PostBank: Improvement in operating profit Key Achievements
Slide 4
Address expansion programme Universal Service Obligations
Target 4018000 addresses Actual to Date 2161958 addresses Planned
Roll Out 1857042 addresses
Slide 5
Rebalancing of the Network Universal Service Obligations
Slide 6
Sapo Contribution To Rural Development l Sapo Nodal Points
Connectivity l Address Expansion Programme l PIT (Public Internet
Terminals) l CPO (Citizens Post Office) l MPCC (Multi- Purpose
community Centers) National Priority Programmes
Slide 7
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 !!!!!!!! WSSD (World summit on sustainable
development) Reintegrating SAPO into Society
Slide 8
SAPOs HIV/AIDs Programme l Conducted an HIV surveillance
testing to determine prevalence rate ( not as high as we thought) l
Trained peer educators l HIV/AIDS - Awareness campaigns l Provision
of emotional care and support to infected and affected employees
through EAP l Provision condoms through the help of the Dept of
Health Reintegrating SAPO into Society
Slide 9
SAPOs Bursary Programme l Internal bursary programme n Aimed at
addressing skill gaps in the workplace n Creating a pool of
candidates in scarce job categories n Tool to redress imbalances in
education levels in line with EE Act l External bursaries l Two
Categories: n Children of employees n External candidates from
disadvantaged backgrounds Reintegrating SAPO into Society
Slide 10
l Abet: Good Abet results - More than 3000 learners have been
through to date l Through the learning institute, SAPO will be the
leading training provider for SADC Training and Development Program
Reintegrating SAPO into Society
Slide 11
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
Slide 12
Major Sapo Liabilities LiabilityAmountCurrent Status PostBank
LoanR976 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 LoanR75 million In discussion with
shareholder that the TBVC loan of R75 million should also be
converted to equity Medical Aid DeficitR2.2 Billion Termination of
post retirement medical benefit for all new members effective from
1 September 2002. Other options are being investigated Pension Fund
Deficit R929 million 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
Slide 13
Strategic Direction
Slide 14
Strategies for the next 3 years l Reduction in staff n With the
decline in mail volumes there will be surplus staff within the
organisation and this will lead to further voluntary retrenchments.
n However certain staff could be re-skilled in areas that The Post
Office may have a lack of skills e.g. Technological Skills. l
Reduction in Transport costs n This will be achieved through
consolidation of transport services to allow for better utilization
of transport resources and cutting of transport costs.
Restructuring to improve operating and financial performance
Slide 15
Strategies for the next 3 years l Shared Services n This
entails the merging of common business functions e.g. HR across all
subsidiaries and corporate. n The efficiencies and cost savings are
achieved by removing the duplication within the Business function.
l Rationalisation of hubs n The South African Post Office has many
sorting centres focusing on the same thing. n Some centres are
underutilized and by combining these centres the South African Post
Office can greatly improve its efficiency and save costs.
Restructuring to improve operating and financial performance
Slide 16
Strategies for the next 3 years l Focusing on Courier, Express
and Parcels market n This market will grow and volumes are expected
to increase in the foreseeable future. n 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. l Electronic enabled services n With the growth of the
internet and its related services the Post Office is diversifying
into these areas to complement their current strengths and generate
income from these new services. n The ECT Act provides us the
platform to provide services on behalf of government and business
and generate income by charging for these services Diversifying to
create new revenues from new markets and products
Slide 17
Strategies for the next 3 years Increasing its Financial
services portfolio l With the declining mail volumes the Post
Office will be diversifying to provide a broad range of financial
services. l The intention is to increase the percentage revenue of
these services, thus becoming less dependant on mail income. l
PostBank will launch more products relating to financial services
and this will provide additional income to the South African Post
Office. Diversifying to create new revenues from new markets and
products
Slide 18
Diversification into Financial services 37% 24% 23% 20% 18% 11%
10% 7% 5% 4% 3% 1% 0% 5% 10% 15% 20% 25% 30% 35% 40% Italy Germany
France Switzerland Sweeden Belgium UK Irland Portugal Austria
Danemark Finland Norway Spain Netherlands Luxembourg Average 11%
Percentage of TO carried out in the financial services in 1999
Slide 19
Strategies for the next 3 years Envisaged Revenue Mix Current
Revenue Split Envisaged Revenue Split in 3 Years
Slide 20
Re-inventing/Transforming The Post Office Business Costs
TraditionallyTransformingTransformed
Slide 21
Major Turnaround projects 2003/2004 Achieving operational
excellence Description 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 ITRationalisation 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
Slide 22
Major Turnaround projects Money ManagementDescription
Rationalisation of hubsBy rationalisation of the hubs the South
African Post Office will save costs but also improve its efficiency
Transport and logistics projectConsolidation 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 ServicesBy 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
Slide 23
Major Turnaround projects Growing our Customer BaseDescription
Payment solution for Social Welfare and pensions (North West
Province as Pilot) By providing a Payment solution the South
African Post Office will be able to grow its customer base.
