease
incentives received are recognised in profit or loss as an integral part of the total lease expense, over the term of the lease.
Contingent rentals are charged to profit or loss in the reporting period in which they are incurred.

Leasehold land which in substance is an operating lease is classified as prepaid lease payments.
126 POS MALAYSIA ANNUAL REPORT 2017

2. Significant accounting policies (continued)


(e) Leased assets (continued)

(ii) Operating lease (continued)

Maintenance and Overhaul Costs

The Group is required to return the aircraft with adherence to certain maintenance conditions. In order to fulfil such conditions of
the lease, maintenance, in the form of major airframe overhaul, engine maintenance checks and restitution of major life-limited
parts, is required to be performed during the period of the lease and upon return of the aircraft to the lessor. The maintenance
provisions are recognised when the Group believes it is probable that the costs will be incurred and the amount is reasonably
estimable.

Maintenance Advances

In many aircraft operating lease contracts, the lessee has the obligation to make periodic payments which are calculated with
reference to the utilisation of airframes, engines and other major life-limited components during the lease (“supplemental
amounts”). In such contracts, upon lessee presentation of invoices evidencing the completion of qualifying work of the aircraft,
the lessor reimburses the lessee for the work, up to a maximum of the supplemental amounts received with respect to such
work.

The Group derecognises amounts not expected to be refunded during the lease when the Group has reliable information that
the Group will not be entitled to reimbursement of maintenance advances based on a maintenance forecasting model, which
estimates the maintenance inflows and outflows to lease termination date or each aircraft.

(f) Goodwill

Goodwill arising on the acquisition of subsidiary companies is tested annually for impairment and whenever there is an indication that
it may be impaired. Goodwill is carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed.
Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

Goodwill is allocated to cash generating unit for the purpose of impairment testing. The allocation is made to those cash generating
units that are expected to benefit from the synergy of the business combination in which the goodwill arose. The Group allocates
goodwill to each business segment in which it operates.

(g) Investment properties

(i) Investment properties carried at fair value

Investment properties are properties which are owned or held under a leasehold interest 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 are measured initially at cost and subsequently 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.

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.

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.
ANNUAL REPORT 2017 POS MALAYSIA 127

2. Significant accounting policies (continued)


(g) Investment properties (continued)

(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) Cash and cash equivalents

Cash and cash equivalents consist of cash on hand, balances and deposits with banks and money market instruments which have an
insignificant risk of changes in 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 cash held for the purpose of collections
on behalf of agency and money order and postal order payables.

(j) Impairment

(i) Financial assets

All financial assets (except for financial assets categorised as fair value through profit or loss, investments in subsidiaries and
investments in associates) are assessed at each reporting date whether there is any objective evidence of impairment as a
result of one or more events having an impact on the estimated future cash flows of the asset. Losses expected as a result
of future events, no matter how likely, are not recognised. For an investment in equity instrument, a significant or prolonged
decline in the fair value below its cost is an objective evidence of impairment. If any such objective evidence exists, then the
impairment loss of the financial asset is estimated.

An impairment loss in respect of loans and receivables and held-to-maturity investments is recognised in profit or loss and
is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows
discounted at the asset’s original effective interest rate. The carrying amount of the asset is reduced through the use of an
allowance account.

An impairment loss in respect of available-for-sale financial assets is recognised in profit or loss and is measured as the
difference between the asset’s acquisition cost (net of any principal repayment and amortisation) and the asset’s current fair
value, less any impairment loss previously recognised. Where a decline in the fair value of an available-for-sale financial asset
has been recognised in other comprehensive income, the cumulative loss in other comprehensive income is reclassified from
equity to profit or loss.

An impairment loss in respect of unquoted equity instrument that is carried at cost is recognised in profit or loss and is
measured as the difference between the financial asset’s carrying amount and the present value of estimated future cash flows
discounted at the current market rate of return for a similar financial asset.

Impairment losses recognised in profit or loss for an investment in an equity instrument classified as available-for-sale is not
reversed through profit or loss.
128 POS MALAYSIA ANNUAL REPORT 2017

2. Significant accounting policies (continued)

(j) Impairment (continued)

(i) Financial assets (continued)

If, in a subsequent period, the fair value of a debt instrument increases and the increase can be objectively related to an event
occurring after the impairment loss was recognised in profit or loss, the impairment loss is reversed, to the extent that the
asset’s carrying amount does not exceed what the carrying amount would have been had the impairment not been recognised
at the date the impairment is reversed. The amount of the reversal is recognised in profit or loss.

(ii) Other assets

The carrying amounts of other assets (except for inventories, 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 unit. 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.

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 pre-tax
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 units (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.

(k) 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.


ANNUAL REPORT 2017 POS MALAYSIA 129

2. Significant accounting policies (continued)


(k) Equity instruments (continued)

(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.

(l) Employee benefits

(i) Short-term employee benefits

Short-term employee benefit 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 has 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.

(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 refund from the plan or reductions in future contribution to the plans. To
calculate the present value of economic benefits, considerations are given to any applicable minimum funding requirements.

Remeasurements of the next 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.

(m) Provisions

A provision is recognised if, as a result of a past event, the Group and the Company have 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.
130 POS MALAYSIA ANNUAL REPORT 2017

2. Significant accounting policies (continued)

(n) Revenue and other income

(i) Revenue

Revenue from services rendered such as postal, courier, international, cargo and ground handling, inflight catering, aircraft
maintenance and engineering services to inbound and outbound commercial airlines, air cargo transportation, provision of
postal logistic solution and inventory and transport and storage services is recognised net of discounts as and when the services
are performed.

Revenue from Ar-Rahnu business is accounted for on an accrual basis. The revenue is derived from fee charged to customers for
safe keeping their gold and financing provided.

Revenue from sales of goods is recognised upon delivery of goods, net of returns, discounts and allowance and upon transfer of
significant risk and rewards of ownership of the goods to the customers.

(ii) Other income

Rental income

Rental income from investment property 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.

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 periods in which the expenses are recognised.

Grants that compensate the Group and the Company for the cost of an asset are recognised in profit or loss on a systematic
basis over the useful life of the asset.

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.

Interest income

Interest income is recognised as it accrues using the effective interest method in profit or loss.

(o) 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.
ANNUAL REPORT 2017 POS MALAYSIA 131

2. Significant accounting policies (continued)


(o) Borrowing costs (continued)

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.

(p) Zakat

This represents business zakat. Zakat expense is calculated based on certain percentage of the net current asset. Zakat is recognised
as other operating expense in profit or loss.

(q) Tax expense

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 period. 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.

Unutilised reinvestment allowance and investment tax allowance, being tax incentives that is not a tax base of an asset, is recognised
as a deferred tax asset to the extent that it is probable that the future taxable profits will be available against the unutilised tax
incentive can be utilised.

(r) Earnings per ordinary share

The Group presents basic earnings per share data for its ordinary shares (“EPS”).

Basic 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.

(s) 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. All operating
segment’s operating results are reviewed regularly by the chief operating decision maker, which in this case is the Chief Executive
Officer of the Group, to make decision about resources to be allocated to the segments and assess its performance, and for which
discrete financial information is available.
132 POS MALAYSIA ANNUAL REPORT 2017

2. Significant accounting policies (continued)


(t) 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 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. 

(u) Fair value measurement

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 are
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.
ANNUAL REPORT 2017 POS MALAYSIA 133

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.

4. Revenue

GROUP COMPANY
2017 2016 2017 2016
RM’000 RM’000 RM’000 RM’000

Postal services 779,528 816,073 781,546 816,073


Courier 684,578 558,685 684,195 555,408
International 192,761 260,927 192,761 260,927
Logistics and aviation 327,588 - - -
Other services 97,808 81,754 1,381 71
2,082,263 1,717,439 1,659,883 1,632,479
134 POS MALAYSIA ANNUAL REPORT 2017

5. Profit before tax

GROUP COMPANY
NOTE 2017 2016 2017 2016
RM’000 RM’000 RM’000 RM’000

Profit before tax is


arrived at after charging:
Auditors’ remuneration
- Statutory audit fees
KPMG Malaysia 1,050 534 310 310
Other auditor 4 - - -
- Other audit fees
KPMG Malaysia 415 377 380 377
- Non-audit fees
KPMG Malaysia 495 119 110 34
Depreciation of property,
plant and equipment 11 127,148 102,762 103,964 97,537
ANNUAL REPORT 2017 POS MALAYSIA 135

5. Profit before tax (continued)

GROUP COMPANY
2017 2016 2017 2016
NOTE RM’000 RM’000 RM’000 RM’000

Profit before tax is


arrived at after charging:
(continued)

Fair value loss through


profit or loss:
- Held for trading
financial instruments 38 97 38 97
Amortisation of prepaid
lease properties 12 581 - - -
Defined benefits obligation 25 10 - - -
Finance costs 9,207 4,188 - -
Impairment loss of
trade receivables 12,110 17,639 7,906 10,894
Inventories written down 554 579 255 579
Net realised foreign
exchange loss 215 - 1,016 -
Operating licence fee 9,400 8,556 8,299 8,164
Property, plant and
equipment written off 778 188 776 185
Rental expense in respect
of:
- Office and computer
equipment 14,072 12,345 9,540 10,746
- Land and buildings 37,458 20,877 22,142 26,511
- Machinery 412 352 386 311
- Motor vehicles 27,577 14,563 27,428 14,563
Staff costs (excluding
key management
personnel)
- Salaries, bonuses and
allowances 771,412 674,291 691,928 653,549

- Contributions to
Employees’ Provident
Fund 121,035 107,201 110,132 103,510
136 POS MALAYSIA ANNUAL REPORT 2017

5. Profit before tax (continued)

GROUP COMPANY
2017 2016 2017 2016
NOTE RM’000 RM’000 RM’000 RM’000

and after crediting :

Amortisation of
government grants 3,832 5,118 3,832 5,118
Change in fair value of
investment properties 11 3,790 - - -
Gain on disposal of other
investment 13 - - -
Gain on disposal of
property, plant and
equipment 7,770 557 7,958 557
Interest income:
- Private debt securities 2,165 3,567 2,165 3,373
- Others 12,836 13,798 6,402 8,116
Net realised foreign
exchange gain - 1,334 - 1,409
Net unrealised foreign
exchange gain 9,441 6,079 4,929 6,079
Reversal of impairment
loss of trade receivables 12,344 3,311 5,815 818
Reversal of inventories
written down 443 380 - -
Rental income:
- Investment properties 1,649 920 - -
- Operating lease other
than those relating to
investment properties 1,375 1,690 1,160 1,696
Recognition of expired
postal orders 26 2,112 4,062 2,112 4,062
Unwinding of discount
- receivables 208 - - -
ANNUAL REPORT 2017 POS MALAYSIA 137

5. Profit before tax (continued)


Included in profit for the year is zakat assessment as follows:

GROUP COMPANY
2017 2016 2017 2016
RM’000 RM’000 RM’000 RM’000

Zakat assessment based


on net current assets 2,566 2,653 1,777 2,418

6. Key management personnel compensation


The key management personnel compensations are as follows:

GROUP COMPANY
2017 2016 2017 2016
RM’000 RM’000 RM’000 RM’000

Directors
- Fees 871 868 871 868
- Remuneration 196 244 196 244
1,067 1,112 1,067 1,112
Other key management
personnel
- Remuneration 12,990 9,377 11,198 8,218
14,057 10,489 12,265 9,330

Other key management personnel comprises 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.
138 POS MALAYSIA ANNUAL REPORT 2017

7. Tax expense
Recognised in profit or loss

GROUP
COMPANY

2017 2016 2017 2016
RM’000 RM’000 RM’000 RM’000

Current tax expense


Malaysian - current year 46,401 31,768 34,334 27,838
- prior years 6,053 7,245 5,570 6,939

Total current tax recognised


in profit or loss 52,454 39,013 39,904 34,777

Deferred tax expense


Reversal of temporary differences (5,284) (3,265) (8,535) (3,438)
Under/(Over) provision in prior year 242 (6,340) 1,351 (5,695)

Total deferred tax recognised


in profit or loss (5,042) (9,605) (7,184) (9,133)

Total income tax expense 47,412 29,408 32,720 25,644

Reconciliation of tax expense


Profit before tax 131,379 92,501 77,874 72,140

Income tax calculated using


Malaysian tax rate of 24% 31,531 22,200 18,690 17,314
Non-deductible expenses 9,298 9,759 8,154 8,226
Tax exempt income (3,557) (2,190) (1,045) (1,140)
Effect of unrecognised
deferred tax assets 3,845 - - -
Recognition of previously
unrecognised deferred tax assets - (1,266) - -

41,117 28,503 25,799 24,400


Under provision in prior years 6,295 905 6,921 1,244

47,412 29,408 32,720 25,644
ANNUAL REPORT 2017 POS MALAYSIA 139

8. Other comprehensive income

GROUP BEFORE TAX TAX EXPENSE NET OF TAX


2017 RM’000 RM’000 RM’000

Items that will not be reclassified


subsequently to profit or loss
Remeasurement of defined benefit plan
liability (633) (6) (639)

Items that are or may be reclassified


subsequently to profit or loss
Foreign currency translation differences
for foreign operations (2,034) - (2,034)

(2,667) (6) (2,673)

9. Earnings per ordinary share


Basic and diluted earnings per ordinary share

The calculation of basic and diluted earnings per ordinary share at 31 March 2017 was based on the profit attributable to ordinary shareholders
and the weighted average number of ordinary shares in issue during the financial year, calculated as follows:

GROUP
2017 2016

Profit for the year attributable to ordinary


shareholders (RM’000) 84,059 63,093

Weighted average number of ordinary shares


at 31 March (‘000) 671,684 537,026

Basic and diluted earnings per ordinary share (sen) 12.5 11.7
140 POS MALAYSIA ANNUAL REPORT 2017

10. Dividends
Dividends recognised by the Company are:

SEN TOTAL
PER SHARE AMOUNT
RM’000

2017
First and final dividend in respect of financial
year ended 31 March 2016 (Single tier) 11.7 62,832

2016
First and final dividend in respect of financial
year ended 31 March 2015 (Single tier) 13.1 70,350

After the reporting period the following dividend was proposed by the Directors. This dividend will be recognised in subsequent financial year
upon approval by the owners of the Company.

SEN TOTAL
PER SHARE AMOUNT
RM’000

First and final single tier dividend 10.7 83,757

11. Property, plant and equipment

FURNITURE
GOVERNMENT BUILDINGS AND FITTINGS,
LEASEHOLD LEASEHOLD IMPROVEMENTS PLANT OFFICE AND CAPITAL
LAND AND LAND AND FREEHOLD AND AND MOTOR COMPUTER WORK-IN-
GROUP BUILDINGS BUILDINGS LAND BUILDINGS RENOVATIONS MACHINERY VEHICLES EQUIPMENT PROGRESS TOTAL

RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Cost
At 1 April 2015 172,349 210,799 2,276 25,605 338,235 70,708 223,783 291,561 60,534 1,395,850
Additions - - - - 6,246 1,179 21,575 7,588 75,429 112,017
Disposals - - - - (201) - (4,273) - - (4,474)
Written off - - - - (3) - - (119) (66) (188)
Transfers - - - - 28,996 24,462 - 46,129 (99,587) -
At 31 March 2016/
1 April 2016 172,349 210,799 2,276 25,605 373,273 96,349 241,085 345,159 36,310 1,503,205
Acquisition of
subsidiaries - - 61,556 265,515 47,248 123,413 225,388 58,469 - 781,589
Additions - - 71,064 10,156 24,407 4,564 2,667 18,521 64,381 195,760
Disposals - (2,364) (132) (245) (2,565) (86) (16,552) (8,493) - (30,437)
ANNUAL REPORT 2017

Written off - - - - (929) (1,310) - (266) (130) (2,635)


Transfers 4,070 - 10,321 (3,446) 452 19,898 28,256 (59,551) -
Effect of movement
in exchange rates - - 911 327 - - - - - 1,238
At 31 March 2017 176,419 208,435 135,675 311,679 437,988 223,382 472,486 441,646 41,010 2,448,720
POS MALAYSIA
141
142

11. Property, plant and equipment (continued)


POS MALAYSIA

FURNITURE
GOVERNMENT BUILDINGS AND FITTINGS,
LEASEHOLD LEASEHOLD IMPROVEMENTS PLANT OFFICE AND CAPITAL
LAND AND LAND AND FREEHOLD AND AND MOTOR COMPUTER WORK-IN-
GROUP BUILDINGS BUILDINGS LAND BUILDINGS RENOVATIONS MACHINERY VEHICLES EQUIPMENT PROGRESS TOTAL
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
ANNUAL REPORT 2017

