Annual Report 2010|2011 Report Annual www.ecgbb.co.za

ANNUAL REPORT ANNUAL 2011

Title of Publication: Eastern Cape Gambling & Betting Board, Board, Betting & Gambling Cape Eastern Publication: of Title Tel. +27 (0)43 702 8300 | Fax. +27 (0)43 748 2218 748 (0)43 +27 Fax. | 8300 702 (0)43 +27 Tel.

2010 PR121/2011 | ISBN: 978-0-621-40090-8 ISBN: | PR121/2011 P.O. Box 15355 | Beacon Bay | East London | 5205 | London East | Bay Beacon | 15355 Box P.O.

Quenera Office Park | Quenera Drive | Beacon Bay | East London East | Bay Beacon | Drive Quenera | Park Office Quenera

NATIONAL RESPONSIBLE GAMBLING PROGRAMME: 0800 006 008 006 0800 PROGRAMME: GAMBLING RESPONSIBLE NATIONAL ECG&BB Building ECG&BB

2010 2011 ANNUAL REPORT MEC’s Hon Mandla Makupula (Education) and Hon Pemmy Majodina (Social Development) and ECGBB CFO Trevor Harper at the launch of Sunduza JSS Computer Laboratory sponsored by the ECGBB.

Sunduza JSS pupils touching ECGBB sponsored computers for the first time in their lives. Sunduza JSS pupils touching ECGBB sponsored computers for the first time in their lives.

Contents

1. Board of Directors and Management 5 5. gaMING PERFORMANCE 21 1.1 Board of Directors 5 5.1 Revenue and Tax Statistics 21 1.2 Management 5 5.2 Distribution of Gambling and Betting Takings 21

2. Vision and Mission 7 6. audit COMMITTEE REPORT 23 2.1 Vision 7 2.2 Mission 7 7. the AUDITOR GENERAL’S REPORT 25 2.3 Objectives & Functions of the Board 7 8. operational PERFORMANCE 29 3. aCCounting Authority’s Responsibilities and Approval 9 8.1 Introduction 29 8.2 Definitions 29 4. CHAIRPERSON’S REPORT 11 8.3 Performance Against Operational Plan 29 4.1 Overview of Strategic Direction 11 8.4 Performance Report – Annexure 1 37 4.2 Performance Delivery 11 4.3 Community Development Projects 12 9. hr OVERSIGHT STATISTICS 39 4.4 Marketing Activities 12 9.1 ECGBB Organogram 53 4.5 Organisational Alignment and Balanced Score Card 13 4.6 Litigation 14 10. audited Financial Statements 55 4.7 Corporate Governance 15 10.1 Statement of Financial Position 55 4.8 Related-Party Transactions 16 10.2 Statement of Financial Performance 56 4.9 International/Continental Travel 16 10.3 Statement of Changes in Net Assets 57 4.10 Attendance Register for Board and Committee Meetings 16 10.4 Cash Flow Statement 58 4.11 Organisational Review 17 10.5 Accounting Policies 58 4.12 Attracting Investments 17 10.6 Notes to the Annual Financial Statements 60 4.13 Employment 18 4.14 Irregular Expenditure 18 4.15 Responsible Gambling 19 4.16 Operational Performance 19 4.17 Expenditure Relating to Soccer World Cup 19

3 Thumbs Up! CEO Mabutho Zwane and ECGBB staff. 1. Board of Directors and Management

1.1 Board of Directors

1.2 Management

Board of Directors & Senior management 5

2. Vision and Mission

2.1 VISION

Eastern Cape: The Best, Most Efficient, Empowering Gaming Regulator!

2.2 MISSION

In support of the Best Gaming Destination, our We are therefore committed to protecting the public We will achieve this through providing excellent mission is to ensure that the EC Gaming Industry is interest through regulation, licensing and appropriate service to our stakeholders and through facilitating conducted honestly and competitively with maximum enforcement. socio-economic benefits to communities within contribution to society. which we operate.

2.3 OBJECTIVES & FUNCTIONS OF THE BOARD

The Board oversees all gambling and betting activities The functions of the Board include, among others: ~~Determining licence conditions. in the province and matters incidental thereto, as ~~Licensing of the gaming industry. contemplated in the Act and advises the responsible ~~Ensuring compliance with the Act by all licensees. It is the responsibility of the Board to ensure that an Member of the Executive Council of the Province for ~~Collection of gambling taxes on behalf of the accountable and credible legal gaming industry exists Economic Development, Environmental Affairs & province. in the province and that internationally recognised Tourism on gambling matters and to exercise certain ~~Combating illegal gambling. standards in the industry are complied with. further powers contemplated in the Act. ~~Undertaking licensing investigations. ~~Issuing and revocation of licences.

Vision & Mission 7

3. Accounting Authority’s Responsibilities and Approval

The directors are required by the Public Finance standards for internal control aimed at reducing the light of this review and the current financial position, Management Act (Act 1 of 1999), to maintain risk of error or deficit in a cost effective manner. they are satisfied that the entity has or has access adequate accounting records and are responsible The standards include the proper delegation of to adequate resources to continue in operational for the content and integrity of the annual financial responsibilities within a clearly defined framework, existence for the foreseeable future. statements and related financial information included effective accounting procedures and adequate in this report. It is the responsibility of the directors to segregation of duties to ensure an acceptable level Although the accounting authority is primarily ensure the annual financial statements fairly represent of risk. These controls are monitored throughout the responsible for the financial affairs of the entity, they the state of affairs of the entity at the end of the financial entity and all employees are required to maintain are supported by the entity’s external auditors. year and the results of its operations and cash flows the highest ethical standards in ensuring the for that period. The external auditors are engaged to entity’s business is conducted in a manner that in The external auditors are responsible for express an independent opinion on the annual financial all reasonable circumstances is above reproach. independently reviewing and reporting on the entity’s statements and were given unrestricted access to all The focus of risk management in the entity is on annual financial statements. The annual financial financial records and related data. identifying, assessing, managing and monitoring statements have been examined by the entity’s all known forms of risk across the entity. While external auditors and their report is presented on The annual financial statements have been operating risk cannot be fully eliminated, the pages 25 to 27. prepared in accordance with standards of Generally entity endeavours to minimise it by ensuring that Recognised Accounting Practice (GRAP), including appropriate infrastructure, controls, systems and The annual financial statements set out on pages any interpretations, guidelines and directives issued ethical behaviour are applied and managed within 55 to 76, which have been prepared on the going by the Accounting Standards Board. predetermined procedures and constraints. concern basis, were approved by the accounting authority on 31 May 2011 and were signed on its The annual financial statements are based on The directors are of the opinion, based on the behalf by appropriate accounting policies consistently applied information and explanations given by management, and supported by reasonable and prudent judgments that the system of internal control provides reasonable and estimates. assurance that the financial records may be relied on for the preparation of the annual financial statements. The directors acknowledge that they are ultimately However, any system of internal financial control can responsible for the system of internal financial provide only reasonable, and not absolute, assurance R M ZWane adV A MAYOSI control established by the entity and place against material misstatement or deficit. Chief Executive Officer chairperson considerable importance on maintaining a strong control environment. To enable the directors to meet The directors have reviewed the entity’s cash flow these responsibilities, the accounting authority sets forecast for the year to 31 March 2012 and, in the

Accounting Authorities Responsibilities & Approval 9

4. CHAIRPERSON’S REPORT

4.1 OVERVIEW OF STRATEGIC DIRECTION

The Eastern Cape Gambling and Betting Board’s licensees operate. A full report on this exercise is Divisions. Furthermore, the Board launched a new Board of Directors approved a revision of its Mission, presented in paragraph 5. logo in line with its stated strategic goals. The Board arising from the Board’s commitment of running an also has undertaken to fund community development efficient organisation that ensures the Eastern Cape The ECGBB currently has 8 Operating Divisions. projects to contribute to socio-economic development gambling industry is conducted competitively. In turn, However, part of the strategic review necessitated in the province. The Board is assisting in the building the Board wants to position the ECGBB, not only as a thorough work organisation review to support the or renovations of schools, crèches, sport (athletics an efficient regulator, but also one that empowers new strategy. It is anticipated this will change the and boxing) promotions, funding of orphanages, old the operators and communities within which the ECGBB’s structure in future to reflect fewer Operating age homes and feeding schemes.

4.2 PERFORMANCE DELIVERY

4.2.1 Global economic recession 4.2.3 Review of ECGBB Act in its structure that will strengthen this weakness – Like most industries, the economic recession in the The Board is currently reviewing our enabling strategic services. The re-focusing of the organisation past two years has affected the gaming industry legislation to ensure that it creates an efficient has resource implications – more staff will need to be negatively. For two years the revenue collected has environment for the collection of revenue and all hired to achieve its strategic goals – from the current been around R90-million and the gross gaming matters incidental to its mandate. 27 to 41 staff members. revenue stabilising around the R1-billion mark. 4.2.4 Organisational environment The environment in which ECGBB operates is largely 4.2.2 Industry performance The ECGBB has undertaken a comprehensive subservient to the gaming environment that prevails The gambling industry continues to create jobs, promote process of organisational development, aligning the in the country and world-wide, and that can be tourism and facilitates and contributes to significant organisation to the new strategy. This will result summarised as follows: infrastructural development and investments. In the in a new structure and completion of a Balanced ~~A highly litigious environment that emanates from financial year 2010/11, the industry employed 3 882 Scorecard that will be easy to use as a tool to measure the high stakes in this lucrative business with good people and contributed to local economic development the attainment of our strategic goals. returns. through concessions to local companies. There were ~~Consequent contestations that tend to lead to drawn more than four million visitors to the casinos, making The organisation identified a weakness in its planning, out cases. them key facilitators of tourism. monitoring and evaluation and has created a position ~~A highly and strictly regulated industry.

Chairperson's Report 11 12 EASTERN CAPE GAMBLING AND BETTING BOARD ANNUAL REPORT 2010|2011

~~Technology driven, necessitating constant sharing ~~Global economic recession. ~~Economic and structural constraints that hamper of latest developments, practices and attending ~~Land claim issues that tend to delay projects – eg the broadening of ownership to new entrants or international gaming regulators’ conferences. casino development projects. potential entrants.

4.3 COMMUNITY DEVELOPMENT PROJECTS

The Eastern Cape Gambling and Betting Board (ECGBB) funded a number of community projects during the financial year under review. These were:

BENEFICIARY VALUE (R) DESCRIPTION AREA Sunduza Junior Secondary 100,000 Computers and computers lab Sterkspruit Ethembeni Old Age Home 20,000 Food parcels Mdantsane Nceduluntu Support Group 20,000 Food parcels and toys Reeston Abonwabisi Community Home 20,000 Food parcels and toys Ziphunzana Nqadu Great Place 162,000 Mobile gym Willowvale Sinempendulo Offender Rehabilitation Programme 90,000 Sponsorship Port Elizabeth

The projects were varied in nature, covering different needs of specific communities. The projects covered early childhood development support, old age home support and education.

4.4 MARKETING ACTIVITIES

The ECGBB restructured its Research and Communication As a marketing strategy the Board identified boxing supported Mr Amos Zingo, a runner for Real Gijimas, Unit to focus on marketing. This has resulted in an as a critical sport that could be used as a platform who participated in the Comrades Marathon and was improved footprint and presence in the public eye. The to disseminate its responsible gambling messages, a bronze medallist. Board launched its new corporate image and strategy in brand development as well as supporting the sport East London on 23 November 2010. in its quest to become professional. The Board also 4.5 ORGANISATIONAL ALIGNMENT AND BALANCE SCORE CARD

4.5.1 BACKGROUND stakeholders which could be actioned, measured and The role of the ECGBB is to rather provide services The ECGBB Board approved the 5-year Strategic reviewed at all levels. During this process it became within a legislative framework as captured in the and Performance Plan on the 11 September 2009. evident that the Vision and Mission needed to be above Mission. The current Vision is therefore more During the review process the Vision was amended amended so that the strategy of the ECGBB could be applicable to licensees in the Eastern Cape who are to read “EASTERN CAPE: THE BEST GAMING translated to all levels and implemented effectively. the accountable parties to attract potential tourists to DESTINATION!” The reason for this thinking can be gleaned from the their casinos rather than the ECGBB. It was resolved motivation below. that the Vision be amended to capture where the In support of this, the mission developed and ECGBB sees itself in the future, a future they can be approved was: 4.5.2 MOTIVATION held accountable for, a future they can impact – a ~~To ensure that the Eastern Cape gaming industry The ECGBB Act stipulates that the core business of future all stakeholders can lead and follow. is conducted honestly and competitively with the ECGBB is to regulate the industry as depicted in maximum contribution to society; is free from the Mission above, however the Vision tells a different It was therefore proposed that the current Vision be corruption and inspires public trust and confidence. story. The way it is currently worded suggests that amended to read: Eastern Cape: The Best, Most ~~To protect the public interest through regulation, the core business of the ECGBB is to attract potential Efficient, Empowering Gaming Regulator! licensing and appropriate enforcement in the gaming tourists to the Eastern Cape. The decision to gaming industry. visit the Eastern Cape for the best gaming experience The efficiency talks to the fact that the ECGBB wants ~~To maintain and regulate a successful gaming industry will not be made based on the fact that the ECGBB is to be seen to be running an efficient organisation which creates jobs, generates revenue and extends an efficient regulator, but rather by the unforgettable which ensures that the EC gaming industry is in turn socio-economic benefits to communities in the province. gaming experience the gaming operators offer their conducted competitively. ~~To ensure that the Eastern Cape gaming industry customers and whether they fulfil this expectation provides and maintains world – class facilities and which will ensure repeat visits. The empowering component talks to the fact that the services to customers. ECGBB wishes to position itself in the market not only The ECGBB has a very limited role to play in how the as an efficient regulator but also one which empowers During the strategic review process it was also gaming operators run their organisations which in the operators but more importantly the communities agreed that an exercise would be conducted to turn make them attractive to potential tourists – this within which licensees operate in the Eastern Cape. align the structure to the strategy and implement is the sole responsibility of the gaming operators with the Balanced Scorecard as part of an Integrated legislative support from the ECGBB. The ECGBB This is an important leg of the strategy which is currently Performance Management System. cannot be held accountable for a future they cannot under discussion in terms of the implementation of an influence. This would make the stakeholders in the SED entity and critical in terms of the new image the An essential part of the score carding process was to organisation demotivated and make for a difficult ECGBB wants to promote and brand. translate the strategy into something meaningful to all organisation to lead.

Chairperson's Report 13 14 EASTERN CAPE GAMBLING AND BETTING BOARD ANNUAL REPORT 2010|2011

The Mission has also been slightly amended to The current Vision is therefore more applicable 4.5.3 BALANCED SCORE CARD PROGESS TO DATE capture the essence of the ECGBB and more to licensees in the Eastern Cape who are the 1. Vision amended. importantly why the ECGBB exists in a shorter more accountable parties to attract potential tourists to 2. Mission amended. concise paragraph. their casinos rather than the ECGBB. Therefore the 3. Strategic Scorecard completed. proposed amendment to the Vision captures where 4. 7 Operational Scorecard completed. It was therefore resolved that the current Mission the ECGBB sees itself in the future where it is held 5. Performance centre workshops completed. be amended to read: In support of the Best Gaming accountable, a future it can impact and where all 6. IPA’s developed. Destination, our mission is to ensure that the EC Gaming stakeholders can lead and follow. Industry is conducted honestly and competitively with 4.5.4 ORGANISATIONAL DESIGN maximum contribution to society. It must be noted that the amended Mission captures The Organisational Design work was done most of what was in the previous Mission, but is more simultaneously as the Balanced Score Card process. We are therefore committed to protecting the public concise and focuses on three main features namely: The following has been developed: interest through regulation, licensing and appropriate ~~Why the ECGBB exists. ~~Job descriptions. enforcement. ~~The ECGBB core business. ~~Service level model. ~~How the ECGBB intends to deliver on its Vision. ~~Functional structure. We will achieve this through providing excellent service to our stakeholders and through facilitating Finally, all three of the above tell a story and provide socio-economic benefits to communities within which a logical business case for the ECGBB stakeholders we operate. to both live, lead and deliver against.

