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REPORT ANNUAL 2018/2019
Department:
edteaEconomic Development,Tourism andEnvironmental Affairs
CONTENTS Part A:GENERAL INFORMATION 2
1. Public Entity’s General Information 3
2. List of Abbreviations/Acronyms 3
3. Foreword by the Executive Authority 4
4. Foreword by the Chairperson 8
5. Overview from the CEO 10
6. Statement of Responsibility and Confirmation of
Accuracy for the Annual Report 13
7. Strategic Overview 14
8. Legislative and Other Mandates 15
9. KZNGBB Organisational Structure 15
10. Members of the Board 18
11. Value created by the KZNGBB 20
Part B:Performance Information 22
1. Auditor’s Report: Predetermined Objectives 23
2. Situational Analysis 23
3. Strategic Outcome Oriented Goals 31
4. Introduction 35
5. Programme 1: Administration 35
6. Programme 2: Finance 45
7. Programme 3: Information And Communication
8. Technology 47 8. Programme 4: Licensing and Registration 48
9. Programme 5: Gaming Monitoring and Compliances 52
10. Programme 6: Betting Monitoring and Control 58
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Part C:GOVERNANCE REPORT 60
1. Introduction 61
2. Portfolio Committees 61
3. Executive Authority 61
4. The Board Governance Structures 64
5. Risk Management 65
6. The Audit Committee 66
7. Accountability and Compliance 66
8. Legislative and Regulatory Compliance 66
9. Ethics and Values 66
10. Whistleblowers Line 67
11. Social Responsibility 67
12. Socio-Economic Development 67
13. Gallery Of Activities And Programmes Undertaken in
the Year Under Review 73
14. Audit Committee Report 79
Part D:HUMAN RESOURCE MANAGEMENT 80
1. Introduction 81
2. Human Resources Oversight Statistics 81
Part E:FINANCIAL STATEMENTS 86
1. Report of the Auditor -General 88
2. Annual Financial Statements 94
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
2Department:
edteaEconomic Development,Tourism andEnvironmental Affairs
PART A
G E N E R A LI N F O R M AT I O N
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART A: GENERAL INFORMATION
3
REGISTERED NAME KwaZulu-Natal Gaming and Betting Board
PHYSICAL ADDRESS (PIETERMARITZBURG) KZNGBB House Redlands Estate 1 George Macfarlane Lane Pietermaritzburg 3201
PHYSICAL ADDRESS (DURBAN) 18th Floor, The Marine22 Dorothy Nyembe Street Durban 4001
POSTAL ADDRESS Private Bag X9102Pietermaritzburg3200
TELEPHONE NUMBER (PIETERMARITZBURG) +27 33 345 2714
TELEPHONE NUMBER (DURBAN) +27 31 583 1800
EMAIL ADDRESS [email protected]
WEBSITE ADDRESS www.kzngbb.org.za
EXTERNAL AUDITORS Auditor-General: South Africa: KZN
BANKERS ABSA Bank
BOARD SECRETARY Mrs S. Meyiwa
1. PUBLIC ENTITY’S GENERAL INFORMATION
2. LIST OF ABBREVIATIONS / ACRONYMSAGSA Auditor General of South Africa
ACT KZN Gaming and Betting Act (No. 08 of 2010)
AMENDMENT ACT KZN Gaming and Betting Amendment Act (No. 04 of 2017)
BOARD KwaZulu-Natal Gaming and Betting Board
EDTEA KwaZulu-Natal Department of Economic Development, Tourism and Environmental Affairs
B-BBEE Broad-Based Black Economic Empowerment
CEO Chief Executive Officer
CFO Chief Financial Officer
CSI Corporate Social Investment
FICA Financial Intelligence Centre Act (No. 38 of 2001)
GROP Gambling Regulatory Online Portal
GRAP Generally Recognised Accounting Practice
KZNGBB/ ENTITY KwaZulu-Natal Gaming and Betting Board
MEC Member of Executive Council
PFMA Public Finance Management Act (No 1 of 1999)
PPPFA Preferential Procurement Policy Framework Act
SARGF South African Responsible Gambling Foundation
SCM Supply Chain Management
SMME Small Medium and Micro Enterprises
TR Treasury Regulations
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3. MEC FOREWORDKWAZULU-NATAL GAMING AND BETTING BOARD
The KZN Gaming and Betting Board is a Schedule 3C Public Entity which forms a part of the Department of Economic Development, Tourism and Environmental Affairs,
I am pleased to present the entity’s Annual Report for the 2018/2019 Financial Year. The regulatory role of the Board is prescribed and defined by provisions of sections 146 of the South African Constitution, National Gambling Act,2004 |(Act No.7 of 2004), including the National regulations, the KZN Gaming and Betting Act, the Public Finance Management Act 1999 (Act No. 1 of 1999) as well as Treasury regulations. In the, 2019 State of the Nation Address, President Cyril Ramaphosa highlighted the following key objectives which are relevant to this report:· Economic Transformation and job creation;· Education and Skills Development;· Building a Capable, Ethical and Developmental State; and· A better Africa and a better world.
In his inaugural speech, the KwaZulu-Natal Premier, the Honourable S. Zikalala highlighted the following key result areas that all government departments and entities must align to:· Job creation;
· Growing the economy;
· SMME’s Development; and
· Building an incorruptible Government.
REVENUE COLLECTION
Albeit, the country is in the grip of harsh economic conditions the gaming and betting industry has managed to achieve
sustainability and growth. The industry directly creates jobs and generates revenue, meaning that the industry remains both
a direct and indirect catalyst for economic growth, since taxes that are collected form a part of the provincial fiscus, which itself
catalyses growth. During the 2018/2019 financial year, despite the challenging economic climate, the KwaZulu-Natal Gaming
and Betting Board managed to grow tax revenue which is a major contributor to the Provincial Governments “own” revenue
collection as follows:-
· Casinos R 430 760 440 (3.37% increase)
· Route Operators R 107 550 420 (12.05% increase)
· Bingo R 1 712 946 (1526% increase)
· Bingo with LPM R 16 992 685 (13.26% increase)
· Betting Industry R 127 661 337 (1.39% increase)
MS.NOMUSA DUBE-NCUBE, MPLMEC DEPARTMENT OF ECONOMIC DEVELOPMENT, TOURISM AND ENVIRONMENTAL AFFAIRS.
Department:
edteaEconomic Development,Tourism andEnvironmental Affairs
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART A: GENERAL INFORMATION
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JOB CREATION
The KZN Gaming and Betting industry has achieved the following in respect of job creation and access to employment
opportunities within communities wherein gambling licensees operates:
REGISTERED EMPLOYEES - EMPLOYMENT/JOB CREATION WITHIN THE GAMBLING INDUSTRY IN KZN
Sector 2018/19 2017/18
Casino 2481 2497
LPMs (Route Operators) 97 98
Bingo 438 294
Bookmakers & Totalisators 3483 3032
TOTAL 6499 5921
SMME CONTRIBUTIONS BY THE GAMBLING INDUSTRY
The Board monitors, through compliance contributions made by licensees within the gambling industry which has contributed
to the following spend on the Provincial economy.
SMME CONTRIBUTIONS BY GAMBLIING INDUSTRY
Description 2018/19 2017/18
Spend on Local Economy – Gaming* R 44 036 173 R 338 510 728
Spend on Local Economy – Betting** R 509 200 348 R 297 746 502
Spend on SMMEs – Gaming* R 24 451 369 R 185 649 549
Spend on SMMEs – Betting** R 233 774 525 R 281 732 347
Spend on PDI Business – Gaming* R 61 780 804 R 648 319 777
Spend on PDI Business – Betting** R 150 389 164 R 131 535 222
TOTAL R 1 023 632 383 R 1 883 494 127
RADICAL ECONOMIC TRANSFORMATION
The transformation of the gaming and betting industry remains a priority in the strategic outcomes of the entity. In addition,
we need to ensure the involvement of more communities in the industry and increase employment and look at ways of
protecting the interests of the public. There needs to be a balance between job creation, socio-economic development and
revenue collection contributions by this sector. One of EDTEA’s key mandates involves the attainment of developmental targets
in respect of the reduction of poverty, inequality and unemployment levels. A key driver in the fight against the eradication
of the aforementioned challenges is the full implementation of the radical economic transformation directive. The Board has
a transformation strategy and implementation plan to support the radical socio-economic transformation of the gambling
industry which aims to create opportunities for previously disadvantaged individuals to gain access to the gambling industry
and to ensure that licensees comply with National and Provincial B-BBEE strategies.
The current context on which the economy operates is not in favour of the previously disadvantaged sectors of the communities,
including women and youth, to that end it is imperative that there are mechanisms in place to ensure the economic growth
and development in these sectors. The KZN Gaming and Betting Board have commenced processes for the implementation
of programmes which are underpinned by the principles of radical economic transformation. In that, the entity will create a
platform for opportunities to enable new black entrants into the industry with a view to create jobs and improve the lives of
the citizens of KwaZulu-Natal. We keenly await the roll-out of these programmes within the upcoming Financial Year
PUBLIC PRIVATE PARTNERSHIPS
In order to sustain the economic development and viability of this province it is key that strategic partnerships are developed
between the government and the private sector. The constant engagement and collaboration with the relevant role players
will create fertile ground in respect of increasing the growth potential of this province. It is in this vein I am looking to engage
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART A: GENERAL INFORMATION
6Department:
edteaEconomic Development,Tourism andEnvironmental Affairs
and develop fruitful public private partnerships with the captains of the gaming and betting industry to improve the lives of
communities in KwaZulu-Natal.
FINANCE AND GOVERNANCE
In line with the Provincial Government’s efforts to ensure budget discipline, prudent financial management and integrity. The
KZN Gaming and Betting Board, as a reporting entity within my portfolio, will also focus on austerity measures in its planning
and execution of strategic and operational objectives. Good governance is essential for the long term success of the entity
and I am pleased to present our governance report on pages 62-79 which sets out how the KZN Gaming and Betting Board
conducts its operations in accordance with internationally accepted principles of good corporate governance.
PROTECTION OF THE PUBLIC INTEREST
This Province is seeing a sharp deterioration in the economic environment over the past two fiscal periods, as a result the
entity’s focus needs to set its strategic outcome oriented goals, taking into account the knock-on effects on government
revenues and available resources. The entity, under my leadership, will commit itself to ensuring the best possible return
on its resources, taking into account the societal negative impacts of gambling. The KZN Gaming and Betting Board has
a cooperation agreement with the South African Responsible Gambling Foundation. The foundation offers free treatment
and counselling programmes to the problem gamblers and their families. One of the key areas of cooperation involves the
undertaking of community awareness programmes within the vulnerable communities that are harshly affected by addictive
gambling in the province. The Board will endeavour to raise awareness relating to the services offered by the body as well as
provide support in an effort to bolster the province-specific initiatives that are undertaken by the South African Responsible
Gambling Foundation.
CONCLUSION
The 2018/2019 financial year saw the new Chairperson and Board members commence their three year term at the gaming
regulator. Our Board members bring critical balance and a wealth of skills and experience to the entity and these elements
would complement the skills of the executive team. I would like to take this opportunity to officially welcome Dr S.G. Ngcobo
and his team as well as the Chief Executive Officer, Ms P. Baloyi and her team and I look forward to a fruitful relationship with
them.
As we plan for the year ahead, we expect and are preparing for another challenging period. However our key economic driver,
the Board and skilled people mean that we are well positioned to grow the industry and deliver the results and service we
were appointed for.
MS.NOMUSA DUBE-NCUBE, MPL
MEC DEPARTMENT OF ECONOMIC DEVELOPMENT, TOURISM AND ENVIRONMENTAL AFFAIRS.
31 July 2019
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART A: GENERAL INFORMATION
7
8Department:
edteaEconomic Development,Tourism andEnvironmental Affairs
I present the KwaZulu-Natal
Gaming and Betting Board’s
Annual Report for the
financial year ended
31 March 2019.
4. FOREWORD BY THE
CHAIRPERSONDr S G Ngcobo Chairperson
KwaZulu-Natal Gaming and Betting Board
During the year the Board’s reporting lines were reviewed and
KZNGB Board is now required to report to the Department of
Economic Development, Tourism and Environmental Affairs
and the Member of the Executive Council responsible for
the Department, the Honourable Ms Nomusa Ncube-Dube
has become the designated MEC responsible in terms of the
KZN Gaming and Betting Act, no 8 of 2010 as amended. This
adjustment has been ably managed by the support staff of
the Department and the Section 8 Representative on the
Board, Mrs Navlene Thavar who adds significant value to
the deliberations of the Board. As the Boards’ governance
structures have continued to produce sound results in
performance and revenue generation it was not deemed
necessary to make any changes to the governance structures
within the Board. Its functions have been ably carried out by
the five (5) established Committees during the year.
Despite ongoing challenges in the South African economic
climate the Board has recorded annual growth in revenue
collection for the Provincial fiscus and the gambling industry
has contributed R684,7 million in gaming and betting taxes.
The underlying reason for the growth in revenues can be
attributed to:
9
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART A: GENERAL INFORMATION
• An increase in the number of gambling operations and
sites being licensed becoming operational.
• The continued roll out of Bingo, Type A and Type B sites
• New Game types, EBT’s and game changes in the industry
• an increase in Internet cafes and online illegal gambling
activities
• Increased monitoring responsibilities in respect of
licensees compliance with bid/license commitments,
license conditions and B-BBEE legislation
• Increased responsibilities in respect of the verification
and collection of gambling taxes payable to the Provincial
Government in terms of the Act.
The Boards primary strategic objective is to ensure that it
executes its mandate through implementation of gambling
policy, legislation and directives issued by the Provincial
Government. This mandate is to regulate the gambling
industry in KwaZulu-Natal, to place restrictions on gambling
where appropriate, to licence persons, machines and
operators, impose fees, taxes, levies and penalties on certain
gambling activities, to appoint and authorise inspectors and
to implement the terms of reference for the Transformation
Fund once approved. These activities have been attended
to again this year by the Board with dedication and energy
and despite challenges arising from delays in the ability to
recruit staff the entity has continued to perform in terms of
achieving operational strategic objectives.
Transformation: The Board continues to ensure that the
transformation strategy is implemented and great effort to
ensure that National Governments policy and applicable
legislation in this respect are being adhered to is being
exerted in the consideration of applications for licences
from the Board as well as in new measures to monitor the
adherence to applicable legislation and licence conditions
by licensees. The Board will continue to drive job creation
and has commenced with a Black Industrialist Programme
which will bear fruit for the Province for many years to come.
Legislative Amendments: There remains some uncertainty
about the gambling law legislative amendments at both a
National and Provincial level which continues to impact the
revenue generation from certain licences in the Province and
may also still impact the business operations of the Board in
due course once the legislation is passed. The Board receives
regular reports and eagerly anticipates the conclusion of
the local process to amend the Provincial legislation which
will lend clarity to a number of participants in the gambling
sector.
BPR: The second phase of the Business Process Re-
engineering Project is nearing completion and the benefits
of the Gambling Regulation Operations Portal which went
live on 15 May 2017 are being identified by the Board as
regulator as well as by the licensees it regulates.
I express my gratitude and deep appreciation to the Board
Members, CEO and Staff who have shown dedication and
diligence in executing their functions and duties, and in
achieving their targets to deliver on the mandate that brings
us all together.
I acknowledge the oversight and support role that the former
MEC Responsible, the new Premier for the Province, Mr Sihle
Zikalala, whom we congratulate on his appointment and
wish well in his new role. We look forward to working closely
with the new MEC Responsible, Ms Nomusa Ncube-Dube, in
our efforts to bring prosperity and growth to the people of
our Province as we usher in the 4th Industrial Revolution.
Dr S G Ngcobo
Chairperson
KwaZulu-Natal Gaming and Betting Board
31 July 2019
10Department:
edteaEconomic Development,Tourism andEnvironmental Affairs
As the Gaming and Betting industry generates revenue
through the collection of taxes from licensees which
forms part of the Provincial Fiscus and contributes to job creation, tourism, economic and social development and
supplier development, it remains both a direct and
indirect catalyst for inclusive economic growth.
5. OVERVIEW
CHIEF EXECUTIVE OFFICER Ms N P Baloyi Chief Executive Officer
KwaZulu-Natal Gaming and Betting Board
The year ended 31 March 2019 has delivered successes and
challenges with an overall growth of 4.7 percent in revenue
collection, The revenue collected increased from R653,730
million in 2017/18 to R684,697 million in 2018/19, the Board
continues to collect levies and taxes from the industry for
Provincial Government. The tax collection from the industry
were as follows:
IndustryR ‘million
2018/19 2017/18 % growth
Casinos R 430,760 R 416,705 3.37%
Route Operators R 107,550 R 95,999 12.03%
Bingo R 1,713 R 0,112 1 526.51%
Bingo with LPM R 16,993 R 15,003 13.26%
Bookmakers R 110,007 R 106,205 3.60%
Totalisator R 17,654 R 19,713 -10.44%
Total R 684,617 R 653,730 4.74%
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART A: GENERAL INFORMATION
11
KEY HIGHLIGHTS OF THE ACHIEVEMENTS FOR THE YEAR UNDER REVIEW
Transformation of the industry continues to be a key
priority for economic development. Inroads have been
made in growing ownership participation especially in
the Bookmaking sector, where the number of Bookmaker
licenses owned by African owners increased from 1% in
2012 to 24% in the period under review. The revision of
the KZN Gaming and Betting Act focused on the Board’s
Transformation of the entire gambling industry, creation of a
new category of horse racing which will allow for rural horse
racing to be brought into the fold thereby creating economic
opportunities for the rural and previously disadvantaged
individuals. As a result of the amendments to the KZN
Gaming and Betting Act, a category of Standardbred and
Harness racing must be incorporated into the regularization
of the industry. The amendments also provided clarity in
respect of the Electronic Bingo Terminals which the Board
has now rolled out, this accounted for the significant growth
in tax revenue from Bingo
The KZNGBB regulates an expanding industry. In 2018/2019
Financial Year, all categories of licensees saw some growth
in revenues due to expansions in the sector despite a slow
growing economy. Suncoast and Sibaya Casinos have added
new gaming positions, Bingo Operators installing Electronic
Bingo Terminals at their respective sites and Route operators
plan on rolling out Type B Limited Payout Machines. There
has, however, been a year on year decline in the revenues for
the horseracing sector. The new determined bookmaking
rights that were issued in 2014 are starting to show some
growth and contributed positively to the growth in the
sector.
The Board social impact study which was commissioned
in the previous year was finalized after the year end and it
revealed amongst other factors gambling prevalence in the
province.
The benefits from Phase 1 of the Gambling Online Regulatory
Portal were realised during the year, efficiencies in processing
of applications and faster turnaround times were some of
the benefits of the system. The entity continued with the
development of Phase 2 which will be rolled out in the
following year.
AUDIT REPORT MATTERS IN THE PREVIOUS YEAR AND HOW
THEY WOULD BE ADDRESSED
The Auditor General has conducted the Year-End Audit. The
Audit opinion received from the Auditor-General in the period
under review was an Unqualified Audit. The matters raised
and reported in the previous financial year were addressed
adequately according to management’s assessment, new
action plans will be implemented to address the current
year findings. Management will continue to strive towards
achieving a Clean Audit in the Year ahead.
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART A: GENERAL INFORMATION
12Department:
edteaEconomic Development,Tourism andEnvironmental Affairs
MINIMIZING THE A NEGATIVE SOCIAL IMPACTS OF GAMBLING
Illegal Gambling continues to be a threat to licensed
gambling operations and poses the highest risk to creating
problem gamblers. The Board has devised a strategy that
includes proactive initiatives to combat illegal gambling and
to ensure that capabilities are strengthened to combat the
scourge of illegal gambling, thereby protecting the interests
of the public. Communication related activities have evolved
from internal and external communications to incorporate
initiatives that protect the interests of the public as well as
stakeholder engagements. Activations include Responsible
gambling and illegal gambling awareness campaigns in
communities.
CONTRIBUTION TOWARDS GOVERNMENT PRIORITIES
The Board’s performance, operations and interventions
continue to contribute, if not directly, then indirectly to the
PGDP strategic goals. Key focus areas remain as follows:
• Ensure accurate revenue collection for the Provincial
Government by the application of the KZN Gaming and
Betting Act through the collection and verification of fees
and taxes payable under the KZN Gaming and Betting
Tax Act by licensees, thereby contributing to growth of
the Provincial Economy.
• Updated KZNGBB’s Transformation Strategy
Implementation plan provides for an increase in the
number of Black persons participating and gaining
access into this industry to encourage growth in SMMEs
to support the smaller players within the gambling
industry, to enhance existing license conditions and will
focus on ownership.
• Targets for job creation within the gambling industry are
set by the Board in license conditions and employment
related commitments made by licenses are closely
monitored.
• The Boards transformation agenda includes training
and development opportunities for Black youth, Black
Women and designated groups to equip them with skills
which will enhance opportunities for future employment
in the gaming and betting industry.
The Board continues to place emphasis on the alignment of
Socio Economic development initiatives by the gambling
industry with the PGDP and the Poverty Alleviation
Master Plan, the SED initiatives are ongoing. Each licensee
continues to contribute to the community that falls within
its jurisdiction of operation, spend on CSI is included in
licensee conditions. Programmes are primary focused on
Health, Welfare, Education, Community Upliftment, Sports
and recreation and Arts and Culture. The gaming and betting
industry expended an amount of over R12.5 million in the
period under review on CSI programmes.
ACKNOWLEDGEMENTS/APPRECIATION
I like to express my appreciation to the previous MEC
responsible for the Gaming and Betting Portfolio, the
Honourable Premier, Mr W. C. Mchunu and the Section 8
Representative for their support. I would like to welcome
the new MEC who is now accountable for the Gaming and
Betting Portfolio, the Honourable Ms. N. Dube-Ncube. We
look forward to a fruitful relationship with the MEC and her
team. I would also like to express my appreciation to the
Chairperson Dr S.G. Ngcobo and Board members for their
leadership. Finally, I would like to appreciate the support
that I have enjoyed from our dedicated Management team
and the KZNGBB staff.
Ms N P Baloyi
Chief Executive Officer
KwaZulu-Natal Gaming and Betting Board
Casino 2481
LPM (Route Operators) 97
Bingo 438
Bookmakers & Totalisators 3483
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART A: GENERAL INFORMATION
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5. STATEMENT OF RESPONSIBILITY AND CONFIRMATION OF ACCURACY FOR THE
ANNUAL REPORTTo the best of my knowledge and belief, I confirm the
following:
• All information and amounts disclosed in the annual
report is consistent with the annual financial statements
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 Generally Recognised
Accounting Principles (GRAP) standards applicable to the
public entity.
• The Accounting Authority is responsible for the preparation
of the annual financial statements and for the judgements
made in this information.
• The Accounting Authority is responsible for establishing,
and implementing a system of internal control has been
designed to provide reasonable assurance as to the
integrity and reliability of the performance information,
the human resources information and the Annual Financial
Statements.
• The external auditors are engaged to express an
independent opinion on the Annual Financial Statements.
In our opinion, the Annual Report fairly reflects the
operations, the performance information, the human
resources information and the financial affairs of the public
entity for the Financial Year ended 31 March 2019.
Yours faithfully
Chief Executive Officer Chairperson of the Board
Ms N P Baloyi Dr S G Ngcobo
31 July 2019 31 July 2019
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART A: GENERAL INFORMATION
14Department:
edteaEconomic Development,Tourism andEnvironmental Affairs
VISIONWe strive to be the centre of excellence in gaming and betting
regulation and transformation of the industry
MISSION
To protect the interest of the public by ensuring the integrity
of legalised gambling through:
• Strict enforcement of applicable legislation;
• Licencing of qualified entities and individuals; and
• Fulfilling the objectives of the Provincial Government to
deliver a significant sources of revenue, enhance tourism,
develop and transform the gaming and horseracing
industry, whilst promoting broad socio-economic and
employment opportunities.
VALUESINTEGRITY
To practice the highest ethical standards within the entity
SERVICE EXCELLENCE
To provide consistent, premium service to our stakeholders
FAIRNESS AND IMPARTIALITY
To make decisions in a fair and appropriate manner based on
relevant criteria and reliable information
PROFESSIONALISM
To demonstrate appropriate skills, good judgment, and polite
behaviour when dealing with all stakeholders
TRANSPARENCY
To embody honesty and open communication with all
stakeholders
INNOVATION
To create new ideas, processes or systems which, when
implemented, lead to positive effective change
6. STRATEGIC
OVERVIEW
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART A: GENERAL INFORMATION
15
7. LEGISLATIVE AND OTHER
MANDATESThe KwaZulu-Natal Gaming and Betting Board is a Provincial
Schedule 3C Public Entity subject to the provisions of the
PFMA. The establishment of the Board, its objects, powers
and functions are set out in Sections 5, 6 and 7 of the Kwa-
Zulu-Natal Gaming and Betting Act, 08 of 2010 and the KZN
Gaming and Betting Amendment Act, No. 04 of 2017, where
applicable. The objects of the Board are to:
ENSURE that all gambling authorised under the Act is
conducted in a manner which promotes the integrity of the
gambling industry and does not cause harm to the public
interest
ENSURE that all gaming authorised under the Act
promotes the province’s objectives for developing a gaming
industry, the priorities of which are the promotion of tourism,
employment and economic and social development in the
province
PROMOTE opportunities for persons contemplated in the
definition of “broad-based black economic empowerment”, as
contained in the Broad-Based Black Economic Empowerment
Act, 2003, to participate in the gambling industry of the
Province in the capacity of licensees or registrants under the
Act
INCREASE the ownership stakes of persons contemplated
in the definition of “broad-based black economic
empowerment”, as contained in the Broad-Based Black
Economic Empowerment Act, 2003 in the gambling industry
of the Province
DEVELOP appreciation for and knowledge of horse racing
amongst all communities, particularly those comprised of
historically disadvantaged persons
LIMIT restrictive practices, the abuse of dominant
market position and mergers in the betting industry, as
contemplated in the Competition Act, 1998 (Act No. 89 of
1998), and the Board is, for the purposes of the said Act, a
regulatory authority as defined in section 1 of that Act.
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART A: GENERAL INFORMATION
16Department:
edteaEconomic Development,Tourism andEnvironmental Affairs
The KZNGBB’s operations are governed by various constitutional, legislative, functional and policy mandates, some of which
include the following (excluding generic legislation such as Basic Conditions of Employment Act, etc):
LEGISLATIVE AND OTHER MANDATES EXPLANATIONKwaZulu-Natal Gaming and Betting Act (Act No. 8 of
2010)
Governs the regulation of the gambling industry and the
Board’s operations.KZN Gaming and Betting Amendment Act (Act No. 4 of
2017)KZN Gaming and Betting Regulations
KZN Gaming and Betting Rules
KwaZulu-Natal Gaming and Betting Tax Act (Act No. 9 of
2010)
Provides for the payment of taxes by persons licenced in
terms of the Act and matters connected therewith.Public Finance Management Act (Act No. 1 of 1999, as
amended)
Ensures a system of financial management is in place, ensures
transparency, accountability and sound management of
the revenue, expenditure, assets and liabilities, as well as
eliminating waste and corruption in the use of public assets.National Treasury Regulations
National Gambling Act (Act No. 7 of 2004, as amended) Provides for the co-ordination of concurrent national and
provincial legislative competence over matters relating
to casinos, racing, gambling and wagering, and provides
for the continued regulation of those matters; establishes
certain uniform norms and standards applicable to national
and provincial regulation and licensing of certain gambling
activities; and provides for the creation of additional norms
and standards applicable throughout the Republic.
National Gambling Regulations
Promotion of Access to Information Act (Act No. 2 of
2000)
Gives effect to the constitutional right of access to any
information held by the State that is required for the
exercise or protection of any rights, thereby promoting
transparency, accountability and effective governance of all
public bodies.Financial Intelligence Centre Act (Act No. 38 of 2001) Reveals the movement of monies derived from unlawful
activities, thereby curbing money laundering and other
criminal activities.Promotion of Administrative Justice Act (Act No. 3 of
2000)
Any act or decision of the Board that contravenes the
principles of procedurally fair administrative actions are
subject to judicial review.Schedule 4 of the Constitution of the Republic of South
Africa (No. 108 of 1996)
Sets out the areas of concurrent national and provincial
legislative competencies, which include racing, gambling
and wagering, excluding lotteries and sports pools.Section 195 of the Constitution of the Republic of South
Africa (No. 108 of 1996)
Public administration must be governed by the democratic
values and principles enshrined in the Constitution.Preferential Procurement Policy Framework Act (Act No.
5 of 2000)
Enhances the participation of previously disadvantaged
individuals and the small, medium and macro enterprises,
SMMEs in the public sector procurement system.Broad-Based Black Economic Empowerment Act (No 53
of 2003), as amended
Provides the framework for the promotion of black economic
empowerment and matters connected therewith.South African National Standards for Gaming Equipment
(1718)
All gambling machines and devices must comply with these
standards to protect the public.
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART A: GENERAL INFORMATION
17
GOVERNMENT POLICY FRAMEWORKS RELEVANCE TO KZNGBBNational Development Plan Transversal
Medium Term Strategic Framework Transversal, but key are: Outcome 12 – An efficient, effective
and development orientated public service; Outcome 14 –
Transforming society and unity the country.
Provincial Growth and Development Strategic
Framework
Sets a long term vision and direction for development in the
Province; serves as the overarching strategic framework for
development in the Province and is utilised in strategic and
annual planning.
Provincial Growth and Development Plan Translates the strategy into a detailed implementation plan
with goals and objectives. The KZNGBB aligns with the plan
to ensure contribution to the Province’s vision.
Medium Term Expenditure Framework The MTEF is annual, rolling three year-expenditure planning.
It sets out the medium-term expenditure priorities and hard
budget constraints against which plans can be developed
and refined.
National Treasury’s Framework for Managing
Programme Performance Information
Clarifies definitions and standards for performance
information; improves integrated structures, systems and
processes required to manage performance information;
defines roles and responsibilities; and promotes accountability
and transparency by providing Parliament, provincial
legislatures, and public with timely, accessible and accurate
performance information.
National Treasury’s Framework for Strategic Plans
and Annual Performance Plans
Sets out a framework to align strategic and annual
performance planning with emphasis on the outcomes
oriented monitoring and evaluation approach led by the
Presidency. Institutions must focus on the achievement of
outcomes oriented planning and report the results in a simple
and clear manner
SCM and PPPFA policy Provides guidelines on Supply Chain Management
KZNGBB Budget Policy and Provincial Guidelines Governs budget processes in line with National and Provincial
requirements.
National Gambling Policy, 2017 Outlines the policy position that intends to review the
gambling landscape in South Africa
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART A: GENERAL INFORMATION
18Department:
edteaEconomic Development,Tourism andEnvironmental Affairs
8. KZNGBB
ORGANISATIONAL STRUCTUREMEC RESPONSIBLE:
Department of Economic Development, Tourism and
Environmental Affairs. Ms N. Dube-Ncube
ACCOUNTING AUTHORITYKZNGBB BOARD
OFFICE OF THE CEOChief Executive Officer - Ms N P Baloyi
Communications Manager - Mrs C Naidoo
LICENSING AND REGISTRATION
Senior Manager: Mr B Radebe
INFORMATION AND COMMUNICATION
TECHNOLOGYIT Manager:Mr S Charles
HUMAN RESOURCESHR Manager:Mr S Gushu
LEGAL SERVICESChief Legal Advisor
Mr M Ngwenya
GOVERNANCE, RISK AND COMPLIANCE
Head: GRCMrs J Stretch
GAMING MONITORING AND CONTROL
Senior Manager: Mr R Goodayle
BETTING MONITORING AND CONTROL
Senior Manager:Mr R Bestel
FINANCEChief Financial Officer
Mr V Ramdas
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART A: GENERAL INFORMATION
19
9. MEMBERS OF THE
BOARD 2018/2019
DR S.G. NGCOBOChairperson of the Board
MS M.P. MYENIDeputy Chairperson
MR S.S ZONDI Board Member
MR S.N. CHETTY Board Member
MS Z. TENZA Board Member
MS N. THAVARMEC EDTEA - Section 8
Representative
MR S. MKHIZEMEC EDTEA - Section 8
Representative
ADV K.P. THANGO Board Member
PROF B.S. STOBIE Board Member
MR L. GABELABoard Member
DR T.I. NZIMAKWEBoard Member
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART A: GENERAL INFORMATION
20Department:
edteaEconomic Development,Tourism andEnvironmental Affairs
KZNGBB VALUE ADDED STATEMENT R’000Value Added 2017/18 2018/19
Income Generated R90 626 R73 473
Revenue(Taxes) R653 730 R684 696
Total R744 356 R758 169
Value Allocated
To employees R44 951 R48 865
Other expenses R22 655 R31 899
Total R67 606 R80 764
Total Value Created R676 750 R677 405
TOTAL VALUE CREATED BY KZNGBB
FINANCIAL CAPITAL
We receive a grant fund of R42, 310 mill (2018/2019 MTEF) from Provincial Government to Fund Operations.
ECONOMIC CAPITAL
We collect Revenue (taxes) for the Province (contributes about 20% of the total “own revenue” for Government)
SOCIAL AND RELATIONSHIP CAPITAL
We depend on licensees to create jobs, Corporate Social Investment, SMME and Enterprise Development, contribute to
tourism spatial and infrastructural development and to develop the rural economy.