Depreciation and
impairment loss
At 1 April 2015
Accumulated
depreciation 44,882 148,837 - 8,333 133,695 26,718 164,450 190,298 - 717,213
Accumulated
impairment loss - - - - - - - - 22,511 22,511
44,882 148,837 - 8,333 133,695 26,718 164,450 190,298 22,511 739,724
Depreciation for the
year 2,939 9,137 - 501 34,033 3,849 20,425 31,878 - 102,762
Disposals - - - - (201) - (4,273) - - (4,474)
At 31 March 2016/
1 April 2016
Accumulated
depreciation 47,821 157,974 - 8,834 167,527 30,567 180,602 222,176 - 815,501
Accumulated
impairment loss - - - - - - - - 22,511 22,511
47,821 157,974 - 8,834 167,527 30,567 180,602 222,176 22,511 838,012
11. Property, plant and equipment (continued)

FURNITURE
GOVERNMENT BUILDINGS AND FITTINGS,
LEASEHOLD LEASEHOLD IMPROVEMENTS PLANT OFFICE AND CAPITAL
LAND AND LAND AND FREEHOLD AND AND MOTOR COMPUTER WORK-IN-
GROUP BUILDINGS BUILDINGS LAND BUILDINGS RENOVATIONS MACHINERY VEHICLES EQUIPMENT PROGRESS TOTAL
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Acquisition of
subsidiaries - - 535 117,463 27,033 90,729 145,095 43,849 - 424,704
Depreciation for the
year 2,947 9,095 - 4,225 39,162 7,947 26,676 37,096 - 127,148
Disposals (1,834) - (146) (1,679) (15) (16,552) (7,853) - (28,079)
Write off - - - - (290) (1,310) - (257) - (1,857)
Transfers - - - - (7,320) - 7,614 (294) - -
Effect of movement
in exchange rates - - - 64 - - - - - 64
At 31 March 2017
Accumulated
depreciation 50,768 165,235 - 130,074 224,358 127,918 338,827 294,709 - 1331,889
Accumulated
ANNUAL REPORT 2017

impairment loss - - 535 366 75 - 4,608 8 22,511 28,103


50,768 165,235 535 130,400 224,433 127,918 343,435 294,717 22,511 1,359,992
Carrying amounts
At 1 April 2015 127,467 61,962 2,276 17,272 204,540 43,990 59,333 101,263 38,023 656,126
At 31 March 2016/
POS MALAYSIA

1 April 2016 124,528 52,825 2,276 16,771 205,746 65,782 60,483 122,983 13,799 665,193
At 31 March 2017 125,651 43,200 135,140 181,239 213,555 95,464 129,051 146,929 18,499 1,088,728
143
144

11. Property, plant and equipment (continued)


POS MALAYSIA

FURNITURE
GOVERNMENT BUILDINGS AND FITTINGS,
LEASEHOLD LEASEHOLD IMPROVEMENTS PLANT OFFICE AND CAPITAL
LAND AND LAND AND FREEHOLD AND AND MOTOR COMPUTER WORK-IN-
COMPANY BUILDINGS BUILDINGS LAND BUILDINGS RENOVATIONS MACHINERY VEHICLES EQUIPMENT PROGRESS TOTAL
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
ANNUAL REPORT 2017

Cost
At 1 April 2015 97,833 210,799 2,276 25,605 318,225 53,872 223,004 262,873 60,093 1,254,580
Additions - - - - 7,261 327 21,575 5,849 74,037 109,049
Disposals - - - - - - (4,273) - - (4,273)
Write off - - - - - - - (119) (66) (185)
Transfers - - - - 29,069 24,462 - 46,069 (99,600) -
At 31 March 2016/
1 April 2016 97,833 210,799 2,276 25,605 354,555 78,661 240,306 314,672 34,464 1,359,171
Additions - - 71,064 - 22,300 204 1,021 14,521 62,622 171,732
Disposals - (2,364) (132) - (501) (86) (16,552) (3,111) - (22,746)
Write off - - - - (929) - - (230) (129) (1,288)
Transfers 4,070 - - 9,192 7,359 452 8,532 28,555 (58,160) -
At 31 March 2017 101,903 208,435 73,208 34,797 382,784 79,231 233,307 354,407 38,797 1,506,869
11. Property, plant and equipment (continued)

FURNITURE
GOVERNMENT BUILDINGS AND FITTINGS,
LEASEHOLD LEASEHOLD IMPROVEMENTS OFFICE AND CAPITAL
LAND AND LAND AND FREEHOLD AND PLANT AND MOTOR COMPUTER WORK-IN-
COMPANY BUILDINGS BUILDINGS LAND BUILDINGS RENOVATIONS MACHINERY VEHICLES EQUIPMENT PROGRESS TOTAL
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Depreciation and
impairment loss
At 1 April 2015
Accumulated
depreciation 37,939 148,837 - 8,336 129,176 14,958 163,846 167,245 - 670,337
Accumulated
impairment loss - - - - - - - - 22,511 22,511
37,939 148,837 - 8,336 129,176 14,958 163,846 167,245 22,511 692,848
Depreciation for the
year 1,809 9,137 - 501 32,623 3,448 20,362 29,657 - 97,537
Disposals - - - - - - (4,273) - - (4,273)
At 31 March 2016
ANNUAL REPORT 2017

Accumulated
depreciation 39,748 157,974 - 8,837 161,799 18,406 179,935 196,902 - 763,601
Accumulated
impairment loss - - - - - - - - 22,511 22,511
39,748 157,974 - 8,837 161,799 18,406 179,935 196,902 22,511 786,112
POS MALAYSIA
145
146

11. Property, plant and equipment (continued)


POS MALAYSIA

FURNITURE
GOVERNMENT BUILDINGS AND FITTINGS,
LEASEHOLD LEASEHOLD IMPROVEMENTS OFFICE AND CAPITAL
LAND AND LAND AND FREEHOLD AND PLANT AND MOTOR COMPUTER WORK-IN-
COMPANY BUILDINGS BUILDINGS LAND BUILDINGS RENOVATIONS MACHINERY VEHICLES EQUIPMENT PROGRESS TOTAL
ANNUAL REPORT 2017

RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Depreciation for the


year 1,817 9,095 - 505 35,693 4,955 20,141 31,758 103,964
Disposals - (1,834) - - (236) (14) (16,552) (1,503) - (20,139)
Write off - - - - (290) - - (222) - (512)
At 31 March 2017
Accumulated
depreciation 41,565 165,235 - 9,342 196,966 23,347 183,524 226,935 - 864,914
Accumulated
impairment loss - - - - - - - - 22,511 22,511
41,565 165,235 - 9,342 196,966 23,347 183,524 226,935 22,511 869,425
Carrying amounts
At 1 April 2015 59,894 61,962 2,276 17,269 189,049 38,914 59,158 95,628 37,582 561,732
At 31 March 2016/
1 April 2016 58,085 52,825 2,276 16,768 192,756 60,255 60,371 117,770 11,953 573,059
At 31 March 2017 60,338 43,200 73,208 25,455 185,818 55,884 49,783 127,472 16,286 637,444
ANNUAL REPORT 2017 POS MALAYSIA 147

11. Property, plant and equipment (continued)


Depreciation for the financial year has been allocated as follows:

GROUP COMPANY
2017 2016 2017 2016
RM’000 RM’000 RM’000 RM’000

Depreciation of property, plant


and equipment 126,642 102,092 103,458 96,867
Other income* 506 670 506 670
127,148 102,762 103,964 97,537

* 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 Leasehold land and buildings

The title deeds for certain landed properties with net carrying value amounting to RM1,440,000 (2016: RM1,977,000) have yet to be
issued in the name of the Company as at 31 March 2017 by the relevant authorities.

11.2 Government leasehold land and buildings

The leasehold land and buildings of the Group and of the Company with costs amounting to RM208,435,000 (2016: RM210,799,000)
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) year 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 values in the statements 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.
148 POS MALAYSIA ANNUAL REPORT 2017

11. Property, plant and equipment (continued)

11.3 Hire purchase and loan arrangements

The net carrying amounts of property, plant and equipment under hire-purchase and loan arrangements are as follows:

GROUP COMPANY
2017 2016 2017 2016
RM’000 RM’000 RM’000 RM’000

Motor vehicles 26,129 - - -


Plant and machinery 1,584 - - -

11.4 Pledged as banking facilities



The net carrying amounts of property, plant and equipment of the Group and the Company pledged as security for banking facilities
granted to the Group and of the Company (as disclosed in Note 24) are as follows:

GROUP COMPANY
2017 2016 2017 2016
RM’000 RM’000 RM’000 RM’000

Plant and machinery 6,586 - - -


11.5 Additions during the year



During the financial year, the Group and the Company acquired property, plant and equipment with an aggregate cost of RM195,760,000
(2016: RM112,017,000) and RM171,732,000 (2016: RM109,049,000) respectively of which RM69,000,000 (2016: Nil) was acquired
by means of issuance of shares as explained in Note 33 to the financial statements.
ANNUAL REPORT 2017 POS MALAYSIA 149

12. Prepaid lease properties

2017 2016
GROUP RM’000 RM’000

Cost
As at 1 April - -
Acquisition of subsidiaries 46,238 -
As at 31 March 46,238 -

Amortisation
As at 1 April - -
Acquisition of subsidiaries (3,839) -
Amortisation charge for the financial year (581) -
As at 31 March (4,420) -

Carrying amount
As at 1 April - -
As at 31 March 41,818 -

Analysed as:
Short term lease (unexpired period less than 50 years) 8,626 -
Long term lease (unexpired period more than 50 years) 33,192 -
41,818 -
150 POS MALAYSIA ANNUAL REPORT 2017

13. Investment properties

2017 2016
GROUP RM’000 RM’000

At 1 April 31,100 31,100


Change in fair value recognised in profit or loss 3,790 -
At 31 March 34,890 31,100

Included in the above are:


At fair value
Freehold land and buildings 13,168 12,048
Leasehold land and buildings with unexpired lease
period of more than 50 years 21,722 19,052
34,890 31,100

Investment properties comprise a number of commercial properties that are leased to third parties and seven pieces of vacant land.

The following are recognised in profit or loss in respect of investment properties:

2017 2016
GROUP RM’000 RM’000

Rental income 1,649 920


Direct operating expenses:
- Income generating investment properties (189) (167)
ANNUAL REPORT 2017 POS MALAYSIA 151

13. Investment properties (continued)


Fair value information

Fair value of investment properties are categorised as follows:

2017
LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
RM’000 RM’000 RM’000 RM’000

Freehold land and buildings - - 13,168 13,168


Leasehold land and buildings - - 21,722 21,722
- - 34,890 34,890

2016
LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
RM’000 RM’000 RM’000 RM’000

Freehold land and buildings - - 12,048 12,048


Leasehold land and buildings - - 19,052 19,052
- - 31,100 31,100

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 investment properties 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 investment properties,
either directly or indirectly.

Level 3 fair value

Level 3 fair value is estimated using unobservable inputs for the investment properties.
152 POS MALAYSIA ANNUAL REPORT 2017

13. Investment properties (continued)


Fair value information (continued)

The following table shows a reconciliation of Level 3 fair values:

2017 2016
GROUP RM’000 RM’000

At 1 April 31,100 31,100


Gains and losses recognised in profit or loss
Change in fair value - Other income - Unrealised 3,790 -
At 31 March 34,890 31,100

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 UNOBSERVABLE SIGNIFICANT UNOBSERVABLE INPUTS
VALUATION TECHNIQUE INPUTS AND FAIR VALUE MEASUREMENT

The Group estimates the fair value of all • Market price of property • The estimated fair value would
investment properties based on the following invicinity 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 property portfolio every year. Changes in Level 3 fair values are analysed by the management every year after obtaining
valuation report from the valuation company.
ANNUAL REPORT 2017 POS MALAYSIA 153

14. Goodwill

GROUP RM’000

Cost
At 1 April 2015/31 March 2016/1 April 2016 4,630
Acquisition of subsidiaries (Note 32) 413,553
At 31 March 2017 418,183

Amortisation and impairment losses


At beginning/end of the financial year -

Carrying amount
At 1 April 2015/31 March 2016/1 April 2016 4,630
At 31 March 2017 418,183

Impairment testing for goodwill is done annually. The carrying values were allocated to 2 (2016: 1) of the Group’s cash-generating units (CGU),
for impairment testing as follows:

2017 2016
RM’000 RM’000

Licensed digital certificate authority 4,630 4,630


Logistics and aviation # 413,553 -
418,183 4,630

# The goodwill in relation to the logistics and aviation segment resulting from the acquisition of Pos Aviation Sdn. Bhd. and its subsidiaries
(as disclosed in Note 32 to the financial statements) has been preliminarily allocated to one CGU, instead of two as the goodwill amounts
are merely provisional amounts, pending the finalisation of the purchase price allocation (PPA) exercise within 12 months from the date of
acquisition.

Impairment testing for goodwill

Management has carried out impairment test review for goodwill based on the recoverable amount of each CGU. The recoverable amount
has been determined based on a value-in-use calculation. To calculate this, cash flow projections are prepared based on financial budgets
as approved by directors which cover a period of five years and applying a terminal value multiple using a terminal growth rate. The pre-tax
discount rate applied to the cash flow projections are ranging from 11.8% to 17.8% (2016: 13.4%).
154 POS MALAYSIA ANNUAL REPORT 2017

14. Goodwill (continued)

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 – discount rates reflect management’s estimate of the risks specific to these entities. In determining appropriate
discount rates for each unit, consideration has been given to the applicable weighted average cost of capital for each unit.

(iii) Growth rates – 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 – the bases used to determine the future earnings potential are historical sales and expected growth rates of the relevant
industry.

Based on the impairment testing, the value-in-use of the respective CGU exceeded its respective carrying amount of the goodwill.

Sensitivity to changes in assumptions

(i) An increase of 0.5 percentage point in the discount rate used would have decreased the value-in-use by RM55,695,000 (2016:
RM3,018,000).

(ii) A decrease of 0.5 percentage point in the terminal growth rate used would have decreased the value-in-use by RM31,449,000 (2016:
RM1,987,000).
ANNUAL REPORT 2017 POS MALAYSIA 155

15. Deferred tax assets and liabilities

Deferred tax assets and liabilities are attributable to the following:

ASSETS LIABILITIES NET


2017 2016 2017 2016 2017 2016
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

GROUP

Property, plant and


equipment including
prepaid lease properties - - (108,874) (57,192) (108,874) (57,192)

Investment properties - - (417) (271) (417) (271)

Provisions 34,883 21,294 - - 34,883 21,294

Post-employment
benefits obigations - - (6) - (6) -

Unutilised tax losses 7,606 - - - 7,606 -

Unabsorbed capital
allowances 18,153 - - - 18,153 -

Other deductible
temporary differences - - (2,359) - (2,359) -

Tax assets/
(liabilities) 60,642 21,294 (111,656) (57,463) (51,014) (36,169)

Set-off (50,432) (21,294) 50,432 21,294 - -

Net tax assets/


(liabilities) 10,210 - (61,224) (36,169) (51,014) (36,169)

COMPANY

Property, plant
and equipment - - (55,235) (55,277) (55,235) (55,277)

Provisions 28,974 19,190 - - 28,974 19,190

Other deductible
temporary differences - - (2,642) - (2,642) -

Tax assets/ (liabilities) 28,974 19,190 (57,877) (55,277) (28,903) (36,087)

Set-off (28,974) (19,190) 28,974 19,190 - -

Net tax liabilities - - (28,903) (36,087) (28,903) (36,087)


156 POS MALAYSIA ANNUAL REPORT 2017

15. Deferred tax assets and liabilities (continued)

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 taxes relate to the same taxation authority.

