Limpopo Gambling Board Annual Report

Annual Report 2021/2022

CONTENTS

Part A: General Information................................................................................................................... 5 1. Foreword by the MEC.................................................................................................................... 6 2. General Information. ..................................................................................................................... 8 3. List of Abbreviations/Acronyms. ................................................................................................. 9 4. Foreword by Chairperson............................................................................................................11 5. Chief Executive Officer’s Overview ........................................................................................... 13 6. Statement of Responsibility and Confirmation of Accuracy for the Annual Report . ........... 20 7. Strategic Overview. ..................................................................................................................... 21 a) Vision..................................................................................................................................... 21 b) Mission.................................................................................................................................. 21 c) Values.................................................................................................................................... 21 8. Legislative and Other Mandates. ............................................................................................... 22 a) Constitutional Mandates........................................................................................................ 22 b) Legislative Mandates............................................................................................................. 22 c) Policy Mandates.................................................................................................................... 23 9. Members of the Board. ............................................................................................................... 24 10. Organisational Structure. ........................................................................................................... 26 11. LGB Business Units.................................................................................................................... 28 Part B: Performance Information........................................................................................................ 32 1. Auditor-General’s Report: Predetermined Objectives ............................................................. 33 2. Overview of Performance........................................................................................................... 33 2.1 Service Delivery Environment............................................................................................... 33 2.1.1 Compliance.................................................................................................................. 33 a) Compliance Betting Statistics...................................................................................... 34 b) Gambling Performance................................................................................................ 39 2.1.2 Law Enforcement......................................................................................................... 49 2.2 Organisational Environment.................................................................................................. 49 2.3 Key Policy Developments and Legislative Changes............................................................. 50 2.5 Progress towards Achievement of Institutional Impacts and Outcomes............................... 50 2.5.1 Impacts and Outcomes as per the Strategic Plan....................................................... 50 2.5.2 Significant Achievements with regard to the Contribution towards the 2019-24 MTSF. ................................................................... 51 3. Amendments to the Strategic Plan............................................................................................ 56 3.1 Strategic Outcomes of the Entity. ......................................................................................... 56 4. Reviewing of the APP.................................................................................................................. 56

1

5. Institutional Programme Performance Information. ................................................................ 58 5.1 Programme 1: Governance................................................................................................... 58 • Performance Information according to the APP.......................................................... 59 • Strategy to overcome areas of under-performance..................................................... 59 • P erformance in relation to Standardised Outputs and Output Indicators for Sectors with Concurrent Functions. ................................................................................................. 59 • Programme Expenditure.............................................................................................. 60 5.2 Programme 2: Finance.......................................................................................................... 61 • Performance Information according to the APP.......................................................... 63 • Strategy to overcome areas of under-performance..................................................... 65 • P erformance in relation to Standardised Outputs and Output Indicators for Sectors with Concurrent Functions. ................................................................................................. 65 • Programme & Sub-Programme Expenditure............................................................... 65 5.3 Programme 3: Compliance. .................................................................................................. 67 • Performance Information according to the APP.......................................................... 69 • Strategy to overcome areas of under-performance..................................................... 73 • P erformance in relation to Standardised Outputs and Output Indicators for Sectors with Concurrent Functions. ................................................................................................. 73 • Programme & Sub-Programme Expenditure............................................................... 73 5.4 Programme 4: Law Enforcement. ......................................................................................... 74 • Performance Information according to the APP.......................................................... 75 • Strategy to overcome areas of under-performance..................................................... 76 • P erformance in relation to Standardised Outputs and Output Indicators for Sectors with Concurrent Functions. ................................................................................................. 76 • Programme Expenditure.............................................................................................. 76 5.5 Reporting on the Institutional Response to the COVID-19 Pandemic.................................. 77 5.6 Progress on Institutional Response to the COVID-19 Pandemic. ........................................ 78 5.7 Linking performance with budgets. ....................................................................................... 78 6. Revenue Collection. .................................................................................................................... 78 7. Capital Investment....................................................................................................................... 79 Part C: Governance.............................................................................................................................. 80 1. Introduction.................................................................................................................................. 80 2. Portfolio Committees. ................................................................................................................. 82 3. Executive Authority..................................................................................................................... 82 4. The Entity ..................................................................................................................................... 83 4.1. Introduction............................................................................................................................ 83 4.2. The Role of the Board........................................................................................................... 84 4.3. Composition of the Board...................................................................................................... 85 4.4. Audit and Risk Committee..................................................................................................... 90

