Presentation to Portfolio Committee on Sport and Recreation 04 September 2018

OVERVIEW 2016/2017 Audited Financial Statements Status of 2017/2018 Audit Turn around initiatives and strategy Overview of Budget and Funding 2017 to 2020 Overview of Revenue and Expenditure allocation Recent Team SA success Concluding remarks

16/17 AUDITED FINANCIAL STATEMENT STATEMENT OF FINANCIAL PERFORMANCE REVENUE STATEMENT OF FINANCIAL PERFORMANCE 2017/03/31 % of total revenue 2016/03/31 % Diff Diff Amount   REVENUES Revenue 177 985 295 96% 179 875 778 97% -1.1% (1 890 483) Overall revenue has not moved significantly from the prior year. Revenue consists of grants or donations from Government, National Lotteries, IOC and Other. Other Income 545 866 0% 807 370 -32.4% (261 504) Other Income consist of advertising income, sundry income & donations, skills development and profits on foreign exchange. Note that the majority of the movement consists of the decrease in advertising income received. Investment income and finance income 7 054 766 4% 3 939 547 2% 79.1% 3 115 219 This investment income relates to interest income received from the bank balance held by Sascoc. The entity earned more finance income in the current year due to the bank balance being higher throughout the year in comparison to the prior year. The increase included in this - is also an increase in the dividend income earned in Gride (consolidated financial statements) thus reasonable that this has increased. Total revenues 185 585 927 100% 184 622 695 0.5% 963 232

16/17 AUDITED FINANCIAL STATEMENT EXPENDITURE   Current Period Prior Period STATEMENT OF FINANCIAL PERFORMANCE 2017/03/31 % of total revenue 2016/03/31 % Diff Diff Amount EXPENDITURES Board member allowances (2 906 394) 2% (2 671 453) 8.8% (234 941) Movement appears to be reasonable. Employee benefits expenses (10 955 590) 7% (11 251 945) 6% -2.6% 296 355 Depreciation (1 517 392) 1% (1 441 501) 5.3% (75 891) Profit on sale of non-current assets 1 581 622 0% - This movement relates to the rights that were not taken up (i.e. therefore sold) in the investment Gride has in Phumela Gaming. Other Operating Expenses (146 608 296) 91% (157 968 081) 90% -7.2% 11 359 785 The operating expense balance has decreased in the current year. Noted that the operating expense consisted of the following categories of expenses: Federations: R2 345 015 Olympics R53 941 046 Paralympics: R23 975 243 Other Games: R7 616 788 Marketing: R 36 016 774 Commonwealth Games: R64 019 Bidding and Hosting: 48 062 General: R9 899 091 Overall the expenses have decreased in the current year due to the fact that in the 2016 financial year, expenses were incurred for the Olympic Games preparation as well as the Commonwealth Games. In the current year, expenses were mostly only incurred for the Olympic Games. Finance costs (207 239) (1 412 949) -85.3% 1 205 710 Finance costs relate to interest paid on overdrafts bank balances.. Total expenditures (160 613 289) 101% (174 745 929) 100% -8.1% 14 132 640

16/17 AUDITED FINANCIAL STATEMENT ASSETS   Current Period Prior Period STATEMENT OF FINANCIAL POSITION 2017/03/31 2016/03/31 % Diff Difference Amount Cash 21 118 952 23 684 578 -10.8% (2 565 626) This line item relates to cash held by the entity. The decease speaks to the decrease in the trade and other payables, more cash outflow. The balance is expected to fluctuate on a monthly basis. Accounts receivable 2 875 739 19 134 979 -85.0% (16 259 240) In the prior year accounts receivable consisted of a Vat receivable balance of R11 million, whereas in the current year this balance has reduced to R1 million. The receivable has decreased in the current year due to SARS refunding SASCOC for VAT claims from prior years. Furthermore on the prior year the entity held prepayments of R7 062 993, whereas in the current year this has dropped to R52 400. This is due to there being large prepayments in the prior year to book flights and accommodation for the Olympics. Taxation receivable 621 440 948 664 -34.5% (327 224) This relates to the tax receivable on the movement in the financial assets held in Gride in the current year. National Lotteries Commission 5 003 250 9 304 975 -46.2% (4 301 725) This debtor relates to the National Lotteries. In the current year, the movement of R4 301 725 was recognised as revenue which is why the balance decreased in the current year. National Lotteries is recognized as a debtor until the cash is received from them. TOTAL CURRENT ASSETS 29 619 381 53 073 196 -44.2% (23 453 815) Property, Plant & Equipment (net) 5 892 381 7 111 564 -17.1% (1 219 183) PPE increased by R2738 569 due to new additions, and PPE decreased by R1517 39 due to the depreciation charge recognised in the current year. Other investment 95 612 344 74 782 023 27.9% 20 830 321 The increase in the other investment relates to the increase in the underlying listed investments that are held in Gride during the current financial year. An additional value of R 6 mill shares were acquired during the year, as well as a fair value gain of R13.9 million. Investment in Subsidiaries 3 - TOTAL ASSETS 131 124 109 134 966 786 -2.8% (3 842 677)

