STRATEGIC 2016 ANNUAL REPORT - Namibia …

1 2016 STRATEGICPARTNERSHIPSINTEGRATED ANNUAL REPORTW indhoek Lager recently won its 10th consecutive gold medal at the DLG awards. * The international Deutsche Landwirtschafts Gesellschaft (DLG) Quality Evaluation rates beer brands that are brewed according to the Reinheitsgebot ( Purity Law ) of 1516 against quality specifi cations for taste, analytical and biological standards. windhoek LAGERWINDHOEK DRAUGHTWINDHOEK LIGHTTAFEL LAGER20162015201420132012201120102009NP2 008NP20072006 DLG AWARDS* Gold Silver Bronze NP not participatingStrategic Partnerships 1 TABLE OF CONTENTSABOUT THIS REPORT2 CHAIRPERSON S STATEMENT4 KEY FACTS AND FIGURES7 NBL PROFILE8 GEOGRAPHICAL FOOTPRINT10 NBL BRAND PROFILES12 PARTNERING FOR THE FUTURE17 NBL S PARTNERSHIP MODEL20A NAMIBIAN INVESTMENT WITH LONG-TERM PROSPECTS36 NBL TIMELINE37 OPERATING ENVIRONMENT39 MANAGING DIRECTOR S REPORT43 VALUE ADDED STATEMENT51 GOOD CORPORATE GOVERNANCE53 REMUNERATION REPORT68 ANNUAL FINANCIAL STATEMENTS71 DIRECTORATEANDADMINISTRATIONI nside back coverNamibia Breweries Limited Integrated ANNUAL REPORT 20162 About this reportChairperson s statementNBL profilePartnering forthe

2 FutureA Namibian investmentNBL timelineABOUT THIS REPORTN amibia Breweries Limited (NBL) is a publicly owned company listed on the Namibian Stock Exchange (NSX) since 1996. NBL continues to embark on its journey towards KPVGTPCVKQPCN DGUV RTCEVKEG 6 JKU TGRQTV TGNCVGU VQ VJG PCPEKCN [GCT HTQO ,WN[ VQ ,WPG CPF EQXGTU CNN QRGTCVKQPU YKVJ VJG GORJCUKU QP 0 COKDKC CU KVU EQTG OCTMGV +VU EQPVGPV RTQXKFGU C JQNKUVKE DWV EQPEKUG XKGY QH UQEKCN GPXKTQPOGPVCN CPF GEQPQOKE HCEVQTU CHHGEVKPI VJG CDKNKV[ QH VJG DWUKPGUU VQ ETGCVG XCNWG QXGT VJG UJQTV medium and long term. Secretaries, Ohlthaver & List Centre (Proprietary) Limited, on tel: +264 61 207 5111 or email: Reporting boundariesNBL forms part of the O&L Group of companies Namibia s largest privately held Group of companies, with revenues contributing about 4% to gross domestic product (GDP).]]]

3 The Group has business interests in food production, fishing, beverages, farming, retail trade, information technology, property leasing and development, marine engineering, steel retailing and the leisure and hospitality industry. O&L indirectly holds an effective stake in NBL. NBL s joint venture with leading drinks company Diageo, and brewer Heineken, established in 2003, was restructured in December 2015. The diagram to the right shows the structure after the change. Detail of further NBL subsidiaries is available on page 129 of the ANNUAL financial statements. Financial and non-financial data in this REPORT is limited to NBL and its subsidiaries, whereas non-financial reporting, including risks, opportunities and partnerships, considers all stakeholders. Stakeholders have been identified as those individuals or groups who can be affected by NBL s business activities, outputs or outcomes, or who can significantly affect NBL s ability to create value over REPORT is aimed at NBL s providers of financial capital, but considered a wide range of stakeholders and topics in the content development process.

4 The REPORT was furthermore guided by the Vision 2019 strategy developed by Ohlthaver & List (O&L or the O&L Group), and influenced by current Namibian challenges such as critical water supply constraints. The year s most significant event was the restructuring of the joint venture agreement in South Africa. This is comprehensively covered throughout the REPORT . The integrated reporting approach and structure allows for comparability of financial and non-financial data. Materiality was applied to information gathered during data collection, as well as Board and management interviews. The following frameworks and reporting requirements were considered zCorporate Governance Code for Namibia (NamCode)z Namibia Companies Act, 2004 (Act No. 28 of 2004) zNamibian Stock Exchange Listing Requirements zInternational Financial Reporting Standards zInternational Integrated Reporting Council s <IR> FrameworkFurther information is available on the website: To provide feedback or request copies of this REPORT , contact our Company STRATEGIC Partnerships 3 Operating environmentManaging Director s reportValue addedstatementGood corporate governanceRemuneration reportAnnual financial statementsAssuranceThe consolidated ANNUAL financial statements from page 72 to 130 were audited by Deloitte & Touche.

