PART D: HUMAN RESOURCES MANAGEMENT 1. Introduction Human Resource Oversight Statistics 88

Transcription

1 Annual eport 2014/2015

2

3

4 TABLE OF CONTENTS PAT A: GENEAL INFOMATION 1. General Information of the Board 5 2. List of Abbreviations 6 3. Strategic Overview 7 4. Legislative and Other Mandates 8 5. Overview by the Chairperson Organisational Structure Overview by the Chief Executive Officer 16 PAT B: PEFOMANCE INFOMATION 1. Statement of esponsibility for Performance Information Executive Management Senior Management Auditor-General s eport: Predetermined Objectives Overview of the Board s Performance Strategic Outcome-Oriented Goals Performance Information by Programme Summary of Financial Information Statistics 52 PAT C: GOVENANCE 1. Introduction Portfolio Committee Executive Authority The Board isk Management Internal Control Unit Internal Auditors Compliance with Laws and egulations Fraud and Corruption Minimising Conflict of Interest Code of Conduct Health, Safety and Environmental Issues Company Secretary Community Social Investment Audit Committee eport 85

5 PAT D: HUMAN ESOUCES MANAGEMENT 1. Introduction Human esource Oversight Statistics 88 PAT E: FINANCIAL INFOMATION 1. Statement of esponsibility for the Annual Financial Statements eport of the Chief Executive Officer eport of the Auditor-General Statement of Financial Position Statement of Financial Performance Statement of Changes in Net Assets Cashflow Statements Statement of Comparison of Budget and Actual Amounts Accounting Policies Notes to the Annual Financial Statements 119

6 part A General Information 1. General Information of the Board 5 2. List of Abbreviations 6 3. Strategic Overview 7 4. Legislative and Other Mandates 8 5. Overview by the Chairperson Organisational Structure Overview by the Chief Executive Officer 16 4

7 1. general information of the board NAME OF ENTITY North West Gambling Board PHYSICAL ADDESS 131 University Drive, Mmabatho, 2735 POSTAL ADDESS Private Bag X34, Mmabatho, 2735 BUSINESS HOUS Monday to Friday, 08:00 to 17:00 TELEPHONE NUMBE FACSIMILE NUMBE NWGB HOTLINE NUMBE WEBSITE AUDITOS Auditor-General South Africa BANK ABSA Bank, Mahikeng BOAD SECETAY Mr angwedi Jacob Montshioa 5

8 2. list of abbreviations ACL AFS AGSA APP BBBEE Board BICS CCMA CEMS CEO CFO CMS COO CSI DEDECT EXCO FEED FICA GG GAP HOD H IT ICP IFS ISO LPM MEC MOU MTSF NGB NCS NGP NWGB PAIA PDI PFMA PPPFA FA /O SABS SAPS SAS TYPE A LPM SITE TYPE B LPM SITE TYPE C LPM SITE Audit Command Language Annual Financial Statements Auditor-General of South Africa Annual Performance Plan Broad-Based Black Economic Empowerment North West Gambling Board Brazil, ussia, India, China and South Africa Commission for Conciliation, Mediation and Arbitration Central Electronic Monitoring System Chief Executive Officer Chief Financial Officer Central Monitoring System Chief Operations Officer Community Social Investment Department of Economic Development, Environment, Conservation and Tourism Executive Committee Finance, Economy and Enterprise Development Financial Intelligence Centre Act Gross Gaming evenue Generally ecognised Accounting Practice Head of Department Human esources Information Technology Internal Control Procedures International Financial eporting Standards Independent Site Operator Limited Payout Machine Member of the Executive Council Memorandum of Understanding Medium-Term Strategic Framework National Gambling Board National egulator for Compulsory Standards National esponsible Gambling Programme North West Gambling Board Promotion of Access to Information Act Previously Disadvantaged Individual Public Finance Management Act Preferential Procurement Policy Framework Act equest for Applications oute Operator South African Bureau of Standards South African Police Service South African evenue Service 3 to 5 machines 6 to 30 machines 40 machines 6

9 3. strategic overview VISION To be a leading and socially conscious authority in the regulation of gambling in the world. MISSION To provide effective and efficient regulatory services and maintain a gambling industry, which contributes to socio-economic growth and development. VALUES The North West Gambling Board s approach to service delivery is premised on the following values: Service Excellence; Integrity; Transparency; and Honesty. STATEGIC OUTCOME-OIENTED GOALS OF THE BOAD Strategic Outcome- Oriented Goal egulate business activities in the Province to create a legal, business and socio-economic environment conducive to business prosperity. Goal Statement oll-out of Limited Pay-out Machines; Facilitation of discussion on the re-allocation of the 5 th casino licence; Licensing of Bookmakers and Totalizators; and Combat illegal gambling in the Province. Justification Create an enabling environment for responsible licensing of all forms of gambling allowed in terms of the legislation. 7

10 4. legislative and other mandates 4.1 Constitutional Mandate Schedule 4 Part A of the Constitution provides that casinos, racing, gambling and wagering are functional areas of concurrent national and provincial legislative competence, which means Provinces have the constitutional mandate to regulate the above mentioned activities. Council and provide for matters connected therewith. The gambling industry has adopted the compliance levels which the licensees must attain and these are monitored annually as they form part of the licence conditions. 4.2 Legislative Mandates Financial Intelligence Centre ACT, ACT No. 38 OF 2001 This legislation is intended to combat money laundering in the country. The Board is a supervisory body in terms of this legislation and therefore has the responsibility to ensure that acts of money laundering do not take place at its licensees National Gambling Act, Act No. 7 of 2004, as amended This is the national legislation that sets out certain norms and standards to be followed by Provincial Gambling Boards in regulation of the gambling industry in their respective jurisdictions Broad-Based Black Economic Empowerment Act, Act No. 53 of 2003, as amended This Act establishes a legislative framework for the promotion of Broad-based, Black Economic Empowerment. It furthermore empowers the Minister to issue Codes of Good Practice, to publish Transformation Charters to establish the Black Economic Empowerment Advisory North West Gambling Act, Act No. 2 of 2001, as amended The North West Gambling Act sets out the powers and functions of the Board Public Finance Management Act,Act No.1 of 1999, as amended The objective of this Act is to regulate financial management in the National Government and Provincial Governments to ensure that all revenue, expenditure, assets and liabilities of those governments are managed efficiently and effectively; to provide for the responsibilities of persons entrusted with financial management in those governments; and to provide for matters connected therewith Occupational Health and Safety Act, Act No. 85 of 1993 The Occupational Health and Safety Act aims to provide for the health and safety of persons at work and for; the health and safety of persons in connection with the activities of persons at work; and to establish an advisory council for occupational health and safety. This is also a requirement for the licensing of gambling operations. 8

11 4.3 Policy Mandates The North West Gambling Board is charged with the responsibility to perform all functions assigned to it in terms of the North West Gambling Act (Act 2 of 2001), as amended, or any other legislation, by providing effective and efficient regulatory services and maintaining a gambling industry that is socially responsible and free from illegal activity. It also advises and reports or makes recommendations to the esponsible Member on any matter relating to the control and regulation of gambling in the North West Province. The North West Gambling Board, in compliance with the Public Finance Management Act, 1999 (Act No. 1 of 1999), as amended ( PFMA ) and, in particular, provisions contained in sections 50 and 51 thereof, is committed to service excellence, integrity, transparency and honesty. The North West Gambling Board furthermore adheres to good corporate governance principles as stipulated in the King Code of Corporate Practices and Conduct (King III eport) and the protocol for State Owned Enterprises on Corporate Governance. The North West Gambling Board, in its discharge of proper supervision and control of gambling and wagering activities, ensures that through its Mission, its set objectives are met by determining, implementing, monitoring and enforcing matters relating to legislation, policy, corporate plans, gambling regulation and financial management. This Board subscribes to all principles (socio-economic and legal) of protecting the public against any unfair, unjustified, dishonest and/ or unscrupulous or illegal practices in gambling; ensuring best practices in promoting responsible gambling; sound and sustainable economic benefits to the provincial government; and maintaining fair and socially responsible regulatory systems and processes in all gambling establishments licensed to operate in the North West Province. It can be concluded therefore that: It is a declared policy of the Board that in all establishments where gambling games are conducted or operated such games are licensed and controlled so as to improve public engagement in gambling, promote safe entertainment, good morals and order, while upholding all relevant provincial government policies and laws; to render effective regulatory control that displays a high standard of professionalism and operates in clear recognition of the dictates of fairness, honesty, transparency and integrity in the best interests of the North West public, licensees and the provincial government; to protect the public against any unfair, unjustified, dishonest and/or unscrupulous practices in the gambling industry, therefore ensuring a sound and sustainable equitable regulatory regime and processes that enhance responsible gambling, public confidence and empowerment of the previously disadvantaged communities, especially where these gambling establishments are located in the Province; and to only allow those who have been found suitable to operate or conduct gambling activities in the Province to do so. 9

12 5. overview by the chairperson The information contained in this report presents the true state of affairs and an exposé of the performance of the North West Gambling Board against its set targets and objectives for the 2014/15 Financial Year. It is in order to present this information to the North West Provincial Legislature, the Premier of the North West Province, the Member of the Executive Council responsible for gambling regulation in the Province, our licensees and the public, after the end of each financial year as key stakeholders of the North West Gambling Board. As required in terms of section 5 of the North Gambling Act, 2001 (Act No.2 of 2001), as amended, the Member of the Executive Council responsible for gambling regulation in the Province, appointed nine (9) members of Board in October 2012 for a period of five (5) years to serve as the Accounting Authority for the business of the North West Gambling Board. 10

13 The tenth member of the Board in the Chief Executive Officer who has been in the employ of the Board from 2008 and his term of office was renewed for another period of five (5) years in December During the period under review, the Board operated with six (6) Board members due to the resignation of three (3) members. However, all planned business of the organisation was meticulously carried out albeit few challenges with the constitution of the quorum for certain scheduled meetings, thereby necessitating postponement and special meetings of the Board. The mandate of the Board remains intact and adequately supported by the empowering legislation which has been tested in many instances to be relevant to the founding objectives of regulating gambling in the country. However, it has been noted that there are developments at national level which may influence change in approach and structure of this industry going forward. Materially, the looming development of a national gambling policy and possible amendment of the National Gambling Act of 2004, may redirect our provincial priorities, structure and size of our gambling market. We have also noted that the introduction of numerous forms of gambling in the Province since 2008, has brought about immense capacity pressure on our organisation which necessitated a wholesome restructuring of the organisation, including establishment of the branches in certain parts of the Province. Against this background, the report provides information which accounts for the activities of the North West Gambling Board in regulation of gambling in the North West Province, in line with the Corporate Plan and Annual Performance Plans for the 2014/15 Financial Year. In addition, this report presents governance considerations, financial management processes and performance management systems and controls which enabled the organisation to achieve its strategic objectives. This account of organisational performance is supported by all relevant documents and financial records, which were subjected to constant internal audit interventions during the year under review and audit by the Auditor-General of South Africa with positive outcomes, as represented by the report of the Auditor-General included herein. It is common cause that funding for government interventions to provide requisite amenities to the general public has become a serious challenge in recent years and this includes the year under review. In specific terms this affected the North West Gambling Board as well, and materially in funding projects which would have improved the level of compliance by its licensees. On the other hand, we believe that in the main, our licensees are making an effort to comply with all legislative requirements, however, there is still work to be done in ensuring that the transformational agenda of government is pursued. In addition, it was also frustrating for the Board to observe the increase in illegal gambling and introduction of the computer based gambling. The challenge of illegal gambling has impacted negatively on the genuine growth of gambling in the Province and in the main, denied licensed gambling operations their due profitability and sustainability. It cannot be denied that the ever-increasing technological advancements in other forms of gambling in the Province constantly challenge our skill and human resource base. It is clear that this form of entertainment has inherent risks to our society and as such, we remain steadfast in striking a reasonable balance between its benefits and the potential social-ills it comes with. It is evident from the performance report contained herein that the North West Gambling Board strived during the year under review for creation of an enabling environment for responsible licensing of all allowed forms of gambling in order to promote the most needed economic growth and transformation in the Province. It is our believe that this can be achieved through numerous interventions, including, but not limited to growth of the gambling industry and effective and efficient regulation of same, while eradicating all elements of criminality and illegal gambling. In this respect, the Board prioritised the repositioning of the Betting sector of the gambling industry, acceleration of the roll-out of Limited Payout Machines, activation of Bingo operations and the re-allocation of the fifth casino license to the Province. We are pleased to be presenting positive results in this area of work, however, acknowledge that there is still a lot of work to be done. 11

14 We therefore cannot allow impairment of our capacity to deliver on our legislative mandate, but commit to overcome all challenges in favour of upgrading the standard of regulatory compliance in this industry to compare with the best in the world. It is common cause that this would need collaboration with other stakeholders, including other law enforcement agencies of government. On the other hand, the social ills associate with gambling could have received much better attention if the relevant structures of the organisation were adequately supported and funded, however, there are plans in place to ensure that this situation improved during the 2015/16 Financial Year. In this light, the Board recognised that its performance against objectives of the North West Gambling Act could have been improved if adequate financial resources were provided to overcome its human resources challenges and the requisite operating requirements. However, the organisation managed with the available resources to meet its key strategic objectives, as outlined in the relevant Corporate Plan and served the industry with distinction. This outcome was complimented by the approval to utilise surplus funds from the 2013/14 Financial Year. A close study of the financial report contained herein will give an indication that the organisation spend all its allocated funding for the financial year under review and material part of the surplus funds from the 2013/14 Financial Year. It evident for the analysis of the financial report as mentioned above that the organisation can do more and better with additional funding and in this respect, as proposal was made to the Provincial Treasury for the organisation to self-funded. This proposal, amongst others, provides for opportunities to fast-track introduction of other forms of gambling, effective regulation of all gambling activities, and increase investment and employment. We identified major threats to this noble commitment and strategic thrust, but believe that our constant change in approach and tactic in effectively regulating this industry could bring about better results and assist sustainability of those licensed to operate gambling activities, while harnessing all benefits created by the industry. The future good of this industry cannot be under-estimated if wellregulated and controlled, thus a need for constant monitoring of our capacity to best regulate it. I herewith and on behalf of the Board, would like to thank the Management and Staff of the North West Gambling Board for their commitment to effective regulation of the gambling industry in the Province and the sterling performance displayed during the year under review. I also appreciate the support we received during the period under review from the Portfolio Committee on Premier, Treasury and Enterprise Development, and the Department of Finance Economy and Enterprise Development, and the Provincial Treasury, our Licensees and the Public of the North West Province, at large. Tiego Kgomo Chairperson of the North West Gambling Board 12

15 13

16 6. organisational structure MEC Board CHIEF EXECUTIVE OFFICE CHIEF OPEATIONS OFFICE LEGAL SEVICES HUMAN ESOUCES COPOATE ELATIONS CHIEF FINANCIAL OFFICE INVESTIGATIONS AND LICENSING FINANCE GAMBLING CONTOL ADMINISTATION Gambling AUDIT AND SYSTEMS INFOMATION TECHNOLOGY 14

17 15

18 7. overview by the chief executive officer The South African gambling regulation regime has been found to be competing amongst the best in world and serves as sound benchmark for many jurisdictions and a solid point of reference for the African continent. It has been noted that South African provides world class probity investigation standards for determination of suitability of participants in the gambling industry or those who would like to be licenced to operate gambling establishments. In addition, South Africa uses world renowned standards for the testing of gambling equipment and operating systems, which have been internationally tried and tested. This provides a safety net for the sustainability of this industry and re-assures the country with benefits and valuable contributions to the national socio-economic spectrum. It should be however be noted that the gambling industry in South Africa has seriously evolved over the period of fifteen (15) years and obviously registered major growth. This brought about complexities in related business transactions, 16

19 The North West Gambling Board participates in both the continental and international space to live up to its mission to be counted amongst the best gambling regulators in the world. while also opening new avenues for its endorsement and sustainability. It is common cause that this evolution also put immense pressure on the existing regulatory mechanisms, structures and systems. It has been observed in the recent years that relevant regulatory authorities in the country are starting to show signs of encountering challenges, which amongst others, create areas of conflict and pure inefficiencies. The common debate about introduction of national norms and standards for regulation of the gambling industry in the country and the notorious operation of Electronic Bingo Terminals in Bingo Halls, are good examples of the challenges mentioned above. On the other hand, the industry keeps on growing and becoming more sophisticated and technologically advanced. This growth comes with multi-faceted business arrangements and transactions, while observing competition for market share within particular types and forms of gambling activities and within regional demarcations in the country. The North West Gambling Board also finds itself in this space and has to create opportunities for capacity building and maintain robust systems to monitor this industry. Indeed, the relevant resources needed for maintenance of high levels of regulation under these circumstances remains a challenge, especially in the light of inadequate financial resources. We appreciate the quantum of the investment this industry brings to the country, the number of jobs created, and the revenue it generates for the provincial and national fiscus in the form of levies and taxes collected. This does indeed remain a reliable and sustainable catalyst for economic growth, development and transformation in our country and its future benefits cannot be denied, however, there is a need to carefully and closely monitor that the results are honestly and correctly calculated. While these benefits cannot be ignored, we are also charged with the responsibility to control and prevent their unintended social-ills, such as addictive and pathological gambling. The North West Gambling Board participates in both the continental and international space to live up to its mission to be counted amongst the best gambling regulators in the world. This includes, attending international conferences, undertaking exchange programmes and leading a couple of international regulatory structures. It is common cause that the improvement of our efficiencies lies in the dynamism of our economy, but most importantly in the regulatory framework we maintain. This gives immense confidence in those who may wish to participate in the gambling industry in our Province and boosts public believe and confidence in the integrity of the safety of the related environment and fairness of the games offered for play. The recent analysis on the North West Province gambling market depicts illegal gambling growing to compete for space with licensed operations, regardless of not complying with the laws of the country and not paying taxes and levies. Evidently, if this threat is not brought under control, it could under-estimate the declared value, growth and sustainability of licensed establishments. There are formidable interventions and mechanisms developed by Provincial Government to close all illegal gambling operations in the Province and there is doubt that this parasite will be eliminated. We need to build more confidence in our citizens and our licensed operations that compliance with laws of the country is not negotiable or meant for the few. egardless of these challenges, the Board stood firm and committed to acceptable principles of good corporate governance, fair administration, consistency and excellent financial management to maintain sound authority of integrity befitting regulation of the gambling industry. The North West Gambling Board introduced new forms of gambling with a view to distribute these operations appropriately through-out the Province in order to provide a legal option to gambling, thereby diluting the effect of illegal gambling and growing leisure activities in the Province. The Management and administration of the North West Gambling Board has 17

20 We are confident that we managed to regulate gambling in the North West Province within the legislative framework of our country and the Province. shown good signs of boldness and confidence, and remains sound and reliable for future monitoring and control of this industry, albeit inadequate resources to pursue its vision. We also identified a need for revitalisation of Broad- Based Black Economic Empowerment in our drive to create an enabling environment for responsible licensing of other forms of gambling. We introduced formidable empowerment targets for our licensees, pitched at 60% of local black participation in equity and economic benefits for new licences (Betting, Bingo and Limited Payout Machines). This opportunity was almost lost with the casino market which we inherited from the former Bophuthatswana government, as no bid commitments were made for casino licences. We resuscitated transformation of the casinos operations through licence conditions, which require licensees to meet 10% target of equity participation of the local Previously Disadvantaged Individuals, and to submit empowerment strategies and targets for compliance monitoring against other related empowerment license conditions. As we report on performance of the organisation for the 2014/15 Financial Year, we also note that the North West Gambling Board has managed to put in place formidable organisational structures, which have been complemented with recruitment of the appropriate calibre of staff, year on year to take its mission forward. This has assisted the organisation to maintain three powerful tiers of Management, led by Executive Management represented by the Chief Executive Officer, the Chief Operations Officer, the Chief Financial Officer, the Legal Manager and the Human esources Practitioner. However, there is a need to continuously assess the effectiveness of the structure and the performance of staff to identify possible areas of improvement. We subscribe to open and transparent processes which we commit to uphold and improve in the future. We can confidently report that gambling activities in the Province have been regulated honestly and in the most socially responsible manner, free from criminal activity and in the best interest of the people of the North West Province, while there are few challenges as mentioned in this report. To this end, we look at the year ahead as the year of serious restructuring of the organisation and major transition of the gambling industry in the North West Province, which will require high levels of commitment and dedication from the Management and staff of the North West Gambling Board. This is compounded by a need for more research to be conducted in order to ascertain few of the observations we have made during the period under review. This will focus on the impact of gambling on society and the economy of the Province, while considering the possibility of a fifth casino. This exercise was planned for the year under review, but had to be rescheduled for the 2014/15 Financial Year in order to allow the revision of the betting market, stabilisation of the Limited Payout Machine and Bingo markets. Plans are in place to embark on this research in order to inform future policy considerations for this industry in the Province and the roll-out of more opportunities for gambling in the Province. We will also embark on robust campaigns and strategies to antagonise illegal gambling operations and promote responsible gambling in the Province. Certainly, this cannot be achieved by the organisation working alone, and thus the need to collaborate with all relevant law enforcement agencies and stakeholders. We are confident that we managed to regulate gambling in the North West Province within the legislative framework of our country and the Province. 18