16/17 AUDITED FINANCIAL STATEMENT ASSETS (cont’d)   Current Period Prior Period STATEMENT OF FINANCIAL POSITION 2017/03/31 2016/03/31 % Diff Difference Amount Payables (9 499 568) (40 283 600) -76.4% 30 784 032 We noted that the reason for the decrease in payables in the current year was due to a decrease in Commonwealth Bid expenses incurred in 2016. These payables comprised R26 million of the payables as at the 2016 year end. Deferred Revenue (24 873 011) (34 793 529) -28.5% 9 920 518 Deferred revenue decreased in the current year due to the entity not entering into any new contracts in the current year, and existing deferred revenue being utilized in the current year and recognised as revenue, due to expenses being incurred against those projects. Current portion obligation under financial lease (241 605) (215 476) 12.1% (26 129) Provisions (1 174 089) (2 444 457) -52.0% 1 270 368 These accruals have decreased in the current year due to the expenses incurred in the current being lower overall compared to the prior years. Long term liabilities (828 721) (871 639) -4.9% 42 918 This loan relates to the long terms portion of the operating lease over James and Ethel Gray Park. Deferred tax (17 954 316) (14 915 952) 20.4% (3 038 364) The increase in the Deferred Tax Liability relates to the increase in Other financial assets due to the Fair Value Adjustment. This is resulting from the investments held in Gride Investments. Obligations under finance lease (368 330) (609 935) -39.6% 241 605 The movement relates to the short term portion of the lease that is payable in the next 12 months. The decrease relates to the increase in the short term portion. TOTAL LIABILITIES (54 939 640) (94 134 588) -41.6% 39 194 948

2017/2018 AUDIT The services of Deloitte has been terminated by mutual consent Audit tender process initiated to appoint new auditors Consideration be given to appoint mid tier firm with BBBEE credentials Internally prepare for the 2017/2018 audit so as to reduce costs and achieve a clean audit Audited Financial statements to be presented to council at planned AGM on 8th December 2018.

TURN AROUND STRATEGY Appointed a new Finance Head To drive all austerity measures Streamline financial reporting to be more meaningful and with greater accuracy Enhance business processes to achieve higher levels of governance and internal controls Review all commitments to negotiate better economies of scale Streamline expenditure Prepare for the 2017/2018 audit Appointed a sponsorship expert on a non exclusive and contingency fee basis

TURN AROUND STRATEGY (cont’d) Formation of the Turnaround Strategy Management Committee Monitor and regulate the turnaround strategy measures Further enforce good governance and rebuild the image of SASCOC Drive the sponsorship and fund raising initiatives Guide SASCOC’s investment activities so as to achieve the best returns Regulate the alignment of all policies to the amended constitution adopted on 8th June 2018 Oversee the restructuring process intended to improve efficiencies and effectiveness Monitor the improvement of standard operating procedures intended to improve internal controls Enforce the development and promotion of High Performance Ensure focus on delivery of Team SA

BUDGET 2017-2020

SPONSORSHIPS/GRANTS/DONATIONS 2017-2020

REVENUE 2013 TO 2017

EXPENDITURE ALLOCATION

RECENT TEAM SA SUCCESS EVENT DATE GOLD SILVER BRONZE TOTAL RECORDS BROKEN Commonwealth Youth Games – Bahamas 19-23 July 2017 8 3 7 18   World Games 20-30 July 2017 Winter Olympics 9-25 February 2018 Commonwealth Games- Gold Coast 4-15 April 2018 13 11 37 - Caster Semenya broke the 1500m Women race record - Tatjana schoenmaker new record time for Africa in the 200m breaststroke  African Youth Games – Algiers, Algeria 19-28 July 15 29

CONCLUDING REMARKS Government support is required to :- Recognise and support the turnaround efforts being made by SASCOC Increase government funding allocations Call for the reverting of Lotto funding to its previous mandates Previously received in excess of R100m Now receive R10m allocation Main change is due to SASCOC now being defined as a federation

“SPORTS HAS THE POWER TO CHANGE THE WORLD………………………………” Least we forget…… “SPORTS HAS THE POWER TO CHANGE THE WORLD………………………………” Thank you