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SA Post Office Group Annual results for year ended 31 March 2012
Presentation to the Parliamentary Portfolio Committee on Communications
Focus 2011 - 2012
Corporate Governance and Compliance King III and Companies Act Financial Services Regulatory Bodies PFMA
Postbank Corporatisation
Long Term Sustainability Platform for the Last Mile Financial Oversight within Economic Crisis Human Resource Capacity Service Improvement Drive Environmental Programmes
2
Vision
To be recognized among the leading
providers of postal and related services in the
world 3
Mission
To enable the nation to efficiently
connect with the world by distributing
information, goods, financial and
government services; leveraging our
broad reach and embracing change,
technology and innovation4
Postal Environment - Global Trends
The introduction of new products and services designed to respond to the needs of a demanding market
Entering new lines of business through investment in new capabilities, partnerships and acquisitions
Expanding and capturing business opportunities beyond local borders
Maximizing the efficiency and effectiveness of existing processes, systems and networks performance
5
Trends 2011/12
Fourth consecutive year of decline in mail volumes, 3.7% in
2011/12.
Increased focus in governance and corporate citizenship
Sustainable development and Environmental impact
Commercialisation and regulation of financial services
Social transformation and delivering Universal Service
Robust Financial Management in a economically challenged
environment.
6
Strategic Themes
Grow top line revenue at an acceptable cost
Deliver on our shareholder mandate and establish excellent
stakeholder relationships
Improve efficiency and effectiveness in the way we conduct
our business
Satisfy our customers by being consistent and innovative
Entrench a high performance culture in the organisation
Contribute positively to our communities and environment
by embracing responsible business and social practice.
7
Government Mandate
To provide physical addresses to every household 1. 199 million against a target of 1.195
million
To make the postal and financial service available to all South Africans at an affordable price 1,572 branches conducting 95.1 million
transactions
1,572 branches providing access to more than 8.5 million social grant recipients
2.7 million motor vehicle licences renewed, a 35% increase from last year
Provide a countrywide service 52 New and 29 Renovated outlets vs. 50
8
Customers and Performance
Satisfy our Customers by being consistent and innovative
E-fulfillment services
Extension of services in SADC – Logistics Business
ISO Accreditation Programme
Entrench a High Performance Culture
Skills Development and Training
Recognition of Prior Learning Programme
Review of the Staffing and Remuneration Models
Achievement of Equity targets
67% participation in Wellness program vs. 60% target9
Environmental Plans
Carbon Emissions - Criteria and targets set Carbon off-set at 7.4% emissions, exceeding target by 2.4%
Paper recycling Programme 687 tons of waste paper recycled against 137 tons recycled last year.
537.89 tones of paper used vs. 385.47 used last year
Electricity consumption reduced by 4.7% against target of 3%
at pilot site Tshwane Mail
Participating in the Carbon Disclosure Project
10
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Measurement of Economic Sustainability
Long-term strategic
objective
Annual objective
Improvement priority
Target
2011/12
Achievement
2011/12
Achieved/ Not
achieved
Achieve growth
(financial
sustainability)
Improve income
statement
Group revenue growth 5% 1.8% Not achieved
Group operating profit R228m R253m Achieved
Increase cost
efficiency
management
Group staff cost % of total
cost
51% 49.8% Achieved
Group total cost % of total
income
96% 95.7% Achieved
Strengthen the
balance sheet
Postbank non-interest
revenue growth
R197m R292m Achieved
Grow Postbank depositors’
book
R394m R273m Not achieved
ROA 1.5% 1.5% Achieved
ROE 6.1% 5.9% Not achieved
Total assets R10.323b R10.375b Achieved
Current ratio 1 1.3 Achieved
Debtors days
Courier
17
55
17
40
Achieved
Achieved
Capital investment in
priority areas
Total Capex R411m R120.8m Not achieved
12
Measurement of non-financial performance indicators
Long-term strategic objective
Annual objective
Improvement priority
Target
2011/12
Achievement
2011/12
Achieved/ Not
achieved
Achieving process efficiency
Business restructuring
Positioning of SA Postbank SOC Ltd
Licence requirements Transition programmes Stakeholder management
Banking licence application is in progress and is expected to be submitted during 2012.
