Integrated Report 2014 Sustainable Business Growth Driving Diversification And Innovation

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Description talk about integrated report 2014 sustainable business growth driving diversification and innovation.

Sustainable Business Growth
Driving diversi?cation and Innovation
Integrated Report
2014
1
South African Post Of?ce SOC Limited (Registration number 1991/005477/06)
Integrated Report 2014
Group Management Report ................................................................................................................3
Administrator’s Statement.............................................................................................................4
Acting Group Chief Executive Of?cer’s Report ..............................................................................6
Strategy ..............................................................................................................................................9
Corporate Governance Report ..........................................................................................................27
Operational Overview .......................................................................................................................53
Postbank ......................................................................................................................................54
Mail Business ..............................................................................................................................56
Retail ...........................................................................................................................................57
Logistics ......................................................................................................................................60
Sustainability ....................................................................................................................................61
Environmental Sustainability .......................................................................................................62
Corporate Citizenship ..................................................................................................................67
Global Reporting Initiative Framework .........................................................................................69
Business Support .............................................................................................................................75
Human Capital Management ....................................................................................................... 76
Information Technology ................................................................................................................80
E-Business ...................................................................................................................................82
Security and Investigation ...........................................................................................................83
Consolidated Annual Financial Statements ......................................................................................85
Audit Committee Report ..............................................................................................................87
Directors’ Responsibilities and Approval......................................................................................90
Secretary’s Statement .................................................................................................................91
Independent Auditors’ Report .....................................................................................................92
Directors’ Report .........................................................................................................................96
Statement of Financial Position ................................................................................................. 103
Statement of Comprehensive Income ...................................................................................... 105
Statement of Changes in Equity................................................................................................ 106
Statement of Cash Flows .......................................................................................................... 108
Notes to the Consolidated Annual Financial Statements .......................................................... 109
Detailed Income Statement ......................................................................................................200
Three Year Period Review ..........................................................................................................202
Glossary.....................................................................................................................................203
Table of Contents
2
South African Post Of?ce SOC Limited (Registration number 1991/005477/06)
Integrated Report 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
3
Group Management Report
4
South African Post Of?ce SOC Limited (Registration number 1991/005477/06)
Integrated Report 2014
Administrator’s Statement
On 7 November 2014, the non-executive directors resigned from the South African Post Of?ce (SAPO) Board of Directors.
The Honourable Minister of Telecommunications and Postal Services, Dr Siyabonga Cyprian Cwele, MP, as the shareholder
representative appointed Dr Simo Lushaba in terms of section 25 of the Post Of?ce Act, 22 of 2011 (as amended).
The Administrator is charged with the responsibility of bringing stability within SAPO, ?nalise the Strategic Turnaround
Plan (STP) to improve ?nancial performance and ?nalise the Audited Annual Financial Statements. The Administrator has
appointed an intervention team made up of persons with requisite skills and knowledge in postal, ?nancial and logistics
business.
The Act provides for the Minister to appoint an Administrator as part of an intervention to stabilise the Post Of?ce. The
Minister will review the performance of SAPO whilst under administration and within six months table a report on his
?ndings to the National Assembly.
Dr S Lushaba
Administrator
5
South African Post Of?ce SOC Limited (Registration number 1991/005477/06)
Integrated Report 2014
6
South African Post Of?ce SOC Limited (Registration number 1991/005477/06)
Integrated Report 2014
Globally, the postal services have been under pressure for a number of years owing to plummeting mail volumes and
revenue. This is caused largely by a growing choice of electronic communication media available to customers. South
Africa is no exception, and in the case of the South African Post Of?ce, the drop in customer volumes has been exacerbated
by repeated strikes and consequently, unreliable mail delivery.
The SA Post Of?ce has been through another challenging year with slow economic recovery and increasing ?nancial
pressures on our already challenged customers. The rapid evolution within the digital space shrinks mail revenue as
customers seek faster communication media. The result is a large ?xed cost structure.
As part of the Universal Service Obligation (USO) the SA Post Of?ce opened 50 (?fty) postal outlets during the year under
review at the time that we are no longer receiving any subsidy. The 50 new points comprised 5 fully ?edged post of?ces
and 45 Retail Postal Agencies. This has increased the Post Of?ce branch network to 2,486 access points.
The new addresses rolled out amounted to 1,197, 254 exceeding the addresses expansion target by 1,574. A total of 37.7%
of these addresses were expanded in rural areas and 62.3% in urban areas.
In the year under review 50 million customers were served at the various post of?ce outlets. Motor vehicle licenses can
be renewed at Post Of?ce outlets in all but two provinces, namely the Northern Cape and the Western Cape. A total of 3.4
million customers renewed their motor vehicle licenses through our post of?ce branches.
On the logistics front, the Logistics Group continues to partner with government departments in ful?lling their mandates.
In the Limpopo Province 6.3 million books were delivered to 3,975 schools for the Department of Education. In the
Northern Cape Province 900,000 books were delivered to 575 schools.
Mail revenue continues to be the key generator by contributing 67% of the Group’s overall revenue. The impact of the four
labour strikes over the past year played an major role in our missing the revenue budget and service delivery to customers.
The deployment of high-speed sorting machines ensures that letters are sorted and delivered in the shortest possible time.
Key programmes like containerisation and mechanization at the major mail centres reduce the number of missorts and
improve delivery standards.
SAPO E-Business experienced huge growth in hybrid mail and electronic bill presentment and payments (EBPP) sector. It
is envisaged that the electronic migration and adoption by the market will offset the decline in mail volumes by a signi?cant
percentage.
Acting Group Chief Executive
Of?cer’s Report
7
South African Post Of?ce SOC Limited (Registration number 1991/005477/06)
Integrated Report 2014
The 1,500 strong post of?ce footprint extends into rural areas, giving Postbank customers access to ?nancial and banking
services, even in rural areas. Postbank cards are accepted at merchants that accept Visa cards in all countries.
During the 2010/2011 ?nancial period the South African Postbank Limited Act no 9 of 2010 was signed into law providing
for the establishment of a subsidiary company of the South Africa Post Of?ce SOC Limited, namely the South African
Postbank Limited, to which the designated assets and liabilities of the current Postbank division will be transferred in terms
of the Postbank Act No 9 of 2010. It is envisaged that the new subsidiary will operate as a fully-?edged bank and will be
regulated in terms of the Banks Act.
Postbank submitted its Section 12 Application to Establish a Bank to the South African Reserve Bank on 25 September
2013 and a decision thereon is awaited. Postbank has been designated as a clearing system participant by SARB from
01 November 2013. This positions Postbank to become an acquirer for ATM, online business and cards. The Postbank
Corporatisation process has further been enabled through funding of R 481 million that has been allocated by the National
Treasury over the Medium Term. The balance of the investment in corporatisation will be funded by Postbank.
Mail transportation is an essential operation for the Post Of?ce, but it has an impact on the environment by contributing
to air pollution. To minimise the impact on the environment we have implemented initiatives to reduce carbon emissions,
recycle paper, reduce water usage and reduce energy consumption. This includes retro?tting power saving light sources
and lighting sensors.
A total of 2,000 trees were purchased and planted across the country in support of Food and Trees for Africa during this
year. These tree planting activities are incorporated into our employee volunteerism schedules to raise awareness of
environment sustainability.
The SA Post Of?ces’ approach to corporate citizenship is not merely donating resources but actually getting involved in
the implementation of the programmes to ensure that these programmes are successful. The Student to Government
Programme has seen a partnership with Microsoft SA and the South African Local Government Association being rolled out
in four provinces that allowed twenty four students to complete their internships in ten municipalities in these provinces.
Humana People to People is a poverty alleviation program in the Ribacross community in Limpopo that has completed
its third year. This year has seen more than 600 people being trained in computer skills, business management, sewing
and gardening. Many of the women who participated in these Programmes have employed other people within their
communities.
Employee volunteerism is core to the corporate citizenship objectives of the SA Post Of?ce. The central message around
corporate citizenship is “Delivering Change” and employees follow this through when they are volunteering their time,
skills and resources. This ?nancial year has seen more than 25% of the staff volunteering in communities and schools
around the country.
During the year ahead the SA Post Of?ce plans to form new partnerships with Isibaya, a non-governmental organisation in
the Eastern Cape, to assist farmers in 55 villages to become economically active and commercially viable as well as The
Red Cap Foundation to bring ICT to rural schools in KwaZulu-Natal.
It is critical for Human Capital development to contribute to the organisation’s bottom line. Addressing the skills gaps,
organisational transformation as well as supporting career development, form part of its output, ensuring that staff is
constantly empowered, inspired and motivated.
During the year under review, the primary focus of IT was on stabilising and improving existing IT capabilities. Its activities
focused speci?cally on IT governance, operational ef?ciency and IT security. A number of projects were initiated and
continue from the prior year like the Infrastructure Refresh, Disaster Recovery and Network Upgrade, Flexcube upgrade to
Universal Banking Solution (UBS) and Track and Trace.
Whilst the availability and stability of systems remains important, the focus within IT will gradually move towards becoming
a true business partner, by providing ?exible and scalable solutions that will be responsive to business needs and reduce
time to market. This will be achieved through considering modern ways of provisioning IT services and transforming the IT
environment to keep abreast with current trends and enable the corporatisation of the Postbank.
8
South African Post Of?ce SOC Limited (Registration number 1991/005477/06)
Integrated Report 2014
Financial performance
Tough trading conditions prevailed during the period under review with further losses in revenue and customers contributing
to the net loss of R 358.88 million posted for the year ended 31 March 2014. This represented an increase of 6.5% from
the restated net loss position of R 337,12 million for the prior year. The declining trend in net pro?ts continued for the last
few years with the past two posting net losses due to the lower than expected revendues, and the lack of government
funding relating to USO obligations.
2010 2011
2012
(Restated)
2013
(Restated)
2014
293,130 117,756 87,771 (337,12) (358,88)
(400,000)
(300,000)
(200,000)
(100,000)
100,000
200,000
R
'
0
0
0
Net pro?t after tax
Net pro?t
after tax
Group revenue increased by 2% to R5.78 billion from R5.69 billion posted in the prior year. The decline in mail and courier
volumes and the loss of customers contributed to a marginal growth of 2% in revenues despite the approval of a general
price increase of 5% for reserved products and services by the Postal Regulator, ICASA. Labour unrest during the year
under review also contributed to the loss in revenues earned and negatively impacted our operations and customer
service. Additional costs were also incurred to clear backlogs resulting from the strike action.
The lower revenues were to some extent offset by the implementation of cost optimisation programmes and containment
measures across the group that resulted in operating expenses being limited to R 6.51 billion (2013: R 6.08 billion) - a
growth of 7% from the prior year.
The balance sheet has strengthened with an increase of R 530 million in the value of the total assets to R 11.29 billion from
R 10.76 billion in the prior year. The growth in total assets has resulted from the increase of R 308 million in short-term
assets to match the growth of R 245 million in the Postbank depositor’s funds.
Mr M Mathonsi
Acting Group Chief Executive Of?cer
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
9
Strategy
10
South African Post Of?ce SOC Limited (Registration number 1991/005477/06)
Integrated Report 2014
The Strategic Corporate Plan
The years ahead
The South African Post Of?ce (SA Post Of?ce) is mandated through its license agreement and Universal Service Obligation
(USO) to provide postal, and communications services to all South Africans at affordable prices. This mandate charges
the regulator, Independent Communication Association of South Africa (ICASA), with ensuring the provision of universal
service and managing the performance of the SA Post Of?ce through the license agreement. In order to ful?l on the
mandate of the USO, a strategic priority for the SA Post Of?ce includes rolling out new addresses and service points in
rural and under-serviced areas. This requirement is aligned to enabling the Government’s national development programme
for 2030.
The SA Post Of?ce remains a monopoly entity in the reserved mail business, which constitutes the biggest component of
its business. The postal industry has been going through a major transformation to adjust to structural changes in its core
mail business, for a number of years which has seen declines in revenue and volumes. The global trend has seen a steady
decline in mail volumes as other forms of communication pervade the market. In an effort to reduce its dependency on
mail and exploit new revenue streams, the SA Post Of?ce needs to focus on further diversifying its products and services.
The SA Post Of?ce faces several challenges that impact the business’s ability to deliver against its mandate and license
requirements. These include, negative customer perception, uncertain ?nancial sustainability due to declining revenues,
loss of USO subsidy and a large ?xed cost base. These challenges present the organisation with opportunities to exploit
new growth alternatives. The 2014/15 – 2016/17 Strategic Corporate Plan of the SA Post Of?ce is aimed at addressing
these business challenges facing the organisation and mapping out a new path that will see the organisation reposition
itself, into a pro?table, self-sustaining, ef?cient and customer centric organisation.
The Strategic Corporate Plan provides us with a good opportunity to chart a new path. This journey will see us creating
a healthy, ?nancially stable, and highly ef?cient and customer centric organisation that is a key contributor to the South
African economy. Over the next three years, the main focus will be on ensuring that the business is self-sustaining, that
we improve our ?nancial position (i.e. increasing revenue base and managing costs more prudently) and that we improve
overall ef?ciencies throughout our different business divisions.
The SA Post Of?ce has been working on a detailed list of initiatives to address the current performance barriers and
concerns in the Group. This has led to the development of the Strategic Turnaround Plan (STP) that is aimed at implementing
strategic initiatives that will stabilise the business and steer it in a positive growth direction. The initiatives include amongst
others, the implementation of alphanumerical postal codes, the roll-out of the Government’s Digital Terrestrial Television
project, expansion of the E-Business products and channels, optimisation of our property portfolio to optimise value,
providing more South African homes with addresses and the corporatisation of Postbank (which will see more people
having access to ?nancial services).
11
South African Post Of?ce SOC Limited (Registration number 1991/005477/06)
Integrated Report 2014
Key themes for SAPO’s Business Transformation
SAPO’S STRATEGIC
THEMES
To be recognised amongst the
leading providers of postal and
related services in the world
• Align business operations to
customer needs, shareholder
priorities and government
priorities
• Ef?cient and sustainable
business that is well de?ned
and well communicated to the
public
• Invest in people, take them
along and build capacity for the
future
• Review internal policies and
streamline processes to foster
good governance and ef?cient
decision-making
• Review and design a physical
network for the future
• Attain innovation with new
products and services.
• New products and services
• Post Bank transformation
• Rationalise product information
• Network optimisation
• Selected operational improvement
• Infrastructure and IT
• Subsidy reintroduction
• Service levels renegotiation
• Funding and balance sheet strategy
• Measurement, performance and reward
• Capability building: skills and disciplines
• Operating and support costs
• Asset upgrade and renewal
• Procurement and strategic sourcing
• Property portfolio management
Products & Services
Assets & Cost Base
Network & Operations
People Processes
Regulatory & Financial
The diagram below highlights strategic initiatives of the different business units.

POSTBANK
• Corporatise the Bank
• Focus on innovative channel strategy
• Focus on product innovations
LOGISTICS
• Review product and pricing strategies and consolidate assets
• Provide competitive logistics services and solutions
• Stimulate economic development and growth by connecting business with
markets and customers
• Be supply chain solution partners of the Government
MAIL
• Modernise and rationalise mail and parcel operations
• Build internal capabilities
• Drive product and price simpli?cation strategies
12
South African Post Of?ce SOC Limited (Registration number 1991/005477/06)
Integrated Report 2014
RETAIL
• Adapt new multi-channel strategy in order to meet customer expectations
• Expand and re?ne retail channel network
• Align property strategy and footprint
• Design innovative products and services
E-BUSINESS
• Grow Hybrid mail business
• Expand into the rest of Africa
• Grow PKI authentication services to Government as primary target market
• Migrate traditional postal products service into single E-Business platform
PROPERTIES
• Improve the effectiveness and ef?ciency of property management processes
• Increase lease and sales/disposition revenues
• Rationalise excess space and reduce lease costs
• Evaluate alternative sale/leaseback options
The removal of the USO subsidy and the capital investment required to successfully implement the initiatives listed above
require the organisation to consider different funding options in order to raise the required capital. The SA Post Of?ce will
have to consider borrowing as one option to its funding requirements. The total funding requirement for the organisation
is R3.5 billion over the three-year planning period. This includes R940 million required for the Corporatisation of the bank
and a further R450 million for improving our current property portfolio.
Our focus in the new ?nancial year includes the implementation of a new organisation structure and the SA Post Of?ce
Strategic Turnaround Plan. The new structure is intended to introduce a new commercial and business delivery focus
within the Group, in addition to entrenching a new culture of responsibility and accountability. The Strategic Turnaround
Plan will focus on different phases that will see the organisation addressing its fundamental building blocks (including
addressing its capacity and capability shortcomings).
The phases will include focusing on revenue improvement, cost containment initiatives, implementing initiatives that will
drive diversi?cation, and innovation to enable the business to drive growth. Key to our plans will be the following:
1
The roll-out of key projects such
as the implementation of alpha-
numerical postal codes
2
The roll-out of the Government’s
Digital Terrestrial Television (DTT)
project
3
Expanding our e-Business
products and channels
4
Optimisation of our property
portfolio to derive value
5
Providing more South African
homes with addresses
6
Corporatisation of Postbank
which will see more people
having access to ?nancial
services.
13
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
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14
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
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15
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
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16
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
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17
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
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18
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
S
T
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A
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E
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I
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T
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19
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
S
T
R
A
T
E
G
I
C

T
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L
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South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
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South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
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24
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
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25
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
S
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26
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
S
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South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
27
Corporate Governance Report
28
South African Post Of?ce SOC Limited (Registration number 1991/005477/06)
Integrated Report 2014
Corporate Governance Report
Mandate, regulation and license
The South African Post Of?ce (SOC) Limited was established on 1 October 1991 as a public company in terms of the
Companies Act, No. 61 of 1973. The state (Republic of South Africa), represented by the Minister of Communications, is
the sole shareholder.
Following the repealing amendment of the Companies Act No. 61 of 1973 and the enactment of by the Companies Act
No. 71 of 2008 (as amended), the SA Post Of?ce was designated as a state-owned company (SOC) Limited SA as per the
Post Of?ce (SOC) Limited Act No. 22 of 2011, as amended.
The SA Post Of?ce is also a major state entity in terms of Schedule 2 of the Public Finance Management Act (PFMA)
No. 1 of 1999 (as amended) and is a SOC Limited in terms of the Companies Act No. 71 of 2008 (as amended).
Regulation
The SA Post Of?ce is mandated to provide postal services according to the Postal Services Act of 1985 and the exclusive
mandate of 1998. This Act provides for the regulation of postal services and the operational functions of the company,
including its universal service obligations (USOs). 
The license to operate as South Africa’s postal services provider was issued to the SA Post Of?ce on behalf of the regulator
in August 2001. This license is valid for 25 years and is reviewed every three years in terms of targets and performance.
The SA Post Of?ce still enjoys a monopoly over reserved services, one that is currently being liberalised in many European
countries. Until 2012/2013 this priviledge was accompanied by government subsidies, provided in return for a USO. The
Postal Services Act of 1998 charges the regulator, Icasa, with ensuring the provision of universal service through the
reserved postal services licensee, namely the SA Post Of?ce.
Through the SA Post Of?ce’s USO, a strategic priority for the Company is rolling out new addresses and branches in
remote areas, in line with the government’s development programme for 2030. The Postal Services Act further appoints
ICASA to monitor the incumbent against ‘anti-competitive’ behaviour.
Legislative and governance framework
The SA Post Of?ce complies with the protocols and legislation governing SOCs and is guided by various postal, courier and
?nancial regulations laid down by the regulatory bodies such as ICASA and the Financial Services Board (FSB).
The Group is required to comply with, inter alia, the following:
• SA Post Offce Act No.1. 22 0f 2011;
• Postbank Act No.1. 9 of 2010;
• Postal Services Act No.1 124 of 1998.
• Public Finance Management Act No.11 of 1999 (as amended);
• Companies Act No.1 71 of 2008 (as amended);
• Relevant legislation applicable to the postal sector and to SOCs;
• King III Code on Good Corporate Governance.
Other relevant local and international codes for the postal sector.
The Group is committed to sound corporate governance principles and is guided primarily by generally accepted corporate
governance practices, in particular the King III Report on Corporate Governance plus the Protocol on Corporate Governance
in the Public Sector. These practices seek to ensure that the entity’s mandate is ful?lled with due consideration to
29
South African Post Of?ce SOC Limited (Registration number 1991/005477/06)
Integrated Report 2014
responsible decision-making, accountability, effective and ethical leadership, as well as fairness and transparency, whilst
performance is monitored and statutory requirements are satis?ed.
In support of the shareholder’s drive to impact positively on poverty alleviation and the social wellbeing of all citizens, the
SA Post Of?ce engages in a range of support activities, such as serving as a conduit for BBBEE share schemes and a
vehicle for the payment of government services. Through Postbank, the company also provides accessible and affordable
banking to the unbanked and lower income segment of the population.
SA Post Of?ce Group shareholding structure
The State is the sole shareholder represented by the Minister of Communications.
The SA Post Of?ce operates in terms of a Group holding structure, with the SA Post Of?ce as the Group holding company,
with two operating subsidiaries and several property companies. The subsidiary companies have their own boards
comprising SA Post Of?ce non-executive and executive directors and the holding company executives who are appointed
in a non-executive capacity to the subsidiary boards. The managing director of the subsidiary company acts as the executive
director of the subsidiary. In line with the founding documents and articles of association of the subsidiaries, the SA Post
Of?ce Board appoints the directors of the subsidiary boards.
The relationship between the subsidiary companies and the SA Post Of?ce, as the shareholder, is governed by the
individual shareholders’ compacts between the holding company and the subsidiary. The shareholder compact, as well as
spelling out the roles and responsibilities of the parties, outlines the performance targets to be met by the subsidiary in
terms of the overall annual corporate plan for the Group.
The SA Post Of?ce Board has delegated some authority to the subsidiary Boards and has determined the relevant
materiality and signi?cance thresholds required by the PFMA for both subsidiaries in terms of approval of transactions.
The Postbank Act has allowed for the creation of the Postbank Company (SOC) Limited as part of the process of corporatising
Postbank. The processes to register Postbank as a fully ?edged commercial bank with a banking license and as a SOC
are currently underway and will result in changes in the current Group structure. The SA Post Of?ce will, in terms of the
Postbank Act, become the 100% shareholder of the Postbank company, once it has been registered.
The mandate of the Board
The SA Post Of?ce has, as its accounting authority, a Board appointed by the Minister of Communications, who is the
shareholder representative.
The mandate of the SA Post Of?ce Board is set out in the South African Post Of?ce Act and has been encapsulated in the
SA Post Of?ce Board charter as well as in the shareholders’ compact signed by the Board and the Minister.
The SA Post Of?ce license and social mandate are derived from the following:
• The SA Post Offce’s legislative mandate in terms of its license and Universal Service Obligation (USO)
• The mandate of the SA Post Offce as a state-owned company (SOC) to ensure alignment of its programmes with
the overall programmes of the government
• Triple bottom line reporting principles, ie proft, people, planet.
The mandate of the SA Post Of?ce Board, as set out in the Board charter, is aligned to the requirements stipulated by the
Protocol on Governance in State-owned Institutions as well as in the shareholders’ compact.
To ful?l its mandate, the SA Post Of?ce Board strives to increase shareholder value and maximising of socio-political
bene?ts in terms of the broader principles and policies of the government.
Independence of the Board
Board members are appointed by the shareholder and the Minister of Communications. The Board considers submissions
and recommendations made by management and makes independent decisions based on its ?duciary responsibilities and
the strategic direction of the company. The Board has a formal charter that de?nes its mandate, roles and responsibilities.
30
South African Post Of?ce SOC Limited (Registration number 1991/005477/06)
Integrated Report 2014
The Board committees meet independently and report back to the Board through their chairpersons. Each committee has
a formal charter that clearly de?nes its roles and responsibilities.
The Audit Committee regularly meets individually with the external and internal auditors. Furthermore, the Board, its
committees and individual directors may engage independent counsel and advisers on request and at the discretion of
the Board.
Similarly, the subsidiary companies have their own independent and unitary Boards that meet independently and make
policy pronouncements for the subsidiary company or recommendations to the Group Holding Board in line with the
shareholders’ agreements; and delegation of authority/materiality framework and their respective Board charters.
A comprehensive framework setting out the authorities and responsibilities of the various sub-committees and subsidiary
companies is in place through an approved system of delegation of authority, which also sets out the applicable ?nancial
thresholds for transacting.
Composition of the SA Post Of?ce Board
The SA Post Of?ce Board is a Unitary Board comprising of a majority of non- executive directors. The non-executive
directors of the Board are appointed by the Minister in accordance with section 11 of the SA Post Of?ce Act. The SA
Post Of?ce Board has executive directors who are appointed by Cabinet on the recommendation of the Minister of
Telecommunications and Postal Services. The executive directors are responsible for the day to day running of the company.
In terms of the SA Post Of?ce Act No 22 of 2011, the Board should comprise of:
(a) Not more than 11 non-executive directors including the Managing Director of the Postbank appointed in terms of
section 11 of the SA Post Of?ce Act
(b) Three executive directors who must include the Chief Executive Of?cer (CEO), Chief Operations Of?cer (COO) and
the Chief Financial Of?cer (CFO)
Board members
NAME DIRECTORSHIP APPOINTED RETIRED
CHAIRMANSHIP/
POSITION IN COMPANY
Dr Hlamalani Manzini
Non-executive Director and
Acting Chairperson of the Board
1 March 2012 7 November 2014 Board
Mr Christopher Hlekane Executive Director 01 October 2012
Group Chief Executive
Of?cer
Mr Shaheen Adam Executive Director 14 October 2011 15 October 2014
Acting Managing Director:
Postbank
Ms Khumo Mzozoyana Executive Director 01 January 2013 Group Chief Financial Of?cer
Ms Nomathemba Kela Non-executive Director 1 March 2012 7 November 2014
Human Resources
Remuneration and
Performance Management
Committee
Mr Templeton Mageza Non-executive Director 17 December 2013 7 November 2014
Risk Management
Committee
Ms Nobuhle Mthethwa Non-executive Director 1 March 2012 23 October 2014 Courier and Freight Group
Mr Sathiaseelan Gounden Non-executive Director 17 December 2013 7 November 2014 Audit Committee
Mr Shu’ayb Patel Non-executive Director 1 August 2007 7 November 2014
Social, Ethics and
Transformation Committee
Mr Sihle Ngubane Non-executive Director 17 December 2013 7 November 2014 IT Governance Committee
Ms Khangekile Simelane Non-executive Director 1 March 2012 22 October 2014 Stamp Advisory Committee
Mr Richard Sishuba Non-executive Director 1 March 2012 23 October 2014 Document Exchange
Ms Selebaleng Mothelesi Non-executive Director 17 December 2013 7 November 2014 Postbank Committee
31
South African Post Of?ce SOC Limited (Registration number 1991/005477/06)
Integrated Report 2014
Committees of the Board
The Group Board as the Accounting Authority oversees the overall decision making across the Group to ensure it retains
proper direction and control of the Group.
The Board has a formal delegation of authority framework agreed to with the Minister. The Board has delegated certain
powers to the CEO and to management but has reserved certain powers exclusively for the Board and these are set out
in the Board Charter.
The Board has also appointed several committees to help it meet these responsibilities. Delegating various functions and
authorities to committees and management however does not absolve the Board and its directors of their duties and
responsibilities.
The Board has delegated certain functions without abdicating its own responsibilities to the following committees:
(a) Audit Committee
(b) Risk Management Committee
(c) Postbank Committee
(d) Human Resources, Remuneration and Performance Management Committee
(e) Nominations Committee; (ad hoc Committee)
(f) Social, Ethics and Transformation Committee
(g) IT Governance Committee
The various Committees of the Board each have formal terms of reference embodied into a charter which further de?nes
the mandates, roles and responsibilities of each Committee. The charters are reviewed and updated on an annual basis
where required.
The Committees of the Board are chaired by a non-executive director and members are drawn from the ranks of non-
executive directors. The executive directors attend Committee meetings in their capacity as executives and other
representatives from management are also invited to Committee meetings when required to report to the Committee.
The Committees meet at pre-arranged meeting dates at least four times in a year and at such other times as deemed
necessary by the Chairperson.
The mandates of the various committees of the SA Post Of?ce Board as tasked to assist the Board in ful?lling its oversight
responsibilities, are detailed below:
Appointment of Administrator
On 7 November 2014, all the non-executive members of the Board resigned and duly the board and all of its committees
dissolved. Dr Simo Lushaba was appointed as administrator in terms of Section 25 of the South African Post Of?ce Act No
22 of 2011 (as amended). As at 31 March 2014, the Board (in compliance with King III) and all its committees were active
and functioning.
32
South African Post Of?ce SOC Limited (Registration number 1991/005477/06)
Integrated Report 2014
Board of directors
The SAPO Memorandum of Incorporation (MOI) provides for a maximum of 14 directors, including the Chief Executive
Of?cer, the Chief Operations Of?cer and the Chief Financial Of?cer. The Board meets at pre-arranged meeting dates
at least four times in a year and at such other times as deemed necessary by the Chairperson. The Board holds annual
workshops at least twice a year to review the Group’s business strategy and to conduct the Group annual risk assessment.
Board composition
Chairperson (Non-Executive):
Dr HN Manzini (Acting)
4
Mr G Mothema
2
Members:
Non-executive Directors
Ms NE Kela
Ms NG Mthethwa
Mr MS Patel
Ms KP Simelane
Mr RV Sishuba
Mr S Gounden
1
Mr PT Mageza
1
Ms SP Mothelesi
1
Mr SJ Ngubane
1
Executive Directors
Mr CJ Hlekane (Chief Executive Of?cer)
Ms K Mzozoyana (Chief Financial Of?cer)
Mr S Adam (Acting MD: Postbank)
Mr B Yafele
3
(Acting Chief Operating Of?cer)
Mr Mathonsi
5
(Chief Operating Of?cer)
Legend ü = Present
X = Absent with apology
1 = Appointed 17 December 2013
2 = Retired 26 June 2013
3 = Retired 14 November 2013
4 = Appointed Acting Chairperson 27 June 2013
5 = Appointed COO 1 July 2014
- = Not a member of the Board
33
South African Post Of?ce SOC Limited (Registration number 1991/005477/06)
Integrated Report 2014
Attendance at SAPO Board Meetings and workshops for the year 1 April 2013 to 31 March 2014
N
A
M
E
0
2
/
0
4
/
2
0
1
3
0
3
/
0
4
/
2
0
1
3
1
0
/
0
4
/
2
0
1
3
2
5
/
0
4
/
2
0
1
3
0
3
/
0
7
/
2
0
1
3
1
0
/
0
7
/
2
0
1
3
2
4
/
0
7
/
2
0
1
3
2
3
/
0
8
/
2
0
1
3
1
0
/
0
9
/
2
0
1
3
1
6
/
0
9
/
2
0
1
3
0
3
/
1
0
/
2
0
1
3
2
3
/
1
0
/
2
0
1
3
Dr HN Manzini ü ü ü ü ü ü ü ü ü ü ü X
Ms NE Kela ü ü ü ü ü ü ü X ü ü ü ü
Ms NG Mthethwa ü ü ü ü ü ü ü ü ü ü ü ü
Mr MS Patel ü ü ü ü ü ü ü ü ü ü ü ü
Ms KP Simelane ü ü ü ü X ü ü ü ü ü ü X
Mr RV Sishuba ü ü ü ü ü ü ü ü ü ü ü ü
Mr S Gounden
1
- - - - - - - - - - - -
Mr PT Mageza
1
- - - - - - - - - - - -
Ms SP Mothelesi
1
- - - - - - - - - - - -
Mr SJ Ngubane
1
- - - - - - - - - - - -
Mr G Mothema
2
X ü ü ü - - - - - - - -
Mr CJ Hlekane ü - ü ü ü ü ü ü ü ü ü X
Ms K Mzozoyana X - X ü ü ü ü ü ü ü ü ü
Mr S Adam X - ü ü ü ü ü ü ü ü ü ü
Mr B Yafele
3
- - - - ü ü ü ü ü ü X ü
N
A
M
E
2
8
/
1
0
/
2
0
1
3
2
7
/
1
1
/
2
0
1
3
0
9
/
1
2
/
2
0
1
3
1
8
/
1
2
/
2
0
1
3
1
3
/
0
1
/
2
0
1
4
2
9
/
0
1
/
2
0
1
4
1
9
/
0
2
/
2
0
1
4
1
2
/
0
3
/
2
0
1
4
2
5
/
0
3
/
2
0
1
4
2
6
/
0
3
/
2
0
1
4
T
O
T
A
L
Dr HN Manzini ü ü ü ü ü ü ü ü ü ü 21
Ms NE Kela ü ü ü ü ü ü ü ü X ü 20
Ms NG Mthethwa ü ü ü ü ü ü ü X ü ü 21
Mr MS Patel ü ü ü ü ü ü ü ü ü ü 22
Ms KP Simelane ü X ü ü ü ü ü ü ü ü 19
Mr RV Sishuba ü ü ü ü ü ü ü ü ü ü 22
Mr S Gounden
1
- - - ü ü ü ü ü ü ü 7
Mr PT Mageza
1
- - - ü ü ü ü ü ü ü 7
Ms SP Mothelesi
1
- - - ü ü ü ü ü ü ü 7
Mr SJ Ngubane
1
- - - ü ü ü ü ü X ü 6
Mr G Mothema
2
- - - - - - - - - - 3
Mr CJ Hlekane ü X ü ü ü ü ü ü X ü 18
Ms K Mzozoyana ü ü ü ü X ü ü ü X ü 17
Mr S Adam ü ü ü ü ü ü ü ü X ü 19
Mr B Yafele
3
ü - - - - - - - - - 8
34
South African Post Of?ce SOC Limited (Registration number 1991/005477/06)
Integrated Report 2014
Committtees of the board
Audit Committee
The SAPO Audit committee was established in terms of Companies Act No. 71 of 2008 (as amended) and the Public
Finance Management Act as amended and relevant Treasury Regulations and in accordance with section 19.1.1.3 of the
SAPO MOI. As a major public entity in terms of Schedule 2 of the PFMA and the Company’s Act, SAPO is required to,
establish an Audit Committee. The Audit Committee is responsible for, evaluating the Group’s ?nancial statements which
will be provided to Parliament and other stakeholders, the systems of internal control which management and the Board
have established, the audit processes, the risk management framework and assesses the Group’s ?nancial performance
against its Corporate Plan. Representatives of external and internal audit have direct access to the Chairperson of the
Committee.
The Audit Committee meets at least four times a year.
Chairperson (Non-Executive):
Mr H Daniels
1
Mr S Gounden
2 7
Members:
Ms KP Simelane
3 6
Mr MS Patel
7
Mr RV Sishuba
4 5
Mr PT Mageza
3 7
Attendance at Audit Committee meetings for the year 1 April 2013 to 31 March 2014
NAME 30/05/2013
*
19/07/2013 11/10/2013 19/11/2013
21/02/2014 05/03/2014
TOTAL
Mr H Daniels
1
ü ü ü ü - - 4
Mr S Gounden
2 7
- - - - ü ü 2
Mr PT Mageza
2 7
- - - - ü ü 2
Mr MS Patel
7
- ü ü ü ü ü 5
Ms KP Simelane*
6
ü - - - ü ü 3
Mr RV Sishuba
4 5
ü X ü ü - - 4
Legend ü = Present
X = Absent with apology
1 = Retired 29 January 2014
2 = Appointed as Chairperson 29 January 2014
3 = Appointed 29 January 2014
4 = Retired 29 January 2014
5 = Retired from the Board 23 October 2014
6 = Retired from the Board 22 October 2014
7 = Retired from the Board 7 November 2014
- = Not a member of the Committee
35
South African Post Of?ce SOC Limited (Registration number 1991/005477/06)
Integrated Report 2014
Risk Management Committee
The SAPO Risk Management Committee was established in terms of section 51 (1) (a) (i) of the Public Finance
Management Act No. 1 of 1999 as amended. The committee monitors, evaluates and advises the Board on the adequacy
of risk management processes and strategies within the Group and recommends the approval of risk policies to the Board.
It further reviews signi?cant risks facing the company and reports these to the Board. The scope of the Risk Management
Committee extends across the Company to include the subsidiary companies whose products and processes expose
the Group to Credit Risk, Liquidity Risk, Market Risk, Balance Sheet Risk and Operational Risk within the legislative and
regulatory framework that governs the SAPO Group. Representatives of Group Risk Management, Internal Audit, the
Security and Investigations division and all core Business Units attend all meetings of the Committee. The committee
meets four times a year.
Chairperson (Non-Executive):
Mr PT Mageza
2 8
Mr RV Sishuba
3 6
Members:
Mr S Gounden
2 8
Mr SJ Ngubane
2 8
Ms NG Mthethwa
2 6
Mr H Daniels
1
Mr MS Patel
4* 8
Attendance at risk Management Committee meetings for the year 1 April 2013 to 31 March 2014
NAME 12/04/2013 30/07/2013 01/11/2013 06/03/2014 TOTAL
Mr PT Mageza
2 8
- - - X 0
Mr RV Sishuba
6
ü ü ü - 3
Mr S Gounden
2 8
- - - ü 1
Mr SJ Ngubane
2 8
- - - ü 1
Ms NG Mthethwa
2 6
- - - ü 1
Mr H Daniels
1
ü ü ü - 3
Mr MS Patel
4* 8
- ü ü - 2
Ms KP Simelane
5 7
ü - - - 1
Legend ü = Present
X = Absent with apology
1 = Retired 29 January 2014
2 = Appointed 29 January 2014
3 = Retired 29 January 2014
4 = Appointed 30 July 2013
5 = Attendance by invitation
6 = Retired from the Board 23 October 2014
7 = Retired from the Board 22 October 2014
8 = Retired from the Board 7 November 2014
* = Retired 29 January 2014
- = Not a member of the Committee
36
South African Post Of?ce SOC Limited (Registration number 1991/005477/06)
Integrated Report 2014
Human Resources, Remuneration and Performance Management Committee
The Human Resources Remuneration and Performance Management Committee was established in accordance with
the Company’s Memorandum of Incorporation. The committee reviews all aspects relating to human resources and
remuneration within the Group. It also monitors compliance with relevant labour and employment legislative matters and
recommends approval of signi?cant human resources related policies to the Board. This committee’s mandate includes
remuneration and performance management issues. The committee meets at least four times a year.
Chairperson (Non-Executive):
Ms NE Kela
5
Members:
Dr HN Manzini
1 5
Ms NG Mthethwa
3
Ms KP Simelane
4
Mr PT Mageza
2 5
Attendance at Human Resources, Remuneration and Performance Management Committee meetings for the year
1 April 2013 to 31 March 2014
NAME
14/05/
2013*
04/06/
2013
25/06/
2013
04/09/
2013
06/11/
2013*
07/03/
2014
10/03/
2014
TOTAL
Ms NE Kela
5
ü ü ü ü ü ü ü 7
Mr PT Mageza
1 5
- - - - - ü ü 2
Ms NG Mthethwa
3
ü ü ü ü X ü ü 6
Ms KP Simelane
4
ü ü ü ü ü ü ü 7
Dr HN Manzini
5
X ü X ü X - - 2
Legend ü = Present
X = Absent with apology
1 = Retired 27 June 2013
2 = Appointed 29 January 2014
3 = Retired from the Board 23 October 2014
4 = Retired from the Board 23 October 2014
5 = Retired from the Board 7 November 2014
- = Not a member of the Committee
37
South African Post Of?ce SOC Limited (Registration number 1991/005477/06)
Integrated Report 2014
Postbank Committee
The Postbank Committee was established with an oversight role over the Postbank to ensure that the Postbank operates
within all the applicable legislation, monitors the performance of the investment portfolio of depositors’ funds as well as
ensuring that these funds are invested appropriately. It also recommends the approval of ledger fees and bank charges to
the Board. The committee meets four times a year. The Postbank Act which came into operation in late 2010, now provides
for the establishment of a Board of Directors for the Postbank when it starts operating as a licensed bank.
Chairperson (Non-Executive):
Ms SP Mothelesi
1 5
Ms NG Mthethwa
2 3
Members:
Dr HN Manzini
2 5
Mr SJ Ngubane
1 5
Mr RV Sishuba
3
Mr S Adam [Acting MD: Postbank]
4
Attendance at Postbank Committee meetings for the year 1 April 2013 To 31 March 2014
NAME 09/05/2013 15/09/2013 18/02/2014 TOTAL
Ms NG Mthethwa
3
ü ü - 2
Dr HN Manzini
5
ü X - 1
Ms SP Mothelesi
1 5
- - ü 1
Mr SJ Ngubane
1 5
- - ü 1
Mr RV Sishuba
3
- - ü 1
Mr S Adam
4
ü ü X 2
Legend ü = Present
X = Absent with apology
1 = Appointed 29 January 2014
2 = Retired 27 June 2013
3 = Retired from the Board 23 October 2014
4 = Retired from the Board 15 October 2014
5 = Retired from the Board 7 November 2014
- = Not a member of the Committee
38
South African Post Of?ce SOC Limited (Registration number 1991/005477/06)
Integrated Report 2014
IT Governance Committee
The committee is responsible for overseeing on behalf of the Board, the execution of IT governance across the Group. The
committee reports to the Board and is responsible for the governance of IT across the Group, which includes monitoring
and reviewing IT policies and practices to ensure that the required IT support is provided and that IT is positioned as a key
enabler for business. The Group CEO, the CIO and relevant representatives from management attend meetings of the
committee. The committee meets at least four times a year.
Chairperson (Non-Executive):
Mr SJ Ngubane
2 7
Mr N Ndhlela
1

Members:
Mr MS Patel
3 7
Mr RV Sishuba
5
Ms S Mothelesi
2 7
Ms KP Simelane
4 6
Attendance at IT Governance Committee meetings for the year 1 April 2013 to 31 March 2014
NAME 09/04/ 2013 15/05/ 2013 27/06/ 2013 05/09/ 2013 01/10/ 2013 18/03/ 2014 TOTAL
Mr N Ndhlela
1
ü ü ü ü ü - 5
Mr RV Sishuba
5
X ü ü ü ü ü 5
Mr MS Patel
3 7
ü ü ü - - - 3
Ms KP Simelane
4 6
- - - ü ü - 2
Mr SJ Ngubane
2 7
- - - - - ü 1
Ms S Mothelesi
2 7
- - - - - ü 1
Legend ü = Present
X = Absent with apology
1 = Retired as Independent Chairperson 19 December 2013
2 = Appointed 29 January 2014
3 = Retired 30 July 2013
4 = Retired 29 January 2014
5 = Retired from the Board 23 October 2014
6 = Retired from the Board 22 October 2014
7 = Retired from the Board 7 November 2014
- = Not a member of the Committee
39
South African Post Of?ce SOC Limited (Registration number 1991/005477/06)
Integrated Report 2014
Social, Ethics and Transformation Committee
The committee was established to monitor the Group’s socio-economic development and transformation activities,
its adherence to generally accepted ethics standards, and to ensure it is seen as a good corporate citizen through its
strategies to combat corruption, protect the environment, and labour and employment practices. The Group CEO and key
representatives from management attend meetings of the committee. The committee meets at least four times a year.
Chairperson (Non-Executive):
Mr MS Patel
4
Members:
Mr S Gounden
1 4
Ms NE Kela
4
Ms KP Simelane
2 3
Attendance at Social, Ethics and Transformation Committee meetings for the year 1 April 2013 to 31 March 2014
NAME 31/05/ 2013 28/09/ 2013 18/10/ 2013 25/02/ 2014 TOTAL
Mr MS Patel
4
ü ü ü ü 4
Ms NE Kela
4
- X X ü 1
Ms KP Simelane
3
ü ü ü - 3
Mr S Gounden
1 4
- - - ü 1
Legend ü = Present
X = Absent with apology
1 = Appointment 17 December 2013
2 = Retired 29 January 2014
3 = Retired from the Board 23 October 2014
4 = Retired from the Board 7 November 2014
- = Not a member of the Committee
40
South African Post Of?ce SOC Limited (Registration number 1991/005477/06)
Integrated Report 2014
Subsidiary Companies
The Courier and Freight Group
The Courier and Freight Group (CFG) is an operating subsidiary company of the South African Post Of?ce. CFG has its own
Board of Directors which is accountable to the SAPO Group which is the sole shareholder. The company provides courier
services which range from overnight to seventy two hour delivery, as well as express freight for consignments ranging
from twenty kilograms up to thirty tons. The Board of Directors of CFG comprises of non-executive directors appointed by
the SAPO Group Board including independent non-executive directors with expertise in the courier and freight industry.
Board Composition
Chairperson (Non-Executive):
Ms NG Mthethwa
6 7
Members
Ms NE Kela
5 8
Dr HN Manzini
4 8
Mr MS Patel
8
Mr CJ Hlekane
Ms K Mzozoyana
Mr JM Mathibe
3
Mr H Daniels
1
Mr B Yafele
2
Attendance at the Courier and Freight Group Board Meetings for the year 1 April 2013 to 31 March 2014
NAME
1
0
/
0
4
/
2
0
1
3
2
3
/
0
5
/
2
0
1
3
0
5
/
0
6
/
2
0
1
3

