Western Cape Gambling and Racing Board...The NGRF deliberates on all pertinent issues that affect...

Annual Report 2013/14

Western Cape Gamblingand Racing Board

WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14 i

CONTENTS

PART A: GENERAL INFORMATION ..................................................................................................................................2

1. GENERAL INFORMATION ........................................................................................................................................2

2. LIST OF ABBREVIATIONS / ACRONYMS ..................................................................................................................3

3. CHAIRPERSON’S REMARKS ....................................................................................................................................5

4. CHIEF EXECUTIVE OFFICER‘S OVERVIEW .............................................................................................................7

5. STATEMENT OF RESPONSIBILITY AND CONFIRMATION OF ACCURACY FOR THE ANNUAL REPORT ................9

6. STRATEGIC OVERVIEW .........................................................................................................................................10

6.1. Vision ...........................................................................................................................................................10

6.2. Mission..........................................................................................................................................................10

6.3 Values ..........................................................................................................................................................10

7. LEGISLATIVE MANDATES .......................................................................................................................................10

8. ORGANISATIONAL STRUCTURE ............................................................................................................................12

PART B: PERFROMANCE INFORMATION ......................................................................................................................14

1. SITUATIONAL ANALYSIS ........................................................................................................................................14

1.1 Service Delivery Environment ....................................................................................................................14

1.2 Organisational Environment ......................................................................................................................14

1.3 Key Policy Developments and Legislative Changes .............................................................................14

1.4 Strategic Outcome Oriented Goals .........................................................................................................15

2. PERFROMANCE INFORMATION BY PROGRAMME / ACTIVITY / OBJECTIVE ....................................................16

2.1. Programme 1: Board of Administration ...................................................................................................16

Sub Programme 1.1: Board .......................................................................................................................18

Sub Programme 1.2. Executive .................................................................................................................21

Sub Programme 1.2.1: Legal Services .....................................................................................................24

Sub Programme 1.2.2: Human Resources ...............................................................................................26

Sub Programme 1.3: Administration and Finance .................................................................................28

Programme 2: Licensing ............................................................................................................................31

Programme 3: Racing and Betting ..........................................................................................................33

Programme 4: Gambling Compliance ...................................................................................................36

Programme 5: Information Technology ...................................................................................................39

3. REVENUE COLLECTION..............................................................................................................................................40

WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14ii

PART C: GOVERNANCE .................................................................................................................................................42

1. INTRODUCTION .....................................................................................................................................................42

2. EXECUTIVE AUTHORITY ..........................................................................................................................................42

3. THE ACCOUNTING AUTHORITY - THE BOARD .....................................................................................................42

4. RISK MANAGEMENT ..............................................................................................................................................52

5. INTERNAL CONTROL UNIT ....................................................................................................................................52

6. INTERNAL AUDIT AND AUDIT COMMITTEES .........................................................................................................52

7. COMPLIANCE WITH LAWS AND REGULATIONS ..................................................................................................53

8. FRAUD AND CORRUPTION ...................................................................................................................................53

9. MINIMISING CONFLICT OF INTEREST ....................................................................................................................53

10. CODE OF CONDUCT ............................................................................................................................................53

11. HEALTH SAFETY AND ENVIRONMENTAL ISSUES ...................................................................................................54

12. COMPANY SECRETARY .......................................................................................................................................54

13. SOCIAL RESPONSIBILITY .......................................................................................................................................54

14. AUDIT COMMITTEE REPORT ..................................................................................................................................55

PART D: HUMAN RESOURCE MANAGEMENT ...............................................................................................................59

1. INTRODUCTION .....................................................................................................................................................59

2. HUMAN RESOURCE OVERSIGHT STATISTICS .......................................................................................................60

PART E: FINANCIAL INFORMATION ...............................................................................................................................66

1. REPORT OF THE EXTERNAL AUDITOR....................................................................................................................66

2. ANNUAL FINANCIAL STATEMENTS ........................................................................................................................69

1WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14


Part A:GENERAL INFORMATION

WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/142

PART A: GENERAL INFORMATION

1. GENERAL INFORMATION REGISTERED NAME Western Cape Gambling and Racing Board

PHYSICAL ADDRESS 68 Orange Street Gardens Cape Town 8001 Republic of South Africa

POSTAL ADDRESS P O Box 8175 Roggebaai 8012

TELEPHONE NUMBER/S +27 21 480 7400

FAX NUMBER +27 21 422 2603

EMAIL ADDRESS [email protected]

WEBSITE ADDRESS www.wcgrb.co.za

EXTERNAL AUDITORS Auditor General (SA)

BANKERS

Nedbank

WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14 3

2. LIST OF ABBREVIATIONS / ACRONYMS

Abbreviation / Acronym Description

ADFIN / Adfin Administration and Finance

AFS Annual Financial Statements

AGSA Auditor-General of South Africa

APP Annual Performance Plan

BBBEE Broad Based Black Economic Empowerment

Board Western Cape Gambling and Racing Board

CEO Chief Executive Officer

CFO Chief Financial Officer

Constitution The National Constitution of the Republic of South Africa, 1996

DRP Disaster Recovery Plan

EE Employment Equity

ERM Enterprise Risk Management

EXCO Executive Committee

FIC Financial Intelligence Centre

FICA Financial Intelligence Centre Act, 2001

G2E Global Gaming Exposition

GRAF Gambling Regulators Africa Forum

GRAP Generally Recognised Accounting Practice

GRC Gambling Review Commission

HCC Human Capital Committee

HOD Head of Department

HR Human Resources

HRBF Horse Racing and Betting Forum

HRC Horse Racing Committee

IAGR International Association of Gaming Regulators

ICT Information and Communication Technology

IT Information Technology

ITC Information Trust Corporation

ITIL Information Technology Infrastructure Library

IYM In Year Monitoring

LCF Legal Compliance Forum

LPM Limited Pay-out Machines

MEC Member of the Executive Council

MTEF Medium Term Expenditure Framework

NGB National Gambling Board

NRGP National Responsible Gambling Programme

NTR National Treasury Regulations

OD Organisational Development

OHASA Occupational Health and Safety Act, 1993

PAIA Promotion of Access to Information Act, 2000

PAJA Promotion of Administrative Justice Act, 2000


PDO Predetermined Objective

PFMA Public Finance Management Act, 1999

PI Performance Indicator

PT Provincial Treasury

PTR Provincial Treasury Regulations

RG Responsible Gambling

SAPS South African Police Services

SCA Supreme Court of Appeal

SC Senior Counsel

SCM Supply Chain Management

SCOF Standing Committee on Finance

SCOPA Standing Committee on Public Accounts

SDP Skills Development Plan

SMME Small Medium and Micro Enterprises

SOPI Strategic Objective Performance Indicator

The Act Western Cape Gambling and Racing Act, 1996

TR Treasury Regulations

UPS Uninterrupted Power Supply

WCG Western Cape Government

WCGRB Western Cape Gambling and Racing Board

Western Cape The Province of the Western Cape


3. THE CHAIRPERSON’S REMARKS

Introduction

It is indeed a great honour and privilege to present the Western Cape Gambling and Racing Board’s Annual Report for the financial year that ended 31 March 2014.

Overview

The overall mandate of the board is to regulate and control gambling and all activities that are incidental thereto throughout the Western Cape Province. Five years ago, the board adopted a robust Strategic Plan upon which the board relied for administrative guidance in the execution of its duties. The main tenet of the Strategic Plan was to control and regulate gambling in a fair, transparent and equitable way in order to encourage and allow a responsible growth of the

industry and to eliminate or minimise the negative social impact gambling may have on society. Although it was not without formidable challenges, I am proud to report here that the board has achieved its objectives.

The board was allocated a total budget of R44 114 394 to perform its mandate for the year under review. Through its meticulous staff, the board processed 6 105 license applications and collected and paid over to stakeholders R462 365 787. This is an increase of 14% compared to the previous year.

For the past thirteen years, the casinos paid to the board directly what were termed exclusivity fees. During the year under review, the exclusivity term had expired for all the casinos but one and the casinos whose exclusivity terms expired are no longer required to pay exclusivity fees. Instantly, the board lost about R10 million in revenue. As it stands now, the board depends on transfer grants from Treasury to augment its annual budget.

The end of exclusivity fees brought on the introduction of a casino gambling tax hike from September 2013. Casino taxes are now 2% points higher than it was during the era of exclusivity fees. This resulted in an average monthly increase of R5, 8 million in casino gambling taxes.

In recognition for achieving an unqualified audit opinion with no other findings, the Auditor-General has, at a public event organised for that purpose, awarded the board a prestigious clean audit plaque for the 2012/13 financial year.

Horse racing continues to be an integral part of the gambling industry in the Western Cape partly as a result of the board’s forward-looking administrative decisions. The sport regrettably continues to decline in the province. The performance of the horseracing industry is being monitored by the Horseracing sub-committee of the board.

Challenges

One of the significant challenges the board faces is illegal gambling. It is a serious challenge because if the board fails to flush it out, it will undoubtedly create untold social, political and economic problems for the province. For its part, the board has requested the Hon. MEC for Finance to approve a budget for the creation of more law enforcement agents to assist in the war on illegal gambling.

Furthermore, the board is in consultation with the South African Police Service and the National Prosecuting Authority to achieve two things: 1) receive all necessary assistance to decisively combat illegal gambling and 2) to heighten the consciousness of other law enforcement agencies so that illegal gambling may be prioritised.

Medium to long term goals

The board’s medium term goal is to engage the public and raise awareness around issues that are gambling related. The general public is not aware of 1) the role the board plays; 2) the available avenues for public participation; 3) the probable benefits communities may derive from legal gambling; and 4) the business opportunities that are available in the gambling industry.

As its five year term Strategic Plan ends in March 2015, the board is drafting a new Strategic Plan that will take into account all of the new developments in the rapidly growing gambling industry.


In the long term, the board intends to develop its workforce so as to utilise information technology as extensively as possible. It is crucial that the board as a regulator, keeps abreast with the internationally accepted best practices of a rapidly growing gambling technological industry.

In pursuit of excellence in regulatory affairs, the board is a member of the National Gambling Regulators Forum (NGRF). This is a voluntary organization whose membership comprises of the ten chairpersons of all ten gambling boards and their CEOs. The NGRF deliberates on all pertinent issues that affect regulation of gambling and activities that are incidental thereto.

The board continues to convene the Responsible Gambling Forum. This is a forum whose membership is comprised of representatives of relevant provincial government departments, gambling operators and the National Responsible Gambling Programme. The board, as a supervisory entity under law, also participates fully in matters that concern the implementation and facilitation of the provisions of the Financial Intelligence Centre Act.

Acknowledgements

Please allow me to conclude by acknowledging the invaluable guidance we have received from our previous MEC (Hon. MEC Winde) and the leadership of our former chairperson, Professor T. Madima. Also, my sincere gratitude goes to the current MEC for Finance, the Provincial Treasury staff and all our hard working employees. I further extend my warmest thanks to all my colleagues on the board for sharing their various expertise and for contributing to the effi ciency of the board.

________________________________________

Ms A LapoortaWestern Cape Gambling and Racing Board

31 August 2014

Auditor-General awarding the Chairperson of the Board with the 2012/13 clean audit plaque.


4. CHIEF EXECUTIVE OFFICER’S OVERVIEW

It is an immense honour and privilege to present this 2013/14 Annual Report on behalf of a really committed board and the many highly competent offi cials that serve under my leadership. Despite a few manageable challenges, the board is proud to announce that it has accomplished all of the tasks it set out to perform during the year under review.

The Western Cape Gambling and Racing Board, as a Schedule 3C Public Finance Management Act Public Entity, among other authorities, is subject to National Treasury Instructions, Provincial Treasury Instructions and Ministerial declarations.

During the last couple of years, the board was not only instructed to decrease expenditure by one percentage point a year, it was also instructed to curtail specifi c expenditures.

The board was allocated a budget of R44 114 394 to perform its mandate. R30 234 752 was fi nanced from statutory resources, R10 326 000 was allocated as a grant from the Western Cape Government to compensate for the loss of exclusivity fees previously due to the board and the board was permitted to retain R3 566 000 from the previous year’s surplus.

During the fi nancial period that ended 31 March 2014, the board realised R5 237 662 of revenue in excess of the budgeted revenue and incurred R6 384 870 less expenditure than budgeted for. This resulted in a surplus over budget of R11 622 532

Tax Collection

The Offi ce of the board continues to prioritise the accurate collection of the taxes and the timely payment of such to the Provincial Treasury. The board collected a total R459 034 109 in taxes. This was an increase of 14% compared to R401 086 599 that was collected in the previous fi nancial year.

The chart below depicts a breakdown of the gaming taxes collected from the different gambling sectors in the Province.

75%

14%

2% 9%

Revenue Collec+on Casinos Limited Payout Machines Totalisator Bookmakers

The chart depicts a breakdown of the gaming taxes collected from the different gambling sectors in the Province.

Tax Collection

Gaming Sector % Gaming Tax Casinos 74.92 R343 912 425 Limited Payout Machines 14.11 R64 749 320 Totalisator 1.55 R7 126 946 Bookmakers 9.42 R43 245 418 Total 100.00 R459 034 109

∎ Casinos ∎ Limited payout machines ∎ Totalisator ∎ Bookmarkers

The fi ve casinos paid a total of R343 912 425. This represents an increase of 16% when compared to R295 486 202 collected the previous year. The substantial increase however, was partly as a result of the September 2013 hike in the tax rates.

As at 31 March 2014, there were 1675 LPMs operated in the Western Cape. These contributed R64 749 320 in gaming taxes; an increase of 17% when compared to R54 898 153 collected last year. The sole Totalisator paid R7 126 946 in total taxes. Unlike the casinos and the LPM industry, the Totalisator taxes decreased by 7% compared to R7 698 233 collected the previous year.


The board collected R43 243 418 from the 169 bookmaker premises in the province, which is similar to the amount collected last year. I should here mention that the biggest tax contributor, GrandWest Casino, in an effort to increase its competitiveness and efficiency, has installed the Bally Systems. The compliance auditors were adequately trained on the system and they now stand ready and able to effectively monitor the casino’s latest gaming system.

I anticipate that within the coming year, three more casinos in our province are going to follow in the footsteps of GrandWest and switch to a different operating system. The LPM industry in the province continues to be carried out by the two Route Operators. As at the end of the year under review, there were 1675 LPMs in operation at 372 LPM sites. There were 51 new LPM sites opened during the year and 41 LPM sites closed.

The main challenges that the board faces are in law enforcement and acquisition of skills to match the gambling industry’s rapidly growing technological advancements. Our efforts to clamp down on illegal gambling continue to yield positive results. Although we have only one enforcement officer, the board managed to initiate 27 investigations from which 107 illegal gambling devices were confiscated and cash totalling R34 806 was seized. At the conclusion of some of the criminal cases, 36 illegal gambling devices were destroyed.

As at 31 March 2014, there are 36 cases pending, 180 confiscated illegal gambling devices are in a storage facility controlled by the board and 21 other devices in the evidence storage of the SAPS.

The gambling industry’s rapid technological advancements continue to be a source of grave concern. There are few training programmes to equip our compliance auditors with matching skills. However, even having to operate within the budget constraint imposed by Treasury, the board does its level best to source the relevant training for its staff so as to strengthen the confidence the public has in its regulatory function.

During the year under review, the board spent R898 615 on staff training and attendance at related forums. I am proud to report further that the board received a ‘clean audit’ from the Auditor-General.

On behalf of the board, I thank the Hon. MEC Alan Winde and his staff for the treasured guidance they provided. I also acknowledge the invaluable leadership that Professor T. Madima provided the board during his tenure and wish him the very best in his life pursuits. Lastly, I extend my warmest gratitude to the all WCGRB board members and our office staff without whom the board would not have achieved its goals.

________________________________________

Dr M. MatsapolaWestern Cape Gambling and Racing Board

31 August 2014


5. STATEMENT OF RESPONSIBILITY AND CONFIRMATION OF ACCURACY FOR THE ANNUAL REPORT

To the best of our knowledge and belief, we confirm the following:

All information and amounts disclosed in the annual report is consistent with the annual financial statements audited by the Auditor-General. The annual report is complete, accurate and is free from any omissions. The annual report has been prepared in accordance with the guidelines on the annual report as issued by National Treasury. The Annual Financial Statements (Part E) have been prepared in accordance with the GRAP standards applicable to the Western Cape Gambling and Racing Board.

The board is responsible for the preparation of the annual financial statements and for the judgements made in this information. The board is responsible for establishing, and implementing a system of internal control that has been designed to provide reasonable assurance as to the integrity and reliability of the performance information, the human resources information and the annual financial statements.

The external auditors are engaged to express an independent opinion on the annual financial statements.

In our opinion, the annual report fairly reflects the operations, the performance information, the human resources information and the financial affairs of the public entity for the financial year ended 31 March 2014.

