1. SABC FY2016/17 FIRST QUARTER REPORT
(1 April to 30 June 2016)

2. TABLE OF CONTENTS EXECUTIVE SUMMARY
FIRST QUARTER FINANCIAL PERFORMANCE
PERFORMANCE AGAINST PREDETERMINED OBJECTIVES

3. SABC 1ST QUARTER REPORT EXECUTIVE SUMMARY
The SABC’s FY2016/17 to 2018/19 strategy is about modernising the way in which the public broadcaster operates and bringing it closer to South African audiences. The goal is to be more relevant, to engage South Africans on a daily basis on various platforms, whilst ensuring long-term financial sustainability.
In order to fulfil and successfully deliver on this strategy, the SABC is placing emphasis on the following key focus areas: Financial Sustainability, Content and Platforms, Human Resources and Governance. Strategic goals have been developed for each of these key focus areas and the 1st Quarter Report seeks to provide feedback on the progress made.

4. EXECUTIVE SUMMARY (cont)
SABC 1ST QUARTER REPORT
EXECUTIVE SUMMARY (cont)
During the 1st Quarter of FY2016/17 the SABC made a number of exciting and ground-breaking changes relating to local content on its Radio and Television platforms. Local music quotas were increased to 90% on all of the Public Broadcaster’s Radio stations – a change that received overwhelming support from many South Africans. Not only were the quotas raised but royalty payments to local musicians were increased by 1%, thereby reconfirming the SABC’s support to the local music industry.
On the heels of implementing the above strategy followed the announcement of the SABC’s commitment to broadcast more South African programmes, produced by South Africans, on all of its Television channels.
The SABC secured exciting new talent on its platforms and contracted a number of local production companies, including emerging companies, to produce top quality programmes which will reflect the South African story. The bold move by the SABC to ensure that 80% – 90% of its television programming is local content attracted national and international accolades.

5. EXECUTIVE SUMMARY (cont)
SABC 1ST QUARTER REPORT
EXECUTIVE SUMMARY (cont)
1st Quarter financial performance was adequate taking into account the increased investment in local content as well as technology infrastructure to ensure readiness for DTT migration. The Corporation had a positive cash balance of R462m at the end of June It should be noted that the cash balance excludes an amount of R120m raised through funding initiatives in the 1st Quarter but only received in July, as well as an amount of R78m in debt due and payable in the Quarter under review but paid in July 2016.
The SABC’s financial ratios indicate that the Corporation is in a satisfactory financial position and can meet all of its obligations. The net loss for the Quarter ended 30 June 2016 was R178.04m, which is R145.85m (453%) below the budgeted loss of R32.19m.

6. EXECUTIVE SUMMARY (cont)
SABC 1ST QUARTER REPORT
EXECUTIVE SUMMARY (cont)
The following are summarised highlights for the Quarter under review:
The SABC received approval for the roll-out of another 19 low-power transmitters. This will ensure that more South African will have access to the Public Broadcaster’s services.
SABC Radio currently reaches 28.8 million listeners and SABC Television has between 21 million and 28 million viewers per week.
The popularity of SABC content via internet and social media channels is growing in leaps and bounds. Quarterly performance data indicates that Twitter is the preferred social media platform for Television audiences while FaceBook allows Radio stations to create a visual link between the Radio brand and its audiences.
Pre-election programming commenced which saw an increase in the amount of live broadcasts on both Television and Radio. Programming in the pre-election phase includes party manifesto coverage, election debates and election shows.

7. EXECUTIVE SUMMARY (cont)
SABC 1ST QUARTER REPORT
EXECUTIVE SUMMARY (cont)
A series of spectacular sporting events, were broadcast on the SABC’s platforms during the 1st Quarter. Events included, amongst others, Cricket, PSL league matches, SAFA and NFD matches, build-up content for the 2016 Rio Olympic Games, Boxing and two marathons.
Lesedi FM and Phalaphala FM launched their new corporate identities during the Quarter under review. This included the unveiling of new logos and payoff lines for both stations. The SABC also completed the refurbishing of the Phalaphala FM studios to prepare for the move of the station to Thohoyandou.
A state-of-the-art radio advertising booking system was implemented which will improve operational efficiencies, management of commercial inventory and provide for a more robust control framework.

8. EXECUTIVE SUMMARY (cont)
SABC 1ST QUARTER REPORT
EXECUTIVE SUMMARY (cont)
Considerable effort went into cleaning-up of the TV licence database in terms of address and account information. A significant number of invalid and prescribed accounts have been expunged. A new collection model has also been implemented by the SABC, supported by an aggressive marketing campaign which will commence in the 2nd Quarter.
Wage negotiations were successfully concluded within the approved budget and final agreements were reached with Organised Labour.
During the 1st Quarter, the SABC successfully negotiated with the Department of Communications to settle the perpetual debt instrument of R27,4m (dating from 1972) over a two-year period.
The South African Revenue Service (SARS) was successfully engaged in clearing irregular expenditure disclosures arising from invalid or non-existent tax clearance certificates.

