GGB ANNUAL REPORT 2011

G A U T E N G G A M B L I N G B O A R D

CMYK:Burgandy = 50c 100m 60y 0KNon Metalic Gold = 10c 25m 60y 25K

Annual Report

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Contents Page

ForewordbyMEC 2Chairperson’sStatement 4AdministrativeInformation 6ActingCEO’sReport 8Reportof theAuditandRiskCommittee 10Reportof theBoard 12PerformanceReport 26Summaryof EngagementsPerformedby theComplianceDepartment 28Reportof theAuditor-General 30

ISBN:978-0-621-40370-1PR253/2011

GAUTENGGAMBLINGBOARD

Establishedintermsof Section3of theGautengGamblingAct,1995

(ActNo4of 1995),asamended

31 March 2011Annual Report


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G A U T E N G G A M B L I N G B O A R D A N N U A L R E P O R T 2 0 1 1

Gamblingplaysan importantrole intheGauteng economy and contributes asignificant amount to the fiscus. Gauteng province is the leader in this industrycountrywideandwecontinuetolookforwaystoimprovetheindustryandfurtherexplore downstream linkages and benefits for the rest of the economy.

It is important to indicate that gamblingamongstotherthingsprovidessocialnetworkingopportunities but we must always be on thelookout for thosewhogethookedandendupneglectingtheirfamilyresponsibilitiesandcauseundue harm. We support responsible gambling programmesinitiatedbytheindustrytoeducatepeople about the industry, its positives andnegatives.

The Board has once more performedoutstandingly and continued to attain unqualified audit reportssince inception including theyearunder review while discharging its mandate toregulate and control gambling in the Province.

In order to minimise special risk and dangersassociated with gambling and following theresultsof thesocio-economicimpactstudy,theBoard will be embarking on a comprehensivepublic awareness and education campaign inGauteng topromote responsible gambling anddebunk the myths associated with gambling.

The gambling industry has been negativelyaffected by global recession and continuouslyhas to explore ways to mitigate these not onlyin South Africa but across the globe. In line with theslowpaceof recoveryof theSouthAfricaneconomy, the taxrevenuecollectionhasshowna decline albeit not huge but it is worrying. There was a slight increase of 7, 9% year onyearincreasingfromR609,1milliontoR657,2million.

We are working with Treasury and the industry to find ways and mechanisms to increase revenue for the fiscus but strike a balance with regards to developmentsintheindustryandforgingaheadwith transformation agenda with vigour.

As part of ensuring effective oversight andaccountability, inApril2011IappointedanewBoard after the expiry of the term of office of the previous Board. As required in terms of the Act and good corporate governance, theBoardMemberscomefromdiverseprofessionalbackgrounds. Their collective qualifications, skills and experience enable them to providetransparency, independent and objectivejudgment in the decision-making process. I am deeplyhonouredbytheirwillingnesstoservethepublic and the province.

Ms QEDANI DOROTHY MAHLANGUMEC FOR ECONOMIC DEVELOPMENT

CORPORATE SOCIAL INVESTMENT

The Board recognises its responsibility

as a corporate citizen towards making a

contribution to the economic and social

development of Gauteng.

The Board’s corporate social

investment initiatives are undertaken

for the benefit of the communities

within which it operates. The initiative

strives to ensure meaningful changes

to people’s lives, to create a culture

of corporate social responsibility, and

ultimately to enhance the Board and

industry’s reputation.

F O R E W O R D B Y T H E M E C

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C H A I R P E R S O N ’ S S T A T E M E N T

I am pleased to present the GautengGamblingBoard’sAnnualReportforthefinancial year ended 31 March 2011.

The tax revenue collection has shown anincrease of 7.9% year-on-year increasing from R609,1 million to R657,2 million. The growth intaxrevenueshouldbeseeninthecontextof thegeneralstateof theglobalandSouthAfricaneconomy. The worst financial crisis since 1930 and theworst global economic recession sinceWorld War II appear to have bottomed out in the first half of the calendar year 2009. The global economic business cycle has switchedfrom recession to slow recovery. The South African economy has not escaped the impactof global recession despite the fact that thelocalbankingsectordidnotsharethesubprimerelatedproblemsexperiencedinotherpartsof the world. We believe the recovery of the major economieswill remainuncertain as the impactof fiscal and monetary stimuli fades. Therefore, the economic landscape is still fragile and thegrowth in taxes will be slow in line with theglobal and local economy.

The Board considers responsible corporategovernance to be integral to the success of the organisation and the Board’s commitmentto it is outlined in the corporate governancereport which appears later in the AnnualReport. Assessment starts at the top with a comprehensive annual peer review of theperformance of all Board members as well asthe Board itself and its various sub-committees.

These sub-committees, which cover the fields of executive, audit and risk, remuneration,nomination, and responsible gambling andgaming; maintain diligent oversight of allsignificant factors within the Board’s purview. TheBoardhasformulatedandabidesbyacodeof ethics which includes a set of clear goalsto achieve its relationship with licensees, staff,thegeneralpublicandthecommunitiesamongwhich we operate and service. The increasingly complex field of compliance with the laws and regulations governing the Board’s businessis another among the many issues on thegovernance agenda. Following publication of theKingIIICodeof Governance,managementhas reviewed current practices relevant to theCode.

During April 2011 the MEC for EconomicDevelopmentGautengappointedanewBoardafter the expiry of the term of office of the previous Board. As required in terms of the Actandgoodcorporategovernance,theBoardMembers come from diverse professionalbackgrounds. Their collective qualifications, skills and experience enable them to providetransparent,independentandobjectivejudgmentin the decision-making process. I am deeply honoured by the confidence placed in me by the MECandtheGautengProvincialGovernmentto leadaverydynamicandbalancedBoardinterms of amongst others, continuity, gendersensitivity, business acumen and industryknowledge.

LookingaheadtheBoardwillbe:

• Intensifying its responsible gamblingawareness campaign in the Province. More than a third of adults in Gautengin the 18-30 year age group participatein some form of gambling, especiallyLotto, Lotto Plus, Powerball, Casinogambling and Dice. Almost two-thirds say that they gamble in a desperate bidtoboosttheirincome,andonlyonethirddo so for fun or entertainment. The high incidence of unemployment and povertyplay an important role in this patternwhich indicates that gambling is beingseenbymanyyoungpeopleasoneof thesolutions to thecurrentchallengeswhichthey face. One of the objectives of the campaignwillbetodrivethemessagethatgambling is a form of entertainment forwhichtheparticipantpays,inthesamewaythatapersongoestoamovieandpaysformovietickets;gamblingshouldnotbeseenas a solution to the participant’s financial woes.

• Reviewing the impact of the proposedwithholdingtaxonpunters’winnings,andcontributing to the deliberations on theproposed amendments to the TaxationLaws Amendment Bill. Following the recommendationof theKatzCommissionThird Interim Report, the Minister of Finance announced during his annualbudget speech in February that the

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Government intends introducing a punters’withholdingtaxof 15%ongamblingwinningsabove R25 000 effective 1 April 2012.

• Implementationof thenewmandateentrustedbyParliament to theBoardduringDecember2010 to act as a supervisorybodyoverseeingcomplianceby accountable institutions in thegambling sector in terms of the FinancialIntelligence Centre Act.

IwishtotakethisopportunitytoexpressmysinceregratitudetothepreviousBoardforthesterlingworkthey did in providing leadership to the organisation.

It has been a memorable few weeks since I wasappointednon-executiveChairpersonof theBoard,and I must express my delight at the extent of supportgiventomebytheMEC,QedaniMahlangu,the Board, Management and staff of the GautengGambling Board.

SP MAFOJANECHAIRPERSON


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LEGALFORMOFENTITY

Establishedintermsof Section3of theGautengGamblingAct,1995(ActNo4of 1995),asamendedBOARDMEMBERS(UPTO31MARCH2011)

Messrs LMogotsi Chairperson

SMahlalela Acting Deputy Chairperson

TMolai

PMafojane

JAndrewsCA(SA)

LModise

Mesdames SMachabaCA(SA)

K Moloto-Stofile

ZNtlangula

BOARDMEMBERS(FROMAPRIL2011)

Messrs PMafojane Chairperson

YNGordhanCA (SA)

AAMahlalutye

SJHall

TMolai

Mesdames DrASMndaweni Deputy Chairperson

SMachabaCA (SA)

K Moloto-Stofile

CMotau

AUDITANDRISKCOMMITTEE

Mesdames SMachabaCA(SA) Chairperson

ZNtlangula(31 March 2011)

Messrs MNkhabuCA(SA)

GNzaloCA(SA)

LNekhondelaCA(SA)

CHIEFEXECUTIVEOFFICERAdvocateMBBLekalakala(Upto31March2011)MsNMakhari(Actingfrom1April2011)

CHIEFOPERATINGOFFICERMrELalumbe

CHIEFFINANCIALOFFICERMsCindySimons(Actingupto30September2010)MsNMakhari(Appointed1October2010)

BOARDSECRETARYMrLLukhwareni

POSTALADDRESS PrivateBag15,Bramley,2018,SouthAfrica

PHYSICALADDRESS125CorlettDrive,Bramley,2018,SouthAfrica

A D M I N I S T R A T I V E I N F O R M A T I O N

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TELEPHONE+27(0)115814800

FAX+27(0)115814900

E-MAIL [email protected]

WEBSITE www.ggb.org.za

BANKERSStandardBank

Legislationgoverningtheentityoperations:

NationalGamblingActNo4of 2007(“asamended”)

GautengGamblingActNo4of 1995(“asamended”)

ThePublicFinanceManagementAct1of 1999(asamendedbyAct29of 1999)

MEMBERS OF THE AUDIT AND RISK

COMMITTEE �0��

MEMBERS OF THE BOARD �0��

CHAIRPERSONP Mafojane

S Machaba AA Mahlalutye K Moloto-Stofile

T Molai YN Gordhan S J Hall C Motau(Absent)

S MachabaChairperson L Nekhondela Z Ntlangula G Nzalo M Nkhabu

(Absent)

DEPUTY CHAIRPERSONDr AS Mndaweni


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A C T I N G C E O ’ S R E P O R T

Hosting the FIFA World Cup 2010 was the highlight of the year and anorganisational triumph for South Africa. The event boosted national morale andlifted some of the post-recession gloom. The soccer world cup created increasedbettingopportunitiesandanawarenessof soccer betting. This resulted in an overall increase in tax collections for fixed odd betting of 23%.

Tax collections on behalf of the GautengProvincial Government increased from R609millionintheprioryeartoR657millioninthecurrent year representing an increase of 7.9%. The collections exceeded budget.

The study on the socio- economic impact of gamblinginGautengwascompletedduringtheyear providing pertinent information on thegambling industrywhichwillenable theBoardto make informed decisions going forward. The studyhasbeenreleasedforpublicconsumptionand is available on the Gauteng GamblingBoard’s website.

TheGautengGamblingBoardispleasedtohaveutilised R2,6 million in uplifting the community. Projectsrangedfromchildcareandprotection,caring for the disabled to assisting in creatingsustainable employment for women. The Staff of theBoardwasproudtobeinvolvedintheseinitiatives.

It is with great pride that the Board has onceagain added to our track record a clean auditreport. I would like to thank the staff of GGB fortheirhardworkandtheBoard,theMECandall relevant stakeholders for their support.

NDANDULENI MAKHARIACTING CHIEF EXECUTIVE OFFICER

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R E P O R T O F T H E A U D I T A N D R I S K C O M M I T T E EF O R T H E Y E A R E N D E D 3 1 M A R C H 2 0 1 1

We are pleased to present our report for the financial year ended 31 March 2011.

AUDITANDRISKCOMMITTEEMEMBERSANDATTENDANCE

TheAuditandRiskCommittee(theCommittee)consists of the members listed hereunder andmeets at least four timesper annumasper itsapproved terms of reference. During the year under review 10 meetings were held.

Name of Member

Mesdames

SMachabaCA(SA) Chairperson

ZNtlangula

Messrs

MNkhabuCA(SA)

GNzaloCA(SA)

LNekhondelaCA(SA)

Audit and Risk Committee Meeting Attendance

Number of meetings attended

Mesdames

SMachaba 7outof 10

ZNtlangula 7outof 10

Messrs

MNkhabu 8outof 10

GNzalo 10outof 10

LNekhondela 8outof 10

AUDITANDRISKCOMMITTEERESPONSIBILITY

TheAudit andRiskCommittee reports that ithas complied with its responsibilities arisingfrom section 51(1)(a) of the Public FinanceManagement Act (PFMA) and TreasuryRegulations 27.1.8 and 27.1.10. The Audit and RiskCommitteealsoreportsthatithasadoptedformaltermsof referenceasitsauditcommitteecharter, has regulated its affairs in compliancewith this charter, and has discharged all itsresponsibilities as contained therein. The audit committeecharterhasbeenreviewedtoensureitsrelevanceasrequiredbyTreasuryRegulation3.1.8.

THEEFFECTIVENESSOFINTERNALCONTROLANDRISKMANAGEMENT

Thesystemof controlisdesignedtoprovidecosteffective assurance that assets are safeguardedand that liabilities and working capital areefficiently managed. In line with the PFMA Act and the King III Report on CorporateGovernance requirements, the committeeprovidedoversightoverthecombinedassuranceprocess within the GGB and is satisfied that optimaleffortandcoordinationexistsbetweenall assurance providers. This is achieved by means of the risk management process, aswell as the identification of corrective actions and suggested enhancements to the controlsand processes. A risk assessment workshop wasconductedduringtheyearwiththeaimof reviewing the GGB risk profile and this formed thebasisof developingtheannualinternalauditoperationalplanandtherollingthreeyearplan(Internal Audit plans).

