1. PRESENTATION FOURTH QUARTER PERFORMANCE REPORT:
1 January – 31 March 2015
PORTFOLIO COMMITTEE ON TRADE & INDUSTRY
7 August 2015
Cape Town
Presenter:
Ms Caroline Kongwa
(Accounting Authority)

2. CONTENT Executive summary Performance against business plan
Progress on actions in the risk register
Report against post audit implementation plan
Financial report
PFMA and Treasury regulation compliance checklist /calendar
Conclusion

3. EXECUTIVE SUMMARY
Research was commissioned to monitor the prevalence of gambling and problem gambling and research to determine the socio-economic impact of illegal gambling with specific focus on online gambling and to determine the capacity required by National Gambling Board (NGB) to combat illegal gambling.
In Improving regulation and prosecution of online gambling, the NGB participated in various collaborative law enforcement Forums and commenced with the application for forfeiture of unlawful winnings to the state.
Development of a register of illegal operatives commenced. The illegal operator’s module concept document and the national registry concept document has been developed.
The NGB gathered national gambling statistics and information about the performance of the South African legalised gambling industry from all Provincial Licensing Authorities (PLA’s).

4. EXECUTIVE SUMMARY cont
EXECUTIVE SUMMARY cont.... Increase in GGR (all modes) per quarter, FY15, from Quarter 1,2 & 3
Gross Gambling Revenue (GGR) generated in the casino industry increased by 8.3% as a result of the increase of operational casinos positions in four out of the nine provinces i.e. Gauteng, Western Cape, KwaZulu-Natal and Northern Cape over the same period.
An increase of 10.2% in was reflected in the (Limited Payout Machine (LPM) industry. This is mainly as a result of a 1.9% increase in the roll out of active LPMs especially in Gauteng, Western Cape, Mpumalanga and Eastern Cape.
The most significant increase in GGR was noticed in the betting industry as GGR increased with 13.3% ,mainly as a result of increased GGR generated in sports betting (totalisators and bookmakers).
Decreases in GGR were noticed in the bingo industry mainly as a result of decreases in the generating of GGR in Gauteng during the first three quarters of FY15. It needs to be highlighted that operational gambling positions in the bingo industry increased by 44.7% from FY15 (Quarter 1: 4 577) to FY15 (Quarter 3: 6 622).

5. EXECUTIVE SUMMARY cont....
GGR per gambling mode, all provinces, FY15, Quarters 1,2 & 3
Casino sector continues to dominate other gambling modes or sectors in terms contribution to GGR followed by betting sector ,LPM sector and the bingo sector respectively

6. EXECUTIVE SUMMARY cont....
GGR per province, all modes, FY15, Quarters 1,2 & 3
Gauteng accounts for the highest amount of GGR generated and taxes/levies contributions;
One new casino has become operational in Northern Cape, resulting in a total of 37 operational casinos in South Africa;
The highest number of licensed bookmaker outlets are still situated in the Western Cape, whereas Gauteng accounts for the most operational bookmakers and totalisator outlets;
An increased roll out of LPMs in almost all provinces except KwaZulu-Natal, Free State and North West was noticed. No LPMs have been rolled out yet in the Northern Cape; and
A substantial increase in the number of operational bingo outlets was noticed, primarily as a result of the roll out of 16 operational bingo outlets in KwaZulu-Natal.
Total: R 17 919 

7. EXECUTIVE SUMMARY cont....
Proposed action
Key challenges
Capacity constraints impacts on our ability to effectively reach out as broad as possible to sections of our communities when doing public awareness and education.
The Legal Skills in the NGB are scarce and this presents a major challenge in the regulatory environment within which NGB operates.
The NGB Trust which existed as a separate entity was de-registered and all confiscated winnings were transferred into an NGB-owned separate bank account. The NGB is experiencing challenges allocating the confiscated winnings due to inadequate documentation.
Collaborating with the dti in participating in the public outreach and initiatives organised by the dti.
Capacitating the organisation in mission critical areas such as compliance generally, prevention and detection of illegal gambling as well as enforcement.
The NGB continues to liaise with the banks in an attempt to obtain source documents for the confiscated suspected unlawful winnings.

8. PROGRESS AGAINST BUSINESS PLAN QUARTERLY MILESTONES
Performance Indicator
Annual Target
4th Quarter Milestones
Actual Achievement
SOOG 1: Enhance Liaison and Statutory Advisory Services
Reviewed communication strategy and plan presented and approved by the Board
Communication strategy and plan reviewed and presented to board for approval
Final strategy and plan submitted to the Accounting Authority for approval.
Achieved
Stakeholder Management Strategy and Plan (Framework) presented and approved by the Board
Approval of stakeholder management strategy and plan (framework) by the Board
Final strategy and plan submitted to the Board for approval
Advisory reports presented to the Accounting Authority. Report on proposed legislative amendments.
Annual advisory report presented to the Accounting Authority.
Review S65 Advisory Report on to the dti.
Partially Achieved.

9. PROGRESS AGAINST BUSINESS PLAN QUARTERLY MILESTONES (CONT…)
Performance Indicator
Annual Target
4th Quarter
Milestones
Actual Achievement
SOOG 1: Enhance Liaison and Statutory Advisory Services (continued)
Audited gambling sector performance report
Annual audited gambling sector performance report
Achieved
Conduct Research on impact of gambling and present the report to the Accounting Authority.
Research on the impact of gambling conducted and a report presented to the Accounting Authority.
Final report submitted and approved by the Accounting Authority
Not Achieved

10. PROGRESS AGAINST BUSINESS PLAN QUARTERLY MILESTONES (CONT…)
Performance Indicator
Annual Target
4th Quarter
Milestones
Actual Achievement
SOOG 2: Optimise Organisational Excellence
Percentage up-time on Information Technology Services(ITS)
Maintain the up-time on all ITS at 97% or above
98% up-time or above.
Achieved

11. PROGRESS AGAINST BUSINESS PLAN QUARTERLY MILESTONES (CONT…)
Performance Indicator
Annual Target
4th Quarter
Milestones
Actual Achievement
SOOG 3: Compliance
Nine consolidated three tier compliance evaluation assessment reports
Nine consolidated reports on the evaluation of the issuance of national licenses, compliance monitoring of licensees and performance of PLAs
Desktop evaluation of five (5) provinces and onsite verification of two (2) provinces
Not Achieved
Report on intervention and support provided to regulators, law enforcement agencies
Report on intervention and support provided to regulators, law enforcement agencies
Providing support to regulators and law enforcement agencies and reporting of progress in suppressing of unlicensed gambling activities.
Achieved

12. SUMMARY PROGRESS ON ACTIONS IN THE RISK REGISTER
Risk name
Risk control
Residual risk
Action
Mis-alignment between National and Provincial legislation.
Establish Forum (NGB and PGB's) work team of legal managers that will be working closely with the dti policy unit.
Each Province continues to implement its own laws that are inconsistent with the National Law and other provincial laws.
The Minister is reviewing the policy and legislation and the NGB has prepared written advice covering mechanisms to manage identified inconsistencies in the gambling legislation.
The NGB has adopted a framework on concurrent gambling legislation, which will be implemented in conjunction with stakeholder management and communication stakeholder strategies and plans.
Absence of approved additional uniform norms and standards.
Formalised and approved norms and standards document in place.
Inadequate involvement of the NGB in making inputs in terms of the National Gambling Act evaluating submissions from the public.
The Minister is amending the national legislation NGB has made written input regarding the determination and strength of norms and standards.
Outdated ICT hardware (servers).
Perform a needs analysis to determine acceptable requirements necessary to update the ICT Infrastructure.
Master plan not yet approved, the risk continues.
A needs analysis was conducted. The necessary server hardware and software were purchased during the fourth quarter.
Inadequate physical and information security.
Ensure that the IT Framework/Policy and Procedures are updated and enforced.
Risk continues while awaiting approval of plans.
ICT Policies were approved by the Accounting Authority on 31 March 2015.

13. Report against post audit implementation plan
Of a total of 134 findings , 121 have been resolved ,4 are currently in progress and 9 have not been addressed relating to annual financials statement matters that were planned to be addressed after the end of the financial year.

14. FINANCIAL STATUS AND PERFORMANCE
VARIANCE ANALYSIS
(Figures reported are subject to change due to audited financial statements)
Administrative Expenses - The negative variance of R848,384 is attributable to the straight-lining of the lease liability which gave rise to a debit to the rental expense account.
Professional and Consulting Fees - The positive variance of R2,621,891 on professional fees was due to savings on projects which have been committed but not yet completed, such as the NCEMS technical advise (R714,072), an Omnibus research on the socio-economic impact of gambling (R340,000) and the on-going internal and external audits (R223,261). Also included in the positive variance is a savings of R1 million on legal fees.

15. FINANCIAL STATUS AND PERFORMANCE (CONT…) Revenue Expenditure

16. Section of the regulation/ act
COMPLIANCE CALENDAR FOR THE FIRST QUARTER: 1 JANUARY 2015 – 31 MARCH 2015
Date
Section of the regulation/ act
Action needed
Done: Yes/No
30 January 2015
Shareholder’s requirement
Submit monthly expenditure and income statements with projections for the remaining months, explanations for material variances as well as possible remedies to be applied to ensure that expenditure and income are in line with the approved budget.
Yes
10 January 2015
Accounting Authorities meet one-on-one with the Executive Authority to discuss strategic issues based on the second draft APP and first draft Corporate plans.
31 January 2015
TR , , , , &
Submission of the third quarterly report signed by the Accounting Authority to the Minister via Public Entity Oversight (PEO). The report should be aligned to the Annual Performance Plan (APP) and Business Plan. TR
Schedule 3B entities to submit quarterly reports on borrowing programme to National Treasury on actual borrowing for quarter and update on borrowing plan.
N/A

17. COMPLIANCE CALENDAR FOR THE FIRST QUARTER: 1 JANUARY 2015 – 31 MARCH 2015 cont....
Date
Section of the regulation/ act
Action needed
Done: Yes/No
31 January 2015
National Treasury Notice No. 33 and Framework for Strategic Plans and Annual Performance Plans
3A public entities submit for approval and tabling, 80 copies and one (1) CD of the Annual Performance Plans to the Minister via Parliamentary Officer, 120 Plein Street, 6th floor, Cape Town, 10 copies to the Public Entity Oversight and 10 copies to the National Treasury.
Yes
Shareholder’s requirement TR
3B public entities submit for approval and tabling, 80 copies and one (1) CD of the Corporate Plans to the Minister via Parliamentary Officer, 120 Plein Street, 6th floor, Cape Town, 10 copies to the Public Entity Oversight and 10 copies to the National Treasury.
N/A
Accounting Authorities submit final draft shareholder’s compact for 2015/16 to the Executive Authority for approval.
The Accounting Authority to discuss Annual Performance Plan or Corporate Plan with the Executive Authority. The Accounting Authority should prepare the Briefing Notes and submit 10 days before the meeting.

18. Section of the regulation/ act
COMPLIANCE CALENDAR FOR THE FIRST QUARTER: 1 JANUARY 2015 – 31 MARCH 2015 cont....
Date
Section of the regulation/ act
Action needed
Done: Yes/No
10 February 2015
Shareholder’s requirement
Accounting Officers meet with the Director-General to discuss the outcome of the Cabinet Lekgotla and other key strategic operational issues
N/A
27 February 2015
Submit monthly expenditure and income statements with projections for the remaining months, explanations for material variances as well as possible remedies to be applied to ensure that expenditure and income are in line with the approved budget
Yes
28 February 2015 TR
Submit to the dti a schedule of the outcome of any disciplinary hearings and/or criminal charges; the names and ranks of employees involved; and the sanctions and any further actions taken against these employees.

19. Section of the regulation/ act
COMPLIANCE CALENDAR FOR THE FIRST QUARTER: 1 JANUARY 2015 – 31 MARCH 2015 cont....
Date
Section of the regulation/ act
Action needed
Done: Yes/No
27 March 2015
Shareholder’s requirement
Submit monthly expenditure and income statements with projections for the remaining months, explanations for material variances as well as possible remedies to be applied to ensure that expenditure and income are in line with the approved budget
Yes
31 March 2015 TR
Submit any financial misconduct committed by their employees
PFMA Section (38)(1)(j)
Submission of assurance letters to show the implementation of effective, efficient and transparent financial management and internal control systems
Submission of 2015/16 Business Plans signed by the Accounting Authorities.

20. CONCLUSION
62.5% of the annual performance targets were achieved for the fourth quarter.
The financial position of the entity has been stabilised and a surplus of R1.060 million has been reported. As at year end 2015 the NGB has spent 92% expenditure against its total budget.
Established internal controls relating to management of expenditure and implemented cost containment measures.
No further irregular expenditure was incurred and irregular expenditure has been reduced from R3.6 million to R1.9 Million. Irregularly awarded contracts were cancelled.
Wasteful expenditure is at a nil balance.
The NGB will continue to monitor the market conduct and market share the information is based on raw data:
As at of year end 2015 growth in Gross Gambling Revenue was at 9.6% compared to end of 2014 at 4.3%.
A total amount of R 319 566  was wagered (turnover) as at year end 2015.
Direct employment in the gambling sector has been monitored annually. Based on the information submitted by PLAs direct employment per province and mode as at year end 2015 as per figures received from PLA’s is permanent and temporary employment.
Based on the information submitted by PLAs, the average Broad-Based Black Economic Empowerment (BBBEE) status or level of the South African gambling industry as at 31 March 2015 per gambling mode and operator, was as follows: Average BBBEE level for casino operators: 2, totalisators: Level 2, LPM operators: Level 2 and bingo operators: Level 1

21. Eco-Glades 2, Block C,Eco Park, Centurion
Thank you
420 Witch-Hazel Avenue
Eco-Glades 2, Block C,Eco Park, Centurion
Telephone:
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