Unrecognised deferred tax assets

Deferred tax assets have not been recognised for the following items:

2017 2016
GROUP RM’000 RM’000

Unutilised tax losses 146,489 65,439


Unabsorbed capital allowances 2,277 11,027
Property, plant and equipment (4,868) (4,832)
Other deductible differences 472 750
144,370 72,384

The deductible temporary differences do not expire under the current tax legislation. Deferred tax assets were not recognised in respect of
these items because it was not probable that future taxable profit will be available against which the Group can utilise the benefits therefrom.
15. Deferred tax assets and liabilities (continued)

Movement in temporary differences during the year

RECOGNISED
RECOGNISED RECOGNISED IN OTHER ARISING FROM
IN PROFIT AT IN PROFIT COMPREHENSIVE BUSINESS
AT OR LOSS 31.3.2016/ OR LOSS INCOME ACQUISITION AT
1.4.2015 (NOTE 7) 1.4.2016 (NOTE 7) (NOTE 8) (NOTE 32) 31.3.2017
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Group
GROUP
Property, plant and equipment including prepaid
lease properties (66,274) 9,082 (57,192) 3,912 - (55,594) (108,874)
Investment properties (271) - (271) (146) - - (417)
Provisions 20,771 523 21,294 (8,409) - 21,998 34,883
Post-employment benefits obligations - - - - (6) - (6)
Unutilised tax losses - - - (6,031) - 13,637 7,606
Unabsorbed capital allowances - - - 18,075 - 78 18,153
Other deductible temporary differences - - - (2,359) - - (2,359)
(45,774) 9,605 (36,169) 5,042 (6) (19,881) (51,014)
ANNUAL REPORT 2017

COMPANY

Property, plant and equipment (62,813) 7,536 (55,277) 42 - - (55,235)


Provisions 17,593 1,597 19,190 9,784 - - 28,974
Other deductible temporary differences - - - (2,642) - - (2,642)
POS MALAYSIA

(45,220) 9,133 (36,087) 7,184 - - (28,903)


157
158 POS MALAYSIA ANNUAL REPORT 2017

16. Investments in subsidiaries

2017 2016
COMPANY NOTE RM’000 RM’000

Ordinary shares
Unquoted shares, at cost 761,157 70,050
Less: Accumulated impairment losses (19,870) (19,870)
741,287 50,180
Redeemable preference shares, at cost (a) 112,674 112,674
Redeemable convertible preference shares, at cost (b) 45,472 -
899,433 162,854

(a) The Redeemable Preference Shares (RPS) held in the subsidiary 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
NAME OF SUBSIDIARY COUNTRY OF PRINCIPAL ACTIVITIES 2017 2016
INCORPORATION % %

Datapos (M) Sdn. Bhd. Malaysia Printing and insertion of 100 100
documents for mailing
Pos Digicert Sdn. Bhd. Malaysia Licensed digital 100 100
(formerly known as Digicert certification authority
Sdn. Bhd.)
ANNUAL REPORT 2017 POS MALAYSIA 159

16. Investments in subsidiaries (continued)

EFFECTIVE OWNERSHIP
INTEREST AND
VOTING INTEREST
NAME OF SUBSIDIARY COUNTRY OF PRINCIPAL ACTIVITIES 2017 2016
INCORPORATION % %

Effivation Sdn. Bhd. Malaysia Property investment 100 100


Pos Ar-Rahnu Sdn. Bhd. Malaysia Ar-Rahnu (Islamic pawn 100 100
broking)
Pos Takaful Agency Sdn. Bhd. Malaysia Dormant 100 100
Poslaju (M) Sdn. Bhd. Malaysia Dormant 100 100
Pos Malaysia & Services Holdings Berhad Malaysia Investment holding 100 100
PSH Capital Partners Sdn. Bhd. Malaysia Investment holding 100 100

PSH Venture Capital Sdn. Bhd. Malaysia Investment holding 100 100
PSH Properties Sdn. Bhd. Malaysia Properties Investment 100 100
PSH Allied Berhad Malaysia Dormant 100 100

PMB Properties Sdn. Bhd. Malaysia Property Investment 100 100

Pos Aviation Sdn. Bhd. Malaysia Provision of airport related 100 -


(formerly known as KL Airport Services ground handling, in-flight
Sdn. Bhd.) catering, cargo handling,
warehousing space and supply
chain management including
custom forwarding agent
services

Subsidiary company of PSH Capital Partners


Sdn. Bhd. :

Prestige Future Sdn. Bhd. Malaysia Dormant 100 100


160 POS MALAYSIA ANNUAL REPORT 2017

16. Investments in subsidiaries (continued)

EFFECTIVE OWNERSHIP
INTEREST AND
COUNTRY OF VOTING INTEREST
NAME OF SUBSIDIARY INCORPORATION PRINCIPAL ACTIVITIES 2017 2016
% %

Subsidiary company of PSH Properties


Sdn. Bhd. :
Real Riviera Sdn. Bhd. Malaysia Property investment 100 100

Subsidiary company of PSH Venture Capital


Sdn. Bhd. :
PSH Express Sdn. Bhd. Malaysia Air courier services and 100 100
fulfilment business
Subsidiary company of Pos Malaysia & Services
Holdings Berhad:
PSH Investment British Virgin Dormant 100 100
Holding (BVI) Ltd.*# Islands

Subsidiary companies of Pos Aviation Sdn. Bhd.:


Pos Asia Cargo Express Sdn. Bhd. Malaysia Provision of air cargo 100 -
(formerly known as DRB-HICOM Asia transport
Cargo Express Sdn. Bhd.)

Pos Aviation Engineering Services Sdn. Bhd. Malaysia Provision of aircraft 100 -
(formerly known as KLAS maintenance and
Engineering Services Sdn. Bhd.) engineering services

Pos Logistics Berhad (formerly known as Konsortium Malaysia Provision of total 100 -
Logistik Berhad) logistics services and
inventory solution
ANNUAL REPORT 2017 POS MALAYSIA 161

16. Investments in subsidiaries (continued)

EFFECTIVE OWNERSHIP
INTEREST AND
VOTING INTEREST
NAME OF SUBSIDIARY COUNTRY OF PRINCIPAL ACTIVITIES 2017 2016
INCORPORATION % %

Subsidiary company of Pos Asia Cargo


Express Sdn. Bhd. :
Gading Sari Aviation Services Ltd. Malaysia Provision of aircraft leasing services 100 -

Subsidiary companies of Pos Logistics


Berhad:
Aman Freight (Malaysia) Sdn. Bhd. Malaysia Freight and forwarding and other 100 -
related services

Cougar Logistic (Malaysia) Sdn. Bhd. Malaysia Freight and forwarding, 100 -
warehousing and other related
services

Diperdana Kontena Sdn. Bhd. Malaysia Leasing of vehicles and 100 -


mechanical equipment

KP Asia Auto Logistics Sdn. Bhd. Malaysia Warehousing, inventory 100 -


solutions, forwarding,
shipping and transport
agent

KP Distribution Services Sdn. Bhd. Malaysia Distribution services 100 -

Malaysian Shipping Agencies Sdn. Bhd. Malaysia Shipping agencies services, freight 100 -
and forwarding and other related
services

Pengangkutan Aspacs Sdn. Bhd. Malaysia Agent for freight forwarding and 100 -
provision of related services

PNSL Berhad Malaysia Shipping agency and chartering 100 -


services

Westport Distripark (M) Sdn. Bhd. Malaysia Business of a Distribution park 100 -
162 POS MALAYSIA ANNUAL REPORT 2017

16. Investments in subsidiaries (continued)

EFFECTIVE OWNERSHIP
INTEREST AND
VOTING INTEREST
NAME OF SUBSIDIARY COUNTRY OF PRINCIPAL ACTIVITIES 2017 2016
INCORPORATION % %

Subsidiary companies of Pos


Logistics Berhad (continued):
Asia Pacific Freight System Malaysia Dormant 100 -
Sdn. Bhd.
Diperdana Selatan Malaysia Dormant 100 -
Sdn. Bhd.
Diperdana Terminal Malaysia Dormant 100 -
Services Sdn. Bhd.
Diperdana Utara Sdn. Bhd. Malaysia Dormant 100 -
Kaypi Logistics Depot Sdn. Bhd. Malaysia Dormant 100 -
Kaypi Southern Terminal Sdn. Bhd. Malaysia Dormant 100 -
North Terminal Sdn. Bhd. Malaysia Dormant 100 -
K.P.B. Sadao I.C.D. Company Limited # Thailand Dormant 100## -
Subsidiary companies of Aman
Freight (Malaysia) Sdn. Bhd. :
Aman Freight Services Sdn. Bhd. Malaysia Dormant 100 -
Maya Perkasa (M) Sdn. Bhd. Malaysia Dormant 100 -

Subsidiary companies of
Malaysian Shipping Agencies
Sdn. Bhd.:
Konsortium Logistik (Sabah) Malaysia Forwarding and related 100 -
Sdn. Bhd. services
Konsortium Logistik (Sarawak) Malaysia Dormant 100 -
Sdn. Bhd.
ANNUAL REPORT 2017 POS MALAYSIA 163

16. Investments in subsidiaries (continued)

EFFECTIVE OWNERSHIP
INTEREST AND
VOTING INTEREST
NAME OF SUBSIDIARY COUNTRY OF PRINCIPAL ACTIVITIES 2017 2016
INCORPORATION % %
Subsidiary companies of
PSNL Berhad :
PNSL Risk Management Malaysia Insurance agency 100 -
Sdn. Bhd. service
Parcel Tankers Malaysia Malaysia Sea chartering services 51 -
Sdn. Bhd.

# Not audited by member firms of KPMG International.

## 49% of the beneficial interest is held in trust in accordance to a trust deed dated 16 March 2012.

* The investment in PSH Investment Holding (BVI) Ltd. has been consolidated based on management financial statements for
the financial year ended 31 March 2017 as a statutory audit is not required in the British Virgin Islands.

16.1 Impairment testing for investments in subsidiaries

At 31 March 2017, 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 certain subsidiaries.

For the purpose of impairment testing, the recoverable amounts of certain subsidiaries were determined based on value-
in-use (“VIU”) calculations. These calculations use pre-tax cash flow projections based on recent financial budgets prepared
by management, which were approved by the directors covering a five-year period and applying a terminal value multiple
using a terminal growth rate. The pre-tax discount rate applied to the cash flow projections range from 11.8% to 17.8%
per annum.

Key assumptions used in value-in-use calculations

The calculation of value-in-use for investments in subsidiaries 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.
164 POS MALAYSIA ANNUAL REPORT 2017

16. Investments in subsidiaries (continued)

16.1 Impairment testing for investments in subsidiaries (continued)

Key assumptions used in value-in-use calculations (continued)

(ii) Discount rates – 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 – 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 – the bases used to determine the future earnings potential are historical sales and expected growth rates of the
relevant industry.

Based on the impairment testing, the value-in-use of the respective investments exceeded its respective carrying amount of the
investment in subsidiary.

Sensitivity to changes in assumptions:

(a) An increase of 0.5 percentage point in the discount rate used would have decreased the value-in-use by RM52,833,000.

(b) A decrease of 0.5 percentage point in the terminal growth rate used would have decreased the value-in-use by RM29,424,000.

16.2 Non-controlling interest in subsidiaries

The Group’s subsidiary that has non-controlling interest (“NCI”) is as follows:

PARCEL TANKERS
MALAYSIA SDN. BHD.
2017
RM’000
NCI percentage of ownership interest and voting interest 49%
Carrying amount of NCI 2,047
Loss allocated to NCI (92)
ANNUAL REPORT 2017 POS MALAYSIA 165

16. Investments in subsidiaries (continued)

16.2 Non-controlling interest in subsidiaries (continued)

PARCEL TANKERS
MALAYSIA SDN. BHD.
2017
RM’000

Summarised financial information before


intra-group elimination
As at 31 March
Non-current assets 4,738
Current assets 39,659
Current liabilities (40,219)
Net assets 4,178

Year ended 31 March


Revenue 13
Loss for the year (188)
Total comprehensive loss (188)
Cash used in operating activities (270)
Net decrease in cash and cash equivalents (270)

# No comparative information as the subsidiary was acquired during the financial year as part of the acquisition of Pos Aviation (refer to Note
32 of the financial statements for further details).

17. Investments in associates

GROUP AND COMPANY


2017 2016
RM’000 RM’000

Unquoted shares, at cost 7,650 7,650


Less: Accumulated impairment losses (7,650) (7,650)
- -

Details of the associates are as follows:

PRINCIPAL PLACE OF PRINCIPAL ACTIVITY/ EFFECTIVE OWNERSHIP


BUSINESS/COUNTRY NATURE OF THE RELATIONSHIP INTEREST AND
NAME OF ENTITY OF INCORPORATION VOTING INTEREST
2017 2016
% %

Elpos Print Sdn. Bhd. Malaysia General printing business and is one of 40.0 40.0
the suppliers of the Group providing
printing services
166 POS MALAYSIA ANNUAL REPORT 2017

17. Investments in associates (continued)

Details of the associates are as follows (continued):

PRINCIPAL PLACE OF PRINCIPAL ACTIVITY/ EFFECTIVE OWNERSHIP


BUSINESS/COUNTRY NATURE OF THE INTEREST AND
NAME OF ENTITY OF INCORPORATION RELATIONSHIP VOTING INTEREST
2017 2016
% %

CEN Sdn. Bhd. Malaysia Investment holding 42.5 42.5


Subsidiary of CEN
Sdn. Bhd.:
CEN Worldwide Malaysia Dormant 42.5 42.5
Sdn. Bhd.
Pospay Exchange Malaysia Dormant 50.0 50.0
Sdn. Bhd.

The summarised financial information of associates, not adjusted for the proportion of ownership interest held by the Group, is as follows:

2017 2016
GROUP RM’000 RM’000

Non-current assets 366 440


Current assets 12,422 12,729
Non-current liabilities - (23)
Current liabilities (77,804) (78,693)
Net liabilities (65,016) (65,547)

Profit / (loss) and total comprehensive income / (expense) 530 (2,073)


Included in the total comprehensive income is:
Revenue 6,615 4,716
Group’s share of results
Group’s share of profit/ (loss) 224 (828)

Unrecognised share of losses

The Group discontinued equity accounting for losses in associates as the losses exceeded the carrying amount of the investments. The Group
has not recognised profit totalling RM224,000 (2016: Loss RM828,000) in the current financial year and losses of RM39,493,000 (2016:
RM39,717,000) cumulatively, since the Group has no obligation in respect of these losses.
ANNUAL REPORT 2017 POS MALAYSIA 167

18. Trade and other receivables

GROUP COMPANY
NOTE 2017 2016 2017 2016
RM’000 RM’000 RM’000 RM’000

Non-current
Non-trade
Maintenance advances a 10,363 - - -
Deposits b 4,737 - - -
15,100 - - -
Current
Trade
Trade receivables c 222,653 130,033 85,798 96,063
Ar-Rahnu financing d 276,619 211,471 - -
Amount due from
immediate holding company e 159 - - -
Amounts due from
subsidiaries f - - 159,064 161,369
Amounts due from
related companies g 42,998 - 854 -
542,429 341,504 245,716 257,432
Accrued receivables h 147,901 46,911 78,613 36,976
690,330 388,415 324,329 294,408
Non-trade
Other receivables 40,222 6,213 1,669 6,051
Maintenance advances a 11,283 - - -
Amounts due from
subsidiaries f - - 160,597 60,016
Deposits 27,465 13,908 12,993 13,283
Investment income
receivables 622 1,537 109 1,537
Staff advances 4,449 5,873 4,169 5,758
Goods and Services Tax (GST) i 698 - - -
84,739 27,531 179,537 86,645
775,069 415,946 503,866 381,053
790,169 415,946 503,866 381,053

(a) Maintenance advances

Maintenance advances includes supplemental rent paid to lessors based on monthly usage of aircrafts. Supplemental rent is pledged to
lessors to provide collateral should an aircraft be returned in a condition that does not meet the requirements of the lease and is refunded
when qualifying heavy maintenance is performed, or is offset against the costs incurred at the end of the lease.
168 POS MALAYSIA ANNUAL REPORT 2017

18. Trade and other receivables (continued)

(b) Deposits

On 10 October 2014, a subsidiary, Parcel Tanker Malaysia Sdn. Bhd. (“PTM”) entered into an agreement with Caribbean Emerald
Shipping Inc. (“CES”) at a cost of USD1.2 million (equivalent to RM4.7 million). The vessel was purchased for use pursuant to the terms
in the agreement between PTM and YUMA Shipping Pte. Ltd. Upon termination of the agreement, the vessel is to be sold back to CES
at the same nominal price at which it was purchased on an as-is-where-is basis.

(c) Trade receivable

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.

In 2016, included in trade receivables are amounts due from related companies of a significant investor that has an influence over the
Group amounting to RM12,333,000. In line with the acquisition of Pos Aviation Sdn. Bhd. and its subsidiaries (“Pos Aviation Group”)
by the Group, RM546,000 relating to the Aviation Group is classified as amount due from subsidiaries. As the Company became a
subsidiary of DRB-Hicom Berhad, the amounts due from subsidiaries of DRB-Hicom Berhad amounting to RM11,787,000 are now
classified as amounts due from related companies.

(d) Ar-Rahnu financing

Included in Ar-Rahnu financing of the Group is RM8,278,000 (2016: RM6,188,000) and RM268,207,000 (2016: RM205,163,000) in
relation to safekeeping fee receivables and collateral value receivables from customers.

(e) Amount due from immediate holding company

The amount due from immediate holding company is unsecured, interest free and repayable on demand.

(f) 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 is RM146,409,000 (2016: RM48,190,000) which is unsecured, bears interest at
range of 4.45% to 5.90% (2016: 4.25%) per annum and repayable on demand.

The remaining non-trade amount due from subsidiaries is RM14,188,000 (2016: RM11,826,000) is unsecured, interest-free and
repayable on demand.

(g) 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.

(h) 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.