Afurthercomplianceriskassessmentworkshopwasconductedattherequestof thecommitteetoenhancetheeffectivenessof thecompliancefunction.

The system of internal control is effective asthevariousreportsof theInternalAuditors,theExternalAuditReportontheAnnualFinancialStatementsandManagementhavenotreportedany significant or material non-compliance with legislation, prescribed policies and procedures.

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INTERNALAUDIT

The committee is satisfied that the key risks have been identified, assessed and have received adequate attention. In compliance with the PFMA, the internal audit plans for 2011 financial year were risk-based. Internal Audit Services havebeenoutsourced toNkonki Incorporatedfor a period of 3 years.

EXTERNALAUDIT

The committee is directly responsible for thebudgetcontrolandoversightof theindependentauditors. The committee has satisfied itself through enquiry that the external auditors of the organisation are independent as defined by the Act. The committee, in consultation with executivemanagement,agreedtotheauditplanand audit fee for the 2011 financial year. The fee isconsideredappropriate for theworkandservices rendered by the external auditors.

Theexternalauditorshaveremainedindependentthroughout the financial year. The committee satisfied itself of their continued objectivity and competence.

MONTHLYANDQUARTERLYREPORTSSUBMITTEDINTERMSOFTHEACT

The Audit and Risk Committee is satisfied with the content and quality of the monthly andquarterly reports prepared and issued by theBoard during the year under review.

EVALUATIONOFFINANCIALSTATEMENTS

TheAuditandRiskCommitteehas:

• ReviewedanddiscussedwiththeAuditor-GeneralandtheAccountingAuthoritytheauditedAnnualFinancialStatementstobeincludedintheannualreport;

• ReviewedtheAuditor-General’smanagementreportandmanagementresponsesthereto;and

• Reviewed significant adjustments resulting from the audit.

TheAuditandRiskCommitteeconcurswithandacceptstheconclusionsof theAuditor-Generalon the Annual Financial Statements and is of the opinion that the audited annual financial statementsbeacceptedand read togetherwiththe report of the Auditor-General.

S MACHABACHAIRPERSON OF THE AUDIT AND RISK COMMITTEE

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TheMembersof theBoardhavepleasurein presenting their report for the yearended 31 March 2011.

INCORPORATION,FUNCTIONSAND POWERS

The Gauteng Gambling Board is a statutorybody established in terms of section 3 of theGauteng Gambling Act, 1995 (Act No 4 of 1995), as amended.

Themainfunctionsof theGautengGamblingBoardareto:

• OverseeandcontrolgamblingactivitiesinGauteng,including:

- Licensing of individuals and entities toconduct gambling and related activities.

- Registering of persons engaged in suchactivities.

- Approval and registering of all gamblingdevices.

- Collectingprescribed taxes and levies forthe Gauteng Province and other specified beneficiaries.

- Ensuring compliance with gamblinglegislation.

• Manage and administer the SportsDevelopment Fund.

• Advise the Member of the ExecutiveCouncil of the Gauteng ProvincialGovernment responsible for theadministration of the Act on mattersrelating to gambling.

MISSIONSTATEMENT

To create and maintain a viable, fair andrespectablegambling industryforallwhohavean interest in, or are affected by gambling inGauteng,bylicensingandcontrollingaswellasadvisinggovernment,makinguseof competentpeople and appropriate resources.

BOARDMEMBERS

The names of the Board Members appear onpage6.

BOARDMEMBERREMUNERATION

Board Member remuneration is reflected in note 9 to the Annual Financial Statements.

SENIORMANAGEMENTREMUNERATION

Senior Management remuneration is reflected in note 10 to the Annual Financial Statements.

PERFORMANCEAGAINSTOBJECTIVES

Theperformanceagainstobjectivesfortheyearunder review is dealt with in the PerformanceReport set out on pages 26 to 27.

GENERAL REVIEW

Thefollowingisabrief overviewof theactivitiesand achievements of the Gauteng GamblingBoard during the year under review.

Socio-economic Impact Study

TheBoardcompleteditssocio-economicimpactstudy of gambling in Gauteng during August2010.

The major findings include:

• Popular forms of gambling in Gautengare firstly the National Lottery, secondly casinogamblingand lastlywith the samelevelof interest, limitedpayoutmachines(LPMs), wagering on horses and sportsbetting.

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• The four main gambling activities wheremen are in the absolute majority includedice, wagering on horses, sports bettingand online gaming.

• The employment status of gamblerstends to influence the type of gambling activities they participate in. For example, gamblersinfull-timeemploymentarelikelyto participate in all gambling activitiesexcluding LPMs, Fafi/Mochaina and Dice, whereas gamblers who are unemployedtend to participate in Dice and Fafi/Mochaina.

• A significant number of participants in the study indicate that there should be morewarningsabout thepotential addiction togambling.

Regulatoryresponsesarisingfromthestudywillinclude:

• Enhancedpublicawarenessandeducationabout gambling and evaluate the impactof publicawarenessandeducationonthepopulation.

• Increasing the cautionary component inadvertising of gambling and evaluate theimpact of responsible advertisements onthe population.

• Expandingthesupportofferedtoproblemgamblersandmonitoringtheeffectivenessof support programmes.

Responsible Gambling

TheBoard’sresponsiblegamblingprogrammeismandatedbythefollowing:

• The Gauteng Gambling Acts preambleprovides that special risks and dangersentailed by opportunities for gamblingand betting justify the imposition of appropriate restrictions, regulations andcontrols.

• Although the issue of problem gamblingis a relatively small one compared to themany greater health and social problemswhich the Province has to address, it isvitally important that both the industryandtheregulatoryauthoritiesdoasmuchas possible to prevent the problem fromgrowing and to reduce its incidence.

Specialised Responsible Gambling Training

- Workshops The National Responsible Gambling

Programme (NRGP) treatment divisionheld a highly successful Employee Wellness Day at Newsclip Media Monitoring andtreated 165 personnel on 28 May 2010.

The Employee Assistance Programme(EAP) focused mainly on gamblingaddiction and problem gambling.

- School Outreach Programme The total for the financial year to date is 23 143 learners at 36 schools. The number

islessthanthepreviousyearduetostrikesheld by civil servants which lasted forabout three weeks, and also due to theWorld Cup.

- Tertiary Institutions TheNRGPconductedacollegeoutreach

to 1,725 tertiary students from fourdifferent institutions.

- AllPay Atotalof 291siteswerevisitedandatotal

of 87 325 beneficiaries of old age pension andsocialgrantswerevisitedinGauteng;where facilitators distributed leaflets debunkinggamblingmythsandpresentingfacts about problem gambling to a totalof 87,325 beneficiaries of old age pension and social grants.

- Transport Hubs During the past year, the Responsible

Outreach Programme in Gauteng wasextended to various transport hubswherein theNRGP interactedwithabout13,825 commuters at 32 sites comprisingbus stations, train stations and taxi ranks.


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- Special Events The presence of the NRGP trained

facilitators handing out informationat various public events raised publicawarenesslevelsaboutproblemgamblingand NRGP’s gambling counselling line.

These included participation in theJohannesburg Rand Easter Show,Tshwane Show and Soweto Festival.

- Advertising and Collateral Various advertisements warning the

public about the dangers of gamblingwereplacedinvariousprintpublicationsand aired on radio stations.

- Awareness Campaign During the year under review EL and

TEEManagementEventswasappointedto conduct an awareness campaign onthe nature of and risk associated withgamblingandtheoddsof winningwhengambling.

Broad Based Black Economic Empowerment (“BBBEE”) in the Gambling Industry

The minimum target in respect of BroadBasedBlackEconomicEmpowermentagreedto between the nine Provincial Regulatorsand the National Gambling Board wastabled before and endorsed by the NationalPolicyCouncil,abodyconsistingof thenine

members of the Executive Council of theprovinces responsible for gambling and theMinister of Trade and Industry. The Gauteng Gambling Board is currently monitoring theannual milestone targets. The completion date for this process is set for 2015.

Casinos

The casino sector is a major source of governmentrevenuethrough itscontributionto taxes. For the financial year under review thesectoraccountedforanamountof 83,18%of total tax revenue. The casino tax increased byaslightamountof 4,75%from lastyear’samount of R521,8 million to R546,6 million. The casinos single digit growth is in linewith theoverall economic landscapeof slowrecovery from the global economic recession.

Operating Profile

The Board took a policy decision on 8 May2007 to allow the amendment of casinolicences to substitute reference to gamblingdevices on the licence with gambling positions. One slot machine is equal to one gamblingpositionandonetableisequalto14gamblingpositions.

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The operating profile of the casinos can be summarised as follows:

Casino NameNo. of Gaming

MachinesNo. of

Gaming TablesNo. of Gaming

PositionsCarnivalCity N/A N/A 2,590

EmeraldSafariResort N/A N/A 1,122

EmperorsPalace N/A N/A 2,872

GoldReef City 1,600 60 N/A

Montecasino N/A N/A 2,848

MorulaSun N/A N/A 678

SilverstarCasinoResort N/A N/A 1,204

TOTAL 1,600 60 11,314

Financial Performance

For the Financial Year Ended �� March �0�� 0�� 0�0

Year-on-Year Increase

CASINOGamingRevenuesGamingTaxCollections

R6,1BillionR546,6Million


5,17%4,75%

HORSE-RACINGANDBETTINGPoolBetting:TotalizatorTurnoverTotalizatorTaxationFixedOddsBetting:Taxescollected


R45,05Million


R36,5Million

1%-0,3%

23,42%

BINGOOPERATIONSBingoRevenuesTaxCollections

R195,6MillionR23,47Million

R150,6MillionR18,08Million

29,88%29,81%

Limited Payout Machines (LPM’s)

The Board has just completed the secondanniversaryof therolloutof sitelicences,andto date a total of 331 site licences have beenapproved together with a total of 858 limitedpayout machines in the Province. The total tax revenue collected from the LPM industryamounts to R10,9 million.

The roll out has been slower than anticipatedduetoamongstothers,thefollowingreasons:

• Poor licence applications.

• Slow process of approval by otherGovernment agencies such as LiquorBoard and Municipalities.

• Thereluctancebypotentialsitelicenseesto comply with licensing requirementssuch as tax compliance and financial probity.


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TheBoardagreeswith theviewsexpressedbyDr Anthony Stacey (commissioned by ZonkeMonitoringSystems)whoconductedresearchintothemarketsizeof thelimitedpayoutindustryin South Africa, and concluded that it wouldbe contrary to the socio-economic and socio-political consideration objectives if regulatorswerewithaviewtoacceleraterollout:

• relax the requirements that a certainpercentage of site licences should bereserved for the benefit of previously disadvantagedindividuals;

• increase the number of limited payoutmachinespersite;

• relax the requirement that in generallimitedpayoutmachinesshouldconstituteasecondarybusiness;

• allowadvertising;• provide leniency and relaxation of the

regulatory requirements such as taxclearance, business licences and liquorlicences.

Current Litigation

The Gauteng Gambling Board is currentlyinvolvedinthefollowinglitigation:

Casino Enterprises (Pty) Ltd trading as Piggs Peak Casino (Plaintiff) versus the Gauteng Gambling Board, National Gambling Board and the Minister of Trade and Industry (Defendant)

Theactioninvolvesadeterminationastowheregambling takes place in respect of interactivegambling (online gambling).

On 20 August 2010 the Judge of the SouthGauteng High Court ruled in favour of theBoard, however the applicant appealed thedecision. The parties are waiting for the hearing date.

Ho, Keith vs the Gauteng Gambling Board, the Chairperson of the Gauteng Gambling Board, Portapa (Pty) Limited and Yeoville Bellevue Community Development Trust

The applicant brought an application in theNorth Gauteng High Court of South Africaagainsttherespondentstoreviewandsetasidethedecisionsof theGautengGamblingBoardandinparticulartheChairpersonof theGautengGambling Board who presided at the hearings.

The decisions pertain, amongst others, to therefusal to permit the applicant to fully andadequately address the hearings.

Colin de Jager, South Rock Trading 20 cc versus The Minister of Safety & Security, the National Commissioner of the South African Police Service, the Provincial Commissioner of the South African Police Service for the Gauteng Province, the Chairperson of the Gauteng Gambling Board, Casino Association of South Africa

The applicants brought a spoliation orderapplication before the Magistrates Court of Carletonvilleagainsttherespondentsinrespectof 239 gambling machines seized at variousplaces on the 04 March 2010.

The Board is opposing this application andparties are currently exchanging pleadings.

Marung Investments (Pty) Ltd vs London Clubs Investments (Pty) Ltd, Emerald Safari Resorts (Pty) Ltd, Ubambo Investment Holdings (Pty) Ltd, Modirapula Leisure (Pty) Ltd and Gauteng Gambling Board

The applicant brought an application in theSouth Gauteng High Court (Johannesburg)against the respondents regarding theshareholdersagreementwhereintheyallegethattherespondentsdidnotfollowproperprocedurein the allotment of shares.

TheBoarddecidednottoopposetheapplicationbut resolved to abide by the Court’s decision. The parties are currently exchanging pleadings.

Legislative Amendments

DuringtheyeartheGautengGamblingActandRegulations were amended. The amendments weretoachievetheincreaseinannuallicencefeesandapplicationfeesintermsof theRegulationspromulgated in Section84of theAct;and togivetheBoardthediscretiontoprobeanypersonwho directly or indirectly holds financial interest of less than 5% when applying for a licence.


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Illegal Gambling

The Gauteng Gambling Board continued itsclose working relationship with the SouthAfrican Police Services and the directorateof Public Prosecutions in order to ensure theeffectiveenforcementof gamblinglegislationinthe Province.

