SABC Annual Results Presentation 5 November 2004

1. SABC Annual Results Presentation5 November 2004 The public broadcaster: Delivering social and financial value

2. What a year! • A year of tremendous achievements for South Africa • For SABC viewers and listeners, world-class coverage of: • Elections 2004 • Decade of Democracy Celebrations • Pan-African Parliament • South Africa’s 2010 Bid • World Cup Rugby • World Cup Cricket And more recently • Olympics 2004

3. What a year! • For the SABC itself: • Strong delivery on public service mandate, exceeding targets for language diversity and local content • Solid financial performance • Recognition from domestic and international peers, with over 120 awards for excellence • In a nutshell: We have succeeded in meeting the triple bottom line in terms of economic, social and environmental value

4. Overview Section 1: Introduction Eddie Funde Chairperson of the Board Section 2: Review of performance Peter Matlare Group CEO Section 3: Review of services Peter Matla re Group CEO Section 4: Financial results Robin Nicholson Chief Financial Officer

5. Section 1Introduction Eddie Funde Chairperson of the Board

6. Chairperson’s statement • Building on achievements of the previous board • Challenges included: • Corporatisation process • Introduction of new editorial policies, including compliance with language mandate • Ensuring regulatory compliance, including submission of licence renewals and amendments, and regional TV licences applications

7. SABC Goals • Critical that SABC continues to be in a position to deliver on its commercial and public service mandates • The Board has set specific goals going forward to build a world-class public broadcaster

8. SABC Goals • This means creating an SABC that enjoys the support and respect of its shareholder, viewers, listeners as well as other stakeholders • Promoting democracy, national unity, (national consciousness) non-racialism, non-sexism and empowerment. • Align the Charter, company objectives and editorial policies. • Create a financially sound company built on a sustainable model enabling it to fulfill its mandate. • Revitalising the company, particularly news and making it a preferred employer of choice. • Ensuring compelling and professional programming • Full regulatory compliance. • Continuous evaluation and monitoring to ensure alignment with the broadcasting act and its own editorial policies.

9. Resourcing • Board will continue to ensure investments that deliver social and financial returns • This will require combination of funding: • Licences • Commercial revenues • Public funding

10. Going forward • New board has clearly defined what needs to be achieved in next year and the years going forward. • Building a strong team of board and management • Ensuring the SABC is a caring organisation • Ensuring good governance, accountability, editorial independence based on accurate balanced reporting and compliance. • Ensuring continued stakeholder involvement and public participation • Contributing to a South Africa that is based on the values contained in the Constitution

11. Section 2Review of performance Peter Matlare Group Chief Executive Officer

12. The strategy • Stabilising the SABC • People • Revenues • Costs • Striving for best practise • Implementing the Act • World class operations • People and success behaviours • World class content and brands

13. The strategy • From non-core to core business • Focus on local content • Focus on industry development • Focus on talent development • Focus on technology investment

14. Our performance • SABC uses a balanced scorecard for measuring performance: • National priorities and mandate • Universal service and access • Local content • Growth and financial health • Innovation, customers and stakeholders • People and success behaviour

15. Growth and financial health • Revenue increased by 11% to R 2.7-billion • TV revenue grew 14% • Radio revenue grew 18 % • License revenue grew 10% • EBITDA improved by R11-million • Cash flow from operations up R236-million

16. Growth and financial health • Expenditure on local content up R 218-million (27.6%) • Foreign content down R49-million (21%) • Total investment in local content R 1,007-bn • Growth in cost contained to 6.8% • Personnel cost growth 9% • Facilities cost growth zero • Signal distribution 6%

17. Public Service highlights • News on TV in 11 languages • Educational TV broadcasts increased by 20% • Language delivery other than English from 25% to 34% • Increased delivery of sports of national interest and minority sports

18. Compliance • Corporatisation completed • Re-organisation completed • Licences renewed • Regional licences applied for

19. Universal Service and Technology

20. Delivering Services • Radio has remained at current level of access -- however we have applied for expanded transmitters that would improve coverage as follows: • Radio: 815 000 • Television: 583 000

21. Technology • Critical in ensuring SABC can meet its mandate • Four business imperatives for 2004: • Operational excellence • Cash efficiencies • Development of skills and talent • Increase in delivery success • Investment during this period R103,9-million.

