SUBMISSION TO PARLIAMENTARY PORTFOLIO OF COMMUNICATIONS 

Response to Matters Raised in October 2010 Meeting

November 2010

Table of Contents

INTRODUCTION
1.	SCHEDULE OF MEETINGS
2.	TURNAROUND STRATEGY
3.	RETENTION BONUSES
3.1.	Background
3.2.	Principles
3.3.	Implementation
3.4.	Current Status
3.5.	Recommendation
3.5.1.	Review current list of employees on retention and align to current business need by end of the current fiscal year
3.5.2.	Review the overall retention policy in the context of the turnaround strategy and an overall talent management strategy
3.5.3.	No new retention contracts be issued and no renewals of existing contracts until a new retention policy is approved.
4.	REPORT ON SUBSIDIARY COMPANIES
5.	PROGRESS ON AUDITOR GENERAL’S INVESTIGATION
6.	REPORT ON SALARY INCREASES OF SENIOR AND MIDDLE MANAGEMENT
7.	REPORT ON DISCIPLINARY CASES
8.	PERFORMANCE REVIEW OF SABC BOARD
8.1.	Functioning of the Board
8.2.	Sub-committees of the Board
8.3.	Board Sub-committee Role Meetings and Key Decisions Made
ANNEXURES
A.1.	ANNEXURE A – Detailed Reports on Board Performance
REPORT OF THE TECHNOLOGY AND DTT SUBCOMMITTEE
REPORT OF THE PBS AND PCS SUBCOMMITTEE
REPORT OF AUDIT SUBCOMMITTEE
REPORT OF THE RISK SUBCOMMITTEE
REPORT OF THE NEWS SUBCOMMITTEE

INTRODUCTION

On 20 October 2010, the Parliamentary Portfolio Committee on Communications requested that the SABC provide reports on the following matters:

1.	The Chairperson and the Board should approve a schedule of quarterly Board meetings for the period between now and December 2011, and submit such a schedule to the Committee on 10 November 2010.
2.	A turn-around strategy for the SABC must be tabled before the Committee on 10 November 2010.
3.	The policy of retention bonuses for staff members be reviewed.
4.	The Acting GCEO provides a full and detailed report to the Committee on the activities of all subsidiary companies associated with the SABC on 10 November 2010.
5.	The Board presents a written report to the Committee on 10 November 2010 on further progress in respect of the Auditor-General’s investigation into alleged irregularities at the Corporation.
6.	The Board reports to the Committee on staff, including Senior and Middle Management, salary increases and benefits as from 2007 to date on 10 November 2010.
7.	The Board reports to the committee on disciplinary cases and reasons why no action was taken in respect of the cases highlighted in the 2009/10 Annual Report on 10 November 2010.
8.	The Board tables a performance review report for the current year that includes a report on the functionality of the Board on 10 November 2010.
This report provides the responses to the requests above. 

1.	SCHEDULE OF MEETINGS

The Chairperson and the Board should approve a schedule of quarterly Board meetings for the period between now and December 2011, and submit such a schedule to the Committee on 10 November 2010.

Date	Purpose	
27 Oct 2010	Quarterly Report	
13 Dec 2010	Budget Revision 1 and Year End Approvals	
21 Jan  2011	Quarterly Report	
23 Feb 2011	Annual budget	
22 Apr 2011	Quarterly Report	
13 Jun 2011	MTEF CAPEX	
13 Jul 2011	MTEF OPEX	
22 Jul 2011	Quarterly Report	
11 Aug 2011	Annual report and MTEF	
21 Oct 2011	Quarterly Report	
12 Dec 2011	Budget Revision 1 and Year End Approvals	
20 Jan 2012	Quarterly Report	
22 Feb 2012	Annual Budget	

2.	TURNAROUND STRATEGY

A turn-around strategy for the SABC must be tabled before the Committee on 10 November 2010.

The SABC’s turnaround strategy will be tabled in the form of a presentation before the Committee on 10 November 2010. A copy of the presentation has been submitted separately.

3.	RETENTION BONUSES

The policy of retention bonuses for staff members be reviewed.

3.1.	Background

A retention strategy was designed for SABC during the period 2007/2008 and implemented towards the latter part of 2008, stemming from a need identified by business and focuses on the following types of Skills:

•	Hot Skills
•	Scarce Skills
•	Business Continuity Skills
•	Critical Skills

The Retention Strategy was identified as a key programme within the SABC Total Reward “6 Barrel” Strategy, in order to attract and retain key talent. From research  performed by Deloitte Consultancy, it was noted that remuneration is the central theme amongst the younger generation and the creative’s that are now being employed within SABC, as well as by the external labour market. The war for skills has taken a twist in terms of comparison for take home pay rather than benefit design and benefits offerings i.e. short term wealth creation rather than long term benefit designs.

3.2.	Principles

The current key principles of the SABC retention strategy include:

•	It is non-entitlement
•	For Scale Codes between 125 and lower, 1 to 20% of the approved SABC midpoint for that relevant scale code will be applied.
•	For all General Managers and higher, between 1% and 20% of actual basic salary will be applied.
•	The Retention addendum to employment contracts must be signed by Employer and Employee before any payment is made
•	Should an individual’s job change the allowance will automatically stop until it is motivated for again.
•	Payment may be pro-rated and paid monthly.
•	For the above, contractual obligations exist and if it is breached, the full after tax retention allowance paid will be claimed from the Employee, unless otherwise agreed to between parties.
•	Allowance can also be paid as once-off payment to potential incumbents, but paid annually as a lump sum, for every year completed.
•	The same Retention Allowance with the prescribed costing can also be utilized as a sign-on attraction fee, but the Retention contract needs to be customized to recover the full after tax amount paid should the Employee breach the contract term.
•	All allowances are fully taxable according to the applicable tax rate, but are non-pensionable.
•	The allowances are non-entitlement and in most instances can be stopped at any time by the Employer, by giving one months notice to do so (with the exception of sign on attraction fees).

The principles have been approved by the Board, and implemented accordingly. 

3.3.	Implementation

The submission on retention was approved by Board in 2008 and implementation commenced during November 2008. The retention strategy focused on a short term need to attract and retain where necessary, with the maximum period being 3 years. 

The initial list of submissions of employees that fell within the category of scarce, hot, critical or business imperative skills equated to approximately R20 million, but after reviewing the lists, it was reduced to R15 million in accordance with the Board approved budget.

It must be noted that this element of retention is one programme within the entire Retention Strategy, and focuses on cash rather than benefit rewards for the purposes of retention and attraction. 

This is in view of the fact that the competitors are competing with money to attract skills from the SABC. This has an impact on the National Labour Market benchmarks, but has a more serious negative impact on SABC having a need to re-invest in recruitment/training etc for new skills.

The relevant Board resolutions are supplied below approving the implementation of the retention strategy.

Board Resolutions

Date	Meeting Type	Text	
 15/09/2008 	 Board Meeting 	  	
 Resolution	 RETENTION COST DOCUMENT	 	 ALL	 	  	 	
 The BOARD RESOLVED to approve the total amount of R16 797 417 for the skills retention, subject to the CFO confirming that the amount was indeed budgeted for.  	

Date	Meeting Type	Text	
 06/10/2008 	 Board Meeting 	  	
 Resolution	 Retention Cost Confirmation of Budget	 	 Board	 	  	 	
 The Board of Directors RESOLVED that the implementation of the retention scheme be and is hereby approved.  	

3.4.	Current Status

At its current state the current retention beneficiaries will expire during next 2 years as per the table below. It would be in the best interest of the company to allow the contracts to expire rather that risk losing some of the key/critical/hot skills that have been retained successfully.

Retention Beneficiaries

3.5.	Recommendation

A three-pronged approach will be followed to address the issue of retention bonuses:

3.5.1.	Review current list of employees on retention and align to current business need by end of the current fiscal year

The retention contract does not create an entitlement mentality since in majority of the cases the Employer can give 1 (one) months notice to suspend such allowance from a changing business/financial need perspective. The risk, however, is that turnover and loss of skills could be a reality for SABC in so far as scarce/critical/business imperative or hot skills are concerned, especially in light of increased competition. 

Therefore, the list of retention employees will be comprehensively reviewed through a structured process as follows:
a.	The list of retention employees per Division be submitted to each Group Executive responsible for that Division, to assess the need for continuation, clearly indicating whether the need still exists, the reasons for the need, the impact if the retention is stopped, etc.
b.	A Committee be established by the Group Exco to assess the Group Executives submissions with a view to critically analyse and decide on continuation or not.
c.	Once the Committee resolves, inform the Group Executive and the HR Manager of those that will continue as well as give notice to those that the Committee has decided must stop.
d.	Re-assess the costs associated, and report quarterly to the Board and Portfolio Committee

3.5.2.	Review the overall retention policy in the context of the turnaround strategy and an overall talent management strategy

One key activity highlighted as part of the turnaround plan is to develop and implement a talent management strategy. As part of this strategy, the retention policy should be reviewed.

3.5.3.	No new retention contracts be issued and no renewals of existing contracts until a new retention policy is approved.

4.	REPORT ON SUBSIDIARY COMPANIES

The Acting GCEO provides a full and detailed report to the Committee on the activities of all subsidiary companies associated with the SABC on 10 November 2010.

We refer to note 9 of SABC Limited Audited Annual Financial Statements for the year ended 31 March 2010.		
					
SABC Limited has the following subsidiaries:				
1) SABC Airwave Travel (Pty) Ltd (Internal travel agency)				
2) Auckland Programme Trade B.V. (Trading in TV programmes)			
3) Astrasat (Pty) Ltd (Dormant)					
4) Skenia Telematics (Pty) Ltd (Dormant)				
5) Rugby Broadcasting (Pty) Ltd (Dormant)				
					
The report below details the abridged Financial Position and Results of the subsidiaries
1.) SABC Airwave Travel (Pty) Ltd						
						
Nature of Business: Travel Agency						
						
Abridged Income Statement						
Year	2006	2007	2008	2009	2010	
 	* 1,000 	* 1,000 	* 1,000 	* 1,000 	* 1,000 	
Other Income	(5,019)	(4,208)	(7,400)	(5,165)	(3,163)	
Expenses	2,468	3,346	4,393	7,280	3,829	
Net Financing (Income)/Loss	(107)	(166)	(643)	(1,780)	(443)	
Income Tax Expense	1,669	318	1,089	211	 	
Net (Profit)/Loss	989	710	2,560	(546)	(223)	
						
Abridged Statement of Financial Position						
 	2006	2007	2008	2009	2010	
 	* 1,000 	* 1,000 	* 1,000 	* 1,000 	* 1,000 	
Non- Current Assets	 	173	162	62	10	
Current Assets	18,479	22,668	21,792	24,913	19,998	
 	 	 	 	 	 	
Non-Current Liabilities	(54)	(124)	(79)	221	221	
Current Liabilities	(10,455)	(13,965)	(14,204)	(18,072)	(13,329)	
						
2.) Auckland Programme Trade B.V. (incorporated in the Netherlands)				
						
Nature of Business: Trading in TV Programmes					
						
Abridged Income Statement						
 	2006	2007	2008	2009	2010	
Fincl Statement Item	* 1,000 	* 1,000 	* 1,000 	* 1,000 	* 1,000 	
Other Income	 	 	(530)	 	 	
Expenses	230	315	304	1,183	1,168	
Net Financing (Income)/Loss	294	(3,803)	538	(1,831)	3,457	
Income Tax Expense	 	860	65	 	60	
Net (Profit)/Loss	(524)	2,629	(377)	648	(4,685)	
						
