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PROGRESS REPORT ON THE SABC

PROGRESS REPORT ON THE SABC. Presenter: Avril Halstead | Chief Director: Sectoral Oversight, Asset and Liability Management Division | AUGUST 2011. Contents. Reporting Compliance with guarantee conditions and commitments Projected cash flow position MTEF application.

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PROGRESS REPORT ON THE SABC

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  1. PROGRESS REPORT ON THE SABC Presenter: Avril Halstead | Chief Director: Sectoral Oversight, Asset and Liability Management Division | AUGUST 2011

  2. Contents • Reporting • Compliance with guarantee conditions and commitments • Projected cash flow position • MTEF application

  3. This report is based on submissions received from the SABC • Dates for submission of the reports by the SABC to the Monitoring Task Team (MTT) and monthly meetings of the MTT have been agreed for the rest of 2011 • SABC submitting on a monthly basis the following information: • CFO report • Divisional income statements • Turnaround strategy executive project update • Performance review report • MTT has also received: • Corporate plan (Missing 3y financial projections) • 36 month cash flow projections (includes 3y financial projections) • Turnaround strategy executive project update (details turnaround initiatives) • SABC to consolidate these reports into a single “turnaround strategy” • An MTEF application has been submitted to DOC (and copied to NT) • Signed performance agreements for Executive Committee members submitted • There are still inconsistencies in the information that has been communicated to Government (e.g. News24)

  4. SABC is still not meeting many of the guarantee conditions Guarantee conditions met: √ Guarantee condition not met: X

  5. SABC has failed to achieve the committed changes in its cost structure Commitment met: √ Commitment not met: X

  6. Process for finalising the turnaround plan and shareholder compact • SABC is proposing amendments to the cost cutting and revenue enhancement initiatives that were committed to in applying for the guarantee and which were the basis for the guarantee being issued • SABC is also proposing that the guaranteed loan be restructured • Request to amend initiatives and restructure loan to be submitted by SABC with revised turnaround plan to MOC and MOF for approval • Turnaround plan needs to be in line with government guarantee requirements and address the issues raised in the Auditor General’s report • SABC Board drafting a proposed shareholder compact • If approved, shareholder compact, which is based on the turnaround plan, can be finalised

  7. SABC’s capacity to meet its obligations is entirely dependent on MTEF funding Source: SABC

  8. SABC’s MTEF application

  9. MTEF application • DOC needs to assess the SABC’s application and submit a request for funding for consideration in the Budget process • For the 2012 Budget, the focus is on finding savings and reprioritising spending as very little additional funding will be made available • SABC’s request for funding in 2011/12 cannot be considered as additional funding is only for unforeseen and unavoidable expenditure • Business case for News24, Sports channel and DTT is still outstanding • Funding requests are to cover operational expenditure (for DTT, SABC had committed that the company would cover all operating expenditure and would only require funding for capital expenditure)

  10. Additional information required • To get a more complete understanding of the MTT has requested the following information from the SABC which is still outstanding: • Business plans for News24, DTT and Sports channel • Turnaround strategy for SABC 3 and link to content procurement • SABC’s proposal for restructuring the Nedbank Loan • Consolidated turnaround strategy • Project plan and progress report on initiatives to address the Auditor General’s recommendations • Separate reporting of public and commercial broadcasting businesses • Monthly reporting on risks and mitigating actions being taken by the SABC

  11. Conclusion • There has been an improvement in the working relationship between the SABC and the MTT, with regular reporting being more forthcoming • The SABC is still not meeting most of the guarantee conditions • The SABC’s financial sustainability is entirely dependent on receiving additional funding from government • Additional information is required to get a more complete understanding of the SABC’s financial position

  12. Annexure

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