1. SITA Quarter one Corporate Performance Report as at 30 June 2015

2. 1.FY2015/2016 Quarter 1 Performance Report 2.FY2015/2016 Financial Performance Report 3.Performance focus areas for Quarter 2 2 Outline

3. SITA Strategic Programmes 333 SITA 22 Transformation Initiatives Service delivery: The purpose of this programme is to provide high-quality IT services to enable government to deliver efficient and convenient services through the use of ICT. Procurement: The purpose of this programme is to address all issues relating to delayed procurement turnaround times, removing customer pain points, and transforming the procurement function. Organisation: The purpose of this programme is to build and maintain organisational capability to enable SITA to achieve its strategic imperatives. Governance and administration: The purpose of this programme is to provide leadership, strategic management, governance, risk and resource management, in line with Government’s accepted norms and standards. Financial sustainability: The purpose of this programme is to ensure effective and efficient financial management and to ensure financial growth and sustainability. Infrastructure: To optimise the provisioning of SITA’s IT infrastructure services in order to increase availability, flexibility, scalability, predictability and security.

4. Financial Sustainability 4 Strategic Objective Performance measure/ indicator 2014-2015 Actual performance against target Reason for variance EstimateTarget Q1Actual status Achieve revenue growth % increase in revenue (year- on-year) R5.086bnQ1: 654 126 739Achieved R951 297 544 Mainly due to higher than expected agency and fully managed IT operations transactions Achieve sound financial management % profitability3.1%Q1: 3% surplus after tax Not achieved 12.6% deficit Mainly due to low margin agency transactions and higher than expected service delivery expenditure Liquidity ratio3.1:1Q1: 1.2:1Achieved 2.2:1 Due to high opening cash balance at the beginning of the quarter under review % expenditure against approved Capex budget 18.2%Q1: 10% of approved 2015/16 Capex Achieved 16.7% Budget: R1.152bn Spend: R191 845m Due to delivery of some commitments from the previous financial year

5. Financial Sustainability SITA achieved three of the four performance indicators measured in the organisations APP The deficit before tax for the quarter under review is currently at R215,3m from a revenue of R1,235bn – translating into a negative effect of 17,4% The actual revenue of R1,235bn is 31,5% above the budgeted amount of R939,4m and the cost of sales of R1,316bn is 17,7% above the budget of R1,118bn for the quarter ended 30 June 2015 5

6. 6 Procurement (1) Strategic Objective Performance measure/ indicator TargetActual performance against targetReason for variance EstimateTargetActual status Review and improve performance of SCM % of tender awards completed within the targeted turnaround time 63%65% of tender awards completed within the targeted turnaround time Achieved 69% (45/65) Total tenders: 65 Completed: 45 Intense monitoring of transactions progress status by supervisors. % of tender contracting completed within the targeted turnaround time of 30 days 18%20% of tender contracting completed within the targeted turnaround time Achieved 62% (8/13) Total contracts: 13 Completed within timelines: 8 Intense monitoring of transactions progress status by supervisors % of tenders published completed successfully/ awarded 70%75% of tender published completed successfully/ awarded Not achieved 60% (6/10) Published tenders: 10 Completed: 6 Cancelled: 4 This measure has not been achieved due to various issues such as failure of specifications, budget and preference point system that resulted into a number of cancellations. Corrective action: Business case to appoint a service provider to review specifications has been developed and procurement process will commence before the end of July. Furthermore, the revised SCM policy will increase the control measure in terms raising the approval of bid specification of a level of line executive for higher value transaction. Impact on next quarter performance target: Corrective action will not have full effect in the next quarter since it will not be fully implemented, however improvement is expected.

