E A S T E R N C A P E - G A M B L I N G & B E T T I N G B O A R D. Annual R E P O R T

Transcription

1 GAMBLING BETTING E A S T E R N C A P E - G A M B L I N G & B E T T I N G B O A R D 2007 Annual R E P O R T

2 E A S T E R N C A P E - G A M B L I N G & B E T T I N G B O A R D

3 A N N U A L R E P O R T GAMBLING BETTING EASTERN CAPE GAMBLING & BETTING BOARD Established in November 1997 in terms of the Gambling & Betting Act, no 5 of 1997 (Eastern Cape) Contents Page 1. Statement of Responsibility by Accounting Authority2 2. Accounting Authority s Report 3 3. Report of the Audit Committee 9 4. Report of the Auditor-General Statement of Corporate Governance Performance Report HR Oversight Statistics Statement of Financial Position Statement of Financial Performance Statement of Changes in Net Assets Cash flow statement Accounting policies Notes to the annual financial statements 45

4 E A S T E R N C A P E - G A M B L I N G & B E T T I N G B O A R D S TAT E M E N T O F R E S P O N S I B I LT Y B Y A C C O U N T I N G A U T H O R I T Y Statement of Responsibilty by Accounting Authority The annual financial statements are the responsibility of the Accounting Authority. The external auditors are responsible for independently auditing and reporting on the financial statements. The Office of the Auditor - General has audited the Board s financial statements and the Auditor-General s report is presented on page. The annual financial statements have been prepared in accordance with Standards of Generally Recognized Accounting Practice (GRAP) and the South African Statements of Generally Accepted Accounting Practices (GAAP), including any interpretations of such Statements, where no GRAP Standard exists. These annual financial statements are based on appropriate accounting policies, supported by reasonable and prudent judgments and estimates. The Accounting Authority has reviewed the Board s budgets and cash flow forecasts for the year to 31 March On the basis of this review, and in the light of the current financial position, the Accounting Authority has every reason to believe that the Board will be a going concern in the year ahead and have continued to adopt the going concern basis in preparing the financial statements. The Accounting Authority sets standards to enable management to meet the above responsibilities by implementing systems of internal control and risk management that are designed to provide reasonable, but not absolute assurance against material misstatements and losses. The entity maintains internal financial controls to provide assurance regarding: The safeguarding of assets against unauthorised use or disposition, and The maintenance of proper accounting records and the reliability of financial information used within the business or for publication. The controls contain self-monitoring mechanisms, and actions are taken to correct deficiencies as they are identified. Even an effective system of internal control, no matter how well designed, has inherent limitations, including the possibility of circumvention or the overriding of controls. An effective system of internal controls, therefore, aims to provide reasonable assurance with respect to the reliability of financial information and, in particular, financial statement presentation. Furthermore, because of changes in conditions, the effectiveness of internal financial control may vary over time. The Accounting Authority has reviewed the entity s systems of internal control and risk management for the period from 01 April 2006 to 31 March The Accounting Authority is of the opinion that the entity s system of internal control and risk management were effective for the period under review. In the opinion of the Accounting Authority, based on the information available to date, the annual financial statements fairly present the financial position of the Eastern Cape Gambling and Betting Board at 31 March 2007 and the results of its operations and cash flow information for the year and the Code of Corporate Practices and Conduct has been adhered to. The annual financial statements for the year ended 31 March 2007, set out on pages to, were approved by the Accounting Authority in terms of section 51(1)(f) of the Public Finance Management Act 1999, (Act 1 of 1999) on 30 May 2007, and are signed on its behalf by: R M ZWANE Acting Chief Executive Officer S L MAJOMBOZI Chairperson

5 A N N U A L R E P O R T A C C O U N T I N G A U T H O R I T Y S R E P O R T Accounting Authority s Report 1. Introduction The Board Members, who constitute the accounting authority in terms of the Public Finance Management Act, 1999 (Act No. 1 of 1999) present their report which forms part of the audited annual financial statements for the year ended 31 March The Eastern Cape Gambling and Betting Board is established as a public entity in terms of the Gambling and Betting Act, 1997 (Act No. 5 of 1997)(Eastern Cape) and is listed as a provincial public entity in Schedule 3C of the Public Finance Management Act, 1999 (Act No. 1 of 1999). The Board Members act as the accounting authority in terms of the PFMA. 2. Organizational Structure A detailed organizational structure diagram is contained on page of the annual report. 3. Principal Activities The principal activities of the Board are the licensing and regulation of the gambling industry and the collection of gambling and betting taxes and fees within the Eastern Cape. 4. Review of Operations Casinos The Board has licensed and regulates three casinos, namely: The Boardwalk Casino & Entertainment World in Nelson Mandela Bay Metropole/City; Hemingways Casino in Buffalo City; and Wild Coast Sun in Bizana The main highlight of the year was the successful investigation and subsequent award of the remaining two casinos in Zones 3 (Albert; Aliwal North; Barkly East; Cathcart; Cradock; Glen Grey/Cacadu/Lady Frere; Graaff-Reinet; Herschel; Hewu/Sada/Whittlesea; Hofmeyr/ Hofmeyer; Indwe; Lady Grey; Middelburg; Molteno; Queenstown; St Marks/Cofimvaba; Sterkstrom; Steynsburg; Tarka/Tarkastad; Venterstad; Wodehouse; Xalanga/Cala and Ntabathemba;) and 4 (Mthatha; Elliot; Elliotdale; Engcobo; Libode/Maclear; Mqanduli; Nqgeleni; Port St Johns/Mzivubu/Imzimvubu; Qumbuand Tsolo). The Casino Licence in Zone 3 was awarded to Lukhanji Leisure (PTY) Limited to be based in Queenstown. This R94 million development is owned 30% by a BEE consortium and will include amenities such as a thirty-two room three star hotel, one hundred and fifty seater conference facility, a restaurant and bar and a child minding facility. The casino will have one hundred and eighty slot machines and six tables. It is envisaged that four hundred and seven jobs will be created during the construction phase and one hundred and sixty nine jobs at operational phase. The casino licence in Zone 4 was awarded to Peermont Global Mthatha (PTY) Limited to be based in Mthatha. This R215 million development boasts a forty room three star hotel, two restaurants and one fast food facility, a child minding facility and a bar. The casino will have two hundred and twenty slot machines and fourteen tables. It is envisaged that seven hundred and eleven jobs will be created during the construction phase and one hundred and sixty four permanent jobs at operational phase. Mr S L Majombozi Chairperson of the Board 3

6 E A S T E R N C A P E - G A M B L I N G & B E T T I N G B O A R D A C C O U N T I N G A U T H O R I T Y S R E P O R T The presently licenced casinos operate a combined one thousand six hundred and eighty machines and fifty-five tables and employ a total number of one thousand and forty-five employees. The machines, in particular, are highly regulated to ensure that the return to player statistics cannot be amended without the Board s regulatory approval and each machine is registered by the Board. Routes and Sites The Limited Payout Machine (LPM) industry has continued to grow in the Province and to date a total of eight hundred and thirty six machines are operating out one hundred and sixty one sites. There is currently a good mix of sites ranging from taverns, clubs and pubs. The industry has generated gross gaming revenues of R71, 8m and contributed R7, 2m to the Provincial Revenue Fund. Bookmakers There are currently eight bookmakers in the province operating out of fourteen branches. This industry is seeing a steady growth in the Province with a number of Bookmakers applying to amend their conditions of licence to include additional premises. One bookmaker retired in the financial year and as a result, sold his business as a going-concern to one of the existing bookmakers in the Province. A significant number of Bookmakers have also made a switch to the new bookmakers wagering system, which system has been tested by the SABS standard 1718 compliant. The remainder who are not yet on this system have been granted an extension up until July isator Phumelela Gaming and Leisure Limited continued to operate the totalisator licence in the province with twenty-one branches as well as a call centre operated to facilitate telephonic betting. Race Courses Phumelela Gaming and Leisure Limited continued to operate the two race courses at Fairview and Arlington. The horseracing industry remains a significant source of employment in the province. Manufacturers and Suppliers of Gaming Equipment The number of manufacturers registered has decreased drastically with most manufacturers opting to apply for a National Licence as provided for in the National Gambling Act, 2004 (Act No. 7 of 2004) ( National Gambling Act ). There is currently five manufacturers registered. Key Persons and Gambling Employees At the end of the financial year new applications totalling one hundred and eighty-one key persons and three hundred and sixty gambling employees were processed and approved. A significant number of these are as a result of the continued rollout of the LPM industry. To date, the gambling industry employs 1052 key persons and 1211 gambling employees. Illegal Gambling It has been a successful year against illegal operators. Some of the long outstanding cases were finally heard before the Courts and were successfully prosecuted resulting in convictions where the perpetrators were fined significant amounts. As part of the process, the machines used in the conduct of illegal gambling were forfeited to the Board. Furthermore, monies confiscated during the raids amounting to R were paid into the account of the Board to be used in upcoming operations designed to combat illegal gambling. Responsible Gambling The Board takes the issue of responsible gambling in a serious light and as such, has sought to establish a Research and Communications Division within its organisational structure. The sole purpose of which will be to conduct research in the Eastern Cape looking at the impact of gambling in the Province since it was legalised. 4

