Post Office on target, needs another cash injection
The South African Post Office (Sapo) was expected to make a net loss of R1.1bn in the current year, Sapo CEO Mark Barnes told MPs on Tuesday.
This was more or less in line with the net loss of R1.2bn set in its corporate plan.
Total revenue of R3.6bn was earned in the period to end-December — against the corporate plan target for the full year of R6.8bn.
Telecommunications and Postal Services Minister Siyabonga Cwele said in opening remarks at a meeting of Parliament’s telecommunications and postal services portfolio committee on Sapo that the organisation was not out of the woods yet, but was "on the road to recovery".
Cwele said the organisation needed a further recapitalisation in addition to the R600m cash injection it received last year from Treasury. This came late and suppliers had refused to offer services.
Vacancies on the Sapo board, including the chairman, would be filled over the next few months, Cwele reported. A new chief financial officer had been appointed and a chief operating officer would take up the position shortly.
The focus this year, he said, would be to corporatise the Postbank, modernise its logistics infrastructure and use it as a hub for e-commerce.
Barnes noted that there were signs of confidence and trust returning to the organisation. The decline in revenue had been stemmed in November. Creditors were being paid and historical labour matters settled.
Revenue from the mail business to end-December was R166m (6%) lower than the same period last year and below budget by R701m (23%). This was due to corporate customers using online and courier alternatives, reduced mailings and the historical delay in the payment of critical suppliers, which were paid in October last year.
These issues had been addressed, Barnes said, and there was R200m in additional revenue in the pipeline, 25% of which had already been contracted. Bids for 11 government tenders had also been submitted.
Revenue from the retail business amounted to R349m by end-December, a 15% increase over the same period last year but below budget by R303m (46%). Revenue from the property division of R53m marked a R28m (107%) increase over last year and was below budget by R225m (81%).
Barnes noted that staff expenses — including voluntary severance package costs and staff liabilities — amounted to R2.8bn by end-December, a year-on-year increase of R28m (1%) and below budget by R720m (19%).
Staff numbers had been reduced by 20% since 2014, mainly due to attrition. Labour relations after a turbulent number of years of strikes had stabilised.
Transport expenses of R239m were R97m (29%) below the same period last year and below budget by R250m (51%).
For 2017 Sapo would focus on being part of the payment of social grants by the South African Social Security Agency; obtaining a bank licence for Postbank; achieving branch network and operational efficiency; and relaunching a competitive courier business.
Barnes said Sapo would also invest this year to become the e-commerce hub of choice in the country and the government’s delivery partner of choice.
The e-commerce business could accommodate external investors while still retaining access to the Sapo assessed loss. The Sapo property portfolio could also be separated.
Barnes said the Postbank was "profitable, well capitalised and the corporatisation process is on track".