HON Mr. Fikile Mbalula MINISTER OF SPORTS Contents Chairperson’s Report 4 - 5 Introduction by the Acting Chief Executive Officer 6 - 7 Human Resource Report 8 BSA Board Members 9 Performance Information 10 - 21 Report of the Audit Committee 22 - 23 Report of the Auditor General 19 - 26 Board Members’ Report 27 - 28 Boxing Awards 2010/11 29 - 32 Annual Financial Statements 38 Statement of Financial Position 41 Statement of Financial Performance 42 Statement of Changes in Net Assets 43 Statement of Cash Flows 44 Accounting Policies 45-58 Notes to the Annual Financial Statements 59-76 Detailed Statement of Financial Performance 77-78
BSA Annual Report 2010/11 Vision
To create a world class regulatory body for boxing in a united and safe environment.
Mission
To enhance the capacity of all stakeholders to improve the quality, passion and popularity of professional boxing in South Africa and Internationally. Values
Boxing SA is founded on the following values and culture:
• Fairness • Respect • Honesty • Excellence • Accountability • Discipline • Ambition • Passion • Consistency CHAIRMAN’S REPORT
Dr. Malefetsane Peter Ngatane
oxing South Africa (BSA) in the year under review In spite of the adverse financial situation BSA held very operated under tremendous pressure. This was both successful boxing tournaments throughout the country. A onB the financial and human resource fronts. The world total of 79 tournaments were held, wherein 21 featured South was still engulfed in a severe global economics recession. Africa Titles, 18 International Bouts as well as 40 Development South Africa and all its facets could not escape. Professional Tournaments (Nursery Tournaments). Female Boxers and Boxing has sponsorship as part of its major challenges. This Ring Officials featured prominently and successfully in all of has severely hampered activities in our sport and needs the above. Due to the non-televising of boxing tournaments ongoing urgent attention. by the SABC, Boxing suffered tremendously both on the viewership and financially. Most of the BSA revenue is BSA held its Annual Boxing Awards Ceremony in Durban, derived from sanctioning fees of tournaments. This situation KwaZulu-Natal. The ceremony was held on the 19th February contributed negatively in exacerbating the already dire state 2011. This event was linked with the Mass Participation of BSA finances. event. Due to the ongoing human resources and managerial challenges, there were organization problems that made In August 2010 The Minister of Sports and Recreation, Dr. the event not be of optimal standard. The BSA was ably Rev Stofile, appointed to the Board of Boxing South Africa assisted by the KZN Department of Sport and the Sport and additional three members to bring the totally of members to Recreation of South Africa (SRSA). seven (7) which is the number prescribed by the Boxing Act of 2001. With the full quota of the stipulated Board members 6 BSA could hold meetings and activities as required by the
BSA Annual Report 2010/11 Act. Financing the organization remained a challenge. BSA has not as yet been properly funded for it to satisfactorily address and carry out its activities as per the Act mandate.
In January 2011, the board of BSA embarked on a search for a permanent CEO, as Mr. Mtya was still acting. The process was completed on the 27th January 2011 lists of recommended candidates were submitted to the new Minister of Sport and Recreation Mr. Fikile Mbalula. The Minister identified Mr. Moffat Qithi to be the CEO of Boxing South Africa.
The AFS were submitted to the AG on time. Some of the queries from the previous audits were addressed though not adequately. All this resulted in a qualified report from the Auditor General (AG). The AG identified as contributing factors, poor Human Resources situation and Financing.
I would like to take this opportunity to personally and on behalf of the Board to pass gratitude to the staff of BSA both in the Head Office and those running the Provincial Offices of BSA (these are still to be promulgated by the Boxing Act).
Dr. Malefetsane Peter Ngatane Chairperson of the Board
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BSA Annual Report 2010/11 INTRODUCTION BY ACTING CHIEF EXECUTIVE OFFICER
Loyiso Mtya : Acting CEO
n the year under review, Boxing SA continued on the path • Do overall risk assessment of the entity it had already set in its quest to improve its image and • Revised Policies to address risks identified restoreI the public faith, the confidence of the stakeholders, • Drafted new policies that were necessary but did as well as all other prospective players across the domain. not exist • Introduced Action Plans for improvement in the Financial Management control of finances As our main challenge has historically been on the financial • Monitored the Action Plans monthly for continuity management front, special attention had to be given to this aspect for boxing to improve its standing. This was mainly The new Policies were approved on 6 May 2011 and brought about by the absence of a CFO to provide proper immediately implemented. Proper monitoring is taking guidance and prepare financial reports, as well as add place. Unfortunately because of the late implementation of influence on financial decision making. these measures, the significant improvements effected may not reflect in the current year, but will certainly shape the Only towards the end of the financial year could a Financial future. Management Consultant be appointed. This appointment certainly eased the situation and added on the effort in Based on the above mentioned strategy, and the appointment the financial department. Since the appointment, we have of the CEO with effect from 1 June 2011, I am confident that achieved the following; there will be smooth progress and improvement in the next 8 financial year.
BSA Annual Report 2010/11 Tournaments New strategies were introduced in the processes of conducting the ratings and sanctions programs. This was aimed at improving the quality of boxers challenging for National titles thus resulting in better matches.
Development and Educational Programs Boxing SA took a strategic decision to expose the current ______boxers to future wealth creation opportunities through the Loyiso Mtya New Venture Creation Program. A partnership was formed Acting CEO with EDULINK to run the skills program.
The program was designed to empower licenses on effective life management skills and allow them to maximize their personal potential. It is also designed to guide them on the necessary considerations they must take into account in creating a sustainable living during and after their boxing days.
Female Boxing South African female boxing continues to grow as female bouts were included in development and National title promotions. This effort came into fruition when female boxer Kabisile Tshabalala won the BSA award for Prospect of the Year.
The reigning WBF Female World Champion Noni Tenge earned a rating by the more recognizable IBF world sanctioning body, another historic punch for South African boxing.
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BSA Annual Report 2010/11 HUMAN RESOURCE STATISTICAL COMPOSITION
BSA Occupational Provincial Status Gender BSA Staff Manager African Indian Coloured White
Male 0 0 0 0 0 0
Resignations Female 0 0 0 0 0 0
Male 0 0 0 0 0 0
Dismissal Female 0 0 0 0 0 0
Appointments Male 2 2 1 1 0 0
Male 5 6 10 0 0 1 Current Staff Permanent Staff Female 6 0 3 1 2 0
Male 1 0 1 0 0 0
Contracts Female 0 0 0 0 0 0
Consultants - Staff Female 1 0 0 1 0 0
Notes # Boxing South Africa appointed the CEO with effect from 1 June 2011 (Subsequent event). * The Financial Management Consultant was appointed with effect from 1 January 2011 on a six months contract.
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BSA Annual Report 2010/11 BOXING SA BOARD MEMBERS AS AT MARCH 2011
Dr. Malefetsane Peter Ngatane Mr. Claude Bassuday Mr. Solly Selebi
Mr. Archie Jonas Mr. Sakhiwe Sodo Mr. Mark Syfris
11 Mr. Andile Sidinile
BSA Annual Report 2010/11 PERFORMANCE INFORMATION
Introduction
Boxing SA is a Schedule 3 Public Entity under the executive authority of the Department of Sport and Recreation. It has been established as a successor to the formerly known as South African National Boxing Control Commission in terms of the Parliament Act 11 of 2001, Boxing Act.
Boxing SA’s leadership has substantially adjusted the Strategic Plan in a context that meets the requirements of the Treasury Regulations 5.2, covering measurable objectives and outputs for the programmes of Boxing SA and the multi‑year projections of baseline allocations and expenditure.
Important areas of work were prioritized and added to the strategic plan and targets that were no longer pertinent were amended accordingly so that they are in alignment with the adjusted strategic plan. The strategic objectives need regular monitoring. Boxing SA did not have a permanent CEO and CFO during the 2010/2011 financial year.
The strategic goal of Boxing SA is to ensure effective and efficient administration of boxing in South Africa. Boxing SA’s strategic course was significantly focused on the achievement of this goal during 2010/2011 and for this reason the organization’s performance is reported in terms of its core mandates.
Functions and duties of BSA
The duties and powers of Boxing SA as contained in section 8 of the Boxing Act, are the following:
(a) Compile and publish information statistics and annual report on its activities;
(b) Assist in the establishment of an association or federation of associations;
(c) (i) Hold meetings at least four times a year;
(ii) Hold meetings at its request, or at the request of the associations, or federation of such associations to discuss boxing matters;
(d) Consider applications for recognition of international boxing bodies or organizations and their boxing champions.
Mandate of Boxing SA
Boxing SA has the statutory mandate premised on the objects of the Act in Section 2 among other things to:
(a) Give effect to the provisions of the Constitution; 12
BSA Annual Report 2010/11 (b) Regulate, control and exercise general supervision over professional boxing at tournaments in the Republic;
(c) Protect and regulate the interests and organizational rights of boxers, trainers, managers, promoters, officials and stakeholders involved in professional boxing matters;
(d) To promote:
(i) Orderly collective action;
(ii) Boxing in the Republic;
(iii) The effective resolution of boxing disputes.
Boxing SA has redefined the above mandates into the following broad strategic objectives:
• Create an organized and regulated environment for professional boxing; • Design an appropriate structural arrangement for boxing; • Improve quality of tournaments; • Enhance the popularity of boxing; • Develop high performing boxers and ring officials for international stage; • Create an enabling environment for the increased welfare of licencees; • Provide for the seamless transition of boxers from amateur to professional ranks.
Boxing South Africa in executing the task of administering professional boxing activities in this country is overseen by the Department of Sport and Recreation, and the Parliamentary Portfolio Committee on Sport and Recreation.
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BSA Annual Report 2010/11 Performance Overview
For 2010/11 financial year Boxing SA has had achievements, and challenges, and these challenges are being systematically addressed during the 2011/12 period, in a spirit of continuous improvement and learning.
Financial Management
The objective of Boxing SA financial accounting is to provide information that external users can use to make decisions about their interest, and also analyze how the entity is performing. Financial Accounting encompasses recording, controlling, and reporting accurately and within time frames (timely). Financial Management/Management Accounting is concerned about information that will assist in decision-making and performance evaluation activities.
Achievements
• Boxing SA’s continuity though experiencing constrained cash flow; • Settlement of long outstanding liabilities; • Conservative, and reduced spending; • Enhanced finance management capacity by the appointment of the Financial Management Consultant;
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BSA Annual Report 2010/11 Challenges
• Inadequate appropriation from SRSA; • Failure to secure a Sponsorship; • Deficit suffered by Boxing SA of R3 million; • SARS Liability that has long been outstanding, as a result BSA incurred fruitless and wasteful expenditure.