Duringtheyear,119(2010:712)illegalgamingmachines were confiscated and 59 (2010 : 56) people were convicted of gambling-relatedoffences.

A budget of R500,000 was allocated to theGambling Community Outreach Programme. R436,997 was spent in order to achieve theobjective of creating awareness of illegalgambling.

Disputes and Complaints

Duringtheyear99disputesandcomplaintswerereceivedandinvestigated,and98of theseweresuccessfully finalised.

Self-exclusions

During the yearunder review277 applicationsfor self-exclusion and 98 applications forupliftment were received and processed.

Sports Development Fund

The incomeof theSportsDevelopmentFundamountedtoR3,77millionduringtheyearunderreview (2010: R2,78 million).

The balance of the Fund at 31 March 2011amounted to R6,92 million.

For the year under review the Board has notpaid out any grants as the MEC has placed amoratoriumontheapprovalof grantsoutof theSports Development fund until further notice.

Since 1997 the Board has approved grantstotaling R21,61 million from the SportsDevelopment Fund.

Human Resources

TheHumanResourcesdepartmentprovidesthefollowingservicestotheorganisation:

• Managementof thepayroll• Management of policies regarding benefits

and practices associated with all thesepolicies

• Performancemanagement• Reward• Talentdevelopment• Employmentequityandtransformation• Resourcing• Traininganddevelopment

Employment Equity

TheBoardcontinuestoensurethatemploymentequity strategy is aligned to the Nationallegislative framework. The current profile is as follows:

• Employeesaccordingtoraceandgender

Race

Fem

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African 29 25 54 79,4%

Coloured 2 2 4 5,9%

Indian 1 0 1 1,5%

White 6 3 9 13,2%

TOTAL 38 30 68 100,0%

Disabled 1 1 1,4%

• TalentManagement

Theongoingmanagementof talentremainsa key priority. This is critical in light of the fierce competition for talent and the need to comply with the Employment EquityAct. Talent audits are done twice annually duringappraisalsandappropriateretentionand development strategies are initiated.


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The Board continues to monitor trendsrelatingtoemployeedeparturestoenableit to react proactively to any identified risks to staff retention.

The approach to talent managementfocuseson:

- talentdiscovery; - talentperformance; - talentdevelopment; - talentmovement;and - talent retention.

• OccupationalHealthandSafety

TheBoardiscommittedtoensuringasafeandhealthyworkplaceforallitsemployees,visitors and invitees. The Board complies with all relevant legislation, in particular,theOccupationalHealthandSafety(OHS)Act of 1993. This includes monitoring risksintheworkplace,addressingreportedincidents, and raising awareness andresponsibility amongst employees aroundserious diseases.

• ManagingHIV/AIDS

The Board is committed to providingongoinginitiativesaimedatminimisingthespread of HIV/AIDS in the workplace. Thediseaseisadequatelymanagedandisnot regarded as a material risk. Some of the initiatives include encouraging employees

to participate in testing, counseling andtreatment of the disease.

TheBoardhasaformalHIV/AIDSPolicywhichiscommunicatedtoallexistingandnew employees, and is available on theIntranet. HIV testing and counseling is provided for all employees throughexternal professional service providers. Employees who test HIV negative areencouraged to adopt safe behaviour toretain their status, while those testingHIVpositiveareencouragedtoenrolinadisease management programme offeredby the agent of the medical aid. All treatment,includinganti-retroviraltherapy,is confidential and provided free of charge to all employees.

• Promoting Employee Well-being

In addition to ensuringhealth and safetyintheworkplaceandpromotingpersonalgrowth through skills development, theBoard offers its employees a range of benefits (outlined below) and has a formal EmployeeAssistancePolicyandEmployeeWellness Programme aimed at promoting abroadersenseof employeegoodhealthand well-being.

The employee benefits include the following:

- Retirementfunding - Medicalaidscheme - Educationalassistance - Personalloans - Homeassistance

• TrainingandDevelopment

TheBoardcontinuestoinvest intrainingand development and for the calendaryear the following interventions wereundertaken:

- 9studybursariesawardedto9employees- 40employeesattended8conferences- 10Boardmembersattended

8conferences- 55employeesattended49training

sessions equating to 423 working days.

• Employee Wellness

The Gauteng Gambling Boardimplemented a formal comprehensivewellness programme since January2009. In this regard we partnered with Independent Counseling and AdvisoryServices (ICAS) to provide counsellingand advisory services to all the Board’semployees and their families, 24 hours aday, 7 days a week.


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Gauteng Gambling Board is committedto fighting HIV/AIDS, by conducting awareness campaigns throughout theyear. The World Aids Day activities form part of our HIV/AIDS campaignof education, voluntary counselling andtesting. These interventions were well received by employees.

Corporate Social Investment

The Board recognises its responsibility as acorporatecitizentowardsmakingacontributionto the economic and social developmentof Gauteng. The Board’s corporate social investment initiatives are undertaken for thebenefit of the communities within which it operates. The initiative strives to ensure meaningful changes to people’s lives, to createacultureof corporatesocialresponsibility,andultimately toenhance theBoardand industry’sreputation.


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Project DetailsAllocated Amount

ActionfortheBlind R 94,000.00

Alex Music Jamboree (Voice of Woman) R 100,000.00

BoitekaneloDayandAftercareCentre R 64,285.04

BronkhorstspruitPrimarySchool R 101,420.00

CancerAssociation R 1,000.00

CenturionAcademy:BramleyChildren’sHome R 5,280.00

EducareFoundation R 100,013.73

Eleos:MercyinAction R 59,990.50

FatherSamynDayCareCentre R 49,994.65

Footprints R 27,100.00

HomelessSolution R 59,935.38

HopeCareCentreInternational R 49,868.10

Ikholwa R 49,999.10

ItirelengAssociationforthePhysicallyDisabled R 93,772.19

ItumelengEarlyChildCare R 70,000.00

JeuglandHighSchool R 144,200.00

KidsCareandSupportTrust R 124,880.34

Kungwini Welfare Organisation R 100,000.00

LebohangCentre R 79,730.57

Project DetailsAllocated Amount

LeratoChildren’sHome R 124,999.63

MalibongweMercyHome R 29,315.00

ManingiGaloreCareers R 25,000.00

MapGames2010 R 50,000.00

Mohau’sOrphansandDisabledHome R 149,993.37

MondeStimulationAcademyDayCare R 119,949.41

Musa Bhengu: Wheelchair R 24,000.02

ReabetsweCommunityEmpowermentProgramme R 98,400.00

RoyalHeartsFootballClub R 29,921.00

SistersSewingProject R 5,000.00

SithabileChildandYouthCareCentre R 22,400.00

SiyabongaDorah’sArk R 40,000.00

The Greater Benoni Child Welfare R 89,841.35

TheLastHopeOrganisation R 96,000.00

ThusongYouthCentre R 50,000.00

TokologoSelf-helpCentreforQuadriplegics R 99,985.05

Tshwaraganang R 107,056.45

VhuthiVhathuniFoundation R 65,213.42

TOTAL R 2,602,544.30


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Corporate Governance

The Gauteng Gambling Board remains fullycommitted to business integrity, fairness,transparency and accountability in all itsactivities. In support of this commitment, the Board subscribes to the highest standardsof corporate governance in all aspects of itsoperations, and to the ongoing developmentand implementation of best practices. The Board is ultimately responsible for ensuringhigh governance standards and is assisted bymanagement who aims to instil a culture of compliance and good governance.

Roles and Responsibilities of the Board

TheBoardfocusesonthekeyelementsof thecorporate governance processes underpinningits operations. In particular its role is to:

• Consider, and adopt if appropriate,operating budgets and business plansproposed by management for theachievementof itsstrategicdirection;

• Delegateauthorityforcapitalexpenditure;• Provideoversightof performanceagainst

targetsandobjectives;• Provide oversight of reporting on the

direction, corporate governance andperformanceof theBoard;

• Identify, consider and review key riskareas;

• Ensureethicalbehaviourandcompliance

with relevant laws and regulations, auditandaccountingprinciples,andtheBoard’sinternal governing documents and codesof conduct;

• Act responsibly towards the Board’srelevantstakeholders;

• Beawareof andcommittotheunderlyingprinciplesof goodcorporategovernance,andensurethatcompliancewithcorporategovernance principles is reviewedregularly.

The Board regularly reviews its annual Boardagenda with the view to ensure that sufficient time is allocated towards the review of itsstrategy,whichinvolvestheanalysisandchoiceof suchstrategy,followedbytheongoingreviewof progress against the approved plans.

Board Meetings

Board meetings are held at least quarterly andmore frequently if circumstances so require.

Proceedingsatmeetingsaredirectedbyaformalagenda. The proposed agenda is circulated prior to the meeting to allow Board memberssufficient opportunity to request additional agenda items to be added.

In addition a comprehensive board pack isdistributedtoallmembersinadvanceof meetingstoensurethattheyareproperlyinformedandtoenablethemtoundertakemeaningfuldiscussion

and effectively discharge their duties. These packstypicallyinclude:

• Agenda• Previousmeetingminutes• Copiesof anyresolutionspassedsincethe

lastBoardmeeting• Minutes of all sub-committee meetings

whichhavetakenplacesincethelastBoardmeeting

• Governance update to assist Boardmembersinremainingabreastof relevantlegislation.

AllBoardMembershaveunrestrictedaccesstothe Board Secretary and all Board records aswellastoindependentprofessionaladviceattheBoard’s expense in appropriate circumstances.

Conflicts of Interest

BoardMembersarerequiredtoinformtheBoardin a timely manner of conflicts or potential conflicts of interest they may have in relation to particular items of business. Declarations of interestaretabledannuallyattheBoardmeetingor whenever a Board member has a conflict of interestonanymatterservingbeforetheBoardor sub-committee meeting.

Board Members

As required in terms of the Act and goodgovernance, the Board Members come from

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diverse professional backgrounds. Their collective qualifications, skills and experience enablethemtoprovidetransparent,independentandobjective judgment in thedecision-makingprocess. They provide strategic direction to the Gauteng Gambling Board in additionto monitoring and measuring the GautengGambling Board’s performance and itsexecutivemanagementagainstkeyperformanceindicators.

The roles of the Chairperson and the Chief Executive Officer are separate, with a clear division of responsibilities.

Number of meetings attended

Board Meetings Hearings

Messrs

LMogotsi(Chairperson)

9outof 11 6outof 8

SMahlalela(Acting Vice Chairperson)

7outof 11 5outof 8

JAndrewsCA(SA)

11outof 11 8outof 8

LModise 10outof 11 6outof 8

TMolai 10outof 11 7outof 8

PMafojane 10outof 11 8outof 8

Board Meetings Hearings

Mesdames

SMachabaCA(SA)

9outof 11 4outof 8

K Moloto-Stofile 10outof 11 4outof 8

ZNtlangula 8outof 11 4outof 8

Board Committees

The Board has established committees toassist in exercising its authority; includingmonitoringtheperformanceof theorganisationtogainassurance thatprogresshasbeenmadetowardstheorganisation’sobjectiveswithinthelimits imposed by the Board. The permanent committees of the Board are the Executive,Audit and Risk, Corporate and Gaming andResponsible Gambling Committees.

Eachcommitteehas termsof referenceunderwhich authority is delegated by the Board.

The office of the Board Secretary provides secretarial services for the Board and each of the committees.

Code of Conduct

The Gauteng Gambling Board has adopteda Code of Conduct aimed at creating aculture of the highest standards of ethics anduncompromising honesty amongst all BoardMembers and staff. The Code of Conduct is founded on the principles of integrity, goodfaith, impartiality, openness and accountability.

The Code of Conduct forms an integral partof theinductionprogrammeandallnewBoardMembersandstaff membersagreetosubscribeto the Code of Conduct.

Legal Compliance

TheLegalDepartmentprovideslegaladvicetoboth the Board and the Secretariat.

Thecompliancefunction’spurposeistoprovideassurancetotheBoardthatitiscompliantwithapplicable legislation. The responsibility of this functionincludes:

• identifying and advising the groupon existing and new legislation that isapplicabletothegroup’sbusiness;

• facilitating compliance with relevantlegislationandassigningresponsibilityforareasof compliance;

• facilitating compliance with internalpolicies, rules, guidelines andprocedures;and


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• monitoring of compliance.

Risk Management

The identification and management of risk is centraltoachievingtheBoard’smandateintermsof the Act. Each year the Board reviews and considers the risk profile of the whole business. This risk profile covers both operational and strategic risks.

TheBoardhas delegated theoversight of riskmanagement to the Audit and Risk Committee.

In addition, the Board specifically requires managementtoimplementasystemof controlfor identifying and managing risk. The Board, throughtheAuditandRiskCommittee,reviewsthesystems thathavebeenestablishedfor thispurpose and regularly review their effectiveness.

In this regard the role of the Audit and RiskCommitteeistoensurethat:

• appropriateriskandcontrolpoliciesareinplace and are communicated throughouttheorganisation;

• the process of risk management and thesystem of internal control are regularlyreviewedforeffectiveness;

• thereisanongoingprocessof identifying,evaluating and managing the significant risks faced by the Board (includingcomplianceandIT-relatedrisks)and thatthisisinplacethroughouttheyear;

• a formal risk assessment is undertakenannually;

• there is an adequate andeffective systemof internalcontrolinplacetomanagethemore significant risks faced by the group toanacceptablelevel;

• ariskregisterismaintainedandkeptuptodate;and

• appropriateinsurancecoverisplacedandregularly reviewed, and that alluninsuredrisks are reviewed and managed.

