National Lotteries Board Portfolio Committee Briefing November 2006

Agenda Background Organisational Structure Financials Activities

Mission To ensure that that the national and other lotteries are run with the utmost integrity, that the interests of all players are protected, that the national lottery generates maximum revenues for good causes in a responsible way and that these revenues are disbursed expeditiously

National Lotteries Board Nora Fakude-Nkuna Shelley Thomas Astrid Ludin (DTI) Henry Makgothi Nornan Axten George Negota Joseph Foster

The National Lotteries Act Establishes the National Lotteries Board Sets up the process for awarding the licence Establishes the National Lottery Distribution Trust Fund (NLDTF) Sets up the process of Distribution Sets up process for Monitoring & Regulating –Private & Society Lotteries –Promotional Competitions

Functions/Objectives Advise the Minister –on the issuing of Licence/s –on the percentages allocated to good causes –on the efficacy of Legislation related to Lotteries Protection of Players Maximize proceeds to good causes Administer NLDTF Monitor & Regulate Other Lotteries Manage the Central Applications Office

Uthingo NLB NLDTF DA Charities DA Art & Culture DA Sport DA RDP DA Misc 28% 45% 22% 5% 0% Weekly transfer Central Applications Office REGULATOR Monitors activities & approves games NGOs CBOs Applications Allocation and distribution of funds (average turnaround time is 8 months) Structure Operates the National Lottery

Organisational Structure

National Lotteries Board’s Equity and Gender

Financial Statements

NLB Balance Sheet as at 31 March 2006 ASSETS Non-current assets Property, plant and equipment Intangible assets Current Assets Investment in securities Trade and other receivables Prepayments and advances Cash and cash equivalents Total assets EQUITY AND LIABILITIES Current liabilities Trade and oher payables Current portion of deferred income Total equity and liabilities 2006 R’ ________ R’

Transfers and subsidies received Surplus on disposal of fixed assets Licence fees Application fee – licence to conduct Nat Lottery Other income Total revenue Administrative expenses Staff costs Audit fees Other operating expenses Depreciation Total expenditure Deficit from operations Finance income Deficit for the year (184) 184 _______ _ (69) 69 _______ _ 2006 R’ R’000 NLB Income Statement for the year ended 31 March 2006

ASSETS Current Assets Investments in securities Trade and other receivables Cash and cash equivalents Total assets LIABILITIES Current liabilities Provision for allocations by Distributing Agencies Capital and reserves Total equity and liabilities 2006 R’ __________ R’ __________ NLDTF Balance Sheet as at 1 March 2006

Revenue Penalties received Other income Total revenue Allocation of grants Assistance to the National Lotteries Board Other operating expenses Total expenditure Surplus/(deficit) from operations Finance income Operating surplus for the year __________ ( ) __________ NLDTF Income Statement for the year ended 31 March R’000

Budget (R’000) 2005/2006 (Actual) 2006/ /2008 Income9,1041,566 Grant 11,735 32,794 40,849 Expenditure20,83934,36042,415

Cost/Disbursement Ratio NLBUKNDA

Activities Regulation –National Lottery –Other Lotteries & Promotional Competitions Distribution of NLDTF License Award Process

Regulatory Activities

Regulating the National Lottery Retail Outlets Payments to the NLDTF Copyright and Trademarks Player Relations Advertising Security Systems Banking and Record Keeping Payment Security Ancillary Activities Directors, Shareholders and Subcontractors Social Responsibility

Salient Lottery facts for the year ended 31 March 2006 Prize Winners Millionaires115 Rollovers42 (LOTTO) Highest Estimated JackpotR34 million Highest PrizeR34,3 million Average Number of Players per Week Total Ticket Sales (incl. VAT):R4,40 billion Highest Weekly LOTTO Sales.R116 million Total Prizes PaidR2,06 billion Total Contribution to NLDTFR1,23 billion Total Allocated to Good CausesR1,27 billion

Contributions (average over 7years)

Ticket Sales Per Province (Rm)

Regulating Other Lotteries Promotional Competitions –Pending Court Action –Responsibility moving to new consumer legislation Society Lotteries

NLDTF Distribution

NLDTF Disbursements Actual Cash Paid 31 March 2006 (R million) Total Charities Arts Sport Miscellaneous Total

NLDTF Disbursements Available VS Allocated 2006 (R million) AvailableAllocatedNumber of Beneficiaries Charities Arts Sport Miscellaneous Total

NLDTF Disbursements Provincial Spread 2006 (R million) ArtsCharitiesSportMiscTotal National EC FS GP KZN LIM MP NC NW WC Total

NLDTF Commitments Grants made but not paid (R million) as at 31 March 2006 Charities444.0 Arts482.8 Sport567.5 Miscellaneous- Total1494.3

Charities Focus Capacity Building Poverty Alleviation Community and Residential Programmes for –children –youth –women –the aged –persons with disabilities –people affected by / infected with HIV/AIDS –the terminally ill –drug abusers

Arts, Culture & Heritage Focus Major Projects of National Significance Rural Grants for projects designed to serve the community Creative Development Grants Festivals Film Production and Distribution Public Art Heritage: Architectural, Archaeological, Historical and Indigenous Knowledge Systems. Environment

Sports Focus Capacity building for sports people, managers, administrators and coaches. Equipment and kit for teams and clubs. Upgrading of existing sporting facilities. Major events

License Award Process

Process 2005 Current License Expires 31 March Months allowed for Conversion JULY : Request for Proposal is issued pursuant to section 13(2)(a) of the Act NOVEMBER : Closing Date for BIDS –Uthingo Management –Gidani –Nikan’Abantu –Igwija DECEMBER : Evaluation Commences 6/7 DECEMBER : Oral Presentations by Bidders

Process 2006 JAN – APR: Evaluation FEB/MAR 2006: Site Visits APRIL : Independent Evaluation of the Process 26 APRIL :Recommendation to the Minister 31 JULY : Preferred Bidder Announced AUGUST: License Negotiation 29 SEPTEMBER 2006: License Awarded to Gidani (Pty) Ltd

Criteria Section 13 of the Act The Minister Shall be SATISFIED that the licencee has sufficient appropriate knowledge or experience to conduct the National Lottery has the necessary financial and other resources will show a clear and continuous commitment to the social responsibility programme The Minister Shall TAKE INTO ACCOUNT that the licencee is a fit and proper person will ensure that the interests of every participant in the National Lottery and Sports Pools are adequately protected will ensure that the net proceeds of the National Lottery and Sports Pools are as large as possible

Decision Tree GOAL PRIMARY CRITERIA X 12 SECONDARY CRITERIA X 105

Strategic Objectives Converting to New Operator Increasing National Lottery Sales and Contributions to the NLDTF Improved Licence Compliance Improved NLDTF Distribution Termination of Illegal Lotteries Improved Publicity

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