Integrated Report 2018/19 SENTECH (SOC) LTD Annual Integrated Report For the year ended 31 March 2019 Integrated Annual Report 2018/19 1 Table of Contents ABBREVIATIONS ....................................................................................................................................................... 4 ABOUT THIS REPORT ............................................................................................................................................... 7 PERFORMANCE RESULTS AT A GLANCE ................................................................................................................. 9 1 ABOUT SENTECH ......................................................................................................................................... 10 1.1 Evolution of SENTECH ..........................................................................................................................................10 1.2 Ownership ...............................................................................................................................................................10 1.3 Legislative Framework ...........................................................................................................................................10 1.4 Mandate ..................................................................................................................................................................10 1.5 Vision, Mission and Corporate Values ..................................................................................................................10 1.6 Legal and Operating Structure .............................................................................................................................11 1.7 Products and Services ............................................................................................................................................12 1.8 Organisational Structure ........................................................................................................................................13 2 STRATEGIC REVIEW ..................................................................................................................................... 20 2.1 Chairperson’s Report ..............................................................................................................................................20 2.2 Chief Executive Offi cer’s Report............................................................................................................................22 2.3 Operating Environment .........................................................................................................................................24 2.4 Business Strategy ...................................................................................................................................................28 2.5 Operating Model....................................................................................................................................................29 2.6 Strategic Risk Profi le ...............................................................................................................................................30 3 OPERATIONAL PERFORMANCE .................................................................................................................. 33 3.1 Chief Financial Offi cer’s Report .............................................................................................................................33 3.2 Chief Operations Offi cer’s Report .........................................................................................................................35 3.3 Performance against Shareholder’s Compact ......................................................................................................41 3.4 Strategic Priorities ..................................................................................................................................................43 4 VALUE CREATION ........................................................................................................................................ 45 4.1 Financial Capital .....................................................................................................................................................45 4.2 Manufactured Capital ............................................................................................................................................47 4.3 Social and Relationship Capital.............................................................................................................................47 4.4 Human Capital ........................................................................................................................................................53 4.5 Intellectual Capital .................................................................................................................................................58 4.6 Natural Capital........................................................................................................................................................61 Integrated Annual Report 2018/19 2 5 CORPORATE GOVERNANCE ....................................................................................................................... 64 5.1 Commitment to Good Governance......................................................................................................................64 5.2 Board of Directors ..................................................................................................................................................64 5.3 Board Sub-Committees .........................................................................................................................................65 5.4 Board Continuity Programme ...............................................................................................................................65 5.5 Approach to Compliance ......................................................................................................................................66 5.6 Ethics .......................................................................................................................................................................66 5.7 Compliance with King IV ........................................................................................................................................66 5.8 Independence of Directors ....................................................................................................................................67 5.9 Internal Audit ..........................................................................................................................................................74 5.10 ICT Governance ......................................................................................................................................................74 5.11 Combined Assurance .............................................................................................................................................75 6 Group Annual Financial Statements ............................................................................................................. 77 6.1 Board’s Responsibilities and Approval .................................................................................................................77 6.2 Statement by the Company Secretary ..................................................................................................................78 6.3 Report of the Audit and Risk Committee .............................................................................................................79 6.4 Report of the Social and Ethics Committee .........................................................................................................83 6.5 Board’s Report ........................................................................................................................................................85 6.6 External Auditor’s Report ......................................................................................................................................88 6.7 Group Annual Financial Statements .....................................................................................................................93 Integrated Annual Report 2018/19 3 ABBREVIATIONS AGSA Auditor-General of South Africa AGM Annual General Meeting AI Artifi cial Intelligence ARC Audit and Risk Committee ASB Accounting Standards Board ASO Analogue Switch Off ATV Analogue Television B-BBEE Broad-Based Black Economic Empowerment BBI Broadband Infraco CAPEX Capital Expenditure CCMA The Commission for Conciliation, Mediation and Arbitration Companies Act Companies Act, Act No. 71 of 2008, as amended CEO Chief Executive Offi cer CFO Chief Financial Offi cer CHF Swiss Franc COO Chief Operations Offi cer CPI Consumer Price Index C&MS Content and Multimedia Services CS Connectivity Services CSI Corporate Social Investment DAB Digital Audio Broadcast DCDT Department of Communications and Digital Technologies DoC Department of Communications DPSA Department of Public Service and Administration DTT Digital Terrestrial Television DTH-S Direct to Home Satellite DR Disaster Recover DSB Digital Sound Broadcasting DTPS Department of Telecommunications