Galaxy design sample Ӏ Worker Ant

PART 1: Executive Summary
1.1
1.2
1.3
1.4
1.5
APPLICANT AND
PROJECT TEAM
DEVELOPMENT AND
OPERATING EXPERIENCE
SUMMARY OF
PROJECT CONCEPT
PROJECT VIABILITY
AND FINANCIAL RETURNS
BENEFITS TO
THE ECONOMY
1.1.1. The Applicant
1.1.2. Project Team
7
8
8
15
IN THIS
DOCUMENT
25
43
49

PART 2: Detailed Proposal
2.1 EMPOWERMENT AND
COMMUNITY ASPECTS
2.2
2.3
2.1.1. Sustainable Employment
2.1.2. Provision of Training and Skills to Employees
2.1.3. Sourcing of Goods and Services
2.1.4. Participation of Black Shareholders in Ownership and / or Profits
2.1.5. Facilities for / Contributions to Needy Communities
63
64
76
92
104
120
ECONOMIC
ASPECTS
SOCIAL
ASPECTS
2.2.1. Maximisation of New Investment in Eastern Cape
2.2.2. Promotion of Tourism
2.2.3. Fiscal Implications
2.3.1. Sports, Arts and Culture Promotion
2.3.2. Protection of Public Interest
147
148
150
162
163
162
172
IN THIS
DOCUMENT

2.4 FINANCIAL
ASPECTS
2.4.1. Financial Control
2.4.2. Financial Strength
2.4.3. Financing Structure and Access to Capital Reserves
2.4.4. Financial Viability
2.4.5. Suitability of Funder
185
186
196
203
206
213
2.5 MANAGEMENT 215
2.5.1. Propriety and Integrity
2.5.2. Access to Expertise and Experience
2.5.3. Strategy and Objectives
216
226
244
2.6 DEVELOPMENT
ASPECTS 261
2.6.1. Development Strategy
2.6.2. Site Location and Size
2.6.3. Site Layout and Design Features
2.6.4. Parking Availability
2.6.5. Internal and External Security
262
280
298
318
320
Undertakings and Disclosures by the Applicant
List of Annexures
List of Appendices
324
326
328

1.1. Applicant and Project Team
Executive Summary
1.1.1.
THE APPLICANT
1.1.2.
PROJECT TEAM
8 GALAXY BINGO | Executive Summary
 The Applicant is EC Gaming Uitenhage (Pty)
Ltd, (previously Galaxy Bingo Uitenhage (Pty)
Ltd) a South African owned and registered
private company with Registration Number
2012/136900/07, which has its registered
and business office within the Eastern
Cape Province. Proof of payment of the
application fee and deposit, as well as for
the purchase of the RFP, in respect of this
application is included as Annexure A2 to
this application.
 Mr Christiaan Gerrit du Toit will be the Lead
Applicant and negotiator for the purposes
of this application, as contemplated in the
RFP. A signed resolution of the shareholders
as to the authority bestowed on the Lead
Applicant is included as Annexure A3.
 The sponsor members of the Applicant,
which are its source of funding for the
Project, are Niveus Investments Limited and
HCI Limited, which are JSE listed companies
respectively holding indirect interests of 29%
and 15% in the Applicant.
 The Applicant is backed by Niveus
Investments Ltd (“Niveus”), a South African-
owned, JSE listed empowerment company
and its holding company, HCI Limited.
 Niveus has a market capitalisation of
approximately R2.5 billion and a proven track
record of meeting all financial commitments
for the rollout of bingo venues in the Eastern
Cape, namely Galaxy Bingo East London and
Galaxy Bingo Port Elizabeth.
 Niveus holds an indirect interest of 100% in
Galaxy Bingo International South Africa (Pty)
Ltd, which holds a direct interest of 29% in
the Applicant.
 Niveus is held as to 51.73% by Hosken
Consolidated Investments Limited (“HCI”),
one of the leading JSE listed empowerment
companies in the country, which has a
market capitalisation of in excess of R17.5
billion and a Level 2 B-BBEE Contributor
Status. HCI therefore holds an indirect
interest of 15% in the Applicant.
 Galaxy Bingo International South Africa
(Pty) Ltd, which holds 29% in the Applicant,
has a number of provincial subsidiaries,
which collectively operate a number of upmarket
bingo venues in the Eastern Cape,
Gauteng, North West and KwaZulu-Natal.
Galaxy Bingo opened one of the first bingo
outlets in South Africa in 1998.
 71% of the equity in the Applicant is
collectively held directly by local PDI
shareholders.

THE CORE MEMBERS
OF THE APPLICANT’S
PROJECT TEAM, AND
THEIR RESPECTIVE AREAS
OF RESPONSIBILITY, ARE
AS REPRESENTED IN THE
TABLE ON THE RIGHT:
1.1.Applicant and Project Team
Executive Summary
PROJECT TEAM 1.1.2.
PROJECT TEAM MEMBER AREAS OF RESPONSIBILITY
Clarence Mngadi (Chairperson of the Applicant) Chairmanship, Shareholder Relations, and Strategic
Review of the Business, with local Eastern Cape
knowledge
Santhalutchmee van Vuuren (Director of the Applicant) HR, Training, Skills Transfer, CSI/SED & Sports,
Arts & Culture
Luthando Bara (Director of the Applicant) Marketing and Tourism Promotion
Notombobom Judith Jennings (Director of the Applicant) Corporate Social Investment and Sports, Arts & Culture
Christiaan Gerrit du Toit (CEO of the Galaxy Group) Site Development, Operations and Skills Transfer to
local shareholders
Mary-Anne Duvenhage (Compliance Officer: Galaxy Group) Internal Audit, Financial Procedures and Control
Paramesh Reshalil (Compliance Manager:
Galaxy Bingo Eastern Cape)
Compliance, Investigations, and Safeguarding of Assets
Local Developers: Transtruct (Local Level 3 B-BBEE
and /or companies with similar credentials)
Development and Rollout of Project
Niveus Investments Ltd Financiers of Applicant
GALAXY BINGO | Executive Summary 9

1.1.
Executive Summary
Applicant and Project Team
1.1.2. PROJECT TEAM
Participation by PDI
Shareholders in Ownership
and Profits
The total effective broad-
based PDI shareholding in
the Applicant is 82.32%,
and the direct local PDI
shareholding is a ground-
breaking and market-
leading 71%, as reflected
on the right:
PDI SHAREHOLDING IN APPLICANT: 82.32%
LOCAL DIRECT PDI SHAREHOLDING: 71%

Executive Summary
PROJECT TEAM 1.1.2.
The Applicant’s
shareholding composition
by far outstrips the
Essential Minimum
Requirements of the RFP,
as indicated on the right:
APPLICANT’S BID VS RFP ESSENTIAL MINIMUM
REQUIREMENTS

1.1.
Executive Summary
1.1.2. PROJECT TEAM
CONSOLIDATED SHAREHOLDING STRUCTURE OF THE APPLICANT
*Direct Shareholdings in the Relevant Entities.
Indirect Shareholdings in the Applicant are Expressed in Brackets.
The Table alongside identifies all natural and
juristic persons holding a financial interest
of five percent or more in the Applicant or in
entities which hold such an interest in
the Applicant:
As appears from the organisational charts
alongside, four Eastern Cape-based entities,
namely Zamori 356 (Pty) Ltd, Euroblitz CC,
Pholela Investment Pioneers (Pty) Ltd and
K2014046696 (Pty) Ltd, all of which are held as
to 100% by black residents of the Eastern Cape
Province will collectively directly hold 71% of the
total shareholding in the Applicant (excluding
the indirect shareholding held by black persons
in the Applicant through the listed entities which
make up the Group, as further described in
this document). The remaining shareholder in
the Applicant is its minority shareholder, Galaxy
Bingo International South Africa (Pty) Ltd,
holding 29% of the equity in the company.
Please refer to Section B: Detailed Proposal
for further information regarding the
Applicant’s local PDI shareholding partners.
M A GOLDING
7%* (1.04%)
SACTWU
28.75% (4.31%)
OTHER
64.25%* (9.63%)
M A GOLDING
8.08%* (2.34%)
HCI LTD
51.73% (15%)
J A COPELYN
5.66%* (1.64%)
OTHER
34.53%* (10%)
NIVEUS INVESTMENTS LTD
100%* (29%)
NIVEUS GAMING AND ENTERTAINMENT (PTY) LTD
100%* (29%)
ZAMORI 356 (PTY) LTD
33%* (33%)
EUROBLITZ CC
22%* (22%)
GALAXY BINGO INTERNATIONAL
SOUTH AFRICA (PTY) LTD
29%* (29%)
K2014046696 (PTY) LTD
2%* (2%)
PHOLELA INVESTMENT
POINEERS (PTY) LTD
14%* (14%)
EC GAMING UITENHAGE
(PTY) LTD

Terms of Shareholding
Executive Summary
PROJECT TEAM 1.1.2.
Participation in Management
and Operations The local PDI shareholders in the Project will
receive their shareholding at no cost.
 Funding for the project, covering the costs
of construction of the venue and set-up
costs for the business, will be provided in
full by Niveus, at no cost to the local PDI
shareholders.
 As the funding provided by Niveus is in the
form of an interest-free loan, this will entail
a substantial cash saving to the Applicant’s
local PDI shareholders, which equates to
R1.5 million in respect of the first year of
operation, decreasing thereafter until the
loan has been repaid in full.
 The Applicant’s local PDI shareholders
cannot lose their equity in the Applicant in
any manner, as they have no obligations
in respect of either funding or equity
repayments.
 From a management control perspective,
the Applicant company will be served by
a Board of five initially elected Directors,
four (80%) of whom are PDI’s and 40% of
whom are PDI women, as illustrated in
the Table below:
PORTFOLIO EQUITY %
Clarence Mngadi
(Chairperson of the Applicant)
Chairmanship, Shareholder Relations, and Strategic Review of
the Business, with Local Eastern Cape Knowledge
33%
Santhalutchmee van Vuuren
(Director of the Applicant)
HR, Training, and Skills Transfer 0%
Luthando Bara
Marketing and Tourism Promotion 22%
Notombobom Judith Jennings
Corporate Social Investment and Sports, Arts & Culture 14%
Christiaan du Toit
Site Development, Operations and Skills Transfer to Local
PDI Directors
0%
NAME OF DIRECTOR

1.1.
Executive Summary
1.1.2. PROJECT TEAM
Participation in Management
and Operations (Continued)
 The local PDI shareholders will be closely
involved in the strategic management of
the Applicant enterprise from the outset,
as indicated in the Table on the previous
page, and as more fully described in the
Detailed Proposal.
 From the outset, the local shareholders
will be entitled to 71% of the management
fees payable in terms of the management
contract, in direct proportion to the extent
of their shareholding in the Applicant.
The management fees are equal to 5% of
GGR, so that the local PDI shareholders
will cumulatively receive 3.55% of the GGR
generated by the Applicant’s business on a
monthly basis, with effect from the date of
commencement of the licensed operations.
The management agreement may be
terminated by the Applicant enterprise
(which will at all times be controlled by
its local PDI shareholders), after five
years of operation, enabling the local PDI
shareholders to take full responsibility for
the further management of the licensed
business, should they wish to do so.
 There are no restrictions on the exercisable
voting rights of the local PDI shareholders.
 After the initially elected directors named
previously have served their first term, all
directors will be elected by the majority
of the shareholders (therefore effectively
determined by the local PDI shareholders) at
each Annual General Meeting.
 The Chairperson is appointed by the majority
of the shareholders in the Applicant.
 The Chairperson has no casting vote in
addition to his deliberative vote.

DEVELOPMENT AND
OPERATING EXPERIENCE

1.2.
Executive Summary
Development and Operating Experience
1.2.
DEVELOPMENT
AND OPERATING
EXPERIENCE
The Galaxy Group of Companies distinguishes
itself in the market by offering specialized
integrated gaming and restaurant facilities,
providing a distinctive and markedly superior
gaming and entertainment solution to the public.

1.2.Development and Operating Experience
Executive Summary
GALAXY BINGO
EAST RAND MALL
OPENED IN
BOKSBURG,
GAUTENG, IN
APRIL 2012

Galaxy Bingo International South Africa (Pty) Ltd, which
holds a direct interest of 29% in the Applicant, has extensive
experience in the swift and streamlined rollout of high
quality integrated bingo developments, as it has recently
demonstrated with pronounced success in the Eastern
Cape, with the completion and opening of the developments
operated by Galaxy Bingo East London and Galaxy Bingo
Port Elizabeth.
1.2.
Executive Summary
Development and Operating Experience

Executive Summary
The sheer extent of the Group’s experience
and capacity is highlighted by the fact
that, within a period of just 10 months,
the Group successfully developed
the following substantial, high quality
developments:
GALAXY BINGO
PORT ELIZABETH
(involving a capital expenditure of
R13 million)
GALAXY GRILL
THE BRIDGE, IN PORT ELIZABETH
R6 million)
GALAXY BINGO
EAST LONDON
R10 million)
GALAXY BINGO
PAVILION
R11 million)
GALAXY BINGO
BRITS
R2 million)
GALAXY BINGO
GATEWAY
R14 million)
GALAXY GRILL,
WONDERPARK, IN PRETORIA
R6 million)

Executive Summary
Development and Operating Experience1.2.

 Since the previous bingo application
process in the Eastern Cape, the Group’s
permanent staff complement has grown
from approximately 400 to approximately
1 000 persons, which is testimony to real
job creation.
 Over 90% of these permanent staff
are PDI’s.
 More than 230 of these permanent staff are
residents of the Eastern Cape Province.
 The Group now boasts more than 1 000
years’ collective experience in the gaming,
entertainment and food and beverage
sectors, as well as an outstanding
compliance track record.
 The recent rollout of the bingo developments
in the Eastern Cape provides compelling
testimony to the integrity and commitment of
the Group, in that the bid commitments were
not only met, but significantly exceeded, as
demonstrated by the Commencement of
Operations Reports furnished to the Board
in April 2014.
Executive Summary
OVER 90%
OF PERMANENT
STAFF ARE PDI’S
Highlights of the Group’s achievements
include the following:
 Between 1998, when the Group rolled out
its first licensed site in Boksburg, and the
previous bidding process in the Eastern
Cape, the Group had ploughed a cumulative
investment of approximately R100 million
into six sizeable, high quality sites, ranging
from between 700m² and 2 400m².

Executive Summary
PROJECT TEAM
C G du Toit
C S Mngadi
M Duvenhage
S van Vuuren
P Reshalil
L Bara J N Jennings

Executive Summary
Development and Operating Experience 1.2
.
The Applicant’s core Project Team members
boast the following impressive credentials:
As an integral part of the Galaxy Group,
the Applicant will draw significantly
on the pool of collective expertise
described above.
If granted, the bingo licence will be held
by EC Gaming Uitenhage (Pty) Ltd, a
private company with Registration Number
2012/136900/07.
NAME EXPERTISE AND EXPERIENCE
Clarence Mngadi The Chairperson of the Applicant, Mr Mngadi is a highly experienced businessman
who brings a wealth of expertise to the Applicant enterprise. Since the previous
bingo application in the Eastern Cape, Mr Mngadi has successfully opened the
landmark Audi and Volkswagen Centre in East London. He also has gaming
experience and was instrumental in the successful opening of the Galaxy Bingo
sites in Port Elizabeth and East London.
Santhalutchmee van Vuuren Ms van Vuuren boasts 12 years’ gaming and food and beverage experience, and
has served as a Director in the gaming and entertainment industry for two years.
She is responsible for the full HR function in respect of the permanent staff of the
Group, which comprises approximately 1 000 persons, as well as managing all the
Galaxy Group’s CSI/SED projects.
Luthando Bara Mr Bara, who will serve the Applicant as its Director in the field of Marketing and
Tourism Promotion, has extensive marketing experience, in his former capacity as
the Marketing Director of the University of Fort Hare, as well as gaming experience,
as the owner-manager of restaurant and bar facilities licensed by the Board as LPM
sites in both Port Alfred and Grahamstown.
Notombobom Judith Jennings Ms Jennings possesses exceptional business acumen, and has established herself
as a successful franchise holder for Vodacom. She will serve the Applicant as its
Director in the fields of Corporate Social Investment and Sports, Arts and Culture.
Christiaan du Toit Mr du Toit is a Chartered Accountant and a Fellow Chartered Management
Accountant with 21 years’ working experience and is in his fifth year with Galaxy
Bingo. He was responsible for the introduction of the new business strategies,
high quality site selection criteria and innovative design concepts which effectively
transformed the Galaxy Group into a profitable, brand-leading business.
Mary-Anne Duvenhage Ms Duvenhage is a Chartered Accountant with almost ten years’ experience, and
boasts exceptional capabilities in the areas of gaming compliance and internal audit,
as well as operational skills.
Paramesh Reshalil Mr Reshalil brings considerable expertise to the Applicant from the perspective of
gaming compliance, having been previously employed as Compliance Manager at
the Boardwalk Casino and Entertainment World.

Executive Summary

1.3.
Executive Summary
Summary of Project Concept
1.3.
SUMMARY
OF PROJECT
CONCEPT
Site Location
The site for the proposed development is
located on Erf 25332, Uitenhage, situated at
42 Union Street, Uitenhage, with the following
GPS co-ordinates:
Latitude: -3.77622229
Longitude: 25.41661263
 The Applicant’s site will be housed in a
substantial area totalling 1 200m², located in
Shop G001 of the prestigious new regional
shopping mall, Corkwood Square, to be
constructed in Union Street, on the outskirts
of Uitenhage. It is evident from existing
bingo developments in the Eastern Cape
that an area in excess of 1 000m² is required
to develop a meaningful integrated gaming
and entertainment business with 300 seats.
 The site is 37 km from the nearest casino
(Boardwalk Casino) and 24 km from the
nearest licensed bingo venue (operated by
Ritz Gaming).

Executive Summary
Summary of Project Concept 1.3.
ARTIST IMPRESSION

Executive Summary
Summary of Project Concept1.3.
ARTIST IMPRESSION
 The Applicant’s site –
− is already zoned Business 1, with place
of amusement rights;
− is located on an extremely busy four
lane road, in and out of Uitenhage;
− will have high visual prominence, being
located next to Union Street, upon
entering Uitenhage from Despatch and
Port Elizabeth;
− will be easily accessible from the large
parking area;
− is located on one of the last remaining
high quality pieces of land which is
available for development in
Uitenhage; and
− is ideal from the perspective of
promoting responsible gambling, in
that it will be part of a larger shopping
centre development which will attract
patrons commanding higher levels of
disposable income. The neighbouring
retail outlets will deal primarily in middle
and high-end merchandising. The
location of the venue therefore provides
the perfect balance between harnessing
the high volume of patrons making use
of the various facilities provided by the
mall, and limiting the potential for the
displacement of income earmarked for
day-to-day essential items.

Executive Summary
ARTIST IMPRESSION

1.3.
Executive Summary
ARTIST IMPRESSION
Project Concept
The proposed bingo development will –
 be developed by the Applicant at a cost
of R15 million (excluding electronic bingo
equipment and rentals);
 be located on one of the last prime pieces of
land available for development in Uitenhage;
 incorporate a ground floor area of 1 200m²,
housing –
− a bingo area spanning approximately
700m² with 300 seats, fitted with
finishes of the highest quality, which will
be of a standard directly comparable
with the other up-market licensed bingo
venues operated by the Galaxy Group;
− a substantial full Grill House
development of the highest quality,
offering a gourmet dining experience at
competitive prices, fitted with flat screen
LED TV’s featuring sporting and similar
events;
− an up-market, sit-down bar area, fitted
with flat screen LED TV’s featuring
sporting and similar events;
− top class local entertainment acts; and

Executive Summary
Investment Quality of Development− a child-minding facility, manned by
child-minders, with provision for –
− a new-style Kiddies’ Cinema;
− various games, colouring-in projects
and crayons;
− state-of-the-art security, including
access control measures whereby
photographs and fingerprints are
taken of parents or guardians, which
are used at the time of collection
of the child, ensuring the complete
safety of patrons’ children; and
 provide for a parking facility offering at least
1 000 parking bays for the use of patrons of
the development.
The Project concept is such as to maximise the
Applicant’s investment to the fullest, as –
 it involves the construction of the
development from scratch on an open piece
of land;
 it is not merely a shop-fitting exercise for an
existing site, but will be a substantial value-
added facility in its own right; and
 vitally, it will be the first bingo venue in South
Africa ever to be developed from scratch, in
the process occasioning significant benefits
to the community in the form of investment
and employment.
The Applicant places the highest premium
on maintaining its established reputation as
a sector participant whose developments are
of the highest quality.
As such the development as a whole will be an
iconic addition to the immediate environment,
with clean lines and a modern, vibrant
entertainment feel, while the Applicant’s site
itself will provide the people of Uitenhage and
visitors to the area with a must-see, must-do
gaming and entertainment destination – the
first of its kind to be owned and controlled by
Eastern Cape-based PDI’s.
The first ever
Galaxy bingo venue
in South Africa to
be developed
from scratch
a must-see,
must-do
gaming and
entertainment
destination

1.3.
Executive Summary
Security
The venue will provide a state-of-the-art,
secure venue located in an up-market,
state-of-the-art mall, with a fully-fledged
surveillance system in compliance with the
requirements of the applicable legislation
and the RFP.
Access to the venue will be rigorously
controlled, with metal detectors installed at the
entrances. In addition, security will extend to the
parking area, which will be floodlit for ease of
observation. An alarm system and panic buttons
linked to an armed response service will further
enhance the safety of patrons and their property
in the venue.

Executive Summary
Development Schedule
The development schedule to be implemented
by the Applicant makes provision for an opening
date of 30 November 2015, as follows:
DATE PROJECT MILESTONE
24 October 2014 Notification of Preferred Bidder Status
25 October 2014 Commencement of Detailed Planning
1 December 2014 Award of licence
November 2014 – March 2016 Construction of greater shopping centre development
1 September 2015 – 30 November 2015 Shop-fitting, pre-opening procedures and inspections
30 November 2015 Opening of development

1.3.
Executive Summary
Impact on Surrounding
Environment and Society
The Applicant’s development is set to have
an overwhelmingly positive impact on the
surrounding environment and society, by
promoting the meaningful development –
100
300
new, permanent
and sustainable
employment
opportunities
new jobs over
the construction
period
 of commercial undertaking in Uitenhage,
by establishing de novo a vibrant, high
quality business offering;
of the geographical environment in which
the business is located, by enhancing its
attractiveness and appeal;
of people, by providing for –
− 100 new, permanent and sustainable
employment opportunities, of which –
- 100% will be reserved for residents
of the Eastern Cape;
- at least 95% will be allocated to
PDI’s;
- at least 65% will be female;
- at senior management level, at least
50% will be female;
- at the management and supervisory
level, more than 80% will be PDI’s;
- at least 50% will have been
previously unemployed, promoting
new entrants into the labour market
and the economy of the Province;
- three will be formal learnerships to
be implemented during the first year
of operation;
− 300 new jobs over the construction
period, of which more than 95% will be
allocated to local PDI workers;
− the contract for the construction of
the development to be allocated to
Transtruct (Pty) Ltd, a 51% local black-
owned entity, with a Level 3 B-BBEE
Contributor Status, and/or entities with
similar B-BBEE credentials;

Executive Summary
CSI/SED
1.5% Of GGR
R200 000Once-off initial project
Projected contribution
R20million

1.3.
Executive Summary
TOURISM
R300 000Per year
+ SAC focused on tourism with
1,5% of GGR
or 4% of NPBT
R4,5million
(plus portion of SAC of
R20 million)

Executive Summary
71%
local black
equity
50%at least
of the Applicant’s
management and
supervisory staff will be
local black women
16%
of the equity in the
Applicant is directly
held by local
black women
 of a 71% locally black-owned Eastern
Cape-based enterprise, in which 16%
(i.e. 23% of the 71% PDI shareholding) is
held by local black women, by ensuring
that it is fully equipped to commence
operations as a licensed bingo operator
in Uitenhage from custom developed
premises, with the benefit of all the
equipment needed for its business;
 of the economic empowerment of the
Applicant’s local PDI partners, through –
− 71% equity participation – at no cost –
and profit-sharing, in the Applicant, by
way of dividends, projected to total over
R226 million over the licence term;
− a 71% share of the management fees
payable in terms of the management
agreement from the outset, projected to
total over R46 million;
− in their capacity as the controlling
shareholders in the Applicant enterprise,
the ability to terminate the management
agreement, and in so doing to assume
full responsibility for the management of
the business, after five years; and
 of women, in that –
− 16% of the equity in the Applicant is
directly held by local black women;
− over 19% of the equity in the Applicant
is held, directly and indirectly, by black
women;
− at least 65% of the Applicant’s staff will
be women;
− at least 50% of the Applicant’s
management and supervisory staff will
be local black women, as a means
of ensuring meaningful scope for
career progression by women in the
Applicant’s business;
− at least two of the Directors of the
Applicant will at all times be black
women;

Executive Summary
 of the Applicant’s staff, in that –
− ongoing skills development will be
provided, as more fully described in the
Detailed Proposal;
− the Applicant will provide staff who have
been in its employ for three years or
longer with housing subsidies;
− on an annual basis, the Applicant will
invest a minimum of R120,000 on
specific skills development measures
for its black employees, including
by way of the provision of bursaries
for further study, training, books,
computers and/or similar resources,
depending on identified training and/or
skills development needs, equating to
a minimum amount of R1.8 million over
the term of the licence;
− the Applicant will make provision
for three formal learnerships to be
implemented during the first year of its
licensed operations, in accordance with
the requirements of the Codes of Good
Practice on B-BBEE;
the Applicant will
invest a minimum of
per year on specific skills
development measures
for its black employees
R120 000

Executive Summary

Executive Summary
 of the community as a whole, in that –
− as an initial project, within 12 months of
the issue of the licence, the Applicant
will allocate R200,000 to corporate
social investment in the surrounding
community, which will focus on the
provision of toilets and similar necessary
facilities for nearby townships and
schools;
will allocate an additional R200,000 to
measures aimed at the promotion of
sports, arts, culture and tourism in the
surrounding area;
− the Applicant will contribute 1.5% of
the GGR generated by its licensed
operations inter alia to the CSI/SED
projects more fully described in the
Detailed Proposal;
− the Applicant’s spend on CSI/SED
initiatives during the first three years of
the licence term is projected at R2,5
million, enabling it to fund a substantial
number of already identified projects,
of which a significant portion will be
allocated to the provision and upgrading
of ablution and sewerage facilities in
local schools in the poorer communities;
initiatives over the full licence term is
projected at R20 million in absolute
value;
operations, or 4% of net profit before
tax, whichever is the greater, to
significant measures directly aimed at
the promotion of sports, arts, culture
and tourism in Uitenhage, including by
providing sustainable, ongoing funding,
which will keep alive and further develop
the iconic Uitenhage Street Carnival,
as more fully described in the Detailed
Proposal;
− the Applicant’s spend on Sports, Arts
and Culture initiatives over the full
licence term (which includes a focus on
tourism) is projected at R20 million in
absolute value;
− the Applicant’s spend on promotion
of tourism over the full licence term
is projected at R4.5 million in absolute
value;
additionally,
an initial spend of
to corporate social
investment
R200 000

1.3.
Executive Summary
SPORTS, ARTS &
CULTURE
Greater of
(WITH FOCUS ON TOURISM)
1.5% of GGR
or 4% of NPBT
Once-off initial project
R200 000
R20million

Executive Summary
BENEFITS
TO THE
COMMUNITY
CSI/SED
1.5% of GGR
R200,00 once-off initial project
Projected contribution:
R20 million
SPORTS, ARTS & CULTURE
Greater of 1.5% of GGR
or 4% of NPBT
R200,00 once-off initial project
Projected contribution: R20 million
TOURISM
R300,000 per year
+ SAC with focus on tourism
Job creation during the above projects,
particularly in the context of the
Uitenhage Street Carnival & CSI Projects
aimed at improving community facilities.
 of SMME’s and suppliers, in that –
− the Applicant will apply its Preferential
Procurement Policy as a mechanism for
ensuring the involvement of SMME’s in
both the construction and operational
phases of the Project;
− PDI suppliers will be paid within seven
days of invoicing;
− in the context of operations and
procurement, the Applicant will embark
on enterprise development initiatives
to establish SMME’s with a view to
procuring goods and services from such
SMME’s;
− the Galaxy Group has already
developed a database of Eastern Cape-
based suppliers which it will invite to
supply quotations for participation in
the Project at various levels, all of which
have attained B-BBEE Contributor
Status of between Level 1 and Level 3;
− the Applicant will embark upon a
Supplier Development Project aimed
at assisting black-owned businesses
(predominantly SMME’s) to develop, so
that they are able to become suppliers
to the Applicant enterprise; and
 of the well-being of the Province, through
the adoption of strategies and measures
designed to ensure that gambling is
conducted in a socially responsible
manner.

PROJECT VIABILITY AND
FINANCIAL RETURNS

Executive Summary
Project Viability and Financial Returns1.4.
1.4.
PROJECT
VIABILITY AND
FINANCIAL RETURNS
The PDI shareholders in the Applicant will
acquire their equity in the Applicant at no cost.
In addition, no security will be required of the
PDI shareholders in respect of the funding to be
provided by Niveus.
Therefore, the Project entails no risk to the
local PDI shareholders, freeing them up to
focus on the skills transfer and management
development measures which are a hallmark
of the Applicant’s bid.
Sourcing, Nature and Level of
Financing and Ability to meet
Financial Obligations
Niveus –
 will be the source of all funding for the
Project, which will be in the form of an
interest-free loan;
 is a large listed company with access to
substantial cash resources of over R259
million as at 31 March 2013;
 has a market capitalisation in excess of R2,5
billion and strong liquidity ratios;
 has undertaken to fund all capital
requirements of the Applicant by means
of interest-free funding up to an amount
of R17 million (plus a 10% tolerance
level for additional expenditure) on the
following terms:
− the loan is repayable out of profits of the
Applicant;
− management fees will be paid to the
shareholders from available profits
before loan repayments may be made;
− the loan is interest-free;
− the Applicant will not be required to
provide security for the funding;

1.4.
Executive Summary
Project Viability and Financial Returns
FUNDING HISTORY OF NIVEUS FOR EASTERN CAPE BINGO PROJECTS
− the loan will be repayable over five years
from the commencement of operations
and repayments will be limited to
available cash out of operations at the
end of each month;
− no dividends will be declared until the
loan is repaid;
 is a subsidiary of HCI Ltd (with a market
capitalisation of R17.5 billion), which has
furthermore agreed to supply the funding
in respect of the Project in the unlikely
event that this should become necessary,
further demonstrating the financial strength
underpinning the Applicant’s bid; and
 has already demonstrated, through its
involvement in the projects recently rolled
out by Galaxy Bingo East London and
Galaxy Bingo Port Elizabeth that it not
only honours its funding obligations, but is
prepared to allocate additional resources
where expenses have proven to be in
excess of the applicable bid commitments.

1.4.
Executive Summary
THE APPLICANT WILL
TIMEOUSLY PROVIDE THE
GUARANTEE DOCUMENTATION
AS PER APPENDICES J AND K
TO THE RFP, IN THE MANNER
AND FORMAT STIPULATED IN
THE RFP.
The financial projections, as set forth in
Appendices C and D to the application,
confirm that the project will deliver
exceptional returns over a 15-year period.
The estimated financial returns flowing from
the Project over the projected term of 15
years, may be summarised as follows:
As is apparent from the graph on the right,
the Project is projected to deliver a healthy
return, in terms of cash flow, throughout the
licence period.
The positive indicators regarding the general
liquidity of the proposed operation in turn
yield the following projections in respect of
net profit after tax:
CASH FLOW BEFORE DIVIDENDS
PROFIT AFTER TAX

THE APPLICANT WILL
ALSO MAKE A SIGNIFICANT
CONTRIBUTION TO BOTH
THE PROVINCIAL AND THE
NATIONAL FISCUS OVER THE
TERM OF THE LICENCE,
AS DEMONSTRATED BELOW:
1.4.
Executive Summary
Total Provincial Accruals Over the 15-Year Licence Term
PROVINCIAL RETURNS
RETURNS TO NATIONAL GOVERNMENT
R142,026,000
Gaming levy @ 10% of GGR R131,414,000
Licence & Application Fees R10,612,000
Total Accruals for the National Government Over the 15-Year Licence Term R219,987,000
VAT * R84,772,000
Company Income Tax R124,132,000
PAYE R7,731,000
Municipal Tax R3,352,000
* VAT output projected to be paid by the lessor of wholly electronic bingo equipment represents an additional R43 million to the fiscus over the 15-year licence
period (less input VAT for acquisition of equipment).

Executive Summary
Project Viability and Financial Returns1.4.
Market Demand Assumptions
The estimates in respect of GGR in the financial
projections were based on the following key market
demand assumptions:
 The base-level targets of GGR for the first
year of operation of bingo venues in the
Eastern Cape are realistic and based on the
established earnings of comparable licensed
venues operated by the Group in the
Eastern Cape and other provinces, taking
into consideration historical GGR and the
average growth per annum.
 The Applicant’s bingo operation –
− will provide an accessible service to
approximately 303 000 people, of whom
206 600 are eligible gamblers;
− needs to capture approximately 0.65%
of the disposable income generated
by the relevant market to achieve its
projections; and
− there is sufficient potential in the market
to justify the establishment of a 300-
seat (Category A) bingo outlet.
 The estimated annual average increase in
gambling spend and GGR is set at 25%
for Year 2, 17,5% for Year 3, 10% for Year
4 and thereafter at a relatively conservative
rate of 6% per annum from Year 5 to 15 of
the model.

Benefits to the Economy1.5.
1.5.
BENEFITS TO
THE ECONOMY
Over and above the direct financial benefits
accruing to the various stakeholders, the project
seeks to deliver a diverse range of sustained
benefits to the economy of the Eastern Cape
Province and its people throughout the duration
of the licence, including by promoting the
development -
 of commercial undertaking in Uitenhage,
by establishing de novo a vibrant, high
quality business offering;
 of the geographical environment in which
the business is located, by enhancing its
attractiveness and appeal, with provision
for a further R5 million to be expended
on the improvement and modernisation
(as opposed to the ongoing or routine
maintenance) of the Applicant’s licensed
bingo venue between years 8 and 15 of
the licence term;

1.5.
Executive Summary
Benefits to the Economy
new, direct, permanent and
ustainable employment
opportunities
100
at least
95%
PDI STAFF
 people, by providing for –
− 100 new, direct, permanent and
sustainable employment opportunities,
of which –
− 100% will be reserved for residents
of the Eastern Cape;
− at least 95% will be allocated to
PDI’s;
− at least 65% will be female;
− at senior management level, at least
50% will be female;
− at the management and supervisory
level, more than 80% will be PDI’s;
− at least 50% will have been
previously unemployed, promoting
new entrants into the labour market
and the economy of the Province;
− three will be formal learnerships to
be implemented during the first year
of operation;

locally black-owned
Eastern Cape-based
enterprise
71%
19%
of the equity in the
Applicant is held, directly
and indirectly, by black
women
Executive Summary
300 new jobs over the construction
period, of which more than 95% will be
allocated to local PDI workers;
the contract for the construction of
the development to be allocated to
Transtruct (Pty) Ltd, a 51% local black-
owned entity, with a Level 3 B-BBEE
Contributor Status, and/or entities with
similar B-BBEE credentials;
a 71% locally black-owned Eastern
Cape-based enterprise, in which 16%
(i.e. 23% of the local PDI shareholding) is
held by local black women, by ensuring
that it is fully equipped to commence
operations as a licensed bingo operator
in Uitenhage from custom developed
premises, with the benefit of all the
equipment needed for its business;
 women, in that –
− 16% of the equity in the Applicant is
held by local black women;
− over 19% of the equity in the Applicant
is held, directly and indirectly, by black
women;
− at least 65% of the Applicant’s staff will
be women;
− at least 50% of the Applicant’s
management and supervisory staff will
be local black women, as a means of
ensuring meaningful scope for career
progression by women in the Applicant’s
business;
− at least two of the Directors of the
Applicant will at all times be black
women;
over

1.5.
Executive Summary
16
19
of the equity in the Applicant
is held by local black women
%
300new jobs over the
construction period
at least
TWOof the Directors of the
Applicant will at all times be
black women
 the Applicant’s staff, in that –
− ongoing skills development will be
provided, as more fully set forth in the
Detailed Proposal;
− the Applicant will provide staff who have
been in its employ for three years or
longer with housing subsidies;
− on an annual basis, the Applicant will
invest a minimum of R120,000 on
specific skills development measures
for its black employees, equating to a
minimum amount of R1,8 million over the
term of the licence;
− the Applicant will make provision
for three formal learnerships to be
implemented during the fi rst year of its
licensed operations;
R120 000
invest a minimum of
per year on specific
skills development
measures for its
black employees

1.5
the Applicant will contribute
%
Executive Summary
of the GGR generated by
its licensed operations to
the CSI/SED projects
at least
of the Applicant’s staff
will be women
the Applicant’s spend on CSI/
SED initiatives over the full
licence term is projected at
in absolute value
millionR20
 the community as a whole, in that –
will allocate R200,000 to CSI/SED
projects in the surrounding community,
which will focus on the provision of
toilets and similar necessary facilities for
nearby townships and schools;
will allocate an additional R200,000
to measures aimed at the promotion
of sports, arts, culture and tourism in
the surrounding area, as more fully
described in the Detailed Proposal;
operations to the CSI/SED projects
more fully described in the Detailed
Proposal;
65%

1.5.
Executive Summary
projected spend
on promoting of tourism
(+ portion of SAC)
initiatives during the first three years of
the licence term is projected at R2,5
million, enabling it to fund a substantial
number of already identified projects,
of which a significant portion will be
allocated to the provision and upgrading
of ablution and sewerage facilities in
local schools in the poorer communities;
initiatives over the full licence term is
projected at R20 million in absolute
value;
operations, or 4% of net profit before
tax, whichever is the greater, to
significant measures directly aimed at
the promotion of sports, arts, culture
and tourism in Uitenhage, including by
providing sustainable, ongoing funding,
which will keep alive and further develop
the iconic Uitenhage Street Carnival,
as more fully described in the Detailed
Proposal;
− the Applicant’s spend on Sports,
Arts and Culture initiatives (which will
include a significant tourism promotion
component) over the full licence term
is projected at R20 million in absolute
value; and
− the Applicant’s spend on the promotion
of tourism over the full licence term is
projected at R4.5 million in absolute
value;
R4.5 mil

Executive Summary
 SMME’s and suppliers, in that –
− the Applicant will apply its Preferential
Procurement Policy as a mechanism for
ensuring the involvement of SMME’s in
both the construction and operational
phases of the Project, subject to the
availability of goods and services, price
and quality;
− PDI suppliers will be paid within seven
days of invoicing;
− in the context of operations and
procurement, the Applicant will embark
on enterprise development initiatives
to establish SMME’s with a view to
procuring goods and services from such
SMME’s;
− the Galaxy Group has already
developed a database of Eastern Cape-
based suppliers which it will invite to
supply quotations for participation in
the Project at various levels, all of which
have attained B-BBEE Contributor
Status of between Level 1 and Level 3;
− the Applicant will embark upon a
Supplier Development Project aimed
at assisting black-owned businesses
(predominantly SMME’s) to develop, so
that they are able to become suppliers
to the Applicant enterprise; and
 of the well-being of the Province, through
the adoption of strategies and measures
designed to ensure that gambling is
conducted in a socially responsible manner.

1.5.
Executive Summary
The Applicant has its
registered offices located
at the following address in
the Province
Moffett on Main Lifestyle Centre,
Shop M1-8
Corner of Main Road and 17th Avenue
Walmer
Port Elizabeth, 6070
A current Tax Clearance Certificate in
respect of the Applicant is attached under
cover of Annexure A4 to this Proposal.
Please refer to Part 2: Detailed Proposal
for a comprehensive overview of the Applicant’s
strategy to establish in Uitenhage a vibrant
licensed bingo venue conforming to the highest
standards of operational excellence and social
responsibility, which will not only provide the
area with a quality, fully integrated entertainment
offering, but which will add real and lasting value
to the community within which it operates.

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