Key Achievements
New retail outlets
Before
After
Key Achievements
PostBank: Growth in deposit base
Smart Save
Flexi Card
Maxi Save
Total Accounts
Increase / (Decrease)
Feb-02
000's
1,249
606
39
1,893
38
Mar-02
000's
1,265
625
38
1,928
34
Apr-02
000's
1,281
648
38
1,967
39
May-02
000's
1,298
674
38
2,010
43
Jun-02
000's
1,315
697
37
2,049
39
Jul-02
000's
1,326
722
37
2,085
36
Aug-02
000's
1,329
748
37
2,113
28
Sep-02
000's
1,333
780
37
2,149
36
Oct-02
000's
1,335
825
37
2,197
48
Nov-02
000's
1,337
870
38
2,244
47
Dec-02
000's
1,332
892
38
2,262
19
Jan-03
000's
1,335
926
38
2,300
37
NUMBER OF POSTBANK ACCOUNTS
2,600
2,300
2,262
2,244
2,113
Aug-02
2,149
2,085
Jul-02
2,049
2,010
1,967
1,800
1,928
2,000
1,893
Accounts (000's)
2,200
2,197
2,400
1,600
1,400
1,200
TOTAL ACCOUNT GROWTH:
Over the last 3 months
Over the last 6 months
Over the last 12 months
TOTAL
'000's
%
103
4.5%
214
9.3%
445
19.3%
SMART SAVE
'000's
%
0
0.0%
9
0.7%
103
7.7%
FLEXI CARD
'000's
%
101
10.9%
204
22.0%
342
36.9%
MAXI SAVE
'000's
%
1
2.7%
1
3.4%
(1)
-2.2%
Jan-03
Dec-02
Nov-02
Oct-02
Sep-02
Jun-02
May-02
Apr-02
Mar-02
Feb-02
1,000
Key Achievements
PostBank: Improvement in operating profit
Actual YTD Net Profit (Millions)
R 60,000,000.00
R 50,000,000.00
Im provem ent of
R 20.8 Million
(60,1%)
R 55,4 M illion
Budget YTD (January 2003)
R37,6 m illion
Exceeded by R17,8 Million (47.3%)
R 40,000,000.00
R 34,6 Million
R 30,000,000.00
R 20,000,000.00
R 10,000,000.00
R-
January
2002
January 2003
Net Prof
it (Million)
Universal Service Obligations
Address expansion programme
• Target – 4018000 addresses
• Actual to Date – 2161958 addresses
• Planned Roll Out – 1857042 addresses
Witswatersrand,
327,544
Wester cape, 188,019
Northren, 511,643
Central, 289,932
Eastern Cape,
275,231
Kwazulu Natal,
569,589
Universal Service Obligations
Rebalancing of the Network
PROFILE ON THE POSTAL OUTLET NETWORK SINCE BECOMING A
COMPANY ON 1 OCTOBER 1991
TOTAL OUTLETS
1991= 2 176
1992= 2 108
1993= 2 073
1994= 2 040
1995= 2 189
1996= 2 406
2002= 2 620
2000
1800
1600
17441715
1667
1609
15131525
1400
1379
1200
1037
1000
806
800
664
600
393 393 406 431
400
204
200
39
11
0
0
0
1
12
64
0
CTPO
MOBILES
01-Oct-91
01-Oct-95
01-Oct-92
01-Oct-96
POSTPOINTS
RETAIL POSTAL AGENCIES
01-Oct-93
01-Oct-94
01-Mar-02
E X C LUD IN G 12 4 P O S T N E T A G E N C IE S
National Priority Programmes
Sapo Contribution To Rural Development

Sapo Nodal Points Connectivity

Address Expansion Programme

PIT (Public Internet Terminals)

CPO (Citizens Post Office)

MPCC (Multi- Purpose community Centers)
Reintegrating SAPO into Society
WSSD (World summit on sustainable development)
A site at Ubuntu village and another at Sandton library were created for the duration of the Summit
From nothing to ………a Post
Office
………in only two weeks!!!!!!!!
Reintegrating SAPO into Society
SAPO’s HIV/AIDs Programme

Conducted an HIV surveillance testing to determine prevalence rate ( not
as high as we thought)

