SABC FY 201617 SECOND QUARTER REPORT 1 July

SABC FY 2016/17 SECOND QUARTER REPORT (1 July to 30 September 2016)

SABC 2 nd QUARTER REPORT TABLE OF CONTENTS • EXECUTIVE SUMMARY • SECOND QUARTER FINANCIAL PERFORMANCE • PERFORMANCE AGAINST PREDETERMINED OBJECTIVES

SABC 2 nd QUARTER REPORT EXECUTIVE SUMMARY In spite of an onslaught of adverse media publicity, the SABC ended the 2 nd Quarter on a successful note with a number of key events being broadcast on its platforms. The public broadcaster’s biggest achievement during the period under review was most definitely its unrivalled coverage of the 2016 Local Elections – the SABC received numerous accolades for its immaculate coverage. Financial performance was satisfactory with the Corporation increasing its cash balance with more than R 200 m to R 660. 5 m at the end of September 2016. The SABC’s financial ratios indicate that the Corporation is in an acceptable financial position and can meet all of its obligations. The net loss for the 2 nd Quarter was R 256. 4 m mainly as a result of below budget revenue generation. Adverse economic conditions and resultant client cut-backs contributed to the revenue underperformance.

SABC 2 nd QUARTER REPORT EXECUTIVE SUMMARY The following are summarised highlights for the Quarter under review: • The SABC performed exceptionally well against its goal of contributing to nation building and social cohesion. Programming on TV and Radio commemorated national days which included Women’s Day and National Heritage Day. The latter focused on content and programming regarding restoration of the dignity of all the citizens, promoting South African languages and national symbols, and promotion and preservation of the different cultures. The month of July was themed Nelson Mandela Month and South Africans were encouraged to dedicate 67 minutes to the Madiba legacy. • SABC 3 launched its new schedule on 1 July 2016. The schedule, reflecting an 80/20 mix of local and international content is a key element in the repositioning of the SABC network to improve audience numbers, fulfil a broader mandate and to promote the development of the local content production industry.

SABC 2 nd QUARTER REPORT EXECUTIVE SUMMARY • SABC Radio still dominates the market by commanding an exceptional share of 71. 8%. PBS Radio contributes 64. 9% towards the overall SABC share performance while PCS Radio has an all adult share of 6. 9%. Radio reaches 28. 1 m all adult South Africans (15+). • A series of spectacular sporting events, were broadcast on the SABC’s platforms during the 2 nd Quarter. Of note was the extremely successful broadcast of the 2016 Rio Olympics and Paralympics. • The popularity of SABC content via internet and social media channels is continuing to show healthy growth. Face. Book and Twitter remain the two most important social media platforms across the SABC’s network.

SABC 2 nd QUARTER REPORT EXECUTIVE SUMMARY • In its commitment to deliver quality top-class programming, the SABC won a number of television and radio awards during the Quarter under review. The SABC was also able to reap the prestigious Mail and Guardian award for Top Companies Reputation Index in the Parastatal category. • During the period under review, the SABC released its 2015/16 Annual Report and Financial statements which was tabled in Parliament by the Shareholder. Subsequently, a media conference was held to convey and contextualize the results.

SABC 2 nd QUARTER REPORT FINANCIAL PERFORMANCE ABRIDGED INCOME STATEMENT for the period ended 30 September 2016 Quarter 2 2016/17 Revenue & Other Income Expenses Earning before Amortisation, Depreciation, Interest and Tax (EBITDA) Amort. & Imp. Prog, Film & Sports Rights Amortisation of Computer Software Depreciation Operating (Profit)/Loss Before Interest & Tax Net Financing (Income)/Loss Operating (Profit)/Loss Before Tax Year to Date Year on Year Actual 2017 R'000 Actual 2016 R'000 Variance % (16) (3, 815, 406) (4, 107, 814) (292, 408) (7) 334, 725 10 3, 173, 692 3, 072, 697 (100, 996) (3) (1, 036, 054) (394, 341) 38 (641, 713) (1, 035, 117) (393, 404) 38 968, 845 1, 021, 516 52, 671 5 968, 845 819, 223 (149, 622) (18) 14% 22, 596 26, 282 3, 686 14 22, 596 22, 917 321 1 5, 686 11% 106, 472 118, 744 12, 272 10 106, 472 110, 765 4, 294 4 88, 208 (179, 833) (67%) 456, 200 130, 489 (325, 711) (250) 456, 200 (82, 211) (538, 411) (655) (11, 604) (10, 100) 1, 504 (13%) (21, 728) (20, 194) 1, 534 8 (21, 728) (1, 660) 20, 068 1, 209 256, 438 78, 108 (178, 330) (70%) 434, 472 110, 295 (324, 177) (294) 434, 472 (83, 872) (518, 343) (618) Actual R'000 Budget R'000 Variance % (1, 998, 811) (2, 344, 839) (346, 028) (15%) (3, 815, 406) (4, 544, 471) (729, 066) 1, 642, 748 1, 776, 681 133, 934 8% 3, 173, 692 3, 508, 418 (356, 063) (568, 157) (212, 094) 60% (641, 713) 558, 905 583, 860 24, 955 4% 11, 521 13, 141 1, 620 53, 679 59, 365 268, 042

SABC 2 nd QUARTER REPORT FINANCIAL PERFORMANCE The SABC’s 2 nd Quarter closed at a net loss of R 434. 4 m for the financial year to date which is, R 324. 2 m unfavourable to budget of R 110. 3 m. The entity’s financial performance tightened by R 518 m in comparison to prior year profits of R 83. 9 m, attributable mainly to the decline in revenue and other income by 7% while overall expenditure escalated by 6%. The Corporation achieved year-to-date revenue and other income of R 3. 8 bn (2015/16: R 4. 1 bn), which is 16% below budget of R 4. 5 bn and 7% lower than prior year earnings. The main revenue streams lagging behind are advertising revenue, licence fees as well as sponsorship revenue; these streams contribute 90% of total income. Operational costs incurred to date are R 4. 3 bn thus favourable to budget of R 4. 7 bn by R 403. 4 m; however this is 6% higher than prior year expenses of R 4. 0 bn. The significant favourable line items to budget were amortisation of programme, film and sports rights, broadcast costs, as well as direct revenue collection costs.

SABC 2 nd QUARTER REPORT FINANCIAL PERFORMANCE The SABC maintained a positive cash balance of R 660. 5 m as it concludes the 2 nd quarter with a net cash outflow of R 220. 6 m mainly to operating activities and investment in capital expenditure. The Corporation is financially stable notwithstanding the constant increase in sports rights fees. It should also be noted that for the past two years operational cash was utilised to fund capital expenditure projects.

SABC 2 nd QUARTER REPORT PERFORMANCE AGAINST PREDETERMINED OBJECTIVES

SABC 2 nd QUARTER REPORT THANK YOU