7 A N N U A L R E P O R T A C C O U N T I N G A U T H O R I T Y S R E P O R T Thirteen Third Party applications were received and processed during the year. Eight of these were subsequently changed to self-exclusions after successful interviews were conducted with the individuals concerned. Five of which are currently still under investigation. During the year under review six hundred and seventy-four persons (including three hundred and sixty-five resident in other provinces, who have excluded themselves in terms of reciprocity agreements) were excluded by the Board. All advertising by licence holders in the province is pre-approved to ensure that it complies with the requirements of legislation and is required to contain slogans relating to responsible gambling and, in the case of print media, must contain the contact details of the National Responsible Gambling Programme. Empowerment The Board takes a keen interest in promoting meaning participation of meeting with empowerment partners. Section 40 Applications The Board dealt with seven section 40 applications from persons who wished to obtain interests in licensees exceeding 5%, of which six were approved and one was declined. Certificates of Suitability Currently there are six holders of Certificates of Suitability. Legislation The three draft amendment Bills submitted to the Department in the previous year for consideration are still outstanding. One of these dealt mostly with amendments to avoid conflicts with the National Gambling Act, 2004 and streamline certain procedures whilst the other two sought to amend certain fees and amend the Businesses Act to reduce unnecessary red tape for limited gambling machine site owners in accordance with government policy. Two minor amendments to the Regulations were effected. Litigation The two unsuccessful bidders, Ekuphumleni Resorts and Elonwabeni Resorts, for the casinos in Zones 3 and 4 have made an application to the High Court seeking to set aside the decision of this Board to award the casino licences to Lukhanji Leisure (Pty) Limited (Zone 3) and Peermont Global (Mthatha) (Pty) Limited (Zone 4) and the Board is defending this application. Staff Photo Left to right Standing: Ms N Makunga (PA to CEO); Ms P Ntombana (IT Programmer); Ms G Thomas (Senior Accounts Clerk); Ms Y Sharrock (Executive Assistant: Legal Affairs); Ms S Ntshoko (Licencing Officer); Ms N Nahayo (Revenue Clerk Seated: Ms Z Kwinana (Receptionist); Mr M Mame (Network Administrator); Ms Z Mkosana (Assistant Accountant) Absent: Ms S Renga (Executive Assistant: Finance); Mr S Kose (Messenger/Driver) 5

8 E A S T E R N C A P E - G A M B L I N G & B E T T I N G B O A R D A C C O U N T I N G A U T H O R I T Y S R E P O R T 5. Financial Performance Highlights Operating Results The net surplus of the Board for the year amounted to R 7,683,045 (2006: R 5,891,043) before taking into account an amount of R 3,392,048 repayable to the Province in terms of applicable legislation. The financial performance of the Board is fully disclosed in the accompanying financial statements. Tax and Fee Collections Gambling and betting taxes, fees and interest collected for the Province during the financial year under review totalled a record R 80,3 million (2005/06: R 62,61 million). collections thus showed a significant increase of 28% over prior year levels and resulted in additional revenues (over and above the initial projections) of R 17,69 million for the Provincial fiscus. The record results achieved are attributed to the continued growth in the gambling industry, which generated gross gaming revenues of R 1,013 billion, being 19,0% up on prior year equivalents. The revenue growth experienced was characterised by satisfactory performances by the casino and racing sectors as well as the impact of the fledgling limited payout machine industry. Although growth rates have slowed towards the end of the financial year, it is considered that solid revenue growth in the industry is sustainable over the short to medium term. The Board remains a major revenue driver for the Provincial fiscus. Taxes and fees collected, together with accumulated interest thereon are remitted monthly in arrears. Gambling revenues generated by and taxes collected are more fully disclosed in the accompanying graphics on pages. Grant Funding Grant funding totalling R 19,246 million was received from the Provincial Government. Included in this amount is a surplus of R 3,392 million, which is refundable to the Province in terms of applicable legislation. Effectively for every R1,00 of grant funding employed by the Board during the year under review, an amount of R 5,67 has been generated for the Provincial Treasury. 6. Board Members Remuneration Non-executive Board and Committee Members: R 935,457. The reason for the increase in Board fees is due to increased Board meetings during the casino licensing process for Zones 3 and 4 as well as committee meetings held during the year under review. Some of these costs were recovered from the applicants who applied for casino licenses. Full details are contained in note 11 to the financial statements. S L MAJOMBOZI CHAIRPERSON 6 Management Team: Left to right: Mr M Tokota (HR Manager); Mr A Bomvu (Acting Chief Financial Officer); Mr R M Zwane (Acting Chief Executive Officer) Absent: Mr M Nontshinga (IT Manager)

9 A N N U A L R E P O R T A C C O U N T I N G A U T H O R I T Y S R E P O R T Revenue and Tax Statistics Financial Year vs Gross Gaming Revenue Generated by Casinos Gambling Taxes Collected from Casinos Gross Gaming Revenue Generated by Racing Million R 900 R 800 R 700 R 600 R 500 R 400 R 300 R 200 R 100 R 0 R 844,3m R 737,0m Million R 70 R 60 R 50 R 40 R 30 R 20 R 10 R 0 R 65,4m R 53,1m Million R 100 R 90 R 80 R 70 R 60 R 50 R 40 R 30 R 20 R 10 R 0 R 97,1m R 94,9m Betting Taxes Collected from Racing Gross Gaming Revenues Generated by the LPM Industry Gambling Taxes from LPM s R 6 R 5 R 4 R 5,6m R 5,2m R 80 R 70 R 60 R 50 R 71,8m R 8 R 7 R 6 R 5 R 7,2m Million R 3 R 2 R 1 Million R 40 R 30 R 20 R 10 R 22,6m Million R 4 R 3 R 2 R 1 R 2,3m R R R Gross Gaming Revenue Generated by Industry Million R 1200 R 1000 R 800 R 600 R 400 R 200 R 1,013b R 854,5m Gambling and Betting Taxes Collected from Industry Million R 80 R 70 R 60 R 50 R 40 R 30 R 20 R 10 R 78,3m R 60,2m R R

10 E A S T E R N C A P E - G A M B L I N G & B E T T I N G B O A R D A C C O U N T I N G A U T H O R I T Y S R E P O R T Distribution of Gambling and Betting Takings: 2006/2007 Financial Year Distribution of Takings from Gaming Machines Distribution of Takings from Gaming Tables 94.43% Return To Public 80.11% Return To Public 0.68% VAT 2.44% VAT 0.42% Gambling Taxes 1.98% Gambling Taxes 4.4% Casino Revenue 15.47% Casino Revenue Distribution of Takings from Racing Industry Distribution of Takings from LPM Industry 61.94% Return To Public 88.69% Return To Public 4.67% VAT 1.39% VAT 2.27% Gambling Taxes 1.13% Gambling Taxes 31.12% Racing Industry Revenue 8.79% LPM Industry Revenue Distribution of Takings from Overall Industry 93.24% Return To Public 0.83% 0.52% 5.41% VAT Gambling Taxes Industry Revenue 8

11 A N N U A L R E P O R T R E P O R T O F T H E A U D I T C O M M I T T E E Report of the Audit Committee The Audit Committee has adopted appropriate formal terms of reference, which have been confirmed by the Board, and has satisfied its responsibilities as set out in the Audit Charter. The Audit Committee is satisfied that internal controls and systems have been put in place and that these controls have functioned effectively during the period under review. The Audit Committee considers the Board s internal controls and systems appropriate in all material respects to: meet the business objectives of the Board; ensure the Board s assets are adequately safeguarded; ensure that the transactions undertaken are recorded in the Board s records and; reduce the Board s risk to an acceptable level. The Audit Committee has evaluated the annual financial statements of the Eastern Cape Gambling and Betting Board for the year ended 31 March 2007 and concluded that they comply, in all material respects, to the requirements of the Public Finance Management Act 1999, (Act 1 of 1999, as amended) and the South African Statements of Generally Accepted Accounting Practice. The Audit Committee agrees that the adoption of the going concern premise is appropriate in preparing the annual financial statements. The Audit Committee has therefore recommended the adoption of the annual financial statements by the Board at their meeting held on 25 May S WHITFIELD CHAIRMAN Audit Committee Members: S Whitfield (Chairman) R Hill X Mbangxa Meeting Dates: 7 May 2006 (Joint Audit & Finance Committee Meeting) 5 June 2006 (Audit Steering Committee Meeting) 0 July October 2006 Audit Committee: Left to right: Mr R Hill ; Mr X Mbangxa; Mr S Whitfield (Chairperson: Audit Committee) 9

12 E A S T E R N C A P E - G A M B L I N G & B E T T I N G B O A R D R E P O R T O F T H E A U D I T O R - G E N E R A L Report of the Auditor General REPORT OF THE AUDITOR-GENERAL TO THE EASTERN CAPE PROVINCIAL LEGISLATURE ON THE FINANCIAL STATEMENTS OF THE EASTERN CAPE GAMBLING AND BETTING BOARD FOR THE YEAR ENDED 31 MARCH Audit Assignment 2. Scope 3. Basis Of Accounting 4. Audit Opinion 5. Emphasis of Matter 6. Appreciation signature S M NGQWALA, for Auditor-General East London, 29 July

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14 E A S T E R N C A P E - G A M B L I N G & B E T T I N G B O A R D R E P O R T O F T H E A U D I T O R - G E N E R A L ADDENDUM TO THE REPORT OF THE AUDITOR-GENERAL ON THE FINANCIAL STATEMENTS OF THE EASTERN CAPE GAMBLING AND BETTING BOARD FOR THE YEAR ENDED 31 MARCH 2007 Basis of Preparation The financial statements have been prepared in accordance with the South African Statements of Generally Accepted Accounting Practices (GAAP) including any interpretations of such Statements issued by the Accounting Practices Board, with the prescribed Standards of Generally Recognised Accounting Practices (GRAP) issued by the Accounting Standards Board replacing the equivalent GAAP Statement as follows: Standard of GRAP GRAP 1: Presentation of financial statements GRAP 2: Cash flow statements GRAP 3: Accounting policies, changes in accounting estimates and errors Replacement of GAAP AC 101: Presentation of financial statements AC 118: Cash flow statements AC 103: Accounting policies, changes in accounting estimates and errors The recognition and measurement principles in the above GRAP and GAAP Statements do not differ or result in material differences in items presented and disclosed in the financial statements. The implementation of GRAP 1, 2 & 3 has resulted in the following significant changes in the presentation of the financial statements: 1. Terminology differences: Standard of GRAP Statement of financial performance Statement of financial position Statement of changes in net assets Net assets Surplus/deficit for the period Accumulated surplus/deficit Contributions from owners Distributions to owners Reporting date Replacement of GAAP Balance sheet AC 118: Cash flow statements Statement of changes in equity Equity Profit/loss for the period Retained earnings Share capital Dividends Balance sheet date 2. The cash flow statement can only be prepared in accordance with the direct method. 3. Specific information such as: (a) receivables from non-exchange transactions, including taxes and transfers; (b) taxes and transfers payable; (c) trade and other payables from non-exchange transactions; must be presented separately on the statement of financial position 4. The amount and nature of any restrictions on cash balances is required to be disclosed. Paragraph of GRAP 1 has not been implemented as the budget reporting standard is in the process of being developed by the international and local standard setters. Although the inclusion of budget information would enhance the usefulness of the financial statements, non-disclosure will not affect fair presentation. 1 2