*
1
3
/
0
6
/
2
0
1
3
1
8
/
0
7
/
2
0
1
3
1
1
/
0
9
/
2
0
1
3
1
6
/
0
9
/
2
0
1
3
2
5
/
1
1
/
2
0
1
3
2
6
/
0
2
/
2
0
1
4
2
0
/
0
3
/
2
0
1
4
TOTAL
Ms NG Mthethwa
7
- - - - - - - ü ü ü 3
Ms NE Kela
5 8
- - - - ü ü ü ü - - 4
Dr HN Manzini
8
ü ü * ü - - - - - - 3
Mr MS Patel
8
ü ü ü ü ü ü ü ü ü ü 10
Mr CJ Hlekane ü X X ü X ü ü X X X 4
Ms K Mzozoyana X ü ü ü ü X ü ü ü ü 8
Mr JM Mathibe
3
ü ü * ü ü ü ü ü ü ü 9
Mr H Daniels
1
- ü * ü ü ü ü ü - - 6
Mr B Yafele
2
- ü ü ü ü ü ü X - - 6
Legend ü = Present
X = Absent with apology
1 = By Invitation, Retired 22 April 2014
2 = Retired 14 November 2013
3 = Managing Director
4 = Retired as Chairperson 27 June 2013
5 = Appointed as Chairperson 27 June 2013 to 25 November 2013
6 = Appointed as Chairperson 29 January 2014
7 = Retired from the Board 23 October 2014
8 = Retired from the Board 7 November 2014
* = Telecon at NCC
- = Not a member of the Committee
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South African Post Of?ce SOC Limited (Registration number 1991/005477/06)
Integrated Report 2014
Document Exchange Group (Docex) Board
The Document and Exchange Group (DOCEX) is an operating subsidiary company of the South African Post Of?ce. DOCEX
has its own Board of Directors which is accountable to the SAPO Group which is the sole shareholder. The company
provides a secure and expeditious delivery of documents, letters and parcels or postal articles within the country. The Board
of Directors of DOCEX comprises of non-executive directors appointed by the SAPO Group Board including independent
non-executive directors with expertise in the courier and freight industry.
Board Composition
Chairperson (Non-Executive):
Mr RV Sishuba
3
Members
Ms KP Simelane
1 4
Ms NG Mthethwa
3
Mr JM Mathibe
2
Mr CJ Hlekane
Ms K Mzozoyana
Attendance at the Document Exchange Group Board meetings for the year 1 April 2013 to 31 March 2014
NAME 17/07/2013 12/09/2013 16/09/2013 03/12/2013 26/02/2014 TOTAL
Mr RV Sishuba
3
ü ü ü ü ü 5
Ms NE Kela
5
ü X ü ü ü 4
Ms NG Mthethwa
3
ü X ü ü ü 4
Ms KP Simelane
1
ü - - - - 1
Mr CJ Hlekane X ü ü ü X 3
Ms K Mzozoyana ü ü ü ü ü 5
Mr JM Mathibe
2
ü ü ü ü ü 5
Legend ü = Present
X = Absent with apology
1 = Retired 30 July 2013
2 = Managing Director
3 = Retired from the Board 23 October 2014
4 = Retired from the Board 22 October 2014
5 = Retired from the Board 7 November 2014
- = Not a member of the Board
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South African Post Of?ce SOC Limited (Registration number 1991/005477/06)
Integrated Report 2014
Chairperson’s Committee
The Chairperson’s Committee was initially established in accordance with Article 15.1.2 of the SAPO Articles of Association.
The Chairperson’s Committee is tasked with giving detailed attention to areas of the Board’s duties and responsibilities
by way of a more comprehensive evaluation of speci?c issues in relation to cross-cutting issues of the Group. The main
responsibility of the Chairperson’s Committee is to enhance good corporate governance within the Group and to deal with
any other matters in between Board meetings. It is made up of the appointed chairpersons of all the committees of the
Board and is chaired by the Chairperson of the Board. The committee meets at least four times a year. The committee has
subsequently been disbanded by the Board in January 2014.
Chairperson (Non-Executive):
Dr HN Manzini
Members:
Ms NE Kela
5
Dr HN Manzini
5
Ms NG Mthethwa
3
Mr MS Patel
5
Ms KP Simelane
4
Mr RV Sishuba
3
Mr H Daniels
1
Mr N Ndhlela
2
Mr CJ Hlekane
Attendance at Chairperson’s Committee meetings for the year 1 April 2013 to 31 March 2014
NAME 26/06/2013 25/09/2013 20/11/2013 TOTAL
Dr HN Manzini
5
ü ü ü 3
Ms NE Kela
5
ü ü ü 3
Ms NG Mthethwa
3
ü ü X 2
Mr MS Patel
5
ü ü ü 3
Ms KP Simelane
4
ü ü ü 3
Mr RV Sishuba
3
ü ü ü 3
Mr CJ Hlekane ü ü X 2
Mr H Daniels
1
ü ü ü 3
Mr N Ndhlela
2
ü ü ü 3
Legend ü = Present
X = Absent with apology
1 = Retired 22 April 2014
2 = Retired 19 December 2013
3 = Retired from the Board 23 October 2014
4 = Retired from the Board 22 October 2014
5 = Retired from the Board 7 November 2014
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South African Post Of?ce SOC Limited (Registration number 1991/005477/06)
Integrated Report 2014
Logistics Audit and Risk Sub-Committee
A Logistics Audit Committee was established as a sub-committee of the Group Audit Committee. The sub-committee
acts in accordance with the Public Finance Management Act and reports to the Group Audit Committee. It evaluates the
?nancial statements for the DOCEX and CFG Groups which are submitted to the Group Holding Board for approval and
for inclusion in the Group’s annual report. The composition of the sub-committee comprises of representatives from the
two subsidiary Boards as well as representatives from both internal and external audit. The committee meets at least four
times a year. The committee has subsequently been disbanded by the Board on 22 April 2014.
Logistic Audit Committee
Chairperson (Non-Executive):
Mr H Daniels
Members:
Ms NG Mthethwa
2
Mr RV Sishuba
2
Ms K Mzozoyana
Attendance at the Logistics Audit Committee meetings for the year 1 April 2013 to 31 March 2014
NAME 09/07/2013 10/10/2013 19/11/2013 TOTAL
Mr H Daniels
1
ü ü ü
3
Ms NG Mthethwa
2
ü ü
X
2
Mr RV Sishuba
2
ü ü ü
3
Legend ü = Present
X = Absent with apology
1 = Retirement 22 April 2014
2 = Retired from the Board 23 October 2014
44
South African Post Of?ce SOC Limited (Registration number 1991/005477/06)
Integrated Report 2014
Board Procurement Task Team
The Board Procurement Task Team was established in terms of the SA Post Of?ce Association. The Procurement Task
Team was appointed by the Board to oversee on behalf of the Chairperson’s Committee and the Board, the Company’s
procurement policies and practices to ensure that the operation policies and procedures relating to procurement are
recognised as “best practice” that all tenders are conducted in a fair and ethical manner. The Task Team has subsequently
been disbanded by the Board on 29 January 2014.
Chairperson (Non-Executive):
Ms NG Mthethwa
2
Members:
Dr HN Manzini
3
Mr RV Sishuba
2
Mr N Ndhlela
1
Attendance at the Board Procurement Task Teams meetings for the year 1 April 2013 to 31 March 2014
NAME 24/05/2013 06/06/2013 06/09/2013 07/11/2013 TOTAL
Ms NG Mthethwa
2
ü ü ü ü 4
Dr HN Manzini
3
X ü ü X 2
Mr RV Sishuba
2
ü ü ü ü 4
Mr N Ndhlela
1
ü ü ü X 3
Legend ü = Present
X = Absent with apology
1 = Retirement 19 December 2013
2 = Retired from the Board 23 October 2014
3 = Retired from the Board 7 November 2014
45
South African Post Of?ce SOC Limited (Registration number 1991/005477/06)
Integrated Report 2014
Audit and Assurance
Internal control is a framework designed to provide reasonable assurance on the achievement of organisational objectives.
The system of internal control, which is embedded in all key operations, provides reasonable rather than absolute assurance
that the Group’s strategic objectives will be achieved. The Board has overall responsibility for internal control.
Management prepares the Group’s ?nancial statements and the auditors examine the underlying accounting assumptions,
principles and procedures management has adopted, with Board approval. To make the comparisons required by an audit,
the auditor must examine not only the ?nancial statements, but the records on which they have been based and the
company’s system of internal controls, including internal audit.
Executive management, as mandated by the Board, has established an organisation-wide system of internal control to
manage signi?cant risks. There is ongoing monitoring and reporting processes by Business Unit (BU) heads to provide
feedback on the status of internal controls.
The Board also receives assurance from the Audit Committee, which derives some of the information from regular internal
and external audit reports.
Internal Audit
The purpose, authority and responsibility of Group Internal Audit are de?ned in a Board-approved charter that is consistent
with the Institute of Internal Auditors de?nition of internal auditing and the principles of King III. Although not reliant on
external audit for any resource support, the internal audit function continues to liaise with the external auditors and other
relevant assurance providers to maximise ef?ciencies in assurance coverage and risks.
The primary scope in providing assurance includes:
• Evaluating the reliability and integrity of information and the means used to identify, measure, classify and report
such information
• Evaluating the systems established to ensure compliance with policies and procedures, plans and legislation that
could be signi?cant to the Group
• Evaluating the means of safeguarding assets and, as appropriate, verifying the existence of such assets
• Evaluating the effectiveness and effciency with which resources are employed
• Evaluating operations or programmes to ensure results are consistent with established objectives and goals and
whether the operations are being carried out as planned
• Monitoring and evaluating governance processes
• Monitoring and evaluating the risk management process
• The assurance mandate is informed by the risk-based audit coverage plan, which is approved annually by the Audit
Committee
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Integrated Report 2014
Risk and Compliance
Risk management
The Board acknowledges the legislative requirements that de?ne and direct the risk management responsibilities of the
Board, executive management, management and employees as in the PFMA (Act 1 of 1999 as amended by Act 29 of
1999 - PFMA) and King III.
The Group’s risk management methodology has been formalised and aligned to Paragraph 14 of National Treasure (NT)
Practice Note 4 of 2009/10 issued in terms of section 52 of the PFMA and King III principles. The Board, through the
risk management policy and framework, has accepted accountability for risk management across the Group and has
additionally established risk governance structures, eg Board committees and other management structures, to monitor
risk and compliance levels in the organisation.
The risk management policy and framework aims to ensure the deployment of a common and systematic risk management
operating standard in accordance with international best practices across all operational activities within the Group. This
will ensure appropriate management of risks, enhance sound corporate governance and effect regulatory compliance,
strategic management, leadership ef?ciency and performance.
The Board requires management to reinforce effective control measures, continuous improvement strategies and
compliance.
All Group executives, Business Units and Support Units’ heads and management at all levels have been mandated and are
required to develop, implement and maintain risk management plans for their areas of responsibility and accountability to:
• Achieve an optimal and cost effective balance between risk exposure and risk mitigation
• Monitor and maintain sound business operating environments to ensure that these remain within the operational
risk appetite
• Enhance management decisions on newly identifed risks
• Reinforce effective control measures, continuous improvement strategies and compliance
As an SOC, the Group also has a risk management plan that is aligned to King III and the ISO 31000 requirements and is,
inter alia, directed at:
• The systematic identifcation and documenting of key risks that may impact negatively on the ability to achieve the
strategic objectives
• The identifcation of relevant control failures
• The identifcation and implementation of risk mitigation strategies
• Providing timely information to all stakeholders to enhance the decision-making process
• Safeguarding the Group’s resources against loss due to fraud, misuse, damage, and fruitless and wasteful
expenditure
• Safeguarding the availability, confdentiality and integrity of information systems
• Ensuring conformance to applicable legislation, regulations, policies, procedures and operating standards
• Enhancing policies and procedures for the management of operational risk, fnancial risk and treasury operations
• Ensuring compliance to the Group’s code of ethics
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Integrated Report 2014
The Board is responsible for the total risk management process within the Group and for overseeing the implementation
of internal controls to address signi?cant risks. The Board:
• Through its Risk Management Committee, oversees the Group’s risk management programme
• Conducted an annual risk assessment and review workshop to identify the current and emerging risks facing the
company and the relevant risk mitigation strategies to avert and manage the risks. Ad hoc assessments are also
performed, informed by emerging risks or changes in the corporate plan
• Has delegated to management the day-to-day responsibility to design, implement and monitor the risk management plan
• Has assigned responsibility for overseeing the implementation of the Group risk plan and the identifed risks to the
Group Chief Risk Of?cer, who is required to report to the Risk Management Committee on the steps being taken
to manage or mitigate risks
• Requires the various business and support units to submit their quarterly operational risk plans for review by the
Risk Management Committee
• Ensures that management reports on the implementation of the annual Group risk management plan are a standing
agenda item for the Risk Management Committee
Risk mitigation strategies for the Group’s strategic risks are directed at improving the control environment and at mitigating
aspects that impact negatively on the following:
• The ability to build and grow an effcient, sustainable business, which is well defned in its purpose and whose
purpose and services are well marketed and communicated
• The ability to ensure adequate investment in employees to build capability for the future
• The ability to align business operations to customer needs, shareholder priorities and government programmes;
• Improved stakeholder relations
• Appropriate procurement governance - failures and the impact on reputation across the procurement value chain
(project initiation, speci?cations, sourcing, contract management and supplier performance management)
• The ability to enhance adequate internal control and governance, streamlining processes and enhancing effcient
decision making
• The ability to renew and design the physical network (workplace infrastructure and systems) for the future, and
innovating new products and services
External insurance cover is a mechanism to mitigate operational risks and transfer some risks to third parties in the
insurance market to the extent considered appropriate and that, inter alia, include:
• Cover for damages to buildings and equipment
• Cover for business interruption
• Comprehensive cover for crime – including electronic crime
• Directors’ and offcers’ liability
• Public liability cover
• Cover for legal liability arising out of the use of non-owned aircraft
• Cover for liabilities or damages arising out of any activities of consultants, contractors, suppliers, vendors,
manufacturers or other advisers appointed by the company
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South African Post Of?ce SOC Limited (Registration number 1991/005477/06)
Integrated Report 2014
Group 2013/2014 risk register
The 2013/2014 strategic risk register for the Group has been approved by the Board and the following are the top key
strategic risks for the Group: contemporaneous
NO RISK INHERENT RISK CONTROL RATING RESIDUAL RISK
1 Revenue Growth Very High Weak Very High
2 IT Infrastructure Very High Weak Very High
3 Business Continuity Very High Satisfactory Very High
4 Employee Relations Very High Weak Very High
5 Cost Optimisation Very High Weak Very High
6 Property Infrastructure Very High Weak Very High
7 Regulator Expectations High Weak High
8 Leadership Continuity High Weak High
9 Employee Life Cycle High Weak High
10 Risk and Compliance High Satisfactory Moderate
11 Group Synergies High Satisfactory Moderate
12 Criminal Activities High Satisfactory Moderate
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South African Post Of?ce SOC Limited (Registration number 1991/005477/06)
Integrated Report 2014
Compliance
As a SOC and a Schedule 2 public entity, the SA Post Of?ce recognises compliance as an integral part of governance and
has established appropriate structures and processes to ensure adequate and effective compliance with statutes, rules
and codes.
The company has developed a legislative universe that incorporates crucial legislations that inherently impact the operations
of the Group. These legislative aspects are then deployed at business area level and entrenched through the development
and implementation of appropriate policies and procedures.
The legislative universe that holds the most signi?cant risk for the Group is the SA Post Of?ce license requirements of
ICASA and, inter alia, the following key legislation:
• PFMA, No. 1 of 1999 - Public Entities Schedule 2
• Postal Services Act, No. 124 of 1998
• Banks Act, No. 94 of 1990
• Companies Act 71 of 2008
• Consumer Protection Act, No. 68 of 2008
• Financial Advisory and Intermediary Services (FAIS) Act, No. 37 of 2002
• Financial Intelligence Centre Act (FICA), No. 38 of 2001
• Prevention and Combating of Corrupt Activities Act, No. 12 of 2004
• Prevention of Organised Crime Act, No. 121 of 1998
• Protection of Constitutional Democracy Against Terrorist and Related Activities Act, No. 33 of 2004
Monitoring of compliance is accomplished through independent assessments, and reporting is done regularly to business/
support unit management, the Group executive management, the Risk Management Committee and the Board.
The Risk Management Committee and the Group Compliance unit review the adequacy and effectiveness of the Group’s
procedures to ensure compliance with legal and regulatory responsibilities. The directors are provided with a comprehensive
overview of the Group’s compliance universe as part of their induction to enable them to understand the laws, rules and
codes of standards required by the company and its business.
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South African Post Of?ce SOC Limited (Registration number 1991/005477/06)
Integrated Report 2014
Social, Ethics and Transformation Committee Report
On 7 November 2014, all the non-executive members of the Board resigned and duly the board and all of its committees
dissolved. Dr Simo Lushaba was appointed as administrator in terms of Section 25 of the South African Post Of?ce Act
No 22 of 2011 (as amended). As at 31 March 2014, the Board (in compliance with King III) and all its committees were
active and functioning. The report below was compiled by the relevant committee members at 31 March 2014 (while still
appropriate) and has been accepted as fair and accurate by the Administrator who has signed the report as such.
The purpose of this report is to outline how the social and ethics committee has discharged its responsibilities as set out in
section 72 of the South African Companies Act No 71 of 2008, as amended and the recommendations of The King Report
on Corporate Governance 2011 (King III).
Composition
The current membership of the Committee comprises of three (3) non-executive directors, Ms Nomathemba Kela, Mr.
Sathie Gounden (from January 2014) and the Chairperson of the Committee, Mr. Shu’ayb Patel. Ms Getty Simelane was a
member of the committee until January 2014.
The Chief Executive Of?cer, Chief Operations Of?cer and Chief Financial Of?cer attend most of the committee’s meetings
and permanent invitees to the meetings include all business unit heads, the MD’s of the subsidiary companies and Post
Bank, as well as the Heads of Internal Audit, Human Capital, Risk, Supply Chain, Corporate Affairs, Sustainability and
Security and Investigations.
Mandate
During the year under review the Social and Ethics Committee’s mandate was expanded to include Transformation issues
hence the changed name.
The SAPO Group Social, Ethics and Transformation Committee of the Board is constituted in accordance with the
Companies Act requirement for the establishment of this Committee.
Terms of Reference
The Committee has conducted its affairs in accordance with its Terms of Reference, and discharged its responsibilities
contained therein.
The key areas of responsibility for the committee are:
• Social and economic development
• Empowerment and transformation
• Corporate citizenship
• Labour and employment
• Environment, health and public safety
• Ethics and code of conduct compliance
• Stakeholder relations
• Regulatory, statutory and legislative compliance
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South African Post Of?ce SOC Limited (Registration number 1991/005477/06)
Integrated Report 2014
Highlights of activities during the period under review
Ethics Survey
The SA Post Of?ce Ethics Committee commissioned the Ethics Institute of South Africa (Ethics SA) to conduct an ethics risk
assessment of the company, including developing an ethics management strategy. Performing an ethics risk assessment
is a key component of the process of ethics management of a company as recommended in the King III Report on
Governance for South Africa. Therefore, the ethics risk assessment complies with best practice recommendations, while
also providing a benchmark against which the company can compare its ethics risk pro?le in future.
Overview of Ethics Assessment Results
The ethics risk assessment of the SA Post Of?ce was undertaken between October and December 2013 with the
company’s employees, and it was intended at gauging their perceptions and expectations of the ethics of the company.
The ?ndings of the ethics risk assessment established both positive ethics risks and negative ethics risks for the company.
Positive ethics risks refer to the ethics achievements and opportunities that exist within the company. Negative ethic risks
refer to areas of ethical concerns that can possibly alienate internal and external stakeholders of the company, and that can
put the company at risk. The speci?c details of the ?ndings are summarized as follows:
Positive ethics risks
The risk assessment established that the participants are convinced that an ethical organisational culture will enhance the
reputation of the SA Post Of?ce. In addition, the assessment found that the SA Post Of?ce employees desire and support
a strong ethical culture in the organisation. Further, the assessment established that the SA Post Of?ce has made progress
in promoting its adopted ethical standards.
Negative Ethical Risks
The risk assessment also established areas of negative ethics risks for the SA Post Of?ce. Ethics SA clustered the
negative ethics risk areas for the company into several categories that include staff relations, human resources and human
resources practices, leadership examples, management approach, ethics management, customer relations, supplier
relations, safety and procurement practices.
Response and Mitigation Plans
In view of the aforementioned ?ndings, an Ethics Implementation Plan was developed and approved by the Board with the
sole objective of addressing the ethical de?ciencies emanating from the survey, as well as the enhancement of existing
ethics standards and practices. Further, the Plan was integrated with other initiatives currently underway within the SAPO
Group as part of comprehensive communication plans being rolled out during the 2014/15 ?nancial year. It is the intention
to re-assess the impact of these plans on Ethics in the company by doing a follow up assessment in about 18 months’
time.
Additional Ethics Measures
Through the counsel of the Social, Ethics and Transformation Committee, some of the supplementary initiatives deployed
within the SAPO Group during the period under review included the promotion of the integration of ethics in all business
decision-making processes, as well as in the formulation and large scale review of especially HR, but also other policies
and procedures.
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South African Post Of?ce SOC Limited (Registration number 1991/005477/06)
Integrated Report 2014
Conclusion
The committee is of the view that the SA Post Of?ce group takes its environmental, social and governance responsibilities
seriously. Appropriate policies, plans and programmes are in place to contribute to social and economic development,
good corporate citizenship, environmental responsibility, fair labour practices and good relations with our customers.
No substantive non-compliance with legislation and regulation, or non-adherence with codes of best practice, relevant to
the areas within the committee’s mandate has been brought to its attention.
The other matters which are ancillary to the Committee’s Terms of Reference and scope of work are highlighted in the
rest of the Integrated Annual Report and more speci?cally under Sustainability, Corporate Citizenship and the Group Key
Performance Indicators.
Dr S Lushaba
(Administrator)
15 December 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
53
Operational Overview
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South African Post Of?ce SOC Limited (Registration number 1991/005477/06)
Integrated Report 2014
Operational Overview
Postbank
Postbank’s ?nancial performance for the year ended 31 March 2014 re?ected the impact of the low interest rate
environment, with net interest income increasing to R318 million from R306 million in the previous ?nancial year. Net fee
and commission income was R255 million as opposed to R273 million in 2013.
Postbank deposits increased by 5% from R4.492 billion in 2013 to R4.738 billion in this ?nancial year, driven by an increase
in the savings account balances and investments by the public. Cash and cash equivalents Investments increased 6% to
R6.589 billion (2013:R6.225 billion). The number of customer accounts increased to 7.5 million (2012: 7.2 million).
The Postbank Amendment Act 44 of 2013 was gazetted on 27 January 2014 con?icts between the amended Postbank Act
and the Banks Act.
Postbank submitted its section 12 banking license application to the South African Reserve Bank (SARB) on 25th
September 2013. The Postbank management continues to engage with SARB to assess the progress with regard to the
application. Three signi?cant areas that received attention in the corporatisation programme, included the ?nalisation of
the cooperation agreement, the ?nalisation of the Memorandum of Incorporation  for the new Postbank entity  and the
revitalised Postbank strategy. Postbank has commenced with the fourth and ?nal phase of the corporatisation programme,
namely the implementation phase. Postbank will continue to implement several signi?cant initiatives in order to meet the
requirements of the Banks Act, including implementing risk management systems and processes, enabling regulatory
reporting and hiring additional skilled banking staff.
Postbank is upgrading its core banking system which aims to replace a number of customisations by standard features and
will also provide a suitable platform to deliver varied products to customers across multiple channels. This new version will
also provide better security features with improved ?exibility and responsiveness to customer needs.  Implementation is
scheduled for 2014.
There is an on-going productive relationship with South African Banking Risk Information Centre (SABRIC), BankservAfrica,
FIC, VISA and PASA as non-bank members to share knowledge on industry trends and ensure alignment with the industry. 
From a regulatory perspective, the engagement and positive relationship with these institutions ensures that Postbank
remains relevant and manages operational risks appropriately.
The notice that designates Postbank as a clearing system participant was amended by SARB and gazetted with effect
from 1 November 2013. The Postbank division of the South African Post Of?ce can now become an acquirer for ATM,
Online Business and Cards (which will be new sources of revenue). Postbank may apply to be a member of any card
scheme for it is no longer limited to VISA and it may
terminate participation in payments streams that are
not pro?table.
Postbank launched a new youth focused product
called Aspire which has shown positive growth since
its launch in December 2013. This is in line with the
revitalised Postbank strategy and refreshed customer
value propositions.
Regrettably, the growth in the depositors book has not
been achieved for this ?nancial year, this is largely due
to the unfavourable economic conditions and because
of this, household income remains under pressure.
The targets for non-interest revenue was not achieved
and this is largely due to the low volumes and internal
capabilities.
Postbank launched its Aspire Card, aimed at the youth
market, during the year under review.
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South African Post Of?ce SOC Limited (Registration number 1991/005477/06)
Integrated Report 2014
The synergy between Postbank and the Post Of?ce continues to favourably enhance the corporatisation proposition of
Postbank as a stand-alone subsidiary of the Post Of?ce. This is also in line with the Post Of?ce’s diversi?cation strategy, in
the face of the global phenomena of falling mail volumes and increasing competition in the ?nancial services industry from
non-traditional ?nancial services operators, such as, retail chains.
Postbank’s relationship with SEF develops entrepreneurship amongst rural women
With more than 1500 post of?ce outlets countrywide,
Postbank has the most extensive network of all banks. In
small towns such as Oranjeville (pictured) Postbank is the
only provider of ?nancial services
The Small Enterprise Foundation (SEF) is one of
Postbank’s major customers. It offers small loans to
groups of rural women for enterprise development.
Currently it prides itself on having 21 000 groups on
its books. These groups associated with the SEF, hold
group savings (Bakgotsi) accounts with Postbank. The
SEF is funded and guided by a Government agency for
small enterprises.
Alinah Rampedi is one of the successful members
from her group of women and is a member of the
Itsoseng Group in Mehlakong Centre near Mankweng,
a rural area in the Limpopo Province. It is situated
between Polokwane and Tzaneen and a distance from
major roads.
Alinah joined SEF in 1998 and received her ?rst loan
of R800 which she used to buy clothes for resale and
other goods. From the income generated she bought
a refrigerator which she used to store perishable
goods. She was granted a second loan of R1400 and
bought clothes and blankets for resale.
In 2003, she was granted her sixth loan for R5000.
Currently, she is in her ninth cycle with a loan amount
of R10,000. This loan was used to expand her spaza
shop and she has bought a pick-up truck for business
purposes.
Alinah is a mother of eight whose husband is unemployed. Her entire family now works with her in the business. As
a result of the success that she has enjoyed, she has built an eight-roomed house for her family and is determined to
continue her success in business.
Postbank cards are accepted at merchants
that accept Visa cards in all countries
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South African Post Of?ce SOC Limited (Registration number 1991/005477/06)
Integrated Report 2014
Mail Business
The core functions of Mail Business are the collection, processing and delivering of all mail items and parcels, within
timeframes, in good quality and cost effectively, as stipulated by the Regulator in the License Agreement.
High-speed sorting machines, such as this one in the
Tshwane Mail Centre, ensure that letters are sorted and
delivered in the shortest possible time
Mail Business continues to be the key revenue generator for the SA Post of?ce contributing 67%. The SA post of?ce
experienced the decline of around 4.3% in mail volumes, with revenue below budget by 0.3% down to prior year. The
effect of the strikes during the year was felt on most products with Bulkmail heavily affected.The impact of the four strikes
in 12 months played a very big role in missing the revenue budget and service delivery to customers.
A total of 1,197,254 addresses were rolled out, exceeding the annual address expansion target of 1,195,680 as one of the
key deliverables within the business unit. A total of 37,7% addresses were expanded in rural areas and 62,3% in urban
areas.
Containerisation and mechanisation at major mail centres reduce
missorts and improve delivery standards
The competitive environment is
becoming increasingly sophisticated
with constant changes in the manner
in which customers communicate as
well as the legal and regulatory
environment. In transforming the
business unit, strategic changes are
necessary to address key challenges
such as integration of operational
units and elimination of redundancies
in processing facilities.
The strategic planning for Mail
Business resolved to embark on
a systematic approach that will
immediately seek to grow the
business, improve on innovation and
embark on an exercise to deliver
value to our clients.
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South African Post Of?ce SOC Limited (Registration number 1991/005477/06)
Integrated Report 2014
Retail
The Retail division is the primary channel of the South African Post Of?ce through which customers can access the
products and services offered by the Company. The South African Post Of?ce branch network consists of 2,486 access
points, which makes it the largest footprint in the country.
Retail outlets – better known as the corner post of?ce – are
seen internally as hubs of postal and commercial activity.
In many cities they are also examples of exemplary
architecture. This is the Bloemfontein Post Of?ce.
In the year under review, a total number of 50 million
customers were served at various Post Of?ce outlets.
The service offering varies from Company owned
products and services to other services that the
Company is rendering on behalf of other entities,
including government and private companies. In some
provinces such as the Eastern Cape, Gauteng, Limpopo
and KwaZulu-Natal. motor vehicle licenses can be
renewed at most of the Post Of?ce outlets. A total of
3.4 million motor vehicle licenses were renewed at
Post Of?ce branches in the ?nancial year under review.
Residents are also able to pay their water and electricity
bills at many of the branches where agreements were
reached with the local municipalities to accept payments
on their behalf. The Post Of?ce also facilitates the
payment of monthly short term insurance premiums
for a number of insurance companies at its branches.
Improving access
The Mobile Post Of?ce concept has been developed as part of the Multi-Channel Strategy to render products and services
in remote rural areas where communities are vastly dispersed and it is not viable to establish fully ?edged branches. These
Mobile Post Of?ce units will follow a route and service different communities on for a speci?c period each day. The Mobile
Post Of?ces are also used for emergencies where branches are closed due to ?re, ?oods, etc. and also during upgrading
of branches. Each Mobile Post Of?ce is ?tted with two counters, an electrical power connection, a generator for back-
up power, is fully air conditioned with a wash basin, fridge and microwave oven. The mobile will render the full basket
of products and services on an on-line basis by means of 3G connectivity. A total of nine mobile post of?ces have been
obtained and is scheduled to be deployed during August 2014.
As part of the operating license condition, the South African Post Of?ce is required to establish 50 new access points
annually. Due to the high cost of erecting conventional bricks and mortar structures, the South African Post Of?ce is
looking at other cost effective means of providing access to commodities. The utilisation of mobile post of?ce units will not
only be cost effective but will enable the Post Of?ce to reach out to communities in the remote rural areas.
In the year under review, the Post Of?ce established 50 additional points of access and re-established 11 Retail Post Of?ce
Agencies. The additional points of access were made up of ?ve fully ?edged branches and 45 Retail Post Of?ce Agencies.
A total of 43 Post Of?ce buildings were renovated to improve the trading environment.
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Integrated Report 2014
Customer service excellence
The Retail Division embarked on a number of projects to improve customer service. A Customer Satisfaction Survey
Mystery Shopper and Mystery Caller Reviews commenced in November 2013 and was conducted at 165 branches of all
classi?cation, with the sample size of 11,297. The following issues were identi?ed as the most important aspects to receive
attention:
1. Staff Issues focusing on
• Staff shortages
• Staff attitude (friendly and courteous)
• Staff knowledge on products and services
2. Process Issues
• Queue length
• Parcel arrival noti?cation
3. Infrastructure Issues
• Inadequate signage
• System related issues
The Retail business unit continued with the reward and recognition programme to acknowledge individual employees and
branches that excelled in customer service. In the ?nancial year in review, 4,073 compliments were received for excellent
service from tellers and branches. The business unit also embarked on customer services excellence road shows. All
33 area of?ces in the seven Regions were visited, the focus was on Branch Managers and tellers regarding the impact
of Consumer Protection Act and ICASA compliance. All the concerns raised at the roadshows were summated and is
receiving the necessary attention. The customer service excellence road show will continue annually until the service
standards are met.
Customer complaints 2012/13 and 2013/14
All complaints that were received by the Post Of?ce were resolved within the stipulated timeframes. Some of the challenges
faced included IT systems down time (Postbank, motor vehicle license and the Webriposte point of sale system), lack of
availability of fax machines and photocopiers, disparate and obsolete pin pads and terminals (pin pads not working, debit
and credit card system), lack of chairs for the elderly and the lack of access ramps for the disabled. There are projects
underway to address sourcing equipment to capacitate the branches i.e the Multi-Function Devices Business Case is still
being completed to address the lack of functional fax and copies, Pin Pads speci?cations were completed and is still to be
presented to Procurement Committee on 10 July 2014 to resolve the card payments transactional issues.
Customer Complaints and Compliments Comparisons - March 2013 and March 2014
COMPLAINTS COMPLIMENTS
Description
YTD
March
2013
YTD
March
2014
(Nr)
Increase/
Decrease
(%)
Increase/
Decrease
Description
YTD
March
2013
YTD
March
2014
(Nr)
Increase/
Decrease
(%)
Increase/
Decrease
Complaints
Received
2 487 3 043 556 22% Compliments
Received
949 4 073 3 124 329%
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Integrated Report 2014
Regional Performance
COMPLAINTS COMPLIMENTS
Region
YTD
March
2013
YTD
March
2014
(Nr)
Increase/
Decrease
(%)
Increase/
Decrease
Region
YTD
March
2013
YTD
March
2014
(Nr)
Increase/
Decrease
(%)
Increase/
Decrease
Central 580 200 -380 -66% Central 353 86 -267 -76%
Eastern Cape 530 269 -261 -49% Eastern Cape 201 295 91 45%
KwaZulu-Natal 453 644 191 42% KwaZulu-Natal 139 2 090 1 951 1 404%
North Central 294 417 123 42% North Central 92 96 4 4%
North East 242 211 -31 -13% North East 74 309 235 318%
Western Cape 220 319 99 45% Western Cape 59 409 350 593%
Wits 168 983 815 485% Wits 28 788 760 2 714%
Total 2 487 3 043 556 22% Total 949 4 073 3 124 329%
0
500
1000
1500
2000
2500
3000
3500
0
1000
2000
3000
4000
4 500
1 500
2 500
3 500
500
March 2013
Complaints Received Compliments Received
March 2013
YTD March 2013 YTD March 2014
949 4 073
YTD March 2013 YTD March 2014
2 487
Complaints Received
3 043
Compliments Received
Business Partnership Initiatives
Employees in outlets who perform well receive recognition
at an annual event in each region. This event is highly
regarded by employees. This is the staff of the Phokeng
Post Of?ce, a tiny village in the Northwest Province.
In order to provide a wider range of services through
the branch network, Retail has in the year under
review, entered into service agreements with the
following service providers and companies:
• Avroy Shlain
• State Life Company
• Setsoto Municipality
• Assupol( New Product)
• Drakenstein Municipality
• 35 New Clients (for bulk motor vehicle license
renewals)
The partnership will enable the clients of these
companies to pay their accounts or premiums at their
nearest post of?ce.
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Integrated Report 2014
Logistics
The current economic climate and the competitive landscape remain a challenge for the overall business. The key business
interventions that were formulated are continuing and becoming more focused, in an effort to ?nd stability for our business,
given the persistent unstable environment we ?nd ourselves. This effort will place us in an enabling position for future
growth and will be instrumental in the delivery of our services and therefore the attainment of our goals.
The following are some of the key and relevant areas:
• The logistics business operations continue to run on an integrated platform to ensure the extraction of synergies
and the maximisation of the cost structures
• The transportation model was consolidated to optimise trips and therefore improve effciencies, not only for the
logistics unit but also the Group
• The implementation of the track and trace system is nearing completion. This will improve our service delivery and
remains a priority for ensuring we meet our customer needs
The creation of the e-platform is aimed at introducing e-products to the existing customers within the legal fraternity.
The Sales Executives continue to issue Digital Certi?cates to existing members. The Law Society of South Africa
(LSSA) pilot project has commenced and 11 Advanced Electronic signatures and signature applications have been
installed thus far. Products have already been piloted and ready for roll out.
The ageing infrastructure is a challenges but the proposal to recapitalise is already on the table. The roll out of this plan will
be prioritised in creating value for the business.
We have continued our partnership with various Government Departments in ful?lling the mandates during the ?nancial
year. The following are some of the projects and engagements that have been accomplished:
• CFG has successfully partnered with:
The Department of Education in Limpopo and delivered 6,3 million books to 3,975 schools between October 2013
and January 2014
The Department of Education in Northern Cape and delivered in excess of 900,000 books to 575 schools between
September 2013 and November 2013
KwaZulu-Natal (KZN) Department of Health (condoms distribution).
Government Communication and Information System (GCIS) SA Yearbook deliveries and booklets to schools.
The logistics business will continue to leverage on the existing relationships with Government and work towards enhancing
future work opportunities that may exist.
PX offers a highly secure containerisation service
During the year under review, the Logistics business unit
delivered the Limpopo province’s textbooks to schools
throughout the province. The project created temporary
employment for 250 local people and delivered 6 million
textbooks to 3,928 schools.
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
61
Sustainability
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Integrated Report 2014
Sustainability
Environmental sustainability
Material
The South African Post Of?ce utilises paper diversely for its services. Hybrid mail plays a major role in the consumption of
paper to print mail items for its clients and the utilisation of paper for documentation in the of?ce. The printers are set for
a default print of double sided pages which encourages the minimisation of paper usage.
Recycling Usage
537.89
230.44
172.17
617.39 618.08
249.45
2011/2012 2012/2013 2013/2014
Paper usage and recyling in tons
The paper recycling target for 2013/2014 was set at 95% of all used paper. A total of 139% was recycled.
The total revenue from the paper recycling amounted to R124,338.05 for the ?nancial year under review, compared to
R267,714.55 for the previous year. The recycled cartridges generated a total revenue of R23,460.00.
IMPROVEMENT
PRIORITY
TARGET 2012/2013 ACHIEVEMENT ACHIEVED/NOT
ACHIEVED
REMARKS
Improve sustainability
through recycling
 
 
Reduce the total
amount of paper used
by 2.5%
Paper usage was
reduced by 25.3%
Achieved Implementing duplex
printing reduced paper
consumption by half the
usual consumption
Recycle 95% of used
paper
139% of paper was
recycled*
Achieved Paper recycling is
ongoing in all regions
Recycle all cartridges 3273.78 kg No target set Cartridge recycling is
ongoing in all regions
* The amount of paper recycled is higher than 100% because other forms of paper such as magazines, newspaper and cardboard
were also recycled. These items are not listed as printing paper. when it is purchased.
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Integrated Report 2014
Air pollution
The Post Of?ce reports on emissions generated from our direct (scope 1) and indirect sources (scope 2). Scope 1 emissions
are emitted by the ?eet controlled by the company and scope 2 emissions are caused by electricity that the company
purchased. These ?gures exclude the Courier and Freight Group (CFG) and Speed Services because these are subsidiaries
and would fall under scope 3 (other indirect emissions)
SCOPE 1 2011/2012 2012/2013 2013/2014
CO2e (Ktons) 14,04 13,14 13,68
The total emissions generated by both scopes for 2013/2014 ?scal year is 57 KtCO
2
(kilotons of carbon dioxide). The
carbon-management target is set at reducing 2,5% of scope 1 emissions for the year under review. The Group’s carbon
emissions reduction target was not met.
For scope 2 emissions (indirect emissions), we reported on mail centres, data centres, depots and warehouses; the total
number of buildings reported on is 156. We emitted 43.3 KtCO
2
e as compared to a target of 67.4 KtCO
2
e that was emitted
in 2012/2013.
2011/2012 2012/2013 2013/2014
Energy (KWh) 53,620,406 75,695,227 47,432,965
CO2eq (tons) 48,985 69,152 43,333
Carbon offsetting compensates for the emissions generated by direct and indirect activities in the company. The target
for 2013/2014 was set at offsetting 10% of emissions from the prior year’s emissions. A total of 2,000 trees were planted
nationwide, offsetting a total of 5,4 KtCO
2
emissions. This has offset 7% against the set target of 10%.
Transport
The transportation of mail is an essential operation for the Post Of?ce that unfortunately impacts on the environment by
contributing to air pollution. In an effort to minimise the impact on the environment, the following initiatives have been
implemented by the Post Of?ce:
• An improved model of an electric scooter that is completing its trial phase within the Wits region
• A gas fuelled caddy was procured in 2013/2014 and is currently being used
• Continuing with leasing fuel-effcient vehicles by replacing petrol driven vehicles with diesel vehicles
SAPO ?eet indicators
INDICATOR UNIT 2011/2012 2012/2013 2013/2014
Total Vehicles No. 1,410 1,471 1,354
Petrol vehicles driven No. 989 839 637
Diesel Vehicles driven No. 469 648 717
Electric scooters No. 5 5 5
Gas Caddy No. 0 0 1
Total Road Distance Covered KM 44,752,141 45,345,971 43,996,238
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South African Post Of?ce SOC Limited (Registration number 1991/005477/06)
Integrated Report 2014
2,764,153.7
1,688,590
1,085,677
3,051,687
3,799,133.6
4,194,089
5,815,840.7
5,487,723.6
5,279,766
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
2011/2012 2012/2013 2013/2014
Total Petrol consumption L Total Diesel consumption L Total Fuel comsumption L
FUEL EFFICIENCY UNIT 2011/2012 2012/2013 2013/2014
Average Fuel consumption - Scooters L/100Km 4.42 4.08 4.02
Average Fuel consumption - Passenger Petrol L/100Km 7.74 7.38 7.23
Average Fuel consumption - Passenger Diesel L/100Km 11.09 10.46 13.1
Average Fuel consumption - Commercial Diesel L/100Km 11.16 10.58 10.39
Average Fuel consumption - Commercial Petrol L/100Km 12.77 12.15 11.68
Energy usage
The total energy consumption of the South African Post Of?ce Group for the ?nancial year 2013/2014 was tracked for 156
buildings (28 Mail centres, 2 Data centres, 81 depots, 3 Area of?ces and 3 Warehouses and 39 Retail outlets). The target
was to reduce the annual energy usage by 3%.
The results for the year under review were:
• The threshold set for 2013/2014 was 73,424,370 KWh; the actual energy consumed for the year under review is
47,432,965 KWh. This is captured from the actual bills.
Initiatives to reduce indirect energy consumption
The SA Post Of?ce has entered into Eskom’s light retro?t performance contracting and conducted a study on energy usage
of lights at the head of?ce building to decide on the feasibility of installing motion sensors.
Light Retro?tting
RETROFITTING PROJECT PROJECT STATUS
Northern Region (4x Mail centres) Complete
Wits (6 Mail Centres) & Johannesburg International Mail centre Complete
Kwa-Zulu Natal (3x Mail Centres) Complete
Central (3X Mail centres) Complete
Head Of?ce (Eco Point) Complete
• The light retroftting project had a monthly saving of 900,416 KWh and a total of 10,804,997 KWh for the year under
review.
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South African Post Of?ce SOC Limited (Registration number 1991/005477/06)
Integrated Report 2014
• The projected monetary savings as a result of light retroftting for 2013/14 is R921,045 and a total of R11,052,535
since 2011.
Lighting sensors
• For the year under review, a pilot study has been concluded at Silver Lakes retail outlet
• The feasibility study of installing sensors at Eco Point was fnalized.
Water usage
SA Post Of?ce aimed to reduce water usage by 3% from the previous year. In the year under review, a total of 112 buildings
were reported on and a decrease of 111,642 Kl was achieved.
2011/2012 2012/2013 2013/2014
Water usage (KL) 227,861 371,884 260,242
Implementation status of the company’s plans
GOAL ACTION IMPLEMENTATION STATUS
Measure the company’s carbon
emissions
Monthly tracking of the company’s
emissions generated from ?eet and
electricity purchased
A dashboard with all the relevant
information is compiled monthly together
with an environmental sustainability
report
Identify methods to reduce the
company’s carbon emissions
Testing of alternative fuels vehicles Testing and inclusion of electric vehicles
in the company’s ?eet.
Install renewable energy technologies
and Solar Photo-voltaic cells. (Solar PVs).
Teleconferencing will be used to reduce
emissions from travelling
Develop a carbon offset programme 2,000 trees were procured to be planted
nationwide
All 2,000 trees were planted
Fossil fuel consumption Fossil fuel consumption tracked on a
monthly basis
A dashboard with all the relevant
Green House Gas (GHG) is compiled
monthly together with an environmental
sustainability report
Participate in the carbon disclosure
project (CDP)
Annual participation in the CDP Co-sponsored the CDP and participated
fully in the CDP
Member of the International Post
Corporation (IPC)
Participate in the environmental
measuring and monitoring system
(EMMS) of the IPC
Disclosed on the EMMS and ranked 16
th