4.6 LITIGATION

The gaming environment is litigious because of the high stakes in the business. A few of our licensees took us to court. The table below give a summary of the litigations:

LITIGATIONS SUMMARY OF THE CASE STATUS ECGBB VS ELONWABENI RESORTS (PTY) LTD Losing bidder (Elonwabeni) for Zone 4 casino licensing launched Boarda is appealing the court judgment to the Supreme Court of high court application against the Board challenging the awardingAppeal. of the licence to the competitor (preferred bidder) and the court ruled in the applicant’s favour. The court ruled in favour of Vukani. ECGBB VS VUKANI GAMING CORPORATION EASTERN CAPEVukani Gaming Corporation Eastern Cape (Pty) Ltd launched an urgent (PTY) LTD court application at the High Court of Grahamstown demanding a takeover of LPM sites that were licensed under the liquidated Route Operator (Luck–At–It Eastern Cape (Pty) Ltd). LITIGATIONS SUMMARY OF THE CASE STATUS ECGBB VS MBIZANA DEVELOPMENT TRUST The Board launched a court application against the Mbizana The Court ruled in favour of the Board. Development Trust trustees that they be removed as trustees for lack of proper management. LUCK–AT–IT EASTERN CAPE (PTY) LTD VS ECGBB A claim for R 1,182,953 including corporate social investment Court awarded in favour of the Board. commitments – outstanding levies/ taxes and lost taxes as a consequence of Luck-At-It being liquidated – has been lodged with the liquidators, Progressive Administration (Cape) (Pty) Ltd.

4.7 CORPORATE GOVERNANCE

4.7.1 The Board of Directors Board members act as the accounting authority 4. A person who has knowledge of and experience The Honourable MEC for Economic Development, in terms of the PFMA. The accounting authority is in the field of welfare or community or socio- Environmental Affairs & Tourism appointed a new responsible for determining strategic direction and economic development. Board of Directors who commenced their duties on 1 policy, and for the monitoring of operational performance 5. One member to represent the Department of April 2011. The new Board members are: and management. The Board meets regularly. Safety & Security in the Provincial Government. ~~Adv N Mayosi (Chairperson) 6. One member to represent the Department of ~~Mr O Mtati (Deputy Chairperson) The Board subscribes to good corporate governance Economic Development, Environmental Affairs & ~~Ms Y Makhasi and to this end all the board members as well as senior Tourism in the Provincial Government. ~~Mr P Voges management are members of the Institute of Directors 7. One member to represent the Department of ~~Mr Z Nomafu and underwent training to familiarise themselves with Finance in the Provincial Government. ~~Mr M Vena the latest King report on corporate governance. 8. A person to represent the community in general. ~~Mr V Tshangana 9. The Chief Executive Officer, who is not entitled to ~~Ms P Nqakula The Board was fully constituted during the year under vote. ~~Mr RM Zwane (CEO, ex officio) review. The Board members are: 1. A legal practitioner of at least five years’ 4.7.2 Board Committees The Board is established as a public entity in terms standing. During the year under review, the Board instituted of the Gambling and Betting Act, 1997 (Act No. 5 2. A chartered accountant of at least five years’ various committees to effectively discharge its duties. of 1997)(Eastern Cape) and is listed as a provincial standing. The governance structure of the Board is shown in public entity in Schedule 3C of the Public Finance 3. An individual who has knowledge of and the figure below: Management Act, 1999 (Act No. 1 of 1999). The involvement in the tourism industry.

Chairperson's Report 15 16 EASTERN CAPE GAMBLING AND BETTING BOARD ANNUAL REPORT 2010|2011

Corporate Governance Committees of the Board

ECG&BB Board of Directors

Audit & Compliance & Finance Legislative HR & Special Risk Licensing Committee Review Remuneration Projects Committee Committee Committee Committee Committee

4.8 RELATED-PARTY TRANSACTIONS

Related party transactions occurred during the financial year under review (see detail on page 70).

4.9 International/CONTINENTAL TRAVEL

Conference Dates Nature Of Conference/Trip Attendees 07 – 12 June 2010 Asia Global Gaming Expo (G2E) SL Majombozi, A Ntsonkota September 2010 Australian Expo M Vanda, D Mzonke 14 – 17 September 2010 8th European Conference on Gambling Studies & Policy Issues: Vienna, Austria RM Zwane, K Canca, CTS Cossie, A Bomvu 9 – 13 October 2010 International Association of Gaming Regulators (IAGR) Conference: Washington DC SL Majombozi, RM Zwane, P White 25 – 27 January 2011 ICE Totally Gaming Conference: London SL Majombozi, M Vanda, B Mnqokoyi 4.10 ATTENDANCE REGISTER FOR BOARD AND COMMITTEE MEETINGS 2010/2011 FINANCIAL YEAR

Legislation Review Compliance and Remuneration Committee Audit and Ris k Finance Committee Committee Licencing Committee MeetingS (2) MeetingS (4) Other Board Meetings (11) Committee Meetings (5) Meetings (2) Meetings (4) C A C A C A C A C A C A Name S L Majombozi Chair 11 Invited 3 Invited – Invited 2 Invited 1 Invited 3 4 K Canca Member 10 Member 2 Member 4 Member 4 4 A Ntsonkota Member 8 Chair 4 4 N Tom Member 5 Chair 2 Chair 2 2 N Mtakati Member 5 Member 1 Member 1 3 CTS Cossie Member 5 Chair 4 Member 2 3 P White Member 9 Chair 5 4 A Mabizela Member 10 Member 2 2 S Whitfield Member 4 R Hill Member 5 1 Key: C = Capacity | A = Attendance | Other = Special Board Meetings

4.11 ORGANISATIONAL REVIEW

In the year under review, all senior management which will be more responsive to the needs of the organisation to be more responsive to the needs of positions were filled. This includes the critical Gaming Industry and Strategic Intent of the 2010/11 the gaming industry in the Eastern Cape as well as position of the Chief Financial Officer and Manager: – 2114/15 Strategic Plan. A detailed organogram is the complex socio-economic needs of the province. Compliance and Licensing. contained on page 53 of the annual report. This will be actioned through carefully designed sets of measures which will hold all stakeholders The ECGBB has taken the opportunity afforded In addition, this process has resulted in the translation accountable for specific deliverables including license by the need to re-align the organisation with the of the ECGBB Strategy into an Integrated Performance holders in terms of meeting their corporate social requirements of the strategy and socio-economic System with meaningful Strategic and Operational and environmental responsibility commitments, as realities of the province, to undertake a radical Scorecards at all levels of the organisation, Individual required in the casino license conditions. review of the structure. This has resulted in a more Performance Agreements and Development Plans. streamlined structure and supporting job descriptions This coupled with the new structure will allow the

Chairperson's Report 17 18 EASTERN CAPE GAMBLING AND BETTING BOARD ANNUAL REPORT 2010|2011

4.12 ATTRACTING INVESTMENTS

The Board secured close to R1,4-billion re- Zone 1 – R1-billion re-investment in the Boardwalk licensing of Hemingways Casino. investment through the casino re-licensing process Casino in Port Elizabeth Zone 5 – R340-million re-investment in the re- in the following casino zones of the province: Zone 2 – R400-million re-investment in the re- licensing of Wild Coast Sun Casino.

4.13 EMPLOYMENT

The gaming industry has created much needed employment opportunities in the province, as depicted below:

Contributions to direct jobs – Eastern Cape

FY2007 FY2008 FY2009 FY2010 ECGBB 26 28 25 27 Casinos 4,961 4,041 3709 2914 Limited Payout Machines 242 169 176 720 Hourseracing industry 278 329 268 221 TOTAL 5,507 4,567 4178 3882

In the year under review and in 2011/2012 the re-investments in Zone 1, Zone 2 and Zone 5 will create more than 5 000 new jobs during the construction phase combined, as well as more than 500 permanent jobs.

4.14 IRREGULAR EXPENDITURE

As descibed in note 32 and 33 of the financial was approved by the board by approving the monthly this over expendiure by R 691 884. The other major statements, the Board incured irregular expenditure management accounts. These monthly management over expenditure was incurrred in Risk management of R 1 657 835. The Auditor General regards the accounts were however not signed by the Board. The and Bussiness Development costs. expenditure exceeding the budget as irregular. The internal Auditors concur with the Board that this is board is of the oppinion that this is not irregular as it not irregular expenditure. The Audit fees were part of 4.15 RESPONSIBLE GAMBLING

The gambling industry, including gambling The NRGP conducted TV, radio and print media applications. To ensure compliance with requirements regulators, in South Africa established and funded public awareness campaigns on gambling with of the legislation, all advertising by licence holders the National Responsible Gambling Programme specific emphasis during the festive season. in the province is vetted by the Board. All adverts (NRGP) to promote responsible gambling. The NRGP are required to carry slogans relating to responsible conducts responsible gambling campaigns and In further pursuit of responsible gambling, the gambling and must contain the contact details of the public education about gambling. Board received and processed 324 self exclusion National Responsible Gambling Programme.

4.16 OPERATIONAL PERFORMANCE

The Board received R23-million annual grant funding year. The financial performance of the Board is fully The Board has reported a deficit of R4,3-million from the Department Economic Development, disclosed in the accompanying annual financial which was funded through the Board’s own cash Environmental Affairs & Tourism (DEDEAT). Gambling statements. The total Gross Gaming Revenues (GGR) reserves. A detailed analysis on the causes of a and betting taxes, fees and interest collected during generated in the financial year under review was deficit is presented in paragraph 4.14 above. the financial year under review totalled R90.1- R1.1-billion. Full details are contained in the annual million (2009/10: R89,7-million). The recession had financial statements. a negative impact in revenue collection resulting in revenue levels equivalent to the previous financial

4.17 EXPENDITURE RELATING TO SOCCER WORLD CUP The Board did not incur expenditure as a result of the soccer World Cup for clothing, tickets, accommodation or transport.

Adv N Mayosi CHAIRPERSON

Chairperson's Report 19

5. GAMING PERFORMANCE

5.1 Revenue and Tax Statistics

2010-2011 Financial Year vs 2009-2010 TOTAL INDUSTRY Gross Gaming Revenue CASINOS RACING LPM INDUSTRY Gross Gaming Revenue Gross Gaming Revenue Gross Gaming Revenue 1100

1000 150 150 1169.6 1000 1137.9

900 135 135 900

800 120 120 800

952.1 700 916.4 105 105 700

600 115.7 90 118.0 90 600 Gambling Taxes Gambling Taxes Gambling Taxes Gambling Taxes 500 100 75 15 101.9 75 103.6 15 500 100

400 80 60 12 60 12 400 80

300 60 45 9 45 9 300 90.2 60 87.4

200 73.8 40 70.6 30 6 30 10.2 6 10.4 200 40

100 20 15 6.3 3 6.5 15 3 100 20

0 0 0 0 0 0 0 0 2010|’11 2009|’10 2010|’11 2009|’10 2010|’11 2009|’10 2010|’11 2009|’10 2010|’11 2009|’10 2010|’11 2009|’10 2010|’11 2009|’10 2010|’11 2009|’10 R 000’000 R 000’000 R 000’000 R 000’000 R 000’000 R 000’000 R 000’000 R 000’000

5.2 Distribution of Gambling and Betting Takings: 2010/2011 Financial Year

DISTRIBUTION OF TAKINGS DISTRIBUTION OF TAKINGS DISTRIBUTION OF TAKINGS DISTRIBUTION OF TAKINGS FROM GAMING MACHINES FROM GAMING TABLES FROM THE RACING INDUSTRY FROM THE LPM INDUSTRY 4.45% 0.68% 2.31% 1.34% 0.42% 1.09% 8.50% 14.69% 2.37% 35.96% 1.82%

5.37%

94.45% 81.18% 56.30% 89.07%

Return to Public VAT Casino Revenue Gambling Taxes

Gaming Performance 21

6. AUDIT COMMITTEE REPORT

We are pleased to present our report for the financial conducted our affairs in compliance with this charter. audit reports have been adequately addressed. We are year ended 31 March 2011. satisfied that the internal audit function is operating The effectiveness of internal control effectively. However, we express our concern that a Audit Committee Members and Attendance The system of internal control was not entirely review of the predetermined objectives of the Board The audit committee consists of the members listed effective for the year under review. During the year had not been carried out prior to the compilation of the hereunder and should meet at least four times a year several deficiencies in the system of internal control annual financial statements. as per its approved terms of reference. During the were reported by the internal auditors. current year 5 meetings were held. Auditor-General South Africa Evaluation of Financial Statements We concur with and accept the Auditor-General South Name of Member Number of Meetingsttended A We have: Africa’s report on the annual financial statements, and P White (Chairperson) 5 ~~Reviewed and discussed the annual financial are of the opinion that the audited annual financial S Whitfield 4 statements which have been recommended to the statements should be accepted read together with the R Hill 5 Accounting Authority to be submitted to the Auditor report of the Auditor-General South Africa. General for audit purposes at 31 May 2011. The Board of Directors appointed a new committee ~~Reviewed the Auditor-General South Africa’s manage- The audit committee is however concerned with the who commenced their duties effective 1 April 2011. ment report and management’s response thereto. irregular expenditure highlighted in paragraph 10 of The new audit committee consists of: ~~Reviewed the entity’s compliance with legal and said report and this matter will be investigated in the ~~L Smith (Chairperson) regulatory provisions. year ending 31 March 2012. ~~H Marsberg ~~Reviewed the performance information to be ~~P White approved by the Accounting Authority. Furthermore, the Committee is concerned with the ~~Z Nomafu (Director and Audit Committee member) ~~Reviewed significant adjustments resulting from the audit. outcome of the audit of pre-determined objectives and have requested that this matter be audited by The new audit committee is considered to have the Internal Audit internal audit during the first and second quarters as correct experience, qualifications and skills to carry The Internal Audit function was outsourced to a service well as third and forth quarters for the year ending out their responsibilities effectively. provider from 1st April 2010. A risk assessment 31 March 2012. was performed and an internal audit plan prepared. Audit Committee Responsibility The internal audit has met their plan for the year as We report that we have adopted appropriate formal adjusted where necessary with the approval of the audit terms of reference in our charter in line with the committee. Due to insufficient time lapsing between requirements of Section 38(1)(a) of the Public the internal audit reports and the date of this report, the Loren Smith Finance Management Act, No. 1 of 1999 and audit committee has not been able to assess whether Chairperson of the Audit Committee (Current) Treasury Regulation 3.1. We further report that we the risks identified by the risk assessment and internal 31 May 2011

