Post Office's fate hangs in the balance

THE South African Post Office's auditors have cast doubt on the state-owned business's ability to survive, which is at odds with the directors' claim that it has sufficient funds to keep afloat.

THE South African Post Office's auditors have cast doubt on the state-owned business's ability to survive, which is at odds with the directors' claim that it has sufficient funds to keep afloat.

This emerged from the annual report, which is still in draft form and has not been published yet, over six months after the financial year-end.

In the report, leaked to Business Times, auditors Deloitte & Touche and Nkonki, said: "Without qualifying our opinion, we draw attention to the fact that the government subsidy has been withdrawn and additional costs to fund the Postbank corporatisation will further add pressure on the performance of the South African Post Office."

It said that difficult conditions "may cast significant doubt on the entity's ability to continue as a going concern in future".

This is in conflict with the directors' report in the same draft annual report, which stated that the directors "believe that the company has adequate financial resources" to continue for the forseeable future, and the annual financial statements "have been prepared on a going- concern basis".

The directors said that they were satisfied "the company is in a sound financial position and it has access to sufficient borrowing facilities" to meet its cash requirements.

The fact that the report is still in draft format raises questions about why it has not been published more than six months after the March financial year-end. The Post Office did not respond to queries on this.

In a letter to parliament dated September 29, Telecommunications and Postal Services Minister Siyabonga Cwele requested an extension for the tabling of the annual report.

"The reasons for not tabling the reports relate to the fact that the auditors have not yet completed the audit process," he said. "This is due to the ongoing challenges at the Post Office that we are still engaging the minister of finance on and that need to be addressed prior to the conclusion of the audit."

Cwele's spokesman, Siya Qoza, said on Friday the minister wrote the letter because the Post Office's annual general meeting had not been held. "The annual report will be tabled in parliament after the AGM."

But, according to a senior source, the Post Office is withholding the report while efforts are under way to improve the financial position so the audit opinion can be amended.

The Post Office was recently unable to pay staff , and had to ask the Treasury for permission to extend its overdraft - believed to be about R400-million.

The Treasury allowed the Post Office to borrow up to R320-million more on its overdraft on condition it cut its staff by 20%.

Tutu Serame of the Democratic Postal and Communication Union said management should be cut if this was true. "We've been calling for a long time for the management layer to be flattened. It's too fat and a lot of waste happens there."

For the year to March, the net loss rose 59% to R361.2-million. Group revenue rose only 2% to R5.8-billion due to a drop in mail and courier volumes, loss of customers and labour unrest.

Workers want a 15% pay hike and permanent jobs.

Cwele has met unions and Post Office management to ask employees to return to work.

Management and unions were explaining to workers the processes under way to address the issues employees have raised, his department said on Friday.

Aubrey Tshabalala of the Communication Workers Union said the company proposed to make casual jobs permanent in phases over four years.