2

4.5. Human Resource, Ethics and Social Committee.................................................................. 91 4.6. Compliance and Enforcement Committee. ........................................................................... 91 4.7. Remuneration Committee. .................................................................................................... 91 4.8. Corporate Social Investment (CSI) Committee..................................................................... 91 4.9. Remuneration of Board Members......................................................................................... 92 5. Risk Management........................................................................................................................ 93 5.1. Nature of Risk Management. ................................................................................................ 93 5.2. Risk Management Process................................................................................................... 93 5.3. Progress made in Addressing Risks Identified ...................................................................... 94 6. Internal Control Unit.................................................................................................................... 95 7. Internal Audit and Audit and Risk Committees........................................................................ 95 7.1. Objective and Role of Internal Audit...................................................................................... 95 7.2. Progress Report for the Year. ............................................................................................... 96 7.3. Key Activities and Objectives of the Audit and Risk Committee........................................... 96 7.4. Audit and Risk Committee Members Information. ................................................................ 97 8. Compliance with Laws and Regulations................................................................................... 98 9. Fraud and Corruption.................................................................................................................. 98 9.1. Creating Awareness.............................................................................................................. 98 9.2. Whistle Blowing..................................................................................................................... 98 10. Minimising Conflict of Interest ................................................................................................... 98 11. Code of Conduct.......................................................................................................................... 99 12. Health, Safety and Environmental Issues................................................................................. 99 13. Company Secretary..................................................................................................................... 99 14. Social Responsibility. ............................................................................................................... 100 15. Audit and Risk Committee Report........................................................................................... 100 15.1. Introduction.......................................................................................................................... 100 15.2.Audit and Risk Committee Responsibilities. ....................................................................... 100 15.3.The Effectiveness of Internal Control.................................................................................. 100 15.4. In-Year Management and Monthly/Quarterly Report. ......................................................... 101 15.5.Evaluation of Financial Statements..................................................................................... 101 16. B-BBEE Compliance Performance Information...................................................................... 102

Part D: Human Resource Management............................................................................................ 103

1. Introduction................................................................................................................................ 104 1.1 Policy Development............................................................................................................. 104 2. Human Resource Oversight Statistics......................................................................................... 104

3

2.1.1Personnel Cost by Programme........................................................................................... 104 2.1.2Personnel Cost by Salary Band.......................................................................................... 105 2.1.3Performance Rewards......................................................................................................... 105 2.1.4Training Cost....................................................................................................................... 105 2.2 Other Peronnel Related Information...................................................................................... 106

Part E: Financial Information............................................................................................................. 109

• Report of the Auditor-General of South Africa..............................................................................110 • Annual Financial Statements for the year ended 31 March 2022................................................117

Responsible Gambling........................................................................................................................ 178

4

PART A: GENERAL INFORMATION

5

1. Foreword by the Member of Executive Council

It is my singular honour and gratitude to present the Annual Report for the 2021/22 financial year which reflects the achievements and challenges encountered. Part of our responsibility as the department is to report on our deeds by way of providing a detailed report on our mandated work bestowed to us, including the work of entities which report to our department which in this regard refers to Limpopo Gambling Board (LGB). The Limpopo Gambling Board is a scheduled 3C Entity in terms of the Public Finance Management Act (PFMA) - charged with regulating, monitoring, and licensing the gambling industry in the Province. In our effort to drive the competitive economy in the Province, the LGB remains one of the catalytic levers in driving such mandate through regulating the gambling industry which in turn creates jobs, alleviates poverty and reduces unemployment. This is all bolstered through the growing of licensed sites such as LPMs, particularly in

rural communities where the scourge of poverty, inequality and unemployment continue to haunt our people. These gambling sites do not only play a role in job creation but also contribute in the upliftment of socio-economic development of our communities. Despite the challenges brought on by the COVID-19 pandemic, which affected the functioning of the economy negatively, the Licensees were able to play their Corporate Social Responsibility roles in various communities. The Entity is very hopeful and optimistic, based on the recent developments on the declaration of the end of the national state of disaster, that the Entity will be able to achieve more and that the Licensees will function fully. While the Entity has been doing very well in discharging its responsibilities in the Province by ensuring that the gambling industry is adequately managed and regulated in compliance with the law, he Province continuously experiences persisting challenges of illegal gambling. The Entity is doing their best in curbing such undesired acts in collaboration with our stakeholders, such as collaborating with law enforcement agencies, government sectors and communities in general. The Entities continuous efforts of rendering awareness relating to illegal and responsible gambling to the people of the Province also plays a crucial role in reducing acts of illegal gambling in the Province which also affects our capacity to generate more revenue.