FINANCIALRESULTS

The financial results of the Gauteng Gambling Board and the taxes and levies collected anddistributed are reflected in the annual financial statements on pages 33 to 71.

The Gauteng Gambling Board has previouslyreceived approval to retain the accumulatedsurplusof R12,01millionasat31March2001,of R13,05 million as at 31 March 2007, of R18,70millionasat31March2008,andR9,95million as at 31 March 2009.

Revenue collected on behalf of DED

• 100% of all monies due was collected,totalling R657,216 million for the financial year 2011.

Allmonieswere accuratelydistributed tobeneficiaries on due date.

• Reporting of all monies collected anddistributed was done to stakeholders onduedate,thedetailsof whicharecontainedin the financial statements.

APPRECIATION

TheBoardwishestoexpressitsappreciationtoallpartieswhoparticipated in its activities andassisted it during the year under review, andspecifically the following:

• The Gauteng Provincial Government,the Executive Council, MEC QedaniMahlangu and the Department of EconomicDevelopment;

• Allapplicantsforlicencesandlicensees;• Industryassociations;• Thestaff of theBoard,pastandpresent,

fortheirdedicationandcommitment;• The National Responsible Gambling

Programme;• TheDirectorsof PublicProsecutionsand

theSouthAfricanPoliceServices;• Other gambling regulatory authorities,

bothlocalandinternational;• Professionalbodieswhorenderedservices

totheBoard;• Independent Audit and Risk Committee

members;• Themediafraternity;and• The public in general.


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REVENUECOLLECTEDONBEHALFOFDED

�0�� 0�0

Budget 649,862 613,078

Actual 657,216 609,143

Vairance 7,353 (3,934)

INCOMEONBEHALFOFBOARDFORTHEYEAR

�0�� 0�0 Budget 95,712 73,152

Actual 96,413 93,593

EXPENDITUREONBEHALFOFBOARDFORTHEYEAR

�0�� 0�0 Budget 90,094 72,814

Actual 72,330 64,764

0

20,000,000

40,000,000

60,000,000

80,000,000

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2009/102010/11

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100,000,000

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OBJECTIVE KEY PERFORMANCE AREA ACHIEVEMENT

Ensuringthatallmoniesdueareproperlyaccountedforanddistributedasprescribed

• Collectionof 100%of allmoniesdue,accuratedistributionandreportingonduedate

• 100%of allmoniesduewascollected,totallingR657,216 million for the financial year 2011

• Allmonieswereaccuratelydistributedto beneficiaries on due date

• Reportingof allmoniescollectedanddistributedwasdonetostakeholdersonduedate,thedetailsof which are contained in the financial statements

Ensuringthecontinuedeffectiveand efficient operation of the GautengGamblingBoard,maintenanceof resourcesandtheoptimaldeploymentthereof

• StrategicplanandbudgetapprovedbytheBoardandsubmittedtotheGautengDepartmentof EconomicDevelopmentandtheGautengMemberof theExecutiveCouncil:EconomicDevelopmentby30September2010

• ThestrategicplanandbudgetwasapprovedbytheBoardduringSeptember2010andsubmittedtotheGautengDepartmentof EconomicDevelopmentandtheGautengMemberof theExecutiveCouncil:EconomicDevelopmentduringSeptember2010

• Executemandatewithintheapprovedbudget • Mandatedischargedwithintheapprovedbudget

• Achievement of an unqualified audit report, detailingobjectives,releasedby31August2010

• An unqualified audit report was achieved for the financial year ended 31 March 2010. This report was approved and released before 31 August 2010.

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OBJECTIVE KEY PERFORMANCE AREA ACHIEVEMENT• Toannuallyreviewlegislationandsubmit

proposedchangestotheGautengDepartmentof EconomicDevelopmentandtheGautengMemberof theExecutiveCouncil:EconomicDevelopmentby31December2010

• ProposedamendmentstotheRegulationsweresubmittedtotheGautengDepartmentof EconomicDevelopmentandtheGautengMemberof theExecutiveCouncil:EconomicDevelopmentduringNovember2010

RollingoutthelimitedpayoutmachinesintheGautengProvince

• Processed100%of alldulylodgedLPMemployeeapplicationswithinonemonthof receipt

• Processed100%of allemployeelicenceapplicationsreceivedwithinonemonth

• Processed100%of alldulylodgedLPMlicencesiteapplicationswithinaperiodof sixmonthsfromdateof receipt

• Processed100%of allsitelicenceapplicationswithinsixmonthsfromdateof receipt

Educatingthepubliconresponsiblegamblingandthefunctionsof theGautengGamblingBoard

• NegotiatewithNRGPandobtainBoard’sapprovalof theResponsibleGamblingProgrammeeachyear

• SuccessfullynegotiatedResponsibleGamblingProgrammefortheyearwithNRGPandobtainedBoard’sapprovalthereof

EnsuringBBBEEinthegamblingindustry

• DevelopandimposeBBBEEtargetforcompliancebytheindustryinGauteng

• Imposedatargetof Level2intermsof theCodesof GoodPracticetobecompliedwithbylicenseesby2015

• MonitorannualmilestonesforcompliancewiththeultimateBBBEEtarget

• ConductedBBBEEauditstomonitorannualmilestonesbylicensees

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The Compliance Department of theGautengGamblingBoardstrivestomeetthefollowingobjectivesof theBoard:

• Ensure that weekly returns are accurate;properly reflect licensees’ activities and ensure the correct amount of taxes andlevies are paid to the Board.

• Ensurethatlicensees’complyinallmaterialaspects with provisions of the GautengGambling Act, Regulations, Rules andother relevant legislation.

• EnsurecompliancetobiddeliverablesandBBBEE legislation.

• Ensure fairness to punters.

Theseobjectivesareachievedby:

• ensuring accuracy of gaming revenuepaid by the licensees’ and complianceto applicable gaming legislation, byperforming revenue and complianceaudits;

• ongoing monitoring of compliancewith BBBEE requirements and bidcommitments,byperformingreviewsandmonitoringauditsonlicensees;and

• testing and approval of gaming devicesand an effective roll-out programme forLimitedPayoutMachines

For the 2010/11 financial year, the following engagementswerecompletedbytheComplianceDepartment:

Betting Audit

• 30Revenueaudits• 68Complianceaudits

The favourable variance was mainly due tothe 2010/11 annual plan which provided forthe office relocation with limited impact on operations during the period of the move. The processwaswellmanagedandresultedinactualprojects completed exceeding planned targets. The annual plan for 2011/12 was adjustedaccordingly with increased targets.

Casino and Bingo Audit

• 26Casinorevenueandcomplianceaudits• 36Bingocomplianceandrevenueaudits

Monitoring

• 88monitoringauditswerecompletedforthe year.

Gaming Control

Machinetesting 4,683

MCSsystemupgrades 4

Tablechanges&moves 276

Newtablerules 9

Surveillance:cameraviews 1,012

Surveillance:interfacing 2,165

Bingocomplianceinspections 24

BingoEBTtesting 33

LPMpre-openingtesting 26

CEMSapprovals 35

Machinedestruction 226

Deviceapprovals 206

Total of completed projects 8,699

S U M M A R Y O F E N G A G E M E N T S P E R F O R M E D B Y T H E C O M P L I A N C E D E P A R T M E N TF O R T H E Y E A R E N D E D 3 1 M A R C H 2 0 1 1

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CarnivalCity N/A N/A 2,590

EmeraldSafariResort N/A N/A 1,122

EmperorsPalace N/A N/A 2,872

GoldReef City 1,600 60 N/A

Montecasino N/A N/A 2,848

MorulaSun N/A N/A 678

SilverstarCasinoResort N/A N/A 1,204

LICENSING

Employee applications

ProvincialKeyemployees 540Otheremployees 656

National224employeeapplications

Company applications

12 Amendmentof licenceapplications02 Certificate of suitability applications15 Financialinterestapplications13 Transferof bookmakerlicenceapplications02 Secondlicencepremisesapplications05 Nationalmanufacturerlicenceapplications01 Nationaltestingagentlicence


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R E P O R T O F T H E A U D I T O R - G E N E R A L T O T H E G A U T E N G P R O V I N C I A L L E G I S L A T U R E O N T H E G A U T E N G G A M B L I N G B O A R D

R E P O R T O N T H E F I N A N C I A L S T A T E M E N T S

Introduction

1. I have audited the accompanying financial statements of the Gauteng GamblingBoard, which comprise the statement of financial position as at 31 March 2011, and the statement of financial performance, statementof changesinnetassetsandcashflow statement for the year then ended and a summary of significant accounting policiesandotherexplanatoryinformationassetoutonpages33to71.

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 withSouthAfricanStandardsof GenerallyRecognised Accounting Practice (SAStandardsof GRAP)andtherequirementsof the Public Finance Management Act,1999 (Act No. 1 of 1999) (PFMA), and for such internal control as managementdetermines necessary to enable thepreparation of financial statements that are freefrommaterialmisstatement,whetherdue to fraud or error.

Auditor-general’s Responsibility

3. As required by section 188 of the Constitution of the Republic of SouthAfrica, 1996 and section 4 of the PublicAudit Act, 2004 (Act No. 25 of 2004) (PAA), my responsibility is to expressan opinion on these financial statements based on my audit.

4. I conducted my audit in accordance with International Standards on Auditing andGeneral Notice 1111 of 2010 issued in Government Gazette 33872 of 15 December 2010. Those standards require that Icomply with ethical requirements andplan and perform the audit to obtainreasonable assurance about whether thefinancial statements are free from material misstatement.

5. An audit involves performing procedures to obtain audit evidence about theamounts 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, theauditorconsidersinternalcontrol

relevanttotheentity’spreparationandfairpresentation of the financial statements in order todesignauditprocedures that areappropriate in thecircumstances,butnotforthepurposeof expressinganopinionontheeffectivenessof theentity’sinternalcontrol. An audit also includes evaluating theappropriatenessof accountingpoliciesusedandthereasonablenessof accountingestimatesmadebymanagement,aswellasevaluating theoverallpresentationof thefinancial statements.

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

Opinion

7. In my opinion, the financial statements present fairly, in all material respects,the financial position of the Gauteng GamblingBoardasat31March2011,andits financial performance and cash flows for the year then ended in accordancewiththeSAStandardsof GRAPandtherequirements of the PFMA.

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REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

8. In accordance with the PAA and in terms of General Notice 1111 of 2010, issued inGovernment Gazette 33872 of 15 December 2010, I include below my findings on the annual performance report as setoutonpages26 to27andmaterialnon-compliance with laws and regulationsapplicable to the public entity.

Predetermined objectives

9. There were no material findings on the annual performance report.

Compliance with laws and regulations

10. There were no findings concerning material non-compliancewithlawsandregulationsapplicable to the public entity.

INTERNAL CONTROL

11. In accordance with the PAA and in terms of General Notice 1111 of 2010,issued in Government Gazette 33872 of 15 December 2010, I considered internalcontrol relevant to my audit, but not forthe purpose of expressing an opinionon the effectiveness of internal control. There were no significant deficiencies in internal control that resulted in aqualification of the auditor’s opinion on the financial statements and/or findings on predetermined objectives and/ormaterial non-compliance with laws andregulations.

Johannesburg29 July 2011


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Thereportsandstatementssetoutbelowcomprise the annual financial statements

Index Pages

Certification by the Acting Chief Executive Officer 32

Statementof FinancialPosition 33

Statementof FinancialPerformance 35

Statementof ChangesinNetAssets 36

CashFlowStatement 37

AccountingPolicies 39

NotestotheAnnualFinancialStatements 47

ANNUALFINANCIALSTATEMENTS

The Annual Financial Statements are preparedin accordance with Statements of GenerallyRecognised Accounting Practice and thereporting requirements of the Public FinanceManagement Act.

The financial statements are prepared in accordancewithappropriateaccountingpoliciesassetoutinthenotestotheFinancialStatements,and which are supported by reasonable andprudent judgements and estimates.

TheFinancialStatementshavebeenpreparedonthegoingconcernbasis,astheBoardMembershave every reason to believe that the GautengGamblingBoardhasadequateresourcesinplaceto continue in operation for the year ahead.

The Board believes that the Annual FinancialStatementsfairlypresent,inallmaterialrespects,the financial position of the Board as at 31 March2011andtheresultsof itsoperationsandcash flow for the year then ended.

TheAnnualReportfortheyearended31March2011setoutonpages2to29and33to71wasapprovedbytheBoardon12August2011andsignedonitsbehalf bytheChairpersonof theBoard and the Chief Executive Officer.

CERTIFICATIONBYTHEACTINGCHIEFEXECUTIVEOFFICER

I am responsible for the preparation of theseAnnualFinancialStatements,whicharesetouton pages 33 to 71 in terms of Section 55 (1)(c)of ThePublicFinanceManagementAct,andwhich I have signed on behalf of the Board.

