Annual and Sustainability Reportfor the year ended 31 March 2009

Annual Report for the year ended 31 March 2009 Sustainability Report Our Stakeholders

Lettter from the chairman1. Corporate administration. Sentech group business activities3. Corporate social responsibility4. Financial and economic information

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ContentsAbout Sentech 4 - 5

Board of Directors 6 - 7

Chairperson’s Report 8 - 11

Chief Executive Officer’s Report 12 - 16

Sustainability Report 17 - 57

Financial Review 58 - 65

Corporate Governance 66 - 72

Risk Management and Internal Audit 73 - 74

Annual Financial Statements 76 - 137

Glossary 138 - 139

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Sentech is a State-owned, fully commercial national enterprise providing broadcasting signal distribution and telecommunications services.

During the past few years, Sentech has reinvented itself, transforming from the technical and broadcasting arm of the South African Broadcasting Corporation (SABC) into a leader in converging

communication technologies.Sentech connects its stakeholders to their world and connects the world to them through a wide range of communication solutions. It provides the sounds of radio and the pictures of television, and offers internet connectivity from anywhere, connecting customers to those overseas and providing virtual private networks for businesses. The Company’s plan is to

provide communication solutions such as voice, data and video on one integrated network.

Whilst its core business remains Broadcasting Signal Distribution, the broadband business is envisaged as a major element of the product mix in future.

About Sentech

About Us

1. About Sentech. Board of Directors3. Chairperson’s Report4. Chief Executive Officer’s Report5. Sustainability Report6. Financial Review7. Corporate Governance8. Risk Management and Internal Audit9. Annual Financial Statements

Annual Report for the year ended 31 March 2009About Sentech

5

Vision

Purpose

Sentech will be a leader in providing broadband communications.

Sentech is a broadband network business accommodating narrowband functionality on a common platform, supplying communication solutions and services to wholesale customers in chosen markets in South Africa and on the rest of the continent.

Values• Integrity, honesty and fairness in dealings with all stakeholders;• Quality customer service is the cornerstone of the Company’s success and every customer contact should be a pleasant experience;

and• Opportunities for Sentech people to develop to their fullest potential by ensuring quality leadership, rewarding excellent performance

and encouraging innovation.

About Us

1. About Sentech. Board of Directors3. Chairperson’s Report4. Chief Executive Officer’s Report5. Sustainability Report6. Financial Review7. Corporate Governance8. Risk Management and Internal Audit9. Annual Financial Statements

Annual Report for the year ended 31 March 2009About Sentech (CONTINUED)

Annual Report for the year ended 31 March 20096

Dr Sebiletso Mokone-MatabaneChief Executive Officer

Dr Mokone-Matabane holds a PhD in educational administration and degrees in television, radio and political science. She has extensive experience in broadcasting, film and telecommunications sectors gained in the USA and South Africa.

Ms Beverley NgwenyaChief Operations Officer

Ms Ngwenya holds a BSc in electrical engineering. She has extensive experience in the telecommunications sector gained from South Africa’s leading ICT companies.

Ms Nandi SihlaliNon-Executive Director

Ms Sihlali holds a BSc in electrical engineering (light current) and is a member of the South African Institute of Electrical Engineers. She has extensive experience in business management and electricial engineering. She also has experience in the telecommunications sector.

Mr Mohammed Siddique CassimChief Financial Officer

Mr Cassim is a chartered accountant, with an electricity pricing certificate and a certificate in regulation and strategy of utilities. He has extensive experience in finance and corporate governance having participated in the drafting of both King II and III reports.

Mr Colin HicklingChairperson

Mr Hickling is the Chairperson of the Public Trustees and Trust Corporation. He has extensive experience in and knowledge of the broadcasting sector having served as the deputy chairperson of the SABC and being on the Sentech Board since 1995.

Board of Directors

1. About Sentech. Board of Directors3. Chairperson’s Report4. Chief Executive Officer’s Report5. Sustainability Report6. Financial Review7. Corporate Governance8. Risk Management and Internal Audit9. Annual Financial Statements

Annual Report for the year ended 31 March 20097

Dr Len KonarNon-Executive Director

Dr Konar is a chartered accountant with a BCom and postgraduate diploma in accounting, a masters of accounting sciences degree, a certificate in tax law as well as a doctorate in commerce (accounting). He has extensive experience in accounting and auditing, risk management, internal auditing and corporate governance. He also participated in the drafting of King II and III.

Mr Thabo LeeuwNon-Executive Director

Mr Leeuw holds an honours bachelor of accounting sciences degree and a management advancement qualification. He has extensive experience in corporate finance.

Adv Nonkumbulo TshombeNon-Executive Director

Adv. Tshombe is an admitted advocate of the High Court of South Africa, with an LLB degree and a higher diploma in taxation. She has extensive legal experience, having paractised as an advocate at the Pretoria Bar.

Dr Yvonne MuthienNon-Executive Director (New Appointment)

Dr Muthien holds a B.A. (Hons) , an M.A. and a D. Phil. She has extensive experience in the ICT sector having worked for one of South Africa’s leading telecommunications companies and served on the SABC Board. She also has extensive experience in strategic management, marketing and corporate communications gained from leading companies both locally and internationally.

Mr Tau MashigoNon-Executive Director (New Appointment)

Mr Mashigo holds a Bachelor of Business Administration degree and several certificates in the fields of Information Technology (IT), business leadership and strategy development. He has extensive experience in the private and public sector, locally and internationally in the implementation of IT enabled business solutions and the management of the respective operational environments.

Board of Directors (CONTINUED)

1. About Sentech. Board of Directors3. Chairperson’s Report4. Chief Executive Officer’s Report5. Sustainability Report6. Financial Review7. Corporate Governance8. Risk Management and Internal Audit9. Annual Financial Statements

Annual Report for the year ended 31 March 20098

The year ahead will no doubt be dominated by our ongoing preparations for the 2010 FIFA World Cup. Sentech has been mandated to provide the backup satellite infrastructure as part of the Government Telecommunications Guarantees. At the time of writing Sentech had successfully provided and operated the satellite infrastructure at four stadia hosting the 2009 FIFA Confederations Cup for transmission of the soccer matches both locally and internationally.

Our satelite infrastructure was also used to provide the international feed to FIFA on a commercial basis.

This event has again showcased Sentech’s position as a world class broadcast signal distributor. We look forward to a successful transmission of the 2010 FIFA World Cup.

One of our key priorities and responsibilities is to maximise on the performance of our considerable sunk investment in Broadcasting Signal Distribution.

In this regard, it is worth noting that the South African Broadcasting Corporation (SABC), accounts for 54% of our revenue and we therefore continue to monitor developments at the public broadcaster with great interest. The SABC remains a valued partner in our quest to ensure universal access to television and radio signals, a critical component of the information society we want to build.

The successful “switch-on” of the Digital Terrestrial Television (DTT) network in October 2008 placed Sentech in a strong technical position to meet the analogue swich-off target date of 1 November 2011.

Whilst we welcomed the announcement in the 2009 Budget Speech of a three-year funding allocation of R480 million towards the capital cost of the DTT network, and a further R330 million to cover the operating costs of the Dual Illumination period, there remains a capital expenditure shortfall (including VAT) of R252 million and a further R734 million to cover the operating costs of the Dual Illumination period.

The Minister of Communications in his address at the launch of the Digital Dzonga in July 2009 confirmed that the switch-off date remains “non-negotiable” and urged all stakeholders to work together to ensure that the deadline is met.

Sentech is confident that the analogue switch-off date could be met with the timeous allocation and payment of the capital expenditure shortfall, finalisation of the Spectrum Plan and the implemenation of the Digital Migration Policy Regulations (published in June 2009). It is then imperative that the next version of the Digital Terrestrial Television Readiness Report emphasises the Sentech requirements, which are key to achieve the analogue switch-off date.

It was most encouraging to hear our new President in his State of the Nation address reaffirm Government’s commitment to ensuring “that the cost of telecommunications are reduced through the projects underway to expand Broadband capacity. We have to ensure that we do not leave rural areas behind in

Sentech … successfully provided and operated the

satellite infrastructure at four stadia hosting the 2009 FIFA

Confederations Cup...‘

’

Chairperson’s Report

Chairperson’s Report

1. About Sentech. Board of Directors3. Chairperson’s Report4. Chief Executive Officer’s Report5. Sustainability Report6. Financial Review7. Corporate Governance8. Risk Management and Internal Audit9. Annual Financial Statements

Annual Report for the year ended 31 March 20099

these exciting developments.”

President Zuma’s passion for rural development speaks directly to the mandate of Sentech to construct and make wireless Broadband infrastructure available on behalf of the State with the primary objective of bridging the digital divide, enabling development in the ICT sector and reducing the cost of communication.

Our determination to fulfil this mandate was strengthened by the maiden budget speech of our new Minister of Communications, General (Ret.) Siphiwe Nyanda, who specifically endorsed the ANC’s Polokwane Conference resolution of the ruling party that “Sentech is a strategic national asset and should be funded to execute its socio-economic mandate for the general public of South Africa”. He confirmed that State Owned Enterprises such as Sentech remain “…important delivery arms for the Department”. Sentech remains committed to fulfilling its mission.

I draw attention to these matters because

they provide the bedrock for our strategic resolve to meet our commitments as additional funding becomes available.

We continue in discussions with the Department of Communications on the utilisation of the R500 million Broadband allocation to provide maximum coverage and benefit, while awaiting further advice on the sourcing of the R3,3 billion required to rollout the wholesale National Wireless Broadband Network (NWBN). Our Minister’s recent assurances in his 2009 budget speech that he is

committed to resolving the funding challenges “as a matter of urgency” were greatly appreciated.

As soon as the required funding

becomes available, Sentech is ready to introduce Broadband to Dinaledi Schools (which will form the nucleus of “information society hubs”), health centres, Government offices at local and provincial level, tribal offices, Thusong Centres and Post Offices. The National Broadband Policy, which is scheduled for completion early next year, will hopefully provide valuable guidelines that will encourage collaboration and eliminate the potential for municipalities and provincial governments to establish independent broadband networks. This

detracts from the cost-efficiency of a single NWBN that will act as a catalyst in reducing the cost of communication in South Africa by saving operators the cost of rolling out their own disparate

The successful “switch on” of Digital Terrestrial Television (DTT) network in October 2008 placed Sentech in a strong technical

position to meet the analogue switch-off target date…‘ ’

Chairperson’s Report (CONTINUED)

1. About Sentech. Board of Directors3. Chairperson’s Report4. Chief Executive Officer’s Report5. Sustainability Report6. Financial Review7. Corporate Governance8. Risk Management and Internal Audit9. Annual Financial Statements

Annual Report for the year ended 31 March 200910

networks and therefore the cost to the end-user.

The spectrum awarded to Sentech is key to the delivery of the NWBN. Some commentators and prospective competitors have called for spectrum to be re-allocated on a “use it or lose it” basis.

I want to state unequivocally that Sentech intends to utilise this spectrum allocation to fulfill its social mandate of delivering broadband to under-serviced areas. We are encouraged in this regard by the commitment of the President and our Minister.

The retail broadband segment of our telecommunications business continues to be a drain on profitability. Aside from the decision to henceforth concentrate only on wholesale broadband, the Board is currently evaluating strategic options that will allow the Company to exploit its telecommunications assets in an innovative and profitable manner.

As a result of the strong performance by the Broadcasting Signal Distribution business, the Group achieved an operating profit of R154 million for the year under review. Interest received on the various Government allocations over the past 18 months improved Sentech’s

cash position significantly but major impairments on the retail broadband infrastructure and analogue equipment that will shortly become redundant, contributed to a net loss of R24 million for the year (against a budgeted loss of R59,1 million). Setting aside the performance of the retail broadband business reveals that the core activity, Broadcasting Signal Distribution, remains profitable.

Another important focus will be on cost containment as we adapt to the economic climate that is buffeting us and so many of our customers. It is indeed encouraging that so many Sentech employees have proactively engaged with Management to propose innovative means of reducing the operating costs and corporate overheads.

The Sentech Board has extended a warm welcome to the newly-appointed Minister of Communications and his deputy, Ms Dina Pule. We await with eager anticipation the appointment

of a new Director General in the department, confident that if the job description contained in the recruitment advertisement is a measure of the successful candidate, Sentech will be extremely well-served by the new “top team” representing its sole shareholder. We at Sentech were saddened by

the passing away of Dr Ivy Matsepe-Casaburri on 6 April 2009 shortly before she was due to retire from a long period of “national service” and express our appreciation for the contribution she made to Sentech and the Communications industry.

During the year under review, the term of office of directors Dr L Konar, Mr T Leeuw, Ms N Sihlali and myself were renewed by the previous Minister and we were also privileged to welcome Mr T Mashigo and Dr Y Muthien to the Sentech Board.

In thanking the Sentech Board, Management and Employees for their invaluable contribution in the year past, especially towards the sucessful transmission of the 2009 Confederations Cup and switch on of the DTT network. I ask them to remain alert, frugal and focused. My sense is that they will be required to make an even greater contribution as the Company is called on to deliver a world class digital broadcast signal and Broadband access in a challenging economic environment.

I would also like to take this opportunity to wish all our customers, including the interim Board of the SABC, our biggest customer, every success in their endeavours.

Colin Hickling Chairperson

President Zuma’s passion for rural development speaks directly to the mandate of Sentech...‘ ’

Chairperson’s Report (CONTINUED)

1. About Sentech. Board of Directors3. Chairperson’s Report4. Chief Executive Officer’s Report5. Sustainability Report6. Financial Review7. Corporate Governance8. Risk Management and Internal Audit9. Annual Financial Statements

Annual Report for the year ended 31 March 2009111. About Sentech. Board of Directors3. Chairperson’s Report4. Chief Executive Officer’s Report5. Sustainability Report6. Financial Review7. Corporate Governance8. Risk Management and Internal Audit9. Annual Financial Statements

Chairperson’s Report (CONTINUED)

Aerial view of the 2010 FIFA World Cup stadiums in South Africa.

Annual Report for the year ended 31 March 20091

On behalf of Sentech Management and Employees I would like to welcome our new Minister, Gen (Ret.) Siphiwe Nyanda, and his Deputy, Ms Dina Pule; we look forward to working with the new ministerial team to strengthen Sentech’s role as a national Broadcasting Signal Distributor and provider of Broadband access.

This past year the focus has been to defend and grow our core business: Broadcasting Signal Distribution. In the year ahead we will continue with plans to maintain our market share by demonstrating to our customers that our well-proven infrastructure is being rapidly upgraded (due to massive DTT expenditure) and remains extremely reliable.

A major achievement was the switch-on of the Digital Terrestrial Television (DTT) network by the late Minister Matsepe-Casaburri at the International Telecommunications Union (ITU), World

Telecommunications Standardisation Assembly (WTSA), held in October last year. This has put Sentech at the forefront of digital broadcasting on the continent.

As the late Minister rightfully said in her address,“…The switch-on of our digital broadcasting signal is a true milestone event. Today South Africa enters a new broadcasting era…” The event was witnessed by delegates from all over the world - 768 delegates, including Ministers and deputy Ministers, from 99 countries. This switch-on also ushered in a new broadcasting era for Sentech which offers opportunities to expand and grow our business, not only locally but into the rest of the African continent.

Given that globally analogue television broadcasting networks must be migrated to digital by June 2015 in compliance with the ITU directive, Sentech’s services are likely to be in great demand. Our digital knowledge, experience and

expertise stands us in good stead as other African countries start the inevitable journey from analogue to digital. Not only have we acquired unique skills in rolling out a digital network but we are steadily mastering the simultaneous operation of a digital and analogue network during this period of “Dual Illumination”.

Notwithstanding the sweeping price increases that face us (e.g. electricity tariffs) our “sunk investment” will allow us to maintain cost-effective rates in a competitive market. We have appointed international consultants to advise on an appropriate pricing mechanism for the digital era.

Policy Environment We were pleased to hear, the new Minister of Communications proclaim in his 2009 Budget Vote: “…I believe that the time has come to outline the country’s long term vision for the sector,

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Chief Executive Officer’s Report

Chief Executive Officer’s Report

‘

1. About Sentech. Board of Directors3. Chairperson’s Report4. Chief Executive Officer’s Report5. Sustainability Report6. Financial Review7. Corporate Governance8. Risk Management and Internal Audit9. Annual Financial Statements

Annual Report for the year ended 31 March 200913

to direct future interventions by all spheres of government and relevant role players, and to provide policy certainty for the industry and investors. We will therefore develop an Integrated National ICT Policy Framework which will be ready by the end of the financial year…”

There are currently ICT interventions, more specifically the rollout of broadband infrastructure at all spheres of Government, including State Owned Enterprises (e.g. Infraco, Sentech, SITA and USAASA), provinces (e.g. Blue IQ) and municipalities. In our view this translates into a fragmented approach that has adversely impacted on the ability of Government to use ICT to drive service delivery and economic development.

This fragmented approach is exacerbated by the highly competitive environment created by the Electronic Communications Act. Any Individual Electronic Communications Network Service (I-ECNS) licensee can roll out

infrastructure that can provide any electronic communications service; and an Electronic Communications Network licensee can provide any electronic communications service.

Sentech therefore welcomes the development of this overarching long term strategy that will not only bring policy certainty to industry and investors but also Government, SOEs and the public as end-users. Sentech would further recommend that this policy should also provide for the Independent Communications Authority of South Africa (ICASA) to regulate tariffs.

The Government intervention referred to by the Minister – through the National ICT Policy Framework and National Broadband Policy – should also define the role of State versus private operators in the rollout of Broadband access and reaffirm Sentech’s role in rolling out the National Wireless Broadband Network (NWBN).

Operational Matters

Turning now to operational matters, performance standard of our major networks, reported more fully on page 20 of the Sustainability Report, achieved our usual high standards.

Since the DTT switch-on, Sentech has been operating and maintaining the digital network as part of a pilot with SABC and e.tv. The pilot DTT network provides 33.3% population coverage as SABC and e.tv have distributed set-top boxes to only a select audience as part of the pilot project.

Performance of the MyWireless network declined slightly due to prolonged mains power failures throughout the year, as well as some hardware breakdowns to the advance age of some network equipment. Accordingly, the average overall availability of 99.6% for the year was below the target norm of 99.7%.

Chief Executive Officer’s Report (CONTINUED)

We have appointed international consultants to advise on an appropriate pricing mechanism for

the digital era.‘’

1. About Sentech. Board of Directors3. Chairperson’s Report4. Chief Executive Officer’s Report5. Sustainability Report6. Financial Review7. Corporate Governance8. Risk Management and Internal Audit9. Annual Financial Statements

Annual Report for the year ended 31 March 200914

The overall network performance of our Carrier of Carriers (CoC) service was marginal during the year primarily due to third party link failures. Average overall availability of 99.6% was below the target norm of 99.7%.

During the period under review, a

concerted effort was made to reduce the accumulated backlog in maintenance required for our civil infrastructure assets such as masts, roads and buildings.

The first phase of a two year project was successfully completed during the period under review. Further

expenditure is planned in the 2009/10 financial year to eliminate the backlog, the bulk of the funds being allocated to road and building infrastructure maintenance.

Electricity load shedding by Eskom and the municipalities had a significant

Chief Executive Officer’s Report (CONTINUED)

1. About Sentech. Board of Directors3. Chairperson’s Report4. Chief Executive Officer’s Report5. Sustainability Report6. Financial Review7. Corporate Governance8. Risk Management and Internal Audit9. Annual Financial Statements

Learners from Iterele, Northview and Progress High Schools pictured at STP during the “Take a Girl Child to Work” day.

Annual Report for the year ended 31 March 200915

impact on the performance of most of Sentech’s Broadcasting Signal Distribution networks and services. The impact of power load shedding, the fuel price increases, as well as electricity tariff increases on the broadcast networks was quantified during February 2008, and a plan to mitigate the risk was initiated for implementation in the 2008/9 financial year.

This plan entailed the provision of 19 additional standby generators to transmission sites where none exist, as well as an increase in power autonomy of some of the sites where standby generators have already been provided.

A total of seven new standby generators were installed and commissioned during the past financial year, with the balance of 12 due for completion in 2009/2010. It is anticipated that interruptions due to mains power failures will continue during the next financial year and for as long as the demand for electricity exceeds the supply or capacity of the electricity infrastructure.

The Short Wave Radio network, which is being refurbished and upgraded, remains an important revenue generator (especially for foreign currency). We will also be reviving our Medium Wave (MW) radio initiatives, countering the under-utilisation of our Cape-based infrastructure, in anticipation of ICASA licencing more broadcasters.

Our international Carrier of Carriers telephony offering operates in a highly competitive market but we nonetheless see it as an important part of the marketing mix that provides an important redundancy option to the major operators.

Pending the rollout of the NWBN, Sentech’s VSAT product line continues to ensure connectivity at schools, hospitals, clinics, Thusong Post Offices, Thusong Community Centres and Government offices.

VSAT Business Performance

Sentech continues to successfully grow its VSAT customer base, achieving an 87% terminal growth in the period under review, thus exceeding the 40% target set in our strategic objectives.

A turnaround strategy for this product line is currently being implemented to expand the product offerings and exploit markets outside South African borders.

I am especially proud of our involvement in projects with the Mpumalanga provincial Department of Education (Mpumalanga schools), South African Post Offices, South African Weather Services and the Department of Home Affairs.

2010 FIFA World Cup

I am pleased to report that we have now leased land from the Department of Public Works for the construction of a second teleport at NASREC.

Construction of the 700 square metre facility will start shortly, accompanied

by the installation of two 13 metre, one 9 metre and one 7,3 metre uplink satellite antenna dishes. Construction and fibre links will be complete by early 2010, allowing for a period of testing and fine-tuning.

Preparations are also underway to equip the additional six stadia hosting the 2010 FIFA World Cup.

It is with pleasure to also report that for the Confedarations Cup Sentech provided a reliable solution in accordance with the Government Telecommunications Guarantees.The back-up local satellite feed performed at 100% availability. The world satellite feed performed at 99.99% availability.

Restructuring at Sentech

The shift in strategic emphasis necessitated a restructuring process at Sentech. Responding to the focus on core business activities, the organisational structure has been realigned and the implementation is currently underway (please see page 34 of the Sustainability Report for the new organisational structure).

The Board has indicated that, as far as possible, the Company will avoid retrenchments. I am pleased at the constructive manner in which Sentech Employees have responded to the challenge.

…performance standard of our major networks, …, achieved our usual high standards. ‘ ’

Chief Executive Officer’s Report (CONTINUED)

1. About Sentech. Board of Directors3. Chairperson’s Report4. Chief Executive Officer’s Report5. Sustainability Report6. Financial Review7. Corporate Governance8. Risk Management and Internal Audit9. Annual Financial Statements

Learners from Iterele, Northview and Progress High Schools pictured at STP during the “Take a Girl Child to Work” day.

Annual Report for the year ended 31 March 200916

Given the economic climate, I am confident of a rewarding and collaborative effort in this regard.

Human Capital

Human capital is a key component of the Sentech business. We compete for skills in the ICT sector where demand exceeds the available supply. In the face of mounting competition for scarce skills, a rapidly changing information, communication and technology landscape, we are doing our utmost to retain our skills base despite funding challenges. On the basis that retaining a scarce and proven skill is more cost effective than attracting new recruits, we are strengthning retention and career progression strategies.

Spending on training, year on year, increased by 12%. The number of learnerships in terms of the agreement with ISETT SETA increased by 25%. The number of student bursaries awarded by the Sentech Educational Fund also increased from two to five.

The Company’s investment in skills development initiatives is expected to increase in the current financial year. See further details on page 47 of the Sustainability Report.

Sentech’s service profile remains fairly constant with more than 60% of employees having more than 10 years service and an average 15 years service. The vast majority of new recruits are younger than 40 years, countering the increased age profile of the current workforce.

Broad-based Black Economic Empowerment (BBBEE)

Sentech achieved its objective to improve its BBBEE rating from level 5 to 4 contributor status. This is mainly due to our improved efforts in the following elements: Management control, Employment equity, Skills development, Preferrential procurement and Socio Economic Development.

Sustainability Report

We continue this year with the practice established in 2007 of including a comprehensive sustainability report as a key component of the Annual Report. We seek continuous improvement in our compliance with the Global Reporting Initiative (GRI) reporting frame work at Application Level C.

Recognition

Sentech would like to thank the Ministry and DoC for their support.I would also like to pay tribute to my Board which has provided Management with principled and strategic leadership. To my Management colleagues and the hundreds of Sentech Employees who do their utmost to deliver, often under difficult circumstances, I say a heartfelt thank you.

I would also like to give special mention to the team that ensured the successful DTT switch-on and continue to work to ensure that Sentech successfully rolls out this digital network; our operations and maintenance team that works to ensure that our networks perform at the service level targets; and the team that ensured that Sentech successfully installed, operated and maintained the Broadcasting Signal Distribution satellite infrastructure for 2009 Confederations Cup. Thank you for your diligence and commitment.

The year under review will also be remembered as one during which we bid farewell to the late Minister Matsepe-Casaburri. She was a valued member of the Sentech family and we will miss her.

Dr. Sebiletso Mokone-MatabaneChief Executive Officer

Chief Executive Officer’s Report (CONTINUED)

1. About Sentech. Board of Directors3. Chairperson’s Report4. Chief Executive Officer’s Report5. Sustainability Report6. Financial Review7. Corporate Governance8. Risk Management and Internal Audit9. Annual Financial Statements

…for the Confedarations Cup the back-up local satellite feed performed at 100% availability‘ ’

Annual Report for the year ended 31 March 200917 Sustainability Report

Sustainability Report

1. About Sentech. Board of Directors3. Chairperson’s Report4. Chief Executive Officer’s Report5. Sustainability Report6. Financial Review7. Corporate Governance8. Risk Management and Internal Audit9. Annual Financial Statements

Vanrhynsdorp transmitter site.

Annual Report for the year ended 31 March 200918

Strategic objective Key Performance Area (KPA)

Key Performance Indicator (KPI)

Status

Broadcasting Signal Distribution

Network Performance • Availability of signal distribution for TV transmission = 99.7%.

Achieved.

• Availability of signal distribution for radio transmission = 99.8%.

Achieved.

Digital Terrestrial Television (DTT)

• Digital switch-on – 1 November 008.

Achieved. Switch-on achieved on 30 October 008.

• 40% population coverage by 31 March 009.*

*subject to timeous transfer of total funding requirements and publication of Digital Migration Policy.

Not achieved. Due to the delays in the finalisation of a frequency plan and DTT migration regulations, and funding shortfalls, only 33% was achieved by 31 March 009.

010 FIFA Soccer World Cup

• Acquired land at NASREC to build the second teleport.

Achieved. The land at NASREC has been secured on lease from the Department of Public Works.

• Finalise the detailed designs of the second teleport.

Not achieved. The technical designs have been finalised. The architectural designs are still to be finalised.

Telecommunications MyWireless • Exit retail broadband and transfer MyWireless customers.

Not achieved. Implementation plan in progress, for completion at the end of December 009.

Biznet • Exit retail. Not achieved. Implementation plan in progress, for completion at the end of March 010.

National Wireless Broadband Network (NWBN)

• Approval of appropriate business and funding model.

Not achieved. The Department of Communications (DoC) is currently engaging with the user-departments to finalise their requirements. This includes confirming the list of participating schools. Thereafter provide them to Sentech to determine the extent of the rollout that can be achieved with the R500 million already allocated.

• Implementation of a national broadband wireless network that would primarily focus on schools, hospitals, clinics, Thusong Post Offices and Government in urban, rural and under serviced areas by 31 March 010.*

*subject to approval of business and funding model for the NWBN

Not achieved. The DoC and National Treasury have not yet approved the business and funding model.

• Development of appropriate products and services for the wholesale market.*

*subject to approval of business and funding model for the NWBN

Not achieved. The DoC and National Treasury have not yet approved the business and funding model.

• Connect 33 Dinaledi Schools.

Not achieved. The DoC and National Treasury have not yet approved the business and funding model and the DoC is still finalising the user requirements.

Performance Summary

Sustainability Report (CONTINUED)

1. About Sentech. Board of Directors3. Chairperson’s Report4. Chief Executive Officer’s Report5. Sustainability Report6. Financial Review7. Corporate Governance8. Risk Management and Internal Audit9. Annual Financial Statements

Annual Report for the year ended 31 March 200919

Strategic objective Key Performance Area (KPA)

Key Performance Indicator (KPI)

Status

Telecommunications VSAT • 40% increase in sales. Achieved terminal growth of 87%.• Network performance at 99.6%. Achieved.

Carrier of Carriers • 6.4% market share. Not achieved. The Company achieved 3.% market share due to regulatory market changes as most customers can now self provide.

• Network performance at 99.6%. Not achieved. Primarily due to third party.link failures

Financial and Economic

Profitability • Loss of R59 million in 008/009.

• Financially sustainable by year 015/16, with no dependence on the fiscus on the basis that the Consolidated Business Model (as per the Corporate Plan) is approved.

The Company achieved an operating profit of R154 million for the year under review. Interest received on the various Government allocations over the past 18 months improved Sentech’s cash position significantly but major impairments on the retail broadband infrastructure contributed to a net loss of R4 million for the year.

Broad based Black Economic Empowerment (BBBEE)

• Achieve level 4 rating in terms of the Broad Based Black Economic Empowerment (BBBEE) Act by 014/015.

Achieved.

Customer service Greater focus on customer centricity: internal and external customers

• Improve the functioning of the Call Centre.

• Customer service training.

Achieved.

Human Capital Align organisational structure to overall corporate strategy and new business focus

• Restructuring of business by 31 March 009.

Not achieved. The new structure was approved by the Board on 5 May 009.

Skills Retention • Training. Achieved, as per the Skills Development Plan.

• Continue implementation of Retention strategy.

Achieved, as per the business requirements.

• Recruitment. Due to the current national ICT skills shortages, the Company experienced a lower rate of recruitment.

Achieve Employment Equity targets

• Achieve Employment Equity targets as included in the 008/9 Corporate plan.

Not achieved, due to recruitment and retention challenges.

Instil performance management culture

• Preparation and finalisation of the Performance Management policies and procedures.

Achieved. The Integrated Performance Management System (IPMS) was imple-mented with effect from 1 January 009.

• Discussions with the Communication Workers Union.

Achieved.

• Train management on the implementation of the system.

Achieved.

• Implementation of the performance management system on 1 April 009.

Achieved.

Sustainability Report (CONTINUED)

1. About Sentech. Board of Directors3. Chairperson’s Report4. Chief Executive Officer’s Report5. Sustainability Report6. Financial Review7. Corporate Governance8. Risk Management and Internal Audit9. Annual Financial StatementsPerformance Summary (CONTINUED)

Annual Report for the year ended 31 March 20090

FM Network Performance APR 2008 to MAR 2009Total Transmit

HoursSentech Target

NormOverall

InterruptionsOverall

PerformanceSentech

InterruptionsSentech

Performance6 84 44 99.800 10 514.05 99.846 3 198.64 99.953

Terrestrial Broadcast Networks

It was again possible to ensure that the average overall availability of 99.82% for the analogue terrestrial TV broadcast networks exceeded the agreed target norm of 99.7% for the year despite interruptions due to mains power failures and inclement weather (rain fade). This is illustrated in Fig 1.

The overall availability of 99.85% achieved for the year under review exceeded Sentech’s target norm of 99.8% for the terrestrial FM Network, as illustrated in Fig 2. The overall availability was adversely affected by extensive mains power interruptions, as well as inclement weather preventing replenishment of diesel fuel to the Blouberg site, which can only be reached by helicopter.