Trained peer educators

HIV/AIDS - Awareness campaigns

Provision of emotional care and support to infected and affected
employees through EAP

Provision condoms through the help of the Dept of Health
Reintegrating SAPO into Society
SAPO’s Bursary Programme

Internal bursary programme

Aimed at addressing skill gaps in the workplace

Creating a pool of candidates in scarce job categories

Tool to redress imbalances in education levels in line with EE Act

External bursaries

Two Categories:


Children of employees
External candidates from disadvantaged backgrounds
Reintegrating SAPO into Society
Training and Development Program

Abet: Good Abet results - More than
3000 learners have been through to
date

Through the learning institute, SAPO
will be the leading training provider for
SADC
Key Strategic Challenges facing SAPO
•
Declining market share (traditional mail)
•
Excess capacity (employees, hubs, trucks, building etc)
•
Re-skilling of employees
•
IT solution
•
Restructuring and refocusing the business
•
Medical aid liability
•
Pension fund conversion
•
Recapitalisation of the company
Major Sapo Liabilities
Liability
Amount
Current Status
PostBank Loan
R976
million
In discussion that the amount of R976 million be
settled through an appropriate cash injection by
Government, on corporatisation of Postbank
Shareholders
Loan
R207
million
In discussion with shareholder that the shareholder
loan of R207 m be converted into equity
TBVC Loan
R75 million
In discussion with shareholder that the TBVC loan of
R75 million should also be converted to equity
Medical Aid Deficit
R2.2 Billion


Pension Fund
Deficit
R929
million
Termination of post retirement medical benefit for all
new members effective from 1 September 2002.
Other options are being investigated
Approval for conversion from defined benefit to defined
contribution has been received from Government.
It is envisaged that the majority of members will
convert to defined contribution and that any residual
guarantee for those who remain with the defined
benefit scheme will be managed by Sapo
Strategic Direction
Strategies for the next 3 years
Restructuring to improve operating and
financial performance


Reduction in staff

With the decline in mail volumes there will be surplus staff
within the organisation and this will lead to further voluntary
retrenchments.

However certain staff could be re-skilled in areas that The Post
Office may have a lack of skills e.g. Technological Skills.
Reduction in Transport costs

This will be achieved through consolidation of transport
services to allow for better utilization of transport resources and
cutting of transport costs.
Strategies for the next 3 years
Restructuring to improve operating and
financial performance


Shared Services

This entails the merging of common business functions e.g. HR across
all subsidiaries and corporate.

The efficiencies and cost savings are achieved by removing the
duplication within the Business function.
Rationalisation of hubs

The South African Post Office has many sorting centres focusing on the
same thing.

Some centres are underutilized and by combining these centres the
South African Post Office can greatly improve its efficiency and save
costs.
Strategies for the next 3 years
Diversifying to create new revenues from new markets
and products


Focusing on Courier, Express and Parcels market

This market will grow and volumes are expected to increase in the
foreseeable future.

Competition is usually strong in this market, however if the Post Office can
improve its ability to deliver at a reasonable cost revenue potential will be
enormous.
Electronic enabled services


With the growth of the internet and it’s related services the Post Office is
diversifying into these areas to complement their current strengths and
generate income from these “new” services.
The ECT Act provides us the platform to provide services on behalf of
government and business and generate income by charging for these
services
Strategies for the next 3 years
Diversifying to create new revenues from new
markets and products
Increasing it’s Financial services portfolio

With the declining mail volumes the Post Office will be
diversifying to provide a broad range of financial services.

The intention is to increase the percentage revenue of these
services, thus becoming less dependant on mail income.