21 STATEGIC OVEVIEW AND IMPLEMENTATION The Board developed a clear strategy with specific objectives to be achieved through implementation of numerous programmes and projects by Management. As a norm within the organisation, relevant business and Annual Performance Plans were developed to support the determined strategic direction of the organisation against which this report has been compiled. We pride ourselves with the performance management policy adopted by the Board which made it possible for the Management Team to deliver the sterling work evidenced by this report. The financial support from government and the diligence of our Financial Management Team cannot be over-emphasised. The record presented by the performance details contained in this report indicates clear understanding of the pre-determined objectives of the organisation and realisation of the targets set. These targets were divided into quarterly milestones which are monitored by Management on a monthly basis and followed-up against the trends of expenditure and impact. The assessment of performance against organisational strategic objectives and implementation expectation are programme-driven in order to individually assess the performance and impact of each department within the organisation. The performance of staff was assessed on quarterly basis against Key Performance Areas and the organisational value system in terms of the well-developed and established performance management system. The record of individual staff performance is supported by specific training plans incorporated into the organisational training schedule, which forms part of the assessment of performance of managers and supervisors. This is a comprehensive system of performance monitoring which enhances implementation of our strategic objectives as consolidated into quarterly reports submitted to the Board for consideration and the esponsible Member. COPOATE GOVENANCE AND ISK MANAGEMENT Good Corporate Governance is not negotiable but a way of running corporate business in an open, transparent and accountable manner. The North West Gambling Board operates with high levels of good corporate governance and more emphasis is being placed on the Board s fiduciary duties. The Board has been trained by the Institute of Directors on their role during the financial year under review and its performance was duly assessed, and clearly the benefits of such interventions are displayed by its achievements. The Board assigned Management to perform their duties in terms of pre-determined targets to achieve specific strategic deliverables, and there is a clear line of separation of responsibilities between these arms of governance within the organisation. This safeguards the organisation from unnecessary interruptions and promotes focus on compliance with organisational policies and accountability at all levels of authority. The organisation developed a Code of Conduct for its Board and staff members, which is adhered to and constantly reviewed for relevance and efficiency. This is the corner-stone of the discipline and a culture of professionalism displayed with this report. This code is also supported by the Board by bringing a wide-range of expertise from different sectors and encouraging skills development and training of its staff. The North West Gambling Board also adheres to best practices of good corporate governance and maintains best practice in this respect to keep the organisation clean of corruption and fraud and socially responsive. In addition, this approach ensures that the North West Gambling Board regularly reviews its policies, processes and practices for legal compliance; uses funds in an economic, cost efficient and effective manner; and adheres to good corporate governance practices, which are continually benchmarked against national norms and standards and appropriate to its changing circumstances from time to time. 19

22 To enhance control over the environment that the North West Gambling Board operates in, the Board adopted an approach of assessing organisational risks every year. In this regard, the Committee responsible for Audit and isk, assesses organisational risks and evaluates controls put in place by Management to minimise the impact of such risks on the organisation and planned deliverables. Emphasis is placed on Management discharging their responsibility by continuously assessing risks facing the organisation and the industry on an annual basis and developing, reviewing and implementing a risk management plan. The North West Gambling Board s Annual Internal Audit Plan is guided by the isk Management Plan, to ensure that all identified risks are constantly covered with audits, providing assurance to both Management and Board that the organisation is not exposed to risks of whatever nature. The North West Gambling Board believes that this is the best approach to diligent management and believes in the importance of this exercise, which is incorporated in its organisational planning programme. CUENT CONSTAINTS AND CHALLENGES Our challenges and constraints have not much changed from what they have been in past financial years, simply because our proposed interventions were not carried out to completion. We hereunder state the challenges faced by the organisation: 1. The amendment of the North West Gambling Act, 2001 There are a number of pending cases brought by illegal gambling operators challenging the constitutionality of the North West Gambling Act, 2001, which resulted in the need for the NWG Act, 2001 to be amended and harmonised to the National Gambling Act, The amendment will assist in strengthening the provisions of the North West Gambling Act, minimise problem areas within the North West Gambling Act and in turn, assist the Board in regulating the gaming industry more effectively. This process seems to be overtaken by events in the light of the recent proposed National Gambling Policy which seeks to revise a variety of current legislative provisions in the National Gambling Act. It is common cause that the amendment of the National Gambling Act will have impact on all provincial legislation. Therefore, the proposal for amendment of the North West Gambling Act will have to be delayed. 2. Shortage of Funds The North West Gambling Board has been under fierce financial constraints for over three financial years, regardless of inflationary and labour implications. It is evident that the operating budget of the Board has dwindled over the said period to a point that regulation of the gambling industry is threatened. We need to protect the public, the industry and government as required by legislation and failure on our part to do so may bear undesirable results for our Province. We have submitted a new proposal on the revision of the funding model for the Board in the light of the revenue collected in order to remedy the apparent financial constraints and this has been tentatively approved for implementation during the 2015/2016 Financial Year 3. Shortage of STAFF The Board is in the process of implementing its revised organogram, however, there are still challenges with filling all vacant positions due to inadequacy of funds and office-space. During the Financial Year under review, we managed to fill most of the vacant positions according to the available compensation budget. 4. Illegal gambling OPEATIONS Illegal gambling operations in the Province are at this stage of re-organising and asserting themselves in different forms to avert our interventions. They however, remain a serious threat to licensed or legal operations and the 20

23 It is obvious that the excellent work displayed in this report could not have been possible without the dedication and discipline of our staff and I hope to see this continuing to change the landscape of the gambling industry in the North West Province. rule of law in our Province. We still experience challenges in courts of law by these operators, although their success rate is gradually diminishing. We currently do not have any pending high court matters in this regard, but we still have to bring many of these operators to book with the assistance of other law enforcement agencies. We remain confident that these illegal activities can be stopped if all stakeholders are working together, including relevant municipalities. Our financial resources cannot manage to bring us the desired results in this respect and as a result, these operations continue to change from one form to the other in avoidance of law enforcement mechanisms. This is another area where funding has become a challenge over and above the need for assistance from other law enforcement agencies. We also hope that the proposed funding model will assist to address this area of operational performance. On behalf of the Management and Staff of the North West Gambling Board, I would like to thank the Board for its undivided support and co-operation during the year under review. The dedication of the Portfolio Committee on Premier, Treasury and Enterprise Development and our Department of Finance Economic and Enterprise Development, is highly appreciated with complementary commitment of our licensees and the public of the North West Province. It is obvious that the excellent work displayed in this report could not have been possible without the dedication and discipline of our staff and hope to see this continuing to change the landscape of the gambling industry in the North West Province. 5. esponsible gambling It has been noted in the past that we have not done enough in respect of promotion of responsible gambling in the Province and this also covered general communication with the public on the activities of the Board. Although our structure makes provision for a Corporate elations Function, the said unit has not been adequately staffed and therefore no meaningful awareness and education programs have been implemented. In the main, the said unit was not adequately funded and therefore could not deliver on expectations. Fortune Sekgaphane Chief Executive Officer 21

24 part B performance information 1. Statement of esponsibility for Performance Information Executive Management Statement of esponsibility for Performance Information Senior Management Executive Management Auditor-General s eport: Predetermined Objectives Senior Management Overview of the Board s Performance Auditor-General s eport: Predetermined Objectives Strategic Outcome-Oriented Goals Overview of the Board s Performance Performance Information by Programme Strategic Outcome-Oriented Goals Summary of Financial Information Performance Information by Programme Statistics Summary of Financial Information 9. Statistics 22

25 1. statement of responsibility for performance information Statement of esponsibility for Performance Information for the year ended 31 March The Chief Executive Officer (CEO) is responsible for the preparation of the public entity s performance information, as well as for the judgements made in this information. The CEO is responsible for establishing and implementing a system of internal controls, designed to provide reasonable assurance as to the integrity and reliability of the performance information. In my opinion, the performance information fairly reflects the actual achievements against planned objectives, indicators and targets, as per the public entity s Strategic and Annual Performance Plan (APP) for the financial year ended 31 March The NWGB s performance information for the year ended 31 March 2015 has been examined by the external auditors and their report is presented on page 98. The performance information of the entity set out on page 31 to page 50 was approved by the Board. Fortune Sekgaphane Chief Executive Officer 23

26 2. executive management MN Mahapa Acting Chief Financial Officer FS Sekgaphane Chief Executive Officer MP Mothiba Chief Operations Officer J Montshioa Legal Manager D Makhudu Human esources Practitioner 24

27 3. senior management K Monate Gambling Audit and Systems Manager T Mathebula Investigations and Licensing Manager S Mogapi Gambling Control Manager 25

28 4. auditor-general s report predetermined objectives The Auditor-General of South Africa (AGSA) currently performs the necessary audit procedures on the performance information to provide reasonable assurance in the form of an audit conclusion. The audit conclusion on the performance against predetermined objectives is included in the report to Management, with material findings being reported under the Predetermined Objectives heading in the report, in the section on other legal and regulatory requirements of the Auditor s eport. efer to page 99 of the Auditors eport, published as Part E: Financial Information. 26

29 SEVICE DELIVEY ENVIONMENT 5. overview of the board s performance The North West Gambling Board is listed as a Schedule 3C Public Entity in terms of the Public Finance Management Act and is established in terms of the North West Gambling Act, 2001 ( Act No. 2 of 2001), as amended to regulate gambling activities in the North West Province. This institution serves as an agent of the Department of Economy and Enterprise Development to discharge this legislative mandate in a socially conscious manner and to promote economic growth and development without stimulating the latent demand for gambling. In the performance of its functions, the North West Gambling Board is expected to successfully strike a balance between creating an enabling environment for gambling, as a leisure or entertainment activity and guarding against socio-economic problems it may create, such as compulsive gambling and loss of value for responsible living standards. In this light, the North West Gambling Board has licensed four Casino operations, three oute Operators, three Bingo Operators, Limited Payout Machines and Betting and Wagering outlets. These are forms of gambling provided for in terms of the National Gambling Act, 2004 (Act No. 7 of 2004) and the North West Gambling Act to be introduced in the country with serious circumspection to offer the public entertainment through gambling or betting. Through prescribed interventions in the North West Gambling Act, all gambling operations and activities should be licensed and must operate according to the rules and regulations of the North West Gambling Board. This entails ensuring that all applicants for licences are found suitable or fit and proper to operate gambling activities in order to curtail all possible forms of criminal activity or unscrupulous practices. In this regard, the Board is inherently charged with the responsibility to protect members of the public against all forms of malpractices in order to promote fair play and responsible gambling. It is therefore, the responsibility of the Board to ensure that all gambling equipment and devices are tested against pre-determined technical standards, evaluated for compliance and approved for operation in the Province before being offered for play to the public. This assists in eliminating all possibilities of cheating, criminal activity or use of unsafe equipment during the offering of these games of chance. In the main, the Board ensures confidence in punters or members of the public that the games are fair and free from criminal influence, and guarantees payment of winnings when they are due. On the other hand, the Board has to ensure that punters are protected from the addictive nature of gambling through awareness and education campaigns. This seeks to promote responsible gambling and to avert the dangers of compulsive and addictive gambling practices which may negatively impact on the living standards of society. It is equally correct that, unless gambling is strictly regulated and constantly monitored, it may destroy the economic growth potential of the area where such facilities are located. Therefore, it is necessary for the Board to constantly monitor its impact on society against the economic benefits it brings. This is the space within which the North West Gambling Board operates and develops strategies to keep gambling as a real economic development driver. During the period under review the Board successfully reviewed Broad-Based Black Economic Empowerment strategies of its licensees in order to assess progress made to achieve contribution level 2 of the relevant codes of good practice, by March This condition was imposed on licensees by the Board and has been constantly monitored to assess the level of compliance and contributions made to achieve same. In addition, the Board revitalised Community Social Investments which its licensees were committed to as part of their licence conditions. In this regard, the Board managed to determine the expected 27

30 monetary investment which each of its licensees had to contribute to communities. Some of our licensees managed to deliver on the expectations of the Board by building community facilities such as, schools, old-age homes and orphanages in addressing community and social challenges in areas where they operate their businesses. Obviously, there are those who failed to do so and the Board had to ensure that controls are put in place to address such situations. There were challenges experienced with the distinction between what is acceptable as a socio-economic development contribution and marketing of these licensed establishments. To this end, the Board also noted that most socio-economic development interventions did not support the National Development Plan or adhere to the provincial strategic priorities. In this regard, the Board resolved to establish a Socio-Economic Development Fund to serve as joint platform to fund acceptable programmes of this nature, as evaluated and approved by its Socio-Economic Development Committee. We are registering good progress in this regard, however, this is an on-going challenge, the benefits of which should be harnessed and consolidated over a reasonable period of time, failing which the Board is empowered to impose punitive sanctions. We were determined that the roll-out of Limited Payout Machines will yield meaningful empowerment credentials and this is evidenced by our performance in the last quarter of the period under review. This project was delayed over a period of time due to specific requirements which were identified as inhibitors, but accordingly addressed with the assistance of our esponsible Member. During the last quarter of the period under review, we observed an increase in applications of Site Operators from the previously disadvantaged sector of our population and appreciate the recognizable growth in that respect. The operation of Limited Payout Machines was upon inception considered to be an opportunity for the previously disadvantage individuals and entities to find a foothold in the gambling industry for skills transfer and economic empowerment purposes. We are pleased to observe more and more of the previously disadvantaged individuals and entities taking up this opportunity and fostering participation in this industry. There is still a lot of monitoring to be conducted by the Board to ensure that the intended results are achieved. This consideration has been extended to Bingo operations and Betting licences with similar credentials. The overall coverage of this intervention is to accelerate economic transformation and to create more jobs. 28

31 Some of these operations have not yet taken shape or commenced business and we believe that in the near future these community benefits and socioeconomic transformational interventions will bear fruits. Cumulatively, these sectors of the gambling industry accelerate job creation and future increase in the numbers of jobs to be created cannot be denied. Over and above this, these operations are expected by law to pay levies and taxes which enhance revenue generation for both the National and Provincial fiscus through which many other socioeconomic interventions may be introduced. OGANISATIONAL ENVIONMENT The internal atmosphere of the organisation has improved to an extent that it started to enhance the culture of the organisation and improved performance. It has been reported that the organisation was at one stage running with six (6) members of the Board, and clearly when this happens in the organisation, there are obvious administration glitches which may indirectly affect staff moral or detract focus from strategic deliverables. The Board kept the organisation on check and Management fostered discipline to streamline responsibility and accountability, while focused on improvement of performance. The organisation experienced a couple of staff resignations and disciplinary actions, however, the situation was managed through change management interventions. There have been interaction between the Board and staff to address some of the challenges and motivational and counselling interventions were put in place. The organisation is on course to recover its culture and regain motivation to deliver on the strategic objectives, however, the pressure on staff to deliver with inadequate resources is becoming insurmountable. It is clear to staff now that most of the enablers for them to achieve strategic objectives cannot be provided due to inadequate funding and this has become a serious point of concern. This is evidenced by expectations for staff to cope with dual responsibilities at certain points of delivery of strategic objectives to an extent that the organisation is starting to accumulate a high leave profile and financial provision. This situation is clearly unsustainable and requires immediate intervention. The Board established that the current funding model for the operations of the organisation is not sustainable and needs revision. A proposal for the organisation to be self-funded has been submitted to the esponsible Member for consideration in order to find a solution to the resource problems within the organisation. KEY POLICY DEVELOPMENTS AND LEGISLATIVE CHANGES The Financial Intelligence Centre Act has been amended to provide for Provincial Gambling Boards to be Supervisory Bodies. This amendment immediately transferred the responsibilities of a Supervisory Body in the gambling industry from the National Gambling Board to Provincial Gambling Boards without consideration of the required resources, capacity and skills. In accordance with the requirements of the said amendment, the North West Gambling Board is now expected to conduct financial intelligence inspections at all its licensed establishments and compile all relevant reports. These entail ensuring that Accounting Institutions (e.g. casinos) monitor unusual transactions, identify suspicious persons and report such to the North West Gambling Board on a regular basis. We are expected in terms of this new role to conduct investigations of unusual transactions and report same to the Financial Intelligence Centre for disciplinary action where instances of non-compliance are identified. In addition, the establishment of the Socio- Economic Development Committee to monitor socio-economic development projects of all its licensees may come with additional responsibilities which may impact if the current resource base of the organisation from an operational point of view to financial management. These new assignments add to the existing mandate of the Board and does not come with special funding. The organisation is currently under-funded and its human resources are thinly stretched to accommodate these new responsibilities. 29

32 6. strategic outcome-orientated goals In developing the strategic objectives of the Board cognisance was taken of the strategic outcomeorientated goals of the controlling Department of Finance, Economy and Enterprise Development. These are aimed at regulating business activities in the Province to create legal, business and socioeconomic environments conducive to business prosperity. STATEGIC OBJECTIVES OF THE BOAD In response to the Medium-Term Strategic Framework , the Board will focus mainly on Service Delivery Outcome 4: decent employment through inclusive economic growth and it has identified the following strategic objectives: Strategic Objective 1 Create an enabling environment for responsible licensing of all forms of gambling allowed in terms of the legislation. Strategic Objective 2 Effective regulation of all forms of gambling. Strategic Objective 3 To ensure a suitable legal environment, supportive of the strategic goals of the Board. Strategic Objective 4 Promote corporate relations and responsible gambling. Strategic Objective 5 Promote BBBEE within the industry. Strategic Objective 6 Strengthen the institutional capacity of the Board. 30

33 7. performance information by programme chief operations office The Chief Operations Office is responsible for Programmes 1 to 3, which incorporates Investigations and Licensing, Gambling Control and Gambling Audit and Systems P Mokae Admin Officer Absent - S Gabaphethe, Admin Officer MP Mothiba Chief Operations Officer 31

34 programme 1 investigations and licensing Back ow (Left to ight) - T Moneoang, O Lesoli, M Masike, O Thompson Front ow (Left to ight) - T Selebano, T Mathebula, G Mohibidu, Y Nkete Absent - T Matiwame, P Hlongwane 32

35 POGAMME 1: INVESTIGATIONS AND LICENSING Purpose: To ensure that every person involved in gambling in the North West Province is suitable and registered or licensed in terms of the North West Gambling Act, 2001 (Act No. 2 of 2001) as amended STATEGIC OBJECTIVES KEY PEFOMANCE INDICATO ACTUAL ACHIEVEMENTS 2013/2014 PLANNED TAGET 2014/2015 ACTUAL ACHIEVEMENTS 2014/2015 DEVIATION FOM PLANNED TAGET TO ACTUAL ACHIEVEMENT FO 2014/2015 COMMENT ON DEVIATIONS Create an enabling environment for responsible licensing of all forms of gambling allowed in terms of the legislation Number of Limited Pay-out Machines rolled-out by 2016 (Type A or B or C). The Fifth Casino licence re-allocated to the North West Province by Delays in the licensing process of Sites None None Number of Bookmaker Holders and Sites licensed Four (4) Bookmaker Licence Holders who were granted licences failed to roll-out Bookmaker Sites/ premises. Number of Totalizators licensed Two (2) applications were received, but one (1) application was withdrawn by the applicant, therefore, the Board only evaluated and granted one (1) licence. Number of Bingo Operations monitored for compliance Fourth (4 th ) Licence granted but due to legal challenges the Licence was not issued. Number of applicants for certificates investigated and licensed 100% (433) More applications for employee registrations received due to continuous roll-out of additional forms of gambling. 33

36 STATEGY TO OVECOME AEAS OF UNDE-PEFOMANCE Strategic Objectives Performance Indicator Strategy TO Address Under-performance Create an enabling environment for responsible licensing of all forms of gambling allowed in terms of the legislation. Number of Limited Pay-Out Machines rolled-out by 2016 (Type A or B or C). The turnaround time for processing applications for Sites reduced from four (4) to three (3) months. Number of Bookmaker Holders and Sites licensed. Enforce compliance with the licence condition B which requires Licence Holders to roll-out premises within three (3) months of the licence being granted. Number of Totalizators licensed. The third (3 rd ) Totalizator licence will be considered once an impact study has been conducted in the 2015/16 financial year. Number of Bingo Operations monitored for compliance. The fourth (4 th ) licence to be issued in the 2015/16 financial year. LINKING PEFOMANCE TO BUDGETS: POGAMME 1: INVESTIGATIONS AND LICENSING 2013/ /15 Budget 000 Actual Expenditure 2013/ Over)/Underexpenditure 000 Budget 000 Actual Expenditure 2014/ Over)/Underexpenditure TOTAL

37 programme 2 gambling control Back ow (Left to ight) - E amokhuwa, V Mothiba, S Mogapi, M Mundalamo, T Sedisa Middle ow (Left to ight) - F Balepile, K Pieterse, S Konzane, P Mohapi, C Bomela Front ow (Left to ight) - O Mosepele, C Baloyi 35