TV Analogue Network Performance APR 2008 to MAR 2009

Total Transmit Hours

Sentech Target Norm

Overall Interruptions

Overall Performance

Sentech Interruptions

Sentech Performance

5 549 064 99.700 9 996.38 99.80 3 645.43 99.934

Ava

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%

Fig 1. Terrestrial Analogue TV Network PerformanceAPR 2008- MAR 2009

99.60

99.65

99.70

99.75

99.80

99.85

99.90

99.95

100.00

AP

R 0

8

MA

Y 0

8

JUN

08

JUL

08

AU

G 0

8

SE

P 0

8

OC

T 08

NO

V 0

8

DE

C 0

8

JAN

09

FEB

09

MA

R 0

9

Sentech Target Norm Sentech Performance Overall Performance

Antenna - 0.05%

Incoming Mains Power Supply- 33.41%

Lines - 1.56%

Transmission - 1.09%

Programme Routing - 0.76%

Installation - 18.98%

Transmitter - 10.61%

Force Majeure - 11.21%

Station Power - 14.07%

Scheduled Maintenance - 14.07%

TV Major InterruptionsAPR 2008 - MAR 2009

Lines/Links - 3.71%

Station Power - 18.01%

Incoming Mains Power Supply - 29.15%

Transmission - 0.01%

Programme Routing - 0.34%

Installation - 4.38%

Force Majeure - 36.04%

Antenna System - 0.73%

Transmitter - 4.37%

Scheduled Maintenance - 3.25%

FM Major InterruptionsAPR 2008 - MAR 2009

Performance of Sentech’s Networks

Sustainability Report (CONTINUED)

Force Majeure – is a condition or event outside of Sentech’s responsibility and consequently does not affect Sentech’s performance; the most common event is “No access to site” due to inclement weather, no transport and/or physical disaster.

Target Norms – are defined by the network design, specifically the level of redundancy provided, and by the Service Level Agreements signed with Sentech’s clients.

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Annual Report for the year ended 31 March 20091

SW Network Performance APR 2008 to MAR 2009

Total Transmit Hours

Sentech Target Norm

Overall Interruptions

Overall Performance

Sentech Interruptions

Sentech Performance

50 647 99.500 19.93 99.743 18.00 99.747

Mar

09

Feb

09

Jan

09

Dec

08

Nov

08

Oct

08

Sep

08

Aug

08

Jul 0

8

Jun

08

May

08

Ap

r 08

Ava

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%

Fig 4. Terrestrial SW Network PerformanceAPR 2008- MAR 2009

99.0099.1099.2099.3099.4099.5099.6099.7099.8099.90

100.00

Sentech Target Norm Sentech Performance Overall Performance

Incoming Mains Power Supply - 1.29%

Force Majeure - 0.19%

Lines/Links 18.68%

Programme Routing - 15.60%

Transmitter - 33.58%

Antenna System - 2.79%

Station Power - 26.86%

Scheduled Maintenance - 1.01%

SW Major InterruptionsAPR 2008 - MAR 2009

As depicted in Fig 4, the continued satisfactory performance of Short Wave transmissions which, despite the advanced age of the transmitters, was more than 99.7% availability against a target norm of 99.5%, can again be attributed to the dedication and innovation of Sentech’s technical staff at Meyerton transmitting station.

Sustainability Report (CONTINUED)

MW Network Performance APR 2008 to MAR 2009Total Transmit

HoursSentech Target

NormOverall

InterruptionsOverall

PerformanceSentech

InterruptionsSentech

Performance61 30 99.500 455.11 99.58 301.64 99.508

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%

99.0099.1099.2099.3099.4099.5099.6099.7099.8099.90

100.00

Sentech Target Norm Sentech Performance Overall Performance

Mar

09

Feb

09

Jan

09

Dec

08

Nov

08

Oct

08

Sep

08

Aug

08

Jul 0

8

Jun

08

May

08

Apr 0

8

Fig 3. Terrestrial MW Network PerformanceAPR 2008- MAR 2009

Incoming Mains Power Supply- 0.47%

Lines/Links - 1.04%

Transmission - 0.79%

Programme Routing - 2.38%

Installation - 33.25%

Transmitter - 40.78%

Antenna System - 0.88%

Station Power - 2.53%

Scheduled Maintenance - 17.89%

MW Major InterruptionsAPR 2008 - MAR 2009Sentech achieved overall availability of

99.3% for the MW broadcast network, which is slightly less than the target norm of 99.5% for the year, as illustrated in Fig 3. Medium Wave transmissions were adversely affected by the deteriorating performance of the obsolete Metro transmitter, project work associated with the installation and commissioning of the new Radio Pulpit transmitter, and lightning damage to the Metro transmitter on two separate occasions. A new digital MW transmitter for Radio Pulpit was taken into service in the current financial year. It is anticipated that the commissioning of the new Radio Pulpit transmitter will assist to improve the MW broadcast network performance during 2009/10.

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Performance of Sentech’s Networks (CONTINUED)

Annual Report for the year ended 31 March 2009

Sentech Target Norm Sentech Performance Overall Performance

Mar

09

Feb

09

Jan 0

9

Dec 0

8

Nov

08

Oct 08

Sep

08

Aug

08

Jul 0

8

Jun 0

8

May

08

Ap

r 08

99.75

99.80

99.85

99.90

99.95

100.00

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ility

%

Fig 5c. TV Linking Network Performance - C BandAPR 2008 – MAR 2009

Programming Routing - 22.35%

Schedule Maintenance - 45.46%

Station Power - 1.89%

Transmission - 4.55%

Force Majeure - 25.76%

Sentech Target Norm Sentech Performance Overall Performance

Mar

09

Feb

09

Jan 0

9

Dec 0

8

Nov

08

Oct 08

Sep

08

Aug

08

Jul 0

8

Jun 0

8

May

08

Ap

r 08

99.75

99.80

99.85

99.90

99.95

100.00

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ility

%

Fig 5d. Radio Linking Network Performance - C BandAPR 2008 – MAR 2009

Lines/Links - 5.21%

Transmitter - 2.03%

Schedule Maintenance - 42.53%

Station Power - 9.93%

Force Majeure - 27.95%

Programming Routing - 8.10%

Transmission - 4.25%

Mar

09

Feb

09

Jan

09

Dec

08

Nov

08

Oct

08

Sep

08

Aug

08

Jul 0

8

Jun

08

May

08

Ap

r 08

Fig 5e. Business TV Network PerformanceAPR 2008 - MAR 2009

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%

97.8098.0098.2098.4098.6098.8099.0099.2099.4099.6099.80

100.00

Sentech Target Norm Sentech Performance Overall Performance

Installation - 81.09%

Transmitter - 0.16%

Antenna Systems - 0.49%

Force Majeure - 18.26%

Mar

09

Feb

09

Jan

09

Dec

08

Nov

08

Oct

08

Sep

08

Aug

08

Jul 0

8

Jun

08

May

08

Ap

r 08

Sentech Target Norm Sentech Performance Overall Performance

98.60

98.80

99.00

99.20

99.40

99.60

99.80

100.00

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ility

%

Fig 5f. Business Radio Network PerformanceAPR 2008 - MAR 2009

Programming Routing - 1.50%

Antenna System - 0.41%

Transmission - 0.43%

Lines/Links - 1.42%

Force Majeure - 17.53%

Incoming Mains Power Supply - 5.15%

Installation - 73.57%

TV Linking Interruptions - C Band APR 2008 - MAR 2009

Radio Linking Interruptions - C Band APR 2008 - MAR 2009

Business TV InterruptionsAPR 2008 - MAR 2009

Business Radio InterruptionsAPR 2008 - MAR 2009

Business TV Network Performance APR 2008 to MAR 2009

Total Transmit Hours

Sentech Target Norm

Overall Interruptions

Overall Performance

Sentech Interruptions

Sentech Performance

067 99.800 30.43 99.86 0.0 99.999

Business Radio Network Performance APR 2008 to MAR 2009

Total Transmit Hours

Sentech Target Norm

Overall Interruptions

Overall Performance

Sentech Interruptions

Sentech Performance

31 491 99.800 90.40 99.875 10.9 99.995

TV Linking Network Performance - C Band APR 2008 to MAR 2009

Total Transmit Hours

Sentech Target Norm

Overall Interruptions

Overall Performance

Sentech Interruptions

Sentech Performance

61 30 99.800 4.40 99.993 3.7 99.995

Radio Linking Network Performance - C Band APR 2008 to MAR 2009

Total Transmit Hours

Sentech Target Norm

Overall Interruptions

Overall Performance

Sentech Interruptions

Sentech Performance

86 184 99.800 8.16 99.991 5.93 99.993

Sustainability Report (CONTINUED)

Satellite Networks

The average overall availability achieved was still well above the target norm of 99.8% for all 12 months of the year. The overall availability achieved for the DTH TV networks was 99.89% (see Figure 5a), the availability for DTH Radio networks was 99.87% (see Figure 5b),

the overall availability achieved for Business TV networks was 99.86% (see Figure 5e) and the overall availability of the Business Radio networks was 99.87% (see Figure 5f).

The availability performances for both TV and Radio C-band satellite linking were above the target norm all year

round, resulting in average overall network performance close to 100%, against a target norm of 99.8%, as illustrated in Figures 5c and 5d.

However, the availability of Sentech’s Ku-band satellite TV and radio services was negatively affected by rain fade in December 2008 and February 2009.

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%

Fig 5a. DTH TV Network Performance - KU BandAPR 2008 - MAR 2009

99.00

99.20

99.40

99.60

99.80

100.00

AP

R 0

8

MA

Y 0

8

JUN

08

JUL

08

AU

G 0

8

SE

P 0

8

OC

T 08

NO

V 0

8

DE

C 0

8

JAN

09

FEB

09

MA

R 0

9

Sentech Target Norm Sentech Performance Overall Performance

Lines/Links - 13.56%

Transmission - 0.36%

Programme Routing - 5.08%

Installation - 46.79%

Force Majeure - 21.30%

Station Power - 6.36%

Scheduled Maintenance - 6.55% Mar

09

Feb

09

Jan

09

Dec

08

Nov

08

Oct

08

Sep

08

Aug

08

Jul 0

8

Jun

08

May

08

Ap

r 08

Ava

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%

Fig 5b. DTH Radio Network Performance - KU BandAPR 2008 - MAR 2009

Sentech Target Norm Sentech Performance Overall Performance

98.80

99.00

99.20

99.40

99.60

99.80

100.00

Antenna System - 0.03%

Lines/Links - 16.13%

Transmission - 0.55%

Programme Routing - 0.02%

Installation - 59.05%

Transmitter - 0.03%

Force Majeure - 17.86%

Station Power - 5.05%

Scheduled Maintenance - 1.29%

DHT TV Network Performance APR 2008 to MAR 2009

Total Transmit Hours

Sentech Target Norm

Overall Interruptions

Overall Performance

Sentech Interruptions

Sentech Performance

137 976 99.800 145.77 99.894 46.53 99.966

DTH Radio Network Performance APR 2008 to MAR 2009

Total Transmit Hours

Sentech Target Norm

Overall Interruptions

Overall Performance

Sentech Interruptions

Sentech Performance

50 416 99.800 316.78 99.873 73.15 99.971

DHT TV Interruptions - KU Band APR 2008 - MAR 2009

DHT Radio Interruptions - KU Band APR 2008 - MAR 2009

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Performance of Sentech’s Networks (CONTINUED)

Annual Report for the year ended 31 March 20093

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%

Fig 6. Availability Analysis for VSATAPR 2008- MAR 2009

99.6599.7099.7599.8099.8599.9099.95

100.00

99.60

Hub Norm Overall Performance Sentech Performance

Mar

09

Feb

09

Jan

09

Dec

08

Nov

08

Oct

08

Sep

08

Aug

08

Jul 0

8

Jun

08

May

08

Ap

r 08

Scheduled Outages - 10.89%

Satelite - 34.30%

Others- 43.03%

Core Network - 11.79%

Mar

09

Feb

09

Jan

09

Dec

08

Nov

08

Oct

08

Sep

08

Aug

08

Jul 0

8

Jun

08

May

08

Ap

r 08

Hub Norm Overall Performance Sentech Performance

99.65

99.70

99.75

99.80

99.85

99.90

99.95

100.00

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%

Fig 7. Availability Analysis for VMESHAPR 2008 - MAR 2009

Equipment (GCU, RF, NCC, RNCC, etc) - 44.53%

Third party - 55.47%

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%

Fig 8. Availability Analysis for BBWAPR 2008 - MAR 2009

99.30%

99.40%

99.50%

99.60%

99.70%

99.80%

99.90%

100.00%

Sentech Norm Overall Performance Sentech Performance

Feb

09

Jan

09

Dec

08

Nov

08

Oct

08

Sep

08

Aug

08

Jul 0

8

Jun

08

May

08

Ap

r 08

Mar

09

ScheduledOutages - 1.07%

Core - 5.01%

NodeBs - 1.43%

INCs - 5.49%

Sentech Links - 17.35%

Power - 38.90%

Telkom Links - 30.76%

Telecommunications Networks

The performance of the VSAT network for the 2008/9 financial year was well above the target norm of 99.8%, despite rain fade which occurred during December 2008 and February 2009, resulting in an overall availability figure for the year of 99.92%. This is depicted in Fig 6.

As indicated in Fig 7, the availability of the VMesh network exceeded Sentech’s target norm for most of the period in consideration, with the exception of September 2008 and November 2008. The decreased availability was due to misalignment of the antenna at STP and interference on third party links respectively, resulting in an overall availability of 99.93% versus a target norm of 99.8%.

Performance of the MyWireless network suffered again during the year under review, as illustrated in Fig 8. This can mainly be ascribed to prolonged mains power failures throughout the year, as well as specific hardware breakdowns in November 2008, December 2008 and March 2009. It should be noted that the MyWireless network equipment has reached end-of life and that lack of spares is becoming a cause for concern. Accordingly, the average overall availability of 99.62% achieved for the full year was below the target norm of 99.70%.

Interruption Ananlysis for VSATAPR 2008 - MAR 2009

Interruption Ananlysis for VMESHAPR 2008 - MAR 2009

Interruption Ananlysis for BBWAPR 2008 - MAR 2009

VSAT Network Performance APR 2008 to MAR 2009

Total Transmit Hours

Sentech Target Norm

Overall Interruptions

Overall Performance

Sentech Interruptions

Sentech Performance

5 71 31 99.800 4 157.17 99.90 368.50 99.960

BBW Network Performance APR 2008 to MAR 2009

Total Transmit Hours

Sentech Target Norm

Overall Interruptions

Overall Performance

Sentech Interruptions

Sentech Performance

1 365 40 99.700 5 11.55 99.60 3 197.1 99.770

VMESH Network Performance APR 2008 to MAR 2009

Total Transmit Hours

Sentech Target Norm

Overall Interruptions

Overall Performance

Sentech Interruptions

Sentech Performance

198 55 99.800 131.54 99.930 49.00 99.980

Sustainability Report (CONTINUED)

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Performance of Sentech’s Networks (CONTINUED)

Annual Report for the year ended 31 March 20094

Mar

09

Feb

09

Jan

09

Dec

08

Nov

08

Oct

08

Sep

08

Aug

08

Jul 0

8

Jun

08

May

08

Ap

r 08

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%

Fig 9. BizNet Network Performance APR 2008 - MAR 2009

99.40

99.50

99.60

99.70

99.80

99.90

100.00

Sentech Norm Overall Performance Sentech Performance

Power - 53.20%

Third Party - 34.07%

Sentech Links - 12.72%

Mar

09

Feb

09

Jan

09

Dec

08

Nov

08

Oct

08

Sep

08

Aug

08

Jul 0

8

Jun

08

May

08

Ap

r 08

98.60

98.80

99.00

99.20

99.40

99.60

99.80

100.00

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%

Fig 10. Availability Analysis for CoC Customers’ Network APR 2008 - MAR 2009

Target Norm Overall Availability Sentech Performance Mar

09

Feb

09

Jan

09

Dec

08

Nov

08

Oct

08

Sep

08

Aug

08

Jul 0

8

Jun

08

May

08

Ap

r 08

30.00

40.00

50.00

60.00

70.00

80.00

Ava

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%

ASR Trend AnalysisAPR 2008 – MAR 2009

CellC MTN Vodacom Norm

Third Party - 52.41%

Scheduled Outages - 4.67%

Equipment - 37.93%

Transmission - 4.91%

Sentech’s Carrier of Carriers (CoC) overall network performance was marginal during the year under review primarily due to third party link failures. All interconnects failed on 31 December 2008 due to subscription expiry dates

that were set for end 2008 in the initial configurations. Accordingly, the average overall availability achieved of 99.56% was below the target norm of 99.7%. This is depicted in Fig 10.

Interruption Ananlysis for BiznetAPR 2008 - MAR 2009

Interruption Ananlysis for COC Sesntech’s NetworkAPR 2008 - MAR 2009

The average availability of Sentech’s BizNet services exceeded the target norm for most of the period under review, as depicted in Fig 9. Notwithstanding the decline in the performance during December 2008 and March 2009 due to hardware failures and mains power failures, the overall availability of the network was 99.9% against a target norm of 99.7%. Biznet Network Performance APR 2008 to MAR 2009

Total Transmit Hours

Sentech Target Norm

Overall Interruptions

Overall Performance

Sentech Interruptions

Sentech Performance

541 008 99.700 534.10 99.900 86.95 99.950

Carrier of Carriers Network Performance APR 2008 to MAR 2009

Total Transmit Hours

Sentech Target Norm

Overall Interruptions

Overall Performance

Sentech Interruptions

Sentech Performance

783 31 99.700 3440.16 99.560 1 68.43 99.790

Sustainability Report (CONTINUED)

Telecommunications Networks (CONTINUED)

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Performance of Sentech’s Networks (CONTINUED)

Annual Report for the year ended 31 March 20095 Sustainability Report (CONTINUED)

Internet Services Network Performance APR 2008 to MAR 2009

Total Hours

Sentech Target Norm

Overall Interruptions

Overall Availability

Sentech Interruptions

Sentech Availability

70 7 99.700 180.9 99.740 136.75 99.810

Scheduled Outages

Core

Power

Third Party - 9%

Unscheduled Outages - 91%

Interruption Analysis for INTERNET ServicesAPR 2008 - MAR 2009

98.40%

98.60%

98.80%

99.00%

99.20%

99.40%

99.60%

99.80%

100.00%

Sentech Norm Overall Availability Sentech Availability

Mar

09

Feb

09

Jan

09

Dec

08

Nov

08

Oct

08

Sep

08

Aug

08

Jul 0

8

Jun

08

May

08

Ap

r 08

Fig 11. Internet Services Network PerformanceAPR 2008 - MAR 2009

The average overall availability of the Internet services was 99.74% against the target norm of 99.7% for the year.

The availability of the Internet services was negatively affected by third party link failures in July 2008, and hardware faults in January and March 2009.

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Performance of Sentech’s Networks (CONTINUED)

Electronic equipment container used during the 2009 Confederations Cup at Mangaung Stadium in Bloemfontein.

Telecommunications Networks (CONTINUED)

Annual Report for the year ended 31 March 20096

Our StakeholdersStakeholders are defined as “those people, organisations and entities that impact on Sentech or who are impacted by Sentech activities”. Based on this definition, the Sentech stakeholders are:

Sustainability Report (CONTINUED)

A key stakeholder is the general South African public, which is impacted daily by Sentech business through our transmission of information to improve their quality of life, be it through radio and television content or Internet connectivity. According to the South African Advertising Research Foundation (SAARF) 2008 All Media and Products Survey (AMPS) figures, there are 9 million television households and 10 million radio households, which equates to 44 million South Africans with access to television and 46,9 million with access to radio (this is calculated at an average per household of 4,6).

The Government has taken a policy decision that Sentech should roll out a National Wireless Broadband Network (NWBN) using appropriate technology that will provide connectivity to schools, hospitals, clinics, Thusong Community Centres, Thusong Post offices and Government offices in rural and under-serviced areas. Despite not having rolled out the NWBN, Sentech is providing connectivity to the abovementioned through its VSTAR product, either on a commercial basis or as part of the Company’s Corporate Social Investment (CSI) strategy.

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Sentech is a State Owned Enterprise (SOE) reporting to the Minister and Department of Communications. This relationship is governed by the Sentech Act, Public Finance Management Act including Treasury Regulations, Articles of Association, Companies Act and Government Protocol on Corporate Governance. On an annual basis, Sentech concludes a Shareholders’ Compact with the Minister of Communications that sets out the governance principles that regulates the relationship between the parties and the key performance targets for the year as set out on page 18. The Minister of Communications and the Sentech Board further interact through bilateral meetings attended by the Chairperson of the Board, Chief Executive Officer and/or any other appointed representative/s.

Shareholder: State (as represented by the Minister of Communications)

Community

Annual Report for the year ended 31 March 20097 Sustainability Report (CONTINUED)

Trade Unions

The Communication Workers Union (CWU) is the only trade union officially recognised by the Company. The union enjoys a membership of 208 persons (an increase of 5.9% from 2008), or 52.6% of the Collective Bargaining Unit (CBU) of 395 persons. The Union represents 38.6% of the total full-time staff complement..

During the past financial year, the Company engaged the Union on the following issues:- Wage Negotiations;- Integrated Performance Management System (IPMS); and- FNB Housing Loans.

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Employees (Our People)

Full-time and temporary Employees constitute the primary stakeholders of the Company. At the close of the financial year, March 2009, there were 538 full-time staff and 47 temporary employees. The tally for both categories was 585. For more details on our people refer page 36.

Government Agencies

Universal Service and Access Agency of South Africa (USAASA)

USAASA was established to promote the goals of universal access and universal service in the under-serviced areas of South Africa. Its mandate includes encouraging and facilitating the provision of universal access and service.

Sentech meets with USAASA at least six times a year to discuss and agree on how the agency can work with the Company to enhance broadband connectivity to schools and Thusong Centres in under-serviced areas. The Company also jointly supports the Orange Farm Multipurpose Community Centre as a designated centre of excellence of the agency.

The Government

The Department of Communications

Sentech executive directors and employees interact with the Department of Communications’ Director General, Deputy-Directors General and other officials in their capacity as representatives of the Shareholder and as policy formulator.

Department of Finance (National Treasury)

The interaction with National Treasury is governed by the Public Finance Management Act (PFMA) and appropriation of funding in terms of the annual budget speech by the Minister of Finance.

Our Stakeholders (CONTINUED)

Annual Report for the year ended 31 March 20098

The viewership statistics are based on the South African Advertising Research Foundation (SAARF) statistics as at 31 March 2009.

Television Broadcasting, VIVID: Sentech has five customers transmitting on PAS-07: - God TV;- TCT;- itv;- SABC (SABC1, SABC2 and SABC3); and- Fashion TV.

On PAS-10, Sentech also has five customers: - Spirit World;- e.tv;- SABC (News International);- CNBC Africa; and- Hope Christian Television.

Sentech has a total of 65 000 registered users on its Vivid platform.

Sentech’s relationship with its Customers is managed by Account Managers who engage on both a formal and informal basis. On a formal basis refers to regular meetings (monthly, quarterly and as when required) and informal basis refers to invitations to sporting events, e.g. golf days, industry conferences and functions.

Broadcasting

Through the viewership (TV) and listenership (radio) of our customers, Sentech’s Broadcasting Signal Distribution network touches the lives of most South Africans - from urban to rural and underserviced areas, ordinary citizens are given access to information.

Terrestrial Analogue Television Broadcasting In this category, Sentech has six customers:

Station Viewership (000)SABC 1 0SABC 18 851SABC 3 14 934e.tv 18 057MNET 1 969CSN 150

Customers

Sustainability Report (CONTINUED)

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Our Stakeholders (CONTINUED)

Annual Report for the year ended 31 March 20099

Station Listenership (000)5 FM 1 891Ikwekwezi FM 1 483Lesedi FM 3 385Ligwalagwala FM 1 76Motsweding FM 855Munghana Lonene FM 1 14Phalaphala FM 96Radio 000 346Good Hope FM 687Lotus FM 45Metro FM 4 439Radio Sonder Grense 1 755SAFM 574Thobela FM 743Ukhozi FM 5 873Umhlobo Wenene FM 4 596Tru FM 394

Station Listenership (000)Algoa FM 913

Capricorn FM 97

Highveld FM 1 474

Igagasi FM 1 842

Jacaranda FM 2 208

M Power FM 25

Oranje FM 471

Radio 702 422

Classic FM 189

Heart FM 666

East Coast Radio 1 660

Kaya FM 1 416

Radio North West 49

Radio Pulpit (MW) 210

Y-FM 1 151

Cape Talk (MW) 173

KFM 1 237

The listenership statistics are based on the SAARF statistics as at 31 March 2009.

Commercial Broadcasters (radio) Sentech has 17 commercial radio customers as detailed in the table below:

The listenership statistics are based on the SAARF statistics as at 31 March 2009 .

Sustainability Report (CONTINUED)

1. About Sentech. Board of Directors3. Chairperson’s Report4. Chief Executive Officer’s Report5. Sustainability Report6. Financial Review7. Corporate Governance8. Risk Management and Internal Audit9. Annual Financial Statements

Public Broadcasters (Radio) Sentech transmits all 17 SABC public broadcasting radio stations:

Customers (CONTINUED)

Our Stakeholders (CONTINUED)

Annual Report for the year ended 31 March 200930

Station Listenership (000)Alfred Nzo 33Barberton Community Radio 18Bush Radio 84CCFM 95Durban Youth Radio 58Eden FM 10Fine Music Radio 50Helderberg FM 3Imbokado FM 15Islamic Unity Convention 8Izwilomzansi FM 89Kangala FM 39Khanya FM 94Kovsie FM 37Kragbron FM 8Kwezi FM 130Laeveld FM 19Link FM 175Maputaland FM 116Mosupatsela FM 184Naledi FM 4Namaqualand FM 33New Castle Community Radio 103New Pan Hellenic Voice Nkqubela FM 41Orange Farm FM 8Qwa-Qwa FM 10Radio KC FM 74Ripple FM 1Setsoto FM 41Soshanguwe Community Radio 110Thembisa Community Radio 41Radio Hindvani 7Radio Graaff Reinet 5Radio Today 8Takalani FM 50Tshwane University FM 18Tuks FM 44Radio Tygerberg 71UJ Radio 13Unitra FM 396Vaal University FM 16Vaaltar FM 155Voice of the Cape 167Vukani FM 13West Coast FM 38Wits FM 1

Community Broadcasters (radio) Sentech has 47 community radio customers as detailed in the table below:

The listerneship statistics are based on the SAARF statistics as at 31 March 2009.

Sustainability Report (CONTINUED)

1. About Sentech. Board of Directors3. Chairperson’s Report4. Chief Executive Officer’s Report5. Sustainability Report6. Financial Review7. Corporate Governance8. Risk Management and Internal Audit9. Annual Financial Statements

Customers (CONTINUED)

Our Stakeholders (CONTINUED)

Annual Report for the year ended 31 March 200931 Sustainability Report (CONTINUED)

In-Store Radio

Sentech has 26 In-Store radio customers, including major South African corporations in the transportation, retail clothing, homeware, furniture, banking and mining sectors.

Telecommunications VSAT Sentech has 104 customers, with a total of 1486 customer terminals, broken down into two categories: Government Departments, Institutions and Agencies In line with its mandate, Sentech provides connectivity (using VSTAR technology) on a commercial basis to Government offices, institutions and agencies.

Corporate CustomersSentech Corporate Customers range from small, medium to major corporations both locally and outside South African borders in the ICT, Mining, Banking, Financial, Construction, Retail and Education sectors.

Carrier of Carriers (CoC)CoC has three types of customers:

In-bound: Bringing international voice traffic into RSA for termination locally via Sentech. Sentech has 11 customers from various countries across the globe.

Out-bound: Sending local voice traffic for termination to international destinations via Sentech, i.e. outside of the RSA.Currently, Sentech has three customers - Cell-C, MTN and Vodacom.

Corporate Customers: Currently Sentech has two corporate customers.

The Company, as part of its 2008/9 business strategy, intends to grow its customer base in the corporate sector.

Independent Communications Authority of South Africa (ICASA)

ICASA regulates the telecommunications and broadcasting industries in the public interest. This includes issuing licences to providers of telecommunication services and broadcasters; monitoring the environment and enforcing compliance with rules, regulations and policies; hearing and deciding on disputes and complaints brought by industry or members of the public against licensees; planning, controlling and managing the frequency spectrum, and protecting consumers from unfair business practices, poor quality services and harmful or inferior products. Sentech holds regular meetings with ICASA to discuss challenges in the regulatory environment that affect the Company’s ability to deliver on its mandate.

Industry Bodies

International Bodies International Telecommunications Union (ITU)

This is a leading United Nations agency for information and communication technologies. As the global focal point for governments and the private sector, ITU’s role in helping the world to communicate effectively and efficiently spans three core sectors: radio communication, standardisation and development. ITU also organises telecommunication events.

1. About Sentech. Board of Directors3. Chairperson’s Report4. Chief Executive Officer’s Report5. Sustainability Report6. Financial Review7. Corporate Governance8. Risk Management and Internal Audit9. Annual Financial Statements

Regulators

Customers (CONTINUED)

Our Stakeholders (CONTINUED)

Annual Report for the year ended 31 March 20093 Sustainability Report (CONTINUED)

Regulators (CONTINUED)

Industry Bodies (CONTINUED)

ITU is based in Geneva, Switzerland, and its membership includes 191 member states (including South Africa) and more than 700 sector members and associates. Sentech is a sector member of ITU. Sentech attends conferences organised by ITU on regulatory, standards and policy matters affecting the Company’s business.

Southern African Broadcasters As-sociation (SABA)

SABA is a regional body representing public broadcasters and signal distributors. Other sector players may join as associate members. Sentech serves on the board of SABA and chairs its technical committee. For several years, Sentech representatives also chaired the gender committee. Sentech representatives attend the annual general meeting as well as committee meetings.

Commonwealth Broadcasters As-sociation (CBA)

CBA is an international forum representing public broadcasters and publicly owned Broadcast Signal Distributors. Meetings are held annually although there are regional workshops on various matters of interest to the membership. Sentech participates in at least one meeting annually.

Commonwealth Telecommunications Organisation (CTO)

CTO is an international body based in London. Sentech joined the organisation two years ago and participates in workshops organised regionally.

National Bodies

National Association of Broadcasters (NAB)

NAB is a national body that represents the interests of broadcasters and Broadcasting Signal Distributors. Sentech serves on the board and the technical committee of NAB. Meetings are held at least quarterly.

South African Communications Forum (SACF)

SACF is an industry body representing the Information and Communications Technology sector. Sentech serves on the board, and policy and regulatory committee. Sentech attends at least three meetings annually in addition to several informal meetings with members of the organisation.

Digital Dzonga

In 2005 the Minister of Communications established a Digital Migration Working Group led by the Department of Communications.

The purpose of the Digital Migration Working Group is to develop

recommendations on how South Africa can migrate from analogue terrestrial television to digital terrestrial television. The Minister of Communications, based on the recommendations of the Digital Migration Working Group established the Digital Dzonga Advisory Council.

The purpose of the Council is to ensure that the migration of South Africa’s analogue broadcasting services to digital is done in accordance with the Broadcasting Digital Migration Policy. Sentech has a representative on the Council who also chairs the Infrastructure Working Group.Sentech also has representatives participating in the Communications sub-committee.

Financiers

Formal and informal discussions are held with our financiers as and when required. Discussions revolve around interest rate and currency risks, investment of surplus cash, policies and procedures as well as operational issues such as Internet Banking, Electronic Funds Transfers (EFT) and authorisations. Key stakeholders include:

• Sentech has bank accounts and overdraft facilities with Amalgamated Banks of South Africa (ABSA).

• Sentech has a long-term loan facility with the Development Bank of South Africa (DBSA). The commitment for the 2009 financial year is R25,9 million, comprising a capital repayment of R14 million and interest of R11,9 million.

1. About Sentech. Board of Directors3. Chairperson’s Report4. Chief Executive Officer’s Report5. Sustainability Report6. Financial Review7. Corporate Governance8. Risk Management and Internal Audit9. Annual Financial Statements

Annual Report for the year ended 31 March 200933 Sustainability Report (CONTINUED)

Sentech has three categories of suppliers

The technology classification refers to all suppliers of technology used to build, operate and maintain the Sentech networks. Almost 90% of the technology suppliers are based in Europe, USA and the Far East. This classification of suppliers is engaged when the Company procures equipment as part of major projects such as Digital Terrestrial Television (DTT), 2010 FIFA World Cup and building of a National Wireless Broadband Network (NWBN). Technology suppliers are also engaged in the procurement of spare parts required to operate and maintain the Sentech networks. Due to international trends, especially in the manufacture of communications technology, it would appear that in the foreseeable future Sentech will continue to procure most of its infrastructure outside South Africa.

The support classification refers to suppliers who provide resources including time and knowledge to support the Sentech networks and ensure that

they perform at the required level. Most of the suppliers are locally based.

The general classification refers to suppliers who provide resources that are used by the Sentech business on a day-to-day basis.

Sentech continues to apply the Preferential Procurement and Broadbased Black Economic Empowerment (BBBEE) legislation when procuring goods and services from suppliers, to ensure that a preferred and compliant local supplier base is established and monitored on an ongoing basis.

