South Africa Post puts stamp on first profit in years

The SA Post Office was poised to post its first operating profit in many years, when it closed its books at the end of March.

The parastatal is expected to post an operating profit of R1,8m, compared with the R154,6m loss in the previous financial year and R577,4m in March 2001. Revenue of R4,5bn (R4bn) has been budgeted for, with operating expenses at R4,466bn (R4,243bn). Chief financial officer Nick Buick briefed Parliament’s committee on public enterprises on the Post Office’s turnaround, saying it was achieved partly through the termination of value-destroying contracts to the tune of about R200m, which had produced savings of about R100m. Future initiatives to secure the parastatal’s turnaround included the consolidation of its courier and parcel business, the mail business and the financial services operation, franchising, the provision of e-mail facilities and the rationalisation of hubs. The organisation had accumulated losses of R1,6bn and outstanding debts of about R4bn, including a medical aid deficit of R2,2bn, a pension fund deficit of R929m and an outstanding loan to PostBank, originally of R976m but now reduced to R975m. The medical aid deficit is expected to be expunged by the end of the year.

PostBank depositors’ funds increased R570m in 2003-04 compared with R189m in the previous year bringing total funds invested at the end of last month to R1bn. Buick said the Post Office was in the process of engaging a consortium of asset managers to structure and implement an appropriate hedging strategy for the pension fund, which was converted from a defined benefit to a defined contribution fund. An amendment to the Post Office Act is on the cards, which would remove government’s guarantee of the pension fund. The fund, which has long suffered a deficit, was 98% funded.