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Financial Highlights 2 Notice of Annual General Meeting 3 General Mandate Circular 5 Board of Directors and Corporate Information 6 Chairman’s Statement 8 Directors’ Report 15 Corporate Governance Report 17 Sustainability Report 24 Board of Directors and Company Secretary 34 Guinness Leadership Team 40 Corporate Events 43 Report of the Audit Committee 50 Statement of Directors’ Responsibilities 51 Independent Auditor’s Report 52 Statement of Financial Position 57 Income Statement 58 Statement of Other Comprehensive Income 59 Statement of Changes in Equity 60 Statement of Cash Flows 61 Notes to the Financial Statement 62 Value Added Statement 106 Financial Summary 107 Shareholders’ Information 108 Complaints Management Policy 112 Guinness Nigeria Key Distributors 115 Proxy Form 117 E-Dividend Payment Mandate Form 119 2 FINANCIAL HIGHLIGHTS

2018 2017 N’000 N’000 Change% Results Revenue 142,975,792 125,919,817 14% Operating profit 13,386,248 10,186,330 31% Profit for the year 6,717,605 1,923,720 249% Total comprehensive income for the year 6,685,021 1,888,387 254% Restructuring (credit)/costs (13,458) 1,030,696 101% Declared dividend 963,768 752,944 28% Proposed dividend 4,030,563 963,768 318% Total equity 87,588,174 42,943,015 104%

Data per 50 kobo share (in kobo) Basic and diluted earnings per share 330 128 158% Declared dividend 64 50 28% Net assets 3,999 2,852 40%

Stock exchange quotation at financial year end 9,775 7,150 37%

3 NOTICE OF ANNUAL GENERAL MEETING

Notice is hereby given that the 68th Annual Veritas Registrars Limited, Plot 89A, Ajose Adeogun Street, Victoria General Meeting of the Members of Guinness Island, Lagos not less than 48 hours before the time for holding Nigeria Plc will be held at the Congress the Meeting.

Hall, Transcorp Hilton Hotel, FCT Abuja on 2. CLOSURE OF REGISTER Wednesday, 24 October 2018 at 11.00 O’clock The Register of Members and Transfer Book will be closed in the forenoon to transact the following from 24 September 2018 to 28 September 2018 both days businesses: inclusive for the purpose of updating the Register of Members.

AGENDA 3. DIVIDEND PAYMENT If the payment of a dividend is Ordinary Business approved, it is intended that the 1. To receive the Report of the Directors, the Financial Statements for the year payment of the dividend will be ended 30 June 2018 and the Reports of the Independent Auditors and the made on Thursday, 25 October Audit Committee thereon. 2018 to holders of shares whose names appear on the Register of 2. To declare a dividend. Members on 21 September 2018.

3. To elect/re-elect Directors 4. AUDIT COMMITTEE In accordance with Section 4. To authorise Directors to fix the remuneration of the Independent Auditors 359(5) of the Companies and Allied Matters Act [cap C20, Laws 5. To elect members of the Audit Committee. of the Federation of Nigeria, 2004], a nomination (in writing) Special Business by any member or a shareholder 6. To fix the remuneration of the Directors. for appointment to the Audit Committee should reach the 7. To consider and, if thought fit, pass the following resolution as an ordinary Company Secretary at least 21 resolution of the Company: days before the date of the Annual General Meeting. “That, in compliance with the rules of the Nigerian Stock Exchange governing transactions with related parties or interested persons, the general mandate 5. E-DIVIDEND granted to the Company in respect of all recurrent transactions entered into Notice is hereby given to all with a related party or interested person which are of a revenue or trading shareholders to open bank nature or are necessary for the Company’s day to day operations including accounts for the purpose of but not limited to the procurement of goods and services on normal dividend payment. A detachable commercial terms be and is hereby renewed”. e-dividend payment mandate and change of address form is attached Notes: to the Annual Report to enable 1. PROXY shareholders furnish particulars A member of the Company entitled to attend and vote is entitled to appoint of their bank and CSCS Accounts a proxy to attend and vote instead of him/her. A proxy need not also be a numbers to the Registrar. member. A form of proxy is enclosed and if it is to be valid for the purposes of the Meeting, it must be completed and deposited at the o¢ce of the Registrar, 4 NOTICE OF ANNUAL GENERAL MEETING

6. GENERAL MANDATE CIRCULAR Dated: 28th Day of August 2018. A circular on the resolution for shareholders’ renewal of the By Order of the Board general mandate for recurrent transactions with related parties which provides the rationale for the mandate sought is included in Rotimi Odusola the Annual Report and Financial Company Secretary Statements. FRC/2016/NBA/00000015186

7. RIGHTS OF SECURITIES’ REGISTERED OFFICE: HOLDERS TO ASK QUESTIONS The Ikeja Brewery, Securities’ Holders have a right Oba Akran Avenue to ask questions not only at the Private Mail Bag 21071, Meeting, but also in writing prior to Ikeja, Lagos. the Meeting, and such questions www.guinness-nigeria.com must be submitted to the Company Secretary on or before 16 October 2018. 5 GENERAL MANDATE CIRCULAR

In order to ensure that its day to day operations are operations of the Company, the discharge of legal and contractual carried out in the most eŽcient manner possible, obligations currently binding on the Company would like to continue to enter into the Company, are of strategic importance to the continued transactions with related parties and interested operations of the Company, guarantee the uninterrupted persons that have been identified as necessary for supply of goods and services such day-to-day operations. These transactions necessary for the operation of the Company as a going concern, have been assessed to exceed 5% of the value of are carried out on a transparent the net tangible assets or issued share capital of the basis and are cost e¨ective and performed e¢ciently and Company. e¨ectively.

iv. The methods and procedures for In compliance with the provisions of d. Production and Distribution determining transaction prices Clause 6 of the Rules of the Nigerian Agreements between the are based on the Company’s Stock Exchange Governing Related Company and its Parent transfer pricing policy and are, Parties or Interested Persons (“the Company, Diageo plc and/or where applicable, subject to the Rules”), the Company hereby seeks other companies or entities approval of the National O¢ce the approval of Shareholders to the within the Diageo Group; for Technology Acquisition and grant of a general mandate in respect e. Arrangements for the provision Promotion (NOTAP). of such recurrent transactions. of specialist support to the Company by its Parent v. Messrs. Ernst and Young, had The relevant items for consideration Company, Diageo plc and/or provided independent financial of the shareholders are as stated other companies or entities opinion that the methods and below: within the Diageo Group; procedures in the Company’s f. Contract manufacturing transfer pricing policy referred i. The transactions for which this purchase or packaging to in paragraph (iv) above are general mandate is sought are arrangements between the su¢cient to ensure that the those of a trading nature and/ Company and its Parent transactions shall be carried out or those which are necessary for Company, Diageo plc and/or on normal commercial terms the day to day operations of the other companies or entities and shall not be prejudicial to the Company and include but are not within the Diageo Group; and interests of the Company and its limited to the following: g. Arrangements for the sale and/ minority shareholders. or purchase of raw materials a. Technical Know-How and or finished goods, technical vi. The Company shall obtain a fresh Support Services Agreements equipment and spare parts by mandate from the shareholders if between the Company and or to the Company by its Parent the methods or procedures in (iv) its Parent Company, Diageo Company, Diageo plc and/or become inappropriate. plc and/or other companies other companies or entities or entities within the Diageo within the Diageo Group. vii. Any person identified as an Group; interested person as defined b. Trademark and Quality ii. The class of related parties and under the Rules shall abstain Control Agreement between interested persons with which and undertake to ensure that its the Company and its Parent the Company will be transacting associates abstain from voting Company, Diageo plc and/or include shareholders, employees on the resolution approving the other companies or entities and their family members, transaction. within the Diageo Group; companies or entities within the c. Distribution Agreements Parent Company, Diageo plc between the Company and Group and subsidiaries of the its Parent Company, Diageo Company etc. Plc and/or other companies or entities within the Diageo iii. The rationale for the transactions Group; are that they are necessary for the 6 BOARD OF DIRECTORS & CORPORATE INFORMATION

Directors B. A. Savage – Chairman R. J. O’Kee¨e (Irish) – Vice-Chairman B. Magunda (Ugandan) (appointed with e ect from 1 July 2018) – Managing Director/Chief Executive O¢cer B. J. Rewane – Non-Executive Director Z. Abdurrahman (Mrs.) – Non-Executive Director S.T. Dogonyaro OON – Non-Executive Director N. C. Edozien – (Ms.) Non-Executive Director O. O. Johnson – (Dr.) Non-Executive Director L. Breen (British) – Non-Executive Director M.D. Sandys (British) (appointed with e ect from 30 August 2017) – Non-Executive Director S.W. Njoroge (Kenyan) (appointed with e ect from 1 March 2018) – Executive Director Y. Ayeni (Mrs) (appointed with e ect from 1 September 2018) – Non-Executive Director R.C. Plumridge (British) (resigned with e ect from 31 October 2017)– Executive Director P. Ndegwa (Kenyan) (resigned with e ect from 30 June 2018) – Immediate Past MD/CEO J.O. Irukwu SAN (retired with e ect from 28 August 2018) – Non-Executive Director

Company Secretary Registrars and Transfer O™ce Registered O™ce Rotimi Odusola Veritas Registrars Limited The Ikeja Brewery 24, Oba Akran Avenue Plot 89A, Ajose Adeogun Street Oba Akran Avenue P.M.B. 21071 Ikeja Victoria Island, Lagos. P.M.B. 21071 Tel: (01) 2709100 www.veritasregistrars.com Ikeja, Lagos Registration No. RC 771 Independent Auditor Bankers PricewaterhouseCoopers Access Bank Plc Head O™ce (Chartered Accountants) Citibank Nigeria Limited 24, Oba Akran Avenue Landmark Towers Diamond Bank Plc P.M.B. 21071 Ikeja Plot 5B, Water Corporation Road First Bank of Nigeria Limited Tel: (01) 2709100 Victoria Island, Lagos First City Monument Bank Plc Fax: (01) 2709338 www.pwc.com/ng/en Guaranty Trust Bank Plc www.guinness-nigeria.com Stanbic IBTC Bank Plc Standard Chartered Bank Nigeria Limited Union Bank of Nigeria Plc United Bank for Africa Plc Zenith Bank Plc

Breweries Ogba Brewery Benin Brewery Aba Brewery Acme Road, Industrial Estate Ogba Benin-Asaba Road Osisioma Industrial Layout Tel: (01) 2709100 Oregbeni Industrial Estate Aba, Abia State Fax: (01) 2709338 Ikpoba Hill, Benin City Tel: (01) 2709100 Tel: (01) 2709100 Fax: (01) 2709338 Fax: (01) 2709338 7 8 CHAIRMAN’S STATEMENT 9 CHAIRMAN’S STATEMENT

INTRODUCTION is much lower due to increased Distinguished Shareholders, representatives of import substitution initiatives by large corporates and capital control regulatory agencies present, fellow directors, measures imposed by the Apex Bank. esteemed ladies and gentlemen. It is with great This culminated into Nigeria’s trade balance rebounding to a surplus pleasure that I welcome you all to the 68th Annual position after the deficit years of General Meeting of Guinness Nigeria Plc holding in 2015 and 2016 due to a plunge in oil our beautiful capital city; Abuja. I feel honored to prices. Inflation has also continued its downward trend which eased to present to you the Financial Statements and Reports 11.23% as at June 2018. for the financial year ended June 30, 2018 together Also, e¨orts to reform the business with a review of the performance of our Company environment during the year received during this period. a boost as the Federal Government surpassed its ease of doing business I would like to use this opportunity to thank our shareholders for the continued reform target of moving up 20 support to the Board and Management of the Company during the financial year places in World Bank’s Ease of Doing in spite of the harsh operating environment. I trust we can continue to count Business ranking in 2018. Nigeria on your support. Let me at this stage welcome the new Managing Director of moved up 24 places to 145th and Guinness Nigeria Plc, Mr. Baker Magunda who took over from the immediate ranked in the top 10 most improved past Managing Director, Mr. Peter Ndegwa. This will be the first Annual General countries. Meeting with our esteemed Shareholders that Baker will be attending since his appointment. I wish him the very best in his new role and I am confident that he THE BREWING INDUSTRY will steer our Company to greater heights. The poor consumer purchasing power in the country had a marked 2018 BUSINESS ENVIRONMENT e¨ect on the brewing industry. The business environment remained challenging in the 2018 financial year The beer market declined by 14% as several factors continue to inhibit consumer spending power. Nigeria’s in volume during the year, driven seemingly unending electricity crisis, the continued parlous state of by RTD, Stout and Lager which infrastructure and the general level of insecurity in the Country continue to declined by 29%, 15% and 11% have a negative e¨ect on the economy and the well-being of the people. The respectively. Looking at performance financial challenges of most state and local governments and the increasingly by categories, the premium category alarming rate of unemployment has culminated into a higher rate of poverty among the populace. These factors significantly put pressure on consumer disposable income during the year. I would like to use this In addition, the lingering security crisis in the North and Middle Belt of the country also significantly a¨ected the nation’s economic performance. The opportunity to thank year under review saw increased attacks by armed herdsmen and clashes with our shareholders farmers, replacing the Boko Haram as the main security threat in the nation. for the continued support to the Board On the bright side, in many respects, the period under review was a period of recovery for the Nigerian economy from the contractions in the economy in and Management 2016. Nigeria’s external reserves closed at $47.8bn in the middle of 2018, the of the Company highest level since 2013. Crude oil export proceeds maintained an upward during the financial trajectory, thanks to the relative stability in the Niger Delta, increased crude oil production and higher oil prices which rose to $79.4/b in the middle of 2018. year in spite of the Furthermore, net capital flow into the country also surged in the period under harsh operating review, thanks to the introduction of the Import and Export Foreign Exchange environment window by the Central Bank of Nigeria. Meanwhile, the domestic import bill 10 CHAIRMAN’S STATEMENT

grew consistently during this period. Similarly, the value category has shown consistent growth.

The Malted soft drinks market lost 27.4% and 19.4% in volume and value respectively during the year. Looking at the categories, the value category grew volume share (+2.4pts) at the expense of mainstream & premium (-1.4pts and -0.9pts respectively) in the 2018 financial year.

OUR PERFORMANCE and therefore commenced the campaign is a global initiative Despite the continued decline of production of Dubic Malt, Orijin Zero promoted by Diageo where road the beer market, the challenging and Malta Guinness in PET bottles. users make a pledge not to drink business environment and the Also, during the year, we introduced and drive. In addition to the above intense competition in the industry, 2 new products namely; Tappers and support to the FRSC, during the the strength of our brands and Royal Kingdom Lager. I am happy year, our Company also donated 2 Guinness Nigeria Plc’s adoption of to inform you that these 2 products additional modern breathalysers to a Total Beverage Alcoholic strategy are currently delivering impressive the FRSC to support its objective of has led to a 14% increase in turnover volumes. stemming road accident caused by during the financial year. The Board drinking while driving. and Management are reasonably CORPORATE SOCIAL confident that the strategic initiatives RESPONSIBIITY Also, Guinness Nigeria Plc signed a being introduced, our continued As an alcoholic beverage Company, Memorandum of Understanding with investment in our brands and people we recognize the need to promote the National Youth Service Corps and the focus to revolutionize our responsible consumption of alcohol. (NYSC) to promote the responsible distribution channels will continue to To this end, during the year, our consumption of alcohol. Through deliver growth for the business in the Company continued its partnership this partnership, responsible coming years. with the Federal Road Safety Corps drinking training sessions have been (FRSC) in promoting safe drinking conducted in NYSC orientation Your Company recorded a profit habits using our flagship responsible camps across the country and after tax of N6.72bn which represent drinking programme called the our youth corpers are now better a 249% increase in profit over the ‘Ember Months’ Campaign. We took educated on the responsible preceding year. The Board has this campaign to popular motor consumption of alcohol where they proposed a dividend per share of parks in some major cities where choose to drink. 184 Kobo which represents 318% commercial vehicle drivers and increase in dividend paid in the other road users were educated on Guinness Nigeria Plc continues to previous financial year. the perils of drinking while driving conduct its business in a socially and how to drink responsibly. The responsible manner and also INNOVATION highlight of the Ember Months’ increasingly contributes to the During the year under review, Campaign was the visit of the communities in which it operates. Guinness Nigeria Plc continued to international football superstar, In March 2018, in furtherance of our innovate by committing resources Thierry Henry to the Ojota Motor Water of Life Program, Guinness to develop brands and innovations Park, Lagos at our invitation where Nigeria Plc partnered with Wateraid thereby necessitating increased he joined o¢cials of the FRSC, to implement a Water Hygiene marketing investments. In line commercial bus operators, road and Sanitation Scheme (WASH) with our innovation agenda, we users and other stakeholders at intervention in communities in commissioned in May 2018 a PET the launch of a new campaign, Kebbi State. This project will provide production line at the Ogba Brewery #JoinThePact. The #JoinThePact these communities with year- 11 CHAIRMAN’S STATEMENT

round access to safe drinking water. Our support to our host communities also We are confident that the strategies continued under the Guinness Nigeria Plc Learning for Life programme and the being adopted by the Board and sponsorship of Indigent students to the Institute of Industrial Technology (IIT), Management will sustain our Lagos. The Guinness Eye Hospital in Onitsha was renovated during the year at profitability and create value for a cost of N5 Million. Also, Guinness Nigeria Plc supported the purchase of an our shareholders. I would like to Optical Coherence Tomography machine for the Guinness Eye Centre at the acknowledge the role played by Lagos University Teaching Hospital (LUTH). our business partners namely our esteemed customers- distributors, In line with Guinness Nigeria Plc’s commitment to support the Federal wholesalers and retail outlets, and Government’s local content agenda and to build sustainable thriving thank them for all their support. We communities, Guinness Nigeria Plc has developed a programme to partner look forward to continuing mutually with several stakeholders to develop the value chain for sorghum, an important beneficial relationship with them. input material for our production. This intervention involves partnering with 5,121 smallholder farmers across eight (8) States in Nigeria in 2018. These CONCLUSION farmers were provided with access to finance, certified seeds, unadulterated In conclusion, I would first like to inputs, mechanization, training on good agronomic practices, training on basic thank our distinguished shareholders book keeping, extension support and access to market. It is expected that this for their unwavering support and intervention will improve the livelihoods of these farmers and their families by commitment over the past year. moving them from subsistence level to full economic inclusion. I would also like to thank our customers and key business partners OUR PEOPLE who stood with us during this tough We believe strongly in people and recognize that our employees are our greatest period and on our journey to return asset. We invest in our people and we are committed to continually developing the business back to profitability world class talent. Guinness Nigeria Plc’s membership of the Diageo Group has as reflected in the results we have increasingly enabled our world class talent take up senior strategic leadership reported for this financial year. roles in sister Diageo markets in Africa and beyond. I would like to make specific mention of the fact that two of our brightest talents during the course of the Finally, I want to thank my fellow financial year were appointed Finance & Strategy Director and Commercial directors, the management team Director of Diageo’s businesses in Uganda and Ghana markets respectively. and our hardworking and talented employees for their unrelenting I believe this is the beginning of many such appointments for our employees and dedication and commitment to I would like to commend and thank our parent company, Diageo plc for their the Company. I thank you for your continued and unwavering belief in Nigeria and investment in the Company and hard work, innovation and passion its talented people. that saw the Company through this challenging period and the return to THE FUTURE profitability. Despite the marked improvement in Nigeria’s ranking in the Ease of Doing Business Index published yearly by the World Bank, the business environment God bless the Federal Republic of remains challenging. Government is however working assiduously through Nigeria and God bless Guinness the Presidential Enabling Business Environment Council (PEBEC) to improve Nigeria Plc. the business environment. We hope that the activities of PEBEC will translate into a more conducive business environment in the near future. Also, the Thank you and God bless you all. Federal Government’s increased spend on capital projects across the country will hopefully have a positive e¨ect on general economic activities and boost consumers’ disposable income. In the long-term, we hope that structural issues which include infrastructural deficits, system ine¢ciencies and holistic policy reforms required to restore growth to faster than the pre-2015 levels are carried out by the government. Babatunde Savage, FCA Chairman, Board of Directors In Guinness Nigeria Plc, we are continually innovating and strengthening our Guinness Nigeria PLC brands to ensure that they are the preferred choice in every product category. 12 13 14 15 DIRECTORS’ REPORT

The Directors are pleased to present to members their report together with the financial statements of Guinness Nigeria Plc (the Company) for the year ended 30 June 2018.

Legal Form and Principal Activities Guinness Nigeria Plc, a public limited liability company quoted on the Nigerian Stock Exchange was incorporated 29 April 1950 as a trading company importing Guinness Stout from Dublin. The Company has since transformed into a manufacturing operation and its principal activities continue to be brewing, packaging, marketing and selling of Guinness Foreign Extra Stout, Guinness Extra Smooth, Malta Guinness, Malta Guinness Herbs Lite, Harp Lager, Smirno¨ Ice, Satzenbrau Lager, Dubic Malt, Snapp, Master’s Choice, Orijin Spirit Mixed Drink, Orijin Bitters, Smirno¨ Ice Double Black with Guarana, Guinness Africa Special, Orijin Zero, Tappers and Royal Kingdom Lager.

Following the approval of the Board of Directors (the Board), Guinness Nigeria Plc acquired the rights to import, market, distribute and sell in Nigeria the International Premium Spirit brands of Diageo plc (“Diageo”), its parent company with e¨ect from 1st January 2016. The Company now has exclusive distribution rights to Diageo’s iconic brands in Nigeria including Baileys, Smirno¨, Gordons, Captain Morgan, Tanquaray, Ciroc and the Johnnie Walker range. Guinness Nigeria Plc installed Polyethylene terephthalate (PET) production lines and commenced production and sale of products in PET format in the 2018 financial year. It currently produces Malta Guinness, Orijin Zero and Dubic Malt in PET formats.

Guinness Nigeria Plc also acquired the right to manufacture locally some of the most successful mainstream spirits brands in Nigeria that are part of Diageo brands including Smirno¨ Vodka and Gordons Gin. Our relationship with Diageo has also enabled us acquire the right to import, market, sell as well as the right to produce locally McDowell’s and Royal Challenge whiskey in Nigeria. This exciting new portfolio of fantastic brands makes Guinness Nigeria Plc the only Total Beverage Alcohol (TBA) business in Nigeria with the experience and capacity to cater for the needs of all consumer segments and delivering great value to its shareholders.

Operating Results The following is a summary of the Company’s operating results

2018 2017 =N=’000 =N=’000

Revenue 142,975,792 125,919,817 Operating profit 13,386,248 10,186,330 Net finance costs (3,443,084) (7,524,249) Profit before taxation 9,943,164 2,662,081 Tax expense (3,225,559) (738,361) Profit for the year 6,717,605 1,923,720 Other comprehensive income, net of tax (32,584) (35,333) Total comprehensive income for the year 6,685,021 1,888,387

Dividend The Directors recommend, subject to approval at the next Annual General Meeting, the payment of a final dividend of N4,031 million (2017: N964 million), which, based on the number of ordinary shares in issue on 30 June 2018, represents a dividend of 184 kobo per ordinary share (2017: 64k). The dividend is subject to deduction of withholding tax at the applicable rate.

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Rights Issue Following shareholders’ approval at the Extra Ordinary General Meeting of the Company held on 24 January 2017, Guinness Nigeria Plc undertook a Rights Issue of 684,494,631 Ordinary Shares of 50 kobo each at N58 per share on the basis of 5 new ordinary shares for every 11 ordinary shares held as at the close of business on 15 March 2017. The O¨er opened on 24 July 2017 and closed on 30 August 2017. The Board of Directors is pleased to inform our esteemed Shareholders that the Rights Issue was oversubscribed by 116%. On 22 September 2017, the Board approved the allotment of 684,494,631 Ordinary Shares of 50 kobo each and these shares were listed on the Nigerian Stock Exchange on 25 October 2017, thus increasing the issued share capital of the Company to N1,095,191,410 (2017: N752,944,094) divided into 2,190,382,819 ordinary shares of 50k each (2017: 1,505,888,188 ordinary shares).

Board Changes Since the last Annual General Meeting, Messrs Ronald Plumridge and Peter Ndegwa resigned from the Board. Also Prof. Joseph Irukwu, SAN retired from the Board after 22 years of meritorious service. On your behalf we wish to thank them for their contributions to the Company during their tenures. Mr. Stanley Njoroge was appointed to the Board as the Finance and Strategy Director and an Executive Director while Mr. Baker Magunda was appointed by the Board as the Managing Director/CEO and an Executive Director. Mrs Yemisi Ayeni was also recently appointed to the Board as a Non-Executive Director, bringing with her a wealth of experience that compliments the strength of the Board.

In accordance with the Articles of Association of the Company and the provisions of the Companies and Allied Matters Act, Messrs Stanley Njoroge and Baker Magunda and Mrs Yemisi Ayeni will retire at the forthcoming Annual General Meeting and, being eligible, hereby o¨er themselves for re-election.

The Directors to retire by rotation are Amb. Sunday Dogonyaro, Dr. Omobola Johnson and Ms. Ngozi Edozien and, being eligible, hereby o¨er themselves for re-election.

Record of Directors’ Attendance The register showing directors’ attendance at Board Meetings will be made available for inspection at the Annual General Meeting as required by Section 258(2) of the Companies and Allied Matters Act.

Directors and their interests The interests of Directors in the issued share capital of the Company during the financial year as recorded in the Register of Members and/or notified by the Directors for the purpose of Section 275 of the Companies and Allied Matters Act and in compliance with the listing requirements of the Nigerian Stock Exchange are as follows:

As at As at Role 30 June 2018 30 June 2017 No. of shares No. of shares

B.A. Savage Chairman 650,000 601,263 R. J. O’Kee¨e Vice-Chairman Nil Nil B. Magunda (appointed with e ect from 1 July 2018) Managing Director/CEO Nil Nil B. J. Rewane Non-Executive Director 25,384 17,452 Z. Abdurrahman Non-Executive Director Nil Nil Amb. S. T. Dogonyaro Non-Executive Director Nil Nil Omobola Johnson (Dr) Non-Executive Director Nil Nil Ngozi Edozien (Ms.) Non-Executive Director Nil Nil Mr. Leo Breen Non-Executive Director Nil Nil Mr. Mark Sandys (appointed with e ect from 30 August 2017) Non-Executive Director Nil Nil S.W. Njoroge (appointed with e ect from 1 March 2018) Executive Director Nil Nil Mrs Yemisi Ayeni (appointed with e ect from 1 September 2018) Non-Executive Director Nil Nil J. O. Irukwu (retired with e ect from 28 August 2018) Non-Executive Director 725,712 503,530 P. Ndegwa (resigned with e ect from 30 June 2018) Executive Director 232,000 232,000 R. C. Plumridge (resigned with e ect from 31 October 2017) Executive Director Nil Nil

No Director has an indirect shareholding in the Company DIRECTORS’ REPORT 17

Directors’ Interest in Contracts None of the directors has notified the Company for the purpose of Section 277 of the Companies and Allied Matters Act of any declarable interest in contracts in which the Company is involved.

Shareholding and Substantial Shareholder The issued and fully paid-up share capital of the Company is 2,190,382,819 ordinary shares of 50 kobo each (2017:1,505,888,188 ordinary shares of 50 kobo each). The Register of Members shows that only one company, Guinness Overseas Limited (a subsidiary of Diageo plc) with 1,099,230,804 ordinary shares (2017: 699,892,739 ordinary shares) and 50.18% shareholding (2017: 46.48% shareholding) held more than 10% interest in the Company. Diageo plc also owns another shareholder of the Company, Atalantaf Limited with 171,712,564 ordinary shares (2017: 118,052,388 shares) and a shareholding of 7.84% (2017: 7.84%). Total shareholding of Diageo plc was 58.02% at year-end (2017: 54.32%).

