1 Presentation to the Portfolio Committee on Communications

2 Table of Contents Overview Mandate Vision Mission and ValuesLegislative and Regulatory Framework Highlights from 11 Years of the MDDA 2014/2015 Annual Report Programme Performance Human Resources Governance, Audit and Financial Analysis

3 Mandate

4 Vision, Mission and Values

5 Regulatory & Legislative Framework

6 Highlights from 11 years of MDDAThe MDDA is the largest contributor to enabling access to, control of and management of the sector by historically disadvantaged individuals. Since its inception: Some 135 community radio stations funded by the MDDA. Some 53 community print projects and 93 small commercial print projects funded by the MDDA. Investment in purchase of world class radio equipment, enabling quality productions. Four TV stations supported by the MDDA. Signal distribution costs for community broadcasting discounted or reduced. More than individuals in community media trained and skilled. More than 230 bursaries awarded for media studies. Eight research projects aimed at providing insight into media in South Africa, Discounts from printers negotiated for Community and Small Commercial newspapers and magazines. Easy to use toolkits published in specific skills areas, such as Marketing and Advertising and Corporate Governance.

7 2014/2015 Annual Report

8 Year Overview 2014/2015 financial year was a period of significant transition for the MDDA: Changes in leadership across Executive Authority and Executive Management levels A number of Board members came to the end of their terms The Agency adapted and aligned its key priorities to the mandate of the new Department of Communications The Agency achieved 56% of its performance indicators; that is 84 of 147 performance indicators achieved, a significant outcome given the challenging environment of 2014/2015 The launch of the DoC’s digital migration provided an opportunity for MDDA to start positioning itself as a key player in this field.

9 Year Overview MDDA received unqualified audit report, an unbroken record since its inception. Spending for year under review was well within the regulated percentage of allocations. Underspending mainly attributable to: Few projects that were approved by the Board due to the Board not having a full quorum of members in last two meetings. High staff-turnover. MDDA received funding from the Government through the DoC, as well as from broadcast service licensees. MDDA received no funding from the print sector. As this sector is an important partner towards achieving media development and diversity in South Africa, the Agency will continue to engage it.

10 2014/15 Project AchievementsCommunity Media 3 community radio stations supported for digital broadcast equipment through grant funding. 2 community print projects supported. 1 community radio station with on-line presence (audio streaming) and 2 newspapers with on-line presence (electronic community newspapers). Small Commercial Media 3 newspapers funded. Research, Training and Development Some 400 Beneficiaries trained on Content Development, Financial Management and Governance. Nine content development seminars held covering all provinces on implications of Digital Terrestrial television (DTT) on Local Content and to develop a strategy for broadcast media. Print media also included in the consultation process. Maintained a database of Trainers / Mentors for the Projects. Media Literacy & Culture of Reading Summit in partnership with Department of Basic Education. Monitoring and Evaluation (M&E) Revised M&E Framework and M&E template. Conducted monitoring over 93 projects (60 site visits and 33 desktop).

11 2014/2015 Challenges Board unable to form a quorum in last two meetings of the year, halting onboarding of new projects. High staff turnover. Executive leadership positions appointed in acting capacity. Inadequate budget allocation due to cessation of print media funding.

12 2014/2015 Programme PROGRAMME PURPOSE STRATEGIC OBJECTIVEPROGRAMME PURPOSE STRATEGIC OBJECTIVE APPROPRIATION 2014/2015 R’000 PROGRAMME A GRANT FUNDING AND SUPPORT 40 965 Sub Programme A1 Community Media To provide technical, non- financial and financial support to diverse media platforms owned and controlled by communities Ownership, control and access to information and content production by communities 29 995 Sub Programme A2 Small Commercial Media To provide technical, non- financial and financial support to diverse media platforms owned and controlled by independent publishers Enhancement of ownership and control by independent media entrepreneurs 1 917 Sub Programme A3 Research, Training and Development To create and enhance a body of knowledge regarding the media landscape and build capacity for a diverse media industry A vibrant, innovative and people centred media 1 924 Sub Programme A4 Monitoring and Evaluation To assess grant agreement compliance and impact of MDDA funded projects The strengthening and promotion of a vibrant, innovative and people centred and diversified media 310