Operations
The focus of this programme is aimed at achieving the following strategic objectives:
• Increasing participation in boxing by people of all race groups and genders; • South African boxers are matched against quality national and international boxers to create opportunities for their upward movement towards contesting for world status; • Creating opportunities for all contestants from every region in the country irrespective of gender and race to participate in the sport.
Achievements
• South African boxing has become more competitive around the world; • Boxing SA enjoys recognition and respect by major international/world professional bodies; • Increased number of international fights staged in SA; • Increased number of boxers in international boxing arena; • Recognition of Boxing SA licencees not only by African Boxing Union (ABU), but also by World Boxing Council (WBC), World Boxing Association (WBA), World Boxing Federation (WBF), International Boxing Ogarnisation (IBO) and International Boxing Federation (IBF).
Challenges
• The number of female participants has not substantially increased; • Development tournaments have not reached the target; • Some provinces had little or no tournaments; • Failure to have Baby Champs project, due to lack of funding. 15
BSA Annual Report 2010/11 Strategic Management & Corporate Services
The objective of this programme is to “Administer, Guide, Manage” affairs of Boxing SA, and to also “Monitor and Report” on the performance of the entity Boxing SA, as well as liaise with all stakeholders. The focus areas are:
• Ethical Practices; • Compliance Legal & Regulatory Framework; • Effective and efficient stakeholder engagement; • Creation of boxing environment that is full of opportunities to all SA Citizens; • Achievement of Government priorities (political and social responsibilities).
Achievements
• Boxing SA’s continuity though experiencing constrained cash flow; • BSA’s relationships with Provincial and Local Governments, as well as South African National Amateur Boxing Organisation (SANABO); • Synergy between BSA and SRSA; • Skills Transfer programme, through the appointment of the Financial Management Consultant.
Challenges
• Late appointment of the permanent CEO; • Late performance of the internal audit functions.
Strategic objectives for the year
1. Good financial results; 2. Efficient financial management; 3. Efficient human capital management; 4. Good corporate governance; 5. Facilitate boxing development projects; 16
BSA Annual Report 2010/11 6. Proper IT systems in place; 7. Maintain safety, health and the environment;
8. Deliver good quantity and quality tournaments.
Report on achievement of strategic objectives for the year
Strategic priority 1: Financial Results
Objectives Targets Actual Achievements
Revenue (Rand) R10.3 million R7.6 million BSA did not receive additional funding from SRSA; neither did it receive a sponsorship as was expected.
Net Profit / (Loss) (Rand) R0.9 million (R2.7 million) BSA incurred significant costs that led to such a deficit, namely Interest and penalties on SARS - R1.5 million, BSA Annual Awards Project - R428 826, Travel and Accommodation costs - R623 931; audit fees payable to AGSA - R802 653.
Debtors Collection (Days) 30 60+ The variance in debtors’ collection is attributable to the promoters only settling their account once he/she is certain of the next tournament date.
Expenditure (Rand) (R9.3 million) (R10.3 million) Much of BSA expenditure is attributable to the significant costs stated under the Net Profit / (Loss) variance.
Going concern (%) 60 60 Boxing SA reported a deficit of R3 million, as a result it is still operating with an unfavourable net asset figure.
Creditors Payment (Days) 30 120+ BSA grant is not enough to settle the long outstanding tax liability and audit fees payable to AGSA.
Boxing South Africa aims to increase financial performance so as to ensure the financial stability of the entity. 17
BSA Annual Report 2010/11 Strategic priority 2: Financial Management and Adherence to PFMA, Treasury Regulations, Boxing SA Policies and other Directives
Objectives Targets Actual Achievements
Performance of Internal audit functions 1 1 BSA engaged Mazars as their Internal Auditors.
Risk assessment & Audit preparation plan 1 1 The risk assessment was done by BSA Financial Management Consultant
Conservative Budgeting (%) 84 80 BSA’s overall spending is unfavourable compared to the budget and as compared to the prior financial year 2009/10.
Financial Management policies and Procedures 25 27 BSA’s policies and procedures have been reviewed and adopted subject to change that might be effected as and when necessary.
Quarterly Reports submitted to SRSA 4 4 BSA submitted all four quarterly reports on time to SRSA.
Unqualified audit report 1 - Qualified Report was issued.
Compliance to Boxing Act and Regulations (%) 100 100
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BSA Annual Report 2010/11 Strategic priority 3: Human Capital Management
Objectives Targets Actual Achievements
Full time CEO 1 1 CEO’s appointment will only come into effect in July.
Full time CFO (Financial Management Consultant – 1 Year 1 1 The Financial Management Contract) Consultant has already been working at BSA.
Training and Development (Board & Staff) 1 1 VIP Training
Formulation / Development of HR Recruitment and Retention - 1 A policy has been created and policy Awaiting final approval.
Strategic priority 4: Information Technology Infrastructure
Objectives Targets Actual Achievements
IT Management: Updated IT Master System and Data recovery system (%). 100 100 All systems in order.
IT Security Management: Well managed IT System, network and hardware (Firewalls and 100 antivirus) (%).
IT user satisfaction: Well addressed IT complaints (%). 100
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BSA Annual Report 2010/11 20
BSA Annual Report 2010/11 Strategic priority 5: Adoption of good governance structure
Objectives Targets Actual Achievements Audit Committee 1 1 The audit committee has been functioning well. The committee is Chaired by Thulani Duncan Ntuli. HR Committee 1 1 The HR committee is headed by Sakhiwe Sodo. The committee functioned effectively during this year compared to prior years. Appointments of FMC and CEO processes have been facilitated by this Committee. Finance Committee 1 1 The Finance committee is headed by Mark Syfris. Sanctioning Committee - 1 The Sanctioning committee is headed by Solly Selebi. The committee comprises BSA Provincial Managers, Media people and Andile Sidinile. Legal and Regulatory Committee - - The Legal and Regulatory Committee was headed by Claude Bassuday. Medical Panel - - There is no official Medical Panel, however, Dr. Malefetsane Ngatane advises the office on medical issues.
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BSA Annual Report 2010/11 SRSA, SANABO, Provincial & Local Government (%) 100 100 The relationship between BSA, and Provincial and Local Government is working. However, its relations with SANABO needs continued engagements for strengthening. BSA’s relationship with SRSA has improved and BSA now receives guidence there to and SRSA has taken steps to become involved in assisting BSA.
Boxing South Africa aims to ensure good corporate governance by adherence to relevant legislations, risk management and internal controls.
Strategic priority 6: Capital (Boxing Development) Projects
Objectives Targets Actual Achievements Boxing SA Mass participation 1 1 BSA has a Project Plan in place. 1. Project Strategic Plan However, funds are required in order to run this project successfully. Boxing SA will engage SRSA so that it is able to tap into the parent Department’s Mass Participation Programme Funds.
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BSA Annual Report 2010/11 Strategic priority 7: Safety, Health & Environment
Objectives Targets Actual Achievements
Banned Substances Workshop 2 - Specific workshop on this matter has been put on hold until enough funding is secured.
Inside Ring Fatalities - - No fatalities were experiences in the ring.
After fight death - - No death after the fight incidents reported.
Strategic priority 8: Delivery of quality tournament
Objectives Targets Actual Achievements
International Tournaments 29 18 Boxing South Africa has 15 male International (World) Champions, and 2 female World Champions. As a result South African boxers are more competitive.
SA Title tournaments 24 21 Most of the SA titles remain vacant. However, BSA has 13 male champions and 2 SA female champions.
Development tournaments 53 40 The anticipated number of tournaments could not be staged as SABC reduced tournament dates and also due to the 2010 World Cup event.
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BSA Annual Report 2010/11 Mass Project / Training & development programme participants 150 100 Lack of adequate funding resulted in training of the boxers to the tune of 100.
Enhance the popularity of boxing amongst its fraternity and increase the customers:
1. Ring Officials 114 137 Number of the participants has 2. Boxers 555 618 generally increased significantly 3. Trainers/Managers 124 134 except for a slight decrease in the 4. Promoters 50 41 number of licensed promoters.
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BSA Annual Report 2010/11 REPORT OF THE AUDIT COMMITTEE
BOXING SOUTH AFRICA
Report of the Audit committee We are pleased to present our report for the financial year ended 31st March 2011.
Audit committee members and attendance The Audit Committee consists of the members listed hereunder and should meet 4 times per annum as per its terms of reference. During the current year five meetings were held.
Name of member Number of meetings attended Thulani Duncan Ntuli (Chairperson) 5 Tendani Ndou 5
Audit Committee Responsibility The Audit Committee reports that it has complied with its responsibilities arising from section 51 (1) (a) (ii) of the PFMA and Treasury Regulations 27.1.8. The Audit Committee also reports that it has adopted appropriate, formal terms of reference such as its audit committee charter, and has regulated its affairs in compliance with this charter but has not discharged all its responsibilities as contained therein as a result of the Internal Audit function that was partially operational.
The effectiveness of internal control The system of internal control was not entirely effective for the year under review. During the year under review, several deficiencies in the system of internal control and/or deviations were reported by the Auditor General of South Africa. In certain instances, the matters reported previously have not been fully addressed.
The quality of in year management and monthly/quarterly reports submitted in terms of the Act The internal Audit function of the entity is outsourced. The internal Audit function performs a risk-based audit; they conducted a risk assessment in terms of Treasury Instruction 3.2.1.
After risk assessment was conducted, the internal Audit prepared a coverage plan based on its assessment of key areas of risk. The Audit Committee approved the plan but Internal Audit was only able to perform one audit project due to lack of budget.
The Committee is satisfied with the content and quality of the report prepared and issued by the Internal Audit Function.
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BSA Annual Report 2010/11 Evaluation of financial statements The Audit Committee has: • Reviewed and discussed with the Auditor General and the Accounting Officer the audited and annual financial statements to be included in the annual report; • Reviewed the Auditor General’s management letter and management response thereto; • Reviewed changes in accounting policies and practices; • Reviewed the entity’s compliance with legal and regulatory provisions; • Reviewed significant adjustment resulting from the audit.
The Audit Committee concurs and accepts the conclusions of the Auditor-General on the Annual Financial Statements and is of the opinion that the audited annual financial statements be accepted and read together with the report of the Auditor-General.
Internal Audit The Audit Committee is not satisfied that the internal audit function is operating effectively and that is has addressed the risks pertinent to the entity in its audit.
Auditor General of South Africa The Audit Committee has met with the Auditor General of South Africa to ensure that there are no unresolved issues.