The designation of Postbank as a clearing participant was gazetted on 27 May 2011.SA Post Office’s (on behalf of Postbank) Visa application hasbeen approved by Visa
International.
Two stakeholder engagement forums in place – the forumwith DoC, which meets fortnightly and the forum that includes DoC and National Treasury, which meets once a month.
The Ministerial oversight committee has been formed.
Achieved
Review and implementation of Shared Services
Review current processes and SAP optimisation
Two position papers delivered – process optimisation (SAP phase 2) andLabour brokers (time management analysis).
Achieved
Transport Complete formulation of new transport model
Model formulated and consolidation was commenced with the national linehaul.
Not achieved
13
Measurement of Social sustainability
Long-term strategic objective
Annual objective
Improvement priority
Target
2011/12
Achievement
2011/12
Achieved/ Not
achieved
Provide a stable, well trained and satisfied employee force
Decent workplaces
Workplace accidents and IODs
5% reduction on previous year’s actual
13.5% increase Not achieved
Improve intellectual capital
Training expenditure as % of group staff budget
1.15% (R34m) 1.25% (R36m) Achieved
Talent management Succession planningto level 4 managers
Not implemented. Completed for Exco members as well as all the GMs.
Not achieved
Performance management
100% TCTC
evaluations
73.05% Not achieved
Labour practices
Management of HR
liabilities
Leave liability Housing liability Post-retirement medical aid cost
10% reduction on previous years’ actuals 10% reduction on previous years’ actuals 20% reduction on previous years’ actuals
24.5% increase 72% reduction 0.6% increase
Not achieved Achieved Not achieved
Employee relations Number of
CCMA cases
66 cases heard at CCMA. 49 ruled in favour of SA Post Office
Not achieved
Health
Wellness programme 60% 67% AchievedHIV/Aids Testing 75% 74% Not achieved
14
Measurement of Social sustainability (continued)
Long-term strategic objective
Annual objective
Improvement priority
Target
2011/12
Achievement
2011/12
Achieved/ Not
achieved
Satisfied customers
Licence and mandate obligations
Access to ICT services
Achieve targets that will emanate from the BU plans to be finalised first quarter 2011
Final ECT Act audit completed.
The Trust Centre is expected to be accredited by the South African Accreditation Authority in May orJune 2012
Achieved Not achieved
Address expansion
1,195,690 1,199,273 Achieved
Additional points of presence
50 52 Achieved
Delivery standard
Logistics
92%
98%
94.40%
94.60%
Achieved
Not achieved
Queue waiting time
Seven minutes 97% of offices complied Not achieved
Customer-centricity
Develop intelligence
Define data strategy during first six months
Deferred until such time that the IT infrastructure refresh programme is completed
Not achieved
Conduct product and customer profitability study by March 2012
Product auditing and marketing metrics project are in progress
Not achieved
15
Measurement of Social sustainability (continued)
Long-term strategic objective
Annual objective
Improvement priority
Target
2011/12
Achievement
2011/12
Achieved/ Not
achieved
Governance and compliance
Ethics Ethics procedures Quarterly meetings Baseline reporting
Ethics committee finalised. Quarterly meetings and baseline reporting not done
Achieved
Anonymous crime reporting
10% increase on previous years’ actuals
3.5% increase Not achieved
Crime and fraud 10% reduction on previous years’ actuals
2.1% reduction Not achieved
Governance Contract management
100% visibility on SAP All available contracts captured on SAP Achieved
Licence agreement Fulfilment of requirements Annual agreed targets are for:• Retail outlet roll outs• Address expansion and• service delivery performance
A revision of set targets has been requested from the Regulator but, in spite of this, SA PostOffice is endeavouring to achieve
General provisions of the Universal Service Obligation as per the Licence are being met
Achieved
Audit issues 70% completion 71% completed AchievedTransformation Employment
equity- GenderBlack female Race Disability
42%29%79%4%
45%35%83%0.44%
Achieved Achieved AchievedNot achieved
BBBEE 60% 61.3% Achieved
16
Measurement of Environmental sustainability
Long-term strategic objective
Annual objective
Improvement priority
Target
2011/12
Achievement
2011/12
Achieved/
Not achievedCorporate environmental
Environmental sustainability
Reduce carbon footprint
Reduce by
2.5%
2.2% Not achieved
Implement a carbon offset programme, and offset5% of total emissions
7.41% Achieved
Reduce fossil fuel consumption
Reduce total fuel by 2.5% 3.17% Achieved
Improve overall fuel efficiency of fleet by 2.5%
4.1% Achieved
Reduce electricity consumption
Reduce by
3%
4.7% Achieved
Reduce water consumption
Implement an effective water recycling programme
Not done Not achieved
Reduce our total water consumption by 3%
Baseline not yet set
Not achieved
Improve sustainability through recycling
Reduce the total amount of paper used by 5%
42% increase in usage
Not achieved
Increase amount of paperrecycled to
45%
27% recycled
Not achieved
Performance highlights
Group profit before tax up 32.6% to R251 million.
