SECTION HEADER (CONTINUED) NAMIBIA BREWERIES LIMITED | INTEGRATED ANNUAL REPORT 2018
INTEGRATED ANNUAL REPORT 2018
CREATING A FUTURE, ENHANCING LIFE Our purpose and shared value DLG AWARDS*
Windhoek Windhoek Windhoek Tafel CAMELTHORN Lager Draught Light Lager urbock
2018 NP
2017
2016 NP
2015 NP
2014 NP
2013 NP
2012 NP
2011 NP
2010 NP
2009 NP NP
2008 NP NP
2007 NP
2006 NP Windhoek
Lager Gold Silver Bronze NP Not participating
recently won its 12th * The international Deutsche Landwirtschafts Gesellschaft (DLG) Quality Evaluation consecutive gold medal rates beer brands brewed according to the Reinheitsgebot (“Purity Law”) of 1516 at the DLG awards. against quality specifications for taste, analytical and biological standards. TABLE OF CONTENTS
2 About this report 22 Managing director’s report
what we do to create a future 4 Chairperson’s statement 32 and enhance life
8 NBL profile 46 good corporate governance
A Namibian investment 18 64 AppendiCES with long-term prospects
20 our business context 69 Annual financial statements
INtegrated Annual Report 2018 1 ABOUT THIS REPORT
Our purpose, as part of the O&L Group, is Creating a Future, Enhancing Life. This report supports our purpose by reflecting on what we do at Namibia Breweries. This is not only a financial report for shareholders. It tells the story of our business and people, and how we create value – and then give back to our communities, customers, suppliers and other stakeholders. By giving back, we are Creating a Future, Enhancing Life.
Namibia Breweries Limited (NBL) is a publicly To provide feedback on or request copies of this owned company that listed on the Namibian Stock report, contact our Company Secretaries, Ohlthaver Exchange (NSX) in 1996. This report relates to the & List Centre (Proprietary) Limited, on telephone: financial year from 1 July 2017 to 30 June 2018, and +264 61 207 5111 or email: [email protected]. covers all operations, with the emphasis on Namibia as our core market. Reporting boundary NBL forms part of the Ohlthaver & List Group We report to our providers of financial capital, but of companies (the O&L Group or the Group), consider a wide range of stakeholders and topics the largest privately held group in Namibia. The in the scope of this report. This includes social, Group’s overall revenue contributes about 4% to environmental, governance and economic factors gross domestic product (GDP). The O&L Group that affect our ability to create value over the short, has business interests in food production, fishing, medium and long term. Our focus is on what is beverages, farming, retail trade, information material: what and how we are giving back as a way technology, property leasing and development, of sharing value. We reflected on these material renewable power generation, marine engineering matters by following a formal, collaborative process. and the leisure and hospitality industry. The O&L Read more about the process and outcome on Group indirectly holds an effective 29.69% stake pages 34 to 44. in NBL. The financial and non-financial data in this report is limited to NBL, its subsidiaries and Our integrated reporting approach and structure associates. allow for comparability of financial and non-financial data over time. The following frameworks and Approval and assurance reporting requirements were considered: The Board, assisted by the Audit Committee, zz Corporate Governance Code for Namibia is ultimately responsible for the integrity (NamCode) and completeness of this report. The Board zz Namibia Companies Act, 2004 (No. 28 of 2004) acknowledges that the report reflects continued improvement towards compliance with the
Further information and the electronic version of this report are available on the website: www.nambrew.com.
2 Namibia Breweries Limited ABOUT THIS REPORT
As per the NamCode requirements, NBL follows a Forward-looking statements combined assurance model based on the three lines This integrated report contains statements about of defence, which includes internal controls and NBL that are or may be forward-looking statements. systems, supported by external verification. The Examples of forward-looking statements include consolidated annual financial statements from statements regarding a future financial position or page 70 to 129 were audited by Deloitte & Touche. future profits, cash flows, strategy, estimates of The unqualified audit opinion is available on capital expenditures, acquisition strategy or future page 77. Further external verification included an capital expenditure levels, and other economic SABS audit from 16 to 17 April 2018 against the factors such as interest and exchange rates. These requirements of SANS 10330:2007 and an SABS may generally be identified by the use of forward- certification audit from 18 to 19 April 2018 against looking words or phrases such as ‘believe’, ‘aim’, the new Standard of ISO 9001:2015. Regarding the ‘expect’, ‘anticipate’, ‘intend’, ‘foresee’, ‘forecast’, latter, we complied first time around and were able ‘likely’, ‘should’, ‘planned’, ‘may’, ‘estimated’ and to successfully transition to the new version of 2015. ‘potential’, or similar words and phrases. By their Several internal audits were also conducted by EY. nature, forward-looking statements involve risks The governance report contains detail of internal and uncertainties because they relate to events controls and specific focus areas for internal audit and depend on circumstances that may or may during 2018. not occur in the future. NBL cautions that forward- looking statements are not guarantees of future performance.
Ohlthaver & List Finance and Trading Providers of Heineken International B.V. Corporation Limited (OLFITRA) financial capital
Employees NBL Investment Holdings 50.01% (Proprietary) Limited 49.99% Suppliers
Public shareholders Governments 59.37%
40.63% Communities
Consumers Namibia Breweries Limited
Customers
Heineken South Africa 25.0% (Proprietary) Limited Strategic partners
REPORTING BOUNDARY
STAKEHOLDER UNIVERSE
INtegrated Annual Report 2018 3 ChAIRpERsON’s sTATEMENT CREATING A FUTURE, ENHANCING LIFE
sven Thieme Chairperson
0.34% 2.47% 2.35% N$613 million 29.67% 26.26% Operating profit Return on assets return on ordinary shareholder funds
4 Namibia Breweries Limited CHAIRPERSON’S STATEMENT
As a company and a country, we are at In order to achieve our a point of reflection: we are rethinking vision and actively live what we do and what we know. At this our purpose, we must point, we want to reinvent how we continue to invest in our brands and address challenges such as poverty our people. Innovation and speed of and unemployment. The O&L Group execution are essential to our success. formulated a purpose that has guided us for several years to think about more than profit: Creating a Future, have been significantly impacted by constrained Enhancing Life. market liquidity. On the other hand, this has resulted in many To live our purpose, we have set ourselves four more requests for support from a range of our targets for 2019, relating to improved earnings, a stakeholders. reduced carbon footprint, being an employer of choice and creating jobs. These targets are beyond NBL continues to give back where we can. An what we imagined we could achieve at that time. example is our annual Independence Day donation They challenged us to think about a bigger agenda to the Ministry of International Relations and than ourselves. We remain committed to our Cooperation for distribution to Namibian foreign purpose and targets, because we believe these are missions across the world. This is our way of saying the keys to sustained success. that we value our ambassadors, consulates and their staff, as they play an important role in reflecting We use monthly leadership sessions to explore a positive image of Namibia while fulfilling their our purpose, and how it relates to the personal diplomatic missions. purpose of our employees. In this process, we have discovered amazing things that our employees are We continue to support the barley project in doing for their communities and families. Once we collaboration with the Ministry of Agriculture, all realise our shared connections and purpose, we Water and Forestry, to strengthen our local supply do not just come to work every day: we live our chain and create jobs. And we continue to tell purpose through the work that we do. people the story of King Lager, as a way to share in our country’s future success. Supporting local Our employees are our first priority – they are enterprises has a multiplier effect on future jobs, integral to looking after our customers. That is why the ability to develop skills, to become economically we participate in a survey such as Great Place to independent and to eradicate poverty. If we support Work®: it tells us how our employees are feeling. The local enterprises, we build our nation and have a results guide us to better recognise, appreciate and positive impact on the future of Namibia. connect with our employees. We also know that it is important for our employees to work for a group We remain committed to making consumers aware that looks after its social and natural environments. of the harm caused by alcohol abuse. Our newly launched television commercial, in partnership What we achieved this year with the Ministry of Safety and Security and the NBL has been one of the most stable performers in Namibian Correctional Services, aims to do just the Group, despite a very tough and difficult year. that. The commercial ‘If You Are Going to Drink Price elasticity of beer is low, which means that and Drive, Welcome to Your New Life’ highlights consumers continue buying our brands despite the the repercussions of driving under the influence constraints they might face in available disposable of alcohol. In support of the National Road Safety income. NBL is also less exposed to Government agenda, it begs motorists and other road users spending than industries such as construction that to change their mindset, behaviour and attitude
INtegrated Annual Report 2018 5 by emphasising how the act of driving under the Where we are heading influence of alcohol has a tragic effect on the lives Over the past few years, we have been recalibrating of families and fellow Namibians. This is one of the and consolidating the business to achieve a position ways in which we are responding to Government’s that has shown its resilience in a difficult year. This call to help educate our youth about the importance enabled us to retain market share, and continue to of responsible drinking, as they are the leaders innovate, expanding our portfolio and being there of tomorrow. for our consumers.
Another achievement that supports our purpose We are excited about the opportunities in export is the revamp of Namibia’s iconic national Hage markets, especially Germany. Geingob rugby stadium. Through our premium beer brand, Windhoek Draught, we have supported Our relationship with Heineken, the world’s second the Namibian national rugby team for the past few largest brewer, is very strong, and will turn our key years. This is a further investment in growing the growth opportunity in South Africa into reality. sport, instilling confidence in the game and growing The combination of this relationship and our brand our local talent. investment in the South African market has changed the game, in addition to diversifying our risks. Sport has the ability to unite people around a shared passion and to create amazing experiences In the short term, we still expect challenges to with a lasting impact. By providing Namibian rugby be overcome to maintain growth momentum, players with the opportunity to compete against but we are optimistic about the medium to long- high-profile teams at this venue, we are creating term prospects for NBL and our ability to achieve a future for the sport, while enhancing the lives of Sustaining growth, ever-expanding, securing those who participate. the future.
This year also marks the 11th anniversary of the The shareholder dividend for 2018 Project Shine campaign in the Swakopmund The NBL Board takes its role and responsibilities district, with NBL as the main sponsor. The initiative seriously, making decisions with integrity and by to clean areas and create awareness supports maintaining a balance between the interests of the our purpose by enhancing the quality of the business, its shareholders and other stakeholders. environment in which people live, and creates a We have a progressive dividend policy that aims future by contributing to the health and safety of to maintain or grow the dividend each year. The our stakeholders. Board declared a dividend of 0.46 cents per ordinary share (2017: 42 cents). The Board, taking What we can still do better into consideration its reserves, resolved to declare We want to be faster in our execution, and achieve a special dividend of N$400 million (193.67 cents breakthrough results more quickly. Our mindset at per share). Payment will be effected to shareholders NBL is to see opportunity rather than challenge, of ordinary shares registered in the books of the which means that we focus on the positive, even company at close of business on 5 October 2018 under difficult conditions. We know that we are and will be paid on 9 November 2018. not yet seeing the full benefit of an empowered workforce. This will be an outcome of the work A few words of appreciation currently being done on personal purpose, and will We are never resilient in isolation. This year give us further growth momentum. confirmed how important it is to have a network of stakeholders that are all sustainable, as they ensure that we can continue Creating a Future, Enhancing Life.
6 Namibia Breweries Limited CHAIRPERSON’S STATEMENT
We therefore thank our suppliers, consumers and I also express my appreciation to Government for loyal customers for their ongoing commitment and creating an environment of relative stability that valued support. To our employees in Namibia and is conducive to business. Continuing collaboration South Africa, I thank you for your efforts to create between Government and the private sector on breakthrough results. This has been critical to our pressing environmental and social issues, such success. We value the role you play in making as water supply and the Namibian Investment breakthrough a philosophy and culture that will Promotion Act (NIPA), is essential. The efforts on all contribute to our success in years to come. sides to engage deserve recognition and thanks.
We remain mindful of the ways in which we Lastly, I thank my fellow Board members, the impact the communities around us. We give O&L Group Executive and our Senior Leadership thanks by giving back through corporate social Team for their unrelenting dedication to our purpose investment (CSI) projects, sponsorships, events and future. and experiences. We hope you will continue to support us.
INtegrated Annual Report 2018 7 8 Namibia Breweries Limited NBL PROFILE
Established in 1920, NBL 10 NBL PROFILE is one of the leading 12 GEOGRAPHIC FOOTPRINT beverage manufacturing
SHARING VALUE BY GIVING BACK companies in Namibia. 14 TO OUR STAKEHOLDERS OUR PRODUCTS ARE EXPORTED TO 16 COUNTRIES 16 PURPOSE-DRIVEN STRATEGY OUTSIDE NAMIBIA AND SOUTH AFRICA.
Integrated Annual Report 2018 9 NBL PROFILE
Established in 1920, NBL is one of the leading provides consumers with a guarantee of quality and beverage manufacturing companies in Namibia and the use of safe, natural ingredients. one of the few independently owned breweries in Our full portfolio includes non-alcoholic products, southern Africa. We produce beer and carbonated for all consumers, and alcoholic products for a wide soft drinks (Softs), with beer constituting 94% of range of adult consumer segments at a spread of total volumes sold. Our products are exported to price points. These products are widely available 16 countries outside Namibia and South Africa. as a result of our extensive distribution network, We have a significant share of the premium beer and are continuously enhanced based on market category in the region and are the leader in the research and consumer feedback. Our partnership Namibian beer market. with Heineken South Africa is an exciting platform Ours is the only large-scale commercial brewery for growth in southern Africa. in Africa that brews according to the German Through responsible drinking initiatives, NBL creates Reinheitsgebot of 1516, which requires the exclusive awareness of potential social harm that can result use of three ingredients: malted barley, hops and from irresponsible alcohol use. water. NBL’s commitment to the Reinheitsgebot
2018 Beer – Namibia | 63.3% 2017 Beer – Namibia | 61.0% Beer – South Africa | 26.0% Beer – South Africa | 28.3% V olume V olume Beer – Export | 4.7% Beer – Export | 4.7% contribution per contribution per Softs | 6.0% Softs | 6.0% category category
2018 2017 Beer | Beer | Revenue 92.9% Revenue 93.9% Other | Other | contribution per 7.1% contribution per 6.1% segment segment
10 Namibia Breweries Limited NBL PROFILE
MAINSTREAM BRANDS beer
This category is the backbone of our portfolio. It enables us to deliver on a growing consumer need for variety and alternative tastes. Tafel Lager King Lager Amstel Lager Windhoek Draught
premium BRANDS beer
We craft bold products from unique and premium ingredients. This enables us to deliver on a growing consumer need for brands that signify their status Windhoek Lager Windhoek Light Tafel Lite Heineken and individuality.
