1 North West Gambling Board | Annual Report 2017 - 2018 2 North West Gambling Board | Annual Report 2017 - 2018 Table of Contents

PART A: GENERAL INFORMATION PART C: GOVERNANCE 1. General Information of the Board 4 1. Introduction 76 2. List of Abbreviations 7 2. Portfolio Committee 76 3. Foreword by the Chairperson 9 3. Executive Authority 76 4. Overview by the Chief Executive Officer 11 4. Composition of the Board 76 5. Statement of Responsibility and 5. The Board 78 Confirmation of the Annual Report 13 6. Risk Management 82 6. Strategic Overview 15 7. Internal Control Unit 85 7. Legislative and other Mandates 16 8. Audit Committtee 85 8. Structure of Committees of the Board 18 9. Internal Auditors 85 9. Organisational Structure 19 10. Compliance with the Laws 86 and Regulations PART B: PERFORMANCE INFORMATION 11. Health, Safety and Environmental issues 86 1. Auditor-General’s Report: 12. Record Management 86 Predetermined Objectives 22 13. Company Secretary 87 2. Statement of Responsibility 14. Socio Economic Development 87 for the Performance Information 23 15. Socio Economic Development by 3. Executive Management 24 Licencees Community Social Investment 87 4. Situational Analysis 25 16. Audit Committee Report 88 5. Strategic Outcome Oriented Goals 26 6. Performance Information by Programme 27 PART D: HUMAN RESOURCES MANAGEMENT 7. Summary of Financial Information 57 1. Introduction 92 8. Statistics 58 2. Human Resource Oversight Statistics 93

PART E: FINANCIAL INFORMATION 1. Statement of Responsibility for the 100 Annual Financial Statements 2. Report of the Auditor-General 101 3. Statement of Financial Position 106 4. Statement of Financial Performance 107 5. Statement of Changes in Net Assets 108 6. Cash-flow Statements 109 7. Statement of Comparison of Budget and Actual Amounts 110 8. Accounting Policies 111 9. Notes to the Annual 121 Financial Statements

3 North West Gambling Board | Annual Report 2017 - 2018 Part A General Information

1. General Information of the Board 2. List of Abbreviations 3. Foreword by the Chairperson 4. Overview by the Chief Executive Officer 5. Statement of Responsibility and Confirmation of the Annual Report 6. Strategic Overview 7. Legislative and other Mandates 8. Structure of the Board 9. Organisational Structure

4 NorthNorth WesWestt GGamblingambmbblinllii g BBoardoard | AnnAnnualual ReReporteport 220170170011717 - 22020120188 1. General Information of the Board

Name of Entity North West Gambling Board Business Hours Monday to Friday, 08:00 to 17:00 NWGB Hotline No. 0860 545 545 E-Mail [email protected] Website www.nwgb.co.za Auditors Auditor-General of South Africa Bank ABSA Bank, Mahikeng Board Secretary Mr Rangwedi Jacob Montshioa

Head Office Physical Address 131 University Drive, Mmabatho, 2735

Postal Address Private Bag X34, Mmabatho, 2735 Telephone Number +27 18 384 3215 Facsimile Number +27 18 384 2290

Regional Office Physical Address 67 Brink Street, Rustenburg, 0299 Telephone Number +27 14 594 2178 Facsimile Number +27 14 594 2541

5 North West Gambling Board | Annual Report 2017 - 2018 6 North West Gambling Board | Annual Report 2017 - 2018 2. List of Abbreviations

AFS Annual Financial Statements AGSA Auditor-General of South Africa APP Annual Performance Plan BBBEE Broad-Based Black Economic Empowerment BOARD North West Gambling Board CCMA Commission for Conciliation, Mediation and Arbitration CEO Chief Executive Officer CSI Community Social Investment FY Financial Year GGR Gross Gaming Revenue GRAP Generally Recognised Accounting Practice HR Human Resources ISO Independent Site Operator LOC Letter of Certification LPM Limited Payout Machine MEC Member of the Executive Council MoU Memorandum of Understanding NWGB North West Gambling Board PFMA Public Finance Management Act PPPFA Preferential Procurement Policy Framework Act RFA Request for Applications RRR Rebranding, Repositioning and Renewal SABS South African Bureau of Standards SAPS South African Police Service SARS South African Revenue Service SED Socio Economic Development TYPE A LPM SITE 3 to 5 machines TYPE B LPM SITE 6 to 30 machines TYPE C LPM SITE 40 machines

7 North West Gambling Board | Annual Report 2017 - 2018 “The rebranding, reposition and renewal of the industry will have to include everyone to pull together in the success of the gambling industry in the province. Harambee Bokone Bophirima!”

Mr Lavelle W Vere Chairperson of the Board

8 North West Gambling Board | Annual Report 2017 - 2018 3. Foreword by the Chairperson

The annual report of the North-West Gambling Board is a reflection of the achievements of the Board and intended objectives for the 2017/18 financial year. This report also takes cognizance some of the challenges confronting the Board.

The Board has during this period set itself strategic objectives, aimed at creating a sound and enabling environment for the gambling industry to thrive whilst placing Previously Disadvantaged Individuals at the epicenter of this growth and development. This is aimed at creating socio-economic opportunities for this stratum and deal with the imbalances of the past as informed by the country’s skewed history.

To achieve this, the Board has put systems in place that are aimed at improving its service provision to licensees through regulation of gambling in the province. Our mandate also transcends the regulation of gambling. This could be seen through different Corporate Social Investment initiatives that we carried out with our different stakeholders.

The rebranding, reposition and renewal of the industry will have to include everyone to pull together in the success of the gambling industry in the province. Harambee Bokone Bophirima!

Collection of taxes is equally important to the Board. It enables the Board to measure the socio-economic impact that gambling has in the province. This is of vital importance as through these taxes and levies, enable us to contribute to the fiscus, helping government to fight the triple socio-economic quagmire confronting our province and the country. Poverty, unemployment and income inequalities continue to be areas of concern in our socio-economic narrative many years post our skewed past.

Despite these challenges the Board has recorded meaningful success in rolling out forms of gambling planned during the financial year under review. This roll out has been to the benefit of the Previously Disadvantaged Individuals. Part of our license conditions encourages licensees to have sixty percent (60%) of ownership held by this stratum.

The Board has also increased the number of Limited Payout Machines, majority of those are in premises owned by Previously Disadvantaged Individuals. The NWGB has rolled-out three Bingo Operations and adjudicated and granted three independent site operators. All these efforts have seen an increase in the creation of job opportunities in the 2017/18 financial year. Illegal gambling continues to be a cause for concern, particularly in the Dr. Ruth Segomotsi District Municipality.

The Board maintains a strategic relationship with all relevant stakeholders in particular the South African Police Service and the Financial Intelligence Centre in dealing with this problem. Illegal gambling operations remain a security threat to our operations and our beloved province. They are a haven for criminal activities such as human and drug trafficking including money laundering. This criminal activity must be arrested before it causes more damage harm to the industry.

Over and above this particular challenge, efforts by the Board to deal with this conundrum are frustrated by illegal operators who perpetuate this scourge with gambling online sites which are disguised as Internet Cafés.

In conclusion, I hereby wish to extend our gratitude to the management and staff of the Board, for their continuous efforts and commitment in ensuring that we provide with effective regulation in the province.

I would also like to take this opportunity to thank the Portfolio Committee on Premier, Treasury and Enterprise Development and the Department of Finance, Economy and Enterprise Development for their oversight role, support and constructive criticism. The SAPS and the people of North West in helping us to deal with among others illegal gambling and other factors posing a threat and impeding in our operations and the industry.

Lavelle Vere Chairperson of the North West Gambling Board.

9 North West Gambling Board | Annual Report 2017 - 2018 “We continue to write a narrative which seeks to change ownership patterns in our industry particularly, our province. The transformation of the gambling industry remains high on the agenda of the Board.”

MMrr N OOliphantliphant CChiefhief EExecutivexecutive OOfficerfficer

10 North West Gambling Board | Annual Report 2017 - 2018 4. Overview by the Chief Executive Officer

The gambling industry remains one of the lucrative businesses in the country, as such, it remains critical for the province’s socio-economic development. It is against this background that we keep this industry in check through proper regulation and to rid it of unscrupulous forces. Through proper regulation we are also able to create sustainable opportunities for the benefit of people of South Africa and in particular North West, irrespective of gender, race or class.

Checks and balances are of critical importance to eradicate socio-economic ills which come with illegal gambling. As the Board, we are duty bound to audit finances of gambling operators. Through this we are able to detect any wrong-doing by our licensees. This further helps us to measure our collection of taxes and levies for the provincial fiscus.

We continue to write a narrative which seeks to change ownership patterns in our industry particularly, our province. The transformation of the gambling industry remains high on the agenda of the Board. In keeping up with this course we have licensed operations in predominantly rural areas and townships. The North West is predominantly rural, creation of job opportunities in these areas has the potential to unlock economic growth and contribute to the social impact that gambling has in our communities.

This synopsis sets a sequence in what we sought to achieve including challenges needing our immediate attention and action. It serves as a barometer of our Annual Performance Plan as per the performance plan in the 2017/18 financial year. Thus it is of critical importance that we take stock of our achievements and challenges through the provisions as set out in our Annual Performance Plan.

General financial review of the public entity

The operations of the Board are currently funded through a grant from the Department of Economy and Enterprise Development. The Board has over years experienced an increase in its budget allocation to enable it to execute its mandate, though in 2017/18 financial year there was a budget cut of R11,780 000.

The Board spent within the budget for the period under review, however, it should be noted that the Statement of Financial Performance for both 2016/17 and 2017/18 financial years recorded a deficit at year end due to the Provision for Long Service Awards and Performance Bonuses in terms of the Board’s Human Resource Policy as well as the budget cut as indicated above. The deficit is catered for, within the accumulated surplus.

Capacity, Constraints and Challenges facing the Board

The Board has during the period under review, managed to overcome its previous challenges pertaining to human capital capacity by filling all the critical positions as per the approved structure. This has enabled the Board to effectively and efficiently conduct its mandate.

Issues ranging from illegal operations continue to be an area of concern which negatively affects the operations particularly in creating an enabling environment for legalized gambling, and further robbing the Province of much needed fiscus.

The Board has further experienced an increase in litigation whereby the decisions of the Board regarding applications for licenses are take on review and this constrained the Board in achieving its pre-determined objectives.

The Board has also experienced a trend whereby its powers are consistently being challenged by the licensees when it comes to imposition of license conditions, despite this being the power vested on the Board by the North West Gambling Act.

Supply Chain Management

The Board has in place a fully-fledged Supply Chain Management unit as required by Regulation 16A of the Treasury Regulations, 2005 and approved Supply Chain Management policy which is continuously reviewed to ensure effective and efficient management system. The Board has also in place relevant committees as required in terms of the relevant provisions of Preferential Procurement Policy Framework Act, with the necessary terms of reference. These committees are pivotal in assisting the Board to implement Supply Chain Management processes. 11 North West Gambling Board | Annual Report 2017 - 2018 Audit report matters in the previous year and how to be addressed

The Auditor-General of South Africa (AGSA) has performed the necessary audit procedures on financial and performance information to provide an audit opinion and an audit conclusion for the 2017/18 financial year. Our Entity obtained an unqualified audit opinion, which is included in the Audit Report, with matters of emphasis being reported under the heading Matters relating to the Auditor’s Report.

The above-mentioned emphasis of matters relates to some instances of irregular expenditure for the tenders awarded prior to 2017/18 financial year. The North West Gambling Board is implementing the necessary internal control measures and ensuring continuous monitoring of the effectiveness thereof to ensure that the findings do not recur.

Outlook or plans for the future to address financial challenges

The Board is earnestly containing expenditure on non-essential items such as catering, consultants, communication and general administration in line with the National Treasury Cost Containment Measures and allocate a greater share of goods and services budget towards its core functions.

Economic viability

Our country and consequently the North West province continue suffer the effects of the global political economy as informed by the hegemony still enjoyed by Western European countries and the United States. These effects, to a larger extent have far-reaching ramifications for countries in the Global South and in particular Sub-Saharan Africa.

The North West a province in the north-western part of South Africa is heavily reliant on three economic pillars, which is mining, agriculture and tourism. These three sectors with the exception of the Tourism has seen little improvement in growing these industries over the years with mining shedding jobs at an alarming. The mining industry is predominantly located in the Bojanala Region of our province where the bulk of licensees or operations are concentrated.

Consequently, retrenchments in the mining industry have had spill-over effects in other sectors of the economy such as retail due to lack of buying power. And the gambling industry has not been spared. This has the potential to harm industries such as ours leading to the inability of the Board to reach its predetermined targets in revenue collection.

On behalf of the management and staff of the North West Gambling Board, I would like to thank the Board for its continuous support in realizing our objectives. The dedication of the portfolio committee on Premier, Treasury and Enterprise Development is highly appreciated including our working relations with licensees as well as the commitment and discipline of the employees and management of the Board.

Nathan Oliphant Chief Executive Officer

12 North West Gambling Board | Annual Report 2017 - 2018 5. Statement of Responsibility and Confirmation of the Accuracy of the Annual Report

To the best of my knowledge and belief, I confirm the following:

All information and amounts disclosed in the annual report is consistent with the annual financial statements. The annual report is complete, accurate and is free from any omissions.

The annual report has been prepared in accordance with the guidelines on the annual report as issued by National Treasury.

The Annual Financial Statements (Part E) have been prepared in accordance with the GRAP standards applicable to the public entity.

The Board is responsible for the preparation of the annual financial statements and for the judgments made in this information.

The Board is responsible for establishing, and implementing system of internal control has been designed to provide reasonable assurance as to the integrity and reliability of the performance information, the human resources information and the annual financial statements.

The external auditors are engaged to express and independent opinion on the annual financial statements. In our opinion, the annual report fairly reflects the operations, the performance information, the human resources information and the financial affairs of the Board for the financial year ended 31 March 2018.

Nathan Oliphant Lavelle W Vere Chief Executive Officer Chairperson of the NWGB

Date: 31 May 2018 Date: 31 May 2018

13 North West Gambling Board | Annual Report 2017 - 2018 14 North West Gambling Board | Annual Report 2017 - 2018 6. Strategic Overview

VISION

To be a leading and socially conscious authority in the regulation of Gambling in the world.

MISSION

To provide effective and efficient regulatory services and maintain a gambling industry, which contributes to socio- economic growth and development.

VALUES

The North West Gambling Board’s approach to service delivery is premised on the following values:

• Service Excellence; • Integrity; • Transparency; • Honesty; and • Respect.

STRATEGIC OUTCOME ORIENTED GOALS OF THE BOARD

Strategic Outcome Oriented Goal

• Regulate business activities in the Province to create a conducive legal, business and socio- economic environment to business prosperity.

Goal Statement

• Roll out of Limited Payout Machines; • Facilitation of discussion on the re-allocation of the 5th casino license; • Licensing of Bookmakers and Totalizators; • Combat illegal gambling in the Province; and • Promotion of Responsible Gambling

Justification

• Create an enabling environment for responsible licensing of all forms of gambling allowed in terms of the legislation.

15 North West Gambling Board | Annual Report 2017 - 2018 7. Legislative and other mandates

7.1 Constitutional Mandate

Schedule 4 Part A of the Constitution provides that casino’s, racing, gambling and wagering are functional areas of concurrent national and provincial legislative competence, which means provinces have the constitutional mandate to regulate the above mentioned activities.

7.2 Legislative Mandates

7.2.1 National Gambling Act, 2004, Act No.7 of 2004, as amended

This is the national legislation which provide for the co-ordination of concurrent national and provincial legislative competence over matters relating to casinos, racing and wagering, and to provide for the continued regulation of those matters. It further establish certain uniform norms and standards applicable to national and provincial regulation and licensing of certain activities.

7.2.2 Broad Based Black Economic Empowerment Act, 2003

This Act establishes a legislative framework for the promotion of Broad Based Black Economic Empowerment. It empowers the Minister to issue codes of good Practice, to publish Transformation Charters, to establish the Black Economic Empowerment Advisory Council and to provide for matters connected therewith.

The Gambling Industry has adopted the compliance levels which the licensee must attain, and these are monitored annually, as they form part of the license conditions.

7.2.3 North West Gambling Act, Act No.2 of 2001, as amended

The North West Gambling Act provide for the regulation of gambling activities in the Province, establish a Board to control and manage gambling activities and set out powers and functions of the Board.

7.2.4 Public Finance Management Act, Act No.1 of 1999, as amended

The objective of this Act is to regulate financial management in the National Government and Provincial Governments; to ensure that all revenue, expenditure, assets and liabilities of those governments are managed efficiently and effectively; and to provide for the responsibilities of persons entrusted with financial management in those governments and to provide for matters connected therewith.

7.2.5 Health and Safety Act 85 of 1993

The Act provides for the promotion and adherence of sound health and safety practices of employees and visitors at designated work places and establish an advisory council for occupational health and safety and matters connected therewith.

16 North West Gambling Board | Annual Report 2017 - 2018 7.2.6 Financial Intelligence Centre Act 38 of 2001

The Act provides for the combating of money laundering activities and further provides for:

(a) Registration of accountable and reporting institutions with the Financial Intelligence Centre Act. (b) Powers of supervisory bodies to conduct inspections. (c) Administrative sanctions that may be imposed by the Centre or supervisory bodies. (d) Establishes an appeal board to hear appeals against decisions of the Centre or supervisory bodies.

7.3 Policy Mandates

The North West Gambling Board as established in terms of section 3 of the North West Gambling Act No.2 of 2001 is mandated to regulate gambling and related activities in the North West Province in concurrence with the National Gambling Board.

Through the above, the Board is expected to ensure that gambling in the Province is conducted or operated in a fair, honest and safe manner while providing protection to the general public against the latent demand for gambling through responsible gambling programmes.

The Board is classified as a schedule 3C public entity in terms of the Public Finance Management Act and is funded through a grant system by the Provincial Treasury and subscribes to all principles of good corporate governance as required in terms of Codes of Good Practice.

The North West Gambling Board, in compliance with the Public Finance Management Act, 1999 (Act 1 of 1999), as amended (“PFMA”), in particular provisions as contained in sections 50 and 51 thereof, has developed a value system to promote service excellence, integrity, transparency and honesty.

The North West Gambling Board furthermore, adheres to good corporate governance principles as stipulated in the King Code of Corporate Practices and Conduct (King III Report) and the protocol for State Owned Enterprises on Corporate Governance. The North West Gambling Board, in its discharge of proper supervision and control of gambling and wagering activities in the province, ensures that through its Mission, its set objectives are met by determining, implementing, monitoring and enforcing matters relating to legislation, policy, Corporate Plans, gambling regulation and financial management.

This Board subscribes to all principles (socio- economic, technological and legal) of protecting the public against any unfair, unjustified, dishonest and/ or unscrupulous or illegal practices in gambling, ensuring best practices of promoting responsible gambling, sound and sustainable economic benefits to the Provincial Government and maintenance of fair and socially responsible regulatory systems and processes in all gambling establishments licensed to operate in the North West Province.

It can be concluded therefore that:

• It is a declared policy of the Board that all establishments where gambling games are conducted or operated, such games are licensed and controlled so as to better public engagement in gambling, promote safe entertainment, good morals and order in preservation of all relevant provincial government policies and laws; • to render effective regulatory control which displays a high standard of professionalism and operates in clear recognition of the dictates of fairness, honesty, transparency and integrity in the best interests of the North West public, Licensees and the Provincial Government; • to protect the public against any unfair, unjustified, dishonest and/or unscrupulous practices in the gambling industry, therefore ensuring a sound and sustainable equitable regulatory regime and processes that enhance responsible gambling, public confidence and empowerment of the previously disadvantaged communities, especially where these gambling establishments are located in the Province; and • to only allow those who have been found suitable to operate or conduct gambling activities in the Province.

17 North West Gambling Board | Annual Report 2017 - 2018 8. Structure of Committees of the Board

18 North West Gambling Board | Annual Report 2017 - 2018 9. Organisational Structure

19 North West Gambling Board | Annual Report 2017 - 2018 20 North West Gambling Board | Annual Report 2017 - 2018 Part B Performance Information

1. Auditor-General’s Report: Predetermined Objectives 2. Statement of Responsibility for the Performance Information 3. Executive Management 4. Situational Analysis 5. Strategic Outcome Oriented Goals 6. Performance Information by Programme 7. Summary of Financial Information 8. Statistics

21 North West Gambling Board | Annual Report 2017 - 2018 1. Auditor-General’s Report: Predetermined Objectives

The Auditor-General of South Africa (AGSA) currently performs the necessary audit procedures on the performance information to provide an audit conclusion. The audit conclusion on the performance against predetermined objectives is included in the report to Management, with material findings being reported under the Report on the audit of the annual performance report heading, in the section on other legal and regulatory requirements of the Auditor’s Report.

Refer to page 101 of the Auditors Report, published as Part E: Financial Information.

222 NorthNorN th WesWestt GambGamblinglinng BBoardoard | AnnAnnualualuau ReRReporteppoporo t 22017017 - 20120188 2. Statement of Responsibility for Performance Information

Statement of Responsibility for Performance Information for the Financial Year ended 31 March 2018.

The Chief Executive Officer (CEO) is responsible for the preparation of the public entity’s performance information, as well as for the judgements made in this information.

The CEO is responsible for establishing and implementing a system of internal controls, designed to provide reasonable assurance as to the integrity and reliability of the performance information.

In my opinion, the performance information fairly reflects the actual achievements against planned objectives, indicators and targets, as per the public entity’s Strategic and Annual Performance Plan (APP) for the Financial Year ended 31 March 2018.

The NWGB’s performance information for the FY ended 31 March 2018 has been examined by the external auditors and their report is presented on page 101.

The performance information of the entity set out on page 27 to page 56 was approved by the Board.

Nathan Oliphant Chief Executive Officer

23 North West Gambling Board | Annual Report 2017 - 2018 3. Executive Management

Mr N Oliphant Chief Executive Officer

S Motlhamme RJ Montshioa SM Motlhabane Chief Financial Officer Legal Services Manager Corporate Services Manager

24 North West Gambling Board | Annual Report 2017 - 2018 4. Situational Analysis

1 Service Delivery Environment

The North West Gambling Board is listed as a schedule Transformation Workshop where new entrants in the 3C Public Entity in terms of the Public Finance business are educated about the gambling industry, the Management Act and is established in terms of the BBBEE act and its dictates, including the Corporate side North West Gambling Act, 2001 (Act No.2 of 2001), as of the business. amended to regulate gambling activities in the North West Province. 2 Organisational Environment

The business of the Board is to create an enabling The Board during the period under review saw the environment for the gambling industry to thrive as term of office of the Chief Executive Officer, who has a business while looking at its ability to create socio- been with the Organisation for a period of ten (10) economic opportunities for the economically depressed years coming to the end. The Chief Executive Officer and marginalised. The mandate further speaks to was instrumental in ensuring that local Previously creating an enabling environment for leisure and Disadvantaged Individuals partake in the gambling entertainment activities. The Board is equally tasked industry by being equity owners in different gambling with ensuring that the gambling industry is strictly modes like Bingos, Route Operators, Independent Site regulated to avert socio-economic factors such as Operators and Bookmakers. compulsive gambling and loss of value for responsible living standards. The Board has further experienced a serious decline in revenue collection and this could be attributed to the The Board has for 2017/18 financial year identified the economy of the Province which has been contracting following strategic objectives: over a period of years. The decline of revenue collection resulted in the reduction of the budget if the Board and • Creating an enabling environment for responsible this has affected the operations of the Board negatively. licensing in all forms of gambling allowed in terms of the legislation; 3 Key Policy Developments and Legislative Changes • Improving efficiencies in the regulation of all forms of gambling; The National Gambling Policy came into effect on 01 • Monitoring and enforcing Compliance with the Broad April 2016, and this policy seeks to review the gambling Based Black Economic Empowerment Act and codes landscape in South Africa particular with regard to issues of Good Practice within the Industry; pertaining to Bingo, amongst others. • Strengthening the Institutional capacity of the Board. The Policy seeks to create a national framework to In this light, the Board managed to licence additional regulate what is commonly known as Electronic Bingo modes of gambling in the form of bingo and Terminals (EBT’s), which will include regulation of the bookmaker operations, continuous roll out of various overall number of Bingo licenses, including EBT’s and licenses create employment, increase revenue, Bingo seats in the country. strengthen BBBEE or PDI empowerment. The Minister of Trade and Industry has during the period The Board is proud to announce that the face of gambling under review promulgated Regulations regarding industry is steadily changing as more local Previously the maximum number of Casino licenses granted Disadvantaged Individuals are now equity owners in throughout the Republic and this resulted in the North the licence holders, albeit with few challenges. West Province being re-allocated its fifth Casino license, which was lost to Gauteng Province during the re- The challenges faced with the local Previously demarcation of provincial boundaries. Disadvantaged Individuals is the fact that some of the shareholders are lured in the business for cosmetic The Board is in the process of putting measures in place purposes. The Board has established that in some to roll out the fifth Casino license, however this has instances this category does not understand the value been constrained by a recently launched High Court and the worth of their shares. In addressing some of application by the Casino Association of South Africa to these challenges the Board has initiated an Annual review the decision of the Minister.