Group revenue up 1.8% to R5.9 billion.
Postbank deposits grew by 6.9% to R4.3 billion.
2.7 million motor licences renewed at post offices.
Distributed more than 41 million items for Census 2012.
Increased the post office footprint by 52 new access points.
Rolled out 1,199,273 addresses to first-time address owners.
SA Post Office won international stamp competition – The
colourful rhythms of South African stamps.
Stamp launch for Chief Albert Luthuli.
Joint stamp issue with Indonesia.
18
Looking forward 2012/13
Declining mail volumes and loss of social grant payouts.
Phasing-out of funding from Government with high costs of
servicing the universal service obligations.
Focus on diversification of revenue streams.
Delivering on our “customer promise”
Postbank corporatisation for financial inclusion.
Investment in our IT infrastructure is a key enabler for growth
in our business.
Strong cost controls and continued improvements of process
efficiencies.
19
SAPO Group SAPO Group
Financial OverviewFinancial Overview
SAPO Group SAPO Group
Financial OverviewFinancial Overview
20
Performance highlights
21
Figures in Rand Thousand Percentage 2012 2011
Total assets 2.8% 10 375 567 10 097 143
Total liabilities 1.6% 7 663 370 7 542 801
Equity 6.2% 2 712 197 2 554 342
Postbank deposits 6.9% 4 257 864 3 984 022
Cash and Investments 4.3% 7 392 811 7 088 867
Return on Assets 0.3% 1.5% 1.2%
Cash flow from operating activities 46.2% 229 623 157 074
Financial performance
22
Figures in Rand Thousand Percentage Change 2012 2011
Revenue up 1.8% 104,393 5,934,811 5,830,418
Expenses up (3.5%) (191,926) 5,681,370 5,489,444
Net finance revenue down (16.4%) (26,351) 134,008 160,359
Profit before tax up 32.6% 61,645 250,978 189,333
Taxation up (33.7%) (23,267) (92,271) (69,004)
Profit after tax up 31.9% 38,378 158,707 120,329
Total assets up 2.8% 278,424 10,375,567 10,097,143
Net asset value up 6.2% 157,855 2,712,197 2,554,342
Cash and investments up 4.3% 303,944 7,392,811 7,088,867
Depositor's book up 6.9% 273,842 4,257,864 3,984,022
Cash flow from operating activities up 46.2% 72,549 229,623 157,074
Profit before tax percent up 1.0% 4.2% 3.2%
Profit after tax percent up 0.6% 2.7% 2.1%
Return on assets up 0.3% 1.5% 1.2%
23
SAPO Group financial overview
SA Post Office Group
Revenue 5,934,811 5,830,418 104,393 1.8%Finance income 166,407 193,045 (26,638) (13.8%)Expenses (5,681,370) (5,489,444) (191,926) (3.5%)Post retirement medical (PRMA) (136,471) (312,000) 175,529 56.3%Finance costs (32,399) (32,686) 287 0.9%Profit before tax 250,978 189,333 61,645 32.6%Taxation (92,271) (69,004) (23,267) (33.7%)
Profit after tax 158,707 120,329 38,378 31.9%
R'000 2012 2011 Change %
24
SAPO excluding subsidiaries
SA Post Office excluding subsidiaries
Revenue 5,580,779 5,453,709 127,070 2.3%Finance income 158,205 185,020 (26,815) (14.5%)Expenses (5,471,656) (5,416,646) (55,010) (1.0%)Finance costs (30,293) (31,588) 1,295 4.1%Profit before tax 237,035 190,495 46,540 24.4%Taxation (88,189) (63,997) (24,192) (37.8%)