Existing suppliers who have not started to transform their businesses are encouraged and offered guidance towards compliance of their businesses to both Sentech’s requirements and BBBEE compliance.

The process of engagement with the suppliers forms part of the tender and procurement processes where, generally, both formal and non-formal meetings are held at different intervals.

Topics of engagement: BBBEE, compliance requirements, general/specific Sentech requirements, lead times planning and improvement, and quality and total cost of ownership, including cost reduction initiatives. Monthly meetings are held with different suppliers as and when necessary. The Company’s commitments for 2009:

• Ongoing overall efficiency improvement in all aspects of supply chain management;

• Procurement will continue to work towards increasing the level of BBBEE compliant suppliers on the database;

• Ongoing supplier evaluation process which targets strategic suppliers, addresses specific measured performance items based on SLAs, lead times, quality and cost competitiveness etc; and

• Sentech will continue to use the information gathered from the tender process, to identify major players in the market, for various goods and services, from which the most suitable partners are then selected and utilised as preferred suppliers.

Suppliers

Internal Auditors

The internal auditors are appointed by the Board and provide an independent assurance and consulting services to the Company covering all departments within Sentech. PKF Inc. continues as the Company’s internal auditors on a annual contract. External auditors place reliance on the work performed by the internal auditors. Going forward, the internal auditors will continue to work closely with the external auditors to share results of work performed and to maximise the use of resources and prevent unnecessary duplication of efforts.

The credibility of this function is enhanced

by discussing all internal audit reports at the Audit Committee meetings, which are chaired by an independent non-executive director and consist of a majority of independent, non-executive directors.

The internal auditors who perform the field work are located at Sentech head office, which makes them easily accessible and ensures that issues are resolved promptly. Meetings between the internal audit Management and Sentech Management are held monthly.

The three-year internal audit plan approved by the Board, details the areas that the internal auditors will cover. Other areas are determined by the risks

identified by the Risk Steering Committee, which are also addressed by internal audit.

External Auditors

Sentech has external auditors that are appointed on a one-year cycle. The current external auditors are KPMG Inc. In accordance with the Public Audit Act, the external auditors attend the Audit Committee meetings throughout the year. From May to August each year, the external auditors audit the Group’s Annual Financial Statements in terms of which they issue an audit report, which forms part of the Sentech Annual Report on page 79.

1. About Sentech. Board of Directors3. Chairperson’s Report4. Chief Executive Officer’s Report5. Sustainability Report6. Financial Review7. Corporate Governance8. Risk Management and Internal Audit9. Annual Financial Statements

Auditors

Annual Report for the year ended 31 March 200934

New Organisational Structure

Board of Directors

Company Secretary

Chief Financial Officer

Chief Executive Officer

Chief Operations Officer

Executive: Network Services

General Manager: Marketing and Sales

General Manager: IT

Head: Supply Chain Management

General Manager: Management and Project Accounting

General Manager: Financial Accounting

and Billing

Executive: Legal &

Regulatory

General Manager:

CEO Office

Sustainability Report (CONTINUED)

Risk Officer Executive:

Human Resources

Outsourced Internal Auditors

1. About Sentech. Board of Directors3. Chairperson’s Report4. Chief Executive Officer’s Report5. Sustainability Report6. Financial Review7. Corporate Governance8. Risk Management and Internal Audit9. Annual Financial Statements

Our People

The New Organisational Structure approved by the Board on 5 May 2009 for implementation.

Annual Report for the year ended 31 March 200935 Sustainability Report (CONTINUED)

Human capital is a key component of the Sentech business. Sentech values its Employees and aspires to recruit and retain the best skills in the market. The Company falls within

the ICT industry, which is a highly specialised technical arena where the demand for skills exceeds the available supply.

Sentech’s “length of service” profile remains fairly constant with 60.2% of Employees in 2008; and 60.5% of Employees in 2007 having more than 20 years service.

01020304050607080

60.9

%

60.2

%60

.5%

4.9%

4.9%

5.2%14

.6%

14.4

%

14.1

%

10.5

%

11.7

%13

.6%

9.0%

8.9%

0 to 4

2009

5 to 9 10 to 14 15 to 19 20 >

6.5%

2008

Length of Service

Years

% o

f em

plo

yees

2007

Our People

On the basis that retaining a known, proven skill is more cost effective that attracting new recruits, the Company uses proven employee

retention and career progression systems.‘ ’

1. About Sentech. Board of Directors3. Chairperson’s Report4. Chief Executive Officer’s Report5. Sustainability Report6. Financial Review7. Corporate Governance8. Risk Management and Internal Audit9. Annual Financial Statements

Annual Report for the year ended 31 March 200936

During the last financial year:

• One Employee received a 40 year long service award;• Seven Employees received 30 year long service awards;• Four Employees received 20 year long service awards; and• Ten Employees received 10 year long service awards.

Number of Employees

The employment status as at 31st of March 2009 is depicted in the table below. There were 538 full-time Employees at the close of the 2008/9 financial year. Staff complement comparable for the past three financial years:

2006/7 2007/8 2008/9

555 545 538

Employee Demographics and Gender Composition Male Female TotalOccupational levels African Coloured Indian White African Coloured Indian White 08/09

Top Management 1 - 1 - - - 6

Senior Management 14 1 3 14 8 - - 4

Sustainability Report (CONTINUED)

1. About Sentech. Board of Directors3. Chairperson’s Report4. Chief Executive Officer’s Report5. Sustainability Report6. Financial Review7. Corporate Governance8. Risk Management and Internal Audit9. Annual Financial Statements

Our People (CONTINUED)

Professionally Qualified & Experienced Specialist & Mid-Management 30 9 4 47 1 - 6 110

Skilled technical & Academically qualified workers, Junior Management, Supervisors, Foremen & Superintendants 83 1 14 70 61 4 5 14 63

Semi-skilled & discretionary decision making 38 5 - 3 17 4 7 76

Unskilled & defined decision making 36 3 - - - - - 41 Total Permanent 0 30 3 135 10 10 7 9 538

Notes: The above table illustrates Sentech’s total number of employees as at end of Financial Year under review, by occupational levels.

Annual Report for the year ended 31 March 200937

2007/8 2008/9Office Province Total Total

1.Upington TCC* Northern Cape 5 4. George TCC Western Cape 47 473. Vredendal TCC4. Cape Town TCC5. Johannesburg TCC Gauteng 36 3616. Sender Technology Park (STP)7. Meyerton Shortwave Station8. Gauteng Head Office Fourways9. Middelburg Cape TCC Eastern Cape 38 4110. East London TCC11. Port Elizabeth TCC1. Durban TCC & Regional Office KwaZulu-Natal 33 3413. Vryheid TCC14. Vryburg TCC North-West 11 1015. Bloemfontein TCC & Regional Office Free State 5 1816. Kroonstad TCC17. Polokwane TCC Limpopo 13 1318. Ermelo TCC Mpumalanga 11 10

TOTAL 545 538

The distribution of Employees is illustrated in the following tables:

Health and WellnessSentech manages Employee wellness through integrated response strategies to empower Employees through knowledge, awareness and support while enhancing business sustainability. Sentech’s

comprehensive health and wellness initiative encompasses psychosocial support, sports and recreation, occupational health and medicine, Employee assistance and health education and promotion. The Company conducted

Healthcare benefit Roadshows across all our offices nationally. This campaign was aimed at educating all Employees about Discovery Health benefits and also to ensure that Employees and their dependants are well insured.

Employee Distribution per Province

Sustainability Report (CONTINUED)

1. About Sentech. Board of Directors3. Chairperson’s Report4. Chief Executive Officer’s Report5. Sustainability Report6. Financial Review7. Corporate Governance8. Risk Management and Internal Audit9. Annual Financial Statements

Our People (CONTINUED)

* Transmitter Control Centre

Investing in Human Capital

Annual Report for the year ended 31 March 200938

More than a hundred Sentech walking enthusiasts braved the cold to partake in Johannesburg’s most loved walking event of the year: The Discovery 702 “Walk the Talk”, which encourages wellness within communities in and around Johannesburg.

The 2008 event saw a little over 50 000 people from all walks of life, including Government officials, such as the former Deputy President Phumzile Mlambo Ngcuka, local celebrities, sporting and media personalities walk for a good cause.

The event’s festivities were the highlight of the event and the attendance seems to be improving year-on-year. The event helped to raise R375 000, which was donated to the Laureus Sport for Good Foundation.

For the eighth consecutive year, Sentech employees participated in the 2008 Discovery 702 Walk the Talk event.

Sustainability Report (CONTINUED)

1. About Sentech. Board of Directors3. Chairperson’s Report4. Chief Executive Officer’s Report5. Sustainability Report6. Financial Review7. Corporate Governance8. Risk Management and Internal Audit9. Annual Financial Statements

Discovery 702 “Walk the Talk”

Our People (CONTINUED)

Annual Report for the year ended 31 March 200939

Policies

Employment Equity

Taking into account the employment challenges in the Information, Communication and Technology sector, Sentech strives to reflect South Africa’s demographics in its staff complement.

Employment Equity Targets for period 2008 to 2010 as submitted to Department of Labour in 2008/9 Male Female Total TotalOccupational levels African Coloured Indian White African Coloured Indian White Male Female Top Management - 1 1 - - - 4 6Senior Management 15 1 1 4 15 1 1 4 1 1 4Professionally Qualified & Experi-enced Specialist & Mid-Management

6 14 6 15 44 45 89

Skilled technical & Academically qualified workers, Junior Manage-ment, Supervisors, Foremen & Superintendants

99 8 5 5 99 8 5 6 137 138 75

Semi-skilled & discretionary decision making

31 6 1 4 30 6 1 4 4 41 83

Unskilled & defined decision making 4 3 - - 4 - - 7 6 53 Total Permanent 193 4 10 48 19 3 9 49 75 73 548

Employment Equity Status as at 31 March 2009 Male Female TotalOccupational levels African Coloured Indian White African Coloured Indian White Top Management 1 - 1 - - - 6Senior Management 14 1 3 14 8 - - 4Professionally Qualified & Experienced Specialist & Mid-Management

30 9 4 47 1 - 6 110

Skilled technical & Academically qualified workers, Junior Management, Supervisors,Foremen & Superintendants

83 1 14 70 61 4 5 14 63

Semi-skilled & discretionary decision making 38 5 - 3 17 4 7 76Unskilled & defined decision making 36 3 - - - - - 41

Total Permanent 0 30 3 135 10 10 7 9 538

The tables below illustrate the Company’s employment equity targets and variances as at 31 March 2009:

Sustainability Report (CONTINUED)

1. About Sentech. Board of Directors3. Chairperson’s Report4. Chief Executive Officer’s Report5. Sustainability Report6. Financial Review7. Corporate Governance8. Risk Management and Internal Audit9. Annual Financial Statements

Our People (CONTINUED)

Annual Report for the year ended 31 March 200940

Employment Equity Variances Male FemaleOccupational levels African Coloured Indian White African Coloured Indian WhiteTop Management -1 - 1 - - - - -Senior Management -1 - 10 -7 -1 -1 -Professionally Qualified & Experienced Specialist & Mid-Management 8 3 33 -10 -4 - -9Skilled technical & Academically qualified work-ers, Junior Management, Supervisors, Foremen & Superintendants -16 4 9 45 -38 -4 - -1Semi-skilled & discretionary decision making 7 -1 -1 -1 -13 - 1 3Unskilled & defined decision making 1 - - - - - - - Total Permanent 9 6 13 87 -90 -13 - -0

56.50 %

7.44 %

5.58 %

30.48 %

Percentage distribution per race in Sentech as at 31 March 2009

African

Coloured

Indian

White

2009

African Coloured Indian White TotalsTargets 385 47 19 97 548

70,5% 8,57% 3,48% 17,70% 100%Actuals 304 40 30 164 538 56,50% 7,44% 5.58% 30,48% 100%

Sentech did not meet some of the targets. Going forward we will endeavour to achieve these targets through the filling of vacant positions created by natural attrition (resignations, retirements, discharges, promotions and deaths).

Variances according to Set Target Percentages for 2009

Sustainability Report (CONTINUED)

1. About Sentech. Board of Directors3. Chairperson’s Report4. Chief Executive Officer’s Report5. Sustainability Report6. Financial Review7. Corporate Governance8. Risk Management and Internal Audit9. Annual Financial Statements

Our People (CONTINUED)

Annual Report for the year ended 31 March 200941

Compensation and Benefits

Sentech’s remuneration policy is to remain competitive in alignment with market trends. Sentech participates in market surveys to ensure that the remuneration structure is competitive. A recent survey indicated that the Company’s remuneration is generally in line with the market.The Company’s remuneration packages are structured on the basis of the total cash package and are at the median (or 50th quartile).

As part of the remuneration package, the Company offers benefits such as subsidised medical aid, pension, group life membership and cell-phone allowance. Technical Employees, who are on call 24 hours, are also entitled to a standby allowance.

Medical Aid Policy

Medical Aid membership is compulsory. Sentech contributes 75% towards the monthly premiums of Employees who are members of Discovery Health. The medical aid policy also provides for post-retirement medical aid subsidisation for those employed prior to 30 May 2005. Currently there are 94 Employees on this post-retirement medical scheme.

In 2008 Sentech approved other Medical Aid options. This opened an opportunity for Employees to select their preferred Discovery Health medical aid option based on their individual requirements.

Retirement Funds Policy

When Sentech separated from the SABC,

Employees had the option of joining either the pension or provident fund. The majority of the Employees elected to join the provident fund.

According to the Sentech Pension Fund rules, the Company contributes 21% of the employee’s monthly earnings to the pension fund and the employee’s obligatory portion can either be 3% or 6%.

Membership to the pension fund was closed in 1997 and there are only five members remaining; three members are between 7 and 10 years from retirement while the remaining two will retire in 13 to 14 years.

According to the Sentech Provident Fund rules, the Company contributes 14% of the employee’s monthly earnings to the provident fund and the employee’s contribution can either be 3% or 6% and is not obligatory.

Group Life Assurance Policy

The Company provides for group life assurance with Sanlam and Momentum Life assurers and underwriters. The employer makes a contribution of 0,33% based on the employee’s monthly earnings

Commission Policy

Sentech has a commission policy applicable to Employees in the sales and marketing division. The remuneration is currently placed on a two-pronged approach; 80/20 and 70/30, i.e. 80% or 70% constituting the basic salary and the balance available for commission earnings.

Integrated Performance Management System

An Integrated Performance Management System is being implemented.

Leave Policy

The Company’s leave benefits are over and above what is prescribed in the Basic Conditions of Employment Act, 75 of 1995, for example: • Annual leave: legislation prescribes

15 days annually and the Company allows between 22 days for Employees and 34 days for Management respectively. Employees may request to redeem annual leave in excess of 15 days.

• Study leave: the Company offers 12 days leave, which is not a legal requirement.

• Family responsibility leave: legislation prescribes three days annually and the Company allows an extra two days.

• Sick leave: Sentech complies with the legislative requirement that the employee is entitled to 30 days’ leave over a 36-month period (three-year cycle).

• Special leave: each case is treated on merit.

Sustainability Report (CONTINUED)

1. About Sentech. Board of Directors3. Chairperson’s Report4. Chief Executive Officer’s Report5. Sustainability Report6. Financial Review7. Corporate Governance8. Risk Management and Internal Audit9. Annual Financial Statements

Our People (CONTINUED)

Annual Report for the year ended 31 March 20094

Trade Unions

The Communication Workers Union (CWU) is the only officially recognised trade union in the Company. The Union enjoys a membership of 208 persons from a Collective Bargaining Unit (CBU) of 395 persons. This constitutes 52.65% of employees within the CBU. In terms of the overall full-time Employees of 539, union membership constitutes 38.58% of the total full-time staff complement.

Improved communication and a spirit of cooperation continue to characterise our Employee Relations environment and it is a point of pride that no working hours were lost to strike action at Sentech in the period under review.

Salary and Conditions of Service Negotiations 2009/2010: Sentech Limited & CWU.

Negotiations on salary and conditions of service commenced in April 2008 and culminated in an agreement facilitated by the Commission for Conciliation Mediation and Arbitration on 25 June 2008. The Company and the Communication Workers Union (CWU) concluded the following agreement:

1. 10% Across the Board salary increase backdated to 1 March 2008.

2. Moratorium on retrenchments from 1 March 2007 to 30 June 2009.

3. Implementation of an Integrated Performance Management System by 1 January 2009.

Health and Safety

Safety Health and Environment (SHE) Policy

All our operations are governed by an integrated Safety, Health and Environment (SHE) policy that emphasises our total commitment to providing and maintaining a healthy and safe workplace. We regard the implementation and maintenance of health and safety standards and practices as an integral part of our business culture and activities. We fulfill this commitment by complying with Occupational Health and Safety Act, 1993 (Act 85 of 1993) and promote all interventions and programmes required to achieve and sustain legal compliance status and to establish world-class best practices.

Sustainability Report (CONTINUED)

1. About Sentech. Board of Directors3. Chairperson’s Report4. Chief Executive Officer’s Report5. Sustainability Report6. Financial Review7. Corporate Governance8. Risk Management and Internal Audit9. Annual Financial Statements

Our People (CONTINUED)

Collective Bargaining Matters

Annual Report for the year ended 31 March 200943

Key performance parameter 2006/7 2007/8 2008/9Injury on Duty 4 4 7Employee fatalities 1 - -Structural damages (masts) 1 -Motor vehicle accidents 3 4 Total 9 8 11

Injury, occupational diseases, lost days, etc.

As indicated, the Company experienced a slight increase in the total number of OHS incidents during 2008/9 compared to the previous financial year. Due to the apparent annual trend in the escalation of motor vehicle accidents, the Company continued the number of interventions to address this issue.

Sustainability Report (CONTINUED)

All Sentech operations are governed by an integrated Safety, Health and Environment (SHE) policy that emphasises the Company’s commitment to

providing and maintaining a healthy and safe workplace‘’

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Our People (CONTINUED)

Various measures are taken to raise awareness within the Company on the nature and implications of our policy and standard and on the initiatives undertaken in support of this policy and standard. Communication occurs, for example, through our Intranet site, newsletter, communiqués and meetings.

Health and Safety Committees

Well established Health and Safety Committees continue to function within Sentech. The appointment of competent Health and Safety Representatives, who are members of the Health and Safety Committees, play an important role in

making sure that all concerns raised by employees pertaining to health, safety and environmental issues are discussed in these meetings and remedial actions are agreed upon and actioned, thus reducing, controlling or eliminating identified hazards.

Health and Safety (CONTINUED)

Annual Report for the year ended 31 March 200944

0

2

4

6

8

10

12 2008/2009

2007/2008

2006/2007

Injury on Duty

Employeefatalities

Key Performance Parameter

No

. of in

ciden

ts

Structural damages (masts)

Motor Vehicle

Accidents

Total

2006/20072007/20082008/2009

Targeting Fewer Incidents

A Disabling Incident Frequency Rate (DIFR) of 1.7% was obtained as a result of the incidents that occurred during the 2008/9 financial year. Stringent safety measures including Safe Working Procedures (Method Statements) will be put in place to address the safety performance. A target of 0.8% disabling incident frequency rate (DIFR) was set for 2009/2010 safety performance.

To ensure the effective reduction of motor vehicle accidents, the intervention programme - Advanced Driving Skill Course - was intensified to improve the driving skill of Employees who are more

vulnerable to motor vehicle accidents e.g. technicians etc. The course, tailor-made for Sentech Employees, covers among other important modules; Defensive Driving, avoidance of possible hijacking and individual practical assessment. The course is proactive and focuses on accident and hijacking avoidance. A series of courses have been held in order to validate the training programme to ensure relevance and consistency. Promoting Improved Safety Performance

Numerous initiatives are undertaken as part of the safety improvement plan to promote health and safety within Sentech.

These initiatives include:-• Appointment of Health and Safety

Representatives to address health and safety issues on all of our sites;

• Established health and safety committees where health and safety concerns and recommendations are addressed;

• Orientation of new Employees on health and safety matters (Sentech Safety Induction);

• Communicating health and safety through newsletters and communiqués;

• Coordination of health and safety training for Management and Employees; and

• Coordination of emergency readiness response exercises.

The graph below depicts the year on year number of work related-injuries and number of days lost due to injuries on duty.

Sustainability Report (CONTINUED)

1. About Sentech. Board of Directors3. Chairperson’s Report4. Chief Executive Officer’s Report5. Sustainability Report6. Financial Review7. Corporate Governance8. Risk Management and Internal Audit9. Annual Financial Statements

Our People (CONTINUED)

Health and Safety (CONTINUED)

Annual Report for the year ended 31 March 200945

Occupation

African Coloured Indian White TOTAL

M F D M F D M F D M F D M F DLegislators, senior officials, managers and owner managers 35 0 - 6 1 - 11 1 - 53 11 - 105 33 -

Professionals 51 0 - 1 1 - 3 3 - 15 6 - 81 30 -

Technicians and associated professionals 13 146 - 15 1 - 15 - - 108 11 - 351 158 -

Clerks and administrative workers 43 - - 5 - 3 7 - - 7 - 5 6 -

Craft and related trade workers 0 - - 7 - - - - 10 - - 39 - -

Labourers and elementary occupations 8 1 - - - - - - - - - - 8 1 -

TOTAL 349 30 - 40 8 - 34 11 - 186 35 - 609 84 -

M: Males; F: Females; and D: Disabled.

Number of staff attending skills Development Training Interventions according to Occupational Category, Race and Gender

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Skills Development

Sustainability Report (CONTINUED)

Our People (CONTINUED)

Sentech is committed to employee development in accordance to the Joint Initiative on Priority Skills Acquisition (JIPSA) and Accelerated and Shared Growth Initiative for South Africa (ASGISA) objectives.

The Company is a contributing member to the Information Systems Electronics and Telecommunications Technology Sector Education and Training Authority (ISETT SETA). Training is provided to all Employees across all levels, according to the established Workplace Skills Plan to address skills shortages.

Sentech’s training and development targets are driven by business needs and the available budget. For the financial year under review, the number of previously disadvantaged individuals trained was 75.3% (78.6% for 2007/8) and the ratio of females trained was 31.8% (29.4% for 2007/8) in a previously totally male dominated environment.

In-house training is provided through The Sentech Advanced School of Technology to ensure that employees keep abreast of developments in all areas according

to global trends. This includes three main focus areas to develop holistic employees:

• People and Management skills;• Information Technology and Systems

skills; and• Technical Broadcasting and

Telecommunications skills.

Some relevant training is out-sourced and provided by tertiary institutions or ICT providers. Employees are also sent for specific training with suppliers and manufacturers. Knowledge attained from such exposure is shared amongst relevant staff and coordinated by the HRD department. The Company is the repository of unique specialist skills in the country and is highly rated by both local and international peer groups.

These skills are core to the business requirements of the Company and are essential for continued performance in the ever-changing ICT world.

Training Interventions

Digital Terrestrial Television Training Interventions

One of the key areas of focus for development during the year under review was on the Digital Terrestrial Television (DTT) migration project. This was a totally new area of expertise and overseas service providers were therefore enlisted during the foundation phase to provide the required knowledge and skills. This contributed to a highly successful project and a “switch-on” within the scheduled period.

The SETA requirement previously was to report on the number of employees trained, but this approach changed in realising that inexperienced employees required more than one training inter-vention. Sentech has amended its records in line with this requirement. 394 (364 for 2007/8 i.e. an Increase of 8.2%) employees from (73% of the staff complement), benefited from 893 course attendances totalling 2691 training days at an average of 6,8 days per person as below:

Annual Report for the year ended 31 March 200946

Number of learners according to Race and Gender

Occupation

African Coloured Indian White TOTAL

M F D M F D M F D M F D M FTelecommunications Technicians 10 13 - - - - 1 - - - - - 11 13IT Support Technicians 3 3 1 - - - - - - - - - 3 3

TOTAL 13 16 1 - - - 1 - - - - - 14 16

M: Males; F: Females; and D: Disabled.

Number of bursaries according to Occupational Category, Race and Gender

Occupation

African Coloured Indian White TOTAL

M F M F M F M F M F

Legislators, senior officials, managers and owner managers - - - - - 1 3

Professionals 1 - - - - - - - 1 -

Technicians and associated professionals 4 - - 1 - - - 5

Clerks and administrative workers 4 9 - 1 - - - - 4 10

Craft and related trade workers - - - - - - - - - -

Labourers and elementary occupations 1 - - - - - - - 1 -

TOTAL 1 13 - 1 1 - - 1 13 15

M: Males; F: Females; and D: Disabled.

Internship Programmes

Employee Bursaries

Sentech has an Internship programme to assist graduates entering the ICT working environment and provide entry level staffing to the Company.

Telecommunication Technicians and IT

Support Technicians programmes were identified as a scarce and critical skill. As a result, 30 learners were placed on the Internship programme compared to the 24 last year. Of the 30 learners, 18 (60%) have been permanently employed

at Sentech and another 4 (13%) have accepted alternative employment. The remainder are working towards obtaining the relevant appointment criteria.

The Company offers bursaries for part time studies to employees who want to develop skills that are either relevant to their functional work or to enhance the work and service of Sentech as a whole.

The Company awarded 28 bursaries to employees during the review period, in comparison to 29 in the previous year.

This included bursaries for employees

who are continuing with their studies as well as new applications. These bursaries apply across the occupational categories.

Sustainability Report (CONTINUED)

1. About Sentech. Board of Directors3. Chairperson’s Report4. Chief Executive Officer’s Report5. Sustainability Report6. Financial Review7. Corporate Governance8. Risk Management and Internal Audit9. Annual Financial Statements

Our People (CONTINUED)

Annual Report for the year ended 31 March 200947

Number of bursaries according to Race and Gender

StatusRace Gender

Indian Male Fourth Year Electronic Engineering at University of KZN

African Female Fourth Year BSc Computer Science at University of Pretoria

African Female Second Year BSc Computer Science and Informatics at University of Johannesburg

African Female First Year Electronic Engineering at Cape Peninsula University of Technology

African Male First Year Computer Engineering at University of KZN

The Sentech Chair in the Faculty of Engineering, Built Environment and Information Technology at the University of Pretoria was established in July 2005 as a joint venture. Steady growth has been achieved each year with 60 students benefiting from the project over

four years. The focussed growth area for the 2009 intake was on attracting “Women in Engineering”, adding two additional students to this group.

The Chair has funded students and provided practical research facilities

within the faculty. Research projects of students include Spectrum Occupancy, MIMO, OFDM, WiMax, Digital Radio and Cognitive Radio topics. These have been extremely pertinent to the current technology in the ICT field.

Overview of academic levels each yearYear B Eng B Eng (hons) M Eng PhD TOTAL006 6 1 - 9007 6 4 1 13008 8 3 5 18009 9 3 7 1 0TOTAL 9 10 17 4 60

The Sentech Educational Fund was established in 2006 to offer scholarships to assist the members of the general public studying in the ICT field. The Fund provides scholarships to a

maximum of R50 000 a year for students deserving of financial assistance. The bursary covers tuition, books and sundry costs. Five students benefited from the Fund during year under review.

There were two bursary holders in 2007/8. Both were offered continuations In 2008/9, but one declined for another offer. Four new bursary holders were included for 2008/9, totalling five.

Non-Employee Bursaries

Sentech Chair in Broadband Wireless Multimedia Communications (BWMC)

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Sustainability Report (CONTINUED)

Our People (CONTINUED)

48

Waste Management Improvement Projects

Sentech has a policy and procedure for the removal and disposal of waste. By its nature, Sentech business produces the following waste materials :

• Components in radio and television transmitters (UHF and VHF Klystrons) (Television Amplifier Devices);

• Transistors and other soli-state devices that contain toxic beryllium, high voltage capacitors that contain toxic fluid (insulating oil), which contain mixtures of heavy hydrocarbons, refined mineral oil and performance additives, batteries and fluorescent tubes. These toxic fluids (insulating oil) can leak into groundwater under landfills, thus contaminating the groundwater;

• Redundant computer components;• Photocopier toner cartridges; and• Paper waste.

Sentech follows a waste management hierarchy to manage waste generated at its facilities. The hierarchy is based on the following principles:-

• Waste prevention and avoidance - waste is not produced as far as

possible;• Waste minimization - waste that is

generated is kept to a minimum;• Resource recovery - recyclable

waste is recycled;• Waste treatment - waste that cannot

be avoided or recycled is treated to reduce possible environmental impact; and

• Waste disposal - after all the above, any remaining waste is land filled in line with current legislation.

The Company has taken initiatives, applying the principle of cradle to grave, to ensure responsible disposal of waste in Sentech.

• A competent service provider has been appointed to collect recyclable papers, tins, plastics, printer cartridges and redundant computer equipment;

• Wheeled bins, categorised in colours according to the type of waste, are being used for temporary storage of waste until collected by a competent service provider;

• Fluorescent tubes crushers are being used for the responsible disposal of spent fluorescent lighting tubes, which contain hazardous mercuric oxide; and

• Proper disposal of scrap metal.

Impact of Sentech Masts, Trans-mitters and Base Stations on the Environment

Sentech is committed to the principle of biodiversity management, by ensuring a process of continual improvement towards supporting environmental sustainability.

The Company has masts that are situated in the nature conservation parks. Certain restrictions that can impact on the environment are observed within these areas such as lettering, lighting of fires, use of non-biodegradable weed killers and disturbing of fauna and flora. The masts and transmitter buildings are painted green to harmonise with the environment.

Diesel-power generators are used to provide backup during failures at transmitter sites. Because of the hazardous nature of diesel on the environment, diesel tanks are bunded to prevent diesel spillage. There are specific stringent procedures that are followed to transport diesel to the transmitter sites. Sentech has initiated measures to avoid harm to vultures, an endangered species, that collide with mast guy ropes. A metal spring coil was attached to the guy ropes to improve visibility.

Sustainability Report (CONTINUED)

1. About Sentech. Board of Directors3. Chairperson’s Report4. Chief Executive Officer’s Report5. Sustainability Report6. Financial Review7. Corporate Governance8. Risk Management and Internal Audit9. Annual Financial Statements

Annual Report for the year ended 31 March 2009

The Environment

Sentech is committed to the principle of biodiversity management, by ensuring a process of continual improvement towards

supporting environmental sustainability.‘ ’

Annual Report for the year ended 31 March 200949

“Bridging the Technological Divide through CSI Interventions”

In line with Sentech’s business objective of empowering the communities it serves, the Company’s Corporate Social Investment (CSI) programmes focus on bridging the technological divide through investment in education, health and other initiatives that have the potential to

improve the quality of life of previously disadvantaged communities.

Changing Mindsets

Sentech is a founder member of Mindset Learn, an educational service supporting the teaching of English, maths and science. Mindset Learn is now in 18% of all high schools in South Africa.

Sentech also supports edutainment channel Mindset Health in their mission to deliver uplifting health education to patients and practitioners at clinics and hospitals across South Africa.

Launched in 2003, Mindset Health was a partnership between the Mindset Network, the national and provincial Departments of Health, with support

Corporate Social Investment

Sustainability Report (CONTINUED)

Patients enjoy the Mindset Health television channel while awaiting attention.

1. About Sentech. Board of Directors3. Chairperson’s Report4. Chief Executive Officer’s Report5. Sustainability Report6. Financial Review7. Corporate Governance8. Risk Management and Internal Audit9. Annual Financial Statements

Annual Report for the year ended 31 March 200950

from Sentech providing satellite broadcasting services. Sentech provides VIVID decoders, allowing the satellite broadcasting of the content. The health programmes target both patients and healthcare practitioners.

This unique project provides positive

educational entertainment programmes in the waiting rooms and staff rooms of 307 public healthcare facilities around the country. The facilities are found in both rural and urban areas, with the majority of the sites in Gauteng.

The Mindset Health television channel

broadcasts programmes in several local languages, focusing on HIV/AIDS and TB.

Over 80 hours of unique content has been developed so far, and Mindset Health also sources content from partners such as the SABC, Soul City,

Sustainability Report (CONTINUED)

1. About Sentech. Board of Directors3. Chairperson’s Report4. Chief Executive Officer’s Report5. Sustainability Report6. Financial Review7. Corporate Governance8. Risk Management and Internal Audit9. Annual Financial Statements

“Take a Girl Child to Work” Day.