25 North West Gambling Board | Annual Report 2017 - 2018 5. Strategic Outcome Oriented Goals

In developing the strategic objectives of the Board, cognisance was taken of the Strategic Outcome Oriented Goals of the controlling Department of Finance, Economy and Enterprise Development. These are aimed at regulating business activities in the Province to create a legal, business and socio-economic environment conducive to business prosperity.

Strategic Objectives of the Board In response to the Medium Term Strategic Framework 2015 – 2019, the Board will focus mainly on Service Delivery Outcome 4: Decent employment through inclusive economic growth. It has identified the following strategic objectives:

STRATEGIC OBJECTIVE 1

• Create an enabling environment for responsible licensing of all forms of gambling allowed in terms of the legislation.

STRATEGIC OBJECTIVE 2

• Improve efficiencies in the regulation of all forms of gambling.

STRATEGIC OBJECTIVE 3

• Monitor and enforce compliance with the Broad- Based Black Economic Empowerment Act (BBBEE Act) and Codes of Good Practice within the Industry.

STRATEGIC OBJECTIVE 4

• Strengthening the institutional capacity of the Board.

26 North West Gambling Board | Annual Report 2017 - 2018 6. Performance Information by Programme

Programme 1 Chief Executive Office

Mr N Oliphant Chief Executive Officer 27 North West Gambling Board | Annual Report 2017 - 2018 R’000 DEVIATIONS DEVIATIONS COMMENT ON COMMENT ON EXPENDIRE (OVER)/ UNDER- R’000 ACTUAL TARGET TO ACTUAL TARGET TO ACTUAL EXPENDITURE 2017/18 DEVIATION FROM PLANNED DEVIATION FROM PLANNED ACHIEVEMENT FOR 2017/18 ACHIEVEMENT FOR 2017/18 R’000 BUDGET ACTUAL ACTUAL 2017/18 2017/18 ACHIEVEMENTS ACHIEVEMENTS R’000 EXPENDIRE TARGET (OVER)/ UNDER- TARGET 2017/18 PLANNED 2017/18 PLANNED R’000 2016/17 2017/18 2016/17 01040505 01 04 05 05 01 04 05 05 None None None None None None None None 0104050105 01 04 05 01 05 01 04 05 01 05 None None None None None None None None None None 2016/17 2016/17 ACTUAL EXPENDITURE ACHIEVEMENTS ACHIEVEMENTS 5 654 5 630 23 6 257 6 250 7 R’000 BUDGET To provide strategic leadership and management of the organization. To STRATEGIC OBJECTIVES ACTUAL KEY PERFORMANCE INDICATOR ACTUAL Strengthening the Institutional capacity of the Board Compiled CorporatePlan andAnnual Performance Plan Number of Quarterly Performance Reports submitted Number of Internal and External Audits coordinated Annual Report submittedNumber of Risk Management re- ports prepared 01 01 01 None None TOTAL 5 654 5 630 23 6 257 6 250 7 Purpose: Linking Performance to Budget: Programme 1: Chief Executive Office 28 North West Gambling Board | Annual Report 2017 - 2018 6. Performance Information by Programme

Programme 2 Investigations and Licensing

Ms Morongoa Moss (Investigations and Licensing Manager)

2929 NorthNortht WesWWesteest GamblingGaambmbmblinlininggB BBoardoaoaro d | AnnAnnualual ReReportport 220170177 - 20201801018 the North West Gambling Act, COMMENT ON DEVIATIONS respective Route Operators due to activation of licensed premises and more site operator license applications received and approved by the Board for period under review litigation instituted by Casino Association of South Africa, The matter is before the North Gauteng High Court. matter will be heard by the High Court between 31 July and 01 August 2018. litigation instituted by Casino Association of South Africa, The matter is before the North Gauteng High Court. matter will be heard by the High Court between 31 July and 01 August 2018. out 4 approved bookmaker premises. out. the registration of more gambling employees. and acquisitions for a period under review. Though fourteen (14) applications were processed for the period under review, only seven (07) were completed within 3 months. period under review. FOR 2017/18 DEVIATION FROM PLANNED TARGET TO ACTUAL ACHIEVEMENT ACTUAL 2017/18 ACHIEVEMENTS TARGET 2017/18 PLANNED 0 1 0 1 The roll out of the fifth Casino License is hampered by 19 11001 20 0 528 13 1 20 1 7 The roll out of the fifth Casino License is hampered by 07 4 Failure by the licensee to commit deadline roll 13 Failure by the licensee to commit deadline roll There was a decline in applications for junket registration 294 265 312 47 More Limited Payout Machines were rolled out by the 230 267 215 52 Less licenses were renewed by gambling operators for a 1039 600 1114 514 New gambling operations were opened, which resulted in 2016/17 ACHIEVEMENTS To ensure that every person involved in gambling the North West Province is suitable and registered or licensed terms of

STRATEGIC OBJECTIVES ACTUAL Create an enabling environment for responsible licensing of all forms gambling allowed in terms of the legislation Purpose: 2001 (Act No. 2 of 2001) as amended. 30 North West Gambling Board | Annual Report 2017 - 2018 COMMENT ON DEVIATIONS respective Route Operators due to activation of licensed premises and more site operator license applications received and approved by the Board for period under review. litigation instituted by Casino Association of South Africa, The matter is before the North Gauteng High Court. matter will be heard by the High Court between 31 July and 01 August 2018. is pending amendment of the legislation to legalize Greyhound Racing in the North West Province. The West Gambling Amendment Bill has been published for comments. 4 approved bookmaker premises. New gambling operations were opened, which resulted in the registration of more gambling employees. and acquisitions for a period under review. Though fourteen (14) applications were processed for the period under review, only seven (07) were completed within 3 months. None None FOR 2017/18 DEVIATION FROM PLANNED TARGET TO ACTUAL ACHIEVEMENT ACTUAL 2017/18 ACHIEVEMENTS TARGET 2017/18 PLANNED - 1 0 1- The granting of the application for Greyhound Racing 1 1 None None 0 1 0 1 The roll out of the fifth Casino License is hampered by 1910 2001 5 1328 3 1 20 3 7 07 4 Failure by the licensee to commit deadline roll out Failure by the licensee to commit deadline roll out. 13 There was a decline in applications for junket registration 294 265 312 47 More Limited Payout Machines were rolled out by the 1039 600 1114 514 2016/17 ACHIEVEMENTS KEY PERFORMANCE INDICATOR ACTUAL Number of limited payout machines rolled-out. Granting of the application for fifth casino license Granting of application for Greyhound Racing. Number of Bookmaker premises rolled-out. Number of Totalizator Branches and Agencies rolled-out Number of Bingo Operators rolled- out Registration of Gambling Employees. Processing of all applications for registrations, acquisitions, removal and transfers within three (3) months of receipt. Review of (Investigations and Licensing) Procedure / Operational Manual

31 North West Gambling Board | Annual Report 2017 - 2018 COMMENT ON DEVIATIONS Less licenses were renewed by gambling operators for a period under review. None 2020/21, pending the outcome of matter before High Court. comments. The indicators has been taken out of the APP 2018/19 operational outlets are profitable operational outlets are profitable ing high renewal fees (engagement with the licensees FOR 2017/18 DEVIATION FROM PLANNED TARGET TO ACTUAL ACHIEVEMENT 4 None 215 52 ACTUAL 2017/18 ACHIEVEMENTS TARGET 2017/18 PLANNED -4 2016/17 ACHIEVEMENTS Granting of the application for fifth casino license The indicator has been captured in the Corporate Plan 2018/19 - Granting of application for Greyhound Racing.Number of Bookmaker premises rolled-out.Number of Totalizator Branches and Agencies rolled-out The North West Gambling Amendment Bill has been published for Renewal of Gambling Licenses. The licensee has committed to roll out six(6) outlets once the 14 The licensee has committed to roll out six(6) outlets once the 14 Less licenses were renewed by gambling operators for mostly cit- KEY PERFORMANCE INDICATOR ACTUAL STRATEGIC OBJECTIVESCreate an enabling environment for responsible licensing of all forms gambling allowed in terms of the legislation PERFORMANCE INDICATOR STRATEGY TO ADDRESS UNDER-PERFORMANCE Renewal of Gambling Licenses. - 267 Number of Monitoring Audits performed to ensure compliance with license conditions by Licensees (One report per quarter.) Strategy to overcome areas of under-performance 32 North West Gambling Board | Annual Report 2017 - 2018 R’000 UNDER- (OVER)/ EXPENDITURE R’000 ACTUAL 2017/18 2017/18 EXPENDITURE R’000 BUDGET R’000 UNDER- (OVER)/ EXPENDITURE R’000 ACTUAL 2016/17 2016/17 EXPENDITURE 13 09313 093 12 564 12 564 529 529 8 853 8 853 8 854 8 854 (1) (1) BUDGET R’000 TOTAL Linking Performance to Budgets: Programme 2: Investigations and Licensing 33 North West Gambling Board | Annual Report 2017 - 2018 6. Performance Information by Programme

Programme 3 Gambling Control

Mr S Mogapi (Gambling Control Manager) 3434 NorthNNorNoororthth WesWestt GGamblingambling BBoardooaroaaarrd | AAnnAnAnnualnnnnualuaualal ReRReportpporpoorrtt2 220170100171717 - 2018 DEVIATIONS DEVIATIONS COMMENT ON COMMENT ON FOR 2017/18 FOR 2017/18 DEVIATION FROM PLANNED DEVIATION FROM PLANNED TARGET TO ACTUAL ACHIEVEMENT TARGET TO ACTUAL ACHIEVEMENT ACTUAL ACTUAL 2017/18 2017/18 ACHIEVEMENTS ACHIEVEMENTS TARGET TARGET 2017/18 2017/18 PLANNED PLANNED 6060 60 60 60 60 None None None None 580 650 650 None None 580 650 650 None None 2868 3263 3263 None None 2868 3263 3263 None None 2016/17 2016/17 ACHIEVEMENTS ACHIEVEMENTS or f To ensure that gambling is conducted in compliance with North West Gambling Legislation and in a fair honest manner ensure that gambling is conducted in compliance with North West To STRATEGIC OBJECTIVES ACTUAL KEY PERFORMANCE INDICATOR ACTUAL Improve efficiencies in the regulation of all forms gambling Create an enabling environment responsible licensing of all forms gambling allowed in terms of the legislation Number of regulatory compliance inspections conducted at licensed premises to ensure compliance with Legislative Requirements and Licensing Conditions Numberof Gambling equipment tested andevaluated toensure compliance withNational Regulator of Compulsory Specifications Technical Requirements. Purpose: 35 North West Gambling Board | Annual Report 2017 - 2018 conducted. UNDER- DEVIATIONS (OVER)/ COMMENT ON EXPENDIRE 2017/18 2017/18 EXPENDITURE FOR 2017/18 DEVIATION FROM PLANNED TARGET TO ACTUAL ACHIEVEMENT BUDGET ACTUAL 2017/ 2018 ACTUAL ACHIEVEMENTS UNDER- (OVER)/ EXPENDIRE TARGET 2017/18 PLANNED 2016/17 EXPENDITURE -- 1 8- 1 8 4 None None 5 None None 1 One extra raid 6060 60 60 60 None 60 None None None 2016/17 2016 /2017 8 4548 454 8 309 8 309 145 145 8 868 8 868 8 742 8 742 127 127 KEY PERFORMANCE INDICATOR ACTUAL ACHIEVEMENTS BUDGETR’000TOTAL ACTUAL R’000 R’000 R’000 R’000 R’000 Review of Gambling Control Procedure Manual Number of non-compliance hearings brought before the Compliance Committee for administrative disciplinary action. Number of unlicensed gambling operations identified and reported to the South African Police Services for criminal investigation and prosecution Number of offence notices issued to unlicensed gambling operators Number of raids on unlicensed Gambling Operations facilitated in conjunction with the South African Police Service. Linking Performance to Budgets: Programme 3: Gambling Control 36 North West Gambling Board | Annual Report 2017 - 2018 37 North West Gambling Board | Annual Report 2017 - 2018 6. Performance Information by Programme

Programme 4 Gambling Audit and Systems

Mr K Monate (Gambling Audit and Systems Manager) 3838 NorthNorNNoo thh WesWWeWestesesttG GamblingGambamambmbllilinininggB BBoardooaroaarard | AAnAnnualnnualuauaall RReReporteppopororortt2 220170010171177 - 202201201801018 DEVIATIONS DEVIATIONS COMMENT ON COMMENT ON is adhered to. (Bookmaker) could not be audited due to the revocation of a gambling license by the Board. (Bookmaker) could not be audited due to the revocation of a gambling license by the Board. (Bookmaker) could not be audited due to the revocation of a gambling license by the Board. FOR 2017/18 FOR 2017/18 DEVIATION FROM DEVIATION FROM PLANNED TARGET TO PLANNED TARGET TO ACTUAL ACHIEVEMENT ACTUAL ACHIEVEMENT 2017/18 2017/18 ACTUAL ACHIEVEMENTS ACTUAL ACHIEVEMENTS TARGET TARGET 2017/18 PLANNED 2017/18 PLANNED 2070 2017 76 20 17 75 None 17 None 1 None One of the Licensees None 2070 20 76 20 75 None 1 None One of the Licensees 171770 17 17 76 17 17 75 None None 1 None None One of the Licensees 2016/17 2016/17 To provide assurance that all levies and taxes from the licensees are accurate complete compliance to legislation To STRATEGIC OBJECTIVES ACTUAL ACHIEVEMENTS KEY PERFORMANCE INDICATOR ACTUAL ACHIEVEMENTS Number of systems/ IT Audits performed to ensure compliance with Gambling Legislature Requirements Number of Annual Financial Statement Analysis Performed to ensure continual financial viability of the licensees Number of Compliance and Revenue Audits performed to ensure compliance with Gambling Legislature Requirements Improve efficiencies in the regulation of all forms gambling Monitor and enforce compliance with the BBBEE Act and codes of good practice within the Industry Purpose: 39 North West Gambling Board | Annual Report 2017 - 2018 R’000 UNDER- (OVER)/ EXPENDIRE DEVIATIONS COMMENT ON (Bookmaker) could not be audited due to the revocation of a gambling license by the Board. R’000 ACTUAL 2017/18 2017/18 EXPENDITURE UNDER-PERFORMANCE FOR 2017/18 DEVIATION FROM PLANNED TARGET TO ACTUAL ACHIEVEMENT R’000 The 2018/19 APP target for this indicator is the active licenses. The 2018/19 APP target for this indicator is the active licenses BUDGET 2017/18 ACTUAL ACHIEVEMENTS R’000 UNDER- (OVER)/ EXPENDIRE TARGET 2017/18 PLANNED R’000 BBBEE Act and Codes of Good Practice ACTUAL 2016/17 - 1 1 None None EXPENDITURE 1770 17 76 17 75 None None 1 One of the Licensees 2016/17 compliance with Gambling Legislature Requirements 2016/17 Number of BBBEE audits conducted to ensure compliance with Number of Compliance and Revenue Audits performed to ensure 7 2117 211 7 163 7 163 48 48 7 735 7 735 7 723 7 723 12 12 STRATEGIC OBJECTIVES PERFORMANCE INDICATOR STRATEGY TO ADDRESS KEY PERFORMANCE INDICATOR ACTUAL ACHIEVEMENTS TOTAL Number of corporate governance audits performed to ensure compliance with King report (codes on corporate governance) Improve efficiencies in the regulation of all forms gambling Monitor and enforce compliance with the BBBEE Act and codes of good practice BUDGET R’000 Review of the Audit Procedure Manual Number of BBBEE audits conducted to ensure compliance with BBBEE Act and Codes of Good Practice Strategy to overcome areas of under-performance Linking Performance to Budgets: Programme 4: Gambling Audit and Systems 40 North West Gambling Board | Annual Report 2017 - 2018 41 North West Gambling Board | Annual Report 2017 - 2018 6. Performance Information by Programme

Programme 5 Legal Services

Mr R J Montshioa (Legal Services Manager) 4242 NorthNorNoNorrthth WesWWestttG GamblingGambammbblinliining BBoardoararard | AnnAnAnnualnnn ualuaall ReRReporteporpoportt2 22017010017 - 201220188 DEVIATIONS DEVIATIONS COMMENT ON COMMENT ON Board and the had to hold the meetings due to pressing matters. Board and the had to hold the meetings due to pressing matters. FOR 2017/18 FOR 2017/18 DEVIATION FROM DEVIATION FROM PLANNED TARGET TO PLANNED TARGET TO ACTUAL ACHIEVEMENT ACTUAL ACHIEVEMENT 2017/18 2017/18 ACTUAL ACHIEVEMENTS ACTUAL ACHIEVEMENTS TARGET 2017/18 2017/18 PLANNED PLANNED TARGET 010101 01 01 05 01 01 05 None None None None None None 04040425 04 04 04 20 04 04 04 28 None None None None 8 None None The committees of the 040404 04 04 04 04 04 04 None None None None None None 01 01 01 None None 25 20 28 8 The committees of the 2016/17 2016/17 cient legal services and support to the Board fi To provide effective and ef provide effective To STRATEGIC OBJECTIVE ACTUAL ACHIEVEMENTS KEY PERFORMANCE INDICATOR ACTUAL ACHIEVEMENTS Number of reports on legal advice to be provided North West Gambling legislation reviewed Number of reports on Contract with third parties reviewed Number of reports on status litigation Number of Board and Committee meetings Strengthening institutional capacity of the Board Purpose: 43 North West Gambling Board | Annual Report 2017 - 2018 R’000 EXPENDITURE (OVER)/ UNDER- COMMENT ON DEVIATIONS R’000 2017/18 FOR 2017/18 DEVIATION FROM PLANNED TARGET TO ACTUAL ACHIEVEMENT BUDGET R’000 ACTUAL EXPENDITURE 2017/18 ACTUAL ACHIEVEMENTS R’000 EXPENDITURE TARGET (OVER)/ UNDER- 2017/18 PLANNED R’000 2016/172016/17 2017/18 - 05 05 None None 01 01 01 None None 2016/17 10 43010 430 12 123 12 123 (1 693) (1 693) 13 685 13685 13 191 13 191 494 494 BUDGET R’000 ACTUAL EXPENDITURE KEY PERFORMANCE INDICATOR ACTUAL ACHIEVEMENTS TOTAL Number of reports on performance assessment of the Board Number of governance policies reviewed. Linking Performance to Budgets: Programme 5: Legal Services 44 North West Gambling Board | Annual Report 2017 - 2018 45 North West Gambling Board | Annual Report 2017 - 2018 6. Performance Information by Programme

Programme 6 Finance Department

Ms S Motlhamme (Chief Financial Offi cer)

466 NorthNoNNortth WesWeWestt GamblingGambmblinling BBoardoaroaaard | AnnAnnualualua RReReportepport 2201701701 - 20120201818 R’000 EXPENDIRE (OVER)/ UNDER- COMMENT ON DEVIATIONS COMMENT ON DEVIATIONS R’000 2017/18 None None 2017/18 FOR 2017/18 DEVIATION FROM DEVIATION FROM PLANNED TARGET TO PLANNED TARGET TO ACTUAL ACHIEVEMENT ACTUAL ACHIEVEMENT FOR BUDGET R’000 ACTUAL EXPENDITURE 2017/18 2017/18 ACTUAL ACHIEVEMENTS ACTUAL ACHIEVEMENTS R’000 EXPENDIRE 04 04 None None (OVER)/ UNDER- 2017/18 2017/18 PLANNED TARGET PLANNED TARGET R’000 2016/172016/17 2017/18 - -- 01 04 01 04 None None None None 1204 12 04 12 04 None None None None 120112121212 1202 0102 12 12 12 02 12 01 01 04 12 12 12 02 None None 01 None 04 None None None None None None None None None None None None None 2016/17 2016/17 23 61823 618 23 141 23 141 477 477 23 921 23 921 23 814 23 814 107 107 BUDGET R’000 ACTUAL EXPENDITURE To provide effective and efficient Financial Management System for the Board STRATEGIC OBJECTIVES ACTUAL ACHIEVEMENTS KEY PERFORMANCE INDICATOR ACTUAL ACHIEVEMENTS TOTAL Strengthening the institutional capacity of the Board Number of Monthly revenue reconciliations and transfer to government by the 15th Number of status report on asset verificationNumber of Stock- take and variance analysis report Submission of the Procurement Plan for the Financial Year 02Number of Procurement Plan progress reports submitted 02 02 Purpose: Linking Performance to Budgets: Programme 6: Finance Department 47 North West Gambling Board | Annual Report 2017 - 2018 6. Performance Information by Programme

Programme 7 Corporate Services Sub-Programmes:

7.1 Human Resources Management 7.2 Corporate Relations 7.3 Information Technology 7.4 Facility Management

Ms S Motlhabane (Corporate Services Manager) 4848 NorthNNorNoorortthh WesWWeWestesesttG GamblingGambamammbbllinliininggB BBoardoaroaoaarrd | AnnAnAAnnualnnnualuauaall ReRReportepporpooorrtt2 22017001017 - 2018 6. Performance Information by Programme

Programme 7

Corporate Services Sub-Programme:

7.1 Human Resources Management

49 NorthNorth West GamGamblingbling BoarBoardd | AnnuaAnnuall Report 2017 - 2018 DEVIATIONS DEVIATIONS COMMENT ON COMMENT ON Budget constraints 2017/18 FOR 2017/18 DEVIATION FROM DEVIATION FROM PLANNED TARGET TO ACTUAL ACHIEVEMENT TUAL ACHIEVEMENT FOR PLANNED TARGET TO AC- 130104 02 Budget constraints None None None None 04 None None 13 02 2017/18 2017/18 ACTUAL ACHIEVEMENTS ACTUAL ACHIEVEMENTS TARGET 2017/18 2017/18 PLANNED PLANNED TARGET -04 01120102 01 01 4 4 01 01 04 04 None None None None None None None None 83 15 83 15 010101 01 01 04 0 01 2016/17 2016/17 ts fi nancial year fi To provide sound Human Resources Management and Development To STRATEGIC OBJECTIVES ACTUAL ACHIEVEMENTS KEY PERFORMANCE INDICATOR ACTUAL ACHIEVEMENTS lled for the Number of new vacant positions fi Number of reports on benchmarking of employees’ salaries and bene Number of policies reviewed (HR, and FM) CR, IT Number of performance reports and FM) prepared (HR, CR, ICT Number of Employment Equity Report Strengthening the institutional ca- pacity of the Board Purpose: 50 North West Gambling Board | Annual Report 2017 - 2018 6. Performance Information by Programme

Programme 7

Corporate Services Sub-Programme:

7.2 Corporate Relations

515 NorthNorNo thth WesWeWWestesttG GamblingGambammmbblinl nggB BBoardoaroa d | AnnAAnnualn ualuaual ReRReporteporppo t2t 2201701717 - 20120180 8 None DEVIATIONS DEVIATIONS COMMENT ON COMMENT ON of more articles of more articles. grammes of the Board necessitated the release necessitated the release programmes of the Board - FOR 2017/18 FOR 017/2018 DEVIATION FROM DEVIATION FROM PLANNED TARGET TO PLANNED TARGET TO ACTUAL ACHIEVEMENT ACTUAL ACHIEVEMENT 08 None None 2017/18 2017/18 ACTUAL ACHIEVEMENTS ACTUAL ACHIEVEMENTS ---- 0408 04 13 None 05 None More activities and 2017/18 2017/18 PLANNED TARGET PLANNED TARGET - - 040144 04 04 08 04 04 13 None None 05 None More activities and pro- None 2004 08 08 0404 04 08 04 None None 2016/17 2016/17 To provide effective, professional support on Corporate Relations and promote Responsible Gambling provide effective, To To strengthen the institutional capacity of the Board STRATEGIC OBJECTIVES ACTUAL ACHIEVEMENTS KEY PERFORMANCE INDICATOR ACTUAL ACHIEVEMENTS Number of media articles release. Number of awareness campaigns conducted to promote responsible gambling Number of review on the implementation of the Communication Strategy Number of newsletter released. Purpose: 52 North West Gambling Board | Annual Report 2017 - 2018 6. Performance Information by Programme

Programme 7 Corporate Services Sub-Programme:

7.3 Information Technology

5353 NorthNNorNo th WesWeWWestt GamblingGamambmbbllininng BBoardoard | AnnAnAnnualnnuaualall ReRReportepoporporort 220170101177 - 2012018018 DEVIATIONS COMMENT ON COMMENT ON DEVIATIONS FOR 2017/18 FOR 2017/18 DEVIATION FROM DEVIATION FROM PLANNED TARGET TO PLANNED TARGET TO ACTUAL ACHIEVEMENT ACTUAL ACHIEVEMENT 04 04 None 2017/18 2017/18 ACTUAL ACHIEVEMENTS ACTUAL ACHIEVEMENTS - 2017/18 2017/18 PLANNED TARGET PLANNED TARGET 01 0106 04 - 04 - None - None - 2016/17 2016/17 To provide Information and Communications Technology support services Technology provide Information and Communications To KEY PERFORMANCE INDICATOR ACTUAL ACHIEVEMENTS Corporate Governance of ICT Policy Framework Implementation (Phase 2) Number of IT Policies to be formulated STRATEGIC OBJECTIVES ACTUAL ACHIEVEMENTS Strengthening the institutional capacity of the Board Purpose: 54 North West Gambling Board | Annual Report 2017 - 2018 6. Performance Information by Programme

Programme 7 Corporate Services Sub-Programmes:

7.4 Facility Management

555 NorthNorN thh WesWestt GamblingGambamblinng BBoardoard | AnnAnnualualua ReRReporteporpo tt2 22017017017 - 20120188 R’000 EXPENDIRE DEVIATIONS DEVIATIONS (OVER)/ UNDER- COMMENT ON COMMENT ON R’000 2017/18 FOR 2017/18 FOR 2017/18 DEVIATION FROM DEVIATION FROM PLANNED TARGET TO PLANNED TARGET TO ACTUAL ACHIEVEMENT ACTUAL ACHIEVEMENT 0404 04 04 None None BUDGET R’000 ACTUAL EXPENDITURE 2017/18 2017/18 ACTUAL ACHIEVEMENTS ACTUAL ACHIEVEMENTS R’000 - EXPENDIRE 04 04 None None (OVER)/ UNDER- 2017/18 2017/18 PLANNED TARGET PLANNED TARGET R’000 2016/172016/17 2017/18 -- - 04 04 04 None None 04 2016/17 2016/17 14 588 13 461 1 126 19 690 19 819 (128) BUDGET R’000 ACTUAL EXPENDITURE File Plan and , To provide maintenance and security of facilities STRATEGIC OBJECTIVES ACTUAL ACHIEVEMENTS KEY PERFORMANCE INDICATOR ACTUAL ACHIEVEMENTS Strengthening the institutional capacity of the Board Number of compliance reports on occupational health and safety regulations and security standards Number of reports on implementation of Records Management Policy Records Control Schedule TOTAL 14 588 13 461 1 126 19 690 19 819 (128) Purpose: Linking Performance to Budgets: Programme Corporate Services 56 North West Gambling Board | Annual Report 2017 - 2018 7. Summary of Financial Information

Revenue Collected

2016/17 2017/18

REVENUE ACTUAL OVER/ REVENUE ACTUAL OVER/ TARGET COLLECTION UNDER) TARGET COLLECTION UNDER) R’000 R’000 COLLECTION R’000 R’000 COLLECTION SOURCES OF REVENUE R’000 R’000

Gaming Levies, Taxes 154 308 120 051 (34 257) 154 473 119 940 (34 533) and Licences

TOTAL 154 308 120 051 (34 257) 154 473 119 940 (34 533)

The Board under collected by 22% in 2016/17 FY and under collected by 22% during 2017/18 FY. The 22% under collection is due to:

• There was a major decline in the Casino Levies, • The Board revoked a number of licenses, • Delay in the roll out of betting shops,

Board Expenditure

2016/17 2017/18

BUDGET ACTUAL OVER/ BUDGET ACTUAL OVER/UNDER- SOURCES OF REVENUE R’000 EXPENDITURE UNDER- R’000 EXPENDITURE EXPENDITURE R’000 EXPENDITURE R’000 R’000 R’000

Grant Received 82 654 82 400 254 89 010 88 392 618

TOTAL 82 654 82 400 254 89 010 88 392 618

The Board received a grant of R77 810 000.00 during 2017/18 FY. The approval to use the savings from previous years was granted and it increased the budget to R89 010 000.00 out of which only R618 000.00 was not utilised as at 31 March 2018.

57 North West Gambling Board | Annual Report 2017 - 2018 8. Statistics

8.1 List Of Licensees

8.1.1 CASINOS

LICENSEES TRADING NAME TOWN Peermont Global (NW) (Pty) Ltd. Rio Hotel Casino Convention Resort Klerksdorp Peermont Global (NW) (Pty) Ltd. Mmabatho Palms Hotel Casino Mmabatho Convention Resort Sun International SA Ltd. Sun City Casino Mogwase

Sun International SA Ltd. The Carousel Casino & Entertainment Temba World

8.1.2 BINGO OPERATORS

LICENSEES TRADING NAME TOWN Santoscan (Pty) Ltd Goldrush Bingo Rustenburg Santosat (Pty) Ltd Goldrush Bingo Potchefstroom Galaxy Bingo North West (Pty) Ltd N/A Brits Galaxy Bingo Moruleng (Pty) Ltd N/A Rustenburg Eliocube (Pty) Ltd Vegas Bingo Rustenburg Eliocube (Pty) Ltd Vegas Bingo Vryburg Pioneer Bingo NW (Pty) Ltd N/A Klerksdorp *Jonoforce (Pty) Ltd N/A Klerksdorp * Latiano 560 (Pty) Ltd Goldrush Bingo NW Mahikeng

* Not yet operational

8.1.3 INDEPENDEND SITE OPERATORS

LICENSEE TRADING NAME TOWN Varloflash (Pty) Ltd Grand Central Station Mahikeng Entertainment Centre Tshufi Gaming and Resort (Pty) Ltd N/A Rustenburg *Vegas Slots North West (Pty) Ltd N/A Rustenburg *Vegas Slots North West (Pty) Ltd N/A Vryburg

* Not yet operational

8.1.4 TOTALIZATOR

LICENSEES NUMBER OF BRANCHES NUMBER OF AGENCIES Phumelela Gaming and Leisure 11 14 Limited

58 North West Gambling Board | Annual Report 2017 - 2018 8.1.5 BOOKMAKER OPERATORS

LICENSEES TRADING NAME TOWN Betting World (Pty) Ltd N/A Sun Village Brits Klerksdorp Mahikeng Orkney Potchefstroom Rustenburg (Nelson Mandela Street) Rustenburg (Boom Street) Rustenburg Taxi Rank Zeerust Omphe Tshiamo Investment (Pty) Ltd Betting World (Pty) Ltd Brits (Industrial Area) Ikageng Gate Jouberton Letlhabile Marikana Vryburg Klerksdorp Lichtenburg Brits Zeerust Central Gaming Management (Pty) Ltd Vendinet (Pty) Ltd Vryburg Vendivista (Pty) Ltd Potchefstroom Loniplex (Pty) Ltd Mahikeng Lonivista (Pty) Ltd Delareyville Dankopath (Pty) Ltd G-Bets Klerksdorp Bapong Moruleng Ga-Rankuwa Potchefstroom Tlhabane Phokeng Wolmaranstad Mahikeng Boitekong Mall

LICENSEES TRADING NAME TOWN Scorebet North West (Pty) Ltd N/A Klerksdorp Rustenburg (Biblio Plaza Rustenburg (Taxi Rank) Rustenburg (Midtown Mall) Brits Letlhabile Zeerust Klerksdorp

8.1.6 ROUTE OPERATORS

LICENSEES TRADING NAME TOWN

Vukani Gaming North West (Pty) Ltd N/A Rustenburg Bon View Trading 111 (Pty) North West Goldrush Gaming Mahikeng

59 North West Gambling Board | Annual Report 2017 - 2018 8.1.7 AMUSEMENT MACHINE OPERATORS

LICENSEES TOWN

Fantasia Family Entertainment Centre Klerksdorp

Fantasia Family Entertainment Centre Potchefstroom

Fantasia Family Entertainment Centre Rio Casino

The Magic Company (Pty) Ltd. Sun City Casino The Magic Company (Pty) Ltd. The Carousel Casino

8.1.8 SITE OPERATORS: GOLDRUSH GAMING

NO. NAME OF THE SITE OWNER NAME OF THE SITE TOWN

1 Joubert Hendrik Johannes Zama Zama Tavern Bloemhof 2 Nelson Floretino Duarte Porto’s Tavern Potchefstroom 3 Reitshwareletse Violet Kwenane Chiccos Restaurant Liqour Mankwe 4 Willem Vander Merwe Tom Dick & Harry Sports Bar Hartebeesport 5 Tlharesane Daniel Segwagwa Itlotle Restaurant Morokweng 6 Mpoyeng George Malatji Thusano Tavern Rustenburg 7 Francisco Jose Jardim Ponte Franks Sports Bar Potchefstroom

8 Kholiwe Regina Letlhogile Reggy’s Tavern Taung 9 Mmathaba Annah Rakoma Bridge’s Tarven Rusternburg 10 Gopolang Mashome Phola Park Mahikeng

11 Alfrea Gabonewe Mogwasi Semunye Tavern Motswedi

12 Toriglo (Pty) Ltd G-Bets- Bapong Bapong 13 Temotheo Joseph Gae Gae’s Tavern Mahikeng 14 Ndo Jeremiah Doyi Central Restaurant Koster 15 Gabolwelwe Kgomotso Elizabeth Mosina P.S.J.M. Zonke Bonke Makapanstad

16 Hazel Strauss Duitswes Kombuis Hartebeespoort

17 Montsiwagae Pogisho John Morula Launch Schweizer-Reneke 18 Phineas Thapelo Setshoane Botsalano Cafe & Restuarant Rustenburg

19 Tlharesane Daniel Segwagwa Ramatlhale Tavern Morokweng

20 Mashome Gopolang Dichaba Kopano Tavern Mahikeng

21 Vuisile Abram Mjezu Vuku Inn Ventersdorp

22 Stephen Bonke Phiri Love and Peace Tavern Moruleng

23 De Sousa Manuel Inacio Capelo Godfather Restaurant Stillfontein

24 Molote Kgomotso Anna Radiate Restaurant Rustenburg

25 Jose Antonio Rodrigues Nikita Pub & Grill Brits

26 Toriglo (Pty) Ltd G Bets Potchefstroom 27 Toriglo (Pty) Ltd G Bets Ga-Rankuwa

60 North West Gambling Board | Annual Report 2017 - 2018 NO. NAME OF THE SITE OWNER NAME OF THE SITE TOWN

28 Toriglo (Pty) Ltd G Bets Klerksdorp

29 Toriglo (Pty) Ltd G Bets Moruleng

30 Toriglo (Pty) Ltd G Bets Tlhabane

31 Fernandes Jose Antonio Super-Hot Food & Pub Tlhabane

32 Esau Maleshane Loate Graceland Restaurant Mahikeng

33 Salamina Josephine Pulane Matshela Pulane’s Tavern Koster

34 Roadways Lodge (Pty) Ltd Roadways Lodge (Pty) Ltd Mahikeng

35 Christian Nnamdi Okwaranwa The Star Restaurant Klerksdorp

36 Emily Moipong Doyi Legae Inn Koster

37 Frederick Jabous Marais Frekkie’s Sports Bar Brits

38 Cecil Monedi Molamu Lokaleng Liquor Restaurant Mahikeng

39 Timothy Kgwadi Thipe Bapo Inn Bar Lounge Brits

40 BigBoy Petrus Tlhabane Down Base Restaurant Koster

41 Esau Maleshane Loate Refilwe Bar Lounge Potchefstroom

42 Jan Andries Benjamin De Beer JW Tavern Ventersdorp

43 Mbusewe Edward Sebia Thandanani Tavern Schweize-Reneke

44 Sandile Agcrey Tyatya Masimong Sports Bar CC Potchefstroom

45 Chauke Frans Sello Sijo’s Tavern Hammanskraal

46 Chiloane Frans Sello Lethabong Tavern Brits

47 Meshark Thetsi Masetlhe Pub Katlego Potchefstroom

48 Jacob Chiefi Kgame JC Tavern Rustenburg

49 Ntshimane Isaac Tlhapi Tlhapi’s Tavern Brits

50 Matsgidiso Samaria Moima Nico City Tavern Moretele

51 David Johannes Jordaan Swartruggens Hotel Swartruggens

52 G-Bets North West G-Bets Wolmaranstad Wolmaranstad

53 Brenda Ncane Ikabo Restaurant Potchefstroom

54 When’s Deb BK Kings Tavern Potchefstroom

55 Xiuqiang Gao Golden Cup Tavern Brits

56 Salamina Josephine Pulane Matshela Pulane’s Tavern Koster

57 Herman Tony Sellwe Curty’s Tavern Luka Village

61 North West Gambling Board | Annual Report 2017 - 2018 8.1.9 SITE OPERATORS: VUKANI GAMING

NO. NAME OF THE SITE OWNER NAME OF THE SITE TOWN

1 Betting World (Pty) Ltd Betting World Rustenburg

2 Northriding Gardens Erf 598 cc Caravela Portuguesa Haartebeespoort

3 Grassa Batista Cosmos Restaurant Zeerust

4 Daniel Concalves Pestana De Sun Pub & Grill Mahikeng

5 Nadia-Ann Pretorius Diamond Saloon Restuarant Christiana

6 Norman Diphoko Diphoko Tavern Rustenburg

7 Nikolaev Ivelin Nonev Phoenix Liquor Restaurant Rustenburg

8 Joao Gabriel Nunes Gully’s Jungle Bar Klerksdrorp

9 Impala Drankkelders cc Impala Hotel Potchefstroom

10 James Edgar Arendse Jammers Pub & Grub Bloemhof

11 Riverwalk Trading 182 cc Keg and Bull Restaurant Rustenburg

12 Mthimkhulu Investiment cc Mthimkhulu Bar Lounge Rustenburg

13 Noordkom Klerksdorp Drankwinkel BK Noordkom Tab Agency Klerksdorp

14 Noordkom Klerksdorp Drankwinkel BK Noordkom Tavern Klerksdorp

15 Joao Manuel Aguiar Da Silva Pick & Eat Restaurant Rustenburg

16 Slipknot Investment 48 (Pty) Ltd Protea Ebony & Ivory Jazz Bar Mahikeng

17 Pedro Goncalves Chadinha Royal Lounge Rustenburg

18 Pedro Goncalves Chadinha Royal Lush Lounge Rustenburg

19 Celistino Correia De Gouveia Sun Night Club Klerksdorp

20 Celistino Correia De Gouveia Sun Restaurant Klerksdorp

21 Rui Miguel De Figueiredo Rocha Surry Hotel Mahikeng

22 Antoinette Kealeboga Atkinson The Pitch Next Door Mahikeng

23 Manuel Moreira Da Silva Mota Transvaal Hotel Rustenburg

24 Santa Fe Entertainment cc Santa Fe Ladies Bar Hartebeesport

25 Phumelela Gaming and Leisure Ltd Tab Taxi Rank Rustenburg

26 Phumelela Gaming and Leisure Ltd Tab Orkney Orkney

27 Phumelela Gaming and Leisure Ltd Tab Klerksdorp Klerksdorp

28 Phumelela Gaming and Leisure Ltd Tab Zeerust Zeerust

29 Phumelela Gaming and Leisure Ltd Tab Brits Brits

30 Wildebeest Liquor (Pty) Ltd Sunset Tavern Rustenburg

31 Phumelela Gaming and Leisure Ltd Tab Sun Village Mogwase

32 Phumelela Gaming and Leisure Ltd Tab Rustenburg Rustenburg

33 Phumelela Gaming and Leisure Ltd Tab Mahikeng Mahikeng

62 North West Gambling Board | Annual Report 2017 - 2018 NO. NAME OF THE SITE OWNER NAME OF THE SITE TOWN

34 Phumelela Gaming and Leisure Ltd Tab Potchefstroom Potchefstroom

35 Phumelela Gaming and Leisure Ltd Tab Lichtenburg Lichtenburg

36 Rabelani Vennon Ramakulukusha Venice Brits

37 Qinglong Lin Rejababotlhe Restaurant Rustenburg

38 Hirot Ashebir Malatjie Yonk Eating House Rustenburg

39 Manuel Francisco De Matos Francisco Restaurant Rustenburg

40 Pienza Business Investments cc Brits Tavern Brits

41 Elsie Nozipho Nthite DVD Tavern Klipgat

42 Thabo Dikhang Silver cloud Restaurant Rustenburg

43 Hesther Cathrina Anastassiou Mamusa Restaurant and Kroeg Schwezer-Reneke

44 Shane Michelle Mourad Lapa Restaurant Brits

45 Matilda Enice Janjies @25 Pub & Grill Bloemhof

46 Ramalima (Pty) Ltd Apollo Entertainment Potchefstroom

47 Lin Xuehua Malan Street Tavern Rustenburg

48 Lin Xuehua First Class Restaurant Rustenburg

49 Guilherme Mendes Catanho Quicksilver Pub & Grill Rustenburg

50 Hendrick Lambert Fick Otto Bert’s Pub & Grill Potchefstroom

51 Darious Manchane Sekgabi Maboneng Taung

52 Omphe Tshiamo Investment (Pty) Ltd Betting World Klerksdorp

53 Omphe Tshiamo Investment (Pty) Ltd Betting World Brits

54 Omphe Tshiamo Investment (Pty) Ltd Betting World Letlhabile

55 Omphe Tshiamo Investment (Pty) Ltd Betting World Vryburg

56 Omphe Tshiamo Investment (Pty) Ltd Betting World Marikana

57 Omphe Tshiamo Investment (Pty) Ltd Betting World PotchefStroom

58 Omphe Tshiamo Investment (Pty) Ltd Betting World Klerksdorp

59 Scorebet NW (Pty) Ltd Scorebet Midtown Mall Rustenburg

60 Scorebet NW (Pty) Ltd Scorebet Taxi Rank Rustenburg

61 Omphe Tshiamo Investment (Pty) Ltd Betting World Lichtenburg

62 Marius Van Staden The Loco Pub & Grill Rustenburg

63 Omphe Tshiamo Investment (Pty) Ltd Betting World Brits

64 Omphe Tshiamo Investment (Pty) Ltd Betting World Zeerust

65 Scorebet NW (Pty) Ltd Scorebet Zeerust 66 Scorebet NW (Pty) Ltd Scorebet Biblio Plaza Rustenburg

63 North West Gambling Board | Annual Report 2017 - 2018 SITE OPERATORS: VUKANI GAMING (Continued)

NO. NAME OF THE SITE OWNER NAME OF THE SITE TOWN

67 Song Gao Ling’s Mahikeng

68 Sean David Farndell Jazz Bar Orkney

8.2 EMPLOYEE REGISTRATIONS

LICENSEES STAFF HEAD COUNT PERMANENT REGISTRATION TEMPORARY REGISTRATION The Carousel Casino 174 164 10 Sun City Casino 362 361 1 Rio Casino 124 122 2 Mmabatho Palms Casino 103 99 4 Phumelela Gaming 73 53 20 Vukani Gaming 12 11 1 Goldrush Gaming 19 18 1 Site Operators 181 166 15 Goldrush Bingo 77 68 9 Galaxy Bingo North West 30 29 1 Galaxy Bingo Moruleng 22 21 1 Vegas Bingo 40 26 14 Pioneer Bingo 44 044 Betting World 163 139 24 Central Gaming 103 90 13 G-Bets 211 174 37 Scorebet North West 218 191 27 Omphe Tshiamo 114 107 7 DDL Security 42 42 0 Bidvest Protea Coin 42 42 0 Grand Central Station 22 18 4 Monsterjam 25 025 Total 2201 1941 260

64 North West Gambling Board | Annual Report 2017 - 2018 8.3 GAMBLING MACHINES AND TABLE STATISTICS

8.3.1 Registered Gambling Tables by Unit

SUN CITY CASINO 51 MMABATHO PALMS 9 THE CAROUSEL CASINO 25 RIO CASINO 11

Figure 1

8.3.2 Registered Gambling Machines by Unit

SUN CITY CASINO 645 MMABATHO PALMS 155 THE CAROUSEL CASINO 700 RIO CASINO 274

Figure 2

8.3.3 Registered Tables by Gambling Mode

BLACKJACK TABLES 28 ROULETTE TABLES 39 POKER TABLES 9 PUNTO BANCO TABLES 7 BACCARAT TABLES 12 Dice Dual 1

Figure 3

65 North West Gambling Board | Annual Report 2017 - 2018 Registered Gambling Tables

SUN CITY CASINO MMABATHO PALMS THE CAROUSEL RIO CASINO CASINO CASINO Black Jack Tables 11 2 12 3 Roulette Tables 18 5 11 5 Poker Tables 3222 Punto Banco Tables 7000 Baccarat Tables 12 0 0 0 Dice Dual 0001 TOTAL 51 9 25 11

Approved Gambling Equipment

MANUFACTURER NUMBER OF LOCs APPROVED 3 Point Gaming 4 AGI Africa 38 Aruze Gaming Africa 116 Atomic Gaming 1 Bally Gaming Africa 136 Custom Gaming Solutions 1 IGT Africa 274 Omega Gaming 4 Signature Gaming 12 Simplicit - E Gaming Solutions 48 UmAfrika Gaming Technologies 148 Vukani Gaming 2 TCS John Huxley 3 TOTAL NUMBER OF LOCs APPROVED 787

8.4 Illegal Gambling Statistics

STATISTICS TOTAL Number of Raids/Closures 5 Confiscated Gambling Computers 260 Confiscated Gambling machines 55 Gambling Machines Destroyed 0 Machines destructed 0 Machines forfeited / Returned 109

66 North West Gambling Board | Annual Report 2017 - 2018 8.5 REVENUE PERFORMANCE AND STATISTICAL ANALYSIS FOR LICENSEE

8.5.1 Casinos

SOURCE 2016-17 2017-18 CHANGE Turnover 11 170 437 683 5,588,301,092 -50% GGR 1 151 336 231 1,067,821,738 - 7% Levies 94 362 294 87,131,912 - 8%

8.5.1.1 Monthly Levy Comparison

LEVIES

67 North West Gambling Board | Annual Report 2017 - 2018 8.5.1.2 Contribution by Machines and Tables

SOURCE TOTAL NUMBER TURNOVER GGR LEVIES LEVIES’ PERCENTAGE Machines 1774 4,738,942,882 873,754,282 71,296,433 82% Tables 96 849,358,210 194,067,455 15,835,479 18% Total 5,588,301,092 1,067,821,737 87,131,912 100%

