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ANNUAL REPORT2013/2014

CONTACT DETAILSEASTERN CAPE GAMBLING AND BETTING BOARDQuenera Park, Quenera Drive, Beacon Bay, East London, 5205

P.O. Box 15355, Beacon Bay, East London

Tel: 043 702 8300 | Fax: 043 748 2218

www.ecgbb.co.za

PR: 295/2014 ISBN: 978-0621-43089-9

NATIONAL RESPONSIBLE GAMBLING PROGRAMME TOLL FREE LINE: 0800 006 008

ECGBB FRAUD PREVENTION TOLL FREE LINE: 0800 333 818gem

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ECGBB ANNUAL REPORT 2013/14 1

ANNUAL REPORT 2013/14

ECGBB ANNUAL REPORT 2013/142

CONTENTS1. Part A: General Information .......................................................................................................................31.1 Public Entity’s General Information ...................................................................................................................................41.2 List of Abbreviations/Acronyms .........................................................................................................................................51.3 Strategic Overview ............................................................................................................................................................61.4 Legislative Mandates ........................................................................................................................................................71.5 Organisational Structure ...................................................................................................................................................81.6 Foreword by the Chairperson ............................................................................................................................................91.7 Chief Executive Officer’s Overview .................................................................................................................................11

2. Part B: Performance Information ............................................................................................................132.1 Statement of Responsibility for Performance Information ...............................................................................................142.2 Overview of the Public Entity’s Performance ..................................................................................................................152.3 Programme Performance ................................................................................................................................................25

3. Part C: Report on Corporate Governance ..............................................................................................333.1 Introduction .....................................................................................................................................................................343.2 Portfolio Committees .......................................................................................................................................................343.3 Executive Authority .........................................................................................................................................................343.4 The Board .......................................................................................................................................................................343.5 Board Charter .................................................................................................................................................................353.6 Composition of the Board ...............................................................................................................................................363.7 Committees .....................................................................................................................................................................383.8 Remuneration of Board Members ...................................................................................................................................393.9 Audit and Risk Management ...........................................................................................................................................393.10 Internal Control ...............................................................................................................................................................423.11 Internal Audit and Audit and Risk Committees ...............................................................................................................423.12 Compliance with Laws and Regulations .........................................................................................................................433.13 Fraud and Corruption ......................................................................................................................................................433.14 Minimising Conflict of Interest .........................................................................................................................................443.15 Code of Conduct .............................................................................................................................................................443.16 Health, Safety and Environmental Issues .......................................................................................................................443.17 Social Responsibility .......................................................................................................................................................443.18 Audit and Risk Committee Report...................................................................................................................................46

4. Part D: Human Resources .......................................................................................................................474.1 Value of Human Capital in the ECGBB ...........................................................................................................................484.2 Overview of Human Resources Matters in the ECGBB ..................................................................................................484.3 Human Resources Priorities for the Year Under Review and the Impact of these Priorities ...........................................494.4 Workforce Planning and Key Strategies to Attract and Recruit a Skilled and Capable Workforce ..................................494.5 Employee Performance Management Framework ..........................................................................................................494.6 Employee Wellness Programmes ...................................................................................................................................494.7 Policy Development.........................................................................................................................................................494.8 Oversight Statistics .........................................................................................................................................................50

5. Part E: Financial Information ...................................................................................................................545.1 Statement of Responsibility ............................................................................................................................................555.2 Report of the External Auditor ........................................................................................................................................56 Statement of Financial Position .......................................................................................................................................59 Statement of Changes in Net Assets ..............................................................................................................................61 Cash Flow Statement ......................................................................................................................................................62 Statement of Comparison of Actual and Budget Amounts..............................................................................................63 Notes to the Annual Financial Statements ......................................................................................................................64


1. Part A: General Information


1. Part A: General Information1.1 Public Entity’s General Information

Registered Name of the Public Entity Eastern Cape Gambling and Betting Board

Registered Office Address

ECGBB Building Quenera Park, Quenera DriveBeacon BayEast London5241

Postal Address

PO Box 15355Beacon BayEast London 5205

Contact Telephone Numbers +27 43 702 8300

Email Address [email protected]

Website Address www.ecgbb.co.za

External Auditors

Auditor-General of South Africa, Eastern Cape Province69 Frere Road Vincent East London5217

PO Box 13252 Vincent 5217

Bankers Information

Standard Bank of South AfricaPO Box 7037 East London5200

Company Secretary

Mr L. Renene – B.Journalism, LLB Previous Company Secretary: Mrs G.P. Koyana – LLB, MBAResignation date: August 2013


1.2 List of Abbreviations/Acronyms

AFS Annual Financial Statements

AGSA Auditor-General of South Africa

APP Annual Performance Plan

BOARD Eastern Cape Gambling and Betting Board

BM Bookmaker

BSC Balance Score Card

CAS Casino

CEO Chief Executive Officer

CFO Chief Financial Officer

CSR Corporate Social Responsibility

DEDEAT Department of Economic Development, Environmental Affairs and Tourism

ECGBB Eastern Cape Gambling and Betting Board

EME Exempted Medium Enterprises

EMR Essential Minimum Requirements

FICA Financial Intelligence Centre Act

GGR Gross Gaming Revenue

HOD Head of Department

IDP Integrated Development Plan

IEC Information Education Communication

IT Information Technology

LOC Letter of Certification

LPMs Limited Payout Machines

MEC Member of the Executive Council

MOU Memorandum of Understanding

MSP Master Services Plan

MTEF Medium Term Expenditure Framework

MTREF Medium Term Revenue and Expenditure Framework

NGB National Gambling Board

NPA National Prosecuting Authority

NRGP National Responsible Gambling Programme

PBL Premier Boxing League

PFMA Public Finance Management Act

PGDP Provincial Growth and Development Plan

RFP Request For Proposal

RO Route Operator

SARGF South African Responsible Gambling Foundation

SAPS South African Police Service

SARS South African Receiver of Revenue

SED Socio-Economic Development

SITE A 3 to 5 machines site

SITE B 20 to 40 machines site

SLA Service Level Agreement

SMART Specific, Measurable, Achievable, Realistic and Time bound

TOTE Totalisator

WAN Wide Area Network


1.3 Strategic Overview

1.3.1 Vision

To be the best, most efficient and empowering gaming regulator.

1.3.2 Mission

To ensure that the Eastern Cape gaming industry is conducted honestly and competitively, with maximum contribution to society. We are, therefore, committed toward protecting the public’s interest through regulation, licensing and appropriate enforcement. We will do this through providing excellent service to our stakeholders and through facilitating socio-economic benefits to the communities within which we operate.

1.3.3 Values

Value Behavioural Demonstration

ConsultationKeeping stakeholders informed on all key issues and endeavouring to involve all stakeholders in decision-making processes where they will be affected by such decisions

Friendliness Encouraging a friendly working environment as well as working relationships

Teamwork People working together toward achieving common goals and targets

RespectThe equal treatment of staff, honesty on organisational issues, and the non-disclosure of confidential information

Service delivery The on time delivery of quality and professional service to all our stakeholders

Honesty Providing open feedback on all issues to staff and stakeholders

EmpowermentProviding training and development to employees, and engaging the services and goods from BBBEE suppliers

Community development Giving back to our communities

1.3.4 Strategic Outcome-Orientated Goals

Goal 1Strategic outcome-oriented goal Excellent services to stakeholders

Goal statement To provide excellent services to our stakeholders

Goal 2Strategic outcome-oriented goal International regulatory system

Goal statement To institutionalise an international competitive regulatory system

Goal 3

Strategic outcome-oriented goalOversight arrangements and socio-economic development commitments

Goal statementTo establish sound institutional oversight arrangements and systems to administer socio-economic development commitments that arise from licence conditions

Goal 4

Strategic outcome-oriented goal Organising and recognition of employees

Goal statementTo develop a high performance, value-based organisation that recognises the ECGBB and its employees as its most important assets

Goal 5

Strategic outcome-oriented goalRevenue collection for the provincial fiscus and socio-economic benefits

Goal statementTo optimise revenue collection for the socio-economic benefits of underprivileged communities


1.4 Legislative Mandates

1.4.1 Schedule in terms of the PFMA

The ECGBB falls under Schedule 3, Part C in terms of the Public Finance Management Act No. 1 of 1999.

1.4.2 Specific Constitutional and other Legislative, Functional and Policy Mandates

1.4.2.1 Gambling and Betting Act, 1997 (Eastern Cape) (Act No. 5 of 1997)

1.4.1.2 National Gambling Act, 2008 (Act No. 10 of 2008)

1.4.1.3 Promotion of Access to Information Act, 2000 (Act No. 2 of 2000)

1.4.1.4 Public Finance Management Act (PFMA), Act No. 1 of 1999 and Treasury Regulations

1.4.1.5 Employment Equity Act, 1998 (Act No. 5 of 1998)

1.4.1.6 Skills Development Levies Act, 1999 (Act No. 9 of 1999)

1.4.1.7 Basic Conditions of Employment Act, 1997 (Act No. 75 of 1997)

1.4.1.8 Treasury Framework for Strategic Plan and Annual Performance Plans

1.4.1.9 Policy Framework for the Government-wide Monitoring and Evaluation System


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1.6 Foreword by the Chairperson

In the Eastern Cape, gambling is about people. As we award licences, regulate and enable the gambling industry to operate legally, we are focused on empowering entrepreneurs, creating jobs and growing the economy. The result of this must be that parents are enabled to put food on the table; that Children believe in a future full of hope – in short, to keep the dream of a fair and equitable South Africa, which is ‘alive with posibilities’.This is not only something we are passionate about – as is reflected in our mission statement, we are committed toward providing excellent service to our stakeholders and to facilitate socio-economic benefits for the communities within which we operate. Our job as Board members of the ECGBB is, therefore, to build a gambling industry with heart. I believe this Annual Report will show that we are doing our jobs with passion and in line with the terms of the Gambling and Betting Act, No. 5 of 1997 (Eastern Cape) (“the Act”).

People first

Over the past five years, especially during the past financial year (2013/2014), the Board has increasingly and strategically committed itself towards putting people (including service providers, punters and the public) first.

In our goal of building a humane industry around gambling as entertainment, the Board focused its energies on a range of interventions. We started by cleaning our own house. Following an extensive employee satisfaction survey, a five-year human resources strategy was put in place in 2013 to help the Board become an employer of choice.

In the past financial year, this strategy was expanded by doing a customer satisfaction survey amongst all gambling service providers during which we simply asked them to rate the interaction they had with our staff. We passed with flying colours! Empowering our staff clearly had an extremely positive ripple effect on the industry outside our walls.

The Board also realised the need for all gambling stakeholders to foster a better understanding of and appreciation for our regulatory requirements. A number of sessions were hosted where stakeholders learned more about why the Board exists and what its functions are. This helped us to build positive relationships in places where the Board – and not illegal or irresponsible gambling – was previously seen as the problem.

Dealing with irresponsible and illegal gambling

Until a few years ago, it was shocking to drive through the smallest of towns and identify illegal gambling operations. It was, therefore, imperative to start engaging with gambling consumers and the public at large around the difference between legal and illegal gambling activities, as well as to explain how illegal gambling can negatively impact the community financially.

We engaged in face-to-face interactions with the public and punters. As we did so, it was interesting to discover that many owners of illegal gambling machines did not even realise they were breaking the law!

Illegal gambling is popular to punters because they say the chances of winning there are higher. The operators of illegal gambling establishments can afford to pay out more than the legal ones as they are not regulated. They do not pay any taxes and often use cheap labour.

Hence the Board started strengthening its programmes in order to protect gamblers and educate the public on illegal gambling as it is unscrupulous and unfair – both to consumers and law-abiding licensees.

We are very proud to say that our Responsible Gambling Programme was the first in the country. In the last financial year alone, it reached 12.9 million people with the message of responsible gambling.

It follows, then, that since we have our education programmes in place, we needed to enhance investigations, intelligence gathering, and also strengthening our knowledge and understanding of the criminal justice cluster. The result is that we are currently in a position to effectively deal with illegal gambling activities in the province.

Sharing the benefit

It is gratifying to see our mission of broadening access to the socio-economic benefits of gaming in the communities within which we operate, maturing. We want ordinary people to benefit from what we do.

I am pleased with the strides being made in implementing a socio-economic development programme that is intended to contribute toward the anti-poverty strategy of the Eastern Cape Province. So far minimal investments have been made by adding value to existing programmes that support the youth, women and the elderly in the province.


We have strengthened our partnership with the Eastern Cape Department of Social Development and Special Programmes to ensure that appropriate systems for referring problem gamblers are developed and utilised.

Sharing the benefit is not just about donating money to worthy causes. It is, very importantly, also about giving small and local entrepreneurs access to the industry. We made a strategic decision to create lower levels of required investment when we award licences for Bingo and Limited Payout Machines (LPMs). The result is that investors can now become part of the industry for an investment as low as R180 000.

Our Bingo rollout was highly successful, and we were the first province in the country where an LPM operator reached the milestone of 1 000 machines. This is testimony to the way we open the doors for entrepreneurs and support them in making the economy grow.

Supporting local culture

In what promises to become a forward looking and innovative strategy, the ECGBB recently completed research on the state of traditional horse racing in the Eastern Cape. The research found that there was a need to enhance this vibrant cultural practice.

Currently we are engaging with a wide range of stakeholders from diverse fields – from Traditional Affairs to Economic Affairs, the tourism sector and beyond. We hope to finalise a policy framework by the end of the current financial year.

Traditional horse racing has the potential to not only draw thousands of spectators, but to also stimulate cultural tourism and create down-stream economic opportunities. In the end, this is what we want gambling to be all about.

On behalf of the Board I wish to express our sincere gratitude to the Provincial Government for its support during the course of the financial year. I would also like to thank management and our staff for their fine performance in helping the organisation to achieve its goals.

ADVOCATE NCUMISA MAYOSICHAIRPERSON OF THE ECGBB ANDACCOUNTING AUTHORITY


1.7. Chief Executive Officer’s Overview

The ECGBB has a two-fold regulatory function. We regulate and control the Eastern Cape’s gambling industry, providing opportunities to those who wish to invest their capital and energy, and ensuring that such investors yield good returns within a fair and competitive advantage which the Board provides.

On the other hand we consistently strengthen our Organisation through strategic, proactive measures, such as best practices, employee training, internal controls, and benchmarking with other regulatory organisations.

Setting and maintaining high standards

I am proud to report that the 2013/2014 financial year bears testimony that we are building a world-class gambling industry in the Eastern Cape.

In terms of gambling revenue, we consistently come fourth after the larger and more developed provinces of Gauteng, KwaZulu-Natal and the Western Cape. It is important to note that our growth rate is on par with theirs, partly due to the quality of our casino operations. Our industry is smaller, but no less vigorous!

This report shows that gambling in the Eastern Cape grew by 6.7%, year-on-year. The figure for the Western Cape for the same period is 3%, while the industry in KwaZulu-Natal grew by 4.2%. Gauteng has not yet released its figures for 2013/2014.

In the year under review, we have contributed R124 million in taxes to the provincial fiscus – exceeding our target of R119 million. Five years ago, this contribution totalled only R89 million.

Over the last seven years we have contributed a total of R763 million through the effective collection of gaming taxes.

The total gross gaming revenue (GGR) has grown from R931.9 million in 2009, to roughly R1.5 billion in the last financial year. GGR for 2013 was R1.4 billion.

Tax revenues come from licensees in the form of casinos, limited payout machines, totalisators, Bingos as well as bookmakers.

The improved collections were partly due to growth in the industry itself and also as a result of effective and improved regulation. Of the taxes collected, a total of R95.3 million were from the province’s four casinos, R19 million from limited payout machines, and R7.3 million from bookmakers and totalisators.

Milestones of 2013/2014

Most importantly, the ECGBB has received its 14th unqualified audit opinion on its financial statements, with 100% achievement of predetermined objectives and targets. We are particularly proud of this achievement as it is the fruit of an organisation that has united around a common purpose of building an industry that can compete with the world.

Amongst others, we achieved the following targets in the past financial year:

Twenty-four (24) applications for various gambling licences were investigated and public hearings were conducted to •ensure transparency in the process of awarding such licences to suitable and qualifying participants. Thirteen (13) gambling licences were issued by the Board to qualifying applicants. These licences included seven (7) Limited Payout Machines (LPMs) for Type B and six (6) Bingo licences.

Monthly Gross Gaming Revenue from only three Bingo venues reached R5.6 million within six months, three of which •fall in the year under review. Six (6) licences have been awarded, and another nine (9) applications are currently under consideration. Every Bingo venue creates an average of 70 employment opportunities. The six Bingo licences that have already been issued will, therefore, create 420 jobs.

Two gambling economic opportunity awareness programmes were conducted in order to provide potential investors with •all the necessary information on the processes of applying for gambling licences. We are the only province where these opportunities are made accessible to small entrepreneurs, with the lowest range of investments being R180 000 for LPMs and R2 million for Bingo.

We have rolled out responsible gambling campaigns in the province using several platforms, including print and electronic •media, billboards, as well as events such as the PBL and the Legends Marathon. Ten campaigns were hosted successfully during the reporting period, reaching 12.9 million people.


To protect the public’s interest as well as licensed operators against unfair and illegal competition, fifty-nine (59) compliance •audits were conducted at a number of licensed operators within the province. Furthermore, thirty-six (36) revenue audits were conducted to verify the completeness and accuracy of gaming revenue that was reported by all the operators in the province. Furthermore, eighty-eight (88) inspections were done at a number of licensed operators within the province in line with the requirements of the Act.

While working closely with the province’s law enforcement agencies, particularly in the more rural areas of the province, five •sweeps were conducted during the reporting period against an increasing number of illegal gambling activities, especially internet-based gambling and the utilisation of internet cafés.

In assessing the impact of our gambling regulation and the awarding of licences to operators, we conducted a Gambling •Prevalence Research Survey for the first time, which was administered by the Eastern Cape Provincial Government Administration Head Office. The report has since been released and will be made available to the Honourable MEC for Economic Development, who will present it to the Honourable Premier and Cabinet for the provision of information and the implementation of some of the recommendations.

In its attempt to contribute toward the social and economic development of the country, the Board has come to realise •that many graduates remain unemployed due to a lack of work experience. As a result, we now run an annual Internship Programme, providing unemployed graduates with the opportunity to acquire practical and relevant work experience, rendering them better equipped and more employable once they are released back into the job market. It also goes without saying that the ECGBB’s Employment Equity Profile has been aligned to that of the National Legislative Framework.

The way forward

During the past financial year (2013/2014), the Board committed itself toward pursuing a strategic thrust – and many of the success stories listed above are the result of that kind of strategic thinking.

In order to continue on this trajectory of growth, we will keep on doing what we do best. We will continue to strengthen our research capacity, building a strong foundation of valid and reliable empirical research that will inform any policy or regulatory reform within the provincial gambling space.

