SAA Group - Amazon Web Servicespmg-assets.s3-website-eu-west-1.amazonaws.com/180425SAA.pdfApr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb

APRIL 2018

SAA Group

Presentation to Standing Committee on Appropriations (SCOA)

2 CONFIDENTIAL – FOR DISCUSSION

Briefing on

Current State of

Airline and

Market

Update on

Turnaround

Implementation

Strategy,

Implementation

and Strategic

Options Risks

Governance,

Supply Chain and

Audits

1 2 3 4

5

Agenda

Oversight Forum

6

1 Briefing on Current State of Airline and Market


Significant increase in

loans due on

demand/within a year

In recent years SAAG has experienced management turbulence, deteriorating results and increasing debt levels

Breakdown of long term

liabilities not available

prior to FY05

Liabilities not

reported

prior to FY01

Coleman Andrews Andre Viljoen Khaya Ngqula Siza Mzimela

Vuyisile Kona

Musa

Zwane SAAG CEOs

Thuli Mpshe

Monwabisi

Kalawe

Nico Bezuidenhout

Note: Guarantees accessed via Transnet prior to stand alone SOE status; *capital expenditure is investment in aircraft, property, equipment & intangible assets

Source: Company financial statements, SA Treasury budget review

1 – BRIEFING ON CURRENT STATE

SAAG

Chairs Donald Ncube Jakes Gerwel Cheryl Carolus Dudu Myeni

= less than 1yr = between 1-5 yrs = more than 5yrs

Maturity


While numerous attempts have been made to restructure, SAAG has met with limited success due to a failure to translate into implementation

Today

Net profit after tax

• Lack of coherent, integrated strategy

• Overt focus on cost reduction without

adequately addressing operating model

constraints

• Limited commercial and business skills to

drive revenue growth

• Reduced customer focus

• Inability to attract and retain best talent

in the market

• Poor implementation driven by a lack of

communication

• Instability of management and

breakdown of culture

• Slow decision-making often due to

increased management restrictions

Note: Financial Year ends 31 March; FY17 NPAT is for YTD; LTTS = Long Term Turnaround Strategy

Source: Corporate Plan, April 2017 – March 2023

Reasons for Underperformance

Corporate Plan

(2017 - Seabury)



Increased competition has resulted in a loss of market share and reduced yields

23 ppt Drop in

marketshare

11% Drop in

average fare*

45 ppt Drop in

marketshare

12% Drop in

average fare**

71 ppt Drop in

marketshare

12% Drop in

average fare**

Domestic Regional International

Note: *Average fare CAGR FY14-FY18 for SAA only (excludes Mango); **Average fare CAGR FY14-FY18

Source: SAA data on airline capacity


2

Update on Turnaround Implementation


SAAG faces a number of liquidity challenges and has identified mitigations and remedial actions

• Reduction in inflows

• Restricted cash access

• Difficulties with fund raising

• Poor domestic and regional GDP growth

• In discussions with the Shareholder

• Government guarantees

• Liquidity improvement and

management

• Freeing up blocked and restricted cash

Liquidity Challenges and Risks Mitigations and Remedial Actions

2 – UPDATE ON TURNAROUND IMPLEMENTATION


R10bn Treasury cash injection used to service immediate debt obligations and working capital needs

2.2 2.2

4.7 4.7

10.0

(7.5)

(5)

-

5

10

15

Cash @ Apr17 TreasuryInjection

DebtRepayments

Cash availablefor FY18

ZAR

bn

Financing FY18 Operational Requirements

SAA Group Financing Cashflow FY18

Source: Management reports

This position is already unsustainable and will become significantly worse without immediate intervention

Treasury

injection

covered debt

repayment and

cash for

operations


● FY18 operational cashflow burn

● Restricted cash held in restricted

accounts as well as blocked funds in

Angola, Zimbabwe and Nigeria

● SARS payments to be effected in FY18


Total P&L impact of initiatives not implemented in FY2018 is estimated at R1.6bn

The FY2018 budget and LTTS were premised on certain key assumptions and initiatives; some of these have however not materialised as planned