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BSA Annual Report 2010/11 REPORT OF THE AUDITOR GENERAL
REPORT OF THE AUDITOR-GENERAL TO PARLIAMENT ON BOXING SOUTH AFRICA REPORT ON THE FINANCIAL STATEMENTS
Introduction 1. I have audited the accompanying financial statements 4. I conducted my audit in accordance with International of Boxing South Africa (Boxing SA), which comprise the Standards on Auditing and General Notice 1111 of 2010 statement of financial position as at 31 March 2011, and issued in Government Gazette 33872 of 15 December the statement of financial performance, statement of 2010. Those standards require that I comply with ethical changes in net assests and cash flow statement for the requirements and plan and perform the audit to obtain year then ended, and a summary of significant accounting reasonable assurance about whether the financial policies and other explanatory information, as set out on statements are free from material misstatement. pages 41 to 76. 5. An audit involves performing procedures to obtain audit Accounting authority’s responsibility for the financial evidence about the amounts and disclosures in the statements financial statements. The procedures selected depend on 2. The accounting authority is responsible for the preparation the auditor’s judgement, including the assessment of the and fair presentation of these financial statements in risks of material misstatement of the financial statements, accordance with South African Standards of Generally whether due to fraud or error. In making those risk Recognised Accounting Practice (SA Standards of GRAP) assessments, the auditor considers internal control and the requirements of the Public Finance Management relevant to the entity’s preparation and fair presentation Act of South Africa, 1999 (Act No. 1 of 1999) (PFMA), of the financial statements in order to design audit and for such internal control as management determines procedures that are appropriate in the circumstances, necessary to enable the preparation of financial statements but not for the purpose of expressing an opinion on the that are free from material misstatement, whether due to effectiveness of the entity’s internal control. An audit also fraud or error. includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting Auditor-General’s responsibility estimates made by management, as well as evaluating 3. As required by section 188 of the Constitution of the the overall presentation of the financial statements. Republic of South Africa, 1996 (Act No. 108 of 1996) and section 4 of the Public Audit Act of South Africa, 2004 (Act 6. I believe that the audit evidence I have obtained is sufficient No. 25 of 2004) (PAA), my responsibility is to express an and appropriate to provide a basis for my qualified audit opinion on these financial statements based on my audit opinion.
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BSA Annual Report 2010/11 Basis for qualified opinion Emphasis of matters Trade and other payables 10. I draw attention to the matters below. My opinion is not 7. The entity could not provide sufficient appropriate audit modified in respect of these matters: evidence to support an amount of R324 026 included in trade and other payables. There were no satisfactory Significant uncertainties alternative audit procedures that I could perform to obtain 11.Enquiries of management and the attorneys revealed that reasonable assurance that all trade and other payables the public entity is a defendant in the following lawsuits: were adequately recorded. Consequently, I could • Premises lawsuit not satisfy myself as to the existence, completeness, • Marketing agent lawsuit rights and obligations and valuation of trade and other • Legal fees lawsuit payables. The outcome of these lawsuits cannot be determined at 8. Included in trade and other payables is an amount of present and a provision for any liability that may result has R518 515 relating to insurance received in advance. The been made in the financial statements. Standard of Generally Recognised Accounting Practice, GRAP 19, Provisions, Contingent liabilities and contingent Restatement of corresponding figures assets, requires the amount recognised as a provision to 12. Misstatements in the corresponding figures were be stated at the best estimate of the expenditure required identified during our audit of the financial statements to settle the present obligation at the reporting date. for the current year relating to finance lease obligations GRAP 19 further states that provisions shall be reviewed and the opening balance of the insurance asset. at each reporting date and adjusted to reflect the current Management corrected these misstatements by restating best estimate. The entity did not review insurance received the corresponding figure for finance lease obligations in advance on 31 March 2011, as required by GRAP 19. and the insurance asset as disclosed in note 1.17 to the financial statements. Qualified opinion 9. In my opinion, except for the effects of the matters Going Concern described in the Basis for qualified opinion paragraphs, 13. Note 21 to the financial statements indicates that Boxing the financial statements present fairly, in all material SA incurred a net deficit of R2 709 332 during the year respects, the financial position of Boxing SA as at 31 ended 31 March 2011 and, as of that date, the entity’s March 2011 and its financial performance and cash flows liabilities exceeded its total assets by R6 248 040. These for the year then ended, in accordance with SA Standards conditions, along with other matters set forth in note 21 of GRAP and the requirements of the PFMA. indicate the existence of a material uncertainty that may cast significant doubt on the entity’s ability to continue as a going concern. 28
BSA Annual Report 2010/11 Irregular expenditure the financial statements and is presented as additional 14. As disclosed in note 23 to the financial statements, information. I have not audited this schedule and irregular expenditure to the amount of R720 308 was accordingly I do not express an opinion thereon. incurred as the entity failed to comply with Supply Chain Management Regulations. REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS Fruitless and wasteful expenditure 19. In accordance with the PAA and in terms of General notice 15. As disclosed in note 22 to the financial statements, 1111 of 2010, issued in Government Gazette 33672 of fruitless and wasteful expenditure to the amount of 15 December 2010, I include below my findings on the R1 603 809 was incurred as a result of the following: annual performance report as set out on pages 15 to 21 • The entity failed to comply with its internal policies and and material non-compliance with laws and regulations procedures regarding insurance claim payments. applicable to the public entity.
• Interest and penalties were incurred as a result of late Predetermined objectives payment on amounts owed to the South African Revenue Included below are the findings raised during our audit of Service and the Auditor General of South Africa. the report on predetermined objectives.
• The human resource function was outsourced even Usefulness of information though Boxing SA staff received training to perform the 20. The following criterion was used to assess usefulness: function themselves. • Measurability: Indicators are well defined and verifiable, Material losses and targets are specific, measurable and time-bound. 16. As disclosed in note 24 to the financial statements, material losses to the amount of R132 335 were incurred 21. The following audit finding relates to the above as a result of shortfalls between cash received for license criterion: fees and cash banked. • For the selected objectives, 23% of the planned and targets were not: Additional matter 17. I draw attention to the matter below. My opinion is not - Specific in clearly identifying the nature and the modified in respect of this matter: required level of performance
Unaudited supplementary schedule - Measurable in identifying the required 18. The supplementary information set out on page 77 of performance the annual financial statements does not form part of 29
BSA Annual Report 2010/11 Compliance with laws and regulations of contravention of section 55(2)(a) of the PFMA. Included below are findings on material non-compliance with laws and regulations applicable to the public entity. Audit committee 25.The audit committee did not function as per the Strategic planning requirements of section 77 of the PFMA and/or Treasury 22. The accounting authority did not finalise and submit a Regulation 27.1 in that: strategic plan to the relevant executive authority on or before 1 April as required by Treasury Regulation 30.1.1 • The audit committee was not constituted correctly as it and 30.1.2 had two members instead of three, • The audit committee did not review: 23. The accounting authority did not ensure that the - effectiveness of the internal control systems; public entity has and maintained an effective, efficient - effectiveness of the internal audit function; and and transparent system of internal control regarding - adequacy, reliability and accuracy of the financial performance management, which described and information provided to management and other represented how the entity’s processes of performance users of such information. planning, monitoring, measurement, review and reporting were conducted, organised and managed as required by Internal Audit section 51(1)(a)(i) of the PFMA. 26. The internal audit function did not adhere to the requirements of section 51(1)(a)(ii) of the PFMA and Annual financial statements, performance and annual Treasury Regulation 27.2, in that: report • The internal audit did not report at all audit committee 24. The accounting authority submitted financial statements meetings. for auditing that were not prepared in all material aspects • A risk management strategy, which includes a fraud in accordance with SA Standards of GRAP, as required prevention plan, was not used to direct internal audit by the 2011 AG Audit directive published in General effort and priority, and to determine the skills required of Notice 1111, issued in Government Gazette no. 33872 managers and staff to improve controls and to manage of 15 December 2010. Certain material misstatements these risks. identified by the AGSA with regards to finance lease • The internal audit function did not evaluate and make obligations, revenue, operating expenditure, trade and recommendations on the effectiveness and efficiency other payables, property, plant and equipment, material of controls on the information systems environment, the loss and loss on de-recognition of leased assets were effectiveness of operations and compliance with laws subsequently corrected, however the uncorrected and regulations. material misstatements resulted in the financial statements receiving a qualified audit opinion as a result 30
BSA Annual Report 2010/11 Procurement and contract management 33. The accounting authority did not take effective and 27. In some cases, sufficient appropriate audit evidence appropriate disciplinary steps against officials who could not be obtained for some of the goods and services made or permitted irregular and fruitless and wasteful with a transaction value between R10 000 and R500 000 expenditure as required by section 51(1)(e) of the were procured by inviting at least three written quotations PFMA. from prospective suppliers as per the requirements of TR 16A6.1 and National Treasury Practice Note 8 of Internal control 2007/08. 34. In accordance with the PAA and in terms of General notice 1111 of 2010, issued in Government Gazette 28. In certain instances, awards were made to suppliers who 33672 of 15 December 2010. I considered internal failed to provide written proof from the South African control relevant to my audit, but not for the purpose of Revenue Service that their tax matters are in order expressing an opinion on the effectiveness of internal as per the requirements of Preferential Procurement control. The matters reported below are limited to the Regulations 16 and TR 16A9.1(d). significant deficiencies that resulted in the basis for the qualified opinion, the findings on the annual performance 29. A list of prospective suppliers was not in place for report and the findings on compliance with laws and procuring goods and services through quotations as regulations included in this report. required of National Treasury Note 8 of 2007/08. Leadership Expenditure management 35. There was a lack of oversight responsibility regarding 30. The accounting authority did not take effective and financial and performance reporting, compliance with appropriate steps to prevent irregular expenditure as per laws and regulations and related internal controls. the requirements of section 51(1)(b) of the PFMA. Policies and procedures were not established and communicated to enable and support understanding and 31 The accounting authority did not take effective and execution of internal control objectives, processes, and appropriate steps to prevent fruitless and wasteful responsibilities. Action plans to address internal control expenditure as per the requirements of section 51(1)(b) deficiencies were not adequately developed and the of the PFMA. implementation thereof was not adequately monitored. A formal IT governance framework was not implemented. 32. The accounting authority did not take effective and appropriate steps to prevent losses through criminal Financial and performance management conduct as per the requirements of section 51(1)(b) of 36. Proper record keeping was not implemented in a the PFMA. timely manner to ensure that complete, relevant and accurate information is accessible and available to 31
BSA Annual Report 2010/11 support financial and performance reporting. There was a lack of controls over daily and monthly processing and reconciling of transactions. There was also a lack of controls over IT systems to ensure reliability of the systems and the availability, accuracy and protection of information. Accurate and complete financial and perfomance reports were not prepared and were not Pretoria supported by reliable information. Compliance with 31 July 2011 applicable laws and regulations was not monitored and reviewed.
Governance 37. Appropriate risk management activities was not implemented to ensure that regular risk assessments, including consideration of IT risks and fraud prevention, were conducted and a risk management strategy to address risks was not developed and implemented. The internal audit unit did not always identify internal control deficiencies and did not always recommend corrective action. The audit committee did not always evaluate and monitor risks and did not provide adequate oversight of the effectiveness of the internal control environment.