PostBank will launch more products relating to financial
services and this will provide additional income to the South
African Post Office.
Diversification into Financial services
Percentage of TO carried out in the financial services in
1999
40%
37%
35%
30%
25%
20%
24% 23%
20%
18%
15%
11%
10%
5%
Average 11%
10% 10%
7%
5% 5% 4% 4%
3%
1% 1%
0%
Strategies for the next 3 years
Envisaged Revenue Mix
Current Revenue Split
Envisaged Revenue Split in 3 Years
Re-inventing/Transforming The Post Office
Traditionally
Transforming
5%
Transformed
20%
20%
Business
20%
60%
95%
80%
Mail
Mail
Other
Costs
Other
Mail
10%
Parcels
Financials
25%
22%
10%
50%
15%
78%
65%
Staff
Transport
Staff
Transport
IT
Other
15%
10%
Staff Costs
IT
Other
Major Turnaround projects
2003/2004
Achieving operational Description
excellence
Consolidation of Parcel
and courier services under
one
roof
–
Speed
Services, CFG, Docex
Courier, Parcel Plus, etc
By consolidating this type of service the South
African Post Office will become more efficient due
to the fewer handling process, standardisation of
process and better utilisation of resources.
Consolidation of IT
Rationalisation of servers, review possible business
models i.e. in-sourcing, outsourcing, co-sourcing etc,
consolidation between CFG, PostBank, Mail ops etc.
National address database
(SAPO needs to own this
database as it is critical
for the implementation of
the ECT Act)
The Post Office also wishes to become the leading
Internet provider in Africa by providing each person
with a logical address that is used to collect their
mail at their convenience, in line with the current
provision of post boxes from which hard copy mail is
currently collected
Major Turnaround projects
Money Management
Description
Rationalisation of hubs
By rationalisation of the hubs the South African Post
Office will save costs but also improve its efficiency
Transport and logistics project
Consolidation of transport services across the group
will result in better utilization of the South African Post
Office transport resources and in turn contribute to
cutting costs.
The e-procurement group – improving
processes and eliminating “maverick”
buying
The South African Post Office engaged the services
of external consultants to review, redesign and
implement a comprehensive procurement strategy
within the current structure of the Post Office.
This strategy, to be implemented at national, regional
and local levels, will be aligned with the government
procurement plan and black economic empowerment.
In addition, systems and processes will be put in
place to enable the Post Office to operate in line with
the world best practice for tendering and procurement
in both government and retail industries.
Shared Services
By adopting the shared services model the South
African Post Office believes it can reduce the total
cost of services from a 30% of total expense to a 10%
- 15% of total cost
Major Turnaround projects
Growing our Customer Base
Description
Payment solution for Social Welfare By providing a Payment solution the South
and pensions (North West Province African Post Office will be able to grow its
as Pilot)
customer base.
Equalisation of services
Electronic
payment
bill
E-mail for life
presentment
By addressing the imbalances of the past the
South African Post Office will be opening more
offices and delivering in previously under
serviced areas which in turn increases our
customer base.
and By providing an alternative channel to pay bills a
new set of customers can be targeted and new
revenues can be generated
By providing e-mail for life the South African
Post Office is ensuring that customers will use the
Post Office as a means of electronic
communication and the Post Office can easily
target these customers and generate additional
