Top Structure BOARD MEMBERS. Gonza Mati Chief Executive Officer. dumisani mafu Chairperson. Nqaba Ntswahlana Board Member.

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2 Top Structure Gonza Mati Chief Executive Officer dumisani mafu Chairperson BOARD MEMBERS Nqaba Ntswahlana Board Member Mxolisi Tsika Board Member menelisi Mdebuka Board Member Zola Tyikwe Senior Manager: Compliance & Enforcement Nombuyiselo Mnguni Senior Manager: Corporate Service senior management Pumlani Tyali Senior Manager: Licensing Agnes Peard Chief Financial Officer Mgwebi Msiya Manager: Social Accountability A n n u a l R e port f or F i n a n c i a l Year Ea s ter n Ca p e L i q u o r B o ard

3 contents Section 1 GENERAL INFORMATION PUBLIC ENTITY S GENERAL INFORMATION 4 LIST OF ABBREVIATIONS/ACRONYMS 4 STRATEGIC OVERVIEW 5 Vision 5 Mission 5 Values 5 Strategic outcome orientated goals 6 LEGISLATIVE AND OTHER MANDATES 7 Constitutional mandates 7 Legislative mandates 7 Policy mandates 7 ORGANISATIONAL STRUCTURE 8 FOREWORD BY THE CHAIRPERSON 9 CHIEF EXECUTIVE OFFICER S OVERVIEW 10 Section 2 PERFORMANCE INFORMATION STATEMENT OF RESPONSIBILITY FOR PERFORMANCE INFORMATION 12 OVERVIEW OF PUBLIC ENTITY S PERFORMANCE 13 Executive Summary 13 Performance Information by division 14 Division 1: Licensing 14 Finance Division 17 Corporate Services 18 Compliance and Enforcement Division 20 Social Responsibility 21 Information Communication and Technology 24 Office of the CEO 25 SUMMARY OF FINANCIAL INFORMATION 26 Revenue generation per major category 26 Programme Expenditure 27 Capital investment, maintenance and asset management plan 28 1

4 Section 3 GOVERNANCE INTRODUCTION 30 THE ACCOUNTING AUTHORITY / BOARD 30 RISK MANAGEMENT 32 INTERNAL AUDIT AND AUDIT COMMITTEES 33 COMPLIANCE WITH LAWS AND REGULATIONS 33 FRAUD AND CORRUPTION 33 MINIMISING CONFLICT OF INTEREST 34 CODE OF CONDUCT 34 HEALTH SAFETY AND ENVIRONMENTAL ISSUES 34 AUDIT COMMITTEE REPORT 35 Section 4 HUMAN RESOURCE MANAGEMENT Expenditure 40 Employment and vacancies 42 Leave utilization for the period 01 April March Labour relations 51 Injury on duty 52 Utilization of consultants 52 Section 5 FINANCIAL INFORMATION STATEMENT OF RESPONSIBILITY 54 REPORT OF THE CHIEF EXECUTIVE OFFICER 54 REPORT OF THE EXTERNAL AUDITOR 55 ANNUAL FINANCIAL STATEMENTS 57 Annual Report for Financial Year Eastern Cape Liquor Board

5 section 1 General information 3

6 PUBLIC ENTITY S GENERAL INFORMATION REGISTERED NAME: PHYSICAL ADDRESS: Eastern Cape Liquor Board 69 Devereux Avenue Vincent 5241 POSTAL ADDRESS: P.O.Box Quigney 5211 TELEPHONE NUMBER: FAX NUMBER: WEBSITE ADDRESS: EXTERNAL AUDITORS: BANKERS: Auditor General First National Bank LIST OF ABBREVIATIONS/ACRONYMS CCMA Council for Conciliation Mediation and Arbitration ECDC Eastern Cape Development Corporation CEO Chief Executive Officer ECLB Eastern Cape Liquor Board ECLA Eastern Cape Liquor Act No 10 of 2003 FAS Foetal Alcohol Syndrome ECPTA Eastern Cape Parks and Tourism Agency ICT Information Communication Technology GIS Geographic Information System SAPS South African Police Services SALTA South African Liquor Traders Association SEDA Small Enterprise Development Agency SCM Supply Chain Management DTI Department of Trade and Industry CED Compliance and Enforcement Division Annual Report for Financial Year Eastern Cape Liquor Board

7 STRATEGIC OVERVIEW Vision Values To be a reputable world class liquor regulator Mission To regulate the retail sales and micromanufacturing of liquor taking into account community considerations The Eastern Cape Liquor Board (ECLB) subscribes to the fundamental guidelines of corporate governance and these are supported by primary pillars of: fairness accountability transparency community participation and consultation responsibility transformation integrity discipline honesty quality service delivery social responsibility 5