Amstel Lite Camelthorn Stellenbrau Erdinger
SOFTS BRANDS portfolio
We craft a suitable drink for every occasion. These brands diversify our portfolio into adjacent categories to reduce our dependence on beer. Vigo Code AquaSplash McKane
Integrated Annual Report 2018 11 IA IB M A N 68.74% VOLUME SHARE GDO KIN M D E T I
N U 0.02% VOLUME SHARE
NTRIE OU S C N A C I
R
F
A 5.15% VOLUME SHARE CA RI B oTSWANA 0.77% St Helena 0.05% F A Kenya 0.03% Swaziland 0.23% H Lesotho 0.06% Tanzania 2.55% T U Mauritius 0.02% Uganda 0.04% O
Mozambique 0.02% Zambia 1.13% S 26.06% Other african Zimbabwe 0.22% VOLUME countries 0.06% SHARE
12 Namibia Breweries Limited NBL PROFILE
RA A B E ED M IT IR N A
U T GEOGRAPHIC E
0.01% S VOLUME FOOTPRINT SHARE
18 BRANDS
7 BRANDS DIRECTLY EXPORTED TO
17 COUNTRIES INCLUDING SOUTH AFRICA – AVAILABLE IN MANY MORE SHARING OUR PRIDE, EXPANDING OUR HORIZONS ...
LIA A R T S
U
A 0.02% VOLUME SHARE
Integrated Annual Report 2018 13 SHARING VALUE BY GIVING BACK TO OUR STAKEHOLDERS
We create and share value through our ability to give back to stakeholders from the returns gained as a market leader with a diversified portfolio, quality commitment, a unique culture and long-term growth opportunities.
NBL is a highly stakeholder-oriented business where our emphasis is often not on the product we sell, but on how the entire business contributes to the well-being of the system in which we operate. By framing our material matters as the ways in which we are “giving back”, we contemplate the scope, spread and nature of how we allocate capital and resources. These material matters are essential for NBL to be able to give back sustainably and in support of our purpose, Creating a Future, Enhancing Life. In considering our material matters as continued support and active participation in the lives of our stakeholders, we remain sensitive to not creating dependency and the commercial opportunity to leverage our brands. We explain these material ways of giving back in detail from pages 34 to 44. This summary tracks the key indicators, investment value and benefits created for our stakeholders:
6.33% By being of revenue a good corporate paid as taxes 6.76% of citizen that does business revenue paid and duties to responsibly, ethically and with Government as dividends transparency, we give our local and central governments Our clearly defined the comfort that they can strategy and purpose also rely on us to pay 26.27% return drive resilience and growth taxes and duties No material on shareholders’ to ensure constant penalties or fines investment dividends and reliable paid for non- repayments to our compliance providers of capital
13.87% of revenue Employee N$3 367 681 reinvested in turnover: invested in the business to 7.27% skills development ensure future and training growth Number of employees: 792 By providing career Non-Namibians development, training and as % of 13.04% of revenue paid transformation opportunities, employees: as salaries, wages and in addition to remuneration and 1.64% other employment cost rewards, we can support our (including medical employees in bringing our aid and pension purpose to life fund contributions) Lost time injury frequency rate: 0%
14 Namibia Breweries Limited NBL PROFILE
N$6.5 million invested in social projects (this includes brands and events that benefited the community) and 77.18% of sponsorships turnover paid to suppliers
We empower Through communities localisation N$11.5 million through CSI initiatives, 5.53% decrease efforts, we grow and investment in while also providing in sales support our supplier barley project society with the benefits volumes base beyond just offering over 3 years of sponsorships contracts and making and events payments for materials and services By offering consumers a diverse portfolio of exceptional quality beverage brands +2.6% in that are relevant, strategically total wealth positioned across all segments, +12.55% in created since widely available, aspirational wealth distributed 1 July 2017 and meet their evolving needs, to employees, we ensure that our brands providers of capital, remain the preferred governments and choice within their reinvested in NBL repertoire since 1 July 2017
We drive collaboration with our customers and strategic partner, Heineken, who We realise efficiency benefit from synergies, 26.5% of water gains through savings expertise, growth requirements 0.8% decrease and waste management, opportunities met by own in sales which decrease our reliance and relationships sources revenue on natural resources and of trust ensure the sustainability of 14m3/hour our business for the benefit water of all our stakeholders consumption reduction 58% of production We ensure effective risk packaged in management, particularly returnable in information technology containers (IT) that results in meeting N$3.6 million legislative and compliance investment requirements while in IT mitigating risk on behalf of our stakeholders
INtegrated Annual Report 2018 15 Purpose-driven strategy
We support the O&L Group’s Vision for 2019 – the year when the Group will celebrate 100 years. NBL will celebrate 100 years a year later, in 2020. We actively pursue our vision to be the most progressive and inspiring company, and are relentless in our efforts to create a sustainable future for all. We passionately embrace our purpose: Creating a Future, Enhancing Life in everything we do.
Our values describe how we behave in living our Our vision metrics for 2019: individual purpose, which is connected to the Group’s purpose:
1 Let’s Talk 1 To achieve a N$2 billion EBIT target
2 Let’s do it 2 To reduce the Group’s carbon footprint by 20% 3 Hooked on Results 3 To be an Employer of Choice 4 We Grow People 4 To create 4 000 additional job opportunities 5 We All Serve
6 Naturally Today for Tomorrow
7 We do the Right Things Right
16 Namibia Breweries Limited NBL PROFILE
The Group’s purpose is guided by three strategic outcomes:
S trategic outcomes
We participated in the Great Place to Work® Everyone is deeply connected to survey and received the special award for Health purpose, lives the values and is and Well-being Excellence in the large corporate 1 proud of what they do organisation category. Everyone We rolled out the breakthrough architecture Purposefully Everyone is successful, Progress in all functional teams, with each individual Producing thriving and making things in 2018 2 working from their own purpose to support the happen in breakthrough mode Breakthrough Group purpose. Everywhere Everyone is valued, recognised 3 We further refined our recognition programmes and appreciated for the and on-site employee initiatives. difference they make
S trategic outcomes We have relaunched and positioned Camelthorn as our authentic, small-batch craft beer brand, and incorporated Urbock into this range.
We continued offering consumers exciting Consistent experiences, amazing promotions and consumer experiences at 1 relationships, and lasting impact bespoke events, as well as sponsorships and Amazing enduring initiatives such as the revamp of the Experiences, Purity-inspired, reliable Hage Geingob rugby stadium, sponsorship 2 quality, impacting the whole Progress Enduring of the Windhoek Draught Welwitschias and in 2018 Impact continued sponsorship of the Tafel Lager Always there, simple and easy, 3 Brave Warriors. the natural choice We continued owning and driving the responsible drinking agenda in Namibia and demonstrated this through our strong track record of implementing high-impact responsible alcohol initiatives such as our new television commercial.
Strategic outcomes We continued reducing our use of natural Excellence in everything, resources and increased our reclamation and 1 executed with care recycling ratios.
We have reduced our water supply risk in Sustaining growth, ever- Windhoek, while remaining aware of potential expanding, securing 2 Progress long-term climate risks. Sustainable the future in 2018 Execution in We maintain ethical and effective governance Everything Bringing sustainability structures based on integrity. 3 everywhere, impacting the world Our material matters identified the ways in which we are giving back to continue sharing Inspired by integrity, creating value sustainably with stakeholders. 4 trust and confidence
Integrated Annual Report 2018 17 A Namibian investment with long-term prospects
zz We have a stable shareholder base and strategic zz We are becoming increasingly water support through our ownership structure and independent and efficient. The five boreholes at position within the O&L Group. The Group and our Windhoek brewery deliver 26.5% of our water Heineken respectively hold an effective 29.69% requirements from own sources, while reduced and 29.68% share in NBL. usage per litre of beverage produced is actively zz T he quality of our brands is consistently managed. recognised internationally through awards, zz We continue reducing our carbon footprint enthusiastic feedback from loyal consumers, through the use of a biomass boiler, while participation at our events, and increased achieving efficiencies throughout the volumes sold during difficult economic times. value chain. zz W e offer a diversified portfolio with alcoholic and zz NBL is one of only a handful of breweries in the non-alcoholic options available in 17 markets. southern hemisphere that is self-sufficient with
We are expanding our presence in several regard to CO2 in all aspects of production, and
markets through joint initiatives with Heineken, sells surplus CO2 to external customers. with South Africa remaining our most attractive zz Dividends to shareholders increased annually growth opportunity. by 8.2% over the past five years, and the net zz King Lager was conceptualised to encourage asset value per share by 15.41%. the development of a Namibian barley industry to support local procurement, job creation and empowerment. King Lager uses Namibian-grown unmalted barley as an ingredient.
18 Namibia Breweries Limited A namibian investment WITH LONG-TERM PROSPECTS
Key facts and figures N$2 687 174 37% Revenue Local procurement spend % 2017: N$2 708 978 2017: 41% 192.6 4.3 Earnings per share Water usage per litre of beverage (cents) produced 2017: 154.2 2017: 4.3 785.8 792 Net asset value per share (cents) Number of employees 2017: 680.9 2017: 802
46.0 (ord inary) 193.67 (special) 98.36% Dividend declared per share Namibian (cents) citizen employees % 2017: 42.0 2017: 98.51% 5.5% 29.1 Decrease in total volumes sold Tons of surplus CO2 sold 2017: 8% 2017: 191 4.7% Exports (excluding South Africa) as % of total volumes 2017: 4.7%
INtegrated Annual Report 2018 19 OUR BUSINESS CONTEXT
Continued growth is expected in the markets Craft beer continues to show category growth in which we operate. The World Bank predicts in Namibia through a small number of local craft economic growth in excess of 3% for sub-Saharan brewers and a proliferation of imported craft Africa in 20181, which is faster than last year, beers from South Africa. Growth is encouraged by building on positive momentum in commodities, consumers seeking alternative beer styles to lager, stable prices for oil and metals, and expanded while remaining committed to experiences that are global trade. shareable, for example at festivals, markets and in local pubs. Political uncertainty and volatile currencies may mute growth in some areas, but we are particularly Other trends in our markets include the increased positive about new government leadership in several consumption of spirits, mostly in the form of long of our markets. drinks and cocktails. Mocktails are becoming pervasive, as is the trend towards sugar-free softs Beer is the most widely consumed alcoholic and mixers. beverage around the world, with Africa one of the fastest growing beer markets. Beer is regarded as a A plethora of imported brands are creating non-essential item within the fast-moving consumer even more clutter on shelves. However, these goods category, but according to Nielsen research2, provide consumers with more brand choices and it is often regarded as a positive leading indicator alternatives to beer and beer styles. for growth in emerging markets. Brands compete for consumers’ attention and If emerging markets follow what is trending in terms share of wallet through consumer experiences of consumer preference in developed markets, brought to life in their worlds with unique and companies such as NBL can expect to realise innovative activations and promotions executed new growth through premium, craft, ciders and in trade through partnerships with our customers. alternative flavours. Our own research shows that We continue to invest into our brands and thereby alcohol-free and lower-alcohol beers are becoming create new and memorable experiences for our specific drivers for growth as consumers seek consumers at every touchpoint in their lives. choices that support their health, future-focused These beverage trends, combined with increased and lifestyle preferences. competition, stimulate creativity and innovation in We are experiencing increased competition our teams. We are becoming more agile and active from categories such as ciders, flavoured beers in making NBL relevant in our consumer worlds. and sweet wines as consumers seek new taste Examples include the introduction of limited edition experiences, sweeter palates evolve and expanded packs and new line extension for well established repertoires become the norm. brands like Tafel Lager, McKanes and Camelthorn. Read more about these in the Managing Director’s With disposable income still under pressure, growth report from pages 22 to 31 , where we also provide is mainly in value segments – where we compete more detail on our response to the Namibian with our mainstream brands – with substitution economy and outlook. trends based on pricing becoming evident.
1 The World Bank, Global Economic Prospects: Sub-Saharan Africa (Brief, January 9, 2018) 2 Nielsen, Beer consumers in emerging markets offer a flavorful, flourishing future (FMCG and retail, May 8, 2018)
20 Namibia Breweries Limited OUR BUSINESS CONTEXT
INtegrated Annual Report 2018 21 MANAGING DIRECTOR’s REPORT CREATING A FUTURE, ENHANCING LIFE
Hendrik van der Westhuizen Managing Director
0.80% 24.89% 24.89%
N$2 687 N$397 686 million 192.6 cents million Revenue Basic earnings per share Profit after taxation
22 Namibia Breweries Limited MANAGING DIRECTOR’S REPORT
2018 was by no means an easy year for any business in Namibia. Despite lower beer volume sales, NBL recalibrated its business strategies and key focus areas in line with a challenging economic climate to deliver a 0.34% increase operating profit. Our business culture of producing breakthrough everywhere most certainly assisted us to stay true to our Group purpose of Creating a Future, Enhancing Life. The commitment, dedication and passion of our employees during these challenging times assisted us in delivering respectable results in a very harsh economic environment.