________________________________________

Dr M MatsapolaChief Executive OfficerWestern Cape Gambling and Racing Board

31 August 2014

________________________________________

Ms A LapoortaChairpersonWestern Cape Gambling and Racing Board

31 August 2014


6. STRATEGIC OVERVIEW

6.1. Vision

To be recognised nationally and internationally as a leading Gambling and Racing regulatory authority.

6.2. Mission

To control and regulate gambling and racing within the Western Cape in a manner that will:

- provide a stable, just, consistent and effective regulatory environment that inspire public confidence and trust; and

- ensure that the industry contributes to the economy of the Western Cape in a socially responsible manner.

6.3 Values

In the execution of their collective functions, the board places the highest value on:

• Integrity

The quality of possessing and steadfastly adhering to a rigorous moral or ethical code and high professional standards.

• Honesty

The quality, condition, or characteristic of being fair, truthful, and morally upright in conduct and adherence to the facts presented.

• Incorruptibility

Moral uprightness and selfless service of public servants.

• Transparency

The principle that the organisation (WCGRB) will conduct its business in an accessible, clear and visible manner and that its activities are open to examination by its stakeholders.

• Responsibility

Having the authority to make decisions and following through on the expectation to make those decisions and take necessary action.

• Accountability

The principle that the organisation is obligated to demonstrate and take responsibility for its actions, decisions and policies and that it is answerable to the public at large.

• Human Resource Development

Encouraging and assisting the board’s staff to acquire new skills and/or to better the skills, knowledge, and viewpoints they already have.

• Mutual respect

Encouraging a culture of mutual respect by treating every person with dignity and equal worth.

7. LEGISLATIVE MANDATES

Per schedule 4 of the Constitution, the regulation of gambling, racing and casinos constitutes a concurrent competence of both the national and provincial legislators. This means that both the National and Provincial Governments have concurrent powers to regulate gambling and all other activities incidental thereto. Thus both national and provincial authorities passed legislation governing the regulation of gambling.

The National Gambling Act establishes the National Gambling board and outlines its competencies. It also confers regulatory competencies on the Provincial Regulators. Provincial gambling legislation and outlines the competencies of each Regulator within their respective provinces. The Western Cape Gambling Board therefore, derives its regulatory force from the Western Cape Gambling and Racing Act.


In performing its administrative functions such as issuing gambling licences, collecting tax revenue and promulgating necessary regulations, the board endeavours to pursue fair, transparent, equitable and just dealings with all the stakeholders. Under law, the board is an organ of State as envisaged in Section 139 of the Constitution. As such, the Promotion of Administrative Justice Act, 2000 (PAJA), binds the board. Therefore, any act or decision of the board that is contrary to the requirements of PAJA may be challenged and reviewed judicially. We are proud to announce that no act or decision of the board became a subject of judicial review during the year under review.

The board is a Schedule 3C public entity and for purposes of the PFMA, reports to the MEC for Finance of the Western Cape Government. The board’s fiscal competencies are therefore defined in the Act and the PFMA. The board is also bound by the Western Cape Executive Council Policy Determinations as published in 1999.

In accordance with an amendment to the FIC Act during 2010, Provincial Gambling Regulators were enjoined as supervisory bodies with the National Gambling Board. As such, our board, just like all other PLAs, is charged with the responsibility of ensuring that all license holders comply with the FIC Act.


8. ORGANISATIONAL STRUCTURE

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Part B:PERFORMANCE INFORMATION

INTRODUCTION

14 WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14

PART B: PERFORMANCE INFORMATION

1. SITUATIONAL ANALYSIS

1.1. Service Delivery Environment

As previously reported there are 5 licensed Casinos, 1 Totalisator, 2 Route Operators, 57 Tote Premises and 30 Bookmakers. The Route Operators were each allocated 1 000 LPMs, but as at 31 March 2014, only 1 675 LPMs were operated on 372 LPM sites.

There has been requests to increase the number of LPMs and to approve other forms of gambling like bingo in the Western Cape. The board has neither approved nor declined the requests. Instead, the board has resolved to first conduct research to determine the socio-economic impact such an increase or new forms of gambling would have on the Western Cape population.

A Remote Gambling Bill has been introduced in parliament and it was made available for public comment. Since the world at large seems to be heading towards licensing Internet gambling, it is not unreasonable to suspect that this Bill may be a signal that remote gambling is heading our way.

The board is currently considering whether applications for bookmaker operator and premises licences should be on an invitation basis. The public and the operators have been given an opportunity to comment on the matter. A decision on this issue is yet to be finalised.

The issue whether the existing casinos may continue paying exclusivity fees for the right to operate within a determined geographical space without competing with another casino in that determined space is yet to be finalised.

1.2. Organisational environment

The current organisational structure was determined when the current Strategic Plan was adopted. This Strategic Plan expires in March 2015. The Chief Executive Officer is preparing to propose that the board should consider a re-alignment of departments so as to efficiently streamline operations.

Illegal gambling is increasing. Thus, the board rightfully desires to increase its law enforcement staff to effectively combat the rising illegal gambling.

1.3. Key policy developments and legislative changes

There were three main legislative amendments in the year under review. First, the relevant Minister may extend a board member’s term when such is about to expire. Second, the annual licence and investigation fees were removed from the Act and they would henceforth be prescribed by Regulation. Lastly, the operative tax rates applicable to casino operator licence holders were increased. The board has two policy initiatives that it is currently considering.

The board has commissioned a study to determine what, if any, social impact an increase in LPMs and the introduction of other forms of gambling will have on the Western Cape. It is envisaged that the study will be concluded during the 2014/15 financial year.

The second note-worthy initiative is that the board is reviewing its bookmaker and bookmaker premises application procedures. Ultimately, after researching the issues, the board issued a Public Notice, inviting public comments on the desirability of having bookmaker and bookmaker premises licence applications controlled by invitation only.

The board also issued new Objections Guidelines with a view to educate the public on its application procedures thereby ensuring that the objections that may be submitted by the public from time to time would improve in quality and relevance. The guidelines explain the advertising procedures and outline grounds on which the public may object to an advertised application.


The board imposed licence conditions on all gambling operator licence holders that compel them to achieve a level 2 BBBEE rating by March 2015. The board also imposed certain intermediate BBBEE compliance conditions and it has been monitoring the industry’s compliance therewith.

New more stringent BBBEE Codes have been introduced. As a result, the board received numerous requests from licensees to review the current BBBEE license conditions since this might produce unintended negative results.

Specifically, the operators are concerned that they may not achieve the prescriptions of their current license conditions if now measured in terms of the more strict requirements of the new Code. Consequently, the board is urgently consulting with its regulator peers nation-wide with an aim to achieve a workable common approach to the matter. One proposal is to ensure that a fair and equitable outcome is achieved. With the implementation date of the new Codes being extended to April 2015, there is slightly more time and room for deliberation with all stakeholders. The board is committed to the cause of broad-based empowerment and will make the appropriate determinations in due course.

1.4 Strategic Outcome Oriented Goal

The strategic outcome-oriented goal of the WCGRB is to ensure that all gambling, racing and activities incidental thereto are effectively regulated in the Province in such a manner that the benefits derived therefrom outweigh the negative social impact gambling may produce.


2. PERFORMANCE INFORMATION BY PROGRAMME

2.1. Programme 1: Board and Administration

Programme Description

To give strategic direction and to provide quality support services to the board and the stakeholders.

Programme Structure

The programme consists of seven board Members, the Chief Executive Officer, the Legal Manager, and the Professional Assistant: Legal Services, Human Resource Manager, the Chief Financial Officer, the Senior Financial Officer, the Senior Administration Officer, the Board Secretary and 10 approved support staff members.

The programme is structured into the following sub-programmes:

Sub-Programme 1.1: Board

Purpose: to give effect to the legislative mandate placed on the Western Cape Gambling and Racing board and to account to the relevant MEC.

Sub-Programme 1.2 Executive

Purpose: To provide strategic and operational assistance to the board for it to fulfil its legislative mandate.

Sub-Programme 1.2.1 Legal services

Purpose: To be an in-house legal resource for the board and its Office.

Sub-Programme 1.2.2 Human Resources

Purpose: To provide Human Resource support services to the board

Sub-Programme 1.3 Administration and Finance

Purpose: To provide administration and financial support services to the board and its office.


Western Cape Gambling and Racing Board

Board


Sub Programme 1.1: Board

Strategic ObjectivesTo ensure effective and efficient leadership and oversight of the Office of all functions of the Office of the Board

Performance Indicator

Actual Achieve-

ment 2012/13

Planned Target

2013/14

Actual Achieve-

ment 2013/14

Deviation from

planned target for 2013/14

Comment on variances

Number of licences issued

799 711 1 493 109.99% 2013/14 saw an influx of new applications across the gambling industries. In most instances when new licences are approved, these are then also renewed in the same period as a result of the alignment of expiry dates of licences. These include the various entities and their respective shareholders.

Number of legislative amendments reviewed for recommendation

- 1 - -100.00% Advised to wait on Provincial Treasury instructions before processing any amendments.

Number of board meetings to give effect to statutory mandate

11 11 13 18.18% Special board meetings, for a breakaway session and to deal with a complaint referred by the Province.

Number of Committee meetings to give effect to statutory mandate

24 24 26 8.33% Finance and IT committee meetings to discuss APP risks and budgets.

Number of regulatory fora attended to acquire best practice

3 5 3 -40.00% Meetings set by third parties and cancelled.

Number of recommended licence applications approved

799 711 1 493 109.99% 2013/14 saw an influx of new applications across the gambling industries. In most instances when new licences are approved, these are then also renewed in the same period as a result of the alignment of expiry dates of licences. These include the various entities and their respective shareholders.

Number of revenue reports evaluated

- 14 11 -21.43% The target set for the year has been over stated as well as January 2014 board meeting cancelled as board members not appointed resulting in no quorum.

Sub Programme 1.1: Board

Purpose: to assist the MEC and to give effect to the legislative mandate placed on the Western Cape Gambling and Racing Board.


Strategy to overcome areas of under performance

When setting targets past performance will be carefully reviewed.

Changes to planned targets

There were no changes to the planned targets during the 2013/14 financial year.

Linking performance with budgets

2013/14 2012/13

Sub- Programme

Name

Budget

R

ActualExpenditure

R

(Over)/Under

ExpenditureR

Budget

R

ActualExpenditure

R

(Over)/Under

ExpenditureR

BOARD 2 729 297 1 303 517 1 425 780 3 274 599 1 447 596 1 827 003



Executive


Sub-Programme 1.2 Executive

Purpose: To provide strategic and operational assistance to the board for it to fulfil its legislative mandate. In order to be an effective, efficient and knowledgeable executive manager who masters best industry practices, the Chief Executive Officer attended numerous forums and seminars, including CEO Forums and international industry conferences.

In addition to assessing various licence applications, the CEO also reviewed numerous submissions prepared for the board’s attention and consideration.

Sub Programme 1.2: Executive

Strategic Objectives

To ensure effective and efficient management of all functions of the BoardPerformance

IndicatorExec

Actual Achievement

2012/13

Planned Target2013/14

Actual Achievement

2013/14

Deviation from planned target

for 2013/14

Comment onvariances

Number of meetings attended to give effect to statutory requirements

38 42 46 9.52% Special Board meetings, for a breakaway session and to deal with a complaint received by the Province.Two ad-hoc meetings held.

Number of regulatory fora attended to represent the Western Cape Gambling and Racing Board

- 4 10 150.00% More meetings attended than anticipated. Meetings are arranged by persons not employed by the Board and therefore have little control on the number of meetings.

Number of recommended licence applications approved in accordance with the delegated authority

6 471 3 563 6 105 71.34% 2013/14 saw an influx of new applications across the gambling industries. In most instances when new licences are approved, these are then also renewed in the same period as a result of the alignment of expiry dates of licences. These include the various entities and their respective shareholders as well as key and gambling employees linked to the said entities.







2013/14 2012/13

Sub- Programme

Name

Budget

R

ActualExpenditure

R

(Over)/Under

ExpenditureR

Budget

R

ActualExpenditure

R

(Over)/Under

ExpenditureR

EXECUTIVE 5 635 883 5 241 291 394 592 7 514 972 3 162 191 4 352 781



Legal Services


Sub-Programme 1.2.1 Legal services

The purpose of this sub-programme is to be an in-house legal resource for the board and its office. The services rendered include legal advice, research, drafting submissions, legal opinions and management of litigation launched by or against the board, representing the board in all out of court legal matters, draft proposed amendments to the Act, Regulations and licence conditions, and representation of the board on national and international legal forums.

Sub Programme 1.2.1: Legal services

Strategic ObjectivesTo provide legal advisory support and research services to the board and its Office


ActualAchievement

2012/13

Planned Target

2013/14

Actual Achievement

2013/14

Deviation from

planned target

for2013/14

Comment onvariances

Number of legal opinions drafted

64 48 70 45.83% Given the contentious nature of matters under consideration by the board and Office, more legal opinions were requested.

Number of reviews of the Western Cape Gambling and Racing Act, 1996(“the Act”)

1 1 1 N/A N/A

Number of reviews of the Western Cape Gambling and Racing Regulations,(“the Regulations”)

1 1 1 N/A N/A

Number of litigious matters project-managed on behalf of the board

9 2 11 450.00% Attended to more litigious matters than anticipated. The number of pending legal matters was used as the baseline when the target was set.


There are no areas of under-performance.





Human Resources


Sub-Programme 1.2.2 Human Resources

Purpose: To provide Human Resource support services to the board

The Sub-programme is responsible for ensuring that the board complies with the relevant labour and employment laws.

In addition, the sub programme focuses on matters dealing with recruitment and appointment of needed staff. It is also its responsibility to ensure that staff receive relevant training to improve their performance capacities and that they receive helpful assistance on issues relating to employee health and safety and in all matters of staff overall benefits.

Sub Programme 1.2.2: Human Resources

Strategic ObjectivesTo ensure HR best practices are achieved and maintained at the office of the Western Cape Gambling and Racing Board


ActualAchievement

2012/13

Planned Target

2013/14

Actual Achievement

2013/14

Deviationfrom

planned target

for2013/14

Comment onvariances

Annual review of HR policies and processes

1 1 1 N/A N/A

Number of SDPs developed

- 1 1 N/A N/A

Number of relevant fora

- 19 19 N/A N/A

The sub-programme has assisted the board in achieving its strategic goals by ensuring compliance with the relevant legislation and by recruiting adequately qualified and competent workforce.







Administration and Finance


Sub-Programme 1.3 Administration and Finance

The Department Administration and Finance provides administrative and financial support services to the board. It also serves as custodian of both the board’s intrinsic and acquired assets

Sub Programme 1.3: Administration and Finance

Strategic ObjectivesTo provide an efficient and effective administrative, procurement and financial service to the board


ActualAchievement

2012/13

Planned Target

2013/14

Actual Achievement

2013/14

Deviationfrom

planned target

for2013/14

Comment onvariances

Number of financial reports submitted to the board and other relevant stakeholders

12 11 11 N/A N/A

Number of SCM policy reviews in line with the board’s prescripts, NTR and PTR

- 1 1 N/A N/A

Number of board and Committee meetings where secretariat services are provided

40 35 39 11.43% Special Breakaway board meeting on19 June 2013.Special board meeting on 4 July 2013 regarding complaint referred by the Province.Special board meeting on 10 December 2013, regarding Intralot applications, which stood over from 29 October 2013 and 2 December 2013 routine board meetings.No board quorum in January 2014, due to board members not yet appointed by the Province.Ad-hoc Fin & IT Committee meeting on 10 July 2013, regarding APP, Risks and Budget 2014/15.


The Department Administration and Finance has contributed to the achievement of the board’s administration and financial goals by providing an administration and finance service which complemented the board’s activities.






2013/14 2012/13

Sub- Programme

Name

Budget

R

ActualExpenditure

R

(Over)/Under

ExpenditureR

Budget

R

ActualExpenditure

R

(Over)/Under

ExpenditureR

ADFIN 8 104 153 8 127 161 (23 008) 7 982 921 6 825 226 1 157 695



Licensing


Programme 2: Licensing

The Licensing department is responsible for receiving licence applications, processing the same and co-ordinating all of the aspects involved in the licensing process for the Casino and LPM industry.

Programme 2: Licensing

Strategic Objectives

Number of licence applications recommended for approval to the CEO and/or the boardPerformance

IndicatorActual

Achievement2012/13

Planned Target2013/14

ActualAchievement

2013/14

Deviation from planned

target for 2013/14

Comment onvariances

Number of probity investigations conducted and recommended for approval in respect of various licences

5 983 4 132 5 547 34.24% 2013/14 saw an influx of new applications across the gambling industries. In most instances when new licences are approved, these are then also renewed in the same period as a result of the alignment of expiry dates of licences. These include the various entities and their respective shareholders as well as key and gambling employees linked to the said entities.

During the year under review, the Licensing Department performed its duties professionally and efficiently. As a result thereof, the board achieved its licensing mandate.