Abridged Statement of Financial Position						
						
 	2006	2007	2008	2009	2010	
Fincl Statement Item	* 1,000 	* 1,000 	* 1,000 	* 1,000 	* 1,000 	
Non- Current Assets	 	8,824	15,194	15,642	12,606	
Current Assets	12,012	6,729	(475)	5,509	(2,284)	
 	 	 	 	 	 	
Non-Current Liabilities	 	 	 	 	 	
Current Liabilities	(103)	(1,015)	(653)	(5,113)	(131)	
						
3.) Astrasat (Pty) Ltd						
						
Nature of Business: Dormant						
						
Abridged Income Statement						
 	2006	2007	2008	2009	2010	
Fincl Statement Item	* 1,000 	* 1,000 	* 1,000 	* 1,000 	* 1,000 	
Other Income	0	0	0	0	0	
Expenses	0	0	0	0	0	
Net Financing (Income)/Loss	0	0	0	0	0	
Income Tax Expense	0	0	0	0	0	
Net (Profit)/Loss	0	0	0	0	0	
						
Abridged Statement of Financial Position						
						
 	2006	2007	2008	2009	2010	
Fincl Statement Item	* 1,000 	* 1,000 	* 1,000 	* 1,000 	* 1,000 	
Non- Current Assets	0	0	0	0	0	
Current Assets	0	0	0	0	0	
 	 	 	 	 	 	
Non-Current Liabilities	0	0	0	0	0	
Current Liabilities	0	0	0	0	0	

4.) Skenia Telematics (Pty) Ltd						
						
Nature of Business: Dormant						
						
Abridged Income Statement						
 	2006	2007	2008	2009	2010	
Fincl Statement Item	* 1,000 	* 1,000 	* 1,000 	* 1,000 	* 1,000 	
Other Income	0	0	0	0	0	
Expenses	0	0	0	0	0	
Net Financing (Income)/Loss	0	0	0	0	0	
Income Tax Expense	0	0	0	0	0	
Net (Profit)/Loss	0	0	0	0	0	
						
Abridged Statement of Financial Position						
						
 	2006	2007	2008	2009	2010	
Fincl Statement Item	* 1,000 	* 1,000 	* 1,000 	* 1,000 	* 1,000 	
Non- Current Assets	0	0	0	0	0	
Current Assets	0	0	0	0	0	
 	 	 	 	 	 	
Non-Current Liabilities	0	0	0	0	0	
Current Liabilities	0	0	0	0	0	
						
5.) Rugby Broadcasting (Pty) Ltd						
						
Nature of Business: Dormant						
						
Abridged Income Statement						
 	2006	2007	2008	2009	2010	
Fincl Statement Item	* 1,000 	* 1,000 	* 1,000 	* 1,000 	* 1,000 	
Other Income	0	0	0	0	0	
Expenses	0	0	0	0	0	
Net Financing (Income)/Loss	0	0	0	0	0	
Income Tax Expense	0	0	0	0	0	
Net (Profit)/Loss	0	0	0	0	0	
						
Abridged Statement of Financial Position						
						
 	2006	2007	2008	2009	2010	
Fincl Statement Item	* 1,000 	* 1,000 	* 1,000 	* 1,000 	* 1,000 	
Non- Current Assets	0	0	0	0	0	
Current Assets	0	0	0	0	0	
 	 	 	 	 	 	
Non-Current Liabilities	0	0	0	0	0	
Current Liabilities	0	0	0	0	0	

5.	PROGRESS ON AUDITOR GENERAL’S INVESTIGATION

The Board presents a written report to the Committee on 10 November 2010 on further progress in respect of the Auditor-General’s investigation into alleged irregularities at the Corporation.

A comprehensive report on progress on dealing with the matters raised in the Auditor General’s investigation is attached separately.
6.	
REPORT ON SALARY INCREASES OF SENIOR AND MIDDLE MANAGEMENT

The Board reports to the Committee on staff, including Senior and Middle Management, salary increases and benefits as from 2007 to date on 10 November 2010. 

Below is a summary of executive and senior management salaries, the detailed Executive Management is provided in Annexure B. 

6.1.	Annual Increases
Level 	FY07/08	FY08/09 	FY09/10 	FY10/11	
Top Management 	6% 	11.5% 	0% 	0% 	
Senior Management 	7.5% 	11.5% 	5% 	0% 	
Middle Management 	7.5% 	11.5% 	5% 	10% 	
Bargaining Unit 	7.5% 	11.5% 	10% 	10% 	

6.2.	Executive Remuneration
Fiscal	Basic 
R’000	Benefits
R’000	Bonuses
R’000	TCTC
R’000	
FY07/08	11,117	4,827	8,231	24,175	
FY08/09	14,453	7,373	6,137	27,963	
FY09/10	29,052	9,448	3,732	42,232	
FY10/11	22,806	11,425	173	34,404	

6.3.	Senior & Middle Management Remuneration

Financial Year	Basic Salary
R’000 	Allowances

R’000 	Company Contributions
R’000 	Guaranteed Total Cost 
R’000	Retention Allowance
R’000 	Performance Bonus 
R’000	Total Payments 
R’000	
FY07/08	43,776	14,122	8,064	65,963	0	8,966	74,928	
FY08/09	54,071	14,456	8,518	77,044	4767	8,679	86,200	
FY09/10	54,101	13,701	8,645	76,447	1,700	0	78,146	
FY10/11	52,070	12,640	8,106	72,816	1,423	4,231	78,470	

7.	REPORT ON DISCIPLINARY CASES

The Board reports to the committee on disciplinary cases and reasons why no action was taken in respect of the cases highlighted in the 2009/10 Annual Report on 10 November 2010.

A report on disciplinary cases is included as part of the report on the progress on the Auditor General’s investigation. This report is attached separately.

8.	PERFORMANCE REVIEW OF SABC BOARD

The Board tables a performance review report for the current year that includes a report on the functionality of the Board on 10 November 2010.

A brief summary of activities of the Board is provided below. Detailed reports of each sub-committee are attached as Annexure A.
8.1.	Functioning of the Board
8.2.	Sub-committees of the Board

The Board consists of nine sub-committees. These are:
•	Governance, Nominations & Remuneration Committee
•	Risk committee
•	Technology and DTT committee
•	Audit committee
•	Turnaround sub-committee
•	News sub-committee
•	Public Broadcasting Services sub-committee
•	Public Commercial Services sub-committee
•	Finance, Investment and Procurement

8.3.	Board Sub-committee Role Meetings and Key Decisions Made

Sub-Committee:	Risk	
Date Formed	June 2010	
Role Summary	The role of the Committee is to assist the Board to ensure that the Company has implemented an effective policy and plan for risk management that will enhance the Company’s ability to achieve its strategic objectives and to ensure that the disclosure regarding risk is comprehensive, timely and relevant. The committee makes recommendations to the Board on risk related matters as required.	
Meetings Held	1.	12th February 2010
2.	29th April 2010
3.	1st October 2010	
Key Decisions Made:	•	Review and development of comprehensive Risk Strategy and Risk Management Plan by January  2011
•	Detailed assessment of legal risks conducted and management instructed to effectively manage performance of SABC attorneys
•	Detailed report on insurances and associated risks was considered and certain areas (including international) identified for further investigation and analysis
•	Requested detailed report on internal risk controls and report to be tabled at next committee meeting
•	Report on IT risk discussed and submitted to Board for approval
•	Recommended to the Board that the reporting line in relation to risk be changed. This was approved by the Board.
•	Identified potential risk with dormant and subsidiary companies and requested report from CFO. Report to be tabled at next meeting.
•	Identified lack of implementation of performance management system for personnel as a key risk. Report to be tabled at next sub-committee meeting.
Compliance with govt. guarantee identified as a key risk and is a standing item for the committee.	

Sub-Committee:	Technology and DTT	
Date Formed	January 2010	
Role Summary	The role of the Committee is to assist the Board in consideration of all DTT and Technology related matters and to make recommendations to the Board on these matters as required.	
Meetings Held	1.	29th June 2010
2.	 27th July 2010 
3.	8th October 2010	
Key Decisions Made:	•	Reviewed SABC’s technology budget and technology plan
•	Requested report on SABC’s DTT preparations but deferred the discussion due to policy developments
•	Recommended business cases for approval to the Board – Digital Library, Corporate Storage Area Network and Multichannel Playout Centre
•	Recommended contracts and tender awards for presentation to the finance committee – Questek contract for news production and computer system, vendor to provide computers to SABC, vendor to provide satellite capacity
•	Discussed key technology projects including progress on low power transmitter project and impact of SKA project
•	Recommended information security policy to Board
•	Discussed key technology issues including technology skills and alternative funding options for capital projects	

Sub-Committee:	Audit	
Date Formed	January 2010	
Role Summary	The Audit Committee (the Committee) is constituted as a statutory committee of South African Broadcasting Corporation (SABC) in respect of its statutory duties and compliance with the Public Finance management Act (the PFMA), the Companies Act (as amended) and King III. The committee oversees integrated reporting and internal audit, oversees financial and audit risk, reviews the finance function of the company and oversees the external audit and co-ordinates assurance functions.	
Meetings Held	1.	3 special meetings
2.	1 scheduled meeting
3.	1 workshop	
Key Decisions Made:	•	Terms of reference approved
•	Adopted New Audit Value Proposition to strengthen its oversight and value add to the corporation
•	Adopted annual Functionality Audit Plan 
•	Report on financial position and performance against govt. guarantee a standing item on agenda	

Sub-Committee:	Turnaround	
Date Formed	January 2010	
Role Summary	The turnaround subcommittee was given the task of dealing with turnaround strategy issues, the interim board hand-over report, the Auditor General of South Africa report and disciplinary matters related to Commercial Enterprises department. It was later agreed in the meeting of the subcommittee will be to give the strategic oversight to the Turn Around Planning Unit in the SABC.	
Meetings Held	1.	9th February  2010
2.	11th March 2010
3.	9th & 23rd April 2010
4.	26th & 28th May 2010
5.	4th June 2010
6.	26th July 2010
7.	19th August 2010
8.	15th September 2010
9.	7th October 2010	
Key Decisions Made:	•	Terms of reference approved
•	Identified priority areas for the turnaround plan
•	Decision taken to adopt Gemini reports as a basis for planning
•	Decision taken for TPU to report to Board because of lack of support from GCEO for the team
•	Decision taken to prioritise certain skill levels and outsource skills audit to expedite appointment of key personnel
•	Discussed reports on progress on disciplinary matters, criminal cases and SIU investigation
•	Discussed shareholder compact
•	Investigated legal implications for separate distinction of PBS and PCS and made recommendations to Board on PSB Bill
•	Requested management to prepare a collective bargaining strategy
•	Referred matter of BAC to finance committee for urgent resolution
•	Discussed proposed structure of SABC
•	Planned a Board breakaway to discuss turnaround strategies
•	Escalated matters to Board including concern regarding going status of corporation and poor performance of HCS
•	Reviewed financial performance of SABC on a regular basis
•	Requested reports on retention scheme and declarations of interest	

Sub-Committee:	News	
Date Formed	January 2010	
Role Summary	The News Sub-Committee is constituted in terms of the Charter of the Board and in terms of the Public Broadcasting Act (Act 4, 1999 as amended, Clause 12 (b)). It’s aim and purpose is to provide oversight to the SABC’s News Division to ensure that the spirit of both the Charter and the Act is complied with.
Its revised Terms of Reference (adopted 8/10/2010) enjoins the Sub-Committee to:
•	Assist the Board in setting the editorial policies of the Corporation having regard to the need to ensure the editorial integrity of news and current affairs programming presented by the Corporation
•	To ensure the SABC produces accessible, accurate, compelling, professional and authoritative news, current affairs and other programming that is fair and balanced
To defend the editorial independence of the News Division and to encourage the pursuit of excellence and the highest professional standards	
Meetings Held	1.	18th February 2010
2.	22nd April 2010
3.	8th October 2010	
Key Decisions Made:	•	Monitoring of implementation of Board decision to close down News International
•	Initial plan for local govt. elections considered by committee
•	Revised terms of reference approved
•	Revised KPAs for Head of News scheduled to be considered at next meeting
•	Input provided into an in-depth turnaround plan for News with final plan expected to be considered at next meeting
•	Requested that the issue of missing archive material be addressed by management
•	Report requested on detailed costs of international travel in news
•	Requested detailed ROI report on international bureaux	