We will also continue to enhance the Organisation by conducting regular audits that will ensure the revenue to be collected and submitted to the provincial fiscus is correct and that gambling machines are not easily manipulated. We also want to ensure that bid commitments made by the industry are fulfilled.

Environmental audits are to be performed. Developing and refining our responsibilities will help contribute meaningfully toward the social milieu of the Eastern Cape Province.

Lastly, for us to keep up the high standards we have set for ourselves, we need to prioritise our Human Resources Management Strategy in order to help us become an employer of choice where employees are engaged and positively contribute toward the Organisation’s objectives.

The mission of the ECGBB is to broaden access to the gaming sector’s socio-economic benefits for the communities within which we operate. We will, therefore, continue to improve and enhance our communication and marketing platforms to reach as many individuals as possible and to communicate and profile the work of the ECGBB.

The Board has provided me with solid and astute leadership and support. This has enabled the Organisation to meet its strategic imperatives and targets set for the reporting period.

As the Accounting Officer I wish to express my sincere appreciation to the Board of Directors, the Chairperson of the Board, the Honourable MEC and Management of the DEDEAT for their continued guidance, support and commitment to the regulation of the gambling industry and the protection of the people in our province.

I further wish to express my sincere appreciation to all our licensees, Management and staff of the ECGBB for their sterling support and commitment to the regulation of the gambling industry and the protection of the people n our province.

Finally, to make this report more accessible to the broader public, we have included short summaries (“In short”) throughout the document. Important aspects are highlighted and put in context in these sections.

MR. RM ZWANECHIEF EXECUTIVE AND ACCOUNTING OFFICER


2. Part B: Performance Information


2. Part B: Performance Information2.1 Statement of Responsibility for Performance Information

The Chief Executive Officer is responsible for the preparation of the public entity’s performance information and for the judgements made in this information.

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

In my opinion, the performance information fairly reflects the operations of the public entity for the financial year ended 31 March 2014.

NAME: RM ZWANE (MR)CHIEF EXECUTIVE AND ACCOUNTING OFFICERDATE: 31/05/2014


2.2 Overview of the Public Entity’s Performance

2.2.1 Strategic Outcome-Oriented Goals

OVERALL PERFORMANCE

VOTED FUNDS

GRANT FUNDING2009/10(R’000)

2010/11(R’000)

2011/12(R’000)

2012/13(R’000)

2013/14(R’000)

TOTAL(R’000)

VOTED FUNDS 22 017 23 338 31 187 35 686 42 687 154 915

LESS REPAID - - - - - -

TOTAL 22 017 23 338 31 187 35 686 42 687 154 915

AIM OF VOTE

The ECGBB oversees all gambling and betting activities in the province and matters incidental thereto, as contemplated in the Act. It advises the responsible MEC for DEDEAT on gambling matters and exercises certain further powers contemplated in the Act. The Aims of the ECGBB include:

Undertaking investigations and licensing of applicants.•

Collection of gambling taxes and fees. •

Ensuring compliance with legislation.•

Combating illegal gambling. •

Promoting responsible gambling.•

It is the responsibility of the ECGBB to ensure that an accountable and credible legal gaming industry exists in the province and that there is compliance with internationally recognised gambling and regulatory standards.

STRATEGIC GOALS

1) To provide excellent services to our stakeholders.

2) To institutionalise an international competitive regulatory system.

3) To establish sound institutional oversight arrangements and systems to administer socio-economic development commitments that arise from licence conditions.

4) To develop a high-performance, value-based organisation that recognises the ECGBB and its employees as its most important assets.

5) To optimise revenue collection for the socio-economic benefit of underprivileged communities.

Goal 1 Goal Statement To provide excellent services to our stakeholders.

Progress made by the ECGBB:In short: Operators in the gambling industry are satisfied with the levels of service they receive from employees of the

ECGBB.a) The ECGBB has conducted stakeholder engagement sessions with internal and external stakeholders to communicate

the strategic imperatives of the Organisation, as informed by the developed Stakeholder Management Strategy.

b) A performance survey was conducted by the ECGBB to assess the manner in which its employees conduct themselves when rendering regulatory services. The outcome of the survey was generally positive as the licensed operators are satisfied with the manner in which the ECGBB conducts itself.


Goal 2 Goal Statement To institutionalise an international competitive regulatory system.

Progress made by the ECGBB:

In short: The Board has engaged with potential investors in a professional manner, and according to protocol, when considering applications for gambling licences. The public can, therefore, rest assured that all operations are above board.

a) The ECGBB followed an international best practise for issuing licences which includes:

• RequestforproposalsregardingdifferenttypesoflicencesthattheBoardrollsoutatdifferentperiodswerepublishedwidely in the Eastern Cape Province using mainstream print media.

• HostedBiddersConferences tohighlight the requirementsof theRFP,drawattention to theEMRs,explain theconsequences of non-compliance and the evaluation process, and also to answer written questions put to the Board by prospective licensees. Furthermore, applicants were allowed opportunity to raise issues from the floor and to allow the Board to receive input from interested parties.

• Facilitatedanumberofpublichearingstoensuretransparencybeforelicencesareawarded.

• EvaluationprocesswasconductedbytheBoardmembersforallapplications.

Goal 3 Goal StatementTo establish sound institutional oversight arrangements and systems to administer socio-economic development commitments that arise from casino licence conditions.


In short: The ECGBB is not a rule unto itself – it has created safety mechanisms to measure and regulate its own performance. Besides building trust with operators and customers, this means that the ECGBB is its own coach, so to speak, and sets high, internationally accepted standards.

a) A number of structures and committees were established by the Board to facilitate oversight performance of the ECGBB as part of institutional oversight responsibilities. These are functional and a year schedule was approved by the Board to regulate these sessions.

b) An Organisational Performance Reporting System has been institutionalised to ensure that Management accounts in terms of its performance as well as financial prudence. Management reports to the Board on a quarterly basis regarding organisational performance.

Goal 4 Goal StatementTo develop a high performance, value-based organisation that recognises the ECGBB and its employees as its most important assets.


In short: People come first. The Board treasures its employees and wants employees to be better equipped if they leave its employment, compared to when they arrived. It is making a contribution to deliver graduates into the marketplace who not only have qualifications, but honed skills. A wide range of policies have been put in place to ensure that employees are both developed and retained. See Section 4 for detailed information.

a) The ECGBB has developed a Human Resources Management Strategy that positions its people as valued assets, providing a sustained, competitive advantage within the rapidly changing business environment.

b) Three employee wellness sessions were held on various wellness issues.

c) A total of 34 employees were provided with training opportunities.

Goal 5 Goal StatementTo optimise revenue collection for the socio-economic benefits of underprivileged communities.


In short: The Board is running a tight ship, because more income means more benefit to the lives of ordinary citizens. Percentage wise, growth in the gambling industry has also consistently kept up with the performance of stronger provinces like Gauteng and the Western Cape. The Board has literally outperformed itself.

a) In the 2013/2014 financial year, the ECGBB collected R124.9 million against a planned target of R119 million.

b) The ECGBB contributed R241,153 towards socio-economic development opportunities in areas that have been identified as the most impoverished in the Eastern Cape Province.


2.2.2 An Overview of the Service Delivery Environment

Context within which the ECGBB operated in the 2013/2014 Financial Year

In short: During the past year, the actions of the ECGBB were clearly guided by very specific, strategic decisions. This enabled the Board to provide the industry with focused leadership.

During the 2013/2014 financial year, the following context informed the operations and activities of the ECGBB:

Strategic engagements with provincial stakeholders for effective regulation.•

Enhanced understanding of the gambling industry, informing risk assessments.•

Informing consumers and the public about legal and illegal gambling activities, and implementing a gambling consumer •education strategy.

Enhancing investigations and intelligence gathering, thereby strengthening the relationship with the Criminal Justice •Cluster in the province.

Developing and refining the Board’s responsibility to contribute meaningfully to the social milieu of the Eastern Cape •Province.

Enhanced r3esearch and development functions.•

ECGBB’s Overall Performance

In short: When the Board sets a strategic target, it sticks to it and delivers since it has procedures in place to evaluate and correct itself. A wide range of programmes – from hosting South Africa’s first Responsible Gambling Programme, to the transparent awarding of licences and performance audits – were envisioned and implemented as a testimony to the well-oiled machine that the ECGBB has become. This is confirmed by the unqualified audit opinion received for the 2013 /2014 financial year.

The overall performance of the ECGBB and its key outputs, particularly relating to services rendered directly to the public during the reporting period, can be summarised as follows:

Ten awareness and responsible gambling campaigns were hosted successfully during the reporting period.•

A total of 12.9 million people were reached through responsible gambling campaigns conducted.•

An amount of R241,153 was made available to a number of organisations in the Eastern Cape Province during the •reporting period. This was done in order to meet the social responsibility of the ECGBB as guided by its Socio-Economic Development Policy and the Eastern Cape Anti-Poverty Strategy, championed by the Eastern Cape Department of Social Development and Special Programme.

Two gambling economic opportunity awareness programmes were conducted during the reporting period. •

A Gambling Prevalence Research Survey in the Public Service in the Eastern Cape Head Office was conducted during •the year.

The ECGBB provided regulatory services to the industry during the reporting period. The following regulatory services were conducted successfully:

Twenty-four (24) licence applications for various gambling licences were investigated and public hearings were •conducted to ensure transparency in the process of awarding licences to suitable and qualifying participants.

Thirteen (13) gambling licences were issued by the Board to qualifying applicants. These licences included Type B and •Bingo licences.

Fifty-nine (59) compliance audits were conducted at a number of licensees within the province.•

Thirty-six (36) revenue audits were conducted in order to verify the completeness and accuracy of gaming revenue •reported by all the operators in the province.

Eighty-eight (88) inspections were conducted at a number of licensees within the province, in line with the requirements •of the ECGBB Act.

One survey on the performance of the ECGBB to licensees was conducted. •

Challenges encountered and corrective steps

In short: The Board has identified a challenge in the awarding of the casino licence in Zone 4, but is currently addressing the matter.


The table below lists the problems or challenges encountered by the ECGBB when the relevant services were provided during the reporting period, as well as the corrective steps that were/are to be taken in dealing with these problems.

BUDGET SUB-PROGRAMME

PERFORMANCE INDICATOR

CHALLENGES OR PROBLEMS ENCOUNTERED

CORRECTIVE STEPS UNDERTAKEN / TO BE TAKEN

Legal services and Board Secretariat

Number of licences issued

An application for a casino licence in Zone 4 was rejected as a result of non-compliance with the requirements of the Casino RFP.

The non-provision of this licence was not the ECGBB’s fault, but rather due to legal requirements which the applicant did not address in the application.

A process is currently underway to re-issue the Zone 4 Casino RFP.

Description of Significant Developments

Below are significant developments – external to the ECGBB – that took place during the reporting period which have impacted on either the demand or ability of the ECGBB to deliver its services.

Significant Developments within the Corporate Services Management and Administration Budget Programme 1

In short: The Board’s success results in higher expenditure as it needs to evaluate applications and ensure compliance to the law.

PERFORMANCE INDICATOR

SIGNIFICANT DEVELOPMENTS

NAME OF THE SIGNIFICANT DEVELOPMENT IN 2013/2014

IMPACT ON THE DEMAND FOR THE ECGBB’S SERVICES

IMPACT ON THE ECGBB’S ABILITY TO DELIVER ITS SERVICES

YES NO

STRATEGIC MANAGEMENT SERVICES

LEGAL SERVICES AND BOARD SECRETARIAT

Number of licences issued

XIssuing of gambling licences

The frequency of meetings had an overall effect on the Board’s fees and budget.

The more the ECGBB issues licences to successful applicants, the more the Organisation increases its processes and capacity to inspect and audit in order to ensure that conditions of licences are adhered to and complied with by the new operators.

2.2.3 Overview of the Organisational Environment

In short: There is a concern that a reduction in the ECGBB’s budget allocation by the Provincial Government will negatively influence the Board’s ability to deliver on its mandate. The Board’s effectiveness means that there is a higher demand for staff and programmes in order for it to fulfil its role in the industry. A smaller budget will make this very difficult.

In preparing the 2013/2014 -15/16 APP, the ECGBB identified a number of organisational development weaknesses to be addressed in the next three to five years. These were characterised in terms of the following:

Reduction of the budget grant allocation by the Department of Economic Development, Environmental Affairs and Tourism •and Eastern Cape Provincial Treasury during the 2013/2014 financial year.

In mitigating the above matters, it is important to report the following:


The reduction of the budget grant allocation will impact negatively on the achievement of the ECGBB’s mandate. Therefore, •budget must be allocated according to the Board’s three budget programmes, the planned targets informed by the statutory requirements, as well as other prescripts and funding responsibilities.

2.2.4 Key Policy Developments and Legislative Changes

There were no major changes to relevant policies or legislation within the ECGBB during the 2013/2014 financial year.

2.2.5 Summary of Revenue Collection

In short: The Eastern Cape hosts the fourth-largest gambling industry in the country after Gauteng, the Western Cape and KwaZulu-Natal. What the numbers below actually do not show, is that gambling in the Eastern Cape grew by 7,2%, year-on-year. The figure for the Western Cape for the same period is 3%, while the industry in KwaZulu-Natal grew by 4.4%. Gauteng has not yet released its figures for 2013/2014.

SUMMARY OF REVENUE IN THE LAST FIVE YEARS

GAMING PERFORMANCE

REVENUE TO FISCUS2009/10 2010/11 2011/12 2012/13 2013/14 TOTAL

R’000 R’000 R’000 R’000 R’000 R’000

Casino 70 595 73 768 78 887 89 044 95 283 407 577

Bookmakers taxes 2 370 2 272 2 851 3 439 3 862 14 794

Totalisator taxes 4 079 3 995 3 987 3 613 3 479 19 153

Bingo - - - - 421 421

LPM 10 356 10 187 13 711 16 130 18 984 69 368

Total taxes 87 400 90 222 99 436 112 226 122 029 511 313

Fees and interest 1 630 1 965 2 502 2 646 2 884 11 627

Exclusivity fee - 42 738 20 000 - - 62 738

TOTAL TO FISCUS 89 030 134 925 121 938 114 872 124 913 585 678

OWN REVENUE2009/10 2010/11 2011/12 2012/13 2013/14 TOTAL

R’000 R’000 R’000 R’000 R’000 R’000

Application fee 221 997 566 788 745 3 317

Administration fee 1 946 2 233 2 830 2 542 2 845 12 396

TOTAL OWN REVENUE 2 167 3 230 3 396 3 330 3 590 15 713

Gambling and betting taxes, fees and interest collected during the financial year under review totalled R124.9 million (2012/2013: R114.9 million). Full details are contained in the Annual Financial Statements.

The total GGR generated in the financial year under review was R1.5 billion (2012/2013: R1.4 billion). Full details are contained in the Annual Financial Statements.

The following is a graphical depiction of the gaming performance per gaming category:


The following is a graphical depiction of the gaming performance per gaming category:

‘Revenue and Tax Statistics 2013/14 vs. 2012/2013

Gross Gaming Revenue Generated by Casinos

Millions

R 1.200

R 1.000

R 800

R 600

R 400

R 200

R 0

2013-2014R 1.171.0m

2012-2013R 1.109.2m

Gambling Taxes Collected from CasinosMillions

R 100

R 90

R 80

R 70

R 60

R 50

R 40

R 30

R 20

R 10

R 0

2013-2014R 95.3m

2012-2013R 89.0m

Gross Gaming Revenue Generated by Racing

Millions

R 180

R160

R140

R 120

R 100

R 80

R 60

R 40

R 20

R 0

2013-2014R 163.4m

2012-2013R 150.8m


Betting Taxes Collected from Racing

Millions

R 8

R 7

R 6

R 5

R 4

R 3

R 2

R 1

R 0

2013-2014R 7.3m

2012-2013R 7.1m

Gross Gaming Revenue Generated by the LPM Industry

Millions

R 190

R 185

R 180

R 175

R 170

R 165

R 160

R 155

R 150

R 145

2013-2014R 189.8m

2012-2013R 161.3m

Gambling Taxes fro LPM’s

Millions

R 19

R 18.5

R 18

R 17.5

R 17

R 16.5

R 16

R 15.5

R 15

R 14.5

2013-2014R 19.0m

2012-2013R 16.1m


Gross Gaming Revenue Generated by Total Industry

Millions

R 1.600

R 1.400

R 1.200

R 1.000

R 800

R 600

R 400

R 200

R 0

2013-2014R 1528.5m

2012-2013R 1421.3m

Gambling and Betting Taxes Collected from Total industry

Millions

R 140

R 120

R 100

R 80

R 70

R 60

R 40

R 20

R 0

2013-2014R 122.0m

2012-2013R 112.2m


Distribution of Gambling and Betting Takings: 2013/14 Financial Year

Distribution of Takings from Casino Gaming Tables

Casino Revenue 16.42%

Gambling Taxes 1.68%

VAT 2.53%

Return to Public 79.36%

Distribution of Takings from Casino Gaming Machines

Casino Revenue 4.37%


VAT 0.67%


Distribution of Takings from Racing Industry

Racing Industry Revenue 45.33%


VAT 6.69%


Distribution of Takings from LMP Industry

LPM Industry Revenue 7.01%


VAT 1.11%



Sum

mar

y of

act

ual R

even

ue c

olle

cted

aga

inst

Bud

get

In s

ho

rt:

The

EC

GB

B h

as s

how

n th

at it

is a

ble

to c

ompl

ete

the

circ

le –

fro

m p

lann

ing

thro

ugh

to im

plem

enta

tion

and

eval

uatio

n. T

his

capa

city

has

ena

bled

the

Boa

rd t

o co

nsis

tent

ly

colle

ct m

ore

reve

nue

than

it b

udge

ted

for.

Sour

ce o

f Rev

enue

2013

/201

420

12/2

013

Budg

et A

mou

ntR

’000

Actu

al A

mou

nt

Colle

cted

R’0

00(O

ver)

/Und

er

Colle

ctio

n R

’000

Budg

et A

mou

ntR

’000

Actu

al A

mou

nt

Colle

cted

R’0

00(O

ver)

/Und

er

Colle

ctio

n R

’000

Cas

ino

89 7

3295

283

(5 5

51)

86 5

9989

047

(2 4

48)

Rou

te o

pera

tors

19 8

7418

984

890

13 4

1616

130

(2 7

14)

Tota

lisat

or3

453

3 47

9(2

6)5

307

3 61

21

695

Boo

kmak

ers

3 44

43

862

(418

)2

592

3 43

9(8

47)

Ann

ual l

icen

ce a

nd

regi

stra

tion

2 18

72

522

(335

)1

833

2 22

6(3

93)

Ban

k in

tere

st30

836

1(5

3)27

041

9(1

49)

Bin

go-

422

(422

)-

--

119

000

124

913

(5 9

13)

110

017

114

873

(4 8

56)

Cas

ino

fees

col

lect

ed e

xcee

ded

the

budg

et b

y R

5.5

mill

ion.