2013/14 2012/13

Programme Name

Budget

R

ActualExpenditure

R

(Over)/Under

ExpenditureR

Budget

R

ActualExpenditure

R

(Over)/Under

ExpenditureR

LICENSING 6 998 319 6 480 429 517 890 6 675 612 5 972 439 703 173



Racing and Betting


Programme 3: Racing and Betting

The Racing and Betting Department is responsible for receiving licence applications, processing them and co-ordinating all of the aspects involved in the licensing process for the Bookmaker and Totalisator industry.

It is also the department’s responsibility to ensure that the taxes are collected timeously; thus the programme conducts regular assessments to determine the accuracy and validity of gambling taxes and whether the operators generally comply with regulations.

The department seeks to inspire public confidence and trust in a regulatory environment free from corruptive elements.

Racing and Betting

Strategic ObjectivesTo appropriately recommend licence applications to the CEO and/or board for approvalTo ensure Racing and Betting activities comply with all provisions of the Act and endeavour for compliance with legislation, regulation, policies and organisational best practices


ActualAchievement

2012/13

Planned Target

2013/14

Actual Achievement

2013/14

Deviationfrom

planned target

for2013/14


Number of investigations and recommendations for approval of applications received for both new and renewal of various licences

488 384 558 45.31% 2013/14 saw an influx of new applications across the gambling industries. In most instances when new licences are approved, these are then also renewed in the same period as a result of the alignment of expiry dates of licences. These include the various entities and their respective shareholders as well as key and gambling employees linked to the said entities.


Racing and Betting

Strategic ObjectivesTo appropriately recommend licence applications to the CEO and/or board for approvalTo ensure Racing and Betting activities comply with all provisions of the Act and endeavour for compliance with legislation, regulation, policies and organisational best practices


ActualAchievement

2012/13

Planned Target

2013/14

Actual Achievement

2013/14

Deviationfrom

planned target

for2013/14


Number of compliance assessments at licensed operators conducted

334 391 407 4.09% Targets set are best estimates. 16 Additional audits. Planned assessments to the actual number of operators and premises licensed at the time. During the course of the year operators cease to operate, new operators and new premises are approved which cause the numbers to deviate.

During the year under review, the Racing and Betting Department performed its duties professionally and efficiently. As a result thereof, the board achieved its legislative mandate. The department made sure that the horse racing and betting industry operators complied with all legal requirements of their individual licenses.






2013/14 2012/13

Sub- Programme

Name

Budget

R

ActualExpenditure

R

(Over)/Under

ExpenditureR

Budget

R

ActualExpenditure

R

(Over)/Under

ExpenditureR

RACING AND BETTING 5 885 724 5 504 610 381 114 5 830 525 4 938 809 891 716



Gambling Compliance


Programme 4: Gambling Compliance

The responsibility of ensuring that licensed operators comply with the law, rules and regulations of the casino and limited pay-out machine industries is the hands of this Sub- Programme.

In carrying out this responsibility, the programme ensures all the license conditions imposed by the board are adhered to and that all gambling taxes are not only calculated accurately, they are valid and timeously paid over to the board by all operators. Through its sole law enforcement agent and the assistance others such as the SAPS and the National Prosecuting Authority, the programme combats illegal gambling.

Programme 4: Gambling Compliance

Strategic ObjectivesAll gambling in the Province is conducted in accordance with the relevant legislationPerformance Indicator

ActualAchievement

2012/13

Planned Target

2013/14

Actual Achievement

2013/14

Deviationfrom

planned target

for2013/14

Comment onvariances

Number of on- site compliance assessments at licensed casinos, route operators and LPM sites

677 699 706 1.00% During the course of a year, there are a number of new LPM sites that open as well as close. Due to this, it is not possible to accurately determine the exact number of assessments that will be conducted at licenced sites

Number of investigations carried out with respect to illegal gambling

24 30 27 -10.00% The Office of the board can only conduct investigations where there are allegations of illegal gambling taking place. The target set is the best estimate based on past performance as well as current trends.


By conducting the scheduled on-site compliance assessments and ensuring timely action against illegal gambling operations, the Programme of Compliance contributed effectively to the regulation of gambling in the Province.


A proposal will be submitted to the board to increase the number of law enforcement agents and the department will review its past activities to determine how to effect improvement.




2013/14 2012/13

Sub- Programme

Name

Budget

R

ActualExpenditure

R

(Over)/Under

ExpenditureR

Budget

R

ActualExpenditure

R

(Over)/Under

ExpenditureR

GAMBLING COMPLIANCE 8 427 993 7 458 308 969 685 7 702 454 7 567 195 135 259



Information Technology


Programme 5: Information Technology

The Department: Information Technology provides all the necessary information technology services to the board. It also serves as custodian of the board’s electronic information.

Programme 5: Information Technology

Strategic ObjectivesMaintain an uptime of over 90% for all information systems


ActualAchievement

2012/13

Planned Target

2013/14

Actual Achievement

2013/14

Deviationfrom

planned target

for2013/14

Comment onvariances

Number of current information technology systems maintained (hardware, software and network infrastructure)

98 *1 094 1 223 11.79% Rapid technological advances forced the department to perform additional tasks to keep all ICT systems up to date.

The IT Department has contributed to the achievement of the board’s goals and mandate by implementing and maintaining relevant and secure ICT solutions for the board. Staff members are continuously trained with appropriate knowledge required to derive the envisaged benefit from operating ICT solutions implemented by the board.


There were no areas of under performance.




2013/14 2012/13

Sub- Programme

Name

Budget

R

ActualExpenditure

R

(Over)/Under

ExpenditureR

Budget

R

ActualExpenditure

R

(Over)/Under

ExpenditureR

INFORMATION TECHNOLOGY 6 333 025 3 614 208 2 718 817 4 299 918 3 763 606 536 312

* Cyclical update of computer systems and hardware occurred in the 2013/14 year.


3. REVENUE COLLECTION

2013/14 2012/13

Sources ofrevenue

Estimate

R

ActualAmount

CollectedR

(Over)/Under

CollectionR

EstimateAmount

R

ActualAmount

CollectedR

(Over)/Under

CollectionR

Application fees 393 650 2 429 150 (2 035 500) 496 903 1 535 850 (1 038 947)

Investigation fees 19 965 880 20 202 257 (236 377) 20 082 460 20 420 343 (337 883)

Exclusivity fees 1 177 000 1 573 461 (396 461) 1 177 000 1 450 195 (273 195)

Operators’ fees 3 791 140 4 906 064 (1 114 924) 3 791 141 4 521 718 (730 577)

Interest 1 020 000 1 038 346 (18 346) 1 080 000 1 131 577 (51 577)

Inspector charge outs 3 887 082 5 145 166 (1 258 084) 3 955 833 4 990 688 ( 1 034 855)

Legal fees recovered - 42 990 (42 990) - - -

Transfers 10 326 000 10 326 000 - - 2 411 000 (2 411 000)

Miscellaneous - 144 992 (144 992) - 108 584 (108 584)

Total 40 560 752 45 808 426 (5 247 674) 30 583 337 36 569 955 (5 986 618)

It is important to highlight that the WCGRB is only permitted to collect revenue and other fees from licensees as prescribed by law. Therefore, the WCGRB is proscribed to increase the amount of fees and other revenue it collects from operators. Unless there is an increase in gambling license applications and the penalties the board may impose for various regulatory violations, there is no other way the board can increase its revenue. Thus, when preparing a budget, the WCGRB relies on past trends to estimate the revenue it anticipates to receive for the financial year.



Part C:GOVERNANCE


PART C: GOVERNANCE

1. INTRODUCTION

The board’s governance is provided for the in Western Cape Gambling and Racing Act, the Public Finance Management Act (PFMA) and it is also run in tandem with the Protocol on Corporate Governance found in the King III Report on Corporate Governance.

2. EXECUTIVE AUTHORITY

The Provincial Legislature appoints the board. However, the board reports directly to the MEC. Any and all reports that the board is mandated to produce and submit are submitted to the MEC. In addition, the board is bound by the policy determinations of the Executive Authority.

3. THE ACCOUNTING AUTHORITY - THE BOARD

Introduction

The board is comprised of seven non-executive members who are appointed by the Provincial Legislature:

The role of the board is as follows:

The Western Cape Gambling and Racing Board was established with the main object of controlling and regulating gambling and racing and all other activities incidental thereto in the Western Cape.

Its functions and powers are outlined in Section 12 of the Act, 1997. In summary the role of the board is to:

• Invite applications for licences in terms of the Act;

• Receive and investigate applications for national and provincial licences;

• Issue national and provincial licences to qualifying or suitable persons, subject to such conditions as the board deems appropriate;

• Probe the suitability of persons acquiring an interest in a licensee or the business to which a licence relates;

• Conduct hearings and investigations into the conduct of licences or pertaining to any matter that the board must administer in terms of the Act;

• Ensure on-going compliance in the licensed industry and impose administrative penalties or such measures as the board deems appropriate for contraventions of the law;

• Protect the public from illegal gambling and instil / ensure public confidence and trust in legalised gambling;

• Detect illegal gambling activities and ensure prosecution thereof;

• Administer, calculate and collect taxes and levies due to the provincial fiscus and all statutory fees as prescribed by the Act;

• Conduct on-going research into gambling and racing throughout the Province and elsewhere to keep abreast of and detect deficiencies in the Act and regulatory practices of the board;

• Impose appropriate licence conditions for effective regulation;

• Attend regulatory forums and conferences in order to keep abreast of the latest developments of the industry; and

• Generally exercise all powers and perform the functions specified in the Act and any conferred by any other Act.

Board Charter

The board’s powers and functions are circumscribed in the Act. The board has adopted a Charter for each of the sub-committees outlining their mandate. The board reviews its corporate governance annually. The board’s committees are listed on pages 48 to 49.


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BOARD MEMBER CHANGES

Ms A Lapoorta (Board Vice Chairperson/ Board Chairperson) [Audit Committee membership ended upon being appointed as board Chairperson on 13 February 2014. Finance & IT Committee chairmanship ended upon being appointed as board Chairperson on 13 February 2014]

Mr DN Polovin (Vice Chairperson) [Stopped serving on LPM Committee, appointed on Horseracing Committee as Chairperson of Human Capital Committee – 26 February 2014]

Mr T Arendse (Member) [Appointed as new board member on 12 February 2014 and as a committee member to the following committees on 26 February 2014: Audit Committee, Finance & IT Committee (Chairperson) & LPM Committee]

Mrs US Deglon (Member) [Board member term expired on 19 January 2014 / re-appointed on 12 February 2014.]

Mr DA Fredericks (Member) [Stopped serving on LPM Committee and appointed as Chairperson of Casino Committee on 26 February 2014]

Mrs I Du Plessis (Member) [Appointed as new board member on 12 February 2014 and as a committee member to the following committees on 26 February 2014: Human Capital Committee, Casino Committee & LPM Committee. Board member resigned 14 April 2014.]

Prof T Madima (Past Chairperson) [Board member term expired on 19 January 2014]

Mr RI Kingwill (Member) [Board member term expired on 19 January 2014]


Nam

eDe

signa

tion

(in te

rms

of

the

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Entit

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ctur

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Date

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Committee No. of meetings held

No. of members Name of members

Audit Committee 4 3 Mr PK Slack [Chairperson] Mr MR BurtonMr T Arendse [Appointed as new board member on 12 February 2014 and as Committee member on 26 February 2014]Ms A Lapoorta [Audit Committee membership terminated upon being appointed as Board Chairperson from 13 February 2014]

Casino Committee 4 3 Mr DA Fredericks (Member) [Appointed as Committee Chairperson on 26 February 2014]Ms US Deglon (Member)Mrs I Du Plessis [Appointed as new board member on 12 February 2014 and as Committee member on 26 Feb 2014]Mr RI Kingwill (Chairperson) [board member term expired on 19 January 2014]

Finance & IT Committee 6 4 - 3 Mr T Arendse [Appointed as new board member on 12 February 2014 and as Committee member and Chairperson on 26 February 2014]Ms A Lapoorta (Chairperson) [Finance & IT Committee chairmanship terminated upon being appointed as Board Chairperson from 13 February 2014]Mr RI Kingwill [board member term expired on 19 January 2014]Mr HC MalilaMr DN Polovin [Stopped serving on Committee on 26 February 2014][Total number committee members reduced from 4 to 3 members on 26 February 2014]

LPM Committee 4 3 Ms US Deglon (Chairperson)Mr T Arendse [Appointed as new board member on 12 February 2014 and as Committee member on 26 February 2014]Mrs I Du Plessis [Appointed as new board member on 12 Feb 2014 and as Committee member on 26 February 2014]Mr DA Fredericks [Stopped serving on Committee on 26 February 2014]Mr DN Polovin [Stopped serving on Committee on 26 February 2014]

COMMITTEES OF THE BOARD


Committee No. of meetings held

No. of members Name of members

Human Capital Committee 4 4 - 3 Ms US Deglon (Member) [Stopped serving on LPM Committee on 26 February 2014]Mr DA Fredericks (Member) Prof TS Madima (Chairperson) [board member term expired on 19 January 2014]Mr DN Polovin [Appointed as Committee Chairperson on 26 February 2014][Total number committee members reduced from 4 to 3 members on 26 February 2014]

Horseracing Committee 4 3 Mr HC Malila (Chairperson)Mr RI Kingwill (Member) [board member term expired on 19 January 2014]Ms A Lapoorta (Member)Mr DN Polovin (Member) [Appointed as Committee member on 26 February 2014]

Legal Committee 0 2 Prof TS Madima (Member) [board member term expired on 19 January 2014]Mr DN Polovin [Committee terminated and functions taken up under Human Capital Committee on 26 February 2014]

BOARD REMUNERATION ARRANGEMENTS

Board meetings:

• The remuneration for board meetings held at the offices is a fixed amount of R3 929.68, irrespective of the length of the meeting, and is all inclusive of preparation time and travel time.

Board committees and other events:

• The remuneration for other meetings and events, such as committee meetings and public hearings, for example, is based on an hourly rate, which in addition to the time attended, extends also to time travelled, preparation time and reimbursement for kilometres travelled.

• The hourly amount is R491.21 per hour.

• This remuneration is payable up to the equivalent of a maximum of 8 hours, plus kilometres travelled.

• The practice is for members to indicate to the Secretary at the start of each meeting what had been their preparation time for a particular meeting.

• The kilometres travelled in instances where the routes varied from the usual route to the office of the board, are also given to the board Secretary individually.

CHAIRPERSON -:

Board meetings: R5 057.36 per meeting

Board committees and other events: R632.17 per hour up to a maximum of 8 hours.


VICE CHAIRPERSON -:



ACTING AS CHAIRPERSON -:



BOARD MEMBER REMUNERATIONName Remuneration

R

Other allowance

R

Other re-imbursements

R

Total

RBOARD

Ms A Lapoorta 127 647 – 28 828 156 475

Mr DN Polovin 124 241 – 12 316 136 557

Mr T Arendse 10 970 – 512 11 483

Mrs US Deglon 89 810 – 9 352 99 162

Mr DA Federicks 142 412 – 14 536 156 949

Mr HC Malila – – 29 731 29 731

Mrs I Du Plessis – – – –

Prof TS Madima (SC) 41 829 – – 41 829

Mr RI Kingwill 95 132 – 11 015 106 147

Total 632 042 – 106 291 738 333

BOARD MEMBER TRAVEL ABROADConference: Global Gaming Expo (G2E) – Macau – China – May 2013Benefits derived from attendance: Introduction to latest gaming technology and designs which and understanding the operation thereof and possible risks and challenges that we may have to anticipate.Name Desig-

nationTravel & Accom-moda-

tionR

AirTickets

R

Confer-ence fees

R

Subsis-tence Allow-ance

R

Fees

R

Other

R

Total

RMr D Fredericks Board

Member13 693 13 132 6 268 8 915 21 510 314 69 832

Mr D Polovin Board Member

13 693 13 208 6 268 8 915 23 580 514 66 178

Total 27 386 26 340 12 536 17 830 51 090 828 136 010


BOARD MEMBER TRAVEL ABROADConference: International Association of Gaming Regulators – Norway – 30 September to 04 October 2013Benefits derived from attendance: Interaction with International Gaming Regulators and sharing of ideas and best practicesName Designation Travel

& Ac-com-

moda-tion

R

Air Tickets

R

Con-fer-

ence fees

R

Subsis-tence Allow-ance

R

Fees

R

Other

R

Total

R

Ms A Lapoorta Vice Chairperson

33 706 23 265 6 892 24 445 35 634 9 057 132 899

Mr H Malila Board Member

28 830 23 265 6 892 24 445 0 3 767 87 199

Total 62 556 46 530 13 784 48 890 35 634 12 824 220 198

Total / Conference

Travel & Accom-

modationR

Air Tickets

R

Confer-ence fees

R

Subsis-tence Al-lowance

R

Fees

R

Other

R

Total

RG2E Macau 27 386 26 340 12 536 17 830 51 090 828 136 010International Association of Gaming Regulators

62 556 46 530 13 784 48 890 35 634 12 824 220 198

Total 89 922 72 870 26 320 66 720 86 724 13 652 356 208

STANDING COMMITTEE ON PUBLIC ACCOUNTSDate of resolution Details Implementation progress25 March 2014 Brief Committee on progress

achieved and/or the outcomes of the investigations done in conjunction with SAPS on illegal gambling sites

Meeting to be scheduled by SCOPA

25 March 2014 Non achievement of 27% of set targets – To be referred to the Committee for further monitoring

Standing committee to monitor

25 March 2014 Detailed report on the losses of revenue incurred by the enitity in respect of Exclusivity.

Report submitted

25 March 2014 Detailed report on the reasons why R2.411 million had to be transferred to WCGRB

Report submitted

25 March 2014 Detailed report on the financial and service delivery impact on the poaching of the WCGRB staff as it is not able to meet the remuneration packages offered by other boards.