Profit after tax 148,846 126,498 22,348 17.7%
%R'000 2012 2011 Change
25
Courier & Freight Group
Courier Freight Group
Revenue 331,837 316,683 15,154 4.6%SSC Management fee 50,979 67,103 (16,124) (31.6%)Expenses (400,404) (360,738) (39,665) (9.9%)Support cost charge-out (29,897) (32,685) 2,788 9.3%Post retirement medical (PRMA) 48 0 48 100.0%Profit before tax (47,436) (9,637) (37,799) (80%)Taxation 0 0 0 0%
Profit after tax (47,436) (9,637) (37,799) (80%)
%R'000 2012 2011 Change
26
Docex
Docex
Revenue 41,251 43,156 (1,905) (4.4%)Expenses (40,245) (39,232) (1,013) (2.6%)Profit before tax 1,006 3,924 (2,918) (74%)Taxation (282) (1,137) 855 75%
Profit after tax 724 2,787 (2,063) (74%)
%R'000 2012 2011 Change
27
SAPO Group Revenue
Mail revenue 3,975,603 3,889,898 85,705 2.2%Logistics 670,972 638,512 32,460 5.1%Financial services revenue 454,387 435,728 18,659 4.3%Postbank revenue 599,835 611,924 (12,089) (2.0%)Sundry revenue 234,014 254,356 (20,342) (8.0%)
Total revenue 5,934,811 5,830,418 104,393 1.8%
R'000 2012 2011 Change %
28
SAPO Group Revenue
Mail revenueLogistics revenue
Postbank revenue
Financial services revenue
Sundry revenue
2012 67.0% 11.3% 10.1% 7.7% 3.9%
2011 66.7% 11.0% 10.5% 7.5% 4.4%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
29
SAPO Group Expenditure
Staff expenditure incl. flexible
labour
Transport expenditure
Property operating leases
All other operating expenses
2012 62% 11% 5% 22%
2011 63% 10% 5% 22%
0%
10%
20%
30%
40%
50%
60%
70%
30
SAPO Group staff costs
Excludes flexible labour costsExcludes flexible labour costs
2012 2011 Change Change
3,228,309 3,095,374 (132,935) (4%)
(500,000)
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
Staff costs (R'000)
2012 2011 Change
Revenue 53% 51% (2%)
(10%)
0%
10%
20%
30%
40%
50%
60%
Staff costs % of revenue
31
SAPO Group transport costs
2012 2011 Change Change
660,568 590,548 (70,020) (11%)
(200,000)
(100,000)
100,000
200,000
300,000
400,000
500,000
600,000
700,000
Transport costs (R'000)
2012 2011 Change
Revenue 11% 10% (1%)
(2%)
0%
2%
4%
6%
8%
10%
12%
Transport costs % of revenue
32
Fuel prices - average (cents)
2005 2006 2007 2008 2009 2010 2011 Oct 2012
Petrol 520 600 664 886 740 809 981 1197
Diesel 498 583 627 938 670 742 931 1141
0
200
400
600
800
1000
1200
1400
Fuel price
33
SAPO Group property costs
2012 2011 Change Change
588,155 544,906 (43,249) (7%)
(100,000)
100,000
200,000
300,000
400,000
500,000
600,000
700,000
Property expenses (R'000)
2012 2011 Change
Revenue 10% 9% (1%)
(2%)
0%
2%
4%
6%
8%
10%
12%
Property expenses % of revenue
34
SAPO Group Profit before tax (R’000)
2008 2009 2010 2011 2012
Profit before tax 565,028 488,241 378,700 189,333 250,978
Change 12% (14%) (22%) (50%) 33%
(100,000)
0
100,000
200,000
300,000
400,000
500,000
600,000
SAPO Group Balance sheet summary