(i) Goods and Services Tax (GST)

Goods and Services Tax (“GST”) refers to the returns due from the Royal Malaysian Custom Department (“RMCD”) in relation to input
tax to be received by a subsidiary of the Group amounting to RM698,000 (2016 : Nil).
ANNUAL REPORT 2017 POS MALAYSIA 169

19. Other investments

SHARES
UNQUOTED QUOTED PRIVATE MEMBERSHIP
LOANS AND IN IN DEBT IN CLUBS,
RECEIVABLES MALAYSIA MALAYSIA SECURITIES UNQUOTED TOTAL
GROUP RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

2017
Non-current
Available-for-sale financial assets - 249,562 - - 468 250,030
Less: Impairment loss - (249,562) - - (249,562)
- - - - 468 468

Current
Financial assets at fair value
through profit or loss:
- Quoted shares in Malaysia - - 331 - - 331
Deposits placed with licensed
banks 8,000 - - - - 8,000
8,000 - 331 - - 8,331
8,000 - 331 - 468 8,799

Representing items:
At amortised cost 8,000 - - - 468 8,468
At fair value - - 331 - - 331
8,000 - 331 - 468 8,799

Market value of quoted investments - - 331 - - 331

2016
Non-current
Available-for-sale financial assets - 249,562 - - - 249,562
Less: Impairment loss - (249,562) - - - (249,562)

- - - - - -

Current
Financial assets at fair value
through profit or loss:
- Quoted shares in Malaysia - - 407 - - 407
Held-to-maturity investments - - - 84,255 - 84,265
- - 407 84,265 - 84,672
- - 407 84,265 - 84,672

Representing items:
At amortised cost - - - 84,265 - 84,265
At fair value - - 407 - - 407
- - 407 84,265 - 84,265

Market value of quoted investments - - 407 - - 407


170 POS MALAYSIA ANNUAL REPORT 2017

19. Other investments (continued)

SHARES PRIVATE

LOANS AND UNQUOTED QUOTED IN DEBT


RECEIVABLES IN MALAYSIA MALAYSIA SECURITIES TOTAL
COMPANY RM’000 RM’000 RM’000 RM’000 RM’000

2017
Non-current
Available-for-sale financial assets - 357,343 - - 357,343
Less: Impairment loss - (357,343) - - (357,343)
- - - - -

Current
Financial assets at fair value
through profit or loss:
- Quoted shares in Malaysia - - 175 - 175
Deposit placed with licensed banks 8,000 - - - 8,000
8,000 - 175 - 8,175
8,000 - 175 - 8,175

Representing items:
At amortised cost 8,000 - - - 8,000
At fair value - - 175 - 175
8,000 - 175 - 8,175
Market value of quoted investments - - 175 - 175

2016
Non-current
Available-for-sale financial assets - 357,343 - - 357,343
Less: Impairment loss - (357,343) - - (357,343)
- - - - -

Current
Financial assets at fair value
through profit or loss:
- Quoted shares in Malaysia - - 213 - 213
Held-to-maturity investments - - - 84,233 84,233
- - 213 84,233 84,446
- - 213 84,233 84,446

Representating items:
At amortised cost - - - 84,233 84,233
At fair value - - 213 - 213
- - 213 84,233 84,446
Market value of quoted investment - - 213 - 213
ANNUAL REPORT 2017 POS MALAYSIA 171

19. Other investments (continued)

Available-for-sale financial assets

In the previous financial years, the Group and the Company recognised impairment losses of RM249,562,000 and RM357,343,000 respectively
for their investments in unquoted equity instruments classified as available-for-sale financial assets as there was a “significant” and “prolonged”
decline in the fair value of the investment. These quoted shares were delisted from Bursa Malaysia Securities Berhad on 24 May 2011.

Deposit placed with licensed banks

In accordance with FRSIC Consensus 22, Classification of fixed deposits and similar instruments as cash and cash equivalents, fixed deposits
that are placed for a period of more than 3 months is regarded as part of investing activities and classified as investments.

20. Inventories

GROUP COMPANY
2017 2016 2017 2016
RM’000 RM’000 RM’000 RM’000

Postal uniforms and


consumables 9,766 7,967 8,463 7,487
POS 2020 merchandise 10 10 10 10
Insertion and mailing materials 5,008 2,807 - -
Digital certificates, CD ROM
and smart cards 325 140 - -
15,109 10,924 8,473 7,497
Recognised in profit or loss:
Inventories recognised as
cost of sales 66,191 37,957 26,806 25,278
Inventories written down 554 579 255 579
Reversal of inventories written
down (443) (380) - -
172 POS MALAYSIA ANNUAL REPORT 2017

21. Prepayments and other assets

GROUP COMPANY
NOTE 2017 2016 2017 2016
RM’000 RM’000 RM’000 RM’000

Advance payment – Terminal dues a 59,932 - 59,932 -


Others 14,796 6,419 3,353 4,890
74,728 6,419 63,285 4,890

a. Advance payment represents advances paid to counter parties 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.

22. Cash and cash equivalents

GROUP COMPANY
NOTE 2017 2016 2017 2016
RM’000 RM’000 RM’000 RM’000

Deposits placed with


licensed banks a 226,081 26,198 204,242 11,367
Money market instruments b 254,398 407,617 83,187 249,211
Cash and bank balances c 295,638 204,897 200,723 161,135
776,117 638,712 488,152 421,713
ANNUAL REPORT 2017 POS MALAYSIA 173

22. Cash and cash equivalents (continued)

a. Included in the deposits placed with licensed banks of the Group is RM1,109,000 (2016: Nil) pledged as security for banking facilities.

b. Money market instruments represent a placement in Islamic funds which invest in short-term Islamic money market instruments
and shariah-compliant permitted investments. As at 31 March 2017, these funds have invested in short-term Islamic money market
instruments.

The Directors regard these money market instruments as cash and cash equivalents as these instruments are readily convertible to known
amounts of cash and are subject to an insignificant risk of changes in value.

c. Included in cash and bank balances of the Group and of the Company are collections on behalf of agency payables, money order and
postal order payables amounting to RM32,568,000 (2016: RM62,039,000).

d. The weighted average effective annual interest rates of short term deposits at the end of the financial year are as follows:

GROUP COMPANY
2017 2016 2017 2016
% % % %
2.5 3.5 2.1 3.6
Deposits with licensed banks

23. Share capital and reserves

GROUP AND COMPANY


NUMBER NUMBER
AMOUNT OF SHARES AMOUNT OF SHARES
NOTE 2017 2017 2016 2016
RM’000 ’000 RM’000 ’000

Issued and fully paid:


Ordinary shares
At 1 April 268,513 537,026 268,513 537,026
Acquisition of subsidiaries a(i) 112,515 225,030 - -
Acquisition of properties a(ii) 10,360 20,721 - -
Transfer in accordance with Section
618(2) of the Companies Act 2016 b 680,004 - - -

Special Rights Redeemable


Preference Share c * * * *
At 1 April/31 March 1,071,392 782,777 268,513 537,026

* Share capital includes the Special Rights Redeemable Preference Share of RM1.00.

a. During the financial year, the issued and paid up on capital of the Company was increased by RM802,879,000 by way of allotment and
issue of shares as follows:

(i) The issuance of 225,030,030 new ordinary shares of RM3.33 per ordinary share, pursuant to the acquisition of the entire equity
interest in Pos Aviation from HICOM Holdings Berhad, a wholly-owned subsidiary company of DRB-HICOM Berhad for a total
consideration of RM749.35 million; and
174 POS MALAYSIA ANNUAL REPORT 2017

23. Share capital and reserves (continued)


(ii) The issuance of 20,720,721 new ordinary shares of RM3.33 per ordinary share, pursuant to the acquisition of part of a parcel of
freehold industrial land measuring 9.912 acres located in Section 28, Shah Alam from HICOM Indungan Sdn. Bhd., an indirect
wholly-owned subsidiary company of DRB-HICOM Berhad, for a total consideration of RM69 million. 

b. On 31 January 2017, pursuant to the transitional provisions relating to the abolition of nominal value under Section 618(2) of Companies
Act 2016, the amount standing to the credit of the Group’s and of the Company’s share premium account shall became part of the Group’s
and of the Company’s share capital. The transitional provisions were applied prospectively.

c. 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.

(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.

d. Revaluation reserve

The revaluation reserve relates to the revaluation of property, plant and equipment immediately prior to its reclassification as investment
property.

e. Translation reserve

The translation reserve comprises all foreign currency differences arising from the translation of the financial statements of foreign
operations.

f. Employee benefits reserve

Employee benefits reserve represents actuarial gains and losses arising from experience adjustments and changes in actuarial
assumption.
ANNUAL REPORT 2017 POS MALAYSIA 175

24. Loans and borrowings

NOTE 2017 2016


GROUP RM’000 RM’000

Non-current
Hire purchase liabilities a 16,208 -
16,208 -
Current

Hire purchase liabilities a 5,737 -


Islamic term loan 30,000 -
Revolving credit b 188,098 98,798
223,835 98,798
240,043 98,798

(a) Hire purchase liabilities

Present Present
Future value of Future value of
minimum minimum minimum minimum
Group and lease lease lease lease
Company payments Interest payments payments Interest payments
2017 2017 2017 2016 2016 2016
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Less than one year 6,812 (1,075) 5,737 - - -

Between one
and five years 17,508 (1,300) 16,208 - - -

24,320 (2,375) 21,945 - - -


176 POS MALAYSIA ANNUAL REPORT 2017

24. Loans and borrowings (continued)

(b) Revolving credit



Included in the loans and borrowings of the Group are revolving credits secured by way of fixed charges over certain property, plant and
equipment of the Group amounting to RM5,000,000 as disclosed in Note 11 to the financial statements and revolving credits secured
by way of guarantee by Pos Malaysia Berhad of up to RM147,798,000 (which is equivalent to the revolving credit facility limit).

25. 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 21 April 2017.

The amount recognised in the statements of financial position are determined as follows:

2017 2016

GROUP RM’000 RM’000

Present value of unfunded obligations 2,910 -

The total expenses recognised in profit or loss are analysed as follows:

2017 2016

GROUP RM’000 RM’000

Current service cost 10 -


Expenses recognised in profit
or loss (Note 5) 10 -
ANNUAL REPORT 2017 POS MALAYSIA 177

25. Post-employment benefit obligations (continued)

The movement during the financial year in the amount recognised in the statements of financial position in respect of the defined benefit
plans are as follows:

2017 2016
GROUP RM’000 RM’000

Acquisitions of subsidiaries (Note 32) 2,313 -


Amounts recognised in profit or loss 10 -
Payments made during the financial year (46) -
Actuarial loss recognised through other comprehensive income 633 -
At 31 March 2,910 -

Actuarial assumptions

The principal actuarial assumptions used in respect of the subsidiary’s defined benefit plans were as follows (expressed as weighted averages):

2017 2016
% %

Discount rate 4.9 -


Future salary growth 6.0 -

The retirement benefit scheme is a final salary defined benefit plan in respect of a 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 benefit
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 Cost 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 date, 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.
178 POS MALAYSIA ANNUAL REPORT 2017

25. Post-employment benefit obligations (continued)

Sensitivity analysis

Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumption constant, would
have affected the unfunded defined benefit obligation by the amount shown below:

2017 2016
Increase Decrease Increase Decrease
GROUP RM’000 RM’000 RM’000 RM’000

Unfunded defined
benefit obligation
Discount rate
(1% movement) (237) 237 - -
Future salary growth
(1% movement) 258 (258) - -

The above sensitivity analysis are 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 reporting period) has been applied as when calculating the benefit liability recognised within the statements 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 year.

The expected contributions to defined benefit obligations are as follows:

2017 2016
GROUP RM’000 RM’000

Within the next 12 months 23 -


Between 2 and 5 years 676 -
Between 5 and 10 years
1,934 -
2,633 -
ANNUAL REPORT 2017 POS MALAYSIA 179

26. Trade and other payables

GROUP COMPANY
NOTE 2017 2016 2017 2016
RM’000 RM’000 RM’000 RM’000

Non-current
Maintenance and overhaul cost a 10,363 - - -

Current
Trade
Trade payables 431,126 202,390 356,796 201,523

Non-trade
Amounts due to immediate
holding company b 26 - 6 -
Amounts due to related
companies c 20,270 - 10,862 -
Amounts due to subsidiaries d - - 76,300 54,704
Other payables and accruals:
Unpresented money orders 36,913 42,003 36,913 42,003
Unpresented postal orders e 12,583 13,367 12,583 13,367
Agency payables 27,833 55,786 27,833 55,786
Money order payables 4,735 6,253 4,735 6,253
Service payables 143,134 37,365 27,020 35,111
Other accruals f 257,636 233,714 233,379 218,247
Goods and Services Tax
(GST) payables g 5,952 1,131 4,612 692
Maintenance and overhaul cost a 11,283 - - -
Deposits received 50,308 25,704 34,746 21,580
570,673 415,323 468,989 447,743
1,001,799 617,713 825,785 649,266
1,012,162 617,713 825,785 649,266

a. Maintenance and overhaul cost

Maintenance and overhaul costs relates to provision made on heavy duty maintenance checks on the airframe, engines, landing gear
and auxiliary power units, being part of the lease aircrafts under contract over the lease period.

b. Amounts due to immediate holding company

Amounts due to immediate holding company is interest-free, unsecured and repayable on demand.
180 POS MALAYSIA ANNUAL REPORT 2017

26. Trade and other payables (continued)

c. Amounts due to related companies

Amounts due to related companies are interest-free, unsecured and repayable on demand.

d. Amounts due to subsidiaries

Amounts due to subsidiaries are unsecured, interest-free and repayable on demand.

e. Unpresented postal orders

During the financial year, the Group and the Company recognised expired postal orders of more than 3 years amounting to RM2,112,000
(2016: RM4,062,000) in the profit or loss.

f. Other accruals

Included in other accruals of the Group and of the Company are deferred government grant received and deferred income in relation to
prepaid mail amounting to RM2,905,000 (2016: RM1,217,000) and RM37,443,000 (2016: RM32,253,000) respectively.

The grant related to assets is amortised over the useful lives of the assets. During the financial year, RM506,000 (2016: RM670,000)
has been amortised as other income in profit or loss.

g. Goods and Services Tax (GST) payables

Goods and Services Tax (“GST”) payable refers to the returns due to the Royal Malaysian Custom Department (“RMCD”) in relation
to output tax received by the Group and the Company amounting to RM5,952,000 (2016 : RM1,131,000) and RM4,612,000 (2016:
RM692,000) respectively.

27. Operating segments

The Group has four 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 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:
ANNUAL REPORT 2017 POS MALAYSIA 181

27. Operating segments (continued)

• Postal Services Includes the provision of basic mail services for corporate and individual customers 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.

• Courier Includes courier, parcel and logistic solutions by sea, air and land to both national and international
destinations.

• International Includes the direct entry and transhipment.

• Logistics and Includes cargo and ground handling, in-flight catering, freight and forwarding and air cargo
Aviation transport.

Other segments 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 current reporting period.

There are varying levels of integration between the Postal Services reportable segment and the Courier reportable segment. This integration
includes shared distribution services. The accounting policies of the reportable segments are the same as described in Note 2.

Information regarding the operations of each reportable segment is shown below. Performance is measured based on segment results. Segment
results are used to measure performance as Management believes that such information is 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 are 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 are used to measure the return of assets of each segment.

Segment liabilities

The total segment liabilities are 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 are used to measure the gearing of each segment.

