SA Post Office Annual Results for the year ended 31 March 2015.

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Presentation transcript:

SA Post Office Annual Results for the year ended 31 March 2015

Statement of Comprehensive Income 2 Revenue Mail and Courier volume decline exacerbated by the prolonged industrial action. Mail revenue declined by R529 million (13%) Courier revenue declined by R213 million (31%) Mail revenue contributes 68% of the Group’s overall revenue Poor revenue performance adds further pressure to cash flow position Expenses Expenditure declined by 2% due to cost optimisation initiatives implemented Transport costs declined by R142 million Property costs declined by R54 million

Profit / (Loss) Trend (R’ millions) 3 10 months YTD financial results unaudited

Statement of Financial Position 4 Non current assets decline - de- recognition of the deferred tax asset of R801 million Current assets includes Postbank investments and cash of R6.9bn to match depositors funds of R4.9bn included in current liabilities Postbank depositors funds increased by R150 million to R4.9bn Retained income decreased to R57 million due to the net loss position Bank overdraft R350 million R79 million

Statement of Cash Flows 5 Operating activities have utilized cash of R362 million for the past two years. Capital expenditure of R122 million included in investing activities. Postbank depositors funds increased by R150 million. Postbank corporatisation funding of R205 million received in the 2013/14 FY. Cash flow position remains constrained. Cash cannot be accessed by SAPO as it relates to Postbank and third party funds

Current Status 6  Mail revenue - significant contributor to SAPO revenue  Courier revenue performance continues to deteriorate  Operating losses continue, resulting in severe cash flow problems Expenditure continues to exceed revenue Significant backlog in creditors Monthly staff costs payments delayed Terms loans utilized to fund staff costs and operations Non payment of salary increases  Investment Memorandum has been presented to Ministers of Telecommunications and Finance in February 2016  The fiscus

Annual Performance Indicators 7 Strategic Goal Number of strategic objectives NumberAchievedNot Achieved Attain financial sustainability2505 Remain customer centric3312 Provide a secure, efficient integrated infrastructure 1101 Provide innovative, affordable and relevant services 1202 Investment in people by creating opportunities and building capacity 2505 Maintain good corporate governance1303 Remain environmentally conscious1220 Total number %86%

Outstanding audit issues – action plans 8 Intangible assets and property,plant and equipment Adherence to defined accounting principles is still at risk due to insufficient asset identification, valuation and verification processes. Processes of valuation/ verification are not sufficiently documented; limited internal skilled resources Sites restoration provision Adherence to defined accounting principles is in progress of being addressed and should be fully concluded for the current 2016 year end process. Key dependence is accounting technical opinion on assumptions used as basis for the provision Retirement benefit obligation Adherence to defined accounting principles is in progress of being addressed and should be fully concluded for the current 2016 year end process. Irregular and fruitless and wasteful expenditure ; Remains at risk for the medium term, processes and controls have been improved to detect and prevent future reoccurrence of irregular expenditure. There were however still incidences detected for the 2016 financial year and the regularization of current irregular contracts is required Deferred tax and income tax Adherence to defined accounting principles is in progress of being addressed and such will be fully concluded for the current 2016 year end process. Heritage assets Adherence to defined accounting principles is still at risk; due to the sensitive physical nature of these asset it is not a process that can be concluded quickly Aggregation of material uncorrected misstatements; Adherence to defined accounting principles is in progress. Additional finance skills are being sourced to assist with the upcoming year end financial close and audit Audit of predetermined objectives; Adherence to National treasury guidelines could not be corrected for 2016 as the objectives were already set; The measurability of objectives will be addressed for the 2017 financial year As per the Auditor General Report to Parliament the following were the basis for the SAPO qualified opinion,as well as the current status:

SAPO: the way forward 9 An Investment Memorandum has been presented to the DTPS and National Treasury SAPO is working with Treasury towards a bank-funded bridging plan against a future capital injection Reaching settlement on creditors and workforce obligations of the past will enable SAPO operations to return to normality The SAPO trading result for FY 18 will be positive