22. Innovation Customers and Stakeholders

23. Stakeholders • Improved access for audiences • Refocused audiences services • Extensive consultation on editorial policies • Effective participation on public hearings • Key social initiatives with government. • 16 Days • HIV and Aids • Educational programming

24. Stakeholders • Key partnerships with civil society • Community builder of the year • Literacy programmes • Support for cultural activities • North Sea Jazz • Macufe • Klein Karoo • Fidelio

25. Customers • Improved relations with marketing industry • Launch of the “Your SABC “ campaign • Launch of the Ya Mampela brand • SABC 2’s Feel at Home • SABC 3 Much Better • On radio we have seen Metro, 5 FM, RSG, SAFM and Good Hope all create exciting offerings

26. Customers • Launch of Consumer Scope • Launch of Future fact • Introduction of the SABC People Panel • Focus on music research • Strong relationship with SAARF

27. People and Success Behaviours

28. 1. Investing in our industry • SABC continues to invest heavily in local production industry, to increase the sector’s capacity and develop talent • Significant investments in productions on all three TV channels • More than 4 000 freelance contractors employed • Commissioned 247 productions, at a cost of R319-million • Specific focus on black-owned companies, to facilitate empowerment

29. 2. Human capital • Our people are at the centre of our success • Human capital investment continues: • Performance management • New system put in place • Align business strategies with performance • Drive performance in strategic areas • Employment equity • No. of black people on staff increased from 58% to 60% • No. of women on staff increased from 39% to 40%

30. Human capital • Training and development • 4 592 trainees this year (61% black) – an all-time high • Support for employees affected by HIV/AIDS • HIV/AIDS strategy developed after extensive research and consultation • Labour relations initiatives • Collective agreement signed with Mwasa • Similar agreement being developed with Bemawu • 195 shop stewards completed training in disciplinary hearings

31. 3. Awards and achievements • More than 120 awards for SABC journalists and staff • TV awards on all three levels: • CNN World Report (global) • CNN African Journalist of the Year (African) • Vodacom Journalist of the Year • A range of other awards for excellence • Radio awards acknowledged excellence in reporting, contributions to language diversity, sport, news and economic growth • Educational programmes received international recognition

32. Section 3Review of services Peter Matlare Group CEO

33. Introduction • Another significant year for SABC radio and television • Great strides made on the path towards the transformation of the SABC into a true public broadcaster • Success of our programming and scheduling strategies confirmed

34. Introduction • SABC radio and television remain dominant in South African broadcasting • Exceeding new local content regulations introduced by ICASA in August 2003 • Establishment of Content Enterprises to improve management of the content of SABC services

35. Public broadcasting performance • PBS Re-building Radio Project launched to take portfolio forward – focused on people and content • Key outputs: re-investment in drama, radio news and current affairs, and music • This investment is what has underpinned excellent performance of this portfolio this year

36. Public Broadcasting performance • Local music quota for PBS radio was increased to 40% in August 2003 • PBS radio continued to perform well above the minimum quota

37. PBS Television • PBS Television channels repositioned and dedicated to public broadcasting, in terms of Broadcasting Act • SABC1 and SABC2 maintained prime time audience dominance of television market • Delivery on local content increased on both PBS channels in line with new ICASA quotas introduced late 2003

38. PBS Television • Language delivery expanded with introduction of news bulletins in siSwati, isiNdebele, xiTsonga and tshiVenda. Increased programming in SA Sign Language and use of subtitles • SABC 1: programme offering defined by celebrating the freedom to engage real issues. Consolidated its position as the nation’s number 1 channel, reaching 88% of potential viewers • SABC 2: programmes that truly reflect the multifaceted nature of the South African family. Rapidly re-establishing itself as the nation’s number 2 channel, reaching 90% of potential viewers