Geographical segments

The Group is 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 varying from retail customers and wholesale customers. There is no significant concentration
of revenue from any customers.
182

27. Operating segments (continued)


POS MALAYSIA

POSTAL OTHER LOGISTICS &


SERVICES COURIER INTERNATIONAL OPERATIONS AVIATION ELIMINATION GROUP
2017 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Revenue
Total external revenue 779,528 684,578 192,761 97,808 327,588 - 2,082,263
Inter-segment revenue 86,258 73,629 - 59,924 41,124 (260,935) -
ANNUAL REPORT 2017

Total revenue for reportable segments 865,786 758,207 192,761 157,732 368,712 (260,935) 2,082,263
Reportable segment results (146,484) 181,005 21,024 27,260 6,533 - 89,338
Other unallocated results 42,041
Profit before taxation 131,379
Reportable segments assets 525,649 173,923 106,225 469,612 1,158,778 2,434,187
Other unallocated assets 830,302
Total assets 3,264,489
Reportable segment liabilities 71,484 39,157 257,392 41,768 393,553 803,354
Other unallocated liabilities 522,444
Total liabilities 1,325,798
Other information
Capital expenditure
- Property, plant and equipment 108,250 45,937 17,545 17,158 6,870 - 195,760
Depreciation of property, plant and equipment (71,522) (25,903) (7,705) (5,130) (16,888) - (127,148)
Finance income 15,001
Finance costs (8,999)
Fair value through profit or loss:
- Held for trading financial instruments 38
Change in fair value of investment properties 3,790
Tax expense (47,412)
27. Operating segments (continued)

POSTAL OTHER
SERVICES COURIER INTERNATIONAL OPERATIONS ELIMINATION GROUP
2016 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Revenue
Total external revenue 816,073 558,685 260,927 81,754 - 1,717,439
Inter-segment revenue 83,685 72,256 - 637 (156,578) -
Total revenue for reportable segments 899,758 630,941 260,927 82,391 (156,578) 1,717,439
Reportable segment results (98,830) 132,177 20,390 14,535 - 68,272
Other unallocated results 24,229
Profit before taxation 92,501
Reportable segments assets 513,423 123,635 70,016 359,003 - 1,066,077
Other unallocated assets 802,669
Total assets 1,868,746
Reportable segment liabilities 30,128 38,362 237,180 51,091 - 356,761
Other unallocated liabilities 396,389
Total liabilities 753,150
Other information
Capital expenditure
- Property, plant and equipment 67,791 30,781 7,462 5,983 - 112,017
ANNUAL REPORT 2017

Depreciation of property, plant and equipment (69,159) (23,111) (5,446) (5,046) - (102,762)
Finance income 17,365
Finance costs (4,188)
Fair value through profit or loss:
- Held for trading financial instruments (97)
POS MALAYSIA

Tax expense (29,408)


183
184 POS MALAYSIA ANNUAL REPORT 2017

28. Financial instruments

28.1 Categories of financial instruments

The table below provides an analysis of financial instruments categorised as follows:

(a) Loans and receivables (“L&R”);


(b) Fair value through profit or loss (“FVTPL”):
- Held for trading (“HFT”);
(c) Available-for-sale financial assets (“AFS”);
(d) Held-to-maturity investments (“HTM”); and
(e) Other financial liabilities measured at amortised cost (“OL”).

CARRYING L&R/ FVTPL


AMOUNT (OL) -HFT HTM AFS
2017 RM’000 RM’000 RM’000 RM’000 RM’000

Financial assets
GROUP
Other investments 8,799 8,000 331 - 468
Trade and other receivables 767,825 767,825 - - -
Cash and cash equivalents 776,117 776,117 - - -
1,552,741 1,551,942 331 - 468

COMPANY
Other investments 8,175 8,000 175 - -
Trade and other receivables 503,866 503,866 - - -
Cash and cash equivalents 488,152 488,152 - - -
1,000,193 1,000,018 175 - -

Financial liabilities
Group
Loans and borrowings (240,043) (240,043) - - -
Trade and other payables (965,862) (965,862) - - -
(1,205,905) (1,205,905) - - -

Company
Trade and other payables (780,825) (780,825) - - -
ANNUAL REPORT 2017 POS MALAYSIA 185

28. Financial instruments (continued)

28.1 Categories of financial instruments (continued)

CARRYING L&R/ FVTPL


AMOUNT (OL) -HFT HTM AFS
2016 RM’000 RM’000 RM’000 RM’000 RM’000

Financial assets
Group
Other investments 84,672 - 407 84,265 -
Trade and other receivables 415,946 415,946 - - -
Cash and cash equivalents 638,712 638,712 - - -
1,139,330 1,054,658 407 84,265 -

Company
Other investments 84,446 - 213 84,233 -
Trade and other receivables 381,053 381,053 - - -
Cash and cash equivalents 421,713 421,713 - - -
887,212 802,766 213 84,233 -

Financial liabilities
Group
Loans and borrowings (98,798) (98,798) - - -
Trade and other payables (583,112) (583,112) - - -
(681,910) (681,910) - - -

Company
Trade and other payables (615,104) (615,104) - - -

28.2 Net gains and losses arising from financial instruments

GROUP COMPANY
2017 2016 2017 2016
RM’000 RM’000 RM’000 RM’000

Net gains/(losses) on:


Fair value through
profit or loss:
- Held for trading
financial instruments (38) (97) (38) (97)
- Held-to-maturity
investments 2,165 3,567 2,165 3,373
Loans and receivables 22,360 (1,581) 8,224 (226)
Financial liabilities
measured at
amortised cost (8,999) (9,490) - (5,302)
15,488 (7,601) 10,351 (2,252)
186 POS MALAYSIA ANNUAL REPORT 2017

28. Financial instruments (continued)

28.3 Financial risk management

The Group’s overall financial risk management objectives are 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 use of financial instruments:

• Credit risk
• Liquidity risk
• Market risk

28.4 Credit risk

Credit risk is the risk of a financial loss to the Group and 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, ArRahnu
financing and investment securities.

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 more than 6 months are monitored individually.

Exposure to credit risk, credit quality and collateral

As at the end of the reporting year, the maximum exposure to credit risk arising from receivables is represented by the carrying amounts
in the statements of financial position.

Management has taken reasonable steps to ensure that receivables 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 is limited due to the Group’s and the Company’s large number of customers.
ANNUAL REPORT 2017 POS MALAYSIA 187

28. Financial instruments (continued)

28.4 Credit risk (continued)

Receivables (continued)

Impairment losses

The ageing of trade receivables, Ar-Rahnu financing and amounts due from immediate holding company and related companies as at
the end of the reporting year was:

GROSS IMPAIRMENT NET


GROUP RM’000 RM’000 RM’000

2017
Not past due 404,089 (122) 403,967
Past due 1 - 30 days 57,709 (203) 57,506
Past due 31 - 120 days 51,132 (230) 50,902
Past due more than 120 days 65,878 (35,824) 30,054
578,808 (36,379) 542,429

2016
Not past due 246,621 (30) 246,591
Past due 1 - 30 days 24,491 (208) 24,283
Past due 31 - 120 days 38,802 (332) 38,470
Past due more than 120 days 58,713 (26,553) 32,160
368,627 (27,123) 341,504
188 POS MALAYSIA ANNUAL REPORT 2017

28. Financial instruments (continued)

28.4 Credit risk (continued)

Receivables (continued)

Impairment losses (continued)

The ageing of trade receivables and amounts due from immediate holding company and related companies as at the end of the
reporting period was:

GROSS IMPAIRMENT NET


COMPANY RM’000 RM’000 RM’000

2017
Not past due 49,902 - 49,902
Past due 1 - 30 days 13,775 (203) 13,572
Past due 31 - 120 days 18,699 (230) 18,469
Past due more than 120 days 18,054 (13, 345) 4,709
100,430 (13,778) 86,652

2016
Not past due 16,089 (30) 16,059
Past due 1 - 30 days 15,563 (208) 15,355
Past due 31 - 120 days 35,208 (332) 34,876
Past due more than 120 days 48,076 (18,303) 29,773
114,936 (18,873) 96,063

The movements in the allowance for impairment losses of trade receivables, amounts due from immediate holding company and
related companies during the financial year were:

GROUP COMPANY
2017 2016 2017 2016
RM’000 RM’000 RM’000 RM’000

At 1 April 27,123 23,460 18,873 18,943


Acquisition of subsidiaries 23,723 - - -
Impairment loss recognised 12,110 17,639 7,906 10,894
Impairment loss written off (14,233) (10,665) (7,186) (10,146)
Impairment loss reversed (12,344) (3,311) (5,815) (818)
At 31 March 36,379 27,123 13,778 18,873

The allowance account in respect of trade receivables is used to record impairment losses. Unless the Group or the Company is satisfied
that recovery of the amount is possible, the amount considered irrecoverable is written off against the receivable directly.
ANNUAL REPORT 2017 POS MALAYSIA 189

28. Financial instruments (continued)

28.4 Credit risk (continued)

Investments and other financial assets

Risk management objectives, policies and processes for managing the risk

Investments are allowed only in liquid securities and only with counterparties that have a credit rating equal to or better than the Group.

Exposure to credit risk, credit quality and collateral

As at the end of the reporting year, the Group and the Company have only invested principally in domestic securities. The maximum
exposure to credit risk is represented by the carrying amounts in the statements of financial position.

In view of the sound credit rating of counterparties, management does not expect any counterparty to fail to meet its obligations.

The investments and other financial assets are unsecured.

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 subsidiaries. The Company
monitors on an on going 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 RM147,798,000 (2016: RM98,798,000) representing the outstanding banking
facilities of the subsidiaries as at the end of the reporting year.

As at the end of the reporting year, 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.
190 POS MALAYSIA ANNUAL REPORT 2017

28. Financial instruments (continued)

28.4 Credit risk (continued)

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.

Exposure to credit risk, credit quality and collateral

As at the end of the reporting year, the maximum exposure to credit risk is represented by their carrying amounts in the Group’s
statements of financial position.

Inter-company loans and advances

Risk management objectives, policies and processes for managing the risk

The Company provides unsecured advances to 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 year, the maximum exposure to credit risk is represented by their carrying amounts in the statement of
financial position.

Loans and advances are only provided to subsidiaries which are wholly-owned by the Company.

The amounts due from subsidiaries and amounts due from related companies are repayable on demand.

Impairment losses

As at the end of the reporting year, the inter-company balance that is assessed to be irrecoverable amounting to RM45,776,000 (2016:
RM45,776,000) had been impaired. The Company does not specifically monitor the ageing of current advances to the subsidiaries.
ANNUAL REPORT 2017 POS MALAYSIA 191

28. Financial instruments (continued)

28.5 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, loans and borrowings.

The Group and the Company maintain a level of cash and cash equivalents and bank facilities deemed adequate by the management
to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they fall due.

It is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or at significantly different
amount.

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 >5


AMOUNT INTEREST CASH FLOWS YEAR YEARS YEARS
RM’000 RATE RM’000 RM’000 RM’000 RM’000

2017
GROUP
Non-derivative
financial liabilities
Revolving credit 188,098 3.65% - 6.00% 188,098 188,098 - -
Term loan 30,000 7.15% - 7.22% 30,000 30,000 - -
Hire purchase liabilities 21,945 3.08% - 5.09% 24,320 6,812 17,508 -
Trade and other
payables 965,862 - 965,862 965,862 - -
1,205,905 1,208,280 1,190,772 17,508 -
COMPANY
Non-derivative
financial liabilities
Trade and other
payables 780,825 - 780,825 780,825 - -
Financial guarantees - - 147,798 147,798 - -
780,825 928,623 928,623 - -
2016
GROUP
Non-derivative
financial liabilities
Revolving credit 98,798 4.69% 98,798 98,798 - -
Trade and other
payables 583,112 - 583,112 583,112 - -
681,910 681,910 681,910 - -
192 POS MALAYSIA ANNUAL REPORT 2017

28. Financial instruments (continued)

28.5 Liquidity risk (continued)

Maturity analysis (continued)

CARRYING CONTRACTUAL CONTRACTUAL UNDER 1 1-5 >5


AMOUNT INTEREST CASH FLOWS YEAR YEARS YEARS
RM’000 RATE RM’000 RM’000 RM’000 RM’000

2016
COMPANY
Non-derivative
financial liabilities
Trade and other
payables 615,104 - 615,104 615,104 - -
Financial guarantees - - 98,798 98,798 - -
615,104 - 713,902 713,902 - -

28.6 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.

28.6.1 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 US 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 fluctuation of the foreign currency.

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 was:
ANNUAL REPORT 2017 POS MALAYSIA 193

28. Financial instruments (continued)

28.6 Market risk (continued)

28.6.1 Currency risk (continued)

Exposure to foreign currency risk (continued)

DENOMINATED IN
USD
2017 2016
GROUP RM’000 RM’000

Trade and other receivables 115,088 49,887


Cash and cash equivalents 183,130 (332)
Trade and other payables (290,205) (195,041)
Exposure in the statements of financial position 8,013 (145,485)

Currency risk sensitivity analysis

A 10% (2016: 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. This analysis assumes that all other variables, in particular interest rates, remained
constant and ignores any impact of forecasted sales and purchases.

PROFIT OR LOSS
2017 2016
GROUP RM’000 RM’000

USD (609) 11,057

A 10% (2016: 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.

28.6.2 Interest rate risk

The Group’s and the Company’s primary interest rate risks relates to debt securities, deposits placed with licensed banks, borrowings
and investments in equity securities.

The Group’s and the Company’s investments in fixed rate debt securities, deposits placed with licensed banks, investments in equity
securities and short term receivables and payables are not significantly exposed to interest rate risk.
194 POS MALAYSIA ANNUAL REPORT 2017

28. Financial instruments (continued)

28.6 Market risk (continued)

28.6.2 Interest rate risk (continued)

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 an interest at range of 4.45% to 5.90% (2016: 4.25%) per annum and are
repayable on demand.

Risk management objectives, policies and processes for managing the risk

The Group and the Company adopt a policy of investing and borrowing mainly in fixed rate instruments to avoid the risk of fluctuation
in interest rates. As for investments in fixed rate debt securities, the Group and the Company will only invest in debt securities that
have a rating of A and above.

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 was:

GROUP COMPANY
2017 2016 2017 2016
RM’000 RM’000 RM’000 RM’000

Fixed rate instruments


Financial assets
Held-to-maturity
investments - 84,265 - 84,233
Deposits placed with
licensed banks 234,081 26,198 212,242 11,367
234,081 110,463 212,242 95,600
Financial liabilities
Hire purchase liabilities (21,945) - - -
212,136 110,463 212,242 95,600

Floating rate instruments


Financial liabilities
Revolving credit (188,098) (98,798) - -
Term loan (30,000) - - -
(218,098) (98,798) - -
ANNUAL REPORT 2017 POS MALAYSIA 195

28. Financial instruments (continued)

28.6 Market risk (continued)

28.6.2 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
2017 2016
GROUP RM’000 RM’000

Floating rate instruments 1,658 751

28.6.3 Other price risk

Equity price risk arises from the Group’s and the Company’s investments in equity securities.

Risk management objectives, policies and processes for managing the risk

Management of the Group monitors the equity investments on a portfolio basis. Material investments within the portfolio are
managed on an individual basis and all buy and sell decisions are approved by the Directors.
196 POS MALAYSIA ANNUAL REPORT 2017

28. Financial instruments (continued)

28.6.3 Other price risk (continued)

Equity price risk sensitivity analysis

This analysis assumes that all other variables remained constant and the Group’s equity investments moved in correlation with FTSE
Bursa Malaysia KLCI (“FBMKLCI”).

A 10% (2016: 10%) strengthening in FBMKLCI at the end of the reporting period would have increased equity and post-tax profit by
RM25,000 (2016: RM31,000) for investment classified as fair value through profit or loss. A 10% (2016: 10%) weakening in FBMKLCI
would have had equal but opposite effect on equity and profit or loss respectively.

28.7 Fair value information


The carrying amounts of cash and cash equivalents, 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.
28. Financial instruments (continued)

28.7 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 CARRIED AT FAIR VALUE FAIR VALUE OF FINANCIAL INSTRUMENTS NOT TOTAL
CARRIED AT FAIR VALUE FAIR CARRYING
LEVEL 1 LEVEL 2 LEVEL 3 TOTAL LEVEL 1 LEVEL 2 LEVEL 3 TOTAL VALUE AMOUNT

RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
2017
GROUP RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Financial assets
Other investments - - - - - - 468 468 468 468
Quoted shares 331 - - 331 - - - - 331 331
331 - - 331 - - 468 468 799 799

Financial liabilities
Hire purchase
liabilities - - - - - - 24,320 24,320 24,320 21,945
ANNUAL REPORT 2017

COMPANY
Financial assets
Quoted shares 175 - - 175 - - - - 175 175
175 - - 175 - - - - 175 175
POS MALAYSIA
197
198
POS MALAYSIA

28. Financial instruments (continued)

28.7 Fair value information (continued)

FAIR VALUE OF FINANCIAL INSTRUMENTS CARRIED AT FAIR FAIR VALUE OF FINANCIAL INSTRUMENTS NOT CARRIED TOTAL
ANNUAL REPORT 2017

VALUE AT FAIR VALUE FAIR CARRYING


LEVEL 1 LEVEL 2 LEVEL 3 TOTAL LEVEL 1 LEVEL 2 LEVEL 3 TOTAL VALUE AMOUNT

RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

2016
GROUP
Financial assets
Held-to-maturity
investments - - - - - 84,247 - 84,247 84,247 84,265
Quoted shares 407 - - 407 - - - - 407 407
407 - - 407 - 84,247 - 84,247 84,654 84,672

COMPANY
Financial assets
Held-to-maturity
investments - - - - - 84,215 - 84,215 84,215 84,233
Quoted shares 213 - - 213 - - - - 213 213
213 - - 213 - 84,215 - 84,215 84,428 84,446
ANNUAL REPORT 2017 POS MALAYSIA 199

28. Financial instruments (continued)

28.7 Fair value information (continued)

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.

