BUSINES PERFORMANCE REPORT 2016/2017 THIRD QUARTER BUSINES PERFORMANCE REPORT TO THE PORTFOLIO COMMITTEE ON TELECOMMUNICATIONS AND POSTAL SERVICES DATE OF PRESENTATION: 15 AUGUST 2017

INTRODUCTION Overview of performance against corporate KPIs Financial Performance Product and Network Performance Governance Internal Audit Employment Equity Plan Enterprise Development Conclusion

Performance Against Corporate KPIs

Performance against Corporate KPIs Achieved/Not Achieved * In Quarter 3, 4 out of 7 (57%) targets were achieved as set out in the table below: Strategic Goal Strategic Objectives KPI Annual Target Q3 Target Actual Performance Achieved/Not Achieved Variance Explanation SG 2: Ensure high levels of customer and stakeholder satisfaction by meeting their needs at all times. Ensure network availability meets SLA requirements across all platforms Weighted average availability based on product revenues Weighted average availability based on product revenues of 99,80% Weighted average availability based on product revenues of 99,80% Achieved Weighted average availability based on product revenues of 99,84 Achieved This target has been over- achieved due to better management of SENTECH’s national network. Improve customer and stakeholder satisfaction Customer service index Baseline +5% Completion of survey for 2016/17 Survey has started but not completed Not achieved Delays were mainly due to addressing recommendation s from previous survey.

Performance against corporate KPIs Achieved/Not Achieved Strategic Goal Strategic Objectives KPI Annual Target Q3 Target Actual Performance Achieved/Not Achieved Variance Explanation SG 3: Drive organisational performance in to improve organisational effectiveness. Effective talent management Performance ratings achieved Average employee performance score of 3,2 for the 2016/17 financial year Performance reviews completed for all employees for quarter 3   Not all reviews fully completed Not achieved The festive season break affected finalisation of the reviews. Dates have been shifted to allow for sufficient time. % Training Plan implemented 80% of the 2016/17 approved training plan interventions implemented 60% of the 2016/17 approved training plan interventions implemented 65.0% of the approved training plan implemented Achieved This target has been over- achieved by a marginal amount due to the completion of additional training interventions than what was required during the quarter.

Performance against Corporate KPIs Achieved/Not Achieved Strategic Goal Strategic Objectives KPI Annual Target Q3 Target Actual Performance Achieved/Not Achieved Variance Explanation SG 4: Ensure that the Company is financially sustainable. Revenue diversification into international markets Develop and implement Pan-African Strategy Pan-African Business Case completed Complete draft- Pan African business case Work has started albeit late Not achieved There have been delays in procuring a service provider to conduct the research to inform the business case. Implement ESD and SED initiatives % actual NPAT spent for the 2016/17 financial year 6% of actual NPAT spent for the 2016/17 financial year Achieve 70% of budgeted ESD and SED spend Above budget achieved Achieved This target has been over-achieved due to an additional number of ESD and SED activities during Q3. Maintain a healthy earnings before Interest and tax (EBIT) Earnings before interest and tax R5.22 million R 3.40 million year to date EBIT of R37.7million achieved   This target has been over-achieved due to dual illumination funds received as well as savings against budget for the following categories of expenditure: operating, selling and administrative.

Financial Performance

Financial Performance Q3 December 2016

Financial Performance Revenue Per Service

Product and Network Performance

Product and Network Performance National Network Performance - Q3 2016 Network Services SLA Target (%) SENTECH Performance (%) Actual R'000 Budget R’000 Weighted Ave (%) Terrestrial Television 99.7 99.84 R146 211 R151 611 55.23 FM Radio 99.76 R69 915 R76 722 26.39 Medium Wave Radio 99.5 99.94 R2 337 R2 833 0.88 Short Wave Radio 99.97 R6 290 R8 186 2.38 Satellite 99.8 R39 553 R48 770 14.96 Total Overall Network availability R264 306 R288 122

Product and Network Performance…

Governance

Governance Board and Board Committee Meetings Scheduled Board and Board Committee meetings have been held in line with legislative and governance requirements. Special meetings were held by the Human Resources, Nominations and Remuneration Committee, and Social and Ethics Committee for consideration of reviewed policies. PFMA Compliance matters The Second Quarter Business Performance Report was submitted to DTPS on 31 October 2016. The 2015/16 Integrated Annual Report was presented to Parliament on 18 October 2016.