NBL weathered a tough year in most markets, with Our breakthrough insights in this trading Namibia sliding into recession and South Africa environment are threefold: experiencing very low and uneven levels of growth. zz We have to increase our below-the-line Our consumers are faced with constant trade-offs marketing spend by offering incentives, rather in their daily choices, and often these are directed than driving brand awareness through above- by discount options. the-line initiatives. This means that we invest While interest rates in Namibia and South Africa in our brands in ways that adds value to our remained stable, the annual inflation rate in consumers, their circumstances and immediate Namibia dropped to an average 3.6% during the needs. We also reward consumers and smaller first four months of 2018, slowing from 7.4% in customers on a more regular basis and in the same period a year ago, mainly due to lower smaller portions. prices of food and housing. Domestic activity in zz New products have to cater for a range wholesale and retail trade remained slow during of demand aspects: from cash-strapped the first half of 2018, reflected in sales volumes consumers to millennials with increasing decreasing by 6%. The demand from South Africa buying power and influence. An example of this remained strong. We continued to produce and convergence is the growing demand for alcohol- deliver above the minimum contracted volumes to free beer and other non-alcoholic offerings. We Sedibeng Brewery in Johannesburg. are also experiencing category migration, with consumers alternating between beer and low- Our trading environments are characterised by priced wines. competitors driving sales through investments in specials, combination packs and bulk offers, as zz We have to embed a culture that produces well as promotions. Unfortunately, these tactics do breakthrough execution, amazing experiences not grow the market. They have a limited impact, and sustainability in any market conditions. We as consumer spend is capped. With no growth in are encouraging employees to step out of their the market, everyone is faced with substitution and comfort zones and to look for opportunities consumers trading down. where we can improve or further grow. We challenge our leadership team to create an environment where employees can deliver breakthrough results. N$2 687 N$397 686 million 192.6 cents million Revenue Basic earnings per share Profit after taxation
INtegrated Annual Report 2018 23 BRAND PERFORMANCE We have relaunched and positioned Camelthorn as our authentic, small-batch craft beer brand, and Tafel Lager remains the biggest beer brand in incorporated Urbock into this range. The seasonal, Namibia, while Windhoek is our dominant brand in dark malted beer has found a perfect place alongside export countries, with South Africa being the largest. the Weiss and Helles Camelthorn beers. There are We are in the fortunate position of sharing marketing great opportunities to grow this brand in Namibia resources and leveraging off synergies between the and South Africa, as the origin and local nature of two brands across our two main markets. We have products constitute some of the main choice drivers a further advantage of accessing Heineken’s global for craft consumers. Our strong Dan Craven digital marketing expertise, thereby expanding our own campaign exceeded reach and engagement targets. marketing capability. Craft beer will remain a small-volume contributor At a time like this, investing in our brands is to our portfolio, but is an important niche and paramount to ensure we continue to create reputational segment for us to compete in. We will therefore continue investing resources in this brand. memorable experiences at every touchpoint in consumers’ lives. This has secured our market share, McKane continues to show strong volume growth, despite the economic downturn in Namibia. particularly in export markets. However, Code and Vigo have been under pressure from competitive Tafel – and particularly on-tap sales – exceeded offerings and aggressive pricing, with the category volume targets following the introduction of Tafel characterised by value and sharing packs. Lite into the Northern Cape region of South Africa. Amazing consumer experiences were created AquaSplash faced the challenge of being out of stock through brand activation at sponsored sports intermittently. We are assisting in building capacity games. The three-year sponsorship agreement with at our co-packers on the source farm in northern the Griquas Rugby Union team that commenced in Namibia, as the brand is starting to gain good February last year, ensured increased brand exposure traction. The Rock n Run sponsorship opportunity as it included naming rights to the Griqualand West gave the brand solid exposure at sporting and family- Rugby Stadium based in Kimberley, South Africa, as oriented events. well as pouring rights. The brand also has naming King Lager benefited from focused regional marketing rights to the team, which is now known as the spend. Re-engineering of the product enabled us to Tafel Lager Griquas. make it available at a more competitive price point. A Tafel 750-ml sharing offering and a 500-ml can This led to an increase in the adoption of the brand and were also launched in South Africa. translated into good growth in the past six months.
The Windhoek Perfect Time, Perfect Beer campaign Demand in the non-alcoholic segment continues to was introduced, anchored by a television commercial grow. Following our investment in Erdinger non- that was launched in April 2018. In contrast to alcoholic and the recent launch of Erdinger Lemon previous campaigns, it focuses on emotional alcohol-free beer, we are in a strong position to gain a share of this segment. Within the first few months, relevance rather than driving the intrinsic credibility sales exceeded targets, and we have adjusted of the brand. We want to reinforce the idea that our forecast to ensure we can meet demand. The any beer-drinking occasion is the perfect time for a segment remains a focus into the next financial year. Windhoek beer. While it is still too soon to measure the quantifiable metrics of the campaign, there are Despite increased competitor and promotional early signs of widespread consumer resonance. tactics, our brand portfolio is performing well and remains a regular, if not the preferred choice, for Windhoek Light expanded its offering to include most Namibians. a larger 440-ml can format, whereas Windhoek Draught was rolled out in a 330-ml can in export More detail about our brand propositions and markets, particularly where consumers seek smaller positioning is available in the brand profile appendix pack sizes. on pages 65 to 67.
24 Namibia Breweries Limited MANAGING DIRECTOR’S REPORT
MARKET PERFORMANCE SUMMARY
Volume comparison
Zimbabwe
Zambia
Tanzania
Swaziland
Lesotho
Kenya
Botswana
South Africa
Namibia
United Arab Emirates
Australia
United Kingdom
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
2018 2017
INtegrated Annual Report 2018 25 FINANCIAL PERFORMANCE SUMMARY
30 June 30 June 2018 2017 Consolidated statements of comprehensive income N$’000s N$’000s
Turnover 2 687 174 2 708 978 Operating expenses (2 074 089) (2 097 965) Operating profit 613 085 611 013 Finance costs (43 325) (50 923) Finance income 32 623 18 304 Equity (loss)/profit from associate (33 441) (155 717) Profit before income tax 568 942 422 677 Income tax expense (171 256) (104 249) Profit attributable to ordinary shareholders 397 686 318 428 Consolidated statements of financial position Property, plant and equipment 1 018 719 988 241 Investment in associate 404 824 438 265 Other non-current assets 37 543 41 888 Non-current assets held for sale – 10 005 Current assets 1 250 092 1 016 774 Total assets 2 703 677 2 495 173 Issued capital 1 024 1 024 Non-distributable reserves (97) 160 Retained income 1 622 001 1 405 101 Ordinary shareholders’ equity 1 622 928 1 406 285 Interest-bearing loans and borrowings (non-current) 285 480 384 379 Other non-current liabilities 217 158 217 011 Current liabilities 585 613 487 498
Total equity and liabilities 2 703 677 2 495 173
26 Namibia Breweries Limited MANAGING DIRECTOR’S REPORT
Turnover decreased by 0.8% to N$2 687 million retainable containers. Net cash flow from financing (2017: N$2 709 million) due predominantly to the activities increased to an outflow of N$158 million decline in overall volumes sold. (2017: N$100 million outflow) due to the repayment of RMB and Standard Bank loans. NBL’s operating profit (before equity losses) increased by 0.34%. Operating expenses decreased OUR BREAKTHROUGH ARCHITECTURE by 1.14%. We maintained our level of investment This year, our particular focus was on rolling out in brands, but directed spend to ensure impact and embedding our breakthrough architecture and reach. in the business. We are bringing the Group’s Most of NBL’s machinery is imported, and is purpose of Creating a Future, Enhancing Life to subject to exchange rate fluctuations. The related the level of individual employees and making it a repair and maintenance agreements are therefore practical aspect of every decision and project. The similarly affected. Consequently, we are focusing individual action plans that follow from this feed on developing our in-house technical expertise into performance management conversations. As a to enable us to manage as much internal line result of this drive to embed purpose, we have seen maintenance as possible. people engage more, challenging thought processes and considering multiple views. This increases the One of NBL’s largest cost elements is malt, which quality of the collective outcomes and an increase in is imported from Europe. In 2018, NBL sourced 27% opportunities to explore. (2017: 41%) of its commodities locally. This exceeds NBL’s 2019 target of 30%. We also want our consumers to connect to our purpose through our brands. When they understand A healthy profit attributable to shareholders of that their purchases will lead to a better future N$398 million was delivered – an increase of 25.34% for Namibia, we know they will keep choosing our on the prior year. This increase is mainly attributable brands. This is the most effective way to mitigate to the proactive recalibration of the business in a discount culture, which is not sustainable for any the face of declining volumes. This was achieved participant in the supply chain. Fortunately, our through a combination of well managed operating customers are becoming more sensitised to the expenses, higher finance income and lower unintended consequences of driving sales through financing costs as well as a significant decrease discounts only, and are reconsidering the trade-offs in the loss from an associate. they are making under pressure.
A total of N$96 million (2017: N$94 million) was MAKING A DIFFERENCE FOR earned in royalties from Heineken South Africa. EMPLOYEES NBL’s net debt-to-equity ratio decreased to -2% We are very proud of NBL’s performance in the (2017: 10%) as a result of interest bearing loan latest Great Place to Work® survey. We received repayments combined with increased levels of the award for Health and Well-being Excellence in cash generated. the large corporate organisation category. We also took our value of We Grow People to the next level Net cash flows from operating activities by securing access for NBL employees to the world- decreased to N$357 million (2017: N$397 million), class Heineken e-learning platform, One2Learn. mainly driven by the strong South African beer We believe that learning is a self-directed, performance. Net cash outflow from investing continuous journey of personal enhancement and activities decreased, mainly due to an increase therefore offer employees access to content that in finance income. Capital investment increased is closely related to our operational and strategic to N$163 million, with the most significant capability needs. investments in assets under construction and
INtegrated Annual Report 2018 27 We are in several system transitions within OUR PARTNERSHIP WITH HEINEKEN the Group to ensure Sustainable Execution in The partnership with Heineken is functioning very we do. We are moving to a new job- Everything well on various levels, including production, skills grading system and developing a new assessment sharing and sales, and in terms of complementary tool for performance management. Together cultures. As a new entity in South Africa, Heineken with these tools, we are also implementing a fully was able to design and configure a market- integrated recruitment management system for the appropriate structure, distribution network Group. We want every system we use to increase and sales force – all exceeding performance our business efficiency and create better access to expectations despite being in operation for information on demand. less than two years. In terms of creating Amazing Experiences, We introduced Heineken’s Strongbow Apple Ciders , we have on-site initiatives to Enduring Impact to Namibia this year. The brand features three create a balanced experience for employees. Our flavours: Dry, Gold Apple and Red Berries. future focus in this regard will be to address female representation and adapt experiences to better THE BARLEY PROJECT AND meet their expectations. KING LAGER King Lager is an offspring of the barley project. We SECURING AND MANAGING OUR continuously remind ourselves that the sustainability WATER SUPPLY of a local barley-farming community is the primary Following the drilling of five boreholes last year, we outcome of the work done in collaboration with are now able to source an increasing portion of our the Ministry of Agriculture, Water and Forestry, water requirements from a recharging aquifer that as well as the Agricultural Business Development is not linked to the Windhoek water supply system. Agency (AgriBusDev). The barley project started As NBL is the largest industrial consumer of water with 370 hectares under irrigation, and the first in Windhoek, this alleviates supply pressure on harvest delivered in 2012. Growth has been slower the city. However, we still recognise the long-term than anticipated due to the delay in Government’s challenges that water scarcity and climate change expansion plans on irrigated land. pose for our business. The current priority for the project is to create During the year, we started negotiations to demand for barley produce in a diversity of increase the extraction volume on our permit with markets, including other local farmers who use the intention of only using the minimum required. the barley in an incubator to grow grass for animal This could, potentially, result in NBL sourcing feeds. The project is also exploring opportunities up to 80% of water required for production from to export seeds. boreholes. For the municipality, however, this could result in the loss of income – a trade-off which we We are still committed to invest in a malting plant have to address in a collective, responsible and once the project has achieved scale. The malted sustainable way. barley can then be used across all beer brands.
In the long term, our growth and expansion plans A highlight for the brand was the King Lager are not based on increased production in Windhoek. ‘acquire, pay off or renovate your home’ We will eventually explore production opportunities competition. The winner, a woman from an informal in other markets. settlement, received a brand-new two-bedroom
28 Namibia Breweries Limited MANAGING DIRECTOR’S REPORT
house in May 2018. King Lager continues to ACHIEVING SUSTAINABLE EFFICIENCIES showcase the many ways in which we can support We are improving our data intelligence to ensure the goals and ideals of Government’s Vision 2030 Sustainable Execution in Everything. New monthly and Harambee National Prosperity Plan to address data feeds for national and key accounts bring us challenges such as unemployment and poverty. closer to actual sell-out rates in the formal sector. King Lager remains a purpose-driven initiative. We We experienced higher churn of customers in are committed to its long-term contribution to our the more informal sector, mostly due to category portfolio and the Namibian economy at large. consolidation and closures as a result of economic pressures. CRAFT BEER AND INNOVATION Our information management team’s breakthrough Increased competition has stimulated creativity solution – providing the business with real-time and innovation in our teams and made us more information about the availability of malt – was agile. We remain relevant by releasing limited awarded as the best Manufacturing Operations editions, for example the Tafel Lager Independence Management (MOM) Application at an international Day packaging, by introducing Summer Radler software conference held in South Africa, hosted exclusively on tap at events and selected outlets in by Wonderware Southern Africa. The joint project Windhoek, and by showcasing McKane’s mixology between NBL, the SAP team from the O&L Centre potential. We also re-launched our craft beer brand, of Excellence and Wonderware Southern Africa Camelthorn, in South Africa. resulted in faster, more accurate data available on key raw materials used in the brewing process, The Swakopmund Brewing Company has created reducing waste and improving efficiency. essential innovation capacity for NBL. It allows our brewers to constantly experiment and test In the last year, we replaced a significant portion their skills in craft beer brewing against the of old and inefficient equipment. In the case of one best in the world. This year, world-famous craft of our packaging lines, this will increase capacity brewer, Christian Hans Müller from Hanscraft & Co. by 20%. Newer-generation equipment will also participated in a special collaboration brew with reduce electricity usage. The biomass boiler was not NBL head brewer Christian Müller. The brewery also operational for several months due to the need for provides a space where consumers can connect on repairs. However, it is still contributing to reducing an experience level with craft beer as an art – and our emissions, and meeting the Group’s target for enjoy freshly crafted beers on tap. reducing its carbon footprint.
Three craft beer brands – Stellenbrau, Soweto We are in the process of building a new depot in Gold and Jack Black – are now part of Heineken Walvis Bay, where the harbour provides better South Africa, with Stellenbrau produced at our opportunities for optimised route to markets. The Windhoek brewery. Following Heineken’s acquisition transition from our old Swakopmund depot will take of a minority stake in Jack Black’s Brewing Co. in place early in 2019, shortly after peak season. Two Diep River, Cape Town, we have started exploring recently opened depots, at Katima and Rosh Pinah, further synergies and potential efficiencies through had an immediate positive impact on sales volumes economy of scale benefits in sourcing, production due to improved availability of stock. However, and transport. overall lower demand and lower volume sales impacted our entire supply chain.