Corporate Social Investment (CONTINUED)

Annual Report for the year ended 31 March 200951 Sustainability Report (CONTINUED)

1. About Sentech. Board of Directors3. Chairperson’s Report4. Chief Executive Officer’s Report5. Sustainability Report6. Financial Review7. Corporate Governance8. Risk Management and Internal Audit9. Annual Financial Statements

Corporate Social Investment (CONTINUED)

Love Life, Khomanani, the Community Health Media Trust, and Kagiso Educational Trust. The programmes are screened through the Sentech satellite broadcast, as well as other platforms such as DVDs.

Mindset Health estimates that 1.5 million patients use the content every month and that reported cases of new HIV infections have dropped significantly at all Mindset Health sites nationally. The broadcast has thus proven to be successful in getting health and HIV/AIDS messaging through to target audiences.

Going Forward

Sentech will continue to provide in-kind satellite broadcast support to Mindset Health, so as to ensure that the HIV/AIDS messaging continues to play its part in reducing the rate of new HIV infections, and thereby stopping the spread of the epidemic – given that it is estimated (by DoH) that over 8 million South Africans are now living with HIV.

Sentech will research a workable model towards the provision of additional support for the security and regular repair and maintenance of the VIVID decoders already installed at Mindset Health sites, in order to ensure that the usage of the content by HCPs and patients is not compromised by theft or vandalism or technical problems that cannot be easily solved at site level.

Ponelopele Oracle Secondary High School

Ponelopele is a public high school in

Ebony Park, Midrand. It was opened in 2006, and Sentech has sponsored Internet connectivity to two computer laboratories since 2007. The computer laboratories have 40 computers, as well as printing, fax, photocopying and projecting services.

They are used by 80 Grade 10; 120 Grade 11 and 35 Grade 12 learners for computer studies. Teachers use the computers for research and assignment preparation.

Dipalo School of Information and Communication Technology

Dipalo is an informal training centre in Pimville, Soweto. It was established in 2001 to provide computer literacy training courses to disadvantaged youth. To date, Dipalo has trained 907 students, of which 40 percent have found employment.

Dipalo’s computer centre offers computer training, as well as basic computer literacy training to high school students during the holidays.

Sentech sponsors the internet connectivity at Dipalo, allowing the centre to add training in internet, email and wireless technology to its services, and opening up access to online jobs, news and other resources to the community of Pimville. Sentech also sponsored a magazine advertisement to promote Dipalo’s training courses.

Courses offered at Dipalo are accredited by the Information Systems, Electronics and Telecommunications Technologies Sector Education and training Authority

(ISETT SETA) at Level 3 and Level 4. The school is located next to Pimville Community Library and users of the library make use of the school Internet from time to time to access information. The trainer’s computer is used to assist the public and students’ computers are used when they are doing theory.

Going Forward

Sentech will adopt a holistic approach by developing a relationship with the schools beyond connectivity. This could include providing technical support through staff volunteerism and/or placement opportunities for the trainees of the school as well as providing mentorship for the schools.

In accordance with the Corporate Social Investment strategy, Sentech reviews the performance of projects after having been in existence for a period of two years. To this end, Sentech no longer supports the following initiatives:

- Sci-Bono Science Centre;- Twilight Chidren Shelter;- Siyabonga Multi Purpose & Telecentre;

and- Ipetleng Senior Secondary School

(NEPAD eSchool).

Annual Report for the year ended 31 March 20095

CHOC Childhood Cancer Foundation

Sentech has been supporting the CHOC Childhood Cancer Foundation since 2004. The CHOC Childhood Cancer Foundation is a countrywide voluntary organisation located in Gauteng (Johannesburg), Western Cape (Cape Town), Free State (Bloemfontein), Eastern Cape (East London & Port Elizabeth) and KwaZulu Natal (Durban and Pietermaritzburg).

The goal of this dedicated group is to improve the welfare and quality of care for children with cancer and life threatening blood disorders. The first group started

in Johannesburg in 1979, and in 2000 joined with other parent groups from all parts of the country to form a national organisation.

Sentech is the proud sponsor of the “World’s Biggest Company Golf Day” which for the past five years has raised funds for more than 800 children in the CHOC Foundation. The funds raised are used to assist children and their families and also for the treatment of these most serious illnesses. Sentech will continue to sponsor the “World’s Biggest Company Golf Day” in the next financial year.

“Take a Girl Child to Work” Day

“Take a Girl Child to Work” Day is an annual Corporate Social Investment event that has been staged in South Africa every May since 2003. Companies invite female learners (school pupils), usually from disadvantaged backgrounds, to spend the day at their place of work.

The goal of the initiative is to “deepen the thinking of the girl child with regard to their infinite roles in society, enhance her self-esteem, inspire and motivate her to reach her full potential and through exposure to diverse careers and positive role models assist her to prepare for the world of work”.

Sustainability Report (CONTINUED)

1. About Sentech. Board of Directors3. Chairperson’s Report4. Chief Executive Officer’s Report5. Sustainability Report6. Financial Review7. Corporate Governance8. Risk Management and Internal Audit9. Annual Financial Statements

Corporate Social Investment (CONTINUED)

Chairperson handing over cheque to CHOC - Bloemfontein.

Annual Report for the year ended 31 March 200953

0

5

10

15

20 2009 Score

2008 Score

Sentech's 2yr target

BEE target

The Outcome of the 2008 and 2009 BBBEE assessment

MC EE SD EP SED CSI

Broad-based Black Economic EmpowermentBlack Economic Empowerment is the responsibility of all businesses within South Africa. The executive management of Sentech has fully embraced this process and is committed to its success. In line with this philosophy, a large proportion of indirect procurement has been targeted towards BBBEE suppliers.

In terms of the strategy, BBBEE is defined as: “An integrated and coherent socio-economic process that directly contributes to the economic transformation of South Africa and brings about significant increases in the numbers of black people that manage, own and control the country’s economy, as well as significant decrease in income inequalities.”

As an organ of the state, Sentech continues to engage in different and ongoing initiatives specifically designed to attract and support meaningful participation of BBBEE compliant

individuals and enterprises as well as adherence to triple bottom-line accountability and fair labour practices through employment equity, skills development and CSI interventions.

Sentech’s BBBEE 2009 results reflect an improvement from Level 5 Contributor status achieved in 2008, to Level 4 Contributor Status, which implies 100% recognition.

The 2009 outcome of the assessment should be viewed within the following context:

• Equity Ownership - public institutions, and other State Owned entities cannot be evaluated on Black Ownership in terms of the BBBEE Scorecard;

• The general level of knowledge of the BBBEE Codes of Good Practice and its implications amongst both internal and external

stakeholders has shown some signs of improvement due to ongoing information and awareness campaigns;

• The Company operates in a highly specialised skills field which makes it difficult to recruit and retain skilled employees. This becomes even more difficult when sourcing black, female employees and/or employees with disability;

• Communications technology equipment is mainly manufactured and procured in the USA and Europe;

• Slow transformation pace, very low sustainability of SMME’s due to inadequate financial and other forms of support; and

• The global economic crisis has also significantly contributed to current unfavourable conditions for growing local businesses.

Sustainability Report (CONTINUED)

1. About Sentech. Board of Directors3. Chairperson’s Report4. Chief Executive Officer’s Report5. Sustainability Report6. Financial Review7. Corporate Governance8. Risk Management and Internal Audit9. Annual Financial Statements

Annual Report for the year ended 31 March 200954

BBBEE Scorecard

Management Control (MC)

Sentech did extremely well and achieved the maximum score on the management control element.

The target was reached on both the exercisable voting rights of Black Board members and Black executive directors using adjusted recognition for gender.

The target for Black senior top manage- ment and middle management using the adjusted recognition for gender, was also achieved.

Employment Equity (EE)

The target was achieved for representation of Black employees in senior management (refer to the Human Resources Employment Equity report for details).

Skills Development (SD)

The target was achieved on the percent- age of Black employees participating in, in-service training programmes.

Initiatives focusing on skills development for Black employees with disabilities should be established in an attempt to improve the current position (refer to the Human Resource Skills Development report for details). Preferential Procurement (PP)

Supply Chain Management unit was engaged in the following preferential procurement initiatives, following the significantly low score achieved in last year:• BBBEE Awareness became the focal

point for all the procurement officers

and various internal and external platforms were utilized to promote and increase BEE awareness.

• Strict qualifying criteria for suppliers applying for registration to Sentech's data base were incorporated into the compulsory application documentation required from vendors to ensure that only BBBBEE compliant vendors were registered.

• All suppliers who failed to qualify for registration were offered constructive guidance and also referred to National Empowerment Rating Agency for formal rating at reduced costs negotiated by Sentech.

• A large number of Qualifying Small Enterprises (QSE) and Exempted Micro Enterprises (EME) suppliers were identified through the tender processes and also through the quotation system used at regional offices and as a result certain indirect spend items were set aside and allocated only to the identified SMME's.

Supply Chain Management unit also used information gathered from the sourcing initiatives to promote procurement from suppliers that were 30-50% black-owned.

The combination of these initiatives resulted in significant improvement from 8.85 preferential procurement points scored in 2008 to 18.40 points scored in 2009.

The target was achieved on the BBBEE procurement spend from all suppliers based on the recognition levels and measured procurement spend.Targets were also achieved on BBBEE procurement spend from QSE, EME and on procurement from suppliers that are more than 30% Black women owned.

The Supply Chain Management unit

will continue to expand and improve on all the existing preferential initiatives with the main aim of working towards achieving the maximum score allocated to preferential procurement.

Enterprise Development (EP)

After successive negative results on this element, Sentech is currently formulating an enterprise development plan that will confront challenges experienced.

The initial phase will concentrate on identifying sustainable Exempted Micro Enterprises (EMEs) in the ICT and Broadcasting sector. The second phase will research the identified EME’s profiles and make recommendations indicating the specific type of assistance required by each small supplier.

Sentech will then review the resources and skills available within these organisation and thereafter establish appropriate plans to develop the chosen and suitable small enterprises.

Sentech will also continue to facilitate the current and ongoing non-monetary enterprise development initiatives such as training, advance or early payment, mentoring and coaching of Exempted Micro Enterprises.

Socio Economic Development (SED)

As a responsible corporate citizen, Sentech is involved in many projects and devotes time and energy helping to transform and uplift the lives of the people of South Africa.

The socio economic development element continued to maintain the maximum score which was also achieved in the year under review.

Sustainability Report (CONTINUED)

1. About Sentech. Board of Directors3. Chairperson’s Report4. Chief Executive Officer’s Report5. Sustainability Report6. Financial Review7. Corporate Governance8. Risk Management and Internal Audit9. Annual Financial Statements

Broad-based Black Economic Empowerment (CONTINUED)

Annual Report for the year ended 31 March 200955

GRI disclosure number Description Page number

1.1 Statement from the most senior decision maker of the Company about the relevance of sustainability to the organisation and its strategy.

16

.1 Name of the organisation. 81. Primary brands, products and/or services 8-31,81.3 Operational structure of the organisation,

including main divisions, operating companies, subsidiaries and joint ventures.34,8

.4 Location of organisation’s headquarters. 143.5 Number of countries where the organisation operates, and names of countries with either major opera-

tions or that are specifically relevant to the sustainability issues covered in the report.8-31

.6 Nature of ownership and legal form. 81.7 Markets served (including geographic breakdown, sectors served and types of customers/beneficiaries). 8-31,81.8 Scale of the reporting organisation 8.9 Significant changes during the reporting period regarding size, structure or ownership. 34.10 Awards received in the reporting period.3.1 Reporting period (e.g., fiscal/calendar year) for information provided. 813. Date of most recent previous report (if any). 31 March 0083.3 Reporting cycle (annual, biennial etc). Annual3.4 Contact point for questions regarding the report or its contents. 143.5 Process for defining report content. 43.6 Boundary of the report (e.g. countries, divisions, subsidiaries, leased facilities, joint ventures, suppliers). 83.7 State any specific limitations on the scope or boundary of the report. 81-83.8 Basis for reporting on joint ventures, subsidiaries, leased facilities, outsourced operations and other enti-

ties that can significantly affect comparability from period to period and/or between organisations.91

3.10 Explanation of the effect of any re-statements of information provided in earlier reports, and the reasons for such re-statement (e.g. mergers/ acquisitions, change of base years/periods, nature of business, measurement methods).

135

3.11 Significant changes from previous reporting periods in the scope, boundary or measurement methods applied in the report.

89

3.1 Table identifying the location of the standard disclosures in the report. 55

GRI Index Sentech Sustainability Report 008/09

Sustainability Report (CONTINUED)

1. About Sentech. Board of Directors3. Chairperson’s Report4. Chief Executive Officer’s Report5. Sustainability Report6. Financial Review7. Corporate Governance8. Risk Management and Internal Audit9. Annual Financial Statements

Annual Report for the year ended 31 March 200956

GRI disclosure number Description

Page number

4.1 Governance structure of the organisation, including committees under the highest governance body responsible for specific tasks, such as setting strategy or organisational oversight.

66

4. Indicate whether the chair of the highest governance body is also an executive officer (and, if so, his or her function within the organisation’s management and the reasons for this arrangement).

68

4.3 For organisations that have a unitary board structure, state the number of members of the highest gov-ernance body that are independent and/or non-executive members.

67

4.4 Mechanisms for shareholders and employees to provide recommendations or direction to the highest governance body.

6

4.14 List of stakeholder groups engaged by the organisation. 6-334.15 Basis for identification and selection of stakeholders with whom to engage. 6EC 4 Financial assistance from the Government. 8EC 8 Infrastructure investments for public benefit. 9, 8-9LA 1 Workforce by employment type, employment contract, region. 39-40LA 3 Minimum benefits 41-4LA 4 Employees covered by collective bargaining agreements. 7,4L A 6 Joint health and safety committees 4LA 7 Injury, occupational diseases, lost days etc. 43LA 8 Training on HIV/Aids. 4LA 10 Training per year per employee. 45LA 13 Diversity. 39EN 14 Strategies, current actions and future plans for managing biodiversity impacts. 48EN 4 Hazardous waste. 48HR Percentage of significant suppliers and contractors that have undergone screening on human rights and

actions taken.33

Sustainability Report (CONTINUED)

1. About Sentech. Board of Directors3. Chairperson’s Report4. Chief Executive Officer’s Report5. Sustainability Report6. Financial Review7. Corporate Governance8. Risk Management and Internal Audit9. Annual Financial Statements

GRI Index Sentech Sustainability Report 008/09 (CONTINUED)

Annual Report for the year ended 31 March 200957

GRI disclosure number Description

Page number

4.1 Governance structure of the organisation, including committees under the highest governance body responsible for specific tasks, such as setting strategy or organisational oversight.

66

4. Indicate whether the chair of the highest governance body is also an executive officer (and, if so, his or her function within the organisation’s management and the reasons for this arrangement).

68

4.3 For organisations that have a unitary board structure, state the number of members of the highest gov-ernance body that are independent and/or non-executive members.

67

4.4 Mechanisms for shareholders and employees to provide recommendations or direction to the highest governance body.

6

4.14 List of stakeholder groups engaged by the organisation. 6-334.15 Basis for identification and selection of stakeholders with whom to engage. 6EC 4 Financial assistance from the Government. 8EC 8 Infrastructure investments for public benefit. 9, 8-9LA 1 Workforce by employment type, employment contract, region. 39-40LA 3 Minimum benefits 41-4LA 4 Employees covered by collective bargaining agreements. 7,4L A 6 Joint health and safety committees 4LA 7 Injury, occupational diseases, lost days etc. 43LA 8 Training on HIV/Aids. 4LA 10 Training per year per employee. 45LA 13 Diversity. 39EN 14 Strategies, current actions and future plans for managing biodiversity impacts. 48EN 4 Hazardous waste. 48HR Percentage of significant suppliers and contractors that have undergone screening on human rights and

actions taken.33

Sustainability Report (CONTINUED)

1. About Sentech. Board of Directors3. Chairperson’s Report4. Chief Executive Officer’s Report5. Sustainability Report6. Financial Review7. Corporate Governance8. Risk Management and Internal Audit9. Annual Financial Statements

Hoedspruit transmitter site.

Annual Report for the year ended 31 March 200958 Financial Review

Financial Highlights and Key Financial Performance Indicators1

CoMpAny2009 2008 2007 2006 2005

R’000 R’000 R’000 R’000 R’000Income Statement 2

Revenue 766,702 724,076 723,224 665,470 610,150 Gross profit 364,025 336,609 193,494 190,555 136,999 Operating loss (83,643) (21,920) (1,147) (65,076) (64,341)Net finance costs 57,051 7,919 (21,169) (22,679) (24,803)Loss before taxation (26,592) (14,001) (22,316) (87,755) (89,144)Loss after taxation (20,915) (7,298) (21,530) (76,419) (64,719)

Balance SheetNon-current assets 759,348 905,352 911,767 771,898 815,218 Current assets 1,133,029 816,833 176,078 83,140 215,400 Total assets 1,892,377 1,722,185 1,087,845 855,038 1,030,618

Equity 449,407 527,664 478,999 394,665 464,470

Non-current liabilities 1,061,675 875,015 395,078 270,530 277,450 Current liabilities 381,295 319,506 213,768 189,843 288,698 Total liabilities 1,442,970 1,194,521 608,846 460,373 566,148

Capital expenditure 120,108 53,811 111,657 36,120 41,592

Cash FlowsNet cash inflow from operating activities 216,328 99,027 104,104 (91,207) 115,464 Net increase in cash and cash equivalents 328,832 620,293 78,546 (112,757) 101,248 Cash and cash equivalents at end of the year 1,042,416 713,584 93,291 14,743 127,500

performance MeasuresTurnover growth % 5.9 0.1 8.7 9.1 15.1 Gross profit growth % 8.1 74.0 1.5 39.1 6.7 Operating loss growth % (281.6) (1,811.2) 98.2 (1.1) (181.1)Return on equity % (18.6) (4.2) (0.2) (16.5) (13.9)Return on operating assets % (4.4) (1.3) (0.1) (7.6) (6.2)Gross profit margin % 47.5 46.5 26.8 28.6 22.5 Operating profit margin % (10.9) (3.0) (0.2) (9.8) (10.5)

Notes:1 The financial review has been based on company figures as the results of the subsidiaries consolidated are not material to the Group’s results and financial

position. 2 The income statement analysis above includes continuing and discontinued operations. These results have been split on the Income Statement presented in

the financial statements. Refer to note 22 in the Annual Financial Statements.

1. About Sentech2. Board of Directors3. Chairperson’s Report4. Chief Executive Officer’s Report5. Sustainability Report6. Financial Review7. Corporate Governance8. Risk Management and Internal Audit9. Annual Financial Statements

Annual Report for the year ended 31 March 200959 Financial Review (ConTInUED)

performance against Budget

CoMpAnyActual Budget Variance Var R’ 000 R’ 000 R’ 000 %

Revenue 766,702 944,548 (177,846) (18.83%)Expenditure 850,345 994,475 144,130 14.49%Operating loss (83,643) (49,927) (33,716) (67.53%)Loss before taxation (26,592) (59,169) 32,577 55.06%

Comments on the Financial Highlights and Key Performance Measures

CoMpAny2009 2008 2007 2006 2005

R’000 R’000 R’000 R’000 R’000Debt equity ratio times 2.4 1.7 0.8 0.7 0.6 Gearing ratio times 3.2 2.3 1.3 1.2 1.2 Interest cover times 1.5 2.8 (0.1) (2.9) (2.6)

Definitions Return on equity: Operating loss expressed as a percentage of the average ordinary shareholders’ equity Return on operating assets: Operating loss expressed as a percentage of the average total assets Debt equity: Interest bearing liabilities divided by equity Gearing ratio: Total liabilities divided by equity Interest cover: Operating profit divided by finance costs

Although sales were below target, budget objectives were to some extent controlled through expenditure savings and the benefit of interest income on the Government Grants received. Net revenue increased by R 43 million (5.9%) compared to the previous financial year. The increase was mainly due to annual tariff increases and, to some degree, new service facilities offered. Primary growth potential has been constrained owing principally to funding limitations and the regulatory environment in which the Company operates. One of the business segments that offset the increased revenue was Carrier of Carriers, due to increased competition in the market, the decline in international traffic call volumes worldwide and a volatile currency situation. VSAT also had a negative impact on revenue due to lack of growth in sales and the leads which were initially incorporated into the forecast that did not materialise in the anticipated time lines.

Operating costs increased by 14% (R104 million) compared to the previous financial year. Albeit the Company continued

to focus on cost control, the increase was mainly as a result of extraordinary expenses which include the impairment of assets, accelerated depreciation and other non-recurring expenses devoid of which, the Company would have posted an operating profit.

On 27 January 2009, the Board of Directors resolved to discontinue all non-performing telecommunication products namely MyWireless, Biznet and VAS, as a result of a request by the shareholder. Assets relating to these products were impaired by R45 million after management view to terminate the products.

The depreciation for analogue assets was accelerated and increased by R7 million as a result of the phasing out of analogue assets to DTT infrastructure.

The remainder of the increase in costs was deliberately incurred to enhance future operational performance. Management will continue to focus on the situation.

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Annual Report for the year ended 31 March 200960

Revenue AnalysisCoMpAny

Revenue by Customer Class 2009 2008 Change 2009 2008R’000 R’000 R’000 % % of Total

Public broadcaster 407,405 352,012 55,393 15.7% 53.1% 48.6%Commercial broadcasters 139,743 128,728 11,015 8.6% 18.2% 17.8%Community broadcasters 12,474 9,838 2,636 26.8% 1.6% 1.4%Foreign broadcasters 34,466 32,570 1,897 5.8% 4.5% 4.5%Facility rentals 18,607 16,244 2,362 14.5% 2.4% 2.2%Carrier of Carriers 76,744 91,507 (14,762) (16.1%) 10.0% 12.6%Multimedia 43,783 62,644 (18,861) (30.1%) 5.7% 8.7%Other 33,480 30,534 2,946 9.6% 4.4% 4.2%

766,702 724,076 42,626 5.9% 100.0% 100.0%

Public broadcaster - 54%

Revenue by Customer Class

Facility rentals - 2%

Multimedia - 6%

Foreign broadcaster - 4%

Carrier of Carriers - 10%

Other - 4%

Commercial broadcaster - 18%

Community broadcaster - 2%

2009Public broadcaster - 49%

Revenue by Customer Class

Facility rentals - 2%

Other - 4%

Multimedia - 9%

Foreign broadcaster - 4%

Carrier of Carriers - 13%

Commercial broadcaster - 18%

Community broadcaster - 1%

2008

Revenue by Customer Class

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Financial Review (ConTInUED)

In order to sustain or increase the growth in revenue, it is imperative that the shareholder provides more funding for Sentech to roll out new infrastructure in the telecommunications and broadcasting businesses.

In order to mitigate against the current business concentration risk, with the major share of our revenue deriving from broadcast signal distribution for the SABC, ICASA should ideally licence

other broadcasters and more broadcasting services.

The Government Grants received are invested and will only be drawn to meet specific projects needs, and therefore cannot be utilised to improve other business operations. The Post Retirement Medical Aid liability has in the past grown annually at higher than inflation rates, and would require the Shareholder to fund this liability in order to enable the company to buy out this benefit.

Annual Report for the year ended 31 March 200961

Public broadcaster - 49%

Revenue by Customer Class

Facility rentals - 2%

Other - 4%

Multimedia - 9%

Foreign broadcaster - 4%

Carrier of Carriers - 13%

Commercial broadcaster - 18%

Community broadcaster - 1%

2008

Revenue Analysis (CONTINuED)CoMpAny

Revenue by Product Category 2009 2008 Change 2009 2008R’000 R’000 R’000 % % of Total

Terrestrial television services 313,151 290,049 23,103 8.0% 40.8% 40.1%

Terrestrial FM and AM radio services 138,209 121,430 16,779 13.8% 18.0% 16.8%

Terrestrial short wave radio services 35,097 31,640 3,457 10.9% 4.6% 4.4%

Terrestrial and satellite linking 85,092 60,494 24,598 40.6% 11.1% 8.4%

Satellite direct-to-home 29,806 23,600 6,206 26.4% 3.9% 3.3%

Business television 13,192 11,912 1,279 10.7% 1.7% 1.6%

Facility rentals 18,936 16,548 2,387 14.4% 2.5% 2.3%

Sales of satellite decoders 255 2,833 (2,578) -91.0% 0.0% 0.4%

Carrier of Carriers 76,744 91,507 (14,762) -16.1% 10.0% 12.6%

VSAT 34,169 44,294 (10,125) -22.9% 4.5% 6.1%

Broadband wireless 6,111 15,108 (8,996) -59.5% 0.8% 2.1%Other 15,936 14,661 1,275 8.7% 2.1% 2.0%

766,702 724,076 42,626 5.9% 100.0% 100.0%

Terrestrial television services - 41%

Revenue by product category

Satellite direct-to-home - 4%

Facility rentals - 2%

Terrestrial and satellite linking - 11%

Business television - 2%

Carrier of Carriers - 10%

VSAT - 4%

Broadband wireless - 1%Other - 2%

Terestrial FM and AM radio services - 18%

Terrestrial short wave radio services - 5%

2009

Terrestrial television services - 40%

2008Satelite direct-to-home - 3%

Sales of satellite decoders - 1%

Facility rentals - 2%

Terrestrial and satellite linking - 8%

Business television - 2%

Carrier of Carriers - 13%

VSAT - 6%

Broadband wireless - 2% Other - 2%

Terestrial FM and AM radio services - 17%

Terrestrial short wave radio services - 4%

2008

Revenue by Product Category

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Financial Review (ConTInUED)

Annual Report for the year ended 31 March 200962

The interest expense arose mainly due to the DBSA Loan.

The significant increase in interest income was due to the interest earned on the Government Grants received and not yet utilised for specific capital projects.

Expenses by Nature

CoMpAny2009 2008 Variance Var 2009 2008

R’000 R’000 R’000 % % of totalEmployee benefit expense 253,575 234,163 25,152 10.7% 29.8% 31.4%Depreciation 133,712 91,757 41,955 45.7% 15.7% 12.3%Amortisation of intangibles 5,456 2,946 2,510 85.2% 0.6% 0.4%Impairment of property, plant and equipment 45,869 - 45,869 100.0% 5.4% 0.0%Transportation expenses 7,865 9,521 (1,656) (17.4%) 0.9% 1.3%Advertising costs 5,637 6,778 (1,141) (16.8%) 0.7% 0.9%Operating lease payments 14,449 56,530 (42,081) (74.4%) 1.7% 7.6%Auditor’s remuneration- Audit fees 1,989 1,677 312 18.6% 0.2% 0.2%- Fees for other services 200 73 127 174.0% 0.0% 0.0%Legal and consulting fees 8,045 4,550 3,495 76.8% 0.9% 0.6%Other cost of sales, selling, admin and operating expenses 373,549 338,001 29,808 8.8% 43.9% 45.3%Cost of sales, selling, admin and operating expenses 850,345 745,996 104,349 14.0% 100.0% 100.0%

Finance Income and Costs

CoMpAny2009 2008 Variance Var

Interest expense R’000 R’000 R’000 %- Borrowings 17,393 5,682 11,711 206.1%- Finance lease 129 876 (747) (85.3%)- Other 14,020 13,390 630 4.7%Finance costs 31,542 19,948 11,594 58.1%Interest income (88,593) (25,138) (63,455) 252.4%Net foreign exchange gains on financing activities - (2,729) 2,729 (100.0%)Finance income (88,593) (27,867) (60,726) 217.9%Total interest income (103,200) (27,867) (75,333) (270.3%)Interest income capitalised (Note13) 14,607 - 14,607 100.0%Net finance costs (57,051) (7,919) (49,132) 620.4%

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Expenses

Financial Review (ConTInUED)

Annual Report for the year ended 31 March 200963

The Company’s operating cash flow for the year was positively influenced by stricter cost control. However, this was negated by deterioration in our working capital, mainly due to a decrease in accounts receivable and inventories. The net cash generated from investing activities in-cludes the Government Grant of R 200 million received for the 2010 World Cup Soccer project and R 150 million for the DTT Phase 3 project.

Total Assets increased by R170 million from last year due to increased cash holdings in respect of Government Grants.

Total Liabilities increased by R248 million from last year due to the increase in deferred revenue (Government Grants).

Cash Flows

Highlights from the company’s cash flow performance is shown below:CoMpAny

2009 2008 VarianceR’000 R’000 R’000

Net cash inflow from operating activities 216,328 99,027 117,301 Net cash outlow from investing activities (191,473) (96,936) (94,537)Net cash utilised in financing activities 303,977 618,202 (314,225)Net increase in cash and cash equivalents 328,832 620,293 (291,461)Cash and cash equivalents at the end of the year 1,042,416 713,584 328,832

Balance Sheet

CoMpAny2009 2008 Variance

R’000 R’000 R’000Non-current assets 759,348 905,352 (146,004)Current assets 1,133,029 816,833 316,196 Total assets 1,892,377 1,722,185 170,192

Equity 449,407 527,664 (78,257)

Non-current liabilities 1,061,675 875,015 186,660 Current liabilities 381,295 319,506 61,789 Total liabilities 1,442,970 1,194,521 248,449

Capital expenditure 120,108 53,811 66,297

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Financial Review (ConTInUED)

Annual Report for the year ended 31 March 200964

The Company has a comprehensive treasury policy in place that is consistent with previous years. The treasury department is responsible for managing liquidity, interest rate, foreign currency and counterparty risks. Furthermore, all dealings and contract negotiations with banks and other lenders are centrally coordinated within the treasury function. An internal treasury risk management team monitors and evaluates the company’s exposure to the aforesaid risks and ultimately reports into the Audit Committee. All exposures are administered within well-defined limits of authority and cautiously monitored.

An overriding philosophy of the Company’s treasury function is that derivative transactions will only be concluded for hedging purposes and no speculative trading is permitted.

Management of the Company’s financial risks are discussed in Note 3 of the financial statements. Additional comments on the Company’s foreign exchange risks are noted below.

Because of the global nature of the market, where Sentech acquires equipment for its capital projects and satellite transponder capacity, the fluctuations in the exchange rates of the most important currencies influencing operating costs and asset valuations (the US Dollar, Euro and British Pound) may adversely affect financial results to a material extent. The Company circumvents its exposure to currency fluctuations by purchasing forward exchange contracts. Capital and inventory imports are significant, and capital imports are contingent on capital replacement and capital expansion programs.

Financial Risks

0

2

4

6

8

10

12

14

16Swiss Franc

Swedish Krona

Euro

British Pound

US Dollar

20052006200720082009

Average Exchange Rates for Foreign Currencies

2009 2008 2007 2006 2005uS Dollar 8.80 7.70 7.16 6.37 6.29British Pound 14.85 15.19 13.74 11.38 11.59Euro 12.73 11.27 9.32 7.76 7.89Swedish Krona 0.79 0.85 0.98 1.16 1.10Swiss Franc 0.12 0.15 0.17 0.19 0.19

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Financial Review (ConTInUED)

Annual Report for the year ended 31 March 200965

Average Exchange Rates for Foreign Currencies

2009 2008 2007 2006 2005uS Dollar 8.80 7.70 7.16 6.37 6.29British Pound 14.85 15.19 13.74 11.38 11.59Euro 12.73 11.27 9.32 7.76 7.89Swedish Krona 0.79 0.85 0.98 1.16 1.10Swiss Franc 0.12 0.15 0.17 0.19 0.19

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Financial Review (ConTInUED)

Mindset Learn - Lenasia, Johannesburg South.

Annual Report for the year ended 31 March 200966

Corporate Governance

Corporate Governance

In order to achieve its national strategic objectives, Sentech has built sound corporate governance structures and processes in compliance with the Sentech Act 63 of 1996, Sentech Amendment Act 44 of 1999, Articles of Association, Government Protocol on Corporate Governance, Public Finance Management Act 1 of 1999 (as amended) and Treasury Regulations, that are regularly reviewed in line with changes in the regulatory and business environment. Sentech further supports and endorses the guiding principles of the South African Code of Corporate Practices and Conduct as included in King Report (King II) and in the draft King III Report.

The Group has further noted the new Companies Act 71 of 2008 and will work towards implementing the applicable provisions from the effective date.

During the year under review, the Sentech participated in a Corporate Governance audit commissioned by the Department of Communications. The audit was conducted by Deloitte and Touche. The report on the outcome of the audit was presented to the Board.

The Board submitted its comments to the report in a letter to the Minister of Communications. The report noted that there is general compliance with principles of good governance in Sentech and identified areas for improvement.