Report submitted

25 March 2014 Detailed report on the financial and service delivery impact of the 25 targets which have not been met including the mechanism to be introduced to avoid such a further occurrence.

Report submitted


4. RISK MANAGEMENT

Risk management is an integral part of the board’s overall activities. Through the use of Enterprise Risk Management the board aims to ensure that it continues to achieving its strategic objectives.

The WCGRB’s risk management includes:

• Integrating risk management into the culture and strategic decision-making of the WCGRB;

• Anticipating and responding to changing social, environmental and legislative conditions;

• Managing risk in accordance with best practice, and demonstrating due diligence in decision making;

• Regarding legal compliance as a minimum standard;

• Balancing the cost of managing risk with the anticipated benefits; and,

• Raising awareness of the need for risk management.

Risk management strategies to identify and manage risks at WCGRB include the following considerations:

• the Board, Departmental Heads and Managers have responsibility for overseeing risk management;

• the Board, Departmental Heads and Management adopt an open and receptive approach to solving risk problems;

• the Departmental Heads and Management support, advise on and implement policies approved by the board;

• the WCGRB makes conservative and prudent recognition and disclosure of the financial and non-financial implications of risks and opportunities;

• the Chief Executive Officer, Departmental Heads and Managers are responsible for encouraging good risk management practices within their units; and,

• key risk indicators will be identified and monitored on a quarterly basis.

The board, its Departmental Heads and Managers periodically assess the organizational risks in terms of the guidelines and methods provided to it by the Executive Authority through the MEC. Accordingly, each department’s risks are reviewed along with the annual performance plan (APP) and the overall budget.

5. INTERNAL CONTROL

The board’s internal controls are effective. The board has in place a number of policies and standard operating procedures specifically designed for control and proper governance of board affairs. The responsibility to implement these control measures is entrusted in the CEO. However, both the external and internal auditors test whether the controls are not only effective but also comport with the prescripts of the PFMA.

6. INTERNAL AUDIT AND AUDIT COMMITTEES

The purpose of performing internal audits is to provide to the board an independent and objective assurance counselling service designed to help improve the board’s operations. The internal auditors help bring a systematic and disciplined approach of evaluating the effectiveness of the board’s risk management, control and governance process.

The head of internal audit reports administratively to the CEO and functionally to the Audit Committee.

The organogram of the Audit Committee for the year under review follows together with a report on its key activities.

Audit committee members’ meeting attendance:

NAME OF MEMBER NUMBER OF MEETINGS ATTENDED1. Mr. P Slack 4 of 42. Mr. M Burton 4 of 43. * Ms A Lapoorta 1 of 24. # Mr T Arendse 1 of 1 - * [Audit Committee membership terminated upon being appointed as Board Chairperson from 13 Feb 2014]- # [Appointed as board member from 12 Feb 2014 and as Audit Committee member from 26 Feb 2014]


The organizational risks:

The Committee reviews each departmental risk, the APP and the budget.

7. COMPLIANCE WITH LAWS AND REGULATIONS

The board complies with every provision of all relevant laws and Regulations.

8. FRAUD AND CORRUPTION

The WCGRB revised and approved a Fraud and Anti-Corruption policy during the 2011 financial year. The policy has been fully implemented and provides for reporting of fraud via the national hotline and directly to the CEO or board.

Submissions are investigated by a dedicated Fraud Committee and reported to the CEO who considers the matters and reports to the board.

9. MINIMISING CONFLICT OF INTEREST

During the month of April each year, the WCGRB receives from each board member a declaration of their shareholdings and business interests. These are then recorded and kept on file. These declarations are reviewed to ascertain that no board member is compromised by an interest the board member may have.

In addition, at each board meeting, board members must declare whether they have any interest that might influence their judgement when deliberating matters that are before the board.

Also, all service providers are required to complete a WCBD4 form to certify that there is no relationship between the service provider and any employee of the WCGRB.

10. CODE OF CONDUCT

The Code of Conduct is central to the WCGRB achieving its mission to inspire public confidence and trust and to provide a stable, just, consistent and effective regulatory environment.

The Code ensures the delivery of high standards by guiding WCGRB employees and board members toward best practice and continued improvement in standards.

The Code of Conduct is readily available to all employees and board members online via the WCGRB’s intranet to which every individual has access. At the commencement of employment of a new employee and the appointment of board members the Code forms part of the induction pack, which all individuals are required to sign receipt of.

Compliance with the Code of Conduct is strictly enforced and monitored and any breaches thereof are dealt with in terms of the board’s disciplinary code and procedure.

Name Qualifica-tions

Internal or external

Date appointed Date Resigned No. of Meetings attended

P Slack Chartered Accountant

External 5 February 2013 4

A Lapoorta Chartered Accountant

Board Member

22 May 2013 Audit Committee membership terminated upon being appointed as board Chairperson from 13 February 2014

1 of 2

M Burton Chartered Accountant

External 8 December 2011 4

T Arendse Chartered Accountant

Board Member

26 February 2014 1 of 1

11. HEALTH SAFETY AND ENVIRONMENTAL ISSUES

The board has an established Occupational Health and Safety Committee (OHASA Committee) established in terms of the Occupational Health and Safety Act 85 of 1993. The OHASA committee, which has representatives of all departments at the board, meets at set monthly intervals through the year to assess the Health and Safety environment at the board and to address any matters that may arise.

12. COMPANY SECRETARY

The board does not have a Company Secretary. However, it has a unit of three staff members within the Administration and Finance Department who serve as its Secretariat.

13. SOCIAL RESPONSIBILITY

While the board itself did not have any social responsibility programmes for the year, the board does impose certain conditions on licence holders to ensure that they do allocate resources to assist poor communities.

The board also established the Western Cape Responsible Gambling Forum to address the potential ills gam-bling might bring.


14. AUDIT COMMITTEE REPORT

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

Audit Committee members and attendance

The audit committee consists of the members listed hereunder and meets at least 4 times per annum as per its approved terms of reference. During the 2013/14 financial year, 4 meetings were held.

NAME OF MEMBER NUMBER OF MEETINGS ATTENDED1. Mr. P Slack 4 of 42. Mr. M Burton 4 of 43. * Ms A Lapoorta 1 of 24. # Mr T Arendse 1 of 1 - * [Audit Committee membership terminated upon being appointed as Board Chairperson from 13 Feb 2014]- # [Appointed as board member from 12 Feb 2014 and as Audit Committee member from 26 Feb 2014]

Audit Committee Responsibility

The Audit Committee reports that it has complied with its responsibilities arising from Section 51(a) of the Public Finance Management Act and Treasury Regulation 27.1.10. The Audit Committee further reports that it has adopted appropriate formal terms of reference as its Audit Committee Charter, has regulated its affairs in compliance with this charter and has discharged all its responsibilities as contained therein.

The Committee has performed an annual self-assessment in respect of its own compliance in terms of the required functions in accordance with the King III Report on Corporate Governance, its own charter and terms of reference, the relevant National Treasury Regulations and the Public Finance Management Act. The Committee has complied with all the respective requirements.

The Effectiveness of Internal Control

Our review of the findings of the Internal Audit work, which was based on the risk assessments conducted in the public entity revealed certain weaknesses, which were then raised with the board.

The system of controls is designed to provide cost-effective assurance that assets are safeguarded and that liabilities and working capital are efficiently managed. The system applied by the Board over financial risk and risk management is effective, efficient and transparent.

In line with the Public Finance Management Act and the King III Report on Corporate Governance requirements, Internal Audit provides the Audit Committee and management with assurance that the internal controls are appropriate and effective. This is achieved by means of the risk management process, as well as the identification of corrective actions and suggested enhancements to the controls and processes.


From the various reports of the Internal Auditors and the Audit Report on the Annual Financial Statements, the management report of the Auditor-General, it was noted that no matters were reported indicating any material deficiencies in the system of internal control nor any deviations therefrom.

Accordingly, we can report that the system of internal control for the period under review was efficient and effective.

The Audit Committee is satisfied that the internal audit function, which is outsourced, is operating effectively and that it has addressed the risks pertinent to the Board in its audit.

A review of the implementation and effectiveness of internal control measures were performed during the year on the following focus areas:

• Review of draft Annual financial statements 2012-13 and 2013-14

• Review of Performance information on Predetermined Objectives

• Follow-up work on previous internal and external audit findings

• Asset verification

• Review of the Racing and Betting department

• Review of IT Department

• Review of the Compliance department

• Review of the Board activities

• Review of Chief Executive Officer’s office

• Review of the Licensing department

• Review of the Adfin department

• Review of the Legal division

• Review of HR division

The Audit Committee requested specific additional work on supply chain management with a focus on possible irregular expenditure.

In-Year Management and Monthly/Quarterly Report

The board has submitted monthly financial and quarterly performance reports to the Executive Authority. The Audit Committee is satisfied with the content and quality of monthly and quarterly reports prepared and issued by the Board during the year under review.

Evaluation of Financial Statements

We have:

• Reviewed and discussed the audited annual financial statements included in the annual report, with the Auditor-General of South Africa and the Board;

• Reviewed the Auditor-General’s management report and management’s response thereto;

• Reviewed the Board’s compliance with legal and regulatory provisions;

• Reviewed significant adjustments resulting from the audit; and

• Reviewed the annual financial statements prepared by the board.


External Auditor’s Report

We have reviewed the public entity’s implementation plan for audit issues raised in the prior year and we are satisfied that the matters have been adequately resolved.

The Audit Committee concurs and accepts the Auditors-General conclusions on the annual financial statements and is of the opinion that the audited annual financial statements be accepted and read together with the report of the Auditor-General.

________________________________________

Paul SlackChairperson of the Audit Committee



Part D:HUMAN RESOURCE MANAGEMENT



1. INTRODUCTION

Effective management and oversight of all matters pertaining to WCGRB employees are vital to the achievement of the boards strategy. The role of the Human Resources Department and Human Capital Committee is to deliver on the responsibility of sustainable remuneration practices and other human resource matters.

Attracting top talent and retaining its present experienced workforce remained a key driver of the human resources agenda in 2013/14. The completion of and implementation of individual development plans during 2012/13 has made it possible for the board to more effectively support its employees financially in achieving tertiary qualifications relevant to the boards’ mandate.

Formal performance reviews are conducted twice a year during March and August. Year-end performance ratings are an important input into remuneration decisions given the finalization of the Organisational Developments exercise that has been performed by the responsible Provincial Government Department. An enhanced performance management approach was introduced to ensure that employee performance is consistently and fairly reviewed.

The board has a comprehensive wellness programme to encourage employees to choose healthier, more balanced lifestyles. It further provides employees and their immediate families with online and after hours telephonic assistance for medical, legal and psychological matters.

Focus for 2014/15

Given that the board will be finalising its Strategic Plan for 2015/20 during the coming year, emphasis will be placed on the identified focus areas as follows:

Transformation:

• Continued focus on enhancing the board’s employment equity status

• Further strengthening an inclusive culture through continuous employee engagement

Talent management: improving the talent pipeline

• Streamlining the recruitment process

• Building a strong internal recruitment capability

Learning and development: shifting the focus from compliance-driven learning to skills-driven learning

• Introducing a system for employees to easily access learning opportunities.

• Introducing a development framework to inform employee competencies and development.

• Embedding a consistent people change management approach in the organisation.

PART D: HUMAN RESOURCE MANAGEMENT


2. HUMAN RESOURCE OVERSIGHT STATISTICS

PERSONNEL COST BY PROGRAMME Programme Total

Expenditure for the entity

(R’000)

Personnel Expenditure

(R’000)

Personnel exp. as a % of total exp.

(R’000)

No. of employees

Average personnel cost per

employee (R’000)

Administration* 14 672 8 490 58% 26 326Compliance 7 458 6 224 83% 14 445Racing & Betting 5 505 5 103 93% 14 365Licensing 6 480 6 271 97% 16 392IT 3 614 1 811 50% 5 362TOTAL 37 729 27 899 74% 75 372

• Administration programme includes the board, the Administration and Finance Department and Executive Department

PERSONNEL COST BY SALARY BANDLevel Personnel

Expenditure (R’000)

% of personnel

exp. to total personnel

cost

No. of employees

Average personnel cost per

employee (R’000)

Top Management 1 016 3.79 1 1 016Senior Management 5 773 21.53 7 825Professional qualified 6 106 22.62 10 611Skilled 10 481 39.05 28 374Semi-skilled 3 491 13.02 20 175TOTAL *26 867 66 407

* Excludes board remuneration of R632 000 and provision for housing allowance of R400 000.

PERFORMANCE REWARDSProgramme Performance rewards

(R’000)Personnel Expenditure

(R’000)% of performance rewards to total personnel cost

Top Management 30 1 016 3Senior Management 104 5 773 2Professional qualified 112 6 106 2Skilled 151 10 481 1Semi-skilled 79 3 491 2Unskilled 0 0 0TOTAL 476 *26 867 2

* Excludes board remuneration of R632 000 and provision for housing allowance of R400 000.


TRAINING COSTS Directorate/ Business Unit

Personnel Expenditure

(R’000)

Training Expenditure

(R’000)

Training Expenditure

as a % of Personnel

Cost

No. of employees

trained

Avg training cost per

employee(R’000)

Board 673 367 55 5 73Executive 3 153 158 5 6 26Administration & Finance 4 662 35 1 13 3Gambling Compliance 6 224 133 2 23 6Racing & Betting 5 103 80 2 21 4Licensing 6 271 48 1 15 3IT 1 811 78 4 8 10

TOTAL 27 899 899 3 91 10

EMPLOYMENT AND VACANCIESProgramme 2012/13

No. of Employees

2013/14 Approved

Posts

2013/14No. of

Employees

2013/14 Vacancies

% of vacancies

Administration 10 12 11 2 32Executive 2 3 2 0 -Management 8 8 8 0 -Compliance 16 16 13 3 48Racing & Betting

10 13 13 0 -

Licensing 16 16 15 1 20IT 4 4 4 0 -TOTAL 66 72 66 6 12


EMPLOYMENT AND VACANCIESSalary Band 2012/13

No. of Employees

2013/14 Approved

Posts

2013/14No. of

Employees

2013/14 Vacancies

% of vacancies

Top Management

1 1 1 0 0

Senior Management

7 7 7 0 0

Professional qualified

10 12 10 2 17

Skilled 26 30 28 2 7Semi-skilled 22 22 20 2 9Unskilled 0 0 0 0 0TOTAL 66 72 66 6 8

EMPLOYMENT CHANGESSalary Band Employment

at beginning of period

Appointments Terminations Employment at end of the

periodTop Management 1 0 0 1Senior Management 7 0 0 7Professional qualified 11 1 3 9Skilled 24 5 4 25Semi-skilled 23 5 4 24Unskilled 0 0 0 0TOTAL 66 11 11 66

REASONS FOR STAFF LEAVING Reason Number % of total no. of staff leavingDeath 1 11Resignation 7 78Dismissal 1 11Retirement 0 0Ill health 0 0Expiry of contract 0 0Other 0 0Total 9 100

The majority of staff who resigned did so for better salary opportunities at other Provincial regulatory authorities. One staff member resigned to take care of her disabled child and another owing to her husband being transferred outside the Western Cape by his employer.


LABOUR RELATIONS: MISCONDUCT AND DISCIPLINARY ACTIONNature of disciplinary Action NumberVerbal Warning 1Written Warning 0Final Written Warning 0Dismissal 1

EQUITY TARGET AND EMPLOYMENT EQUITY STATUS

Levels MALEAfrican Coloured Indian White

Current Target Current Target Current Target Current TargetTop Management

1 0 0 0 0 0 0 0

Senior Management

1 1 3 3 0 0 0 0


3 2 1 2 0 0 3 1

Skilled 4 7 7 8 1 1 4 3Semi-skilled 0 3 3 5 0 0 0 1Unskilled 0 0 0 0 0 0 0 0TOTAL 9 13 14 18 1 1 7 5

Levels FEMALEAfrican Coloured Indian White

Current Target Current Target Current Target Current TargetTop Management

0 1 0 0 0 0 0 0

Senior Management

0 0 2 2 0 0 1 1


0 1 2 1 0 0 1 1

Skilled 4 7 8 8 0 1 0 3Semi-skilled 1 2 13 5 0 0 3 2Unskilled 0 0 0 0 0 0 0 0TOTAL 5 11 25 16 0 1 5 7


Levels Disabled StaffMale Female

Current Target Current TargetTop Management 0 0 0 0Senior Management 0 0 0 0Professional qualified 0 0 0 0Skilled 0 0 0 0Semi-skilled 0 0 0 0Unskilled 0 0 0 0TOTAL 0 0 0 0

The board is actively seeking to appoint a suitably qualified disabled person. Unfortunately the board is unable currently to achieve its goal because of the layout of the office building the board presently uses. The board will, however, continue to pursue this much-desired aim until it succeeds.