Corporate Governance Report 2. Composition of the Board of Directors and Procedure for Board Appointments In Guinness Nigeria Plc, our actions and interactions with During the financial year 2018, the our consumers, customers, employees, government Board consisted of the Chairman, oŽcials, suppliers, shareholders and other stakeholders 9 non-executive directors and reflect our values, beliefs and principles. 2 executive directors. The non- executive directors are independent Our business is largely self-regulated and we pride ourselves as leading our of management and are free from peers in the industry and Nigeria in this regard. In addition to self-regulation at any constraints, which may materially standards often above the minimum legal or regulatory requirements, we are a¨ect the exercise of their judgement committed to conducting business in line with best practice, in accordance with as directors of the Company. applicable laws and regulations in Nigeria, in line with the requirements of the Nigerian Stock Exchange as well as in compliance with the Code of Corporate All directors are selected on the Governance in Nigeria. basis of core competencies that strengthens the capacity of the To further sustain our commitment to ethical business standards, values of Board including experience in integrity, honesty and fairness, as well as good corporate governance, Guinness marketing, general operations, Nigeria Plc signed up to the Convention on Business Integrity in September strategy, corporate governance 2011. The Board and the Company also participated fully in and successfully and compliance, human resources, completed all the requirements for certification on the Corporate Governance technology, media or public relations, Rating System (CGRS) implemented by the Nigerian Stock Exchange. The finance or accounting, retail, Company has thus made significant progress on the path to being listed on the consumer products, international NSE Premium Board. business/markets, logistics, product design, merchandising or experience The Company complied with other corporate governance requirements during as a Managing Director or Finance the year under review as set out below: Director. In addition to having one or more of these core competencies, 1. Board of Directors candidates for appointment The Board is responsible for the oversight of the business, long-term strategy as Directors are identified and and objectives, and the oversight of the Company’s risks while evaluating and considered on the basis of directing implementation of Company controls and procedures including, knowledge, experience, integrity, in particular, maintaining a sound system of internal controls to safeguard diversity, leadership, reputation, and shareholders’ investments and the Company’s assets. There are currently four ability to understand the Company’s (4) regularly scheduled Board meetings during each financial year, and the Board business. meets whenever required to ensure the discharge of its functions. 18

3. Separation of the positions of iii. Financial reporting and controls Chairman and Managing Director • Approval of preliminary announcements of interim and final results. The positions of the Managing • Approval of the annual report and accounts, including the corporate Director and that of the Chairman of governance statement. the Board are occupied by di¨erent • Approval of the dividend policy. persons and the Managing Director • Declaration of the interim dividend and recommendation of the final is responsible for implementation of dividend. the Company’s business strategy and • Approval of any significant changes in accounting policies or practices. the day-to-day management of the • Approval of treasury policies including foreign currency exposure. business. iv. Internal controls 4. Schedule of Matters Reserved Ensuring maintenance of a sound system of internal control and risk for the Board management including: The following are the matters • receiving reports from the Finance and Risk Committee and reviewing the reserved for the Board of Directors of e¨ectiveness of the Company’s risk and control processes to support its the Company: strategy and objectives; • undertaking an annual assessment of these processes through the Finance i. Strategy and management and Risk Committee; and • Input into the development of the • approving an appropriate statement for inclusion in the annual report. long-term objectives and overall commercial strategy for the v. Contracts Company. • Major capital projects. • Oversight of the Company’s • Contracts which are material strategically or by reason of size, entered operations. into by the Company in the ordinary course of business, for example bank • Review of performance in the borrowings and acquisitions or disposals of fixed assets of amounts above light of the Company’s strategy, the threshold reserved for executive directors under the Schedule of Limits objectives, business plans and and Authorities. budgets and ensuring that any • Contracts of the Company (or any subsidiary) not in the ordinary course of necessary corrective action is business, for example loans and repayments; foreign currency transactions taken. and; major acquisitions or disposals of amounts above the thresholds • Extension of the Company’s reserved for Executive directors under the Schedule of Limits and activities into new business or Authorities. geographic areas. • Major investments including the acquisition or disposal of interests of more • Any decision to cease to operate than five (5) percent in the voting shares of any company or the making of all or any material part of the any takeover o¨er. Company’s business. vi. Communication ii. Structure and capital • Approval of resolutions and corresponding documentation to be put forward • Changes relating to the to shareholders at a general meeting. Company’s capital structure • Approval of all circulars and listing particulars (approval of routine documents including reduction of capital, such as periodic circulars about scrip dividend procedures or exercise of share issues (except under conversion rights could be delegated to a committee). employee share plans) and share • Approval of press releases concerning matters decided by the Board. buy backs. • Major changes to the Company’s vii. Board membership and other appointments corporate structure. • Changes to the structure, size and composition of the Board, following • Changes to the Company’s recommendations from the Governance and Remuneration Committee. management and control • Ensuring adequate succession planning for the Board and senior structure. management following recommendations from the Governance and • Any changes to the Company’s Remuneration Committee. listing or its status as a publicly • Appointments to the Board, following recommendations by the Governance listed company. and Remuneration Committee. • Approval of appointment of the Chairman of the Board following DIRECTORS’ REPORT 19

recommendations by the Governance and Remuneration Committee. The Governance and Remuneration • Appointment of non-executive directors including independent directors Committee is in charge of evolving following recommendations by the Governance and Remuneration a continuing education programme Committee. to ensure existing directors stay • Membership and Chairmanship of Board Committees. current with the Company’s business • Continuation in o¢ce of directors at the end of their term of o¢ce, when and objectives as well as relevant they are due to be re-elected by shareholders at the Annual General Meeting industry information and other and otherwise as appropriate. external factors such as corporate • Continuation in o¢ce of non-executive directors at any time. governance requirements and best • Appointment or removal of the company secretary following practices. As part of the programme, recommendations by the Governance and Remuneration Committee. directors are encouraged to • Appointment, reappointment or removal of the external auditor to be put to periodically attend appropriate shareholders for approval, following the recommendation of the Finance and continuing education seminars Risk Committee. or programmes which would be beneficial to the company and the viii. Remuneration directors’ service on the Board. • Approval of the remuneration policy for the directors, company secretary and other senior executives following recommendations by the Governance 6. Performance Evaluation process and Remuneration Committee. The Governance and Remuneration • Approval of the remuneration of the non-executive directors, subject to the Committee oversees a formal Articles of Association and shareholder approval as appropriate following evaluation process to assess the recommendations by the Governance and Remuneration Committee. composition and performance of • The introduction of new share incentive plans or major changes to existing the Board, each Committee, and plans, to be put to shareholders for approval following recommendations by each individual director on an annual the Governance and Remuneration Committee. basis. The assessment is conducted to ensure the Board, Committees, ix. Delegation of authority and individual members are e¨ective • The division of responsibilities between the Chairman and the Chief and productive and to identify Executive O¢cer, which should be in writing. opportunities for improvement. • Approval of terms of reference of Board Committees. • Receiving reports from Board Committees on their activities. As part of the process, each member completes a detailed and x. Corporate governance matters thorough questionnaire and each • Undertaking a formal and rigorous review of its own performance, that of its member also participates in an oral Committees and individual Directors. interview/conversation session • Determining the independence of directors. as a follow up to the completion • Considering the balance of interests between shareholders, employees, of the questionnaires. The results customers and the community. are aggregated and summarized • Review of the Company’s overall corporate governance arrangements. for discussion purposes however; • Receiving reports on the views of the Company’s shareholders. individual responses are not attributed to any member and are 5. Induction and Training kept confidential to ensure honest The Company has in place a formal induction program for newly appointed and candid feedback is received. directors. As part of this induction, each new director is provided with core The Governance and Remuneration materials and asked to complete a series of introductory meetings to become Committee reports annually to knowledgeable about the Company’s business and familiar with the senior the full Board with result of the management team. Newly appointed directors are also conducted round evaluation exercise. Directors will not the production facilities of the Company to gain first-hand knowledge of be nominated for re-election unless the production process and the emphasis placed on health and safety by the it is a¢rmatively determined that the Company. Director is substantially contributing to the overall e¨ectiveness of the Board.

20

A summary of the Board Performance Evaluation in the 2018 financial year is that the Board is comprised of highly experienced and e¨ective individuals and they are conversant with their oversight functions. The Chairman of the Board has fostered an environment that encourages and supports the active participation and contribution of Board members at meetings. The Board takes its oversight functions very seriously, is committed to the business of the Company and detailed level of thoroughness goes into every decision taken and policy generated by the Board. It was however noted that there is room for improvement in the area of continuous capacity development for Directors. The recommendations of the performance evaluation has been considered by the Board and are being implemented as required.

7. Attendance at Board Meetings The Board held four (4) meetings during the 2018 financial year. The following table shows the membership and attendance of directors at Board meetings during the 2018 financial year:

S/N Directors 30/08/17 30/08/17 25/10/17 29/01/18 26/04/18 Total No. of Meetings attended

1 B. A. Savage P P P P 4 2 R. J. O’Kee¨e P P P P 4 3 P. Ndegwa P P P P 4 4 J. O. Irukwu P P P P 4 5 B. J. Rewane P P P P 4 6 Z. Abdurrahman P P P P 4 7 S. T. Dogonyaro P P P P 4 8 Ngozi Edozien (Ms.) P P P P 4 9 Omobola Johnson (Dr) P P P P 4 10 Leo Breen P P P P 4 11 Mark Sandys P P P P 4 12 Stanley Njoroge NYA NYA NYA P 1 13 R. C. Plumridge P P LTB LTB 2 P – Present | NYA – Not Yet Appointed | LTB– Left the Board

8. Board Committees As at the date of this report, the Company has in place, the following Board Committees:

a. Executive Committee This is a Committee comprising of the Executive Directors and all members of the Guinness Nigeria Leadership Team/ the Executives of the Company who are, from time to time vested with delegated responsibility for all businesses, which should be dealt with expeditiously and are not of such a nature as to necessitate consideration by a full meeting of the Directors. In particular, the Committee exercises the approval powers delegated by the Board of Directors in the Company’s Schedule of Limits and Authorities in between meetings of the Board of Directors. The activities of the Committee are reported to the Board at its next scheduled meeting for notice and/or ratification as appropriate.

b. Governance and Remuneration Committee Among other responsibilities, the Governance and Remuneration Committee is charged with instituting a transparent procedure for the appointment of new Directors to the Board and making recommendations to the Board regarding the tenures and re-appointment of Non-Executive Directors on the Board. The Committee provides a written report highlighting its deliberations and recommendations to the Board on a quarterly basis.

The Committee comprised of the following members during the financial year: Mr. R. J. O’Kee¨e - Chairman Amb. S.T. Dogonyaro - Committee Vice Chairman P. Ndegwa - Member (resigned with e¨ect from 30 June 2018) Mrs. Z. Abdurrahman - Member

DIRECTORS’ REPORT 21

The Committee met four (4) times during the year. The following table shows the attendance of the members of the Committee at the meetings:

Directors 25/08/17 24/10/17 23/01/18 25/04/18 Total No. of Meetings Attended

1 R. J. O’Kee¨e P P P P 4 2 Amb. S.T. Dogonyaro P P P P 4 3 P. Ndegwa P AWA P P 3 4 Mrs. Z. Abdurrahman P P P P 4 P – Present | AWA – Absent with Apology

c. Finance and Risk Committee The Finance and Risk Committee is responsible for monitoring the integrity of the financial statements of the Company and reviewing the e¨ectiveness of the Company’s internal control and risk management system, among others. The Committee comprises five (5) non-executive directors selected to provide a wide range of financial, commercial and international experience. Members of the Committee who served during the year are:

J. O. Irukwu, SAN - Chairman B. J. Rewane - Member N. Edozien - Member Dr O. O. Johnson - Member L. Breen - Member

The Committee met four (4) times during the year. The following table shows the attendance of the members of the Committee at the meetings:

S/N Directors 28/8/2017 20/10/2017 26/01/2018 23/04/2018 Total No. of Meetings Attended

1 J. O. Irukwu P P P P 4 2 B. J. Rewane P P P P 4 3 N. Edozien P P P P 4 4 O. O. Johnson P P P P 4 5 L. Breen P P P AWA 3 P – Present | AWA – Absent with Apology

Each of the Committee’s meetings was attended by the Finance and Strategy Director, the Financial Controller, the Head, Controls, Compliance and Ethics, the Legal Director and the Head of Corporate Security and Brand Protection; and each provided updates and assurances to the committee on the adequacy of the actions being taken to mitigate any risks identified in the areas of the business they are responsible for. The engagement partner of the external auditors, PwC was also present with other key members of his team. Other senior management members are invited to brief the Committee on agenda items related to their areas of responsibilities.

During the year, the Committee reviewed the Company’s quarterly financial reports, the annual report and accounts and the management letter before recommending their approval to the Board. The Committee also reviewed the critical accounting policies, judgements and estimates applied in the preparation of the financial statements.

Similarly, the Committee reviewed reports on significant tax risks, management of the risk of fraud, risks relating to the general or regional elections held during the financial year, other current and emerging risk issues a¨ecting the 22

Company’s operations, as well as the related controls and assurance processes designed to manage and mitigate such risks. This is in addition to receiving regular updates on the Company’s controls and governance environment.

The Committee reviews the plans of both the internal and external auditors and approves the plans at the beginning of the financial year.

The Board was kept updated and informed at its regular quarterly meetings of the activities of the Finance and Risk Committee through the minutes of the Committee and verbal updates provided to the Board by the Chairman of the Committee which is included as a regular item on the agenda of Board meetings.

d. Audit Committee The Company has a statutory Audit Committee set up in accordance with the provisions of the Companies and Allied Matters Act. It comprises of a mixture of non-executive directors and ordinary shareholders elected at the Annual General meeting. It evaluates annually, the independence and performance of external auditors, receives the interim and final audit presentation from the external auditors and also reviews with management and the external auditors the annual audited financial statements before its submission to the Board. During the year, the Committee reviewed and approved the audit plan and scope of the external auditors for the financial year and reviewed quarterly and half yearly financial results before presentation to the Board. The Committee also makes recommendations to the Board on the appointment and remuneration of external auditors and received reports from management on the accounting system and internal controls framework of the Company. The members of the statutory Audit Committee during the 2018 financial year are as follows:

N. Okwuadigbo - Chairman/Shareholder G. O. Ibhade - Shareholder M. O. Igbrude - Shareholder Z. Abdurrahman - Non-Executive Director Dr. O. O. Johnson - Non-Executive Director L. Breen - Non-Executive Director

The Committee met four (4) times during the year. The following table shows the attendance of the members of the Committee at the meetings:

28/8/2017 20/10/2017 26/01/2018 23/04/2018 Total No. of Meetings Attended

1 Mazi N. Okwuadigbo P P P P 4 2 M. O. Igbrude P P P P 4 3 G. O. Ibhade P P P P 4 4 L. Breen P P P P 4 5 Z. Abdurrahman P P P P 4 6 O.O. Johnson P AWA P P 3

P – Present | AWA – Absent with Apology

9. Code of Business Conduct and Code of Governance for Directors As a member of the society in which we operate, we are not just interested in being the best performing consumer products Company, we are equally committed to our ambition to become the most trusted and respected business in Nigeria.

The Company has a Code of Business Conduct (COBC) which is based on our purpose and values as an organisation. At the heart of our COBC is a culture of “Acting with Personal Integrity” at all times as we engage with internal and external stakeholders. The COBC is applicable to all employees, directors and business partners of the Company. Our COBC covers salient topics which include Health, Safety and Personal Security, Bribery and Corruption, Responsible Drinking, Money Laundering, Discrimination and Human DIRECTORS’ REPORT 23

Rights, Information Management and Security, Quality, Insider trading, Conflict of risk for Diageo hence changes in the Interest, Competition and Anti-Trust, Data Privacy, Relationships with customers, organisation during the year were suppliers and other business partners, External Communications and social media carefully managed to ensure our robust amongst others. control environment and assurance programme is not impacted. We apply the principles of fairness, integrity and transparency in all our business dealings as entrenched in our COBC and in line with international best practices. There remains a regular review and Training, awareness and communication programmes as well as compliance monitoring of the overall risk and monitoring mechanisms are in place to ensure that all relevant stakeholders remain control environment of the business by aware of and comply with the provisions of our COBC and policies.During the year, the Risk Management Committee and like in the past, we sustained continuous engagements with our people (contractors by the Finance and Risk Committee of and employees) in building understanding of our Code and Corporate Governance the Board; and implementation of Crisis principles and to further embed our ethical standards in their daily activities. This Management and Business Continuity way, we expect that they will choose to do the right thing every day and everywhere. Plans which are regularly tested for Key policies covered in these engagements are Anti-Bribery and Corruption, Health e¨ectiveness. and Safety, Competition and Anti-Trust, Responsible Drinking, Conflict of Interest Declaration and Data Privacy. Our employees and contractors also completed 11. Dealings in Securities Code mandatory policy trainings rolled out by Diageo and signed up to our Annual In line with relevant legal and regulatory Certificate of Compliance. provisions, the Board approved a Dealings in Securities Code (DSC), We also seek to create a culture in which employees feel comfortable raising which prescribes a code of behaviour concerns about potential breaches of our COBC or policies. We expect anyone by directors and senior employees, who comes across a breach to report it immediately, either through our confidential as well as those in possession of whistleblowing helpline SpeakUp, to their Line Manager, to a member of the Controls, market sensitive information relating Compliance & Ethics team, the Human Resources or Legal team. Our approach to to the Company. A¨ected persons breach management is embedded in the Diageo Breach Management Standard and are prohibited from dealing in the our local Disciplinary Policy. All allegations are taken seriously and those that require Company’s securities during closed action are investigated and addressed promptly. We monitor breaches to identify periods and are mandated to obtain trends or common areas where further action may be required. consent to deal from appropriate senior executives of the Company. 10. Statement of Company’s Risk Management Policies and Practices The company secretary, who is the The Board of Directors has the responsibility of ensuring the maintenance of a sound designated Code Manager tasked with system of internal control and risk management which it does through its Finance ensuring adherence to the provisions of and Risk Committee. In compliance with the requirements of the Code of Corporate the DSC, regularly issues Closed Period Governance issued by the Securities and Exchange Commission in 2011 and as may Notifications to Directors, employees be revised from time to time, Management provided assurance to the Board during and other relevant persons under the the financial year that the risk management control and compliance systems in DSC. Guinness Nigeria Plc are operating e¢ciently and e¨ectively.

Guinness Nigeria Plc’s approach to risk management is in line with Diageo’s Global Risk Management Standard. On an annual basis, we undertake a holistic risk assessment to identify top internal and external existing or emerging risks which are thereafter ranked based on their likelihood of occurrence and their impact to the business. These risks are assigned to owners who are then tasked with ensuring that robust plans are in place to mitigate these risks. These risks and mitigation plans are reviewed on a bi-monthly basis at the Risk Management Committee (RMC) meeting which is chaired by the Managing Director and comprise the heads of functions and other extended leadership team members.

We have continued to sustain a strong control programme through our Controls Assurance and Risk Management (CARM) framework, which also ensures Guinness Nigeria Plc complies with the Sarbanes Oxley Act 2002. Embedding change is a top 24

Sustainability Report

Guinness Nigeria Plc’s sustainability strategy is fully aligned with Diageo’s global strategy and is underpinned by 3 main pillars namely: Leadership in Alcohol in Society, Building Thriving Communities and Reducing our Environmental Impact in the communities where we live and work. Other areas of social and environmental impact are the Guinness Eye Hospitals, our Undergraduate Scholarship schemes and our flagship Water of Life initiative.

Our aim is to be recognised as the best performing, most trusted and respected brand In Nigeria and we understand that to achieve this we need to deliver on our sustainable development commitments.

In the year ended 30 June 2018, we implemented a variety of initiatives that helped us advance our Sustainable Development strategy in Nigeria.

LEADERSHIP IN ALCOHOL IN SOCIETY At Guinness Nigeria Plc we recognise that, when consumed moderately and responsibly by adults who choose to drink, alcohol can be part of a balanced lifestyle and play a positive role in social occasions and celebrations. We are however cognizant of the risks associated with the misuse and abuse of alcohol, therefore we deliver a variety of initiatives which promote a culture in which adults who choose to drink alcohol, do so responsibly.

with the Federal Road Safety Corp (FRSC) is aimed at creating awareness and We work in partnership with enlightening commercial motorists and the general public on the dangers governments, individuals, non- of drinking alcohol while driving. In 2018, we visited popular motor parks in governmental organisations and Lagos, Benin and Abuja to give talks and share information in local languages other companies to tackle the with commercial vehicle drivers, transporters and motorcycle operators on the misuse of alcohol including excessive negative consequences of drink-driving and how to drink responsibly. drinking, drink-driving, and underage

drinking. We also adhere strictly to The high point of the 2018 Ember Months’ campaign was held at Ojota Motor the Diageo Marketing Code and local Park with Thierry Henry the famous footballer, who was in Nigeria as part of the guidelines that ensure our brands are Guinness’ Made of Black campaign. He joined o¢cials of the Federal Road Safety advertised and marketed responsibly. Corps (FRSC) and other partners and a large crowd of transporters and road

users at the event where a new campaign, #JoinThePact was launched. The Annual Ember Months’ Responsible #JoinThePact campaign is a global initiative that Diageo introduced over 9 years Drinking Campaign ago for people to make a pledge not to drink and drive. Our flagship responsible drinking

programme called the Ember Guinness Nigeria Plc has been running the Ember Months’ campaign in Months’ campaign in partnership partnership with the Federal Road Safety Corps for 13 years and it has evolved DIRECTORS’ REPORT 25 into an impactful platform, making it possible for both parties to jointly spread life-changing responsible drinking messages that potentially reach millions of Nigerians every year.

DRINKPositive Campaign The DRINKPositive campaign which held in January 2018 is an internal awareness drive amongst employees of Guinness Nigeria Plc. The aim of the campaign was to leverage the role of employees to connect with our value of promoting moderation and tackling harm that results from irresponsible consumption of alcohol. Guinness Nigeria Plc has a proud heritage of striving to ensure people have positive experiences with alcohol. During the DRINKPositive campaign employees were encouraged to share stories about how they, through their roles, help consumers to DRINKPositive by sharing tips on how people can make informed choices about drinking, or not drinking.

Donation of Breathalysers In March 2018, Guinness Nigeria Plc donated 2 modern breathalysers to the Federal Road Safety Corps as part of our e¨orts in promoting safety on our roads. The donation of these state of the art alcohol testing kits is part of our e¨orts towards safeguarding motorists and other road users by stemming the tide of accidents caused by drink-driving. This donation brings to four (4) the total number of breathalysers that have been donated by Guinness Nigeria Plc to support the work of the FRSC.

Promoting Responsible Consumption by Partnering the National Youth Service Corps (NYSC) In 2018, Guinness Nigeria Plc signed a Memorandum of Understanding with the National Youth Service Corps. The MoU marked the beginning of Guinness Nigeria Plc’s partnership with the NYSC on programmes that promote the responsible consumption of alcohol. In line with the MoU, Guinness Nigeria Plc trained NYSC Desk O¢cers drawn from Nigeria’s 36 states and the FCT. These Desk O¢cers have in turn delivered responsible drinking training sessions in NYSC orientation camps across the country. Corps members trained as part of this scheme have so far organised many responsible drinking outreach programmes using the DRINKiQ resource materials in communities across the country. DRINKiQ is Diageo’s global responsible drinking resource, providing information, tools and resources to help people better understand the role of alcohol as part of a balanced lifestyle and to make informed choices about drinking - or not drinking. www.DRINKiQ.com was first introduced in 2008 when Diageo led the industry in launching a responsible drinking website.

Preventing Underage Drinking - SMASHED In February 2018, Guinness Nigeria Plc partnered with Rue 14 studios, a leading theatre and arts company to launch the SMASHED initiative for the first time in Nigeria. Smashed is a Diageo plc initiative targeted at tackling the issue of underage drinking amongst youth using drama and interactive educational tools. The initiative is aimed at enabling students understand the facts, causes, and consequences surrounding alcohol misuse and under-age drinking. It was launched in the UK more than a decade ago and has now been delivered in 15 countries around the world. The pilot program in Nigeria involved 28 government and private schools in Lagos State and reached over 6000 students and teachers in classes SS1 – SS 3. 26

BUILDING THRIVING SOCIETIES Our Breweries are located at the heart of the communities where we live and work and because of that we 37 communities across 15 states of the country including: Badia, Mafoluku, are committed to ensuring that we Ajegunle, Ogba, Ikorodu and Iju in Lagos State; Oregbeni in Edo State; Owode in create value for all our stakeholders Oyo State; Ikpayongo and Tyowannye in Benue State; Egbeluowo and Odeukwu and the network of people who communities in Abia State; Eleme in Rivers State; Onitsha and Awba Ofemili in contribute to our business success. Anambra State; Odigbo in Ondo State; Nsude in Enugu State; Isu Ekiti in Ekiti We have established programmes State; Jebba, in Kwara State; Ozanogogo in Delta State; Adigbe, Abeokuta, under this pillar that focus on three Ijebu Ode, Iperu-Remo and Ibido in Ogun State, Gwam in Bauchi State, as well important areas; providing safe as Agoi-Ibami, Eminekpon, Inyie Ukam, Irishi Okpashu, Abuagbor Ishane Iye, drinking water and sanitation (Water Abuagbor Ogboabang, Beven-Ariang Bayatu, Kabun, Irie-Ukam Bayalele, Ugbe of Life), scholarship for young Ichito Bayalele and Ukware Bayanu - all in Cross River State. Nigerians and providing quality eye care to Nigerians through our Guinness Eye Centres in two (2) Sustainable Agriculture – Empowering local farmers in Nigeria major cities in Nigeria. Women play a significant role in agriculture in Nigeria. About 70% of the

agricultural workers, 80% of food producers, and 10% of those who process Water Stewardship basic foodstu¨s are women, thus making up more than two thirds of the Complementing our e¨orts to workforce in agricultural production. They depend heavily on agriculture for protect water resources, we work their livelihoods, yet female farmers are under-rewarded, under recognised and with local communities to provide hold insecure tenure in land rights. access to safe drinking water through our Water of Life programme. In In April 2018, Guinness Nigeria Plc partnered with a leading international March 2018, we partnered with development agency to train 1,086 farmers in fifteen (15) communities within Ovia WATERAID to implement a Water North- East and Ovia South West LGAs in Edo State. Through this pilot programme Hygiene and Sanitation Scheme Guinness Nigeria Plc has developed a direct relationship with the farmers and (WASH) intervention in communities created a new group of female farmers of cassava, to generate a sustainable, in Kebbi State. The Water project will alternative supply of raw materials which are used in Guinness’s supply chain. provide more than 5,000 persons with year-round access to safe drinking water. Guinness Nigeria Plc’s latest intervention in local goverment area (LGA) comes on the heels of a previous pilot project which facilitated the construction of ten boreholes in rural communities in Cross River State’s Bebi and Obanliku

LGAs. The pilot project helped over 7,000 people in these LGAs to access Promoting Eye Care in Nigeria through our Eye Hospitals: safe drinking water, and trained Donation to Guinness Eye Centre Lagos 70 community members on basic A part of our commitment to helping Nigerians access first-rate eye care borehole maintenance and water services, Guinness Nigeria Plc supported the purchase of an Optical Coherence resource management. Tomography machine for the Guinness Eye Centre at the Lagos University Teaching Hospital (LUTH). It is for diagnosis and monitoring of common blinding Since the launch of our ‘Water of eye diseases such as Glaucoma, Diabetes Maculopathy/ Retinopathy childhood Life’ Program, Guinness Nigeria Plc eye cancer, Retinoblastoma and age related macular degeneration. Our has constructed water facilities in DIRECTORS’ REPORT 27

interventions in the eye centre through the years have enhanced the centre’s capacity to provide high quality eye care services to Nigerians as well as its capacity to train eye care professionals.

Donation to Guinness Eye Centre Onitsha During the year 2018, Guinness Nigeria plc also donated five million naira (N5,000,000) to Guinness Eye Centre Onitsha for the ongoing renovation works.