8 Strategic outcome orientated goals Strategic Goal Strategic objective short title Strategic objective statement To ensure that only fully compliant license applications are processed within timeframes stipulated by the Act. To minimise non-compliance by licensed liquor traders and the occurrence of illegal liquor trading from To consistently apply the provisions of the Act relating to social responsibility to all liquor traders from To ensure the ECLB conducts its business in a manner that is consistent with all principles of good governance by Efficient Licensing To grant licenses to qualifying applicants 2.1 Pre-registration assessment To ensure that the quality of the inspection reports meet all the requirements of the Act 2.2 Compliance monitoring and To promote self regulation and enforce compliance enforcement 2.3 Complaints Management To handle complaints in a professional and efficient manner 3.1 Community awareness To contribute to reducing the socio-economic and health effects of excessive alcohol consumption as contained in Section 2 of the Eastern Cape Liquor Act (No 10 of 2003) through the use of credible intelligence and strong partnerships 4.1 Financial Management To ensure effective, efficient and transparent management of financial and related functions in support of the core business of the ECLB 5.1 Human Resource Management, Corporate Administration and Supply Chain Management To deliver reliable and consistent back office support to the core functions of ECLB 6.1 Provision of ICT Services To provide efficient and cost-effective ICT services and related functions to support the core business of the ECLB 7.1 Effective strategic planning To ensure that the strategic plan is implementable by management who have taken ownership of the strategic plan 7.2 Effective organizational performance monitoring, evaluation and reporting 7.3 Policy formulation and implementation To establish an organizational performance monitoring and evaluation system to ensure that all divisions submit monthly performance reports that are measured against the operational plan To employ participatory methods to develop policies supportive of legislation and government priorities, for Board approval as required 7.4 Legal advisory services To endeavor to have a fully compliant entity, not only with its enabling statute but with all other legislation Annual Report for Financial Year Eastern Cape Liquor Board

9 LEGISLATIVE AND OTHER MANDATES Constitutional mandates The ECLB responds to Section 104 of the Constitution (Act 108 of 1996 as amended) which provides for the regulation of Liquor by the Provincial and Local spheres of government. Legislative mandates The Eastern Cape Liquor Board is established in terms of the Eastern Cape Liquor Act (Act 10 of 2003) to: Regulate the registration of retail sales and micromanufacturing of liquor in the province Encourage and support the liquor industry in the management and reduction of the socio-economic and other costs of excessive alcohol consumption by creating an environment in which: The entry of new participants into the liquor industry is facilitated; Appropriate steps are taken against those selling liquor outside the regulatory framework; To ensure that those involved in the liquor industry may attain and maintain adequate standards of service delivery; Participation by ward committees and communities in the consideration of applications for registration certificates is provided for; and The particular realities confronting the liquor industry in the province can be addressed. Policy mandates The National Liquor Policy requires provinces to regulate the licensing of retail and micro-manufacturing of liquor, and provides categories for licenses. The ECLB is charged with interpreting and implementing this policy at a Provincial level. The ECLB is also responsible for ensuring alignment of its activities with the policy directives of the Province. Specific policies include the Provincial Growth and Development Plan, the Premier s State of the Province Address, and the MEC s Policy Speech. 7

10 ORGANISATIONAL STRUCTURE Chief Executive officer Strategic Manager Personal Assistant Board Secretary Legal Officer Chief Financial Officer Senior Manager: Licensing Chief Inspector Senior Manager: Corporate Service Social Responsibility Manager ICT Manager Financial Accountant Personal Assistant Personal Assistant Personal Assistant Senior Officer: Social Accountability Webmaster & Desktop Controller Bookkeeper License Process Controller 4 District Officers Senior Inspector Office of CI Human Resources Manager Cost Analyst 6 x Admin Officer 10 Senior inspectors AN, QTN, CRA, EL, MTH, PE Human Resources Practitioner Personal Assistant 2 x Client Service Consultants 5 x Inspectors: EL,PE & MTH Personnel Practitioner 2 x Filing Clerks 11 x Admin Officers: AN, QTN, CRA, EL, Supply Chain Officer MTH, PE 4 x Receptionists QTN, CRA, MTH, PE Messenger/ Driver 3 x Office Assistants: QTN, MTH, PE Receptionist 2 x Cleaners Annual Report for Financial Year Eastern Cape Liquor Board

11 FOREWORD BY THE CHAIRPERSON The ECLB continued to make great strides in terms of fulfilling its objectives as provided in the Eastern Cape Liquor Act 3, 10 of 2003, during the year under review. The annual financial statements have been prepared in accordance with the standards of Generally Recognised Accounting Practices (GRAP). The Public Finance Management Act, 1 of 1999 requires the Accounting Authority to maintain adequate accounting records, and also bears the responsibility of ensuring that the annual financial statements fairly present the state of the affairs of the entity as at the end of the financial year and the results of its operations and cashflows. The entity continued to obtain an unqualified audit report for the fifth year in succession with vast improvement in performance information reporting. The value of Eastern Cape liquor industry market size amounted to R 4,6 billion in 2012/13 compared to R 3,6 billion in the previous financial year. The national value increased from R 47,6 billion to R 52,5 billion in 2012/13. The research on socio-economic impact of alcohol abuse in the Eastern Cape has been completed. The research results indicate that 64% of drinkers consume liquor due to boredom, whilst 36% are social drinkers. Intervention strategies have been devised to combat liquor abuse based on the research findings. These strategies will be rolled out in the next financial year (2013/14). These activities will involve partnerships with private sector and public sector role players. The annual financial statements set out on pages 57 to 80, which have been prepared on the going concern basis, were approved by the Accounting Authority on 31 May 2013 and were signed on its behalf by DUMISANI MAFU Chairperson 9