In spite of challenges relating to other Provincial Gambling Authorities attracting qualified personnel from the board, it has managed to keep its turnover rate within an acceptable level (below 10%). The board continued to attract appropriately qualified persons during its interview process and spends the required resources (time and money) in getting appointees trained and equipped.

The board offers various social activities throughout the year to keep staff motivated and to create an enabling environment for personal as well as career development.



Part E:FINANCIAL INFORMATION



PART E: FINANCIAL INFORMATION

1. REPORT OF THE EXTERNAL AUDITOR

REPORT OF THE AUDITOR-GENERAL TO THE WESTERN CAPE PROVINCIAL PARLIAMENT ON WESTERN CAPE GAMBLING AND RACING BOARD

REPORT ON THE FINANCIAL STATEMENTS

Introduction

1. IhaveauditedthefinancialstatementsoftheWesternCapeGamblingandRacingBoardsetoutonpages69to102,whichcomprisethestatementoffinancialpositionasat31March2014,thestatementoffinancialperformance,statementofchangesinnetassets,thecashflowstatementandstatementofcomparisonofbudgetandactualamounts for theyear thenended,andthenotes,comprisingasummaryofsignificantaccountingpoliciesandotherexplanatoryinformation.

Accounting authority’s responsibility for the financial statements

2. The accounting authority is responsible for the preparation and fair presentation of these financialstatements in accordance with the South African Standards of Generally Recognised AccountingPractice(SAStandardsofGRAP)andtherequirementsofthePublicFinanceManagementAct(ActNo.1of1999)(PFMA)andtheWesternCapeGamblingandRacingAct,1996(ActNo.4of1996),andforsuchinternalcontrolastheaccountingauthoritydeterminesisnecessarytoenablethepreparationoffinancialstatementsthatarefreefrommaterialmisstatement,whetherduetofraudorerror.

Auditor-general’s responsibility

3. Myresponsibilityistoexpressanopiniononthesefinancialstatementsbasedonmyaudit.IconductedmyauditinaccordancewiththePublicAuditActofSouthAfrica,2004(ActNo.25of2004)(PAA),thegeneralnoticeissuedintermsthereofandInternationalStandardsonAuditing.ThosestandardsrequirethatIcomplywithethicalrequirementsandplanandperformtheaudittoobtainreasonableassuranceaboutwhetherthefinancialstatementsarefreefrommaterialmisstatement.

4. Anauditinvolvesperformingprocedurestoobtainauditevidenceabouttheamountsanddisclosuresinthefinancialstatements.Theproceduresselecteddependontheauditor’sjudgement,includingtheassessmentoftherisksofmaterialmisstatementofthefinancialstatements,whetherduetofraudorerror.Inmakingthoseriskassessments,theauditorconsidersinternalcontrolrelevanttotheentity’spreparationandfairpresentationofthefinancialstatementsinordertodesignauditproceduresthatareappropriateinthecircumstances,butnotforthepurposeofexpressinganopinionontheeffectivenessoftheentity’sinternalcontrol.Anauditalsoincludesevaluatingtheappropriatenessofaccountingpoliciesusedandthereasonablenessofaccountingestimatesmadebymanagement,aswellasevaluatingtheoverallpresentationofthefinancialstatements.

5. IbelievethattheauditevidenceIhaveobtainedissufficientandappropriatetoprovideabasisformyauditopinion.

Opinion

6. Inmyopinion,thefinancialstatementspresentfairly,inallmaterialrespects,thefinancialpositionoftheWesternCapeGamblingandRacingBoardasat31March2014,anditsfinancialperformanceandcashflowsfortheyearthenendedinaccordancewiththeSAStandardsofGRAPandtherequirementsofthePFMAandtheWesternCapeGamblingandRacingAct,1996.


Emphasis of matters

7. Idrawattentiontothemattersbelow.Myopinionisnotmodifiedinrespectofthesematters.

Material underspending of the budget

8. Asdisclosedinthestatementofcomparisonofbudgetandactualamountsasat31March2014,theentity hasmaterially underspent the overall operating expenditure and capital expenditure budgetbyR4916034(12%)andR1468836(68%), respectively.Thishadno impactonservicedeliveryasnomandatewascurtailedandefficienciesweregenerated.Thetargetsnotmetrelatemainlytothosethatareadministrativeinnatureordemand-driven.

Restatement of corresponding figures

9. Asdisclosed innote21tothefinancialstatements, thecorrespondingfiguresfor31March2013havebeenrestatedasaresultofanerrordiscoveredduring2013-14inthefinancialstatementsoftheWesternCapeGamblingandRacingBoardat,and for theyearended,31March2013. Thiswasdue to theretrospectiveimplementationoftheSAStandardsofGRAPonemployeebenefitsduringtheyear.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

10. InaccordancewiththePAAandthegeneralnoticeissuedintermsthereof,Ireportthefollowingfindingsonthereportedperformanceinformationagainstpredeterminedobjectivesforselectedprogrammespresentedintheannualperformancereport,non-compliancewithlegislationaswellasinternalcontrol.Theobjectiveofmytestswastoidentifyreportablefindingsasdescribedundereachsubheadingbutnottogatherevidencetoexpressassuranceonthesematters.Accordingly,Idonotexpressanopinionorconclusiononthesematters.

Predetermined objectives

11. I performed procedures to obtain evidence about the usefulness and reliability of the reportedperformanceinformationforthefollowingselectedprogrammespresentedintheannualperformancereportoftheentityfortheyearended31March2014:

•Programme2:Licensing(onpage31) •Programme3:RacingandBetting(onpages33to34) •Programme4:GamblingCompliance(onpages36to37)

12. Ievaluatedthereportedperformanceinformationagainsttheoverallcriteriaofusefulnessandreliability.

13. I evaluated the usefulness of the reported performance information to determine whether it waspresented in accordance with the National Treasury’s annual reporting principles and whether thereported performance was consistent with the planned programmes. I further performed tests todeterminewhetherindicatorsandtargetswerewelldefined,verifiable,specific,measurable,timeboundandrelevant,asrequiredbytheNationalTreasury’sFrameworkformanagingprogrammeperformanceinformation.

14. I assessed the reliability of the reportedperformance information todeterminewhether itwas valid,accurateandcomplete.

15. I did not raise any material findings on the usefulness and reliability of the reported performanceinformationfortheselectedprogrammes.

Additional matter

16. Although I raised nomaterial findings on the usefulness and reliability of the reported performanceinformationfortheselectedprogrammes,Idrawattentiontothefollowingmatter:

Achievement of planned targets

17. Refertotheannualperformancereportonpages14to40forinformationontheachievementofplannedtargetsfortheyear.

WESTERNCAPEGAMBLINGANDRACINGBOARD–ANNUALREPORT2013/1468

Compliance with legislation

18. Ididnotidentifyanyinstancesofmaterialnon-compliancewithspecificmattersinkeylegislation,assetoutinthegeneralnoticeissuedintermsofthePAA.

Internal control

19. Ididnotidentifyanysignificantdeficienciesininternalcontrol.

CapeTown30July2014


Notes 2014

R

2013Restated

R

STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2014

ASSETS

Current assets 26 319 099 33 656 074

Cashandcashequivalents 2 13134445 15482056Inventories 3 27315 31310Prepayments 100296 146929Tradeandotherreceivablesfromexchangetransactions 4 695150 2249660Cashandcashequivalents-Trustfunds(securities) 5 6486186 7685009Cashandcashequivalents-Trustfunds(trust) 5 5875707 8061110

Non-current assets 2 539 394 2 737 319 Property,plantandequipment 6 2486800 2678597Intangibleassets 7 52594 58722

Total assets 28 858 493 36 393 393

LIABILITIES

Current liabilities 17 477 494 32 495 393 Tradeandotherpayables 2241638 15254671Provision 1454712 300000Employeebenefits 1419250 1194603Trustfunds(securities) 6486186 7685009Trustfunds(trust) 5875707 8061110

Non-currentliabilities 381000 332000Employeebenefits 381000 332000

Total liabilities 17 858 494 32 827 393

Net Assets 11 000 000 3 566 000

NET ASSETS

Approvedaccumulatedsurplus 11000000 3566000

Total net assets 11 000 000 3 566 000

2. ANNUAL FINANCIAL STATEMENTS


Notes 2014

R

2013Restated

R

STATEMENT OF FINANCIAL PERFORMANCE FOR THE YEAR ENDED 31 MARCH 2014

Revenue 24 45798414 36569955

Exchange 35472414 34158955Operatingrevenue 34256098 32918795Saleofnotesandsundry 134980 108584Investmentincome 1038346 1131577Legalfeesrecoverable 42990 -

Non-exchange 10326000 2411000Governmentgrant 19 10326000 2411000

Total expenses 37910084 33805207

Depreciation:Property,plantandequipment 6 878797 1198759Amortization:Intangibleassets 7 6128 2553Eliminationofillegalgamblingoperations 174009 114303LegalFees 1367895 424643Rental 76671 151304Employeerelatedcosts 27898796 25558807Travelandsubsistence 2050623 1861179Other 24 5405909 4462029Financecosts 51257 31629

Gains/(Loss)ondisposalofproperty,plantandequipment 3647 (11178)

Gains/(Loss)onactuarialvaluations 6365 (3833)

Surplus for the year 24 7 898 343 2 749 738


Notes Accumulated Surplus

R

Total Net Assets

R

STATEMENT OF CHANGES IN NET ASSETS FOR THE YEAR ENDED 31 MARCH 2014

Balance at 1 April 2012 12 698 000 12 698 000

Surplusfortheperiodrestated 24 2749737 2749737

Restatedsurplusbeforeappropriation 15447737 15447737SurpluspayabletoWesternCapeGovernmentrestated (11881737) (11881737)

Balance at 31 March 2013 3 566 000 3 566 000 Surplusfortheperiod 24 7898343 7898343

Surplusbeforeappropriation 11464343 11464343SurpluspayabletoWesternCapeGovernment (464343) (464343)

Balance at 31 March 2014 11 000 000 11 000 000


Notes 2014

R

2013Restated

R

STATEMENT OF CASH FLOW FOR THE YEAR ENDED 31 MARCH 2014

Cash flows from operating activities

Receipts 509775704 439887388Operatingrevenue 35867601 31572473Interestreceived 1038346 1131577Otherreceipts 177970 108584Governmentgrant 10326000 2411000Taxesandleviescollected 462365787 404663754

Payments (499558227) (435670418)Interestpaid (51257) (629)Employeecosts (27898796) (25193640)Accountspayable (10402665) (5812395)Provision 1154712 -

Taxesandleviesdistributed (462360221) (404663754)

Net cash flows from operating activities 16 10217478 4216970

Cash flows from investing activities

Purchaseofproperty,plantandequipment (704364) (1396882)Purchaseofintangibleasset - (61275)Proceedsfromsaleofplantandequipment 21012 25408

Net cash flow from investing activities (683 352) (1 432 749)

Cash flow from financing activities

SurpluspayabletoWesternCapeGovernmentredeemed (11881737) (2157071)Netreceiptsandpaymentsfortrustfunds (3384226) 3641761

Net cash flows from financing activities (15 265 963) 1 484 689

Net increase in cash and cash equivalents (5 731 837) 4 268 910

Cash and cash equivalents at beginning of year 16 31 228 175 26 959 265

Cash and cash equivalents at end of year 16 25 496 338 31 228 175


Original budget

R

Final budget

R

Actual

R

Variance

R

Reference

STATEMENT OF COMPARISON OF BUDGET AND ACTUAL AMOUNTS AS AT 31 MARCH 2014

Receipts

Renderingofservice 29214752 29214752 34434068 5219316 1Investmentincome 1020000 1020000 1038346 18346 2GrantRevenue 10326000 10326000 10326000 -Total receipts 40 560 752 40 560 752 45 798 414 5 237 662 PaymentsEmployeecosts 29292904 29292904 27898796 1394108 3Operatingexpenses 12648290 12648290 9075106 3573184 4FinanceCharges - - 51257 (51257) 5Total payments 41 941 194 41 941 194 37 025 160 4 916 034

Net operating receipts / payments (1 380 442) (1 380 442) 8 773 254 10 153 696 Capital ExpenditureAcquisitionoffixedas-sets 2173200 2173200 704364 1468836 6Net receipts / payments (3 553 642) (3 553 642) 8 068 890 11 622 532

Thebudgetisapprovedonacashbasisbyfunctionalclassification.Theapprovedbudgetcoverstheperiodfrom1April2013to31March2014.

Thebudgetandaccountingbasediffer.Thefinancialstatementsarepreparedontheaccrualbasisusingaclassificationonthenatureofexpensesinthestatementoffinancialperformance.Thefinancialstatementsdifferfromthebudget,whichisapprovedonthecashbasis.

Theamountsinthefinancialstatementswererecastfromtheaccrualbasistothecashbasisandreclassifiedbyfunctionalclassificationtobeonthesamebasisasthefinalapprovedbudget.

Areconciliationbetweentheactualamountsonacomparablebasisaspresentedinthestatementofcomparisonofbudgetandactualamountsandtheactualamountsinthestatementoffinancialperformancefortheperiodended31March2014ispresentedbelow.Thefinancialstatementsandbudgetdocumentsarepreparedforthesameperiod.Thereisabasisdifference:thebudgetispreparedonacashbasisandthefinancialstatementsontheaccrualbasis.

ReconciliationActualamountoncomparablebasisaspresentedinthebudgetand actualcomparativestatement

8773254

BasisdifferenceNoncashitems 874912

Depreciation 884924Actuarialvaluationgain (6365)(Profit)/Lossondisposalofassets (3647)

Actualamountperthestatementoffinancialperformance 7898343

R

Finalbudget

R


Explanation of variances1. ApplicationfeesexceededbudgetbyR2035500mainlyduetochangeinprocessfor

gamblingemployeesandnationalmanufacturerlicence.

Exclusivityfeeswereprudentlybudgetedforbasedontheuncertaintywhichsurroundedthecontinuanceoftheexclusivityfee.Exclusivityfeesforonecasinoisstillchargedandtheactualamountincreasedaspertheprescribedformula.ThisamountexceededbudgetbyR1511385.

Basedonthesurgeinapplications,boardinspector’schargeoutexceededbudgetby R1258084.

ThesurgeinapplicationshadtheeffectofincreasinginvestigationfeesandothermiscellaneousrevenuebyR328187.

2. Investmentincomewasprudentlybudgetedforandasotherrevenueincreased,theinterestontheBoard’sfinancialresourcesincreased.

3. Thesavingsinemployeecostsareduetovacancies.AcontributortothisphenomenonisthepoachingofWCGRBstaffbyothergamblingboardsasWCGRBisnotabletomeettheremunerationpackagesofferedbyotherboards.Theboard’svacanciesresultedinfivevacantmanyearsduringthetwelvemonthsended31March2014.

4. Theunderspendinginoperatingexpensesareadirectresultof: Thevacancieswhichgaveeffecttoasavinginadministrationandlogisticalcostsof 236746Legalactionbylicenceholderswithcostsawardedagainsttheboardresultedinthebudgetbeingexceeded. (167695)Travelandsubsistenceprudentlyprovidedforcomplianceauditorstotraveltoauditsbutsavedduetostaffhavingtosharetransportandlessboardmemberstravellingabroad 1748198OverbudgetonauditfeesasacostsavingresultedfromInternalAuditreliance 348750Traininginitiativeswhichhavebeenpostponedtoalaterdate 208265Leasecostswhichhavebeendeferredtoalaterdate 294059Conferencefeesaslessdelegatessenttoconference 30621Parkingrentalnotrequiredfortheperiod 161342Savingoninsurancebudget 38414Equipmentmaintenancebudgetnotrequiredforthisperiod 75980Printersdecommissionedlaterthanexpected-increaseinconsumablesused (42751)Recruitmentcostsoverspendduetovacantpostsbeingfilled (66032)Leviesunderbudgeted (41962)Occupationalhealthandsafetyleviesunderbudgeted (10085)Professionalservicesnotrequiredastasksperformedbystaff 261270Stationeryandpublicationsnotrequiredduetovacancies 283208Computerlicencefeesnotrequiredassystemsnotboughtforvacantposts 214856

3573184

5. TheoverspendonfinancecostsisadirectresultofadoptingGRAP25withtheresultantinterestburdenofaccruingforlongtermemployeebenefits.