Transfers between Level 1 and Level 2 fair values

There has been no transfer between Level 1 and 2 fair values during the financial year (2016: 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
200 POS MALAYSIA ANNUAL REPORT 2017

29. Capital management

The Group’s objectives when managing capital are 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.

2017 2016
GROUP RM’000 RM’000

Total borrowings (Note 24) 240,043 98,798


Less: Cash and cash equivalents (Note 22) (742,440) (576,673)
Net cash (502,397) (477,875)
Total equity 1,938,691 1,115,596

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.
ANNUAL REPORT 2017 POS MALAYSIA 201

30. Commitments

a) Operating lease commitments

The Group as lessee

The Group has entered into non-cancellable lease agreements for land and warehouses, which are renewable at the end of the lease
period subject to an increase clause.

The Group has aggregate future minimum lease commitments as at the end of the reporting period as follows:

2017 2016
GROUP RM’000 RM’000

Future minimum lease payments:


Not later than one (1) year 32,411 -
Later than one year (1) year and not later than
two (2) years 29,078 -
Between two (2) to five (5) years 8,261 -
Later than five (5) years 3,087 -
72,837 -

b) Capital commitments

GROUP COMPANY
2017 2016 2017 2016
RM’000 RM’000 RM’000 RM’000

Property, plant and equipment


Authorised but not contracted for 19,044 76,681 18,270 55,820

Contracted but not provided for 324,260 83,955 86,198 60,874


202 POS MALAYSIA ANNUAL REPORT 2017

31. Significant related party transactions

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 party are subject to common control. Related parties may be individuals
or other entities.

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 has related party relationship with its significant investors, subsidiaries, associates and key management personnel.

Significant related party transactions

Related party transactions have been entered into in the normal course of business under normal trade 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 18 and 26 to the financial statements.
ANNUAL REPORT 2017 POS MALAYSIA 203

31. Significant related party transactions (continued)

GROUP COMPANY
2017 2016 2017 2016
RM’000 RM’000 RM’000 RM’000

A. Immediate holding company


Sales of services 376 - - -
Purchase of services (286) - - -

B. Subsidiaries
Sales of services - - 62,411 52,578
Purchase of services - - (53,685) (78,830)
Finance income - - 6,226 6,395
Rental expense - - (7,432) (8,030)

C. Related companies
Sales of services 90,036 10,526 17,354 4,669
Rental income 1,299 369 1,299 369
Purchase of services (57,806) (56,766) (41,571) (56,766)
Rental expense - (12) - (12)
Purchase of freehold land (69,000) - (69,000) -
Purchase of capital expenditures (5,927) (10,231) (5,927) (10,231)

During the financial year, the Company issued 225,030,030 new ordinary shares pursuant to the acquisition of the entire equity interest in Pos
Aviation Sdn. Bhd. (formerly known as KL Airport Services Sdn. Bhd.) (“Pos Aviation”) from HICOM Holdings Berhad, a wholly-owned subsidiary
company of DRB-HICOM Berhad and 20,720,721 new ordinary shares, pursuant to the acquisition of part of a parcel of freehold industrial
land located in Section 28, Shah Alam from HICOM Indungan Sdn. Bhd., an indirect wholly-owned subsidiary company of DRB-HICOM Berhad.

The issuance of shares resulted in the Company becoming a 53.5% subsidiary of DRB-HICOM Berhad. Accordingly, the Company regarded DRB-
HICOM Berhad and Etika Strategi Sdn. Bhd. as its immediate holding company and ultimate holding company respectively. The details of the
transaction are as disclosed in Note 33 to the financial statements.

Transactions with related companies of a significant investor that has an influence over the Group has been classified during the financial
year as transaction with related companies with the exception of transactions with Pos Aviation and its subsidiaries which are subsidiaries
of the Group effective on 13 September 2016. The comparatives for the prior year have been re-presented to conform with the current year’s
presentation.
204 POS MALAYSIA ANNUAL REPORT 2017

32. Acquisition of subsidiary

On 13 September 2016, the Company acquired the entire equity interest in Pos Aviation Sdn. Bhd. (formerly known as KL Airport Services Sdn.
Bhd.) (“Pos Aviation”) and its subsidiaries for RM749,350,000 satisfied via the issuance of 225,030,030 new ordinary shares of the Company
at an issue price of RM3.33. The share price at the completion date was RM3.26 resulting in the fair value of the consideration transferred to
be RM735,598,000. The following summarises the major classes of consideration transferred, and the recognised amounts of assets acquired
and liabilities assumed at the acquisition date:

2017
GROUP Note RM’000

Fair value of consideration transferred


Equity instruments issued (225,030,030 ordinary shares) 733,598

Identifiable assets acquired and liabilities assumed


Property, plant and equipment 11 356,885
Prepaid lease properties 12 42,399
Deferred tax assets 15 11,444
Other receivables 13,236
Other investments 624
Current tax assets 9,198
Trade and other receivables 239,788
Cash and cash equivalents 21,876
Inventories 1,795
Deferred tax liabilities 15 (31,325)
Post-employment benefits obligations 25 (2,313)
Trade and other payables (230,342)
Loans and borrowings (111,081)
Non-controlling interest (2,139)
Total identifiable net assets 320,045

The following fair values have been determined on a provisional basis:

• the fair values of property, plant and equipment have been determined provisionally pending completion of an independent valuation.

• the fair value of intangible assets has yet to be determined pending completion of an independent valuation.

Acquisition-related costs

The Group and the Company incurred acquisition-related costs of RM3,085,000 related to external legal fees, due diligence costs and other
related expenses which have been charged to the Group’s and the Company’s profit or loss and other comprehensive income, with the exception
of RM104,000 which was set off against the share premium account.
ANNUAL REPORT 2017 POS MALAYSIA 205

32. Acquisition of subsidiary (continued)

Effect of acquisition

During the financial year, Pos Aviation Group contributed revenue and profit after tax at RM327,588,000 and RM18,874,000 respectively for the
period from the acquisition date to 31 March 2017.

2017
GROUP RM’000

Net cash inflow arising from acquisition of subsidiary


Purchase consideration settled in cash and cash equivalents, including the acquisition-related costs (3,085)
Cash and cash equivalents acquired 21,876
18,791

Goodwill
Goodwill was recognised as a result of the acquisition as follows:
Total consideration transferred 733,598
Fair value of identifiable net assets (320,045)
Goodwill 413,553

The accounting of business combination of Pos Aviation Group were based on provisional fair value of its identifiable assets, liabilities, and
contingent liabilities. In accordance with MFRS 3, the Group will be carrying out the Purchase Price Allocation (“PPA”) exercise within 12 months
from the date of acquisition.
206 POS MALAYSIA ANNUAL REPORT 2017

33. Significant events

On 14 March 2016, the Group entered into the following corporate exercises:

i. a conditional share sale agreement with HICOM Holdings Berhad, a wholly-owned subsidiary of DRB-HICOM Berhad for the acquisition
of the entire issued and paid-up capital of Pos Aviation comprising 88,328,527 ordinary shares of RM1.00 each in Pos Aviation
35,300,000 redeemable convertible preference shares of RM1.00 each in Pos Aviation and such number of new Pos Aviation shares
issued, for total purchase consideration of RM 749.35 million; and

ii. a conditional sale and purchase agreement with HICOM Indungan Sdn. Bhd. and HICOM Engineering Sdn. Bhd., indirectly wholly-
owned subsidiary of DRB-HICOM Berhad, for the proposed acquisition of part of a parcel of freehold industrial land held under GRN
311546 Lot 62010, Pekan HICOM, District Petaling, State of Selangor Darul Ehsan located along Jalan Jijan 28/35, Section 28, 40400
Shah Alam measuring 9.912 acres for a purchase consideration of RM69.00 million.

The acquisitions were approved by the shareholders on 18 August 2016 and the exercises were completed on 13 September 2016.  

34. Comparative figures

The following comparative figures have been reclassified to conform with the current year’s presentation:

AS RESTATED AS PREVIOUSLY STATED


GROUP COMPANY GROUP COMPANY
RM’000 RM’000 RM’000 RM’000

Statement of profit or loss and


other comprehensive income
Cost of sales (1,412,799) (1,377,560) - -
Other income 13,703 19,200 13,802 19,298
Selling and distribution expenses (19,422) (18,078) - -
Administrative expenses (199,423) (179,372) - -
Other expenses (17,521) (13,600) (91,656) (82,583)
Cost of materials and consumables - - (25,174) (12,494)
Staff costs - - (849,295) (821,627)
Rental, communication and utilities - - (95,333) (97,401)
Transportation - - (396,213) (394,402)
Maintenance and supplies - - (89,404) (83,237)
Depreciation of property, plant and equipment - - (102,092) (96,867)
Fair value through profit or loss:
Held for trading financial
instruments - - (97) (97)
ANNUAL REPORT 2017 POS MALAYSIA 207

35. Supplementary information on the breakdown of realised and unrealised profits

The breakdown of the retained earnings of the Group and of the Company as at 31 March 2017, into realised and unrealised profits, pursuant
to Paragraph 2.06 and 2.23 of Bursa Malaysia Main Market Listing Requirements are as follows:

GROUP COMPANY
2017 2016 2017 2016
RM’000 RM’000 RM’000 RM’000
Total retained earnings of the
Company and its subsidiaries:
- Realised 743,493 782,623 715,632 721,256
- Unrealised 69,708 91,135 (42,159) (30,105)
813,201 873,758 673,473 691,151
Total share of retained earnings
of associates:
- Realised (7,650) (7,650) - -
805,551 866,108 673,473 691,151
Less: Consolidation adjustments 61,230 (20,554) - -
Total retained earnings 866,781 845,554 673,473 691,151

The determination of realised and unrealised profits is based on the Guidance of Special Matter No.1, Determination of Realised and Unrealised
Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by Malaysian Institute
of Accountants on 20 December 2010.
208 POS MALAYSIA ANNUAL REPORT 2017

Pos Malaysia Berhad


(Company No. 229990-M)
(Incorporated in Malaysia)

and its subsidiaries

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 98 to 216 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 March 2017 and of their financial performance and cash flows for the financial year
then ended.

In the opinion of Directors, the information set out in Note 35 on page 207 to the financial statements has been compiled in accordance with the
Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosures Pursuant to Bursa Malaysia
Securities Berhad Listing Requirements, issued by the Malaysian Institute of Accountants, and presented based on the format prescribed by Bursa
Malaysia Securities Berhad.

Signed on behalf of the Board of Directors in accordance with a resolution of the Directors:

………………………………………………………………………….................................................................
Brigadier General (K) Tan Sri Dato’ Sri (Dr) Haji Mohd Khamil bin Jamil
Director

…………………………………………...............................
Dato’ Abdul Hamid bin Sh. Mohamed
Director

Kuala Lumpur,

Date: 23 June 2017


ANNUAL REPORT 2017 POS MALAYSIA 209

Pos Malaysia Berhad


(Company No. 229990-M)
(Incorporated in Malaysia)

and its subsidiaries

Statutory declaration pursuant to


Section 251(1)(b) of the Companies Act, 2016

I, Dato’ Mohd Shukrie bin Mohd Salleh, 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 103 to 207 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 Dato’ Mohd Shukrie bin Mohd Salleh, NRIC: 740322-06-5477, at Kuala Lumpur on 23 June

2017.

…………………………………………..............................
Dato’ Mohd Shukrie bin Mohd Salleh

Before me :
210 POS MALAYSIA ANNUAL REPORT 2017

INDEPENDENT AUDITORS’ REPORT TO THE


MEMBERS OF POS MALAYSIA BERHAD
(Company No: 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 March 2017 of the
Group and 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 103 to 206.

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
March 2017 and of their financial performance and 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 auditor’s 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’ Code of Ethics for Professional Accountants (“IESBA
Code”), and we have fulfilled our other ethical responsibilities in accordance with the By-Laws and the IESBA Code.
ANNUAL REPORT 2017 POS MALAYSIA 211

Pos Malaysia Berhad


Independent Auditors’ Report for the
Financial Year Ended 31 March 2017

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
Refer to Note 14 to the financial statements.

The key audit matter How the matter was addressed in our audit
The Group has a significant goodwill balance amounting to We performed the following audit procedures, amongst others:
RM418,183,000, including goodwill of RM413,553,000 arising from
its acquisition of Pos Aviation Group during the financial year. • We assessed the significant and highly sensitive assumptions
to determine if they are appropriate and supportable by
The Group performs annual goodwill impairment assessment comparing those assumptions with each of the CGU with
by comparing the aggregated carrying amount of the allocated internally derived information and external market data;
goodwill of each cash-generating unit (“CGU”) against the respective
discounted cash flow projections to determine the amount of • We evaluated the estimation uncertainty and performed a
impairment loss which should be recognised, if any. sensitivity analysis on the key assumptions; and

We identified the potential impairment of goodwill as a key audit • We considered the adequacy of the disclosures of the
matter due to the following factors: assumptions applied, which are particularly sensitive,
uncertain or require significant judgement, in the assessment
- significance of the assets to the Group’s consolidated statement of goodwill impairment.
of financial position; and

- impairment assessments prepared by the Group are complex


and contain assumptions, particularly profit margin, growth rate
and discount rates that are inherently uncertain.
212 POS MALAYSIA ANNUAL REPORT 2017

Pos Malaysia Berhad


Independent Auditors’ Report for the
Financial Year Ended 31 March 2017

Company level
Valuation of Cost of Investment 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 investment in subsidiaries amounting We performed the following audit procedures, amongst others:
to RM899,433,000 including cost of investment of RM736,579,000
arising from its acquisition of Pos Aviation Group during the financial • We challenged the Company’s assessment in identifying
year. investments that have impairment indicators by evaluating
whether internal and external indicators had been considered;
We identified the potential impairment of cost of investment in
subsidiaries as a key audit matter due to the following factors: • We assessed the significant and highly sensitive assumptions
to determine if they are appropriate and supportable by
- significance of the assets to the Company’s statement of comparing those assumptions with internally derived
financial position; and information and external market data;

- impairment assessments prepared by the Company are • We evaluated the estimation uncertainty and performed a
complex and contain assumptions, particularly profit margin, sensitivity analysis on the key assumptions; and
growth rate and discount rates that are inherently uncertain.
• We considered the adequacy of the disclosures of the
assumption applied, which are particularly sensitive, uncertain
or require significant judgement in the assessment of
invesment in subsidiaries.
ANNUAL REPORT 2017 POS MALAYSIA 213

Pos Malaysia Berhad


Independent Auditors’ Report for the
Financial Year Ended 31 March 2017

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, but does not include the financial statements of the Group and of the Company and our auditors’ report thereon.

Our opinion on the financial statements of the Group and of the Company does not cover the Directors’ Report and we do 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 Directors’ Report and, in
doing so, consider whether the Directors’ Report is materially inconsistent with the financial statements 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, we conclude that there is a material misstatement
of the Directors’ Report, we are required to report that fact. We have nothing to report in this regard.

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.
214 POS MALAYSIA ANNUAL REPORT 2017

Pos Malaysia Berhad


Independent Auditors’ Report for the
Financial Year Ended 31 March 2017

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 conducted 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.

• 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.
ANNUAL REPORT 2017 POS MALAYSIA 215

Pos Malaysia Berhad


Independent Auditors’ Report for the
Financial Year Ended 31 March 2017

Auditors’ Responsibilities for the Audit of the Financial Statements (continued)

• 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, related safeguards.

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 of the current financial 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 auditor’s 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 the subsidiaries of which we have not acted as auditors
are disclosed in Note 16 to the financial statements.