8.5.1.3 Levy Contribution by Machines and Tables

LEVIES

Figure 5

68 North West Gambling Board | Annual Report 2017 - 2018 8.5.2 Limited Payout Machines (LPMs)

SOURCE 2016-17 2017-18 CHANGE Turnover 913 834 366 1,284,121,232 41% GGR 77 038 566 100,767,926 31% Levies 4 622 314 6,042,950 31%

Monthly levy comparison

LEVIES

Figure 6

69 North West Gambling Board | Annual Report 2017 - 2018 8.5.3 Bingo Operations

SOURCE 2016-17 2017-18 % CHANGE Turnover 1 405,656,362 2 236,644,529 59 GGR 84,911,638 129,498,952 53 Levies 5,094,698 7,715,580 51

Monthly tax comparison

LEVIES

Figure 7

70 North West Gambling Board | Annual Report 2017 - 2018 8.5.4 Totalizator

SOURCE 2016-17 2017-18 % CHANGE Turnover 248,756,843 220,969,907 -11 GGR 61,486,331 56,905,552 -7 Taxes 4,015,922 3,985,214 -1

8.5.4.1 Monthly Tax Comparison

TAXES

Figure 8

71 North West Gambling Board | Annual Report 2017 - 2018 8.5.4.2. Contribution: Horse Racing vs Sport

SOURCE TURNOVER GGR TAXES CONTRIBUTION ON TAXES

Horse Racing 100,283,858 22,180,759 1,566,190 39%

Sport 120,686,050 34,724,792 2,419,024 61%

Total 220,969,908 56,905,551 3,985,214 100%

Percentage contribution

TAX CONTRIBUTION

Figure 9

72 North West Gambling Board | Annual Report 2017 - 2018 8.5.5. Bookmakers

SOURCE 2016-17 2017-18 % CHANGE Turnover 1 046,902,027 1 161,199,573 11

GGR 109 241,678 153 288,679 40

Taxes 7 049,124 9 276,674 32

8.5.5.1. Monthly Tax Comparison

TAXES

Figure 10

73 North West Gambling Board | Annual Report 2017 - 2018 8.5.5.2. Tax contribution by Horse Racing and Sport

SOURCE TURNOVER GGR TAXES TAX PERCENTAGE Horse racing 94 205 648 9 831 751 634 421 9% Sport 952 523 779 99 409 927 6 414 703 91% Total 1 046 902 027 109 241 678 7 049 124 100%

5.3 Percentage contribution: Horse Racing and Sport

Figure 11

74 North West Gambling Board | Annual Report 2017 - 2018 Part C GOVERNANCE

1. Introduction 2. Portfolio Committee 3. Executive Authority 4. Composition of the Board 5. The Board 6. Risk Management 7. Internal Control Unit 8. Audit Committtee 9. Internal Auditors 10. Compliance with the Laws and Regulations 11. Health, Safety and Environmental issues 12. Record Management 13. Company Secretary 14. Socio Economic Development 15. Socio Economic Development by Licencees Community Social Investment 16. Audit Committee Report

7575 NorthNoroorrtthh WWesWestestGt GamblingGambmbblinliiinnggB BBoardoaoaroarrd | AAnAnnualnnnnualu ReReportport2t 22017017 - 20120188 1. Introduction

The North West GambIing Board is a statutory body established in terms of the provisions of the section 3 of the North West Gambling Act, 2001 (Act No. 2 of 2001), as amended, to regulate gambling activities in the North West Province. This institution is also classified as a Schedule 3C Public Entity, in terms of the Public Finance Management Act. The Board is led by Directors appointed in the terms of section 5 of the North West Gambling Act serving the role of an Accounting Authority in terms of the Public Finance Management Act.

The North West Gambling Board is an agent of the Department of Economy and Enterprise Development accountable to the Provincial Legislature. In this regard, the functions, objectives and responsibilities of the North West Gambling Board are guided by the North West Gambling Act, 2001 (Act No. 2 of 2001) as amended; the National Gambling Act, 2004 (Act No. 7 of 2004), the Public Finance Management Act, 1999 (Act No.1 of 1999) as amended, the Financial Intelligence Centre Act (Act No. 38 of 2001) as amended, and other related Legislation, Regulations and Rules.

2. Portfolio Committee

As part of the oversight role performed by the Provincial Legislature, the North West Gambling Board held series of meetings with the Portfolio Committee on Premier, Finance, Economy and Enterprise Development to present Annual Report for the 2016/17 FY, Quarterly Reports for the 2017/18 FY and a draft for the Annual Performance Plan for 2018/19 FY.

This interaction with the Portfolio Committee has gone a long way to improve the performance of the organisation, to address the financial and operational challenges experienced and to provide guidance and advise to the Board.

3. Executive Authority

During the period under review, the North West Gambling Board submitted four quarterly reports to the Executive Authority on 12 July 2017, 12 October 2017, 12 January 2018 and 13 April 2018 respectively.

4. Composition of the Board

Members of the Board, from various fields of expertise, are appointed by the MEC responsible for Finance, Economy and Enterprise Development in the Province. These include:

(i) legal practitioners; (ii) accountants or auditors registered in terms of the Public Accountants and Auditors Act, 1991 (Act No. 80 of 1991); (iii) persons with knowledge and experience in the field of welfare or socio-economic development; (iv) persons with knowledge of, and active involvement in, the tourism industry; (v) persons with proven business acumen; (vi) persons with knowledge of the gambling industry; and (vii) members designated from the Department of Finance, Economy and Enterprise Development and the Department of Public Safety and Transport.

During the period under review, the Board consisted of seven (7) members excluding the Chief Executive Officer who is an ex officio, and carried two (2) vacancies to be filled in terms of the provisions of section 5 of the North West Gambling Act, 2001.

76 North West Gambling Board | Annual Report 2017 - 2018 Members of the Board

Mr LW Vere Ms LI Seepe Mr TK Mathe Chairperson Deputy Chairperson Board Member

Ms N Maharaj Ms M Jansen-Mwase Colonel SM Reddy Board Member Board Member Board Member

Mr N Oliphant Mr RJ Montshioa Chief Executive Officer Board Secretariat

77 North West Gambling Board | Annual Report 2017 - 2018 5. The Board

5.1. The Role of the Board

The Board performs the following functions as prescribed in section 4 of the North West Gambling Act, 2001 as amended, and the National Gambling Act, 2004 (Act No. 7 of 2004):

(a) to oversee gambling activities in the Province; (b) to advise the MEC on any matter referred to it by the MEC relating to the control of gambling in the Province; (c) to exercise such powers and perform such functions and duties as may be assigned to the Board in terms of this Act or any other law; and in particular to:- (i) invite applications for licenses in terms of this Act; (ii) consider and dispose of applications for licenses in such a manner and at such time and place as it may from time to time determine; (iii) grant, renew, amend, refuse, suspend or revoke licenses under this Act; (iv) impose conditions in respect of any licenses at any time; (v) revoke licenses granted under the Ordinance; (vi) acquire, hold, hire, let and alienate intellectual, movable and immovable property; (vii) open and maintain bank accounts; (viii) appoint staff and do all things incidental thereto; (ix) conclude and perform contracts; (x) participate in or conduct quasi-judicial and administrative proceedings; (xi) make and enforce rules for the conduct of its proceedings and hearings; (xii) receive, expand and generally administer funds; collect and administer, in accordance with the provisions of the Act, levies and fees imposed by or under the North West Gambling Act, 2001 (Act No. 2 of 2001), as amended; (xiii) make rules and regulations governing the licensing, conduct and operation of any gambling activity or business; (xiv) conduct or cause to be conducted hearings, investigations and enquiries with regard to any matter falling within the scope of its functions; (xv) apply to court to place any gambling operation under supervisory management; (xvi) enter into agreement with or obtain the assistance of any department or organ of State, including the South African Police Service, to conduct or assist it in conducting its investigations; (xvii) obtain information from license holders and other persons and agencies; (xviii) conduct an ongoing study of, and investigation into gambling throughout the Province and elsewhere, to keep abreast of developments in the industry; (xix) determine minimum internal control systems for license holders, including accounting and reporting procedures and any other procedures or systems, whether computerised or not; (xx) impose penalties for any breach of any of the rules or regulations made under the North West Gambling Act, 2001 (Act No. 2 of 2001), as amended, which may include fines or the suspension of or the imposition of conditions relating to any license issued in terms of the North West Gambling Act, 2001 (Act No. 2 of 2001), as amended; (xxi) determine fees and charges in respect of investigations, enquiries and any other function performed by the Board; (xxii) collect and administer interest and penalties imposed by or under this Act; (xxiii) undertake or cause to be undertaken tests on equipment and gambling devices used or to be used in gambling activities and to recover the costs thereof from any person at whose instance, such tests are undertaken; (xxiv) issue summonses for the appearance of persons or the production of books, documents or things in connection with applications, hearings, investigations or enquiries under the North West Gambling Act, 2001 (Act No. 2 of 2001), as amended, including the rules or regulations made thereunder; (xxv ) establish field or branch offices; (xxvi) establish and administer funds for the proper administration of this Act; (xxvii) consult with any person or employ consultants regarding any matter relevant to the performance of its functions on such terms and conditions as the Board may determine; (xxviii) compile a list of persons who are to be excluded or rejected from specified licensed premises and of those who are prohibited from partaking in specified gambling; (xxix) make rules governing the licensing, conduct and operation of amusement games, including the licensing thereof, and in consultation with the responsible member of the Executive Council and Treasury to impose license fees therefore;

78 North West Gambling Board | Annual Report 2017 - 2018 (xxx) generally exercise the powers and (xv) to ensure that Licensees’ internal control perform the functions and duties procedures mitigate gambling regulatory risks specified in this Act or assigned to it by and are in line with gambling legislation; any other law. (xvi) to provide legal advice and support to the Board and Management; 5.2 Board Charter (xvii) to provide the Board with secretariat functions; (xviii) to ensure an effective and efficient legal The Board operates with an approved Board Charter framework; that sets out the composition, membership and (xix) to ensure corporate governance by Management size of the Board. The Charter further sets out the and the Board; role and responsibilities of the Board with regard to (xx) to ensure efficient financial management; the performance and accountability of the entity, (xxi) to ensure that internal and external audits are monitoring and implementing the corporate plan, laws, conducted; regulations, policy and codes of business practice. (xxii) to ensure compliance with internal controls and other relevant legislation; 5.3. Objectives for the period under review: (xxiii) to ensure efficient and effective supply chain 2017/18 management; (xxiv) to provide and maintain an effective, up- to-date The Board set the following objectives for the period and secure information technology system for under review, in line with its mandate derived from the the organisation; North West Gambling Act, 2001 (Act No. 2 of 2001) as (xxv) to ensure the provision of effective and efficient amended, the Regulations and the National Gambling human resource support services; and Act, 2004 (Act No. 7 of 2004): (xxvi) to ensure the formulation and implementation of HR strategies to enhance education, training, (i) to create an enabling environment for responsible development and retention of staff. licensing of all forms of gambling allowed in terms of the legislation; 5.4. Corporate Governance (ii) to roll out Limited Payout Machines and Bingo Operations; The core values of the North West Gambling Board are to (iii) to follow up on the possibility of the Fifth Casino embrace the principles of good corporate governance, license in the Province; as contained in the King IV Report on Corporate (iv) to roll out bookmaker licenses; Governance and the precepts of the Public Finance (v) to improve efficiencies in the regulation of all Management Act 1999, (Act No. 1 of 1999), supported forms of gambling; by Treasury Regulations. (vi) to develop and maintain effective regulatory mechanisms and provide for all necessary 5.5. Role, functions and objectives resources; (vii) to ensure adequacy of legislation; The Board is generally responsible for the regulation of (viii) to finalise amendments to gambling legislation; gambling activities in the North West Province, including (ix) to review Regulations on fees payable by the performance of the following functions: Licensees; (x) to encourage and promote BBBEE within the (i) to advise the MEC responsible for Finance, industry through implementation of approved Economy and Enterprise Development on any industry specific BBBEE targets; matter referred to it by the MEC relating to the (xi) to ensure that gambling equipment operates in control of gambling in the Province; compliance with legislation and SABS technical (ii) to invite, receive, consider, grant or refuse standards; applications for licenses in terms of the North (xii) to conduct legal compliance inspections on West Gambling Act, 2001 (Act No. 2 of 2001), as licensed gambling operations; amended; (xiii) to ensure that gambling activities are conducted (iii) to collect and administer gambling levies and in a fair and honest manner;to combat all fees under the North West Gambling Act, 2001 forms of illegal gambling and conduct special (Act No. 2 of 2001), as amended; investigations referred by other departments; (iv) to make rules and regulations governing the (xiv) to provide assurance that the gambling levies licensing, conduct and operation of any gambling are accurately calculated; to provide assurance activity or business; that the Licensees maintain a level of continual financial suitability and comply with legislative requirements;

79 North West Gambling Board | Annual Report 2017 - 2018 07 11 09 04 07 08 MEETINGS ATTENDED OTHER COMMITTEES NUMBER OF (23 February 2017) Committee Committee Member of Compliance Committee Services Committee Chairperson of the Compliance Committee Member of Risk Committee Committee Member of the Compliance Committee None Chairperson of Risk Committee None Member of Corporate Services None Member of Corporate Services BOARD DIRECTORSHIP Downtown Studio media and arts co. Board Section 21 co North West Parks Board LegalLegal None South Rand Hospital None 10 Liaison of Finance EXPERTISE Accountant None Chairperson of the Audit of Economy of Safety and Development and Enterprise of Department of Department of Department B. Admin Honors Representative Bachelor of Laws (LLB) Accounting for Public Entities, Corporate Governance (Chartered Accountant) RA (Registered Auditor) 2017) STATUS QUALIFICATIONS AREA OF Member as Board (September 11-10-12 Active BEd Business None Chairperson of the Corporate APPOINTED Member 1-11-16 Recalled Chairperson NAME DESIGNATION DATE Mr N Oliphant Member 20-02-17 2017/18 FY N. Dip PGC (LED) Representative Ms Jansen- Mwase Mr LW Vere ChairpersonMs LMI Seepe 07-09-15 Deputy Ms N Maharaj Active Member Master of Laws (LLM) 11-10-12Mr TK Mathe Active Member B.Proc, LLB, Col. S Reddy 07-09-15 Member Active 25-04-16 CA Active LLB Representative Composition of the Board Members (1 April 2017 – 31 March 2018) 80 North West Gambling Board | Annual Report 2017 - 2018 Committees of the Board

NUMBER OF MEETINGS NUMBER OF MEMBERS NUMBER OF MEETINGS NAMES OF MEMBERS HELD ATTENDED ATTENDED COMPLIANCE COMMITTEE 6 3 6 of 6 Ms. N Maharaj 6 of 5 Mr. TK Mathe 6 of 5 Col. S Reddy 1 of 5 Mr N Oliphant (Co-opted) CORPORATE SERVICES COMMITTEE 4 3 4 of 4 Ms. LMI Seepe 4 of 4 Col. S Reddy 0 of 3 Ms M Jansen-Mwase (member withdrawn) 1 of 4 Mr N Oliphant (Co-opted) RISK COMMITTEE 5 3 5 of 5 Mr. N Oliphant

2 of 5 Mr. M Mokgobinyane 5 of 5 Ms N Maharaj AUDIT COMMITTEE 3 6 3 of 3 Mr. TK Mathe 0 of 3 Mr. N Oliphant 2 of 3 Mr. Z Mothibe 3 of 3 Mr. M Mokgobinyane 2 of 3 Ms. T Moromane (Term ended 31 July 2017) 2 of 3 Ms. O Diutlwileng (Term ended 31 July 2017) 1 of 3 Ms J Brown (Term started 28 November 2017) 1 of 3 Ms P Mangoma (28 November 2017)

81 North West Gambling Board | Annual Report 2017 - 2018 Remuneration of Board Members

NAME BOARD FEES TRAVEL AND CELLPHONE ALLOW- TOTAL SUBSISTENCE ANCE L Vere (Chairperson) 351 350 75 836 10 473 437 659 L Seepe (Deputy Chairperson) 265 913 279 428 10 473 555 814 T Mathe 132 235 27 830 10 473 170 538 N Maharaj 235 633 218 868 10 473 464 974 SM Reddy (In Public Service) - 83 160 - 83 160 TL Moromane 8 970 8 952 - 17 922 G Diutlwileng 8 970 29 753 - 38 723 MV Mokgobinyane 19 830 4 549 - 24 379 Z Mothibe 14 640 8 498 - 23 138 J Brown 1 650 5 300 - 6 950 P Mangoma 3 540 215 3 755

6. Risk Management

The Board adopted a formal approach to Risk Management. Before the beginning each Financial Year, a risk assessment workshop is conducted, which enables the Entity to identify the risks in line with the Annual Performance Plan and Corporate Plan. All the risks are identified, discussed, rated and accordingly recorded on the Risk Register in terms of priority, which constitutes the basis for the development of the Internal Audit Plan for the period under review, as well as the three-year rolling plan.

The Risk Register incorporates the Risk Mitigation Plans for all the risks identified, of which progress on implementation is reported to the Risk Management Committee of the Board on a quarterly basis.

The Risk Assessment for 2017/18 financial year was conducted during September 2016, and the risks are depicted in the table below.

Risks

STRATEGIC OBJECTIVE RISK CAUSE IMPACT LIKELIHOOD TREATMENT PLAN NO.

RISK DESCRIPTION 1. Create an enabling Proliferation of 1. Ineffective Critical. Likely. 1. Appointment of environment unlicensed and implementation of peace officers. for responsible illegal gambling the illegal gambling 2. Review and licensing of all activities. strategy. implementation of forms of gambling (continued) 2. Inadequate tools the Illegal Gambling allowed in terms and capacity to Strategy and of the legislation. identify Illegal Procedure Manuals. (continued) gambling activities. 3. Rollout of 3. investigate and Awareness prosecute illegal campaigns. gambling operations and prolonged investigations. 4. Migration from machines to computer based gambling and failure to keep up with technological advancement in the gambling industry.

82 North West Gambling Board | Annual Report 2017 - 2018 STRATEGIC RISK CAUSE IMPACT LIKELIHOOD TREATMENT PLAN

RISK NO. OBJECTIVE DESCRIPTION 2. Create an Increase of 1. Proliferation of Critical. Likely. 1. Review and enabling Problem illegal gambling implementation of environment Gambling in activities. the Illegal Gambling for responsible the province. 2. Lack of awareness Strategy and Procedure licensing of campaigns Manuals. all forms of focussing on 2. Rollout of Awareness gambling informing the campaigns. allowed in public about terms of the the seriousness legislation. of ‘Problem (continued) Gambling’. 3. Create an Delays in the 1. Inadequate skills Critical. Common. 1. Relevant training and enabling rollout of (human resource), development. environment licenses. Inadequate 2. & 3. Review the for responsible monitoring. procedure manual to licensing of 2. Delays in include compliance all forms of disciplinary actions hearings. gambling against licensees. 4. Develop clear rules allowed in 3. Inadequate specific to each mode of terms of the procedure gambling. legislation. manuals. (continued) 4. Technical non- compliance of licensed premises. 4. Create an Non- 1. Late publication of Moderate. Moderate. 1. &2. Roll out of enabling compliance notices. integrated case environment with the 2. Inadequate management system. for responsible North West monitoring. licensing of Gambling Act. 3. Ineffective all forms of implementation of gambling internal controls. allowed in terms of the legislation. (continued) 5. Improve Delay in 1. Inadequate skills Major. Moderate. 1. Relevant training and efficiencies in processing (human resource). development. the regulation gambling 2. Inadequate 2. Roll out of integrated of all forms of license monitoring. case management gambling. applications. 3. Ineffective system 2. implementation Develop project plans for of procedure each application. manuals. 3. Review the procedure manual to include the review of all application forms.

83 North West Gambling Board | Annual Report 2017 - 2018 Risks (continued)

STRATEGIC RISK CAUSE IMPACT LIKELIHOOD TREATMENT PLAN OBJECTIVE DESCRIPTION RISK NO. 6. Monitor Fronting. 1. Inadequate Major. Moderate. 1. & 2. Review of the procedure and enforce probity checks. manual. compliance with 2. Insufficient 3. Training of investigators Broad Based monitoring. on BBBEE requirements. Black Economic Empowerment Licensing of 1. Inadequate Major. Moderate. 1. & 2. Review of the Act and Codes non-compliant probity checks. procedure manual and of Good Practice applicants. 2. Insufficient Training of investigators within the monitoring and on BBBEE requirements. industry. review controls. 7. Strengthening Delay in critical 1. Inadequate Moderate. Moderate. 1. Continuous engagement the Institutional decision number of with the MEC to Capacity of the making. Board members ensure that the Board. appointed Board compliment is to form an maintained. effective and legislative Board compliment. 8. Strengthening Leakage, 1. Inadequate Moderate. Moderate. 1. Implementation of the the Institutional loss and implementation file plan. Capacity of the unauthorised of records 2. Implement the ICT Board. access to management Governance monitoring information. policy/strategy. tool. 2. Inadequate implementation of ICT Governance Policy Framework. 3. Ineffective maintenance of environmentally controlled server rooms (smoke detector, fire suppression system). Possible 1. Inadequate Moderate. Moderate. 1. & 2. Development of a misstatement monitoring. project plan for preparation in the Annual 2. Ineffective of AFS and AR. Financial implementation 3. GRAP training. Statements and of internal annual report. controls.

84 North West Gambling Board | Annual Report 2017 - 2018 7. Internal Control Unit

The Audit Committee approved the Internal Audit Plan, which was guided by the risks as they were identified. The internal audit function was outsourced and the service provider reported directly to the Audit Committee in line with Treasury Regulation 27.2. The work of the internal auditors, as performed in line with the approved Internal Audit Plan, was verified by the Audit Committee every quarter.

8. Audit Committee

NAME QUALIFICATIONS INTERNAL IF INTERNAL, DATE DATE NO OF OR POSITION IN APPOINTED RESIGNED MEETINGS EXTERNAL THE PUBLIC ATTENDED ENTITY Mr TK Mathe CA (Chartered External N/A 07-09-2015 Active 5 of 5 Accountant) RA (Registered Auditor)

Mr NI Kunene BCom External Head of 03-02-2017 01-11-16 1 of 5 Department Mr Z Mothibe BCom,B. External N/A 04-08-2014 Active 5 of 5 Accounting Science(Hons), Master of Business Leadership (MBL) Mr M Mokgobinyane BCom (Hons) External N/A 04-08-2014 Active 4 of 5 Ms T Moromane BCom (Hons) External N/ A 04-08-2014 Active 5 of 5

Ms O Diutlwileng BCom (Accounting External N/A 04-08-2014 Active 5 of 5 and Audit) Ms J Brown B.Comm Finance External Klerksdorp 28-11-2018 Active 1 of 3 Municipality Ms P Mangoma Masters of External N/A 28-11-2018 Active 1 of 3 Philosophy in accounting Sciences

9. Internal Auditors

The internal audit function of the Board was outsourced to Morar Incorporated at the beginning of the 2017/18 Financial Year.

85 North West Gambling Board | Annual Report 2017 - 2018 10. Compliance with Laws and Regulations

The Board strives to comply with all the laws of the country by ensuring that the Act, Regulations and Rules of the Board are amended regularly to accommodate the requirements of new laws of the country or amendments of related legislation. In terms of the latest amendments to the Financial Intelligence Centre Act, the North West Gambling Board is assigned the role of a Supervisory Body, which adds numerous functions to regulating gambling activities. The Board signed a Memorandum of Understanding with the Financial Intelligence Centre to discharge these responsibilities and functions in collaboration with the Financial Intelligence Centre, and to assist in combating money laundering activities and the financing of terrorists and related activities in the Province.

The Board concluded a Memorandum of Understanding (MoU) with the Competition Commission aimed at fostering relations in respect of investigation of competition matters.