6. Thesavingoncapitalexpenditureisduetoassetsbeingacquiredinthepreviousyearratherthanfromthe2013/2014budgetallotment.

VarianceR

STATEMENT OF COMPARISON OF BUDGET AND ACTUAL AMOUNTS AS AT 31 MARCH 2014


1. Measurement basis and accounting policies1.1 Basis of preparation

Theprincipalaccountingpoliciesadoptedinthepreparationoftheseannualfinancialstatementsaresetoutbelow.

Assets,liabilities,revenuesandexpenseshavenotbeenoffsetexceptwhenoffsettingisrequiredorpermittedbyaStandardofGRAP.

ThefinancialstatementshavebeenpreparedinaccordancewiththeeffectiveStandardsofGenerallyRecognisedAccountingPractices(GRAP)

1.1.1 Thecashflowstatementhasbeenpreparedinaccordancewiththedirectmethod.1.1.2 Thefinancialstatementshavebeenpreparedusingthehistoricalcostbasis.1.1.3 ThesefinancialstatementsarepresentedinSouthAfricanRandsinceitisthecurrencyinwhichall

transactionsoftheWesternCapeGamblingandRacingaredenominated.1.1.4 Whenthepresentationorclassificationofitemsintheannualfinancialstatementsisamended,prior

periodcomparativeamountsarerestated.1.1.5 Atthedateofauthorisationofthefinancialstatementsfortheyearended31March2014,the

followingstandardswereissuedbutnotyeteffective:

Standard Effective dateGRAP18 Segmentreporting 1April2015

GRAP20 Relatedpartydisclosures notdeterminedGRAP32 Serviceconcessionsarrangements,grantor notdetermined

GRAP105Transfersoffunctionsbetweenentitiesundercommoncontrol 1April2015

GRAP106Transfersoffunctionsbetweenentitiesnotundercommoncontrol 1April2015

GRAP107 Mergers 1April2015GRAP108 Statutoryreceivables notdetermined

Allapplicablestandardswillbeadoptedatitseffectivedate.

Managementisoftheopinionthattheimpactoftheapplicationofthestandardswillbeasfollows:

GRAP 18Thestatementwillnothaveaneffectonthefinancialposition,performanceordisclosureoftheboardasthestatementwillnotapplytotheboard.

GRAP 20Thisstatementwillnothaveaneffectonthefinancialposition,performanceordisclosureoftheboardastheboardcurrentlysubscribestotherequirementsofthisstandard.


NOTES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2014




GRAP 107Thisstatementwillnothaveaneffectonthefinancialposition,performanceordisclosureoftheboardastheboarddoesnotenvisageanymergers.

GRAP 108Thisstatementwillnothaveaneffectonthefinancialposition,performanceordisclosureoftheboardastheboardcurrentlysubscribestotherequirementsofthisstandard.

1.1.6 InthecurrentyeartheEntityhasadoptedallnewandrevisedstandardsandinterpretationsissuedbytheAccountingStandardsBoard(ASB)thatarerelevanttoitsoperations,andeffective.Theadoptionofthesenewandrevisedstandardsandinterpretationshasresultedinchangestotheaccountingpolicies.

Onenewstandardhasbecomeeffectivefortheperiodended31March2014andispresentedbelow.

GRAP 25 – Employee Benefits 1.1.7 Useofestimates,judgementsandassumptionsmadeinthepreparationofthefinancialstatements

Inpreparingtheannualfinancialstatements,managementisrequiredtomakeestimatesandassumptionsthataffecttheamountsrepresentedintheannualfinancialstatementsandrelateddisclosures.Useofavailableinformationandtheapplicationofjudgementareinherentintheformationofestimates.

Significantestimatesandjudgementsmaderelatetothemeasurementofimpairmentlossesrelatingtotradeandotherreceivables,residualvalues,usefullivesanddepreciationmethodsandassetimpairmenttests.Thenatureandcarryingamountsoftheitemsaffectedbytheseestimates,whereapplicable,areindicatedinthenotesrelatingtotheseitems.

Significant judgements include:

Impairment of trade receivablesTheBoardassessesitstradereceivablesforimpairmentattheendofeachreportingperiod.Indeterminingwhetheranimpairmentlossshouldberecordedinsurplusordeficit,theBoardmakesjudgementsastowhetherthereisobservabledataindicatingameasureabledecreaseintheestimatedfuturecashflowsfromthefinancialasset.

Fair value estimationThecarryingvaluelessimpairmentprovisionoftradereceivablesandpayablesareassumedtoapproximatetheirfairvaluesduetotheshorttemnatureoftheseassetsandliabilities.



Property, plant and equipment and Intangible assetsTheboardassessestheusefullifeandresidualvaluesoftheseassetsbasedontheconditionoftheassetsandthereplacementpolicyoftheBoard.

Provisions and contingent liabilitiesManagementjudgementisrequiredwhenrecognisingandmeasuringprovisionsandwhenmeasuringcontingentliabilities.

Provisionsarediscountedwherethetimevalueeffectismaterial.

1.2 Policies and measurement basis 1.2.1 Going Concern

Thefinancialstatementshave,basedontheapprovalbytheMECfortheretentionofR11000000(2013:R3566000)ofthe2013/2014fiscalyearretainedsurplustofinancethebudgetedshortfallinthe2014/2015budget,beenpreparedonagoingconcernbasis.

Thefollowingpolicieshavebeenconsistentlyappliedinallmaterialrespectsthroughouttheperiodexceptasindicated.

1.2.2 Revenue from exchange transactionsIdentificationRevenueisthegrossinflowofeconomicbenefitsorservicepotentialduringthereportingperiodwhenthoseinflowsresultinanincreaseinnetassets.

Revenuefromexchangetransactionsreferstorevenuethataccruedtotheboarddirectlyinreturnforservicesrendered/goodssold,thevalueofwhichapproximatestheconsiderationreceivedorreceivable.Atthetimeofinitialrecognitionthefullamountofrevenueisrecognised.Itisasubsequenteventiftheboarddoesnotenforceitsobligationtocollecttherevenue.

RecognitionRevenueisrecognisedontheaccrualbasistotheextentthatitisprobablethateconomicbenefitswillflowtotheBoardandtherevenuecanbereliablymeasured.

Board inspectors’ charge outThisrepresentsthehourlychargeoutrateforboardinspectorsperformingprobitiesandapplicationinvestigations.

Therevenueisrecognisedoninvoiceforthehourstheinspectorsperformedthedutiesofprobityandinvestigations.

Exclusivity feesExclusivityfeesrepresentfeespaidbycasinooperatorsintermsofsection44AoftheWesternCapeGamblingandRacingAct(Act4of1996)asamended.Therevenueisrecognisedoninvoiceatthegrantingorrenewalofacasinooperatorlicenceforaperiodoftenyearsfromthefirstgrantingofalicence.Theexclusivityfeesofsomecasinoshavesinceexpired.

Interest receivedInterestisrecognisedonatimeproportionbasiswhichtakesintoaccounttheeffectiveyieldontheassetovertheperioditisexpectedtobeheld.



Investigation feesThisrepresentsfeespaidbylicensedoperatorsintermsofsection44oftheWesternCapeGamblingandRacingAct(Act4of1996)asamended.

Therevenueisrecognisedoninvoiceatthegrantingorrenewalofanoperatorlicence.

Licence application feesThisrepresentsafeepayableintermsofsection44oftheWesternCapeGamblingandRacingAct(Act4of1996)asamended.

Therevenueisrecognisedoninvoiceattimeofapplication.

Operator’s feeOperatorfeesrepresentfeespaidbyrouteoperatorsintermsofschedule44CoftheWesternCapeGamblingandRacingAct(Act4of1996)asamended.Therevenueisrecognisedoninvoiceatthegrantingorrenewalofarouteoperatorlicence.

MeasurementRevenueismeasuredatthefairvalueoftheconsiderationreceivedorreceivable.

1.2.3 Revenue from non-exchange transactionsGovernmentgrantsThisrepresentsgrantsfromgovernmenttomeetbudgetobligations.Thegrantisrecognisedasrevenueatthetimeitisreceived.

1.2.4 Property, plant and equipmentThecostofanitemofproperty,plantandequipmentisrecognizedasanassetwhen:-itisprobablethatfutureeconomicbenefitsassociatedwiththeitemwillflowtotheboard;and-thecostoftheitemcanbemeasuredreliably.

Property,plantandequipmentismeasuredatcostatthedateofacquisition.

Costsincludecostsincurredinitiallytoacquireorconstructanitemofproperty,plantandequipmentandcostsincurredsubsequentlytoaddtoit.

Ifareplacementcostisrecognisedinthecarryingamountofanitemofpropertyplantandequipment,thecarryingamountofthereplacedcostisderecognised.

Property,plantandequipmentiscarriedatcostlessaccumulateddepreciationandanyimpairmentlosses.

Property,plantandequipmentisdepreciatedonthestraightlinebasisovertheirexpectedusefullivestotheirestimatedresidualvalue.



Theusefullivesofproperty,plantandequipmenthavebeenassessedasfollows:

Item Useful lifeComputeraccessories 2-15yearsComputers 3-25yearsEquipmentandfurniture 2-25yearsMotorVehicles 4-10yearsCellularphones 2yearsEquipmentlessthanR5000 2-15years

Theresidualvaluesandusefullivesofassetsarereviewedandadjustedifappropriateateachstatementoffinancialpositiondate.

Anasset’scarryingamountiswrittendownimmediatelytoitsrecoverableamountifthecarryingamountisgreaterthanitsestimatedrecoverableamount.

Inassessingtheremainingusefullivesandresidualvaluesofproperty,plantandequipment,managementhavemadejudgementsbasedonhistoricalevidenceaswellasthecurrentconditionofproperty,plantandequipmentunderitscontrol.

Property,plantandequipmentacquiredatacostofR250orlessperitemaredepreciatedat100%intheyearitisacquired.

Theresidualvalue,usefullifeanddepreciationmethodofeachassetarereviewedattheendofeachreportingperiod.

Iftheexpectationsdifferfrompreviousestimates,thechangeisaccountedforasachangeinaccountingestimate.

Thedepreciationchargeforeachperiodisrecognisedinprofitorlossunlessitisincludedinthecarryingamountofanotherasset.

Compensationfromthirdpartiesforanitemofproperty,plantandequipmentthatwasimpaired,lostorgivenupisrecognisedinsurplusordeficitwhenthecompensationbecomesreceivable.

TheItemsofproperty,plantandequipmentarederecognisedwhentheassetisdisposedoforwhentherearenofurthereconomicbenefitsorservicepotentialexpectedfromtheuseoftheasset.Thegainorlossarisingonthedisposalorretirementofanitemofproperty,plantandequipmentisdeterminedasthedifferencebetweenthesales.

1.2.5 Intangible assetsAnintangibleassetisrecognisedasanassetwhen:-itisprobablethatfutureeconomicbenefitsassociatedwiththeitemwillflowtotheboard;and-thecostorfairvalueoftheitemcanbemeasuredreliably.

Intangibleassetsareinitiallyrecognisedatcostatthedateofacquisition.

Intangibleassetsacquiredatnocostshallberecognisedatitsfairvalueatthedateofacquisition.

Anintangibleassetiscarriedatcostlessaccumulateddepreciationandanyimpairmentlosses.



Intangibleassetsareamortisedonthestraightlinebasisovertheirexpectedusefullivestotheirestimatedresidualvalue.

Intangibleassetsareamortisedonastraightlinebasisoveritsusefullifeatthefollowingannualrates:

Item Useful life WCGRBDatabasesoftware 10years

Theresidualvalue,usefullifeanddepreciationmethodofeachassetarereviewedattheendofeachreportingperiod.

Iftheexpectationsdifferfrompreviousestimates,thechangeisaccountedforasachangeinaccountingestimate.

1.2.6 Employee benefits1.2.6.1 Shorttermemployeebenefits

Thecostofallshorttermemployeebenefitsisrecognisedduringtheperiodinwhichtheemployeerenderstherelatedservice.

Theprovisionsforemployeeentitlementstosalariesandannualleaverepresentstheamountwhichtheboardhasapresentobligationtopayasaresultofemployees’serviceprovidedforatthereportingdate.Theprovisionshavebeencalculatedatundiscountedamountsbasedoncurrentsalaryrates.

1.2.6.2 LongtermemployeebenefitsTheboardhasanobligationtoprovidelong-termservicebenefitstoallofitsemployees.Accordingtothepolicyofthelong-termserviceallowancescheme,whichtheboardinstitutedandoperates,anemployeeisentitledtoacashallowance,calculatedintermsofthepolicy,after10yearsofcontinuedservice.

Theboard’sliabilityisbasedonanactuarialvaluation.Theprojectedunitcreditmethodisusedtovaluetheliabilities.Actuarialgainsandlossesonthelong-termserviceawardsarerecognisedinthestatementoffinancialperformance.

Theamountrecognisedasaliabilityforlong-termserviceawardsisthenettotalofthefollowingamounts:thepresentvalueofthedefinedbenefitobligationatthereportingdate;minusthefairvalueatthereportingdateofplanassets(ifany)outofwhichtheobligationsaretobesettleddirectly.

Theentityrecognisesthenettotalofthefollowingamountsasexpenseorrevenue,excepttotheextentthatanotherStandardrequiresorpermitstheirinclusioninthecostofanasset:currentservicecost;interestcost;theexpectedreturnonanyplanassetsandonanyreimbursementrightrecognisedasanasset;actuarialgainsandlosses,whichisrecognisedimmediately;pastservicecost,whichisrecognisedimmediately;andtheeffectofanycurtailmentsorsettlements.

Retirement benefitRetirementbenefitsareprovidedforemployeesthroughaseparateprovidentfundtowhichtheboardcontributes.



ThefundisregulatedbythePensionFundsActandisoperatedasadefinedcontributionplan,andismanagedbyanindependentboardoftrustees.

Retirementbenefitsaredeterminedbythecontributionstothefundandcontributionsarechargedagainstincomeintheyearinwhichtheybecomepayable.

1.2.7 Trust fundsTrustfundsrepresentdepositsbygamingenterprisesforthepurposesofcoveringcostsanddefaultsincurredintermsofsection34oftheWesternCapeGamblingandRacingAct,1996(Act4of1996), asamended.

1.2.8 Financial instrumentsClassificationTheboardclassifiesfinancialassetsandfinancialliabilitiesintothefollowingcategories:-Financialassets.-Financialliabilities.

Classificationdependsonthepurposeforwhichthefinancialinstrumentswereobtained/incurredandtakesplaceatinitialrecognition.

Classificationisre-assessedonanannualbasis,exceptforderivativesandfinancialassetsdesignatedasatfairvaluethroughprofitorloss,whichshallnotbeclassifiedoutofthefairvaluethroughprofitorlosscategory.

Initial recognition and measurementFinancialinstrumentsarerecognisedinitiallywhentheboardbecomesapartytothecontractualprovisionsoftheinstruments.

Theboardclassifiesfinancialinstruments,ortheircomponentparts,oninitialrecognitionasafinancialasset,afinancialliabilityoranequityinstrumentinaccordancewiththesubstanceofthecontractualarrangement.

Financialinstrumentsaremeasuredinitiallyatfairvalue.

Forfinancialinstrumentswhicharenotatfairvaluethroughprofitorloss,transactioncostsareincludedintheinitialmeasurementoftheinstrument.

Subsequent measurementFinancialassetsatamortisedcost,subsequentlymeasuredatamortisedcost,usingtheeffectiveinterestmethod,lessaccumulatedimpairmentlosses.

FinancialliabilitiesconsistoftradeandotherpayablesandTrustfunds.Theyarecategorisedasfinancialliabilitiesheldatamortisedcost,areinitiallyrecognisedatfairvalueandsubsequentlymeasuredatamortisedcost,usingtheeffectiveinterestmethod.

Impairment of financial assetsAteachreportingdatetheboardassessesallfinancialassets,otherthanthoseatfairvaluetodeterminewhetherthereisobjectiveevidencethatafinancialassetorgroupoffinancialassetshasbeenimpaired.

Foramountsduetotheboard,significantfinancialdifficultiesofthedebtor,probabilitythatthedebtorwillenterbankruptcyanddefaultofpaymentsareallconsideredindicatorsofimpairment.



Impairment losses are recognised in profit or lossImpairmentlossesarereversedwhenanincreaseinthefinancialasset’srecoverableamountcanberelatedobjectivelytoaneventoccurringaftertheimpairmentwasrecognised,subjecttotherestrictionthatthecarryingamountofthefinancialassetatthedatethattheimpairmentisreversedshallnotexceedwhatthecarryingamountwouldhavebeen,hadtheimpairmentnotbeenrecognised.

Reversalsofimpairmentlossesarerecognisedinprofitorloss.

Trade and other receivablesTradeandotherreceivablesaremeasuredatinitialrecognitionatfairvalue,andaresubsequentlymeasuredatamortisedcostusingtheeffectiveinterestratemethod.Appropriateallowancesforestimatedirrecoverableamountsarerecognisedinsurplusordeficitwhenthereisobjectiveevidencethattheassetisimpaired.Significantfinancialdifficultiesofthedebtor,probabilitythatthedebtorwillenterbankruptcyorfinancialreorganisation,anddefaultordelinquencyinpayments(morethan3monthsoverdue)areconsideredindicatorsthatthetradereceivableisimpaired.Theallowancerecognisedismeasuredasthedifferencebetweentheasset’scarryingamountandthepresentvalueofestimatedfuturecashflowsdiscountedattheeffectiveinterestratecomputedatinitialrecognition.