out of 23 postal services that participated
internationally
Baseline the company’s electricity
consumption
The electricity consumption baseline for
buildings (mail centres, data centres, area
of?ces and depots) is 2009/2010
The data for 156 buildings are being
reported on for their monthly usage and
the other buildings data is still being
collected to cover the entire organisation
Buildings electricity consumption Mail centres, Depots, Retail, Data
Centres, Of?ces and Warehouses
A monthly dashboard and report are
compiled to show the performance of the
buildings in energy consumption
Smart metering Smart meters that measure electricity
and water usage to be installed at the six
mail centres and Eco Point
The audit to determine the number
of meters required in each building is
completed
Identify initiatives to reduce electricity
consumption
Eskom Performance Contracting Project
for Lighting
The retro?tting commenced in April 2012
and was completed in the year under
review
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Integrated Report 2014
GOAL ACTION IMPLEMENTATION STATUS
Lighting sensors for of?ce blocks A study was conducted in March 2013 at
Eco-Point to identify the opportunity of
saving electricity by using sensors
The business case for piloting the light
sensors is under review and will be
?nalised in 2014/2015
Building water consumption Baseline water consumption from
2009/2010
The collection of data is being ?nalised
in order to conclude 2009/2010 as a
baseline for water usage in buildings
Introduce cartridge recycling Still ?nalising the national service provider
for recycling cartridges
Currently data on waste is collected and
reporting should be effective from this
?nancial year
Introduce an effective programme for
electronic waste
A service level agreement has been
concluded with service providers
Two out of six regions have started to
report on electronic waste
Introduce recycling programmes for other
recyclable items (plastic, cans, glass)
There is a national service agreement
to recycle other recyclable waste with
Nampak
The pilot phase for recycling other waste
is concluded. A business case for roll out
nationally is currently under review
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Integrated Report 2014
Corporate Citizenship
SA Post Of?ce in Communities
As a caring corporate citizen, the SA post of?ce believes that good citizenship is key to the SA Post Of?ce’s vision. With
more than 2  000 outlets, the SA Post Of?ce has one of the largest footprints in the country, therefore the company
is perfectly placed to make a meaningful difference in the lives of hundreds of people, especially in the rural areas.
Since 2011, the SA Post Of?ce has through partnerships with both the private and public sector been able to implement
programmes that have not only made a meaningful but also a sustainable difference to the lives of hundreds of people.
The SA Post Of?ce’s approach to corporate citizenship is not merely donating resources but actually getting involved in the
implementation of the programme and going the extra mile to ensure that these programmes are successful.
The investment areas
The SA Post Of?ce continues to focus its investment in women, young people, the disabled and people living with HIV and
AIDS with a bias towards people living in rural and peri- urban areas. The areas of investment are: digital inclusion, poverty
alleviation, environmental sustainability and HIV and AIDS.
Corporate Social Investment
In the year under review, the SA Post Of?ce continued the work it started in 2011 with its various partners and the
achievements have been signi?cant.
Student to Government Programme:
The purpose of this programme is to give unemployed graduates technology skills that will make them more employable
as well as enable them to assist local municipalities in rendering their services to the communities. By providing young
people with the appropriate skills and competencies and placing them in local municipalities, we are addressing the
challenges of training and unemployment among young people as well as the challenge of service delivery in the local
municipalities.
The year under review saw the beginning of phase two of this partnership with Microsoft SA and the South African Local
Government Association (SALGA) being rolled out in four provinces. Twenty four students participated in the programme,
completing their internships at 10 local municipalities in these provinces.
Over the two years, forty-eight students have participated in the programme. Twenty-eight of those students have now
secured employment, some permanent and others on contract. Twenty have been absorbed by municipalities, while
others got employment from government departments, parastatals and private companies.
In an effort to combat poor service delivery and an attempt to develop the youth, 22 local municipalities opened their doors
to allow these students to gain the appropriate experience. This resulted in better and more ef?cient service delivery to 112
towns, affecting the lives of approximately 3,127,040 citizens
Humana People to People:
The poverty alleviation programme in the community of Ribacross in Limpopo completed its third year and so far, more
than 8,000 community members have been reached. This ?nancial year has seen more than 600 people being trained
in computer skills, business management and sewing and gardening. These skills assist people to start their own small
businesses. Many of the women who participated in these programmes have gone on to employ other people in their
communities.
E-Rural Access Programme:
The E-Rural Access programme has been ?rmly established in the three villages in the Northern Cape and Limpopo.
Although the SA Post Of?ce’s ?nancial investment stopped in 2011, the company has been involved in providing training
for the community forum members. Unfortunately, these training sessions were unable to continue during the year
under review because the internet connectivity was stopped by the Department of Rural Development and Land Reform
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Integrated Report 2014
(DRDLR). The DRDLR has subsequently revamped these centres and re-established connectivity in March 2014, therefore
the training of these members can commence in the new ?nancial year.
Tree Planting:
The SA Post Of?ce has committed to offsetting 5% of its carbon emissions by planting 857 trees per year until 2012.
This project has continued into the 2013/2014 ?nancial period with the SA Post Of?ce planting 2,000 trees across the
country. Many of the regional of?ces have incorporated these tree planting activities into their employee volunteerism
schedules. The SA Post Of?ce continues to use these tree planting events to raise awareness about the importance of the
environment.
Employee Volunteerism:
Employee volunteerism is core to the corporate citizenship objectives of the SA Post Of?ce. The central message around
SA Post Of?ce’s corporate citizenship is “Delivering Change” and the staff follows this through by volunteering their
time, skills and resources in the communities. This ?nancial year has seen more than 25% of the staff volunteering in
communities and schools around the country.
The year ahead:
The year ahead will see the SA Post Of?ce forming new partnerships to grow our corporate social investment activities.
The SA Post Of?ce has partnered with Isibaya, a non-governmental organisation in the Eastern Cape to assist farmers in 55
villages to become economically active and commercially viable. Another exciting partnership has been established with
The Red Cap Foundation to bring ICTs to rural schools in Kwa Zulu Natal.
Student 2 Government Graduates
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Integrated Report 2014
SAPO Compliance Status against the Global Reporting Initiative (GRI) Framework
ECONOMIC
The economic dimension of sustainability concerns the organisation’s impact on the economic conditions of its stakeholders and on
economic systems at local, national and global levels.
Compliance Status
Aspect: Economic Performance
Fully
Comply
Partially
Comply
Do not
Comply
EC1
Direct economic value generated and distributed, including revenues, operating
costs, employee compensation, donations and other community investments,
retained earnings and payments to capital providers and governments.
x
EC2
Financial implications and other risks and opportunities for the organisation’s
activities due to climate change.
x
EC3 Coverage of the organisation’s plan obligations. x
EC4 Signi?cant ?nancial assistance received from government. x
Aspect: Market Presence
EC5
Range of ratios of standard entry level wage by gender compared to local minimum
wage at signi?cant locations of operation.
x
EC6
Policy, practices and proportion of spending on locally-based suppliers at signi?cant
locations of operation.
x
EC7
Procedures for local hiring and proportion of senior management hired from the local
community at locations of signi?cant operation.
x
Aspect: Indirect Economic Impacts
EC8
Development and impact of infrastructure investments and services provided
primarily for public bene?t through commercial, in-kind, or pro bono engagement.
x
EC9
Understanding and describing signi?cant indirect economic impacts, including the
extent of impacts.
x
Environmental
The environmental dimension of sustainability concerns an organisation’s impacts on living and non-living natural systems, including
ecosystems, land, air and water. Environmental Indicators cover performance related to inputs (e.g. material, energy, water) and
outputs (e.g. emissions, ef?uents, waste). In addition, they cover performance related to biodiversity, environmental compliance and
other relevant information such as environmental expenditure and the impacts of products and services.
Compliance Status
Aspect: Materials
Fully
Comply
Partially
Comply
Do not
Comply
EN1 Materials used by weight or volume. x
EN2 Percentage of materials used that are recycled input materials. x
Aspect: Energy
EN3 Direct energy consumption by primary energy source. x
EN4 Indirect energy consumption by primary source. x
EN5 Energy saved due to conservation and ef?ciency improvements. x
EN6
Initiatives to provide energy-ef?cient or renewable energy based products and
services and reductions in energy requirements as a result of these initiatives.
x
EN7 Initiatives to reduce indirect energy consumption and reductions achieved. x
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Integrated Report 2014
Aspect: Water
EN8 Total water withdrawal by source. x
EN9 Water sources signi?cantly affected by withdrawal of water. x
EN10 Percentage and total volume of water recycled and reused. x
Environmental
The environmental dimension of sustainability concerns an organisation’s impacts on living and non-living natural systems, including
ecosystems, land, air and water. Environmental Indicators cover performance related to inputs (e.g. material, energy, water) and
outputs (e.g. emissions, ef?uents, waste). In addition, they cover performance related to biodiversity, environmental compliance and
other relevant information such as environmental expenditure and the impacts of products and services.
Compliance Status
Aspect: Biodiversity
Fully
Comply
Partially
Comply
Do not
Comply
EN11
Location and size of land owned, leased, managed in, or adjacent to protected areas
and areas of high biodiversity value outside protected areas.
N/A
EN12
Description of signi?cant impacts of activities, products and services on biodiversity
in protected areas and areas of high biodiversity value outside protected areas.
N/A
EN13 Habitats protected or restored. N/A
EN14 Strategies, current actions and future plans for managing impacts on biodiversity. N/A
EN15
Number of IUCN Red List species and national conservation list species with
habitats in areas affected by operations, by level of extinction risk.
N/A
Aspect: Emissions, Ef?uents and Waste
EN16 Total direct and indirect greenhouse gas emissions by weight. x
EN17 Other relevant indirect greenhouse gas emissions by weight. x
EN18 Initiatives to reduce greenhouse gas emissions and reductions achieved. x
EN19 Emissions of ozone-depleting substances by weight. x
EN20 NO, SO and other signi?cant air emissions by type and weight. x
EN21 Total water discharge by quality and destination. N/A
EN22 Total weight of waste by type and disposal method. x
EN23 Total number and volume of signi?cant spills. x
EN24
Weight of transported, imported, exported, or treated waste deemed hazardous
under the terms of the Basel Convention Annex I, II, III and VIII and percentage of
transported waste shipped internationally.
x
EN25
Identity, size, protected status and biodiversity value of water bodies and related
habitats signi?cantly affected by the reporting organisation’s discharges of water and
runoff.
N/A
EN26
Initiatives to mitigate environmental impacts of products and services and extent of
impact mitigation.
x
EN27
Percentage of products sold and their packaging materials that are reclaimed by
category.
x
Aspect : Compliance
EN28
Monetary value of signi?cant ?nes and total number of non-monetary sanctions for
noncompliance with environmental laws and regulations.
N/A
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Integrated Report 2014
Aspect : Transport
EN29
Signi?cant environmental impacts of transporting products and other goods and
materials used for the organisation’s operations and transporting members of the
workforce.
N/A
Aspect : Overall
EN30 Total environmental protection expenditures and investments by type. N/A
Labour Practices and Decent Work
• The speci?c Aspects under the category of Labour Practices are based on internationally recognises universal standards,
including:
• United Nations Universal Declaration of Human Rights.
• United Nations Convention: International Covenant on Civil and Political Rights.
• United Nations Convention: International Covenant on Economic, Social and Cultural Rights.
• Convention on the Elimination of all Forms of Discrimination against Women (CEDAW).
• ILO Declaration on Fundamental Principles and Rights at Work (in particular the eight core Conventions of the ILO consisting of
Conventions 100, 111, 87, 98, 138, 182, 29, 105).
• The Vienna Declaration and Programme of Action.
Compliance Status
Aspect: Employment
Fully
Comply
Partially
Comply
Do not
Comply
LA1
Total workforce by employment type, employment contract and region, broken
down by gender.
x
LA2
Total number and rate of new employee hired and employee turnover by age group,
gender and region.
x
LA3
Bene?ts provided to full-time employees that are not provided to temporary or part-
time employees, by signi?cant locations of operation.
x
LA15 Return to work and retention rates after parental leave, by gender. x
Aspect: Labour/Management Relations
LA4 Percentage of employees covered by collective bargaining agreements. x
LA5
Minimum notice period(s) regarding operational changes, including whether it is
speci?ed in collective agreements.
x
Aspect: Occupational Health and Safety
LA6
Percentage of total workforce represented in formal joint management–worker
health and safety committees that help monitor and advise on occupational health
and safety programmes.
x
LA7
Rates of injury, occupational diseases, lost days and absenteeism and total number
of work-related fatalities, by region and by gender
x
LA8
Education, training, counselling, prevention and risk-control programmes in place to
assist workforce members, their families, or community members regarding serious
diseases.
x
LA9 Health and safety topics covered in formal agreements with trade unions. None
Aspect: Training and Education
LA10
Average hours of training per year per employee by gender and by employee
category.
x
LA11
Programmes for skills management and lifelong learning that support the continued
employability of employees and assist them in managing career endings.
x
LA12
Percentage of employees receiving regular performance and career development
reviews, by gender.
x
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Integrated Report 2014
Aspect: Diversity and Equal Opportunity
LA13
Composition of governance bodies and breakdown of employees per employee
category according to gender, age group, minority group membership and other
indicators of diversity.
x
Aspect: Equal Remuneration For Women And Men
LA14
Ratio of basic salary and remuneration of women to men by employee category, by
signi?cant locations of operation.
x
Human Rights
The International Legal Framework for Human Rights is comprised of a body of law made up of treaties, conventions, declarations
and other instruments. The corner stone of human rights is the International Bill of Rights which is informed by three instruments:
i) The Universal Declaration of Human Rights (1948)
ii) The International Covenant on Civil and Political Rights (1966)
iii) The International Covenant on Economic, Social and Cultural Rights (1966)
Organisations can affect a wide range of human rights. In assessing which human rights are relevant for reporting, an organisation
should consider all human rights. Some additional instruments which may be useful for a reporting organisation to re?ect upon are:
• ILO Declaration on Fundamental Principles and Rights at Work (1998) (which builds upon the eight core Conventions of the ILO
consisting of Conventions 100, 111, 87, 98, 138, 182, 29, 105)9
• The regional conventions, adhering to the principle of universality in the International Bill of Rights, for areas where the org
anization operates, including: the African Charter on Human and Peoples Rights (1981), the Arab Charter on Human Rights (1994),
the American Convention on Human Rights (1969), the European Convention on Human Rights (ECHR) (1950)
• Conventions protecting the rights of individuals who may be impacted by the organisation’s work, including but not limited
to the Convention on the Elimination of Discrimination Against Women (CEDAW) (1979), the Convention on the Rights of
the Child (1989), the International Convention on the Elimination of All Forms of Racial Discrimination (1966), ILO Convention
107 Indigenous and Tribal Populations Convention (1957), ILO Convention 169 Concerning Indigenous and Tribal Peoples in
Independent Countries (1991), UN Declaration on the Rights of Indigenous Peoples (2007) and Convention on the Rights of
Persons with Disabilities (2007)
Compliance Status
Aspect: Investment and Procurement Practices
Fully
Comply
Partially
Comply
Do not
Comply
HR1
Percentage and total number of signi?cant investment agreements and contracts
that include clauses incorporating human rights concerns, or that have undergone
human rights screening.
N/A
HR2
Percentage of signi?cant suppliers, contractors and other business partners that
have undergone human rights screening and actions taken.
N/A
HR3
Total hours of employee training on policies and procedures concerning aspects of
human rights that are relevant to operations, including the percentage of employees
trained.
N/A
Aspect: Non-discrimination
HR4 Total number of incidents of discrimination and corrective actions taken. x
Aspect: Freedom of Association and Collective Bargaining
HR5
Operations and signi?cant suppliers identi?ed in which the right to exercise freedom
of association and collective bargaining may be violated or at signi?cant risk and
actions taken to support these rights.
x
Aspect: Child Labour
HR6
Operations and signi?cant suppliers identi?ed as having signi?cant risk for incidents
of child labour and measures taken to contribute to the effective abolition of child
labour.
N/A
Aspect: Forced and Compulsory Labour
HR7
Operations and signi?cant suppliers identi?ed as having signi?cant risk for incidents
of forced or compulsory labour and measures to contribute to the elimination of all
forms of forced or compulsory labour.
N/A
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Integrated Report 2014
Aspect: Security Practices
HR8
Percentage of security personnel trained in the organisation’s policies or procedures
concerning aspects of human rights that are relevant to operations.
N/A
Aspect: Indigenous Rights
HR9
Total number of incidents of violations involving rights of indigenous people and
actions taken.
N/A
Aspect: Assessment
HR10
Percentage and total number of operations that have been subject to human rights
reviews and/or impact assessments.
- Ramps for alternatively abled persons
- Lowered counters for the alternatively abled persons
x
HR11
Number of grievances related to human rights ?led, addressed and resolved through
formal grievance mechanisms.
x
Society
Society Performance Indicators focus attention on the impacts organisations have on the local communities in which they operate
and disclosing how the risks that may arise from interactions with other social institutions are managed and mediated. In particular,
information is sought on the risks associated with bribery and corruption, undue in?uence in public policy-making and monopoly
practices.
Community members have individual rights based on:
• Universal Declaration of Human Rights
• International Covenant on Civil and Political Rights
• International Covenant on Economic, Social and Cultural Rights
• Declaration on the Right to Development
Compliance Status
Aspect: Local Communities
Fully
Comply
Partially
Comply
Do not
Comply
SO1
Percentage of operations with implemented local community engagement, impact
assessments and development Programmes.
x
SO9
Operations with signi?cant potential or actual negative impacts on local
communities.
N/A
SO10
Prevention and mitigation measures implemented in operations with signi?cant
potential or actual negative impacts on local communities.
N/A
Aspect: Corruption
SO2
Percentage and total number of business units analysed for risks related to
corruption.
x
SO3
Percentage of employees trained in organisation’s anti-corruption policies and
procedures.
x
SO4 Actions taken in response to incidents of corruption. x
Aspect : Public Policy
SO5 Public policy positions and participation in public policy development and lobbying. x
SO6
Total value of ?nancial and in-kind contributions to political parties, politicians and
related institutions by country.
x
Aspect: Anti-Competitive Behaviour
SO7
Total number of legal actions for anti-competitive behaviour, anti-trust and monopoly
practices and their outcomes.
x
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Integrated Report 2014
Aspect: Compliance
SO8
Monetary value of signi?cant ?nes and total number of non-monetary sanctions for
non-compliance with laws and regulations.
x
Product Responsibility
Product Responsibility Performance Indicators address the aspects of a reporting organisation’s products and services that directly
affect customers, namely, health and safety, information and labelling, marketing and privacy.

These aspects are chie?y covered through disclosure on internal procedures and the extent to which these procedures are not
complied with.
Compliance Status
Fully
Comply
Partially
Comply
Do not
Comply
Aspect: Customer Health and Safety
PR1
Life cycle stages in which health and safety impacts of products and services are
assessed for improvement and percentage of signi?cant products and services
categories subject to such procedures.
N/A
PR2
Total number of incidents of non-compliance with regulations and voluntary codes
concerning health and safety impacts of products and services during their life cycle,
by type of outcomes.
N/A
Aspect: Product and Service Labelling
PR3
Type of product and service information required by procedures and percentage of
signi?cant products and services subject to such information requirements.
N/A
PR4
Total number of incidents of non-compliance with regulations and voluntary codes
concerning product and service information and labelling, by type of outcomes.
N/A
Product Responsibility
Product Responsibility Performance Indicators address the aspects of a reporting organisation’s products and services that directly
affect customers, namely, health and safety, information and labelling, marketing and privacy.

These aspects are chie?y covered through disclosure on internal procedures and the extent to which these procedures are not
complied with.
Compliance Status
Fully
Comply
Partially
Comply
Do not
Comply
Aspect: Customer Health and Safety
PR5
Practices related to customer satisfaction, including results of surveys measuring
customer satisfaction.
x
Aspect : Marketing Communications
PR6
Programmes for adherence to laws, standards and voluntary codes related to
marketing communications, including advertising, promotion and sponsorship.
x
PR7
Total number of incidents of non-compliance with regulations and voluntary codes
concerning marketing communications, including advertising, promotion and
sponsorship by type of outcomes.
x
Aspect: Customer Privacy
PR8
Total number of substantiated complaints regarding breaches of customer privacy
and losses of customer data.
x
Aspect: Compliance
PR9
Monetary value of signi?cant ?nes for noncompliance with laws and regulations
concerning the provision and use of products and services.
x
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
75
Business Support
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Integrated Report 2014
Business Support
Human Capital Management
1. Introduction
Business is not as usual… With the rapid changes in a shrinking economy, regulatory and legislative compliance promulgated
in parliament, the constant and changing needs of customers and a shortened product life cycle, constantly place stresses
on the organisation, therefore, Human Capital Management constantly reviews and re-aligns its strategy towards people
enablement in order to ensure optimal ef?ciency of its workforce.
2. Management of talent
Recruitment and selection processes have been re?ned to address all vacancies with the timeous appointments across all
levels, rolling out from executive level downwards.
A collective agreement was signed with relevant stakeholders regarding the employment of casual workers. A new entry
level category was created to include them into the organisation workforce with the understanding that they will become
full-time permanent employees over a three-year period.
A process has been initiated to address the identi?cation of successors for critical positions. The process was launched
and the pilot phase concluded in Postbank.
Performance management (individual scorecards) was done for approximately 2,000 employees on the total cost to
company package. This paper based process will be automated and implemented in phases starting mid-2014.
3. Human Capital Development
To remain competitive in today’s uncertain economic times, it is critical for Human Capital Development to contribute
positively to the organisation’s bottom-line. The challenges associated with the changing nature of work and the workplace
environment is reality for all organisations. Rapid change requires a skilled and knowledgeable workforce with employees
who are adaptive, ?exible and motivated. The drive toward transformation and striving toward a culture of high performance,
is synonymous to the characteristics of the typical work environment and businesses of the 21
st
century.
Addressing skills gaps, organisational transformation as well as supporting career development, forms part of its output,
ensuring that the staff is constantly empowered, inspired and motivated.
Table 1. Status of the Workplace Skills Plan for the ?nancial year April 2013 to March 2014
FINANCIAL YEAR
2013-2014
PLANNED
INTERVENTIONS
IMPLEMENTED
INTERVENTIONS
VARIANCE
% IMPLEMENTED
April - June 4,008 4,194 (186) 104,6%
July- Sept 4,581 3,879 702 84,7%
Oct-Dec 4,581 6,673 (2,092) 145,7%
Jan - Mar 4,581 3,049 1,532 66,6%
Total 17,751 17,795 (44) 100,2%
For the 2013/2014 ?nancial year, 100,2% of the consolidated plan was implemented.
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Integrated Report 2014
Vocational and Functional Training
3.1. Bachelor in Business Administration
The Bachelor in Business Administration intervention is part of a multi-pronged approach in ensuring that employees in
critical positions are equipped with the minimum requirements, which will ensure compliance as per the Financial Services
Board’s (FSB) requirements. The South African Post Of?ce obtained funding from the Services SETA for learners – for
Bachelor in Business Administration (BBA).
A total of 583 employees (nationally) from different business units were registered onto this relevant programme.
A total of 511 employees (88%) successfully progressed to the second year after their examinations in November 2013.
Behavioural Training
3.2. Personal Mastery (Behavioural)
Personal Mastery is a programme developed for employees in order for them to re-discover themselves, identify where
they ?t into the workplace as a group, and also ultimately ?nd their place in an interrelated world that connects with
others. The training was conducted in all the regions by the contracted provider. A total of 1410 employees attended this
intervention.
In Cape Town, a special session was scheduled to enable the facilitators of the programme to focus on Learners with
Special Needs (LSN). A facilitator with sign language skills was employed to facilitate the session for the hearing impaired
which hugely contributed to the success of this programme. The feedback received from the individual attendees, proved
that they were impressed that the organisation cared about them and they thoroughly enjoyed themselves during the
intervention.
Hearing impaired learners attending the Personal Mastery Programme (Cape Town July 2013)
4. Corporate Social Investment – Digital Literacy
Digital Literacy is a Microsoft product that is designed to
facilitate learning for new users, on Personal Computers.
This programme is used to train new computer users and
ful?lling the South African Post Of?ce Groups’ mandate in
terms of social responsibility whereby unemployed learners
are invited to attend the training. The duration of the program
runs ?ve days and the unemployed people are assessed
upon completion and certi?cated accordingly.
For this ?nancial year a total of 404 people received digital
literacy training of which 332 were unemployed (external). From the 332 external unemployed learners, 203 were
African females and 29 were African males. They were all assessed and 298 learners were deemed competent and
awarded certi?cates. A total of 34 learners who were deemed not yet competent were given opportunities to re-write the
assessment. For this period, a total of 203 females, and 29 males were trained in Digital Literacy.
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5. Workforce Status
5.1. Workforce movements
The number of staff at the end of the 2013/2014 ?nancial year is 23,820. This depicts an increase of 2.5% of staff since
April 2013. This increase in the staff compliment was due to casuals that were appointed permanently.
However, the staff compliment decreased by 1.2% (280 employees) since the 3rd quarter. This insigni?cant decline is
experienced within the active casual group that was appointed based on operational requirements.
The graph below portrays the workforce movements for all quarters across all job categories for 2013/2014.
Exec
Snr
Mgr
Mgr C B A
Short
Term
Staff
Casua
ls
Learn
er
Totals
1st Quarter 2014 [Apr - Jun] 38 140 396 4,181 9,012 974 304 8,106 63 23,214
2nd Quarter 2014 [Jul - Sep] 42 135 409 4,208 9,319 971 262 8,054 75 23,475
3rd Quarter 2014 [Oct - Dec] 37 134 396 4,199 10,031 967 261 7,993 82 24,100
4th Quarter 2014 [Jan - Mar] 35 139 399 4,196 10,246 998 135 7,596 76 23,820
0
5000
10000
15000
20000
25000
30000
*Includes all internal movements (transfers/promotions/exits/appointments)
5.2. Workforce Transformation (Employment Equity)
The graph below displays the representation of Females, Black Females, Blacks and People with Disabilities within the
organisation for the FY 2013/2014 against the set target.
0.00%
50.00%
100.00%
Representation
of females
Representation
of Black
females
Representation
of Blacks
Disability
Target April 2013 March 2014
The representation of Blacks has increased by 1% since April 2013 and is currently sitting at 85%. In the same period;
overall Whites declined by 1%, from 16 % to 15%. However, the overall White females remain an area of concern as they
are currently at 8.80% against a target of 5.34%
Overall, African females are under-represented with 5% and coloured females by 0.14%. The focus should, therefore,
should be on the implementation of af?rmative action through recruitment and talent and succession management
initiatives that seek to empower suitably quali?ed females, according to the employment equity targets in order to address
racial disparity at specialist and management levels.
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Integrated Report 2014
5.3. Current Identi?ed People with Disabilities
The percentage of people with disabilities (PwD) identi?ed in the organisation at the end of Oct 2013, was 68 employees
(there was one termination). This ?gure of PwD identi?ed increased to 85 employees during the period 1 Nov to 10 Dec
2013; which is an increase of 21%. A desktop investigation of medical fles and application for TTD and IHR was done and
there was an increase from 85 to 158 of employees with disabilities (an increase of 85%).
6. Management of Workforce liabilities
Systems and processes are in place to manage leave effectively. The employee composite increased during the year with
the appointment of the casuals which increased the leave liability, this also affected the increase in absenteeism for this
period.
The sick leave rate has been signi?cantly reduced from 2.6% to 1.26%, even below the industry benchmark of 2.3%.
7. Workforce Health and Wellness
SA Post Of?ce continues providing a number of health and wellness services to the employees.
7.1. Health Management
Staff participation in HIV/AIDS testing programmes
The HIV and Aids programme is aimed at assisting employees to deal with issues of HIV and Aids, whether who are
infected or affected by it. We continue to providing voluntary con?dential counselling and testing of employees, 79% of
our employees know their status. Ngatana, our HIV support groups, continue to be a source of support to employees who
are HIV positive.
Monthly health promotion themes are followed in all the regions in the form of events, power talks, workshops and print.
7.2. Workforce Wellness
7.2.1 Employee Assistance Programme (EAP)
The Employee Assistance programme is designed to assist employee who experience work, life and psychosocial
problems. In addition, there are sensitisation programmes designed to assist the employees to cope, manage or avoid
psychosocial and work related problems.
7.2.2 Sports activities within SA Post Of?ce
Employees within the Group are engaged in individual and team sports throughout the year. Registered sporting codes
currently active include soccer, netball, volleyball, golf, angling, aAthletics, gymnastics and cycling
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Integrated Report 2014
Information Technology
The role of the South African Post Of?ce Information Technology (SAPO IT) division is to provide support to all the
business units within the organisation by providing the information technology services that enable them to achieve their
strategic goals. This is achieved by ensuring that the IT systems are available in accordance with the required Service
Level Agreements, for use by the business. It further aims to ensure that the information assets of the organisation are
accessible to the right people in a secure manner. These services are provisioned through structured and associated IT
processes that are aligned to industry standards and guidelines such as King III codes, Information Technology Information
Library (ITIL), Control Objectives for Information and Related Technology (COBiT) and Project Management Body of
Knowledge (PMBOK).
During the year under review, the primary focus of IT was on stabilising and improving existing IT capabilities. IT activities
focussed speci?cally on the following areas:
• IT Governance: Addressing audit and risk issues and ensuring that proper governance structures are in place.
A governance framework aligned to the King III guidelines was presented in the fourth quarter and approved by
the Board for implementation. Most of the governance structures and policies were established. A number of
projects were initiated to address the weaknesses in the environment that were identi?ed through the audit and
risk assessments. The progress on the major IT projects that were implemented, are dealt with later in the report.
• Operational Ef?ciency: Improving system availability as well as achieving optimal return on IT investments.
Systems were relatively stable during the year, achieving an average availability of 96%. The focus was on ef?cient
utilisation of IT resources (people and IT infrastructure) and cost effective use of IT for growth. The IT architecture
was reviewed and a number of applications were identi?ed for rationalisation and simpli?cation in alignment with
the approved IT strategy and Shared Services Model. The Infrastructure Refresh and other projects are underway
to replace legacy systems in order to achieve this objective.
• IT Security: Strengthening the operational IT Security to protect the information assets of the organisation. In 2011
and 2012, several signi?cant security incidents were experienced by SAPO, some of which could be attributed
directly to inadequate IT Security in the organisation’s IT systems and infrastructure. The IT Security Remediation
Project was set up with the objective of managing and performing a number of initiatives required to stabilise the
current IT environment and to deliver the current IT Security services effectively. This will also create a platform
from which future IT Security initiatives will be established to drive SAPO towards its stated objective of ISO 27001
compliance. Vulnerability and threat monitoring of the environment was carried out through the use of Managed
Security Services. The security strategy is being revised to capacitate and address some of the gaps identi?ed. A
number of security policies were presented to the Board for approval and implementation.
Apart from these activities, a number of projects were initiated or continued from the previous year. Some of the major
projects worth noting are the following.
• Infrastructure Refresh: The project aims to replace all legacy systems by upgraded technology systems and at
the same time, achieving the objective of rationalising and simplifying the IT environment. The project will also
help to address a signi?cant number of audit ?ndings and risks identi?ed in the current environment. The platform
commissioning was completed and the application migration phase is underway. The project is expected to be
completed in March 2015.
• Disaster Recovery and Network Upgrade: The project aims to ensure that SAPO has a full disaster recovery plan
to allow for business continuity in the event of a disaster. It is a regulatory requirement to ensure that Postbank is
compliant with Payments Association of South Africa (PASA), South African Reserve Bank (SARB) and other ?nancial
services industry requirements. The review of the technical speci?cations for these projects has commenced and
the procurement process will commence in the new ?nancial year. In the meantime, an Interim Disaster Recovery
Plan is in place for Postbank.
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Integrated Report 2014
• Flexcube upgrade to Universal Banking Solution (UBS): The purpose of the project is to upgrade the Flexcube
core banking solution to the UBS version and provide better stability and functionality to Postbank. The project will
also improve the security and address some of the audit and risk ?ndings identi?ed within the banking environment.
The upgrade will form a solid foundation on which the Postbank Corporatisation can depend on. The project has
progressed well and is expected to be completed in June 2014.
• Track and Trace: This project aims to replace all the instances of Track and Trace solutions in the environment with
a single, upgraded solution that will meet the requirements of the different business units. This projects seeks
to achieve a signi?cant amount of rationalisation of the current IT environment. The project is expected to be
completed in August 2014.
Going forward
While the emphasis will continue to be on availability and stability of systems, the focus within IT will gradually move
towards becoming a true business partner, by providing ?exible and scalable solutions that will be responsive to business
needs and reduce time to market. This will be achieved through considering modern ways of provisioning IT services
and transforming the IT environment to keep abreast with current trends. IT will need to build suf?cient competence
and investment to become a true partner and support business in realising its strategies. The corporatisation of Postbank
and the implementation of the Shared Service Model will pose new challenges and require a well-de?ned technology
architecture and strategy.
The IT organisation will enhance its project execution capability, improve the speed of execution and ensure that projects
are delivered within acceptable timelines. The investment in stabilisation activities will continue and focus will be given
to reducing operational costs. IT will also build capacity to manage contracts and licensing arrangements more ef?ciently.
Other areas that will be enhanced are:
• Overall business continuity (including Disaster Recovery (DR)
• Network performance and fexibility
• Information and Data security
• Providing usable management information to improve strategic decision making
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Integrated Report 2014
E-Business
The E-Business Unit operates as a Business Communication and Transaction platform focusing on the electronic ful?lment
of communications and transactions through multiple delivery channels and includes Hybrid Mail, Mobile, Internet,  The
Trust  Centre and Self Service kiosks etc. Our strategic intent is to develop an online Post Of?ce channel for our customers
so that they can transact with the Post Of?ce in the comfort of their of?ces or from anywhere, using the available mobile
technologies.
During year under review, the unit grew its revenue from R112 million in 2012/2013 to R223 million in 2013/2014, representing
a revue growth of 99,1%. The huge growth areas were primarily in the Hybrid Mail and Electronic Bill Presentment and
Payments sector. The market is warming up to the Post Of?ce Electronic offering. There was, however, very little marketing
efforts in this space, and this poses a huge risk if not curbed. It is envisaged that the electronic migration and adoption by
the market will offset the decline in mail volumes by a signi?cant percentage. Efforts are afoot to roll out various electronic
services.
A number of new initiatives were also launched during 2013/2014 which should see additional growth from other revenue
sources in the Authentication Services and the Electronic Bill Presentment and Payment (EBPP). The South African Trust
Centre is slowly taking shape and is gaining traction in the market.
A number of
Programmes that
are in progress and
which will help with
the diversi?cation of
revenue are:
Secure electronic
communications
The expansion
of the Hybrid Mail
platform
Online
services such
as electronic
forms, e?ling and
other government
related services
Secure
electronic
transactions online
[ The Post of?ce
online channel}
Extension of the
EBPP services to
more channels
It is projected that with proper intervention and investment,
the E-Business unit revenue will GROW by at least 42% in 2014/15.
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Integrated Report 2014
Security and Investigation
During the 2013/2014 ?nancial, the South African Post Of?ce experienced three waves of industrial actions that resulted
in the loss of 59 days of business operations. In addition to losing revenue that is estimated at R236 million, property
was damaged and vandalised and non-striking employees were intimidated and/or assaulted. The strike action primarily
affected the Mail Business in the Wits Region, and it is here that a signi?cant increase in postal crime was recorded.
During the period under review, a total of 2,911 incidents were recorded compared to 2,424 in the same period of
2012/2013, representing a 20% increase. The increased number of reported incidents are the result of labour disputes and
protest actions which has resulted in an increase of 37% in postal crime related incidents.
Postal crime incidents comprise of 54% (1,570 incidents) of all crime categories. The increase in postal crime amounts to
87% of the total number of increased incidents reported during 2013/2014.
Incidents of fraud and theft increased from 392 incidents during 2012/2013 to 532 incidents – an increase of 140 incidents
(35%). There has been a 98% increase in reported loss – R5.4 million loss in 2012/2013 to R10.9 million loss during
2013/2014.
The Graph below indicates the monthly patterns over a three-year period.
0
100
200
300
400
500
A
p
r
i
l

M
a
y

J
u
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e

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a
r
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a
r
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h

YTD Incidents (Three-year comparison per month)
2011 / 2012 2012 / 2013 2013 / 2014
Crime categories
• Armed Robbery – In total, 59 armed robberies were recorded during the ?nancial year compared to 127 in the
previous year, therefore a decrease of 68 incidents. Notably, the most incidents (21) had occurred in the Eastern
Cape Region. In the Wits Region armed robberies decreased by 41 incidents (from 51 to 10). Reported ?nancial loss
has decreased signi?cantly from R5.3 million in 2012/2013 to R1.7 million during 2013/2014.
The national decrease in the number of incidents and ?nancial loss is attributed to improved employee awareness,
improved cash management as well as the deployment of 100 cash-upload receptacles at high-cash volume
branches.
The Reprioritisation of Branch Security Upgrade Project was directed to further reinforce physical security at
Postal Outlets in order to prevent armed robbery incidents, enhance employee/customer safety which will require
R20 million CAPEX funding.
• Cash in Transit (CIT) and Hijacking – At the end of March 2014 and six incidents of vehicle hi-jacking was recorded
(three incidents in 2012/2013), and for the second year in a row no incidents of CIT robberies had occurred.
• Housebreaking – In comparison to the previous ?nancial year (169), 158 housebreaking incidents occurred in the
2013/2014 ?nancial year – a decrease of 11 incidents.
• Postal Crime – Incidents of all types of postal articles i.e. standard, non-standard and parcel-related crime increased
by 426 incidents (37%), from 1,144 to 1,570 reported incidents.
84
South African Post Of?ce SOC Limited (Registration number 1991/005477/06)
Integrated Report 2014
• Fraud – In total, 372 fraud incidents were recorded during the ?nancial year compared to 260 in the previous
year, therefore a decrease of 112 incidents. Of the 372 fraud incidents, 252 (68%) relate to fraud committed on
Postbank savings products at Retail Outlets – an increase of 84 incidents compared to the 168 incidents reported
in 2012/2013.
Fraud losses reported during 2013/2014 amounted to R10 million and re?ects an increase of R7.4 million in comparison to
the R2.5 million reported during 2012/2013. Postbank related fraud amounts to R2 million of the total fraud related loss.
A total reported loss of R5 million was committed at a Retail Outlet in the Northern Region over a period of a few years –
banking fraud.
Investigations
Of the 2911 cases investigated during the 2013/2014 ?nancial year, 2,667 investigations were completed, representing 92%.
296 (10%) cases investigated were unfounded/false and 662 (23%) cases concluded were followed by the investigations
that were referred to the line management to institute disciplinary action.
Anonymous Crime Reporting
During the 2013/2014 ?nancial year, 163 incidents were reported through the Hotline, an increase of 26 (19%) in comparison
to the 137 incidents reported during 2012/2013.
Of all the incidents reported to Security and Investigation Services, 98 (60%) were not crime and dishonesty related, but
related to general procedural and operational irregularities.
Crime Awareness
Crime awareness initiatives are continuously undertaken by the Security and Investigation Services Team during their
normal functions.
A need has been identi?ed to deploy a structured national crime awareness campaign across all Business Units in SAPO.
This campaign will require dedicated funding of R3 million to implement.
Conclusion
Ongoing labour unrest will have an impact on the ability to reduce the levels of postal related crime and will negatively
impact on the image of the South African Post Of?ce.
Improved physical security of postal outlets will continuously receive priority attention. It is also intended to extend the
cash-upload receptacles to 500 more outlets if funding is available.
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
85
Consolidated Annual Financial
Statements for the year ended
31 March 2014
South African Post Of?ce (SOC) Limited
(Registration number 1991/005477/06)
These consolidated annual ?nancial statements were
prepared by: Bianca Branford CA (SA)
Senior Manager: Financial Reporting
These consolidated annual ?nancial statements
have been audited in compliance with the applicable
requirements of the Companies Act No 71 of 2008 by
Deloitte & Touche and Nkonki Incorporated
Chartered Accountants (S.A.)
Registered Auditors
Published 15 December 2014
86
SOUTH AFRICAN POST OFFICE (SOC) LIMITED (Registration number 1991/005477/06)
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
Index
The reports and statements set out below comprise the consolidated annual ?nancial statements presented to the
shareholder:
Index Page
Audit Committee Report 87
Directors’ Responsibilities and Approval 90
Group Company Secretary’s Certi?cation 91
Independent Auditors’ Report 92
Directors’ Report 96
Statement of Financial Position 103
Statement of Comprehensive Income 105
Statement of Changes in Equity 106
Statement of Cash Flows 108
Notes to the Consolidated Annual Financial Statements 109
The following supplementary information does not form part of the consolidated annual
?nancial statements:
Detailed Income Statement 200
Three Year Period Review 202
87
SOUTH AFRICAN POST OFFICE (SOC) LIMITED (Registration number 1991/005477/06)
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
Audit Committee Report
On 7 November 2014, all the non-executive members of the Board resigned and duly the board and all of its committees
dissolved. Dr Simo Lushaba was appointed as administrator in terms of Section 25 of the South African Post Of?ce Act
No 22 of 2011 (as amended). As at 31 March 2014, the Board (in compliance with King III) and all its committees were
active and functioning. The report below was compiled by the relevant committee members at 31 March 2014 (while still
appropriate) and has been accepted as fair and accurate by the Administrator who has signed the report as such.
The audit committee (the committee) hereby presents its report in respect of the ?nancial year ended 31 March 2014 in
terms of its obligations according to Treasury Regulations issued in terms of the Public Finance Management Act (PFMA)
and in terms of the Companies Act No 71 of 2008, as amended (the Companies Act).
1. Members of the Audit Committee
The committee was established in accordance with the provisions of PFMA and the Companies Act. The Audit Committee
Charter requires that the committee be comprised of a minimum of three members.
The members of the committee are all independent non-executive directors of the group and include:
Name Changes
Mr S Gounden (Chairperson) Appointed 29 January 2014; retired 07 November 2014
Mr PT Mageza Appointed 29 January 2014; retired 07 November 2014
Mr MS Patel Re-appointed 30 July 2013; retired 07 November 2014
Ms G Simelane Appointed 29 January 2014; retired 22 October 2014
Mr H Daniels (Interim Chairperson) Retired 29 January 2014
Mr R Sishuba Retired 29 January 2014
The committee is satis?ed that the members thereof have the required knowledge and experience as set out in Section
94(5) of the Companies Act No 71 of 2008 and Regulation 42 of the Companies Regulation, 2011.
2. Meetings held by the Audit Committee
The audit committee performs the duties laid upon it by Section 94(7) of the Companies Act by holding meetings with the
key role players on a regular basis and by the unrestricted access granted to the external auditors.
In terms of the Audit Committee Charter, the committee must meet at least four times a year. Details of the committee
meetings during the ?nancial year under review are disclosed in the Corporate Governance Report.
The committee held meetings with the Group Chief Executive Of?cer, senior management, external auditors and internal
auditors, collectively and individually, on matters related to governance, internal control and risk, throughout the reporting
period.
3. Responsibility
The committee has complied with its responsibilities arising from the PFMA, Treasury Regulation, Companies Act and
also reports that it operated in terms of the Audit Committee Charter as its terms of reference in discharging all its
responsibilities as regulated therein.
4. Effectiveness of internal controls
The committee acknowledges management’s efforts to strengthen internal controls. However, when seen in the context
of the reports issued by external audit and internal audit, it is clear that management’s efforts have not yielded the required
bene?ts to date.
The committee is concerned that in certain instances the matters reported in prior years have not been fully and satisfactorily
addressed. Management has given assurance that effective corrective action will be implemented in respect of all internal
control weaknesses and the committee will monitor these.
88
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CONSOLIDATED ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
Audit Committee Report
The committee is especially concerned with the high rate of non-adherence to established policies and procedures and the
lack of subsequent punitive measures against the responsible of?cials, when required. The committee believes that there
needs to be tighter controls around work ethic, responsibility and accountability and that non-adherence to such, should
be addressed through a fair and rigorous application of the performance management system.
Vacancies undermine the effective functioning of the system of internal control and it is imperative that management
reviews its recruitment procedures and processes to ensure that vacancies are ?lled expeditiously with properly quali?ed,
skilled and experienced personnel.
The committee is not satis?ed that fraud and corruption has been reduced to an acceptable level and these concerns
have been raised with management. The South African Post Of?ce (SOC) Limited has adopted aggressive anti-corruption
measures to curb the frequency and magnitude of fraud and corruption.
Owing to the strategic importance of and huge dependence on Information and Communication Technology (ICT), the
committee is concerned that the ICT environment is not operating at an optimal level. Management has undertaken to
present an ICT risk register and progress report on the respective action plans to the committee for monitoring purposes.
5. Speci?c focus areas
Going forward, the committee has identi?ed the following speci?c focus areas to monitor, support and advise management
on:
• Enhancement of reporting on performance information;
• Modernisation of the information technology;
• Effectiveness of the internal audit function;
• Improving the control environment;
• Cohesive risk management framework; and
• Embedding a combined assurance model.
6. Quality of monthly and quarterly management reports submitted in terms of the PFMA
The committee was satis?ed with the content and quality of quarterly ?nancial reports prepared and issued by management
during the year under review, in compliance with the statutory reporting framework. The committee has requested and
received the monthly management accounts and interim (quarterly) ?nancial statements for deliberations at the committee
meetings.
The committee has however suggested improvements to reports especially relating to performance information. The
committee has recommended that the South African Post Of?ce move towards preparing interim ?nancial statements,
which would assist it in attending to reconciliations timeously as well as eliminate year-end adjustments.
7. Internal audit function
The committee is satis?ed that internal audit has properly discharged its functions and responsibilities during the year
under review.
The capacity of internal audit has been enhanced through the redesign of the internal audit process, employment of
additional personnel and investments in an intensive training programme. The committee expects these initiatives to
contribute to internal audit becoming more ef?cient, more responsive to the challenges and providing audit reports of a
high quality to management and the committee on a timely basis. The committee supports the direction that internal audit
is adopting in providing the necessary skills and agility required for internal audit to respond quickly and effectively to the
demands for internal audit across The South African Post Of?ce’s multipal locations.
89
SOUTH AFRICAN POST OFFICE (SOC) LIMITED (Registration number 1991/005477/06)
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
The recent appointment of specialist ICT auditors is a welcome development in light of the need for expertise in the
auditing of automated systems and the development and maintenance of a system of continuous auditing.
The committee is satis?ed that the internal audit function is operating effectively and that it has addressed the risks
pertinent to The South African Post Of?ce (SOC) Limited.
8. Evaluation of the consolidated annual ?nancial statements
The committee has:
• reviewed and discussed the audited consolidated annual ?nancial statements with the external auditors and
management;
• reviewed the external auditors’ management letter and management’s response thereto;
• reviewed and discussed the performance information with management;
• reviewed changes in accounting policies and practices; and
• reviewed the group’s compliance with legal and regulatory provisions.
9. External auditors’ report
The committee concurs with and accepts the conclusions and the audit opinion of the external auditors on the consolidated
annual ?nancial statements and is of the view that the audited consolidated annual ?nancial statements be accepted and
read together with the report of the external auditors.
The committee con?rms that it has been actively involved throughout the audit process and is thoroughly appraised of the
issues giving rise to the audit opinion.
The committee appreciates the enormity of the challenge associated with managing a large, geographically dispersed
and complex audit. However, the external audit issues raised should have been avoided given the effort put in by certain
of?cials and the ongoing assurances given by management to the committee that these matters were under control.
On behalf of the committee:
Dr S Lushaba
Administrator
22 December 2014
Audit Committee Report
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CONSOLIDATED ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
The directors are required in terms of the Companies Act No 71 of 2008 (Companies Act) to maintain adequate accounting
records and are responsible for the content and integrity of the consolidated annual ?nancial statements and related
?nancial information included in this report. It is their responsibility to ensure that the consolidated annual ?nancial
statements fairly present the state of affairs of the group as at the end of the ?nancial year and the results of its operations
and cash ?ows for the year then ended, in conformity with International Financial Reporting Standards (IFRS). The external
auditors are engaged to express an independent opinion on the consolidated annual ?nancial statements.
The consolidated annual ?nancial statements are prepared in accordance with IFRS and the Companies Act and are based
upon appropriate accounting policies consistently applied and supported by reasonable and prudent judgements and
estimates.
The directors acknowledge that they are ultimately responsible for the system of internal ?nancial control established by
the group and place considerable importance on maintaining a strong control environment. To enable the directors to meet
these responsibilities, the board of directors sets standards for internal control aimed at reducing the risk of error or loss in
a cost effective manner. The standards include the proper delegation of responsibilities within a clearly de?ned framework,
effective accounting procedures and adequate segregation of duties to ensure an acceptable level of risk. These controls
are monitored throughout the group and all employees are required to maintain the highest ethical standards in ensuring
the group’s business is conducted in a manner that in all reasonable circumstances is above reproach. The focus of risk
management in the group is on identifying, assessing, managing and monitoring all known forms of risk across the
group. While operating risk cannot be fully eliminated, the group endeavours to minimise it by ensuring that appropriate
infrastructure, controls, systems and ethical behaviour are applied and managed within predetermined procedures and
constraints.
The directors are of the opinion, based on the information and explanations given by management, that the system
of internal control provides reasonable assurance that the ?nancial records may be relied on for the preparation of the
consolidated annual ?nancial statements. However, any system of internal ?nancial control can provide only reasonable,
and not absolute, assurance against material misstatement or loss.
The directors have reviewed the group’s cash ?ow forecast for the twelve months after signature date and, in the light of
this review and the current ?nancial position, they are satis?ed that the group has or has access to adequate resources to
continue in operational existence for the foreseeable future.
The external auditors are responsible for independently auditing and reporting on the group’s consolidated annual ?nancial
statements. The consolidated annual ?nancial statements have been audited by the group’s external auditors and their
report is presented on pages 92 to 95.
The consolidated annual ?nancial statements set out on pages 85 to 202, which have been prepared on the going
concern basis, were approved by the Board of Directors on 22 December 2014 and signed on its behalf by:
Mr M Mathonsi
Acting Group CEO
Khumo Mzozoyana
CFO
Directors’ Responsibilities and Approval
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SOUTH AFRICAN POST OFFICE (SOC) LIMITED (Registration number 1991/005477/06)
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
Group Company Secretary’s Certi?cation
Declaration by the group company secretary in respect of Section 88(2)(e) of the
Companies Act
In terms of Section 88(2)(e) of the Companies Act No 71 of 2008, as amended, I certify that the group has lodged with
the Companies and Intellectual Property Commission (CIPC) all such returns as are required of a public company in terms
of the Companies Act and that all such returns are true, correct and up to date.
Adv MM Mphelo
Acting Company Secretary
22 December 2014
92
SOUTH AFRICAN POST OFFICE (SOC) LIMITED (Registration number 1991/005477/06)
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
Independent Auditors’ Report to Parliament on the South African Post
Of?ce SOC Limited
REPORT ON THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
Introduction
We have audited the consolidated and separate ?nancial statements of the South African Post Of?ce SOC Limited and its
subsidiaries as set out on pages 103 to 199, which comprise the consolidated and separate statement of ?nancial position
as at 31 March 2014, the consolidated and separate statement of comprehensive income, statement of changes in equity
and the statement of cash ?ows for the year then ended, as well as the notes, comprising a summary of signi?cant
accounting policies and other explanatory information.
Accounting Authority’s responsibility for the consolidated and separate ?nancial statements
The board of directors which constitutes the accounting authority is responsible for the preparation and fair presentation
of these consolidated and separate ?nancial statements in accordance with International Financial Reporting Standards
and the requirements of the Public Finance Management Act of South Africa and the Companies Act of South Africa, and
for such internal control as the accounting authority determines is necessary to enable the preparation of consolidated and
separate ?nancial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ responsibility
Our responsibility is to express an opinion on these consolidated and separate ?nancial statements based on our audit.
We conducted our audit in accordance with the Public Audit Act of South Africa, the general notice issued in terms thereof
and International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and
perform the audit to obtain reasonable assurance about whether the consolidated and separate ?nancial statements are
free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated
and separate ?nancial statements. The procedures selected depend on the auditor’s judgement, including the assessment
of the risks of material misstatement of the consolidated and separate ?nancial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair
presentation of the consolidated and separate ?nancial statements in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control.
An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting
estimates made by management, as well as evaluating the overall presentation of the consolidated and separate ?nancial
statements.
We believe that the audit evidence we have obtained is suf?cient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the group and company ?nancial statements present fairly, in all material respects, the ?nancial position of
South African Post Of?ce SOC Limited as at 31 March 2014, and its ?nancial performance and statement of cash ?ows for
the year then ended in accordance with International Financial Reporting Standards, and the requirements of the Public
Management Finance Act of South Africa and the Companies Act of South Africa.
Emphasis of Matter
Without qualifying our opinion, we draw attention to note 47 to the ?nancial statements which indicates that the group
incurred a net loss of R361 million for the year ended 31 March 2014 and, as at the date of this report, the group is
projecting a loss of R1.3 billion for the year ending 31 March 2015. These conditions, along with other matters as set forth
in note 47 indicate the existence of a material uncertainty which may cast signi?cant doubt about the company’s ability to
continue as a going concern.
Unaudited supplementary information
Without qualifying our opinion we draw attention to the fact that the detailed income statement as set out on pages
200 - 201 and the supplementary information as set out on page 202 do not form part of the ?nancial statements and are
presented as additional information. We have not audited these schedules and accordingly do not express an opinion on
them.
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SOUTH AFRICAN POST OFFICE (SOC) LIMITED (Registration number 1991/005477/06)
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
Independent Auditors’ Report to Parliament on the South African Post
Of?ce SOC Limited
Other matter
We draw attention to the matter below. Our opinion is not modi?ed in respect of this matter.
Other reports required by the Companies Act
As part of our audit of the consolidated and separate ?nancial statements for the year ended 31 March 2014, we have
read the Directors’ Report, the Audit Committee’s Report and the Statement by the Company Secretary for the purpose of
identifying whether there are material inconsistencies between these reports and the audited consolidated and separate
?nancial statements. These reports are the responsibility of the respective preparers. Based on reading these reports
we have not identi?ed material inconsistencies between the reports and the audited consolidated and separate ?nancial
statements. We have not audited the reports and accordingly do not express an opinion on them.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
Reportable irregularities
In accordance with our responsibilities in terms of sections 44(2) and 44(3) of the Auditing Profession Act, we reported that
we had identi?ed certain unlawful acts or omissions committed by persons responsible for the management of the South
African Post Of?ce SOC Limited which constitute reportable irregularities in terms of the Auditing Profession Act, and have
reported such matters to the Independent Regulatory Board for Auditors.
The entity has breached the requirements of section 45 of the Companies Act No.71 of 2008 (the Companies Act).  The
entity provided ?nancial assistance to its related entities without obtaining a special resolution by the shareholder for these
transactions, and did not assess the liquidity and solvency requirements prior to advancing the ?nancial assistance, as
required by the Companies Act.
The entity did not comply with the requirements of section 129 of the Companies Act to consider a resolution to commence
voluntary business rescue proceedings when it had reasonable grounds to believe that the entity was ?nancially distressed. 
The Board of Directors (the Board) did not deliver a written notice to each affected person to inform them of the reasons
for not adopting a resolution to commence voluntary business rescue proceedings. 
The entity has not complied with the requirements of Section 55 (1) of Public Finance Management Act 1 of 1999 and
Section 30 (1) of the Companies Act 71, 2008. Consolidated and separate annual ?nancial statements for the ?nancial year
ended 31 March 2014 were not ?nalised within ?ve months after the ?nancial year end as required by the Public Finance
Management Act and six months after the year end as required by the Companies Act.
Predetermined objectives
In accordance with the PAA and the general notice issued in terms thereof, we report the following ?ndings on the
reported performance information against predetermined objectives for the selected objectives presented in the annual
report, non-compliance with legislation as well as internal control. We performed tests to identify reportable ?ndings as
described under each subheading but not to gather evidence to express assurance on these matters. Accordingly, we do
not express an opinion or conclusion on these matters.
We performed procedures to obtain evidence about the usefulness and reliability of the reported performance information
for the following selected objectives presented in the annual performance report of the public entity for the year ended
31 March 2014:
• Objective 1: Alternative ?nancing model pages 13 to 15 of the Performance Information Report.
• Objective 2: Human capital capacity building on pages 16 to 18 of the Performance Information report.
• Objective 3: Meet License and mandate obligations by increasing the accessibility of products and services on
pages 19 to 20 of the Performance Information report.
• Objective 4: Customer centricity 20 to 21 of the Performance Information report.
• Objective 5: Postbank Corporatization on page 19 of the Performance Information report.
• Objective 6: Active participation in Africa’s development agenda on page 20 of the Performance Information report.
• Objective 7: Ensuring that critical IT systems are available on page 21 of the Performance Information report.
• Objective 8: Provide of an ef?cient technology platform on pages 21 to 22 of the Performance Information report.
• Objective 9: Providing a secure environment for our customers on page 22 of the Performance Information report.
94
SOUTH AFRICAN POST OFFICE (SOC) LIMITED (Registration number 1991/005477/06)
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
Independent Auditors’ Report to Parliament on the South African Post
Of?ce SOC Limited
• Objective 10: Maintenance of ethical business practices on pages 23 to 26 of the Performance Information report.
• Objective 11: Contract management on page 24 of the Performance Information report.
• Objective 12: Crime awareness on page 21 of the Performance Information report.
• Objective 13: Preferential procurement Enterprise development on page 19 of the Performance Information report.
We evaluated the reported performance information against the overall criteria of usefulness and reliability.
We evaluated the usefulness of the reported performance information to determine whether it was presented in
accordance with the National Treasury’s annual reporting principles and whether the reported performance was consistent
with the planned objectives. We further performed tests to determine whether indicators and targets were well de?ned,
veri?able, speci?c, measurable, time bound and relevant, as required by the National Treasury’s Framework for managing
programme performance information (FMPPI).
We assessed the reliability of the reported performance information to determine whether it was valid, accurate and
complete.
We did not raise any material ?ndings on the usefulness and reliability of the reported performance information for the
selected objectives.
Additional matter
Although we raised no material ?ndings on the usefulness and reliability of the reported performance information for the
selected objectives, we draw attention to the following matter:
Achievement of planned targets
Refer to the annual performance report on pages 13 to 26 for information on the achievement of the planned targets for
the year.
Compliance with legislation
We performed procedures to obtain evidence that the entity has complied with applicable laws and regulations regarding
?nancial matters, ?nancial management and other related matters. Our ?ndings on material non-compliance with speci?c
matters in key applicable laws and regulations as set out in the General Notice issued in terms of the PAA are as follows:
Expenditure Management
Although the accounting authority has embarked on a process to identify irregular expenditure, the entity continued to
incur irregular expenditure during the current ?nancial year. The accounting authority has therefore not taken effective
steps to prevent irregular expenditure, as required by section 51(1) (b) (ii) of the Public Finance Management Act.
During the current year management completed a full review of all procurement contracts which resulted in the
identi?cation of irregular expenditure amounting to R 71 million as disclosed in note 50 in the Annual Financial Statements.
A further R 10 million potential irregular expenditure was identi?ed which is currently being investigated as disclosed in
the aforementioned note.
Internal control
We considered internal controls relevant to the audit of the ?nancial statements, group key performance indicators and
compliance with laws and regulations. We also draw your attention to the comments included in the directors’ report
regarding the internal control environment. The matters reported above and below under the fundamentals of internal
control are limited to the signi?cant de?ciencies that were identi?ed during the audit, the ?ndings on the group key
performance indicators and the ?ndings on compliance with laws and regulations included in this report.
Leadership and Governance
During the current ?nancial year we identi?ed potential and actual reportable irregularities which we have reported to
the Independent Regulatory Board for Auditors. All potential and actual irregularities reported related to various actual
and potential non-compliance with the Companies Act of South Africa. The accounting authority did not have suf?cient
processes in place to prevent non-compliance with the Companies Act of South Africa.
95
SOUTH AFRICAN POST OFFICE (SOC) LIMITED (Registration number 1991/005477/06)
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
Independent Auditors’ Report to Parliament on the South African Post
Of?ce SOC Limited
There was an improvement in the process to identify irregular expenditure, the entity did however continue to incur
irregular expenditure during the current ?nancial year. The accounting authority has therefore not taken effective steps to
prevent irregular expenditure, as required by section 51(1) (b) (ii) of the Public Finance Management Act.
Leadership did not ensure that processes and systems that are in place could identify and prevent non-compliance with
various legislation
OTHER REPORTS
Investigations
• Investigation instituted by the Minister of Communications for matters including governance, ?nancial management
and other various matters, this investigation is on-going.
• Investigation by the Public Protector regarding potential irregularities relating to procurement; and
• Investigation by Special Investigation Unit (SIU). This investigation was proclaimed by the president of the Republic
of South Africa, Mr JG Zuma on 04 February 2014 (Government Gazette no 37303) for matters relating property
procurement, loans advanced to subsidiaries, Human resource process and other various matters. This investigation
has not been completed by the SIU and is ongoing.
Audit-related services and special audits
The following agreed-upon procedures engagements have been performed and reports issued by us at the request of the
South African Post Of?ce SOC Limited:
• Agreed-upon procedures on the license fee payable by the South African Post Of?ce SOC Limited to Independent
Communications Authority of South Africa (“ICASA”) for the year ended 31 March 2014
• Agreed-upon Procedures on Government Grants received by the South African Post Of?ce SOC Limited for the year
ended 31 March 2014;
• Agreed-upon procedures for Marine Living Resource Fund on the reasonableness of revenue recorded with regards
to the sale of licenses and permits by South African Post Of?ce SOC Limited on their behalf for the year ended 31
March 2014.
• Agreed-upon procedures on the return in terms of regulation 4.4 (i) and (ii) of the Short-Term Insurance Act. (no. 53
of 1998) to the Intermediaries Guarantee Facility Limited (“IGF”) for South African Post Of?ce SOC Limited for the
year ended 31 March 2014;
• Agreed-upon procedures on the return in terms of regulation 4.4 (i) and (ii) of the Short-Term Insurance Act. (no.
53 of 1998) to the Intermediaries Guarantee Facility Limited (“IGF”) for South African Post Of?ce SOC Limited
(specifcally for the amounts collected on behalf of third parties by retail) for the year ended 31 March 2014; and
• Agreed-upon procedures on the return in terms of regulation 4.4 (i) and (ii) of the Short-Term Insurance Act. (no.
53 of 1998) to the Intermediaries Guarantee Facility Limited (“IGF”) for South African Post Of?ce SOC Limited
(speci?cally for the amounts collected on behalf of third parties by retail) for the year ended 31 March 2014.