The Board relies on its internal audit function to constantly evaluate its compliance with all relevant laws and their applicability to its business of regulating gambling in the Province.

In this regard, much attention is placed on compliance with those laws and identifying possible areas of deviation or non-compliance, to provide corrective measures or requisite systems of internal control.

11. Health, Safety and Environmental Issues

A Health and Safety Committee is in place as required in terms of section 18 of the Occupational Health and Safety Act, 1993 (Act No. 85 of 1993), as amended as well as health and safety representatives as required in terms of section 16. The workplace Health and Safety Policy is in place and has been adopted, as per section 7. The appointment of a Section 16.2 Responsible Manager for Health and Safety was concluded.

The Facility Department is committed to improving health and safety standards of the Board and creating a safe- wise culture amongst employees as well as cultivating green-office practices by reducing our carbon footprint as an organisation.

Facility Management Policy has been introduced in the Board, with the aim of structurally dealing with matters relating to the improvement of the working environment for employees. Maintenance work is properly carried out which amongst others involves servicing of air conditioning units, fire suppression and detection systems, maintenance of electrical equipment and waterproofing. Space utilization is being managed in such a manner that enables the Board to achieve its objectives. As such the department embarked on a project to procure new premises that serve both as a storage facility and additional office space to accommodate the growing staff compliment.

Incidents reported for the fiscal year include two incidents of damage/loss of assets, five medical injuries, two road traffic accidents where members of staff were involved in whilst on duty and one first aid incident. To improve safety at the Head Office, the main staircase has been fitted with carpets to reduce slipping hazards. Emergency exit doors have been corrected to open in a direction that will not obstruct traffic flow during evacuations. Service providers appointed to render various value-adding services to the Board are closely monitored and managed accordingly.

12. Records Management

The department has successfully relocated archived records from the warehouse previously leased by the Board to the new storage facility, where a central registry will be established. Records are being managed in accordance with the National Archives and Records Services Act of 43 of 1996, the approved classification systems and the Records Management Policy of the Board.

The preservation of records of the Board remain a one of the main priorities for the department. The movement of records is closely monitored, as a means to address the risk of loss and/or leakage of information. The Department is now migrating from paper-based records to electronic records

Amendments to the file plan have been approved by the North West Provincial Archives and Records Services Department. The Records Department staff attended formal training that will assist in their contribution to improve the standard of records and archives

86 North West Gambling Board | Annual Report 2017 - 2018 13. Company Secretary

The organisation appointed a Legal Manager whose role, inter alia, is to provide the services of a Company Secretary to the Board. The responsibilities of this position entail facilitation of training for Board Members, facilitation of Board and Sub-committee Meetings, as well as capturing and safeguarding/keeping records and minutes of the Board. Furthermore, the Legal Manager ensures the attendance of all members of the Board to the business of the organisation, while observing a register of interest and compliance with general guidelines on good Corporate Governance. All other inherent responsibilities and duties of the Company Secretary, including the provision of legal advice and support to the Board, are performed by the Legal Manager who, administratively, reports to the CEO, but remains directly accountable to the Board.

14. Socio Economic Development by the office

The mandate of the Board transcend regulation. And through various socio-economic initiatives the Board it has embarked on different projects aimed at fight the triple challenges of poverty, unemployment and income inequalities in various impoverished and economically depressed communities. These projects include funding for the education of three students from poor backgrounds. These students were adopted by the Board as part of its CSI initiative during the Bray July in the 2016/17 FY.

The Board further committed to fund their studies until the completion of their studies. One of the students who is studying towards an Agricultural Economics Degree with the Mafikeng Campus of the North University scored a distinction in his second year, with an average of over eighty (80) percent. The Board further made a donation of two school shoes, socks and school bags for four farm schools in the Dr Ruth Segomotso Mompati District Municipality. The Board spent R940 750.43 from its SED for 2016/17 FY.

15. Socio Economic Development by Licensees Community Social Investment

During the year under review, a total amount of R3,2 million was spent towards CSI. The target as per license conditions was R14,8 million. The licensees only contributed 21% of the above target.

Socio Economic Development (SED) expenditure for 2017/18 FY

No Licensee Total 1 Sun City 818 253 2 Carousel 230 436 3 Rio Casino 1 256 945 4 Mmabatho Palms 187 349 5 Vukani 889 611 6 Goldrush Slots 324 919 7 Galaxy Bingo Brits 333 247 8 Galaxy Bingo Moruleng 154 435 9 Vegas Bingo - Rustenburg 63 100 10 Vegas Bingo - Vryburg 59 400 11 Goldrush Bingo - Potchefstroom 179 370 12 Goldrush Bingo - Rustenburg 320 077 13 Betting World 79 125 14 Scorebet 44 000 15 Phumelela 700 000 Total 5 640 267

87 North West Gambling Board | Annual Report 2017 - 2018 16. Audit Committee Report

Audit Committee Report

We are pleased to present our report for the Financial Year ended 31 March 2018.

Audit Committee Responsibilities

The Audit Committee complied with its responsibilities arising from Section 51(1) (a) of the Public Finance Management Act, 1999 (Act No. 1 of 1999) and Treasury Regulations 27.1.8 and 27.1.10. The Audit Committee furthermore reports that it adopted formal Terms of Reference as its Audit Committee Charter, regulated its affairs in compliance with this Charter and discharged all its responsibilities as contained therein.

Mr T K Mathe (Chairperson Audit Committee)

8888 NorthNorNoNororthth WesWeWWestesestGt GamblingGammmbbllinliining BBoardoaroarrd | AnnAnAAnnualnnnnualuuaaall ReRReporteppoporoorrtt2 220170170011717 - 202201201801018 Membership

The Board appointed the committee for the three year period June 2014 to July 2017. The Audit Charter allows members to serve up to a maximum of two terms. Previous members who served two terms were not reappointed and new members were appointed effective from November 2017 as replacements.

The committee consists solely of independent members who are all financially literate. The Committee is chaired by the Board Members appointed in terms of the provisions of Section 5(1)(b) of the North West Gambling Act, No 2 of 2001.

The current members are Terrance Mathe (Chairman), Zebulon Mothibe (member), Moshupi Mokgobinyane (member), Princess Mangoma (member), Jeanne-Marie Brown (member).

Effectiveness of Internal Controls and Internal Audit

The Committee:

Reviewed and approved the annual internal audit plans and evaluated the independence, effectiveness and performance of the internal audit function; • considered the reports of the internal auditors on the Board’s systems of internal control including financial controls, business risk management and maintenance of effective internal control systems; • received assurances that proper accounting records were maintained and that the systems safeguarded the Board’s assets against unauthorized use or disposal; • assessed the Board’s compliance with the applicable laws and regulations that governs its operations; • reviewed validity, accuracy and completeness of performance information reported on quarterly and annual basis; reviewed issues raised by internal audit and the adequacy of corrective action taken by management in response thereto; • assessed the adequacy of the performance of the internal audit function and found it satisfactory; and • concluded that there were no material breakdowns in internal control.

There was an improvement in the entity’s system of internal controls and Management implemented internal audit recommendations. This is evidenced by the Unqualified Audit Report from the AGSA in previous periods, as well as the number of positive findings by the internal audit. There are, however, several deficiencies in the system of internal controls and/or deviations. These were reported by the internal auditors and the Auditor-General and are being addressed. The Audit Committee takes note of Management’s commitment to correct the deficiencies, and both the action plans and the monitoring of progress were consistent during the period under review.

During the period under review, Internal Audit completed the assurance and consulting audits in the fol- lowing key risk areas:

• Compliance Review: Governance and Legislation • Human Resources and payroll management • Revenue • Receivables • Compliance Review: Illegal Gambling Activities • Information Technology • Supply Chain and Expenditure Management • Asset Management • Performance Information • Follow up on management’s implementation of Action Plan on Auditor General’s findings • Inventory Management • Quarterly and Annual Financial Statements

Our review of the findings of the internal audit work, which was based on the risk assessment conducted, revealed specific weaknesses, which were then raised with the Board.

In-Year Management And Monthly/ Quarterly Report

The entity reported monthly and quarterly to the Treasury, as required by the PFMA. Monitoring was done regularly, and performance information was reviewed periodically during the period under review. 89 North West Gambling Board | Annual Report 2017 - 2018 Attendance

The names of the members who were in office during the period 01 April 2017 to 31 March 2018 and the details of audit committee meetings attended by each of the members are:

NUMBER OF MEETINGS HELD NUMBER OF MEMBERS NUMBER OF MEETINGS NAMES OF MEMBERS ATTENDED ATTENDED AUDIT COMMITTEE 3 6 3 of 3 Mr. TK Mathe (Chairman) 0 of 3 Mr. N Oliphant 2 of 3 Mr. Z Mothibe 3 of 3 Mr. M Mokgobinyane 2 of 3 Ms. T Moromane (Term ended 31 July 2017) 2 of 3 Ms. O Diutlwileng (Term ended 31 July 2017)

1 of 3 Ms J Brown (Term started 28 November 2017) 1 of 3 Ms P Mangoma (28 November 2017)

Evaluation Of Financial Statements

The Committee:

• confirmed, based on management’s review, that the interim and annual financial statements were prepared on the going concern basis; • examined the interim and annual financial statements and other financial information made public, prior to their approval by the Board; • considered accounting treatments, significant or unusual transactions and accounting judgements; • considered the appropriateness of accounting policies and any changes made • considered any problems identified as well as any compliance and tax matters that could materially affect the financial statements; and • met separately with management, external audit and internal audit and satisfied themselves that no material control weakness exists

Following the review by the committee of the annual financial statements of The North West Gambling Board for the year ended 31 March 2018, the committee is of the view that, in all material respects, it complies with the relevant provisions of the PFMA and GRAP and fairly presents the financial position at that date and the results of its operations and cash flows for the year. In conjunction with the risk committee, the committee has also satisfied itself as to the integrity of the remainder of the annual report.

Having achieved its objectives for the financial year, the committee recommended the annual financial statements and annual report for the year ended 31 March 2018 for approval to the Board.

We reviewed the Board implementation plan for audit issues, raised during the previous period under review and we are satisfied that the matters have been adequately resolved.

Terence K Mathe Chairperson of the Audit Committee North West Gambling Board 90 North West Gambling Board | Annual Report 2017 - 2018 Part D Human Resources Management

1. Introduction 2. Human Resource Oversight Statistics

91 North West Gambling Board | Annual Report 2017 - 2018 1. Introduction

Overview of HR matters as the public entity.

Strategic Objective - Strengthen the institutional capacity of the Board

The Human resources department is responsible for all HR functions including payroll. During the year under review the appointment were as follows:

• Nineteen (19) permanent positions were filled • two (2) temporary employees were appointed.

Set HR Priorities for the year under review and the impact of these priorities.

The Human Resources department was focusing on five (5) Key Performance Indicators all were achieved except for filing of vacant positions which could not be achieved due to budget that was cut.

Workforce planning framework and key strategies to attract and recruit a skilled and capable workforce.

The Board offers a Total Cost to Company package which is inclusive of seven and half percent (7.5%) contribution to provident fund, fifty percent (50%) contribution to medical aid and long Service Awards for employees of the Board who have 5, 10, 15, 20 an 25 years in the employ of the Board.

Performance Management framework.

The Board has implemented a Performance Management Policy to encourage good performance and reward good performance. The employees are assessed twice a year and bonuses were paid in September 2017.

Employee Wellness Programmes

The Board together with the Department of Finance, Economy and Enterprise (FEED) hosted wellness day on 29 September 2017 and on the 19 December 2017, the Board hosted another wellness day, employees took part in different activities.

Policy development

The Human Resources Policy of the Board was reviewed for the year under review.

Highlight achievements

Ten (10) employees received Long Service awards for the year under review.

Challenges faced by the public entity

The Board could not fill all vacant positions due to budget cut.

Future HR Plans/Goals

The Human Resources Department plan to fill all vacant and budgeted positions, administer payroll and employee benefits and monitor employment equity targets and implement same.

92 North West Gambling Board | Annual Report 2017 - 2018 2. Human Resources Oversight Statistics

Personnel Cost by Programme

PROGRAMME TOTAL PERSONNEL PERSONNEL EXP. NO OF AVARAGE EXPENDITURE FOR EXPENDITURE AS A % OF TOTAL EMPLOYEES PERSONNEL COST THE ENTITY (R’000) EXP PER EMPLOYEE (R’000) (R’000) Chief Executive Officer 6 256 521 4 256 196.08 5 6 709 366.01 Corporate Services 19 690 871 12 186 602.68 14 41 297 234.21 Finance 23 921 164 7 236 614.08 8 17 425 683.18 Legal Services 13 685 423 2 225 698.13 3 7 317 956.88 Audit and Systems 7 735 000 5 970 651.82 7 13 459 280.91 Gambling Control 8 868 463 5 971 365.19 7 14 426 526.09 Investigations and 8 852 559 3 850 826.31 4 12 320 902.19 Licensing Total Permanent 89 010 000 41 697 954.29 47 110 379 072.31

Personnel Cost by Salary Band

LEVEL PERSONNEL % OF PERSONNEL NO OF EMPLOYEES AVERAGE EXPENDITURE EXP. TO TOTAL PERSONNEL COST (R’000) PERSONNEL COST PER EMPLOYEE Top Management 5 888 059.18 14 4 1 472 014.80 Senior Management 6 138 621.68 15 9 682 069.08 Professional qualified 8 258 572.18 19 13 635 274.78 Skilled 14 852 583.86 36 41 362 258.14 Semi-skilled 4 525 709.18 11 22 205 714.05 Unskilled 1 152 755.90 3 9 128 083.99 Total 40 816 301.98 98 98 416 492.87 Non-permanent 881 652.31 2 12 73 471.02 Grand Total 41 697 954.29 100 110 379 072.31

Performance Awards

PROGRAMME PERFORMANCE REWARDS PERSONNEL EXPENDITURE %OF PERFORMANCE (R’000) REWARDS TO TOTAL PERSONNEL COT (R’000) Top Management 409 278.56 5 888 059.18 1 Senior Management 407 002.93 6 138 621.68 1 Professional qualified 548 649.96 8 258 572.18 1 Skilled 1 049 413.18 14 852 583.86 3 Semi-skilled 251 888.88 4 525 709.18 1 Unskilled 90 564.08 1 152 755.90 0 Total 2 756 797.59 40 816 301.98 7 Non-permanent 0 881 652.31 0 Grand Total 2 756 797.59 41 697 954.29 7

93 North West Gambling Board | Annual Report 2017 - 2018 Training Costs

PROGRAMME PERSONNEL TRAINING TRAINING NO. OF EMPLOYEES AVG TRAINING COST EXPENDITURE EXPENDITURE EXPENDITURE AS A TRAINED PER EMPLOYEE (R’000) (R’000) % OF PERSONNEL COST

Chief Executive 4 256 196.08 49 683.18 0.1 5 9 936.64 Officer Corporate Services 12 186 602.68 178 640.49 0.4 20 8 932.02 Finance 7 236 614.08 103 393.32 0.2 9 11 488.15 Legal Services 2 225 698.13 23 148.44 0.05 2 11 574.22 Audit and Systems 5 970 651.82 121 490.82 0.3 13 9 345.45 Gambling Control 5 971 365.19 25 254.30 0.06 4 8 418.10 Investigations 3 850 826.31 22 369.76 0.05 2 11 184.88 and Licensing Total Permanent 41 697 954.29 523 980.31 1.3 54 70 879.45 Non-permanent 0 0 0 0 Grand Total 41 697 954.29 523 980.31 1.3 54 70 879.45

Employment and Vacancies – Per Programme

PROGRAMME 2016/17 2017/18 2017/18 2017/18 % OF NUMBER OF APPROVED NO. OF VACANCIES VACANCIES EMPLOYEES POSTS EMPLOYEES Chief Executive Officer 4 6 4 2 2 Corporate Services 28 33 32 1 1 Finance 15 17 17 0 0 Legal Services 4 5 4 1 1 Audit and Systems 10 12 12 0 0 Gambling Control 12 12 10 2 2 Investigations and Licensing 10 10 9 1 1 Regional Office Bojanala 0 2 2 0 0 Regional Officer Ngaka Modiri Molema 0 2 0 2 2 Total Permanent 83 99 90 9 9 Non-permanent 22 0 2 0 0 Grand Total 105 99 92 9 9

94 North West Gambling Board | Annual Report 2017 - 2018 Employment and Vacancies – Per Occupational Levels – Approved and filled 2017/18

LEVEL 2016/17 2017/18 2017/18 2017/18 % OF NUMBER OF APPROVED NO. OF VACANCIES VACANCIES EMPLOYEES POSTS EMPLOYEES Top Management 4 4 3 1 1 Senior Management 7 8 8 0 0 Professional qualified 13 14 11 3 3 Skilled 37 41 39 2 2 Semi-skilled 15 23 21 2 2 Unskilled 7 9 8 1 1 Total 83 99 90 9 9 Non-permanent 22 0 2 0 0 Grand Total 105 99 92 9 9

Employment and Vacancies – Per Occupational Levels

SALARY BAND EMPLOYMENT AT BEGINNING APPOINTMENTS TERMINATIONS EMPLOYMENT AT THE OF PERIOD END OF THE PERIOD Top Management 4 0 1 3 Senior Management 7 2 1 8 Professional qualified 13 0 2 11 Skilled 37 6 2 39 Semi-skilled 15 9 1 21 Unskilled 7 2 1 8 Total 83 19 8 90 Non-permanent 22 2 10 2 Grand Total 105 21 18 92

Reasons for Staff Leaving

REASON FOR LEAVING NUMBER % OF TOTAL NO. OF STAFF LEAVING Death 0 0 Resignation 8 8 Dismissal 1 1 Retirement 0 0 Ill health 1 1 Expiry of Contract 8 8 Other 0 0 TOTAL 18 18

Labour Relations: Misconduct and Disciplinary Action

NATURE OF DISCIPLINARY ACTION NUMBER

Verbal Warning 0 Written Warning 2 Final Written Warning 0 Dismissal 1

95 North West Gambling Board | Annual Report 2017 - 2018 Equity Target and Employment Equity Status

MALE AFRICAN COLOURED INDIAN WHITE

LEVELS CURRENT TARGET CURRENT TARGET CURRENT TARGET CURRENT TARGET Top Management 1 2 0 0 0 0 0 0 Senior Management 5 5 0 0 0 0 0 0 Professional qualified 7 6 0 1 0 1 0 0 Skilled Technical 18 17 2 2 0 1 0 1 Semi-skilled 9 8 0 0 0 1 0 0 Unskilled 2 3 0 0 0 0 0 0 TOTAL 42 41 2 3 0 3 0 0 Non-Permanent 1 0 0 0 0 0 0 0 Grand Total 43 41 2 3 0 3 0 0

The status of Employment Equity for males is as follows:

• African males are less than the targeted number, • Coloured males are less than the targeted number, • Indian males are not represented, and • White males are not represented.

The Table Indicates the Status of Females.

FEMALE AFRICAN COLOURED INDIAN WHITE

LEVELS CURRENT TARGET CURRENT TARGET CURRENT TARGET CURRENT TARGET Top Management 22000000 Senior Management 32000001 Professional qualified 66000001 Skilled Technical 16 14 221102 Semi-skilled 10 11 011101 Unskilled 65000100 TOTAL 43 40 232305 Non-Permanent 10000000 Grand Total 44 40 232305

The Status of Employment Equity for male is as follows:

• African females are more than the targeted number, • Coloured females are less than the targeted number, • Indian females are less than the targeted number, and • White females are not represented.

96 North West Gambling Board | Annual Report 2017 - 2018 The Table Indicates the Status of People with Disabilities.

DISABLED STAFF MALE FEMALES

LEVELS CURRENT TARGET CURRENT TARGET Top Management 0 0 0 0 Senior Management 0 0 0 0 Professional qualified 0 0 0 0 Skilled 1 1 1 1 Semi-skilled 0 0 0 0 Unskilled 0 0 0 0 Non-Permanent 0 0 0 0 TOTAL 1 1 1 1

97 North West Gambling Board | Annual Report 2017 - 2018 98 North West Gambling Board | Annual Report 2017 - 2018 Part E Financial Information

1. Statement of Responsibility for the Annual Financial Statements 2. Report of the Auditor-General 3. Statement of Financial Position 4. Statement of Financial Performance 5. Statement of Changes in Net Assets 6. Cash-flow Statements 7. Statement of Comparison of Budget and Actual Amounts 8. Accounting Policies 9. Notes to the Annual Financial Statements

99 North West Gambling Board | Annual Report 2017 - 2018 1. Statement of Responsibility for the Annual Financial Statements

The Accounting Authority is responsible for the preparation of the public entity’s Annual Financial Statements and for the judgements made regarding this information.

The Accounting Authority is responsible for establishing, and implementing a system of internal control designed to provide reasonable assurance as to the integrity and reliability of the Annual Financial Statements.

In my opinion, the financial statements fairly reflect the operations of the public entity for the Financial Year ended 31 March 2018.

The external auditors are engaged to express an independent opinion on the Annual Financial Statements of the public entity.

The NWGB Annual Financial Statements for the year ended 31 March 2018 have been audited by the external auditors and their report is presented on page 101.

The Annual Financial Statements of the public entity set out on page 106 to page 141 have been approved.

100 North West Gambling Board | Annual Report 2017 - 2018 Report of the auditor-general to the North West provincial legislature on the North West Gambling Board

Report on the audit of the financial statements

Opinion

1. I have audited the financial statements of the North West Gambling Board set out on pages 106 to 141 , which comprise the statement of financial position as at 31 March 2018, the statement of financial perfor- mance, statement of changes in net assets, cash flow statement and statement of comparison of budget and actual amounts for the year then ended, as well as the notes to the financial statements, including a summary of significant accounting policies.

2. In my opinion, the financial statements present fairly, in all material respects, the financial position of the North West Gambling Board as at 31 March 2018, and its financial performance and cash flows for the year then ended in accordance with the South African Standards of Generally Recognised Accounting Practice (SA standards of GRAP) and the requirements of the Public Finance Management Act of South Africa, 1999 (Act No. 1 of 1999) (PFMA).

Basis for opinion

3. I conducted my audit in accordance with the International Standards on Auditing (ISAs). My responsibilities under those standards are further described in the auditor-general’s responsibilities for the audit of the fi- nancial statements section of this auditor’s report.

4. I am independent of the public entity in accordance with the International Ethics Standards Board for Ac- countants’ Code of ethics for professional accountants (IESBA code) and the ethical requirements that are relevant to my audit in South Africa. I have fulfilled my other ethical responsibilities in accordance with these requirements and the IESBA code.

5. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.

Emphasis of matters

6. I draw attention to the matters below. My opinion is not modified in respect of these matters.

Irregular expenditure

7. As disclosed in note 34 to the financial statements, irregular expenditure of R13 647 337 was incurred in the current year and R10 435 850 in respect of previous years had not yet been resolved.

Restatement of corresponding figures

8. As disclosed in note 40 to the financial statements, the corresponding figures for 31 March 2017 were re- stated as a result of numerous errors in the financial statements of the entity at, and for the year ended, 31 March 2018 .

Responsibilities of the accounting authority for the financial statements

9. The accounting authority is responsible for the preparation and fair presentation of the financial statements in accordance with the SA standards of GRAP and the requirements of the PFMA, and for such internal control as the accounting authority determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

101 North West Gambling Board | Annual Report 2017 - 2018 10. In preparing the financial statements, the accounting authority is responsible for assessing the North West Gambling Board’s ability to continue as a going concern, disclosing, as applicable, matters relating to going concern and using the going concern basis of accounting unless the accounting authority either intends to liquidate the public entity or to cease operations, or has no realistic alternative but to do so.

Auditor-general’s responsibilities for the audit of the financial statements

11. My objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes my opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

12. A further description of my responsibilities for the audit of the financial statements is included in the an- nexure to this auditor’s report.

Report on the audit of the annual performance report

13. In accordance with the Public Audit Act of South Africa, 2004 (Act No. 25 of 2004) (PAA) and the general no- tice issued in terms thereof, I have a responsibility to report material findings on the reported performance information against predetermined objectives for selected programmes presented in the annual perfor- mance report. I performed procedures to identify findings but not to gather evidence to express assurance.