38 POGAMME 2: GAMBLING CONTOL Purpose: To ensure that gambling is conducted in compliance with the North West Gambling Legislation and in a fair and honest manner. STATEGIC OBJECTIVES KEY PEFOMANCE INDICATO ACTUAL ACHIEVEMENTS 2013/14 PLANNED TAGET 2014/15 ACTUAL ACHIEVEMENTS 2014/15 DEVIATION FOM PLANNED TAGET TO ACTUAL ACHIEVEMENT FO 2014/15 COMMENT ON DEVIATIONS Effective regulation of all forms of gambling. Number of regulatory compliance inspections conducted at licensed premises within ninety (90) working days. Number of gambling machines tested and evaluated at casinos within ninety (90) working days. Number of gambling machines tested and evaluated at Limited Payout Machine Sites within ninety (90) working days. Number of reported illegal gambling operations to the South African Police Services for criminal investigation and prosecution within ninety (90) working days None None More gambling machines tested due to additional requests by Casino Licence Holders Less Limited Payout Machines rolled-out None None LINKING PEFOMANCE TO BUDGETS: POGAMME 2: GAMBLING CONTOL 2013/ /15 Budget 000 Actual Expenditure 2013/ Over)/Underexpenditure 000 Budget 000 Actual Expenditure 2014/ Over)/Underexpenditure TOTAL

39 programme 3 gambling audit and systems department Left to ight - P Kgohloane, T Makete, K Monate (sitting), I Boemo, M Molosi, M Tshabalala, T Koloane 37

40 POGAMME 3: GAMBLING AUDIT AND SYSTEMS DEPATMENT Purpose: To provide assurance that all levies and taxes from the licensees are accurate and complete and that compliance to legislation is adhered to. STATEGIC OBJECTIVES KEY PEFOMANCE INDICATO ACTUAL ACHIEVEMENTS 2013/2014 PLANNED TAGET 2014/2015 ACTUAL ACHIEVEMENTS 2014/2015 DEVIATION FOM PLANNED TAGET TO ACTUAL ACHIEVEMENT FO 2014/2015 COMMENT ON DEVIATIONS Improve efficiencies in the regulation of all forms of gambling. Number of systems/ IT Audits performed to ensure compliance with gambling legislative requirements None None Number of Compliance and evenue Audits performed to ensure compliance with gambling legislative requirements One Licensee (Hurtees Entertainment Centre) temporarily closed business in 3 rd and 4 th quarter. Number of Annual Financial Statement analysis performed to ensure continual financial viability of the licensees None None Number of corporate governance audits performed to ensure compliance with King III report (codes on corporate governance). None None None Promote Broad-Based Black Economic Empowerment within the industry. Number of BBBEE Audits conducted to ensure compliance with BBBEE Act, North West Gambling Act and License conditions None Staff shortage. 38

41 STATEGY TO OVECOME AEAS OF UNDE-PEFOMANCE Strategic Objectives Performance Indicator Strategy TO Address Under-performance Improve efficiencies in the regulation of all forms of gambling. Number of Compliance and evenue Audits performed to ensure compliance with gambling legislative requirements. The Board issued a licence condition that the licence holder should be operational in the 2015/16 financial year. Promote Broad-Based Black Economic Empowerment in the industry Number of BBBEE Audits conducted to ensure compliance with BBBEE plans, North West Gambling Act and License conditions. The department has employed additional four (4) auditors to increase capacity. LINKING PEFOMANCE TO BUDGETS: POGAMME 3: GAMBLING AUDIT AND SYSTEMS 2013/ /15 Budget 000 Actual Expenditure 2013/ Over)/Underexpenditure 000 Budget 000 Actual Expenditure 2014/ Over)/Underexpenditure TOTAL

42 programme 4 legal services Left to ight - K Mogorosi, J Montshioa, O Senne Absent - M Mogolega-Dichaba, S Tshabalala 40

43 POGAMME 4: LEGAL SEVICES Purpose: To provide effective and efficient legal services and support to the Board. STATEGIC OBJECTIVES KEY PEFOMANCE INDICATO ACTUAL ACHIEVEMENTS 2013/14 PLANNED TAGET 2014/2015 ACTUAL ACHIEVEMENTS 2014/15 DEVIATION FOM PLANNED TAGET TO ACTUAL ACHIEVEMENT FO 2014/15 COMMENT ON DEVIATIONS Strengthening the institutional capacity of the Board. Number of reports on legal advice to be provided. 100% 4 4 None None Number of contracts with third parties reviewed. 100% 4 4 None None Number of reports on status of litigation. 100% 4 4 None None Number of Board and Committee meetings The Board had to convene special meetings to attend to urgent matters. STATEGY TO OVECOME AEAS OF UNDE-PEFOMANCE Strategic Objectives Performance Indicator Strategy to Address Under-performance To ensure a suitable legal environment for supporting the department s strategic goals. Number of North West Gambling ules in respect of LPMs and Bingo reviewed. Employ additional H to assist in executing the strategic objective. LINKING PEFOMANCE TO BUDGETS: POGAMME 4: LEGAL SEVICES 2013/ /15 Budget 000 Actual Expenditure 2013/ Over)/Underexpenditure 000 Budget 000 Actual Expenditure 2014/ Over)/Underexpenditure (124) (2 249) TOTAL (124) (2 249) 41

44 programme 5 finance and IT support department Left to ight - T Modimogale, Molusi, N Segaetsho, E Phosiwa, M Moheta, M Kojoana, M Mahapa, L Moiloa, A Mosienyane, D Sepeng, Z Jacobs, G Seate, K Mohumapele and L Tladi. Absent - I Cassim, T Motsogi, K Marumolwa, W Sedumedi, S Leshomo and O Moromane 42

45 POGAMME 5: FINANCE AND IT SUPPOT DEPATMENT Purpose: To provide effective and efficient financial management system and Information Technology support for the Board. STATEGIC OBJECTIVES KEY PEFOMANCE INDICATO ACTUAL ACHIEVEMENTS 2013/2014 PLANNED TAGET 2014/2015 ACTUAL ACHIEVEMENTS 2014/2015 DEVIATION FOM PLANNED TAGET TO ACTUAL ACHIEVEMENT FO 2014/2015 Strengthening the institutional capacity of the Board. Number of financial status reports None None Submission of budget for 2014/15 financial year None None Number of monthly bank re-conciliations performed within seven (7) days to manage cash and cash equivalents of the Board None None Number of monthly reconciliations of creditors and debtors to ensure payment of creditors and recoveries within 30 days None None Number of monthly revenue re-conciliations and transfer to government by the 15 th monthly None None Number of Internal and External Audits conducted None None COMMENT ON DEVIATIONS 43

46 STATEGIC OBJECTIVES KEY PEFOMANCE INDICATO ACTUAL ACHIEVEMENTS 2013/14 PLANNED TAGET 2014/15 ACTUAL ACHIEVEMENTS 2014/15 DEVIATION FOM PLANNED TAGET TO ACTUAL ACHIEVEMENT FO 2014/15 COMMENT ON DEVIATIONS Strengthening the institutional capacity of the Board. (continued) Number of status reports on asset verification None None Number of four (4) stocktake and variance analysis reports None None Master Systems Plan reviewed The Board is looking to implement a total solution, integrating all processes, to enable synergy amongst different processes across the entity. An update of the Master Systems Plan will be completed during the first quarter of the 2014/15 financial year. Number of IT policies reviewed None None LINKING PEFOMANCE TO BUDGETS: POGAMME 5: finance and it SUPPOT DEPATMENT 2013/ /15 Budget 000 Actual Expenditure 2013/ Over)/Underexpenditure 000 Budget 000 Actual Expenditure 2014/ Over)/Underexpenditure (1 364) TOTAL (1 364) 44

47 programme 6 office of the ceo The Chief Executive Office is responsible for Programme 6 which incorporates Human esources and Corporate elations functions Left to ight - F Sekgaphane, Z Jacobs, T Kgengwe 45

48 programme 6.1 human resources department Left to ight - K Goshupelwang, B Dikola, T Thulo, B Tekanyo, Z Esterhuizen, D Makhudu, K Moeng, D Matsipane, Mantshonyane, L Monoto 46

49 POGAMME 6: CHIEF EXECUTIVE OFFICE 6.1 HUMAN ESOUCES DEPATMENT Purpose: To provide sound Human esources management and development. STATEGIC OBJECTIVES KEY PEFOMANCE INDICATO ACTUAL ACHIEVEMENTS 2013/2014 PLANNED TAGET 2014/2015 ACTUAL ACHIEVEMENTS 2014/2015 DEVIATION FOM PLANNED TAGET TO ACTUAL ACHIEVEMENT FO 2014/2015 COMMENT ON DEVIATIONS Strengthening the institutional capacity of the Board. Number of positions filled in line with the approved organisational structure The positions that were not filled were due to the following: System Analyst the suitable candidate could not be found. Legal Officer and Legal Secretary resignations were received in December Auditor and Accounting Clerk employees were promoted to higher positions. Number of reports on benchmarking of employees salaries and benefits None None Number of leave reports None None Human esources Policy reviewed The Policy has been combined into one (1) instead of four (4) Pool Vehicle Policy and Cell Phone Policy were reviewed during the year under review. 47

50 STATEGIC OBJECTIVES KEY PEFOMANCE INDICATO ACTUAL ACHIEVEMENTS 2013/2014 PLANNED TAGET 2014/2015 ACTUAL ACHIEVEMENTS 2014/2015 DEVIATION FOM PLANNED TAGET TO ACTUAL ACHIEVEMENT FO 2014/2015 COMMENT ON DEVIATIONS Strengthening the institutional capacity of the Board. (continued) Number of performance appraisal reports The Board changed the reporting from Quarterly to Bi-annual for the period under review. The Performance Appraisals for the year under review were due for submission by end of April The report for 2013/14 financial year was compiled, submitted to the Board for approval and implemented as per the Policy. Number of employee payroll reports None None Number of reports on training Training was conducted; however, the budget was not sufficient to cater for all training planned. Training not conducted due to budget constraints shall be attended to during the next financial year. Number of reports on employee health and wellness Two (2) reports were compiled instead of one (1). eports were compiled as required by ICAS. Number of Employment Equity reports None None STATEGY TO OVECOME AEAS OF UNDE-PEFOMANCE Strategic Objectives Performance Indicator Strategy to Address Under-performance Strengthening the institutional capacity of the Board Number of vacant positions filled in line with the approved organisational structure. The positions that were not filled were due to the following: System Analyst the suitable candidate could not be found Legal Officer and Legal Secretary resignations were received in December 2015 Auditor and Accounting Clerk employees were promoted to higher positions. Number of performance appraisal reports. The policy was revised to allow managers to conduct performance reviews bi-annually. 48

51 programme 6.2 corporate relations Left to ight - M Teme, T Jood, E Gaboutlwelwe 49

52 POGAMME 6: CHIEF EXECUTIVE OFFICE 6.2 COPOATE ELATIONS Purpose: To promote corporate relations and responsible gambling STATEGIC OBJECTIVES KEY PEFOMANCE INDICATO ACTUAL ACHIEVEMENTS 2013/14 PLANNED TAGET 2014/15 ACTUAL ACHIEVEMENTS 2014/15 DEVIATION FOM PLANNED TAGET TO ACTUAL ACHIEVEMENT FO 2014/15 COMMENT ON DEVIATIONS To strengthen the institutional capacity of the Board. Develop and implement the Communication Strategy. eport on socioeconomic impact study. Number of education and awareness campaigns. 40% 1 1 None None 100% The terms of reference report completed but there were delays in procuring a service provider. Deferred to the 2015/16 financial year Participated in more provincial activities, which resulted in an increased number of educational and awareness campaigns. STATEGY TO OVECOME AEAS OF UNDE-PEFOMANCE Strategic Objectives Performance Indicator Strategy TO Address Under-performance To strengthen the institutional capacity of the Board. eport on socio-economic impact study. The appointment of a service provider will be done in the second (2 nd ) quarter of the 2015/16 financial year and a full report finalised by the end of the 2015/16 financial year. LINKING PEFOMANCE TO BUDGETS: POGAMME 6: OFFICE OF THE CEO 2013/ /15 Budget 000 Actual Expenditure 2013/ Over)/Underexpenditure 000 Budget 000 Actual Expenditure 2014/ Over)/Underexpenditure TOTAL

53 8. summary of financial information SUMMAY OF EVENUE COLLECTED SOUCES OF EVENUE EVENUE TAGET / /2015 ACTUAL COLLECTION 000 (OVE)/UNDE COLLECTION 000 EVENUE TAGET 000 ACTUAL COLLECTION 000 (OVE)/UNDE COLLECTION 000 Gaming Levies, Taxes and License Fees TOTAL The Board collected 3% more than its revenue target during the 2013/14 Financial Year and under collected by 1% during 2014/15 Financial Year. The reason for over-collection is attributed to the Sun City Nedbank Golf Challenge, organised during the month of December in both financial years; the roll-out of the LPMs and the inclusion of Bingo operations as well as the natural growth of the industry. SUMMAY OF BOAD EXPENDITUE SOUCES OF EVENUE Budget / /2015 ACTUAL EXPENDITUE 000 (OVE)/UNDE- EXPENDITUE 000 Budget 000 ACTUAL EXPENDITUE 000 (OVE)/UNDE- EXPENDITUE 000 Grant received TOTAL The Board received a grant of for 2014/15 Financial Year. The approval to use the savings from previous years was granted in March 2015 and it increase the 2014/15 budget to , out of which a balance of was not used as at 31 March

54 9. statistics 9.1 List of Licensees 53 Casinos 53 Bingo Operations 53 Independent Site Operators 53 Bookmakers 53 oute Operators 53 Site Operators 54 Totalizator 58 Phumelela Gaming and Leisure Ltd Branches 58 Phumelela Gaming and Leisure Ltd Agencies 58 Amusement Machine Operators Holders of Certificate of Suitability Employee egistration Gambling Machines and Table Statistics egistered Statement Gambling of esponsibility Tables by for Unit Performance Information egistered Executive Management Gambling Machines by Unit egistered Senior Management Gambling Tables by Gambling Mode egistered Auditor-General s Gambling eport: TablesPredetermined Objectives Approved Overview Letters of the Board s of Certification Performance Illegal Strategic Gambling Outcome-Oriented Statistics Goals evenue Performance Performance Information by Programme by Licencees Casinos Summary of Financial Information Limited Statistics Payout Machines 64 Bingo Operations 64 Totalizators 65 Bookmakers 66 52

55 9.1. List of Licensees CASINOS Licensee trading Name Town Peermont Global (NW) (Pty) Ltd. io Casino Hotel, Casino and Convention esort Klerksdorp Peermont Global (NW) (Pty) Ltd. Mmabatho Palms Hotel, Casino and Convention esort Mmabatho Sun International (SA) Ltd. Sun City Casino Mogwase Sun International (SA) Ltd. The Carousel Casino and Entertainment World Temba BINGO OPEATIONS Licensee Trading Name Town Santoscan (Pty) Ltd. Goldrush Bingo ustenburg Santosat (Pty) Ltd. Goldrush Bingo Potchefstroom Galaxy Bingo North West (Pty) Ltd. Galaxy Bingo North West Brits independent SITE OPEATO Hurtees Entertainment Centre (Pty) Ltd. Hartebeespoort BOOKMAKES Licensee Town Betting World (Pty) Ltd. Sun Village Betting World (Pty) Ltd. ustenburg Cornelius Johannes Coertze Brits Central Gaming Management (Pty) Ltd. Not yet operational Century Loop ite Trade (Pty) Ltd. Not yet operational Dankopath (Pty) Ltd trading as G-Bets Not yet operational VBet SA North West (Pty) Ltd. Not yet operational OUTE OPEATOS OUTE OPEATOS NUMBE OF SITES Vukani Gaming North West (Pty) Ltd. 54 Bathusi Investment (Pty) Ltd trading as Bathusi Gaming 8 Bon View Trading 111 (Pty) Ltd trading as North West Goldrush Gaming 81 53

56 VUKANI GAMING NOTH WEST (PTY) LTD 1 NAME OF THE SITE OWNE NAME OF THE SITE Noordkom Klerksdorp Drankwinkel BK Noordkom Tavern Noordkom Klerksdorp Drankwinkel BK Noordkom Tab Agency Manuel Moreira Da Silva Mota Transvaal Hotel Santa FE Entertainment CC Santa FE Ladies Bar Isaac Abraham Palmer Shongweni Grassa Batista Cosmos Jose Da Mata Caravela Portuguesa estaurant Daniel Concalves Pestana De Sun Pub & Grill Impala Drankkelders CC Impala Hotel ui Miguel De Figueiredo ocha Surrey Hotel Molifi Cyprian Lekoma Protea Ebony and Ivory Jazz Bar Kelebogile Allta Mamakgoa Mongale Moonlight Inn Magxolo Douglas adebe Mthimkhulu Bar Lounge Joao Gabriel Nunes Gullys Jungle Bar Tsamayasentle Joseph Tsamai Karabo Liquor estaurant Kelebogile Allta Mamakgoa Mongale Moonlight Tab Celistino Correia Gouveia Sun estaurant Norman Diphoko Diphoko Tavern Sebodi Samuel Mokgadi Sedibelo Liquor estaurant Egopoleng Frank Modisamongwe Tlotlang Club 2000 Manuel Francisco De Matos Francisco estaurant ichard John Steyn Keg & Bull estaurant John Ntimba Ntimba Tavern Phumelela Gaming and Leisure Ltd Tab Potchefstroom Phumelela Gaming and Leisure Ltd Tab Orkney Phumelela Gaming and Leisure Ltd Tab Lichtenburg C & W Trust Pepperboom Lounge Queen Christina Tabane Kyalami General Dealer & estaurant Guiherme Mendes Catanho Quicksilver Pub & Grill Grassa Batista Chillers Lounge estaurant Tshepiso Anderson Mphehlo Lovers Paradise Liqour estaurant Abraham Jacobus oets Scorpio ally Terrein Jacques Jacobus Jacobs Libra estaurant Susara Van Wyk Easy Eats Pub & estaurant Christelle Kruger Alpha Snack Bar Daniel Paulus Mattheus Fourie Pirate Inn Samuel Ngwenya Bluemoon Entertainment 54

57 VUKANI GAMING NOTH WEST (PTY) LTD (continued) 1. NAME OF THE SITE OWNE NAME OF THE SITE Queen Christina Tabane Queen s Tavern Samson Matjeke Klerksdorp Motswako Pub 7 Take Hesther Cathrina Anastassiou Mamusa estaurant & Kroeg Dale Nkosinathi Mavuka Lefaragatlhe Pub & estaurant Benjamin Eramus McCarthy Morokweng Liquor Tavern James Edgar Arendse Jammers Pub & Grub Joao Manuel Aguiar Da Silva Pick & Eat estaurant Antoinettte Kealeboga Atkinson The Pitch Next Door uth Nkefi Mogwere Monamodi Liquor estaurant Nadia Coates Mugglers Burnout Pub & Grill (Pty) Ltd Burnout Pub & Grill Dirk Jacobus Laubscher Phoenix Tavern Thekiso James Lepholletse Mamusa Liquor estaurant Candro Trade (Pty) Ltd Surrey Hotel Eating House Country Cloud Trading 222 CC Eagles Pub & Grill BATHUSI INVESTMENT (PTY) LTD trading as, BATHUSI GAMING 2 NAME OF THE SITE OWNE NAME OF THE SITE Shadreck Williams Moretele Bar Lounge Adelice Nthabiseng Makoso efiloe Pub Catherine Ntatsi Masisi Fourways Tavern Jackie Skgwela J.D.S Tavern Viwe Samuel Ncalo Jazz Tavern Sebanto David Tladi Strike s Tavern Vincent Medupe Sleek s Tavern Lin Xuehua Malan Street Tavern 55

58 Bon View Trading 111 (PTY) LTD trading as, North West Goldrush Gaming 3 NAME OF THE SITE OWNE NAME OF THE SITE Jansen Van ensburg Sarel Johannes Noordwes Boere estaurant Mmasoel Elizabeth Malapane Maliza Tavern Itumeleng Simon Sima Itumeleng Liquor estaurant Norman Keitumetse Letsapa Ikhutseng Bar Lounge Loate Esau Maleshane Graceland Bar Herman Tony Sellwe Curtys Tavern Ishmael Morake Moeketsi Chaichos Inn Kebookile Johanna Mayo Blue House Phumelela Gaming and Leisure Ltd Tab ustenburg Phumelela Gaming and Leisure Ltd Tab Mahikeng Phumelela Gaming and Leisure Ltd Tab Klerksdorp Phumelela Gaming and Leisure Ltd Tab Zeerust Phumelela Gaming and Leisure Ltd Tab ustenburg Taxi ank Francisco Jose Jardin Ponte Franks Sports Bar Johannes Hendrik Joubert Zama Zama Tavern Alfred Gabonewe Mokgwasi Semunye Liquor Tavern Chauke Frans Sello Sijo Tarven Andries Zabe Sithiole Yizo Yizo Liquor estaurant Gabolwelwe Kgomotso Elizabeth Mosina P.S.J.M Zonke Bonke Mashome Gopolang Phola Park Gosalamang Phillia Mooketsi Sejosenye Liquor Tavern Nape Vennesa Omogolo V Lounge Seboletswe Tshenolo Hilda G. Town Mmathaba Annah akoma Bridges Tavern Ndo Jeremiah Doyi Central estaurant Willem Van Der Merwe Tom, Dick & Harry Sports Bar Moagaesi Kanene Thomas Thaba Bar Lounge Letlhogile Kholiwe egina eggys Place Deldrank CC Oasis estaurant Karabo Dominic Karaboz Jose-Paulo Fernandes de Andrade Theos Sports Bar and estaurant Elvis Moyo White House Nelson Florentino Duarte Porto Tavern Pierre Vermeulen JW Tavern Annah Dimakatso Botlhoko Carousel Tavern Saki Nicholas Ngobeni Nico City Tavern Mmapelo Caroline Seema Pelo s Tavern Ntshimane Isaac Tlhapi Tlhapi s Tavern Matutu Caiphus Letlole Supingstad Bar Lounge Senosi Banyaditse Phenous Basha Liqour estaurant Chiloane Dricca Lethabong Tavern Malanga Enerst Mathebula Ayibusegaza Tavern 56

