The National Treasury revealed that the South African Post Office’s (SAPO) financial position continued deteriorating this year.
On 9 February 2023, the SAPO was placed in provisional liquidation following a successful application by a group of creditors.
The provisional liquidation resulted from SAPO’s inability to pay its debts to creditors to continue operations.
Cabinet approved that the Post Office be placed under voluntary business rescue based on the DCDT’s business continuity report.
A business rescue specialist has been appointed and has commenced work with the Post Office.
The business rescue option is primarily premised on supporting it to implement the ‘Post Office of Tomorrow’ Strategy.
The organisation was recapitalised with R2.4 billion to implement the strategy. This was before it received a provisional liquidation order.
On Tuesday, the National Treasury told Parliament’s Standing Committee on Appropriations that the Post Office’s financial position deteriorated in the first quarter of the 2023/24 financial year.
Revenue of R482.8 million was R86.1 million (15%) below budget and R145.5 million (15%) below the prior year’s performance.
The reasons for the underperformance were, among others, branch closures, load-shedding, and suppliers suspending their services due to non-payment.
Operating expenses for the quarter amounted to R964.1 million, which was R329.4 million (25%) below budget and a year-on-year decrease of R385.6 million (29%).
While operating costs were reduced due to cost containment measures, it continued to exceed revenue. Staff costs were the main contributor to the high operating expenses.
As a result, the Post Office generated a net loss of R367.3 million for the quarter against a projected net loss of R610.5 million.
Despite the SAPO performing better than budget in terms of profitability, this was primarily due to below-budget expenses for the quarter and not improved revenue generation.
The cost-to-income ratio for the quarter was 199.7%, indicating the Post Office’s unsustainable cost structure.
The Post Office had 1,024 operational branches as of 30 June 2023, of which only 10.2% were profitable.
SAPO’s outstanding liabilities are R4.7 billion. A further R3.9 billion is owed to Postbank.