TABLE OF CONTENTS. Part C: Governance

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1 Annual Report 2016

2 PR192/2016 ISBN: Title of Publication: North West Gambling Board Annual Report 2015/2016

3 Annual Report TABLE OF CONTENTS Part A: General Information 1. General Information of the Board 3 2. List of Abbreviations 4 3. Strategic Overview 5 4. Legislative and Other Mandates 6 5. Structure of Committees of the Board 8 6. Organisational Structure 9 7. Foreword by the Chairperson Overview by the Chief Executive Officer 12 Part B: Performance Information 1. Statement of Responsibility for Performance Information Executive Management Senior Management Auditor-General s Report: Predetermined Objectives Overview of the Board s Performance Strategic Outcome Oriented Goals Performance Information by Programme Summary of Financial Information Statistics 41 Part C: Governance 1. Introduction Portfolio Committee Executive Authority The Board Risk Management Internal Control Unit Internal Auditors Compliance with Laws and Regulations Fraud and Corruption Minimising Conflict of Interest Code of Conduct Health, Safety and Environmental Issues Company Secretary Community Social Investment Audit Committee Report 84 Part D: Human Resources Management 1. Introduction Human Resource Oversight Statistics 88 Part E: Financial Information 1. Statement of Responsibility for the Annual Financial Statements Report of the Chief Executive Officer Report of the Auditor-General Statement of Financial Position Statement of Financial Performance Statement of Changes in Net Assets Cash-flow Statements Statement of Comparison of Budget and Actual Amounts Accounting Policies Notes to the Annual Financial Statements 122

4 General information Part A General Information 1. General Information of the Board 2. List of Abbreviations 3. Strategic Overview 4. Legislative and Other Mandates 5. Structure of Committees of the Board 6. Organisational Structure 7. Foreword by the Chairperson 8. Overview by the Chief Executive Officer 2 North West Gambling Board

5 Annual Report General Information of the Board Name of Entity North West Gambling Board Business Hours Monday to Friday, 08:00 to 17:00 NWGB Hotline Number Website Auditors Auditor-General of South Africa Bank ABSA Bank, Mahikeng Board Secretary Mr Rangwedi Jacob Montshioa Head Office Physical Address 131 University Drive, Mmabatho, 2735 Postal Address Private Bag X34, Mmabatho, 2735 Telephone Number Facsimile Number Regional Office Physical Address 67 Brink Street, Rustenburg, 0299 Telephone Number Facsimile Number

6 General information 2. List of Abbreviations ACL Audit Command Language AFS Annual Financial Statements AGSA Auditor-General of South Africa APP Annual Performance Plan BBBEE Broad-Based Black Economic Empowerment BOARD North West Gambling Board CCMA Commission for Conciliation, Mediation and Arbitration CEMS Central Electronic Monitoring System CEO Chief Executive Officer CFO Chief Financial Officer CMS Central Monitoring System COO Chief Operations Officer CSI Community Social Investment EXCO Executive Committee FEED Department of Finance, Economy and Enterprise Development FICA Financial Intelligence Centre Act FMPP Framework for Managing Programme Performance Information FY Financial Year GGR Gross Gaming Revenue GRAP Generally Recognised Accounting Practice HOD Head of Department HR Human Resources IT Information Technology ICP Internal Control Procedures IFRS International Financial Reporting Standards ISO Independent Site Operator LPM Limited Payout Machine MEC Member of the Executive Council MoU Memorandum of Understanding MTEF Medium Term Expenditure Framework MTSF Medium Term Strategic Framework NGB National Gambling Board NRCS National Regulator for Compulsory Standards NRGP National Responsible Gambling Programme NWGB North West Gambling Board PAIA Promotion of Access to Information Act PDI Previously Disadvantaged Individual PFMA Public Finance Management Act PPPFA Preferential Procurement Policy Framework Act RFA Request for Applications R/O Route Operator RRR Rebranding, Repositioning and Renewal RHR Reconciliation, Healing and Renewal SABS South African Bureau of Standards SAPS South African Police Service SARS South African Revenue Service SCM Supply Chain Management SMME Small Medium and Micro Enterprise T/A Trading As TR Treasury Regulations VTSD Villages, Townships and Small Dorpies TYPE A LPM SITE TYPE B LPM SITE TYPE C LPM SITE 3 to 5 machines 6 to 30 machines 40 machines 4 North West Gambling Board

7 Annual Report Strategic Overview Vision To be a leading and socially conscious authority in the regulation of gambling in the world. Strategic Outcome Oriented Goals of the Board Strategic Outcome Oriented Goal 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. Regulate business activities in the Province to create a conducive legal, business and socio-economic environment to business prosperity. Goal Statement Roll-out of Limited Payout Machines; Facilitation of discussion on the re-allocation of the 5th casino licence; Licensing of Bookmakers and Totalizators; Combat illegal gambling in the Province; and Promotion of Responsible Gambling Justification Create an enabling environment for responsible licensing of all forms of gambling allowed in terms of the legislation. 5

8 General information 4. Legislative and Other Mandates 4.1 Constitutional Mandate Schedule 4 Part A of the Constitution provides that Casino s, 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. 4.2 Legislative Mandates National Gambling Act, 2004, Act No.7 of 2004, as amended This is the national legislation which provide for the co-ordination of concurrent national and provincial legislative competence over matters relating to casinos, racing and wagering, and to provide for the continued regulation of those matters. It further establish certain uniform norms and standards applicable to national and provincial regulation and licensing of certain activities Broad Based Black Economic Empowerment Act, 2003 This Act establishes a legislative framework for the promotion of Broad Based Black Economic Empowerment. It empowers the Minister to issue codes of good Practice, to publish transformation charters, to establish the Black Economic Empowerment Advisory Council and to provide for matters connected therewith. The Gambling Industry has adopted the compliance levels which the licensee must attain, and these are monitored annually, as they form part of the licence conditions North West Gambling Act, Act No.2 of 2001 as amended The North West Gambling Act provide for the regulation of gambling activities in the Province, establish a Board to control and manage gambling activities and set out 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; and to provide for the responsibilities of persons entrusted with financial management in those governments and to provide for matters connected therewith Health and Safety Act 85 of 1993 The Act provides for the promotion and adherence of sound health and safety practices of employees and visitors at designated work places and establish an advisory council for occupational health and safety and matters connected therewith Financial Intelligence Centre Act 38 of 2001 The Act provides for the combating of money laundering activities and further provides for: (a) Registration of accountable and reporting institutions with the Financial Intelligence Centre Act. (b) Powers of supervisory bodies to conduct inspections. (c) Administrative sanctions that may be imposed by the Centre or supervisory bodies. (d) Establishes an appeal board to hear appeals against decisions of the Centre or supervisory bodies. 6 North West Gambling Board

9 Annual Report Policy Mandates The North West Gambling Board as established in terms of section 3 of the North West Gabling Act No.2 of 2001 is mandated to regulate gambling and related activities in the North West Province in concurrence with the National Gambling Board. Through the above, the Board is expected to ensure that gambling in the Province is conducted or operated in a fair, honest and safe manner while providing protection to the general public against the latent demand for gambling through responsible gambling programmes. The Board is classified as a schedule 3C public entity in terms of the Public Finance Management Act and is funded through a grant system by the Provincial Treasury and subscribes to all principles of good corporate governance as required in terms of Codes of Good Practice. The North West Gambling Board, in compliance with the Public Finance Management Act, 1999 (Act 1 of 1999), as amended ( PFMA ), in particular provisions as contained in sections 50 and 51 thereof, has developed a value system to promote 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 Report) 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 in the province, 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, technological and legal) of protecting the public against any unfair, unjustified, dishonest and/ or unscrupulous or illegal practices in gambling, ensuring best practices of promoting responsible gambling, sound and sustainable economic benefits to the Provincial Government and maintenance of 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 all establishments where gambling games are conducted or operated, such games are licensed and controlled so as to better public engagement in gambling, promote safe entertainment, good morals and order in preservation of all relevant provincial government policies and laws; to render effective regulatory control which 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. 7

10 General information 5. Structure of Committees of the Board MEC Board Risk Committee HR Committee Audit Committee Compliance Committee 8 North West Gambling Board

11 Annual Report Organisational Structure MEC Board Chief Executive Office Chief Financial Officer Legal Services Chief Operations Office - Investigations and Licensing - Gambling Control - Gambling Audit and Systems - Finance - Supply Chain Corporate Services - Human Resources - Corporate Relations - Information Technology - Facilities 9

12 General information 7. Foreword by the Chairperson The North West Gambling Board ( the Board ), is a statutory body established in terms of section 3 of the North West Gambling Act, 2001 (Act No.2 of 2001), as amended ( the Act ) to regulate gambling and related activities in the North West Province, hereby in terms of the provisions of Section 55 of the Public Management Act (PFMA) presents its Annual Report to the Provincial Legislature, the Premier of the North West Province, the Member of the Executive Council for Finance, Economy and Enterprise Development, (FEED) and the public, as a detailed and accurate record of the performance of the North West Gambling Board during the 2015/16 Financial Year. The current Board of Directors was appointed in October 2012 and consist of nine (9) members appointed by the Responsible Member in terms of section 5 of the Act, with the Chief Executive Officer serving as an ex-officio member and divided into committees as follows: (a) (b) (c) (d) Compliance Committee Audit Committee Human Resource Committee Risk Committee 10 North West Gambling Board

13 Annual Report The Board drafted a Medium Term Framework which runs for a period of five (5) years from As part of the broader strategic economic development cluster in the Province, the Board aligned itself with the Government of South Africa service delivery outcome 4: Decent employment through inclusive economic growth, as well as the strategic orientated outcome of our mother Department of Finance, Economy and Enterprise Development ( FEED ): regulation of business activities in the Province to create a legal, business and socio-economic environment conducive to business prosperity. With the aforementioned in mind, the Board drafted and implemented a Corporate Plan which is premised on the following strategic objectives: (a) (b) (c) (d) Create an enabling environment for responsible licensing of all forms of gambling allowed in terms of legislation. Improve efficiencies in the regulation of all forms of gambling. Monitor and enforce compliance with the Broad-Based Black Economic Empowerment Act and Codes of Good practice within the industry. Strengthening the institutional capacity of the Board. It is with great pleasure to announce and report that the Board through its Management Team achieved and implemented the ideals of all of the above strategic objectives, amidst a number of challenges along the way. It is against this background that I would like to give my greatest gratitude to my fellow Board members and Chairpersons of various committees of the Board, the Honourable Premier of the North West Province, S.O.R. Mahumapelo, Honourable Member of the Executive Council for FEED, Ms. Wendy Nelson, the Chairperson of the Portfolio Committee, Honourable Raymond Elisha and members of the Committee on Premier, Treasury and Enterprise Development, the Department of Finance, Economy and Enterprise Development, and the Treasury, for their outstanding and unwavering support during the past twelve (12) months and look forward to another fulfilling year of gambling regulation in the Province. I would be failing in my duty if I do not extent my greatest gratitude to the Management of the Board under the capable leadership of the Chief Executive Officer, Mr Fortune Sekgaphane and the staff of the Board, our licensees and other stakeholders and in particular the South African Police Service for their dedication to ensuring that the Board reaches its intended objectives. It is therefore with the greatest of pleasure and gratitude that I present the Annual Report of the North West Gambling Board for the 2015/16 Financial Year. Lavelle W Vere Chairperson of the North West Gambling Board 11

14 General information 8. Overview by the Chief Executive Officer As we look forward to another year of hard work in striving to achieve the broader objectives of economic development through provision of responsible and responsive gambling regulation in the Province. It is prudent that we take a look at the 2015/16 Financial Year in order to report back to our principals and stakeholders. The 2015/16 has been a very successful year for the Board although it also came with its own anticipated challenges. Gambling in South Africa as well as in the Province has evolved and grown steadily since 1994 which necessitated a change in the organisation as a whole for the purpose of effective regulation. Staffing At the beginning of the Financial Year under review, the Board was operating with the staff compliment of fifty seven (57) employees. Following the revision of the structure, one hundred and eleven (111) positions were approved by the Board of which eighty three (83) were prioritised and budgeted for. Twenty eight (28) of the prioritised positions were filled. Eight (8) employees left the employment of the Board bringing the total staff compliment to seventy seven (77) by the end of the 2015/16 Financial Year. Further to the above, the Board has taken in seventeen (17) unemployed persons on temporary employment with a view of giving them the necessary skills and experience for them to be employable. 12 North West Gambling Board

15 Annual Report Gambling regulatory duties Keeping with the spirit and mission of the Board which seek to establish an effective and efficient regulatory services and maintaining an industry which contributes to socio-economic growth and development, the Management of the Board developed and implemented an Annual Performance Plan which was in line with the strategic objective of the Board for 2015/16 Financial Year. Over and above the Historic licensed operators of Casinos, Totalizator, Bookmakers and Route Operations for Limited Payout Machines, and in line with the provisions of Legislation, the Board created a conducive environment which saw a number of new gambling entrants in the Industry through the Request for Applications for Bookmaker Operators which was deliberately biased towards the benefit of the historically Previously Disadvantaged Individuals. We further continued with the systematic and deliberate rollout of Limited Payout Machine operations which we started in This amongst others, supported the call and initiative by the Premier of the Province to ensure that services particularly for economic development are extended to the Villages, Townships and Small Dorpies (VTSD). We also introduced a new form of gambling known as Junkets Agent Operations which is provided for in terms of section 63 of the Act. The aforementioned saw a creation of much needed job opportunities while maintaining employment levels at an acceptable rate in the Province. The Board together with the Department of FEED, participated in a number of initiatives to educate our people on responsible gambling through the Setsokotsane Programme led by the Premier of the Province, Honourable Mahumapelo. Amidst all of the above, the Board acknowledges the challenges which continue to exist in this space. Paramount to the challenges of effective gambling regulation there is a problem of rampant unlicensed gambling operations. During the period under review, we have identified sixty two (62) unlicensed gambling operations in the Province. We, together with other stakeholders such as the South African Police Service are working very hard to find a lasting solution to this problem which is costing the economy of the Province millions in potential revenue. It is the intention and mandate of the Board to ensure that, it upholds and improves in the future and ensures transformation and complete inclusiveness and participation of previously disadvantaged individuals in the industry. The Chief Executive Officer would also want to extend his gratitude to the Board of Directors, Executive Management, Senior Management and the entire Staff of the North West Gambling Board in their endeavour to support the Board in realising its strategic objectives and set targets achieved during the Financial Year under review. It is therefore with great pleasure and gratitude, to present the Annual Report of the North West Gambling Board for the 2015/16 Financial Year. The legalised form of gambling modes contributed R140 million into the Provincial Revenue Fund up from R110 million in 2014/15 Financial Year. As part of conditions of licensing, the aforementioned entities further contributed to Community Social Investments an amount of R5,1 million to various projects across the Province. Fortune Sekgaphane Chief Executive Officer 13

16 Performance Information Part B Performance Information 1. Statement of Responsibility for Performance Information 2. Executive Management 3. Senior Management 4. Auditor-General s Report: 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 14 North West Gambling Board

17 Annual Report Statement of Responsibility for Performance Information Statement of Responsibility for Performance Information for the Financial 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 financial year ended 31 March 2016 has been examined by the external auditors and their report is presented on page 102. The performance information of the entity set out on page 23 to page 39 was approved by the Board. Fortune Sekgaphane Chief Executive Officer 15

18 Performance Information 2. Executive Management FS Sekgaphane Chief Executive Officer MP Mothiba (Resigned) Chief Operations Officer RJ Montshioa Legal Manager S Motlhamme Chief Financial Officer (Vacant) Corporate Services Manager 16 North West Gambling Board

19 Annual Report Senior Management Front row, seated: S Mogapi D Makhudu T Mathebula Back row, standing: F Khomogwe K Monate M Maake 17

20 Performance Information 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 Report. Refer to page 102 of the Auditors Report, published as Part E: Financial Information. 18 North West Gambling Board

21 Annual Report 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 (4) Casinos. The process of rolling out the fifth casino license is dependent on the Department of Trade and Industry finalising the Regulations to enable the Province to commence with the license processes. Furthermore, the North West Gambling Board has three (3) Route Operators for Limited Payout Machines, three (3) Bingo Operators, six (6) Bookmaker License Holders which have thirteen (13) premises, five (5) Amusement Machine Operators, one (1) Independent Site Operator, Limited Payout Machines and fourteen (14) Totalizator Outlets. 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 licenses are found suitable or fit and proper to operate gambling activities in order to curtail all possible forms of criminal activity or unscrupulous practices. 19

22 Performance Information In the premise of promoting responsible gambling in the North West Province, it is the responsibility of the Board to ensure that it has strategy in place which seeks to promote responsible gambling. It is the responsibility of the Board to protect members of the public against all forms of malpractices in order to promote fair play and responsible gambling. In achieving the above, it is 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. The rationale behind this is to ensure that, there is no possibility 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 payments of winnings when they are due. Through its strategy of responsible gambling the Board has embarked on awareness and education campaigns on responsible gambling. The purpose of this is to ensure that punters are protected from the addictive nature of gambling. Failure of the Board not to embark on this strategy, could have had compulsive and negative impact on the living standards of society. As a matter of fact, unless gambling is strictly regulated and constantly monitored, it will destroy the economic growth potential of the area where such facilities are located. Social Responsibility As part of social responsibility, the Board has ensured that there is a contribution to communities from the licensees in order to deliver on the expectations of the Board. The Board has established a Socio-Economic Development Committee, which mandate is to ensure that programmes of the Board are aligned with the National Development Plan and adhered to the Provincial strategic priorities. As a result, the Board embarked on a number of programmes which will expedite the meaningful empowerment credentials in order for it to achieve its socio-economic impact to the communities. These interventions are already showing signs of positive results, as it can be seen in the steady increase in job opportunities. Organisational Environment The Board is proud to announce the achievement of its recruitment target as it can be observed from the last quarter of the Financial Year under review. To ensure that the Board will continue to achieve its objectives, positions will be prioritised and funded annually, until hundred and eleven (111) positions identified in the organogram are all filled. Furthermore, the Board will continue to attract and retain scarce skills. 20 North West Gambling Board

23 Annual Report

24 Performance Information 6. Strategic Outcome Oriented Goals In developing the strategic objectives of the Board, cognisance was taken of the Strategic Outcome Oriented Goals of the controlling Department of Finance, Economy and Enterprise Development. These are aimed at regulating business activities in the Province to create a legal, business and socio-economic environment conducive to business prosperity. Strategic Objectives of the Board In response to the Medium Term Strategic Framework , the Board will focus mainly on Service Delivery Outcome 4: Decent employment through inclusive economic growth. 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 Improve efficiencies in the regulation of all forms of gambling. Strategic Objective 3 Monitor and enforce compliance with the Broad-Based Black Economic Empowerment Act (BBBEE Act) and Codes of Good Practice within the Industry. Strategic Objective 4 Strengthening the institutional capacity of the Board. 22 North West Gambling Board

25 Annual Report Performance Information by Programme Chief Operations Office The Chief Operations Office is responsible for Investigations and Licensing, Gambling Control and Gambling Audit and Systems. 23

26 Performance Information Programme 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 Strategic Objectives Key Performance Indicator Actual Achievements 2014/2015 Planned Target 2015/2016 Actual Achievements 2015/2016 Deviation from Planned Target to Actual Achievement for 2015/2016 Comment on Deviations Create an enabling environment for responsible licensing of all forms of gambling allowed in terms of the legislation. Number of Limited Payout Machines rolled out The delay in the roll-out of sites were caused by delays in the consideration and approval by the sites especially the Type B sites by NGB. The backlog of 196 LPMs will be rolled out in the first quarter of the 2016/17 FY. Fifth Casino Licence granted and issued The process of rolling out the fifth casino license is dependent on the Department of Trade and Industry finalising the Regulations. Number of Bookmaker premises rolled out Licensees failed to roll out Bookmaker premises as per license conditions. However, the backlog of 10 Bookmaker premises will be rolled out in the first quarter of the 2016/17 FY Number of Totalizator agencies and branches rolled out Century Loop Rite Trade (the licensee) has not yet submitted applications for Branches and Agencies and is therefore not operational. Number of license conditions reviewed and issued addressing BBBEE objectives Over-achievement is due to additional modes of licenses approved in the 2015/16 FY. 24 North West Gambling Board

27 Annual Report Strategy to Overcome Areas of Under-Performance 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 Payout Machines rolled out. 40 Type A and 135 Type B Machines to be rolled out (175 LPMs) before the end of the next quarter Number of Bookmaker premises rolled out. 10 Bookmaker premises to be rolled out in the next quarter Number of Totalizator agencies and branches rolled out. Five (5) Totalizator branches to be rolled out in the next quarter Linking Performance to Budgets: Programme 1: Investigations and Licensing 2014/ /16 Budget R 000 Actual Expenditure 2014/2015 R 000 (Over/Under) Expenditure R 000 Budget R 000 Actual Expenditure 2015/16 R 000 (Over/Under) Expenditure R (2 412) Total (2 412) 25

28 Performance Information Programme 2: Gambling Control Purpose: To ensure that gambling is conducted in compliance with the North West Gambling Legislation and in a fair and honest manner Strategic Objectives Key Performance Indicator Actual Achievements 2014/15 Planned Target 2015/16 Actual Achievements 2015/16 Deviation from Planned Target to Actual Achievement for 2015/2016 Comment on Deviations Improve efficiencies in the regulation of all forms of gambling Number of regulatory compliance inspections conducted at licensed premises to ensure compliance with Legislative Requirements and Licensing Conditions None Number of gambling machines tested and evaluated at casinos to ensure compliance with the National Regulator of Compulsory Specifications Technical Requirements More gambling machines tested at the request of Licensees. Number of gambling machines tested and evaluated at Limited Payout Machine sites to ensure compliance with the National Regulator of Compulsory Specifications Technical Requirements None Number of Bingo Terminals tested and evaluated to ensure compliance with the National Regulator of Compulsory Specifications Technical Requirements. None None Number of illegal gambling operations reported to the South African Police Services for criminal investigation and prosecution None Number of offence notices issued to illegal gambling operators. None None 26 North West Gambling Board

29 Annual Report Linking Performance to Budgets: Programme 2: Gambling Control 2014/ /16 Budget R 000 Actual Expenditure 2014/15 R 000 (Over/Under) Expenditure R 000 Budget R 000 Actual Expenditure 2015/16 R 000 (Over/Under) Expenditure R Total

30 Performance Information Programme 3: Gambling Audit and Systems Department Purpose: To provide assurance that all levies and taxes from the Licensees are accurate and complete and that compliance to legislation is adhered to Strategic Objectives Key Performance Indicator Actual Achievements 2014/2015 Planned Target 2015/2016 Actual Achievements 2015/2016 Deviation from Planned Target to Actual Achievement for 2015/2016 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 One (1) Licensee (Century Loop Rite Trade) could not be audited for two (2) consecutive quarters because it was not operational. Number of Compliance and Revenue Audits performed to ensure compliance with Gambling Legislative Requirements One (1) licensee (Hurtees) could not be audited for four (4) consecutive quarters because of closure of business. 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 Monitor and enforce compliance with the BBBEE Act and codes of good practice within the Industry Number of BBBEE Audits conducted to ensure compliance with BBBEE plans, North West Gambling Act and License Conditions One (1) licensee (Hurtees) could not be audited for four (4) consecutive quarters because of closure of business 28 North West Gambling Board

31 Annual Report Strategy to Overcome Areas of Under-Performance Strategic Objectives Performance Indicator Strategy to Address Under-Performance Improve efficiencies in the regulation of all forms of gambling Number of Compliance and Revenue Audits performed to ensure compliance with Gambling Legislative Requirements Audit reviews will be conducted once the licensee starts operating Monitor and enforce Compliance with the BBBEE Act and codes of good practice within the industry Number of BBBEE audits conducted to ensure compliance with BBBEE plans, North West Gambling Act and License conditions Audit reviews will be conducted once the Licensees start operating Linking Performance to Budgets: Programme 3: Gambling Audit and Systems 2014/ /16 Budget R 000 Actual Expenditure 2014/15 R 000 (Over/under) Expenditure R 000 Budget R 000 Actual Expenditure 2015/16 R 000 (Over/under) Expenditure R (491) Total (491) 29

32 Performance Information Programme 4: Legal Services Purpose: To provide effective and efficient legal services and support to the Board Strategic Objectives Key Performance Indicator Actual Achievements 2014/15 Planned Target 2015/2016 Actual Achievements 2015/16 Deviation from Planned Target to Actual Achievement for 2015/2016 Comment on Deviations Strengthening institutional capacity of the Board Number of reports on legal advice to be provided Number of reports on Contracts with third parties reviewed None None None None Number of reports on status of litigation None None North West Gambling legislation reviewed Not planned/ New Key Performance Indicator There was a need identified to review additional legislation in respect of Regulations Number of reports on performance assessment of the Board Not planned/ New Key Performance Indicator None None Number of reports on performance assessment of committees of the Board. Not planned/ New Key Performance Indicator None None Number of Board and committee meetings There was a need for special meetings to address urgent matters affecting the daily running of the organisation. 30 North West Gambling Board

33 Annual Report Linking Performance to Budgets: Programme 4: Legal Services 2014/ /16 Budget R 000 Actual Expenditure 2014/15 R 000 (Over/under) Expenditure R 000 Budget R 000 Actual Expenditure 2015/16 R 000 (Over/under) expenditure R (2 249) (162) Total (2 249) (162) 31

34 Performance Information Programme 5: Finance Department Purpose: To provide effective and efficient financial management system for the Board Strategic Objectives Key Performance Indicator Actual Achievements 2014/2015 Planned Target 2015/2016 Actual Achievements 2015/2016 Deviation from Planned Target to Actual Achievement for 2015/2016 Comment on Deviations Strengthening the institutional capacity of the Board. Number of Financial status reports prepared to ensure that the Board sustain its operations None None Number of Budget vs Actual reports to ensure that the programmes spend within their allocated budget None None Submission of Budget for 2016/17 FY None None Number of Monthly bank reconciliations performed within seven (7) days for each account 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 reconciliations None None Number of Monthly revenue transfer to the government by the 15th April and May revenue transfers were made on 26 June 2015 and 14 July 2015 respectively, due to the fact that the Board laboured under the impression that the self-funding model was approved which then would have allowed retention of the collected revenue to be used for the entity s operation. A total of 12 transfers was made during the year of which two (2) was not transferred on the 15th. 32 North West Gambling Board

35 Annual Report Strategic Objectives Key Performance Indicator Actual Achievements 2014/2015 Planned Target 2015/2016 Actual Achievements 2015/2016 Deviation from Planned Target to Actual Achievement for 2015/2016 Strengthening the institutional capacity of the Board. Number of internal and external audits conducted. Number of compliance evaluation reports on internal control procedure manuals prepared None None None None % of goods and services procured in line with Treasury Regulations, PFMA and PPPFA. 100% 100% 100% None None Number of status reports on asset verification None None Number of assets spot check reports None None Number of stock-take and variance analysis reports None None Linking Performance to Budgets: Programme 5: Finance Department 2014/ /16 Budget R 000 Actual Expenditure 2014/15 R 000 (Over/under) Expenditure R 000 Budget R 000 Actual Expenditure 2015/16 R 000 (Over/under) Expenditure R (1 364) Total (1 364) Comment on Deviations 33

36 Performance Information Programme 6: Chief Executive Office The Chief Executive Officer is responsible for providing strategic leadership and general management of the organisation. This program is also responsible for the strategic planning, reporting, monitoring and evaluation of the overall performance of the Board. Over and above that, this office is responsible for the Governance and Risk Management. Linking Performance to Budgets: Programme 6: Chief Executive Office 2014/ /16 Budget R 000 Actual expenditure 2014/15 R 000 Over)/underexpenditure R 000 Budget R 000 Actual expenditure 2015/16 R 000 Over)/underexpenditure R (238) Total (238) 34 North West Gambling Board

37 Annual Report Programme 7: Corporate Services The Corporate Services Manager is responsible for Human Resources, Corporate Relations, Facilities and Information Technology. The position of Corporate Services Manager was advertised, but has not yet been filled. 35

38 Performance Information Programme 7: Corporate Services Department 7.1 Human Resources Purpose: To provide sound Human Resources management and development Strategic Objectives Key Performance Indicator Actual Achievements 2014/2015 Planned Target 2015/2016 Actual Achievements 2015/2016 Deviation from Planned Target to Actual Achievement for 2015/2016 Comment on Deviations Strengthening the institutional capacity of the Board Number of positions filled in line with the approved organisational structure In April 2015/16 FY the Board approved the new structure leading to the establishment of new positions resulting in an increase in staff complement. Number of reports on benchmarking of employees salaries and benefits None None Number of leave reports None None Human Resources policy reviewed None None Number of performance appraisals reports None None Number of employee payroll reports None None Number of reports on training None None Number of reports on employee health and wellness None None Number of employment equity reports None None 36 North West Gambling Board

39 Annual Report Corporate Relations Purpose: Provide effective, professional support to Corporate Relations and promote Responsible Gambling Strategic Objectives Key Performance Indicator Actual Achievements 2014/2015 Planned Target 2015/2016 Actual Achievements 2015/2016 Deviation from Planned Target to Actual Achievement for 2015/2016 Comment on Deviations To strengthen the institutional capacity of the Board Number of internal articles in line with Communication Strategy 80% The Board utilised more platforms to profile its image and promote various services. Report on full implementation of the Corporate Identity Manual The funds were not enough to roll out the full implementation of the corporate identity refurbishment plan. Number of exhibitions profiling the services and programmes of the Board The Board participated in more provincial activities and exhibitions to promote its services. Number of educational and awareness campaigns conducted The Board participated in more provincial activities which set a platform to educate people on its programmes and services. Strategy to overcome areas of under-performance Strategic Objectives Performance Indicator Strategy to Address Under-Performance Strengthening the institutional capacity of the Board Report on full implementation of the Corporate Identity Manual Request for more funding in the 2016/17 FY. 37

40 Performance Information 7.3 Information and Communications Technology Purpose: To provide Information and Communications Technology Support Services Strategic Objectives Key Performance Indicator Actual Achievements 2014/15 Planned Target 2015/16 Actual Achievements 2015/16 Deviation from Planned Target to Actual Achievement for 2015/2016 Comment on Deviations Strengthening the institutional capacity of the Board Review Master System Plan None Reviewed IT policies The Board had only five (5) approved policies to be reviewed; there was a shortfall of one (1) Number of software licenses renewed None None Number of operating system updates None None Number of Virus definitions updates None None Strategy to overcome areas of under-performance Strategic Objectives Performance Indicator Strategy to Address Under-Performance Strengthening the institutional capacity of the Board Report on full implementation of the Corporate Identity Manual Request for more funding in the 2016/17 FY. 38 North West Gambling Board

41 Annual Report Programme Facility Management The Sub-Directorate Facilities Management has not been functional because the positions of a Facilities Management Manager and Officers are still vacant in anticipation of being filled during the 2016/2017 financial year. Currently, only the positions of Messenger and Office Assistants (Cleaners) have been filled. Linking Performance to Budgets: Programme 7: Corporate Services 2014/ /16 Budget R 000 Actual Expenditure 2014/15 R 000 Over)/Under- Expenditure R 000 Budget R 000 Actual Expenditure 2015/16 R 000 (Over/Under) Expenditure R Total

42 Performance Information 8. Summary of Financial Information Summary of Revenue Collected 2014/ /2016 Sources of Revenue Revenue Target R 000 Actual collection R 000 (Over/under) Collection R 000 Revenue Target R 000 Actual Collection R 000 (Over/under Collection R 000 Gaming Levies, Taxes and Licences Total The Board over collected by 1% in 2014/15 Financial Year and over collected by 6% during 2015/16 Financial Year. The Junket Jackpot contributed 24% on the overall revenue collection during the year under review. The additional Bookmakers, Limited Payout Machines during the year under review also contributed to overcollection of revenue. Summary of Board Expenditure 2014/ /2016 Sources of Revenue Budget R 000 Actual Expenditure R 000 Over/under- Expenditure R 000 Budget R 000 Actual Expenditure R 000 Over/under Expenditure R 000 Grant Received Total The Board received a grant of R during 2015/16 Financial Year. The approval to use the savings from previous years was granted and it increased the budget to R out of which only R was not utilised as at 31 March North West Gambling Board

43 Annual Report Statistics List of Licensees Casinos Bingo Operations Independent Site Operator Bookmakers Route Operators Site Operators Totalizators Amusement Machine Operators Holders of Certificate of Suitability Employee Registration Gambling Machines and Table Statistics Registered Gambling Tables by Unit Registered Gambling Machines by Unit Registered Gambling Tables by Gambling Mode Registered Gambling Tables Approved Letters of Certification Illegal Gambling Statistics Revenue Performance by Licensees Casinos Limited Payout Machines Bingo Operations Totalizator Bookmakers 41

44 Performance Information 9.1 List of Licensees Casinos Licensees Trading Name Town Peermont Global (NW) (Pty) Ltd Rio Hotel Casino Convention Resort Klerksdorp Peermont Global (NW) (Pty) Ltd Mmabatho Palms Hotel Casino Mmabatho Convention Resort Sun International SA Ltd Sun City Casino Mogwase Sun International SA Ltd The Carousel Casino & Entertainment World Temba Bingo Operations Licensees Trading Name Town Santoscan (Pty) Ltd Goldrush Bingo Rustenburg Santosat (Pty) Ltd Goldrush Bingo Potchefstroom Galaxy Bingo North West (Pty) Ltd N/A Brits Independent Site Operator Licensee Trading Name Town Hurtees Entertainment Center (Pty) Ltd* N/A Hartebeespoort * Hurtees ceased operations in 2014 and is in the process of applying for the removal of business to other premises Bookmakers Licensees Trading Name Town Betting World (Pty) Ltd N/A Sun Village Betting World (Pty) Ltd N/A Rustenburg Cornelius Johannes Coertze N/A Rustenburg Central Gaming Management (Pty) Ltd Vendinet (Pty) Ltd Vendivista (Pty) Ltd Vendinet (Pty) Ltd Vryburg Potchefstroom Rustenburg Century Loop Rite Trade (Pty) Ltd* N/A Operations not yet commenced Dankopath (Pty) Ltd G-Bets Klerksdorp Bapong Moruleng Ga-Rankuwa Potchefstroom Tlhabane VBet SA North West (Pty) Ltd N/A Klerksdorp * Operations not yet commenced 42 North West Gambling Board

45 Annual Report Route Operators Licensees Trading Name Town Vukani Gaming North West (Pty) Ltd N/A Rustenburg Bathusi Investment (Pty) Ltd Bathusi Gaming Rustenburg Bon View Trading 111 (Pty) Ltd North West Goldrush Gaming Mafikeng 43

46 Performance Information List of Site Operators Vukani Gaming North West (Pty) Ltd No. Licensees Trading Name Town 1 Catharina Van Sittert Noordkom Tavern Klerksdorp 2 Catharina Van Sittert Noordkom Tab Agency Klerksdorp 3 William Mortimer Henning Sante Fe Ladies Bar Hartebeespoort 4 Isaac Abraham Palmer Shongweni Rustenburg 5 Grassa Batista Cosmos Zeerust 6 Jose Da Mata Caravela Portuguesa Restaurant Haartebeespoort 7 Daniel Concalves Pestana De Sun Pub & Grill Mahikeng 8 Tertius Esterhuizen Impala Hotel Potchefstroom 9 Rui Miguel Rocha Surrey Hotel Mahikeng 10 Molifi Cyprian Lekoma Protea Ebony and Ivory Jazz Bar Mahikeng 11 Magxolo Douglas Radebe Mthimkhulu Bar Lounge Mogwase 12 Joao Gabriel Nunes Gullys Jungle Bar Klerksdorp 13 Celistino Correia Gouveia Sun Restaurant Klerksdorp 14 Norman Diphoko Diphoko Tavern Phokeng 15 Sebodi Samuel Mokgadi Sedibelo Liquor Restaurant Makgobistad 16 Egopoleng Frank Modisamongwe Tlotlang Club 2000 Taung 17 Manuel Francisco De Matos Francisco Restaurant Rustenburg 18 Richard John Steyn Keg & Bull Restaurant Safarituine 19 John Ntimba Ntimba Tavern Stillfontein 20 Jean Wlliam Jacobs Sterlitzia Park Rustenburg 21 Phumelela Gaming and Leisure Ltd Tab Potchefstroom Potchefstroom 22 Phumelela Gaming and Leisure Ltd Tab Orkney Orkney 23 Phumelela Gaming and Leisure Ltd Tab Lichtenburg Lichtenburg 24 Guiherme Mendes Catanho Quicksilver Pub & Grill Rustenburg 25 Susara Van Wyk Easy Eats Pub & Restaurant Klerksdorp 26 Christelle Kruger Alpha Snack Bar Potchefstroom 27 Samuel Ngwenya Bluemoon Entertainment Brits 28 Hesther Cathrina Anastassiou Mamusa Restaurant & Kroeg Schwaizer-Reneke 29 James Edgar Arendse Jammers Pub & Grub Bloemhof 30 Joao Manuel Aguiar Da Silva Pick & Eat Restaurant Rustenburg 31 Antoinettte Kealeboga Atkinson The Pitch Next Door Mahikeng 44 North West Gambling Board

47 Annual Report Vukani Gaming North West (Pty) Ltd (Continued) No. Licensees Trading Name Town 32 Candro Trade (Pty) Ltd Surrey Hotel Eating House Mahikeng 33 Phumelela Gaming and Leisure Ltd Tab Brits Brits 34 Phumelela Gaming and Leisure Ltd Tab Rustenburg Rustenburg 35 Phumelela Gaming and Leisure Ltd Tab Sun Village Mogwase 36 Betting World (Pty) Ltd Betting World Rustenburg 37 Phumelela Gaming and Leisure Ltd Tab Mahikeng Mahikeng 38 Wildebeest Liquor (Pty) Ltd Sunset Tavern Rustenburg 39 Taz Motors CC Them Stone Pub and Grill Brits 40 Noah Edward Marope Sandton Tavern Lehurutshe 41 Gerhardus Jacobus Albertus Viljoen Gecko s Coffee & Grill Restaurant Mooinooi 42 Barend Jacobus Gnade Bullets Schweizer-Reneke 43 Lehobo Nhlodi Philemon Tranvaal Hotel Rustenburg 44 Hirot Ashebir Malatjie Yonk Eating House Rustenburg 45 Pedro Goncalves Chadinha Royal Lounge Rustenburg 46 Pedro Goncalves Chadinha Royal Lush Lounge Rustenburg 47 Daniel Petros Potgieter Pretzels Freemanville 48 Celestino Correia De Gouveia Sun Night Club Klerksdorp 49 Mosimanegape Benjamin Kobang Poloko Restaurant Ganalaagte 45

48 Performance Information Bathusi Investment (Pty) Ltd t/a, Bathusi Gaming No Licensees Trading Name Town 1 Lin Xuehua Malan Street Tavern Rustenburg 2 Lin Xuehua First Class Restaurant Rustenburg 3 Catherine Ntatsi Masisi Fourways Tavern Mogwase 4 Vincent Medupe Sleek s Tavern Koster 5 Tshegofatso Benedict Mabote Lesedi By Night Hebron 6 Viwe Samuel Ncalo Jazz Tavern Rustenburg 7 Jackie Sekgwela J.D.S Tavern Brits 8 Shadreck Williams Moretele Bar Lounge Moretele Bon View Trading 111 (Pty) Ltd t/a, North West Goldrush Gaming No Licensees Trading Name Town 1 Mmajoel Elizabeth Malapane Maliza Tavern Mmakau 2 Rakale Josia Radikobonyana Boikhutsong Bar Lounge Rustenburg 3 Stephen Bonke Phiri Love and Peace Tavern Saulspoort 4 Fernandes Jose Antonio Super-Hot Food & Pub Tlhabane 5 Hazel Strauss Duitswes Kombuis Hartebeespoort 6 Braz Sousa Da Costa Roadway Lodge (Pty)Ltd Mahikeng 7 Robertina Gaborekwe Motaung Nono s Restaurant Klipgat 8 Kholiwe Regina Letlhogile Reggie s Tavern Taung 9 Matseke Piet Ranko Ndofaya Tavern Klipgat 10 Chistiana Nnamdi Okwaranwa The Star Restaurant Klerksdorp 11 Gopolanag Mashome Dichaba Kopano Mahikeng 12 Matutu Caiphus Letlole Supingstad Bar Lounge Zeerust 13 Itumeleng Simon Sima Itumeleng Liquor Restaurant Taung 14 De Sousa Manuel Inacio Capelo Godfather Restaurant Stilfontein 15 Alfred Gabonewe Mogwasi Semunye Tavern Lehurutshe 16 Willem Vander Merwe Tom Dick and Harry Sports Bar Hartebeespoort 17 Tlharesane Daniel Segwagwa Itlotle Restaurant Morokweng 18 Kedifentse Getrude Kgaladi Nox s Tavern Bethanie 19 Mmathaba Annah Rakoma Bridge s Tavern Saulspoort 20 Phineas Thapelo Setshoane Botsalano Café and Restaurant Rustenburg 46 North West Gambling Board

49 Annual Report Bon View Trading 111 (Pty) Ltd t/a, North West Goldrush Gaming (continued) No Licensees Trading Name Town 21 Molote Kgomotso Anna Radiate Restaurant Rustenburg 22 Phumelela Gaming and Leisure Ltd Tab Klerksdorp Klerksdorp 23 Phumelela Gaming and Leisure Ltd Tab Rusternburg Rustenburg 24 Phumelela Gaming and Leisure Ltd Tab Zeerust Zeerust 25 Thelmarie Raath Sixpence and Penny Liquor Restaurant Koster 26 Mashome Gopolang Phola Park Tavern Mahikeng 27 Moleko s Tavern-Oppideck CC Moleko s Tavern-Oppideck CC Brits 28 Ndo Jeremiah Doyi Central Restaurant Koster 29 Karabo Dominic Mafatshe Karaboz Rustenburg 30 Dikhutsafalo Samuel Pooe Blue Note Tavern Coligny 31 Ishmael Morake Moeketsi Chaichos Inn Lehurutshe 32 Glenda s Pub and Grill CC Libertas Pub and Grill Ottosdal 33 Three - Empire Trading and Project CC Eagle Square (Lagos Restaurant) Lichtenburg 34 Esau Maleshano Loate Graceland Restaurant Mahikeng 35 Poroti Reuben Motsepe Maphelong Pub and Grill Hammanskraal 36 Vuisile Abraham Mjezo Vuku Inn Ventersdorp 37 Jansen Van Rensburg Sarel Johannes Noordwesboere Bar Potchefstroom 38 Chiloane Dricca Lethabong Tavern Klipgat 39 Manuel Luiz Pereira Da Costa Discovery Sports Bar Potchefstroom 40 Ntshimane Isaac Tlhapi Tlhapi s Tavern Klipgat 41 Kebookile Johanna Mayo Blue House Tavern Orkney 42 Elvis Moyo White House Tavern Mahikeng 43 Jose Paulo Fernandes De Andrade Theo s Sports Bar Swartruggens 44 Deldrank Bk Oasis Restaurant Delareyville 44 Pierre Vermeulen JW Tavern Ventersdorp 46 Herman Tony Sellwe Curty s Tavern Rustenburg 47 Kanene Thomas Moagaesi Thaba Bar Lounge Madibogo 48 Norman Keitumetse Letsapa Ikhutseng Bar Lounge Kraaipan 49 Lion Peterson New Millinium Restaurant Brits 50 Frans Sello Chauke Sijo s Tavern Mathibestad 51 Fransisco Jose Jardim Ponte Franks Sports Bar Potchefstroom 52 Fredrick Jacobus Marais Frekkies Sports Bar Silkaatsnek 47

50 Performance Information Bon View Trading 111 (Pty) Ltd t/a North West Goldrush Gaming (continued) No Licensees Trading Name Town 53 Pogiso John Montsiwagae Morula Lodge Schweizer-Reneke 54 Andries Zabe Sithole Yizo Yizo Tavern Hammanskraal 55 Nelson Floretino Duarte Porto s Tavern Potchefstroom 56 Tlharesane Daniel Segwagwa Ramatlhale Tavern Morokweng 57 Joubert Hendrik Johannes Zama Zama Tavern Bloemhof 58 Gabolwelwe Kgomotso Elizabeth P.S.J.M Zonke Bonke Makapanstad Mosina 59 Samuel Myekeni Ntsizi Café Uhuru Potchefstroom 60 Moarabi Daniel Khutswane Badibone Kae Inn Zeerust 61 Mahabae Suzan Modisadife Suzan s Tavern Wolmaranstad 62 Nico City Tavern Nico City Tavern Moretele 63 Petronella Magrieta Van Vuuren Blue Star Tavern Ventersdorp 64 José Antonio Rodrigues Nikita Pub & Grill Brits 65 Susana Martha Henny Oase Liquor Restaurant Swartruggens 66 Maria Cecilia De Freitas Dos Santos Tumelong Restaurant Potchefstroom 67 Masimong Sports Bar CC Masimong Sports Bar Potchefstroom 68 Kuki Miriam Cwati Thandeka s Tavern Klipgat 69 Molebatsi Jeffrey Dithejane Legae Pub & Restaurant Wolmaranstad 70 Santoscan (Pty) Ltd Goldrush Bingo Rustenburg 71 Santosat (Pty) Ltd Goldrush Bingo Potchefstroom 72 On The Go Liquor (Pty) Ltd Promosa Restaurant Potchefstroom 48 North West Gambling Board

51 Annual Report List of Totalizators No Licensees Number of Branches Number of Agencies 1 Phumelela Gaming and Leisure Limited Century Loop Rite Trade (Pty) Ltd* 0 0 *Operations not yet commenced List of Totalizator Branches Phumelela Gaming and Leisure Limited - Branches Brits Klerksdorp Lichtenburg Mahikeng Orkney Potchefstroom Rustenburg taxi rank Rustenburg (CBD) Zeerust Sun village Taung (this branch ceased operations on 24 November 2015) 49

52 Performance Information List of Totalizator Agencies Phumelela Gaming and Leisure Limited - Agencies Hartebeespoort Letlhabile Noordkom Centre Ventersdorp Amusement Machine Operators Licensees Town Number of Machines Fantasia Family Entertainment Centre Klerksdorp 20 Fantasia Family Entertainment Centre Potchefstroom 13 Fantasia Family Entertainment Centre Rio Casino 17 The Magic Company (Pty) Ltd. Sun City Casino 75 The Magic Company (Pty) Ltd. The Carousel Casino North West Gambling Board

53 Annual Report Holders of Certificate of Suitability Registrants Type of Service 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 Repro 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 Security Services Surveillance Systems Surveillance Systems Surveillance Systems Printing Printing Printing Printing and Supplier Supplier and Maintenance Security Services Surveillance Systems Security Services 51

54 Performance Information 9.3 Employee Registration Licensees Registered Gambling Employees Permanent Registration Temporary Registration The Carousel Casino Sun City Casino Mmabatho Palms Casino Rio Casino Phumelela Gaming DDL Security Services (Pty) Ltd t/a, 24/7 Security Services Vukani Gaming North West Goldrush Gaming Bathusi Gaming Site Operators Betting World Central Gaming Management Galaxy Bingo Goldrush Bingo G-Bets V-Bet CJ Coertze Total North West Gambling Board

55 Annual Report Gambling Machines and Table Statistics Mmabatho Palms 9 Rio Casino 11 Carousel Casino 25 Registered Gambling Tables by Unit Sun City Casino 43 Figure 1 Mmabatho Palms Casino 155 Rio Casino 274 Registered Gambling Machines by Unit Carousel Casino 700 Sun City Casino 645 Figure 2 Punto Banco Tables 2 Poker Tables 9 Baccarat Tables 2 Blackjack Tables 37 Registered Gambling Tables by Mode Roulette Tables 38 Figure 3 53

56 Performance Information Registered Gambling Tables Sun City Casino Mmabatho Palms Casino Carousel Casino Rio Casino Black Jack Tables Roulette Tables Poker Tables Punto Banco Tables Baccarat Tables Total Approved Letters of Certification Number of LOCs Approved 3 Point Gaming 2 Aristocrat 46 Aruze Gaming 81 Atomic Gaming 57 Austrian Gaming Industries Africa 23 Bally Gaming 130 BET Entertainment Technologies 1 Bettech Gaming 1 CDP Gaming 1 Cerion Trading 4 Custom Gaming Solutions 7 GPI Management Services 5 International Gaming Technologies 239 Omega Gaming 55 Route Gaming Solutions 1 Season s Find 1090 CC 1 Simplicit - E Gaming Solutions 28 TCS John Huxley 15 Turf Sports 10 Vukani Gaming Corporation 8 WMS Gaming 16 Total number of approvals done North West Gambling Board

57 Annual Report Illegal Gambling Statistics Statistics Total Number of Raids/Closures 3 Confiscated Gambling Computers 151 Confiscated Gambling Tables 0 Gambling Machines Destroyed 64 Gambling Tables Destroyed 0 Number of Gambling Machines in the Warehouse 52 55

58 Performance Information 9.6 Revenue Performance and Statistical Analysis by Licensees Casinos Source % Change Turnover % GGR % Levies % Monthly Levy Comparison (Millions) Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Figure 4 56 North West Gambling Board

59 Annual Report Contribution by Machines and Tables Source Total Number Turnover GGR Levies Machines Tables Total Levy Contribution by Machines and Tables Levy Tables 44% Contribution by Machines Machines 56% and Tables Figure 5 57

60 Performance Information Limited Payout Machines (LPMs) Source % Change Turnover % GGR % Levies % Monthly Levy Comparison (Thousands) Figure 6 0 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar North West Gambling Board

61 Annual Report Bingo Operations Source % Change Turnover % GGR % Levies % Monthly Tax Comparison (Thousands) Figure Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

62 Performance Information Totalizator Source % Change Turnover % GGR % Taxes % Monthly Tax Comparison (Thousands) Figure 8 0 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar North West Gambling Board

63 Annual Report Contribution by Branches, Agencies and Telebet Source Total Number Turnover GGR Taxes Branches Agencies Telebet Total Tax Contribution by Branches, Agencies and Telebet Agencies 11% Telebet 12% Tax Contribution Branches 77% Figure 9 61

64 Performance Information Bookmakers Source % Change Turnover % GGR % Taxes % Monthly Tax Comparison (Thousands) Monthly tax comparison: Taxes Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Figure North West Gambling Board

65 Annual Report Contribution by Horse racing and Sport Source Turnover GGR Taxes Horse racing Sport Total Tax contribution by Horse racing and Sport Horse racing 9% Tax contribution by Horse racing and Sport Sport 91% Figure 11 63

66 Governance Part C Governance 1. Introduction 2. Portfolio Committee 3. Executive Authority 4. The Board 5. Risk Management 6. Internal Control Unit 7. Internal Auditors 8. Compliance with Laws and Regulations 9. Fraud and Corruption 10. Minimising Conflict of Interest 11. Code of Conduct 12. Health, Safety and Environmental Issues 13. Company Secretary 14. Community Social Investment 15. Audit Committee Report 64 North West Gambling Board

67 Annual Report Introduction 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. The Board is led by 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. In this regard, the functions, objectives and responsibilities of the North West Gambling Board 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 (Act No. 38 of 2001) as amended, and other related Legislation, Regulations and Rules. 2. Portfolio Committee As part of the oversight role performed by the Provincial Legislature, the North West Gambling Board held series of meetings with the Portfolio Committee to present Annual Report for the 2014/15 Financial Year, Quarterly Reports for the 2015/16 Financial Year and a draft for the Annual Performance Plan for 2016/17 Financial Year. 3. Executive Authority During the period under review, the North West Gambling Board submitted four quarterly reports to the Executive Authority on 31 July 2015, 09 October 2015, 14 January 2016 and 18 April 2016, respectively. Composition of the Board Members of the Board, from various fields of expertise, are appointed by the MEC responsible for Finance, Economy and Enterprise Development in the Province. These include: (i) (ii) (iii) (iv) (v) (vi) (vii) legal practitioners; accountants or auditors registered in terms of the Public Accountants and Auditors Act, 1991 (Act No. 80 of 1991); persons with knowledge and experience in the field of welfare or socio-economic development; persons with knowledge of, and active involvement in, the tourism industry; persons with proven business acumen; persons with knowledge of the gambling industry; and members designated from the Department of Finance, Economy and Enterprise Development and the Department of Public Safety and Transport. During the period under review, the Board comprised of only seven (7) members instead of nine (9), as required by the provisions of the North West Gambling Act. This interaction with the Portfolio Committee has gone along way to improve the performance of the organisation, to address the financial and operational challenges experienced and to provide guidance and advise to the Board. 65

68 Governance Members of the Board Seated, from left to right: FS Sekgaphane (Chief Executive Officer) LMI Seepe (Deputy Chairperson) LW Vere (Chairperson) Standing from left to right: TK Mathe, Dr N Maharaj, Col CM Kgorane, TC Kgomo NI Kunene and HM Mashao. 66 North West Gambling Board

69 Annual Report

70 Governance 4. The Board 4.1 The Role 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 (xix) and other persons and agencies; 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) (xxii) 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; 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; 68 North West Gambling Board

71 Annual Report (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 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 review: 2015/16 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 Regulations and the National Gambling Act, 2004 (Act No. 7 of 2004): (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) to create an enabling environment for responsible licensing of all forms of gambling allowed in terms of the legislation; to roll out Limited Payout Machines and Bingo Operations; to follow up on the possibility of the Fifth Casino license in the Province; to roll out bookmaker licenses; to improve efficiencies in the regulation of all forms of gambling; to develop and maintain effective regulatory mechanisms and provide for all necessary resources; to ensure adequacy of legislation; to finalise amendments to gambling legislation; to develop Bingo rules; to review Information Security and Systems; 69

72 Governance (xi) to encourage and promote BBBEE within the industry through implementation of approved industry specific BBBEE targets; (xii) to ensure that gambling equipment operates in compliance with legislation and SABS technical standards; (xiii) to conduct legal compliance inspections on licensed gambling operations; (xiv) to ensure that gambling activities are conducted in a fair and honest manner; (xv) to combat all forms of illegal gambling and conduct special investigations referred by other departments; (xvi) to provide assurance that the gambling levies are accurately calculated; to provide assurance that the Licensees maintain a level of continual financial suitability and comply with legislative requirements; (xvii) to ensure that Licensees internal control procedures mitigate gambling regulatory risks and are in line with gambling legislation; (xviii) to provide legal advice and support to the Board and Management; (xix) to provide the Board with secretariat functions; (xx) to ensure an effective and efficient legal framework; (xxi) to ensure corporate governance by Management and the Board; (xxii) to ensure efficient financial management; (xxiii) to ensure that internal and external audits are conducted; (xxiv) to ensure compliance with internal controls and other relevant legislation; (xxv) to ensure efficient and effective supply chain management; (xxvi) to provide and maintain an effective, upto-date and secure information technology system for the organisation; (xxvii) to ensure the provision of effective and efficient human resource support services; and (xxviii) to ensure the formulation and implementation of HR 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 19 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 III Report on Corporate Governance and the precepts of the Public Finance Management Act 1999, (Act No. 1 of 1999), supported by Treasury Regulations Role, 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) (ii) (iii) (iv) 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; to invite, receive, consider, grant or refuse applications for licenses in terms of the North West Gambling Act, 2001 (Act No. 2 of 2001), as amended; to collect and administer gambling levies and fees under the North West Gambling Act, 2001 (Act No. 2 of 2001), as amended; 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; 70 North West Gambling Board

73 Annual Report (vi) (vii) to undertake or cause to be undertaken tests on gambling equipment and gambling devices used or to be used in gambling activities; and 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 Regulations 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. 71

74 Governance Composition of Board Members (1 April 2015 to 31 March 2016) Name Designation Date Appointed Status Qualifications Area of Expertise Board Directorships Other Committees Number of Meetings Attended Mr LW Vere Chairperson 07 September 2015 Active Master of Law (LLM) Bachelor of Law LLB Legal None None 4 Ms LMI Seepe Deputy Chairperson 11 October 2012 Active BEd Business None HR Committee 8 Dr N Maharaj Member 11 October 2012 Active PhD Law Legal - South Hospital - Housing Company Tshwane - The Road Traffic Management Corporation - Setsoto Municipality Risk Committee Compliance Committee 5 Mr HM Mashao Member 01 December 2012 Active BCom Finance None Compliance Committee HR Committee 7 Mr TC Kgomo Member (relieved of responsibilities as chairperson on 07 September 2015) 11 October 2012 Active BCom Finance - Henjen Petroleum (Pty) Ltd - North-West University Risk Committee HR Committee 6 Mr NI Kunene Member 03 February 2015 Active BCom Finance None Audit Committee 5 Mr TK Mathe Member 07 September 2015 Active CA (Chartered Accountant) RA (Registered Auditor) Accountant none Audit Committee Compliance Committee 4 Col CM Kgorane Member 01 December 2012 Active BA Political Science Safety and Security None Compliance Committee 3 72 North West Gambling Board

75 Annual Report Committees of the Board Number of Meetings Held Number of Members Attended Number of Meetings Attended Names of Members Compliance Committee of 4 Dr N Maharaj 3 of 4 Col CM Kgorane 1 of 4 Mr HM Mashao (appointed to the Committee on 09 November 2015) 1 of 4 Mr TK Mathe (appointed to the Committee on 09 November 2015) Human Resources Committee of 3 Ms LMI Seepe 3 of 3 Mr H Mashao 0 of 3 Mr TC Kgomo (appointed to the Committee on 09 November 2015) Audit Committee of 6 Ms T Moromane (relieved as Chairperson of the Committee on 09 November 2015 but remained as a Member) 5 of 6 Ms O Diutlwileng 6 of 6 Mr Z Mothibe 6 of 6 Mr M Mokgobinyane 4 of 6 Dr N Maharaj (removed as Member of the Audit Committee on 09 November 2015) 1 of 6 Ms LMI Seepe (removed as Member of the Audit Committee on 09 November 2015) 2 of 6 Mr TK Mathe (appointed as Member and Chairperson of the Audit Committee on 09 November 2015) 0 of 6 Mr NI Kunene (appointed as a Member on the Audit Committee 09 November 2015) Risk Committee of 0 Mr TC Kgomo (appointed as the Chairperson of the Committee on 09 November 2015) 0 of 0 Mr M Mokgobinyane (appointed to the Committee on 09 November 2015) 0 of 0 Dr N Maharaj (appointed to the Committee on 09 November 2015) 73

76 Governance Remuneration of Board Members Name Remuneration Other Allowances Other Reimbursements Mr LW Vere Ms LMI Seepe Mr TC Kgomo Dr N Maharaj Mr TK Mathe Col CM Kgorane Mr HM Mashao Mr NI Kunene Ms TL Moromane Ms O Diutlwileng Mr M Mokgobinyane Mr Z Mothibe Total 5. Risk 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 Risk Register. Risks identified are discussed, rated and updated in the Risk Register 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 Risk Mitigation Plan was developed to ensure risks identified are mitigated continuously. Risk mitigation progress reports are prepared quarterly for consideration by the Audit and Risk Committee and the Board. 6. Internal Control Unit The Audit and Risk 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 Risk Committee in line with Treasury Regulation The work of the internal auditors, as performed in line with the approved Internal Audit Plan, was verified by the Audit and Risk Committee every quarter. 7. Internal Auditors The internal audit function of the Board has been outsourced to Maseng Viljoen Incorporated t/a MvI Group. 74 North West Gambling Board

77 Annual Report Compliance with Laws and Regulations 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 a Supervisory Body, 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 in respect of investigation of competition matters. The Board relies 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. Fraud and Corruption The Board has a fraud and corruption policy in place which is supported by a fraud and corruption hotline that is available for use by both staff and the general public. 10. Minimising Conflict of Interest Section 10 of the North West Gambling Act, 2001 (Act No. 2 of 2001), as amended, provides for the disclosure of conflict of interest. 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 matter relating to those proceedings. 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 whether it amounts to any conflict of interest or whether participation by such a member in the deliberations of any specific matter related there to, 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 Register, which is circulated and signed by all Board Members with or without conflict of interest in items on the agenda of meetings 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 make the necessary disclosures before any matter on the agenda is discussed. Reported cases are recorded and investigated accordingly. 75

78 Governance 11. Code of Conduct The Board developed a manual aimed at facilitating excellent HR 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/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 HR 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 underperformance. The purpose of these procedures is to provide appropriate processes for dealing with all cases in a manner that is predictable, consistent and fair. 13. Company Secretary 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 Register 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. 12. Health, Safety and Environmental Issues The Board established a Health and Safety Committee as required in terms of section 18 of the Occupational Health and Safety Act, 1993 (Act 85 of 1993), as amended and appointed health and safety representatives in terms of section 16. The Health and Safety Committee was provided with the relevant training. One (1) minor incident of injury on duty was reported and registered. The offices of the Board were evaluated by the Mahikeng Fire and Emergency Department and were declared safe for occupation. 76 North West Gambling Board

79 Annual Report Community Social Investment The North West Gambling Board, as a Gambling Regulator in the Province, ensures that all the Licensees contribute towards the social and economic infrastructure of the province. These initiatives promote access to the economy for black people, in particular local communities. During the year under review, a total amount of R was spent towards CSI. However, this is yet to be audited against the target as set out on the License Conditions. As per the License Conditions imposed by the Board, Licensees shall ensure that one percent (1%) of the gross gambling revenue be paid out into the Socio- Economic Development Fund, or the Licensees carry out their Community Social Investment (CSI) Initiatives and report to the Board quarterly. Name of Project CSI Pillar Amount Spent Beneficiaries SANTOSAT (Pty) Ltd Trading T/A Goldrush Bingo Lomanyaneng Community AIDS Project Welfare OH NW Welfare Community Total SANTOSCAN (Pty) Ltd T/A Goldrush Bingo CORE North West Education Rebaone Care and Training, Childcare and Gentiles Gospel Choir Welfare Lencoe Home Based Care Centre Welfare Kgolagano Care Centre (Aged) - Modderkuil Welfare Total Galaxy Bingo North West (Pty) Ltd Bursaries - NWU Students Education Total Bon View Trading 111 (Pty) Ltd T/A North West Goldrush Gaming Ablution Block for the Madiba Combined School. Education Total

80 Governance Name of Project CSI Pillar Amount Spent Beneficiaries Vukani Gaming North West (Pty) Ltd Ikateleng Education NWU Mafikeng Campus Education Roundabout Water Solutions Health Roundabout Water Solutions Health Roundabout Water Solutions Health Waterval Christian Centre Welfare North-West University Education Total Bathusi Investment (Pty) Ltd Licensee has not yet embarked on any CSI project, but deposited contributions of R into the Board s account. Total Phumelela Gaming and Leisure Ltd SOS Children s Village - Rustenburg Education and Social Highveld Horsecare Unit Equine Welfare and Social Total Central Gaming (Pty) Ltd Huhudi and Colridge Stadiums - Donation for Youth Development equipment for training centres. Amaqhawe Enterprise Development Agency - Education Youth training for Accounting Total North West Gambling Board

81 Annual Report Name of Project CSI Pillar Amount Spent Beneficiaries Betting World (Pty) Ltd Highveld Horsecare Unit (Rustenburg) Highveld Horsecare Unit (Sun Village) Equine Welfare & Social Equine Welfare & Social Community Community North-West University (Rustenburg) Education North-West University (Sun Village) Education Total CJ Coertze Mothutlong Network against violence and Welfare child abuse: 16 Days of Activism for No Violence Against Women and Children Total Vbet SA North West (Pty) Ltd SAVF Rethabile Klerksdorp Children s Home Health Community SAVF Rethabile Klerksdorp Children s Home Education Community Total Dankopath (Pty) Ltd t/a G-bets Neolet Foundation Education Total

82 Governance Name of Project CSI Pillar Amount Spent Beneficiaries Sun International (SA) Ltd t/a Sun City Resort Ramakoka Wantong Festival Community Thabita Meals Orphanage & Thari Mmelegi Community Orphanage - Mandela Day Blanket Drive Johan van Wyk Community Lefaragathle Family Community Mokgalwaneng Bakery Community Thari Mmelegi Community Amahlubi Traditional Council Community Temogo Brickmaking Project Education Sanitary Towels for Women s Day: Education Lerome Secondary School - Morongwa Primary School - Borite Primary School - Tswaidi Secondary School Reoleboge Special School Education Sunny Bush Early Learning Centre Education Kyokushin Karate Club Sport Total North West Gambling Board

83 Annual Report Name of Project CSI Pillar Amount Spent Beneficiaries Peermont Global (NW) (Pty) Ltd t/a Rio Hotel Casino Convention Resort Institute of Hotel Management Education North-West University - Potchefstroom Education Cocekani Technical High School - cement Community wall around school Upliftment Technical High School Community Upliftment Vegetable tunnels - seeds water, electricity and staff salaries Mzi s Car Wash Rio Go-Karts Enterprise Development Enterprise Development Enterprise Development Total

84 Governance Name of Project CSI Pillar Amount Spent Beneficiaries Sun International (SA) Ltd t/a the Carousel Casino and Entertainment World Carousel View Hospice Community Development TP HENTIQ Car Wash Community Development Nchaupe High School Education Sleepy Hollow Trails Education Mafikeng Hotel School Bursary Scheme Education Mahika Mahikeng Cultural Festival Education Carousel View Hospice Health and Welfare Nchaupe High School Health and Welfare Community Travis Snyders-Urban Soul Group Health and Welfare Community The Charity Cycling Club Sports, Arts and Culture CSI Team Uniform Others Community Village of Hope - Outdoor Signage Others Community Sun City Cycle Donations Others Community Total North West Gambling Board

85 Annual Report Name of Project CSI Pillar Amount Spent Beneficiaries Peermont Global (NW) (Pty) Ltd t/a Mmabatho Palms Hotel Casino Convention Resort Mahikeng Hotel School - Bursaries for Education students Bogorosi Foundation - School uniform, shoes, Education stationery and books for children Ngaka Modiri Molema Municipality - Chess Youth Development Oratile Semunza Disability Centre Youth Development Girls and Boys Town - Peermont CEO (Anthony Puttergil) participated in the CEO sleepout to aid the Boys and Girls Town Centre. Youth Development Bogorosi Children Youth Women Development - Upgrades at the centre. Unathi Community Orphans Home Black African Young Boys (BAYOFA) Linen donation in partnership with the Mahikeng Bikers Association during a blanket drive event held at Mmabatho Palms Youth Development Youth Development Youth Development Other Total

86 Governance 15. Audit Committee Report We are pleased to present our report for the financial year ended 31 March Audit Committee Responsibilities The Audit and Risk 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 Regulations and The Audit and Risk Committee furthermore reports that it adopted formal Terms of Reference as its Audit and Risk Committee Charter, regulated its affairs in compliance with this Charter and discharged all its responsibilities as contained therein. 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 Report 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. During the period under review, Internal Audit completed the assurance and consulting audits in the following key risk areas: Archiving and Filing Review Compliance Review: Governance and Legislation Illegal Gambling Review (biannual) Information Technology Review Supply Chain Management Review Asset Management Review Performance Information Audit Improvement Plan Review Inventory Management Quarterly and Annual Financial Statements In-Year Management and Monthly/ Quarterly report The entity Reported monthly and quarterly to the Treasury, as 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 Report. 84 North West Gambling Board

87 Annual Report Audit Committee report 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. TK Mathe Chairperson of the Audit Committee Effective: 07 September

88 Human Resources Management Part D Human Resources Management 1. Introduction 2. Human Resources Oversight Statistics 86 North West Gambling Board

89 Annual Report Introduction Overview of the Human Resources matters. The Strategic Objective of the Human Resources Department within the Board is to strengthen the institutional capacity of the Board. The Human Resources 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. During the period under review, the prioritised positions of the Board were increased from sixty five (65) to eighty three (83), against the total number of hundred and eleven (111) approved positions. Over and above eighty three (83), there were seventeen (17) temporary employees appointed by the Board. During the period under review, twenty eight (28) permanent employees and seventeen (17) temporary employees were appointed. During the recruitment process internal employees were also considered and some were promoted to higher position. Set Human Resources Priorities and Impact The Major priority for the Human Resources Department is to ensure that the institutional capacity is strong enough to achieve all objectives of the Board. Positions were filled as planned, Salaries of employees were review as planned, Leave reports compiled, Human Resources policy, reviewed as planned, Performance rewards implemented as per the policy of the Board, Payroll reports compiled as planned, Thirty eight (38) employees were trained during the year under review, Employee wellness program was conducted and reports were compiled as planned and Employment Equity report was submitted as prescribed by the legislation and the plan was reviewed. Workforce planning framework and key strategies to attract and recruit a skilled and capable workforce. The Board offers a Total Cost to Company remuneration package which is inclusive of seven and half percent (7.5%) employee contribution to the provident fund and fifty percent (50%) employer contribution towards medical aid. The Board also offers performance bonuses depending on the staff performance and based on the availability of funds. The Board also offers Long Service Awards in terms of the policy. Annually the Board conduct salary survey to determine appropriate percentage for salary increase which is processed in April each year as per the approved policy. Employee Performance Management Framework. The Performance Management policy is in place and employees were assessed twice a year. The performance bonuses were paid in terms of the outcome of performance assessment conducted by management. The total amount of R was approved by the Board for payment of staff performance bonuses. 87

90 Human Resources Management Employee wellness programme 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. ICT policies were reviewed during the year under review. Future Human Resources plans/goals The following are the plans for Human Resources Department: Recruitment of staff Review of remunerations Review 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 Resources Oversight Statistics The total expenditure for personnel costs is R excluding Board fees. The amount comprised of: Basic Salary Provident Fund Medical Aid Long Service Awards Performance Bonus Unemployment Insurance Fund Acting Allowance 88 North West Gambling Board

91 Annual Report Personnel Cost by Programme Programme Total Expenditure for the Entity (R 000) Personnel Expenditure (R 000) Personnel Exp. as a % of Total exp. (R 000) No. of Employees Average Personnel cost per Employee (R 000) Chief Executive Officer % Chief Operations Office % Corporate Services % Finance % Legal Services % Audit and Systems % Gambling Control % Investigations and % Licensing Total Permanent % Non-permanent % Grand Total % The non-permanent employees budget was provided for in Finance, Corporate Services, Legal and Investigations and Licensing department. Personnel Cost by Salary Band Level Personnel Expenditure (R 000) % Of Personnel Exp. to Total Personnel Cost R 0000 No of Employees Average Personnel Cost per Employee (R 000) Top Management % Senior Management % Professional Qualified % Skilled Technical % Semi-skilled % Unskilled % Total Permanent % Non-Permanent % Grand Total %

92 Human Resources Management Performance Rewards Programme Performance Rewards Personnel Expenditure % of Performance Rewards to Total Personnel Cost (R 000) Top Management % Senior Management % Professional Qualified % Skilled % Semi-skilled % Unskilled % Total % Non-Permanent % Grand Total % Training Costs Directorate/ Business Unit Personnel Expenditure (R 000) Training Expenditure (R 000) Training Expenditure as a % of Personnel Cost No. of Employees Trained Avg Training Cost of Employees (R 000) Chief Executive % Chief Operations Office % Corporate Services % Finance % Legal Services % Audit and Systems % Gambling Control % Investigations and Licensing % Total Permanent % Non-permanent Total % North West Gambling Board

93 Annual Report Employment and Vacancies as per the Department Programme 2014/2015 Approved Posts 2015/2016 Approved Posts 2015/2016 No of Employees 2015/2016 Vacancies % of Vacancies Chief Executive Office % Chief Operations Office % Corporate Services % Finance % Legal Services % Audit and Systems % Gambling Control % Investigations and % Licensing Total Permanent % Non-Permanent % Total % Employment and Vacancies as per Occupational Levels Programme 2014/2015 Approved Posts 2015/2016 Approved Posts 2015/2016 No of Employees 2015/2016 Vacancies % of Vacancies Top Management % Senior Management % Professional qualified % Skilled % Semi-skilled % Unskilled % Total Permanent % Non-Permanent % Grand Total % The Board increased its budgeted positions from 65 to 83 in order to work effectively and efficiently to achieve all its objectives. Positions that were advertised during the year were all filled as planned. 91

94 Human Resources Management Employment Changes The employment at the beginning, appointments, termination and employment at the end of the period. Salary Band Employment at beginning of Period Appointments Termination Employment at end of the Period Top Management Senior Management Professional qualified Skilled Semi-skilled Unskilled Total Permanent Non-Permanent Grand Total At the beginning of 2015/16 FY the Board approved a new structure which brought about changes to job titles and staff movement. The reasons for changes of employment Reason Number % of Total No of Staff Leaving Death 0 0 % Resignation 9 11 % Dismissal 0 0 % Retirement 0 0 % Ill health 0 0 % Expiry of contract 0 0 % Other 0 0 % Total 9 11 % Labour Relations: Misconduct and Disciplinary Action Nature of Disciplinary Action Number Verbal Warning 0 Written Warning 0 Final Written Warning 1 92 North West Gambling Board

95 Annual Report Equity Target and Employment Equity Status The tables below indicate the current status and the target as per the Employment Equity Plan. The Table indicates the status of males. 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 Non-Permanent Grand Total The table indicates the status of females. 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 Non-Permanent Grand Total

96 Human Resources Management The Table indicates the Status of People with Disabilities. Disabled Staff Levels Male Females Current Target Current Target Top Management Senior Management Professional Q ualified Skilled Semi-skilled Unskilled Total Non-Permanent Grand Total North West Gambling Board

97 Annual Report

98 Financial Information Part E Financial Information 1. Statement of Responsibility for the Annual Financial Statements 2. Report of the Chief Executive Officer 3. Report of the Auditor-General 4. Statement of Financial Position 5. Statement of Financial Performance 6. Statement of Changes in Net Assets 7. Cash-flow Statements 8. Statement of Comparison of Budget and Actual Amounts 9. Accounting Policies 10. Notes to the Annual Financial Statements 96 North West Gambling Board

99 Annual Report Statement of Responsibility for 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 regarding 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 2016 have been audited by the external auditors and their report is presented on page 102. The Annual Financial Statements of the public entity set out on page 106 to page 143 have been approved. Fortune Sekgaphane Chief Executive Officer North West Gambling Board Lavelle Vere Chairperson of the Board North West Gambling Board 01 August August

100 Financial Information 2. Report by the Chief Executive Officer 1. Legislative Mandate The North West Gambling Board is mandated in terms of the Provincial Act as well as the National Gambling Act to regulate gambling in the Province in concurrence with the National Gambling Board. The Board has licensed the following modes of gambling: (a) (b) (c) (d) (e) Casinos Totalizator Limited Payout Machines Bookmakers Bingo The Board oversees that licensed gambling operators authorised to offer the aforementioned modes of gambling in the Province, do so within the prescripts of Legislation, Conditions of License and that such gambling activities are conducted in a safe environment for the general public and in a fair, honest and responsible manner. As mandated by Legislation, the Board strives for transformation of the gambling industry. In this regard, the Board has devised requirements for all gambling operators to reserve at least a sixty percent (60%) of shareholding in their business of Previously Disadvantaged Individuals in the North West Province. The requirement also prescribes that thirty five percent (35%) of the reserved sixty percent (60%) shareholding should be held by women with fully exercisable votes and economic rights. As the North West Gambling Board inherited gambling operations which were in existence prior to the legalisation of gambling in South Africa, the aforementioned is not always possible with such entities, however, the Board is continuously engaging such operators to find alternative ways of ensuring that the requirements as mentioned above are complied with. 2. Financial Management The operations of the Board are currently funded through a grant from the Provincial Treasury. This form of funding has presented some challenges on the effectiveness of the Board, as result the Board presented a proposal for self funding to the provincial treasury which proposal has been approved in principle. However, implementation of this model has been postponed to 2016/17 Financial Year. The Board proudly expresses its pride in the excellent financial management of its affairs which also bears elements of consciousness about compliance with the provisions of the Public Finance Management Act and its Regulations. This can be articulated by the previous five years reports of unbroken good track record, evidenced in the external audit reports. We look forward to maintaining and improving the standards for better administration of the organisation in the future. It should be noted that, even during the Financial Year under review, the Board operated under very stringent controls on the approved budget to deliver its strategic objectives. We still in the year under review, record good and excellent audit results and maintain a high level of financial accountability. 98 North West Gambling Board

101 Annual Report Constraints and Challenges 3.1. Unlicensed Gambling Unlicensed gambling continue to be a thorn which the Board cannot afford to leave unchallenged as this continues to rob our people and in particular the Provincial fiscus of the much needed revenue. The recent analysis and observations show that the unlicensed gambling market is growing at a very fast pace and is competing fiercely with licensed gambling operations, regardless of not complying with the laws of the Country and not paying levies and taxes. Chief Executive Officer Fortune Sekgaphane Personal Assistant Zarina Jacobs The Board is continuously striving to fight this trend with the South African Police Service and other law enforcement agencies. We are also engaging other stakeholders to form a united front against unlicensed gambling operators and there is no doubt that this parasite will be eliminated. We have to date registered very little success, but we are working tirelessly to ensure that the situation is turned around Amendment of the North West Gambling Act, 2001 In light of the proposed National Gambling Policy, it is possible that the National Gambling Act of 2004 will be amended. The imminent amendment of the this Act will create a need to review the North West Gambling Act in order to ensure harmonisation of two (2) pieces of legislation. It is therefore imperative for all suggestions to amend the North West Gambling Act to be put on hold until the National Gambling Act is amended. 99

102 Financial Information 4. Strengthening the Institutional Capacity of the Board Keeping with its vision of being a leading and socially conscious authority in the regulation of gambling in the world, the Board benchmark with other international jurisdictions and exposed its Board members and management to the best practices employed elsewhere in the world. The Board is a member and participates in the activities of the International Association of Gaming Regulators which consists of representatives from the gambling regulatory organisations throughout the world. We also continue to engage with our counterparts in the African continent through Forum like the Gambling Regulators Africa Forum (GRAF), which we are also a member of, to share ideas and assist one another to ensure a uniform approach to gambling regulation across the continent. As we report on performance of the Board, we are confident that we have managed to place solid structures in place to attain the mission and vision of the organisation. We are further confident that we have managed to regulate gambling in the Province within the legislative framework. While also operating within the set targets of the Board. These targets were divided into quarterly milestones, which are monitored by Management on a monthly basis and assessed against the organisational strategic objectives, the implementation of which are programme driven. 5. Programmes to Promote Responsible Gambling The Board in the previous years realised that it was not doing enough in respect of the promotion of responsible gambling in our communities. As an effort to correct the status quo, the Board capacitated its Corporate Relations function with the aim of intensifying awareness campaigns on gambling in general. We are pleased to announce that we have diligently reached out to various communities in the Province using platforms such as the Setsokotsane Programme led by the Office of the Premier of the Province, to educate and share information with communities on the effects of gambling on society. 6. Word of thanks It is obvious that the excellent work displayed in this report could not have been achieved without the dedication and discipline of our staff, for which I am very grateful and hope to see it continuing in the year ahead in order to change the landscape of the gambling industry in the North West Province and the living conditions of our people in general. Nko ya kgomo, mogala tshwara thata, e se re go utlwa sebodu wa kgaoga Ke a Leboga Fortune Sekgaphane Chief Executive Officer 100 North West Gambling Board

103 Annual Report

104 Report of the auditor-general to the North West provincial legislature on North West Gambling Board Report on the financial statements Introduction 1. I have audited the financial statements of the North West Gambling Board set out on pages 106 to 143, which comprise the statement of financial position as at 31 March 2016, 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 Recognised Accounting Practice (SA standards of GRAP) 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

105 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 2016 and its financial performance and cash flows for the year then ended, in accordance with SA Standards of GRAP and the requirements of the PFMA. Report on other legal and regulatory requirements 7. 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, 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 8. 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 2016: Programme 1: Investigations and licensing on pages 24 to 25 Programme 2: Gambling control on pages 26 to 27 Programme 3: Gambling audit and systems department on pages 28 to 29 Programme 5: Finance department on pages 32 to 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). 10. I assessed the reliability of the reported performance information to determine whether it was valid, accurate and complete. 11. 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 12. 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 matters: Achievement of planned targets 13. Refer to the annual performance report on pages 23 to 39 for information on the achievement of the planned targets for the year. Unaudited supplementary information 14. The supplementary information set out on pages 40 to 94 does not form part of the annual 2 103

106 performance report and is presented as additional information. I have not audited these schedules and, accordingly, I do not report thereon. Compliance with legislation 15. 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 compliance with specific matters in key legislation, as set out in the general notice issued in terms of the PAA, are as follows. Strategic planning and performance management 16. One of the programmes in the strategic plan did not include key performance measures and indicators for assessing performance in delivering the entity s desired outcomes and objectives for the affected programme as required by Treasury Regulation (d). Internal control 17. 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 compliance with legislation included in this report. Leadership 18. Leadership has established formal controls to ensure the reliability of the systems and the availability, accuracy and protection of information. During the transition to a self-funding model management s oversight over the performance management system failed to prevent the reportable non-compliance matter in the annual performance plan. Rustenburg 31 July

107 Annual Report

108 Annual Financial Statements 4. Statement of Financial Position as at 31 March 2016 Note(s) R R Assets Current Assets Cash and cash equivalents 3 21,420,714 13,222,725 Receivables from exchange transactions 4 2,110, ,479 Receivables from non-exchange transactions 5 28,009,735 7,734,611 Prepayments 6 551, ,194 Inventories 7 454, ,179 52,546,810 22,419,188 Non-Current Assets Property, plant and equipment 8 7,599,120 6,299,539 Total Assets 60,145,930 28,718,727 Liabilities Current Liabilities Payables from exchange transactions 10 2,782,120 1,943,991 Taxes and transfers payable (non-exchange) 11 32,054,478 11,213,114 Unspent: Socio Economic Development Fund 35 6,247,869 - Accruals 13 1,583,807 1,305,969 Investigation fees - deposit 12 1,702,757-44,371,031 14,463,074 Non-Current Liabilities Operating lease liability 9 492, ,507 Total Liabilities 44,863,135 15,051,581 Net Assets 15,282,795 13,667,146 Accumulated surplus 15,282,795 13,667, North West Gambling Board

109 Annual Report Statement of Financial Performance as at 31 March 2016 Note(s) R R Revenue Revenue from exchange transactions Investigation fees 15 5,853,442 1,269,399 Other income , ,911 Interest received 217, ,962 Total revenue from exchange transactions 6,239,306 1,492,272 Revenue from non-exchange transactions Transfer revenue Department of Finance, Economy and Enterprise 17 64,661,000 48,137,000 Development Total revenue 16 70,900,306 49,629,272 Expenditure Employee related costs 18 (30,463,218) (20,887,283) Depreciation and amortisation (1,158,041) (593,014) Lease rentals on operating lease (3,412,718) (3,142,843) Administrative expenses 19 (34,094,223) (23,419,144) Total expenditure 69,128,200 48,042,284 Loss on disposal of assets (156,463) (58,769) Surplus for the year 1,615,643 1,528,

110 Annual Financial Statements 6. Statement of Changes in Net Assets as at 31 March 2016 Accumulated Surplus R Total net Assets R Balance at 01 April 2014 Changes in net assets Surplus for the year 12,138,927 1,528,219 12,138,927 1,528,219 Total changes 1,528,219 1,528,219 Balance at 01 April 2015 Changes in net assets Surplus for the year 13,667,152 1,615,643 13,667,152 1,615,643 Total changes 1,615,643 1,615,643 Balance at 31 March ,282,795 15,282, North West Gambling Board

111 Annual Report Cash Flow Statement as at 31 March 2016 Note(s) R R Cash flows from operating activities Receipts Taxes and levies collected 120,784,869 - Investigation fees received 6,789,237 1,269,399 Grants 64,661,000 48,137,000 Interest income 188, ,962 Other receipts 133, ,910 Socio Economic Development Fund Contribution 7,100, ,656,790 49,629,271 Payments Employee costs (30,185,380) (20,599,283) Suppliers (38,003,086) (25,618,994) Taxes and levies transfers (119,799,149) - Socio Economic Development Contribution (857,100) - (188,844,715) (46,218,277) Net cash flows from operating activities 22 10,812,075 3,410,994 Cash flows from investing activities Purchase of property, plant and equipment 8 (2,614,086) (3,246,096) Net increase/(decrease) in cash and cash equivalents 8,197, ,898 Cash and cash equivalents at the beginning of the year 13,222,725 13,057,827 Cash and cash equivalents at the end of the year 3 21,420,714 13,222,

112 Annual Financial Statements 8. Statement of Comparison of Budget and Actual Amounts as at 31 March 2016 Budget on Accrual Basis Approved budget Approved Budget Adjustments Approved Savings Final Budget Actual Amounts on Comparable Basis Difference between Final Budget and Actual Reference R R R R R R R Statement of Financial Performance Revenue Other non-tax revenue ,239,306 6,239,306 Note16 Government grant 52,661,000 12,000,000-64,661,000 64,661,000 - Total revenue 52,661,000 12,000,000 64,661,000 70,900,306 6,239,306 Expenses Compensation of employees (26,930,436) (2,814,234) - (29,744,670) (30,463,218) (718,548) Note 34 Use of goods and services (24,022,775) (8,393,556) (3,769,518) (36,185,849) (37,506,941) (1,321,092) Note 34 Depreciation and amortisation (1,158,041) (1,158,041) Note 8 Total expenditure (50,953,211) (11,207,790) (3,769,518) (65,930,519) (69,128,200) (3,197,681) Loss on disposal (156,463) (156,463) Surplus for the year 1,707, ,210 (3,769,518) (1,269,519) 1,615,643 2,885, North West Gambling Board

113 Annual Report Accounting Policies as at 31 March Presentation of Annual Financial Statements The annual financial statements have been prepared in accordance with the Standards of Generally Recognised Accounting Practice (GRAP), 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 explicitly stated. The details of any changes in accounting policies are explained in the relevant policies. Assets, liabilities, revenue and expenditure have not been offset except when offsetting is required by the Standard of GRAP. 1.1 Presentation currency These annual financial statements are presented in South African Rand, which is the functional currency of the Board. 1.2 Significant judgements and sources of estimation uncertainty 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: Receivables from exchange and non-exchange transactions 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 nonexchange 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 transactions for impairment at the end of each reporting period. In determining whether an impairment loss should be recorded in surplus or deficit 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. 111

114 Annual Financial Statements 9. Accounting Policies (continued) as at 31 March 2016 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 GRAP 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. 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 nonexchange transaction are carried at fair value and disclosed in the statement of financial position. The fair value of payables from exchange and nonexchange 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 nonexchange transactions in the statement of financial position. 1.3 Property, plant and equipment 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 of the item can be measured reliably. Property, plant and equipment are 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 monetary assets, or a combination of monetary 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, its deemed cost is the carrying amount of the asset(s) given up. 112 North West Gambling Board

115 Annual Report 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. Recognition 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 the significant components of item of property, plant and equipment. have different useful lives, they are accounted for as separate items (major components) 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 straight line basis over the useful lives of the assets. The carrying amount of property, plant and equipment is reviewed for impairment when events or changes in circumstances indicate the carrying amount may not be recoverable. An item of property, plant and equipment is derecognised upon disposal or when no future benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the assets (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the surplus or deficit section of the Statement of Financial Performance in the year the assets is derecognised.. The asset s residual value, useful lives and depreciation method are reviewed and adjusted if appropriate at each financial year-end. The useful lives of items of property, plant and equipment are estimated as follows: Item Depreciation method Average useful life Office furniture Straight line years Motor vehicles Straight line 8-12 years Office equipment Straight line 7-12 years Computer equipments Straight line 5-10 years Leasehold improvements Straight line the shorter of the lease period, plus renewal or useful life. 113

116 Annual Financial Statements 9. Accounting Policies (continued) as at 31 March 2016 The residual value, the useful life and depreciation method of each asset are reviewed at least at each reporting date. If the expectations differ from previous estimates, the change will be treated in accordance with GRAP 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 Statement of Finacial Position or in the notes thereto: Class Cash and cash equivalents Receivables 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 entity has the following types of financial liabilities (classes and category) as reflected on the face of the Statement of Financial Position or in the notes thereto: Class Payables from exchange transactions Payables from nonexchange transactions Initial recognition Category Financial liability measured at amortised cost Financial liability measured at amortised cost 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. 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. ` 114 North West Gambling Board

117 Annual Report 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 assesses 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. 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 : - derecognises the asset; and - recognises 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 recognises 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 115

118 Annual Financial Statements 9. Accounting Policies (continued) as at 31 March 2016 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 recognises 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 continues to recognise the transferred asset in its entirety and recognises 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. 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, canceled, 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 GRAP on Revenue 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. 116 North West Gambling Board

119 Annual Report A financial asset and a financial liability are only offset and the net amount presented in the Statement of Financial Position when the Board 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 Board 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 lowest of cost and current replacement value. 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. 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 replacement 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 the 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 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. 1.9 Impairment of non-cash-generating assets Cash-generating assets are assets managed with the objective of generating a commercial return. An asset generates a commercial return when it is deployed in a manner consistent with that adopted by a profit-oriented entity. Non-cash-generating assets are assets other than cash-generating assets. The Board only has non cash-generating assets. 117

120 Annual Financial Statements 9. Accounting Policies (continued) as at 31 March 2016 Carrying amount is the amount at which an asset is recognised in the Statement of Financial Position after deducting any accumulated depreciation and accumulated impairment losses thereon. 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-cashgenerating asset is determined using the following approach: 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. Restoration cost approach Restoration 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. 118 North West Gambling Board

121 Annual Report Recognition and measurement If the recoverable service amount of a non-cashgenerating 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. When the amount estimated for an impairment loss is greater than the carrying amount of the noncash-generating asset to which it relates, the Board recognises a liability only to the extent that is a requirement in the Standards of GRAP. After the recognition of an impairment loss, 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. Reversal of an impairment loss The Board assesses at each reporting date whether there is any indication that an impairment loss recognised in prior periods for a non-cashgenerating 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-cashgenerating asset is recognised immediately in surplus or deficit. 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. Redesignation The redesignation of assets from a cash-generating asset to a non-cash-generating asset or from a non-cash-generating asset to a cash-generating asset only occurs 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 represents the amount, which the Board has an obligation to pay as a result of an employee s services, provided to the Statement of Financial Position date. Provision has been calculated at undiscounted amounts based on current salary rates. Retirement 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. 119

122 Annual Financial Statements 9. Accounting Policies (continued) as at 31 March Contingencies Contingent assets and contingent liabilities are not recognised. Contingencies are disclosed under note Revenue from exchange transactions Revenue is measured at fair value of the consideration received or receivable and represents the amount receivable in the normal course of business. Revenue 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. Revenue from Exchange Transactions is recognised when they become due and is measured at fair value. The recognition is based on the status of completion of investigation per application Revenue 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. Revenue 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 are 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 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. 120 North West Gambling Board

123 Annual Report Irregular expenditure Irregular expenditure means expenditure incurred in contravention of, or not in accordance with a requirement of the PFMA. 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 information The annual financial statements and the budget are on the same basis of accounting therefore a comparison with the budgeted amounts for the reporting period have been included 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 Related parties Related 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 reporting 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 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 probable that an outflow of resources embodying economic benefits will be required to settle the obligation. The unspent funds on the Socio-Economic Development Fund is recognised as a liability in the Statement of Financial Position. as it represents the reduction in the ring-fenced balance in the Fund. Management are those persons responsible for planning, directing and controlling the activities of the Board, including those charged with the governance of the Board in accordance with legislation, in instances where they are required to perform such functions. 121

124 Annual Financial Statements 10. Notes to the Annual Financial Statements as at 31 March New standards and interpretations 2.1 Standards and interpretations 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 2016 or later periods: Standard/ Interpretation: Effective date: Years beginning on or after Expected impact: GRAP 18: Segment Reporting 01 April 2017 Not relevant GRAP 20: Related parties Not yet determined Relevent GRAP 32: Service Concession Arrangements: Grantor Not yet determined Not relevant GRAP 108: Statutory Receivables Not yet determined Relevant IGRAP 17: Service Concession Arrangements where 01 April 2016 Not relevant a Grantor Controls a Significant Residual Interest in an Asset GRAP 16 (as amended 2015): Investment Property 01 April 2016 Not relevant GRAP 17 (as amended 2015): 01 April 2016 Relevant Property, Plant and Equipment GRAP 109: Accounting by Principals and Agents Not yet determined Relevant GRAP 21 (as amended 2015): 01 April 2017 Relevant Impairment of non-cash-generating assets GRAP 26 (as amended 2015): 01 April 2017 Not relevant Impairment of cash-generating assets Directive 12: The Selection of an Appropriate Reporting Framework by Public Entities 01 April 2018 Not relevant 122 North West Gambling Board

125 Annual Report Cash and cash equivalents Cash and cash equivalents consist of: Petty cash ABSA Admin Account 5,697,183 5,410,973 ABSA Call Account 29,533 29,236 ABSA Revenue Account 9,376,551 7,767,340 ABSA Credit card 68,813 15,171 Socio Economic Development Fund 6,247,869-21,420,714 13,222,725 Included in cash and cash equivalent is the funds relating to the cash received on behalf of the Department of Economy and Enterprise Development in the form of levies and taxes; and the Socio Economic Development Fund which is not available for use by the entity. The newly proposed Socio Economic Development Fund intend to promote meaningful contribution of the gambling industry towards sustainable socio-economic development programmes in the North West Province. Contributions to the Fund is from the licensees and therefore not part of the Government Grant. 4. Receivables from exchange transactions Trade debtors 1,897, ,047 Rent deposit 199, ,491 Staff telephone recoveries 13,755 9,941 2,110, ,479 Fair value of trade and other receivables from exchange transactions R R Trade and other receivables Trade and other receivables which are less than 24 months past due are not considered to be impaired. At 31 March ,110, ,479 The ageing of amounts past due but not impaired is as follows: 1 month past due 1,532,893 19,872 2 months past due - 7,817 3 months past due 577,453 24,

126 Annual Financial Statements 10. Notes to the Annual Financial Statements (continued) as at 31 March Receivables from non-exchange transactions R R Levies and taxes 28,009,735 7,734,611 Fair value of receivables from non-exchange transactions Other receivables from non-exchange transactions 28,009,735 7,734,611 The fair value of receivables from non-exchange transactions approximates their carrying amounts. Casino levies, taxes and other receivables Current 28,009,735 7,734, Prepayments Prepayments 551, ,385 SARS - 25,790 Fraudulent transactions , , Inventories Stationery and consumables on hand 454, ,179 Inventories recognised as an expense during the year 810, ,860 Stationery and consumables comprise of stationery for distribution to staff during the course of work. Stationery and consumables are measured at lower of cost and net replacement value. 124 North West Gambling Board

127 Annual Report Property, plant and equipment Cost / Valuation Accumulated Carrying Value Depreciation and Accumulated Impairment Cost / Valuation Accumulated Carrying Value Depreciation and Accumulated Impairment Office furniture 2,723,588 (750,975) 1,972,613 2,215,751 (651,515) 1,564,236 Motor vehicles 377,951 (69,193) 308, ,951 (42,844) 335,107 Office equipment 2,879,555 (659,759) 2,219,796 2,220,866 (411,347) 1,809,519 Computer equipment 3,304,342 (1,014,484) 2,289,858 2,699,993 (703,005) 1,996,988 Leasehold improvements 1,164,428 (356,333) 808, ,173 (48,484) 593,689 Total 10,449,864 (2,850,744) 7,599,120 8,156,734 (1,857,195) 6,299,539 Reconciliation of property, plant and equipment Opening Balance Additions Disposals Depreciation Total Office furniture 1,564, ,341 (103,258) (172,706) 1,972,613 Motor vehicles 335, (26,349) 308,758 Office equipment 1,809, ,689 - (248,412) 2,219,796 Computer equipment 1,996, ,800 (53,205) (402,725) 2,289,858 Leasehold improvements 593, ,256 - (307,850) 808,095 6,299,539 2,614,086 (156,463) (1,158,042) 7,599,120 Reconciliation of property, plant and equipment Opening balance Additions Disposals Depreciation Total Office furniture 1,100, ,578 (26,109) (112,151) 1,564,236 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) (260,317) 1,996,988 Leasehold improvements - 642,173 - (48,484) 593,689 3,704,981 3,246,096 (58,520) (593,018) 6,299,

128 Annual Financial Statements 10. Notes to the Annual Financial Statements (continued) as at 31 March Operating lease liability Office building Operating lease accrual 492, ,507 The Board rents office buildings from Pizzazz Investment 2 (Pty) Ltd (Pizzazz) 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 31 July Pizzazz sold the property under lease to Senatla Investment Capital Pty LTD (Senatla) during the 2014/2015 financial year. The lease agreement was ceded to Senatla in October 2014 and an addendum was duly signed between the Board and Senatla. R R 10. Payables from exchange transactions Other payables - Investigation fees 281, ,105 Other payables - Suppliers 2,501,020 1,796,886 2,782,120 1,943,991 The fair value trade and other payables approximates their carrying amounts. 11. Taxes and transfers payable (non-exchange) Licence fees received in advance 2,756,250 2,837,700 Provincial Department of Finance Economy 29,298,228 8,375,414 and Enterprise Development 32,054,478 11,213,114 Fair value of taxes and transfers payable (non-exchange) Taxes and transfers payable (non-exchange) 32,054,478 11,213,114 The fair value of taxes and transfers payable (non-exchange) approximates their carrying amounts. 12. Investigation fees: Deposit Investigation fees: Deposit 1,702, North West Gambling Board

129 Annual Report Accruals Reconciliation of provisions Opening Utilised During Balance Additions the Year Total Leave accrual 1,305, ,736 (352,898) 1,583,807 Reconciliation of leave accrual - 31 March 2015 Leave accrual 1,017, ,646 (57,648) 1,305,969 The leave accrual relates to the Board s estimated liability arising as a result of services rendered by employees. 14. Other revenue R R Other recoveries 14, Tender application fees 14,000 12,000 Insurance recovery 16,117 (1,721) Travel cost recoveries 124, , , , Investigation fees Investigation fees 5,853,442 1,269,

130 Annual Financial Statements 10. Notes to the Annual Financial Statements (continued) as at 31 March Revenue R R Investigation fees 5,853,442 1,269,399 Other income 168, ,911 Interest received - bank accounts 217, ,962 Government grant 64,661,000 48,137,000 70,900,306 49,629,272 The amount included in revenue arising from exchanges of goods or services are as follows: Investigation fees 5,853,442 1,269,399 Other revenue 168, ,911 Interest received - bank accounts 217, ,962 6,239,306 1,492,272 The amount included in revenue arising from non-exchange transactions is as follows: Transfer revenue Government grant 64,661,000 48,137, North West Gambling Board

131 Annual Report Government grants and subsidies R R Government grant 64,661,000 48,137,000 Government grant Original allocation 52,661,000 48,137,000 Adjustment budget 12,000,000-64,661,000 48,137, Personnel costs Basic salary 22,463,607 15,228,714 Performance bonus 1,541, ,579 Medical aid contributions 2,245,821 1,807,111 Compensation commission 47,390 62,502 Leave pay expense 277, ,999 Provident fund contribution 3,874,437 2,524,262 Long-service awards 13,115 80,116 30,463,218 20,887,283 Chief Executive Officer (FS Sekgaphane) Basic salary 1,873,104 1,631,410 Performance bonuses 196, ,298 Medical aid 30,584 28,286 Cellphone allowance 18,000 18,000 Travel and subsistence 376, ,576 2,495,218 2,062,570 The difference from previous year is due to salary adjustment and increased travelling. 129

132 Annual Financial Statements 10. Notes to the Annual Financial Statements (continued) as at 31 March Personnel costs (continued) R R Chief Operations Officer (MP Mothiba) Basic salary 1,362,292 1,132,613 Termination leave 221,245 - Performance bonuses 99,253 96,272 Provident fund 87,576 84,946 Medical aid 51,089 46,584 Cellphone allowance 8,800 11,200 Acting allowance - 13,595 Travel and subsistence 120, ,137 1,950,436 1,495,347 Chief Financial Officer (Seipone Motlhamme) Basic salary 958,445 - Provident fund 71,883 - Cellphone allowance 9,600 - Travel and subsistence 130,480-1,170,408 - The Chief Financial Officer resigned on 31 of March The function was outsourced for the entire 2014/15 financial year. The position has since been filled effective 1 April Legal Manager (J Montshioa) Basic salary 831, ,014 Performance bonuses 70,655 - Provident fund 62,343 58,126 Medical aid 17,888 17,051 Cellphone allowance 9,600 9,600 Acting allowance 21,995 4,017 Travel and subsistence 235, ,916 1,249,079 1,118, North West Gambling Board

133 Annual Report Personnel costs (continued) R R Audit and Systems Manager (K Monate) Basic salary 763, ,749 Performance bonuses 82,675 62,359 Provident Fund 57,281 44,542 Medical aid 28,668 25,361 Cellphone allowance 9,600 9,600 Acting allowance - 2,145 Travel and subsistence 384, ,883 1,325,974 1,055,639 The difference from prior year is due to salary adjustment and increased traveling Investigating and Licensing Manager (T Mathebula) Basic salary 664, ,862 Provident Fund 49,821 27,140 Medical aid 24,260 11,438 Cellphone allowance 9,600 6,400 Travel and subsistence 174,208 81, , ,945 Gaming Control Manager (S Mogapi) Basic salary 655, ,495 Performance bonuses 55,739 48,747 Provident fund 49,182 43,012 Medical aid 33,413 30,765 Cellphone allowance 9,600 9,600 Travel and subsistence 270, ,737 Long-service award 13,115-1,087, ,

134 Annual Financial Statements 10. Notes to the Annual Financial Statements (continued) as at 31 March Administrative expenses R R Advertising 10,930,146 4,487,577 Auditors remuneration 2,958,169 2,257,837 Bank charges 77,808 53,430 Cleaning 372, ,678 Computer expenses 284,298 1,201,906 Consulting and professional fees 2,597,175 2,644,695 Interest paid - 23,274 Entertainment 44,758 29,074 Gifts and donations - 3,400 Transport hire 96,873 16,530 Insurance 185, ,097 Motor vehicle expenses 34,164 53,408 Board members fees 1,523,628 1,021,450 Postage and courier 4,832 3,518 Printing and stationery 506, ,172 Security 313, ,824 Staff welfare 521, ,741 Subscriptions and membership fees 116,276 90,381 Telephone and fax 1,375,294 1,017,406 Training 864, ,337 Travel - local 7,303,474 5,550,310 Travel - overseas 2,030,329 1,140,324 Loose tools 35,426 73,320 Electricity 540, ,557 Credit checks 87, ,417 Relocation costs 66,315 28,470 Repairs and maintenance 574, ,234 Venue expenses 649, ,777 34,094,223 23,419, North West Gambling Board

135 Annual Report Operating surplus Operating surplus for the year is stated after accounting for the following: Operating lease charges Premises - Contractual amounts 3,385,419 3,130,237 Equipment - Contractual amounts 27,299 12,606 3,412,718 3,142,843 R R Loss on disposal of assets (156,463) (58,769) Depreciation on property, plant and equipment and 1,158, ,014 amortisation of intangible assets Personnel costs 30,463,218 20,887, Auditors remuneration External audit fees 2,518,028 1,824,034 Internal audit fees 440, ,803 2,958,169 2,257,

136 Annual Financial Statements 10. Notes to the Annual Financial Statements (continued) as at 31 March Cash generated from operations Surplus adjustments for: Depreciation and amortisation 1,615,643 1,528,219 1,158, ,014 Loss on sale of assets 156,463 58,769 Movements in operating lease assets and accruals (96,403) 111,842 Movements in leave payable 277, ,998 Reversal of Incorrect adjustment to Acc Depreciation - (239) Changes in working capital: (303,939) (56,029) Inventories Receivables from exchange transactions (1,129,867) (733,089) Receivables from non-exchange transactions (20,275,124) (770,254) Prepayments (220,703) (176,738) Payables from exchange transactions 838,136 1,072,843 Taxes and transfers payable (non exchange) 20,841,364 1,494,658 Investigation fees - deposit 1,702,757 - Unspent: Socio Economic Development Fund 6,247,869-10,812,075 3,410,994 R R 134 North West Gambling Board

137 Annual Report Operating lease commitments Office building Minimum lease payments due - within one year 3,155,844 2,887,216 - in second to fifth year inclusive 1,081,720 4,214,089 4,237,564 7,101,305 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 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 R R Minimum lease payments due - within one year 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 an option for renewal for a further three periods at an escalation rate of 10%. Warehouse 2 Minimum lease payments due - within one year The Board did not renew the contract with Ace Investment Properties when it expired on 29 February , ,945 Rustenberg office Minimum lease payments due - within one year 347,113 - The Board rents an office building from New Heights under the operating lease with an escalation rate of 10% per annum for a period of one years effective from 1 March 2016., with the option of renewal for a further twelve (12) months. 135

138 Annual Financial Statements 10. Notes to the Annual Financial Statements (continued) as at 31 March Related parties Relationships Controlling department North West Department of Finance, Economic and Enterprise Development R R Related party balances Amount owed Department of Finance, Economy and Enterprise Development 32,054,478 11,213,114 Related party transactions Grant received Department of Finance, Economy and Enterprise Development 64,661,000 48,137,000 Cash surrendered Department of Finance, Economy and Enterprise Development 119,799, ,912,258 Sponsorship Department of Culture, Arts and Traditional Affairs 491, North West Gambling Board

139 Annual Report Directors emoluments 31 March 2016 Board Members Board Fees Local Travel and Subsistence Cellphone Allowance L Vere (Chairperson) 198,975 38,480 4, ,655 L Seepe (Deputy Chairperson) 214, ,043 7, ,861 T Mathe 82,593 15,883-98,476 N Maharaj 130, , ,114 T Kgomo 168, ,378 3, ,136 C Kgorane - (In Public Service) - 25,165-25,165 H Mashao - (In Public Service) - 21,636-21,636 NI Kunene - (In Public Service) - 14,620-14,620 FS Sekgaphane - (Ex-officio) J Montshioa (Secretariat) Total 795, ,516 14,400 1,253, March 2015 Board Members Board Fees Travel and Subsistence Cellphone Allowance T Kgomo 225, ,866 5, ,293 N Maharaj 150, , ,456 E Matlawe 33,965 27,204-61,169 L Seepe (Deputy Chairperson) 149,681 85, ,190 C Kgorane - (In Public Service) - 4,313-4,313 G Mbao - (In Public Service) - 26,067-26,067 C Kgorane (In Public Service) H Mashao - (In Public Service) NI Kunene (In Public Service) , ,637 5, ,488 Total 137

140 Annual Financial Statements 10. Notes to the Annual Financial Statements (continued) as at 31 March Directors emoluments (continued) 31 March 2016 Board s committees Committee Fees Other Benefits L Seepe 7,080-7,080 N Maharaj 14,160 10,990 25,150 T Mathe 13,825 4,343 18,168 TL Moromane 37,570 21,409 58,979 G Diutlwileng 28,320 59,528 87,848 MV Mokgobinyane 24,780 9,605 34,385 Z Mothibe 26,670 11,686 38, March 2015 Board s committees Total 152, , ,966 Committee Fees Other Benefits N Maharaj 15,075 8,155 23,230 E Matlawe 2,813 1,810 4,623 G Diutlwileng 12,938 39,236 52,174 TL Moromane 23,060 11,115 34,175 N Dutton 5,175 4,704 9,879 MV Mokgobinyane 7,763 5,712 13,475 L Seepe 13,838 6,372 20,210 Z Mothibe 10,350 7,267 17,617 Total 91,012 84, , North West Gambling Board

141 Annual Report Risk 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 is 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 concentration of credit risks. The Board s 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 March 2016 March 2015 Financial assets - Receivables from non-exchange transaction 28,009,735 7,734,611 Financial assets - Receivables from exchange transaction 2,110, ,479 Financial assets - prepayments 551, ,194 Cash and cash equivalents 21,420,714 13,222,725 Financial liabilities - payables (exchange) (2,782,120) (1,943,992) Financial liabilities - payables (non-exchange) (32,054,478) (11,213,114) Financial assets by category At Amortised Cost At Fair Value At Cost Receivables from non-exchange transactions - 28,009,735 - Receivables from exchange transactions - 2,110,346 - Prepayments - 551,897 - Cash and cash equivalents - 21,420, ,092,692 - Financial liabilities by category At Fair Value At Amortised Cost At Cost Payables (exchange) 2,782, ,782,120 Payables (non-exchange) 32,054, ,054,478 34,836, ,836,598 Total 139

142 Annual Financial Statements 10. Notes to the Annual Financial Statements (continued) as at 31 March 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 operations and that the realisation of assets and settlement of liabilities, contingent obligations and commitments will occur in the ordinary course of business. 28. Events after the reporting date There were no events after the reporting date that could materially affect the financial statements. 29. Fruitless and wasteful expenditure R R Opening balance 34,661 11,388 Incurred during the year 6,509 23,273 Amount recoverable (6,509) - 34,661 34,661 Fruitless and wasteful expenditure incurred during the period of reporting resulted from the interest on overdue accounts and traffic fines. Individual transactions were investigated and the results were either a written off or staff members who acted negligently were held responsible, whereby the expenses will be recovered from their salaries. The process of writing off the opening balance is underway. 30. Irregular expenditure The Board did not incur irregular expenditure 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 of1 April 2015 to 31 March North West Gambling Board

143 Annual Report Donations and sponsorships The Board sponsored the Bray July and Mahika Mahikeng events to the tune R during 2015/16 Financial Year. The events were sponsored from the ex-gratia payment fron Sun International for the Socio Economic Development as per the settlement agreement. The proposal by the Board to establish a Socio Economic Development fund was approved by the Executive Authority. The establishment of the Fund is not yet finalised though a bank account is already opened into which the ex-gratia payment from Sun International was deposited into. 33. Reconciliation between budget and statement of financial performance R R Reconciliation of budget surplus/deficit with the surplus/ deficit in the statement of financial performance: Net surplus per the statement of financial performance 1,615,643 1,528,219 Adjusted for: Non budgeted income item: operating income (6,021,805) (1,384,310) Investment income (217,501) (107,943) Loss/gain on the sale of assets 156,463 58,769 Operating activities: operating expenses 4,467,200 (94,735) Net surplus per approved budget

144 Annual Financial Statements 10. Notes to the Annual Financial Statements (continued) as at 31 March Statement of Comparison of Budget and Actual Amounts Other non-tax revenue Revenue 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. Compensation of employees The Board overspend on the compensation of employees with 2% due to salary adjustments and labour dispute settlement fee. Goods and services are within target though there has been an increase in activities around official public notices and travelling and subsistence relating to processing of licensing applications received. Further to that, the entity engaged in the Setsokotsane Programme initiated by the office of the Premier. The amount of R5.7 million as re-allocation of funds (accumulated investigation fees and interest received) was approved by the Accounting Authority for utilisation on goods and services. 35. Unspent: Socio Economic Development Fund The unspent Socio Economic Development Fund is the remaining balance of the ex-gratia payment from Sun International as indicated in Note 32 above. The establishment of the Fund is not yet finalised. However a bank account was opened and it was used for this specific payment as per the settlement agreement between the Board and the Licensee. The funds in the account are kept on behalf of the Socio Economic Development Fund and the balance will be transfered on the finalisation of the establishment of the Fund. The cash and cash equivalents in Note 3 include an amount of R6, 247, 869 which is the balance after the donations as per Note 32. The settlement from Sun International was R7.4 million out of which R was donated directly to Tshedimosetso Human Development Organisation (THUDO) by Sun International and only R7,1 million was therefore deposited into the Socio Development Fund account. Below is the breakdown of the unspent funds: 142 North West Gambling Board

145 Annual Report Unspent: Socio Economic Development Fund Continued Socio Economic Development Fund comprises: R R Unspent fund - Socio Economic Development 6,247,869 - Additions during the year 7,100,000 - Interest received from trust account 4,969 - Bank charges (840) - Socio Economic Development - Mahika Mahikeng (491,000) - Socio Economic Development - Bray July (365,260) - 6,247, Prior period errors The following prior year errors on note 24 and note 33 where identified during 2015/16 financial year. The correction of the error(s) on the disclosure notes are as follows: Note 24. Related parties on the amount owed to the Department was previously disclosed as R The correction of error and the impact is disclosed below: Note 33. Reconciliation between Budget and Statement of Financial Performance Non-budgeted income items: operating income and loss/(gain) on sale of assets were previously disclosed as R and R The correction of error and the impact is disclosed below R R Note 24. Related parties Amount owed (Department of Finance, Economy and Enterprise Development) - 11,213,114 Note 33. Reconciliation between Budget and Statement of Financial Performance Non-budgeted income items: operating income loss/(gain) on sale of assets - - 1,384,309 58,

146 Annual Financial Statements Notes North West Gambling Board

147 Annual Report SIGNS OF PROBLEM 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 BOARD PROMOTES AND ENCOURAGES RESPONSIBLE GAMBLING WINNERS KNOW WHEN TO STOP FOR PROBLEM GAMBLING COUNSELLING PHONE

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