14. My procedures address the reported performance information, which must be based on the approved per- formance planning documents of the public entity. I have not evaluated the completeness and appropriate- ness of the performance indicators included in the planning documents. My procedures also did not extend to any disclosures or assertions relating to planned performance strategies and information in respect of future periods that may be included as part of the reported performance information. Accordingly, my find- ings do not extend to these matters.

15. I evaluated the usefulness and reliability of the reported performance information in accordance with the criteria developed from the performance management and reporting framework, as defined in the general notice, for the following selected programmes presented in the annual performance report of the public entity for the year ended 31 March 2018:

Programmes Pages in the annual performance report Programme 2 : investigation and licensing 29-33 Programme 3 : gambling control 34-36 Programme 4 : gambling audit and systems 38-40

16. I performed procedures to determine whether the reported performance information was properly pre- sented and whether performance was consistent with the approved performance planning documents. I performed further procedures to determine whether the indicators and related targets were measurable and relevant, and assessed the reliability of the reported performance information to determine whether it was valid, accurate and complete. 17. The material finding in respect of the usefulness and reliability of the selected programmes are as follows:

Programme 2: Investigation and Licensing

18. I did not identify material findings on the usefulness and reliability of the reported performance information for this programme.

Programme 3: Gambling Control

Indicator: Number of unlicensed gambling operations identified and reported to the South African Police Services for criminal investigation and prosecution

102 North West Gambling Board | Annual Report 2017 - 2018 19. The planned indicator was not specific in clearly identifying the nature and required level of performance due to the public entity not clearly indicating the type of illegal gambling activities to be investigated and reported on as required by the Framework for managing programme performance information (FMPPI). In addition, I was unable to obtain sufficient appropriate audit evidence for the reported achievement for this indicator and the reported achievement could not be confirmed by alternative means. Consequently, I was unable to determine whether any adjustments were required to the reported achievement of 60.

Programme 4: Gambling Systems and Audits

20. I did not identify material findings on the usefulness and reliability of the reported performance information for this programme.

Other matters

21. I draw attention to the matters below.

Achievement of planned targets

22. Refer to the annual performance report on pages 27 to 56 for information on the achievement of planned targets for the year and explanations provided for the under/over achievement of a significant number of targets. This information should be considered in the context of the material findings on the usefulness and reliability of the reported performance information in paragraphs 19 of this report.

Adjustment of material misstatements

23. I identified material misstatements in the annual performance report submitted for auditing. These material misstatements were on the reported performance information of Programme 2: Investigation and Licens- ing, Programme 3: Gambling Control and programme 4: Gambling Audit and Systems. As management subsequently corrected only some of the misstatements, I raised material findings on the usefulness and reliability of the reported performance information. Those that were not corrected are reported above.

Report on the audit of compliance with legislation

Introduction and scope

24. In accordance with the PAA and the general notice issued in terms thereof, I have a responsibility to report material findings on the compliance of the public entity with specific matters in key legislation. I performed procedures to identify findings but not to gather evidence to express assurance. 25. The material findings on compliance with specific matters in key legislations are as follows:

Annual financial statements

26. The financial statements submitted for auditing were not prepared in accordance with the prescribed finan- cial reporting framework as required by section 55(1)(b) of the PFMA. Material misstatements of current li- abilities and disclosure items identified by the auditors in the submitted financial statement were corrected, resulting in the financial statements receiving an unqualified audit opinion.

Expenditure management

27. Effective steps were not taken to prevent irregular expenditure of R13 647 337, as required by section 51(1) (b)(ii) of the PFMA. The majority of the irregular expenditure was caused by procurements above R500 000 that were done without following a competitive bidding process, as required by Treasury Regulation 16A6.1.

Procurement and contract management

28. Some of the goods and services with a transaction value above R500 000 were procured without inviting competitive bids, and deviations were approved by the accounting officer although it was practical to invite competitive bids, as required by treasury regulations 16A6.1 and 16A6.4. Similar non-compliance was re- ported in the previous year.

103 North West Gambling Board | Annual Report 2017 - 2018 29. Some of the invitations for competitive bidding were not advertised for a required minimum period or at least in the government tender bulletin, as required by treasury regulation 16A6.3(c). Similar non-compli- ance was reported in the previous year. 30. Some of the contracts were awarded to bidders based on evaluation criteria that differed from those stipu- lated in the original invitation for bidding, in contravention of treasury regulation 16A6.3(a). Similar non- compliance was reported in the previous year.

31. Some of the contracts were awarded to bidders based on preference points that were not calculated in ac- cordance with the requirements of the Preferential Procurement Policy Framework Act and its regulations. Similar non-compliance was reported in the previous year.

32. Some of the contracts were extended without the approval of a properly delegated official, as required by section 44 of the PFMA and treasury regulations 8.1 and 8.2.

Revenue management

33. Effective and appropriate steps were not taken to collect all revenue due from employees and licencees, as required by section 51(1)(b)(i) of the PFMA.

Other information

34. The accounting authority is responsible for the other information. The other information comprises the information included in the annual report, which includes the foreword by the chairperson of the board, overview by the chief executive officer and the audit committee’s report. The other information does not include the financial statements, the auditor’s report and those selected programmes presented in the an- nual performance report that have been specifically reported in this auditor’s report.

35. My opinion on the financial statements and findings on the reported performance information and compli- ance with legislation do not cover the other information and I do not express an audit opinion or any form of assurance conclusion thereon.

36. In connection with my audit, my responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements and the selected pro- grammes presented in the annual performance report, or my knowledge obtained in the audit, or otherwise appears to be materially misstated.

37. If, based on the work I have performed, I conclude that there is a material misstatement in this other infor- mation, I am required to report that fact. I have nothing to report in this regard.

Internal control deficiencies

38. I considered internal controls relevant to my audit of the financial statements, reported performance infor- mation and compliance with applicable legislation; however, my objective was not to express any form of assurance on it. The matters reported below are limited to the significant internal control deficiencies that resulted in the findings on the annual performance report and the findings on compliance with legislation included in this report.

39. Oversight responsibility by the accounting authority, and adequate financial and performance management, were not sufficiently implemented to ensure the adequate preparation and presentation of financial state- ments, performance reporting and monitoring of compliance with applicable laws and regulations. This resulted in material misstatements to the financial statements, which were subsequently corrected, and repeated non-compliance findings.

Rustenburg 31 July 2018

104 North West Gambling Board | Annual Report 2017 - 2018 Annexure – Auditor-general’s responsibility for the audit

1. As part of an audit in accordance with the ISAs, I exercise professional judgement and maintain professional scepticism throughout my audit of the financial statements, and the procedures performed on reported per- formance information for selected programmes and on the public entity’s compliance with respect to the selected subject matters.

Financial statements

2. In addition to my responsibility for the audit of the financial statements as described in this auditor’s report, I also:

 identify and assess the risks of material misstatement of the financial statements whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for my opinion. The risk of not detecting a material mis- statement resulting from fraud is higher than for one resulting from error, as fraud may involve collu- sion, forgery, intentional omissions, misrepresentations, or the override of internal control  obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effective- ness of the public entity’s internal control  evaluate the appropriateness of accounting policies used and the reasonableness of accounting esti- mates and related disclosures made by the accounting authority  conclude on the appropriateness of the accounting authority’s use of the going concern basis of account- ing in the preparation of the financial statements. I also conclude, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the North West Gambling Board’s ability to continue as a going concern. If I conclude that a material uncertainty exists, I am required to draw attention in my auditor’s report to the related disclosures in the financial statements about the material uncertainty or, if such disclosures are inadequate, to modify the opinion on the financial statements. My conclusions are based on the information available to me at the date of this auditor’s report. However, future events or conditions may cause a [type of auditee] to cease continuing as a going concern  evaluate the overall presentation, structure and content of the financial statements, including the dis- closures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation

Communication with those charged with governance

3. I communicate with the accounting authority regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that I identify during my audit. 4. I also confirm to the accounting authority that I have complied with relevant ethical requirements re- garding independence, and communicate all relationships and other matters that may reasonably be thought to have a bearing on my independence and, where applicable, related safeguards.

105 North West Gambling Board | Annual Report 2017 - 2018 3. Statement of Financial Position as at 31 March 2018

2018 2017 Restated Note(s) R R

Assets Current Assets Cash and cash equivalents 3 16,995,007 19,687,363 Receivables from exchange transactions 4 1,248, 008 1,314,644 Receivables from non-exchange transactions 5 7,998,563 8,514,437 Prepayments 6 239,835 623,064 Inventories 7 325,460 293,720 26,806,873 30,433,228 Non-Current Assets Property, plant and equipment 8 8,814,398 8,200,171 Total Assets 35,621,271 38,633,399 Liabilities Current Liabilities Finance lease obligation 25 42,120 103,266 Payables from exchange transactions 10 3,263,447 1,553,350 Taxes and transfers payable (non-exchange) 11 14,290,288 13,748,180 Unspent: Socio Economic Development Fund 39 4,047,846 4,988,597 Accruals 13 2,041,507 1,911,226 Investigation fees: deposit 12 3,233,679 1,623,522 Provisions 26 3,821,603 2,904,872 30,740,490 26,833,013 Non-Current Liabilities Finance lease obligation 25 395 38,202 Operating lease liability 9 596,473 157,364 Provisions 26 4,593,141 3,588,331 5,190,009 3,783,897 Total Liabilities 35,930,499 30,616,910 Net Assets -309,228 8,016,489 Accumulated surplus/deficit -309,228 8,016,489

106 North West Gambling Board | Annual Report 2017 - 2018 4. Statement of Financial Performance for the Year ended 31 March 2018

Accumulated Total surplus net assets Note(s) R R

Revenue Revenue from exchange transactions

Investigation Fees 15 4,440,669 4,365,229 Other income 14 210,977 94,069 Interest received 582,913 609,649

Total revenue from exchange transactions 5,234,559 5,068,947

Revenue from non-exchange transactions

Transfer revenue Department of Finance, Economy and Enterprise Development 17 77,810,000 77,154,000

Total revenue 16 83,044,559 82,222,947

Expenditure Employee related costs 18 44,700,799 38,668,416 Depreciation and amortisation 8 1,703,596 1,912,841 Finance costs 19 9,741 14,801 Lease rentals on operating lease 22 5,830,536 3,827,022 Debt Impairment 20 (3,634) 706,599 Administrative expenses 21 38,774,125 38,876,093

Total expenditure 91,015,163 84,005,772

Operating deficit 22 (7,970,604) (1,782,825) Loss on disposal of assets (355,114) (259,314) Deficit for the year (8,325,718) (2,042,139)

107 North West Gambling Board | Annual Report 2017 - 2018 5. Statement of Changes in Net Assets for the Year ended 31 March 2018

Accumulated Total surplus net assets Note(s) R R

Adjustments Prior period errors 10,029,168 10,029,168 Prior year adjustments 29,460 29,460 Balance at 01 April 2016 as restated 10,058,628 10,058,628 Changes in net assets Deficit for the year (2,042,139) (2,042,139) Total changes (2,042,139) (2,042,139) Opening balance as previously reported 8,823,279 8,823,279 Adjustments Correction of errors (806,790) (806,790) Balance at 01 April 2017 as restated 8,016,489 8,016,489 Changes in net assets Deficit for the year (8,325,718) (8,325,718) Total changes (8,325,718) (8,325,718) Balance at 31 March 2018 (309,228) (309,228)

108 North West Gambling Board | Annual Report 2017 - 2018 6. Cash Flow Statement for the Year ended 31 March 2018

2018 2017 R Restated Note(s) R

Cash flows from operating activities Receipts Taxes and Levies collected 122,175,862 138,619,580 Investigation Fees 5,935,424 3,705,355 License renewal 5,208,483 2,829,800 Grants 77,810,000 77,154,000 Interest income 596,847 604,513 Other receipts 501,250 234,364 212,227,866 223,147,612 Payments Employee costs (41,632,101) (36,705,233) Suppliers (47,832,530) (45,247,732) Finance costs (9,741) (14,801) Taxes and Levies Transfers (121,733,213) (139,001,688) Socio Economic Development Contribution (940,750) (1,279,772) (212,148,335) (222,249,226) Net cash flows from operating activities 24 79,531 898,386

Cash flows from investing activities Purchase of property, plant and equipment 8 (2,672,935) (2,603,713) Cash flows from financing activities Finance lease payments (98,953) (28,025)

Net increase/(decrease) in cash and cash equivalents (2,692,357) (1,733,352) Cash and cash equivalents at the beginning of the year 19,687,363 21,420,714 Cash and cash equivalents at the end of the year 3 16,995,006 19,687,362

109 North West Gambling Board | Annual Report 2017 - 2018 7. Statement of Comparison of Budget and Actual Amounts

Difference Actual between Approved Approved Final amounts on Adjustments final Reference budget Savings budget comparable budget and basis actual

Statement of Financial Performance

Revenue

Other non-tax revenue --- - 5,234,559 5,234,559 Note 16 Government Grant 89,590,000 (11,780,000) - 77,810,000 77,810,000 - Approved savings ------Total revenue 89,590,000 (11,780,000) - 77,810,000 83,044,559 5,234,559

Expenses

Compensation of employees (43,273,981) 1,223,981 - (42,050,000) (44,700,798) (2,650,798) Note 18 Use of goods and services (41,964,994) 8,656,019 (11,116,000) (44,424,975) (44,604,661) (179,686) Note 21, 22 & 23

Depreciation and --- -(1,703,596) (1,703,596) Note 8 amortisation Finance cost --- -(9,741) (9,741) Debt impairment --- -3,634 3,634

Total expenditure (85,238,975) 9,880,000 (11,116,000) (86,474,975) (91,015,163) (4,540,187)

Loss on disposal --- -(355,114) (355,114) Deficit for the period 4,351,025 (1,900,000) (11,116,000) (8,664,975) (8,325,718) 399,258

110 North West Gambling Board | Annual Report 2017 - 2018 8. Accounting Policies

1. Presentation of Annual Financial Statements

The annual financial statements have been prepared in accordance with the Standards of Generally Recognised Account- ing Practice (GRAP), including any interpretations, guideline and directives issued by the Accounting Standard Board, and with section 91(1) of Public Finance Management Act.

These annual financial statements have been prepared on an accrual basis of accounting.

A summary of the significant accounting policies, which have been consistently applied, is disclosed below and are con- sistent with the previous period, unless explicitly stated. The details of any changes in accounting policies are explained in the relevant policies. Assets, liabilities, revenue and expenditure has not been offset except when offsetting is required by the Standard of GRAP.

1.1 Presentation currency

These annual financial statements are presented in South African Rand, which is the functional currency of the Board. All figures have been rounded to the nearest Rand.

1.2 Significant judgements and sources of estimation uncertainty

In preparing the annual financial statements, management is required to make estimates and assumptions that affect the amounts represented in the annual financial statements and related disclosures. Use of available information and the application of judgement is inherent in the formation of estimates. Actual results in the future could differ from these estimates which may be material to the annual financial statements. Significant judgements include:

Receivables from exchange and non-exchange transactions

Trade and other receivables are stated at the nominal value as reduced by appropriate allowances for estimated irre- coverable amounts. The carrying amount of these receivables approximate fair value due to the short period to maturity of these instruments. Trade and other receivables from exchange transactions are disclosed separately from trade and other receivables from non-exchange transactions. Trade and other receivables in exchange for which the entity gives approximately equal value to another entity are recognised as trade and other receivables from exchange transactions. Trade and receivables received without directly giving approximately equal value in exchange are recognised as trade and other receivables from non- exchange transactions.

The entity assesses its receivables from exchange and non-exchange transactions for impairment at the end of each reporting period. In determining whether an impairment loss should be recorded in surplus or deficit in a statement of financial performance, the entity makes judgements as to whether there is observable data indicating a measurable decrease in the estimated future cash flows from a financial asset.

Allowance for slow moving, damaged and obsolete stock

The Board considers an allowance for slow moving, damaged and obsolete inventory to write inventory down to the lower of cost or net realisable value at each reporting period. The items of inventory or stock kept by the Board only refers to stationery consumables used in the normal day to day operations in the delivery of service. Management have made estimates of the selling price and direct cost to sell on certain inventory items. The write down is included as a deficit in the statement of financial performance.

Useful lives and residual values

The entity’s management determines the estimated useful lives, residual values and related depreciation charges for as- sets as noted in the accounting policy 1.3 Property, Plant and Equipment. These estimates are based on industry norms.

111 North West Gambling Board | Annual Report 2017 - 2018 1.2 Significant judgements and sources of estimation uncertainty (continued)

The effect of review of useful life and residual values are accounted for in accordance with GRAP 3.

Where changes are made to the estimated residual values, management also makes these changes prospectively.

Allowance for doubtful debts

On receivables an impairment loss is recognised in surplus and deficit when there is objective evidence that it is im- paired. The impairment is measured as the difference between the receivables carrying amount and the present value of estimated future cash flows discounted at the effective interest rate, computed at initial recognition.

Leave accrual

The entity determines the amount of leave accrual on the basis of the number of days owed to employees as annual leave at any reporting date multiplied by the rate of pay per hour calculated excluding any discretionary payments made during the operating year. Leave accrual is disclosed as a payable in the statement of financial position.

Accounts Payables

The entity has both exchange and non-exchange transactions. The basis of recognition is either date of service or delivery in the case of goods and services. Payables from exchange and non-exchange transaction are carried at fair value and disclosed in the statement of financial position. The fair value of payables from exchange and non-exchange transactions approximates their carrying value. The carrying amount of these payables approximate fair value due to the short period to maturity of these instruments. Trade and other payables from exchange transactions are disclosed separately from trade and other payables from non-exchange transactions in the statement of financial position.

1.3 Property, plant and equipment

The cost of an item of property, plant and equipment is recognised as an asset when: • it is probable that future economic benefits or service potential associated with the item will flow to the entity; and • the cost of the item can be measured reliably.

Property, plant and equipment is initially measured at cost.

The cost of an item of property, plant and equipment is the purchase price and other costs attributable to bring the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Trade discounts and rebates are deducted in arriving at the cost.

Where an asset is acquired through a non-exchange transaction, its cost is its fair value as at date of acquisition.

Where an item of property, plant and equipment is acquired in exchange for a non-monetary asset or monetary assets, or a combination of monetary and non-monetary assets, the asset acquired is initially measured at fair value (the cost). If the acquired item’s fair value was not determinable, it’s deemed cost is the carrying amount of the asset(s) given up.

The initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located is also included in the cost of property, plant and equipment, where the entity is obligated to incur such expenditure, and where the obligation arises as a result of acquiring the asset or using it for purposes other than the production of inventories.

Recognition of costs in the carrying amount of an item of property, plant and equipment ceases when the item is in the location and condition necessary for it to be capable of operating in the manner intended by management.

112 North West Gambling Board | Annual Report 2017 - 2018 1.3 Property, plant and equipment (continued)

When the significant components of item of property, plant and equipment, have different useful lives, they are ac- counted for as separate items (major components) of property, plant and equipment.

Property, plant and equipment are stated at cost, less accumulated depreciation and accumulated impairment in value. Depreciation is calculated on straight line basis over the useful lives of the assets.

The carrying amount of property, plant and equipment are reviewed for impairment when events or changes in circum- stances indicate the carrying amount may not be recoverable.

An item of property, plant and equipment is derecognised upon disposal or when no future benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the assets (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the surplus or deficit section of the Statement of Financial Performance in the year the assets is derecognised. .

The asset’s residual value, useful live and depreciation method are reviewed and adjusted if appropriate at each finan- cial year - end.

The useful lives of items of property, plant and equipment are estimated as follows:

Item Depreciation method Average useful life Office furniture Straight line 12 - 19 years Motor vehicles Straight line 8 - 12 years Office equipment Straight line 7 - 12 years Computer equipment Straight line 5 - 12 years Leasehold improvements Straight line the shorter of the lease period, plus renewal or useful life. Finance lease Straight line 2 years

The residual value, the useful life and depreciation method of each asset are reviewed at least at the end of each re- porting date. If the expectations differ from previous estimates, the change will be treated in accordance with GRAP 3.

Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately.

The depreciation charge for each period is recognised in surplus or deficit unless it is included in the carrying amount of another asset.

1.4 Financial instruments

Classification

The entity has the following types of financial assets (classes and category) as reflected on the Statement of Financial Position or in the notes thereto:

Financial asset Category Cash and cash equivalent Financial asset measured at amortised cost Receivable from exchange transactions Financial asset measured at amortised cost Other receivables from non-exchange transactions Financial asset measured at amortised cost

The entity has the following types of financial liabilities (classes and category) as reflected on the face of the state- ment of Financial Position or in the notes thereto.

Financial liability Category Payables from exchange transactions Financial liability measured at amortised cost Pay- ables from non-exchange transactions Financial liability measured at amortised cost

113 North West Gambling Board | Annual Report 2017 - 2018 1.4 Financial instruments (continued)

Initial recognition

The entity recognises a financial asset or a financial liability in its statement of financial position when the entity be- comes a party to the contractual provisions of the instrument.

Initial measurement of financial assets and financial liabilities

The entity measures a financial asset and financial liability initially at its fair value plus, in the case of a financial asset or a financial liability not subsequently measured at fair value, transaction costs that are directly attributable to the acquisition or issue of the financial asset or financial liability.

Subsequent measurement of financial assets and financial liabilities

The entity measures all financial assets and financial liabilities after initial recognition using the following categories:

• Financial instruments at fair value. • Financial instruments at amortised cost. • Financial instruments at cost.

Gains and losses

A gain or loss arising from a change in the fair value of a financial asset or financial liability measured at fair value is recognised in surplus or deficit.

For financial assets and financial liabilities measured at amortised cost or cost, a gain or loss is recognised in surplus or deficit when the financial asset or financial liability is derecognised or impaired, or through the amortisation process.

Impairment and un-collectability of financial assets

The entity assess at the end of each reporting period whether there is any objective evidence that a financial asset or group of financial assets is impaired.

Financial assets measured at amortised cost:

If there is objective evidence that an impairment loss on financial assets measured at amortised cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance ac- count. The amount of the loss is recognised in surplus or deficit.

Financial assets measured at cost:

If there is objective evidence that an impairment loss has been incurred on an investment in a residual interest that is not measured at fair value because its fair value cannot be measured reliably, the amount of the impairment loss is measured as the difference between the carrying amount of the financial asset and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment losses are not reversed.

Derecognition

Financial assets

The entity derecognises financial assets using trade date accounting. The entity derecognises a financial asset only when: • the contractual rights to the cash flows from the financial asset expire, are settled or waived; • the entity transfers to another party substantially all of the risks and rewards of ownership of the financial asset; or

114 North West Gambling Board | Annual Report 2017 - 2018 1.4 Financial instruments (continued)

• the entity, despite having retained some significant risks and rewards of ownership of the financial asset, has trans- ferred control of the asset to another party and the other party has the practical ability to sell the asset in its entirety to an unrelated third party, and is able to exercise that ability unilaterally and without needing to impose additional restrictions on the transfer. In this case, the entity : - derecognise the asset; and - recognise separately any rights and obligations created or retained in the transfer.

The carrying amounts of the transferred asset are allocated between the rights or obligations retained and those trans- ferred on the basis of their relative fair values at the transfer date. Newly created rights and obligations are measured at their fair values at that date. Any difference between the consideration received and the amounts recognised and derecognised is recognised in surplus or deficit in the period of the transfer.

If the entity transfers a financial asset in a transfer that qualifies for derecognition in its entirety and retains the right to service the financial asset for a fee, it recognise either a servicing asset or a servicing liability for that servicing contract. If the fee to be received is not expected to compensate the entity adequately for performing the servicing, a servicing liability for the servicing obligation is recognised at its fair value. If the fee to be received is expected to be more than adequate compensation for the servicing, a servicing asset is recognised for the servicing right at an amount determined on the basis of an allocation of the carrying amount of the larger financial asset.