Other Reporting Responsibilities

The supplementary information set out in Note 35 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad and is not part of the
financial statements. The Directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special
Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad
Listing Requirements, as issued by the Malaysian Institute of Accountants (“MIA Guidance”) and the directive of Bursa Malaysia Securities Berhad. In our
opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia
Securities Berhad.
216 POS MALAYSIA ANNUAL REPORT 2017

Pos Malaysia Berhad


Independent Auditors’ Report for the
Financial Year Ended 31 March 2017

Other Matters

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 Tai Yoon Foo


(LLP0010081-LCA & AF 0758) Approval Number: 2948/05/18(J)
Chartered Accountants Chartered Accountant

Petaling Jaya, Selangor

Date:
TOP 10 PROPERTIES
No Location Subject Property Registered/ Existing Use/ Tenure Land Area Gross Net Book Value Date of
Beneficial Description (square Floor Area as at Revaluation
Owner metre) (square 31 March 2017
metre)

1 International Southern Support Zone, KL Pos Aviation Sdn. Head Office, Cargo Leasehold 50 years 55,985 67,607 104,589,000 -
Airport International Airport, 64000 Bhd. Complex, Workshop (expiring in year
Sepang, Selangor Darul and Inflight Catering 2048)
Ehsan

2 Section 28, Shah HS(D) 316566 PT 856 Pos Malaysia Berhad Vacant Land Freehold 40,093 Not applicable 71,064,000 22/01/2016
Alam Section 28, Pekan Hicom,
District of Petaling, State of
Selangor

3 Shah Alam HS(D) 98478, PT No. 1, PMB Properties Sdn. MPC Section 21 Shah Leasehold 99 90,072 46,451 65,817,000 -
Section 21, Town of Shah Bhd. Alam/ Double Storey years (expiring on
Alam, District of Petaling Office Building, 2 19/07/2094)
Jaya, State of Selangor units of 1 1/2 Storey
Factory Building

4 Sadao, Songkhla, Title Deeds (“Chanode” KPB Sadao ICD Co Ltd Vacant Land Freehold 325,254 Not applicable 58,654,000 10/03/2016
Thailand in Thailand) Nos. 36822
to 36828, Lot/Survey
Nos. 104/1976, 24/1977,
25/1978, 62/1979,
61/1980,
60/1981 and 59/1982
respectively, Samnak Kham
Sub-District, Sadao District,
Songkhla Province, Thailand
ANNUAL REPORT 2017

5 Pelabuhan Klang Haulage Central, Lot 6, Pos Logistics Berhad Haulage Operations Leasehold expiring 141,640 114,444 47,664,000 -
Jalan Mohamed 3, Bandar in 99 years
Sultan Suleiman, 42000
Pelabuhan Klang, Selangor

6 Brickfields PN 27419, Lot No. Pos Malaysia & Pos Laju Warehouse Leasehold 99 10,922 3,442 45,864,000 -
361, Section 72, Town Services Holdings years (expiring on
POS MALAYSIA

and District of Kuala Bhd 20/05/2097)


Lumpur, State of Wilayah
Persekutuan Kuala Lumpur
217
218

TOP 10 PROPERTIES (continued)


POS MALAYSIA

No Location Subject Property Registered/ Existing Use/ Tenure Land Area Gross Net Book Value Date of
Beneficial Description (square Floor Area as at Revaluation
Owner metre) (square 31 March 2017
metre)

7 KLIA HS(D) 7443, PT No 27, Malaysia Airports Pos Malaysia Concession 36,950 18,729 17,609,000 -
Town of Lapangan Terbang (Sepang) Sdn. Bhd. International Hub
Antarabangsa Sepang, (PMIH)
District of Sepang, State of
ANNUAL REPORT 2017

Selangor

Greentown, Ipoh PN 155068, Lot No 2436N, Effivation Sdn. Bhd. Vacant Land Leasehold 999 1,310 Not applicable
Town of Ipoh, District of years (expiring on
Kinta, State of Perak 30/12/2893)

Greentown, Ipoh PN 155069, Lot No 2437N, Effivation Sdn. Bhd. Vacant Land Leasehold 999 1,424 Not applicable
Town of Ipoh, District of years (expiring on
Kinta, State of Perak 30/12/2893)

Greentown, Ipoh PN 4738, Lot No 31448, Effivation Sdn. Bhd. Vacant Land Leasehold 999 2,722 Not applicable
Town of Ipoh, District of years (expiring on
Kinta, State of Perak 30/12/2893)

8 Greentown, Ipoh PN 153337, Lot No 35120, Effivation Sdn. Bhd. Vacant Land Leasehold 999 2,228 Not applicable 17,250,000 17/03/2017
Town of Ipoh, District of years (expiring on
Kinta, State of Perak 24/03/2895)

Greentown, Ipoh PN 153721, Lot No 2351N, Effivation Sdn. Bhd. Vacant Land Leasehold 999 1,500 Not applicable
Town of Ipoh, District of years (expiring on
Kinta, State of Perak 30/12/2883)

Greentown, Ipoh GRN55283, Lot No 31449, Effivation Sdn. Bhd. Vacant Land Freehold 3,010 Not applicable
Town of Ipoh, District of
Kinta, State of Perak

Greentown, Ipoh PN 155073, Lot No 2740N, Effivation Sdn. Bhd. Vacant Land Leasehold 999 1,507 Not applicable
Town of Ipoh, District of years (expiring on
Kinta, State of Perak 30/12/2893)
TOP 10 PROPERTIES (continued)
No Location Subject Property Registered/ Existing Use/ Tenure Land Area Gross Net Book Value Date of
Beneficial Description (square Floor Area as at Revaluation
Owner metre) (square 31 March 2017
metre)

9 Prai Industrial No 2001, Mukim 1, Diperdana Kontena Haulage Operations Leasehold 60 years 40,485 91,337 15,186,000 -
Estate Lorong Perusahaan 1, Prai Sdn. Bhd. (expiring in year
Industrial Estate, 13600 2034)
Prai, Pulau Pinang

10 Pulau Indah Westport Distripark, Lot No. Pos Logistics Berhad Warehouse Leasehold 27 44,408 478,004 13,502,000 -
5628, Pulau Indah, 42009 years (expiring on
Pelabuhan Klang, Selangor 31/08/2024)
ANNUAL REPORT 2017
POS MALAYSIA
219
220 POS MALAYSIA ANNUAL REPORT 2017

ANALYSIS OF
SHAREHOLDINGS
as at 30 June 2017

Total number of issued : 782,776,836 ordinary shares and 1 Special Rights Redeemable Preference Share
shares

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 : 18,368

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 Employees Provident Fund Board 63,327,936 8.09 - -

4 Kumpulan Wang Persaraan (Diperbadankan) 60,666,200 7.75 6,665,000 0.85

5 Tan Sri Dato’ Seri Syed Mokhtar Shah bin Syed Nor - - 418,748,150# 53.50

6 Etika Strategi Sdn Bhd - - 418,748,150^ 53.50

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.
ANNUAL REPORT 2017 POS MALAYSIA 221

DISTRIBUTION OF SHAREHOLDINGS

Holdings No. of Shares % of issued No. of Shareholders/ % of Shareholders/


Share Capital Depositors Depositors

Less than 100 197,949 0.03 4,950 26.95

100 to 1,000 4,158,202 0.53 6,499 35.38

1,001 to 10,000 20,979,750 2.68 5,803 31.59

10,001 to 100,000 26,453,623 3.38 929 5.06

100,001 to less than 5% of issued shares 272,443,783 34.80 184 1.00

5% and above of issued shares 458,543,529 58.58 3 0.02

Total 782,776,836 100.00 18,368 100.00

30 LARGEST REGISTERED SHAREHOLDERS

No Name of Shareholders No. of Shares %

1 Maybank Nominees (Tempatan) Sdn Bhd 225,030,030 28.75


Kuwait Finance House (Malaysia) Berhad For HICOM Holdings Berhad

2 Cartaban Nominees (Tempatan) Sdn Bhd 172,997,399 22.10


DRB-HICOM Berhad

3 Kumpulan Wang Persaraan (Diperbadankan) 60,516,100 7.73

4 Citigroup Nominees (Tempatan) Sdn Bhd 37,502,636 4.79


Employees Provident Fund Board

5 Citigroup Nominees (Tempatan) Sdn Bhd 36,586,700 4.67


Exempt An For AIA Bhd.

6 HICOM Holdings Berhad 20,720,721 2.65

7 AMSEC Nominees (Tempatan) Sdn Bhd 18,440,800 2.36


MTrustee Berhad For
CIMB Islamic Dali Equity Growth Fund (UT-CIMB-Dali)
222 POS MALAYSIA ANNUAL REPORT 2017

No Name of Shareholders No. of Shares %

8 Citigroup Nominees (Tempatan) Sdn Bhd 16,730,300 2.14


Employees Provident Fund Board (Nomura)

9 Citigroup Nominees (Tempatan) Sdn Bhd 7,433,400 0.95


Universal Trustee (Malaysia) Berhad For CIMB Islamic Dali Equity Fund

10 Citigroup Nominees (Tempatan) Sdn Bhd 7,045,000 0.90


Employees Provident Fund Board (CIMB Prin)

11 HSBC Nominees (Asing) Sdn Bhd 6,166,100 0.79


BBH And Co Boston For Vanguard Emerging Markets Stock Index Fund

12 Citigroup Nominees (Asing) Sdn Bhd 6,000,000 0.77


Exempt An For Citibank N.A Singapore (UBP SG1)

13 Citigroup Nominees (Asing) Sdn Bhd 4,537,300 0.58


Exempt An For Citibank New York (Norges Bank 14)

14 HSBC Nominees (Asing) Sdn Bhd 4,211,700 0.54


JPMCB NA For Vanguard Total International Stock Index Fund

15 Cartaban Nominees (Asing) Sdn Bhd 4,130,900 0.53


Exempt An For State Street Bank & Trust Company (West CLT OD67)

16 Maybank Nominees (Tempatan) Sdn Bhd 3,200,000 0.41


National Trust Fund (IFM Maybank)

17 Citigroup Nominees (Tempatan) Sdn Bhd 3,064,800 0.39


Employees Provident Fund Board (AM Inv)

18 Citigroup Nominees (Tempatan) Sdn Bhd 3,057,700 0.39


Kumpulan Wang Persaraan (Diperbadankan) (CIMB Equities)

19 Amanahraya Trustees Berhad 3,046,000 0.39


Public Islamic Select Treasures Fund

20 HSBC Nominees (Tempatan) Sdn Bhd 2,947,100 0.38


HSBC (M) Trustee Bhd For CIMB Islamic Dali Equity Theme Fund

21 Maybank Nominees (Tempatan) Sdn Bhd 2,558,000 0.33


Maybank Trustees Berhad For CIMB Islamic Balanced Growth Fund (230122)

22 Citigroup Nominees (Asing) Sdn Bhd 2,554,600 0.33


CBNY For DFA Emerging Markets Small Cap Series

23 HSBC Nominees (Asing) Sdn Bhd 2,540,000 0.32


BNP Paribas Secs Svs Paris For Hi-Kabl-Fonds

24 CIMB Group Nominees (Tempatan) Sdn Bhd 2,496,200 0.32


CIMB Commerce Trustee Berhad - Kenanga Growth Fund

25 Citigroup Nominees (Asing) Sdn Bhd 2,468,898 0.32


CBNY For Emerging Market Core Equity Portfolio DFA Investment Dimen-
sions Group Inc
ANNUAL REPORT 2017 POS MALAYSIA 223

No Name of Shareholders No. of Shares %

26 Citigroup Nominees (Tempatan) Sdn Bhd 2,156,700 0.28


Kumpulan Wang Persaraan (Diperbadankan) (Nomura)

27 Hong Leong Assurance Berhad 2,148,700 0.27


As Beneficial Owner (Life Par)

28 UOB Kay Hian Nominees (Asing) Sdn Bhd 2,078,294 0.27


Exempt An For UOB Kay Hian Pte Ltd ( A/C Clients )

29 Amanahraya Trustees Berhad 1,943,300 0.25


For CIMB Islamic Dali Asia Pacific Equity Growth Fund

30 Maybank Nominees (Tempatan) Sdn Bhd 1,935,900 0.25


National Trust Fund (IFM Kenanga)

TOTAL 666,245,278 85.11

DIRECTORS’ DIRECT AND INDIRECT INTERESTS IN SHARES IN THE COMPANY AND ITS RELATED CORPORATION
(Based on the Register of Directors’ Shareholdings)

No. of shares No. of shares

Direct Indirect
Name of Directors Direct Interest
Interest %
% Indirect Interest
Interrest %
%

COMPANY
Brigadier General (K) Tan Sri Dato’ Sri (Dr) Haji Mohd 57 + - -
Khamil bin Jamil
RELATED CORPORATION
Shares held in Etika Strategi Sdn Bhd, the ultimate
holding company by :
Brigadier General (K) Tan Sri Dato’ Sri (Dr) Haji Mohd 30,000 10.0 - -
Khamil bin Jamil
Shares held in DRB-HICOM Berhad, the holding company
by :
Datuk Mohamed Razeek bin Md Hussain Maricar 3,100 + - -

Notes:

+ Negligible

None of the other Directors in office as at 30 June 2017 held any interest in shares in the Company and its related corporation.
224 POS MALAYSIA ANNUAL REPORT 2017

Notice of
25th Annual General Meeting
NOTICE IS HEREBY GIVEN THAT the 25th Annual General Meeting (“AGM”) of Pos Malaysia Berhad (“Pos Malaysia” or “the Company”) will be held
at Glenmarie Ballroom, Holiday Inn Kuala Lumpur Glenmarie, 1, Jalan Usahawan U1/8, 40250 Shah Alam, Selangor Darul Ehsan on Tuesday, 22 August
2017 at 9.00 a.m. for the following purposes:

As Ordinary Business:

1. To receive the Audited Financial Statements for the financial year ended 31 March 2017 and the Reports Please refer to Note A
of the Directors and Auditors thereon.

2. To declare a first and final single tier dividend of 10.7 sen per ordinary share in respect of the financial (Resolution 1)
year ended 31 March 2017.

3. To re-elect the following Directors who retire by rotation pursuant to Article 115 of the Company’s
Constitution, and who being eligible, offered themselves for re-election:

(a) Brigadier General (K) Tan Sri Dato’ Sri (Dr) Haji Mohd Khamil bin Jamil (Resolution 2)
(b) Dato’ Ibrahim Mahaludin bin Puteh (Resolution 3)
(c) Lim Hwa Yu (Resolution 4)

4. To re-appoint KPMG PLT as Auditors of the Company for the ensuing year and to authorise the Directors to (Resolution 5)
fix their remuneration.

As Special Business:

To consider and, if thought fit, to pass the following ordinary resolutions:

5. Proposed Continuation in office of Dato’ Abdul Hamid bin Sh Mohamed as Independent Non-Executive
Director

“THAT approval be and is hereby given to Dato’ Abdul Hamid bin Sh Mohamed, who will reach the nine
(9) years tenure as an Independent Non-Executive Director on 20 October 2017, to continue to act as
Independent Non-Executive Director of the Company until the conclusion of the next AGM of the Company
in accordance with the Malaysian Code on Corporate Governance.” (Resolution 6)

6. Proposed Continuation in office of Dato’ Ibrahim Mahaludin bin Puteh as Senior Independent Non-
Executive Director

“THAT subject to passing of Resolution 3, approval be and is hereby given to Dato’ Ibrahim Mahaludin
bin Puteh, who will reach the nine (9) years tenure as an Independent Non-Executive Director on 25
February 2018, to continue to act as Senior Independent Non-Executive Director of the Company until
the conclusion of the next AGM of the Company in accordance with the Malaysian Code on Corporate
Governance.” (Resolution 7)

7. Proposed Payment of Directors’ Fees in Respect of the Financial Year Ended 31 March 2017

“THAT the payment of Directors’ fees of RM871,000.00 to the Non-Executive Directors of the Company in
respect of the financial year ended 31 March 2017 be hereby approved.” (Resolution 8)

ANNUAL REPORT 2017 POS MALAYSIA 225

8. Proposed Payment of Directors’ Benefits (excluding Directors’ Fees) From 31 January 2017 Until the Next
AGM

“THAT the payment of Directors’ benefits (excluding Directors’ fees) for amount up to RM980,000 to the
Non-Executive Directors of the Company from 31 January 2017 until the conclusion of the next AGM of
the Company to be held by September 2018 pursuant to the Companies Act 2016, be hereby approved.” (Resolution 9)

9. Proposed Renewal of Shareholders’ Mandate for Mandated Recurrent Related Party Transactions of a
Revenue or Trading Nature (“Proposed Renewal of Shareholders’ Mandate”)

“THAT subject to the Companies Act 2016 (“the Act”), the Constitution of the Company and the Main
Market Listing Requirements (“the Listing Requirements”) of Bursa Malaysia Securities Berhad (“Bursa
Securities“), the mandate for the Company and its subsidiaries (“Pos Malaysia Group”) to enter into any
of the mandated recurrent related party transactions of a revenue or trading nature as set out in Section
2.2.3 of the Company’s Circular to Shareholders dated 31 July 2017 with the transacting related parties
mentioned therein which are necessary for the Pos Malaysia Group’s day-to-day operations, be hereby
renewed subject to the following:

(a) the transactions are in the ordinary course of business and are on terms 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

(b) the shareholders’ mandate is subject to annual renewal and disclosure is made in the annual report
of the Company of the aggregate value of transactions conducted pursuant to the shareholders’
mandate during the financial year where the aggregate value is equal to or exceeds the applicable
prescribed threshold under Paragraph 10.09(1) of the Listing Requirements.

