1. SABC
FY2016/17
4TH QUARTER REPORT

2. SABC FY2016/17 4th Quarter Report
EXECUTIVE SUMMARY
The SABC ended the final Quarter of the 2016/17 financial year on a disappointing note with a major liquidity challenge. A lack of cash flow is preventing the SABC from honouring payment of its committed contracts and the commissioning of local content productions which, if not remedied, will result in the SABC being unable to retain its audiences, maintain sustainability, and fulfil its mandate and license conditions going forward.
A decline in revenue sources, cost to deliver on the mandate, personnel costs and capital expenditure projects are the main contributing factors to the SABC’s current financial position. Certain un-researched decisions, such as the implementation of the 90/10 local music and 80/20 local content quotas on SABC 3, further impacted on the decline of audience numbers and revenue.

3. SABC FY2016/17 4th Quarter Report
EXECUTIVE SUMMARY (cont)
The SABC’s total revenue and income for the 4th Quarter was R1.6 billion, which was a R353m (20%) decline compared to prior year 4th Quarter. The total quarterly revenue underperformed by 22% (R466m) compared to budget. Total revenue year to date decreased by R740m (9%) from prior year. The SABC’s performance for the quarter ended 31 March 2017 shows an operating loss of R509 million which was below the budgeted loss of R137 million. Expenses performed better than budget which cushioned the SABC from bigger losses.
The SABC is expecting to conclude FY2016/17 with a net loss of R1.1 billion, resulting in a 52% (R590million) decline compared to prior year results. The SABC is currently in discussions with the Department of Communications and National Treasury to raise funding for the Corporation.

4. SABC FY2016/17 4th Quarter Report
EXECUTIVE SUMMARY (cont)
Despite the financial performance, the SABC continued to serve the information, educational and entertainment needs of millions of citizens in all official languages and in multiple genres ranging from children’s and educational programmes, drama, documentaries, news and current affairs, to the best soap operas and sporting events Highlights for the Quarter under review include:
The new SABC 2 schedule media launch was held end-January and the new programmes were rolled-out during the first week of February. The tweaked SABC 1 offering was launched in February and the media launch of a newly positioned SABC 3 took place at the end of the Quarter with the new schedule going to air at the beginning of the new fiscal.

5. SABC FY2016/17 4th Quarter Report
EXECUTIVE SUMMARY (cont)
SABC Radio achieved an excellent All Adult National Listening Share of 71% in the latest (Jul-Dec 2016) survey. PBS Radio stations accounted for 64.8% while PCS stations delivered 6.2% audience share.
SABC successfully broadcast a number of Sporting events including the AFCON tournament on SABC1 and all SABC Radio stations. In addition the 2016/17 cricket season ended with the broadcast of the South Africa vs., Sri Lanka tour with ball by ball commentary on SABC3.
In its efforts to promote social cohesion and nation building, the SABC celebrated, through its content and activities, Freedom Day on 27 March 2017.
The SABC conducted compliance workshops with Radio Services across the regions and all 18 Radio Services were covered. The workshops focused on licence obligations, ICASA Regulations and upcoming policies and legislation that will affect the broadcasting industry.

6. Comparison Year on Year
SABC FY2016/17 4th Quarter Report
FINANCIAL PERFORMANCE – ABRIDGED INCOME STATEMENT
Income Statement
4th Quarter
YTD April 2017
Comparison Year on Year
Actual R'000
Budget R'000
Variance R'000
Var %
Actual* R'000
Actual 2017 R'000
Actual 2016 R'000
Revenue & Other Income
(1,643,700)
(2,109,991)
(466,291)
(22)
(7,272,619)
(9,223,241)
(1,982,924)
(21)
(8,092,225)
(819,606)
(10)
Expenses
1,575,524
1,737,843
162,318 9
6,253,679
7,047,894
794,215 11
6,593,923
(340,244)
(5)
Earning before Amortisation, Depreciation, Interest and Tax (EBITDA)
(68,176)
(372,148)
(303,972) 82
(1,018,940)
(2,175,347)
(1,156,407) 53
(1,498,302)
(479,362) 32
Amort. & Imp. Prog, Film & Sports Rights
504,105
446,972
57,133
(13)
1,915,853
1,921,858
(6,005) 1
1,760,760
155,093
(8)
Amortisation of Computer Software
15,565
13,141
2,424
(18)
49,632
52,565
2,933 6
44,457
5,175
Depreciation
65,222
59,365
5,857
222,033
237,473
(15,440) 7
201,480
20,553 10
Operating (Profit)/Loss Before Interest & Tax
516,716
147,330
(369386)
(251)
1,169,017
36,549
(1,132,021)
(3,097)
569,229
599,788
105
Net Financing (Income)/Loss
(7,635)
(10,100)
(2,465) 24
(35,116)
(40,394)
(5,278)
(27,288)
7,828 29
Operating (Profit)/Loss Before Tax
509,080
137,230
(371,850)
(271)
1,133,902
(3,845)
(1,137,299)
(29,576)
541,941
591,9611
109

