The SABC has again recorded a loss of over R400 million in revenue, according to CEO, James Aguma.
Aguma announced this at a briefing of the SABC’s 2015/16 financial results.
“We realised a net loss of R411 million,” he said. “I know some of you were prepared for R1 billion [referring to estimates made by the DA]…I’m sorry I let you down, it’s only R411 [million].”
This year’s loss is an increase from the amount the public broadcaster lost in 2015.
During the 2014/15 financial year, the SABC saw a loss of R401 million, having recorded revenue of R7.44 billion rand from a budget of around R8 billion.
According to Aguma, the SABC’s net asset exceeds its liabilities by R2.7 billion.
“So the question of us being insolvent is out because our assets exceed the liabilities,” he said.
The SABC’s cash balance for the financial year was R881 million, lower than last year’s balance, which was just over R1 billion.
Loss “sustainable”, says CEO
According to Aguma, the R411 million loss is sustainable.
“If you look at it…we still have cash, we have a net asset position…there’s no creditor who has not been paid, there’s no employee who has not been paid,” he said.
How was the money lost?
Aguma stated numerous reasons for the recorded loss.
“I made sure that when we are talking about these slides [results presentation], we keep a focus on our mandate and we told you that we have provincial presence, we have to report in 11 official languages, we to even report on developmental sports,” he explained.
Shockingly enough, Aguma added that whether or not these SABC’s public mandate operations gives them revenue, “it is not an issue”.
“We also conducted elections, those are public mandate requirements for which you don’t get revenue. The peculiarity of the SABC is such that, you have a job to do that is imposed on you by the state,” he went on.
“The question is, is there revenue? That’s for the SABC to resolve and we as management, even when there is no revenue, we still broadcast. Technically, we would call that a deficit,” Aguma said.
- Expenditure incurred on unforeseen events of national interest, which don’t have any commercial value, was top among the reasons for the loss.
“There are certain events that we can’t avoid, of national interest because we are a public broadcaster. So we would go and broadcast events, but when we come back to the advertisers, they’d say there is no revenue, but the public is interested in it,” Aguma said.
- Another contributing factor was the broadcast of sports and other events which yielded negative returns.
This was from important events that were, according to Aguma, imposed on the SABC by the state or Icasa.
“Economically, the return on investment was negative, but there is a social return on investment,” he explained.
- Government was also to blame for contributing less than 3% (2.5%) in revenue to the SABC.
“It used to be about over R200 million, this financial year we are sitting with R167 million out of an R8 billion budget,” Aguma said.
- Paying out post-retirement service costs was the fourth listed factor.
“This is really a technicality,” Aguma said, “we as the SABC, undertook many years ago, that we shall carry the costs for staff members. Meaning those who worked in the 70s, 80s and so on, you retire gracefully with the knowledge that the SABC is going to carry the costs of your post-retirement benefits.”
- Fifth, were the tax adjustments arising from the corrections of previous financials
“[In] 2013 we had a disclaimer in the financials. We put in an action plan to deal with the audit matters. As a result of dealing with the audit matters, we were correcting other financials in the balance sheet and so, there were certain adjustments that had to be passed in the financial statements,” Aguma explained.
“We have been trying to correct mistakes in financials and as a result, there was the issue of tax adjustments arising from prior period errors,” he added.
As with last year’s results, global economic slowdown , increased competition in the broadcast industry, clients cutting TV and radio advertising budgets, were also put down as contributing factors. The SABC spent R876 million covering news, R573 million on sports rights and R187 million on production costs
“We are not complaining as the SABC…I’m just saying, you have to understand these dimensions. We are very grateful that we can see the socio-economic return,” Aguma said.