Governance Changes in Directorships Mr Obrey Nekhavhambe’s term as the acting CFO has ended on 30 November 2016 following the appointment of the CFO, Mr Siphamandla Mthethwa, for a five-year term with effect from 1 December 2016. Ms Lungile Ndlovu has been appointed as a Non-Executive Director for a three-year term with effect from 11 December 2016. Ms Jacqueline Huntley and Ms Zodwa Mbele have been reappointed as Non-Executive Directors for a three-year term each with effect from 11 December 2016. Ms Xoliswa Daku term has retired as a Non-Executive Director with effect from 12 December 2016.

Internal Audit

Internal Audit The table below summarizes the Internal Audit Function’s progress against the 2016/17 Revised IA Plan relevant to Quarter 3. The IAF has completed all audits set out in the 2016/17 Internal Audit Plan together with approved ad-hoc assignments. Name of Internal Audit Project Fieldwork Completed Audit Report Issued Audit Project Status HR Full Scope Audit n Risk Assurance Procedures Broadcast Operations Follow Up Audit Predetermined Objectives Review Q2 Name of Internal Audit Project Ad-Hoc Project Requested By Fieldwork Completed Audit Report Issued SCM Tender Review n

Risk Management

Risk Management Progress on Mitigation of top Risks There has been only one movement in the risk levels between quarter 2 and 3. The DTT risk that relates to the alignment of the DTT to SKA plans has been reduced due to a successful migration in the SKA area. All the other risk levels stayed the same due to quarter 3 being a corporate planning period and more resources are focused on the planning.

Employment Equity Plan

Employment Equity Plan The Employment Equity Plan has been finalised to enable the attraction of African talent and black women. At top management levels 100% are black, 87% at senior management and 73% at specialists and middle management levels are black; and 82% for skilled and technical levels. HR Dashboard Number of Employees 552 Employee Turnover 0.9% Black Representation In Top Management 100% Black Women Representation In Top Management 25% Black Women Representation In Senior Management 20% Black Women Representation In Specialist And Middle Management 30% Black Women Representation In Technical Levels 38% Representation of Disabled Candidates 0.7% Total Training Spend R 3 541 956.27 Occupational Health And Safety(TRIR) 0.0462%,

Enterprise Development

Enterprise Development The Enterprise and Supplier Development Programme operates on three pillars namely; grant funding, early payment and incubation programme. SENTECH remains committed to job creation. Sixty nine (69) jobs were created as a result of the Company’s ESD programme for ICT SMMEs.

Conclusion

Conclusion Performance against Corporate Plan KPIs was above average with more than 50% of Q3 targets achieved. The company showed exceptional EBIT performance of 414% against the set target. Continuing business revenue (dual illumination grant excluded) missed the target whilst the total revenue was on target. Expenditure was lower than what was budgeted due to reduced maintenance & employee costs in respect of official vacancies provided for but not yet filled, legal and consulting fees, reduced satellite rental due to favourable forex rates Network performance exceeded SLA targets despite slight percentage drop in Medium Wave performance. The Broadcasting Signal Distribution product portfolio remains the primary driver of revenue contributing more than 80%.

Conclusions… Governance remains effective and stable. Internal Audit continue to perform its duties well. Risks including strategic and new risks are continuously being monitored and effective risk management plans implemented. Employment equity plan has been finalised to enable the attraction of African talent and black women. SENTECH remains committed to job creation and enterprise development.

Thank You!