Audit Committee Report 23

7. THE AUDITOR GENERAL’S REPORT

REPORT OF THE AUDITOR GENERAL TO THE Auditor-General’s responsibility made by management, as well as evaluating the EASTERN CAPE PROVINCIAL LEGISLATURE ON 3. As required by section 188 of the Constitution of overall presentation of the financial statements. THE EASTERN CAPE GAMBLING AND BETTING the Republic of South Africa, 1996 (Act No. 108 BOARD FOR THE YEAR ENDED 31 MARCH 2011 of 1996) and section 4 of the Public Audit Act of 6. I believe that the audit evidence I have obtained is South Africa, 2004 (Act No. 25 of 2004) (PAA), sufficient and appropriate to provide a basis for my A. REPORT ON THE FINANCIAL STATEMENTS my responsibility is to express an opinion on these audit opinion. financial statements based on my audit, Introduction Opinion 1. I have audited the accompanying financial statements 4. I conducted my audit in accordance with International 7. In my opinion, the financial statements present fairly, in of the Eastern Cape Gambling and Betting Board, Standards on Auditing and General Notice 1111 of all material respects, the financial position of the Eastern which comprise the statement of financial position 2010 issued in Government Gazette 33872 of 15 Cape Gambling and Betting Board as at 31 March 2011 as at 31 March 2010, the statement of financial December 2010. Those standards require that I comply and its financial performance and cash flows for the year performance, statement of changes in net assets and with ethical requirements and plan and perform the then ended, in accordance with SA Standards of CRAP statement of cash flows for the year then ended, a audit to obtain reasonable assurance about whether the and in the manner required by the PFMA. summary of significant accounting policies and other financial statements are free from material misstatement. explanatory information, as set out on pages 55 to 76. Emphasis of matters 5. An audit involves performing procedures to obtain 8. I draw attention to the matters below. My opinion is Accounting authority’s responsibility audit evidence about the amounts and disclosures not modified in respect of these matters: for the financial statements in the financial statements. The procedures selected 2. The accounting authority is responsible for the preparation depend on the auditor’s judgement, including the Restatement of corresponding figures and fair presentation of these financial statements in assessment of the risks of material misstatement 9. As disclosed in note 26 to the annual financial accordance with South African Standards of Generally of the financial statements, whether due to fraud or statements certain comparative figures for 31 March Recognised Accounting Practice (SA Standards of GRAP) and error. In making those risk assessments, the auditor 2010 have been reclassified to separately disclose these in the manner required by the Public Finance Management considers internal control relevant to the entity’s amounts in the statement of financial performance. Act of South Africa (PFMA). This responsibility includes: preparation and fair presentation of the financial designing, implementing and maintaining internal control statements in order to design audit procedures that Irregular expenditure relevant to the preparation and fair presentation of financial are appropriate in the circumstances, but not for the 10. As disclosed in note 31 to the annual financial statements that are free from material misstatement, purpose of expressing an opinion on the effectiveness statements the current year approved budget was whether due to fraud or error; selecting and applying of the entity’s internal control. An audit also includes overspent by R1 657 835. This has been disclosed appropriate accounting policies; and making accounting evaluating the appropriateness of accounting policies as irregular expenditure. At year end, this expenditure estimates that are reasonable in the circumstances. used and the reasonableness of accounting estimates was still under investigation.

Auditor General's Report 25 26 EASTERN CAPE GAMBLING AND BETTING BOARD ANNUAL REPORT 2010|2011

Material overspending of the budget reported targets were not: requirements of TR 16A6.3(c). Adequate responses to 11. I draw attention to note 33 to the annual financial ~~Specific in clearly identifying the nature and the advertisement were however received for the bid. statements detailing the under and overspending required level of performance; of the budget for the current year resulting in a ~~Measurable in identifying the required performance; 19. Sufficient appropriate audit evidence could not net overspending of R1 657 835 which has been ~~Time-bound in specifying the time period or be obtained that awards were made to suppliers disclosed as irregular expenditure. deadline for delivery. who provided written proof from the South African Revenue Service that their tax matters are in order B. REPORT ON OTHER LEGAL 15. There was no logical link between the objectives, as per the requirements of Preferential Procurement AND REGULATORY REQUIREMENTS indicators and targets for 62% of the objectives tested. Regulations 16 and TR 16A9.1(d).

12. In accordance with the PAA and in terms of General Reliability of Information 20. Awards were made to bidders who did not submit an notice1111 of 2010, issued in Government 16. The following criteria are relevant to the finding below: SBD 4 declaring whether the bidder or any person Gazette33872 of 15 December 2010, I include below Validity: Actual reported performance has occurred connect with the bidder is employed by the state or if my findings on the annual performance report as set and pertains to the entity the bidder is a legal person, whether the bidder has out on pages 29 to 37 and material non-compliance ~~Accuracy; Amounts, numbers, and other data a relationship with persons/ a person involved in the with laws and regulations applicable to the Eastern relating to reported actual performance have been evaluation and/or adjudication of the bids as per the Cape Gambling and Betting Board. recorded and reported appropriately requirements of Practice Note 7 of 2009/10. ~~Completeness: All actual results and events that Predetermined objectives should have been recorded have been included in Expenditure management Usefulness of information the annual performance report 21. The Accounting Authority did not ensure that the 13. The following criteria are relevant to the finding below: expenditure for the year is in accordance with the ~~Consistency: Objectives, indicators and targets are Audit finding: approved budget as required by to section 53(4) of consistent between planning and reporting documents Reasons for major variances between planned the PFMA. ~~Relevance: A clear and logical link exists between and actual reported targets were not supported by the objectives, outcomes, outputs, indicators and sufficient appropriate evidence Strategic planning and performance management performance targets 17. Sufficient appropriate evidence to support the reasons 22. The accounting authority did not ensure that the ~~Measurability: Indicators are well-defined and/ for 82% of the major variances between the planned public entity has and maintains an effective, efficient or verifiable, and targets are specific, and/or and the actual reported targets could not be obtained. and transparent system of internal control regarding measurable and/or time-bound. performance management, which described and Compliance with laws and regulations represented how the entity’s processes of performance Audit findings: Procurement of goods and services planning, monitoring, measurement, review and Planned and reported targets are not measurable 18. Certain invitations for competitive bidding were not reporting as conducted, organised and managed as 14. For the selected objectives, 91% of the planned and advertised for a minimum period of 21 days as per the required by section 51(1)(a)(i) of the PFMA. Internal controls and internal audit Leadership Governance 23. In terms of Treasury Regulation 27,2,1, a risk management26. Management did not take adequate steps to ensure 32. No fraud prevention plan or risk assessment/ strategy, which must include a fraud prevention plan, that controls were in place for the correct and management policy existed during the year, In addition must be used to direct internal audits effort and priority. accurate reporting on performance information. the risks to reporting on predetermined objectives Management did not comply with this regulation as the were not identified and responded to timeously. fraud prevention plan had not been updated or approved27. Internal controls over the preparation of the financial for implementation. In addition, there was no risk statements are not adequate and management D. OTHER REPORTS management policy in place during the year. occasionally overrides SCM and compliance policy. Investigations Annual financial statements, 28. Reports on performance information are not adequately 33. During the year, an investigation into the appointment performance and annual reports reviewed and insufficient evidence exists regarding of the CEO was finalised. This investigation took 24. The accounting authority submitted financial the actual performance and variances identified. place as a result of suspected misconduct into statements for auditing that were not prepared in In addition, there is no suitably qualified person the CEO’s appointment at the request of the MEC all material aspects in accordance with generally dedicated to ensuring that performance objectives are of the Department of Economic Development, accepted accounting practice as required by section adequately met and correctly reported on. Environmental Affairs & Tourism. 55(1) ((a) and) (b) of the PFMA, The material misstatements identified by the AGSA with regards to 29. The executive authority did not adequately monitor Governance review current assets, liabilities, expenditure and disclosure the expenditure incurred against the approved budget 34. During the year, a governance review was performed items were subsequently corrected. during the year. This resulted in irregular expenditure on all board members and employees as well as their disclosed in the notes to the financial statements. entities at the request of the MEC of the Department C. INTERNAL CONTROL of Economic Development, Environmental Affairs & Financial and performance management Tourism. 25. In accordance with the PAA and in terms of General 30. Performance information was not correctly and notice 1111 of 2010, issued in Government Gazette accurately reported on and the information provided 33872 of 15 December 2010, I considered internal was not relevant or useful. control relevant to my audit, but not for the purpose of expressing an opinion on the effectiveness of internal 31. Processes and systems implemented by management control. The matters reported below are limited to the over financial reporting were not adequately monitored East London significant deficiencies that resulted in the correction and reviewed during the year as a result the financial 29 July 2011 of material misstatements in the financial statements, statement submitted for audit contained material the findings on the annual performance report and misstatements that were corrected during the audit. the findings on compliance with laws and regulations included in this report.

Auditor General's Report 27

8. OPERATIONAL PERFORMANCE

8.1 INTRODUCTION

This Performance Report has been prepared through the endeavours of management and staff representatives as delegated by the Board. It remains at all times a dynamic and working document that will form the basis of our operations.

8.2 DEFINITIONS

Board Eastern Cape Gambling and Betting Board RFP Request For Proposal CEO Chief Executive Officer SAACREG South African Advisory Council for Responsible Gambling LPM Limited Payout Machine Section 40 Applications Acquisition of financial interest as defined in the Act MEC Member of the Council Site A Three to five machines Other licence Bookmakers,manufacturers and Totalizator Site B Twenty to forty machines Other registrations Certificate of suitability WAN Wide Area Network PFMA Public Finance Management Act LOC Letter of Certification

8.3 PERFORMANCE AGAINST OPERATIONAL PLAN

PLANS TO ADDRESS ACHIEVEMENT / CHALLENGES / REASONS CHALLENGES & NON- MEASURABLE OBJECTIVE PERFORMANCE INDICATOR / MEASURE TARGET ACTUAL OUTPUT FOR NON-PERFORMANCE PERFORMANCE Provide effective and efficient~ ~Appropriate mechanisms developed to ~~All new systems established and 95% complete Implementation & rollout Service Providers appointed strategic leadership and ensure: operational of BSC commenced late for BSC & OD. direction to the organisation. yyInternal controls and audit procedures October 2010. yyIndependent external auditors ~~Controls and audit arrangements 100% complete None None yyOversight and management of risk established yyOversight of financial statements ~~Appropriate strategic leadership 100% complete None None yyDetermination of appropriate arrangements established senior management remuneration 100% complete None None arrangements ~~Board and senior management communication with ECGBB improved yy Procedures for appointing Board strategic preparations initiated for the members next three years APP

Operational Performance 29 30 EASTERN CAPE GAMBLING AND BETTING BOARD ANNUAL REPORT 2010|2011

PLANS TO ADDRESS ACHIEVEMENT / CHALLENGES / REASONS CHALLENGES & NON- MEASURABLE OBJECTIVE PERFORMANCE INDICATOR / MEASURE TARGET ACTUAL OUTPUT FOR NON-PERFORMANCE PERFORMANCE Provide oversight and ~~Financial policies, guidelines and ~~Policies, guidelines and procedures in 95% complete Critical senior managementAll managers & other all–inclusive general procedures developed and implemented place and operational positions filled late (Octobercritical junior staff positions will be filled and thereby administration ~~Supply Chain Management (SCM) 2010) policies, guidelines & Policies, guidelines and procedures procedures will be fully developed and implemented operational. Capacity impedements will ~~Revised SCM procedures in place and 95% complete Contributory factor was be addressed and plans are operational capacity impedements – in place to ensure timeous however, SCM procudures review. revewed by management, but only pending relevant Board subcommittee and thereafter full Board approval. Formulate, manage and implement ECGBB strategic ~~Strategic planning procedures established~~All strategic planning systems reviewed100% complete None None planning procedures in terms of PFMA and Treasury and adjusted based on experience specifications ~~Motivations for strategic and performance100% complete None None planning adjustments prepared, where relevant

~~Revised documents completed, where 100% complete None None necessary Formulate, manage and ~~All SLAs prepared in accordance with ~~SLAs categorised for review and oversight100% complete None None monitor SLAs entered into Board-approved specifications ~~SLAs adjusted based on M&E procedures100% complete None None by the ECGBB with various ~~ All SLAs subjected to rigorous monitoringundertaken external interests and and evaluation procedures agencies.

Sound internal financial ~~Accurate budgeting, sound cashflow ~~Systems reviewed to determine possible100% complete None None management established management and the preparation of improvements management accounts in place ~~Proper internal financial management 100% complete None None ~~Annual financial statements prepared in systems in place accordance with relevant standards and ~~Unqualified audit opinion received 100% complete None None legislation ~~Unqualified audit reports ~~Adequate systems devised to ensure 100% complete None None sustained financial management SCM procurement systems ~~Appropriate procurement systems and ~~PFMA-compliant SCM systems in place100% complete None None established practices designed and implemented ~~Review systems to determine possible 100% complete None None improvements 100% complete (systemsNone None Internal controls and risk management Internal control and risk management Maintain and review reviewed and improved) reviewed and updated systems reviewed and adjusted where adequate and effective necessary internal control and risk Fraud prevention plan in place management systems. Internal audit services in place PLANS TO ADDRESS ACHIEVEMENT / CHALLENGES / REASONS CHALLENGES & NON- MEASURABLE OBJECTIVE PERFORMANCE INDICATOR / MEASURE TARGET ACTUAL OUTPUT FOR NON-PERFORMANCE PERFORMANCE Legal support systems ~~Legal service needs identified and ~~Legal support register revised and 90% complete (systems Capacity related Plans to address capacity established documented updated reviewed and improved).impedements impedements have been put in place and Legal Services Manager position advertised.

State of the art Information ~~Comprehensive ICT systems established~ ~ICT systems reviewed and updated 100% complete None None and Communications ~~Electronic Document Management ~~EDMS installation completed 40% complete Project ongoing EDMS will be fully Technology (ICT) systems System (EDMS) designed developed by the year established 2011/12.

Ensure that all gambling ~~Gambling fee collection mechanisms in~ ~Collection mechanisms for gambling fees100% complete None None fees and taxes are collected place and fully operational and taxes reviewed and adjusted where efficiently. ~~Gambling tax collection mechanisms in required place and fully operational Participate in on–going ~~Co-operative investigations established ~~lnternal co-operative procedures 100% complete None None investigations into options with relevant ECGBB divisions established for implementing initiatives for increasing income from ~~Potential for increased gaming-related to increase gaming revenue gaming. income identified

Effective regulatory and ~~Appropriate licence regulatory systems ~~All systems reviewed, updated and 100% complete None None advisory frameworks to in place strengthened ensure that gaming licences ~~Advisory procedures in place are properly allocated ~~Licence allocation procedures reviewed and updated License and regulate casinos,~ ~Licensing procedures established for: ~~Status of licences confirmed: None None horseracing, route and site yyCasinos yyBoardwalk Casino (Zone 1) 100% complete None None and bingo operations. y y 100% complete None yHorseracing yHemingways Casino (Zone 2) None 100% complete None yyRoute and Site Operations yyQueens Casino (Zone 3) None 100% complete The Board has appealed yyBingo operations yyWild Coast Sun Casino (Zone 5) Pending the Supreme Court 0% complete against the high court ~~Regulatory procedures established for: yyZone 4 Mthatha Casino licence of Appeal decision in the Supreme yy awarded Casinos Court of Appeal yyHorseracing yyRoute and Site operations yyBingo operations ~~Route and Site operator: 100% complete None None yyVukani Gambling EC

Operational Performance 31 32 EASTERN CAPE GAMBLING AND BETTING BOARD ANNUAL REPORT 2010|2011

PLANS TO ADDRESS ACHIEVEMENT / CHALLENGES / REASONS CHALLENGES & NON- MEASURABLE OBJECTIVE PERFORMANCE INDICATOR / MEASURE TARGET ACTUAL OUTPUT FOR NON-PERFORMANCE PERFORMANCE ~~Phumelela Gaming & Leisure Ltd 100% complete None None yyFairview Racecourse yyArlington Racecourse yyTotalisator Licence ~~Gaming equipment manufacturers and 100% complete None None suppliers ~~Advance notice provided to Board 100% complete regarding licence renewal dates and procedures

Ensure that licence conditions~ ~Detailed record of all licence conditions~ ~Compliance register compiled for each 80% complete Capacity problem due to Plans are in place to are complied with compiled and updated regularly licence category the casino re–licensing enhance capacity capacity to address the problem ~~Key measurement indicators established process for Zones 1 & 2. Plans are in place to to verify licence condition compliance ~ 80% complete Capacity problem due to ~Conditions reviewed with licencees to enhance capacity to the casino re–licensing include SED project (in association with address the problem the EC PGT) process for Zones 1 & 2. But SED & EC PGT project not yet in place.

