Post Office’s significant ‘liabilities dwarf assets’


The business rescue practitioners who have been appointed to reverse the troubled situation at the Post Office say they are working through a multitude of issues and among other things are investigating the struggling state institution’s property and financial position.

The Post Office’s “asset base is dwarfed by its overall liabilities of approximately R12.5 billion”, say business rescuers Anoosh Rooplal and Juanito Damons in a statement.

This situation forms the basis on which a decision on possible business rescue will be based. To get the company into a solvent position, an efficient cost structure must be found, they say.

“We are working with management to deal with the drop in revenue, create additional revenue streams, reduce costs, make crucial structural changes to the Post Office’s business model and make key investments in technology and infrastructure to drive performance.”

Rooplal says it is critical to stop the outflow of cash and allocate capital to put the company in a position to properly serve its customers.

The practitioners have carried out a comprehensive analysis of the staff and hope that disciplinary action against some senior management members will be completed within the next few weeks.

Salary payments are monitored and reviewed and are dependent on the Post Office’s cash flow and funding from the Department of Communications and Digital Technologies and the National Treasury. There are also regular meetings with the workers’ committee and medical funds.

Post Office branches

One of the other major focal points is an investigation into the Post Office’s network of branches which form the cornerstone of the institution.

“The team conducted an extensive review and analysis of the branch network. This involved a variety of criteria from the individual branches, which included profitability, geographical accessibility, universal service obligations to keep certain branches open, services such as the renewal of vehicle licenses and the payment of Sassa allowance.

“We know that several branches are not operational due to rent arrears or IT problems, or business has to be done manually because the power has been cut off due to outstanding bills.

“We are aware that the conditions at some branches are not optimal and hope to rectify this in the future. However, it will take time while we try to steer the institution out of the financial difficulties it is currently experiencing,” says Rooplal.

He says that a customized approach cannot be followed in deciding which branches to reopen and which to close. Because the Post Office has certain legal obligations to fulfil, a calculation of mere profitability or costs is not an option.

“The practitioners’ job is to restructure the institution into a solvent institution that can settle its debts in time.”

The reopening of key branches is nevertheless high on the business list. The Post Office’s Newcastle branch has already reopened after the outstanding power bill was settled. The branch will be fully operational by next week.

The post office in Newcastle serves around 100,000 people and provides services such as the renewal of vehicle licences, mail delivery and the payment of Sassa allowance.

Damons says this was an important step and shows the business rescue practitioners’ commitment to negotiate with municipalities and landlords to reopen the doors of key post offices that have been closed.