If, as a result of a transfer, a financial asset is derecognised in its entirety but the transfer results in the entity obtaining a new financial asset or assuming a new financial liability, or a servicing liability, the entity recognise the new financial asset, financial liability or servicing liability at fair value.

On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received is recognised in surplus or deficit.

If the transferred asset is part of a larger financial asset and the part transferred qualifies for derecognition in its entirety, the previous carrying amount of the larger financial asset is allocated between the part that continues to be recognised and the part that is derecognised, based on the relative fair values of those parts, on the date of the transfer. For this purpose, a retained servicing asset is treated as a part that continues to be recognised. The difference between the car- rying amount allocated to the part derecognised and the sum of the consideration received for the part derecognised is recognised in surplus or deficit.

If a transfer does not result in derecognition because the entity has retained substantially all the risks and rewards of ownership of the transferred asset, the entity continue to recognise the transferred asset in its entirety and recognise a financial liability for the consideration received. In subsequent periods, the entity recognises any revenue on the trans- ferred asset and any expense incurred on the financial liability. Neither the asset, and the associated liability nor the revenue, and the associated expenses are offset.

Financial liabilities

The entity removes a financial liability (or a part of a financial liability) from its statement of financial position when it is extinguished — i.e. when the obligation specified in the contract is discharged, cancelled, expires or waived.

An exchange between an existing borrower and lender of debt instruments with substantially different terms is ac- counted for as having extinguished the original financial liability and a new financial liability is recognised. Similarly, a substantial modification of the terms of an existing financial liability or a part of it is accounted for as having extin- guished the original financial liability and having recognised a new financial liability.

The difference between the carrying amount of a financial liability (or part of a financial liability) extinguished or trans- ferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in surplus or deficit. Any liabilities that are waived, forgiven or assumed by another entity by way of a non-exchange transaction are accounted for in accordance with the Standard of GRAP on Revenue from Non-exchange Transactions (Taxes and Transfers).

115 North West Gambling Board | Annual Report 2017 - 2018 Presentation

Interest relating to a financial instrument or a component that is a financial liability is recognised as revenue or expense in surplus or deficit.

Losses and gains relating to a financial instrument or a component that is a financial liability is recognised as revenue or expense in surplus or deficit.

A financial asset and a financial liability are only offset and the net amount presented in the Statement of Financial Position when the Board currently has a legally enforceable right to set off the recognised amounts and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

In accounting for a transfer of a financial asset that does not qualify for derecognition, the Board does not offset the transferred asset and the associated liability.

1.5 Leases

Leases are classified as finance leases where the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

Operating lease payments are recognised as an expense on a straight line basis over the lease term, except where an- other systematic basis is more representative of the time pattern in which economic benefits from the lease of assets are consumed. Contingent rentals arising under operating lease are recognised as an expense in the period in which they are incurred. The difference between the amount recognised as an expense and the contractual payments are rec- ognised as an operating lease asset or liability.

1.6 Inventories

Inventories are initially measured at cost except where inventories are acquired at no cost or for nominal considerations. The costs shall then be the fair value as at the date of acquisition. Subsequently inventories are measured at lowest of cost and current replacement value. The cost of inventories is assigned using the first in first out formula. The same formula is used for all inventories having a similar nature and use in the entity.

Inventories comprised of stationery and consumables for distribution during the course of rendering service.

The cost of inventories comprises of all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.

The amounts of any write down of inventories to net replacement value and all losses of inventories are recognised as an expense in the period that the write down or loss occurred.

1.7 Taxation

The income of the Board is exempt from the tax in terms of Section 10 (1) (e) of the Income Tax Act (Act 580 of 1962). In terms of Section 24 (1) of the VAT Act, North West Gambling Board is deregistered as a VAT vendor with effect from 1 April 2005.

1.8 Leave Accrual

The employees of the Board are entitled to 21 working days per annum as leave gratuity. The leave days are recognised as accrued to employees. The leave accrual is based on the total number of leave days due to each employee at year- end multiplied by each employee’s respective daily rate of cost to company.

1.9 Impairment of non-cash-generating assets

Cash-generating assets are assets managed with the objective of generating a commercial return. An asset generates a commercial return when it is deployed in a manner consistent with that adopted by a profit-oriented entity.

Non-cash-generating assets are assets other than cash-generating assets. The Board only have the non-cash generat- ing assets.

116 North West Gambling Board | Annual Report 2017 - 2018 1.9 Impairment of non-cash-generating assets (continued)

Carrying amount is the amount at which an asset is recognised in the Statement of Financial Position after deducting any accumulated depreciation and accumulated impairment losses thereon.

Identification

When the carrying amount of a non-cash-generating asset exceeds its recoverable service amount, it is impaired.

The Board assesses at each reporting date whether there is any indication that a non-cash-generating asset may be impaired. If any such indication exists, the Board estimates the recoverable service amount of the asset.

Value in use

Value in use of non-cash-generating assets is the present value of the non-cash-generating assets remaining service potential.

The present value of the remaining service potential of a non-cash-generating assets is determined using the following approach:

Depreciated replacement cost approach

The present value of the remaining service potential of a non-cash-generating asset is determined as the depreciated replacement cost of the asset. The replacement cost of an asset is the cost to replace the asset’s gross service potential. This cost is depreciated to reflect the asset in its used condition. An asset may be replaced either through reproduction (replication) of the existing asset or through replacement of its gross service potential. The depreciated replacement cost is measured as the reproduction or replacement cost of the asset, whichever is lower, less accumulated depreciation calculated on the basis of such cost, to reflect the already consumed or expired service potential of the asset.

The replacement cost and reproduction cost of an asset is determined on an “optimised” basis. The rationale is that the Board would not replace or reproduce the asset with a like asset if the asset to be replaced or reproduced is an overde- signed or overcapacity asset. Overdesigned assets contain features which are unnecessary for the goods or services the asset provides. Overcapacity assets are assets that have a greater capacity than is necessary to meet the demand for goods or services the asset provides. The determination of the replacement cost or reproduction cost of an asset on an optimised basis thus reflects the service potential required of the asset.

Restoration cost approach

Restoration cost is the cost of restoring the service potential of an asset to its pre-impaired level. The present value of the remaining service potential of the asset is determined by subtracting the estimated restoration cost of the asset from the current cost of replacing the remaining service potential of the asset before impairment. The latter cost is determined as the depreciated reproduction or replacement cost of the asset, whichever is lower.

Service units approach

The present value of the remaining service potential of the asset is determined by reducing the current cost of the re- maining service potential of the asset before impairment, to conform to the reduced number of service units expected from the asset in its impaired state. The current cost of replacing the remaining service potential of the asset before impairment is determined as the depreciated reproduction or replacement cost of the asset before impairment, which- ever is lower.

Recognition and measurement

If the recoverable service amount of a non-cash-generating asset is less than its carrying amount, the carrying amount of the asset is reduced to its recoverable service amount. This reduction is an impairment loss.

117 North West Gambling Board | Annual Report 2017 - 2018 1.9 Impairment of non-cash-generating assets (continued)

An impairment loss is recognised immediately in surplus or deficit.

When the amount estimated for an impairment loss is greater than the carrying amount of the non-cash-generating as- set to which it relates, the Board recognises a liability only to the extent that is a requirement in the Standards of GRAP.

After the recognition of an impairment loss, the depreciation (amortisation) charge for the non-cash-generating asset is adjusted in future periods to allocate the non-cash-generating asset’s revised carrying amount, less its residual value (if any), on a systematic basis over its remaining useful life.

Reversal of an impairment loss

The Board assess at each reporting date whether there is any indication that an impairment loss recognised in prior periods for a non-cash-generating asset may no longer exist or may have decreased. If any such indication exists, the Board estimates the recoverable service amount of that asset.

An impairment loss recognised in prior periods for a non-cash-generating asset is reversed if there has been a change in the estimates used to determine the asset’s recoverable service amount since the last impairment loss was recognised. The carrying amount of the asset is increased to its recoverable service amount. The increase is a reversal of an impair- ment loss. The increased carrying amount of an asset attributable to a reversal of an impairment loss does not exceed the carrying amount that would have been determined (net of depreciation or amortisation) had no impairment loss been recognised for the asset in prior periods.

A reversal of an impairment loss for a non-cash-generating asset is recognised immediately in surplus or deficit.

After a reversal of an impairment loss is recognised, the depreciation (amortisation) charge for the non-cash-generating asset is adjusted in future periods to allocate the non-cash-generating asset’s revised carrying amount, less its residual value (if any), on a systematic basis over its remaining useful life.

Re-designation

The re-designation of assets from a cash-generating asset to a non-cash-generating asset or from a non-cash-generating asset to a cash-generating asset only occur when there is clear evidence that such a re-designation is appropriate.

1.10 Employee benefits

Short-term employee benefits

The cost of all short term employee benefits is recognised during the period in which the employee renders a related service. The provision for employee entitlement to annual leave represent the amount, which the Board has present obligation to pay as a result of employee’s services, provided to the Statement of Financial Position date. Provision has been calculated at undiscounted amounts based on current salary rates.

Retirement benefits

The Board contributes to a defined contribution plan. Contribution to defined contribution fund are charged to Statement of Financial Performance in the year to which they relate.

1.11 Provisions

Provisions are recognised when: • the entity has a present obligation as a result of a past event; • it is probable that an outflow of resources embodying economic benefits or service potential will be required to settle the obligation; and • a reliable estimate can be made of the obligation.

118 North West Gambling Board | Annual Report 2017 - 2018 1.11 Provisions (continued)

The amount of a provision is the best estimate of the expenditure expected to be required to settle the present obliga- tion at the reporting date. Provisions are reviewed at each reporting date and adjusted to reflect the current best esti- mate. Provisions are if it is no longer probable that an outflow of the resource embodying economic benefits or service potential will be require to settle the obligations.

1.12 Contingencies

Contingent assets and liabilities are not recognised. Contingencies are disclosed in note 35.

1.13 Revenue from exchange transactions

Revenue is measured at fair value of the consideration received or receivable and represents the amount receivable in the normal course of business. Revenue is measured when it is probable that the economic benefits associated with the transaction will flow to the Board that can be reliably measured.

An exchange transaction is one in which the Board receives fees charged from services rendered, recoveries of expenses incurred in the production of revenue and sundry income.

Revenue from Exchange Transactions is recognised when they become due and is measured at fair value.

1.14 Revenue from non-exchange transactions

Non-exchange transactions are transactions that are not exchange transactions. In a non-exchange transaction, an entity either receives value from another entity without directly giving approximately equal value in exchange, or gives value to another entity without directly receiving approximately equal value in exchange.

Revenue from non-exchange transactions relates to grant funding from Provincial Department of Finance, Economy and Enterprise Development.

Grant received or receivable are recognised when the resources that have been transferred meet the criteria for rec- ognition as an assets. A corresponding liability is raised to the extent that the grant is conditional. The liabilities are transferred to revenue as and when the conditions to the grant are met. Grants without any conditions attached, are recognised as revenue when the asset is recognised.

1.15 License application fees

This represents a fee payable in terms of section 40 of the North West Gambling Act (Act 2 of 2001) as amended. The revenue is recognised at the time of application.

1.16 Comparative figures

When the presentation or classification of items in the annual financial statements is amended, prior period comparative amounts are restated. The nature and reason for the reclassification is disclosed. Where accounting errors have been identified in the current year, the correction is made retrospectively as far as is applicable, and the prior year compara- tives are restated accordingly.

1.17 Fruitless and wasteful expenditure

Fruitless and wasteful expenditure means expenditure that was made in vain and could have been avoided had rea- sonable care been exercised. Fruitless and wasteful expenditure is accounted for as expenditure in the Statement of Financial Performance and where recovered, it is subsequently accounted for as revenue in the Statement of Financial Performance.

1.18 Irregular expenditure

Irregular expenditure as defined in section 1 of the Public Finance Management Act as expenditure other than unauthor- ised expenditure, incurred in contravention of, or that is not in accordance with a requirement of any applicable legisla- tion, including any provincial legislation providing for procurement procedures. Irregular expenditure is accounted for as expenditure in the Statements of Financial Performance and where recovered subsequently accounted for as revenue in the Statement of Financial Performance. 119 North West Gambling Board | Annual Report 2017 - 2018 1.19 Budget information

The annual financial statements and the budget are on the same basis of accounting therefore a comparison with the budgeted amounts for the reporting period have been included in the Statement of comparison of budget and actual amounts. The explanation on the variance between the budget and the actual amounts has been provided.

1.20 Related parties

Related parties are parties that control or significantly influence the Board in making financial and operating decisions. Specific information with regards to related party transactions is included in the disclosure notes.

Management are those persons responsible for planning, directing and controlling the activities of the Board, including those charged with the governance of the Board in accordance with legislation, in instances where they are required to perform such functions.

1.21 Going concern

These annual financial statements have been prepared on the assumption that the Board will continue to operate as a going concern for at least the next 12 months.

1.22 Payables from exchange and non-exchange transactions

Payables from exchange and non-exchange transactions are recognised when the Board has a present obligation as a result of past events and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation.

The unspent funds on the Socio-Economic Development Fund is recognised as a liability in the Statement of Financial Position, as it represents the reduction in the ring -fenced balance in the Fund.

1.23 Events after reporting date

Events after reporting date are those events, both favourable and unfavourable, that occur between the reporting date and the date when the financial statements are authorised for issue.

1.24 Commitments

Items are classified as commitments when an entity has committed itself to future transactions that will normally result in the outflow of cash.

Disclosures are required in respect of unrecognised contractual commitments. Commitments for which disclosure is necessary to achieve a fair presentation should be disclosed in a note to the finan- cial statements, if both the following criteria are met:

• Contracts should be non-cancellable or only cancellable at significant cost (for example, contracts for computer or building maintenance services); and • Contracts should relate to something other than the routine, steady, state business of the entity – therefore salary commitments relating to employment contracts or social security benefit commitments are excluded.

120 North West Gambling Board | Annual Report 2017 - 2018 9. Notes to the Annual Financial Statements

2. New standards and interpretations

GRAP 26 (as amended 2015): Impairment of cash-generating assets

The Board agreed to include a research project on its work programme to review GRAP 21 and GRAP 26 to assess whether the principles in these Standards could be simplified and streamlined. As part of its research project, the Board considered the following aspects which led to the proposed amendments included in this Exposure Draft:

• simplifying the approach to impairment to make it clearer when an asset is cash generating or non-cash- generating; • assessing the feasibility of one measurement approach for non-cash-generating assets; and • Assessing the feasibility of combining the two Standards.

Summary of changes:

The changes to the Standard of GRAP on Impairment of Cash-generating Assets are outlined below:

General definitions:

The definitions of cash-generating assets and cash-generating unit have been amended to be consistent with the amendments made to clarify the objective of cash-generating assets and non-cash-generating assets below.

Cash generating assets and non-cash-generating assets:

Additional commentary has been added to clarify the objective of cash-generating assets and non-cash-generating as- sets.

Disclosures:

The requirement to disclose the criteria developed to distinguish cash-generating assets from non-cash-generating as- sets has been amended to be consistent with the amendments made to clarify the objective of non-cash-generating assets and cash-generating assets.

The effective date of the standard is for years beginning on or after 01 April 2017.

The entity expects to adopt the standard for the first time in the 2017 annual financial statements.

121 North West Gambling Board | Annual Report 2017 - 2018 2.1 Standards and interpretations not yet effective or relevant

The following standards and interpretations have been published and are mandatory for the entity’s accounting periods beginning on or after 01 April 2018:

Standard/ Interpretation: Effective date: Expected impact: Years beginning on or after • GRAP 18: Segment Reporting 01 April 2017 Not Relevant • GRAP 20: Related parties 01 April 2017 Relevant • GRAP 32: Service Concession Arrangements: Grantor 01 April 2016 Not Relevant • GRAP 108: Statutory Receivables 01 April 2016 Relevant • IGRAP 17: Service Concession Arrangements where a Grantor 01 April 2016 Not Relevant Controls a Significant Residual Interest in an Asset • GRAP 16 (as amended 2015): Investment Property 01 April 2016 Not Relevant • GRAP 17 (as amended 2015): Property, Plant and Equipment 01 April 2016 Relevant • GRAP 109: Accounting by Principals and Agents 01 April 2017 Relevant • GRAP 21 (as amended 2015): Impairment of non-cash 01 April 2017 Relevant generating assets • Directive 12: The Selection of an Appropriate Reporting 01 April 2017 Relevant Framework by Public Entities

2018 2017 Restated R R

3. Cash and cash equivalents Cash and cash equivalents consist of: Petty cash 1,881 1,836 ABSA Admin Account 2,697,252 5,007,556 ABSA Call Account 176,721 29,997 ABSA Revenue Account 10,071,307 9,482,690 ABSA Credit card - 176,687 Socio Economic Development Fund 4,047,846 4,988,597 16,995,007 19,687,363

Included in cash and cash equivalent is the funds relating to the cash received on behalf of the Department of Economy and Enterprise Development in the form of levies and taxes; and Socio Economic Development Fund which is not avail- able for use by the entity. The Socio Economic Development Fund intended to promote meaningful contribution of the gambling industry towards sustainable socio-economic development programmes in the North West Province was estab- lished. Contributions to the Fund is from the licensees and therefore Government not part of the Grant.

122 North West Gambling Board | Annual Report 2017 - 2018 2018 2017 Restated R R

4. Receivables from exchange transactions Trade debtors 1,627,598 1,802,794 Provision for doubtful debts (702,965) (706,599) Rent deposit 319,491 199,491 Staff telephone recoveries 3,883 18,958 1,248,008 1,314,644

Fair value of trade and other receivables from exchange transactions

Trade and other receivables 1,248,008 1,314,644 Trade and other receivables from exchange transactions

Trade and other receivables which are less than 3 months past due are not considered to be impaired. At 31 March 2018.

The ageing of amounts past due but not impaired is as follows:

1 month past due 427,765 493,665 3 months past due 820,243 820,979

5. Receivables from non-exchange transactions

Levies and taxes 7,998,563 8,514,437

Fair value of receivables from non-exchange transactions

Other receivables from non-exchange transactions 7,998,563 8,514,437 The fair value of receivables from non-exchange transactions approximates their carrying amounts. Casino levies, taxes and other receivables

Current 7,998,563 8,514,437 6. Prepayments

Prepayments 239,835 623,064

7. Inventories

Stationery and consumables on hand 325,460 293,720 Inventories recognised as an expense during the year 456,912 1,023,831

Stationery and consumables comprises of stationery for distribution to staff during the course of work. Stationery and consumables are measured at lower of cost and net replacement value.

123 North West Gambling Board | Annual Report 2017 - 2018 8. Property, plant and equipment

2018 2017 Accumulated Accumulated depreciation Carrying depreciation Carrying Cost and value Cost and value accumulated accumulated impairment impairment Office furniture 2,995,899 (976,431) 2,019,468 2,930,501 (783,592) 2,146,909 Motor vehicles 888,326 (183,981) 704,345 867,851 (95,542) 772,309 Office equipment 3,932,003 (1,160,575) 2,771,428 3,404,054 (996,305) 2,407,749 Computer equipment 4,174,234 (1,915,366) 2,258,868 3,691,721 (1,354,721) 2,337,000 Leasehold 2,089,487 (1,071,712) 1,017,775 1,390,142 (995,406) 394,736 improvements Leased assets 282,698 (240,184) 42,514 278,386 (136,918) 141,468 Total 14,362,647 (5,548,249) 8,814,398 12,562,655 (4,362,484) 8,200,171

Reconciliation of property, plant and equipment - 31 March 2018

Opening Additions Disposals Depreciation Total balance Office furniture 2,146,909 71,524 (188) (198,777) 2,019,468 Motor vehicles 772,309 20,474 - (88,438) 704,345 Office equipment 2,407,749 1,133,927 (306,645) (463,603) 2,771,428 Computer equipment 2,337,000 592,372 (48,280) (622,224) 2,258,868 Leasehold improvements 394,736 850,325 - (227,286) 1,017,775 Leased assets 141,468 4,313 - (103,267) 42,514 8,200,171 2,672,935 (355,113) (1,703,595) 8,814,398

Reconciliation of property, plant and equipment - 31 March 2017

Opening Additions Disposals Depreciation Total balance Office furniture 1,972,613 513,220 (114,516) (224,408) 2,146,909 Motor vehicles 308,758 489,900 - (26,349) 772,309 Office equipment 2,219,796 571,953 (18,665) (365,335) 2,407,749 Computer equipment 2,289,858 694,033 (126,134) (520,757) 2,337,000 Leasehold improvements 808,095 225,714 - (639,073) 394,736 Leased assets 169,493 108,893 - (136,918) 141,468 7,768,613 2,603,713 (259,315) (1,912,840) 8,200,171

124 North West Gambling Board | Annual Report 2017 - 2018 2018 2017 Restated R R 9. Operating lease liability Office building

Operating lease accrual 596,473 157,364

The Board extended its contract with Senatla Investment Capital to rent office buildings under the operating lease with an escalation rate of 9% per annum for a period of five years effective from 1 August 2017. The lease expires on the 31 July 2022.

The Board extended its contract with New Heights to rent office buildings under the operating lease with an escalation rate of 6% per annum for a period of two (2) years effective from 31 March 2017. The lease expires on the 28 February 2019.

The Board entered into a contract with La Quinta Properties rent warehouse and offices under the operating lease with an escalation rate of 10% per annum for a period of five (5) years effective from 01 August 2017. The lease expires on the 31 July 2022.

10. Payables from exchange transactions

Other payables - Investigation fees 7,186 123,344 Other payables - Suppliers 3,256,261 1,430,006 3,263,447 1,553,350

The fair value trade and other payables approximates their carrying amounts.

11. Taxes and transfers payable (non-exchange)

License fees received in advance 5,208,483 2,829,800 Provincial Department of Finance Economy and Enterprise Development, 9,081,805 10,918,380 14,290,288 13,748,180

Fair value of taxes and transfers payable (non-exchange) Taxes and transfers payable (non-exchange) 14,290,288 13,748,180

The fair value of taxes and transfers payable (non-exchange) approximates their carrying amounts.

12. Investigation Fees: Deposit

Investigation Fees: Deposit 3,233,679 1,623,522

125 North West Gambling Board | Annual Report 2017 - 2018 13. Accruals

Reconciliation of leave accrual - 31 December 2017

Opening Balance Additions Utilised during Total the year Leave accrual 1,911,226 1,084,192 (953,911) 2,041,507

Reconciliation of leave accrual - 31 March 2017

Opening Balance Additions Utilised Total during the year Leave accrual 1,583,807 1,180,612 (853,193) 1,911,226

The leave accrual relate to the Board’s estimated liability arising as a result of services rendered by employees.

