Johannesburg - The South African Post Office (Sapo) appears to be far from recovery after it posted another loss of R1.13 billion, after it secured loan guarantees of R3.7bn to stay afloat.
The cash crunch at Sapo continued after it recorded another loss last year of R1.51bn. The board and executive management promised in their financials tabled in Parliament this week that they would recover in due course.
The corporate plan in place will fix some of the problems at Sapo, but competition remains tough.
“For the year ended March 31, 2016, the group generated a comprehensive loss of R1.135bn. The organisation has been experiencing cash constraints and has not had sufficient working capital,” it said.
Deterioration
“The cause of the deterioration of the group’s liquidity position is both due to internal and external factors, such as the migration of customers towards digital communication, general decline in the mail business volumes and revenue, as well as an inappropriate and inefficient business model,” Sapo said.
All these factors have led to Sapo not generating sufficient revenue. It has raised R3.7bn from financial institutions to meet its short- and long-term requirements.
Sapo said in its financials its revenue declined by 9 percent from R5.1bn to R4.6bn at the end of the financial year in March. Cash flow operations increased from R126 million to R526m.
Despite its poor financial state the group would be able to continue operating for the foreseeable future, it said.
Sapo has been in financial trouble in the last few years, and the Minister of Telecoms and Postal Services, Siyabonga Cwele, dissolved the previous board and appointed an administrator, Simo Lushaba, for several months.
A new board was appointed last year and Lushaba returned to the position of chairman of the board of directors.
Sapo said Finance Minister Pravin Gordhan had granted it a cash injection of R650m as indicated in his Budget in February.
This was to ensure Sapo remained solvent, and this happened at the time loan discussions were in place with the banks.
Guarantees
Cwele and Gordhan increased guarantees for Sapo from R1.27bn to R3.97bn.
“A R3.7bn loan facility was negotiated with the banks with a three-year bullet repayment profile,” Sapo said.
Last year Sapo had also blamed the strikes by the unions for its poor financial performance.
It signed an agreement with the unions a few months ago to avert any strike.
Sapo is one of the state entities that have been hit by strike actions in recent years.
BUSINESS REPORT