Public Finance Management Act

As a State Owned Enterprise (SOE), Sentech is required to comply with the Public Finance Management Act (PFMA) and

Treasury Regulations.

In terms of the PFMA, Sentech is classified as a Schedule 3b National Public Enterprise reporting to the Minister of Communications. The Minister of Communications (Minister), who is the sole shareholder of Sentech on behalf of the State, is defined as the “executive authority” and the Board of Directors is defined as the “accounting authority”. The Chief Executive Officer is the “accounting officer” of Sentech.

Board Charter

The Board has adopted a charter, which provides a concise overview of the role, powers, functions, duties and responsibilities of the directors, both collectively and individually.

The Board has determined that based on the Articles of Association, Shareholder’s Compact and applicable legislation, its main functions and responsibilities are as follows:

• Give strategic direction to the Group in line with Government’s objectives and ensure that Sentech remains a sustainable and viable business. The strategic objectives are set out in the annual Corporate Plan submitted to the Department of Communications and National Treasury;

• Prepare and approve corporate plans, annual budgets, Annual Reports and financial statements;

• Effectively lead, control and manage the Sentech

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Annual Report for the year ended 31 March 200967 Corporate Governance (ConTInUED)

business subject to the provisions of the Sentech Act; Sentech Amendment; Shareholder’s Compact; Companies Act; PFMA and other applicable legislation;

• Monitor and evaluate implementation by executive Management of the Board’s strategies and performance objectives as set out in the Corporate Plan and Shareholder’s Compact;

• Ensure that the Group is managed effectively in accordance with corporate governance best practice and highest ethical standards;

• Responsibility for the risk management process, including the system of internal controls and ensuring that it is effective, efficient and transparent; and

• Regularly assess the performance and effectiveness of the Board as a whole and the individual directors, including the Chairperson of the Board and Chief Executive Officer, committees of the Board and the chairpersons of the committees.

The Structure, Composition and Size of the Board

Structure and sizeIn terms of the Sentech Amendment Act, the Board shall consist of three executive directors and at least four non-executive directors. The three executive directors shall be the persons performing the functions of a Chief Executive Officer, Chief Operations Officer and Chief Financial Officer. In terms of the Shareholder’s Compact, the number of non-executive directors shall be limited to a maximum of seven directors.

The executive directors are appointed by the Minister on the recommendation of the Board. On the appointment of non-executive directors, the Board makes nominations which the Minister may consider for appointment.

As at 31 March 2009, the Board had a unitary structure comprising a total of ten directors; three executive and seven non-executive directors. The Board was balanced in terms of skills and expertise. In terms of gender there was an equal split. In terms of racial diversity, 90% of the directors are historically disadvantaged South Africans.

CompositionFor the period under review, following the resignations of Mr. Bheki Langa and Mr. Solly Mokoetle in the 2007/8 financial year, the Board requested the Minister to appoint two additional non-executive directors, with financial accounting, corporate finance and ICT technical skills and expertise. It was on this basis that two additional appointments were made: Mr. Tau Mashigo and Dr. Yvonne Muthien were appointed with effect from1 September 2008.

Board Membership and Meeting Attendance

In terms of the Articles of Association, the Board should hold at least four meetings per year and any special meetings as and when required. During the period under review the Board held five scheduled board meetings, two strategic workshops to formulate and approve the new business strategy and three special meetings convened to address urgent matters relating to the Sentech funding requirements.

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Annual Report for the year ended 31 March 200968

Director’s name position on the Board Appointment date

Expiry of term

of office

Scheduled Board

meetings attended

Special Board

meetings attended

Strategic Workshops

attended

Mr. Colin HicklingNon-executive directorChairperson 1 Jan 1995 31 Aug 2011 5/5 3/3 2/2

Dr. Sebiletso Mokone-Matabane

Executive directorChief Executive Officer 1 Mar 2003 30 Sept 2010 5/5 3/3 2/2

Ms. Beverly Ngwenya Executive directorChief Operations Officer 11 Jun 2007 31 May 2012 5/5 3/3 2/2

Mr. Mohammed Siddique Cassim

Executive directorChief Financial Officer 1 May 2006 30 April 2011 5/5 3/3 2/2

Dr. Deenadayalen Konar** Non-executive director 1 April 2005 31 Aug 2011 4/5 1/3 2/2

Mr. Thabo LeeuwNon-executive directorChairperson: Audit Committee 1 April 2005 31 Aug 2011 5/5 2/3 1/2

Mr. Tau Mashigo* Non-executive director 1 Sep 2008 31 Aug 2011 2/2 1/2*** 1/2

Dr. Yvonne Muthien* Non-executive director 1 Sep 2008 31 Aug 2011 2/2 1/2 1/2

Ms. Nandipha SihlaliNon-executive directorChairperson: Technology Committee 1 Mar 2006 28 Feb 2012 5/5 1/2 2/2

Adv. Nonkumbulo Tshombe

Non-executive director Chairperson: HRA, Remuneration & Nominations Committee 1 Dec 2003 30 Nov 2010 4/5 2/3 2/2

* Appointed 1 September 2008** Chairperson of the Audit Committee until 31 December 2008*** Attended the meeting of 28 August 2008 by invitation

Corporate Governance (ConTInUED)

Role of the Chairperson and Chief Executive Officer

The role of the Chairperson of the Board and Chief Executive Officer does not vest in the same person. In terms of the Sentech Amendment and the Company’s Articles of Association, the Minister has appointed a non-executive director as Chairperson of the Board. The Chief Executive Officer is an executive director of the Board.

Mr. Colin Hickling was reappointed as non-executive Chairperson for three years, starting 1 September 2008.

Dr. Sebiletso Mokone-Matabane’s term expires on 30 September 2010.

Role of the Company Secretary

The role of the Company Secretary is to advise the directors, both individually and collectively on their powers, duties and responsibilities in compliance with the Sentech Act, Sentech

Amendment Act, Public Finance Management Act and Treasury Regulations, Shareholders Compact, Companies Act, Government Protocol on Corporate Governance, King II and other applicable legislation.

The directors have unrestricted access to the Company Secretary and other officials in the Company Secretariat.

Director Induction and Training

New directors are taken through an induction programme which covers the following topics: Sentech’s strategic objectives, financial and operational status; and corporate governance practices.

In addition, new directors receive an ‘Induction Manual’ which is a collation of applicable legislation, policies and regulations; business plans and other information relating to the Sentech business; and information from the Company Secretariat on Sentech as a corporate entity and the functioning of the Board.

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Annual Report for the year ended 31 March 200969

Chairperson of Board other non-executive Directors

Chairperson of Board Committees

Annual retainer R250 000 R100 000

Meeting fee:

• Board R8 000 R6 000

• Audit Committee R6 000 R8 000

• Human Resources Committee R5 000 R6 000

• Technology Committee R6 000 R8 000

Other work outside Board and Committee meetings R2 000/hour R2 000/hour

Directors Remuneration

Corporate Governance (ConTInUED)

The Board conducts an annual evaluation of the performance of the Board as a whole and of the individual directors, including the Chairperson of the Board. The evaluation assesses the Board’s effectiveness and how the participation of each director can be improved and developed.

As required in terms of the Shareholder’s Compact, the outcome of the evaluation is presented to the Minister. For the period under review, the Board conducted a self assessment the outcome of which was reported to the Minister.

Directors’ remuneration is detailed on page 131 of the annual financial statements.

Code of Ethics

The Group has a number of policies that effectively constitute a Code of Ethics which regulates the behaviour and conduct of Board members, management and the general staff body. These policies address the following key components of Ethics:

• Fraud;• Human rights and discrimination;• Employment Equity;• Political activity;• Stakeholder relations; • Conflict of interest; and• Declaration of gifts from suppliers and customers.

The Policies have been communicated to staff and are reviewed, as and when necessary, to ensure alignment to best business practices and changes in the legislative environment.

Appointment of External Auditors

Following an open tender process, the Shareholder appointed KPMG Inc. as the external auditors of Sentech Limited and its subsidiaries with effect from date of the Annual General Meeting held on 28 August 2008. In accordance with the Public Audit Act, the appointment is for a one year period which may be renewed.

Committees of the Board of Directors

The Board has three committees:

• Audit;• Technology; and• Human Resources, Affirmative Action, Remuneration

and Nominations.

The Minister determines the remuneration structure for non-executive directors. Following a review of the remuneration packages paid to non-executive directors of all State Owned Enterprises (SOEs) reporting to the Department of

Communications, the Minister determined a new remuneration structure which was effective from 1 January 2008. The current remuneration structure is as follows:

Board Evaluation

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Annual Report for the year ended 31 March 200970

Director’s name position on the Committee Scheduled Committee Meetings Attended

Mr. Thabo Leeuw* Chairperson 5/6Dr. Sebiletso Mokone-Matabane Member - Chief Executive Officer 6/6Mr. Mohammed Siddique Cassim Member - Chief Financial Officer 6/6Dr. Deenadayalen Konar** Member - Non-executive director 4/6Mr. Tau Mashigo*** Member - Non-executive director 2/2Mr. John Saker Independent adviser 5/6Adv. Nonkumbulo Tshombe Member - Non-executive director 6/6* Appointed Chairperson of the Audit Committee from 1 January 2009** Chairperson of the Audit Committee until 31 December 2008*** Appointed to serve on the Committee from 27 October 2008

Corporate Governance (ConTInUED)

All committees have adopted terms of references which are reviewed as and when necessary to ensure that they continue to be relevant and also in compliance with applicable legislation. For the period under review, the Committees have complied with their responsibilities under their terms of references.

Audit Committee

In its annual review of the terms of references of this committee, the Board, in line with the terminology used in the Public Finance Management Act (PFMA), new Companies Act and guidelines in the proposed King III, changed the name of this committee from “Audit & Risk” to “Audit” Committee. The Committee will continue to have oversight on the risk management and internal audit.

Purpose of the CommitteeThe Audit Committee is constituted in terms of sections 76 and 77 of the PFMA and regulation 27.1.1 of the Treasury Regulations. The purpose of the committee is to review the following:

• The effectiveness of internal control systems;• The effectiveness of internal audit;• The risk areas of the entity’s operations to be covered

in the scope of the internal and external audits;• Oversight of the risk management process;• The adequacy, reliability and accuracy of financial

information provided to management and other users of such information;

• Any accounting and auditing concerns identified as a result of internal and external audits;

• The entity’s compliance with legal and regulatory provisions;

• The activities of the internal audit function, including its annual work programme, co-ordination with the external auditors, the reports of significant investigations and the responses of management to specific recommendations; and

• The independence and objectivity of the external auditors.

Composition of the CommitteeIn line with the requirements of section 77(a) of the PFMA, the Audit Committee included at least three non-executive directors, two executive directors (the Chief Executive Officer and Chief Financial Officer) and an independent adviser, Mr. John Saker. The Chief Operations Officer (COO) attends all meetings by invitation.

Due to a potential conflict of interest, Dr Deenadayalen Konar stepped down as Chairperson of the Audit Committee and the Board appointed Mr. Thabo Leeuw with effect from 1 January 2009 in his place.

In subsequent events to the period under review:

• The composition was amended to have the Audit Committee constituted of only non-executive directors and any independent advisor(s) appointed by the Board as and when necessary; and

• Mr. John Saker resigned as an independent advisor following the appointment of KPMG Inc as external auditors. He currently attends the Audit Committee meetings as part of the external auditors.

MeetingsThe committee holds six meetings a year and special meetings

noTE: UnDER MEETInG ThE pARAGRAph IS InCoMplETE

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Annual Report for the year ended 31 March 200971

Director’s name position on the Committee Scheduled Committee Meetings Attended

Ms. Nandipha Sihlali Chairperson 3/3Dr. Sebiletso Mokone-Matabane Member - Chief Executive Officer 3/3Ms. Beverly Ngwenya Member - Chief Operations Officer 3/3Mr. Thabo Leeuw Member - Non-executive director 1/3Mr. Mlamli Booi Member - Independent adviser 3/3Mr. Tau Mashigo* Member - Non-executive director 0/1Dr. Yvonne Muthien* Member - Non-executive director 1/1

* Appointed to serve on the Committee from 27 October 2008

Corporate Governance (ConTInUED)

Technology Committee

Purpose of the CommitteeThe purpose of the committee is to review and provide the Board with recommendations on the following:

• Technology (ies) to support the business objectives;• Performance of all Sentech networks, including sales

performance;• Maintenance and operations of all Sentech networks;

and• Information technologies (IT) and information systems

(IS).

Composition of the CommitteeThe committee is constituted of four non-executive directors: Ms. Nandipha Sihlali (Chairperson), Mr Thabo Leeuw, Mr Tau Mashigo and Dr. Yvonne Muthien; one independent adviser, Mr. Mlamli Booi and two executive directors, namely the Chief Executive Officer and the Chief Operations Officer. The executives responsible for technology, operations and maintenance attend all meetings by invitation.

MeetingsThe committee holds three meetings a year and special meetings as necessary. For the period under review, the committee held three meetings and no special meetings. The attendance record for the individual members is outlined below:

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Annual Report for the year ended 31 March 200972

The Executive Committee is constituted in terms of the Sentech Amendment Act and Articles of Association, which provides that the day-to-day affairs of the Company shall be managed by the executive committee which consists of the executive directors of the Board: Chief Executive Officer, Chief Operations Officer and Chief Financial Officer.

Other members of Management are invited to attend, as and when required.

The committee is chaired by the Chief Executive Officer. Forty-six meetings were held, including 19 ordinary meetings, 26 special meetings and one workshop.

Going Concern

The going concern status of Sentech Limited is dealt with on page 82 of the Directors’ Report.

For the third year, Sentech is presenting the Annual Report to include a Sustainability Report, which conforms to the principles of triple bottom-line reporting. The information

focuses on the economic, social and environmental elements of the business. The Sustainability Report is included on page 17-57 of the Annual Report.

Human Resources, Affirmative Action, Remuneration and Nominations Committee

Purpose of the CommitteeThe committee reviews and provides the Board with recommendations on the following:

• Human resources issues in general, including HR policies and procedures, retention of staff and employment equity;

• Remuneration and benefits of non-executive and executive directors, senior management;

• Nomination of non-executive directors; and• Recruitment of executive directors.

Composition of the CommitteeThe composition of the committee includes four non-executive directors: Adv Nonkumbulo Tshombe (Chairperson), Mr. Colin Hickling, Dr. Yvonne Muthien and Ms. Nandipha Sihlali, and two executive directors, namely the Chief Executive Officer and Chief Operations Officer.

The Human Resources executive attends all meetings by invitation.

MeetingsThe committee holds three meetings a year and special meetings as and when necessary. During the year under review, the committee held three meetings and no special meetings.

Director’s name position on the Committee Scheduled Committee Meetings Attended

Adv. Nonkumbulo Tshombe Chairperson 2/3Mr. Colin Hickling Member - Non-executive director 3/3Dr. Sebiletso Mokone-Matabane Executive director - Chief Executive Officer 3/3Ms. Beverly Ngwenya Executive director - Chief Operations Officer 3/3Dr. Yvonne Muthien* Member - Non-executive director 1/1Ms. Nandipha Sihlali Member - Non-executive director 3/3

Executive Committee (EXCO)

Sustainability Report

Corporate Governance (ConTInUED)

1. About Sentech2. Board of Directors3. Chairperson’s Report4. Chief Executive Officer’s Report5. Sustainability Report6. Financial Review7. Corporate Governance8. Risk Management and Internal Audit9. Annual Financial Statements

* Appointed to serve on the Committee from 27 October 2008

Annual Report for the year ended 31 March 200973

Risk Management Objectives

The Sentech Board is responsible for: • The process of risk management and the system of internal

control, which is regularly reviewed for effectiveness and for establishing appropriate risk and control policies and communicating these throughout the Group;

• Ensuring that there is an ongoing process for identifying, evaluating and managing the significant risks faced by the Group, that has been in place for the year under review and up to the date of approval of the annual report and financial statements;

• Ensuring that there is an adequate system of internal control in place to mitigate the significant risks faced by the Group to an acceptable level. Such a system is designed to manage, rather than eliminate, the risk of failure or maximise opportunities to achieve business objectives. This can only provide reasonable, but not absolute, assurance;

• Ensuring that there is a documented and tested process in place that will allow the Group to continue its critical business processes in the event of a disastrous incident impacting on its activities;

• Where material joint ventures and associates have not been dealt with as part of the group for the purposes of applying these recommendations.

• Management and internal control assurance applied to these activities should be disclosed, where these exist;

• That any additional information in the annual report to assist understanding of the Group's risk management processes and system of internal control should be provided as appropriate; and

• Where the board cannot make any of the disclosures set out above, it should state this fact and provide a suitable explanation.

Accordingly, in 2005 the Board approved a Risk Management Strategy and Policy, which was communicated to all employees.

During the financial year under review, the Group continued its implementation of an updated Risk Management Strategy and has been monitoring compliance thereto. Ongoing efforts are made to ensure that the Risk Management Strategy becomes part of the organisational culture.

Framework for the Risk Management Process

Sentech’s risk management process is based on the framework developed by the Committee of Sponsoring Organisations of the Treadway Commission (COSO) called Enterprise Risk Management - Integrated Framework, as well the Control Objectives for Information and related Technology (CobiT) Framework. These Frameworks underpin the processes of

identifying, assessing and mitigating real and potential threats to the Group’s key business objectives and strategic intent. The risk management process is designed to be practical, effective, cost efficient and be applied to all areas of potential exposure to risk.

The Group’s approved risk management policy is documented in its comprehensive Risk Management Manual. The manual is available to all staff and managers on the Group’s Intranet. This document gives practical guidance to staff on identifying, assessing, mitigating and reporting risks. It also defines roles and responsibilities for risk management procedures.

Roles and Responsibility for Risk Management

The Board has delegated the task of monitoring the risk management process to the Audit Committee. The Executive Committee is responsible for ensuring that all significant risks facing the Group are managed in accordance with the Risk Management Policy Framework. Risk Champions in each business unit support their Executive and act as facilitators for the risk management process in their area. Line management is responsible for managing and mitigating risks at the operational level. A Risk Steering Committee plays an oversight role in the design and implementation of the risk management process. The Group’s Risk Manager facilitates the risk management process on an enterprise-wide level.

Key RisksKey business risks identified and assessed in the previous financial year are still relevant. The top risks facing the Group’s achievement of its strategic business objectives are:

1. Funding (High Risk)

The lack of adequate or access to funding is a major factor inhibiting the Group to control and mitigate its key strategic risks.

2. Back-up Facilities - Redundancy (High Risk)

The Group is significantly dependent on a single facility housing all it’s essential infrastructure for supplying broadcasting and telecommunications services throughout the country (and into other parts of the world). The second teleport, to be build at NASREC for the 2010 World Cup Soccer will as a legacy of this event, eliminate this risk.

3. ICT Skills Shortages (High Risk)

The human capital demand for technological and technical skills exceeds the supply countrywide. Overseas countries also hold in high esteem the sectoral South African skills market. Sentech is vulnerable to the migration of scarce ICT

Risk Management and Internal Audit

Risk Management and Internal Audit

1. About Sentech2. Board of Directors3. Chairperson’s Report4. Chief Executive Officer’s Report5. Sustainability Report6. Financial Review7. Corporate Governance8. Risk Management and Internal Audit9. Annual Financial Statements

Annual Report for the year ended 31 March 200974

skills to its competitors or other markets which have ‘deep remuneration pockets’.

Sentech has introduced a Retention Bonus and a Career Progression system to mitigate this risk. The Group has also implemented an Integrated Performance Management System.

4. Competition (High Risk)

New participants are increasingly entering the markets in which Sentech operates, due to liberalisation of the sector as a result of the Electronic Communications Act (ECA). This, in turn, requires Sentech to remain competitive and satisfy customer demands. A turn around strategy, including a growth strategy, is currently being implemented in mitigation.

5. Exchange Rate Fluctuations (High Risk)

Sentech procures most of its equipment for the broadcasting and telecommunications business from Europe. The Group also has long term satellite contracts that are dollar based. Consequently, the Group’s business is exposed to exchange rate fluctuations.

6. Concentration Risk (High Risk)

Sentech is overly dependent on SABC as a client. Sentech receives 54 % of its revenue from the Broadcaster. Should SABC be unable to pay this account, and / or self provide, then Sentech’s going concern status will be questionable.

7. CoC Fixed Cost Recovery Risk (High Risk)

The Carrier of Carriers (CoC) business margins have been steadily declining since its launch in 2003. The viability of this business is questionable. A turnaround strategy has been formulated and is currently being implemented.

Internal Audit

The Internal Audit activity provides the Board with independent assurance concerning its risk management, control and governance processes. Internal Audit reports functionally to the Chairperson of the Audit Committee, formatively to the Chief Executive Officer and administratively to the Chief Financial Officer. The role of Internal Audit is to provide support to management and the Audit Committee in discharging their responsibilities. The Internal Audit function is currently outsourced to PKF Inc, an independent audit firm, on a three year contract, having been appointed in November 2007 following a due tender process.

The scope of the internal audit function includes assessing the adequacy of internal controls, fraud prevention, risk management

and the safeguarding of assets. Unrestricted consultation is encouraged between Internal Audit and the directors and management of Sentech. In the period under review Internal Audit conducted reviews of Human Resources and Payroll, Projects, the Information Technology Environment and Inventory as well as certain ad-hoc requests by management and approved by the Audit Committee.

Internal Audit Plan

The Audit Committee and Board have approved an Internal Audit Charter to help regulate and guide the Internal Audit function. Based on the Charter, the Board has approved a three year Internal Audit Plan. The Board has delegated the authority to the Audit Committee to monitor Internal Audit performance against the approved plan. The Internal Audit Plan focuses on the following key areas: • The information systems environment; • The reliability and integrity of financial and operational

information; • The effectiveness of operations; • Safeguarding of assets; and • Compliance with laws, regulations and control.

Internal audits are conducted in accordance with standards set by the Institute of Internal Auditors.

Fraud Prevention Plan

In line with its Fraud Prevention Plan and Policy, the Group has established a “whistle blowing” service facility. The Group uses an independent whistle blowing service, “TipOffs Anonymous”, to receive and log complaints from Sentech staff and outsiders. This facility allows Employees anonymously to record their concerns regarding potential fraud and ethics violations. These calls are forwarded to the Chairperson of the Board and thereafter to the Chief Executive Officer for investigation. All calls received are investigated and action is taken, where appropriate.

Investigations

For the period under review, no forensic investigation took place

Conclusion

The current risk management and internal audit structures provide the Board with appropriate assurance that business significant risks are systematically identified, assessed and mitigated in order to meet Sentech’s risk appetite and tolerance. In this way, the Board recognises that all material risks to which Sentech is exposed and is assured that the requisite risk management culture, practices, policies, resources and systems are progressively implemented and effective.

Risk Management and Internal Audit (ConTInUED)

1. About Sentech2. Board of Directors3. Chairperson’s Report4. Chief Executive Officer’s Report5. Sustainability Report6. Financial Review7. Corporate Governance8. Risk Management and Internal Audit9. Annual Financial Statements

Annual Report for the year ended 31 March 2009751. About Sentech2. Board of Directors3. Chairperson’s Report4. Chief Executive Officer’s Report5. Sustainability Report6. Financial Review7. Corporate Governance8. Risk Management and Internal Audit9. Annual Financial Statements

Short Wave facility in Meyerton.

Risk Management and Internal Audit (ConTInUED)

Annual Report for the year ended 31 March 200976

ContentsDirectors’ Responsibility for Financial Reporting 77

Statement by Company Secretary 78

Independent Auditors’ Report 79

Report of the Audit Committee 80

Directors’ Report 81-83

Balance Sheets 84

Income Statements 85

Statements of Changes in Equity 86-87

Cash Flow Statements 88

Notes to the Annual Financial Statements 89-137

Annual Financial Statements

Annual Financial Statements

Annual Report for the year ended 31 March 200977

Directors’ Responsibility for Financial Reporting

The Public Finance Management Act (PFMA) requires the directors to prepare annual financial statements that comply with International Financial Reporting Standards.

The directors are responsible for the Group’s system of internal control, which is designed to provide reasonable, but not absolute, assurance against material misstatement and loss. Internal control is broadly defined as a process, effected by a Group’s board of directors, management and other personnel, designed to provide reasonable assurance regarding the achievement of objectives in the following categories:

• economical, efficiency and effectiveness of operations;

• internal financial controls; and

• compliance with applicable laws and regulations.

The directors have reviewed the Group’s system of internal control for the period from 1 April 2008 to 31 March 2009. The directors are of the opinion that internal controls are adequate and that the financial records can be relied upon for preparing the annual financial statements. The directors are unaware of any significant breakdown in internal controls during the financial period reported on. They believe that the group will continue its operational activities for the foreseeable future, as a going concern.

The financial statements for the year ended 31 March 2009, which appear on pages 81 to 137 were approved by the board of directors on 21 July 2009 and signed on its behalf by:

Mr CK HicklingChairperson

Dr S Mokone-MatabaneChief Executive Officer

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Annual Financial Statements (CONTINUED)

Annual Report for the year ended 31 March 200978

In terms of section 268(G)(d) of the Companies Act 61 of 1973, I certify that the Company has lodged with the Registrar of Companies all such returns as are required of a public company in terms of the Act, and that all such returns are true, correct and up to date.

Adv R ImasikuCompany Secretary

Statement by Company Secretary

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Annual Financial Statements (CONTINUED)

Annual Report for the year ended 31 March 200979

Independent Auditors’ Report

Report on the Financial StatementsWe have audited the annual financial statements and group annual financial statements of Sentech Limited, which comprises of the balance sheets at 31 March 2009, and the income statements, the statements of changes in equity and cash flow statements for the year then ended, and notes which include a summary of significant accounting policies and other explanatory notes and the directors’ report, as set out on pages 81 to 137

Directors’ Responsibility for the Financial StatementsThe Group’s directors are responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards and in the manner required by the Companies Act of South and the Public Finance Management Act. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditor’s ResponsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor

considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting principles used and the reasonableness of accounting estimates made by management, as well as evaluating the overall financial statement presentation.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OpinionIn our opinion, these financial statements present fairly, in all material respects, the financial position of the Sentech Limited and subsidiaries at 31 March 2009, and financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards and in the manner required by the Companies Act of South Africa and the Public Finance Management Act.

Report on other Legal and Regulatory Requirements

Report on Performance InformationWe have reviewed the performance information set out on pages 18 to 19.

Responsibilities of the DirectorsThe accounting officer has additional responsibilities as required by section 40(3)(a) of the PFMA to ensure that the annual report and audited financial statements fairly present the performance against predetermined objectives of the company.

The accounting authority has additional responsibilities as required by section 55(2)(a) of the PFMA to ensure that the annual report and audited financial statements fairly present the performance against predetermined objectives of the public entity.

Auditor’s ResponsibilityWe conducted our review in accordance with section 13 of the Public Audit Act, 2004 read with General Notice 616 of 2008, issued in Government Gazette No. 31057 of 15 May 2008.

In terms of the foregoing our review consists of making enquiries of company personnel and applying other review procedures. A review is substantially less in scope than an audit and consequently does not enable me to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

FindingsBased on our review, nothing has come to my attention that causes me to believe that the reporting of Sentech Limited and subsidiaries against predetermined objectives is not fairly stated as required by the Public Finance Management Act.

Non-compliance with Laws and RegulationsWe draw attention to the report of Sentech Limited Board of Directors on pages 81 to 82, which indicates non-compliance with certain sections of the Public Finance Management Act, No1 of 1999, as amended, and the Treasury Regulations.

KPMG Inc.Registered Auditors

Per M RattiganChartered Accountant (SA) Registered AuditorDirector21 July 2009

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

Annual Financial Statements (CONTINUED)

Annual Report for the year ended 31 March 200980

We are pleased to present our report for the financial year ended 31 March 2009.

The Audit Committee members and attendance are reflected on page 70 in the Corporate governance statement.

Audit Committee Members and Attendance: The Audit Committee consists of the members listed on page 70 and meets six times per annum as per its approved terms of reference. During the current year six meetings were held.

Audit Committee ResponsibilityThe Audit Committee reports that it has complied with its responsibilities arising from section 51(1)(a) of the PFMA and Treasury Regulations 27.1.7 and 21.1.10(b) and (c).

s51(1)(a)(ii) of the PFMA states the following:

(a) The accounting authority must ensure that the public entity has and maintains–

(i) effective, efficient and transparent systems of financial and risk management and internal control;

(ii) a system of internal audit under the control and direction of an Audit Committee complying with and operating in accordance with regulations and instructions prescribed in terms of sections 76 and 77; and

(iii) an appropriate procurement and provisioning system which is fair, equitable, transparent, competitive and cost effective.

The Audit Committee also reports that it has adopted appropriate formal terms of reference and has regulated its affairs in compliance with and has discharged all its responsibilities as contained therein.

The Effectiveness of Internal ControlThe Audit Committee is of the opinion, based on the information and explanations given by management and the internal auditors and discussions with the independent external auditors on the results of their audits and the status in addressing the matters raised, that the internal accounting controls are operating satisfactorily, to ensure that the financial records may be relied upon for preparing the annual financial statements, and accountability for assets and liabilities is maintained.

During the year under review, the finance function was adequately capacitated to efficiently and effectively manage the Group’s finances in accordance with the PFMA and other applicable legislations. Whilst certain key functions in technology, information systems and finance remained vacant for most of the year, the Committee is reassured by appointments made subsequent to year end in light of the business restructuring.

Nothing significant has come to the attention of the Audit Committee to indicate that any material breakdown in the functioning of these controls, procedures and systems has occurred during the year under review.

The Audit Committee is satisfied with the content and quality of monthly and

quarterly reports prepared and issued by the Board of directors and Sentech during the year under review.

Evaluation of Financial StatementsThe Audit Committee has:• Reviewed and discussed the Audited

Annual Financial Statements to be included in the Annual Report with the independent external auditors and the Board;

• Reviewed the independent external auditors’ management letter and management’s response thereto;

• Reviewed the appropriateness of accounting policies and practices; and

• Reviewed adjustments resulting from the audit.

The Audit Committee concurs and accepts the independent external auditor’s’ conclusions on the annual financial statements, and is of the opinion that the audited Annual Financial Statements should be accepted and read together with the report of the independent external auditors.

Mr T LeeuwChairperson of the Audit Committee

Report of the Audit Committeein terms of regulation 27 (1) (10) (b) and (c) of the Public Finance Management Act, 1 of 1999, as amended

1. Directors’ Responsibility for Financial Reporting

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Annual Financial Statements (CONTINUED)

Annual Report for the year ended 31 March 200981

Sentech is an enterprise wholly-owned by the State of the Republic of South Africa, as represented by the Minister of Communications. As a State enterprise, Sentech is subject to the Public Finance Management Act, 1 of 1999 (PFMA) and Treasury Regulations.

In terms of the PFMA, the Sentech Board of Directors (referred to as the Accounting Authority), has the responsibility to prepare Annual Financial Statements and ensure that they are audited by the independent external auditors, being KPMG Inc.

The Sentech Board has pleasure in presenting the 2008/2009 audited Annual Financial Statements on pages 81 to 137 which fully set out the financial position, the result of operations and cash flows of the Group for the financial year ended 31 March 2009.

The directors wish to highlight the following:

Business of Sentech Sentech is engaged in the following business activities:

• As a common carrier, the distribution of broadcasting signals for South African broadcasting licensees in accordance with provisions of the Independent Broadcasting Authority

153 of 1993, as repealed; and

• Since 2002, Multimedia and International Telephony services in terms of the Telecommunications Act 103 of 1996, as amended.

Performance ReviewSentech has invested available resources in:

• Operating and maintaining the current networks (broadcasting and telecommunications);

• Successfully completing phase three of the migration from analogue terrestrial to Digital Terrestrial Television (DTT); and

• Continuing discussions with Government on the rollout of a National Wholesale Broadband Wireless (NWBN) network, including the Dinaledi Schools project.

Lack of adequate funding still remains a concern and is required to capitalise the business, successfully complete the migration from analogue terrestrial to Digital Terrestrial Television (DTT) by 1 November 2011 and rollout a National Wireless Broadband Network (NWBN). Sentech requires R3,8 billion, to rollout the National Wireless Broadband Network (NWBN). Government only allocated R500 million and prescribed that Sentech

should consider alternative sources of funding to raise the additional funding. Sentech, Department of Communications and National Treasury are still working on an appropriate business and funding model.

