Upload
others
View
1
Download
0
Embed Size (px)
Citation preview
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
Western Cape Gamblingand Racing Board
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
WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/144
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
WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14 5
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.
WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/146
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.
WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14 7
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.
WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/148
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
WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14 9
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
WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/1410
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.
WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14 11
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.
WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/1412
8. ORGANISATIONAL STRUCTURE
Ms A
La
po
ort
a
Bo
ard
Ch
air
Mr
P A
bra
ha
ms
CFO
& H
OD
: A
dfin
Mr
D P
olo
vin
De
pu
tyC
ha
ir
Mr
RB
en
ne
t
HO
D: C
om
plia
nc
e
Mrs
U D
eg
lon
Bo
ard
Me
mb
er
Mr
P K
win
da
HO
D: IT
Mr
H M
alila
Bo
ard
Me
mb
er
Mrs
M B
asso
n
HO
D: Lic
en
sin
g
Mr
D F
red
eric
ks
Bo
ard
Me
mb
er
Ms Y
Sk
ep
u
Ma
na
ge
r: L
eg
al
Mr
T A
ren
dse
Bo
ard
Me
mb
er
Mr
W B
ow
ers
Ma
na
ge
r: H
R
Va
ca
nt
Bo
ard
Me
mb
er
Ms L
du
To
it
HO
D: R
ac
ing
Dr
M M
ats
ap
ola
CEO
BO
AR
D
EX
CO
13WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14
Western Cape Gamblingand Racing Board
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.
15WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14
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.
16 WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14
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.
17WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14
Western Cape Gambling and Racing Board
Board
18 WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14
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.
19WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14
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
20 WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14
Western Cape Gambling and Racing Board
Executive
21WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14
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.
22 WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14
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
EXECUTIVE 5 635 883 5 241 291 394 592 7 514 972 3 162 191 4 352 781
23WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14
Western Cape Gambling and Racing Board
Legal Services
24 WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14
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
Performance Indicator
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.
Strategy to overcome areas of under performance
There are no areas of under-performance.
Changes to planned targets
There were no changes to the planned targets during the 2013/14 financial year.
25WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14
Western Cape Gambling and Racing Board
Human Resources
26 WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14
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
Performance Indicator
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.
Strategy to overcome areas of under performance
There are no areas of under-performance.
Changes to planned targets
There were no changes to the planned targets during the 2013/14 financial year.
27WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14
Western Cape Gambling and Racing Board
Administration and Finance
28 WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14
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
Performance Indicator
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.
29WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14
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.
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
ADFIN 8 104 153 8 127 161 (23 008) 7 982 921 6 825 226 1 157 695
30 WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14
Western Cape Gambling and Racing Board
Licensing
31WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14
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.
Strategy to overcome areas of under performance
There are no areas of under-performance.
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
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
32 WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14
Western Cape Gambling and Racing Board
Racing and Betting
33WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14
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
Performance Indicator
ActualAchievement
2012/13
Planned Target
2013/14
Actual Achievement
2013/14
Deviationfrom
planned target
for2013/14
Comment on variances
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.
34 WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14
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
Performance Indicator
ActualAchievement
2012/13
Planned Target
2013/14
Actual Achievement
2013/14
Deviationfrom
planned target
for2013/14
Comment on variances
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.
Strategy to overcome areas of under performance
There are no areas of under-performance.
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
RACING AND BETTING 5 885 724 5 504 610 381 114 5 830 525 4 938 809 891 716
35WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14
Western Cape Gambling and Racing Board
Gambling Compliance
36 WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14
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.
37WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14
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.
Strategy to overcome areas of under performance
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.
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
GAMBLING COMPLIANCE 8 427 993 7 458 308 969 685 7 702 454 7 567 195 135 259
38 WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14
Western Cape Gambling and Racing Board
Information Technology
39WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14
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
Performance Indicator
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.
Strategy to overcome areas of under performance
There were no areas of under performance.
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
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.
40 WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14
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.
41WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14
Western Cape Gamblingand Racing Board
Part C:GOVERNANCE
42 WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14
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.
43WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14
Nam
eDe
signa
tion
(in te
rms
of th
e Pu
blic
Ent
ity B
oard
stru
ctur
e)
Date
appo
inte
dDa
te
resig
ned/
Term
ex
pire
d
Qua
lifica
-tio
nsA
rea
of
Expe
rtise
Boar
dDi
rect
orsh
ips
(List
the
entit
ies)
No
of
Boar
d m
eetin
gshe
ld
No
of
Boar
d m
eetin
gsat
tend
ed
Oth
er
Com
mitt
ees
(e.g
: A
udit
com
mitt
ee)
No.
of
Com
mitt
eeM
eetin
gshe
ld
No.
of
Com
mitt
ee
Mee
tings
atte
nded
Tota
l N
o.
of mee
tings
at
tend
ed
Ms A
Lap
oorta
Cha
ir-
pers
on
22 M
ay
2013
21 M
ay
2016
B.C
omC
A(S
A)
Aud
iting
an
d
Acc
ount
-in
g
Wes
tern
C
ape
Gam
blin
g &
Rac
ing
Boar
d
Kuhu
mel
e-la
Tra
din
g (P
ty) L
td
Kuhu
mel
e-la
Ad
viso
ry
Serv
ices
(P
ty)
[13]
11 o
f 12
Fina
nce
& IT
C
omm
ittee
[6]
4 of
519
of 2
2
Aud
it
Com
mitt
ee[4
]1
of 2
Hors
e-ra
cing
C
omm
ittee
[4]
3 of
3
Mr D
N P
olov
inV
ice
C
hairp
er-
son
22 O
ct
2012
21 O
ct
2015
BA L
LBLa
wW
este
rn
Cap
e G
ambl
ing
& R
acin
g Bo
ard
1313
Fina
nce
& IT
C
omm
ittee
65
27 o
f 28
Hum
an
Cap
ital
Com
mitt
ee
44
Lega
l C
omm
ittee
11
LPM
C
omm
ittee
4
4
Mr T
Are
ndse
Boar
d
Mem
ber
12 F
eb
2014
11 F
eb20
17C
TA
CA
(SA
)A
uditi
ng
and
A
ccou
nt-
ing
Wes
tern
C
ape
Gam
blin
g &
Rac
ing
Boar
d
[13]
2 of
2A
udit
C
omm
ittee
[4]
1 of
13
of 3
Fina
nce
& IT
C
omm
ittee
[4]
0 of
0
LPM
C
omm
ittee
[4]
0 of
0
BOA
RD M
EMBE
R IN
FORM
ATIO
N
44 WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14
Nam
eDe
signa
tion
(in te
rms
of th
e Pu
blic
Ent
ity B
oard
stru
ctur
e)
Date
appo
inte
dDa
te
resig
ned/
Term
ex
pire
d
Qua
lifica
-tio
nsA
rea
of
Expe
rtise
Boar
dDi
rect
orsh
ips
(List
the
entit
ies)
No
of
Boar
d m
eetin
gshe
ld
No
of
Boar
d m
eetin
gsat
tend
ed
Oth
er
Com
mitt
ees
(e.g
: A
udit
com
mitt
ee)
No.
of
Com
mitt
eeM
eetin
gshe
ld
No.
of
Com
mitt
ee
Mee
tings
atte
nded
Tota
l N
o.
of mee
tings
at
tend
ed
Ms U
S D
eglo
nBo
ard
M
embe
r20
Jan
20
11
12 F
eb
2014
19 J
an
2014
11 F
eb
2017
M A
(R
esea
rch
Psyc
hol-
ogy)
UC
T 20
06
Hum
an
Reso
urce
s &
Rese
arch
Wes
tern
Cap
e G
ambl
ing
&
Raci
ng B
oard
Sout
h A
fri-
can
Disa
bilit
y D
evel
opm
ent
Trus
t (SA
DD
T)Th
e Le
arni
ng
Cap
e In
itiat
ive
The
Inte
rna-
tiona
l Lab
our
Org
anisa
tion
The
Wor
ld
Heal
th o
rgan
-isa
tion
1312
Cas
ino
Com
mitt
ee4
420
of 2
3
Hum
an
Cap
ital
Com
mitt
ee
[4]
2 of
3
LPM
C
omm
ittee
[4]
2 of
3
Mr D
A
Fed
eric
ksBo
ard
M
embe
r30
Aug
20
1229
Aug
20
15D
iplo
ma
Ind
ustri
al
Rela
tions
Labo
ur re
la-
tions
Wes
tern
Cap
e G
ambl
ing
&
Raci
ng B
oard
1313
Hum
an
Cap
ital
Com
mitt
ee
44
26 o
f 26
LPM
C
omm
ittee
44
Cas
ino
Com
mitt
ee4
4
Hors
e-
raci
ng
Com
mitt
ee
[4]
1 of
1
Mr H
C M
alila
Boar
d
Mem
ber
27 S
ept
2011
26 S
ept
2014
MBA
B.