13 2015/2015 Programme cont. PROGRAMME PURPOSE STRATEGIC OBJECTIVEPROGRAMME PURPOSE STRATEGIC OBJECTIVE APPROPRIATION 2014/2015 R’000 PROGRAMME B LEGAL AND CONTRACTS MANAGEMENT To provide legal support and advice, and contract management service to the Agency Legally sound contract management and litigation free Agency `61 PROGRAMME C HR AND CORPORATE AFFAIRS To develop MDDA human capital so as to deliver products and services that delight stakeholders Creation of an environment and capabilities that deliver MDDA value products and services 1 799 PROGRAMME D RISK MANAGEMENT AND AUDIT To limit the negative impact of organizational and environmental risks Enhanced governance and accountability standards of the MDDA 1 205

14 2014/2015 Programme cont. PROGRAMME PURPOSE STRATEGIC OBJECTIVEPROGRAMME PURPOSE STRATEGIC OBJECTIVE APPROPRIATION 2014/2015 R’000 PROGRAMME E FINANCIAL MANAGEMENT AND AUXILIARY SERVICES 7 111 Sub Programme E1 Finance and Supply Chain Management To provide the Agency with overall financial and supply chain management, and guide management in complying with legislative requirements, budget planning, financial management and administration To strengthen, grow and protect the MDDA funding base Sub Programme E2 Information Technology To strengthen the Media Development and Diversity Agency’s Information Management System To standardise the basic IT infrastructure and to ensure that it complies with industry standards 527 PROGRAMME F COMMUNICATIONS CEO’S OFFICE: COMMUNICATIONS AND STAKEHOLDER MANAGEMENT To enhance the MDDA brand as a leader in media development and diversity A well known, valued and reputable brand 620

15 Programme Performance

16 Summary of Projects Supported for 2014/2015Sector No. of Projects Total Rand Value Approved R’000s % Approved Regulations Community Media 5 60% Community Radio 3 Community Television Community Print 2 Provincial Hubs Small Commercial Media - Print 25% Research, Training and Development 15% Sub-Total 100% DoC – Programme Productions DoC Total

17 Overview of Projects Approved – 2014/15Community radio: Name of Organisation Type of support Province District Broadcast languages Target Audience Ownership Kumani FM Digital Broadcast infrastructure (on-air & production studio) equipment, contribution towards salaries, transmission costs , audio steaming and operational costs. EC Buffalo City Metro 60% isiXhosa 30% English 10% Afrikaans Youth 100% owned by the community through 5 member Board of Governance ICORA FM KZN uThungulu District 100% isiZulu Family 100% owned by the community through a 5 member Board of Governance Sekhukhune FM Limpopo Sekhukhune District 92% Sepedi 3% isiNdebele 5% English 100% owned by the community through a 9 member Board of Governance Kumkani CR – Buffalo City Metropolitan Municipality – Eastern Cape – 60% isiXhosa, 30% English and 10% Afrikaans, the licensed broadcast coverage area is Buffalo City Metropolitan area in the Eastern Cape, target audience is youth – listenership uThungulu District Municipality, KwaZulu-Natal, 100% isiZulu, target audience is family and broadcast coverage area is Babanango, Queen, Esikhawini & Richards Bay in KZN, the listenership is Sekhukhune CR,

18 Overview of Projects Approved – 2014/15 – cont.Community print: Name of Organisation Type of support Province District Language of publication Target Audience Ownership Mamre News Personnel costs, capital expenses, printing & distribution costs, newspaper development (electronic newspaper) & training. Western Cape City of Cape Town Setswana isiZulu English Family 100% owned by the community through a 5 member Board of Governance. Ledig Sun Printing & distribution costs, electronic newspaper development, office equipment and salaries. North West Bojanala Platinum IsiXhosa Afrikaans 100% owned by the community through a 5 member Board of Governance .