Thecarryingamountoftheassetisreducedthroughtheuseofaprovisionaccount,andtheamountofthelossisrecognisedinsurplusordeficitwithinoperatingexpenses.Whenatradereceivableisuncollectable,itiswrittenoffagainsttheprovisionaccountfortradereceivables.

Subsequentrecoveriesofamountspreviouslywrittenoffarecreditedagainstoperatingexpensesinsurplusordeficit.

Trade and other payablesTradepayablesareinitiallymeasuredatfairvalue,andaresubsequentlymeasuredatamortisedcost,usingtheeffectiveinterestratemethod.

Cash and cash equivalentsCashandcashequivalentscomprisecashatbank,inhandandshorttermfixeddeposits.Cashandcashequivalentsaremeasuredatamortisedcostwithchangesbeingincludedinsurplusordeficit.

Impairment of financial assetsAteachstatementoffinancialpositiondateanassessmentismadewhetherthereisanyobjectiveevidenceofimpairmentoffinancialassets.Ifthereisevidencethentherecoverableamountisestimatedandanimpairmentlossisrecognised.

Afinancialassetisconsideredimpairedifobjectiveevidenceindicatesthatoneormoreeventshavehadanegativeeffectontheestimatedfuturecashflowsofthatasset.

Allimpairmentlossesarerecognisedinthesurplusordeficit.

1.2.9 LeasesAleaseisclassifiedasafinanceleaseifittransferssubstantiallyalltherisksandrewardsincidentaltoownership.

Aleaseisclassifiedasanoperatingleaseifitdoesnottransfersubstantiallyalltherisksandrewardsincidentaltoownership.



Finance leases

Financeleasesarerecognisedasassetsandliabilitiesinthestatementoffinancialpositionatamountsequaltothefairvalueoftheleasedpropertyor,iflower,thepresentvalueoftheminimumleasepayments.Thecorrespondingliabilitytothelessorisincludedinthestatementoffinancialpositionasafinanceleaseobligation.

Thediscountrateusedincalculatingthepresentvalueoftheminimumleasepaymentsistheprimeinterestrate.

Theleasepaymentsareapportionedbetweenthefinancechargeandreductionoftheoutstandingliability.Thefinancechargeisallocatedtoeachperiodduringtheleasetermsoastoproduceaconstantperiodicrateofreturnontheremainingbalanceoftheliability.

Operating leasesOperatingleasepaymentsarerecognisedasanexpenseonastraight–linebasisovertheleaseterm.

Anycontingentrentsareexpensedintheperiodtheyareincurred.

1.2.10 Unauthorised, irregular, fruitless and wasteful expenditureIntermsofsection55(2)(b)(i)ofthePublicFinanceManagementAct,1999thefinancialstatementsmustincludeparticularsofanyunauthorised,irregular,fruitlessandwastefulexpenditure.

Allunauthorised,irregularandfruitlessandwastefulexpenditureischargedagainstincomeintheperiodinwhichtheyareincurred.

1.2.11 InventoryInventoryisstatedatthelowerofcostornetrealisablevaluewhilecostisdeterminedonafirst-in-first-outbasis.Netrealisablevaluerepresentstheestimatedsellingpriceintheordinarycourseofbusinesslessanycostsincurredinsellinganddistribution.

Inventorycompriseofstationeryandcomputerconsumablesthatshallbeconsumedwithinashort-termperiodinthenormalbusinessoftheboardandnotheldforresale.Lossesandwrite-downsduetoobsolescenceorshrinkagearerecognisedthroughthesurplusordeficit.

1.2.12 TaxationTheboard’sincomeisexemptformtaxationintermsofSection10(1)(cA)(i)oftheIncomeTaxAct,1962.

1.2.13 Contingent LiabilitiesContingentliabilitiesarepossibleobligationsthatarosefrompasteventsandwhoseexistencewillbeconfirmedbytheoccurrenceornonoccurrenceofoneormoreuncertainfutureeventsnotwhollywithinthecontroloftheboard;orapresentobligationthatarisesfrompasteventsbutisnotrecognisedbecauseitisnotprobablethatanoutflowofresourcesembodyingeconomicbenefitswillberequiredtosettletheobligationortheamountoftheobligationcannotbemeasuredwithsufficientreliability.

1.2.14 Related partiesIndividualsaswellastheirclosefamilymembersand/orentitiesarerelatedpartiesifonepartyhastheability,directlyorindirectly,tocontrolorjointlycontroltheotherpartyorexercisesignificantinfluenceovertheotherpartyinmakingfinancialand/oroperatingdecisions.

KeymanagementpersonnelaredefinedastheChiefExecutiveOfficerandallothermanagementreportingdirectlytotheChiefExecutiveOfficerorasdesignatedbytheChiefExecutiveOfficer.



TheWesternCapeGamblingandRacingBoardoperatesasaProvincialPublicEntitywithitsparentdepartmentbeingTheWesternCapeProvincialTreasuryandisthereforeregardedasarelatedparty.

TheboardoperatesinaneconomicsectorcurrentlydominatedbyentitiesdirectlyorindirectlyownedbytheSouthAfricanGovernment.AsaconsequenceoftheconstitutionalindependenceofthethreespheresofgovernmentinSouthAfrica,entitieswithinthenational,provincialandlocalsphereofgovernmentareconsideredtoberelatedparties.

Managementincludesthosepersonsresponsibleforplanning,directingandcontrollingtheactivitiesoftheboard,includingthosechargedwiththegovernanceoftheboardinaccordancewithlegislation,ininstanceswheretheyarerequiredtoperformsuchfunctions.

Transactionswithrelatedpartiesarerecordedatcostontheaccrualbasisintheperiodinwhichitoccurred.

1.2.15 Comparative figures Wherenecessary,comparativefigureshavebeenadjustedtoconformtochangesinpresentationinthecurrentyear.

1.2.16 Provisions and contingenciesTheboardrecognisesprovisionswhenithasapresentobligationasaresultofapasteventanditisprobablethatanoutflowofresourcesembodyingeconomicbenefitswillberequiredtosettletheobligationandareliableestimatecanbemadeoftheobligation.

Contingenciesarenotrecognisedbutdisclosedseparatelywhenapplicable.

2. Cash and cash equivalents

2014R

2013R

Currentaccount-Nedbank 13128365 8188991Shorttermfixeddeposit - 8000000Pettycash 4000 4000

Total 13132365 16192991

Less:AmountpayabletoTrustfunds(securities) - 80000AmountpayabletoTrustfunds(trusts) (2080) 630936

Total 13134445 15482056

3. Inventories

Stationeryandcomputerconsumablesonhand 27315 31310



4. Trade and other receivables

2014R

2013R

Amountsdueinrespectoftradingoperations 230515 1897504Amountsdueinrespectofotheractivities 464634 407446

695150 2304950Lessprovisionfordoubtfuldebts - 55290

695150 2249660

Themaximumexposuretocreditriskatthereportingdateisthecarryingvalueofeachclassofreceivablesmentionedabove.

Theamountsaresubjecttotheboard’sstandardcredittermsandareduewithinamaximumofeither30daysor60daysaftermonthenddependingontheclassofdebtor.Interesthasnotbeenchargedontheseaccounts.

FinesimposedbytheCEOcanbeappealedtotheboardandtheseamountsarecollectedaftertheappealprocesshasrunitscoursewhichhastheeffectofsomefinesremainingoutstandingpastthestandardcredittermsof30daysor60days.

Tradeandotherreceivablescanbeanalysedasfollows:Neitherpastduenorimpaired 563460 1936980Pastduebutnotimpaired 131690 312680Pastdueandimpaired - 55290

695150 2304950

Thecreditqualityoffinancialassetsthatareneitherpastduenorimpairedcanbeassessedbyreferencetotheinternalcreditratings:

Group1-neworexistingcustomerswithtransactionslessthan 60daysGroup2-existingcustomerswithtransactionsmorethan60daysbutwithnodefaultsinthepast.Group3-existingcustomerswithtransactionsmorethan60dayswithsomedefaultinthepast.Alldefaultsarefullyrecoverable.

Tradeandotherreceivables.

CounterpartieswithoutexternalcreditratingGroup1 520470 1936980Group2 - -Group3 - -

520470 1936980

Patsduebutnotimpaired 131690 312680



2014R

2013R

Asat31March2014,tradereceivablesofR131690(2013:R3212680)werepastduebutnotimpaired.Theserelatetoexistinglicenceholderswithnodefaultsinthepast.Alltheamountswerefullyrecovered.Theageanalysisofthesetradereceivablesisasfollows

90days 131690 312680

Asat31March2014tradeandotherreceivablesthatwereimpairedamountedtoR0(2013:R55290).Theamountoftheprovisionasat31March2014wasR0(2013:R55290).Theageanalysisofthesereceivablesare:

24months - 55290

Themovementintheprovisionfordoubtfuldebtsisasfollows:

Openingbalance 55290 511959Amountswrittenoffduringtheyear 55290 456669Closingbalance - 55290

Credit riskTheboard’screditriskisprimarilyattributabletoitstradeandotherreceivables.Theamountpresentedinthestatementoffinancialpositionisnetofallowancesfordoubtfulreceivables,estimatedbytheboard’smanagementbasedonpriorexperienceandthecurrenteconomicenvironment.

TheboardholdsR5875707(2013:R8061110)intrustfromitsdebtorsandisabletowithdrawfundsfromthetrustaccountsforamountsduetotheboard.

Consequently,themajorityoftheboard’stradeandotherreceivablesaresecuredbythetrustaccountsinpossessionoftheboard.

Thecreditriskonliquidfundsislimitedbecausethecounterpartiesarebankswithhighcreditratingsassignedbyinternationalcreditratingagencies.

Theboardholdsnospecificcollateralforitscreditriskexposureotherthanthetrustaccounts

Theboardhasnosignificantconcentrationofcreditrisk.



5. Trust funds

2014R

2013R

Trustfunds(securities) 6486186 7605009Trustfunds(trusts) 5877787 7430174

Total 12363973 15035183

Add:Amount(payable)/receivableto/fromcurrentaccountSecurities - 80000Trusts (2080) 630936

Total 12361893 15746119

Currentlydisclosedinthefinancialstatements

Current assetsTrustfunds(securities) 6486186 7685009Trustfunds(trusts) 5875707 8061110

Total 12361893 15746119

Current liabilitiesTrustfunds(securities) 6486186 7685009Trustfunds(trusts) 5875707 8061110

Total 12361893 15746119



6. Property, plant and equipment2014

Com-puter

Acces-sories

R

Com-puters

R

Leased Assets

R

Equip-ment

& Furniture

R

Motor Vehicles

R

Equip-ment at

cost < R5 000

R

Total

R

Grosscarryingamountatbeginningofyear 544658 4505503 70263 3039036 230000 523850 8913310Accumulateddepreciationatbeginningofyear (378155) (3010676) (51439) (2269540) (161216) (363686) (6234712)

Netcarryingamountatbeginningofyear 166503 1494827 18824 769497 68784 160164 2678598MovementsduringtheyearAcquisitionsandtransfersin 211702 370980 - 16200 - 105482 704364Depreciationexpensedfortheyear (135703) (442512) (10102) (242841) (35815) (11823) (878796)Disposalsandtransfersout (3206) (10157) - (1128) - (2875) (17366)

Netcarryingamountatendofyear 239296 1413139 8721 541727 32969 250948 2486800

Grosscarryingamountatendofyear 548957 3570197 20193 2888169 230000 446693 7704209Accumulateddepreciationatendofyear (309662) (2157059) (11472) (2346442) (197031) (195745) (5217410)

2013

Grosscarryingamountatbeginningofyear 657314 3885896 50070 3002431 230000 471021 8296732Accumulateddepreciationatbeginningofyear (511811) (2799957) (43593) (2023985) (125401) (274924) (5779670)

Netcarryingamountatbeginningofyear 145503 1085939 6477 978445 104599 196098 2517061MovementsduringtheyearAcquisitionsandtransfersin 104601 1183002 20193 36257 - 52828 1396882Depreciationexpensedfortheyear (83602) (737592) (7847) (245142) (35815) (88762) (1198759)Disposalsandtransfersout (0) (36522) - (64) - - (36586)

Netcarryingamountatendofyear 166502 1494827 18824 769496 68784 160164 2678597

Grosscarryingamountatendofyear 544658 4505503 70263 3039036 230000 523850 8913310Accumulateddepreciationatendofyear (378155) (3010676) (51439) (2269540) (161216) (363686) (6234713)

Noneoftheboard’sassetsarepledgedassecurity.



7. Intangible assets

2014R

2013R

ComputerSoftware Total TotalGrosscarryingamountatbeginningofyear 61275 -Accumulatedamortisationatbeginningofyear (2553) -

Netcarryingamountatbeginningofyear 58722 -MovementsduringtheyearAcquisitionsandtransfersin - 61275Amortisationexpensedfortheyear (6128) (2553)Netcarryingamountatendofyear 52594 58722

Grosscarryingamountatendofyear 61275 61275Accumulatedamortisationatendofyear (8681) (2553)

8. Trade and other payables

Accrualsforaccountspayable 1412494 2358170Financeleaseobligations 9099 19920WCGandWPRacingClubtaxesandlevies 755702 994844SurpluspayabletoWCG 64343 11881737Currentyear 464343 12281737Adjustmenttosurplusduepriorperioderror (400000) (400000)

2241638 15254671

9. Provision

Openingbalance 300000 -Additionalprovisionduringtheyear 1454712 300000

1754712 300000Amountswrittenoffduringtheyear 300000 -Closingbalance 1454712 300000

Theprovisionrepresents:AwardsbytheCCMAtoemployees.TheboardisappealingtheCCMArulingintheLabourCourt.

Costsawardedagainsttheboardincourtrulings

9.1 CCMA casesTheManager:LegalServicesandtheManager:HumanResourceswereawardedR229645.26andR165467.13bytheCCMAonthecontentionthattheyweretreatedunfairlybybeingexcludedfromtheboard’sprogressionpolicy.



Employeeswereawardedoneyear’shousingallowanceintheamountofR399600onthecontentionthattheboardapprovedthehousingallowancepolicybutthattheimplementationthereofwasdelayedbytheMinister.

9.2 LitigationThuoGamingwonanappealagainstacourtrulingontheboard'sauthoritytoplaceconditionsonitslicence.ThecostoftheappealwasawardedandtheboardisinstructedtopayThuoGaming’slegalcostswhichisestimatedatR300000.

Theboardproceededwithlegalactionagainstaformeremployeeforthenon-deliveryofanassetwhichtheemployeeattestedtothefactthattheassetwasreceived.Themagistrateconcludedthattheboardfailedtoprovethatitwouldbesuccessfulinacaseandawardedthelegalcostofthepreviousemployee’sactionfortheboardtopay.ThecostisestimatedatR60000.

Hollywoodsportsbetchallengedtheboard’sinterpretationofwhenbetscanbelawfullycancelledbyabookmaker.ThejudgementwasinfavourofHollywoodSportsbetwithcosts.TheestimatedcostisR300000.

10. Employee benefits

2014R

2013R

Employee Benefit Obligations:

AccrualforLeavepay 1031321 826344Accrualforbonus 310929 300259

1342250 1126603Currentportionoflongserviceawards 77000 68000

1419250 1194603

Employee Benefit Obligations: Long Service AwardsAspergovernmentgazetteanemployeeshallqualifylongserviceawardsintermsofleavedayscreditsforthevariousperiodsofcontinuousservicecompletedatthesameemployerasfollows:

Completed Years of Service

Total Long Service Benefit Award

Formula Used to Calculate Total Long Service Benefit Award

10 OneMonth’sSalary (1/12)*AnnualSalary=8.33%

Longservicebenefitsareawardedintheformofa13thcheque(equivalenttoonemonth’sadditionalsalary)thatisawardedtoemployeesuponcompletionof10yearsinservice.Nobenefitispayableuponcompletionofsubsequent10yearlyintervals,i.e.20,30or40yearsofservice.Wehaveconvertedthebenefitintoapercentageoftheemployee’sannualsalary.Theconversionisbasedona12monthsworkingyearandthereforethebenefitsawardedcanbeexpressedasfollows:

Valuation of assets Thelongserviceawardsliabilityoftheboardisunfunded.Nodedicatedassetshavebeensetasidetomeetthisliability.