Sub-Committee:	PBS/PCS	
Date Formed	January 2010	
Role Summary	The PBS/PCS sub-committee reports to the Board on the extent to which the two divisions have achieved their objectives during the relevant period and in particular to ensure that the public broadcasting services and public commercial services provided by the Corporation, comply with the provisions of the Broadcasting Act.	
Meetings Held	1.	18th February 2010
2.	24th March 2010
3.	11th August 2010	
Key Decisions Made:	•	Agreed terms of reference for the two sub-committees
•	Agreed framework within which the committee would operate and devised an annual work plan to monitor the performance of the relevant divisions
•	Considered an interim RFP book which was subsequently approved by the Board
•	Considered various programming business plans in accordance with the DAF and recommended where relevant business plans for approval to the Board
•	Report on all new programming strategies for the divisions expected to be tabled at next sub-committee meeting
•	Approved the closure of the 2008 marketing tender and the opening of a new tender
•	Initiated review of “terms of trade”  and IP rights regimes and report and recommendations expected for consideration by the sub-committee by end March 2011
•	Committee set to review all editorial policies by Jan 2011
•	Committee set to review Content Enterprises structure by January 2011
•	Committee set to review cost of mandate vs. revenue by March 2011
•	Strategic frameworks for sales “fix-it” plan given to Commercial Enterprises and currently being implemented
•	Oversight of delivery against govt. guarantee included as part of work plan framework developed	

Sub-Committee:	Finance, Investment and Procurement	
Date Formed	January 2010
	
Role Summary	•	Established in accordance with chapter 12 of the Board Charter and in terms of paragraph 27.1.1 of the Treasury Regulations.

•	The role of the committee is to advise the Board on budgetary, financial management, treasury, assets and liability matters, and the generation of the annual financial statements as well as to guide the Board in discharging its duties as set out in Part 2 of Chapter 6 of the Public Finance Management Act and the Treasury Regulations. The Committee meets 4 times a year.
•	Committee has 5 members with two members being external members and three non executive directors. GCEO and CFO are permanent invitees to the Committee

Meetings Held	•	3 February 2010
•	28 July 2010
•	7 October 2010	
Key Decisions Made:	•	Approved the appointment of the Bid Adjudication Committee
•	Approved SABC Treasury Policy
•	Approved debt collection agency agreement
•	Recommended approval of the Annual Financial Statements for FY09/10
•	Review Financial report for 1st & 2nd Quarter to 30 September 2010
•	Considered Cash Flow forecasts to March 2011
•	Recommended NBC output deal
•	Procurement workshop scheduled for edification of Committee members
•	Performance against Government Guarantee conditions standard agenda item for all Committee meetings

ANNEXURES
A.1.	ANNEXURE A – Detailed Reports on Board Performance

REPORT OF THE TURNAROUND SUBCOMMITTEE

Chairperson: Cedric Gina
Members: David Niddrie
                 Clare O’Neil
       Felleng Sekha
       Desmond Golding
                 Magatho Mello

This subcommittee was formed by resolution of the Board in the meeting of 19 January 2010. Initially, Deputy Chairperson of the Board was going to be the chairperson but that changed in the Board Meeting of 29 January 2010 wherein all sub-committees were appointed by the Board.

The turn around subcommittee was given the task of dealing with turn around strategy issues, the interim board hand-over report, the Auditor General of South Africa report and disciplinary matters related to Commercial Enterprises department. It was later agreed in the meeting of the subcommittee will be to give the strategic oversight to the Turn Around Planning Unit in the SABC.

On 09 February 2010, this sub-committee had it’s first meeting which was attended by Chairperson and Deputy Chairperson of the Board. Mr Itani Tseisi and Zweli Mthembu were introduced as people that the sub-committee will work with from the office of the GCEO.

Mr Zweli Mthembu did a presentation on the planning framework. The subcommittee raised the following matters to be prioritized:

•	Debtors reconciliation,
•	Revenue claw back strategy,
•	Headcount reduction and
•	Employee benefits costs review.											

Mr Mthembu also presented the updated information on the Digital Terrestrial Technology planned migration from current status. Mr Mthembu presented the four stages.

The GCEO did not attend the first Turn Around Sub-committee.													
On 11 March 2010, a second meeting of the Turn Around Subcommittee took place.
The chairperson and the GCEO attended the meeting.

The resignation of Mr Sipho Sithole, Group Head Strategy and Risk,  was noted by the subcommittee.	
The subcommittee was briefed about vacancies in the TPU and the names of suggested people were mentioned in the meeting.

Committee decided to investigate the legal implications for a separate distinction of Public Broadcasting Services and Public Commercial Services.

Skills Audit outsourcing was decided to expedite the appointment of key personnel

Group Strategy workshop was to be held in April to develop framework of strategy of strategy and operational plans.

Decision was taken to prioritize certain skills level in the organization

The committee takes an important decision to adopt the previous work by Gemini as a basis document to be tweaked and be provided to the Board workshop in April. A request is made by the committee that a person from legal be seconded to the TPU to help in managing relevant stakeholders.

The committee also discussed progress on the disciplinary matters.

Criminal cases report was submitted by the GCEO.

09 April 2010, another meeting of the subcommittee took place. The GCEO was not present in the meeting. Mr Zweli Mthembu indicated that there was a presentation on the proposed structure but presentation was deferred to the next meeting to accommodate the GCEO	

Mr Mthembu responded to enquiries about unfilled posts in the TPU and he explained administrative challenges encountered in the organization.

The GCEO and CFO were to submit the report on the filling of post in the following meeting. It was also resolved that a monthly expenditure report of TPU must be provided. It was agreed to submit proposals on the PBS Bill to the full board meeting of 29 April 2010.

The update of SIU was discussed in the meeting.

 A report from Clive Dekker attorney was presented and discussed

The committee requested to be furnished with a collective bargaining strategy after receiving a report that all unions have separate recognition agreements.

The company secretary was requested to provide an analysis of all declarations of interests, conflict of interest,	and determine how many employees were involved.
The matter of the Bid Adjudication Committee was referred to the Finance Report for a speedy resolution.
It was decided that the company secretary was to provide recommendations of the interim Board on petrol cards

Claire O’Neal indicated that she was talking to people who can help in the Commercial Enterprises division as a response to the request of  Mr Mthembu that he made in his last meeting’s presentation. Ms O’Neal was requested to discuss the same with Mr Mthembu

23 April 2010.

The GCEO was in attendance.

The meeting discussed an update on disciplinary matters, including suspensions.

The GCEO presented the proposed structure and the committee decided that it should also be discussed in the 6-7 May 2010 Board breakaway. The GCEO was asked to circulate to all Board members the proposed new structure.

The committee raised a concern that many specialists have not been appointed to TPU vacant positions.

Human Capital Services made a commitment to finish all outstanding disciplinary matters by 30 June 2010. 

HCS was requested to inform all managers that chairing hearings at SABC is not a matter of choice for them, they must be available to preside over disciplinary hearings. In this meeting, it was resolved that all those suspensions that relate to outside cases of employees be reviewed.

A wage mandate proposal was presented for the first time for negotiations that started in February 2010.

The subcommittee was ready to submit many resolutions to the Board for approval but the ordinary meeting of the Board did not take place as per the calendar.

26 May 2010.

The meeting was attended by Deputy chairperson of the Board. The GCEO was outside of the country without leaving an acting GCEO in the company. 

The chair reported on the 6-7 May 2010 workshop in Foxwood and the way forward on the proposals.

Deputy Chairperson of the Board briefed the subcommittee on the discussion between her and chairperson with the Acting Minister of Communications. The Acting Minister of Communication, Pravin Gordham called for calm and the fact that all discussions must be confidential.
The proposed shareholder compact was presented to the committee by Itani.

The going concern status of the corporation was raised as a serious concern and it was felt that the matter needs urgent attention of the Board.

The committee discussed possible things that may be presented a s a report to the Minister Of Communications during the bilateral of 22 June 2010.

Plans for the Board breakaway were agreed and finalized.

The issue of vacancies was discussed and it was noted that the critical positions were  not filled.

The TAC decided to escalate the poor work performance of HCS in terms of delays in disciplinary hearings, collective bargaining matters delay in the TPU and secretariat appointments.

SIU update report was presented.

The PCC presentation delegation was decided in the meeting.

28 May 2010.

The Board breakaway was discussed, which was to happen on 5-6 June 2010.

Mr Heunis presented what he has done in Commercial Enterprises as from 19 April 2010. Mr Heunis appreciated the assistance of Claire O’Neal

Highlighted challenges like Landmark Booking system, Lack of Controls, Sponsorships etc that needed to be scrutinized. It was reported that a specialist information technology employee was working on the system.

It was reported that revenue targets for May and April were achieved.

The wage negotiations was discussed to attempt to find a solution because the other two unions were threatening a strike

Mrs Nzimande appealed to the committee that DTT presentation be left to management only and the committee agreed with that proposal.

04 June 2010.

The serious matter of the going concern was presented by the external auditors and they explained that it was critical for the conclusion of the audit for 2009/10.

After careful consideration, the committee decided to recommend that TPU reports to the Board because of lack of GCEO support for the team.

2010 ticket allocation was discussed with Peter Kwele making a presentation.

10 percent increase for bargaining chamber employees was to be recommended to the board. Senior managers were to be remunerated on performance basis in terms of the Government Guarantee.

TPU was tasked to prepare a proposal on the revision of retention payments at SABC.

The disciplinary matters update was discussed recording progress and concern about a former employee who was allowed to come and be a witness in an internal hearing. The review of the disciplinary procedure was once again raised as a priority.

The SIU update report was presented by the chairperson of the committee.

26 July 2010.

SABC TURN AROUND PLAN
	
The Chairperson reported that the GCEO had reported to the Audit Committee on 26 July 2010 that the Turn Around Plan was still in progress. The Exco breakaway intended to develop the Turn Around Strategy had not been held and no document was ready for presentation. The Chairperson alerted members to the fact that the GCEO had undertaken at the bilateral meeting with the Shareholder on the 8 June 2010, that the SABC Turn Around Plan would be submitted by the first week in July. The Board had authorised the Chairperson of the Board and two members of the Board to attend the Group Executive Committee meeting on 15 June 2010 to brief Executives on the commitment to provide the plan to the Shareholder and National Treasury. The Chairperson had addressed Exco and had clearly articulated the Board’s displeasure and concern that the Turn Around Plan had not been developed. The Executives were advised that the failure to develop the Turn Around Plan could result in the Company receiving a qualified audit for the FY 09/10. 
	
In spite of assurances from the GCEO and management, the plan had not been submitted and the Company had defaulted on the commitment made to the Shareholder and National Treasury.
 	
RESOLVED that 
	
the Turn Around Committee report to the Board that no Turn Around Plan had been received from the GCEO or management as undertaken by the GCEO to both the DoC and National Treasury at the Bilateral meeting held on 8 June 2010;

the Chairperson of the Board be requested to communicate in writing with the Shareholder and National Treasury and inform them that the Turn Around Plan was not yet to hand;

The GCEO be instructed to provide the Turn Around Plan to ensure that by 25 August 2010 the Turn Around Plan approved by the Board is submitted to National Treasury and the DoC;

The delegation of authority to the TPU of executive powers to develop the Turn Around Plan and to source information directly from Group Executive members and if need be, consult directly with Group Executive members, be and is hereby recommended to the Board for approval.	