6

I would be remiss to report on the performance of the Entity without specifically stating my appreciation for the continuous excellent work of sustaining their status of clean audit during the 2021/22 financial year. Credit goes to leadership of the Board, Executive Management and the entire staff. I would like to also appreciate the role played by the Portfolio Committee – Economic Development, Environment and Tourism on their oversight role, Office of the Premier and Provincial Treasury for their continuous guidance and support.

Allow me to present and submit the Annual Report of the Limpopo Gambling Board for the 2021/22 financial year.

_______________________ Honourable Thabo Mokone MEC for Economic Development, Environment and Tourism 31 May 2022

7

2. General Information

Limpopo Gambling Board

Registered Name:

8 Hans van Rensburg Street, Polokwane, 0699

Physical Address:

Private Bag x 9520, Polokwane, 0700

Postal Address:

(015) 230 2300

Telephone Number:

ceo@lgb.co.za

Email Address:

www.lgb.org.za

Website Address:

Auditor-General of South Africa

External Auditors:

32 Dimitri Crescent, Polokwane, Extension 1

Physical Address:

(015) 283-9300

Telephone Number:

Standard Bank of South Africa

Bankers:

Mall of the North, Polokwane

Physical Address:

(015) 265-2000

Telephone Number:

8

3. List of Abbreviations/Acronyms

Limpopo Gambling Act No. 3 of 2013

ACT ADV AFS

Advocate

Annual Financial Statements Auditor-General of South Africa

AGSA

Annual Performance Plan

APP

Broad-Based Black Economic Empowerment

BBBEE BCOM

Bachelor of Commerce Bachelor of Pharmacy

B.PHARM

Chartered Accountant South Africa

CA (SA)

Chief Executive Officer Chief Financial Officer Central Supplier Database Corporate Social Investment

CEO CFO CSD CSI CTA

Certificate in the Theory of Accounting

Department of Trade, Industry and Competition

DTI

Limpopo Gambling Board

ENTITY

Expanded Public Works Programme Enterprise Risk Management Financial Intelligence Centre Act Firearm, Liquor and Second-Hand Goods

EPWP

ERM FICA

FLASH

Gross Gaming Revenue Great North Transport

GGR GNT

Human Resources Management

HR

Internal Audit

IA

Limpopo Department of Economic Development Environment and Tourism

LEDET

Limpopo Gambling Board

LGB LLB LLM LPM MBA MBL MCS MEC MTEF MTSF

Bachelor of Laws Master of Laws

Limited Pay-out Machines

Masters of Business Administration Masters of Business Leadership Monitoring and Control Systems Member of Executive Council Medium-Term Expenditure Framework Medium-Term Strategic Framework

National Gambling Board National Prosecuting Authority

NGB NPA

9

Previously Disadvantaged Individuals

PDI

Public Finance Management Act, Act 1 of 1999

PFMA

Doctor of Philosophy

PHD

Preferential Procurement Policy Framework Act

PPPFA

Registered Auditor

RA

Request for Application Republic of South Africa

RFA RSA RTP

Return to Player

South African Police Service

SAPS SAQA

South African Qualifications Authority

South African Responsible Gambling Foundation

SARGF

South African Revenue Service Supply Chain Management

SARS

SCM SLA

Service-Level Agreement

Small, Medium and Micro Enterprises

SMME

Treasury Regulations

TR

Tshwane University of Technology

TUT

University of Johannesburg University of South Africa

UJ

UNISA

University of Venda Ultra-Short Base Line

UNIVEN

USBL

10

4. Foreword by the Chairperson of the Board

Introduction

Another year has gone past, and it is now that time when we present the Limpopo Gambling Board Annual Report to the Executive Authority. The Annual Report outlines our achievements against the targets which were set for the 2021/22 financial year.

High Level Overview of the Public Entity’s Strategy and the Performance.

It is with a great pleasure to report that the Entity has achieved all the set targets as per theAnnual Performance Plan. These significant outcomes are through the collective efforts of our Executive Management, the leadership of the Board and continuous support from the Shareholder.