Com
pt.
Gov
ernm
ent
Fina
nce
Wes
tern
Cap
e G
ambl
ing
&
Raci
ng B
oard
1310
Fina
nce
& IT
C
omm
ittee
65
16 o
f 23
Hors
e-ra
cing
C
omm
ittee
41
45WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14
Nam
eDe
signa
tion
(in te
rms
of th
e Pu
blic
Ent
ity B
oard
stru
ctur
e)
Date
appo
inte
dDa
te
resig
ned/
Term
ex
pire
d
Qua
lifica
tions
Are
a of
Ex
perti
se
Boar
dDi
rect
orsh
ips
(List
the
entit
ies)
No
of
Boar
d m
eetin
gshe
ld
No
of
Boar
d m
eetin
gsat
tend
ed
Oth
er
Com
mitt
ees
(e.g
: A
udit
com
mitt
ee)
No.
of
Com
mitt
eeM
eetin
gshe
ld
No.
of
Com
mitt
ee
Mee
tings
atte
nded
Tota
l N
o.
of mee
tings
at
tend
ed
Mrs
I D
u Pl
essis
Boar
d
Mem
ber
12 F
eb
2014
17 A
pril
2014
BA. L
LB (L
aw)
Law
Wes
tern
Cap
e G
ambl
ing
&
Raci
ng B
oard
[13]
2 of
2C
asin
o
Com
mitt
ee[4
]1
of 1
3 of
3
Hum
an C
apita
l C
omm
ittee
[4]
0 of
0
LPM
C
omm
ittee
[4]
0 of
0
Prof
TS
Mad
ima
(SC
)Pa
st
Cha
ir-pe
rson
Bo
ard
20 J
an
2011
19 J
an
2014
B. Iu
ris
LL.M
Ph
.D (L
aw)
MBA
A
dju
nct P
ro-
fess
or o
f Law
in
Com
mer
-ci
al L
aw
Dep
artm
ent
at U
CT
Seni
or C
oun-
sel /
Silk
Law
Wes
tern
Cap
e G
ambl
ing
&
Raci
ng B
oard
C
ompe
titio
n Tr
ibun
al
Kapa
Bi
osys
tem
s
[13]
5 of
11
Hum
an C
apita
l C
omm
ittee
41
of 3
7 of
15
Lega
l C
omm
ittee
11
Mr R
I Kin
gwill
Boar
d
Mem
ber
20 J
an
2011
19 J
an 2
014
B.C
omC
TAC
A(S
A)
Aud
iting
an
d
Acc
ount
ing
Wes
tern
Cap
e G
ambl
ing
&
Raci
ng B
oard
Som
erse
t Wes
t C
ount
ry C
lub
Cen
tre fo
r Pr
oteo
mic
an
d G
enom
ic
Rese
arch
On
Dem
and
In
vest
men
tsPa
rel V
alle
i A
dva
nced
Ed
ucat
ion
Trus
t
1110
Cas
ino
C
omm
ittee
[4
]3
of 3
21of
23
Fina
nce
& IT
C
omm
ittee
[6]
4 of
5
Hors
erac
ing
Com
mitt
ee
[4]
3 of
3
Aud
it
Com
mitt
ee[4
]1
of 1
46 WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14
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]
47WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14
Nam
eDe
signa
tion
(in te
rms
of
the
Publ
ic
Entit
y Bo
ard
stru
ctur
e)
Date
ap-
poin
ted
Date
re-
signe
d/Te
rm
expi
red
Qua
lifica
tions
Are
a of
Ex-
perti
seBo
ard
Dire
ctor
ship
s (L
ist th
e en
ti-tie
s)
Oth
er C
om-
mitt
ees
(e.g
: A
udit
com
mit-
tee)
No.
