SECTION HEADER (CONTINUED) NAMIBIA BREWERIES LIMITED | INTEGRATED ANNUAL REPORT 2018 REPORT ANNUAL INTEGRATED 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 <IR> zz Namibian Stock Exchange Listing Requirements Framework. The Board has applied its collective zz International Financial Reporting Standards mind to the preparation and presentation of zz International Integrated Reporting Council’s the report and, accordingly, approved it on (IIRC) Integrated Reporting <IR> Framework 4 September 2018. 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.