15 A N N U A L R E P O R T S TAT E M E N T O F C O R P O R AT E G O V E R N A N C E Statement of Corporate Governance 1. Introduction Corporate Governance is concerned with the organisational arrangements that have been put into place to provide an appropriate set of checks and balances within which the stewards of the Board operate. The objective is to ensure that those to whom the stakeholders have entrusted the direction and success of the Board act in the best interest of these stakeholders. The Eastern Cape Gambling and Betting Board ensures that its processes and practices are reviewed on an ongoing basis in order to comply with good corporate governance practices, which are continually benchmarked against best practice. The Accounting Authority recognizes the need to conduct the business of the enterprise with the highest degree of integrity and in full compliance with generally accepted corporate governance practices. The Board is committed to the principles of openness, accountability and integrity which flow from this compliance and believe that compliance with the principles incorporated in the King Report on Corporate Governance for South Africa 2002 has been achieved. 2. Stakeholders In addition to the interest of government as the shareholder, the Accounting Authority acknowledges the interests of other stakeholders, including employees, creditors, customers, suppliers and local communities. The Accounting Authority regularly communicates with all stakeholders on material matters of significant interest and concern. The information furnished to stakeholders conforms to the criteria of promptness, openness, substance over form, relevance, clarity, effectiveness, transparency and objectivity. The Accounting Authority places great emphasis on reporting on both financial and non-financial matters, as well as addressing both positive and negative aspects. 3. Governing Bodies Board The Board comprises of eight non-executive members appointed in terms of section 5 of the Gambling and Betting Act 1997 (Act no. 5 of 1997 (Eastern Cape). Three members represent Provincial Government Departments whilst the remaining five are independent members appointed by virtue of their specialist knowledge and skills. The Chief Executive Officer is an ex-officio member of the Board with no voting powers. The Board meets on a monthly basis. The term of office of all Accounting Authority is five years. The Accounting Authority are responsible for determining strategic direction and policy and for the monitoring of operational performance and management. Board Committees The Board has put into place the following committees to assist it in discharging its responsibilities: Audit Committee The Audit Committee is constituted in accordance with the requirements of the Public Finance Management Act. The Chairperson is independent and non - executive and the committee consists of a majority of independent members. A representative of the Office of the Auditor-General attends all meetings of the Audit Committee in an observer capacity. All members of the Audit Committee are financially literate and no relationships exist which could interfere with the members independence from management. Both internal and external audit have unrestricted access to the Audit Committee. The Audit Committee has adopted appropriate formal terms of reference which have been approved by the Board and are encapsulated in the Audit Committee Charter. Internal Audit reports directly to the Audit Committee on an operational level. 1 3

16 E A S T E R N C A P E - G A M B L I N G & B E T T I N G B O A R D S TAT E M E N T O F C O R P O R AT E G O V E R N A N C E The principal functions of the Audit Committee are to : Review the Annual Financial Statements Review the effectiveness of internal controls and systems Evaluate the risks associated with the operations of the Board Evaluate the effectiveness of the risk management systems in place Evaluate the findings of internal audit. Finance Committee The Finance Committee consists of four non-executive members as well as the Chief Executive Officer. The Finance Committee has adopted formal terms of reference, which have been approved by the Board. The principal functions of the Finance Committee are to: Review the budget process and recommend the annual budget for approval of the Board Review the monthly management accounts and monitor financial performance against approved budgets Review and recommend the annual financial statements for the approval of the Board Advise the Board on all matters with financial implications. Remuneration Committee The Remuneration Committee consists of two non-executive members as well as the Chief Executive Officer. The principal functions of the Remuneration Committee are to: Establish and maintain the remuneration policy Ensure acceptable corporate governance in terms of the Board remuneration practices Establish the basis and content of GCTC Establish variable pay schemes as appropriate based on grade level and job categories Appoint consultants as required to advise the Remuneration Committee as and when required 4. Risk Management The Accounting Authority is responsible for the implementation and maintenance of effective, efficient and transparent systems of risk management and internal control. Management, as mandated by the Accounting Authority, has established a system of internal control to manage significant risks. The risk management and internal control systems are reviewed on an ongoing basis for effectiveness and for establishing appropriate risk and control policies. There is an ongoing process for identifying and managing the significant risks faced by the Board, which has been in place for the year under review and up to the date of approval of the annual report and financial statements. There is an adequate system of internal control in place to mitigate the significant risks faced by the Board to an acceptable level. The system is designed to manage, rather than eliminate, the risk of failure or maximise opportunities to achieve business objectives. This can only provide reasonable, but not absolute, assurance. The Accounting Authority is of the opinion that appropriate risk management policies and practices are in place and that adequate systems and expertise are being applied to achieve compliance with those policies and procedures. 5. Internal Audit The Accounting Authority has an internal audit function that has the support and co-operation of both the Board and Management. The internal audit function has written terms of reference, approved by the Board of Directors and encapsulated in the Internal Audit Charter. The internal audit function is under the control and direction of the Audit Committee and reports at the highest level of authority and at 1 4

17 A N N U A L R E P O R T P E R F O R M A N C E R E P O R T all audit committee meetings. The internal audit function provides an independent, objective appraisal and evaluation of the risk management processes, internal controls and governance processes in terms of which corrective actions and recommended enhancements to controls and processes are proactively identified. Audit plans are risked-based and are updated annually based on the outcome of risk assessment reviews, ensuring that the audit coverage is focused on identified areas of high risk. 6. Related-Party Transactions No related party transactions occurred during the financial year under review. Attendance Register for Board and Committee Meetings Name Board (27 Meetings) Audit Committee (3 Meetings) Finance Committee (1 Meetings) Joint Audit & Finance Committee Meetings (1 Meeting) Remuneration Committee Meetings (1 Meeting) Capacity Attendance Capacity Attendance Capacity Attendance Capacity Attendance Capacity Attendance S.Majombozi Chair 26 K Canca Deputy 24 Chair X Mbangxa Member 22 Member 2 Chair 1 Member 0 S Mlonyeni Member 21 Member 0 Member 1 P Mnqandi Member 24 P Myles Member 22 Member 1 P Nqakula Member 14 Member 1 Member 1 M Fatyela Member 4 A Ntsonkota Member 23 Chair 1 S Whitfield Chair 3 Chair 1 R Hill Member 2 Member 0 Board Members: Standing: Mr R M Zwane (Acting Chief Executive Officer); Mr A Ntsokotha; Mr S Mlonyeni; Mr P Myles; Rev M A Fatyela Seated: Mr P Mnqandi; Mr X Mbangxa (Finance Committee Chairperson); Mr S L Majombozi Chairperson of the Board); Ms K Canca (Deputy Chairperson) 1 5

18 E A S T E R N C A P E - G A M B L I N G & B E T T I N G B O A R D S TAT E M E N T O F C O R P O R AT E G O V E R N A N C E Performance Report Introduction This Performance Report is intended to give an overview of the performance of the ECGBB against the approved Operational Plan for the year ended 31 March Definitions BOARD - Eastern Cape Gambling and Betting Board CEO - Chief Executive Officer DEDEA - Department of Economic Development and Environmental Affairs LPM - Limited Payout Machine LAN - Local Area Network MEC - Member of the Executive Committee NEPAD - New Partnership for Africa s Development NGB - National Gambling Board NRGP - National Responsible Gambling Programme PFMA - Public Finance Management Act RFP - Request For Proposal SAACREG - South African Advisory Council for Responsible Gambling SITE A - Three to five machines SITE B - Twenty to forty machines WAN - Wide Area Network WTO - World Trade Organisation Performance Against Operational Plan OBJECTIVES (Key Performance Areas) 8.1 Regulatory Framework: Review act, regulations and rules ACTION PLAN ACHIEVEMENTS CONSTRAINTS Conduct reviews, consultations and note comments regarding the Act, Regulations and Rules Obtain suggestions on improvements from staff and licence holders Liaison with other Boards Deliberation by the Board Submit to MEC and Legislature Amendments to the Act promulgated Legislation sub-committee appointed. Suggestions obtained. LPM licensing process re-engineered. Legal compliance forum meetings held regularly. Prior year s amendments outstanding from DEDEA 8.2 Licencing And Compliance: Issue RFP for outstanding casino licences. Finalisation by Board Advertise in newspapers and Gazette. Advertisements for Zones 3 and 4 were placed in newspapers and gazette and the bid applications opened for inspection by the public. Investigations commenced and were finalized resulting in the award of Zone 3 casino licence to Lukhanji Leisure (Pty) Limited and Zone 4 casino licence to Peermont Global Mthatha (Pty) Limited. 1 6

19 A N N U A L R E P O R T P E R F O R M A N C E R E P O R T OBJECTIVES (Key Performance Areas) Issue RFP for LPM sites Receive applications for LPM sites. Assign investigations for LPM sites. ACTION PLAN ACHIEVEMENTS CONSTRAINTS Inform route operators (site A) Advertise in newspapers and Gazette (site B). Receive and record applications and ensure fees are paid and determine if applicants comply with the RFP requirements. Allocate applications for investigation to staff. Issued RFP s for batches 11 and 12 (site A s) and batch 4 (site B s) Receipt of applications analyzed for batches 11 and 12 (site A s 54 applications) and batch 4 (site B s 6 applications). 60 site investigations conducted. 54 site A and 6 site B applications allocated and under investigation. Re-engineered LPM process. Casino licencing process (zones 3 & 4) took precedence. Re-engineered LPM process. Casino licencing process (zones 3 & 4) took precedence. Evaluation Licencing of LPM sites. Register key persons, gambling employees and devices. Evaluate applications, ensure that all criteria (including liquor licence issued by the ECLB) are in place. A provisional or final licence is issued. Certificate to commence business issued. Assign work to inspectorate; evaluate applications and conduct interviews with those who are possibly disqualified. 54 Site A and 6 Site B applications evaluated. 70 Site A applications licences issued and operations began on 62 premises. 66 certificates issued. 181 key employees, 360 gambling employees, 93 gambling devices and 446 machines registered. Finance Committee: Left to right: Rev M A Fatyela; Mr X Mbangxa (Chairperson: Finance Committee); Mr S Mlonyeni 1 7