~~On-going compliance with licence 80% complete Capacity problem due to Plans are in place to conditions secured the casino re–licensing enhance capacity capacity process for Zones 1 & 2 to address the problem Investigate and regulate ~~Appropriate probity requirements ~~Revised investigation and regulatory 90% complete Review of legislation is Process is pending the objectively and fairly. established for all inspection personnel procedures in place and operational underway going through all legal stages but it is well ~~Inspection reports subjected to random monitired. review and verification Develop and maintain ~~All Key Persons defined for registration:~~Key Persons Register updated 95% complete GIMS implemented during Dedicated personnel accurate records concerning to attend to the GIMS yy the period under review. It gaming personnel registered Managers. has minor discrepancies discrepancies as key persons in terms of yySupervisors. that are being attended to. Ch.12 s.68 of the ECGBB Act yyPit bosses. yyIn-house inspectors. ~~Key Persons definitions reviewed and 95% complete GIMS implemented. Minor Dedicated personnel yySurveillance personnel. adjusted where required discrepancies are being to attend to the GIMS ~~Other categories. attended to discrepancies ~~Certificates of registration issued to all ~~New Certificates of Registration issued 95% complete GIMS implemented. Minor Dedicated personnel Key Persons in terms of s.115 of the where required discrepancies are being to attend to the GIMS ECGBB Regulations. attended to discrepancies ~~Monitoring procedures established ~~Certificates of Registration renewed 95% complete GIMS implemented. Minor Dedicated personnel ~~Registration renewal procedures where appropriate discrepancies are being to attend to the GIMS established attended to discrepancies PLANS TO ADDRESS ACHIEVEMENT / CHALLENGES / REASONS CHALLENGES & NON- MEASURABLE OBJECTIVE PERFORMANCE INDICATOR / MEASURE TARGET ACTUAL OUTPUT FOR NON-PERFORMANCE PERFORMANCE Institutionalise the ECGBB ~~ECGBB-DEDEAT Shareholder’s Compact~ ~Prepare Compact document for wider 100% complete None None Shareholder’s Compact concluded and signed off distribution to indicate the partnership ~~Train all Board members and senior relationship with DEDEAT management on the Shareholder‘s ~~Compact marketed as facilitating rather100% complete None None Compact than coercive ~~Provision made for the Compact to be reviewed annually Provide timeous, quality legal~ ~% Customer Satisfaction Index ~~76% 0% complete Capacity related Plans to address capacity services to divisions and the impedements. Legal impedements has been Board Services Manager position put in place and Legal vacant Services Manager position advertised. Provide timeous, quality legal services to Provincial Gaming~ ~% compliance with Service Level ~~76% 0% complete Provincial Gaming Trust notReport for PGT has been Trust Agreement ysset in place submitted to the Board for approval

Compliance with contracts ~~Compliance Audit reported to Board on~ a~ 80% 100% complete None None between the ECGBB and quarterly basis DEDEAT, licensees and Provincial Gaming Trust

Reduce costs of litigation ~~% Reduction in litigation costs ~~10% reduction 0% complete Litigations were Once legal manager is unavoidable appointed it will reduce litigation costs

Ensure that all Board ~~% of Board members trained ~~100% compliance with skills training 100% complete None None members and Trustees are plan adequately trained to carry out their legal mandates Plan for Implementation & Review human resources ~~HR policies and practices comply with ~~Strategic initiatives developed and 70% complete Implementation & rollout rollout of BSC commenced policies to ensure sound established best practice systems implemented to ensure appropriate filling of BSC commenced late October 2010 human resource practices. ~~HR manuals and resource documents of organogram posts prepared to ensure standardised ~~Focus on leadership qualities 100% complete None None implementation

Develop and implement staff ~~Comprehensive Personnel Development~ ~Personnel Development Plan approved 100% PDP plans None None training and development Plan compiled and in place by Board development programmes ~~Detailed training requirements specified~ ~Personnel Development Plan 80% training plan for for all categories of personnel implementation strategies developed all levels ~~Systems established for quarterly reviews80% HR policies developed and reviewed

Operational Performance 33 34 EASTERN CAPE GAMBLING AND BETTING BOARD ANNUAL REPORT 2010|2011

PLANS TO ADDRESS ACHIEVEMENT / CHALLENGES / REASONS CHALLENGES & NON- MEASURABLE OBJECTIVE PERFORMANCE INDICATOR / MEASURE TARGET ACTUAL OUTPUT FOR NON-PERFORMANCE PERFORMANCE Develop and maintain ~~IPMS defined and installed ~~IPMS procedures adopted by all divisions100% Alignment of IPA’sNone None Integrated Performance ~~Management IPMS linked to strategic as a basis for management assessmentto Organisational and Management Systems plan goals and objectives Divisional strategy (IPMS). ~~IPMS aligned to the BSC system 100% Approval of None None Balance Scorecard and organisational design plans

~~IPMS-specific training provided 90% complete Pending completion of BSCPending completion of BSC process process ~~Quarterly performance review programme100% complete None None established ~~Ongoing implementation 100% complete None None

Strategic planning systems ~~Basic templates for all key documents ~~Review the ECGBB Strategic Plan based100% None None established established: on 2009/10 experience yyFive-Year Strategic and Performance ~~Revise and update where necessary 100% complete None None Plan ~~Formulate a new APP for the next MTEF100% complete None None yyThree-Year MTEF-related Annual period Performance Plan (APP) yyOne-Year Operational Plan (budget) ~~Formulate a One-Year Operational plan 100% complete None None yyRelevant data sources identified, (budget) for the next year (2011/12) established and updated regularly ~~Submit all documents to the Board for 100% complete None None approval by the due date(s) Establish relevant socio– ~~Comprehensive and accessible data base~~ Board approvals secured 100% complete None None economic data requirements established ~~Skilled data base team assembled 100% complete None None

~~Relevant and cost-effective IT hardware100% complete None None and software acquired and installed ~~Data storage and retrieval procedures 90% complete Document management established system is ongoing Establish ECGBB role and ~~PGDP components relevant to the ~~Develop and maintain close working 0% Capacity problem as Strategic Services Manager responsibilities regarding the ECGBB identified and defined relationships with PGDP management Strategic Services Managerposition will be filled: PGDP position not filled yet. relationships with PGDP will be enhanced

~~Ensure alignment of PGT interests with 0% PGT not approved by the Report for PGT has been PGDP principles and goals Board submitted to the Board for approval

~~Develop a proactive, participatory PGDP0% Capacity problem as Strategic Services Manager role for the ECGBB Strategic Services Managerposition will be filled: position not filled yet. relationships with PGDP will be enhanced PLANS TO ADDRESS ACHIEVEMENT / CHALLENGES / REASONS CHALLENGES & NON- MEASURABLE OBJECTIVE PERFORMANCE INDICATOR / MEASURE TARGET ACTUAL OUTPUT FOR NON-PERFORMANCE PERFORMANCE Strategic Services Establish ECGBB role and ~~IDP components relevant to the ECGBB~ ~Extend and widen the interest base 0% complete Capacity problem as Manager position will be responsibilities regarding identified and defined of ECGBB relationships with all Strategic Services Manager filled: relationships with municipal IDPs municipalities position not filled municipalities for planning purposes will be enhanced

Strategic Services Manager ~~Ensure that ECGBB skills and data 0% complete Capacity problem as position will be filled and sources are made available to Strategic Services Manager thereby skills and data municipalities for planning purposes position not filled sources are made available to municipalities for planning purposes.

~~Assist municipalities, wherever possible,0% complete Capacity problem as in the formulation and revision of IDPs Strategic Services Manager and GDSs position not filled Develop appropriate systems ~~Reliable ECGBB intranet system ~~Comprehensive system upgrade plan 100% complete None None for maintaining intranet and established and operational formulated to address existing and new website facilities ~~Reliable and accurate ECGBB website needs established and operational ~~Board approval secured for systems and100% complete None None costs ~~Procedures and mechanisms planned 100% complete None None to ensure improved internal access to systems and data [intranet] and to external data and information [Web]

Ensure that IT policies ~~Comprehensive Master Systems Plan ~~Revised and updated MSP completed 0% complete Not done yet but internal Plan has been put in place and practices are updated (MSP) developed and regularly updated IT audit conducted and to attend to MPS regularly recommendations are being implemented

~~Hardware and software implications 100% complete None None approved by Board ~~Implementation systems established 100% complete None None

~~Monitoring and maintenance procedures100% complete None None established Develop and implement a ~~Nature and intent of the BSC system ~~BSC application implemented 100% complete None None Balanced Scorecard System defined and promoted among all ~~BSC output report prepared for 80% complete BSC process not complete BSC process will be (BSC) system personnel management yet completed ~~Regular internal BSC system workshops ~ arranged to ensure maximum staff ~Annual BSC output report prepared for participation and commitment Board ~~BSC application implemented

~~BSC output report prepared for management

Operational Performance 35 36 EASTERN CAPE GAMBLING AND BETTING BOARD ANNUAL REPORT 2010|2011

PLANS TO ADDRESS ACHIEVEMENT / CHALLENGES / REASONS CHALLENGES & NON- MEASURABLE OBJECTIVE PERFORMANCE INDICATOR / MEASURE TARGET ACTUAL OUTPUT FOR NON-PERFORMANCE PERFORMANCE Identify relevant customer ~~Appropriate Service Delivery Plan ~~Finalised Service Delivery Plan approved0% complete Marketing & advertising OD implementation services developed by Board consultant appointed late developed and approved (October 2010)

~~Quality customer oriented service 100% complete None None delivered to the public, licensees and other stakeholders Complete BSC & OD for ~~Adequately trained and resourced staff 80% complete Awaited BSC & OD for re–alignment of positions to structure available to deliver quality re–alignment of positions to the strategy services the strategy Establish an appropriate ~~ ~~ 100% complete None None marketing–oriented personnel Internal ECGBB Marketing Unit Marketing oriented personnel component component established established ~~ECGBB promotional initiatives planned 50% Complete Marketing & Advertising OD implementation and implemented consultant appointed developed and approved October 2010

~~Prepare and print ECGBB annual report100% complete None None

Develop relevant advisory ~~Relevant advisory services established ~~Advisory Services Directory adjusted 0% complete Marketing & Adv. Consult. OD implementation services for stakeholders through stakeholder engagement based on experience apptd. 10/2010 developed and approved ~~Advisory service procedures and ~~Revised advisory service made available0% Complete Marketing & Adv. Consult. OD implementation practices established apptd. 10/2010 developed and approved ~~Outcomes reviewed 0% Marketing & Adv. Consult. OD implementation apptd. 10/2010 developed and approved Develop marketing strategies ~~Clear improvement in ECGBB external ~~Initiate comprehensive implementation 0%of Complete Marketing & Adv. Consult. OD implementation to improve the external image image the image marketing Plan apptd. 10/2010 developed and approved of the ECGBB ~~Measure changes through Focus-Group0% Complete Marketing & Adv. Consult. OD implementation market research apptd. 10/2010 developed and approved ~~Report outcomes to Board 0% Complete Marketing & Adv. Consult. OD implementation apptd. 10/2010 developed and approved ~~Extend marketing process 0% Complete Marketing & Adv. Consult. OD implementation apptd. 10/2010 developed and approved Establish an effective and ~~Key marketing-related research functions~~ ECGBB market research function 100% complete None None professional internal research internalised established competency. ~~Review all previous ECGBB market 0% complete Marketing & Adv. Consult. OD implementation research commissioned apptd. 10/2010 developed and approved ~~Undertake implementation where 0% complete Marketing & Adv. Consult. OD implementation feasible apptd. 10/2010 developed and approved ~~Plan own market research procedures 0% complete Marketing & Adv. Consult. OD implementation apptd. 10/2010 developed and approved 8.4 PERFORMANCE REPORT – ANNEXURE 1

8.4.1 TAX AND FEE COLLECTIONS – FIVE YEAR REVIEW OF THE BOARD

PROVINCIAL REVENUE 2006/07 2007/08 2008/2009 2009/2010 2010/2011 TOTAL

R 000’000 R 000’000 R 000’000 R 000’000 R 000’000 R 000’000 Casino 65 346 71 556 70 516 70 595 73 768 351 781 Bookmakers Taxes 1 689 2 296 2 339 2 370 2 272 10 966 Totalisator Taxes 4 040 4 116 4 147 4 079 3 995 20 377 LPM 7 175 9 300 10 840 10 356 10 187 47 858 Fees 1 752 1 801 1 378 1 630 1 965 8 526 OWN REVENUE

Exclusivity Fee – – – – 42 738 42 738 Application Fee 1 301 2 319 2 086 221 997 6 924 Administration Fee 1 935 543 2 351 1 946 2 233 9 008 TOTAL REVENUE 83 238 91 931 93 657 91 197 138 155 493 178

GRANT FUNDING Voted 19 246 20 233 20 690 22 017 23 338 105 524 Less: Repaid – – – – – – Nett Utilised 19 246 20 233 20 690 22 017 23 338 105 524

On behalf of the Board we wish to express our sincere gratitude to the Provincial Government for the support afforded to us during the course of the financial year and to management and staff for their performance in achieving the goals of the Board.