15 September 2010

THE COMMITTEE RESOLVED that 
	
(i)	the Turn Around Planning Unit (TPU) will be headed by Justice Ndaba to replace Mr. Zweli Mkhize;

(ii)	the TPU will look into resourcing internally first before engaging outside experts.

	

REPORT OF THE TECHNOLOGY AND DTT SUBCOMMITTEE

REPORT TO THE PARLIAMENTARY PORTFOLIO COMMITTEE BY 
THE CHIEF TECHNOLOGY OFFICER, 
MR. RICHARD WAGHORN
ON THE ESTABLISHMENT AND FUNCTIONING 
OF THE TECHNOLOGY AND DTT COMMITTEE OF THE SABC

Introduction and Context

The Board established a committee to consider both Technology and DTT issues. Since being established in January 2010 the committee has met three times. This paper was prepared by the Chief Technology Officer and not by a Board member.

The role of the Technology and DTT Committee 

The Committee has an independent role, operating as an overseer and a maker of recommendations to the Board for its consideration and final approval, and the Committee does not assume the functions of management.

Terms of Reference of the Technology and DTT Committee of the SABC

The terms of reference for the Committee have not been prepared, discussed or approved. 

Meetings and Functioning of the Technology and DTT Committee

Three meetings of the Technology and DTT Committee have been held since its formation in January 2010, the details of which are reflected below:
•	Meeting on the 12 February 2010
•	Meeting on the 29 April 2010
•	Meeting on the 1 October 2010.

Other meetings were scheduled but these were cancelled.

At the first meeting on 12 February 2010, the Chief Technology Officer presented a detailed report on technology at the SABC and the operations of the Technology division.

The report set out:
•	The structure of the Technology division and the activities of the business units
•	Progress that the Technology division had made against the Government Guarantee performance measures
•	Progress against the performance objectives for 2009/10 as per the SABC Corporate Plan issued in February 2009
•	The strategic focus of the division
•	The key projects that the Technology division was working on
•	The readiness of the Technology division to support the SABC’s coverage of the 2010 FIFA World Cup
•	The headcount of the division, including historical data
•	The financial position of the division, including historical data
•	The key challenges the division faces 

The report was well received by the Committee members. The report was comprehensive and to the point setting out the facts on how the division is run and operated and the technology issues facing the division – and the SABC – going forward. 

At this meeting the Committee members requested a discussion on the SABC’s DTT strategy from the Chief Operating Officer and the DTT team and this was to be scheduled for a future date. 

At the meeting there was a discussion about how coding and multiplexing works. The Chief Technology Officer emphasised the importance of broadcasters retaining control of the coding and multiplexing activity and after the meeting circulated to the GCEO for onward distribution to the Committee members, a report that the Chief Technology Officer had previously prepared on the issue in August 2009. 

The members also requested a report on the SABC’s obligations for the 2010 FIFA World Cup in respect of Technology.

At the second meeting on 29 April 2010, the Chief Technology Officer submitted a number of papers for discussion. Some of those papers were requested by Committee members in the period since the first meeting. However, a presentation on the DTT strategy was not given at the meeting as in the preceding weeks there were a number of policy issues that were developing at that time in relation to DTT and it was agreed between the Chairperson of the Committee and the GCEO’s office that it would not be necessary at this time.

The papers submitted to the meeting were:
•	A report on the 2010/11 Budget for the Technology division. This included an update on progress against the Government Guarantee performance measures for the Technology division for 2009/10, the key strategic focus areas for the division for 2010/11, the operational and capital expenditure budgets for 2010/11 and the key performance indicators for 2010/11.
•	A paper on coding and multiplexing for DTT which set out the strategic and costs reasons for broadcasters retaining the control of the coding and multiplexing activity. This paper was not discussed.
•	A paper on the building maintenance responsibilities of the Technology division, which extends to mechanical and electrical infrastructure (such as power, lifts, air-conditioning). This paper was not discussed.

At the meeting the Committee members requested further information on:
•	The risks and liabilities of not renewing the contract with Siemens when the contract expires on 31 December 2010. A paper was prepared by SABC Legal.
•	Whether the SABC is using SAP optimally or not across Finance, HR and Procurement.
•	Progress on the initiative to roll–out of low power transmitters to increase the SABC’s footprint of terrestrial coverage for analogue television and FM radio services.
•	An update on the progress of the Square Kilometre Array (SKA) project and how that could impact on the availability of the SABC’s television and radio services in the Northern Cape.

At the same time the Committee requested that the Chief Technology Officer prepare:
•	A business plan for early retirements in the Technology division, following a discussion with the Chief Technology Officer who had raised the issue. A plan has been pulled together but this has not yet been submitted.
•	A business continuity and disaster recovery plan for the SABC as one was not in place. A project is now being run by Siemens, as a first step, for technology business units to pull plans together and then test them.
•	A paper on the disaster recovery arrangements for the 2010 FIFA World Cup. (This was emailed to the Company Secretary’s office on 11 May for onward distribution).

The meetings of the Technology and DTT Committee that were arranged for the end of May and then for the end of July were cancelled.

The next meeting of the Committee took place on 1 October 2010. At this meeting papers that were carried over were tabled in addition to a number of business cases that required consideration by the Committee Members. Not all the papers that were submitted to the meeting were discussed due to time constraints.

Papers that were discussed were:
•	A paper on the relationship with Siemens. This paper set out the purpose of the relationship, the contractual history, background on the Technology Roadmap and the key deliverables under the contract. The paper set out background to the business cases for critical projects that were tabled at the same meeting.
•	The business case for the implementation of a Digital Library at a capital expenditure cost of R280.9m to be delivered by Siemens as a turnkey project under the contract with Siemens. This was recommended for presentation to a joint meeting of Board Committees on 19 October.
•	The business case for the implementation of a Corporate Storage Area Network at a capital expenditure cost of R59.9m to be delivered by Siemens as a turnkey project under the contract with Siemens. This was recommended for presentation to a joint meeting of Board Committees on 19 October.
•	The business case for the implementation of a Multi-Channel Playout Centre at a capital expenditure cost of just under R158m to be delivered by Siemens as a turnkey project under the contract with Siemens. This was recommended for presentation to a joint meeting of Board Committees on 19 October.
•	The capital and operational contracts with Questek for the delivery of a new news production system and news computer system. This was recommended to be presented to the Finance Committee.
•	The selection of a vendor to provide computers to the SABC. This was recommended to be presented to the Finance Committee.
•	The selection of a vendor to provide satellite capacity. This was recommended to be presented to the Finance Committee with a recommendation on the duration of contract award related to achievement of BEE status for the preferred vendor.
•	The Information Security Policy was noted and recommended to go to the Board.
•	The paper on the low power transmitter roll-out was discussed as was the update paper on the SKA.

Papers that were not discussed were:
•	Paper on coding and multiplexing (carried over from the July meeting which was cancelled)
•	Disaster recovery arrangements for the World Cup (carried over from the July meeting which was cancelled)
•	Optimal use of SAP (carried over from the July meeting which was cancelled)
•	Business case for a radio playout system 
•	Maintenance of building infrastructure (carried over from the July meeting which was cancelled)

At the meeting on 1 October 2010, the Committee members discussed how capital projects could be funded by different means if the SABC did not have its own funds or capital expenditure funding requests through the MTEF process were not successful. Members also discussed people skills in the Technology environment and requested a paper on the issue.

Then on 19 October 2010, a joint meeting of four committees was arranged to discuss the business cases for the projects to be delivered by Siemens. The Committees represented were Technology, Finance, PBS and PCS. The Chief Technology Officer gave a presentation on the SABC’s digital capability, the history of the relationship with Siemens, the detail of the three business cases and how those business cases would help deliver on the requirement to enable the SABC to become a digital business with a  full digital workflow. 

In addition, the contract award for the upgrade of equipment in Studios 1 and 2 was also discussed, as this is a project for R14.9m that will also be delivered by Siemens.

The business cases for the Digital Library, the Corporate Storage Area Network and the Multi-Channel Playout Centre, and the contract award for Studios 1 and 2, were all recommended for approval by the Board.

Conclusion

In conclusion, the Committee has considered a number of issues during the year relating to technology and DTT issues. It is unfortunate that meetings have been cancelled as that has impacted on the timeline for making decisions and responding promptly and timeously on the requests of the Committee members.

REPORT OF THE PBS AND PCS SUBCOMMITTEE

Public Broadcasting Services Committee and Public Commercial Services Committee (PBS/PCS)

Introduction

All the SABC board subcommittees are constituted in terms of a charter envisaged by the Broadcasting Act and operate according to the specified and approved terms of reference. The Public Broadcasting Services (“PBS”) Committee and Public Commercial Broadcasting Services (“PCS”) are established in accordance with clause 12 of the Board Charter and in terms of Section 9(1)(a) of the Broadcasting Act No. 4 of 1999 (“the Broadcasting Act”). The primary role of the Committees is to ensure that the public broadcasting services and commercial broadcasting services provided by the Corporation comply with the provisions of section 10 and section 11 respectively, of the Broadcasting Act.
The Board came into office on the 10th January 2010, members of the Sub-Committees were appointed at a full Board meeting held on 29th January 2010. 

A)	PBS Sub-Committee

a.	Ambassador Masekela 		Chairperson 
b.	Mr Clifford Motsepe 		Member
c.	Ms Suzanne Vos			Member
d.	Prof Pippa Green 			Member
e.	Mr David Niddrie			Member 

B)	PCS Sub-Committee

a.	Clare O’Neil				Chairperson
b.	Ms Felleng Sekha			Member 
c.	Mr Cedric Gina			Member
d.	Mr Magatho Mello			Member

1.	Performance against the Terms of reference and enabling legislation and short synopsis of the mandate of the Committee.
PBS Sub-Committee
1.1.	Report to the Board on the extent to which the public service division has achieved its objectives during the relevant period.
1.2.	Ensure that the public broadcasting services provided by the Corporation, comply with:
•	 the provisions of section 10 of the Broadcasting Act, to the extent that such services
•	Make broadcasting services available to South Africans in all the official languages of the Republic of South Africa.
•	Reflect both the unity and diverse cultural and multilingual nature of South Africa and all of its cultures and regions to audiences.
•	Strive to be of high quality in all of the languages served.
•	Provide significant news and public affairs programming which meets the highest standards of journalism, as well as fair and unbiased coverage, impartiality, balance and independence from government, commercial and other interests.
•	Include significant amounts of educational programming, both curriculum-based and informal educative topics from a wide range of social, political and economic issues, including, but not limited to, human rights, health, early childhood development, agriculture, culture, religion, justice and commerce and contributing to a shared South African consciousness and identity.
•	Enrich the cultural heritage of South Africa by providing support for traditional and contemporary artistic expression.
•	Strive to offer a broad range of services targeting, particularly, children, women, the youth and the disabled.
•	Include programmes made by the Corporation as well as those commissioned from the independent production sector to assist in encouraging and promoting the development of local industry.
•	Include national sports programming as well as developmental and minority sports.