7. SABC FY2016/17 4th Quarter Report
FINANCIAL PERFORMANCE
One of the SABC’s main goals is to remain financially sustainable by growing its revenue base from various sources while prudently managing its costs. However, spend on advertising is beginning to fragment between channels with the introduction of digital media and video on demand platforms providing new opportunities for advertisers to reach niche’ markets. There is also continued and increased competition on radio platforms as advertisers show discontent on schedule changes and scepticism about the SABC’s 90/10 music policy on radio and the consequent financial losses suffered.
Overall financial performance was impacted by the tough economic environment in South Africa, compounded by the weaker exchange rates and cost pressures from investing in new technologies and negative dynamics within the SABC.

8. SABC FY2016/17 4th Quarter Report
FINANCIAL PERFORMANCE
The SABC’s total revenue and income for the fourth quarter decreased is at R1.6 billion, a R353 million (20%) compared to prior year fourth quarter. The total quarterly revenue underperformed by 22% (R466 million) compared to the quarterly budget. The significant decline is as a result of AFCON soccer tournament which traded off potential advertising and sponsorship revenue.Total revenue for the year to date decreased by R 820million (11%) from prior year.
The SABC’s performance for the quarter ended 31 March 2017 shows an operating loss of R509 million which exceeded the budgeted loss of R137 million. The subdued performance was mainly attributable to declining advertising revenue across all platforms coupled with deteriorating TV licence fees collection. Expenses performed better than budget which cushioned the SABC from bigger losses.
The SABC has a statutory mandate to reach and serve all South African audiences and as a result incurs unplanned expenditure due to its mandate to cover both sports and news.

9. SABC FY2016/17 4th Quarter Report
FINANCIAL PERFORMANCE
The SABC maintained a positive cash balance of R 32m at the end of the 4th Quarter with a net cash outflow of R1.1billion mainly to operating activities and investment in capital expenditure. The Corporation is experiencing a cash crises as a result of financial pressures owing to constant increases in Sports Rights fees and investment in capital projects, amongst other things. It should also be noted that for the past two years operating cash was utilised to fund capital expenditure projects.

10. SABC FY2016/17 4th Quarter Report
PERFORMANCE AGAINST PREDETERMINED OBJECTIVES
Strategic Objective
Key Activities
Performance
Indicator(s) Q4
Target
Actual Perf
Comment on variance
FINANCIAL SUSTAINABILITY
Goal: TO BE A FINANCIALLY SUSTAINABLE ORGANISATION
ENSURE THE SABC IS PROFITABLE
Manage revenue and expenditure in accordance with the approved budget.
Net Profit before Tax
R3,4m
R1, 33 billion loss
All revenue streams underperformed in terms of budget as well as year on year. Constrained economic conditions, advertiser client cut backs across the industry, low-disposal income were some of the factors that contributed to the loss.
ENSURE THE SABC IS ABLE TO MEET ITS FINANCIAL OBLIGATIONS
Manage working capital (i.e. debtors days and creditors days) and manage investments to ensure adequate cash availability at all times.
Maintain a minimum cash and cash equivalents balance of R600m
R900m
R39m
The SABC’s revenue sources under performed and the Corporation had to use its reserves to fund infrastructure / capex projects as well as Sports Rights and events of national interest.