N. MAKHARIACTING CHIEF EXECUTIVE OFFICER

Johannesburg31March2011

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R’000 R’000

ASSETS

Current assets 144,273 175,551Tradeandotherreceivables 5 8,529 15,648Newbuildingattorneytrustaccount 2 492 468Deposit 5.1 257 257Cashandcashequivalents 15.4 134,981 159,178Inventory 22 14 0

Non-current assets 102,321 106,141Property,plantandequipment 2 101,928 105,973Intangibleassets 3 393 168

Non-currentsassetsheldforsale 4 14,100 14,100

TOTAL ASSETS 260,694 295,792

LIABILITIES

Current liabilities 128,584 163,682Tradeandotherpayables 8 57,129 81,035Provisions 9 1,705 1,353Collectionsfordistribution 18.1 42,102 53,112Licencefeesreceivedinadvance 27,648 28,182

TOTAL LIABILITIES 128,584 163,682


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Notes �0�� 0�0

R’000 R’000

Net Assets 132,110 132,110RevaluationReserve 7 8,545 8,545AccumulatedSurplus 6 123,565 123,565

TOTAL NET ASSETS AND LIABILITIES 260,694 295,792

S T A T E M E N T O F F I N A N C I A L P O S I T I O N

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Notes �0�� 0�� 0�0 �0�0R’000 R’000 R’000 R’000Actual Budget Actual Budget

Revenue

RevenuefromExchangeTransactions 10.1 59,700 64,808 57,154 43,592RevenuefromNon-exchangeTransactions 10.2 33,487 27,404 29,511 26,200Interestreceivable 3,226 3,500 6,928 3,360

Total Revenue 96,413 95,712 93,593 73,152

Expenses

Boardmemberremuneration 11 1,673 1,657 1,346 1,850Employeerelatedcosts 14 42,609 54,958 41,581 42,000Depreciation 2 4,444 1,992 1,328 888Amortisation 3 (221) 140 141 141Otheroperatingexpenses 13 23,825 31,347 20,368 27,935

Total Expenditure (72,330) (90,094) (64,764) (72,814)

Lossonsaleof Property,PlantandEquipment 10.3 (11) 0 (236) 0

Surplus for the year 24,072 5,618 28,593 338

S T A T E M E N T O F F I N A N C I A L P E R F O R M A N C EF O R T H E Y E A R E N D E D 3 1 M A R C H 2 0 1 1


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AccumulatedSurplus

RevaluationReserve

Total

R’000 R’000 R’000

Balanceat31March2009 113,620 7,138 120,758

Increaseintherevaluationreserve - 1,407 1,407

Approvedretentions 9,945 - 9,945

Balanceat31March2010 123,565 8,545 132,110

Netsurplusfortheperiod 24,072 - 24,072

SurplustobepaidovertoProvincial

RevenueFund (24,072) - (24,072)

Balance at 31 March 2011 123,565 8,545 132,110

S T A T E M E N T O F C H A N G E S I N N E T A S S E T SF O R T H E Y E A R E N D E D 3 1 M A R C H 2 0 1 1

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Notes �0�� 0�0

R’000 R’000

Cash flows from operating activities

Receipts:

Cashreceiptsfromlicenseesandotherinstitutions 97,883 78,390

Increase/(Decrease)inTradeandotherReceivables 2,422 (5,887)

(Decrease)/IncreaseinBuildingTrustAccount (24) 98,574

IncreaseinInventory 14 0

InterestReceived 3,226 6,928

103,521 178,005

Payments:

Cashpaidtosuppliersandemployees (83,715) (41,339)

CashpaidtoProvincialRevenueFund 15.2 (28,593) (14,050)

Increase/(Decrease)of moniesheldinTrustPeermont 15.3 (3,986) 245

Increase/(Decrease)incollectionfordistribution 18.1 (11,009) 30,907

(127,303) 24,237

Net cash flows from operating activities (23,782) 153,768

Cash flows from investing activities

Additionstoproperty,plantandequipment 2 (404) (106,464)

AdditiontoPPE:BuildingProject 2 - 708

Proceedsfromsaleof property,plantandequipment 2 (11) 114

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Notes �0�� 0�0

R’000 R’000

Net cash outflow from investing activities (415) (105,642)

(Decrease)/Increaseincashandcashequivalents (24,197) 48,127

Cashandcashequivalentsatbeginningof year 159,178 111,051

Cash and cash equivalents at end of year 15.4 134,981 159,178

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ACCOUNTINGPOLICIES

1. BASIS OF PREPARATION

The annual financial statements were prepared on an accrual basis of accounting and inaccordance with historical cost conventionunless otherwise stated.

These financial statements have been prepared in accordancewith the standardsof GenerallyRecognised Accounting Practices (GRAP)issued by the Accounting Standards Board inaccordancewithsection55(1)(b)of thePublicFinance Management Act, Act 1 of 1999 asamended by Act 29 of 1999.

The reporting framework asprescribedby theAccounting Standards Board in Directive 5of March2009, andwhich aredeemedby theBoardtobeapplicabletoitself aresummarisedasfollows:

Standard of GRAP approved and effective

GRAP1 Presentationof FinancialStatements

GRAP2 CashFlowStatements

GRAP3 AccountingPolicies,ChangesinAccountingEstimatesandErrors

GRAP4 TheEffectsof ChangesinForeignExchangeRates

GRAP5 BorrowingCosts

GRAP6 ConsolidatedandSeparateFinancialStatements

GRAP7 InvestmentsinAssociates

GRAP8 InterestinJointVentures

GRAP9 RevenuefromExchangeTransactions

GRAP10 FinancialReportinginHyperinflationary Economies

GRAP11 ConstructionContracts

GRAP12 Inventories

GRAP13 Leases

GRAP14 Eventsafterthereportingdate

GRAP16 InvestmentProperty

GRAP17 Property,PlantandEquipment

GRAP19 Provisions,ContingentLiabilitiesandContingentAssets

GRAP26 Impairmentof Cash-generatingAssets

GRAP100 Non-CurrentAssetsHeldforSaleandDiscontinuedOperations

GRAP101 Agriculture

GRAP102 IntangibleAssets

Standards of GRAPEFFECTIVEDATE

OFSTANDARDGRAP18SegmentReporting

Unknown

GRAP21Impairmentof Non-cash-generatingAssets

1April2012

GRAP23RevenuefromNon-exchangeTransactions(TaxesandTransfers)

1April2012

GRAP24Presentationof BudgetInformationinFinancialStatements

1April2012

GRAP25Employee Benefits

Unknown

GRAP26Impairmentof Cash-generatingAssets

1April2012

GRAP103HeritageAssets

1April2012

GRAP104FinancialInstruments

Unknown

GRAP105Transferof functionsbetweenentitiesundercommoncontrol

Unknown

GRAP106Transferof functionsbetweenentitiesnotundercommoncontrol

Unknown

GRAP107Mergers

Unknown

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The Board has decided to early adopt GRAP23 Revenue from Non-Exchange Transactions(Taxes and Transfers). Early adoption of GRAP 23 does not have any impact on prior yearfigures except for reclassification from Revenue to Revenue from Non-Exchange Transactions.

Accounting policies for material transactions,eventsor conditionsnot coveredby the aboveGRAPstandardsweredevelopedinaccordancewith the hierarchy set out in paragraph 12of GRAP 3. The details of any changes in accountingpoliciesareexplainedintherelevantpolicy. Assets, liabilities, revenue and expenses were not offset except when offsetting wasrequired or permitted by a standard of GRAP.

A summary of the significant accounting policieswhichhavebeenconsistentlyappliedaredisclosedbelow:

1. ACCOUNTING POLICIES1.1 Presentation currency

The annual financial statements are presentedinSouthAfricanRand,whichisthefunctionalcurrencyof theBoard,andamountshavebeenroundedtothenearestRand.

1.2 Going concern assumption

The annual financial statements were prepared on a going concern basis, i.e. the assumptionisthattheBoardwillcontinuetooperateasagoingconcernforat leastthe next 12 months.

1.3 Property, plant and equipment

Property, plant and equipment are statedatcost lessaccumulateddepreciationandaccumulatedimpairmentlosses,exceptforbuildings which are stated at a revaluedamount, being its fair value at the dateof the revaluation less any subsequentaccumulateddepreciation and subsequentaccumulated impairment losses. Accumulated depreciation at the date of revaluationiseliminatedagainstthegrosscarryingamountof theassetand thenetamountrestatedtotherevaluedamountof the asset.

Theusefullivesof itemsof property,plantandequipmentwereassessedasfollows:

Buildings 50yearsFixtures and fittings 10yearsFurnitureandequipment 6yearsMotorvehicles 5yearsInformationtechnologyequipment 3years

Subsequent expenditure

Subsequent costs are included in theassets’ carrying amount or recognised asa separate asset,onlywhen it isprobablethat future economic benefits or service potential over the total life of the assetin excess of the most recently assessedstandardsof performanceof theexistingasset will flow to the Board. All other repairs and maintenance are charged tothe Statement of Financial Performanceduring the financial period in which they are incurred.

The cost of an item of property, plantand equipment acquired in exchange fora non-monetary or a monetary asset ora combination of monetary and non-monetary assets is measured at its fair value. If the acquired itemcannotbemeasuredatitsfairvalue,itscostismeasuredatthecarrying amount of the asset given up.

Depreciation

Depreciation is recognised on a straight-linebasisovertheestimatedusefullifeof theassettoitsresidualvaluefromthedaythat the asset is ready for use.

Residual value is what the asset wouldcurrently receive if in the condition itwould be at the end of its useful life. The assets’ residual values and useful lives

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are reviewed and adjusted if appropriateat each reporting date, and any changesare recognised as a change in accountingestimates in the Statement of FinancialPerformance. The actual useful lives of theassets,residualvaluesanddepreciationmethod are assessed annually and mightvary depending on a number of factors. In re-assessing asset lives, factors suchas technological innovation, product lifecycles and maintenance programme aretaken into account.

Impairment of property, plant and equipment

The Board tests for impairment wherethere is an indication that an assetmight be impaired. An assessment of whetherthereisanindicationof possibleimpairment is done at each reportingdate. Where the carrying amount of an item of property, plant and equipmentis greater than the estimated recoverableamount (or recoverable service amount),andan impairment loss is charged to theStatementof FinancialPerformance

Revaluation

TheLand&Buildingwillberevaluedafterevery five years and then disclosed at a fair revalued amount. Taking into account the fact that the Building is depreciated over50years,theBoardisof theopinionthatthe valuation interval period of five (5) years is appropriate. This revaluation will

be undertaken by professional valuers.

All other non-current assets will beaccountedforatactualacquisitioncosttothe Board, less depreciation, and will besubject to an annual fair value evaluation.

Shouldtherevaluationamountexceedthecarrying value, a Revaluation Surplus willbedisclosedintheStatementof FinancialPosition. Should the opposite occur, then a lossonrevaluationitemwillbedisclosedintheStatementof FinancialPerformanceasan expense.

Disposal of property, plant and equipment

The gain or loss on the disposal orretirement of an item of property, plantand equipment is determined as thedifferencebetweenthesalesproceedsandthe carrying values of the assets on thedate of disposal and is recognised in theStatement of Financial Performance.

Land

Landisnotdepreciated,asitisdeemedtohave an indefinite useful life.

1.4 Intangible Assets

Anintangibleassetisrecognisedwhen:

• It is probable that the expected futureeconomic benefit or service potential that

is attributable to the asset will flow to the Board;and

• Thecostorfairvalueof theassetcanbemeasured reliably.

Intangible assets are carried at costless accumulated amortisation and anyimpairment losses. Software is amortised onastraight-linebasisoveritsanticipateduseful life. Generally, costs associated with development computer softwareprogrammesarerecognisedasanexpenseas incurred. However, costs that are clearly associated with an identifiable and unique product, which will be controlledby the Board and have a probable benefit exceeding the cost beyond one year, arerecognised as intangible assets.

Expenditurewhichenhancesandextendsthe benefits of computer software programmesbeyondtheoriginallifeof thesoftware is capitalised. Computer software developmentcostsrecognisedasassetsareamortised using the straight-line methodover their useful lives. Costs associated withthemaintenanceof existingcomputersoftware programmes are expensed asincurred.

The useful life of Intangible Assets is 2years.


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Impairment

The Board tests for impairment wherethere is an indication that an IntangibleAsset might be impaired. An assessment of whetherthereisanindicationof possibleimpairment is done at each reportingdate. Where the carrying amount of an item of property, plant and equipmentis greater than the estimated recoverableamount (or recoverable service amount)an impairment loss is charged to theStatement of Financial Performance.

1.5 Non-current assets held for sale

Non-current assets are classified as held for sale if their carrying amount willbe recovered principally through a saletransactionratherthanthroughcontinuinguse. This condition is regarded as met onlywhenthesaleishighlyprobableandtheassetisavailableforimmediatesaleinits present condition. Management must be committed to the sale, which shouldbe expected to qualify for recognition asacompletedsalewithinoneyearfromthedate of classification.

Non-current assets held for sale aremeasured at the lower of its carryingamount and fair value less costs to sell.

Anon-currentassetisnotdepreciated(oramortised) while it is classified as held for sale.

1.6 Cash and cash equivalents

Cash includes cash on hand (includingpetty cash) and cash with banks. Cash equivalents are short-term, highly liquidinvestments;readilyconvertibleintoknownamounts of cash, held with registeredbankinginstitutions,andaresubjecttoaninsignificant risk of change in value.

For the purposes of the cash flow statement, cash and cash equivalentscomprise cash on hand and in the bank. The Board categorises cash and cashequivalents as financial assets; loans and receivables.

1.7 Provisions and contingencies

Provisionsarerecognisedwhen:

• the Board has a present obligation as aresultof apastevent;

• it is probable that an outflow of resources embodying economic benefits will be requiredtosettletheobligation;and

• a reliable estimate can be made of theobligation.

Provisions are not recognised for futureoperating losses.

Where there are a number of similar obligations, the likelihood that an outflow willberequiredinsettlementisdeterminedbyconsideringtheclassof obligationsasa

whole. A provision is recognised even if the likelihood of an outflow with respect toanyoneitemincludedinthesameclassof obligations may be small.

Provisionsarereviewedateachreportingdate and adjusted to reflect the current best estimates. Provisions are measured at the presentvalueof theexpenditureexpectedto be incurred to settle the obligation. The increaseintheprovisionduetopassageof time is recognised as interest expense.