12 report of the CHIEF EXECUTIVE OFFICER I hereby present the ECLB organisational performance report for the 2012 / 2013 Financial Year as indicated in the Division Performance Report on pages 12 to 25. Gonza Mati Chief Executive Officer Annual Report for Financial Year Eastern Cape Liquor Board

13 section 2 PERFORMANCE information 11

14 PERFORMANCE INFORMATION Statement of Responsibility for Performance Information for the year ended 31 March 2013 The Chief Executive Officer is responsible for the preparation of the public entity s performance information and for the judgements made in this information. The Chief Executive Officer is responsible for establishing, and implementing a system of internal control designed to provide reasonable assurance as to the integrity and reliability of performance information. In my opinion, the performance information fairly reflects the actual achievements against planned objectives, indicators and targets as per the strategic and annual performance plan of the public entity for the financial year ended 31 March The Eastern Cape Liquor Board performance information for the year ended 31 March 2013 have been examined by the external auditors and their report is presented on page 55. The performance information of the entity set out on page 12 to page 25 were approved by the board. Gonza Mati Chief Executive Officer Annual Report for Financial Year Eastern Cape Liquor Board

15 OVERVIEW OF PUBLIC ENTITY S PERFORMANCE Executive Summary The liquor industry research results indicated that the value of the Eastern Cape liquor industry market size increased from R3, 6 billion in 2012 to R4, 6 billion as at March The national total value increased from R47, 6 billion to R52, 5 billion for the corresponding periods. The size of the industry that the entity regulates is the fourth largest after Gauteng, Western Cape and Kwa-Zulu Natal. The value of total national liquor consumption grew by 9,5% which is more than the previous year s growth of 9%. The national total annual volume growth decreased from 4, 9% to 1,7%. The value growth in the Eastern Cape was 12,5% and the volume growth was 13,1%. There has been a steady decline in the number of new applications received which resulted in the same pattern with regards to new applications approved. There has also been a sustained increase in the number of applications declined through the application of more stringent compliance measures. The number of existing licenses which were due for renewal amounted to 8022 and 7631 licenses were renewed and 391 licenses have not been renewed. In the liquor industry in the Eastern Cape it is assumed that for each liquor license issued a minimum of 3 jobs are created. ECLB issued 803 new licenses to liquor traders in the period. The Liquor Traders Development programme has been a successful exercise which has been embarked on, in conjunction with the Eastern Cape Development Corporation (ECDC) and the private sector. The Liquor Traders Development Programme has been received with enthusiasm by the liquor traders. A total of 269 liquor traders from Sterkspruit, Queenstown and East London district were trained and awarded with Business Skills Certificates in Basic Bookkeeping, Stock Control, People Management and Customer Care. The Eastern Cape Liquor Board (ECLB) will continue to ensure that there is community consultation before a liquor application is considered. Non-compliant liquor traders have been served with the appropriate notices and where there was no change in behaviour these outlets were ultimately closed. The Socio-Economic Research that was embarked upon by ELCB has been completed and the report indicates that Cacadu District is the highest district with alcohol consumption prevalence, with 34% of its population consuming alcohol. Nelson Mandela Metro follows after Cacadu with 33% and the third one being Chris Hani with 24%. However Cacadu district is the least populated of these three districts and Nelson Mandela Metro has the most population ( ). OR Tambo District which came in fifth place as per the report, with 20% of its population consuming alcohol has the highest population ( ). In light of the above information Nelson Mandela Metro has the highest number of people consuming alcohol, followed by OR Tambo. Based on the above analysis, alcohol consumption is most prevalent in urban areas as per the report. A major mass media campaign was launched with a media briefing to announce the socio-economic research study results and was attended by a number of media houses. This culminated in ECLB receiving extensive print media coverage on Daily Dispatch, Herald, Fever, Eastern Cape Today and New Age. Electronic news coverage received included radio stations such as Tru fm, Umhlobo Wenene, Algoa fm and various community radio stations. In line with the National Liquor Authority, ECLB observed the Sobriety Week Campaign by hosting a campaign in Grahamstown during September A massive festive season campaign was embarked on (billboards placed in strategic areas, tavern based awareness campaigns and road safety campaigns) during the reporting period. ECLB closes the 2012/13 financial year on a high note having reached an agreement with South African Breweries whereby they have undertaken to conduct a study on the prevalence of Foetal Alcohol Syndrome in Bethelsdorp which is in the northern areas of Nelson Mandela Bay. The Foundation for Alcohol Related Research (FARR) has already been appointed to conduct the study. The study will be conducted over a period of three years and in phases. The first phase will focus on prevalence, second phase on treatment and third phase on prevention. 13