PCS Sub-Committee
1.3.	Report to the Board on the extent to which the public commercial service division has achieved its objectives during the relevant period.
1.4.	Ensure that the public commercial broadcasting services provided by the Corporation:
•	Are operated in an efficient manner so as to maximize the revenue provided to its shareholder.
•	Subsidize the public broadcasting services to the extent recommended by the Board and approved by the Minister of Communications.
•	Account separately from the public broadcasting division and keep proper and accurate books and records of the financial affairs of the commercial service division as required by the Broadcasting Act.
•	Prepare audited annual financial statements in respect of the commercial service division, separately from those of the public broadcasting services, in accordance with generally accepted accounting practice.
•	Commission a significant amount of programming from the independent production sector to, inter alia, encourage development of the local industry.
•	Comply with the overall values of a public broadcasting service in the provision of programmes and service, and comply with the values set out in § 10(1) of the Broadcasting Act, notwithstanding the fact that the PCS division exists as a commercial division of the Corporation.
•	Are subject to the same policy and regulatory structures as outlined in §29 and § 30 of the Broadcasting Act for commercial broadcasting services.
After its’ first meeting on 18th February 2010, and subsequently upon considering all the specific functions of the two “broadcasting specific” Sub-Committees, the Chairpersons of PBS and PCS Sub-Committees of the Board (Ambassador Masekela and Ms O’Neil respectively) agreed to hold the two Sub-Committees in a joint forum going forward. This was to enable effective oversight of the:-
a)	Television Platforms (PBS and PCS)
b)	Radio Platforms (PBS and PCS)
c)	Content Enterprises Division (Policies, Commissioning and Acquisition)
d)	Marketing of content and platforms to viewers and listeners
e)	Regulatory issues / challenges / deliverables (ICASA mandate)
f)	Costs vs. Revenues
g)	Structures (Platforms vs. Content Enterprises)
The joint Chairpersons then devised a FRAMEWORK within which the committee would operate in, which set out an annual work plan for the divisions in order to monitor its implementation against the divisions KPI’s. The annual work plan being:-
•	Review of the strategies that are set out in order to deliver against the Corporate Plan Key Performance Indicators for the divisions (PBS, PCS and Content Enterprises).
•	 See progress against the Key Performance Indicators for the respective divisions as outlined in the Corporate Plan: MTEF 2010 -2013. 
•	Understand how the respective divisions incorporate the Corporate Goals (as set out by the Board in February 2010 and encapsulated in the Corporate Plan) into their strategies and Key Performance Areas.
•	Carefully monitor the costs and revenues of each division (according to the deliverables set against the Government Guarantee)
•	Understand the difference between the structures of the Platforms versus the structures of Content Enterprises (is there duplication)?
•	Understand the cost of delivering the mandate versus the revenues.
•	Gain a clear understanding of what informs the content strategies and who drives the content strategies.
•	Deal with the subject of “terms of trade” with Independent Producers (which, among others, includes the subject of “Intellectual Property”).
•	Understand the “way forward” for Marketing (structure / Marketing Agency suppliers):-
•	Understand the challenges of each division / fully understand the “red flag” issues (for example):
•	At the end of each Sub-Committee meeting, the Chairpersons expected to understand what the respective divisions require from the Board. 
i.	Sign offs; approvals and recommendations to the Board

2.  Number of meetings held
To date the PBS/PCS Sub-Committee has met three times (with two postponements)

•	18th February 2010
•	24th March 2010
•	24th May 2010 (cancelled due to instruction to Company Secretary from Chairperson of Board)
•	30th July 2010 (postponed due to poor documentation & failure to deliver documentation timeously to the Sub-Committee to consider)
•	11th August 2010
•	22nd October 2010 (postponed due to lack of quorum) – four member of the joint sub-committee had resigned (Ambassador Masekela, Ms Sekha, Mr Mello and Mr Niddrie), it was announced at the PPC on 20th October 2010 that their resignations were accepted with immediate effect. This affected the quorum of the two committees for that day.
•	The next meeting is scheduled for Friday 26th November 2010 – PBS/PCS Programming Summit.

The four resignations from the Board resulted in the PBS Sub-Committee losing its Chairperson (Ms Masekela) and one member, Mr Niddrie. The PCS Sub-Committee lost two of its members, Ms Sekha and Mr Mello.  

On 6th September 2010 at a Special Board meeting, the Board requested that Ms O’Neil chair both Sub-Committees due to the resignation of Ambassador Masekela. 

3. Approvals of the Committee that have affected business (e.g. approval of business cases)

Throughout the year, numerous local productions business plans were considered by the PBS/PCS Operations Cluster. In accordance with the Delegation of Authority framework, these business plans, where necessary, were submitted and recommended firstly to the Group Executive Committee and from there to the PBS/PCS Sub-Committee for approval and recommendation to the full Board. Local production business plans are approved against the backdrop of delivering against ICASA mandate requirements. 
 
The following business plans, which are included in the list below, will be submitted to the Board for approval at the next Board meeting:-
•	Generations 20
•	Erfsondes Series 3
•	Muvhango Series 10 & 11 Addendum
•	Muvhango Series 12
•	SA Got Talent Series 1 Addendum (recommended to the Audit Committee)
Over and above the ongoing renewals of top performing shows across the PBS/PCS platforms in terms of mandate, audience and revenue requirements, the Sub-Committee also considered an interim RFP book in May to be released to the local production industry. This was recommended and approved by the full Board at a Special Board meeting on the 14th June 2010. The value of the RFP book amounted to R65, 464,600 covering mainly the factual, children, entertainment and religious genre categories. 

The Committee expects to see all the new programming strategies for the new fiscal at the PBS/PCS programming Summit scheduled for the 26th November 2010.

										
Ops Cluster Date	Name of Business Plan	Operations Approval	Group Recommendation	Value of Contract	
1 March 2010	•	Pasella Series 19

•	Yotv Series 22	Approved

Approved	Yes (Board approved)

Yes (Board approved)	R12, 481, 176.00

R19, 914, 624.00	
19 May 2010	•	7de Laan Series 12

•	Erfsondes Series 2 Addendum	Approved 
  
Approved
	Yes (Board approved)
 
Yes (Board approved)	R49, 246, 848.00

R      250, 450.00	
22 July 2010	•	Hectic Nine-9 Series 5
•	SA Got Talent Series 1 Addendum
•	Generations Series 20
•	Gospel Gold Series 11

•	Erfsondes Series 3

•	Muvhango Series 11 Addendum
	Approved
Approved
Approved
Approved
Approved
Approved	Ends at Cluster level
Yes
Submit to Board
Ends at Cluster level 
Submit to Board
Submit to Board 	R 9, 640, 822.00
R     193,601.00
R68, 728, 329.60
R 5, 104, 632.00
R17, 696, 092.00
R 1, 040, 774.00	
20 August 2010	•	Sokhulu & Partners	Approved	Ends at Cluster level	R 8, 112, 010.00	
7 September 2010	•	Muvhango Series 12
•	Umnthunzi Wentaba

•	3 Talk Series 3	Approved
Approved
Approved	Submit to Board
Ends at Cluster level
Yes (Board approved)	R42, 917, 316.00
R 7, 557, 433.00
R43, 813, 545.00	

4. Policy decisions, PFMA implications

The full Board received a letter from the TVIEC at the beginning on its tenure, whereby the TVIEC mapped out their concerns regarding local production payments and terms of trade with the local production industry.

The Sub-Committee Chairpersons as well as the Chairperson of the Board met with representatives of the TVIEC in March in order to understand their issues. The Board then mandated the PBS/PCS sub-committee to address their issues. In discussion, it was discovered that most of the matters were operational and those matters were handed over to the Executive management to resolve. 

It was further identified that the issue the Board needed to look into was the matter of “terms of trade” and Intellectual Property rights when commissioning local productions. Any change in the IP rights regime would require policy decisions by the Board. The Board mandated the Acting GCEO and the Chairperson of PBS/PCS on the 6th September 2010 to examine the IP regime matter and recommend to the Board after exploring the subject. One of the topics discussed with the TVIEC was that of co-funding documentaries.

The Chair PBS/PCS and the Acting GCEO requested that the Minister delegate the authority to the SABC in respect of section 54 of the PFMA at the Ministerial Bi-lateral held on 15th October 2010. This delegation will allow the SABC and the local production industry to explore the possibility of co-funding documentaries. The Company Secretariat will be sending a follow up letter to the Minister of Communications in this regard.   

5. Key objectives that the Committee has achieved or aims to achieve by 31st March 2011

•	Setting out an annual work plan by way of the PBS/PCS Framework at the beginning of the fiscal in order to monitor implementation against the Government Guarantee and the divisions KPI’s set out in the Corporate Plan.
o	This was achieved by the Committee; however the Committee is still concerned at the lack of leadership in the division; however these issues are being addressed in the Turnaround Plan.
•	Releasing an interim RFP Book to the local production industry
o	After an absence of RFP books from the SABC for the past two years, the Committee recommended and Board approved the release a R65million RFP book in June 2010
•	Marketing Tender
o	The Committee approved the closure of the Marketing Tender of 2008 (due to irregularities in the procurement process) and the opening of a new Marketing Tender process, which is underway.
o	The deadline for the approval of new Marketing & Communication Agencies is 31st March 2011.
•	Terms of Trade
o	The Acting GCEO & Chairperson of PBS/PCS are examining all the options and matters around the subject of “terms of trade” and IP rights regimes.
o	The Acting GCEO & Chairperson of PBS/PCS have set a deadline of March 2011, whereby they will make a recommendation to the Sub-Committee and then Board on any policy changes that should be made (particularly in respect of co-productions of documentaries).
o	The request for the Minister to delegate the authority to the SABC in respect of Section 54 of the PFMA has been tabled at the Ministerial bi-lateral on the 15th October 2010.
•	Editorial Policy review
o	In line with the Turnaround Strategy plan, the Committee has set to review all editorial policies by January 2011
•	Content Enterprises Structure
o	In line with the Turnaround Strategy plan, the Committee has set to review the Content Enterprises structure by January 2011
•	The cost of delivering the mandate
o	In line with the Turnaround Strategy plan, the Committee has set to review the cost of ICASA mandate requirements vs. current revenue procurement and funding by 31st March 2011.
•	The strategic frameworks for an advertising sales “fix-it” plan were given to the Commercial Enterprises division by the Chair PCS
o	The sales “fix-it” plan is underway and will continue to be implemented and monitored through to the end of March 2011.
•	The platforms (particularly SABC1 & SABC2) delivered the spectacular 2010 Soccer World Cup to the nation through the “feel it, it’s here” marketing campaign.
6. Support to Executives, training & mentoring

The Interim Board handover report to the Board in January 2010 as well as the AG Report identified what it termed the “malaise at the SABC”, naming three major causes:-
•	Lack of Leadership
•	Poor quality of reporting
•	Poor governance
Mentoring

A the beginning of the year, the SABC Group Executive identified general & senior managers (middle management) with leadership potential to attend a Leadership Development Programme at the Gordon Institute of Business Science, concentrating on specific projects that could be used effectively in the organization.

One of the groups (this particular group consisting of five females), upon receiving permission from the GCEO, approached the Chairperson of PCS (Ms Clare O’Neil) to become the project “sponsor” way of mentorship and guidance throughout the programme. 
The team is made up of managers from Channel, Content Enterprises, Sales, Finance and Internal Audit. The focus of their project is “credit note management”, whereby they aim to have effective systems and controls in place across the value chain (from content acquisitions to channels to sales to finance and eventually to internal audit) by writing up standard operating procedures and service level agreements for each division in order to assist in the management of credit notes.
To date Ms O’Neil, through the office of the Company Secretariat has met the team three times for an hour and a half in order to guide them through the requirements GIBS set out for each stage of the project. Ms O’Neil mentors this team on a voluntary basis, giving up her own time to do so.

Support to Executives and training

In March 2010, the Board resolved (upon being requested by the GCEO), that the Chair PCS and a member of the Turnaround and Finance Sub-Committees (Ms Clare O’Neil) extend her oversight to the Advertising Sales Division through the office of the GCEO. 

Due to the fact that revenues were under pressure and that the advertising sales division were not performing or delivering to the potential of the SABC brands and audiences, Ms O’Neil was requested to evaluate the issues in Advertising Sales and to provide immediate advice and strategy frameworks for the turnaround of this revenue generating division.  