R M ZWANE Chief Executive Officer

Operational Performance 37

9. HR OVERSIGHT STATISTICS FOR THE PERIOD APRIL 2010 TO MARCH 2011

Table 1.1: Main Service For Service Delivery Improvement And Standards Actual Potential Standard of Achievement Main Services Actual Customers Customers Service against Standards Gambling Regulation Casino, Horse Racing Industry and Route Operators High High

Table 2.1: Personnel Costs by Programme Personnel costs Average Personne l Training Professional & as % of Tota l Personnel Costs Programme Total Expenditure Expenditure Expenditure Special Services Expenditure per Employee Employment Eastern Cape Gambling & Betting Board 35 762 037 14 119 747 716 964 3 400 792 39 522 954 27

Table 2.2: Personnel Costs by Salary Band Average Personne l % of Tota l Personnel Cost Total Personne l Number of Salary Bands Expenditure Personnel Costs per Employee Expenditure Employees Lower skilled (Band B1–B2) 336 802 2 168 401 2 Skilled (Band B3–B5) 1 442 844 10 240 474 6 Highly skilled production (Band C1–C5) 5 479 157 39 421 474 13 Highly skilled supervision (Band D1–D3) 3 392 978 24 1 130 993 3 Senior management (Band D4–E1) 3 467 966 25 1 155 989 3 TOTAL 14 119 747 100 3 117 331 0 27

Table 2.3: Salaries, Overtime, Home Owners Allowance & Medical Aid by Programme Medical Salaries as % Overtime as % HOA as % of Ass. as % of Total of Personne l of Personne l Personne l Personne l Personne l Programme Salaries Costs Overtime Costs HOA Costs Medical Ass. Costs Coat Eastern Cape Gambling & Betting Board 7 746 788 55 0 0 609 652 4 8 356 440 TOTAL 7 746 788 55 0 0 609 652 4 8 356 440

HR Oversight Statistics 39 40 EASTERN CAPE GAMBLING AND BETTING BOARD ANNUAL REPORT 2010|2011

Table 2.4: Salaries, Overtime, Home Owners Allowance & Medical Aid by Salary Band Medical Salaries as % Overtime as % HOA as % of Ass. as % of Total of Personne l of Personne l Personne l Personne l Personne l Salary Bands Salaries Costs Overtime Costs HOA Costs Medical Ass. Costs CoSt Lower skilled (Band B1–B2) 167 235 1 0 0 18 396 0.13 185 631 Skilled (Band B3–B5) 567 541 4 0 0 78 649 0.56 646 190 Highly skilled production (Band C1–C5) 4 349 683 31 0 0 356 419 2.52 4 706 102 Highly skilled supervision (Band D1–D3) 1 023 465 7 0 0 156 188 1.11 1 179 653 Senior management (Band D4–E1) 1 638 864 12 0 0 – 0 1 638 864 TOTAL 7 746 788 55 0 0 0 0 609 652 4.32 8 356 440

Table 3.1: Employment and Vacancies by Programme at end of period Number of Posts Filled Number of Posts Additional to the Programme Number of Posts Filled Vacancy Rate Establishment Eastern Cape Gambling & Betting Board 34 27 20.6 0 TOTAL 34 27 20.6 0

Table 3.2: Employment and Vacancies by Salary Band at end of period Number of Posts Filled Number of Posts Additional to the Salary Band Number of Posts Filled Vacancy Rate Establishment Lower skilled (Band B1–B2) 2 2 0 0 Skilled (Band B3–B5) 6 6 0 0 Highly skilled production (Band C1–C5) 19 13 31.6 0 Highly skilled supervision (Band D1–D3) 4 3 25 0 Senior management (Band D4–E1) 3 3 0 0 TOTAL 34 27 20.6 0 Table 4.1: Job Evaluation Number of Jobs % of Posts Number of Posts % of Upgraded Number of Posts % Of Downgraded Salary Band Number of Posts Evaluated Evaluated Upgraded Posts Evaluated Downgraded Posts Evaluated Lower skilled (Band B1–B2) 2 0 0 0 0 0 0 Skilled (Band B3–B5) 6 0 0 0 0 0 0 Highly skilled production (Band C1–C5) 19 0 0 0 0 0 0 Highly skilled supervision (Band D1–D3) 4 0 0 0 0 0 0 Senior management (Band D4–D5) 2 0 0 0 0 0 0 Senior management Services (Band E1–E2) 1 0 0 0 0 0 0 TOTAL 34 0 0 0 0 0 0

Table 4.2: Profile of employees whose positions were upgraded following upgrading of their posts

Beneficiaries African Asian Coloured White Total Female 0 0 0 0 0 Male 0 0 0 0 0 TOTAL 0 0 0 0 0 Employees with Disabilities 0 0 0 0 0

Table 4.3: Employees whose salary level exceed the grade determined by Job Evaluation [i.t.o. PSR 1.V.C.3] Number of Job Evaluation Remuneration Reason for No of Employees Occupation Employees Level Level Deviation in Dept Manager: Legal Services 0 System Analyst 0 TOTAL 0 % of TOTAL Employment 0

Table 4.4: Profile of employees whose salary level exceeded the grade determined by Job Evaluation [i.t.o. PSR 1.V.C.3]

Beneficiaries African Asian Coloured White Total Female 0 0 0 0 0 Male 0 0 0 0 0 TOTAL 0 0 0 0 0 Employees with Disabilities 0

HR Oversight Statistics 41 42 EASTERN CAPE GAMBLING AND BETTING BOARD ANNUAL REPORT 2010|2011

Table 5.1: Annual Turnover Rates by Salary Band Employment at Beginning of Salary band Period Appointments Terminations Turnover Rate Lower skilled (Band B1–B2) 2 0 0 0 Skilled (Band B3–B5) 6 0 0 0 Highly skilled production (Band C1–C5) 13 0 1 7.7 Highly skilled supervision (Band D1–D3) 3 0 1 33.3 Senior management – Service Band D4–D5– Permanent 2 2 0 0 Senior management – Service Band E1–E2 – Permanent 1 0 0 0 TOTAL 27 2 2 7.4

Table 5.2: Annual Turnover Rates by Critical Occupation Employment at Beginning of Occupation Period Appointments Terminations Turnover Rate NO CRITICAL POSTS IDENTIFIED

Table 5.3: Reasons why staff are leaving the Board % of Tota l % of Tota l Termination Type Number Resignations Employment Total Total Employment Death, Permanent 0 0 0 27 27 Resignation, Permanent 2 7.4 7.4 27 27 Dismissal–operational changes, Permanent 0 0 0 27 27 Discharge due to ill health, Permanent 0 0 0 27 27 Dismissal–misconduct, Permanent 0 0 0 27 27 Retirement, Permanent 0 0 0 27 27 TOTAL 2 7.4 7.4 27 27 Resignations as % of Employment 7.40%

Table 5.4: Promotions by Critical Occupation Progressions to Employment at Promotions to Salary Level another Notc h Notch Beginning of another Saarl y Promotions as a % within Saarl y progressions as a Occupation Period Level of Employment Level % of Employment NO CRITICAL POSTS IDENTIFIED Table 5.5: Promotions by Salary Band Progressions to Employment at Promotions to Salary Level another Notc h Notch Beginning of another Saarl y Promotions as a % within Saarl y progressions as a Salary Band Period Level of Employment Level % of Employment Lower skilled (Band B1–B2) 2 0 0 0 0 Skilled (Band B3–B5) 6 0 0 0 0 Highly skilled production (Band C1–C5) 13 0 0 0 0 Highly skilled supervision (Band D1–D3) 3 0 0 0 0 Senior management (Band D4–E1) 3 1 3.7 0 0 TOTAL 27 1 3.7 0 0

Table 6.1: Total number of Employees (incl. Employees with disabilities) per Occupational Category (SASCO) Male, Female, Male, Male, Male, Total Male, Female, Female, Female, Total Female, Occupational Category African Coloured Indian Blacks White African Coloured Indian Blacks White TOTAL Senior officials & managers, Permanent 5 1 0 6 0 0 0 0 0 0 6 Professionals, Permanent 3 0 0 3 4 7 0 0 7 0 14 Clerks, Permanent 0 0 0 0 0 4 0 1 5 0 5 Service & sales workers, Permanent 0 0 0 0 0 0 0 0 0 0 0 Craft & related trade workers, Permanent 0 0 0 0 0 0 0 0 0 0 0 Plant & machine operators & assemblers, Permanent 1 0 0 1 0 0 0 0 0 0 1 Elementary occupations, Permanent 1 0 0 1 0 0 0 0 0 0 1 TOTAL 10 1 0 11 4 11 0 1 12 0 27 Employees with Disabilities 0 0 0 0 0 0 0 0 0 0 0

Table 6.2: Total number of Employees (incl. Employees with disabilities) per Occupational Bands Male, Female, Male, Male, Male, Total Male, Female, Female, Female, Total Female, Occupational Bands African Coloured Indian Blacks White African Coloured Indian Blacks White TOTAL Top Management, Permanent 1 1 0 2 0 0 0 0 0 0 2 Senior Management, Permanent 4 0 0 4 0 0 0 0 0 0 4 Professionally qualified and experienced specialists and 3 0 0 3 4 7 0 0 7 0 14 mid–management, Permanent

HR Oversight Statistics 43 44 EASTERN CAPE GAMBLING AND BETTING BOARD ANNUAL REPORT 2010|2011

Male, Female, Male, Male, Male, Total Male, Female, Female, Female, Total Female, Occupational Bands African Coloured Indian Blacks White African Coloured Indian Blacks White TOTAL Skilled technical and academically qualified workers, 1 0 0 1 0 4 0 1 4 0 6 junior management, supervisors, foremen, Permanent Semi–skilled & discretionary decision making, Permanent 0 0 0 0 0 0 0 0 0 0 0 Unskilled & defined decision making, Permanent 1 0 0 1 0 0 0 0 0 0 1 TOTAL 10 1 0 11 4 11 0 1 11 0 27

Table 6.3:Recruitment Male, Female, Male, Male, Male, Total Male, Female, Female, Female, Total Female, Occupational Bands African Coloured Indian Blacks White African Coloured Indian Blacks White TOTAL Senior Management, Permanent 0 1 0 0 0 0 0 0 0 0 1 Professionally qualified and experienced specialists and 0 0 0 0 0 0 0 0 0 0 0 mid–management, Permanent Skilled technical and academically qualified workers, 0 0 0 0 0 0 0 0 0 0 0 junior management, supervisors, foremen, Permanent TOTAL 0 1 0 0 0 0 0 0 0 0 1

Table 6.4: Promotions Male, Female, Male, Male, Male, Total Male, Female, Female, Female, Total Female, Occupational Bands African Coloured Indian Blacks White African Coloured Indian Blacks White Total Senior Management, Managers, Permanent 1 0 0 0 0 0 0 0 0 0 1 Skilled technical and academically qualified workers 0 0 0 0 0 0 0 0 0 0 0 Professionally qualified and experienced specialists 0 0 0 0 0 0 0 0 0 0 0 TOTAL 1 0 0 0 0 0 0 0 0 0 1

Table 6.5: Terminations Male, Female, Male, Male, Male, Total Male, Female, Female, Female, Total Female, Occupational Bands African Coloured Indian Blacks White African Coloured Indian Blacks White TOTAL Senior Management, Permanent 0 0 0 0 0 0 0 0 0 0 0 Professionally qualified and experienced specialists and 1 0 0 1 0 0 0 0 0 0 1 mid–management, Permanent Skilled technical and academically qualified workers, 0 0 0 0 1 0 0 0 0 0 1 junior management, supervisors, foremen, Permanent Male, Female, Male, Male, Male, Total Male, Female, Female, Female, Total Female, Occupational Bands African Coloured Indian Blacks White African Coloured Indian Blacks White TOTAL Semi–skilled & discretionary decision making, Permanent 0 0 0 0 0 0 0 0 0 0 0 Unskilled & defined decision making, Permanent 0 0 0 0 0 0 0 0 0 0 0 TOTAL 1 0 0 1 1 0 0 0 0 0 2

Table 6.6: Disciplinary Action Male, Female, Male, Male, Male, Total Male, Female, Female, Female, Total Female, Disciplinary Action African Coloured Indian Blacks White African Coloured Indian Blacks White TOTAL TOTAL 0 0 0 0 0 0 0 0 0 0 0

Table 6.7: Skills Development Male, Female, Male, Male, Male, Total Male, Female, Female, Female, Total Female, Occupational Categories African Coloured Indian Blacks White African Coloured Indian Blacks White Total Legislators, Senior Officials and Managers 0 0 0 0 0 0 0 0 0 0 0 Professionals 0 0 0 0 0 0 0 0 0 0 0 Technicians and Associate Professionals 0 0 0 0 0 0 0 0 0 0 0 Clerks 0 0 0 0 0 0 0 0 0 0 0 Service and Sales Workers 0 0 0 0 0 0 0 0 0 0 0 TOTAL 0 0 0 0 0 0 0 0 0 0 0 Employees with disabilities 0 0 0 0 0 0 0 0 0 0 0

Table 7.1: Performance Rewards by Race, Gender & Disability Number of % of Tota l Average Cost per Beneficiaries Total Employment Employment Cost Beneficiary African, Female 10 10 100 616 273 61 627 African, Male 11 11 100 1 135 022 103 183 White, Male 4 4 100 295 329 73 832 White, Female 0 0 0 0 0 Indian, Female 1 1 100 49 804 49 804 Employee with a disability 0 0 0 0 0 TOTAL 26 26 100 2 096 431 288 446

HR Oversight Statistics 45 46 EASTERN CAPE GAMBLING AND BETTING BOARD ANNUAL REPORT 2010|2011

Table 7.2: Performance Rewards by Salary Band for Personnel below Senior Management Service Number of % of Tota l Average Cost per Salary Band Beneficiaries Total Employment Employment Cost Beneficiary Lower skilled (Band B1–B2) 2 2 100 58 815 29 407 Skilled (Band B3–B5) 6 6 100 262 865 43 810 Highly skilled production (Band C1–C5) 13 13 100 1 532 607 117 870 Highly skilled supervision (Band D1–D3) 2 2 100 105 905 52 952 TOTAL 23 23 100 1 960 192 244 040

Table 7.3: Performance Rewards by Critical Occupation Number of Percentage of Average Cost per Critical Occupations Beneficiaries Total Employment Total Employment Cost Beneficiar y NO CRITICAL OCCUPATIONS IDENTIFIED

Table 7.4: Performance Related Rewards (Cash Bonus) by Salary Band for Senior management Service Number of % of Tota l Average Cost per Personnel Cost SMS Band Beneficiaries Total Employment Employment Cost Beneficiary % Of SMS Wage Bill SMS Level – D4 0 0 0 – – 0 0 Level – D5 2 2 100 2 742 384 1 371 192 0 0 Level – E1 1 1 100 1 742 174 1 742 174 0 0 TOTAL 3 3 100 4 484 558 3 113 366 0 0

Table 8.1: Foreign Workers by Salary Band Total Employment Employment at Total at Beginning Employment at Change in Beginning of Employment at Total Change Salary band period % Of Total End of Period % of Total Employment % of Total Period End of Period in Employment Lower skilled (Level 1–2) Skilled (Level 3–5) Highly skilled production (Level 6–8) Highly skilled supervision (Level 9–12) NO FOREIGN WORKERS EMPLOYED Senior management (Level 13–16)

TOTAL Table 8.2: Foreign Workers by Major Occupation Total Employment Employment at Total at Beginning Employment at Change in Beginning of Employment at Total Change Major Occupation period % Of Total End of Period % of Total Employment % of Total Period End of Period in Employment NO FOREIGN WORKERS EMPLOYED

Table 9.1: Sick Leave for Jan2010 to Dec 2010 Number of % of tota l Total number Total number %Days with Employees Employees of Employees of days with Medical using sick using sick Average Dyas Estimated Cost using sick medical Salary Band Total Days Certificate leave leave per Employee (R’000) leave certification Lower skilled (Band B1–B2) 2 0 1 50 2 2 2 0 Skilled (Band B3–B5) 32 10.6 3 9.4 10.7 28 5 11 Highly skilled production (Band C1–C5) 69 23 6 8.7 11.5 322 12 23 Highly skilled supervision (Band D1–D3) 5 1.66 2 40 2.5 110 2 2 Senior management (Band D4–E1) 0 0 0 0 0 0 0 0

Table 9.2: Disability Leave for Jan2010 to Dec 2010 Number of % of tota l Total number Employees Employees of Employees Total number %Days with using using using of days with Medical Disability Disability Average Dyas Estimated Cost Disability medical Salary Band Total Days Certificate Leave Leave per Employee (R’000) Leave certification N/A 0 0 0 0 0 0 0 0 TOTAL 0 0 0 0 0 0 0 0

Table 9.3: Annual Leave for Jan 2010 to Dec 2010 Average per Salary Band Total Days Taken Employee Employment Lower skilled (Band B1–B2) 35 17.5 2 Skilled (Band B3–B5) 89 14.83 6 Highly skilled production (Band C1–C5) 305 20.33 13 Highly skilled supervision (Band D1–D3) 45 11.25 3 Senior management (Band D4–E1) 0 0 3 TOTAL 474 63.91 27