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BSA Annual Report 2010/11 BOARD MEMBER’S REPORT
The Board submits its report for the year ended 31 March 4. Accounting policies 2011. This report forms part of the audited financial The attached financial statements have been prepared in statements. accordance with the PFMA. Accounting records, control and reporting conform to Generally Recognized Accounting 1. Legal form and jurisdiction Practice. The reporting requirements of the South African Boxing South Africa is a public entity in terms of Schedule Statements of Generally Accepted Accounting Practice are 3A of the Public Finance Management Act, 1999 (Act No. 1 reflected in the financial statements. of 1999) and is governed by the Boxing Act, 2001 (Act No. 11 of 2001). 5. Property , plant and equipment Property, plant and equipment to the value of R28 800 2. Review of activities (2010: R6 131) have been acquired during the accounting period under review. Main business and operations Boxing South Africa is responsible for the administration of 6. Board members’ Remuneration professional boxing in South Africa. It is a requirement in terms of section 55 of the PFMA to disclose remuneration paid and accrued to Board members The operating results and state of affairs of Boxing South as well as the Chief Executive Officer, General Manager and Africa are fully set out in the attached annual financial Chief Financial Officer. The honorariums of Board Members statements. are shown in the notes to the Financial Statements.
Net deficit of the entity is R 2 709 332 (2010: R 2 176 810 7. Board members surplus). The board members of the company during the year and to the date of this report are as follows: Trade and other payables include Value Added Tax (VAT) payable to the South African Revenue services after VAT deregistration with effect from 1 April 2005. Provision was also made for interest and penalties imposed by the South African Revenue Services.
3. Subsequent events Boxing South Africa Board is not aware of any matters or circumstances which may have arisen since the end of the financial year, not otherwise dealt with in the annual financial statements, which significantly affects the position of the organization or the results of its operations. 33
BSA Annual Report 2010/11 Names Designation
Dr. P Ngatane Chairman
A.T. Jonas Non-executive board member
C. Bassuday Non-executive board member
S. Sodo Non-executive board member
A. Sidinile Non-executive board member
M. Syfris Non-executive board member
S. Selebi Non-executive board member
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BSA Annual Report 2010/11 BOXING ARWARDS FOR THE YEAR 2010/11
The recipients of the Boxing Awards for the year 2010/11 are as follows:
Boitshepo Mandawe - Fight Of The Year Chris-van-Heerden - Fight Of The Year
Boitshepo Mandawe – Gauteng Chris van Heerden – Gauteng
One performer whose boxer/fighter style ensures all out This superbly fit and exciting South African/ABU Welterweight action, Mandawe is a thrill every minute. With a record of 8 champion has compiled a record of 16 wins and one defeat, wins and 2 defeats that comprises a 60% knockout ratio, he 10 of those wins by means of knockouts. He has successfully has a bright future as a fighter. defended his titles twice and is now in line to challenge for the IBO world title.
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BSA Annual Report 2010/11 Mzimasi Mnguni - Lifetime Achievement Award Nkosinathi Joyi - Boxer Of The Year
Mzimasi Mnguni – Eastern Cape Nkosinathi Joyi – Eastern Cape
Eyethu Promotions has put its 30 years of dedicated boxing The former South African, former IBO and, current IBF excellence into top gear in the last few years. The period world mini Flyweight champion is unbeaten in 21 fights in question saw Mzi Mnguni, as the only active promoter that include 15 knockouts, resulting in a 68,18% knockout in this boxing mad area, organising 5 National title fights ratio. He is in the forefront of South African boxers who are and one international fight, keeping East London right on eligible to unite world titles in their divisions and, judging the trend as the Mecca of Boxing. He has deservedly won by his unbelievable boxing abilities and his rating by the every available prize in South African boxing, and can only international boxing authorities as the best mini flyweight be awarded the ultimate achievement, which represents the boxer in the world today, there is no stopping him. ceiling of our recognition. BOXING ARWARDS FOR THE YEAR 2010/11
Jodi Solomons - Manager Of The Year Kabisile Tshabalala - Prospect Of The Year
Jodi Solomons – Gauteng Kabisile Tshabalala – Gauteng
This former amateur boxer is only the second female boxing Rated no.1 in the South African Junior Featherweight manager, and the first to produce a world champion in Isaac division, Tshabalala is one of the leading forces in female Chilembe, the IBO Super Middleweight champion. Among boxing in the country today. With an unbeaten record of 5 the protégés are former SA and world champion Zolani fights and 1 draw in 6, she is now in line to challenge for the Marali, as well as budding prospect Bongani Dlamini. newly introduced National title.
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BSA Annual Report 2010/11 Sithembiso Ngqezana - Media Award Thabo Spampool - Ring Official Winner
Sthembiso Ngqezana – Eastern Cape Thabo Spampool – Gauteng
This sports journalist of Mhlobo Wenene has gained a One of the best referee/judges in the world, Spampool has reputation as the voice of boxing due to the impartial and travelled with distinction and gained valuable experience far excellent commentary and analysis of boxing. and wide, showcasing South Africa in such powerhouses as Las Vegas, USA. The year in question saw him referee a total of 13 fights in and outside South Africa.
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BSA Annual Report 2010/11 BOXING ARWARDS FOR THE YEAR 2010/11
Flo-Simba - Knockout Of The Year Lennox Mpulampula - Trainer Of The Year
Flo Simba – Gauteng Lennox Mpulampula – Eastern Cape
The IBO Youth Heavyweight is one of the most exciting This former boxer has, besides having successfully served boxers in the world in the last decade. With dazzling speed amateur boxing as a National coach in international and knockout power to match, he has an 81,82% knockout competition, produced a number world beaters and ratio, his prowess had to be recognized. champions that include the first female world champion to come out of Africa, Noni Tenge. He is without doubt the best trainer in South Africa today, and surely one of the best the country has ever produced.
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BSA Annual Report 2010/11 Shona Mactaggert - Lifetime Achievement Thulani Magudulela - Promoter Of The Year
Shona Macttagart – Gauteng Thulani Magudulela – KwaZulu-Natal
Known as the superwoman of boxing, Shona is one of the The only active promoter in his province, the Director of hardest working people and sharpest brains in world boxing. Ludonga Promotions is the reason is still alive in KZN. The Having organised National and World fights for Golden year in question saw him promote a total of 6 tournaments Gloves all over the world, she has gained a lot of friends that included National championships, development for South African boxing because of her dedicated and tournaments as well as female and amateur boxers. His inspirational demeanour. efforts have resulted in KZN boasting of 2 South African champions resident in the Province.
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BSA Annual Report 2010/11 Annual Financial Statements Boxing South Africa Annual Financial Statements for the year ended 31 March 2011
ANNUAL FINANCIAL STATEMENTS
General Information
Board Dr. P Ngatane (Chairman) A. T. Jonas C. Bassuday S. Sodo A. Sidinile M. Syfris S. Selebi
Auditors Auditor-General of South Africa
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BSA Annual Report 2010/11 Boxing South Africa Annual Financial Statements for the year ended 31 March 2011
ANNUAL FINANCIAL STATEMENTS
Index
The reports and statements set out below comprise the financial statements presented to the shareholder:
Index Page
Statement of Financial Position 41
Statement of Financial Performance 42
Statement of Changes in Net Assets 43
Statement of Cash Flows 44
Accounting Policies 45-58
Notes to the Financial Statements 59-76
The following supplementary information does not form part of the financial statements and is unaudited:
Detailed Statement Of Financial Performance 77-78
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BSA Annual Report 2010/11 Boxing South Africa Annual Financial Statements for the year ended 31 March 2011
STATEMENT OF FINANCIAL POSITION
Figures in Rand Note(s) 2011 2010 (restated)
ASSETS Non -current assets Property, plant and equipment 2 278 834 547 878 Intangible assets 3 9 151 6 612 287 985 554 490 Current assets Trade and other receivables from exchange transactions 4 1 153 928 1 198 655
Cash and cash equivalents 5 3 646 088 4 925 942 Financial asset 6 247 036 126 335 5 047 052 6 250 932 Total assets 5 335 037 6 805 422 NET ASSETS AND LIABILITIES
LIABILITIES
Non - current liabilities Finance lease obligation 7 163 049 281 822
Current liabilities Finance lease obligation 7 26 168 18 262 Trade and other payables 8 11 254 964 10 190 040 Provisions 9 125 694 27 117 Operating lease liability 13 202 - 11 420 028 10 235 419 Total liabilities 11 583 077 10 517 241 Net assets and liabilities (6 248 042) (3 538 708)
Net assets and liabilities Accumulated (deficit) (6 248 040) (3 538 708)
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BSA Annual Report 2010/11 Boxing South Africa Annual Financial Statements for the year ended 31 March 2011
STATEMENT OF FINANCIAL PERFORMANCE
Figures in Rand Note(s) 2011 2010 (restated)
Revenue 12 6 198 366 7 908 864 Operating expenses (5 812 046) (2 877 396)
Operating surplus for the year 15 386 320 5 031 468
Interest income 46 667 16 287
Other income 13 1 351 780 126 419
Employee costs 14 (2 859 562) (2 360 856) Depreciation and amortisation 2 (155 409) (163 917) Fair value adjustments 16 82 624 (23 613)
Finance costs 16 (1 561 752) (448 978)
(3 095 652) (2 854 658)
(Deficit)/ Surplus for the year (2 709 332) 2 176 810
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BSA Annual Report 2010/11 Boxing South Africa Annual Financial Statements for the year ended 31 March 2011
STATEMENT OF CHANGES IN NET ASSETS
Note (s) Accumulated Total Net Figures in Rand deficit Assets
Balance at 01 April 2009 (5 888 629) (5 888 629)
Changes in net assets
Surplus for the year 2 176 810 2 176 810
Correction of error 1.17 173 111 173 111
Restated balance at 31 March 2010 (3 538 708) (3 538 708)
Restated balance at 01 April 2010 (3 538 708) (3 538 708)
Deficit for the year (2 709 332) (2 709 332)
Balance at 31 March 2011 (6 248 040) (6 248 040)
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BSA Annual Report 2010/11 Boxing South Africa Annual Financial Statements for the year ended 31 March 2011
STATEMENT OF CASH FLOWS
Figures in Rand Note(s) 2011 2010 (restated)
Cash flows from operating activities
Cash receipts from grants and fees 6 222 975 7 092 877 Cash paid to suppliers and employees (7 252 608) (3 157 949) Cash generated from operations 17 (1 029 633) 3 934 928 Interest income 46 667 16 287 Finance costs (85 862) (448 978) Net cash (outflow)/inflow from operating activities (1 068 827) 3 502 237
Cash flows from investing activities
Purchase of property, plant and equipment 2 (28 800) - Purchase of Insurance asset (120 000) (126 335) Purchase of other intangible assets 3 (7 654) (6 131) Fair value adjustment ‑ Capital portion 82 624 (23 613) Net cash (outflow)/inflow from investing activities (73 830) (156 079)
Cash flows from financing activities
(Decrease) in finance lease liability (137 197) (120 653)
Total cash movement for the year (1 279 854) 3 225 505 Cash at the beginning of the year 4 925 942 1 700 437 Total cash at end of the year 5 3 646 088 4 925 942
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BSA Annual Report 2010/11 Boxing South Africa Annual Financial Statements for the year ended 31 March 2011
ACCOUNTING POLICIES
1. Presentation of Financial Statements
The financial statements have been prepared in accordance with the Standards of Generally Recognised Accounting Practices (GRAP) issued by the Accounting Standards Board in accordance with the Public Finance Management Act (Act 1 of 1999).These annual financial statements have been prepared on an accrual basis of accounting and are in accordance with historical cost convention unless specified otherwise. They are presented in South African Rand.