Transforming lives through Guinness Nigeria’s Undergraduate Scholarship Scheme For over 10 years, Guinness Nigeria Plc’s undergraduate scholarship scheme has provided a platform for the Company to support youth development across its host communities in Lagos, Edo and Abia states. In the last financial year, Guinness Nigeria Plc paid tuition for 20 undergraduates (from our host communities) who are beneficiaries of the scheme.

The undergraduate scholarship scheme is one of three scholarship schemes program) underpins our Company’s Guinness Nigeria Plc leverages to support young Nigerians. Guinness Nigeria commitment to equipping young Plc also sponsors a technical training scholarship which enables young school Nigerians with the technical skills they leavers to study at the Institute for Industrial Technology (IIT), Isheri Lagos State. need to pursue successful careers in the This scholarship (which covers full tuition for a three-year Electromechanics engineering field.

REDUCING OUR ENVIRONMENTAL FOOTPRINT Reducing our carbon footprint and driving operational e¢ciencies remain key priorities for our business. This is why our targets under this pillar addresses issues such as carbon emission, waste water, deforestation, and packaging. As a drinks company, we know that water is and will always be a material resource, and therefore its careful management is a critical aspect of our environment strategy. The Diageo water blueprint defines our strategic approach to water stewardship. This blueprint is based on four core areas where we will increase our e¨orts: in the sourcing of raw materials; in our own operations; in the communities which we operate; and through local and global advocacy water stewardship e¨orts.

Partnership with Wecyclers In April 2018, Guinness Nigeria Plc signed up Wecyclers, a social enterprise that promotes environmental sustainability, socio-economic development, and Plc partnered with Lagos community health to support Guinness Nigeria Plc waste management agenda. Business School (LBS) and other This partnership is aimed at supporting the implementation of Guinness Nigeria multinationals, environmental Plc’s 4R waste management strategy, covering REDUCTION, REUSE, RECOVERY specialists, government agencies, and RECYCLING, while also addressing increasing local and global concerns policy makers and specialist around the environmental issues of waste disposal. This is in line with our academics to host a symposium that commitment to reduce our environmental footprint as well as join the global brought various stakeholders within movement to tackle environmental pollution. the ecosystem together to deliberate

and create awareness on policy World Water Day Programme with Lagos Business School measures, actions and means of In commemoration of the annual World Water day, Guinness Nigeria implementing the water Sustainable 28

Development Goals and targets. Guinness Nigeria Plc’s sustainability e¨orts are focused on those areas of society where its business has the greatest impact and in the communities where we operate. Our programmes support three main strands of our strategy, which align with some of the United Nations Global goals highlighted below:

We are reducing alcohol-related harm through We are empowering women our responsible drinking programmes and in di¨erent communities through partnership and coaboration with others. across the country through our local material sourcing The DrinkIQ eLearning platform also provides programmes in the cassava consumers with information they need to make and sorghum value chains. responsible drinking choices

We are providing access to safe We are accelerating the drinking water and sanitation for implementation of our 4R Waste over 33 million Nigerians in 22 Management strategy which states in Nigeria through our Water focuses on waste Reduction, Reuse, of Life scheme. Recovery and Recycling.

DONATIONS During the course of the year, donations amounting to N11.775 million (2017: N11.775million) were made to various charitable ventures: N’000 Scholarship payments 1,775 Renovation at Guinness Eye Centre Onitsha 5,000 Eye Care Equipment for Guinness Eye Centre Lagos 5,000 11,775

In accordance with Section 38(2) of the Companies and Allied Matters Act, the Company did not make any donation or give to any political party, political association or for any political purpose in the course of the year under review.

ENVIRONMENTAL MANAGEMENT POLICY At Guinness Nigeria Plc, we recognize that our management of environmental issues is important to our stakeholders and fundamental to the long-term sustainability of the Company. Our aim is to achieve and maintain environmental sustainability – a condition where our business causes neither long-term critical degradation of natural resources, nor lasting damage to species, habitats, biodiversity or the climate. Our stance in this area is contained in our Environment Policy.

One of our biggest initiatives in this regard is the Guinness Ogba Brewery E·uent Treatment Plant (ETP) which was completed and commissioned in 2015. The plant has continued to treat all waste water generated from the operations at the brewery thereby significantly reducing the polluting impact of the waste water to the environment.

Environmental Sustainability Guinness Nigeria Plc uses a wide range of resources in its business. Some like fuel are finite, others like cereal are vulnerable to the e¨ects of climate change. The Company is therefore focused on reducing any undesirable impact of its operations on the environment. Environmental Impact Assessments (EIA) are carried out before the commencement of any new projects. Environmental Audits are also conducted whenever required and the recommendations from these audits are duly implemented.

E¢cient water management is a challenge in our business. However, the business has taken this very seriously with a realization that our business is largely dependent on water. We recorded an improvement of 6.9% on water usage e¢ciency in the 2018 financial year versus the 2017 financial year. This improvement was mainly from continuous improvement DIRECTORS’ REPORT 29 initiatives on site including the removal of Kieselghur, reuse and HEALTH AND SAFETY optimization of cleaning water recycling of brewing by-products Guinness Nigeria Plc is committed in process areas; encouraging (e.g. spent grains and yeast for to an occupational health and safety behavioural/mind-set change among pig farmers and compost plants), system that promotes a safe working employees around cleaning through evacuation of E·uent Treatment environment for all employees, awareness and training; regular leaks Plant (ETP) sludge to compost plants, contractors, customers and visitors audit across our production areas; waste cartons evacuation to paper to our sites. At Guinness Nigeria Plc, Cleaning-In-Place (CIP) & chemical mills and continued e¢cient removal occupational health and safety holds usage optimization. of broken bottles from our sites for paramount importance among all recycling which all of have continued operational activities. In 2007, Diageo On energy usage, we also recorded to yield significant improvements. launched its Zero Harm Strategy an improvement of 6.4% in the In addition to all these initiatives, we with the objective of ensuring that 2018 financial year over 2017. On have also put in place a sustainable everyone working or visiting our biological oxygen demand, we had solution for waste label management sites go home safely every day, a slight improvement of 0.6% in the to optimize our waste to landfill everywhere. This is in line with the 2018 financial year versus the 2017 initiative. The continued focus and Diageo purpose of celebrating life financial year. We also recorded commitment of the Company’s every day, everywhere. an improvement of 10.4% in the leadership to our environmental 2018 financial year versus the 2017 agenda has resulted in significant Our aim as a Company is to create financial year on green house gases improvements in all these areas. a proactive safety culture in which while we recorded a decline of 3.5% all our employees believe that all (i.e. -3.5%) on waste to landfill in the We are however committed as an injuries and occupational illnesses are F18 financial versus F17. However, in organization to going green by 2020, foreseeable and preventable and act absolute terms F18 waste numbers driven by e¢cient management in a manner that demonstrates their were better than F17 numbers in of our gas generators, improved personal commitment to this belief. tonnes. production planning strategies in Valuing each other is one of Diageo the usage of utilities, good asset values and this starts with every In the course of the year, the care management for all production employee being passionate about Company continued to deploy facilities, and regular reviews of keeping each other safe, obsessively waste management strategies which heat balance and temperature committed to preventing every single include the optimization of the Beer control. We have also installed boiler injury and recognizing the benefits of Membrane Filtration technology both economizers in our plant as part of safe behaviour and celebrating safety in our Ogba and Benin Breweries for our e¨orts in this regard. success.

In the 2018 financial year, the % Improvement of F18 over F17 business recorded 3 Lost Time 0.10% Accident (all 3 are third party contractor employees) in Supply and none in Demand as opposed to 1 LTA in Supply and 0 in Demand 0.50% recorded in 2017. We recorded a total of 37 minor injuries and medically treated cases in 2018 (28 from 10% Supply versus a target of 18 and 9 in Demand versus a target of 12) while in 2017 financial year, we recorded 0.6 6.4 6.9

-0.44 a total of 25 injuries (15 from Supply -10% and 10 from Demand). In the year -0.50% under review, we recorded a total -3.5 of 26 Road Tra¢c Accidents (RTA) in 0% Water (l/l) Energy (mj/l) BOD (g/l) WTL (g/l) GHG (g/l) Demand against a total of 30 in 2017. This represents 15% improvement 30

over 2017 financial year. Road Tra¢c Accidents (RTA) are accidents that involve property damage to vehicles without Company’s Policies/Strategy for addressing & bodily injuries. managing the impact of HIV/AIDS, Malaria and other serious diseases on the Company’s employees and In summary, we recorded an improvement on our safety their families performance in the 2018 financial year mainly in the area Guinness Nigeria Plc is committed to protecting the of third party contractor management. In addition, the health, safety and wellbeing of its employees in line with organization re-strategized in driving greater rigor in the all relevant legislative requirements and best practice deployment of safety management strategies across all functions aimed at delivering our Zero Harm Safety agenda. principles. In line with this, Guinness Nigeria Plc currently These areas include confined space entry, emergency has two robust policies on this: response, segregation/removal of forklift truck operation - Guinness Nigeria HIV/Aids Policy; and from production areas, contractor management, permit to - Guinness Nigeria Policy on Wellness work administration and 100% completion of the severe and fatal incident prevention protocols. In spite of the challenges Guinness Nigeria Plc HIV/Aids Policy: we had in F18, Guinness Nigeria Plc safety records has We recognize that the potential social and economic continually demonstrated a growing improvement in our consequences of HIV/AIDS in Nigeria and in Sub- safety culture collectively driven by both employees and Saharan Africa are enormous; however, there is hope, contractors across our sites. The entire improvement story in safety is traceable to the commitment of the Company’s if the government and civil society collaborate and are leadership to the safety of lives and properties. mobilized to fight the spread of the disease together. Guinness Nigeria Plc is determined to play its part with respect to this and the HIV/AIDS policy is a statement Type of Number Number Comments of our commitment to prevent the spread of HIV/ Incident of of AIDS in our workplaces and communities and to care Incident Incident for our employees and their dependents who su¨er in F18 in F17 from its e¨ects. The Policy follows guidelines from the 1 Occupational Nil Nil None for both Nigerian National Action Committee on AIDS (NACA) Illnesses years and forms part of the overall plan for the protection and enhancement of health of all our employees. 2 First Aid 28 15 86.7% increase over F17 arising Some of the elements of the Policy include - from third party contractors • Measures to prevent the spread of HIV/AIDS such as 3 First Aid 9 10 10% reduction on education and awareness campaigns. Injuries/MTC injuries from our • Strategies to reduce the impact of the epidemic in in Demand Demand the workplace. colleagues • Plans to protect employees and their families from 4 Lost Time 3 1 The 3 LTAs were HIV/AIDS and its e¨ects. Accident from third • Confidentiality and non-discrimination towards Supply party contractors employees with HIV/AIDS thereby promoting 5 Lost Time 0 0 Sustained appropriate and e¨ective ways of managing HIV/AIDS Accident improvement in the workplace. Demand in Demand LTA • Promotion of a non-discriminatory working 6 Road Tra¢c 26 30 Over 15% environment in which employees living with HIV/AIDS Accident reduction are able to speak about their HIV/AIDS status without versus LY fear of stigmatization or rejection. 7 3rd Party 0 0 No fatality from • Management of HIV/AIDS via voluntary counselling Fatality any of and testing. our 3rd party vendors 8 Employees 0 0 No employee Fatality fatality DIRECTORS’ REPORT 31

Guinness Nigeria Plc is an active trust, openness and honesty and The key elements of the Policy participant in business coalitions and recognizes their joint responsibility include – other fora (Nigeria Business Coalition to find workable solutions to Against Aids (NIBUCAA), National problems at work. Employment Equity and Equality: Action Committee on AIDS (NACA) and • Undertaking regular review of Guinness Nigeria Plc is committed State Agency for the Control of Aids policy practice, procedure and to equal treatment of employees (SACA)) leading the national response initiatives to ensure that they regardless of age, gender, race, ethnic to HIV/AIDS in Nigeria. Through our maximize employee wellbeing. origin, religion or belief, disability, HIV/AIDS education and awareness marital status, pregnancy, sexual programmes we encourage employees We encourage employees to live a orientation, number of dependents, to adopt personal behavior, which healthy well balanced life and we have part-time or fixed-term status, creed, minimizes the risks of their contracting a number of programmes and facilities color, nationality, membership or non- HIV/AIDS. Through these and the to assist employees to either evaluate membership of a trade union. development of our own workplace their current level of wellbeing or to programmes, the Company sustains re-establish and maintain it and this is Diversity: We value diversity, its advocacy role in promoting done via various channels including recognizing that di¨erent people with awareness and understanding of the but not limited to: informal dialogue, di¨erent backgrounds and experiences disease of HIV/AIDS and its impact occupational health information can bring valuable insights that at global, national, community and and advices, health screening for all contribute to the business. workplace levels. employees (pre-employment health screening, post-employment risk (c) Dissemination of Information Guinness Nigeria Plc Wellness assessment for all employees, once in In order to maintain a shared Policy: 2 years comprehensive health screen perception of our goals, we are Wellbeing is defined as positive etc.). committed to communicating information to employees in as fast state of being well, contented and and e¨ective a manner as possible. healthy. A state of wellbeing therefore EMPLOYMENT AND EMPLOYEES We consider this critical to the encompasses achieving, amongst (a) Human Rights Policy: maintenance of team spirit and high other things, good work life balance, Guinness Nigeria Plc prides itself in its employee morale. the management of stress at work and commitment to human rights and is providing a work environment that is guided by the Global Human Rights We use both one way and two free from discrimination, bullying and & Anti-discrimination policy. In our way modes of communication harassment. workplaces and the communities – leveraging digital means - an employee page on the company in which we operate, we believe a intranet – Yammer; as well as the The policy aims to assist employees in serious commitment to respecting traditional methods - circulars and maintaining a healthy level of wellbeing human rights is fundamental to our newsletters. General employee town and outlines the support available to way of business. hall meetings are held quarterly at employees in achieving this. Some of our various sites where all employees the ways in which Guinness Nigeria Plc (b) Equality and Diversity Policy: meet with management and get supports the principles of wellbeing Guinness Nigeria Plc is proud to be a updates on the business/people include – multi-cultural community operating related issues in an atmosphere of in an increasingly competitive candid and open dialogue. In addition, a good communication link with the • Providing occupational health and diverse business world. We workforce is maintained through support services to enhance value equality and diversity and are regular meetings between union employee wellbeing. committed to creating a working representatives, employees and • Providing training and support environment where we: management. Engagement is viewed to line managers on good • Treat all individuals fairly, with as an important driver of employee management practices dignity and respect. performance. encouraging a partnership • Provide open opportunities to all. approach between employees • Provide a safe, supportive and and line managers that fosters welcoming environment for all employees and visitors.

32 DIRECTORS’ REPORT

(d) Sta¥ Diversity, Employee ACQUISITION OF OWN SHARES Development and Training The Company did not purchase any of its own shares during the 2018 financial Initiatives year (2017: Nil). At the end of the 2018 financial year, we had a sta¨ strength of 827 PROPERTY, PLANT AND EQUIPMENT (667 males and 160 females). We Information relating to changes in property, plant and equipment is given in successfully increased the number of Note 15 to these financial statements. female employees by 2%; and 43% of our new hires in 2018 were females. DISTRIBUTION The Company’s products are distributed through numerous distributors who are We have on-boarded our new joiners spread across the country. Our distributors are our strategic business partners through the corporate induction who contribute immensely to the success of our business and also benefit programme and continue to build mutually from their relationship with Guinness Nigeria Plc. people manager capability by rolling out the Leadership training which The Company also has distribution agreements with distributors who export its focuses on leading high performing products to the United Kingdom, South Africa and the United States of America teams. in addition to strategic alliances on distribution with other companies within the Diageo group in several African countries. Our Learning and Development Policy aims to ensure that all SUBSEQUENT EVENTS employees are provided with the There were no events after the statement of financial position date which could necessary support to enable them have had a material e¨ect on the state of a¨airs of the Company as at this date grow and deliver in their current or the financial results for the year ended 30 June 2018 which has not been and future roles. Learning and adequately provided for. development opportunities within the Company focus on mandatory ROYALTY AND TECHNICAL SERVICES AGREEMENTS training, capability development It has been the practice for the Company to maintain a close relationship with and career development. Priority is Diageo plc as technical partner and adviser. In this capacity, we receive technical given to learning and development and commercial support from certain members of the Diageo group under opportunities that are a part of an various Technical Services Agreements and Trademark and Quality Control individual’s partnership commitment Agreements. or development plan. In addition, there is also opportunity for INDEPENDENT AUDITOR full sponsorship of a course or PricewaterhouseCoopers acted as the Company’s independent auditor during professional programme for the year under review. The independent auditors’ report was signed by Mr. Osere employees in line with their Alakhume, a partner in the firm, with Institute of Chartered Accountants of development plan. Nigeria (ICAN) membership number ICAN 00000000647

Our people are encouraged and PricewaterhouseCoopers has indicated their willingness to continue in o¢ce as supported to be members of auditor in accordance with Sec 357(2) of the Companies and Allied Matters Act professional institutions. Our 1990. continued employee development initiatives saw us awarded the By Order of the Board Association of Chartered Certified Accountants (ACCA) Approved Employer Gold Status in 2014.

Recognitions and Awards In 2018, we received several recognitions and awards including being inducted into the “Hall of Mr. Baker Magunda Fame” of “Best Companies to Work Managing Director For” by Great Place to Work in Nigeria 28 August 2018 and we were also given an award by the Industrial Training Fund (ITF), Ikeja Area O¢ce as highest employer in training contribution. 33 34 BOARD OF DIRECTORS & COMPANY SECRETARY

11 09 05 07 03

06 04 35

02 10 08 12 14

01 36 BOARD OF DIRECTORS

1 Mr. Babatunde Abayomi of Management and Harvard Business Director in 1998 and the Deputy Savage, FCA School. He is a Fellow of both the Managing Director in 2005. Chairman Institute of Chartered Accountants of Nigeria (ICAN) and the Chartered Upon his retirement from the Mr. Babatunde Savage holds Institute of Taxation of Nigeria Company in June 2009, Mr. Savage a Bachelor of Science degree (CITN). was appointed Chairman of the from the University of Ibadan. Board of Directors (the Board) of the He had his accountancy training Mr. Savage joined the Board of Company with e¨ect from 1st July with Coopers & Lybrand (now Guinness Nigeria Plc (the Company) 2009. PricewaterhouseCoopers) from 1978 in 1996. He was the Company’s to 1983. Mr. Savage has attended Director of Finance and later He is the Chairman of the Council various overseas management Corporate Planning Director. He of the International Chamber of trainings including Cranfield School was appointed the Corporate A¨airs Commerce (ICCN). He resides in Nigeria.

2 Mr. Rory John O’Kee¥e Manager, Diageo Ireland (based in Mr. O’Kee¨e was appointed the Vice-Chairman Dublin); Marketing and Innovation Managing Director of Guinness Manager, Diageo Jamaica; Marketing Nigeria Plc with e¨ect from 14 Mr. John O’Kee¨e holds a Bachelor Director, Diageo Jamaica/Caribbean; November 2014 and was later of Commerce degree from the Marketing Director, Diageo Nordics; promoted to the role of President, University College Cork, Ireland Commercial and Innovation Director, Diageo Africa in July 2015. specializing in Economics and Diageo Nordics; General Manager, Marketing. He joined Diageo plc in Diageo Sweden and Finland; Mr. O’Kee¨e was elected as the Vice 1994 and he has held a number of Managing Director Diageo Russia Chairman of the Board with e¨ect leadership responsibilities including and Commonwealth of Independent from 19 September 2016. He is the Brand Manager, Diageo Ireland; New States (CIS) markets (based in Chairman of the Governance and Product Development Manager, Moscow); Managing Director Diageo Remunerations Committee of the Diageo Ireland; Guinness Brand Russia and Eastern Europe; Global Board. He resides in the Republic of Category Director Beer and Baileys Ireland. for Diageo plc.

3 Mr. Baker Magunda Manager, Uganda Breweries Limited Mauritius and Madagascar). Under Managing Director/Chief Executive and has held several strategic his leadership Meta Abo witnessed O‹cer leadership roles including Managing the launch of the Guinness brand in Director Uganda Breweries Limited, the country and a strong innovation Baker Magunda holds a Bachelor Managing Director Kenya Breweries pipeline of brands brought to market. of Economics [Honours] from Limited, and Managing Director Makerere University Uganda. He has Diageo Guinness Cameroon SA. His appointment as the Managing nearly twenty years’ experience in Director and Chief Executive O¢cer the consumer goods and alcohol Baker was appointed Managing of Guinness Nigeria Plc was with industry and has worked across Director of Diageo owned Meta Abo e¨ect from 1st July 2018. He resides Africa in Uganda and Kenya as well Breweries in Ethiopia in February in Nigeria. as Ethiopia and the Sudan. He 2016, also accountable for Indian joined Diageo in 1999 as Marketing Ocean Markets (Seychelles, Reunion,

4 Professor J. O. Irukwu, SAN the Founding President of the Professor Irukwu joined the board Non-Executive Director (NED) Professional Reinsurers Association of the company as a non-executive of Nigeria. He is a Professor of Law director in December 1996. Professor Irukwu holds MBA and and Insurance. Ph.D. degrees as well as several Professor Irukwu served as the honorary doctorate degrees. He A Senior Advocate of Nigeria, Chairman of the Finance and is a Fellow of the Corporation of Professor Irukwu is also a past Risk Committee of the Board. Insurance Brokers, a past president president of Ohaneze Ndigbo, a of the West African Insurance socio-cultural group representing the Professor J. O. Irukwu, SAN retired from the Board Companies Association and third largest ethnic group in Nigeria. of Directors of Guinness Nigeria Plc with e¨ect from 28 August 2018. BOARD OF DIRECTORS 37

5 Mr. Bismarck Jemide International Merchant Bank Nigeria subsidiary), NLNG Prize Award Rewane Limited and held positions as General Foundation, UNIC Insurance Plc, Non-Executive Director (NED) Manager, Assistant General Manager, Nigeria Economic Summit Group, Head of Development Finance, UBA Custodian Limited, Virgin Mr. Bismarck Rewane graduated Divisional and Credit Manager. He Nigeria Airways Limited, Fidelity from the University of Ibadan with was also with the First National Bank Bank Plc, First City Monument a Bachelors and Honours degree of Chicago, Barclays Bank of Nigeria Bank Plc and Top Feeds Nigeria in Economics (1972). He worked and Barclays Bank International Plc, Limited. at several blue-chip financial United Kingdom. institutions within Nigeria and abroad Bismarck Rewane joined the Board of holding various senior management An Associate of the Institute of Guinness Nigeria as a Non-executive positions. Bankers, England and Wales, director in 2008. He is a member of Mr. Rewane has served on the the Finance and Risk Committee of Between 1981 and 1989, he was with Board of several organisations, the Board. He resides in Nigeria. including Navgas (a Vitol Group

6 Mrs. Zainab Abdurrahman Managing Director; Group General Mrs. Abdurrahman retired from Non-Executive Director (NED) Manager of NNPC Retail Limited the NNPC in 2009 and now in charge of NNPC Petrol Stations runs a private business. She was Mrs. Zainab Abdurrahman holds – Land and Floating; General appointed to the Board as a Non- an honours degree in Economics Manager, Investment Division; executive director on 4th November from the Ahmadu Bello University, Manager Domestic Investment 2011. Zaria specializing in Finance, and Finance; and Head, Domestic Operations Research, Statistics, and International Investments. Mrs. Abdurrahman is a member of Project Evaluation, Accounting She represented NNPC interests the Governance and Remuneration and Economic Analysis. She joined on the Board of several oil service Committee and also represents the Nigerian National Petroleum companies and international trading the Board on the statutory Audit Corporation (NNPC) in 1979 where joint venture companies for several Committee. She resides in Nigeria. she held a number of strategic years. leadership responsibilities including

7 Ambassador Sunday Minister/Head Consular & Education National Honour of O¢cer of the Thomas Dogonyaro, OON (Fleet St. London), Nigeria High Order of Niger (OON) in 2002. Non-Executive Director (NED) Commission London; Ambassador and Coordinator of Programs Federal Amb. Dogonyaro was appointed a Amb. Dogonyaro had a brief stint Government/NEPAD Secretariat; non-executive director with e¨ect in lecturing in his early career and Ambassador/Head of Nigerian from 4th September 2014. He is the he has thereafter held several Mission in Sao Tome and Principe. Vice Chairman of the Governance leadership positions in government and Remunerations Committee of among which are Deputy Head He is the Founder and an Executive the Board. He resides in Nigeria. of Mission/Minister Nigeria High director of African Policy Research Commission Pretoria, South Africa; Institute. He was conferred the 38

8 Ms. Ngozi Edozien She joined Pfizer Inc. as Vice Ms. Edozien was appointed to the Non-Executive Director (NED) President, PGP Planning and Business Board with e¨ect from 26 November Development in May 1999 a position 2015 and is a member of the Finance Ms. Edozien has over 20 years’ she held until her appointment as and Risk Committee of the Board. experience in finance/private equity, the Regional Director Pfizer Global She resides in Nigeria. general management and strategy/ Pharmaceuticals, East, Central and business development functions Anglophone West Africa in January with multinational companies in 2005 a position she held till March Europe, USA and Africa. She is 2008. She is the founder and an alumnus of Harvard Business Managing Director of Invivo Partners School. Limited.

9 Dr. Omobola Johnson the skills and competencies as a She is a Fellow of the Aspen Global Non-Executive Director (NED) member of Nigeria’s Presidential Leadership Network (AGLN) and Advisory Council. serves on the Boards of several An alumnus of the prestigious blue-chip companies. Dr. Johnson University of Manchester, University She became Nigeria’s Minister of brings to the Board over 30 years of London and Cranfield University, Communication Technology in 2011, of experience from both the private Dr. Johnson started her professional and during her four-year tenure at and public sectors of the Nigerian career in management consulting the Ministry, she oversaw the creation economy. in the London O¢ce of Arthur and implementation of policy to Andersen/Andersen Consulting (now enable a¨ordable internet, including She was appointed to the Board known as Accenture) in 1985. the development and presentation with e¨ect from 29th January 2016. of the country’s 2013-2018 National She is a member of the Finance and In 2005, Dr. Johnson was appointed Broadband Plans. During her time as Risk Committee and also represents as the Country Managing Director Minister, the percentage of internet the Board on the statutory Audit for Accenture. In March 2010, users in the country nearly doubled Committee. She sought early retirement from from 24% (2010) to 43% (2014). She Accenture to enable her engage served meritoriously in that capacity and participate more deeply in until May 2015. nation building by deploying

10 Mr. Leo Breen over 14 years’ working experience as He was appointed to the Board as a Non-Executive Director (NED) Finance Director and has managed non-executive director with e¨ect finance operations for a Diageo from 25 April 2017. He is a member Mr Leo Breen holds a Bachelor of business unit comprising 16 countries of the Finance and Risk Committee Arts in Philosophy from Newcastle including companies in Greece and of the Board and also represents University (1988) and is a member Italy. He was the Finance Director the Board on the statutory Audit of the Chartered Institute of for Diageo China from 2006 to 2011 Committee. Management Accountants. He has and is currently the Finance Director, Diageo Africa, based out of London.