39. Investment in local content • Increased investment in local content of R132-m, as part of continued focus on local industry, has delivered award-winning programming: • Radio: drama and documentaries • Television: drama and documentaries • Showcasing events of national importance

40. PCS Radio • Radio stations in SABC’s commercial service portfolio offer programmes and services that are in keeping with the principles of public broadcasting • Metro FM continues to grow brand presence and audience, with over 6-million listeners • Significant investment in 5FM, leading to 13% growth in audience • Tighter focus on Goodhope FM, to address challenges

41. PCS Television • As a commercial channel, SABC 3 prides itself on bringing viewers a fusion of the best of local with the best of international programmes • Exceeded its local content quota and delivered quality local content, eg. Isidingo • Introduction of South Africa’s first daily talk show, 3-Talk • Moving news to 7pm has ensured its position as the most-watched English news bulletin

42. News and current affairs • News content informed by editorial policies • Special focus on elections through Current Affairs slots on radio and television, resulting in accolades from key stakeholders • Programmes aimed at reflecting a country in transition and marking the first Decade of Democracy • All television Current Affairs shows tackled the key election campaign issues, such as unemployment, HIV/Aids and crime

43. News and Current Affairs • Radio News and Current Affairs • Extended Current Affairs programmes on SAfm • Production of iPhalamente on Ukhozi FM • Television News and Current Affairs • For the first time ever, television bulletins in siSwati, isiNdebele, xiTsonga and tshiVenda • Asikhulume, a Nguni weekly Current Affairs show was introduced on SABC 1 and immediately established itself as the biggest Current Affairs show in South Africa

44. SABC Africa • SABC Africa leading broadcaster of African programmes in the DSTV bouquet • 180 Degrees in Africa • 60 Minutes Live • Live coverage of key events such as inauguration of Pan African Parliament • Entertainment on SABC Africa continued to cross borders with top quality African films in English and French

45. Education • Increased delivery: broadcast minutes up 20% • Established itself as a world leader in dramatic edutainment • Has earned an enviable reputation for excellence in the production and delivery of educational material • This development has attracted an impressive list of funders, sponsors and stakeholders

46. Religion • Continued to reflect diversity of faiths in South Africa: • The Big Question: an interactive magazine show on SABC 2 • The Chatroom: a multifaith youth morality show • HIV/Aids awareness campaign • National Transformation Day of Prayer • Bayethe Jesu

47. Sport • Continued increased investment in domestic soccer, cricket, rugby and minority sports, plus premier events: • 2010 bid matches/bid • All Africa Games 2003 • Rugby World Cup 2003 • President’s Cup golf • Africa Cup of Nations 2004 • Number of future contracts secured

48. Section 4Financial outcomes Robin Nicholson Chief Financial Officer

49. Key financial imperatives • Sustainable financial outcomes within the context of the SABC’s mixed funding model • Strategic and deliberate focus on the funding of core activities of the SABC • The funding of programming including news • The provision and distribution of broadcasting services • The technologies and facilities that support broadcasting activities of the SABC • Modernisation of the organisation’s financial management and systems

50. Highlights • The corporation remained largely self-funded (97% of revenue from SABC activities) • Revenue sources increased by 11% • TV revenue grew by 14% • Radio revenue grew by 18% • Non core revenues declined in line with expectations • TV license revenue grew by 10% • Costs remained contained • Programme and broadcast costs grew by 6% • Personnel remuneration (excl. PRMA) grew by 7% • News costs grew by 9% in total • Sport costs grew by 17% in total • Facilities costs remained constant • Contribution from TV improved by R128m • Contribution from Radio improved by R66m • An overall improvement of R151m from a loss of R148m to a profit of R3,4m