9. EXECUTIVE SUMMARY (cont)
SABC 1ST QUARTER REPORT
EXECUTIVE SUMMARY (cont)
Following a comprehensive review of the SABC’s tax position, amended tax returns for the past four years were filed during the 1st Quarter.
The SABC performed exceptionally well against its goal of contributing to nation building and social cohesion. Programming on TV and Radio commemorated national days in the 1st Quarter which included Freedom Day, Workers Day and Youth Day. Content was related to the key themes of freedom, democracy and liberation as well as the role of youth in the liberation struggle.
May was Africa Month and the SABC focussed on a range of issues including identity, history, cuisine and lifestyle.
In its commitment to deliver quality top-class programming, the SABC won a number of television and radio awards during the Quarter under review.

10. Management Projection
SABC 1ST QUARTER REPORT
FINANCIAL PERFORMANCE
INCOME STATEMENT – 1 April to 30 June 2016
1ST QUARTER FY2016/17
1ST QUARTER FY2015/16
YEAR-END PROJECTIONS
YTD Actual
YTD Budget
YTD
YTD Var %
YTD LY Actual
LY Actual Variance
LY Actual
Management Projection
Budget FY 2017
Projection Variance
Var %
June 2016
Variance
June 2015
Var%
* 1,000
Advertising Revenue
(1,383,528)
(1,609,369)
(225,841)
(14)
(1,479,799)
(96,271)
(7)
(6,462,085)
(6,660,199)
(198,114)
(3)
Sponsorship Revenue
(98,256)
(124,741)
(26,485)
(21)
(104,321)
(6,065)
(6)
(554,546)
(596,318)
(41,772)
Trade Exchanges
(27,649)
(51,121)
(23,472)
(46)
(44,933)
(17,284)
(38)
(204,485)
Licence Fees
(186,154)
(246,371)
(60,217)
(24)
(204,856)
(18,702)
(9)
(1,147,000)
Government Grants
(64,122)
(66,085)
(1,963)
(43,301)
20,821 48
(233,045)
Revenue: Content & Commercial Exploitation
(10,081)
(26,677)
(16,596)
(62)
(83,209)
(73,128)
(88)
(111,502)
(121,654)
(10,152)
(8)
Revenue Websites
(1,878)
(3,230)
(1,352)
(42)
(1,561)
317 20
(57,656)
(53,068)
4,588 9
Other Revenue
(39,464)
(62,957)
(23,493)
(37)
(36,038)
3,426 10
(170,614)
(171,147)
(533)
(0)
Revenue
(1,811,132)
(2,190,551)
(379,419)
(17)
(1,998,018)
(186,886)
(8,940,933)
(9,186,916)
(245,983)
Other Income
(5,462)
(9,081)
(3,619)
(40)
(14,307)
(8,845)
(39,285)
(36,325)
2,960 8
Revenue & Other Income
(1,816,594)
(2,199,632)
(383,038)
(2,012,325)
(195,731)
(10)
(8,980,218)
(9,223,241)
(243,023)
Amortisation of Programme and Film Rights
328,997
366,941
37,944
291,895
(37,102)
(13)
1,422,575
1,422,574
(1)

11. Management Projection
SABC 1ST QUARTER REPORT
FINANCIAL PERFORMANCE (cont)
INCOME STATEMENT – 1 April to 30 June 2016
1ST QUARTER FY2016/17
1ST QUARTER FY2015/16
YEAR-END PROJECTIONS
YTD Actual
YTD Budget
YTD
YTD Var %
YTD LY Actual
LY Actual Variance
LY Actual
Management Projection
Budget FY 2017
Projection Variance
Var %
June 2016
Variance
June 2015
Var%
* 1,000
Advertising Revenue
(1,383,528)
(1,609,369)
(225,841)
(14)
(1,479,799)
(96,271)
(7)
(6,462,085)
(6,660,199)
(198,114)
(3)
Sponsorship Revenue
(98,256)
(124,741)
(26,485)
(21)
(104,321)
(6,065)
(6)
(554,546)
(596,318)
(41,772)
Trade Exchanges
(27,649)
(51,121)
(23,472)
(46)
(44,933)
(17,284)
(38)
(204,485)
Licence Fees
(186,154)
(246,371)
(60,217)
(24)
(204,856)
(18,702)
(9)
(1,147,000)
Government Grants
(64,122)
(66,085)
(1,963)
(43,301)
20,821 48
(233,045)
Revenue: Content & Commercial Exploitation
(10,081)
(26,677)
(16,596)
(62)
(83,209)
(73,128)
(88)
(111,502)
(121,654)
(10,152)
(8)
Revenue Websites
(1,878)
(3,230)
(1,352)
(42)
(1,561)
317 20
(57,656)
(53,068)
4,588 9
Other Revenue
(39,464)
(62,957)
(23,493)
(37)
(36,038)
3,426 10
(170,614)
(171,147)
(533)
(0)
Revenue
(1,811,132)
(2,190,551)
(379,419)
(17)
(1,998,018)
(186,886)
(8,940,933)
(9,186,916)
(245,983)
Other Income
(5,462)
(9,081)
(3,619)
(40)
(14,307)
(8,845)
(39,285)
(36,325)
2,960 8
Revenue & Other Income
(1,816,594)
(2,199,632)
(383,038)
(2,012,325)
(195,731)
(10)
(8,980,218)
(9,223,241)
(243,023)
Amortisation of Programme and Film Rights
328,997
366,941
37,944
291,895
(37,102)
(13)
1,422,575
1,422,574
(1)