2018 2017 14. Other revenue Restated R R

Other recoveries 2,711 4,159 Tender application fees 20,800 14,400 Insurance recovery 33,991 35,465 Travel cost recovery 9,032 40,045 Legal costs recovery 144,443 - 210,977 94,069 15. Investigation Fees

Investigation Fees 4,440,669 4,365,229

16. Revenue

Investigation Fees 4,440,669 4,365,229 Other income 210,977 94,069 Interest received - bank accounts 582,913 609,649 Government grant 77,810,000 77,154,000 83,044,559 82,222,947

The amount included in revenue arising from exchanges of goods or services are as follows:

Investigation Fees 4,440,669 4,365,229

Other revenue 210,977 94,069 Interest received - bank accounts 582,913 609,649 5,234,559 5,068,947 The amount included in revenue arising from non-exchange transactions is as follows:

Transfer revenue Government grant 77,810,000 77,154,000

126 North West Gambling Board | Annual Report 2017 - 2018 2018 2017 Restated R R 17. Government grants and subsidies Government grant 77,810,000 77,154,000

Government grant

Original allocation 89,590,000 77,154,000 Adjustment (11,780,000) - 77,810,000 77,154,000

18. Personnel costs Basic salary 31,936,689 27,193,650 Performance bonus 2,984,556 2,736,457 Medical aid contributions 2,882,554 2,648,694 Compensation commission 118,495 188,012 Leave pay expense 130,280 327,419 Provident fund contribution 5,385,315 4,770,866 Long-service awards 1,262,910 803,318 44,700,799 38,668,416

Chief Executive Officer (FS Sekgaphane) Basic salary 1,647,108 1,969,247 Performance Bonuses 219,224 207,398 Medical aid 52,892 38,471 Cellphone allowance 9,081 25,188 Travel and subsistence 264,785 310,435 Long Service Award 83,514 - Termination leave 156,351 - 2,432,955 2,550,739

Chief Financial Officer (Seipone Motlhamme) Basic salary 1,079,918 1,011,159 Performance Bonuses 91,793 106,172 Provident fund 80,994 75,837 Acting allowance 8,973 2,619 Cellphone allowance 10,152 17,590 Travel and subsistence 254,353 239,075 1,526,183 1,452,452

127 North West Gambling Board | Annual Report 2017 - 2018 2018 2017 Restated R R 18. Personnel costs (continued)

Legal Manager (J Montshioa)

Basic salary 1,042,623 876,867 Performance bonuses 98,261 92,071 Provident fund 76,265 65,765 Medical aid 21,140 19,182 Cellphone allowance 8,973 13,595 Acting allowance 14,235 11,971 Travel and subsistence 352,925 431,752 1,614,422 1,511,203

Corporate Services Manager(S Motlhabane) Basic Salary 1,059,872 826,992 Provident fund 79,490 62,024 Cellphone allowance 8,973 15,990 Travel allowance 161,231 117,919 1,309,566 1,022,925

Audit and Systems Manager (K Monate) Basic salary 1,013,301 951,560 Performance bonuses 126,424 118,945 Provident fund 75,998 71,367 Medical aid 50,694 46,115 Cellphone allowance 6,576 9,600 Long service award - 19,309 Travel and subsistence 343,077 289,798 1,616,070 1,506,694

Investigating and Licensing Manager (T Mathebula Started 04 August 2014 and resigned 30 April 2017)

Basic salary 63,396 707,015 Provident fund 4,755 53,026 Medical aid 7,326 26,658 Cellphone allowance 1,998 10,595 Travel and subsistence 22,790 162,938 Leave payout 12,033 - 112,298 960,232

128 North West Gambling Board | Annual Report 2017 - 2018 2018 2017 Restated R R 18. Personnel costs (continued)

Gaming Control Manager (S Mogapi) Basic salary 751,429 698,525 Performance Bonuses 78,900 - Provident fund 56,357 52,389 Medical aid 40,284 36,008 Cellphone allowance 6,576 9,600 Travel and subsistence 308,101 305,046 1,241,647 1,101,568

Investigations and Licensing Manager (M Moss employed 01 March 2018)

Basic Salary 67,432 -

Provident fund 5,057 - 72,489 -

19. Finance costs

Finance leases 9,741 14,801

20. Debt impairment

Debt impairment (3,634) 706,599

129 North West Gambling Board | Annual Report 2017 - 2018 2018 2017 Restated R R 21. Administrative expenses

Advertising 2,867,334 5,119,707 Auditors remuneration 2,898,658 2,184,979 Bank charges 84,204 66,711 Cleaning 357,500 306,933 Computer expenses 543,056 439,952 Consulting and professional fees 12,220,398 10,428,535 Entertainment 75,108 53,011 Gifts and donations - 350 Transport hire 31,150 - Insurance 341,032 241,495 Magazines, books and periodicals 885 - Motor vehicle expenses 131,305 71,829 Board members fees 1,699,766 1,504,378 Postage and courier 4,144 4,431 Printing and stationery 769,953 1,250,263 Security 462,812 305,625 Staff welfare 575,457 583,987 Subscriptions and membership fees 212,895 197,741 Telephone and fax 3,046,517 2,526,163 Training 1,120,526 873,173 Travel - local 8,831,197 8,418,223 Travel - overseas 1,036,244 2,511,382 Loose tools 70,403 29,953 Electricity 661,281 635,253 Credit checks 47,978 43,398 Relocation costs - 49,616 Repairs and maintenance 398,193 605,090 Venue expenses 286,129 423,915 38,774,125 38,876,093

22. Operating deficit Operating deficit for the year is stated after accounting for the following: Operating lease charges Premises • Contractual amounts 5,388,437 3,799,723 Equipment • Contractual amounts 442,099 27,299 5,830,536 3,827,022 Loss on disposal of assets (355,114) (259,314) Depreciation on property, plant and equipment and amortisation of 1,703,596 1,912,841 intangible assets Personnel costs 44,700,799 38,668,416

130 North West Gambling Board | Annual Report 2017 - 2018 2018 2017 Restated R R

23. Auditors’ remuneration

External audit fees 2,339,203 1,727,886 Internal audit fees 559,455 457,093 2,898,658 2,184,979 24. Cash generated from operations

Deficit (8,325,718) (2,042,139) Adjustments for: Depreciation and amortisation 1,703,596 1,912,841 Loss on sale of assets 355,114 259,314 Debt impairment (3,634) 706,599 Movements in operating lease assets and accruals 439,109 (334,740) Movements in leave payable 130,281 327,419 Movement in the provisions 1,921,541 1,447,751 Changes in working capital:

Inventories (31,740) 160,398 Receivables from exchange transactions 70,271 116,734 Receivables from non-exchange transactions 515,874 19,495,298 Prepayments 383,229 (289,029) Payables from exchange transactions 1,710,094 (1,228,773) Taxes and transfers payable (non-exchange) 542,108 (18,306,298) Investigation fees - deposit 1,610,157 (67,717) Increase/decrease: Socio Economic Development Fund (940,751) (1,259,272) 79,531 898,386 25. Finance lease obligation Minimum lease payments due

- within one year 42,120 103,266

- in second to fifth year inclusive 395 38,202 Present value of minimum lease payments 42,515 141,468 Non-current liabilities 395 38,202 Current liabilities 42,120 103,266 42,515 141,468

131 North West Gambling Board | Annual Report 2017 - 2018 2018 2017 Restated R R 26. Provisions Performance bonuses 2,984,555 2,736,457

Long service awards 4,779,000 3,756,746 Roany Barnes 651,189 - 8,414,744 6,493,203 Performance Bonuses Reconciliation Opening balance 2,736,457 2,061,235 Increase in provision 3,004,895 2,736,457 Amount used (2,756,797) (2,061,235) 2,984,555 2,736,457 Current portion of provision for long service awards 185,859 168,415

Roany Barnes 651,189 - 837,048 168,415

The performance bonus provision is raised in terms of Human Resources Policy on Performance Management, and the payouts are dependent on the final moderated individual and organisational performance scores which are approved by the entity in September each year. Payouts are also limited to the availability of funds/budget at the time.

Long service awards reconciliation opening balances 3,588,331 2,984,216 Increase in provision 1,410,985 803,318 Amount used (220,316) (30,788) less current portion (185,859) (168,415) 4,593,141 3,588,331

The provision for long service awards is raised in terms of Human Resource Policy. The actuaries (Simeka Consultants & Actuaries (PTY) Ltd) used a salary escalation rate of 5.3% p.a. which includes real growth of 1% p.a. and a further allowance of 1% p.a. for merit increase. In the calculations, the actuaries assumed that the salary increases are given on 1 April of each year. The current portion re- lates only to employees who qualify for long service awards in the next twelve months. The non-current portion has been discounted and adjusted for the probability of staff leaving the employ of the entity before they are eligible for an award

27. Related parties

Relationships Controlling entity: North West Department of Economic and Enterprise Development

Related party balances Amount owed Department of Economy and Enterprise Development 14,290,288 13,748,180 Related party transactions Grant received Department of Economy and Enterprise Development 77,810,000 77,154,000 Cash surrendered Department of Economy and Enterprise Development 121,733,213 139,001,688

132 North West Gambling Board | Annual Report 2017 - 2018 2018 2017 Restated R R 28. Commitments

Operating Lease Commitment Mafikeng Office Minimum lease payments due - within one year 4,205,626 1,081,720 - in second to fifth year inclusive 11,293,544 - 15,499,170 1,081,720

The Board extended its contract with Senatla Capital (Pty) (Senatla) Ltd to rents office building under the operating lease with an escalation rate of 9% per annum for a period of five years effective from 1 August 2017. The lease expires on the 31 July 2022.

Warehouse Minimum lease payments due - within one year 875,520 - - in second to fifth year inclusive 3,588,346 - 4,463,866 -

The Board entered into a contract with La Quita Properties to rents a warehouse under an operating lease with escalation rate of 10% for a period of five (5) year effective from 01 August 2017. The lease expires on the 31 July 2022.

Rustenburg office

Minimum lease payments due -within one year 349,869 424,470

The Board rents office building from New Heights under the operating lease with an escalation rate of 6% per annum for a period of one year effective from 1 March 2016, with the option of renewal for further two years.

Coffee Machines

Minimum lease payments due -within one year 25,024 54,599

The Board entered into a contract with Nestle to rents the coffee machines under an operating lease with no escalation rate for a period of two (2) year effective from March 2017. The lease expires on the 28 February 2019.

Photocopier Machines Minimum lease payments due -within one year 607,203 -

-in second to third year inclusive 759,004 - 1,366,207 -

The Board entered into a contract with Konica Minolta to rents the coffee photocopier machine under an operating lease with no escalation rate for a period of three (3) year effective from March 2017. The lease expires on the 28 February 2020.

133 North West Gambling Board | Annual Report 2017 - 2018 2018 2017 Restated R R 28. Commitments (continued)

Other Commitments

Minimum payments due

- Within one year 2,524,271 6,936,203 - In second and fifth year inclusive 1,392,153 1,983,028 3,916,424 8,919,231

29. Members’ emoluments

Board Members 31 March 2018

Local travel and Cellphone Total subsistence allowance

L Vere (Chairperson) 75,836 32,282 459,468 L. Seepe (Deputy Chairperson) 279,428 25,975 571,316 T. Mathe 23,474 12,307 156,466 N. Maharaj 218,868 13,252 467,753 C. Kgorane - (In Public Service) --- M. Jansen Mwase - (In Public Service) --- SM Reddy - (In Public Service) 83,160 - 83,160 FS. Sekgaphane - (Ex-officio) --- J. Montshioa (Secretariat) --- 680,766 83,816 1,738,163 31 March 2017

Local travel and Cellphone Total subsistence allowance

L. Vere (Chairperson) 195,443 150,705 760,243 L. Seepe (Deputy Chairperson) 120,637 25,188 320,205 T. Mathe 12,290 15,990 121,027 N. Maharaj 226,602 15,990 421,046 T Kgomo 4,896 - 10,671 C. Kgorane - (In Public Service) --- SM. Reddy --- H. Mashao (In public service) 22,892 - 34,442 NI Kunene - (In Public Service) 17,936 - 17,936 M Jansen Mwase (In Public Service) --- FS Sekgaphane - (CEO until 14 January 2018) --- 600,696 207,873 1,685,570

134 North West Gambling Board | Annual Report 2017 - 2018 Board’s Committees

31 March 2018

Committees fees Travel and Total subsistence T. Mathe 11,550 4,356 15,906 TL. Moromane 8,970 8,952 17,922 G. Diutlwileng 8,970 29,753 38,723 MV. Mokgobinyane 19,830 4,549 24,379 Z. Mothibe 14,640 8,498 23,138 J Brown 1,650 5,300 6,950 P Mangoma 3,540 215 3,755 69,150 61,623 130,773

29. Members’ emoluments (continued) 31 March 2017

Committees fees Travel and Total subsistence N. Maharaj 2,888 7,538 10,426 T. Mathe 26,163 7,929 34,092 TL. Moromane 25,260 24,002 49,262 G. Diutlwileng 19,590 70,330 89,920 MV. Mokgobinyane 21,720 7,720 29,440 Z. Mothibe 16,050 13,517 29,567 111,671 131,036 242,707

135 North West Gambling Board | Annual Report 2017 - 2018 2018 2017 Restated R R

30. Risk management

Liquidity risk

The Board manages risk through an ongoing review of future commitments. Cash flow forecast is prepared and monitored. The Board receives an annual grant and therefore not exposed to liquidity risk.

Credit risk

Credit risk consists mainly of cash deposits and cash equivalents. The Board only deposits cash with major banks with high credit standards.

The Board maximum exposure to credit risk is equal to the cost amount of financial assets at balance sheet date and is summarised as follows:.

Financial instrument Financial assets - Receivable from non-exchange transaction 7,998,563 8,514,437 Financial assets - Receivable from exchange transaction 1,248,008 1,314,644 Financial assets - Prepayments 239,835 623,064 Cash and Cash equivalent 16,995,007 19,687,363 Financial liabilities - Payables (exchange transaction) (3,273,011) (1,553,350) Financial liabilities - Payables (non-exchange transaction) (14,290,288) (13,748,180)

Financial assets by category

At amortised cost At fair value At fair value

Receivables from non-exchange transactions - 7,998,563 -

Receivables from exchange transactions - 1,248,008 -

Prepayments - 239,835 -

Cash and cash equivalents - 16,995,007 -

- 26,481,413 -

Financial liabilities by category

At fair value At amortised cost At cost Total Payables (exchange) 3,273,011 - - 3,273,011

Payables (non-exchange) 14,290,288 --14,290,288

17,563,299 --17,563,299

31. 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 settle- ment of liabilities, contingent obligations and commitments will occur in the ordinary course of business.

136 North West Gambling Board | Annual Report 2017 - 2018 2018 2017 Restated R R

32. Events after the reporting date

The labour related case was settled on 30 May 2018 and it has been disclosed accordingly in the AFS.

33. Fruitless and wasteful expenditure

Opening balance 8,035 34,661 incurred during the year 8,983 19,045 Amount recoverable - (11,010) Amount written off (1,094) (34,661) 15,924 8,035

Fruitless and Wasteful expenditure incurred during the period of reporting resulted from the accommodation that was not utilised by the officials of the Board. Individual transactions were investigated and the results were either a write off or staff members who acted negligently were held responsible, whereby the expenses will be recovered from their salaries.

34. Irregular expenditure

Reconciliation of irregular expenditure Opening balance 10,435,850 3,244,125 Add: Irregular expenditure- relating to prior year. 1,197,525 7,191,725 Add: Irregular expenditure - relating to current year. 12,449,812 - 24,083,187 10,435,850

Irregular expenditure incurred relates to procurement of goods and services in 2015/16 and 2016/17 financial years for which payments for services continued in 2017/18 financial year. The investigation was finalised and the Account- ing Authority is still discussing the report to finalisation of the process. The request for condonation was submitted and presented to the Provincial Advisory Committee on Irregular Expenditure (PACO) on the irregular expenditure relating to audit outcome of 2016/17 financial year and the Board is awaiting the approval thereof.

35. Contingencies

Contingent liabilities

Vukani Gaming North West (PTY)LTD//NWGB: Applicant is seeking amongst others, an order setting aside the decision of the Board to impose as administrative penalty of R280 000.00 due to failure by Vukani to register its site operator as accountable institutions with FICA. The liability is estimated at R420 000.00.

Peermont Global North West (PTY) LTD//NWGB: The applicant is seeking amongst others, an order setting the deci- sion of the Board to impose a of R337 500.00 on Peermont for contravening Regulation 66 and 96 of the North West Regulation, 2002. The liability is estimated at R1 037 500.00

South Africa Limited Carousel Casino (UM28/2018): The applicant is seeking an order interdicting the Board from enforcing the 2018 license conditions pending the finalisation of the Review Proceedings at the Tribunal. Tribunal is requested to review and set aside the decision. The estimated amount is R650 000.00

Sun International (SA) Limited/NWGB & Others (M255/2017) The Applicant is being amongst others reviewing, correcting or setting aside both the decision of the Board and Review Tribunal respectively. (Free Play). The liability is estimated at RR720 000.00

Sun International (SA) - Sun City Casino (UM43/2018)): The applicant is seeking an order interdicting the Board from enforcing the 2018 license conditions pending the finalisation of the Review Proceedings at the Tribunal. Cost estimated at R500 000.00

137 North West Gambling Board | Annual Report 2017 - 2018 2018 2017 Restated R R

35. Contingencies (continued)

Sun Internatiional (SA) Limited / NWGB: The applicant is seeking amongst others, an order setting the decision of the Board to impose a fine of R1 147 500 for the contravention of Regulation 66 and 96 of the North West Regulations, 2002. Liability is estimated at R350 000.00

Vukani Gaming North West (PTY) LTD/ NWGB and others: The applicant is seeking an order interdicting the Respondents (not the Board) from permitting the use of their premises for purposes of restricted gambling activities. Costs estimated at R120 000.00

CJ Coertzee / NWGB: The applicant is seeking an order to review and set aside the decision of the Board on 21 September 2017 to revoke CJ Coertzee’s Bookmaker license. Costs estimated at R115 000.00

Ronnie Barnes / NWGB: The CCMA case was settled on 30 May 2018, however the legal cost is estimated at R393 437.49

Galaxy Bingo North West: Applicant seeks an order to set aside the decision by the Board to impose license conditions. Legal cost is estimated at R300 000.00

Central Gaming Management / NWGB (M375/2016): The applicant is seeking an order in terms of which the Board should provide written reasons for the discarding of is objection to an application by Betting World (PTY) Ltd for permission and /or license to Conduct bookmaker license. The liability is estimated at R173 015.99

Hollywood SportBook/NWGB (UM45/2017): The applicant is seeking an order interdicting the Board from taking steps against applicant, including steps aimed at or intended to prevent or impede sale and purchase of top-up vouchers. The estimate is R477 017.65.

Peermont Global North West (PTY) LTD/NWGB: The applicant is seeking an order to review and set aside the decision of the Board on 17 August 2017 to impose the new license conditions. Legal cost is estimated at R550 000

Contingent assets

Central Gaming Management (Pty) LTD/ NWGB (M176/2017): The applicant is seeking amongst others an order inter- dicting the Board from authorising Eliocube to conduct the operation of EBTs. Financial exposure is estimated at R400 000.00

Central Gaming Management (Pty) LTD/N (M212/2017): The applicant is seeking amongst others the removal, correction or setting aside of the decision of the Board to issue Request for Application in relation to Limited Payout Machines. Financial exposure is estimated at R270 000.00

Grammaticus (Pty) LTD / The Minister of SAPS (8694/2017): The applicant is seeking amongst others, an order setting aside or invalidating the search warrants issued by the Magistrate of Brits Magistrate Court, pertaining to Grammaticus busi- ness premises in Brits. Estimate is at R680 000.0

Century Loop Rite Trade / NWGB (M108/2017): The applicant made a request to the High Court for the setting aside, cor- rection, review of decision by the Board to impose and revoke its license. Estimation is R310 000.00

Sun International (SA) Limited / NWGB (M418/2017): The applicant is seeking an order to review and set aside the deci- sion of the Board on 10 June 2016 to grant Bingo Application in Rustenburg - Eliocube. Amount estimated at R500 000.00

Strauss // NWGB (M402/2017): The applicant is seeking amongst others, an order setting aside or invalidating the search warrants issued by the Magistrate of Zeerust Magistrate Court. Amount estimated at R110 000.0

Casino Association of South Africa // Minister of Trade and Industry and Four others (82407/2016): The applicant is seeking an order to review and set aside the decision of the minister of Trade and Industry on 10 June2016 to increase the number of casino licenses in the North West Province from 4 to 5. Cost estimated at R1 500 000.00

Peermont Global North West (Pty) LTD // NWGB (M420/2017): The applicant is seeking amongst others reviewing, correcting or setting aside both the decision of the view tribunal and the Board respectively. Cost is estimated at R1 200 000.00t

138 North West Gambling Board | Annual Report 2017 - 2018 2018 2017 Restated R R

36. Budgetary basis, period and scope

The budget is approved on a cash basis by functional classification. An amount of R89 590 000.00 was allocated to the entity. During adjustment process an amount of R11 780 000.00 was cut from the allocation resulting to final budget of R77 810 000.00. The budget adjustment let to the usage of the accumulated savings from investigation fees and other revenue amounting to R11 200 000.00.

37. Reconciliation between budget and statement of financial performance

Reconciliation of budget surplus/deficit with the surplus/deficit in the statement of financial performance:

Net deficit per the statement of financial performance (8,325,718) (2,042,139) Adjusted for: Non budgeted income item: operating income (2,910,061) (4,374,225) Investment income (582,913) (609,649) Operating activities 11,818,692 7,026,013 Net surplus per approved budget --

38. Statement of Comparison of Budget and Actual Amounts

The budget is approved on cash basis by functional classification. The approved budget covers the period from 01 April 2017 to 31 March 2018. The budget is prepared on a cash basis and the financial statement on accrual basis. The amounts in the financial statement were recast from accrual basis to the cash basis and reclassified by functional clas- sification to be on the same basis as the final approved budget. In terms of paragraph 13(c) of GRAP 20, the comparison of budget and actual amounts shall present separately by way of note disclosure, an explanation of material differences between the budget for which the entity is held publicly accountable and actual amounts.

Other non-tax revenue

Revenue classified as other non-tax revenue relates to recovered amounts from investigations performed on behalf of applicants and licensees. Investigations are ad-hoc and thus not budgeted for.

Compensation of Employees

The Board spend within the budget on the Compensation of employees for the period under review.

Goods and services

The allocation of goods and services was reduced from R41 964 994.00 during the adjustment budget. Subsequently the Board approved an amount of R11 200 000.00 available for use by the entity from the accumulated savings which increase budget allocation to R44 425 076.00. This was to make provision for investigation expenses and legal costs. Goods and services expenditure for the period under review is within the budget.

39. Unspent: Socio Economic Development Fund

The unspent Socio Economic Development Fund is the remaining balance of the ex-gratia payment from Sun Interna- tional. A bank account was opened and was used for this specific payment as per the settlement agreement between the Board and the Sun International. The funds in the account are used for the Socio Economic Development projects, as per the terms and conditions of the Ex-gratia payment.

139 North West Gambling Board | Annual Report 2017 - 2018 2018 2017 Restated R R 39. Unspent: Socio Economic Development Fund (continued) Socio Economic Development Fund comprises of:

Unspent conditional grants and receipts Unspent fund - Socio Economic Development 4,047,846 4,988,597

Balance at the beginning of the year 4,988,597 6,247,869 Interest received during the year - 15,817 Bank charges (1,949) (1,778) Socio Economic Development: - Bray July - (498,401) Socio Economic Development - Projects (938,802) (774,910) 4,047,846 4,988,597 40. Prior period errors

Presented below are those items contained in the statement of financial position and statement of financial perfor- mance that have been affected by prior year adjustment

Statement of Financial Position

2017 As previously Correction of Restated reported error Accounts receivable from exchange transaction 2,111,609 (796,965) 1,314,644 Leave pay provision 1,910,093 1,133 1,911,226 Property, plant and equipment 8,046,699 153,472 8,200,171 Deferred liability 136,668 20,696 157,364 Finance lease (liability) - 141,468 141,468 Accumulated surplus 8,823,279 (806,790) 8,016,489 21,028,348 (1,286,986) 19,741,362 Statement of Financial Performance

2017 As previously Correction of Restated reported error Administrative expense 38,920,712 (44,618) 38,876,094 Personnel expense 38,667,284 1,132 38,668,416 Depreciation and amortisation 1,775,200 137,641 1,912,841 Finance cost - 14,801 14,801 Operating expense 3,806,326 20,696 3,827,022 Debt impairment - 706,599 706,599 83,169,522 836,251 84,005,773 Disclosure notes (2017) Other commitments 8,919,231 8,919,231

140 North West Gambling Board | Annual Report 2017 - 2018 2018 2017 Restated R R 41. Change in estimate (2018)

Effect on the statement of Financial Performance

Decrease in depreciation 30,575 - Increase in surplus of the year (30,575) - --

141 North West Gambling Board | Annual Report 2017 - 2018 Notes

142 North West Gambling Board | Annual Report 2017 - 2018 143 North West Gambling Board | Annual Report 2017 - 2018 144 North West Gambling Board | Annual Report 2017 - 2018