2013 Annual Report East African Breweries Limited East African Breweries Limited Corporate Centre, Ruaraka P.O. Box 30161 - 00100 Nairobi, Kenya www.eabl.com Building East Africa’s Most Celebrated Business... | 2013 EABL Annual Report & Financial Statements 1 Financial Highlights 5 Chairman’s Statement 6 Brands 10 Investing behind our Iconic Beer Brands 12 Growing Faster with Spirits 16 Innovation to meet new Consumer Needs 18 Supply Chain 22 Production 24 Agriculture 24 People 28 Building our Talent 31 Quick Overview Contents Building our Culture, Celebrating our Legacy 32 Building our Staff Welfare 32 Reputation 34 Community Engagement 36 Responsible Drinking 38 Compliance and Ethics 39 Performance 42 Board of Directors 44 Notice of the Annual General Meeting 46 Corporate Governance 50 Shareholding Structure 55 Financial Section 58 2 2013 EABL Annual Report & Financial Statements | Building East Africa’s most celebrated business Financial Highlights through our… Net Sales Value Kshs(’000,000) Profit Before Tax Kshs(’000,000) 59,061,875m in 2013 11,114,919m in 2013 55,522,166m in 2012 15,253,049m in 2012 Brands Supply Chain People Reputation 59,061,875 11,114,919 55,522,166 15,253,049 44,895,037 12,258,989 38,679,196 12,568,087 34,407,715 11,506,951 Earnings per Share Kshs Dividend per Share Kshs 8.83 in 2013 5.50 in 2013 13.46 in 2012 8.75 in 2012 8.83 5.50 Five Gold & Six Silver Awards - Monde We firmly adhere to world-class EABL declared ‘Best Company to Work By positively contributing to the 2013 standards in order to produce only the For’ in Kenya development of the communities best. Recognition of our seamless supply Our commitment to creating the best around us, we promote overall Tusker, Tusker Malt, Tusker Lite, chain is proof of our meticulous, quality working environment for our staff has growth for all. 13.46 8.75 Serengeti Premium Lager and Uganda raw material sourcing and manufacturing taken us to greater heights. Waragi scooped gold awards from the processes keen to deliver superior prestigious Monde Selection. products consistently. 9.30 8.75 9.08 8.75 8.71 8.05 2013 2012 2011 2010 2009 Financial Highlights | 2013 EABL Annual Report & Financial Statements 5 Chairman’s Taarifa Ya Statement Mwenyekiti We have completed another exciting year for EABL, as we move closer to our goal Tumekamilisha mwaka mwingine wa kusisimua EABL, huku tukizidi kukaribia lengo of building Eastern Africa’s most celebrated business. letu la kuijenga biashara iliyosifika zaidi katika kanda la Afrika Mashariki. East African Breweries Limited (EABL) is the leading In spite of this, EABL delivered a robust performance beverage alcohol company in Eastern Africa. We in the financial year, with net sales growth of 6% and Kampuni ya East African Breweries Limited (EABL) Licha ya hayo, kampuni ya EABL iliimarika katika have strong brands and a proven business model growth of 0.2% in operating profit before financing inaongoza katika utengenezaji wa vinywaji vya mwaka wa kifedha, tukinakili ukuaji wa mauzo ya which spans seven countries in the region. This and exceptional items. We believe that this growth pombe katika eneo la Afrika Mashariki. Tuna bidhaa asilimia 6, na ukuaji wa faida ya uendeshaji ya geographic diversity presents us with an attractive demonstrates the strength of EABL’s business bora pamoja na mpangilio wa biashara iliyothibitika, asilimia 0.2 kabla ya kutoa athari za shughuli za long-term growth opportunity given the forecast model and its resilience in the face of some tough katika nchi saba eneo hili. Umahiri wetu wa kijiografia kipekee na za kifedha. Tunaamini ya kwamba unatupa nafasi murwa ya kujiendeleza kwa kipindi ukuaji huu unathibitisha umaarufu wa mpangilio high growth rates of the consumer economies market conditions. cha muda mrefu, hasa kufuatia utabiri wa uchumi wa biashara ya EABL pamoja na ujasiri wake dhidi where we operate. unaoendelea kuimarika kwa kasi eneo hili letu. ya hali ngumu ya soko. We also made significant progress on our strategic We are encouraged by the increasing stability we are agenda in the year. We have made deliberate choices Tunahamasishwa na utulivu unaoboreka wa Pia, tumeweza kupiga hatua kubwa kimkakati katika seeing in the region both economically and to build a legacy that will stand the test of time kiuchumi pamoja na wa kisiasa katika eneo la mwaka jana. Tumetekeleza uamuzi makusudi wa politically. Interest rates and inflation are broadly through the investments we make. Afrika Mashariki. Viwango vya riba pamoja na kukuza urithi utakaodumu kupitia uwekezaji wetu. stable, prospects for oil and gas exploitation are mifumuko ya bei viliweza kubaki imara, matarajio improving, and infrastructure development is ya ugunduzi wa mafuta na gesi ya kuchimba Katika mwaka huo wa kifedha, kampuni ya EABL In the financial year, EABL invested Kshs 6 billion in accelerating. Peaceful elections held in Kenya in yanaimarika, na pia maendeleo ya miundombinu iliwekeza mtaji halisi wa shilingi bilioni 6. net capital expenditure. Our latest investments inazidi kwa kasi. Uchaguzi nchini Kenya Maongezo ya mtaji hivi karibuni ni pamoja na 2013 should act as a springboard for further include a new and expanded warehouse at the Kenya ulioendelezwa kwa amani mwaka wa 2013 upanuzi wa ghala mpya katika kiwanda cha Kenya investment in the region. These are positive Breweries Limited plant, a new packaging line in utaweza kustawisha uwekezaji wa kibiashara Breweries, kiwanda cha ufungaji bidhaa nchini indicators that bolster our confidence in the Uganda, a new spirits line and a yeast recovery plant katika kanda hili la Afrika Mashariki. Hivi ni Uganda, kiwanda cha mvinyo pamoja na cha continued growth of the consumer economies in in Kenya. We are procuring new dual purpose vessel viashiria muhimu vinavyoimarisha imani yetu chachu nchini Kenya. Tulileta bomba mpya ili our region. katika ukuaji wa uchumi wa matumizi katika kanda kuendeleza ufanisi wetu wa utengenezaji wa tanks and bright beer tanks to enhance our brewing letu la Afrika Mashariki. pombe. Pia, tumekamilisha ujenzi wa zana za efficiency. We have also completed the construction However, the geographic diversity that EABL enjoys usafishaji wa maji taka katika maeneo yetu yote. of effluent treatment plants in all our sites. can also expose us to any areas of volatility across Hata hivyo, umahiri wetu wa kijiografia the region. This was demonstrated during the last unaoendeleza kampuni ya EABL pia huenda Kwa upande wa mipango yetu ya kuboresha financial year where we saw strong market growth in As part of our manufacturing excellence programmes, ukaweza kutuambulia hali tete zilizo kwenye eneo utengenezaji, tulifikia hatua kubwa ya kuhakikisha Kenya but experienced some market softness in we achieved key milestones in having our key beer hili letu. Hali hii ilidhihirika wazi mwaka jana bidhaa zetu muhimu zinatengenezwa katika Uganda, Tanzania and South Sudan. In Uganda, brands being produced at all brewing sites, eliminating tulipoweza kuimarisha uthabiti wetu wa kisoko viwanda vyetu vyote, hii ikituondolea changamoto nchini Kenya, ilhali soko katika nchi zinginezo za ya kusafirisha nje bidhaa hizi kwa soko mbalimbali. there was an economic slowdown which affected the need to export the brands across the markets. As a Uganda, Tanzania na Kusini mwa Sudan Hivyo basi, bidhaa za Tusker Lager, Tusker Lite, consumer purchasing power; in Tanzania, the result, we now have Tusker Lager, Tusker Lite, Tusker Malt Lager, Guinness, Pilsner and Senator being zikionyesha udhaifu. Nchini Uganda kutoimarika Tusker Malt Lager, Guinness, Pilsner na Senator beverage alcohol sector contracted following a 25% kwa uchumi ulipunguza uwezo wa ununuzi kwa sasa zinatengenezwa nchini Uganda na Tanzania. brewed in Uganda and Tanzania. rise in excise duty; and in South Sudan, there was a wateja; nchini Tanzania, sekta ya utengenezaji wa scarcity of hard currency which impacted the pombe iliadhiriwa kutokana na nyongeza ya Tumejitolea kuimarisha umaarufu wa bidhaa zetu consumer economy. We are committed to strengthening the consumer ushuru wa bidhaa kwa asili mia 25; na pia Kusini kwa wateja wetu. Uwekezaji wetu katika equity of our brands. Our investment in advertising mwa Sudan, ukosefu wa pesa za kigeni ulidhuru matangazo na ukuzaji wa mauzo uliongezeka kwa and promotion rose by 11% in the year, and I am proud uchumi wa ununuzi. asili mia 11 katika mwaka, na najivunia juhudi za timu zetu kwenye nyanja hii, zikiwemo; 6 2013 EABL Annual Report & Financial Statements | Chairman's Statement Chairman's Statement | 2013 EABL Annual Report & Financial Statements 7 of the work that our teams have delivered in this livelihoods for an estimated 26,000 partners across “Ni Wakati Wetu” ya Tusker, kampeni za “Bell Kwa miaka iliyopita, kampuni ya EABL imewekeza area: Tusker’s “It’s Our Time”, the new “Bell Nation”, the agricultural value chain. Nation”, na “Serengeti Fiesta” na pia uzinduzi vilivyo kwenye mipango ya ukuzi: haswa ununuzi the Serengeti Fiesta, the relaunch of Pilsner lager upya wa bidhaa ya Pilsner Lager. Hali ya juu ya wa asili mia 51 ya Serengeti Breweries nchini being just a few of the highlights. Our commitment Over the past years, EABL has made significant ubora wa bidhaa zetu ilidhihirishwa tulipotuzwa Tanzania pamoja na ununuzi wa asili mia 20 wa medali tano za dhahabu na sita za fedha katika to quality was demonstrated by the award of five investments in line with its growth strategy: in umiliki uliokuwa si wetu, wa kampuni ya Kenya tuzo kuu duniani ya Monde Selection, Gold and six Silver medals at the global Monde particular the purchase of 51% of Serengeti Breweries Breweries Limited. Mabadiliko ya muundo na ya inayoendelezwa kila mwaka. Selection annual awards for product excellence. Limited in Tanzania and the purchase of the 20% kifedha – ikiwemo faida ya kifedha ya kipekee ya shareholding in Kenya Breweries Limited that we did mwaka jana tulipouza umiliki wetu katika kampuni We strengthened our spirits portfolio with the not already own.