1. National Lotteries Board Portfolio Committee Briefing November 2006

2. Agenda Background Organisational Structure Financials Activities

3. 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

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

5. 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

6. 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

7. 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

8. Organisational Structure

10. National Lotteries Board’s Equity and Gender

11. Financial Statements

12. 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’000 649 299 948 147 448 3 490 14 3 943 154 895 155 843 155 843 ________- 55 843 155 843 2005 R’000 528 67 595 136 736 209 15 1 063 138 023 138 618 138 390 228 138 618

13. 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 11 735 - 228 8 000 692 20 655 5 702 10 200 633 4 096 208 20 839 (184) 184 _______ _ 16 618 1 228 - 51 16 898 4 472 9 325 508 2 234 428 16 967 (69) 69 _______ _ 2006 R’000 2005 R’000 NLB Income Statement for the year ended 31 March 2006

14. 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’000 2 439 979 32 423 1 137 425 3 609 827 1 472 807 2 137 020 __________ 3 609 827 2005 R’000 1 966 094 9 656 1 137 417 3 113 167 1 297 510 1 815 657 __________ 3 113 167 NLDTF Balance Sheet as at 1 March 2006

15. 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 1 229 931 25 897 7 247 1 263 075 1 187 326 11 735 17 1 199 078 63 997 257 366 __________ 321 363 1 029 853 - 7 585 1 037 438 1 161 629 18 944 18 1 180 591 (143 153) 265 134 __________ 121 981 NLDTF Income Statement for the year ended 31 March 2006 20062005 R’000

16. Budget (R’000) 2005/2006 (Actual) 2006/20072007/2008 Income9,1041,566 Grant 11,735 32,794 40,849 Expenditure20,83934,36042,415

17. Cost/Disbursement Ratio NLBUKNDA

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

19. Regulatory Activities

20. 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

21. Salient Lottery facts for the year ended 31 March 2006 Prize Winners55 229 532 Millionaires115 Rollovers42 (LOTTO) Highest Estimated JackpotR34 million Highest PrizeR34,3 million Average Number of Players per Week6 300 000 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

22. Contributions (average over 7years)

23. Ticket Sales Per Province (Rm)

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

25. NLDTF Distribution

26. NLDTF Disbursements Actual Cash Paid 31 March 2006 (R million) 200120022003200420052006Total Charities069.5174.5305.8631.7526.31707.8 Arts025.440.2140.3190.7177.0573.6 Sport021.662.6149.5226.9304.9765.5 Miscellaneous4.10.09.617.40.69.240.9 Total4.1116.5286.9613.01 049.91017.43087.8

27. NLDTF Disbursements Available VS Allocated 2006 (R million) AvailableAllocatedNumber of Beneficiaries Charities815.0625.61051 Arts507.0228.8192 Sport398.0409.6795 Miscellaneous91.09.31 Total1811.01273.32039

28. NLDTF Disbursements Provincial Spread 2006 (R million) ArtsCharitiesSportMiscTotal National0.8132.2155.69.3297.9 EC30.354.621.3106.2 FS2.629.837.269.6 GP94.7165.249.4309.3 KZN31.553.220.4105.1 LIM5.917.126.749.7 MP4.322.311.638.2 NC11.615.023.450.0 NW2.845.535.583.8 WC44.390.728.5163.5 Total228.8625.6409.69.31273.3

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

30. 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

31. 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

32. 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

33. License Award Process

34. Process 2005 Current License Expires 31 March 2007 6 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

35. 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

36. 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

37. Decision Tree GOAL PRIMARY CRITERIA X 12 SECONDARY CRITERIA X 105

38. Strategic Objectives 2007-9 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

39. END