Boa

rdw

alk,

Hem

ingw

ay’s

and

Wild

Coa

st S

un c

ompl

eted

thei

r m

ajor

cap

ital r

evam

p. T

his

resu

lted

in a

n in

crea

se in

GG

R. T

he

gam

blin

g ta

xes

are

paid

ove

r to

DE

DE

AT.

2.2.

6 Su

mm

ary

of P

aym

ents

by

Prog

ram

me

ACTU

AL V

S. B

UD

GET

EXP

END

ITU

RE

BY P

RO

GR

AMM

E

In s

ho

rt:

The

dow

nsid

e to

the

Boa

rd’s

abi

lity

to c

olle

ct h

ighe

r lev

els

of re

venu

e is

that

mor

e in

com

e m

eans

mor

e re

spon

sibi

lity,

mea

ns m

ore

expe

nditu

re. T

his

is th

e re

ason

why

the

Boa

rd

has

gone

ove

r bu

dget

in it

s C

orpo

rate

Man

agem

ent a

nd A

dmin

istr

atio

n, a

nd R

esea

rch

and

Dev

elop

men

t.

2013

/201

420

12/2

013

Prog

ram

me

Nam

eBu

dget

R’0

00Ac

tual

Exp

endi

ture

R

’000

Ove

r/(U

nder

) Ex

pend

iture

R’0

00Bu

dget

R’0

00Ac

tual

Exp

endi

ture

R

’000

Ove

r/(U

nder

) Ex

pend

iture

R’0

00

Cor

pora

te S

ervi

ce M

anag

emen

t and

A

dmin

istr

atio

n

25

429

29 7

65

4

336

26

575

3

0 11

9

3

543

Gam

blin

g R

egul

atio

n an

d C

onsu

mer

Pro

tect

ion

2

3 48

1

20

890

(2

591)

16

617

1

5 30

6

(1

311

)

Res

earc

h an

d D

evel

opm

ent

200

719

519

841

8

64

24

Tota

l

49

111

51 3

74

2 2

64 4

4 03

3

46

289

2

256


Corporate Service Management and Administration overspent on the following areas during the financial year under review:

External audit fees.•

Printing and stationary. •

Water, electricity, and property rates and taxes. •

CAPEX.•

Gambling Regulation and Consumer Protection overspent on hearing and evaluation costs. This was due to the extensive process involved in the bingo licensing process. These costs were recovered from the investigations deposits.

Research and Development overspent on its budget as a result of research work and surveys conducted during the year. Furthermore, the over-expenditure was financed by virements from Gambling Regulation and Consumer Protection Programme.

2.3. Programme Performance

2.3.1 Budget Programme 1: Corporate Services Management and Administration

2.3.1.1 Purpose of the Programme

The purpose of this programme is to provide corporate administrative and management support services to the Organisation, including the Board of Directors, in ensuring that the mandate of the ECGBB is executed and achieved accordingly.

2.3.1.2 Sub-Programmes

Office of the Chief Executive Officer•

Strategic Management Services•

Legal Services and Board Secretariat•

Financial Management•

Human Resources Management and Development•

Communication and Marketing•

Designated Programmes and Vulnerable Groups•

Socio-Economic Development•

Information Management and Technology•

2.3.1.3 Strategic Objectives

To deliver a quality customer-oriented service to the public, licensees and other stakeholders.•

To maintain and review effective risk management systems.•

To ensure that only suitable, qualified applicants are awarded licences and that licence holders optimise revenue growth •and measurable contributions for socio-economic development.

To influence and maintain a regulatory framework for the gambling industry and provide appropriate advice to the responsible •executive authority.

To ensure accurate budgeting, sound cashflow management, and preparation of management accounts and AFS in •accordance with relevant standards and legislation.

To review and update Human Resources policies.•

To ensure adequately trained and a resourced staffing structure in order to deliver quality service.•

To implement a balanced score card and integrated performance management system capable of monitoring and evaluating •performance at shareholder, Board and operational levels.

To ensure optimal information and communication systems.•

To ensure that the Act, regulations and rules meet the needs of the province and developments within the industry.•

To review, maintain and update secure and appropriate Information Technology systems.•


Key

Per

form

ance

Mea

sure

s an

d t

hei

r Tar

get

s an

d a

ctu

al R

esu

lts

for

the

2013

/201

4 F

inan

cial

Yea

r

In s

ho

rt:

The

Boa

rd e

xcee

ded

its ta

rget

for

the

num

ber

of B

ingo

lice

nces

it s

et o

ut to

aw

ard.

The

goo

d ne

ws

behi

nd th

e ob

viou

s bu

dget

ary

impl

icat

ions

is th

at m

ore

“Typ

e B

”-lic

ence

s w

ere

awar

ded.

Thi

s is

the

ent

ry-le

vel t

hat

was

cre

ated

by

the

Boa

rd fo

r sm

alle

r en

trep

rene

urs

who

nee

d to

inve

st o

nly

R18

0 00

0. T

he fa

ct t

hat

the

Boa

rd w

as a

ble

to d

eliv

er

mor

e lic

ence

s si

mpl

y m

eans

gre

ater

eco

nom

ic im

pact

on

a lo

cal,

com

mun

ity le

vel.

In o

ther

wor

ds, n

ot o

nly

the

big

play

ers

get t

o be

nefit

.

SUB-

PRO

GR

AMM

E: L

EGAL

SER

VICE

S AN

D B

OAR

D S

ECR

ETAR

IAT

Str

ateg

ic O

bje

ctiv

eTo

ens

ure

that

onl

y su

itabl

e, q

ualifi

ed a

pplic

ants

are

aw

arde

d lic

ence

s an

d th

at li

cenc

e ho

lder

s op

timis

e re

venu

e gr

owth

and

mea

sura

ble

cont

ribut

ions

to s

ocio

-eco

nom

ic

•de

velo

pmen

t.To

influ

ence

and

mai

ntai

n a

regu

lato

ry fr

amew

ork

for

the

gam

blin

g in

dust

ry a

nd p

rovi

de a

ppro

pria

te a

dvic

e to

the

resp

onsi

ble

ME

C.

• Per

form

ance

Ind

icat

or

Act

ual

A

chie

vem

ent

2012

/201

3 (B

ase

Lin

e In

form

atio

n)

Pla

nn

ed T

arg

et20

13/2

014

Act

ual

A

chie

vem

ent

2013

/201

4

Var

ian

ce f

rom

20

12/2

013

to

2013

/201

4

Dev

iati

on

fro

m

pla

nn

ed t

arg

et

for

2013

/201

4C

om

men

t o

n D

evia

tio

ns

Num

ber

of li

cenc

es is

sued

858

13-7

2+

5

In 2

013/

2014

, th

e E

CG

BB

iss

ued

mor

e lic

ence

s fo

r B

ingo

and

Typ

e B

tha

n w

as

antic

ipat

ed.

The

ad

ditio

nal

budg

et

that

w

as u

tilis

ed f

or a

chie

ving

the

tar

gets

is

reco

vera

ble

from

the

inve

stig

atio

n de

posi

t pa

id b

y th

e ap

plic

ants

.

In s

ho

rt:

The

fact

that

mor

e lic

ence

s w

ere

awar

ded,

as

stat

ed a

bove

, was

not

onl

y go

od fo

r sm

alle

r sc

ale

entr

epre

neur

s. It

als

o m

eant

that

rev

enue

col

lect

ed e

xcee

ded

budg

et b

y R

5.5

mill

ion.

Mak

ing

it ea

sier

for

peop

le to

do

busi

ness

in th

e ga

mbl

ing

indu

stry

has

dow

nstr

eam

ben

efits

for

the

Boa

rd a

nd th

e pr

ovin

cial

fisc

us.

SUB-

PRO

GR

AMM

E: F

INAN

CIAL

MAN

AGEM

ENT

SER

VICE

S

Str

ateg

ic O

bje

ctiv

eTo

ens

ure

accu

rate

bud

getin

g, s

ound

cas

h flo

w m

anag

emen

t, an

d pr

epar

atio

n of

man

agem

ent a

ccou

nts

and

AF

S in

acc

orda

nce

with

rel

evan

t sta

ndar

ds a

nd le

gisl

atio

n.• P

erfo

rman

ce In

dica

tor

Act

ual

Ach

ieve

men

t 20

12/2

013

(Bas

e Li

ne In

form

atio

n)

Pla

nned

Tar

get

2013

/201

4

Act

ual

Ach

ieve

men

t 20

13/2

014

Var

ianc

e fr

om

2012

/201

3 to

20

13/2

014

Dev

iatio

n fr

om

plan

ned

targ

et fo

r 20

13/2

014

Com

men

t on

Dev

iatio

ns

Rev

enue

col

lect

edR

112

mill

ion

R11

9 m

illio

nR

124.

9 m

illio

n+

R12

.9 m

illio

n+

R5.

9 m

illio

nG

row

th in

the

num

ber o

f lic

ense

es re

sulte

d in

th

e in

crea

se

in

reve

nue

gene

ratio

n co

mpa

red

to th

e pr

evio

us y

ear.

% o

f goo

ds a

nd s

ervi

ces

expe

nditu

re to

SM

ME

s10

min

imum

*5% (R

895

033)

7.8%

(R1.

4 M

illio

n)N

o va

rianc

e+

2.8%

(R50

4 96

7)

Pro

cure

men

t of

goo

ds a

nd s

ervi

ces

from

th

e S

MM

Es

was

in

crea

sed

and

ther

e w

ere

no d

evia

tions

on

the

over

all b

udge

t (a

s a

resu

lt of

the

pro

cure

men

t fr

om t

he

SM

ME

s).

*In

2012

/201

3, th

e pr

ocur

emen

t of g

oods

and

ser

vice

s fr

om th

e S

MM

Es

was

mea

sure

d by

the

num

ber

of S

MM

Es

used

; hen

ce th

e ba

selin

e in

dica

tor

is n

ot s

how

n as

a p

erce

ntag

e.


In s

ho

rt:

The

Boa

rd is

pas

sion

ate

abou

t car

ing

for m

embe

rs o

f soc

iety

who

can

not c

are

for t

hem

selv

es, a

nd h

as fu

lfille

d its

soc

ial r

espo

nsib

ility

obl

igat

ions

. A li

st o

f pro

ject

s an

d sc

hool

s th

at b

enefi

ted

from

the

Boa

rd’s

CS

I pro

gram

me

can

be fo

und

unde

r S

ectio

n 3.

17.

SUB-

PRO

GR

AMM

E: S

OCI

O-E

CON

OM

IC D

EVEL

OPM

ENT

Str

ateg

ic O

bje

ctiv

eTo

del

iver

a q

ualit

y, c

usto

mer

-orie

nted

ser

vice

to th

e pu

blic

, lic

ense

es a

nd o

ther

sta

keho

lder

s.

• Per

form

ance

Ind

icat

or

Act

ual

A

chie

vem

ent

2012

/201

3 (B

ase

Lin

e In

form

atio

n)

Pla

nn

ed T

arg

et20

13/2

014

Act

ual

A

chie

vem

ent

2013

/201

4

Var

ian

ce f

rom

20

12/2

013

to

2013

/201

4

Dev

iati

on

fro

m

pla

nn

ed t

arg

et

for

2013

/201

4C

om

men

t o

n D

evia

tio

ns

Num

ber

of s

ocia

l re

spon

sibi

lity

prog

ram

mes

co

nduc

ted

64

4-2

No

devi

atio

nN

o de

viat

ion

Sum

mar

y of

Pay

men

ts b

y Su

b-Pr

ogra

mm

e of

Bud

get P

rogr

amm

e 1

In s

ho

rt:

Whe

re th

e B

oard

exc

eede

d its

bud

get,

it is

, in

a se

nse,

the

‘vic

tim’ o

f its

ow

n su

cces

s. M

ore

need

ed to

be

spen

t bec

ause

mor

e lic

ence

s w

ere

awar

ded

than

exp

ecte

d. S

ome

of th

e ex

tra

cost

s w

ere

reco

vere

d fr

om in

vest

igat

ion

depo

sits

.

2013

/201

420

12/2

013

Prog

ram

me

nam

eBu

dget

R’0

00Ac

tual

Exp

endi

ture

R

’000

Ove

r/(U

nder

) Ex

pend

iture

R’0

00Bu

dget

R’0

00Ac

tual

Exp

endi

ture

R

’000

Ove

r/(U

nder

) Ex

pend

iture

R’0

00

Offi

ce o

f the

CE

O

3

455

4 6

22

1 16

75

484

5 19

1(2

93)

Str

ateg

ic M

anag

emen

t Ser

vice

s

2

662

2

595

(67)

3 56

03

404

(156

)

Fin

anci

al M

anag

emen

t

6

264

7

922

1 65

86

052

6 72

066

8

Lega

l Ser

vice

s an

d B

oard

S

ecre

taria

t

5

181

6

484

1 30

34

830

6 26

31

433

Hum

an R

esou

rce

Man

agem

ent a

nd

Dev

elop

men

t

4

992

5

335

343

4 37

25

494

1 12

2

Com

mun

icat

ion

and

Mar

ketin

g

9

91

796

(195

)98

11

244

263

Soc

io-E

cono

mic

Dev

elop

men

t

1

75

177

238

988

349

4

Vul

nera

ble

Gro

ups

-

6464

--

-

Info

rmat

ion

Man

agem

ent a

nd

Tech

nolo

gy

1

609

1

770

161

909

881

(28)

Tota

l

25

329

30 4

154

436

26 5

7730

080

3 50

3


Primary areas of actual to budget differences are as follows:

Financial Management•

Increased audit fees. °

Increasing cost of printing and stationary. °

Legal Services and Board Secretariat•

The planned schedule for Board meetings were more during the financial year due to the new Bingo licensing process °that was rolled out, resulting in increased Board members fees. However, some of these fees were recovered from the investigation deposits.

Human Resource Management and Development•

Increased need for CAPEX items to cater for increased number of employees. °

Costs of building and fixtures and fittings maintenance higher than budgeted for. °

Ever-increasing rates and taxes. °

Consulting fees as a result of VIP consulting and job grading. °

Changes to planned targets

There were no changes on the performance indicators that were made during the financial year under review.

2.3.2 Budget Programme 2: Gambling Regulation and Consumer Protection


The purpose of this programme is to implement the Act and other statutory mandates through conducting compliance, auditing, licensing, investigations, gaming control, and law enforcement as well as educating the consumers on responsible gambling.


The following are budget sub-programmes of Gambling Regulation and Consumer Protection:

Investigation and licensing administration.•

Law enforcement and gaming control.•

Audit and compliance services.•

Consumer protection and public education.•

2.3.2.3 Strategic Objectives

The following strategic objectives are those that guide the performance of the Budget Programme in order to achieve the desired outcomes:

To conduct investigations and regulatory functions in an objective manner in order to ensure that the decision-making •processes are impeccable and watertight to avoid any possible legal challenges.

To protect the public’s interest and the licensed operators from unfair and illegal competition.•

2.3.2.4 Key Performance Measures and their Targets and actual Results for the 2013/2014 Financial Year

In short: The Board believes that regulation and education should go together. It is significant that, before it embarked on a more focused process of law enforcement and dealing with illegal gambling, the ECGBB did extensive consultation. If operators of illegal gambling venues do not realise that their actions are illegal, they need education, not confrontation with the law. This has bought a lot of goodwill for the Board in the gambling industry. Another factor was the Customer Satisfaction Survey done by the Board. It shows that gambling operators are satisfied with the professionalism of ECGBB employees when they interact with operators. The ECGBB is, therefore, now able to fulfil its mandate to protect consumers and gambling operators against illegal gambling. Evidence of this is the number of illegal machines that have been confiscated.


Str

ateg

ic O

bje

ctiv

esTo

con

duct

inve

stig

atio

ns a

nd r

egul

ator

y fu

nctio

ns in

an

obje

ctiv

e m

anne

r in

ord

er to

ens

ure

that

the

deci

sion

-mak

ing

proc

esse

s ar

e im

pecc

able

and

wat

ertig

ht to

any

pos

sibl

e •

lega

l cha

lleng

es.

To p

rote

ct th

e pu

blic

’s in

tere

st a

nd th

e lic

ense

d op

erat

ors

from

unf

air a

nd il

lega

l com

petit

ion.

• INVE

STIG

ATIO

N A

ND

LIC

ENSI

NG

AD

MIN

ISTR

ATIO

N

Per

form

ance

Ind

icat

or

Act

ual

A

chie

vem

ent

2012

/201

3 (B

ase

Lin

e In

form

atio

n)

Pla

nn

ed T

arg

et20

13/2

014

Act

ual

A

chie

vem

ent

2013

/201

4

Var

ian

ce f

rom

20

12/2

013

to

2013

/201

4

Dev

iati

on

fro

m

pla

nn

ed t

arg

et

for

2013

/201

4C

om

men

t o

n D

evia

tio

ns

Num

ber

of li

cenc

e ap

plic

atio

ns in

vest

igat

ed88

824

-64

+16

In 2

013/

2014

we

rece

ived

mor

e ap

plic

atio

ns

for

licen

ces

than

was

ant

icip

ated

.

SUB-

PRO

GR

AMM

E: L

AW E

NFO

RCE

MEN

T AN

D G

AMIN

G C

ON

TRO

L

Str

ateg

ic O

bje

ctiv

es

To p

rote

ct th

e pu

blic

’s in

tere

st a

nd th

e lic

ense

d op

erat

ors

from

unf

air a

nd il

lega

l com

petit

ion

• Per

form

ance

Ind

icat

or

Act

ual

A

chie

vem

ent

2012

/201

3 (B

ase

Lin

e In

form

atio

n)

Pla

nn

ed T

arg

et20

13/2

014

Act

ual

A

chie

vem

ent

2013

/201

4

Var

ian

ce f

rom

20

12/1

3 to

20

13/2

014

Dev

iati

on

fro

m

pla

nn

ed t

arg

et

for

2013

/201

4C

om

men

t o

n D

evia

tio

ns

Num

ber

of s

wee

ps

cond

ucte

d5

55

No

varia

nce

No

devi

atio

nN

one

Num

ber

of in

spec

tions

co

nduc

ted

1 29

384

88-1

205

+4

Mor

e in

spec

tions

con

duct

ed in

201

3/20

14

wer

e du

e to

the

addi

tiona

l lic

ense

d op

erat

ors

with

mul

tiple

lice

nces

.T

here

has

bee

n ef

ficie

nt u

se o

f res

ourc

es

with

no

budg

et d

evia

tions

or

finan

cial

im

plic

atio

ns.