59 Bon View Trading 111 (Pty) Ltd trading as, North West Goldrush Gaming (continued) 3 NAME OF THE SITE OWNE NAME OF THE SITE Frederick Jacobus Marais Frekkie s Sports Bar Stephen Bonke Phiri Love & Peace Tavern Vuile Abram Mjezu Vuku Inn Moses Mokgobye Mosito Masheleng Tavern aetsho Jacob Mmono Tsholofelo Liquor estaurant antuwe Phillimon Mongae Lapa la Mankwe Liquor Tavern Matseke Piet anko Ndofaya Tavern Obed David Madiege Pitso David Tavern obertina Gaborekwe Motaung Nono s estaurant Ntoko Victor Mokgofe Boikhutso Tavern Mosekwa Albert aseboya Danny s Tavern Ntombi Sharlotte Menyuko Sharley Baby Pub Dick Kleinbooi Morake The Place Tavern Irolang Ben Motsaathebe Motsaathebe Bar Lounge Gopolang Mashome Dichaba Kopano Tavern Naome Mapula Lesejane Montwana Inn and Drinking Palace Konaetsile Petrus Molebalwa KP Tavern Tlharesane Daniel Segwagwa amatlhale Tavern Tlharesane Daniel Segwagwa Itlotle estaurant Hazel Strauss Duitswes Kombuis Diutlwileng Otukile Ben Lerothodi Bar Lounge Josiah Lazarus Mogapi Joe s Tavern Poroti euben Motsepe Maphelong Pub & Grill Fernandes Jose Antonio Super-Hot Food and Pub Patrick Matebesi Masike Super P Liquor estaurant Montshioagae Pogiso John Morula Launch Matshidiso Joyce Mmeti Sis Joyce Tavern Phineas Thapelo Setshoane Botsalano Café and estaurant Oppi Deck CC Moleko s Tavern Tuelo Olga Molefi Margo s Pub & Grill Phumelela Gaming & Leisure Ltd Brits Tab Phumelela Gaming & Leisure Ltd Sun Village Phumelela Lebang Morgan Mbenge Platinum Liquor estaurant Emmarentia De Klerk The Saloon estaurant Albert Bongo Achugwo Bobo s Tavern Moarabi Daniel Khutswane Badibone Kae Inn Beauty Tuduetso Mbewe Molamu Liquor estaurant 57

60 TOTALIZATOS Licensee Phumelela Gaming and Leisure Limited Century Loop ite Trade (Pty) Ltd* *Not yet commenced operations PHUMELELA GAMING AND LEISUE LIMITED - BANCHES Brits Klerksdorp Lichtenburg Mahikeng Orkney Potchefstroom ustenburg Taxi ank ustenburg Zeerust Taung Sun Village PHUMELELA GAMING AND LEISUE LIMITED - AGENCIES Hartebeespoort Letlhabile Noordkom Centre Ventersdorp AMUSEMENT MACHINE OPEATOS Licensee TOWN Number of Machines Fantasia Family Entertainment Centre Klerksdorp 20 Fantasia Family Entertainment Centre Potchefstroom 13 Fantasia Family Entertainment Centre io Casino 17 The Magic Company (Pty) Ltd. Sun City Casino 62 The Magic Company (Pty) Ltd. The Carousel Casino holders of certificate of suitability Licensee DDL Security Services (Pty) Ltd trading as, 24/7 Security Services CA Nizetich CC trading as, Deltatronics Technology and Procurement Holdings (Pty) Ltd Kalula Trade 23 (Pty) Ltd Lithotech Sales Pretoria (Pty) Ltd Top Print CC epro Print (Pty) Ltd Protea Playing Card CC TCS John Huxley (Pty) Ltd Dimension Data Integrated Security Solutions (Pty) Ltd Dementor Surveillance and Security CC Fidelity Security Services (Pty) Ltd egistration Type Security Services Surveillance Systems Surveillance Systems Surveillance Systems Printing Printing Printing Printing and Supplier Supplier and Maintenance Security Services Surveillance Systems Security Services 58

61 9.3 Employee registration Licensee Gambling Head Count egistered Employees Temporarily egistered The Carousel Casino and Entertainment World Sun City Casino Mmabatho Palms Hotel, Casino and Convention esort io Casino, Hotel and Convention esort Phumelela Gaming and Leisure DDL Security Services (Pty) Ltd trading as, 24/7 Security Services Vukani Gaming North West (Pty) Ltd North West Goldrush Gaming Bathusi Gaming Site Operators Betting World (Pty) Ltd Galaxy Bingo North West (Pty) Ltd Goldrush Bingo: Potchefstroom Goldrush Bingo: ustenburg TOTAL

62 9.4 Gambling Machines and Table Statistics Carousel Casino Sun City Casino Mmabatho Palms Casino io Casino Figure 1: egistered Gambling Tables by Unit Carousel Casino Sun City Casino Mmabatho Palms Casino io Casino Figure 2: egistered Gambling Machines by Unit Blackjack tables oulette tables Poker tables Punto Banco tables Baccarat tables Figure 3: egistered Tables by Gambling Mode 60

63 EGISTEED gambling TABLES SUN CITY CASINO MMABATHO PALMS CASINO CAOUSEL CASINO IO CASINO BlackJack Tables oulette Tables Poker Tables Punto Banco Tables Baccarat Tables TOTAL Approved Letters of Certification Number of LOC s Approved Aristocrat 19 Aruze Gaming 42 Atomic Gaming 38 Austrian Gaming Industries Africa 36 Bally Gaming 149 Cerion Trading 1 Custom Gaming Solutions 1 GPI Management Services 7 International Gaming Technologies 150 Omega Gaming 51 oute Gaming Solutions 0 Simplicit-E Gaming Solutions 13 TCS John Huxley 9 Turf Sports 5 Vukani Gaming Corporation 15 WMS Gaming 45 Total Number of Approvals Done ILLEGAL GAMBLING STATISTICS STATISTICS TOTAL Number of aids/closures 0 Confiscated Gambling Machines 0 Confiscated Gambling Tables 0 Gambling Machines Destroyed 755 Gambling Tables Destroyed 0 Number of Machines in the Warehouse

64 62

65 9.6 EVENUE PEFOMANCE BY LICENSEES CASINOS Source % Change Turnover % GG % Levies % Monthly levy comparison Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Figure 4: Monthly levy comparison Contribution by Machines and Tables Source TOTAL number Turnover GG Levies Machines Tables Total Levy Contribution by Machines and Tables 86% 14% Machines Tables Figure 5: Levy Contribution by Machines and Tables 63

66 9.6.2 LIMITED PAYOUT MACHINES (LPMs) Source % Change Turnover % GG % Levies % Monthly levy comparison Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Figure 6: Monthly levy comparison BINGO OPEATIONS Source % Change Turnover % GG % Levies % Monthly tax comparison Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Figure 7: Monthly tax comparison NB: Bingo operations commenced business in December

67 TOTALIZATO Source % Change Turnover % GG % Levies % Monthly tax comparison Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Figure 8: Monthly tax comparison Contribution by Branches, Agencies and Telebet Source Total number Turnover GG Levies Branches Agencies Telebet Total Tax Contribution by Branches, Agencies and Telebet 9% 12% 79% Branches Agencies Telebet Figure 9: Tax Contribution by Branches, Agencies and Telebet 65

68 BOOKMAKES Source % Change Turnover % GG % Taxes % Monthly tax comparison Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Figure 10: Monthly tax comparison Contribution by Horseracing and Sport Source Turnover GG Levies Horse racing Sport Total Tax contribution by Horseracing and Sport 77% 23% Sport Horse racing Figure 11: Tax Contribution by Branches, Agencies and Telebet 66

69 67

70 part C Governance 1. Introduction Portfolio Committee Executive Authority The Board isk Management Internal Statement Control of esponsibility Unit for Performance Information Internal Executive Auditors Management Compliance Senior Management with Laws and egulations Fraud Auditor-General s and Corruption eport: Predetermined Objectives Minimising Overview of Conflict the Board s of Interest Performance Code Strategic of Conduct Outcome-Oriented Goals Health, Performance Safety Information and Environmental by Programme Issues Company Summary of Secretary Financial Information Community Statistics Social Investment Audit Committee eport 85 68

71 1. INTODUCTION The North West GambIing Board is a statutory body established in terms of the provisions of the section 3 of the North West Gambling Act, 2001 (Act No. 2 of 2001), as amended to regulate gambling activities in the North West Province. This institution is also classified as a Schedule 3C Public Entity, in terms of the Public Finance Management Act. This institution is led by a Board of directors appointed in the terms of section 5 of the North West Gambling Act serving the role of an Accounting Authority in terms of the Public Finance Management Act. The North West Gambling Board is an agent of the Department of Economy and Enterprise Development accountable to the Provincial Legislature through the Portfolio Committee on Premier, Treasury and Enterprise Development and Finance. In this regard, the key mandate of the North West Gambling Board, functions, objectives and responsibilities are guided by the North West Gambling Act, 2001 (Act No. 2 of 2001) as amended; the National Gambling Act, 2004 (Act No. 7 of 2004), the Public Finance Management Act, 1999 (Act No. 1 of 1999) as amended, the Financial Intelligence Centre Act and other related legislation, egulations and ules. 2. POTFOLIO COMMITTEE As part of the oversight role performed by the Provincial Parliament, the North West Gambling Board held two meetings with the Portfolio Committee on Premier, Treasury Premier, Treasury and Enterprise Development during the period under review to present the Annual eport for 2014/15 Financial Year and the Annual Performance Plans for 2015/16 Financial Year. The 2015/16 Annual Performance Plans, amongst others, included licensing of other forms of gambling, improving capacity to promote efficiencies and effectiveness in regulation of gambling, strengthening technologies, eradication of illegal gambling, improving broad-based black economic empowerment and promotion of responsible gambling and generally alignment with government priorities. In addition, the Annual Performance Plans included a proposal on the change of the funding model of the Board to address its financial challenges and re-position it to fully perform according to its legislative mandate. 3. EXECUTIVE AUTHOITY During the period under review, the North West Gambling Board submitted four quarterly reports to the Executive Authority on 31 July 2014, 31 October 2014, 31 January 2015 and 29 April 2015, respectively. Composition of the Board Members of the Board, from various fields of expertise, are appointed by the MEC responsible for Finance, Economy and Entreprise Development in the Province, such as: (i) legal practitioners; (ii) accountants or auditors registered in terms of the Public Accountants and Auditors Act, 1991 (Act No. 80 of 1991); (iii) persons with knowledge and experience in the field of welfare or socio-economic development; (iv) persons with knowledge of, and active involvement in, the tourism industry; (v) persons with proven business acumen; (vi) persons with knowledge of the gambling industry; and (vii) persons nominated by Members of the Executive Council responsible for Finance, Safety and Security, Finance, Economy and Entreprise Development. During the period under review, the Board was mostly comprised of only eight members instead of nine, as required by the provisions of the North West Gambling Act. 69

72 members of the board 70

73 Back ow (Left to ight) - N Maharaj, HM Mashao, FS Sekgaphane (CEO), ME Matlawe and C Kgorane Front ow (Left to ight) - G Mbao, TC Kgomo (Chairperson) and LI Seepe Absent - NI Kunene 71

74 4. THE BOAD 4.1 The ole of the Board The Board performs the following functions, as prescribed in section 4 of the North West Gambling Act, 2001 as amended, and the National Gambling Act, 2004 (Act 7 of 2004): (a) to oversee gambling activities in the Province; (b) to advise the MEC on any matter referred to it by the MEC relating to the control of gambling in the Province; (c) to exercise such powers and perform such functions and duties as may be assigned to the Board in terms of this Act or any other law; and in particular to:- (i) invite applications for licences in terms of this Act; (ii) consider and dispose of applications for licenses in such a manner and at such time and place as it may from time to time determine; (iii) grant, renew, amend, refuse, suspend or revoke licences under this Act; (iv) impose conditions in respect of any licences at any time; (v) revoke licences granted under the Ordinance; (vi) acquire, hold, hire, let and alienate intellectual, movable and immovable property; (vii) open and maintain bank accounts; (viii) appoint staff and do all things incidental thereto; (ix) conclude and perform contracts; (x) participate in or conduct quasi-judicial and administrative proceedings; (xi) make and enforce rules for the conduct of its proceedings and hearings; (xii) receive, expand and generally administer funds; (xiii) collect and administer, in accordance with the provisions of the Act, levies and fees imposed by or under the North West Gambling Act, 2001 (Act No. 2 of 2001), as amended; (xiv) make rules and regulations governing the licensing, conduct and operation of any gambling activity or business; (xv) conduct or cause to be conducted hearings, investigations and enquiries with regard to any matter falling within the scope of its functions; (xvi) apply to court to place any gambling operation under supervisory management; (xvii) enter into agreement with or obtain the assistance of any department or organ of State, including the South African Police Service, to conduct or assist it in conducting its investigations; (xviii) obtain information from licence holders and other persons and agencies; (xix) conduct an ongoing study of, and investigation into gambling throughout the Province and elsewhere, to keep abreast of developments in the industry; (xx) determine minimum internal control systems for licence holders, including accounting and reporting procedures and any other procedures or systems, whether computerised or not; (xxi) impose penalties for any breach of any of the rules or regulations made under the North West Gambling Act, 2001 (Act No. 2 of 2001), as amended, which may include fines or the suspension of or the imposition of conditions relating to any licence issued in terms of the North West Gambling Act, 2001 (Act No. 2 of 2001), as amended; (xxii) determine fees and charges in respect of investigations, enquiries and any other function performed by the Board; (xxiii) collect and administer interest and penalties imposed by or under this Act; (xxiv) undertake or cause to be undertaken tests on equipment and gambling devices used or to be used in gambling activities and to recover the costs thereof from any 72

75 person at whose instance such tests are undertaken; (xxv) issue summonses for the appearance of persons or the production of books, documents or things in connection with applications, hearings, investigations or enquiries under the North West Gambling Act, 2001 (Act No. 2 of 2001), as amended, including the rules or regulations made thereunder; (xxvi) establish field or branch offices; (xxvii) establish and administer funds for the proper administration of this Act; (xxviii) consult with any person or employ consultants regarding any matter relevant to the performance of its functions on such terms and conditions as the Board may determine; (xxix) compile a list of persons who are to be excluded or rejected from specified licensed premises and of those who are prohibited from partaking in specified gambling; (xxx) make rules governing the licensing, conduct and operation of amusement games, including the licensing thereof, and in consultation with the responsible member of the Executive Council and Treasury to impose license fees therefore; (xxxi) generally exercise the powers and perform the functions and duties specified in this Act or assigned to it by any other law. 4.2 Board Charter The Board operates with an approved Board Charter that sets out the composition, membership and size of the Board. The Charter further sets out the role and responsibilities of the Board with regard to the performance and accountability of the entity, monitoring and implementing the corporate plan, laws, regulations, policy and codes of business practice. 4.3 Objectives for the period under EvIEW: 2014/15 The Board set the following objectives for the period under review, in line with its mandate derived from the North West Gambling Act, 2001 (Act No. 2 of 2001), as amended, the egulations and the National Gambling Act, 2004 (Act No. 7 of 2004): (i) to create an enabling environment for responsible licensing of all forms of gambling allowed in terms of the legislation; (ii) to roll-out Limited Payout Machines and Bingo Operations; (iii) to follow up on the possibility of the Fifth Casino licence in the Province; (iv) to roll-out bookmaker licences; (v) to improve efficiencies in the regulation of all forms of gambling; (vi) to develop and maintain effective regulatory mechanisms and provide for all necessary resources; (vii) to ensure adequacy of legislation; (viii) to finalise amendments to gambling legislation; (ix) to develop Bingo rules; (x) to review Information Security and Systems; (xi) to promote BBBEE within the industry; (xii) to encourage and promote BBBEE within the industry through implementation of approved industry specific BBBEE targets; (xiii) to ensure that gambling equipment operates in compliance with legislation and SABS technical standards; (xiv) to conduct legal compliance inspections on licensed gambling operations; (xv) to ensure that gambling activities are conducted in a fair and honest manner; (xvi) to combat all forms of illegal gambling and conduct special investigations referred by other departments; (xvii) to provide assurance that the gambling levies are accurately calculated; (xviii) to provide assurance that the licensees maintain a level of continual financial suitability and comply with legislative requirements; 73

76 (xix) to ensure that licensees internal control procedures mitigate gambling regulatory risks and are in line with gambling legislation; (xx) to provide legal advice and support to the Board and Management; (xxi) to provide the Board with secretariat functions; (xxii) to ensure an effective and efficient legal framework; (xxiii) to ensure corporate governance by Management and the Board; (xxiv) to ensure efficient financial management; (xxv) to ensure that internal and external audits are conducted; (xxvi) to ensure compliance with internal controls and other relevant legislation; (xxvii) to ensure efficient and effective supply chain management; (xxviii) to provide and maintain an effective, upto-date and secure information technology system for the organisation; (xxix) to ensure the provision of effective and efficient human resource support services; and (xxx) to ensure the formulation and implementation of H strategies to enhance education, training, development and retention of staff. The Board s report on achievements in relation to the above objectives is contained in the general overview on pages 27 to Corporate Governance The core values of the North West Gambling Board are to embrace the principles of good corporate governance, as contained in the King II and III eport on Corporate Governance and the precepts of the Public Finance Management Act 1999, (Act No. 1 of 1999), supported by Treasury egulations ole, functions and objectives The Board is generally responsible for the regulation of gambling activities in the North West Province, including the performance of the following functions: (i) to advise the MEC responsible for Finance, Economy and Enterprise Development on any matter referred to it by the MEC relating to the control of gambling in the Province; (ii) to invite, receive, consider, grant or refuse applications for licences in terms of the North West Gambling Act, 2001 (Act No. 2 of 2001), as amended; (iii) to collect and administer gambling levies and fees under the North West Gambling Act, 2001 (Act No. 2 of 2001), as amended; (iv) to make rules and regulations governing the licensing, conduct and operation of any gambling activity or business; (v) to conduct ongoing studies and investigations into gambling throughout the Province and elsewhere; (vi) to undertake or cause to be undertaken tests on gambling equipment and gambling devices used or to be used in gambling activities; and (vii) to compile and maintain a list of persons excluded from casinos in the Province. The National Gambling Act, 2004 (Act No. 7 of 2004) sets certain norms and standards to be followed by Provincial Gambling Boards in the regulation of gambling in their respective jurisdictions. As a provincial regulator, the Board is enjoined to implement the provisions of the North West Gambling Act, 2001 (Act No. 2 of 2001), as amended. As a statutory body, the Board performs its functions in terms of the North West Gambling Act, 2001 (Act No. 2 of 2001), as amended. The North West Gambling egulations of 2002 provide certain procedural prescriptions and process requirements with regard to the implementation of the North West Gambling Act, 2001 (Act No. 2 of 2001), as amended. 74

77 Composition of Board Members (1 April 2014 to 31 March 2015) NAME DESIGNATION DATE APPOINTED STATUS QUALIFICATIONS AEA OF EXPETISE BOAD DIECTOSHIPS OTHE COMMITTEES NUMBE OF MEETINGS ATTENDED TC Kgomo Chairperson 11 October 2012 Active BCom Finance (Business) 1. Henjen Petroleum (Pty) Ltd 2. University of North West None 14 LMI Seepe Deputy Chairperson 11 October 2012 Active BEd Business None Audit and isk Committee H Committee 11 TS Mokaila Board Member 11 October 2012 Terminated 05 December 2014 BA Communication Management (Business) None H Committee 0 ME Matlawe Board Member 11 October 2012 esigned 02 July 2014 MA Town and egional Planning Business None Audit and isk Committee 5 N Maharaj Board Member 11 October 2012 Active PhD Law Legal 1. South and Hospital 2. Housing Company Tshwane 3. The oad Traffic Management Corporation 4. Setsoto Municipality Audit and isk Committee Compliance Committee 14 HM Mashao Board Member 01 December 2012 Active BCom Finance None Audit and isk Committee H Committee 6 CM Kgorane Board Member 01 December 2012 Active BA Political Science Safety and Security None Compliance Committee 9 GN Mbao Board Member 01 December 2012 esigned 31 December 2014 MA Law Legal None Compliance Committee 10 NI Kunene Board Memeber 03 February 2015 Active BCom Finance None None 0 75