Key Assumptions

Forex & Oil Price Assumptions Negative Market Dynamics not Anticipated

Key Initiatives

1. Exit 5 wide body aircraft

2. Retain narrow body aircraft

3. Reduce freighter fleet

4. Procurement benefits

5. Central Africa routes rationalisation

1. Sale of 5x owned A340-300 aircraft

2. R900m capital budget

3. Purchase of 2x A340-600

4. R13bn recap over three years

5. Going concern

1. Additional competitor capacity

2. Growth of LCCs

3. JNB by-pass

4. Cape Town reaches critical mass

1. ZAR/USA at R13.2 vs R13 budgeted

2. Brent at $53.6/Bbl vs $50.0/Bbl budgeted today @

$67/Bbl

Status of completion Status of completion

Not completed Completed

Key



A number of quick wins have recently been implemented, to arrest immediate losses and start to turn around performance …

Capacity

Redistribution

Route

Optimisation

Other

Organisation

• Shifted 4 narrow-body aircraft to Mango to address excess capacity for SAA and reduce impact of

Low Cost Carriers (LCC) market share gain

• Planned return for 1 of 3 freighters to lessor to optimise profitability

• At lease maturity, shift from 737-300 to ATR-72 aircraft (freight) to further improve operating

cost economics

• Reviewed unprofitable routes including reductions in West Africa, LHR and domestic transfer to

Mango

• Adjustment of SAA schedule to focus on business and premium economy traffic

• Continuing to build Change Hub in order to manage transformation within the business

• RfP issued for operating model redesign – creating fit for purpose organisation

• Renegotiated terms with key suppliers

• Approached potential lenders to support financing requirements

• Initial discussions with Board regarding role of subsidiaries

Staff costs • Engaging labour around state of the airline and possible restructuring

• Negotiations with labour and pilots to achieve greater productivity



Trending below

last year

Trending above

last year

Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

-8% -5% -5% -8% -8% 1% 4% 5% 7% 6% 8% 2%

-2% 0% -8% -1% -1% 5% 9% 15% 11% 4% 0% -9%

-2% -3% -4% -4% -1% -4% -5% -11% -11% -15% -16% -16%

5% 3% 3% 0% -4% -3% -3% -2% -2% -2% -3% -3%

3% 0% -2% -3% -5% -7% -8% -12% -12% -16% -19% -18% 3% 2% 0% -1% -1% -4% -7% -12% -13% -18% -28% -29%

-13% -7% -6% -7% -4% 5% 7% 6% 8% 8% 13% 7% -12% -10% -9% -10% -8% 0% 6% 7% 10% 10% 25% 22%

Total - SAA Routes

10916 49 41 23

154

-67-151 -191 -181 -122 -129

-93

+76-180 +59

+156

-134

-164

-163-80 -103

-73+196

C4 (m's)

2 291 2 278 2 195 2 307 2 308 2 208 2 2612 066 2 142 2 034

1 8071 994

ASK(m)

-88 -87 -89 -88 -87-80

-91 -95-101 -97 -95 -94

Gross CASK

-11%-7% -8%

9%

-3%

-8%

5%1% 2% 2%

-9%

1%

Gross Margin

93 96 92 9889 87 88

85 80 8092 88

Gross RASK

77%69% 68%

76%

74% 75% 76% 72% 76% 72% 68%73%

LF%

1 7581 575

1 4891 753 1 719 1 666 1 720

1 4791 631

1 4721 227

1 453

RPK(m)

85 87 85 87 86 87 83

75 78 80 85 80

Yield(c/RPK)

588 705 554 781513 216

586 047 577 420 564 743 581 935500 831 537 412

449 251376 761

420 028

TOTAL PAX

3 645 3 744 3 804 3 906 4 036 4 182 4 160

3 305 3 292 3 421 3 634 3 522

Gross Avg Fare

… that have led to improvements in RASK, yield and average fare across the SAA network


… DOMESTIC


-9% -5% -1% -8% -1% -1% 5% 14% 14% 14% 26% 26%

1% -5% -4% 0% -6% -3% 4% 17% 13% 7% 8% -14%

-2% 1% 0% -1% 2% -3% -5% -18% -16% -26% -41% -46%

1% 1% -1% -2% -2% -4% -3% -1% -5% -1% 2% 2%

-2% 2% -1% -3% 0% -7% -8% -19% -20% -27% -40% -45% 0% 3% 0% -2% 0% -6% -8% -19% -19% -27% -42% -48%

-6% 0% 4% -2% 1% 12% 14% 17% 24% 20% 33% 31% -11% -7% -2% -7% 0% 2% 9% 15% 19% 15% 27% 29%