20 E A S T E R N C A P E - G A M B L I N G & B E T T I N G B O A R D P E R F O R M A N C E R E P O R T OBJECTIVES (Key Performance Areas) Licencing of applicants for various licences ACTION PLAN ACHIEVEMENTS CONSTRAINTS A provisional or final licence is issued. 2 Casino licences awarded and one casino Provisional licence issued. 1 Bookmaker license application and a transfer of a bookmaker licence and an amendment of a bookamker licence conditions were approved. 2 transfers of LPM licences approved and 1 amendment of a totalisator licence to include and delete other premises approved. 6 Section 40 applications (persons wishing to obtain an interest of 5% or more in licensees)approved. Registration and/or certification of various applicants. Carrying out of inspections and investigations. A certificate of registration is issued. Conduct inspections and audits of licensees. 2 Manufacturer registrations issued. 8.3 Revenue Collection Collection of gambling and betting tax. Collection of R71,5m in taxes. Monitor timeousness, accuracy and completeness of tax returns. Timeous receipting and invoicing of all gambling taxes. Follow-up and collection of arrears. Imposition of penalties and/or interest in accordance with the Act. R78,3m collected. Monitored. Gambling taxes timeously received and invoiced. Arrears minimized. Penalties and interest raised for 2 casinos. Verification of gambling tax Investigators conduct audits to ensure the validity, accuracy and completeness of the gambling tax and compliance with internal controls 8 Casino, 14 bookmaker and 2 route operator revenue audits carried out. Casino licencing process (zones 3 & 4) took precedence. Collection of fees Collection of R1,8m in fees. All fees should be timeously collected. Fees should be accurately and timeously allocated between the province and board in accordance with the Act. Recoveries of costs incurred by investigators and inspectors. Fees totaling R1,8m were collected. All fees were timeously collected Fees were timeously allocated and paid over to the province. Recoveries effected monthly. 1 8

21 A N N U A L R E P O R T P E R F O R M A N C E R E P O R T OBJECTIVES (Key Performance Areas) 8.4 Financial Management and Administration Budget process ACTION PLAN ACHIEVEMENTS CONSTRAINTS The Budget will be completed in accordance with PFMA deadlines Final submission made in August Monthly budget draws i.r.o. Provincial grant. Annual report and AFS. Monthly management accounts and quarterly reports. Maintenance of internal control systems 8.5 Social Responsibility: Promotion of responsible gambling Promotion of tourism Continuous follow-up measures and good communication will be fostered with the department. AFS to be produced in accordance with PFMA requirements. Annual reporting process completed in accordance with PFMA requirements. Monthly management accounts produced and quarterly reports submitted to the Province. Systems to safeguard all assets and ensure efficiencies to be enforced. Accountability to be enforced and all financial controls monitored. The use of company assets to be monitored and controlled. Review and update the communication strategy Issue appropriate press statements and advertisements. Communicate with licence holders. Liaise with Eastern Cape Tourism Board in order to determine Tourism objectives Include licence conditions in new licences based on tourism imperatives. Monitor compliance with bid commitments. Liaise with SAPS to ensure that crime levels at or near gambling premises are minimised. Transfers received monthly in advance. AFS completed and approved during May and published in August Annual report completed and approved during May and published in August Management accounts produced monthly. Systems monitored. Financial controls monitored. Use of assets monitored and controlled. Reviewed Issued Communicated with licence holders regularly. Liaised Bid commitments monitored. Liaised with SAPS. 1 9

22 E A S T E R N C A P E - G A M B L I N G & B E T T I N G B O A R D P E R F O R M A N C E R E P O R T OBJECTIVES (Key Performance Areas) Benefit society through spin-offs/ profits of gambling ACTION PLAN ACHIEVEMENTS CONSTRAINTS Monitor compliance with and enforce licence conditions where commitments were made with regard to the public. Licence conditions enforced. Community development Develop public confidence Illegal gambling Donate items forfeited to the Board to deserving institutions in accordance with the approved policy. Inform the public of the checks conducted to ensure they are fairly treated by the casino. Respond to complaints from the public. Enforcement of regulations Follow up leads from public and investigate and arrange with SAPS and Director of Prosecutions for appropriate actions. No items forfeited. Responded to press enquiries. 2 complaints received from the public were dealt with. Regulations enforced. Leads from public followed up and investigations continued. 8.6 Human Resources Management Training and development Implement work place skills plan. 32 training opportunities granted to 32 employees. Objective and participative style of management Encourage transparent management through workshops, regular departmental meetings, regular management meetings and monthly business performance meetings. 28 meetings and workshops were held. Major policy reviews. Performance management Revise performance agreements. Bi-annual performance appraisal carried out and performance measured. 28 contracts signed. 28 performance reviews conducted. HR policy Payroll General administration Industrial relations Recommend updates of Human Resources and Remuneration policy and update manual in line with Board resolutions. Ensure that payroll is correctly administered. Ensure the efficient management of the switchboard, pool cars, security and the building. Ensure compliance with relevant labour legislation and ensure that disciplinary, grievance and dispute resolution procedures are adhered to. Human Resources Policy manual updated and approved by the Board. Draft Remuneration Policy developed. Payroll monitored. Monitored. 2 disciplinary hearings held and finalised. 2 0

23 A N N U A L R E P O R T P E R F O R M A N C E R E P O R T OBJECTIVES (Key Performance Areas) 8.7 Quality Customer Service Customer oriented service ACTION PLAN ACHIEVEMENTS CONSTRAINTS Continuous assessment of the standard of customer satisfaction. Regular visits to customers by Senior Management. Monitored. 5 meetings held with casino and racing operators. Code of conduct At all times maintain professional and objective relationship with customers. Maintained. 8.8 Internal Control Systems Appropriate documentation of operational systems. Effective risk management. Adequate and effective systems of internal controls. Compliance with controls and adherence to policies, procedures and legislation. Perform special investigations Review systems of the Board. Review business risk profile. Review internal control systems for adequacy and effectiveness. Identify weaknesses and make recommendations. Review existing policies and procedures for adequacy. Perform audits to establish compliance with policies, procedures and relevant statutes/ legislation. As per management request, or audit coverage plan. Regular meetings to be held between Internal Audit, management and audit committee. Internal audits conducted on Legal division, CEO s office, Finance & HR. All policies reviewed and amendments approved by the Board. All policies reviewed and amendments approved by the Board. Internal audits conducted on Legal division, CEO s office, Finance & HR. Major policy reviews undertaken. Internal audits conducted on Legal division, CEO s office, Finance & HR. None requested. 3 audit committee meetings and two meetings with internal auditors held. 2 1

24 E A S T E R N C A P E - G A M B L I N G & B E T T I N G B O A R D P E R F O R M A N C E R E P O R T OBJECTIVES (Key Performance Areas) 8.9 Information Technology Management Business continuity plan ACTION PLAN ACHIEVEMENTS CONSTRAINTS Review business continuity plan including disaster recovery plan. Reviewed. Information security control procedure Review the system of securing information. Back-up system replaced. Departmental network audit performed. Communication with licencees Maintain WAN connections. Monitor communication systems. Maintained. Monitored. Website and intranet Provision of appropriate hardware systems. Systems development and support Market and upgrade website and intranet as needed. Develop and upgrade systems as and when required. Interaction with users to develop and acquire software. Support all systems. Maintain IT systems documentation. Maintained and updated. 3 desktops and 6 notebook computers replaced. Mail server replaced. Navision debtors system upgraded. Employee registration and illegals systems upgraded. Maintained. Remuneration Committee: Left to right: Mr P Myles; Mr A Ntsonkota (Chairperson: Remuneration Committee); 2 2 Mr R M Zwane (Acting Chief Executive Officer)

25 A N N U A L R E P O R T P E R F O R M A N C E R E P O R T OBJECTIVES (Key Performance Areas) 8.10 Research And Development Research ACTION PLAN ACHIEVEMENTS CONSTRAINTS Conduct, commission or consider the results of internal and external research regarding gambling related matters in the province, nationally and internationally. Liaise with institutions like the South African Advisory Council for responsible gambling (SAACREG) and the National Gambling Board. Utilise results of research to determine whether amendments need to be made to our policies, legislation or regulations. Results of NGB Socio Economic Impact Study received. Research study tour to Canada undertaken. Liaised with NRGP on responsible gambling services required and received proposals. One SAACREG meeting attended. Results considered and policy proposals recommended to the Board. Keep abreast with developments in gambling industry and the environment Regularly attend relevant conferences, read relevant publications, peruse relevant court judgments and consider statutory amendments or propose statutory amendments in other jurisdictions. Keep up to date with general developments which impact on the industry. Visit leading jurisdictions. 5 international conferences attended: Banff, Melbourne, Las Vegas, Spain and Lake Tahoe. NGB conference attended in Cape Town. GRAF conference attended in Port Elizabeth. 5 international conferences attended: Banff, Melbourne, Las Vegas, Spain and Lake Tahoe. NGB Conference attended in Cape Town. GRAF conference attended in Port Elizabeth. Research study tour to Canada undertaken. Research study tour to Nova Scotia and Manitoba in Canada undertaken. 2 3