19 Overview of Projects Approved – 2014/15 – cont.Small commercial media: Name of Organisation Type of support Province District Language of publication Target Audience Ownership North Western Times (Kuruman Chronicle) Printing, distribution, operational costs & stipends Northern Cape John Taole Gaetsewe Setswana English Entire community Close Corporation Langa Media (Bushbuck- ridge News) Mpumalanga Ehlanzeni District Tshitsonga Sepulane Close to Home (Phetoho News) Free State Thabo Mofutsanyane Sesotho

20 Consultative Seminar / Focus GroupTraining 2014/2015 Type No. of delegates World Press Freedom Day Dialogue 2014 Seminar 37 Learning Forum 2014  Training 99 Content Development Seminars · KwaZulu-Natal Province · Mpumalanga Province · Eastern Cape Province · North West Province · Gauteng Province · Northern Cape Province · Free State Province · Limpopo Province · Western Cape Province Consultative Seminar / Focus Group 34 22 40 29 28 13 25 Media Kidiocracy Exchange Programme Media Freedom Day 2014 Roundtable Roundtables 45 Grantee Compliance Orientation Workshop Training 47

21 Projects Monitored Nationally 2014/2015

22 Strategic and Business Plan 2014/19

23 Human Resources

24 Number of posts filled additional to the AgencyVacancy Rate at 31 March 2015 Programme Number of posts Number of posts filled Vacancy rate Number of posts filled additional to the Agency Lower skilled (level 5) 4 3 1 Skilled (levels 9 – 13) - Highly skilled production (levels 14 – 15) 13 8 5 Highly skilled supervision (levels 16 – 17) 11 6 Senior management (levels 19 – 21) Total 32 17 15

25 Vacant positions at 31 March 2015Chief Executive Officer Chief Financial Officer Chief Operations Officer Programme Director Human Resource Manager Communications Manager Supply Chain Management Specialist Legal & Contracts Manager Executive Secretary to the CEO Secretary to the COO Company Secretary Project Officer (Research Training & Development) Project Officer – Community Media Financial Disbursement Officer Risk Management Officer

26 Employment Equity at 31 March 2015Levels Males Females Total A C I W Executive/Senior Manager Manager 3 6 Professional/Specialist 2 8 Administrative/Support 5 14 19

27 Governance, Audit and Financial Analysis

28 Governance In carrying out its mandate, the MDDA has remained committed to good governance. The Agency has over the past 11 years of its existence attained an unqualified audit opinion from the Auditor General – South Africa. The 2014/15 financial year marks another year of an unqualified audit. The Board consists of nine members; six members are appointed on the recommendation of Parliament and three members are appointed by the President, taking into consideration the funding of the Agency, of whom one is from the commercial print media and another one from the commercial broadcast media. The Board held 5 meetings during the financial year, but did not comprise a quorum in the last two Board meetings due to Board members terms expiring. In accordance with the Audit and Risk Committee Charter, the audit committee held four meetings during 2014/2015.

29 Audit Outcomes 2014/15

30 Audit Movement Details 2014/15 2013/14 MovementAudit opinion (Financial) Unqualified Regressed Findings on predetermined objectives (PDOs) Unchanged Findings on compliance with laws and regulations Yes No

31 Audit Report Highlights 2014/15Findings Remedial Action/Status 1. Restatement of corresponding figures – Employee Cost & Grant Cost Employee costs incorrectly classified as grant costs Corresponding figures for employee cost (of the team responsible for community and small commercial media projects) for 31 March 2014 have been restated as a result of an error discovered during 31 March 2015. The employee cost has been adjusted to reflect all the cost, particularly those of the team responsible for the projects. This adjustment will be carried forward into the ensuing financial years. 2. Property, Plant and Equipment Zero value assets still in use – Reassessment of useful lives The zero value assets that are in use must be replaced. The zero valued assets will accordingly be disposed off and replaced. To ensure that this finding does not recur the MDDA has reassessed the useful life for computer equipment and furniture and fittings upwards. Computer Equipment – 6 years (from 3 years) Furniture and Fittings – 8 years (from 5 years)

32 Audit Report Highlights 2014/15Findings Remedial Action/Status 1. Non-compliance with laws and regulations Annual Financial Statements to be prepared in terms of the PFMA Quarterly reports were not submitted to the Department of Communication timeously as required by Treasury Regulation The AFS were adjusted accordingly in order to meet the requirement of the PFMA and GRAP. Reports are submitted to the Department of Communication and discussed during the Minister’s Bilateral Meetings with the Board and the executive management.