Contingentassetsandcontingentliabilitiesare not recognised.

1.8 Revenue from exchange transactions

Revenueisderivedfromavarietyof sourceswhich includes collection commission,application fees, administration fees,recoveries of investigation expenses andother services provided.

Revenueisrecognisedwhenitisprobablethat future economic benefits or service potential will flow to the Board and these benefits can be measured reliably.

Revenue from exchange transactionsrefers to revenue that accrued to theBoard directly in return for servicesrendered/goods sold, thevalueof whichapproximated consideration received orreceivable.

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Measurement

Revenue is measured at the fair value of the consideration received or receivableforthesupplyof services intheordinarycourse of activities.

Rendering of services

When the outcome of a transaction involvingtherenderingof servicescanbeestimatedreliably,revenueassociatedwiththetransactionisrecognisedbyreferencetothestageof completionof thetransactionat the reporting date. The outcome of a transactioncanbeestimatedreliablywhenall the following conditions are satisfied:

• It is probable that the economic benefits or service potential associated with thetransaction will flow to the Board;

• Thecostsincurredforthetransactionandthecosts tocomplete the transactioncanbe measured reliably.

When services are performed by an indeterminate number of acts over aspecified time frame, revenue is recognised on a straight-line basis over the specified time frame unless there is evidence thatsomeothermethodbetterrepresentedthestage of completion. When a specific act is much more significant than any other acts, the recognition of revenue is postponeduntil the significant act is executed.

When the outcome of the transaction involvingtherenderingof servicecannotbeestimatedreliably,revenueisrecognisedonly to the extent of the expensesrecognised that are recoverable.

Income from collection commission

Incomefromagencyservicesisrecognisedon a monthly-basis once the incomecollected on behalf of agents has beenquantified. The income is recognised in termsof anagencyagreement

Interest, royalties and dividends

Interest earned on the bank balance isrecognised on a time proportionate basisthat takes into account the effective yieldon the interest investment.

1.9 Revenue from non-exchange transactions

Non-exchange transactions are defined as transactionswheretheentityreceivesvaluefromanotherentitywithoutdirectlygivingapproximatelyequalvalueinexchangeandincludes licence fees, penalties collectedand sports betting levies. Revenue is the gross inflows of economic benefits or service potential during the reportingperiod, when those inflows results in an increaseinnetassets,otherthanincreasesrelating to contribution from owners.

Fairvalueistheamountforwhichanassetcould be exchanged, or liability settled,betweenknowledgeable,willingparties inan arm’s length transaction.

Measurement

Anassetacquiredthroughanon-exchangetransactionshallinitiallybemeasuredatitsfair value as at the date of acquisition.

Recognition

An inflow of resources from a non-exchangetransactionrecognisedasanassetshall be recognised as revenue, except totheextentthataliabilityisalsorecognisedin respect of the same inflow.

As an entity satisfies a present obligation recognised as a liability in respect of aninflow of resources from a non-exchange transactionrecognisedasanasset, itshallreducethecarryingamountof theliabilityrecognised and recognise an amount of revenue equal to that reduction.

1.10 Significant judgements and source of estimation uncertainty The preparation of these financial

statements in conformity with GRAPrequires the use of certain criticalaccounting estimates. It also requires management to exercise its judgementin the process of applying the Board


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A N N U A L R E P O R T 2 0 1 1

accounting policies. The areas involving a higherdegreeof judgementorcomplexityorareaswhereassumptionsandestimatesare significant to the financial statements are disclosed in the notes to the financial statements where applicable.

1.11 Leases

A lease is classified as a finance lease if it transfers substantially all the risks andrewards incidental to ownership. A lease is classified as an operating lease if it does not transfersubstantiallyall therisksandrewards incidental to ownership.

Operating Leases – Lessee

Operating lease payments are recognisedasanexpenseonastraight-linebasisoverthe lease term. The difference between theamountsrecognisedasanexpenseandthecontractualpayments isrecognisedasan operating lease asset or liability.

Operating leases are those leases whichdonotfallwithinthescopeof theabovedefinition of finance leases. Payments made under operating leases are chargedagainstincomeonastraight-linebasisoverthe period of the lease.

1.12 Retirement benefits

Provident Fund

The Board contributes to a defined contribution fund. Contributions to the defined contribution fund are charged to theStatementof FinancialPerformanceinthe year to which they relate.

Medical Aid

The Board does not incur a liability forpost-retirement medical benefits.

Short-term Employee Benefits

The cost of short-term employee benefits (thosepayablewithin12monthsaftertheservice isrendered,suchaspaidvacationleave and sick leave, bonuses, and non-monetary benefits such as group life), arerecognisedintheperiodinwhichtheserviceisrenderedandarenotdiscountedwhen the effect is not material.

The expected cost of compensatedabsences is recognised as an expense, astheemployeesrenderservicesthatincreasetheir entitlement or, in the case of non-accumulatingabsences,whentheabsenceoccurs.

The expected cost of bonus paymentis recognised as an expense when thereis a legal or constructive obligation tomake such payments as a result of pastperformance.

1.13 Financial instruments

The Board classifies financial assets and financial liabilities into the following categories:

• Held-to-maturityinvestment• Loansandreceivables• Available for sale financial assets• Interest-bearing borrowings. Classification depends on the purpose

for which the financial instruments were obtained / incurred and managementdetermines the classification at initial recognition. With regard to reclassifications, the entity shall not reclassify a financial instrument into or out of the fair valuethrough profit or loss category while it is heldorissued

The Gauteng Gambling Board classifies financial instruments, or their component parts, on initial recognition as a financial asset, a financial liability or an equity instrument in accordance with thesubstance of the contractual arrangement.

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Initial recognition

Financial assets and financial liabilities arerecognisedon theGautengGamblingBoard’s Statement of Financial Positionwhen the entity becomes party to thecontractual provisions of the instrument.

Financial instruments carried on theStatement of Financial Position includecash and bank balances, trade and otherreceivables and trade and other payables.

Loans and other receivables

Trade and other receivables are initiallycarried at their estimated fair values andsubsequently carried at amortised cost. Appropriate allowances for estimatedirrecoverableamountsarerecognisedintheStatementof FinancialPerformancewhenthereisobjectiveevidencethattheassetisimpaired. Interest income is recognised in theStatementof FinancialPerformancebyapplying the effective interest rate.

Trade and other receivables, loans toemployees,andcashandcashequivalentsthat have fixed and determinable payments thatarenotquotedinanactivemarketareclassified as loans and receivables.

Trade and other payables

Trade and other payables are initiallycarried at their estimated fair values andsubsequently carried at amortised cost,using the effective interest rate method.

Liabilities for annual leave (accrued leavepay) are recognised as they accrue toemployees. Provision is based on the potentialliability(valueof leavecreditsasat 31 March) of the Board.

Impairment

At the end of each reporting period theBoard assesses all financial assets, other than those at fair value through surplusor deficit, to determine whether there is objective evidence that a financial asset or group of financial assets has been impaired.

Where Investment has been impaired, the carryingvalueisadjustedbytheimpairmentloss,whichisrecognisedasanexpenseinthe Statement of Financial Performancein the period that the impairment isidentified. Impairment losses recognised intheStatementof FinancialPerformanceon equity instruments are not reversedthrough the Statement of FinancialPerformance.

Where financial assets are impaired through useof anallowanceaccount,theamountof the loss is recognised in surplus or deficit within operating expenses. When such assetsarewrittenoff,thewrite-off ismadeagainst the relevant allowance account. Subsequent recoveries of amountspreviouslywrittenoff arecreditedagainstoperating expenses.

Inassessingwhetherthereisanyindicationthatanassetmaybeimpaired,anentityshallconsiderExternalandInternalsourcesof informationinaccordancewiththeGRAPstandard.

Derecognition

Financial assets are derecognised whenthe right to receive cash flows from the investments have expired or have beentransferredandtheBoardhadtransferred,substantially all risk and rewards of ownership.

Disposal Ondisposalof aninvestment,thedifference

betweenthenetdisposalproceedsandthecarryingamountischargedorcreditedtothe Statement of Financial Performance.


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1.14 Taxes and levies (collection for distribution)

Taxes and levies are accounted for onan invoice basis. These are collected in an agency capacity and are therefore nottreated as revenue.

1.15 Taxation

The Board is exempt from taxation intermsof Section10(1)(cA)of theIncomeTax Act.

1.16 Unauthorised expenditure

Unauthorisedexpendituremeans:

• Overspending on the budget.• Expenditure not in accordance with the

purpose of the budget.

The Board has not incurred anyunauthorised expenditure.

1.17 Irregular expenditure

Irregular expenditure is expenditurethat is contrary to the Public FinanceManagement Act, 1999 (Act No 1 of 1999asamendedbyAct29of 1999)orincontraventionof theBoard’sSupplyChainManagement Policy. Irregular expenditure excludes unauthorised expenditure.

TheBoardhasnot incurredany irregularexpenditure.

1.18 Fruitless and wasteful expenditure

Fruitless expenditure means expenditurethat is made in vain and would havebeen avoided had reasonable care beenexercised.

The Gauteng Gambling Board hasnot incurred any fruitless and wastefulexpenditure.

1.19 Comparative figures

Where necessary, comparative figures have been adjusted to conform to changes inpresentation in the current year.

1.20 Events after reporting date

Anyknownoranticipatedeventthatmayoccurafterthereportingperiodisdeclaredin the notes to the financial statements. See Note 23 to the Annual FinancialStatements.

1.21 Related parties

Theentityoperatesinaneconomicsectorcurrently dominated by entities directlyor indirectlyownedbytheSouthAfricanGovernment. As a consequence of the constitutional independence of thethree spheres of government in SouthAfrica, only entities within the national/provincial/localsphereof governmentareconsidered to be related parties.

Managementarethosepersonsresponsibleforplanning,directingandcontrollingtheactivities of the entity, including thosechargedwiththegovernanceof theentityinaccordancewithlegislation,ininstanceswhere they are required toperform suchfunctions.

Closemembersof thefamilyof apersonareconsideredtobethosefamilymemberswho may be expected to influence, or be influenced by, in their dealings with the entity.

Only transactions with related partiesnotatarm’slengthornotintheordinarycourse of business are disclosed.

1.22 Inventory

Inventoryisstatedatthelowerof costornetrealisablevaluewhilecostisdeterminedon a first-in first-out basis. Net realisable valuerepresentstheestimatedsellingpriceintheordinarycourseof businesslessanycosts incurred in selling and distribution. Inventory comprises of stationery thatshall be consumed within a short-termperiodinthenormalbusinessof theentityand not held for sale.

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2. PROPERTY, PLANT AND EQUIPMENT

Building Fixtures & fittings

Motor vehicles

IT Hardware Land Paintings Furniture & equipment

Total

31 MARCH 2011 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000Openingnetcarryingamount 67,351 2,737 120 671 23,582 247 11,265 105,973Grosscarryingamount 67,722 3,344 258 2,913 23,582 294 12,546 110,659Accumulateddepreciation (371) (607) (138) (2,242) - (47) (1,281) (4,686)Additions - - - 314 - - 661 975Disposals - - - (2) - - (463) (465)-Cost - - - (45) - - (609) (654)-Accumulateddepreciation - - - 43 - - 146 189Depreciationcharge (1,335) (264) (52) (367) - (45) (2,767) (4,850)Changeinestimate - - - 387- - 1 18 405Revaluation - - - - - - - -Assetheldforsale - - - - - - -Accumulateddepreciationreversal - - - - - - (110) (110)Closingnetcarryingamount 65,996 2,473 68 1003 23,582 203 8,604 101,928Grosscarryingamount 67,722 3,344 258 3,182 23,582 294 12,598 110,980AccumulatedDepreciation (1,726) (871) (190) (2,179) - (91) (3,993) (9,050)

31 MARCH 2010Openingnetcarryingamount 12,528 98 172 446 - 28 683 13,955Grosscarryingamount 12,600 606 258 2,468 - 63 2,255 18,250Accumulateddepreciation (72) (508) (86) (2,022) - (35) (1,572) (4,295)Additions 67,816 2,738 - 486 23,582 231 11,539 106,392Disposals - - - (20) - - (331) (351)-Cost - - - (41) - - (1,248) (1,289)-Accumulateddepreciation - - - 21 - - 917 938Depreciationcharge (299) (99) (52) (241) (12) (626) (1,329)Changeinestimate - - - - - - - -Revaluation 1,406 - - - - - - 1,406Assetheldforsale (14,100) - - - - - - (14,100)Accumulateddepreciationreversal - - - - - - - -Closingnetcarryingamount 67,351 2,737 120 671 23,582 247 11,265 105,973Grosscarryingamount 67,722 3,344 258 2,913 23,582 294 12,546 110,659AccumulatedDepreciation (371) (607) (138) (2,242) (47) (1,281) (4,686)


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On 8 February 2010, the Gauteng GamblingBoard took ownership of the new office building in Bramley situated on RR1 and RR3of the sectional title known as Waverley Office Park. The property is situated at Erf number 377, Bramley Township, City of Johannesburg.

The new building was funded by a retentionof R69,9 million with the remainder of thepurchasebeingfundedthroughretainedsurplusamounts.Monies to fund the project were placed intrust. The balance of the trust account at the beginning of the financial year amounted to R467,913. Interest was earned on this money which is reflected in the Statement of Financial Position. The closing balance of this account is R491,933 and is reflected in the Statement of Financial Position under Current Assets.

• The budgeted figure for Property, Plant and Equipment was R11,859,162(2010:R109,767,625)

• Theoverrunonthebudgetfordepreciationis due to the acquisition of the newbuilding.