12. FINANCIAL PERFORMANCE (cont)
SABC 1ST QUARTER REPORT
FINANCIAL PERFORMANCE (cont)
The SABC ended the 1st Quarter of FY2016/17 on an operating (EBITDA) loss of R124.27m, which is R154.51m (511%) below the budgeted profit of R30.24m. The net loss was R178.04m, which is R145.85m (453%) below the budgeted loss of R32.19m.
Revenue
Total revenue and other income amounted to R1.82 billion (2015: R2.01 billion); which was R383.04m lower than the budget of R2.19 billion and R195.73m lower than the prior period’s revenue. The key underperformers were advertising revenue, licence fee revenue, trade exchange revenue, other revenue and sponsorship revenue. Advertising and TV licence revenue will improve during the next Quarters as a result of a newly implemented advertising radio booking system, and the TV Licence database clean-up project, a revised collection method and payment incentives coupled with an aggressive marketing campaign.

13. FINANCIAL PERFORMANCE (cont)
SABC 1ST QUARTER REPORT
FINANCIAL PERFORMANCE (cont)
Expenditure
Total expenditure for the Quarter under review was R2 billion (2015: R1.93 billion); which was an underspend of R237.16m (11%) against the budgeted amount of R2.24 billion but R77.35m (4%) above the prior period’s 1st Quarter expenditure. The major under spending against budget were amortisation of Programme and Film Rights, broadcast costs, direct revenue collection costs, marketing costs and other expenses.
Cash Position
The SABC had a positive cash balance of R462.04m at the end of June 2016 with a net cash outflow of R419.07m. The cash balance excludes an amount of R120m raised through funding initiatives in the 1st Quarter but only received in July, as well as an amount of R78m in debt due and payable in the Quarter under review but paid in July

14. FINANCIAL PERFORMANCE (cont)
SABC 1ST QUARTER REPORT
FINANCIAL PERFORMANCE (cont)
The SABC continued to meet its mandate obligations during the 1st Quarter, despite ever- increasing Rights fees, particularly in Sports. Another contributing factor to the cash balance is the fact that during the past two years operational cash was used to fund capital expenditure projects. The Corporation is pursuing various alternative financing, funding and reprioritising possibilities to finance Capex and Sports Rights in order to effectively bolster cash reserves.
Debtor’s management
As at 30 June 2016 overdue debts made up 16% (31 March 2016: 17%) of the total debts. Debts greater than 1 year amounted to R4.62m (0.34%). Debts greater than 2 years amounted to R7.79m (0.57%) and debts greater than 3 years was R32.50m (2.37%). Debt older than 3 years is handed over to Legal for debt collection purposes.

15. SABC 1ST QUARTER REPORT
PERFORMANCE AGAINST PREDETERMINED OBJECTIVES

16. SABC 1ST QUARTER REPORT
PERFORMANCE AGAINST PREDETERMINED OBJECTIVES

17. SABC 1ST QUARTER REPORT
PERFORMANCE AGAINST PREDETERMINED OBJECTIVES

18. SABC 1ST QUARTER REPORT
PERFORMANCE AGAINST PREDETERMINED OBJECTIVES

19. SABC 1ST QUARTER REPORT
PERFORMANCE AGAINST PREDETERMINED OBJECTIVES

20. SABC 1ST QUARTER REPORT
PERFORMANCE AGAINST PREDETERMINED OBJECTIVES

21. THANK YOU SABC 1ST QUARTER REPORT
PERFORMANCE AGAINST PREDETERMINED OBJECTIVES
THANK YOU