A summary of the significant accounting policies, which have been consistently applied, are disclosed below.
These accounting policies are consistent with the previous period.
Standards Approved but not yet Effective • GRAP 18 - Segment Reporting • GRAP 21 - Impairment of non cash generating assets • GRAP 23 - Revenue from non exchange transactions (Taxes and transfers) • GRAP 24 - Presentation of budget information in the financial statements • GRAP 25 - Employee Benefits • GRAP 26 - Impairment of cash generating assets • GRAP 104 - Financial Instruments • GRAP 105 - Transfer of functions between entities under common control • GRAP 106 - Transfer of functions between entities not under common control • GRAP 107 - Mergers
1.1 Adoption of new and revised Standards
Standards and Interpretations effective in the current period. In the current year, the entity adopted by section 55(2)(a) of the PFMA to ensure that the annual report and audited financial statements fairly present the performance against predetermined objectives of the entity.
1.2 Significant judgements and sources of estimation uncertainty
In preparing the annual financial statements, management makes estimates and assumptions that affect the amounts represented in the annual financial statements and related disclosures. Use of available information and the application of judgement are inherent in the formation of estimates.
The formation of estimates; actual results in the future could differ from these estimates which may be material to the annual financial 48
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ACCOUNTING POLICIES (continues)
statements. Significant judgements include:
Provision for doubtful debts
The provision for doubtful debts has dropped substantially since the method of calculation changed. The provision is calculated as 10% of all debts older than 2 years included in trade receivables. The reason for the change in the method of calculation is that the debt balances per promoter will be set off against credit balances owing to the same promoter hence reducing BSA liabilities. Therefore it is not feasible for BSA to provide a high provision for doubtful debts.
Impairment testing
Reviews and tests the carrying value of assets when events or change in circumstances suggest that the carrying amount may not be recoverable. If there are any indications that impairment may have occurred, estimates of expected future cash flows from these assets are prepared.
Provisions
The current year provision consists of leave provision consisting of the cost of all employees’ leave balances as at 31 March 2011 and the chairman’s discretionary fund amount for which the amount has been decided by BSA board.
Fair value estimation
The fair value of financial instruments that are not traded in an active market (for example, trade receivables and trade payables) is determined by using estimated discounted cash flows, to determine fair value for the remaining financial instruments. The economic entity makes assumptions that are based on market conditions existing at the end of each reporting period.
The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the economic entity for similar financial instruments.
Property, plant and equipment
The expected useful life of property plant and equipment is determined based on the time that the assets will be in use by the entity. The useful lives are reviewed at each reporting period.
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ACCOUNTING POLICIES (continues)
1.3 Property, plant and equipment
Property, plant and equipment are tangible non-current assets (including infrastructure assets) that are held for use in the production or supply of goods or services, rental to others, or for administrative purposes, and are expected to be used during more than one period.
The cost of an item of property, plant and equipment is recognised as an asset when:
• It is probable that future economic benefits or service potential associated with the item will flow to the entity; and • The cost of the item can be measured reliably.
Costs include costs (cash or cash price equivalent) incurred initially to acquire an item of property, plant and equipment and costs incurred subsequently to add to, replace part of, or service it. If a replacement cost is recognised in the carrying amount of an item of property, plant and equipment, the carrying amount of the replaced part is derecognised.
Property, plant and equipment are stated at cost less accumulated depreciation and any recognised impairment loss. The costs of self‑constructed assets include the cost of materials, direct labour and an appropriate proportion of production overheads. Depreciation is charged so as to write off the cost of valuation of assets, over their estimated useful lives, using the straight ‑ line method, on the following bases:
Item Average useful life Furniture and fixtures 8 years Motor vehicles 5 years Office equipment 5 years IT equipment 4 years Computer software 3 years Promoting equipment 4 years
Depreciation on items of property, plant and equipment commences when the asset is available for use by the entity.
Residual values, depreciation methods and useful lives are reviewed annually or adjusted where necessary during the year. The residual value of an asset is the estimated amount that an entity would currently obtain from disposal of the asset, after deducting the estimated costs of disposal, if the asset were already of the age and condition expected at the end of its useful life. Useful life is the period over which an asset is expected to be available for use by an entity.
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BSA Annual Report 2010/11 Boxing South Africa Annual Financial Statements for the year ended 31 March 2011
ACCOUNTING POLICIES (continues)
Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item are depreciated separately.
The depreciation charge for each period is recognised in surplus or deficit.
Items of property, plant and equipment 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 surplus or deficit arising from the derecognition of an item of property, plant and equipment is included in surplus or deficit when the item is derecognised. The surplus or deficit arising from the derecognition of an item of property, plant and equipment is determined as the difference between the net disposal proceeds, if any, and the carrying amount of the item.
1.4 Intangible assets
An asset is identified as an intangible asset when it: • Is capable of being separated or divided from an entity and sold, transferred, licensed, rented or exchanged, either individually or together with a related contract, assets or liability; or • Arises from contractual rights or other legal rights, regardless whether those rights are transferable or separate from the economic entity or from other rights and obligations.
An intangible asset is recognised when:
• It is probable that the expected future economic benefits that are attributable to the asset will flow to the entity; and
• The cost of the asset can be measured reliably.
Intangible assets acquired separately are measured on initial recognition at cost.
Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses.
An intangible asset is regarded as having an indefinite useful life when, based on all relevant factors, there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows or service potential. Amortisation is not provided for these intangible assets, but they are tested for impairment annually and whenever there is an indication that the asset may be impaired. For all other intangible assets amortisation is provided on a straight line basis over their useful life.
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ACCOUNTING POLICIES (continues)
The useful life of an intangible asset with an indefinite life is reviewed annually to determine whether indefinite life assessment continues to be supportable. If not, the change in the useful life assessment from indefinite to finite is made on a prospective basis.
Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the asset may be impaired. The amortisation period and the amortisation method of an intangible asset with a finite useful life are reviewed at least at each financial year end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortisation period or method, as appropriate, and treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in the statement of financial performance in the expense category consistent with the function of the intangible asset.
Reassessing the useful life of an intangible asset with a finite useful life after it was classified as indefinite is an indicator that the asset may be impaired. As a result the asset is tested for impairment and the remaining carrying amount is amortised over its useful life.
Amortisation is provided to write down the intangible assets, on a straight line basis, to their residual values as follows:
Item Useful life Computer software 3 years
Intangible assets are derecognised: • On disposal; or • When no future economic benefits or service potential are expected from its use or disposal.
1.5 Financial instruments
Initial recognition and measurement
Financial instruments are recognised initially when the economic entity becomes a party to the contractual provisions of the instruments.
The entity classifies financial instruments, or their component parts, on initial recognition as a financial asset, a financial liabilityor an equity instrument in accordance with the substance of the contractual arrangement. 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.
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BSA Annual Report 2010/11 Boxing South Africa Annual Financial Statements for the year ended 31 March 2011
ACCOUNTING POLICIES (continues)
For financial instruments which are not at fair value through surplus or deficit, transaction costs are included in the initial measurement of the instrument.
Regular way purchases of financial assets are accounted for at trade date.
Subsequent measurement
Financial instruments at fair value through surplus or deficit are subsequently measured at fair value, with gains and losses arising from changes in fair value being included in surplus or deficit for the period.
Impairment of financial assets
At each end of the reporting period the economic entity assesses all financial assets, other than those at fair value through surplus or deficit, to determine whether there is objective evidence that a financial asset or group of financial assets has been impaired.
For amounts due to the economic entity, significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy and default of payments are all considered indicators of impairment.
In the case of equity securities classified as available-for-sale, a significant or prolonged decline in the fair value of the security below its cost is considered an indicator of impairment. If any such evidence exists for available-for-sale financial assets, the cumulative loss - measured as the difference between the acquisition cost and current fair value, less any impairment loss on that financial asset previously recognised in surplus or deficit - is removed from equity as a reclassification adjustment and recognised in surplus or deficit.
Impairment losses are recognised in surplus or deficit.
Impairment losses are reversed when an increase in the financial asset’s recoverable amount can be related objectively to an event occurring after the impairment was recognised, subject to the restriction that the carrying amount of the financial asset at the date that the impairment is reversed shall not exceed what the carrying amount would have been had the impairment not been recognised.
Reversals of impairment losses are recognised in surplus or deficit except for equity investments classified as available-for-sale.
Impairment losses are also not subsequently reversed for available-for-sale equity investments which are held at cost because fair value was not determinable.
Trade and other receivables
Trade receivables are initially measured at fair value, and are subsequently measured at amortised cost using the effective interest rate 53
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ACCOUNTING POLICIES (continues)
method. Appropriate allowances for estimated irrecoverable amounts are recognised in surplus or deficit when there is objective evidence that the asset is impaired. The allowance recognised is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the effective interest rate computed at initial recognition.
Trade and other payables
Trade payables are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest rate method.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. These are initially and subsequently recorded at fair value.
1.6 Leases
A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership. A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership.
The determination of whether an arrangement is, or contains a lease is based on the substance of the arrangement and requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset.
Finance leases – lessee
The following situations would normally individually or in combination lead to a lease being classified as a finance lease and have been considered by the entity:
The lease transfers ownership of the asset to the lessee by the end of the lease term;
The lessee has the option to purchase the asset at a price that is expected to be sufficiently lower than the fair value at the date the option becomes exercisable for it to be reasonably certain, at the inception of the lease, that the option will be exercised;
The lease term is for the major part of the economic life of the asset even if title is not transferred;
At the inception of the lease the present value of the minimum lease payments amounts to at least substantially all of the fair value of the 54 leased asset ;
BSA Annual Report 2010/11 Boxing South Africa Annual Financial Statements for the year ended 31 March 2011
ACCOUNTING POLICIES(continues)
The leased assets are of such specialised nature that only the lessee can use them without major modifications;
If the lessee can cancel the lease, the lessor’s losses associated with the cancellation are borne by the lessee;
Gains or losses from the fluctuation in the fair value of the residual accrue to the lessee and the lessee has the ability to continue the lease for a secondary period at a rent that is substantially lower than market rent.