Yours faithfully, Yours faithfully,
Deloitte & Touche
Registered Auditor
Per: Trushar Kalan
Partner
22 December 2014
Nkonki Inc.
Registered Auditor
Per: Zakhele Nkosi
Partner
22 December 2014
96
SOUTH AFRICAN POST OFFICE (SOC) LIMITED (Registration number 1991/005477/06)
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
Directors’ Report
The directors have pleasure in submitting their report on the consolidated annual ?nancial statements of the South
African Post Of?ce (SOC) Limited and the group for the year ended 31 March 2014.
1. Incorporation
The company was incorporated on 01 October 1991 and obtained its certi?cate to commence business on the same day.
2. Holding company
The group’s holding company is a State Owned Company (SOC), namely the South African Post Of?ce (SOC) Limited
incorporated in RSA.
3. Ultimate holding company
The group’s ultimate holding company is the South African Government which is incorporated in RSA.
4. Nature of business
The South African Post Of?ce (SOC) Limited is incorporated in South Africa with interests in the services industry. The
activities of the group are undertaken through the company and its principal subsidiaries. The group operates in South
Africa.
The business of the group is:
• The provision of universal, accessible, reliable and affordable postal services to the people of the Republic of South
Africa in terms of the SA Post Offce Act No 22 of 2011 and the Postal Services Act No 124 of 1998;
• To conduct the business of a bank that will encourage and attract savings amongst the people of the Republic of
South Africa in accordance with the Postbank Act No 9 of 2010, as amended and the relevant sections of the Postal
Services Act No 124 of 1998, and also to provide agency services;
• To provide an infrastructure for the movement of paper and electronic documents between members in various
industries and become the preferred partner in the judicial system through its subsidiary the Document Exchange
Group; and
• To provide courier, freight and related logistical services to business within and beyond the South African boundaries.
The business of the group is conducted through its operating divisions: Mail, Consumer Services, Postbank as well as its
operating subsidiaries within logistics – The Courier and Freight Group (Pty) Ltd (CFG) and The Document Exchange (Pty)
Ltd (Docex).
These divisions and subsidiaries are responsible for all the trading activities of the group, which are conducted through
the mail distribution network as well as the infrastructure of service points available throughout the country. The main
support divisions in the group are: Human Resources, Information Technology, Property Management, Finance, Risk and
Compliance, Security and Investigation Services, Sales and Customer Services, Corporate Services, Marketing, Supply
Chain Management, Internal Audit and Strategic Planning.
There have been no material changes to the nature of the group’s business from the prior year.
97
SOUTH AFRICAN POST OFFICE (SOC) LIMITED (Registration number 1991/005477/06)
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
Directors’ Report
5. Directorate
The directors in of?ce at the date of this report are as follows:
DIRECTORS OFFICE DESIGNATION CHANGES
Dr HN Manzini Acting Chairperson of the Board: Group Non-executive Retired 07 November 2014
Mr CJ Hlekane CEO: Group /
Director: The Courier and Freight Group /
Director: The Document Exchange /
Director: Sapos Properties
Executive
Ms K Mzozoyana CFO: Group /
Director: The Courier and Freight Group /
Director: The Document Exchange /
Director: Sapos Properties
Executive
Mr M Mathonsi Acting Group CEO /
COO: Group /
Acting MD: The Courier and Freight Group /
Acting MD: The Document Exchange
Executive Appointed 01 July 2014
Acting Group CEO from
03 October 2014
Mr S Adam Acting MD: Postbank Executive Retired 15 October 2014
Mr MJ Mathibe MD: The Courier and Freight Group /
Acting MD: The Document Exchange
Executive Retired 25 July 2014
Mr B Yafele Acting COO: Group Executive Appointed 09 May 2013,
Retired 14 November 2013
Mr G Mothema Director: Group Executive Retired 26 June 2013
Ms G Simelane Director: Group Non-executive Retired 22 October 2014
Mr H Daniels Director: Group Non-executive Retired 22 April 2014
Mr JS Ngubane Director: Group Non-executive Appointed 17 December 2013,
Retired 07 November 2014
Mr JS Kotsi Director: Sapos Properties Non-executive
Mr MS Patel Director: Group /
Director: The Courier and Freight Group
Non-executive Retired 07 November 2014
Ms N Kela Director: Group /
Director: The Courier and Freight Group /
Director: The Document Exchange
Non-executive Retired 07 November 2014
Mr N Mnisi Director: Sapos Properties Non-executive
Mr NC Dube Director: The Document Exchange Non-executive Retired 14 July 2014
Ms NG Mthethwa Director: Group /
Chairperson of the Board: The Courier and
Freight Group /
Director: The Document Exchange
Non-executive Retired 23 October 2014
Mr R Sishuba Director: Group /
Chairperson of the Board: The Document
Exchange
Non-executive Retired 23 October 2014
Mr S Gounden Director: Group Non-executive Appointed 17 December 2013,
Retired 07 November 2014
Ms SP Mothelesi Director: Group Non-executive Appointed 17 December 2013,
Retired 07 November 2014
Mr T Mageza Director: Group Non-executive Appointed 17 December 2013,
Retired 07 November 2014
6. Directors’ interests in contracts
During the ?nancial year, no contracts were entered into in which directors or of?cers of the group had an interest.
98
SOUTH AFRICAN POST OFFICE (SOC) LIMITED (Registration number 1991/005477/06)
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
7. Secretary
The acting company secretary for the group is Adv MM Mphelo.
Postal address
PO Box 10000
Pretoria
0001
Business address
350 Witch Hazel Avenue
Highveld Extension 70
Centurion
0157
8. Auditors
Deloitte & Touche and Nkonki Incorporated (the ?rms) were appointed in of?ce as the joint auditors for the company and
its subsidiaries for 2014.
The board of directors, on recommendation of the audit committee, appointed the ?rms as the external auditors for the
group for the next ?ve years.
At the next AGM, the shareholder will be requested to re-appoint Deloitte & Touche and Nkonki Incorporated as the
independent external auditors of the group and to con?rm Mr T Kalan & Mr Z Nkosi as the designated lead audit partners
for the 2015 ?nancial year.
9. Review of ?nancial results and activities
The consolidated annual ?nancial statements have been prepared in accordance with International Financial Reporting
Standards (IFRS), the Public Finance Management Act No 1 of 1999 as amended, and the requirements of the Companies
Act No 71 of 2008. The accounting policies have been applied consistently compared to the prior year, except for the
adoption of new or revised accounting standards as set out in note 54.
The group recorded a net loss after tax for the year ended 31 March 2014 of R 361,210 million. This represented an
increase of 59% from the net loss after tax of the prior year of R 226,881 million.
Group revenue increased by 2% from R 5,690 billion in the prior year to R 5,778 billion for the year ended 31 March 2014.
The decline in mail and courier volumes and the loss of customers contributed to the marginal growth of 2% in revenues
despite the approval of a general price increase of 5% for reserved products and services by the Regulator, ICASA.
Labour unrest during the year under review also contributed to the loss in revenues earned and negatively impacted our
operations and customer service. Additional costs were also incurred to clear backlogs resulting from the strike action.
The lower revenues were to some extent offset by the implementation of cost optimisation Programmes and containment
measures across the group that resulted in operating expenses declining to R 6,506 billion from the prior year of
R 6,076 billion.
No subsidy funding has been received from the shareholder for the 2014 ?nancial year. The group will therefore need to
review the future extent of its universal service costs. The universal service obligation priorities that are being carried out
by the group will have to be reviewed in line with the business sustainability model, funding model and the execution of
the mandate in light of the removal of the subsidy from Government. In the meantime the South African Post Of?ce (SOC)
Limited has held discussions with the Department of Telecommunications and Postal Services, ICASA and the National
Treasury to review the license requirements over the medium term.
Directors’ Report
99
SOUTH AFRICAN POST OFFICE (SOC) LIMITED (Registration number 1991/005477/06)
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
The Postbank Corporatisation process has commenced and funding of R 481 million has been allocated by the National
Treasury over the Medium Term Expenditure Framework (MTEF) period for investment in systems and people necessary
for Postbank to meet the requirements of a registered bank.
Capital expenditure for the year amounted to R 222,265 million (2013: R 140,239 million).
Group cash ?ows used in operating activities increased by 29% from R 429,652 in the prior year to R 333,969 for the year
ended 31 March 2014.
10. Dividends
The company’s dividend policy is to consider an interim and a ?nal dividend in respect of each ?nancial year. At its discretion,
the board of directors may consider a special dividend, where appropriate. Depending on the perceived need to retain
funds for expansion or operating purposes, the board of directors may pass on the payment of dividends.
Given the current state of the global economic environment, the board of directors believes that it would be more
appropriate for the group to conserve cash and maintain adequate debt headroom to ensure that the group is best placed
to withstand any prolonged adverse economic conditions. Therefore the board of directors has resolved not to declare a
dividend for the ?nancial year ended 31 March 2014 (2013: R 0).
11. Property, plant and equipment
There was no change in the nature of the property, plant and equipment of the group or in the policy regarding their use.
The useful lives of certain property, plant and equipment have been revised during the current year. Refer to note 53 for
more detail.
The correction of prior period errors resulted in adjustments. Refer to note 55 for more detail.
In terms of the ICASA license agreement the South African Post Of?ce (SOC) Limited is required to own a museum
which contains assets of a historical nature, including stamps, paintings, artifacts and machinery. These assets have been
recognised for the ?rst time in the current ?nancial year after management catalogued and valued the assets. Refer to
note 3 for more detail.
12. Share capital
2014 2013 2012
‘000 ‘000 ‘000
NUMBER OF SHARES
Authorised
Ordinary par value shares of R1 each 1,000,000 1,000,000 1,000,000
2014 2013 2014 2013
‘000 ‘000 NUMBER OF SHARES
Issued
Ordinary par value shares 200,940 200,940 200,939,821 200,939,821
There have been no changes to the authorised or issued share capital during the year under review.
13. Interests in subsidiaries
Details of material interests in subsidiary companies are presented in the consolidated annual ?nancial statements in
note 7.
Directors’ Report
100
SOUTH AFRICAN POST OFFICE (SOC) LIMITED (Registration number 1991/005477/06)
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
The interest of the group in the pro?ts and losses after tax of its subsidiaries for the year ended 31 March 2014 are as
follows:
COMPANY
2014 2013 2012
R ‘000 R ‘000 R ‘000
Centriq Insurance Innovation Limited - - -
Sapos Properties (Bloemfontein) (Pty) Ltd (25) (28) (25)
Sapos Properties (Cape Town) (Pty) Ltd (102) (29) (36)
Sapos Properties (East Rand) (Pty) Ltd (309) (165) (135)
Sapos Properties (Port Elizabeth) (Pty) Ltd 188 (124) (189)
Sapos Properties (Rossburgh) (Pty) Ltd 34 48 49
The Courier and Freight Group (Pty) Ltd (75,345) (60,884) (47,134)
The Document Exchange (Pty) Ltd 1,735 (826) 724
Total interest in pro?ts and losses after tax (73,824) (62,008) (46,746)
As detailed in note 54, the group adopted “IFRS 10 Consolidated Financial Statements” in the current year, which
resulted in Centriq Insurance Innovation (Pty) Ltd, an investee which was previously consolidated under IAS 27 or SIC-12,
to no longer be consolidated into the group.
The South African Post Of?ce (SOC) Limited has undertaken to provide the Courier and Freight Group (Pty) Ltd with ?nancial
support as per the approved corporate plan and budgets as approved by the shareholder. Subordination agreements are
in place for each of the following subsidiaries:
• Sapos Properties (Bloemfontein) (Pty) Ltd
• Sapos Properties (Cape Town) (Pty) Ltd
• Sapos Properties (Rossburgh) (Pty) Ltd
• Sapos Properties (Port Elizabeth) (Pty) Ltd
• The Courier and Freight Group (Pty) Ltd
14. Fruitless and wasteful and irregular expenditure
As per the requirement of the board, the South African Post Of?ce (SOC) Limited has formulated a Financial Misconduct
Framework which creates a framework to enable the management of ?nancial misconduct activities such as fruitless &
wasteful and irregular expenditure.
A Financial Misconduct Committee has been established and mandated through the ?nancial misconduct policy to regulate,
monitor and report on all proven fruitless, wasteful and irregular expenditure and institute management consequences that
need to be carried out.
The Financial Misconduct Committee is reviewing certain instances of potential non-compliance with laws, policies and
procedures and will report on them, if there are any, in the next reporting period.
The total fruitless and wasteful expenditure for the group for the year amounted to R 41,197 million
(2013: R 39,132 million). Refer to note 48 for more detail.
The total irregular expenditure for the group for the year amounted to R 71,012 million (2013: R 45,653 million). Refer to
note 50 for more detail.
15. Postbank corporatisation
During the 2010/2011 ?nancial period the South African Postbank Limited Act no 9 of 2010 was signed into law providing
for the establishment of a subsidiary company of the South Africa Post Of?ce SOC Limited, namely the South African
Postbank Limited, to which the designated assets and liabilities of the current Postbank division will be transferred in terms
of the Postbank Act No 9 of 2010. It is envisaged that the new subsidiary will operate as a fully ?edged bank and will be
regulated in terms of the Banks Act. The Application to Establish a Bank was submitted to the South African Reserve Bank
on 25 September 2013.
Directors’ Report
101
SOUTH AFRICAN POST OFFICE (SOC) LIMITED (Registration number 1991/005477/06)
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
16. Liquidity and solvency
The directors have performed the required liquidity and solvency tests required by the Companies Act No 71 of 2008 (refer
to note 47 - Going concern).
17. Going concern
For the year ended 31 March 2014 the group generated net losses of R 361,210 million (2013: R 226,881 million), while the
total assets exceeded the total liabilities by R 2,438 billion (2013: R 2,305 billion), which implies that the entity is technically
solvent.
The organisation has been experiencing cash constraints, and as such has not had suf?cient working capital. The cause
of the deterioration of the group’s liquidity position is both due to internal and external factors, such as the migration of
customers towards digital communication, a general decline in the mail business revenue as well as an inappropriate and
inef?cient business model. This has resulted in the group not generating suf?cient revenue to ?nance its high cost-base
and thus a material uncertainty of the entity’s ability to continue as a going concern for the foreseeable future.
To assist the entity with working capital, realising its assets and discharging its liabilities in the normal course of business,
an overdraft of R 320 million has been secured with Standard Bank, which is guaranteed by the Shareholder. In addition,
the directors have received a letter of guarantee of R 1,67 billion from the shareholder to act as a letter of comfort to the
creditors, which also supports the going concern assumption on which the ?nancial statements have been prepared. The
terms of the guarantee are as follows:
• The guarantee will be reduced by any appropriation or transfer made by either the Department of Telecommunications
and Postal Services (DTPS) of the Treasury through the budget process;
• The South African Post Of?ce (SOC) Limited will require Government approval of the terms of the ?nancing raised
against the guarantee before concluding any agreements;
• Consideration is to be given to establishing a separate Postbank holding company independent of South African
Post Offce (SOC) Limited, to be established and designated as a bank controlling company for the Postbank;
• In addition, the net pro?t target will be reset in line with the latest net loss projections of R 676 million for the
2014/15 fnancial year;
• All salary increases must be approved by the Minister of Finance and the Minister of Telecommunications and
Postal Services;
• Should labour increases exceed the assumptions included in the turnaround plan, measures will have to be taken
to ensure that overall salary bill remains with the budgets identifed in the turnaround plan;
• The R 1,67 billion guarantee speci?cally excludes the guaranteeing of the overdraft facility as this was not included
in the headroom calculations;
• All conditions attached to the R 320 million also applies to this guarantee.
The directors have had to critically examine the ?nancial health of the organisation and as a result a new operation model
has been designed. This seeks to address the high ?xed cost structure and will see the organisation freeing up cash of
R1,5 billion over the next 3 years, which in turn will lead to better working capital management with less dependency on
the overdraft facility. Accordingly the consolidated annual ?nancial statements have been prepared on a going concern
basis.
18. Borrowing limitations
The company is a Schedule 2 entity as per the Public Finance Management Act. In terms of Section 66 (3) (a), the
accounting authority may not borrow money or issue a guarantee, indemnity or security, or enter into any other transaction
that binds or may bind that public entity to any ?nancial commitment.
19. Special resolutions
No special resolutions, the nature of which might be signi?cant to the shareholder in their appreciation of the state of
affairs of the group were made by the group or any of its subsidiaries during the period covered by this report.
Directors’ Report
102
SOUTH AFRICAN POST OFFICE (SOC) LIMITED (Registration number 1991/005477/06)
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
20. Events after the reporting period
Appointment of Administrator
On 7 November 2014, all the non-executive members of the Board resigned and duly the board and all of its committees
dissolved. Dr Simo Lushaba was appointed as administrator in terms of Section 25 of the South African Post Of?ce Act No
22 of 2011 (as amended). As at 31 March 2014, the Board (in compliance with King III) and all its committees were active
and functioning.
Industrial Strike Action
From July 2014 to November 2014, the company was subject to industrial strike action. This action has resulted in loss of
income and future income due to services not being rendered, delays in receipt of debtors payments, damage to and loss
of ?xed assets, increased security costs and injuries on duty (IODs). The estimated reported insurance claims, IODs and
Criminal cases value amounts to approximately R 6,2 million. This is however a non-adjusting balance sheet event and the
assets at 31 March 2014 are fairly stated.
Reportable Irregularities
The company has been issued with the following Reportable Irregularities as de?ned in the Auditing Profession Act 2005:
• Contravention of the Companies Act No 71 of 2008: Section 129(7) - Company resolution to begin business rescue
proceedings, which states that if the board of a company has reasonable grounds to believe that the company is
?nancially distressed, but the board has not adopted a resolution contemplated in this section, the board must
deliver a written notice to each affected person, setting out the criteria referred to in section 128(1)(f) that are
applicable to the company, and its reasons for not adopting a resolution contemplated in this section.
• Contravention of the Companies Act No 71 of 2008: Section 45 - Financial assistance to directors, which places a
limitation on a company’s board of directors’ powers, namely that despite any provision of a company’s Memorandum
of Incorporation to the contrary, the board of directors may not authorise any ?nancial assistance to a related or
inter-related company unless pursuant to a special resolution of the shareholders.
• Contravention of the Companies Act No 71 of 2008: Section 30(1) - Annual ?nancial statements, as well as
contravention of the Public Finance Management Act No 1 of 1999: Section 55(1) - Annual report and ?nancial
statements, which requires the consolidated and separate annual ?nancial statements to be approved and audited
within ?ve months (six months per the Companies Act) after year end.
The company is in constant contact with the joint auditors and CIPC in order to resolve these Reportable Irregularities.
21. Litigation statement
The group becomes involved from time to time in various claims and lawsuits incidental to the ordinary course of business.
The group is not currently involved in any such claims or lawsuits, which individually or in the aggregate, are expected to
have a material adverse effect on the business or its assets.
22. Insurance and risk management
The group follows a policy of reviewing the risks relating to assets and possible liabilities arising from business transactions
with its insurers on an annual basis. Wherever possible assets are automatically included. There is also a continuous asset
risk control programme, which is carried out in conjunction with the group’s insurance brokers. All risks are considered to
be adequately covered, except for political risks, in the case of which as much cover as is reasonably available has been
arranged.
23. Date of authorisation for issue of ?nancial statements
The consolidated annual ?nancial statements have been authorised for issue by the directors on 15 December 2014. No
authority was given to anyone to amend the consolidated annual ?nancial statements after the date of issue.
24. Acknowledgements
Thanks and appreciation are extended to all of our shareholders, staff, suppliers and consumers for their continued support
of the group.
Directors’ Report
103
SOUTH AFRICAN POST OFFICE (SOC) LIMITED (Registration number 1991/005477/06)
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
GROUP COMPANY
Note(s)
2014
R ‘000
2013
(Restated)
R ‘000
2012
(Restated)
R ‘000
2014
R ‘000
2013
(Restated)
R ‘000
2012
(Restated)
R ‘000
Assets
Non-Current Assets
Heritage assets 3 21,964 - - 21,964 - -
Investment property 4 20,686 21,161 20,379 20,686 21,161 20,379
Property, plant and equipment 5 1,367,609 1,325,223 1,324,322 1,347,422 1,303,355 1,298,815
Intangible assets 6 89,913 85,604 64,439 89,299 84,443 62,729
Investments in subsidiaries 7 - - - 17,744 17,589 17,694
Loans and long term receivables
to group companies
8 - - - 3,488 2,905 2,851
Investments and other ?nancial
assets
9 653,485 645,367 606,319 653,485 645,367 606,319
Deferred tax 10 800,568 654,537 537,104 798,017 651,308 534,245
2,954,225 2,731,892 2,552,563 2,952,105 2,726,128 2,543,032
Current Assets
Inventories 11 77,389 50,854 61,293 77,125 50,812 61,102
Loans and long term receivables
to group companies
8 - - - - 38,921 -
Investments and other ?nancial
assets
9 3,647,981 4,073,966 4,301,742 3,632,369 4,058,966 4,286,742
Current tax receivable 12 114 34,292 503 - 34,163 -
Operating lease asset 13 26 6 - - - -
Trade and other receivables 14 600,592 593,701 521,481 558,076 544,124 458,778
Cash and cash equivalents 15 4,011,114 3,276,755 3,277,136 3,974,896 3,237,394 3,237,102
8,337,216 8,029,574 8,162,155 8,242,466 7,964,380 8,043,724
Non-current assets held for sale 16 - - 201 - - -
Total Assets 11,291,441 10,761,466 10,714,919 11,194,571 10,690,508 10,586,756
Statement of Financial Position as at 31 March 2014
104
SOUTH AFRICAN POST OFFICE (SOC) LIMITED (Registration number 1991/005477/06)
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
GROUP COMPANY
Note(s)
2014
R ‘000
2013
(Restated)
R ‘000
2012
(Restated)
R ‘000
2014
R ‘000
2013
(Restated)
R ‘000
2012
(Restated)
R ‘000
Equity and Liabilities
Equity
Share capital 17 200,940 200,940 200,940 200,940 200,940 200,940
Non-distributable reserves 18 & 19
& 20
1,313,470 796,709 794,879 1,313,470 796,709 794,879
Retained income 923,886 1,307,341 1,646,294 927,426 1,333,321 1,649,955
2,438,296 2,304,990 2,642,113 2,441,836 2,330,970 2,645,774
Liabilities
Non-Current Liabilities
Operating lease accrual 13 76,491 48,720 44,047 76,134 48,498 43,507
Retirement bene?t obligation 21 1,308,066 1,310,187 1,177,399 1,307,524 1,309,615 1,176,861
Deferred tax 10 244,287 251,127 207,998 243,422 250,594 207,441
Provisions 22 399,348 372,788 282,877 393,594 366,981 270,067
2,028,192 1,982,822 1,712,321 2,020,674 1,975,688 1,697,876
Current Liabilities
Amount owing to shareholder 23 - 270,674 248,327 - 270,674 248,327
Government grants 24 85,305 94,401 108,670 85,305 94,401 108,670
Current tax payable 12 - - 7,947 - - 7,947
Operating lease accrual 13 3,637 20,421 16,255 3,123 19,044 15,159
Trade and other payables 25 809,000 702,563 738,284 737,900 648,136 662,226
Retirement bene?t obligation 21 131,243 126,648 121,808 131,202 126,607 121,767
Unearned revenue 26 324,631 330,862 365,075 312,923 317,452 335,606
Provisions 22 330,109 313,629 251,589 320,580 293,080 240,874
Deposits from the public 27 4,737,610 4,492,211 4,257,864 4,737,610 4,492,211 4,257,864
Funds collected on behalf of third
parties
28
92,040 122,245 244,666 92,040 122,245 244,666
Bank overdraft 15 311,378 - - 311,378 - -
6,824,953 6,473,654 6,360,485 6,732,061 6,383,850 6,243,106
Total Equity and Liabilities 11,291,441 10,761,466 10,714,919 11,194,571 10,690,508 10,586,756
Statement of Financial Position as at 31 March 2014
105
SOUTH AFRICAN POST OFFICE (SOC) LIMITED (Registration number 1991/005477/06)
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
GROUP COMPANY
Note(s) 2014
R ‘000
2013
(Restated)
R ‘000
2014
R ‘000
2013
(Restated)
R ‘000
Revenue 31 5,778,440 5,689,545 5,397,961 5,314,240
Other income 32 202,286 227,043 297,453 248,187
Operating expenses (2,093,595) (2,058,326) (2,190,829) (2,032,893)
Employee costs (3,665,103) (3,369,687) (3,494,745) (3,215,404)
Transport costs (747,353) (648,068) (559,766) (453,047)
Operating loss 33 (525,325) (159,493) (549,926) (138,917)
Finance income 34 141,579 119,582 142,591 120,755
Fair value adjustments 35 65,019 98,855 65,019 98,855
Interest paid 36 (192,545) (317,534) (192,419) (316,642)
Loss before tax (511,272) (258,590) (534,735) (235,949)
Taxation 37 150,062 31,709 151,120 31,356
Loss for the year (361,210) (226,881) (383,615) (204,593)
Other comprehensive income (loss):
Items that will not be reclassi?ed to
pro?t or loss:
Remeasurements on net de?ned bene?t
asset
(30,918) (155,639) (30,950) (155,611)
First time recognition of heritage assets 21,965 - 21,965 -
Income tax relating to items that will not
be reclassi?ed
4,565 43,571 4,565 43,571
Total items that will not be reclassi?ed
to pro?t or loss
(4,388) (112,068) (4,420) (112,040)
Items that may be reclassi?ed to pro?t
or loss:
Available-for-sale ?nancial assets
adjustments
8,264 2,250 8,264 2,250
Income tax relating to items that may be
reclassi?ed
(1,543) (420) (1,543) (420)
Total items that may be reclassi?ed to
pro?t or loss
6,721 1,830 6,721 1,830
Other comprehensive income (loss) for
the year net of taxation
38
2,333 (110,238) 2,301 (110,210)
Total comprehensive loss for the year (358,877) (337,119) (381,314) (314,803)
Statement of Comprehensive Income
106
SOUTH AFRICAN POST OFFICE (SOC) LIMITED (Registration number 1991/005477/06)
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
Share
capital
Revaluation
reserve
Fair value
adjustment
assets-
available-
for-sale
reserve
Convertible
loans from
shareholder
Total
reserves
Retained
income
Total equity
R ‘000 R ‘000 R ‘000 R ‘000 R ‘000 R ‘000 R ‘000
Group
Opening balance as
previously reported
200,940 - 10 750,000 750,010 1,761,247 2,712,197
Adjustments
Prior period error - - - - - (16,396) (16,396)
Change in accounting
policy
- - 44,869 - 44,869 (98,554) (53,685)
Balance at 01 April 2012
as restated
200,940 - 44,879 750,000 794,879 1,646,297 2,642,116
Loss for the year - - - - - (226,881) (226,881)
Other comprehensive
income (loss)
- - 1,830 - (1,830) (112,068) (110,238)
Total comprehensive
income (loss) for the year
- - 1,830 - (1,830) (338,949) (337,119)
Balance at 01 April 2013 200,940 - 46,709 750,000 796,709 1,307,348 2,304,997
Loss for the year - - - - - (361,210) (361,210)
Other comprehensive
income (loss)
- 17,864 6,721 - 24,585 (22,252) 2,333
Total comprehensive
income (loss) for the year
- 17,864 6,721 - 24,585 (383,462) (358,877)
Convertible loans from
shareholder
- - - 492,176 492,176 - 492,176
Total contributions by
owners of company
recognised directly in
equity
- - - 492,176 492,176 - 492,176
Balance at 31 March 2014 200,940 17,864 53,430 1,242,176 1,313,470 923,886 2,438,296
Note(s) 17 18 & 38 19 & 38 20 38
Statement of Changes in Equity
107
SOUTH AFRICAN POST OFFICE (SOC) LIMITED (Registration number 1991/005477/06)
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
Share
capital
Revaluation
reserve
Fair value
adjustment
assets-
available-
for-sale
reserve
Convertible
loans from
shareholder
Total
reserves
Retained
income
Total
equity
R ‘000 R ‘000 R ‘000 R ‘000 R ‘000 R ‘000 R ‘000
Company
Opening balance as
previously reported
200,940 - 10 750,000 750,010 1,709,935 2,660,885
Adjustments
Prior year error - - - - - (16,399) (16,399)
Change in accounting policy - - 44,869 - 44,869 (43,578) 1,291
Balance at 01 April 2012 as
restated
200,940 - 44,879 750,000 794,879 1,649,958 2,645,777
Loss for the year - - - - - (204,593) (204,593)
Other comprehensive
income (loss)
- - 1,830 - 1,830 (112,040) (110,210)
Total comprehensive
income (loss) for the year
- - 1,830 - 1,830 (316,633) (314,803)
Balance at 01 April 2013 200,940 - 46,709 750,000 796,709 1,333,325 2,330,974
Loss for the year - - - - - (383,615) (383,615)
Other comprehensive
income (loss)
- 17,864 6,721 - 24,585 (22,284) 2,301
Total comprehensive
income (loss) for the year
- 17,864 6,721 - 24,585 (405,899) (381,314)
Convertible loans from
shareholder
- - - 492,176 492,176 - 492,176
Total contributions by
owners of company
recognised directly in
equity
- - - 492,176 492,176 - 492,176
Balance at 31 March 2014 200,940 17,864 53,430 1,242,176 1,313,470 927,426 2,441,836
Note(s) 17 18 & 38 19 & 38 20 38
Statement of Changes in Equity
108
SOUTH AFRICAN POST OFFICE (SOC) LIMITED (Registration number 1991/005477/06)
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
GROUP COMPANY
Note(s)
2014
R ‘000
2013
Restated
R ‘000
2014
R ‘000
2013
Restated
R ‘000
Cash ?ows used in operating activities
Cash used in operations 40 (317,136) (191,930) (355,418) (147,892)
Interest received 141,579 117,665 142,591 118,838
Dividends received - 1,917 - 1,917
Interest paid (192,545) (315,962) (192,419) (316,642)
Tax received (paid) 41 34,133 (41,342) 34,163 (41,675)
Net cash used in operating activities (333,969) (429,652) (371,083) (385,454)
Cash ?ows used in investing activities
Purchase of property, plant and
equipment
5 (166,478) (110,161) (165,693) (108,075)
Sale of property, plant and equipment 5 - 11,267 - 4,513
Purchase of investment property 4 (39) (352) (39) (352)
Purchase of other intangible assets 6 (18,082) (47,628) (18,080) (47,627)
Loans to group companies repaid - - 38,858 -
Loans advanced to group companies - - - (38,858)
Net movement in ?nancial assets 491,150 289,833 491,762 289,833
Net cash from investing activities 306,551 142,959 346,808 99,434
Cash ?ows from ?nancing activities
Proceeds from government grant - 51,965 - 51,965
Movement in deposits from the public 245,399 234,347 245,399 234,347
Proceeds from shareholders loan 205,000 - 205,000 -
Net cash from ?nancing activities 450,399 286,312 450,399 286,312
Total cash movement for the year 422,981 (381) 426,124 292
Cash at the beginning of the year 3,276,755 3,277,136 3,237,394 3,237,102
Total cash at the end of the year 15 3,699,736 3,276,755 3,663,518 3,237,394
Statement of Cash Flows
109
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
1. Accounting Policies
1.1 Presentation of Consolidated Annual Financial Statements
The consolidated annual ?nancial statements have been prepared in accordance with International Financial Reporting
Standards (IFRS), and the Companies Act 71 of 2008. The annual ?nancial statements have been prepared on the historical
cost basis, except for available-for-sale ?nancial assets that are carried at fair value and all other ?nancial assets and
?nancial liabilities that are measured at fair value through pro?t and loss. These annual ?nancial statements incorporate
the principal accounting policies set out below. They are presented in South African Rands.
These accounting policies are consistent with the previous year, except for the changes set out in note 54 - Changes in
accounting policy.
1.2 Consolidation
Basis of consolidation
The consolidated annual ?nancial statements incorporate the consolidated annual ?nancial statements of the group and all
investees which are controlled by the group.
The group has control of an investee when it has power over the investee; it is exposed to or has rights to variable returns
from involvement with the investee; and it has the ability to use its power over the investee to affect the amount of the
investor’s returns.
The results of subsidiaries are included in the consolidated annual ?nancial statements from the effective date of acquisition
to the effective date of disposal.
Adjustments are made when necessary to the consolidated annual ?nancial statements of subsidiaries to bring their
accounting policies in line with those of the group.
All intra-group transactions, balances, income and expenses are eliminated in full on consolidation.
Subsidiaries
Subsidiaries are all entities (including structured entities) over which the group has control. The group controls an entity
when the group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to
affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control
is transferred to the group. They are deconsolidated from the date that control ceases.
The group accounts for business combinations using the acquisition method of accounting. The cost of the business
combination is measured as the aggregate of the fair values of assets given, liabilities incurred or assumed and equity
instruments issued. Costs directly attributable to the business combination are expensed as incurred, except the costs
to issue debt which are amortised as part of the effective interest and costs to issue equity which are included in equity.
Contingent consideration is included in the cost of the combination at fair value as at the date of acquisition. Subsequent
changes to the assets, liability or equity which arise as a result of the contingent consideration are not affected against
goodwill, unless they are valid measurement period adjustments. Subsequent changes to the fair value of the contingent
consideration that is deemed to be an asset or liability is recognised in accordance with IAS 39 either in pro?t or loss or as
a change to other comprehensive income. Contingent consideration that is classi?ed as equity is not re-measured, and its
subsequent settlement is accounted for within equity.
The acquiree’s identi?able assets, liabilities and contingent liabilities which meet the recognition conditions of IFRS 3
Business combinations are recognised at their fair values at acquisition date, except for non-current assets (or disposal
group) that are classi?ed as held-for-sale in accordance with IFRS 5 Non-current assets held-for-sale and discontinued
operations, which are recognised at fair value less costs to sell.
110
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
1. Accounting Policies (continued)
1.2 Consolidation (continued)
Contingent liabilities are only included in the identi?able assets and liabilities of the acquiree where there is a present
obligation at acquisition date.
On acquisition, the group assesses the classi?cation of the acquiree’s assets and liabilities and reclassi?es them where
the classi?cation is inappropriate for group purposes. This excludes lease agreements and insurance contracts, whose
classi?cation remains as per their inception date.
Non-controlling interests arising from a business combination, which are present ownership interests, and entitle their
holders to a proportionate share of the entity’s net assets in the event of liquidation, are measured either at the present
ownership interests’ proportionate share in the recognised amounts of the acquiree’s identi?able net assets or at fair
value. The treatment is not an accounting policy choice but is selected for each individual business combination, and
disclosed in the note for business combinations. All other components of non-controlling interests are measured at their
acquisition date fair values, unless another measurement basis is required by IFRS’s.
In cases where the group held a non-controlling shareholding in the acquiree prior to obtaining control, that interest is
measured to fair value as at acquisition date. The measurement to fair value is included in pro?t or loss for the year. Where
the existing shareholding was classi?ed as an available-for-sale ?nancial asset, the cumulative fair value adjustments
recognised previously to other comprehensive income and accumulated in equity are recognised in pro?t or loss as a
reclassi?cation adjustment.
Goodwill is determined as the consideration paid, plus the fair value of any shareholding held prior to obtaining control,
plus non-controlling interest and less the fair value of the identi?able assets and liabilities of the acquiree. If the total of
consideration transferred, non-controlling interest recognised and eviously held interest measured is less than the fair
value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognised directly
in the income statement.
Goodwill is not amortised but is tested on an annual basis for impairment. If goodwill is assessed to be impaired, that
impairment is not subsequently reversed.
Goodwill arising on acquisition of foreign entities is considered an asset of the foreign entity. In such cases the goodwill
is translated to the functional currency of the group at the end of each reporting period with the adjustment recognised in
equity through to other comprehensive income.
Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated.
unrealised losses are also eliminated. When necessary amounts reported by subsidiaries have been adjusted to conform
with the group’s accounting policies.
1.3 Signi?cant judgements and sources of estimation uncertainty
In preparing the consolidated annual ?nancial statements, management is required to make estimates and assumptions
that affect the amounts represented in the consolidated annual ?nancial statements and related disclosures. Use of
available information and the application of judgement is inherent in the formation of estimates. Actual results in the future
could differ from these estimates which may be material to the consolidated annual ?nancial statements. Signi?cant
judgements include:
111
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
1. Accounting Policies (continued)
1.3 Signi?cant judgements and sources of estimation uncertainty (continued)
Trade receivables, Held to maturity investments and Loans and receivables
The group assesses its trade receivables, held to maturity investments and loans and receivables for impairment at the
end of each reporting period. In determining whether an impairment loss should be recorded in pro?t or loss, the group
makes judgements as to whether there is observable data indicating a measurable decrease in the estimated future cash
?ows from a ?nancial asset.
The impairment for trade receivables, held to maturity investments and loans and receivables is calculated on a portfolio
basis, based on historical loss ratios, adjusted for national and industry-speci?c economic conditions and other indicators
present at the reporting date that correlate with defaults on the portfolio. These annual loss ratios are applied to loan
balances in the portfolio and scaled to the estimated loss emergence period.
Available-for-sale ?nancial assets
The group follows the guidance of IAS 39 to determine when an available-for-sale ?nancial asset is impaired. This
determination requires signi?cant judgment. In making this judgment, the group evaluates, among other factors, the
duration and extent to which the fair value of an investment is less than its cost; and the fnancial health of and near-term
business outlook for the investee, including factors such as industry and sector performance, changes in technology and
operational and ?nancing cash ?ow.
Allowance for slow moving, damaged and obsolete stock
An allowance was made for stock to be written down to the lower of cost or net realisable value. Management has made
estimates of the selling price and direct cost to sell on certain inventory items.
Fair value estimation
The fair value of ?nancial instruments traded in active markets (such as trading and available-for-sale securities) is based
on quoted market prices at the end of the reporting period. The quoted market price used for ?nancial assets held by the
group is the current bid price.
The fair value of ?nancial instruments that are not traded in an active market (for example, over the counter derivatives)
is determined by using valuation techniques. The group uses a variety of methods and makes assumptions that are
based on market conditions existing at the end of each reporting period. Quoted market prices or dealer quotes for
similar instruments are used for long-term debt. Other techniques, such as estimated discounted cash ?ows, are used to
determine fair value for the remaining ?nancial instruments.
The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair
values.
The fair value of ?nancial liabilities for disclosure purposes is estimated by discounting the future contractual cash ?ows at
the current market interest rate that is available to the group for similar ?nancial statements.
Impairment testing of non - ?nancial assets
The recoverable amounts of cash-generating units and individual assets have been determined based on the higher of
value in use calculations and fair values less costs to sell. These calculations require the use of estimates and assumptions.
It is reasonably possible that assumptions may change which may then impact estimations and may then require a material
adjustment to the carrying value of tangible assets.
112
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
1. Accounting Policies (continued)
1.3 Signi?cant judgements and sources of estimation uncertainty (continued)
The group reviews and tests the carrying value of assets when events or changes in circumstances suggest that the
carrying amount may not be recoverable.
Provisions
Provisions were raised and management determined an estimate based on the information available.
Expected manner of realisation for deferred tax
Deferred tax is provided for on the fair value adjustments of investment properties based on the expected manner of
recovery, i.e. sale or use. This manner of recovery affects the rate used to determine the deferred tax liability.
Taxation
Judgement is required in determining the provision for income taxes due to the complexity of legislation. There are many
transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business.
The group recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due.
Where the ?nal tax outcome of these matters is different from the amounts that were initially recorded, such differences
will impact the income tax and deferred tax provisions in the period in which such determination is made.
The group recognises the net future tax bene?t related to deferred income tax assets to the extent that it is probable
that the deductible temporary differences will reverse in the foreseeable future. Assessing the recoverability of deferred
income tax assets requires the group to make signi?cant estimates related to expectations of future taxable income.
Estimates of future taxable income are based on forecast cash ?ows from operations and the application of existing tax
laws in each jurisdiction. To the extent that future cash ?ows and taxable income differ signi?cantly from estimates, the
ability of the group to realise the net deferred tax assets recorded at the end of the reporting period could be impacted.
Site restoration and dismantling cost
Decommissioning costs that are expected to be incurred upon the termination or conclusion of lease agreements have
been capitalised in terms of the relevant lease agreements. It is uncertain whether these leases will be extended or
terminated earlier and this creates uncertainties regarding the amount and timing of the cash ?ows. There are no expected
reimbursements for the costs that will be incurred.
The main assumptions used in the calculation of this capitalisation are as follows:
The Universal Service Obligations (USO) obliges the South African Post Of?ce (SOC) Limited to expand its presence in
South Africa (SA), especially in rural SA. This means that the South African Post Of?ce (SOC) Limited would most probably
not reduce the number of leasehold premises, but instead expand its presence to more buildings. The type of leasehold
premises has been taken into account in arriving at a conclusion regarding possible restoration. A vacant stand with a Mail
Collection Point (MCP) would probably not require restoration should they ever wish to relocate. The South African Post
Of?ce (SOC) Limited may not wish to relocate from shopping centres and malls. In the event that it does relocate the
terms of the lease and the nature of its business are such that restoration of the premises would not be required. The date
that the South African Post Of?ce (SOC) Limited originally occupied the leasehold premises is also an indication of the
chances of ever moving out of the premises, thus negating the liability to restore such leasehold premises. During the 2014
?nancial period, the South African Post Of?ce (SOC) Limited relocated from 16 (2013: 16) leasehold premises of which six
(2013: six) of the lessors required restoration, thus further supporting the expectation that relocation and thus restoration
would not occur in most instances.
113
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
1. Accounting Policies (continued)
1.4 Heritage assets
An entity shall recognise a heritage asset when, and only when:
• the entity controls the asset as a result of past events;
• it is probable that future economic benefts associated with the asset will fow to the entity; and
• the fair value or cost of the asset can be measured reliably.
Heritage assets are measured at their fair value less costs to sell.
The fair value of heritage assets is determined based on market prices in the local area.
A gain or loss arising on initial recognition of heritage assets at fair value less costs to sell is included in other comprehensive
income for the period in which it arises.
Revaluations are made with suf?cient regularity such that the carrying amount does not differ materially from that which
would be determined using fair value at the end of the reporting period.
Any increase in an asset’s carrying amount, as a result of a revaluation, is credited to other comprehensive income and
accumulated in the revaluation surplus in equity. The increase is recognised in pro?t or loss to the extent that it reverses a
revaluation decrease of the same asset previously recognised in pro?t or loss.
Any decrease in an asset’s carrying amount, as a result of a revaluation, is recognised in pro?t or loss in the current period.
The decrease is debited in other comprehensive income to the extent of any credit balance existing in the revaluation
surplus in respect of that asset.
1.5 Investment property
Investment property is recognised as an asset when, and only when, it is probable that the future economic bene?ts that
are associated with the investment property will ?ow to the enterprise, and the cost of the investment property can be
measured reliably.
Investment property is initially recognised at cost. Transaction costs are included in the initial measurement.
Investment property is carried at cost less depreciation and any accumulated impairment losses.
Depreciation is provided to write down the cost, less estimated residual value on straight line basis over the useful life of
the property, which is as follows:
Item Useful life
Buildings 30 - 100 years
Land Inde?nite
The residual value, useful life and depreciation method of each asset are reviewed at the end of each reporting period. If
the expectations differ from previous estimates, the change is accounted for as a change in accounting estimate.
The depreciation charge for each period is recognised in pro?t or loss.
1.6 Property, plant and equipment
The cost of an item of property, plant and equipment is recognised as an asset when:
• it is probable that future economic benefts associated with the item will fow to the group; and
• the cost of the item can be measured reliably.
Property, plant and equipment is initially measured at cost.
Costs include costs incurred initially to acquire or construct an item of property, plant and equipment and costs incurred
subsequently to add to, replace part of, or service it. If a replacement cost is recognised in the carrying amount of an item
of property, plant and equipment, the carrying amount of the replaced part is derecognised.
114
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
1. Accounting Policies (continued)
1.6 Property, plant and equipment (continued)
The initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located is also
included in the cost of property, plant and equipment, where the entity is obligated to incur such expenditure, and where
the obligation arises as a result of acquiring the asset or using it for purposes other than the production of inventories.
Property, plant and equipment is carried at cost less accumulated depreciation and any impairment losses.
Property, plant and equipment is depreciated on the straight line basis over their expected useful lives to their estimated
residual value.
The useful lives of items of property, plant and equipment have been assessed as follows:
Item Average useful life
Assets under construction Not depreciated until asset is complete and in use
Buildings 30 - 100 years
Data processing equipment 3 - 8 years
Furniture and ?xtures 3 - 12 years
Land Inde?nite
Leasehold improvements Term of the lease
Motor vehicles 3 - 20 years
Plant and machinery 3 - 20 years
Site restoraion Expected term of the lease
The residual value, useful life and depreciation method of each asset are reviewed at the end of each reporting period. If
the expectations differ from previous estimates, the change is accounted for as a change in accounting estimate.
The depreciation charge for each period is recognised in pro?t or loss.
The gain or loss arising from the derecognition of an item of property, plant and equipment is included in pro?t or loss
when the item is derecognised. The gain or loss arising from the derecognition of an item of property, plant and equipment
is determined as the difference between the net disposal proceeds, if any, and the carrying amount of the item.
1.7 Site restoration and dismantling cost
The company has an obligation to dismantle, remove and restore items of property, plant and equipment. Such obligations
are referred to as ‘decommissioning, restoration and similar liabilities’. The cost of an item of property, plant and equipment
includes the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located,
the obligation for which an entity incurs either when the item is acquired or as a consequence of having used the item
during a particular period for purposes other than to produce inventories during that period. These assets are individually
considered and depreciated over the expected lease term rather than the actual lease contract.
If the related asset is measured using the revaluation model:
a. Changes in the liability alter the revaluation surplus or de?cit previously recognised on that asset, so that:
– a decrease in the liability (subject to (b)) is credited to other comprehensive income and accumulated in
the revaluation surplus in equity, except that it is recognised in pro?t or loss to the extent that it reverses a
revaluation defcit on the asset that was previously recognised in proft or loss; and
– an increase in the liability is recognised in pro?t or loss, except that it is debited to other comprehensive
income as a decrease to the revaluation surplus to the extent of any credit balance existing in the revaluation
surplus in respect of that asset.
115
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
1. Accounting Policies (continued)
1.7 Site restoration and dismantling cost (continued)
b. In the event that a decrease in the liability exceeds the carrying amount that would have been recognised had the
asset been carried under the cost model, the excess is recognised immediately in pro?t or loss.
c. A change in the liability is an indication that the asset may have to be revalued in order to ensure that the carrying
amount does not differ materially from that which would be determined using fair value at the end of the reporting
period. Any such revaluation is taken into account in determining the amounts to be taken to pro?t or loss and to
other comprehensive income under (a). If a revaluation is necessary, all assets of that class are revalued.
1.8 Intangible assets
An intangible asset is recognised when:
• it is probable that the expected future economic benefts that are attributable to the asset will fow to the entity; and
• the cost of the asset can be measured reliably.
Intangible assets are initially recognised at cost.
An intangible asset arising from development (or from the development phase of an internal project) is recognised when:
• it is technically feasible to complete the asset so that it will be available for use or sale.
• there is an intention to complete and use or sell it.
• there is an ability to use or sell it.
• it will generate probable future economic bene?ts.
• there are available technical, ?nancial and other resources to complete the development and to use or sell the
asset.
• the expenditure attributable to the asset during its development can be measured reliably.
Intangible assets are carried at cost less any accumulated amortisation and any impairment losses.
The amortisation period and the amortisation method for intangible assets are reviewed regularly.
Internally generated brands, mastheads, publishing titles, customer lists and items similar in substance are not recognised
as intangible assets.
Amortisation is provided to write down the intangible assets, on a straight line basis, to their residual values as follows:
Item Average useful life
Intangible assets under development Not amortised until asset is complete and in use
Licenses 1-3
Software 2-8
Software - personal computers 1-3
116
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
1. Accounting Policies (continued)
1.9 Interests in subsidiaries
Company consolidated annual ?nancial statements
In the company’s separate consolidated annual ?nancial statements, investments in subsidiaries are carried at cost less
any accumulated impairment.
The cost of an investment in a subsidiary is the aggregate of:
• the fair value, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments
issued by the company; plus
• any costs directly attributable to the purchase of the subsidiary.
1.10 Financial instruments
Classi?cation
The group classi?es ?nancial assets and ?nancial liabilities into the following categories:
• Financial assets at fair value through pro?t or loss - held for trading
• Financial assets at fair value through pro?t or loss - designated
• Held-to-maturity investment
• Loans and receivables
• Available-for-sale ?nancial assets
• Financial liabilities at fair value through pro?t or loss - designated
• Financial liabilities measured at amortised cost
Classi?cation depends on the purpose for which the ?nancial instruments were obtained/incurred and takes place at initial
recognition. Classi?cation is re-assessed on an annual basis, except for derivatives and ?nancial assets designated as at
fair value through pro?t or loss, which shall not be classi?ed out of the fair value through pro?t or loss category.
A ?nancial asset classi?ed as available-for-sale that would have met the de?nition of loans and receivables may be
reclassi?ed to loans and receivables if the entity has the intention and ability to hold the asset for the foreseeable future
or until maturity.
Initial recognition and measurement
Financial instruments are recognised initially when the group becomes a party to the contractual provisions of the
instruments.
The group classi?es ?nancial instruments, or their component parts, on initial recognition as a ?nancial asset, a ?nancial
liability or an equity instrument in accordance with the substance of the contractual arrangement.
Financial instruments are measured initially at fair value, except for equity investments for which a fair value is not
determinable, which are measured at cost and are classi?ed as available-for-sale ?nancial assets.
For ?nancial instruments which are not at fair value through pro?t or loss, transaction costs are included in the initial
measurement of the instrument.
Transaction costs on ?nancial instruments at fair value through pro?t or loss are recognised in pro?t or loss.
117
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
1. Accounting Policies (continued)
1.10 Financial instruments (continued)
Regular way purchases of ?nancial assets are accounted for at trade date. Investments are recognised and derecognised
on trade date. Trade day is de?ned as the day where all risks and rewards associated with the investment are transferred
and where the purchase or sale of an investment is under a contract whose terms require delivery of the instrument within
the timeframe established by the market concerned. The initial measurement is at fair value plus transaction costs, except
fort hose ?nancial assets classi?ed at FVTPL which are initially measured at fair value.
Subsequent measurement
Financial instruments at fair value through pro?t or loss are subsequently measured at fair value, with gains and losses
arising from changes in fair value being included in pro?t or loss for the period.
Net gains or losses on the ?nancial instruments at fair value through pro?t or loss exclude dividends and interest.
Dividend income is recognised in pro?t or loss as part of other income when the group’s right to receive payment is
established.
Loans and receivables are non-derivative ?nancial assets with ?xed or determinable payments that are not quoted in an
active market. Loans and receivables are subsequently measured at amortised cost, using the effective interest method,
less accumulated impairment losses. Interest income is recognised by applying the effective interest rate except for short-
term receivables where the recognition of interest would be immaterial.
Held-to-maturity investments are non-derivative ?nancial assets with ?xed or determinable payments and ?xed maturity
that the group has the intent and ability to hold to maturity. Held-to-maturity investments are subsequently measured at
amortised cost, using the effective interest method, less accumulated impairment losses, with revenue recognised on
an effective yield basis. The group’s cash on hand and cash in the bank equivalents and short-term deposits (i.e ?xed and
cancelable deposits) are included in the held-to-maturity category.
Financial assets are classi?ed as available-for-sale where the intention with regard to the instrument and its origination
does not fall within the ambit of other ?nancial asset classi?cation. Available-for-sale ?nancial assets are measured at fair
value, with fair value gains and losses recognised directly in other comprehensive income as the available-for-sale equity
revaluation reserve. Interest is calculated using the effective interest method. Where the ?nancial asset is disposed of
or is determined to be impaired, the cumulative gain or loss previously recognised in the available for sale reserve is
included in pro?t or loss for the period. Negotiable Certi?cates of Deposits (NCDs) and equity investments held by the
group are classi?ed under available-for-sale ?nancial assets. Available-for-sale ?nancial assets are subsequently measured
at fair value. This excludes equity investments for which a fair value is not determinable, which are measured at cost less
accumulated impairment losses.
Gains and losses arising from changes in fair value are recognised in other comprehensive income and accumulated in
equity until the asset is disposed of or determined to be impaired. Interest on available-for-sale ?nancial assets calculated
using the effective interest method is recognised in pro?t or loss as part of other income. Dividends received on available-
for-sale equity instruments are recognised in pro?t or loss as part of other income when the group’s right to receive
payment is established.
Dividends on available-for-sale equity instruments are recognised in pro?t or loss when the group’s right to receive
dividends is established. Financial assets may be designated as available-for-sale in accordance with the group Asset and
Liability Management (ALM) investment strategy.
Financial liabilities at amortised cost are subsequently measured at amortised cost, using the effective interest method.
Financial liabilities at FVTPL are subsequently measured at fair value excluding transaction cost on disposal. Change in fair
value is directly recognised in pro?t and loss.
118
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
1. Accounting Policies (continued)
1.10 Financial instruments (continued)
Derecognition
Financial assets are derecognised when the rights to receive cash ?ows from the investments have expired or have been
transferred and the group has transferred substantially all risks and rewards of ownership. If the group neither transfers
nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the group
recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the group retains
substantially all the risks and rewards of ownership of the transferred ?nancial asset, the group continues to recognise
the ?nancial asset and also recognises a collateralised borrowing for the proceeds received.
Regular way sales of ?nancial assets are accounted for at trade date.
A ?nancial liability (or part of a ?nancial liability) is derecognised and removed from the Statement of Financial Position
when it is extinguished, that is, when the obligation is discharged, cancelled or expires.
An exchange between an existing borrower and lender of debt instruments with substantially different terms, or the
modi?cation of the terms of the existing ?nancial liability, shall be recognised as an extinguishments of the original
?nancial liability and the recognition of a new ?nancial liability.
Fair value determination
The fair values of quoted investments are based on current bid prices. If the market for a ?nancial asset is not active (and
for unlisted securities), the group establishes fair value by using valuation techniques. These include the use of recent
arm’s length transactions, reference to other instruments that are substantially the same, discounted cash ?ow analysis,
and option pricing models making maximum use of market inputs and relying as little as possible on entity-speci?c inputs.
Impairment of ?nancial assets
Financial assets, other than those at FVTPL, are assessed for indications of impairment during the reporting period and at
each reporting date in line with the group’s treasury policy. Financial assets are impaired where there is objective evidence
that, as result of one or more events that occurred after the initial recognition of the ?nancial asset, the estimated future
cash ?ows of the ?nancial asset have been impacted.
For amounts due to the group, signi?cant ?nancial dif?culties of the debtor, probability that the debtor will enter bankruptcy
and default of payments are all considered indicators of impairment.
In the case of equity securities classi?ed as available-for-sale, a signi?cant or prolonged decline in the fair value of the
security below its cost is considered an indicator of impairment. If any such evidence exists for available-for-sale ?nancial
assets, the cumulative loss - measured as the difference between the acquisition cost and current fair value, less any
impairment loss on that ?nancial asset previously recognised in pro?t or loss - is removed from equity as a reclassi?cation
adjustment to other comprehensive income and recognised in pro?t or loss.
Impairment losses are recognised in pro?t or loss.
The carrying amount of the ?nancial asset is reduced by the impairment loss directly for all ?nancial assets with the
exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When
a trade receivable is considered uncollectable, it is written off against the allowance account. Subsequent recoveries
of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the
allowance account are recognised in the pro?t or loss. The group’s policy on the impairment of trade and other receivables
is outlined in the below paragraphs of this note.
119
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
1. Accounting Policies (continued)
1.10 Financial instruments (continued)
Impairment losses are reversed when an increase in the ?nancial asset’s recoverable amount can be related objectively to
an event occurring after the impairment was recognised, subject to the restriction that the carrying amount of the ?nancial
asset at the date that the impairment is reversed shall not exceed what the carrying amount would have been had the
impairment not been recognised.
Reversals of impairment losses are recognised in pro?t or loss except for equity investments classi?ed as available-for-sale.
Impairment losses are also not subsequently reversed for available-for-sale equity investments which are held at cost
because fair value was not determinable.
Where ?nancial assets are impaired through the use of an allowance account, the amount of the loss is recognised in pro?t
or loss within operating expenses. When such assets are written off, the write off is made against the relevant allowance
account. Subsequent recoveries of amounts previously written off are credited against operating expenses.
Financial instruments designated as at FVTPL
Financial assets may be designated at initial recognition as at FVTPL if any of the following criteria are met:
• the designation eliminates or signi?cantly reduces the inconsistent treatment that would otherwise arise from
measuring the assets and liabilities or recognising gains or losses on them on a different basis;
• the assets and liabilities are part of a group of ?nancial assets which are managed and their performance evaluated
on a fair value basis, in accordance with a documented risk management strategy; or
• the ?nancial assets and liabilities contain an embedded derivative that would need to be separately recorded.
Loans to (from) group companies
These include loans to and from holding companies, fellow subsidiaries and subsidiaries are recognised initially at fair value
plus direct transaction costs.
Loans to group companies are classi?ed as loans and receivables.
Loans from group companies are classi?ed as ?nancial liabilities measured at amortised cost.
Loans from the shareholder
These ?nancial liabilities are classi?ed as ?nancial liabilities measured at amortised cost.
Trade and other receivables
Trade receivables are measured at initial recognition at fair value, and are subsequently measured at amortised cost using
the effective interest method. Appropriate allowances for estimated irrecoverable amounts are recognised in pro?t or loss
when there is objective evidence that the asset is impaired. Signi?cant ?nancial dif?culties of the debtor, probability that
the debtor will enter bankruptcy or ?nancial reorganisation, and default or delinquency in payments (more than 30 days
overdue) are considered indicators that the trade receivable is impaired. The allowance recognised is measured as the
difference between the asset’s carrying amount and the present value of estimated future cash ?ows discounted at the
effective interest rate computed at initial recognition.
The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is
recognised in pro?t or loss within operating expenses. When a trade receivable is uncollectable, it is written off against
the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are credited against
operating expenses in pro?t or loss.
Trade and other receivables are classi?ed as loans and receivables.
120
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
1. Accounting Policies (continued)
1.10 Financial instruments (continued)
Trade and other payables
Trade payables are initially measured at fair value, and are subsequently measured at amortised cost, using the effective
interest method.
Other payables are initially measured at fair value and are subsequently measured at FVTPL with any resulting gains and
losses recognised in pro?t and loss.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits, and other short-term highly liquid investments
that are readily convertible to a known amount of cash and are subject to an insigni?cant risk of changes in value. These
are initially and subsequently recorded at fair value.
Bank overdraft and borrowings
Bank overdrafts and borrowings are initially measured at fair value, and are subsequently measured at amortised cost,
using the effective interest method.
Held-to-maturity
These ?nancial assets are initially measured at fair value plus direct transaction costs.
At subsequent reporting dates these are measured at amortised cost using the effective interest method, less any
impairment loss recognised to re?ect irrecoverable amounts. An impairment loss is recognised in pro?t or loss when there
is objective evidence that the asset is impaired, and is measured as the difference between the investment’s carrying
amount and the present value of estimated future cash ?ows discounted at the effective interest rate computed at initial
recognition. Impairment losses are reversed in subsequent periods when an increase in the investment’s recoverable
amount can be related objectively to an event occurring after the impairment was recognised, subject to the restriction
that the carrying amount of the investment at the date the impairment is reversed shall not exceed what the amortised
cost would have been had the impairment not been recognised.
Financial assets that the group has the positive intention and ability to hold to maturity are classi?ed as held to maturity.
Offsetting
Where a legally enforceable right of offsetting exists for recognised ?nancial assets and ?nancial liabilities, and there is an
intention to settle the liability and realise the asset simultaneously, or to settle on a net basis, all related ?nancial effects
are offset. Otherwise it is not allowed.
1.11 Taxation
Current tax assets and liabilities
Current tax for current and prior periods is, to the extent unpaid, recognised as a liability. If the amount already paid in
respect of current and prior periods exceeds the amount due for those periods, the excess is recognised as an asset.
Current tax liabilities (assets) for the current and prior periods are measured at the amount expected to be paid to (recovered
from) the tax authorities, using the tax rates (and tax laws) that have been enacted or substantively enacted by the end of
the reporting period.
121
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
1. Accounting Policies (continued)
1.11 Taxation (continued)
Deferred tax assets and liabilities
A deferred tax liability is recognised for all taxable temporary differences, except to the extent that the deferred tax liability
arises from:
• the initial recognition of an asset or liability in a transaction which:
– is not a business combination; and
– at the time of the transaction, affects neither accounting pro?t nor taxable pro?t (tax loss).
A deferred tax liability is recognised for all taxable temporary differences associated with investments in subsidiaries and
branches except to the extent that both of the following conditions are satis?ed:
• the parent or investor is able to control the timing of the reversal of the temporary difference; and
• it is probable that the temporary difference will not reverse in the foreseeable future.
A deferred tax asset is recognised for all deductible temporary differences to the extent that it is probable that taxable
pro?t will be available against which the deductible temporary difference can be utilised, unless the deferred tax asset
arises from the initial recognition of an asset or liability in a transaction that:
• is not a business combination; and
• at the time of the transaction, affects neither accounting pro?t nor taxable pro?t (tax loss).
A deferred tax asset is recognised for all deductible temporary differences arising from investments in subsidiaries and
branches to the extent that it is probable that:
• the temporary difference will reverse in the foreseeable future; and
• taxable pro?t will be available against which the temporary difference can be utilised.
A deferred tax asset is recognised for the carry forward of unused tax losses and unused STC credits to the extent that
it is probable that future taxable pro?t will be available against which the unused tax losses and unused STC credits can
be utilised.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset
is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by
the end of the reporting period.
Tax expenses
Current and deferred taxes are recognised as income or an expense and included in pro?t or loss for the period, except to
the extent that the tax arises from: a transaction or event which is recognised, in the same or a different period, to other
comprehensive income.
Current tax and deferred taxes are charged or credited to other comprehensive income if the tax relates to items that are
credited or charged, in the same or a different period, to other comprehensive income.
Current tax and deferred taxes are charged or credited directly to equity if the tax relates to items that are credited or
charged, in the same or a different period, directly in equity.
122
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
1. Accounting Policies (continued)
1.12 Leases
A lease is classi?ed as a ?nance lease if it transfers substantially all the risks and rewards incidental to ownership. A lease
is classi?ed as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership.
Operating leases - lessor
Operating lease income is recognised as an income on a straight-line basis over the lease term.
Income from leases is disclosed under revenue in pro?t or loss.
Operating leases – lessee
Operating lease payments are recognised as an expense on a straight-line basis over the lease term. The difference
between the amounts recognised as an expense and the contractual payments are recognised as an operating lease
asset. This liability is not discounted.
1.13 Inventories
Inventories are measured at the lower of cost and net realisable value.
Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion
and the estimated costs necessary to make the sale.
The cost of inventories comprises of all costs of purchase, costs of conversion and other costs incurred in bringing the
inventories to their present location and condition.
The cost of inventories is assigned using the weighted average cost formula. The same cost formula is used for all
inventories having a similar nature and use to the entity.
When inventories are sold, the carrying amount of those inventories are recognised as an expense in the period in which
the related revenue is recognised. The amount of any write-down of inventories to net realisable value and all losses of
inventories are recognised as an expense in the period the write-down or loss occurs. The amount of any reversal of any
write-down of inventories, arising from an increase in net realisable value, are recognised as a reduction in the amount of
inventories recognised as an expense in the period in which the reversal occurs.
1.14 Non-current assets held for sale
Non-current assets are classi?ed as held for sale if their carrying amount will be recovered through a sale transaction
rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset
is available for immediate sale in its present condition. Management must be committed to the sale, which should be
expected to qualify for recognition as a completed sale within one year from the date of classi?cation.
Non-current assets held for sale are measured at the lower of its carrying amount and fair value less costs to sell.
A non-current asset is not depreciated (or amortised) while it is classi?ed as held for sale.
1.15 Impairment of non-?nancial assets
The group assesses at each end of the reporting period whether there is any indication that an asset may be impaired. If
any such indication exists, the group estimates the recoverable amount of the asset.
The recoverable amount of an asset is the higher of its fair value less costs to sell and its value in use.
If the recoverable amount of an asset is less than its carrying amount, the carrying amount of the asset is reduced to its
recoverable amount. That reduction is an impairment loss.
123
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
1. Accounting Policies (continued)
1.15 Impairment of non-?nancial assets (continued)
An impairment loss of assets carried at cost less any accumulated depreciation or amortisation is recognised immediately
in pro?t or loss. Any impairment loss of a revalued asset is treated as a revaluation decrease.
An entity assesses at each reporting date whether there is any indication that an impairment loss recognised in prior
periods for assets may no longer exist or may have decreased. If any such indication exists, the recoverable amounts of
those assets are estimated.
The increased carrying amount of an asset attributable to a reversal of an impairment loss does not exceed the carrying
amount that would have been determined had no impairment loss been recognised for the asset in prior periods.
A reversal of an impairment loss of assets carried at cost less accumulated depreciation or amortisation is recognised
immediately in pro?t or loss. Any reversal of an impairment loss of a revalued asset is treated as a revaluation increase.
1.16 Share capital and equity
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its
liabilities.
1.17 Employee bene?ts
Short-term employee bene?ts
The cost of short-term employee bene?ts, (those payable within 12 months after the service is rendered, such as paid
vacation leave and sick leave, bonuses, and non-monetary bene?ts such as medical care), are recognised in the period in
which the service is rendered and are not discounted.
The expected cost of compensated absences is recognised as an expense as the employees render services that increase
their entitlement or, in the case of non-accumulating absences, when the absence occurs.
The expected cost of pro?t sharing and bonus payments is recognised as an expense when there is a legal or constructive
obligation to make such payments as a result of past performance.
De?ned contribution plans
Payments to de?ned contribution retirement bene?t plans are charged as an expense as they fall due.
A de?ned contribution plan is a pension plan under which the group pays ?xed contributions. The group has no legal
orconstructive obligations to pay further contributions if the fund does not hold suf?cient assets to pay all employees
the bene?ts relating to employee service in the current and prior periods. Contributions are recognised as an expense as
incurred.
De?ned bene?t plans
A de?ned bene?t plans the cost of providing the bene?ts is determined using the projected unit credit method.
Actuarial valuations are conducted on an annual basis by independent actuaries separately for each plan.
Past service costs are recognised immediately.
Actuarial gains and losses are recognised in the year in which they arise, in other comprehensive income.
124
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
1. Accounting Policies (continued)
1.18 Provisions and contingencies
Provisions are recognised when:
• the group has a present obligation as a result of a past event;
• it is probable that an outfow of resources embodying economic benefts will be required to settle the obligation;
and
• a reliable estimate can be made of the obligation.
The amount of a provision is the present value of the expenditure expected to be required to settle the obligation.
Provisions are not recognised for future operating losses.
If an entity has a contract that is onerous, the present obligation under the contract shall be recognised and measured as
a provision. A provision for onerous contracts is recognised when the expected bene?ts to be derived by the group from
a contract are lower than the unavoidable cost of meeting its obligations under the contract.
Management applies its judgment to the fact of patterns and advice it receives from its attorneys, advocates and other
advisors in assessing if an obligation is probable, more likely than not, or remote. This judgment application is used to
determine if the obligation is recognised as a liability or disclosed as a contingent liability.
Contingent assets and contingent liabilities are not recognised.
1.19 Government grants
Government grants are recognised when there is reasonable assurance that:
• the group will comply with the conditions attaching to them; and
• the grants will be received.
These are included in subsidy received in advance until they are utilised.
Government grants are recognised as income over the periods necessary to match them with the related costs that they
are intended to compensate.
A Government grant that becomes receivable as compensation for expenses or losses already incurred or for the purpose
of giving immediate ?nancial support to the entity with no future related costs is recognised as income of the period in
which it becomes receivable.
Government grants related to assets, including non-monetary grants at fair value, are presented in the statement of
?nancial position by deducting the grant in arriving at the carrying amount of the asset.
Grants related to income are deducted from the related expense.
1.20 Revenue
Revenue from the sale of goods is recognised when all the following conditions have been satis?ed:
• the group has transferred to the buyer the signifcant risks and rewards of ownership of the goods;
• the group retains neither continuing managerial involvement to the degree usually associated with ownership nor
effective control over the goods sold;
• the amount of revenue can be measured reliably;
• it is probable that the economic benefts associated with the transaction will fow to the group; and
• the costs incurred or to be incurred in respect of the transaction can be measured reliably.
125
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
1. Accounting Policies (continued)
1.20 Revenue (continued)
When the outcome of a transaction involving the rendering of services can be estimated reliably, revenue associated with
the transaction is recognised by reference to the stage of completion of the transaction at the end of the reporting period.
The outcome of a transaction can be estimated reliably when all the following conditions are satis?ed:
• the amount of revenue can be measured reliably;
• it is probable that the economic benefts associated with the transaction will fow to the group;
• the stage of completion of the transaction at the end of the reporting period can be measured reliably; and
• the costs incurred for the transaction and the costs to complete the transaction can be measured reliably.
When the outcome of the transaction involving the rendering of services cannot be estimated reliably, revenue shall be
recognised only to the extent of the expenses recognised that are recoverable.
Service revenue is recognised by reference to the stage of completion of the transaction at the end of the reporting period.
Stage of completion is determined by services performed to date as a percentage of total services to be performed.
Revenue earned from the provision of services over a ?xed period, such as post box rental is recognised on a straight line
basis over the period of the service.
Where the company’s role in a transaction is that of a principal, revenue is recognised on a gross basis. This requires
revenue to comprise the gross value of the transactions billed to customers after trade discounts. Where the company’s
role in a transaction is that of an agent, revenue is recognised on a net basis, with revenue representing the margin earned.
Revenue comprises income from services provided and the sale of retail products, excluding value added tax, rebates and
discounts. These services include work performed as an agent of certain Government Departments, other authorities and
businesses.
Revenue is measured at the fair value of the consideration received or receivable and represents the amounts receivable
for goods and services provided in the normal course of business, net of trade discounts and volume rebates, and value
added tax.
Interest is recognised, in pro?t or loss, using the effective interest method.
Dividends are recognised, in pro?t or loss, when the company’s right to receive payment has been established.
Service fees included in the price of the product are recognised as revenue over the period during which the service is
performed.
1.21 Translation of foreign currencies
Foreign currency transactions
A foreign currency transaction is recorded, on initial recognition in Rands, by applying to the foreign currency amount the
spot exchange rate between the functional currency and the foreign currency at the date of the transaction.
At the end of the reporting period:
• foreign currency monetary items are translated using the closing rate;
• non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the
exchange rate at the date of the transaction; and
• non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates
at the date when the fair value was determined.
126
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
1. Accounting Policies (continued)
1.21 Translation of foreign currencies
Exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from
those at which they were translated on initial recognition during the period or in previous consolidated annual ?nancial
statements are recognised in pro?t or loss in the period in which they arise.
When a gain or loss on a non-monetary item is recognised to other comprehensive income and accumulated in equity,
any exchange component of that gain or loss is recognised to other comprehensive income and accumulated in equity.
When a gain or loss on a non-monetary item is recognised in pro?t or loss, any exchange component of that gain or loss
is recognised in pro?t or loss.
Cash ?ows arising from transactions in a foreign currency are recorded in Rands by applying to the foreign currency
amount the exchange rate between the Rand and the foreign currency at the date of the cash ?ow.
1.22 Insurance contracts
The group issues short-term insurance contracts that protect the group’s customers against the risk of loss or damage.
These contracts transfer signi?cant insurance risk. As a general guideline, the group de?nes signi?cant insurance risk as
the possibility of having to pay bene?ts, on the occurrence of an insured event, that is at least 10% more than the bene?ts
payable if the insured event did not occur.
For all these contracts, premiums are recognised as revenue (earned premiums) proportionally over the period of coverage.
The portion of premium received on in-force contracts that relates to unexpired risks at the reporting date is reported as
the unearned premium liability which is included under other payables.
Claims and loss adjustment expenses are charged to pro?t and loss as incurred based on the estimated liability for
compensation owed to contract holders. They include direct and indirect claims settlement costs and arise from events
that have occurred up to the reporting date even if they have not been reported to the group. The group does not discount
its liabilities for unpaid claims other than for disability claims. Liabilities for unpaid claims are estimated based on past
experience.
1.23 Fruitless and wasteful expenditure
Fruitless expenditure means expenditure which was made in vain and would have been avoided had reasonable care been
exercised.
All expenditure relating to fruitless and wasteful expenditure is recognised in pro?t and loss in the period that the
expenditure was incurred. The expenditure is classi?ed in accordance with the nature of the expense, and where recovered,
is subsequently accounted for as income in pro?t and loss in the relating period.
127
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
2. New standards and interpretations
2.1 Standards and interpretations effective and adopted in the current year
In the current year, the group has adopted the following standards and interpretations that are effective for the current
?nancial year and that are relevant to its operations:
IFRS 10 Consolidated Financial Statements
This standard replaces the consolidation sections of IAS 27 Consolidated and Separate Financial Statements and SIC 12
Consolidation – Special Purpose Entities. The standard sets out a new de?nition of control, which exists only when an
entity is exposed to, or has rights to, variable returns from its involvement with the entity, and has the ability to effect
those returns through power over the investee.
The effective date of the standard is for years beginning on or after 01 January 2013.
The group has adopted the standard for the ?rst time in the 2014 consolidated annual ?nancial statements.
The impact of the standard is set out in note 54 Changes in Accounting Policy.
IAS 27 Separate Financial Statements
Consequential amendment as a result of IFRS 10. The amended standard now only deals with separate ?nancial statements.
The effective date of the amendment is for years beginning on or after 01 January 2013.
The group has adopted the amendment for the ?rst time in the 2014 consolidated annual ?nancial statements.
The impact of the amendment is not material.
IFRS 12 Disclosure of Interests in Other Entities
The standard sets out disclosure requirements for investments in subsidiaries, associates, joint ventures and unconsolidated
structured entities. The disclosures are aimed to provide information about the signi?cance and exposure to risks of such
interests. The most signi?cant impact is the disclosure requirement for unconsolidated structured entities or off balance
sheet vehicles.
The effective date of the standard is for years beginning on or after 01 January 2013.
The group has adopted the standard for the ?rst time in the 2014 consolidated annual ?nancial statements.
The impact of the standard is set out in note 54 Changes in Accounting Policy.
IFRS 13 Fair Value Measurement
This is a new standard setting out guidance on the measurement and disclosure of items measured at fair value or required
to be disclosed at fair value in terms of other IFRS’s.
The effective date of the standard is for years beginning on or after 01 January 2013.
The group has adopted the standard for the ?rst time in the 2014 consolidated annual ?nancial statements.
The impact of the standard is not material.
128
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
2. New standards and interpretations (continued)
2.1 Standards and interpretations effective and adopted in the current year (continued)
IAS 1 Presentation of Financial Statements
The amendment now requires items of other comprehensive income to be presented as:
• Those which will be reclassi?ed to pro?t or loss
• Those which will not be reclassi?ed to pro?t or loss.
The related tax disclosures are also required to follow the presentation allocation.
In addition, the amendment changed the name of the statement of comprehensive income to the statement of pro?t or
loss and other comprehensive income.
The effective date of the amendment is for years beginning on or after 01 July 2012.
The group has adopted the amendment for the ?rst time in the 2014 consolidated annual ?nancial statements.
The adoption of this amendment has not had a material impact on the results of the company, but has resulted in more
disclosure than would have previously been provided in the consolidated annual ?nancial statements.
IAS 19 Employee Bene?ts Revised
• Require recognition of changes in the net de?ned bene?t liability (asset) including immediate recognition of de?ned
bene?t cost, disaggregation of de?ned bene?t cost into components, recognition of remeasurements in other
comprehensive income, plan amendments, curtailments and settlements;
• Introduce enhanced disclosures about defned beneft plans;
• Modify accounting for termination bene?ts, including distinguishing bene?ts provided in exchange for service and
bene?ts provided in exchange for the termination of employment and affect the recognition and measurement of
termination benefts; and
• Clari?cation of miscellaneous issues, including the classi?cation of employee bene?ts, current estimates of
mortality rates, tax and administration costs and risk-sharing and conditional indexation features.
The effective date of the amendment is for years beginning on or after 01 January 2013.
The group has adopted the amendment for the ?rst time in the 2014 consolidated annual ?nancial statements.
The impact of the amendment is set out in note 54 Changes in Accounting Policy.
Disclosures – Offsetting Financial Assets and Financial Liabilities (Amendments to IFRS 7)
Amendment requires additional disclosures for ?nancial assets and liabilities which are offset and for ?nancial instruments
subject to master netting arrangements.
The effective date of the amendment is for years beginning on or after 01 January 2013.
The group has adopted the amendment for the ?rst time in the 2014 consolidated annual ?nancial statements.
The adoption of this amendment has not had a material impact on the results of the company, but has resulted in more
disclosure that would have previously been provided in the consolidated annual ?nancial statements.
129
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
2. New standards and interpretations (continued)
2.1 Standards and interpretations effective and adopted in the current year (continued)
Government Loans (Amendment to IFRS 1)
The amendment allows ?rst time adopters the option to measure loans from government at below market interest rates,
which existed at transition date, at the amounts measured in accordance with their previous GAAP. The provisions of par
10A of IAS 20 will only apply to subsequent loans.
The effective date of the amendment is for years beginning on or after 01 January 2013.
The group has adopted the amendment for the ?rst time in the 2014 consolidated annual ?nancial statements.
The impact of the amendment is not material.
IAS 1 – Annual Improvements for 2009 – 2011 cycle
Clari?cation is provided on the requirements for comparative information. Speci?cally, if a retrospective restatement
is made, a retrospective change in accounting policy or a reclassi?cation, the statement of ?nancial position at the
beginning of the previous period is only required if the impact on the beginning of the previous period is material. Related
notes are not required, other than disclosure of speci?ed information.
The effective date of the amendment is for years beginning on or after 01 January 2013.
The group has adopted the amendment for the ?rst time in the 2014 consolidated annual ?nancial statements.
The impact of the amendment is not material.
Consolidated Financial Statements, Joint Arrangements and Disclosures of Interests in Other Entities:
Transition Guidance.
Transitional guidance for the application of IFRS 10, IFRS 11 and IFRS 12. The amendment limits the requirement to provide
adjusted comparative information to only the preceding comparative period.
The effective date of the amendment is for years beginning on or after 01 January 2013.
The group has adopted the amendment for the ?rst time in the 2014 consolidated annual ?nancial statements.
The impact of the amendment is set out in note 54 Changes in Accounting Policy.
2.2 Standards and interpretations not yet effective
The group has chosen not to early adopt the following standards and interpretations, which have been published and are
mandatory for the group’s accounting periods beginning on or after 01 April 2014 or later periods:
IFRS 9 Financial Instruments
This new standard is the ?rst phase of a three phase project to replace IAS 39 Financial Instruments: Recognition and
Measurement. To date, the standard includes chapters for classi?cation, measurement and derecognition of ?nancial
assets and liabilities. The following are main changes from IAS 39:
• Financial assets will be categorised as those subsequently measured at fair value or at amortised cost.
• Financial assets at amortised cost are those ?nancial assets where the business model for managing the assets
is to hold the assets to collect contractual cash ?ows (where the contractual cash ?ows represent payments of
principal and interest only). All investments and other ?nancial assets are to be subsequently measured at fair value.
• Under certain circumstances, ?nancial assets may be designated as at fair value.
130
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
2. New standards and interpretations (continued)
2.2 Standards and interpretations not yet effective (continued)
• For hybrid contracts, where the host contract is an asset within the scope of IFRS 9, then the whole instrument is
classi?ed in accordance with IFRS 9, without separation of the embedded derivative. In other circumstances, the
provisions of IAS 39 still apply.
• Voluntary reclassi?cation of ?nancial assets is prohibited. Financial assets shall be reclassi?ed if the entity changes
its business model for the management of ?nancial assets. In such circumstances, reclassi?cation takes place
prospectively from the beginning of the ?rst reporting period after the date of change of the business model.
• Financial liabilities shall not be reclassi?ed.
• Investments in equity instruments may be measured at fair value through other comprehensive income. When
such an election is made, it may not subsequently be revoked, and gains or losses accumulated in equity are not
recycled to pro?t or loss on derecognition of the investment. The election may be made per individual investment.
• IFRS 9 does not allow for investments in equity instruments to be measured at cost.
• The classi?cation categories for ?nancial liabilities remains unchanged. However, where a ?nancial liability is
designated as at fair value through pro?t or loss, the change in fair value attributable to changes in the liabilities
credit risk shall be presented in other comprehensive income. This excludes situations where such presentation
will create or enlarge an accounting mismatch, in which case, the full fair value adjustment shall be recognised in
pro?t or loss.
The effective date of the standard is for years beginning on or after January 01, 2018.
The group expects to adopt the standard for the ?rst time in the 2016 consolidated annual ?nancial statements.
The impact of this standard is currently being assessed.
Offsetting Financial Assets and Financial Liabilities (Amendments to IAS 32)
Clari?cation of certain aspects concerning the requirements for offsetting ?nancial assets and ?nancial liabilities.
The effective date of the amendment is for years beginning on or after 01 January 2014.
The group expects to adopt the amendment for the ?rst time in the 2015 consolidated annual ?nancial statements.
It is unlikely that the amendment will have a material impact on the company’s consolidated annual ?nancial statements.
IAS 36 – Recoverable Amount Disclosures for Non-Financial Assets
The amendment brings the disclosures for impaired assets whose recoverable amount is fair value less costs to sell in line
with the disclosure requirements of IFRS 13 Fair Value Measurements.
The effective date of the amendment is for years beginning on or after 01 January 2014.
The group expects to adopt the amendment for the ?rst time in the 2015 consolidated annual ?nancial statements.
The adoption of this amendment is not expected to impact on the results of the company, but may result in more disclosure
than is currently provided in the consolidated annual ?nancial statements.
IFRS 10, IFRS 12 and IAS 27 – Investment Entities
The amendments de?ne an investment entity and introduce an exception to consolidating particular subsidiaries for
investment entities. These amendments require an investment entity to measure those subsidiaries at fair value through
pro?t or loss in accordance with IFRS 9 Financial Instruments in its consolidated and separate annual ?nancial statements.
The amendments also introduce new disclosure requirements for investment entities in IFRS 12 and IAS 27.
The effective date of the amendments is for years beginning on or after 01 January 2014.
The group expects to adopt the amendments for the ?rst time in the 2015 consolidated annual ?nancial statements.
The impact of this amendment is currently being assessed.
131
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
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132
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
Notes to the Consolidated Annual Financial Statements
3. Heritage assets (continued)
Reconciliation of heritage assets - Group - 2014
Opening
balance
Additions Closing
balance
R’000 R’000 R’000
Documents - 10 10
Other assets - 126 126
Philatelic stationary - 206 206
Photographs - 24 24
Stamps - 18,318 18,318
Works of art - 3,280 3,280
Total heritage assets - 21,964 21,964
Reconciliation of heritage assets - Company - 2014
Opening
balance
Additions Closing
balance
R’000 R’000 R’000
Documents - 10 10
Other assets - 126 126
Philatelic stationary - 206 206
Photographs - 24 24
Stamps - 18,318 18,318
Works of art - 3,280 3,280
Total heritage assets - 21,964 21,964
Valuations
The effective date of the revaluations was 31 March 2014. Revaluations were performed by independent valuers,
Phakamisani Consulting and Projects CC. Phakamisani Consulting and Projects CC is not connected to the group.
The valuation was based on current market values and no discount rates were used.
Other information
In terms of the ICASA license agreement, the South African Post Of?ce (SOC) Limited is required to own a museum
which contains assets of a historical nature, including stamps, paintings, artifacts and machinery.
The assets were recognised for the ?rst time in the current year after management compiled a catalogue of and valued
the assets.
A register containing the information required by Regulation 25(3) of the Companies Regulations, 2011 is available for
inspection at the registered of?ce of the company.
133
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
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134
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
Figures in Rand thousand
4. Investment property
Reconciliation of investment property - Company - 2014
Opening
balance
Additions Depreciation Closing balance
Investment property 21,161 39 (514) 20,686
Reconciliation of investment property - Company - 2013 (Restated)
Opening
balance
Additions Transfers Depreciation Closing balance
Investment property 20,379 352 976 (546) 21,161
Reconciliation of investment property - Company - 2012 (Restated)
Opening
balance
Additions Transfers Depreciation Closing balance
Investment property 18,596 3 2,296 (516) 20,379
Investment properties and signi?cant componants thereof are stated at the cost less accumulated depreciation and impairment
thereof.
A register containing the information required by Regulation 25(3) of the Companies Regulations, 2011 is available for inspection at
the registered of?ce of the company.
Investment property obtained by means of Government grants
The following assets that are ?nanced through project speci?c funding are recorded in the asset register and included therein at R1
in accordance with the accounting policy for Government grants. If these had been recorded at cost and depreciated over their useful
lives, their book value would be as follows:
Group and company reconciliation 2014
Cost