Total - DOM

1 22 9

76

-42 -23

-81-51 -33 -29 -21

-51

-38+3

+14

-31 +20-11 +6

+37

+11+5

+57

+99C4 (m's)

341 334

321 324 333 321 326

271 278241

180 180

ASK(m)

-116-125 -118 -120

-108

-126 -122 -129-148

-135 -139 -146

Gross CASK

-6%

-25%

-9%

5%

-6%

-18%

3%

28%

-11% -14%-8%

Gross Margin

135 137128

118

151 150

113 110100 106 108

120

Gross RASK

81%74%

83% 84%

69% 73% 73% 77%83% 81% 77%

71%

LF%

252

261222

243 243 248269

218 214173

150 152

RPK(m)

102 99 99108 116 120 119 125

136 134

100 100

Yield(c/RPK)

270 921243 618

263 418

277 734 268 896 265 639 282 662

231 187 232 683

181 834152 037 154 308

TOTAL PAX

1 372 1 4501 560 1 605 1 524 1 565

1 791 1 756

1 312 1 380 1 332 1 317

Gross Avg Fare

Trending below

last year

Trending above

last year

2 – QUARTER 3 REPORT


… REGIONAL



-3% -5% -8% -8% -6% 6% 8% 12% 13% 14% 17% 16%

-4% -3% -8% -1% -2% 3% 11% 16% 11% 1% 0% -8%

0% -4% -2% 1% 2% -1% -10% -15% -13% -18% -19% -18%

5% 4% 0% 0% -6% 0% -1% 6% 2% 4% 2% 3%

6% 0% -2% 1% -4% -1% -11% -10% -12% -14% -17% -15% 7% 3% 2% 3% 0% 2% -6% -4% -6% -7% -12% -11%

-11% -10% -8% -7% 0% 8% 10% 8% 11% 10% 18% 16% -9% -12% -12% -9% -4% 3% 3% -1% 4% 1% 7% 6%

Total - REG

31 1256 58 59 38

0

91

7 1

95

-24

+4

+4 -17

-43-25

+17 -14

-21

+9

+61 +75

+101C4 (m's)

510 526 521

508 492 491 475440 463 432

383419

ASK(m)

-102 -101 -103 -103 -101-93

-105 -110-119 -114 -109 -113

Gross CASK

6%

-5%

10%15%

2%

20%

2%

9% 10%7%

Gross Margin

117 119 119134

110 113 115

108 103 98113 112

Gross RASK

68%63% 60%

67% 67%74%

66% 63% 64%

64% 67% 66%

LF%

345 354

318293

335 329 315 294343

284240

270

RPK(m)

110 112 111 109 103114 114

96 100 99 104 108

Yield(c/RPK)

180 362 171 256 160 833186 897 184 884 175 304

170 889158 885

179 968

150 663129 249

147 754

TOTAL PAX

3 283 3 294 3 4393 162 3 362 3 271

3 060 3 056 2 997 3 188 3 159 3 298

Gross Avg Fare

Trending below

last year

Trending above

last year


… INTERNATIONAL



-10% -6% -6% -8% -11% -2% 3% 1% 4% 3% 5% -3%

-1% 2% -9% -3% 1% 8% 11% 16% 12% 7% 4% -3%

-2% -3% -6% -6% -3% -5% -4% -8% -9% -11% -9% -8%

6% 3% 4% 1% -4% -4% -3% -4% -2% -4% -5% -5%

4% 0% -2% -5% -6% -9% -7% -11% -11% -15% -14% -13% 5% 1% -3% -5% -5% -7% -6% -10% -10% -14% -14% -12%

-15% -8% -8% -9% -8% 1% 4% 1% 4% 5% 9% 2% -16% -10% -9% -10% -9% 0% 4% 3% 4% 5% 11% 1%

Total - INT

104

-56-141

-86-9 -11 -19

-152-47 -78

-139

-16

-80 +58 -147

-40

+24

-4

-100

-90-158

-108-93

-88

C4 (m's)

1 460 1 429 1 379 1 448 1 454 1 396 1 4601 356 1 402 1 361

1 2441 395

ASK(m)

-74 -75 -74 -72

-75 -75 -79 -82 -86 -84 -83 -81

Gross CASK

-9%

-16%-5%

-15%

9%

-1% -1% -2%

-15%

-4%-7%

-2%

Gross Margin

8075

80 7770

7065 69

8175 79

71

Gross RASK

79%70% 71%

80%

78% 78% 78%71%

77% 75%67%

74%

LF%

1 152

1 004 9741 156 1 140 1 090 1 136

9681 074 1 015

837

1 031

RPK(m)