26 E A S T E R N C A P E - G A M B L I N G & B E T T I N G B O A R D P E R F O R M A N C E R E P O R T Performance Report Annexure 1 TAX AND FEE COLLECTIONS TEN YEAR REVIEW SINCE INCEPTION OF THE BOARD PROVINCIAL REVENUE 1997/98 Rm 1998/99 Rm 1999/00 Rm 2000/01 Rm 2001/02 Rm 2002/03 Rm 2003/04 Rm 2004/05 Rm 2005/06 Rm 2006/07 Rm TOTAL Rm Casino Taxes 25,691 25,374 18,073 27,828 20,482 26,064 66,881 46,345 53,060 65, ,144 Bookmakers Taxes 9 1,356 1,318 1, ,674 1,670 1,689 11,848 isator Taxes 1,196 4,386 2,408 2,499 2,371 2,532 2,812 3,549 3,924 4,040 29,717 LPM Taxes ,261 7,175 9,436 Fees , ,137 1,148 1,111 1,563 1,752 10,490 OWN REVENUE Exclusivity Fee ,114 10, ,697 Application Fee - 2, , ,301 8,076 Administration Fee 263 1, ,228 1,297 1,320 1,297 1,470 1,766 1,935 12,496 TOTAL REVENUE 27,884 35,377 42,856 45,986 26,523 32,051 73,433 54,513 65,043 83, ,904 GRANT FUNDING VOTED 1,975 1,588 7,000 8,000 10,000 10,630 12,400 13,364 14,364 19,246 98,567 LESS: REPAID ,863 3,906 3,398 3,833 2,357 4,897 3,392 23,646 NETT UTILISED 1,975 1,588 7,000 6,137 6,094 7,232 8,567 11,007 9,467 15,854 74,921 During the financial year under review taxes and fees collected from the gambling industry amounted to R80, 3m. The accumulated revenues collected in the past ten years amounted to R486, 904m in relation to net provincial funding of R 74,921m. Effectively for every rand of government funding employed an amount of R4, 17m has been returned. On behalf of the Board we wish to express our sincere gratitude to the Provincial Government for the support afforded to us during the course of the financial year and to management and staff for their performance in achieving the goals of the Board. R M ZWANE ACTING CHIEF EXECUTIVE OFFICER 2 4

27 A N N U A L R E P O R T H R O V E R S I G H T S TAT I S T I C S For the period April 2006 to March 2007 HR Oversight Statistics for the Period April 2006 to March 2007 Table 1.1 Main Service For Service Delivery Improvement And Standards Main Services Actual Customers Potential Customers Standard of Service Gambling Regulation Casino and horse racing industry High Actual Achievement against Standards High Table 1.2 Consultation Arrangements for Customers Type of Arrangement Actual Customers Potential Customers Actual Achievement NIL NIL NIL NIL Table 1.3 Service Delivery Access Strategy Access Strategy Actual Achievement NIL NIL Table 1.4 Service Information Tool Type of Information Tool NIL Table 1.5 Complaint Mechanism Complaint Mechanism NIL Actual Achievement NIL Actual Achievement NIL Table 2.1 Personnel Costs by Programme Programme Eastern Cape Gambling & Betting Board Expenditure Table 2.2 Personnel Costs by Salary Band Salary Bands Personnel Expenditure Training Expenditure Professional & Special Services Personnel costs as % of Expenditure Average Personnel Costs per Employee Employment 18,019,588 9,610,493 1,818, , , Personnel Expenditure % of Personnel Costs Average Personnel Cost per Employee Personnel Expenditure Number of Employees Lower skilled (Level 1-2) 81, ,970 1 Skilled (Level 3-5) 128, ,053 2 Highly skilled production (Level 6-8) 1,029, ,529 6 Highly skilled supervision (Level 9-12) 6,088, , Senior management (Level 13-16) 2,282, ,785 3 TOTAL 9,610, ,416,

28 E A S T E R N C A P E - G A M B L I N G & B E T T I N G B O A R D H R O V E R S I G H T S TAT I S T I C S For the period April 2006 to March 2007 Table 2.3 Salaries, Overtime, Home Owners Allowance & Medical Aid by Programme Programme Eastern Cape Gambling & Betting Board Salaries Salaries as % of Personnel Costs Overtime Overtime as % of Personnel Costs HOA HOA as % of Personnel Costs Medical Ass. Medical Ass. as % of Personnel Costs Personnel Coat 4,896, , ,203,695 TOTAL 4,896, , ,203,695 Table 2.4 Salaries, Overtime, Home Owners Allowance & Medical Aid by Salary Band Salary Bands Salaries Salaries as % of Personnel Costs Overtime Overtime as % of Personnel Costs HOA HOA as % of Personnel Costs Medical Ass. Medical Ass. as % of Personnel Costs Personnel Coat Lower skilled 65, , , (Levels 1-2) Skilled (Levels 119, , ) Highly skilled 808, , , production (Levels 6-8) Highly skilled 2,567, , ,788, supervision (Levels 9-12) Senior 1,334, , ,363, management (Levels 13-16) TOTAL 4,896, , ,203, Table 3.1 Employment and Vacancies by Programme at end of period Programme Number of Posts Number of Posts Filled Vacancy Rate Number of Posts Filled Additional to the Establishment Eastern Cape Gambling & Betting Board TOTAL Table 3.2 Employment and Vacancies by Salary Band at end of period Salary Band Number of Posts Number of Posts Filled Vacancy Rate Number of Posts Filled Additional to the Establishment Lower skilled (Level 1-2) - Permanent Skilled (Level 3-5) - Permanent Highly skilled production (Level 6-8) - Permanent Highly skilled supervision (Level 9-12) - Permanent Senior management (Level 13-16) - Permanent TOTAL

29 A N N U A L R E P O R T H R O V E R S I G H T S TAT I S T I C S For the period April 2006 to March 2007 Table 3.2 Employment and Vacancies by Critical Occupation at end of period Salary Band Number of Posts Number of Posts Filled NO CRITICAL OCCUPATION IDENTIFIED Vacancy Rateå Number of Posts Filled Additional to the Establishment TOTAL Table 4.1 Job Evaluation Salary Band Number of Posts Number of Jobs Evaluated % of Posts Evaluated Number of Posts Upgraded % of Upgraded Posts Evaluated Number of Posts Downgraded % Of Downgraded Posts Evaluated Lower skilled (Level 1-2) Skilled (Level 3-5) Highly skilled production (Level 6-8) Highly skilled supervision (Level 9-12) Senior management Service Band B Senior management Service Band C TOTAL Table 4.2 Profile of employees whose positions were upgraded following upgrading of their posts Beneficiaries African Asian Coloured White Female Male Employees with Disabilities Table 4.3 Employees whose salary level exceed the grade determined by Job Evaluation [i.t.o. PSR 1.V.C.3] Occupation Number of Employees 0 Job Evaluation Level Remuneration Level N/A N/A Reason for Deviation No of Employees in Dept % of Employment

30 E A S T E R N C A P E - G A M B L I N G & B E T T I N G B O A R D H R O V E R S I G H T S TAT I S T I C S For the period April 2006 to March 2007 Table 4.4 Profile of employees whose salary level exceeded the grade determined by Job Evaluation [i.t.o. PSR 1.V.C.3] Beneficiaries African Asian Coloured White Female 0 Male N/A N/A 0 0 Employees with Disabilities Table 5.1 Annual Turnover Rates by Salary Band Salary band Employment at Beginning of Period Appointments Terminations Turnover Rate Lower skilled (Level 1-2) Permanent Skilled (Level 3-5) - Permanent Highly skilled production (Level 6-8) - Permanent Highly skilled supervision (Level 9-12) - Permanent Senior management Service Band B- Permanent Senior management Service Band C- Permanent TOTAL Table 5.2 Annual Turnover Rates by Critical Occupation Occupation Employment at Beginning of Period Appointments Terminations Turnover Rate NO CRITICAL POSTS IDENTIFIED TOTAL Table 5.3 Reasons why staff are leaving the Board Termination Type Number % of Resignations % of Employment Employment Death, Permanent Resignation, Permanent Dismissal-operational changes, Permanent Discharge due to ill health, Permanent Dismissal-misconduct, Permanent Retirement, Permanent TOTAL Resignations as % of Employment

31 A N N U A L R E P O R T H R O V E R S I G H T S TAT I S T I C S For the period April 2006 to March 2007 Table 5.4 Promotions by Critical Occupation Occupation Employment at Beginning of Period Promotions to another Salary Level Salary Level Promotions as a % of Employment Progressions to another Notch within Salary Level NO CRITICAL POSTS IDENTIFIED Notch progressions as a % of Employment TOTAL Table 5.5 Promotions by Salary Band Salary Band Lower skilled (Level 1-2) - Permanent Skilled (Level 3-5) - Permanent Highly skilled production (Level 6-8) - Permanent Employment at Beginning of Period Promotions to another Salary Level Salary Level Promotions as a % of Employment Progressions to another Notch within Salary Level Notch progressions as a % of Employment Highly skilled supervision (Level 9-12) - Permanent Senior management (Level 13-16) - Permanent TOTAL Table 6.1 number of Employees (incl. Employees with disabilities) per Occupational Category (SASCO) Occupational Category African Coloured Indian Blacks White Female, African Female, Female, Female, Female, Coloured Indian White Blacks Senior officials & managers, Permanent Professionals, Permanent Clerks, Permanent Service & sales workers, Permanent Craft & related trade workers, Permanent Plant & machine operators & assemblers, Permanent Elementary occupations, Permanent TOTAL Employees with Disabilities TOTAL 2 9

32 E A S T E R N C A P E - G A M B L I N G & B E T T I N G B O A R D H R O V E R S I G H T S TAT I S T I C S For the period April 2006 to March 2007 Table 6.2 number of Employees (incl. Employees with disabilities) per Occupational Bands Occupational Bands Top Management, Permanent Senior Management, Permanent Professionally qualified and experienced specialists and mid-management, Permanent Skilled technical and academically qualified workers, junior management, supervisors, foremen, Permanent Semi-skilled & discretionary decision making, Permanent Unskilled & defined decision making, Permanent African Coloured Indian Blacks White Female, African Female, Female, Female, Female, Coloured Indian White Blacks TOTAL Table 6.3 Recruitment Occupational Bands Senior Management, Permanent Professionally qualified and experienced specialists and midmanagement, Permanent Skilled technical and academically qualified workers, junior management, supervisors, foremen, Permanent African Coloured Indian Blacks Female, White African TOTAL Female, Female, Female, Female, Coloured Indian White TOTAL Blacks TOTAL