R ‘000
Accumulated
depreciation
R ‘000
Carrying value
R ‘000
Investment property 217 (39) 178
Group and company reconciliation 2013 (Restated)
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Investment property 217 (29) 188
Group and company reconciliation 2012 (Restated)
Cost

R ‘000
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depreciation
R ‘000
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R ‘000
Investment property 217 (26) 191
135
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
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136
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
Figures in Rand thousand
5. Property, plant and equipment (continued)
Reconciliation of property, plant and equipment - Group - 2014
Opening
balance
Additions Retirements Transfers Depreciation
Closing
balance
Assets under construction - 76,148 - (21,209) - 54,939
Buildings 589,141 1,953 (2,604) - (29,731) 558,759
Data processing equipment 107,589 55,848 (1,897) - (44,959) 116,581
Furniture and ?xtures 27,765 3,733 (557) - (3,109) 27,832
Land 219,976 - - - - 219,976
Leasehold improvements 64,182 11,425 (446) - (14,049) 61,112
Machinery and equipment 115,349 24,445 (5,541) - (24,645) 109,608
Motor vehicles 22,620 14,135 (22) - (2,527) 34,206
Site restoration 178,601 19,865 - - (13,870) 184,596
Total property, plant and equipment 1,325,223 207,552 (11,067) (21,209) (132,890) 1,367,609
Reconciliation of property, plant and equipment - Group - 2013 (Restated)
Opening
balance
Additions Retirements Transfers Depreciation
Closing
balance
Buildings 600,153 20,272 (19) (1,067) (30,198) 589,141
Data processing equipment 100,841 53,864 (694) - (46,422) 107,589
Furniture and ?xtures 30,599 1,628 (93) (274) (4,095) 27,765
Land 219,976 - - - - 219,976
Leasehold improvements 75,755 12,471 (226) 302 (24,120) 64,182
Machinery and equipment 144,646 3,341 (4,812) 42 (27,868) 115,349
Motor vehicles 6,167 18,585 (35) - (2,097) 22,620
Site restoration 146,185 43,511 - - (11,095) 178,601
Total property, plant and equipment 1,324,322 153,672 (5,879) (997) (145,895) 1,325,223
Reconciliation of property, plant and equipment - Group - 2012 (Restated)
Opening
balance
Additions Retirements Transfers Depreciation Closing
balance
Buildings 609,569 22,870 (9) (2,181) (30,096) 600,153
Data processing equipment 125,006 24,740 (386) (841) (47,678) 100,841
Furniture and ?xtures 33,403 2,999 (299) (822) (4,682) 30,599
Land 219,976 - - - - 219,976
Leasehold improvements 101,191 20,236 (194) 2,066 (47,544) 75,755
Machinery and equipment 161,218 17,610 (1,858) (213) (32,111) 144,646
Motor vehicles 9,051 13 (194) (202) (2,501) 6,167
Site restoration 6,312 148,042 - - (8,169) 146,185
Total property, plant and equipment 1,265,726 236,510 (2,940) (2,193) (172,781) 1,324,322
Reconciliation of property, plant and equipment - Company - 2014
Opening
balance
Additions Retirements Transfers Depreciation
Closing
balance
Assets under construction - 76,148 - (21,209) - 54,939
Buildings 584,695 1,954 (2,606) - (29,527) 554,516
Data processing equipment 102,532 55,080 (1,618) - (43,812) 112,182
Furniture and ?xtures 27,587 3,728 (556) - (3,250) 27,509
Land 216,075 - - - - 216,075
Leasehold improvements 64,036 11,412 (446) - (13,994) 61,008
Machinery and equipment 111,814 24,445 (6,405) - (23,669) 106,185
Motor vehicles 18,015 14,135 (13) - (1,725) 30,412
Site restoration 178,601 19,865 - - (13,870) 184,596
Total property, plant and equipment 1,303,355 206,767 (11,644) (21,209) (129,847) 1,347,422
137
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
Figures in Rand thousand
5. Property, plant and equipment (continued)
Reconciliation of property, plant and equipment - Company - 2013 (Restated)
Opening
balance
Additions Retirements Transfers Depreciation
Closing
balance
Buildings 595,504 20,273 (19) (1,046) (30,017) 584,695
Data processing equipment 96,235 51,777 (658) - (44,822) 102,532
Furniture and ?xtures 30,350 1,629 (91) (274) (4,027) 27,587
Land 216,075 - - - - 216,075
Leasehold improvements 75,492 12,471 (226) 302 (24,003) 64,036
Machinery and equipment 138,577 3,341 (3,519) 42 (26,627) 111,814
Motor vehicles 397 18,584 - - (966) 18,015
Site restoration 146,185 43,511 - - (11,095) 178,601
Total property, plant and equipment 1,298,815 151,586 (4,513) (976) (141,557) 1,303,355
Reconciliation of property, plant and equipment - Company - 2012 (Restated)
Opening
balance
Additions Retirements Transfers Depreciation
Closing
balance
Buildings 604,716 22,870 (9) (2,181) (29,892) 595,504
Data processing equipment 118,275 24,549 (347) (508) (45,734) 96,235
Furniture and ?xtures 33,071 2,999 (298) (822) (4,600) 30,350
Land 216,075 - - - - 216,075
Leasehold improvements 101,191 19,885 (194) 2,066 (47,456) 75,492
Machinery and equipment 152,987 17,579 (1,728) (213) (30,048) 138,577
Motor vehicles 682 13 (8) - (290) 397
Site restoration 6,312 148,042 - - (8,169) 146,185
Total property, plant and equipment 1,233,309 235,937 (2,584) (1,658) (166,189) 1,298,815
Pledged as security
No property, plant and equipment has been pledged as security for liabilities.
Borrowing costs capitalised
There were no borrowing costs that required capitalisation during the year.
Fair value
Property, plant and equipment and signifcant components thereof are stated at their cost less accumulated depreciation and impairment
thereof. According to company policy, valuations are done to assess the relevance of the cost model on a regular basis. Mail centers
and hubs have been valued at depreciated replacement costs and all other ?xed properties are re?ected at municipal values.
The fair value of the assets are not signi?cantly different from the carrying value thereof and would have been as follows:
GROUP COMPANY
2014
R ‘000
2013
R ‘000
2012
R ‘000
2014
R ‘000
2013
R ‘000
2012
R ‘000
Freehold land and buildings 717,684 819,937 819,937 717,684 819,937 819,937
Other information
A register containing the information required by Regulation 25(3) of the Companies Regulations, 2011 is available for inspection at the
registered of?ce of the company.
138
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
5. Property, plant and equipment (continued)
Property, plant and equipment obtained by means of Government grants
The following assets that are ?nanced through project speci?c funding are recorded in the asset register and included therein at
R1 in accordance with the accounting policy for Government grants. If these had been recorded at cost and depreciated over their
useful lives, their book value would be as follows:
Group and company reconciliation 2014 Cost
R ‘000
Accumulated
depreciation
R ‘000
Carry value
R ‘000
Buildings 87,693 (18,506) 69,187
Data processing equipment 382,026 (380,151) 1,875
Furniture and ?ttings 593 (593) -
Land 4,028 - 4,028
Leasehold improvements 303,504 (291,549) 11,955
Machinery and equipment 104,013 (54,491) 49,522
Motor vehicles 490 (490) -
Total property, plant and equipment by means of Government grants 882,347 (745,780) 136,567
Group and company reconciliation 2013 (Restated) Cost
R ‘000
Accumulated
depreciation
R ‘000
Carry value
R ‘000
Buildings 85,855 (15,368) 70,487
Data processing equipment 391,846 (379,688) 12,158
Furniture and ?ttings 596 (596) -
Land 4,028 - 4,028
Leasehold improvements 295,771 (281,915) 13,856
Machinery and equipment 104,076 (44,182) 59,894
Motor vehicles 490 (490) -
Total property, plant and equipment by means of Government grants 882,662 (722,239) 160,423
Group and company reconciliation 2012 (Restated) Cost
R ‘000
Accumulated
depreciation
R ‘000
Carry value
R ‘000
Buildings 83,455 (12,144) 71,311
Data processing equipment 396,677 (341,836) 54,841
Furniture and ?ttings 596 (596) -
Land 4,028 - 4,028
Leasehold improvements 286,514 (270,611) 15,903
Machinery and equipment 103,679 (33,766) 69,913
Motor vehicles 490 (490) -
Total property, plant and equipment by means of Government grants 875,439 (659,443) 215,996
139
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
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140
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
Figures in Rand thousand
6. Intangible assets (continued)
Reconciliation of intangible assets - Company - 2014
Opening
balance
Additions Retirements Transfers Amortisation Closing
balance
Computer software 84,443 18,080 (1,250) (12,053) (33,183) 56,037
Intangible assets under
development
- - - 33,262 - 33,262
84,443 18,080 (1,250) 21,209 (33,183) 89,299
Reconciliation of intangible assets - Company - 2013 (Restated)
Opening
balance
Additions Amortisation Closing
balance
Computer software 62,729 47,627 (25,913) 84,443
Reconciliation of intangible assets - Company - 2012 (Restated)
Opening
balance
Additions Retirements Transfers Amortisation Closing
balance
Computer software 81,060 19,228 (316) (640) (36,603) 62,729
Other information
Included in intangible assets is computer software that is not considered integral to computer equipment.
There were no impairments of intangible assets during the year.
Intangible assets obtained by means of Government grants
Intangible assets that are ?nanced through project speci?c funding are recorded in the asset register and included therein at R1 in
accordance with the accounting policy for Government grants. If these assets had been recorded at cost and depreciated over their
expected useful lives, their carrying value would be as follows:
Group and company reconciliation 2014 Cost
R ‘000
Accumulated
amortisation
R ‘000
Carry value
R ‘000
Computer software 249,026 (247,685) 1,341
Group and company reconciliation 2013 (Restated) Cost
R ‘000
Accumulated
amortisation
R ‘000
Carry value
R ‘000
Computer software 256,397 (236,747) 19,650
Group and company reconciliation 2012 (Restated)
Cost
R ‘000
Accumulated
amortisation
R ‘000
Carry value
R ‘000
Computer software 256,397 (228,182) 28,215
141
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
7. Investments in subsidiaries
The following table lists the entities which are controlled by the group, either directly or indirectly through subsidiaries.
Group
Name of company Held by
%
holding
2014
%
holding
2013
%
holding
2012
CFG Zimbabwe (Pty) Ltd The Courier and Freight Group (Pty) Ltd -% 100.00 % 100.00 %
The Courier and Freight Botswana (Pty) Ltd The Courier and Freight Group (Pty) Ltd 100.00 % 100.00 % 100.00 %
The Courier and Freight Namibia (Pty) Ltd The Courier and Freight Group (Pty) Ltd 100.00 % 100.00 % 100.00 %
The Courier and Freight Swaziland (Pty) Ltd The Courier and Freight Group (Pty) Ltd -% 100.00 % 100.00 %
The following table lists the entities which are controlled directly by the company, and the carrying amounts of the investments in the
company’s separate ?nancial statements.
Name of company
%
holding
2014
%
holding
2013
%
holding
2012
Cost
amount
2014
Cost
amount
2013
Cost
amount
2012
R’000 R’000 R’000
Centriq Insurance Innovation (Pty) Ltd 100.00 % 100.00 % 100.00 % - - -
Sapos Properties (Bloemfontein) Pty Ltd 100.00 % 100.00 % 100.00 % 750 750 750
Sapos Properties (Cape Town) (Pty) Ltd 100.00 % 100.00 % 100.00 % 4,085 4,085 4,085
Sapos Properties (East Rand) (Pty) 100.00 % 100.00 % 100.00 % 11,195 11,195 11,195
Sapos Properties (Port Elizabeth) (Pty) Ltd 100.00 % 100.00 % 100.00 % 1,670 1,670 1,670
Sapos Properties (Rossburgh) (Pty) Ltd 100.00 % 100.00 % 100.00 % 3,800 3,800 3,800
The Courier and Freight Group (Pty) Ltd 100.00 % 100.00 % 100.00 % 1,053 1,053 1,053
The Document Exchange (Pty) Ltd 100.00 % 100.00 % 100.00 % - - -
Total cost of investment in subsidiaries 22,553 22,553 22,553
Impairment of investment in subsidiaries (4,809) (4,964) (4,859)
Total investment in subsidiaries net of impairment 17,744 17,589 17,694
The investments in subsidiary companies listed above are unlisted.
Refer to note 51 for deregistered companies.
142
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
GROUP COMPANY
2014