of M
eet-
ings
hel
dN
o. o
f Mee
t-in
gs a
ttend
ed
Mr P
K Sl
ack
Aud
it
Com
mitt
ee:
Ind
epen
den
t no
n-
exec
utiv
e C
hairp
erso
n
9 Se
pt 2
009
5 Fe
b 20
13
28 S
ept 2
012
4 Fe
b 20
16
B C
omm
(H
ons)
Fi
nanc
ial
Man
agem
ent
CA
(SA
Aud
iting
and
A
ccou
ntin
gC
hair
of
Boar
d
Wes
tern
Pro
v-in
ce B
lood
Tr
ansf
usio
n Se
rvic
eO
ther
Boa
rd
Mem
bers
hips
- Sou
th
Afri
can
Oil
and
Gas
A
llianc
e (S
AO
GA
)- N
atio
nal
Allia
nce
for
the
D
evel
opm
ent
of C
omm
unity
A
dvi
ce
Offi
ces
Aud
it
Com
mitt
ee4
4
Mr M
R Bu
rton
Aud
it
Com
mitt
ee:
Ind
epen
den
t no
n-
exec
utiv
e m
embe
r
8 D
ec 2
011
7 D
ec 2
014
B.C
ompt
Hon
sC
A(S
A)
Aud
iting
and
A
ccou
ntin
gW
este
rn
Cap
e Liq
uor
Aut
horit
y
Aud
it
Com
mitt
ee4
4
EXTE
RNA
L A
UDIT
CO
MM
ITTEE
MEM
BERS
48 WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14
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
49WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14
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.
50 WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14
VICE CHAIRPERSON -:
Board meetings: R3 959.28 per meeting
Board committees and other events: R494.91 per hour up to a maximum of 8 hours.
ACTING AS CHAIRPERSON -:
Board meetings: R4 403.04 per meeting
Board committees and other events: R550.38 per hour up to a maximum of 8 hours.
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
51WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14
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
52 WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14
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]
53WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14
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.
54 WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14
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.
55WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14
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.
56 WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14
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
Western Cape Gambling and Racing Board
57WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14
Part D:HUMAN RESOURCE MANAGEMENT
Western Cape Gamblingand Racing Board
58 WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14
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
59WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14
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.
60 WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14
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
61WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14
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.
6262 WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14
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
Professional qualified
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
Professional qualified
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
63WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14
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.
64 WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14
WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14 65
Part E:FINANCIAL INFORMATION
Western Cape Gamblingand Racing Board
WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/1466
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.
WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14 67
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
WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14 69
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
WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/1470
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
WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14 71
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
WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/1472
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
WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14 73
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
WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/1474
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
WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14 75
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.
GRAP 32Thestatementwillnothaveaneffectonthefinancialposition,performanceordisclosureoftheboardasthestatementwillnotapplytotheboard.
NOTES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2014
WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/1476
GRAP 105Thestatementwillnothaveaneffectonthefinancialposition,performanceordisclosureoftheboardasthestatementwillnotapplytotheboard.
GRAP 106Thestatementwillnothaveaneffectonthefinancialposition,performanceordisclosureoftheboardasthestatementwillnotapplytotheboard.
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.
NOTES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2014
WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14 77
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.
NOTES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2014
WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/1478
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.
NOTES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2014
WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14 79
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.
NOTES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2014
WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/1480
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.
NOTES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2014
WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14 81
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.
NOTES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2014
WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/1482
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.
NOTES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2014
WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14 83
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.
NOTES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2014
WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/1484
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
NOTES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2014
WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14 85
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
NOTES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2014
WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/1486
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.
NOTES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2014
WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14 87
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
NOTES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2014
WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/1488
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.
NOTES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2014
WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14 89
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.
NOTES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2014
WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/1490
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.
NOTES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2014
WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14 91
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%
NOTES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2014
WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/1492
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:
NOTES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2014
WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14 93
-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
NOTES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2014
WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/1494
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
NOTES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2014
WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14 95
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.
NOTES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2014
WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/1496
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.
NOTES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2014
WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14 97
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
NOTES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2014
WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/1498
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.
NOTES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2014
WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14 99
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.
NOTES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2014
WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14100
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
NOTES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2014
WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14 101
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.
NOTES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2014
WESTERN CAPE GAMBLING AND RACING BOARD – ANNUAL REPORT 2013/14102
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
NOTES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2014
2014R
2013R
Western Cape Gambling and Racing Board
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