SUB-

PRO

GR

AMM

E: A

UD

IT A

ND

CO

MPL

IAN

CE S

ERVI

CES

Str

ateg

ic O

bje

ctiv

esTo

ens

ure

com

plia

nce

and

adhe

renc

e to

bid

com

mitm

ents

, lic

ence

con

ditio

ns, l

egis

latio

n an

d re

gula

tions

prio

r to

and

afte

r th

e co

mm

ence

men

t of t

he o

pera

tions

• Per

form

ance

Ind

icat

or

Act

ual

A

chie

vem

ent

2012

/201

3 (B

ase

Lin

e In

form

atio

n)

Pla

nn

ed T

arg

et20

13/2

014

Act

ual

A

chie

vem

ent

2013

/201

4

Var

ian

ce f

rom

20

12/2

013

to

2013

/201

4

Dev

iati

on

fro

m

pla

nn

ed t

arg

et

for

2013

/201

4C

om

men

t o

n D

evia

tio

ns

Num

ber

of c

ompl

ianc

e au

dits

con

duct

ed67

5759

-8+

2

In 2

013/

2014

, m

ore

com

plia

nce

audi

ts w

ere

cond

ucte

d du

e to

add

ition

al o

pera

tors

with

m

ultip

le l

icen

ces.

How

ever

, th

ere

has

been

ef

ficie

nt u

se o

f re

sour

ces

with

no

budg

et

devi

atio

ns o

r fin

anci

al im

plic

atio

ns.

Num

ber

of r

even

ue

audi

ts c

ondu

cted

2836

36+

8N

o de

viat

ion

No

devi

atio

n

In s

ho

rt:

The

Boa

rd w

ants

gam

blin

g to

be

seen

as

a fo

rm o

f en

tert

ainm

ent,

just

like

goi

ng t

o th

e m

ovie

s. I

t sh

ould

not

be

a fo

rm o

f ge

nera

ting

an in

com

e, a

s th

is le

ads

to p

robl

em

gam

blin

g. I

t is

pro

ud o

f th

e fa

ct t

hat

it cr

eate

d th

e co

untr

y’s

first

aw

aren

ess

prog

ram

me,

and

tha

t it

has

reac

hed

alm

ost

13 m

illio

n pe

ople

in

the

past

fina

ncia

l ye

ar. T

his

prog

ram

me

not o

nly

info

rms

peop

le a

bout

the

issu

es a

roun

d pr

oble

m g

ambl

ing,

but

als

o th

e va

rious

opt

ions

offe

red

by th

e E

CG

BB

–fr

om e

duca

tiona

l pro

gram

mes

, to

ongo

ing

site

vis

its a

nd a

udits

to p

rote

ct c

onsu

mer

s, a

nd th

e ex

clus

ions

pro

gram

me,

whe

re p

robl

em g

ambl

ers

are

refu

sed

entr

y to

gam

blin

g es

tabl

ishm

ents

.

SUB-

PRO

GR

AMM

E: C

ON

SUM

ER P

RO

TECT

ION

AN

D P

UBL

IC E

DU

CATI

ON

Str

ateg

ic O

bje

ctiv

esTo

edu

cate

the

publ

ic o

n ga

mbl

ing

rela

ted

issu

es• P

erfo

rman

ce In

dic

ato

r

Act

ual

A

chie

vem

ent

2012

/201

3 (B

ase

Lin

e In

form

atio

n)

Pla

nn

ed T

arg

et20

13/2

014

Act

ual

A

chie

vem

ent

2013

/201

4

Var

ian

ce f

rom

20

12/2

013t

o

2013

/201

4

Dev

iati

on

fro

m

pla

nn

ed t

arg

et

for

2013

/201

4C

om

men

t o

n D

evia

tio

ns

Num

ber

of a

war

enes

s pr

ogra

mm

es c

ondu

cted

610

10+

4N

o de

viat

ion

No

devi

atio

n

Num

ber

of p

eopl

e re

ache

d th

roug

h re

spon

sibl

e ga

mbl

ing

cam

paig

ns

N/A

7 00

012

.96

mill

ion

No

varia

nce

+12

.89

mill

ion

The

PB

L pl

atfo

rm u

tilis

ed y

ield

ed f

ar m

ore

resu

lts t

han

was

ant

icip

ated

on

the

num

ber

of p

eopl

e re

ache

d th

roug

h th

e re

spon

sibl

e ga

mbl

ing

cam

paig

ns d

ue t

o th

e ca

mpa

ign

bein

g ru

n on

nat

iona

l tel

evis

ion.

Num

ber

of e

cono

mic

op

port

unity

aw

aren

ess

prog

ram

mes

con

duct

edN

/A2

2N

o va

rianc

eN

o de

viat

ion

No

devi

atio

n


Summary of Payments by Sub-Programme of Budget Programme 2

2013/2014 2012/2013

Programme NameBudget R’000

Actual Expenditure

R’000

Over/(Under) Expenditure

R’000

Budget R’000

Actual Expenditure

R’000

Over/(Under) Expenditure

R’000

Licensing and Investigation

5 766 8 130 2 364 4 917 6 014 1 097

Law Enforcement and Gaming Control

3 511 3 125 (386) 2 617 2 491 (126)

Audit and Compliance 4 204 3 924 (280) 3 034 2 774 (260)

Consumer Protection and Public Education

10 000 5 710 (4 290) 6 048 4 027 (2021)

Total 23 481 20 948 (2 592) 26 577 30 080 3 503

Primary areas of actual to budget differences are as follows:

Licensing and investigation•

Higher evaluation and hearing costs as a result of the Bingo licensing process. These costs are recoverable and °reflected as recovery income, therefore, having a nil effect on surplus/deficit.

Consumer protection and public education•

There was a saving on consumer protection programmes in order to cover the over-expenditure in Programme 1. °

Changes to planned targets

There were no changes on the performance indicators that were made during the financial year under review.

2.3.3 Budget Programme 3: Research and Development


The purpose of this programme is to build a strong foundation of valid and reliable empirical research to inform operational, policy advisory and public interest activities, such as consumer protection.


Empirical research on the gambling industry and consumer protection.•

General and ad hoc surveys.•

Strategic Objectives

To guide the generation of information in the gambling industry.•

To deliver a quality, customer-oriented service to the public, licensees and other stakeholders.•


Key

Per

form

ance

Mea

sure

s an

d t

hei

r Tar

get

s an

d a

ctu

al R

esu

lts

for

the

2013

/201

4 F

inan

cial

Yea

r

Str

ateg

ic O

bje

ctiv

esTo

gui

de th

e ge

nera

tion

of in

form

atio

n in

the

gam

blin

g in

dust

ry.

•To

del

iver

a q

ualit

y, c

usto

mer

-orie

nted

ser

vice

to th

e pu

blic

, lic

ense

es a

nd o

ther

sta

keho

lder

s.• EM

PIR

ICAL

RES

EAR

CH O

N G

AMBL

ING

IND

UST

RY A

ND

AD

HO

C SU

RVE

YS

Per

form

ance

Ind

icat

or

Act

ual

A

chie

vem

ent

2012

/201

3 (B

ase

Lin

e In

form

atio

n)

Pla

nn

ed T

arg

et20

13/2

014

Act

ual

A

chie

vem

ent

2013

/201

4

Var

ian

ce f

rom

20

12/2

013

to

2013

/201

4

Dev

iati

on

fro

m

pla

nn

ed t

arg

et

for

2013

/201

4C

om

men

t o

n D

evia

tio

ns

Num

ber

of r

esea

rch

stud

ies

cond

ucte

d0

11

No

varia

nce

No

devi

atio

nN

o de

viat

ion

Num

ber

of s

urve

ys

cond

ucte

d0

11

No

varia

nce

No

devi

atio

nN

o de

viat

ion

Su

mm

ary

of

pay

men

ts b

y su

b-p

rog

ram

me

of

Bu

dg

et P

rog

ram

me

3:

2013

/201

420

12/2

013

Prog

ram

me

Nam

eBu

dget

R’0

00Ac

tual

Exp

endi

ture

R

’000

Ove

r/(U

nder

) Ex

pend

iture

R’0

00Bu

dget

R’0

00Ac

tual

Exp

endi

ture

R

’000

Ove

r/(U

nder

) Ex

pend

iture

R’0

00

Em

piric

al R

esea

rch

200

719

519

57

230

0-2

72

Gen

eral

and

Ad

Hoc

Sur

vey

-

-

-

269

564

295

Tota

l

2

00

7

19

519

841

864

23

Str

ateg

ies

to o

verc

om

e ar

eas

of

un

der

-per

form

ance

by

Bu

dg

et P

rog

ram

me

3:

The

re w

ere

no a

reas

of u

nder

-per

form

ance

on

the

perf

orm

ance

indi

cato

rs th

at w

ere

plan

ned

durin

g th

e fin

anci

al y

ear

unde

r re

view

.

Ch

ang

es t

o p

lan

ned

tar

get

s

The

re w

ere

no c

hang

es o

n th

e pe

rfor

man

ce in

dica

tors

that

wer

e m

ade

durin

g th

e fin

anci

al y

ear

unde

r re

view

.


3. Part C: Report on Corporate Governance


3. Part C: Report on Corporate Governance3.1 Introduction

Corporate governance embodies processes and systems by which public entities are directed, controlled and held to account. In addition to legislative requirements based on a public entity’s enabling legislation and the Companies Act, corporate governance with regard to a public entity’s is applied through the precepts of the Public Finance Management Act (PFMA) and runs in tandem with the Protocol on Corporate Governance, which encapsulates the principles contained in the King’s Report on Corporate Governance.

Parliament, the Executive and the Boards of the public entities are all responsible for corporate governance.

3.2 Portfolio Committees

The Portfolio Committee on Economic Development, Environmental Affairs and Tourism oversees the service delivery performance of the ECGBB. Hence it reviews the non-financial information contained in the Annual Report of the ECGBB, and is also concerned with service delivery and enhancing economic growth.

NO. DATE BUSINESS OF MEETINGS AND ENGAGEMENTS

1 19 September 2014 Presentation of the 2014/2015 – 2016/2017 Annual Performance Plan of the ECGBB

2 7 November 2014 Consideration of the Annual Report and Financial Oversight Reports

3.3 Executive Authority

Oversight by the Executive Authority rests by and large on the prescripts of the PFMA. The Executive Authority has the power to appoint and dismiss the Board of a public entity. The Executive Authority must also ensure that the appropriate mix of executive and non-executive directors is appointed, and that directors have the necessary skills to guide the particular public entity.

Reports submitted to the Executive Authority during the year under review:

NO. DATE REPORTS SUBMITTED TO THE EXECUTIVE AUTHORITY

1 31 July 2014 2014/2015 First Quarter Performance Report

2 31 August 2014 2013/2014 Annual Financial Statements / Annual Report

3 30 September 2014 2014/2015 Annual Budget

4 24 October 2014 2014/2015 Second Quarter Performance Report

5 24 October 2014 Six Months Oversight Report and Six Months Performance Information Report

6 30 January 2015 2014/2015 Third Quarter Performance Report

7 24 April 2015 2014/2015 Fourth Quarter Performance Report

3.4 The Board

The Board conducts its business in accordance with the principles of good Corporate Governance, the ECGBB Act, and the PFMA. The Board charter sets out the specific responsibilities to be discharged by the Board members collectively, as well as what is expected of each individual role.

Appointment of Board Members

The Board is established as a statutory body in terms of the Gambling and Betting Act, 1997 (Act No. 5 of 1997) (Eastern Cape), and is listed as a provincial public entity in Schedule 3C of the Public Finance Management Act, 1999 (Act No. 1 of 1999). The Board members act as the Accounting Authority in terms of the PFMA. The Accounting Authority is responsible for determining strategic direction and policy, and for the monitoring of operational performance and management.

The current Board members of the ECGBB were appointed in April 2011 by the Honourable MEC for DEDEAT, and all assumed responsibilities in April 2011 following a rigorous and independent process headed by a retired judge.


Roles and responsibilities of the Board:

The primary responsibilities of the Board are as follows:

Giving strategic direction to the Organisation.•

Identifying key risk areas and key performance indicators of the Organisation’s business.•

Monitoring significant investment, regulatory and project-related decisions.•

Reviewing the performance of management against business plans, budgets and corporate governance standards.•

Ensuring that its obligations in terms of the relevant legislation, including the PFMA, are effectively discharged. •

3.5 Board Charter

As recommended by the King Code III, the Board has a charter setting out its responsibilities, which should be disclosed in its Annual Report. At a minimum, the charter should confirm:

The Board’s responsibility for the adoption of strategic plans.•

Monitoring of operational performance and management.•

Determination of policy processes to ensure the integrity of the public entity’s risk management and internal controls.•

Communication policy, orientation and evaluation.•

Progress made regarding compliance with the Charter

The objective of the Board charter is to ensure that all Board members, employees of the Board, and other stakeholders are aware of the duties and responsibilities of the Board, as well as have the basis upon which it interacts with Management, in giving effect to its obligations.

The Board charter ensures that Board members are responsible for the full and effective control of the Board, and assumes responsibility for the following:

Monitoring of management of the Organisation and the implementation of its plans and strategies.•

Ensuring that a comprehensive system of policies and procedures remains operative.•

Ensuring ethical behaviour.•

Reserving specific powers to the Board, where considered appropriate or necessary.•

Acting responsibly toward stakeholders.•

Ensuring compliance with corporate governance principles and relevant legislation.•

The Board charter recognises that the two key and distinct tasks associated with the conduct of the Board’s affairs are (1) the running of the affairs of the Organisation, and (2) the executive responsibility for the conduct of the Organisation’s business.


3.6 Composition of the Board

The Honourable MEC for DEDEAT appointed a new Board of Directors who commenced their duties on 1 April 2011. The Board consists of eight non-executive directors and one executive director. These are:

MR. RM ZWANECHIEF EXECUTIVE AND ACCOUNTING OFFICER

MRS. JL AUGUST MR. P WHITE

MR. O MTATI DEPUTY CHAIRPERSON

ADV. N MAYOSI CHAIRPERSON

DR. P VOGES MR. V TSHANGANA MR. Z NOMAFU MR. M VENA


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3.7 Committees

The Board has four sub-committees:

Audit and Risk Committee.•

Compliance and Licensing Committee.•

Finance Committee.•

Human Resources and Remuneration Committee.•

Roles and Responsibilities of Committees

Audit and Risk Committee

The Audit and Risk Committee assists Management in fulfilling its responsibilities for overseeing the financial reporting process, the system of internal control, the audit process, and the ECGBB’s process for monitoring compliance with laws and regulations and the Code of Conduct. Unless otherwise stated, the Audit and Risk Committee performs an advisory role to the ECGBB. The Audit and Risk Committee is accountable to the Accounting Authority to properly consider and evaluate any matter it has to deal with or which has been referred to it.

Finance Committee

The Finance Committee is formed to review and recommend the Annual Financial Statements, as well as any other publicly released financial statement of the Board, any change in the Board’s financial year or tax year, any material change in the ECGBB’s accounting policies other than changes which bring the ECGBB’s accounting policies in conformity with Generally Recognised Accounting Principles (GRAP), as well as the approval of any expenditure beyond the budgeted limits. The Committee must also perform such other functions that may be assigned to it by the Board from time to time.

Human Resources and Remuneration Committee

The purpose of the Human Resources and Remuneration Committee is to:

Advise and make recommendations to the Board on Human Resources, including, but not limited to, the organisational •structure skills and development, and policies and practice.

Ensure that the Chief Executive Officer, senior managers and the staff of the Board receive reasonable and fair rewards for •their individual and combined contributions to the overall performance of the Board.

Make recommendations to the Board on the remuneration of members.•

Compliance and Licensing Committee

The function of the Compliance and Licensing Committee is to:

Consider and recommend to the Board’s licensing investigation reports, investigation methods, the licensing, regulatory •compliance, revenue audit processes and Methodology.

Conduct hearings, enquiries and evaluations on any matter presented before it, as well as impose fines and issue warnings •to licensees on any non-compliance matter laid before it.

Monitor adherence to the internal control procedures, compliance plans and bid deliverables by the licences. •

Review and enforce the findings relating to, amongst others, special investigations, illegal gambling activities, cheating •activities, excluded persons, and patron disputes. The Committee also performs such other functions that may be assigned to it by the Board from time to time.

Consider the outcome of the legislative review process and make recommendations to the Board in respect thereof.•


Number of Meetings held during the 2013/2014 Financial Year:

Committee No. of meetings held No. of members Names of members

Audit and Risk 7 4Ms L Smith; Mr Z NomafuMr P White; Mr H Marsberg

Compliance and Licensing

10 4Dr P Voges; Mr M VenaMs P Nqakula; Mr O Mtati

Finance 6 3Mr Z Nomafu; Dr P VogesMr V Tshangana;

Human Resources and Remuneration

3 3Ms Y Makhasi; Mr M VenaMr O Mtati

3.8 Remuneration of Board Members

Board remuneration is payable as follows:

Chairperson – R12 000 per day and R12 000 per month retainer. •

Deputy Chairperson – R10 000 per day.•

Ordinary Board member – R8 500 per day.•

Committee members appointed as representatives of the respective provincial departments are not paid for Board meetings •– except in exceptional circumstances.

Name Remuneration (R) Other re-imbursements (R) Total (R)

Adv. N Mayosi 420 000 38 250 458 250

Mr M Vena 195 500 68 950 264 450

Mr O Mtati 274 000 66 650 340 650

Dr P Voges 170 000 76 750 246 750

Ms Y Makhasi 59 500 25 750 85 250

Mr Z Nomafu 204 000 42 200 246 200

Mr V Tshangana 34 000 - 34 000

Ms P Nqakula 34 000 - 34 000

Mr H Marsberg* 19 000 - 19 000

Ms L Smith* 45 000 - 45 000

Mr P White 123 900 - 123 900

TOTAL 1 578 900 318 550 1 897 450

* Members of the Audit and Risk Committee who are not members of the Board.

3.9 Audit and Risk Management

Nature of Risk Management

The ECGBB has adopted an Enterprise Risk Management Framework which is a continuous, proactive and systematic process to be carried out by the Board, Executive Management and staff, and applied in strategy setting as well as across the Organisation. It is designed to identify potential events that may affect the ECGBB, and manage any form of risk that may be within its risk appetite. Furthermore, it must provide reasonable assurance regarding the achievement of the ECGBB’s objectives.

Risk Management Strategies to Identify and Manage Risks

The identification and management of risks within the ECGBB can be outlined in terms of the following processes:

A methodology and framework for Enterprise Risk Management are defined and agreed upon to by the Organisation, i.e. •


the Board and Management of the ECGBB.

A gap analysis of the entity’s Enterprise Risk Management process is done at regular intervals, taking into account that the •Auditor-General’s report and internal audit report have been completed.