R ‘000
2013
(Restated)
R ‘000
2012
(Restated)
R ‘000
2014

R ‘000
2013
(Restated)
R ‘000
2012
(Restated)
R ‘000
8. Loans and long term receivables to group companies
Loans
Pensecure (Pty) Ltd
This loan is interest free
and has no ?xed terms of
repayment. This loan has
been subordinated in favour
of creditors. The full amount
has been impaired.
- - - - - 1,356
Sapos Properties
(Bloemfontein) (Pty) Ltd
This loan is interest free
and has no ?xed terms of
repayment. This loan has
been subordinated in favour
of creditors. The full amount
has been impaired.
- - - 397 351 259
Sapos Properties (Cape
Town) (Pty) Ltd
This loan is interest free
and has no ?xed terms of
repayment. This loan has
been subordinated in favour
of creditors. The full amount
has been impaired.
- - - 1,394 1,238 1,138
Sapos Properties (East
Rand) (Pty) Ltd
This loan is interest free
and has no ?xed terms of
repayment. Due to the fact
that this company is making
pro?ts, this loan is not
impaired.
- - - 2,962 2,905 2,851
Sapos Properties (Port
Elizabeth) (Pty) Ltd
This loan is interest free
and has no ?xed terms of
repayment. This loan has
been subordinated in favour
of creditors. The full amount
has been impaired.
- - - 709 1,152 1,112
Sapos Properties
(Rossburgh) (Pty) Ltd
This loan is interest free
and has no ?xed terms of
repayment. This loan has
been subordinated in favour
of creditors. The full amount
has been impaired.
- - - 3,322 3,066 2,732
143
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
GROUP COMPANY
2014

R ‘000
2013
(Restated)
R ‘000
2012
(Restated)
R ‘000
2014

R ‘000
2013
(Restated)
R ‘000
2012
(Restated)
R ‘000
8. Loans and long term receivables to group companies (continued)
The Courier and Freight
Group (Pty) Ltd
This loan is interest free
and has no ?xed terms of
repayment. This loan has
been subordinated in favour
of creditors. The full amount
has been impaired.
- - - 219,322 219,322 219,322
The Courier and Freight
Group (Pty) Ltd
This loan is interest free
and has no ?xed terms of
repayment. This loan has
been subordinated in favour
of creditors. The full amount
has been impaired.
- - - 40,918 40,918 40,918
The Courier and Freight
Group (Pty) Ltd
This loan is repayable over 12
months and accrues interest
at the prime interest rate.
This loan was not impaired.
- - - - 38,921 -
The Courier and Freight
Botswana (Pty) Ltd
This loan is interest free
and has no ?xed terms of
repayment. The full amount
has been impaired. The
company seized trading
in 2005, is dormant and
in the process of being
deregistered.
3,560 3,560 3,560 - - -
The Courier and Freight
Namibia (Pty) Ltd
This loan is interest free
and has no ?xed terms of
repayment. The full amount
has been impaired. The
company seized trading
in 2005, is dormant and
in the process of being
deregistered.
2,294 2,294 2,294 - - -
The Courier and Freight
Swaziland (Pty) Ltd
This loan is interest free
and has no ?xed terms of
repayment. The full amount
has been impaired. The
company was deregistered
during the year under review.
- 7,304 7,304 - - -
144
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
GROUP COMPANY
2014

R ‘000
2013
(Restated)
R ‘000
2012
(Restated)
R ‘000
2014

R ‘000
2013
(Restated)
R ‘000
2012
(Restated)
R ‘000
8. Loans and long term receivables to group companies (continued)
CFG Zimbabwe (Pty) Ltd
This loan is interest free
and has no ?xed terms of
repayment. The full amount
has been impaired. The
company was deregistered
during the year under review.
- 4,742 4,742 - - -
Total loans 5,854 17,900 17,900 269,024 307,873 269,688
Impairment of loans (5,854) (17,900) (17,900) (266,066) (266,047) (266,837)
Total loans net of
impairment - - - 2,958 41,826 2,851
With the exception of the loan to the Courier and Freight Group (Pty) Ltd for R 38,921 million, the South African Post Of?ce (SOC)
Limited does not anticipate the recovery of the loans within the next 12 months.
Long term receivables
The Courier and Freight Group (Pty)
Ltd

This receivable accrues interest at the
prime interest rate and has no ?xed
terms of repayment. The receivable has
been subordinated in favour of creditors.
The full amount has been impaired.
- - - 210,832 113,809 71,512
The Document Exchange (Pty) Ltd
This receivable accrues interest at the
prime interest rate and has no ?xed
terms of repayment. The receivable has
not been impaired.
- - - 530 - -
Total long term receivables - - - 211,362 113,809 71,512
Impairment of long term receivables - - - (210,832) (113,809) (71,512)
Total long term receivables net of
impairment - - - 530 - -
The South African Post Of?ce (SOC) Limited does not anticipate the recovery of the above mentioned receivables within the next 12
months.
Non-current assets - - - 3,488 2,905 2,851
Current assets - - - - 38,921 -
Total loans and long term receivables
net of impairment
- - - 3,488 41,826 2,851
145
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
GROUP COMPANY
2014

R ‘000
2013
(Restated)
R ‘000
2012
(Restated)
R ‘000
2014

R ‘000
2013
(Restated)
R ‘000
2012
(Restated)
R ‘000
8. Loans and long term receivables to group companies (continued)
Credit quality of loans and long term receivables to group companies
The credit quality of loans and long term receivables to group companies that are neither past due nor impaired can be assessed by
reference to the subsidiary companies’ abilty to generate pro?ts.
Loans and long term receivables to subsidiaries amounting to R 476,898 million (2013: R 379,856 million) are subordinated in favour
of creditors.
Loans and long term receivables to group companies impaired
As of 31 March 2014, loans and long term receivables to group companies of R 476,898 million (2013: R 379,856 million) were
impaired and provided for.
The ageing of these loans is as follows:
3 to 6 months - - - 57,394 60,338 8,743
Over 6 months 5,854 17,900 17,900 422,997 361,344 323,833
The creation and release of provision for impaired loans and long term receivables have been included in operating expenses in the
statement of comprehensive income (note 33). Amounts charged to the allowance account are generally written off when there is no
expectation of recovering any cash.
The maximum exposure to credit risk at the reporting date is the fair value of each class of loan and long term receivable mentioned
above. The group does not hold any collateral as security.
9. Investments and other ?nancial assets
At fair value through pro?t or loss
Post Retirement Medical Aid Asset
833,103 768,085 669,230 833,103 768,085 669,230
Provident Fund Asset
18,032 16,046 48,154 18,032 16,046 48,154
Total at fair value through pro?t or
loss
851,135 784,131 717,384 851,135 784,131 717,384
Available-for-sale
Gidani investment
- - - - - -
Negotiable Certi?cate of Deposits
798,219 1,004,904 444,912 798,219 1,004,904 444,912
Promissory Notes
666,536 575,876 928,737 666,536 575,876 928,737
Unlisted shares - Centriq Insurance
Innovation (Pty) Ltd
87,964 77,422 75,023 87,964 77,422 75,023
Total available-for-sale
1,552,719 1,658,202 1,448,672 1,552,719 1,658,202 1,448,672
146
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
GROUP COMPANY
2014

R ‘000
2013
(Restated)
R ‘000
2012
(Restated)
R ‘000
2014

R ‘000
2013
(Restated)
R ‘000
2012
(Restated)
R ‘000
9. Investments and other ?nancial assets (continued)
Held to maturity
Fixed Deposits
1,527,612 1,225,000 2,492,005 1,512,000 1,210,000 2,477,005
Jibar Linked Notes
370,000 1,052,000 250,000 370,000 1,052,000 250,000
Total held-to-maturity
1,897,612 2,277,000 2,742,005 1,882,000 2,262,000 2,727,005
Total investments and other ?nancial
assets
4,301,466 4,719,333 4,908,061 4,285,854 4,704,333 4,893,061
Non-current assets
At fair value through pro?t or loss
565,521 567,945 531,296 565,521 567,945 531,296
Available-for-sale
87,964 77,422 75,023 87,964 77,422 75,023
Total non-current assets
653,485 645,367 606,319 653,485 645,367 606,319
Current assets
At fair value through pro?t or loss
285,614 216,186 186,088 285,614 216,186 186,088
Available-for-sale
1,464,755 1,580,780 1,373,649 1,464,755 1,580,780 1,373,649
Held-to-maturity
1,897,612 2,277,000 2,742,005 1,882,000 2,262,000 2,727,005
Total current assets
3,647,981 4,073,966 4,301,742 3,632,369 4,058,966 4,286,742
Total investments and other ?nancial
assets
4,301,466 4,719,333 4,908,061 4,285,854 4,704,333 4,893,061
147
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
GROUP COMPANY
2014

R ‘000
2013
(Restated)
R ‘000
2012
(Restated)
R ‘000
2014

R ‘000
2013
(Restated)
R ‘000
2012
(Restated)
R ‘000
9. Investments and other ?nancial assets (continued)
The Negotiable Certi?cates of Deposits (NCDs), Cell Captive Money Market Assets and Promissory Notes are classi?ed as available
for sale ?nancial assets, which are measured at fair value, with fair value gains and losses recognised directly in other comprehensive
income.
The Fixed Deposits and Jibar Linked Notes are classi?ed as held to maturity instruments, which are measured at amortised cost,
using the effective interest method, less any impairment, with revenue recognised on an effective yield basis. The Fixed Deposits and
Jibar Linked Notes shown above are greater than 90 days and less than 12 months in time to maturity. The Fixed Deposits and Jibar
Linked Notes that are less than 90 days in maturity are classi?ed as cash and cash equivalents and are included under short-term
deposits in note 15.
The group owns an equity stake of 100 ordinary shares in Gidani Management (Pty) Ltd, which represents 10.00% of Gidani shares.
The fair value of the shares was determined by the South African Post Of?ce (SOC) Limited management to be zero at year end
(2013: R 0). The shares were allocated to the South African Post Of?ce (SOC) Limited by the Department of Trade and Industry.
The Post Retirement Medical Aid (PRMA) Asset of R 833,103 million (2013: R 768,085) has been ear-marked to partially fund
the PRMA Liability of R 1,439 billion (2013: R 1,436 billion) of the South African Post Of?ce (SOC) Limited (refer to note 21). The
remaining liability is adequately offset by the other assets of some R 740,191 million (2013: R 705,985 million) emanating from a
contribution holiday in 2005 when the De?ned Bene?t Pension Scheme was converted to a De?ned Contribution Scheme.
The breakdown of the PRMA Asset is as follows:
PRMA Asset:
Local cash 145,010 119,803 119,613 145,010 119,803 119,613
Local bonds 311,219 265,545 221,396 311,219 265,545 221,396
Local equity 352,775 321,009 294,191 352,775 321,009 294,191
Foreign cash - 3,232 1,752 - 3,232 1,752
Foreign bonds 24,099 58,496 32,278 24,099 58,496 32,278
Total PRMA Asset 833,103 768,085 669,230 833,103 768,085 669,230
Fair value hierarchy of ?nancial assets at fair value through pro?t or loss
For ?nancial assets recognised at fair value, disclosure is required of a fair value hierarchy which re?ects the signi?cance of the inputs
used to make the measurements.
Level 1 represents those assets which are measured using unadjusted quoted prices for identical assets in active markets.
Level 2 applies inputs other than quoted prices included in level 1, that are observable for the assets either directly (as prices) or
indirectly (derived from prices).
Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not
based on observable market dates (unobservable inputs).
148
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
GROUP COMPANY
2014

R ‘000
2013
(Restated)
R ‘000
2012
(Restated)
R ‘000
2014

R ‘000
2013
(Restated)
R ‘000
2012
(Restated)
R ‘000
9. Investments and other ?nancial assets (continued)
The tables below exclude the Provident Fund Asset, which does not represent ?nancial instruments.
Level 1
Equity and bonds 583,093 605,719 523,554 583,093 605,719 523,554
Level 2
Equity and bonds 250,010 162,366 145,676 250,010 162,366 145,676
Total level 1 and 2 833,103 768,085 669,230 833,103 768,085 669,230
For the year ended 2014, there were no transfers between level 1, 2 and 3.
Financial assets at fair value through pro?t or loss are dominated in the following currencies:
Rand 809,004 706,357 635,200 809,004 706,357 635,200
Other 24,099 61,728 34,030 24,099 61,728 34,030
Fair value hierarchy of available-for-sale ?nancial assets
For ?nancial assets recognised at fair value, disclosure is required of a fair value hierarchy which re?ects the signi?cance of the inputs
used to make the measurements.
Level 1 represents those assets which are measured using unadjusted quoted prices for identical assets in active markets.
Level 2 applies inputs other than quoted prices included in level 1 that are observable for the assets either directly (as prices) or
indirectly (derived from prices).
Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not
based on observable market dates (unobservable inputs).
Level 2
Negotiable Certi?cates of
Deposits
798,219 1,004,904 444,912 798,219 1,004,904 444,912
Promissory Notes 666,536 575,876 928,737 666,536 575,876 928,737
Unlisted shares - Centriq
Insurance Innnovation (Pty) Ltd
87,964 77,422 75,023 87,964 77,422 75,023
Total level 2 1,552,719 1,658,202 1,448,672 1,552,719 1,658,202 1,448,672
For the year ended 2014, there were no transfers between level 1, 2 and 3.
Available-for-sale ?nancial assets are denominated in the following currencies:
Rand 1,552,719 1,658,202 1,448,672 1,552,719 1,658,202 1,448,672
Held to maturity ?nancial assets are denominated in the following currencies:
Rand 1,897,612 2,277,000 2,742,005 1,882,000 2,277,000 2,742,005
The maximum exposure to credit risk at the reporting date is the carrying amount of the held to maturity ?nancial assets.
149
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014

GROUP COMPANY
2014

R ‘000
2013
(Restated)
R ‘000
2012
(Restated)
R ‘000
2014

R ‘000
2013
(Restated)
R ‘000
2012
(Restated)
R ‘000
10. Deferred tax
Deferred tax liability
Available for sale ?nancial assets
adjustments
(12,214) (21,719) (10,104) (12,214) (21,719) (10,104)
Financial instruments (78,934) (69,591) (37,982) (78,934) (69,591) (37,982)
Property, plant and equipment (142,683) (155,269) (155,613) (141,935) (154,754) (155,073)
Trade and other payables (1,989) (1,707) (2,292) (1,989) (1,689) (2,275)
Trade and other receivables (8,467) (2,841) (2,007) (8,350) (2,841) (2,007)
Total deferred tax liability (244,287) (251,127) (207,998) (243,422) (250,594) (207,441)
Deferred tax asset
Income received in advance 70,988 33,583 25,877 69,701 32,254 24,846
Employee related 493,615 482,625 420,677 493,367 482,324 420,348
Provisions 146,188 137,997 90,295 145,470 136,730 89,051
Deferred tax balance from
temporary differences other than
unused tax losses
710,791 654,205 536,849 708,538 651,308 534,245
Tax losses available for set off
against future taxable income
89,777 (9,332) 255 89,479 - -
Total deferred tax asset 800,568 654,537 537,104 798,017 651,308 534,245
Deferred tax liability (244,287) (251,127) (207,998) (243,422) (250,594) (207,441)
Deferred tax asset 800,568 654,537 537,104 798,017 651,308 534,245
Total net deferred tax asset 556,281 403,410 329,106 554,595 400,714 326,804
150
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
GROUP COMPANY
2014

R ‘000
2013
(Restated)
R ‘000
2012
(Restated)
R ‘000
2014

R ‘000
2013
(Restated)
R ‘000
2012
(Restated)
R ‘000
10. Deferred tax (continued)
Reconciliation of deferred tax asset
At beginning of year 403,410 329,106 284,798 400,714 326,804 282,280
Accelerated capital allowances
for tax purposes
8,473 347 (29,176) 8,719 319 (29,092)
Increases in tax loss available for set off
against future taxable income
89,449 72 171 89,479 - -
Deductible temporary difference
movement on heritage
assets at fair value (OCI)
(4,101) - - (4,101) - -
Deductible temporary difference
movement on available for sale
?nancial instruments (OCI)
(1,371) (586) (10,104) (1,371) (586) (10,104)
Taxable (deductible) temporary difference
movement on actuarial gains and losses on
de?ned bene?t plan (OCI)
8,666 43,571 (21,024) 8,666 43,571 (21,024)
Deductible temporary difference
movement on ?nancial instruments
(9,343) (21,615) (16,432) (9,343) (21,615) (16,432)
Taxable (deductible) temporary difference
movement on income received in advance
37,405 7,707 (11,511) 37,447 7,408 (11,309)
Taxable temporary difference movement
on provisions
6,155 47,702 47,590 6,793 47,680 47,687
Taxable (deductible) temporary difference
movement on de?ned bene?t plan
13,059 (8,979) 75,628 13,059 (8,979) 75,628
Taxable (deductible) temporary difference
movement on trade and other payables
(300) 587 (1,088) (300) 585 (1,086)
Taxable (deductible) temporary difference
movement on trade and other receivables
(5,509) (834) 1,634 (5,509) (834) 1,634
Taxable temporary difference on employee
bene?ts
10,288 6,332 8,620 10,342 6,361 8,622
Total deferred tax asset 556,281 403,410 329,106 554,595 400,714 326,804
Recognition of deferred tax asset
An entity shall disclose the amount of a deferred tax asset and the nature of the evidence supporting its recognition, when:
• the utilisation of the deferred tax asset is dependent on future taxable pro?ts in excess of the pro?ts arising from the reversal of
existing taxable temporary differences; and
• the entity has suffered a loss in either the current or preceding period in the tax jurisdiction to which the deferred tax asset relates.
Unrecognised deferred tax asset
Deductible temporary differences not
recognised as deferred tax assets, no
expiry under current legislation
110,321 86,945 71,014 - - -
Use and sales rate
The deferred tax rate applied to the fair value adjustments of ?nancial assets is determined by the expected manner of recovery.
Where the expected recovery is through sale, the capital gains tax rate of 18.67% (2013: 18.67%) is used. If the expected manner of
recovery is through inde?nite use the normal tax rate of 28.00% (2013: 28.00%) is applied.
If the manner of recovery is partly through use and partly through sale, a combination of capital gains rate and normal tax rate is used.
151
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
GROUP COMPANY
2014

R ‘000
2013
(Restated)
R ‘000
2012
(Restated)
R ‘000
2014

R ‘000
2013
(Restated)
R ‘000
2012
(Restated)
R ‘000
11. Inventories
Merchandise 35,898 31,638 36,079 35,898 31,638 36,079
Consumables 60,873 39,682 43,010 60,609 39,547 42,819
Total inventories 96,771 71,320 79,089 96,507 71,185 78,898
Write-downs (19,382) (20,466) (17,796) (19,382) (20,373) (17,796)
Total inventories net of write-
downs 77,389 50,854 61,293 77,125 50,812 61,102
12. Current tax receivable (payable)
Current tax at the end of the year consists of:
Current tax payable - - (7,946) - - (7,947)
Current tax receivable 114 34,293 503 - 34,163 -
Balance at the end of the year 114 34,293 (7,443) - 34,163 (7,947)
13. Operating lease asset (accrual)
Current assets 26 6 - - - -
Non-current liabilities (76,491) (48,720) (44,047) (76,134) (48,498) (43,507)
Current liabilities (3,637) (20,421) (16,255) (3,123) (19,044) (15,159)
Net operating lease accrual (80,102) (69,135) (60,302) (79,257) (67,542) (58,666)
152
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
The group has entered into operating leases for buildings. The operating leases (as the lessee) are straight-lined over the period of
the lease contract. Refer to note 42 for the future minimum payments under non-cancellable operating leases.
GROUP COMPANY
2014

R ‘000
2013
(Restated)
R ‘000
2012
(Restated)
R ‘000
2014

R ‘000
2013
(Restated)
R ‘000
2012
(Restated)
R ‘000
14. Trade and other receivables
Trade receivables 231,713 297,970 213,591 191,292 253,117 164,287
Employee costs in advance 1,725 3,097 4,362 1,699 3,081 4,354
Prepayments 63,719 46,300 11,721 63,719 37,368 11,721
Deposits 725 807 1,529 - - 671
VAT - 3,058 - - - -
Interest accrued on short-term
investments
117,219 102,806 99,281 116,916 102,785 99,250
International debtors 140,668 138,311 123,059 140,668 138,311 123,059
Other receivables 44,823 1,352 67,938 43,782 9,462 55,436
Total trade and other
receivables 600,592 593,701 521,481 558,076 544,124 458,778
Trade receivables consists of:
Trade receivables 278,021 341,837 267,596 230,881 286,941 202,893
Less: provision for impairment (46,308) (43,867) (54,005) (39,589) (33,824) (38,606)
Trade receivables - net 231,713 297,970 213,591 191,292 253,117 164,287
Trade and other receivables pledged as security
No trade or other receivables were pledged as security during the year.
Fair value of trade receivables
Trade receivables 231,713 297,970 213,591 191,292 253,117 164,287
Trade receivebales are discounted at year end at the prime interest rate of 9.00% (2013: 8.50%) to bring them to their net present
value. Trade receivables are shown net of impairment.
Trade receivables include related parties net of impairment. For more detail refer to note 44.
Long term related party receivables net of impairment have been reclassi?ed to “Loans and long term receivables from group
companies”. For more detail refer to note 8.
153
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
GROUP COMPANY
2014

R ‘000
2013
(Restated)
R ‘000
2012
(Restated)
R ‘000
2014

R ‘000
2013
(Restated)
R ‘000
2012
(Restated)
R ‘000
14. Trade and other receivables (continued)
Trade and other receivables past due but not impaired.
Trade and other receivables which are less than 30 days past due are not considered to be impaired.
At 31 March 2014, R 115,575 million (2013: R 56,944 million) were past due but not impaired.
The ageing of amounts past due but not impaired is as follows: Domestic
31 - 90 days past due 6,202 15,722 15,592 40,227 4,760 6,044
91 - 120 days past due 41,020 41,020 25,356 42,211 30,853 23,870
The ageing of amounts past due but not impaired is as follows: International
More than 12 months 29 202 262 29 202 262
Trade and other receivables impaired
As of 31 March 2014, trade and other receivables of R 14.461 million (2013: R 1.170 million) were impaired and provided for.
Reconciliation of provision for impairment of trade and other receivables
Opening balance 43,867 54,005 37,322 33,824 38,606 19,187
Provision for impairment 14,461 1,170 16,683 14,083 1,170 19,419
Unused amounts reversed (12,020) (11,308) - (8,318) (5,952) -
Total provision for impairment 46,308 43,867 54,005 39,589 33,824 38,606
The maximum exposure to credit risk at the reporting date is the fair value of each class of loan mentioned above. The group does not
hold any collateral as security.
The company operates under various credit terms. Bulkmail is seven days from date of statement, and the rest of the business
operates on thirty days from statement date. The group’s domestic trade receivables are R 198 million (2013: R260 million) of which
R20 million (2013: R 20 million) are older than 30 days.
At each reporting date, the group assesses whether there is any objective evidence that trade and other receivables should be
impaired. Individual signi?cant ?nancial assets are tested for impairment. Group impairment losses for trade and other receivables
amounting to R 46 million (2013: R 44 million) have been raised in the statement of comprehensive income, where there was
objective evidence that the group will not be able to collect all amounts due, in accordance with the original terms agreed upon. The
impairment allowances are considered to be adequate for the group.
Included in the trade debtors are international debtors. Debts in this category are held with individual countries and trade is governed
by rules set up by the Universal Postal Union (UPU) currently situated in Switzerland. Services are divided into various product
categories and each product has a unique payment term ranging 12 months onwards. The nature of the business allows countries to
operate trade debtors and creditors accounts. Average payment terms per country on letters and expedited mail services are about 18
months. International trade receivables are R 140 million (2013: R 123 million) of which R 0.092 million (2013: R 0.202 million) is older
than 12 months.
The South African Post Of?ce (SOC) Limited and its subsidiary companies fall outside of the de?nition of a “Credit Provider” for
purposes of registration with the National Credit Regulator. The South African Post Of?ce (SOC) Limited and its subsidiary companies
nevertheless have to comply with the National Credit Act where accounts are opened for Juristic persons such as Sole Proprietors
and Trusts, where less than 3 trustees are appointed.
Trade receivables comprise a large number of customers, dispersed across different industries and geographical areas. The group
uses an internal/external credit scoring system to assess all potential customers’ creditworthiness. Customers credit is assessed
manually, using information derived from credit bureaus, ?nancial accounting records, bank records and other sources, after which
they are put through an internal grading system. Where appropriate, the necessary credit guarantees or deposits will be required
before opening an account. Accounts are opened for clients who are creditworthy and who accept the terms and conditions
prescribed by The South African Post Of?ce (SOC) Limited and its subsidiaries. Such accounts are assigned a credit limit. The account
number, the terms as well as the credit limit is con?rmed in writing to the customer. Assessments of accounts are done on a regular
basis as outlined in the group procedure document. The frequency is determined by the nature of each business within the group.
Security or sureties are requested to support accounts which failed about 20% of the assessment criteria. Trade and other receivables
discounted after impairment is R 3.2 million (2013: R4 million). The terms of trade receivables have not been re-negotiated.
154
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
GROUP COMPANY
2014

R ‘000
2013
(Restated)
R ‘000
2012
(Restated)
R ‘000
2014

R ‘000
2013
(Restated)
R ‘000
2012
(Restated)
R ‘000
15. Cash and cash equivalents
Cash and cash equivalents include cash on hand and actual bank balances and investments in money market instruments.
The effective interest rate of money market instruments is 5.64% (2013: 5.40%).
Cash and cash equivalents consist of:
Bank balances 1,962,923 1,875,770 2,247,136 1,926,705 1,836,409 2,207,102
Short-term deposits 2,048,191 1,400,985 1,030,000 2,048,191 1,400,985 1,030,000
Bank overdraft (311,378) - - (311,378) - -
Total cash and cash equivalents 3,699,736 3,276,755 3,277,136 3,663,518 3,237,394 3,237,102
Current assets 4,011,114 3,276,755 3,277,136 3,974,896 3,237,394 3,237,102
Current liabilities (311,378) - - (311,378) - -
Total cash and cash equivalents 3,699,736 3,276,755 3,277,136 3,663,518 3,237,394 3,237,102
Cash and cash equivalents held
by the entity that are not available
for use by the group.
3,699,736 3,276,755 3,277,136 3,663,518 3,237,394 3,237,102
This relates to funds collected on behalf of third parties as per note 28 and depositors’ funds as per note 27.
The total amount of undrawn
facilities available for future
operating activities and
commitments
- - - - - -
16. Non-current assets held for sale
The non-current assets are to be sold piecemeal.
Assets and liabilities
Non-current assets held for
sale
Property, plant and equipment - - 201 - - -
17. Share capital
Authorised
1000 000 000 Ordinary shares
of R1
1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000
Issued
Ordinary shares of R1 each 200,940 200,940 200,940 200,940 200,940 200,940
799,060,179 unissued ordinary shares are held by the Department of Communication on behalf of the South African Government.
This authority remains in force until the next Annual General Meeting.
155
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
GROUP COMPANY
2014

R ‘000
2013
(Restated)
R ‘000
2012
(Restated)
R ‘000
2014

R ‘000
2013
(Restated)
R ‘000
2012
(Restated)
R ‘000
18. Revaluation reserve
In terms of the ICASA license agreement, the South African Post Of?ce (SOC) Limited is required to own a museum which contains
assets of a historical nature, including stamps, paintings, artifacts and machinery.
The assets were recognised for the ?rst time in the current year after management compiled a catalogue of and valued the assets.
A gain or loss arising on initial recognition of heritage assets at fair value less costs to sell is included in other comprehensive income
and accumulated in the revaluation surplus in equity for the period in which it arises and may not be reclassi?ed to pro?t or loss.
Any increase in an asset’s carrying amount, as a result of a revaluation, is credited to other comprehensive income and accumulated
in the revaluation surplus in equity. The increase is recognised in pro?t or loss to the extent that it reverses a revaluation decrease of
the same asset previously recognised in pro?t or loss.
Heritage assets 17,864 - - 17,864 - -
19. Fair value adjustment on assets-available-for-sale reserve
Financial assets are classi?ed as available-for-sale where the intention with regard to the instrument and its origination does not fall
within the ambit of other ?nancial asset classi?cation.
Negotiable Certi?cates of Deposits (NCDs), Promissory Notes and the unlisted shares held in the cell captive Centriq Insurance
Innovation (Pty) Ltd are classi?ed as available for sale ?nancial assets.
Available-for-sale ?nancial assets are measured at fair value, with fair value gains and losses recognised directly in other
comprehensive income as the available-for-sale equity revaluation reserve. Interest is calculated using the effective interest method.
Where the ?nancial asset is disposed of or is determined to be impaired, the cumulative gain or loss previously recognised in the
available for sale reserve is included in pro?t or loss for the period.
NCDs and Promissory Notes are measured to fair value using quoted market prices. The net asset value model is used in the
determination of the fair value of unlisted shares for which no reference can be made to quote market prices.
Quoted market prices
(1,805) (113) 10 (1,805) (113) 10
Unlisted shares
55,235 46,822 44,869 55,235 46,822 44,869
Total fair value adjustment
53,430 46,709 44,879 53,430 46,709 44,879
156
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
20. Convertible loans from shareholder
During the year, an amount of R 205,000 million was received from National Treasury for the corporatisation of Postbank. The
Department of Communication still needs to issue South African Post Of?ce (SOC) Limited shares in exchange. These funds are
included in Postbank’s investment portfolio and are managed through Postbank’s Asset and Liability Committee (ALCO)processes. The
amount is interest free and has no ?xed terms of repayment. There is no expectation to repay these funds which are viewed as being
equity in nature.
As a result of the incorporation of the former TBVC states i.e. Transkei, Bophuthatswana, Venda and Ciskei post of?ces, a
shareholder loan to the amount of R 287,176 million was received. The incorporation was done in accordance with the Post and
Telecommunications Reorganisation Act which provided for the integration of the departments of Post and Telecommunications of the
TBVC states with Telkom and the South African Post Of?ce (SOC) Limited. The amount was previously classi?ed as a ?nancial liability
at cost and carried interest at a rate of 8.5% per annum in terms of section 80 of the Public Finance Management Act and there were
no ?xed repayment terms for this liability. The company has applied to the Department of Communication for permission to convert
this loan to share capital, which was granted during the year and 287,176 million R1 shares will be issued as compensation.
In March 2005, an amount of R 750,000 million was received from the National Treasury in order to recapitalise in the South African
Post Of?ce (SOC) Limited. The amount is interest free and has no ?xed terms of repayment and thus it is viewed asequity.
Department of Communications 205,000 - - 205,000 - -
(Postbank)
Department of Communications 287,176 - - 287,176 - -
(TBVC)
National Treasury 750,000 750,000 750,000 750,000 750,000 750,000
Total convertible loans from
shareholder
1,242,176 750,000 750,000 1,242,176 750,000 750,000
21. Retirement bene?ts
South African Post Of?ce (SOC) Limited retirement fund
In terms of section 10A of the South African Post Of?ce Act (Act No 44 of 1958, as amended), the ?nancial obligations of the South
African Post Of?ce (SOC) Limited retirement fund in respect of its de?ned bene?t members and pensioners are guaranteed by the
South African Post Of?ce (SOC) Limited whilst the Government of the Republic of South Africa in turn guarantees the obligations of
the South African Post Of?ce (SOC) Limited in this regard.
In terms of a recent actuarial valuation, the fund was fully funded and the actuary concluded that it was in a sound ?nancial position.
Post retirement telephone obligation
The group has undertaken to pay the telephone accounts for certain retired employees until either the time of their death, that of
their spouse or when they change their address. The group’s net obligation in this regard is the amount of future bene?ts that the
employees have earned in return for their service in the prior periods. Any unrecognised actuarial gains or losses and past service
costs are recognised immediately. There are no plan assets for this liability and the employer funds this as the need to be settled
arises.
157
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
GROUP COMPANY
2014

R ‘000
2013
(Restated)
R ‘000
2012
(Restated)
R ‘000
2014

R ‘000
2013
(Restated)
R ‘000
2012
(Restated)
R ‘000
21. Retirement bene?ts (continued)
Post retirement medical aid contribution
During the 2008/2009 ?nancial period, R 456,800 million’s worth of assets were transferred to the South African Post Of?ce (SOC)
Limited as a result of the Registrar for Medical Schemes’ decision on 12 November 2008. The relevant assets are speci?cally and
exclusively utilised for the future funding of the South African Post Of?ce (SOC) Limited’s Post Retirement Medical Aid (PRMA)
liability and have consequently been ear-marked and invested according to a speci?c unique investment mandate. The current value of
the PRMA asset is R 833,104 million, (2013: R 768,085 million).
The company has negotiated with bargaining unit employees that employees retiring after 30 June 2005 will receive PRMA bene?ts.
This curtailment of bene?ts was accounted for during the 2005 period. In addition, spouses and dependants of employees who
passed away whilst in the service of the South African Post Of?ce (SOC) Limited after 2005 will also receive medical aid bene?ts as
part of the De?ned Bene?t Plan.
Carrying value
Present value of the PRMA
liability
(1,434,228) (1,431,487) (1,293,162) (1,433,645) (1,430,874) (1,292,583)
Present value of the post
retirement telephone obligation
(5,081) (5,348) (6,045) (5,081) (5,348) (6,045)
Total post retirement liabilities (1,439,309) (1,436,835) (1,299,207) (1,438,726) (1,436,222) (1,298,628)
Non-current liabilities (1,308,066) (1,310,187) (1,177,399) (1,307,524) (1,309,615) (1,176,861)
Current liabilities (131,243) (126,648) (121,808) (131,202) (126,607) (121,767)
Total post retirement liabilities (1,439,309) (1,436,835) (1,299,207) (1,438,726) (1,436,222) (1,298,628)
Movements for the year
Opening balance (1,436,835) (1,299,207) (1,386,135) (1,436,222) (1,298,628) (1,385,565)
Bene?ts paid 126,648 121,808 129,396 126,607 121,767 129,355
Net expense recognised in pro?t
or loss
(129,122) (259,436) (42,468) (129,111) (259,361) (42,418)
Total post retirement liabilities (1,439,309) (1,436,835) (1,299,207) (1,438,726) (1,436,222) (1,298,628)
Net expense recognised in pro?t or loss
Interest cost (98,204) (103,797) (117,554) (98,161) (103,750) (117,505)
Actuarial (losses) gains (30,918) (155,639) 75,086 (30,950) (155,611) 75,087
Net post retirement expense (129,122) (259,436) (42,468) (129,111) (259,361) (42,418)
158
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
21. Retirement bene?ts (continued)
Key assumptions used
Assumptions used on last valuation on 31 March 2014.
Discount rates used 8.65 % 7.25 % 8.50 % 8.65 % 7.25 % 8.50 %
General in?ation rates used 6.85 % 5.75 % 6.00 % 6.85 % 5.75 % 6.00 %
Bene?t in?ation rates used 7.85 % 6.50 % 7.00 % 7.85 % 6.50 % 7.00 %
Sarary in?ation rates used 7.35 % 6.25 % 6.50 % 7.35 % 6.25 % 6.50 %
In determining the value to be placed on these post employment bene?ts, various assumptions in respect of various economic and
demographic factors have been made. In order to have consistency between the bene?ts, the same assumptions for all bene?ts
have been applied where relevant.
In assessing the appropriateness of the assumptions used, it is important to consider the assumptions as a whole rather than
in isolation. In particular, the relationship between the assumptions for the discount rate and the rate of increase in bene?ts is
important.
IAS 19 (AC 116) Employee Bene?ts (IAS19) requires that realistic assumptions be applied in the valuation and that this should be
determined with reference to the yields on corporate stock of similar duration to the liabilities. The standard further indicates that if
the corporate bond market is not suf?ciently deep and liquid reference should be made to the yields on government stock. For the
purpose of this valuation account has been taken of the yields on South African government stock as re?ected in the yield curve of
the Bond Exchange of South Africa. The basic in?ation assumption has also been determined by reference to the in?ation rate implied
in the market by the difference between the yield on nominal and in?ation linked government stock.
A discount rate of 8.65% p.a. (2013: 7.25%) was assumed in this valuation. This is a 1.4% increase in the prior year valuation interest
rate and re?ects the general increase in market interest rates over the ye based on standard actuarial tables and other assumption
rates that are generally used in the market place for the valuation of liabilities of this nature. Allowance has been made for AIDS
related deaths in respect of the long service and leave encashment bene?ts, but not the PRMA bene?ts, using the Actuarial Society
of South Africa AIDS model.
The results of the valuation are highly dependent on the choice of assumptions and the relationship between them. Therefore,
in order to assist the user in interpretation of the valuation results show the impact on the liabilities of a number of different
assumptions.
Actuarial valuations are performed on an annual basis.
Sensitivity analysis - Post retirement telephone obligation
Discount rate analysis LIABILITY CHANGE IN LIABILITY
2014
R ‘000
2013
(Restated)
R ‘000
2012
(Restated)
R ‘000
2014
%
2013
(Restated)
%
2012
(Restated)
%
+ 1 % 4,714 4,942 5,602 (7.2) (7.6) (7.3)
Central 5,081 5,348 6,045 - - -
- 1 % 5,501 5,813 6,551 8.3 8.7 8.4
Bene?t obligation at year-end 2011
(Restated)
R ‘000
2012
(Restated)
R ‘000
2013
(Restated)
R ‘000
2014

R ‘000
2015

R ‘000
Projected bene?t obligation 6,494 6,045 5,348 5,081 5,021
Sensitivity analysis - PRMA
Bene?t in?ation analysis LIABILITY CHANGE IN LIABILITY
2014
R ‘000
2013
(Restated)
R ‘000
2012
(Restated)
R ‘000
2014
%
2013
(Restated)
%
2012
(Restated)
%
+ 1 % 1,571,149 1,571,575 1,415,101 9.6 9.8 9.4
Central 1,433,645 1,430,874 1,292,583 - - -
- 1 % 1,314,927 1,309,621 1,187,581 (8.3) (8.5) (8.2)
159
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
Figures in Rand thousands
21. Retirement bene?ts (continued)
Discount rate analysis LIABILITY CHANGE IN LIABILITY
2014
R ‘000
2013
(Restated)
R ‘000
2012
(Restated)
R ‘000
2014
%
2013
(Restated)
%
2012
(Restated)
%
+ 1 % 1,313,161 1,307,827 1,186,052 (8.4) (8.6) (8.2)
Central 1,433,645 1,430,874 1,292,583 - - -
- 1 % 1,575,707 1,576,277 1,417,725 9.9 10.2 9.7
Bene?t obligation at year-end 2011
(Restated)
R ‘000
2012
(Restated)
R ‘000
2013
(Restated)
R ‘000
2014