Finance leases are recognised as assets and liabilities in the statement of financial position at amounts equal to the fair value of the leased property or, if lower, the present value of the minimum lease payments, each determined at the inception of the lease. The corresponding liability to the lessor is included in the statement of financial position as a finance lease obligation.
The discount rate used in calculating the present value of the minimum lease payments is the entity’s incremental borrowing rate.
The lease payments are apportioned between the finance charge and reduction of the lease obligation. The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate of on the remaining balance of the liability. Finance charges are charged directly against income.
Assets held under finance lease are depreciated over their expected useful lives on the same basis as owned assets, or where shorter, the term of the relevant lease.
The economic entity entered into finance leasing arrangements for certain of its motor vehicles and office equipment.
The average lease term is 5 years and the average effective lending rate was 9.5 % (2010: 11.75%).
Operating leases – lessee
Operating lease payments are recognised as an expense on a straight-line basis over the lease term. The difference between the amounts recognised as an expense and the contractual payments are recognised as an operating lease asset or liability. This liability is not discounted.
Any contingent rents are expensed in the period they are incurred.
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ACCOUNTING POLICIES(continues)
1.7 Impairment of assets
The entity assesses at the end of each reporting period whether there is any indication that an asset may be impaired. If any such indication exists, the entity estimates the recoverable amount of the asset. If it is not possible to estimate the recoverable amount of the individual asset, the recoverable amount of the cash generating unit to which the assets belongs is determined.
The recoverable amount of an asset or a cash generating unit is the higher of its fair value less costs to sell and its value in use.
If the recoverable amount of an asset is less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. That reduction is an impairment loss.
An impairment loss of assets carried at cost less any accumulated depreciation or amortisation is recognised immediately in surplus or deficit. Any impairment loss of a revalued asset is treated as a revaluation decrease.
An impairment loss is recognised for cash generating units if the recoverable amount of the unit is less than the carrying amount of the units. The impairment loss is allocated to reduce the carrying amount of the assets of the unit in the following order:
• First, to reduce the carrying amount of any goodwill allocated to the cash generating unit and • Then, to the other assets of the unit, pro rata on the basis of the carrying amount of each asset in the unit.
An entity assesses at each reporting date whether there is any indication that an impairment loss recognised in prior periods for assets other than goodwill may no longer exist or may have decreased. If any such indication exists, the recoverable amounts of those assets are estimated.
The increased carrying amount of an asset other than goodwill attributable to a reversal of an impairment loss does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years.
A reversal of an impairment loss of assets carried at cost less accumulated depreciation or amortisation other than goodwill is recognised immediately in surplus or deficit. Any reversal of an impairment loss of a revalued asset is treated as a revaluation increase.
1.8 Provisions and Contingencies
Provisions are recognised when: • The entity has a present obligation (legal or constructive) as a result of a past event; • It is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and • A reliable estimate can be made of the obligation. 56
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ACCOUNTING POLICIES (continues)
The amount of a provision is the present value of the expenditure expected to be required to settle the obligation. wWhere the effect of the time value of money is material, the amount of the provision is the present value of the expenditure required to settle the present obligation.
Contingent assets and contingent liabilities are recognised when: • There is a possible obligation to be confirmed by a future event that is outside the control of the entity; • The inflow of economic benefits is probable, but not virtually certain, and occurrence depends on an event outside the control of the entity.
1.9 Government Grants
Government grants are recognised as income over the periods necessary to match them with the related costs which they are intended to compensate, on a systematic basis. A government grant that becomes receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the entity with no future related costs is recognised as income of the period in which it becomes receivable.
Government grants related to assets, including non‑monetary grants at fair value, are presented in the statement of financial position either by setting up the grant as deferred income or by deducting the grant in arriving at the carrying amount of the asset.
Grants related to income are presented as a credit in the statement of financial performance.
Repayment of a grant related to income is applied first against any un‑amortised deferred credit set up in respect of the grant. To the extent that the repayment exceeds any such deferred credit, or where no deferred credit exists, the repayment is recognised immediately as an expense.
Repayment of a grant related to an asset is recorded by increasing the carrying amount of the asset or reducing the deferred income balance by the amount repayable. The cumulative additional depreciation that would have been recognised to date as an expense in the absence of the grant is recognised immediately as an expense.
1.10 Revenue other than government grants
When the outcome of a transaction involving the rendering of services can be estimated reliably, revenue associated with the transaction is recognised by reference to the stage of completion of the transaction at the end of the reporting period. The outcome of a transaction can be estimated reliably when all the following conditions are satisfied: • The amount of revenue can be measured reliably;
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ACCOUNTING POLICIES (continues)
• It is probable that the economic benefits associated with the transaction will flow to the entity; • The stage of completion of the transaction at the end of the reporting period can be measured reliably; and • The costs incurred for the transaction and the costs to complete the transaction can be measured reliably.
When the outcome of the transaction involving the rendering of services cannot be estimated reliably, revenue shall be recognised only to the extent of the expenses recognised that are recoverable.
Revenue is measured at the fair value of the consideration received or receivable and represents the amounts receivable for goods and services provided in the normal course of business, net of trade discounts and volume rebates, and value added taxation. Revenue is recognised to the extent that it is probable that the economic benefits will flow to Boxing South Africa and the amount can be reliably mea- sured. Interest is recognised on a time proportion basis which takes into account the principle investment and the effective interest rate.
1.11 Revenue from exchange transactions
Revenue is the gross inflow of economic benefits or service potential during the reporting period when those inflows result in an increase in net assets, other than increases relating to contributions from owners.
An exchange transaction is one in which the entity receives assets or services, or has liabilities extinguished, and directly gives approximately equal value (primarily in the form of goods, services or use of assets) to the other party in exchange.
Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction.
1.12 Borrowing Costs
Borrowing costs are recognised as an expense in the period in which they are incurred.
1.13 Irregular, fruitless and wasteful expenditure
Irregular expenditure means expenditure incurred in contravention of, or not in accordance with, the requirements of any applicable legislation, including the PFMA.
Fruitless and wasteful expenditure means expenditure that was made in vain and would have been avoided had reasonable care been exercised .
All irregular, fruitless and wasteful expenditure is charged against income in the period in which they are incurred.
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BSA Annual Report 2010/11 Boxing South Africa Annual Financial Statements for the year ended 31 March 2011
ACCOUNTING POLICIES (continues)
1.14 Events after reporting date
Disclose for each material category of non-adjusting events after the reporting date:
• Nature of the event; • Estimation of its financial effect or a statement that such an estimation cannot be made.
Boxing South Africa directors are not aware of any matters or circumstances which may have arisen since the end of the financial year, not otherwise dealt with in the annual financial statements, which significantly affects the position of the organization or the results of its operations.
1.15 Employee benefits Short term employee benefits
The cost of short term employee benefits, (those payable within 12 months after the service is rendered, such as paid vacation leave and sick leave, and non-monetary benefits such as medical care), are recognised in the period in which the service is rendered and are not discounted.
The expected cost of compensated absences is recognised as an expense as the employees render services that increase their entitlement or, in the case of non – accumulating absences, when the absence occurs.
1.16 Budget Information
In order to fully comply with GRAP 1, a note has been included reconciling the budget with the surplus in the statement of financial performance.
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BSA Annual Report 2010/11 Boxing South Africa Annual Financial Statements for the year ended 31 March 2011
ACCOUNTING POLICIES (continues)
1.17 Prior Period Error
2011 Effect:
Some income and expenses relating to prior year financial period were incorrectly accounted for in the statement of financial performance. The correction of the error(s) results in adjustments as follows:
Statement of Financial Performance
Effect on opening accumulated loss
Accumulated loss opening balance (3 711 819) Prior year sanctioning fees not accounted for 17 200 National lotteries grant utilised in the prior year 22 946 Depreciation calculated on R1 asset reversed (4) Licence refund relating to prior year licence paid (10 000) Finance lease expense not set off against finance lease liability (10 899) Finance lease opening balance correction 153 868 Adjusted opening balance (3 538 708)
Statement of Financial Position
Trade and other payables
Disclosure Note 8
The fair value adjustment amount was overstated in the prior year; adjusting journals were incorrectly processed to fair value adjustment creditors instead of trade payables.
The prior year figure for provisions was incorrectly disclosed in sundry payables.
The trade and other payables include the total amount owing to SARS, rather than just the VAT portion as disclosed in the prior year.
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BSA Annual Report 2010/11 Boxing South Africa Annual Financial Statements for the year ended 31 March 2011
ACCOUNTING POLICIES (continues)
8. Trade payables 2010 2010
(restated)
Trade payables 3 007 738 2 495 182 Deferred income 695 000 695 000 SARS 1 013 224 6 113 936 AGSA - - Sundry payables 5 429 578 302 103 Accrued expense 42 593 42 593 Insurance received in advance 588 117 588 117 Msopi trust 353 - Fair value adjustment (559 446) (46 890) 10 217 157 10 190 040
Provisions - 27 117 - 27 117
TOTAL 10 217 157 10 217 157
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BSA Annual Report 2010/11 Boxing South Africa Annual Financial Statements for the year ended 31 March 2011
NOTES TO THE FINANCIAL STATEMENTS
2. Property, plant and equipment 2011 2010 Figures in Rand Cost / Accumulated Carrying Value Cost / Accumulated Carrying Value Valuation Depreciation Valuation Depreciation Own Assets
Furniture and fixtures 125 826 (94 490) 31 336 100 203 (75 235) 24 968 Office equipment 10 617 (6 605) 4 012 25 758 (19 987) 5 771 IT equipment 209 263 (159 262) 50 001 210 253 (109 173) 101 080 Promoting equipment 13 264 (13 264) - 13 264 (9 808) 3 456 358 971 (273 621) 85 349 349 478 (214 203) 135 275 Capitalised leased assets
Motor vehicles 141 119 (58 917) 82 202 141 119 (30 693) 110 426 Office equipment 125 980 (14 697) 111 283 406 516 (104 339) 302 177 267 099 (73 614) 193 485 547 635 (135 032) 412 603
Total 626 070 (347 235) 278 834 897 113 (349 235) 547 878
Reconciliation of property, plant and equipment – 2011 Opening Additions Write Offs Revaluation Depreciation Closing Balance Balance Own Assets Furniture and fixtures 24 968 26 000 (102) (4) (19 530) 31 336 Office equipment 5 771 2 800 (3 128) - (1 431) 4 012 IT equipment 101 080 - (155) - (50 924) 50 001 Promoting equipment 3 456 - - - (3 456) - 135 275 28 800 (3 385) (4) (75 341) 85 349
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BSA Annual Report 2010/11 Boxing South Africa Annual Financial Statements for the year ended 31 March 2011
NOTES TO THE FINANCIAL STATEMENTS (continues)
Opening Additions Write Offs Revaluation Depreciation Closing Balance Balance Capitalised leased asset
Motor vehicles 110 426 - - - (28 224) 82 202 Office equipment 302 177 125 980 (268 301) - (48 573) 111 283 412 603 125 980 (268 301) - (76 797) 193 485 Total 547 878 154 780 (271 686) (4) (152 138) 278 834
2. Property, plant and equipment (continued) Reconciliation of property, plant and equipment – 2010 Figures in Rand Opening Depreciation Total Balance Own assets Furniture and fixtures 37 528 (12 560) 24 968 Office equipment 9 983 (4 212) 5 771 IT equipment 126 701 (25 621) 101 080 Promoting equipment 6 607 (3 151) 3 456 180 819 (45 544) (135 374) Capitalised leased asset
Motor vehicles 135 828 (25 402) 110 426 Office equipment 383 480 (81 303) 302 177 519 380 (45 544) 135 275 Total 700 127 (152 249) 547 878
Property, plant and equipment pledged as securities for finance leases consists of a motor vehicle and office equipment as disclosed above. Refer to note 7 – finance lease obligations.