78 COMMITTEES OF THE BOAD Number OF MEETINGS HELD Compliance Committee Number OF MEMBES ATTENDED 7 3 Human esource Committee 3 3 Audit and isk Committee 4 8 NUMBE OF MEETINGS ATTENDED NAMES OF MEMBES 7 of 7 N Maharaj 6 of 7 GN Mbao (esigned 31 December 2014) 3 of 7 CM Kgorane TS Mokaila (Terminated 05 December 2014) 3 of 3 LMI Seepe 2 of 3 GN Mbao (esigned 31 December 2014) 1 of 3 HM Mashao 1 of 4 ME Matlawe (esigned 02 July 2014) 4 of 4 T Moromane (Term ended 31 May 2014 and reappointed 31 July 2014) 1 of 4 N Dutton (Term ended on 31 May 2014) 4 of 4 O Diutlwileng (Term ended 31 May 2014 and reappointed 31 July 2014) 3 of 4 Z Mothibe (Appointed on 31 July 2014) 3 of 4 M Mokgobinyane (Appointed on 31 July 2014) 1 of 4 L Seepe (Appointed on 31 July 2014) 3 of 4 N Maharaj (Appointed on 31 July 2014) 0 of 4 H Mashao (Appointed on 31 July 2014) COMMITTEES OF THE BOAD NAME EMUNEATION OTHE ALLOWANCE OTHE EIMBUSEMENTS TOTAL T Kgomo L Seepe N Maharaj E Matlawe G Diutlwileng TL Moromane N Dutton MV Mokgobinyana Z Mothibe

79 5. isk ManagemenT The Board adopted a formal approach to risk assessment. At the start of each financial year, a risk assessment workshop is conducted. The process allows each department to identify their risks in line with the Corporate Plan. All departmental risks are consolidated in an organisational isk egister. isks identified are discussed, rated and updated in the isk egister in terms of priority, which constitutes the basis for the Internal Audit Plan for the period under review, as well as a three-year rolling plan. A isk Mitigation Plan was developed to ensure risks identified are mitigated continuously. isk mitigation progress reports are prepared quarterly for consideration by the Audit and isk Committee and the Board. 6. INTENAL CONTOL UNIT The Audit and isk Committee approved the Internal Audit Plan, which was guided by risks as they were identified. The internal audit function was outsourced and the service provider reported directly to the Audit and isk Committee, in line with Treasury egulation The work of the internal auditors, as performed in line with the approved Internal Audit Plan, was verified by the Audit and isk Committee every quarter. 7. INTENAL AUDITOS The internal audit function of the Board has been outsourced to Masengviljoen Incorporated t/a MVI Group. 8. COMPLIANCE WITH LAWS AND EGULATIONS The Board strives to comply with all the laws of the country by ensuring that the Act, regulations and rules of the Board are amended regularly to accommodate the requirements of new laws of the country or amendments of related legislation. In terms of the latest amendments to the Financial Intelligence Centre Act, the North West Gambling Board is assigned the role of Supervisory Institution, which adds numerous functions to regulating gambling activities. The Board signed a Memorandum of Understanding with the Financial Intelligence Centre to discharge these responsibilities and functions in collaboration with the Financial Intelligence Centre, and to assist in combating money laundering activities and the financing of terrorists and related activities in the Province. The Board concluded a Memorandum of Understanding (MoU) with the Competition Commission aimed at fostering relations when it comes to Investigation pertaining to competition matters. The Board places reliance on its internal audit function to constantly evaluate its compliance with all relevant laws and their applicability to its business of regulating gambling in the Province. In this regard, much attention is placed on compliance with those laws and identifying possible areas of deviation or non-compliance, to provide corrective measures or requisite systems of internal control. 9. FAUD AND COUPTION The Board has an approved fraud and corruption policy ready for implementation, as well as the fraud and corruption hotline that is available for use by both staff and the general public. eported cases are recorded and investigated accordingly. 77

80 10. MINIMISING CONFLICT OF INTEEST Section 10 of the North West Gambling Act, 2001 (Act No. 2 of 2001), as amended, provides for the disclosure of conflict of interest, which means that a member of the Board shall not vote or participate in proceedings when his or her family or business associate has a controlling or financial interest. In a situation where a conflict of interest arises, a member of the Board shall fully disclose the nature of his or her interest and leave the meeting. Such disclosure will be considered by other members of the Board so as to establish if it amounts to any conflict of interest or whether participation by such a member in the deliberations of any specific matter will compromise integrity, transparency and/ or fair administration of the business of the Board. However, the disclosure will still be recorded in the minutes of the proceedings. The Board operates with a Charter that also provides for declarations of interest, and stipulates that: Board Members shall at all times observe the legal requirements in respect of the declaration of interest and do everything reasonably possible to avoid a conflict of interest in the execution of their duties and responsibilities to the entity. This is monitored by the Conflict of Interest egister, which is circulated and signed by all Board Members with or without conflict of interest in items on the agenda of meeting of the Board. The agenda of all meetings of the Board includes an item on declaration of interest to ensure that all members of the Board are afforded the opportunity to the make necessary disclosures before any matter on the agenda is discussed. 11. CODE OF CONDUCT The Board developed a manual, aimed at facilitating excellent H management and compliance with statutory and legislative processes, good ethics and conduct. The Board also has a Code of Conduct Policy, which promotes good ethical behaviour and/ 78

81 or conduct and provides guidelines for constant monitoring. This policy is complemented by a clearly defined value system, which is part of the general performance management tools. To ensure compliance with all policies and guidelines for promotion of good ethical behaviour, Management has been empowered by the H Policy to take corrective action against employees who are in breach of their contracts of employment, either on account of misconduct or incapacity, non-performance and/or under-performance. The purpose of these procedures is to provide appropriate processes for dealing with all cases in a manner that is predictable, consistent and fair. 12. HEALTH, SAFETY AND ENVIONMENTAL ISSUES The Board established a Health and Safety Committee and received training in this regard. 13. COMPANY SECETAY The organisation appointed a Legal Manager whose role, inter alia, is to provide the services of a Company Secretary to the Board. The responsibilities of this position entail facilitation of training for Board Members, facilitation of Board and sub-committee meetings, as well as capturing and safeguarding/keeping records and minutes of the Board. Furthermore, the Legal Manager ensures the attendance of all members of the Board to the business of the organisation, while observing a egister of Interest and Compliance with General Guidelines on Good Corporate Governance. All other inherent responsibilities and duties of the Company Secretary, including the provision of legal advice and support to the Board, are performed by the Legal Manager who, administratively, reports to the CEO, but remains directly accountable to the Board. 79

82 15. community social investment 80

83 The licensees are required in terms of the license conditions, to contribute one percent (1%) of net profit, after tax, for Community Social projects. During the year under review, a total amount of was spent on CSI. NAME OF POJECT CSI PILLA/FOCUS AMOUNT SPENT PE POJECT NUMBE OF BENEFICIAIES SANTOSAT (Pty) Ltd trading as, GOLDUSH BINGO Kgolagano Centre Health and Welfare, Education ebaone Community Care, aboloka Orphans and abused Children TOTAL SANTOSCAN (Pty) Ltd trading as, GOLDUSH BINGO Khaya Tshepo Home Health and Welfare TOTAL GALAXY BINGO NOTH WEST (Pty) Ltd Bursaries Education TOTAL BON VIEW TADING 111 (Pty) Ltd trading as, NOTH WEST GOLDUSH GAMING Khaya Tshepo Home of Hope Health and Welfare Neolet Foundation Health and Welfare Lomanyaneng Community AIDS Project Health and Welfare Feel at Home Disability Centre Health and Welfare Kgolagano Care Centre for the aged Health and Welfare TOTAL VUKANI GAMING NOTH WEST (Pty) Ltd Ikateleng Project NWU Puk Nr2 Education Edutak Pre School Education Cape Educational Trust Education Clover Mama Africa Dinah Mogale Community oundabout Water Solutions Community TOTAL PHUMELELA GAMING AND LEISUE LIMITED SOS Children Village ustenburg Educational and Social Highveld Horse Care Unit Equine Welfare & Social TOTAL

84 NAME OF POJECT CSI PILLA/FOCUS AMOUNT SPENT PE POJECT NUMBE OF BENEFICIAIES SUN INTENATIONAL (SA) Ltd t/a Sun City esort Temogo Special School Education Mafikeng Hotel School Bursaries Education Mma Mokwena Health Lesetleng Clinic Health Sandfontein Clinic Health Sekhoto Family Community Sun City Community Bicycle Project Community Johan Van Wyk Community Gift of the Givers Community Sandfontein Clinic Health Care Holy Family School Education Invitation to the valley of the waves 17 September Education Mt December s House & Celebrating Madiba Day Community Isikhumbuzo Heritage Day Community Donation of furniture to surrounding communities Community Donation of School uniforms Education Frieda Molotsi J & M Biltong Kiosk Enterprise Development Holy family School Pool Education Moefi School- Mabalstaadt; Kgosi Mabelane Birthday Education Johan Van Wyk SA Disabled Golf Community TOTAL PEEMONT GLOBAL (Nw) (Pty) Ltd trading as, IO HOTEL CASINO CONVENTION ESOT Institute of Hotel Management - Bursaries Education University of North West in Potchefstroom - Bursaries Education MyLab Chemistry Kits Education Are-Fademeheng Secondary School Learning Camp for Grade 12 Education MSC College Bursary for HIV Facilitator to be intergrated back into io based Training Programmes Education University of NW in Mahikeng egistration Fees Education University of Free State egistration Fees for NW Learner Education Ikageng Self Help - New battery and labour for electric wheelchair. Payment for services rendered Community Upliftment Vegetable Tunnels Seed and Staff Salaries Enterprise Development Mzi s Car Wash New signage for the car wash. Vacuum Cleaners Enterprise Development io Go Karts- Spares and parts for the go kart track Enterprise Development Khuma Primary School Sponsorship for educational school trip to Cape Town Youth Development Mofatlhosi Secondary School Soccer Field Youth Development Klerksdorp Technical High School econstruction of buildings, Centre for Arts, Drama and Dance Youth Development TOTAL 2 259,

85 NAME OF POJECT CSI PILLA/FOCUS AMOUNT SPENT PE POJECT SUN INTENATIONAL (Sa) LIMITED trading as, THE CAOUSEL CASINO AND ENTETAINMENT WOLD NUMBE OF BENEFICIAIES One Sun Farming Project Community Development Black Men (100% Black Beneficiaries) Community Wonder Bags Community Development Charity Organisations (100% Black Beneficiaries) 271 pensioners Mandela Day Celebration Community Development Pensioners (100% Black Beneficiaries) Mandela Day Celebration: Blankets Community Development % Black Beneficiaries Mafikeng Hotel School Bursary Scheme Education Students (100% Black Beneficiaries) Feeding Scheme Health and Welfare Children (100% Black Beneficiaries) Nchaupe High School Tourism Project Class enovations Education Learners (100% Black Beneficiaries) Carousel View Water Project Health and Welfare esidents (100% Black Beneficiaries) PKSA Sports Academy Sports Beneficiaries Courier Service Costs for wonder bags Other % Black Beneficiaries TOTAL ADDITIONAL EXPENDITUE NW Earthequake relief programme Community Development 250, % Black Beneficiaries PEEMONT GLOBAL (Nw) (Pty) Ltd trading as, MMABATHO PALMS HOTEL CASINO CONVENTION ESOT Bogosi Home - Stationery, School uniform and Computer Education A e Aganeng Primary School - Computer Education Collect a school shoe campaign Education Mahikeng Hotel School Education Ngaka Modiri Molema Municipality- Chess Youth Development Super Shongwe Memorial & Charity Golf Day Youth Development Golf Development Youth Development AJ All Stars boys: Soccer ground at Mmabatho Palms for under 8, 10 to 12 Youth. Youth Development Christmas Charity drive in partnership with office of the Premier Youth Development Mandela Day Other Mahikeng Bikers Blanket Drive Other Linen donation to Home Based Care Centres and Old Age Homes Other egistration for BEE Certificate Humphrey Lekoane who operates a Mini Golf Other TOTAL

86 84

87 16. audit committee report We are pleased to present our report for the financial year ended 31 March Audit Committee esponsibilities The Audit and isk Committee complied with its responsibilities arising from Section 51(1)(a) of the Public Finance Management Act, 1999 (Act No. 1 of 1999) and Treasury egulations and The Audit and isk Committee furthermore reports that it adopted formal Terms of eference as its Audit and isk Committee Charter, regulated its affairs in compliance with this Charter and discharged all its responsibilities as contained therein. The Effectiveness Of Internal Controls Our review of the findings of the internal audit work, which was based on the risk assessment conducted revealed specific weaknesses, which were then raised with the Board. There was an improvement in the entity s system of internal controls and Management implemented internal audit recommendations. This is evidenced by the Unqualified Audit eport from the AGSA in previous periods, as well as the number of positive findings by the internal audit. There are, however, several deficiencies in the system of internal controls and/or deviations. These were reported by the internal auditors and the Auditor-General and are being addressed. The Audit Committee takes note of Management s commitment to correct the deficiencies, and both the action plans and the monitoring of progress were consistent during the period under review. Supply Chain Management eview Asset Management eview Performance Information Audit Improvement Plan eview Inventory Management Quarterly and Annual Financial Statements In-Year Management and Monthly/Quarterly eport The entity reported monthly and quarterly to the Treasury, as is required by the PFMA. Monitoring was done regularly, and performance information was reviewed periodically during the period under review. Evaluation Of Financial Statements The Audit Committee reviewed and discussed the Draft Annual Financial Statements (AFS) to be submitted for audit. The Audit Committee concurs with, and accepts the conclusions of the Auditor- General on the AFS and is of the opinion that the audited AFS should be accepted and read together with the report of the Auditor-General and this Annual eport. Auditor-General s eport We reviewed the Board implementation plan for audit issues, raised during the previous period under review and we are satisfied that the matters have been adequately resolved. During the period under review, Internal Audit completed the assurance and consulting audits in the following key risk areas: Archiving and Filing eview Compliance eview: Governance and Legislation Illegal Gambling eview (biannual) Information Technology eview TL Moromane Chairperson of the Audit and isk Committee 85

88 part D Human resource management 1. Introduction Human esource Oversight Statistics Statement of esponsibility for Performance Information 2. Executive Management 3. Senior Management 4. Auditor-General s eport: Predetermined Objectives 5. Overview of the Board s Performance 6. Strategic Outcome-Oriented Goals 7. Performance Information by Programme 8. Summary of Financial Information 9. Statistics 86

89 1. INTODUCTION Overview of H MATTES AT the public entity The Human esources Department of the Board is responsible for policies, recruitment, performance management, training, payroll administration, leave administration, employment equity, occupational health and safety and benefits administration such as provident fund and medical aid. The positions of the Board were also increased from forty five (45) to sixty five (65) during the year under review. These positions were increased in order to achieve all objectives of the Board. The strategic objective of the Human esources Department within the Board is to strengthen the institutional capacity of the Board. During the year under review five (5) employees resigned, and thirty seven (37) positions were filled, twenty four (24) of which were permanent positions and thirteen (13) temporary positions. During the recruitment process internal employees were also considered and some appointed to higher positions. Set H priorities for the year under review and the IMPACT of these priorities The major priority for the Human esources Department is to ensure that the institutional capacity is strong enough to achieve all objectives of the Board. Positions were filled as planned, performance bonus were implemented as per the policy of the Board, remuneration of staff was reviewed as per the policy, and remuneration was paid on time each month. An employment equity report was submitted as prescribed by the legislation, and all administration was carried out as expected. and half percent (7.5%) employer contribution to provident fund and fifty percent (50%) employer contribution towards medical aid. The Board also offers performance bonuses depending on the availability of funds, this process is also dependent on the approval of the Board. The Long Service awards were also implemented as per the policy. The remuneration is reviewed in April each year. Employee performance management framework The Board has the performance management policy and employees are assessed twice in a year. The performance for 2014/15 financial year was assessed and implemented as per the policy. The total amount paid for performance bonuses was Employee wellness programmes Independent Counselling and Advisory Services (ICAS) is administering the employee wellness programme. Two reports were submitted during the year under review. Policy development Highlights The Board reviews its policies once annually. A Pool Vehicle Policy was introduced and Cell Phone Policy was reviewed during the year under review. Challenges faced by the public entity No challenges were faced, except that positions were filled later than expected, due to morotorium that was in place. Workforce planning framework and key STATEGIES TO attract and recruit a skilled and CAPABLE workforce The Board offers a Total Cost to Company remuneration package which is inclusive of seven Future H plans /goals The Board is increasing its personnel from sixty five (65) to eighty two (82) in the next financial year. The following are the plans for Human esources Department. 87

90 ecruitment of staff eview of remunerations eview of Board policies Assessment of staff performance Training and development Employment Equity reporting Administration of payroll, leave and staff benefits. Management of the employee wellness programme. 2. HUMAN ESOUCE OVESIGHT STATISTICS The budgets for the Chief Operations Office and non-permanent employees are combined with the Chief Executive Officer s budget. The total budget for personnel cost is ,645.00, as contained in the Annual Financial Statements. The above-mentioned amount of is the employee cost comprising basic salary, provident fund, medical aid, long service awards, performance bonus, unemployment insurance fund and acting allowance. Personnel Cost by programme Programme Total Expenditure for the entity ( 000) Personnel Expenditure ( 000) Personnel exp. as a % of total exp. ( 000) No. of employees Average personnel cost per employee ( 000) Chief Executive Officer % Chief Operations Office % Finance % Legal Services % Audit and Systems % Gambling Control % Investigations and Licensing % TOTAL PEMANENT Non-Permanent % TOTAL Personnel cost by SALAY band Level Personnel Expenditure ( 000) % of personnel exp. to total personnel cost ( 000) No. of employees Average personnel cost per employee ( 000) Top Management % Senior Management % Professional qualified % Skilled % Semi-skilled % Unskilled % TOTAL PEMANENT % Non-Permanent % TOTAL %

91 Performance ewards Programme Performance rewards Personnel Expenditure ( 000) % of performance rewards to total personnel cost ( 000) Top Management % Senior Management % Professional qualified % Skilled % Semi-skilled % Unskilled % TOTAL % Training Costs Directorate/ Business Unit Personnel Expenditure ( 000) Training Expenditure ( 000) Training Expenditure as a % of Personnel Cost. No. of employees trained Avg training cost per employee Chief Executive % Chief Operations Office % Finance % Legal Services % Audit and Systems % Gambling Control % Investigations and Licensing % TOTAL PEMANENT % Non-Permanent % TOTAL % ( 000) Employment and VACANCIES Programme 2013/2014 No. of Employees 2014/2015 Approved Posts 2014/2015 No. of Employees 2014/2015 Vacancies % of vacancies Chief Executive Office % Chief Operations Office % Finance % Legal Services % Audit and Systems % Gambling Control % Investigations and Licensing % TOTAL PEMANENT % Non-Permanent TOTAL % 89

92 Employment and VACANCIES (continued) Programme 2013/2014 No. of Employees 2014/2015 Approved Posts 2014/2015 No. of Employees 2014/2015 Vacancies % of vacancies Top Management % Senior Management % Professional qualified % Skilled % Semi-skilled % Unskilled % TOTAL PEMANENT % Non-Permanent GAND TOTAL % The positions that were vacant could not be filled as planned due to moratorium that was issued by the MES s Office, however, as soon as the approval was granted, the recruitment process was finalised. The suitable candidate for position such as Chief Financial Officer resumes the duties next financial year on 01 April Some on the positions such as Systems Auditor were also filled accordingly and suitable candidates were expected to resume duties on 01 April These positions remained vacant for a period less than 12 months. Internal candidates were considered for appointment in higher positions, these positions were: Senior Auditor and Senior Licensing Officer, the position of a Bookkeeper was also filled internally. The Board is offering a total Cost to Company which is inclusive of employer contribution of 7.5 % on Provident fund and fifty 50% contribution to medical aid. The Board also offer the performance bonus to staff members that have been six (6) months in the employ of the Board. The Long Service awards is also a tool that the Board uses to retain staff. During the year under review five (5) employees resigned from the Board, these positions were advertised accordingly, three (3) positions were filled and the recruitment process for two (2) positions as at the end March 2015 was still underway. Employment changes Salary Band Employment at beginning of period Appointments Terminations Employment at end of the period Top Management Senior Management Professional qualified Skilled Semi-skilled Unskilled Total permanent Non-Permanent Grand Total

