Cape Town – The SA Post Office (SAPO) Group CEO Mark Barnes says the executive management has taken seriously the concerns raised by the Office of the Auditor General in the entity’s 2015/16 annual report.
Briefing the Portfolio Committee on Telecommunications and Postal Services on its annual performance report on Friday, Barnes said one of the concerns the Auditor General was the fact that the SAPO Group and company incurred a total comprehensive loss of R1.14 billion during the year ended 31 March 2016.
In giving the Post Office a qualified audit opinion, the Auditor General said: “The group and company are not generating sufficient revenue to finance their high cost base. These conditions, along with other matters as set forth in the going concern note 47 to the financial statements, indicate the existence of a material uncertainty that may cast significant doubt on the entity’s ability to operate as a going concern.”
The Group CEO said the Post Office has had a tough year, with revenues declining by R513 million to R4.8 billion.
He said steps were being taken to ensure the Post Office takes a turn for the better.
“I don’t expect us to have a clean bill of health by the end of this year, but definitely cleaner and more importantly, if there isn’t, there will be consequences, measurable people consequences.
“So we started that process, we have a Financial Misconduct Committee that meets every two weeks and it reviews everything in that category of fruitless and wasteful expenditure and puts a stop to it,” he said.
Barnes said the management and the board were addressing the remaining qualification areas.
The Post Office’s executives have had their contracts altered to include the resolving of audit issues as one of their key performance areas.
“We have taken the [audit report] on board very seriously. I have been through all the performance contracts now and there isn’t a single senior executive who doesn’t have on their performance contracts the obliteration of these audit exceptions and issues.
“We start by taking account more frequently under the guidance of the audit risk committee.
“For example, after our first six months now, we are going to have a semi audit of the company so that six months in advance, we will start identifying the issues that are occurring.
“If you read last year’s audit report and read this year’s audit report, they kind of look the same. We want to change that significantly going forward,” he said.
In the Post Office’s annual report, Barnes, who joined the entity in January this year, said the Post Office has over the past year undergone a journey of “extraordinary renewal”, with the organisation implementing a turnaround strategy in difficult circumstances.
Some of the challenges faced by the Post Office over and above declining revenues included its inability to pay suppliers, resulting in declining service levels and the closure several branches.
Some 1423 employees left the Post Office during the course of the financial year resulting in a loss of some key skills.
Barnes said in the annual report despite this, the Post Office was able to pass the requisite solvency and liquidity tests for the year.
The Post Office has signed a joint agreement with the recognised trade unions to settle historic wage issues and conditions of employment and a R650 million capital injection was received on 1 April 2016 from National Treasury.
With the support of a further government guarantee, the Post Office was able to raise further debt funding of R2.7 billion to pay for past liabilities, fund continuing losses and invest over R1.5 billion in capital projects over the next three years, which are critical to the achievement of the corporate plan.
In the financial year under review, the South African Reserve Bank approved the SA Post Office’s Section 13 first-level application towards a fully-fledged banking licence for Postbank.
“The executive team is very focussed on resolving the audit issues,” Barnes said. – SAnews.gov.za