income
Major Turnaround projects
Creating future wealth
Description
Hybrid mail
By sorting and transporting mail electronically to
the closest destination will improve efficiencies
and generate additional revenue through value
added services.
Financial Switch
A financial and data switch will be installed to
link up with all commercial banks and payment
clearance bureau, as well as providers of virtual
products such as Vodacom.
Biometrics
Will assist in payment of pensions, grants by
verifying who the customer is through fingerprint
scanning. Authentication also depends on this
method of verification.
Corporatisation of PostBank
PostBank will be converted to an independent
entity with it’s own board and relationship with
other financial institutes e.g. the Reserve bank,
FSB and National treasury
Current Process
Collections
Bulkmailer
Mail House
Electronic
data
Transfer
Printing
Stuffing
Other Mail
Capemail or SuperHub
Transport
Sorting
Receiving
Sorting Sorting
Dispatch
Witspos or SuperHub
Home
Sorting
Receiving
Transport
Postman
Home
Postman
Depot
Transport
Collections
Granny Mail
Home
Postman
Hybrid Mail Process
Small Business
Post Office Data Center
Bulkmailer
Public
Electronic
data
Transfer
e-Receiving
e-sorting
Collections
e-Sending
Witspos or Superhub
Electronic
data
Transfer
Email
e-Receiving
Stuffing
Printing
Sorting
Web
Fax
Postman
Secure Email
Postman
Depot
Transport
Granny Mail
Savings
Bulkmailer
Collections
Mail House
Electronic
data
Transfer
Printing
Stuffing
Other Mail
Capemail or SuperHub
Transport
Sorting
Receiving
Sorting
Sorting
Dispatch
Witspos or SuperHub
Sorting
Receiving
Transport
Postman
Postman
Depot
Transport
Collections
Granny Mail
Postman
Financial Plan
BUDGET
2004-2006
SAPO Total Group
SOUTH AFRICAN POST OFFICE (GROUP) : INCOME STATEMENT
ITEM
Actual
2001/2002
R'000
Budget
2002/2003
R'000
Forecast
2002/2003
R'000
Budget
2003/2004
R'000
Budget
2004/2005
R'000
Budget
2005/2006
R'000
INCOME
POSTAL SERVICES/COURIER FREIGHT
MONEY-TRANSFER SERVICES
AGENCY SERVICES
INTEREST RECEIVED
SUNDRY INCOME
RENTAL INCOME
INTERNAL CHARGES
3,845,964
3,035,860
40,371
256,061
150,648
204,218
14,217
144,589
4,106,264
3,313,537
42,077
276,469
142,805
122,656
18,429
190,291
4,048,042
3,116,575
45,504
296,656
236,328
129,556
18,767
204,656
4,468,747
3,453,009
44,540
302,578
241,580
114,719
20,546
291,775
4,824,918
3,724,551
47,658
323,758
267,175
127,593
21,984
312,199
5,210,997
4,013,493
50,994
346,422
301,796
140,717
23,523
334,053
OPERATING EXPENDITURE
STAFF EXPENSES
MATERIAL AND SERVICES
ACCOMMODATION
TRANSPORT
INTERNATIONAL CHARGES
COST OF INSURANCE
PROVISION & WRITE OFFS
COMMUNICATION SERVICES
SECURITY SERVICES
AUDIT,BANK & DIRECTORS FEES
AGENT & LEGAL COSTS
CURRENCY ADJUSTMENTS
DEPRECIATION OF ASSETS
SERVICE CONTRACTORS
INTEREST PAID
MARKETING
RSC LEVY & OTHER MINOR EXP.
INTERNAL CHARGES
4,197,977
2,188,533
141,697
236,696
598,757
87,576
19,365
65,539
138,933
60,800
36,796
18,439
2,212
178,909
77,356
156,440
19,520
25,822
144,589
4,270,720
2,152,145
227,155
276,519
591,885
68,352
21,766
14,743
120,087
59,040
36,070
17,667
6
221,592
52,952
129,117
75,135
16,198
190,291
4,209,335
2,139,100
183,225
237,560
600,652
76,691
24,194
17,284
107,664
60,052
39,239
17,581
(9,384)
171,511
57,076
175,208
62,493
44,533
204,656
4,466,850
2,164,912
238,276
246,050
585,293
79,912
17,888
9,261
115,202
71,877
37,128
20,765
(337)
240,816
63,367
156,903
96,286
31,476
291,775
4,768,961
2,306,168
264,245
262,493
620,040
85,506
18,986
10,015
122,426
76,685
39,952
22,219
(350)
251,154
67,455
172,353
103,844
33,573
312,199
5,091,183
2,453,756
281,710
280,047
656,935
91,490
20,157
10,835
130,043
81,820
42,972
23,774
(364)
274,856
71,816
189,717
111,756
35,809
334,053
OPERATING PROFIT(LOSS)
EARLY RETIREMENTS
MEDICAL AID DEFICIT
GSP EXPENSES