Annual risk management assessments and risk assessments for all major changes and incidents are facilitated, including •accidents, purchases of capital equipment, restructuring of operational processes, etc.

A risk identification process with the ECGBB’s targets and objectives are then aligned with the risk assessment process.•

A system to facilitate risk monitoring and risk improvement is developed and implemented on a quarterly basis.•

Decisions regarding mitigation for every key risk facing the ECGBB are documented in the ECGBB’s risk register.•

Solutions and mitigation strategies for common risks are negotiated collectively by the Management of the ECGBB.•

Risk management training is conducted at appropriate levels within the entity to inspire a risk awareness culture.•

Risk registers for all functional areas at strategic, tactical and operational levels are also maintained•

A risk management framework and methodology is communicated to all employees.•

The necessary risk management documentation is developed in respect of the risk management process.•

This validates that the enterprise’s risk management is operating in all functional areas, and that all significant risks are •being recognised and effectively managed in a timely manner.

Regular communication with the Audit and Risk Committee regarding the status of enterprise risk management.•

Reports to the Audit and Risk Committee regarding the•

progression of enterprise risk management and its implementation; and °

identified significant and material risk exposures as well as recommendations across the ECGBB. °

Risk Assessment

Risk assessment is the determination of the quantitative or qualitative value of risk related to a concrete situation and a recognised threat. Quantitative risk assessment requires calculations of two components of risk, namely (1) the magnitude of the potential loss, and (2) the probability (p) that the loss will occur.

Risk assessment allows an entity to consider how potential events might affect the achievement of its set objectives. Management assesses events by analysing the likelihood and its impact. Below is a process that is utilised by the ECGBB to assess its risks, magnitude thereof, and the potential loss it could bring about.

Impact Parameters

Seve

rity

R

anki

ng

Continuity of Service Delivery Reputation/Safety Strategic Mandate

Criti

cal

5

Risk event will result in widespread and lengthy reduction in continuity of service delivery (more than 48 hours) to customers.

Major environmental damage. Serious injury (permanent disability) or death of personnel or members of the public. Major negative media coverage.

Critical outcomes or missed opportunities that are of significant importance for achieving the objectives. Will lead to non-achievement of objectives and/or the collapse of business’ activity.

Maj

or4

Reduction in service delivery or disruption for a period ranging between 24 and 48 hours over a significant area.

Significant injury of personnel or public. Significant negative media coverage.

Major outcomes or missed opportunities that are likely to have a relatively major impact on the ability to meet objectives. It may also lead to a cost increase greater than 20%.

Mod

erat

e3

Reduction in service delivery or disruption for a period ranging between 8 and 47 hours over a regional area.

Lower level of safety or health impacts. Negative media coverage.

Moderate outcomes or missed opportunities that are likely to have a relatively moderate impact on the ability to meet objectives. May also lead to a cost increase greater than 10%.


Seve

rity

R

anki

ngContinuity of Service Delivery Reputation/Safety Strategic Mandate

Min

or2

Brief local inconvenience (possible to work around it). Loss of an asset with minor impact on operations.

Little environmental, safety or health impacts. Limited negative media coverage.

Minor outcomes or missed opportunities that are likely to have a relatively minor impact on the ability to meet objectives. May also lead to a cost increase greater than 10%.

Insi

gnifi

cant

1 No impact on business or core systems.

No environmental, safety or health impacts and/or negative media coverage.

Insignificant outcomes or missed opportunities that are likely to have an insignificant impact on the ability to meet objectives. May have minimal or no impact on cost.

Likelihood Parameters

Please note: Risk rating = impact x likelihood

Probability Factor

Measurement Criteria Qualification Criteria Rating

CommonThe risk is already occurring, or is likely to occur more than once within the next 12 months.

The risk is almost certain to occur in the current circumstances. 5

Likely The risk will easily occur, and is likely to occur at least once within the next 12 months.

More than an even chance of occurring. 4

ModerateThere is an above average chance that the risk will occur at least once in the next 3 years.

Could occur quite often. 3

Unlikely The risk could easily occur, and is likely to occur at least once within the next 12 months.

Small likelihood, but could happen. 2

RareThe risk is already occurring, or is likely to occur more than once within the next 12 months.

Not expected to happen – event would be a surprise. 1

SUMMARY OF THE TOP TEN RISKS AS PER RISK REGISTER DURING THE 2013/2014 FINANCIAL YEAR

No. Risk Description Implications for Business Risk Mitigation PlansRisk Owners: Budget Sub-Programmes

1Non-compliance by licensee with licence conditions

Under collection of revenue, non-compliance with licence conditions

Continuous monitoring of compliance with licence conditions and imposition of fines and penalties

Gambling Regulation and Consumer Protection

2 Outdated legislationChallenges from licensees in the form of complaints or litigation

Submit annual updates of legislation to DEDEAT

Legal Services & Board Secretariat

3Inadequate funding to achieve overall mandate

Mandate not accomplished

Engage DEDEAT and Provincial Treasury annually to allocate more funding

Office of the Chief Executive Officer

4

Incorrect information supplied by licensees, resulting in inaccurate information maintained in the GIMS database

Under collection of gambling fees

Annual verification audits and the database is monitored monthly



No. Risk Description Implications for Business Risk Mitigation PlansRisk Owners: Budget Sub-Programmes

5

Challenges with implementation of integrated performance management system

The Organisation will not achieve its objectives

Monthly performance centre meeting

All Budget Sub-Programmes

6Not keeping abreast with industry developments

Challenges from licensees in the form of complaints or litigation

Training on industry updates annually, attendance at compliance Fora ( GRAF, IAGRA, CEO, Legal & Compliance, IT, HRBF, law enforcement, gambling expo)


7

Non-compliance with various sections of the Provincial Gambling Act, e.g. revenue collection

Failure to achieve ECGBB mandate

The database is monitored monthly by Compliance and Licensing Division and bi-annually audited by Internal Audit

Gambling Regulation and Consumer ProtectionFinancial Management

8Merger between Liquor Board and Gambling Board

Possible disruption of operations

Beyond Management control, dependent on MEC

Office of the Chief Executive Officer

9

Failure to deliver on ECGBB socio-economic development (SED) initiatives due to external dependencies or parties (not delivering)

Socio-economic development (SED) initiatives may not be achieved

Annual monitoring of compliance with trust initiatives

Gambling Regulation and Consumer ProtectionSocio Economic Development.

10Retention and succession strategy not in place or inactive

Experienced staff leaving the Organisation, inability to retain staff resources

Pending approval of the Retention and Succession Strategy

Human Resources Management and Development

3.10 Internal Control

Internal controls are tested and verified by Internal Audit. During the year, the following areas were covered by Internal Audit:

Compliance revenue: Review processes followed by Programme 2 and confirm compliance of processes with the Gambling •Act and Regulations.

Revenue: Finance-related controls around the billing and recoveries process.•

Performance reporting: Effectiveness of internal controls relating to quarterly performance reports. •

The reports on the above sections highlighted areas in which controls are either inadequate or not functioning effectively. The Board makes use of an audit tracking document to assist in keeping track of these issues, following progress in instituting corrective measures. The audit tracking document is reported to Management and Board members on a monthly basis.

3.11 Internal Audit and Audit and Risk Committees

The Audit and Risk Committee assists Management in fulfilling its responsibilities of overseeing the financial reporting process, the system of internal control, the audit process, and the ECGBB’s process for monitoring compliance with laws and regulations and the Code of Conduct. Unless otherwise stated, the Audit and Risk Committee performs an advisory role to the ECGBB. The Audit and Risk Committee is also accountable to the Accounting Authority to properly consider and evaluate any matter it has to deal with or which has been referred to it.


Name QualificationsInternal or External

Date AppointedNo. of Meetings Attended

Ms L Smith B.Comm(Hons), CA(SA), RA External 1 April 2011 7/7

Mr Z Nomafu B.Compt(Hons), M.Comm, CA(SA) External 1 April 2011 4/7

Mr P White B.Comm(Hons), CA(SA) External 1 April 2011 7/7

Mr H Marsberg B.Comm(Hons) External 1 April 2011 5/7

Internal Audit’s function is outsourced to an external service provider.

3.12 Compliance with Laws and Regulations

In executing its responsibilities, the ECGBB complies with the following legislation:

Constitution of the Republic of South Africa. The ECGBB ensures that the bill of rights is observed in respect of all dealings •with its stakeholders and employees.

National Gambling Act of 2004 and the Eastern Cape Gambling and Betting Act, No. 5 of 1997. The ECGBB performs all •its functions in compliance with the procedural prescripts set out in these two Acts.

The PFMA 1 of 1999 and Treasury Regulations with respect to Strategic and Budget Planning, Financial Management and •Internal Control Systems.

The Division of Revenue Act with respect to disbursement and accountability of funds transferred to other organisations.•

Labour Relations Act/1995.•

The Basic conditions of employment Act 75/1997 and the Employment Equity Act, No. 55 of 1998. All employees within the •ECGBB observe the procedural prescripts set out in the legislation listed above.

Preferential Procurement Policy Framework Act. The ECGBB ensures that all its supply chain processes are undertaken in •terms of the above Act.

Broad Based Black Economic Empowerment Act and the Codes of Good Practice.•

Over and above the aforementioned pieces of legislation, the Board has developed its own policies and plans to guide and regulate its functionality. These include, among others:

Delegations of authority policy.•

Supply Chain Management Policy.•

Asset Management Policy within the Finance Policy.•

Human Resource Management Policy. •

Fraud Prevention Plan.•

Risk Management Framework.•

Performance Management Policy.•

Disaster Management Policy.•

Travel and Subsistence Policy.•

3.13 Fraud and Corruption

The Board makes use of a Fraud Prevention Policy which is reviewed annually by the Audit and Risk Committee as well as the Board itself. The policy is work shopped to all new staff during the induction process.

The policy seeks to define the term ‘fraud’ and provide employees with steps to follow should they ever suspect fraudulent activities. The policy sets out the reporting lines to be followed should an employee wish to report a possible fraudulent activity. The Board also makes use of a Fraud Hotline number (0800 333 818) should an employee wish to report fraudulent activity anonymously.


3.14 Minimising Conflict of Interest

The Board manages conflict of interest by including a standing agenda item for all Board and Committee meetings in which members are required to state any conflicts of interest. Staff and Board members are required to disclose their interests in companies bi-annually.

3.15 Code of Conduct

The Code of Conduct consists of statutory principles which inform the general code of conduct and ethics of all members of the ECGBB and its employees, as laid down in the Eastern Cape Gambling and Betting Act.

The Code is applied with due consideration to the following entrenched provisions:

All employees and Board members are required to declare any conflict of interest, as provided for in the Eastern Cape •Gambling and Betting Act.

All employees and Board Members may not have any financial interest in any gambling activity.•

Board members and employees shall not participate in any gaming or betting within the province, except in the performance •of their duties in terms of the Act.

Board members, employees and their families may not accept any donation, reward or other benefit directly or indirectly •from an applicant or licence holder, except within the recognised exceptions stipulated in the Act.

3.16 Health, Safety and Environmental Issues

No health, safety and environment issues were reported during the year under review.•

An evacuation drill was conducted.•

A risk assessment was conducted by the Buffalo City Metropolitan Municipality, which reported back to the entity on the •findings, along with recommendations.

3.17 Social Responsibility

Below is a summary of the contributions made toward SED in pursuit of the Eastern Cape Anti-Poverty Strategy, championed by the Eastern Cape Department of Social Development and Special Programme. This information is disclosed in the Statement of Financial Performance which can be found in the Financial Information section of the Annual Report.


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3.18 Audit and Risk Committee Report

We are pleased to present our report for the financial year ended 31 March 2014.

Audit and Risk Committee Members and Attendance:

The Audit and Risk Committee consists of the members listed below. The Committee is expected to meet at least four times a year, as per its approved terms of reference. During the year under review, five meetings were held.

Name of Member Number of Meetings Attended

L Smith (Chairperson) CA(SA), RA 7

P White CA(SA) 7

H Marsberg, B.Comm 5

Z Nomafu (Director and Audit Committee Member) CA(SA) 4

The Audit and Risk Committee is considered to have the correct experience, qualifications and skills to carry out its responsibilities effectively.

Audit and Risk Committee Responsibility

We report that we have adopted appropriate formal terms of reference in our charter, in line with the requirements of Section 51 of the Public Finance Management Act, No. 1 of 1999 and Treasury Regulation 3.1. We further report that we conducted our affairs in compliance with this charter.

The Effectiveness of Internal Control

Based on the information provided to the Audit and Risk Committee by both Management and Internal Audit, it would appear that the system of internal control was effective for the year under review.

Evaluation of Financial Statements and Performance Information

We have:

Reviewed and discussed the draft Annual Financial Statements document prior to the approval by the Accounting •Authority.

Reviewed the entity’s compliance with legal and regulatory provisions.•

Reviewed the performance information approved by the Accounting Authority. •

Reviewed significant adjustments resulting from the audit.•

Internal Audit

The internal audit function is outsourced to an external service provider.

Risk Management

The Audit and Risk Committee has ensured that the Risk Management Framework was prepared and approved during the financial year. Risks were identified during a formal risk identification process and the Chief Executive Officer has been appointed as the Risk Officer for the entity.

Auditor-General South Africa

We concur with and accept the draft report on the Annual Financial Statements, and are of the opinion that the audited Annual Financial Statements should be accepted, read together with the report of the Auditor-General South Africa.

Loren Smith Chairperson of the Audit and Risk Committee 31 July 2014


4. Part D:Human Resources


4. Part D: Human Resources4.1 Value of Human Capital in the ECGBB

Human capital plays an increasingly important role in the Organisation’s success. Success is evident to organisations that effectively manage their employees. The Organisation has, therefore, placed tremendous value on its human capital by creating strategies, policies and practices that remove barriers to performance, resulting in motivated and satisfied employees.

The implementation of the Human Resources Management Strategy will continue to play a vital role in the achievement of the Organisation’s overall strategic objectives and its mandate, which is to regulate the gambling industry and protect the public in the province.

4.2 Overview of Human Resources Matters a the ECGBB

Employment Equity

The ECGBB’s Employment Equity profile has been aligned to that of the National Legislative Framework as follows:

Human

Resources

Statistics

Category

Description

2012/2013

African

Male

Coloured

Male

Indian

Male

White

Male

African

Female

Coloured

Female

Indian

Female

White

Female

Foreign

Male

Foreign

Female

EQUITY

Provincial economic active population percentages

39.3% 5.9% 0.8% 5.6% 37.8% 4.8% 0.6% 5.4% 0.0% 0.0%

Actual employee numbers

16 1 1 3 23 1 - 1 - -

Disabled - - - - - - - - - -

ECGBB workforce percentages

33.3% 2.2% 2.2% 6.6% 48.8% 4.4% 0.0% 2.2% 0.0% 0.0%

TOTAL PER-MANENT STAFF

46 16 1 1 3 23 1 - 1 - -

INTERNS 8 3 - - - 5 - - - - -

Training and Development

A total of 34 staff members attended training interventions during year under review.

Occupational Health and Safety

The Board places emphasis on the health and safety of its employees. The Board also conducts annual evacuation drills to create awareness and ensure that staff members remain prepared to react in the event of a real emergency.

Recruitment and Selection

Eight new permanent appointments were made, and one fixed term contract was signed.

There were five terminations during the period under review. Staff turnover for the period under review was 10.9%. To address this challenge, the Board has implemented a succession and retention policy.

The Board, in its attempt to contribute toward the social and economic development of the Province, recognises that many graduates remain unemployed because of a lack of work experience. As a result, the Organisation runs an Internship Programme on an annual basis, providing unemployed graduates the opportunity to acquire practical and relevant work experience, rendering them better equipped and more employable once they are released back into the job market at the end of the programme.


4.3 Human Resources Priorities for the Year under Review and the Impact of these Priorities

Human Resources (HR) priorities included the following:

Implementing a Human Resources Management Strategy to support the human capital aspect in the delivery of the •Organisation’s objectives.

Creating sound employee relations and open communication channels by distributing information to all employees in a •structured and timely manner.

Creating employee engagement in order to achieve business objectives.•

Promoting overall employee wellness.•

4.4 Workforce Planning and Key Strategies to Attract and Recruit a Skilled and Capable Workforce

The Board has developed the following Policies to attract and retain a skilled and capable workforce:

Recruitment and Selection Policy.•

Remuneration and Reward Policy.•

Employee Performance Management Framework. •

Succession and Retention Policy.•

4.5 Employee Performance Management Framework

The ECGBB has an existing Integrated Performance Management Policy. This policy ensures that the Organisation’s strategic objectives are translated into operational and performance objectives that are cascaded at every level (from top to bottom throughout the Organisation). It also gives a clear indication as to how both the Organisation and its employees are functioning. This performance is then measured on a quarterly basis in order to assess whether the employees are moving in the right direction.

To ensure that this process is managed effectively, the Organisation acquired an electronic performance management system.

4.6 Employee Wellness Programmes

The Board values the wellness of its employees, and during the year under review facilitated three wellness days to create awareness in various areas of health and wellness amongst all employees.

The Board is also in the process of contracting a wellness provider to facilitate our Employee Assistance Programme. This will ensure that staff members have access to certain wellness programmes throughout the year.

4.7 Policy Development

Achievement Highlights

The following HR Policies were either reviewed /or developed:

Employee Wellness Policy.•

Employment Equity Policy.•

Human Resources Manual.•

Remuneration and Reward Policy.•

Bursary Policy.•

Succession Planning and Retention Policy.•

Disciplinary Code and Procedure.•

Challenges faced by the Public Entity

The lack of budget to make use of external consultants for certain organisational development interventions, e.g. •organisational design.


The lack of adequate office space to accommodate employees.•

The implementation of a leadership programme that will improve performance of the management team.•

Future HR Plans/Goals

To implement the Human Resources Management Strategy, which will ensure that a number of programmes and policies •are put in place.

To become an employer of choice where employees are engaged and positively contribute toward the Organisation’s •objectives.