33 A N N U A L R E P O R T H R O V E R S I G H T S TAT I S T I C S For the period April 2006 to March 2007 Table 6.4 Promotions Occupational Bands Senior Management, Permanent Professionally qualified and experienced specialists and midmanagement, Permanent Skilled technical and academically qualified workers, junior management, supervisors, foremen, Permanent African Coloured Indian Blacks Female, White African Female, Female, Female, Female, Coloured Indian White TOTAL Blacks TOTAL Table 6.5 Terminations Occupational Bands Senior Management, Permanent Professionally qualified and experienced specialists and mid-management, Permanent Skilled technical and academically qualified workers, junior management, supervisors, foremen, Permanent Semi-skilled & discretionary decision making, Permanent Unskilled & defined decision making, Permanent African Coloured Indian Blacks Female, White African Female, Female, Female, Female, Coloured Indian White TOTAL Blacks TOTAL Table 6.6 Disciplinary Action Disciplinary Action African Coloured Indian Blacks White Female, African Female, Female, Female, Female, Coloured Indian White Blacks TOTAL TOTAL 3 1

34 E A S T E R N C A P E - G A M B L I N G & B E T T I N G B O A R D H R O V E R S I G H T S TAT I S T I C S For the period April 2006 to March 2007 Table 6.7 Skills Development Occupational Category Legislators, senior officials & managers African Coloured Indian Blacks White Female, African Female, Female, Female, Female, Coloured Indian White Blacks Professionals Technicians & Associated Professionals Clerks, Permanent Service & sales workers, Permanent TOTAL Employees with Disabilities Table 7.1 Performance Rewards by Race, Gender & Disability Number of Beneficiaries Employment % of Employment Cost TOTAL Average Cost per Beneficiary African, Female , ,207,621 African, Male , ,402,914 White, Male , ,600,640 White, Female , ,714,910 Indian, Female , ,847,220 Employee with a disability TOTAL , , Table 7.2 Performance Rewards by Salary Band for Personnel below Senior Management Service Salary Band Number of Beneficiaries Employment % of Employment Cost Average Cost per Beneficiary Lower skilled (Levels 1-2) , ,897,000 Skilled (Levels 3-5) , ,786,260 Highly skilled production (Levels 6-8) Highly skilled supervision (Levels 9-12) , ,544, , ,329,884 TOTAL , ,

35 A N N U A L R E P O R T H R O V E R S I G H T S TAT I S T I C S For the period April 2006 to March 2007 Table 7.3 Performance Rewards by Critical Occupation Critical Occupations Number of Beneficiaries Employment % of Employment Cost NO CRITICAL OCCUPATIONS IDENTIFIED Average Cost per Beneficiary TOTAL Table 7.4 Performance Related Rewards (Cash Bonus) by Salary Band for Senior management Service Critical Occupations Number of Beneficiaries Employment % of Employment Cost Average Cost per Beneficiary % Of SMS Wage Bill Personnel Cost SMS Band A Band B Band C TOTAL , , , ,601, ,583, ,928, Table 8.1 Foreign Workers by Salary Band Salary band Lower skilled (Level 1-2) Skilled (Level 3-5) Highly skilled production (Level 6-8) Highly skilled supervision (Level 9-12) Senior management (Level 13-16) Employment at Beginning period % Of Employment at End of Period % of Change in Employment NO FOREIGN WORKERS EMPLOYED % of Employment at Beginning of Period Employment at End of Period Change in Employment TOTAL Table 8.2 Foreign Workers by Major Occupation Major Occupation Employment at Beginning period % Of Employment at End of Period % of Change in Employment NO FOREIGN WORKERS EMPLOYED % of Employment at Beginning of Period Employment at End of Period Change in Employment TOTAL

36 E A S T E R N C A P E - G A M B L I N G & B E T T I N G B O A R D H R O V E R S I G H T S TAT I S T I C S For the period April 2006 to March 2007 Table 9.1 Sick Leave for Jan2006 to Dec 2006 Salary Band Days %Days with Medical Certificate Number of Employees using sick leave % of total Employees using sick leave Average Days per Employee Estimated Cost (R 000) number of Employees using sick leave number of days with medical certification Lower skilled (Levels 1-2) Skilled (Levels 3-5) Highly skilled production (Levels 6-8) Highly skilled supervision (Levels 9-12) Senior management (Levels 13-16) TOTAL Table 9.2 Disability Leave for Jan2006 to Dec 2006 Salary Band Days %Days with Medical Certificate Number of Employees using Disability Leave % of total Employees using Disability Leave Average Days per Employee Estimated Cost (R 000) number of Employees using Disability Leave number of days with medical certification NO DISABILITY LEAVE TAKEN 0 0 TOTAL Table 9.3 Annual Leave for Jan 2006 to Dec 2006 Salary Band Days Taken Average per Employee Employment Lower skilled (Levels 1-2) Skilled (Levels 3-5) Highly skilled production (Levels 6-8) Highly skilled supervision,managers (Levels 9-12) Senior management (Levels 13-16) TOTAL Table 9.4 Capped Leave for Jan 2006 to Dec 2006 days of capped leave taken Average number of days taken per employee Average capped leave per employee as at 31 Dec 2003 Number of Employees number of capped leave available at 31 Dec 2003 Number of Employees as at 31 Dec 2003 Lower skilled (Level 1-2) 0 0 Skilled (Level 3-5) 0 0 Highly skilled production (Level 6-8) NO CAPPED LEAVE TO BOARD 0 0 Highly skilled supervision (Level 9-12) EMPLOYEES 0 0 Senior management (Level 13-16) 0 0 TOTAL

37 A N N U A L R E P O R T H R O V E R S I G H T S TAT I S T I C S For the period April 2006 to March 2007 Table 9.5 Leave Payouts Reason Capped leave payouts on termination of service for 2004/2005 Current leave payouts on termination of service for 2004/2005 TOTAL Amount Number of Employees Average Payment per Employee NO CAPPED LEAVE Table 10.1 Steps taken to reduce the risk of occupational exposure Units/categories of employees identified to be at high risk of contracting HIV & related diseases (if Any) N/A Key steps taken to reduce the risk Table 10.2 Details of Health Promotion & HIV/AIDS Programmes [tick YES/NO and provide required information] Question YES NO Details, if any 1. Has the department designated a member of the SMS to implement the provisions contained in Part VI E of Chapter 1 of the Public Service Regulations, M Tokota H R Manager 2001? If so, provide her/his name and position. 2. Does the department have a dedicated unit or have you designated specific staff members to promote health and well being of your employees? If so, indicate the number of employees who are involved in this task and the annual budget that is available for this purpose. 3. Has the department introduced an Employee Assistance or Health Promotion Programme for your employees? If so, indicate the key elements/services of the programme. 4. Has the department established (a) committee(s) as contemplated in Part VI E.5 (e) of Chapter 1 of the Public Service Regulations, 2001? If so, please provide the names of the members of the committee and the stakeholder(s) that they represent. 5. Has the department reviewed the employment policies and practices of your department to ensure that these do not unfairly discriminate against employees on the basis of their HIV status? If so, list the employment policies/practices so reviewed. 6. Has the department introduced measures to protect HIV-positive employees or those perceived to be HIV-positive from discrimination? If so, list the key elements of these measures. 7. Does the department encourage its employees to undergo Voluntary Counselling and Testing? If so, list the results that you have achieved. 8. Has the department developed measures/indicators to monitor & evaluate the impact of your health promotion programme? If so, list these measures/indicators. M Mame, S Renga, W Smit, H D Alton H R Manual, Recruitment TABLE 11.1 Collective Agreements Subject Matter N/A Date Table 11.2 Misconduct & Disciplinary Hearings Finalized Outcomes of disciplinary hearings Number % of TOTAL

38 E A S T E R N C A P E - G A M B L I N G & B E T T I N G B O A R D H R O V E R S I G H T S TAT I S T I C S For the period April 2006 to March 2007 Table 11.3 Type of Misconduct Addressed & Disciplinary Hearings Type of Misconduct Number % of MISCONDUCT TOTAL Table 11.4 Grievances Lodged Number of grievances lodged Number % of Resolved Not resolved NO GRIEVANCES TOTAL 0 0 Table 11.5 Dispute Lodged Number of grievances lodged Number % of Upheld Dismissed N/A TOTAL 0 0 Table 11.6 Strike Actions Strike Actions Number of person working days lost cost (R 000) of working days lost Amount (R 000) recovered as a result of no work no pay NONE NONE NONE Table 11.7 Precautionary Suspensions Precautionary Suspensions Number of people suspended 2 Number of people whose suspension exceeded 30 Days 2 Average number of days suspended 121 Cost (R 000) of suspensions 468, Table 12.1 Training Needs Occupational Categories Legislators, senior officials and managers Professionals Technicians and associate professionals Clerks Gender Employment Learnerships Skills Programmmes & other short courses Other forms of training Female Male Female Male Female Male Female Male

39 A N N U A L R E P O R T H R O V E R S I G H T S TAT I S T I C S For the period April 2006 to March 2007 Table 12.2 Training Provided Occupational Categories Legislators, senior officials & managers Professionals Technicians & associate professionals Clerks Gender Employment Learnerships Skills Programmmes & other short courses Other forms of training Female Male Female Male Female Male Female Male TOTAL Table 13.1 Injury on duty Nature of Injury on duty Number % of Required basic medical attention only Temporary Disablement Permanent Disablement Fatal NO IOD CASES TOTAL 0 0 Table 14.1 Report on consultant appointments using appropriate funds Project Title number of consultants that worked on the project Duration: Work days Contract value in Rands SAB&T Internal Audit ,027 Others ,913 TOTAL NUMBER OF PROJECTS ,940 Table 14.2 Analysis of consultants using appropriate funds, i.t.o. HDI s Project Title % ownership by HDI Groups % Management by HDI Groups SAB&T Internal Audit TOTAL Number of Consultants from HDI groups that work on the project Table 14.3 Report on consultants appointments using Donor funds Project Title number of consultants that worked on the project Duration: Work days NO CONSULTANTS USED Donor and Contract value in Rands number of Projectås individual consultants Duration: Work days Table 14.4 Analysis of consultants appointments using Donor funds, i.t.o. HDI Project Title % ownership by HDI Groups NO CONSULTANTS USED % Management by HDI Groups NO CONSULTANTS USED Contract value in Rands Number of Consultants from HDI groups that work on the project 3 7