10. Employee benefits (continued)

The amounts recognised in the statement of financial position are as follows:

Carrying value

2014R

2013R

Presentvalueofthedefinedbenefitobligation 458000 400000

Changes in the present value of the defined benefit obligation are as follows:

OpeningBalance 400000 327000CurrentServiceCost 77000 68000InterestCost 30000 31000BenefitsPaid (42635) (29833)ActuarialLoss/(Gain) (6365) 3833

458 000 400 000

Currentliability 77000 68000

Non-currentliability 381000 332000

Net expenses recognised in the statement of financial performance:

CurrentServiceCost 77000 68000InterestCost 30000 31000ActuarialLoss/(Gain) (6365) 3833

100 635 102 833

Key assumptions usedAssumptionsusedatthereportingdate:

2014 2013

Discountrate 8.18% 7.37%Consumerpriceinflation(CPI) 6.36% 5.62%Normalsalaryincreaserate 7.36% 6.62%Neteffectivediscountrate 0.76% 0.70%



Age band Promotional Increase

Promotional Salary Increase Rates 20-24 5%25-29 4%30-34 3%35-39 2%40-44 1%

45andover 0%

Age band Decrement for Males

NRA 65

Decrement for Females NRA 65

Early Retirement 20-54 0% 0%55-59 5% 10%60-64 5% 10%

65 100% 100%

Age band Withdrawal rates Male

Withdrawal rates

Female

Withdrawal Decrements 20-24 16% 24%25-29 12% 18%30-34 10% 15%35-39 8% 10%40-44 6% 6%45-49 4% 4%50-54 2% 2%55-59 1% 1%

60andover 0% 0%

Mortality RatesMortalitybeforeretirementhasbeenbasedontheSA85-90mortalitytables.Thesearethemostcommonlyusedtablesintheindustry.

Normal Retirement Age:Thenormalretirementageforallactiveemployeeswasassumedtobe65years.

Withdrawal RateTheeffectof20%p.a.changeintheassumedlevelofwithdrawalratesisasfollows:



-20% Withdrawal

rate

Valuation Assumption

+20% Withdrawal

TotalAccruedLiability 480000 458000 437000CurrentServiceCost 90000 85000 79000InterestCost 41000 39000 37000

Normal Salary InflationThecostofthelongserviceawardsisdependentontheincreaseintheannualsalariespaidtoemployees.

Therateatwhichsalariesincreasewillthushaveadirecteffectonthelongserviceawardsliability.

Theeffectofa1%p.a.changeinthenormalsalaryinflationassumptionisasfollows:

1% point decrease

Current valuation

percentage

1% point increase

TotalAccruedLiability 444000 458000 472000CurrentServiceCost 81000 85000 88000InterestCost 38000 39000 40000

2014R

2013R

Theliabilityamountsforthecurrentannualreportingperiodandpreviousreportingperiodareasfollows:

Presentvalueofobligation 458000 400000



11. Emoluments of board members and executive

Salary

R

Fees

R

Retire.Fund

R

Bonus

R

Other

R

Total

R

2014Board membersProfTSMadima 41829 - 41829MsALapoorta 127647 28828 156475MsUSDeglon 89810 9352 99162MrDFredericks 142412 14536 156949MrRIKingwill 95132 11015 106147MrHMalila (ProvincialTreasuryOfficial) - 29731 29731MrDPolovin 124241 12316 136557MrTCArendse 10970 512 11483

632042 106291 738333

ExecutiveChiefExecutiveOfficer 703120 51152 91099 214082 1059452Manager:LegalServices 466915 33170 53377 94569 648031HOD:Admin.andFinance 546468 36507 60575 127720 771270HOD:Licensing 549333 39495 60560 138547 787935HOD:Compliance 549333 39495 60560 179032 828421HOD:RacingandBetting 484947 34797 56256 184310 760310HOD:InformationTech. 511571 37114 55904 153424 758013Manager:HumanResources 375920 26098 42192 65678 509888

4187606 297829 480524 1157362 6123321

2013Board membersProfTSMadima 98251 - 98251MsALapoorta 139803 8165 147968MsUSDeglon 124392 22105 146497MrDFredericks 53222 1645 54867MrRIKingwill 185483 34326 219809MrHMalila (ProvincialTreasuryOfficial) - 13636 13636MrDPolovin 37417 889 38306Adv.RVincent 65820 5504 71324

704388 86270 790658

ExecutiveChiefExecutiveOfficer 388403 28257 33751 124481 574891Manager:LegalServices 458991 32713 35303 115649 642656HOD:Admin.andFinance 521878 38961 57709 164605 783152HOD:Licensing 473912 34630 50738 163109 722389HOD:Compliance 521752 38951 57695 194191 812590HOD:RacingandBetting 429634 32470 52302 146327 660733HOD:InformationTech. 459813 34255 59875 149575 703518Manager:HumanResources 347171 25738 42643 72923 488476

3601554 265976 390016 1130860 5388406



12. Lease arrangement

Finance lease arrangementsMinimumleasepaymentsunderfinanceleases

Atthestatementoffinancialpositiondate,theboardhadoutstandingcommitmentsundernoncancellableleaseswhichfalldueasfollows:

2014R

2013R

MinimumleasepaymentsdueWithinoneyear 9497 12073Inthesecondtofifthyearinclusive - 9497

9497 21570

FutureFinanceChargesWithinoneyear 398 1251Inthesecondtofifthyearinclusive - 399

398 1650Presentvalueofminimumleasepaymentsdue

9099 19920

Theboardleasescellularphonesonfixedtermcontracts.Theleaseswereclassifiedasfinanceleasesbecausealloftherisksandrewardsofownershiphavesubstantiallybeentransferredtotheboard.Theaveragetermofthesecellularphonecontractsistwoyears.

OperatingleasearrangementsMinimumleasepaymentsunderoperatingleases

Atthestatementoffinancialpositiondate,theboardhadoutstandingcommitmentsundernon-cancellableoperatingleases,whichfalldueasfollows:

Withinoneyear 101789 50985Inthesecondtofifthyearinclusive 84794 16995

186582 67980

Operatingleasepaymentsrepresentrentalspayablebytheboardforequipmenthire.

13. Retirement benefit plan

TheboardoperatesasingleretirementbenefitplandomiciledintheRepublicofSouthAfricaandisgovernedbythePensionFundsAct,1956(Actno.24of1956).Allpermanentstaffarecoveredbytheretirementbenefitplan.



Theboardoperatesadefinedcontributionretirementplanforallpermanentstaff.Theassetsofthefundareheldseparatefromthoseoftheboard,infundsunderthecontroloftrustees.

ThetotalcostchargedtoincomeofR2585630(2013:R2363013)representscontributionspayabletothefundasspecifiedintherulesofthefund.

14. Related party transactions

RelatedpartyrelationshipsexistwithintheBoard.Duringtheyearallpurchasingandsellingtransactionswereconcludedatarmslength.Detailsofrelatedpartiesandrelatedpartytransactionsareasfollows:

Related party RelatedpartytransactionWesternCapeProvincialMEC NodirecttransactionsFinance,EconomicDevelopmentandTourism-MinisterAWinde(MECresponsibleforGambling)

WesternCapeProvincialHeadOfficial:ProvincialTreasury NodirecttransactionsDrJCStegmann(ProvincialTreasuryDepartmentresponsibleforGambling)

WesternCapeProvincialTreasury(ProvincialTreasuryDepartmentresponsibleforGambling)

Taxesandleviesasreflectedinnote15

WesternCapeProvincialDepartmentofEconomicDevelopmentandTourism

Nodirecttransactions

(DepartmentwithintheportfolioofMinisterAWinde)

MembersoftheBoard Feesforattendanceofmeetingsasreflectedinnote11

ExecutivemanagementoftheBoard Remunerationasreflectedin note11

WesternCapeProvincialDepartmentofTransportandPublicWorks

TheBoardoccupiesabuildingfreeofchargemanagedbytheDepartmentofTransportandPublicWorks

DepartmentofthePremier TheBoardreceivedcorporateservicesfreeofchargefromOrganisationalDevelopment,EnterpriseRiskManagementandLegalServices.



15. Taxes and levies collected during the year

2014R

2013R

ProvincialtaxesCasino 343912425 295486202Horseracingandbetting 50372364 50702244Limitedpayoutmachines 64749320 54898153

459034109 401086599Levies

Casino 1850829 1921629Horseracing 289321 249974Limitedpayoutmachines 516680 518400

2656830 2690003Interest,finesandpenaltiesCasino 7500 4353

Horseracing 371998 224474Limitedpayoutmachines 295350 658325

674848 887152

Totalcollected 462365787 404663754

Distributableto:ProvincialGovernmentWesternCape 444232989 386120993NationalResponsibleGamblingProgramme 159592 101253WesternProvinceRacingClub(GoldCircleasagents) 17973206 18441508

462365787 404663754

16. Cash flow statement

a)CashandcashequivalentsCashandcashequivalentsconsistofcashonhandandbalanceswithbanks.Cashandcashequivalentsincludedinthecashflowstatementcomprisethefollowingstatementofamountsindicatingfinancialposition:

2014R

2013R

Cashonhandandbalanceswithbanks 13134445 15482056Cashatbanksfortrustfunds(refernote5) 12361893 15746119

25496338 31228175

b)Property,plantandequipment

Duringtheperiod,theboardacquiredproperty,plantandequipmentandintangibleassetswithanaggregatecostofR704364



CashpaymentsofR704364weremadetopurchaseproperty,plantandequipmentandintangibleassets.

c)Reconciliationofnetcashflowsfromoperatingactivitiestosurplus.

2014R

2013R

Surplus 7898343 2749737

Non cash movementsDepreciation-tangibleassets 878797 1198760Depreciation-intangibleassets 6128 2553

Gains/(Loss)ondisposalofproperty,plantandequipment 3647 (11178)Operatingcashflowsbeforeworkingcapitalchanges 8779619 3962228

Working Capital 1437859 254742(Decrease)/Increaseinpayables (13013033) 9499125(Increase)inothercurrentassets 46633 (100374)(Increase)/Decreaseininventories 3995 (166)(Increase)/Decreaseinreceivables 1554511 (1245781)Increase/(Decrease)inprovisions 1154712 300000Increase/(Decrease)inemployeebenefitsliabilities 273647 1526603(Increase)/DecreaseinSurpluspayabletoWCG 11417394 (9724665)

Net cash flows from operating activities 10217478 4216970

17. Change in estimates

AnassessmenthasbeenmadeoftheusefullifeoftheBoard’stangibleassetseffective 31March2014.

Managementisoftheopinionthattheusefullivesoftheassetsareinlinewiththecurrentcircumstances.

Thechangeinusefullifehasledtoadecreaseindepreciationasthechangeswereappliedprospectively.

TheeffectinthecurrentyearisanincreaseinnetsurplusofR354909,resultinginafuturedecreaseinnetsurplusofR354909overthenexttwoyears.



18. Financial Risk Managment

Interest rate managementTheBoardisnotexposedtoanymaterialinterestriskandasaconsequencedoesnotpayanymaterialamountsofinterest.

CreditriskmanagementPotentialconcentrationsofcreditriskconsistprimarilyofcashinvestments,tradereceivablesandshorttermreceivables.

Shorttermcashsurplusesareinvestedwithmajorbanksofhighqualitycreditstanding.

Asat31March2014,managementdidnotconsidertheretobeanysignificantconcentrationofriskwhichhadnotbeenadequatelyprovidedfor.

2014R

2013R

MaximumexposuretocreditriskatreportingdateCashandCashequivalents 13134445 15482056Tradeandotherreceivables 695150 2249660TrustFunds(securities) 6486186 7685009TrustFunds(trust) 5875707 8061110

Liquidity riskTheBoardhasminimiseditsliquidityriskbyensuringthatithasadequatebankingfacilitiesandfundsintrustforanyclaimagainstitstradereceivables.

MaximumexposuretoliquidityriskatreportingdateTradeandotherpayables 2241638 15254671TrustFunds(securities) 6486186 7685009TrustFunds(trust) 5875707 8061110

Fair value of financial instrumentsThecarryingamountsreportedinthestatementoffinancialpositionfortradeandotherreceivables,cashandcashequivalents,tradeandotherpayables,provisionsandfinancialliabilitiesapproximatefairvalue.

19. Goverment grant

TheBoardreceivedagrantfromtheWesternCapeGovernmentofR10326000(2013-R2411000).

Thegrantwastoassistinfundingthelossoftheexclusivityfeeandhadnoconditionsattachedtoit.

Thegrantwasrecognisedinsurplusonreceiptthereof.



20. Financial Instruments

InaccordancewithGRAP104.45thefinancialliabilitiesandassetsoftheboardareclassifiedasfollows:

2014R

2013R

Financial AssetsFinancial Instruments at amortised cost:

Classification

CashandCashequivalentsFinancialInstrumentsatamortisedcost 13134445 15482056

TradeandotherreceivablesFinancialInstrumentsatamortisedcost 695150 2249660

TrustFunds(securities)FinancialInstrumentsatamortisedcost 6486186 7685009

TrustFunds(trust)FinancialInstrumentsatamortisedcost 5875707 8061110

Total Financial Assets 26 191 488 33 477 835

Financial Liability Financial Instruments at amortised cost:

Classification

TradeandotherpayablesFinancialInstrumentsatamortisedcost 2241638 15254671

TrustFunds(securities)FinancialInstrumentsatamortisedcost 6486186 7685009

TrustFunds(trust)FinancialInstrumentsatamortisedcost 5875707 8061110

Total Financial Liability 14 603 531 31 000 790



21. Prior Period Error

Theboard,inthepast,didnotaccountforemployeebenefitsasprescribedbyIAS19.

TheboardimplementedtheprinciplesofGRAP25-EmployeeBenefitsasitaccountingpolicyforemployeebenefits.Thefinancialstatementsof2013havebeenrestatedtocorrectthiserror.Theeffectoftherestatementonthosefinancialstatementsissummarisedbelow.

Effecton2013(Increase)inemployeerelatedcosts (365167)(Increase)infinancecosts (31000)(Increase)inactuariallosses (3833)Decreaseinprofit (400000)

Decreaseintradeandotherpayables 1526603Increaseinemployeebenefits-currentportion (1194603)Increaseinemployeebenefits-non-currentportion (332000)

22. Contingencies

Theboarddoesnothaveanymaterialcontingenciesfordisclosureat31March2014.

23. Commitments

Theboarddoesnothaveanycommitmentsfordisclosureasat31March2014.



24. Net surplus for the year

Revenue 45808426 36569955

Exchange 35482426 34158955

ActuarialGainonemployeebenefits 6365 -

Boardinspectors'chargeout 5145166 4990688

Exclusivityfees 1573461 1450195

Investmentincome 1038346 1131577

Investigationfees 20202257 20420343

Licenceapplicationfees 2429150 1535850

Operator'sfee 4906064 4521718

Profitondisposalofassets 3647 -

Saleofnotesandsundry 134980 108584

Legalfeesrecoverable 42990 -

Nonexchange 10326000 2411000

Governmentgrant 10326000 2411000

Expenditure 37910084 33820218

Depreciation 878797 1198759

Computeraccessories 135703 83602

Computers 442512 737592

MotorVehicles 35815 35815

EquipmentatcostlessthanR5000 11823 88762

LeasedAssets 10102 7847

Equipment&furniture 242841 245142

Depreciation-Intangibleassets 6128 2553

Eliminationofillegalgamblingoperations 174009 114303

Destructionofillegaldevices 7500 7866

Informerrewards 26000 9850

Storage 140509 96587

Financecosts 51257 31629

Legalfees 1367895 424643

Lossondisposalofassets - 11 178

Lossonactuarialvaluations - 3833

Rentalofparkingbaysandstorage 76671 151304

Employeerelatedcosts 27898796 25558807

Travelandsubsistence 2050623 1861179

Other 5405909 4462029

Advertising 5430 9804Advisors 188730 60178

Auditfees 1111250 1111025

Externalauditfees-currentyear 825526 803493

Internalauditfees-currentyear 285724 307532

Bankfees 12533 13064

Computersoftwareannuallicences 556208 460023

Conference&membershipfees 192723 167312

Consumables 110798 93014

Courierservices 17851 13083

Entertainment 85597 91015

Insurance 281670 298392

Motorvehicle 38673 29667

Postage 4809 4319

Publications 15507 7747

Recruitment 186032 173483

Rentalofequipment 297276 164108

Repairsandmaintenance 966430 514419

Equipment 224327 206802

Premises 742104 307617

Services-Transcriptions/Translations 78 871 19101

Securityservices 7105 7008

Skillsdevelopmentlevy 257962 218684

Stationery 245228 120529

Telephonesandcommunication 604140 548472

Telephones 42284 91245

Cellulartelephones 277380 248256

Facsimile 22116 23704

Internet 256818 175636

Telkomnetworkline 5542 9632Training 141086 337582

Net surplus for the year 7898343 2749737


2014R

2013R


Seafare House, 68 Orange Street, Gardens, Cape Town, 8001

PO Box 8175, Roggebaai, 8012

tel: +27 21 480 7400 +27 21 422 2603fax:

www.wcgrb.co.za email: [email protected]

PR192/2014

ISBN: 978-0-621-42861-2

Western Cape Gambling and Racing Board...The NGRF deliberates on all pertinent issues that affect...

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Transcript of Western Cape Gambling and Racing Board...The NGRF deliberates on all pertinent issues that affect...