Post Office expects to report another R1bn loss this financial year
SA POST OFFICE (Sapo) acting chairperson Colleen Makhubele yesterday flagged that the entity was expecting to report another R1 billion loss at the end of the current financial year.
The anticipated loss highlighted the Post Office’s continuing struggle to address irregular contracts identified by Auditor-General Kimi Makwetu last year and ageing infrastructure amid fierce competition from courier companies.
Makhubele said the state-owned company made a net loss of R1.1bn in the 2019/20 financial year and an R1.17bn loss a year earlier.
Makhubele told journalists in Pretoria yesterday that the board had put in place interventions as part of a 90-day strategy aimed at addressing the losses.
“We are looking at revenue-generating initiatives, and we are looking at resignalling our people to be more productive,” Makhubele said. “All of these are seeking to address the position. Also, we are reviewing our current contracts, and we are seeing a lot of savings out of that. We are anticipating revenue coming from initiatives we have embarked on.”
Sapo has received a total of R8bn in government bailouts since 2016.
Makhubele said Sapo had been losing money for the past decade.
She said the sustainability of the business was also in question.
“For example, for the past four years, Sapo has recorded a net loss in the region of R1bn. Although we have no debt, our expenditure continues to exceed revenue. Our staff cost as a percentage of our revenue is high, more than 70 percent. Our security costs are more than 80 percent of our South African Social Security Agency (Sassa) revenue, for example,” said Makhubele.
A new board was appointed last November to stabilise Sapo, restore its credibility and claw back its market share. Acting chief executive Ivumile Nongongo said that retrenchments were not on the table as an option to revive the company’s fortunes.
“If we can improve our revenue, there may be no need to have talks on retrenchments. Perhaps Sapo is inappropriately staffed. There are areas where staff need reskilling,” said Nongongo.
Sapo, which is responsible for the distribution of Sassa grants to 11 million beneficiaries every month, said it was making inroads in its plan to review costly contracts.
Makhubele said that Sapo since December had reduced cash-in-transit costs to R519 million from R800m, with an estimated cost saving of more than R280m by the end of the financial year.
She said Sapo’s board had instructed management to review all its contracts to ensure that they offered value for money and that the services or goods procured through the contracts remained essential.
Makhubele said Sapo was bleeding money as a result of some contracts.
“Some contracts had retainers paid to several service providers without performing any duties and the scope not clarified,” Makhubele said.
As part of its revenue-generating initiatives, Makhubele said Sapo was planning to launch its e-commerce platform. She said it would likely partner with local businesses to provide products and services that will assist the company to create value for its clients.