40 E A S T E R N C A P E - G A M B L I N G & B E T T I N G B O A R D Organogram CHIEF EXECUTIVE OFFICER PROFESSIONAL ASSISTANT/SECRETARY TO BOARD CHIEF FINANCIAL OFFICER FINANCIAL/MANAGEMENT ACCOUNTANT EXECUTIVE ASSISTANT ASSISTANT ACCOUNTANT ACCOUNTS CLERK (1)(1 VACANT) REVENUE CLERK ADMINISTRATION MANAGER RECEPTIONIST DRIVER/MESSENGER INTERNAL AUDIT (OUTSOURCED) The Internal Audit function reports to the Chairman of the Audit Committee. HEAD: LEGAL AFFAIRS (VACANT) COMPLIANCE MANAGER EXECUTIVE ASSISTANT INSPECTORS (6) (1 VACANT) INVESTIGATORS (5) LICENSING OFFICER INFORMATION TECHNOLOGY MANAGER NETWORK CONTROLLER PROGRAMMER 3 8

41 A N N U A L R E P O R T A N N U A L F I N A N C I A L S TAT E M E N T S For the year ended March 2007 Statement of Financial Position as at 31 March 2007 ASSETS Notes R R Non-current assets 7,205,768 7,431,287 Property, plant and equipment 2 7,205,768 7,431,287 Current assets 26,634,783 19,136,959 Inventories 3 56,565 29,538 Trade and other receivables 4 7,598,679 5,531,635 Cash and cash equivalents 13 18,979,539 13,575,786 TOTAL ASSETS 33,840,551 26,568,246 Non-current liabilities 6,335,622 6,726,208 Deferred Government Grant 5 6,335,622 6,726,208 Current Liabilities 16,840,120 13,557,605 Trade and other payables 6 4,678,722 2,158,972 Provisions 7 1,462, ,605 Collections for distribution 7,306,509 5,529,250 Prepaid Income 8 3,392,048 4,896,778 TOTAL LIABILITIES 23,175,742 20,283,813 NET ASSETS 10,664,809 6,284,433 ANALYSIS OF NET ASSETS Accumulated surpluses 10,664,809 6,284,433 TOTAL NET ASSETS 10,664,809 6,284,

42 E A S T E R N C A P E - G A M B L I N G & B E T T I N G B O A R D A N N U A L F I N A N C I A L S TAT E M E N T S For the year ended March 2007 Statement of Financial Performance for the year ended 31 March 2007 REVENUE Notes Fees 3,301,720 2,564,864 Recoveries 2,165,415 1,110,923 Government Grant - Operations 19,246,000 14,364,000 Government Grant Released 390, ,586 Interest Received 1,240, ,140 Other Revenue 33, ,830 R 26,377,845 19,313,343 R EXPENDITURE Employee costs 9,215,683 7,765,141 Training costs 1,818, ,473 Legal expenses 1,788, ,743 Board Members emoluments 935, ,340 Depreciation - property plant & equipment 626, ,233 Consulting fees 605, ,670 Travelling & subsistance 602, ,817 Inspection & investigation costs 394, ,376 Auditors fees 399, ,074 Operating expenses 2,218,906 2,217,433 Finance costs ,605,421 13,422,300 SURPLUS FOR THE YEAR 7,772,424 5,891,043 S Statement of Changes in Net Assets For the year ended 31 March 2007 Balance at 1 April 2005 Accumulated Surpluses As previously stated 6,603,871 6,603,871 Correction of prior period error (1,313,703) (1,313,703) As restated 5,290,168 5,290,168 Net surplus for the year 5,891,043 5,891,043 Due to Provincial revenue fund (4,896,778) (4,896,778) Balance At 31 March ,284,433 6,284,433 Net surplus for the year 7,772,424 7,772,424 Due to Provincial revenue fund (3,392,048) (3,392,048) Balance at 31 March ,664,809 10,664,809 R R 4 0

43 A N N U A L R E P O R T A N N U A L F I N A N C I A L S TAT E M E N T S For the year ended March 2007 Cash Flow Statement For the year ended 31 March 2007 CASH FLOWS FROM OPERATING ACTIVITIES Notes Receipts 117,934,307 82,594,171 Gambling Fees 83,377,246 64,181,937 Grant 19,246,000 14,364,000 Customers 15,311 4,048,234 R R Payments 113,370,997 78,570,079 Gambling Fees 83,377,246 64,181,937 Suppliers & employees 29,993,751 14,388,142 Cash generated from operations ,563,310 4,024,092 Interest received 1,240, ,140 Interest paid Foreign Exchange loss - - Net cash flows from operating activities 5,804,278 4,719,232 CASH FLOWS FROM INVESTING ACTIVITIES Proceeds on disposal of property, plant and equipment - 170,603 Acquisition of property, plant and equipment (400,525) (471,604) Net cash outflows from investing activities (400,525) (301,001) CASH FLOWS FROM FINANCING ACTIVITIES (Repayment of) / Increase in finance lease obligations - - Net cash (outflows) / inflows from financing activities - - Net increase in cash and cash equivalents 5,403,753 4,418,231 Cash and cash equivalents at beginning of the year 13,575,786 9,157,555 Cash and cash equivalents at end of the year ,979,539 13,575,

44 E A S T E R N C A P E - G A M B L I N G & B E T T I N G B O A R D A N N U A L F I N A N C I A L S TAT E M E N T S For the year ended March 2007 Accounting Policies The principal accounting policies adopted in the preparation of these financial statements are set out below and are consistent with those applied in the previous year except as disclosed in note Basis of Preparation The financial statements have been prepared on the historical cost basis in accordance with the generally recognized accounting practice financial reporting framework and the requirements of the Public Finance Management Act (Act 1 of 1999). This framework is defined as the effective Standards of Generally Recognized Accounting Practice (GRAP) and the South African Statements of Generally Accepted Accounting Practices (GAAP), including any interpretations of such Statements, where no GRAP Standard exists. These Standards are established by a recognized national standard-setting body and are designed to achieve fair presentation. 1.2 Revenue Recognition Revenue compromises principally of: Fees charged for services rendered; Recoveries of expenses incurred in the production of revenues; Grant funding received from Provincial Government and Interest income Revenue is recognised on an accrual basis. 1.3 Property, Plant & Equipment Fixed assets are stated at historical cost less accumulated depreciation. Depreciation is calculated on the straight - line method to write off the cost of assets to their residual values over their anticipated useful lives as follows: Buildings Surveillance Equipment Computer Equipment Motor Vehicles Fixtures and Fittings Cellphone Equipment Furniture and Equipment 50 Years 4 Years 3 Years 5 Years 0 Years 2 Years 4 10 Years Land is not depreciated as it is deemed to have an indefinite life. Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or, where shorter, the term of the relevant lease. The capital element of future obligations under the leases is included as a liability in the statement of financial position. Gains or losses arising on the disposal of property, plant and equipment are determined as the difference between the sales proceeds and the carrying amount of the asset and are recognised in the statement of financial performance as realised. Property, plant and equipment are reviewed for impairment losses whenever events indicate that the carrying amount may not be recoverable. An impairment loss is recognised in respect of the amount by which the carrying amount of the asset exceeds its recoverable amount, which is the higher of an asset s net selling price and value in use. An impairment loss or a reversal of an impairment loss is recognised as an expense/ income in the statement of financial position as incurred. 4 2

45 A N N U A L R E P O R T A N N U A L F I N A N C I A L S TAT E M E N T S For the year ended March 2007 Accounting Policies continued 1.4 Estimates Except for property, plant and equipment, there were no estimates. 1.5 Leases Operating Leases Leases where the lessor retains the risks and rewards of ownership of the underlying asset are classified as operating leases. Payments made under operating leases are charged to the statement of financial performance as incurred. 1.6 Inventories Inventories are valued at the lower of cost and net realisable value. Cost is determined on the first-in, first-out (FIFO) method. 1.7 Financial Instruments Financial assets are recognised when the board has a right or other access to economic benefits. Financial liabilities are recognised when there is a contractual obligation to transfer benefits. Investments in financial assets are initially recognised at cost. Subsequently financial assets and liabilities are re-measured at fair value. 1.8 Cash and Cash Equivalents Cash and cash equivalents are carried in the balance sheet at cost. For purposes of the cash flow statement, cash and cash equivalents comprise cash in hand and deposits held on call with the bank. 1.9 Trade Receivables Trade receivables are carried at original invoice amount less provision made for impairment. A provision for impairment is established when there is objective evidence that the Board will not be able to collect all amounts due according to the original terms of the receivables. The amount of the provision is the difference between the carrying amount and the recoverable amount Trade Payables Trade payables are carried at the fair value of the consideration to be paid in future for goods or services that have been received or supplied and invoiced or formally contracted for with the supplier Provisions Provisions are recognised when the Board has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount of the obligation can be made. 4 3

46 E A S T E R N C A P E - G A M B L I N G & B E T T I N G B O A R D A N N U A L F I N A N C I A L S TAT E M E N T S For the year ended March 2007 Accounting Policies continued 1.12 Retirement Benefits The policy of the Board is to provide retirement benefits through an established fund governed by the Pension Funds Act. The provident fund is a defined contribution fund which does not require an actuarial valuation. Contributions to the provident fund are charged to the Income Statement in the year to which they relate. The Board has no obligations to fund post - retirement medical benefits Foreign Currency Transactions Foreign currency transactions are recorded at the rates ruling at the date of transaction and all gains and losses are recognised in the statement of financial performance as incurred Government Grants Government grants relating to operational costs are recognized in the statement of financial position over the period necessary to match them with the costs which they are intended to compensate Government grants relating to the acquisition of assets are included in non-current liabilities as deferred income and are released to the statement of financial performance over the expected lives of the related assets Comparatives Where necessary, comparative figures have been adjusted to conform with changes in presentation in the current financial year. 4 4