7. Procurement (2) 7 Strategic Objective Performance measure/ indicator TargetActual performance against target Reason for variance EstimateTargetActual status Drive economies of scale in the acquisition of large ICT goods and services % savings on acquisition of ICT goods and services with major OEMs 12%12% savings on acquisition of ICT goods and services with major OEMs Achieved 25% Total spend: R9 942 587.37 Total savings: R2 232 060.48 The organisation and its clients are realising cost benefits from the negotiated Microsoft framework agreement. Drive transformation agenda % of ICT acquisition spend through SMME entities 5%7% of ICT acquisition spend through SMME entities Not achieved 6% Addressable spend: R942 545 987.11 SMME spend: R53 368 105.52 There is no structured approach to drive spend against SMMEs as the strategy is currently under development. Corrective action: Comprehensive SITA economic transformation strategy is currently being developed. An interim programme with focus areas has been developed with immediate focus on enterprise development and SMME development through preferential development. Impact on next quarter performance target: Corrective action will not have full effect in the next quarter since it will not be fully implemented, however improvement is expected. % of ICT acquisition spend through BBBEE- compliant entities 50%55% of acquisitions spend through BBBEE level 1-4- compliant entities Achieved 86% Addressable spend: R942 545 987.11 BBBEE spend: R808 173 295.28 Naturally, the majority of suppliers that SITA is doing business with are level 1-4, however, there is no current initiative to enhance spend against BBBEE level 1-4 entities.

8. Procurement (3) 8 ObjectivePerformance measure/ indicator 2014-2015Actual performance against targetReason for variance EstimateTargetActual status Curb fraud and corruption in procurement process related activity Number of findings per interim external audit with respect to fraud and corruption in procurement process-related activities 0 findings Achieved 0 findings Based on internal audit report on bids adjudicated for this quarter, no finding on incident of fraud and corruption identified, however, there were certain shortcomings in controls that need to be enhanced to avoid occurrence of fraud and corruption. Controls have been put in place and there is close monitoring and reporting by Internal Audit.

9. Procurement SITA achieved five of the seven Procurement performance indicators measured in the organisations APP the two are currently being addressed through key strategic initiatives underway The development of the integrated procurement strategic plan will provide SITA with a road map to address key Procurement challenges SITA’s approved transformation development programme will target enterprise development, preferential procurement on targeted entities and black industrialists/manufacturing Procurement’s revised approved policy enhances controls with respect to root challenges such as cancellations, poor specifications and technical evaluations 9

10. Procurement SITA achieved five of the seven Procurement performance indicators measured in the organisations APP the two are currently being addressed through key strategic initiatives underway The development of the integrated procurement strategic plan will provide SITA with a road map to address key Procurement challenges SITA’s approved transformation development programme will target enterprise development, preferential procurement on targeted entities and black industrialists/manufacturing Procurement’s revised approved policy enhances controls with respect to root challenges such as cancellations, poor specifications and technical evaluations 10

11. Service Delivery (1) 11 ObjectivePerformance measure/ indicator 2014-2015Actual performance against targetReason for variance EstimateTargetActual status Enhance efficiency of government business processes No of e- government services implemented 90% (on 5 vertical e-Services) 90% of milestones completed as per plan Not achieved 49% (20/41 milestones achieved) 1)Client buy-in not yet secured for all e-services. 2)Implementation action for 2014/15 services required a lot of attention. 3)Cancelling of Java platform delayed planned development. Corrective action:  Steercom to be reinstituted as oversight for CSM, SMS and STM deliverables.  CEO had meeting with e-Gov role players on 26 Jun 2015 to get programme back on track.  Meeting held with DPSA and DTPS on 25 Jun 2015. Impact on next quarter performance target: Milestone will have to be postponed. (Re-planning already presented by some project managers.) % implementation of e-Cabinet lead site implementation 98% achieved on planned deliverables 90% of milestones completed as per plan Not achieved 0% milestones None of the 11 planned milestones for the quarter were completed fully. Work-in-progress is 68% against milestones. 1)LAN installation at Tuynhuys: The Department of Public Works delayed construction work at the server room and installation of new cable way ducting. After intervention by The Presidency, Public Works is completing the work with an updated plan to be approved by the e-Cabinet Steercom. 2)The procurement planning was based on a deviated shortened process; however the normal procurement process was advised by SCM. The revised plan has been tabled for discussion and approval by the client. The help- desk will only be activated prior to pilot implementation. Corrective action: The impact of the delays experienced as indicated above have been discussed with the client in detail. A project change proposal will be tabled for approval at the next Executive Steercom.