93 easons for STAFF LEAVING eason Number % of total no. of staff leaving Death 0 0 % esignation 5 7.1% Dismissal 0 0 % etirement 0 0 % Ill health 0 0 % Expiry of contract 0 0 % Other 0 0 % Total 5 7.1% LABOU ELATIONS: MISCONDUCT AND DICIPLINAY ACTION NATUE OF DISIPLINAY ACTION Number Verbal Warning 0 Written Warning 0 Final Written Warning 0 Equity Target and Employment Equity Status MALE Levels African Coloured Indian White Current Target Current Target Current Target Current Target Top Management Senior Management Professional qualified Skilled Semi-skilled Unskilled TOTAL FEMALE Levels African Coloured Indian White Current Target Current Target Current Target Current Target Top Management Senior Management Professional qualified Skilled Semi-skilled Unskilled TOTAL DISABLED STAFF Levels MALE FEMALE Current Target Current Target Top Management Senior Management Professional qualified Skilled Semi-skilled Unskilled TOTAL

94 part E financial information 1. Statement of esponsibility for the Annual Financial Statements eport of the Chief Executive Officer Statement of esponsibility for Performance Information 3. eport of the Auditor-General Executive Management 4. Statement of Financial Position Senior Management 5. Statement of Financial Performance Auditor-General s eport: Predetermined Objectives 6. Statement of Changes in Net Assets Overview of the Board s Performance 7. Cashflow Statements Strategic Outcome-Oriented Goals 8. Statement of Comparison of Budget and Actual Amounts Performance Information by Programme 9. Accounting Policies Summary of Financial Information 10. Notes to the Annual Financial Statements Statistics 92

95 1. statement of ESPONSIBILITY FO THE Annual Financial Statements The Accounting Authority is responsible for the preparation of the public entity s Annual Financial Statements and for the judgements made in this information. The Accounting Authority is responsible for establishing, and implementing a system of internal control designed to provide reasonable assurance as to the integrity and reliability of the Annual Financial Statements. In my opinion, the financial statements fairly reflect the operations of the public entity for the financial year ended 31 March The external auditors are engaged to express an independent opinion on the Annual Financial Statements of the public entity. The NWGB Annual Financial Statements for the year ended 31 March 2015 have been audited by the external auditors and their report is presented on page 98. The Annual Financial Statements of the public entity set out on page 102 to page 135 have been approved. Fortune Sekgaphane Chief Executive Officer North West Gambling Board Date: 12 August 2015 TC Kgomo Chairperson of the Board North West Gambling Board Date: 12 August

96 2. report of the chief executive officer This report presents a summary of the activities of the North West Gambling Board during the period under review and supports the non-financial information outlined in previous pages. It also seeks to provide translation of the financial information presented in the audited Annual Financial Statements and clarifies expenditure and revenue against the activities undertaken by the Board. In addition, this report 94

97 contains the analysis of the financial position of the North West Gambling Board which also provides a full account of major challenges experienced during the year under review. Some of these challenges impacted negatively on the strategic objectives set out for the 2014/15 Financial Year. The organisation maintains a solid outlook and remains a going concern while at the same time it faces financial challenges which in the view of the Board can be addressed by changing the funding model. Basic principles of business management dictate that the North West Gambling Board must be adequately funded for it to achieve maximum output, more especially because it not allowed to source its funding by any means. The maximum output of the organisation is determined by a list of activities which are undertaken to effectively regulate the gambling industry in the Province. The model of regulation of this industry is well articulated in the National Gambling Act, which must be read together with the North West Gambling Act and all other related laws of the country. It is common-cause that non-compliance by the Board with any of the laws mentioned about is undesirable. In addition, it is obvious that the existence of the North West Gambling rests on its purpose and as a result, if the organisation cannot serve its purpose the need for its existence vanishes. As result of its form and base of establishment, the North West Gambling Board is not allowed to generate revenue from other sources to sustain its operations, unless it is adequately funded or an alternative funding model in introduced. egardless of these challenges, the organisation continues to deliver positive results, however, the pressure placed on the Management Team and Staff is unsustainable. The gambling market in the Province is matured and well-grounded and it is growing year on year. Therefore effective and world class regulatory systems and mechanisms should be introduced to create a perfect synchrony. At the time of this report, the situation denied this match and while the industry is steadily transforming in technology. It should at all times be remembered that the industry brings a whole lot of benefits and opportunities for our people in the Province and without proper regulatory interventions, the good that is currently appreciated may be lost to disorder, unscrupulous behaviour, excessive gambling and a host of societal and economic problems which will not be good for the well-being of the Province. The thinking around strict regulation of gambling operations comes from the Weinhan Commission which influenced the promulgation of the 1996 National Gambling Act and it was informed by a study conducted in many jurisdictions of the world. It therefore remains prudent to always bear in mind that inadequate funding for regulatory interventions in this regard may easily take away the value of the thoughts, which informed the promulgation of the National Gambling Act or National Policy. We are proud about the excellent financial management discipline in the organisation and the level of consciousness around the principle of value for money, which accounts for the good performance of the organisation even under these pressing circumstances. The record of the external audit reports for the previous five years clearly depicts this situation and future good performance results cannot be denied, if the necessary financial interventions can be put in place. The organisation has been receiving good and excellent audit reports from the Auditor-General against a very tight budget to deliver on its strategic objectives and to maintain a high level of financial accountability. The current budget situation of the organisation is a recipe for serious risks and possible failure by the Board to deliver on its legislative mandate. As mentioned above, the organisation is not adequately capacitated in a number of areas, funding being a key resource which contributes immensely to this state of affairs. We are convinced that the organisation will not be able to deliver fully on its legislative mandate if it remains under-funded or its funding model is not reviewed. Inadequacy of financial resources affects the capacity of the organisation to recruit relevant skills and to fill vacancies of critical positions. 95

98 Generally, the gambling industry demands the highest possible level of skills some of which are not readily available locally and the solution could only be training and development of current staff and provision of relevant and accurate tools of trade. As sophisticated as this industry is, relevant training programmes and institutions are not easily accessible and clearly the necessary tools are not readily available in the country. This state of affairs has disadvantaged a number of gambling regulators in the African continent and our organisation is not an exception. In order for our organisation to perform at its maximum and work fast towards achieving all its medium-term strategic objectives, these areas need special attention. If this situation persists, the organisation s compensation budget will deplete the operating budget to an extent that the organisation will be rendered ineffective and fail to satisfy its legislative mandate. However, the organisation generates revenue for the provincial revenue fund in millions of rand on monthly basis which could be utilised, wherever possible to supplement operational requirements of the organisation. This is a point of motivation raised in support of the self-funding model in order to address all challenges and enhance capacity within the organisation for delivery of the best results. On the other hand, we should be mindful of the fact that the gambling industry is highly technologically advanced and changes in this environment are frequent. If we have to be up our game as regulators of this industry, we should at least be in the position to resource our processes with all necessary tools, otherwise we would literally fail to report the desired results. In addition, we are constantly fighting the scourge of illegal gambling in the Province and we are unfortunately not adequately empowered by legislation to close this operation on our own, and thus constantly request the assistance and support of the local law enforcement agencies. This arrangement has not yet yielded the expected results due to the complexities of the investigations which must be conducted and legal battles we engage in with illegal gambling operators. This matter remains one of the major challenges in our industry which requires urgent and quite forceful interventions. The organisation is persistent to deliver on all its strategic objectives as translated from the enabling legislation and could not discontinue or plan to discontinue any of its activities. However, the following activities are seriously stressed and are delaying delivery of the desired results: The fifth casino licence which was relocated to the Gauteng Province in 2006, without acknowledgement of the rights of the North West Province to the said licence. This matter has been on the strategic plan of the organisation for a number of years. Closure of illegal gambling operations in the Province which has been going on for many years and could not be stopped. We are not fully in control of the situation in this regard simply because we are dependent on other law enforcement agencies to offer the necessary assistance and support. Promotion of responsible gambling Provision of suitable office-space to address health and safety and general security concerns. At this stage, the organisation is in the process of rolling out Limited Payout Machines and Betting outlets to allow growth of this industry and create more job opportunities, promote economic transformation and grow the revenue base for the Province. Applications for Bookmaker and Totalisator licences were received and evaluated during the Financial Year under review and betting out-lets will be rolledout during the 2015/16 Financial Year. In addition, the organisation plans to call for expression of interest for the fifth casino licence in the third quarter of the 2015/16 and to finalise the evaluation process in the next Financial Year. 96

99 It should be appreciated that the organisation acquired an unqualified audit opinion from the Auditor-General 2014/15 Financial Year which continues as a trend which has an opportunity for improvement. This accounts for the high level of financial and organisational management of the institution which qualifies the environment within which we would like to drive economic growth and development in the Province. We will continue with our commitment to clean management of the affairs of the Board and believe to perform much better with adequate resources. If properly regulated, the gambling industry can accelerate its current contribution to job creation, investment, tourism, economic growth, including levies and taxes collected for the provincial and national fiscus. The Board is convinced that funding of the organisation is a major frustration to its business and is currently pursuing a proposal for change of its funding model in order to promote a pure performance-based funding structure and increase of the own revenue base for the Province. It is the view of the Board that through the proposed self-funding model, the Board will be in the position to effectively regulate the gambling industry. While this is projected to be achieved in a period of five (5) years from April 2016, the Board is confident that within a period of three (3) years of approval of this funding model, its funding requirements would have stabilised and the revenue base will from there onwards constantly grow year on year. We appreciate the assistance and undivided support of our Member of the Executive Council responsible for Economy and Enterprise Development, our Provincial Treasury, our Committee of the Legislature, Management and Staff of the North West Gambling Board. The North West Gambling Board will continue to strive for excellence and relevance to its legislative mandate. We believe that without the support of the public and the industry players, our mission to effectively regulate the gambling industry in North West Province, will be cumbersome. Fortune Sekgaphane Chief Executive Officer 97

100 eport of the Auditor-General to the North West Provincial Legislature on North West Gambling Board eport on the financial statements Introduction 1. I have audited the financial statements of the North West Gambling Board set out on pages 102 to 135, which comprise the statement of financial position as at 31 March 2015, the statement of financial performance, statement of changes in net assets, cash flow statement and the statement of comparison of budget and actual amounts for the year then ended, as well as the notes, comprising a summary of significant accounting policies and other explanatory information. Accounting authority s responsibility for the financial statements 2. The accounting authority is responsible for the preparation and fair presentation of these financial statements in accordance with the South African Standards of Generally ecognised Accounting Practice (SA standards of GAP) and the requirements of the Public Finance Management Act of South Africa, 1999 (Act No. 1 of 1999) (PFMA), and for such internal control as the accounting authority determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor-general s responsibility 3. My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with International Standards on Auditing. Those standards require that I comply with ethical requirements, and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. 4. 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 policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. 5. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion. 1

101 Opinion 6. In my opinion, the financial statements present fairly, in all material respects, the financial position of the North West Gambling Board as at 31 March 2015 and its financial performance and cash flows for the year then ended, in accordance with the SA standards of GAP and the requirements of the PFMA. Emphasis of matter 7. I draw attention to the matter below. My opinion is not modified in respect of this matter. estatement of corresponding figures 8. As disclosed in note 35 to the financial statements, the corresponding figures for 2014 have been restated as a result of an error discovered during 2015 in the financial statements of the entity at, and for the year ended, eport on other legal and regulatory requirements 9. In accordance with the Public Audit Act of South Africa, 2004 (Act No. 25 of 2004) (PAA) and the general notice issued in terms thereof, I have a responsibility to report findings on the reported performance information against predetermined objectives for selected programmes presented in the annual performance report, non-compliance with legislation and internal control. The objective of my tests was to identify reportable findings as described under each subheading but not to gather evidence to express assurance on these matters. Accordingly, I do not express an opinion or conclusion on these matters. Predetermined objectives 10. I performed procedures to obtain evidence about the usefulness and reliability of the reported performance information for the following selected programmes presented in the annual performance report of the entity for the year ended 31 March 2015: Programme 1: Investigations and licensing on pages 32 to 34 Programme 2: Gambling control on pages 35 to 36 Programme 3: Gambling audit and systems department on pages 37 to 39 Programme 5: Finance and IT support department on pages 42 to I evaluated the reported performance information against the overall criteria of usefulness and reliability. 12. I evaluated the usefulness of the reported performance information to determine whether it was presented in accordance with the National Treasury s annual reporting principles and whether the reported performance was consistent with the planned programmes. I further performed tests to determine whether indicators and targets were well defined, verifiable, specific, measurable, time bound and relevant, as required by the National Treasury s Framework for managing programme performance information (FMPPI). 13. I did not identify any material findings on the usefulness and reliability of the reported performance information on any of the selected programmes of the entity. Additional matters 14. Although I identified no material findings on the usefulness and reliability of the reported performance information for the selected programmes, I draw attention to the following 2

102 matters: Achievement of planned targets 15. efer to the annual performance report on pages 32 to 50 for information on the achievement of the planned targets for the year. Adjustment of material misstatements 16. I identified material misstatements in the annual performance report submitted for auditing on the reported performance information for Programme 1: Investigations and licensing. As management subsequently corrected the misstatements, I did not identify any material findings on the usefulness and reliability of the reported performance information. Unaudited supplementary schedules 17. The supplementary information set out on pages 53 to 91 does not form part of the annual performance report and is presented as additional information. I have not audited these schedules and, accordingly, I do not report thereon. Compliance with legislation 18. I performed procedures to obtain evidence that the entity had complied with applicable legislation regarding financial matters, financial management and other related matters. My findings on material non-compliance with specific matters in key legislation, as set out in the general notice issued in terms of the PAA, are as follows: Financial statements, performance and annual reports 19. The financial statements submitted for auditing were not prepared in accordance with the prescribed financial reporting framework and supported by full and proper records as required by section 55(1)(a) and (b) of the PFMA. Material misstatements in aggregate, identified by the auditors in the submitted financial statements were subsequently corrected, resulting in the financial statements receiving an unqualified audit opinion. Internal control 20. I considered internal control relevant to my audit of the financial statements, the annual performance report and compliance with legislation. The matters reported below are limited to the significant internal control deficiencies that resulted in the findings on non-compliance with legislation included in this report. Leadership 21. Management s internal controls and processes over the preparation and presentation of financial statements were not able to produce financial and performance reports that were free from material misstatements. As a result, material corrections had to be made to the financial statements and the performance report. Financial and performance management 22. Financial and performance management have established formal controls and over IT systems to ensure the reliability of the systems and the availability, accuracy and protection of information, but these controls were not operating effectively throughout the year. 3

103 Governance 23. In order to maintain the good governance structures that have been established by the Board, the Board will need to consider the rate of change and the expansion in business processes experienced and envisaged for the entity. ustenburg 31 July

104 4. statement of financial position as at 31 march 2015 NOTE(S) Assets Current Assets Cash and cash equivalents 3 13,222,725 13,057,827 eceivables from exchange transactions 4 980, ,390 eceivables from non-exchange transactions 5 7,734,611 6,964,357 Prepayments 6 331, ,456 Inventories 7 150,179 94,150 22,419,188 20,518,180 Non-Current Assets Property, plant and equipment 8 6,299,539 3,704,981 Non-Current Assets 6,299,539 3,704,981 Current Assets 22,419,188 20,518,180 Non-current assets held for sale (and) (assets of disposal groups) - - Total Assets 28,718,727 24,223,161 Liabilities Current Liabilities Payables from exchange transactions 10 1,943, ,143 Taxes and transfers payable (non-exchange) 11 11,213,114 9,718,456 Accruals 12 1,305,969 1,017,971 14,463,075 11,607,570 Non-Current Liabilities Operating lease liability 9 588, ,665 Non-Current Liabilities 588, ,665 Current Liabilities 14,463,075 11,607,570 Liabilities of disposal groups - - Total Liabilities 15,051,582 12,084,235 Assets 28,718,727 24,223,161 Liabilities (15,051,582) (12,084,235) Net Assets 13,667,145 12,138,926 Accumulated surplus 13,667,145 12,138,

105 5. statement of financial performance for the year ended 31 march 2015 NOTE(S) evenue evenue from exchange transactions Other revenue 13 1,384, ,451 Interest received 107,962 17,937 Total revenue from exchange transactions 1,492, ,388 evenue from non-exchange transactions Government grant Department of Finance, Economy and Enterprise Development 48,137,000 39,559,000 1,492, ,388 48,137,000 39,559,000 Total revenue 14 49,629,271 40,298,388 Expenditure Personnel 16 (20,887,283) (17,512,815) Depreciation and amortisation (593,014) (334,704) Administrative expenses 17 (26,561,987) (18,309,652) Total expenditure (48,042,284) (36,157,171) Loss on disposal of assets (58,769) (15,837) Surplus for the year 1,528,218 4,125,380 Taxation - - Surplus for the 12 months 1,528,218 4,125,

106 6. statement of changes in net assets for the year ended 31 march 2015 Accumulated surplus Total net assets Opening balance as previously reported 7,966,211 7,966,211 Adjustments Prior period errors 47,335 47,335 Balance at 01 April 2013 as restated* 8,013,546 8,013,546 Changes in net assets Surplus for the year 4,125,380 4,125,380 Total changes 4,125,380 4,125,380 Balance at 01 April ,138,927 12,138,927 Changes in net assets Surplus for the 12 months 1,528,218 1,528,218 Total changes 1,528,218 1,528,218 Balance at 31 March ,667,145 13,667,145 Note(s)

107 7. cashflow statement for the year ended 31 march 2015 NOTE(S) Cash flows from operating activities eceipts Grants 48,137,000 39,559,000 Interest income 107,962 17,937 Other receipts 1,384,309 1,650,451 49,629,271 41,227,388 Payments Employee costs (20,599,283) (17,401,177) Suppliers (25,618,995) (18,585,599) (46,218,278) (35,986,776) Total receipts 49,629,271 41,227,388 Total payments (46,218,278) (35,986,776) Net cash flows from operating activities 20 3,410,993 5,240,612 Cash flows from investing activities Purchase of property, plant and equipment 8 (3,246,096) (1,275,571) Net increase in cash and cash equivalents 164,898 3,965,041 Cash and cash equivalents at the beginning of the year 13,057,827 9,092,786 Cash and cash equivalents at the end of the year 3 13,222,725 13,057,

108 8. statement of comparison of budget and actual amounts for the year ended 31 march 2015 Approved budget Adjustments Final Budget Actual amounts on comparable basis Difference between final budget and actual NOTE(S) Statement of Financial Performance evenue Other non-tax revenue (1,492,271) (1,492,271) 13 Transfers received (48,137,000) - (48,137,000) (48,137,000) - (48,137,000) - (48,137,000) (49,629,271) (1,492,271) evenue evenue Other non-tax revenue ,492,271 1,492, Government Grant 48,137,000-48,137,000 48,137,000 - Authorised savings - 4,204,845 4,204,845 4,204,845 - Total revenue 48,137,000 4,204,845 52,341,845 53,834,116 1,492,271 Expenses Compensation of employees (25,798,280) - (25,798,280) (20,887,284) 4,910, Use of goods and services (22,338,720) - (22,338,720) (26,561,986) (4,223,266) 34 Depreciation and amortisation (593,014) (593,014) 8 Total expenditure (48,137,000) - (48,137,000) (48,042,284) 94,716 evenue 48,137,000 4,204,845 52,341,845 53,834,116 1,492,271 Expenditure (48,137,000) - (48,137,000) (48,042,284) 94,716 Loss on disposal (58,769) (58,769) Surplus for the year - 4,204,845 4,204,845 5,733,063 1,528,

109 9. accounting policies 1. Presentation of Annual Financial Statements The annual financial statements have been prepared in accordance with the Standards of Generally ecognised Accounting Practice (GAP),including any interpretations, guideline and directives issued by the Accounting Standard Board. These annual financial statements have been prepared on an accrual basis of accounting. A summary of the significant accounting policies, which have been consistently applied, is disclosed below and are consistent with the previous period, unless explicicly stated. The details of any changes in accounting policies are explained in the relevant policies. Assets, liabilities, revenue and expenditure has not been offset except when offsetting is required by the Standard of GAP. These accounting policies are consistent with the previous period, except for the changes set out in note Changes in accounting policy. 1.1 Presentation currency These annual financial statements are presented in South African and, which is the functional currency of the Board. 1.2 Significant judgements and sources of ESTIMATION UNCETAINTY In preparing the annual financial statements, management is required to make estimates and assumptions that affect the amounts represented in the annual financial statements and related disclosures. Use of available information and the application of judgement is inherent in the formation of estimates. Actual results in the future could differ from these estimates which may be material to the annual financial statements. Significant judgements include: eceivables from exchange and non-exchange trasactions Trade and other receivables are stated at the nominal value as reduced by appropriate allowances for estimated irrecoverable amounts. The carrying amount of these receivables approximate fair value due to the short period to maturity of these instruments. Trade and other receivables from exchange transactions are disclosed separately from trade and other receivables from non-exchange transactions. Trade and other receivables in exchange for which the entity gives approximately equal value to another entity are recognised as trade and other receivables from exchange transactions. Trade and receivables received without directly giving approximately equal value in exchange are recognised as trade and other receivables from non- exchange transactions. The entity assesses its receivables from exchange and non-exchange trasactions for impairment at the end of each reporting period. In determining whether an impairment loss should be recorded in surplus or deficit 107