R ‘000
2015

R ‘000
Projected bene?t obligation 1,379,641 1,293,162 1,431,487 1,434,228 1,420,057
22. Provisions
Reconciliation of provisions - Group - 2014
Opening
balance
Additions
Utilised
during the
year
Change in
discount
factor
Total
Bonus 65,515 276,843 (273,205) - 69,153
General provision 132,943 130,151 (133,016) - 130,078
Leave pay 169,677 131,565 (94,006) - 207,236
Long service cash awards 50,716 3,844 (9,813) - 44,747
Long service leave awards 11,845 1,602 (1,190) - 12,257
Onerous contract 7,325 - (7,325) - -
Site restoration 248,396 40,668 - (23,078) 265,986
Total provisions 686,417 584,673 (518,555) (23,078) 729,457
Reconciliation of provisions - Group - 2013
(Restated)
Opening
balance
Additions
Utilised
during the
year
Change in
discount
factor
Total
Bonus 61,465 12,387 (8,337) - 65,515
General provision 95,190 174,376 (136,623) - 132,943
Leave pay 144,335 109,584 (84,242) - 169,677
Long service cash awards 47,442 11,259 (7,985) - 50,716
Long service leave awards 10,348 2,576 (1,079) - 11,845
Onerous contract 7,325 - - - 7,325
Site restoration 168,361 61,577 - 18,458 248,396
Total provisions 534,466 371,759 (238,266) 18,458 686,417
Reconciliation of provisions - Group - 2012
(Restated)
Opening
balance
Additions
Utilised
during the
year
Total
Bonus 59,698 59,702 (57,935) 61,465
General provision 123,811 329,628 (358,249) 95,190
Leave pay 116,074 96,054 (67,793) 144,335
Long service cash awards 49,648 8,554 (10,760) 47,442
Long service leave awards 9,181 2,388 (1,221) 10,348
Onerous contract 7,325 - - 7,325
Site restoration 8,652 159,773 (64) 168,361
Total provisions 374,389 656,099 (496,022) 534,466
160
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
Figures in Rand thousands
22. Provisions (continued)
Reconciliation of provisions - Company - 2014
Opening
balance
Additions
Utilised
during the
year
Change in
discount
factor
Total
Bonus 64,117 241,313 (236,440) - 68,990
General provision 127,446 125,616 (125,846) - 127,216
Leave pay 160,097 126,348 (88,659) - 197,786
Long service cash awards 50,306 3,742 (9,782) - 44,266
Long service leave awards 11,845 1,602 (1,190) - 12,257
Site restoration 246,250 40,488 - (23,079) 263,659
Total provisions 660,061 539,109 (461,917) (23,079) 714,174
Reconciliation of provisions - Company - 2013
(Restated)
Opening
balance
Additions
Utilised
during the
year
Change in
discount
factor
Total
Bonus 59,702 8,024 (3,609) - 64,117
General provision 92,598 170,860 (136,012) - 127,446
Leave pay 134,961 103,154 (78,018) - 160,097
Long service cash awards 46,988 11,164 (7,846) - 50,306
Long service leave awards 10,348 2,576 (1,079) - 11,845
Site restoration 166,344 61,448 - 18,458 246,250
Total provisions 510,941 357,226 (226,564) 18,458 660,061
Reconciliation of provisions - Company - 2012
(Restated)
Opening
balance
Additions
Utilised
during the
year
Total
Bonus 56,998 59,702 (56,998) 59,702
General provision 118,861 327,721 (353,984) 92,598
Leave pay 106,931 90,680 (62,650) 134,961
Long service cash awards 49,236 8,454 (10,702) 46,988
Long service leave awards 9,181 2,388 (1,221) 10,348
Site restoration 6,571 159,773 - 166,344
Total provisions 347,778 648,718 (485,555) 510,941
GROUP COMPANY
2014
R ‘000
2013
(Restated)
R ‘000
2012
(Restated)
R ‘000
2014
%
2013
(Restated)
%
2012
(Restated)
%
Non-current liabilities 399,348 372,788 282,877 393,594 366,981 270,067
Current liabilities 330,109 313,629 251,589 320,580 293,080 240,874
Total provisions 729,457 686,417 534,466 714,174 660,061 510,941
General provision
The provision relates to various items such as the provisions for audit fees, legal fees, travel and car rentals, pension payments,
shortages and possible losses under investigation and other similar obligations.
161
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
22. Provisions (continued)
Leave obligation
Employees are entitled to 22 days leave per annum. Provided that a staff member has taken at least 15 days in a period the remaining
leave may be carried over into future years. Any leave balance remaining when an employee leaves the service of the South African
Post Of?ce (SOC) Limited for whatever reason (e.g. resignation, death, retirement) is encashed at that time.
Sensitivity analysis - Leave obligation
Discount rate analysis Liability Change in liability
2014
R ‘000
2013
(Restated)
R ‘000
2012
(Restated)
R ‘000
2014
%
2013
(Restated)
%
2012
(Restated)
%
+ 1 % 192,618 164,324 139,210 3.0 3.2 3.6
Central 198,775 169,677 144,335 - - -
- 1 % 205,745 176,094 148,229 (3.3) (3.8) (2.0)
Capped leave
In addition to their “normal” current accrued leave some staff members also have an amount of “capped” leave. During 2001 and
2002 the South African Post Of?ce (SOC) Limited negotiated with staff in different categories that leave accrued up till that date
would in future only be encashed at the salary as at that time. This leave can be taken as leave or encashed, but only after all other
accrued leave has been taken. Any remaining balance will be paid out as cash when the employee leaves the service of the South
African Post Of?ce (SOC) Limited.
Given these rules, the South African Post Of?ce (SOC) Limited recognises that the balances in both the “capped” leave and
“normal” accrued leave will not be settled in the 12 months following the date of calculation, and therefore some form of calculation
is required. In performing these calculations, we have applied an assumption, that 50% of the balance standing in the “normal”
accrued leave will be taken as leave, in the next 12 months. The remainder of the “normal” and the balance in the “capped” leave
will be paid out in cash when the employee leaves the service of the post of?ce by death, resignation or retirement. In the case of
the “accrued” leave, this will be based on the salary applicable at that date, and in the case of the “capped” leave, based on the
current ?xed rate.
A restricted number of employees are members of the leave provident fund. This provident fund provides for leave in excess of 60
days at a speci?c point in time. No additional employees may become members of this fund. Leave in this fund can only be encashed
when the employee retires or resigns and cannot be utilised as leave. As provident fund assets are suf?cient this leave is not accrued
by the company.
Long service leave awards
The group has different policies in respect of long service leave awards. The group has valued this bene?t in the current period, and
shall be valuing the bene?t annually. Any unrecognised actuarial gains or losses and past service costs are recognised immediately.
Sensitivity analysis - Long service leave awards
Discount rate analysis Liability Change in liability
2014
R ‘000
2013
(Restated)
R ‘000
2012
(Restated)
R ‘000
2014
%
2013
(Restated)
%
2012
(Restated)
%
+ 1 % 21,616 11,271 9,841 4.0 4.8 4.9
Central 22,438 11,845 10,348 - - -
- 1 % 23,342 12,475 10,905 (4.2) (5.3) (5.4)
Long service cash awards
The group has a policy of increasing leave days due to employees reaching ten years with the South African Post Of?ce (SOC)
Limited. The increase in leave days is from 22 to 24 days in the employee’s tenth period only. Any unrecognised actuarial gains or
losses and past service costs are recognised immediately.
162
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
22. Provisions (continued)
Sensitivity analysis - Long service cash awards
Discount rate analysis Liability Change in liability
2014
R ‘000
2013
(Restated)
R ‘000
2012
(Restated)
R ‘000
2014
%
2013
(Restated)
%
2012
(Restated)
%
+ 1 % 43,064 49,140 45,108 3.6 3.1 5.1
Central 44,747 50,716 47,422 - - -
- 1 % 46,567 53,417 49,028 (4.0) (5.3) (3.4)
Onerous lease
The Courier and Freight Group (Pty) Ltd entered into a property lease agreement for a period of three years commencing on
01 October 2010 and terminating on 30 September 2013.
Site restoration
The provision relates to the decommissioning costs that are expected to be incurred upon the termination or conclusion of lease
agreements. These costs have been capitalised in terms of the relevant lease agreements. It is uncertain whether these leases will
be extended or terminated earlier and this creates uncertainties regarding the amount and timing of the cash ?ows. There are no
expected reimbursements for the costs that will be incurred.
The main assumptions used in the calculation of this provision are as follows:
The Universal Service Obligations (USO) obliges the South African Post Of?ce (SOC) Limited to expand its presence in South Africa
(SA), especially in rural SA. This means that the South African Post Of?ce (SOC) Limited would most probably not reduce the number
of leasehold premises, but instead expand its presence to more buildings. The type of leasehold premises has been taken into
account in arriving at a conclusion regarding possible restoration. A vacant stand with a Mail Collection Point (MCP) would probably
not require restoration should they ever wish to relocate. The South African Post Of?ce (SOC) Limited may not wish to relocate from
shopping centres and malls. In the event that it does relocate the terms of the lease and the nature of its business are such that
restoration of the premises would not be required. The date that the South African Post Of?ce (SOC) Limited originally occupied
the leasehold premises is also an indication of the chances of ever moving out of the premises, thus negating the liability to restore
such leasehold premises. During the 2014 ?nancial period, the South African Post Of?ce (SOC) Limited relocated from 16 (2013: 16)
leasehold premises of which six (2013: six) of the lessors required restoration, thus further supporting the expectation that relocation
and thus restoration would not occur in most instances.
23. Amount owing to shareholder
GROUP COMPANY
2014
R ‘000
2013
(Restated)
R ‘000
2012
(Restated)
R ‘000
2014
%
2013
(Restated)
%
2012
(Restated)
%
Department of Communications - 270,674 248,327 - 270,674 248,327
The amount owing to the shareholder is the liability that arose as a result of the incorporation of the former TBVC states i.e. Transkei,
Bophuthatswana, Venda and Ciskei post of?ces. The incorporation was done in accordance with the Post and Telecommunications
Reorganisation Act which provided for the integration of the departments of Post and Telecommunications of the TBVC states with
Telkom and the South African Post Of?ce (SOC) Limited. The liability is classi?ed as a ?nancial liability at cost and bears interest at a
rate of 8.5% per annum (2013: 8.5%) in terms of section 80 of the Public Finance Management Act. There are no ?xed repayment
terms on this liability.
Permission to convert this loan to share capital was granted during the year. Refer to note 20 for more information.
Fair value of loans to shareholder
Department of Communications - 270,674 248,327 - 270,674 248,327
163
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
GROUP COMPANY
2014

R ‘000
2013
(Restated)
R ‘000
2012
(Restated)
R ‘000
2014

R ‘000
2013
(Restated)
R ‘000
2012
(Restated)
R ‘000
24. Government grants
At fair value through pro?t or loss
Subsidy unutilised 85,305 94,401 108,670 85,305 94,401 108,670
Current liabilities
Fair value through pro?t or loss 85,305 94,401 108,670 85,305 94,401 108,670
The Government provided the company with a subsidy to cover a portion of its operating expenditure and to fund speci?c projects.
The balance has been ringfenced for USO obligations. The balances and transactions are summarised as below:
Subsidies received
Current period - 51,965 180,442 - 51,965 180,442
Roll over from prior period 79,580 94,602 237,458 79,580 94,602 237,458
Less: expenditure acknowledged
Infrastructure (9,805) (14,619) (14,404) (9,805) (14,619) (14,404)
Universal service obligation - (45,583) (242,567) - (45,583) (242,567)
System improvements - (404) (44,167) - (404) (44,167)
VAT - (6,381) (22,160) - (6,381) (22,160)
Total subsidy unutilised 69,775 79,580 94,602 69,775 79,580 94,602
The Department of Communication provided the company with a subsidy speci?cally for the Public Information Terminals and Citizens
Post Of?ces during the past. However, no funding has been received for the last two ?nancial years. The balances and transactions
are summarised as below:
Subsidies received
Current period - interest accrued 709 753 751 709 753 751
Roll over from prior period 14,821 14,068 13,317 14,821 14,068 13,317
Total subsidy unutilised 15,530 14,821 14,068 15,530 14,821 14,068
164
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
GROUP COMPANY
2014

R ‘000
2013
(Restated)
R ‘000
2012
(Restated)
R ‘000
2014

R ‘000
2013
(Restated)
R ‘000
2012
(Restated)
R ‘000
25. Trade and other payables
Trade payables 379,843 258,168 248,542 303,099 247,874 210,828
Deposits received 77,825 70,472 68,624 76,496 69,232 67,516
Employee bene?t payments (43,812) 17,648 40,492 14,919 14,171 37,748
Government grants 57,337 8,138 9,273 57,337 8,138 9,273
Operating lease payables - 17 17 - - -
Other accrued expenses 254,148 276,084 307,790 204,410 238,330 275,345
Other payables 51,788 39,621 34,277 50,241 37,996 33,076
VAT 31,871 32,415 29,269 31,398 32,395 28,440
Total trade and other payables 809,000 702,563 738,284 737,900 648,136 662,226
The average credit period on all purchases is 60 days. The group has a policy in place with its payables not to pay interest on late
payments. All invoices were paid within the 60 days time frame in the ?nancial year 2014. The group has ?nancial risk management
policies in place to ensure that all payables are paid within the credit time frame.
Fair value of trade and other payables
Trade payables 379,843 258,168 248,542 303,099 247,874 210,827
Trade payables are discounted at year end at the prime interest rate of 9.00% (2013: 8.50%) to bring them to their net present value.
26. Unearned revenue
Unearned revenue consists of the following:
Bulk mail, parcels and registered
letters revenue
6,822 19,918 19,918 6,822 19,918 19,918
Franking mail revenue 6,666 7,414 7,414 6,666 7,414 7,414
Box revenue 217,108 229,607 229,607 217,108 229,607 229,607
Stamp and envelope revenue 16,946 7,247 23,917 16,946 7,247 23,917
Key deposit fees 55,591 52,312 52,312 55,591 52,312 52,312
Speed services revenue 1,822 66 1,540 1,822 66 1,540
International revenue 486 888 898 486 888 898
Electronic Bill Presentments and
Payments revenue (EBPP) 7,482 - - 7,482 - -
XPS freight 875 653 498 - - -
PX containers 456 709 1,640 - - -
Subscription fees 10,377 12,048 27,331 - - -
Total unearned revenue 324,631 330,862 365,075 312,923 317,452 335,606
165
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
26. Unearned revenue (continued)
Relating to South African Post Of?ce (SOC) Limited (company):
Bulk mail, parcels and registered letters revenue
The deferred revenue calculation is based on the mail delivery performance statistics. Assumptions were used that 25% of all mail
posted was delivered within the same region and 75% delivery between regions.
Franking mail revenue
The deferred revenue calculation is based on the assumption that eight working days revenue is unearned. This period is formulated
on a combination of the mail delivery standard and the holding time of customers after purchase.
Box revenue
The renewal cycle for the rental of the boxes is a calendar period from 1 January to 31 December, however, the ?nancial period for
the South African Post Of?ce (SOC) Limited is 1 April to 31 March. This means that revenue for three months of the renewal cycle is
earned for that ?nancial period and the remaining nine months of the renewal cycle is regarded as deferred revenue.
Stamp and envelope revenue
The deferred revenue is based on the assumption that ten working days revenue is unearned. This period is formulated on a
combination of the mail delivery standards and the holding time of customers after purchase.
Key deposit fees
According to the current delivery policy, key deposits are payable in all cases when a client applies for a postbox service. The
collected deposit fees for all box keys are not recognised as revenue.
Speed services revenue
Domestic items:
40% of the revenue generated on the 31 March is deferred to the new ?nancial year. This is due to the fact that the parcels must be
delivered overnight and thus some of the parcels are only delivered on 1 April.
International items:
80% of the revenue generated on the 31 March is deferred to the new ?nancial year. This is due to the fact that the parcels must be
delivered overnight and thus the majority of the parcels are only delivered on 1 April.
International revenue
As revenue has to be recognised when services are rendered and in terms of terminal dues, it will be recognised when items are
delivered to their destinations. The mail delivery standards are applied for the different categories on a weighted average basis. The
last seven days sales were extracted and the mail delivery performance statistics were used to calculate the revenue to be deferred
for those days.
EBPP revenue
The deferred revenue is for advance payments received for services that still needs to be rendered.
Relating to The Courier and Freight Group:
XPS freight
A report is extracted from the operational system, UNIVERSE, showing all items billed in the year, but not yet delivered. Deferred
revenue was calculated based on the stage of completion method, as follows:
The amount of days after year end until delivery divided by the total amount of days to complete delivery multiplied by the revenue
billed and recognised.
PX containers
A report is extracted from the operational system, INTAC, showing all containers billed in the year, but not yet delivered. Deferred
revenue was calculated based on the stage of completion method, as follows:
The amount of days after year end until delivery divided by the total amount of days to complete delivery multiplied by the revenue
billed and recognised.
Relating to The Document Exchange (Pty) Ltd:
Subscription fees
Members pay the subscription fee annually. In cases where the membership overlaps two ?nancial years, the portion of the amount
belonging to the next ?nancial year is the unearned revenue and is deferred to the next ?nancial year.
166
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
GROUP COMPANY
2014

R ‘000
2013
(Restated)
R ‘000
2012
(Restated)
R ‘000
2014

R ‘000
2013
(Restated)
R ‘000
2012
(Restated)
R ‘000
27. Deposits from the public
Term deposits 167,658 173,159 185,025 167,658 173,159 185,025
Transactional and savings
accounts
4,569,952 4,319,052 4,072,839 4,569,952 4,319,052 4,072,839
Total deposits from the public 4,737,610 4,492,211 4,257,864 4,737,610 4,492,211 4,257,864
Deposit products include transactional savings accounts and term deposits. Transactional and savings accounts are all overnight
deposits which are all payable on demand. Term deposits vary from one month to ?ve years. All amounts owed to the depositors
are classi?ed as ?nancial liabilities at cost. Interest payable on both transactional and deposit accounts are capitalised monthly. All
account holders are individuals within the Republic of South Africa.
Interest paid on overnight deposit accounts is ?xed and varies from 0.00% to 2.83% per annum (2013: 0.00% to 4.95%) depending
on the account balance. Term deposits attract interest that varies from 4.80% to 5.30% per annum (2013: 4.80% to 5.30%) and all
rates are linked to prime rate.
Deposits from the public are fully covered by investments and other ?nancial assets as well as cash and cash equivalents, and these
amounts are included in the total balances re?ected in notes 9 and 15.
28. Funds collected on behalf of third parties
Agency services and collections 68,042 90,317 212,138 68,042 90,317 212,138
Money and postal orders 23,998 31,928 32,528 23,998 31,928 32,528
Total funds collected on behalf
of third parties
92,040 122,245 244,666 92,040 122,245 244,666
Funds collected from the customers of the group third party clients are paid into their bank accounts within 24 hours following the
collection at Post Of?ce outlets. In terms of service level agreements with the clients, no interest will be paid to clients for the
24 hour period before the money collected is paid into the client’s respective accounts. Money and postal orders are unclaimed
obligations that are payable on demand.
167
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
Figures in Rand thousands
29. Financial assets by category
The accounting policies for ?nancial instruments have been applied to the line items below:
Group - 2014
Loans and
receivables
Fair value
through pro?t
or loss - held for
trading
Held to maturity
investments
Available-for-
sale
Total
Cash and cash equivalents - 33,034 3,978,080 - 4,011,114
Investments and other ?nancial
assets
- 833,103 1,897,612 1,552,719 4,283,434
Trade and other receivables 536,873 - - - 536,873
Total ?nancial assets 536,873 866,137 5,875,692 1,552,719 8,831,421
Group - 2013 (Restated)
Loans and
receivables
Fair value
through pro?t
or loss - held for
trading
Held to maturity
investments
Available-for-
sale
Total
Cash and cash equivalents - 29,175 3,247,580 - 3,276,755
Investments and other ?nancial
assets
- 768,085 2,277,000 1,658,202 4,703,287
Trade and other receivables 544,343 - - - 544,343
Total ?nancial assets 544,343 797,260 5,524,580 1,658,202 8,524,385
Company - 2014
Loans and
receivables
Fair value
through
pro?t
or loss - held
for trading
Held to
maturity
investments
Available-for-
sale
Total
Cash and cash equivalents - 33,034 3,941,862 - 3,974,896
Investments and other ?nancial
assets
- 833,103 1,882,000 1,552,719 4,267,822
Loans and long term receivables
to group companies
3,488 - - - 3,488
Trade and other receivables 494,357 - - - 494,357
Total ?nancial assets 497,845 866,137 5,823,862 1,552,719 8,740,563
Company - 2013 (Restated)
Loans and
receivables
Fair value
through
pro?t
or loss - held
for trading
Held to
maturity
investments
Available-for-
sale
Total
Cash and cash equivalents - 29,174 3,208,220 - 3,237,394
Investments and other ?nancial
assets
- 768,085 2,262,000 1,658,202 4,688,287
Loans and long term receivables
to group companies
41,826 - - - 41,826
Trade and other receivables 506,756 - - - 506,756
Total ?nancial assets 548,582 797,259 5,470,220 1,658,202 8,474,263
Trade and other receivables in the above tables exclude prepayments and VAT, which do not represent ?nancial instruments.
Other ?nancial assets in the above tables exclude the Provident Fund Asset, which does not represent ?nancial instruments.
168
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
Figures in Rand thousands
30. Financial liabilities by category
The accounting policies for ?nancial instruments have been applied to the line items below:
Group - 2014
Financial
liabilities at
amortised cost
Fair value
through
pro?t or loss -
designated
Total
Bank overdraft 311,378 - 311,378
Deposits from the public 4,737,610 - 4,737,610
Funds collected on behalf of third parties 92,040 - 92,040
Trade and other payables 379,843 397,286 777,129
Total ?nancial liabilities 5,520,871 397,286 5,918,157
Group - 2013 (Restated)
Financial
liabilities at
amortised cost
Fair value
through
pro?t or loss -
designated
Total
Amount owing to shareholder 270,674 - 270,674
Deposits from the public 4,492,211 - 4,492,211
Funds collected on behalf of third parties 122,245 - 122,245
Trade and other payables 258,168 411,980 670,148
Total ?nancial liabilities 5,143,298 411,980 5,555,278
Company - 2014
Financial
liabilities at
amortised cost
Fair value
through
pro?t or loss -
designated
Total
Bank overdraft 311,378 - 311,378
Deposits from the public 4,737,610 - 4,737,610
Funds collected on behalf of third parties 92,040 - 92,040
Trade and other payables 303,099 403,403 706,502
Total ?nancial liabilities 5,444,127 403,403 5,847,530
Company - 2013 (Restated)
Financial
liabilities at
amortised cost
Fair value
through
pro?t or loss -
designated
Total
Amount owing to shareholder 270,674 - 270,674
Deposits from the public 4,492,211 - 4,492,211
Funds collected on behalf of third parties 122,245 - 122,245
Trade and other payables 247,874 367,867 615,741
Total ?nancial liabilities 5,133,004 367,867 5,500,871
At year-end there were no ?nancial liabilities held for trading.
Trade and other payables numbers in the above tables exclude VAT, which do not represent ?nancial instruments.
169
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
GROUP COMPANY
2014

R ‘000
2013
(Restated)
R ‘000
2014

R ‘000
2013
(Restated)
R ‘000
31. Revenue
Postbank 308,159 314,447 308,159 314,447
Postbank interest revenue 275,576 275,891 275,576 275,891
Retail products 77,973 14,863 77,973 14,863
Services rendered - Postal 4,076,325 4,006,160 4,062,814 3,968,580
Services rendered - Agency and money transfer 353,061 405,478 353,061 405,478
Services rendered - Courier 687,346 672,706 320,378 334,981
Total revenue 5,778,440 5,689,545 5,397,961 5,314,240
Revenue comprise income from services provided and the sale of retail products, excluding VAT, rebates, and discounts as well as
Postbank ?nance income, excluding VAT.
These services include work performed as an agent of certain Government departments, other authorities and businesses.
32. Other income
Commissions received 1,781 1,342 1,781 1,342
Discount received - 17,544 - 17,544
Fees earned 16,230 14,140 16,230 14,140
Government grants - 10 - 10
Other income 44,134 27,399 40,960 24,184
Pension fund surplus 1,986 5,604 1,986 5,604
Pro?t and loss on exchange differences 5,308 3,873 5,308 3,873
Pro?t and loss on sale of property, plant and equipment (2) 5,388 - -
Recoveries 45,071 85,553 143,943 116,362
Rental income 49,838 28,550 49,635 27,566
Sundry income 6,303 9,919 5,973 9,841
Technology 31,637 27,721 31,637 27,721
Total other income 202,286 227,043 297,453 248,187
33. Operating loss
Operating loss for the year is stated after accounting for the following:
Operating lease charges
Premises
• Contractual amounts 351,361 317,500 337,426 300,894
Motor vehicles
• Contractual amounts 127,970 104,946 105,197 95,711
Equipment
• Contractual amounts 15,481 17,700 15,385 17,439
Total operation lease charges 494,812 440,146 458,008 414,044
170
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
GROUP COMPANY
2014

R ‘000
2013
(Restated)
R ‘000
2014

R ‘000
2013
(Restated)
R ‘000
33. Operating loss (continued)
Loss on sale of property, plant and equipment (2) 5,388 - -
Transport costs 747,353 648,068 559,766 453,047
Inventory written off 1,084 2,598 991 2,577
Trade and other receivables written off 3,498 10,140 175 4,782
Impairment on other ?nancial assets (921) 921 96,233 39,719
Pro?t on exchange differences (5,308) (3,873) (5,308) (3,873)
Amortisation of intangible assets 33,730 26,463 33,183 25,913
Depreciation of property, plant and equipment 132,888 145,894 129,844 141,556
Depreciation of investment property 514 568 514 546
Employee costs 3,665,103 3,369,687 3,494,745 3,215,404
Research and development costs 818 3,334 818 3,334
Business restructuring 11,995 5,746 11,995 5,723
Licenses 19,857 20,114 19,857 20,104
Delivery standard measurement 1,273 724 1,273 724
Postbank corporatisation 100 4,833 - 4,833
Forensic audit 11,811 12,025 11,811 12,025
Revenue protection - (192) - (192)
Delivery standard measurement
The universal service aims to ensure that basic postal services and ?nancial transactions which are essential to social and economical
inclusion are available to everybody in an appropriate way at an affordable cost. This is intended to ensure that people living in rural
areas obtain the advantage of postal and ?nancial services, irrespective of whether the income generated is less than the cost of
providing the service.
License agreement
In terms of Section 16(3) of the Postal Services Act, 1998 (Act No 124 of 1998) the Minister of Communications granted and issued a
license to the Post Of?ce of South Africa (SOC) Limited with a period of validity of 25 years, effective 1 April 2000.
In terms of the license conditions the Post Of?ce of South Africa (SOC) Limited must pay the National Reserve Fund (or SA
Government) an annual license fee equal to 0.55% of its annual regulated turnover.
34. Finance income
Dividend revenue
Unlisted ?nancial assets - Local - 1,917 - 1,917
Interest revenue
Available-for-sale 135 3,854 135 3,854
Held-to-maturity 117,569 131,372 118,804 132,700
Trade and other payables discounting 23,875 (17,561) 23,652 (17,716)
Total interest revenue 141,579 117,665 142,591 118,838
Total ?nance income 141,579 119,582 142,591 120,755
Interest income on impaired ?nancial assets amounted to R 2,205 million (2013: R 3,535 million).
171
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
GROUP COMPANY
2014

R ‘000
2013
(Restated)
R ‘000
2014

R ‘000
2013
(Restated)
R ‘000
35. Fair value adjustments
Other ?nancial assets 65,019 98,855 65,019 98,855
The fair value gains and losses recognised are derived from ?nancial assets subsequently measured at fair value through pro?t and
loss and relate to the Post Retirement Medical Aid Asset as noted in note 21.
36. Interest paid
Actuarial valuations 108,087 227,544 107,757 226,800
Finance leases - 1,572 - -
Former TBVC states loan 17,229 22,347 17,229 22,347
Interest paid other 12,067 451 12,271 1,875
Postbank ?nance cost 35,613 44,635 35,613 44,635
Trade and other receivables discounting (1,073) 3,048 (1,073) 3,048
Unwinding of site restoration provision 20,622 17,937 20,622 17,937
Total interest paid 192,545 317,534 192,419 316,642
172
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
GROUP COMPANY
2014

R ‘000
2013
(Restated)
R ‘000
2014

R ‘000
2013
(Restated)
R ‘000
37. Taxation
Major components of taxation
Current
Local income tax - current period 45 41 - -
Local income tax - recognised in current tax for prior periods - (435) - (435)
Total current tax 45 (394) - (435)
Deferred
Originating and reversing temporary differences (75,346) 25,580 (76,328) 25,901
Arising from previously unrecognised tax loss/tax 79 - - -
credit/temporary difference
Bene?t of unrecognised tax loss/tax credit/temporary (91,486) (73) (91,437) -
difference used to reduce deferred tax expense
Originating and reversing temporary differences (OCI) 16,310 (53,560) 16,310 (53,560)
Arising from prior period adjustments 336 (3,262) 335 (3,262)
Total deferred tax (150,107) (31,315) (151,120) (30,921)
Total taxation (150,062) (31,709) (151,120) (31,356)
Reconciliation of the tax expense
Reconciliation between applicable tax rate and average effective tax rate.
Applicable tax rate 28.00 % 28.00 % 28.00 % 28.00 %
Exempt income 14.90 % 23.55 % 15.63 % 24.60 %
Increase in tax rate (0.02)% (2.13)% - % (2.39)%
Disallowable charges (19.99)% (29.81)% (21.75)% (37.19)%
Restatement of opening deferred tax balance (0.04)% 0.93 % (0.05)% 1.05 %
Current tax relating to prior year - % 0.10 % - % 0.11 %
Subject to tax at reduced rate 0.81 % 2.14 % 0.89 % 2.40 %
Net deferred tax not raised (3.13)% (3.59)% - % - %
Recognised in equity (0.10)% (2.32)% (0.11)% (2.61)%
Effective tax rate 20.43 % 16.87 % 22.61 % 13.97 %
Deductible temporary differences, unused tax losses and unused
tax credits for which no deferred tax asset has been recognised.
112,784 86,945 - -
173
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
Figures in Rand thousands
38. Other comprehensive income
Components of other comprehensive income - Group - 2014
Gross Tax Net
Items that will not be reclassi?ed to pro?t or loss
Movements on revaluation
Gains on ?rst time recognition of heritage assets 21,965 (4,101) 17,864
Remeasurements on net de?ned bene?t liability
Remeasurements on net de?ned bene?t liability (30,918) 8,666 (22,252)
Total items that will not be reclassi?ed to pro?t or loss (8,953) 4,565 (4,388)
Items that may be reclassi?ed to pro?t or loss
Available-for-sale ?nancial assets adjustments
Revaluation gains on available for sale ?nancial assets 8,264 (1,543) 6,721
Total items that may be reclassi?ed to pro?t or loss 8,264 (1,543) 6,721
Total other comprehensive income (689) 3,022 2,333
Components of other comprehensive income - Group - 2013 (Restated)
Gross Tax Net
Items that will not be reclassi?ed to pro?t or loss
Remeasurements on net de?ned bene?t liability
Remeasurements on net de?ned bene?t liability (155,639) 43,571 (112,068)
Total items that will not be reclassi?ed to pro?t or loss (155,639) 43,571 (112,068)
Items that may be reclassi?ed to pro?t or loss
Available-for-sale ?nancial assets adjustments
Revaluation gains on available for sale ?nancial assets 2,250 (420) 1,830
Total items that may be reclassi?ed to pro?t or loss 2,250 (420) 1,830
Total other comprehensive income (153,389) 43,151 (110,238)
174
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
Figures in Rand thousands
38. Other comprehensive income (continued)
Components of other comprehensive income - Company - 2014
Gross Tax Net
Items that will not be reclassi?ed to pro?t or loss
Movements on revaluation
Gains on ?rst time recognition of heritage assets 21,965 (4,101) 17,864
Remeasurements on net de?ned bene?t liability
Remeasurements on net de?ned bene?t liability (30,950) 8,666 (22,284)
Total items that will not be reclassi?ed to pro?t or loss (8,985) 4,565 (4,420)
Items that may be reclassi?ed to pro?t or loss
Available-for-sale ?nancial assets adjustments
Revaluation gains on available for sale ?nancial assets 8,264 (1,543) 6,721
Total items that may be reclassi?ed to pro?t or loss 8,264 (1,543) 6,721
Total other comprehensive income (721) 3,022 2,301
Components of other comprehensive income - Company - 2013 (Restated)
Gross Tax Net
Items that will not be reclassi?ed to pro?t or loss
Remeasurements on net de?ned bene?t liability
Remeasurements on net de?ned bene?t liability (155,611) 43,571 (112,040)
Total items that will not be reclassi?ed to pro?t or loss (155,611) 43,571 (112,040)
Items that may be reclassi?ed to pro?t or loss
Available-for-sale ?nancial assets adjustments
Revaluation gains on available for sale ?nancial assets 2,250 (420) 1,830
Total items that may be reclassi?ed to pro?t or loss 2,250 (420) 1,830
Total other comprehensive income (153,361) 43,151 (110,210)
175
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
GROUP COMPANY
2014

R ‘000
2013
(Restated)
R ‘000
2014

R ‘000
2013
(Restated)
R ‘000
39. Auditors’ remuneration
Fees 15,591 13,857 13,409 11,383
There are no unful?lled conditions or contingencies.
40. Cash used in operations
Loss before tax (511,272) (258,590) (534,735) (235,949)
Adjustments for:
Depreciation and amortisation 167,132 172,925 163,541 168,015
Loss (pro?t) on sale of assets 2 (5,388) - -
Dividends revenue - (1,917) - (1,917)
Interest revenue (141,579) (117,665) (142,591) (118,838)
Interest paid 192,545 317,534 192,419 316,642
Fair value adjustments (65,019) (98,855) (65,019) (98,855)
Impairment loss on other ?nancial assets (921) 921 96,233 39,719
Movements in operating lease assets and accruals 10,967 8,833 11,715 8,876
Movements in retirement bene?t assets and liabilities 3,535 6,832 3,504 6,770
Movements in provisions 43,040 151,951 54,113 149,120
Discount received - (17,544) - (17,544)
Pro?t and loss on exchange differences (5,308) (3,873) (5,308) (3,873)
Providend fund actuarial gain (1,986) (5,604) (1,986) (5,604)
Recoveries (45,071) (85,553) (143,943) (116,362)
General expenses 224 (1,801) 1,874 (8,371)
Changes in working capital:
Inventories (26,535) 10,439 (26,313) 10,290
Trade and other receivables (6,891) (72,220) (13,952) (85,346)
Trade and other payables 106,437 (35,721) 89,764 (14,090)
Unearned revenue (6,231) (34,213) (4,529) (18,154)
Funds collected on behalf of third parties (30,205) (122,421) (30,205) (122,421)
Total cash used in operations (317,136) (191,930) (355,418) (147,892)
41. Tax refunded (paid)
Balance at the beginning of the year 34,292 (7,444) 34,163 (7,947)
Current tax for the year recognised in pro?t or loss (45) 394 - 435
Balance at the end of the year (114) (34,292) - (34,163)
Tax refunded (paid) 34,133 (41,342) 34,163 (41,675)
176
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
GROUP COMPANY
2014

R ‘000
2013
(Restated)
R ‘000
2014

R ‘000
2013
(Restated)
R ‘000
42. Commitments
Authorised capital expenditure
Already contracted for but not provided for
• Property, plant and equipment 181,344 287,913 180,899 287,203
Not yet contracted for and authorised by directors
• Property, plant and equipment 221,901 19,758 221,901 19,458
This committed expenditure relates to plant and equipment and will be ?nanced by available bank facilities, retained pro?ts, rights
issue of shares, issue of debentures, mortgage facilities, existing cash resources, funds internally generated, etc.
Operating leases – as lessee (expense)
Minimum lease payments due - Buildings
• within one year 207,172 187,403 197,608 175,437
• in second to ?fth year inclusive 603,733 585,852 598,907 561,457
• later than ?ve years 74,531 138,948 74,531 138,948
Total minimum lease payments due 885,436 912,203 871,046 875,842
None of the lease agreements contain any contingent rent clauses and it is assumed that there are no contingent rent payments.
It is also assumed that there are no restrictions that would impose additional debts that are not covered in the minimum contract
terms. Rental payments are based on a rate per square meter relating to the prevalent market rate at the inception of the contract.
Escalation clauses vary from contract to contract averaging at 8.00% (2013: 8.00%). Contract renewal options are assumed to be
exercised by the company, unless decided otherwise by management.
Minimum lease payments due - Vehicles
• within one year 86,263 48,368 80,236 46,311
• in second to ?fth year inclusive 50,207 66,313 46,300 65,976
Total minimum lease payments due 136,470 114,681 126,536 112,287
The group leases vehicles from Avis Fleet Services and Fleet Africa under Full Maintenance Lease (FML) agreements. The lease
period ranges from two to ?ve years at an interest rate of prime less 2.00% to prime plus 2.25% (2013: prime less 2.00% to prime
plus 2.25%). The vehicles are being utilised for the delivery of parcels and mail.
Operating leases – as lessor (income)
Minimum lease payments due - Buildings
• within one year 7,869 5,866 8,303 5,866
• in second to ?fth year inclusive 24,273 17,042 24,653 17,042
• later than ?ve years 1,507 1,382 1,507 1,382
Total minimum lease payments due 33,649 24,290 34,463 24,290
Rental income has been based on a rate per square meter relating to the prevalent market rate at the inception of each contract.
Escalation clauses vary from contract to contract with an average of 7.00% (2013: 7.00%). Lease agreements are entered into for
a minimum of two years to a maximum of three year period. Contract renewal option period is assumed to be exercised by the
company, unless decided otherwise by management. None of the lease agreements contain any contingent rent clauses.
Minimum lease payments due - Vehicles
• within one year - - 4,715 3,144
• in second to ?fth year inclusive - - 3,144 9,431
Total minimum lease payments due - - 7,859 12,575
Vehicles are leased to The Courier and Freight Group (Pty) Ltd (a subsidiary) for a period of 36 months at amounts of R 392 939 per
month with an interest cost of prime plus 1.00%.
177
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
GROUP COMPANY
2014

R ‘000
2013
(Restated)
R ‘000
2014

R ‘000
2013
(Restated)
R ‘000
43. Contingencies
The following contingent liabilities were identi?ed:
Bank guarantees 8,353 6,756 6,275 6,756
Employees 40,400 9,238 40,400 9,238
Guarantees in respect of employee housing loans 1,503 1,504 1,503 1,504
Summons 296,725 346,725 296,725 346,725
Service providers 17,982 12,518 16,601 12,518
Total contingencies 364,963 376,741 361,504 376,741
The South African Post Of?ce (SOC) Limited is in receipt of a summons in which the plaintiff has claimed R 296,725 million
(2013: R 296,725 million) in damages arising out of an alleged breach of an agreement, purportedly concluded between the parties
during 2004. The South Africa Post Of?ce (SOC) Limited is defending the damages action.
44. Related parties
Relationships
Ultimate holding company South African Government
Holding company South African Post Of?ce (SOC) Limited
Subsidiaries Refer to note 7
Shareholder with signi?cant in?uence The Department of Communications
Post employment bene?t plan for employees Old Mutual Corporate Limited
Members of key management: Refer to note 45
Related party balances
Loans and long term receivables - Owing (to) by related parties
CFG Zimbabwe (Pty) Ltd - 4,742 - -
Department of Communications - (270,674) - (270,674)
Sapos Properties (Bloemfontein) (Pty) Ltd - - 397 351
Sapos Properties (Cape Town) (Pty) Ltd - - 1,394 1,238
Sapos Properties (East Rand) (Pty) Ltd - - 2,962 2,905
Sapos Properties (Port Elizabeth) (Pty) Ltd - - 714 1,152
Sapos Properties (Rossburgh) (Pty) Ltd - - 3,322 3,066
The Courier and Freight Botswana (Pty) Ltd 3,560 3,560 - -
The Courier and Freight Group (Pty) Ltd - - 471,071 412,970
The Courier and Freight Namibia (Pty) Ltd 2,294 2,294 - -
The Courier and Freight Swaziland (Pty) Ltd - 7,304 - -
The Document Exchange (Pty) Ltd - - 530 -
178
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
GROUP COMPANY
2014

R ‘000
2013
(Restated)
R ‘000
2014

R ‘000
2013
(Restated)
R ‘000
44. Related parties (continued)
Related party balances (continued)
Amounts included in trade receivables regarding related parties
Auditor-General 50 60 50 1
Centriq Insurance Innovation (Pty) Ltd 3,321 3,271 3,321 3,271
Department of Communications 1,422 45 200 -
National Treasury - 2 - -
The Courier and Freight Group (Pty) Ltd - - - 1,125
The Document Exchange (Pty) Ltd - - 497 992
The Presidency 43 16 26 -
Amounts included in trade payables regarding related parties
Centriq Insurance Innovation (Pty) Ltd - - - 3,280
National Treasury 2,235 677 2,235 678
The Courier and Freight Group (Pty) Ltd - - 5,523 -
The Independent Communications Authority of South Africa
(ICASA)
65 23 65 23
Convertible loans from shareholder
Department of Communications 287,176 - 287,176 -
National Treasury 955,000 750,000 955,000 750,000
Operating lease liability
The Courier and Freight Group (Pty) Ltd - - 3 1
The Document Exchange (Pty) Ltd - - 125 123
Provisions
Centriq Insurance Innovation (Pty) Ltd - - 4,493 779
Government grant
South African Government 69,775 79,580 69,775 79,580
Travel advances to key management personnel
Travel and subsistence advances - 22 - 22
179
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
GROUP COMPANY
2014

R ‘000
2013
(Restated)
R ‘000
2014

R ‘000
2013
(Restated)
R ‘000
44. Related parties (continued)
Related party transactions
Interest paid to (receivable from) related parties
Department of Communications 709 753 709 753
The Courier and Freight Group (Pty) Ltd - - (2,205) (3,535)
Purchases from related parties
Centriq Insurance Innovation (Pty) Ltd - - - 18,083
National Treasury 399,937 - 399,937 -
The Independent Communications Authority of South Africa
(ICASA) 26,244 7,023 26,244 7,023
The Presidency - 131 - -
Sales to related parties
Auditor-General 27 77 10 13
Centriq Insurance Innovation (Pty) Ltd - - - 18,263
Department of Communications 1,684 1,655 - 18
National Treasury 11 - 1 -
The Presidency 119 - - -
Management fees expensed in relation to related parties
The Courier and Freight Group (Pty) Ltd - - 47,963 53,853
Commission and administration fees received in relation to
related parties
Centriq Insurance Innovation (Pty) Ltd - - 1,876 2,993
The Document Exchange (Pty) Ltd - - 1,200 1,200
Shared services recoveries in relation to related parties
The Courier and Freight Group (Pty) Ltd 558 - 45,911 35,608
Leases recoveries in relation to related parties
The Courier and Freight Group (Pty) Ltd - - - 1,572
Rent received from related parties
The Courier and Freight Group (Pty) Ltd - - 41 13
The Document Exchange (Pty) Ltd - - 653 653
180
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
Figures in Rand thousand
45. Directors’ and prescribed of?cers’ emoluments
Executive
2014
Emoluments
Pension paid or
receivable
Expense
allowance
Other bene?ts ¹ Total
Mr CJ Hlekane
2
2,844 264 - - 3,108
Ms K Mzozoyana
3
2,098 194 53 - 2,345
Mr B Yafele
4
1,463 - 9 - 1,472
Mr S Adam
5
1,825 169 - 9 2,003
Mr MJ Mathibe
6
1,890 220 36 9 2,155
Total executive emoluments 10,120 847 98 18 11,083
1. Other bene?ts include mainly telephone and various travel related reimbursements.
2. Group CEO. Also a director of The Courier and Freight Group, The Document Exchange and Sapos Properties.
3. Group CFO. Also a director of The Courier and Freight Group, The Document Exchange and Sapos Properties.
4. Group COO. Retired 14 November 2013.
5. Acting MD: Postbank. Retired 15 October 2014.
6. MD: The Courier and Freight Group. Also Acting MD: The Document Exchange. Retired 25 July 2014.
Retired implies resigned, retired or dismissed.
2013 (Restated)
Emoluments
Pension paid or
receivable
Expense
allowance
Other bene?ts ¹ Total
Mr CJ Hlekane
2
1,421 134 - - 1,555
Mr MJ Mathibe
3
1,561 150 30 18 1,759
Ms K Mzozoyana
4
517 49 13 - 579
Ms TN Mashanda
5
216 - - - 216
Mr NJD Buick
6
498 48 13 107 666
Mr S Adam
7
1,600 147 - 9 1,756
Total executive emoluments 5,813 528 56 134 6,531
1. Other bene?ts include mainly telephone and various travel related reimbursements.
2. Group CEO. Appointed 1 October 2012. Also a director of The Courier and Freight Group, The Document Exchange and Sapos Properties.
3. Acting group CEO from 1 June 2012 to 30 September 2012. Also MD: The Courier and Freight Group. Also MD: The Document Exchange.
4. Group CFO. Appointed 1 January 2013. Also a director of The Courier and Freight Group, The Document Exchange and Sapos Properties.
5. Acting CFO from 15 November 2012 to 31 December 2012.
6. Group CFO. Retired 30 June 2012.
7. Acting MD: Postbank.
Retired implies resigned, retired or dismissed.
181
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
Figures in Rand thousand
45. Directors’ and prescribed of?cers’ emoluments (continued)
Non-executive
2014
Emoluments ¹
Expense
allowance ²
Total
Dr HN Manzini
3
526 19 545
Mr H Daniels
4
546 21 567
Mr MS Patel
5
615 40 655
Ms SP Mothelesi
6
123 1 124
Mr JS Ngubane
6
128 3 131
Mr PT Mageza
6
141 7 148
Mr S Gounden
6
122 5 127
Mr R Sishuba
7
588 32 620
Ms G Simelane
8
519 17 536
Ms N Kela
9
597 17 614
Ms NG Mthethwa
10
650 18 668
Mr G Mothema
11
75 2 77
Total non-executive emoluments 4,630 182 4,812
1. Emoluments include both directors’ fees for meetings and annual/quarterly retainer fees.
2. The group re-imburses travel and accommodation expenses for members outside the Gauteng province.
3. Acting Chairperson of the Board. Retired 07 November 2014.
4. Retired 22 April 2014.
5. Also a director of The Courier and Freight Group. Retired 07 November 2014.
6. Appointed 17 December 2013. Retired 07 November 2014.
7. Also Chairperson of the Board of The Document Exchange. Retired 23 October 2014.
8. Retired 22 October 2014.
9. Also a director of The Courier and Freight Group and The Document Exchange. Retired 07 November 2014.
10. Also Chairperson of the Board of The Courier and Freight Group and a director of The Document Exchange. Retired 23 October 2014.
11. Retired 26 June 2013.
Retired implies resigned, retired or dismissed.
2013 (Restated)
Emoluments ¹
Expense
allowance ²
Total
Dr HN Manzini 3 313 9 322
Adv LP Nobanda 250 16 266
Mr G Mothema 768 27 795
Mr H Daniels 272 6 278
Mr MS Patel 4 428 99 527
Mr R Sishuba 479 27 506
Mr SEO Dietrich 105 4 109
Mr TC Ngcobo 4 437 14 451
Ms G Simelane 410 14 424
Ms K Sicwebu 342 5 347
Ms N Kela 497 14 511
Ms NG Mthethwa 565 16 581
Total non-executive emoluments 4,866 251 5,117
1. Emoluments include both directors’ fees for meetings and annual/quarterly retainer fees.
2. The group re-imburses travel and accommodation expenses for members outside the Gauteng province.
3. Acting Chairperson of the Board. Also a director of The Courier and Freight Group.
4. Also a director of The Courier and Freight Group.
182
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
Figures in Rand thousand
45. Directors’ and prescribed of?cers’ emoluments (continued)
Prescribed of?cers
2014
Emoluments
Pension paid
or receivable
Expense
allowance
Leave pay
Other
bene?ts ¹
Total
Adv MM Mphelo
2
881 83 - - - 964
Mr MS Diaz
3
973 90 20 53 16 1,152
Ms S Myburg
4
975 90 36 - 9 1,110
Ms M Lancaster
5
822 87 20 84 16 1,029
Mr L Lose
6
1,369 127 30 - 68 1,594
Mr MC Sebusi
7
273 - 6 - 2 281
Mr CA Phillips
8
1,245 115 30 - 23 1,413
Mr M Faasen
9
1,103 120 30 - - 1,253
Mr P Ngomane
10
933 86 36 - 9 1,064
Mr KT Rapoo
11
974 90 30 - - 1,094
Mr DD Jacobs
12
601 - - - 8 609
Mr LP Govender
13
1,233 114 30 - 9 1,386
Mr M Borotho
14
625 59 12 - - 696
Ms BS Bulunga
15
969 90 28 - 21 1,108
Ms NJ Dewar
16
1,615 150 - - 9 1,774
Mr JS Kotsi
17
1,454 135 30 - 23 1,642
Mr NA Mnisi
18
1,301 123 - - 23 1,447
Mr B Tiribabi
19
914 85 16 - - 1,015
Mr TE Xiphu
20
1,362 126 10 - 23 1,521
Mr K Mothobi
21
1,427 - - - - 1,427
Total prescribed of?cers
emoluments 21,049 1,770 364 137 259 23,579
1. Other bene?ts include mainly telephone and various travel related reimbursements.
2. Acting group Company Secretary. Appointed 15 February 2014.
3. GE: Human Resources. Retired 30 November 2013.
4. Acting GE: Human Resources. Appointed 01 July 2013.
5. Acting CIO. Also GE: Strategy. Retired 03 December 2013.
6. GE: Corporate Affairs.
7. GM: Treasury. Retired 30 June 2013.
8. Chief Audit Executive.
9. Group Principal Of?cer.
10. GM: Security & Investigation Services.
11. Acting MD: Sapos Properties.
12. Executive Legal Advisor. Retired 30 September 2013.
13. GE: Management Accounting. Also acting GE: Supply Chain Management until 30 September 2013.
14. GE: Supply Chain Management. Appointed 01 October 2013.
15. Group Company Secretary. Retired 14 February 2014.
16. CFO: Postbank.
17. GE: Mail Business.
18. GE: Retail. Retired 30 April 2014.
19. Acting group CIO. Appointed 19 April 2013.
20. GE: Government Relations.
21. Acting GE: CEO. Contracted employee.
Retired implies resigned, retired or dismissed.
183
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
Figures in Rand thousand
45. Directors’ and prescribed of?cers’ emoluments (continued)
2013 (Restated)
Emoluments Pension paid
or receivable
Expense
allowance
Other
bene?ts ¹
Total
Adv MM Mphelo
2
881 83 - - 964
Mr MS Diaz
3
1,387 131 30 23 1,571
Ms M Lancaster
4
1,204 116 30 23 1,373
Mr L Lose
5
1,272 122 30 9 1,433
Mr MC Sebusi
6
339 - 8 2 349
Mr CA Phillps
7
1,156 112 30 23 1,321
Mr M Faasen
8
309 27 8 - 344
Mr P Ngomane
9
851 83 36 9 979
Mr KT Rapoo
10
896 87 30 9 1,022
Mr DD Jacobs
11
400 - - - 400
Mr LP Govender
12
1,142 110 30 9 1,291
Ms BS Bulunga
13
975 95 30 23 1,123
Ms NJ Dewar
14
1,537 114 - 9 1,660
Mr JS Kotsi
15
1,355 130 30 23 1,538
Mr NA Mnisi
16
1,249 117 - 23 1,389
Mr NF Dikgale
17
591 57 15 4 667
Mr TE Xiphu
18
1,265 122 30 23 1,440
Mr K Mothobi
19
430 - - - 430
Total prescribed of?cers
emoluments
17,239 1,506 337 212 19,294
1. Other bene?ts include mainly telephone and various travel related reimbursements.
2. Assistant group Company Secretary.
3. GE: Human Resources.
4. Acting CIO. Also GE: Strategy.
5. GE: Corporate Affairs.
6. GM: Treasury.
7. Chief Audit Executive.
8. Group Principal Of?cer.
9. GM: Security & Investigation Services.
10. Acting MD: Sapos Properties.
11. Executive Legal Advisor. Appointed 03 December 2012.
12. GE: Management Accounting. Also acting GE: Supply Chain Management.
13. Group Company Secretary.
14. CFO: Postbank.
15. GE: Mail Business.
16. GE: Retail.
17. Executive Legal Services. Retired 28 September 2012.
18. GE: Government Relations.
19. Acting GE: CEO. Contracted from 05 December 2012.
Retired implies resigned, retired or dismissed.
184
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
GROUP COMPANY
2014

