'Negative cash flow' disease sends Sapo to ER

Not only did the threemonth strike last year go a long way towards dealing the SA Post Office (Sapo) a lethal blow (See the “courier versus post office” story in last week’s FTW), but it has now shot itself financially in both feet and a good bit more of its corporate remains. Nobody in the post office is denying that Sapo is running at a loss, with the gloriously titled SA Post Office Strategic Corporate Plan admitting that Sapo “was not generating positive cash f lows”. The Post Office has already made public that its preliminary net loss for the financial year to March 31 2015 was about R1.1bn – and it is struggling to pay some of its suppliers. Adding to this, chief postman, Minister Siyabonga Cwele, has had to admit to Parliament that Sapo owes almost R245m to more than 2 000 suppliers, and is in arrears of over six months. But acting-CEO Mlu Mathonsi and interim administrator Simosizwe Lushaba are dancing the Eskom shuff le. They have insisted to the press that “a massive turnaround is taking place”. And, in a May Sapo projection, the two are placing their bets on hitting a R1.3 billion profit by 2017 and a R1.5bn profit by 2018. However, this is “being taken with a pinch of salt” by the freight industry, according to conversations with management contacts. Most agreed that Sapo’s current and on-going bout of the dreaded “negative cash f low” is unlikely to improve. “If you’re not able to give your customers a reliable service, you’re going to keep losing more and more business until the final crunch,” said one exec. “This has accelerated since that strike, as everybody found other same-cost alternatives. And once found and proven reliable, nobody’s going to let go.” And the official opposition, the DA, also put a few titbits before the press. Cameron MacKenzie, the man with the tonguetripping title of “the DA shadow deputy minister of telecommunications and postal services”, said that Sapo was “using its suppliers as a second overdraft to f loat its negative cash f low. “A further 879 creditors remain unpaid for over 60 days, with 1 804 unpaid for more than 30 days. This total amount owed to creditors for more than 30 days is unclear, but what is apparent is that this amount is much more than the organisation’s total current overdraft facilities at commercial banks, meaning that the Sapo cannot pay its current debts.”