12. Service Delivery (2) 12 ObjectivePerformance measure/ indicator 2014-2015Actual performance against targetReason for variance EstimateTargetActual status Enhance efficiency of government business processes Approval of award recommendation for the new IFMS project Award Recommendation Finalised contract for IFMS RFP1282 – software licences Not achieved 0% The contract has not yet been finalised. Commencement of the contracting with the winning bidder is dependent on the award being made. Waiting for software tender to be awarded Corrective action: The delay in awarding the tender adversely impacted this target and other APP targets related to IFMS. Therefore, the APP targets will have to be revisited Impact on next quarter targets: An impact analysis and project timeline review is planned to be done once the tender has been awarded and meetings with the winning software bidder have been conducted. Approval of the award recommendation for the new IFMS project RFP for hardware published RFP for system implementation services published Not achieved 0% RFPs have been drafted and are undergoing reviews. However, finalisation and publication is dependent on IFMS software tender award and input from winning software bidder. Waiting for software tender to be awarded Corrective action: The delay in awarding the tender adversely impacted this target and other APP targets related to IFMS. Therefore, the APP targets will have to be revisited. Impact on next quarter targets: An impact analysis and project timeline review is planned to be done once the tender has been awarded and meetings with the winning software bidder have been conducted.

13. Service Delivery (3) 13 ObjectivePerformance measure/ indicator 2014-2015Actual performance against targetReason for variance EstimateTargetActual status Enhance efficiency of government business processes % implementatio n of infrastructure upgrades and modernisation plan Hosting 100% Bandwidth Upgrades 100% DR Services 92% 90% of milestones completed as per annual plan Not achieved 87% (39/45 milestones achieved) 1)DC modernise: 32/33 MoUs with RHDDV for DC modernisation not signed yet; meeting with the supplier is scheduled for 13 July 2015. 2)Hybrid Cloud: 3/6 BC and RFB technical specs not yet approved for hybrid Cloud. 3)Network upgrade: 4/6 NGN VPN migration assessments not completed; WC VPN: 502 sites not achieved. 1)Scope review negotiations delayed signing of MoUs with RHDDV. 2)Rework required on BC and specification delayed submission for approval. 3)NGN provincial VPN migration cost assessment delayed due to internal capacity. 4)Neotel not able to deliver on volume of work contracted - letter of consent issued. Corrective action: 1)BC approved for additional broadband resources. 2)NGN assessment will be delayed until capacity is acquired. 3)If Neotel cannot remedy situation, alternative capacity will have to be sourced. Impact on next quarter performance target: Project plans will be updated. % implementatio n of process automation and integration 91%90% of milestones completed as per annual plan Achieved 100% The declaration of interest (companies and gifts) process has been automated. Intensified efforts were made to complete the system in time to enable SITAzens to complete and finalise the declarations online.

14. Service Delivery (4) 14 ObjectivePerformance measure/ indicator 2014-2015Actual performance against targetReason for variance EstimateTargetActual status Enhance efficiency of government business processes % level of performance against signed SLA metrics contracted 95%95% performance against contracted SLA metrics Achieved 98% The SLA metrics calculation uses the weighted scoring, and the performance measurement is for 1)responsiveness, 2)WAN services, availability 3)Hosting Services – mainframe availability, and service management availability. CSI initiatives are yielding positive results. Improve security of government data assets % of ICT controls implemented according to plan 97%90% of security (ICT controls) plan implemented Not achieved 78% (7/9) milestones achieved) Cybersecurity: 6/7 Employee vetting: 0/1 Physical security: 1/1 Due to delays by SSA and DI to finalise the clearances. Corrective action: Letters were written to both the SSA and DI requesting feedback on clearances that were completed and forwarded more than 12 months ago. DI has provided feedback and confirmed that the majority of the clearances are still being processed. Impact on next quarter targets: Overall performance will be tracked on a monthly basis in order to ensure that the target is achieved by 31 March 2016.