Since April 2010, Ms O’Neil has met with the Acting GE: Commercial Enterprises (through the office of the GCEO) every two to three weeks for three hours. 

Ms O’Neil has also assisted with reinvigorating stakeholder management of the advertising industry, with the aim of instilling confidence in the SABC as the key advertising platform reaching the majority of South African audiences across radio and television. One such event, facilitated by Ms O’Neil, occurred on 1st June 2010, where she accompanied the GCEO and sales management to address the four advertising industry bodies (the Association for Communication & Advertising; Advertising Media Forum; Advertising & Marketing Association for South Africa and the Marketing Association of South Africa). These forums have continued between the sales management and the Advertising Industry Forum on a regular basis; Ms O’Neil attends these meetings in order to facilitate the exchange between this important stakeholder group and the SABC. 
This work has been done by Ms O’Neil as a voluntary contribution to the SABC.

Still concerned at the poor quality of documentation from the PBS/PCS division, the Chairperson of PCS (Ms O’Neil), through the office of the Company Secretariat met with the division on 30th July 2010 for two hours to go through and train the team how to report against the work plan framework requirements.

7. Government Guarantee conditions particular to PBS/PCS that have been considered, addressed or will be addressed

Each division has to ensure compliance with the conditions of the five-year Government Guarantee, in particular with respect to the implementation of the Corporate Plan and ensuring that the SABC remains a going concern. 
 In formulating its work plan framework for the division at the beginning of the fiscal, the Committee determined the following oversight to the following Government Guarantee conditions particular to PBS/PCS:-

•	Monitor progress and performance against the KPI’s set out in the Corporate Plan for the division.
•	Monitor progress and performance of cost and revenues set against the Government Guarantee on a quarterly basis.
•	Ensure that the public service mandate and regulatory obligations continue to be met (hence an interim RFP book issues in June 2010).
•	In the Board mandated “extended oversight” to Advertising Sales, the Chair of PCS ensured a rapid turnaround sales strategy framework for revenue enhancement, which started as a sales “fix-it” plan. Oversight ensuring the implementation of the “fix it” plan started in June 2010 and will continue until March 2011. 
•	Further elements particular to PBS / PCS are monitored on a quarterly basis are:
o	Financial Health of the divisions
•	revenue vs. expenditure

o	Austerity Measures
•	Schedule stability (creates consistency in audiences and advertising revenues)
•	Flighting of commercials (reduces errors and issuing of credit notes)
•	Ensure maintenance of Audience Share (for consistent revenue delivery)

•	The area that still has to be considered and addressed is headcount and structure within Content Enterprises; this will be addressed within the turnaround strategy and re-structure of the entire Corporation.

8. AG Report recommendations

The Board resolved that all the major findings in the AG Report would be handed to the Turnaround Sub-Committee to manage, consider and address. However each sub-committee is cognizant of the over-arching issues in the AG report and consistently seeks to ensure good governance, better quality in reporting and a concerted effort is underway to address the leadership issues at a senior management level. 

Clare O’Neil
Chairperson: PBS/PCS Sub-Committee
SABC Board

ANNEXURE A.1: 
PERFORMANCE REVIEW REPORT (APRIL – SEPTEMBER 2010) FROM PBS/PCS SUB-COMMITTEE

Government Guarantee Conditions
•	Financial Health
•	Revenue
PBS delivered revenues of R1.473bn, 2% below the target of R1.5bn for the period under review. However, this was mitigated by 8% over-delivery of profitability within PBS. PCS exceeded the half-year revenue target by R4m, delivering R577m. Profitability for this portfolio exceeded target by 15% at R339m.

•	Expenditure
Both PCS and PBS continue to drive cost-saving initiatives and adhere to austerity measures; in the PBS portfolio expenditure was limited to R670m for the period under review, or a saving against budget or R89m. In PCS, R242m was spent of the R282m budgeted for the half-year.

•	Austerity Measures
o	Schedule Stability
One of the primary focus areas of the Austerity Measures was maintaining stable schedules. The target set for Platforms by the Interim Board was 90% schedule stability. A 10% leeway was given to allow for last minute schedule changes arising from factors outside the platforms’ direct control. In the PBS portfolio SABC 1 achieved 96%, SABC 2 98%, while SABC 3, the PCS channel, also managed to achieve 98% schedule stability.
o	Flighting of Commercials
Similarly, all booked commercials had to be flighted as per the booking schedules. A target of 98% for booked commercials was set, allowing only 2% margin for error from the booking office. Against this, PCS achieved 99% for the successful flighting of commercials and PBS TV achieved an average of 95%.
o	Audience Share
The media environment is characterized by fragmentation as audiences are presented with greater choices in the form of new platforms, channels and stations. A significant feature of this rapidly changing environment is a decrease in traditional broadcast media which is especially prevalent in the radio arena. The longer term trend of the SABC television network shedding 2% audience share per fiscal since 2007 should be understood in this context. This means the way in which the SABC meets the needs of its audiences has become more important than ever. 

For the period under review, SABC television share is at 60%, but this was driven by extraordinary programming – mainly the successful delivery of the FIFA World Cup. It should be noted that e-tv’s overall share has stagnated at 21% since the beginning of the fiscal. A number of initiatives aimed at making SABC more attractive are underway including SABC 1’s ‘6.30pm reloaded’ campaign, which saw a significant recovery in SABC1’s audience share.

The reloaded campaign, together with SABC 1 being the home of the World Cup, saw the channel exceed its 34% primetime audience target, achieving almost 36% share.  Unfortunately, the network missed the 66% primetime target by nearly 3%, with SABC 2 recording a 17% share and SABC 3 10.3%. SABC 3’s figures, however, have stabilized and recorded a marginal increase during the 2nd Quarter.
The most recently released radio figures are for the period to end-July 2010 and these showed the SABC achieving a 66% audience share for the first time since FY2008/9. PBS radio achieved 57%, still short of its 58% target, but an increase on the numbers from the previous diary. 

REPORT OF AUDIT SUBCOMMITTEE

AUDIT COMMITTEEE CHAIRS REPORTS
03 NOVEMBER 2010

Performance against the Terms of Reference and enabling legislation. Short synopsis of the mandate of the Committee

The Audit Committee (the Committee) is constituted as a statutory committee of South African Broadcasting Corporation (SABC) in respect of its statutory duties and compliance with
The Public Finance management Act (the PFMA)
The Companies Act (as amended) (section 94(7) 
The Kings III

The Composition of the Committee

The Committee comprises of three members and two external members invited on their basis of their relevant and related skills. Members of the Committee suitably skilled and experienced independent non-executive directors, and command collectively sufficient qualifications and experience to fulfil their duties, including an understanding of the financial and sustainability reporting; internal financial controls; external audit process; internal audit process; corporate law; risk management; sustainability issues; information technology governance as it relates to integrated reporting; and governance processes within the company.

The Group CEO, the Chief Financial Officer and the Chief Operations Officers attend the Committee meetings. 

The external auditors, the head of Internal Audit and the Head of Group Risk attend the Committee meeting s as invitees. 

The Committee is chaired by an independent non-executive director.

Role and responsibilities

(a) The Committee oversees integrated reporting, and in particular the Committee looks at -
i. all factors and risks that may impact on the integrity of the integrated report, including
factors that may predispose management to present a misleading picture, significant judgements and reporting decisions made;
ii. review the annual financial statements, interim reports, preliminary or provisional result announcements, summarised integrated information;
iii. comment in the annual financial statements on the financial statements, the accounting practices and the effectiveness of the internal financial controls;
iv. review the disclosure of sustainability issues in the integrated report to ensure that it is reliable and does not conflict with the financial information;
v. recommend to the board whether or not to engage an external assurance provider on material sustainability issues;
vi. recommend the integrated report for approval by the board;
vii. content of the summarised information for whether it provides a balanced view; and
viii. engage the external auditors to provide assurance on the summarised financial information.

(b) The Committee ensures that a combined assurance model is applied to provide a coordinated approach to all assurance activities, and in particular the Committee: -
i. ensure that the combined assurance received is appropriate to address all the significant risks facing the company; and
ii. monitor the relationship between the external assurance providers and the company.

© The Committee reviews the expertise, resources and experience of the company’s finance function, and discloses the results of the review in the integrated report.
(d) The Committee is responsible for overseeing of internal audit, and in particular the Committee is responsible : -
i. for the appointment, performance assessment and/or dismissal of the Chief Audit Executive;
ii. approve the internal audit plan; and
iii. ensure that the internal audit function is subject to an independent quality review, as and when the Committee determines it appropriate.

(e) The Committee is an integral component of the risk management process and specifically the Committee oversee:
iv. financial reporting risks;
v. internal financial controls;
vi. fraud risks as it relates to financial reporting; and
vii. IT risks as it relates to financial reporting.

(f) The Committee is responsible for recommending the appointment of the external auditor and to oversee the external audit process and in this regard the Committee approves :
 
i.  the terms of engagement and remuneration for the external audit engagement;
ii. monitor and report on the independence of the external auditor in the annual financial statements;
iii. define a policy for non-audit services provided by the external auditor;
iv. approve the contracts for non-audit services to be rendered by the external auditor;
v. ensure that there is a process for the audit committee to be informed of any Reportable Irregularities (as identified in the Auditing Profession Act, 2005) identified and reported by the external auditor; and 
vi. review the quality and effectiveness of the external audit process.

Meetings

The Committee has held one workshop on Directors roles and responsibilities in relation to the Audit Committee as well as in terms of the Companies Act, Broadcasting Act King III and the PFMA. 
The Committee has held 4 meetings to date; 1 scheduled and 3 special. The Committee is required to meet at least four times a year.  

Number of Meetings Held
4 meetings to date
 
5 Key objectives that the Committee has achieved or aims to achieve by 31 March 2011

•	Invited two non-executive members to bolster the skills set required in the auditing committee functionality 
•	The internal audit function is being assessed to improve its functional efficiency 
•	The Terms of Reference were approved by the Audit Committee
•	A New Audit Value proposition to strengthen its oversight functionality and value add to the corporation will be recommended to the next Audit Committee meeting
•	Rationalization of the three audit firms, with a view of having one external audit firm 
•	Strengthening of the Internal Audit Unit
•	Appointment of the new Chief Audit Executive
•	Adopted the Annual Functionality Audit Plan
•	Adoption of the three year plan
•	Build strong capacity within the organization – compliance (value) based organization
•	Skills development within the Internal Audit
•	Improved communication
•	Institutionalisation of the monitoring and tracking system

Support to executives; training, mentoring

There is support by executive management. However, there is limited support from the executives of the internal audit process. Two reasons can be sighted. First, in the past the credibility of the Internal Audit has been affected as it was seen not to be impartial. This is one of the fundamental reasons why a new value offering for the Internal Audit is being pursued to strengthen its credibility and professionalism. In addition, the appointment of the new head will assist in this regard. Two, management tend not to implement the decision or the finding of the Internal Audit. After the report has been prepared with particular finding, its sent to the related head, who is expected to institute actions as per the findings. In many cases its either it is not happening or its procrastinated.  
 
Government Guarantee conditions particular to your Committee that have been considered addressed or will be addressed

The Committee has as a standing item a report on financial position of the SABC and the performance against the Government Guarantee.   The angle is more on the oversight and propositions on remedial actions to avoid financial risk and going concern.

Recommendations if any of the AG Report that have been considered will be considered by your Committee

Bolstering the capacity and skills of the Audit Committee. The Committee co-opted two members with relevant and related financial skills.
Improvement of the Internal Audit. The assessment of the Internal Audit is underway and a new value offer.