INTELLECTUAL CAPITAL
We are 1 of 9 Provincial Gambling Regulators and carry the Province’s constitutional mandate in respect of regulating the
industry.
11. VALUE CREATED BY THE KZNGBB
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART A: GENERAL INFORMATION
21
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART B: PERFORMANCE INFORMATION
22Department:
edteaEconomic Development,Tourism andEnvironmental Affairs
PART B
P E R F O R M A N C EI N F O R M AT I O N
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART B: PERFORMANCE INFORMATION
23
1. AUDITOR’S REPORT: PREDETERMINED OBJECTIVESThe Auditor-General South Africa (AGSA) currently performs the necessary audit procedures on the performance information
to provide reasonable assurance in the form of an audit conclusion. The audit conclusion on the performance against
predetermined objectives is included in the report to management, with material findings being reported under the
Predetermined Objectives heading in the Report on other legal and regulatory requirements section of the Auditor’s Report.
Refer page 88 of the Auditors Report, published as Part E: Financial Information.
2. SITUATIONAL ANALYSISKZNGBB Transfer from Office of the Premier to Department of Economic Development, Tourism and Environmental Affairs
Effective 1 April 2019, the KZNGBB, through a proclamation by the Honourable Premier, was transferred from the Office of
the Premier to the Department of Economic Development, Tourism and Environmental Affairs (EDTEA). Section 137 of the
Constitution authorizes the Premier to transfer, by proclamation, the administration of any function to a member of the
Executive Council.
As EDTEA is mandated to oversee the socio-economic transformation in the province it leads policy and strategic initiatives
directed at promoting development and growth in various sectors of the economy. In order to achieve its objectives, EDTEA
co-operates with various stakeholders and social partners that include the private sector and civil society. Like EDTEA, the
KZNGBB’s operations are guided by National and Provincial legislative, policy and strategic frameworks.
Gambling Market Share Statistics by Province
Predominantly, the same corporate players are operating across the nine Provinces. Below is the national gambling industry
by market share as at 2018
Gauteng R173 193 384 061 44%
Western Cape R61 315 640 408 16%
KwaZulu-Natal R70 291 705 629 18%
Mpumalanga R16 726 305 590 4%
Limpopo R12 057 973 119 3%
North West R10 707 300 591 3%
Northern Cape R4 263 821 301 1%
Eastern Cape R31 310 865 382 8%
Free State R9 932 132 028 3%
Source: NGB Financial Year Ending 31 March 2018
GAMBLING MARKET SHARE STATISTICS BY PROVINCE
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART B: PERFORMANCE INFORMATION
24Department:
edteaEconomic Development,Tourism andEnvironmental Affairs
In 2018, KZN positioned itself as the second largest
contributor to the South African Gambling market against
eight other provinces at 18.0% (R70 291 705 629). There has
been an increase in the complexity of gaming systems and
technological advancements within the gaming industry.
General legislative challenges exist in an environment
of technology, innovation and development and with
the recent introduction of legislation regarding remote
gambling, the Board will engage and input to the proposed
gambling policy and monitor any impact on operation.
In South Africa, Internet gaming has not yet been regulated
and is illegal. There have been challenges that relate to online
gaming (Internet, social media) with no formal integrated
response. The draft National Norms and Standards dated
23rd May 2014, outlined norms and standards in respect of
online gaming which set out that online gaming requires
a co-ordinated policy approach. The National Policy
Framework has recommended that online gambling remain
illegal at this point and that measures be introduced to close
down existing operations and prosecute perpetrators. The
intention is for all enforcement agencies to jointly ensure the
eradication of illegal online gambling. Illegal gambling is
growing (increase in online gambling, unlicensed gambling
machines and gambling computer terminals and internet
cafes) and its impact on society.
National Industry Developments (excluding legislative
amendments)
Other industry developments and matters for consideration
in the strategic plan include the following:
· Upcoming National General Elections in 2019;
· The growing monopolisation (dominance of a very few
“big players”) in the betting industry.
· Technical Standards used to test gaming equipment
require review as they are outdated.
· Continued decline in viability of the horseracing industry.
· The challenge of minors gambling which is exacerbated by
online and social media opportunities.
· Crypto currency and Bitcoin and impact on the gambling
industry;
· Rollout of change of CEMS from Zonke to Route
Monitoring;
· EBT Roll out on a National scale;
· The reality of money laundering and the growing
challenge of cyber-crime within the sector (involvement
of SAPS required).
· Role of regulators in respect of competitive issues.
· Self-regulation model for horseracing.
· Change of Central Electronic Monitoring System for
Limited Payout Machines sector.
· Fourth Industrial Revolution
2.1 SERVICE DELIVERY ENVIRONMENT During the period under review, the KZNGBB fulfilled
its mandate through its predetermined objectives and
performance achievements in respect of its planned targets
as contained in the 2018/19 Annual Performance Plan ,
KZNGBB PERFORMANCE ACHIEVEMENT AGAINST 2018/19 APP TARGETS
Target not Achieved 10%Target Achieved 90%
The partial attainment of targets were in the main, as a result
of targets being met outside of the prescribed timeframes.
The entity has processes to ensure ongoing monitoring and
evaluation of performance of programmes/sub-programmes,
as well as performance against budget throughout the financial
year, and reported quarterly on financial and non-financial
performance and Regulation 3 of the KwaZulu-Natal Gaming
and Betting Regulations to its oversight bodies as required.
Performance information, enhancements to planning,
setting of performance targets, and development of
technical indicators and approvals of any amendment
were undertaken to address audit findings and to improve
performance reporting and compliance with performance
management frameworks going forward.
The entity has ensured that its budgets and resourcing
supported its service delivery targets and implementation of
its strategic objectives. The KZNGBB’s budget planning was in
accordance with the Medium Term Expenditure Framework
(MTEF). Spending pressures were experienced as efforts to avoid
wasteful and inefficient spending, in adherence to Provincial
Treasury Circular No PT10 of 2016-17, were maintained. The
current economic environment and Cabinet’s decision to
implement austerity measures were observed, and fiscal
discipline and sound financial management received increased
focus. The entity operated within these parameters, however
limited funds negatively impacts on the extent to which the
industry is regulated i.e. the number of planned site inspections
and audits were reduced from previous year.
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART B: PERFORMANCE INFORMATION
25
The successful achievement of strategic objectives ensured contributions to Government priorities (in terms of the Provincial Growth
and Development Plan and the Medium Term Strategic Framework) and the ongoing development of a gambling industry which
promotes tourism, employment and economic transformation and social development in the Province. Attention remained on
ensuring accurate revenue collection for the Province, effective industry regulation and enforcement of compliance, promotion of
radical economic transformation and socio-economic development, protection of the public, elimination of fraud and corruption; and
enhanced service delivery. In line with the PGDP, this was achieved through delivery of the following:
• Capacitated entity enabled regulatory and compliance activities, licensing and registration of suitable new entrants and existing
licensees/registrants, and regulatory activities in line with gambling legislation thereby limiting potential negative impact on
society and promoting the integrity of the gambling industry.
• Verification of taxes payable by licensees ensured accuracy tax collection for Province.
• Stipulation of employment related licence conditions within communities promoted job creation / employment opportunities
within the gambling industry.
• Approved transformation strategy to promote access and ownership participation by previously marginalised persons within the
gambling industry.
• Licence conditions revised to incorporate Black ownership, management control, job creation/employment opportunities; skills
development, enterprise and supplier development (SMME development), and socio-economic development in compliance with
B-BBEE Codes of Good Practice.
• Monitoring of licensees’ progress against compliance targets in respect of employment equity, skills development and broad-based
black economic empowerment (B-BBEE) through regular audits and inspections.
• Facilitation of public participation and consultation through conducting public hearings and disputes resolution.
• Enforcement of compliance within the industry through disciplinary hearings and issuance of warning letters.
• Activities undertaken to eradicate illegal gambling and to create awareness of illegal gambling.
• Reports through the Whistleblower hotline are investigated.
• Awareness campaigns and initiatives in respect of responsible gambling.
The tables below reflect the industry statistics as at 31 March 2019 which directly impact on the service delivery functions
carried out by the operational units of the entity.
Table 1: Industry Statistics: Licensees – as at 31st March 2019
Sector Sector
Casinos 5 Totalisators 2
Bingo Operators 22 Racecourse Operators 2
Independent Site Operator 0 Totalisator Outlets 109
Route Operators 4 National Manufacturer Licence 1
Site Operators 563 Provincial Certificate of Registration as a Manufacturer 1
Bookmakers Rights (holding 109) 50
Table 2: Gaming Machines and Table Statistics – as at 31st March 2019
Casino Name No. of Licensed Gaming
Machines
No. of Operational
Machines
No. of Licensed Gaming Tables
No. of Operational
Tables
No. of Table Games
Sibaya 1400 1200 61 49 49
Suncoast 2350 1622 80 57 57
Umfolozi 300 288 14 14 14
Blackrock 300 300 10 10 10
Golden Horse 450 450 23 22 22
TOTAL 4800 3860 188 152 152
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART B: PERFORMANCE INFORMATION
26Department:
edteaEconomic Development,Tourism andEnvironmental Affairs
The entity has continued to support a growing gambling
industry and has for the most part met the demands of
increased service delivery and regulatory requirements. This
industry growth is attributable to:
• An increase in the number of gambling operations and
sites being licensed and becoming operational.
• The continued roll out of Bingo, Type A and Type B sites.
• New game types, EBT’s and game changes in the industry.
• An increase in internet cafes and online illegal gambling
activities.
• Increased monitoring responsibilities in respect of
licensees’ compliance with bid/licence commitments,
licence conditions and B-BBEE legislation.
• Increased responsibilities in respect of the verification
and collection of gambling taxes payable to Provincial
Government in terms of the Act.
In ensuring regulatory compliance and enforcement, such
growth in the gambling industry has resulted in significant
growth in Board operational activities in respect of licensing,
registration monitoring and control activities. Such growth
in operations was evidenced by the following:
• An increase in the number of licensing and registration
applications received in the gaming sector.
• An increase in the number of applications processed and
investigated by the Licensing and Registration units.
• An increase in the number of corporate licences and
certificates; and employee registration certificates issued
within the Betting sector.
• An increase in the number of operational changes
request applications and gaming hardware and software
applications processed for the Gaming sector.
• An increase in the number of FICA inspections conducted
on gaming sites
• An increase in the number of monitoring audits/
inspections conducted
• An increase in the number of illegal gambling inspections/
investigations and awareness/training interventions
conducted to combat illegal gambling
Notwithstanding the growth in operations and regulatory
related activities, the resources within the units have
remained the same. Where there are vacancies resulting
from resignation or promotion, the lengthy delays in the
filling of vacant funded positions (due to the requirement
to obtain approval from the responsible MEC and Treasury),
negatively impact on service delivery, and the achievement
of performance targets, specifically within the operational
units.
Challenges were experienced in meeting planned targets
in respect of the processing of manual licensing and
registration applications within targeted timeframes. The
implementation of the automated application system
(Gambling Regulatory Online Portal “GROP”, also known
as Project Jika) during 2017/18 has enhanced operational
efficiencies and service delivery turn-around times within
certain units, and it is anticipated that a further improvement
in turnaround times will continue into the next financial year.
The continued implementation of the Board’s authorised
delegations to the Office of the CEO, including procurement
and financial delegations have resulted in improved service
delivery to stakeholders through reduced turnaround times
for various applications and operational approvals.
Significant focus has been given to the transformation of the
horseracing and betting sector during the period to increase
the number of Black persons accessing and participating
in the industry. Positive strides have been made which is
evidenced by an increase in “ownership participation” by
Black persons in this sector. Of the 26 new bookmaking
rights approved in 2016 (compulsory 60% ownership to be
held by Black People), 17 of such rights are operational. White
ownership has reduced from 73% to 32% since 2011/12
while Black African ownership has grown from 1% to 24%;
and Black persons ownership in businesses with a minimum
of 26% shareholding is a new category (28%). The graphs
below depict the progress made specifically in respect of
ownership since 2012, to April 2019.
TRANSFORMATION STATISTICS OF BOOKMAKING BUSINESSES AS AT 2011
Whites 73%
Indian 20%
Black 5%
Coloured 2%
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART B: PERFORMANCE INFORMATION
27
TRANSFORMATION OF BOOKMAKING BUSINESSES - 31 MARCH 2019
Indian Sole Props 14%
Black Owned Corporates 24%
Coloured Sole Props 2%
Non -Black Empowered Corporates 14%
Black Empowered Corporates 28%
White Females Sole Props 10%
White Males Sole Props 8%
Consultation with the industry in terms of Section 30A of the
Act and a review of licence conditions took place to ensure
that the Boards mandate to transform the industry and
increase participation by Black people were incorporated.
Existing conditions were enhanced where necessary with
the Board requiring a B-BBEE Compliant licensee for all new
applications and relevant Financial Acquisitions. Monitoring
of compliance by licensees with their B-BBEE commitments
were enhanced to ensure the Board meets its transformation
and to ensure a compliant industry.
The Board introduced the Black Industrialist program during
the year. This was in support of the objective to increase
participation by those previously excluded in the industry.
The implementation of a Black Gambling Industrialist
Programme during this planning cycle was a catalyst in the
realisation of the following:
• Advancing Black ownership and participation at executive
management levels.
• Securing financial sources to allow Black persons to access
or buy into the gambling industry.
• Tourism infrastructure development.
• Promotion of small business within local communities and
creating an enabling environment.
• Economic development of local communities.
• Educational assistance from existing licensees.
• Employment creation.
The Board remains committed to expedite economic
empowerment within the industry, and as such monitoring
compliance and implementation of licensees’ transformation
related commitments will receive additional focus in the
forthcoming year. This includes the transfer of technical
know-how and skills to run a gambling operation and
services that support the gambling industry, (including
supplier, manufacturers and maintenance providers that are
registered with the Board in accordance with the Act). Non-
compliant licensees are summoned to hearings held by the
Board’s Disciplinary processes. The Licensing Committee
held stakeholder engagements with larger licensees that
were not meeting the compliance targets and objectives of
the Board. The Board met with all stakeholders to gain an
understanding of the industries and their needs as well as
outlined its key priorities which included transformation of
the industry.
2.2 ORGANISATIONAL ENVIRONMENT The entity’s operations remain very labour intensive and
from an operational point of view, the increase in number
of operational licensees required additional licensing,
registration, compliance and monitoring responsibilities,
which results in increased operational costs. The number of
staff within the respect operational units have not increased,
despite the growth in licensing, monitoring and compliance
related activities.
The current organisational structure has 3 vacant funded
posts, however in keeping in line with the austerity measures
implemented by Provincial Treasury, these positions may only
be filled once the necessary approvals have been obtained.
The lengthy approval process for the filling of critical vacant
posts impacts negatively on the entity as it places strain on
existing resources as a result of additional workloads, and
where units are under resourced, it impacts negatively on the
achievement of quarterly and annual performance targets.
The implementation of GROP has been a key and critical
project which has brought about operational efficiencies in
respect of the processing of various types of applications.
The implementation of Phase 2 commenced during the
year, including the automation of processes such as taxes,
compliance processes among others. Delegations approved
and implemented in terms of Section 22 of the KZN Gaming
and Betting Act continued to show improvements in turn
around and service delivery in the processing of applications,
particularly operational change requests. Other planned
GROP system developments will be undertaken during 2019
which will further automate processes, thereby improving
service delivery to our stakeholders.
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART B: PERFORMANCE INFORMATION
28Department:
edteaEconomic Development,Tourism andEnvironmental Affairs
The Board has maintained National Government’s focus
in respect of austerity measures and in accordance with
Treasury Circular No PT (10) of 2016/17, has continued to
implement the following measures in its planning and daily
operations:
• Vacant posts remained frozen and critical posts that
became vacant through natural attrition were motivated
in line with Treasury’s directive.
• Travel related costs and subsistence and travel (S&T)
were claimed in line with Treasury circular No PT (10).
• Advertising costs for notices were recovered from
applicants and no marketing adverts were placed by the
entity.
• National transversal contract for copiers contributed to
cost reductions.
• Utilisation of an on-line travel system reduces travel and
accommodation costs resulted in savings on S&T claims,
as well as the rationalisation of travel.
• External legal opinions were only sought when
necessary, reducing the costs for outsourced legal
services.
2.3 KEY POLICY DEVELOPMENTS AND
LEGISLATIVE CHANGES
The following policies and legislative changes have a
direct impact on the Board’s regulatory responsibilities and
strategic, annual and operational planning.
KWAZULU-NATAL GAMING AND BETTING AMENDMENT ACT, 2017
In 2017, the KwaZulu-Natal Provincial Legislature amended
the KZN Gaming and Betting Act No. 08 of 2010. The
main motivation for the amendments was to rectify and
strengthen areas of the Act around which litigation revolved
and regarding which threats of litigation existed. Such
amendments included the following:
• The Provincial legislature amplified the Board’s mandate
beyond the specific focus of the horseracing and betting
sector to a broader impact which includes the gaming
industry. This also resulted in amendments in respect of
the horseracing and betting Transformation Fund. The
definitions were also aligned with those contained in
the Broad-Based Black Economic Empowerment Act in
order to align the transformation goals of the Act with
National legislation.
• The provision of clarity around the Province’s policy
allowing for electronic bingo terminals as a game
type within the Province. This was aimed at settling
continuous litigation and to facilitate transformation
and opportunities for Black persons.
• Recognition of other forms of horseracing
(thoroughbred horseracing, standard bred horseracing
and harness racing) which aim to bring into the fold the
rural horseracing industry. Traditional horseracing is a
popular sport in rural communities of KZN, with minimal
support and is not regulated.
• Recognition of technological advancements in gaming
equipment. A number of definitions were inserted in
respect of systems of compulsory standards (SABS),
applicable to gaming equipment to align with National
legislation dealing with compulsory standards (The
National Regulator for Compulsory Specifications Act
No 5 of 2008).
• Issues relating to acquisitions of financial interests in the
gambling industry.
These amendments included additional responsibilities for
the Board and has a direct impact on the regulation of the
industry and operational capacity. As the Board’s mandate
in respect of transformation is no longer limited to the
horseracing and betting industry, the Board’s Transformation
Strategy and Implementation Plan must be revised to
include the Casino, LPM and Bingo sectors. In addition, the
KZN Gaming and Betting Rules are to be revised to ensure
alignment with the Amendment Act as these rules regulate
the operations of the gambling industry. Other forms of
horseracing will need to be incorporated into the Board’s
regulatory activities.
KZN GAMING AND BETTING REGULATIONS 2012
Future amendments to Regulations are expected in order to
align with the Amendment Act.
DRAFT NATIONAL GAMBLING AMENDMENT BILL
The potential impact of the National Gambling Amendment
Bill impacting the Board include the following:
• Clarity around the definition of Bingo, specifically to clarify
the recognition of EBTs as gambling equipment.
• Restrictions on gambling premises and locations of
automated teller machines.
• Responsibilities of the National Gambling Regulator (NGR).
• Restriction in the structure and allocation of bingo licences
and machines.
• Establishment of a self-regulatory body for the Horseracing
Industry.
• Restrictions on betting on local and foreign lottery results,
including sports pools.
• Promotion of broad-based Black economic empowerment
in the gambling industry and mandatory provisions around
the imposition of B-BBEE targets in licence conditions to
advance the objectives of the B-BBEE Act.
• Enforcement provisions in respect of non-compliance
relating to transformation.
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART B: PERFORMANCE INFORMATION
29
• Enhancements to advertising restrictions.
• Development of register of unlawful gambling operators to improve the National Self-Exclusion Programme.
• National re-certification of gaming equipment (Draft National Regulations).
• Determination of rates for products belonging to Ttotalisator operators.
• Development of inspectorate to combat illegal gambling activities together with other enforcement agencies.
JOB CREATION
With unemployment being high (unemployment rate in South Africa increased to 27.2 percent in the second quarter of 2018
from 26.7 percent in the previous period according to Trading Economics) ongoing focus must be given to contributions to
the development of sustainable jobs within the gambling industry to alleviate poverty and improve quality of life within the
Province, thereby stimulating economic growth.
Gaming and Betting licensees contribute to job creation provide and access to employment opportunities in the communities
in which gambling operates, thereby encouraging new entrants into the industry within the Provincial economy. Additional
jobs continue to be created through the growth in existing licensed operations. Targets for job creation within the gambling
industry are set by the Board in licence conditions and employment related commitments made by licensees are closely
monitored. The Board stipulates employment conditions for communities, specifying number of jobs for gambling operations
as part of the licensing process.
As at December 2018, a total of 6 578 gambling industry employees are registered with the Board. The Bookmakers and
Totalisators registered employees have increased substantially since 2017/18 (increased by 78%) due to the registration of
Tote Agents. The table below reflects the comparative registered gambling employee statistics within the Province (registered
by the Board in terms of the Act) which illustrates a total growth in employment of registered employees within the gambling
industry within KZN of 11.10% since March 2018.
REPORTED SMME SPEND BY GAMING LICENSEES - 2013/14 TO 2018/2019
REPORTED SMME SPEND BY BETTING LICENSEES - 2016/17 TO 2018/2019
R 1200000 000,00
R 350000 000,00R 300000 000,00
R 250000 000,00
R 200000 000,00
R 150000 000,00
R100000 000,00
R 50000 000,00
R 0,00
R 1000000 000,00
R 800000 000,00
R 600000 000,00
R 400000 000,00
R 200000 000,00
R 0,00
Local Economy
SMME
PDI Business
Local Economy
SMME
PDI Business
2013/14
R 962 714 103,73
R 127 810 072,38
R 593 390 950,40
2016/17
R 195 676 276,40
R 75 617 228,81
R 85 722 972,34
2017/18
R 297 746 502,12
R 281 732 347,71
R 131 535 222,82
2018/19
R 513 892 765,88
R 515 100 542,17
R 235 899 749,60
2014/15
R 954 038 093,69
R 114 673 610,60
R 568 544 589,19
2015/16
R 805 487 931,61
R 256 556 656,67
R 859 682 129,55
2016/17
R 820 003 969,26
R 222 966 191,59
R 846 796 059,77
2017/18
R 338 510 728,00
R 185 649 549,37
R 648 319 777,17
2018/19
R 124 167 202,82
R 138 517 051,00
R 223 626 792,99
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART B: PERFORMANCE INFORMATION
30Department:
edteaEconomic Development,Tourism andEnvironmental Affairs
REPORTED SMME SPEND BY GAMING LICENSEES - 2014/145 TO 2018/2019
010002000300040005000600070008000
With the continued roll out of approved gaming and betting licences, it is anticipated that employment opportunities will
continue to increase.
SERVICE DELIVERY DEMANDS
The Board continues to develop the entity’s capacity through the implementation of the Workplace Skills Plan, using
the outcomes of the skills audit undertaken during 2016/17. Improved capacity will result in the improvement in entity
performance. The entity’s operations are very labour intensive and from an operational point of view, increased licensees
mean additional inspections, audits and monitoring, resulting in increased operational costs over the MTEF. The entity
will continue to support a growing gambling industry and meet the demands of increased service delivery and regulatory
activities in respect of:
· Licensing of gambling operations and sites and monitoring once operational.
· Rolling out of new gambling categories such as Bingo and Type B sites.
· Approval of new game types and game changes, especially in the Casino industry.
· Registration of gaming and betting employees and tote agents.
· Monitoring of licensees’ compliance with bid/licence commitments, licence conditions and B-BBEE legislation.
· Stringent enforcement of licence conditions and licence commitments.
· Proactive initiatives to combat illegal gambling in internet cafes and online.
· Verification and collection of gambling taxes payable to Provincial Government in terms of the Act.
· Implementation and administration of the Transformation Fund.
· Implementation of the Black Gambling Industrialist Programme.
MINIMISING THE NEGATIVE SOCIAL IMPACTS OF GAMBLING
There have been challenges that relate to online gaming (Internet, social media) with no formal integrated response. The draft National Norms and Standards dated 23rd May 2014, outlined norms and standards in respect of online gaming which set out that online gaming requires a co-ordinated policy approach. The National Policy Framework has recommended that online gambling remain illegal at this point and that measures be introduced to close down existing operations and prosecute perpetrators. The intention is for all enforcement agencies to jointly ensure the eradication of illegal online gambling. Illegal gambling is growing (increase in online gambling, unlicensed gambling machines and gambling computer terminals and internet cafes) and is impacting on society. The Board has included as part of its Betting Monitoring and Control Programme, a focus towards the eradication of illegal gambling activities in the Province. The strategy will include proactive initiatives to combat illegal gambling in internet cafes and online and to ensure that capabilities are strengthened to combat the scourge of illegal gambling, thereby protecting the interests of the public. Reports of illegal gambling through the Whistle-blower hotline will continue to be investigated. In addition, all reported cases of fraud and corruption within the industry will be investigated. There has been an increase in the complexity of gaming systems and technological advancements within the
gaming industry. General legislative challenges exist in an environment of technology, innovation and development and with
the recent introduction of legislation regarding remote gambling, the Board will engage and input to the proposed gambling
policy and monitor any impact on operations.
Year Casino LPM (Route Operators) BingoBookmakers &
Totalisators Total2014/15 2167 97 311 1170 37452015/16 2643 104 323 1675 47452016/17 2638 103 194 1959 48942017/18 2497 98 294 3032 59212018/19 2481 97 438 3483 6499
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Protection of the public - Communication related activities have evolved from internal and external communications, to
incorporate initiatives that protect the interests of the public as well as stakeholder engagements. Activities include responsible
gambling and illegal gambling awareness campaigns in communities together with undertaking strategic research projects
which focus on different sectors within the gaming and betting industry. In this vein the KZNGBB commissioned a Socio
Economic Impact Study that was undertaken by the South African Responsible Gambling Foundation. The study reviewed
amongst others, the socio economic impact of gambling on communities within the Province. The study was completed and
published within the 2018/19 Financial Year. Recently, this unit’s function has been broadened to include activities around
corporate social responsibility where building stakeholder relationships with other Government Departments in respect
of socio-economic development within the Province is required. Specific focus during 2019/20 must be given to creating
awareness around the Board’s transformation imperatives and developing appreciation for and knowledge of the industry
amongst communities, particularly those comprised of disadvantaged persons
FINANCIAL INTELLIGENCE CENTRE ACT, AS AMENDED
Sections relating to compliance by licensees with this Act, imposes increased responsibilities for the entity as an “accountable
institution.
3. STRATEGIC OUTCOME ORIENTED GOALS
Enhance the integrity of the Gaming and Betting Industry
GOAL 1: To create a fair regulatory environment that will enable an appropriately regulated and compliant
Gaming and Betting Industry thereby maintaining the integrity of the industry.
Increase inclusive and sustainable economic growth and contribution to job creation and tourism
GOAL 2: To propel participation, access, and Black ownership stakes in line with Provincial demographics; and
the promotion of industry knowledge and skills transfer; SMME and entrepreneurial development of persons
contemplated in the Broad-Based Black Economic Empowerment Act within the Gaming and Betting industry
within the Province.
Grow revenue for Provincial Government and the entity Grow revenue for Provincial Government and the entity
GOAL 3: To grow revenue for the Provincial Government through strategic interventions.
Protect the interests of the Public
GOAL 4: To protect the interests of the Public through facilitation of illegal gambling initiatives in conjunction
with SAPS.
Optimize institutional service excellencec
GOAL 5: To optimise service excellence through accountable governance, effective administrative, human
resources, and financial management services; and efficient delivery of services to industry stakeholders.
In developing the strategic goals and objectives of the Board, cognisance was taken of the Board’s mandate as contained in
the Act as well as strategic priorities of Government (as contained in the National Development Plan (NDP), the Provincial
Growth and Development Strategy, the Provincial Growth and Development Plan (PGDP), the Poverty Eradication Master
Plan; and the Medium Term Strategic Framework). The table below contains the Board’s strategic outcome oriented goals as
per its Strategic Plan, the links to Government’s goals and the progress made towards the achievement thereof. The entity
has successfully contributed, either directly or indirectly, to provincial priorities contained in the NDP, PGDP, PEMP and MTSF
through various interventions undertaken by its Programmes and Sub-Programmes as detailed in the tables below.
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART B: PERFORMANCE INFORMATION
32Department:
edteaEconomic Development,Tourism andEnvironmental Affairs
KZNGBB Strategic Outcome Oriented Goal
KZNGBB Strategic Objective
MTSF Outcome PGDP Goal EDTA Strategic Outcome Oriented Goal
1 ENHANCE THE INTEGRITY OF THE GAMING AND BETTING INDUSTRY
1 To ensure a transformed and regulated gambling industry through the implementation of inclusive growth, economic development and empowerment strategies, effective regulation and co- operative governance
4
7
Decent Employment through inclusive economic growth
Spatial Equity
1
6
Inclusive Economic growth
Governance and Policy
2
3
Inclusive and sustainable economic growth that supports decent employment
Preferred tourism destination in the country
2 INCREASE INCLUSIVE AND SUSTAINABLE ECONOMIC GROWTH AND CONNTRIBUTION TO JOB CREATION AND TOURISM
5. To provide efficient legal advisory services to the entity, to manage entity’s legal risks and litigation, to develop licence conditions that comply with B-BBEE Laws and to institute enforcement proceedings
7 To promote the Board’s strategic imperatives relating to transformation, social and economic development and protection of the public through effective communication, stakeholder engagement services and research
10 To license and register applicants in the Gaming and Betting industry who are deemed suitable and compliant with transformation requirements
11 To ensure a properly regulated, transformed and compliant gambling industry that generates revenue towards the socio-economic development of the Province and provides economic opportunities for previously disadvantaged individuals
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KZNGBB Strategic Outcome Oriented Goal
KZNGBB Strategic Objective
MTSF Outcome PGDP Goal EDTA Strategic Outcome Oriented Goal
3. GROW REVENUE FOR PROVINCIAL GOVERNMENT AND THE ENTITY
3 To facilitate revenue growth for the Provincial Government and KZNGBB
4 Decent Employment through inclusive economic growth
Spatial Equity
1 Inclusive Economic growth
Inclusive and sustainable economic growth that supports decent employment
4 PROTECT THE INTERESTS OF THE PUBLIC
12 To combat illegal gambling in the Province
12 An efficient, effective and development oriented public service
6 Governance and Policy
5 Achieve institutional excellence responsive to the needs of the Province
5 OPTIMIZE INSTITUTIONAL SERVICE EXCELLENCE
6 To optimize service excellence through enhanced Human Resource Management services which supports an efficient, ethical, effective and development-oriented public service
12 An efficient, effective and development oriented public service
6 Governance and Policy
Achieve institutional excellence responsive to the needs of the Province
2 To optimise service excellence through strategic leadership, enhanced strategic planning and performance management and executive support
4 To strengthen governance, accountability, risk and compliance management services to ensure a sound internal control environment
6 To optimize service excellence through enhanced Human Resource Management services which supports an efficient, ethical, effective and development-oriented public service
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART B: PERFORMANCE INFORMATION
34Department:
edteaEconomic Development,Tourism andEnvironmental Affairs
KZNGBB Strategic Outcome Oriented Goal
KZNGBB Strategic Objective
MTSF Outcome PGDP Goal EDTA Strategic Outcome Oriented Goal
8 To provide effective, efficient and transparent financial management services to the entity in compliance with the PFMA and other applicable financial regulations and policies
5
9 To optimize service excellence through compliance with DPSA ICT Governance Framework and improved ICT management services that support the entity in its service delivery
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART B: PERFORMANCE INFORMATION
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4. INTRODUCTIONBelow are the consolidated annual performance results for each Programme/Sub-Programme for the period under review. The
details synopsis of achievements, strategies to overcome areas of underperformance are included in Part B of the Annual Report
as required by Treasury’s Framework for Annual Reports for public entities.
5. PROGRAMME 1: ADMINISTRATIONThe purpose of the Administration Programme is to provide strategic and administrative management and support to the
entity. The Administration Programme is comprised of the following five sub-programmes, namely:
· Sub-Programme 1.1 Office of the CEO
· Sub-Programme 1.2 Governance Risk and Compliance
· Sub-Programme 1.3 Legal Services
· Sub-Programme 1.4 Human Resources
· Sub-Programme 1.5 Communications
5.1 SUB-PROGRAMME 1.1- OFFICE OF THE CEO
The purpose of the sub-programme is to provide leadership, oversight of operations, strategic and administrative support to
Board and management and to ensure management of programme performance information.
STRATEGIC OBJECTIVES ANNUAL TARGETS FOR 2018/19:
SUB-PROGRAMME 1.1: OFFICE OF THE CEO
No. Strategic Objective
Actual Achievement2017/2018
Planned Target2017/2018
Actual Achievement2018/19
Deviation from Planned Target to Actual Achievement for 2018/19
Comment on Deviations
SO1.1 Provide strategic leadership and management to ensure responsive, accountable, and efficient administration and operations
KZNGBB draft and final strategic and annual plans; 4 quarterly performance reports; and annual performance report were produced and submitted
Unqualified audit opinion in respect of performance information
KZNGBB achieved an Unqualified audit opinion findings in respect of performance information
Not applicable Not applicable
SO1.2 Promote economic value, social development and transformation within the gambling industry
Approved Transformation Strategy in place with 4 quarterly transformation progress reports
1 revised Transformation implementation plan by 30 September 2019.
1 revised Transformation implementation plan by 30 September 2019.
