The gap between BotswanaPost’s revenue and expenditure has widened, thanks largely to the amalgamation with its sister company – Botswana Couriers and Logistics in 2018.
The two turned into a single entity after the sole shareholder – Botswana government issued out an instruction for the two entities to amalgamate following the cancelation of a proposed merger between BotswanaPost and another State Owned Entity – Botswana Savings Bank (BSB).
This week at the group’s financial presentation by the Chief Executive it became very clear that BotswanaPost went into bed with an insolvent sister company – Botswana Couriers and Logistics.
The group’s financials shows that the Postman absorbed approximately P12.4 million worth of operating losses in prior year balances and over P30 million in unrecoverable bad debts. The company also inherited a worrying creditors’ book — a large portion of which came with genuine litigation risks.
At a press conference held at Poso House this week, BotswanaPost CEO – Cornelius Ramatlhakwane called on for a significant capital injection from the government who also happens to be the sole shareholder.
Ramatlhakwane said a cash injection will enable the new amalgamated entity to improve its cash flow, its gearing and restructure its balance sheet.
“Crucially, we are yet to receive P7.5 million in amalgamation costs that was pledged to us by the Shareholder when this process began. This has left our balance sheet in a severely weakened financial position,” added Ramatlhakwane.
Additionally, Ramatlhakwane said, the Post found itself in an information vacuum as every executive at Botswana Couriers & Logistics resigned before amalgamation happened.
“We were, for a time, working in the dark in terms of resolving many of these issues.
Amalgamating with another entity was a big step into the unknown, according to Ramatlhakwane. However, it was worth noting that the vast majority of the amalgamation procedures were handled internally, with restricted input from outside consultants.
BotswanaPost absorbed the then existing Botswana Couriers & Logistics entity with its own fair share of challenges, many of which were characterised by weak operational performance, sub-optimal staff productivity and a loss-making financial position.
When the postal parastatal received the directive from the government to amalgamate Botswana Couriers and BotswanaPost under one team, one brand and one common set of values, “we did so with firmer foundations than ever before. Such an all-encompassing project presented us with yet another dramatic turning point in the history of BotswanaPost.”
To date no jobs have been lost due to this amalgamation.
The parastatals’ new Board was appointed in July 2018 with the amalgamation process already underway.
The amalgamated entity officially began trading on the 1st October 2018.
BotswanaPost new Board chairman Nathan Kgabi expressed that, as a result of the amalgamation process, to some extent, “we had largely anticipated a rise in operational costs and unpredictable prices. This is precisely why major steps were taken to reinforce our fundamental strengths, that is, efficient utilisation of resources. This resulted in a significant improvement in our profitability to P6.2million before tax. “
Now that BotswanaPost has the Couriers and Logistics function under its belt, it is positioning itself to capitalise on this asset and leverage it to its full potential. From Ramatlhakwane’s point of view, “this will in turn create new revenue streams with a very high upside, especially now that we can provide logistics services using our own operational culture.”
Going forward, the BotswanaPost executive tam and the Board expect the financial situation to improve significantly.