110 in a statement of financial performance, the entity makes judgements as to whether there is observable data indicating a measurable decrease in the estimated future cash flows from a financial asset. Allowance for slow moving, damaged and obsolete stock The Board considers an allowance for slow moving, damaged and obsolete inventory to write inventory down to the lower of cost or net realisable value at each reporting period. The items of inventory or stock kept by the Board only refers to stationery consumables used in the normal day to day operations in the delivery of service. Management have made estimates of the selling price and direct cost to sell on certain inventory items. The write down is included as a deficit in the statement of financial performance. Useful lives and residual values The entity s management determines the estimated useful lives, residual values and related depreciation charges for assets as noted in the accounting policy 1.3 Property, Plant and Equipment. These estimates are based on industry norms. The effect of review of useful life and residual values are accounted for in accordance with GAP 3. Where changes are made to the estimated residual values, management also makes these changes prospectively. Allowance for doubtful debts On receivables an impairment loss is recognised in surplus and deficit when there is objective evidence that it is impaired. The impairment is measured as the difference between the receivables carrying amount and the present value of estimated future cash flows discounted at the effective interest rate, computed at initial recognition. 1.2 Significant judgements and sources of ESTIMATION UNCETAINTY (continued) Leave accrual The entity determines the amount of leave accrual on the basis of the number of days owed to employees as annual leave at any reporting date multiplied by the rate of pay per hour calculated excluding any discretionary payments made during the operating year. Leave accrual is disclosed as a payable in the statement of financial position. Accounts Payables The entity has both exchange and non-exchange transactions. The basis of recognition is either date of service or delivery in the case of goods and services. Payables from exchange and non-exchange transaction are carried at fair value and disclosed in the statement of financial position. The fair value of payables from exchage and non-exchage transactions approximates their carrying value. The carrying amount of these payables approximate fair value due to the short period to maturity of these instruments. Trade and other payables from exchange transactions are disclosed separately from trade and other payables from non-exchange transactions in the statement of financial position. 108

111 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) 1.3 Property, plant and equipment Initial recognition and measurement The cost of an item of property, plant and equipment is recognised as an asset when: it is probable that future economic benefits or service potential associated with the item will flow to the entity; and the cost or fair value of the item can be measured reliably. Property, plant and equipment is initially measured at cost. The cost of an item of property, plant and equipment is the purchase price and other costs attributable to bring the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Trade discounts and rebates are deducted in arriving at the cost. Where an asset is acquired through a non-exchange transaction, its cost is its fair value as at date of acquisition. Where an item of property, plant and equipment is acquired in exchange for a non-monetary asset or assets, or a combination of assets and non-monetary assets, the asset acquired is initially measured at fair value (the cost). If the acquired item s fair value was not determinable, it s deemed cost is the carrying amount of the asset(s) given up. The initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located is also included in the cost of property, plant and equipment, where the entity is obligated to incur such expenditure, and where the obligation arises as a result of acquiring the asset or using it for purposes other than the production of inventories. ecognition of costs in the carrying amount of an item of property, plant and equipment ceases when the item is in the location and condition necessary for it to be capable of operating in the manner intended by management. When significant components of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major componentes) of property, plant and equipment. Property, plant and equipment are stated at cost, less accumulated depreciation and accumulated impairment in value. Depreciation is calculated on the stright line basis over the useful lives of the assets. The carrying amount of property, plant and equipment are reviewed for impairement when events or changes in circumstances indicate the carrying amount may not be recoverable. An item of property, plant and equipment is de-recognised upon disposal or when no future benefits are expected from its use or disposal. Any gain or loss arising on derecognising of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the profit or loss section of the Statement of Financial Perfomance in the year the asset is derecognised. The asset s residual value, useful live and depreciation method are reviewed and adjusted if appropriate at each financial year- end. 109

112 The useful lives of items of property, plant and equipment are estimated as follows: Item Office furniture Motor vehicles Office equipment Computer equipment Leasehold improvements Average useful life years 8-12 years 7-12 years 5-10 years the shorter of the lease period, plus renewal or useful life The residual value, the useful life and depreciation method of each asset are reviewed at least at of each reporting date. If the expectations differ from previous estimates, the change will be treated in accordance with GAP 3. Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately. The depreciation charge for each period is recognised in surplus or deficit unless it is included in the carrying amount of another asset. 1.4 Financial instruments Classification The board has the following types of financial assets (classes and category) as reflected on the face of the effect on prior years or in the notes thereto: Class Cash and cash equivalents eceivables from exchange transactions Other receivables from non-exchange transactions Category Financial asset measured at amortised cost Financial asset measured at amortised cost Financial asset measured at amortised cost The board has the following types of financial liabilities (classes and category) as reflected on the face of the effect on prior years or in the notes thereto: Class Payables from exchange transactions Payables from non-exchange transactions Category Financial liability measured at amortised cost Financial liability measured at amortised cost Initial recognition The entity recognises a financial asset or a financial liability in its effect on prior years when the entity becomes a party to the contractual provisions of the instrument. Initial measurement of financial assets and financial liabilities The entity measures a financial asset and financial liability initially at its fair value plus, in the case of a financial asset or a financial liability not subsequently measured at fair value, transaction costs that are directly attributable to the acquisition or issue of the financial asset or financial liability. 110

113 Subsequent measurement of financial assets and financial liabilities The entity measures all financial assets and financial liabilities after initial recognition using the following categories: Financial instruments at fair value. Financial instruments at amortised cost. Financial instruments at cost. Gains and losses A gain or loss arising from a change in the fair value of a financial asset or financial liability measured at fair value is recognised in surplus or deficit. For financial assets and financial liabilities measured at amortised cost or cost, a gain or loss is recognised in surplus or deficit when the financial asset or financial liability is derecognised or impaired, or through the amortisation process. Impairment and uncollectibility of financial assets The entity assess at the end of each reporting period whether there is any objective evidence that a financial asset or group of financial assets is impaired. Financial assets measured at amortised cost If there is objective evidence that an impairment loss on financial assets measured at amortised cost has been incurred, the amount of the loss is measured as the difference between the asset s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset s original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account. The amount of the loss is recognised in surplus or deficit. Financial assets measured at cost If there is objective evidence that an impairment loss has been incurred on an investment in a residual interest that is not measured at fair value because its fair value cannot be measured reliably, the amount of the impairment loss is measured as the difference between the carrying amount of the financial asset and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment losses are not reversed. 111

114 Derecognition Financial assets The entity derecognises financial assets using trade date accounting. The entity derecognises a financial asset only when: the contractual rights to the cash flows from the financial asset expire, are settled or waived; the entity transfers to another party substantially all of the risks and rewards of ownership of the financial asset; or the entity, despite having retained some significant risks and rewards of ownership of the financial asset, has transferred control of the asset to another party and the other party has the practical ability to sell the asset in its entirety to an unrelated third party, and is able to exercise that ability unilaterally and without needing to impose additional restrictions on the transfer. In this case, the entity: - derecognise the asset; and - recognise separately any rights and obligations created or retained in the transfer. The carrying amounts of the transferred asset are allocated between the rights or obligations retained and those transferred on the basis of their relative fair values at the transfer date. Newly created rights and obligations are measured at their fair values at that date. Any difference between the consideration received and the amounts recognised and derecognised is recognised in surplus or deficit in the period of the transfer. If the entity transfers a financial asset in a transfer that qualifies for derecognition in its entirety and retains the right to service the financial asset for a fee, it recognise either a servicing asset or a servicing liability for that servicing contract. If the fee to be received is not expected to compensate the entity adequately for performing the servicing, a servicing liability for the servicing obligation is recognised at its fair value. If the fee to be received is expected to be more than adequate compensation for the servicing, a servicing asset is recognised for the servicing right at an amount determined on the basis of an allocation of the carrying amount of the larger financial asset. If, as a result of a transfer, a financial asset is derecognised in its entirety but the transfer results in the entity obtaining a new financial asset or assuming a new financial liability, or a servicing liability, the entity recognise the new financial asset, financial liability or servicing liability at fair value. On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received is recognised in surplus or deficit. If the transferred asset is part of a larger financial asset and the part transferred qualifies for derecognition in its entirety, the previous carrying amount of the larger financial asset is allocated between the part that continues to be recognised and the part that is derecognised, based on the relative fair values of those parts, on the date of the transfer. For this purpose, a retained servicing asset is treated as a part that continues to be recognised. The difference between the carrying amount allocated to the part derecognised and the sum of the consideration received for the part derecognised is recognised in surplus or deficit. If a transfer does not result in derecognition because the entity has retained substantially all the risks and rewards of ownership of the transferred asset, the entity continue to recognise the transferred asset in its entirety and recognise a financial liability for the consideration received. In subsequent periods, the entity recognises any revenue on the transferred asset and any expense incurred on the financial liability. Neither the asset, and the associated liability nor the revenue, and the associated expenses are offset. 112

115 Financial liabilities The entity removes a financial liability (or a part of a financial liability) from its effect on prior years when it is extinguished i.e. when the obligation specified in the contract is discharged, cancelled, expires or waived. An exchange between an existing borrower and lender of debt instruments with substantially different terms is accounted for as having extinguished the original financial liability and a new financial liability is recognised. Similarly, a substantial modification of the terms of an existing financial liability or a part of it is accounted for as having extinguished the original financial liability and having recognised a new financial liability. The difference between the carrying amount of a financial liability (or part of a financial liability) extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in surplus or deficit. Any liabilities that are waived, forgiven or assumed by another entity by way of a non-exchange transaction are accounted for in accordance with the Standard of GAP on evenue from Non-exchange Transactions (Taxes and Transfers). Presentation Interest relating to a financial instrument or a component that is a financial liability is recognised as revenue or expense in surplus or deficit. Losses and gains relating to a financial instrument or a component that is a financial liability is recognised as revenue or expense in surplus or deficit. A financial asset and a financial liability are only offset and the net amount presented in the effect on prior years when the entity currently has a legally enforceable right to set off the recognised amounts and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously. In accounting for a transfer of a financial asset that does not qualify for derecognition, the entity does not offset the transferred asset and the associated liability. 1.5 Leases Leases are classified as finance leases where the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases. Operating lease payments are recognised as an expense on a straight line basis over the lease term, except where another systematic basis is more representative of the time pattern in which economic benefits from the lease of assets are consumed. Contingent rentals arising under operating lease are recognised as an expense in the period in which they are incurred. The difference between the amount recognised as an expense and the contractual payments are recognised as an operating lease asset or liability. 1.6 Inventories Inventories are initially measured at cost except where inventories are acquired at no cost or for nominal considerations. The costs shall then be the fair value as at the date of acquisition. Subsequently inventories are measured at replacement cost. The cost of inventories is assigned using the first in first out formula. The same formula is used for all inventories having a similar nature and use in the entity. 113

116 Inventories comprised of stationery and consumables for distribution during the course of rendering service. The cost of inventories comprises of all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. The amounts of any write down of inventories to net realisable value and all losses of inventories are recognised as an expense in the period that the write down or loss occurred. 1.7 TAXATION The income of the Board is exempt from tax in terms of Section 10(1)(e) of the Income Tax Act (Act 580 of 1962). In terms of Section 24 (1) of the VAT Act, North West Gambling Board is deregistered as a VAT vendor with effect from 1 April PAYABLES from exchange and non-exchange transactions Payables from exchange and non-exchange transactions are recognised when the Board has a present obligation as a result of past events and it is problable that an outflow of resources embodying economic benefits will be required to settle the obligation. 1.9 Leave Accrual The employees of the Board are entitled to 21 working days per annum as leave gratuity. The leave days are recognised as accrued to employees. The leave accrual is based on the total number of leave days due to each employee at year-end multiplied by each employee s respective daily rate of cost to company Impairment of non-cash-geneating assets Identification When the carrying amount of a non-cash-generating asset exceeds its recoverable service amount, it is impaired. The Board assesses at each reporting date whether there is any indication that a non-cash-generating asset may be impaired. If any such indication exists, the Board estimates the recoverable service amount of the asset. Value in use Value in use of non-cash-generating assets is the present value of the non-cash-generating assets remaining service potential. The present value of the remaining service potential of a non-cash-generating assets is determined using the following approach: 114

117 Depreciated replacement cost approach The present value of the remaining service potential of a non-cash-generating asset is determined as the depreciated replacement cost of the asset. The replacement cost of an asset is the cost to replace the asset s gross service potential. This cost is depreciated to reflect the asset in its used condition. An asset may be replaced either through reproduction (replication) of the existing asset or through replacement of its gross service potential. The depreciated replacement cost is measured as the reproduction or replacement cost of the asset, whichever is lower, less accumulated depreciation calculated on the basis of such cost, to reflect the already consumed or expired service potential of the asset. The replacement cost and reproduction cost of an asset is determined on an optimised basis. The rationale is that the Board would not replace or reproduce the asset with a like asset if the asset to be replaced or reproduced is an overdesigned or overcapacity asset. Overdesigned assets contain features which are unnecessary for the goods or services the asset provides. Overcapacity assets are assets that have a greater capacity than is necessary to meet the demand for goods or services the asset provides. The determination of the replacement cost or reproduction cost of an asset on an optimised basis thus reflects the service potential required of the asset. estoration cost approach estoration cost is the cost of restoring the service potential of an asset to its pre-impaired level. The present value of the remaining service potential of the asset is determined by subtracting the estimated restoration cost of the asset from the current cost of replacing the remaining service potential of the asset before impairment. The latter cost is determined as the depreciated reproduction or replacement cost of the asset, whichever is lower. Service units approach The present value of the remaining service potential of the asset is determined by reducing the current cost of the remaining service potential of the asset before impairment, to conform to the reduced number of service units expected from the asset in its impaired state. The current cost of replacing the remaining service potential of the asset before impairment is determined as the depreciated reproduction or replacement cost of the asset before impairment, whichever is lower. ecognition and measurement If the recoverable service amount of a non-cash-generating asset is less than its carrying amount, the carrying amount of the asset is reduced to its recoverable service amount. This reduction is an impairment loss. An impairment loss is recognised immediately in surplus or deficit. Any impairment loss of a revalued non-cash-generating asset is treated as a revaluation decrease. When the amount estimated for an impairment loss is greater than the carrying amount of the non-cashgenerating asset to which it relates, the Board recognises a liability only to the extent that is a requirement in the Standards of GAP. 115

118 After the recognition of an impairment loss, the depreciation (amortisation) charge for the non-cashgenerating asset is adjusted in future periods to allocate the non-cash-generating asset s revised carrying amount, less its residual value (if any), on a systematic basis over its remaining useful life. eversal of an impairment loss The Board assess at each reporting date whether there is any indication that an impairment loss recognised in prior periods for a non-cash-generating asset may no longer exist or may have decreased. If any such indication exists, the Board estimates the recoverable service amount of that asset. An impairment loss recognised in prior periods for a non-cash-generating asset is reversed if there has been a change in the estimates used to determine the asset s recoverable service amount since the last impairment loss was recognised. The carrying amount of the asset is increased to its recoverable service amount. The increase is a reversal of an impairment loss. The increased carrying amount of an asset attributable to a reversal of an impairment loss does not exceed the carrying amount that would have been determined (net of depreciation or amortisation) had no impairment loss been recognised for the asset in prior periods. A reversal of an impairment loss for a non-cash-generating asset is recognised immediately in surplus or deficit. Any reversal of an impairment loss of a revalued non-cash-generating asset is treated as a revaluation increase. After a reversal of an impairment loss is recognised, the depreciation (amortisation) charge for the noncash-generating asset is adjusted in future periods to allocate the non-cash-generating asset s revised carrying amount, less its residual value (if any), on a systematic basis over its remaining useful life. edesignation The redesignation of assets from a cash-generating asset to a non-cash-generating asset or from a noncash-generating asset to a cash-generating asset only occur when there is clear evidence that such a redesignation is appropriate Employee benefits Short-term employee benefits The cost of all short term employee benefit is recognised during the period in which the employee renders a related service. The provision for employee entitlement to annual leave represent the amount, which the Board has present obligation to pay as a result of employee s services, provided to the balance sheet date. Provision has been calculated at undiscounted amounts based on current salary rates. etirement benefits The Board contributes to a defined contribution plan. Contributions to the defined contribution fund are charged to Statement of Financial Performance in the year to which they relate. 116

119 1.12 Contingencies Contingent assets and contingent liabilities are not recognised. Contingencies are disclosed in note evenue from exchange transactions evenue is measured at fair value of the consideration received or receivable and represents the amount receivable in the normal course of business. evenue is measured when it is probable that the economic benefits associated with the transaction will flow to the Board that can be reliably measured. An exchange transaction is one in which the Board receives fees charged from services rendered, recoveries of expenses incurred in the production of revenue and sundry income. evenue from Exchange Transactions are recognised when they become due and are measured at fair value evenue from non-exchange transactions Non-exchange transactions are transactions that are not exchange transactions. In a non-exchange transaction, an entity either receives value from another entity without directly giving approximately equal value in exchange, or gives value to another entity without directly receiving approximately equal value in exchange. evenue from non-exchange transactions relates to grant funding from the Provincial Department of Finance, Economy and Enterprise Development. Government grants Grants received or receivable are recognised when the resources that have been transferred meet the criteria for recognition as an asset. A corresponding liability is raised to the extend that the grant is conditional. The liabilities are transferred to revenue as and when the conditions to the grant are met. Grants without any conditions attached are recognised as revenue when the asset is recognised Licence fees and Levies Licence fees and levies received represent licence fees and levies charged to licenced operators and are collected on behalf of the Department of Finance, Economy and Enterprise Development Comparative figures When the presentation or classification of items in the annual financial statements is amended, prior period comparative amounts are restated. The nature and reason for the reclassification is disclosed. Where accounting errors have been identified in the current year, the correction is made retrospectively as far as is applicable, and the prior year comparatives are restated accordingly. 117

120 1.17 Unauthorised expenditure Unauthorised expenditure is expenditure that is not in accordance with the purpose of the Board or in the case of the main division not in accordance with the purpose of the main division. Unauthorised expenditure is accounted for as an expense in the Statement of Financial Performance and, where recovered, it is subsequently accounted for as revenue in the Statement of Financial Performance Fruitless and WASTEFUL expenditure Fruitless and wasteful expenditure means expenditure that was made in vain and could have been avoided had reasonable care been exercised. Fruitless and wasteful expenditure is accounted for as expenditure in the Statement of Financial Performance and where recovered, it is subsequently accounted for as revenue in the Statement of Financial Performance Irregular expenditure Irregular expenditure means expenditure incurred in contravention of, or not in accordance with a requirement of any applicable legislation, including the PFMA or any provincial legislation. Irregular expenditure is accounted for as expenditure in the Statement of Financial Performance and where recovered subsequently accounted for as revenue in the Statement of Financial Performance Budget INFOMATION Budget information in accordance with GAP 24 has been provided in the statement of comparison of budget and actual amounts. The explanation on the variance between the budget and the actual amounts has been provided. efer to note elated PATIES elated parties are parties that control or significantly influence the Board in making financial and operating decisions. Specific information with regards to related party transactions is included in the disclosure notes Going concern These annual financial statements have been prepared on the assumption that the Board will continue to operate as a going concern for at least the next 12 months Events after EPOTING DATE Events after reporting date are those events, both favourable and unfavourable, that occur between the reporting date and the date when the financial statements are authorised for issue. 118

121 10. notes to the annual financial statements 2. New standards and interpretations 2.1 Standards and Interpretations The entity has chosen to use the related parties standards to formulate the disclosure. Standard/ Interpretation Effective date: Years beginning on or after GAP 20: elated parties 01 April 2016 Expected impact 2.2 Standards and INTEPETATIONS issued, but not yet effective The entity has not applied the following standards and interpretations, which have been published and are mandatory for the entity s accounting periods beginning on or after 01 April 2015 or later periods: Standard/ Interpretation Effective date: Years beginning on or after Expected impact GAP108: Statutory eceivables Not yet determined Not yet assessed 2.3 Standards and INTEPETATIONS not yet effective or ELEVANT The following standards and interpretations have been published and are mandatory for the entity s accounting periods beginning on or after 01 April 2015 or later periods but are not relevant to its operations: Standard/ Interpretation Effective date: Years beginning on or after Expected impact GAP 18: Segment eporting 1st April 2015 Not relevant GAP 105: Transfers of functions between entities under 1st April 2015 Not relevant common control GAP 106: Transfers of functions between entities 1st April 2015 Not relevant not under common control GAP 107: Mergers 1st April 2015 Not relevant IGAP 11: Consolidation Special purpose entities Not yet determined Not relevant IGAP 12: Jointly controlled entities Non-monetary Not yet determined Not relevant contributions by ventures GAP 6 (as revised 2010): Consolidated and Not yet determined Not relevant Separate Financial Statements GAP 7 (as revised 2010): Investments in Associates Not yet determined Not relevant GAP 8 (as revised 2010): Interests in Joint Ventures Not yet determined Not relevant GAP32: Service Concession Arrangements: Grantor Not yet determined Not relevant IGAP17: Service Concession Arrangements where a Not yet determined Not relevant Grantor Controls a Significant esidual Interest in an Asset DIECTIVE 11: Changes in measurement bases following the initial adoption of Standards of GAP Not yet determined Not relevant 119