Equalisation of servicesBy 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. Electronic bill presentment and
payment By providing an alternative channel to pay bills a new set
of customers can be targeted and new revenues can be generated
E-mail for lifeBy 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
Slide 24
Major Turnaround projects Creating future wealthDescription
Hybrid mailBy sorting and transporting mail electronically to the
closest destination will improve efficiencies and generate
additional revenue through value added services. Financial SwitchA
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. BiometricsWill 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 PostBankPostBank will be
converted to an independent entity with its own board and
relationship with other financial institutes e.g. the Reserve bank,
FSB and National treasury
Slide 25
Current Process Witspos or SuperHub Capemail or SuperHubMail
House Bulkmailer Depot Postman Home Transport
PrintingStuffingSorting Dispatch Sorting Electronic data Transfer
CollectionsGranny Mail ReceivingSorting Receiving CollectionsOther
Mail Postman Home
Slide 26
Hybrid Mail Process Witspos or Superhub Post Office Data Center
Depot Postman Transport Electronic data Transfer Bulkmailer
CollectionsGranny Mail e-Receivinge-sortinge-Sending
e-ReceivingPrinting StuffingSorting Public Small Business Email
Secure Email Fax Web
Slide 27
Witspos or SuperHub Capemail or SuperHubMail House Bulkmailer
Depot Postman Transport PrintingStuffingSorting DispatchSorting
Electronic data Transfer CollectionsGranny Mail ReceivingSorting
Receiving CollectionsOther Mail Postman Savings
Slide 28
Financial Plan
Slide 29
BUDGET 2004-2006
Slide 30
SAPO Total Group
Slide 31
Slide 32
Slide 33
Slide 34
Thank you Any Questions?
Slide 35
SAPO Including PostBank
Slide 36
Balance Sheet
Slide 37
Slide 38
Slide 39
SAPO Excluding PostBank
Slide 40
Balance Sheet
Slide 41
Slide 42
Slide 43
PostBank
Slide 44
Balance Sheet
Slide 45
Slide 46
Cash Flow
Slide 47
CFG
Slide 48
CFG Balance Sheet
Slide 49
Slide 50
Slide 51
Counter Service (Investment in Postlink) and our queue lengths,
and how do these compare with that of banks, etc. l The current
benchmark for queuing time is 5 minutes maximum. This is based on a
gap survey that was done with the help of customers in 1994. l The
4 longest queues at each Post Office is measured and reported
nationally on a daily basis. The target is 90% conformance. The
results are between 94% and 97% conformance. l In general banks do
not have standard queue waiting times and queue times are not
measured. l The point of sale system (Postlink) was developed and
installed at a cost of R186,9m. Although the Postlink system did
not have a very big impact on the shortening of transactions at
counter level, it had the effect that back office and checking
functions were largely reduced and resources could be set free to
assist with customer service. Key Achievements
Slide 52
Funding Report: Subsidy Utilisation Main Use Funding of
Universal Service Obligations Funding of projects/investments to
improve efficiencies; reduce costs and increase revenue Received
R900 million during 2001 and 2002 Utilisation as follows:R'Million
Universal Service Obligations - Post Offices202 - Mail delivery 27
Staff reduction costs302 Infrastructure improvements 31 Control
Environment projects 20 Technology upgrades 47 Contract settlements
10 Brand repositioning 20 Carried forward to 2003/04234
Slide 53
Funding Plan for 2003/2004 Balance carried forward234 2003
Allocation300 534 To be utilised as follows:R'million Universal
Service Obligation - Post Offices167 - Mail delivery 15 Staff
reduction costs152 Post Office Automation 30 Post Office upgrades
30 Automation/Rationalisation of hubs 50 System upgrades and
enhancements 40 Technology upgrades 50 534