16 Performance Information by division Division 1: Licensing Purpose of the division The Licensing Division is responsible for the processing of applications for registration of retail sale and micromanufacturing in accordance with the provisions of the Act and other applicable statutory provisions. The division is responsible for the preparation and processing of fully compliant applications for consideration by the Licensing Committee and ratification by the Board, the administration of license renewals, and the maintenance of accurate and current information on licensed liquor trading outlets. Performance indicators Performance Indicator Actual Achievement 2011/2012 Planned target 2012/2013 Actual Achievement 2012/2013 Deviation from planned target to Actual Achievement for 2012/13 Comment on deviations Number of new liquor licenses processed within 60 days Number of Liquor Traders empowered annually The target is a projected figure and is demand driven The training programme was oversubscribed Performance analysis There has been a steady decline in the number of new applications received which resulted in the same pattern with regards to new applications approved. There has also been a sustained increase in the number of applications declined through stricter compliance measures being applied. Annual Report for Financial Year Eastern Cape Liquor Board

17 Trend of Applications Received per year The table and the graph below depict the number of applications received year on year. Year Number of application received 2010/ / / / / / / / /13 CONSIDERED APPLICATIONS A total of 978 compliant applications were captured into the Licensing system from 01 April 2012 to 31 March 2013 and their breakdown is as follows: ü 796 were new applications ü 167 were transfers and ü 15 were removals All 978 applications were submitted to Government printers for publication within 7 days applications were considered during the period under review and the decision was as follows: ü 803 applications were approved; ü 515 applications were refused; ü 20 applications were queried; ü 6 application was scheduled for public hearing; ü 48 applications were issued with a conditional letter. The outcomes of all applications finalised by the Board was communicated within 30 days. Manager s Appointment applications ü 3173 manager s appointment applications were received, processed and certificates issued. Controlling Interest applications ü 11 applications were received, processed and certificates issued. Special Events ü 94 applications which are included in the 1392 applications considered for the period under review were received ü 89 special events certificates were issued whilst 5 were withdrawn. CATERGORY OF ACTIVE LICENSES The total number of active licenses as at 31 March 2013 is The table and the graph below show the number of licenses per category. 15,9% 0,1% 64,3% 19,7% On consumption On / Off consumption Off consumption Micro Manufacturing 15

18 ACTIVE VERSUS NON- RENEWED LICENSES YEAR ON YEAR Liquor Traders must renew their licenses on an annual basis and statistics of renewals year on year is depicted in the table and graph hereunder. Year Active Licenses Non Renewed 2010/ / / For the period under review of the 8022 which were due for renewal, 7631 licenses were renewed and 391 have not been renewed Active Licenses: 6568 Non-renewals 979 Active Licenses: 7972 Non-renewals 496 Active Licenses: 8212 Non-renewals / / /13 Liquor Traders Development Programme As part of executing the mandate relating to the promotion and development of new entrants in the liquor industry, the Eastern Cape Liquor Board has formed partnerships with South African Breweries, Distell, Eastern Cape Development Corporation, Small Enterprise Development Agency, Eastern Cape Parks and Tourism Agency to implement the following programmes: Business Skills Training Liquor Traders from the East London, Port Elizabeth, Queenstown and Sterkspruit districts were empowered through Business Skills training programme and they attended training workshops on Customer Care, Stock Control, Book/Recordkeeping, Tax, People management and cooperative development. Micro-manufacturing Support Five (5) micro-manufactures (Emerald Value Brewery, Harrison Hope Wine Estate, Boar s Head Brewery and Theescombe Wine Estate) have been provided advice on how to link with the hospitality industry and have been linked to local tourism agencies for registration. Grading of Taverns Consultative meetings with liquor traders associations, local municipalities, liquor manufactures and tourism agencies were held to seek input on the proposed grading of taverns concept. The objectives are to improve the standard of service and tavern premises as well as to use grading as an incentive to grow their business. Co-operative Development Two co-operatives (one in Port Elizabeth and one in East London) are in the process of being registered. Thus moving the member taverners / co-operative shareholders to a higher level in the industry value chain. Liquor Traders Associations ECLB has registered formally and is working with 6 liquor traders associations namely: King William s Town South African Liquor Traders Association East London SALTA Sisonke Liquor Traders Association (Sterkspruit) Camdeboo Liquor Traders Associations Jansenville Liquor Traders Associations Port Elizabeth SALTA Action to address variances Stricter measures will be applied when accepting new applications. The business skills programme review process resulted into the need to categorise the prospective trainees and offer customised training relevant to their level. A peer-review mechanism to monitor the impact of training is to be implemented through the traders associations. Annual Report for Financial Year Eastern Cape Liquor Board

19 Finance Division Purpose of the division The Finance Division is a support service to the core business of the organisation. This division executes the Board s fiduciary duties, ensuring that resources are used effectively, efficiently and economically within the prescripts to fulfil the Board s financial and related reporting and accountability responsibilities. Financial and asset management are managed through the Finance division, and internal controls are reviewed in order to address audit outcomes and findings. The overall ECLB budget is monitored by the Finance Division, and the division reports on monthly movements to ensure corrective action to bring expenditure in line with budgeted allocations where necessary. The Finance Division coordinates the risk portfolio, which is in turn managed through the internal audit function. Furthermore, the Finance Division facilitates the implementation of the risk management plan through the risk committee. Performance indicators Performance Indicator Actual achievement 2011/2012 Planned Target 2012/2013 Actual Achievement 2012/2013 Comment on deviations Budget compliance in line with Treasury regulations Number of financial oversight reports produces Number of risk reports produced n/a n/a New indicator n/a Analysis of performance The Finance division achieved all the targets that were set for the period under review. The following activities were performed: The Budget for 2012/13 was prepared with management, approved by the Board and presented in a Budget Book. The first draft budget for 2013/14 was submitted to Treasury and DEDEAT as required. The Financial Oversight reports were prepared and presented to management and the Board on a monthly basis. The assets register was reconciled as at year end. The Draft Annual Financial Statements were drafted and presented to all parties as required in May The final Annual Report was presented to all parties by end August The Revenue reconciliations were performed for the entire year and payment was made on time. The total revenue collected for 2012/13 was R The audit tracking report was updated monthly with any new audit reports, and management reported on the implementation of corrected measures monthly. 17

20 Corporate Services Purpose of the division The role of Corporate Services is to provide support services to the core functions of ECLB. The division takes lead in the following areas: Human Resources management Corporate Administration Supply Chain management Performance indicators Performance Indicator Actual achievement 2011/2012 Planned Target 2012/2013 Actual Achievement 2012/2013 Comment on deviations Number of reports on performance management and skills development Number of reports on the Human Resources Management Planning (i.e. report on recruitment, employee wellness and labour relations) Number of reports on records management services(i.e. personnel records) Number of reports on auxiliary services (i.e. housekeeping, reception, maintenance of buildings/offices and fleet services) Compliance with supply chain management processes Number of reports on contracts management services 2* n/a 2* n/a 2* n/a 2* n/a 2* 100% 100% n/a 2* n/a * A rating measurement of (Yes = 2, Partial = 1 and No = 0) was used in the 2011/12 financial year for all the indicators. The rating method was changed in 2012/13 to ensure measurability of indicators. Annual Report for Financial Year Eastern Cape Liquor Board

21 Analysis of performance Performance Management and Development System All the Performance Agreement contracts for 2012/13 were signed in April Half-year performance reviews were conducted in October 2011 and all staff members were assessed. Final performance reviews were conducted in March All staff members have completed the performance agreement contracts for 2013/14 in March Skills Development Skills Development plan has been implemented as the staff members had attended courses and trainings as outlined in their skills development plans. Leave Management workshop was conducted in August Staff members from both Head Office and Districts were trained on how to manage the leave. Supply Chain Management training was conducted for all the staff members who are involved in procurement activities in August 2012 and 23 staff members were trained from both Head Office and the Districts. All the Inspectors attended the Conflict Management training in September Twenty (20) staff members from different divisions attended the Advanced Project Management course. A workshop on reviewed Corporate Services policies for 2013/14 has been conducted for all staff members. Labour relations The monthly consultative meetings between the Management and Labour representatives were held during April 2012 to March These meetings were held to discuss issues of mutual interest between the employees and the Management. HR Administration and Recruitment All the personnel and HR records have been updated for the period under review. A new Social Accountability Manager has been appointed and commenced duties on 01 February Fleet reconciliations are performed monthly for all the ECLB vehicles and any variance is reported. Employee Wellness Program Employee Health and Wellness program for the 2012/13 has been developed and implemented. World AID s Day in December 2012, Women s day in August 2012 were held and the Speaker from Masimanyane Women s Association was invited to come and discuss HIV/AIDS, women s health related issues and how they affect the employees both at work and in their private lives. This is in line with the ECLB Employee Wellness programme. Supply Chain Management Supplier database for 2012/13 was compiled. Bids for Licensing system, WAN and Internet services, Volume Software Systems and for the Network Document Centres have been finalised and awarded during 2012/13 financial year. Procurement of goods from R upwards are strictly evaluated and adjudicated. Goods and services are procured from the suppliers registered in ECLB database. SCM policy has been reviewed and approved and any procurement above R2000 must be accompanied by 3 quotations. All the Bid Committee members were appointed and trained for 2012/13 financial year. 19

22 Compliance and Enforcement Division Purpose of the division The purpose of the division is to ensure full compliance with the provisions of the Act, by: Taking appropriate steps against all identified illegal liquor outlets Ensuring that liquor traders comply with the Act, regulations and liquor trading conditions Encourage participation by Ward Committees / Ward Councillors and communities in the consideration of applications for registration. Performance indicators Performance Indicator Actual achievement 2011/2012 Planned Target 2012/2013 Actual Achievement 2012/2013 Deviation from planned target to Actual Achievement for 2012/13 Comment on deviations Number of preregistration inspections conducted Number of compliance monitoring visits conducted Number of planned targeted surprise blitz campaigns organized and coordinated by the ECLB Percentage of identified illegal outlets referred to the criminal justice system Number of planned training/information sharing sessions with relevant stakeholders Percentage of complaints received and referred/resolved Less applications have been received than the anticipated annual target Inaccessibility of outlets in deep rural areas during heavy rains More blitz operations conducted than anticipated due to additional complaints received 100% 100% 47% -53% The variance is due to illegal outlets that were identified but warned to close down and those who removed evidence before they could be arrested There is a growing need to share information on compliance issues with stakeholders 67% 100% 90.6% -9.4% The variance is as a result of pending complaints that are still under investigation Annual Report for Financial Year Eastern Cape Liquor Board

23 Analysis of performance As per the APP and Operational Plan, the division had six planned activities and targets for the period under review. 871 preregistration compliance inspections for applications that were found to be compliant in all documentation were conducted during the period under review post-registration compliance inspections were conducted on registered liquor outlets throughout the province. 29 information-sharing sessions were attended in the period under review with municipalities, Safety and Liaison, SAPS Provincial and Cluster meetings, communities as well as Liquor Regulatory Authorities. 793 South African Police members were trained throughout the Province and appointed to enable them to deal with matters relating to liquor trading legislation, regulations and trading conditions as attached to registration certificates. 105 blitz operations were conducted with SAPS throughout the province and 481 illegal liquor traders were identified during the period under review. 98 complaints were received, recorded and investigated. Social Responsibility Purpose of the division The purpose of the division is primarily to educate the public on the dangers of the abuse of liquor. The ECLB is specifically targeting in-school youth, pregnant women, road users and the general public. The division is also responsible for all internal and external communications. Performance Indicator Actual achievement 2011/2012 Planned Target 2012/2013 Actual Achievement 2012/2013 Deviation from planned target to Actual Achievement for 2012/13 Comment on deviations Number of awareness education campaigns conducted Number of people reached through awareness campaigns Socio-economic research conducted Liquor industry research conducted More mass media coverage due to increased public interest. New indicator The number of people reached exceeded target due to more people attending the campaigns than anticipated. New indicator 1 1 No variance N/A New indicator 2 2 No variance N/A 21

24 Analysis of performance Awareness Campaigns ECLB continues to contribute to reducing socio-economic and health effects of excessive alcohol consumption through education awareness campaigns in collaboration with other stakeholders. A total of 116 awareness and education programmes were conducted during the period under review. School- based programme Under-age drinking school-based education campaigns were conducted by ECLB at targeted schools throughout the province. Other school-based campaigns were conducted in collaboration with SAB through their You Decide Campaign at targeted schools. Promotional materials with key messages on under-age drinking were distributed during the campaigns. Community- based programmes and mass media campaigns Information sessions on ECLB s programmes and alcohol abuse messages including Foetal Alcohol Syndrome (FAS) awareness campaigns were conducted in collaboration with stakeholders such as Department of Social Development, South African Breweries, Department of Education and SANCA. A National Sobriety week and FAS provincial campaign was embarked upon in Grahamstown together with DTI and other stakeholders. ECLB embarked on massive Festive Campaign against drunk driving in Amatole District Municipality (Stutterheim). Electronic billboards with messages on drunk driving were placed at strategic points in East London and Mthatha to educate drivers and pedestrians about dangers of drunk driving and walking on the road while under the influence of liquor. Conducted drunk driving Easter Weekend Campaign through which two road shows were undertaken in OR Tambo (Mthatha) and Amatole District Municipalities (Tyityiba Administrative Area) respectively. Electronic billboards and street banners were utilised to amplify messaging to drivers and pedestrians. Mobilised various media houses to communicate key campaigns to target audience. Further hosted a media briefing which was attended by eight media houses. Subsequent to the media briefing, various media houses reported positively on ECLB, and the media houses include Daily Dispatch, Herald, New Age, East London Fever, Eastern Cape Today, Kowie FM, and Fort Hare Community Radio. A total of people were reached with the education and awareness campaigns. This number exceeded the target of 6500 for the year under review due to the huge turnout of people to awareness campaigns and ECLB was further invited to participate in awareness campaigns conducted by its partners. Liquor Industry research ECLB subscribed to Nielson Research Company to obtain information on Liquor Industry market research. The total market size of the liquor industry in South Africa was worth R52.5 billion as at end of March The Eastern Cape is sitting at R4.6 billion, the leading provinces being Gauteng, Western Cape and KwaZulu Natal. value by province - total liquor - mat 20,000,000 15,000,000 10,000,000 5,000,000 0 R 15,821,424 R 2,736,777 R 2,117,946 R 3,341,913 R 3,815,916 gauteng R 9,421,409 north west R 1,057,921 limpopo province R 4,587,805 mpumalanga R 9,651,144 free state kwazulu natal northern cape eastern cape western cape Annual Report for Financial Year Eastern Cape Liquor Board

25 Socio-economic research The entity successfully commissioned a study on socioeconomic impact of liquor abuse in the Eastern Cape through the SADC Research Centre. The study has revealed interesting trends in liquor consumption in the country and province as well as areas that require immediate interventions through education programmes. To respond to socio-economic effects of alcohol arising from the study, a communication strategy has been developed as a mechanism to mitigate negative impacts of alcohol. The following are some of the study results: Percentage of the district population that drink alcohol 50% 34% 33% 25% 25% 24% 24% 22% 20% 20% 15% 0% SA EC CACADU NMM CHRIS HANI AMATHOLE OR TAMBO UKHALAMBA ALFRED NZO Actions to address major variances The number of targeted people to be reached with education campaigns has been increased to

26 Information Communication and Technology Purpose of the division The ICT Division is responsible for the development and implementation of internal controls to ensure the appropriate use and availability of ICT services and facilities, as well as effective backup and failsafe contingencies. The provision of technical and management services as performed by the ICT Division may be broken down into four distinct areas, namely: services and infrastructure network and inter-connectivity facilities research, development and deployment of new ICT services and solutions development, maintenance and implementation of ICT policies. Performance indicators PERFORMANCE INDICATOR Actual achievement 2011/2012 Planned Target 2012/2013 Actual Achievement 2012/2013 Deviation from planned target to Actual Achievement for 2012/13 Comment on deviations Uptime of ICT network 98.34% 97.5% 99.8% % is the minimum requirement for uptime Number of ICT systems/services completed Delays in funding affected completion of the projects Analysis of performance The averaged availability of the ICT Infrastructure, servers and server services for the period under review was 99.8% which is well within the minimum requirement for 97.5% uptime and availability. ICT Systems/services An Electronic Order Entry System was implemented to replace the manual Order System previously used by the entity. A decision was taken by management to fully commission the Electronic Order Entry System at the start of the 2013/14 financial year to minimise the impact on procurement and auditing processes for the 2012/13 financial year. Service providers were appointed, and projects commenced for the following ICT related systems and services: Development of a new Licensing System to manage license information Deployment of autonomous Wide-area Network (WAN) and Internet services Procurement of Microsoft Volume Software Licensing Agreement Network Document Printing, Scanning and Faxing systems. Terms of Reference were developed and a Request for Quotation was issued for the implementation of a Geographical Information System (GIS) which will function in conjunction with the new Licensing System to provide the entity with more efficient tools for the development of industry intelligence and assist with management of the liquor industry in the Eastern Cape. Procurement was initiated and completed for an electronic infrastructure uptime and availability monitoring tool. This tool will be implemented in Quarter 1 of 2013/14. Annual Report for Financial Year Eastern Cape Liquor Board

27 Office of the CEO Purpose of the division The division is responsible for initiating and producing implementable overall strategic plans through an inclusive participatory process involving relevant employees and shareholder s representatives, for final approval by the Board. The division is also responsible for measuring and monitoring the organisational performance against the planned targets as contained in the annual performance plan and operational plan, performance reports are produced on a monthly basis by each division. These reports are then consolidated monthly, quarterly as part of the financial oversight report, and annually as part of the annual report. Policy formulation and reviews are undertaken annually to ensure that the internal operating environment is flexible and can adapt to external changes in the environment. Legal advisory services are rendered to the entity by the office of the CEO to ensure compliance with all relevant legal requirements. Performance indicators PERFORMANCE INDICATOR Actual achievement 2011/2012 Planned Target 2012/2013 Actual Achievement 2012/2013 Deviation from planned target to Actual Achievement for 2012/ Annual performance plan produced 1* 1 1 n/a Number of performance reports 1* n/a produced Report on policies approved by the 1* 1 1 n/a Board Percentage compliance with legal requirements 1* 100% 100% n/a * The 2011/12 indicators were measured through (Yes=1; No =0) rating method and were changed from 2012/13 to be measurable. Analysis of performance The performance of the organisation is monitored against the targets set in the APP and the Operational Plan. All statutory reports were submitted to DEDEAT as required. The review of all the policies done by management and employee representatives and a report was submitted to the Board for approval. Legal advisory services and support was provided to management and the Board on legislation and regulatory requirements. 25

28 SUMMARY OF FINANCIAL INFORMATION Revenue generation per major category The table below depicts revenue generated by ECLB from 01 April 2012 to 31 March The revenue represents license fees due and paid in the process of issuing licenses. All revenue generated is paid over to the DEDEAT on a monthly basis. REVENUE STATS Quarter 1 Quarter 2 Quarter 3 Quarter 4 TOTAL ANNUAL FEE Sec 20(a) ANNUAL FEE Sec 20(b) ANNUAL FEE Sec 20(c) APP - CONTROLLING INTEREST APP COPY OF REGISTRATION APP - REGISTRATION APP - TRANSFER APP - REMOVAL LODGEMENT OF APPEAL NEW REGISTRATION Sec 20(a) NEW REGISTRATION Sec 20(b) NEW REGISTRATION Sec 20(c) NEW REGISTRATION Sec 20(d) TRANSFER/REMOVAL Sec 20(a) TRANSFER/REMOVAL Sec 20(b) TRANSFER/REMOVAL Sec 20(c) UNALLOCATED RECEIPTS TOTAL REVENUE RECEIVED Annual Report for Financial Year Eastern Cape Liquor Board

29 Programme Expenditure 2012/2013 Programme Name Budget Actual Expenditure (Over)/Under Expenditure R 000 R 000 R 000 Licensing Finance (97) Corporate Service Compliance IT Social Responsibility Office of CEO Capital projects Total The ECLB received an additional R6 million in December 2012 for capital projects. All the procurement processes was finalised by year end, and all the funds were committed to the projects. 27

30 Capital investment, maintenance and asset management plan Infrastructural projects undertaken during the 2012/13 financial year are as follows: Microsoft Volume Software Licensing Agreement A Volume Software Licensing Agreement was procured to cover the software licensing requirements of the entity with respect to all workstations and server systems. This agreement will run for a period of 3 years after which a renewal thereof will be considered. The two remaining years will cover the 2013/14 and 2014/15 financial years. The financial implications of this project are R over a period of 3 years, with the annual contract cost being R WAN & Internet Services Procurement for WAN & Internet services to cover the requirements of the entity s ICT infrastructure was completed in the 2012/13 financial year, and deployment will commence in the 2013/14 financial year. This contract will run for a period of 3 years, namely the 2013/14, 2014/15 an 2015/16 financial years. The financial implications of this contract are R over the contract period of 3 years, with the annual contract cost being R Development of a new Licensing System The tender for the development of a new Licensing System to automate the process of liquor license management and issuance was awarded in the 2012/13 financial year. Development of this system will commence and be completed in the 2013/14 financial year. The financial implications of the development of the new Licensing System are R during the 2013/14 financial year. 2012/2013 Infrastructure projects Budget Actual Committed Expenditure R 000 R 000 R 000 Wan & Internet Microsoft Licenses Licensing Software Monitoring Software IT Equipment Office Furniture and equipment Intangible assets Total Annual Report for Financial Year Eastern Cape Liquor Board

31 section 3 GOVERNANCE 29

32 INTRODUCTION Corporate governance embodies processes and systems by which public entities are directed, controlled and held to account. In addition to legislative requirements based on a public entity s enabling legislation, and the Companies Act, corporate governance with regard to public entity s is applied through the precepts of the Public Finance Management Act (PFMA) and run in tandem with the principles contained in the King s Report on Corporate Governance. Parliament, the Executive and the Accounting Authority of the public entity are responsible for corporate governance. THE ACCOUNTING AUTHORITY / BOARD Introduction The members and the Board and its committees jointly and severally derive their fiduciary responsibilities from the provisions of the EC Liquor Act and the PFMSA and this Charter and the Terms of Reference of the various committees of the Board. These fiduciary responsibilities involves the following responsibilities: The duty to exercise the utmost care to ensure reasonable protection of the assets and records of the ECLB; The duty to act with fidelity, honesty, integrity and in the best interests of the ECLB entity in managing the financial affairs of the ECLB; The duty to disclose on request, to the Executive Authority responsible for the public entity or the legislature to which the public entity is accountable, all material facts, including those reasonably discoverable, which in any way may influence the decisions or actions of the executive authority or that legislature; and The duty to seek, within the sphere of influence of the accounting authority, to prevent any prejudice to the financial interests of the state. The Board and its committees shall also have those responsibilities as set out in the PFMA and the EC Liquor Act. Annual Report for Financial Year Eastern Cape Liquor Board

33 The role of the Board is as follows: The Board is mandated to regulate the liquor establishments within the Eastern Cape, by complying with the Eastern Cape Liquor Act, Act 10 of The board is ultimately accountable and responsible to the MEC, for Economic Affairs, Environment and Tourism for the Performance and affairs of the ECLB in terms of the Eastern Cape Liquor Act and the PFMA. The Board must therefore retain full and effective control over the ECLB and must give strategic direction to the ECLB s Executive Management. The board is also responsible for ensuring that the ECLB complies with all relevant laws, regulations and codes of business practice. Composition of the Board Name Date appointed Position Qualifications Other Committees (e.g: Audit committee) No. of Meetings attended Dumisani Mafu 7/10/2009 Board Chairperson Bachelor of Law 12 Nqaba Ntswahlana 7/10/2009 Board Member Senior Management Audit Committee 12 Development Programme Menelisi Mdebuka 09/11/2010 Board Member B. Com 12 (Management) Honours B. Com (Industrial Psychology) Mxolisi Tsika 11/07/2011 Deputy Chairperson Masters in Philosophy 12 Remuneration of board members Name Remuneration Other allowance Other re-imbursements Total Dumisani Mafu Nqaba Ntswahlana Menelisi Mdebuka Mxolisi Tsika

34 The entity has fully functional Audit and Risk Committees. The ECLB Board meets regularly as indicated in the table below. For period 01 April 2012 to 31 March 2013 Board meetings held Other Board/ Committee meetings Meetings with the MEC/ Legislature/ Department Board member training 26 April April 2012-Portfolio Committee Legislature 28 May May Risk Committee and Audit Committee 28 June July July Audit Committee 16 July meeting with MEC, Board and Management 23 August September September meeting with MEC and chairpersons of the Boards 25 October November November Risk Committee and Audit Committee 08 November Portfolio Committee Legislature Board meetings held Other Board/ Committee meetings Meetings with the MEC/Legislature/ Department 14 December March February Board and management planning workshop 12 March 2013 (Special meeting) March 2013 (included visits to manufacturers) One member attended: Being a Director Part II (lodsa) Board member training Being a Director Part 2-13 March March Audit Committee Being a Director Part 3-18 March 2013 RISK MANAGEMENT The risk assessment for 2012/13 was done in April A risk register and risk action plan was compiled and monitored by the Risk Officer in conjunction will all managers. Annual Report for Financial Year Eastern Cape Liquor Board