11. 2 properties from total annual target of 3
SABC FY2016/17 4th Quarter Report
PERFORMANCE AGAINST PREDETERMINED OBJECTIVES
Strategic Objective
Key Activities
Performance
Indicator(s)
Q4 Target
Actual Perf
Comment on variance
CONTENT AND PLATFORMS
Goal: TO ACQUIRE AND SCHEDULE COMPELLING AND QUALITY PROGRAMMING, SPANNING A RANGE OF GENRES AND EXCEEDING MANDATE OBJECTIVES ACROSS TRADITIONAL AND EMERGING BROADCAST AND DIGITAL MEDIA PLATFORMS.
MEET LOCAL CONTENT REQUIREMENTS OF SABC LICENCES
Contributing to nation-building by creating the space for South Africans to reflect the South African experience on SABC television platform.
Meet ICASA local content (PBS 55%, PCS 35%) quotas as per terrestrial television channel licence conditions.
S1 70%
S2 60%
S3 40%
S1 80%
S2 67%
S3 53%
Achieved
INCREASE NUMBER OF PROPERTIES THAT WILL ALLOW PEOPLE WITH DISABILITIES (PWD) ACCESS TO PUBLIC BROADCASTING.
Increase number of properties that will allow People With Disabilities (PWD) access to public broadcasting.
Number of properties broadcast with sign language
2 properties from total annual target of 3 1
Delays to the contracting book impacted on delivery
Number of companies controlled or owned by PWDs from which content was procured. 2
Target achieved
DIVERSIFY CONTENT BY SUPPORTING AND INCLUDING PRODUCTION OF PROVINCIAL CONTENT.
Increase the number of properties & inserts of provincial content.
Number of provincial properties & inserts broadcast.
90 inserts
1 property
70 inserts
0 property
Delays to the contracting book impacted on delivery. Business processes and workflows reviewed and changed

12. SABC FY2016/17 4th Quarter Report
PERFORMANCE AGAINST PREDETERMINED OBJECTIVES
LAUNCH SABC CHANNELS ON DTT
Television division to deliver an additional channel to the current three licenced terrestrial channels
Additional channels to be carried on the DTT transmitter network 1
Encore
DTT platform not launched in order to add additional channels.
DISTRIBUTE SABC CONTENT OVER THE INTERNET
Produce, encode and stream TV programmes and radio stations digitally.
Number of programmes and radio stations distributed over web-based platforms
Total of 25 programmes; 19 radio stations
All 19 Radio Stations provided 24/7 live streaming to its audiences.
Radio Podcast Episodes downloaded by audiences
YTD CAGR 16.5%
Achieved
Integrate social media into programming
Growth of total social media followers
15% 8%
Not Achieved
PROVIDE BALANCED, ACCURATE AND RELEVANT COVERAGE OF LOCAL GOVERNMENT ELECTIONS.
Production and coverage of Local and General Elections on all platforms
Compliance with the approved elections broadcast plan and regulatory and legislative requirements.
N/A
DEVELOP AND IMPLEMENT DIGITAL LIBRARY WORKLOWS AND INFRASTRUCTURE FOR SABC CONTENT
Determine business requirements, identify and evaluate vendors, procure suppliers, design, build and operationalize technology projects.
Developed and approved technology project plan for digital library.
Appoint vendors for digital library
Business case has been sent to Finance, Investment, Procurement and Technology Sub- Committee for approval
Due to large amount involved the approval process is long.