33 Key Root Cause 2014/15 Transversal root causes No Root cause Yes/NoMovement Comment on the status of the root cause Action Plan/Status 01  Instability or vacancies in key positions Yes There was a 54% vacancy rate at MDDA during the year under audit and all the key positions were vacant impacting on the running of the organisation. The CEO and CFO positions were vacant during the year under review. The MDDA vacancies have been filled. This will enable the Agency to fill all staff vacancies

34 Commitments by ManagementVacancies in key management personnel will be filled before the end of quarter three for the financial year. Compliance report will be reviewed by the audit committee on a quarterly basis . Interim financial statements prepared by management will be reviewed by internal audit to ensure compliance with GRAP. Key strategic positions will be filled on or before the end of the third quarter.

35 Financial Statements 31 March 2015

36 Annual Budget vs Revenue 2014/15DETAILS PY: 201 3/14 2014/15 VARIANCE REASON Audited R’000 Budget REVENUE Transfer from DOC 20 790 21 815 - Print and Broadcast Income 35 804 29 353 32 213 2 860 Increased broadcast funding contributions Interest 4 103 6 527 4 624 (1 903) The interest income is lower due to economic conditions and varying period of investing TOTAL REVENUE 60 697 57 695 58 652 (957) Insert the issue of the investment policy to be approved so that we are able to demonstrate a plan to reinvest in viable schemes

37 Revenue Analysis R21.8m was received as a grant for year ended 31 March 2015 as compared to R20.7m received in previous financial year. This transfer was used to fund projects and administration of the Agency. R32m was received from broadcast contributions compared to R35.8 m in previous financial year. Decrease is due to non-renewal of print funding agreement by PDMSA. Interest income increased slightly to R4.6m from R4.1m in prior year. Overall income received for year ended 31 March 2015 decreased by 3% compared to prior year (R58.6m as compared to R60.6m received in previous financial year). Broadcast funding continued being largest contributor by 55%.

38 Annual Budget vs Expenditure 2014/15DETAILS PY: 201 3/14 2014/15 VARIANCE REASON Audited R’000 Budget EXPENDITURE Grant Costs (Community Media, Small Commercial Media, Monitoring and Evaluation, Research, Training and Development) 36 909 34 781 36 416 (1 635) Slight increase in the number of grantees complying with funding agreement Administrative Cost 8 474 7 601 7 769 (168) Underspending is attributable to high staff turnover Employee Cost 12 029 15 128 11 523 3 605 Depreciation and Amortisation 211 185 329 (144) Useful life assessed Finance Cost 34 (34) TOTAL EXPENSES 57 623 57 695 56 071 1 624

39 Expenditure Analysis For year ended 31 March 2015, the Agency disbursed R36m to grantees who complied with the funding aid agreement. Spending on administration and employee cost decreased to R19.6m compared to R20.7m in previous financial year. The 5% decrease is mainly attributable to high staff turnover. Overall expenditure for year ended 31 March 2015 decreased to R56m as compared to R57.6m in previous financial year.

40 Statement of Financial PositionCash and Cash Equivalents: The cash on hand reflects huge amounts of committed funds, as the Agency releases the funds in tranches. The cash and cash equivalent increased by 2.4 per cent compared to the prior year. These reserves will be used to service commitments to the value of R43 million and liabilities amounting to R8 million. The MDDA will focus on implementation of the revised grant funding strategy Commitments Commitments represent the project funds approved for specific projects for which contracts have been entered into which await the disbursement. Unutilised project funds are held on a call and other short term investments accounts.  Item Actual – Financial Year March 2015 R’000 Actual – Prior Year March 2014 Cash and Cash Equivalents 78 340 76 498  Item Commitments March 2015 R’000 Commitments PY March 2014 Closing Balance of Commitments 43 734 70 321

41 Use of Consultants Project Section AmountInternal Audit Co-sourcing Services Internal Audit Recruitment Services Human Resource Management Human Resource Services Legal Services Legal Research Services Research Grand Total

42 Irregular, Fruitless and Wasteful ExpenditureIrregular Expenditure For the year under review the MDDA did not incur irregular expenditure. The internal controls in supply chain management were enhanced and compliance was monitored regularly. Fruitless and Wasteful Expenditure The Agency incurred R on interest on CCMA award in favour of an employee in terms of Labour Relations Act. The full amount was considered irrecoverable and therefore written off.

43 Contingent Liabilities and LitigationsThere was no contingent liability at the end of the financial year. Litigations At the end of the financial year there was no ligation against the MDDA.

44 Thank You