R ‘000
2013
(Restated)
R ‘000
2014

R ‘000
2013
(Restated)
R ‘000
46. Risk management
Capital risk management
Capital risk refers to the risk that the group will become unable to absorb losses, maintain public con?dence and support the
competitive growth of the business. The management of capital risk will ensure that opportunities can be acted on timeously while
solvency is never threatened.
The group’s objectives when managing capital are to safeguard the group’s ability to continue as a going concern in order to provide
returns for shareholder and bene?ts for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
The capital structure of the group consists of debt, which includes the borrowings (excluding derivative ?nancial liabilities) disclosed
in notes 8, 23 & 24, cash and cash equivalents disclosed in note 15, and equity as disclosed in the statement of ?nancial position.
In order to maintain or adjust the capital structure, the group may adjust the amount of dividends paid to shareholder, return capital to
shareholder, issue new shares or sell assets to reduce debt.
The group monitors capital on the basis of the gearing ratio.
This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings (including ‘current and non-
current borrowings’ as shown in the statement of ?nancial position) less cash and cash equivalents. Total capital is calculated as
‘equity’ as shown in the statement of ?nancial position plus net debt.
The group’s exposure to capital risk arises from primarily the following:
• Funds which are being received from the shareholder may cease before completion of the projects that they are intended to
fnanced; and
• Funds received from the shareholder are speci?cally for certain identi?ed projects.
The capital risk is managed in terms of certain guidelines agreed between the group and shareholder.
There are no externally imposed capital requirements.There have been no changes to what the entity manages as capital, the
strategy for capital maintenance or externally imposed capital requirements from the previous year.
The gearing ratio at 2014 and 2013 respectively were as follows:
Total borrowings
Amount owing to shareholder 23 - 270,674 - 270,674
Bank overdraft 15 311,378 - 311,378 -
Deposits from the public 27 4,737,610 4,492,211 4,737,610 4,492,211
5,048,988 4,762,885 5,048,988 4,762,885
Less: Cash and cash equivalents 15 4,011,114 3,276,755 3,974,896 3,237,394
Net debt 1,037,874 1,486,130 1,074,092 1,525,491
Total equity 2,438,296 2,304,990 2,441,836 2,330,970
Total capital 3,476,170 3,791,120 3,515,928 3,856,461
Gearing ratio 30 % 39 % 31% 40 %
185
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
46. Risk management (continued)
Financial risk management
The group’s `activities expose it to a variety of ?nancial risks: market risk (including currency risk, fair value interest rate
risk, cash ?ow interest rate risk and price risk), credit risk and liquidity risk.
A comprehensive treasury policy has been compiled and approved by the board to ensure that all ?nancial risks to which
the group is exposed are understood and managed. The treasury policy covers all key areas of risk management namely
identi?cation, measurement, management and reporting of risk. Governance structures are in place to achieve effective
independent monitoring and management of market risks through:
• The group’s Asset and Liability Management (“ALM”) function that is responsible for the day to day monitoring,
evaluation and reporting of all market risks;
• The group’s Asset and Liability Committee (“ALCO”) which is responsible for ensuring that the impact of ?nancial
risks is being effectively managed and reported throughout the group and that all policies, risk, limits, and relevant
market risk issues are reported to the Group Risk Committee;
• The board’s Group Risk Committee which is responsible for ensuring that from a strategic perspective, risk is
handled as an area of competitive advantage and a key source of innovation; and
• The group ALCO reports on a quarterly basis to the board’s Group Risk Committee.
Financial risk management objectives
The group’s ALM function monitors and manages ?nancial risks relating to the treasury operations of the group through
internal risk reports which analyse the degree and magnitude of risks. These risks include fair value interest rate risk,
currency risk, credit risk, liquidity risk and cash ?ow interest rate risk.
The group seeks to minimise the effects of the negative impact of these risks by ensuring compliance with the treasury
policy limits and benchmarks with regard to the following:
• Proposed money market investment strategies do not result in the breach of asset/liability mismatch gap limit;
• Ensuring that the net interest income volatility is within approved benchmark;
• Adequate overnight liquidity limit is complied with by having suffcient call balances;
• The South African Post Of?ce (SOC) Limited’s credit exposure is diversi?ed across a range of acceptable
counterparties and the maximum investment with a particular counterparty will be limited to 25% of the total
investments. Where the amount to be invested per entity is less than or equal to R50 million, the minimum
investment with any one counterparty should be limited to 50% + 1 of the total investment and not exceeding R25
million; and
• Instrument limits are set to avoid excess concentration in any given ?nancial investment instrument.
Overall the group’s main ?nancial risk management objective is to ensure enhanced return within the risk pro?les or
parameters approved by the board.
186
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
46. Risk management (continued)
Fair value assumptions of ?nancial instruments
The fair value of ?nancial assets and ?nancial liabilities are determined as follows:
• The fair value of ?nancial assets and ?nancial liabilities with standard terms and conditions and traded on active
liquid markets is determined with reference to quoted market prices;
• The fair value of other ?nancial assets and ?nancial liabilities (excluding derivative instruments) is determined in
accordance with generally accepted pricing models based on discounted cash ?ow analysis using prices from
observable current market transactions and dealer quotes for similar instruments; and
• The fair value of foreign currency forward contracts is measured using quoted forward exchange rates and interest
rate differential between local and foreign rates derived from quoted interest rates matching maturities of contracts.
Valuation of unlisted shares in Gidani Management (Pty) Ltd
The group had previously owned an equity stake of 1125 shares in Uthingo Management (Pty) Ltd. The liquidation of Uthingo
Management (Pty) Ltd was ?nalised in the ?nancial year ending 31 March 2010. The group received a ?nal termination
dividend of R 1,917 million) in the previous ?nancial year. (Refer to note 34).
Subsequent to the liquidation of Uthingo Management (Pty) Ltd, the group had been allocated 100 ordinary shares in
Gidani Management (Pty) Ltd, which represent 10% of Gidani shares. The shares were allocated to the South African Post
Of?ce (SOC) Limited by the Department of Trade and Industry on 28 July 2010.
The fair value of the South African Post Of?ce (SOC) Limited’s stake in Gidani was determined by management to be zero.
The discounted cash ?ow model was used in the determination of the fair value of the South African Post Of?ce (SOC)
Limited’s shareholding in Gidani.
Liquidity risk
Liquidity risk is the risk that the group will not be able to meet both expected and unexpected current and future cash ?ow
needs without negatively affecting either the daily operations or the ?nancial condition of the group.
The group’s exposure to liquidity risk arises mainly as a result of the following:
• Unexpected withdrawal of cash by Postbank clients;
• Daily working capital requirements; and
• The group has signed contracts with third parties where its retail network is used as a collection agent for
municipalities and other institutions. All contracts stipulate that funds collected for third parties are paid over to
them after 24 hours.
Liquidity risk is managed in terms of the board approved treasury policy with appropriate dashboard liquidity risk pro?les
which are monitored by the group’s ALM function. The management of liquidity risk and particularly the group’s cash ?ows
is strongly focused on the short to medium term to ensure that the group ALM function and the Treasury are quick to
respond to immediate cash ?ow requirements under different stress scenarios.
On a quarterly basis, the group ALM function performs behavioural and stress analyses to identify business as usual as
well as potential stress cash ?ow requirements. Medium and long term liquidity strategies are approved by the group’s
ALCO and implemented by the group’s Treasury.
187
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
Figures in Rand thousand
46. Risk management (continued)
The group manages its daily liquidity by having cash reserves on overnight call balances of at least R 250 million and
maintaining overdraft credit facilities with all the major banks. The group’s ALM function monitors the forecast and actual
cash ?ows and matching the maturity pro?les of ?nancial assets and liabilities of the banking division.
At year-end, the group had overnight call balances of R 346,504 million (2013: R 474 million) and R 50 million
(2013: R 50 million) in overdraft/credit facilities with the major banks. R 311,378 million overdraft facility was utilised at
year-end (2013: R 0 million).
Actions in managing liquidity risk at group ALCO meetings are reported to the Group Risk Committee of the board on a
quarterly basis.
Liquidity risk tables
The tables below detail the group’s remaining contractual maturity for its ?nancial assets and ?nancial liabilities. The ?gures
have been compiled based on the undiscounted cash ?ows based on the earliest date on which the group can be required
to recognise ?nancial assets and settle ?nancial liabilities.
The liquidity risk table below shows the contractual maturity gap at period end. The tables include both interest and
principal cash ?ows.
Group
At 31 March 2014 Overnight
Less than 3
months
Between 3
and 12
months
Greater than
1 year
Equity Total
Cash and cash equivalents 1,402,833 2,394,784 - - - 3,797,617
Investments - 211,664 972,698 2,222,984 - 3,418,346
Other ?nancial assets 144,543 31,902 103,318 247,715 325,775 880,253
Trade and other receivables - 536,873 - - - 536,873
Deposits from the public (4,572,931) (42,247) (102,802) (19,630) - (4,737,610)
Funds collected on behalf of third
parties
(92,040) - - - - (92,040)
Trade and other payables - (777,129) - - - (777,129)
(3,117,595) 2,355,847 973,214 2,462,069 352,775 3,026,310
At 31 March 2013 (Restated) Overnight
Less than 3
months
Between 3
and 12
months
Greater than
1 year
Equity Total
Cash and cash equivalents 1,865,291 1,446,469 - - - 3,311,760
Investments - 639,019 3,405,797 - - 4,044,816
Other ?nancial assets 119,813 35,216 75,644 157,553 321,009 709,235
Trade and other receivables - 544,343 - - - 544,343
Amounts owing to shareholder - (270,674) - - - (270,674)
Deposits from the public (4,321,124) (43,872) (58,051) (49,760) (19,404) (4,492,211)
Funds collected on behalf of third
parties
(122,245) - - - - (122,245)
Trade and other payables - (670,148) - - - (670,148)
(2,458,265) 1,680,353 3,423,390 107,793 301,605 3,054,876
188
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
GROUP COMPANY
2014
R ‘000
2013
R ‘000
2012
R ‘000
2014
R ‘000
2013
R ‘000
2012
R ‘000
46. Risk management (continued)
Company
At 31 March 2014
Overnight
Less than 3
months
Between 3
and 12
months
Greater than
1 year
Equity Total
Cash and cash equivalents 1,366,610 2,183,121 - - - 3,549,731
Investments - 211,664 743,052 957,215 2,233,984 3,402,863
Loans and long term receivables
to group companies
- - - 3,488 - 3,488
Other ?nancial assets 144,543 31,902 41,290 62,028 99,388 379,151
Trade and other receivables - 494,357 - - - 494,357
Deposits from the public (4,572,931) (42,247) (102,802) (19,630) - (4,737,610)
Funds collected on behalf of third
parties
(92,040) - - - - (92,040)
Trade and other payables - (706,502) - - - (706,502)
(3,153,818) 2,172,295 895,703 2,279,870 99,388 2,293,438
At 31 March 2013 (Restated)
Overnight
Less than 3
months
Between 3
and 12
months
Greater than
1 year
Equity Total
Cash and cash equivalents 1,826,246 1,446,469 - - - 3,272,715
Investments - 639,019 3,390,413 - - 4,029,432
Loans and long term receivables
to group companies
- 9,714 29,033 3,079 - 41,826
Other ?nancial assets 119,813 35,216 75,644 157,553 321,009 709,235
Trade and other receivables - 506,756 - - - 506,756
Amounts owing to shareholder - (270,674) - - - (270,674)
Deposits from the public (4,321,160) (43,872) (58,015) (49,760) (19,404) (4,492,211)
Funds collected on behalf of third
parties
(122,245) - - - - (130,703)
Trade and other payables - (670,148) - - - (670,148)
(2,497,346) 1,652,480 3,437,075 110,872 301,605 3,004,686
189
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
46. Risk management (continued)
Market risk
Market risk is the potential negative impact on earnings resulting from unfavourable changes in exchange rates, interest rates, prices
and other market volatilities i.e. the risk that the fair value or future cash ?ows of ?nancial instruments will ?uctuate.
The group’s exposure to market risk arises primarily from its activities in four main areas:
• Interest rate risk in the group’s portfolio as a result of the ?nancial assets and ?nancial liabilities re-pricing mismatch in line with the
group ALCO’s view of the interest rates;
• Repricing risk is the risk of adverse impact on the group’s interest return from mismatched ?nancial assets and liabilities.
Investment risk arising from the group’s surplus cash ?ow. The investment risk is the risk of falling interest rates at the time of the
investment or re-investment of the group’s surplus cash or the risk of the cash reserves maturing being re-invested at lower rates
than expected;
• Foreign exchange risk arising from the group’s exposure to international postal services and products as well as the import of
capital goods sourced offshore; and
• Systemic risk is the risk that events either globally or locally threaten the ongoing ?nancial soundness of ?nancial markets.
The group manages the market risk it is exposed to in its banking division’s money market portfolio by restricting the money market
re-pricing mismatch or gap between interest rate sensitive ?nancial assets and ?nancial liabilities to a percentage gap or difference
agreed at the group ALCO meetings and documented in the group treasury policy.
The group manages the foreign exchange risk by hedging exposures that are above a certain limit as per the requirements of the
group treasury policy.
Market risk is quanti?ed by performing sensitivity analyses on both interest and exchange rates. For interest rate risk, the policy
stipulates that a 1% point adverse shift in the yield curve should not result in a 10% reduction in the projected income in the money
market portfolio return over a 12 months horison. This is done for both the held to maturity portfolio where cash ?ow interest
sensitivity is measured and the available for sale portfolio in respect of fair value sensitivity analysis.
The group’s exposure to currency risk is also evaluated by the exchange rate sensitivity analysis. The group only enters into a foreign
exchange forward cover where the foreign exposure is greater than R 1 million and a 1% point adverse move in the exchange rate
result in a loss of R 0.5 million over a one day horison.
It is the responsibility of the group ALM function to monitor compliance with risk limits and all breaches are discussed at the monthly
group ALCO meetings.
All measures actioned in managing market risk at the group ALCO meetings are reported to the group Risk Committee of the board
on a quarterly basis.
Interest rate risk
Interest rate risk is the risk that the group’s earnings or economic value of the ?nancial assets will decline as a result of changes in
the interest rates.The group’s exposure to interest rate risk arises primarily from the following:
• Re-pricing risk (mismatch risk) - timing differences in the maturity and re-pricing of fnancial assets and fnancial liabilities; and
• Investment risk on the group’s surplus operational cash reserves arising from adverse movements in the interest rates.
The interest rate risk is managed in terms of the board approved treasury policy. The policy speci?es a percentage gap or re- pricing
mismatch between interest rate sensitive ?nancial assets and ?nancial liabilities which in turn is monitored and measured by the
group’s ALM function. Interest rate limit breaches are reported at the group ALCO meetings.
Activities in managing interest rate risk at group ALCO meetings are reported to the group’s Risk Committee of the board on a
quarterly basis.
Appropriate interest rate risk dashboard indicators have been compiled to provide the group ALCO members with the necessary
interest rate risk information on a weekly basis, including a measure of compliance with approved limits and benchmarks.
190
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
GROUP COMPANY
2014

R ‘000
2013
(Restated)
R ‘000
2014

R ‘000
2013
(Restated)
R ‘000
46. Risk management (continued)
Cash ?ow interest rate risk
The table below re?ects net interest income sensitivity for a given 1% up and downward shift in interest rates at year-end:
Increase (decrease)
1% increase in interest rates 44,875 25,992 44,875 25,554
1% decrease in interest rates (44,875) (42,403) (44,875) (41,964)
Fair value interest rate risk
The table below re?ects the impact on the available-for-sale equity reserve for a given 1% up and downward shift in interest rates at
year end:
Increase (decrease)
1% increase in interest rates (7,625) (6,747) (7,625) (6,747)
1% decrease in interest rates 7,718 6,834 7,718 6,834
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in the ?nancial loss to the group.
The group’s exposure to credit risk arises primarily from credit sales to its clients and money market investment activities.
Credit risk is managed in terms of the board approved group treasury risk policy, which in turn encompasses comprehensive credit
procedures, limits and governance structure. Formal credit ratings are utilised in the credit evaluation process of the counterparties.
The minimum credit ratings for counterparties are Fitch National Long Term Rating ‘A’ and Fitch National Short Term Rating ‘F1’.
The credit quality of counterparties is monitored by the group ALM function. The group’s credit exposure is diversi?ed across a
range of acceptable counterparties and the maximum investment with any counterparty is limited to 25% of total investments. All
counterparty limits are reviewed in line with balance sheet growth and at least on an annual basis.
It is the responsibility of the group ALM function to monitor compliance with the approved counterparty credit limits and any breach
is reported to the monthly group ALCO meeting.
Activities in managing credit risk at the group ALCO meetings are reported to the group Risk Committee of the board on a quarterly
basis.
The carrying amounts of ?nancial assets recorded in the ?nancial statements represents the group’s maximum exposure to credit
risk. The group is further exposed to the credit risk as a result of the housing guarantees that it issues on behalf of a certain category
of its employees. At year-end the maximum amount the group could have to pay if the guarantees are called on amounts to R 1,502
million, (2013: R 1,504 million).
All ?nancial assets except for those that are measured at fair value through pro?t or loss are assessed to determine any evidence of
impairment. Any deterioration in any counterparty credit rating is regarded as evidence of impairment. During the course of the year,
there was no evidence of impairment observed in held to maturity ?nancial assets and available for sale assets held by the group.
The group credit risk is considered to be limited because all its counterparties are major banks with high credit ratings and other
investments are in Government and liquid corporate paper. The credit risk pro?le and quality of the group’s counterparties is
considered to be sound, well managed and commensurate with the risk appetite of the board.
191
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
GROUP COMPANY
2014

R ‘000
2013
(Restated)
R ‘000
2014

R ‘000
2013
(Restated)
R ‘000
46. Risk management (continued)
Foreign exchange risk
Foreign exchange risk is the risk of the decline in the earnings or realisable value in the net ?nancial asset position of the group arising
from adverse movements in foreign exchange rates.The group is exposed to foreign exchange risk as a result of exposures that arise
from rendering of international postal services and products as well as capital imports that are sourced offshore.
The group manages the foreign currency exposures relating to international postal services through the utilisation of Universal Postal
Union (UPU) approved netting agreements between South Africa and debtor and creditor countries. In the event where the exposure
after netting exceeds the limit speci?ed below, a forward foreign exchange contract is taken to hedge the foreign exchange risk.
The group manages foreign exchange risk arising from capital imports sourced offshore by utilisation of forward foreign exchange
contracts as documented in the board approved treasury policy. The treasury policy stipulates the following in respect of utilisation of
forward cover:
• No forward cover is required where the currency exposure is less than R 1 million in value and a 1% adverse exchange rate move
does not result in a R 0,5 million currency loss.
• Forward cover is taken where the exposure in respect of a speci?c foreign currency commitment is more than R 1 million and 1%
adverse move in the exchange rate results in the group experiencing a loss of more than R 0,5 million. Actions taken in managing
foreign exchange risk at the group ALCO meetings are reported to the group Risk Committee of the board on a quarterly basis.
At year-end, the group was exposed to the following foreign currency denominated ?nancial assets and ?nancial liabilities for which
no forward cover had been taken out:
Foreign currency exposure at the end of the reporting period
Financial assets
Botswana Pula 2 11 2 11
Euro 49 76 49 76
Great Britain Pounds 1,148 1,417 1,148 1,417
Special drawing rights 8,789 10,191 8,789 10,191
United States Dollars 1,213 995 1,213 995
Financial liabilities
Botswana Pula 299 273 299 273
Euro 412 361 412 361
Kenyan Shilling 9 173 9 173
New Zealand Dollars - 11 - 11
Special drawing rights 10,595 9,860 10,595 9,860
Swiss Franc 9 3 9 3
United States Dollars 49 21 49 21
Zambian Kwacha 5 4 5 4
At year-end, the group’s net income at risk from foreign exposure arose from the net asset currency position. A depreciation of 1% in
the exchange rate would result in R 0,033 million foreign currency gain for the group (2013: R 0,290 million currency gain).
Price risk
The table below re?ects the impact on the group’s income for a given 1% up and downward shift in market rates at period end:
Increase (decrease)
1% increase in interest rates (5,622) (5,706) (5,622) (5,706)
1% decrease in interest rates 6,479 6,656 6,479 6,656
192
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
46. Risk management (continued)
Method and assumptions: Sensitivity analyses of ?nancial assets and liabilities
(i) Fair value interest sensitivity
On Government and corporate bonds classi?ed as available for sale assets, the group determines fair value interest sensitivity using quoted yield to
maturity rates for speci?c Government and corporate bonds held by the group. The group calculates the fair value interest sensitivity for a one day
horison and is measured for a 1% parallel shift in the rates. For fair value sensitivity the group Treasury policy stipulates that a 1% adverse change in the
rates should not result in a 0.75% capital loss in the portfolio over a one day period.
(ii) Cash ?ow interest sensitivity
The group calculates the cash ?ow interest sensitivity to determine interest at risk on held to maturity ?nancial assets and ?nancial liabilities at
amortised cost (note that none of the loans and receivables are interest bearing). The cash ?ow interest sensitivity includes all variable interest
bearing ?nancial assets and liabilities included in these categories. The sensitivity is calculated by interpolating along the Jibar and FRA quoted
rates. The interpolation is performed to coincide with the maturities and re-investments of the principal cash ?ows. The calculation of the cash
?ow interest sensitivity analysis is in line with the group’s investment strategy. The cash ?ow sensitivity is measured for a 1% parallel shift in
the rates.
(iii) Foreign currency sensitivity
The group calculates foreign currency risk sensitivity on both the hedged and uncovered foreign currency exposures. The sensitivity is calculated by
using the quoted exchange rates against the local currency i.e. rand. The foreign exchange rate sensitivity is calculated for one day holding period on
uncovered foreign exposures. The exchange rate sensitivity is measured for a 1% change in the rates.
(iv) Equity risk sensitivity
At year-end, the group had unlisted shares in Gidani Management (Pty) Ltd. The directors had used the discounted cash ?ow model in determining the
fair value of the shares. The equity risk in the shares was considered to be minimal as the equity holding wasn’t exposed to the volatility of the stock
market. On listed shares, the equity price risk is measured for 1% change in the share prices.
(v) Fair value of ?nancial assets and ?nancial liabilities recorded at amortised cost
The directors consider the carrying amount of ?nancial assets and ?nancial liabilities recorded at amortised cost and having a duration that is less or
equal to twelve months as approximating their fair value. At year-end there were no ?nancial assets and ?nancial liabilities having a duration greater than
twelve months that were carried at amortised cost.
(vi) Fair value measurements recognised in the statement of ?nancial position
For an analysis of ?nancial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3, based on the degree
to which the fair value is observable, see note 9.
47. Going concern
For the year ended 31 March 2014 the group generated net losses of R 361,210 million (2013: R 226,881 million), while the total assets exceeded the total
liabilities by R 2,438 billion (2013: R 2,305 billion), which implies that the entity is technically solvent.
The organisation has been experiencing cash constraints, and as such has not had suf?cient working capital. The cause of the deterioration of the group’s
liquidity position is both due to internal and external factors, such as the migration of customers towards digital communication, a general decline in the
mail business revenue as well as an inappropriate and inef?cient business model. This has resulted in the group not generating suf?cient revenue to ?nance
its high cost-base and thus a material uncertainty of the entity’s ability to continue as a going concern for the foreseeable future.
To assist the entity with working capital, realising its assets and discharging its liabilities in the normal course of business, an overdraft of R 320 million has
been secured with Standard Bank, which is guaranteed by the Shareholder. In addition, the directors have received a letter of guarantee of R 1,67 billion
from the shareholder to act as a letter of comfort to the creditors, which also supports the going concern assumption on which the ?nancial statements
have been prepared. The terms of the guarantee are as follows:
• The guarantee will be reduced by any appropriation or transfer made by either the Department of Telecommunications and Postal Services (DTPS)
of the Treasury through the budget process;
• The South African Post Of?ce (SOC) Limited will require Government approval of the terms of the ?nancing raised against the guarantee before
concluding any agreements;
• Consideration is to be given to establishing a separate Postbank holding company independent of South African Post Of?ce (SOC) Limited, to be
established and designated as a bank controlling company for the Postbank;
• In addition, the net proft target will be reset in line with the latest net loss projections of R 676 million for the 2014/15 fnancial year;
• All salary increases must be approved by the Minister of Finance and the Minister of Telecommunications and Postal Services;
• Should labour increases exceed the assumptions included in the turnaround plan, measures will have to be taken to ensure that overall salary bill
remains with the budgets identifed in the turnaround plan;
• The R 1,67 billion guarantee specifcally excludes the guaranteeing of the overdraft facility as this was not included in the headroom calculations;
• All conditions attached to the R 320 million also applies to this guarantee.
The directors have had to critically examine the ?nancial health of the organisation and as a result a new operation model has been designed. This seeks
to address the high ?xed cost structure and will see the organisation freeing up cash of R1,5 billion over the next 3 years, which in turn will lead to better
working capital management with less dependency on the overdraft facility. Accordingly the consolidated annual ?nancial statements have been prepared
on a going concern basis.
193
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
GROUP COMPANY
2014

R ‘000
2013
(Restated)
R ‘000
2014
R ‘000
2013
(Restated)
R ‘000
48. Fruitless and wasteful expenditure
Opening balance 39,132 38,338 31,455 30,661
Fruitless and wasteful expenditure - current year 2,065 794 2,065 794
Less: Amounts condoned - - - -
Total fruitless and wasteful expenditure 41,197 39,132 33,520 31,455
Analysis of current fruitless and wasteful expenditure -
current year
3G cards - 148 - 148
Human capital management: CCMA and associated costs 8 - 8 -
Penalties and interest 2,057 614 2,057 614
Rent paid without occupation - 32 - 32
Total current fruitless and wasteful expenditure- current year 2,065 794 2,065 794
Other expenditures in the statement of comprehensive income includes fruitless and wasteful expenditures that were incurred
during the period under review. These expenditures are made up of ?nes and penalties of suppliers and third party customers, as well
as rental incurred on leased property before taking up occupation.
49. Material losses due to criminal conduct
Fraudulent incident relating to Post Of?ce Treasury 5,275 5,275 5,275 5,275
Commercial crime 5,629 - 5,629 -
Total material losses due to criminal conduct 10,904 5,275 10,904 5,275
50. Irregular expenditure
Opening balance 117,381 71,713 117,381 71,713
Add: Current year irregular expenditure 96,274 1,049,949 71,012 795,708
Add: Prior year irregular expenditure - 1,116,760 - 876,920
Less: Amounts condoned - (2,121,041) - (1,626,960)
Irregular expenditure awaiting condonation 213,655 117,381 188,393 117,381
Analysis of awaiting condonation per age classi?cation
Current year 96,274 45,668 71,012 45,668
Prior years 117,381 71,713 117,381 71,713
Total irregular expenditure awaiting condonation 213,655 117,381 188,393 117,381
Irregular expenditure is expenditure other than unauthorised expenditure, incurred in contravention of or that is not in accordance
with a requirement of any applicable legislation, including:
• the PFMA Act; or
• the State Tender Board Act, 1968 (Act No 86 of 1968), or any regulations made in terms of that Act; or
• any provincial legislation providing for procurement procedures in that Provincial Government.
194
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
GROUP COMPANY
2014

R ‘000
2013
(Restated)
R ‘000
2014

R ‘000
2013
(Restated)
R ‘000
50. Irregular expenditure (continued)
Categories of irregular expenditure include:
• Irregular expenditure incurred as a result of non-compliance with a Treasury Regulation which required cognisance to be take of
a National Treasury determination. For example, a department, trading entity, constitutional institution or public entity procured
goods or services by means of price quotations where the value of the purchase exceeded the threshold values determined by the
National Treasury for price quotations;
• Irregular expenditure incurred as a result of institutions procuring goods or services by means other than through competitive bids
and where reasons for deviating from inviting competitive bids have not been recorded and approved by the accounting of?cer or
accounting authority; and
• Irregular expenditure incurred as a result of non-compliance with a requirement of the institution’s delegations of authority issued
in terms of the PFMA.
The South African Post Of?ce (SOC) Limited started reporting on irregular expenditure in the 2011 ?nancial year in accordance
with the PFMA requirement and continued accordingly. The South African Post Of?ce (SOC) Limited is addressing the root causes
resulting in irregular expenditure and it should also be noted that a total solution will only be achieved in the medium term due to the
interventions considered and currently being implemented.
The process to identify any other irregular expenditure is continuing in order to have these investigated and condoned where relevant.
Also, the expenditure was incurred or paid to address institutional requirements.:
An amount of R 30,926 million of the total of R 96,274 million disclosed as “irregular expenditure” for the 2013/14 ?nancial
year,relates to contracts previously disclosed as irregular and which are in the ?nal stages of being regularised. The process is inthe
?nal stages of being completed.
An amount of R 157,452 million of the total of R 213,655 million disclosed as “awaiting condonation” concerns a particular
contractwhere an investigation was initiated and where the results are pending in order to determine third party liability or not. These
amounts cannot be condoned until the investigation has been concluded.
The group has identi?ed an amount of R 10,039 million of potential “irregular expenditure” during the 2013/14 ?nancial year and these
instances are currently being investigated in accordance with the National Treasury Regulations. This amount is not re?ected above,
but will be disclosed as and when the investigation is completed and con?rmed as “irregular”.
Included in the group is an amount of R 23,304 million that relates to “irregular expenditure” for the Courier and Freight Group (Pty)
Ltd.
Included in the group is an amount of R 1,958 million that relates to “irregular expenditure” for the The Document Express (Pty) Ltd.
51. Deregistered Entities
The following dormant subsidiary entities, which have never been consolidated were deregistered in the 2013/2014 ?nancial year and
the accumulated losses per the entities’ 2007 annual ?nancial statements were as follows:
Subsidiary company
The Courier and Freight Swaziland (Pty) Ltd 7,742 7,742 - -
CFG Zimbabwe (Pty) Ltd 698,384 698,384 - -
Total accumulated losses 706,126 706,126 - -
The accumulated losses in the companies were allocated to the loan accounts which were subsequently impaired.
195
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
GROUP COMPANY
2013
R ‘000
2012
R ‘000
2013
R ‘000
2012
R ‘000
52. Comparative ?gures
Certain comparative ?gures have been reclassi?ed.
The effects of the reclassi?cation are as follows:
Statement of Financial Position
Loans and long term receivables to group companies (Non-Current
Assets)
- - (38,921) -
Loans and long term receivables to group companies (Current
Assets)
- - 38,921 -
Trade and other receivables 3,058 (129) - -
Trade and other payables (3,058) 129 - -
Subsidy unutilised (14,821) (14,068) (14,821) (14,068)
Trade and other payables 14,821 14,068 14,821 14,068
Funds collected on behalf of third parties 8,458 14,427 8,458 14,427
Trade and other payables (8,458) (14,427) (8,458) (14,427)
Employee costs (227,544) (253,518) (226,800) (252,748)
Interest paid 227,544 253,518 226,800 252,748
53. Change in estimate
Property, plant and equipment
The useful life of certain buildings have been revised during the current year. The effect of this revision has decreased the
depreciation charges for the current and future periods by R 2,140 million.
The impact on tax is an increase of R 0,599 million.
The useful life of certain data processing equipment have been revised during the current year. The effect of this revision has
increased the depreciation charges for the current and future periods by R 7,276 million.
The impact on tax is a decrease of R 2,037 million.
The useful life of certain furniture and ?xtures have been revised during the current year. The effect of this revision has increased the
depreciation charges for the current and future periods by R 1,765.
The impact on tax is a decrease of R 0,494 million.
The useful life of certain leasehold improvements have been revised during the current year. The effect of this revision has increased
the depreciation charges for the current and future periods by R 45,512 million.
The impact on tax is a decrease of R 12,743 million.
The useful life of certain motor vehicles have been revised during the current year. The effect of this revision has increased the
depreciation charges for the current and future periods by R 1,614 million.
The impact on tax is a decrease of R 0,452 million.
The useful life of certain plant and machinery has been revised during the current year. The effect of this revision has increased the
depreciation charges for the current and future periods by R 8,518 million.
The impact on tax is a decrease of R 2,385 million.
Intangible assets
The useful life of certain software has been revised during the current year. The effect of this revision has increased the depreciation
charges for the current and future periods by R 2,249 million.
The impact on tax is a decrease of R 0,630 million.
Investment properties
The useful life of certain investment properties have been revised during the current year. The effect of this revision has increased the
depreciation charges for the current and future periods by R 0,036 million.
The impact on tax is a decrease of R 0,010 million.
196
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
54. Changes in accounting policy
The consolidated annual ?nancial statements have been prepared in accordance with International Financial Reporting Standards
(IFRS) on a basis consistent with the prior year except for the adoption of the following new or revised standards.
IFRS 10 Consolidated Financial Statements
The group adopted “IFRS 10 Consolidated Financial Statements” in the current year.
IFRS 10 was issued in May 2011 and replaces the guidance on control and consolidation of “IAS 27 Consolidated and Separate
Financial Statements”, “SIC-12 Consolidation Special Purpose Entities” and “SIC 33 Consolidation”. IFRS 10 establishes a new
defnition of control, whereby an entity has control of an investee when it has power over the investee; it is exposed to or has rights
to variable returns from involvement with the investee; and it has the ability to use its power over the investee to affect the amount
of the investor’s returns.
The potential implications of the adoption of IFRS 10 on the group are as follows:
• Certain investee’s which were previously consolidated would continue to be consolidated.
• Certain investee’s which were previously consolidated would no longer be consolidated.
• Certain investee’s which were not previously consolidated would now be consolidated.
The adoption of IFRS 10 has been applied in accordance with the applicable transitional provisions as set out below:
Transitional provisions - previously consolidated investees
When the group concludes, at the date of initial application, that an investee that was previously consolidated in accordance with IAS
27 or SIC-12 should now be consolidated in accordance with IFRS 10, the following transitional provisions apply:
The interest in the investee is measured by the group at the amount it would have been measured at if IFRS 10 was effective when
the group became involved with the investee (without control in accordance with IFRS 10) or lost control of the investee. Only the
annual period immediately preceding the initial application date is adjusted retrospectively. If the date that the group became involved
with the investee (without control in accordance with IFRS 10) or lost control of the investee is established as being earlier than the
beginning of the immediately preceding year, then an adjustment is made to equity at the beginning of the immediately preceding
annual period. The adjustment is determined as the difference between the previous carrying amounts of assets, liabilities and non-
controlling interest recognised and the recognised amount of the group’s interest in the investee.
It is therefore not a requirement to present restated ?gures for years earlier than the immediately preceding year. IFRS 10 also
provides that it is not required to quantify the impact of the change in accounting policy on the current year.
Application - previously consolidated investees
Management have applied the principles of IFRS 10, and concluded that Centriq Insurance Innovation (Pty) Ltd, an investee which
was previously consolidated under IAS 27 or SIC-12, shall no longer be consolidated into the group. Adjustments have been made in
accordance with the transitional provisions by measuring the interest in Centriq Insurance Innovation (Pty) Ltd as of the beginning of
the current period.
IAS 19 Employee Bene?ts Revised
During the year, the group changed its accounting policy with respect to the treatment of the recognition of changes in the net
de?ned bene?t liability (asset) including immediate recognition of de?ned bene?t cost, disaggregation of de?ned bene?t cost into
components, recognition of remeasurements in other comprehensive income, plan amendments, curtailments and settlements. In
order to conform with the benchmark treatment in of IAS19 – Employee Bene?ts. The group now recognises all remeasurements
(actuarial gains and losses) in other comprehensive income.
The aggregate effect of the changes in accounting policy on the consolidated annual ?nancial statements for the year ended
31 March 2013 is as follows:
197
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
GROUP COMPANY
2013
R ‘000
2012
R ‘000
2013
R ‘000
2012
R ‘000
54. Changes in accounting policy (continued)
Statement of Financial Position
Investments in subsidiaries
Previously stated - - 37,639 37,745
Adjustment - IFRS 10 - - (20,050) (20,050)
- - 17,589 17,589
Investments and other ?nancial assets
Previously stated 4,740,622 4,922,721 4,626,911 4,818,038
Adjustment - IFRS 10 (21,289) (14,660) 77,422 75,023
4,719,333 4,908,061 4,704,333 4,893,061
Deferred tax
Previously stated 345,521 316,425 342,072 313,560
Adjustment - IFRS 10 (1,972) (10,826) (1,219) (10,263)
Adjustment - IAS 19 43,744 17,702 43,744 17,702
387,293 323,301 384,597 320,999
Trade and other receivables
Previously stated 608,473 527,699 552,583 473,205
Adjustment (9,372) 8,337 - -
599,101 536,036 552,583 473,205
Non-distributable reserves
Previously stated (749,887) (750,010) (749,887) (750,010)
Adjustment - IFRS 10 (46,822) (44,869) (46,822) (44,869
(796,709) (794,879) (796,709) (794,879)
Retained income
Previously stated (1,582,683) (1,761,247) (1,551,170) (1,709,935)
Adjustment - IFRS 10 47,504 54,878 (9,331) 160
Adjustment - IAS 19 175,680 45,466 175,708 45,522
(1,359,499) (1,660,903) (1,384,793) (1,664,253)
Retirement bene?t obligation
Previously stated (1,217,411) (1,236,039) (1,216,770) (1,235,404)
Adjustment - IAS 19 (219,424) (63,168) (219,452) (63,224)
(1,436,835) (1,299,207) (1,436,222) (1,298,628)
Current tax payable
Previously stated (826) (8,937) - (7,947)
Adjustment - IFRS 10 826 990 - -
- (7,947) - (7,947)
Trade and other payables
Previously stated (720,046) (747,989) (663,019) (676,351)
Adjustment - IFRS 10 5,720 (4,492) 62 57
(714,326) (752,481) (662,957) (677,294)
Unearned revenue
Previously stated (354,941) (373,049) (317,452) (335,606)
Adjustment - IFRS 10 24,079 7,974 - -
(330,862) (375,075) (317,452) (335,606)
Outstanding insurance claims
Previously stated (700) (2,433) - -
Adjustment - IFRS 10 700 2,433 - -
- - - -
198
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
GROUP COMPANY
2013
R ‘000
2012
R ‘000
2013
R ‘000
2012
R ‘000
54. Changes in accounting policy (continued)
Pro?t or Loss
Revenue
Previously stated 5,696,236 5,700,797 5,314,239 5,322,616
Adjustment - IFRS 10 (6,691) (11,444) - -
5,689,545 5,689,353 5,314,239 5,322,616
Other income
Previously stated 222,498 401,655 248,188 425,803
Adjustment - IFRS 10 4,545 (2,466) - -
227,043 399,189 248,188 425,803
Operating expenses
Previously stated (6,295,952) (6,029,306) (5,916,302) (5,683,121)
Adjustment - IFRS 10 21,452 (8,027) - -
Adjustment - IAS 19 226,927 115,264 226,183 114,437
(6,064,764) (5,922,069) (5,690,119) (5,568,684)
Finance income
Previously stated 143,557 166,981 139,213 158,876
Adjustment - IFRS 10 (5,517) (5,435) - -
138,040 161,546 139,213 158,876
Taxation
Previously stated 28,295 (184,542) 28,947 (88,189)
Adjustment - IFRS 10 10,497 3,714 9,493 (159)
Adjustment - IAS 19 (17,529) 38,726 (17,529) 38,726
21,263 (142,102) 20,911 (49,622)
Remeasurements on net de?ned bene?t asset
Previously stated - - - -
Adjustment - IAS 19 (155,639) 75,086 (155,611) 75,087
(155,639) 75,086 (155,611) 75,087
Income tax relating to items that will not be reclassi?ed
Previously stated - - - -
Adjustment - IAS 19 43,579 (21,024) 43,571 (21,024)
43,579 (21,024) 43,571 (21,024)
Available for sale ?nancial assets adjustments
Previously stated (149) (852) (149) (852)
Adjustment - IFRS 10 2,399 54,973 2,399 54,973
2,250 54,121 2,250 54,121
Income tax relating to items that may be reclassi?ed
Previously stated 26 - 26 -
Adjustment - IFRS 10 (446) (10,104) (446) (10,104)
(420) (10,104) (420) (10,104)
199
Notes to the Consolidated Annual Financial Statements
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
GROUP COMPANY
2013
R ‘000
2012
R ‘000
2013
R ‘000
2012
R ‘000
55. Prior period errors
In the past, the provision for site restoration was not calculated on all leases with a restoration clause, but only on leases where
restoration was likely. In order to conform with the benchmark treatment in of IAS37 – Provisions, Contingent Liabilities and
Contingent Assets, the group now recognises a provision for each lease that contains a restoration clause.
The correction of the error results in adjustments as follows:
Statement of Financial Position
Property, plant and equipment 171,608 139,872 171,608 139,872
Provisions (239,257) (160,032) (239,257) (160,032)
Retained ncome 52,158 14,609 51,472 14,298
Deferred tax 16,117 5,805 16,117 5,805
Pro?t or Loss
Depreciation expense 11,093 8,169 11,093 8,169
Finance Income 18,458 - 18,458 -
Interest paid 17,937 11,990 17,937 11,990
Deferred tax (10,445) (5,805) (10,445) (5,805)
200
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
Supplementary Information
GROUP COMPANY
Note(s)
2014
R ‘000
2013
(Restated)
R ‘000
2014
R ‘000
2013
(Restated)
R ‘000
Detailed Income Statement
Revenue
Retail services
Postbank 308,159 314,447 308,159 314,447
Retail products 77,973 14,863 77,973 14,863
Services rendered
Agency and money transfer services 353,061 405,478 353,061 405,478
Courier services 687,346 672,706 320,378 334,981
Postal 4,076,325 4,006,160 4,062,814 3,968,580
Postbank interest revenue 275,576 275,891 275,576 275,891
Services rendered - - - -
Total revenue 31 5,778,440 5,689,545 5,397,961 5,314,240
Other income
Commissions received 1,781 1,342 1,781 1,342
Discount received - 17,544 - 17,544
Dividends received 34 - 1,917 - 1,917
Fair value adjustments 35 65,019 98,855 65,019 98,855
Fees earned 16,230 14,140 16,230 14,140
Gains on disposal of assets - 5,388 - -
Government grants - 10 - 10
Interest received 34 118,501 117,665 142,591 118,838
Other income 44,134 27,399 40,960 24,184
Pro?t and loss on exchange differences 5,308 3,873 5,308 3,873
Provident fund actuarial gain 1,986 5,604 1,986 5,604
Recoveries 45,071 85,553 143,943 116,362
Rental facilities income 31,637 27,721 31,637 27,721
Rental income 49,838 28,550 49,635 27,566
Skills development levy refund 6,301 9,919 5,973 9,841
Total other income 408,884 445,480 505,063 467,797
Expenses (Refer to page 108) (6,506,051) (6,076,081) (6,245,340) (5,701,344)
Operating loss 33 (318,727) 58,944 (342,316) 80,693
Interest paid 36 (192,545) (317,534) (192,419) (316,642)
Loss before taxation (511,272) (258,590) (534,735) (235,949)
Taxation 37 150,062 31,709 151,120 31,356
Loss for the year (361,210) (226,881) (383,615) (204,593)
201
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
Supplementary Information
GROUP COMPANY
Notes
2014
R ‘000
2013
(Restated)
R ‘000
2014
R ‘000
2013
(Restated)
R ‘000
Detailed Income Statement
Expenses
Administration and management fees 540 5,998 47,963 53,835
Advertising 50,800 87,102 49,446 85,879
Assessment rates & municipal charges 224,230 207,830 219,040 202,207
Auditors remuneration 39 15,591 13,857 13,409 11,383
Bad debts (2,671) 27,936 208 27,765
Bank charges 108,672 142,813 108,220 142,407
Cleaning 1,570 1,728 - -
Commission paid 513 450 118 99
Computer expenses - 673 - -
Consulting and professional fees 184,453 168,649 172,356 158,630
Consumables 137,194 72,128 131,906 68,448
Delivery expenses 36,157 43,890 34,543 32,467
Depreciation, amortisation and impairments 166,211 173,846 259,774 207,734
Donations 2,326 3,690 2,244 3,289
Employee costs 3,665,103 3,369,687 3,494,745 3,215,404
Entertainment 305 359 315 272
Fines and penalties 2,207 432 2,116 375
General expenses (25,735) 1,233 26,233 651
Insurance 59,316 46,659 57,444 43,094
International terminal fees 97,898 77,588 97,898 77,588
Lease rentals on operating lease 494,812 440,146 458,008 414,044
Legal expenses 39,660 27,038 39,653 26,989
Magazines, books and periodicals 1,881 1,513 1,881 1,513
Motor vehicle expenses 85 134 48 54
Petrol and oil 117,903 110,589 86,434 77,316
Printing and stationery 38,377 34,889 38,182 34,232
Pro?t and loss on sale of assets and liabilities 2 - - -
Promotions 230 1,067 213 1,052
Protective clothing 1,840 8,161 1,841 7,982
Repairs and maintenance 184,324 189,181 163,691 170,754
Research and development costs 818 3,334 818 3,334
Royalties and license fees 20,515 20,114 20,505 20,104
Security 6,911 5,273 6,768 5,186
Software expenses 107,582 92,752 106,906 92,752
Staff welfare 2,425 3,877 2,370 3,869
Storage fees 2,320 1,747 2,259 1,740
Subscriptions (22,343) 199 - -
Telephone and fax 158,856 147,312 150,789 139,371
Training 14,529 15,610 14,529 15,610
Transport and freight 495,310 415,867 340,843 265,622
Travel - local 83,991 91,536 75,097 84,558
Travel - overseas 31,343 19,194 16,527 3,735
Total expenses 6,506,051 6,076,081 6,245,340 5,701,344
202
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
Supplementary Information
1. Three year period review - Group
Statement of ?nancial position 2014

R ‘000
2013
(Restated)
R ‘000
2012
(Restated)
R ‘000
Funds supplied
Non-current assets 2,954,225 2,731,892 2,552,563
Current assets 8,337,216 8,029,574 8,162,155
Non-current assets held for sale - - 201
Total assets 11,291,441 10,761,466 10,714,919
Funds used
Equity 2,438,296 2,304,990 2,642,113
Non-current liabilities 2,028,192 1,982,822 1,712,321
Current liabilities 6,824,953 6,473,654 6,360,485
Total equity and liabilities 11,291,441 10,761,466 10,714,919
Statement of comprehensive income 2014

R ‘000
2013
(Restated)
R ‘000
2012
(Restated)
R ‘000
(Loss) pro?t before tax (511,272) (258,590) 33,717
Finance income 141,579 119,582 161,546
Interest paid (192,545) (317,534) (317,093)
Statement of cash ?ows 2014

R ‘000
2013
(Restated)
R ‘000
2012
(Restated)
R ‘000
Net cash (used in) generated from operating activities (333,969) (429,652) 157,074
Net cash from investing activities 306,551 142,959 750,107
Net cash generated from (used in) ?nancing activities 450,399 286,312 (11,852)
Total cash movement for the year 422,981 (381) 895,329
Solvency and liquidity 2014

R ‘000
2013
(Restated)
R ‘000
2012
(Restated)
R ‘000
Debt-equity ratio 3.631 : 1 3.669 : 1 3.055 : 1
Current ratio 1.222 : 1 1.240 : 1 1.283 : 1
Acid test ratio 1.210 : 1 1.232 : 1 1.283 : 1
203
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
Glossary
ALCO Asset and Liability Committee
ALM Asset and liability management
ATR Annual training report
BBA Bachelor in Business Administration
BBBEE Broad-based black economic empowerment
BU Business unit
CAE Chief Audit Executive
CIT Cahs in Transit
Capex Capital expenditure
CDP Carbon disclosure project
CEO Chief Executive Of?cer
CFC Customer foreign currency
CFG Courier Freight Group
CFO Chief Financial Of?cer
CIO Chief Information Of?cer
CIPC Commission for Intellectual Properties and Companies
CNG Compressed natural gas
COO Chief Operating Of?cer
CPD Continuous professional development
CRM Customer relationship management
Docex Document Exchange
EMMS Environmental measuring and monitoring system
ER Employee relations
FAIS Financial and Intermediary Services
FECs Foreign exchange forward contracts
FML Full maintenance lease
FPP Fraud prevention plan
FSB Financial Services Board
FVTPL Fair value through pro?t or loss
GAAP Generally Accepted Accounting Practice
GCEO Group Chief Executive Of?cer
GCIS Government Communication and Information Services
GRI Global Reporting Initiative
HRTC Human Resources and Training Committee
IAS International Accounting Standards
ICASA Independent Communications Authority of South Africa
204
South African Post Of?ce (SOC) Limited (Registration number 1991/005477/06)
Consolidated Annual Financial Statements for the year ended 31 March 2014
South African Post Of?ce SOC Limited (Registration number 1991/005577/06)
Integrated Report 2014
IFRS International Financial Reporting Standards
IGF Intermediaries Guarantee Facility Limited
IOD Incidents on duty
IPC International Post Corporation
ICT Information and communications technology
IT Information technology
MCP Mail collection point
MD Managing Director
MOI Memorandum of Incorporation
MTEF Medium-term expenditure framework
NCD Negotiable certi?cate of deposits
NT National Treasury
PAA Public Audit Act
PFMA Public Finance Management Act
PRMA Post-retirement medical assets
RemCom Remuneration Committee
ROE Return on expenditure
RPL Recognition of prior learning
SAAA South African Accreditation Authority
SADC Southern African Development Community
SARS South African Revenue Service
SASSA Social Security Agency
SOC State-owned company
SU Support Unit
TCTC Total cost to company
TTD Temporary total disability
TVBC Transkei, Venda, Bophuthatswana and Ciskei
UPU Universal Postal Union
USO Universal service obligation
VCCT Voluntary con?dential counselling and testing
WRE Webriposte
WSP Workplace skills plan
Glossary

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