11 Mr. Mark Sandys decades cognate experience. He Director, Whisky and Reserve, Asia Non-Executive Director (NED) has worked for Diageo plc for over Pacific. He is currently the Global 19 years in di¨erent capacities Head of Beer, Baileys and Smirno¨ Mark Sandys obtained an MA in including as Global Marketing for Diageo plc. English and French from Balliol Strategy and Innovation Director College, Oxford University in 1996. Baileys, Marketing and Innovation He was appointed to the Board as a He is a highly experienced Senior Director, Diageo Russia and Eastern non-executive director with e¨ect Marketing Executive with over 2 Europe (based in Moscow); Category from 30 August 2017. He resides in Ireland. BOARD OF DIRECTORS 39

12 Mr. Stanley Njoroge He also led several tax training and Risk Director, Africa and Europe, Finance and Strategy Director sessions across Africa including he was responsible for providing in Lagos. Stanley joined Diageo in assurance to the audit committee of Mr. Stanley Wanyoike Njoroge 2008 as the Tax Manager in East Diageo plc’s Board of Directors on is a Certified Public Accountant Africa Breweries Limited (EABL) and the management of key risks across and a member of the Institute of expanded his experience within wider Diageo’s businesses in Africa (Nigeria, Certified Accountants of Kenya finance. Within Diageo, he has held East Africa, South Africa, Africa (ICPAK). a number of key finance leadership Regional Markets) and across Europe roles across Asia and Africa including markets. He is an alumnus of both the Financial Controller of EABL, Finance University of Nairobi and Strathmore Director of PT Gitaswara Indonesia He was appointed an executive University in Nairobi Kenya. Stanley’s and Finance Director of Meta Abo director of the Company with e¨ect initial experience was in tax advisory Brewery SC/Diageo Ethiopia. from 1 March 2018. He resides in with Deloitte & Touche East Africa Nigeria providing tax consultancy and Prior to joining Guinness Nigeria managing tax clients in Kenya and Plc, he was the Diageo Global Audit Uganda.

13 Mrs. ‘Yemisi Ayeni returned to Nigeria in 1991 as a Operators’ Association of Nigeria Non-Executive Director (NED) Senior Manager in the Corporate and the Chair of the Association’s Finance team of Price Waterhouse, Institute Committee. She also Mrs. ‘Yemisi Ayeni is the immediate Lagos. previously served as Chairperson past Managing Director of Shell Nig. of LEAP Africa, as an Executive Closed Pension Fund Administrator Mrs. Ayeni joined Shell Nigeria in Council Member of Women in Ltd, a position she held for 10 years 1994 and held a wide variety of roles Management and Business (WIMBIZ) until her retirement in Apr-15. A in various Shell companies during and as a member of the Board of 1985 honors graduate of Accounting her 21 years with Shell. In November Management of St. Saviour’s School, and Business Finance from the 2004, she was appointed Finance Ikoyi (her alma mater). prestigious University of Manchester, Director, Shell Nigeria Exploration & UK; Mrs. Ayeni is also a Chartered Production Company Ltd (SNEPCo), Mrs. Ayeni is currently the Accountant - a member of the earning her the distinction of being Chairperson of NASCON Allied Institute of Chartered Accountants in the first Nigerian woman ever to be Industries PLC; a Non-Executive England and Wales (1989). appointed to the Board of a Shell Director of Stanbic-IBTC Pension Mrs. Ayeni started her professional Company in Nigeria. Managers Ltd. and a founding career with Price Waterhouse, member of the Panel of Advisors for London in 1985; where she spent Until her retirement, Mrs. Ayeni was the Africa Initiative for Governance. 5 years working her way through a Council Member of the Nigerian Mrs. Ayeni is happily married with a variety of increasingly senior Stock Exchange and the Chair of children. Audit roles, before moving to the the Exchange’s Demutualization and Firm’s Corporate Reconstruction Technical Committees; she was also Mrs. Ayeni’s appointment as a Non-Executive and Insolvency team in 1990. She the Vice-Chair of the Pension Fund Director is with e¨ect from 1st September 2018.

14 Rotimi Odusola Prior to that he was Senior Manager, Oyebode, one of Nigeria’s leading Company Secretary Commercial Legal in MTN Nigeria commercial law firms, where he was Communications Limited (“MTN responsible for full legal advisory Rotimi has over two decades of Nigeria”). At MTN Nigeria, he was services to major clients across leadership experience in broad responsible for providing proactive various industries that included multi-functional roles spanning legal legal advice and support to the manufacturing, tobacco, agro-allied practice, corporate and regulatory various units of the multinational and food processing, oil and gas, a¨airs as well as commercial legal telecommunications business in telecommunications, aviation and management. Nigeria. banking.

He joined Guinness Nigeria Plc as Prior to joining MTN Nigeria, Rotimi He was appointed the Company Legal Director in November 2014. was Senior Associate at Aluko & Secretary of Guinness Nigeria Plc with e¨ect from 29th January 2016. 40 GUINNESS LEADERSHIP TEAM

Baker Magunda – Managing Director/Chief Executive O¢cer

first row: Stanley Njoroge – Finance and Strategy Director Colman Hanna – Supply Chain Director Rotimi Odusola – Legal Director/Company Secretary Adenike Adebola – Marketing Director, Spirits, RTD & Premium Core Brands second row: Bola Olajomi-Otubu – Human Resources Director Viola Graham-Douglas – Corporate Relations Director Jody Samuels-Ike – Marketing Director, Innovation & Lager Tsola Barrow – Commercial Director 41 42 43

CORPORATE EVENTS Launch of Royal Kingdom Lager with visits to state 44 governors and traditional fathers. Guinness Nigeria Plc launched of Royal As part of the activities, the Guinness Kingdom lager; a truly local beer finely brewed Leadership Team paid a courtesy visit to the to international quality in 2018. It has a refined, Edo state Governor, Godwin Obaseki; Delta crisp and refreshing taste made with pure State Governor, Ifeanyi Okowa; the Oba of ingredients for a rich and rewarding experience. Benin, Omo N’Oba N’edo Uku Akpolokpolo, Oba Ewuare II; the Olu of Warri, Ogiamen The lager is a result of years of extensive Ikenwoli II and the Asagba of Asaba, Obi research, and the need to celebrate the Professor Ejike Joseph Edozien to introduce indigenous people in the heartbeat of Nigeria this truly unique brand. with a beer that stands as a symbol of their pride, heritage, communal life and kingdoms.

Launch of PET bottles Guinness Nigeria Plc, launched a new PET format in 2018 for its Adult Premium Non-alcoholic Drinks - Malta Guinness classic, Dubic Malt, and Orijin Zero- available in portable 33cl plastic bottles. BAILEYS BAKEFEST 2 45 The 2nd edition of the Baileys BakeFest was held on Saturday 16 June 2018 at Muri Okunola Park, Victoria Island, Lagos. It was a one-day treat extravaganza was set aside to demonstrate the versatility of Baileys through its infusion into a wide array of treats.

The much anticipated celebrity bake- o¨ featured Bisola of Big Brother Naija fame with Nelson aka Chef Cupid #TeamCubis. Superstar DJ Exclusive was teammates with Barbara of Oven Secrets #TeamXBee while celebrated movie star Ik Ogbonna and Busola of Slascakesnbakes made up #TeamIkBus. #TeamTK saw Toke Makinwa & Kofo of Bake A Lott.

The panel of judges consisting of Chef Alex of XO Bakery, Chef Tosan of cakes by Tosan along with Modupe Fagboungbe of SALT Lagos and celebrated mixologist Lara Rawa of Eventi Cocktails, were left dazzled.

Baileys Bakefest 2 enjoyed the support of Visa, Eva, NG COM, Accelerate TV and Vava Furniture.

BBN WONDERLAND 3 1 Brand-1 partner- 1 spectacular weekend experience of indulgence -35 brides to be – 35 weddings in the making. CEO NSE Bell Ringing Ceremony 46

Guinness Nigeria Plc successfully complete Corporate Governance Rating System Assessment

Guinness Nigeria Plc successfully completed the CGRS Assessment and attained the CGRS mark in January 2018. The CGRS Rating Certificate was presented to the company at a ceremony held in April 2018.

67th Annual General Meeting SMIRNOFF X1 TOUR blazing the trail of consumer engagement in Nigeria 47

Malta Guinness ‘Go Get It” National Consumer Promotion

Malta Guinness rewarded loyal Consumers with a share of N100,000,000 over a 16 weeks National consumer promotion that ran on both cans and bottles of Malta Guinness during the 2018 financial year.

Maltavator Challenge Malta Guinness launched an exciting consumer engagement platform tagged- “Maltavator challenge”- a physically and mentally challenging obstacle course challenge experience where Forty Contestants from Nigeria, Ghana, Ethiopia and Cote D’Ivoire unleash their can do spirit to compete in the Maltavator Challenge TV show for the grand prize of $20,000. 48 49

FINANCIAL STATEMENTS 50 REPORT OF THE AUDIT COMMITTEE FOR THE YEAR ENDED 30 JUNE

In compliance with Section 359(6) of the Companies and Allied Matters Act, we have -

(a) reviewed the scope and planning of the audit requirements;

(b) reviewed the external Auditors’ Memorandum of Recommendations on Accounting Policies and Internal Controls together with Management Responses; and

(c) ascertained that the accounting and reporting policies of the Company for the year ended 30 June 2018 are in accordance with legal requirements and agreed ethical practices.

In our opinion, the scope and planning of the audit for the year ended 30 June 2018 were adequate and the Management Responses to the Auditors findings were satisfactory.

Mazi. Nnamdi Okwuadigbo, FCA Chairman FRC/2012/ICAN/00000000225

28 August 2018

Members of the Audit Committee

Mazi. Nnamdi Okwuadigbo, FCA - Shareholder/Chairman Mr. G. O. Ibhade - Shareholder Mr. M. O. Igbrude - Shareholder Mrs. Z. Abdurrahman - Director Dr. O. O. Johnson - Director Mr. Leo Breen - Director STATEMENT OF DIRECTORS’ RESPONSIBILITIES 51 FOR THE YEAR ENDED 30 JUNE

The Companies and Allied Matters Act requires the Directors to prepare financial statements for each financial year that give a true and fair view of the state of financial a¢airs of the Company at the end of the year and of its profit or loss.

The responsibilities include ensuring that the Company:

a) keeps proper accounting records that disclose, with reasonable accuracy, the financial position of the Company and comply with the requirements of the Companies and Allied Matters Act;

b) establishes adequate internal controls to safeguard its assets and to prevent and detect fraud and other irregularities; and

c) prepares its financial statements using suitable accounting policies supported by reasonable and prudent judgements and estimates, and are consistently applied.

The Directors accept responsibility for the annual financial statements, which have been prepared using appropriate accounting policies supported by reasonable and prudent judgements and estimates, in conformity with International Financial Reporting Standards (IFRS) and both the requirements of the Financial Reporting Council of Nigeria Act and the Companies and Allied Matters Act.

The Directors are of the opinion that the financial statements give a true and fair view of the state of the financial a¨airs of the Company and of its profit. The Directors further accept responsibility for the maintenance of accounting records that may be relied upon in the preparation of financial statements, as well as adequate systems of internal financial control.

Nothing has come to the attention of the Directors to indicate that the Company will not remain a going concern for at least twelve months from the date of this statement.

Signed on behalf of the Board of Directors by:

Babatunde A. Savage Baker Magunda FRC/2013/ICAN/00000003514 (FRC Reg in view) 28 August 2018 28 August 2018 52

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF GUINNESS NIGERIA PLC

Report on the audit of the financial statements

Our opinion In our opinion, Guinness Nigeria Plc’s (“the company’s”) financial statements give a true and fair view of the financial position of the company as at 30 June 2018, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards and the requirements of the Companies and Allied Matters Act and the Financial Reporting Council of Nigeria Act.

What we have audited

Guinness Nigeria Plc’s financial statements comprise:

• the statement of financial position as at 30 June 2018;

• the income statement for the year then ended;

• the statement of comprehensive income for the year then ended;

• the statement of changes in equity for the year then ended;

• the statement of cash flows for the year then ended; and

• the notes to the financial statements, which include a summary of significant accounting policies.

Basis for opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report.

We believe that the audit evidence we have obtained is su¢cient and appropriate to provide a basis for our opinion.

Independence We are independent of the company in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) . We have fulfilled our other ethical responsibilities in accordance with the IESBA Code.

PricewaterhouseCoopers Chartered Accountants, Landmark Towers, 5B Water Corporation Road, Victoria Island, Lagos, Nigeria 53

Key audit matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matter How our audit addressed the key audit matter

Valuation of Export Expansion Grants (EEG) receivable (N2.99 billion) Refer to notes 20a (trade and other receivables) and 4b (use of estimates and judgements) to the.financial statements.

The company recognises export expansion grant (EEG) receivable Our procedures involved the following: when it meets the pre-conditions for qualifying for the grant. As at 30 June 2018, the company had EEG receivable classified into four • Gained an understanding of status of categories namely: the EEG scheme in Nigeria through discussions with our internal Public (1) EEG qualified and recognised in the books, but not yet applied Sector Experts, review of publicly for; available information and enquiries (2) EEG applied for but awaiting approved grant rate from the with the directors of the company. Nigerian Export Promotion Council (NEPC); (3) EEG applied for and with approved grant rate but, awaiting • Checked EEG rates approved by the issuance of export credit certificate (ECC); NEPC for the 2013 - 2016 financial (4) EEG claims backed up with previously-issued negotiable duty years to supporting documentation. credit certificate (NDCC) - which have now been re -submitted to We also obtained evidence of filing NEPC for validation. made with the NEPC for the 2017 claims. Based on the revised guidelines on EEG as issued by the NEPC in 2017, the company has submitted application to the NEPC for • Challenged assumptions made by the the backlog of EEG for the 2013 - 2017 financial years while no directors on recoverability of accrued application has been submitted for 2018. An approved grant rate EEG receivable and the judgements of 30% was received for 2013; 15% for 2014 - 2015; and 10% for applied for the rate used for the 2017 2016 while no approved rate has been communicated for 2017. and 2018 claims. Management has applied 15% for 2017 and 2018 based on their best estimate on what is expected to be approved. These rates were • Confirmed the category 1 receivable applied in determining the EEG receivable recognised for these to client’s internal and third party periods. underlying records.

As at 30 June 2018, 100% provision was made for the receivable • With respect to category 4 claims, we classified in categories 1 and 2, while 50% provision was made for checked the balance to NDCCs issued receivable in categories 3 and 4 to reflect the estimated recoverable by the NEPC. amount of EEG claims following the revised guidelines. As a result, a total EEG impairment provision of N2.99 billion was recognised as • Assessed reasonableness of the part of the impairment provision for trade and other receivables in Company’s EEG impairment provision the financial statements. The unimpaired EEG receivable balance of at year end based on the prevailing N1.03 billion represents 50% of categories 3 and 4 grants. circumstances around the EEG scheme. We considered this to be a key audit matter because of materiality of the EEG impairment provision balance as at year end and the • Evaluated that the carrying value of judgement applied by management in determining the provision EEG receivable reflects 50% of value amount due to uncertainties around applicability of the grants to of the categories 3 and 4 claims. date. 54

Other information The directors are responsible for the other information. The other information comprises the Financial Highlights, Board of Directors and Corporate Information, Board of Directors and Company Secretary, Directors’ Report, Statement of Directors’ Responsibilities, Report of the Audit Committee, Value Added Statement, Financial Summary and Shareholders’ Information (but does not include the financial statements and our auditor’s report thereon), which we obtained prior to the date of this auditor’s report, and the Chairman’s Statement, Corporate Governance Report, Sustainability Report, Guinness Leadership Team, Corporate Events, Complaints Management Policy and Guinness Nigeria Key Distributors, which are expected to be made available to us after that date.

Our opinion on the financial statements does not cover the other information and we do not and will not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed on the other information that we obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

When we read the Chairman’s Statement, Corporate Governance Report, Sustainability Report, Guinness Leadership Team, Corporate Events, Complaints Management Policy and Guinness Nigeria Key Distributors, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance.

Responsibilities of the directors and those charged with governance for the financial statements The directors are responsible for the preparation of the financial statements that give a true and fair view in accordance with International Financial Reporting Standards and the requirements of the Companies and Allied Matters Act, the Financial Reporting Council of Nigeria Act, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the company’s financial reporting process. 55

Auditor’s responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists.

Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is su¢cient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the e¨ectiveness of the company’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.

• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor‘s report. However, future events or conditions may cause the company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence , and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. 56

Report on other legal and regulatory requirements The Companies and Allied Matters Act requires that in carrying out our audit we consider and report to you on the following matters. We confirm that :

i) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;

ii) the company has kept proper books of account, so far as appears from our examination of those books and returns adequate for our audit have been received from branches not visited by us;

iii) the company’s statement of financial position, income statement and statement of comprehensive income are in agreement with the books of account.

For: PricewaterhouseCoopers 28 August 2018 Chartered Accountants Lagos, Nigeria

Engagement Partner: Osere Alakhume FRC/2013/ICAN/00000000647 STATEMENT OF FINANCIAL POSITION 57 AS AT 30 JUNE

Notes 2018 2017 ASSETS =N=’000 =N=’000 Non-current assets Property, plant and equipment 15(a) 97,602,019 87,324,546 Intangible assets 16(a) 1,000,214 1,364,420 Prepayments 18 42,688 120,813 Other receivables 17 - 1,614 Total non-current assets 98,644,921 88,811,393

Current assets Inventories 19 19,032,362 23,094,499 Trade and other receivables 20 23,890,304 22,966,508 Prepayments 18 875,597 1,232,951 Restricted cash 21(a) 3,360,720 3,338,351 Cash and cash equivalents 21(b) 7,451,064 6,594,514 Total current assets 54,610,047 57,226,823 Total assets 153,254,968 146,038,216

EquityChairman’s Statement Share capital 22(b) 1,095,191 752,944 Share premium 22(c) 47,447,029 8,961,346 Our Performance programme, is currently benefitting internal communications and sale of I am pleased to inform you that 6,000 people across the ten Retainedenergy saving earnings light bulbs. 39,045,954 33,228,725 Guinness Nigeria delivered market communities. Also 120 community Total equity 87,588,174 42,943,015 share gains in the beer category members were trained in basic Conclusion through the performance of Orijin borehole maintenance and water In conclusion, special thanks go to and Satzenbrau. resource management. you, our distinguished shareholders, Liabilitiesfor your unwavering support through Revenue for the year ended 30 June An ultra-modern Water Health Non-currentthe years. I also liabilities thank our key 2015 stood at N118.5bn, representing Centre was donated by the Company partners (distributors, customers, a 9% increase over the prior year. to the Adigbe community near Loanssuppliers, and professionalborrowings advisers 24(a) 8,116,367 24,889,439 Abeokuta, Ogun State during the among others) for contributing to the Going into the 2016 financial year, year as part of our Water of Life Employeesuccess story benefits of the Company. 25 1,104,749 979,785 the Board and management are programme. The Water Health Deferred tax liabilities 27(a) 13,598,563 13,506,315 resolute in their commitment to Centre was commissioned by the I would like to commend our improve the performance of the Deputy Governor of Ogun State, Totalparent non-current company, Diageo liabilities Plc, for 22,819,679 39,375,539 Company and deliver greater Mrs. Yetunde Onanuga. The project its unwavering support for our value and return on investments to comprises of a sophisticated 6-step Company and its continued belief shareholders. water purification plant, a borehole, Currentin Nigeria. liabilities We look forward to its a high capacity power generating continued partnership in the years It is worthy of note that in the course set and giant water reservoirs with Bankahead. overdrafts I must also appreciate my 21 - 7,537,760 of the year, there were changes capacity to serve over 1, 000 people Currentfellow Directorstax liabilities for their continued 13(d) 2,841,607 150,756 to the leadership of the Company. per day. commitment to the success of the Please join me to welcome Mr. DividendCompany. payable 23(b) 3,211,277 3,482,928 Peter Ndegwa, our new Managing Guinness Nigeria collaborated Director/CEO to Guinness Nigeria with other members of the Beer LoansFinally, and I appreciate borrowings the management 24(a) 5,618,506 9,495,600 Plc and wish him a very successful Sectoral Group (BSG) to launch a Tradeteam and and allother our committed payables 28 31,175,725 43,052,618 tenure in oŽce. drink-drive initiative themed “Drive employees for their hard work and Alcohol-Free”. The nation-wide Totaluntiring current dedication liabilities in ensuring 42,847,115 63,719,662 Corporate Social Responsibility campaign is targeted at commercial that the Company continues to be In July 2015, we announced the drivers. Additionally, your Company Totalprofitable liabilities and successful. 65,666,794 103,095,201 conclusion of the first phase of the partnered with the Federal Road Total equity and liabilities 153,254,968 146,038,216 Safe Water and Improved Sanitation Safety Corps to execute a Drink-Drive God bless the Federal Republic of and Hygiene (SWISH) programme campaign during the Christmas/New Nigeria and God bless Guinness undertaken in collaboration with Year festive season. The campaign, Nigeria Plc!!! Concern Universal, an NGO, with which involved road shows, was Approved by the Board of Directors on 28 August 2018 and signed on its behalf by: additional funding from the Diageo aimed at educating the public on Foundation. The programme is the dangers of drink-driving and currently providing access to safe promotion of responsible alcohol water in 10 rural communities in consumption. Abi, Bekwarra, and Obanliku Local Government Areas of Cross River To mark the 2015 World EnvironmentBabatunde Mr. B. A. Savage A. Savage (Chairman) Baker Magunda Stanley Njoroge State. A key innovative element of Day, the Company sponsored a radio Chairman this programme is the emphasis on programme which enlightened the FRC/2013/ICAN/00000003514Signed on 3 September 2015 (Managing Director) (Finance & Strategy Director) local governance of boreholes to public on actions they should take ensure its sustainability. The project, to help protect the environment. We which is part of our Water of Life also engaged employees through The notes on pages 62 to 102 are integral parts of these financial statements.

The Managing Director and Finance and Strategy Director were granted waiver to certify the financial statements of Guinness Nigeria Plc, without indicating an FRCN number pending the completion of their registration with the Financial Reporting Council of Nigeria (FRCN).

9 58 INCOME STATEMENT FOR THE YEAR ENDED 30 JUNE

Notes 2018 2017 =N= ’000 =N= ’000

Revenue 8 142,975,792 125,919,817 Cost of sales (94,350,387) (77,604,513) Gross profit 48,625,405 48,315,304

Other income 9(a) 668,363 847,333 Marketing and distribution expenses 9(b) (26,012,074) (25,286,661 Administrative expenses (9,895,446) (13,689,646 Operating profit 13,386,248 10,186,330

Finance income 10(a) 2,201,476 2,253,385 Finance costs 10(b) (5,644,560) (9,777,634) Net finance costs (3,443,084) (7,524,249)

Profit before taxation 11 9,943,164 2,662,081 Tax expense 13(a) (3,225,559) (738,361) Profit for the year 6,717,605 1,923,720

Earnings per share Basic and diluted earnings per share (kobo) 14(a) 330 128

The notes on pages 62 to 102 are integral parts of these financial statements. STATEMENT OF OTHER COMPREHENSIVE INCOME 59 FOR THE YEAR ENDED 30 JUNE

Notes 2018 2017 =N= ’000 =N= ’000

Profit for the year 6,717,605 1,923,720

Other comprehensive income Items that will never be reclassified to the income statement

Defined benefit plan actuarial loss 25(a) (46,548) (50,476) Tax credit on other comprehensive loss 27(b) 13,964 15,143

Other comprehensive loss for the year, net of tax (32,584) (35,333)

Total comprehensive income for the year 6,685,021 1,888,387

The notes on pages 62 to 102 are integral parts of these financial statements. 60 STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE

Notes Share Share Share based Retained Total capital premium payment earnings equity reserve =N=’000 =N=’000 =N=’000 =N=’000 =N=’000

Balance at 1 July 2016 752,944 8,961,346 - 31,946,315 41,660,605

Total comprehensive income Profit for the year - - - 1,923,720 1,923,720 Other comprehensive income - - - (35,333) (35,333) Total comprehensive income for the year - - - 1,888,387 1,888,387

Transaction with owners, recorded directly in equity Dividends to equity holders 23(a) - - - (752,944) (752,944 Unclaimed dividends written back 23(d) - - - 146,967 146,967 Share-based payment charge 26(c) - - 159,460 - 159,460 Share-based payment recharge 26(c) - - (159,460) - (159,460) Total transactions with owners - - - (605,977) (605,977

Balance at 30 June 2017 752,944 8,961,346 - 33,228,725 42,943,015

Balance at 1 July 2017 752,944 8,961,346 - 33,228,725 42,943,015

Total comprehensive income Profit for the year - - - 6,717,605 6,717,605 Other comprehensive loss - - - (32,584) (32,584) Total comprehensive income for the year - - - 6,685,021 6,685,021

Transaction with owners, recorded directly in equity Rights issue 22(d) 342,247 38,485,683 - - 38,827,930 Dividends to equity holders 23(a) - - - (963,768) (963,768) Unclaimed dividends written back 23(d) - - - 95,976 95,976 Share-based payment charge 26(c) - - 162,902 - 162,902 Share-based payment recharge 26(c) - - (162,902) - (162,902)

Total transactions with owners 342,247 38,485,683 - (867,792) 37,960,138

Balance at 30 June 2018 1,095,191 47,447,029 - 39,045,954 87,588,174

The notes on pages 62 to 102 are integral parts of these financial statements. STATEMENT OF CASH FLOWS 61 FOR THE YEAR ENDED 30 JUNE

Notes 2018 2017 =N= ’000 =N= ’000 Cash flows from operating activities

Profit before taxation 9,943,164 2,662,081 Adjustments for: Depreciation 15(a) 8,874,523 8,635,004 Amortisation of intangible assets 16(a) 364,206 358,628 Share-based payment 26(c) 162,902 159,460 Finance income 10(a) (2,201,476) (2,253,385) Finance costs 10(b) 5,644,560 9,777,634 Impairment of inventories 334,531 782,957 Write-o¨ of property, plant and equipment 15(h) 108,136 344,749 Gain on disposal of property, plant and equipment 15(h) (10,064) (364,943) Long service awards 25(b) 141,645 (8,206) Curtailment loss on gratuity 25(a) - 76,964 23,362,127 20,170,943 Changes in working capital: Inventories 3,727,606 (10,856,208) Trade and other receivables 20(b) (307,696) 4,574,079 Prepayments 435,478 1,321,454 Trade and other payables 28(b) (11,805,751) 7,450,115 Cash generated from operating activities 15,411,764 22,660,383

Income tax paid 13(d) (370,320) (592,686) Gratuity paid 25(a) (122,116) (384,077) Value added tax paid 28(b) (4,242,832) (3,501,289) Long service awards paid 25(b) (86,708) (136,790) Net cash generated from operating activities 10,589,788 18,045,541

Cash flows from investing activities Finance income received 10(a) 1,305,692 478,736 Proceeds from disposal of property, plant and equipment 15(h) 25,946 391,144 Acquisition of property, plant and equipment 15(g) (16,960,755) (8,438,204) Net cash used in investing activities (15,629,117) (7,568,324)

Cash flows from financing activities Proceeds from loans and borrowings 24(b) 62,207,195 20,118,131 Repayment of loans and borrowings 24(b) (66,797,166) (21,773,304) Repayment of finance lease liabilities 24(b) (2,039,168) (1,269,580) Finance costs paid 10(b) (3,642,534) (7,662,933) Net cash proceeds from rights issue 22(d) 24,602,346 - Dividends paid 23(b) (963,768) (706,557) Net cash generated from/(used in) financing activities 13,366,905 (11,294,243)

Net increase/(decrease) in cash and cash equivalents 8,327,577 (817,026) E¨ect of foreign exchange rate changes on cash and cash equivalents 66,733 582,642 Cash and cash equivalents at 1 July (943,246) (708,862) Cash and cash equivalents at 30 June 21(b) 7,451,064 (943,246)

The notes on pages 62 to 102 are integral parts of these financial statements. 62 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE

Note Page 1 Reporting entity 63 2 Basis of preparation 63 3 Functional and presentation currency 63 4 Use of estimates and judgements 63 5 Basis of measurement 64 6 Changes in accounting policies 64 7 Significant accounting policies 65 8 Revenue 74 9 Other income and marketing and distribution expenses 74 10 Finance income and finance costs 75 11 Profit before taxation 76 12 Personnel expenses 77 13 Taxation 78 14 Earnings and declared dividend per share 79 15 Property, plant and equipment 80 16 Intangible assets 82 17 Other receivables 83 18 Prepayments 83 19 Inventories 83 20 Trade and other receivables 84 21 Cash and bank balances 84 22 Share capital and reserves 85 23 Dividends 86 24 Loans and borrowings 87 25 Employee benefits 88 26 Share based payments 91 27 Deferred tax liabilities 93 28 Trade and other payables 93 29 Financial risk management and financial instruments 94 30 Operating leases 100 31 Contingencies 100 32 Related parties transactions and balances 101 33 Events after the reporting date 102 34 Comparatives 102

63 NOTES TO THE FINANCIAL STATEMENTS

1. Reporting entity Guinness Nigeria Plc, (‘the Company’), a public Company quoted on the Nigerian Stock Exchange, was incorporated in Nigeria on 29 April 1950, as a trading company importing Guinness Stout from Dublin. The Company has since transformed itself into a manufacturing operation and its principal activities continue to be brewing, packaging, marketing and selling of Guinness Foreign Extra Stout, Guinness Extra Smooth, Guinness African Special, Malta Guinness, Malta Guinness Herbs Lite, Harp Lager, Smirno¨ Ice, Smirno¨ Ice - Double Black, Satzenbrau Lager, Dubic Lager, Snapp, Orijin Ready-to-drink, Orijin Bitters, Orijin Zero non-alcoholic, Johnnie Walker, Smirno¨ Vodka, Ciroc, Baileys, Captain Morgon, McDowell’s No.1 Whisky, McDowell’s VSOP Brandy, Royal Challenge, Gordon and other International Premium Brands (IPS) making it a total beverage alcohol (TBA) Company.

The address of the Company’s registered o¢ce is at 24 Oba Akran Avenue, Ikeja, Lagos.

2. Basis of preparation The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS). The financial statements were authorised for issue by the Board of Directors on 28 August 2018, and will be submitted for adoption to the Annual General Meeting of Shareholders.

3. Functional and presentation currency These financial statements are presented in Naira, which is the Company’s functional currency. All financial information presented in Naira (N) has been rounded to the nearest thousand unless otherwise stated.

4. Use of estimates and judgements The preparation of the financial statements in conformity with IFRS requires management to make estimates and assumptions that a¨ect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may di¨er from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognised prospectively. Information about assumptions and estimation uncertainties and critical judgements in applying accounting policies that have the most significant e¨ect on the amounts recognised in the financial statements are described in the following notes:

(a) Assumptions and estimation uncertainties Note 25 – measurement of defined benefit obligations: key actuarial assumptions Note 26 – share-based payments Note 31 – recognition and measurement of provisions and contingencies: key assumptions about the likelihood and magnitude of an outflow of resources

(b) Judgements Significant judgements were made in application of accounting policies that could have significant e¨ects on the amounts recognised in the financial statements.

Note 20a – recognition and measurement of impairment on other receivables

Measurement of fair values Some of the Company’s accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities.

When measuring the fair value of an asset or a liability, the Company uses observable market data as far as possible. Fair values are categorised into di¨erent levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:

64 NOTES TO THE FINANCIAL STATEMENTS

Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities Level 2 – inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. as derived from prices). Level 3 – inputs for the asset or liability that are not based on observable market data (unobservable inputs).

If the inputs used to measure the fair value of an asset or a liability might be categorised in di¨erent levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.

The Company recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.

Further information about the assumptions made in measuring fair values is included in the following notes: Note 26 – Share based payments Note 29 – Financial risk management and financial instruments

5. Basis of measurement The financial statements have been prepared on the historical cost basis except for the following items which have been measured on an alternative basis on each reporting date.

Items Measurement basis Non-derivative financial instruments Initially measured at fair values and subsequently measured at amortised cost.

Employee benefits Present value of defined benefit obligation.

Share-based payment transactions Event day fair value of the equity instrument issued.

6. Changes in accounting policies Except for the changes below, the Company has consistently applied the significant accounting policies as set out in Note 7 to all periods presented in these financial statements. The Company has adopted the following new standards (where applicable) with a date of initial application for periods starting on or after 1 January 2017:

Amendment to IAS 12 – Income taxes, Recognition of deferred tax assets for unrealised losses. The amendment was issued to clarify the requirements for recognising deferred tax assets on unrealised losses. The amendment clarifies the accounting for deferred tax where an asset is measured at fair value and that fair value is below the asset’s tax base. It also clarifies certain other aspects of accounting for deferred tax assets. The amendment clarifies the existing guidance under IAS 12. It does not change the underlying principles for the recognition of deferred tax assets. E¨ective for annual periods beginning on or after 1 January 2017.

Amendment to IAS 7 – Cash flow statements, Statement of cash flows on disclosure initiative In January 2016, the International Accounting Standards Board (IASB) issued an amendment to IAS 7 introducing an additional disclosure that will enable users of financial statements to evaluate changes in liabilities arising from financing activities. The amendment responds to requests from investors for information that helps them better understand changes in an entity’s debt. The amendment will a¨ect every entity preparing IFRS financial statements. However, the information required should be readily available. Preparers should consider how best to present the additional information to explain the changes in liabilities arising from financing activities.

These changes to the standards do not have material e¨ect on the financial statements.

65 NOTES TO THE FINANCIAL STATEMENTS

7. Significant Accounting Policies Except for the changes explained in Note 6, the Company has consistently applied the following accounting policies to all periods presented in these financial statements.

(a) Foreign currency transactions Transactions denominated in foreign currencies are translated and recorded in Naira at the actual exchange rates as of the date of the transaction.

Monetary assets and liabilities denominated in foreign currencies are translated to the functional currency at the exchange rate at the reporting date. Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated to the functional currency at the exchange rate when the fair value was measured. Foreign currency di¨erences are generally recognised in income statement. Non-monetary items that are measured based on historical cost in a foreign currency are not re-measured at every reporting date.

(b) Financial instruments

i. Non-derivative financial assets The Company initially recognises loans and receivables on the date that they are originated. All other financial assets are recognised initially on the trade date at which the Company becomes a party to the contractual provisions of the instrument.

The Company derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in transferred financial assets that is created or retained by the Company is recognised as a separate asset or liability.

The Company has the following non-derivative financial assets:

Cash and cash equivalents Cash and cash equivalents comprise cash on hand; cash balances with banks and call deposits with original maturities of three months or less.”

Loans and receivables Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables comprise trade and other receivables. Such assets are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, loans and receivables are measured at amortised cost using the e¨ective interest method, less any impairment losses.

Loans and receivables with short-term maturities and no stated rates of interest are measured at original invoice amounts where the e¨ect of discounting is not significant.

ii. Non-derivative financial liabilities All financial liabilities are recognised initially on the trade date at which the Company becomes a party to the contractual provisions of the instrument. The Company derecognises a financial liability when its contractual obligations are discharged or cancelled or expire.

The Company has the following non-derivative financial liabilities: loans and borrowings, bank overdrafts, dividend payable, trade and other payables. Such financial liabilities are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition these financial liabilities are measured at amortised cost using the e¨ective interest method.

66 NOTES TO THE FINANCIAL STATEMENTS

Financial assets and liabilities are o¨set and the net amount presented in the statement of financial position when, and only when, the Company has a legal right to o¨set the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.

The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counterparty.

(c) Share Capital The Company has one class of shares, ordinary shares. Ordinary shares are classified as equity. When new shares are issued, they are recorded in share capital at their par value. The excess of the issue price over the par value is recorded in the share premium reserve.

Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction from equity, net of any tax e¨ects.

(d) Property, plant and equipment

i. Recognition, measurement and derecognition Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the asset. Property, plant and equipment under construction are disclosed as capital work-in-progress. The cost of self-constructed asset includes the cost of materials and direct labour, any other costs directly attributable to bringing the assets to a working condition for their intended use including, where applicable, the costs of dismantling and removing the items and restoring the site on which they are located and borrowing costs on qualifying assets.

Purchased software that is integral to the functionality of the related equipment is capitalised as part of the equipment.

When parts of an item of property, plant and equipment have di¨erent useful lives, they are accounted for as separate items (major components) of property, plant and equipment. The carrying amount of an item of property, plant and equipment shall be derecognised on disposal or when no future economic benefits are expected from its use.

Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment, and are recognised in income statement.

ii. Subsequent costs The cost of replacing a part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Company and its cost can be measured reliably.

The carrying amount of the replaced part is derecognised. The costs of the day-to-day servicing of property, plant and equipment are recognised in income statement as incurred.

iii. Depreciation Depreciation is calculated over the depreciable amount, which is the cost of an asset less its residual value. Depreciation is recognised in income statement on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment which reflects the expected pattern of consumption of the future economic benefits embodied in the asset. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Company will obtain ownership by the end of the lease term in which case the assets are depreciated over the useful life.

67 NOTES TO THE FINANCIAL STATEMENTS

The estimated useful lives for the current and comparative years are as follows: Leasehold land – lease period Buildings – 60 years Plant and machinery – 2 to 40 years Furniture and equipment – 3 to 5 years Motor vehicles – 4 years Returnable packaging materials – 5 to 10 years

Capital work-in-progress is not depreciated. The attributable cost of each asset is transferred to the relevant asset category immediately the asset is available for use and depreciated accordingly.

(e) Intangible Assets Intangible assets that are acquired by the Company and have finite useful lives are measured at cost less accumulated amortisation and accumulated impairment losses. The Company’s intangible assets with finite useful life comprises computer software, concession right and distribution right. Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific intangible asset to which it relates.

Amortisation is calculated over the cost of the asset, or other amount substituted for cost less its residual value. Amortisation is recognised in the income statement on a straight-line basis over the estimated useful lives of intangible assets. The estimated useful lives for the current and preceding years are as follows:

Computer software- SAP - 11 years Computer software-others - 5 years Concession right - 10 years Distribution right - 5 years

Amortisation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

An intangible asset is derecognised where it is certain that there would be no future flow of economic benefit to the Company as a result of holding such asset.

(f) Leases Determining whether an arrangement contains a lease At inception of an arrangement, the Company determines whether the arrangement is or contains a lease. At inception or on re-assessment of an arrangement that contains a lease, the Company separates payments and other consideration required by the arrangement into those for the lease and those for other elements on the basis of their relative fair values. If the Company concludes for a finance lease that it is impracticable to separate the payments reliably, then an asset and a liability are recognised at an amount equal to the fair value of the underlying asset; subsequently, the liability is reduced as payments are made and an imputed finance cost on the liability is recognised using the Company’s incremental borrowing rate.

Leased assets Leases in terms of which the Company assumes substantially all the risks and rewards of ownership are classified as finance leases. Upon initial recognition, the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset.

Other leases are operating leases and the leased assets are not recognised in the Company’s statement of financial position.

68 NOTES TO THE FINANCIAL STATEMENTS

Lease payments Payments made under operating leases are recognised in income statement on a straight-line basis over the term of the lease. Lease incentives received are recognised as an integral part of the total lease expense, over the term of the lease.

Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.

(g) Inventories Inventories are measured at the lower of cost and net realisable value. The cost of inventories includes expenditure incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to their existing location and condition. The basis of costing is as follows:

Raw materials, non-returnable packaging – purchase cost on a weighted average basis including materials and consumable spare parts transportation and applicable clearing charges.

Finished products and products-in-process – average cost of direct materials and labour plus the appropriate amount attributable to production overheads based on normal production capacity.

Inventory-in-transit – purchase cost incurred to date.

Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs to completion and selling expenses. Inventory values are adjusted for obsolete, slow-moving or defective items.

(h) Impairment

i. Non-derivative financial assets A financial asset not measured at fair value through the income statement is assessed at each reporting date to determine whether there is objective evidence that it is impaired. A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial recognition of the asset, and that the loss event had a negative e¨ect on the estimated future cash flows of that asset that can be reliably estimated.

Objective evidence that financial assets are impaired can include default or delinquency by a debtor, restructuring of an amount due to the Company on terms that the Company would not consider otherwise, indications that a debtor or issuer will enter bankruptcy, or the disappearance of an active market for a security.

The Company considers evidence of impairment for receivables at both a specific asset and collective level. All individually significant receivables are assessed for specific impairment. All individually significant receivables found not to be specifically impaired are then collectively assessed for any impairment that has been incurred but not yet identified. Receivables that are not individually significant are collectively assessed for impairment by grouping together receivables with similar risk characteristics.

In assessing collective impairment, the Company uses historical trends of the probability of default, timing of recoveries and the amount of loss incurred, adjusted for management’s judgement as to whether current economic and credit conditions are such that the actual losses are likely to be greater or less than suggested by historical trends.

An impairment loss in respect of a financial asset measured at amortised cost is calculated as the di¨erence between its carrying amount and the present value of the estimated future cash flows discounted at the asset’s original e¨ective interest rate. Losses are recognised in income statement and reflected in an allowance account against receivables. Interest on the impaired asset continues to be recognised through the unwinding of the 69 NOTES TO THE FINANCIAL STATEMENTS

discount. When a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through income statement.

ii. Non-financial assets The carrying amount of the Company’s non-financial assets, other than inventories are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated.

The recoverable amount of an asset is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the “cash-generating unit or CGU”).

The Company’s corporate assets do not generate separate cash inflows. If there is an indication that a corporate asset may be impaired, then the recoverable amount is determined for the CGU to which the corporate asset belongs.

An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

(i) Employee benefits

i. Defined contribution plan A defined contribution plan is a post-employment benefit plan (pension fund) under which the Company pays fixed contributions into a separate entity. The Company has no legal or constructive obligations to pay further contributions if the fund does not hold su¢cient assets to pay all employees the benefits relating to employee service in the current and prior periods.

In line with the provisions of the Pension Reform Act 2014, the Company has instituted a defined contribution pension scheme for its management and non-management employees. Employee’s contributions to the scheme are funded through payroll deductions while the Company’s contribution is charged to the income statement. The Company contributes 10% and 12% for management and non-management employees respectively while employees contribute 8% of their insurable earnings (basic, housing and transport allowance).

ii. Gratuity – Defined benefit gratuity scheme Lump sum benefits payable upon retirement or resignation of employment are fully accrued over the service lives of management and non-management sta¨ under the scheme. Employees under the defined benefit scheme are those who had served a minimum of 5 years on or before 31 December 2008 when the scheme was terminated. Independent actuarial valuations are performed periodically on a projected unit credit basis. Remeasurement gains/losses arising from valuations are charged in full to other comprehensive income. The Company ensures that adequate arrangements are in place to meet its obligations under the scheme. 70 NOTES TO THE FINANCIAL STATEMENTS

– Defined contribution gratuity scheme The Company has a defined contribution gratuity scheme for management and non-management sta¨. Under this scheme, a specified amount is contributed by the Company to third party fund managers and recognised as an employee benefit expense to income statement over the service life of the employees.

iii. Other long-term employee benefits The Company’s other long-term employee benefits represents Long Service Awards payable upon completion of certain years in service and accrued over the service lives of the employees. Independent actuarial valuations are performed periodically on a projected unit credit basis. Actuarial gains or losses and curtailment gains or losses arising from valuations are charged in full to income statement.

iv. Termination benefits Termination benefits are expensed at the earlier of when the Company can no longer withdraw the o¨er of those benefits and when the Company recognises costs for a restructuring. If benefits are not expected to be settled wholly within 12 months of the end of the reporting period, then they are discounted.

v. Short-term employee benefits Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognised for the amount expected to be paid under short-term cash bonus if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the obligation can be estimated reliably.

vi. Share-based payment transactions The fair value of equity settled share options and share grants is initially measured at grant date based on the binomial or Monte Carlo models and is charged in the income statement over the vesting period. For equity settled share-based payments, the credit is included in share-based payment reserve in equity whereas for cash settled share-based payments a liability is recognised in the statement of financial position, measured initially at the fair value of the liability.

For cash settled share options and share grants, the fair value of the liability is remeasured at the end of each reporting period until the liability is settled, and at the date of settlement, with any changes in the fair value recognised in the income statement. Cancellations of share options are treated as an acceleration of the vesting period and any outstanding charge is recognised in income statement immediately.

(j) Provisions and contingent liabilities Provisions A provision is recognised if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as finance cost.

A provision for restructuring is recognised when the Company has approved a detailed and formal restructuring plan, and the restructuring either has commenced or has been announced publicly. Future operating losses are not provided for.

Contingent liabilities A contingent liability is a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company, or a present obligation that arises from past events but is not recognised because it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or the amount of the obligation cannot be measured with su¢cient reliability.

71 NOTES TO THE FINANCIAL STATEMENTS

Contingent liabilities are only disclosed and not recognised as liabilities in the statement of financial position. If the likelihood of an outflow of resources is remote, the possible obligation is neither a provision nor a contingent liability and no disclosure is made.

(k) Revenue Revenue from the sale of goods in the course of ordinary activities is measured at the fair value of the consideration received or receivable, net of value added tax, excise duties, sales returns, trade discounts and volume rebates. Revenue is recognised when persuasive evidence exists that the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable and there is no continuing management involvement with the goods and the amount of revenue can be measured reliably.

If it is probable that discounts will be granted and the amount can be measured reliably, then the discount is recognised as a reduction of revenue as the sales are recognised.

(l) Government grants Government grants that compensate the Company for expenses incurred are recognised in the income statement as a reduction to cost of sales in the periods in which the expenses are recognised if the Company will comply with the condition attaching to them and it is probable that the grants will be received from the government.

(m) Finance income and finance costs Finance income comprises interest income on funds invested. Finance income is recognised as it accrues in income statement, using the e¨ective interest method.

Finance costs comprise interest expense on borrowings, unwinding of the discount on provisions, interest expense on factoring of trade receivables recognised on financial assets except finance costs that are directly attributable to the acquisition, construction or production of a qualifying asset which are capitalised as part of the related assets, are recognised in income statement using the e¨ective interest method.

Foreign currency gains and losses are reported on a net basis as either finance income or finance cost depending on whether foreign currency movements are in a net gain or net loss position.

(n) Taxation Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognised in income statement except to the extent that it relates to a business combination, or items recognised directly in equity or in other comprehensive income.

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates statutorily enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

Tax assets and liabilities are o¨set if there is a legally enforceable right to o¨set current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on di¨erent tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.

Deferred tax is recognised in the income statement account except to the extent that it relates to a transaction that is recognised directly in equity. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the amount will be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

72 NOTES TO THE FINANCIAL STATEMENTS

Deferred tax is measured at the tax rates that are expected to be applied to temporary di¨erences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are o¨set if there is a legally enforceable right to o¨set current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on di¨erent tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.

Deferred tax is recognised in respect of temporary di¨erences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary di¨erences:

i. the initial recognition of assets or liabilities in a transaction that is not a business combination and that a¨ects neither accounting nor taxable income statement.

ii. di¨erences relating to investments in subsidiaries and jointly controlled entities to the extent that it is probable that they will not reverse in the foreseeable future.

iii. temporary di¨erences arising on the initial recognition of goodwill.

(o) Earnings per share The Company presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the earnings attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period. Diluted EPS is determined by adjusting the earnings attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding, for the e¨ects of all dilutive potential ordinary shares.

(p) Statement of cash flows The statement of cash flows is prepared using the indirect method. Changes in statement of financial position items that have not resulted in cash flows such as translation di¨erences, fair value changes, equity-settled share-based payments and other non-cash items are eliminated for the purpose of preparing the statement of cash flows. Dividends paid to ordinary shareholders are included in financing activities. Finance cost paid is also included in financing activities while finance income received is included in investing activities.

(q) Operating segments Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Guinness Leadership Team which comprises of the members of the Board of Directors and other Executive O¢cers.

Segment information is required to be presented in respect of the Company’s business and geographical segment, where applicable. The Company’s primary format for segment reporting is based on operating segments. The operating segments are determined by management based on the Company’s internal reporting structure. Where applicable, segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.

(r) New standards and interpretations adopted A number of new standards, amendments to standards and interpretations are e¨ective for annual periods beginning on or after 1 January 2017 and have not been applied in preparing these financial statements. Those which are relevant to the Company and have been applied in preparing these financial statements are as stated in Note 6.

73 NOTES TO THE FINANCIAL STATEMENTS

(s) New standards and interpretations not yet adopted The following new standards and amendments issued but not e¨ective for the 30 June 2018 year end, are expected to have significant impacts on the Company’s financial statements. The Directors are currently assessing their impact on the Company’s financial statements.

Amendments to IFRS 2 – ‘Share-based payments’, Clarifying how to account for certain types of share-based payment transactions. This amendment clarifies the measurement basis for cash-settled, share-based payments and the accounting for modifications that change an award from cash-settled to equity-settled. It also introduces an exception to the principles in IFRS 2 that will require an award to be treated as if it was wholly equity-settled, where an employer is obliged to withhold an amount for the employee’s tax obligation associated with a share-based payment and pay that amount to the tax authority. E¨ective for annual periods beginning on or after 1 January 2018.

IFRS 15 – Revenue from contracts with customers. The FASB and IASB issued their long awaited converged standard on revenue recognition on 29 May 2014. It is a single, comprehensive revenue recognition model for all contracts with customers to achieve greater consistency in the recognition and presentation of revenue. Revenue is recognised based on the satisfaction of performance obligations, which occurs when control of good or service transfers to a customer. E¨ective for annual periods beginning on or after 1 January 2018.

The IASB has amended IFRS 15 to clarify the guidance, but there were no major changes to the standard itself. The amendments comprise clarifications of the guidance on identifying performance obligations, accounting for licences of intellectual property and the principal versus agent assessment (gross versus net revenue presentation). New and amended illustrative examples have been added for each of these areas of guidance. The IASB has also included additional practical expedients related to transition to the new revenue standard. E¨ective for annual periods beginning on or after 1 January 2018.

IFRS 9 – Financial Instruments (2009 &2010), Financial liabilities, Derecognition of financial instruments and Financial assets - General hedge accounting This IFRS is part of the IASB’s project to replace IAS 39. IFRS 9 addresses classification and measurement of financial assets and replaces the multiple classification and measurement models in IAS 39 with a single model that has only two classification categories: amortised cost and fair value.

The IASB has updated IFRS 9, ‘Financial instruments’ to include guidance on financial liabilities and derecognition of financial instruments. The accounting and presentation for financial liabilities and for derecognising financial instruments has been relocated from IAS 39, ‘Financial instruments: Recognition and measurement’, without change, except for financial liabilities that are designated at fair value through profit or loss. E¨ective for annual periods beginning on or after 1 January 2018.

IFRIC 22, ‘Foreign currency transactions and advance consideration This IFRIC addresses foreign currency transactions or parts of transactions where there is consideration that is denominated or priced in a foreign currency. The interpretation provides guidance for when a single payment/ receipt is made as well as for situations where multiple payment/receipts are made. The guidance aims to reduce diversity in practice. E¨ective for annual periods beginning on or after 1 January 2018.

IFRS 16 – Leases This standard replaces the current guidance in IAS 17 and is a far reaching change in accounting by lessees in particular. Under IAS 17, lessees were required to make a distinction between a finance lease (on balance sheet) and an operating lease (o¨ balance sheet). IFRS 16 now requires lessees to recognise a lease liability reflecting future lease payments and a ‘right-of-use asset’ for virtually all lease contracts. The IASB has included an optional exemption for certain short-term leases and leases of low-value assets; however, this exemption can only be applied by lessees.

74 NOTES TO THE FINANCIAL STATEMENTS

For lessors, the accounting stays almost the same. However, as the IASB has updated the guidance on the definition of a lease (as well as the guidance on the combination and separation of contracts), lessors will also be a¨ected by the new standard. At the very least, the new accounting model for lessees is expected to impact negotiations between lessors and lessees. Under IFRS 16, a contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. IFRS 16 supersedes IAS 17, ‘Leases’, IFRIC 4, ‘Determining whether an Arrangement contains a lease, SIC 15, ‘Operating Leases – Incentives’ and SIC 27, ‘Evaluating the Substance of Transactions Involving the Legal Form of a Lease’. E¨ective for annual periods beginning on or after 1 January 2019.

(t) Service concession charges Service concession charges represent fixed annual amounts payable to the grantor in respect of concession right to the concession asset. These amounts are charged to the income statement over the duration of the concession period, if immaterial.

For lessors, the accounting stays almost the same. However, as the IASB has updated the guidance on the definition of a lease (as well as the guidance on the combination and separation of contracts), lessors will also be a¨ected by the new standard. At the very least, the new accounting model for lessees is expected to impact negotiations between lessors and lessees. Under IFRS 16, a contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. IFRS 16 supersedes IAS 17, ‘Leases’, IFRIC 4, ‘Determining whether an Arrangement contains a lease, SIC 15, ‘Operating Leases – Incentives’ and SIC 27, ‘Evaluating the Substance of Transactions Involving the Legal Form of a Lease’. E¨ective for annual periods beginning on or after 1 January 2019.

8. Revenue 2018 2017 =N= ’000 =N= ’000 Nigeria 135,734,892 119,420,446 Export 7,240,900 6,499,371 142,975,792 125,919,817

Nigeria is the Company’s primary geographical segment as over 94% of the Company’s revenue is earned from sales in Nigeria. All of the Company’s revenue is derived from sale of similar products with similar risks and returns. Additionally, there is no identifiable component of the business with up to 10% of the total revenue for the year. Thus, further segment information has not been presented.

9. Other income and marketing and distribution expenses

(a) Other income comprises: 2018 2017 =N= ’000 =N= ’000 Operating lease income (Note 15(c)) 421,529 285,612 Sale of by-products 236,770 196,778 Gain on disposal of property, plant and equipment 10,064 364,943 668,363 847,333

(b) Marketing and distribution expenses 2018 2017 =N= ’000 =N= ’000 Marketing expenses 12,047,558 10,196,935 Distribution expenses 13,964,516 15,089,726 26,012,074 25,286,661

75 NOTES TO THE FINANCIAL STATEMENTS

10. Finance Income and Finance Costs

(a) Finance income is as follows: (i) Finance income per income statement 2018 2017 =N= ’000 =N= ’000 Interest income on bank deposits 296,072 316,316 Interest income on distributors’ overdue debts and others 121,130 169,093

Total interest income arising from financial assets 417,202 485,409 Gain on re-measurement of foreign currency balances 1,784,274 1,767,976 2,201,476 2,253,385

(ii) Finance income received in the statement of cash flows 2018 2017 =N= ’000 =N= ’000 Finance income per income statement 2,201,476 2,253,385 Unrealised exchange gain (821,186) (1,767,976) Accrued finance income (74,598) (6,673) 1,305,692 478,736

(b) Finance costs are as follows:

(i) Finance costs per income statement 2018 2017 =N= ’000 =N= ’000 Finance expense on loans and borrowings 1,906,761 5,478,032 Interest expense on overdraft 634,239 1,045,922 Unwinding of discount on employee benefits (Note 25(c)) 145,595 134,562 Loss on re-measurement of foreign currency balances 2,957,965 3,119,118 5,644,560 9,777,634

(ii) Finance costs paid in the statement of cash flows 2018 2017 =N= ’000 =N= ’000 Finance costs per income statement 5,644,560 9,777,634 Unwinding of discount on employee benefits (Note 25) (145,595) (134,562) Accrued finance costs on loans and borrowings (Note 24(b)) - (165,751) Unrealised foreign exchange loss (1,856,431) (1,814,388) 3,642,534 7,662,933

76 NOTES TO THE FINANCIAL STATEMENTS

11. Profit before Taxation (a) Profit before taxation is stated after charging: 2018 2017 =N= ’000 =N= ’000 Depreciation of property, plant and equipment (Note 15(a)) 8,874,523 8,635,004 Write-o¨ of property plant and equipment (Note 15(h)) 108,136 344,749 Amortisation of intangible assets (Note 16(a)) 364,206 358,628 Auditors’ remuneration 35,000 32,500 Personnel expenses (Note12(a)) 9,599,511 11,545,819 Directors’ remuneration (Note 11(b)) 962,571 455,300 Gain on disposal of property, plant and equipment (Note 15(h)) (10,064) (364,943) Lease rental expenses (Note 30(a)) 1,159,067 1,335,759 Royalty and technical service fees (Note 32) 503,859 1,373,112

(b) Directors’ remuneration Remuneration, excluding gratuity and pension contributions for Directors of the Company, who discharged their duties mainly in Nigeria, was as follows: 2018 2017 =N= ’000 =N= ’000 Fees paid to Non-executive Directors 70,621 45,475 Fees and remuneration paid to the Chairman 31,620 29,837 Remuneration paid to Executive Directors 860,330 379,988 962,571 455,300

The remuneration (excluding gratuity and pension contributions) of the highest paid Director amounted to N461 million (2017: N186 million).

The table below shows the number of Directors of the Company (excluding the Chairman) whose remuneration excluding certain benefits, gratuity and pension contributions (in respect of services to the Company) fell within the bands shown below: 2018 2017 Number =Number N2,000,001 - N12,500,000 6 6 N20,000,000 and above 3 3 9 9

77 NOTES TO THE FINANCIAL STATEMENTS

(c) Analysis of expenses by nature 2018 2017 =N= ’000 =N= ’000 Raw materials and consumables 71,639,030 53,439,891 Freight costs 12,077,526 13,022,465 Advertising and promotion 12,047,558 11,557,163 Personnel expenses (Note 12(a)) 9,599,511 11,545,819 Depreciation (Note 15(a)) 8,874,523 8,635,004 Amortisation (Note 16(a)) 364,206 358,628 Lease rental expenses (Note 30(a)) 1,159,067 1,335,759 Royalty and technical service fees (Note 32) 503,859 1,373,112 Repairs and maintenance 4,505,010 3,456,295 Travel and entertainment 253,945 272,750 Professional costs 1,047,121 935,315 External labour costs 285,015 949,196 Facilities 3,495,365 1,419,146 IT Service costs 4,651 270,192 Impairment provision for trade and other receivables 403,441 2,305,852 Utilities 3,512,120 4,399,355 Others 485,958 1,304,878 Total cost of sales, marketing, distribution and administrative expenses 130,257,906 116,580,820

Included in the professional costs are the following payments relating to non-audit services provided by PricewaterhouseCoopers in the year:

i. Quarterly technical services fees and royalty certification - Nil (2017: N1.5 million). ii. Professional support services for rights issue - Nil (2017: N8 million). iii. Infrastructure tax relief certification - N1.1 million (2017: N1 million). iv. Review of special purpose financial information of brands with pioneer status – Nil (2017: N1.5 million).

12. Personnel Expenses (a) Personnel expenses including the provision for gratuity liabilities and other long term employee benefits comprise:

2018 2017 =N= ’000 =N= ’000 Salaries, wages and allowances 8,568,103 9,660,166 Contributions to defined contribution plans 740,319 702,831 Share-based payments expense (Note 26(c)) 162,902 159,460 Other long term employee benefits (Note 25(b)) 141,645 (8,206) Termination (credit)/cost arising from restructuring (13,458) 1,030,696 Other termination costs - 872 Total personnel expenses 9,599,511 11,545,819

(b) The average number of persons employed during the year are: 2018 2017 Number Number Operations and Technical 397 481 Sales 319 340 Marketing 25 42 Finance, IT and Human Resources 53 76 Legal and Corporate A¨airs 10 12 804 951

78 NOTES TO THE FINANCIAL STATEMENTS

(c) The average number of employees of the Company during the year, whose duties were wholly or mainly discharged in Nigeria, received annual remuneration (excluding pension contributions and certain benefits) in the following ranges: 2018 2017 Number Number N100,000 – N500,000 27 - N500,001 – N1,000,000 25 1 N1,000,001 – N1,500,000 19 13 N1,500,001 – N2,000,000 20 65 N2,000,001 – N2,500,000 19 42 N2,500,001 – N3,000,000 52 35 N3,000,001 – N3,500,000 24 23 N3,500,001 – N4,000,000 27 128 N4,000,001 – N4,500,000 49 100 N4,500,001 – N5,000,000 53 91 N5,000,001 – N5,500,000 32 70 N5,500,001 – N6,000,000 15 62 N6,000,001 – N6,500,000 15 43 N6,500,001 – N7,000,000 20 40 N7,000,001 – N7,500,000 42 38 N7,500,001 – N8,000,000 37 23 N8,000,001 – N8,500,000 41 18 N8,500,001 – N9,000,000 27 22 N9,000,001 – N9,500,000 21 12 N9,500,001 – N10,000,000 16 8 N10,000,001 and above 223 117 804 951

13. Taxation The tax charge for the year has been computed after adjusting for certain items of expenditure and income, which are not deductible or chargeable for tax purposes, and comprises:

(a) Amounts recognised in income statement 2018 2017 =N= ’000 =N= ’000 Current tax expense: Income tax 1,739,102 - Tertiary education tax 394,245 150,756 Prior years under-provision 986,000 6,962 3,119,347 157,718

Deferred tax expense: Origination and reversal of temporary di¨erences (Note 27(b)) 106,212 580,643 Total tax expense 3,225,559 738,361

(b) Tax credit recognised in other comprehensive income 2018 2017 =N= ’000 =N= ’000 Remeasurement of defined benefit liability (Note 27(b)) 13,964 15,143 79 NOTES TO THE FINANCIAL STATEMENTS

(c) Reconciliation of e¨ective tax rate 2018 2017 =N= ’000 =N= ’000 Profit before taxation 9,943,164 2,662,081

Income tax using the statutory tax rate (30%) 2,982,949 798,624 Adjusted for: Impact of tertiary education tax 394,245 150,756 E¨ect of tax incentives and exempted income (608,076) (275,348) Non-deductible (529,559) 143,061 Adjustment for prior periods 986,000 (78,732) Total income tax expense in income statement 3,225,559 738,361

(d) Movement in current tax liability 2018 2017 =N= ’000 =N= ’000 Balance at 1 July 150,756 585,724 Payments during the year (370,320) (592,686) Charge for the year (Note (13(a)) 3,119,347 157,718 Withholding tax credit notes utilised (58,176) - Balance at 30 June 2,841,607 150,756

14. Earnings and declared dividend per share (a) Basic and diluted earnings per share

2018 2017 Profit attributable to ordinary shareholders (N’000) 6,717,605 1,923,720 Weighted average number of shareholders (thousands) 2,034,731 1,505,888

Basic and diluted earning per share (Kobo) 330 128

There were no dilutive ordinary potential shares during the year.

(b) Declared dividend per share Dividend declared per share of 64 kobo (2017: 50k) is based on total declared dividend of N963,768 (2017: N752,94,000) on 1,505,888,188 (2017: 1,505,888,188) ordinary shares of 50 kobo each, being the ordinary shares in issue at the date the dividend was declared.

80 NOTES TO THE FINANCIAL STATEMENTS

15. Property, plant and equipment (PPE) (a) The movement on PPE during the year was as follows:

Lesasehold Buildings Plant & Furniture & Motor Returnable Capital Land Machinery Equipment Vehicles Packaging Work-in- Materials Progress Total =N=’000 =N=’000 =N=’000 =N=’000 =N=’000 =N=’000 =N=’000 =N=’000 Cost At 1 July 2016 828,428 20,337,781 92,830,351 1,419,342 7,396,800 32,363,239 1,757,226 156,933,167 Additions - 2,051 1,823,660 - 633,178 3,031,980 3,620,888 9,111,757 Transfers - 156,866 3,765,812 4,200 - - (3,926,878) - Reclassification to intangible assets - - (9,104) - - - (6,437) (15,541) Disposals/write-o¨s - - (98,094) - (574,401) (1,674,722) - (2,347,217) At 30 June 2017 828,428 20,496,698 98,312,625 1,423,542 7,455,577 33,720,497 1,444,799 163,682,166

At 1 July 2017 828,428 20,496,698 98,312,625 1,423,542 7,455,577 33,720,497 1,444,799 163,682,166 Additions - - 2,770,509 - 2,079,592 3,369,505 11,056,408 19,276,014 Transfers - 57,824 4,396,364 3,387 34,800 - (4,492,375) - Disposals/write-o¨s - - (274,952) (2,126) (58,451) (133) - (335,662) At 30 June 2018 828,428 20,554,522 105,204,546 1,424,803 9,511,518 37,089,869 8,008,832 182,622,518

Depreciation and impairment

At 1 July 2016 128,925 3,007,910 41,231,124 1,272,677 4,864,130 19,195,417 - 69,700,183 Charge for the year 15,195 332,017 3,782,278 33,871 1,024,326 3,447,317 - 8,635,004 Reclassification to intangible assets - - (1,300) - - - - (1,300) Disposals/write-o¨s - - (3,837) - (557,044) (1,415,386) - (1,976,267) At 30 June 2017 144,120 3,339,927 45,008,265 1,306,548 5,331,412 21,227,348 - 76,357,620

At 1 July 2017 144,120 3,339,927 45,008,265 1,306,548 5,331,412 21,227,348 - 76,357,620 Charge for the year - 211,845 4,120,781 31,074 1,156,718 3,354,105 - 8,874,523 Disposals/write-o¨s - - (163,751) (1,807) (45,953) (133) - (211,644) At 30 June 2018 144,120 3,551,772 48,965,295 1,335,815 6,442,177 24,581,320 - 85,020,499

Carrying amount At 30 June 2017 684,308 17,156,771 53,304,360 116,994 2,124,165 12,493,149 1,444,799 87,324,546 At 30 June 2018 684,308 17,002,750 56,239,251 88,988 3,069,341 12,508,549 8,008,832 97,602,019

(b) Included in property, plant and equipment are assets purchased under finance lease arrangements as follows:

Motor Plant & Total Vehicles Machinery =N=’000 =N=’000 =N=’000 Cost 298,743 13,439,914 13,738,658 Accumulated depreciation (248,084) (4,907,598) (5,155,683) Carrying amount 50,659 8,532,316 8,582,975

The leased assets serve as security for the lease obligations (Note 24(e))

81 NOTES TO THE FINANCIAL STATEMENTS

(c) Included in property, plant and equipment are plant and machinery and motor vehicles, which the Company has leased out to third parties under operating lease arrangements. The cost of these assets was N1,041 million (2017: N3,979 million) with corresponding accumulated depreciation charge of N93 million (2017: N3,433 million). Income realised from these assets is included in other income (Note 9).

(d) Capital work-in-progress Additions to capital work-in-progress during the year is analysed as follows: 2018 2017 =N= ’000 =N= ’000 Plant and machinery 10,900,072 3,459,822 Buildings 156,336 156,866 Furniture and equipment - 4,200 11,056,408 3,620,888

(e) Included in property, plant and equipment are assets purchased during the year amounting to N4,343 million that had not been paid for, which are included in trade and other payables (2017: N2,027 million). This has been adjusted for in the statement of cashflows. Refer to Note 15(g).

(f) Capital expenditure commitments at the year end authorised by the Board of Directors comprise: 2018 2017 =N= ’000 =N= ’000 Contracted 3,832,886 3,917,996 Not contracted 676,553 10,888,393 4,509,439 14,806,389

(g) Cash paid on acquisition of property, plant and equipment in the statement of cash flows: 2018 2017 =N= ’000 =N= ’000 Additions during the year (Note 15(a)) 19,276,014 9,111,757 Payments on prior year acquisitions 2,027,393 1,353,840 Accruals on current year acquisitions (4,342,652) (2,027,393) 16,960,755 8,438,204

(h) PPE disposed/written o¨ in the statement of cash flows: 2018 2017 =N= ’000 =N= ’000 Cost of PPE disposed and written o¨ 335,662 2,347,217 Accumulated depreciation on PPE disposed/written o¨ (211,644) (1,976,267) Carrying amount of PPE disposed/written o¨ 124,018 370,950 Proceeds from disposal of property, plant and equipment (25,946) (391,144) 98,072 (20,194)

Analysed as: Carrying amount of property, plant and equipment written o¨ 108,136 344,749 Gain on disposal of property, plant and equipment (10,064) (364,943) 98,072 (20,194)

(i) No borrowing costs were capitalised during the year (2017: Nil)

82 NOTES TO THE FINANCIAL STATEMENTS

16. Intangible assets (a) The movement in intangible assets during the year was as follows:

Distribution Concession Computer Total Rights Rights software =N= ’000 =N= ’000 =N= ’000 =N= ’000 Cost Balance at 1 July 2016 995,250 485,611 2,291,215 3,772,076 Reclassification from PPE - - 15,541 15,541 Balance at 30 June 2017 995,250 485,611 2,306,756 3,787,617

Balance at 1 July 2017 995,250 485,611 2,306,756 3,787,617 Balance at 30 June 2018 995,250 485,611 2,306,756 3,787,617

Amortisation Balance at 1 July 2016 99,525 114,466 1,849,278 2,063,269 Reclassifications from PPE - - 1,300 1,300 Charge for the year 199,050 41,624 117,954 358,628 Balance at 30 June 2017 298,575 156,090 1,968,532 2,423,197

Balance at 1 July 2017 298,575 156,090 1,968,532 2,423,197 Charge for the year 199,050 41,624 123,532 364,206 Balance at 30 June 2018 497,625 197,714 2,092,064 2,787,403

Carrying amount At 30 June 2017 696,675 329,521 338,224 1,364,420 At 30 June 2018 497,625 287,897 214,692 1,000,214

(b) Reclassification from property, plant and equipment In 2014, the Company entered into a concession agreement (“the Agreement”) with the Edo State Government (“the Grantor”). Under the terms of the agreement, the Company was granted the right to build, operate, maintain, repair, control and ensure public access to the Iyoha Road (“the Road”) for a period of ten (10) years from 1 June 2015 after which control of the Road reverts to the Grantor. Based on the concession agreement, N288 million which represents the carrying amount of the construction work on the Road as at 30 June 2018, has been recognised as an intangible asset. The intangible asset represents the Company’s right over the Road for the concession period.

Under the Agreement, the Company has obligations to operate, maintain, repair, control, charge and collect tolls for its accounts only from the trucks utilising the Road for the Company’s logistics operation, together with the payment of concession fee of five million Naira (N5,000,000) per annum. At the end of the concession period, the toll road will become the property of the Grantor and the Company will have no further involvement in its operation or maintenance requirements.

The Agreement contains an option for renewal at the instance of both parties. Either party to the Agreement reserves the right to terminate the Agreement if the other party commits a material breach in respect of the performance of its material obligations or is in material breach of any warranty given by it under the Agreement.

(c) The amortisation charge of all intangible assets is included in administrative expenses. 83 NOTES TO THE FINANCIAL STATEMENTS

(d) Acquisition of distribution rights to Diageo Plc’s international premium spirits brands (IPS) in Nigeria. Guinness Nigeria purchased the distribution rights to Diageo plc’s international premium spirits (IPS) brands in Nigeria with e¨ect from 1 January 2016 and the rights will be amortized over a period of five (5) years which gives Guinness Nigeria plc the right to distribute and market the IPS brands in Nigeria. The related amortisation expense of N199 million (2017: N199 million) is recognized in administrative expenses in the year.

17. Other receivables Non-current other receivables represent the long term portion of loans granted to employees of the Company. No interest is charged on these loans. The loans are secured by the employees’ retirement benefits. The current portion of other receivables is included in trade and other receivables reported in current assets.

18. Prepayments Prepayments comprise: 2018 2017 =N= ’000 =N= ’000 Prepaid rent 389,677 325,710 Prepaid advertising expense - 272,397 Other prepaid expenses 528,608 634,844 918,285 1,232,951

Prepayments is analysed into: N’000 N’000 Non-current 42,688 120,813 Current 875,597 1,232,951 918,285 1,353,764

Other prepaid expenses relate to housing and education subsidy and leave allowance, car-cash allowance and payment made in advance for purchase of raw materials.

19. Inventories (a) Inventories comprise: 2018 2017 =N= ’000 =N= ’000 Finished products 5,940,813 7,905,986 Products in process 2,548,549 1,546,382 Raw materials and packaging materials 6,868,838 9,183,617 Engineering spares 3,054,298 3,163,880 Inventories in transit 619,864 1,294,634 19,032,362 23,094,499

Inventory balances have been disclosed net of provision for impairment as at year end.

The value of raw and packaging materials, spare parts, changes in finished products and products in process recognised in cost of sales during the year amounted to N71,639 million (2017: N53,778 million).

During the year, impairment of inventories amounted to N335 million (2017: N783 million). This write-down is included in cost of sales and has been adjusted for in the statement of cash flows.

84 NOTES TO THE FINANCIAL STATEMENTS

20. Trade and other receivables (a) Trade and other receivables comprise: 2018 2017 =N= ’000 =N= ’000 Financial assets: Trade receivables (Note 29(a)) 18,610,741 16,299,545 Other receivables- current 3,720,891 1,277,930 Amounts due from related parties (Note 32(b)) 525,623 5,103,628 Total financial assets 22,857,255 22,681,103

Non-financial assets: Other receivables- current 1,033,049 285,405 Total trade and other receivables 23,890,304 22,966,508

The other receivables non-financial asset balance consists of N4,026 million (2017: N4,928 million) gross balance relating to Export Expansion Grant (EEG) receivable with an associated impairment provision balance of N2,993 million at year end (2017: N4,642 million).

Following the revised guidelines on the Export Expansion Grant (EEG) scheme (“the scheme”), the company recognised EEG receivable based on rates approved by the Nigerian Export Promotion Council (“NEPC”). Also, accrual was made for the period which approved rate was not yet obtained from NEPC based on expected rate. Impairment provision for the EEG receivable balance is made based on estimated recoverable amount.

Movement in impairment provision of other receivables is as follows: 2018 2017 =N= ’000 =N= ’000 Opening balance (4,797,325) (3,128,077) Additions in the year (1,032,241) (1,669,248) Release in the year 2,684,347 - (3,145,219) (4,797,325)

(b) Changes in trade and other receivables in the statement of cash flows 2018 2017 =N= ’000 =N= ’000 Change in non-current other receivables 1,614 (1,614) Change in current trade and other receivables (923,796) 3,543,155 Unrealised exchange gain 760,966 1,185,325 Accrued finance income 74,598 6,673 Withholding tax credit notes applied for tax settlement (Note 13(d)) (58,176) - Equity settled share based payment (Note 26 (c)) (162,902) (159,460) (307,696) 4,574,079

21. Cash and bank balances (a) Restricted cash 2018 2017 =N= ’000 =N= ’000 Restricted cash 3,360,720 3,338,351

Restricted cash relates to unclaimed dividends amounting to N3,361 million (2017: N3,338 million ) held in a separate interest bearing bank account in accordance with guidelines issued by the Securities and Exchange Commission (SEC). Under the SEC guidelines, these amounts are restricted from use by the Company.

85 NOTES TO THE FINANCIAL STATEMENTS

(b) Cash and cash equivalents Bank balances 7,422,130 6,565,580 Short-term deposits 28,934 28,934 Cash and cash equivalents 7,451,064 6,594,514 Bank overdrafts - (7,537,760) Cash and cash equivalents in the statement of cash flows 7,451,064 (943,246)

Cash and cash equivalents have maturities of less than three months.

22. Share capital and reserves (a) Authorised ordinary shares of 50k each in thousands of shares 2018 2017 At 30 June 2,500,000 2,500,000

(b ) Issued and fully paid-up ordinary shares of 50k each in thousands of shares 2018 2017 At 30 June 2,190,383 1,505,888

Movement in issued and fully paid-up ordinary shares is as follows: Opening number of shares 1,505,888 1,505,888 Additions through rights issue (Note 22(d)) 684,495 - At 30 June 2,190,383 1,505,888

Share capital in thousands of naira At 30 June 1,095,191 752,944

Movement in issued and fully paid-up ordinary share capital is as follows: Opening balance 752,944 752,944 Additions through rights issue (Note 22(d)) 342,247 - Closing balance 1,095,191 752,944

(c) Share premium Share premium represents the consideration received in excess of the nominal value of ordinary shares of the Company. All shares rank equally with regard to the Company’s residual assets. The holders of ordinary shares are entitled to receive dividends as declared from time to time, and are entitled to one vote per share at meetings of the Company.

(d) Rights Issue 2018 2017 Cash received (424,178,375 shares @ N58) 24,602,346 - Loan conversion to share (260,316,256 shares @ N58) 15,098,343 - Total proceed 39,700,689 - Rights issue expenses (872,759) Net transfer to share capital and share premium 38,827,930 -

Net transfer to share capital and share premium is analysed below: Share capital 342,247 752,944 Share premium 38,485,683 - Closing balance 38,827,930 752,944

86 NOTES TO THE FINANCIAL STATEMENTS

Guinness Nigeria Plc undertook a Rights Issue of 684,494,631 Ordinary Shares of 50 kobo each at N58 per share on the basis of 5 new ordinary shares for every 11 ordinary shares held as at the close of business on 15 March 2017. On 22 September 2017, the Board approved the allotment of 684,494,631 Ordinary Shares of 50 kobo each and these shares were listed on the Nigerian Stock Exchange on 25 October 2017, thus increasing the issued share capital of the Company to N1,095,191,410 (2017: N752,944,094) divided into 2,190,382,819 ordinary shares (2017: 1,505,888,188 ordinary shares).

(e) Share based payment reserve The share based payment reserve comprises the cumulative weighted average fair value of executive share option and executive share award plans granted by Diageo plc to Directors and employees of the Company which have not vested at year end.

23. Dividends (a) Declared dividends The following dividends were declared and paid by the Company during the year:

2018 2017 =N= ’000 =N= ’000 64k (2017: 50k) 963,768 752,944

After the respective reporting dates, the following dividends were proposed by the Directors. The dividends have not been provided for and there are no income tax consequences.

2018 2017 =N= ’000 =N= ’000 184k (2017: 64k) 4,030,563 963,768

(b) Dividend payable 2018 2017 =N= ’000 =N= ’000 At 1 July 3,482,928 3,860,475 Declared dividend (Note 23(a)) 963,768 752,944 Unclaimed dividend transferred to retained earnings (95,976) (146,967) Received from registrar 160,409 - Payments during the year: Paid by the registrar (198,084) - Restricted cash (138,000) (276,967) Cash and cash equivalents (963,768) (706,557) At 30 June 3,211,277 3,482,928

(c) As at 30 June 2018, a balance of N54 million (2017: N145 million receiveable) is payable to the Company’s registrar, Veritas Registrars Nigeria Limited for dividends paid on behalf of the Company. The balance of N3,361 million (2017: N3,338 million) represents unclaimed dividends of N3,211 million, unclaimed dividend transfered to retained earnings of N96 million and the balance of N54 milliom payable to the Company’s registrar and are held in separate interest yielding bank accounts in line with the Security and Exchange Commission (SEC) guidelines.

(d) During the year, unclaimed dividends amounting to N96 million (2017: N147 million) became statute barred and was transferred to retained earnings.

87 NOTES TO THE FINANCIAL STATEMENTS

24. Loans and borrowings (a) Loans and borrowings comprise: 2018 2017 =N= ’000 =N= ’000 Related party loans (Note 32(b)) 8,161,915 22,092,495 Unsecured term loans (Note 24(d)) 5,572,958 10,243,454 Finance lease liabilities (Note 24(d)) - 2,049,090 Total loans and borrowings 13,734,873 34,385,039

The total loans and borrowings is classified as follows: Non-current liabilities Related party loans 8,116,367 21,935,900 Unsecured term loans - 2,020,333 Finance lease liabilities - 933,206 Total non-current loans and borrowings 8,116,367 24,889,439

Current liabilities Related party loans 45,548 156,595 Unsecured term loans 5,572,958 8,223,121 Finance lease liabilities - 1,115,884 Total current loans and borrowings 5,618,506 9,495,600 Total loans and borrowings 13,734,873 34,385,039

As as at 30 June 2018, the Company had an oustanding related party loan of $22.5 million (2017: $71.8 million) included in loans and borrowing. The naira equivalent is N8,161 million (2017: N22,092 million). The loan has a five year tenor from May 2016 to May 2021 at an interest rate of 3 months LIBOR plus 475 bps.

(b) Movement in loans and borrowings 2018 2017 =N= ’000 =N= ’000 At 1 July 34,385,039 36,229,920 “Proceeds from loans and borrowings obtained during the year” 62,207,195 20,118,131 Finance cost: - Interest expense 1,906,761 5,312,281 - Accrued interest expense - 165,751 Exchange di¨erence on foreign currency loan 1,077,316 914,121 Related party loan conversion to equity (15,098,343) - Interest paid (1,906,761) (5,312,281) Loans repaid during the year (66,797,166) (21,773,304) Finance lease repaid during the year (2,039,168) (1,269,580) At 30 June 13,734,873 34,385,039

(c) Net debt 2018 2017 =N= ’000 =N= ’000 Cash and cash equivalents 7,451,064 6,594,514 Loans and borrowings-current (including bank overdraft) (5,618,506) (17,033,360) Loans and borrowings-non-current (8,116,367) (24,889,439) (6,283,809) (35,328,285)

For more information about the Company’s exposure to interest rate, foreign currency and liquidity risks, see Note 29.

88 NOTES TO THE FINANCIAL STATEMENTS

(d) Terms and conditions of the outstanding loans and borrowings except related party loans were as follows:

Nominal Year of Carrying Face Carrying Face Interest Rate Maturity Amount Value Amount Value 2018 2018 2017 2017 =N=’000 =N=’000 =N=’000 =N=’000 Unsecured term loan 1 14.0% 2019 - - 1,925,833 1,925,833 Unsecured term loan 2 90-days NIBOR +1% 2019 - - 2,934,551 2,934,551 Unsecured term loan 3 19.00% 2017 - - 5,137,945 5,137,945 Unsecured term loan 4 12.00% 2016 - - - - Unsecured term loan 4 3-months LIBOR +5% 2018 743,773 743,773 245,125 245,125 Unsecured term loan 5 3-months LIBOR + 4% 2018 1,066,142 1,066,142 - - Unsecured term loan 6 3-months LIBOR +5% 2018 2,647,067 2,647,067 - - Unsecured term loan 7 3-months LIBOR +7% 2018 1,115,976 1,115,976 - - Finance lease liabilities 7.2 - 13.5% 2013-2019 - - 2,049,090 2,047,394 5,572,958 5,572,958 12,292,544 12,290,848

(e) Finance lease liabilities Finance lease liabilities are payable as follows:

Present value Interest Future Present value Interest Future of Minimum Minimum of Minimum Minimum Lease Lease Lease Lease Payments Payments Payments Payments 2018 2018 2018 2017 2017 2017 =N=’000 =N=’000 =N=’000 =N=’000 =N=’000 =N=’000 Less than one year - - - 1,115,884 273,936 1,389,820 Between 1 - 2 years - - - 843,446 103,409 946,855 Between 2 - 3 years - - - 86,463 2,552 89,015 Between 3 - 4 years - - - 3,297 129 3,426 - - - 2,049,090 380,026 2,429,116

25. Employee benefits 2018 2017 =N= ’000 =N= ’000 Present value of defined benefit obligation (Note 25(a)) 329,990 354,117 Present value of long service awards (Note 25(b)) 774,759 625,668 1,104,749 979,785

(a) Movement in the present value of the defined benefit obligation (gratuity) 2018 2017 =N= ’000 =N= ’000 Defined benefit obligation at 1 July 354,117 537,011 Benefit paid by the plan (122,116) (384,077) Interest expense on obligation 51,441 73,743 Curtailment loss - 76,964 Actuarial loss recognised in other comprehensive income 46,548 50,476 329,990 354,117

The defined benefit obligation (gratuity) was discontinued and frozen with e¨ect from 31 December 2008. Consequently, no current service costs have been recognised (2017: Nil). Interest cost on the plan amounted to N51 million in the current year (2017: N74 million).

89 NOTES TO THE FINANCIAL STATEMENTS

(b) Movement in the present value of the long service award during year was as follows:

2018 2017 N’000 N’000 Long service award at 1 July 625,668 709,845 Interest cost 94,154 60,819 Current service cost 73,853 85,662 Curtailment gain - (118,893) Benefit paid by the plan (86,708) (136,790) Net actuarial losses 67,792 25,025 Long service award at 30 June 774,759 625,668

Expense recognised in the income statement for long service award: 2018 2017 N’000 N’000 Current service costs 73,853 85,662 Past service costs (curtailment) - (118,893) Net actuarial losses 67,792 25,025 Net expense/(credit) excluding interest on obligation 141,645 (8,206)

Interest expense on obligation 94,154 60,819 235,799 52,613

(c) Total expense recongnised on the income statement for defined benefit obligation and long service award includes: 2018 2017 =N= ’000 =N= ’000 Current service costs 73,853 85,662 Past service costs (curtailment) - (118,893) Net actuarial losses 67,792 25,025 141,645 (8,206) Interest expense on obligation 145,595 134,562 287,240 126,356

(d) Movement in the defined contribution gratuity plan during year was as follows:

2018 2017 =N= ’000 =N= ’000 At 1 July - - Charge for the year 343,377 273,355 Payments during the year (343,377) (273,355) At 30 June - -

(e) Pension payable The balance on the pension payable account represents the amount due to the Pension Fund Administrators which was yet to be remitted as at the year end. The movement in this account during the year is as follows:

2018 2017 =N= ’000 =N= ’000 At 1 July 254 3,159 Charge for the year (employer contribution) 396,943 429,476 Payments during the year (employer contribution) (395,692) (432,381) At 30 June 1,505 254

Pension payable is recognised as part of trade and other payables.

90 NOTES TO THE FINANCIAL STATEMENTS

(f) Actuarial gains and losses recognised in other comprehensive income:

2018 2017 Losses recognised during the year (46,548) (50,476) Tax credit 13,964 15,143 (32,584) (35,333)

(g) Actuarial assumptions Principal actuarial assumptions at the reporting date (expressed as weighted averages):

2018 2017 Long term average discount rate (per annum) 14% 16% Notional interest rate on accrued gratuity (per annum) 5% 5% Average pay increase (per annum) 13% 13% Average rate of inflation (per annum) 12% 12% Average length of service for current employees (years) 6.43 6.43

These assumptions depict management’s estimate of the likely future experience of the Company. Due to unavailability of published reliable demographic data in Nigeria, the demographic assumptions regarding future mortality are based on the rates published jointly by the Institute and Faculty of Actuaries in the United Kingdom (UK) as follows: 2018 2017 Mortality in service Number of deaths in year out of 10,000 lives Sample age 25 7 7 30 7 7 35 9 9 40 14 14 45 26 26

Withdrawal from service Age band Rate Rate 1 - 30 12.0% 12.0% 31 - 39 8.5% 8.5% 40 - 44 5.0% 5.0% 45 - 50 3.5% 3.5% 51 - 55 2.5% 2.5%

The estimated weighted average liability duration were 6.61 years (2017: 4.45 years) and 4.53 years (2017: 6.43 years) for the long service award and gratuity obligations respectively.

(h) Sensitivity analysis Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions holding other assumptions constant would have a¨ected the defined benefit obligation by the amounts shown below.

91 NOTES TO THE FINANCIAL STATEMENTS

Gratuity Long service Net periodic awards benefit cost =N= ’000 =N= ’000 =N= ’000 Discount rate +1% (11,223) (39,458) (2,194) -1% 12,105 43,245 2,297 Inflation rate +1% - 8,309 5,109 -1% - (7,640) (4,699) Salary increase +1% - 38,626 10,657 -1% - (35,812) (9,818) Mortality Experience Age rated up by 1 year 234 (1,683) (421) Age rated down by 1 year (211) 1,503 376

Sensitivity to each actuarial assumption was determined while other assumptions were held constant. There has not been a change from the sensitivity approach adopted in prior years. Although the analysis does not take account of the full distribution of cash flows expected under the plan, it does provide an approximation of the sensitivity of the assumptions shown.

26. Share based payments (a) Diageo plc (“Diageo”), has a number of executive share option and executive share award plans for Directors and key management sta¨ including directors and employees of Guinness Nigeria Plc. A recharge arrangement exists between Diageo plc and Guinness Nigeria Plc whereby vested shares awards/share options delivered to employees by Diageo plc are recharged to Guinness Nigeria Plc. The recharge transaction is recognised as an intercompany liability with a corresponding adjustment in the share-based payment reserve for the capital contribution recognised in respect of the share-based payment. The recharge process accommodates adjustments to the cumulative value of share-based payment expense recharged by Diageo plc to the Company.

(b) The Company has a share appreciation rights scheme for senior management and other sta¨ under which employees are granted the right to receive, at the date the right is exercised, cash equal to the appreciation in the Company’s share price since the grant date. All the rights vest 3 years after the grant date. The rights have a contractual life of 10 years.

(c) The employee benefit expense recognised in respect of equity settled share-based payments is as follows:

2018 2017 =N= ’000 =N= ’000 Equity-settled share based payment transactions Executive share option plans 13,824 27,938 Executive share award plans 149,078 131,522 Total expense recognised as employee costs 162,902 159,460

The principal executive share awards/options are as follows;

Diageo executive long term incentive plan (DELTIP) Awards made to executives under the plan are in the form of shares and share options at the market value at the time of grant. Share awards vest/are released on the third anniversary of the grant date. Share options granted under this scheme may normally be exercised between three and ten years after the grant date. There are no performance conditions to be satisfied.

Performance share plan (PSP) Under the PSP, share awards can take a number of di¨erent forms. No payment is made for awards. To date, participants have been granted conditional rights to receive shares. Awards normally vest after a three-year period, the ‘ ‘performance cycle’, subject to achievement of three equally weighted performance tests:

92 NOTES TO THE FINANCIAL STATEMENTS

(i) a comparison of Diageo’s three-year total shareholder return (TSR) with a peer group of 17 companies including Diageo plc. The vesting range is 25% if Diageo’s TSR produces a median ranking compared with the TSR of the peer group companies, up to 100% if Diageo is ranked first, second or third in the peer group; (ii) compound annual growth in organic net sales over three years; and (iii) total organic operating margin improvement over three years.

Targets for net sales and operating margin are set annually by the remuneration committee. The vesting range is 25% for achieving minimum performance targets, up to 100% for achieving the maximum target level. Re-testing of the performance condition is not permitted. Dividends are accrued on awards and are given to participants to the extent that the awards actually vest at the end of the performance cycle. Dividends can be paid in the form of cash or shares.

The calculation of the fair value of each share option/award used the Monte Carlo pricing model and the following weighted average assumptions: 2018 2017 Risk free interest rate Executive share options/awards 0.76% 1.1%

Expected life Executive share options/awards 36 months 36 months

Dividend yield Executive share options/awards 2.56% 3.0%

Weighted average share price Executive share options/awards 2,077p 1,918p

Weighted average fair value of awards granted in the year Executive share options/awards 1,071p 733p

Number of awards granted in the year Executive share options/awards 28,258 84,866

Transactions on share-based payment During the year, there were no transactions on share appreciation rights. Transactions on the executive share options/ awards were as follows: Number of awards/options in units 2018 2017 Outstanding at 1 July 227,552 229,945 Granted 28,258 84,866 Exercised/awarded (9,803) (75,908) Forfeited/expired/transferred - (11,351) Outstanding at 30 June 246,007 227,552

At 30 June 2018, 28,258 (2017: 72,956) executive share options/awards were exercisable at a weighted average exercise price of 2,077 pence (2017: 1,918 pence)

93 NOTES TO THE FINANCIAL STATEMENTS

27. Deferred tax liabilities (a) Recognised net deferred tax liabilities are attributable to the following:

Assets Liabilities Net 2018 2017 2018 2017 2018 2017 =N=’000 =N=’000 =N=’000 =N=’000 =N=’000 =N=’000 Property, plant and equipment - - (16,151,210) (15,533,056) (16,151,210) (15,533,056) Employee benefits 331,425 293,935 - - 331,425 293,935 Unrealised exchange di¨erence 459,484 - - 162,834 459,484 162,834 Inventories 980,451 880,091 - - 980,451 880,091 Trade and other receivables 771,654 737,992 - - 771,654 737,992 Other items 9,633 - - (48,111) 9,633 (48,111) 2,552,647 1,912,018 (16,151,210) (15,418,333) (13,598,563) (13,506,315)

(b) Movement in deferred tax liabilities during the year

Balance Recognised Recognised Balance Balance Recognised Recognised Balance 1 July in Income in other 30 June 1 July in Income in other 30 June 2017 Statement comprehen- 2018 2016 Statement comprehen- 2017 sive Income sive Income =N=’000 =N=’000 =N=’000 =N=’000 =N=’000 =N=’000 =N=’000 =N=’000 Property, plant and equipment (15,533,056) (618,154) - (16,151,210) (15,509,832) (23,224) - (15,533,056) Employee benefits 293,935 23,526 13,964 331,425 374,057 (95,265) 15,143 293,935 Intangible assets - - - - (30,256) 30,256 - - Unrealised exchange losses 162,834 296,650 - 459,484 1,000,252 (837,418) - 162,834 Inventories 880,091 100,360 - 980,451 584,037 296,054 - 880,091 Trade and other receivables 737,992 33,662 - 771,654 641,200 96,792 - 737,992 Other items (48,111) 57,744 - 9,633 (273) (47,838) - (48,111) (13,506,315) (106,212) 13,964 (13,598,563) (12,940,815) (580,643) 15,143 (13,506,315)

There are no unrecognised deferred tax assets and liabilities at the end of the current and preceding year.

28. Trade and other payables (a) Trade and other payables comprise: 2018 2017 =N= ’000 =N= ’000 Trade payables 20,029,198 20,514,653 Other payables and accrued expenses 9,179,942 9,138,162 Amount due to related parties (Note 32(c)) 1,966,585 13,399,803 31,175,725 43,052,618

(b) Changes in trade and other payables in the statement of cash flows 2018 2017 =N= ’000 =N= ’000 Change in trade and other payables (11,876,893) 5,522,637 Exchange di¨erence on foreign currency payables (1,856,431) (900,258) Value added tax paid during the year 4,242,832 3,501,289 E¨ect of accruals for property, plant and equipment (2,315,259) (673,553) (11,805,751) 7,450,115

The Company’s exposure to currency and liquidity risk related to trade and other payables is disclosed in Note 29.

94 NOTES TO THE FINANCIAL STATEMENTS

29. Financial risk management and financial instruments The Company has exposure to the following risks arising from financial instruments: – Credit risk – Liquidity risk – Market risk

This note presents information about the Company’s exposure to each of the above risks, the Company’s objectives, policies and processes for measuring and managing risk, and the Company’s management of capital. Further quantitative disclosures are included throughout these financial statements.

Risk management framework The Risk Management Committee is responsible for developing and monitoring the Company’s risk management policies which are established to identify and analyse the risks faced by the Company, to set appropriate risk limit and controls, and monitor risks and adherence to limits.

Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company’s activities.

The Company’s Finance and Risk Committee oversees how management monitors compliance with the Company’s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company.

Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the audit committee.

(a) Credit risk Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company’s receivables from customers and related parties. The carrying amount of lease financial assets represents the maximum credit exposure.

Trade and other receivables The Company’s exposure to credit risk in relation to trade receivables is influenced mainly by the individual characteristics of each customer. The demographics of the Company’s customer base, including the default risk of the industry and customers’ operating environment, has influence on credit risk. The Company has established a credit policy under which each new customer is assessed individually for creditworthiness before the Company’s standard payment and delivery terms and conditions are o¨ered. Credit limits are established for each customer, which represents the maximum open amount. These limits are reviewed periodically.

Other receivables includes employee debtors, related party receivables and other sundry receivables. The Company reviews amounts due in respect of other receivables on a periodic basis taking into consideration functions such as continued employment relationship/going concern status of the respective counterparties and its ability to o¨set amounts receivable against balances due to these counterparties.

In monitoring customer’s credit risk, customers are classified according to their credit characteristics,including whether they are an individual, corporate and wholesale, geographic location, maturity and existence of previous di¢culties. The Company establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables. The main component of this allowance are a specific loss component that relates to individually significant exposures. The collective loss allowance is determined based on historical date of payment statistics for similar financial assets.

The maximum exposure to credit risk for trade and other receivables and related impairment losses at the reporting date was: 95 NOTES TO THE FINANCIAL STATEMENTS

2018 2017 =N= ’000 =N= ’000 Trade receivables 21,031,352 18,588,394 Impairment provision (2,420,611) (2,288,849) 18,610,741 16,299,545

Other receivables (current and non-current) 3,872,461 1,434,721 Impairment provision (151,570) (155,178) 3,720,891 1,279,544

Due from related parties 525,623 5,103,628 22,857,255 22,682,717

Impairment losses The aging of trade and other receivables and related impairment allowances for the Company at the reporting date was: Impair Carrying Impair Carrying Gross ment amount Gross ment amount 2018 2018 2018 2017 2017 2017 =N=’000 =N=’000 =N=’000 =N=’000 =N=’000 =N=’000 Not past due 18,436,585 - 18,436,585 18,336,730 - 18,336,730 Past due 1 - 30 days 2,702,161 - 2,702,161 2,117,613 - 2,117,613 Past due 31 - 60 days 511,914 - 511,914 908,554 - 908,554 Past due 61 - 180 days 507,647 - 507,647 663,639 - 663,639 Past due greater than 180 days 3,271,130 (2,572,182) 698,948 3,100,208 (2,444,027) 656,181 25,429,437 (2,572,182) 22,857,255 25,126,744 (2,444,027) 22,682,717

The movement in the allowance for impairment in respect of trade and other receivables during the year was as follows: 2018 2017 =N= ’000 =N= ’000 Balance at 1 July (2,444,027) (2,444,027) Trade receivable write-o¨ 275,286 - Impairment loss recognised in income statement (403,441) - Balance at 30 June (2,572,182) (2,444,027)

The impairment loss as at 30 June relates to trade and other receivables which in the Company’s assessment will not be recoverable from the counter parties mainly due to their economic circumstances. The Company believes that the unimpaired amounts past due dates are collectible, based on historic payment behaviour and extensive analyses of the underlying counter party’s credit ratings. Based on historic default rates, the Company believes that, apart from the above, no additional impairment allowance is necessary in respect of trade and other receivables past due. The impairment loss is included in administrative expenses.

Cash and cash equivalents The Company held cash and cash equivalents of N7,451 million as at 30 June 2018 (2017: N6,595 million), which represents its maximum credit exposure on these assets. The cash and cash equivalents are held by reputable financial institutions in Nigeria.

Restricted cash The Company held unclaimed dividends amounting to N3,361 million (2017: N3,338 million) in short-term deposit with reputable financial institutions in Nigeria. This represents the Company’s maximum credit exposure on this asset.

96 NOTES TO THE FINANCIAL STATEMENTS

Credit quality of cash and cash equivalents 2018 2017 Credit Ratings =N= ’000 =N= ’000 A - 3,720,419,874 AA- 594,895,358 1,171,655,091 A+ 6,345,496,731 685,890,322 BBB+ 307,026,003 1,013,938,665 BBB 203,645,455 2,609,554 Cash and cash equivalents 7,451,063,547 6,594,513,506

Bank overdraft has been excluded from this rating Credit rating keys A- A financial institution of good financial condition and strong capacity to meet its obligations as and when they fall due. Adverse changes in the environment (macro-economic, political and regulatory) will result in a medium increase in risk attributable to an exposure to this financial institution. However, financial condition and ability to meets its obligations as and when they fall due should remain largely unchanged.

AA- A financial institution of very good financial condition and a strong capacity to meet its obligations as and when they fall due. However, financial condition and ability to meet obligations as and when they fall due should remain strong.

BBB A financial institution of satisfactory financial condition and adequate financial capacity to meet its obligations as and when they fall due. It may have one major weakness which, if addressed, should not impair its ability to meets obligations as and when they fall due. Adverse changes in the environment (macro-economic, political and regulatory) will result in a medium increase in risk attributable to an exposure to this financial institution.

A+ (plus) or – (minus) may be added to a rating. A plus added to a rating indicates that the rating may be raised. A minus means that the rating may be lowered. When no plus or minus is added to the rating, this means that the rating is unlikely to change. A positive or negative added to a rating is therefore a reflection of the rating outlook.

The credit ratings were sourced from Fitch Ratings Inc, Global Credit Rating Company Limited and Agusto & Co. Limited. All other financial assets are not rated.

(b) Liquidity risk Liquidity risk is the risk that the Company will encounter di¢culty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company’s approach to managing liquidity is to ensure, as far as possible, that it will always have su¢cient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation.

The credit terms with customers and payment terms to its vendors are favourable to the Company in order to help provide su¢cient cash on demand to meet expected operational expenses, including the servicing of financial obligations. This excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters. The Company had no overdraft facilities with its banks as at 30 June 2018 (2017: N7,538 million). The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting agreements:

97 NOTES TO THE FINANCIAL STATEMENTS

Total Carrying Contractual 6 months 6-12 Amount Cashflows or Less months 1-2years 2-5years =N=’000 =N=’000 =N=’000 =N=’000 =N=’000 =N=’000 Non-derivative financial liabilities 30 June 2018 Unsecured term loans (5,572,958) (5,572,958) (5,572,958) - - - Dividend payable (3,211,277) (3,211,277) (3,211,277) - - - Trade and other payables (31,175,725) (31,175,725) (31,175,725) - - - Related party loan (8,161,915) (8,795,625) (252,055) (312,996) (674,191) (7,556,383) (48,121,875) (48,755,585) (40,212,015) (312,996) (674,191) (7,556,383)

Non-derivative financial assets Cash and cash equivalents 7,451,064 7,451,064 7,451,064 - - - Trade and other receivables 22,857,255 22,857,255 22,158,307 698,948 - - Restricted cash 3,360,720 3,360,720 3,360,720 - - - 33,669,039 33,669,039 32,970,091 698,948 - - Liquidity (gap)/surplus (14,452,836) (15,086,546) (7,241,924) 385,952 (674,191) (7,556,383)

30 June 2017 Non-derivative financial liabilities Unsecured term loans (10,243,454) (11,165,339) (7,303,919) (1,682,711) (2,178,709) - Finance lease liabilities (2,049,090) (2,429,116) (1,389,820) (946,856) (89,015) (3,425) Dividend payable (3,482,928) (3,482,928) (3,482,928) - - - Trade and other payables (43,052,618) (43,052,618) (43,052,618) - - - Bank overdraft (7,537,760) (7,537,760) (7,537,760) - - - Related party loan (22,092,495) (26,866,529) (753,349) (596,754) (1,186,638) (24,329,788) (88,458,345) (94,534,290) (63,520,394) (3,226,321) (3,454,362) (24,333,213)

Non-derivative financial assets Cash and cash equivalents 6,594,514 6,594,514 6,594,514 - - - Trade and other receivables 22,682,717 22,682,716 22,026,536 656,181 - - Restricted cash 3,338,351 3,338,351 3,338,351 - - - 32,615,582 32,615,581 31,959,401 656,181 - - Liquidity gap (55,842,763) (61,918,709) (31,560,993) (2,570,140) (3,454,362) (24,333,213)

(c) Market risk Market risk is the risk that changes in market prices, such as foreign exchange rate, interest rates and equity prices will a¨ect the Company’s income or the value of its holding of financial instruments. The objective of market risk management is to manage and control market risk exposure within acceptable parameters, while optimising the return.

The Company manages market risks by keeping costs low through di¨erent cost optimization initiatives and productivity agenda. Furthermore market developments are monitored constantly through scenario planning and events assessed regularly with view to taking mitigating actions where necessary.

(i) Currency risk The Company is exposed to currency risk to the extent that there is a mismatch between the currencies in which sales and purchases are denominated and the Naira. The currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to the changes in foreign exchange rates. In managing currency risk, the Company aims to reduce the impact of short-term fluctuations on earnings. Although the Company employs various measures including matching sales and purchase currencies to mitigate exposure to foreign exchange rate movement, over the longer term, however, permanent changes in exchange rates would 98 NOTES TO THE FINANCIAL STATEMENTS

have an impact on profit. The Company monitors the movement in the currency rates on an ongoing basis. The Company’s exposure to foreign currency risk was as follows in notional terms:

30 June 18 30 June 17 GBP (£) Euro (€) US ($) GBP (£) Euro (€) US ($) 000 000 000 000 000 000 Financial assets Cash and cash equivalents 441 1,253 2,215 2,238 1,617 4,540 Trade and other receivables 120 - 1,030 734 342 4,360 561 1,253 3,245 2,972 1,959 8,900

Financial liabilities Trade and other payables (786) (2,798) (7,560) (165) (470) (28,109) Related party loan - - (22,478) - - (71,827) (786) (2,798) (30,038) (165) (470) (99,936) Net exposure (225) (1,545) (26,793) 2,807 1,489 (91,036)

The following significant exchange rates applied during the year: Average rate Reporting date spot rate 2018 2017 2018 2017 =N= =N= =N= =N= GBP (£) 1 485.99 409.25 476.63 477.25 Euro (€) 1 430.08 352.80 421.80 418.64 US ($) 1 359.99 322.24 361.08 367.12

Sensitivity analysis on foreign currency rates A ten percent (10%) strengthening of the Naira, against the Euro, Dollar and GBP at 30 June would have increased/ (decreased) income statement and equity by the amounts shown below. This analysis is based on foreign currency exchange rate variances that the Company considered to be reasonably possible at the end of the reporting period and has no impact on equity. The analysis assumes that all other variables, in particular interest rates, remain constant. The analysis is performed on the same basis for 2017, albeit that the reasonably possible foreign exchange rate variances were di¨erent, as indicated below.

Decrease/(Increase) in income statement =N= ’000 30 June 2018 GBP (£) 10,731 Euro (€) 65,174 US ($) 967,450

30 June 2017 GBP (£) (200,946) Euro (€) (93,503) US ($) 5,013,107

A ten percent (10%) weakening of the Naira against the above currencies would have had the equal but opposite e¨ect on the above currencies to the magnitude of the amounts shown above, on the basis that all other variables remain constant.

99 NOTES TO THE FINANCIAL STATEMENTS

(ii) Interest rate risk At the reporting date, the interest rate profile of the Company’s interest-bearing financial instruments was:

2018 2017 =N= ’000 =N= ’000 Fixed rate instruments Short-term bank deposits 3,389,654 3,367,285 Bank overdrafts - (7,063,778) 3,389,654 (3,696,493)

Variable rate instruments Loans and borrowings (13,734,873) (27,321,261)

The Company does not account for any fixed rate financial assets and liabilities at fair value through income statement. Therefore a change in interest rates at the end of the reporting period would not a¨ect income statement.

(d) Capital management “The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Board of Directors monitors the return on capital as well as the level of dividends to ordinary shareholders. The Company considers total equity in the statement of financial position to be its capital.

The Company’s management is committed to enhancing shareholder value in the long term, both by investing in the businesses and brands so as to improve the return on investment and by managing the capital structure. The Company manages its capital structure to achieve capital e¢ciency, maximise flexibility and give the appropriate level of access to debt markets at attractive cost levels.

The Company regularly assesses its debts and equity capital levels against its stated policy for capital structure. The Company’s management monitors the return on capital, which the Company defines as result from operating activities divided by total shareholders’ equity. Management also monitors the level of dividends to all shareholders.

The Company’s return on capital as at the end of the reporting period was as follows: 2018 2017 =N= ’000 =N= ’000 Result from operating activities 13,386,248 10,186,330 Total shareholders’ equity 87,588,174 42,943,015 Return on capital 15% 24%

Furthermore, the Company’s adjusted net debt to equity ratio at the end of the reporting period was as follows: 2018 2017 =N= ’000 =N= ’000 Total liabilities 65,666,794 103,095,201 Cash and cash equivalents (7,451,064) (6,594,514) Adjusted net debt 58,215,730 96,500,687 Total equity 87,588,174 42,943,015 Adjusted net debt to equity ratio: 0.66 2.25

There was no change in the Company’s approach to capital management during the current and preceding year.

(e) Fair values - Financial instruments not measured at fair value Fair values versus carrying amounts The fair values of financial assets and liabilities which have been determined using level 2 hierarchy, together with the carrying amount shown in the statement of financial position, are as follows:

100 NOTES TO THE FINANCIAL STATEMENTS

2018 2017 Carrying Fair Carrying Fair Amount Value Amount Value =N=’000 =N=’000 =N=’000 =N=’000 Liabilities measured at amortised cost Unsecured term loans 5,572,958 5,572,958 10,243,454 10,243,454 Finance lease liabilities - - 2,049,090 2,047,394 Related party loan 8,161,915 8,161,915 22,092,495 22,092,495 13,734,873 13,734,873 34,385,039 34,383,343

The Company’s financial instruments with the exception of non-current other receivables are short term financial instruments. Accordingly, management believes that their fair values are reasonable approximation of their carrying values.

The fair value of the financial instruments above have been determined using the discounted cash flows technique. The valuation model considers the present value of expected cash flows using market related yields as follows:

2018 2017 =N= ’000 =N= ’000 Unsecured term loans 17.51% 15.50% Finance lease liabilities 17.37% 15.50%

The future cash flows are based on contractual amounts and considers the probability of occurrence of the cash flows. There are no significant unobservable inputs. The fair values were determined on the same basis in prior year and there was no transfer between levels during the year.

30. Operating Leases (a) Leases as lessee The Company leases a number of o¢ces, warehouses, factory facilities and trucks for distribution of its products under operating leases. During the year, an amount of N1,159 million was recognised as an expense in income statement in respect of these leases (2017: N1,336 million). Lease rentals are paid upfront and included in prepayments and charged to the profit or loss over the life of the lease.

(b) Leases as lessor The Company leases some of its plant and machinery and motor vehicles to third parties under operating lease arrangements. Income from these operating lease arrangements during the year was N423 million (2017: N286million). At year end, minimum lease payments under operating lease rental commitments are receivable as follows:

2018 2017 =N= ’000 =N= ’000 Less than one year 817,551 1,038,878 Between one and two years 36,474 211,102 Between two and three years 2,970 25,071 Between three and four years - 2,435 856,995 1,277,486

31. Contingencies (a) Guarantee and contingent liabilities Contingent liabilities at the reporting date arising in the ordinary course of business out of guarantees relating customs bond amounted to N2,900 million (2017: N3,000 million ). In the opinion of the Directors, no material loss is expected to arise from these guarantees.

101 NOTES TO THE FINANCIAL STATEMENTS

(b) Pending litigation and claims The Company is subject to various claims and other liabilities arising in the normal course of business. The contingent liabilities in respect of pending litigation and other liabilities amounted to N1,774 million as at 30 June 2018 (2017: N2,542 million ). In the opinion of the Directors and based on legal advice, no material loss is expected to arise from these claims. . (c) Technical service fees and royalties liabilities Guinness Nigeria Plc pays royalties and technical service fee for trademark and quality control as well as technical know-how and support services respectively upon approval of such licenses by the National O¢ce for Technology Acquisition and Promotion (NOTAP). The application for NOTAP approval for some of the licenses which have since expired is in progress hence the liabilities will be recognized upon obtaining of the NOTAP certificates.

(d) Financial commitments The Directors are of the opinion that all known liabilities and commitments, which are relevant in assessing the state of a¨airs of the Company, have been taken into consideration in the preparation of these financial statements.

32. Related Parties transactions and balances (a) Parent and ultimate controlling entity Related parties include the parent and ultimate controlling company, Diageo plc and other Diageo group entities. Directors, their close family members and any employee who is able to exert a significant influence on the operating policies of the Company are considered as related parties. Key management personnel are also regarded as related parties. Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including any director (whether executive or otherwise) of the Company.

As at 30 June 2018, Guinness Overseas Limited and Atalantaf Limited owned 50.18% (2017: 46.48%) and 7.84% (2017: 7.84%) respectively of the issued share capital of the Company.

(b) Transactions with related parties The Company has transactions with its parent and other related parties who are related by virtue of being members of the Diageo group. The total amounts due to related parties by nature of the transactions are shown below:

(i) Trademark and technology licences Diageo Plc, through some of its members has given Guinness Nigeria Plc exclusive rights to the know-how, manufacturing, distribution and marketing of its international brands namely, Guinness Foreign Extra Stout, Guinness Extra Smooth, Guinness African Special, Malta Guinness, Malta Guinness Low Sugar, Harp Lager, Smirno¨ Ice, Smirno¨ Ice - Double Black, Satzenbrau Lager, Snapp, Orijin, Orijin Bitters, Orijin Zero non-alcoholic and Masters Choice. In consideration of this a royalty of 0.5% of net sales value and a technical service fee of 2% of net sales value are payable by Guinness Nigeria Plc to its related parties for Trademark and technology licences respectively. The royalty and technical service fees payable by Guinness Nigeria Plc under these agreements for the current financial year is N504 million (2017: N1,373 million).

These licences have been approved by the National O¢ce for Technology Acquisition and Promotion (NOTAP). The certificates of registration, Diageo Great Britain - Certificate No. CR 006561 for Trademark and Quality control with maximum approved amount payable of N1,540 million, Diageo North America INC - Certificate Nos. CR 006493 for Technical know-how and support services and CR 006491 for Trademark and Quality control with maximum approved amount payable of N180 million, Diageo Ireland - Certificate No. CR 006531 for Trademark and Quality control with maximum approved amount of N1,809 million, Diageo Brands B.V - Certificates No. CR 006490 for Technical know-how and support services with maximum approved amount of N36 million are valid from 1 March, 2017 to 30 April, 2020.

102 NOTES TO THE FINANCIAL STATEMENTS

(ii) Purchases, sales, promotional support, other services and dividend

Transaction Value Balance due (to)/ from 2018 2017 2018 2017 =N=’000 =N=’000 =N=’000 =N=’000 Purchases, promotional support and other services Ultimate parent (29,545) (225,976) (3,145) (20,207) Other related parties (17,598,655) (17,715,590) (2,923,107) (12,425,389 Technical service fees and royalties Other related parties (503,859) (1,373,112) 959,667 (954,207)

Dividend payable Other related parties (525,210) (3,060,079) - - (18,657,269) (22,374,757) (1,966,585) (13,399,803)

Sales and other services Ultimate parent 182,005 131,083 20,088 29,222 Other related parties 20,487,525 19,742,686 505,535 5,074,406 20,669,530 19,873,769 525,623 5,103,628 Related party loan and finance costs 13,930,580 (22,092,495) (8,161,915) (22,092,495)

(c) Transactions with key management personnel

Key management personnel compensation: In addition to their salaries, the Company also provides non-cash benefits to executive directors and executive o¢cers and contributes to post employment defined benefit and defined contribution plans on their behalf. In accordance with the terms of the plans, directors and executive o¢cers retire at the age of 55 at which time they become entitled to receive post employment benefits.

Executive o¢cers also participate in share based payment plans (see Note 26) and the Company’s long service awards benefit plan. Key management personnel compensation comprised:

2018 2017 =N= ’000 =N= ’000 Short-term employee benefits Salaries and wages 735,501 316,571

Long-term employee benefits Post-employment benefits - 137,947

Share based payments plan Diageo executive share options/awards 77,026 239,160 812,527 693,678

33. Events after the reporting date There are no significant subsequent events, which could have had a material e¨ect on the financial statements of the Company as at 30 June 2018 that have not been adequately provided for or disclosed in the financial statements.

34 Comparatives Where necessary, comparative figures have been adjusted to conform with changes in presentation in the current year.

103 104 105

OTHER NATIONAL DISCLOSURES 106 VALUE ADDED STATEMENT FOR THE YEAR ENDED 30 JUNE

2018 2017 =N= ’000 % =N= ’000 % Revenue 142,975,792 125,919,817 Bought-in materials and services - Local (82,324,445) (76,004,082) - Imported (28,164,038) (19,319,676) 32,487,309 30,596,059

Other income 668,363 847,333 Finance income 2,201,476 2,253,385 Valued added 35,357,148 100 33,696,777 100

Distribution of Value Added: To Government: Taxation 3,225,559 9 738,361 2

To Employees: Salaries, wages and fringe benefits 9,599,511 27 11,545,819 34

To Providers of Finance: Finance costs 5,644,560 16 9,777,634 29

Retained in the Business: For replacement of property, plant and equipment 8,874,523 25 8,635,004 26 For replacement of intangible assets 364,206 1 358,628 1 Declared dividend 963,768 3 752,944 2 To augment reserve 6,685,021 19 1,888,387 6 35,357,148 100 33,696,777 100

107 FINANCIAL SUMMARY

Income Statement 2018 2017 2016 2015 2014 =N= ’000 =N= ’000 =N= ’000 =N= ’000 =N= ’000

Revenue 142,975,792 125,919,817 101,973,030 118,495,882 109,202,120

Operating profit/(loss) 13,386,248 10,186,330 4,415,623 15,667,379 16,123,378

Profit/(loss) before taxation 9,943,164 2,662,081 (2,347,241) 10,795,102 11,681,560

Profit/(loss) for the year 6,717,605 1,923,720 (2,015,886) 7,794,899 9,573,480

Statement of comprehensive income Profit after taxation 6,717,605 1,923,720 (2,015,886) 7,794,899 9,573,480 Other comprehensive (loss)/ income net of tax (32,584) (35,333) 172,539 32,115 (77,950) Comprehensive income/(loss) for the year 6,685,021 1,888,387 (1,843,347) 7,827,014 9,495,530

Per 50k share data (in kobo) Basic earnings/(loss) per share 330 128 (134) 518 636 Declared dividend per share 64 50 320 320 700

Statement of Financial Position 2018 2017 2016 2015 2014 =N= ’000 =N= ’000 =N= ’000 =N= ’000 =N= ’000 Employment of funds Property, plant and equipment 97,602,019 87,324,546 87,232,984 87,754,074 90,683,405 Intangible assets 1,000,214 1,364,420 1,708,807 942,887 608,138 Prepayments 42,688 120,813 180,818 13,283 171,119 Other receivables - 1,614 - 24,876 25,570 Net current assets/(liabilities) 11,762,932 (6,492,839) (19,239,787) (12,588,832) (3,408,438) Loans and borrowings-non current (8,116,367) (24,889,439) (14,034,546) (12,250,754) (27,429,985) Employee benefits (1,104,749) (979,785) (1,246,856) (2,212,922) (3,028,651) Deferred tax liabilities (13,598,563) (13,506,315) (12,940,815) (13,341,236) (12,559,441) Net assets 87,588,174 42,943,015 41,660,605 48,341,376 45,061,717

Funds employed Share capital 1,095,191 752,944 752,944 752,944 752,944 Share premium 47,447,029 8,961,346 8,961,346 8,961,346 8,961,346 Share based payment reserve - - - 18,582 18,582 Retained earnings 39,045,954 33,228,725 31,946,315 38,608,504 35,328,845 Shareholders’ funds 87,588,174 42,943,015 41,660,605 48,341,376 45,061,717

Net assets per share (kobo) 3,999 2,852 2,767 3,210 2,992 108 SHAREHOLDERS’ INFORMATION

Share Capital History The share capital history of the Company is as shown below. The issued and paid-up share capital of the Company as at 30 June 2018 is:

AUTHORISED SHARE CAPITAL ISSUED AND FULLY PAID

DATE VALUE (N) SHARES VALUE (=N=) SHARES CONSIDERATION

31/08/72 3,000,000 6,000,000 3,000,000 6,000,000 Conversion to Naira 14/12/72 5,000,000 10,000,000 5,000,000 10,000,000 Script Issue(2:3) 30/03/76 8,000,000 16,000,000 8,000,000 16,000,000 Script Issue(3:5) 5/11/76 10,000,000 20,000,000 10,000,000 20,000,000 Public Issue 11/3/77 15,000,000 30,000,000 15,000,000 30,000,000 Script Issue(1:2) 28/09/78 25,000,000 50,000,000 25,000,000 50,000,000 Script Issue(2:3) 21/02/80 37,500,000 75,000,000 37,500,000 75,000,000 Script Issue(1:2) 25/02/82 50,000,000 100,000,000 50,000,000 100,000,000 Script Issue(1:3) 15/03/84 75,000,000 150,000,000 75,000,000 150,000,000 Script Issue(1:2) 13/03/84 100,000,000 200,000,000 100,000,000 200,000,000 Script issue(1:3) 26/07/90 150,000,000 300,000,000 150,000,000 300,000,000 Script Issue(1:2) 18/07/90 200,000,000 400,000,000 180,000,000 360,000,000 Rights Issue(1:5) 29/09/95 350,000,000 700,000,000 270,000,000 540,000,000 Right Issue (1:2) 2/1/97 350,000,000 700,000,000 339,519,721 679,039,441 Conversion of ICLS to shares 19/06/97 400,000,000 800,000,000 350,519,721 679,039,441 Scrip Dividend to Shares 16/07/97 400,000,000 800,000,000 350,733,576 701,467,151 Scrip Dividend to Shares 13/07/98 400,000,000 800,000,000 353,982,125 707,964,249 Increase in authorised 20/11/02 1,000,000,000 2,000,000,000 353,982,125 707,964,249 share capital 20/11/03 1,000,000,000 2,000,000,000 89,970,207 1,179,940,415 Bonus issue(2:3) 16/11/06 1,000,000,000 2,000,000,000 737,462,759 1,474,925,519 Bonus issue(1:4) 10/7/08 1,250,000,000 2,500,000,000 737,462,759 1,474,925,519 Increase in authorised share capital 2/11/12 1,250,000,000 2,500,000,000 752,944,094 1,505,888,188 Scrip Dividend to Shares 9/22/17 1,250,000,000 2,500,000,000 1,095,191,410 2,190,382,819 Right Issue(5:11)

Substantial Interest in Shares: According to the register of members, the following persons held more than 5% of the issued share capital of the Company as at 30 June 2018.

Shareholders Number of Shares Percentage

Guinness Overseas Limited 1,099,230,804 50.18% Atalantaf Limited 118,052,388 7.84% SHAREHOLDERS’ INFORMATION 109

Statistical Analysis of Shareholding a) The shares of the Company are held in the ratio of 46% by Nigerians and 54% by o¨shore investors. b) The Company’s issued shares of 2,190,382,819 as at year end are held by shareholders as follows:

Statistical Analysis of Shareholding as at 30 June 2018

Range Total Holders % Units %

1 - 1,000 30,192 44% 11,855,767 1% 1,001 - 5,000 27,961 40% 71,440,519 3% 5,001 - 10,000 6,157 9% 44,447,339 2% 10,001 - 50,000 3,991 6% 76,200,890 3% 50,001 - 100,000 355 1% 24,940,811 1% 100,001 - 500,000 303 0% 61,112,423 3% 500,001 - 1,00,000 48 0% 33,612,614 2% 1,000,001 - 1,000,000,000 46 0% 767,541,652 35% 1,000,000,001 - 2,000,000,000 1 0% 1,099,230,804 50% Grand Total 69,054 100% 2,190,382,819 100%

Ten – Year Dividend History Dividend in the last ten years Year Profit/(loss) After Taxation Dividend Proposed (=N=) Dividend per Share (k) 2003 6,636,335,000 5,604,717,000 475 2004 7,913,503,000 6,194,687,000 525 2005 4,859,019,000 3,539,821,000 300 2006 7,440,102,000 4,719,762,000 400 2007 10,691,060,000 6, 637,164,836 450 2008 11,860,880,000 8, 849, 553,000 600 2009 13, 541, 189, 000 11,061,941,393 750 2010 13, 736, 359, 000 12, 168, 135,531 825 2011 17,927,933,821 14,749,255,190 1,000 2012 14,671,194,963 11,799,404,152 800 2013 11,863,726,504 10,541,217,309 700 2014 9,570,223,809 4,818,842,202 320 2015 9,570,223,809 4,818,842,202 320 2016 (2,015,886,000) 752,944,094 50 2017 1,923,720,000 963,768,440 64 2018** 6,717,605,142 4,030,563,085 184

** Dividend has not been declared by shareholders Dividends declared were gross as they were subject to deduction of withholding tax at the appropriate rates. 110 SHAREHOLDERS’ INFORMATION

Unclaimed Dividends and Share Certificates Members are hereby informed that some dividend warrants and share Unclaimed Dividends With Dates certificates have been returned to the Registrars’ o¢ce unclaimed because the addresses could not be traced. This notice is to request all a¨ected Dividends Dates Declared shareholders to contact: 76 24/11/2006 In the case of unclaimed dividends & Share Certificates 77 15/11/2007 The Registrar 78 10/07/2008 Veritas Registrars Limited Plot 89A, Ajose Adeogun Street, 79 28/11/2008 Victoria Island, Lagos 80 03/11/2009

Those applying to the Company Secretary for payment of unclaimed 81 15/11/2010 dividends should also include either the original dividend warrants or Photostat copies of their certificates to facilitate payment. 82 10/11/2011 83 05/11/2012 The Company Secretary’s o¤ce Guinness Nigeria Plc 84 15/11/2013 24, Oba Akran Avenue P.M.B. 21071, Ikeja, Lagos 85 14/11/2014 Tel: +234 1 270 9100 Fax: +234 1 2709338 86 26/11/2015 e-mail: [email protected] 87 23/11/2016

88 25/10/2017

112 COMPLAINTS MANAGEMENT POLICY

1. Introduction management of complaints. Policy and practices are Guinness Nigeria Plc (“GNPLC” 2. Establish a standard regularly evaluated and or “the Company”) is committed approach to complaints the information is used to to providing excellent service handling including improve services. to all our shareholders. Our aim the establishment of is to continuously improve our performance indicators to 4. Scope service to ensure we are meeting monitor compliance. their needs and expectations and 3. Ensure that the relevant 4.1 This Policy shall apply to issues, to encourage feedback on our employees of the Company enquiries or complaints from performance. This Policy provides and our Registrar are aware shareholders to the Company comprehensive guidelines for the of their responsibilities and or the Registrar regarding management of shareholders’ are empowered to manage shareholders’ rights, interests or issues and complaints by the complaints privileges and requiring a formal Company and our Registrar. 4. Ensure that complaints or informal response. and enquiries from the We recognize that complaints Company’s shareholders are 4.2 The Policy shall not apply to and compliments provide unique managed in a fair, impartial complaints on matters that are information about the quality of and e¢cient timely manner. sub-judice or which do not relate service our shareholders receive. to shareholders’ rights, interests The management of a complaint 3. Principles or privileges. provides the opportunity for This Complaints Management complainants to have their issues Policy is underpinned by the 5. Roles and Responsibilities resolved promptly and e¢ciently following guiding principles: ensures that any identified risks 5.1 The Company Secretary are managed appropriately and • The management of that action is taken to minimise or Guinness Nigeria Plc and our The Company Secretary has eliminate those risks. Registrar are committed to ultimate responsibility for providing quality service to ensuring that shareholders’ Guinness Nigeria Plc has all our shareholders. complaints are received and therefore issued this Complaint • Shareholders are attended to in a timely and Management Policy (“the Policy”) encouraged and enabled to e¢cient manner and shall in line with the requirements provide feedback about the ensure that the Registrar and of the Securities and Exchange service they receive from the all employees of the Company Commission’s Rules Relating to Company and our Registrar. charged with the implementation the Complaints Management • All complaints are of this Policy discharge their Framework of the Nigerian acknowledged and responsibilities e¢ciently and in a Capital Market (“SEC Rules”) responded to promptly. timely manner. issued on 16th February, 2015 and • All complaints are dealt with the Nigerian Stock Exchange’s in a manner that is e¨ective, 5.2 The Registrar Directive (NSE/LARD/LRD/ complete, fair to all parties CIR6/15/04/22) to all Listed and provides just outcomes. The Registrar shall be the first Companies (“the NSE Directive”) • Complaint information is point of call for all shareholders’ issued on 22nd April, 2015. openly communicated while issues and complaints and shall protecting confidentiality ensure that these are attended 2. Objectives and personal privacy. to courteously, promptly and • All complaints are recorded e¢ciently. The objectives of this Complaints to enable review of Management Policy are to: individual cases and report 6. Steps in the Complaints on aggregated complaints Management Process 1. Assist the Company with information. the timely and e¨ective • Our Complaint Management 6.1 Complaints and enquiries by 113 COMPLAINTS MANAGEMENT POLICY

shareholders may be made as c) complaints or enquiries received • Nature and details of the enquiry follows: by e-mail are acknowledged or complaint. within two (2) working days of a) Contact the Registrar: receipt. • Action taken/status. Shareholders who wish to make a complaint/enquiry shall in the first d) complaints or enquiries received • Date of the resolution of the instance contact the Registrar. by post are responded to within complaint. The Registrar manages all the five (5) working days of receipt. registered information relating The Company shall also provide to all shareholdings, including e) all other complaints or enquiries information on the details shareholder name(s), shareholder are resolved within ten (10) and status of complaints to address and dividend payment working days of receipt. the Securities and Exchange instructions amongst others. Commission and The Nigerian f) The Nigerian Stock Exchange is Stock Exchange on a quarterly Upon receipt of a complaint or notified, within two (2) working basis. an enquiry, the Registrar shall days, of the resolution of a immediately provide the relevant complaint or enquiry. 8. Liaison with the Registrar details of such complaint or During the course of investigating enquiry to Guinness Nigeria Plc g) where a complaint/enquiry a shareholder’s enquiry, complaint for monitoring, record keeping cannot be resolved within the or feedback, the Company may and reporting purposes. stipulated timeframe set out liaise with the Registrar to: above, the shareholder shall be In resolving complaints or notified that the matter is being • determine the facts; enquiries, the Registrar shall be investigated. It should be noted • determine what action has been guided by the timelines stipulated that delays may be experienced in undertaken by the Registrar (if in clause 5 (c-f) of this Policy. some situations, including where any); and documents need to be retrieved • coordinate a response with the b) Contact Guinness Nigeria Plc’s from storage. assistance of the Registrar. Company Secretary: If the Registrar is unable to satisfactorily h) the same or similar medium that 9. Contact Details of the Registrar address and resolve a complaint, was used for the initial enquiry issue or enquiry by a shareholder is used in providing a response The Registrar may be contacted within ten (10) working days, the (whether by email, phone, post or as follows: shareholder may contact the fax), unless otherwise notified to o¢ce of the Company Secretary. or agreed with the shareholder. Veritas Registrars Limited (formerly Zenith Registrars 6.2. Where a complaint or an enquiry 7. Electronic Complaints Register Limited) is sent to Guinness Nigeria Plot 89A, Ajose Adeogun Street, Plc directly, the Company 7.1 The Company shall maintain an Victoria Island, Lagos upon receipt of the complaint electronic complaints register. or enquiry, shall use its best Telephone: +234 1 2708930 -4; endeavours to ensure that: 7.2 The electronic complaints register +234 1 2793873; +234 1 2716116 shall include the following E-mail: [email protected] a) relevant details of the complaint information: Website: www.veritasregistrars.com or enquiry are immediately recorded. • The date that the enquiry or 10. Contact Details of the Company complaint was received. Secretary b) a response is provided by the • Complainant’s information Company or the Registrar within (including name, address, Shareholders seeking to escalate the time frame set out in sub- telephone number, e-mail unresolved complaints are clauses c-f below. address). 114 COMPLAINTS MANAGEMENT POLICY

invited to contact the Company 13. Review of this Policy Secretary as follows: This Policy may be reviewed from time to time by management The Company Secretary and all changes, amendments or Guinness Nigeria Plc subsequent versions of this Policy 24, Oba Akran Avenue will be published on Guinness P.M.B. 21071, Nigeria Plc website (www. Ikeja, Lagos guinness-nigeria.com).

Telephone: +234 1 2709100 Approved by the Board of E-mail: [email protected] Guinness Nigeria Plc and signed website: www.guinness-nigeria.com on its behalf by:

11. Communication of this Policy This Policy shall be communicated as follows:

• The Policy shall be available Baker Magunda on Guinness Nigeria Plc’s Managing Director/Chief Executive website (www.guinness- O¢cer nigeria.com).

• A shareholder may request a copy of this by contacting the O¢ce of the Company Secretary. Rotimi Odusola Company Secretary • The Policy shall be made available for perusal at General Meetings of the Company.

12. Cost Wherever possible, and subject to statutory requirements, the Company will not charge shareholders for making enquiries, giving feedback, providing a response or for any aspect in the course of resolving a shareholder matter.

However, in some circumstances, the Registrar may charge shareholders a fee (for example, to resend previous dividend statements upon request by the shareholder). GUINNESS NIGERIA KEY DISTRIBUTORS 115

1 EDDINHO NIG. LTD. 36 GARRANZIA NIG. LTD 2 J OGUNGBOLA & SONS LIMITED 37 JINDU BEST GLOBAL LIMITED 3 OYEDOH NIG. LIMITED 38 NOSAMA NIGERIA LIMITED 4 EDDINHO NIG. LTD - ENUGU 39 EDDINHO NIG. LTD - LOKOJA 5 CELESTINE OKEKE AND SONS NIG. LTD 40 HYCO INTERGRATED RESOURCE NIG LTD 6 IFEOMA CHUKWUKA NIGERIA LIMITED 41 KATO ENT LTD 7 PETERCO GLOBAL INVESTMENT LTD 42 INNOVATION ERA NIGERIA LTD 8 SENNA ATLANTIC LIMITED 43 OLAGUNSOYE WILLIAMS LIMITED 9 MIMOSA VENTURES NIGERIA LTD 44 IHECHIDERE ENT NIG LTD 10 OBIANCO INT LTD 45 P. NWAGBOGWU & SONS NIG LTD 11 TASHO NIGERIA LTD 46 NKOB & FNMGBAB STORES LTD 12 K. C. INVEST. (NIG.) LTD 47 EVERDAY MUKON ENT NIG 13 ALMA STORES LIMITED 48 FULLMAN RESOURCES LTD 14 NATHAN OFOMA & SONS LTD 49 CHRISEMUA & SONS NIG. LTD 15 UGONNAYA UGONNA & SONS LTD 50 G. A. DIKE & SONS LTD 16 YVONNE JAY RENTALS LTD 51 P. N. DIBOR & COMPANY LIMITED 17 THAMES AGHEDO ENTERPRISES LTD 52 FOLKY MERCHANT NIG LTD 18 RETAIL SUPERMARKET NIGERIA LTD 53 PARK N SHOP 19 ENOBA & SONS RESOURCES 54 HGOTET OIL NIGERIA LTD 20 CAPSTON BEE NIGERIA LIMITED 55 BUSINESS ALLY LIMITED 21 MODUPE FOLARIN NIG LTD 56 RAYD GLOBAL SOLUTIONS LIMITED 22 OLIVER ONYEKACHI & SONS 57 JOCEAN VENTURES NIGERIA LIMITED 23 SANEG NIGERIA LTD 58 SAMMY MAUTIN NIG LTD 24 J. JOCAC CO.NIG LTD 59 SELEYIBO MULTI GLOBAL COY LIMITED 25 OZONE F&L TRADING COMPANY LIMITED 60 INNOVATION ERA NIG LTD 26 E- UMEH TRADING STORES (NIG) LTD 61 BLESSED SOLO SOLUTION LIMITED 27 D- DEY LTD 62 OMOTAYO STORES 28 B. I. ONYEKA & SONS LIMITED 63 PRIME COMFORT INV TRUST COMPANY 29 TOBROS NIGERIA LIMITED 64 OSAMWENMA GLOBAL ENTERPRISE 30 DENIKE AGORO ENTERPRISES 65 SHADE ‘PHILOMENA STORES LTD 31 ABIKKA TRADING CO LTD 66 ANBSOLITE ACCORD INVESTMENT LIMITED 32 LEXICAN INVESTMENTS LIMITED 67 P. N. IGWE AND SONS TRD CO. LTD 33 JIM HANSON RESOURCES CO. LTD 68 NEXT INTERNATIONAL NIGERIA LIMITED 34 MRS TINA U & ASSOCIATES 69 TOKEM TRADING STORES 35 YTTT DISTRIBUTION LTD 70 FIDWELL LIMITED 116 PROXY FORM 117

68th Annual General Meeting of the Members of Guinness Nigeria Plc to be held at the Congress Hall, Transcorp Hilton Hotel, Abuja, on Wednesday, 24 October 2018 at 11.00 O’clock.

I/We* ……………...... ….………………………………………………………………………… NUMBER OF SHARES

…………...... …………… RESOLUTION FOR AGAINST ABSTAIN Being a member/members of Guinness Nigeria Plc, hereby appoint To declare a dividend To re-elect as Director, ...... …...... …...... …………………………………. Mr. Baker Magunda

or failing him, Mr. B.A. Savage, or failing him Mr. Baker Magunda or To re-elect as Director, failing him Mr. R.J. O’Kee¨e as my /our proxy to act and vote for Mr. Stanley Njoroge me/us and on my/our behalf at the Annual General meeting of the To re-elect as Director Company to be held on Wednesday, 24 October 2018 and at any Mrs. Yemisi Ayeni adjournment thereof. To re-elect as Director Dated this ……...... ….. day of …...... ……..… 2018 Mr. Sunday Dogonyaro To re-elect as Director Shareholder’s signature ………...... ………………… Ms. Ngozi Edozien

*Delete as necessary To re-elect as Director Dr. Omobola Johnson 1. A member (shareholder) entitled to attend and vote at the To fix the remuneration of the Annual General Meeting is entitled to appoint a proxy in his auditors stead. All proxies should be deposited at the Registered O¢ce not less than 48 hours before the time of holding the Meeting. To elect members of the Audit 2. In the case of joint shareholders, any of such may complete the Committee form, but the names of all joint shareholders must be stated. To fix the remuneration of the 3. If the Shareholder is a corporation, this form must be under its Directors common seal or under the hand of an o¢cer or attorney duly authorised. To renew the general mandate 4. Provision has been made on this form for some Directors of of the Company to enter into the Company to act as your proxy, but if you wish, you may recurrent transactions with related parties for the Company’s insert in the blank spaces on the form (marked **) the name day to day operations of the person whether a member of the Company or not, who will attend the Meeting and vote on your behalf instead of any of the Directors. The proxy must produce the admission card Please indicate with an “X” in the appropriate box how you wish sent with the Notice of the Meeting to obtain entrance to the your votes to be cast on the resolution set out above. Unless meeting. otherwise instructed, the proxy will vote or abstain from voting at 5. The proxy must produce the Admission Card sent with the his discretion Notice of Meeting to obtain entrance to the meeting. ADMISSION CARD Please Admit ...... Name of Shareholder To the Annual General Meeting of Guinness Nigeria Plc which will be held at Congress Hall, Trancorp Hilton Hotel, Abuja, on Wednesday, 24 October 2018

...... This admission card must be produced by the Shareholder or his proxy in order to Address of Shareholder obtain entrance to the Annual General Meeting. Number of Shares held Rotimi Odusola Company Secretary 118 AFFIX E-DIVIDEND MANDATE FORM CURRENT PASSPORT 119 (To be Stamped by Bankers)

Please write your name at Please note that Only Clearing Banks are acceptable the back of your passport photograph NAME OF SHAREHOLDER’S TICK COMPANY ACCOUNT NO.

INSTRUCTION Guinness Nigeria Plc Please complete all sections of this form to make it eligible for processing and return to the address below:

The Registrar Veritas Registrars Limited 89, Ajose Adeogun Street Victoria Island Lagos.

I/We hereby request that henceforth, all my/our dividend payment(s) due to me/us from my/our holdings in all the companies ticked at the right hand column be credited directly to my/our bank detailed below:

Bank Verification Number

Bank Name

Bank Account Number

Account Opening Date

SHAREHOLDER ACCOUNT INFORMATION Surname/Company Name First Name Other Names

Address:

City State

Country

Previous Address (if any)

CHN(if any)

Mobile Telephone 1

Mobile Telephone 2

E-mail Address

Company Seal/Incorporation No. Shareholder’s Signature Shareholder’s Signature (Corporate Shareholder) or Thumbprint or Thumbprint

VERITAS REGISTRARS LIMITED. Plot 89A, Ajose Adeogun Street, P.O. Box 75315, Victoria Island, Lagos, Nigeria. Telephone: +234–1–2708930-4, 2784167–8; Fax:(01)2704085 [email protected] www.veritasregistrars.com 120