4.8 Oversight Statistics

Personnel Cost by Programme

ProgrammeTotal Expenditure

for the Entity (R’000)

Personnel Expenditure

(R’000)

Personnel Expenditure as

a % of Total Expenditure

No. of Employees

Average Personnel Cost per Employee

(R’000)

Office of the CEO 4 622 2 661 57.6% 2 1 331

Compliance & Licensing

20 890 11 598 55.5% 21 552

Financial Management

7 922 3 825 48.3% 7 546

Human Resources

5 335 2 421 45.4% 8 303

Information Technology

1 770 1 201 67.9% 2 601

Legal Services & Board Secretariat

6 484 1 389 21.4% 2 695

Strategic Management Services

2 595 2 038 78.5% 4 510

Personnel Cost by Salary Band

LevelPersonnel

Expenditure (R’000)

% of Personnel Expenditure to Total

Personnel Cost (R’000)

No. of EmployeesAverage Personnel Cost per Employee

(R’000)

Senior management 4 580 18.2% 3 1 527

Professional qualified 3 675 14.6% 4 919

Skilled 4 158 16.5% 5 832

Semi-skilled 12 375 49.2% 30 413

Unskilled 346 1.4% 4 87

Total 25 134 100% 46 3 778


Performance Awards

Programme Performance RewardsPersonnel Expenditure

(R’000)

% of Performance Rewards to Total Personnel Cost

(R’000)

Senior management 782 4 580 3.1%

Professional qualified 161 3 675 0.6%

Skilled 411 4 158 1.6%

Semi-skilled 617 12 375 2.5%

Unskilled 28 346 0.1%

Total 1 944 25 134 7.9%

Training Costs

Directorate/ Business Unit

Personnel Expenditure

(R’000)

Training Expenditure

(R’000)

Training Expenditure as a % of Personnel

Cost.

No. of Employees trained

Average Training Cost per

Employee(R’000)

Office of the CEO 2 661 20 0.8% 1 20

Strategic Management Services

2 038 70 3.4% 4 18

Legal Services and Board Secretariat

1 389 32 2.3% 2 16

Corporate Services

7 447165

2.2% 9 18

Compliance and Licensing

11 598 186 1.6% 18 10

* Training does not include costs relating to travel and accommodation.

Employment and vacancies

Programme2011/12No. of

Employees

2013/2014 Approved Posts

2013/2014No. of

Employees

2013/2014 Vacancies

% of Vacancies

Compliance & Licensing

18 23 21 2 8.7%

Corporate Services 16 17 17 - -

Legal Services 2 3 2 1 33.3%

Office of the CEO 2 2 2 - -

Strategic Services Management

4 5 4 1 20%

Senior Management 3 3 3 - -

Professional qualified 4 5 4 1 25%

Skilled 6 6 5 1 16.7

Semi-skilled 3 32 30 2 6.1%

Unskilled 4 4 4 - -

Total 42 50 46 4 8%


Employment Changes

Salary BandEmployment at Beginning of the Period

Appointments TerminationsEmployment at End of the Period

Senior Management 3 - - 3

Professional qualified 4 1 1 4

Skilled 6 0 1 5

Semi-skilled 25 8 3 30

Unskilled 4 - - 4

Total 42 9 5 46

Reasons for Staff Leaving

Reason Number % of Total No. of Staff leaving

Death - 0

Resignation 5 100%

Dismissal - -

Retirement - -

Ill health - -

Expiry of contract - -

Other - -

Total 5 100%

Labour Relations: Misconduct and Disciplinary Action

Nature of Disciplinary Action Number

Verbal warning 1

Written warning -

Final written warning 1

Dismissal -

Equity Target and Employment Equity Status

Levels MALE

African Coloured Indian White

Current Target Current Target Current Target Current Target

Senior management

2 2 1 1 - 1 - -

Professional qualified

2 2 - 1 1 - - -

Skilled 2 8 - - - - - 3

Semi-skilled 8 2 - - - - 3 -

Unskilled 2 1 - - - - - -

Total 16 15 1 2 1 1 3 3



Levels FEMALE

AFRICAN COLOURED INDIAN WHITE

Current Target Current Target Current Target Current Target

Senior management

- 2 - 1 - - - -

Professional qualified

1 - - 3 - - - 1

Skilled 2 10 - 1 - - 1 1

Semi-skilled 18 5 1 1 - 1 - -

Unskilled 2 - - 1 - - - -

Total 23 17 1 7 - 1 1 2


Levels Disabled Staff

Male Female

Current Target Current Target

Senior management - - - -

Professional qualified - - - -

Skilled - 1 - -

Semi-skilled - - - -

Unskilled - - - -

Total - 1 - -


5. Part E:Financial Information


5. Part E: Financial Information 5.1 Statement of Responsibility

Statement of Responsibility and Confirmation of Accuracy for the Annual Report

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

All information and amounts disclosed in the Annual Report is consistent with the Annual Financial Statements audited by the Auditor-General.

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 Accounting Authority is responsible for the preparation of the Annual Financial Statements and for the judgements made in this information. The Accounting Authority is responsible for establishing, and implementing a 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 an 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 entity for the financial year ended 31 March 2014.

Name: Adv N. MayosiCapacity: ChairpersonDate: 23 May 2014

Name: R.M. ZwaneCapacity: Chief Executive OfficerDate: 23 May 2014


5.2 Report of the External Auditor

REPORT OF THE AUDITOR-GENERAL TO THE EASTERN CAPE PROVINCIAL LEGISLATURE ON EASTERN CAPE GAMBLING AND BETTING BOARD

REPORT ON THE FINANCIAL STATEMENTS

Introduction

1. I have audited the financial statements of the Eastern Cape Gambling and Betting Board set out on pages 59 to 88, which comprise the statement of financial position as at 31 March 2014, the statement of financial performance, statement of changes in net assets, cash flow statement, and statement of comparison of budget information with actual information for the year then ended, as well as the notes, comprising a summary of significant accounting policies and other explanatory information.

Accounting Authority’s Responsibility for the Financial Statements

2. The Accounting Authority is responsible for the preparation and fair presentation of these financial statements 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), 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.

Auditor-General’s Responsibility

3. My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with the Public Audit Act of South Africa, 2004 (Act No. 25 of 2004) (PAA), the general notice issued in terms thereof, and International Standards on Auditing. Those standards require that I comply with ethical requirements, and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

4. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by Management, as well as evaluating the overall presentation of the financial statements.

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

Opinion

6. In my opinion, the financial statements present fairly, in all material respects, the financial position of the Eastern Cape Gambling and Betting Board as at 31 March 2014 and its financial performance and cash flows for the year then ended, in accordance with SA Standards of GRAP and the requirements of the PFMA.

Emphasis of Matters

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

Restatement of Corresponding Figures

8. As disclosed in Notes 9, 15, 25 and 31 to the financial statements, the corresponding figures were restated as a result of misstatements identified by Management.

Irregular Expenditure

9. As disclosed in Note 33 to the financial statements, the public entity incurred and condoned irregular expenditure (for which goods/services were received) of R558 409 as the expenditure incurred was in contravention of Treasury regulations and the PFMA relating to Supply Chain Management (SCM) practices.


Report on Other Legal and Regulatory Requirements

10. In accordance with the PAA and the general notice issued in terms thereof, I report the following findings on the reported performance information against predetermined objectives for selected programmes presented in the annual performance report, non-compliance with legislation as well as internal control. The objective of my tests was to identify reportable findings as described under each subheading, but not to gather evidence to express assurance on these matters. Accordingly, I do not express an opinion or conclusion on these matters.

Predetermined Objectives

11. I performed procedures to obtain evidence about the usefulness and reliability of the reported performance information for the following selected programmes presented in the annual performance report of the public entity for the year ended 31 March 2014:

Programme 1: Corporate services management and administration on pages 25 to 28. °

Programme 2: Gambling regulation and consumer protection on pages 28 to 31. °

12. I evaluated the reported performance information against the overall criteria of usefulness and reliability.

13. I evaluated the usefulness of the reported performance information to determine whether it was presented in accordance with the National Treasury’s annual reporting principles and whether the reported performance was consistent with the planned objectives. I further performed tests to determine whether indicators and targets were well defined, verifiable, specific, measurable, time bound and relevant, as required by the National Treasury’s Framework for Managing Programme Performance Information (FMPPI).

14. I assessed the reliability of the reported performance information to determine whether it was valid, accurate and complete.

15. I did not raise any material findings on the usefulness and reliability of the reported performance information for the selected programmes.

Additional Matter

16. Although I raised no material findings on the usefulness and reliability of the reported performance information for the selected programmes, I draw attention to the following matter:

Achievement of Planned Targets

17. Refer to the annual performance report on pages 13 to 32 for information on the achievement of the planned targets for the year.

Compliance with Legislation

18. I performed procedures to obtain evidence that the public entity had complied with applicable legislation regarding financial matters, financial management and other related matters. My findings on material non-compliance with specific matters in key legislation, as set out in the general notice issued in terms of the PAA, are as follows:

Annual Financial Statements and Reporting

19. The financial statements submitted for auditing were not prepared, in all respects, in accordance with the prescribed financial reporting framework as required by Section 55(1)(b) of the PFMA. Material misstatements in disclosure items identified by the auditors in the submitted financial statements were subsequently corrected, resulting in the financial statements receiving an unqualified audit opinion.

Procurement and Contract Management

20. Goods and services (the category of R500 000 and below) were procured without obtaining the required price quotations, as required by Treasury regulation 16A6.1.


Internal Control

21. I considered internal control relevant to my audit of the financial statements, performance report and compliance with legislation. The matters reported below are limited to the significant internal control deficiencies that resulted in the findings on non-compliance with legislation included in this report.

Leadership

22. Leadership did not adequately monitor the implementation of internal controls and approved policies and procedures, especially relating to SCM. In addition, the entity did not ensure that there were adequate skills and resources relating to financial reporting to correctly account for the financial transactions in the records of the entity.

Financial and Performance Management

23. The financial statements submitted for auditing were subject to amendments as a result of inadequate monitoring of, and reviews performed, on the financial statements to ensure that errors were detected and corrected in a timely manner.

24. Material non-compliance was identified and reported. This was due to Management not considering compliance with all relevant SCM regulations as well as the entity’s SCM policy when procuring goods and services.

Governance

25. The internal audit function was not fully effective during the year under review. This was evidenced by a lack of review of the maintenance of controls, specifically relating to SCM and the review of the Annual Financial Statements.

East London31 July 2014

East London

31 July 2014


Restated

2014 2013

Notes R R

ASSETS

Current assets

Cash and cash equivalents 2 3,869,283 8,941,794

Prepayments 3 360,905 191,154

Receivable on collection for distribution from non-exchange transactions 4 10,993,565 10,248,452

Trade and other receivables from exchange transactions 5 1,392,302 1,768,788

16,616,055 21,150,188

Non-current assets

Property, plant and equipment 6 7,587,902 7,127,202

Intangible assets 7 151,079 145,583

TOTAL ASSETS 24,355,036 28,422,973

LIABILITIES

Current liabilities

Collections for distributions from non-exchange transactions 8 (11,359,017) (5,750,480)

Trade and other payables from exchange transactions 9 (7,788,987) (17,163,006)

Provisions 10 (3,418,157) (2,782,270)

TOTAL LIABILITIES (22,566,161) (25,695,756)

NET ASSETS 1,788,875 2,727,217

Net assets

Accumulated surplus 1,788,875 2,727,217

TOTAL NET ASSETS 1,788,875 2,727,217

STATEMENT OF FINANCIAL POSITIONAs at 31 March 2014


Restated

2014 2013

Notes R R

REVENUE

Revenue from exchange transactions 11 7,340,074 8,633,205

Revenue from non-exchange transactions 11 42,687,000 35,687,000

50,027,074 44,320,205

EXPENDITURE

Administrative expenditure 12 10,845,670 11,331,506

Corporate social investment 13 241,153 883,316

Consumer protection and public education 14 5,710,552 5,461,934

Depreciation 6 493,490 476,075

Amortisation of intangible assets 7 96,141 56,464

Employee costs 15 25,694,443 20,284,778

Impairment loss - other debtors - 17,026

Legal costs 2,036,155 719,433

Marketing and research costs 16 1,248,791 1,418,371

Other operating expenses 17 2,878,289 3,212,175

Statutory audit fees 18 2,083,863 1,878,750

Zone 4 settlement - (297,579)

TOTAL EXPENDITURE 51,328,547 45,442,249

NET EXPENDITURE 1,301,437 1,122,044

Finance income 19 390,013 384,282

Loss on disposal of property, plant and equipment 26,882 9,346

TOTAL OTHER INCOME 363,131 374,936

DEFICIT FOR THE YEAR 938,342 747,108

STATEMENT OF FINANCIAL PERFORMANCEFor the year ended 31 March 2014


Accumulated Total

Surplus

R R

Balance as at 1 April 2012 4,262,374 4,262,374

Correction of error 788,049 788,049

Balance as at 1 April 2012 restated

Deficit for the year 694,656 694,656

Correction of error 52,452 52,452

Restated deficit 747,108 747,108

Restated balance as at 31 March 2013 2,727,217 2,727,217

Restated balance as at 1 April 2013 2,727,217 2,727,217

Deficit for the year 938,342 938,342

Balance as at 31 March 2014 1,788,875 1,788,875

STATEMENT OF CHANGES IN NET ASSETSFor the year ended 31 March 2014


Restated

Notes 2014 2013

R R

CASH FLOWS FROM OPERATING ACTIVITIES

Receipts

Gambling fees and taxes

126,450,449 116,728,522

Grant 42,687,000 35,687,000

Receipts from customers 7,523,288 11,689,280

176,660,737 164,104,802

Payments

Gambling fees and taxes 119,305,388 117,891,502

Payment to suppliers and employees 61,735,164 45,553,382

181,040,552 163,444,884

Net cash flows from operating activities 20 (4,379,815) 659,918

CASH FLOWS FROM INVESTING ACTIVITIES

Interest received 390,013 384,282

Proceeds from sale of property, plant and equipment 6 16,514 2,718

Purchase of property, plant and equipment 6 (997,586) (778,977)

Purchase of intangible assets

7 (101,637) (50,902)

Net cash flows from investing activities (692,696) (442,879)

Net increase in cash and cash equivalents (5,072,511) 217,039

Cash and cash equivalents at beginning of the year 8,941,794 8,724,755

Cash and cash equivalents at end of the year 2 3,869,283 8,941,794

CASH FLOW STATEMENTFor year ended 31 March 2014


Notes Approved Budget

Final Approved

Budget

Actual Amounts

Difference: Final

Budget and Actual

R R R R

REVENUE

Revenue from exchange transactions 6,111,514 8,648,131 7,340,074 (1,308,730)

Revenue from non-exchange transactions 40,463,000

40,463,000

42,687,000

2,224,000

46,574,514 49,111,131 50,027,074 915,270

EXPENDITURE

Administrative expenditure 6,162,998 7,917,101 10,845,670

2,911,501

Corporate social responsibility 244,000 337,472 241,153 (96,319)

Consumer protection and public education 6,774,550 5,729,550 5,710,552 (18,998)

Depreciation 588,708 588,708 493,490 (95,218)

Amortisation of intangible assets 117,359 117,359 96,141 (21,218)

Employee costs 24,872,631 26,584,773 25,694,443 (893,750)

Legal costs 767,397 1,626,591 2,036,155 409,564

Marketing costs 670,780 670,780 1,248,791 576,667

Other operating expenses 2,322,131 2,322,131 2,878,289 560,979

Statutory audit fees 1,416,667 2,216,667 2,083,863 (132,804)

TOTAL EXPENDITURE 43,937,221 48,111,131 51,328,547 3,200,404

TOTAL (SURPLUS) / DEFICIT (2,637,293) (1,000,000) 1,301,473 2,285,134

Finance income - - 390,013 390,013

Loss on disposal of property, plant and equipment

- - 26,882 26,882

- - 363,131 363,131

(SURPLUS) / DEFICIT FOR THE YEAR 20 (2,637,293)

(1,000,000)

938,342 1,922,003

CAPEX 400,000 1,000,000 1,099,223 99,223

(SURPLUS) / DEFICIT FOR THE YEAR INCLUDING CAPEX

(2,237,293) - 2,037,565 2,021,226

STATEMENT OF COMPARISON OF ACTUAL AND BUDGET AMOUNTSFor year ended 31 March 2014


1. Accounting Policies for the Year ended 31 March 2014

1.1 Reporting Entity

These Annual Financial Statements are for the Eastern Cape Gambling and Betting Board. The financial statements encompass the reporting entity as specified in the Public Finance Management Act, Act No. 1 of 1999, as amended. This comprises:

Province of the Eastern Cape Provincial Planning and Treasury.•

Province of the Eastern Cape Economic Development, Environmental Affairs and Tourism.•

1.2 Basis of Preparation

The Annual Financial Statements have been prepared in accordance with the effective Standards of Generally Recognised Accounting Practice (GRAP) for the Accrual Basis of Accounting, including any interpretations, guidelines and directives issued by the Accounting Standards Board.

The Annual Financial Statements have been prepared on a going concern basis and the accounting policies have been applied consistently throughout the period.

A summary of the significant accounting policies, which have been consistently applied, are disclosed below.

The following Standard of GRAP has been approved and an effective date has been determined by the Minister of Finance. The respective effective dates of this Standard falls within reporting periods beginning after 1 April 2013 and have not been early adopted by the Board:

The following Standards of GRAP have been approved, but the Minister of Finance has not determined an effective date yet.

Reference Topic Impact on GRAP reporting framework

GRAP 20 Related Party Disclosures

Compliance with GRAP 20 not yet required. The accounting policy of the board was followed. Effect on future financial years to be assessed after Minister of Finance has determined an effective date.

The following Standards of GRAP have been approved but are not required to be applied by the Board:

Reference Topic Impact on GRAP reporting framework

GRAP 18 Segment Reporting Impact to be assessed on future reporting periods when application becomes compulsory (when effective date is announced).

GRAP 105Transfer of Functions Between Entities Under Common Control

Impact to be assessed on future reporting periods should the Board find itself in a position whereby functions are transferred to entities under common control.

GRAP 106Transfer of Functions Between Entities Not Under Common Control

Impact to be assessed on future reporting periods should the Board find itself in a position whereby functions are transferred to entities not under common control.

GRAP 107 MergersImpact to be assessed on future reporting periods should the Board find itself in a position whereby it mergers with another entity.

NOTES TO THE ANNUAL FINANCIAL STATEMENTSFor year ended 31 March 2014


1.2.1 Property, plant and equipment

Property, plant and equipment are stated at historical cost less accumulated depreciation. Depreciation is calculated on the straight-line method to write off the cost of assets to their residual values over their anticipated useful lives.

The useful lives of items of property, plant and equipment have been assessed as follows:

Item Average useful life

Buildings 50 years

Fixtures and fittings 10 years

Motor vehicles 5 years

Office and operating equipment 4 years

Sundry assets 5 years

Office furniture 10 years

Computer equipment 3 years

OtherCell phones•Library books •

2 years3 years

Land is not depreciated as it is deemed to have an indefinite life.

The useful lives as well as residual values are reviewed annually.

Gains or losses arising on the disposal of property, plant and equipment are determined as the difference between the sales proceeds and the carrying amount of the assets, and are recognised in the statement of financial performance as realised.