72 74 70 74 75 71 67

64 65 6976

67

Yield(c/RPK)

130 609112 604

108 765

130 254 129 118 123 800 128 384110 759

124 761 116 754

95 475

117 966

TOTAL PAX

8 867 9 152 9 121 9 024 9 013 9 0998 420

7 880 8 253 8 727 9 0568 429

Gross Avg Fare

Trending below

last year

Trending above

last year

3 Strategy, Implementation and Strategic Options


The Group turnaround plan forecasts breakeven by FY2021

(7)

(6)

(5)

(4)

(3)

(2)

(1)

-

1

2

FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23

ZAR

bn

SAA Group

SAA Group Net Profit/Loss

Actual Forecast

Source: Management reports

3 – STRATEGY, IMPLEMENTATION AND STRATEGIC OPTIONS


1. Transform SAA into a commercially capable organisation

whilst defending the safety track record. “Flying for Profits”

2. Establish an efficient production and

operating platform for SAA

3. Win the battle for premium and

business traveller in the domestic

market.

4. Win the battle for price

sensitive segment of the

market in the domestic

market.

5. Become a focused and niche

player in the international

market leveraging alliances

and partnerships

6. Grow scale in the regional market through organic growth

and commercial partnerships as well as SAATM

8. Develop aviation skills for the

group and achieve workforce

diversity in all occupational

categories

7. Lead in customer experience

management

9. Shape the aviation policy in

SA and Africa to defend SAA

market and enable growth in

the market

10. Strengthen balance sheet

and address liquidity

challenges

The SAA Change Agenda is driven by ten key strategic priorities



Take control, reduce costs

and deliver service Exercise Internal and External Options Maximise Shareholder Value Optimise Revenue and Customer

Service

15 -30 months 0-6 months 3-18 months 24-36 months

● Cost/contract management

● Focus on core activities

● Network & Route Profitability

● Customer Engagement

● Robust Systems & Processes

● Management and organisation Accountability

● Revenue Management

● Cost Management

● Brand / Marketing

● Profit Centres

● Digital

● Recover Market share

● Market & Customer focussed Strategy

● Fleet alignment

● SAAT / Air Chefs / Cargo

● Voyager

● Mango

● Alliances / Code shares

● Strategic partners

● Promoter of the African Experience

● Network Growth

● Revenue Growth

Plan leverages a structured approach consisting of 4 phases; initial phase focuses on

addressing immediate remedial actions

Grow

Stabilise

Change

Arrest

November 2017



Market Strategy - A number of key strategic initiatives to address the market at domestic, regional and international level

Arrest Change

Take control, reduce

costs and deliver service

Exercise Internal and

External Options

Stabilise Grow

Maximise Shareholder

Value

Optimise Revenue and

Customer Service

Market Short term action (6 m) Medium term implementation (6-18 m)

Short term initiation (6 m)

Longer term implementation (18+ m)

Medium term initiation (6-18)

International • Lease LHR Slot

• Resolve HKG

• Review North-America

• Revenue focus on other routes

• Whole of state approach to connecting traffic

• Review CPT options

• Aircraft layout/product

• New markets east west e.g. Sydney, Melbourne, South America, Miami

• Evaluate China options

• JVs with Star Alliance and other partners

• LHR second rotation (from Africa)

• Product (wifi on board, Right size)

• Become key player for East - West premium traffic through JNB leveraging alliances and partnerships

• 4th US destination

• LCC long haul operation

• Create JNB as premium connecting Hub

Regional • Grow Mango on LCC routes

• Manage franchise partners – mixed asset model

• Growth traffic through West Africa

• Whole of state approach to connecting traffic

• Create JNB as premium connecting Hub

• Smaller gauge through partner or self

• Reconfigure A/C layout

• Increase west Africa links to US and UK

• Establish East Africa hub through partnership

• Address airport infra requirements (JNB), e.g. immigration, fast-track, pax & baggage transfer

• Franchise model for Africa – SA Express

• JV

• Become major regional player consolidating JNB hub through strategic partnerships

Domestic • SA focus on premium and connecting traffic (FSC)

• Mango wins the battle for leisure and price sensitive traffic (LCC)