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BSA Annual Report 2010/11 Boxing South Africa Annual Financial Statements for the year ended 31 March 2011
NOTES TO THE FINANCIAL STATEMENTS (continues)
3. Intangible assets Fingures in Rand 2011 2010 Cost / Amortisation Carrying value Cost / Amortisation Carrying value Valuation Valuation Computer software 13 785 (4 634) 9 151 37 078 (30 466) 6 612
Reconciliation of intangible assets – 2011 Fingures in Rand Opening Additions Write Offs Amortisation Closing balance Balance Computer software 6 612 7 654 (1 844) (3 271) 9 151
Reconciliation of intangible assets – 2010 Fingures in Rand Opening Additions Write Offs Amortisation Closing Balance Balance Computer software 12 149 6 131 - (11 668) 6 612
Figures in Rand Note(s) 2011 2010 4. Trade and other receivables
Trade receivables from exchange transactions 1 141 118 1 460 393 Fair value adjustment debtors (90 316) (80 597) Provision for doubtful debts (22 597) (228 148) Other receivables 103 001 47 007 Prepayments 22 722 - 1 153 928 1 198 655
Reconciliation of provision for doubtful debts Opening balance (228 148) (642 224) Provision for impairment 205 551 414 076 (22 597) (228 148)
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BSA Annual Report 2010/11 Boxing South Africa Annual Financial Statements for the year ended 31 March 2011
NOTES TO THE FINANCIAL STATEMENTS (continues)
Figures in Rand Note(s) 2011 2010 5. Cash and cash equivalents Cash on hand 1 320 4 612 Msopi Trust - 1 055 Bank balances 3 644 768 4 920 275 3 646 088 4 925 942
6. Financial asset Financial asset measured at fair value through profit or loss 247 036 126 335
BSA invests R10 000 per month for the purpose of Boxers’ insurance.
7. Finance lease obligation Minimum lease payments due - within one year 150 029 136 748 - in second to fifth year inclusive 467 265 164 196 617 294 300 944 Less: future finance charges (428 077) (860) Present value of minimum lease payments 189 217 300 084
Present value of minimum lease payments due - within one year 26 168 18 262 - in second to fifth year inclusive 163 049 281 822 189 217 300 084
Non-current liabilities 163 049 281 822 Current liabilities 26 168 18 262 189 217 300 084
Finance lease relate to motor vehicles and office equipment with lease terms of 5 years. The entity’s obligations under finance leases are secured by the lessors’ title to the leased asset. The current portion of the finance leases are based on the interest expense to be incurred 65
BSA Annual Report 2010/11 Boxing South Africa Annual Financial Statements for the year ended 31 March 2011
NOTES TO THE FINANCIAL STATEMENTS (continues)
in the next financial year based on monthly payments.
Figures in Rand Note(s) 2011 2010 8 Trade and other payables
Trade payables 878 051 2 495 182 Deferred income – conditional grant - 695 000 SARS 8 604 497 6 113 936 AGSA 755 162 - Sundry payables 617 288 302 103 Accrued expenses 20 684 42 593 Insurance received in advance 518 515 588 117 Fair value adjustment creditors (139 233) (46 890) 11 254 964 10 190 040
Trade payables consist of balances owing to promoters arising from tournaments that have occurred. Insurance received in advance relates to insurance received from boxers and will be paid over to the relevant service providers in the next financial year.
9. Provisions
Leave pay 79 694 (18 883) Other 46 000 46 000 125 694 27 117
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BSA Annual Report 2010/11 Boxing South Africa Annual Financial Statements for the year ended 31 March 2011
NOTES TO THE FINANCIAL STATEMENTS (continues)
Figures in Rand Note(s) 2011 2010 10. Operating lease commitments
Minimum lease payments
- within one year 187 768 - - in second to fifth year inclusive 220 674 - 408 442 -
11. Contingent liability
Legal proceedings - Sponsorship 1 197 000 1 197 000 Legal proceedings - Legal fees 519 976 519 976 Legal proceedings - Unpaid rental 310 609 310 609 Legal proceedings - Unpaid service fees - 111 025 2 027 585 2 138 610
Boxing SA is a defendant in a legal action involving a dispute with a sponsorship company contracted to secure sponsors on behalf of Boxing SA. The directors are of the opinion that it is improbable that the plaintiff will be successful. The company has not followed up on the matter.
Boxing SA is disputing legal fees charged by their former attorneys, as they consider the fees to be excessive in terms of the work performed. The attorneys have not pursued the case further.
Boxing SA is a defendant in a case for premises for unpaid rental, which is currently being defended by Du Preez and Associates. Summons was issued on 11 August 2009 and an intention to defend was filed on the 4 September 2009.
These cases have not been resolved as at 31 March 2011 and are carried forward from the prior year.
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BSA Annual Report 2010/11 Boxing South Africa Annual Financial Statements for the year ended 31 March 2011
NOTES TO THE FINANCIAL STATEMENTS (continues)
Figures in Rand Note(s) 2011 2010 12. Revenue
Sanctioning fees 1 790 724 3 901 586 Sponsorships - 400 000 Grant income - Sports and Recreation South Africa 2 208 000 3 087 000 License fees 527 588 520 278 Grant income - National Lotteries 672 054 - Grant income - Eastern Cape 1 000 000 - 6 198 366 7 908 864
The amount included in revenue arising from the exchange of goods and services are as follows:
Sanctioning fees 1 790 724 3 901 586 License fees 527 588 520 278 2 318 312 4 421 864
The amount included in revenue arising from non exchange of goods and services are as follows:
Sponsorships - 400 000 Grant income - Sports and Recreation South Africa 2 208 000 3 087 000 Grant income - National Lotteries 672 054 - Grant income - Eastern Cape 1 000 000 - 3 880 054 3 487 000
13. Other income Insurance revenue 347 600 57 000 Forfeit fees 24 609 69 419 Provision for bad debts adjustment 205 551 - Extinction of debt by prescription 774 020 - 1 351 780 126 419 68
BSA Annual Report 2010/11 Boxing South Africa Annual Financial Statements for the year ended 31 March 2011
NOTES TO THE FINANCIAL STATEMENTS (continues)
Figures in Rand Note(s) 2011 2010 14. Employee costs
Basic salaries 2 152 158 1 834 467 UIF 31 758 30 614 SDL 24 825 21 243 PAYE 505 415 413 918 Leave payments 98 577 (44 925) Subsistence allowance 3 461 4 090 Group life employee benefit 33 601 34 417 Other salary related costs 9 767 67 032 2 859 562 2 360 856
15. Operating (deficit)/surplus
Operating (deficit)/surplus for the year is stated after accounting for the following:
Operating lease charges Premises - Contractual amounts 173 453 112 039 Legal expenses 72 954 189 732 Auditors’ remuneration 902 653 250 116
16. (Deficit)/surplus for the year The (deficit) for the year is stated after accounting for the following costs: Finance costs (1 561 752) (448 978) Fair value adjustments 82 624 (23 613) Interest income 46 667 16 287
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BSA Annual Report 2010/11 Boxing South Africa Annual Financial Statements for the year ended 31 March 2011
NOTES TO THE FINANCIAL STATEMENTS (continues)
Figures in Rand Note(s) 2011 2010 17. Cash generated from operations
(Deficit)/surplus for the year (2 709 332) 2 176 810 Adjustment For:
Depreciation and amortisation 155 409 163 917 Interest income (46 667) (16 287) Finance costs 85 862 - Interest incurred 1 475 890 448 978 Adjustment for provision (205 551) - Extinction of debt by prescription (774 020) - Loss on de-recognition of leased asset 148 730 - Bad debts 141 211 - Prior period adjustments (221 638) - Asset write off 5 226 - Fair value adjustments (82 624) 23 613 Changes in working capital: Decrease in trade and other receivables 44 727 (815 987) Increase in trade and other payables 1 064 924 1 953 884 Movement in provisions (98 578) - Movement in operating lease liability (13 202) - (1 029 633) 3 934 928
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BSA Annual Report 2010/11 Boxing South Africa Annual Financial Statements for the year ended 31 March 2011
NOTES TO THE FINANCIAL STATEMENTS (continues)
Figures in Rand Note(s) 2011 2010 18. Related parties
Relationships Parent department - Sports and Recreation South Africa Fellow controlled entity - South African Institute for Drug Free Sport Affiliated federation - The South African National Boxing Organisation Provincial department - The Eastern Cape Provincial Government Key management personnel - Remuneration of Key Management Personnel
Related party transactions
Grant received from Sports and Recreation South Africa 2 208 000 3 087 000 Grant received from Eastern Cape Provincial Government 1 000 000 - Remuneration of key management personnel (Refer to Note 19) 876 347 602 790
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BSA Annual Report 2010/11 Boxing South Africa Annual Financial Statements for the year ended 31 March 2011
NOTES TO THE FINANCIAL STATEMENTS (continues)
19. Members’ emoluments
The amount reflected as member’s fees in the detailed statement of financial performance relates to non-executive members remuneration for this financial year. The board members have not been paid these amounts as well as prior amounts therefore BSA has raised a provision for these balances and they will be paid in the next financial year.