INtegrated Annual Report 2018 29 Unfortunately, we are experiencing a muted increase OUR STRATEGIC RISKS AND in new suppliers entering the market, limiting our OPPORTUNITIES opportunities for supplier development and local zz Increased competition is affecting our ability procurement. With low supplier confidence in the to negotiate competitive trading terms as economy, many are reducing their investment in aggressive competitor price strategies erode research and innovation. While our South African margins in their efforts to increase market supplier base remains stable, there are some threats share. We counter the embedding of a discount to the availability of cans at times, due to large culture by working with our customers to create competitor orders. demand and build sustainable relationships. We are proud of milestones in our relationships zz The availability of water can potentially limit with two local suppliers: Dinapama Manufacturing & our growth and expansion ambitions, favouring Supplies (Dinapama) and Plastics Namibia: future capacity development in other regions. Boreholes have mitigated the short-term risk to zz NBL forms part of the new preferential Windhoek production. procurement agreement that the O&L Group zz C ompetitors are creating new beverage signed with Dinapama, a 100% Namibian garment categories for consumers, outside the manufacturer. We will be procuring promotional boundaries of premium beers committed to T-shirts from them to strengthen our local the Reinheitsgebot. While we are aware of the supply chain, support job creation and ensure increasing competitiveness of the landscape, we sustainability. are confident in our own strategies, innovation zz NBL was the first company to place an order for capabilities and breakthrough thinking. There is shrink wrap at Plastics Namibia in 2011, as part opportunity for us to use the diverse offering in of our commitment to develop local suppliers. our portfolio to capture the demand moment, This year, Plastics Namibia launched the which is different for every consumer. construction of a state-of-the-art manufacturing zz In a dynamic world, we have to be able to plant at Brakwater to close the gap on an respond rapidly to new opportunities. Our estimated 50% of plastic currently imported strategic decision-making and execution across from abroad. functions have to improve. This is supported by In our supplier selection, we consider each supplier’s improved data intelligence and availability. sustainability and exposure to NBL. Although we zz Ongoing foreign currency and exchange want to be a prime customer, we are also sensitive rate fluctuations affect our profitability and to creating dependency. An example this year was forecasting. To mitigate the potentially negative the difficulties that the woodchip supplier to our impact on import and export opportunities, biomass boiler experienced when the boiler was we continue to explore markets that provide out of action. Unfortunately, the returnable beer exchange hedging and reduce operating crate manufacturing business, MCG Namibia, expenses. Developing local suppliers closed down. We now have to procure remains a priority. these from South Africa again. zz T he loss of intellectual property through uncontrolled sharing of sensitive information might provide competitors with a competitive advantage. As is the case with all businesses, we are exposed to cybercrime, which we counter through risk assessments and employee awareness and education.
30 Namibia Breweries Limited MANAGING DIRECTOR’S REPORT
zz Utility price increases may lead to an increase in operating expenses, thereby potentially affecting profitability. We increase efficiencies throughout our supply chain to reduce usage and ensure sustainability. zz A limited skills pool in Namibia – with demand exceeding supply – means that we compete to attract and retain the right skills. We invest in employee learnership and leadership development programmes to train people, expand the talent pool and ensure succession.
OUR PRIORITIES FOR NEXT YEAR To further diversify and grow our volumes, we plan to continue developing brands and creating experiences. These ambitions require the availability of water, skilled people and significant capital investments. Our focus in the short term will be on growing volumes in South Africa, in partnership with Heineken, while exploring longer-term opportunities to establish a production footprint in one of our African markets.
Our focus on digital marketing will be maintained as we continue to enhance our capabilities and partner with agencies to develop breakthrough campaigns. This will assist in making our brands even more accessible to all Namibians. We want to ensure our portfolio has offerings that meet the changing needs and behaviour of consumers. We plan to draw even closer to them through surveys and, by crystallising these insights, to ensure relevance, engagement and authentic experiences.
While we are continuously achieving further efficiencies in our supply chain, there are always opportunities to manage costs down. This requires a breakthrough approach and emphasises the opportunity to create an environment where employees can be the best that they can be.
Relationships will always remain a priority, founded in our ability to give back and share value with our stakeholders.
INtegrated Annual Report 2018 31 WHAT WE DO TO CREATE A FUTURE AND ENHANCE LIFE
We have been creating value for almost 100 years by contributing to the social, economic and environmental well-being of Namibia. In our previous two integrated annual reports, we demonstrated how our partnerships contributed to our long-term success, built on a common purpose and aligned values.
In this report, we consider our partnerships and stakeholders from a different angle: we used a formal materiality process to identify the matters that enable us to create value in the short, medium and long term.
INPUTS INTO OUR MATERIALITY PROCESS STEPS 1 MATERIALITY PROCESS We considered a range of influences, Scanning our context risks, industry challenges and trends. We were guided by regulatory and 2 Identifying our issues/opportunities legislative compliance requirements while also taking into account the concerns and expectations of Ranking these according to our stakeholders. likelihood and impact
MATERIALITY PROCESS OUTCOME Sense-making through discussion and using an external stakeholder lens Our nine material ways of giving back combines the financial value created (as per our value-added statement) on Clustering and consolidating into page 68 with our intent to create holistic nine material ways of giving back stakeholder value, and is directly aligned to our purpose. They are measurable (see the summary on pages 14 and 15) while considering our impact, today and into the future, beyond our business boundaries. We recognise that they are dynamic, and that our emphasis and 3 resource allocation priorities will change over time. The principle of giving back will remain constant.
A summary of the key indicators and financial value shared by giving back is available on pages 14 and 15.
32 Namibia Breweries Limited WHAT WE DO TO CREATE A FUTURE AND ENHANCE LIFE
DERS OF CAP PROVI ITAL
RS Our clearly defined strategy E and purpose drive resilience GO LD V O and growth to ensure By being a good Ecorporate H R E constant dividends and citiz N K M A reliable repayments responsibly,en that ethically does business and E T N S to our providers with transparency, we T L of capital L give our local and A central governments the comfort that they can We ensure effective risk management, particularly also r (IT) that results in to pay taxes in information technology meeting legislative and dutiesely on us and compliance
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S on behalf of our stakeholders E
C opportunities, in addition de R By providing career E to remuneration and and transformation velopment, training U M
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A benefit of all our decrease our relianceon na sustainability of our
We realise efficiency gains N thr To live our purpose, Creating a Future, Enhancing Life,
collaboration we give back to our stakeholders We drive strategiccustomers partner, and in a way that creates with our Heineken, who and relationshipssynergies, of trust expertise, growth opportunities sustainability beyond just benefit fr doing business
We empower communities S through CSI T C om R U initiatives, while also providing S A S benefits of By offering E T T society with the I consumers a sponsorships O and events T E diverse portfolio Through I G M N IC E of exceptional localisation U R quality beverage P S efforts, we grow M A A brands that are and support M R N relevant, strategically O T D positioned across all our supplier base C N segments, widely available, E beyond just offering R aspirational and meet their S evolving needs, we ensure that contracts and making our brands remain the preferred paymentsand forservices materials choice within their repertoire
C O S NS ER UM PLI ERS SUP
INtegrated Annual Report 2018 33 MATERIAL MATTERS
Our clearly defined strategy and purpose drive resilience and growth to ensure constant 1 dividends and reliable repayments to our providers of capital
How do we continue giving back?
Our shareholders and funders require historical and We know that strained local and international forward-looking information to make an informed operating environments can negatively impact assessment about their capital allocation and our ability to trade and grow. We are transparent acceptable levels of risk. To retain them as long-term about the key strategic risks facing the business partners who support the business, we communicate and explain how these are effectively mitigated to a balanced overview of our performance, strategy, ensure NBL remains future fit and well positioned and progress with implementation. We give back to capitalise on growth opportunities. Our position to them by paying finance costs on borrowings and in the O&L Group, and the stability of having the dividends. Total dividends to approximately Group as a strong, stable shareholder, contributes 1 403 shareholders have increased by 8.2% to our financial resilience.
Read more about our strategy on pages 16 and 17, about our financial performance and risk mitigation in the Managing Director’s report on pages 22 and 31, and about growth opportunities in our business context on page 20.
2 By being a good corporate citizen that does business responsibly, ethically and with transparency, we give our local and central governments the comfort that they can also rely on us to pay taxes and duties
How do we continue giving back?
Recent incidents of corporate collapse and failure As a good corporate citizen, we endeavour to reduce have triggered a renewed focus on good corporate the harm and social cost associated with alcohol governance. As a market leader in Namibia, we abuse. We market alcoholic beverages in a way contribute to the stability and functioning of that encourages responsible consumption and our country. We recognise our responsibility to promotes alcohol harm reduction. We do this in do business in a way that contributes to inclusive collaboration with Government, the community and sustainable development for all stakeholders. and non-governmental institutions in Namibia. This includes our leading involvement in the W e support Government’s Growth at Home strategy, Self-Regulating Alcohol Industry Forum (SAIF), the Harambee National Prosperity Plan and, which comprises major alcohol producers and ultimately, Vision 2030. We do this, for example, distributors in Namibia. through the barley project and Government’s green scheme programme. We also continue to engage with SAIF membership is based on voluntary compliance Government on key issues – such as water security – with a code of conduct that prescribes world-class to ensure alignment on the challenges facing Namibia. standards in self-regulation for the prevention of Our commitment to sourcing and developing local the negative consequences of alcohol abuse. suppliers is evident in new agreements with An O&L Group Committee ensures that an Dinapama and Namibia Plastics. Read more independent evaluation against the code is done about these initiatives in the Managing Director’s on all NBL marketing and sales campaigns, report on pages 22 to 31. advertising and promotional material.
34 Namibia Breweries Limited WHAT WE DO TO CREATE A FUTURE AND ENHANCE LIFE
We work closely with the Namibian Police Force, empowers them to make smart decisions about Motor Vehicle Accident (MVA) Fund, National Road the use of alcohol. Safety Council of Namibia, Roads Authority and T other stakeholders such as the Private Sector he programme forms part of NBL’s Stay Cool, Road Safety Forum, to combat drink-driving. Enjoy Responsibility campaign. It aims to instil a sense of accountability and responsibility among Almost 800 people participated in our responsible consumers for the broader reach of their actions, drinking programme, DRINKiQ®, in the south and beyond alcohol-related harm. Stay Cool, Enjoy along the coast of Namibia during March 2018, Responsibility is incorporated into roadblocks, bringing the total participants to close to 5 800 billboards, trailers and special festive-season events. since the inception of the programme in 2009. The campaign also inspired the newly launched Cab The DRINKiQ® programme empowers participants App service, LEFA. We are giving back by supporting with knowledge on alcohol consumption, as well a local entrepreneur in this venture, which provides a as the physical, emotional and psychological solution and alternative to driving under the influence repercussions of excessive use. Participants walk of alcohol. This is Namibia’s first ‘cab on request’ app away with a better understanding of the short and which started with two vehicles and now has 36 safe long-term effects of alcohol abuse, which and secure vehicles on the road.
By providing career development, training and transformation opportunities, in addition to 3 remuneration and rewards, we can support our employees in bringing our purpose to life
How do we continue giving back?
Our employees are our most valuable asset. Our can negatively impact quality, and might hinder speed purpose, Creating a Future, Enhancing Life, is closely of execution and our ability to innovate and stay linked to the experiences of our 792 employees who ahead of competitors. The attraction and retention are spread across the country – from the head office of engaged, high-performance and highly skilled and manufacturing plant in Windhoek to six depots. employees is therefore essential. Employees are encouraged to define their individual purpose as part of our breakthrough architecture. We are committed to increasing the diversity of Read more about this initiative in the Managing our employee demographics, and to supporting Director’s report on pages 22 to 31. Government’s efforts to drive transformation in the workplace. Our employees contribute their diverse skills and competencies to produce breakthrough Through our Remuneration Policy, we ensure everywhere, which delivers the results that make our employees are incentivised to support the implementation of and delivery on the Group’s for a sustainable business. Vision 2019 strategy and goals. It enables us to To continue offering employment and development attract, acquire, retain and appropriately reward opportunities to employees, we have to be employees. competitive, transformed and achieve our strategic target of being an Employer of Choice. We also use the annual Great Place to Work® assessment to determine the state of our culture We face some challenges in achieving this: our and people practices. While Human Capital Policies portfolio of brands requires a range of unique technical and systems are centralised in the O&L Group, we and specialised skills, which are in short supply. This adapt our employee programmes and engagements potentially limits our growth and expansion plans, according to NBL’s needs.
INtegrated Annual Report 2018 35 We give back to our employees through rewards We have a strong focus on development, exposure initiatives such as our Value Star programme. and career growth within NBL and will continue Through the programme, we identify specific people pledging resources and strategic focus towards who display behaviours associated with the Group’s supporting our purpose of Creating a Future, values. They then participate in an annual award Enhancing Life. ceremony and incentives. A monthly NBL Value Star is chosen with one overall winner selected from the When we define the ways of giving back to 12 NBL employees. The annual winner joins the other employees, we have to accommodate the needs of subsidiary winners for an incentive trip. both older and younger generations of employees. This means, for example, increasing e-learning We remain committed to growing leadership opportunities, facilitating access to the Heineken talent in Namibia through internal development University and participating in the Heineken and public programmes. NBL invested N$3 367 681 Global internship programme. Through our newly (2017: N$4 812 446) in training and development centralised employee relations function in the and has multiple talent development programmes O&L Group, we are able to provide employees with in place. We partner with training and education a Group-wide view on opportunities and exposure. institutions for leadership development, professional/ functional development programmes and specialised Our relationship with the recognised union, the technical training, among others. Namibia Food and Allied Workers Union (NAFAU), remains strong and cooperative, with no strikes We sponsored two technical apprenticeships during having taken place in nearly 30 years. 53% 2018, which includes job attachment periods. (2017: 52%) of employees form part of the bargaining We also provided internships and job attachments unit, 64% (2017: 50%) of whom are members of to 13 Namibian students as part of their tertiary NAFAU. 23% of the bargaining-unit employees are qualification requirements. members of the Namibia Wholesale and Retail Workers Union (NWRWU), which is lower than In support of our value of We Grow People, we the required level for a formalised relationship. sponsored, either wholly or partially, a total of 48 employees’ tertiary studies through study loans Employee turnover remains well below 10% and or assistance. This is in line with our people strategy absenteeism is tracked on a monthly basis. Our and responds to the reported national skills shortage. on-site clinic in Windhoek offers occupational and In addition to study assistance, NBL awarded a primary healthcare services. Health, safety and full bursary to an employee to study towards his wellness programmes make for a healthy workforce brewmaster qualification in Germany – a fully fledged and increased productivity. Employee induction and Bachelor of Engineering Science considered as a continued training programmes emphasise the risks global best practice qualification in the brewing of working in an environment that is characterised by industry. Moreover, NBL in partnership with Heineken moving machinery, the handling of chemicals, forklift Global, seconded an NBL employee to the Heineken and truck operations, as well as ventilation and Global head office in Amsterdam. This is a strategic lighting demands. development assignment to fast-track development and knowledge/skills transfer upon her return to Namibia.
Read more about giving back to our employees in the Managing Director’s report on pages 22 to 31 and in the Remuneration report on pages 62 and 63.
36 Namibia Breweries Limited WHAT WE DO TO CREATE A FUTURE AND ENHANCE LIFE
We empower communities through CSI initiatives, while also providing society with the 4 benefits of sponsorships and events
How do we continue giving back?
To bring Sustainability Everywhere, Impacting This has expanded with the launch of a partnership the World, we give back to our communities in between Windhoek Beer UK and Save the Namibia in many ways. Our approach is to invest Rhino International. NBL donated a minimum of for sustainability: in all cases, we support our £5 000 to Save the Rhino International. A new investments with engagements to ensure campaign will drive awareness through a range of future viability. fundraising events and activities in outlets. In May, for example, a Windhoek Lager team member When we support an event such as Miss Teen running the Hackney Half Marathon in a rhino Namibia, we work with the organisers to find ways outfit, raised more than £700. In Namibia, NBL in which they can earn or raise money in the future, also rewarded four people who provided tips that and not only be dependent on sponsorships. We led to the arrest of rhino poachers. assist to take events to the next level, to create scale and to enhance the lives of participants, Through brand sponsorship and events, we even under challenging economic conditions. connect with and give back to our communities in ways that deliver amazing, memorable As part of the O&L Group, we can have a real experiences. This covers a range of sporting, impact and create change when we consolidate cultural and musical events. Examples include contributions. Through the Group, we have a wider Windhoek Draught’s support of the Welwitschias, audience and expanded community, which adds to the Namibian national rugby team. The the reach of an initiative such as our first drinking sponsorship aims to create opportunities for and driving television commercial. The ad, themed young Namibians to play rugby at a professional ‘Welcome to Your New Life’, strengthens our stand level. Divan Serfontein, ex-Springbok captain, as a leader in alcohol harm reduction in Namibia partnered with NBL and Namibia Rugby Limited by calling on motorists to refrain from drinking to design a rugby academy as a feeder to produce and driving through an emotive portrayal of professional rugby players. In giving back through the consequences. this sponsorship, we want to:
While our products are generally associated with zz generate income and bring people into the great social occasions, fun and laughter, we are not stadiums so these can become self-funding afraid to confront the unpopular reality of the other and less reliant on sponsorships; side: when people don’t enjoy alcoholic beverages zz improve competitiveness by providing strategic responsibly, there are consequences. Read more in assistance through the restructuring of the rugby the Chairperson’s statement on pages 4 to 7. controlling body and creating Namibia Rugby In terms of community projects, environmental Limited. This resulted in the team’s transition and conservation efforts featured together with from amateur to professional status. This means our support to responsible drinking. Environmental that their exposure to provincial and international initiatives included Project Shine, the Fish River rugby will increase, thereby improving the Canyon Clean-up and various other project national team’s chances of qualifying for the supported in conjunction with the Recycle Forum, Rugby World Cup in 2019; and as well as conservation efforts related to our zz re-energise the Namibian rugby culture and campaign to blow the horn on rhino poaching. evoking feelings of national pride. Read more about our investment in upgrading the Hage We support the fight against rhino poaching to Geingob rugby stadium in the Chairperson’s bolster the sustainability of Namibia’s tourism statement on pages 4 to 7. industry. Namibia is home to free-roaming rhino and the largest population of black rhino in Africa.
INtegrated Annual Report 2018 37 Tafel Lager sponsors the Brave Warriors national Through the Tafel Lager Griquas Rugby football team, enabling them to attend training sponsorship, we facilitated the visit of a Griquas camps that resulted in improved performance delegation to Namibia, focusing on skills and and subsequent FIFA ranking. Through the capacity building of local talent in coaching and Tafel Lager Dr Hage Geingob Soccer Cup, we refereeing, as well as grassroots development. were able to transition from club games to Discussions are underway to create exchange qualifying as a national team that was ranked programmes for up-and-coming young rugby for the 2018 African Nations Championship. players who have left school and are pursuing rugby as a profession.
Read more about the specific brand sponsorships and events in Appendix A on pages 65 to 67.
38 Namibia Breweries Limited WHAT WE DO TO CREATE A FUTURE AND ENHANCE LIFE
Through localisation efforts, we grow and support our supplier base beyond just offering 5 contracts and making payments for materials and services
How do we continue giving back?
The limited scale of the Namibian economy makes way of giving back to suppliers through a long-term it challenging to develop competitive local vision and commitment to development. industries. This creates reliance on imported raw materials for the production and packaging We engage with critical suppliers through quarterly of NBL’s beverages. Despite this, there is an reviews. These reviews include an open discussion expectation from Government and communities on quality issues, areas of poor communication, that local companies in Namibia, such as NBL, pricing trends, as well as opportunities for should stimulate job creation and support broader innovation. This helps to establish a mature economic growth and stability. relationship based on trust and continuous improvement. We are actively exploring options to develop local Our new data analysis and business intelligence suppliers, particularly within manufacturing, logistics system – Go digital! – provides oversight of all data services, marketing and advertising. This includes related to sourcing and distribution to allow for providing assistance to small and medium-sized accurate market and commodity analysis. suppliers, where appropriate. For example, we offer preferential payment terms and provide technical We also work with other areas of our supply chain and administrative support to improve business to create opportunities to share value. The Bottle efficiencies. Read more about our new supply Dealers’ Association of Namibia is an example of agreements with Dinapama and Namibia Plastics our engagement with a newly formalised group, in the Managing Director’s report on pages 22 to 31. who collect empty bottles from the streets, resulting in more frequent payments to assist them Our approach is to provide small suppliers with with cash flow challenges. This also supports our the security of income and potential scale to grow wider initiatives to collect returnable bottles. About sustainably. An example of this is a distributor we 58% of NBL’s production is packaged in returnable supported in Walvis Bay that started with containers that are collected through an extensive one employee and now employs 50 people. network to minimise waste. We have strategic, long-standing relationships The return of empty 500-ml and 750-ml returnable with European suppliers from whom we import bottles forms part of transport logistics. During 100% of our malted barley and hops requirements. 2018, NBL achieved a return ratio of 99%. This The procurement of a major portion of ingredients is, inter alia, made possible by an agreement is based on long-term contracts – some running with competitor AB InBev Namibia to exchange three to four years into the future – to ensure the returnable bottles on a weekly basis. required volumes and quality. Packaging material, which includes bottles, cans, cartons and shrink In our primary services contract with Imperial foil, is predominantly imported from South Africa. Managed Solutions Namibia (Proprietary) Limited (IMS), we create opportunities to give back Through the barley project, we are working with by encouraging subcontracting to small local Government to create a local industry that will transport companies. More than 53% of all primary generate jobs and income for rural communities. transport loads have owners who were previously Our ultimate goal is to secure our barley supply disadvantaged. More than 74% of primary transport locally and reduce reliance on imported raw loads in Namibia are handled by previously material. The project, which features King Lager as disadvantaged owners. its beer brand, provides an example of a sustainable
INtegrated Annual Report 2018 39 By offering consumers a diverse portfolio of exceptional quality beverage brands that 6 are relevant, strategically positioned across all segments, widely available, aspirational and meet their evolving needs, we ensure that our brands remain the preferred choice within their repertoire
How do we continue giving back?
Our brands aim to remain close to our consumers by We continue to offer new ways and venues to enjoy involving them in Amazing Experiences, Enduring our products, for example at the Swakopmund Impact. These consumers are from all income levels, Brewing Company. With the inflow of new craft a range of geographic locations and feature diverse brewers into the country, including the opening of demographics. As part of giving back to them, we a microbrewery in Windhoek, we provide technical believe in connecting them to our purpose and expertise, support and guidance to some of these offering them products that continue to exceed brewers. We regard them as new players that their expectations. contribute to the growth of the category, helping cultivate interest and excitement, which grows the We craft bold products from unique premium overall consumer pool. ingredients. This enables us to deliver on a growing consumer need for brands that signify their status To remain close to our consumers, we have increased and individuality. the frequency of surveys, providing us with quicker insights into changing consumer patterns, brand With significant strain on consumers’ disposable choices within their repertoire, and attitudes towards income, we focus on giving back by remaining our brands. More frequent surveys also provide us relevant and ensuring that our brands create with agility to refine campaigns and innovate to meet value for consumers through providing a range of emerging needs. quality offerings and always delivering memorable experiences at connection moments. To promote a The national Tafel Lager consumer campaign is an healthy, balanced lifestyle, our brand portfolio includes example of how NBL gives back. We split the country a number of ‘lite’ versions of existing products. These into zones, and rewarded five consumers with double- include Amstel Lite and Tafel Lite, which are lower in cab bakkies. Of the five bakkies won, one traded in total energy than their mother brands. The expansion his prize for a smaller vehicle and has started a taxi of our brands and product offering into Softs and business, while one winner traded in her bakkie and bottled water also ensures that consumers are able to used the capital to start a hair salon. enjoy non-alcoholic options while remaining loyal to NBL. Read more about new product launches in the Managing Director’s report on pages 22 to 31.
Read more about beer consumption trends on page 20, and find detail about our brand portfolio on page 11.
40 Namibia Breweries Limited WHAT WE DO TO CREATE A FUTURE AND ENHANCE LIFE
We drive collaboration with our customers and strategic partner, Heineken, who benefit from 7 synergies, expertise, growth opportunities and relationships of trust
How do we continue giving back?
Our customers encompass formal and informal more frequent deliveries as a way to support our wholesale and retail trade outlets in the markets customers. In response to planning and forecasting in which we operate. These include, for example, activities becoming more complex, we are rolling supermarkets, liquor stores, shebeens, pubs and out our truck routing and scheduling system to other hospitality outlets. all depots. This will ensure optimised loads, best routes and achieve fuel savings. Electronic invoice We create value for our customers through our matching now also assists in improving efficiency direct interaction with them, and via our strategic between NBL and customers. partnership with Heineken. In South Africa, Swaziland, Lesotho, Zambia and Our customers benefit from incentive programmes Botswana, we service customers through Heineken that share value through increased sales volumes SA, while NBL offers selected Heineken products and market share growth. in Namibia. The strategic partnership allows both In the informal market, we support shebeen owners parties to benchmark, transfer skills and collaborate with point-of-sale material and advertising. on brand campaigns. In addition to leveraging one another’s brand portfolios, Heineken and To strengthen our customer relationship, we are NBL have a volume migration agreement that actively increasing direct sales and shipments to provides joint access to the Sedibeng Brewery in constitute more than 53% of Namibia volumes. This Johannesburg and NBL’s brewery in Windhoek. This will give customers the cost benefit of less handling creates production flexibility and efficiency options. and increased access to stock. We offer further discounts if full pallets are ordered. At the same Engagement touchpoints with Heineken increased time, we have increased our support to customers more than fourfold during the past year in terms of for the payment of casual labour on trucks, as this joint planning and logistics arrangements. We have improves our turnaround times. formal weekly, monthly and quarterly forums, in addition to daily contact that results in smoother Given current economic conditions, we have also operations on both sides. adapted to accommodate smaller orders and
Read more about our relationship with Heineken in the Chairperson’s statement on pages 4 to 7 and the Managing Director’s report on pages 22 to 31.
INtegrated Annual Report 2018 41 We realise efficiency gains through savings and waste management, which decrease our 8 reliance on natural resources and ensure the sustainability of our business for the benefit of all our stakeholders
How do we continue giving back?
Our long-term ability to give back to our Our CO2 recovery plant enables us to be
stakeholders is intrinsically linked to the availability independent. We have not purchased CO2 of the natural resources used in our production since the plant was commissioned in 2013.
processes. We have a responsibility to protect the NBL also produces Softs which require CO2. environment in which we operate for the benefit These beverages are produced without importing
of all who depend on it. CO2 from South Africa, where it is predominantly produced by burning fossil fuels. During the Our resource allocation decisions are guided by year, we sold 29.1 tons of excess CO to our commitment to 2 Creating a Future, Enhancing external customers (2017: 191 tons). Life, and take into account the environmental impact of each product’s entire life cycle – from its Additional outputs of the manufacturing process development to the disposal of the product and include packaging waste. 58% of our production its materials. To reduce our impact, we focus on is packaged in returnable containers that are reducing water and energy consumption, and the collected through an extensive network to amount of waste from production processes. minimise waste.
Our biomass boiler at the Windhoek production Besides enhancing our own internal processes to plant replaced approximately 2 713 650 litres of achieve a world-class, sustainable operation, we heavy fuel oil since it was taken into production support campaigns to expand public awareness of
which equates to a CO2 emissions reduction of good environmental practices. This includes, for 7 236 tons. example, clean-up campaigns such as Project Shine and the activities of the Recycle Namibia Forum The boiler uses wood chips sourced from pervasive (RNF), which is chaired by NBL. invader bush, thereby clearing land for use and improving the carrying capacity of farms. To date, We are the main sponsor of Project Shine that invader bush thinning has been completed for comprises two environmental activities in the approximately 1 700 hectares. Erongo region: a clean-up and an awareness campaign. As a partnership project with the Our rooftop solar plant met 8.1% (2017: 7.6%) of Swakopmund Municipal Council, Bannerman our electricity demand in the past year. Overall, Resources, First National Bank and Plastic the solar plant has provided us with approximately Packaging, it creates understanding of waste 1 607 786 kWh of green energy, thereby saving management, the risk involved in illegal dumping 1 608 tons of CO emissions in support of the 2 of waste along the roads and in open spaces, and O&L Group’s target to achieve a 20% reduction emphasises the importance of recycling waste in its carbon footprint by 2019. generated in the municipal jurisdiction.
Beer, among other fermented alcoholic products, Water supply in Windhoek remains constrained produces CO as its main by-product. On its own, 2 due to the impact of longer-term climate change. the CO from beer fermentation is considered 2 Water is vital to our operations: it is the primary carbon neutral, as it originates from CO 2 ingredient in our products and is used in its sequestered on a continuous basis by growing manufacturing processes. Therefore, we have barley rather than using a fossil fuel. Instead of to practise responsible water stewardship. releasing it into the atmosphere, a brewery can
recover, purify and reuse this CO2 as the ‘fizz’ in its beverages.
42 Namibia Breweries Limited WHAT WE DO TO CREATE A FUTURE AND ENHANCE LIFE
Longer-term sustainable water supply will depend the actual water for the product, do not go to on plans to connect the centre of Namibia to other waste. The majority is reclaimed and transferred water sources to reduce dependency on rainfall to the city’s effluent system, from where it is and dams. Supply options include desalination or, recycled. We do pre-cleaning of our effluent, which as in the case of NBL, the migration of production is treated by the City of Windhoek according to a to other areas, including Sedibeng in South Africa. contractual agreement. The agreement prevents us from building our own wastewater plant, as the city With five boreholes on our Windhoek premises, works benefit from the bacteria in our effluent. This we were able to extract 26.5% of our water is an example where we are able to give back to requirements from own sources this year. We the environment in a sustainable way. also continue to invest in water-saving initiatives. Water reclamation in our brewing and packaging We are extending our internal water reclamation plants reduced our water consumption by plant as a further way to reduce fresh water 14m3/hour in the past year. consumption. The installation of the additional water reclamation capacity unfortunately requires Currently, 4.3 litres of water are used to produce equipment that will increase our electricity one litre of beer. The water used in additional to consumption.
Environmental parameters 2014 2015 2016 2017 2018 Benchmark Trend
Water consumption 4.9 4.8 4.4 4.3 4.3 5.0 (industry (hl* per hl of product) average) Total electricity consumption 9.0 9.2 9.5 9.7 9.9 N/A^ (kWh** per hl of product)
Thermal energy consumption 65.2 64.0 70.2 61.9 60.0 77.0 (global (MJ*** per hl of product) standard)
* hl = hectolitre (equal to 100 litres) ** kWh = one kilowatt hour (equal to 3.6 megajoules) *** MJ = one megajoule (equal to one million joules) ^ No comparable data available due to difference in technology, seasonality and volume throughput.
During 2018, we moved away from wraparound We are transitioning into a new overflow packaging to normal tray cartons. Although we are warehouse, which can increase our direct losing a branding opportunity, the cost and waste drop shipments. Blue lights for forklifts will be reduction benefits were overriding. implemented in the next year, adding to existing safety measures.
INtegrated Annual Report 2018 43 We ensure effective risk management, particularly in IT, which results in meeting legislative 9 and compliance requirements, while mitigating risk on behalf of our stakeholders
How do we continue giving back?
As a market leader, significant employer and employees to different environments, a proudly Namibian brand owner, we have to while ensuring that contracts include training manage a wide range of risks on behalf of our and maintenance elements. stakeholders, as they can be affected by even small Two generators at our depots mitigate the risk disruptions or unexpected events at NBL. Our of unreliable power supply. Employees can now ability to mitigate these risks gives stakeholders maintain effective customer service and adherence peace of mind, which is a way in which we earn to stock management principles at all times. We their trust and deliver on our promises. continue to enhance customer service through our Rapid social, economic and technological change Sales Automation System. This system ensures that is challenging business stability. In particular, NBL remains on top of in-store execution: outlets information and technology are receiving a are always stocked, product range is maintained stronger focus in light of increasingly pervasive and products are correctly priced. cybercrime and risks to data security. For NBL, The Audit Committee, in conjunction with the loss of intellectual property as a result of Management Risk Committee, assists the cybercrime or uncontrolled sharing of sensitive Board in monitoring the effectiveness of the information, could provide a competitive risk management process, including fraud and advantage to other role players. corruption, IT-related items, and compliance with Our Senior Leadership Team is charged with risk standards adopted by the O&L Group. implementing our strategies and objectives, and is The Board is ultimately responsible for managing also responsible for ensuring that internal controls the Group’s risk and setting its risk appetite. We are in place and function effectively to mitigate risk do a risk and opportunity assessment annually to to operations. We manage significant operational identify the critical business, operational, financial risks through sophisticated IT systems. The SAP and compliance exposures facing NBL, as well warehouse management system, for example, is as the adequacy and effectiveness of controls. used across all Windhoek-based operations. This We use BarnOwl risk management software to system helps us to optimise planning, particularly ensure a unified and structured risk management as complexity intensifies with increasing numbers approach across the O&L Group. Our risk approach of new stock-keeping units. is preventative and our methodology is now When bringing in new technology or equipment, aligned to ISO 31000. we follow an evaluation process that considers To support ethical business practices, we have a price, state-of-the-art applications and after- 24-hour Tip-Offs Anonymous hotline and maintain sales service. We arrange for site visits where a zero-tolerance stance on fraud. The hotline is relevant, as a way to evaluate suppliers and expose operated by a confidential, independent supplier.
Read more about our strategic risks in the Managing Director’s report from pages 22 to 31.
44 Namibia Breweries Limited WHAT WE DO TO CREATE A FUTURE AND ENHANCE LIFE
INtegrated Annual Report 2018 45 46 NNamibiaamibia Breweries LLimitedimited GOOD CORPORATE GOVERNANCE
The NBL Board of Directors 48 BOARD PROFILES is committed to corporate 52 SENIOR LEADERSHIP TEAM governance and has put processes in place to 62 REMUNERATION REPORT ensure that NBL achieves Namibian and international best practice.
IINtegratedntegrated AAnnnnualual Report 2018 47 BOARD PROFILES
EXECUTIVE DIRECTORS NON-EXECUTIVE DIRECTORS
Hendrik van der Westhuizen (44) Graeme Mouton (41) Sven Thieme (50) Qualifications: BSc in Operations Qualifications: CA(Nam) Qualifications: CA(Nam)(SA) Management from the Production Graeme joined O&L Group in 2005 as Sven is the Executive Chairperson Management Institute of South Finance Manager at the O&L Centre. of the O&L Group. He joined O&L Africa, Postgraduate Degree in In 2007, Graeme was seconded to in 1998, after working for Association in Management (AIM) Guinness Ghana Breweries Limited four years as a Chartered from the University of Cape Town in Accra, a Diageo subsidiary, as a Accountant in Luxembourg. He and a Management and Senior Management Accountant for was also the architect of several Management Diploma from the 19 months. Prior to his current role, joint ventures entered into by University of Stellenbosch he held the position of Finance O&L, including the deal between Wessie has been with the O&L Group Director at Model Pick n Pay Heineken, Diageo and Namibia since 2003. In 2006 he was appointed Namibia. Breweries. to the Board of Hangana Seafood He was appointed to the NBL Board He was appointed to the NBL (Proprietary) Limited and became on 17 September 2013. Board in March 2002 and elected its Managing Director in 2009. He Chairperson on 11 July 2002. played an integral role in successfully placing Hangana Seafood (Proprietary) Limited on the road of sustained profitability and has over 19 years of experience in the Food and Beverage Industry. He was appointed to the NBL Board as Managing Director on 2 April 2012.
48 Namibia Breweries Limited GOOD CORPORATE GOVERNANCE
Ernst Ender (72) Günther Hanke (62) Hans-Bruno Gerdes (66) Qualifications and experience: Qualifications: BCom (Accounting) Qualifications: BProc degree from Two-year postgraduate commercial with completed articles, Senior the University of Cape Town traineeship with AC Toepfer. Senior management certificate from the Hans-Bruno is a consultant to the Management Programme University of Stellenbosch Business attorneys firm Engling, Stritter & School, CFA(SA) Ernst was appointed as Executive Partners and an associate of the Director in 1983, having joined the Günther joined the O&L Group of Institute of Chartered Secretaries. Group in 1975. He took responsibility Companies in March 2004 as Group He practises as a commercial/ for the Company’s marketing and Financial Director responsible for corporate attorney, holds numerous sales function until 2002, when formulating and executing strategy directorships and is actively involved he became responsible for the as part of the Executive Team. He in the organised legal profession. development of the export markets. has held various senior executive He serves as Chairperson of the Ernst retired in 2008 but remains positions over the past 25 years. Audit Committee. on the NBL Board as Non-executive He is currently the Chairman of He was appointed to the NBL Board Director. He was also appointed as a Dimension Data Namibia and is a on 28 July 2000 and to the Audit Non-executive Director to the O&L Director of various O&L companies Committee on 28 November 2001. Board in June 2008. with the Group. He was appointed to the NBL Board He is an alternate Director to on 1 February 1983. S. Thieme and was appointed to the NBL Board on 1 October 2015.
INtegrated Annual Report 2018 49 The NBL Board of Directors is committed to corporate governance and has put processes in place to ensure that NBL continuously strives to achieve Namibian and international best practice.
NON-EXECUTIVE DIRECTORS (CONTINUED)
Peter Grüttemeyer (64) Carl-Ludwig List (69) Lieven van der Borght (56) Qualifications: CA(Nam) Qualifications: Banking (Germany) Qualifications: LLM and MBA from the Catholic University of Leuven, Peter joined the O&L Group in Carl-Ludwig matriculated in Cape Belgium October 2003 as Chief Executive Town and completed his banking Officer where he is responsible education in Germany in 1971 With many years of experience for formulating and executing after attending the University of within the Heineken Group and other strategy. He is a qualified Chartered Stellenbosch. He served the reputable international corporates, Accountant and prior to joining O&L Group from 1972 to 1992. Lieven holds the position of Heineken O&L he held the position of partner Regional Commercial Director Africa He was appointed to the NBL Board in charge of the Deloitte Namibia and Middle East. He served as a on 28 June 1979. practice. Non-executive Director of Heineken Sirocco Dubai and Heineken South He was appointed to the NBL Board Africa (Proprietary) Limited. on 3 June 2004 and to the Audit Committee on 2 December 2010. He is an alternate Director to R Pirmez and was appointed to the NBL Board on 2 December 2010.
50 Namibia Breweries Limited GOOD CORPORATE GOVERNANCE
Laura McLeod-Katjirua (58) Roland Pirmez (58) Steven Siemer (51) Qualifications: GradDip DVST Qualifications: Engineering degree Qualifications: Master’s degree in and Management, Diploma in Basic in Agriculture and Master’s degree in Business Economics – University of Education Brewing – Université Catholique de Groningen Louvain Governor McLeod-Katjirua has a Steven was appointed Finance long history of serving the people Roland was appointed President of Director of Heineken Africa, of Namibia. She has been active in Heineken Africa, Middle East and Middle East and Eastern Europe the promotion of gender equality Eastern Europe in 2015. From 2013 in 2017. From 2014 to 2017, he and education in Namibia. She is until 2015, he was President of Asia, was Finance Director of Heineken currently the appointed Governor of Pacific and CEO APB. Roland joined Spain. Steven joined Heineken in Khomas Region where she continues Heineken in 1995. From 1995 to 1990 as Marketing Controller of to support various initiatives that 1998, he was Managing Director of Heineken Netherlands. In 2001, he support the development and Heineken Angola. In 1998, he was was appointed as Finance Director well-being of Namibians. appointed General Manager of Thai of Heineken Ireland. From 2005 to Asia, Pacific Brewery Co Limited, 2007, Steven was Head of Region She was appointed to the NBL Board Thailand and in 2002, he became Control and from 2007 to 2010, on 2 April 2012. Chief Executive Officer of Heineken Business Development Director, for in Russia. Heineken CEE, Austria. From 2010 until 2014, he was Finance Director He was appointed to the NBL Board of Brau Union Austria on 8 September 2015. He was appointed to the NBL Board on 1 July 2017.
INtegrated Annual Report 2018 51 SENIOR LEADERSHIP TEAM
Our Senior Leadership Team is charged with implementing the Company’s strategies and objectives. This Team is also responsible for ensuring that internal controls are in place and function effectively in order for the Company to operate and to mitigate risk to such operation.
1 2 3
7 8 9
52 Namibia Breweries Limited GOOD CORPORATE GOVERNANCE
4 5 6
Senior Leadership Team
Hendrik van der Westhuizen Anton Goosen John Fitzgerald 1 Managing Director 4 Global Sales Manager 7 General Manager NBL SA
Graeme Mouton Abrie du Plooy René Duffy 2 Finance Director 5 Logistics Manager 8 Global Marketing Manager
Timothy Izaks Christin Obst Hans Herrmann 3 Human Capital Manager 6 Strategic Sourcing Manager 9 Supply Manager
INtegrated Annual Report 2018 53 Introduction The NBL Board believes that, while best Good corporate governance is fundamental to recommended practice is being applied, further the success of any organisation and NBL is no enhancements will be made over time in line with exception to this rule. The NBL Board of Directors its objective to continuously improve corporate is committed to corporate governance and has put governance. processes in place to ensure that NBL continuously The Board strives to achieve Namibian and international best practice. The following report outlines the way that All members of the Board have a fiduciary Directors control and govern the Company. responsibility to represent the best interests of NBL and all its stakeholders. NBL’s Board of Directors’ Compliance key purpose is to ensure the Company’s prosperity NBL has to comply with all applicable Namibian by collectively directing its affairs, while meeting legislation as well as the Listing Requirements of the the appropriate interests of its shareholders and Namibian Stock Exchange (NSX). The NSX requires other stakeholders. In addition to business and NBL to comply with the Corporate Governance financial issues, the Board deals with challenges Code for Namibia (NamCode) which is based on and opportunities relating to corporate governance, the principles of South Africa’s 2009 King Report on corporate social responsibility and corporate ethics. Corporate Governance’s (King III) recommendations The Board currently consists of two Executive as well as Namibian legislation. NBL has started a Directors and eight Non-executive Directors, with process to evaluate compliance with the new two alternate Directors. King IV Report on Corporate Governance™ for South Africa, 2016 (King IV™) with the intention Read more about the Directors in their to align governance structures, practices and profiles on pages 46 to 51. disclosures to these requirements in future.
54 Namibia Breweries Limited GOOD CORPORATE GOVERNANCE
Years of tenure and Name Status Independent Gender Nationality appointment date
E Ender Non-executive Yes Male German 35 (1 February 1983)
H-B Gerdes Non-executive Yes Male Namibian 18 (28 July 2000)
P Grüttemeyer Non-executive, No Male Namibian 14 (3 June 2004) shareholder representative
G Hanke Non-executive, No Male Namibian 3 (1 October 2015) shareholder representative (alternate to S Thieme)
C-L List Non-executive, Yes Male Namibian 38 (28 June 1979) shareholder representative
L McLeod- Non-executive Yes Female Namibian 6 (2 April 2012) Katjirua
G Mouton Executive (Finance No Male Namibian 5 (17 September 2013) Director)
R Pirmez Non-executive, No Male Belgian 3 (8 September 2015) shareholder representative
S Thieme Chairperson No Male Namibian 16 (14 March 2002)
L van der Borght Non-executive, No Male Belgian 7 (2 December 2010) shareholder representative (alternate to R Pirmez)
H van der Executive (Managing No Male Namibian 6 (2 April 2012) Westhuizen Director)
S Siemer Non-executive No Male Dutch 1 (1 July 2017)
INtegrated Annual Report 2018 55 King IV™ and the NamCode recommend that Mr Sven Thieme was re-elected as chairperson the majority of Directors be independent. In this of the Board at the prior year’s Annual General regard, the NBL Board continues to depart from Meeting (AGM) held on 1 December 2017. the recommendation in respect of the number of independent Directors serving on NBL’s Board Committees statutory committees. NBL Directors, including the To assist the Board with properly discharging its Chairperson of the Board, continue to be appointed duties, it delegates certain functions to the various based on their experience, competency, leadership Board Committees and to the Senior Leadership skills and strong business ethics, and it is these Team. Each Board Committee acts within agreed, attributes that are regarded as the main criteria written terms of reference. The minutes of Board for appointment. Committee meetings are provided to the Board.
The responsibilities of the Chairperson and the Chief The Company Secretary is responsible for verifying Executive Officer remain separate, as recommended that all Board Committees comply with statutory, by King IV™ and the NamCode. regulatory, NSX Listing Requirements and best practice. Directors have access to the Company In discharging their responsibilities, and under Secretary at all times. appropriate circumstances, all Directors are entitled to seek independent advice at NBL’s expense. The various established Board Committees are set out below. Established procedures require all Directors to inform the Board timeously of any actual or A Senior Leadership Team is charged with potential conflicts of interest they may have in implementing the Company’s strategies and relation to particular items of the business. Directors objectives. This Team is also responsible for are obliged to recuse themselves from discussions ensuring that internal controls are in place and or decisions on matters in which they have a conflict function effectively in order for the Company to of interest or a potential or perceived conflict of operate and to mitigate risk to such operation. interest. In general, Directors are required to avoid any direct or indirect interest that conflicts or may The Board holds the Senior Leadership Team conflict with the Company’s interest. accountable for their activities, which are monitored and controlled through regular reports and performance measurements.
NBL Board of Directors
Remuneration and Nomination Committee
Audit Committee
Management Risk Committee
56 Namibia Breweries Limited GOOD CORPORATE GOVERNANCE
Attendance at Board and Committee meetings was as follows:
Remuneration and Management Nomination Board Audit Committee Risk Committee Committee 5 1 1 28 23 4 8 15 12 Sep Dec Mar May Aug Sep Nov Feb Oct Meeting dates 2017 2017 2018 2018 2017 2017 2017 2018 2017 1 Mar 2018
E Ender PPPP
H-B Gerdes PPPPPPPP
P Grüttemeyer PPPPPPPP
G Hanke AAAA
C-L List P P P P*
L McLeod-Katjirua P A A A
G Mouton PPPPPPPP P
R Pirmez P P P P* P
S Thieme PPPP P
L van der Borght A A A A
H van der Westhuizen P P P P P P P P P P**
S Siemer AA P* P
E van Lokven# P P* P A
B Mukuahima# P
* via teleconference number of independent Directors serving on the ** by invitation Committee. The Audit Committee members, # Committee member but not a Board member P = Present including the Chairperson, are appointed based on A = Apologies their experience, competency, leadership skills and
Audit Committee strong business ethics, and it is these attributes that are regarded as the main criteria for appointment. The Audit Committee is comprised of the following three members: The Committee’s terms and reference, as set out in an Audit Committee Charter, and approved by zz H-B Gerdes (Chairperson); the Board, is to review the Company’s financial zz P Grüttemeyer (O&L representative); and statements, the appropriateness of the Company’s zz E van Lokven (Heineken representative). accounting and disclosure policies, compliance with International Financial Reporting Standards, and the The NBL Audit Committee continues to depart effectiveness of internal controls. from the recommendation in respect of the
INtegrated Annual Report 2018 57 The Committee considered and recommended an The Board is satisfied that the Committee complied internal audit charter for approval by the Board. with its legal, regulatory or other responsibilities.
The Company’s external and internal auditors, Remuneration and Nomination Committee Finance Director, and Managing Director attend The Committee is comprised of the following Audit Committee meetings by invitation. The members: Committee invites other members of the NBL Senior Leadership Team as required. The auditors, both zz R Pirmez (Chairperson and Heineken internal and external, attended all Audit Committee representative); meetings during the year under review. zz P Grüttemeyer (O&L representative); and
The Audit Committee roles include: zz B Mukuahima (O&L representative).
zz monitoring the integrity of financial statements The Remuneration and Nomination Committee’s and making recommendations to the Board; main responsibilities, as set out in its Board approved terms of reference, include monitoring the zz ensuring integrated reporting takes place; appropriateness of the Company’s Remuneration zz reviewing and monitoring the internal audit plan; Policy and ensuring a formal and transparent zz reviewing internal and external audit reports process exists in respect of appointing new and monitoring that corrective actions are Directors to the Board. In fulfilling this function, performed, providing a communication channel the Committee is required to: between the Board, the internal and external auditors and other assurance providers; zz Assess the necessary and desirable competencies of prospective Board members zz assisting the Board, in conjunction with based on merit and objective criteria. In the Management Risk Committee, to monitor doing so, candidates from a wide range of the effectiveness of the risk management backgrounds are to be considered, in keeping process, including fraud and corruption, with the dynamics and diversity of the country. information technology-related items, and compliance with risk standards adopted by zz Review Board nominations from shareholders the O&L Group; and to provide recommendations to the Board in respect of such nominations. zz reviewing NBL’s policies and practices concerning business conduct and ethics, zz Ensure that, on appointment to the Board, including whistleblowing reports received via the Non-executive Directors receive a formal letter of Tip-offs Anonymous hotline; and assisting the appointment setting out clearly what is expected Board to discharge its responsibility to: of them in terms of their time commitment, Committee service (if any), and involvement –– safeguard NBL’s assets; outside Board meetings. –– operate adequate and effective systems of zz Define and implement procedures for the annual internal control, financial risk management statement of disclosure of any conflict of interest and governance; and the annual statement of compliance. –– review financial information and shareholder zz Give full consideration to succession planning reporting; in the course of its work, taking into account monitor compliance with laws and –– the challenges and opportunities facing the regulations; and Company and, therefore, what skills and –– provide oversight of the external and internal expertise are needed on the Board in the future. audit functions and appointments.
58 Namibia Breweries Limited GOOD CORPORATE GOVERNANCE
zz Keep under review the structure, size and review meetings. The minutes of this Committee composition (including the skills, knowledge are made available to and discussed at Audit and experience) of the Board, and make Committee meetings as well. recommendations to the Board with regard The Management Risk Committee comprises: to any changes, subject to the provisions of the Company’s Articles of Association and the zz H van der Westhuizen (Chairperson); Namibia Companies Act, 2004. zz G Mouton; zz Consider and, if appropriate, make zz NBL Senior Leadership Team; recommendations to the Board regarding zz O&L Head Group Risk Manager; and –– the tenure of Non-executive Directors on the Board; and zz Internal Auditors Ernst and Young Namibia (EY)
–– the reappointment of any Non-executive No undue, unexpected or unusual risks were Director at the conclusion of his or her taken in the past year and no material losses were specified term of office. experienced as a result of such risks. The Board is zz Action any other duties or responsibilities satisfied with the effectiveness of the Company’s expressly delegated to the Committee by risk management processes. the Board. Internal controls Read more about remuneration in the report NBL’s internal controls are designed and operated on pages 62 to 63. to support the identification, evaluation and management of risks and strategic opportunities Management Risk Committee affecting the Company, as well as the business environment in which it operates. Internal control The Management Risk Committee has an systems are in place to provide the Senior independent and advisory role with accountability Management Team and the Board with reasonable to the Audit Committee. The purpose of the assurance as to the integrity and reliability of the Management Risk Committee is to assist the Board financial statements. of Directors to fulfil its responsibilities relating to: Continuous management reviews, a review of zz the governance of risk; internal financial controls, and a review of external zz the assessment and review of credit, market, parties providing internal audits, test whether the fiduciary, liquidity, reputational, operational, business complies with internal control procedures fraud, strategic, technology, data-security, and and policies. Experienced and qualified employees business-continuity risks; and are appointed as control champions throughout the zz monitoring the overall risk profile. business functions to review and evaluate financial as well as technical controls. The Directors who serve on the Management Risk Committee are ultimately responsible for Any deficiencies are recorded, monitored regularly, the Company’s risk management system. The and reported to the Senior Leadership Team. This system is designed to manage risk rather than to has proven to be a very successful approach to eliminate it. On a monthly basis, risks are identified, critically evaluating and improving internal control assessed and discussed within the different policies and procedures. The internal audit function business functions. These risks are closely managed, was outsourced to the auditing firm EY. The internal monitored and mitigated. Reports on the top key audit programme is founded on a three-year risk- risks, along with their respective mitigation plans, based approach. The internal audit plan is approved are delivered at each Board meeting as well as at by the Audit Committee and regularly reviewed by Audit Committee meetings and monthly business the Risk and Compliance Department.
INtegrated Annual Report 2018 59 During the reporting year, the following internal Stakeholder communication, ethics and Tip-offs audits were performed: Anonymous hotline NBL’s Board is aware of the importance of zzStakeholder Engagement communicating the Company’s activities to all zzProcure to Pay stakeholders in a balanced and comprehensive zzInventory Management manner. Each key stakeholder group therefore zzWarehousing and Distribution has a business owner who is the individual in NBL primarily accountable for managing the relationship zzProduction and regularly engaging with the stakeholder or zzOshakati Depot stakeholder group concerned. zzCentral Distribution Depot Shareholder communications take the form of zzRundu Agency analyst presentations where NBL announces its All findings and recommendations are recorded on interim and final financial results. The Company also an audit tracker and closely monitored by the Senior publishes and reports on details of its performance Leadership Team. (including its interim and final financial results) in two local daily newspapers. Other Company notices The Risk and Compliance Department is responsible and publications occur, on its website, where its for ensuring that corrective actions are taken and most recent financial and historical information is recommendations implemented. available, including its annual reports.
EY also performs internal follow-up audits and The Audit Committee is responsible for embedding reports independently to the Audit Committee a culture of high ethical standards. The Committee and then to the Senior Management Team on the periodically reviews the Company’s Code of findings and recommendations it identifies. Both the Ethics and the Company’s programme to monitor internal and external auditors have unlimited access compliance therewith. Employees have several to the Chairperson of the Audit Committee. means available to them to raise their concerns and make recommendations or obtain feedback from There is a strong drive within NBL to uphold the the Senior Leadership Team. One such avenue is highest technical and operational standards. Fire the workplace forum within the different functions, and safety policies and procedures are regularly which is held on a weekly or fortnightly basis. At reviewed and tested so that they continue to be these forums, employees have the opportunity to compliant. Each manager within his/her function discuss matters of concern to them. If an employee is evaluated constantly on the health and safety is not comfortable with airing their views at these ratings achieved during these audits. By strictly forums, they can contact the Tip-offs Anonymous following this programme, NBL has managed hotline. The hotline is administrated by independent to improve its health and safety standards for service provider, Deloitte & Touche. employees, contractors, suppliers and other providers of service to NBL. NBL invites all shareholders to attend its AGM and also facilitates participation by way of focused Since 2015, insurance audits were conducted by proxy solicitation. Group Risk on the Methodology of Marsh. The main plant is audited on an annual basis, while depots are audited on a rotational basis. During the reporting year, the main plant was audited. NBL received a five-Star rating (90%) in respect of its overall compliance with local and international insurance standards.
60 Namibia Breweries Limited GOOD CORPORATE GOVERNANCE
Shareholding analysis for 30 June
2018 2017
Number of shares in issue 206 529 000 206 529 000 Number of shares traded 7 733 674 6 522 077 Value of shares traded (N$) 300 553 821 199 510 240 Market price (cents per share) 4 498 3 330 Closing price (cents per share) 4 498 3 330 Dividend yield (percentage) 2.1 2.5 Bid price (cents per share) 4 500 3 351 Earnings yield percentage (HEPS) 4.7% 6.9% Price: earnings ratio (HEPS) 21.3 14.5
Public and non-public shareholdings
Percentage Number of Percentage Number of of total shares in of issued shareholders shareholders issue share capital
Public 1 402 99.94 83 908 702 40.6 Non-public (holding company) 1 0.06 122 620 298 59.4 Total 1 403 100.00 206 529 000 100
Distribution of shareholders per category
Percentage Number of Percentage Number of of total shares in of issued shareholders shareholders issue share capital
Corporate bodies 27 1.92 123 038 976 59.57 Nominee companies 88 6.28 74 985 453 36.31 Private individuals 1 263 90.02 7 352 031 3.56 Trusts 25 1.78 1 152 540 0.56 Total 1 403 100 206 529 000 100
Shareholder spread (by beneficial owner)
Percentage Number of Percentage Number of of total shares in of issued shareholders shareholders issue share capital
1 – 1 000 872 62.15 418 506 0.20 1 001 – 50 000 484 34.50 2 914 577 1.41 50 001 – 100 000 17 1.21 1 164 520 0.56 100 001 – 10 000 000 27 1.93 17 260 477 8.36 10 000 000 and above 3 0.21 184 770 920 89.47 Total 1 403 100 206 529 000 100
INtegrated Annual Report 2018 61 REMUNERATION REPORT
NBL’s remuneration approach aims to support the The Remuneration and Nomination Committee implementation of and delivery on the Group’s is mandated to oversee all matters pertaining to Vision 2019 strategy and goals by enabling it to remuneration and report back to the Board with attract, acquire, retain and appropriately reward findings and recommendations. Its responsibilities employees. include monitoring the Company’s Remuneration Policy, including policies relating to: NBL has a Remuneration Policy that applies to its Executives. The Policy is reviewed periodically to zzparameters used in determining senior leadership take account of changing circumstances in the remuneration scales; market, the industry and the economy. zzExecutive remuneration, including remuneration packages for Senior Management; The Committee considered and decided against the implementation of a long-term incentive scheme as zzthe structure of the remuneration of Executive the current short-term incentive scheme, which is Directors, Non-executive Directors, the based on key performance indicators and financial Chairperson and, where applicable, Board performance, have proven effective as it is linked to Committee members; NBL’s long-term targets. zzthe design of Executive incentives, inclusive of the Board criteria on which performance-related Remuneration principles and governance elements are based with regard to the trading The main principles of the Company’s Remuneration period, if applicable; and Policy for Executives are to: zzsenior employee recruitment, retention and termination. zzprovide total remuneration which is competitive in structure and quantum with comparator The Committee has to ensure that there is a formal, companies’ practices within the Southern African transparent and objective method to support Development Community Region; recommendations to shareholders regarding zzachieve clear alignment between total Director remuneration packages, including pension remuneration on the one hand, and delivered benefits. It also has to ensure that the fees paid business and personal performance on the other; to Non-executive Directors are a fair reflection of zzlink variable elements of remuneration to the the contribution they make to the Company. This achievement of challenging performance criteria requires that the Committee advise on and monitor that are consistent with the best interest of the a suitable performance-related formula, inclusive Company; of the Board criteria on which performance-related elements are based. The Committee separates the zzprovide an appropriate balance of fixed and review and recommendation of Non-executive fees variable remuneration; and from the review and recommendation of Executive zzprovide internal equity among Executives and remuneration, each with its own motivation and facilitate the movement of Executives within the basis for the recommendation. O&L Group.
62 Namibia Breweries Limited GOOD CORPORATE GOVERNANCE
Directors’ emoluments Short-term Incentive Scheme The Directors’ emoluments are available on Executive Directors and the rest of the Senior page 129. Leadership Team participate in an annual Short- term Incentive Scheme. The Scheme is a cash bonus Remuneration components plan designed to support the overall Remuneration Policy by: Base salary The fixed element of remuneration is referred to as zz motivating participants to focus on achieving base salary. Its purpose is to provide a competitive financial year performance goals which level of remuneration for each grade of manager. contribute to sustainable shareholder value; and The base salary is set to be competitive at the zz providing significant bonus differentials based on median level, with reference to market practice in performance against predetermined Company companies that are comparable in terms of size, financial targets, as well as strategic and market sector, business complexity and divisional or personal performance objectives. international scope. Executive Directors and members of the Senior Base salaries are reviewed annually and adjusted Leadership Team may earn a bonus of up to 41.67% as necessary at the beginning of the financial year, of their total annual package. The Senior Leadership taking into account external market trends, and Team’s functional targets are based on their business and personal performance. respective critical success factors, and include both financial and non-financial targets. Financial targets Benefits comprise 50% of the Scheme’s bonus potential, Benefits provide security for employees and while strategic and divisional/personal targets, their families and include membership of a including leadership competency assessments, retirement fund and a medical aid scheme to make up the remaining 50%. which contributions are made. The retirement fund is a defined contribution fund. Other benefits The Remuneration and Nomination Committee include – where appropriate – a company car, reviews the performance of Executive Directors and housing, cellphone and beer allowances. the Senior Leadership Team every year.
INtegrated Annual Report 2018 63 APPENDICES
We craft a suitable drink for every APPENDIX A – 65 OUR BRAND PROFILES occasion to continue delivering on a growing consumer need for APPENDIX B – 68 VALUE-ADDED STATEMENT variety and alternative tastes.
64 Namibia Breweries Limited APPENDICES
APPENDIX A OUR BRAND PROFILES
Available formats Sponsorship/ Product Description and sizes campaigns Region
WINDHOEK Windhoek Lager is a 100% pure beer that is brewed zz330-ml NRB Perfect Time, Perfect Australia, Botswana, LAGER with passion and commitment, according to the zz330-ml can Beer campaign Germany, Kenya, Lesotho, Reinheitsgebot (Bavarian “Purity Law”) of 1516, Windhoek Jazz Mauritius, Mozambique, using only malted barley, hops and water. This beer zz440-ml can Festival, Ongwediva Namibia, South Africa, is mild in bitterness with a distinctive hops flavour zz500-ml RB Trade Fair, Groen St Helena, Swaziland, Taiwan, and delivers an exquisite taste profile. Windhoek Namibië, Wild Tanzania, Uganda, United zz750-ml RB Lager is the recipient of multiple consecutive Gold Jobs Namibia, Arab Emirates, United DLG Medals for quality since 2007 and is Namibia zz30-L keg ISAP, Cheetah Kingdom, Zambia, Zimbabwe Breweries Limited’s most widely exported brand. Conservation, 4% ABV. Namibian Embassies for Independence Day, Save the Rhino International UK collaboration
WINDHOEK Windhoek Draught is an easy drinking beer that is zz330-ml can Various associations Available in SADC through DRAUGHT ideal for socialising and sharing. It is extraordinarily zz330-ml NRB (Australia, with sport and the agreements with reputable fresh and deliciously smooth. 4% ABV. UK & Mozambique outdoors (e.g. Currie agents. Australia, Kenya, only) Cup, Volleyball for Tanzania, United Kingdom, All) and international Zambia zz440-ml can music i.e. Boyz II zz440-ml NRB Men, MTN Bushfire Festival zz750-ml RB zz20-L keg zz30-L keg zz50-L keg
WINDHOEK Windhoek Light is a 100% pure beer that is carefully zz330-ml NRB Fish River Ultra Botswana, Lesotho, LIGHT brewed the Reinheitsgebot way. As a refreshing, zz440-ml can Marathon, Namib Mauritius, Namibia, South crisp and natural light lager, Windhoek Light is lower Quest, Inyatsi Swazi Africa, Swaziland, Zambia, in alcohol and kilojoules without compromising on Frontier Zimbabwe a full-bodied taste. It contains no preservatives or artificial ingredients. 2.4% ABV.
TAFEL LAGER Tafel Lager is a fine quality smooth-tasting natural zz330-ml can Proud sponsor of Biggest beer brand in lager beer with a wholesome flavour and aroma. The zz330-ml NRB the national football Namibia with a national taste can be described as the ideal balance between team, the Tafel Lager footprint. Renewed its refreshment, flavour and bitterness. Tafel Lager zz440-ml can Brave Warriors presence in South Africa celebrates national pride. 4% ABV. zz500-ml RB through the Heineken distribution network. zz750-ml RB Botswana, Taiwan
TAFEL LITE Tafel Lite is a lite premium beer. It offers a smooth, zz330-ml NRB NAMAS Namibia fresh and crisp taste, characterised by a balanced zz330-ml slender can malty mouth feel. Tafel Lite has 27% less glycaemic carbohydrates per 100-ml when compared to Tafel zz660-ml NRB Lager. 4% ABV.
HANSA Draught is often described as the freshest form of zz20-L keg Sponsor of the Namibia DRAUGHT beer. This on-tap beer offering is brewed using only zz30-L keg Oktoberfest in malted barley, hops and water, in accordance with Namibia the Reinheitsgebot. 4% ABV. zz50-L served in 250-ml and 500-ml offering It is also the beer of choice at various carnivals nationally
CAMELTHORN Camelthorn is a quirky and unpretentious craft beer zz330-ml NRB None Namibia, South Africa brand, available in Weiss and Helles (small-batch zz30-L keg liquids). 5% ABV. In 2018, the Urbock variant, at 7% ABV, was relaunched under the Camelthorn brand.
INtegrated Annual Report 2018 65 Available formats Sponsorship/ Product Description and sizes campaigns Region
CLUB SHANDY Club Shandy is a quality blend of naturally brewed zz330-ml NRB None Namibia beer and the finest lemonade. It has a cool, crisp, refreshing taste and is low in alcohol. Club Shandy makes a great thirst quencher. 2.5% ABV.
VIGO Vigo is a refreshing non-alcoholic malt-based zzVigo Marula Moments associated Namibia sparkling soft drink that is inspired by African zzVigo Kiwano with young, creative flavours and is preservative free. and inspiring zzVigo Wild Orange Namibians zzVigo Marula Lite
zz330-ml NRB zz330-ml slender can
AQUASPLASH AquaSplash is a range of still, sparkling and flavoured UNFLAVOURED: Lifestyle activities Namibia mineral waters sourced and bottled in Namibia. zzStill: 500-ml, 1-L and sports and 5-L opportunities zzSparkling: 500-ml and 1-L
FLAVOURED: zzHoney-Melon zzLemon-Lime zzMarula zzPeach-Pear zzStrawberry zzWild Berry zzAll flavoured waters come in 500-ml and 1-L packs
KING LAGER King Lager is rich in taste with a substantially fuller zz330-ml NRB Home-grown barley Namibia body. It is the first beer to contain home-grown zz440-ml can as part of the green Namibian barley. 5.5% ABV. scheme initiatives zz750-ml RB
CODE Code is a range of locally produced carbonated soft zzCitrus Freeze #LiveNow Namibia drinks, available in three bold flavours. zzBerry Blast zzApple Surge zz330-ml slender can
MCKANE McKane is a range of quality mixers produced in zzTonic Water #MixItUp Botswana, Mauritius, Namibia. The perfect accompaniment for spirits, and zzSoda Water Namibia, Swaziland, Zambia, great in cocktails. Zimbabwe zzLemonade zzAvailable in 330-ml slender cans
TONIC: Contains quinine and is a refreshing mixer for gin and vodka SODA: The versatile mixer for spirits and cordials LEMONADE: Perfect on its own, as a mixer with spirits, rock shandies as well as a cocktail ingredient
66 Namibia Breweries Limited APPENDICES
Available formats Sponsorship/ Product Description and sizes campaigns Region
HEINEKEN Heineken is available in more than 170 countries. This zz330-ml NRB UEFA Champions Namibia premium beer is brewed with passion, under licence zz330-ml can League by NBL in Namibia, using the special Heineken yeast. Heineken connects you to a more enjoyable and inspiring (beer) experience. 5% ABV.
AMSTEL LAGER Amstel was first established in 1870 in Amsterdam zz330-ml NRB Leverage off Namibia (The Netherlands) and derives its name from the zz330-ml can international Amstel River. Amstel Lager has a mildly bitter taste platform and cheerful character with a wholesome, floral zz30-L keg aroma accompanied by hints of hops. 5% ABV.
AMSTEL LITE Amstel Lite is a great-tasting, quality lite beer and zz330-ml NRB Squash Namibia offers consumers a wider variety of choice at point of zz440-ml can purchase. Amstel Lite is lower than Amstel Lager in alcohol content and calories. 4% ABV.
STELLENBRAU Stellenbrau is a Craven Craft® Lager. This light zz330-ml NRB None Namibia, Zambia golden-coloured beer features a well-attenuated zz440-ml can body and a perfect degree of noble hop bitterness. It has a rich, foamy head and easy drinking character. zz30-L keg A rich malt aftertaste completes this lager to perfection. Stellenbrau was voted top lager at the Global Craft Beer Awards in Berlin in 2014. 4.5% ABV.
Jonkers Weiss: A golden-yellow Hefeweizen with a deep, refreshing banana aroma that is rounded off by a delicious fruity accent. Full bodied, with a smooth yeast taste and mildly hopped finish. This Weiss is brewed using the Weihenstephan yeast strain – which is celebrated worldwide for its alluring banana and close aromas. A remarkable Weiss foam head rounds off this beer to perfection. 4.5% ABV.
ERDINGER Erdinger Weissbier with fine yeast: The ultimate zz330-ml NRB Desert Dash Namibia premium wheat beer. Traditionally matured in the zz500-ml NRB bottle – like champagne. Erdinger Weissbier is brewed according to a traditional recipe and in strict zz500-ml can accordance with the Bavarian Purity Law, making use of a fine yeast. 5.3% ABV.
Erdinger Alkoholfrei: The refreshing isotonic recovery drink. This genuine fitness beverage contains all B-group vitamins, as well as only 25 kcal per 100 ml.
INtegrated Annual Report 2018 67 Directorate and administration
EXECUTIVE DIRECTORS COMMITTEES H van der Westhuizen Board Remuneration and Nomination Committee Appointed to the Board as Managing Director on 2 April 2012. R Pirmez (Chairperson) B Mukuahima G Mouton Appointed to the Board on 17 September 2013. Board Audit Committee H-B Gerdes (Chairperson) NON-EXECUTIVE DIRECTORS P Grüttemeyer S Thieme E van Lokven Appointed to the Board on 14 March 2002. Elected Chairperson of the Board on 11 July 2002. Management Risk Committee H van der Westhuizen (Chairperson) E Ender1 G Mouton Joined the Group in 1975. Senior Leadership Team Appointed to the Board on 1 February 1983. O&L Head: Group Risk Management
H-B Gerdes ADMINISTRATION Appointed to the Board on 28 July 2000. Company Registration Number 2/1920 (Incorporated in Namibia) P Grüttemeyer 1979/001528/10 (Externally registered in South Africa) Appointed to the Board on 3 June 2004. Secretaries C-L List Ohlthaver & List Centre (Proprietary) Limited Appointed to the Board on 28 June 1979. Alexander Forbes House, 23 – 33 Fidel Castro Street PO Box 16, Windhoek, Namibia L McLeod-Katjirua Appointed to the Board on 2 April 2012. Auditors Deloitte & Touche (Namibia) R Pirmez3 PO Box 47, Windhoek, Namibia Appointed to the Board on 8 September 2015. Sponsor SLM Siemer4 PSG Konsult Appointed to the Board on 1 July 2017. PO Box 196, Windhoek, Namibia
L van der Borght3 Transfer Secretaries Alternate Director to R Pirmez. Transfer Secretaries (Proprietary) Limited Appointed to the Board on 2 December 2010. PO Box 2401, Windhoek, Namibia
G Hanke Principal Bankers Alternate Director to S Thieme. First National Bank of Namibia Limited Appointed to the Board on 1 October 2015. PO Box 285, Windhoek, Namibia
Nationalities Attorneys 1 German Engling, Stritter & Partners 2 French PO Box 43, Windhoek, Namibia 3 Belgian 4 Dutch
GREYMATTER & FINCH # 12355 NAMIBIA BREWERIES LIMITED | INTEGRATED ANNUAL REPORT 2018