Post Office ‘has turnaround strategy to reduce loss’
THE Post Office remains optimistic that it will, within a year, significantly reduce the net loss it incurred in the 2018-19 financial year.
This as Auditor-General Kimi Makwetu found that it had incurred a total loss of R1 171 564 000 in the year under review.
“The Post Office did not generate sufficient revenue to finance its high cost base. These conditions, along with other matters, indicate that a material uncertainty exists on the Post Office group and company’s ability to continue as a going concern,” Makwetu said.
He made the finding in his audit report contained in the Post Office annual report recently tabled in Parliament.
However,
acting
chief
financial officer Jabulani Dlamuka said the group’s net loss for the year remained relatively unchanged at R1.172 billion from R1.173 billion in the previous year.
“As much as the revenue increased in the current financial year, we could not improve our net loss position due to the significant upfront costs and unforeseen additional costs required for the implementation of the social grants payments.
“The Post Office strategic plan 2019/20 to 2021/22 shows the planned reduction in the net loss position to R378 million for the 2019-20 financial year, which will be a major milestone in its turnaround,” Dlamuka said.
He added that the institution’s financial situation was stronger with total assets exceeding liabilities by R5.2 billion.
“In the prior year, total assets exceeded total liabilities by R3.4bn. This has greatly improved the solvency and liquidity position of the group,” Dlamuka said.
Mark Barnes, the former chief executive who recently resigned, said in the report that a R2.95bn capital injection from the government during the financial year enabled the Post Office to find itself in a sound financial position with no external bank borrowings or outstanding government guarantees.
“The Post Office continues its progress towards profitability, although significant upfront expenditure was incurred by the group in the preparation and implementation of the SA Social Security Agency project, which amounted to R754m,” Barnes said.
He said revenue had increased by R897m to R5.44bn while expenses increased by R1.43bn to R6.78bn.
“The Post Office is now in a position to invest in upgrades to infrastructure and IT with an approved capital budget of R826m for the 201920 financial year,” Barnes added.
The Post Office said it was also addressing irregular expenditure.
“The process to identify irregular expenditure is continuing in order to have it investigated and condoned, where relevant,” it said.