Property, plant and equipment are reviewed for impairment losses whenever events indicate that the carrying amount may not be recoverable. An impairment loss is recognised in respect of the amount by which the carrying amount of the asset exceeds its recoverable amount, which is the higher of an asset’s net selling price and value in use. An impairment loss or reversal of an impairment loss is recognised as an expense/income in the statement of financial performance as incurred.

1.2.2 Intangible Assets

An intangible asset is recognised when

it is probable that the expected future economic benefit or service potential that is attributable to the asset will flow to the •entity; and

the cost or fair value of the asset can be measured reliably.•

Intangible assets are carried at cost less accumulated amortisation and any impairment losses.

Software is amortised on a straight‐line basis over its anticipated useful life. Generally, costs associated with developing computer software programs are recognised as an expense incurred. However, costs that are clearly associated with an identifiable and unique product, which will be controlled by the entity and have a probable benefit exceeding the cost beyond one year, are recognised as intangible assets.

Expenditure which enhanced and extended the benefits of computer software programs beyond the original life of the software is capitalised. Computer software development costs recognised as assets are amortised using the straight‐line method over their useful lives. Costs associated with the maintenance of existing computer software programs are expensed as incurred.

The useful life of the intangible assets has been assessed as follows:

Item Average useful life

Computer software 3 years



Intangible assets are derecognised when the asset is disposed of or when there are no further economic benefits or service potential expected from the use of the asset. The gain or loss arising on the disposal or retirement of an intangible asset is determined as the difference between the sales proceeds and the carrying value, and is recognised in the statement of financial performance.

1.2.3 Financial Instruments

Financial assets and financial liabilities are recognised on the entity’s Statement of Financial Position when the entity becomes party to the contractual provisions of the instrument.

Impairment of Financial Assets

The entity assesses at each reporting date whether there is any objective evidence that a financial asset, or a group of financial assets, is impaired. A financial asset, or a group of financial assets, is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that have occurred after the initial recognition of the asset (an incurred ‘loss event’) and that loss event has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include indications that the debtors, or a group of debtors, is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial re-organisation, and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.

Trade and Other Receivables

Trade and other receivables are categorised as financial instruments at amortised cost and are initially recognised at fair value plus direct transaction costs, and subsequently carried at amortised cost using the effective interest rate method, less any impairment loss recognised to reflect irrecoverable amounts. Amortised cost refers to the initial carrying amount, plus interest, less repayments and impairments.

Cash and Cash Equivalents

Cash includes cash on hand (including petty cash) and cash with banks (including call deposits). Cash equivalents are short-term, highly liquid investments, readily convertible into known amounts of cash that are held with registered banking institutions with maturities of three months or less, and are subject to an insignificant risk of change in value. For the purposes of the Statement of Cash Flows, cash and cash equivalents comprise cash on hand, deposits held on call with banks, net of bank overdrafts. The entity categorises cash and cash equivalents as at fair value.

Derecognition of Financial Instruments

The Board derecognises a financial asset (or group of financial assets) when:

the contractual rights to the cash flows arising from the financial asset have expired;•

the entity transfers the financial asset, including substantially all the risks and rewards of ownership;•

the entity transfers the contractual rights to receive the cash flows of the financial asset, but assumes a corresponding •obligation to pay the cash flows to one or more recipients, and consequently transfers substantially all the risks and benefits associated with the asset; or

no future economic benefits are expected.•

A financial liability, or group of financial liabilities, is derecognised when, and only when, the liability is extinguished, i.e. when the obligation specified in the contract is discharged, cancelled or expires.

1.2.4 Retirement Benefits

The policy of the Board is to provide retirement benefits through an established fund governed by the Pension Fund Act.

The provident fund is a defined contribution fund which does not require an actuarial valuation. Contributions to the provident fund are charged to the Statement of Financial Performance in the year to which they relate. The Board has no obligation to fund post-retirement medical benefits.

1.2.5 Provisions and Contingencies

Provisions are recognised when



the entity has a present obligation as a result of a past event;•

it is probable that an outflow of resources embodying economic benefits or service potential will be required to settle the •obligation; and

a reliable estimate can be made of the obligation.•

The amount of a provision is the best estimate of the expenditure expected to be required to settle the present obligation at the reporting date.

Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. Provisions are reversed if it is no longer probable that an outflow of resources embodying economic benefits or service potential will be required to settle the obligation.

Contingent Assets and Contingent Liabilities

Contingent assets and contingent liabilities are not recognised.

1.2.6 Revenue

Revenue comprises principally of:

Revenue from Exchange Transactions:

Fees charged for services rendered (i.e. annual admin fees).•

Recoveries of expenses incurred in the production of revenue.•

Sundry income.•

Revenue from Non-Exchange Transactions (Taxes and Transfers)

Grant funding received from the Provincial Government.•

Revenue from Exchange Transactions is recognised on an accrual basis using the following methods to determine the stage of completion:

Fees charged for services rendered are recognised when they become due in terms of the Eastern Cape Gambling and •Betting Act, No 5 of 1997. These fees are invoiced in advance in December each year for the financial year ending 31 March.

Recoveries of expenses incurred in the production of revenue are accrued on completion of service rendered.•

Revenue from Exchange Transactions is measured at amortised cost on the date it accrues.

Revenue from Non-Exchange Transactions:

Revenue relating to operational expenditure is recognised in the period in which the transfer agreement becomes binding and is measured at fair value as at the date of recognition.

Gambling Taxes and Fees to the Provincial Treasury and Planning

The gambling taxes and part of the fees collected are paid over to the Provincial Revenue Fund at the end of each month, as prescribed by the Gambling and Betting Act. These gambling taxes and fees are not recognised as revenue as they are collected on behalf of the state. However, an asset and liability is recognised when taxes and fees become receivable from licensees and payable to the state. Receivables and payables for collection and distribution to the state are initially measured at cost and carried at fair value.

1.2.7 Trade and Other Payables

Trade payables are obligations to pay for goods or services that have been acquired from suppliers in the ordinary course of business. Accounts payable are classified as current liabilities if payment is due within one year (or in the normal operating cycle of the business, if longer). If not, they are presented as non-current liabilities.

Trade payables are recognised initially at fair value and subsequently measured at amortised cost, using the effective interest rate method.



Leave Accrual

The employees of the Board are entitled to 22 working days per annum as leave gratuity. The policy adopted by the Board is that all its employees should take leave during the year, failing which they will forfeit their leave days on 30 June each year. The leave days are recognised as they accrue to employees. The liability is based on the total amount of leave days due to each employee at year end, multiplied by each employee’s respective daily rate of remuneration which is calculated from the respective employee’s gross annual remuneration package.

Thirteenth Cheque

The employees of the Board can structure their salary package to have a bonus portion (thirteenth cheque) which is paid on 15 January each year. The bonus is recognised as it accrues to employees who have elected to structure their salary packages to have a bonus portion.

1.2.8 Operating Leases

Leases where the lessor retains the risk and reward of ownership of the underlying asset are classified as operating leases. Payments made under operating leases are charged to the statement of financial performance on a straight-line basis over the period of the lease.

1.2.9 Inventory

It is the policy of the Board to expense the cost of stationary items as and when they are purchased.

1.2.10 Fruitless and Wasteful Expenditure

Fruitless expenditure means expenditure which was made in vain and would have been avoided had reasonable care been exercised.

All expenditure relating to fruitless and wasteful expenditure is recognised as an expense in the statement of financial performance in the year that the expenditure was incurred. The expenditure is classified in accordance with the nature of the expense, and where recovered, it is subsequently accounted for as revenue in the statement of financial performance.

1.2.11 Irregular Expenditure

Where irregular expenditure was incurred in the previous financial year and is only condoned in the following financial year, the register and the disclosure note to the Annual Financial Statements must be updated with the amount condoned.

Irregular expenditure that was incurred and identified during the current financial year, and which was not condoned by the National Treasury or the relevant authority, must be recorded appropriately in the irregular expenditure register. If liability for the irregular expenditure can be attributed to a person, a debt account must be created if such a person is liable in law. Immediate steps must be taken thereafter to recover the amount from the person concerned. If recovery is not possible, the accounting officer or Accounting Authority may write off the amount as debt impairment and disclose such in the relevant note to the Annual Financial Statements. The irregular expenditure register must also be updated accordingly. If the irregular expenditure has not been condoned and no person is liable in law, the expenditure related thereto must remain against the relevant expenditure item, be disclosed as such in the note to the Annual Financial Statements, and updated accordingly in the irregular expenditure register.

1.2.12 Taxation

No provision for taxation has been made as the Eastern Cape Gambling and Betting Board is exempted in terms of Section 10 (1)(cA)(1) of the Income Tax Act (Act No. 58 of 1962).

1.2.13 Related Parties

The entity operates in an economic sector currently dominated by entities directly or indirectly owned by the South African Government. As a consequence of the constitutional independence of the three spheres of government in South Africa, only entities within the national/provincial/local sphere of government are considered to be related parties.

1.2.14 Budget Information

Comparison of budget and actual amounts are presented in a separate additional financial statement: Statement of Comparison of Budget and Actual Amounts. The entity presents both the approved and the final budget amounts. Differences (variances) between the actual amounts and budget amounts are also presented. The financial statements and budget are both prepared on the accrual basis. The entity has elected to prepare a separate financial statement to present the budget to actual comparison.



1.2.15 Accounting Estimates and Judgements

Management is required to make estimates and assumptions that affect the amounts represented in the Annual Financial Statements and related disclosures. The determination of estimates requires the exercise of judgement based on various assumptions and other factors, including historical experience. Actual results in the future may vary from the estimates. Judgements and estimates are principally made in the following areas:

The calculation of residual value per asset falling under property, plant and equipment.•

The estimation of the remaining useful lives of each item of property, plant and equipment. •

1.2.16 Commitments

Commitments are not recognised in the statement of financial position as a liability or as expenditure in the statement of •financial performance, but are included in the disclosure notes.

Commitments are disclosed for:•

Approved and contracted commitments, where the expenditure has been approved and the contract has been awarded °at the reporting date.

Approved but not yet contracted commitments, where the expenditure has been approved and the contract has yet to °be awarded or is awaiting finalisation at the reporting date.

Items are classified as commitments where the entity commits itself to future transactions that will normally result in the •outflow of resources.

Other commitments for contracts are non-cancellable or only cancellable at significant cost, and contracts should relate to •something other than the business of the entity.

1.2.17 Subsequent Events

Events between the financial year ending 31 March 2014 and the Annual Financial Statements reporting date, which could materially impact on the fair presentation of the Annual Financial Statements, have been duly considered.



2014R

Restated2013

R

2. CASH AND CASH EQUIVALENTS

Cash and cash equivalents consist of:

Bank balances 1,833,943 2,225,957

Cash on hand 5,000 5,000

1,838,943 2,230,957

Investigation deposits 2,030,340 6,710,837

3,869,283 8,941,794

3. PREPAYMENTS

Business licences 73,277 20,035

Insurance expenditure 48,961 49,644

Computer licences 151,782 15,859

Training on leadership 51,870 -

Other prepaid expenditure 35,015 105,616

360,905 191,154

4. RECEIVABLES ON COLLECTION FOR DISTRIBUTION FROM NON-EXCHANGE TRANSACTIONS

Government taxes and levies from non-exchange transactions 10,993,565 10,248,452

5. TRADE AND OTHER RECEIVABLES FROM EXCHANGE TRANSACTIONS

Deposits 16,897 16,897

Mbizana Development Trust 1,266,610 1,524,387

Sundry debtors 21,148 212,571

Trade debtors 87,647 14,933

1,392,302 1,768,788

Less: Impairment of trade and other receivables - -

1,392,302 1,768,788

Fair value of trade and other receivables

Trade receivables - Age analysis

120 days 5,000 -

90 days - -

60 days - 5,250

30 days - -

Current 82,647 9,683

TOTAL 87,647 14,933



2014R

Restated2013

R

Trade and other receivables impaired

The amount of the impairment was R0 as of 31 March 2014 (2013: R0)

Opening balance - 143,460

Reconciliation of provision for impairment of trade and other receivables - -

Utilisation of impairment - (143,460)

- -

Amounts past due, but not impaired 5,000 5,250

6. PROPERTY, PLANT AND EQUIPMENT

2014 2013

Cost (R)

Accumulated Depreciation

and Accumulated Impairment

(R)

Carrying Value (R)

Cost (R)

Accumulated Depreciation

and Accumulated Impairment

(R)

Carrying Value (R)

Buildings – note 5,239,472 987,718 4,251,754 5,232,974 987,718 4,245,256

Cell phones 135,127 104,771 30,356 147,262 49,646 97,616

Computer equipment 1,113,766 440,363 673,403 635,633 384,485 251,148

Fixtures and fittings 288,325 103,600 184,725 277,286 95,865 181,421

Furniture and equipment 1,142,430 639,094 503,336 855,480 552,846 302,634

Land 1,070,750 - 1,070,750 1,070,750 - 1,070,750

Library books 215,814 215,814 - 215,814 215,814 -

Motor vehicles 1,354,392 480,813 873,578 1,354,392 376,015 978,377

10,560,075 2,972,173 7,587,902 9,789,591 2,662,389 7,127,202

Reconciliation of property, plant and equipment – 31 March 2014

Opening

Balance (R)Additions (R) Disposals (R)

Depreciation (R)

Total (R)

Buildings – note 4,245,256 6,498 - - 4,251,754

Cell phones 97,616 5,699 12,152 60,807 30,356

Computer equipment 251,148 651,369 23,469 203,145 675,903

Fixtures and fittings 181,421 33,577 3,600 26,673 184,725

Furniture and equipment 302,634 300,443 4,175 98,067 500,834

Land 1,070,750 - - - 1,070,750

Motor vehicles 978,377 - - 104,798 873,579

7,127,202 997,586 43,396 493,490 7,587,902

Note – there is no charge in 2014 due to the valuation of buildings which results in a residual value exceeding the cost.



Reconciliation of property, plant and equipment – 31 March 2013

Opening Balance

(R)Additions (R) Disposals (R) Depreciation (R) Total (R)

Buildings 4,352,011 - - 106,755 4,245,256

Cell phones 24,182 123,753 - 50,320 97,616

Computer equipment 278,092 155,965 8,771 174,138 251,148

Fixtures and fittings 58,133 144,698 3,215 18,195 181,421

Furniture and equipment 288,687 57,433 80 43,406 302,634

Land 1,070,750 - - - 1,070,750

Library books - - - - -

Motor vehicles 764,510 297,128 - 83,261 978,377

6,836,365 778,977 12,066 476,075 7,127,202

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

The Board reviewed the residual values and remaining useful lives of property, plant and equipment items. It was deemed impractical to determine the effect on future reporting periods. It was not deemed practical to determine the residual values of the library books and, as such, these items remain in use with a zero carrying value.

7. INTANGIBLE ASSETS

2014 2013

Summary

Cost/Valuation (R)

Accumulated Amortisation (R)

Carrying Value (R)

Cost/Valuation (R)

Accumulated Amortisation

(R)

Carrying Value (R)

Computer software 307,534 156,455

151,079 205,897 60,314 145,583

307,534 156,455 151,079 205,897 60,314 145,583

Reconciliation of intangible assets – March 2014

Opening

Balance (R) Additions (R) Disposals

(R) Transfers (R) Amortisation

(R) Total (R)

Computer software 145,583 101,637 - - 96,141 151,079

Total 145,583 101,637 - - 96,141 151,079

Reconciliation of intangible assets – March 2013

Opening

Balance (R) Additions (R) Disposals

(R) Transfers (R) Amortisation

(R) Total (R)

Computer software 151,145 50,902 - - 56,464 145,583

Total 151,145 50,902 - - 56,464 145,583



2014

R

Restated2013

R

8. COLLECTIONS FOR DISTRIBUTION FROM NON-EXCHANGE TRANSACTIONS

Taxes and levies 11,359,017 5,750,480

11,359,017 5,750,480

9. TRADE AND OTHER PAYABLES FROM EXCHANGE TRANSACTIONS

Accruals 2,839,378 2,734,304

Investigation deposit accounts 2,014,777 6,710,837

Trade payables 2,934,832 7,717,865

7,788,987 17,163,006

Trade and other payables are recorded at amortised cost

10. PROVISIONS

Performance bonus provision opening balance 2,782,270 -

Provision used during the year (1,938,685) (2,669,493)

(Over)/Under provision (843,585) 2,669,493

- -

Provision for the year 3,418,157 2,782,270

Performance bonus provision closing balance 3,418,157 2,782,270

11. REVENUE

Revenue from exchange transactions:

The amounts included in revenue arising from exchange of services are as follows:

Bad debts recovered - 136,035

Over provision of debtors - 7,425

Fees 3,589,876 3,323,114

Recoveries 3,749,030 4,873,708

Sundry income 1,168 292,923

7,340,074 8,633,205

Revenue from non-exchange transactions:

The amount included in revenue arising from non-exchange transactions is as follows:

Government funding – DEDEAT 42,687,000 35,687,000



2014

R

Restated2013

R

12. ADMINISTRATIVE EXPENSES

Bank charges 35,343 34,912

Board of Directors – fees 1,897,450 3,077,840

Board of Directors – travel and subsistence 927,941 930,023

Consultation fees 1,028,670 780,957

Evaluation and hearings 2,055,580 1,987,133

Inspection, investigation, compliance and audit costs 678,865 531,117

Stationary and printing 852,798 496,948

Training and development 1,722,811 1,956,998

Travelling and subsistence 1,486,901 1,386,356

Special events 159,311 149,222

10,845,670 11,331,506

13. CORPORATE SOCIAL INVESTMENT

The Board has supported various projects in the year under review in the fields of early childhood education, sport, health and social welfare. The amount spent on Corporate Social Investment for 2014 is R241,153 (2013 – R883,316).

14. CONSUMER PROTECTION AND PUBLIC EDUCATION

The Board undertook consumer protection and public education activities amounting to R5,710,552 for 2014 (2013 – R5,461,934).

15. EMPLOYEE COSTS

Basic salary 17,937,458 13,867,390

Casual and temporary labour 689,092 252,150

Funeral benefit 6,178 4,490

Insurance 83,497 111,938

Medical aid – company contributions 825,433 616,324

Pension 1,794,846 1,437,135

Performance awards 2,714,894 2,669,493

Recruitment costs 388,652 253,215

Other non-pensionable allowances 1,060,418 1,013,934

Unemployment Insurance Fund 68,340 58,709

Skills Development Levy 125,634 -

25,694,443 20,284,778

The Board registered for Skills Development Levy in October 2013.