• Resolve issues around SA Express

• Move majority of flights to Mango • Consider future SAA position in domestic market

• Premium and connecting traffic (SAA)

• Maintain leadership position in price sensitive traffic (Mango)

• Develop SA Express



Organisational Strategy - A number of radical strategic initiatives will underpin the airline restructuring and its implementation

HR organisation to fit the revised operating

model and develop professional skills and

workforce diversity across all areas

Creating the culture and tools to ensure

customer service excellence through an

integrated customer engagement strategy at all

touchpoints throughout the journey, improving

NPS

Distribution channel strategy is aimed at

increasing share of direct digital sales, reduce

number of call centres and lower indirect

channel costs

Develop codeshares beyond Star Alliance,

similar to the Air New Zealand model, with a

view of reviewing membership

Overall fleet reduction to be implemented

• Narrow body: sub-lease 738 to Mango and

maintain A320 narrow body fleet constant

over 5-year period

• Wide body: reduce A340 fleet from end-

2018

Develop through partnerships

• Seek JV with SAAT once operations restructured and develop a southern MRO centre of excellence

• Spin AirChefs with a potential JV so SAA remains involved as stakeholder/shareholder

• Enable Voyager for potential future part spin-off

• Evaluate outsourcing or strategic partner for Cargo

Transform SAA into a commercially capable airline

whilst maintaining passenger safety record and

establish an efficient production and operating

platform, asking for exemption from the PFMA

• Business process simplification

• Restructuring

• Cost programmes

Deploy IT platform to enable efficient business

and operational support


4

Risks


Limited management capacity to execute the strategy is a key risk to the implementation of the turnaround plan

Role Division Status

1. Legal Officer Legal Interim resource starting April

2018. Search ongoing for a

permanent appointment.

2. Risk Officer Risk Interim resource starting May

2018. Search ongoing for a

permanent appointment.

3. Procurement Officer Procurement Appointment made

4. Chief Commercial Officer Commercial Filled. Started February 2018

5. General Manager: Cargo Cargo Shortlisted and interviews

scheduled for 6 April 2018.

6. Chief Information Officer IT Appointment made

7. CEO Mango Mango Resource acting

8. CEO Air Chefs Air Chefs Appointment made and will

commence April 2018

9. Head of Department: Taxation Finance Appointment made and will

commence May 2018

10. Regulatory Policy Risk Filled. Started March 2018

4 – RISKS


Additional capacity to industrialise strategy implementation is required at SAA

Alliance and JVs

Finance

Data Science

Digital

Revenue Assurance

Distribution Channel

Legal

Enterprise Risk

Supply Chain Management

Network Development

Revenue Management

Sou

th A

fric

an A

irw

ays

Skills and Capacity Required at SAA

SAA to leverage external capacity to provide the

necessary skills and capacity as when required

In addition to stabilising the Group Executive Committee at SAA, there is

a need to bring short-term highly skilled resources to industrialise the

strategy implementation.

4 – RISKS


Conditions and key dependencies for successful turnaround strategy execution at SAA

Conditions

1. Continuous going concern

2. Close collaboration between the shareholder and the board

3. Good governance and Board responsiveness

4. Executive and organisational capacity and skills

Key Dependencies

1. Successful manpower productivity rightsizing

2. Organisational culture and agreement with labour

3. Speed and agility of contract revisions and re-negotiations

4. Funding of the SAA turnaround plan and debt extension beyond FY2019

4 – RISKS


Dependencies and risks for the revised financial plan

● Lifting of 6-month contract moratorium

● Successful manpower productivity rightsizing

● Speed and agility of contract revisions and re-negotiations

● Responsiveness from Board on decision making

● Continuous going-concern

● Long-term debt extension beyond FY19

● Retirement of wide-body aircraft

● Macroeconomic drivers

● Competition behaviour and market reaction to SAA initiatives

● External drivers such as FX and Brent price

● Risk of unionised labour unrest and follow-on effect on operations

● Cash flow

● Aircraft availability and dispatch reliability

Key dependencies

Main risks to financial plan

4 – RISKS

5

Governance, Supply Chain and Audits


SAA has seen a significant increase in irregular, fruitless and wasteful expenditure compared to FY2016