• Written-off furniture with a book value of R59,887 was given to Dinokeng, asister agency within the Department of Economic Development.

• Included in the asset register is R1 fullydepreciated assets which are not beingutilised. It is intended that these assets will be disposed of in the next financial year.

Useful Lives

Theusefullivesof theassetshavebeenreviewedand adjusted to more accurately reflect the actual expected life spans of the assets withinGauteng Gambling Board. In the majority of cases,thelivesof theitemshavebeenextendedconsiderably, as the Gauteng Gambling Boardhas embarked on a campaign to ensure thatassets are not unnecessarily replaced and thatthoseitemsinuseareproperlytakencareof andsafe guarded. The useful lives of assets which werefullydepreciatedatthereportingdatehavebeenreviewedasfollows:

Office Equipment: Additional 1 year ITHardware: Additional2yearsPaintings: Additional2years

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�0�� 0�0

R’000 R’000

3 INTANGIBLEASSETSIntangible assets relate to software used for operational purposes.Openingnetcarryingamount 168 237Grosscarryingamount 1,521 1,449Accumulatedamortisation (1,353) (1,212)AdditionsDisposals-Cost

4--

72--

-Accumulatedamortisation 221 (141)Amortisationcharge (141) (141)Changeinestimate 362

Closingnetcarryingamount 393 168Grosscarryingamount 1,525 1,521Accumulatedamortisation (1,132) (1,353)

4 NON-CURRENTASSETSHELDFORSALE

Assets held for sale consists of land and building purchased on 31 March 1999. The office building is held under Title Deed Number T86131 99. The property is situated at Portion4of Erf 44VerwoerdburgstadRegistrationDivisionJRProvinceof Gautengand measures 2,210 square meters in extent.

Thepropertywasrevaluedbyanindependentvaluer,ValcoPropertyValuers,RegistrationNo 3629/4 on 31 December 2009, at R14,100,000.00. The revalued amount was used as the new carrying amount. The property has been sold through a tender process and is currently being registered to the new owner.

Events or circumstances have lead the period to complete the sale beyond one year. The entity remains committed to its plan to sell the asset as the entity has obtained a firm purchase commitment.


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�0�� 0�0

R’000 R’000

5 TRADEANDOTHERRECEIVABLES

Tradedebtors 4,024 6,446

GautengProvincialGovernment–collectioncommission 4,000 8,333

Sundrydebtors 505 869

Interestreceivable–BoardAccount 182 347

Interestreceivable–TrustAccount 244 453

Staff debtors 79 69

8,529 15,648

5.1 Deposits

Cityof Tshwane 15 15

CityPowerJohannesburg 242 242

257 257

6 ACCUMULATEDSURPLUS

Intermsof Section17(6)of theGautengGamblingAct1995,asamended,andSection53(3)of the Public Finance Management Act, surplus funds at the close of the financial yearshallbepaid to theProvincialRevenueFund,unlessTreasuryapprovalhasbeenobtained to retain such funds. Approval was received to retain the following surplus amounts:

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R’000 R’000

YearEnded31March AmountR’000

31March2001 12,014

31March2007 13,049

31March2008 18,704

31March2009 9,945

53,712

The new building was funded by a retention of R69,853 million. This amount forms part of the retained surplus reflected in the Statement of Financial Position.

Retained surplus total: R123,565

7 REVALUATIONRESERVEReserveonrevaluationof property,plantandequipmentBuilding 8,412 8,412Motorvehicles 110 110Paintings 23 23

8,545 8,545

8 TRADEANDOTHERPAYABLESPeermont:SocialAdvancement 27,342 31,328Creditorsandaccruals 4,777 20,150Investigationdeposits 938 964ProvincialRevenueFund–currentyearsurplus 24,072 28,593

57,129 81,035


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�0�� 0�0

R’000 R’000During the financial year 2005, Peermont acquired a number of gaming positions from Emerald Safari Resort. The approval for this transaction was granted by the Board on conditionthatPeermontspendanamountof R50milliononsocialupliftmentprojectsin the East Rand and Vaal areas.

Peermonthascommittedtospendthisamountontheimprovementof thequalityof school education of previously disadvantaged individuals in the East Rand and Vaalareas.

Anamountof R50millionwasplacedintrustwiththeBoardpendingthecompletionof the project and the balance is R27.3 million. This amount earns interest at the same rateastheotherbankbalancesof theBoardandaccruesinfavourof Peermontandtheproject. The total amount is reflected in the Statement of Financial Position under Trade and other payables.TheGautengGamblingBoardconsidersthecarryingamountof tradeandotherpayablesapproximate to their fair value due to their short-term maturity.

9 PROVISIONSProvision – leave pay 1,231 1,353

Openingbalance 1,353 1,122Utilisationof provisionsduringtheyear (1,017) (808)Provisionsmadeduringtheyear 895 1,039

Provision – bonus pay 474 -

Openingbalance - -Utilisationof provisionsduringtheyear (85) -Provisionsmadeduringtheyear 559 -

TOTAL 1,705 1,353

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R’000 R’000

10 REVENUERevenueconsistsof:

10.1 Exchange RevenueAdministrationfees 114 72Applicationfees 4,783 3,403

Collectioncommission 51,385 48,705Costrecovery–On-sitecasinoinspectors - 993Sundryincome 255 627Recoveriesof investigationexpenses 3,163 3,354

59,700 57,154

10.2 Non-Exchange RevenueLicencefees 30,725 27,241Penaltiescollected 125 101Sportsbettinglevies 2,637 2,169

33,487 29,511

10.3 Loss on sale of assets (11) (236)


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�0�� 0�0

R’000 R’000

11 BOARDMEMBERREMUNERATION

BoardMemberemolumentsfornon-executiveBoardMemberservicesrenderedduringtheyear:

MessrsLMogotsiTMolaiPMafojaneSMahlalelaLModiseJAndrewsMesdamesSMachabaZNtlangulaPNdabaK Moloto-Stofile

165194197105130168

149149

-158

19814410670

--

125149168130

TOTAL PAID TO BOARD MEMBERS 1,415 1,090

AUDIT AND RISK COMMITTEE REMUNERATION 258 256

TOTAL 1,673 1,346

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12 SENIORMANAGEMENTREMUNERATION

Basic Salary

R’000

Allowances

R’000

��th Cheque

R’000

Performance BonusR’000

EmployerContributions

R’000

Total

R’000FORTHEYEARENDED31MARCH2011

AdvocateMBBLekalakalaChief Executive Officer

1,893 - 155 520 308 2,876

ELalumbeChief Operating Officer

1,533 - 125 433 303 2,394

NMakhariChief Financial Officer(01/10/2010to31/03/2011)

530 23 22 - 100 675

OHadebeManager : Human Resources

1,052 - 86 289 171 1,598

KJacobsManager : MIS

934 60 81 289 234 1,598

LKobueManager : Compliance

982 42 84 290 202 1,600

LLukhwareniManager : Legal Services

980 23 82 289 222 1,596

JJOberholzerManager : Licensing, Registration and Betting(01/04/2010to31/12/2010)

782 45 92 324 184 1,427

CSimonsActing Chief Financial Officer(01/04/2010to30/09/2010)

605 10 - 139 65 819


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Basic Salary

R’000

Allowances

R’000

��th Cheque

R’000

Performance BonusR’000

EmployerContributions

R’000

Total

R’000

FORTHEYEARENDED31MARCH2010

AdvocateMBBLekalakalaChief Executive Officer

1,674 95 141 472 280 2,662

ELalumbeChief Operating Officer

1,346 145 114 393 275 2,273

DDondurChief Financial Officer(01/04/09to04/01/2010-seconded)

709 117 91 316 155 1,388

OHadebeManager : Human Resources

879 123 78 263 155 1,498

KJacobsManager : MIS

848 60 74 262 213 1,457

LKobueManager : Compliance

893 82 76 263 184 1,498

LLukhwareniManager : Legal Services

863 95 75 262 199 1,494

JJOberholzerManager : Licensing, Registration and Betting

968 150 84 293 222 1,717

CSimonsActing Chief Financial Officer (04/01/2010to31/03/2010)

163 47 - - 35 245

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R’000 R’000

13 OTHEROPERATINGEXPENSESAdvertisements 557 211Auditfees: 1,102 956

ExternalAudit 576 504InternalAudit 526 452

Bankcharges 47 38BoardMembers’training 19 -Conferencecosts 489 467EmployeeAssistanceProgramme 127 148GamblingCommunityOutreachProgramme 437 107InformationTechnology 206 500Insurance 488 297Investigationandenforcementcosts 366 257Legalexpenses 1,884 2,012ManagementDevelopmentProgramme 23 628Office accommodation and storage rentals 1,296 985Office consumables, maintenance and refreshments 408 286Photocopying 489 284Postage,printingandstationery 407 413Professionalandconsultingfees 1,162 993BadDebtswrittenoff 285 -PublicRelations 401 605

ResponsibleGamblingAwarenessProgramme 3,000 2,652

Securityexpenses 865 87Socialresponsibility 2,603 1,842


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�0�� 0�0

R’000 R’000

SkillsDevelopmentLevy 389 373Staff recruitment 295 59Staff traininganddevelopment 705 521Telephoneandcommunications 1,025 1,138Transcriptioncosts 63 13TravellingandsubsistenceLocal 2,108 1,776Overseas 2,579 2,720

23,825 20,368BBBEEandSMMEspend=74%

AmountpaidtoBBBEEsuppliersasapercentageof totalexpenditure(excludingsalariesandResponsibleGamblingAwarenessprogramme)

14 EMPLOYEERELATEDCOSTS

Includedintheemployeerelatedcostsare: 42,609 41,581

-Salaries,bonusesandallowances 36,726 36,106- Defined contribution plan expense 3,675 3,411-Medicalaidcontributions 1,683 1,528-Grouplifecontributions 395 349-Otheremployercontributions 130 187

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15 NOTES TO THE CASH FLOW STATEMENT15.1 Reconciliation of the net surplus to cash generated from operations

Netsurplus 24,072 28,593Adjustmentsfor:Depreciation 4,444 1,328Amortisation (221) 141InterestReceivable (3,226) (6,928)Provisionforleavepay (122) 231Lossonsaleof property,plantandequipment 11 236Provisionforbonus 474 -

Operatingsurplusbeforeworkingcapitalchanges 25,432 23,601

(Decrease)/Increaseintradeandotherpayables (15,933) 21,725

Decrease/(Increase)intradeandotherreceivables 4,680 (8,274)

Cash generated from operations 14,179 37,052

15.2 Cash Paid to Provincial Revenue Fund

Surplus2010 28,593 -

Surplus2009 - 23,995

RetainedSurplus - (9,945)

28,593 14,050


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�0�� 0�0

R’000 R’000

15.3 Monies held in trust

Amountsheldintrust-Peermont:SocialAdvancement

OpeningBalance (31,328) (31,083)

Closingbalance 27,342 31,328

(Decrease)/Increaseof moniesheldintrust (3,986) 245

15.4 Cash and cash equivalents

Cash and cash equivalents consist of cash on hand and balances with banks. Cash and cash equivalents included in the Cash Flow Statement comprise the followingStatementof FinancialPositionamounts:

Bank 134,980 159,177

Pettycash 1 1

134,981 159,178

16 RETIREMENTBENEFITS

The Board provides retirement benefits for all its permanent employees through a defined contribution provident fund which is subject to the Pension Fund Act, 1956 asamended

Thetotalamountexpensedduringtheyearwas 3,675 3,411

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17 LEASES

Operating leases

Thefutureminimumleasepaymentsundernon-cancellableoperatingleasesfortheBoard’sphotocopiers,telecommunicationssystemsandothersareasfollows: - Within 1 year 284 466

-1to5years 229 685

TOTAL 513 1,151

18 TAXESANDLEVIES

18.1 Taxes and levies for distribution to beneficiaries at year-end

GautengProvincialAdministration 31,924 47,290

PhumelelaGaming&LeisureLimited 3,254 2,663

SportsDevelopmentFund 6,925 3,159

42,102 53,112

Gamblingtaxesarecollectedonbehalf of theGautengProvincialGovernmentonaweekly basis from Licensees, and distributed to the Province monthly. The Gauteng GamblingBoardearnscollectioncommissionof 8%onallmoniescollected,lesstheamount of interest earned on these monies. The collection commission is reflected in the Statement of Financial Performance.

Taxesandleviesarecollectedthroughoutthemonthanddistributedonthelastdayof the following month. The amount is reflected under Current Liabilities – collections for distribution on the Statement of Financial Position. The liability of R42,105 as at 31 March 2011 was distributed on the 22 April 2011.


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�0�� 0�0

R’000 R’000

18.2 Reconciliation of taxes and levies collected for the year

18.2.1 Provincialtaxes

18.2.1.1 Gauteng Provincial Government

Bettingtax 76,149 67,737

Totalizator-horse-racing 28,421 28,853

-othersport 2,677 2,421

On-coursebookmakers -horse-racing 4,159 5,197

-othersport 317 56

Off-coursebookmakers - horse-racing 32,011 26,705

- othersport 8,564 4,505

GamingTax 581,066 541,406

Casinos - machines 416,423 397,503

- tables 130,260 124,324

Bingo 23,470 18,075

LimitedPayoutMachines 10,913 1,504

Taxes collected for Gauteng Provincial Government 657,215 609,143

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Balancebroughtforward 657,215 609,143

18.2.2 Levies Collected

SportsDevelopmentFundLevies 3,766 2,780

Levies 3,527 2,634

Interestearned 239 146

PhumelelaGaming&LeisureLimited

Off-coursebookmakers 36,049 31,830

Total levies collected 39,815 34,610

Interest earned and penalties received 2,484 3,588

Total collections for distribution 699,514 647,341

Taxes and levies for distribution to beneficiaries at year-end (42,102) (53,112)

657,412 594,229

18.3 Taxes and levies distributed during the year

GautengProvincialAdministration 675,066 612,411

PhumelelaGaming&LeisureLimited 35,458 31,625

SportsDevelopmentfund - 2,250

710,524 646,286

Less:Prioryear-endcollectionsdistributedduringtheyear (53,112) (52,057)

657,412 594,229


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19 VATDEREGISTRATION

In terms of Section 24(1) of the VAT Act, the Gauteng Gambling Board was deregistered for VAT with effect from 1 April 2005. In terms of Section (892)(iv) of the VAT Act, the Gauteng Gambling Board qualified for exemption from paying VAT Output on the value of its assets upon deregistration.