15. Service Delivery SITA achieved two of the seven performance indicators measured in the organisations APP To accelerate the customer centricity initiative, SITA’s has started a process to institutionalise a new way of working that addresses structures, tools, processes and access to the right skills for improved service delivery to customers 289 out of 307 SLAs (94,14%) have been signed. Outstanding SLAs are mainly due to negotiations still in progress with customers or awaiting sign-off from customers The relevant Governance structures to ensure success of e-Government are in the process of being instituted The e-Cabinet solution has been designed and configured The organisations infrastructure modernisation programme is on track 15

16. Organisation 16 Objective Measure/ indicator 2014-2015 Actual performance against target Reason for variance EstimateTarget Actual status Build a performing organisation % Improvement on HPO baseline N/A New Measure 1. Establish the HPO baseline Achieved 100% The HPO baseline was determine d and HPO improvem ent plan approved N/A N/A New Measure2. Development and executive approval of an HPO improvement plan

17. Governance and Administration 17 ObjectivePerformance measure/ indicator 2014-2015Actual performance against targetReason for variance EstimateTargetActual status Establish effective governance practice Compliance with internal control framework 91% of 2013/2014 MLP’s resolved Internal control framework approved Not achieved 0% ICF draft is available and will be tabled for approval. The framework will be tabled before the broader Exco on 13 July 2015. Maturity level of risk management implementation 3+Approved risk management policy, framework, strategy and implementation plan Achieved 100% All documents have been approved. N/A

18. Organisation and Governance All displaced employees have been placed in the organisation SITA’s approved integrated talent management strategy will guide the integrated management of talent across the business The organisation has embarked upon an employee value proposition programme to energise and re engage employees SITA’s litigation procedures are monitored and tracked on a weekly basis The organisation is in the process of reviewing commercial contracts, with the primary focus on avoiding and eliminating contractual pitfalls and enforcing performance and legal compliance in terms of contractual obligations All Auditor-General findings have been automated and are regularly monitored by Internal Audit, Exco and the Audit, Risk and Compliance Committee The external audit for FY2014/15 is in progress 18

19. Quarter 1 Performance Summary 19 Figure 1 - Quarter 1 performance results against planned targets

21. Statement of Financial Performance 21

22. Statement of Financial Position 22

23. 23 Statement of Financial Position (2)

24. Statement of Cash Flows 24

25. Working Capital Management Ratios 25

26. Accounts Receivable Age Analysis 26

27. Capital Expenditure: Original budget 27

28. Capex Budget Revision 28 Flaws discovered in the originally approved budget: – Operational budget was unrealistic – Calculated cash flow from operations was done incorrectly and could not be substantiated – This resulted in significant uncertainties that affected SITA’s ability to accurately forecast cash flows – To manage the risk relating to the financial sustainability of SITA, the capital expenditure budget had to be revised – The revised capital expenditure budget was approved by the Board on 29 July 2015 Measures implemented to manage budget related challenges: – Budget review committee instituted – Additional resource to assist with managing the process

29. Revised Capital Expenditure Budget 29

30. Performance Focus Areas for Quarter 2 30 Finalise FY2014/2015 Performance Assessments Finalise FY2015/2016 IBSC contracting FY2015/2016 Organisational alignment assessment against the approved CBSC Intensify efforts in the implementation of projects and initiatives as per approved FY2015/2016 APP -(Quarter 1 non-achievements and quarter 2 targets) Address Challenges / Lessons learned from FY2014/2015 external audit

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