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Insolvent Post Office says new revenue streams will help turnaround

Minister Stella Ndabeni-Abrahams is appointing a team of experts to work on the development of a bankable turnaround plan for the Post Office, which is insolvent. File photo.
Minister Stella Ndabeni-Abrahams is appointing a team of experts to work on the development of a bankable turnaround plan for the Post Office, which is insolvent. File photo.
Image: GCIS

The SA Post Office (Sapo) says it is determined to implement a turnaround strategy that includes a focus on new revenue streams, with monthly reports to the government on its “remedial” action plan.

This comes as Sapo was found to be commercially insolvent by the auditor-general's office, the SABC reported this week. According to the report, AG Tsakani Maluleke said for the financial year 2019/20, the Post Office Group incurred losses of more than R1.7bn while its liabilities exceeded its assets by R1.5bn.

In a statement on Wednesday, Sapo said it had taken note of the AG's comments on the release of its 2019/20 annual financial results. New group CEO Nomkhita Mona said she had spent the first week in her role meeting government, management and labour representatives.

“These engagements have exposed the massive opportunities (which outweigh the challenges) that Sapo will be tapping into to turn its fortunes around.

“The minister [Stella Ndabeni-Abrahams] is in the process of appointing a team of turnaround experts to work with the board and the executive team in the development of a bankable turnaround plan, in line with the requirements of the post-Covid-19 economy. We welcome this process, as it will allow the various teams to ensure the basics are in place — and improve on the matters flagged by the latest audit report.”

Mona said Sapo’s opportunities include participating in e-commerce, digitisation of its processes and in the courier-service space.

“In the long term, we are confident that we have the opportunity to build a world-class, commercially viable postal service — with no heavy reliance on the national fiscus. However, in the short to medium term, we fully expect that the national government will support Sapo’s efforts in dealing with these legacy issues.”

In a statement on Tuesday after its recent AGM, Sapo said: “Despite challenging trading conditions, revenue performed below target by 8%. The entity received recapitalisation funding of R2.947bn on January 25 2019 which was used to settle term loans of R1.035bn  and pay outstanding creditors.”

In the period under review, staff numbers dropped by 1,871 through natural attrition and voluntary severance packages, as part of cost-cutting. The entity reduced energy costs by 17%.

The delivery performance of mail items stood at 89.25%, an improvement of 12.85 percentage points from the prior year. About 535 million items were delivered during the year. While mail delivery was not possible during lockdown, the post office said it had cleared the backlog from this period.

Acting chairperson Tia van der Sandt said to ensure the relevance of the post office in a competitive market, the board had set out to oversee the development and implementation of projects.

In the review period, 8.1 million Sassa beneficiaries were paid monthly through the Post Office-Postbank system. The Sassa project gave the Post Office access to technologies which include access to the home affairs database and fingerprint readers. This opens the possibility to offer more services in co-operation with other government entities, such as renewal applications for driving licences, identity books and passports,” said the board.

Sapo delivered 2.6 million schoolbooks to 3,873 schools in Limpopo and the Northern Cape and more than 8,000 laptops to the universities of Pretoria and Johannesburg. Said Van der Sandt: “We hope to expand this service to other provinces as well, thereby keeping money within the fiscus and reducing pressure on state coffers.”

Revenue from motor vehicle licences improved by R23.9m in the year.

“The board committed itself to providing a remedial action plan for shortcomings within the Post Office. The board will report to the minister monthly against the remedial plan, as is normal business practice.

“It is essential to introduce new revenue streams to the Post Office as part of a turnaround plan, and the board intends that this be done as soon as possible.”

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