HR Oversight Statistics 47 48 EASTERN CAPE GAMBLING AND BETTING BOARD ANNUAL REPORT 2010|2011

Table 9.4: Capped Leave for Jan 2010 to Dec 2010 Average capped Total number Total days of Average number leave per of capped leave Number of capped leave of days taken per employee as at 31 Number of available at 31 Employees as at 31 taken employee December 2003 Employees December 2003 December 2003 Lower skilled (Levels B1 – B2) 0 0 Skilled (Levels B3 – B5) 0 0 Highly skilled production (Levels C1 – C5) NO CAPPED LEAVE TO BOARD EMPLOYEES 0 0 Highly skilled supervision (Levels D1 – D3) 0 0 Senior management (Levels D4 – E1) 0 0 TOTAL 0 0

Table 9.5: Leave Payouts Number of Average Payment Reason Total Amount Employees per Employee Capped leave payouts on termination of service for 2010/11 NO CAPPED LEAVE Current leave payout on termination of service for 2010/11 2 66 577 TOTAL

Table 10.1: Steps taken to reduce the risk of occupational exposure

Units/categories of employees identified to be at high risk of contracting HIVated & re ldiseases (if any) Key steps taken to reduce the risk N / A

Table 10.2: Details of Health Promotion & HIV/AIDS Programmes [tick YES/NO and provide required information]

Question YES NO Details, if any 1. Has the department designated a member of the SMS to implement the provisions contained in Part VI E of Chapter 1 of the Public√ Service M Tokota – H R Manager Regulations, 2001? If so, provide her/his name and position. 2. Does the department have a dedicated unit or have you designated specific staff members to promote health and well being of your√ M Mame, S Renga, W Smit, H D’Alton employees? If so, indicate the number of employees who are involved in this task and the annual budget that is available for this purpose. 3. Has the department introduced an Employee Assistance or Health Promotion Programme for your employees? If so, indicate the key elements/services of the programme. 4. Has the department established (a) committee(s) as contemplated in Part VI E.5 (e) of Chapter 1 of the Public Service Regulations,√ 2001? M Mame, S Renga, W Smit, H D’Alton If so, please provide the names of the members of the committee and the stakeholder(s) that they represent. 5. Has the department reviewed the employment policies and practices of your department to ensure that these do not unfairly discriminate√ H R Manual, Recruitment against employees on the basis of their HIV status? If so, list the employment policies/practices so reviewed. Table 11.1: Collective Agreements

Subject Matter Date N / A

Table 11.2: Misconduct & Disciplinary Hearings Finalized

Outcomes of disciplinary hearings Number % of Total Total TOTAL 0 0 0

Table 11.3: Type of Misconduct Addressed & Disciplinary Hearings

Type of Misconduct Number % of Total MISCONDUCT 0 0 TOTAL 0 0

Table 11.4: Grievances Lodged

Number of grieancesv addressed Number % of total Resolved

Not resolved NO GRIEVANCES TOTAL

Table 11.5: Disputes Lodged

Number of disputes addressed Number % of total Upheld

Dismissed N / A TOTAL

HR Oversight Statistics 49 50 EASTERN CAPE GAMBLING AND BETTING BOARD ANNUAL REPORT 2010|2011

Table 11.6: Strike Actions

Strike Actions TOTAL number of person working days lost TOTAL cost(R'000) of working days lost NONE Amount (R'000) recovered as a result of no work no pay

Table 11.7: Precautionary Suspensions

Precautionary Suspensions Number of people suspended 0 Number of people whose suspension exceeded 30 days 0 Average number of days suspended 0 Cost (R'000) of suspensions 0

Table 12.1:Training Needs identified Skills Programmes & other short Other forms of Occupational Categories Gender Employment Learnerships courses training Total Legislators, senior officials and managers Female 0 0 0 0 0 Male 4 0 6 6 12 Professionals Female 5 0 10 0 10 Male 8 0 13 1 14 Technicians and associate professionals Female 0 0 1 0 1 Male 1 0 1 0 1 Clerks Female 7 0 9 0 9 Male 2 0 3 0 3 TOTAL 27 0 43 7 50

Table 12.2: Training Provided Skills Programmes & other short Other forms of Occupational Categories Gender Employment Learnerships courses training Total Legislators, senior officials and managers Female 0 0 0 0 0 Male 4 0 21 1 22 Professionals Female 4 0 1 0 1 Male 9 0 3 1 4 Skills Programmes & other short Other forms of Occupational Categories Gender Employment Learnerships courses training Total Technicians and associate professionals Female 0 0 0 0 0 Male 1 0 0 0 0 Clerks Female 7 0 6 23 29 Male 2 0 2 0 2 TOTAL 27 0 33 25 58

Table 13.1: Injury on Duty

Nature of injury on duty Number % of total Required basic medical attention only Temporary TOTAL Disablement

Permanent Disablement NO IOD CASES Fatal TOTAL

Table 14.1: Report on consultant appointments using appropriated funds Total number of consultants that worked on the Duration: Wor k Contract avlue in Project Title project days Rand PWC – Internal Audit 1 390 868 Softline VIP 1 67 524 STBB Consulting 1 574 584 Lumoko Strat 1 1 046 007 Kettle Consulting 1 249 375 Maseng Viljoen 1 47 652 Balanced Scorecard & OD 1 178 524 Quantity Surveyors 2 1 021 215 TOTAL number of projects 9 0 3 575 749

HR Oversight Statistics 51 52 EASTERN CAPE GAMBLING AND BETTING BOARD ANNUAL REPORT 2010|2011

Table 14.2 - Analysis of consultant appointments using appropriated funds, i.t.o. HDIs Number of Consultants Percentage Percentage from HDI groups ownership by HDI management by that work on the Project Title groups HDI groups project PWC – Internal Audit 100 100 2 TOTAL 2

Table 14.3: Report on consultant appointments using Donor funds Total number of consultants that Donor and worked on the Duration: Wor k Contract avlue in Project Title project days Rand NO CONSULTANTS USED

Total individaul Total duration: Total contract Total number of projects consultants Work days value in Rand NO CONSULTANTS USED

Table 14.4: Analysis of consultant appointments using Donor funds, i.t.o. HDIs Number of Consultants Percentage Percentage from HDI groups ownership by HDI management by that work on the Project Title groups HDI groups project NO CONSULTANTS USED 9.1 ECGBB ORGANOGRAM

CHIEF EXECUTIVE OFFICER

OFFICE MANAGER (v)

PERSONAL INTERNAL ASSISTANT AUDIT SERVICES to the CEO Outsourced

CHIEF COMPLIANCE & FINANCIAL LICENSING OFFICER MANAGER

PERSONAL PERSONAL ASSISTANT ASSISTANT to the CFO to the C&LM (v)

STRATEGIC LEGAL SERVICES SERVICES MANAGER MANAGER (v) (v)

HUMAN INFORMATION SNR AUDITOR SNR INVESTIGATOR SNR INSPECTOR PERSONAL ACCOUNTANT RESOURCES TECHNOLOGY Audit & Compliance Investigations & Law Enforcement & ASSISTANT MANAGER MANAGER (v) (v) Licensing (v) Gaming Control (v) to the SSM (v)

PROCUREMENT HR OFFICER ADMINISTRATOR SYSTEMS AUDITOR INVESTIGATOR INSPECTOR (v) (v) ANALYST

MARKETING SED ASSISTANT RECEPTIONIST AUDITOR INVESTIGATOR INSPECTOR SPECIALIST ACCOUNTANT (v) COORDINATOR (v)

REVENUE DRIVER AUDITOR INVESTIGATOR INSPECTOR ADMINISTRATOR (v)

GENERAL ACCOUNTS ASSISTANT AUDITOR INVESTIGATOR INSPECTOR (v) (v) ADMINISTRATOR (v)

GENERAL ASSISTANT LICENSING INSPECTOR OFFICER (v) LEGEND:

GENERAL ASSISTANT LICENSING CURRENTLY CURRENT (v) OFFICER OCCUPIED VACANCY

HR Oversight Statistics 53

10. Audited Financial Statements for the Year Ended 31 March 2011

10.1 Statement of Financial Position

Figures in Rand Note(s) 2011 2010 Assets Current Assets Trade and other receivables from exchange transactions 3 1 401 323 1 545 178 Receivable on collection for distribution from non–exchange transactions 4 6 921 310 6 822 755 Prepayments 5 287 579 407 985 Cash and cash equivalents 6 52 547 277 11 375940 61 157 489 20 151 858 Non–Current Assets Property, plant and equipment 7 7 127 261 7 535 482 Total Assets 68 284 750 27 687 340

Liabilities Current Liabilities Trade and other payables from exchange transactions 8 7 135 668 7 520 313 Collections for distributions from non–exchange transactions 9 52 321 195 7 008 875 59 456 863 14 529 188 Total Liabilities 59 456 863 14 529 188 Net Assets 8 827 887 13 158 152 Net Assets Accumulated surplus 8 827 887 13 158152 8 827 887 13 158152 Total Net Assets 8 827 887 13 158 152

Audited Financial Statements 55 56 EASTERN CAPE GAMBLING AND BETTING BOARD ANNUAL REPORT 2010|2011

10.2 Statement of Financial Performance

Figures in Rand Note(s) 2011 2010 Revenue Revenue from Exchange Transactions 10 7 552 286 5 452 151 Revenue from non–Exchange Transactions 10 23 338 000 22 017 000 Total Revenue 30 890 286 27 469 151 Expenditure Employee costs 11 (14 119 747) (13 777 537) Depreciation and amortisation 7 (763 150) (751 347) Impairment loss/ Reversal of impairments 3 (156 000) (422 273) Other Operating Expenses 12 (1 899 067) (1 734 564) Administrative expenditure 13 (14 638 095) (17 867 702) Statutory audit fees 14 (1 692 806) (967 202) Gifts, sponsorships and donations paid 15 (390 769) (1 001 780) Marketing cost 16 (2 102 403) (920 800) Total Expenditure (35 762 037) (37 443 205) (Loss) gain on disposal of property, plant and equipment (26 608) 74 435 Finance income 19 568 095 1 275 409 Deficit for the year (4 330 264) (8 624 210) 10.3 Statement of Changes in Net Assets

Figures in Rand Accumulated surplus Total net assets Opening balance as previously reported 21 525 959 21 525 959 Adjustments Change in accounting policy (note 23) 34 809 34 809 Prior year adjustments 203 141 203 141 Balance at 01 April 2009 as restated 21 763 909 21 763 909 Changes in net assets Deficit for the year (8 605 757) (8 605 757) Total changes (8 605 757) (8 605 757) Opening balance as previously reported 13 176 604 13 176 604 Adjustments Change in accounting policy (note 23) (18 453) (18 453) Balance at 01 April 2010 as restated 13 158 151 13 158 151 Changes in net assets Deficit for the year (4 330 264) (4 330 264) Total changes (4 330 264) (4 330 264) Balance at 31 March 2011 8 827 887 8 827 887

Audited Financial Statements 57 58 EASTERN CAPE GAMBLING AND BETTING BOARD ANNUAL REPORT 2010|2011

10.4 Cash Flow Statement

Figures in Rand Note(s) 2011 2010 Cash flows from operating activities Receipts Receipts from customers 7 816 547 5 088 705 Grants 23 338 000 22 017 000 Gambling fees and taxes 134 826 119 89 905 862 165 980 666 117 011 567 Payments Payment to Suppliers and Employees (35 228 334) (40 726 355) Gambling fees and taxes (89 768 354) (89 587 239) (124 996 688) (130 313 594) Net cash flows from operating activities 21 40 983 978 (13 302 027) Cash flows from investing activities Purchase of property, plant and equipment 7 (396 494) (617 578) Proceeds from sale of property, plant and equipment 7 15 758 111 146 Interest Income 568 095 1 275 409 Net cash flows from investing activities 187 359 768 977 Net increase/(decrease) in cash and cash equivalents 41 171 337 (12 533 050) Cash and cash equivalents at the beginning of the year 11 375 940 23 908 990 Cash and cash equivalents at the end of the year 6 52 547 277 11 375 940 10.5 Accounting Policies

1. Basis of Preparations The financial statements have been prepared on a implemented by inclusion of a note on Reconciliation The annual financial statements have been prepared going concern basis and the accounting policies have of budget surplus/deficit with the surplus/deficit in the in accordance with the effective Standards of been applied consistently throughout the period. statement of financial performance in the financial Generally Recognised Accounting Practice (GRAP) statements until the implementation of GRAP 24 for the Accrual Basis of Accounting including any Whilst GRAP 24 on Presentation of Budget becomes effective. interpretations, guidelines and directives issued by the Information in Financial Statements is not effective, Accounting Standards Board. in order to enhance the usefulness of the financial Accounting Standards which have been approved statements, Paragraph 11 - 15 of GRAP 1 has been and are effective:

GRAP 1 Presentation of Financial Statements GRAP 19 Provisions, Contingent Liabilities and Contingent Assets GRAP 2 Cash flow Statements GRAP 102 Intangible Assets GRAP 3 Accounting Policies, Changes in Accounting Estimates and Errors Directive 5 Determining the GRAP reporting framework GRAP 9 Revenue from Exchange Transactions IGRAP 1 Applying the Probability Test on Initial Recognition of Exchange Revenue was formulated to conform with GRAP23 GRAP 12 Inventories IPSAS 20 Related parties disclosure GRAP 13 Leases IFRS 7 Financial instruments: Disclosures GRAP 14 Events After the Reporting date IAS19 (AC116) Employee benefits GRAP 16 Investment Property IAS32 (AC125) Financial instruments: Presentation GRAP 17 Property, Plant and Equipment IAS39 (AC133) Financial instruments: Recognition and measurements

A summary of the significant accounting policies, which For the 2010/11 reporting period, the following yet effective. The effective date for all the below have been consistently applied, are disclosed below. Standards of GRAP have been issued but are not standards are from 01 April 2011:

No. Title of Standard Impact on GRAP Reporting Framework GRAP 18 Segment Reporting No segment reporting required for the 2010/11 reporting period No effect on the Board for the next financial year. GRAP 21 Impairment of Non–cash–generating Full compliance to GRAP 21 not required. Entities may use Assets GRAP 21 to formulate an accounting policy for the impairment of non–cash–generating assets. The accounting policy is in line with GRAP21 therefore no effect on the next financial year. GRAP 23 Revenue from Non–Exchange Transactions (Taxes and Transfers) Full compliance to GRAP 23 not required. Accounting policy was formulated to conform with GRAP 23. GRAP 24 Presentation of Budget Information Full compliance to GRAP 24 not required. Disclosure was made for budget against actual in the financial statements. GRAP 25 Employee Benefits Full compliance with GRAP 25 not required. The accounting policy of the Board was followed.

Audited Financial Statements 59 60 EASTERN CAPE GAMBLING AND BETTING BOARD ANNUAL REPORT 2010|2011

No. Title of Standard Impact on GRAP Reporting Framework GRAP 26 Impairment of Cash–generating assets Full compliance to GRAP 26 not required. Entities may use GRAP 26 to formulate an accounting policy for the impairment cash–generating assets. Accounting policy were compiled to conform with GRAP26. No effect on comings year. GRAP 103 Heritage Assets Entities may use GRAP 103 to formulate an accounting policy for heritage assets. The Board does not have any heritage assets, therefore no effect on the coming year. GRAP 104 Financial Instruments Full compliance with GRAP 104 not required.