REPORT OF THE RISK SUBCOMMITTEE

REPORT TO THE PARLIAMENTARY PORTFOLIO COMMITTEE BY THE CHAIRPERSON OF THE RISK COMMITTEE, 
MR PETER HARRIS
ON THE ESTABLISHMENT AND FUNCTIONING 
OF THE RISK COMMITTEE OF THE SABC

Introduction and Context

In view of the importance of focusing on risk and acting on the advice of the external auditors and the independent non-executives serving on the Audit and Risk Committee, it was decided to split the Risk and Audit committee.  The Risk Committee has met three times since receiving Board approval for its formation in June 2010.

The role of the Risk Committee (King III)

The Committee has an independent role, operating as an overseer and a maker of recommendations to the Board for its consideration and final approval.

The Committee does not assume the functions of management, which remain the responsibility of the executive directors, officers and other members of senior management.

The role of the Committee is to assist the Board to ensure that:
•	The Company has implemented an effective policy and plan for risk management that will enhance the Company’s ability to achieve its strategic objectives; and

•	The disclosure regarding risk is comprehensive, timely and relevant.

The Committee must perform all the functions as is necessary to fulfill its role as stated afore and including the following:
•	Oversee the development and annual review of a policy and plan for risk management to recommend for approval to the Board.

•	Monitor implementation of the policy and plan for risk management taking place by means of risk management systems and processes.

•	Make recommendations to the Board concerning the levels of tolerance and appetite and monitoring that risks are management within the levels of tolerance and appetite as approved by the Board.

•	Oversee that the risk management plan is widely disseminated throughout the company and integrated in the day-to-day activities of the Company.

•	Ensure that risk management assessments are performed on a continuous basis.

•	Ensure that frameworks and methodologies are implement ted to increase the possibility of anticipating unpredictable risks.

Terms of Reference of the Risk Committee of the SABC

The terms of reference for the Risk Committee were the subject of detailed  discussion within the Risk Committee in its first meetings and have now been finalised and agreed.  A copy of the terms of reference of the Risk Committee is attached hereto as Annexure “A”.

The terms of reference of the Risk Committee prescribe that it shall meet five times in each financial year to consider issues relevant to its mandate.

In summary, the duties and responsibilities of the Risk Committee are as follows:

•	The committee shall be responsible to:
o	Oversee the development of a risk management strategy, the annual review of the policy and plan; to enable the Corporation to mitigate its key risks and recommend the same to the Board for approval. 

o	Oversee the implementation of the risk management strategy as well as the review of such strategy for the Corporation.

o	Regularly evaluate the status of key risks to the Corporation  
Examples of key risks to the SABC include technology risks, fraud risks, legal risks, risks posed by the new Multichannel environment, content acquisition risks and the threat posed by the competitive environment including the proliferation of channels in the new Multichannel environment, staff risks (i.e. attraction and retention of appropriately skilled people especially in light of the increasing competition for skills posed by new competitors entering the market, the impact of HIV-AIDS, training and the inability to retain skilled staff) infrastructure risks and the risks posed by reliance on a third party distribution network, inability to spend budget, risk of legislative and regulatory interference.

o	In conjunction with the Audit committee, where necessary, to review the efficacy of the  internal risk controls of the Corporation.

o	Review and recommend, if appropriate, the directors’ statements on risk management strategies in place in the annual report.

•	Specific functions of the committee shall include the duty to: 

o	Acquaint itself with its role as set out in all the Corporation’s relevant governance instruments and provide clear direction to the Board and management with regard to the development and implementation of a risk management strategy.
o	Assist in the determination of the risk appetite of the Corporation and ensure that an appropriate risk management strategy is prepared and presented to the Board for approval.

o	Consider and recommend to the Board the approval of any matter (work plan or policies) which falls within its authority and which has been submitted to it for consideration by the Group Executive committee. 

o	Access any information in possession of any staff member of the Corporation if the committee believes that such information will assist it in making a judicious recommendation of the Board on behalf of the Corporation.  In this regard, the committee may request any staff member or third party commissioned by the Corporation to appear before it for the purpose of presenting or answering any questions it may have in respect of any transaction submitted to it for consideration.

•	Wherever necessary, the Committee shall invite independent external persons having relevant skills/expertise or experience to advise the committee to interrogate and understand the implications for the Corporation of any decision recommended by it to the Board, particularly in respect of any complex matters which are likely to have significant impact on the Corporation.

•	The Committee shall together with the Company Secretary oversee the development of a structured and formal performance evaluation of the Committee’s performance to help ensure that the Committee remains focused and delivers on its mandate and that of the Corporation.

Meetings and Functioning of the Risk Committee

Three meetings of the Risk Committee have been held since its formation in June 2010, the details of which are reflected below:
•	Risk Committee Meeting on the 29th of June 2010;
•	Risk Committee Meeting on the 27th of July 2010;
•	Risk Committee Meeting on the 8th of October 2010.

The reason for the two meetings being held in June and July is that the Committee agreed, at its first meeting on the 29th of June 2010, that in view of the fact that it had been constituted in June 2010, and that the issues of risk facing the SABC were considerable, there should be two meetings in fairly quick succession.  The purpose of these meetings was to prepare a framework for the work of the Risk Committee going forward and also to address matters of urgent risk faced by the Corporation.

An enterprise-wide Risk Management Policy and Risk Management Framework was approved by the Board of the SABC in October 2008.  In addition, risk assessment workshops were conducted throughout the organisation from March 2009 to October 2009 and risks were identified by the pillar (cluster) system and management structures.  Controls were identified and evaluated for adequacy to determine the residual risk and action plans were identified to manage the residual risk.
  
It should be noted that the SABC has an approved Risk Policy and Risk Management Framework which is part of the Corporate Plan for 2010 – 2013, approved by the Minister of Communications.  The SABC uses CURA software to record, delegate and monitor risk management across the organisation.  The Risk Policy, Risk Management Framework and risk software (CURA) are formal instruments collectively used to manage risk within the entity.  Management operational Risk Committees and the Board Risk Committee monitor the effectiveness and risk management system in order to make the necessary interventions and decisions.

Since its formation in June 2010, the Risk Committee has received reports on the current function and structure of risk in the SABC from the Head of Risk, Mr Itani Tseisi, as well as the identification of the top twenty risks.  The top twenty risks are detailed in annexure B.  The identification of the primary risks facing the SABC arose from discussions with the various Divisions of the SABC and action items were identified to address the risks.  In this regard, there are monthly meetings of the Risk Managers in each division in order to ensure that the risks are constantly assessed and actions taken to address them.    Management Operational Risk Committees meet on a monthly basis with the last CURA assessment and monitoring having taken place at the end of September 2010.  

The presentation by the Head of Risk to the Risk Committee on the 27th of July 2010 identified the top ten risks as well as their consequence or impact.  The risk office is also proceeding with the process of procuring a risk management software tool that enables more efficient and effective risk management, monitoring and reporting processes.

Decisions of the Risk Committee

Review and development of comprehensive Risk Strategy and Risk Management Plan

The Risk Committee has mandated that the structure of Risk in SABC be reviewed and that a revised comprehensive Risk Strategy and Risk Management Plan be placed before the Risk Committee in early January 2011.  The Board passed a resolution that outside experts be contracted to assist the Head of Risk to develop the strategy and plan which will include a re-evaluation of the key risks to the SABC, their prioritisation and updated plans to address the identified risks.  The maximum budget allocated by the Board for this exercise is R1.5 million.  The external experts will be working with the Head of Risk to accomplish the above objective and to report to the Risk Committee.  The review and development of the Risk Strategy and the Risk Management Plan is ahead of schedule and will be completed by mid-December 2010.  Thereafter, the Risk Strategy and Plan will be placed before the Risk Committee in mid January 2011 and then delivered to the Board for comment and adoption by the end of this financial year.

Legal Risk

The Risk Committee has requested that an urgent assessment of the legal risks of the SABC be undertaken as well as an identification of which cases should be prioritised for immediate action.  The Head of Legal at the SABC, Adv. Ntsietso Mofokeng, compiled a detailed report in relation to the legal risk issues facing the Corporation, which report was presented to the Risk Committee on the 8th of October 2010.  The legal risk report analysed each matter in terms of whether:
•	The matter has become redundant, i.e., the SABC has been sued but the Plaintiff / Applicant is no longer pursuing the matter.
•	The case should be abandoned, i.e., the SABC has instituted action but in view of changed circumstances or a cost/benefit assessment, the SABC has decided to no longer pursue the matter.
•	The matter should be settled, i.e., it serves the interests of the SABC to pursue settlement rather than follow litigation;
•	Which matters are uncontested, i.e., those matters where there is no legal basis for acting in defence and immediate payment should be made.

The Risk Committee has instructed the legal department of the SABC to give strict attention to the management of the attorneys of the SABC to ensure appropriate legal performance and efficiency savings in terms of both time and cost.  Specifically, the Risk Committee has instructed the GE Legal, Advocate Mofokeng, to prepare an updated summary of the costs to date expended on the legal matters of the SABC.  

It should also be noted that the Risk Committee mandated Advocate Mofokeng to prepare a report for both the DOC as well as the Risk Committee in relation to the long outstanding PIC claim.  

In relation to the long outstanding litigation with RISA, the Risk Committee confirmed that an amount of R27 million, the amount claimed by RISA, should be placed into an escrow account while the matter of the RISA claim is referred to the Copyright Tribunal.  This recommendation will be placed before the Board of the SABC for approval.

5.4	Insurances of the Corporation

The Risk Committee has also requested a report and analysis of all risks relating to the insurances of the Corporation.  A comprehensive report was presented to the Risk Committee at its meeting on the 8th of October 2010.  Arising from this report, a number of areas were identified as requiring further investigation and analysis, including more information in relation to concerns about the current risks relating to “international content”.  In this respect, the Acting Chief Operating Officer has been requested to present the Risk Committee, at its next meeting, with a report specifying the key concerns and risks in relation to international content and its acquisition. This analysis is currently in the process of being conducted.  

5.5	Internal Audit Controls
It should be noted that Internal Audit has, at the request of the Risk Committee, been requested to assess the internal risk controls of the SABC and to report to the Risk Committee on its findings.
We have been informed by the Acting Head of Internal Audit at the SABC that this report has been completed and will be presented to the Risk Committee at its next meeting.
5.6	Information technology Risk
The Risk Committee requested from the Chief Technology Officer of the SABC, a report in relation to the information technology risks faced by the SABC, with particular emphasis on information security.  A comprehensive report was received from the Chief Technology Officer on the 8th of October 2010, which report addresses the following areas:
•	The policies, sub-policies, procedures and standards employed in relation to information security at the SABC;
•	Provision for the physical and logical security of information systems at the SABC;
•	The issue of SABC users being trained and aware of their responsibilities;
•	Management of user access and rights;
•	Monitoring of system use and compliance;
•	Basic business continuity and disaster recovery plans.

This report will need to be approved by the Board of the SABC and thereafter action will be taken in relation to implementation pertaining to the above areas. As stated in the report, “the overall rational behind the adoption and subsequent design and implementation of information security policies is based on enabling the SABC to secure its business and related information technology assets”. There is a Broadcast Continuity Plan and a Disaster Management Plan in place.  The Disaster Recovery Plan is in the process of development.

5.7	Current Structure of Risk Function in SABC
Part of the problem identified with the current management structure of the risk function in the SABC is that the Risk Managers report to their Heads of Department and not to the Head of Risk.  The Risk Committee was requested by the Head of Risk to review this reporting line so that the Risk Managers report directly to the Head of Risk and follow a dotted reporting line to the Heads of Department.  The Risk Committee agreed with the recommendation of the Head of Risk that the reporting line in the risk function in the SABC should be changed and, accordingly, this recommendation was placed before the Board of the SABC and a resolution was passed by the Board to ensure that the reporting line in relation to the risk function at SABC be changed.