13. SABC FY2016/17 4th Quarter Report
PERFORMANCE AGAINST PREDETERMINED OBJECTIVES
REPLACE RADIO STATIONS' PRODUCTION PLAY-OUT SYSTEM
Service provider contract finalisation, Approval of project rollout plan.
Signed contract with service provider and approved project plan
Continue project implementat ion as per project milestones
Project delayed awaiting approval of supplier for hardware roll out. – BAC report was not presented at BAC scheduled for 5 April. Request for additional funds for the Regional Roll-out – Awaiting Resolution from Group
Project delayed awaiting approval of supplier for hardware roll out. A meeting is scheduled with SCM for early April to obtain reasons for the submission not to be included in the pack. This is causing further delays for the JHB roll-out. Implementation timelines will only be revised as soon as a date to order the Hardware is determined
UPGRADE/REPLACE TV FCC (final control centre) PLAY-OUT AUTOMATION
Determine business requirements, identify and evaluate vendors, procure suppliers, design, build and operationalize FCC
Complete user requirement and evaluation of RFI responses. RFP response evaluation and awarding of contract. Approved project plan.
Issue order for equipment and start installation of equipment  a nd related automation software
The process has not been completed as yet owing to a number of requirement changes.
The BAC has rejected the proposal and the business case has to be re-submitted to the committee for approval.
UPGRADE PRODUCTION STUDIOS TO DIGITAL
Develop, approve and implement TV production studio digitisation plan
Developed and approved plan. Cost gathering via RFI Approved CAPEX budget
Complete Capex approval and prepare for RFP process
Studio 1 and 2 RFP
BEC rescheduled for the 24th April for the evaluation of studio equipment. Rescheduling from original date was as a result of the error in the BEC membership that should have at on the BEC

14. SABC FY2016/17 4th Quarter Report
PERFORMANCE AGAINST PREDETERMINED OBJECTIVES
Strategic Objective
Key Activities
Performance
Indicator(s) Q4
Target
Actual Perf
Comment on variance
HUMAN RESOURCES
Goal: DEVELOP A DYNAMIC AND MOTIVATED FIT-FOR-PURPOSE WORKFORCE THAT EMBRACES LEARNING AND IS SUFFICIENTLY ADAPTABLE TO MIGRATE INTO THE DIGITAL AGE
ATTRACTING AND RETAINING TALENT
Determining adequate supply and demand projections for the critical workforce segments and ensures that the corporation has the optimal number of capable people performing the right roles, at the right time and in the right place.
Workforce Plan approved and implemented
Implementation of Workforce Plan (100%) by end of quarter
The Workforce Plan was not implemented 100%. The Workforce Plan was, however, used to contain headcount through vacancy management plans.
The workforce plan could not be implemented 100% because it was not approved by EXCO.
EMBEDDING A HIGH PERFORMANCE CULTURE
Institutionalise Performance Management Policy with revised tool including thresholds and stretch targets.
Approved Performance Management implementation plan and performance contracts in place for all staff.
Quarterly reviews conducted.
Final performance conversation conducted (100%) and evaluations conducted by 7 April 2017
Performance Management was placed on hold in order to finalise job descriptions for all positions
Revised performance contracts have been submitted to Executive Directors for sign off
OPTIMISE LEARNING & DEVELOPMENT
Develop a Workplace Skills Plan (WSP) and Operational Training Plan that is aligned to the Skills Audit report and digital migration requirements.
Scarce and critical training needs identified and addressed through WSP
80% achievement of WSP and reported by end of Q4.
26% achievement
Due to operational challenges the WSP training target could not be achieved

15. SABC FY2016/17 4th Quarter Report
PERFORMANCE AGAINST PREDETERMINED OBJECTIVES
Strategic Objective
Key Activities
Performance
Indicator(s) Q4
Target
Actual Perf
Comment on variance
GOVERNANCE
Goal: ENSURE COMPLIANT GOVERNANCE PRACTICES COMPLEMENTED BY EFFECTIVE RISK MANAGEMENT AND INTERNAL CONTROL ENVIRONMENT.
DEVELOP AND MAINTAIN AN EFFICIENT, EFFECTIVE AND TRANSPARENT SYSTEM OF RISK MANAGEMENT AND INTERNAL CONTROLS
Assess, revise and document internal controls.
Self-assessment to ensure that key internal controls documented in SAP are being performed
Identification of controls and related gaps for: Revenue - Content Inventory Management
Implementation of the Integrated Internal Control Framework has been limited to process mapping and gap analysis.
Project Qinisa has been place on hold pending the outcome of a forensic audit.
Self-assessment to establish if the key internal controls documented in SAP are being performed for:
- HR
- Procurement
Human Resources (HR), SCM and Finance processes have been mapped and internal control shortcomings have been reported to management.
Project Qinisa has been place on hold pending the outcome of a forensic audit

16. SABC 2nd QUARTER REPORT
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