1.1. Significant judgments and Residual value on Property, plant and equipment Land is not depreciated as it is deemed to have an sources of estimation uncertainty Property, plant and equipment: Motor vehicles - indefinite life. In preparing the annual financial statements, management has estimated that the residual value for management is required to make estimates and motor vehicles is 25% of the original cost price. No The useful life as well as residual values are reviewed assumptions that affect the amounts represented in the other assets carry any residual value. annually. annual financial statements and related disclosures. Use of available information and the application of 1.2. Property, plant and equipment Gains or losses arising on the disposal of property, judgement is inherent in the formation of estimates. Property, plant and equipment are stated at historical plant and equipment are determined as the difference Actual results in the future could differ from these cost less accumulated depreciation. Depreciation is between the sales proceeds and the carrying amount estimates which may be material to the annual financial calculated on the straight-line method to write off of the assets and are recognised in the statement of statements. Significant judgements include: the cost of assets to their residual values over their financial performance as realised. anticipated useful lives as follows: Provisions Property, plant and equipment are reviewed for Provisions were raised and management The useful lives of items of property, plant and impairment losses whenever events indicate that determined an estimate based on the information equipment have been assessed as follows: the carrying amount may not be recoverable. An available. Additional disclosure of these estimates impairment loss is recognised in respect of the of provisions are included in provisions. Item Average useful life amount by which the carrying amount of the asset Buildings 50 years exceed its recoverable amount, which is the higher Allowance for doubtful debts Fixtures and fittings 10 years of an asset's net selling price and value in use. An On debtors an impairment loss is recognised in Motor vehicles 5 years impairment loss or reversal of an impairment loss is surplus and deficit when there is objective evidence Furniture and equipment 4 - 10 years recognised as an expense/income in the statement of that it is impaired. The impairment is measured as Computer equipment 3 - 4 years financial performance as incurred. the difference between the debtors carrying amount Other and the objective evidence. – Cell phone 2 years – Library books 3 years 1.3. Financial instruments Trade and other receivables charged to the Statement of Financial Performance Financial assets Trade and other receivables are initially measured at in the year to which they relate. The Board has no Financial assets are recognised when the board has a transaction costs and thereafter are re-measured at obligations to fund post-retirement medical benefits. right or other access to economic benefits. fair value using objective evidence for assessment of impairment. 1.6. Provisions and contingencies Receivables and cash are recognised as financial Provisions are recognised when: assets when the entity is party to a contract and as a Trade and other payables ~~the entity has a present obligation as a result of a consequence, has a right to receive cash. Trade payables are recognised as financial liabilities past event; when the entity is party to a contract and as a ~~it is probable that an outflow of resources Financial liabilities consequence, has a right to pay cash. Payables are embodying economic benefits or service potential Financial liabilities are recognised when there is a initially measured at transaction cost and carried at will be required to settle the obligation; and contractual obligation to transfer benefits. fair value of the consideration to be paid in future ~~a reliable estimate can be made of the obligation. for goods or services that have been received or Impairment of financial assets supplied and invoiced or formally contracted for with The amount of a provision is the best estimate of The Entity assesses at each reporting date whether the supplier and are derecognized when the liability the expenditure expected to be required to settle the there is any objective evidence that a financial asset or is extinguished. present obligation at the reporting date. a group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired Cash and cash equivalents Provisions are reviewed at each reporting date if, and only if, there is objective evidence of impairment Cash and cash equivalents are carried at cost. For and adjusted to reflect the current best estimate. as a result of one or more events that has occurred purposes of the cash flow statement, cash and cash Provisions are reversed if it is no longer probable after the initial recognition of the asset (an incurred equivalents comprise cash in hand and deposits held that an outflow of resources embodying economic 'loss event') and that loss event has an impact on the on call with the bank. benefits or service potential will be required, to settle estimated future cash flows of the financial asset or the the obligation. group of financial assets that can be reliably estimated. 1.4. Inventories Evidence of impairment may include indications that Inventories are fully expensed in the year any Leave provision the debtors or a group of debtors is experiencing purchases were made. The employees of the Board are entitled to 22 significant financial difficulty, default or delinquency working days per annum as leave gratuity. The policy in interest or principal payments, the probability 1.5. Retirement benefits adopted by the Board is that all its employees should that they will enter bankruptcy or other financial re- The policy of the Board is to provide retirement take leave during the year, failing which they will organization and where observable data indicate that benefits through an established fund governed by the forfeit their leave days on the 30th of June each there is a measurable decrease in the estimated future Pension Fund Act. The provident fund is a defined year. The leave days are recognised as they accrue to cash flows, such as changes in arrears or economic contribution fund which does not require an actuarial employees. The liability is based on the total amount conditions that correlate with defaults. valuation. Contributions to the provident fund are of leave days due to each employee at year end

Audited Financial Statements 61 62 EASTERN CAPE GAMBLING AND BETTING BOARD ANNUAL REPORT 2010|2011

multiplied by each employee's respective daily rate of when they become due in terms of the Eastern Cape of ownership of the underlying asset are classified remuneration which is calculated from the respective Gambling and Betting Act No 5 of 1997. as operating leases. Payments made under operating employee's gross annual remuneration package. ~~Recoveries of expenses incurred in the production leases are charged to the statement of financial of revenue are accrued on completion of service performance on a straight line basis over the period 13th Cheque rendered. of the lease. The employees of the Board can structure their salary package to have a bonus portion (13th cheque) which Revenue from Exchange Transaction is measured at 1.10. Comparatives is paid on the 15th of January each year. The bonus is fair value on the date it accrues. Where necessary, comparative figures have been recognised as it accrues to employees who have elected reclassified to conform to changes in presentation in to structure their salary packages to have a bonus portion. Revenue from Non Exchange Transaction: the current year. Revenue relating to operational expenditure is Contingent assets and contingent liabilities recognised in the period in which the transfer 1.11. Fruitless and wasteful expenditure Contingent assets and contingent liabilities are not agreement becomes binding and is measured at fair Fruitless expenditure means expenditure which was recognised. Contingencies are disclosed in note 22. value as at the date of recognition. made in vain and would have been avoided had reasonable care been exercised. 1.7. Revenue Gambling taxes and fees to the fiscus Revenue comprises principally of: The gambling taxes and part of the fees collected All expenditure relating to fruitless and wasteful are paid over to the Provincial Revenue Fund at the expenditure is recognised as an expense in the Revenue from Exchange Transactions: end of each month as prescribed by the Gambling statement of financial performance in the year that the ~~Fees charged for services rendered (i.e. Annual and Betting Act. These gambling taxes and fees are expenditure was incurred. The expenditure is classified admin fees); not recognised as revenue as they are collected on in accordance with the nature of the expense, and ~~Recoveries of expenses incurred in the production of behalf of the state, however an asset and liability is where recovered, it is subsequently accounted for as revenue; recognised when taxes and fees become receivable revenue in the statement of financial performance. ~~Sundry income from licensee and payable to the state. Receivable and payables for collection and distribution to the state are 1.12. Irregular expenditure Revenue from Non-Exchange Transactions (Taxes initially measured at cost and carried at fair value. Where irregular expenditure was incurred in the and Transfers) previous financial year and is only condoned in ~~Grant funding received from Provincial Government 1.8. Accruals the following financial year, the register and the Performance bonus disclosure note to the financial statements must be Revenue from Exchange Transaction is recognised Accrual for performance bonus is raised at year end updated with the amount condoned. on accrual basis using the following methods to and paid in the following financial year. determine stage of completion: 1.9. Operating leases Irregular expenditure that was incurred and identified ~~Fees charged for services rendered are recognised Leases where the lessor retains the risk and reward during the current financial year and which was not condoned by the National Treasury or the relevant recover the amount from the person concerned. If irregular expenditure has not been condoned and authority must be recorded appropriately in the recovery is not possible, the accounting officer or no person is liable in law, the expenditure related irregular expenditure register. If liability for the accounting authority may write off the amount as debt thereto must remain against the relevant expenditure irregular expenditure can be attributed to a person, a impairment and disclose such in the relevant note to item, be disclosed as such in the note to the financial debt account must be created if such a person is liable the financial statements. The irregular expenditure statements and updated accordingly in the irregular in law. Immediate steps must thereafter be taken to register must also be updated accordingly. If the expenditure register.

10.6 Notes to the Annual Financial Statements

2. Inventories

Figures in Rand 2011 2010 Stationery – 14 659 Crockery – 3 794 Change in accounting policy – (18 453) – –

During the financial year, the Board change its policy to expense stationery and crockery in the year it was purchased.

3. Trade and other receivables from exchange transactions

Figures in Rand 2011 2010 Trade debtors 381 590 576 578 Staff loans – 3 600 Deposits 16 897 16 897 Sundry debtors 1 002 836 948 103 1 401 323 1 545 178 Fair value of trade and other receivables Trade receivables – Age analysis 120 days – 384 417 90 days 37 575 174 049 60 days 118 103 124 30 days 95 656 17 988 Current 130 256 –

Total 381 590 576 578

Audited Financial Statements 63 64 EASTERN CAPE GAMBLING AND BETTING BOARD ANNUAL REPORT 2010|2011

Figures in Rand 2011 2010

Trade and other receivables impaired The amount of the impairment was R (156 000) as of 31 March 2011 (2010: R734 146). Reconciliation of provision for impairment of trade and other receivables Opening balance 734 146 311 873 Provision for impairment 156 000 422 273 Utilisation of impairment (734 146) –

156 000 734 146

4. Receivable on collection for distribution from non-exchange transactions

Figures in Rand 2011 2010 Government taxes and levies from non–exchange transactions 6 921 310 6 822 755

5. Prepayments

Figures in Rand 2011 2010 Other prepaid expenditure 233 227 353 331 Insurance expenditure 34 284 34 412 Business licenses 20 068 20 242 287 579 407 985

6. Cash and cash equivalents

Figures in Rand 2011 2010 Cash and cash equivalents consist of: Bank balances 52 545 277 11 373 940 Cash on hand 2 000 2 000 52 547 277 11 375 940 7. Property, plant and equipment Accumulated Accumulated depreciation and depreciation and accumulated accumulated Figures in Rand Cost/Valuation impairment Carrying value Cost/Valuation impairment Carrying value Land 1 070 750 – 1 070 750 1 070 750 – 1 070 750 Buildings 5 232 974 (773 790) 4 459 184 5 232 974 (666 823) 4 566 151 Fixtures and fittings 181 765 (107 527) 74 238 182 882 (88 436) 94 446 Motor vehicles 1 185 967 (505 338) 680 629 1 185 967 (345 242) 840 725 Furniture and equipment 1 110 995 (759 632) 351 363 1 272 008 (784 114) 487 894 Computer equipment 1 102 167 (727 646) 374 521 1 250 858 (923 651) 327 207 Library books 215 814 (178 980) 36 834 215 814 (109 768) 106 046 Cell phones 165 946 (86 204) 79 742 152 643 (110 380) 42 263 Total 10 266 378 (3 139 117) 7 127 261 10 563 896 (3 028 414) 7 535 482

Reconciliation of property, plant and equipment - 2011 Depreciation Figures in Rand Opening baancel Additions Disposals Depreciation Adjustment Total Land 1 070 750 – – – – 1 070 750 Buildings 4 556 151 – – (106 967) – 4 459 184 Fixtures and fittings 94 446 – – (20 208) – 74 238 Motor vehicles 840 725 – – (160 096) – 680 629 Furniture and equipment 487 894 14 794 (26 511) (124 814) – 351 363 Computer equipment 327 207 284 674 (8 814) (228 546) – 374 521 Library books 106 046 – – (69 212) – 36 834 Cell phones 42 263 97 026 (66) (53 307) (6 174) 79 742 Total 7 535 482 396 494 (35 391) (763 150) (6 174) 7 127 261

Reconciliation of property, plant and equipment - 2010

Figures in Rand Opening baancel Additions Disposals Prior Period Errors Depreciation Total Land 1 070 750 – – – – 1 070 750 Buildings 4 594 313 78 364 – – (106 526) 4 566 151 Fixtures and fittings 106 541 5 291 – – (17 386) 94 446 Motor vehicles 819 162 272000 (28 786) (58 786) (162 865) 840 725 Furniture and equipment 575 889 42 876 (5 484) – (125 387) 487 894

Audited Financial Statements 65 66 EASTERN CAPE GAMBLING AND BETTING BOARD ANNUAL REPORT 2010|2011

Figures in Rand Opening baancel Additions Disposals Prior Period Errors Depreciation Total Computer equipment 391 364 153 870 (1 000) – (217 027) 327 207 Library books 143 383 31 876 – – (69 213) 106 046 Cell phones 64 549 33 301 (2 644) – (52 943) 42 263 Total 7 765 951 617 578 (37 914) (58 786) (751 347) 7 535 482

Land and buildings, comprise a sub-division of Erf 2863, Beacon Bay measuring 2371 m2, purchased 2002, together with an office building.

8. Trade and other payables from exchange transactions

Figures in Rand 2011 2010 Trade payables 4 047 394 3 849 222 Accruals 3 088 274 3 671 091 7 135 668 7 520 313

9. Collections for distributions from non-exchange transactions

Figures in Rand 2011 2010 Taxes and levies 9 583 445 7 008 875

Exclusivity fee 42 737750 – 52 321 195 7 008 875

Exclusivity fee collected from Zone 1 and paid to the Provincial Revenue Fund on 26 May 2011.

10. Revenue

Figures in Rand 2011 2010 Revenue from Exchange transactions: The amounts included in revenue arising from exchanges of goods or services are as follows: Fees 3 229 574 2 259 602 Recoveries 4 301 481 3 178 035 Sundry income 21 231 13 790 Allowances for credit losses – 724

7 552 286 5 452 151 Figures in Rand 2011 2010 Revenue from Non–Exchange transactions: The amount included in revenue arising from non–exchange transactions is as follows: Government Funding – Operations 23 338 000 22 017 000

11. Employee costs

Figures in Rand 2011 2010 Basic salary 8 954 962 8 113 708 Performance awards 2 189 622 2 140 980 Medical aid – company contributions 638 795 598 783 Unemployment Insurance Fund 41 298 41 869 Insurance 54 193 (5 511) Casual labour – 128 553 Reversal of leave (137 238) – Leave payments 113 815 253 358 Pension 884 099 889 944 Other non pensionable allowances 1 096 500 1 405 100 Other salary related costs 283 701 210 753 14 119 747 13 777 537 Senior Management Remuneration: Remuneration of Chief Executive Officer Salary 1 109 090 896 996 Allowances 120 000 120 000 Fund Contributions 175 584 145 285 Bonus 337 500 240 419 1 742 174 1 402 700

Audited Financial Statements 67 68 EASTERN CAPE GAMBLING AND BETTING BOARD ANNUAL REPORT 2010|2011

Figures in Rand 2011 2010 The Chief Executive officer was appointed 01/12/2009. Remuneration of Chief Finance Officer * Salary 840 513 876 000 Allowances 144 000 120 000 Fund Contribution 60 917 95 249 Bonus 194 992 201 555 1 240 422 1 292 804 The Chief Financial officer was appointed 01/10/2010. * Included in the remuneration of the Chief Financial Officer is an amount of R424 998 paid to Mr. D Mzonke who was the Acting Chief Financial Officer for a period of six months before the appointment of the permanent Chief Financial Officer. Compliance & Licensing Manager Salary 894 930 775 468 Allowance 219 000 120 000 Fund Contribution 108 271 86 880 Bonus 279 761 224 320 1 501 962 1 206 668 The Compliance and Licensing Manager was appointed 01/01/2011. Total Senior Management Remuneration 4 484 558 3 902 172

12. Other Operating expenses

Figures in Rand 2011 2010 Other operating expenses are made up of the following line items: Sundry expenses 105 179 69 706 Fuel & oil 70 554 63 904 Security services 269 473 100 992 Software annual license fees 6 057 152 975 Photocopier usage 28 533 85 742 License fees – software packages 43 553 62 422 Canteen & catering 168 910 219 147 Losses on disposal of assets (667) 1 001 Insurance premiums 153 908 147 438 Maintenance and repairs: Property and buildings 13 051 11 733 Figures in Rand 2011 2010 Maintenance and repairs: Machinery and equipment 90 551 21 737 Maintenance and repairs: Other – 19 181 Bi lateral Relations 106 890 – Stores / consumables – 28 801 Municipal services 243 388 228 659 Courier and delivery charges 17 740 12 524 Communication costs 396 778 435 162 Rentals in respect of operating leases – Plant, machinery and equipment 71 880 73 440 Staff wellness and team building 49 547 – Year–end function 63 742 – 1 899 067 1 734 564

13. Administrative expenses

Figures in Rand 2011 2010 Evaluation and hearing 1 899 822 1 818 148 Inspection and investigation 407 049 346 521 Travelling and subsistence 1 424 489 1 381 975 Consultation fees 3 553 720 2 161 367 Board of Directors' fees 2 360 484 4 937 335 Legal fees 2 440 064 3 408 910 Stationary and printing 198 368 88 467 Bad debts – 57 000 Bank charges 39 689 59 541 Training and staff development 2 314 410 3 608 438 14 638 095 17 867 702

14. Statutory audit fees

Figures in Rand 2011 2010 Statutory Audits 1 692 806 967 202

Audited Financial Statements 69 70 EASTERN CAPE GAMBLING AND BETTING BOARD ANNUAL REPORT 2010|2011

15. Gifts, sponsorships and donations

Figures in Rand 2011 2010 Gifts 54 425 1 780 Sponsorships 264 594 – Donations 71 750 1 000 000 390 769 1 001 780

As part of its corporate social responsibility, the Board has donated computers to Sunduza Primary School in Sterkspruit. and the costs incurred related to the setting up of the computer laboratory. Furthermore, the Board engaged a construction company for the construction of a boxing ring in Idutywa.

