Friday , November 15 2019
Home / africa / Post Office losses widen to more than R1bn as mail volumes decline

Post Office losses widen to more than R1bn as mail volumes decline



20:34 10/15/2019

Lameez Omarjee

Losses at the SA Post Office increased by R95m, to R1.1bn, for the 2018/19 financial year.

The Portfolio Committee on Communications was on Tuesday briefed on the Post office's annual report for the year ended March 31, 2019. According to the presentation to members of Parliament, mail revenue is still a major source of income for the Post Office, but contributions from this revenue stream have been declining.

The report showed that mail revenue declined 8% to R2.8bn as a result of declining mail volumes.

On the flipside, revenue from alternative services has been growing. For example, motor vehicle licensing revenue grew 5% to R308m. During the period the Post Office also took over the distribution of social grants, the South African Social Security Agency project contributed R714m to Post Office revenue.

However, the Sassa project has also contributed to expenses of the Post Office. Expenses, including finance costs increased 18% to R7.7bn. Costs associated with the Sassa project mounted to R798m, or 10% of all expenses.

Expenses associated with the Sassa project were allocated to additional staff who had to be recruited (R79m), Postbank card costs (R234m), security costs (R277m), transport costs of R37m and banking costs of R78m. Other operating costs related to the Sassa project mounted to R93m.

The Auditor General of South Africa had given the Post Office a qualified audit opinion. This related to delayed submissions on other receivables listed on its financial statements, and deposits related to Sassa liabilities as there was "insufficient detail" included on the reconciliations of unclaimed amounts relating to Sassa grants, the report read.

In terms of its cash position, during the period, the Post Office received a R2.947bn capital injection. The recapitalisation was used to settle loans from R1.035bn and pay critical suppliers. Funding of R900m was ringfenced for investment in capital projects, according to the report. Capital expenditure for the period amounted to R186m.

The Post Office indicated that liquidity concerns still remain, as expenditure exceeds revenue. Excluding Postbank, the Post Office's cash equivalents amount to R1.9bn – comprising R1.2bn in recapitalisation funds, R368m from Sassa prepayment funds and R300m in unused subsidies. According to the financial report, Postbank depositors' funds amount to R5.2bn.

New board

Fin24 previously reported that a new board for the SA Post Office would be announced by Minister of Communications and Digital Technologies Stella Ndabeni-Abrahams, later this month. The minister had extended the term of the current board in August. But their term will not be extended again.

Group COO Lindiwe Kwele has been serving as the interim CEO, formerly CEO Mark Barnes resigned over differences with government in the future structure of the group, particularly the location of Postbank.


Source link