35
2012 2011% R'000 R'000 R'000
Total assets up 2.8% 278,424 10,375,567 10,097,143Non current assets up 0.2% 3,884 2,117,289 2,113,405Current assets up 3.4% 274,540 8,258,278 7,983,738
Total liabilities up 1.6% 120,569 7,663,370 7,542,801Non current liabilities down (0.6%) (8,254) 1,276,614 1,284,868Current liabilities up 2.1% 128,823 6,386,756 6,257,933
Equity up 6.2% 157,855 2,712,197 2,554,342Total equity and liabilities up 2.8% 278,424 10,375,567 10,097,143
SA Post Office Group Change
36
Group key balance sheet items
2012 2011% R'000 R'000 R'000
Total assets up 2.8% 278,424 10,375,567 10,097,143Total liabilities up 1.6% 120,569 7,663,370 7,542,801Equity up 6.2% 157,855 2,712,197 2,554,342
Property, plant & equipment down (6.0%) (74,965) 1,184,449 1,259,414Other financial assets up 17.2% 118,687 807,067 688,380Deferred tax up 11.0% 31,292 316,726 285,434Cash & investment up 4.3% 303,944 7,392,811 7,088,867Trade and other receivables down (15.7%) (97,956) 527,699 625,655Employment benefit obligations up 2.5% 35,591 1,438,164 1,402,573Trade and other payables up 0.3% 2,861 1,032,678 1,029,817Deposits from public up 6.9% 273,842 4,257,864 3,984,022Amount owing to the shareholder up 9.4% 21,352 248,327 226,975
ChangeSA Post Office Group
37
SAPO Group Total Assets (R’000)
2008 2009 2010 2011 2012
Total assets 7,690,781 8,691,229 9,596,917 10,097,143 10,375,567
Change 10% 13% 10% 5% 3%
0
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
38
SAPO Group Depositor’s funds (R’000)
2008 2009 2010 2011 2012
Depositor's funds 2,891,700 3,295,867 3,651,987 3,984,022 4,257,864
Change 11% 14% 11% 9% 7%
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
4,500,000
39
SAPO Group Net asset value (R’000)
2008 2009 2010 2011 2012
Net Asset Value 1,596,747 1,962,824 2,436,586 2,554,342 2,712,197
Change 29% 23% 24% 5% 6%
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
40
SAPO Group Cash flow (R’000)
2012 2011% R'000 R'000 R'000
Cash and cash equivalents down (31.1%) (1,479,057) 3,277,157 4,756,214
Cash generated from operations up 12.2% 56,697 520,408 463,711
Net cash from operating activities up 46.2% 72,549 229,623 157,074
Net cash (to)/from investing activities up 345.3% 2,589,773 (1,839,666) 750,107
Net cash from financing activities up 1133.4% 131,274 (142,856) (11,582)
SA Post Office Group Change
Subsidy utilisation – 2011/12
52 New points of presence
52 New points of presence
1,199,273 New addresses
1,199,273 New addresses
41
Decline in funding (R’000)
42
2009 2010 2011 2012 2013 2014 2015
Subsidy 371 600 383 092 306 077 180 442 51 964 0 0
YOY Change 0.0% 3.1% -20.1% -41.0% -71.2%
-80.0%
-70.0%
-60.0%
-50.0%
-40.0%
-30.0%
-20.0%
-10.0%
0.0%
10.0%
50 000
100 000
150 000
200 000
250 000
300 000
350 000
400 000
450 000
End of PresentationEnd of PresentationEnd of PresentationEnd of Presentation
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