2011 Name Non-executive Honorarium Other Total members allowances
Dr. P. Ngatane Chairperson 21 156 - 21 156 S. Sodo Board member 7 869 - 7 869 A. Jonas Board member 7 869 - 7 869 C. Bassuday Board member 2 623 - 2 623 A. Sidinile Board member 15 738 - 15 738 M. Syfris Board member 7 869 - 7 869 S. Selebi Board member 15 738 1 463 17 201 78 862 1 463 80 325
2010 Name Non - executive Honorarium Other Total members allowances
Dr. P. Ngatane Chairperson 13 308 - 13 308 S. Sodo Board member 9 900 - 9 900 A. Jonas Board member 9 900 - 9 900 C. Bassuday Board member 9 900 - 9 900 A. Sidinile Board member - - - M. Syfris Board member - - - S. Selebi Board member - - - 43 008 - 43 008 72
BSA Annual Report 2010/11 Boxing South Africa Annual Financial Statements for the year ended 31 March 2011
NOTES TO THE FINANCIAL STATEMENTS (continues)
2011
Name Executive Basic Acting Other Total member salary allowance allowances L. Mtya Acting CEO 395 137 297 928 102 957 796 022
2010 Name Executive Basic Acting Other Total member salary allowance allowances L. Mtya Acting CEO 233 632 248 273 77 877 559 782
20. Risk management Financial risk management
Boxing South Africa (BSA) is exposed to financial risk through its financial assets and financial liabilities.
The board members have overall responsibility for the establishment and oversight of BSA’s risk management framework. The board has established the Audit committee, which is responsible for monitoring BSA’s risk management policies.
BSA’s risk management policies are established to identify and analyse the risks faced by BSA, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in BSA’s activities. BSA, through its training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations.
BSA’s Audit committee oversees how management monitors compliance with BSA’s risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by BSA. BSA’s Audit committee is assisted in its oversight role by Internal audit. Internal audit undertakes both regular and ad-hoc reviews of risk management controls and procedures, the results of which are reported to the Audit committee.
BSA’s exposure to risk, its objectives, policies and processes for managing the risk arising from its financial instruments and methods used to measure BSA’s exposure to these risks, have not changed significantly from the prior year. BSA does not have major exposure to credit, liquidity and market risk, which is described in more detail below.
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BSA Annual Report 2010/11 Boxing South Africa Annual Financial Statements for the year ended 31 March 2011
NOTES TO THE FINANCIAL STATEMENTS (continues)
Figures in Rand 2011 2010
Liquidity risk
Liquidity risk is the risk of not being able to meet commitments, repayments, withdrawals and insurance claims payable in full at any time. Liquidity risk in relation to BSA is that the entity will not meet its obligations as they become due because of the inability to obtain adequate funding or liquidate assets. The entity manages liquidity risk through an ongoing review of future commitments and credit facilities.
Cash flow forecasts are prepared and adequate utilised borrowing facilities are monitored.
Interest rate risk
BSA has limited exposure to interest rate risk. Cash and cash equivalents carry interest at a variable rate. The entity is not permitted to have an overdraft facility, in terms of the PFMA.
Financial risk sensitivity analysis Interest rate sensitivity Interest received for the period 5 407 16 287
A change of 100 basis points in South African prime interest rate at the reporting date would have increased or decreased the surplus by amounts shown below. The analysis assumes that all other variables remain constant. The analysis assumes that all other variables remain constant. The analysis is performed on the same basis for 2009 and 2010.
Increase of 100 basis points 49 564 49 564
Decrease of 100 basis points (49 564) (49 564)
Credit risk
Credit risk is the risk that one party to the financial instrument will cause a financial loss for the other party to a financial instrument by failing to meet an obligation.
Credit risk arises from cash deposits with banks and financial institutions, cash and cash equivalents, outstanding receivables and 74 committed transactions. The entity only deposits cash with major banks with high quality credit standing. BSA management evaluates
BSA Annual Report 2010/11 Boxing South Africa Annual Financial Statements for the year ended 31 March 2011
NOTES TO THE FINANCIAL STATEMENTS (continues)
credit risk relating to customers on an ongoing basis.
The credit quality of the customer is assessed taking into account its financial position, past experience and other factors. Individual risk limits are set based on internal or external ratings in accordance with limits set by the board. The utilisation of credit limits is regularly monitored. No credit limits were exceeded during the reporting period, and management does not expect any deficits from non- performance by these counterparties.
Financial assets which potentially subject the company to concentrations of credit risk consist principally of trade receivables from boxing promoters.
BSA’s exposure to credit risk is influenced mainly by advances to boxers and staff debt. The credit risk will increase should BSA not fullfil its obligation.
Market risk
Market risk is the risk that changes in market prices, such as interest rate, foreign exchange rates and equity prices will affect the value of BSA’s financial assets and the amount of BSA’s financial liabilities.
The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return on risk. The nature of BSA’s exposure to market risk and its objectives, policies and procedures for managing market risks have not changed significantly from the prior period.
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BSA Annual Report 2010/11 Boxing South Africa Annual Financial Statements for the year ended 31 March 2011
NOTES TO THE FINANCIAL STATEMENTS (continues)
Financial assets by category The accounting policies for financial instruments have been applied to the line items below: 2011 Figures in Rands Total Trade and other receivables 1 153 928 Cash and cash equivalents 3 646 088 Financial asset 247 036 5 047 052
2010 Figures in Rands Total Trade and other receivables 1 198 655 Cash and cash equivalents 4 925 942 Financial asset 126 335 6 250 932
Financial liabilities by category The accounting policies for financial instruments have been applied to the line items below: 2011 Figures in Rands Total Trade and other payables 11 254 964 Finance lease obligation 189 217 Operating lease liability 13 202 Provisions 125 694 11 583 077
2010 Figures in Rands Total Trade and other payables 10 190 040 Finance lease obligation 300 084 Provisions 27 117 76 10 517 241
BSA Annual Report 2010/11 Boxing South Africa Annual Financial Statements for the year ended 31 March 2011
NOTES TO THE FINANCIAL STATEMENTS (continues)
Figures in Rand 2011 2010
21. Going concern
In the current year the entity incurred a net deficit of R 2 709 332 (2010: R 2 176 810 surplus) and the total liabilities exceed its total assets by R 6 248 040 (2010: R 3 538 708). The going concern risk has been assessed as high.
The reason for the deficit incurred in this financial year is as a result of a decrease in revenue generated as well as excessive interest incurred on overdue account with SARS. No payment to SARS has been made this year since a settlement amount is being negotiated.
BSA receives financial support in the form of a grant from Sports and Recreation South Africa. An additional grant of R4,5 million has been approved in this financial year but not received as at 31 March 2011. This grant will be used to settle excessive liabilities i.e. SARS and AGSA in the next financial year.
22. Fruitless and wasteful expenditure
Suspended employee salary - 550 000 HR consultant costs 37 919 - Insurance claims 90 000 - SARS interest and penalties 1 425 475 615 622 AGSA interest 50 415 - 1 603 809 1 165 622
BSA did not have sufficient funds available to pay AGSA and SARS during the year therefore interest and penalties were incurred on these overdue accounts.
BSA is negotiating with SARS on a settlement amount to be paid up in the next financial year with additional funding to be received from National Treasury.
BSA has agreed on a payment plan to settle AGSA in the next financial year.
BSA incurred the cost of an HR consultant while 2 employees had been trained to perform the relevant duties.
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BSA Annual Report 2010/11 Boxing South Africa Annual Financial Statements for the year ended 31 March 2011
NOTES TO THE FINANCIAL STATEMENTS (continues)
Figures in Rand 2011 2010
23. Irregular expenditure
Unapproved finance lease payments 138 197 - Expenditure in contravention of Supply Chain Management (SCM) regulations 582 111 - 720 308 -
24. Material loss
Licence fee loss 132 335 37 204
25. Subsequent events Non-adjusting events
- 18 April 2011 - The Acting CEO Mr. Loyiso Mtya was suspended by the board. The financial manager, Ms. Tumelo Kekana was appointed as the Acting CEO by the board thereafter.
- 20 April 2011 - An amount of R 1 008 050 was paid to SARS in settlement of the amount owing for the 2010/2011 financial year only.
- 6 May 2011 - The board approved BSA current policies that have been revised and new policies that were created to address control weaknesses existing in the entity.
- 1 June 2011 - The new CEO, Mr. Moffat Qithi was appointed by the Minister of Sports and Recreation and resumed duty.
- 20 June 2011 - An amount of R 4 500 000 was paid to SARS, in full settlement of the balance owing.
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BSA Annual Report 2010/11 Boxing South Africa Annual Financial Statements for the year ended 31 March 2011
NOTES TO THE FINANCIAL STATEMENTS (continues)
Figures in Rand 2011
26. Reconciliation of budget (deficit)/surplus with the (deficit)/surplus in the statement of financial performance
Net (deficit) as per the statement of financial performance (2 709 332)
Adjusted for differences between the budget and actual:
Fair value adjustments 82 624 Decrease in provisions 205 551
Other adjustments:
Decrease in revenue (R10 118 066 – R7 884 988) 2 233 078 Increase in expenditure (R10 118 066 – R10 306 145) 188 079 Net surplus/(deficit) per approved budget -
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BSA Annual Report 2010/11 Boxing South Africa Annual Financial Statements for the year ended 31 March 2011
DETAILED STATEMENT OF FINANCIAL PERFORMANCE
Figures in Rand 2011 2010 Operating expenses
Accounting fees (11 576) (484 650) Advertising (80 193) - Auditors’ remuneration (902 653) (250 116) Bad debts (141 211) (334 657) Bank charges (46 378) (39 312) Consulting and professional fees (128 458) (57 199) Consumables (20 604) (3 823) Donations (5 000) (1 229) Entertainment - (4 550) Conferences and workshops (11 033) (3 470) Skills development - National Lotteries (648 250) (47 915) Skills development - Eastern Cape (1 000 000) - Members emoluments (78 862) (43 008) Tournament expenses - Baby Champs - (1 970) Hire (34 840) - Insurance (274 677) (294 756) Lease rentals (173 453) (112 039) Licence fee loss (132 335) (37 204) Assets written off (5 226) - Loss on derecognition of leased asset (148 730) - Legal expenses (72 954) (189 732) Petty cash expense - (30 000) Storage costs (31 610) (6 237) Repairs and maintenance (48 627) (5 678) Subscriptions (7 642) (5 702) Training - (100 442) Travel and accommodation (625 951) (241 340) 80 Accrued expenses - (70 025)
BSA Annual Report 2010/11 Boxing South Africa Annual Financial Statements for the year ended 31 March 2011
DETAILED STATEMENT OF FINANCIAL PERFORMANCE (continues)
Figures in Rand 2011 2010 BSA annual awards (428 826) - Boxing belts (31 008) - General expenses (91 245) (8 890) Utilities (59 943) (22 032) Postage and courier (9 457) (15 690) Printing and stationery (182 193) (177 683) Publications (3 420) - Telephone and fax (211 091) (236 079) Website (73 250) (2 250) Computer support (91 353) (49 719) (5 812 046) (2 877 396)
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BSA Annual Report 2010/11 Boxing South Africa Annual Financial Statements for the year ended 31 March 2011
Notes
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BSA Annual Report 2010/11