Due to their continued poor performance, the current retail broadband services, MyWireless, Biznet and VAS will be phased out in their current form.

For more information on the financial performance of the Group, refer to the Financial Review (pages 58 to 64) and the financial statements (pages 76 to 137).

RentWorks Africa LeasesBetween 2003 and 2005 the Company concluded an operating sale and lease back with RentWorks Africa (Pty) Ltd to procure the equipment necessary to rollout the MyWireless, Carrier of Carriers and upgrade the aged and obselete analogue broadcasting signal distribution networks. The operating leases were for a five year period. In the financial year under review, the Group was faced with the termination of most of the operating leases.

Considering the reliance of the business on these networks, the Board resolved to buy back the equipment from Rentworks, via a finance lease. Initially

Directors’ Report

Actual 2009 Budget 2009 VarianceR’000 R’000 R’000

Revenue 757,088 944,548 (187,460)Operating expenditure (612,561) (994,473) 381,912Operating profit (loss) 144,527 (49,925) 194,452Net finance cost 57,051 (9,243) 66,294Net profit (loss) before taxation 201,578 (59,168) 260,746Loss for the year after taxation and loss from discounted operation (20,915) (59,168) 38,253

Budget versus actual revenue and expenditure

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Annual Financial Statements (CONTINUED)

Annual Report for the year ended 31 March 200982

the agreement was structured as a finance lease but due to the available cash reserves the Company was later able to procure the equipment outright from RentWorks. According to the structure of the transaction and based on expert advice, the Board did not deem it necessary to secure PFMA approval for the transaction. The current auditors are of the opinion that approval should have been obtained from the National Treasury. Accordingly, R8.265 million of interest incurred on the finance lease is deemed to be irregular expenditure in terms of the PFMA. The Board remains satisfied that the cash transaction was in the best interest of the Company. Approval and condonation of the situation will be sought from the National Treasury.

VAT on Government Grants

The VAT liability relating to Goverment Grants received by the Company was not correctly classified under current liabilities in the prior year. The VAT has not been paid to SARS and the applicable SARS interest expense was not accounted for in the prior year. The prior year financial statements have been restated to correct this error.

Going Concern Status

The Board believes that the Group is a going concern despite the concern over current liquidity difficulties.

During the year under review, Government paid R150 million allocated in the 2008 Budget Speech to roll out phase three of the migration from analogue terrestrial to Digital Terrestrial

Television (DTT); and R200 million for the 2009 Confederations Cup and for the 2010 FIFA World Cup. Given further funding allocations in the 2009 Budget Speech; Polokwane resolutions; recent statements by the new Minister of Communications on the strategic nature of Sentech and his decision to form a Task Team that would investigate how the Company business can be turned around, the Board is confident that any liquidity difficulties would be addressed and resolved.

Subsidiaries and Joint Ventures

Sentech has 4 subsidiaries that constitute the Sentech Group:

• Infohold (Proprietary) Limited (Registered in terms of the laws

of South Africa) is the Holding Company for Infosat (Pty) Ltd. Sentech owns 100% of the shares in Infosat (Pty) Ltd.

• InfoSat (Proprietary) Limited (Registered in terms of the laws of

South Africa): is a provider of value added business solutions, on an IP platform, to customers both within the borders of South Africa and to neighbouring states. The company is a wholly-owned subsidiary of Infohold (Pty) Ltd.

• Vivid Multimedia (Proprietary) Limited (Registered in terms of the laws of South Africa) was established with the purpose of exploring the “Pay TV” market. The company is wholly owned by Sentech and remains dormant.

• Sentech International (Proprietary) Limited (Registered in terms of the laws of South Africa) was established for the purposes of exploring broadcasting and telecommunications business opportunities in other parts of the African continent. The company is wholly owned by Sentech and remained dormant during the period under review.

Dividends

No dividends have been declared or paid during the period under review.

Share Capital

There has been no movement in the share capital of the Company and the subsidiaries during the period under review.

Fixed Assets

During the financial year under review fixed assets acquired amounted to R117,933 million (R54,314 million - 2008) and disposals totalled R0.287million (R52,211 million - 2008).

Profits and Losses of Subsidiaries

Infosat Pty (Ltd) is the only active subsidiary in the Group and recorded the following results

2009 2008R000’s R000’s

Loss after taxation (2,756) (686)

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Annual Financial Statements (CONTINUED)

Directors’ Report (CONtINuED)

Annual Report for the year ended 31 March 200983

2009 2008R000’s R000’s

Loss after taxation (2,756) (686)

Directors, Company Secretary and Auditors

The Directors of Sentech Limited, during the year under review:

Mr. Colin Hickling Non-executive ChairpersonDr. Sebiletso Mokone-Matabane Chief Executive OfficerMs. Beverly Ngwenya Chief Operations Officer Mr. Mohammed Siddique Cassim Chief Financial OfficerDr. Deenadayalen Konar Non-executive directorMr. thabo Leeuw Non-executive directorMr. tau Mashigo Non-executive director Appointed: 1 September 2008Dr. Yvonne Muthien Non-executive director Appointed: 1 September 2008Ms. Nandipha Sihlali Non-executive directorAdv. Nonkumbulo tshombe Non-executive director

The Company Secretary of Sentech Limited and its subsidiaries, during the year under review:Adv. Rachel Imasiku

The independent External Auditors of Sentech Limited and its subsidiaries, during the year under review:KPMG Inc.

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Annual Financial Statements (CONTINUED)

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Directors’ Report (CONtINuED)

Annual Report for the year ended 31 March 200984

GROUP COMPANYRestated Restated

2009 2008 2009 2008Note R ‘000 R ‘000 R ‘000 R ‘000

ASSETSNon-current assetsProperty, plant and equipment 4 741,451 882,258 741,451 882,258 Intangible assets 5 17,897 22,791 17,897 22,791 Investments in subsidiaries 6 - - * * Long-term receivables 8 - 463 - 303

759,348 905,512 759,348 905,352

Current assetsInventories 7 13,825 17,793 13,825 17,793 trade and other receivables 8 77,219 86,286 76,788 85,456 Cash and cash equivalents 9 1,042,753 713,622 1,042,416 713,584

1,133,797 817,701 1,133,029 816,833

Total assets 1,893,145 1,723,213 1,892,377 1,722,185

EQUITYShare capital 10 2 2 2 2 Share premium 10 75,890 75,890 75,890 75,890 Other reserves 88,614 88,614 88,614 88,614 Revaluation reserve 344,851 402,193 344,851 402,193 Accumulated losses (61,692) (37,880) (59,950) (39,035) Total equity attributable to equity holders of the company 447,665 528,819 449,407 527,664

LIABILITIESNon-current liabilitiesLoans and borrowings 11 92,709 130,506 92,709 130,506 Deferred tax 12 20,944 67,014 20,944 67,014 Deferred income - government grants 13 828,082 579,743 828,082 579,743 Employee benefits 14 119,940 97,752 119,940 97,752

1,061,675 875,015 1,061,675 875,015 Current liabilitiestrade and other payables 15 322,070 291,442 319,283 286,238

Provisions 16 4,000 - 4,000 - tax payable 21 19,012 - 19,012 - Loans from subsidiaries 25 - - 277 5,331 Short-term loans and borrowings 11 38,723 27,937 38,723 27,937

383,805 319,379 381,295 319,506

Total liabilities 1,445,480 1,194,394 1,442,970 1,194,521

Total equity and liabilities 1,893,145 1,723,213 1,892,377 1,722,185

* amount below R 1,000

Balance SheetsAs at 31 March 2009

Annual Financial Statements (CONTINUED)

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash flow Statements10. Notes to the Annual Financial Statement

Annual Report for the year ended 31 March 200985

GROUP COMPANYRestated Restated

2009 2008 2009 2008Note R ‘000 R ‘000 R ‘000 R ‘000

Revenue 17 750,347 699,115 757,088 705,726 Cost of sales 18 (468,527) (427,672) (484,948) (434,407) Gross profit 281,820 271,443 272,140 271,319

Selling expenses 18 (5,637) (6,778) (5,637) (6,778) Administrative expenses 18 (75,135) (83,919) (74,485) (83,914) Other operating expenses 18 (47,491) (96,422) (47,491) (96,422) Results from operating activities 153,557 84,324 144,527 84,205 Finance income 20 88,615 27,887 88,593 27,867 Finance expenses 20 (32,534) (19,948) (31,542) (19,948)

Profit before income tax 209,638 92,263 201,578 92,124

Income tax expense 21 (61,279) (23,242) (58,211) (23,011)

Profit from continuing operations 148,359 69,021 143,367 69,113

Discontinued operationLoss from discontinued operation (net of income tax) 22 (172,171) (77,005) (164,282) (76,411)

Loss for the year (23,812) (7,984) (20,915) (7,298)

Attributable to:Equity holders of the Company (23,812) (7,984) (20,915) (7,298)

Income StatementsFor the year ended 31 March 2009

Annual Financial Statements (CONTINUED)

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash flow Statements10. Notes to the Annual Financial Statement

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

Annual Report for the year ended 31 March 200986

GROuPAttributable to equity holders of the Group

NoteShare

capitalShare

premiumRevalution

reserve1

Gain on waiver of

SABC loan2Accumulated

lossesTotal

equity

Balance at 1 April 2007, as previously reported 2 75,890 350,943 88,614 (34,608) 480,841

Prior year adjustment 28 - - - - (8,286) (8,286) Balance at 1 April 2007, restated 2 75,890 350,943 88,614 (42,894) 472,555

Revaluation of land and buildings as restated, net of deferred tax 3 - - 64,248 - - 64,248 Disposal of land and buildings - - (12,998) - 12,998 - total restated net income and expenses recognised directly in equity - - 51,250 - 12,998 64,248 Loss for the year - - - - (7,984) (7,984) total recognised income and expense - - 51,250 - 5,014 56,264

Balance at 31 March 2008, restated 2 75,890 402,193 88,614 (37,880) 528,819Revaluation of land and buildings, net of deferred tax 3 - - (57,342) - - (57,342) total net income and expenses recognised directly in equity - - (57,342) - - (57,342) Loss for the year - - - - (23,812) (23,812) total recognised income and expense - - (57,342) - (23,812) (81,154)

Balance at 31 March 2009 2 75,890 344,851 88,614 (61,692) 447,665

1 Revaluationreserve Significant land and buildings are revalued to fair value annually and less significant land and buildings are revalued on a three year cycle. The last valuation was performed on 20 November 2008. See Note 4. 2 GainonwaiverofSABCloan The SABC, in terms of an agreement arranged by the shareholder, waived the interest-free portion of its long-term loan. The gain is reflected as a non-distributable reserve to increase the equity contribution from the shareholder. 3 Revaluationoflandandbuildings The revaluation reserve movement for the year on land and buildings is the gross revaluation amount of R93,840,000 (2008 - R78,872,000) less the corresponding deferred tax amount of R29,592,000 (2008 - R21,381,000).

Statements of Changes in EquityFor the year ended 31 March 2009

Annual Financial Statements (CONTINUED)

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

Annual Report for the year ended 31 March 200987

1 Revaluationreserve Significant land and buildings are revalued to fair value annually and less significant land and buildings are revalued on a three year cycle. The last valuation was performed on 20 November 2008. See Note 4. 2 GainonwaiverofSABCloan The SABC, in terms of an agreement arranged by the shareholder, waived the interest-free portion of its long-term loan. The gain is reflected as a non-distributable reserve to increase the equity contribution from the shareholder. 3 Revaluationoflandandbuildings The revaluation reserve movement for the year on land and buildings is the gross revaluation amount of R93,840,000 (2008 - R78,872,000) less the corresponding deferred tax amount of R29,592,000 (2008 - R21,381,000).

COMPANYAttributable to equity holders of the Company

NoteShare

capitalShare

premiumRevalution

reserve1

Gain on waiver of

SABC loan2Accumulated

lossesTotal

equity

Balance at 1 April 2007, as previously reported 2 75,890 350,943 88,614 (36,449) 479,000

Prior year adjustment 28 - - - - (8,286) (8,286) Balance at 1 April 2007, restated 2 75,890 350,943 88,614 (44,735) 470,714

Revaluation of land and buildings as restated, net of deferred tax 3 - - 64,248 - - 64,248 Disposal of land and buildings - - (12,998) - 12,998 - total restated net income and expenses recognised directly in equity - - 51,250 - 12,998 64,248 Loss for the year - - - - (7,298) (7,298) total recognised income and expense - - 51,250 - 5,700 56,950

Balance at 31 March 2008, restated 2 75,890 402,193 88,614 (39,035) 527,664Revaluation of land and buildings, net of deferred tax 3 - - (57,342) - - (57,342) total net income and expenses recognised directly in equity - - (57,342) - - (57,342) Loss for the year - - - - (20,915) (20,915) total recognised income and expense - - (57,342) - (20,915) (78,257)

Balance at 31 March 2009 2 75,890 344,851 88,614 (59,950) 449,407

Statements of Changes in Equity (CONtINuED)For the year ended 31 March 2009

Annual Financial Statements (CONTINUED)

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

Annual Report for the year ended 31 March 200988

GROUP COMPANYRestated Restated

2009 2008 2009 2008Note R ‘000 R ‘000 R ‘000 R ‘000

Cash flows from operating activitiesCash generated from operations 23 126,768 90,636 144,671 91,108 Interest received 20 103,221 27,887 103,199 27,867 Interest paid 20 (32,534) (19,948) (31,542) (19,948)

Net cash inflow from operating activities 197,455 98,575 216,328 99,027

Cash flows from investing activitiesAcquisition of property, plant and equipment 4 (117,933) (54,314) (117,933) (54,314) Receipt of long-term receivables 463 7,500 303 7,500 Acquisition of intangible assets 5 (572) (2,178) (572) (2,178) Proceeds from sale of property, plant and equipment 23 14 45,259 14 45,259 Government grants utilised for capital expenditure (73,285) (93,203) (73,285) (93,203) Net cash outflow from investing activities (191,313) (96,936) (191,473) (96,936)

Cash flows from financing activitiesReceipt of interest bearing liabilities 11 (27,011) (34,883) (46,023) (34,883) Government grants received 13 350,000 665,334 350,000 665,334 Repayment of long-term trade payables - (12,249) - (12,249) Net cash inflow from financing activities 322,989 618,202 303,977 618,202

Net increase in cash and cash equivalents 329,131 619,841 328,832 620,293

Cash and cash equivalents at beginning of the year 9 713,622 93,781 713,584 93,291

Cash and cash equivalents at the end of the year 9 1,042,753 713,622 1,042,416 713,584

Cash Flow StatementsFor the year ended 31 March 2009

Annual Financial Statements (CONTINUED)

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

Annual Report for the year ended 31 March 200989

1. General lnformation1.1 Reporting entity and Basis of Preparation

Sentech Limited (the “Company”) is a company incorporated and domiciled in South Africa. The address of its registered office is Augusta House, Fourways Golf Park, Roos Street, Fourways. Sentech Limited (‘the Company’) and its subsidiaries (together ‘the Group’) provides broadcasting, telecommunications and broadband services. The consolidated financial statements of the Company as at and for the year ended 31 March 2009 comprise the Company and its subsidiaries (together referred to as the “Group” and individually as “Group entities”). The Company has transmission stations across the country and provides services mainly within the South African borders.

1.2 Basis of Preparation

1.2.1 Statement of Compliance

The annual financial statements of Sentech Limited have been prepared in accordance with International Financial Reporting Standards (IFRS), the requirements of the South African Companies Act and the Public Finance Management Act (No 1 of 1999 as amended by Act 29 of 1999).

These group consolidated financial statements and annual financial statements were authorised for issue by the Board of Directors on 21 July 2009.

1.2.2 Basis of Measurement

The consolidated annual financial statements have been prepared under the historical cost basis, except for the following: - land and buildings are measured at the net replacement value.

1.2.3 Functional Currency

The financial statements are presented in South African Rands. All financial information presented in Rands has been rounded to the nearest thousand.

1.2.4 Use of Estimates and Judgements

The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.

In particular, information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in the consolidated financial statements is included in the following notes:

- Note 4 – valuation of property- Note 14 – measurement of defined benefit obligations- Notes 12 and 21 – utilisation of tax losses- Notes 16 and 26 – contingencies and provisions

2. Summary of Significant Accounting Policies The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements, and have been applied consistently by Group entities. Certain comparative amounts have been reclassified to conform with the current year’s presentation, and restated for prior year errors (see Note 28). In addition, the comparative income statement has been re-presented as if an operation discontinued during the current period had been discontinued from the start of the comparative period (see Note 22).

Notes to the Annual Financial Statements

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of changes in equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

Annual Report for the year ended 31 March 200990

Standard or Interpretation Effective date

IFRIC 13 Customer Loyalty Programmes Annual periods commencing on or after 1 July 2008

IFRIC 16 Hedges of a Net Investment in a Foreign Operation

Annual periods commencing on or after 1 October 2008

IFRS 2 amendment IFRS 2 Share-based Payment: Vesting Conditions and Cancellations

Annual periods commencing on or after 1 January 2009

IFRS 8 Operating Segments Annual periods commencing on or after 1 January 2009

IAS 1 Presentation of Financial Statements Annual periods commencing on or after 1 January 2009

IAS 23 Borrowing Costs Annual periods commencing on or after 1 January 2009

IAS 27 and IFRS 1 amend-ment

Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate

Annual periods commencing on or after 1 January 2009

IAS 32 and IAS 1 amendment IAS 32 Financial Instruments: Presentation and IAS 1 Presentation of Financial Statements: Puttable Financial Instruments and Obligations Arising on Liquidation

Annual periods commencing on or after 1 January 2009

IFRS 7 Amendment Improving Disclosure about Financial Instruments

Annual periods commencing on or after 1 January 2009

IFRIC 15 Agreement for the Construction of Real Estate Annual periods commencing on or after 1 January 2009

AC 503 revised Accounting For Black Economic Empowerment (BEE) transactions

Annual periods commencing on or after 1 January 2009

AC 504 IAS 19 - the Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction in the South African Pension Fund Environment

Annual periods commencing on or after 1 April 2009

IFRS 3 Business Combinations Annual periods commencing on or after 1 July 2009

IAS 27 amendment Consolidated and Separate Financial Statements

Annual periods commencing on or after 1 July 2009

IAS 39 amendment Eligible hedged items Annual periods commencing on or after 1 July 2009

IFRS 1 First time Adoption of International Financial Reporting Standards

Annual periods commencing on or after 1 July 2009

IFRS 5 Improvements to IFRS’s - IFRS 5 Non-cur-rent assets Held for Sale and Discontinued Operations

Annual periods commencing on or after 1 July 2009

IFRIC 17 Distribution of Non - Cash Assets to Owners Annual periods commencing on or after 1 July 2009

2.1 Interpretations to existing standards that are not yet effective and have not been early adopted by the Group

In terms of IFRS, the Group is required to include in its annual financial statements disclosure about the future impact of standards and interpretations issued but not yet effective at the reporting date. At the date of authorisation of the financial statements, the following standards and interpretations were in issue but not yet effective:

2. Summary of Significant Accounting Policies (CONtINuED)

Notes to the Annual Financial Statements (CONTINUED)

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

Annual Report for the year ended 31 March 200991

2.1 Interpretations to existing standards that are not yet effective and have not been early adopted by the Group (CONtINuED)

All standards will be adopted at their effective date (except for the effect of those standards that are not applicable to the entity).

IFRIC 13, IFRIC 16, IFRS 2, IFRS 3, IFRS 8, IAS 27 and IFRS 1 amendment, IFRIC 15, IFRS 3, IFRS 1, IFRS 5, IFRIC 17, AC 503, AC 504, IAS 32, IAS 1 amendment, IAS 27 amendment, and IAS 39 amendment are currently not applicable to the business of the entity and will therefore have no impact on future financial statements. The directors are of the opinion that the impact of the application of the remaining Standards and Interpretations will be as follows: IAS 1 will be adopted by Sentech Limited for the first time for its financial reporting period ending 31 March 2010. The Group will present all non-owner changes in equity in a single statement of comprehensive income (which will include the current income statement) and owner changes in equity in the statement of changes in equity. Reclassification adjustments and income tax relating to each component of other comprehensive income will be disclosed on the face of the statement of comprehensive income. IAS 23 The statement is not envisaged to have a significant effect on the Company.

2.2 Consolidation 2.2.1 Subsidiaries Subsidiaries are all entities over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the income statement.

Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised gains arising from transactions with equity accounted investees are eliminated against the investment to the extent of the Group’s interest in the investee. Unrealised losses are also eliminated in the same way as unrealised gains but considered an impairment indicator of the asset transferred.

2.3 Foreign Currency Translation Transactions in foreign currencies are translated to the respective functional currencies of Group entities at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate at that date. The foreign currency gain or loss on monetary items is the difference between amortised cost in the functional currency at the beginning of the period, adjusted for effective interest and payments during the period, and the amortised cost in foreign currency translated at the exchange rate at the end of the period. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Foreign currency differences arising on retranslation are recognised in profit or loss, except for differences arising on the retranslation of available-for-sale equity instruments or a financial liability designated as a hedge of the net investment in a foreign operation, which are recognised directly in equity.

Notes to the Annual Financial Statements (CONTINUED)

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

2. Summary of Significant Accounting Policies (CONtINuED)

Annual Report for the year ended 31 March 200992

2.4 Financial instruments 2.4.1 Non-derivative Financial instruments Non-derivative financial instruments comprise investments in equity instruments, trade and other receivables, cash and cash equivalents, loans and borrowings, and trade and other payables. Non-derivative financial instruments are recognised initially at fair value for instruments not at fair value through profit or loss, plus any directly attributable transaction costs. Subsequent to initial recognition non-derivative financial instruments are measured as described below. Cash and equivalents comprise cash balances, ring fenced cash and call deposits. Bank overdrafts that are repayable on demand and form an integral part of the Group’s cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows. Accounting for finance income and expenses is discussed in Note 2.16. Held-to-maturity Investments If the Group has the positive intent and ability to hold debt securities to maturity, then they are classified as held-to-maturity. Held-to-maturity investments are measured at amortised cost using the effective interest method, less any impairment losses.

Available-for-sale Financial Assets The Group’s investments in equity securities and certain debt securities are classified as available-for-sale financial assets. Subsequent to initial recognition, they are measured at fair value and changes therein, other than impairment losses, and foreign currency differences on available-for-sale monetary items (see Note 2.3), are recognised directly in equity. When an investment is derecognised, the cumulative gain or loss in equity is transferred to profit or loss.

Financial Assets at fair value through Profit or Loss

An instrument is classified at fair value through profit or loss if it is held for trading or is designated as such upon initial recognition. Financial instruments are designated at fair value through profit or loss if the Group manages such investments and makes purchase and sale decisions based on their fair value in accordance with the Group’s documented risk management or investment strategy. Upon initial recognition attributable transaction costs are recognised in profit or loss when incurred. Financial instruments at fair value through profit or loss are measured at fair value, and changes therein are recognised in profit or loss. Other Other non-derivative financial instruments are measured at amortised cost using the effective interest method, less any impairment losses. 2.4.2 Derivative Financial Instruments The Group holds derivative financial instruments to hedge its foreign currency risk exposures. Embedded derivatives are separated from the host contract and accounted for separately if the economic characteristics and risks of the host contract and the embedded derivative are not closely related, a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative, and the combined instrument is not measured at fair value through profit or loss. Derivatives are recognised initially at fair value, plus attributable transaction costs are recognised in profit or loss when incurred. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are accounted for as described below. 2.4.3 Cash Flow Hedges Changes in the fair value of the derivative hedging instrument designated as a cash flow hedge are recognised directly in equity to the extent that the hedge is effective. To the extent that the hedge is ineffective, changes in fair value are recognised in profit or loss.

Notes to the Annual Financial Statements (CONTINUED)

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

2. Summary of Significant Accounting Policies (CONtINuED)

Annual Report for the year ended 31 March 200993

2.4.3 Cash Flow Hedges (CONTINUED)

If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or exercised, then hedge accounting is discontinued prospectively. The cumulative gain or loss previously recognised in equity remains there until the forecast transaction occurs. When the hedged item is a non-financial asset, the amount recognised in equity is transferred to the carrying amount of the asset when it is recognised. In other cases the amount recognised in equity is transferred to profit or loss in the same period that the hedged item affects profit or loss. 2.4.4 Fair Value Hedges Hedge accounting is not applied to derivative instruments that economically hedge monetary assets and liabilities denominated in foreign currencies. Changes in the fair value of such derivatives are recognised in profit or loss as part of the foreign currency gains and losses. 2.5 Share Capital Ordinary Shares Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares and share options are recognised as a deduction from equity, net of any tax effects.

2.6 Property, Plant and Equipment 2.6.1 Recognition and Measurement Land and buildings comprise mainly transmitter stations and offices. Significant land and buildings are revalued to fair value annually, less significant land and buildings are revalued on a three year cycle and are stated at revalued amounts, based on periodic valuations by external independent valuers, less subsequent accumulated depreciation (see below) and impairment losses. Any accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount and the net amount is restated to the revalued amount.

Increases in the carrying value arising on the revaluation of land and buildings (revaluation surpluses) are credited to revaluation reserves in shareholders’ equity. Decreases in the carrying value that offset previous increases are charged against revaluation reserves in shareholders’ equity. All other decreases in excess of revaluation surpluses are recognised directly in profit or loss. Each year, the difference between depreciation based on the revalued carrying value of the asset charged to the income statement and deprecation based on the asset’s original cost is transferred from revaluation reserves to retained earnings/(accumulated losses). When revalued land and buildings are sold, the revaluation surpluses included in revaluation reserve are transferred to retained earnings/(accumulated losses). Other items of property, plant and equipment are measured at cost less accumulated depreciation and impairment losses. The cost of property, plant and equipment, the date of transition to IFRS, was determined by reference to its fair value at that date. Cost includes expenditures that are directly attributable to the acquisition of the asset. The cost of self constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the asset to a working condition for its intended use, and the costs of dismantling and removing the items and restoring the site on which they are located. Cost may also include transfers from equity of any gains/losses on qualifying cash flow hedges of foreign currency purchases of property, plant and equipment. When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment. Gains and losses on disposal of property, plant and equipment are determined by comparing the proceeds from disposal to the carrying amount of property, plant and equipment and are recognised net within “other income” in profit or loss. When revalued assets are sold, the amounts included in the revaluation surplus reserve are transferred to retained earnings.

Notes to the Annual Financial Statements (CONTINUED)

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

2. Summary of Significant Accounting Policies (CONtINuED)

Annual Report for the year ended 31 March 200994

2.6.2 Subsequent Costs The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group and its cost can be measured reliably. When parts are replaced, the carrying amount of the old part is derecognised and the replacement part is capitalised. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred.

2.6.3 Depreciation Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Group will obtain ownership by the end of the lease term. Land is not depreciated. The estimated useful lives for the current and comparative periods are currently as follows: Buildings 40 years Improvements to leasehold premises 20 years Motor vehicles 5 years Computer, network and office equipment 2 to 5 years Monitoring equipment 5 to 10 yearsTechnical equipment 10 to 20 years Depreciation methods, useful lives and residual values are reassessed at each reporting date. 2.7 Intangible Assets 2.7.1 Licences Licences are shown at historical cost less accumulated amortisation and impairments. The historical cost is determined as the net present value of future discounted cash flows based on the original agreement for the purchase of the licences. Licences are amortised on a straight-line basis over their estimated useful lives, which is the period of the licences according to signed agreements, ranging from 15 to 25 years.

The directors assess the recoverability of the carrying value of each intangible asset annually and revisions are made where it is considered necessary (impairment testing). The corresponding licence obligation is calculated on the present value of the future payments discounted at a market related interest rate at the reporting date and the applicable interest movements are accounted for in the income statement. 2.7.2 Computer Software Computer software are measured at cost less accumulated amortisation and accumulated impairment losses. Computer software recognised as assets are amortised on a straight-line basis over their estimated useful lives, which is currently two years. The amortisation period, residual value and amortisation method are reviewed at each reporting period.

2.7.3 Subsequent Costs Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is recognised in profit or loss as incurred. 2.8 Leased Assets Leases in terms of which the Group assumes substantially all the risks and rewards of ownership are classified as finance leases. Upon initial recognition the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Group will obtain ownership by the end of the lease term. Other leases are operating leases and the leased assets are not recognised on the Group’s balance sheet.

2. Summary of Significant Accounting Policies (CONtINuED)

Notes to the Annual Financial Statements (CONTINUED)

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

Annual Report for the year ended 31 March 200995

2.9 Impairment 2.9.1 Financial Assets A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset. An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount, and the present value of the estimated future cash flows discounted at the original effective interest rate. An impairment loss in respect of an available-for-sale financial asset is calculated by reference to its fair value. Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics.

All impairment losses are recognised in profit or loss. Any cumulative loss in respect of an available-for-sale financial asset recognised previously in equity is transferred to profit or loss.

An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised. For financial assets measured at amortised cost and available-for-sale financial assets that are debt securities, the reversal is recognised in profit or loss. For available-for-sale financial assets that are equity securities, the reversal is recognised directly in equity.

2.9.2 Non-financial Assets The carrying amounts of the Group’s non-financial assets, other than inventories and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. For goodwill and

intangible assets that have indefinite lives or that are not yet available for use, the recoverable amount is estimated each year at the same time. The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the “cash-generating unit”). The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to cash-generating units that are expected to benefit from the synergies of the combination. An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its estimated recoverable amount. Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amounts of the other assets in the unit (group of units) on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

2. Summary of Significant Accounting Policies (CONtINuED)

Notes to the Annual Financial Statements (CONTINUED)

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

Annual Report for the year ended 31 March 200996

2.10 Inventories Inventories are measured at the lower of cost and net realisable value. The cost of inventories is based on the weighted average method, and includes expenditure incurred in acquiring the inventories and other costs incurred in bringing them to their existing location and condition. Cost also may include transfers from equity of any gain or loss on qualifying cash flow hedges of foreign currency purchases of inventories.

Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses. 2.11 Employee Benefits 2.11.1 Short-term Benefits The cost of all short-term employee benefits are recognised during the period in which services are rendered. Employee entitlements to annual leave and long service leave are recognised when they accrue to employees in respect of past services rendered up to balance sheet date. This obligation is not discounted. 2.11.2 Retirement Benefits The Group operates both defined benefit (Sentech Pension Fund) and defined contribution (Sentech Retirement Fund) plans for all its employees. The assets of each fund are held in separate trustee-administered funds located in South Africa. Both plans are funded from contributions made by employees and the Company. 2.11.3 Defined Benefit Plan A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Group’s net obligation in respect of defined benefit pension plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in

return for their service in the current and prior periods; that benefit is discounted to determine its present value. Any unrecognised past service costs and the fair value of any plan assets are deducted. The discount rate is the yield at the reporting date on AA credit-rated bonds that have maturity dates approximating the terms of the Group’s obligations and that are denominated in the same currency in which the benefits are expected to be paid. The calculation is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a benefit to the Group, the recognised asset is limited to the total of any unrecognised past service costs and the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. An economic benefit is available to the Group if it is realisable during the life of the plan, or on settlement of the plan liabilities. When the benefits of a plan are improved, the portion of the increased benefit relating to past service by employees is recognised in profit or loss on a straight-line basis over the average period until the benefits become vested. To the extent that the benefits vest immediately, the expense is recognised immediately in profit or loss. The Group recognises all actuarial gains and losses arising from defined benefit plans directly in profit or loss.

2.11.4 Defined Contribution Plan A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension plans are recognised as an employee benefit expense in profit or loss when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is available.

2. Summary of Significant Accounting Policies (CONtINuED)

Notes to the Annual Financial Statements (CONTINUED)

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

Annual Report for the year ended 31 March 200997

2.12 Provisions A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. 2.12.1 Onerous Contracts A provision for onerous contracts is recognised when the expected benefits to be derived by the Group from a contract are lower than the unavoidable cost of meeting its obligations under the contract. The provision is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the Group recognises any impairment loss on the assets associated with that contract. 2.13 Revenue Recognition Revenue comprises the fair value of the consideration received or receivable for the sale of goods and services in the ordinary course of the Group activities. The Group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and specific criteria have been met for each of the Group’s activities as described below. The amount of revenue is not considered to be reliably measurable until all contingencies relating to the sale have been resolved. The Group bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.

2.13.1 Goods Sold The Group sells a range of broadcasting and telecommunication products. Sales of goods are recognised when a group entity has delivered products to the customer, the customer has full discretion over the channel and price to sell the products, and there is no unfulfilled obligation that could affect the customer’s acceptance of the products. Delivery does not occur until the products have been shipped to the specified location, the risks of obsolescence and loss have been transferred to the customer, and either the customer has accepted the products in accordance with the sales contract, the acceptance provisions have lapsed, or the Group has objective evidence that all criteria for acceptance have been satisfied. Customers have a right to return faulty products. Sales are recorded based on the price specified in the sales contracts, net of the estimated volume discounts and returns at the time of sale. Experience is used to estimate and provide for the discounts and returns. No element of financing is deemed present as the sales are made with a credit term of 30 days, which is consistent with the market practice.

2.13.2 Services The Group sells broadcasting and transmission services. These services are provided on a time basis or as a fixed-price contract, with contract terms generally ranging from less than one year to three years. Revenue from time and material contracts is recognised at the contractual rates as labour hours are delivered and direct expenses incurred.

2. Summary of Significant Accounting Policies (CONtINuED)

Notes to the Annual Financial Statements (CONTINUED)

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

Annual Report for the year ended 31 March 200998

2.13.2 Services (CONtINuED)

Revenue from fixed-price contracts for delivering design services is recognised under the percentage-of-completion (POC) method. Under the POC method, revenue is generally recognised based on the services performed to date as a percentage of the total services to be performed. If circumstances arise that may change the original estimates of revenues, costs or extent of progress toward completion, estimates are revised. These revisions may result in increases or decreases in estimated revenues or costs and are reflected in income in the period in which the circumstances that give rise to the revision become known by management.

2.13.3 Rental Income Rental income from the rental of premises is recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives granted are recognised as an integral part of the total rental income, over the term of the lease. 2.14 Government Grants Grants that compensate the Group for the cost of an asset are recognised initially as deferred income which is classified under long term liabilities. Grants relating to completed asset projects are deducted from the cost of the relevant asset (net presentation method). The depreciation expense recognised in the income statement over the useful life of the asset is calculated from the net cost of the asset which is after deduction of the corresponding deferred government grant. Grants that compensate the Group for expenses incurred are recognised in the income statement on a systematic basis in the same periods in which the expenses are recognised. Government grants are only recognised when there are reasonable assurance that they will be received and the Group will comply with the conditions associated with the grant. Deferred income is classified as a non-current liability as uncertainty exists as to the timing of the release of the government grants.

2.15 Lease Payments Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognised as an integral part of the total lease expense, over the term of the lease.

Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.

2.16 Finance Income and Expense Finance income comprises interest income on governments grants invested and other interest received. Interest income is recognised as it accrues in profit or loss, using the effective interest method. Finance expenses comprise interest expense on borrowings, unwinding of the discount on provisions, changes in the fair value of financial assets at fair value through profit or loss and impairment losses recognised on financial assets that are recognised in profit or loss. All borrowing costs are recognised in profit or loss using the effective interest method. Foreign currency gains and losses are reported on a net basis.

2.17 Income Tax Expense Income tax expense comprises current and deferred tax. Income tax expense is recognised in profit or loss except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

2. Summary of Significant Accounting Policies (CONtINuED)

Notes to the Annual Financial Statements (CONTINUED)

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

Annual Report for the year ended 31 March 200999

2.17 Income Tax Expense (CONtINuED)

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Deferred tax is recognised using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss, and differences relating to investments in subsidiaries and jointly controlled entities to the extent that it is probable that they will not reverse in the foreseeable future. In addition, deferred tax is not recognised for taxable temporary differences arising on the initial recognition of goodwill. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously. A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised. Additional income taxes that arise from the distribution of dividends are recognised at the same time that the liability to pay the related dividend is recognised.

2.18 Discontinued Operations A discontinued operation is a component of the Group’s business that represents a separate major line of business or geographical area of operations that has been disposed of or is held for sale, or is a subsidiary acquired exclusively with a view to resale. Classification as a discontinued operation occurs upon disposal or when the operation meets the criteria to be classified as held for sale, if earlier. When an operation is classified as a discontinued operation, the comparative income statement is re-presented as if the operation had been discontinued from the start of the comparative period.

2. Summary of Significant Accounting Policies (CONtINuED)

Notes to the Annual Financial Statements (CONTINUED)

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

Annual Report for the year ended 31 March 2009100

3. Financial Instruments and Risk Management

Exposure to continuously changing market conditions has made mangement of financial risk critical for Sentech. Treasury policies, risk limits and control procedures are continuously monitored by Sentech’s Board of Directors through its Audit Committee.

The Group holds financial instruments to finance its operations, for the temporary investment of short-term funds and to manage currency and interest rate risks. In addition, certain financial instruments, for example trade receivables and trade payables, arise directly from our operations.

The Group finances its operations primarily through Government Grants and loans. The Group uses derivative financial instruments to manage its exposure to market risks from changes in interest and foreign exchange rates. The derivatives used for this purpose are principally forward exchange contracts. We do not speculate in derivative instruments.

The table below sets out the Group’s classification of financial assets and liabilities

GROUP

Financial liabilities at

amortised cost

Loans and receivables

Total carrying value Fair value

Note R’000 R’000 R’000 R’0002009Classes of financial instrumentsAssets - 1,097,719 1,097,719 1,097,719 trade and other receivables * 8 - 54,966 54,966 54,966 Cash and cash equivalents 9 - 1,042,753 1,042,753 1,042,753

Liabilities (443,326) - (443,326) (443,326) Borrowings 11 (131,432) - (131,432) (131,432) trade and other payables ** 15 (311,894) - (311,894) (311,894)

2008Classes of financial instrumentsAssets - 777,069 777,069 777,069 trade and other receivables * 8 - 63,447 63,447 63,447 Cash and cash equivalents 9 - 713,622 713,622 713,622

Liabilities (419,093) - (419,093) (419,093) Borrowings 11 (158,443) - (158,443) (158,443) trade and other payables ** 15 (260,650) - (260,650) (260,650)

* Excluding prepayments and deposits** Excluding deferred revenue

Notes to the Annual Financial Statements (CONTINUED)

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

Annual Report for the year ended 31 March 2009101

COMPANYFinancial

liabilities at amortised

costLoans and

receivablesTotal carrying

value Fair value2009 Note R’000 R’000 R’000 R’000Classes of financial instrumentsAssets - 1,096,951 1,096,951 1,096,951 trade and other receivables * 8 - 54,535 54,535 54,535 Cash and cash equivalents 9 - 1,042,416 1,042,416 1,042,416

Liabilities (440,816) - (440,816) (440,816) Borrowings 11 (131,432) - (131,432) (131,432) trade and other payables ** 15 (309,107) - (309,107) (309,107) Loans from subsidiaries 25 (277) - (277) (277)

2008Classes of financial instrumentsAssets - 776,307 776,307 776,307 trade and other receivables * 8 - 62,723 62,723 62,723 Cash and cash equivalents 9 - 713,584 713,584 713,584

Liabilities (419,220) - (419,220) (419,220) Borrowings 11 (158,443) - (158,443) (158,443) trade and other payables ** 15 (255,446) - (255,446) (255,446) Loans from subsidiaries 25 (5,331) - (5,331) (5,331)

* Excluding prepayments and deposits** Excluding deferred revenue

3.1 Fair Value of Financial Instruments Fair value of financial instruments noted in the balance sheet approximates carrying value except as disclosed below. the estimated net fair values as at 31 March 2009, have been determined using available market information and appropriate valuation methodologies as outlined below. this value is not necessarily indicative of the amounts the Group could realise in the normal course of business. the fair value of receivables, cash and cash equivalents, and other liiquid funds, payables and accruals, approximate their carrying amount due to the short-term maturities of these instruments.

the fair value of the borrowings disclosed are based on quoted prices or, where such prices are not available, the expected future payments discounted at market interest rates.

3. Financial Instruments and Risk Management (CONtINuED)

Notes to the Annual Financial Statements (CONTINUED)

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

Annual Report for the year ended 31 March 2009102

3.2 Interest Rate Risk Management

the Group is exposed to fluctuations in interest rates (i.e. cash flow interest rate risk) on its borrowings and investments. It does not at present hedge its exposure to adverse interest rate movements. the Group manages its interest cost through the utilisation of a combination of fixed and floating interest rate debt instruments and investments. Fixed rate debt represents approximately 74% (2008 : 70%) of the total debt. there were no material changes in the policies and processes for managing and measuring interest rate risk during the year.

The table below summarises the variable interest bearing borrowings outstanding:

2008Notional amount

Average maturity

Interest rate

Notional amount

Average maturity

Interest rate

Finance lease liabilities - equipment 7,970 <1 year 14.00% 905 <1 year 14.30%Finance lease liabilities - motor vehicles 793 <1 year 14.00% 5,895 1-5 years 14.30%ICASA loan 25,000 1-2 years 13.00% 39,975 <1 year 14.50%DBSA loan 97,669 1-5 years 11.03% 111,668 1-5 years 11.03%

the sensitivity analysis below have been determined based on the exposure to interest rates for variable interest bearing borrowings at the balance sheet date. A 100 basis point increase or decrease is used when reporting interrest rate risk and represents management’s assessment of the reasonably possible change in interest rates.

If interest rates at year-end changed by 100 basis points, with all other variables held constant, the Group’s profit for the year ended 31 March 2009 would change by R0.30 million (2008: R0,47 million).

3.3 Credit Risk Management

Credit risk comprises the risk of customer default and the risk that conditions in foreign countries might adversely affect the ability of counter parties in that country to meet their obligations. Credit control procedures are in place. New customers are first vetted by a credit checking agency and periodically thereafter. Customers may be called upon to pay in advance.

Our exposure to credit risk is influenced mainly by the individual characteristics of each type of customer. Management seeks to reduce the risk of irrecoverable debt by improving credit management through credit checks and limits. trade receivables comprise a large and widespread customer base, covering residential, business consisting of government, wholesale and global and corporate customer profiles.

the Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables and investments. the collective loss allowance is determined based on historical data of payment statistics for similar financial assets as well as expected future cash flows.

there were no material changes in the exposure to credit risk and its objectives, policies and processes for managing and measuring the risk during the currrent financial year. the carrying amount of financial assets represents the maximum exposure.

3. Financial Instruments and Risk Management (CONtINuED)

Notes to the Annual Financial Statements (CONTINUED)

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

Annual Report for the year ended 31 March 2009103

The maximum exposure to credit risk for trade and other receivables at the reporting date by type of customer was:

GROUP COMPANY2009 2008 2009 2008

R’000 R’000 R’000 R’000

Broadcasters 31,875 26,645 31,767 26,645 Facility rental 1,981 1,500 1,981 1,500 VSAt 38,573 50,638 37,916 49,936 MyWireless 3,873 4,107 3,873 4,107 Impairment of trade receivables (21,336) (20,369) (21,002) (20,071) Other receivables 22,253 23,765 22,253 23,339 Loans to subsidiaries 77,219 86,286 76,788 85,456 Long-term receivables - 463 - 303

77,219 86,749 76,788 85,759

The ageing of trade receivables at the reporting date: GROUP COMPANY2009 2008 2009 2008

R’000 R’000 R’000 R’000

Not passed due / current 12,024 20,463 12,174 20,463 Ageing of past due but not impaired31 to 60 days 19,242 18,993 18,830 18,993 61 to 90 days 12,170 7,075 12,061 7,075 Older than 90 days 11,530 16,453 11,470 15,889

54,966 62,984 54,535 62,420

The ageing in the allowance for the impairment of trade debtors at reporting date:

GROUP COMPANY2009 2008 2009 2008

R’000 R’000 R’000 R’000

Current defaulted trade 1,794 5,873 1,794 5,873 31 to 60 days 779 3,176 755 3,176 61 to 90 days 1,196 1,494 1,172 1,494 Older than 90 days 17,567 9,826 17,281 9,528

21,336 20,369 21,002 20,071

3. Financial Instruments and Risk Management (CONtINuED)

Notes to the Annual Financial Statements (CONTINUED)

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

Annual Report for the year ended 31 March 2009104

the impairment loss at 31 March 2009 relates to receivables which have been outstanding for a long time or are under dispute and have not been settled subsequent to year end. Based on historic default rates, the Group believes that no impairment allowance is necessary in respect of trade receivables not provided for as the customers have a good trade record with the Group. High level negotiations are underway in respect of receivables provided for and the Group may terminate services if no progress is made regarding their collection.

the movement in the allowance for impairment of trade receivables during the year is disclosed in note 8.

there were no material changes in the policies and processes for managing and measuring credit risk in the 2009 financial year.

3.4 Foreign Currency Exchange Rate Risk Management

the Group is exposed to foreign currency purchases of: l inventories; l capital equipment; and l satellite transponder capacity.

the use of financial instruments, to manage the risk of currency volatility, is limited at present to forward foreign exchange contracts. the Group’s policy is to review all foreign currency liabilities and all satellite lease rental obligations for a period of up to one year. the group also enters into forward foreign exchange contracts to economically hedge future foreign expenses and capital committments.

there were no material changes in the exposure to foreign currency exchange rate risk and its objectives, policies and processes for managing and measuring the risk during the current financial year.

Foreign trade receivables and payables on 31 March 2009 include aggregate net payables of R6,6 million (2008: net receivables of R7,2 million). the currencies in which transactions with customers and suppliers are primarily denominated are Euro, Swiss Franc (CHF), British Pound (GBP), Swedish Krona (SEK) and united States Dollar (uSD).

The following US Dollar satellite rental commitments exist at year end:

GROUP AND COMPANY 2009 2008

$’000 R’000 $’000 R’000

1 year 9,048 85,793 8,874 72,057 1-2 years 9,002 85,357 8,829 71,691 2-3 years 4,452 42,214 4,392 35,663

22,502 213,364 22,095 179,411

3. Financial Instruments and Risk Management (CONtINuED)

Notes to the Annual Financial Statements (CONTINUED)

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

Annual Report for the year ended 31 March 2009105

the Group has various monetary assets and liabilites in currencies other than the Group’s functional currency. the following table represents the net currency exposure (net carrying amount of foreign denominated monetary assets and liabilities) of the Group according to the different foreign currencies.

GROUP AND COMPANYCHF Euro GBP USD SEK Total

2009 R’000 R’000 R’000 R’000 R’000 R’000

Net foreign currency monetary assets / (liabilities) (5,120) 13,350 4,087 22,309 (293) 34,333

2008

Net foreign currency monetary assets / (liabilities) - (2,524) 3,493 15,476 - 16,445

the uS Dollar commitments are translated into Rands at the year-end spot rate of R9.482 (2008 : R8.12). the table above represents the Group’s rental commitments to Intelsat Corporation.

A 10% variance in the strengthening of the Rand relative to the united States Dollar, with all other variables held constant, would have the following effect on the table below.

GROUP AND COMPANY 2009

GROUP AND COMPANY 2008

Effect on profit before tax increase / (decrease)

Effect on profit before tax increase / (decrease)

Rand appreciates Rand depreciates Rand appreciates Rand depreciates R’000 R’000 R’000 R’000

1 year 8,579 (8,579) 7,206 (7,206)1-2 years 8,536 (8,536) 7,169 (7,169)2-3 years 4,221 (4,221) 3,566 (3,566)

21,336 (21,336) 17,941 (17,941)

3. Financial Instruments and Risk Management (CONtINuED)

Notes to the Annual Financial Statements (CONTINUED)

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

Annual Report for the year ended 31 March 2009106

the following table illustrates the sensitivity to a reasonably possible change in the foreign exchange rate, with all other variables held constant, to the Group’s profit before tax:

The following exchange rates applied during the year.

Average rate Reporting date spot rate 2009 2008 2009 2008

EuRO 12.731 11.267 12.601 12.860GBP 14.851 15.185 13.557 16.145uSD 8.801 7.695 9.482 8.120SEK 0.795 0.846 0.862 0.727CHF 0.121 0.146 0.119 0.122

Sensitivity Analysis

A 10% weakening of the Rand against the following currencies at year-end would have decreased equity and profit or loss by the amounts shown below. the analysis assumes all other variables, in particular interest rates, remain constant. the analysis is performed on the same basis for 2008.

GROUP AND COMPANY2009 2008

R’000 R’000

EuRO (1,335) (252) GBP 409 349 uSD 2,232 1,548 SEK (29) - CHF (512) -

764 1,645

A 10% strengthening of the Rand against the currencies at year-end would have had an equal but opposite effect in the above currencies to the amounts shown above, on the basis that all other variables remain constant.

3. Financial Instruments and Risk Management (CONtINuED)

Notes to the Annual Financial Statements (CONTINUED)

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

Annual Report for the year ended 31 March 2009107

3.5 Liquidity Risk

Liquidity risk constitutes the risk that there are insufficient funds or liquid assets to enable the Group to settle its obligations in the ordinary course of business activities.

the Group monitors cash and ensures that it has sufficient credit facilities available to meet future cash requirements. New borrowings require approval from the Ministry of Communications with the concurrence of the Ministry of Finance.

there were no material changes in the exposure to liquidity risk and its objectives, policies and processes for managing and measuring the risk during the current financial year.

the table below analyses the Group’s financial liabilities which will be settled on a gross basis into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date. the amounts disclosed in the table below are the contractual undiscounted cash flows.

GROUP AND COMPANYCarrying amount

Contractual cash flows 1 year 1-2 years 2-5 years

Note R’000 R’000 R’000 R’000 R’0002009Non-derivative financial liabilitesFinance lease liabilities 11 8,763 8,763 7,620 1,143 - Interest bearing debt (excluding finance leases) 11 122,669 124,669 39,686 20,352 64,631 trade and other payables (excluding deferred income) 15 309,107 309,107 309,107 - - total Company 440,539 442,539 356,413 21,495 64,631 Subsidiaries 2,787 2,787 2,787 - - total Group 443,326 445,326 359,200 21,495 64,631

2008Non-derivative financial liabilitesFinance lease liabilities 11 6,800 6,800 906 317 5,577 Interest bearing debt (excluding finance leases) 11 151,643 156,668 31,999 39,586 85,083 trade and other payables (excluding deferred income) 15 255,446 255,446 255,446 - - total Company 413,889 418,914 288,351 39,903 90,660 Subsidiaries 5,204 5,204 5,204 - - total Group 419,093 424,118 293,555 39,903 90,660

Sentech is a Schedule 3B entity and in terms of the treasury Regulations requires the shareholder’s approval for all funding transactions.

3. Financial Instruments and Risk Management (CONtINuED)

Notes to the Annual Financial Statements (CONTINUED)

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

Annual Report for the year ended 31 March 2009108

3.6 Capital Management

Sentech manages accumulated profit / (loss) and fair value reserves as capital. the objective of capital management is to ensure that Sentech is sustainable over the long term.

there were no changes to the Group’s approach to capital management during the financial year.

the major items that impact the equity of the Group includes the following: l Revenue received from sales; l Cost of funding the business; l Cost of operating the ICt business; and l Cost of expanding the business to ensure capacity growth is in line with increasing the broadcast footprint.

the tariff increases for the business is subject to contractual obligations in place. the government as the sole shareholder has the responsibility to ensure that the Group is adequately capitalised to ensure continuity of service. the Group’s policy is to fund the capital expansion programme through its own resources and by means of government grants.

3. Financial Instruments and Risk Management (CONtINuED)

Notes to the Annual Financial Statements (CONTINUED)

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

Annual Report for the year ended 31 March 2009109

4. Property, Plant and EquipmentGROUP AND COMPANY

Land and buildings

Motor vehicles

Computer, technical

and office equipment

Capital work-in-progress Total

R’000 R’000 R’000 R’000 R’00031 March 2009Opening carrying value 545,782 6,299 245,864 84,313 882,258 Devaluation (78,872) - - - (78,872)Impairments (Note 18) - - (45,869) - (45,869)Additions 13,920 196 60,510 43,307 117,933 Disposals (100) - (187) - (287)transfers (280) - 280 - - Depreciation charge (Note 18) (72,631) (5,577) (55,504) - (133,712)Closing carrying value 407,819 918 205,094 127,620 741,451

Cost or valuation 610,139 6,358 783,283 127,620 1,527,400 Accumulated depreciation (202,320) (5,440) (578,189) - (785,949)Carrying amount 407,819 918 205,094 127,620 741,451

31 March 2008Opening carrying value 444,845 9,690 299,840 125,317 879,692 Revaluation 93,840 - - - 93,840 Additions 35,874 - 18,440 - 54,314 Disposals (13) (1,841) (8,953) (41,404) (52,211)transfers (14) - (2,006) 400 (1,620)Depreciation charge (Note 18) (28,750) (1,550) (61,457) - (91,757)Closing carrying value 545,782 6,299 245,864 84,313 882,258

Cost or valuation 724,806 12,101 738,466 84,313 1,559,686 Accumulated depreciation (179,024) (5,802) (492,602) - (677,428)Carrying amount 545,782 6,299 245,864 84,313 882,258

Notes to the Annual Financial Statements (CONTINUED)

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

Annual Report for the year ended 31 March 2009110

the Group’s land and buildings were last revalued on 20 November 2008 by the directors in conjunction with ubuntu Valuation & Appraisal Services. Details of the land and buildings are available for inspection at the registered office.

Valuations were made on the basis of comparative land sales in each area. the revaluation surplus, net of applicable deferred income taxes, was credited or debited to revaluation reserve in shareholders’ equity.

Depreciation expense of R102 million (2008 : R71 million) has been charged in cost of sales and R31 million (2008: R21 million) in other operating expenses.

An impairment loss of R45 million was recognised in respect of property, plant and equipment relating to a loss making business and discontinued operations, namely MyWireless, Biznet and VAS. the carrying amount of assets relating to the discontinued operation will not be realised through sale thus they have not been classified as assets held for sale.

If land and buildings were stated on the historical cost basis, the amounts would be as follows:

GROUP AND COMPANY2009 2008

R’000 R’000

Cost 534,813 520,893 Accumulated depreciation (229,221) (208,251)Carrying value 305,592 312,642

the historic carrying value of other catagories of property, plant and equipment is immaterial as most of these assets were purchased many years ago.

4. Property, Plant and Equipment (CONtINuED)

Notes to the Annual Financial Statements (CONTINUED)

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

Annual Report for the year ended 31 March 2009111

5. Intangible Assets GROUP AND COMPANY

Licences Software TotalR’000 R’000 R’000

31 March 2009Opening carrying value 16,997 5,794 22,791 Additions - 572 572 Disposals - (10) (10) Amortisation charge (Note 18) (1,325) (4,131) (5,456) Closing carrying value 15,672 2,225 17,897

Cost 24,833 15,671 40,504 Accumulated amortisation and impairment (9,161) (13,446) (22,607) Carrying value 15,672 2,225 17,897

31 March 2008Opening carrying value 18,321 5,949 24,270 Additions - 2,178 2,178 Disposals - (711) (711) Amortisation charge (Note 18) (1,324) (1,622) (2,946) Closing carrying value 16,997 5,794 22,791

Cost 24,833 15,109 39,942 Accumulated amortisation and impairment (7,836) (9,315) (17,151) Carrying value 16,997 5,794 22,791

Amortisation of Intangible Assets

the licences relate to Multimedia and Carrier of Carriers and are amortised on a straight-line basis over their anticipated useful lives, for which the period ranged from between fifteen to twenty-five years. the carrying amounts and remaining amortisation periods individually are R6,7 million (18 years) and R9 million (8 years) respectively.

Impairment Tests for Intangible Assets

the directors have assessed the carrying value of each intangible asset and a provision for impairment is not considered necessary.

Notes to the Annual Financial Statements (CONTINUED)

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

Annual Report for the year ended 31 March 2009112

6. Investments in Subsidiaries COMPANY

2009 2008R’000 R’000

Carrying amount * *

the subsidiaries have contributed a loss of R2,756,000 (2008: R686,000) for the year after tax.

the Group’s interest in principal subsidiaries, all of which are unlisted, are as follows :

Name Country of % interestincorporation held

31 March 2009Infohold (Pty) Limited Republic of South Africa 100%Vivid Multimedia (Pty) Limited Republic of South Africa 100%Sentech International (Pty) Limited Republic of South Africa 100%

31 March 2008Infohold (Pty) Limited Republic of South Africa 100%Vivid Multimedia (Pty) Limited Republic of South Africa 100%Sentech International (Pty) Limited Republic of South Africa 100%

* amounts below R1,000

Intercompany loans are disclosed in Note 25.

7. Inventories GROUP AND COMPANY

2009 2008R’000 R’000

Consumables 13,825 17,793

Inventory write-downs included above 544 5,118

the inventory held is not encumbered.

Notes to the Annual Financial Statements (CONTINUED)

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

Annual Report for the year ended 31 March 2009113

8. trade and Other Receivables GROUP COMPANY

2009 2008 2009 2008R’000 R’000 R’000 R’000

trade receivables 45,430 72,337 44,665 71,475 Less: Impairment of receivables (21,336) (20,369) (21,002) (20,071) trade receivables – third party 24,094 51,968 23,663 51,404 Other receivables 22,253 23,302 22,253 23,036 Long-term loans - 463 - 303 Receivables from related parties (Note 25) 30,872 11,016 30,872 11,016

77,219 86,749 76,788 85,759 Less: Long-term portion - (463) - (303)

77,219 86,286 76,788 85,456

The fair values of trade and other receivables are as follows:

trade receivables 24,094 51,968 23,663 51,404Receivables from related parties (Note 25) 30,872 11,016 30,872 11,016total trade receivables 54,966 62,984 54,535 62,420Other receivables 22,253 23,765 22,253 23,339

77,219 86,749 76,788 85,759

The carrying amounts of the trade and other receivables are denominated in the following currencies:

CurrencyuS Dollar 11,967 18,130 11,967 18,130British pound 2,872 3,618 2,872 3,618Euro 6,854 1,668 6,854 1,668SA Rand 55,526 63,333 55,095 62,343

77,219 86,749 76,788 85,759

Notes to the Annual Financial Statements (CONTINUED)

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

Annual Report for the year ended 31 March 2009114

Movements on the provision for impairment of trade receivables are as follows:

GROUP COMPANY2009 2008 2009 2008

R’000 R’000 R’000 R’000

At 1 April (20,369) (17,636) (20,071) (17,338) Receivables provided for during the year as uncollectable (9,661) (5,287) (9,625) (5,233) Bad debts written-off 8,694 2,554 8,694 2,554 At 31 March (21,336) (20,369) (21,002) (20,017)

the creation and utilisation of the provision for impaired receivables has been included in administration costs in the income statement (Note 18). the other classes within trade and other receivables do not contain impaired assets. the maximum exposure to credit risk at the reporting date is the fair value of each class of receivable mentioned above. the Group does not hold any collateral as security. Refer to Note 3 for detailed credit risk analysis.

8. trade and Other Receivables (CONtINuED)

Notes to the Annual Financial Statements (CONTINUED)

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

Annual Report for the year ended 31 March 2009115

9. Cash and Cash EquivalentsGROUP COMPANY

2009 2008 2009 2008R’000 R’000 R’000 R’000

Cash at bank and on hand 46,431 33,808 46,094 33,770 Short-term bank deposits 996,322 679,814 996,322 679,814

1,042,753 713,622 1,042,416 713,584

Cash and cash equivalents include funds that are ring fenced, net of VAt, for the following projects:

GROUP AND COMPANY2009 2008

R’000 R’000

Digital terrestrial transmission project 119,298 73,580 Broadband project 438,596 438,596 under sea cable project 18,421 18,421 Community broadcasters project 19,339 24,474 2010 World Cup Soccer 190,046 -

785,700 555,072

Facilities available 73,170 73,170 utilised - - unutilised 73,170 73,170

the carrying amounts of the Group’s cash and cash equivalents include amounts denominated in the following foreign currencies:

Foreign Rands Foreign Rands2009 2009 2008 2008’000 R’000 ’000 R’000

CurrencyuS Dollar 1,172 11,117 1,176 9,526 Euro 752 9,480 805 10,298 British Pound 92 1,237 108 1,739 SA Rand 1,020,582 692,021 total for Company 1,042,416 713,584 Subsidiaries - SA Rand 337 38 total for Group 1,042,753 713,622

Guarantees issued to:Eskom Enterprises 994 722 South African Revenue Services 6,000 3,000 Properties and related rates and taxes 1,126 1,218

8,120 4,940

Notes to the Annual Financial Statements (CONTINUED)

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

Annual Report for the year ended 31 March 2009116

10. Share Capital and Share Premium GROUP AND COMPANY

2009 2008R’000 R’000

Authorised

100 000 ordinary shares of R1 each 100 100

Issued2 000 ordinary shares of R1 each 2 2

Share premium 75,890 75,890

total issued share capital and share premium 75,892 75,892

the shareholder (the Department of Communications) controls the unissued shares.

11. Loans and BorrowingsInterest bearing liabilitiesFinance lease liabilities 8,763 6,800 DBSA loan 97,669 111,668 ICASA Licences loan 25,000 39,975 total borrowings 131,432 158,443 Less: Payable within 12 months Short-term portion (38,723) (27,937) total long-term liabilities 92,709 130,506

Finance lease liabilitiesFinance lease liabilities are secured over the assets (motor vehicles and equipment) leased with a net carrying amount of 429 5,924

It is the Group’s policy to lease motor vehicles under finance leases. the average lease term is 3-4 years. For the year ended 31 March 2009, the average effective borrowing rate was 13.2% (2008: 14.3%). Interest rates are linked to prime rate.

No arrangements have been entered into for contingent rental payments. the fair value of the Group’s lease obligations approximates their carrying amount. the Group’s obligations under finance leases are secured by the lessors’ charges over the leased assets.

Notes to the Annual Financial Statements (CONTINUED)

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

Annual Report for the year ended 31 March 2009117

DBSA loanthe loan relates to infrastructure development. the loan is for a period of 10 years ending on 31 March 2014 and is not secured. Interest is charged at a fixed rate of 11.03% per annum and the loan is repayable in bi-annually equal instalments. the loan covenants have not been breached during the financial year.

ICASA licences loanthe loan relates to the granting of the Multimedia and Carrier of Carriers licence by ICASA. the loan expires on the 31 March 2010 and is being repaid through monthly payments of R2 million. Interest on late payments is charged at market related interest rates.

Contractual cashflows for loans and borrowings have been disclosed in note 3.

12. Deferred Income taxDeferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes relate to the same fiscal authority. the offset amounts are as follows:

GROUP AND COMPANY2009 2008

R’000 R’000

Deferred tax liabilities:– Deferred income tax liability to be recovered after more than 12 months 77,616 130,368 Deferred income tax assets:– Deferred income tax asset to be recovered after more than 12 months (56,672) (63,354)

Deferred income tax liabilities (net) 20,944 67,014

The gross movement on the deferred income tax account is as follows:

Beginning of year 67,014 44,126 Income statement charge (Note 21) (24,689) (6,704) tax accounted for directly in equity (21,381) 29,592 End of year 20,944 67,014

11. Loans and Borrowings (CONtINuED)

Notes to the Annual Financial Statements (CONTINUED)

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

Annual Report for the year ended 31 March 2009118

Deferred Tax Assets GROUP AND COMPANY

Provisions

Unearned income and

depositsGovernment

grant Tax losses TotalR’000 R’000 R’000 R’000 R’000

Balance at 1 April 2007 24,497 2,707 4,737 40,721 72,662 Charged to the income statement 8,263 6,365 - (29,352) (14,724) Rate change (845) (93) (163) (1,404) (2,505) Change in prior year overprovision 8,482 - - (561) 7,921 At 31 March 2008 40,397 8,979 4,574 9,404 63,354 Charged to the income statement 6,440 (5,538) 1,820 (9,404) (6,682) At 31 March 2009 46,837 3,441 6,394 - 56,672

The deferred income tax accounted for in equity during the year is as follows: GROUP AND COMPANY

2009 2008R’000 R’000

Revaluation reserves in shareholders’ equity:– Property, plant and equipment 21,381 (29,592)

the movement in deferred tax assets and liabilities during the year, without taking into consideration the offsetting of balances within the same tax jurisdiction, is as follows:

Deferred Tax Liabilities GROUP AND COMPANY

Property, plant &

equipment

Prepayments and

deposits TotalR’000 R’000 R’000

Balance at 1 April 2007 (114,853) (1,935) (116,788) Charged to the income statement 11,514 471 11,985 Rate change 3,960 67 4,027 Charged directly to equity (29,592) - (29,592) Balance at 31 March 2008 (128,971) (1,397) (130,368) Charged to the income statement 33,393 (2,022) 31,371 Charged directly to equity 21,381 - 21,381 Balance at 31 March 2009 (74,197) (3,419) (77,616)

12. Deferred Income tax (CONtINuED)

Notes to the Annual Financial Statements (CONTINUED)

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

Annual Report for the year ended 31 March 2009119

13. Deferred Income – Government Grants GROUP AND COMPANY

2009 2008R’000 R’000

Deferred Income 828,082 579,743

Analysis of movement in deferred income:Opening balance 579,743 87,314 transferred from pre-payments - 16,334 Net funding received (see below) 307,017 569,298 Interest capitalised 14,607 - utilsed as follows: -Community broadcasters (24,311) (1,118) -SABC Loan settlement (300) - -Acquisition of property, plant and equipment (48,674) (92,085) Closing balance 828,082 579,743

Government grants received 350,000 649,000 Deemed VAt (42,983) (79,702) Net funding received 307,017 569,298

Cash flow received from government grants:Government grants received 350,000 649,000Community broadcasters grant received - 16,334

350,000 665,334

Government grants are received in relation to the purchase and construction of property, plant and equipment. the deferred income relating to completed assets has been netted off against the cost of the respective asset under property, plant and equipment, net presentation basis. the asset will then be depreciated over its useful life based on the net carrying amount after taking deferred income into account as per company policy, see policy 2.14.

Government grants have been classified as a non-current liability due to the Group following the net presentation basis for accounting for government grants. Also uncertainty exists as to the timing of the release of the government grants to property, plant and equipment on completion of the relavent assets.

Notes to the Annual Financial Statements (CONTINUED)

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

Annual Report for the year ended 31 March 2009120

14. Employee BenefitsGROUP AND COMPANY2009 2008

R’000 R’000

The employee benefit obligation is made up as follows:

Retirement benefits (2,200) (3,800) Retirement medical benefits 122,140 101,552

119,940 97,752

Retirement benefitsthe Group provides retirement benefits to all its employees and operates a funded defined benefit plan and a defined contribution plan governed by the Pension Funds Act of 1956. the defined benefit plan was actuarially valued on 31 March 2009 by an independent actuary and will be evaluated again at the end of the 2010 financial year. the fund is a legal entity separate from the company. the assets of the fund are invested according to statutory prescriptions and the investments policy of the fund.

the expected cost of these benefits are accrued over the period of employment, using the projected unit credit method. Actuarial gains and losses are recognised as they arise.

Present value of funded obligations 9,200 10,000 Fair value of plan assets (11,400) (13,800) Net asset recognised in the balance sheet (2,200) (3,800)

Change in the defined benefit funding obligation:Present value of funded obligation at beginnig of year 7,400 25,700 Service cost benefits earned during the year 300 300 Interest cost on projected benefit obligation 700 1,600 Benefits paid - (21,200) Actuarial losses 800 1,000

9,200 7,400

Change in plan assets:Fair value of plan assets at the beginning of the year 11,200 29,800 Expected return on plan assets 1,200 2,200 Employee and employer contributions 200 500 Benefits paid - (21,200) Actuarial losses (1,200) (100)

11,400 11,200

Fund Surplus 2,200 3,800

Notes to the Annual Financial Statements (CONTINUED)

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

Annual Report for the year ended 31 March 2009121

GROUP AND COMPANY2009 2008

R’000 R’000Components of the retirement benefit obligation recognised in the income statement:Current service cost 300 300 Interest cost 700 1,600 Expected return on plan assets (1,200) (2,200) Actuarial losses recognised 2,000 1,100 total, included in employee remuneration costs 1,800 800

Movement in asset recognised in the balance sheetNet (asset) / liability at beginning of the period 3,800 4,100 Net amount recognised in profit or loss 1,800 (800) Contributions paid to the fund (200) 500 Net liability at end of the period 2,700 3,800

Principle actuarial assumptions usedDiscount rate 8.6% 9.6%Future salary increases 7.0% 7.0%Expected return on plan assets 8.6% 10.6%Future pension increases 5.2% 3.8%Proportion of employees opting for early retirement 43.3% 43.3%

Membership of the fund were: Members2009 2008

Active members at beginning of the year 6 10Exits during the year - (4) Active members at end of the year 6 6

the investments of the fund are in unitised type of investments (insurance policies). the investments of the fund provided a return of 9.61 % (2008: 11.44 %) for the year-end, which we derived from a “spectrum” of Government Bond Rates plus a small equity premium. the investments are expected to provide a return similar to that assumed in determining the expected present value of the plan assets. Projected contributions to the fund for the 2009/10 financial year are R 0.3 million.

14. Employee Benefits (CONtINuED)

Notes to the Annual Financial Statements (CONTINUED)

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

Annual Report for the year ended 31 March 2009122

GROuP AND COMPANY2009 2008

R’000 R’000

Present value of unfunded obligations 122,140 101,552 Liability recognised in the balance sheet 122,140 101,552

Movement in the Liability Recognised in the Balance Sheet:Liability at beginning of the year 101,552 75,569 Movement for the yearBenefits paid (1,854) (1,595) Other expenses included in staff costs 22,442 27,578 Current service cost 3,890 3,208 Interest cost 8,367 18,963 Actuarial loss 10,185 5,407 Liability at end of the year 122,140 101,552

Principle Actuarial Assumptions UsedDiscount rate 8.5% 9.5%Annual increase in health care costs 7.0% 8.0%CPI Inflation 8.5% 9.7%Expected retirement age 63 63

the expected employer benefits to be paid in 2009/10 amount to R1,9 million. Projected contributions to the fund for the 2009/10 financial year are R14,4 million.

Sensitivity AnalysisGROUP AND COMPANY

Central AssumptionAccrued Liability (R’000) 7% +1.00% -1%1% change in health care inflation 122,240 144,729 104,209 10% change in post retirement mortality 14,385 17,335 12,054

Historical Information GROUP AND COMPANY

2009 2008 2007 2006 2005R’000 R’000 R’000 R’000 R’000

Retirement BenefitsPresent value of the obligation 9,200 7,400 25,700 21,600 25,400 Present value of the plan assets (11,400) (11,200) (29,800) (20,800) (18,400) Fund (Surplus) / Deficit (2,200) (3,800) (4,100) 800 7,000 Retirement medical benefitsPresent value of the obligation 122,140 101,552 75,569 75,689 45,121

Retirement medical benefitsthe Group provides post-retirement benefits to its retirees in the form of contributions to the independent medical aid fund and operates as an unfunded defined benefit plan. the liability was actuarially valued at 31 March 2009 by an independent actuary, and will be evaluated again at the end of the 2010 financial year.the expected costs of these benefits are accrued over the period of employment, using the projected unit credit method. Actuarial gains and losses are recognised as they arise.

14. Employee Benefits (CONtINuED)

Notes to the Annual Financial Statements (CONTINUED)

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

Annual Report for the year ended 31 March 2009123

15. trade and Other PayablesGROUP COMPANY

2009 2008 2009 2008R’000 R’000 R’000 R’000

trade payables 72,251 66,134 70,035 60,754 Amounts due to related parties (Note 25) 166,397 114,956 161,320 114,956 Accrued expenses 73,246 79,560 77,752 79,736 Deferred revenue 10,176 30,792 10,176 30,792

322,070 291,442 319,283 286,238

16. Provisions GROUP AND COMPANY2009 2008

R’000 R’000

Opening balance - - Provisions made during the year 4,000 - Closing balance 4,000 -

Fastcomm provisionA provision of R4 million has been recognised for expected claims by a joint venture partner, Fastcomm, in respect of the Group’s obligations according to the joint venture agreement. the provision has been estimated using information available to management after consultations with legal counsel. It is not certain when this amount will be settled since there is an ongoing dispute with Fastcomm as their total claim is R26,2 million, see Note 26.

Notes to the Annual Financial Statements (CONTINUED)

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

Annual Report for the year ended 31 March 2009124

17. Revenue GROUP COMPANY

2009 2008 2009 2008R’000 R’000 R’000 R’000

Revenue by product categoryterrestrial television services 313,152 290,049 313,152 290,049 terrestrial FM and AM radio services 138,209 121,430 138,209 121,430 terrestrial short wave radio services 35,097 31,640 35,097 31,640 terrestrial and satellite linking 85,095 60,494 85,095 60,494 Satellite direct-to-home 29,806 23,600 29,806 23,600 Business television 13,192 11,912 13,192 11,912 Facility rentals 18,936 16,548 18,936 16,548 Sales of satellite decoders 255 2,833 255 2,833 Carrier of Carriers 76,744 91,507 76,744 91,507 InfoSat business solutions 5,573 6,024 - - VSAt 34,169 44,294 34,169 44,294 Broadband wireless 6,111 15,108 6,111 15,108 Other 9,195 8,050 15,936 14,661

765,534 723,489 766,702 724,076 Less: Revenue from discontinued operations (Note 22) (15,187) (24,374) (9,614) (18,350) Revenue from continuing operations 750,347 699,115 757,088 705,726

Notes to the Annual Financial Statements (CONTINUED)

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

Annual Report for the year ended 31 March 2009125

18. Expenses by Nature GROUP COMPANY

2009 2008 2009 2008R’000 R’000 R’000 R’000

Employee benefit expense (Note 19) 253,575 245,013 253,575 234,163 Depreciation (Note 4) 133,712 91,757 133,712 91,757 Amortisation of intangible assets (Note 5) 5,456 2,946 5,456 2,946 Impairment of property, plant and equipment (Note 4) 45,869 - 45,869 - transportation expenses 7,865 9,521 7,865 9,521 Advertising costs 5,637 6,778 5,637 6,778 Operating lease payments 14,449 56,530 14,449 56,530 Auditor’s remuneration- Audit fees 1,989 1,677 1,989 1,677 - Fees for other services 200 73 200 73 Legal and consulting fees 8,045 4,550 8,045 4,550 Other cost of sales, selling, administration and operating expenses 374,308 327,271 373,549 338,002 total cost of sales, selling, administration and other operating expenses 851,104 746,116 850,345 745,997

Less: Discontinued operations (Note 22)

(254,314) (131,325)

(237,784) (124,476) 596,790 614,791 612,561 621,521

Disclosed as follows in the income statement for continuing operations:

Cost of sales 468,527 427,672 484,948 434,407 Selling expenses 5,637 6,778 5,637 6,778 Administrative expenses 75,135 83,919 74,485 83,914 Other operating expenses 47,491 96,422 47,491 96,422

596,790 614,791 612,561 621,521

Notes to the Annual Financial Statements (CONTINUED)

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

Annual Report for the year ended 31 March 2009126

19. Employee Benefit Expense GROUP COMPANY

2009 2008 2009 2008R’000 R’000 R’000 R’000

Employee Benefit Expense from Continuing Operations

Wages and salaries 198,390 196,158 198,390 185,308 Statutory charges 1,641 1,691 1,641 1,691 Pension costs – defined contribution plans 29,302 18,786 29,302 18,786 Post-employment benefits 24,242 28,378 24,242 28,378

253,575 245,013 253,575 234,163

Included in the above amounts are the following expenses relating to discontuing operations

Wages and salaries 25,564 26,370 23,951 25,066 Statutory charges 188 194 177 185 Pension costs – defined contribution plans 3,365 3,471 3,152 3,299

29,117 30,035 27,280 28,550

Number of employees 539 545 539 545

20. Finance Income and Expenses Group Company

2009 2008 2009 2008R’000 R’000 R’000 R’000

Recognised in profit or lossInterest expense • Borrowings 18,385 5,682 17,393 5,682 • Finance lease interest 129 876 129 876 • Other interest 14,020 13,390 14,020 13,390 Finance expenses 32,534 19,948 31,542 19,948 Interest income (88,615) (25,158) (88,593) (25,138) Other interest - (2,729) - (2,729) Finance income (88,615) (27,887) (88,593) (27,867) total interest income (103,222) (27,887) (103,200) (27,867)Interest income capitalised on government grants not recognised in profit or loss (Note 13) 14,607 - 14,607 -Net finance income (56,081) (7,939) (57,051) (7,919)

the finance income and expenses for discontinuing operations are not significant and thus have not been seperately disclosed.

Notes to the Annual Financial Statements (CONTINUED)

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

Annual Report for the year ended 31 March 2009127

21. Income tax Expense GROUP COMPANY

2009 2008 2009 2008R’000 R’000 R’000 R’000

South African Income tax- Current 19,012 - 19,012 - - Deferred (Note 12) (24,689) (6,704) (24,689) (6,704) - Current year (24,689) 1,218 (24,689) 1,218 - Prior year under-provision - (7,922) - (7,922)

(5,677) (6,704) (5,677) (6,704)

Income tax expense on continuing operations 61,279 23,242 58,211 23,011 Income tax effect of discontinuing operations (Note 22) (66,956) (29,946) (63,888) (29,715)

(5,677) (6,704) (5,677) (6,704)

the tax on the Group’s profit before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable to profits of the consolidated entities as follows:

GROUP COMPANY2009 2008 2009 2008

R’000 R’000 R’000 R’000

Loss for the period (23,812) (7,984) (20,915) (7,298) total income tax credit (5,677) (6,704) (5,677) (6,704) Loss before tax (29,489) (14,688) (26,592) (14,002)

tax calculated at domestic tax rates applicable to profits in the respective countries 28% 28% 28% 28%Expenses not deductible for tax purposes (6%) (45%) (7%) (48%)Rate change - 10% - 11%Prior year underprovision - 54% - 57%unrecognised tax losses (3%) (1%) - -tax charge 19% 46% 21% 48%

Notes to the Annual Financial Statements (CONTINUED)

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

Annual Report for the year ended 31 March 2009128

22. Discontinued Operation On 27 January 2009, the Board of Directors resolved to discontinue all non-performing telecommunication products namely MyWireless, Biznet and VAS. this was as a result of a request by the shareholder. At the end of the 2009 financial year, these products were still being used and will be discontinued during the 2010 financial year. the comparative income statement has been restated to show the discontinued operation separately from continuing operations. Management committed to a plan to terminate these products due to the strategic decision to place greater focus on the Group’s core business.

GROUP COMPANY2009 2008 2009 2008

R’000 R’000 R’000 R’000

Results of discontinued operationRevenue 15,187 24,374 9,614 18,350 Expenses (254,314) (131,325) (237,784) (124,476) Results from operating activities (239,127) (106,951) (228,170) (106,126) Income tax effect 66,956 29,946 63,888 29,715 Loss for the period (172,171) (77,005) (164,282) (76,411)

Cash flows used in discontinued operation

Net cash used in operating activities

(179,938) (99,260)

(169,058) (98,528) Net cash from investing activities (31,300) - (31,300) - Net cash used in discontinued operation (211,238) (99,260) (200,358) (98,528)

Notes to the Annual Financial Statements (CONTINUED)

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

Annual Report for the year ended 31 March 2009129

23. Cash Generated from Operations GROUP COMPANY

2009 2008 2009 2008R’000 R’000 R’000 R’000

Loss for the period (23,812) (7,983) (20,915) (7,298) Income tax expense (Note 21) (5,677) (6,704) (5,677) (6,704) Loss before income tax (29,489) (14,687) (26,592) (14,002) Adjustments for: - depreciation 133,712 91,757 133,712 91,757 - amortisation 5,456 2,946 5,456 2,946 - impairment of assets 45,869 1,620 45,869 1,620 - loss on disposals on property, plant and equipment 273 6,952 273 6,952 - loss on disposal of intangible assets - 711 - 711 - interest received (88,615) (27,887) (88,593) (27,867) - interest paid 32,534 19,948 31,542 19,948 - post retirement medical benefit 22,188 26,283 22,188 26,283 Cash generated from operations before working capital changes 121,928 107,643 123,855 108,348 Working capital changes - Increase / (decrease) in inventories 3,968 (6,434) 3,968 (6,434) - Increase / (decrease) in trade and other receivables 9,226 (43,676) 8,827 (44,418) - (Decrease) / increase in trade and other payables (8,354) 33,103 13,075 30,129 - (Decrease) / increase in loan to subsidiary - - (5,054) 3,483 Cash generated from operations 126,768 90,636 144,671 91,108

In the cash flow statement, proceeds from sale of property, plant and equipment comprise:Carrying amount (Note 4) 287 52,211 287 52,211 Loss on disposal of property, plant and equipment (273) (6,952) (273) (6,952) Proceeds from disposal of property, plant and equipment 14 45,259 14 45,259

Notes to the Annual Financial Statements (CONTINUED)

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

Annual Report for the year ended 31 March 2009130

24. Commitments(a) Capital Commitments

Capital expenditure contracted for at the balance sheet date but not yet incurred is as follows:

GROUP AND COMPANY2009 2008

R’000 R’000Property, plant and equipment 40,927 9,336

the authorised capital expenditure for property, plant and equipment is planned to occur in the new financial year. It will be financed from internal cash resources and from government grants received.

(b) Operating Lease Commitments

the Group leases various facilities, offices and equipment under non-cancellable operating lease agreements. the leases have varying terms, escalation clauses and renewal rights.the lease expenditure charged to the income statement during the year is disclosed in Note 18.

the future aggregate minimum lease payments under non-cancellable operating leases are as follows:

GROUP AND COMPANY2009 2008

R’000 R’000No later than 1 year 111,021 131,791Later than 1 year and no later than 5 years 127,027 237,788Later than 5 years 30,508 30,770

268,557 400,349

Notes to the Annual Financial Statements (CONTINUED)

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

Annual Report for the year ended 31 March 2009131

25. Related-party transactionsParties are considered to be related if one party has the ability to control the other party or exercise significant influence or joint control over the other party in making financial or operational decisions.

Due to the fact that Sentech is 100% owned by Government, this includes the company as part of the National Sphere.the company transacts with various other companies within the national sphere and all significant transactions are disclosed below.

Related party transactions occurred between Sentech and telkom SA Ltd, Department of Public Works, Agricultural Research Council, Municipalities, Gauteng Department of Education, Eskom, Department of Communication (DOC), SABC as well as other government entities.

All transactions with government departments were on an arm’s length basis and therefore these are considered to be normal dealings.

Directors’ Emoluments (Group and Company)

Total Basic salary

Expense allowances and

other benefits Provident Fund Fees R’000 R’000 R’000 R’000 R’000

2009ExECutIVE

- S Mokone-Matabane 2,013 1,724 48 241 - - B Ngwenya 1,332 1,115 61 156 - - M S Cassim 1,576 1,325 66 185 - NON-ExECutIVE- C Hickling 422 - - - 422 - N tshombe 209 - - - 209 - L Konar 246 - - - 246 - t Leeuw 288 - - - 288 - M Booi * 12 - - - 12 - N Sihlali 257 - - - 257- B Langa *** - - - - - -Y Muthien 85 - - - 85 -t Mashigo 80 - - - 80

6,520 4,164 175 582 1,599

2008ExECutIVE

- S Mokone-Matabane 1,820 1,568 33 219 - - B Ngwenya 1,194 1,014 38 142 - - M S Cassim 1,437 1,216 51 170 - NON-ExECutIVE- C Hickling 277 - - - 277 - N tshombe 180 - - - 180 - L Konar 152 - - - 152 - t Leeuw 173 - - - 173 - M Booi * 56 - - - 56 - N Sihlali 187 - - - 187 - S Mokoetle ** 48 - - - 48 - B Langa *** 48 - - - 48

5,572 3,798 122 531 1,121

* RESIGNED: 26 JuLY 2007** APPOINtED : 1 AuGuSt 2007 ; RESIGNED : 1 DECEMBER 2007*** APPOINtED : 1 AuGuSt 2007 ; RESIGNED : 22 JANuARY 2008

Notes to the Annual Financial Statements (CONTINUED)

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

Annual Report for the year ended 31 March 2009132

Government Grants

Various transactions are entered into with the Department of Communications with respect to government grants.Government Grants are accounted for in terms of IAS 20 (Accounting for Government Grants and Disclosure of Government Assistance).

GROUP AND COMPANY2009 2008

Outstanding loans R’000 R’000- DOC loan - 300

Government grants received (Note 13) 350,000 665,334

Entities within the National Sphere

the Group is controlled by the Government of South Africa who owns 100% of the company’s shares. the following transactions were carried out with related parties (fellow national entities):

i) Sales of Goods and Services

GROUP AND COMPANY2009 2008

R’000 R’000Sales of services:

- Agricultural Research Council - 466 - Air traffic and Navigation Services Company 369 356 - SABC 414,681 406,260 - Gauteng Department of Education 6,241 - - ISEtt SEtA 864 307 - universal Service Agency 866 657 - total Facilities Management Company (Pty) Limited 2,696 4,307 - Department of Public Works 2,407 2,777 - ESKOM 689 733 - SA Post Office Limited 3,163 2,918 - SA Weather Service 286 293

432,262 419,074

Services are rendered at market related rates in terms of the approved tariff book.

25. Related-party transactions (CONtINuED)

Notes to the Annual Financial Statements (CONTINUED)

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

Annual Report for the year ended 31 March 2009133

25. Related-party transactions (CONtINuED)

GROUP AND COMPANY2009 2008

R’000 R’000ii) Purchases of goods and services- Development Bank of Southern Africa 25,966 31,943 - ESKOM 19,481 16,571 - SABC 194 5,606 - South African Revenue Service 52,071 75,213 - tELKOM SA Limited 50,409 29,628 - the Independent Communications Authority of South Africa 30,916 14,008 - total Facilities Management Company (Pty) Limited 2,726 2,763 - unemployment Insurance Fund 1,512 1,623

183,275 177,355

Goods and services are transacted on an arm’s length basis.

iii) Balances outstanding at year end

Receivables- Agricultural Research Council - 288 - Air traffic and Navigation Services Company - 33 - SABC 5,512 8,286 - Gauteng Department of Education 1,945 - - ISEtt SEtA 837 89 - Department of Public Works 1,110 1,145 - ESKOM 156 30 - SA Post Office Limited 904 1,088 - SA Weather Service - 57 - South African Revenue Service 20,394 - - total Facilities Management Company (Pty) Limited 14 -

30,872 11,016

Payables- ESKOM 884 777 - South African Revenue Service 164,285 107,905 - tELKOM SA Limited 1,228 4,650 - the Independent Communications Authority of South Africa - 1,499 - unemployment Insurance Fund - 125

166,397 114,956

Notes to the Annual Financial Statements (CONTINUED)

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

Annual Report for the year ended 31 March 2009134

v) Loans Owing (to)/ by SubsidiariesLoans to subsidiary 45,023 37,783Loans owing to subsidiary (45,300) (43,114)

(277) (5,331)

COMPANY2009 2008

R’000 R’000

iv) Transactions with Subsidiaries

Income from the provision of management services to InfoSat (Pty) Ltd 6,600 6,600

Both loans are of long term nature, non-interest bearing, and there are no terms of repayment. However, in terms of IAS1 - Presentation of Financial Statements, the amounts owing to subsidiaries have been disclosed as current as there is not an unconditional right to avoid payment for more than 12 months after balance sheet date.

26. Contingent LiabilitiesAt year end, the Group was involved in several pending legal cases.

Fastcomm Claim

A claim has been instituted against the Group relating to a dispute with a joint venture partner, Fastcomm, who alleges that the Group did not perform it terms of the joint venture agreement. A legal claim of R26.2 million has been made. Based on relevant consultations with legal counsel and the information available, management estimates that the most likely outcome will require the Group to make a settlement of about R4 million and a provision for this amount has been recognised, see Note 16. the directors are of the opinion that the excess claim of R22.2 million can be successfully defended by the Group.

Interest on Late Tax Payments

A contingent liability of R13 million exists in respect of South African Revenue Services for penalties for the non-payment of deemed VAt on Government Grants received. the group has not been paying deemed output VAt on government grants since July 2006 when the VAt Act was amended. Management together with their tax advisors believe that the penalties will be waived. the liability has been estimated using the maximum threshold for penalties that can be levied according to the VAt Act. the timing of this cost is not certain as management is in the process of making representation with the South African Revenue Services.

27. Events after the Balance Sheet Datesthere were no material events that took place subsequent to the balance sheet date.

25. Related-party transactions (CONtINuED)

Notes to the Annual Financial Statements (CONTINUED)

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

Annual Report for the year ended 31 March 2009135

28. Prior Year Adjustments28.1 Property, plant and equipment

Land and buildings were incorrectly valued at 31 March 2008. the financial statements for the 2008 financial year have been restated to correct this error. the effect of the restatement on those financial statements is summarised below and is the same for group and company.

Effect on 2008 in R’000Decrease in loss on disposal of property, plant and equipment 2,681Effect on tax expense -Increase in profit 2,681

Increase in of property, plant and equipment 2,681Effect on tax liability -Increase in equity 2,681

Effect on 2008 in R’000Increase in valuation of property, plant and equipment (land and buildings) 49,413 Increase in deferred tax liability (17,152) Increase in equity (revaluation reserve) 32,261 Increase in accumulated depreciation (4,014) Decrease in deferred tax liability 1,124 Decrease in equity (accumulated losses) (2,890)

Increase in depreciation on property, plant and equipment (buildings) (4,014) Decrease in deferred tax expense 1,124 Decrease in profit (2,890)

During the 2009 financial year, it was discovered that certain property, plant and equipment were incorrectly written off during the 2008 financial year. the financial statements for the 2008 financial year have been restated to correct this error. the effect of the restatement on those financial statements is summarised below and is the same for group and company.

28.2 Retirement Benefit Obligations

the retirement medical aid benefit obligation was understated by R12 557 000 in the prior year financial statements. the prior year financial statements have been restated to correct this error. the effect of the restatement on those financial statements is summarised below and is the same for group and company.

Effect on 2008 in R’000Increase in retirement benefit fund expense (12,557) Decrease in deferred tax expense 3,516 Decrease in profit (9,041)

Increase in retirement benefit obligation (12,557) Decrease in deferred tax liability 3,516

Decrease in equity (9,041)

Notes to the Annual Financial Statements (CONTINUED)

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

Annual Report for the year ended 31 March 2009136

28. Prior Year Adjustments (CONtINuED)

28.3 ICASA Interest Penalty

the company was in negotiation with ICASA regarding the licence mechanism and the quantum, and in so doing held back the payments on these licences. ICASA interest penalties arising from the company’s delay to make these licence payments in accordance with the licence agreements were not accounted for in the prior period financial statements. the prior year financial statements have been restated to correct this error. the effect of the restatement on those financial statements is summarised below and is the same for group and company.

Effect on periods prior to 2007 in R’000Increase in interest expense (7,666) Decrease in deferred tax liability 2,223 Decrease in equity and retained earnings (5,443)

Effect on 2008 in R’000Increase in interest expense (2,062) Decrease in tax expense 577 Decrease in profit (1,485)

Increase in payables (2,062) Decrease in deferred tax liability 577 Decrease in equity (1,485)

28.4 Deferred Government Grants

the VAt liability relating to Goverment Grants received by the company was not correctly classified under current liabilities in the prior year. the VAt was not paid to SARS and the applicable SARS interest expense not accounted for in the prior year. the prior year financial statements have been restated to correct this error. the effect of the restatement on those financial statements is summarised below and is the same for Group and Company.

Effect on periods prior to 2007 in R’000Increase in interest penalty and payables (2,843) Effect on tax expense - Decrease in equity and retained earnings (2,843)

Effect on 2008 in R’000Increase in payables (current liabilities) 88,646 Decrease in deferred government grants (88,646)

-

Increase in interest penalty for late payment (13,458) Effect on tax expense - Decrease in profit (13,458)

Increase in payables 13,458 Effect on tax liability - Decrease in equity 13,458

Notes to the Annual Financial Statements (CONTINUED)

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

Annual Report for the year ended 31 March 2009137

Effect on 2008 in R’000Increase in operating expenses (12,998) Decrease in tax expense - Decrease in equity (revaluation reserve) (12,998)

Effect on 2008 in R’000Decrease in deferred tax expense 11,566 Decrease in deferred tax liability (5,075) Decrease in equity 6,491

28.5 Revaluation Surplus on Disposed Assets

the revaluation surplus was not correctly transferred to retained earnings in the prior year. the prior year financial statements have been restated to correct this error. the effect of the restatement on those financial statements is summarised below and is the same for group and company.

28.6 Deferred Tax

Certain taxable differences were not taken into account in the prior year tax computation. these differences exclude the above prior year adjustments. the prior year financial statements have been restated to correct this error. the effect of the restatement on those financial statements is summarised below and is the same for group and company.

28. Prior Year Adjustments (CONtINuED)

Notes to the Annual Financial Statements (CONTINUED)

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

1. Directors’ Responsibility for Financial Reporting

2. Statement by Company Secretary3. Independent Auditors’ Report4. Report of the Audit Committee5. Directors’ Report6. Balance Sheets7. Income Statements8. Statements of Changes in Equity9. Cash Flow Statements10. Notes to the Annual Financial Statement

Annual Report for the year ended 31 March 2009138

AA - Automobile Association ACD - Average Call DurationAFS - Annual Financial StatementsAR - Annual ReportASR - Answer Seizure RateBBBEE - Broad-based Black Economic Empowerment BBQ - Black Business QuarterlyBEE - Black Economic EmpowermentBSD - Broadcast Signal Distribution BWMC - Broadband Wireless Multimedia Communications BT - Broadcast TelevisionCBU - Collective Bargaining UnitCEO - Chief Executive OfficerCFO - Chief Financial OfficerCHOC - Children’s Haematology Oncology ClinicCoC - Carrier of CarriersCOO - Chief Operations OfficerCOTS - Commercially Off The ShelfCRM - Customer Relationship ManagementCSI - Corporate Social InvestmentCWU - Communication Workers’ UnionDIFR - Disabling Incident Frequency RateDNS - Domain Name System DoC - Department of CommunicationsDTH - Direct to HomeDTT - Digital Terrestrial TelevisionEASSY - East Africa Submarine SystemECA - Electronic Communications ActECNS - Electronic Communications Network Service EFC - Encryption Facility CentreEFT - Electronic Funds Transfers EMEA - Europe, Middle East and AfricaERP - Enterprise Resource PlanningFIFA - Fédération Internationale de Football Association (French for International Federation of Association Football)FM - Frequency ModulationGRI - Global Reporting Initiative HBS - Host Broadcast ServicesHDTV - High Definition TelevisionIBC - International Broadcast CentresICASA - Independent Communications Authority of South AfricaICT - Information Communication Technology

Glossary

Glossary

Annual Report for the year ended 31 March 2009139

IP - Internet ProtocolIS - Information SystemsISO - International Organisation for Standardisation ISP - Internet Service ProviderIT - Information TechnologiesITU - International Telecommunications Union JIPSA - Joint Initiative on Priority Skills AcquisitionKU-band - Kurtz-Under BandMMDS - Multichannel Multipoint Distribution ServiceMTBF - Mean Time Between FailuresMW - Medium WaveNWBN - National Wireless Broadband NetworkNemisa - National Electronic Media Institute of South AfricaNT - National Treasury OHS - Occupational Health and SafetyPFMA - Public Finance Management ActPHRU - Perinatal HIV Research UnitPMS - Performance Management SystemPOP - Point of PresenceSABC - South African Broadcasting CorporationSAPO - South African Post OfficeSAPS - South Africa Police ServiceSAWS - South African Weather ServiceSHE - Safety, Health and EnvironmentSLA - Service Level AgreementsSMS - Short Messaging SystemSNG - Satellite News GatheringSOE - State Owned EnterpriseSTL - Studio Transmitter Link STP - Sender Technology ParkSW - Short WaveTCC - Transmitter Control CentreTSDF - Telecommunications Skills Development ForumTV - Television UHF - Ultra High FrequencyUMTS –TDD - Universal Mobile Telephone Service-Time Division DuplexUNISA - University of South AfricaVAN - Value Added NetworkVHF - Very High FrequencyVoIP - Voice Over Internet Protocol

Glossary (CONtINuED)

Glossary (CONTINUED)

Annual Report for the year ended 31 March 2009140Notes

Notes

Annual Report for the year ended 31 March 2009141Notes

Notes (CONTINUED)

Annual Report for the year ended 31 March 2009142Contact Details

Registered officeAugusta House Fourways Golf ParkRoos StreetFourways2055

Postal addressPrivate Bag X06Honeydew2040South Africa

Corporate Communications011 691 7256

Company Secretary011 691 7103

www.sentech.co.za

AuditorsKPMG IncDirector: M RattiganCrescent 85 Empire Road Parktown2193

Contact Details

Annual Report for the year ended 31 March 2009143

Annual Report for the year ended 31 March 2009144