When the business rescue process is completed, the Post Office will have about 657 branches across South Africa. Picture: Bhekikhaya Mabaso / Independent Newspapers
A formal application for R3.8 billion in funding for the SA Post Office (Sapo) from National Treasury has been submitted.
In an update on progress that has been made in the process, joint Business Rescue Practitioners (BRPs), Anoosh Rooplal and Juanito Damons on Tuesday said this was in order to fully implement the approved business rescue (BR).
On July, 10, 2023 Sapo was placed into BR.
Actions taken by the BR Practitioners over the past few months
Sapo had received the full R2.4bn funding allocation from National Treasury in 2023, which was supporting the current operations and payment of the dividends due to relevant affected parties of the company.
Over the past year, the BRPs said they had stabilised the business and made progress on cutting costs. This has included rescaling the business. As a result, about 4 875 people out of a total staff complement of 11 083 were retrenched through a Section 189 process, in consultation with the CCMA.
The first tranche of retrenchment packages was paid in June 2024 and the second tranche was paid on August, 28, 2024. The final tranche would be paid in November 2024 as agreed with the CCMA and relevant unions.
Rooplal said, “We needed to restructure the Post Office not only to align the costs to revenue, but to also have the capacity and renewed infrastructure to grow the business”.
The capacity of the Financial Misconduct Committee was reinforced, enabling more than 250 disciplinary matters to be completed. This had resulted in dismissals, where recommended.
The branch network was rationalised, with 366 Post Office branches permanently closed.
“When this process is completed, the Post Office will have about 657 branches across South Africa, with 232 sites offering Motor Vehicle Licence renewals through the Department of Transport. The closures will not affect the Post Office’s Universal Service Obligation (USO) mandate (which is to provide postal services to all South Africans, regardless of where they live), nor having a presence in all provinces,” the BRPs said.
Secured creditors supported the write-off of 88% of the amounts owed to them, which had reduced the Sapo’s debt burden. By July 31, 2024, 98.6% of all creditors had been paid a compromised 12c in the rand or 12% of the amount owed to them, totalling R842 million.
Statutory & payroll creditors (SARS, Post Office Retirement Fund & Medical Aid Schemes) would be paid a further 18 cents dividend upon receipt of the R3.8bn funding from the Fiscus.
The BRPs said the balance sheet was scrutinised and strengthened. The BRPs had decreased the liabilities of Sapo to R440m by June 30, 2024 from R8.7bn on July 10, 2023. The net asset value had improved to a positive R840m from the deficit of R7.9bn at June 30, 2023.
The BRPS said, “Further operational and sales activities were undertaken to support the business. They included migrating the key system applications and hardware to a new data centre, which stabilised the connectivity and IT operations, and comprehensively overhauling the automated sorting capabilities to ensure cost-efficient and effective mail handling in large mail centres.
“An internal committee was constituted to focus and comply with international postal obligations and as a result international and African mail backlogs have all been cleared. Domestic mail backlogs has been reducing since the commencement of business rescue and mail is moving frequently.”
To support the delivery of mail and parcels, a multi-modal approach to “last mile” delivery had been adopted. A combination of walking, bicycles, motorcycles and vans were being used to optimise routes and delivery. Some 422 leased vehicles have been deployed to move mail and postmen to delivery depots and to make street deliveries.
Outlook
Meanwhile, in line with the Government of National Unity's intentions to consider private partnerships, the BRPs were proactively and reactively considering mutually beneficial partnerships for Sapo.
An internal Investment Committee had been constituted and partnership protocols have been established.
“Already, one partnership has been agreed, with Ethiopian Airlines in 2023. The partnership has cleared the international mail back log and resumed mail connections to international destinations,” they said in a statement.
The BRPs were actively pursuing strategic partnerships with various state organs to revitalise Sapo’s operations from government-to-government business, enhance service delivery and unlock new growth opportunities.
They were also pursuing partnerships that will help to improve the “last mile” of delivery, support digital inclusion, and will lead to property upgrades. They are examining opportunities to repurpose buildings and provide built-in services to small retailers in areas where a branch may not in itself be commercially viable.
Looking ahead, the BRPs said Sapo was pursuing relevance and financial sustainability through the delivery of meaningful economic and digital communication access to all South Africans. A number of proof of concepts were being rolled out to support this strategy.
BUSINESS REPORT