20 FINANCIALINSTRUMENTS

Categories of Financial Instruments

Loans and Receivables

R’000

Financial liabilities at amortised cost

R’000

Total

R’0002011 Financial Year

Current assets

Tradeandotherreceivables 8,024 - 8,024

Cashandcashequivalents 134,981 - 134,981

Loansreceivables 507 - 507

Current liabilities

Tradeandotherpayables - 57,129 57,129

2010 Financial Year

Current assets

Tradeandotherreceivables 14,779 - 14,779

Cashandcashequivalents 159,178 - 159,178

Loansreceivables 869 - 869

Current liabilities

Tradeandotherpayables - 81,035 81,035 Loans receivables consists of loans to employees which has been included in the sundry.

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Risks

In the course of the Board business operations it was exposed to interest rate, credit, liquidity and market risks. The Board developed a comprehensive risk management process to monitor and control these risks. The risk management process relating to each of these risks is discussed under the headings below.Credit Risk

Managementmanagesthecreditriskrelatingtoemployeeloansbydeductingthepaymentsduebytheemployeesmonthlyfromtheirsalariesandby keeping a register of the amounts due and owing by each employee. If the employees would like to take out an additional loan after payments havebeenmadeontheinitialloan,managementwillinspecttheregisterandlimitthetotalof theinitialloanplustheadditionalloantoR3,000,therefore limiting the credit risk per employee to R3,000. Credit risk is fairly low in respect of these parties as they are related to the Gauteng Gambling Board.

FinancialassetsthatpotentiallysubjecttheGautengGamblingBoardtocreditriskconsistprincipallyof cashandcashequivalents, loansandreceivables, and trade and other receivables.The Gauteng Gambling Board’s cash and cash equivalents are placed with high credit quality financial institutions.There has been no significant change during the financial year or since the end of the financial year, to the Gauteng Gambling Board’s exposure to credit risk, the approach of measurement, or the objectives, policies and processes for managing this risk.The carrying amount of financial assets recorded in the financial statements represents the Gauteng Gambling Board’s maximum exposure to credit risk.Interest and Market Risk There is no significant interest rate or other market risk applicable to the financial liability as the amounts are interest free and the time value of money effect is not deemed to be significant in affecting their fair values.


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Thefollowingrepresentsinformationonthecreditqualityof tradereceivablesthatareneitherpastduenorimpaired:

�0�� 0�0A 99,9% 99,8% A – The debtors are of good credit quality and no default in payment is expected.

B 0,1% 0,2% B–Thesedebtorsusuallypay,buthavepreviouslypaidlateandthereforethereisa possibility that these debtors will not be recoverable.

Age analysis of financial assets that are past due but not impaired

� – �0 days past due

�0 – �0 days past due

�� – �0 days past due

�� – ��0 days past due

Total

2011

TradeReceivables 4,150 (804) (510) (967) 1,869

2010

TradeReceivables 513 62 59 (75) 559

Thecreditsontheageanalysiscanbeexplainedasfollows:

Intermsof GautengGamblingRegulation270,thetaxonsportsbettingunlikehorse-racingisapercentageongrossbettingrevenueandispaidbythebookmaker and not the punter. Where the gross betting revenue is less than zero, i.e. the bookmaker has operated at a loss for the tax period, he will accumulate a tax credit which can be claimed against future sports betting tax liability. This credit may never be refunded in cash.

Market and Interest Risk

There is no significant interest rate or other market risk applicable to these financial assets as the amounts are interest free and the time value of money effect is not deemed to be significant in affecting their fair values.

The Board’s policy is to manage interest rate risk by maintaining an appropriate mix between fixed and floating interest rates so that fluctuations in variable rates do not have a material impact on profit / (loss). The interest rate risk for the Board is minimal.

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Liquidity Risk

The Board manages the liquidity risk through the proper management of working capital and actual versus forecasted cash flows. Adequate reserves, liquid resources are maintained.

�0�� 0�0

R’000 R’000

21 SOCCER WORLD CUP EXPENDITURE

No tickets were purchased for the Soccer World Cup during the financial year 2011.

Purchase of other World Cup apparel 17 42

Total World Cup expenditure 17 42

22 INVENTORY

The balance of the stationery inventory as at 31 March 2011 is R13,544. The total expenditure on stationery for this financial year was R182,718

23 EVENTSAFTERREPORTINGDATE

23.1 The sale contract for the building in Centurion was signed on 26 May 2011 and is currently being registered to the new owner. The building is currently classified under assets held for sale.


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23.2 A new Board was appointed on 20 April 2011. The Board consists of the following members:

Messrs PMafojane Chairperson YNGordhanCA (SA) AAMahlalutye SJHall TMolai

Mesdames DrASMndaweni Deputy Chairperson SMachabaCA(SA) K Moloto-Stofile CMotau

24 NEW STANDARDS AND INTERPRETATIONS

24.1 Standards and Interpretations issued, but not yet effective

GRAP 18: Segment reporting

Segments are identified by the way in which information is reported to management, both for purposes of assessing performance and making decisions about how future resources will be allocated to the various activities undertaken by the Board. The major classifications of activities in budget documentation will usually reflect the segments for which an entity reports information to management.

Segment information is either presented based on services or geographical segments. Service segments relates to a distinguishable component of an entity that provides specific outputs or achieves particular operating objectives that are in line with the Board overall mission. Geographical segments relate to specific outputs generated, or particular objectives achieved, by an entity within a particular region.

The effective date of the standard is unknown. It is unlikely that the standard will have a material impact on the Board annual financial statements when it becomes effective.

GRAP 21: Impairment of Non-cash-generating Assets

Cash-generating assets are assets held in order to generate a commercial return. An Asset generates a commercial return when it is deployed in a manner consistent with that adopted by a profit-oriented entity. Non-cash-generating assets are assets other than cash-generating assets. A non-cash-generating asset is impaired when the carrying amount of the asset exceeds its recoverable service amount. In assessing whether thereisanyindicationthatanassetmaybeimpaired,anentityshallconsiderExternalsourcesandInternalsourcesof informationaboutthe assets. If indications are present that an asset may be impaired, an entity is required to make a formal estimate of recoverable service amount.

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The effective date of the standard is for years beginning on or after 1 April 2012. It is unlikely that the standard will have a material impact on the Board annual financial statements.

GRAP 23: Revenue from Non-Exchange Transaction (Taxes and Transfers)

Revenuefromnon-exchangetransactionsariseswhenanentityreceivesvaluefromanotherentitywithoutdirectlygivingapproximatelyequalvalue in exchange. An asset acquired through a non-exchange transaction shall initially be measured at its fair value as at the date of acquisition. This revenue will be measured at the amount of increase in net assets recognised by the Board. An inflow of resources from a non-exchange transaction recognised as an asset shall be recognised as revenue, except to the extent that a liability is recognised for the same inflow. As an entity satisfies a present obligation recognised as a liability in respect of an inflow of resources fromanon-exchangetransactionrecognisedasanasset,itwillreducethecarryingamountof theliabilityrecognisedasanamountequaltothat reduction.

The effective date of the standard is for years beginning on or after 1 April 2012. The Board has decided to early adopt the standard for the years beginning 1 April 2010.

GRAP 24: Presentation of Budget Information in Financial Statements

Subject to the requirements of Paragraph.19, an entity shall present a comparison of the budget amounts for which it is held publicly accountable and actual amounts, either as a separate additional financial statements, or as additional budget columns in the financial statements presented in accordance with the Standards of GRAP.

The effective date of the standard is for years beginning on or after 1 April 2012. It is unlikely that the standard will have a material impact on the Board annual financial statements.

GRAP 26: Impairment of Cash-generating Assets

Cash-generating assets are assets held in order to generate a commercial return. A cash-generating asset is impaired when its carrying amount exceeds its recoverable amount. In assessing whether there is any indication that an asset may be impaired, an entity shall consider both External and Internal sources of information. If indications are present that an asset may be impaired, an entity is required to make a formal estimate of recoverable service amount.

Theeffectivedateof thestandardisforyearsbeginningonorafter1April2012It is unlikely that the standard will have a material impact on the Board annual financial statements.


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GRAP 103: Heritage Assets

Heritage assets are assets which have a cultural, environmental, historical, natural, scientific, technological or artistic significance, and are held indefinitely for the benefit of present and future generations.

Certain heritage assets are described as inalienable items, and are thus assets which are retained indefinitely and cannot be disposed of without consent, as required by law or otherwise.

Theeffectivedateof thestandardisforyearsbeginningonorafter1April2012It is unlikely that the standard will have a material impact on the Board annual financial statements.

25 RELATEDPARTYTRANSACTIONS

25.1 Department of Economic Development

TheGautengGamblingBoardisestablishedintermsof Section3of theGautengGamblingAct,1995(Actno4of 1995),asamended,andreportstotheMECforEconomicDevelopmentforGautengProvincialGovernmentinrespectof gamblingregulationandcontrolintheprovince.

25.2 Board MembersTheBoardMembersareappointedbytheMECforEconomicDevelopmentintermsof Section5of theGautengGamblingAct,1995(Actno 4 of 1995), as amended. Board Member fees amount to R1,673 million for this financial year (2010 : R1,346 million).

25.3 Executive Management

TheExecutiveManagementareappointedbytheBoardintermsof Section12of theGautengGamblingAct,1995(Actno4of 1995),asamended. Refer to note 12 for Executive Management Remuneration.

26 CONTINGENCIES

26.1 Litigations

Casino Enterprise (Swaziland) (Pty) Ltd/Gauteng Gambling Board and OthersCasinoEnterprise seeksanorderdeclaring that thegamblers in theProvinceof GautenggamblingonPiggsPeakson-linecasinodosoinSwazilandandsuchgamblingtakesplacelegallyinSwaziland,anddoesnotcontraveneinanymannereithertheProvincialorNationallegislation of the Republic of South Africa. Furthermore, they seek an order declaring that the advertisement of their on-line casino in the Republic of South Africa is not illegal.

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TheGautengGamblingBoardisopposingthematteronthebasisthatboththeadvertisingof andtheGamblingonthePlantiff ’son-linecasino are in contravention of the National and Provincial legislations.

The trial was held on 26 July 2010 and a Judgement was granted in favour of the Gauteng Gambling Board and the Plaintiff appealed. The appeal will be head by the SCA on 23 August 2011.

The Plaintiff is only seeking a declaration from court and is not claiming money from the defendants. The parties had also agreed that they would not seek cost orders against each other. Gauteng Gambling Board is going to pay its own legal fees estimated at R500,000.00

26.2 Collins De Jager/Gauteng Gambling Board and OthersTheapplicantsbroughtaspoliationorderapplicationbeforetheMagistratesCourtof Carletonvilleagainsttherespondentsinrespectof 239gambling machines seized at various places on the 04 March 2010. There were three matters involving the same parties and the Court has ruled in favor of the Gauteng Gambling Board on two of them. In view of the fact that the facts of this matter are similar to those which have been finalised, we believe that the court will also rule in favour of the Gauteng Gambling Board in this matter.

Gauteng Gambling Board is going to pay its own legal fees estimated at R50,000.00

26.3 Ho, Keith/Gauteng Gambling Board and Others

Theapplicantbroughtanapplicationtoreviewandsetasidethedecisionsof theGautengGamblingBoardandinparticulartheChairpersonof the Gauteng Gambling Board who presided at the hearings. The decisions pertain, amongst others, the refusal to permit the applicant to fully and adequately address the hearings. The application also relates to the review and setting aside the decision of the Gauteng Gambling Board to proceed with a relocationapplication by Portapa and on a date not suitable to the applicant’s attorney.

The applicant’s attorneys proposed that the matter be withdrawn and each party pays its own costs. We have since instructed our attorneys to request the applicant’s attorneys to formally withdraw the matter and to tender our cost.


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N O T E S

MYTHLuck favours the superstitious.

FACTAlthoughmanygamblersbelievethatluckyrituals,actionsorobjectscanhelptiptheoddsintheirfavouralloutcomesare random and pure chance. ‘Lady Luck’ does not exist in gambling and cannot influence results.

MYTHIf youknowtherulesof agame,youincreaseyourchancesof winning.

FACTKnowingtherulesof thegamecanonlyhelpyoumakedecisions while playing. It cannot increase your chances of winning.

Signs of Problem GamblingSpendingmoretimeormoneyongamblingthanintended

Borrowingorstealingmoneytofundgambling

Missingwork,school,orothercommitmentstogamble

Gamblingmoretorecoveryourlosses

Feelingworried,anxiousandmoodywhenyouarenotgambling

Familyrelationshipsbreakingdownbecauseof debtanddishonesty

Hidingyourgamblingfromothersbutunabletostopgambling

Gamblingwitheverbiggeramountstoreachdesiredlevelof excitement

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GGB ANNUAL REPORT 2011

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