We also appreciate the fact that the undesirable conditions which we were subjected to since 2020, as a result of the

Covid-19 pandemic, has subsided, thus allowing Licensees to operate more easily. The lifting of the lockdown restrictions has also enabled our staff to reach out more to communities to ensure that the gambling laws are enforced. Once more, it is with the outmost pleasure to report that the Board has again done well in terms of maintaining good governance for the year 2021/22 and attained an unqualified audit opinion without any significant findings (clean audit). This outcome could not be realized without the dedication of the staff with support and guidance from the leadership of the Board, the Executive Authority and the entire Shareholder family, including the Provincial Treasury and the Office of the Premier. In addition, our levy collections for the financial year 2020/21 increased by 60%, compared to the previous year, 2019/20. This means that the Entity has contributed more to the fiscus of the Province, which will ultimately make a positive contribution to the socio-economic development of our people. The increase in levies collection was as a result of additional licensed LPM sites and the opening of the Phalaborwa Bingo site.

Strategic Relationships

I am encouraged to say that our continuous cooperation and collaboration with our stakeholders is making a positive impact, particularly in the eradication of illegal gambling activities in the Province. We, however, still experience other challenges related to illegal online gambling. This is not insurmountable and with continued efforts, together with our stakeholders and law enforcement agencies, more will be accomplished.

11

Our effort to disseminate information regarding responsible gambling to our punters and the public in collaboration with the South African Responsible Gambling Foundation (SARGF), and the National Gambling Board is also worth noting. We also appreciate the contribution made by the National Lotteries Commission.

The solid working relationship with Licensees has resulted in the sustenance of jobs and the improvement of the socio-economic conditions of our people in the Province.

The Strategic Focus over the Medium to Long Term Period

In our quest to regulate, monitor and license the gambling industry for the economic growth of the Province, we will continue to license more sites such as LPMs in phases, as well as Bookmakers and Totalizators. This intervention will enhance our role in creating employment opportunities for our people, eradicate poverty and most importantly create a viable entertainment industry in the Province. The growth of the licensed sites in the Province will also contribute to revenue collection by the Entity on behalf of the Shareholder. The Entity will continue to play its role of uplifting our communities through various pillars, as stated in the Limpopo Development Plan, through the implementation of the CSI projects. We will, for this coming financial year, work with stakeholders such as the National Gambling Board, the South African Police Service, the National Prosecuting Authority and various other government departments in conducting investigations on illegal gambling activities, which have a negative impact to our economy. Words of appreciation go to the Executive Authority Hon MEC Thabo Mokone; The Portfolio Committee on Economic Development, Environment and Tourism; the Standing Committee on Public Accounts (SCOPA); other government departments; the gambling industry and gambling stakeholders (SARGF, NGB and NLC) who collaborated with us on gambling matters. Conclusion Lastly, I want to express my appreciation and gratitude to the Executive Management and staff members of the Entity for the commitment that was displayed in ensuring that the Entity fulfills its mandate of regulating, monitoring and licensing the gambling industry. Acknowledgements/Appreciation

___________________ Mr. Mataboge Elijah Tjiane Chairperson: Limpopo Gambling Board 31 May 2022

12

5. Chief Executive Officer’s Overview

Introduction

It is with pleasure that I report on the annual performance of the Limpopo Gambling Board against the set targets for 2021/22 as outlined in the Annual Performance Plan. The Entity has managed to perform its regulatory role in the Province despite the challenges that were encountered as a result of the COVID-19 pandemic. The gambling industry was closed from 28 June to 25 July 2021 under Alert Level 4 of the State of National Disaster, with the exception of the sports betting sector. In line with the objectives of regulating gambling, the gambling industry plays a crucial role in contributing towards economic growth, job creation and socio-economic development.

The Entity has achieved 100% (13 out of the 13) of the targets set in the 2021/22 Annual Performance Plan.

Service Delivery Overview

The Entity collected levies amounting to R 129 926 129.67 during the financial year, despite the State of National Disaster and the National Lockdown at various Alert levels throughout the financial year. The levies collected are 60% higher than the levies collected in 2020/21, although the big difference can be attributed to the alleviation of the effects of the State of National Disaster and the National Lockdown which were more severe in 2020/21. At the same time, the levies collected in 2021/22 are higher than the levies collected in the pre COVID-19 period, wherein the highest levies collected in 2019/20 amounted to R117 401 487, 97. This is a good sign that the gambling industry is recovering and the recovery is expected to improve as more of the population gets vaccinated and the effects of the virus subside. Furthermore, it is anticipated that the State of National Disaster and the National Lockdown will be terminated and this should also contribute to the recovery of the gambling industry. Bookmakers contribute to the biggest increase in levies collected, as the levies collected from Bookmakers increased by 49%, followed by LPMs at 36%; whilst Casino levies increased by 32% and Bingo levies increased by 30%. The Totalizator levies increased by 20% compared to a large decline of 54% in 2020/21, at which time the Totalizator, Phumelela Gaming and Leisure Limited (Phumelela) was also put under administration in 2020. The Board is pleased to announce the approval of the acquisition of 100% financial interest in Phumelela by 4Racing (Pty) Ltd. It is expected that this will bring stability to the Totalizator and the horseracing industry.

13

The Entity is authorised to licence 3 000 LPMs in terms of the National Gambling Act No.7 of 2004; however, only 1 500 LPMs may be licensed in the first phase. Fourteen LPM Site licence applications were processed during the financial year which will result in the Entity reaching the 1 500 first phase licensing limit during the first quarter of 2022/23. In the next financial year, the Board will request the NGB to conduct a socio-economic impact study of LPMs in Limpopo Province as per Regulation 13 of the National Gambling Act, to enable the Minister of Trade, Industry and Competition to decide whether more LPMs should be licensed under phase 2.

During the financial year, VbetSA opened three Bookmaker sites in the Province. This brings the total number of operational Bookmaker sites in Limpopo to 95.

The opening of the Bookmaker sites and LPM Sites in the respective areas contributes to economic development by creating employment, offering entertainment to the local population, contributing to the local municipalities through municipal rates and taxes, and to the Provincial and National Government through taxes, levies and fees. The licensing of LPM sites and the opening of Bookmaker sites contributed to the creation of employment in the Province. The number of employees in the gambling industry increased by 2.93% (from 3745 employees to 3858). As the Entity continues to regulate and monitor Licensees, it is apparent that most Licensees are committed to maintaining a good compliance culture in line with the relevant legislation, licence conditions and internal control procedures. The Entity takes this opportunity to appreciate the efforts of the Licensees and looks forward to working together during 2022/23 under the aura of COVID-19. The additional mandate of the Entity is to investigate and combat illegal gambling activities through its Law Enforcement Business Unit. The Entity conducts this through collaboration with the SAPS, NPA and other Government Departments. In addition to the investigation of illegal gambling activities, the Entity conducts crime awareness campaigns to the entire community of Limpopo in line with the principles of Community Policing as a required policing model in South Africa. During the 2021/22 financial year, a total of 25 illegal gambling operators were arrested during investigations, and admission of guilt fines to the amount of R29 500.00 were paid within various police stations around Limpopo Province. A total of 59 cases were investigated during the financial year. Investigations also resulted in the confiscation of 116 illegal gambling machines in the form of Chinese Roulettes from various spaza shops and taverns throughout the Province. The Entity destroyed 57 illegal gambling machines and the remaining 59 will be destroyed during the 2022/23 financial year.

General Financial Review of the Public Entity

The operations of the Entity are funded through a grant from the Department of Economic Development, Environment and Tourism. The Entity’s allocation in the current year increased from R60 million to R75

14

million, which indicates an increase of R 15 million. The increase in the budget is attributed to the additional funding that was allocated to the Entity during the budget adjustment, after an approval was granted for the surplus revenue retention from the 20/21 financial year. Although the Entity was affected by the pandemic, it was still able to collect levies and other operational income. The collection for the current financial year (R 140 567 016) was higher than that of the previous financial year (R 90 210 868). Interest received for the year was R 553 919. The Entity had to decrease its anticipated collection in relation to revenue to cater for the impact of the pandemic and the lockdown on the industry. The Entity’s total expenditure amounted to R 63 030 205 which accounted for 83% of the adjusted grant of R 75 651 490. Only 90 % of the employee cost was spent during the financial year. There were delays in finalising recruitment processes for some positions that the Entity had anticipated to complete before the financial year end. The Entity was not able to spend 17% of its 2021/22 budget. The spending in the current year was lower than originally estimated, when compared to the previous financial year where 99% of the allocated grant was spent. The Entity had budget challenges in the beginning of the financial year and had thereafter applied for a revenue retention which was only approved at the end of November 2021. Prior to this, the Entity has had to use the allocated funding sparingly to ensure that the regulated mandate was not affected, and that service delivery and contractual obligations were covered. The budgets in the Province were cut for the first time in 2020 and these cuts were carried through to the 2021 financial year. The Provincial Treasury had set the funding aside for COVID-19, which meant that the institutions in the Province were allocated a reduced budget. This greatly affected the spending patterns in the Province and the Limpopo Gambling Board was not immune to this. When the spending eventually improved in the 4th quarter of the financial year, there was a Constitutional court judgement that saw the National Treasury issue a halt of the procurement of goods and services in excess of R 30 000 which would have required institutions to apply the prequalifying criteria as set out in the PPPFA. This too, had contributed to the under-spending of the Entity, as some of the projects and purchases that relate to the core Business Units had to be halted. Spending Trends of the Public Entity

The Entity, however, has a positive outlook on the financial year ahead and is positive that spending patterns will improve.

Capacity Constraints and Challenges facing the Public Entity

The Entity has 73 posts on the organisational structure, of which 59 of them are filled. The Entity managed to fill seven (7) posts during the financial year. The 7 positions referred to herewith relates to 1 post in the Human Resource Management Unit and 6 positions in the Compliance Business Unit. This meant that the Entity was able to increase capacity in one of its core Business Units and as at the end of the 2021/22 financial year, this Business Unit was fully capacitated. Of the 7 new employees appointed in the Entity, 6 of those positions were filled by the Entity’s former interns. The Entity had appointed an acting CFO from 2020 due to the resignation of the former CFO. The post of the CFO was advertised in December of 2021,

15

however, the post had to be re-advertised in March of 2022. The Entity anticipates that the vacancy will be filled during the 2022/23 financial year. The recruitment process for the Manager Supply Chain position was completed and a new Manager will commence employment in this position on the 1st of April 2022. During the financial year, the Entity had a few colleagues in the Supply Chain Management Unit to act in the position. The high vacancy rate of 19% has had a negative impact on the operations of the Entity. The Entity currently has a partnership with the SAPS to address illegal gambling activities within the Province, which had allocated the FLASH (Firearm, Liquor and Second-hand Goods) Unit to work with the Entity in dealing with illegal gambling activities. FLASH’s core mandate is strictly regulatory and as such, does not have investigating officers. As a result of this, they are unable to investigate cases of illegal gambling effectively. Communications with SAPS at a National level are underway to remedy the current challenge.

Discontinued Key Activities/Activities to be Discontinued

Not applicable to the Entity.

New or Proposed Key Activities

In an effort to make informed decisions based on scientific facts, the Entity commissioned a Socio Economic impact study which is a collaboration with the South African Responsible Gambling Foundation. The study is in progress and it is anticipated to be finalised towards the end of September 2022. In line with its strategic objectives, the Entity concluded a Memorandum of Understanding with the Limpopo Tourism Agency to collaborate on various matters of mutual interest. The Entity would like to express appreciation to the South African Responsible Gambling Foundation and the National Lotteries Commission for their collaboration on matters of responsible gambling as well as addressing illegal gambling. Goldrush Bingo Phalaborwa was opened on 26 November 2021 and it has employed 26 people, the majority of whom are from Phalaborwa. The Licensee will further contribute to the community through Community Social Responsibility projects and providing leisure for the local and neighbouring communities.

Requests for Roll-Over of Funds

The Entity did not request any roll-over of funds.

Supply Chain Management

The Entity has a Supply Chain Management Unit in place as required by Regulation 16A of Treasury Regulations (2005), and an approved LGB Procedure Manual which will be reviewed annually to ensure an effective and efficient management system.

There were no conflicts of interest by the officials and their close family members in SCM matters of the

16

Entity.

The Auditor-General of South Africa made an assessment of procurement processes, contract management and any related controls.

Despite the COVID-19 challenges which saw the SCM staff work on a rotational basis, the Entity was able to pay creditors within a period of thirty (30) days.

All Concluded Unsolicited Bid Proposals for the Year Under Review

The Entity did not conclude unsolicited proposal/bid.

Whether SCM Processes and Systems are in Place

The Entity has an approved procedure manual in place which assists in enhancing the Supply Chain Management processes. The Entity, however, plans to review its procurement processes in an effort to improve processes and continue achieving procurement goals and objectives.

The Entity has in place the relevant Bid Committees as required by National Treasury in terms of Treasury Regulations.

Challenges Experienced and How they are Resolved

National Treasury, on the 25th of February 2022, issued a circular directing public institutions that “tenders advertised on or after 16th of February 2022 be held in abeyance; and no new tenders be advertised” as a result of the Constitutional Court’s ruling on the matter between Minister of Finance and Afribusiness NPC concerning the validity of the Preferential Procurement Regulations, 2017. This decision has affected the smooth running of the Entity as most of the request for quotations particularly the procurement of promotional materials for both the Law Enforcement and Compliance Business Units were put on hold as costing exceeded the R 30 000 threshold. The contract for the short term insurance cover for the assets of the Entity will terminate on the 31 April 2022 and there is a need to urgently appoint a supplier to render these services.

The Entity was unable to appoint the service provider to conduct the B-BBEE verification services for the Entity and this resulted in non-compliance regarding the B-BBEE to the B-BBEE Commission.

The Limpopo Provincial Treasury issued an Instruction Note No.02 of 2022/2023 repealing the Limpopo Transversal Supply Chain Management and the Entity is in the process of developing its own SCM Policy.

National Treasury further stipulates that until new procurement takes effect or confirmation is obtained from the Constitutional Court on the continued suspension of invalidity of Preferential Policy Regulations 2017, public institutions must request an exemption from the provisions of PPPFA for procurement related activities in excess of the R 30 000 threshold. A letter requesting exemption has been submitted to the

17

Minister of Finance in this regard.

Audit Report Matters in the Previous Year and How They Would Be Addressed

The Auditor-General of South Africa (AGSA) has performed the necessary audit procedures on the financial and performance information to provide an audit opinion for the 2020/21 financial year.

The Entity obtained an unqualified audit opinion with no findings, which is included in the Auditor’s Report on pages 110 to 116 of the Report.

Outlook/Plans for the Future to Address Financial Challenges

The Entity will be applying for a revenue retention with the Provincial treasury to be able to supplement the current year budget. The allocation that has been granted to the Entity will not be sufficient to cater for all the costs that are anticipated to be incurred for the 2022/23 financial year. To date, the Entity has an expected surplus of R 19 million that will be surrendered to the Provincial Treasury and the Revenue Fund. A portion of the R 19 million will be requested to be retained to be utilised for the service delivery expenses within the Entity.

Events after the Reporting Date

During the 2021/22 financial year, the Entity was taken to the CCMA by the representative trade union over a salary increment dispute that related to the 2020/21 financial year. The matter was not concluded by the end of the financial year. The matter was only set to be concluded in April 2022 pending the ruling by the CCMA.

Economic Viability

The effects of the global political economy as well as the current pandemic and the fact that the country is well underway to economic recovery to get back to pre COVID-19 economic performance (or even better), presents a mixed bag of conditions for businesses to operate in. As a result, some industries and sectors are performing better whilst others are not. The same currently applies to the gambling industry wherein some sectors are recovering faster and better than others. Overall, the outlook of the gambling industry is promising, provided that the COVID-19 situation improves for the better and the economic conditions improve. The current economic situation including the impact of the pandemic has seen allocations from the Provincial Treasury decreasing which has, in turn, seen the spending decreasing in the economy. The Entity has since not been able to contribute to the economy as it would in other years. In these difficult times the Entity was, however, able to absorb 6 of its interns into permanent positions. This meant that the Entity was able to put food on the table for six additional families in the Province.

18

Acknowledgements/Appreciation

I would like to thank the Board for their dedicated support and cooperation during the 2021/22 financial year. Furthermore, a word of gratitude to the MEC of LEDET, Mr T.A Mokone, and the Management of the Department of Economic Development, Environment and Tourism for the role they played in ensuring that the Entity was able to carry out its mandate despite the financial constraints. A word of gratitude also goes to the Members of the Portfolio Committee on Economic, Development, Environment and Tourism, the Standing Committee on Public Accounts, Provincial Treasury, National Gambling Board, South African Responsible Gambling Foundation, the National Lotteries commission, law enforcement agencies, our Licensees and the public of Limpopo for the contribution made in ensuring that the Entity maintains good governance and enforced gambling prescripts. This has enabled the Entity to maintain a clean audit (unqualified audit without findings).

Credit also goes to the Premier of the Province, Hon. C.S. Mathabatha and all Members of the Executive Council for their support and encouragement.

It is obvious that the excellent work displayed in this report could not have been possible without the dedication and discipline of our committed LGB Management and staff who went the extra mile in the execution of their duties.

__________________________ Mr. Mokgase Gregory Makoko Chief Executive Officer 31 May 2022

19

6. S tatement of Responsibility for Performance Information for the Year Ended 31 March 2022

To the best of our knowledge and belief, we confirm the following:

All information and amounts disclosed in the Annual Report are consistent with the Annual Financial Statements audited by the Auditor-General of South Africa.

a) The Annual Report is complete, accurate and free from any omissions. b) The Annual Report has been prepared in accordance with the guideline on the Annual Report, as issued by the National Treasury. c) The Annual Financial Statements (Part E) have been prepared in accordance with the GRAP standards applicable to the Entity. d) The Entity is responsible for the preparation of the Annual Financial Statements and for the judgments made in this information. The Entity is responsible for establishing and implementing a system of internal control and this 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 2022.

Yours faithfully

_______________

______________

Mr. M.G. Makoko

Mr. M.E. Tjiane

Chief Executive Officer

Chairperson of the Board

31 May 2022

31 May 2022

20

7. Strategic Overview

Vision

a)

To be the leading, exemplary and innovative regulator in the world.

Mission

b)

To regulate the gambling industry in a responsible and ethical manner for the benefit of the people of the Province by ensuring compliance with legislation, promoting responsible gambling, and facilitating sustainable local economic development.

Values

c)

The Limpopo Gambling Board has identified the following values as the principles that will govern behaviour of all employees within the organisation.

Values Integrity

Description

To operate in accordance with the highest moral and ethical standards. Responsibility To accept responsibility towards our most important resources - our employees, and to maximise the development and utilisation thereof. Consultation To strive towards a healthy relationship through interactive communication and consultation with our stakeholders. Transparency To fulfil our obligations to our stakeholders with honesty, integrity and transparency. Diversity To accept and respect the uniqueness and difference of all people and to provide a safe, positive and nurturing environment for the exploration of these differences.

Teamwork

To value the complementary talents and perspectives of the Entity and personnel in achieving our objectives.

21

8. Legislative and Other Mandates

In terms of the PFMA, the Limpopo Gambling Board is listed as a Schedule 3C Public Entity.

The mandate of the Entity is to regulate, control and monitor gambling activities in the Province in accordance with the Limpopo Gambling Act, Act No 3 of 2013.

The pursuit of the vision and the mission above will be regulated and guided by the following broad legislative mandates:

a) Constitutional Mandates

In terms of Part A of Schedule 4 of the Constitution of the Republic of South Africa, Act No. 108 of 1996, Casino, racing, gambling and wagering are matters of concurrent National and Provincial Legislative competence.

b) Legislative Mandates

PUBLIC FINANCE MANAGEMENT ACT, NO. 1 of 1999

The Public Finance Management Act is utilised to regulate the Management of finances.

In terms of the Public Finance Management Act, No.1 of 1999, the Limpopo Gambling Board is classified as a Schedule 3C public Entity.

LIMPOPO GAMBLING ACT, NO. 3 OF 2013

The Limpopo Gambling Board was established in terms of the Limpopo Gambling Act, No. 4 of 1996 and was retained in terms of the Limpopo Gambling Act No 3 of 2013.

The Limpopo Gambling Act, No. 3 of 2013 came into operation on 1 September 2014 and it consequently repealed the Limpopo Gambling Act, No. 4 of 1996. The Act empowers the MEC to establish and appoint the Board to manage the affairs of the Entity. The objectives of the Entity are to licence, regulate and monitor gambling activities in the Province.

NATIONAL GAMBLING ACT, ACT NO.7 OF 2004

The Entity must comply with national norms and standards during the licensing process. The National Gambling Act empowers the Minister to prescribe the maximum number of Casino Licences that may be granted in the Republic and in each Province.

THE CRIMINAL PROCEDURE ACT, NO 51 OF 1977

The Law Enforcement Inspectors of the Entity are declared as Peace Officers in terms of Section 334 and are conferred with the powers in terms of chapter 2 of the abovementioned Act.

22