GSP RECOVERIES
NON OPERATING EXPENSES
NET PROFIT/LOSS
(352,013)
(78,241)
(249,000)
(13,714)
181,675
(300)
(511,593)
(164,456)
(201,000)
(337,652)
0
300,000
0
(403,108)
(161,293)
(174,535)
(301,633)
(64,500)
436,405
3,355
(262,201)
1,897
(190,045)
0
(200,000)
500,000
0
111,852
55,957
(178,045)
0
(100,000)
350,000
0
127,912
119,814
(26,043)
0
(7,374)
33,417
0
119,814
SOUTH AFRICAN POST OFFICE (GROUP): BALANCE SHEET
March
Forecast
Budget
Budget
Budget
2002
2002/03
2003/04
2004/05
2005/06
R'000
R'000
R'000
R'000
R'000
ASSETS
Noncurrent assets
1,140,886
1,095,097
2,223,855
2,348,352
2,429,579
Property, plant and equipment
1,106,809
1,019,218
1,136,823
1,224,227
1,258,625
32,877
75,879
1,087,032
1,124,125
1,170,954
1,442,469
1,254,704
1,377,819
1,598,358
Investments
Deferred taxation
Current assets
Inventories
1,200
1,289,693
75,338
73,077
69,423
65,952
63,974
Trade and other receivables
458,387
444,483
409,639
388,912
363,403
Cash and cash equivalents
755,968
924,909
775,642
922,955
1,170,981
2,430,579
2,537,567
3,478,559
3,726,171
4,027,937
(1,312,821)
(1,360,800)
(365,557)
145,885
259,930
EQUITY AND LIABILITIES
Capital and reserves
Share capital
200,940
585,640
1,469,235
1,469,235
1,469,235
(1,513,761)
(1,946,441)
(1,834,793)
(1,323,351)
(1,209,306)
2,025,843
2,288,378
2,476,355
2,294,390
2,543,028
696,947
1,034,599
1,034,599
646,000
646,000
1,023,488
1,173,034
1,365,048
1,576,285
1,829,970
83,440
80,745
76,708
72,105
67,058
1,717,557
1,609,989
1,367,761
1,285,897
1,224,980
Trade and other payables
874,469
911,872
874,062
852,286
831,164
Funds collected on behalf of third parties
215,088
221,541
223,756
230,469
235,078
Provision for future commitments
129,318
132,659
126,026
119,725
113,738
Retirement benefit obligations
55,000
60,500
60,500
50,000
45,000
Contributions for future intergration costs
22,173
419,822
283,417
83,417
33,417
2,430,579
2,537,567
3,478,559
3,726,171
Accumulated loss
Noncurrent liabilities
Shareholder's loan
Interest bearing borrowings
Retirement benefit obligations
Deposits from the public
Provisions
Current liabilities
Taxation
Subsidy received in advance
207,000
14,968
1,687
4,027,937
SOUTH AFRICAN POST OFFICE (GROUP)
CASH FLOW STATEMENT
March
2002
Forecast
2002/03
Budget
2003/04
Budget
2004/05
Budget
2005/06
R'000
R'000
R'000
R'000
R'000
Cash (outflow) / inflow from operating activities
(116,988)
318,802
344,725
361,120
383,112
Cash received from customers
3,614,265
3,825,617
4,262,012
4,578,470
4,934,710
(3,698,408)
(3,567,935)
(4,001,964)
(4,312,173)
(4,663,676)
(84,143)
257,682
260,048
266,297
271,034
6,554
236,328
241,580
267,175
301,796
(39,078)
(321)
(175,208)
(156,903)
(172,353)
(189,717)
53,546
(163,002)
(486,005)
(375,043)
(355,354)
(61,454)
(120,000)
(358,447)
(337,950)
(308,525)
(43,002)
(1,011,153)
(37,093)
(46,829)
Cash paid to suppliers and employees
Cash (utilised) / generated by operations
Interest received
Interest paid
Taxation Paid
Cash (outflow) / inflow from investing activities
Acquisition of property, plant and equipment
Net acquisition of non current investments
Decrease/ (increase) in current investments
115,000
Increase / (decrease) of equity
Cash (outflow) / inflow from subsidy
883,595
418,325
(136,405)
(200,000)
(50,000)
(33,417)
(181,675)
600,000
(436,405)
300,000
(500,000)
300,000
(350,000)
300,000
(33,417)
Cash (outflow) / inflow deposits from public
54,042
149,546
192,014
211,237
253,685
Increase in deposits from the public
54,042
149,546
192,014
211,237
253,685
(Decrease)/ increase in cash and cash equivalents
408,925
168,941
(149,267)
147,314
248,026
Cash and cash equivalents at beginning of period
347,043
755,968
924,909
775,642
922,956
Cash and cash equivalents at end of period
755,968
924,909
775,642
922,956
1,170,981
Subsidy expenses
Subsidy received