5.8	SABC Subsidiaries and Dormant Companies 
The Risk Committee identified the issue of subsidiaries and dormant companies as an area of concern and potential risk for the SABC.  This includes foreign controlled entities and international companies.  In this regard, the matter was raised in the meeting of the Risk Committee of the 27th of July 2010 and the Acting CFO was requested to present a report to the Risk Committee in relation to the above companies and any risks posed by such companies for the SABC.  The report in relation to the subsidiary and dormant companies of the SABC will be presented by the Acting CFO to the Risk Committee at its next meeting.

5.9	Risks relating to the Performance Management System for Personnel at SABC
This was identified as an area of concern by the Risk Committee at its meeting on the 23rd of September 2010 when it was expressed that the revitalised Performance Management System for personnel was in place, but that compliance therewith was lacking.  It has been agreed by the Risk Committee that this area will be addressed in a detailed report to be placed before the Risk Committee.

Conclusion

In conclusion, many of the high risk issues facing the corporation have been and are in the process of being addressed through the work of the Risk Committee as well as the other sub-committees of the Board.  In addition, specific strategies and plans have been decided on by the Board in response to the urgent risk issues that have been placed before the Board and which relate to compliance with the Government Guarantee.  In relation to compliance with the Government Guarantee, it has been stated that this is one of the major risks facing the SABC and, as such, should be a standing item on the agenda of the Risk Committee and that the Acting GCEO must  provide the Risk Committee with a report in respect of the key compliance areas of the Government Guarantee at each meeting of the Risk Committee.

REPORT OF THE NEWS SUBCOMMITTEE

Introduction

News is an essential core of the services that the SABC delivers to the South African public. Radio News delivers 1255 bulletins in 13 languages a month, as well as 32 Radio News current affairs programmes broadcast on 14 stations in 13 languages.
Television delivers 18 television bulletins daily, as well as 10 weekly current affairs programmess on three channels

The Sub-Committee

The News Sub-Committee is constituted in terms of the Charter of the Board and in terms of the Public Broadcasting Act (Act 4, 1999 as amended, Clause 12 (b)).
It’s aim and purpose is to provide oversight to the SABC’s News Division to ensure that the spirit of both the Charter and the Act is complied with.
Its revised Terms of Reference (adopted 8/10/2010) enjoins the Sub-Committee to:

•	Assist the Board in setting the editorial policies of the Corporation having regard to the need to ensure the editorial integrity of news and current affairs programming presented by the Corporation
•	To ensure the SABC produces accessible, accurate, compelling, professional and authoritative news, current affairs and other programming that is fair and balanced
•	To defend the editorial independence of the News Division and to encourage the pursuit of excellence and the highest professional standards

Having regard to the Broadcasting Act, the Charter of the Corporation, and the Editorial Policies of the SABC, the committee also aims to :

•	Ensure that news and current affairs is broadcast  in all official languages
•	Ensure that languages are treated equitably in line with the Constitution and the Broadcasting Act
•	“Offer a plurality of views and a variety of news, information and analysis from a South African point of view” (Act 4, 1999, clause 4 (c))
•	Ensures compliance with the SABC’s Editorial Policies
•	Ensure “the rights of all South Africans to receive and impart information and ideas” (8 (d))
•	Ensure “a high standard of accuracy, fairness and impartiality in news and programmes that deal with matters of public interest” (8 (f)) in the News

In particular, the News Sub-Committee strives to ensure that, as spelt out in the Corporation’s Editorial Policies, that the News Division: 
•	Provides news, current affairs and analysis that is “substantial.....authentic and meaningful to ordinary, enquiring South Africans so that they can form their own opinion”.
•	Provides news that is contextualized and reported honestly
•	Is not influence by “advertising, commercial, political or personal considerations” and that the SABC news divisions remain independent and not be “a mouthpiece of the government of the day”.
•	Is guided by professional news merit and judgement when making editorial decisions
•	Does not allow its staff to compromise their integrity in any way by accepting gifts and favours that are not disclosed
•	Fosters open dialogue with viewers and listeners
•	Recounts the story of South Africa in “all its variety and complexity”.
•	Reflect a “truly national broadcaster...providing a showcase for all South Africa’s provinces and people.”
Members and meetings

The News Sub-Committee has the following members;
•	Felleng Sekha (chair)
•	Suzanne Vos
•	Ambassador Barbara Masekela
•	David Niddrie
•	Desmond Golding
•	Pippa Green
It has met three times during the course of 2010, not including postponements and cancellations of meetings.
It met on 18 February, 22 April and 8 October.
On October 19 it held an additional meeting in conjunction with the Technology, PCS/PBS, Finance sub-committees to consider an urgent proposal from the Technology Division that affects all aspects of the business.
Four planned meetings were postponed or cancelled. These include
•	12 February (due to absence of the then chair)
•	May: The Chair of the Board cancelled all Board meetings and sub-committee meetings planned in the latter part of May due to the dispute over the process of appointing the Head of News
•	3 August:  The Acting Head of News did not avail himself for the meeting.
•	27 September: postponed due to unavailability of the Chair of the Sub-Committee.
On the 20 October, 2010, the President of the country informed the Chair of the Portfolio Committee on Communications that four members of the Board who had tendered their resignations would be relieved from their duties immediately. These included three members of the Sub-Committee: the Chair, Ms Sekha and members, Ambassador Masekela and Mr Niddrie.

Challenges facing the News Division and the Committee

News has been a major challenge for the Corporation. 
In the past five years, it has had to deal with low public perceptions about its credibility, its editorial independence and its quality.

Audience
Partly as a result of this, audience ratings on news shows on both Radio and TV have fallen sharply. In the past year alone, Radio News Current Affairs programs have lost a total of about 1,2 million listeners. This is in line with a general decline since 2006. Most (although not all) of the shows have declined in audience. All the morning shows (prime listening time) have declined in audience with the exception of Ikwekwezi and Umhlobo we Nene. For instance, Ukhozi has dropped by  18,7%, Lesedi by 9%, SAFM (6am-9am slot) by 21,2% and RSG by 6% from mid 2009 to mid 2010.
Most TV News shows have also declined in Audience Share:  for instance the 7pm bulletin on SABC 3 from 10,4% to 8, 4%; Siswati/Ndebele News from 33,8% to 28,6%  and Zulu News from 42,9% to 40%.  
Afrikaans News has remained steady and News@1 has increased from 10,3% to 12,9%.
TV News current affairs shows have also declined.  Ten out 13 have lost Audience Share.

Costs
The other major challenge is the costs in the News Division. Overall, News costs grew by more than 80% between 2005/6 and 2008/9 but fell by 21% in 2009/10. However costs are still high, particularly employee compensation costs. (In 2010, they are estimated to be more than R448 million with a headcount of 1014 employees in the News Division).

Appointment of the Head of News
Another major challenge for the News Sub-Committee was the process around the appointment of the Head of News. A proposal from two members of the News Sub-Committee to the Chair of the Governance and Remuneration Committee and of the Board to consider a restructuring of News as part of the Turnaround Strategy was not considered, and interviews for the Head of News position went ahead assuming the extant structure.
Two members of the News Sub-Committee were nominated to sit on the interviewing panel for the positions of the Head of News. Events that unfolded are a matter of public record: a Head was appointed without the authority of the Board. On 6 September this appointment was confirmed by the Board with five non-Executive members voting for, two voting against and one abstention. Four members of the Board were absent when the voting took place.
The uncertainty created around this process created challenges for the Sub-Committee in that it was not able to properly engage the news management on its strategies for a turnaround plan, nor on crucial upcoming news events such as the local government elections in sufficient depth.

Key matters considered by the Committee

However, notwithstanding the last challenge outlined above, the Committee has endeavoured to create a working relationship with the News management in an effort to work together to address the pressing problems in the News Division.

SA News International
The Board decided in January to close down SA News International. The sub-committee followed up this decision requesting specific costs of running the remaining four bureaux. The News Division reported to the Sub-Committee on 22 April that it had been “scaled down” due to the unavailability of a suitable platform. Half the original staff has been redeployed to other areas of the operation. The number of freelancers has been scaled down from 404 to 177 due to the minimization of SANI.

Local Government Elections
The initial plan for the coverage of Local Government elections was presented to the Sub-Committee at its meeting of 22 April. The News Division reported that it was in discussions with the IEC to update its existing contract in terms of the SABC’s requirements.
The News Division was scheduled to hold a workshop in June to map out a detailed Election Coverage Plan. The Division is expected to report to the Sub-Committee on this at its next meeting.

Revised Terms of Reference
The Committee also approved a revised Terms of Reference document, updated from one that existed from the Funde Board.

KPAs for Head of News
The News sub-committee has also, before it, a revised plan of KPAs for the Head of News. This could not be approved on 8 October due to time constraints, and is still to be brought before the Committee.

Turnaround Strategy
On 8 October, the Head of News, Mr Phil Molefe, presented a strategy to the Sub-Committee to improve content, appearance on-air, to reduce technical faults, and thus to turn around declining audience share.
The News sub-committee is also considering a more in-depth plan drawn up by the Head of News to rejuvenate both the look and quality of news and current affairs broadcasts on TV and Radio. This plan includes:
•	Changes in the on-air look of TV News
•	A marketing plan
•	More regional and local news on the regional radio stations
•	Training plans for journalists to increase professionalism and quality
•	Broadcast plans for Special Projects of National Interest
•	Reduction of costs beginning with a reduction of freelancers.
•	A plan for a 24-hour news channel.
The final draft of the plan is being worked on by the News Division management, with input from News sub-committee members, and will be brought before the next News Sub-Committee meeting.

Other decisions taken by the News Sub-Committee include:
•	To address the issue of the disappearance of valuable archive material and ensure that criminal charges are pursued if necessary
•	To request a detailed costs of international travel in the News Division, with a breakdown of personnel, to be presented before the Sub-Committee
•	To request the Head of News to provide a detailed report on the process of employment of  AM Live presenter Mr C Molebatsi and audience research on focus groups as a result of bad anecdotal reaction to the style of the new SAFM presenter.
•	To request from the Head of News a Return on Investment estimation from international Bureaux which will give the Board clear idea of the costs versus the value news stories. 

Key Objectives for 2011

By March 2011, the News Sub-Committee aims to have in place:

A complete and approved turnaround strategy for News, including plans for:
•	Cost containment
•	Reduction of freelancers
•	Measurable improvement in quality of news
•	An improvement in audience measures
•	Enhanced credibility among the general public
•	Consistent roll-out of a local-government elections plan
•	An operational plan for a 24-hour news channel
•	An ability to attract professional talent back into the Corporation
•	KPAs for every news manager and news staffer

Support to Executives
•	The News sub-committee expressed its support for Mr Molefe at its meeting on 8 October, stressing that the dispute over his appointment was over the process, and was not personal.
•	A member of the Sub-Committee is working with the News Division management to produce a comprehensive turnaround strategy for news, which will be presented to the Sub-Committee at its next meeting.
•	The Sub-Committee will consider KPAs for the News Division and its head and will provide oversight and guidance in rolling these out to all managers and staffers in the Division.
Government Guarantee conditions and AG’s Report

The major input from the Sub-Committee to meet the Government Guarantee conditions will be to focus on cost containment, to oversee high-item running costs such as international travel and  operational costs of the bureaux, and to work with the Division to restore audiences in a bid to increase a share of advertising revenue on the news programs.
The Sub-Committee is also pursuing inquiries into the disappearance of archival material. Although not specifically mentioned in the AG’s report, this material needs to be accounted for not only to be complaint with good governance practises but also to safeguard the valuable national legacy that the SABC holds in trust.

Pippa Green
Member: News Sub-Committee
2/11/2010

A.2.	Annexure B – Detailed Executive Management Salaries 2006 - 2010