Not applicable Not applicable
36Department:
edteaEconomic Development,Tourism andEnvironmental Affairs
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART B: PERFORMANCE INFORMATION
SUB-PROGRAMME 1.1: OFFICE OF THE CEO
PI No. Performance Indicator
Actual Achievement 2017/18
Planned Target2018/19
Actual Achievement2018/19
Deviation from Planned Target to Actual Achievement for 2018/19
Comment on Deviations
Strategic Objective 1.1: Provide Strategic leadership and management to ensure responsive, accountable, and efficient administration and operations
1.1.1.1 Approved 2019/20 Annual Performance Plan by 1 April
Draft and final Strategic and Annual Performance Plans submitted to Executive Authority within prescribed timeframes
Approved Annual Performance Plans by 1 April
Approved Annual Performance Plan submitted by 1 April
Not applicable Not applicable
1.1.1.2 Number of quarterly Performance reports against APP Targets
4 Quarterly Performance reports submitted to the Executive Authority within 30 days from the end of the quarter
4 Quarterly Performance reports against APP Targets.
4 Quarterly Performance reports against APP Targets.
Not applicable Not applicable
1.1.1.3 Number of quarterly Regulation 3 reports submitted in compliance with legislative prescripts.
Not Applicable- Not included in 2017/18 APP
4 quarterly Regulation 3 reports produced and submitted in compliance with legislative prescripts.
4 Quarterly Regulation 3 reports submitted in compliance with legislative prescripts.
Not applicable Not applicable
1.1.1.4 Annual Performance Report submitted to Auditor-General by due date.
Not applicable – not included in 2017/18 APP
Annual performance report produced and submitted to AGSA for audit by due date
Annual Performance Report prepared and submitted to Auditor-General for auditing on 31 May
Not applicable Not applicable
Strategic Objective 1.2 Promote economic value, social development and transformation within the gambling industry.
1.2.1.1 Number of quarterly Transformation Strategy Implementation Reports
Transformation Strategy and Implementation Plan developed and approved on 24 November 2016 (no amendments thereto required)4 Quarterly transformation progress reports
4 quarterly Transformation Strategy Implementation Reports
4 Quarterly transformation progress reports were presented to Board
Not applicable Not applicable
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART B: PERFORMANCE INFORMATION
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SUB-PROGRAMME 1.1: OFFICE OF THE CEO
PI No. Performance Indicator
Actual Achievement 2017/18
Planned Target2018/19
Actual Achievement2018/19
Deviation from Planned Target to Actual Achievement for 2018/19
Comment on Deviations
Strategic Objective 1.1.3 Ensure contribution to National Gambling Policy and co-operative governance and keeping abreast with regulatory, technical and industry developments (Strategic Objective Not Included in 2018/19 APP)
N/A Number of regulatory / industry fora attended to represent KZNGBB
28 Regulatory/industry fora attended by the CEO to represent KZNGBB
Strategic Objective Not Included in 2018/19 APP
Not applicable Not applicable Not applicable
5.2 SUB-PROGRAMME 1.2 - GOVERNANCE RISK AND COMPLIANCE
The purpose of the sub-programme is to implement governance, risk and compliance programmes to ensure that the entity
continues to operate within the boundaries of relevant legislation and governance best practice for public entities
No. Strategic Objective
Strategic Objective Indicator
Actual Achievement2017/2018
Planned Target2018/19
Actual Achievement2018/2019
Deviation from Planned Target to Actual Achievement for 2018/2019
Comment on Deviations
Strategic objectives annual targets for 2018/19 : sub-programme 1.2 – Governance risk and compliance
SO.1.3 Provide governance, Risk and compliance management service to ensure a sound internal control environment.
1.3.1 Number of Board/Board Committee meetings supported
Annual review of 7 Governance structures and 5 governance policies and 40 meetings held to give effect to the entity’s statutory mandate
30 Board meetings supported
40 Board/Committee meetings supported
Not applicable Not applicable
1.3.2 Number of Strategic Risk Management Plans produced within timeframes
1.Strategic Risk Plan produced by 30 September 2018
1.Strategic Risk Plan produced by 30 September 2018
Not applicable Not applicable
1.3.3 Number of Fraud Susceptibility Assessment Reports produced within timeframe
Fraud susceptibility report produced by 31 March 2019
Fraud susceptibility report produced by 31 March 2019
Not applicable Not applicable
1.3.4 Compliance Awareness Training Program Developed by 30 December 2018
Compliance Awareness Training Programme developed by 30 December 2018
Compliance Awareness Training Programme developed by 30 December 2018
Not applicable Not applicable
N/A Management of enterprise risk and compliance in line with relevant legislation
Assessment of enterprise risk and production of risk management plans and Compliance Framework reviewed
Not included as a Separate Strategic Objective in 2018/2019
Not Applicable Not applicable Not applicable
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART B: PERFORMANCE INFORMATION
38Department:
edteaEconomic Development,Tourism andEnvironmental Affairs
SUB-PROGRAMME 1.2 – GOVERNANCE RISK AND COMPLIANCE
PI No. Performance Indicator
Actual Achievement 2017/18
Planned Target2018/19
Actual Achievement2018/19
Deviation from Planned Target to Actual Achievement for 2018/19
Comment on Deviations
Strategic Objective 1.3 Provide governance, risk and compliance management services to ensure a sound internal control environment
1.3.1.1 Number of Resolution Registers updated within 10 working days of Board/Committee Meetings
7 Board / Committee Charters reviewed and updated and 5 Governance policies reviewed/developed
30 Resolution Registers updated within 10 working days of Board/Committee Meetings
30 Resolution Registers updated within 10 working days of Board/Committee Meetings
100% of target achieved.
Positive variance of additional 10 meetings held and registers up-dated.
Not applicable
1.3.1.2 Number of quarterly Board Resolutions Status Reports
40 Board and Board Committee meetings held: 11 Board meetings 29 Board Committee meetings
4 quarterly Board Resolutions Status Reports
4 quarterly Board Resolutions Status Reports were prepared
Not applicable Not applicable
1.3.2.1 Annual Strategic Risk Registers produced by 30th September
No target under this Performance Indicator in 2017/18
Annual Strategic Risk Registers produced by 30th September.
100% achieved Annual Strategic Risk Registers produced by 30th September.
Not applicable Not applicable
1.3.3.1 Number of Fraud and corruption training sessions
No target under this Performance Indicator in 2017/18
2 Fraud and corruption training sessions
2 Fraud and corruption training sessions took place,
Not applicable Not applicable
1.3.4.1 Number of Compliance Awareness training sessions
No target under this Performance Indicator in 2017/18
2 Compliance Awareness training sessions
2 Compliance Awareness training sessions took place,
Not applicable Not applicable
Strategic Objective 1.2.2: Management of enterprise risk and compliance in line with relevant legislation
N/A Annual enterprise risk assessment and strategic risk management plan
No target under this Performance Indicator in 2018/19. Indicator moved to 1.3.2.1
Not applicable Not applicable Not applicable Not applicable
N/A Number of compliance risk management plans
No target under this Performance Indicator in 2018/19. Indicator moved to 1.3.4.1
Not applicable Not applicable Not applicable Not applicable
N/A Reviewed Fraud Prevention Plan
No target under this Performance Indicator in 2018/19. Indicator moved to 1.3.3.1
Not applicable Not applicable Not applicable Not applicable
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART B: PERFORMANCE INFORMATION
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SUB-PROGRAMME 1.2 – GOVERNANCE RISK AND COMPLIANCE
PI No. Performance Indicator
Actual Achievement 2017/18
Planned Target2018/19
Actual Achievement2018/19
Deviation from Planned Target to Actual Achievement for 2018/19
Comment on Deviations
Strategic Objective 1.3 Provide governance, risk and compliance management services to ensure a sound internal control environment
1.3.1.1 Number of Resolution Registers updated within 10 working days of Board/Committee Meetings
7 Board / Committee Charters reviewed and updated and 5 Governance policies reviewed/developed
30 Resolution Registers updated within 10 working days of Board/Committee Meetings
30 Resolution Registers updated within 10 working days of Board/Committee Meetings
100% of target achieved.
Positive variance of additional 10 meetings held and registers up-dated.
Not applicable
1.3.1.2 Number of quarterly Board Resolutions Status Reports
40 Board and Board Committee meetings held: 11 Board meetings 29 Board Committee meetings
4 quarterly Board Resolutions Status Reports
4 quarterly Board Resolutions Status Reports were prepared
Not applicable Not applicable
1.3.2.1 Annual Strategic Risk Registers produced by 30th September
No target under this Performance Indicator in 2017/18
Annual Strategic Risk Registers produced by 30th September.
100% achieved Annual Strategic Risk Registers produced by 30th September.
Not applicable Not applicable
1.3.3.1 Number of Fraud and corruption training sessions
No target under this Performance Indicator in 2017/18
2 Fraud and corruption training sessions
2 Fraud and corruption training sessions took place,
Not applicable Not applicable
1.3.4.1 Number of Compliance Awareness training sessions
No target under this Performance Indicator in 2017/18
2 Compliance Awareness training sessions
2 Compliance Awareness training sessions took place,
Not applicable Not applicable
Strategic Objective 1.2.2: Management of enterprise risk and compliance in line with relevant legislation
N/A Annual enterprise risk assessment and strategic risk management plan
No target under this Performance Indicator in 2018/19. Indicator moved to 1.3.2.1
Not applicable Not applicable Not applicable Not applicable
N/A Number of compliance risk management plans
No target under this Performance Indicator in 2018/19. Indicator moved to 1.3.4.1
Not applicable Not applicable Not applicable Not applicable
N/A Reviewed Fraud Prevention Plan
No target under this Performance Indicator in 2018/19. Indicator moved to 1.3.3.1
Not applicable Not applicable Not applicable Not applicable
5.3 SUB-PROGRAMME 1.3 LEGAL SERVICESThe purpose of the sub-programme is to provide in-house legal resources for the Board and management and to ensure that the
Board’s regulation of the gambling industry in the Province complies with and conforms to legislation and regulatory requirements.
SUB-PROGRAMME 1.3 – LEGAL SERVICESNo. Strategic
ObjectiveStrategic Objective Indicator
Actual Achievement 2017/18
Planned Target2018/19
Actual Achievement2018/19
Deviation from Planned Target to Actual Achievement for 2018/19
Comment on Deviations
SO 1.4
Provide legal advisory services to manage entity’s legal risks, exposure and licensee/registrant discipline within the gambling industry
1.4.1 Number of Legal Reports appraising Board of Legal matters managed
39 Legal opinions / advice were provided within timeframes and legal matters reported to Board in 9 Legal Reports
8 Legal Reports to Board
9 Legal Reports submitted to Board
1 additional report produced
Not applicable
1.4.2 Percentage of identified licensee/registrant contraventions processed
No target was set in 2017/18 under this Strategic Objective Indicator 1.4
100% identified licensee/registrant contraventions processed
100% identified licensee/registrant contraventions processed
Not applicable Not applicable
N/A Regulation of the industry through legislative amendments and licensee discipline for non-compliance
Target for 2018/19 amended and incorporated in strategic indicator 1.4.
1 Submission for amendments (100%) was prepared and submitted within prescribed timeframes; and 10 charge sheets / 3 warning letters (100%) were prepared within prescribed timeframes
Not applicable Not applicable Not applicable Not applicable
N/A Promote licensee contribution to B-BBEE, employment and socio-economic development through licence conditions
Target for 2018/19 amended and incorporated in strategic indicator 1.4.
B-BBEE, employment and socio-economic development related licence conditions were developed for 7 approved licences (100%); and 86 existing licence conditions were reviewed (100%)
Not applicable Not applicable Not applicable Not applicable
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART B: PERFORMANCE INFORMATION
40Department:
edteaEconomic Development,Tourism andEnvironmental Affairs
SUB-PROGRAMME 1.3 LEGAL SERVICES
PI No. Performance Indicator
Actual Achievement 2017/18
Planned Target2018/2019
Actual Achievement2018/2019
Deviation from Planned Target to Actual Achievement for 2018/2019
Comment on Deviations
Strategic Objective 1.4: Provide legal advisory services to manage entity’s legal risks, exposure and licensee/registrant’s discipline within the gambling industry.
1.4.1.1 Percentage of legal opinions/advice furnished to Board and management within 21 days of request.
100% of 39 legal to opinions/advice furnished Divisions within prescribed timeframes
100% of legal opinions/advice furnished to Board and management within 21 days of request
100%% of legal opinions/advice furnished to Board and management within 21 days of request
Not Applicable Not Applicable
1.4.1.2 Percentage of proposals for amendments to National and Provincial legislation submitted within prescribed timeframe
This performance indicator target fell under a separate Strategic Objective in 2017/18. This has since been amended.
100% of proposals for amendments to National and Provincial legislation submitted within prescribed timeframe
100% of proposals for amendments to National and Provincial legislation was submitted within prescribed timeframes
Not Applicable Not applicable
1.4.1.3 Percentage of existing licence conditions reviewed annually
New performance indicator set in 2018/19
100% of existing licence conditions reviewed annually
100% of existing licence conditions were reviewed in the year
Not applicable Not applicable
1.4.2.1 Percentage of charge sheets/warning letters issued to licensees/registrants within 1 month of initiation by units
Performance Indicator target was amended and moved from Strategic Objective 1.3.2 to strategic Objective 1.3.1
100% of Charge Sheets and 3 warning letters issued to licensees within prescribed time frames.
100% of charge sheets/warning letters issued to licensees/registrants within 1 month of initiation by units
78% of charge sheets/warning letters issued to licensees/registrants within 1 month of initiation by units
Target Not achieved by 22% (3 out of 14 charge sheets/ warning letters) were issued beyond time frames.
Human Resources Capacity within legal unit.
1.4.2.2 Percentage of non-compliance Section 87 Enquiries findings communicated to licensees/registrants within 10 working days of Board decision
Not Applicable – not included in 2017/18 APP as target
100% of non-compliance Section 87 Enquiries findings communicated to licensees/registrants within 10 working days of Board decision
100% of non-compliance Section 87 Enquiries findings communicated to licensees/registrants within 10 working days of Board decision.
Not applicable Not applicable
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART B: PERFORMANCE INFORMATION
41
SUB-PROGRAMME 1.3 LEGAL SERVICES
PI No. Performance Indicator
Actual Achievement 2017/18
Planned Target2018/2019
Actual Achievement2018/2019
Deviation from Planned Target to Actual Achievement for 2018/2019
Comment on Deviations
Strategic Objective 1.3.2: Regulation of the industry through legislative amendments and licensee applicable discipline for non-compliance (Not Included in 2018/19 APP)
N/A Percentage of charge sheets/warning letters issued to licensees within prescribed timeframes
100% of Charge Sheets and 3 warning letters issued to licensees within prescribed time frames.
Not Applicable – not included in 2018/19 as separate Strategic Objective. target included in Strategic Objective 1.4.2.1
Not applicable Not applicable Not applicable
N/A Percentage of timely submissions of amendments to applicable Provincial and National legislation
Timely submission of 100% (1 out of 1) of amendments to applicable Provincial and National legislation – Amendment to the KwaZulu-Natal Gaming and Betting Regulations
Not Applicable – not included in 2018/19 APP as separate target. moved to 1.4.1.2 Performance Indicator Target
Not applicable Not applicable Not applicable
Strategic Objective 1.3.3: Promote licensee contribution to B-BBEE, employment and socio-economic development through licence conditions (Not Included in 2018/19 APP)
N/A Percentage of approved licences containing licence conditions in terms of the National Gambling Act
100% of 7 approved licences contain conditions which address Section 53(c) of the National Gambling Act
Not Applicable – not included in 2018/19 APP as a separate strategic objective indicator target. It is reported under Strategic Objective 1.4.1.3
Not applicable Not applicable Not applicable
N/A Percentage of existing licence conditions reviewed annually
100% of 86 existing licence conditions reviewed during 2017/18
Not Applicable – not included in 2018/19 APP as target
Not applicable Not applicable Not applicable
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART B: PERFORMANCE INFORMATION
42Department:
edteaEconomic Development,Tourism andEnvironmental Affairs
SUB-PROGRAMME 1.4 HUMAN RESOURCES
PI No. Performance Indicator
Actual Achieve-ment 2017/2018
Planned Target2018/2019
Actual Achieve-ment2018/2019
Deviation from Planned Target to Actual Achievement for 2018/2019
Comment on Deviations
Strategic Objective 1.5 Provide human resource management services to ensure that appropriately skilled human re-sources are in place
1.5.1.1 Number of quar-terly HR Strategy Implementation Reports sub-mitted to HRR Committee
Not applicable – not included in 2017/18 APP
4 quarterly HR Strategy Implementation Reports sub-mitted to HRR Committee
4 quarterly HR Strategy Implementation Reports were submitted to HRR Committee
Not applicable Not applicable
1.5.1.2 Average percent-age of vacant funded posts
Maintained an average vacancy rate of 11.25% during 2017/18
Maintain a vacan-cy rate of 10% or less annually
Maintained an average vacancy rate of 6.84% during 2018/19
Not applicable Not applicable
N/A Percentage of performance agreements and appraisals submitted within prescribed time-frame
Achieved 89.81% submis-sion of signed performance agreements and appraisals by due dates
Not included in 2018/19 APP , target moved to Operational Plan
Not Applicable Not applicable Not applicable
5.4 SUB-PROGRAMME 1.4 HUMAN RESOURCES
The purpose of the sub-programme is to ensure implementation of the human resources strategy by attracting, developing and
retaining suitably qualified and competent human resources for the Board.
SUB-PROGRAMME 1.4 – HUMAN RESOURCESNo. Strategic
ObjectiveStrategic Objective Indicator
Actual Achievement 2017/2018
Planned Target2018/19
Actual Achievement2018/2019
Deviation from Planned Target to Actual Achievement for 2018/19
Comment on Deviations
SO 1.5
Provide human resource management services to ensure that appropriately skilled human resources are in place
1.5.1 Number of revised HR Strategy Implementation Plans by due dates
HR Strategy implemented and progress reported to Board/HR Sub-Committee (vacancy rate maintained at average of 11.25%; recruitment of 5 new staff in accordance with the requirements of the Act; skills development through implementation of the WSP; and performance agreements in place and performance reviews undertaken)
1 revised HR strategy implementation plan by 31 March 2019
1 revised HR Strategy Implementation Plans by due date
Not applicable Not applicable
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PART B: PERFORMANCE INFORMATION
43
SUB-PROGRAMME 1.4 HUMAN RESOURCES
PI No. Performance Indicator
Actual Achieve-ment 2017/2018
Planned Target2018/2019
Actual Achieve-ment2018/2019
Deviation from Planned Target to Actual Achievement for 2018/2019
Comment on Deviations
1.5.1.3 Percentage of annual declara-tion of financial interests by staff of the Board
Performance Indicator Target not included in 2017/2018 APP –Not Applicable
95% of annual declaration of financial interests by staff of the Board
91% of annual declaration of financial interests by staff of the Board undertak-en (71 out of 78 forms submitted timeously.
4% declarations not undertak-en within time periods
Delays by unit
1.5.1.4 Percentage targets of Work-place Skills Plan achieved
62% of Workplace Skills Plan targets achieved - (13 out of 21 planned training initia-tives undertaken
60% of Workplace Skills Plan targets achieved
55% of Workplace Skills Plan targets achieved - (47 out of 85 planned training initia-tives undertaken)
Negative variance of 5%
No training interven-tions were undertaken during Q3 due to HR capacity constraints
5.5 SUB-PROGRAMME 1.5 COMMUNICATIONS
The purpose of the sub-programme is to address the communication requirements of all stakeholders, both internally and externally,
through stakeholder engagement using different communication mechanisms.
SUB-PROGRAMME 1.5: COMMUNICATIONS
No. Strategic Objective
Strategic Objective Indicator
Actual Achievement 2017/2018
Planned Target2018/2019
Actual Achievement2018/2019
Deviation from Planned Target to Actual Achievement for 2018/2019
Comment on Deviations
SO 1.6
Provide communication and stakeholder engagement services to promote internal and external communications.
1.6.1 Number of revised Communication Strategy Implementation Plans by due dates
Communications Strategy in place and implemented through: facilitation of 10 awareness campaigns; 6 entity newsletters published; 30 stakeholder engagements undertaken; and social impact study conducted
1 revised Communications Strategy Implementation Plan by 31 March 2019
1 revised Communication Strategy Implementation Plans by due date
Not applicable
Not applicable
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART B: PERFORMANCE INFORMATION
44Department:
edteaEconomic Development,Tourism andEnvironmental Affairs
SUB-PROGRAMME 1.5: COMMUNICATIONS
PI No. Performance Indicator
Actual Achievement 2017/2018
Planned Target2018/2019
Actual Achievement2018/2019
Deviation from Planned Target to Actual Achievement for 2018/2019
Comment on Deviations
Strategic Objective 1.6: Provide communication and stakeholder engagement services to promote internal and external communications
1.6.1.1 Number of quarterly Communications Strategy Implementation Reports submitted to CEO
Not applicable – not included in 2016/17 APP
Number of quarterly Communications Strategy Implementation Reports submitted to CEO
4 quarterly Communications Strategy Implementation Reports submitted to CEO
Not applicable Not applicable
1.6.1.2 Number of public awareness campaigns or related initiatives undertaken
Not applicable – not included in 2017/18 APP
3 public awareness campaigns or related initiatives
23 public awareness campaigns - 17 responsible gambling awareness (SARGF School Awareness Programme)
Positive variance of 20 awareness campaigns
Additional initiatives undertaken with SARGF: Schools Awareness Programme and “Responsible Gambling month”
N/A Number of internal and external newsletters published
4 internal and 2 external newsletters published
Not applicable – not included in 2018/19 APP – Moved to operational plan
Not applicable Not applicable Not applicable
N/A Social Impact Study conducted
Social Impact Study Draft 1 Report was submitted by SARGF by 31 March 2018
Social Impact Study conducted within prescribed timeframe applicable – not included in 2018/19 APP – Moved to operational plan
Not applicable Not applicable Not applicable
1.6.1.3 Number of stakeholder engagements facilitated/ undertaken
30 Stakeholder engagements undertaken
20 stakeholder engagements
26 stakeholder engagements facilitated/undertaken
Positive variance of 6 stakeholder engagements
6 Unplanned engagements were undertaken
PROGRAMME 1 : LINKING PERFORMANCE WITH BUDGETS2018/2019 2017/2018
SUB-PROGRAMME NAME BUDGETACTUAL
EXPENDITURE
(OVER)/UNDER
EXPENDITURE BUDGETACTUAL
EXPENDITURE
(OVER)/UNDER
EXPENDITURE
R’000 R’000 R’000 R’000 R’000 R’000
Office of the CEO 3 759 3 453 306 3 224 2 852 372
Governance, Risk & Compliance 7 392 7 423 -31 7 276 6 483 793
Legal Services 6 414 7 865 -1 451 3 297 3 427 -130
Human Resources 5 645 3 785 1 860 6 099 4 557 1 542
Communications 2 075 1 602 473 1 244 857 387
TOTAL 25 285 24 128 1 157 21 140 18 176 2 964
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART B: PERFORMANCE INFORMATION
45
6. PROGRAMME 2: FINANCEThe purpose of the programme is to support the entity by the provision of financial administration, asset management and
procurement services. This programme is also responsible for managing the relationship between the internal auditing services
provided to the KZNGBB. The functions within this programme include: Supply Chain Management, Cost and Management
Accounting and Financial Accounting.
PROGRAMME 2: FINANCE
No. Strategic Objective
Actual Achievement 2017/2018
Planned Target2018/2019
Actual Achievement2018/2019
Deviation from Planned Target to Actual Achievement for 2018/2019
Comment on Deviations
SO 2.1
Provide effective, efficient and transparent financial management services to the entity
Unqualified audit opinion
Achieve unqualified audit opinion from the Auditor-General through compliance with legislative frameworks relating to finances
Unqualified audit opinion
Not applicable Not applicable
N/A Ensure effective financial reporting in accordance with legislative requirements
Compliance with timely submission of Unaudited Financial Statements; Annual Report and quarterly reports
Not Applicable – not included in 2018/19 APP as a separate strategic objective indicator target.
Not applicable Not applicable Not applicable
N/A Implement an appropriate procurement and provisioning system which is fair, equitable, transparent, competitive and cost-effective
Annual Procurement Plan and SCM Policy in place to ensure an appropriate procurement and provisioning system
Not Applicable – not included in 2018/19 APP as a separate strategic objective indicator target.
Not applicable Not applicable Not applicable
PROGRAMME 2: FINANCE
PI No. Performance Indicator
Actual Achievement 2017/2018
Planned Target2018/2019
Actual Achievement2018/2019
Deviation from Planned Target to Actual Achievement for 2018/2019
Comment on Deviations
Strategic Objective 2.1: Implement systems of financial management and internal controls in line with statutory/regulatory requirements
2.1.1.1 Number of quarterly financial reports submitted within 1 month of reporting period
4 quarterly reports submitted within 1 month of reporting period.
4 quarterly reports submitted within 1 month of reporting period
4 quarterly reports submitted within 1 month of reporting period.
Not applicable Not applicable
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART B: PERFORMANCE INFORMATION
46Department:
edteaEconomic Development,Tourism andEnvironmental Affairs
PROGRAMME 2: FINANCE
PI No. Performance Indicator
Actual Achievement 2017/2018
Planned Target2018/2019
Actual Achievement2018/2019
Deviation from Planned Target to Actual Achievement for 2018/2019
Comment on Deviations
2.1.1.2 Percentage of invoices settled within 30 days
Indicator was not included in 2017/18 APP
95% of invoices settled within 30 days
96% of invoices settled within 30 days
Target achieved Not applicable
2.1.1.3 Approved budget submitted to KZN Treasury by 31 March 2019
Approved budget submitted to KZN Treasury by 31 March 2019
Approved budget submitted to KZN Treasury by 31 March 2019
Approved budget submitted to KZN Treasury by 31 March 2019
Not applicable Not applicable
2.1.1.4 Annual Report for preceding year submitted to the MEC and Auditor General by end August
Annual Report for preceding year submitted to the MEC and Auditor General by end August
Annual Report for preceding year submitted to the MEC and Auditor General by end August
Annual Report for 2017/18 submitted to the MEC and Auditor General 31 August 2018
Not applicable Not applicable
Strategic Objective 2.2 Ensure effective financial reporting in accordance with legislative requirements (Strategic Objective not Included in 2018/2019)
2.2.1 Timely submission of Unaudited Financial Statements to the Auditor-General and KZN Treasury
Approved Annual Financial Statements submitted to Auditor-General and Provincial Treasury on 31 May 2017
Unaudited Financial Statements submitted to the Auditor-General and KZN Treasury by 31 May 2018
Unaudited Financial Statements submitted to Auditor-General and KZN Treasury on 31 May 2018
Not applicable Not applicable
2.2.2 Timely submission of Annual Report to KZN Treasury and the Auditor-General
Annual Report prepared and submitted to Provincial Treasury and Auditor-General within prescribed timeframe
Annual Report submitted to KZN Treasury and the Auditor-General by 31 August 2018
Annual Report submitted to Honourable Premier, KZN Treasury and Auditor-General by 31 August 2018
Not applicable Not applicable
2.2.3 Number of Quarterly reports submitted to the responsible MEC as specified in the PFMA and SLA
4 Quarterly reports submitted to the responsible MEC in compliance with the PFMA and Service Level Agreement
4 Quarterly reports submitted within 1 month of the reporting period
4 Quarterly reports submitted within 1 month of the reporting period
Not applicable Not applicable
Strategic Objective 2.3: Implement an appropriate procurement and provisioning system which is fair, equitable, transparent, competitive and cost-effective
2.3.1 Approved Procurement Plan
2017/18 Procurement Plan approved on 29 March 2018
2018/19 Procurement Plan developed for approval by 31 March 2018
2019/20 Procurement Plan approved on 28 February 2019
Not applicable Not applicable
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART B: PERFORMANCE INFORMATION
47
PROGRAMME 2 : LINKING PERFORMANCE WITH BUDGETS2018/2019 2017/2018
SUB-PROGRAMME NAME BUDGETACTUAL
EXPENDITURE
(OVER)/UNDER
EXPENDITURE BUDGETACTUAL
EXPENDITURE
(OVER)/UNDER
EXPENDITURE
R’000 R’000 R’000 R’000 R’000 R’000
Financial management 26 059 18 952 7 107 18 925 13 688 5 237
7. PROGRAMME 3: INFORMATION AND COMMUNICATION TECHNOLOGYThe purpose of the programme is to provide information and communication technology (ICT) and knowledge management
services to the entity.
PROGRAMME 3: INFORMATION AND COMMUNICATION TECHNOLOGY
No. Strategic Objective
Actual Achievement 2017/2018
Planned Target2018/2019
Actual Achievement2018/2019
Deviation from Planned Target to Actual Achievement for 2018/2019
Comment on Deviations
SO 3.1
Provide efficient information communication and technology.
ICT Strategy and Implementation Plan reviewed and 85.71% of planned activities implemented as per the plan
1 revised ICT Strategy Implementation Plan by 31 March 2019
1 revised ICT Strategy Implementation Plan by 31 March 2019
Not applicable Not applicable
N/A Comply with the Corporate Governance of Information and Communication Technology Policy Framework
Achievement of level 2 compliance in terms of DPSA within prescribed timeframe
No Target set on Strategic Indicator, moved to operational plan in 2018/19
Not applicable Not applicable Not applicable
N/A Implementation of the KZNGBB Gambling Regulatory Online Portal
70% of KZNGBB Gambling Regulatory Online Portal Project activities implemented in terms of Project Plan as per target
No Target set on Strategic Indicator, moved to operational plan in 2018/19
Not Applicable Not applicable Not applicable
PROGRAMME 3: INFORMATION AND COMMUNICATION TECHNOLOGY
PI No. Performance Indicator
Actual Achievement 2017/18
Planned Target2018/19
Actual Achievement2018/19
Deviation from Planned Target to Actual Achievement for 2018/19
Comment on Deviations
Strategic Objective 3.1: Implementation of the ICT Strategy that is aligned with business strategy
3.1.1 Quarterly ICT Strategy Implementation reports
Not applicable – not included in 2017/18 APP
4 Quarterly reports 4 Quarterly reports submitted
Not applicable Not applicable
N/A Percentage achievement of ICT Strategy implementation
Not applicable – not included in 2017/18 APP
No Target set on Strategic Indicator, moved to operational plan in 2018/19
Not Applicable Not applicable Not applicable
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART B: PERFORMANCE INFORMATION
48Department:
edteaEconomic Development,Tourism andEnvironmental Affairs
PROGRAMME 3: INFORMATION AND COMMUNICATION TECHNOLOGY
PI No. Performance Indicator
Actual Achievement 2017/18
Planned Target2018/19
Actual Achievement2018/19
Deviation from Planned Target to Actual Achievement for 2018/19
Comment on Deviations
Strategic Objective 3.2: Comply with the Corporate Governance of Information and Communication Technology Policy Framework
N/A Level 2 compliance achieved as per DPSA and ICT Policy Framework
Existing ICT Policy Framework is in line with DPSA and activities implemented in accordance with the framework
No Target set on Strategic Indicator, moved to operational plan in 2018/19
Not applicable Not applicable Not applicable
Strategic Objective 3.3: Implementation of the KZNGBB Gambling Regulatory Online Portal
N/A Percentage achievement of KZNGBB Gambling Regulatory Online Portal project implementation
100% of BPR project activities implemented (accumulative) in terms of the Project Plan
No Target set on Strategic Indicator, moved to operational plan in 2018/19
Not applicable Not applicable Not applicable
PROGRAMME 3: LINKING PERFORMANCE WITH BUDGETS
2018/2019 2017/2018
SUB-PROGRAMME NAME BUDGETACTUAL
EXPENDITURE
(OVER)/UNDER
EXPENDITURE BUDGETACTUAL
EXPENDITURE
(OVER)/UNDER
EXPENDITURE
R’000 R’000 R’000 R’000 R’000 R’000
Information,Communication & Technology 9 688 6 926 2 762 7 146 4 946 2 200
8. PROGRAMME 4: LICENSING AND REGISTRATION8.1. SUB-PROGRAMME 4.1: LICENSING AND REGISTRATION - BETTING
The purpose of the sub-programme is to receive, investigate and prepare licences and registration certificates for all applications
in the Betting sector (Racecourse Operators, Totalisator, and Bookmaker sectors) as required in the Act to ensure the suitability and
continuous suitability of all applicants; and to roll out new betting initiatives.
SUB-PROGRAMME 4.1: LICENSING AND REGISTRATION: BETTING
No. Strategic Objective
Strategic indicator
Actual Achievement2017/2018
Planned Target2018/2019
Actual Achievement2018/19
Deviation from Planned Target to Ac-tual Achieve-ment for 2018/19
Comment on Deviations
SO 4.1
Licensing and Registration of approved suit-able applicants.
Percentage of corporate licenses and certificates of registration issued to approved suit-able applicants
No target was set in 2017/18 APP
100% of license and corporate certificates of registrations applicants probed to en-sure they are fit and proper
92.14% of corporate licenses and certificates of registration issued appli-cants that are fit and proper.
7.86% not achieved
Processes still manual in some cases.
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART B: PERFORMANCE INFORMATION
49
SUB-PROGRAMME 4.1: LICENSING AND REGISTRATION: BETTING
No. Indicator title Actual Achievement 2017/18
Planned Target2018/19
Actual Achievement2018/19
Deviation from Planned Target to Actual Achievement for 2018/19
Comment on Deviations
4.1.1.1 Percentage of corporate licence and registration applications processed within prescribed timeframes.
Applications processed within prescribed timeframes:Corporate licence and registrations - 85.71% (18 out of 21) Betting sector employee and Tote Agent registrations - 22.49% (228 out of 1014).
70% of corporate licence applications processed within prescribed time frames.
92% (23 out of 25) of all Corporate licence applications processed within prescribed timeframes.
Target achieved and exceeded by 22%
Planned Target in APP was achieved due to the GROP System (Automation)
4.1.1.2 Percentage of applications for employee registration processed within prescribed timeframes.
Licences and corporate/employee certificates of registration issued within prescribed timeframes:Corporate licences - 50% (3 out of 6)
60% of applications for employee registrations processed within prescribed time frames.
8.77% (104 out of 1186) Employee registrations applications received processed within prescribed timeframes.
712 applications is 60% of 1186. (Planned target is 60% of employee registration applications processed and investigated within prescribed time frames)
Target not achieved and 91.23% (1082 applications) were processed beyond time frames).
Reasons for Non Achievement include that these were considered as low risk and not a priority.
4.1.1.3 Percentage of corporate licences and certificates of registration issued within prescribed time frames.
50% (3 outof 6) of licencesand corporatecertificates ofregistrationissued withinprescribedtimeframes.
100% of corporate licence applications and certificates of registration processed within prescribed time frames.
0% of corporate licence applications and certificated of registrations were processed within prescribed time frames:
Licences and corporate/employee certificates - 0% (0 out of 1)
Target not achieved as 1 corporate licence application was received during the year and not processed and investigated within prescribed time frames.
Target Not Achieved
Reasons for Non Achievement include that there were external dependencies resulting in delays in seeking necessary approvals for the unit.
4.1.1.4 Percentage of Certificates of Registration for employees issued within prescribed time frames.
Betting employees and Tote Agent certificates - 100% (1013 out of 1013)
70% of Certificates of Registration for employees issued within prescribed time frames.
100% (1139 out of 1139) of Certificates of Registration for employees issued within prescribed time frames.
Not Applicable Not Applicable
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART B: PERFORMANCE INFORMATION
50Department:
edteaEconomic Development,Tourism andEnvironmental Affairs
SUB-PROGRAMME 4.1: LICENSING AND REGISTRATION: BETTING
No. Indicator title Actual Achievement 2017/18
Planned Target2018/19
Actual Achievement2018/19
Deviation from Planned Target to Actual Achievement for 2018/19
Comment on Deviations
4.1.1.5 Percentage of renewed licence/ Certificates issued within prescribed timeframes.
Applications for renewal of licence/ certificate processed and licences/certificates issued before expiry - 65.93% (178 out of 270)
100% of renewed licences/ Certificates issued within prescribed timeframes.
75.68% (112 out of 148) of renewed licences/ Certificates issued within prescribed timeframes.– 75.68%
Target not achieved and 24.32% (36 out of 148) of renewed licences/certificates processed and issued beyond time frames.
Planned Targets Not Achieved
Renewal of licence certificates finalized outside time frames.
4.1.1.6 Percentage of Corporate licence and registration applicants probed on B-BBEE/Transformation and socio-economic commitments
100% (14 out of 14) of corporate applications finalised contain applicants’ B-BBEE status
100% of corporate licence applicants probed on B-BBEE/Transformation and socio-economic commitments status.
100% 0f corporate licence applicants probed on B-BBEE/Transformation status.
Not applicable Not applicable
8.2. SUB-PROGRAMME 4.2: LICENSING AND REGISTRATION: GAMING
The purpose of the sub-programme is to receive, investigate and prepare licences and registration certificates for all applications
in the Gaming sector (Casinos, LPMs and Bingo) as required by the Act to ensure the suitability and continuous suitability of all
applicants; and to roll out new gaming initiatives.
SUB-PROGRAMME 4.2: LICENSING AND REGISTRATION: GAMING
No. Indicator title Actual Achievement 2017/18
Planned Target2018/19
Actual Achievement2018/19
Deviation from Planned Target to Actual Achievement for 2018/19
Comment on Deviations
4.2.1.1 Percentage of corporate license and registration applications processed within prescribed timeframes
70.53%(67 out of 95) of corporate license and registration applications processed within prescribed timeframes
70% of corporate license and registration applications processed and investigated within prescribed timeframes
57.69% (75 out of 130 corporate license and registration applications processed within prescribed timeframes)
Target not achieved, 12.31% (16 out of 130) applications were processed beyond the timeframes
Target not achieved. Applications were processed after the timeframes.
4.2.1.2 Percentage of Applications for employee registrations processed within prescribed timeframes.
78.70% (340 out of 432) of applications for employee registrations in Casino, Bingo and LPM industry processed and investigated within prescribed timeframes
60% of applications for employee registrations processed within prescribed timeframes.
58.37% (272 out of 466) applications for employee registrations processed within prescribed timeframes.
Target not achieved and 1.63% (8 out of 466 applications) were processed beyond time frames
Reasons for Non Achievement include that these were considered as low risk and not a priority.
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART B: PERFORMANCE INFORMATION
51
SUB-PROGRAMME 4.2: LICENSING AND REGISTRATION: GAMING
No. Indicator title Actual Achievement 2017/18
Planned Target2018/19
Actual Achievement2018/19
Deviation from Planned Target to Actual Achievement for 2018/19
Comment on Deviations
4.2.1.3 Percentage of corporate licences and corporate certificates of registration issued within prescribed time frames.
98.59% (70 out of 71) of licences and/or corporate certificates of registration issued within prescribed timeframes
100% of corporate licences and certificates of registration issued within prescribed time frames.
97.14% (102 out of 105) of corporate licences and certificates of registration issued within prescribed time frames:
Target not achieved 2.86% (3 out of 105) corporate licence and certificates of registration within prescribed time frames.
Reasons for Non Achievement include that there were external dependencies resulting in delays in seeking necessary approvals for the unit.
4.2.1.4 Percentage of Certificates of Registration for employees issued within prescribed time frames.
99.53% (420 out of 422) of employee certificates of registration issued within prescribed timeframes
70% of Certificates of Registration issued within prescribed time frames.
100% (461 out of 461) of Certificates of Registration issued within prescribed time frames:
Not applicable Not applicable
4.2.1.5 Percentage of renewed licences/ Certificates issued within prescribed timeframes.
Applications for renewal of licence/ certificate processed and licences/certificates issued before expiry - 65.93% (178 out of 270)
100% renewed licences/ Certificates issued within prescribed timeframes..
100% (627out of 627) renewed licences/ Certificates issued within prescribed timeframes.
Not applicable Not applicable
4.2.1.6 Percentage of corporate licence applicants probed on B-BBEE/Transformation and socio-economic commitments status.
100% (2 out of 2) of corporate applications finalised contain applicants’ B-BBEE status
100% of corporate licence applicants probed on B-BBEE/Transformation and socio-economic commitments status.
100% of corporate licence applicants probed on B-BBEE/Transformation and socio-economic commitments status.
Not applicable Not applicable
PROGRAMME 4 : LINKING PERFORMANCE WITH BUDGETS2018/2019
SUB-PROGRAMME NAME BUDGETACTUAL
EXPENDITURE
(OVER)/UNDER
EXPENDITURE BUDGETACTUAL
EXPENDITURE
(OVER)/UNDER
EXPENDITURE R’000 R’000 R’000 R’000 R’000 R’000Senior Manager 1 382 730 652 1 269 1 245 24Betting 4 523 5 250 -727 4 305 3 249 1 056Gaming 4 542 3 107 1 435 4 317 4 125 192TOTAL 10 447 9 087 1 360 9 891 8 619 1 272
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART B: PERFORMANCE INFORMATION
52Department:
edteaEconomic Development,Tourism andEnvironmental Affairs
CASINO MONTHLY GGR
R400000 000,00
R350000 000,00
R300000 000,00
R250000 000,00
R200000 000,00
R150000 000,00
R100000 000,00
R50000 000,00
R0,00APR MAY JUNE JULY AUG SEP OCT NOV DEC JAN FEB MAR
CASINO MONTHLY GAMING TAXES
0
2017/18
2017/18
2018/19
2018/19
5 00 000
10 000 000
15 000 000
20 000 000
25 000 000
30 000 000
35 000 000
40 000 000
45 000 000
60 000 000
9. PROGRAMME 5: GAMING MONITORING AND COMPLIANCE 6.1: SUB-PROGRAMME: MONITORING & GAMING AUDIT
The purpose of the sub-programme is to monitor gaming activities in the Province; audit gaming revenue collection for the Province;
and to enforce compliance with relevant legislation.
APR MAY JUNE JULY AUG SEP OCT NOV DEC JAN FEB MAR
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART B: PERFORMANCE INFORMATION
53
ROUTE OPERATOR MONTHLY GGR
R70000 000,00
R60000 000,00
R50000 000,00
R40000 000,00
R30000 000,00
R20000 000,00
R10000 000,00
R0,00
2018/19
APR MAY JUNE JULY AUG SEP OCT NOV DEC JAN FEB MAR
ROUTE OPERATOR MONTHLY GAMING TAXES
12 000 000
10 000 000
8 000 000
6 000 000
4 000 000
2 000 000
0
2017/18
2017/18
2018/19
APR MAY JUNE JULY AUG SEP OCT NOV DEC JAN FEB MAR
BINGO OPERATORS MONTHLY GGR
10 000 000
9 000 000
8 000 000
7 000 000
6 000 000
5 000 000
4 000 000
3 000 000
2 000 000
1 000 000
0
2017/18 2018/19
APR MAY JUNE JULY AUG SEP OCT NOV DEC JAN FEB MARAPR MAY JUNE JULY AUG SEP OCT NOV DEC JAN FEB MAR
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART B: PERFORMANCE INFORMATION
54Department:
edteaEconomic Development,Tourism andEnvironmental Affairs
2017/18 2018/19
BINGO OPERATORS MONTHLY - LPM’S GGR
12 0000
10 0000
8 0000
6 0000
4 0000
2 0000
0APR MAY JUNE JULY AUG SEP OCT NOV DEC JAN FEB MAR
BINGO OPERATORS MONTHLY - LPM’S TAXES
1 800 000
1 600 000
1 400 000
1 200 000
1 000 000
800 000
600 000
400 000
200 000
0APR MAY JUNE JULY AUG SEP OCT NOV DEC JAN FEB MAR
2017/18 2018/19
BINGO OPERATORS MONTHLY TAXES
300 000
250 000
200 000
150 000
100 000
50 000
0
0
APR MAY JUNE JULY AUG SEP OCT NOV DEC JAN FEB MAR
2017/18
2017/18
2018/19
2018/19
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART B: PERFORMANCE INFORMATION
55
SUB-PROGRAMME 5.1: MONITORING AND GAMING AUDIT
No. Strategic Objective
Actual Achievement 2017/2018
Planned Target2018/2019
Actual Achievement2018/2019
Deviation from Planned Target to Actual Achievement for 2018/2019
Comment on Deviations
SO.5.1 Ensure the completeness of gaming taxes payable to the Provincial Revenue Fund
100% of planned monthly tax audits conducted:60 Casino48 Route Operator82 Bingo21 Bingo with LPMs
12 monthly Gaming Tax Compliance Reports
12 Monthly Gaming Tax Compliance Reports
Not applicable Not applicable
SO.5.2 Maintain regulatory and technical compliance in the gambling industry
100% of planned annual compliance audits and FIC inspections conducted on gaming licensees -Compliance audits:5 Casino 4 Route Operator250 LPM sites7 Bingo
FIC inspections:5 Casino 4 Route Operator7 Bingo
1 annual Gaming Regulatory Compliance Monitoring Plan
1 annual Gaming Regulatory Compliance Monitoring Plan
Not applicable Not applicable
SO.5.2 No target was set out in 2017/18 in respect of this Strategic Objective Indicator
Percentage of new compliant gaming operations certified against licensee compliance reports
100% of new compliant operations certified
Not applicable Not applicable
SO.5.3 Protect the interests of the public within the gambling industry
No target was set out in 2017/18 in respect of this Strategic Objective Indicator
100% of gaming related disputes / complaints lodged are investigated and outcomes determined
100% of gaming related disputes / complaints lodged are investigated and outcomes determined
Not applicable Not applicable
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART B: PERFORMANCE INFORMATION
56Department:
edteaEconomic Development,Tourism andEnvironmental Affairs
SUB-PROGRAMME 5.1: MONITORING AND GAMING AUDIT
PI No. Performance Indicator
Actual Achievement 2017/18
Planned Target2018/19
Actual Achievement2018/19
Deviation from Planned Target to Actual Achievement for 2018/19
Comment on Deviations
Strategic Objective 5.1: Ensure the completeness of gaming taxes payable to the Provincial Revenue Fund
5.1.1.1 Percentage of monthly gaming tax verification reports compiled on operational gaming licensees
60 Casino and 48 Route Operators monthly tax audits conducted
100% of monthly gaming tax verification reports compiled on operational gaming licensees
100% of monthly gaming tax verification reports compiled on gaming licensees:
5 Casinos -60 verification reports 4 Route Operators -48 verification reports
9 Bingo - 94 verification reports
Not applicable Not applicable
Strategic Objective 5.2: Maintain regulatory and technical compliance in the gaming industry
5.2.1.1 Number of compliance inspection checklists in respect of gaming inspections
5 Casino compliance audits 4 Route Operator compliance audits 5 Casino FICA inspections 4 Route Operator FICA inspections
136 compliance inspection checklists in respect of gaming inspections
136 compliance inspection checklists in respect of gaming inspections were conducted.120 LPM site audits8 FIC Audits8 Compliance Audits
Not applicable Not applicable
5.2.1.2 Percentage of gaming related change requests/applications processed within prescribed timeframe
250 LPM sites compliance audits
100% of operational change request applications processed in compliance with legislation
50/59 = 84.75% of operational change request applications processed in compliance within timeframes.
9/59 = 15.25 % of operational change request applications processed outside of time frames.
Applications relating to EBT related change requests processed outside timeframes due to need to consider additional requirements.
5.2.1.3 Number of transformation monitoring reports in respect of gaming licensees
20 Casino and 16 Route Operator monitoring audits / Monitoring audits conducted on 100% of licensed operational Bingo Halls
48 transformation monitoring reports 20 Casino reports16 Route Operator reports12 Bingo reports
48 transformation monitoring reports 20 Casino reports16 Route Operator reports12 Bingo reports
Not applicable Not applicable
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART B: PERFORMANCE INFORMATION
57
9.2. SUB-PROGRAMME 5.2: GAMING CONTROL
The purpose of the sub-programme is to control all forms of gaming operations through regulatory inspections, certifications
and processing of gaming applications thereby ensuring that gaming operations are conducted in compliance with legislation.
STRATEGIC OBJECTIVE 5.2: MAINTAIN REGULATORY AND TECHNICAL COMPLIANCE IN THE GAMING INDUSTRY
PI No. Performance Indicator
Actual Achievement 2017/18
Planned Target2018/19
Actual Achievement2018/19
Deviation from Planned Target to Actual Achievement for 2018/19
Comment on Deviations
5.2.1.4 Number of compliance inspection checklists in respect of gaming inspections
100% of planned gaming operation inspections were conducted:30 Casino7 Bingo
Additional special certifications: 1 Casino1 Bingo
100% of LPM sites and limited payout machines certified:42 LPM sites187 LPMs
37 compliance inspection checklists
39 compliance checklists(18 inspection checklists and 21 certification checklists)
2 additional certifications
New systems upgrades
5.2.1.5 Percentage of gaming related change requests/applications processed within prescribed timeframe
100% of planned gaming operation inspections were conducted:30 Casino7 Bingo
Additional special certifications: 1 Casino1 Bingo
100% of LPM sites and limited payout machines certified:42 LPM sites187 LPMs
100% of gaming related change requests/applications processed within prescribed timeframe
1379/1391 = 99% gaming related change requests processed within timeframe.
12/1391 = 1% gaming related change requests processed out of time
12 gaming related change requests out of time due to bingo saturation and roll out
Bingo litigation
5.2.2.1 Percentage of new compliant gaming sites and gaming machines certified within prescribed timeframe
100% (493 out of 493) of gaming operational change requests were processed and evaluated
100% of new compliant gaming sites and gaming machines certified within prescribed timeframe
100% of new compliant gaming sites and gaming machines certified within prescribed timeframe99 sites469 gaming machines
Not applicable Not applicable
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART B: PERFORMANCE INFORMATION
58Department:
edteaEconomic Development,Tourism andEnvironmental Affairs
TAXES - BOOKMAKERS AND TOTALISATORS
0
2017/18 2018/19
16 000 000
14 000 000
12 000 000
10 000 000
8 000 000
6 000 000
4 000 000
APR MAY JUNE JULY AUG SEP OCT NOV DEC JAN FEB MAR
10. PROGRAMME 6: BETTING MONITORING AND CONTROLThe purpose of the sub-programme is to monitor betting activities in the Province; verify betting revenue collection for the Province;
enforce compliance with relevant legislation; and to ensure that the Board’s mandate in respect of the eradication of illegal gambling
in the Province is carried out.
SUB-PROGRAMME 5.2 : GAMING CONTROL
PI No. Performance Indicator
Actual Achievement 2017/2018
Planned Target2018/2019
Actual Achievement2018/2019
Deviation from Planned Target to Actual Achievement for 2018/2019
Comment on Deviations
Strategic Objective 5.3: Protect the interests of the public within the gambling industry
5.3.1.1 Percentage of gaming related disputes/complaints investigated within time frames
100% (29 out of 29) of patron disputes investigated, decided upon and letters of notification issued within targeted timeframe
100% of patron disputes investigated within timeframe
100% (19 out of 19) of patron disputes investigated, decided upon and letters of notification issued within targeted timeframe
Not applicable Not applicable
PROGRAMME 5 : LINKING PERFORMANCE WITH BUDGETS2018/2019 2017/2016
SUB-PROGRAMME NAME BUDGETACTUAL
EXPENDITURE
(OVER)/UNDER
EXPENDITURE BUDGETACTUAL
EXPENDITURE
(OVER)/UNDER
EXPENDITURE
R’000 R’000 R’000 R’000 R’000 R’000
Senior Manager 1 872 1 835 37 1 677 1 652 25
Monitoring & Gaming Audit 6 189 6 030 159 6 253 6 256 -3
Gaming Control 6 271 5 618 653 6 338 5 645 693
TOTAL 14 332 13 483 849 14 268 13 553 715
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PART B: PERFORMANCE INFORMATION
59
SUB-PROGRAMME 6.1: BETTING MONITORING AND CONTROL
No. Strategic Objective
Strategic Indicator
Actual Achievement 2017/2018
Planned Target2018/2019
Actual Achievement2018/2019
Deviation from Planned Target to Actual Achievement for 2018/2019
Comment on Deviations
SO.6.1 Ensure completeness of betting taxes payable to the Provincial Revenue Fund
Number of monthly betting tax compliance reports
No target was set out in 2017/18 in respect of this Strategic Objective Indicator
12 betting tax compliance reports compiled
12 betting tax compliance reports compiled and submitted to Chief Executive Officer
Not applicable Not applicable
SO.6.2 Maintain regulatory and technical compliance in the betting industry
Number of annual betting regulatory compliance monitoring reports
No target was set out in 2017/18 in respect of this Strategic Objective Indicator
Compile 1 Annual Regulatory Compliance Plan and 1 Annual Transformation Monitoring Plan
2 Annual plans compiled.
1 additional plan prepared
Additional monitoring plan for Transformation
S.O. 6.3 Protect the interest of the public within the betting industry
Percentage of outcomes determined in respect of lodged betting disputes / complaints
No target was set out in 2017/18 in respect of this Strategic Objective Indicator
6.3.1 – 100% of betting related disputes / complaints lodged are investigated and outcomes determined
59% achieved
(20 out of 34 betting disputes/ complaints investigated and outcome determined)
Target not achieved. Negative variance of 41%
14 betting disputes / complaints still being investigated
Percentage of reported illegal activities handed over to SAPS for investigation
No target was set out in 2017/18 in respect of this Strategic Objective Indicator
6.3.2 – 100% of reported illegal gambling activities handed over to SAPS for investigation
94% achieved
45 out of 48 reported illegal gambling activities handed over to SAPS for investigation.
Target not achieved. Negative variance of 6%
3 reported illegal gambling activities were not actionable
GRPAHS FOR BOOKMAKER: HORSES AND SPORT
BOOKMAKER - CONTINGENCY TAXES
TOTALISATOR - HORSE RACING TAXES
TOTALISATOR - SPORT TAXES
18 500 000 1 550 000
1 450 000
1 350 000
1 250 000
1 300 000
1 500 000
1 400 000
17 500 000
17 000 000
16 500 000
15 500 000
15 000 000
16 000 000
18 000 000
2 000,000
4 000,000
6 000,000
8 000,000
10 000,000
12 000,000
0,00
2017/2018 2017/2018 2017/20182018/2019 2018/2019 2018/2019
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART B: PERFORMANCE INFORMATION
60Department:
edteaEconomic Development,Tourism andEnvironmental Affairs
SUB-PROGRAMME 6.1: BETTING MONITORING AND CONTROLPI No. Performance
IndicatorActual Achievement 2017/18
Planned Target2018/19
Actual Achievement2018/19
Deviation from Planned Target to Actual Achievement for 2018/19
Comment on Deviations
Strategic Objective 6.1: Ensure the completeness of betting taxes payable to the Provincial Revenue Fund6.1.1.1 Percentage of
monthly tax verification reports compiled on operational betting licensees
Monthly tax validations conducted on 100% of operational betting licensees (578 tax validations / 578 operational betting licensees)
Monthly tax verification reports compiled on 100% of operational betting licensees
100% achieved
549 out of 549 targeted monthly tax verification reports compiled on operational licensees
Not applicable Not applicable
Strategic Objective 6.2: Maintain regulatory and technical compliance in the betting industry6.2.1.1 Number of
compliance inspection checklists in respect of betting inspections
100% of planed inspections conducted [320 on-site inspections and 6 FICA inspections] / 2 Additional unplanned on-site inspections conducted
256 Compliance inspections
250 compliance inspection checklists compiled out of 256 planned compliance inspections.
Negative variance of 6 compliance inspection checklists
6 compliance inspections were not conducted due to resources being allocated to assist with other operational areas
6.2.1.2 Percentage of betting related change requests/applications processed within prescribed timeframe
97% (70 out of 72 operational change requests processed within targeted timeframes)
100% of betting related change requests/applications processed within prescribed
86.84% achieved
66 out of 76 betting related change requests/applications were processed within targeted timeframe
Negative variance of 13.16%10 out of 76 betting related change requests/applications were processed outside of targeted timeframe
Some processes still manual and delays were experienced in processing.
6.2.1.3 Number of transformation monitoring reports in respect of betting licensees
9 annual monitoring inspections on corporate licensees conducted and 23 annual B-BBEE monitoring reports compiled on betting licensees.
20 Transformation monitoring reports in respect of betting licensees
20 Transformation Monitoring reports compiled
Not applicable Not applicable
Strategic objective 6.3: Protect the Interests of the Public within the betting industry6.3.1.1 Percentage of
betting related disputes/complaints investigated within prescribed time frames
100% (14 out of 14) of lodged betting disputes investigated, heard and decided upon and letters of outcome issued within targeted timeframe
100% of betting related disputes/complaints investigated within prescribed time frames
28% achieved8 out of 29 disputes / complaints investigated within prescribed timeframe
Target not achieved, Negative variance of 72%3 out of 29 disputes / complaints investigated outside of prescribed timeframes18 out of 25 disputes/complaints are still under investigation
Negative variance caused by the following factors:-· Delays in facilitating dispute hearings· Delays in obtaining responses from licensees· Delays in notifying punters
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SUB-PROGRAMME 6.1: BETTING MONITORING AND CONTROLPI No. Performance
IndicatorActual Achievement 2017/18
Planned Target2018/19
Actual Achievement2018/19
Deviation from Planned Target to Actual Achievement for 2018/19
Comment on Deviations
6.3.1.2 Number of illegal gambling inspection reports
38 Illegal gambling inspections conducted in conjunction with SAPS and other licensing authorities
20 illegal gambling inspection reports on raids conducted in conjunction with the SAPS
21 out of 21 signed illegal gambling inspection reports in respect of planned raids conducted in conjunction with the SAPS
Positive variance of 1 illegal gambling inspection report.
All reports of illegal gambling must be investigated by SAPS and the KZNGBB inspectors must accompany the SAPS when requested.
PROGRAMME 6 : LINKING PERFORMANCE WITH BUDGETS2018/2019 2017/2018
SUB-PROGRAMME NAME BUDGETACTUAL EXPENDITURE
(OVER)/UNDER EXPENDITURE BUDGET
ACTUAL EXPENDITURE
(OVER)/UNDER EXPENDITURE
R’000 R’000 R’000 R’000 R’000 R’000
Betting, Monitoring & Control 8 198 7 031 1 167 7 422 6 542 880
Illegal Gambling 1 286 1 155 131 1 134 1 117 17
TOTAL 9 484 8 186 1 298 8 556 7 659 897
REVENUE COLLECTION2018/2019 2017/2018
SUB-PROGRAMME NAME ESTIMATE
ACTUAL AMOUNT
COLLECTED
(OVER)/UNDER
COLLECTION ESTIMATE
ACTUAL AMOUNT
COLLECTED(OVER)/UNDER
COLLECTION
R’000 R’000 R’000 R’000 R’000 R’000
Fees Received 27 059 23 337 3 722 20 394 22 317 -1 923
Grants Received 42 104 42 310 -206 62 904 63 196 -292
Interest Received 4 776 7 152 -2 376 3 284 4 987 -1 703
Other Income 22 644 -622 20 2 18
Rollover/Retention 21 336 21 336 0 13 338 13 338 0
Gain on disposal of Assets 28 -28 3 -3
TOTAL 95 297 94 807 490 99 940 103 843 -3 903
Captial Investment2018/2019 2017/2018
SUB-PROGRAMME NAME BUDGETACTUAL
EXPENDITURE
(OVER)/UNDER
EXPENDITURE BUDGETACTUAL
EXPENDITURE(OVER)/UNDER EXPENDITURE
R’000 R’000 R’000 R’000 R’000 R’000
Computer Equipment 3 601 470 3 131 27 27 0
Office Equipment & Furniture 2 500 103 2 397 56 56 0
Software 228 -228 1 598 747 851
TOTAL 6 101 801 5 300 1 681 830 851
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART C: CORPORATE GOVERNANCE
62Department:
edteaEconomic Development,Tourism andEnvironmental Affairs
PART C
C O R P O R AT E G O V E R N A N C E
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1. INTRODUCTION1.1 The Board provides strategic direction and ethical
leadership to the KwaZulu-Natal Gaming and Betting
Board (the Entity).
1.2 The Board of Directors is the accounting authority of the
Entity.
1.3 The Board is committed to the highest standards of
business integrity, ethical values and governance. It
recognises its responsibility to conduct its affairs with
prudence, transparency, accountability, honesty, fairness
and in a socially responsible manner, in compliance with
legislation, regulation and voluntary codes to ensure the
sustainability of the business.
1.4 Governance structures and processes are regularly
reviewed to align them with legislative and regulatory
changes and to reflect best practice.
1.5 In addition to the KwaZulu-Natal Gaming and Betting
Board legislation, the corporate governance principles
embodied in the Public Finance Management Act (PFMA)
apply to the entity and are complied with. In addition the
Board has committed to compliance with the principles
for good governance embodied in the Protocol for
Corporate Governance in the Public Sector (2003) as
amended.
1.6 The 31st of March 2019 marks the end of the first year in
office for the Board.
2. PORTFOLIO COMMITTEES2.1 Parliament exercises its role by evaluating the
performance of the entity, by interrogating its annual
financial statements and other relevant documents
which are tabled.
2.2 The Standing Committee on Public Accounts (SCOPA)
reviews the annual financial statements and the audit
reports of the external auditors.
2.3 The Portfolio Committee exercises oversight over the
service delivery performance and reviews the non-
financial information that is contained in the annual
reports of the entity. The Portfolio Committee is
concerned with service delivery and the enhancement of
economic growth.
2.4 During the financial year, four Finance Portfolio
Committee meetings and one Premier’s Portfolio
Committee meeting were held.
3. EXECUTIVE AUTHORITY (OFFICE OF THE PREMIER)
3.1 The PFMA governs and gives oversight authority to the
Executive Authority over the Board.
3.2 The Executive Authority also has power to appoint and
dismiss the Board. When appointing the Board, the
Executive Authority ensures that there is an appropriate
mix of Members with the necessary skills to guide the
entity.
3.3 On 3 May 2019, a Financial and Non-Financial Report was
presented to the Executive Authority, for the Quarter
4 period which is from 01 January 2019 to 31 March
2019. The report detailed revenue, expenditure, service
delivery information all required in terms of Regulation 3
to the KZN Gaming and Betting Act, as amended.
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART C: CORPORATE GOVERNANCE
64Department:
edteaEconomic Development,Tourism andEnvironmental Affairs
4. THE BOARD GOVERNANCE STRUCTURES4.1 Board Composition:
4.1.1 The Board is a unitary structure with nine non-executive members and the CEO as an executive Board Member.
4.1.2 The MEC Responsible had appointed a Representative on the Board as he is empowered to do by Section 8 of the Act.
This role has been performed by Adv S. Chamane during the financial year.
4.1.3 Details of the Board Members are as follows:
Name Designation Date Appointed Area of Expertise Committee Membership
Dr S.G. Ngcobo Chairperson 11 April 2018 Governance, Business Development, Education
1. Attends All Board Meetings, also part of Social Ethics and Transformation for period under review
Mrs M.P. Myeni Deputy Chairperson
11 April 2018 Communications, ICT
1. Licencing, Registration, Monitoring, Control and Compliance Committee (Chairperson)
Mr S.N. Chetty Member 11 April 2018 Legal 1. Licencing, Registration, Monitoring, Control and Compliance Committee
2. Disciplinary and Dispute Hearings Committee (Chairperson)
Prof B.S. Stobie Member 11 April 2018 Finance 1. Audit Committee2. Finance Committee (Chairperson)
Ms Z.P. Tenza Member 11 April 2018 Legal 1. Human Resources and Remuneration Committee (Chairperson)
2. Licencing, Registration, Monitoring, Control and Compliance Committee
Mr L.S. Gabela Member 11 April 2018 Finance, Auditing, Public Administration
1. Licencing, Registration, Monitoring, Control and Compliance Committee
2. Finance Committee 3. Audit Committee (Chairperson
Mr S.S. Zondi Member 11 April 2018 Marketing, Public Administration
1. Social Ethics and Transformation Committee
Adv K.P. Thango Member 11 April 2018 Legal 1. Social Ethics and Transformation Committee (Chairperson)
2. Disciplinary and Dispute Hearings Committee
Dr T.I. Nzimakwe Member 11 April 2018 Public Administration
1. Finance Committee2. Human Resources and
Remuneration Committee
Ms P.N. Baloyi Chief Executive Officer
May 2015 Governance, Legal and Compliance
1. MANCO2. IT Steering Committee3. Attends all Board and Committee
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART C: CORPORATE GOVERNANCE
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4.1.4 The role of the non-executive Chairperson and the Chief
Executive Officer is formalised, separate and clearly
defined. The Chairman is responsible for leading the
Board, while the Chief Executive Officer is responsible
for the operational and financial management of the
entity. The division of responsibilities at the helm of the
entity ensures a balance of authority and power with no
single individual having unrestricted decision making
powers.
4.1.5 The non-executive Board Members have extensive
business experience and specialist skills across a
range of sectors including accounting, finance, law
and human resources. This enables them to provide
balanced, independent advice and judgment in the
decision making process.
4.1.6 The Board Members are free from any business
relationship that could interfere with their objectivity
or judgment in the implementation of the business
of the entity. Should a matter arise that has potential
conflict with a Board Member’s personal interest and
the Member’s obligation to act in the best interest of
the entity, such Member is required to declare such
conflict and recuse themselves from that part of the
meeting where such matter will be discussed
4.1.7 The Board Members provide effective leadership that is
based on an ethical foundation, which is characterised
by acting responsibly, accountably, honestly, with
integrity and transparency. This sets the tone from the
top, to promote an ethical culture within the Entity.
4.1.8 The Board meets at least eight times a year and
additional meetings can be convened to consider
specific business issues which may arise between
scheduled meetings. A number of additional meetings
and workshops were required during the year.
4.2 INDEPENDENCE OF BOARD MEMBERS
4.2.1 The KwaZulu-Natal Gaming and Betting Act
prescribes that Board Members are appointed for a
fixed term period of three years, only, although they
may be reappointed for a further term. Taking this
into account and that there are no factors which
are considered to prevent the Board Members from
exercising their independent judgment or acting in
an independent manner, all Members are considered
to be classified as independent in terms of the King IV
definition.
4.3 BOARD CHARTER
4.3.1 The scope of authority, responsibility, composition
and functioning of the Board is contained in a formal
charter which is regularly reviewed.
4.3.2 Board Members retain overall responsibility and
accountability for:
4.3.2.1 Approving strategic plans;
4.3.2.2 Monitoring operational performance and
management;
4.3.2.3 Ensuring effective risk management and internal
controls;
4.3.2.4 Legislative, regulatory and governance compliance;
4.3.2.5 Approval of significant accounting policies and
annual financial statements;
4.3.2.6 Monitoring transformation and empowerment;
4.3.2.7 Balanced and transparent reporting to stakeholders.
4.4 BOARD COMMITTEES4.4.1 The Board has delegated specific functions to
Committees, established in terms of Section 18 of
the Act, to assist the Board in meeting its oversight
responsibilities. All Board Committees are chaired by a
Board Member except for the Audit Committee which
is chaired by an external independent Member.
4.4.2 The Board does not abdicate its responsibilities to the
Committees, the ultimate responsibility still rests with
the Board.
4.4.3 All Committees have documented terms of reference
which are reviewed annually and the Head of
Governance, Risk and Compliance confirms that the
Committees have functioned in accordance with
these written terms of reference during the financial
year.
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART C: CORPORATE GOVERNANCE
66Department:
edteaEconomic Development,Tourism andEnvironmental Affairs
Num
ber o
f m
eeti
ngs
held
Dr S
G N
gcob
o
Mrs
MP
Mye
ni
Mr S
N C
hett
y
Prof
BS
Stob
ie
Ms
ZP T
enza
Mr L
S G
abel
a
Mr S
S Zo
ndi
Adv
KP
Than
go
Dr T
I N
zim
akw
e
Mr V
. Ra
mph
al
(Ext
erna
l)
Ms V
. Ndl
ovu
(Ext
erna
l)
Board 8 8 8 4 6 7 8 7 6 5 - -
Special Board (&Strategy)
2 2 2 - 1 2 2 1 2 2 - -
Board Workshop 1 1 1 - 1 1 1 1 1 1 - -
Audit Committee 4 - - - 3 - 4 - - - 4 4
Dispute Hearing 3 - - 3 - 3 - - 2 - - -
SET Committee 3 2 1 - - - - 3 3 - - -
Finance Committee 5 - - - 5 - 5 - - 4 - -
Human Resources Committee
4 - - - 2 4 - - - 3 - -
Licensing, Committee
5 - 5 3 - 4 5 - - - - -
Public Hearings 4 - 4 2 - 4 4 - 1 - - -
Ad Hoc Meetings* - 7 4 1 2 4 3 3 2 4
Finance Portfolio - - - - - - - - - - - -
Premier’s Portfolio Committee
- 1 3 - 1 - 2 1 1 1 - -
Section 87 1 - - 1 - 1 - - 1 - - -
Section 41 - - - - - - - - - - - -
Stakeholder Engagement
9 6 3 - 2 4 5 5 3 5 - -
Total 49 27 30 14 22 34 39 19 22 26 4 4
* Ad Hoc includes HR Workshop, HR Moderation and Accommodation
4.6 REMUNERATION OF BOARD MEMBERS
4.5 BOARD AND COMMITTEE MEETING ATTENDANCE
Members’ fees Reimbursive expenses Total
Dr SG Ngcobo 366 827 20 124 386 951
Ms MP Myeni 449 736 20 504 470 240
Mr SN Chetty 313 974 5 646 319 620
Prof. BS Stobie 373 067 4 485 377 552
Ms ZP Tenza 407 601 8 133 415 734
Mr LS Gabela 437 166 41 056 478 222
Mr SS Zondi 256 440 624 257 064
Adv KP Thango 361 752 10 194 371 946
Dr TI Nzimakwe 252 799 10 095 262 894
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART C: CORPORATE GOVERNANCE
67
to the Audit Committee. The Audit Committee
is responsible for ensuring that the entity has
implemented an effective policy and plan to
manage risk and that disclosures regarding risk are
comprehensive, timely and relevant.
5.3 The Head of Governance Risk and Compliance is
responsible for designing and implementing the
risk management process and monitoring ongoing
progress. With the assistance of a Risk Officer, she
regularly reviews the entity’s risk to ensure mitigation
strategies are being implemented by the business
units. Internal Auditors monitor the progress of the
entity and business units in managing risks and report
their findings to the Audit Committee quarterly.
5.4 Risk management is embedded in the entity’s annual
business planning cycle. In determining the strategic
and operational plans for the year ahead each
business unit is required to review its operational
risk register. This includes a review of the risks of
the previous financial year, considering new and
emerging risks and facilitated workshops with all
levels of management. A risk framework sets out the
various risks that should be considered as part of the
risk identification process. These potential risks are
updated annually to ensure all relevant issues are
considered.
5.5 Each risk on the register is assigned an impact
and probability rating. The impact assigned to a
risk is assessed and takes account of the financial,
compliance, reputation and people effects on the
entity. The probability of a risk materialising is also
measured. The impact and probability ratings are
then used to determine the inherent risk rating and
its significance to the entity.
5.6 Detailed risk mitigation plans are developed for each
risk, which then determines the level of residual risk.
Residual risk ratings are then assigned to each risk.
5.7 Quarterly reports are furnished to the Audit
Committee and to Board on the implementation of
the risk mitigation plans.
4.7 MANAGEMENT COMMITTEE
4.7.1 Executive management and the Board work closely
in determining the entity’s strategic objectives.
Authority has been delegated by the Board to the
Chief Executive Officer and Management Committee
for the implementation of the strategy and ongoing
management of the business.
4.7.2 The Management Committee comprises the Chief
Executive Officer, all Senior Manager and three
Unit Managers. The Board is apprised of progress
through reporting at board meetings and regular
communication with management.
4.7.3 The responsibilities of Management include:
· Developing and implementing the annual
performance plan and action plans;
· Preparing budgets and monitoring expenditure;
· Monitoring operational performance against
agreed targets;
· Adhering to financial management policies;
· Determining human resources policies and
practices;
· Monitoring and managing risk; and
· Communicating with stakeholders
4.8 BOARD SECRETARY
4.8.1 The Board Secretary ensures that board procedures,
all regulations and governance codes are observed
and also provides guidance to the Board Members
on governance, compliance and their fiduciary
responsibilities. Members have unrestricted access to
the advice and services of the Board Secretary.
4.8.2 The Board Secretary was appointed and assumed her
duties on the 01st of February 2018.
1.4.3 The Board is satisfied that the Board Secretary has the
necessary skills and expertise to fill the role.
5. RISK MANAGEMENT5.1 The KZNGBB follows a disciplined approach to
evaluating risks and developing appropriate
strategies to mitigate and manage risk. The risk
management methodology is considered by the
Audit Committee as well as the Set Committee
and any enhancements recommended during the
financial year have been adopted.
5.2 The Board is responsible for the oversight of risk
management and has delegated the responsibility
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART C: CORPORATE GOVERNANCE
68Department:
edteaEconomic Development,Tourism andEnvironmental Affairs
6. THE AUDIT COMMITTEE6.1 ROLE
The Committee has an independent role with
accountability to both the Board and stakeholders.
The Committee’s responsibilities include the statutory
duties prescribed by the Public Finance Management
Act, the KZN Gaming and Betting Act and activities
recommended by King III as well as additional
responsibilities assigned by the Board.
6.2 FUNCTIONS
The Committee’s functions cover reporting, combined
assurance, internal audit, financial management,
performance management, risk management and
external audit and are outlined in detail in the Audit
Committee report on pages 79 of the audited financial
statements.
6.3 COMPOSITION
The Committee comprises 2 independent external
members who were appointed during 2016 and two
Board Members, one of whom is the Chairperson and
one who is the Chairperson of the Board’s Finance
Committee.
7. ACCOUNTABILITY AND COMPLIANCE7.1 INTERNAL AUDIT
The internal audit function provides information to
facilitate the establishment and maintenance of an
effective system of internal control to manage risks
associated with the entity’s business. The role of
internal audit is outlined in the terms of reference of
the Audit Committee and in the Internal Audit Charter.
Details of the internal audit function are contained
in the Audit Committee Report on pages 79 of the
audited financial statements.
7.2 INTERNAL CONTROL
Systems of internal control are designed to manage,
rather than eliminate, the risk of failure to achieve the
entity’s strategic objectives and to provide reasonable,
not absolute, assurance against misstatement or
loss. The Audit Committee considers the results of
formal documented reviews of systems of internal
controls and risk management including the design,
implementation and effectiveness of internal financial
controls. In addition the Audit Committee has oversight
of the entity’s performance against its strategic targets
and annual performance plan.
7.3 EXTERNAL AUDIT
The Board members ultimately accept responsibility
for the preparation of the audited annual financial
statements and performance reports that they fairly
represent the results of the entity in accordance with
the PFMA and GRAP Standards. The Auditor General
as “External Auditor” for the entity is responsible for
independently auditing and reporting on the financial
statements in conformance with GRAP Standards and
applicable laws as well as the performance of the
entity.
8. LEGISLATIVE AND REGULATORY COMPLIANCE
8.1 Legislative and regulatory compliance is monitored by
the Head; Governance, Risk and Compliance.
8.2 She is responsible for providing advice to the
operational business units, creating awareness and
developing an understanding of relevant legislation
and regulation.
8.3 Compliance with the KZN Gaming and Betting Act has
received primary attention during the financial year as
has compliance the PFMA, Treasury Regulations and
the Protection of Personal Information Act.
8.4 Five requests for information were received by the
KZNGBB in terms of the promotion of Access to
Information Act during the period. Where the entity
was in possession of the requested information, this
was provided.
8.5 Apart from the matters listed in the Audit Report under
the Governance and Compliance Section, there was no
other instances of major non-compliance.
9. ETHICS AND VALUES8.1 The KZNGBB subscribes to the highest ethical standards
of business conduct. A set of values and a Code of Conduct requires staff to display integrity, respect, openness, and affords them the right and obligation to challenge others who are not adhering to these values.
8.2 The KZN Gaming and Betting Act and Code of Conduct also sets stringent standards relating to the acceptance of gifts from third parties and declarations of potential conflicts of interest.
8.3 A fraud prevention policy ensures the entity’s firm stance against fraud and prosecution of offenders. This policy outlines the Board’s response to fraud, theft and corruption committed by staff and external parties against the entity. During the year fraud awareness has
been a priority for the GRC Unit.
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PART C: CORPORATE GOVERNANCE
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10. WHISTLEBLOWERS LINE10.1 Staff are encouraged to report suspected fraudulent
or unethical behaviour via a toll-free telephone service
managed by an external service provider. All reported
incidents are investigated.
10.2 Awareness of this facility is created and staff members
are encouraged to report incidents before significant
losses are incurred.
11. SOCIAL RESPONSIBILITY11.1 It is the Board’s mandate to ensure that all gambling
authorised by it is conducted in a manner that promotes
the integrity of the gambling industry and does
not cause harm to the public interest. The KwaZulu-
Natal Gaming and Betting Board in accordance with
the entity’s legislated mandate, must ensure that
the interests of the public are maintained whilst
ensuring that the industry invests in socio-economic
development of communities. The entity maintains
a balance between job creation, socio-economic
development and revenue collection contributions by
this sector.
11.2 The KwaZulu-Natal Gaming and Betting industry’s
Corporate Social Responsibility Commitments are based
on license conditions and are aligned to education
and infrastructure programmes incorporating
community education, Health infrastructure and Social
Development, Community Development, Support
and Moral Regeneration Programmes, Agriculture,
Conservation and Environmental Programmes and
Arts, Culture, Sports and Recreation programmes. The
KZNGBB ensures compliance by the licensee in terms
of Corporate Social Responsibility commitments,
11.3 The Board takes this mandate seriously when granting
licences or registrations and in its monitoring function.
Licence conditions are imposed which take the
community’s, in which our licensees operate, best
interest into account. The Monitoring and Compliance
Business Units ensure adherence to these licence
conditions as well as initiatives of the South African
Responsible Gambling Foundation with whom the
KZNGBB has a close working relationship.
11.4 The Board has embarked on awareness campaigns
with the South African Responsible Gambling
Foundation (SARGF), the assessment of gambling
saturation levels and a social impact study. As part of
the Socio-Economic Impact study, there were focus
groups that were held in various communities within
the Province. These groups included the youth,
patrons at gambling establishments, senior citizen
groups as well as religious groups. The awareness
campaigns undertaken within the year under review
comprises of KZNGBB and SARGF school campaigns
as well as reporting illegal gambling incidents.
Community awareness programmes were held during
the year. The key activities that were undertaken
included Community Radio Talkshows on Responsible
Gambling assistance as well as the implications of
Illegal Gambling. In addition, Community awareness
programmes were undertaken in the Community of
Chatsworth.
11.5 Future initiatives include events that would be jointly
held with the National Gambling Board and the
Department of Trade and Industry which will create
awareness about the possible harms of gambling and
illegal gambling.
12. SOCIO-ECONOMIC DEVELOPMENT
12.1 A total amount of R 12 506 230.97 was contributed
to CSI initiatives by Gaming and Betting Licensees.
23.48% of contributions are made to Education
and 32.84% to Community Upliftment projects. A
breakdown of contributions in the various categories,
is reflected below:
CATEGORY OF CSI CASINOROUTE
OPERATOR BINGO BETTING TOTAL
Health and Welfare 464 183,60 684 249,00 110 000,00 1 650 239,26 2 908 671,86
Education 4 119 997,88 1 105 000,00 185 000,00 269 518,18 5 679 516,06
Community Upliftment Projects 545 174,57 575 000,00 266 057,12 330 852,73 1 717 084,42
Sports and Recreation 76 790,00 - - 1 190 712,68 1 267 502,68
Arts and Culture 100 000,00 30 000,00 185 000,00 38 620,00 353 620,00
Other Donations - - - 579 835,95 579 835,95
Total CSI Contributions 5 306 146,05 2 394 249,00 746 057,12 4 059 778,80 12 506 230,97
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART C: CORPORATE GOVERNANCE
70Department:
edteaEconomic Development,Tourism andEnvironmental Affairs
Gaming and Betting licensees provide access to employment opportunities, thereby encouraging new entrants into the
industry within the Provincial economy. Additional jobs continue to be created through the growth in existing licensed
operations.
The table below reflects the comparative registered gambling employee statistics within the Province (registered by the Board
in terms of the Act).
As can be seen in the chart below, overall, there has been a growth in the number of registered gambling employees since
2014/15 – growth of 73 54%. This growth is as a result of increased gaming and betting licence operations.
EMPLOYMENT - REGISTERED GAMBLING INDUSTRY EMPLOYEES
COMPARATIVE CSI CREPORTED CONTRIBUTIONS - 2016/17 TO 2019/20 (AS AT JUNE 2019)
REGISTERED EMPLOYEES -EMPLOYMENT/JOBCREATION WITHIN THE GAMBLING INDUSTRY IN KZN
7000
6000
5000
4000
3000
2000
1000
0
7000
6000
5000
4000
3000
2000
1000
02014/15
3745
2015/16
4745
2016/17
4894
2017/18
5921
2018/19
6499
Casino LPM (Route Operators) Bingo Bookmakers & Totalisators Total
2014/15 2167 97 311 1170 3745
2015/16 2643 104 323 1675 4745
2016/17 2638 103 194 1959 4894
2017/18 2497 98 294 3032 5921
2018/19 2481 97 438 3483 6499
Health and Welfare 4%
Education 39%
Community Upliftment Projects 5%
Sports and Recreation 50%
Arts and Culture 1%
Other Donations 1%
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART C: CORPORATE GOVERNANCE
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SMME Spend by Gaming Licensees: The graphs below depicts the SMME spend by Gaming licensees in the period under
review.
REPORTED CORPORATE SOCIAL INVESTMENT CONTRIBUTIONS
REPORTED SMME SPEND BY GAMING LICENSEES - 2014/15 TO 2018/19
10000000
8000000
6000000
4000000
2000000
0
2018/19
R 976 642 502
R2 56 695 041
R 801 536 734
2017/18
R 338 510 728
R 185 649 549
R 648 319 777
2016/17
R 820 003 969
R 2 222 966 191
R 846 796 059
2015/16
R805 487 931
R 256 556 656
R 859 682 129
2014/15
R 954 038 093
R 1 146 736 100
R 568 544 589
The chart below reflects the contributions made to CSI by the gaming and betting licences for the period 2015/16 to 2017/18.
R12 000 000,00
R10 000 000,00
R8 000 000,00
R6 000 000,00
R4 000 000,00
R2 000 000,00
R0,00
Local Economy
SMME
PDI Business
2018/19 2017/18 2016/2017 2015/2016R5 306 146,05 R2 633 855,75 R7 171 903,76 R9 580 422,33 R2 394 249,00 R1 577 928,28 R2 755 251,40 R1 344 259,94 R746 057,12 R902 673,09 R568 987,39 R16 640,54
R4 059 778,80 R6 024 362,34 R9 253 478,76 R3 088 540,60
CasinoLPMsBingoBookmakers & Totalisators
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART C: CORPORATE GOVERNANCE
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edteaEconomic Development,Tourism andEnvironmental Affairs
SMME Spend by Betting Licensees: The graphs below depicts the SMME spend by Betting licensees in the period under review.
REPORTED SMME SPEND BY BETTING LICENSEES - 2016/17 TO 2018/19
R600000 00.00
R500000 00.00
R400000 00.00
R300000 00.00
R200000 00.00
R100000 00.00
R 0.00
Local Economy
SMME
PDI Business
2018/19
R 509 200 348
R 233 774 525
R 150 389 164
2017/18
R 297 746 502
R 281 732 347
R 131 535 222
2016/2017
R 195 676 276
R 75 617 229
R 85 722 972
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13. GALLERY OF ACTIVITIES AND PROGRAMMES UNDERTAKEN IN THE YEAR UNDER REVIEW
Socio Economic Impact Study Focus Groups at licensee
establishment in KwaDukuza
Socio Economic Impact Study Focus Groups at Umkomaas Bible Fellowship Church
.JPG
Socio Economic Impact Focus Group Sessions Held at Senior Citizens Group Phoenix
Socio Economic Impact Study Focus Groups at Emmanuel
Ministries in Asherville
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PART C: CORPORATE GOVERNANCE
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edteaEconomic Development,Tourism andEnvironmental Affairs
Joint SARGF and KZNGBB Leadership Development Programme Excursion held at Paradise Valley
Social Worker Training undertaken by SARGF and KZNGBB at DAFTA Chatsworth
Social Worker Training at Chatsworth Child Welfare with SARGF and KZNGBB
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Stakeholder Engagement with KZNGBB and Suncoast Casino.
KZNGBB supports the Dundee July Rural Horseriding Festival
KZNGBB supports the Dundee July Rural Horseriding Festival
KZNGBB supports the Dundee July Rural Horseriding Festival
Stakeholder Engagement between Gold Circle and KZNGBB
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PART C: CORPORATE GOVERNANCE
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edteaEconomic Development,Tourism andEnvironmental Affairs
Kingdom Slots Donates to Uthombo Foundation
Joint SARGF and KZNGBB info sharing sessions with senior citizens DAFTA
Adv KP Thango, Mr S Charles, Mr V Ramdas and Ms P Baloyi at
SUNCOAST Expansion Launch Event
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Schools Awareness Programme: Shallcross
Parliament Portfolio Committee visit to Great
Bingo in Ladysmith
Parliament Portfolio Committee visits undertaken at
Gold Rush Bingo
Joint School Awareness Programme - Umlazi
Joint School Awareness Programme by SARGF and KZNGBB -
Fairvale Secondary School Wentworth
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART C: CORPORATE GOVERNANCE
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edteaEconomic Development,Tourism andEnvironmental Affairs
November Month Joint Awareness at Gold Rush
Bingo Chatsworth
November Month Joint Awareness Campaigns at Hollywood
Bets Stanger
November Month Joint Activations Awareness Programme conducted by KZNGBB and SARGF
November Month Joint Awareness Campaign conducted by KZNGBB and
SARGF at Suncoast Casino
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14. AUDIT AND RISK COMMITTEE REPORT
The Committee oversees the appointment, contract and remuneration of the Internal Audit function and that it is suitably capable with access to the Audit Committee Chair and reports to the Committee on internal audit duties and other matters designated to the function. The Audit Committee monitors that the Internal audit function follows a risk based plan, reviews the risk profile regularly and adapts the plan accordingly.
Based on the various reports by Internal Audit, the Audit Report on the Annual Financial Statements and the management report of the Auditor-General, the Committee noted that some matters were reported indicating deficiencies in the systems of internal control. We also noted that management has implemented adequate controls in most areas within the organisation to provide reasonable assurance that all major inherent risks are appropriately identified; managed and applicable legislation is adhered to.
Accordingly, we can report that the system of internal control over the financial reporting period under review was efficient and effective but has room for improvement.
Evaluation of Financial Statements: We have:· Reviewed and discussed the audited annual financial
statements to be included in the annual report, with the Auditor-General South Africa and the Chief Executive Officer (Accounting Officer);
· Reviewed the Auditor-General South Africa’s management letter and management’s response thereto;
· Reviewed changes in accounting policies and practices;· Reviewed the entity’s compliance with legal and
regulatory provisions; and· Reviewed significant adjustments made as a result of the
audit.
We concur with and accept the Auditor-General South Africa’s report on the annual financial statements, and are of the opinion that the audited annual financial statements be accepted and read together with the report of the Auditor-General South Africa.
Mr L.S. Gabela Chairperson of the Audit Committee: KwaZulu-Natal Gaming and Betting Board
31 July 2019
AUDIT AND RISK COMMITTEE REPORT
Report of the Audit Committee: We are pleased to present our report for the financial year ended 31 March 2019
Audit Committee Members and Attendance: During the 2018/19 financial year the Audit Committee consisted of the four members who are listed hereunder. The Committee must meet at least four (4) times per annum as per its approved terms of reference, the Audit Committee Charter. During the reporting period five meetings were held and attendance was as tabled below:
Name of Member Number of Meetings Attended
Mr L.S. Gabela 5
Prof B.S. Stobie 5
Mr V. Ramphal 5 Mrs V. Ndlovu 5
Audit Committee Responsibility: We report that we have adopted appropriate formal terms of reference in our Charter in line with the requirements of Section 51 (1) (a) (ii) of the Public Finance Management Act and Treasury Regulation 27.1. We report further that we have conducted our affairs in compliance with this Charter.
Internal Audit: We are satisfied that during the reporting period the internal audit function operated effectively and that it addressed the risks pertinent to the entity in its audits. The internal audit function was outsourced for the 2018/19 period. The internal audit function was outsourced for the 2018/19 period and the service provider undertook all audits per the annual audit plan approved by the Audit Committee.
As a Committee we met with the Internal Audit during the year to ensure that the function was executed effectively and objectively.
We are satisfied with the content and quality of the quarterly reports prepared and issued by the internal auditors of the entity during the year under review.
The quality of in year management quarterly reports submitted in terms of the PFMA: We reviewed the in year management quarterly reports submitted and were satisfied with the content and quality of reports prepared and submitted by management during the year.
The Effectiveness of Internal Control: In line with the PFMA, Treasury Regulations and the King IV Report on Corporate Governance for South Africa 2016 (effective date 01 April 2017) requirements, Internal Audit provides the Audit Committee and management with the assurance that the internal control is appropriate and effective. The Committee ensures that there is a Chief Audit Executive and Internal Audit function which is independent of management.
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART D: HUMAN RESOURCES MANAGEMENT
80Department:
edteaEconomic Development,Tourism andEnvironmental Affairs
PART D
HUMAN RESOURCESMANAGEMENT
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1. INTRODUCTIONThe KZNGBB strives to be an employer of choice, and the HRM Strategy was drafted with this particular aim.
The Strategic objective for Human Resources is to attract, develop and retain suitable, qualified and competent human
resources for the Board. The overall purpose of HR is to ensure that all matters relating to human capital management and
development are implemented effectively and efficiently
The Human Resources Unit provides services such as Training and Development, Recruitment and Selection, Labour Relations,
Performance Management and Development Employee Wellness and Human Resource Administration. The Unit set a number
of priorities for the year under review, which included the following:
• The Workplace Skills Plan and Annual Training Report submitted to the relevant SETA
• Employment Equity plan developed and approved.
• Human Resource Strategy developed and approved.
• Human Resources policies reviewed.
• Job Descriptions reviewed.
• Employee Wellness Program implemented.
• Succession Planning not achieved and this has been carried over to the 2018/19 FY
• Employment Equity Plan for the entity submitted timeously.
• Performance Reward System not yet fully developed and implemented
• Skills audit commenced.
Some of the targets were not achieved due to prolonged recruitment processes. The unit is still facing a challenge with:
• The lack of a performance reward system.
2. HUMAN RESOURCES OVERSIGHT STATISTICS2.1. PERSONNEL COSTS BY SALARY BAND
Level Personnel Expenditure
% of personnel exp. To total personnel
cost
No of employees* Average personnel cost per employee
Top Management 1 909 893.15 4.04% 1 1 909 893.15
Senior Management 7 225 118.34 15.28% 6 1 204 186.39
Professional qualified 9 201 893.31 19.46% 11 836 535.76
Skilled 25 370 993.10 53.66% 49 517 775.37
Semi – Skilled 3 319 639.39 7.02% 12 276 636.62
Unskilled 250 430.56 0.53% 2 125 215.28
TOTAL 47 277 967.85 100.00% 81 583 678.62
* - the number of employees includes those who resigned during the year
2.2. PERFORMANCE REWARDS
Level Performance rewards Personnel Expenditure % of performance rewards to total
personnel cost
Top Management 0 1 909 893.15 0
Senior Management 0 7 225 118.34 0
Professional qualified 32 960.38 9 201 893.31 0.07%
Skilled 0 25 370 993.10 0
Semi – Skilled 0 3 319 639.39 0
Unskilled 0 250 430.56 0
TOTAL 32 960.38 47 277 967.85 0.07%
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
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edteaEconomic Development,Tourism andEnvironmental Affairs
2.3. TRAINING COSTS
Programme / Activity / Objective
Personnel Expenditure
Training Expenditure
Training Expenditure as % of Personnel
Cost
No. of Employees
trained
Avg training cost per
employee
KZNGBB 47 277 967.85 381 768.00 0.78% 79 4 832.50
2.4. EMPLOYMENT AND VACANCIES
Programme/activity/objective 2017/18 No. of employees
2018/19 Approved
posts
2018/19 No. of employees
2018/19 vacancies
% of vacancies
Office of the CEO 3 4 3 1 1.15
Licensing & Registration 10 13 13 - -
Gaming Monitoring & Compliance 17 22 20 2 2.30
Betting Monitoring & Control and Law enforcement
13 14 11 3 3.45
Finance 9 11 10 1 1.15
Human Resources 5 9 9* 2 2.30
ICT 4 6 4 2 2.30
Legal Services 3 3 3 - -
Governance Risk and Compliance 5 5 5 - -
TOTAL 69 87 78 11 12.64
* includes two positions not on the approved structure.
Employment Level 2017/18 No. of employees
2018/19 Approved
Posts
2018/19
No. of employees
2018/19 vacancies
% of Vacancies
Top Management 1 1 1 - -
Senior Management 6 7 6 1 1.15
Professional qualified 10 11 11 - -
Skilled 42 56 46 10 11.49
Semi-skilled 9 11 12* -* -
Unskilled 1 1 2* -* -
TOTAL 69 87 78 11 12.64
* includes two positions not on the approved structure.
2.5. EMPLOYMENT CHANGES
Industry Norm KZNGBB 2017/18 FY KZNGBB 2018/19 FY
7.5% per annum 10% (8) 3.44% (3)
The above table indicates that our labour turnover has decreased from the previous financial year.
Salary Band Employment at beginning of period
Appointments Terminations Employment at end of period
Top Management 1 - - 1
Senior Management 6 - - 6
Professional qualified 10 1 - 11
Skilled 42 7 3 46
Semi – Skilled 9 3 - 12
Unskilled 1 1 - 2
TOTAL 69 12 3 78
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During the 2018/19 financial year, the following key vacant positions were filled by the entity:
• Manager – Human Resources (May 2018)
• Compliance Officer (June 2018)
• Procurement Officer (June 2018)
• Inspector – Gaming Systems Engineer (August 2018)
• Receptionist – 2 posts (September 2018)
• General Assistant (September 2018)
• Executive Assistant: CEO (September 2018)
• Compliance Officer – 2 posts (December 2018)
• Licensing & Registration Officer (January 2019)
• Licensing & Registration Officer (February 2019)
Reasons for staff leaving
Reason Number % of total no. of staff leaving
Resignation 3 100%
Total 3 100%
There were three resignations during the financial year. Of the three, two employees resigned to pursue business opportunities
while the third resigned due to a better opportunity (salary, benefits and higher level position). The entity experienced delays
in the filling of positions due to the austerity measures implemented by the Provincial Government. This resulted in a longer
recruitment process as approval must first be sought prior to the position being advertised.
2.6. LABOUR RELATIONS: MISCONDUCT AND DISCIPLINARY ACTION
Nature of disciplinary action Number
Verbal warning -
Written warning 2
Final written warning 1
Dismissal -
Total 3
2.7. EQUITY TARGETS AND EMPLOYMENT EQUITY STATUS
The Employment Equity Plan for the entity has been developed and approved.
Levels MALESAfrican Coloured Indian White
Current Target Current Target Current Target Current targetTop Management - N/A - N/A - N/A - N/A
Senior Management 2 1 - N\A 1 N\A 2 N\A
Professional qualified 7 N/A - N/A 1 N/A - N/A
Skilled 20 N\A - N\A 3 N\A - N\A
Semi-skilled 3 N/A - N/A - N/A - N/A
Unskilled - N\A - N\A - N\A - N\A
TOTAL 32 N/A - N/A 5 N/A 2 N/A
Levels FEMALESAfrican Coloured Indian WhiteCurrent Target Current Target Current Target Current target
Top Management 1 N/A - N/A - N/A - N/A
Senior Management - 3 - N\A - N\A 1 N\A
Professional qualified 2 N/A - N/A 1 N/A - N/A
Skilled 15 N/A 1 N\A 5 N\A 2 N\A
Semi-skilled 5 N/A 1 N/A 2 N/A 1 N/A
Unskilled 2 N\A - N\A - N\A - N\A
TOTAL 25 3 2 N/A 8 N/A 4 N/A
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
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84Department:
edteaEconomic Development,Tourism andEnvironmental Affairs
DURBAN KZNGBB STAFF
PIETERMARITZBURG KZNGBB STAFF
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KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART E: FINANCIAL STATEMENTS
86Department:
edteaEconomic Development,Tourism andEnvironmental Affairs
The reports and statements set out below comprise the
consolidated annual financial statements presented to the
provincial legislature:
Accounting Authority’s Responsibilities and Approval 87
Report of the Auditor General 88
Annexure- Auditor-General’s responsibility
for the Audit 91
Accounting Authority’s Report 92
Statement of Financial Position 94
Statement of Financial Performance 95
Statement of Changes in Net Assets 96
Cash Flow Statement 97
Statement of Comparison of Budget and Actual Amounts 98
Accounting Policies 99
Notes to the Consolidated Annual Financial Statements 109
PART E
F I N A N C I A L S TAT E M E N T S
CONTENTS
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PART E: FINANCIAL STATEMENTS
87
ACCOUNTING AUTHORITY’S RESPONSIBILITIES AND APPROVALThe members are required by the Public Finance and Management Act, (Act 1 of 1999), to maintain adequate accounting
records and are responsible for the content and integrity of the consolidated annual financial statements and related financial
information included in this report. It is the responsibility of the members to ensure that the consolidated annual financial
statements fairly present the state of affairs of the entity as at the end of the financial year and the results of its operations
and cash flows for the period then ended. The external auditors are engaged to express an independent opinion on the
consolidated annual financial statements and was given unrestricted access to all financial records and related data.
The consolidated annual financial statements have been prepared in accordance with Standards of Generally Recognised
Accounting Practice (GRAP) including any interpretations, guidelines and directives issued by the Accounting Standards Board.
The consolidated annual financial statements are based upon appropriate accounting policies consistently applied and
supported by reasonable and prudent judgements and estimates.
The members acknowledge that they are ultimately responsible for the system of internal financial control established by
the entity and place considerable importance on maintaining a strong control environment. To enable the members to meet
these responsibilities, the accounting authority sets standards for internal control aimed at reducing the risk of error or deficit
in a cost effective manner. The standards include the proper delegation of responsibilities within a clearly defined framework,
effective accounting procedures and adequate segregation of duties to ensure an acceptable level of risk.
These controls are monitored throughout the entity and all employees are required to maintain the highest ethical standards
in ensuring the entity’s business is conducted in a manner that in all reasonable circumstances is above reproach. The
focus of risk management in the entity is on identifying, assessing, managing and monitoring all known forms of risk across
the entity. While operating risk cannot be fully eliminated, the entity endeavours to minimise it by ensuring that appropriate
infrastructure, controls, systems and ethical behaviour are applied and managed within predetermined procedures and
constraints.
The members are of the opinion, based on the information and explanations given by management, that the system of internal
control provides reasonable assurance that the financial records may be relied on for the preparation of the consolidated
annual financial statements. However, any system of internal financial control can provide only reasonable, and not absolute,
assurance against material misstatement or deficit.
The members have reviewed the entity’s cash flow forecast for the year to 31 March 2020 and, in the light of this review and the
current financial position, they are satisfied that the entity has or has access to adequate resources to continue in operational
existence for the foreseeable future.
The annual financial statements are prepared on the basis that the entity is a going concern and that the Provincial
Government has neither the intention nor the need to liquidate or curtail materially the scale of the entity.
Although the accounting authority are primarily responsible for the financial affairs of the entity, they are supported by the
entity’s external auditors.
The external auditors are responsible for providing reasonable assurance on the entity’s consolidated annual financial
statements. The consolidated annual financial statements have been examined by the entity’s external auditors and their
report is presented on page 88.
The consolidated annual financial statements set out on pages 92 to 135, which have been prepared on the going concern
basis, were approved by the accounting authority on 29 May 2019 and were signed on its behalf by:
Dr SG Ngcobo
Chairperson
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REPORT OF THE AUDITOR-GENERAL TO PROVINCIAL LEGISLATURE ON KWAZULU-NATAL GAMING AND BETTING BOARDREPORT ON THE AUDIT OF THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
Opinion
1. I have audited the consolidated and separate financial statements of the KwaZulu-Natal Gaming and Betting Board (KZN
Gaming and Betting Board) set out on pages 92 to 135, which comprise the consolidated and separate statement of
financial position as at 31 March 2019, the consolidated and separate statement of financial performance, statement of
changes in net assets and the statement of cash flows, as well as the notes to the consolidated and separate financial
statements, including a summary of significant accounting policies.
2. In my opinion, the consolidated and separate financial statements present fairly, in all material respects, the consolidated
and separate financial position of the KZN Gaming and Betting Board as at 31 March 2019, and their financial perfonnance
and cash flows for the year then ended in accordance with the South African Standards of Generally Recognised Accounting
Practice (SA Standards of GRAP) and the requirements of the Public Finance Management Act of South Africa, 1999 (Act No.
1 of 1999) (PFMA).
Basis for opinion
3. I conducted my audit in accordance with the International Standards on Auditing (ISAs). My responsibilities under those
standards are further described in the auditor-general’s responsibilities for the audit of the consolidated and separate
financial statements section of this auditor’s report.
4. I am independent of the entity in accordance with sections 290 and 291 of the International Ethics Standards Board for
Accountants’ Code of Ethics for Professional Accountants (IESBA code}, parts 1 and 3 of the International Ethics Standards
Board for Accountants’ International Code of Ethics for Professional Accountants (including International Independence
Standards) and the ethical requirements that are relevant to my audit in South Africa. I have fulfilled my other ethical
responsibilities in accordance with these requirements and the IESBA codes.
5. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.
Responsibilities of accounting authority for the financial statements
6. The board, which constitutes the accounting authority is responsible for the preparation and fair presentation of the
consolidated and separate financial statements in accordance with SA Standards of GRAP and the requirements of the
PFMA, and for such internal control as the accounting authority determines is necessary to enable the preparation of
consolidated and separate financial statements that are free from material misstatement, whether due to fraud or error.
7. In preparing the consolidated and separate financial statements, the accounting authority is responsible for assessing its
entity’s ability to continue as a going concern, disclosing, as applicable, matters relating to going concern and using the
going concern basis of accounting unless the appropriate governance structure either intends to liquidate the entity or to
cease operations, or has no realistic alternative but to do so.
Auditor-general’s responsibilities for the audit of the consolidated and separate financial statements
8. My objectives are to obtain reasonable assurance about whether the consolidated and separate financial statements as a
whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes my
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with the ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these consolidated and separate financial statements.
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PART E: FINANCIAL STATEMENTS
89
9. A further description of my responsibilities for the audit of the consolidated and separate financial statements is included in
the annexure to this auditor’s report. I Report on the audit of the annual performance report
10. In accordance with the Public Audit Act of South Africa, 2004 (Act No. 25 of 2004) (PAA) and the general notice issued
in terms thereof, I have a responsibility to report material findings on the reported performance information against
predetermined objectives for selected programmes presented in the annual performance report. I performed procedures
to identify findings but not to gather evidence to express assurance.
11. My procedures address the reported performance information, which must be based on the approved performance
planning documents of the entity. I have not evaluated the completeness and appropriateness of the performance
indicators included in the planning documents. My procedures also did not extend to any disclosures or assertions
relating to planned performance strategies and information in respect of future periods that may be included as part of
the reported performance information. Accordingly, my findings do not extend to these matters.
12. I evaluated the usefulness and reliability of the reported performance information in accordance with the criteria developed
from the performance management and reporting framework, as defined in the general notice, for the following selected
programmes presented in the annual performance report of the entity for the year ended 31 March 2019:
Programmes Pages in the annual performance repoRT
Programme 4 - Licensing and Registration 48-51
Programme 6 - Betting, Monitoring and Control 58-61
13. I performed procedures to determine whether the reported performance information was properly presented and whether
performance was consistent with the approved performance planning documents. I performed further procedures to
determine whether the indicators and related targets were measurable and relevant, and assessed the reliability of the
reported performance information to determine whether it was valid, accurate and complete.
14. I did not raise any material findings on the usefulness and reliability of the programmes tabulated in paragraph 12 above.
Other matters
15. I draw attention to the matters below.
Achievement of planned targets
16. Refer to the annual performance report on pages 23 to 61 for information on the achievement of planned targets for the
year and explanations provided for the under/over achievement of a number of targets.
Adjustment of material misstatements
17. I identified material misstatements in the annual performance report submitted for auditing. These material misstatements
were on the reported performance information of the licensing and registration and betting, monitoring and control
programmes. As management subsequently corrected the misstatements, I did not raise any material findings on the
usefulness and reliability of the reported performance information.
Report on the audit of compliance with legislation
Introduction and scope
18. In accordance with the PAA and the general notice issued in terms thereof, I have a responsibility to report material findings
on the compliance of the entity with specific matters in key legislation. I performed procedures to identify findings but not
to gather evidence to express assurance.
19. The material findings on ·compliance with specific matters in key legislation are as follows:
Expenditure management
20. Effective and appropriate steps were not taken to prevent irregular expenditure of R331 255 disclosed in note 28 to the
REPORT OF THE AUDITOR-GENERAL TO PROVINCIAL LEGISLATURE ON KWAZULU-NATAL GAMING AND
BETTING BOARD (CONTINUED)
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PART E: FINANCIAL STATEMENTS
90Department:
edteaEconomic Development,Tourism andEnvironmental Affairs
annual financial statements, as required by section 51(1)(b)(ii) of the PFMA. The majority of the irregular expenditure was
caused by the use of expired contracts.
Consequence management
21 . I was unable to obtain sufficient appropriate audit evidence that disciplinary steps were taken against officials who had
incurred irregular expenditure as required by section 51(1)(e)(iii) of the PFMA. This was due to proper and complete records
that were not maintained as evidence to support the inquiry or investigations into irregular expenditure.
Other information
22. The accounting authority is responsible for the other information. The other information comprises the information
included in the annual report. The other information does not Include the consolidated and separate financial statements,
the auditor’s report and those selected programmes presented in the annual performance report that have been specifically
reported in this auditor’s report.
23. My opinion on the financial statements and findings on the reported performance information and compliance with
legislation do not cover the other information and I do not express an audit opinion or any form of assurance conclusion
thereon.
24. In connection with my audit, my responsibility is to read the other information and, in doing so, consider whether the other
information is materially inconsistent with the consolidated and separate financial statements and the selected programmes
presented in the annual performance report, or my knowledge obtained in the audit, or otherwise appears to be materially
misstated.
25. The other information I obtained prior to the date of this auditor’s report is annual report which was not fully completed,
and various schedules or reports to be included in the annual report were still being updated or outstanding, and are expected
to be made available after 31 July 2019.
26. If, based on the work I have performed on the other information that I obtained prior to the date of this auditor’s report,
I conclude that there is a material misstatement of this other information, I am required to report that fact. I am unable to
conclude whether the annual report information is materially misstated because information was still being updated.
27. When I do receive and read the updated annual report, if I conclude that there is a material misstatement therein, I am
required to communicate the matter to those charged with governance and request that the other information be corrected.
If the other information is not corrected, I may have to retract this auditor’s report and re-issue an amended report as
appropriate. However, if it is corrected this will not be necessary.
lnternal control deficiencies
28. I considered internal control relevant to my audit of the consolidated and separate financial statements, reported
performance information and compliance with applicable legislation; however, my objective was not to express any form
of assurance on it. The matters reported below are limited to the significant Internal control deficiencies that resulted in the
findings on compliance with legislation included in this report.
29. Management did not exercise effective oversight and monitoring over the implementation of the necessary compliance
related controls.
Pietermaritzburg
31 July 2019
REPORT OF THE AUDITOR-GENERAL TO PROVINCIAL LEGISLATURE ON KWAZULU-NATAL GAMING AND
BETTING BOARD (CONTINUED)
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ANNEXURE- AUDITOR-GENERAL’S RESPONSIBILITY FOR THE AUDIT
1. As part of an audit in accordance with the ISAs, I exercise professional judgement and maintain professional scepticism
throughout my audit of the consolidated and separate financial statements, and the procedures performed on reported
performance information for selected programmes and on the entity’s compliance with respect to the selected subject
matters.
FINANCIAL STATEMENTS
2. In addition to my responsibility for the audit of the consolidated and separate financial statements as described in this
auditor’s report, I also:
• I dentify and assess the risks of material misstatement of the consolidated and separate financial statements whether
due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for my opinion. The risk of not detecting a material misstatement resulting
from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control
• obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s
internal control • evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the accounting authority
• conclude on the appropriateness of the accounting authority’s use of the going concern basis of accounting in the
preparation of the consolidated and separate financial statements. I also conclude, based on the audit evidence
obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the
KZN Gaming and Betting Board’ ability to continue as a going concern. If I conclude that a material uncertainty exists,
I am required to draw attention in my auditor’s report to the related disclosures in the consolidated and separate
financial statements about the material uncertainty or, if such disclosures are inadequate, to modify the opinion on the
financial statements. My conclusions are based on the information available to me at the date of this auditor’s report.
However, future events or conditions may cause the entity to cease continuing as a going concern
• evaluate the overall presentation, structure and content of the consolidated and separate financial statements,
including the disclosures, and whether the consolidated and separate financial statements represent the underlying
transactions and events in a manner that achieves fair presentation
• obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities
within the group to express an opinion on the consolidated and separate financial statements. I am responsible
for the direction, supervision and performance of the group audit. I remain solely responsible for my audit opinion
Communication with those charged with governance
3. I communicate with the accounting authority regarding, among other matters, the planned scope and timing of the audit
and significant audit findings, including any significant deficiencies in internal control that I identify during my audit
I also confirm to the accounting authority that I have complied with relevant ethical requirements regarding independence,
and communicate all relationships and other matters that may reasonably be thought to have a bearing on my independence
and, where applicable, related safeguards.
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART E: FINANCIAL STATEMENTS
92Department:
edteaEconomic Development,Tourism andEnvironmental Affairs
ACCOUNTING AUTHORITY’S REPORT
The members submit their report for the year ended 31 March 2019.
1. ESTABLISHMENTThe entity was established on 01 April 2011 in terms of Section 5 of the KwaZulu-Natal Gaming and Betting Act, Act 8 of 2010, as amended.
2. REVIEW OF ACTIVITIESMain business and operationsIn terms of Section 6 of the Act, the objects of the Board are to:
(a) Ensure that all gambling authorised under this Act is conducted in a manner which promotes the integrity of the gambling industry and does not cause harm to the public interest;
(b) Ensure that all gaming authorised under this Act promotes the Province’s objectives for developing a gaming industry which objectives are the promotion of tourism, employment and economic and social development in the Province;
(c) Promote opportunities for persons contemplated in the definition of “broad-based black economic empowerment”, as contained in the Broad-Based Black Economic Empowerment Act, 2003 (Act No.53 of 2003), to participate in the gambling industry of the Province in the capacity of licensees or registrants under this Act ;
(d) Increase the ownership stakes of persons contemplated in the definition of “broad-based black economic empowerment”, as contained in the Broad-Based Black Economic Empowerment Act, 2003 (Act No.53 of 2003), in the gambling industry of the Province;
(e) Develop appreciation for and knowledge of horse racing amongst all communities, particularly those comprised of historically disadvantaged persons; and
(f ) Limit restrictive practices, the abuse of dominant market position and mergers in the betting industry, as contemplated in the Competition Act, 1998 (Act No. 89 of 1998), and the Board is, for the purposes of the said Act, a regulatory authority as defined in section 1 of that Act.
The operating results and state of affairs of the entity are fully set out in the attached financial statements and do not in our opinion require any further comment.
Net deficit of the entity was R 6 488 915 (2018: surplus R 23 850 950). The deficit was due to the entity utilising previous surpluses to fund operations. The unusually high surplus for the previous year was as a result of Provincial Treasury returning an amount of R20 033 000 which is to be utilised for the specific purpose of office accommodation for the entity.
The term of office for the previous Board of Members ended on 31 March 2018 and the new Board of Members were appointed with effect from 11 April 2018 and sworn in by the Honourable Premier, Mr TW Mchunu, on 20 April 2018. The Chief Executive Officer filled the role of the Accounting Authority (in terms of the PFMA) during the period of there being no Board of members. Paragraph 6 below lists the details of the Board of Members.
3. GOING CONCERNWe draw attention to the fact that at 31 March 2019, the entity had an accumulated surplus (deficit) of R 62 566 166 and that the entity’s total assets exceed its liabilities by R 62 566 166.
The consolidated annual financial statements have been prepared on the basis of accounting policies applicable to a going concern. This basis presumes that funds will be available to finance future operations and that the realisation of assets and settlement of liabilities, contingent obligations and commitments will occur in the ordinary course of business.
4. SUBSEQUENT EVENTSThe members are not aware of any matter or circumstance arising since the end of the financial year which would warrant any changes to the financial statements or further disclosures to be made.
The reporting line for the entity changed after year end. With effect from 01 April 2019, the reporting structure was amended
from the Office of the Premier to the Department of Economic Development, Tourism and Environmental Affairs.
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5. ACCOUNTING POLICIES
The consolidated annual financial statements have been prepared in accordance with the prescribed Standards of Generally
Recognised Accounting Practices (GRAP) issued by the Accounting Standards Board as the prescribed framework by National
Treasury.
6. ACCOUNTING AUTHORITY
The term of office of the previous Members expired on 31 March 2018 and the new Board of Members were appointed with
effect from 11 April 2018 and were sworn in by the Honourable Premier, Mr TW Mchunu, on 20 April 2018.
The members of the entity during the year and to the date of this report are reflected below:
Name Nationality
Dr SG Ngcobo South African Appointed 11 April 2018
Ms MP Myeni South African Appointed 11 April 2018
Adv KP Thango South African Appointed 11 April 2018
Ms ZP Tenza South African Appointed 11 April 2018
Mr LS Gabela South African Appointed 11 April 2018
Mr SS Zondi South African Appointed 11 April 2018
Dr TI Nzimakwe South African Appointed 11 April 2018
Prof. BS Stobie South African Appointed 11 April 2018
Mr SN Chetty South African Appointed 11 April 2018
7. CHIEF EXECUTIVE OFFICER
The Chief Executive Officer of the entity is Ms PN Baloyi.
8. BOARD SECRETARY
The Board secretary of the entity is Mrs SH Meyiwa of:
Business addressKZNGBB House
Redlands Office Estate
1 George MacFarlane Drive
Pietermaritzburg
3201
Postal address Private Bag X9102
Pietermaritzburg
3200
9. AUDITORS
The Auditor-General South Africa will continue in office for the next financial period.
ACCOUNTING AUTHORITY’S REPORT (CONTINUED)
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART E: FINANCIAL STATEMENTS
94Department:
edteaEconomic Development,Tourism andEnvironmental Affairs
STATEMENT OF FINANCIAL POSITIONAS AT 31 MARCH 2019
2019 2018
* Restated
Notes R R
Assets
Current Assets
Trade and other receivables 2 3 397 892 2 150 723
Cash and cash equivalents 3 93 455 761 93 511 146
96 853 653 95 661 869
Non-Current Assets
Movable assets 4 2 046 259 2 299 188
Intangible assets 5 2 382 905 3 877 232
4 429 164 6 176 420
Total Assets 101 282 817 101 838 289
Liabilities
Current Liabilities
Operating lease liability 6 498 395 114 557
Payables from exchange transactions 7 36 809 618 32 415 198
Taxes and transfers payable (non-exchange) 8 1 111 539 112 914
Cash and cash equivalents (credit card) 3 297 099 140 539
38 716 651 32 783 208
Total Liabilities 38 716 651 32 783 208
Net Assets 62 566 166 69 055 081
Accumulated surplus 9 62 566 166 69 055 081
* See Note 24
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STATEMENT OF FINANCIAL PERFORMANCEFOR THE YEAR ENDED 31 MARCH 2019
2019 2018
* Restated
Notes R R
Revenue
Revenue from exchange transactions
Rendering of services 10 23 336 615 22 437 270
Interest income 11 7 152 030 4 915 259
Sundry income 2 956 2 156
Recoveries 10 570 637 -
Interest received - investment 72 826 72 142
Gain on disposal of movable assets 28 265 2 733
Total revenue from exchange transactions 31 163 329 27 429 560
Revenue from non-exchange transactions
Transfer revenue
Government grants & subsidies 42 309 919 63 196 000
Total revenue 10 73 473 248 90 625 560
Expenditure
Employee related costs 12 48 864 618 44 950 775
Depreciation and amortisation 13 2 504 153 2 105 700
Lease rentals on operating lease 14 3 863 504 1 175 604
General Expenses 15 24 708 325 18 380 947
Repairs and maintenance 18 21 563 161 584
Total expenditure 79 962 163 66 774 610
(Deficit) surplus for the year (6 488 915) 23 850 950
* See Note 24
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STATEMENT OF CHANGES IN NET ASSETSFOR THE YEAR ENDED 31 MARCH 2019
Accumulated Total Net
Surplus Assets
R R
Opening balance as previously reported 45 222 931 45 222 931Prior year adjustments (18 800) (18 800)Balance at 01 April 2017 as restated* 45 204 131 45 204 131Changes in net assetsSurplus for the year 23 850 950 23 850 950Total changes 23 850 950 23 850 950Restated* Balance at 01 April 2018 69 055 081 69 055 081Changes in net assetsSurplus for the year (6 488 915) (6 488 915)Total changes (6 488 915) (6 488 915)Balance at 31 March 2019 (refer to note 9) 62 566 166 62 566 166
* See Note 24
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CASH FLOW STATEMENTFOR THE YEAR ENDED 31 MARCH 2019
* See Note 24
2019 2018
* Restated
Notes R R
Cash flows from operating activitiesReceiptsFees earned 22 996 623 24 089 522Grants 10 42 309 919 63 196 000Interest income 7 224 856 4 915 259Other income 573 593 2 156
73 104 991 92 202 937
PaymentsEmployee costs (48 864 618) (44 950 775)Suppliers (23 723 687) (21 833 592)
(72 588 305) (66 784 367)Net cash flows from operating activities 19 516 686 25 418 570
Cash flows from investing activities
Purchase of movable assets 4 (572 805) (83 002) Proceeds from claims 4 72 011 22 288Purchase of intangible assets 5 (227 837) (746 752)Net cash flows from investing activities (728 631) (807 466)
Net (decrease)/increase in cash and cash equivalents (211 945) 24 611 104Cash and cash equivalents at the beginning of the year 93 370 607 68 759 503Cash and cash equivalents at the end of the year 3 93 158 662 93 370 607
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PART E: FINANCIAL STATEMENTS
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STATEMENT OF COMPARISON OF BUDGET AND ACTUAL AMOUNTS
FOR THE YEAR ENDED 31 MARCH 2019
Budget on Accrual Basis
Approved Adjustments Final Actual Difference Reference
budget Budget amounts on between
comparable final budget
basis and actual
R R R R R R
Statement of Financial
Performance
Revenue
Revenue from exchange
transactions
Rendering of services 27 059 100 - 27 059 100 23 336 615 (3 722 485) 29
Interest received (trading) 4 776 345 - 4 776 345 7 152 030 2 375 685 29
Miscellaneous other revenue 22 000 - 22 000 2 956 (19 044)
Recoveries - - - 570 637 570 637 29
Interest received - - - 72 826 72 826 29
Gains on disposal of assets - - - 28 265 28 265 29
Total revenue from
exchange transactions 31 857 445 - 31 857 445 31 163 329 (694 116)
Revenue from non-exchange
transactions
Transfer revenue
Government grants &
subsidies 42 104 000 - 42 104 000 42 309 919 205 919 29
Amounts rolled over / retained
from previous year 10 823 941 10 512 519 21 336 460 21 336 460 - 29
Total revenue 84 785 386 10 512 519 95 297 905 94 809 708 (488 197)
Expenditure
Personnel (56 084 665) 2 895 124 (53 189 541) (48 864 618) 4 324 923 29
Depreciation and amortisation (2 100 000) - (2 100 000) (2 504 153) (404 153) 29
Lease rentals on operating lease (4 913 000) - (4 913 000) (3 863 504) 1 049 496 29
Repairs and maintenance (180 000) - (180 000) (21 563) 158 437 29
General Expenses (18 307 721) (10 506 643) (28 814 364) (24 708 325) 4 106 039 29
Total expenditure (81 585 386) (7 611 519) (89 196 905) (79 962 163) 9 234 742
Surplus before capital
expenditure 3 200 000 2 901 000 6 101 000 14 847 545 8 746 545
Capital expenditure (3 200 000) (2 901 000) (6 101 000) (808 401) 5 292 599 29
Actual Amount on Comparable
Basis as Presented in
the Budget and Actual
Comparative Statement - - - 14 039 144 14 039 144
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PART E: FINANCIAL STATEMENTS
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ACCOUNTING POLICIES
1. PRESENTATION OF CONSOLIDATED ANNUAL FINANCIAL STATEMENTS
The consolidated annual financial statements have been prepared in accordance with the Standards of Generally Recognised
Accounting Practice (GRAP), issued by the Accounting Standards Board in accordance with Section 122(3) of the Public
Finance and Management Act, (Act 1 of 1999).
These consolidated annual financial statements have been prepared on an accrual basis of accounting and are in accordance
with historical cost convention as the basis of measurement, unless specified otherwise. They are presented in South African
Rand.
A summary of the significant accounting policies, which have been consistently applied in the preparation of these
consolidated annual financial statements, are disclosed below.
1.1 Government grants
Grants received or receivable are recognised when the resources that have been transferred meet the criteria for recognition
as an asset. A corresponding liability is raised to the extent that the grant is conditional. The liabilities are transferred to
revenue as and when the conditions are met. Grants without any conditions are recognised as revenue when the asset is
recognised
1.2 Cash and cash equivalents
Cash and cash equivalents are carried at fair value. For the purpose of the cash flow statements cash and cash equivalents
comprise cash on hand and deposits held at call with banks.
1.3 Movable assets
Movable assets are tangible non-current assets that are held for use in the production or supply of goods or services, rental
to others, or for administrative purposes, and are expected to be used during more than one period.
The cost of an item of movable assets is recognised as an asset when:
• it is probable that future economic benefits or service potential associated with the item will flow to the entity; and
• the cost of the item can be measured reliably.
Movable assets is initially measured at cost.
The cost of an item of movable assets is the purchase price and other costs attributable to bring the asset to the location and
condition necessary for it to be capable of operating in the manner intended by management. Trade discounts and rebates
are deducted in arriving at the cost.
Where an asset is acquired through a non-exchange transaction, its cost is its fair value as at date of acquisition.
Where an item of movable assets is acquired in exchange for a non-monetary asset or monetary assets, or a combination of
monetary and non-monetary assets, the asset acquired is initially measured at fair value (the cost). If the acquired item’s fair
value was not determinable, it’s deemed cost is the carrying amount of the asset(s) given up.
When significant components of an item of movable assets have different useful lives, they are accounted for as separate
items (major components) of movable assets.
Costs include costs incurred initially to acquire or construct an item of movable assets and costs incurred subsequently to
add to, replace part of, or service it. If a replacement cost is recognised in the carrying amount of an item of movable assets,
the carrying amount of the replaced part is derecognised.
The initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located is also
included in the cost of movable assets, where the entity is obligated to incur such expenditure, and where the obligation
arises as a result of acquiring the asset or using it for purposes other than the production of inventories.
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1.3 Movable assets (continued)
Recognition of costs in the carrying amount of an item of movable assets ceases when the item is in the location and condition
necessary for it to be capable of operating in the manner intended by management.
Items such as spare parts, standby equipment and servicing equipment are recognised when they meet the definition of
movable assets.
Major inspection costs which are a condition of continuing use of an item of movable assets and which meet the recognition
criteria above are included as a replacement in the cost of the item of movable assets. Any remaining inspection costs from
the previous inspection are derecognised.
Movable assets are depreciated on the straight line basis over their expected useful lives to their estimated residual value. The
useful lives of items of movable assets have been assessed as follows:
Item Depreciation method Average useful life
Furniture and fixtures
Motor vehicles
Office equipment
Computer equipment
Straight line
Straight line
Straight line
Straight line
6 to 12 years
4 years
5 to 10 years
3 to 6 years
The depreciable amount of an asset is allocated on a systematic basis over its useful life.
Each part of an item of movable assets with a cost that is significant in relation to the total cost of the item is depreciated
separately.
The depreciation method used reflects the pattern in which the asset’s future economic benefits or service potential are
expected to be consumed by the entity. The depreciation method applied to an asset is reviewed at least at each reporting
date and, if there has been a significant change in the expected pattern of consumption of the future economic benefits or
service potential embodied in the asset, the method is changed to reflect the changed pattern. Such a change is accounted
for as a change in an accounting estimate.
The entity assesses at each reporting date whether there is any indication that the entity expectations about the residual
value and the useful life of an asset have changed since the preceding reporting date. If any such indication exists, the entity
revises the expected useful life and/or residual value accordingly. The change is accounted for as a change in an accounting
estimate.
The depreciation charge for each period is recognised in surplus or deficit unless it is included in the carrying amount of
another asset.
Items of movable assets are derecognised when the asset is disposed of or when there are no further economic benefits or
service potential expected from the use of the asset.
The gain or loss arising from the derecognition of an item of movable assets is included in surplus or deficit when the item is
derecognised. The gain or loss arising from the derecognition of an item of movable assets is determined as the difference
between the net disposal proceeds, if any, and the carrying amount of the item.
Assets which the entity holds for rentals to others and subsequently routinely sell as part of the ordinary course of activities,
are transferred to inventories when the rentals end and the assets are available-for-sale. Proceeds from sales of these assets
are recognised as revenue. All cash flows on these assets are included in cash flows from operating activities in the cash flow
statement.
The entity separately discloses expenditure to repair and maintain movable assets in the notes to the financial statements
(see note 4).
ACCOUNTING POLICIES (CONTINUED)
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1.4 Intangible assets
An asset is identifiable if it either:
• is separable, i.e. is capable of being separated or divided from an entity and sold, transferred, licensed, rented or
exchanged, either individually or together with a related contract, identifiable assets or liability, regardless of whether
the entity intends to do so; or
• arises from binding arrangements (including rights from contracts), regardless of whether those rights are transferable
or separable from the entity or from other rights and obligations.
A binding arrangement describes an arrangement that confers similar rights and obligations on the parties to it as if it were
in the form of a contract.
An intangible asset is recognised when:
• it is probable that the expected future economic benefits or service potential that are attributable to the asset will
flow to the entity; and
• the cost or fair value of the asset can be measured reliably.
The entity assesses the probability of expected future economic benefits or service potential using reasonable and
supportable assumptions that represent management’s best estimate of the set of economic conditions that will exist over
the useful life of the asset.
Intangible assets acquired through an exchange transaction are initially recognised at cost.
Where an intangible asset is acquired through a non-exchange transaction, its initial cost at the date of acquisition is
measured at its fair value as at that date.
Expenditure on research (or on the research phase of an internal project) is recognised as an expense when it is incurred.
An intangible asset arising from development (or from the development phase of an internal project) is recognised when:
• it is technically feasible to complete the asset so that it will be available for use or sale.
• there is an intention to complete and use or sell it.
• there is an ability to use or sell it.
• it will generate probable future economic benefits or service potential.
• there are available technical, financial and other resources to complete the development and to use or sell the asset.
• the expenditure attributable to the asset during its development can be measured reliably.
Intangible assets are carried at cost less any accumulated amortisation and any impairment losses.
An intangible asset is regarded as having an indefinite useful life when, based on all relevant factors, there is no foreseeable
limit to the period over which the asset is expected to generate net cash inflows or service potential. Amortisation is not
provided for these intangible assets, but they are tested for impairment annually and whenever there is an indication that
the asset may be impaired. For all other intangible assets amortisation is provided on a straight line basis over their useful life.
The amortisation period and the amortisation method for intangible assets are reviewed at each reporting date.
Reassessing the useful life of an intangible asset with a finite useful life after it was classified as indefinite is an indicator that
the asset may be impaired. As a result the asset is tested for impairment and the remaining carrying amount is amortised
over its useful life.
Internally generated brands, mastheads, publishing titles, customer lists and items similar in substance are not recognised
as intangible assets.
Internally generated goodwill is not recognised as an intangible asset.
Amortisation is provided to write down the intangible assets, on a straight line basis, to their residual values as follows:
ACCOUNTING POLICIES (CONTINUED)
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1.4 Intangible assets (continued)
Item Useful life
Computer software, internally generated 3 years
Computer software, other 3 to 6 years
Intangible assets under development no depreciation
The entity discloses relevant information relating to assets under construction or development, in the notes to the financial
statements (see note 5).
Intangible assets are derecognised:
• on disposal; or
• when no future economic benefits or service potential are expected from its use or disposal.
The gain or loss arising from the derecognition of an intangible assets is included in surplus or deficit when the asset is
derecognised (unless the Standard of GRAP on leases requires otherwise on a sale and leaseback).
1.5 Financial instruments
Initial recognition and measurement
Financial assets and liabilities are recognised when the entity becomes a party to the contractual provisions of the financial
instrument.
Trade receivables are stated at amortised cost, net of estimates for irrecoverable amounts. These types of financial instruments
arise out of the ordinary course of the entity’s activities through charging customers for legislated fees as well as recovery of
costs based on the work performed.
Trade payables are stated at amortised cost that is considered a reasonable approximation of the fair value thereof.
Credit Risk
Trade receivables are susceptible to credit risk, however this is adequately minimised as the charges are legislated and the
course of recovery is adequately provided for in the legislation. There has been no substantial change in this risk from the
previous period.
Receivables from exchange transactions
Trade receivables are measured at initial recognition at fair value, and are subsequently measured at amortised cost using
the effective interest rate method. Appropriate allowances for estimated irrecoverable amounts are recognised in surplus or
deficit when there is objective evidence that the asset is impaired. Significant financial difficulties of the debtor, probability
that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments (more than 30
days overdue) are considered indicators that the trade receivable is impaired. The allowance recognised is measured as
the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the
effective interest rate computed at initial recognition.
The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the deficit is
recognised in surplus or deficit within operating expenses. When a trade receivable is uncollectible, it is written off against
the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are credited against
operating expenses in surplus or deficit.
Payables from exchange transactions
Trade payables are initially measured at fair value, and are subsequently measured at amortised cost, using the effective
interest rate method.
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1.5 Financial instruments (continued)
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits, and other short-term highly liquid investments
that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. These are
initially and subsequently recorded at fair value.
Liquidity Risk
The entity has sufficient funds and adequate funding sources to service its financial liabilities.
1.6 Operating leases
A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership. A lease is
classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership.
When a lease includes both land and buildings elements, the entity assesses the classification of each element separately.
Operating leases - lessee
Operating lease payments are recognised as an expense on a straight-line basis over the lease term. The difference between
the amounts recognised as an expense and the contractual payments are recognised as an operating lease asset or liability.
1.7 Impairment of non-cash-generating assets
Cash-generating assets are assets used with the objective of generating a commercial return. Commercial return means that
positive cash flows are expected to be significantly higher than the cost of the asset.
Non-cash-generating assets are assets other than cash-generating assets.
Impairment is a loss in the future economic benefits or service potential of an asset, over and above the systematic recognition
of the loss of the asset’s future economic benefits or service potential through depreciation (amortisation).
Carrying amount is the amount at which an asset is recognised in the statement of financial position after deducting any
accumulated depreciation and accumulated impairment losses thereon.
A cash-generating unit is the smallest identifiable group of assets managed with the objective of generating a commercial
return that generates cash inflows from continuing use that are largely independent of the cash inflows from other assets or
groups of assets.
Costs of disposal are incremental costs directly attributable to the disposal of an asset, excluding finance costs and income
tax expense.
Depreciation (Amortisation) is the systematic allocation of the depreciable amount of an asset over its useful life.
Fair value less costs to sell is the amount obtainable from the sale of an asset in an arm’s length transaction between
knowledgeable, willing parties, less the costs of disposal.
Recoverable service amount is the higher of a non-cash-generating asset’s fair value less costs to sell and its value in use.
Useful life is either:
• the period of time over which an asset is expected to be used by the entity; or
• the number of production or similar units expected to be obtained from the asset by the entity.
Value in use
Value in use of non-cash-generating assets is the present value of the non-cash-generating assets remaining service potential.
The present value of the remaining service potential of a non-cash-generating assets is determined using the following
approach:
ACCOUNTING POLICIES (CONTINUED)
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PART E: FINANCIAL STATEMENTS
104Department:
edteaEconomic Development,Tourism andEnvironmental Affairs
1.7 Impairment of non-cash-generating assets (continued)
Depreciated replacement cost approach
The present value of the remaining service potential of a non-cash-generating asset is determined as the depreciated
replacement cost of the asset. The replacement cost of an asset is the cost to replace the asset’s gross service potential.
This cost is depreciated to reflect the asset in its used condition. An asset may be replaced either through reproduction
(replication) of the existing asset or through replacement of its gross service potential. The depreciated replacement cost is
measured as the current reproduction or replacement cost of the asset, whichever is lower, less accumulated depreciation
calculated on the basis of such cost, to reflect the already consumed or expired service potential of the asset.
The replacement cost and reproduction cost of an asset is determined on an “optimised” basis. The rationale is that the entity
would not replace or reproduce the asset with a like asset if the asset to be replaced or reproduced is an overdesigned or
overcapacity asset. Overdesigned assets contain features which are unnecessary for the goods or services the asset provides.
Overcapacity assets are assets that have a greater capacity than is necessary to meet the demand for goods or services
the asset provides. The determination of the replacement cost or reproduction cost of an asset on an optimised basis thus
reflects the service potential required of the asset.
Recognition and measurement
If the recoverable service amount of a non-cash-generating asset is less than its carrying amount, the carrying amount of the
asset is reduced to its recoverable service amount. This reduction is an impairment loss.
An impairment loss is recognised immediately in surplus or deficit.
Any impairment loss of a revalued non-cash-generating asset is treated as a revaluation decrease.
When the amount estimated for an impairment loss is greater than the carrying amount of the non-cash-generating asset to
which it relates, the entity recognises a liability only to the extent that is a requirement in the Standards of GRAP.
After the recognition of an impairment loss, the depreciation (amortisation) charge for the non-cash-generating asset is
adjusted in future periods to allocate the non-cash-generating asset’s revised carrying amount, less its residual value (if any),
on a systematic basis over its remaining useful life.
Reversal of an impairment loss
The entity assess at each reporting date whether there is any indication that an impairment loss recognised in prior periods
for a non-cash-generating asset may no longer exist or may have decreased. If any such indication exists, the entity estimates
the recoverable service amount of that asset.
An impairment loss recognised in prior periods for a non-cash-generating asset is reversed if there has been a change in
the estimates used to determine the asset’s recoverable service amount since the last impairment loss was recognised. The
carrying amount of the asset is increased to its recoverable service amount. The increase is a reversal of an impairment loss.
The increased carrying amount of an asset attributable to a reversal of an impairment loss does not exceed the carrying
amount that would have been determined (net of depreciation or amortisation) had no impairment loss been recognised for
the asset in prior periods.
A reversal of an impairment loss for a non-cash-generating asset is recognised immediately in surplus or deficit. Any reversal
of an impairment loss of a revalued non-cash-generating asset is treated as a revaluation increase.
After a reversal of an impairment loss is recognised, the depreciation (amortisation) charge for the non-cash-generating asset
is adjusted in future periods to allocate the non-cash-generating asset’s revised carrying amount, less its residual value (if
any), on a systematic basis over its remaining useful life.
ACCOUNTING POLICIES (CONTINUED)
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1.8 Employee benefits
Short-term employee benefits
The cost of short-term employee benefits, (those payable within 12 months after the service is rendered, such as paid vacation
leave and sick leave, bonuses, and non-monetary benefits such as medical care), are recognised in the period in which the
service is rendered and are not discounted.
The expected cost of compensated absences is recognised as an expense as the employees render services that increase
their entitlement or, in the case of non-accumulating absences, when the absence occurs.
The expected cost of surplus sharing and bonus payments is recognised as an expense when there is a legal or constructive
obligation to make such payments as a result of past performance.
Defined contribution plans
Payments to defined contribution retirement benefit plans are charged as an expense as they fall due.
Payments made to industry-managed (or state plans) retirement benefit schemes are dealt with as defined contribution
plans where the entity’s obligation under the schemes is equivalent to those arising in a defined contribution retirement
benefit plan.
Post retirement benefits
The entity operates a defined contribution provident fund, the assets of which are held in a separate trustee administered
fund, to provide for these costs. All employees of the entity are entitled to membership of the plan, which is governed by the
Pension Funds Act of 1956.
Contributions are based on a percentage of the payroll and charged to the statement of financial performance in the year to
which they relate.
Other post retirement obligations
The entity has no obligation to fund post retirement medical benefits.
1.9 ProvisionsProvisions are recognised when the entity has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount of the obligation can be made. Employee entitlements to annual leave and annual bonuses are recognised when they accrue to employees. A provision is made for the estimated liability for annual leave and annual bonuses as a result of services rendered by employees up to the balance sheet date.
A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument.
The entity recognises a provision for financial guarantees and loan commitments when it is probable that an outflow of resources embodying economic benefits and service potential will be required to settle the obligation and a reliable estimate of the obligation can be made.
Determining whether an outflow of resources is probable in relation to financial guarantees requires judgement. Indications that an outflow of resources may be probable are:
• financial difficulty of the debtor; • defaults or delinquencies in interest and capital repayments by the debtor; • breaches of the terms of the debt instrument that result in it being payable earlier than the agreed term and the
ability of the debtor to settle its obligation on the amended terms; and• a decline in prevailing economic circumstances (e.g. high interest rates, inflation and unemployment) that impact on
the ability of entities to repay their obligations.
ACCOUNTING POLICIES (CONTINUED)
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PART E: FINANCIAL STATEMENTS
106Department:
edteaEconomic Development,Tourism andEnvironmental Affairs
1.9 Provisions (continued)
Where a fee is received by the entity for issuing a financial guarantee and/or where a fee is charged on loan commitments, it
is considered in determining the best estimate of the amount required to settle the obligation at reporting date. W here a fee
is charged and the entity considers that an outflow of economic resources is probable, an entity recognises the obligation
at the higher of:
• the amount determined using in the Standard of GRAP on Provisions, Contingent Liabilities and Contingent Assets;
and
• the amount of the fee initially recognised less, where appropriate, cumulative amortisation recognised in accordance
with the Standard of GRAP on Revenue from Exchange Transactions.
1.10 Commitments
Items are classified as commitments when the Board has committed itself to future transactions that will normally result in
the outflow of resources.
Commitments are not recognised in the statement of financial position as a liability, but are included in the disclosure notes
in the following cases:
• approved and contracted capital commitments;
• where the capital expenditure has been approved and the contract has been awarded at reporting date; and
• where disclosure is required by a specific standard of GRAP.
1.11 Revenue
Revenue is the gross inflow of economic benefits or service potential during the reporting period when those inflows result
in an increase in net assets, other than increases relating to contributions from owners.
An exchange transaction is one in which the entity receives assets or services, or has liabilities extinguished, and directly
gives approximately equal value (primarily in the form of goods, services or use of assets) to the other party in exchange.
Revenue from license fees is recognised on an accrual basis in accordance with the term of the license agreement.
Measurement
Revenue is measured at the fair value of the consideration received or receivable, net of trade discounts and volume rebates.
Rendering of services
When the outcome of a transaction involving the rendering of services can be estimated reliably, revenue associated with
the transaction is recognised by reference to the stage of completion of the transaction at the reporting date. The outcome
of a transaction can be estimated reliably when all the following conditions are satisfied:
• the amount of revenue can be measured reliably;
• it is probable that the economic benefits or service potential associated with the transaction will flow to the entity;
• the stage of completion of the transaction at the reporting date can be measured reliably; and
• the costs incurred for the transaction and the costs to complete the transaction can be measured reliably.
When the outcome of the transaction involving the rendering of services cannot be estimated reliably, revenue is recognised
only to the extent of the expenses recognised that are recoverable.
Service revenue is recognised by reference to the stage of completion of the transaction at the reporting date. Stage of
completion is determined by services performed to date as a percentage of total services to be performed.
Interest, royalties and dividends
Interest income is accrued on a time proportion basis, taking into account the principal amount and the effective interest
rate. Interest is recognised, in surplus or deficit, using the effective interest rate method.
ACCOUNTING POLICIES (CONTINUED)
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PART E: FINANCIAL STATEMENTS
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1.12 Revenue from non-exchange transactions
Non-exchange transactions are defined as transactions where the entity receives value from another entity without directly
giving approximately equal value in exchange.
Revenue is the gross inflow of economic benefits or service potential during the reporting period when those inflows result
in an increase in net assets, other than increases relating to contributions from owners.
Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties
in an arm’s length transaction.
1.13 Comparative figures
Where necessary, comparative figures have been reclassified to conform to changes in presentation in the current year or to
improve the readability and understanding of the financial statements.
1.14 Fruitless and wasteful expenditure
Fruitless expenditure means expenditure which was made in vain and would have been avoided had reasonable care been
exercised.
All expenditure relating to fruitless and wasteful expenditure is recognised as an expense in the statement of financial
performance in the year that the expenditure was incurred. The expenditure is classified in accordance with the nature of the
expense, and where recovered, it is subsequently accounted for as revenue in the statement of financial performance.
1.15 Irregular expenditure
Irregular expenditure as defined in section 1 of the PFMA is expenditure other than unauthorised expenditure, incurred in
contravention of or that is not in accordance with a requirement of any applicable legislation, including -
(a) this Act; or
(b) the State Tender Board Act, 1968 (Act No. 86 of 1968), or any regulations made in terms of the Act; or
(c) any provincial legislation providing for procurement procedures in that provincial government.
National Treasury practice note no. 4 of 2008/2009 which was issued in terms of sections 76(1) to 76(4) of the PFMA requires
the following (effective from 1 April 2008):
Irregular expenditure that was incurred and identified during the current financial year and which was condoned before year
end and/or before finalisation of the financial statements must also be recorded appropriately in the irregular expenditure
register. In such an instance, no further action is also required with the exception of updating the note to the financial
statements.
Irregular expenditure that was incurred and identified during the current financial year and for which condonement is being
awaited at year end must be recorded in the irregular expenditure register. No further action is required with the exception of
updating the note to the financial statements.
Where irregular expenditure was incurred in the previous financial year and is only condoned in the following financial year,
the register and the disclosure note to the financial statements must be updated with the amount condoned.
Irregular expenditure that was incurred and identified during the current financial year and which was not condoned by the
National Treasury or the relevant authority must be recorded appropriately in the irregular expenditure register. If liability
for the irregular expenditure can be attributed to a person, a debt account must be created if such a person is liable in law.
Immediate steps must thereafter be taken to recover the amount from the person concerned. If recovery is not possible, the
accounting officer or accounting authority may write off the amount as debt impairment and disclose such in the relevant
note to the financial statements. The irregular expenditure register must also be updated accordingly. If the irregular
expenditure has not been condoned and no person is liable in law, the expenditure related thereto must remain against the
relevant programme/expenditure item, be disclosed as such in the note to the financial statements and updated accordingly
in the irregular expenditure register.
ACCOUNTING POLICIES (CONTINUED)
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PART E: FINANCIAL STATEMENTS
108Department:
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1.16 Budget information
The approved budget is prepared on a accrual basis and presented by economic classification linked to performance outcome
objectives.
The approved budget covers the fiscal period from 01/04/2018 to 31/03/2019.
The consolidated annual financial statements and the budget are on the same basis of accounting therefore a comparison
with the budgeted amounts for the reporting period have been included in the Statement of comparison of budget and
actual amounts.
1.17 Related parties
A related party is a person or an entity with the ability to control or jointly control the other party, or exercise significant
influence over the other party, or vice versa, or an entity that is subject to common control, or joint control.
Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. Joint
control is the agreed sharing of control over an activity by a binding arrangement, and exists only when the strategic financial
and operating decisions relating to the activity require the unanimous consent of the parties sharing control (the venturers).
Related party transaction is a transfer of resources, services or obligations between the reporting entity and a related party,
regardless of whether a price is charged.
Significant influence is the power to participate in the financial and operating policy decisions of an entity, but is not control
over those policies.
Management are those persons responsible for planning, directing and controlling the activities of the entity, including
those charged with the governance of the entity in accordance with legislation, in instances where they are required to
perform such functions.
Close members of the family of a person are considered to be those family members who may be expected to influence, or
be influenced by, that management in their dealings with the entity.
The entity is exempt from disclosure requirements in relation to related party transactions if that transaction occurs within
normal supplier and/or client/recipient relationships on terms and conditions no more or less favourable than those which it
is reasonable to expect the entity to have adopted if dealing with that individual entity or person in the same circumstances
and terms and conditions are within the normal operating parameters established by that reporting entity’s legal mandate.
Where the entity is exempt from the disclosures in accordance with the above, the entity discloses narrative information
about the nature of the transactions and the related outstanding balances, to enable users of the entity’s financial statements
to understand the effect of related party transactions on its consolidated annual financial statements.
ACCOUNTING POLICIES (CONTINUED)
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PART E: FINANCIAL STATEMENTS
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NOTES TO THE CONSOLIDATED ANNUAL FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2019
2019 2018* Restated
R R
2. Trade and other receivablesTrade debtors 1 217 873 351 150Deposits 17 575 7 250Accrued interest 421 405Prepaid expenses 396 579 134 351Sundry debtors 27 272 5 844Study assistance 28 300 64 233Accrued income (refer to note 2.1) 1 709 872 1 587 490
3 397 892 2 150 723
Trade and other receivables - provision for doubtful debts
As of 31 March 2019, trade and other receivables of R 52 764 (2018: R 52 764) were provided for.
The ageing of these amounts is as follows:
Over 6 months 52 764 52 764
Reconciliation of provision for doubtful debtsOpening balance 52 764 52 764
2.1 Accrued incomeAccrued income comprises of the following:
Recovery of expenditure 578 349 -Legal fee recoveries 569 901 -Interest accrued 561 622 562 490Grant receivable - 1 025 000
1 709 872 1 587 490
Recovery of expenditure relates to the accrual of expenditure incurred by the entity on behalf of the KZN Liquor Authority for
the secondment of an employee to the latter. The entity has accrued for the salary costs that is to be recovered.
Legal fee recovery represents the anticipated amount that the entity will collect after being awarded a cost order in its favour
by a court.
Interest accrued at year end represents the interest earned on all bank accounts up to 31 March but received after year end.
Grant receivable relates to an amount that was due from Provincial Treasury during the 2016/17 financial year but was not paid
until the current financial year. Provincial Treasury held back the amount from the entity’s grant allocation to cater for costs
relating to legal matters involving the entity.
* See Note 24
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART E: FINANCIAL STATEMENTS
110Department:
edteaEconomic Development,Tourism andEnvironmental Affairs
NOTES TO THE CONSOLIDATED ANNUAL FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 MARCH 2019
2019 2018* Restated
R R
3. Cash and cash equivalentsCash and cash equivalents consist of:Cash on hand 3 640 3 719Bank balances 81 203 676 81 974 699Short-term deposits 12 248 445 11 532 728Credit card (297 099) (140 539)
93 158 662 93 370 607
Current assets 93 455 761 93 511 146Current liabilities (credit card) (297 099) (140 539)
93 158 662 93 370 607
2019 2018
Cost /
Valuation
Accumulated
depreciation
and
accumulated
impairment
Carrying
value
Cost /
Valuation
Accumulated
depreciation
and
accumulated
impairment
Carrying
value
4. Movable assetsFurniture and fixtures 467 100 (337 104) 129 996 444 403 (324 546) 119 857Motor vehicles 425 937 (362 046) 63 891 475 459 (404 140) 71 319Office equipment 499 837 (338 590) 161 247 476 374 (348 559) 127 815Computer equipment 7 218 355 (5 527 230) 1 691 125 6 778 712 (4 798 515) 1 980 197Total 8 611 229 (6 564 970) 2 046 259 8 174 948 (5 875 760) 2 299 188
Opening
balance
Additions Disposals Depreciation Total
Reconciliation of movable assets - 2019Furniture and fixtures 119 857 28 580 (1 918) (16 523) 129 996Motor vehicles 71 319 - (7 428) - 63 891Office equipment 127 815 74 505 (17 648) (23 425) 161 247Computer equipment 1 980 197 469 720 (16 752) (742 040) 1 691 125
2 299 188 572 805 (43 746) (781 988) 2 046 259
Opening
Balance
Additions Disposals Depreciation Total
Reconciliation of movable assets - 2018Furniture and fixtures 82 635 50 781 - (13 559) 119 857Motor vehicles 71 319 - - - 71 319Office equipment 141 817 5 324 - (19 326) 127 815Computer equipment 2 624 526 26 897 (19 555) (651 671) 1 980 197
2 920 297 83 002 (19 555) (684 556) 2 299 188
* See Note 24
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PART E: FINANCIAL STATEMENTS
111
NOTES TO THE CONSOLIDATED ANNUAL FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 MARCH 2019
2019 2018
Cost /
Valuation
Accumulated
depreciation
and
accumulated
impairment
Carrying
value
Cost /
Valuation
Accumulated
depreciation
and
accumulated
impairment
Carrying
value
5. Intangible assetsComputer software, 4 742 562 (2 710 280) 2 032 282 4 514 725 (1 205 371) 3 309 354internally generatedComputer software 2 335 665 (1 985 042) 350 623 2 335 665 (1 767 787) 567 878Total 7 078 227 (4 695 322) 2 382 905 6 850 390 (2 973 158) 3 877 232
2019 2018* Restated
R R
4. Movable assets (continued)The entity received net insurance proceeds of R72 012 (2018: R 22 288) at year end in respect of claims for the theft
and damage of assets.
Expenditure incurred to repair and maintain property, plant and
equipmentExpenditure incurred to repair and maintain property, plant and
equipment included in Statement of Financial PerformanceGeneral expenses - 47 259Repairs and maintenance - 10 516
- 57 775 The above represent amounts expended by the entity for the repair and maintenance of movable assets. It excludes
amounts paid in terms of operating leases and general operating expenditure relating to movable assets.
Opening
balance
Additions Disposals Total
Reconciliation of intangible assets - 2019Computer software, internally generated 3 309 354 227 837 (1 504 909) 2 032 282Computer software 567 878 - (217 255) 350 623
3 877 232 227 837 (1 722 164) 2 382 905
Opening
balance
Additions Disposals Total
Reconciliation of intangible assets - 2018Computer software, internally generated 3 794 663 720 062 (1 205 371) 3 309 354Computer software 756 960 26 690 (215 772) 567 878
4 551 623 746 752 (1 421 143) 3 877 232
* See Note 24
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PART E: FINANCIAL STATEMENTS
112Department:
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2019 2018* Restated
R R
5. Intangible assets (continued)Intangible assets under developmentCumulative expenditure recognised in the carrying value of Intangible
assetsIntangible assets under development 797 713 569 876
The entity, with the assistance of SITA, is currently developing an integrated regulatory system (i.e. software) that will
enable it to streamline the processes relating to licensing, registration, monitoring and compliance. The first phase
of the development was implemented during the year with phase 2 in development at year end and testing due to
commence after year end.
6. Operating lease liabilityCurrent liabilities 498 395 114 557
The operating lease liability arose from the lease for the Pietermaritzburg and Durban offices.
7. Payables from exchange transactionsTrade payables 545 299 592 902Income received in advanced 26 502 053 25 594 876Cash guarantees received from licensees 2 141 014 1 425 047Third party payments 1 068 777 908 338Sundry creditors 76 688 68 688Leave pay accrual 2 115 159 1 856 616Accrued expenses (refer note 7.1) 4 360 628 1 968 731
36 809 618 32 415 198
Income received in advance relates to revenue received from licensees for services to be rendered by the entity, the
majority of the balance comprises of annual licence fees for the next financial year.
The cash guarantees received from licensees are security for any fees or penalties prescribed in terms of the KZN Gaming
& Betting Act, as amended, taxes determined in terms of the KZN Gaming & Betting Tax Act, or any gambling debts
payable by the licensee.
Amounts due to third parties refer to payments to be made on behalf of employees to the provident fund and medical
aid.
Maturity analysis of Trade and other payables
Liquidity Risk Not later than a month 28 116 129 27 096 117Later than a month and not later than three months 4 437 316 2 037 419Later than three months and not later than a year 4 256 173 3 281 663
36 809 618 32 415 199
The entity has sufficient cash resources to meets the above obligations.
NOTES TO THE CONSOLIDATED ANNUAL FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 MARCH 2019
* See Note 24
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PART E: FINANCIAL STATEMENTS
113
2019 2018* Restated
R R
7. Payables from exchange transactions (continued)7.1 Accrued expenses
Accrued expenses comprises of the followingExpenditure relating to Board remuneration 1 276 791 82 430Capital expenditure 569 876 569 876Current expenditure 2 513 961 1 316 425
4 360 628 1 968 731
Accrued expenses relating to Board members represents fees due to the erstwhile board members for meetings they
attended prior to their term ending.
Accrued expenses for capital expenditure relate to expenditure incurred for the development of the online regulatory
system (refer to note 5).
Accrued expenses for current expenditure relate to goods and services rendered at year end but not yet invoiced.
Accrued expenses in respect of subsistence and travel claims relate to official trips undertaken by employees before
year end that were not yet paid.
8. Taxes and transfers payable (non-exchange)Gambling tax payable 96 347 73 794Statutory payables 1 015 192 39 120
1 111 539 112 914
Gambling tax payable refers to taxes collected on behalf of the Province from all licensees in terms of the KZN Gaming and Betting Act. The amount represents taxes received in advance, amounts due to the Province or refunds due to licensees.
Statutory payables refer to the various payroll taxes and levies payable to the South African Revenue Service.
NOTES TO THE CONSOLIDATED ANNUAL FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 MARCH 2019
* See Note 24
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114Department:
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NOTES TO THE CONSOLIDATED ANNUAL FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 MARCH 2019
2019 2018* Restated
R R
9. Accumulated surplusReconciliation of accumulated surplus2012 - Net assets acquired from erstwhile entities 25 081 667 25 081 6672012 - Deficit realised (4 176 104) (4 176 104)2013 - Surplus realised 6 941 425 6 941 4252014 - Surplus realised 10 430 950 10 430 9502014 - Prior year adjustments (2012) 1 244 954 1 244 9542015 - Surplus realised 11 684 747 11 684 7472015 - Amount surrendered to Provincial Revenue Fund (20 800 000) (20 800 000)2015 - Prior year adjustments (2013) (37 786) (37 786)2016 - Prior year adjustments (2014) (72 805) (72 805)2016 - Surplus realised 4 460 584 4 460 5842017 - Prior year adjustments 1 272 546 1 272 5462017 - Surplus realised 9 192 753 9 192 7532018 - Surplus realised 23 850 950 23 850 9502019 - Prior year adjustment (2017) (18 800) (18 800)2019 - Loss for the year (6 488 915) -
62 566 166 69 055 081
Ring-fenced internal funds and reserves within accumulated surplusBuilding investmentOpening balance 25 588 660 6 254 196Interest earned 1 506 881 473 972Amount spent during the year (2 955 837) (1 172 508)Funds returned from Provincial Treasury - 20 033 000
24 139 704 25 588 660
The above funds have been reserved for the purposes of acquiring suitable office accommodation for the entity. During the
2018 year Provincial Treasury returned the R20 million that was previously surrendered.
The funds are invested by the entity until such time as they are required (refer to note 3). The interest earned on these retained
amounts forms part of the amount disclosed in the statement of financial performance (refer to note 11).
* See Note 24
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PART E: FINANCIAL STATEMENTS
115
NOTES TO THE CONSOLIDATED ANNUAL FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 MARCH 2019
2019 2018* Restated
R R
10. RevenueRendering of services 23 336 615 22 437 270Interest income 7 152 030 4 915 259Sundry income 2 956 2 156Interest received 72 826 72 142Recoveries 570 637 -Government grants & subsidies 42 309 919 63 196 000
73 444 983 90 622 827
The amount included in revenue arising from exchanges of goods orservices are as follows:Rendering of services 23 336 615 22 437 270Interest income 7 152 030 4 915 259Sundry income 2 956 2 156Interest received 72 826 72 142Recoveries 570 637 -
31 135 064 27 426 827
Included in recoveries is an amount of R569 901 relating to cost awards for legal expenses issued in favour of the Board
by the courts.
The amount included in revenue arising from non-exchange transactions is
as follows:
Transfer revenueGovernment grants & subsidies 42 309 919 63 196 000
11. InterestInterest incomeBank and investments 7 152 030 4 915 259
Included in interest received is an amount of R1 506 881 (2018: R 473 972 ) that accrued to the Building Investment
(note 9). This amount even though included in income, do not form part of the operating income of the entity.
* See Note 24
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART E: FINANCIAL STATEMENTS
116Department:
edteaEconomic Development,Tourism andEnvironmental Affairs
NOTES TO THE CONSOLIDATED ANNUAL FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 MARCH 2019
2019 2018* Restated
R R
12. Employee related costsBasic remuneration 43 615 871 39 962 680Performance bonus 32 960 70 733Cell phone allowance 226 209 227 894Leave pay accrual 258 543 233 447Medical aid subsidy 2 485 993 2 144 504Long-service awards 313 000 -Acting allowances 130 943 -Temporary employees 337 321 726 392Provident fund costs and risk benefits 1 199 376 1 301 955Termination benefits 83 774 156 721Reallocation Allowance 47 634 -Unemployment insurance 132 994 126 449
48 864 618 44 950 775
Basic
remuneration
Allowances and
Long Service
Award
Contributions Total
Senior management renumerationFor the year ended 31 March 2019
PN Baloyi Chief Executive Officer 1 665 271 35 500 194 602 1 895 373BE Radebe Senior Manager - Licensing &Registration (See note) 1 027 963 51 500 120 127 1 199 590RS Goodayle Senior Manager - Gaming,Monitoring & Compliance 1 023 629 56 500 124 469 1 204 598PJ Stretch Head - Governance Risk & PJPCompliance 1 027 963 52 500 120 127 1 200 590V Ramdas Chief Financial Officer 1 015 195 47 500 133 886 1 196 581RC Bestel Senior Manager - BettingMonitoring & Control 998 158 61 500 149 724 1 209 382M Ngwenya Chief Legal Officer 998 990 12 000 149 848 1 160 838
7 757 169 317 000 992 783 9 066 952
* See Note 24
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART E: FINANCIAL STATEMENTS
117
NOTES TO THE CONSOLIDATED ANNUAL FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 MARCH 2019
Basic
remuneration
Allowances and
Long Service
Award
Contributions Total
12. Employee related costs (continued)For the year ended 31 March 2018PN Baloyi Chief Executive Officer 1 560 032 16 500 182 341 1 758 873BE Radebe Senior Manager - Licensing& Registration 958 465 43 500 112 029 1 113 994RS Goodayle Senior Manager - GamingMonitoring & Compliance 954 416 43 500 116 078 1 113 994PJ Stretch Head Governance, Risk &Compliance 958 465 43 500 112 029 1 113 994V Ramdas Chief Financial Officer 946 920 43 500 124 466 1 114 886RC Bestel Senior Manager Betting Monitoring & Control 930 864 43 500 139 630 1 113 994M Ngwenya Chief Legal Officer 931 640 12 000 139 746 1 083 386
7 240 802 246 000 926 319 8 413 121
Mr Radebe was seconded to the KwaZulu-Natal Liquor Authority with effect from 08 October 2018 to assist with the
vacant Chief Executive Officer position. As agreed between the parties, the Board paid the salary of Mr Radebe during
this period and the KwaZulu-Natal Liquor Authority was responsible for the payment of the acting allowance and travel
expenses. The Board has raised a recoverable of R578 349 at year end. The value disclosed above is the full amount paid
to Mr Radebe for the period.
2019 2018* Restated
R R
13. Depreciation and amortisationAmortisation (refer to note 5 ) 1 722 165 1 421 144Depreciation (refer to note 4) 781 988 684 556
2 504 153 2 105 700
14. Lease rentals on operating leasePremisesContractual amounts 3 580 457 893 004EquipmentContractual amounts 283 047 282 600
3 863 504 1 175 604
* See Note 24
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART E: FINANCIAL STATEMENTS
118Department:
edteaEconomic Development,Tourism andEnvironmental Affairs
NOTES TO THE CONSOLIDATED ANNUAL FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 MARCH 2019
2019 2018* Restated
R R
15. General expensesAdvertising, Publications and Public Hearings 147 909 90 464Audit committee fees 142 934 158 174Auditors remuneration (refer to note 17) 770 127 875 968Bank charges 78 288 91 069Board remuneration (refer to note 16) 3 340 223 3 744 064Cleaning 223 401 2 571Computer expenses 1 428 228 938 816Conferences and seminars 40 119 113 865Consulting and professional fees 487 358 1 887 969Courier & postage 9 420 30 914Electricity 500 879 412 086Entertainment - 2 610External meeting refreshments 72 491 21 125Fleet expenses 149 671 135 378Gifts 700 -Illegal gambling operations 24 108 33 226Insurance 367 214 365 469Internal audit 474 150 796 912Legal expenses 5 144 242 1 090 734Levies (statutory) 514 032 504 229Office set-up and restoration costs 2 863 141 1 172 508Licensing, investigation and monitoring costs 574 417 599 448Marketing 643 443 39 333Printing and stationery 341 953 240 816Probity checks 10 150 47 022Security 8 336 34 575Software licenses and support 2 196 187 1 619 047Staff placement costs 65 314 178 445Staff welfare 135 939 160 934Subscriptions 12 119 8 340Telephone and fax 720 230 548 642Training 381 768 598 271Travel - overseas 624 526 -Uniforms 553 -Travel and subsistence 2 214 755 1 814 048Venue expenses - 23 875
24 708 325 18 380 947
Consulting and professional fees - During the 2018 year, the Board engaged a consultant to assist with the HR functions of the entity until the post was filled. In addition, the entity engaged consultants to assist with the financial and HR systems.Software licenses and support - During 2018, the first phase of the internally developed regulatory system went live, this accounted for the increase in the support costs payable for assistance and maintenance of the system. These costs continued into the current year.Office set-up and restoration costs - During the 2019, the entity moved its Pietermaritzburg operations into new premises and incurred these costs to set-up the office and to move in.Legal expenses increased due to litigation brought by a licensees/applicants in respect of decisions made by the Board.
* See Note 24
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART E: FINANCIAL STATEMENTS
119
NOTES TO THE CONSOLIDATED ANNUAL FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 MARCH 2019
Members’
fees
Reimbursive
expenses
Total
16. Board remunerationNon-executive2019Dr SG Ngcobo 366 827 20 124 386 951Ms MP Myeni 449 736 20 504 470 240Adv KP Thango 361 752 10 194 371 946Ms ZP Tenza 407 601 8 133 415 734Mr LS Gabela 437 166 41 056 478 222Mr SS Zondi 256 440 624 257 064Dr TI Nzimakwe 252 799 10 095 262 894Prof. BS Stobie 373 067 4 485 377 552Mr SN Chetty 313 974 5 646 319 620
3 219 362 120 861 3 340 223
Members’
fees
Reimbursive
expenses
Total
2018Adv BS Khuzwayo 555 000 22 402 577 402Mr ED Mpanza 484 000 14 761 498 761Mr SN Chetty 472 000 17 078 489 078Mrs H Hart 412 000 12 386 424 386Adv ND Hollis SC 418 000 19 442 437 442Mr PM Miller 396 000 5 403 401 403Mrs ST Mthembu 440 000 102 393 542 393Ms B Zulu 350 000 23 200 373 200
3 527 000 217 065 3 744 065
2019 2018* Restated
R R
17. Auditors’ remunerationFees 770 127 875 968
18. Repairs and maintenanceOffice buildings 21 563 132 659Office equipment - 28 925
21 563 161 584
Expenditure in respect of office buildings includes the entity’s share of the repairs and maintenance costs relating to
the space occupied in Pietermaritzburg.
* See Note 24
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART E: FINANCIAL STATEMENTS
120Department:
edteaEconomic Development,Tourism andEnvironmental Affairs
NOTES TO THE CONSOLIDATED ANNUAL FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 MARCH 2019
2019 2018* Restated
R R
19. Cash generated from operations(Deficit) surplus (6 488 915) 23 850 950Adjustments for:Depreciation and amortisation 2 504 153 2 105 700(Gain) / Loss on disposal of assets (28 265) (2 733)Movements in operating lease assets 383 838 114 557Changes in working capital:Trade and other receivables (1 247 169) (299 438)Payables from exchange transactions 4 394 419 285 424Taxes and transfers payable (non exchange) 998 625 (635 890)
516 686 25 418 570
20. Related partiesRELATIONSHIPSMembers Refer to members’ report noteUltimate controlling entity KwaZulu-Natal Provincial LegislatureControlling entity Office of the Premier (until 31 March 2019) Department
of Economic Development, Tourism and Environmental
Affairs (effective 01 April 2019)Related entity Transformation Fund (Controlled by the same Accounting
Authority)Senior Management Details of Senior Managers are provided in note 12
Related party transactionsCollection of gambling taxes on behalf of the ProvinceOffice of the Premier 679 505 576 308 185 808
The entity is responsible for the collection and distribution of all gambling taxes payable to the Province in terms
of the KwaZulu-Natal Gaming & Betting Tax Act, Act 9 of 2010 (as amended). The entity was initially only responsible
for taxes payable by the horseracing and betting sectors. However, with effect from 01 November 2017, the entity
became responsible for all the collection and distribution of all gambling taxes.
The values reflected above represents the actual cash distributed for the Province in terms of the Act.
Grant recievedOffice of the Premier 42 310 000 63 196 000
Secondment of employee to KZN Liquor AuthorityEmployee costs (recoverable) 578 349 -
* See Note 24
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART E: FINANCIAL STATEMENTS
121
NOTES TO THE CONSOLIDATED ANNUAL FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 MARCH 2019
2019 2018* Restated
R R
21. TaxationThe entity is exempted from the payment of income tax.
22. Employee benefit obligationsDefined contribution planIt is the policy of the entity to provide retirement benefits to all its employees. A defined contribution provident fund
which is subject to the Pensions Fund Act exist for this purpose.
The amount recognised as an expense for defined contribution plans is 6 337 975 5 777 990
23. Comparative figures
Certain comparative figures have changed as a result of rounding. In addition, certain comparative figures have been
reclassified to improve the readability and understanding of the financial statements.
Employee related costs - note 12, has been reclassified to improve the understanding of the financial statements. In the
prior year the entity disclosed the costs associated with the provident fund as part of Basic salary. This amount has been
disclosed separately in the current year to enhance the readers understanding of the financial statements. The change
only amended the disclosure in the note and had no effect on the statement of financial performance, statement of
financial position or cash flow statement.
24. Prior period errors
Prior period error 1 - Income taken to income in advance:
During the previous year an amount of R120 000 was recognised as income in advance instead of income. This has been
corrected to reflect the amount in the income statement as income for the period.
Prior period error 2 - Incorrect treatment of Study Assistance provided to employees:
In the past the entity treated study assistance provided to employees as a loan and recognised the expenditure on
the employee passing the relevant exam. During the previous financial year, the auditors flagged this as the incorrect
treatment. As a result the entity has amended the treatment to recognise the expenditure immediately and to raise a
recoverable if the employee does not pass. As a result the opening accumulated surplus balance was reduced by R18
800, additional expenditure of R76 200 was recognised in the prior year and debtors balance was reduced by R95 000.
The cashflow statement was adjusted accordingly.
Prior period error 3 - Prepaid expenditure not reversed:
An amount of R60 236 in respect of prepaid expenses was not accounted for as expenditure during the prior period. This
error has now been corrected resulting in an increase in expenditure and a decrease in trade and other receivables.
The effects of the changes are shown below:
* See Note 24
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART E: FINANCIAL STATEMENTS
122Department:
edteaEconomic Development,Tourism andEnvironmental Affairs
NOTES TO THE CONSOLIDATED ANNUAL FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 MARCH 2019
2019 2018* Restated
R R
24. Prior period errors (continued)
Statement of financial positionAccumulated surplus (decrease) - 18 800Trade and other receivables (decrease) - (155 236)Payables from exchange transactions (decrease) - 120 000
Statement of financial performanceRevenue from exchange transactions (increase) - 120 000General expenses (increase) - (76 200)Lease rentals on operating leases (increase) - (60 236)
25. CommitmentsAuthorised capital expenditureAmounts contracted for• Intangible assets 1 393 914 1 620 914
Total capital commitmentsAlready contracted for but not provided for 1 393 914 1 620 914
Total commitments
Total commitmentsAuthorised capital expenditure 1 393 914 1 620 914
Operating leases - as lessee (expense)Minimum lease payments due- within one year 4 427 099 1 314 770- in second to fifth year inclusive 15 024 824 2 982 428
19 451 923 4 297 198
Operating lease payments represent the rental payable by the entity for the leasing of certain of its equipment
and for the leasing of office space in Pietermaritzburg and Durban.
* See Note 24
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART E: FINANCIAL STATEMENTS
123
NOTES TO THE CONSOLIDATED ANNUAL FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 MARCH 2019
26. Contingencies
• Afrisun KZN (Pty) Ltd vs KwaZulu-Natal Gaming & Betting Board and Various Unnamed Respondents - Afrisun is
seeking an interdict to stop the Board from considering applications in respect of bingo halls to operationalise
electronic bingo terminals. The Board is defending the matter. The legal representatives of the the Board are confi-
dent that its defence will be successful. However, a cost order is sought against Board if its defence is unsuccessful.
The estimated costs for counsel to complete the litigation is estimated at R1,5 million.
• Afrisun KZN Pty LTd vs the Premier of KZN and others - The applicant is seeking to set aside the Board’s decision
with regards to Bingo. The Board intially sought to abide the decision of the court but then became an active par-
ticiapant in the matter. The legal representatives of the the Board are confident that its defence will be successful.
However, a cost order is sought against Board if its defence is unsuccessful. At this stage it is not possible to rea-
sonably quantify the costs should such an order be made against the Board. The estimated costs for our counsel is
approximately R3 million.
• Hollywood Sportsbook KwaZulu-Natal (Pty) Ltd vs KwaZulu-Natal Gaming and Betting Board and Estate Late Wil-
liam Legassick - Hollywood Sportsbook is challenging the Board’s decision to reject their application based on its
ownership not being in line with the Act. The legal representatives of the the Board are confident that its defence
will be successful. However, a cost order is sought against Board if its defence is unsuccessful. At this stage it is not
possible to reasonably quantify the costs should such an order be made against the Board. The estimated costs for
counsel is R2 million.
• The Peoples Forum Against EBTs vs KZNGBB - The applicant is seeking to set aside the Board’s decision with regards
to the installation of EBT’s. The Board is opposing the matter and as such could be liable for costs if an award is
made against it. At this stage it is not possible to reasonably quantify the costs should such an order be made
against the Board. The estimated costs for counsel in the matter is R1,5 million.
• Afrisun vs KZNGBB and 22 Others - the applicant brought an application in terms of PAJA seeking to set aside
the Board’s decision to approve applications for the renewal of Bingo licenses. The Board is opposing the matter.
The legal representatives of the the Board are confident that its defence will be successful. However, a cost order is
sought against Board if its defence is unsuccessful. At this stage it is not possible to reasonably quantify the costs
should such an order be made against the Board. The estimated costs for counsel is R3,5 million.
• Marshalls World of Sport (Pty) Ltd and Another vs KwaZulu-Natal Gaming and Betting Board and Others - Marshalls
World of Sport is seeking to set aside the decision of the Board to refer an appeal made by Marshall, against a
decision of a sub-committee of the Board, to the responsible MEC. The matter is still to be set down for a hearing.
The legal representatives of the the Board are confident that its defence will be successful. However, a cost order
is sought against Board if its defence is unsuccessful. It is estimated that costs could amount to R300 000.
• Marshalls World of Sport (Pty) Ltd and Another vs KwaZulu-Natal Gaming and Betting Board and Others (second
matter) - Marshalls World of Sport is seeking to set aside the decision of the Board to refer an appeal made by Mar-
shall, against a decision of a sub-committee of the Board, to the responsible MEC. The matter is still to be set down
for a hearing. The legal representatives of the the Board are confident that its defence will be successful. However,
a cost order is sought against Board if its defence is unsuccessful. It is estimated that costs could amount to
R300 000.
• Tupac Business Enterprises CC vs The Chairperson of the Board, KwaZulu-Natal Gaming & Betting Board and Others
- Tupac Enterprises is seeking to set aside the decision of the Board to award the tender for the provision of office
accommodation in Pietermaritzburg to another service provider. The court found in favour of the Board, however
Tupac has been granted leave to appeal. The estimated costs for counsel is R250 000.
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART E: FINANCIAL STATEMENTS
124Department:
edteaEconomic Development,Tourism andEnvironmental Affairs
NOTES TO THE CONSOLIDATED ANNUAL FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 MARCH 2019
26. Contingencies (continued)
• Galaxy Bingo Durban CBD (Pty) Ltd vs The Chairperson of the Board, KwaZulu-Natal Gaming & Betting Board and
Others - Galaxy Bingo Durban CBD has made an application seeking to review the decision of the Board to award
rights to operate independent site operator limited payout machines to itself and others. The Board has resolved
to abide the decision of the court. In the event that the review is successful, the Board may be required to refund
application fees of approximately R1,3 million which was recognised in revenue in the 2016 financial year.
2019 2018* Restated
R R
27. Fruitless and wasteful expenditureOpening balance 85 005 -Fruitless and wasteful- current year 656 85 005Fruitless and wasteful expenditure closing balance 85 661 85 005
Interest and penalties arose due to the late payment of SARS and suppliers. A system glitch resulted in the late payment
of SARS, on discovery the amount was immediately repaid. An application has been made to the SARS for the waiver of
the interest and penalties and the matter was not finalised at year end..
The current year amount relates to interest charged for late payment of invoices and was due to the invoices not being
sent timeously by the service provider.
28. Irregular expenditure Opening balance 2 889 518 1 798 784Irregular Expenditure - current year (Incident 3) 331 255 -Irregular expenditure - current year (Incident 2) 2 668 745 1 090 734
5 889 518 2 889 518
Analysis of expenditure awaiting condonation per age classificationCurrent year 3 000 000 1 090 734Prior years 2 889 518 1 798 784
5 889 518 2 889 518
* See Note 24
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART E: FINANCIAL STATEMENTS
125
NOTES TO THE CONSOLIDATED ANNUAL FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 MARCH 2019
28. Irregular expenditure (to be updated with condonation) (continued)
Details of irregular expenditure
Incident 1 - Board remuneration.
In 2015, Provincial Treasury conducted
an audit into the remuneration paid to
former board members and the number
of meetings held. The report identified a
potential over payment of R1,798,784 to
members. The report recommended that the
MEC of Finance implement procedures for
the recovery of the amounts. The entity has
approached the MEC for the condonation of
the amount.
Disciplinary steps taken/
criminal proceedings
The matter is with the MEC
of Finance and the Provincial
Treasury to implement the steps
as recommended per the report.
1 798 784
Incident 2 - Legal fees
The process for the appointment of legal
service providers was deemed to be irregular
by the Auditor-General, in that they felt
that the deviation process followed did not
fully articulate the circumstances prior to
the approval to deviate by the Accounting
Authority. The matter has been resolved with
the appointment of a new legal panel and
a revised engagement model. Furthermore,
the Accounting Authority considered and
condoned the appointment of the legal
service providers thereby rectifying the
deviation from SCM principles in November
2018. The matter will be referred to Provincial
Treasury for a final review and confirmation
per the direction of the Auditor-General.
No employee was found to be
negligent in the matter
3 759 479
Incident 3 - Expired Contracts
The entity made use of contracts that had
expired. The matter is still being investigated
to determine the extent of the irregular
expenditure and the persons, if any,
responsible for incurring such.
To be investigated
331 255
5 889 518
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART E: FINANCIAL STATEMENTS
126Department:
edteaEconomic Development,Tourism andEnvironmental Affairs
29. Budget differencesMaterial differences between budget and actual amountsThe material differences between the budget and actual amounts can be attributed to the following:
• Fees earned - The entity budgeted for adjustments to the license fees which did not materialise in the current
financial year. Furthermore the number of anticipated applications were not realised during the year contributing
to the decreased collection.
• Interest received - Included in the amount is interest in respect of the building investment (refer to note 11)
which is not regarded as part of the operating budget.The remainder of the variance was due to increased interest
rates and larger cash balances, the latter as a result of the entity now collecting all taxes prior to distribution
thereof on behalf of the Provincial Treasury.
• Recoveries - The entity was successful in defending certain litigation initiated against it and the court awarded
costs in favour of the entity. As a result the entity has accrued for recoveries relating to past legal costs.
• Personnel - The process for the filling of vacant positions on the structure or resignations has contributed to the
large variance for compensation. In certain instances where temp employees or consultants could be utilised the
entity engaged such.
• Lease rentals on operating leases - The entity planned to secure suitable office accommodation for its
Pietermaritzburg operations from the start of the financial year and budgeted for a full year rental. However the
process was delayed due to challenges experienced within the procurement process resulting in the variance.
ª Repairs and maintenance - The entity planned to secure suitable office accommodation for its Pietermaritzburg
operations and made provision in the budget for its operational needs. However the process was delayed due to
challenges experienced within the procurement process resulting in the variance.• Goods and services - The entity experienced under expenditure for the year due to the following reasons:
(a) Training - capacity constraints within the HR division impacted the rollout of the training programme for the
year.
(b) Investigation costs - the non-processing of applications received in respect of previous requests for
applications, due to challenges, resulted in under expenditure under this item.
(c) Marketing and advertising - delays in the roll out of the marketing plan for the year and outreach
programmes. The entity did not spend its budget on adverts for vacancies due to the delays referred to
above.
(d) General reductions in levels of expenditure were realised with the improvement of current contracts and by
implementation of stringent controls over expenditure.
(e) There were a number of projects that were on the go at year end and which will be rolled over into the next
financial year.
• Capital expenditure - The implementation of the online regulatory system was still on-going at year end and
the expected levels of expenditure did not materialise. The entity was also in the process of acquiring additional
software and the replacement of furniture at year end.
NOTES TO THE CONSOLIDATED ANNUAL FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 MARCH 2019
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART E: FINANCIAL STATEMENTS
127
NOTES TO THE CONSOLIDATED ANNUAL FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 MARCH 2019
29. Budget differences (continued) Changes from the approved budget to the final budgetThe changes between the approved and final budget were a consequence of changes in the overall budget parameters.
The changes made to the approved budget were as follows:
• Compensation of employees - Due to the challenges experienced within the recruitment process the entity
realised under expenditure and these amounts were transferred to operational expenditure to cater for increased
legal costs and other spending pressures.
• Lease rentals on operating lease - The lease for the Pietermaritzburg office resulted in increased levels of
expenditure.
• General expenses - Budget from other classes were moved to good and services to cater for certain budget
pressures and to support operations.
• Capital expenditure - the budget was increased by the additional allocation of R2,9 million to cater for the
compliance system and the regulatory system development as well as the purchase of furniture.
At amortised
cost
Total
R R
30. Financial instruments disclosureCategories of financial instruments2019Financial assetsTrade and other receivables from exchange transactions 3 397 892 3 397 892Cash and cash equivalents 92 038 668 92 038 668
95 436 560 95 436 560
Financial liabilitiesTrade and other payables from exchange transactions 36 809 618 36 809 618Taxes and transfers payable (non-exchange) 1 111 539 1 111 539Cash and cash equivalents (credit card) 297 099 297 099
38 218 256 38 218 256
2018Financial assetsTrade and other receivables from exchange transactions 2 150 318 2 150 318Cash and cash equivalents 92 166 863 92 166 863
94 317 181 94 317 181
Financial liabilitiesTrade and other payables from exchange transactions 32 415 199 32 415 199Taxes and transfers payable (non-exchange) 112 914 112 914Bank overdraft 140 539 140 539
32 668 652 32 668 652
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART E: FINANCIAL STATEMENTS
128Department:
edteaEconomic Development,Tourism andEnvironmental Affairs
NOTES TO THE CONSOLIDATED ANNUAL FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 MARCH 2019
31. Risk management
Liquidity risk
The entity’s risk to liquidity is a result of the funds available to cover future commitments. The entity manages liquidity
risk through an ongoing review of future commitments and credit facilities.
Credit risk
Credit risk consists mainly of cash deposits, cash equivalents, derivative financial instruments and trade debtors. The
entity only deposits cash with major banks with high quality credit standing and limits exposure to any one counter-
party.
Trade receivables comprise a widespread customer base. Management evaluated credit risk relating to customers on an
ongoing basis. If customers are independently rated, these ratings are used. Otherwise, if there is no independent rating,
risk control assesses the credit quality of the customer, taking into account its financial position, past experience and
other factors. Individual risk limits are set based on internal or external ratings in accordance with limits set by the board.
The utilisation of credit limits is regularly monitored. Sales to retail customers are settled in cash or using major credit
cards. Credit guarantee insurance is purchased when deemed appropriate.
32. New standards and interpretations
32.1 Standards and interpretations effective and adopted in the current year
In the current year, the entity has adopted the following standards and interpretations that are effective for the current
financial year and that are relevant to its operations:
GRAP 16 (as amended 2016): Investment Property
Amendments to the Standard of GRAP on Investment Property resulted from editorial changes to the original text and
inconsistencies in measurement requirements in GRAP 23 and other asset-related Standards of GRAP in relation to the
treatment of transaction costs. Other changes resulted from changes made to IAS 40 on Investment Property (IAS 40) as
a result of the IASB’s amendments on Annual Improvements to IFRSs 2011 – 2013 Cycle issued in December 2013.
The effective date of the amendment is for years beginning on or after 01 April 2018.
The entity has adopted the amendment for the first time in the 2018/2019 consolidated annual financial statements. The
impact of the amendment is not material.
GRAP 17 (as amended 2016): Property, Plant and Equipment
Amendments to the Standard of GRAP on Property, Plant and Equipment resulted from editorial changes to the original
text and inconsistencies in measurement requirements in GRAP 23 and other asset-related Standards of GRAP in relation
to the treatment of transaction costs. Other changes resulted from changes made to IPSAS 17 on Property, Plant and
Equipment (IPSAS 17) as a result of the IPSASB’s Improvements to IPSASs 2014 issued in January 2015 and Improvements
to IPSASs 2015 issued in March 2016.
The effective date of the amendment is for years beginning on or after 01 April 2018.
The entity has adopted the amendment for the first time in the 2018/2019 consolidated annual financial statements.
GRAP 21 (as amended 2016): Impairment of non-cash-generating assets
Amendments to the Standard of GRAP on Impairment of Non-cash Generating Assets resulted from changes made to
IPSAS 21 on Impairment of Non-Cash-Generating Assets (IPSAS 21) as a result of the IPSASB’s Impairment of Revalued
Assets issued in March 2016.
The effective date of the amendment is for years beginning on or after 01 April 2018.
KwaZulu-Natal Gaming and Betting BoardAnnual Report 2018/2019
PART E: FINANCIAL STATEMENTS
129
NOTES TO THE CONSOLIDATED ANNUAL FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 MARCH 2019
32. New standards and interpretations (continued)
The entity has adopted the amendment for the first time in the 2018/2019 consolidated annual financial statements. The
impact of the amendment is not material.
GRAP 31 (as amended 2016): Intangible Assets
Amendments to the Standard of GRAP on Intangible Assets resulted from inconsistencies in measurement requirements
in GRAP 23 and other asset-related Standards of GRAP in relation to the treatment of transaction costs. Other changes
resulted from changes made to IPSAS 31 on Intangible Assets (IPSAS 31) as a result of the IPSASB’s Improvements to
IPSASs 2014 issued in January 2015.
The effective date of the amendment is for years beginning on or after 01 April 2018.
The entity has adopted the amendment for the first time in the 2018/2019 consolidated annual financial statements. The
impact of the amendment is not material.
Directive 12: The Selection of an Appropriate Reporting Framework by Public Entities
The purpose of this Directive is to prescribe the criteria to be applied by public entities in selecting and applying an
appropriate reporting framework.
The effective date of the directive is for years beginning on or after 01 April 2018.
The entity has adopted the directive for the first time in the 2018/2019 consolidated annual financial statements. The
impact of the directive is not material.
32.2 Standards and interpretations issued, but not yet effective
The entity has not applied the following standards and interpretations, which have been published and are mandatory
for the entity’s accounting periods beginning on or after 01 April 2019 or later periods:
GRAP 104 (revised): Financial Instruments
Following the global financial crisis, a number of concerns were raised about the accounting for financial instruments.
This included that (a) information on credit losses and defaults on financial assets was received too late to enable proper
decision-making, (b) using fair value in certain instances was inappropriate, and (c) some of the existing accounting
requirements were seen as too rules based. As a result, the International Accounting Standards Board® amended its
existing Standards to deal with these issues. The IASB issued IFRS® Standard on Financial Instruments (IFRS 9) in 2009 to
address many of the concerns raised. Revisions were also made to IAS® on Financial Instruments: Presentation and the
IFRS Standard® on Financial Instruments: Disclosures. The IPSASB issued revised International Public Sector Accounting
Standards in June 2018 so as to align them with the equivalent IFRS Standards.
The revisions better align the Standards of GRAP with recent international developments. The amendments result in
better information available to make decisions about financial assets and their recoverability, and more transparent
information on financial liabilities.
The most significant changes to the Standard affect:
• Financial guarantee contracts issued
• Loan commitments issued
• Classification of financial assets
• Amortised cost of financial assets
• Impairment of financial assets
• Disclosures
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32.2 Standards and interpretations issued, but not yet effective (continued)
The effective date of the amendment is not yet set by the Minister of Finance.
The entity expects to adopt the amendment for the first time when the Minister sets the effective date for the amendment.
The impact of this standard is currently being assessed.
Guideline: Guideline on the Application of Materiality to Financial Statements
The objective of this guideline: The objective of this Guideline is to provide guidance that will assist entities to apply
the concept of materiality when preparing financial statements in accordance with Standards of GRAP. This Guideline
aims to assist entities in achieving the overall financial reporting objective. This Guideline outlines a process that may be
considered by entities when applying materiality to the preparation of financial statements. The process was developed
based on concepts outlined in Discussion Paper 9 on Materiality – Reducing Complexity and Improving Reporting,
while also clarifying existing principles from the Conceptual Framework for General Purpose Financial Reporting (“the
Conceptual Framework”) and other relevant Standards of GRAP. This Guideline includes examples and case studies to
illustrate how an entity may apply the principles in this Guideline, based on specific facts presented.
It covers: Definition and characteristics of materiality, Role of materiality in the financial statements, Identifying the users
of financial statements and their information needs, assessing whether information is material, applying materiality in
preparing the financial statements, and Appendixes with References to the Conceptual Framework for General Purpose
Financial Reporting & References to pronouncements used in the Guideline.
The effective date of the guideline is not yet set by the Minister of Finance.
The entity expects to adopt the guideline for the first time when the Minister sets the effective date for the guideline.
The adoption of this standard is not expected to impact on the results of the entity, but may result in more disclosure
than is currently provided in the consolidated annual financial statements.
GRAP 34: Separate Financial Statements
The objective of this Standard is to prescribe the accounting and disclosure requirements for investments in controlled
entities, joint ventures and associates when an entity prepares separate financial statements.
It furthermore covers Definitions, Preparation of separate financial statements, Disclosure, Transitional provisions and
Effective date.
The effective date of the standard is for years beginning on or after 01 April 2020.
The entity expects to adopt the standard for the first time in the 2020/2021 consolidated annual financial statements. It
is unlikely that the standard will have a material impact on the entity’s consolidated annual financial statements.
GRAP 35: Consolidated Financial Statements
The objective of this Standard is to establish principles for the presentation and preparation of consolidated financial
statements when an entity controls one or more other entities.
The effective date of the standard is for years beginning on or after 01 April 2020.
The entity expects to adopt the standard for the first time in the 2020/2021 consolidated annual financial statements. It
is unlikely that the standard will have a material impact on the entity’s consolidated annual financial statements.
GRAP 38: Disclosure of Interests in Other Entities
The objective of this Standard is to require an entity to disclose information that enables users of its financial statements
to evaluate:
NOTES TO THE CONSOLIDATED ANNUAL FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 MARCH 2019
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NOTES TO THE CONSOLIDATED ANNUAL FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 MARCH 2019
32.2 Standards and interpretations issued, but not yet effective (continued)
the nature of, and risks associated with, its interests in controlled entities, unconsolidated controlled entities, joint
arrangements and associates, and structured entities that are not consolidated; and
the effects of those interests on its financial position, financial performance and cash flows.
It furthermore covers Definitions, Disclosing information about interests in other entities, Significant judgements and
assumptions, Investment entity status, Interests in controlled entities, Interests in joint arrangements and associates,
Interests in structured entities that are not consolidated, Non-qualitative ownership interests, Controlling interests
acquired with the intention of disposal, Transitional provisions and Effective date.
The effective date of the standard is for years beginning on or after 01 April 2020.
The entity expects to adopt the standard for the first time in the 2020/2021 consolidated annual financial statements. It
is unlikely that the standard will have a material impact on the entity’s consolidated annual financial statements.
IGRAP 4 (revised): Applying the Probability Test on Initial Recognition of Revenue
The amendments to this Interpretation of the Standard of GRAP clarifies that the entity should also consider other factors
in assessing the probability of future economic benefits or service potential to the entity. Entities are also uncertain
of the extent to which factors, other than the uncertainty about the collectability of revenue, should be considered
when determining the probability of the inflow of future economic benefits or service potential on initial recognition of
revenue. For example, in providing certain goods or services, or when charging non-exchange revenue, the amount of
revenue charged may be reduced or otherwise modified under certain circumstances. These circumstances include, for
example, where the entity grants early settlement discounts, rebates or similar reductions based on the satisfaction of
certain criteria, or as a result of adjustments to revenue already recognised following the outcome of any review, appeal
or objection process.
The consensus is that on initial recognition of revenue, an entity considers the revenue it is entitled to, following its
obligation to collect all revenue due to it in terms of legislation or similar means. In addition, an entity considers other
factors that will impact the probable inflow of future economic benefits or service potential, based on past experience
and current facts and circumstances that exist on initial recognition.
An entity applies judgement based on past experience and current facts and circumstances. The effective date of the
amendment is for years beginning on or after 01 April 2020.
The entity expects to adopt the interpretation for the first time in the 2020/2021 consolidated annual financial statements.
It is unlikely that the standard will have a material impact on the entity’s consolidated annual financial statements.
GRAP 6 (as revised 2010): Consolidated and Separate Financial Statements
The definition of ‘minority interest’ has been amended to ‘non-controlling interest’, and paragraph .60 was added by the
Improvements to the Standards of GRAP issued in November 2010. If an entity elects to apply these amendments earlier,
it shall disclose this fact.
Paragraph .59 was amended by Improvements to the Standards of GRAP issued in November 2010. An entity shall apply
these amendments prospectively for annual financial periods beginning on or after the effective date [in conjunction
with the effective date to be determined by the Minister of Finance for GRAP 105, 106 and 107] from the date at which it
first applied the Standard of GRAP on Non-current Assets Held for Sale and Discontinued Operations. If an entity elects
to apply these amendments earlier, it shall disclose this fact.
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32. New standards and interpretations (continued)
The Standards of GRAP on Transfer of Functions Between Entities Under Common Control, Transfer of Functions Between
Entities Not Under Common Control and Mergers amended paragraphs .03, .39, .47 to .50 and added paragraphs .51
to .58 and .61 to .62. An entity shall apply these amendments when it applies the Standards of GRAP on Transfer of
Functions Between Entities Under Common Control, Transfer of Functions Between Entities Not Under Common Control
and Mergers.
The effective date of the amendment is for years beginning on or after 01 April 2019.
The entity expects to adopt the amendment for the first time in the 2019/2020 consolidated annual financial statements.
It is unlikely that the amendment will have a material impact on the entity’s consolidated annual financial statements.
GRAP 7 (as revised 2010): Investments in Associates
Paragraphs .03 and .42 were amended by the Improvements to the Standards of GRAP issued in November 2010. If an
entity elects to apply these amendments earlier, it shall disclose this fact.
The Standards of GRAP on Transfer of Functions Between Entities Under Common Control, Transfer of Functions
BetweenEntities Not Under Common Control and Mergers amended paragraphs .22, .28 and .38 and added paragraph
.24. An entity shall apply these amendments and addition when it applies the Standards of GRAP on Transfer of Functions
Between Entities Under Common Control, Transfer of Functions Between Entities Not Under Common Control and
Mergers.
The effective date of the standard is for years beginning on or after 01 April 2019.
The entity expects to adopt the standard for the first time in the 2019/2020 consolidated annual financial statements. It
is unlikely that the amendment will have a material impact on the entity’s consolidated annual financial statements.
Directive 7 (revised): The Application of Deemed Cost
This Directive was originally issued by the Accounting Standards Board (the Board) in December 2009. Since then, it has
been amended by:
• Consequential amendments when the following Standards of GRAP were amended to clarify some of the principles:
• GRAP 105 Transfer of Functions Between Entities Under Common Control
• GRAP 107 Mergers
Consequential amendments arising from GRAP 110 Living and Non-living Resources issued in December 2017.
Consequential amendments arising from the following Standards of GRAP in May 2018:
• GRAP 34 Separate Financial Statements
• GRAP 35 Consolidated Financial Statements
• GRAP 36 Investments in Associates and Joint Ventures
• GRAP 37 Joint Arrangements
• GRAP 38 Disclosure of Interests in Other Entities
The effective date of this Directive coincides with the effective dates of the applicable Standards of GRAP, as determined
by the Minister of Finance. If an entity has assets that it previously could not recognise and/or measure in accordance
with the Standards of GRAP on their initial adoption on the transfer date or the merger date because information about
the acquisition cost of the assets was not available, an entity applies this Directive to those assets. The fair value of those
assets is determined at the date of adopting the Standards of GRAP on the transfer date or the merger date in accordance
with the Directive’s Appendix paragraph A3.
The effective date of this revised directive is for years beginning on or after 01 April 2019.
NOTES TO THE CONSOLIDATED ANNUAL FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 MARCH 2019
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NOTES TO THE CONSOLIDATED ANNUAL FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 MARCH 2019
32. New standards and interpretations (continued)
The entity expects to adopt the directive for the first time in the 2019/2020 consolidated annual financial statements. It
is unlikely that the standard will have a material impact on the entity’s consolidated annual financial statements.
GRAP 18 (as amended 2016): Segment Reporting
Segments are identified by the way in which information is reported to management, both for purposes of assessing
performance and making decisions about how future resources will be allocated to the various activities undertaken
by the municipality. The major classifications of activities identified in budget documentation will usually reflect the
segments for which an entity reports information to management.
Segment information is either presented based on service or geographical segments. Service segments relate to a
distinguishable component of an entity that provides specific outputs or achieves particular operating objectives
that are in line with the municipality’s overall mission. Geographical segments relate to specific outputs generated, or
particular objectives achieved, by an entity within a particular region.
The subsequent amendments to the Standard of GRAP on Segment Reporting resulted from editorial and other changes
to the original text have been made to ensure consistency with other Standards of GRAP.
The most significant changes to the Standard are:
General improvements: An appendix with illustrative segment disclosures has been deleted from the Standard as the
National Treasury has issued complete examples as part of its implementation guidance.
The effective date of the standard is for years beginning on or after 01 April 2019
The entity expects to adopt the standard for the first time when the Minister sets the effective date for the standard.
The adoption of this standard is not expected to impact on the results of the entity, but may result in more disclosure
than is currently provided in the consolidated annual financial statements.
GRAP 20: Related parties
The objective of this standard is to ensure that a reporting entity’s consolidated annual financial statements contain the
disclosures necessary to draw attention to the possibility that its financial position and surplus or deficit may have been
affected by the existence of related parties and by transactions and outstanding balances with such parties.
An entity that prepares and presents financial statements under the accrual basis of accounting (in this standard referred
to as the reporting entity) shall apply this standard in:
• identifying related party relationships and transactions;
• identifying outstanding balances, including commitments, between an entity and its related parties;
• identifying the circumstances in which disclosure of the items in (a) and (b) is required; and
• determining the disclosures to be made about those items.
This standard requires disclosure of related party relationships, transactions and outstanding balances, including
commitments, in the consolidated and separate financial statements of the reporting entity in accordance with the
Standard of GRAP on Consolidated and Separate Financial Statements. This standard also applies to individual
consolidated annual financial statements.
Disclosure of related party transactions, outstanding balances, including commitments, and relationships with related
parties may affect users’ assessments of the financial position and performance of the reporting entity and its ability
to deliver agreed services, including assessments of the risks and opportunities facing the entity. This disclosure also
ensures that the reporting entity is transparent about its dealings with related parties.
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NOTES TO THE CONSOLIDATED ANNUAL FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 MARCH 201932. New standards and interpretations (continued)
The standard states that a related party is a person or an entity with the ability to control or jointly control the other party,
or exercise significant influence over the other party, or vice versa, or an entity that is subject to common control, or joint
control. As a minimum, the following are regarded as related parties of the reporting entity:
A person or a close member of that person’s family is related to the reporting entity if that person:
• has control or joint control over the reporting entity;
• has significant influence over the reporting entity;
• is a member of the management of the entity or its controlling entity.
An entity is related to the reporting entity if any of the following conditions apply:
• the entity is a member of the same economic entity (which means that each controlling entity, controlled entity
and fellow controlled entity is related to the others);
• one entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of an
economic entity of which the other entity is a member);
• both entities are joint ventures of the same third party;
• one entity is a joint venture of a third entity and the other entity is an associate of the third entity;
• the entity is a post-employment benefit plan for the benefit of employees of either the entity or an entity related to
the entity. If the reporting entity is itself such a plan, the sponsoring employers are related to the entity;
• the entity is controlled or jointly controlled by a person identified in (a); and
• a person identified in (a)(i) has significant influence over that entity or is a member of the management of that
entity (or its controlling entity).
The standard furthermore states that related party transaction is a transfer of resources, services or obligations between
the reporting entity and a related party, regardless of whether a price is charged.
The standard elaborates on the definitions and identification of:
• Close member of the family of a person;
• Management;
• Related parties;
• Remuneration; and
• Significant influence
The standard sets out the requirements, inter alia, for the disclosure of:
• Control;
• Related party transactions; and
• Remuneration of management
The effective date of the standard is for years beginning on or after 01 April 2019.
The entity expects to adopt the standard for the first time in the 2020/2020 consolidated annual financial statements.
The adoption of this standard is not expected to impact on the results of the entity, but may result in more disclosure
than is currently provided in the consolidated annual financial statements.
GRAP 108: Statutory Receivables
The objective of this Standard is: to prescribe accounting requirements for the recognition, measurement, presentation
and disclosure of statutory receivables.
It furthermore covers: Definitions, recognition, derecognition, measurement, presentation and disclosure, transitional
provisions, as well as the effective date.
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NOTES TO THE CONSOLIDATED ANNUAL FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 MARCH 201932. New standards and interpretations (continued)
The effective date of the standard is not yet set by the Minister of Finance.
The entity expects to adopt the standard for the first time when the Minister sets the effective date for the standard.
The adoption of this standard is not expected to impact on the results of the entity, but may result in more disclosure
than is currently provided in the consolidated annual financial statements.
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NOTES
PR262/2019
ISBN: 978-0-621-47616-3
www.kzngbb.org.za