5 As per the NamCode requirements, NBL follows a combined assurance model based on the three lines of defence, which includes internal controls and systems, supported by external verification. The latter included a SABS audit against the requirements of SANS 10330:2007 on 22 and 23 July 2015 and a SABS recertification against the requirements of ISO 9001:2008. Several internal audits were also conducted by Ernst & Young during the year. Read more about our internal audit programme on page statementsThis integrated REPORT contains statements about NBL that are or may be forward-looking statements. Examples of forward-looking statements include statements regarding a future financial position or future profits, cash flows, strategy, estimates of capital expenditures, acquisition strategy, or future capital expenditure levels, and other economic factors such as interest and exchange rates.

6 These may generally be identified by the use of forward-looking words or phrases such as believe , aim , expect , anticipate , intend , foresee , forecast , likely , should , planned , may , estimated and potential , or similar words and phrases. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. NBL cautions that forward-looking statements are not guarantees of future approvalThe Board, assisted by the Audit Committee, is ultimately responsible for the integrity and completeness of this REPORT . The Board has applied its collective mind to the preparation and presentation of the REPORT and, accordingly, approved it on 6 September 2016 .

7 Navigational iconsThe following icons are applied throughout the REPORT to improve usability and show the integration between the relevant elements of the REPORT . This icon is used for referring to NBL s website: This icon is used for cross referencing in the Investment Holdings(Proprietary) LimitedOhlthaver & List Finance and Trading Corporation Limited (OLFITRA)Heineken South Africa (Proprietary) LimitedPublic shareholdersGovernment Institutions Pension FundNamibia Breweries LimitedHeineken Namibia this reportChairperson s statementNBL profilePartnering forthe futureA Namibian investmentNBL timelineDear stakeholdersThis integrated REPORT looks back QP C XGT[ UWEEGUUHWN [GCT VJCV UVCPFU QWV HQT KVU UVTQPI CPF TGYCTFKPI RCTVPGTUJKRU 6JG[ HQTO VJG EQTG VJGOG CPF TGRQTVKPI HTCOGYQTM HQT VJKU TGRQTV CPF DTKPI C RQUKVKXG QWVNQQM HQT Namibia Breweries Limited (NBL) in the NQPIGT VGTO FGURKVG OCP[ EJCNNGPIGU in our markets and country.]]]]

8 NBL remains a star performer among the O&L Group as is evident by international recognition for the quality of its brands, people practices and transformation initiatives. NBL was recognised as one of the leaders in the promotion of Employment Equity in Namibia and awarded the Overall Top Performer in the Workplace category by the Employment Equity Commission of Namibia . NBL was also crowned the overall winner of the category Best Plant Information Management System Application at an international software conference held in South Africa during May delivered excellent financial results for the year with turnover increasing by an average of over the past five years. Operating profit for the year was EVOLVING OURPURPOSECHAIRPERSON S STATEMENTN$34 million higher than the previous year, which was N$507 million.

9 Return on assets was whereas the return on ordinary shareholders funds increased to (2015: ). The Board believes the Company remains in a healthy position with good growth prospects. Evolving our purpose through partnershipsThe O&L Group has been on a journey to formulate and refine its purpose for more than six years. At the time of developing the Group s vision, the global financial crisis, among other factors, made us realise that our purpose is more important than our pockets: we agreed that we want to create a sustainable future. Our purpose, Creating a Future, Enhancing Life, means that everyone in the Group works differently to six years ago. People now understand their individual and personal purpose and how this aligns to what we want to achieve as a business.

10 Our philosophy is to see our employees as our most important asset. As a result, our employees come to work to achieve something, rather than only to receive a salary. Our purpose is at the root of our approach to partnerships. We create partnerships with people and institutions that can relate to our purpose and our values and that can help us achieve Vision Breweries Limited Integrated ANNUAL REPORT 20164 Operating environmentManaging Director s reportValue addedstatementGood corporate governanceRemuneration reportAnnual financial statementsOur targets for the Group s Vision 2019 are to zreach a N$2 billion earnings before interest and tax (EBIT) target; zreduce our carbon footprint by 20%; zremain an Employer of Choice; and zcreate 4 000 additional job has made impressive contributions to these Group targets during the year.