Expenditure FY2017 Quantum Root Causes

1. Irregular • R125.9 million • Interest on late payments

• Lack of planning on aircraft returns

• Delays in finalising contracts 2. Fruitless and wasteful • R40.4 million

Irregular expenditure mainly resulted from delays in concluding contracts, whilst fruitless and wasteful

expenditure was largely a result of late payments

Progress in addressing irregular, fruitless and wasteful expenditure

● Reviewing the Supply Chain Management (SCM) Policy

● Capacitating the SCM department

● Undertaking refresher training for the rest of the business

● Consequence management where appropriate

5 – GOVERNANCE, SUPPLY CHAIN AND AUDITS


The Board and management acknowledge the severity of the AGSA findings …

2016/17 Qualification Areas Audit Finding(s)

1. Property, aircraft and equipment • SAA did not adequately review useful lives and residual values of property,

aircraft and equipment in accordance with IAS 16

2. Rotables

• Existence of some rotables could not be verified; and

• The completeness of the rotables on the fixed asset register could not be established

3. Property, plant and equipment (PPE) • SAA did not assess its PPE for impairment in terms of IAS36

4. Inventory

• The key assumptions applied by SAAT in calculating net realisable value were not supported by sufficient appropriate audit evidence

• Existence of certain inventory items could not be verified

5. Maintenance costs

• Maintenance costs recognised in the incorrect period

• Maintenance costs not reflecting on Statement of Comprehensive Income

• Incorrect exchange rates used

• Prepayments charged to the Statement of Comprehensive Income

6. Irregular expenditure • SAA did not establish adequate controls to maintain complete records of

irregular expenditure

7. Fruitless and wasteful expenditure • SAA did not establish adequate controls to maintain complete records of

fruitless and wasteful expenditure

8. Material uncertainty related to going concern • Material uncertainty exists that may cast significant doubt on the

company’s ability to continue as a going concern



… and a detailed project plan is being implemented to address these findings

2016/17 Qualification Areas Root Cause(s) Resolution Status Target Date

1. Property, aircraft and

equipment

• Annual review of useful lives and residual values on owned aircraft not done at component level

• Lack of clarity on property ownership between SAA & SAAT impacted accuracy of allocation of adjustments

In progress May 2018

2. Rotables • Stock counts not done

• Stock receipt on both Memis & SAP not done


3. Property, plant and

equipment (PPE)

• Carrying value of assets more than recoverable amounts

• Accelerated depreciation on some assets


4. Inventory • No records of policy being applied Completed February 2018

5. Maintenance costs

• Accruals not made

• Differences between SAA & AGSA on treatment of restoration costs

Completed January 2018

6. Irregular expenditure • Lack of planning on aircraft returns

• Delays in finalising contracts

Completed January 2018

7. Fruitless and wasteful expenditure

• Late payments In progress April 2018

8. Material uncertainty related to going concern

• Under capitalisation

• Accumulated losses

In progress September 2018


6

Oversight Forum


The Oversight Forum – (April – Sept 2018)

6 – OVERSIGHT FORUM

PURPOSE

1. National Treasury as a shareholder of South African Airways and the Board of Directors of SAA have decided to form a joint task force ( The

Oversight Forum) aimed at jointly finding solutions to the funding challenges facing SAA as well creating an enabling environment for

successful execution of the turn-around strategy at SAA.

2. Both National Treasury and Board of Directors of SAA understand that an urgent solution must be found to address the funding challenges

facing South African Airways.

TERMS OF REFERENCE

1. Determine the optimal capital structure for SAA;

2. Determine mechanisms to implement the optimal capital structure and funding model for SAA;

3. Define a work programme to plan and monitor the realisation of the objectives of the Oversight Forum, as set out in the attached “Oversight

Committee Work Plan”; and

4. Design appropriate mechanisms to oversee and monitor the implementation of the turnaround strategy beyond the term of the

Oversight Forum

COMPOSITION

1. The Chairperson of the Oversight Forum shall be the Deputy Minister of Finance. and the Deputy Chairperson will be an SAA Board

Member. In the absence of the Chairperson, the Deputy Chairperson shall chair the Oversight Forum.

2. Minuted resolutions of the Oversight Forum shall be binding on the Parties, who undertake to implement their respective tasks within the

agreed time frames.

3. The meetings of the Oversight Forum shall take place bi-weekly (in either person or teleconference/videoconference) on dates pre-

determined by the Forum. Any amendments to the pre-determined dates will be after consultation with the SAA and National Treasury

representatives.

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