The South African Post Office’s 2022 annual report shows that the state-owned enterprise (SOE) is commercially and technically insolvent.
The Post Office’s financial statements revealed that it incurred a loss of R2.2 billion for the year ended 31 March 2022.
Furthermore, total liabilities exceeded total assets by R4.1 billion, while current liabilities exceeded current assets by R6.5 billion.
The Post Office could also not pay its debts as and when they were due.
One of the reasons for the dismal performance is that the Post Office missed its revenue target by a country mile.
SA Post Office CEO Nomkhita Mona revealed that they only generated R3.033 billion in revenue, well below the target of R4.812 billion.
Mona provided many excuses for the poor performance, including:
- The lingering effects of the Covid-19 lockdown and the associated business impact.
- Increased customer migration to digital alternatives, which lowered transaction volumes.
- Suppliers withdrawing services because they had not been paid.
It was also revealed that the Post Office’s performance worsened compared to the prior year, only achieving 3 of its 17 KPIs.
Despite the Post Office’s dismal financial situation, its directors believe it will have adequate financial resources to continue operations for the foreseeable future.
The Auditor-General was not convinced. She said the lack of information from the SAPO casts significant doubt on its going concern claim.
“The Post Office did not adequately disclose all the principle events and conditions that may cast significant doubt on its ability to continue as a going concern,” the Auditor-General said.
The Post Office’s management brushed off these concerns, saying there is no intention from the government, its only shareholder, or the board to liquidate the enterprise or cease operations.
They explained that the National Treasury had granted funding of R1.6 billion to support the Post Office’s public service mandate for the 2022/23 to 2024/25 financial years.
“This indicates that the shareholder intends for SAPO to continue to render its legislative mandates at least until 31 March 2025,” they said.
The Post Office’s dismal financial state also did not prevent its executives from getting good salary packages.
SAPO CEO Nomkhita Mona received a salary package of R4 million, while group operations executive Zukiswa Ntsikeni received R2.7 million.