15. EMPLOYEE COSTS (CONTINUED)

Restated

2014 2013

Senior Management Remuneration: R R

Remuneration of the Chief Executive Officer

Allowances 120,000 120,000

Bonus 361,416 336,200

Fund contributions 225,885 210,125

Salary 1,411,551 1,328,297

2,118,852 1,994,622

Remuneration of the Chief Financial Officer

Allowances 120,000 120,000

Bonus 210,507 195,820


Salary 795,040 746,264

1,232,475 1,161,018

Remuneration of the Compliance and Licensing Manager

Allowances 110,400 110,400

Bonus 209,712 195,081


Salary 762,440 720,933

1,228,809 1,157,084

SENIOR MANAGEMENT REMUNERATION 4,580,136 4,312,724

The amount shown as bonuses above relates to the provision raised in terms of the Integrated Performance Management System.

16. MARKETING AND RESEARCH COSTS

The costs for marketing and research include the following:

Advertising, subscriptions and publications 531,735 434,774

Research and public education 717,056 983,597

1,248,791 1,418,371



Restated

2014 2013

R R

17. OTHER OPERATING EXPENSES

Canteen and catering 250,998 203,015

Communication costs 519,593 545,807

Computer consumables 25,619 5,844

Courier and delivery charges 62,936 102,478

Consumables 1,454 3,897

Fuel, oil and licences 207,533 123,680

Fire fighting - 3,881

Insurance premiums 151,383 166,084

Software support 50,812 27,326

Maintenance and repairs: Machinery, equipment and other 185,103 298,718

Maintenance and repairs: Property and buildings 5,008 229,443

Municipal services 440,064 403,011

Rentals in respect of operating leases – plant, machinery and equipment 231,070 230,380

Security services 355,788 362,168

Software annual licence fees 217,288 147,908

Staff wellness and team building 101,183 303,796

Uniforms and corporate clothing; crockery 9,591 121

Year end function 62,866 54,618

2,878,289 3,212,175

18. STATUTORY AUDIT FEES

Statutory Audit – Auditor-General 2,083,863 1,878,750

19. FINANCE INCOME

Interest Revenue

Bank 347,790 397,884

Trade and other receivables from exchange transactions 42,223 (13,602)

390,013 384,282



Restated

2014 2013

R R

20. CASH GENERATED FROM OPERATIONS

Surplus/(deficit) (938,342) (747,108)

Adjustments for:

Allowances for losses 0 17,026

Amortisation of intangible assets 96,141 56,464

Depreciation 493,490 476,075

Interest income (390,013) (384,282)

Loss on disposal of assets – see below 26,882 9,346

Changes in working capital:

Decrease in trade and other payables (3,129,594) 3,022,952

Increase in long-term receivables -

Increase in trade and other receivables (538,379) (1,790,555)

(4,379,815) 659,918

Disposal of assets:

Proceeds 16,514 2,718

Book value 43,396 12,064


21. COMPARISON OF ACTUAL TO BUDGET AMOUNTS

The budget disclosed in the comparison of budget to actual amounts covers the period 1 April 2013 to 31 March 2014 for the Eastern Cape Gambling and Betting Board. The budget is prepared on the same basis as the Annual Financial Statements, being the accrual basis of accounting. Expenses in the budget are classified in the same manner as for the financial statements.

22. OPERATING LEASE COMMITMENTS

Minimum lease payments due

- within one year 37,893 212,118

- in second year - 20,485

Present value of minimum lease payments 37,893 232,603

The Eastern Cape Gambling and Betting Board entered into operational lease agreements with the following terms:

Six photocopy machines for a period of 36 months, with a minimum monthly charge of R11,935 which remains constant. •The machines will be returned to the lessor at the end of the period. The lessor is required to provide maintenance for the equipment during the period of the agreement.

PABX and conference phone systems are leased for a period of 36 months, with a minimum monthly charge of R5,888 and •R1,001 respectively. The equipment will be returned to the lessor at the end of the lease period.



Restated

2014 2013

23. TRAINING AND DEVELOPMENT COSTS R R

Overseas Travel

Car hire 3,098 1,873

Daily allowance 8,593 458,894

Training 73,724 41,553

Travel and accommodation 1,442,659 1,063,234

Local Travel

Car hire 40,607 15,967

Daily allowance 105,190 20,225

Training 424,523 99,992

Travel and accommodation 437,890 151,606

Bursary

Accommodation - 4,713

Registration fees and books 81,326 84,522

Subsistence and travel 534 14,419

2,618,143 1,956,998

Included in the training costs is travel and accommodation that relates to overseas conferences attended by the Board members and staff during the year under review. The costs relating to this line item are budgeted for under training and research and development, and reported as such in the Annual Financial Statements.



24. BOARD AND COMMITTEE MEMBERS EMOLUMENTS 2014

Board Fees

Expenses Allowances

Sub-Committees

Other Total

31 March 2014 R R R R R

For services as Board Members 1,340,500 - 306,700 250,250 1,897,450

31 March 2013

For services as Board Members 2,486,600 - 268,200 323,040 3,077,840

Detailed Board and Committee members emoluments:

March 2014

Board MembersBoard Fees Retainer

Board Committee

Fees

Training: Overseas and

LocalTotal

R R R R R

Adv. N Mayosi 276,000 144,000 - 38,250 458,250

M Vena 195,500 - 47,700 21,250 264,450

O Mtati 274,000 - 53,900 12,750 340,650

P Voges 170,000 - 64,000 12,750 246,750

Y Makhasi – resigned 31 July 2013 59,500 - 4,500 21,250 85,250

Z Nomafu 204,000 - 42,200 - 246,200

P White – appointed 28 August 2013 93,500 - - - 93,500

V Tshangana 34,000 - - - 34,000

P Nqakula – resigned 31 August 2013 34,000 - - - 34,000

1,340,500 144,000 212,300 106,250 1,803,050

March 2014

Board Fees Retainer

Board Committee

Fees


LocalTotal

Audit Committee Members (who are not Board members) R R R R R

H Marsberg - - 19,000 - 19,000

L Smith - - 45,000 - 45,000

P White* - - 30,400 - 30,400

- - 94,400 - 94,400

TOTAL 1,340,500 144,000 306,700 106,250 1,897,450

* Appointed as a Board member on 28 August 2013.



March 2013

Board MembersBoard Fees Retainer

Board Committee

Fees


LocalTotal

R R R R R

Adv. N Mayosi 460,250 144,000 - 24,750 629,000

M Vena 318,750 - 34,200 25,500 378,450

O Mtati 519,850 - 49,400 46,750 616,000

P Voges 317,850 - 43,600 21,250 382,700

Y Makhasi 242,250 - 27,000 29,750 299,000

Z Nomafu 338,650 - 37,700 25,500 401,850

V Tshangana 144,500 - - - 144,500

P Nqakula 144,500 - - - 144,500

2,486,600 144,000 191,900 173,500 2,996,000

Audit Committee Members (who are not Board members)

H Marsberg - - 22,800 2,540 25,340

L Smith - - 34,500 3,000 37,500

P White - - 19,000 - 19,000

- - 76,300 5,540 81,840

TOTAL 2,486,600 144,000 268,200 179,040 3,077,840



25. RELATED PARTIES

Relationships

a) RB and Associates

During April 2012, Mr O Mtati, a Board Director, was appointed as a director and became a shareholder in RB and Associates.

b) DEDEAT

The ECGBB is a Section 3C Public Entity falling under DEDEAT. The latter serves as the Executive Authority of the ECGBB.

The ECGBB receives a grant from the DEDEAT for its operations, collects gambling taxes on DEDEAT’s behalf, and pays them over.

CORRECTION OF ERROR:

The Board noted that, in the previous year, the DEDEAT disclosure note had been omitted. This error has in the current financial period been corrected and the comparative amounts restated. The error had no effect on the Statement of Financial Position, Statement of Financial Performance, Statement of Changes in Net Assets, or the Cash Flow Statement.

c) Mbizana Development Trust

The Chief Executive Officer was previously the administrator of the Mbizana Development Trust. New Trustees were appointed on 11 January 2013 and the Chief Executive Officer’s term of office as an administrator came to an end. This note has remained in the current financial year as to disclose the prior year’s comparative balance.

d) Related party transactions included in exchange transactions:

2014R

Restated2013

R

DEDEAT

Opening balance: 5,750,479 8,748,861

Taxes and levies collected on behalf of:

DEDEAT 124,913 926 114,893,121

Taxes and levies paid over to:

DEDEAT (119,305,388) (117,891,502)

Balance at year end: 11,359,017 5,750,479

Mbizana Development Trust: 1,266 610 1,524,387

Amounts spent with RB & Associates: 446,163 136,736



26. RISK MANAGEMENT

Liquidity risk: The Board manages liquidity risk through an ongoing review of future commitments. Cash flow forecasts are prepared and monitored.

Restated

Maturity analysis of non-derivative financial liabilities 2014 2013

Contractual maturities due R R

- within one year 22,566,161 25,695,756

- in second year - -

22,566,161 25,695,756

Credit risk: Credit risk consists mainly of cash deposits and cash equivalents. The Board only deposits cash with major banks with high credit standards. Therfore, the Board has no concentration of credit risks.

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

2014 2013

R R

Cash and cash equivalents 3,869,283 8,941,794

Receivables on collection for distribution 10,993,565 10,248,452

Trade and other receivables from exchange 1,392,302 1,768,788

As of 31 March 2014, trade and other receivables were not impaired. The age analysis of financial assets is indicated in Note 5.

27. FINANCIAL INSTRUMENTS

The table below indicates the different classes of financial instruments.

Amortised Cost Fair Value

31 March 2014 R R

Financial Assets 12,577,021 3,869,283

Cash and cash equivalents - 3,869,283

Prepayments 360,905 -

Receivable on collection for distribution from non-exchange transactions 10,993,565 -

Trade and other receivables from exchange transactions 1,392,302 -

Financial Liabilities (22,566,161)

Payable on collection for distributions (11,359,017) -

Trade and other payables from exchange (7,788,987) -

Provisions (3,418,157) -



31 March 2013

Financial Assets 12,208,394 8,941,794

Cash and cash equivalents - 8,941,794

Prepayments 191,154 -

Receivable on collection for distribution from non-exchange transactions 10,248,452 -

Trade and other receivables from exchange transactions 1,768,788 -

Financial Liabilities (25,695,756) -

Payable on collection for distributions (5,750,480) -

Trade and other payables from exchange (17,163,006)

Provisions (2,782,270) -

Financial instruments at amortised cost are non-derivative financial assets and financial liabilities with fixed or determinable payments, excluding those that have been designated as fair value at initial recognition or those that are held for trading.

Financial instruments at fair value comprise financial assets or financial liabilities that are:

a) Derivatives.

b) Combined instruments that are designated at fair value.

c) Instruments held for trading. A financial instrument is held for trading if

i. it is acquired or incurred principally for the purpose of selling or repurchasing it in the near-term; or

ii. on initial recognition it is part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short-term profit taking.

d) Non-derivative financial assets or financial liabilities with fixed or determinable payments that are designated at fair value at initial recognition.

e) Financial instruments that do not meet the definition of financial instruments at amortised cost of financial instruments at cost.

28. GOING CONCERN

The entity receives an annual government grant and prepares its budget on the basis of such grant. The entity is not able to generate sufficient cash flows from its core business to cover its operations. As such, the entity is dependent for its continued operation in the foreseeable future on continued Government financial support. Management has determined that such support is reasonably expected to continue and, therefore, has prepared these Annual Financial Statements on the going concern basis.

29. EVENTS AFTER THE REPORTING DATE

Management has reviewed the events between 31 March 2014 and the date of issue by the Accounting Authority to the Executive Authority. No events occurred during this time frame which provide further information on the amounts disclosed by 31 March 2014.

30. TAXATION

The income of the ECGBB is exempted from taxation in terms of Section 10(1)(CN) of the Income Tax Act, No. 58 of 1962.



2014Restated

2013

31. OPERATIONAL AND CAPITAL COMMITMENTS R R

Capital Expenditure 58,484 -

Approved and contracted 58,484 -

Operational Expenditure 1,183,635 3,720,050

Approved and contracted 1,183,635 3,720,050

Total Commitments 1,242,118 3,720,050

CORRECTION OF ERROR:

In the prior period, an operational commitment amounting to R981,754 was erroneously omitted from this Note in the financial statements. However, the error has been corrected during the period under review, and the comparatives have been restated to reflect this amount. This amount is included in the restated balance.

The error has no effect on the Statement of Financial Position, Statement of Financial Performance and the Cashflow Statement.

The expenditure on these commitments will be financed from own resources



32. CONTINGENT LIABILITIES

2014R

Restated2013

R

1. Potential employment contract liability upon materialisation of certain conditions: There is a potential liability that may arise upon renewal of the Chief Executive’s employment contract as per the current terms of the contract. The matter is currently under review and consideration by the Board.

Correction of error: In the previous period, this Contingent Liability was not included in the Notes to the financial statements. The ECGBB has thus corrected and restated prior period figures by an amount of R840 501. 903,539 840,501

2. An employee took the ECGBB to the CCMA regarding a post she applied for. The CCMA ruled in favour of the applicant and ordered the Board to pay an amount of R80,000 to the applicant. Estimated legal costs to resolve the case amounted to R60,000. The matter was subsequently settled in the year under review without any costs being paid. - 60,000

903,539 900,501



33. IRREGULAR EXPENDITURE

Details of irregular expenditure

Irregular expenditure brought forward - -

Irregular expenditure identified during the year 558,409 449,504

Irregular expenditure condoned during the year (558,409) (449,504)

Total - -

The current year irregular expenditure of R558,409 relates to non-compliance with procurement requirements, however goods and services were received.

34. BUDGET VERSUS ACTUAL

Reconciliation - Budget surplus with deficit per statement of financial performance:

Net deficit per the statement of financial performance (938,342) (694,656)

Zone 4 Settlement not budgeted for - (297,579)

Over budget: Revenue from exchange transactions (915,942) (739,963)

(Over) / under budget: Revenue from finance income (390,013) 67,794


Over budget: Expenditure 3,217,415 2,205,058

Net surplus per approved budget 1,000,000 550,000

Actual to Budget Variance

34. BUDGET VERSUS ACTUAL CONTINUED R

Material variances

Revenue from exchange transactions (915,942)

Administrative expenditure 3,200,404

35. BUDGET VS ACTUAL CONTINUED

Revenue from exchange transactions – Related recovery of the over-expenditure of Evaluation and Hearing Costs expenses. Refer note 12.

Administrative expenditure – The over-expenditure is primarily attributable to the increased costs of Board fees and Evaluation and Hearing Costs relating to the Bingo Licensing process. Refer note 12.

Other operating costs – During the year the ECGBB was faced with high costs of repairs and maintenance relating to the building, fixtures and fittings as well as higher than anticipated municipal related costs.

Material variances are further explained in annexure A to these Annual Financial Statements.

36. CRIMINAL OR DISCIPLINARY STEPS TAKEN AS A CONSEQUENCE OF MATERIAL LOSSES

No material losses suffered, therefore no disciplinary steps taken.



37. FRUITLESS AND WASTEFUL EXPENDITURE

Fruitless and wasteful expenditure is defined as expenditure which is made in vain and would have been avoided had reasonable care been exercised.

During the current financial year, the Board incurred fruitless and wasteful expenditure amounting to R6,246 in total. The staff members concerned have been notified and the expenses will be recovered in full from them.

38. SURRENDERING OF UNSPENT FUNDS

The Board has no unspent funds at 31 March 2014 and has therefore not accounted for unspent funds as per Treasury Instruction 3 of 2014/15.

2014R

Restated2013

R

39. CORRECTION OF ERROR

During the year ended 31 March 2014, salaries and other payables were incorrectly recognised: -

The comparative amount has been restated as follows:

Decrease in accumulated surplus - 788,049

Increase in salaries 52,452

Increase in staff end of contract accrual - 840,501

Net effect on Accumulated surplus opening balance - 840,501

In the current year, the ECGBB corrected an error relating to non-disclosure of a liability that arose as a result of the terms on the Chief Executive Officer’s contract of employment. The cumulative liability amount at the beginning of 2013 would have been R788,000 accruing from the date of entering the contract. An amount of R52,452 would have been expensed in 2013, thus as at 31 March 2013, the total cumulative liability amount is R840,501 as reflected above and is included in the Accounts Payable balance. The Opening Accumulated surplus has therefore been restated by an amount of R840,501.



ANNEXURE A: VARIANCE ANALYSIS (i) The actual amounts Vs final budget amounts:

FINAL APPROVED BUDGETAnd ACTUAL

Final Approved Budget

Actual Variance % REASON FOR VARIANCE

Depreciation 588 708.00 493 490.00 -95 218.00 (16.17%) ECGBB did not acquire new vehicles, old vehicles with NIL B.Values were still in use

Amortisation of intangible assets

117 359.00 96 141 -21 218.00 18.07% Purchase of Board pads done during the year thus necessitating apportionment of amortization

Legal costs 1 626 591.00 2 036 155.00 409 564.00 25.18% This variance is attributable to the costs relating to the application and Investigation process.

Marketing costs 670 780.00 1 248 791.00 578 011.00 86.17% The Board, inter alia, placed adverts for various licensing processes for new licenses, eg. Zone 4 casino licence, Bingo and LPM operations

Other operating expenses

2 322 131.00 2 878 289.00 556 158.00 23.95% Primarily Attributable to the increased costs of Board Evaluation and Hearing Costs and fees relating to the Bingo Licensing process. There was also an increase of licence applications, these costs were however recovered from the deposits

(ii) The Approved budget VS Final budget amounts:

APPROVED and FINAL BUDGET

Approved Budget

Final Approved Budget

Variance % REASONS FOR VARIANCE

Revenue from exchange transactions

6 111 514.00 8 648 131.00 2 536 617.00 41.5 Unpredicted budgetary constraints virements had to be done.

Administrative expenditure

6 162 998.00 7 917 101.00 1 754 103.00 28.46 Unpredicted budgetary constraints virements had to be done.

Corporate social responsibility

244 000.00 337 472.00 93 472.00 38.31 Unpredicted budgetary constraints virements had to be done.

Consumer protection and public protection

6 774 550.00 5 729 550.00 -1 045 000.00 (15.43%) Unpredicted budgetary constraints virements had to be done.

Legal costs 767 397.00 1 626 591.00 859 194.00 112% Unpredicted budgetary constraints virements had to be done.

Statutory audit fees

1 416 667.00 2 216 667.00 800 000.00 56.47% Unpredicted budgetary constraints virements had to be done.


ANNUAL REPORT2013/2014

CONTACT DETAILSEASTERN CAPE GAMBLING AND BETTING BOARDQuenera Park, Quenera Drive, Beacon Bay, East London, 5205

P.O. Box 15355, Beacon Bay, East London

Tel: 043 702 8300 | Fax: 043 748 2218

www.ecgbb.co.za

PR: 295/2014 ISBN: 978-0621-43089-9

NATIONAL RESPONSIBLE GAMBLING PROGRAMME TOLL FREE LINE: 0800 006 008

ECGBB FRAUD PREVENTION TOLL FREE LINE: 0800 333 818gem

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