AND THAT the Proposed Renewal of Shareholders’ Mandate will be subject to annual renewal and any
authority conferred by 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 it will lapse, unless by a resolution
passed at the meeting, the authority is renewed; 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 resolution passed by the shareholders in general meeting;


226 POS MALAYSIA ANNUAL REPORT 2017

whichever is earlier;

AND THAT the Directors of the Company and/or any of them be and are hereby authorised to complete
and do all such acts and things (including executing such documents as may be required) to give effect to
the transactions contemplated and/or authorised by this resolution and with full power to assent to any
conditions, modifications, revaluations, variations and/or amendments thereof in the best interest of the
Company.” (Resolution 10)

10. Proposed New Shareholders’ Mandate for New Recurrent Related Party Transactions of a Revenue or Trading
Nature (“Proposed New Shareholders’ Mandate”)

“THAT subject to the Companies Act 2016 (“the Act”), the Constitution of the Company and the Main Market
Listing Requirements (“the Listing Requirements”) of Bursa Malaysia Securities Berhad (“Bursa Securities“),
approval be and is hereby given to the Company and its subsidiaries (“Pos Malaysia Group”) to enter into any
of the new recurrent related party transactions of a revenue or trading nature as set out in Section 2.2.3 of
the Company’s Circular to Shareholders dated 31 July 2017 with the transacting related parties mentioned
therein which are necessary for the Pos Malaysia Group’s day-to-day operations subject to the following:

(a) the transactions are in the ordinary course of business and are on terms 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

(b) the shareholders’ mandate is subject to annual renewal and disclosure is made in the annual report
of the Company of the aggregate value of transactions conducted pursuant to the shareholders’
mandate during the financial year where the aggregate value is equal to or exceeds the applicable
prescribed threshold under Paragraph 10.09(1) of the Listing Requirements.

AND THAT the Proposed New Shareholders’ Mandate will be subject to annual renewal and any authority
conferred by 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 it will lapse, unless by a resolution
passed at the meeting, the authority is renewed; 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 resolution passed by the shareholders in general meeting;

whichever is earlier;

AND THAT the Directors of the Company and/or any of them be and are hereby authorised to complete
and do all such acts and things (including executing such documents as may be required) to give effect to
the transactions contemplated and/or authorised by this resolution and with full power to assent to any
conditions, modifications, revaluations, variations and/or amendments thereof in the best interest of the
Company.” (Resolution 11)
ANNUAL REPORT 2017 POS MALAYSIA 227

11. To transact any other business of which due notice has been given in accordance with the Act and the
Company’s Constitution.

FURTHER NOTICE IS HEREBY GIVEN THAT for the purpose of determining a member who shall be entitled
to attend this 25th AGM, the Company shall be requesting Bursa Malaysia Depository Sdn Bhd, in accordance with
Article 89(3) of the Company’s Constitution and Section 34(1) of the Securities Industry (Central Depositories) Act
1991, to issue a General Meeting Record of Depositors as at 16 August 2017. Only Depositors whose names appear
on the Record of Depositors as at 16 August 2017 shall be entitled to attend this 25th AGM or appoint proxies to
attend and/or vote on his/her behalf.

Notice of Book Closure and Notice of Dividend Entitlement and Payment:

NOTICE IS ALSO HEREBY GIVEN THAT the first and final single tier dividend of 10.7 sen per ordinary share in
respect of the financial year ended 31 March 2017, if approved by the shareholders at the 25th AGM, will be paid
on 6 October 2017 to shareholders whose names appear in the Register of Members or Record of Depositors at the
close of business on 8 September 2017.

A Depositor shall qualify for entitlement to the dividend only in respect of:

(a) shares deposited into the Depositor’s securities account before 12.30 p.m. on 6 September 2017 in respect
of securities which are exempted from mandatory deposit;

(b) shares transferred into the Depositor’s securities account before 4.00 p.m. on 8 September 2017 in respect
of ordinary transfers; and

(c) shares bought on Bursa Malaysia Securities Berhad on a cum entitlement basis according to the Rules of
Bursa Malaysia Securities Berhad.

By Order of the Board,

Dato’ Carol Chan Choy Lin (MIA 3930)


Company Secretary

Kuala Lumpur
Date: 31 July 2017
228 POS MALAYSIA ANNUAL REPORT 2017

NOTES:
Note A - Audited Financial Statements

The Audited Financial Statements are meant for discussion only in accordance with Section 340(1)(a) of the Companies Act 2016 (“the Act”) as it does
not require a formal approval of the shareholders and hence, is not put forward for voting.

Resolutions 2, 3 and 4 – Re-election of Directors

Brigadier General (K) Tan Sri Dato’ Sri (Dr) Haji Mohd Khamil bin Jamil, Dato’ Ibrahim Mahaludin bin Puteh and Lim Hwa Yu are due to retire at the 25th
AGM of the Company and are eligible to offer themselves for re-election at the AGM in accordance with the Company’s Constitution. All the three (3)
retiring Directors are seeking re-election as Directors of the Company.

The Board through the Board Nomination and Remuneration Committee (“BNRC”) has deliberated on the suitability of the retiring Directors to be re-
elected as Directors. Upon deliberation, the Board (except the retiring Directors) collectively agreed that the said 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 Main Market Listing Requirements (“Listing Requirements”) of Bursa Malaysia Securities Berhad (“Bursa Securities”).

Further, in line with Recommendation 3.1 of the Malaysian Code on Corporate Governance 2012 (“MCCG 2012”), the BNRC has considered and
affirmed, and the Board has endorsed that Dato’ Ibrahim Mahaludin bin Puteh and Lim Hwa Yu, the Independent Directors who are seeking re-election
at the 25th AGM of the Company comply with the independence criteria as prescribed in the Listing Requirements of Bursa Securities and remained
independent in exercising their judgement and in carrying out their duties as Independent Directors.

Resolution 5 – Re-appointment of Auditors

Messrs KPMG has been registered in the name of KPMG PLT following conversion of its status to a limited liability partnership (“LLP”) pursuant to
Section 29 of the LLP Act 2012 effective 27 December 2016.

Resolutions 6 and 7 - Continuation in Office of Dato’ Abdul Hamid bin Sh Mohamed and Dato’ Ibrahim Mahaludin bin Puteh as
Independent Non-Executive Directors of the Company

Recommendation 3.3 of the MCCG 2012 provides that shareholders’ approval can be sought in the event that the Company intends for an independent
director who has served in that capacity for more than nine (9) years, to continue to act as Independent Director of the Company.

The Board is recommending to the shareholders for Dato’ Abdul Hamid bin Sh Mohamed and Dato’ Ibrahim Mahaludin bin Puteh, who will be reaching
the nine (9) years tenure as Independent Non-Executive Director on 20 October 2017 and 25 February 2018 respectively, to continue to act as
Independent Non-Executive Director and Senior Independent Non-Executive Director of the Company respectively. The Board through the BNRC, had
assessed and endorsed that Dato’ Abdul Hamid bin Sh Mohamed and Dato’ Ibrahim Mahaludin bin Puteh be retained as Independent Non-Executive
Director and Senior Independent Non-Executive Director of the Company respectively as they have continued to display high level of integrity and is
objective in their judgement and decision making in the best interest of the Company, shareholders and stakeholders and is able to express unbiased
views without any influence. The detailed justifications of the Board for making such recommendation are set out in the Corporate Governance
Statement in the Annual Report 2017 of the Company.
ANNUAL REPORT 2017 POS MALAYSIA 229

Resolution 8 – Directors’ Fees

The amount of Directors’ fees payable to the Non-Executive Directors (“NEDs”) of the Company includes fees payable to the NEDs as members of the
Board and Board Committees.

The Directors’ fees structure for the financial year ended (“FYE”) 31 March 2017 remains unchanged compared to the preceding FYE 31 March 2016
as follows :-

Board/Board Committees Chairman Member

Board RM 120,000 RM 80,000

Board Audit Committee RM 15,000 RM 10,000

Other Board Committees RM 8,000 RM 6,000

Resolution 9 – Directors’ Benefits

The amount of Directors’ benefits (excluding Directors’ fees) payable to the NEDs comprises meeting allowances and medical benefits from 31 January
2017 until the conclusion of the next AGM of the Company to be held by September 2018 (20 months) pursuant to the Act, which shareholders’
approval will be sought at this 25th AGM in accordance with Section 230 (1) of the Act.

The estimated amount of meeting allowances is calculated based on the current composition of the Board and Board Committees, and the number of
scheduled and non-scheduled meetings for Board, Board Committees and general meetings from 31 January 2017 until the next AGM of the Company.
Meeting allowances will be paid to Directors upon their attendance at Board, Board Committees’ and general meetings.

Medical benefits include outpatient, hospitalisation, maternity and dental shall be paid on reimbursement basis up to a cap amount pursuant to the
Company’s policy.

Resolutions 10 and 11 – Renewal of Shareholders’ Mandate and New Shareholders’ Mandate for Mandated and New Recurrent
Related Party Transactions of a Revenue or Trading Nature

The proposed Resolutions if passed, will respectively renew the existing shareholders’ mandate and grant a new mandate to the Pos Malaysia Group
to enable the Pos Malaysia Group to respectively enter into the mandated and new recurrent related party transactions of a revenue or trading nature
which are necessary for the Pos Malaysia Group’s day to day operations, 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 to the detriment
of the minority shareholders of the Company. The details are as set out in the Circular to Shareholders dated 31 July 2017.

Voting Procedures

Pursuant to Paragraph 8.29A of the Listing Requirements of Bursa Securities, voting at the 25th AGM of the Company will be conducted by poll, rather
than on a show of hands. Poll Administrator and Independent Scrutineers will be appointed to conduct the polling process and to verify the results of
the poll, respectively.
230 POS MALAYSIA ANNUAL REPORT 2017

Proxy

1. A member entitled to attend and vote is entitled to appoint a proxy to exercise all or any of his/her rights to attend, participate, speak and vote
in his/her stead. A proxy need not be a member of the Company.

2. A member may appoint a maximum of two (2) proxies to attend the meeting provided that such member holds not less than the minimum board
lot as specified under the Rules of Bursa Malaysia Depository Sdn Bhd and the Listing Requirements of Bursa Securities.

3. Pursuant to the Listing Requirements of Bursa Securities, where a member of the Company is an exempt authorised nominee as defined under the
Central Depositories Act (“CDA”), which is exempted from compliance with the provisions of Section 25A(1) of the CDA, of which holds ordinary
shares in the Company for multiple beneficial owners in one securities account (“omnibus account”), there is no limit to the number of proxies
which the exempt authorised nominee may appoint in respect of each omnibus account it holds.

4. Where a member appoints two (2) proxies to attend the meeting, the member shall specify the proportion of his/her shareholding to be
represented by each proxy.

5. The instrument appointing a proxy shall be in writing under the hand of the appointer or of his attorney duly appointed under a power of attorney
or if such appointer is a corporation, either under the corporation’s seal or under the hand of an officer or attorney duly appointed under a power
of attorney.

6. The instrument appointing a proxy or representative shall be deposited at the Company’s Share Registrar’s office at Symphony Share Registrars
Sdn Bhd, Level 6, Symphony House, Pusat Dagangan Dana 1, Jalan PJU 1A/46, 47301 Petaling Jaya, Selangor Darul Ehsan not less than forty-
eight (48) hours before the time for holding the meeting or any adjournment thereof, or, in the case of a poll, not less than twenty-four (24) hours
before the time appointed for the taking of the poll.

STATEMENT ACCOMPANYING THE NOTICE OF ANNUAL GENERAL MEETING


(Pursuant to Paragraph 8.27(2) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad)

No notice in writing has been received by the Company nominating any candidate for election as Director at the 25th AGM of the Company. The Directors
who are due for retirement and seeking for re-election pursuant to the Company’s Constitution are as set out in the Notice of AGM and their profile are
set out in the Directors’ Profile in the 2017 Annual Report.
PROXY FORM POS MALAYSIA BERHAD (229990-M)

25th ANNUAL GENERAL MEETING


CDS Account No.
Total Number of Shares Held
Contact Number
I/We,
(FULL NAME OF SHAREHOLDER AS PER NRIC/PASSPORT IN BLOCK LETTERS)

NRIC/Passport/Company No.:
Address :
being a member of Pos Malaysia Berhad (229990-M), hereby appoint the following:

(1) PROXY “A” :


(FULL NAME OF PROXY “A” AS PER NRIC/PASSPORT IN BLOCK LETTERS)

NRIC/Passport :
Address:
or failing him/her,
(FULL NAME AS PER NRIC/PASSPORT IN BLOCK LETTERS)

NRIC/Passport :
Address:

(2) PROXY “B” (if Applicable) :


(FULL NAME OF PROXY “B” AS PER NRIC/PASSPORT IN BLOCK LETTERS)

NRIC/Passport :
Address:
or failing him/her,
(FULL NAME AS PER NRIC/PASSPORT IN BLOCK LETTERS)

NRIC/Passport :
Address:
OR
the CHAIRMAN OF THE MEETING (if no proxy is named above);
as my/our proxy to vote for me/us and on my/our behalf, at the 25th Annual General Meeting of the Company, to be held at Glenmarie Ballroom, Holiday
Inn Kuala Lumpur Glenmarie, 1, Jalan Usahawan U1/8, 40250 Shah Alam, Selangor Darul Ehsan on Tuesday, 22 August 2017 at 9.00 a.m. and at any
adjournment thereof. My/our proxy is to vote as indicated below:
The proportion of my/our holding to be represented by my/our proxies are as follows:

Proxy A % Proxy B % Total 100%

No. Ordinary Resolution For Against


1 Declaration of Dividend
2 Re-election of Brigadier General (K) Tan Sri Dato’ Sri (Dr) Haji Mohd Khamil bin Jamil as Director
3 Re-election of Dato’ Ibrahim Mahaludin bin Puteh as Director
4 Re-election of Lim Hwa Yu as Director
5 Re-appointment of KPMG PLT as the Company’s Auditors for the ensuing year
6 Continuation of Dato’ Abdul Hamid bin Sh Mohamed as Independent Non-Executive Director
7 Continuation of Dato’ Ibrahim Mahaludin bin Puteh as Senior Independent Non-Executive Director
8 Approval of Directors’ fees
9 Approval of Directors’ benefits (excluding Directors’ fees)

Proposed Renewal of Shareholders’ Mandate for Mandated Recurrent Related Party Transactions of a
10 Revenue or Trading Nature

11 Proposed New Shareholders’ Mandate for New Recurrent Related Party Transactions of a Revenue or
Trading Nature

Please indicate with an (“X”) in the appropriate spaces as to how you wish your votes to be cast on the Ordinary Resolutions specified in the Notice of the 25th Annual
General Meeting. If you do not do so, the Proxy may vote or abstain from voting at his/her discretion.

Signed this day of 2017


Signature(s)/Common Seal of Shareholder
NOTES ON PROXY :

1. A member entitled to attend and vote is entitled to appoint a proxy to exercise all or any of his/her rights to attend, participate, speak and vote
in his/her stead. A proxy need not be a member of the Company.

2. A member may appoint a maximum of two (2) proxies to attend the meeting provided that such member holds not less than the minimum board
lot as specified under the Rules of Bursa Malaysia Depository Sdn Bhd and the Listing Requirements of Bursa Securities.

3. Pursuant to the Listing Requirements of Bursa Securities, where a member of the Company is an exempt authorised nominee as defined under
the Central Depositories Act, which is exempted from compliance with the provisions of Section 25A(1) of the Central Depositories Act, of which
holds ordinary shares in the Company for multiple beneficial owners in one securities account (“omnibus account”), there is no limit to the
number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds.

4. Where a member appoints two (2) proxies to attend the meeting, the member shall specify the proportion of his/her shareholding to be
represented by each proxy.

5. The instrument appointing a proxy shall be in writing under the hand of the appointer or of his attorney duly appointed under a power of attorney
or if such appointer is a corporation, either under the corporation’s seal or under the hand of an officer or attorney duly appointed under a power
of attorney.

6. The instrument appointing a proxy or representative shall be deposited at the Company’s Share Registrar’s office at Symphony Share Registrars
Sdn Bhd, Level 6, Symphony House, Pusat Dagangan Dana 1, Jalan PJU 1A/46, 47301 Petaling Jaya, Selangor Darul Ehsan not less than forty-
eight (48) hours before the time for holding the meeting or any adjournment thereof, or, in the case of a poll, not less than twenty-four (24) hours
before the time appointed for the taking of the poll.

Complete this form, where applicable, place in envelope and post to:
Please Fold Here

AFFIX
STAMP

The Share Registrar


SYMPHONY SHARE REGISTRARS SDN BHD
(378993-D)
Level 6, Symphony House
Pusat Dagangan Dana 1
Jalan PJU 1A/46
47301 Petaling Jaya
Selangor Darul Ehsan

Please Fold Here

PERSONAL DATA PRIVACY

By submitting an instrument appointing a proxy(ies) and/or representative(s) to attend, speak and vote at the 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 AGM;
• preparation and compilation of the attendance lists, minutes and other documents relating to the AGM (which includes any adjournment
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)
POS MALAYSIA BERHAD
Level 8, Pos Malaysia Headquarters,
Dayabumi Complex, 50670 Kuala Lumpur
03-2267 2267
www.pos.com.my