Johannesburg - The financial crisis at the South African Post Office (Sapo) deepened yesterday after the entity recorded a loss of R1.4 billion in the year under review.
The financial woes at Sapo took place while it was being overseen by Deputy President Cyril Ramaphosa, who had taken the postal company over in order to get it out of financial trouble.
Ramaphosa was appointed by President Jacob Zuma in 2014 to oversee the turnaround of Eskom, SAA and Sapo.
The struggling state-owned entities (SOEs) have been a serious concern for the government and two weeks ago Minister in the Presidency Jeff Radebe warned SOEs to improve their financial performance.
When Sapo tabled its annual report in Parliament yesterday, it admitted that these were among their worst results.
The latest annual loss is a significant increase from the R406.6 million loss in the previous financial year.
“The operating environment has been challenging for the SA Post Office during the 2014/15 financial year with lower volumes presented by customers for mail, hybrid and logistics,” it said.
“Labour instability and negative publicity adversely affected the SA Post Office brand, customer confidence and financial performance,” it added in the report.
But Sapo said it was working on implementing the new turnaround strategy. This would help it get out of trouble.
It said the turnaround plan had been endorsed by the cabinet and Parliament.
The plan had also been communicated to staff and included restructuring and retrenchment plans.
The R1.4bn loss was a serious blow to Sapo, it said.
“An overdraft facility is utilised to assist the entity with working capital requirements in the normal course of business. This facility is backed by a state guarantee,” the report said.
“Furthermore the company is engaging several funding institutions to raise debt of R1.25bn in order to meet the short- and long-term funding requirements of the organisation, including the implementation of the strategic turnaround plan.”
The R1.25bn debt will be backed by the existing R1.67bn guarantee and another government guarantee of R2.5bn.
The Sapo report will now face scrutiny from Parliament as the company has to improve its financial performance.
Sapo has been struggling over the last few years and has been mired in labour disputes.
It told Parliament a few months ago that it had to change its business model and focus on new technologies to be more competitive.
It is struggling with its operations in the cities as customers turn to the latest technologies.
BUSINESS REPORT