122 3. Cash and cash equivalents Cash and cash equivalents consist of: Petty cash 5 1,037 ABSA Admin Account 5,410,973 6,694,339 ABSA Call Account 29,236 29,046 ABSA evenue Account 7,767,340 6,253,347 ABSA Credit card 15,171 80,058 13,222,725 13,057, eceivables from exchange transactions Trade debtors 771,047 85,884 ent deposit 199, ,900 Staff telephone recoveries 9,941 7, , ,390 Fair value of trade and other receivables from exchange transactions Trade and other receivables 980, ,390 Trade and other receivables from exchange transactions Trade and other receivables which are less than 3 months past due are not considered to be impaired. At 31 March 2015, 52,042 (2014: 56,005) were past due but not impaired. The ageing of amounts past due but not impaired is as follows: 1 month past due 19,872 1,135 2 months past due 7,817 12,449 3 months past due 24,353 42, eceivables from non-exchange transactions Levies and taxes 7,734,611 6,964,357 Fair value of receivables from non-exchange transactions eceivables from non-exchange transactions 7,734,611 6,964,357 The fair value of receivables from non-exchange transactions approximates their carrying amounts. Casino levies, taxes and other receivables Current 7,734,611 6,964,

123 6. Prepayments Prepayments 305, ,647 SAS 25,790 25,790 Fraudulent transactions , , Inventories Stationery and consumables on hand 150,179 94,150 Inventories recognised as an expense during the 12 months 840, ,804 Stationery and consumables comprises of stationery for distribution to staff during the course of work. Stationery and consumables are measured at lower of cost and net realisable value. 8. Property, plant and equipment Cost / Valuation Accumulated depreciation and accumulated impairment Carrying value Cost / Valuation Accumulated depreciation and accumulated impairment Carrying value Office furniture 2,215,751 (651,515) 1,564,236 1,706,306 (605,388) 1,100,918 Motor vehicles 377,951 (42,844) 335, ,889 (17,621) 142,268 Office equipment 2,220,866 (411,347) 1,809,519 1,291,581 (271,487) 1,020,094 Computer equipment 2,699,993 (703,005) 1,996,988 1,936,463 (494,762) 1,441,701 Leasehold improvements 642,173 (48,484) 593, Total 8,156,734 (1,857,195) 6,299,539 5,094,239 (1,389,258) 3,704,981 econciliation of property, plant and equipment Opening balance Additions Disposals Depreciation Total Office furniture 1,100, ,578 (26,109) (112,148) 1,564,239 Motor vehicles 142, ,062 - (25,223) 335,107 Office equipment 1,020, ,688 (2,420) (146,843) 1,809,519 Computer equipment 1,441, ,595 (29,991) (260,316) 1,996,990 Leasehold improvements - 642,173 - (48,484) 593,689 3,704,982 3,246,096 (58,520) (593,014) 6,299,

124 8. Property, plant and equipment econciliation of property, plant and equipment Cost / Valuation Accumulated depreciation and accumulated impairment Carrying value Cost / Valuation Accumulated depreciation and accumulated impairment Carrying value Office furniture 546, ,824 (3,197) (74,133) 119,578 1,100,918 Motor vehicles 60, (13,324) 94, ,268 Office equipment 595, ,074 (2,970) (79,962) 127,932 1,020,094 Computer equipment 1,147, ,673 (9,665) (167,285) 87,491 1,441,702 2,350,026 1,275,571 (15,832) (334,704) 429,921 3,704, Operating lease liability Office building Operating lease accrual 588, ,665 The Board rents office buildings from Pizzazz Investment 2 (Pty) Ltd (Pizzazz) under the operating lease with an escallation rate of 9% per annum for a period of five years effective from 1 August The lease expires on the 31 July Pizzazz sold the property under lease to Senatla Investment Capital Pty LTD (Senatla) during the 2014/15 financial year. The lease agreement was ceded to Senatla in October 2014 and an addendum was duly signed between the Board and Senatla. 10. Payables from exchange transactions Other payables - Investigation received in advance 147,105 - Other payables 1,796, ,143 1,943, ,143 The fair value trade and other payables approximates their carrying amounts. 11. Taxes and transfers payable (non-exchange) Licence fees received in advance 2,837,700 2,294,900 Provincial Department of Finance Economy and Enterprise Development, 8,375,414 7,423,556 11,213,114 9,718,456 Fair value of taxes and transfers payable (non-exchange) Taxes and transfers payable (non-exchange) 11,213,114 9,718,456 The fair value of taxes and transfers payable (non-exchange) approximates their carrying amounts. 122

125 12. Accruals econciliation of accruals Opening Balance Additions Utilised during the year Total Leave accrual 1,017, ,646 (57,648) 1,305,969 econciliation of accruals Leave accrual 906, ,607 (103,968) 1,017,971 The leave accrual relate to the Board s estimated liability arising as a result of services rendered by employees. 13. Other revenue Investigation fees 1,269, ,623 Other recoveries ,828 Tender application fees 12,000 - Insurance ecovery) (1,721) - Travel cost recoveries 103,700-1,384, , evenue Other revenue 1,384, ,451 Interest received - bank accounts 107,962 17,937 Government grant 48,137,000 39,559,000 49,629,271 40,298,388 The amount included in revenue arising from exchanges of goods or services are as follows: Other revenue 1,384, ,451 Interest received - bank accounts 107,962 17,937 1,492, ,388 The amount included in revenue arising from non-exchange transactions is as follows: Transfer revenue Government grant 48,137,000 39,559,

126 15. Government grants and subsidies Government grant 48,137,000 39,559,000 Government grant Government Grant as per the Budget Book 48,137,000 31,559,000 First Budget adjustment - 10,000,000 Second Budget adjustment - (2,000,000) 48,137,000 39,559, Personnel costs Basic salary 15,228,714 12,466,313 Performance bonus 896,579 1,292,153 Medical aid contributions 1,807,111 1,395,485 Compensation commission 62, ,188 Leave pay expense 287, ,638 Provident fund contribution 2,524,262 2,123,339 Long-service awards 80,116 11,699 20,887,283 17,512,815 Chief Executive Officer (FS Sekgaphane) Basic salary 1,631,410 1,514,773 Perfomance Bonuses 171,298 45,977 Medical aid 28,286 26,198 Cellphone allowance 18,000 18,000 Travel and subsistence 213, ,508 2,062,570 1,900,456 Chief Operations Officer (MP Mothiba) Basic salary 1,132,613 1,051,637 Perfomance Bonuses 96,272 51,926 Provident fund 84,946 78,873 Medical aid 46,584 9,600 Cellphone allowance 11,200 9,600 Acting allowance 13,595 12,280 Travel and subsistence 110, ,845 1,495,347 1,321,

127 16. Personnel costs (continued) Chief Financial Officer (NB Mutheiwana) Basic salary - 924,633 Performance Bonuses - 100,571 Long service award - 18,493 Provident fund - 69,348 Medical aid - 30,345 Travel and subsistence, cellphone and acting allowance - 191,116 Termination leave - 59,517-1,394,023 The Chief Financial Officer resigned on the 31st of March The function was outsourced for the entire 2014/15 financial year. The position has since been filled effective 1st April Legal Manager (J Montshioa, appointed December 2013) Basic salary 775, ,952 Provident fund 58,126 19,571 Medical aid 17,051 2,810 Cellphone allowance 9,600 3,200 Acting allowance 4,017 - Travel and subsistence 254,916 21,326 1,118, ,859 Legal Manager (J Mantsho, resigned September 2013) Basic salary - 342,933 Back pay - 5,078 Termination leave - 27,273 Provident fund - 25,720 Medical aid - 2,607 Cellphone allowance - 4,800 Travel and subsistence - 56, ,

128 16. Personnel costs (continued) Audit and Systems Manager (K Monate) Basic salary 591, ,434 Perfomance Bonuses 62,359 63,251 Provident fund 44,542 41,358 Medical aid 25,361 23,487 Cellphone allowance 9,600 9,600 Travel and subsistence 319, ,958 Acting Allowance 2,145-1,055, ,088 Investigating and Licensing Manager (T Mathebula, appointed August 2014) Basic salary 361,862 - Provident fund 27,140 - Medical aid 11,438 - Cellphone allowance 6,400 - Travel and subsistence 81, ,945 - Gaming Control Manager (S Mogapi) Basic salary 573, ,911 Perfomance Bonuses 48,747 45,370 Provident fund 43,012 31,943 Medical aid 30,765 28,190 Cellphone allowance 9,600 6,270 Travel and subsistence 122,737 61, , ,

129 17. Administrative expenses Advertising 4,487,577 1,388,372 Auditors remuneration 2,257,837 2,024,598 Bank charges 53,430 44,552 Cleaning 372,678 52,546 Computer expenses 1,201, ,144 Consulting and professional fees 2,644,695 1,821,718 Interest Paid 23,274 11,388 Entertainment 29, ,730 Gifts and donations 3,400 6,749 Transport hire 16,530 22,230 Insurance 154, ,761 Lease rentals on operating lease 3,142,843 2,749,438 Magazines, books and periodicals - 26,332 Motor vehicle expenses 53,408 44,430 Board members fees 1,021,450 1,212,702 Postage and courier 3,518 3,518 Printing and stationery 893, ,508 Protective clothing - 2,707 Security 217, ,034 Software expenses - 57,376 Staff welfare 221,741 - Subscriptions and membership fees 90,381 64,058 Telephone and fax 1,017, ,244 Training 611, ,079 Travel - local 5,550,310 4,183,294 Travel - overseas 1,140, ,284 Assets expensed 73,320 20,655 Electricity 476, ,144 Credit checks 109,417 50,948 elocation costs 28, Debt impairment - 1,456 epairs and maintenance 193, ,044 Venue expenses 472, ,263 26,561,987 18,309,

130 18. Operating surplus Operating surplus for the 12 months is stated after accounting for the following: Operating lease charges Premises Contractual amounts 3,130,237 2,749,438 Equipment Contractual amounts 12,606-3,142,843 2,749,438 Loss on sale of property, plant and equipment (58,769) (15,837) Depreciation on property, plant and equipment and amortisation of intangible assets 593, ,704 Personnel costs 20,887,283 17,512, Auditors remuneration Audit fees 1,824,034 1,573,003 Consulting fees 433, ,595 2,257,837 2,024, Cash generated from operations Surplus 1,528,218 4,125,380 Adjustments for: Depreciation and amortisation 593, ,704 Loss on sale of assets 58,769 15,837 Movements in operating lease assets and accruals 111, ,350 Movements in leave payable 287, ,639 eversal of Incorrect adjustment to Acc Depreciation (239) - Changes in working capital: Inventories (56,029) 86,710 eceivables from exchange transactions (733,089) (247,390) eceivables from non-exchange transactions (770,254) 683,607 Prepayments (176,738) 45,383 Payables from exchange transactions 1,072,843 (203,604) Taxes and transfers payable (non exchange) 1,494,658 44,996 3,410,993 5,240,

131 21. Operating lease commitments Office building Senatla Investment Capital (PTY) LTD - within one year 2,887,216 2,063,283 - in second to fifth year inclusive 4,214,089 5,503,400 7,101,305 7,566,683 The Board rents office building from Senatla Capital (Pty) (Senatla) Ltd under the operating lease with an escalation rate of 9% per annum for a period of five years effective from 1 August The lease expires on the 31 July The original lease was entered into with Pizzaz Investment and through the sale and cession during the current year, an addendum has been signed with Senatla. Warehouse 1 North West Development Corporation - within one year 216, ,182 The Board rents a warehouse under an operating lease, for a period of one (1) year effective from 01 March 2015 and expires on 29 February Initially, the Board rented this warehouse under an operating lease, with initial period of three (3) years with option for renewal for further three periods at an escalation rate of 10%.. Warehouse 2 Ace Investment - within one year 180,945 55,847 The Board rents a second warehouse under an operating lease, for a period of one (1) year. The lease is effective from 01 July 2014 and expires on 30 June Initially, the Board rented this warehouse under an operating lease, with initial period of one (1) year with option for renewal for further three periods at an escalation rate of 8%. 22. elated parties elationships Controlling Department: North West Department of Finance Economy and Enterprise Development elated party balances Amount owed Department of Finance, Economy and Enterprise Development 8,350,664 7,423,

132 22. elated parties (continued) elated party transactions Grant eceived Department of Finance, Economy and Enterprise Development 48,137,000 39,559,000 Cash surrendered Department of Finance, Economy and Enterprise Development 104,912,258 96,075, Members emoluments Board Members: 2015 Board fees Subsistence and travel Cellphone allowance Total T. Kgomo 225, ,866 5, ,293 N. Maharaj 150, , ,456 E. Matlawe 33,965 27,204-61,169 L. Seepe 149,681 85, ,190 C. Kgorane - (In Public Service) - 4,313-4,313 G. Mbao - (In Public Service) * - 26,067-26,067 H. Mashao - (In Public Service) NI. Kunene - (In Public Service) FS Sekgaphane - (Ex-officio) , ,637 5, ,488 * Allowance for overseas trip Board Members: 2014 T. Kgomo 228, ,967 2, ,888 N. Maharaj 116, , ,850 E. Matlawe 93,938 92, ,914 TS. Mokaila 22,963 3,808-26,771 L. Seepe 142,212 97, ,812 C. Kgorane - (In Public Service) G. Mbao - (In Public Service) H. Mashao - (In Public Service)* 8, ,250 NI. Kunene - (In Public Service) FS Sekgaphane - (Ex-officio) , ,295 2,700 1,100,485 * Allowance for overseas trip 130

133 23. Members emoluments (continued) Audit and isk Committee: 2015 Audit committee fees Other benefits Total E. Matlawe 2,813 1,810 4,623 TL. Moromane 23,060 11,115 34,175 G. Diutlwileng 12,938 39,235 52,173 N. Dutton 5,175 4,704 9,879 MV. Mokgobinyane 7,763 5,712 13,475 Z. Mothibe 10,350 7,267 17,617 N Maharaj 15,075 8,155 23,230 L Seepe 13,838 6,372 20,210 91,012 84, ,382 Audit and isk Committee: 2014 G Diutlwileng 12,938 46,859 59,797 TL Moromane 16,907 9,232 26,139 N Dutton 12,938 13,343 26,281 42,783 69, , isk management Liquidity risk The Board manages risk through an ongoing review of future commitments. Cash flow forecast is prepared and monitored. The Board receives an annual grant and therefore not exposed to liquidity risk. Credit risk Credit risk consists mainly of cash deposits and cash equivalents. The Board only deposits cash with major banks with high credit standards. The Board has therefore no concetration of credit risks. The Board maximum exposure to credit risk is equal to the cost amount of financial assets at balance sheet date and is summarised as follows: Financial instrument Financial assets - eceivables from non exchange transactions 7,734,611 6,964,357 Financial assets - eceivables from exchange transactions 980, ,390 Financial assets - Prepayments 331, ,456 Cash and cash equivalents 13,222,725 13,057,827 Financial liabilities - Payables (exchange) (1,943,992) (871,142) Financial liabilities - Payables (non-exchange) (11,213,114) (9,718,456) 131

134 24. isk management (continued) Financial assets by catergory At amortised cost At fair value At cost Prepayments - 331,194 - Cash and cash equivalents - 13,222, ,553,919 - Financial liabilities by category At fair value At amortised cost At cost Total Payables (exchange) (1,943,992) - - (1,943,992) Payables (non-exchange) (11,213,114) - - (11,213,114) (13,157,106) - - (13,157,106) 25. Going concern The annual financial statements have been prepared on the basis of accounting policies applicable to a going concern. This basis presumes that funds will be available to finance future opeartions and that the realisation of assets and settlement of liablities, contigent obligations and commitments will occur in the ordinary course of business. 26. Events after the reporting date There were no events after the reporting date that could materially affect the financial statements. 27. Unauthorised expenditure The Board did not incur unathorised expenditure for the period under review. 28. Fruitless and wasteful expenditure Opening balance 11,388 - Incured during the year 23,273 11,388 Condoned/ecovered ,661 11,388 Fruitless and Wasteful expenditure incurred during the period of reporting result from a Writ of execution served by the Sherrif on outstanding obligation as per Court order. It must be borne in mind that the Board is not directly responsible to execute such orders as they are dealt with on its behalf by the State Attorney s office. The Board has engaged the State Attorney s office in an attempt to recoup fruitless and wasteful expenditure. The State Attorney s office has given an undertaking to pursue the recovery of the amounts of interest paid from the applicant. 132

135 29. Irregular expenditure The Board did not incur irregular expenditure for the period under review Non-compliance with legislation The Board complied with the applicable legislation for the period under review. 31. Budgetary basis, period and scope The budget is approved on a cash basis by functional classification. The approved budget covers the fiscal period of 1 April 2014 to 31 March Donations and sponsorships The Board did not receive donations and/or sponsorship for the period under review. 33. econciliation between budget and statement of financial performance econciliation of budget surplus/deficit with the surplus/deficit in the statement of financial performance: Net surplus per the statement of financial performance 1,528,218 4,125,380 Adjusted for: Non-budgeted income items: operating income (826,439) (683,966) Investment income (107,943) (17,937) Loss/(gain) on the sale of assets 1,721 15,837 Operating activities: operating expenses (595,557) (3,439,314) Net surplus per approved budget Statement of comparison of budget viz actual amounts Other non TAX revenue evenue classified as other non-tax revenue relates to recovered amounts from investigations performed on behalf of applicants and licensees. Investigations are ad-hoc and thus not budgeted for. Authorised Savings The amount of authorised savings were approved by the Executive Authority to utilisation in the current and future financial periods against goods and service as per submitted request for approval. The approval of the request was only granted later in the current financial year. 133

136 34. Statement of comparison of budget viz actual amounts (continued) Compensation of Employees The board underspend on the Compensation of emplayees due to vacant positions which were either not filled or filled towards the end of the reporting period. Goods and Services Use of goods and services overspent due to increased activity around official public notices and travelling and subsistence relating to processing of licensing applications received. Further to that, the entity engaged in activities relating to image, branding and organisational development. 35. Prior period errors Correction of error in security computer An item of computer equipment was erronously expensed in the previous financial year. The correction of the error and the impact is disclosed below: Statement of Financial Position Increase in computer equipment cost - 19,075 Increase in computer equipment accumulated depreciation - (1,272) Increase in accumulated surplus - (17,803) Statement of Financial Performance Increase in depreciation - 1,272 Decrease in computer expense - (19,075) Change in ESTIMATE of PEPAYMENTS and ECEIVABLE from exchange transactions The Board has classified the deposit of the office rental as the prepayments for the past reporting period instead of classifying them as other receivables. The effect of the above has been determined and it is disclosed below: Effect on Statement of Financial Position Decrease in Prepayments - (153,900) Increase in Other eceivables - 153,

137 35. Prior period errors (continued) Changes in ESTIMATE and residual VALUE recognition of MOTO vehicle The Board had not undertaken a review of useful life inchange in estimate and residual value re the pastr two reporting periods. Further the depreciation on motor vehicles has been calculated in past without considering the residual value of the asset. The effect of the above has been dermined and disclosed below: Statement of Financial Position Decrease in motor vehicles accumulated depreciation - 62,469 Increase in accumulated surplus - (62,469) Statement of Financial Performance Decrease in depreciation - 7,478 Change in ESTIMATE of other POPETY, plant and equipment The Board has not reviewed the useful life of assets for the previous two years. As a result there was an error in accurately determining the carrying value of assets for the last two years. This error has been determined and is disclosed in the detail below: Effect on Statement of Financial Position (Increase)/Decrease in Accumulated Depreciation - 367,452 (Increase)/Decrease in Accumulated Surplus - (367,452) Statement of Financial Performance (Increase)/Decrease in Depreciation - (171,845) Correction of error of computer SOFTWAE The treatment of computer software (ie. packaged software) was incorrectly capitalised in prior financial periods. The Board s software does not satisfy the recognition criteria of an intangible as stated in GAP 31 and therefore must have been expensed. Due to the fact that the Board does not have the rights to change the underlying source code of the programs and can therefore not change or modify the software in any way, the items as listed cannot be regarded as intangible. The payment of annual license fees contributes to this fact, the Board has a right to use the software but no real control over the development. The impact of the error has therefore been determined and the effect thereof is disclosed here below: Statement of Financial Position Decrease in computer software cost - (1,269,851) Decrease in computer software accumulated amortisation - 573,190 Decrease in accumulated surplus - 382,586 - (314,075) Statement of Financial Performance Decrease in depreciation - (175,277) Increase in computer expense - 489, ,

138 Notes 136

139 SIGNS OF POBLEM GAMBLING Spending more time or money on gambling than intended Borrowing or stealing money to fund gambling Missing work or school or other commitments to gamble Gambling more to recover your losses Feeling worried, anxious and moody when you are not gambling Family relationships breaking down because of debt and dishonesty Hiding your gambling from others, but unable to stop gambling Gambling with ever bigger amounts to reach desired level of excitement THE BOAD POMOTES AND ENCOUAGES ESPONSIBLE GAMBLING POBLEM GAMBLING COUNSELLING LINE:

140 Physical Address 131 University Drive Mmabatho 2735 Postal Address Private Bag X34 Mmabatho 2735 Contact Tel: +27 (18) Fax: +27 (18) Business Hours Monday to Friday 08h00-17h00 P270/2015 ISBN: