CHAIRPERSON S STATEMENT

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4 CHAIRPERSON S STATEMENT The Directors are required by the Public Finance Management Act (Act 1 of 1999) to maintain adequate accounting records and are responsible for the content and integrity of the Annual Financial Statements and related financial information included in this report. It is the responsibility of the directors to ensure that the annual financial statements fairly represent the state of affairs of the entity at the end of the financial year and the results of its operations and cash flows for that period. The External Auditors are engaged to express an independent opinion on the annual financial statements and were given unrestricted access to all financial records and related data. The Annual Financial Statements have been prepared in accordance with Standards of Generally Recognised Accounting Practice (GRAP), including any interpretations, guidelines and directives issued by the Accounting Standards Board. The Annual Financial Statements are based on appropriate accounting policies consistently applied and supported by reasonable and prudent judgments and estimates. The Board of Directors acknowledge that they are ultimately responsible for the system of internal financial control established by the entity and place considerable importance on maintaining a strong control environment. To enable the Directors to meet these responsibilities, the accounting authority sets standards for internal control aimed at reducing the risk of error or deficit in a cost-effective manner. The standards include the proper delegation of responsibilities within a clearly defined framework, effective accounting procedures and adequate segregation of duties to ensure an acceptable level of risk. These controls are monitored throughout the entity and all employees are required to maintain the highest ethical standards in ensuring the entity s business is conducted in a manner that, in all reasonable circumstances, is above reproach. The focus of risk management in the entity is on identifying, assessing, managing and monitoring all known forms of risk across the entity. While operating risk cannot be fully eliminated, the entity endeavours to minimise it by ensuring that appropriate infrastructure, controls, systems and ethical behaviour are applied and managed within predetermined procedures and constraints. The Directors are of the opinion, based on the information and explanations given by management, that the system of internal control provides reasonable assurance that the financial records may be relied on for the preparation of the annual financial statements. However, any system of internal financial control can provide only reasonable, and not absolute, assurance against material misstatement or deficit. The Directors have reviewed the entity s cash-flow expenditure for the year ending 31 March 2012 and, in the light of this review and the current financial position, they are satisfied that the entity has, or has access to, adequate resources to continue in operational existence for the foreseeable future. Although the accounting authority is primarily responsible for the financial affairs of the entity, they are supported by the entity's External Auditors. The External Auditors are responsible for independently reviewing and reporting on the entity's Annual Financial Statements. These have been examined by the entity's External Auditors and their report is presented on page 44. 2

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7 1. GENERAL INFORMATION 1. 1 VISION Eastern Cape: The Best, Most Efficient, Empowering Gaming Regulator. 1.2 MISSION Our mission is to ensure the Eastern Cape Gaming Industry is conducted honestly and competitively with maximum contribution to society. We are therefore committed to protecting the public interest through regulation, licensing and appropriate enforcement. We will do this through providing excellent service to our stakeholders and through facilitating socio-economic benefits to communities within which we operate. 1.3 VALUES The ECGBB s activities and operations anchor on the following values: Value Behaviour Demonstrate this through: Consultation Keeping stakeholders informed on all key issues and through endeavouring to involve all stakeholders in decision-making processes where they will be affected by such decisions. Friendliness Encouraging friendly working relationships and a friendly environment. Teamwork People working together towards achieving common goals and targets. Respect The equal treatment of staff, honesty on organisational issues and through nondisclosure of confidential information. Service Delivery The on-time delivery of a quality and professional service to all our stakeholders. Honesty Providing open feedback to staff and stakeholders on all issues. Empowerment Providing training and development to employees and through engaging the services and goods from BBBEE suppliers. Community Development Giving back to our communities. 5

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9 1.5 LEGISLATIVE MANDATE The ECGBB derives its mandate from and strives towards full implementation and compliance with the following pieces of legislation that govern the rendering of effective and efficient service delivery: Eastern Cape Gambling and Betting Act, No 5 of 1997; National Gambling Act, 33 of 1996, which was repealed on 1 November 2004 by the National Gambling Act, 7 of Other pieces of legislation under which the ECGBB operates include, inter alia, the following:- Basic Conditions of Employment Act, 75 of 1997; Employment Equity Act, 55 of 1998; Labour Relations Act, 66 of 1996; Promotion of Administrative Justice Act, 3 of 2000; Promotion of Access to Information Act, 2 of 2000; Public Finance Management Act, 1 of 1999, as amended; Preferential Procurement Policy Framework Act, 5 of

10 1.6 ACCOUNTING OFFICER S OVERVIEW The role of the Eastern Cape Gambling and Betting Board (ECGBB) is, first and foremost, to regulate all gambling activities in the province as contemplated in the Eastern Cape Gambling and Betting Act (No 5 of 1997). But it is tasked with more than this. President Jacob Zuma, in his State of the Nation address, unveiled government s New Growth Path to address unemployment, inequality and poverty by unlocking employment opportunities in South Africa. The Eastern Cape Gambling & Betting Board (ECGBB), as a regulator, has a critical role to play in support of this initiative by denting the grinding poverty in our province. Responding to the clarion call by the president, the MEC for Economic Development and Environmental Affairs Mcebisi Jonas responded with a bouquet of measures to ensure both progress and sustainability. From the outset, allow me to acknowledge the sterling leadership provided by the Board and the Chairperson in particular, who have made a tangible difference in delivering on our mandate and creating an environment conducive to the economic development of the province. A full staff complement in key strategic posts has further ensured that the organisation has unrivalled capacity to function optimally. As a gambling regulator, we are called upon to present creative and innovative ways to push back the frontiers of poverty and spur economic growth in the gaming sector. Recent efforts in this regard have included: We awarded Tsogo Sun Emonti Pty (Ltd) t/a Hemingways Casino a new 15-year casino licence. Tsogo Sun Emonti Pty (Ltd) envisages investing a further R400-million into East London, which will create well over 100 jobs. In addition, Sun International s investment of R1-billion into the Boardwalk Casino will create 500 direct jobs. Our Responsible Gambling & Customer Care Strategy sets forth a pragmatic social marketing strategy that ensures behavioural change in dealing with problem gambling, customer care and research. We are very conscious of the fact that we have to strike a delicate balance between revenue collection and social responsibility. To this end, the ECGBB has succeeded in carving a dynamic niche as a key player poised to propel our province s boxing heritage to dizzying new heights. This investment in boxing is underpinned by extensive media exposure, which has succeeded in endearing the Board to legions of sports lovers throughout the province. In addition, the year under review has seen the following milestones: The appointment of the Board of Directors at the beginning of the financial year which has brought about stability in the organisation. Subsequent to that, all critical Board committees were established, thus ensuring compliance with the responsibilities of corporate governance. All remaining Senior Management posts, which are critical to the functionality of the organisation, were filled in the latter part of the financial year. With regard to the Operations of the ECGBB, I am proud to report that: A route operator licence was issued for a period of fifteen (15) years. GIS mapping was undertaken of the location of all licensed premises in the province. A feasibility study on the introduction of a Bingo Licence was commissioned and a report made available to the Board. Risk management has been implemented. 8

11 ECGBB funded a number of community projects during the financial year under review, to the value of R1.2-million. Among these projects, we established a fully-fledged computer laboratory at Sunduza Junior Secondary School in Sterkspruit, Joe Gqabi District, with internet access on eighteen (18) computers. The above activities have enabled the ECGBB to collect R102 million in taxes versus a budget of R99.7 million. In addition to the total collected taxes and fees, R20-million of exclusivity was received from the Zone 2 Casino Licence. In terms of our compliance and auditing services, I can report that the ECGBB did not experience any significant challenges with regard to licensees complying with the conditions of their licences, or with revenue to be collected. There were also no significant challenges regarding the verification of gambling devices, employees employed by the industry or environmental audits. Over and above the above responsibilities, ECGBB conducted a number of successful raids and operations with the assistance of South African Police Services regarding illegal gambling in the province. To this end, we destroyed over 55 illegal gambling machines and devices worth in excess of R As part of communicating and creating platforms to disseminate responsible messages: The Board sponsored a number of boxing promoters whose world-class boxing tournaments provided significant opportunities for the ECGBB to communicate responsible gambling messages, as well as exposing the ECGBB s brand to the public. The Chairperson and CEO granted interviews to umhlobo Wenene s Sport Show and dstv s Supersport to articulate the ECGBB s CSI initiatives. Despite these success stories, a number of challenges emerged during the reporting period which I would like to highlight. These include: The declining budget allocation received from DEDEAT, which will impact negatively on the operations of the ECGBB. The review of the ECGBB Act, which has a significant impact on the fees charged, which have remained unchanged for the past ten (10) years. Proposed additional tax levy by the Honourable Minister of Finance in his 2012 Budget Speech on Gross Gambling Revenue to be introduced effective from 01 April 2013 financial year. We are addressing these challenges as an organisation, with further guidance and leadership provided by the Board of the ECGBB. As the Accounting Officer, I would like to express my sincere appreciation to DEDEAT, the Board of Directors of the ECGBB, Management and all ECGBB staff for their continued support. In conclusion, we would like to extend our thanks and appreciation to all licensees. MR REUBEN MABUTHO ZWANE CEO AND ACCOUNTING OFFICER OF THE ECGBB 9

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13 2. INFORMATION ON PREDETERMINED OBJECTIVES 2.1 OVERALL PERFORMANCE VOTED FUNDS GRANT FUNDING 2007/ / / / /12 TOTAL VOTED FUNDS LESS REPAID TOTAL AIM OF VOTE The ECGBB oversees all gambling and betting activities in the province and matters incidental thereto, as contemplated in the Act. It advises the responsible Member of the Executive Council of the provincial Department of Economic Development and Environmental Affairs on gambling matters and exercises certain further powers contemplated in the Act. The aim of the ECGBB includes, among others: Licensing of the gaming industry. Ensuring compliance with the Act by all licensees. Collection of gambling taxes on behalf of the province. Combating illegal gambling. Undertaking licensing investigations. Issuing and revocation of licenses. Determining license conditions. It is the responsibility of the ECGBB to ensure that an accountable and credible legal gaming industry exists in the province and that the industry complies with internationally recognised standards STRATEGIC GOALS To provide excellent services to our stakeholders. To institutionalise an international competitive regulatory system. To establish sound institutional oversight arrangements and systems to administer socio-economic development commitments arising from license conditions. To develop a high-performance, value-based organisation that recognises the ECGBB and its employees as its most important assets. To optimise revenue collection for the socio-economic benefit of underprivileged communities. 11

14 2.1.4 OVERVIEW OF THE SERVICE DELIVERY ENVIRONMENT FOR 2011/ ROLLOUT OF VARIOUS LICENCES BY THE ECGBB Bingo Licence: The ECGBB has conducted a market feasibility study on bingo as a new form of gambling in the province. The outcomes of the study will influence the development of a policy framework that will culminate in the issuing of a Request for Proposal for Bingo Licences. It is anticipated that this work will be rolled out during the 2012/13 financial year. Route Operator Licence: The ECGBB issued a RFP on 27 June 2011 in anticipation of the expiry of V Slots licence in April A new Route Operator license was issued for a period of 15 years. Sites Operator Licences (LPMs): The ECGBB is currently receiving applications for the site operator licences from Vukani Gaming Eastern Cape (Pty) Ltd ( V Slots ) for all the expiring site licences in terms of their current seven (7) year term licence. V Slots is expected to reach the LPM target in the new fifteen (15) year term licence with the renewals and new site licences. Casino Projects: The Wild Coast Sun Casino re-investment which includes refurbishment and construction work is projected to be completed in June 2012 in terms of the project development schedule. Hemingways and Boardwalk Casino re-investment development projects are anticipated to be completed in November and December 2012 respectively. Bookmakers: The ECGBB issued two Bookmakers licenses, one is new and the other a renewal ILLEGAL GAMBLING ECGBB in collaboration with the SAPS managed to root out illegal activities, which are by their nature clandestine. During the year under review ECGBB confiscated and destroyed over 55 illegal gambling machines and illegal gambling devices worth over R These illegal gambling machines and devices were confiscated from illegal gambling operations throughout the province from 1999 until At least twelve (12) cases of illegal gambling were successfully prosecuted during this financial year. This breakthrough, in prosecuting and shutting down illegal gambling activities, was a joint effort of the ECGBB and the South African Police Services (SAPS). 12

15 2.1.5 OVERVIEW OF THE ORGANISATIONAL ENVIRONMENT FOR 2011/ PROMOTION OF RESPONSIBLE GAMBLING AND BALANCING THE NEGATIVE EFFECTS OF GAMBLING In intensifying the promotion of responsible gambling we have ensured compliance with the requirements of the legislation, and all advertising by licence holders in the province was vetted by the Board. All adverts are required to carry slogans relating to responsible gambling and must contain the contact details of the National Responsible Gambling Programme toll free number. The South African gambling industry, including gambling regulators, established and funded the National Responsible Gambling Programme (NRGP) to promote responsible gambling. The NRGP conducts responsible gambling campaigns and public education about gambling. The NRGP conducted TV, radio and print media public awareness campaigns on gambling with specific emphasis on the festive season. In further pursuit of responsible gambling, the Board received and processed 515 applications of exclusions GAMBLING REVIEW COMMISSION The Gambling Review Commission Report, which was commissioned by the Honourable Minister of Trade and Industry, was presented to Parliament and has a number of policy-related recommendations. The ECGBB will interact with the report in order to implement recommendations that relate to the ECGBB, once adopted PROPOSED TAX ON GROSS GAMBLING REVENUE AND ITS EFFECTS Following the 2012 Budget Speech the Honourable Minister of Finance proposed that a national tax based on Gross Gambling Revenue should be introduced effective 2013 as an additional tax levy on a uniform provincial gambling tax base. The ECGBB will engage National Treasury, the National Gambling Board and industry stakeholders regarding this policy proposal as it may have a direct / indirect impact on the operations of the ECGBB in collecting accrued taxes from licensees CORPORATE GOVERNANCE THE BOARD OF DIRECTORS The Honourable MEC for Economic Development and Environmental Affairs appointed a new Board of Directors, who commenced their duties on 1 April 2011, with the exception of the CEO, Mr R M Zwane, who was appointed to serve in the Board from 1 December 2009 as an Ex Officio Member. The new board is: Adv. N Mayosi Chairperson Mr O Mtati Deputy Chairperson Mr Z. Nomafu Mr M Vena Mr V Tshangana Ms P Nqakula Mr P Voges Ms Y Makhasi Mr R M Zwane CEO (Ex Officio) 13

16 The Board is established 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. The Accounting Authority is responsible for determining strategic direction and policy and for the monitoring of operational performance and management. The Board subscribes to good corporate governance. To this end all the Board members as well as senior management are members of the Institute of Directors and underwent training to familiarise themselves with the latest King Report on corporate governance. The ECGBB board is constituted as follows: A legal practitioner of at least five years standing - Adv. N Mayosi. A chartered accountant of at least five years standing Mr Z Nomafu CA (SA). An individual who has knowledge of and involvement in the tourism industry Mr P Voges. A person who has knowledge of and experience in the field of welfare or community or socio-economic development Mr O Mtati. One member to represent the Department of Safety & Security in the Provincial Government Ms P Nqakula. One member to represent the Department of Economic Development and Environmental Affairs in the Provincial Government - Mr M Vena. One member to represent the Department of Finance in the Provincial Government Mr V Tshangana. A person to represent the community in general Ms Y Makhasi. The chief executive officer, who is not entitled to vote Mr R M Zwane. MEMBERS OF THE SUB-COMMITTEES OF THE ECGBB BOARD AUDIT AND RISK COMMITTEE Ms L S Smith CA(SA) Mr Z Nomafu CA(SA) Mr P White CA(SA) Mr H Marsberg Committee Chairperson Committee Member Committee Member Committee Member 14

17 COMPLIANCE AND LICENSING COMMITTEE Mr P Voges Mr M Vena Ms P Nqakula Mr O Mtati Committee Chairperson Committee Member Committee Member Committee Member FINANCE COMMITTEE Mr Z Nomafu CA(SA) Mr P Voges Mr V Tshangana Committee Chairperson Committee Member Committee Member HUMAN RESOURCES AND REMUNERATION COMMITTEE Ms Y Makhasi Mr M Vena Mr O Mtati Committee Chairperson Committee Member Committee Member 15

18 ATTENDANCE REGISTER FOR BOARD AND COMMITTEE MEETINGS FOR 2011/2012 FINANCIAL YEAR Name Adv M Mayosi O Mtati Capacity Human Resources & Remuneration Committee (Meetings) 6 Attendance Capacity Chairperson Deputy Chairperson Board (Meetings) 16 Y Makhasi Member Capacity Audit & Risk Committee (Meetings) 8 Z Nomafu Member 15 Member 4 Finance Committee (Meetings) 5 Capacity Compliance & Licensing Committee (Meetings) 7 Capacity Attendance Attendance Attendance Attendance 15 Member 7 Member 3 P Nqakula Member 12 Member 6 V Tshangana Member 12 Member 4 M Vena Member 12 Member 7 Member 6 P Voges Member 16 Member 4 L Smith Chairperson Chairperson H Marsberg Member 8 P White Member Chairperson Chairperson KEY POLICY DEVELOPMENT AND LEGISLATIVE CHANGE The Draft Amendment Bill 2011 was presented to and approved by the Cabinet Committee and Cabinet. The remaining process towards amending the ECGB Act includes: (a) (b) (c) (d) State Law Advisor Certification; Translation; 14-day publication in the Government Gazette and local newspaper; and Introduction in Provincial Legislature. The draft set of regulations on what has been developed addresses each of the draft amendments in the Bill. The only outstanding matters relating to such amendments (to the regulations) relate to the fees. Comparative research has been done to compare fees with other Provincial Gambling Boards. 16

19 2.1.7 REVENUE, EXPENDITURE AND OTHER SPECIFIC TOPICS SUMMARY OF REVENUE IN THE LAST FIVE YEARS Revenue Category Revenue To Fiscus 2007/ / / / /12 TOTAL Rm Rm Rm Rm Rm Rm Casino Bookmakers Taxes isator Taxes LPM Fees Exclusivity Fee To Fiscus Own Revenue Application Fee Administration Fee Own Revenue Grand Revenue GAMING PERFORMANCE Gambling and betting taxes, fees and interest collected during the financial year under review totalled R164.6-million (2010/11: R90,1-million). Included in this amount is R20-million exclusivity fees paid by the Hemingways Casino. The total Gross Gaming Revenues (GGR) generated in the financial year under review was R1.2-billion. Full details are contained in the annual financial statements. 17

20 The following is a graphical depiction of gaming performance per gaming category. Revenue and Tax Statistics vs

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22 Distribution of Gambling and Betting Takings: 2011/2012 Financial Year 20

23 2.1.8 LIST OF CATEGORIES OF LICENCES ECGBB regulates and administers the following: TYPES OF LICENCES: Casinos Route Operators isator Bookmakers Race Courses Gambling Machine Sites Bingo CERTIFICATES OF SUITABILITY Suitability of third parties Financial and controlling interests in the licensee REGISTRATIONS Registration of machines and gambling devices Registration of licensed employees Manufacturers of gaming related equipment 21

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25 2.2 PROGRAMME PERFORMANCE PROGRAMME 1: ADMINISTRATION PROGRAMME PURPOSE The purpose of this programme is to provide corporate administrative and management support services to the organisation including the board of directors in ensuring that the mandate of the ECGBB is executed and achieved accordingly. The programme is made up of the following sub-programmes: Office of the CEO; Strategic Management Services; Legal Services; Finance; Human Resources Management; Communication and Marketing and Information Technology STRATEGIC OBJECTIVES: Service excellence Good governance Promote responsible gambling Market ECGBB as an empowering institution Attract competent employees Retain skilled employees Research traditional horseracing Optimise information systems Optimise revenue Demonstrate organisational and financial performance KEY PERFORMANCE INDICATORS AND TARGETS NO. Key Performance Indicator BASELINE (ACTUAL OUTPUT) 2010/11 ACTUAL PERFORMANCE AGAINST TARGET TARGET (2011/12) ACTUAL (2011/12) REASONS FOR LEVEL OF PERFORMANCE (VARIANCE & IMPLICATIONS) PLANNED IMPROVEMENT (CORRECTIVE ACTIONS) Sub-Programme: Office Of The CEO % Satisfaction Rating On Stakeholder Survey % Completion Of Risk Management Audit (Assessment) % Implementation Of Shareholders Compact % Implementation Of Bi-Lateral Agreement With N/A 70% 0% 100% (1) 100% (1) 100% (1) 100% 100% 0% 100% 100% 0% The indicator has been relocated to the new Budget Sub-Programme: Research & Development. Furthermore, the target has been rolled over to 2012/13 financial year. Target achieved as planned. DEDEAT advised that Shareholder Compacts are no longer applicable to Schedule 3C Public Entities. Malawi Government imposed travel restrictions on regional / international travel, hence the target was This will continue to receive focus in the 2012/13 financial year. In 2012/13 APP this indicator and target has been revised accordingly. No longer applicable to ECGBB, only SLA suffices. To be implemented in 2012/13 Financial Year. 23

26 NO. Key Performance Indicator Malawi BASELINE (ACTUAL OUTPUT) 2010/11 ACTUAL PERFORMANCE AGAINST TARGET TARGET (2011/12) ACTUAL (2011/12) REASONS FOR LEVEL OF PERFORMANCE (VARIANCE & IMPLICATIONS) not achieved. The travel restrictions have since been lifted. The target has been rolled over to the 2012/13 financial year. PLANNED IMPROVEMENT (CORRECTIVE ACTIONS) 1.5 No Of CEO Fora And Conferences Attended The forum that was scheduled to take place in quarter three was cancelled No Of Licensee Meetings Attended % Compliance vs Deliverables % Development Of Sed Entity % Updated Administrative Policies And Procedures % Strategic Leadership With Development Plans % Recommen- Dations Approved % Unqualified Audit Report Time Taken To Respond To Queries % Complete- Ness Of Reports And Documents No Of Office Of The Ceo Scorecard Review Sessions % Structure In Support Of Work Organisation Principles At the time of setting the targets, other categories of licensees such as Bookmakers, Route Operators and isator were not catered for. Only casino sessions planned. 100% 100% 100% Target achieved as planned. N/A 50% 0% N/A 80% (14) 80% (14) The performance indicator and target has been suspended indefinitely. All organisational policies that were earmarked during the year under review were reviewed by management and approved accordingly. 100% 100% 100% Target achieved as planned. 100% 100% 100% 100% 100% 100% N/A 8 days 3 days N/A 100% 100% N/A % 100% 100% Target achieved as planned. Target achieved as planned. Target achieved as planned. Target achieved as planned. Target achieved as planned. Target achieved as planned. Indicator and target suspended indefinitely 24

27 NO. Key Performance Indicator BASELINE (ACTUAL OUTPUT) 2010/11 ACTUAL PERFORMANCE AGAINST TARGET TARGET (2011/12) ACTUAL (2011/12) 1.17 % Variance N/A 10% 12% 2.1 No Of Surveys % Survey Results N/A 65% 0% % Stakeholder Feedback (Results) No Of Responsible Gambling Campaigns No Of Problem Gambling Calls From Eastern Cape (As Per Nrgp) No Of Ecgbb Sponsored Projects No Of Staff Communication Meetings Internal Newsletter Stakeholder Newsletter Time Taken To Place Adverts % Equipment And Technology Effectiveness REASONS FOR LEVEL OF PERFORMANCE (VARIANCE & IMPLICATIONS) Budget was exceeded due to unforseen circumstances that were beyond management control. Sub-Programme: Marketing & Communication N/A 50% 0% N/A N/A 4 0 N/A 4 0 Target relocated to Research & Development Budget Sub-Programme. Furthermore, the target has been rolled over to 2012/13 financial year. The target has been rolled over to 2012/13 financial year. Target or indicator is linked to 1.1 in CEO s office; rolled over to 2012/13 financial year. Responsible gambling campaigns conducted in the year under review were more than the projected / targeted number. However, no budget deviations occurred as a result of this variance. The indicator was not in the control of the ECGBB. ECGBB sponsored projects in the year under review were more than the projected / targeted number. Staff communication meetings occurred more often than anticipated due to operational demands. The target has been rolled over to 2012/13 financial year. The target has been rolled over to 2012/13 financial year. N/A 8 days 5 days Target achieved as planned. N/A 100% 0% Target could not be achieved / performed. Lack of equipment and technology requires monitoring in order PLANNED IMPROVEMENT (CORRECTIVE ACTIONS) Will be done in 2012/13 financial year. Will be done in 2012/13 financial year. Will be done in 2012/13 financial year. In 2012/13 APP this indicator and target has been revised accordingly. Will be done in 2012/13 financial year. Will be done in 2012/13 financial year. In 2012/13 APP this indicator and target has been revised accordingly. 25

28 NO. Key Performance Indicator BASELINE (ACTUAL OUTPUT) 2010/11 ACTUAL PERFORMANCE AGAINST TARGET TARGET (2011/12) ACTUAL (2011/12) REASONS FOR LEVEL OF PERFORMANCE (VARIANCE & IMPLICATIONS) to ensure effectiveneness. PLANNED IMPROVEMENT (CORRECTIVE ACTIONS) 2.12 Brand Presence N/A 100% 100% Target achieved as planned No Of Marketing Bsc Review Sessions N/A 4 4 Target achieved as planned. Sub-Programme: Strategic Services % Of PGDP And District IDP Meetings % Compliance To Code Of Ethics (No Of Breaches <2) Number Of Reviews For Ecgbb Units (Quarterly Reviews) % Strategic Management Policies & Procedures Reviewed & Developed % Development Of 3-Year App % Development Of 1-Year Operational Plan No Of Strategic Service Bsc Review Sessions % Board And Committee Meetings Coordinated Vs Committee Charter N/A 100% 0% N/A 100% 100% N/A N/A 100% 25% 100% (1) 100% (1) 100% (1) 100% (1) 100% (1) 100% (1) N/A % (11 Board meetings; 21 Committees meetings) Sub-Programme: Legal Services 100% (9 Board meetings; 17 Committees meetings) 100% (12 Board meetings; 25 Committee s meetings) Target could not be achieved / performed due to reprioritisation. Target achieved as planned. Target achieved as planned. First draft has been produced pending management, committee and full Board approval. The target has been rolled over to 2012/13 financial year. Target achieved as planned. Target achieved as planned. The target for BSC Review Sessions was initially planned to be done on a monthly basis but subsequently performed on a quarterly basis and was achived accordingly. Board and sub-committee meetings co-ordinated were more than anticipated due to operational demands. In 2012/13 APP this indicator and target has been revised accordingly. The policy is targeted for completion in the second quarter of 2012/13 financial year. In 2012/13 APP this indicator and target has been revised accordingly. 4.2 % Of Board Members 100% (8 Board 100% (8 Board 100% Target achieved as planned. 26

29 NO. Key Performance Indicator BASELINE (ACTUAL OUTPUT) 2010/11 ACTUAL PERFORMANCE AGAINST TARGET TARGET (2011/12) Trained Members) Members) ACTUAL (2011/12) REASONS FOR LEVEL OF PERFORMANCE (VARIANCE & IMPLICATIONS) PLANNED IMPROVEMENT (CORRECTIVE ACTIONS) % Board Committee Meetings Vs Charter % Board Meetings Vs Charter No Of Fora Attended % Agreements Developed % Implementation Vs Agreed Deliverables % Legal Services Security Policy Reviewed % Hr Committee Meetings Vs Charter % Compliance Vs Deliverables % Developed And Updated Policies And Procedures No Of HR Bsc Review Sessions % Competitive Salary Package vs Market Related Remuneration (1 P.A.) % Implementation Of An Approved Training Plan 100% (21 Committees meetings) 100% (11 Board meetings) 100% (17 Committees meetings) 100% (9 Board meetings) 100% (25 Committee s meetings) 100% (12 Board meetings held) N/A 4 2 Board sub-committee meetings convened were more than anticipated due to operational demands. Board meetings convened were more than anticipated due to operational demands. A moratorium on meetings was imposed by National Gambling Board (NGB) in agreement with Provinces pending their review of the CEO forum strategy. 100% 100% 100% Target achieved as planned. N/A 100% 0% N/A 100% (4) 100% (1) 0% Linked to 4.6 above. Target could not be achieved / performed due to capacity challenges. The target has been rolled over to 2012/13 financial year. Sub-Programme: Human Resources 100% (4) 100% (6) The target was exceeded due to operational demands. In 2012/13 APP this indicator and target has been revised accordingly. The policy is targeted for completion in the second quarter of 2012/13 financial year. 100% 100% 100% Target achieved as planned. N/A 100% 100% Target achieved as planned. N/A 12 9 N/A 60% 60% 100% 65% 65% Implementation of Balance Score Card became fully operational in quarter. Target achieved as planned. Target achieved as planned. In 2012/13 APP this indicator and target has been revised accordingly. 27

30 NO Key Performance Indicator % Developed Hr Strategy And Implementation Plan BASELINE (ACTUAL OUTPUT) 2010/11 ACTUAL PERFORMANCE AGAINST TARGET TARGET (2011/12) ACTUAL (2011/12) N/A 100% 25% % Ipas / Pdps Implemented 100% 95% 100% (33 IPA s) Time Taken To Place Employees % Finance And Audit Committee Meetings Vs Charter % Reduced Matters Of Emphasis From The Ag % Reduction In Material Items Reported By Ag % Unqualified Audit Report % Budget Compiled And Approved Annually (2013) % Sla Compliance Vs Deliverables % Developed And Updated Financial Polices & Procedures % Functionality Of Website % Reviewed And Updated Navision Access Rights % Virus Packages Loaded On All PCs N/A 3 mths 3 mths 100% (7) 3 100% (114) Sub-Programme: Finance 100% (4 Finance; 4 Audit) 100% (3) 100% (7 Finance; 7 Audit) 100% (3) 50% 55% (51) 100% 100% 100% 100% 100% 100% 100% 100% 100% 95% 100% 100% REASONS FOR LEVEL OF PERFORMANCE (VARIANCE & IMPLICATIONS) HR Strategy still in development phase by yearend. The target has been rolled over to 2012/13 financial year. Target achieved as planned. Target achieved as planned. Finance and Audit & Risk committee meetings convened were more than anticipated due to operational demands. Target achieved as planned. Target achieved as planned. Target achieved as planned. Target achieved as planned. Target achieved as planned. Target achieved as planned. Sub-Programme: Information Technology 100% 99% 99% 100% 100% 100% 100% 100% 100% 7.4 % VIP Up-Time 100% 98% 98% 7.5 % Telephone System Up-Time 100% 100% 100% Target achieved as planned. Target achieved as planned. Target achieved as planned. Target achieved as planned. Target achieved as planned. PLANNED IMPROVEMENT (CORRECTIVE ACTIONS) To be completed in the first quarter of 2012/13 financial year. 28

31 NO Key Performance Indicator BASELINE (ACTUAL OUTPUT) 2010/11 ACTUAL PERFORMANCE AGAINST TARGET TARGET (2011/12) ACTUAL (2011/12) % Completion Of Annual Disaster Recovery Plan N/A 100% 100% % Availability 98% 98% 98% % Intranet Functionality 100% 100% 100% No Of It Fora Attended (4 Per Annum) REASONS FOR LEVEL OF PERFORMANCE (VARIANCE & IMPLICATIONS) Target achieved as planned. Target achieved as planned. Target achieved as planned. Operational requirements. PLANNED IMPROVEMENT (CORRECTIVE ACTIONS) In 2012/13 APP this indicator and target has been revised accordingly No Of Cems Audits Conducted (1 Per Annum) % It Bsc System Implemented % It Security Policy Reviewed % Accuracy Of Gims N/A 100% 0% N/A 100% 100% 80% 100% 95% Target achieved as planned. Budgetary constraints. Target rolled over to 2012/13 financial year. Target achieved as planned. Minor discrepancies still exist with GIMS. This will continue to receive focus in the next financial year. Regular reconciliations are to be performed. 29

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33 2.2.2 PROGRAMME 2: REGULATION PROGRAMME PURPOSE The purpose of this programme is to implement the ECGBB Act and other Statutory Mandates through conducting compliance, auditing, licensing, investigations, gaming control and law enforcement STRATEGIC OBJECTIVES: Monitor CSI contributions Award licences to suitably qualified applicants Ensure compliance Influence and maintain regulatory framework KEY PERFORMANCE INDICATORS AND TARGETS NO. Key Performance Indicator BASELINE (ACTUAL OUTPUT) 2010/11 ACTUAL PERFORMANCE AGAINST TARGET TARGET (2011/12) ACTUAL (2011/12) REASONS FOR LEVEL OF PERFORMANCE (VARIANCE & IMPLICATIONS) PLANNED IMPROVEMENT (CERRECTIVE ACTIONS) Sub-Programme: Compliance And Licensing % Of Disputes Resolved % Reduction In Number Of Exclusions Time Taken To Investigate Applications 1 100% 0% N/A 10% 0% 4.5 mths 4.5 mths 4.5 mths Target could not be achieved due to lack of evidence on the disputes lodged. Investigation still work-in-progress by year end. The target has been rolled over to 2012/13 financial year. No reduction in exclusions as this is dependent on the punters / gamblers for exclusion. Generally, the target was achieved within the prescribed timeline, except for one application which took eight months longer than anticipated due to the complex nature of the application. In 2012/13 APP this indicator & target has been revised accordingly. In 2012/13 APP this indicator and target has been revised accordingly. 4 5 % Of Illegal Operations Investigated No Of Illegal Operations Closed 100% 100% 100% (6) N/A 10 4 Target achieved as planned. Legal processes taking longer than anticipated for the pending cases. In 2012/13 APP this indicator and target has been revised accordingly. 31

34 NO Key Performance Indicator No Of Machines Confiscated No Of Sweeps Per Zone No Of Law Enforcement Fora Attended And Information Shared No Of Legal and Compliance Fora Attended and Information Shared No Of Horseracing and Betting Fora Attended and Information Shared No of OCC Meetings Attended And Information Shared BASELINE (ACTUAL OUTPUT) 2010/11 ACTUAL PERFORMANCE AGAINST TARGET TARGET (2011/12) ACTUAL (2011/12) N/A 20 7 N/A REASONS FOR LEVEL OF PERFORMANCE (VARIANCE & IMPLICATIONS) This is linked to 5 above. Target achieved as planned. A moratorium on meetings was imposed by National Gambling Board (NGB) in agreement with provinces pending their review of the CEO forum strategy. A moratorium on meetings was imposed by National Gambling Board (NGB) in agreement with provinces, pending their review of the CEO forum strategy. Operational requirements. Target could not be achieved due to budgetary constraints. PLANNED IMPROVEMENT (CERRECTIVE ACTIONS) In 2012/13 APP this indicator and target has been revised accordingly. In 2012/13 APP this indicator and target has been revised accordingly. In 2012/13 APP this indicator and target has been revised accordingly. In 2012/13 APP this indicator and target has been revised accordingly. In 2012/13 APP this indicator and target has been revised accordingly % Monitored Environmental Compliance Of Casino Operators No Of Gambling Related Devices Tested No Of Compliance Audits Completed No Of Compliance Inspections 100% 100% 100% Target achieved as planned. Target exceeded. More devices registered as a result of equipment upgrades at casinos and LPM sites. Target could not be achieved due to capacity challenges and budgetary constraints. Target exceeded. More licence applications received during the year than anticipated. In 2012/13 APP this indicator and target has been revised accordingly. In 2012/13 APP this indicator and target has been revised accordingly. 32

35 NO Key Performance Indicator No Of Self Exclusions No Of Licensee Exclusions (Bannings) No Of 3rd Party Exclusions BASELINE (ACTUAL OUTPUT) 2010/11 ACTUAL PERFORMANCE AGAINST TARGET TARGET (2011/12) ACTUAL (2011/12) N/A N/A N/A 8 0 % Compliance vs Deliverables 100% 100% 100% % CSI Spend vs Bid 100% 100% 100% Commitments No Of Illegals Captured REASONS FOR LEVEL OF PERFORMANCE (VARIANCE & IMPLICATIONS) Target exceeded. More responsible gambling campaigns conducted during the year under review. Lesser number reported by licensees. No 3 rd party exclusions reported to the ECGBB. Target achieved as planned. Target achieved as planned. Target exceeded. More illegal operations closed. PLANNED IMPROVEMENT (CERRECTIVE ACTIONS) In 2012/13 APP this indicator and target has been revised accordingly. In 2012/13 APP this indicator and target has been revised accordingly. In 2012/13 APP this indicator and target has been revised accordingly. 22 No Of Revenue Audits Completed Target exceeded. More revenue audits conducted than planned. 33

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37 2.2.3 PROGRAMME 3: SOCIO-ECONOMIC DEVELOPMENT There were no indicators or targets crafted / set for this programme as it was still in its infancy stage. In the 2012/13 financial year a new Budget Programme 3 called Research and Development has been developed with two sub-programmes the Empirical Research on Gambling Industry and Consumer Protection Budget Sub- Programme, and the General & Adhoc Surveys Budget Sub-Programme. Socio-Economic Development has been relocated to Programme 1 as a sub-programme. 35

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39 3.1 REPORT OF THE AUDIT COMMITTEE Report of the Audit and Risk Committee We are pleased to present our report for the financial year ended 31 March Audit and Risk Committee Members and Attendance The audit committee consists of the members listed hereunder and should meet at least 4 times a year as per its approved Terms of Reference. During the current year 5 meetings were held. Name of Member Number of Meetings Attended L Smith (Chairperson) CA(SA), RA 8 H Marsberg, B.Com 8 Z Nomafu (Director and Audit Committee Member) CA(SA) 4 P White CA (SA) 6 The Audit Committee members were appointed with effect from 1 April 2011 and members have remained unchanged for the year. The Audit Committee is considered to have the correct experience, qualifications and skills to carry out their responsibilities effectively.. Audit and Risk Committee Responsibility We report that we have adopted appropriate formal terms of reference in our charter, in line with the requirements of Section 38(1)(a) of the Public Finance Management Act, No. 1 of 1999 (PFMA) and Treasury Regulation 3.1. We further report that we conducted our affairs in compliance with this charter. The Effectiveness of Internal Control We report that as part of our mandate to provide oversight to the Board we have considered the following: the efficiency and effectiveness of the system of internal control applied by the Board; risk management; the Annual Financial Statements; the management report of the Auditor-General; and the quality of in-year management and monthly/quarterly reports submitted in terms of the PFMA and the Division of Revenue Act. Based on the information provided to the Audit and Risk Committee by both Management and internal audit, it would appear that the system of internal control was not entirely effective for the year under review. Management responses to weaknesses so identified indicate that these will be addressed in the year ending 31 March. Evaluation of Financial Statements We have reviewed and discussed the annual financial statements, which have been recommended to the Accounting Authority to be submitted to the Auditor-General for audit purposes on 31 May In this regard we consider it appropriate to bring the following matters to the attention of the users of these annual financial statements: Regarding employee bonuses, we have expressed our concern to management and to the Accounting Authority regarding the payment of bonuses to employees during a financial year in which the Board incurred a deficit, and we have drawn attention to Section 51 of the Public Finance Management Act. We note, however, that Management and the Accounting Authority have not conflicted with any legislation or prescripts by awarding bonuses to employees. We have reviewed the Auditor-General South Africa s management report and management s response thereto. We have reviewed the Board s compliance with legal and regulatory provisions. We have reviewed the performance information to be approved by the Accounting Authority and to be submitted to the Auditor-General of South Africa on 31 May We have reviewed significant adjustments resulting from the audit. 37

40 Internal Audit The Internal Audit function is outsourced to a service provider. Internal audit has met their operational plan for the year, as adjusted where necessary, with the approval of the Audit Committee. Risk Management The Audit and Risk Committee has ensured that the Risk Management Framework was prepared and approved during the financial year. Risks were identified during a formal risk identification process and the Chief Executive Officer has been appointed as the Risk Officer for the Entity. We are, however, unable to determine the effectiveness of the risk management process given its infancy. The function will be addressed in the year ending 31 March Pre-determined Objectives The Audit and Risk Committee has directed Internal Audit s resources to the audit of predetermined objectives at both 30 September 2011 and 31 March This process, we believe, has provided valuable feedback to Senior Management as well as to the Accounting Authority in terms of the Board s performance against these objectives. However, we consider it appropriate to note our concern that despite the guidance provided by both Internal Audit and this committee, the process of recording objectives and measuring performance against them remains somewhat inadequate in the Performance Information Report. Report of the Auditor General South Africa We concur with and accept the Auditor-General of South Africa s report on the annual financial statements, and are of the opinion that the audited annual financial statements should be accepted, read together with the report of the Auditor-General of South Africa. Loren Smith Chairperson of the Audit and Risk Committee, 31 July

41 3.2 REPORT OF THE ACCOUNTING OFFICER STRENGTHENING OF TRUSTS OVERSIGHT FUNCTION A number of Trusts have been established through the Terms and Conditions of Licence of Licensees. Most of these Trusts hold equity in the licensees and are required to submit progress reports with respect to the implementation of community projects, in line with the objects of the said Trusts. Furthermore, the ECGBB will enter into Service Level Agreements (SLAs) with the second category of Trusts - the Community Trusts that hold no equity in licensees, to agree on socio-economic projects to be implemented in the areas in which the Trusts operate MARKETING AND COMMUNICATION The ECGBB has enhanced and strengthened its Marketing and Communication Strategy in order to ensure that it becomes visible both to the provincial gaming industry and to the public that it seeks to support and protect. A Communication and Marketing Strategy has been developed and approved during the 2011/12 financial year. In this regard, the Board signed a sponsorship agreement with Eyethu Boxing Promotions which provided brand exposure on the Supersport television channel. This platform also allowed ECGBB to broadcast responsible gambling messages under the following slogan: Avoid the knockdown, gamble responsibly. ECGBB, in partnership with DEDEAT, DSRAC, and ECPTA, hosted an International Boxing Federation (IBF) title fight between reigning champion Nkosinathi Joyi, from Mdantsane, and a Japanese challenger Katsunari Takayama EMPLOYMENT CREATION The gaming industry has created much needed employment opportunities in the province, as showcased below: SECTOR CATEGORY FY2007 FY2008 FY2009 FY2010 FY2011 Casinos 4,961 4,041 3,709 2,914 3,752 Limited Payout Machines Horseracing Industry TOTAL 5,482 4,548 4,153 3,855 4,488 In the year under review (2011/2012) the re-investments in Zone 1, Zone 2 and Zone 3 have cumulatively created 3,560 new jobs during the construction and operational phases EMPLOYMENT EQUITY PLAN The ECGBB has used the demographics of Provincial Economic Active Population (EAP) to determine its relevant labour market. The following diagrams indicate the applicable percentage that will be used in this reporting term to determine the numerical goals and targets that must be pursued in order to achieve the required levels of representivity of designated groups in the workforce of the ECGGB. The EAP statistics are based on the latest information available from the Department of Labour and from Statistics South Africa. The table below indicates an analysis of the over- and under-representation of the workforce profile when measured against the Provincial EAP targets. This is done for the previous financial year (01/04/ /03/2012) as well as the next three years of the EE Plan. 39

42 Figure 1: Equity plan for the next three years Years African Males Coloured Males Indian Males White Males African Females Coloured Females Indian Females White Females Foreign Males Foreign Females Provincial EAP 39.30% 5.90% 0.80% 5.60% 37.80% 4.80% 0.60% 5.40% 0.00% 0.00% 100% Current Actual Employee numbers Disabled Employees Workforce Percentages % 3.03% 0.00% 9.09% 54.54% 0.00% 0.00% 0.00% 0.00% 0.00% 100% Provincial EAP 39.30% 5.90% 0.80% 5.60% 37.80% 4.80% 0.60% 5.40% 0.00% 0.00% 100% Year 1 01/04/ /03/2013 Actual Employee numbers Disabled Employees Workforce Percentages % 2.44% 2.43% 7.32% 46.34% 4.87% 2.44% 4.88% 0.00% 0.00% 100% Provincial EAP 39.30% 5.90% 0.80% 5.60% 37.80% 4.80% 0.60% 5.40% 0.00% 0.00% 100% Year 2 01/04/ /03/2014 Actual Employee numbers Disabled Employees Workforce Percentages % 4.2% 2.08% 6.25% 43.75% 6.25% 2.08% 4.2% 0.00% 0.00% 100% Provincial EAP 39.30% 5.90% 0.80% 5.60% 37.80% 4.80% 0.60% 5.40% 0.00% 0.00% 100% Year 3 01/04/ /03/2015 Actual Employee numbers Disabled Employees Workforce Percentages % 5.88% 1.96% 5.88% 41.2% 5.88% 1.96% 3.92% 0.00% 0.00% 100% SOCIO ECONOMIC DEVELOPMENT (SED) AND / OR SOCIAL RESPONSIBILITY In order to realise the implementation and sustainability of the Eastern Cape Gambling and Betting Board s (ECGBB) SED Projects, the Board has reviewed the SED Policy framework with a view to guide the implementation of the SED Projects. The ECGBB funded a number of community projects during the financial year under review. These were: BENEFICIARY R-VALUE BRIEF DESCRIPTION OF PROJECT AREA CATEGORY Ntini Golf Day Isizwe Boxing R R The East London chapter of the Black Management Forum requested a sponsorship to support fundraising by former Proteas fast bowler Makaya Ntini for a Cricket Development Academy to be based in Mdantsane. The sponsorship went into organising logistics for the event. ECGBB sponsored Nqadu-based Isizwe Boxing Promotions as a developmental initiative to revive and East London Idutywa Sport Sport 40

43 BENEFICIARY R-VALUE BRIEF DESCRIPTION OF PROJECT AREA CATEGORY Promotions promote boxing in the former Transkei area. Qelane R Renovation of Qelane Community Hall to temporarily house a creche. This included toilets, tiling, fencing, ceiling, partitioning, establishment of a vegetable garden and its fencing, vegetable seed and garden implements. Qelane Village Mthatha Early Childhood Development Traditional Horse Racing Sunduza Junior Secondary School Mandela Day Winter Rose Dancan Village Orphanage Home Showtime Boxing Academy Paterson High School S.E.E.D Project EC Council Of Churches R R R R R R R R R Sponsored a traditional horse racing event at Nqadu Great Place. Donated computers and established a computer lab, provided mounting computer desks and computers cabling and facilitated connectivity in six schools at Sterkspruit. Sponsored food parcels and blankets to elderly people selected by Department of Social Develeopment. Sponsored the Mdantsane-based rugby team to attend national play-offs in Cape Town. Donated food parcels to orphanages in Ziphunzana. In supporting the development of boxing and contributing to healthy lifstyles, ECGBB sponsored the establishment of a non-aligned boxing gym that will assist in training young boxers. Donated a rooter for school computer laboratory for connectivity to computers linked to the internet. ECGBB sponsored this Port Elizabeth-based project that seeks to combat the use of drugs and help exoffenders to rehabilitate and re-integrated into communities. The project covered the northern suburbs of Port Elizabeth, where drug abuse is rife. ECGBB sponsored the Eastern Cape Council of Churches to enable it to host a youth workshop on economic opportunities. Nqadu Village Sterkspruit King William s Town, Elliot & Cala Mdantsane Duncan Village in East London East London Paterson in Port Elizabeth Port Elizabeth East London Sport Education Welfare Sport Welfare Sport Education Other Education Amathole Hockey Association Loaves & Fishes Race Sponsorships For ECGBB General Employee And 20 Others R R R A Grade 12 Cambridge High school learner, who is a telented hockey player, was picked to play for Amathole but lacked funds to attend the tournament in Durban. ECGBB contributed in order for the learner to have acccommodation and pay tournament fees in order to participate. Sponsored the General Manager to attend and accept an award at the SOMAFCO awards in Johannesburg. The organisation won the Best ECD category. Supported athletes from Rewal Gijimas to attend the Comrades Marathon. Also assisted Mr Amos Zingo, a general worker at ECGBB, to attend and partcipate in the Two Oceans Marathon (Cape Town) and Washie Marathon (Port Alfred). Cambridge in East London East London East London Sport Other Sport 41

44 The projects were varied in nature, covering different needs of specific communities. They covered early childhood development support, old age home support, education and sport OVERSEAS / CONTINENTAL TRAVEL Conference Dates Nature Of Conference/Trip Attendees April June th Biennial SA Gambling Conference: Durban Global Gaming Expo Asia (G2E Asia): Macau 3 6 October 2011 Global Gaming Expo: Las Vegas RM Zwane, B Jaxa, N Makunga, K Ngqondela, H Adonis, N Nahayo Adv N Mayosi, RM Zwane, M Vena, O Mtati, B Jaxa Adv N Mayosi, RM Zwane, T Harper, Z Nomafu, H Adonis October 2011 International Association of Gaming Regulators (IAGR) Conference: Cape Town Adv N Mayosi, RM Zwane, P Nqakula, V Tshangana, B Jaxa, M Tokota, K Ngqondela, S Mbanjwa 42

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47 REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS 7. In accordance with the PAA and the General Notice issued in terms thereof, I report the following findings relevant to performance against predetermined objectives, compliance with laws and regulations and internal control, but not for the purpose of expressing an opinion, Predetermined objectives 8. I performed procedures to obtain evidence about the usefulness and reliability of the information in the report on the annual operational performance as set out on pages 22 to 35 of the annual report. 9. The reported performance against predetermined objectives was evaluated against the overall criteria of usefulness and reliability, The usefulness of information in the annual performance report relates to whether it is presented in accordance with the National Treasury's annual reporting principles and whether the reported performance is consistent with the planned objectives. The usefulness of information further relates to whether indicators and targets are measurable (i.e. well defined, verifiable, specific, measurable and time bound) and relevant as required by the National Treasury's Framework for managing programme performance information (FMPPI). The reliability of the information in respect of the selected programmes is assessed to determine whether it adequately reflects the facts (i.e, whether it is valid, accurate and complete). 10. The material findings are as follows: Usefulness of information Presentation Reasons for major variances not explained 11. Fifty-five percent of major variances between planned and actual achievements were not explained in the annual performance report for the year under review as per the National Treasury's Annual Report Preparation Guide. This was due to a lack of documented and approved internal policies and procedures to address reporting processes and events pertaining to performance management and reporting. Consistency Reported objectives, indicators and targets not consistent with planned objectives 12. Treasury Regulation (TR) (g) requires that the annual performance plan should form the basis for the annual report, therefore requiring the consistency of objectives, indicators and targets between planning and reporting documents. A total of 65% of the reported objectives, indicators and targets were not consistent with the objectives, indicators and targets as per the approved annual performance plan. This was due to officials that were not adequately trained and skilled to prepare the performance plan. Changes to objectives not approved 13. TR requires that the annual performance plan must be approved by the executive authority. Therefore, if the annual performance plan is changed in-year due to significant policy or mandate changes, the updated plan has to be approved by the executive authority. A total of 62 (100% of changes made) objectives, reported in the report on the annual operational performance, were inconsistent with the objectives as per the approved annual performance plan. This was due to significant changes that were made subsequent to the appointment of a strategic service manager. Measurability Performance targets are not specific 14. The National Treasury's FMPPI requires that performance targets be specific in clearly identifying the nature and required level of performance. A total of 47% of the targets relevant to the office of the CEO, Strategic Services and Compliance and Licensing were not specific in clearly identifying the nature and the required level of 45

48 performance. This was due to the fact that management was not aware of the requirements of the FMPPI and officials that were not adequately trained and skilled to prepare the annual performance plan. Performance targets are not time bound 15. The National Treasury's FMPPI requires that the time period or deadline for delivery be specified. All of the targets relevant to the office of the CEO, Strategic Services and Compliance and Licensing were not time bound in specifying a time period or deadline for delivery. This was due to the fact that management was not aware of the requirements of the FMPPI and officials that were not adequately trained and skilled to prepare the annual performance plan. Performance indicators not well defined 16. The National Treasury's FMPPI requires that indicators should have clear unambiguous data definitions so that data is collected consistently and is easy to understand and use. A total of 49% of the indicators relevant to the office of the CEO, Strategic Services and Compliance and Licensing were not well defined in that clear, unambiguous data definitions were not available to allow for data to be collected consistently. This was due to the fact that management was not aware of the requirements of the FMPPI and officials that were not adequately trained and skilled to prepare the annual performance plan. Indicators not verifiable 17. The National Treasury's FMPPI requires that it should be possible to validate the processes and systems that produce the indicator. A total of 49% of the indicators relevant to the office of the CEO, Strategic Services and Compliance and Licensing were not verifiable in that valid processes and systems that produced the information on actual performance did not exist. This was due to officials that were not adequately trained and skilled to prepare the annual performance plan Reliability of information Reported Indicators not supported by sufficient appropriate evidence (validity, accuracy and completeness) 18. The National Treasury's FMPPI requires that documentation addressing the systems and processes for identifying, collecting, collating, verifying and storing information be properly maintained. I was unable to obtain all the information and explanations I considered necessary to satisfy myself as to the validity, accuracy and completeness of the actual reported performance relevant to 53% of the indicators of the office of the CEO, 35% of Compliance and Licensing and 29% of Strategic Services. 19. This was due to limitations placed on the scope of my work by the absence of adequate portfolios of evidence and the institution's records not permitting the application of alternative audit procedures. Additional matter Achievement of planned targets 20. Only 66% of the planned targets were achieved during the year under review. This was mainly due to the fact that indicators and targets were not adequately budgeted for. Management also did not take proper corrective action to ensure that underperformance identified and reported in the quarterly reports was addressed during the year. Compliance with laws and regulations 21. I performed procedures to obtain evidence that the entity has complied with applicable laws and regulations regarding financial matters, financial management and other related matters. My findings on material noncompliance with specific matters in key applicable laws and regulations as set out in the General Notice issued in terms of the PAA are as follows: 46

49 Annual financial statements 22. The financial statements submitted for auditing were not prepared in all material respects in accordance with the requirements of section 55(1) of the PFMA. Material misstatements of disclosure items and the cash flow statement identified by the auditors were subsequently corrected, resulting in the financial statements receiving an unqualified audit opinion. Strategic planning and performance management 23. The accounting authority did not ensure that the public entity had and maintained an effective, efficient and transparent system of internal control regarding performance management, which described and represented how the entity's processes of performance planning, monitoring, measurement, review and reporting were conducted, organised and managed as required by section 51(1)(a)(i) of the PFMA. Procurement and contract management 24. The preference point system was not applied in all procurement of goods and services above R as required by section 2(a) of the Preferential Procurement Policy Framework Act, 2011 (Act No.6 of 2011) (PPPFA) and TR 16A6.3(b), 25. Invitations for competitive bidding were not always advertised in at least the government tender bulletin and for a minimum of 21 days as required by TR 16A6.3(c). 26. Goods and services with a transaction value below R were procured without obtaining the required price quotations as required by TR 16A6.1. Expenditure management 27. The accounting authority did not take effective steps to prevent irregular expenditure as required by section 51(1)(b)(ii) of the PFMA. Asset management 28. Bank reconciliations were not performed on a weekly basis as required by TR (j). Internal control 29. I considered internal control relevant to my audit of the financial statements, annual operational performance report and compliance with laws and regulations. The matters reported below under the fundamentals of internal control are limited to the significant deficiencies that resulted in the findings on the report on the annual operational performance and the findings on compliance with laws and regulations included in this report. Leadership 30. The material findings related to the reporting on performance objectives are the result of officials that did not have the required knowledge of the FMPPI. The public entity did not properly plan and provide training on performance information planning, management and reporting. The accounting authority did not ensure that the public entity had and maintained an effective, efficient and transparent system of internal control regarding performance management, which described and represented how the entity's processes of performance planning, monitoring, measurement, review and reporting were conducted, organised and managed. Management did not take adequate steps to ensure that controls were in place for the correct and accurate reporting on performance objectives. This resulted in information that was not useful or reliable. 47

50 31. Irregular expenditure was incurred by the entity due to contraventions of the supply chain management regulations, which can be attributed to the lack of monitoring to ensure that the related controls were implemented throughout the year under review Financial and performance management 32. Material misstatements related to the cash flow statement, completeness of the financial instrument note to the financial statements, the budget reconciliation and the disclosure of irregular expenditure were identified during the audit. This was due to a lack of full understanding of the financial reporting framework. Management did correct the material misstatements identified. 33. Management did not implement adequate controls over the reporting on predetermined objectives with the result that the annual operational performance report contained numerous material misstatements that were identified during the audit and corrected by management. The operational performance report is not useful and reliable due to the reasons reported in paragraph 30 above. The information system of the public entity is furthermore not adequate for the preparation of the report on predetermined objectives. 34. Management did not properly review and monitor the entity's compliance with laws and regulations. As a result material non-compliance was identified related to the PFMA, Treasury Regulations and the PPPFA. East London 31 July

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52 3.4 STATEMENT OF FINANCIAL POSITION As at 31 March 2012 NOTES ASSETS R R Current assets Cash and cash equivalents 6 8,724,755 52,547,277 Pre-payments 5 177, ,579 Receivable on collection for distribution from non-exchange transactions 4 8,493,807 6,921,310 Trade and other receivables from exchange transactions 2 1,763,818 1,401,323 19,159,619 61,157,489 Non-current assets Property, plant and equipment 7 6,836,365 7,127,261 Intangible assets 8 151, TOTAL ASSETS 26,147,129 68,284,750 LIABILITIES Current liabilities Collections for distributions from non-exchange transactions 10 8,741,716 52,321,195 Trade and other payables from exchange transactions 9 13,143,039 7,135,668 TOTAL LIABILITIES 21,884,755 59,456,863 NET ASSETS 4,262,374 8,827,887 Net assets Accumulated surplus 4,262,374 8,827,887 TOTAL NET ASSETS 4,262,374 8,827,887 50

53 3.5 STATEMENT OF FINANCIAL PERFORMANCE For the year ended 31 March 2012 NOTES REVENUE R R Revenue from Exchange Transactions 11 6,105,287 7,552,286 Revenue from non-exchange Transactions 11 31,187,000 23,338,000 37,292,287 30,890,286 EXPENDITURE Administrative Expenditure 14 9,950,531 12,198,031 Corporate Social Responsibility 32 1,003, ,769 Depreciation 7 658, ,150 Amortisation Intangible Assets 8 3,849 - Employee Costs 12 14,713,370 14,119,747 Impairment Loss - Trade Debtors 2 143, ,000 Impairment Loss - Other Debtors 3 53,576 - Legal Costs 33 3,244,354 2,440,064 Marketing Costs 16 3,133,237 2,102,403 Other Operating Expenses 13 2,540,313 1,899,067 Statutory Audit Fees 15 1,240,000 1,692,806 Zone 4 Settlement 28 5,500,000 - Expenditure 42,185,507 35,762,037 4,893,220 4,871,751 Finance Income , ,095 Loss on Disposal of Property, Plant and Equipment 122,097 26, , ,487 DEFICIT FOR THE YEAR 4,565,513 4,330, STATEMENT OF CHANGES IN NET ASSETS For the year ended 31 March 2012 Accumulated Surplus R Balance as at 01 April 2010, as restated 13,158,151 13,158,151 R Deficit for the Year 4,330,264 4,330,264 Balance as at 31 March ,827,887 8,827,887 Balance as at 01 April ,827,887 8,827,887 Deficit for the Year 4,565,513 4,565,513 Balance as at 31 March ,262,374 4,262,374 51

54 3.7 CASH FLOW STATEMENT For the year ended 31 March 2012 CASH FLOWS FROM OPERATING ACTIVITIES NOTES Receipts R R Gambling Fees and Taxes 121,710, ,826,119 Grant 31,187,000 23,338,000 Receipts from Customers 10,279,104 7,816,547 Payments 163,176, ,980,666 Gambling Fees and Taxes and Exclusivity Fee 164,619,352 89,768,354 Payment to Suppliers and Employees 42,169,144 35,228, ,788, ,996,688 Net cashflows from operating activities 21 (43,611,520) 40,983,978 CASH FLOWS FROM INVESTING ACTIVITIES Interest Received 449, ,095 Proceeds from Sale of Property, Plant and Equipment 7 149,000 15,758 Purchase of Property, Plant and Equipment 7 (809,806) (396,494) Net Cash Flows from Investing Activities (211,002) 187,359 Net (decrease) / Increase in Cash and Cash Equivalents (43,822,522) 41,171,337 Cash and Cash Equivalents at Beginning of the Year 52,547,277 11,375,940 Cash and Cash Equivalents at End of the Year 6 8,724,755 52,547, ACCOUNTING POLICIES FOR THE YEAR ENDED 31 MARCH Basis of Preparation The Annual Financial Statements have been prepared in accordance with the effective Standards of Generally Recognised Accounting Practice (GRAP) for the Accrual Basis of Accounting, including any interpretations, guidelines and directives issued by the Accounting Standards Board. The Annual Financial Statements have been prepared on a going concern basis and the accounting policies have been applied consistently throughout the period. While GRAP 24 on Presentation of Budget Information in Annual Financial Statements is not effective, in order to enhance the usefulness of the Annual Financial Statements, Paragraph of GRAP 1 has been implemented by inclusion of a note on Reconciliation of Budget Surplus/Deficit with the surplus/deficit in the statement of financial performance in the Annual Financial Statements, until the implementation of GRAP 24 becomes effective. Accounting Standards which have been approved and are effective: GRAP 1 Presentation of Annual Financial Statements GRAP 2 Cash Flow Statements GRAP 3 Accounting Policies, Changes in Accounting Estimates and Errors GRAP 9 Revenue from Exchange Transactions GRAP 14 Events After the Reporting Date GRAP 17 Property, Plant and Equipment GRAP 19 Provisions, Contingent Liabilities and Contingent Assets GRAP 102 Intangible Assets Directive 5 Determining the GRAP Reporting Framework IGRAP 1 Applying the Probability Test on Initial Recognition of Exchange Revenue 52

55 ACCOUNTING POLICIES FOR THE YEAR ENDED 31 MARCH 2012 IPSAS 20 IFRS 7 IAS 19 (AC 116) IAS 32 (AC 125) IAS 39 (AC 133) Related Parties Disclosure Financial Instruments: Disclosures Employee Benefits Financial Instruments: Presentation Financial Instruments: Recognition and Measurements A summary of the significant accounting policies, which have been consistently applied, are disclosed below. The following Standards of GRAP have been approved and an effective date has been determined by the Minister of Finance. The respective effective dates of these Standards fall within reporting periods beginning after 1 April 2012 and have not been early adopted by the Board: Reference Topic Impact on GRAP reporting framework GRAP 21 GRAP 23 GRAP 24 GRAP 26 GRAP 103 GRAP 104 Impairment Of Non-Cash- Generating Assets Revenue From Non-Exchange Transactions (Taxes And Transfers) Presentation Of Budget Information In Financial Statements Impairment Of Cash-Generating Assets Heritage Assets Financial Instruments The current accounting policy is in line with GRAP 21, therefore no impact on future financial years. Accounting policy was formulated to conform with GRAP 23, therefore no impact on future financial years. Disclosure note included for budget against actual. Impact on future financial years not estimated to be significant. No effect in future financial years, since Accounting policy was compiled to conform with GRAP 26. The Board does not have any Heritage Assets, therefore no effect in future financial years. Full compliance with GRAP 104 not yet required. The accounting policy of the Board was followed. Effect on future financial years to be assessed after Minister of Finance has determined an effective date. The following Standards of GRAP have been approved, but the Minister of Finance has not determined an effective date yet. Reference GRAP 25 Topic Employee Benefits Impact on GRAP reporting framework Full compliance with GRAP 25 not yet required. The accounting policy of the Board was followed. Effect on future financial years to be assessed after Minister of Finance has determined an effective date. The following Standards of GRAP have been approved but which the Board is not required to apply: Reference GRAP 18 Topic Segment Reporting Impact on GRAP reporting framework Impact to be assessed on future reporting periods when application becomes compulsory (when effective date is announced). 53

56 ACCOUNTING POLICIES FOR THE YEAR ENDED 31 MARCH Property, Plant and Equipment Property, plant and equipment 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: The useful lives of items of property, plant and equipment have been assessed as follows: Item Buildings Fixtures and Fittings Motor Vehicles Furniture and Equipment Computer Equipment Other - Cell phone - Library books Average useful life 50 years 10 years 5 years 4-10 years 3-4 years 2 years 3 years Land is not depreciated as it is deemed to have an indefinite life. The useful life as well as residual values are reviewed annually. Gains or losses arising from the disposal of property, plant and equipment are determined as the difference between the sales proceeds and the carrying amount of the assets, 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 exceed its recoverable amount, which is the higher of an asset's net selling price and value in use. An impairment loss or reversal of an impairment loss is recognised as an expense/income in the statement of financial performance, as incurred Intangible Assets An intangible asset is recognised when: it is probable that the expected future economic benefit or service potential that is attributable to the asset will flow to the entity; and the cost or fair value of the asset can be measured reliably. Intangible assets are carried at cost less accumulated amortisation and any impairment losses. Software is amortised on a straight line basis over its anticipated useful life. Generally, costs associated with developing computer software programmes are recognised as an expense as incurred. However, costs that are clearly associated with an identifiable and unique product, which will be controlled by the entity and have a probable benefit exceeding the cost beyond one year, are recognised as intangible assets. Expenditure which enhanced and extended the benefits of computer software programmes beyond the original life of the software is capitalised. Computer software development costs recognised as assets are amortised using the straight line method over their useful lives. Costs associated with the maintenance of existing computer software programmes are expenses, as incurred. 54

57 ACCOUNTING POLICIES FOR THE YEAR ENDED 31 MARCH 2012 The useful life of the intangible assets has been assessed as follows: Item Computer Software Average useful life 3 years Intangible assets are derecognised when the asset is disposed of or when there are no further economic benefits or service potential expected from the use of the asset. The gain or loss arising on the disposal or retirement of an intangible asset is determined as the difference between the sales proceeds and the carrying value, and is recognised in the statement of financial performance. 1.3 Financial Instruments Financial assets and financial liabilities are recognised on the entity's Statement of Financial Position when the entity becomes party to the contractual provisions of the instrument. Impairment of Financial Assets The Entity assesses at each reporting date whether there is any objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset (an incurred 'loss event') and that loss event has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial re-organization and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults. Trade and Other Receivables Trade and other receivables are categorised as loans and receivables and are initially recognised at fair value plus direct transaction costs and subsequently carried at amortised cost using the effective interest rate method, less any impairment loss recognised to reflect irrecoverable amounts. Amortised cost refers to the initial carrying amount, plus interest, less repayments and impairments. Trade and Other Payables and Borrowings Financial liabilities consist of trade payables and borrowings. They are categorised as financial liabilities at amortised cost and are initially recognised at fair value and subsequently measured at amortised cost which is the initial carrying amount, less repayments, plus interest. Cash and Cash Equivalents Cash includes cash on hand (including petty cash) and cash with banks (including call deposits). Cash equivalents are short-term highly liquid investments, readily convertible into known amounts of cash, that are held with registered banking institutions with maturities of three months or less and are subject to an insignificant risk of change in value. For the purposes of the Statement of Cash Flows, cash and cash equivalents comprise cash on hand, deposits held on call with banks, net of bank overdrafts. The entity categorises cash and cash equivalents as loans and receivables. 55

58 ACCOUNTING POLICIES FOR THE YEAR ENDED 31 MARCH Derecognition of Financial Instruments The Board derecognises a financial asset (or group of financial assets) when: - The contractual rights to the cash flows arising from the financial asset have expired; or - The entity transfers the financial asset, including substantially all the risks and rewards of ownership; or - It transfers the contractual rights to receive the cash flows of the financial asset, but assumes a corresponding obligation to pay the cashflows to one or more recipients, and consequently transfers substantially all the risks and benefits associated with the asset; or - No future economic benefits are expected. A financial liability (or group of financial liabilities) is derecognised when and only when the liability is extinguished, i.e. when the obligation specified in the contract is discharged, cancelled or expires. 1.4 Retirement Benefits Retirement benefits The policy of the Board is to provide retirement benefits through an established fund governed by the Pension Fund 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 Statement of Financial Performance in the year to which they relate. The Board has no obligations to fund post-retirement medical benefits. 1.5 Provisions and contingencies Provisions are recognised when: - the entity has a present obligation as a result of a past event; - it is probable that an outflow of resources embodying economic benefits or service potential will be required to settle the obligation; and - a reliable estimate can be made of the obligation. The amount of a provision is the best estimate of the expenditure expected to be required to settle the present obligation at the reporting date. Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. Provisions are reversed if it is no longer probable that an outflow of resources embodying economic benefits or service potential will be required, to settle the obligation. Contingent assets and contingent liabilities Contingent assets and contingent liabilities are not recognised. 1.6 Revenue Revenue comprises principally of: Revenue from Exchange Transactions: - Fees charged for services rendered (i.e. Annual admin fees); - Recoveries of expenses incurred in the production of revenue; - Sundry income Revenue from Non-Exchange Transactions (Taxes and Transfers) - Grant funding received from Provincial Government 56

59 ACCOUNTING POLICIES FOR THE YEAR ENDED 31 MARCH 2012 Revenue from Exchange Transactions is recognised on accrual basis using the following methods to determine stage of completion: - Fees charged for services rendered are recognised when they become due in terms of the Eastern Cape Gambling and Betting Act No 5 of Recoveries of expenses incurred in the production of revenue are accrued on completion of service rendered. Revenue from Exchange Transactions is measured at fair value on the date it accrues. Revenue from Non Exchange Transactions: Revenue relating to operational expenditure is recognised in the period in which the transfer agreement becomes binding and is measured at fair value as at the date of recognition. Gambling taxes and fees to the fiscus The gambling taxes and part of the fees collected are paid over to the Provincial Revenue Fund at the end of each month as prescribed by the Gambling and Betting Act. These gambling taxes and fees are not recognised as revenue as they are collected on behalf of the state, however an asset and liability is recognised when taxes and fees become receivable from licensee and payable to the state. Receivable and payables for collection and distribution to the state are initially measured at cost and carried at fair value Accruals Performance bonus Accrual for performance bonus is raised during the year and paid in the following financial year. Leave provision The employees of the Board are entitled to 22 working days per annum as leave gratuity. The policy adopted by the Board is that all its employees should take leave during the year, failing which they will forfeit their leave days on the 30th of June each year. The leave days are recognised as they accrue to employees. The liability is based on the total amount of leave days due to each employee at year end multiplied by each employee's respective daily rate of remuneration which is calculated from the respective employee's gross annual remuneration package. 13th Cheque The employees of the Board can structure their salary package to have a bonus portion (13th cheque) which is paid on the 15th of January each year. The bonus is recognised as it accrues to employees who have elected to structure their salary packages to have a bonus portion. 1.8 Operating Leases Leases where the lessor retains the risk and reward of ownership of the underlying asset are classified as operating leases. Payments made under operating leases are charged to the statement of financial performance on a straight line basis over the period of the lease. 1.9 Fruitless And Wasteful Expenditure Fruitless and Wasteful expenditure means expenditure which was made in vain and would have been avoided had reasonable care been exercised. All expenditure relating to fruitless and wasteful expenditure is recognised as an expense in the statement of financial performance in the year that the expenditure was incurred. The expenditure is classified in accordance with the nature of the expense, and where recovered, it is subsequently accounted for as revenue in the statement of financial performance. 57

60 ACCOUNTING POLICIES FOR THE YEAR ENDED 31 MARCH Irregular Expenditure Where irregular expenditure was incurred in the previous financial year and is only condoned in the following financial year, the register and the disclosure note to the Annual Financial Statements must be updated with the amount condoned. Irregular expenditure that was incurred and identified during the current financial year and which was not condoned by the National Treasury or the relevant authority must be recorded appropriately in the irregular expenditure register. If liability for the irregular expenditure can be attributed to a person, a debt account must be created if such a person is liable in law. Immediate steps must thereafter be taken to recover the amount from the person concerned. If recovery is not possible, the accounting officer or accounting authority may write off the amount as debt impairment and disclose such in the relevant note to the Annual Financial Statements. The irregular expenditure register must also be updated accordingly. If the irregular expenditure has not been condoned and no person is liable in law, the expenditure related thereto must remain against the relevant expenditure item, be disclosed as such in the note to the Annual Financial Statements and updated accordingly in the irregular expenditure register Taxation No provision for taxation has been made as the Eastern Cape Gambling and Betting Board is exempted in terms of Section 10 (1)(cA)(1) of the Income Tax Act (Act No: 58 of 1962) Related Parties The entity operates in an economic sector currently dominated by entities directly or indirectly owned by the South African Government. As a consequence of the constitutional independence of the three spheres of government in South Africa, only entities within the national/provincial/local sphere of government are considered to be related parties Budget Information Comparison of budget and actual amounts are presented in a separate additional financial statement: Statement of Comparison of Budget and Actual amounts. The entity only presents the final budget amounts. Differences (variances) between the actual amounts and budget amounts are also presented. The financial statements and budget are not presented on the same basis as the financial statements are prepared on the accrual basis and the budget on the modified accrual basis of accounting. Reconciliation between the surplus/deficit for the period as per the Statement of Financial Performance and budgeted surplus/ (deficit) is included in the Statement of Comparison of budget and actual amounts.. 58

61 3.9 NOTES TO THE ANNUAL FINANCIAL STATEMENTS For the year ended 31 March TRADE AND OTHER RECEIVABLES FROM EXCHANGE TRANSACTIONS Deposits 16,897 16,897 Mbizana Development Trust (see note 3 below) 1,235, ,542 Sundry debtors 61,163 70,294 Trade debtors 593, ,590 R R 1,907,278 1,557,323 Less: Impairment of trade and other receivables 143, ,000 1,763,818 1,401,323 Fair value of trade and other receivables Trade receivables - Age analysis 120 days 189, days 14,000 37, days 19, , days 233,785 95,656 Current 136, ,256 TOTAL 593, ,590 Trade and other receivables impaired The amount of the impairment was (R ) as of 31 March 2012 (2011: R ) Opening balance 156, ,000 Reconciliation of provision for impairment of trade and other receivables 143, ,146 Utilisation of impairment (156,000) (734,146) 143, ,000 Amounts past due, but not impaired 259,796 95, IMPAIRMENT OF OTHER DEBTORS Impairment of Other Debtors 53,576 - Note: The Board paid salaries for staff employed by Mbizana Development Trust and bursaries for students who are from disadvantaged families pending the appointment of trustees on behalf of the Mbizana Development Trust. The Board expects the Mbizana Development Trust to refund this loan once new trustees have been appointed and they inturn have appointed Directors in their special purpose vehicle which holds shares in Transkei Sun International (Pty) Ltd. The Board expects the Trustees to be appointed within the 2012/13 financial year. 59

62 4. RECEIVABLE ON COLLECTION FOR DISTRIBUTION FROM NON-EXCHANGE TRANSACTIONS Government taxes and levies from non-exchange transactions 8,493,807 6,921,310 R R 5. PREPAYMENTS Business licences 42,386 20,068 Insurance Expenditure 49,340 34,284 Other prepaid expenditure 85, , , , CASH AND CASH EQUIVALENTS Cash and cash equivalents consist of: Bank Balances 8,719,755 52,545,277 Cash on Hand 5,000 2,000 8,724,755 52,547,277 Cash and Bank: Cash is invested with Standard Bank of Southern Africa Limited, which is a reputable bank in Southern Africa and earns interest at 4.90% per annum. 7. PROPERTY, PLANT AND EQUIPMENT Cost/ Valuation Accumulated depreciation and Accumulated impairment Carrying value Cost/ Valuation Accumulated depreciation and Accumulated impairment Carrying Value Buildings 5,232, ,963 4,352,011 5,232, ,790 4,459,184 Cell phones 97,026 72,844 24, ,946 86,204 79,742 Computer equipment 538, , ,092 1,102, , ,521 Fixtures and Fittings 170, ,481 58, , ,527 74,238 Furniture and equipment 799, , ,687 1,110, , ,363 Land 1,070,750-1,070,750 1,070,750-1,070,750 Library Books 215, , , ,980 36,834 Motor Vehicles 1,057, , ,510 1,185, , ,629 R 9,181,790 R 2,345,425 R 6,836,365 R 10,266,378 R 3,139,117 R 7,127,261 60

63 Reconciliation of property, plant and equipment -31 March 2012 Opening Depreciation Additions Disposals Depreciation balance adjustment Buildings 4,459, ,174-4,352,010 Cell phones 79, ,561-24,182 Computer equipment 374, , , ,092 Fixtures and Fittings 74, ,105-58,134 Furniture and equipment 351,363 52,036-98,935 15, ,687 Land 1,070, ,070,750 Library Books 36, ,834 - Motor Vehicles 680, , , , ,510 R 7,127,261 R 654,812 R 271,096 R 658,837 R 15,777 R 6,836,365 Reconciliation of property, plant and equipment 31 March 2011 Opening balance Additions Disposals Depreciation Depreciation adjustment Buildings 4,566, ,967-4,459,184 Cell phones 42,263 97, ,307 6,174 79,742 Computer equipment 327, ,674 8, , ,521 Fixtures and Fittings 94, ,208-74,238 Furniture and equipment 487,894 14,794 26, , ,363 Land 1,070, ,070,750 Library Books 106, ,212-36,834 Motor Vehicles 840, , ,629 R 7,535,482 R 396,494 R 35,391 R 763,150 R 6,174 R 7,127,261 Land and building, comprise a sub-division of Erf 2863, Beacon Bay measuring 2371m2, purchased 2002, together with an office building. Included in property, plant and equipment is surveillance equipment with a cost of R and library books with a cost of R that have been fully depreciated but still in use. 8. RECONCILIATION OF INTANGIBLE ASSETS Description Opening Balance Additions Disposals Transfers Amortization Computer Software - 154, , ,145 R - R154,994 R - R - R 3,849 R 151,145 61

64 Description Summary Computer Software Cost/ Valuation Accumulated Amortization Carrying Value Cost/ Valuation Accumulated Amortization Carrying Value 154,994 3, , R 154,994 R 3,849 R151,145 R - R - R - 9. TRADE AND OTHER PAYABLES FROM EXCHANGE TRANSACTIONS R R Accruals 4,622,849 3,088,274 Elonwabeni (Pty) Ltd (Refer note 27) 5,500,000 - Trade payables 3,020,190 4,047,394 13,143,039 7,135,668 Trade and other payables are recorded at fair value. 10. COLLECTIONS FOR DISTRIBUTION FROM NON-EXCHANGE TRANSACTIONS Exclusivity fee - 42,737,750 Taxes and levies 8,741,716 9,583,445 8,741,716 52,321, REVENUE Revenue From Exchange Transactions: The amounts included in revenue arising from exchange of services are as follows: Bad Debts Recovered 156,000 - Fees 3,396,459 3,229,574 Recoveries 2,507,196 4,301,481 Sundry income 45,632 21,231 6,105,287 7,552,286 Revenue from non-exchange transactions: The amount included in revenue arising from non-exchange transactions is as follows: Government Funding - Department of Economic Development, Environmental Affairs and Tourism 31,187,000 23,338,000 62

65 12. EMPLOYEE COSTS R R Basic Salary 9,893,859 8,931,539 Casual Labour 61,288 - Insurance 65,867 54,193 Medical Aid - Company Contributions 661, ,795 Other Non-Pensionable Allowances 1,052,196 1,096,500 Pension 1,082, ,099 Performance Awards 1,632,455 2,189,622 Recruitment Costs 219, ,701 Unemployment Insurance Fund 44,495 41,298 14,713,370 14,119,747 Senior Management Remuneration: Remuneration of the Chief Executive Officer Allowances 120, ,000 Bonus 315, ,500 Fund contributions 194, ,584 Salary 1,066,938 1,109,090 1,696,738 1,742,174 Remuneration of the Chief Financial Officer Allowances 108, ,000 Bonus 100, ,992 Fund contributions 87,186 60,917 Salary 666, , ,912 1,240,422 Remuneration of the Compliance & Licensing Manager Allowances 108, ,000 Bonus 182, ,761 Fund contributions 120, ,271 Salary 602, ,930 1,013,090 1,501,962 SENIOR MANAGMENT REMUNERATION 3,672,740 4,484,558 63

66 13. OTHER OPERATING EXPENSES R R Bi-Lateral Relations 21, ,890 Canteen And Catering 143, ,910 Communication Costs 552, ,778 Computer Consumables 22,925 28,533 Courier And Delivery Charges 65,090 17,740 Fuel, Oil And Licenses 94,414 70,554 Insurance Premiums 150, ,908 License Fees - Software Packages/Purchases 44,565 43,553 Losses Written Off 22,028 (667) Maintenance And Repairs: Machinery, Equipment And Other 95,123 90,551 Maintenance And Repairs: Property And Buildings 32,815 13,051 Municipal Services 384, ,388 Rentals In Respect Of Operating Leases - Plant, Machinery And Equipment 215,824 71,880 Security Services 392, ,473 Software - Annual License Fees 112,510 6,057 Staff Wellness And Team Building 124,740 49,547 Uniforms And Corporate Clothing; Crockery 2, ,179 Year-End Function 61,926 63,742 2,540,313 1,899, ADMINISTRATIVE EXPENSES R R Bank Charges 30,420 39,689 Board Of Directors - Fees 1,501,450 2,291,678 Board Of Directors - Travel And Subsistence 693,945 68,806 Consultation Fees 2,342,403 3,553,720 Evaluation And Hearings 608,457 1,899,822 Inspection And Investigation 530, ,049 Stationery And Printing 354, ,368 Training And Staff Development 2,307,228 2,314,410 Travelling And Subsistence 1,581,886 1,424,489 9,950,531 12,198, STATUTORY AUDIT FEES Statutory Audit - Auditor-General 1,240,000 1,692,806 64

67 16. MARKETING COSTS The costs for research and public education include the following: R R Advertising, Subscription And Publications 793, ,617 Research And Public Education 2,339,420 1,568,786 3,133,237 2,102, OPERATING LEASE COMMITMENTS Minimum Lease Payments Due: - Within One Year 226, ,742 - In Second Year 250, ,383 Present value of minimum lease payments 476, ,125 The Eastern Cape Gambling and Betting Board entered into operational lease agreements with the following terms: Four photocopy machines for a period of 36 months with a minimum monthly charge of R4 679, which remains constant. The machines will be returned to the hirer at the end of the period. The lessor is required to provide maintenance for the equipment during the period of the agreement. A PABX and conference phone system are leased for a period of 36 months with minimum monthly charges of R5 913 and R1 005, respectively. The equipment will be returned ot the lessor at the end of the lease period. 18. TRAINING AND DEVELOPMENT COSTS R R Overseas Travel Car Hire 1,600 16,053 Registration Daily Allowance 178,313 32,412 Training 75,318 - Travel And Accommodation 828,007 1,548,982 Local Travel Car Hire 45,936 41,223 Registration Daily Allowance 156, ,931 Training 484,869 - Travel And Accommodation 416, ,675 Bursary Accomodatiom 41,107 33,798 Registration Fees & Books 44,426 43,971 Subsistence And Travel 34,602 42,366 2,307,228 2,314,411 Included in the training costs is travel and accommodation that relates to overseas conferences attended by Board members and Senior Management during the year under review. The costs for this line item has always been budgeted for under training, as well as under research and development, and is reported as such in the annual financial statements. 65

68 19. FINANCE INCOME R R Interest Revenue Bank 413, ,830 Debtors 36,744 23, , , TAXATION The income of the Board is exempt from taxation in terms of section 10(1) (ca) of the Income Tax Act no 58 of CASH (USED IN) GENERATED FROM OPERATIONS Deficit (4,565,513) (4,330,264) Adjustments For: Allowances For Losses 197, ,000 Depreciation 662, ,150 Gain On Sale Of Assets And Liabilities - 26,808 Interest Income (449,804) (568,095) Loss On Disposal Of Assets 122,096 (1,001) Changes In Working Capital: Trade And Other Payables (37,556,333) 44,927,675 Trade And Other Receivables (2,021,688) 9,705 (43,611,520) 40,983, RELATED PARTIES Relationships a) Administrator of Mbizana Development Trust: R M Zwane - Chief Executive Officer The Chief Executive Officer was appointed by the High Court as the administrator of the Mbizana Development Trust on 19th of August This resulted in the trust being a related party to the Eastern Cape Gambling and Betting Board due to significant roles the Chief Executive Officer assumed in the operations of the trust. There were no transactions between the Eastern Cape Gambling and Betting Board and those members of the key management personnel and companies in which key management personnel have an interest in, during the year under review. b) Senior Management R M Zwane - Chief Executive Officer J T Harper - Chief Financial Officer B L Jaxa - Compliance and Licensing Manager Salaries for key management personnel are disclosed in note 12. c) RB and Associates During April 2012, Mr O Mtati, a Board Director, was appointed as a director and became a shareholder in RB and Associates. d) Eastern Cape Parks and Toursim Agency The Eastern Cape Parks and Tourism Agency (ECPTA) is a schedule 3C entity under the DEDEAT family of public entities. During the year under review the ECPTA had earmarked funds to procure a promoter for the hosting of a 66

69 boxing event in the Eastern Cape. ECPTA was unable to successfully secure a promoter and the earmarked funds were transferred to ECGBB to sponsor the event. ECPTA entered into a partnership agreement with ECGBB whereby ECPTA transferred R to the Board. This transfer was used by the Board to sponsor an international fight on behalf of ECPTA.. e) Related party transactions included in exchange transactions Opening Balance: Amatola Trust 18,977 - Mbizana Development Trust 932, ,761 Reimbursement Amounts Paid By: Amatola Trust 18,977 - Mbizana Development Trust 932, ,357 Additional Amounts Paid On Behalf Of: Amatola Trust - - Mbizana Development Trust 1,235,531 - Outstanding Amounts At Year End Amatola Trust - 18,977 Mbizana Development Trust 1,235, ,542 R R The costs were incurred by the entity while the Trusts were experiencing operational challenges. In instances where there were amounts outstanding at year end, these were included in receivable and in some instances were paid post year-end by the Trusts. 23. BOARD MEMBERS EMOLUMENTS Board Fees Expenses Allowances 2012 Sub Committees Other 31 March 2012 R R R R R For Services As Directors 878, , ,250 1,501, March 2011 For Services As Directors 477,000 68,809-1,814,675 2,360,484 A new Board of Directors was appointed 01/04/2011. Detailed Board members emoluments: Board Members Board Fees Retainer 2012 Board Committee Fees Training Overseas & Local R R R R R Adv N Mayosi 183, ,000-55, ,050 M Vena 119,000-59,500 25, ,000 O Mtati 159,000-50,300 34, ,300 P Voges 153,000-62, ,800 Y Makhasi 102,000-22,000 8, ,500 Z Nomafu 161,500-37,700 17, ,200 V Tshangana P Nqakula , , , ,250 1,394,850 67

70 Audit Committee Members H Marsberg ,400-30,400 L Smith ,000-42,000 P White ,800-22,800 R J Hill (Prior Member) - - 7,600-7,600 S Whitfield (Prior Member) - - 3,800-3, , ,600 TOTAL 878, , , ,250 1,501, RISK MANAGEMENT Liquidity risk The Board manages liquidity risk through an ongoing review of future commitments. Cash flow forecasts are prepared and monitored. 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). The following table illustrates the sensitivity of the entity to interest rate changes should interest rates increase or decrease with 2% during the next financial year: R R -2% -2% Decrease in net deficit for the year 93, ,238 2% 2% Increase in deficit for the year 93, ,238 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 therefore has no concentration of credit risks. The Board s maximum exposure to credit risk is equal to the cost amount of the financial assets at balance sheet date and is summarised as below: Cash and cash equivalents 8,724,755 52,547,277 Receivables on collection for distribution 8,493,807 6,921,310 Trade and other receivables from exchange transactions 1,763,818 1,401,323 As of 31 March 2012, trade and other receivables were impaired with an amount of R The age analysis of financial assets are indicated in note 2 and note 3. R R 25. FINANCIAL INSTRUMENTS The table below indicates the different classes of financial instruments. The carrying value approximate their fair value. Loans and receivables are non-derivative financial assets and financial liabilities with fixed or determinable payments that are not quoted in an active market other than those that the entity intends to sell, those that the entity upon initial recognition, designates as available for sale; or those for which the holder may not recover substantially all of its initial investment. 68

71 Available for sale financial instruments are those derivative financial assets that are designated as available for sale or are not classified loans and receivables, held-to-maturity investments or financial assets at fair value through profit or loss. Receivables/ Loans Available for sale 31 March 2011 R R Financial Assets Cash And Cash Equivalents 52,547,277 Prepayments 287,579 Receivable On Collection For Distribution 6,921,310 - Trade And Other Receivables From Exchange 1,401,323 - Financial Liabilities' Payable On Collection For Distributions (52,321,195) - Trade And Other Payables From Exchange (7,135,668) - 31 March 2012 Financial Assets Cash And Cash Equivalents 8,724,755 Prepayments 177,239 - Receivable On Collection For Distribution 8,493,807 - Trade And Other Receivables From Exchange 1,763,818 - Financial Liabilities' Payable On Collection For Distributions (8,741,716) - Trade And Other Payables From Exchange (13,143,039) GOING CONCERN The entity receives an annual Government grant and prepares its budget on the basis of such grant. The entity is not able to generate sufficient cash flows from its core business to cover its operations. As such, the entity is dependant for its continued operation in the foreseeable future on continued Government financial support. Management have determined that such support is reasonably expected to continue and therefore have prepared these Annual Financial Statements on the going concern basis. 27. EVENTS AFTER THE REPORTING DATE Elonwabeni applied for a casino license in Zone 4(Mthatha) in 2005 and were unsuccessful. Following this, Elonwabeni sucessfully challenged the award of the Casino License and on the 31st October 2011, the ECGBB was ordered by the Supreme Court of Appeal to issue the license subject to terms and conditions of its application in The said license was issued by the Board on 28 th March The ECGBB has on the 23 rd May 2012 sucessfully entered into negotiations with Elonwabeni Resorts to cancel the license which will result in the Board issuing a new request for Proposal RFP. The Board has provided an amount of R5.5 m for this purpose which has been raised and disclosed in Note 9 of the Financial Statements. 28. IRREGULAR EXPENDITURE Details of irregular expenditure R R Over Expenditure Of The Budget - As Previously Reported - 1,657,835 Correction Of Prior Period Error - -1,657,835 Non Adherence To SCM Policies And Procedures 449, ,504-69

72 In the prior year the formal process of the Board approving over-expenditure was not followed. In the current year the Board has approved the over-expenditure. However, during 2012 it was established that such expenditure did not in fact meet the definition of irregular expenditure as definied by the PFMA, and as such the disclosure of irregular expenditure in 2011 has been amended. 29. CRIMINAL OR DISCIPLINARY STEPS TAKEN AS A CONSEQUENCE OF MATERIAL LOSSES 30. BUDGET VERSUS ACTUAL Reconciliation - Budget surplus/(deficit) with surplus/(deficit) per statement of financial performance: R R Net Deficit Per The Statement Of Financial Performance Zone 4 Settlement Not Budgeted For (Refer To Note 27) -4,565,513-4,330,264 5,500,000 Over Budget: Revenue From Exchange Transactions 263,691 Debt Impairment Not Budgeted For 197,036 Loss On Sale Of Property, Plant And Equipment 122,097 (Under)/Over Budget: Expenditure (1,082,311) 2,672,429 Net profit / (deficit) per approved budget 435,000 (1,657,835) 31. CORPORATE SOCIAL INVESTMENT The Board has sponsored various schools and sporting codes as part of its Corporate Social Investment. The schools are a junior secondary school and a creche. The sporting codes include boxing, hockey and marathon running. 32. LEGAL FEES The Board has engaged the services of various legal firms to provide legal advice on the following matters: Legislation Review Route Operator Licence Zone 4 Casino Licensing Process Mbizana Development Trust Bingo RFP. 70

73 71

74 4. HUMAN RESOURCE INFORMATION MANAGEMENT Table 1.1 Main Service For Service Delivery Improvement And Standards Main Services Actual Customers Potential Customers Standard of Service Actual Achievement against Standards Gambling Regulation Casino, Horse Racing Industry and Route Operators - High High Table 2.1 Personnel Costs by Programme Programme Eastern Cape Gambling & Betting Board Expenditure Personnel Expenditure Training Expenditure Professional & Special Services Personnel Costs as % of Expenditure Average Personnel Costs per Employee Employment Table 2.2 Personnel Costs by Salary Band Lower Skilled (Band B1-B2) Salary Bands Personnel Expenditure % of Personnel Costs Average Personnel Cost per Employee Personnel Expenditure Number of Employees Skilled (Band B3-B5) Highly skilled production (Band C1-C5) Highly skilled supervision (Band D1-D3) Senior management (Band D4-E1) TOTAL 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 TOTAL Table 2.4 Salaries, Overtime, Home Owners Allowance & Medical Aid by Salary Band Salary Bands Lower Skilled (Band B1 - B2) Salaries Salaries as % of Personnel Costs Overtime Over-time as % of Personnel Costs HOA HOA as % of Personne l Costs Medical Ass. Medical Ass. as % of Personnel Costs Personnel Costs Skilled (Band B3 - B5) Highly Skilled Production (Band C1 - C5) Highly Skilled Supervision (Band D1 - D3) Senior Management

75 Salary Bands Salaries Salaries as % of Personnel Costs Overtime Over-time as % of Personnel Costs HOA HOA as % of Personne l Costs Medical Ass. Medical Ass. as % of Personnel Costs Personnel Costs (Band D4 - E1) TOTAL 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 Lower skilled (Band A1 - B2) Salary Band Number of Posts Number of Posts Filled Vacancy Rate Number of Posts Filled Additional to the Establishment Skilled (Band B3 - B5) Highly Skilled Production (Band C1 - C5) Highly Skilled Supervision (Band D1 - D3) Senior Management (Band D4 - E1) TOTAL Table 4.1 Job Evaluation Salary Band Lower skilled (Band A1 - B2) 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 Skilled (Band B3 - B5) Highly Skilled production (Band C1 - C5) Highly Skilled Supervision (Band D1 - D3) Senior Management (Band D4 - D5) Senior Management Service (Band E1 - E2)

76 Table 4.2 Profile of Employees Whose Positions Were Upgraded, Following Upgrading of Their Posts Beneficiaries African Asian Coloured White Female Male Employees with Table 4.3 Employees Whose Salary Level Exceed the Grade Determined by Job Evaluation (ito PSR 1.V.C.3) Occupation Number of Employees Manager: Legal Services 0 System Analyst 0 0 % of Employment 0 Job Evaluation Level Remuneration Level Reason for Deviation No of Employees in Dept Table 4.4 Profile of Employees Whose Salary Level Exceeded the Grade Determined by Job Evaluation (ito PSR 1.V.C.3) Beneficiaries African Asian Coloured White Female Male Employees with Disabilities 0 Table 5.1 Annual Turnover Rates by Salary Band Lower Skilled (Band B1 - B2) Skilled (Band B3 - B5) Salary Band Highly Skilled Production (Band C1 - C5) Highly Skilled Supervision (Band D1 - D3) Senior Management Service (Band D4 - D5, Permanent) Senior Management Service (Band E1 - E2, Permanent) Employment at Beginning of Period Appointments Terminations Turnover Rate TOTAL Table 5.2 Annual Turnover Rates by Critical Occupation Occupation Employment at Beginning of Period Appointments Terminations Turnover Rate NO CRITICAL POSTS IDENTIFIED 74

77 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 Discharged Due to Ill Health - Permanent Dismissal, Misconduct - Permanent Retirement - Permanent TOTAL Resignations as % of Employment 0.00% 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 Notch progressions as a % of Employment NO CRITICAL POSTS IDENTIFIED 0 0 TOTAL Table 5.5 Promotions by Salary Band Salary Band Lower Skilled (Band B1 - B2) 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 Skilled (Band B3 - B5) Highly Skilled Production (Band C1 - C5) Highly Skilled Supervision (Band D1 - D3) Senior Management (Band D4 - E1) TOTAL Table 6.1 Number of Employees (incl. employees with disabilities) per Occupational Category (SASCO) Occupational Category Senior Officials And Managers, Permanent Male, African Male, Coloured Male, Indian Male, Blacks Male, White Female, African Female, Coloured Female, Indian Female, Blacks Female, White TOTAL

78 Occupational Category Professionals, Permanent Clerks, Permanent Service And Sales Workers, Permanent Craft And Related Trades Workers, Permanent Plant And Machine Operators And Assemblers, Permanent Elementary Occupations, Permanent Male, African Male, Coloured Male, Indian Male, Blacks Male, White Female, African Female, Coloured Female, Indian Female, Blacks Female, White TOTAL Employees With Disabilities Table 6.2 Number of Employees (incl. employees with disabilities) per Occupational Bands Occupational Bands Top Management, Permanent Senior Management, Managers, Permanent Professionally Qualified And Experienced Specialists And Mid- Management, Permanent Skilled Technical And Academically Qualified Workers, Junior Management, Supervisors, Foremen, Permanent Semi-Skilled And Discretionary Decision Making, Permanent Unskilled And Defined Decision Making, Permanent Male African Male Coloured Male Indian Male Blacks Male White Female African Female Coloured Female Indian Female Blacks Female White TOTAL

79 Table 6.3 Recruitment Occupational Bands Senior Management, Managers, Permanent Professionally Qualified And Experienced Specialists And Mid- Management, Permanent Skilled Technical And Academically Qualified Workers, Junior Management, Supervisors, Foremen, Permanent Male African Male Coloured Male Indian Male Blacks Male White Female African Female Coloured Female Indian Female Blacks Female White TOTAL Table 6.4 Promotions Occupational Bands Male African Male Coloured Male Indian Male Blacks Male White Female African Female Coloured Female Indian Female Blacks Female White Senior Management, Managers, Permanent Skilled Technical and Academically Qualified Workers Professionally Qualified and Experienced Specialists TOTAL Table 6.5 Terminations Occupational Bands Senior Management, Managers, Permanent Professionally Qualified and Experienced Specialists and Mid-Management, Permanent Skilled Technical and Academically Qualified Workers, Junior Management, Supervisors, Foremen, Permanent Male African Male Coloured Male Indian Male Blacks Male White Female African Female Coloured Female Indian Female Blacks Female White

80 Occupational Bands Semi-skilled and Discretionary Decision Making, Permanent Unskilled and Defined Decision Making, Permanent Male African Male Coloured Male Indian Male Blacks Male White Female African Female Coloured Female Indian Female Blacks Female White TOTAL Table 6.6 Disciplinary Action Disciplinary Action Male African Male Coloured Male Indian Male Blacks Male White Female African Female Coloured Female Indian Female Blacks Female White TOTAL Table 6.7 Skills Development Occupational Categories Legislators, Senior Officials And Managers Male African Male Coloured Male Indian Male Blacks Male White Female African Female Coloured Female Indian Female Blacks Female White Professionals Technicians And Associate Professionals Clerks Service And Sales Workers Employees With Disabilities Table 7.1 Performance Rewards by Race, Gender & Disability Number of Beneficiaries Employment % of Employment Cost Average Cost per Beneficiary African, Female African, Male White, Male White, Female Indian, Female Employee with a disability TOTAL

81 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 (Band B1 - B2) Skilled (Band B3 - B5) Highly Skilled Production (Band C1 - C5) Highly Skilled Supervision (Band D1 - D3) TOTAL Table 7.3 Performance Rewards by Critical Occupation Critical Occupations Number of Beneficiaries Employment % of Employment Cost Average Cost per Beneficiary NO CRITICAL OCCUPATIONS IDENTIFIED TOTAL Table 7.4 Performance Related Rewards (Cash Bonus) by Salary Band for Senior Management Service SMS Band Number of Beneficiaries Employment % of Employment Cost Average Cost per Beneficiary % of SMS Wage Bill Personnel Cost SMS Band - D Band - D Band - E TOTAL Table 8.1 Foreign Workers by Salary Band Salary band Lower Skilled (Level 1-2) Skilled (Level 3-5) Employment at Beginning Period % Of Employment at End of Period % Of Change in Emplo y-ment % Of Employment at Beginning of Period Employment at End of Period Change in Employment Highly Skilled Production (Level 6-8) Highly Skilled Supervision (Level 9-12) NO FOREIGN WORKERS EMPLOYED Senior Management (Level 13-16) NO FOREIGN WORKERS EMPLOYED 79

82 Salary band Employment at Beginning Period % Of Employment at End of Period % Of Change in Emplo y-ment % 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 of Period % of Employment at End of Period % of Chang e in Emplo y-ment % of Employment at Beginning of Period Employment at End of Period Change in Employment NO FOREIGN WORKERS EMPLOYED TOTAL Table 9.1 Sick Leave for Jan 2010 to Dec 2010 Salary Band Days % Days with Medical Certificate Number of Employees Using Sick Leave % of 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 B1 - B2) Skilled (Levels B3 - B5) Highly Skilled Production (Levels C1 - C5) Highly Skilled Supervision (Levels D1 - D3) Senior Management (Levels D4 - E1) TOTAL Table 9.2 Disability Leave for Jan2010 to Dec 2010 Salary Band Days % Days with Medical Certificate Number of Employees Using Disability Leave % of Employees Using Disability Leave Average Days per Employee Estimated Cost (R 000) Number of Employees Using Disability Leave Number of Days with Medical Certificate N/A TOTAL

83 Table 9.3 Annual Leave for Jan 2010 to Dec 2010 Salary Band Days Taken Average per Employee Employment Lower Skilled (Levels B1 - B2) Skilled (Levels B3 - B5) Highly Skilled Production (Levels C1 - C5) Highly Skilled Supervision (Levels D1 - D3) Senior Management (Levels D4 - E1) TOTAL Table 9.4 Capped Leave for Jan 2010 to Dec 2010 Level Days of Capped Leave Taken Average Number of Days Taken per Employee Average Capped Leave per Employee at 31 December 2003 Number of Employees Number of Capped Leave Available at 31 December 2003 Number of Employees as at 31 December 2003 Lower Skilled (Levels B1 - B2) Skilled (Levels B3 - B5) Highly Skilled Production (Levels C1 - C5) Highly Skilled Supervision (Levels D1 - D3) Senior Management (Levels D4 - E1) NO CAPPED LEAVE TO BOARD EMPLOYEES TOTAL 0 0 Table 9.5 Leave Payouts Reason Amount Number of Employees Average Payment per Employee Capped Leave Payouts on Termination of Service for 2010/11 NO CAPPED LEAVE Current Leave Payout on Termination of Service for 2010/11 - R66, TOTAL 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) Key Steps Taken To Reduce Risk No steps taken 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 ECGBB designated a member of the SMS to implement the provisions contained in Part VI E of Chapter 1 of the Public Service Regulations, 2001? If so, provide her/his name and position. 2. Does the ECGBB 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. M Tokota HR Manager M Mame, S Renga, W Smit, H D Alton 81

84 Question YES NO Details, if any 3. Has the ECGBB introduced an Employee Assistance or Health Promotion Programme for your employees? If so, indicate the key elements/services of the programme. 4. Has the ECGBB 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 ECGBB 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 ECGBB 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 ECGBB encourage its employees to undergo Voluntary Counselling and Testing? If so, list the results that you have achieved. 8. Has the ECGBB 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 Date No collective agreements undertaken Table 11.2 Misconduct & Disciplinary Hearings Finalised Outcomes of disciplinary hearings Number % of TOTAL Table 11.3 Type of Misconduct Addressed & Disciplinary Hearings Type of Misconduct Number % of Misconduct 0 0 TOTAL 0 0 Table 11.4 Grievances Lodged Number of grievances addressed Number % of Resolved 0 Not resolved 1 100% TOTAL 1 Table 11.5 Disputes Lodged Number of disputes addressed Number % of total Upheld No disputes lodged Dismissed TOTAL 0 82

85 Table 11.6 Strike Actions Strike Actions number of person working days lost cost (R'000) of working days lost NONE Amount (R'000) recovered as a result of no work no pay Table 11.7 Precautionary Suspensions Precautionary Suspensions Number of people suspended 0 Number of people whose suspensions exceeded 30 days 0 Average number of days suspended 0 Cost (R'000) of suspensions 0 Table 12.1 Training Needs Identified Occupational Categories Gender Employment Learnerships Legislators, Senior officials and Managers Skills Programmes & Other Short Courses Other Forms of Training Female Male Professionals Female Male Technicians and Associate Professionals Female Male Clerks Female Male Table 12.2 Training Provided Occupational Categories Gender Employment Learnerships Legislators, senior officials and managers Skills programmes & Other Short Courses Other forms of training Female Male Professionals Female Technicians and associate professionals Male Female Male Clerks Female

86 Occupational Categories Gender Employment Learnerships Skills programmes & Other Short Courses Other forms of training Male Table 13.1 Injury on Duty Nature of injury on duty Number % of total Required Basic Medical Attention Only 1 Temporary Disablement 1 Permanent Disablement 0 Fatal 1 3 Table 14.1 Report on Consultant Appointments using Appropriated Funds Number of Consultants that Project Title Worked on the Project Duration: Work days Contract Value in Rand PWC Internal Auditors Softline VIP STBB Consulting Navision Le Roux Attorneys Wilson Consulting T Thomas & Sons number of projects Table 14.2 Analysis of Consultant Appointments using Appropriated Funds, ito HDIs Percentage Percentage Ownership Number of Consultants from HDI Project Title Management by by HDI Groups Groups That Worked On the Project HDI Groups Marketing, Strategy Session, Quantity Surveyors TOTAL Table 14.3 Report on Consultant Appointments using Donor Funds Number of Project Title Consultants that Worked on the Project NO CONSULTANTS USED Duration: Work days Donor and Contract Value in Rand Number of Projects Individual Consultants Duration: Work Days Contract Value in Rand NO CONSULTANTS USED Table 14.4 Analysis of Consultant Appointments using Donor Funds, ito HDIs Percentage Percentage ownership by Project Title management by HDI HDI groups groups Number of consultants from HDI groups that work on the project NO CONSULTANTS USED 84

87 85

88 5. ACRONYMS AND ABBREVIATIONS AFS AGSA APP BOARD BM BSC CAS CEO CFO CSR DEDEAT EAP ECGBB EME FICA GGR HOD IDP IEC IT LOC LPMs MEC MOU MSP MTEF MTREF NGB NPA NRGP OCC PFMA PGDP RFP RO SAACREG SAPS SARS SED SITE A SITE B SLA SMART TOTE WAN Annual Financial Statement Auditor-General of South Africa Annual Performance Plan Eastern Cape Gambling and Betting Board Bookmaker Balance Score Card Casino Chief Executive Officer Chief Financial Officer Corporate Social Responsibility Department of Economic Development, Environmental Affairs and Tourism Economically Active Population Eastern Cape Gambling and Betting Board Exempted Medium Enterprises Financial Intelligence Centre Act Gross Gaming Revenue Head of Department Integrated Development Plan Information Education Communication Information Technology Letter of Certification Limited Payout Machines Member of the Council Memorandum of Understanding Master Services Plan Medium Term Expenditure Framework Medium Term Revenue and Expenditure Framework National Gambling Board National Prosecuting Authority National Responsible Gambling Programme Operational Changes Committee Public Finance Management Act Provincial Growth and Development Plan Request For Proposal Route Operator South African Advisory Council for Responsible Gambling South African Police Service South African Receiver of Revenue Socio-Economic Development Three to five machines Twenty to forty machines Service Level Agreement Specific, Measurable, Achievable, Realistic and Time bound isator Wide Area Network 86

89 NOTES 87

90 Publisher Eastern Cape Gambling and Betting Board Quenera Park, Quenera Drive Beacon Bay East London 5205 P.O. Box Beacon Bay East London Tel: Fax: Layout, Design Copyworld, on behalf of the ECGBB Tel: Printing Copyworld, on behalf of the ECGBB Tel: