ANNUAL FINANCIAL STATEMENTS PART E

PART E

195 2015/2016 ANNUAL REPORT GAUTENG DEPARTMENT OF ECONOMIC DEVELOPMENT

TABLE OF CONTENT

Report to the Auditor-General 196

Statement of Financial Performance 198

Statement of Financial Position 152

Statement of Changes in Net Assets 201

Cash Flow Statement 201

Accounting policies 202

Notes to the Annual Financial Statements 210

ANNUAL FINANCIAL STATEMENTS

PART E


EP T T E A IT GENE AL T THE GAUTENG PROVINCIAL LEGISLATURE ON GAUTENG LIQUOR BOARD

Introduction

1. I have audited the financial statements of the Gauteng Li-quor Board set out on pages 198 to 219, which comprise the statement of financial position as at 31 March 2016, the statement of financial performance, statement of changes in equity, and statement of cash flows for the year then ended, as well as the notes, comprising a sum-mary of significant accounting policies and other explan-atory information.

A statements

2. The accounting officer is responsible for the preparation and fair presentation of these financial statements in accordance with the South African Standards of Generally Recognised Accounting Practice (SA Standards of GRAP) and the requirements of the Public Finance Management Act, 2009 (Act No. 1 of 1999) (PFMA), Gauteng Liquor Act, 2003 (Act No. 2 of 2003) and for such internal control as the accounting officer determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor-general’s responsibility

2. My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with International Standards on Auditing. Those standards require that I comply with ethical requirements, and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

4. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

5. I believe that the audit evidence I have obtained is suf-ficient and appropriate to provide a basis for my audit opinion.

Opinion

7. In my opinion, the financial statements present fairly, in all material respects, the financial position of the Gauteng Liquor Board as at 31 March 2016 and its financial per-formance and cash flows for the year then ended, in accordance with the SA standards of GRAP and require-ments of the PFMA.

Report on other legal and regulatory requirements

8. In accordance with the Public Audit Act of South Africa, 2004 (Act No. 25 of 2004) (PAA) and the general notice issued in terms thereof, I have a responsibility to report findings on the reported performance information against predetermined objectives of selected programme s presented in the annual performance report, compliance with legislation and internal control. The objective of my tests was to raise reportable findings as described under each subheading, but not to gather evidence to express assurance on these matters. Accordingly, I do not express an opinion or conclusion on these matters.

Predetermined objectives

9. I did not audit performance against predetermined objec-tives for the Gauteng Liquor Board, as the entity’s per-formance objectives are included as part of the Gauteng Department of Economic Development’s annual perfor-mance report.

Compliance with legislation

10. I performed procedures to obtain evidence that the trad-ing entity had complied with applicable legislation re-garding financial matters, financial management and oth-er related matters. My material findings on compliance with specific matters in key legislation, as set out in the general notice issued in terms of the PAA, are as follows:

A

11. The financial statements submitted for auditing were not prepared in accordance with the prescribed financial reporting framework, as required by section 40(1)(b) of the PFMA. Material misstatements of revenue, trade and other receivables, trade and other payables and statement of cash flow items identified by the auditors were subsequently corrected, resulting in the financial statements receiving an unqualified audit opinion.

Revenue management

12. Penalties were not always charged on late renewals, as required by section 100 of the Gauteng Liquor Act.

REPORT OF THE AUDITOR-GENERAL REPORT OF THE AUDITOR-GENERAL

PART E


Internal control

13. I considered internal control relevant to my audit of the financial statements, the performance report and com-pliance with legislation. The matters reported below are limited to the significant internal control deficiencies that resulted in the basis for my opinion. The findings on compliance with legislation are included in this report.

Leadership

14. The accounting officer did not always exercise adequate oversight of financial reporting and compliance with key legislation.

Financial and performance management

15. Management did not implement sufficient monitoring controls to ensure that the financial statements are sup-ported by credible information. Furthermore compliance with key legislation was not adequately monitored.

Johannesburg

31 July 2016

REPORT OF THE AUDITOR-GENERAL

PART E


2016 2015Restated*

Note(s) R’OOO R’OOO

Assets

Trade and other receivables 2 1 844 131

Current Assets

Cash and cash equivalents 3 541 8 726

2 385 8 857

Non-Current Assets

Property, plant and equipment 4 1 124 1 430

Total Assets 3 509 10 287

Liabilities

Current Liabilities

Trade and other payables 5 21 959 18 352

Provisions 6 736 782

22 695 19 134

Total Liabilities 22 695 19 134

Net Assets (19 186) (8 847)

Accumulated surplus/(deficit) (19 187) (8 848)

ANNUAL FINANCIAL STATEMENTS ANNUAL FINANCIAL STATEMENTS

STATEMENT OF FINANCIAL POSITION FOR THE YEAR ENDED 31 MARCH 2016

PART E


2016 2015Restated*


Revenue

Revenue from exchange transactions

Recoveries 14 -

Garnishee order 13 12

Rental of parking 11 10

Total revenue from exchange transactions 38 22

Revenue from non-exchange transactions Taxation revenue

Licences and Permits

Transfer revenue

7 35,022 30,531

Government grants & subsidies 17 729 18 156

Total revenue from non-exchange transactions 52 751 48 687

Total revenue 52 789 48 709

ExpenditureEmployee related costs

8 (43 036) (35 187)

Depreciation and amortisation (290) (378)

Impairment loss (914) (82)

Interest (paid)/received (10) (95)

Repairs and maintenance (117) (980)

General Expenses 9 (18 746) (16 137)

Total expenditure (63 113) (52 859)

Operating deficit (10 324) (4 150)

Loss on disposal of assets and liabilities (15) (19)

(10 339) (4 169)


STATEMENT OF FINANCIAL PERFORMANCE FOR THE YEAR ENDED 31 MARCH 2016

PART E


Accumulated surplus

Total net assets

R’OOO R’OOO

Balance at April 01, 2014 (4 679) (4 679)

Changes in net assets

Deficit for the year (4 169) (4 169)

Total changes (4 169) (4 169)

Opening balance as previously reported Adjustments (8 851) (8 851)

Correction of errors 3 3

Restated* Balance at April 01, 2015 as restated* (8 848) (8 848)

Changes in net assets Deficit for the year (10 339) (10 339)

Total changes (10 339) (10 339)

Balance at March 31, 2016 (19 187) (19 187)


STATEMENT OF CHANGES IN NET ASSESTS FOR THE YEAR ENDED 31 MARCH 2016

PART E


Notes

2016

R ‘000

2015Restated*

R’OOO

C

Receipts

Licence Fees 35 022 31 772

Grants 17 729 18 156

Garnishees and rentals 38 22

52 789 49 950

Payments

Compensation of employees (40 013) (33 267)

Goods and services (20 951) (18 834)

Finance costs (10) (95)

(60 974) (52 196)

N 10 (8 185) (2 246)

C

Purchase of assets 4 - (807)

Proceeds from sale of assets 4 - 15

N (792)

Net increase/(decrease) in cash and cash equivalents (8 185) (3 038)

Cash and cash equivalents at the beginning of the year 8 726 11 764

Cash and cash equivalents at the end of the year 3 541 8 726


STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH 2016

PART E


1. Presentation of Annual Financial Statements

The annual financial statements have been prepared in accordance with the Standards of Generally Recognised Accounting Practice (GRAP), issued by the Accounting Standards Board in accordance with Section 91(1) of the Public Finance Management Act (Act 1 of 1999).

These annual financial statements have been prepared on an accrual basis of accounting and are in accordance with historical cost convention as the basis of measurement, unless specified otherwise.

In the absence of an issued and effective Standard of GRAP, accounting policies for material transactions, events or conditions were developed in accordance with paragraphs 8, 10 and 11 of GRAP 3 as read with Directive 5.

Assets, liabilities, revenues and expenses were not offset, except where offsetting is either required or permitted by a Standard of GRAP.

A summary of the significant accounting policies, which have been consistently applied in the preparation of these annual financial statements, are disclosed below.

These accounting policies are consistent with the previous period.

1.1. Presentation currency

These annual financial statements are presented in South African Rand, which is the functional currency of the entity.

1.2. Going concern assumption

These annual financial statements have been prepared based on the expectation that the entity will continue to operate as a going concern for at least the next 12 months.

In preparing the annual financial statements, management is required to make estimates and assumptions that affect the amounts represented in the annual financial statements and related disclosures. Use of available information and the applica-tion of judgement is inherent in the formation of estimates. Actual results in the future could differ from these estimates which may be material to the annual financial statements. Significant judgements include:

I

The carrying value less impairment provision of trade receivable and payables are assumed to approximate their fair values. The fair value of financial liabilities for disclosure purpose is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Board for similar financial instruments.

I

The Board assess whether there are indicators of impairment for all non-financial assets at each reporting date.When value in use calculations are undertaken.management estimate the expected future cash flows from the asset or cash generating unit and choose a suitable discount rate in order to calculate the present value of those cash flows.

Provisions

Provisions were raised and management determined an estimate based on the information available. Additional disclosure of these estimates of provisions are included in note 6 - Provisions.

1.4. Property, plant and equipment

Property, plant and equipment are tangible non-current assets (including infrastructure assets) that are held for use in the production or supply of goods or services, rental to others, or for administrative purposes, and are expected to be used during more than one period.


ACCOUNTING POLICIES FOR THE YEAR ENDED 31 MARCH 2016

PART E


The cost of an item of property, plant and equipment is recognised as an asset when:

• it is probable that future economic benefits or service potential associated with the item will flow to the entity; and

• the cost of the item can be measured reliably.

Property, plant and equipment is initially measured at cost.

The cost of an item of property, plant and equipment is the purchase price and other costs attributable to bring the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Trade discounts and rebates are deducted in arriving at the cost.

Where an asset is acquired through a non-exchange transaction, its cost is its fair value as at date of acquisition.

Where an item of property, plant and equipment is acquired in exchange for a non-monetary asset or monetary assets, or a com-bination of monetary and non-monetary assets, the asset acquired is initially measured at fair value (the cost). If the acquired item’s fair value was not determinable, it’s deemed cost is the carrying amount of the asset(s) given up.

When significant components of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

Costs include costs incurred initially to acquire or construct an item of property, plant and equipment and costs incurred subse-quently to add to, replace part of, or service it. If a replacement cost is recognised in the carrying amount of an item of property, plant and equipment, the carrying amount of the replaced part is derecognised.

The initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located is also in-cluded in the cost of property, plant and equipment, where the entity is obligated to incur such expenditure, and where the obligation arises as a result of acquiring the asset or using it for purposes other than the production of inventories.

Recognition of costs in the carrying amount of an item of property, plant and equipment ceases when the item is in the location and condition necessary for it to be capable of operating in the manner intended by management.

Property, plant and equipment is carried at cost less accumulated depreciation and any impairment losses. Property, plant and equipment is carried at cost less accumulated depreciation and any impairment losses. The useful lives of items of property, plant and equipment have been assessed as follows:

Item Depreciation method Average useful life

Furniture Straight line 5 - 10 years

Computer equipment Straight line 3 - 5 years

The residual value, and the useful life and depreciation method of each asset are reviewed at the end of each reporting date. If the expectations differ from previous estimates, the change is accounted for as a change in accounting estimate.

Reviewing the useful life of an asset on an annual basis does not require the entity to amend the previous estimate unless ex-pectations differ from the previous estimate.

Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately.

The depreciation charge for each period is recognised in surplus or deficit unless it is included in the carrying amount of an-other asset.

Items of property, plant and equipment are derecognised when the asset is disposed of or when there are no further economic benefits or service potential expected from the use of the asset.

The gain or loss arising from the derecognition of an item of property, plant and equipment is included in surplus or deficit when the item is derecognised. The gain or loss arising from the derecognition of an item of property, plant and equipment is determined as the difference between the net disposal proceeds, if any, and the carrying amount of the item.



PART E


1.5 Financial instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or a residual inter-est of another entity.

• cash;

• a residual interest of another entity; or

• a contractual right to:

- receive cash or another financial asset from another entity; or

- exchange financial assets or financial liabilities with another entity under conditions that are potentially favourable to the entity.

Initial recognition

The Gauteng Liquor Board recognises a financial asset or a financial liability in its statement of financial position when it be-comes a party to the contractual provisions of the instrument.

I

The Gauteng Liquor Board measures a financial asset and financial liability initially at its fair value plus transaction costs that are directly attributable to the acquisition or issue of the financial asset or financial liability.

The Gauteng Liquor Board measures all financial assets and financial liabilities after initial recognition using the following category:

• Financial instruments at amortised cost.

The statement of financial position include the financial assets and liabilities classified as financial assets at amortised cost. and they include the following:

a) Trade and other receivables

Receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less allowance for irrecoverable amounts.

b) Cash and cash equivalents

Cash and cash equivalents comprise of bank balance.

Cash and cash equivalents are recognised initially at fair value.

c) Trade and other payables

Trade and other payables comprise accruals for services that have been acquired in the ordinary course of business. Trade payables are initially recognised at fair value and subsequently at amortised cost using the effective interest rate method.

I

The Gauteng Liquor Board assess at the end of each reporting period whether there is any objective evidence that a financial asset or group of financial assets is impaired.



PART E


If there is objective evidence that an impairment loss on financial assets measured at amortised cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced directly OR through the use of an allowance account. The amount of the loss is recognised in surplus or deficit.

When a receivable is uncollectible,it is written off against the related provision for impairment.Such receivables are written off after all the necessary procedures have been completed and the amount of loss has been determined.Subsequent recoveries of amounts previously written off are credited against operating expenses.

For certain categories of loans and receivables.provision for impairment are recognised based on the following considerations:

d) Trade and other receivables

For trade and other receivables, a provision for impairment is established when the is objective evidence that the entity wil not be able to collect all amounts due according to the original terms of the receivables.Indicators of impairment include long overdue accounts.significant financial difficulties of the debtorsand the defaults in payment of licence fees.

Derecognition

Financial assets

The Gauteng Liquor Board derecognises a financial asset only when

• the contractual rights to the cash flows from the financial asset expire, are settled or waived;

• The Board retains the right to receive cash flows from the asset.but has

• assumed an obligation to pay them in full without delay to a third party under ‘pass through’ arrangement ;or

• the Board has transferred its rights to receive cash flows from the asset and

• either has transferred substantially all the risks and rewards of the asset or has neither transferred nor retained sub-stantially all the risks and rewards of the asset, but has transferred control of the asset.

Financial liabilities

The entity removes a financial liability (or a part of a financial liability) from its statement of financial position when it is extinguished - i.e. when the obligation specified in the contract is discharged, cancelled, expires or waived.

For financial instruments measured at amortised cost, a gain or loss is recognised in surplus or deficit when the financial instru-ment is derecognised, and through the amortisation process.

Presentation

Interest relating to a financial instrument or a component that is a financial liability is recognised as revenue or expense in surplus or deficit.

Losses and gains relating to a financial instrument or a component that is a financial liability is recognised as revenue or expense in surplus or deficit.

A financial asset and a financial liability are only offset and the net amount presented in the statement of financial position when the Board currently has a legally enforceable right to set off the recognised amounts and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

E

Employee benefits are all forms of consideration given by an entity in exchange for service rendered by employees.

The accounting policy in terms of the compensation of employees is in line with the policy of the Gauteng Provincial Department of Economic Development; and is as follows:



PART E


L

Other long term employee benefits (such as capped leave) are recognised as expenditure in the statement of financial perfor-mance.

Short-term employee benefits are employee benefits (other than termination benefits) that are due to be settled within twelve months after the end of the period in which the employees render the related service.

The cost of short-term employee benefits are expensed in the statement of financial performance in the year in which it occurs . Short term employee benefits that gives rise to a present or constructive obligations are recognised and disclosed in the notes to the financial statements. This is limited to leave pay accrual and service bonus as set out in note 5.

Salaries and wages shown in the statement of financial performance comprise payments to employees(including leave entitlements. thirteenth cheque and performance bonuses).

P

Post-employment benefits are employee benefits (other than termination benefits) which are payable after the completion of employment.

Employer contributions are expensed in the statement of financial performance.

No provision is made for retirement benefits in the financial statements of the Board, or in the financial statements of the parent department. Any potential liabilities are disclosed in the financial statement of the National Revenue Funds and not in the statements of the employer department. This policy is in line with the Gauteng Provincial Department of Economic Devel-opment policy.

T

Termination benefits such as severance packages are recognised as an expense in the statement of financial performance.

1.7. Revenue from exchange transactions

Revenue is the gross inflow of economic benefits or service potential during the reporting period when those inflows result in an increase in net assets, other than increases relating to contributions from owners.

Measurement

Revenue is measured at the fair value of the consideration received or receivable, net of trade discounts and volume rebates.

Sale of goods

Revenue from the sale of goods is recognised when all the following conditions have been satisfied:

• The entity has transferred to the purchaser the significant risks and rewards of ownership of the goods;

• The entity retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;

• The amount of revenue can be measured reliably;

• It is probable that the economic benefits or service potential associated with the transaction will flow to the entity; and

• The costs incurred or to be incurred in respect of the transaction can be measured reliably.

When the outcome of a transaction involving the rendering of services can be estimated reliably, revenue associated with the transaction is recognised by reference to the stage of completion of the transaction at the end of the reporting period. The outcome of a transaction can be estimated reliably when all the following conditions are satisfied:



PART E


• The amount of the revenue can be measured reliably;

• It is probable that the economic benefits associated with the transaction will flow to the entity;

• The stage of completion of the transaction at the end of the reporting period can be measured reliably;

• The costs incurred for the transaction and the costs to complete the transaction can be measured reliably.

When the outcome of the transaction involving the rendering of services cannot be estimated reliably. Revenue shall be rec-ognised only to the extent of the expenses recognised that are recoverable.

1.8 Revenue from non-exchange transactions

Revenue comprises gross inflows of economic benefits or service potential received and receivable by an entity, which rep-resents an increase in net assets, other than increases relating to contributions from owners.

Conditions on transferred assets are stipulations that specify that the future economic benefits or service potential embodied in the asset is required to be consumed by the recipient as specified or future economic benefits or service potential must be returned to the transferor.

Control of an asset arise when the entity can use or otherwise benefit from the asset in pursuit of its objectives and can exclude or otherwise regulate the access of others to that benefit.

Exchange transactions are transactions in which one entity receives assets or services, or has liabilities extinguished, and di-rectly gives approximately equal value (primarily in the form of cash, goods, services, or use of assets) to another entity in exchange.

Fines are economic benefits or service potential received or receivable by entities, as determined by a court or other law en-forcement body, as a consequence of the breach of laws or regulations.

Non-exchange transactions are transactions that are not exchange transactions. In a non-exchange transaction, an entity either receives value from another entity without directly giving approximately equal value in exchange, or gives value to another entity without directly receiving approximately equal value in exchange.

Transfers are inflows of future economic benefits or service potential from non-exchange transactions, other than taxes.

The main income of the GLB consists of license fees which are received in term of the Gauteng Liquor Act No.2 of 2003 and Regulations.

Recognition

An inflow of resources from a non-exchange transaction recognised as an asset is recognised as revenue, except to the extent that a liability is also recognised in respect of the same inflow.

As the entity satisfies a present obligation recognised as a liability in respect of an inflow of resources from a non-exchange transaction recognised as an asset, it reduces the carrying amount of the liability recognised and recognises an amount of rev-enue equal to that reduction.

MeasurementRevenue from a non-exchange transaction is measured at the amount of the increase in net assets recognised by the entity.

When, as a result of a non-exchange transaction, the entity recognises an asset, it also recognises revenue equivalent to the amount of the asset measured at its fair value as at the date of acquisition, unless it is also required to recognise a liability.

Where a liability is required to be recognised it will be measured as the best estimate of the amount required to settle the obligation at the reporting date, and the amount of the increase in net assets, if any, recognised as revenue. When a liability is subsequently reduced, because the taxable event occurs or a condition is satisfied, the amount of the reduction in the liability is recognised as revenue.



PART E


Transfers

Apart from Services in kind, which are not recognised, the entity recognises an asset in respect of transfers when the transferred resources meet the definition of an asset and satisfy the criteria for recognition as an asset.

The entity recognises an asset in respect of transfers when the transferred resources meet the definition of an asset and satisfy the criteria for recognition as an asset.

Transferred assets are measured at their fair value as at the date of acquisition.

C

Where necessary, comparative figures have been reclassified to conform to changes in presentation in the current year.

1.10 Fruitless and wasteful expenditure

Fruitless expenditure means expenditure which was made in vain and would have been avoided had reasonable care been exercised.

All expenditure relating to fruitless and wasteful expenditure is r1e3cognised as an expense in the statement of financial performance in the year that the expenditure was incurred. The expenditure is classified in accordance with the nature of the expense, and where recovered, it is subsequently accounted for as revenue in the statement of financial performance.

1.11 Irregular expenditure

Irregular expenditure as defined in section 1 of the PFMA is expenditure other than unauthorised expenditure, incurred in contravention of or that is not in accordance with a requirement of any applicable legislation, including -

(a) this Act; or

(b) the State Tender Board Act, 1968 (Act No. 86 of 1968), or any regulations made in terms of the Act; or

(c) any provincial legislation providing for procurement procedures in that provincial government.

National Treasury practice note no. 4 of 2008/2009 which was issued in terms of sections 76(1) to 76(4) of the PFMA requires the following (effective from 1 April 2008):

Irregular expenditure that was incurred and identified during the current financial and which was condoned before year end and/or before finalisation of the financial statements must also be recorded appropriately in the irregular expenditure register. In such an instance, no further action is also required with the exception of updating the note to the financial statements.

Irregular expenditure that was incurred and identified during the current financial year and for which condonement is being awaited at year end must be recorded in the irregular expenditure register. No further action is required with the exception of updating the note to the financial statements.

Where irregular expenditure was incurred in the previous financial year and is only condoned in the following financial year, the register and the disclosure note to the financial statements must be updated with the amount condoned.

Irregular expenditure that was incurred and identified during the current financial year and which was not condoned by the Na-tional Treasury or the relevant authority must be recorded appropriately in the irregular expenditure register. If liability for the irregular expenditure can be attributed to a person, a debt account must be created if such a person is liable in law. Immediate steps must thereafter be taken to recover the amount from the person concerned. If recovery is not possible, the accounting officer or accounting authority may write off the amount as debt impairment and disclose such in the relevant note to the fi-nancial statements. The irregular expenditure register must also be updated accordingly. If the irregular expenditure has not been condoned and no person is liable in law, the expenditure related thereto must remain against the relevant programme/expenditure item, be disclosed as such in the note to the financial statements and updated accordingly in the irregular expen-diture register.



PART E


1.12 Events after reporting date

Events after reporting date are those events, both favourable and unfavourable, that occur between the reporting date and the date when the financial statements are authorised for issue. Two types of events can be identified:

• those that provide evidence of conditions that existed at the reporting date (adjusting events after the reporting date); and

• those that are indicative of conditions that arose after the reporting date (non-adjusting events after the reporting date).

The entity will adjust the amount recognised in the financial statements to reflect adjusting events after the reporting date once the event occurred.

The entity will disclose the nature of the event and an estimate of its financial effect or a statement that such estimate cannot be made in respect of all material non-adjusting events, where non-disclosure could influence the economic decisions of users taken on the basis of the financial statements.



PART E


2016 2015Restated*


2. Trade and other receivables

Impairment of receivables (914) (82)

Accrued penalties on overdue licenses 2 649 82

Third party payments payroll accounts 94 117

Staff debtors 15 14

1 844 131

Reconciliation of provision for impairment of trade and other receivables

Opening balance 82 428

Provision raised 914 82

Provision utilised (82) (428)

914 82

3. Cash and cash equivalentsCash and cash equivalents consist of:

Cash in the bank 541 8 726

4. Property, plant and equipment

2016 2015

Cost /Valuation Accumulateddepreciation

andaccumulated

impairment

Carrying value Cost / Valuation Accumulateddepreciation

andaccumulated

impairment

Carrying value

Furniture 1 436 (900) 536 1 436 (810) 626

Computer equipment 2,199 (1 611) 588 2 232 (1 428) 804

Total 3 635 (2 511) 1 124 3 668 (2 238) 1 430

Reconciliation of property, plant and equipment - 2016

Openingbalance

Disposals Depreciation Total

Furniture 626 - (90) 536

Computer equipment 804 (16) (200) 588

1 430 (290) 1 124

Reconciliation of property, plant and equipment - 2015

Opening balance

Additions Disposals Depreciation Total

Furniture 426 315 (5) (110) 626

Computer equipment 609 492 (29) (268) 804

1 035 807 (34) (378) 1 430


NOTES TO THE ANNUAL FINANCIAL STATEMENT FOR THE YEAR ENDED 31 MARCH 2016

PART E


2016 2015


5. Trade and other payables

Trade creditors 2 948 1 858

Income received in advance 15 133 13 826

Pension Fund 1 -

Staff leave accrual 3 023 1 920

Service bonus accrual 854 638

Accrued interest - 95

Bargaining Council - 2

Reversals - 13

21 959 18 352

6. Provisions

Reconciliation of provisions - 2016

Opening Balance

Provision raised

Amounts used Unused amounts reversed

Total

Performance bonus 454 380 (331) (123) 380

Capped leave 328 28 - - 356

782 408 (331) (123) 736

Reconciliation of provisions - 2015

Opening Balance

Provision raised

Amounts used

Unused amounts reversed

Total

Performance bonus 465 454 (430) (35) 454

Capped leave - 328 - - 328

465 782 (430) (35) 782



PART E


7. Licences and Pennits

The Gauteng Liquor Board is responsible for the regulating Liquor Trading in Gauteng and is also responsible for the collection of License fees in terms of the Gauteng Liquor Act and Regulations.The main sources of revenue are as follows:

Renewals and penalties 26 477 25 561

New applications 1 507 1 399

Conversions and other 65 279

Activations 813 690

Occasional licences 1 458 1 292

Other - 1 198

Alteration of structure 42 -

Copies 12 -

Duplicate of licence 18 -

Inspectors reports 7 -

Management reports 604 -

Financial and controlling interest 12 -

Restoration fee 1 017 -

Shebeen 34 -

Transfer of licence 371 -

Pending lodgement 438 -

Penalties 2 147 82

Recovery of debts previously written off - 30

35 022 30 531

2016 2015




PART E


8. Employee related costs

Basic 31 796 25 546

Performance Bonus 263 427

Pension - company contributions 2 622 2 092

Leave pay provision charge 1 144 571

13th Cheques 1 855 1 395

Non pensionable allowances 3 208 3 368

Housing benefits and allowances 669 574

Bargaining council - company contribution 7 7

Medical aid - company contribution 1 470 1 147

Compensation 2 60

43 036 35187

9. General expenses

Advertising 37 241

Audit fees 728 818

Bank charges 94 100

Cleaning 597 547

Professional fees 706 1 425

Consumables 649 8

Departmental consumption 59 31

Flowers - 1

Insurance - 16

Conference and delegations 840 59

Ext comp ser: infor services 1 948 -

Levies paid 157 186

Printing and stationery 32 123

Research and development costs 1 123 351

Security costs 1 136 640

Licence fees - Computers 93 -

Telephone costs 177 728

Travel and subsistence - local 125 92

Travel and subsistence - foreign 138 -

Electricity 926 1 326

Theft and losses - 35

Legal expenses 681 1 147

Transport claims 127

Rental of buildings 8 371 8 262

18 744 16 136

2016 2015

R’OOO R’OOO



PART E


2016 2015

R’OOO R’OOO

by operations

Deficit (10 339) (4 169)

Adjustments for:

Depreciation 290 378

Loss on disposal 15 19

Movements in provisions (46) (10)

Changes in working capital:

Trade and other receivables (1 713) 414

Increase/ (decrease) in trade and other payables - 281

Trade and other payables 3 608 811

Movement in assets held for sale - 30

11. Commitments

The were no contracted capital commitments in the current financial year.

12. TaxationThe Gauteng Liquor Board is exempted from Income tax in terms of section 10 (1) of the Income Tax Act.

13. Related parties

Controlling entity Gauteng Department of Economic Development

13.1 Department of Economic Development

The Gauteng Liquor Board is a trading entity of the Department of Economic Development and its business operations are regulated as per Gauteng Liquor Act no. 2 of 2003.The entity reports to the MEC for Economic Development.

Gauteng Liquor Board receives a subsidy from the Gauteng Department of Economic Development to run its opera-tional costs.



PART E


13.2 Executive Management

Details of Executive Management remuneration are as follows:

Remuneration of management

Executive management

Senior Managers Remuneration (2015 -16)Basic Salary Service Bonus

Other Contributions/

IncomeTotal

Motlhake MM 611 51 358 1 020

Bodibe - Lushaba CK 575 48 343 966

Malebo JM 713 59 - 1 018

Nzimande RN 636 21 220 877

2 535 179 1 167 3 881

Senior Managers Remuneration (2014 -15) Basic Salary Service Bonus Other Contributions/

Income

Total

Motlhake MM 721 48 127 896

Bodibe - Lushaba CK 784 46 70 900

Malebo JM 821 56 88 965

2 326 150 285 2 761

2016 2015

R’OOO R’OOO



PART E


13.3 Board Members

Chiba B 90 54

Chiba BG 171 99

Chuene MP - 143

Daniel J 170 101

Els L 165 123

Gxilishe DP 63 59

Hlahla MA - 99

Khoza MP 126 79

Kupiso OB - 13

Mabe E 130 88

Madi SE - 136

Maja MS 204 16

Manoko RA 61 47

Masenya LM 173 105

Masilela LM 137 76

Masilo AS 632 99

Masina P 161 59

Mboweni MC 100 67

Modise EM 117 92

Mokgatle LG - 32

Molebatsi DS 199 101

MolokwaneDP 267 54

Mufumadi NM - 256

Naik RC - 88

Ngakatau IS 393 62

Ngoma GYW 405 56

Oakenfull LM 310 62

Pandelane FR 879 199

Radebe KJ 348 40

Selepe MD 98 69

Van der Westhuizen FJ 230 80

Williams JS 74 60

5 703 2 716


2016 2015Restated*



PART E


14. Irregular expenditure

Opening balance 9 202 9 202

Add: Irregular Expenditure - current year (7 787) -

1 415 9 202

15. Fruitless and wasteful expenditure

Fruitless and wasteful expenditure 8 236 8 141

Interest on overdue accounts 10

8 246 8 236

16. Financial instruments disclosure

C

2016

Financial assets

At fair value At amortised cost

Total

Trade and other receivables from exchange transactions - 1 844 1 844

Cash and cash equivalents 541 - 541

541 1 844 2 385


At fair value Total

Trade and other payables from exchange transactions 21 959 21 959

Provisions 736 736

22 695 22 695

2015

Financial assets

At fair value At amortised cost

Total

Trade and other receivables from exchange transactions - 131 131

Cash and cash equivalents 8 726 8 726

8 726 131 8 857


At fair value Total

Trade and other payables from exchange transactions 18 353 18 353

Provision 782 782

19 135 19 135


2016 2015Restated*



PART E


17. Risk management

Financial risk management Liquidity risk

Liquidity risk is the risk that the entity will not be able to meet its financial obligations as they fall due.The entity’s approach to managing liquidity is to ensure , as far as possible, that it will always have sufficient liquidity to meet its liabilities when due. under both normal and stressed conditions, without incurring unacceptable losses. The DED has in prior years, assisted the GLB with regards to payments/obligations to be made.

At March 31, 2016 Less than 1 month between 1 and 2 months

between 2 and 3 months

Over 3 months

Trade and other payables 21 959 - - -

At March 31, 2015 Less than 1 month between 1 and 2 months

between 2 and 3 months

Over 3 months

18 353 - - -

Credit risk

Credit risk is the risk of financial loss to the Board if a customer/licence holder.staff or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Board’ receivables.

At year end, the Board did not consider there to be any significant concerntration of credit risk which has not been adequately provided for.

18. Prior period errors

During the current financial year prior periods errors were discovered.Retrospective adjustments to the prior period have been made due to the significant nature of the effect of the errors on the prior periods reported results.The effect of the correction is as follows:

Decrease in trade and other payables from exchange transaction - 3

Deficit as previously reported Decrease in general expenses - (4 171)

Decrease in general expenses - 3

(4 168)

Statement of changes in equity

Increase in opening retained earnings - 3


2016 2015Restated*



PART E


C

Trade and other payables have decreased as a result of reclassification of capped leave from staff leave accrual to provision for capped leave in accordance to GRAP.

The provision have increased as a result of capped leave to the provision for capped leave from staff leave accrual in accordance with GRAP.

Employee costs have decreased as a result of performance awards reclassified from other expenses to employee costs.

General expenses decreased as a result of reversal of accrual for government printing expense.

During the current financial period errors were identified which resulted in restatement of prior periods figures.

Decrease in trade and other payables Increase in provision - (328)

Increase in provision - 328

- -

Decrease in trade and other payables Increase in provision - 9

Decrease in general expenses - (9)

- -

20. Change in estimate

In the current year there was no change in the estimated useful life of property, plant and equipment.

21. Contingent Liabiilities

Karen Fernandes - Compensation for loss of income

The plaintiff, Karen Fernandes, instituted a claim for an amount of two million rands against Gauteng Liquor Board for loss of income as a results of closure of liquor stores.

22. Going concern

The annual financial statements have been prepared on the basis of accounting policies applicable to a going concern. This basis presumes that funds will be available to finance future operations and that the realisation of assets and settlement of liabilities, contingent obligations and commitments will occur in the ordinary course of business.

23. Events after the reporting date

Disclose for each material category of non-adjusting events after the reporting date:

• nature of the event.

• estimation of its financial effect or a statement that such an estimation cannot be made.

The entity is not aware of any events that occurred after reporting date that will have an impact on the financial statements.


2016 2015Restated*



Documents

ANNUAL FINANCIAL STATEMENTS PART E