16. Marketing cost

Figures in Rand 2011 2010 The costs for research and public education include the following: Promotional advertising – 500 Research and public education 1 568 786 429 622 Films and photography – 1 252 Advertising Subscription and Publications 533 617 489 426 2 102 403 920 800

17. Operating lease commitments

Figures in Rand 2011 2010 Minimum lease payments due – within one year 56 149 56 149 – in second to third year inclusive 112 295 140 374 Present value of minimum lease payments 168 444 196 523

The Board reached an agreement with the lessor for the cancellation of the lease in respect of the old photocopying machines which was for a period of 60 months, and entered into a new lease for a period of 36 months. The information disclosed in comparative figures is in respect of the old photocopying machines. This is due to the fact that the lease agreement in respect of the new photocopying machines was signed after year-end.

The ECG&BB entered into an operational lease agreement with the following terms: - Four photocopy machines for a period of 36 months with the minimum monthly charge of R4 679. - The machines will be returned to the hirer at the end of the period. - The lessor is required to provide a maintenance for the equipment during the period of the agreement. 18. Training and Development Costs

Figures in Rand 2011 2010 Overseas Travel Travel and Accommodation 1 548 982 1 989 772 Car Hire 16 053 12 487 Other (registration daily allowances) 32 412 1 056 866 Local Travel Travel and Accommodation 280 839 294 923 Car Hire 41 223 27 810 Other (registration daily allowances) 394 902 226 580 2 314 411 3 608 438

Included in the training costs is travel and accommodation that relates to overseas conferences attended by the Board members and Senior management during the year under review. The costs for this line item has always been budgeted under training as well as under research and development and reported as such in the annual financial statements.

19. Finance income

Figures in Rand 2011 2010 Interest Revenue Bank 568 095 1 275 409

20. Taxation The income of the Board is exempt from taxation in terms of section 10(1) (cA) of the Income Tax Act no 58 of 1962.

21. Cash generated from (used in) operations

Figures in Rand 2011 2010 Deficit (4 330 264) (8 605 757) Adjustments for: Depreciation 763 150 751 347 Gain (loss) on sale of assets and liabilities 26 808 (74 435) Interest income (568 095) (1 275 409) Allowance for losses 156 000 478 547 Loss on disposal of assets (1 001) 1 001

Audited Financial Statements 71 72 EASTERN CAPE GAMBLING AND BETTING BOARD ANNUAL REPORT 2010|2011

Figures in Rand 2011 2010 Changes in working capital: Trade and other receivables from exchange transactions 9 705 (1 351 923) Trade and other payables from exchange transactions 44 927 675 (3 225 398) 40 983 978 (13 302 027)

22. Contingencies The contingent liability is composed of possible legal costs relating to litigation.

The case refers to the unsuccessful Zone 4 (Mthatha) casino license applicant who is contesting the final decision of the Board issuing the license to the competing applicant. The entity’s lawyers estimated the legal costs to be R1,5 million.

23. Related parties Relationships Administrator of Mbizana Development Trust RM Zwane (Chief Executive Officer) Trustee of Amatola Trust SL Majombozi (Chairperson) Members of key management RM Zwane (Chief Executive Offocer) JT Harper (Chief Financial Officer) BL Jaxa (Compliance and Licensing Manager)

The Chief Executive Officer was appointed by the High Court as the administrator of the Mbizana Development Trust on 19th of August 2009. The former Chairperson was appointed a trustee of Amatola Trust. This resulted in the trusts being related parties to the Eastern Cape Gambling Board due to significant roles the Chief Executive Officer and the former Chairperson assumed in the operations of the trusts.

There were no transactions between the Eastern Cape Gambling & Betting Board and those members of the key management personnel and companies in which key management personnel have an interest in during the year under review.

Figures in Rand 2011 2010 Salaries for Key Management Personnel are disclosed in note 11. During the year under review, the following related party transactions occurred: Related party transactions included in exchange transactions

Additional amounts paid on behalf of: Amatola Trust – 1 773 Mbizana Development Trust 298 761 – Reimbursement amounts paid by: Amatola Trust 252 357 – Mbizana Development Trust – 250 000 Outstanding amounts at year end Amatola Trust 18 977 18 976 Mbizana Development Trust 932 542 633 781

The costs were incurred by the entity while the trusts were experiencing operational challenges and in instances where there were amounts outstanding at year end, these were included in receivable and in some instances were paid post year end by the trusts.

24. Board Members’ emoluments

Figures in Rand Fees Expense Allowances Sub Committees Other Total 2011 For services as directors 477 000 68 809 – 1 814 675 2 360 484 2010 For services as directors 381 500 164 128 149 000 4 242 706 4 937 334

A new Board of Directors was appointed 01/04/2011. Detailed Board members emoluments:

Board Members Fees Expense allowances Other 2011 2010 K. Canca 68,000 675 221,000 289,675 791,491 A. Ntsonkota 59,500 5,183 202,100 266,783 656,949 N. Mqakama – – – – 28,364 C.T.S. Cossie 34,000 1,135 201,200 236,335 444,602 N. Mtakati 42,500 30,135 99,750 172,385 890,866 N. Tom 8,500 785 43,000 52,285 206,400 M. Sibam – – – – 156,250 S.L. Majombozi 120,000 30,893 690,525 841,418 1,440,911 P. White 68,000 – 217,750 285,750 161,100 A. Mabizela 76,500 – 93,750 170,250 118,800 S. Whitfield – – 19,000 19,000 22,500 R. Hill – – 26,600 26,600 19,000 477,000 68,806 1,814,675 2,360,481 4,937,334

Audited Financial Statements 73 74 EASTERN CAPE GAMBLING AND BETTING BOARD ANNUAL REPORT 2010|2011

Detailed Board members emoluments - Included in the amounts under “Other: are the following items:

Board Members Overseas Travel Reading Documents Special Projects Other Total K. Canca 76,500 34,000 110,500 – 221,000 A. Ntsonkota 59,000 34,000 109,100 – 202,100 C.T.S. Cossie 76,500 34,000 90,700 – 201,200 N. Mtakati – 34,000 64,750 – 99,750 N. Tom – 34,000 9,000 – 43,000 S.L. Majombozi 336,000 48,000 306,525 – 690,525 S. Whitfield – – 19,000 – 19,000 R. Hill – – 26,600 – 26,600 P. White 76,500 34,000 107,250 – 217,750 A. Mabizela – 34,000 59,750 – 93,750 624,500 286,000 904,175 – 1,814,675

25. Change in accounting policy Inventory The Board change its accounting policy during the financial year relating to accounting treatment of inventory. Inventory previously carried as the lower of cost or net-realisable value has been changed to expensing these type of expenses in the year it has been incurred.

Figures in Rand 2011 2010 Decrease in inventory (18 453) (34 809) Decrease in retained income (18 453) (34 809)

The reason for the change in treatment of inventory is due to the fact that inventory was previously disclosed in the annual financial statements is mainly made up of stationery and crockery purchased for internal ause and not for trading purposes.

26. Comparative figures Certain comparative figures have been reclassified to show depreciation & amortisation and impairments separately in the statement of financial performance.

The effects of the reclassification are as follows:

Figures in Rand 2011 2010 Statement of Financial Performance Increase in Depreciation and amortisation – 751 347 Decrease in Other Operating expenses – (751 347) Increase in Impairment loss / Reversal of impairments – 422 273 Decrease in Administrative expenses – (422 274)

27. Risk management Liquidity risk – The Board manages liquidity risk through an ongoing review of the future commitments. Cash flow forecasts are prepared and monitored.

Interest rate risk – The Board policy is to manage interest rate risk so that fluctuations in variable rates do not have material impact on surplus / (deficit). The following table illustrates the sensitivity of the entity’s and equity to interest rate changes should interest rates increase or decrease with 2% during the next financial year:

Figures in Rand 2011 2010 –2% –2% Decrease in net deficit for the year (227 238) (510 163) +2% +2% Increase in net deficit for the year 227 238 510 163

Credit risk – Credit risk consists mainly of cash deposits and cash equivalents. The Board only deposits cash with major banks with high credit standards. The Board has therefore no concentration of credit risks.

The board’s maximum exposure to credit risk is equal to the cost amount of the financial assets at balance sheet date and is summarised as below:

Figures in Rand 2011 2010 Trade and other receivables from exchange 1 401 323 1 545 178 Receivable on collection for distribution 6 921 310 6 822 755 Cash and cash equivalents 52 547 277 11 375 940

As of 31 March 2011, trade and other receivables was impaired with an amount of R156 000. The age analysis of financial assets are indicated in note 3.

28. Financial instruments The table below indicates the difference classes of financial instruments. The carrying value approximate their fair value as well.

Loans and receivables are non-derivative financial assets and financial liabilities with fixed or determinable payments that are not quoted in an active market other than those that the entity intends to sell, those that the entity upon initial recognition, designates as available for sale; or those for which the holder may not recover substantially all of its initial investment.

Audited Financial Statements 75 76 EASTERN CAPE GAMBLING AND BETTING BOARD ANNUAL REPORT 2010|2011

Available for sale financial instruments are those non-derivate financial assets that are designated as available for sale or are not classified loans and receivables, held-to-maturity investments or financial assets at fair value through profit or loss.

Figures in Rand Receivables/Loans Available for sale 2011 Financial assets Trade and other receivables from exchange 1 401 323 – Receivable on collection for distribution 6 921 310 – Prepayments 287 579 – Financial liabilities Trade and other payables from exchange (7 135 668) – Payable on collections for distributions (52 321 195) –

2010 Financial assets Trade and other receivables from exchange 1 545 178 – Receivable on collection for distribution 6 822 755 – Prepayments 407 985 – Financial liabilities Trade and other payables from exchange (7 520 313) – Payable on collections for distributions (7 008 875) –

29. Going concern The annual financial statements have been prepared on the basis of accounting policies applicable to a going concern. This basis presumes that funds will be available to finance future operations and that the realisation of assets and settlement of liabilities, contingent obligations and commitments will occur in the ordinary course of business.

30. Events after the reporting date A new board and audit committee was appointed after the reporting date on 01/04/2011. There were no further events after the reporting date that require disclosure in the financial statements. 31. Fruitless and wasteful expenditure

Figures in Rand 2011 2010 Opening balance – 19 986 Fruitless and wasteful expenditure – Prior year – 870 Fruitless and wasteful expenditure recovered from debtor – (870) Fruitless and wasteful expenditure condoned – (19 986) – –

No fruitless and wasteful expenditure was incurred during the year under review. 2010: Interest of R870 was charged by a service provider on late payments of an invoice. An official has since paid the interest.

32. Irregular expenditure

Figures in Rand 2011 2010 Opening balance – 795 272 Irregular expenditure – prior year – 8 893 785 Irregular expenditure – current year 1 657 835 – Irregular expenditure approved by the board – (795 272) Irregular expenditure condoned – (8 893 785) 1 657 835 –

Description of irregular expenditure Disciplinary steps taken/criminal proceedings Details of irregular expenditure – prior year – The Board has condoned and considers expenditure to be The MEC approved the retrospective adjustment of Board Members fees valid and therefore no disciplinary steps were taken. Due to the casino licensing process for zone one and litigation relating to zone four, the Board incurred unexpected expenditure for legal costs. The travelling and subsistence expenditure and training costs increased due to overseas travel for study tours. The Board utilised services of consultants in the licensing process and the CFO support. Details of Irregular expenditure – current year 1 657 835 Over expenditure of the current year budget None taken, under investigation

33. Criminal or disciplinary steps taken as a consequence of material losses None.

Audited Financial Statements 77 78 EASTERN CAPE GAMBLING AND BETTING BOARD ANNUAL REPORT 2010|2011

34. Budget versus actual The below indicate the over- or under on income and expenditure as per the approved budget to comply with GRAP01:

Figures in Rand 2011 2010 Under expenditure in Labour Cost 4 173 986 1 253 086 Under expenditure in Transport Cost 70 581 142 854 Under expenditure in Facility Cost 741 – Under / (over) expenditure in Communication and System Costs 213 141 (128 422) (Over) expenditure in Risk Management Costs (2 439 299) – (Over) expenditure in Business Development Costs (3 613 391) (2 044 010) (Over) expenditure in Other Costs (1 053 759) (2 928 949) (Over) expenditure in Corporate Governance Costs (691 884) (4 255 501) Under expenditure on CAPEX 164 007 617 577 Less: Over expenditure of direct expenditure in relation to hearings and investigations to be recovered 1 518 042 – Net deficit per approved budget (1 657 835) (7 343 365)

35. Soccer World Cup 2010 Expenditure No expenditure has been incurred for the 31 March 2011 and 31 March 2010 which relates to the Soccer World Cup 2010. Reviving local rivalry in boxing! Thabo Sonjica (Duncan Village) and Mcbute Sinyabi (Mdantsane) facing each other in an ECGBB-sponsored boxing tournament.

Crowds at the Orient Theatre in East London enjoying the boxing!

Annual Report 2010|2011 Report Annual www.ecgbb.co.za

ANNUAL REPORT ANNUAL 2011

Title of Publication: Eastern Cape Gambling & Betting Board, Board, Betting & Gambling Cape Eastern Publication: of Title Tel. +27 (0)43 702 8300 | Fax. +27 (0)43 748 2218 748 (0)43 +27 Fax. | 8300 702 (0)43 +27 Tel.

2010 PR121/2011 | ISBN: 978-0-621-40090-8 ISBN: | PR121/2011 P.O. Box 15355 | Beacon Bay | East London | 5205 | London East | Bay Beacon | 15355 Box P.O.

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2010 2011 ANNUAL REPORT