47 A N N U A L R E P O R T A N N U A L F I N A N C I A L S TAT E M E N T S For the year ended March 2007 Notes To The Annual Financial Statements For the year ended 31 March Property, plant and equipment 2007 Net Book Value 01/04/2006 LAND BUILDINGS COMPUTER EQUIPMENT MOTOR VEHICLES FIXTURES AND FITTINGS CELLPHONE EQUIPMENT FURNITURE AND EQUIPMENT R R R R R R R R TOTAL 1,070,750 4,903, , , ,219 17, ,677 7,431,287 Current Year Movements - Additions , ,023 84, ,525 - Disposals Depreciation - (103,092) (178,909) (188,600) (13,522) (32,525) (109,396) (626,044) Net Book Value 31/03/2007 1,070,750 4,799, , ,708 92,697 21, ,605 7,205,768 At 31/03/2007 Cost 1,070,750 5,154,610 1,350, , ,157 37,522 1,041,287 9,735,250 Accumulated - (354,685) (975,717) (571,806) (43,460) (16,132) (567,682) (2,529,482) Depreciation Net Book Value 1,070,750 4,799, , ,708 92,697 21, ,605 7,205, Net Book Value 01/04/2005 1,070,750 5,006, , , ,862 53, ,578 7,580,247 Current Year Movements - Additions , ,365 15,461 14, , ,604 - Disposals - - (301) (5,871) (6,172) - Depreciation - (103,092) (174,239) (173,167) (12,104) (50,459) (101,331) (614,392) Net Book Value 31/03/2006 1,070,750 4,903, , , ,219 17, ,677 7,431,287 At 31/03/2006 Cost 1,070,750 5,154,610 1,070, , , , ,963 9,445,498 Accumulated - (251,593) (796,808) (383,206) (29,938) (94,380) (458,286) (2,014,211) Depreciation Net Book Value 1,070,750 4,903, , , ,219 17, ,677 7,431,287 The total net book value of cellphone equipment, as included above, represents leased assets held in terms of finance lease agreements. Land and buildings comprise a sub-division of Erf 2863, Beacon Bay measuring 2376 m2, purchased in 2002, together with an office building. 4 5

48 E A S T E R N C A P E - G A M B L I N G & B E T T I N G B O A R D A N N U A L F I N A N C I A L S TAT E M E N T S For the year ended March 2007 Notes to the Annual Financial Statements continued For the year ended 31 March Inventories R R Stationery 52,157 25,542 Crockery 4,408 3,996 56,565 29, Trade and other receivables Trade receivables 7,294,085 5,449,098 Other receivables 242,545 33,950 Prepayments 62,049 53,103 7,598,679 5,536,151 Provision for doubtful debts - (4,516) 7,598,679 5,531, Deferred Government Grant Government Grants received to be recognised in future accounting periods At the beginning of the year 6,726,208 7,116,794 Released to Income (390,586) (390,586) At the end of the year 6,335,622 6,726,

49 A N N U A L R E P O R T A N N U A L F I N A N C I A L S TAT E M E N T S For the year ended March 2007 Notes to the Annual Financial Statements continued For the year ended 31 March Trade and other payables R R Trade payables 218, ,551 Accruals 1,251, ,010 Accruals - staff costs 2, ,191 Other payables 3,206,574 1,161,220 4,678,722 2,158, Provisions Audit Fees Bonus Leave Pay Workmens Comp. Legal Fees R R R R R R At 1 April ,000 28, ,059 12,844 62, ,604 Additional Provisions 399, , ,078 11, ,996 2,318,152 Utilization of Provisions (306,434) (132,598) (776,522) - (612,360) (1,827,914) At 31 March ,475 15, ,615 24, ,867 1,462,842 The Audit fee provision represents the best estimate of audit fees payable in respect of the annual audit. Bonus and leave pay provisions relate to the Boards estimated liabilities as a result of services rendered by employees Prepaid Income R R Surplus due to Provincial Revenue Fund 3,392,048 4,896,778 This represents surplus funds standing to the credit of the Board which are payable to the Provincial Revenue Fund in terms of the Public Finance Management Act, 1999 (Act no. 1 of 1999). 4 7

50 E A S T E R N C A P E - G A M B L I N G & B E T T I N G B O A R D A N N U A L F I N A N C I A L S TAT E M E N T S For the year ended March 2007 Notes to the Annual Financial Statements continued For the year ended 31 March Board Members and Executives Emoluments Non-Executive Board Members Fees Travel Exp Allow. Other Salary Allow. Fund Contr. Bonus 2007 R R R R R R R R R K.Canca 131,050 10,500 14, ,550 79,300 S L Majombozi 193,800 4,800 12, ,600 79,840 X.Mbangxa 85,750 11,960 14, ,710 70,000 S.Mlonyeni ,000 27,840 19,000 P.Mnqandi 90,750 39,660 14, ,410 73,260 P.Myles 96,000 1,864 28, ,015 57,200 A.Ntsonkota 94,500 4,740 14, ,240 56,740 P.Nqakula - 1,189 28,600 29,789 22,000 M. Fatyela ,250 4,303 - Non-Executives Audit Committee Members S.Whitfield 8,000-8,000 8,000 R.Hill 4,000-4,000 8,000 Executives ,850 75, , , ,340 Chief Executive Officer 700, ,000 70,127 55,840 1,012, ,560 Chief Financial Officer 584, ,400 61,287 46, , ,178 Head : Legal Affairs 274,604-42,561 46, , ,064 Compliance Manager 420, ,000 63,747 48, , ,916 Administration Manager 224, ,500 33,957 34, , ,602 IT Manager 248,305 71,500 27,465 34, , ,761-2,452, , , ,342 3,680,616 2,998, ,850 75, ,001 2,452, , , ,342 4,616,073 3,471,

51 A N N U A L R E P O R T A N N U A L F I N A N C I A L S TAT E M E N T S For the year ended March 2007 Notes to the Annual Financial Statements continued For the year ended 31 March Taxation R R The income of the Board is exempt from taxation interms of section 10 (1) (ca) of the Income Tax Act no 58 of Commitments Operating Lease Commitments Not Later than one year 107, ,724 Later than one year and not later than five years - 116, , , Prior Year Error During the financial year the Board discovered that it made an error with regard to the treatment of government grant funding relating to the acquisition of assts. In previous years such grants had been released to income statement over the useful lives of the underlying assets. In order to comply with the generally recognised accounting practice financial reporting framework, the Board now defers grant funding employed in the acquisition of assets and recognises it as income over the expected lives of the related assets. The correction of this error has been accounted for retrospectively and the comparatives for 2005/2006 have been restated to conform to the changed policy. The effect of this error is an increase in grant revenues released of R 390,586 (2005/2006 : R 119,651). Opening accumulated surpluses at 1 April 2004 and 1 April 2005 have been reduced by R 5,922,742 and R1,313,703 respectively which are amounts of the adjustment relating to financial periods prior to 2004/2005 and 2005/ Notes to the cash flow statements 13.1 Reconciliation of cash flows from operating activities to surplus Surplus 7,772,424 5,891,043 Non - cash movements : Depreciation 626, ,392 Government Grant released (390,586) (390,586) Net Investment income (1,240,968) (695,140) Foreign exhange loss - - Surplus on disposal of property, plant and equipment - (170,603) Surplus for repayment (3,392,048) (4,896,778) Operating cash flows before working capital changes 3,374, ,

52 E A S T E R N C A P E - G A M B L I N G & B E T T I N G B O A R D A N N U A L F I N A N C I A L S TAT E M E N T S For the year ended March 2007 Notes to the Annual Financial Statements continued For the year ended 31 March 2007 Working capital changes : Decrease / (Increase) in inventories (27,027) 2,732 Increase in trade and other receivables (2,067,044) (720,676) Increase in trade and other payables 2,519, ,809 Increase in provisions 490, ,293 Increase in collections for distribution 1,777, ,334 Increase / (Decrease) in prepaid income (1,504,730) 2,571,272 4,563,310 4,024, Cash and cash equivalents R R Cash on hand and balances at bank 18,979,539 13,575,786 As required in terms of section 31.2 of the Treasury Regulations to the Public Finance Management Act, approval from National Treasury has been obtained in respect of the bank where funds are held. 14. Statutory information in terms of the Public Finance Management Act, 1999 (Act no. 1 of 1999) 14.1 Material Losses - Criminal Conduct and Irregular, Fruitless and Wasteful Expenditure - Nil 14.2 Criminal or disciplinary steps taken as a consequence of material losses - Nil 14.3 Losses recovered or written off Bad debts written off Bad debts recovered 4,516 4, Financial Assistance from the State Grant funding - Operations 19,246,000 14,364,

53 A N N U A L R E P O R T A N N U A L F I N A N C I A L S TAT E M E N T S For the year ended March 2007 Notes to the Annual Financial Statements continued For the year ended 31 March Contingent Liability There is a contingent liability in respect of a court case that has been brought up by two applicants who were unsucessful in their application for a casino licence. The costs of this litigation cannot be ascertained. 16. Operating expenses R R Operating expenses are made up of the following line items: Maintenance services 342, ,871 Telephone costs 362, ,038 Research & public education 217,520 - Evaluation & Hearing costs 300, ,951 Advertising, subscriptions & publications 247, ,540 Insurance 133, ,001 Printing, stationary & postage 95,815 92,240 Municipal services & taxes 148, ,656 Computer expenses 110,656 68,450 Rentals 135, ,944 Carting & refreshments 82,629 57,136 Bank charges 41,020 31,103 Bad debt & doutful debts - 5,103 VAT paid - 275,241 2,218,906 2,224, Risk management 17.1 Liquidity risk The Board manages liquidity risk through an ongoing review of the future commitments. Cash flow forecasts are prepared and monitored. 5 1

54 E A S T E R N C A P E - G A M B L I N G & B E T T I N G B O A R D A N N U A L F I N A N C I A L S TAT E M E N T S For the year ended March 2007 Interest rate risk The Board policy is to manage interest rate risk so that fluctuations in variable rates do not have material impact on surplus (deficit). At year end, financial instruments exposed to interest rate risk were as follows: Cash flow interest rate risk Financial instrument Current interest rate Due in less than a year Cash in current banking institution 8.40% 18,548,251 Credit risk Credit risk consists mainly of cash deposits and cash equivalents. The Board only deposits cash with major banks with high credit standards. 18. Post balance sheet events There were no events occurred after the balance sheet date. 5 2

55 A N N U A L R E P O R T Eastern Cape Gambling and Betting Board Registered Address: ECGBB Building, Quenera Park, Quenera Drive, Beacon Bay, 5241 Postal Address: PO Box 15355, Beacon Bay, 5205 Tel: +27 (0) Fax: +27 (0) PR Number: PR126/2007 ISBN:

56