2018 - International Breweries...

ANNUALREPORT& FINANCIALSTATEMENTS

2018

Our Dream

Dream

01Our shared Dream energizes everyone to work in the same direction: Bringing people together for a better world.

Bringing peopletogether for abetter world

Our Dream-People-Culture platform is a unique strength of our company and guides our performance.

The essence of our culture is embodied in 10 Guiding Principles.

People

02Our greatest strength is our people. Great people grow at the pace of their talent and are rewarded accordingly.

People

03We recruit, develop and retain people who can be better than ourselves. We will be judged by the quality of our teams.

Culture

04We are never completely satisfied with our results, which are the fuel of our company. Focus and zero-complacency guarantee lasting competitive advantage

Culture

05The consumer is the boss. We serve our consumers by offering brand experiences that play a meaningful role in their lives, �and always in a responsible way.

Culture

06We are a company of owners. Owners take results personally.

Culture

07We believe common sense and simplicity are usually better guidelines than unnecessary sophistication and complexity.

Culture

08We manage our costs tightly, to free up resources that will support sustainable and profitable �top line growth.

Culture

09Leadership by personal example is at the core of our culture. We do what we say.

Culture

10We never take shortcuts. Integrity, hard work, quality, and responsibility are key to building our company.

Content

Corporate Information

Notice of Annual General Meeting

Brief History

New Brewery, Brand Stories & Social Investments

The Board

Chairman’s Statement

Report of the Directors

General Mandate Circular

Report of Audit Committee

Statement of Directer’s Responsibilities

External Auditor’s Report

Statement of Profit or Loss and Other Comprehensive income

Statement of Financial Position

Statement of Equity

Cash Flows

Notes to the Financial Statements

Statement of Value Added

Five-Year Financial Summery

Shareholders Information

E-Dividend Mandate Form

Proxy Form

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Corporate Information

CitiBank LimitedEcobank Plc. First Bank of Nigeria Plc.First City Monument Bank Plc.Guaranty Trust Bank Plc. Polaris Bank LimitedRand Merchant Bank Limited

Stanbic IBTC Plc. Standard Chartered Bank LimitedUnion Bank of Nigeria PlcUnited Bank of Africa Plc.Wema Bank Plc.Zenith Bank Plc.

ChairmanHRM Nnaemeka Alfred Achebe, CFR,MNI Appointed 30 May, 2018

DirectorsMrs. Annabelle Degroot BritishMr. Sunday Akintoye Omole NigerianMr. Folorunsho Awomolo NigerianMr. Michael Oerlemans (SouthAfrican) Resigned 28 February, 2018Mr. Christopher Tyne (SouthAfrican) Resigned 19 March 2018Mr. Zuber Momoniat (SouthAfrican) Appointed 26 February 2018Mr. Andrew Scott Murray American Appointed 23 October, 2018HRM Peter Nwokike Anugwu Nigerian Appointed 30 May, 2018Mr. Michael Onochie Ajuwku Nigerian Appointed 30 May, 2018Ms. Abiye Tobin-West Nigerian Appointed 30 May, 2018Mr. Phillip Redman British Resigned 31 December, 2018Otunba Michael Daramola Nigerian Appointed 30 May, 2018Mr. Godwin Oche Nigerian Appointed 30 May, 2018Mr. Richard Rivett-Carnac American With effect from 31 December 2018Ms. Olutoyin Odulate Nigerian With effect from 18 April,2019Mr. Gustav Van Heerden (SouthAfrican) Resigned 19 February, 2018Mrs. Afolake Lawal Nigerian Resigned 30 May 2018

Alternate:Mr. Olugbenga Awomolo (Mr. Folorunsho Awomolo)

Company registration numberRC 9632

Bankers

Company secretary/General CounselMr. Muyiwa Ayojimi22/36 Glover road,Ikoyi,Lagos

Independent AuditorsPricewaterhouseCoopersLandmark Towers5B, Water Corporation RoadVictoria Island,Lagos, Nigeria.

Corporate Head Office22/36 Glover road,Ikoyi,Lagos

Email: [email protected]: www.internationalbreweriesplc.com

Brewery Plants

GatewayKm 3 Shagamu- Abeokuta Expressway,Flourgate Industrial Scheme,Ogun State.

IlesaLawrence Omole Way,Omi-Asoro, IlesaOsun State

OnitshaSABMiller Drive, Habour Industrail Layout,Onitsha,Anambra

Port Harcourt186/187 Trans-Amadi Industrial layout,Oginigba, Port Harcourt,River State

NOTICE IS HEREBY GIVEN that the 42nd Annual General Meeting of INTERNATIONAL BREWERIES PLC will hold at the Auditoriuml, Green Legacy Resort, Presidential Boulevard Road, Oke-Mosan Abeokuta, Ogun State on 20 August 2019 at 10.00.a.m. for the following purposes:

ORDINARY BUSINESS

1. To lay before the meeting the report of the Directors, the Statement of Financial Position as at 31 December 2018, together with the Statement of Comprehensive Income for the year ended on that date and the Reports thereon of the Independent Auditors and the Audit Committee.

2. To ratify/re-elect Director(s).

3. To authorize the Directors to fix the remuneration of the External Auditors.

4. To elect members of the Audit Committee.

SPECIAL BUSINESS

5. To approve the remuneration of the Directors.

6. To consider and if thought fit, pass the following resolution as an ordinary resolution of the Company:“That pursuant to Rule 20.8 of the Rulebook of the Nigerian Stock Exchange (Issuers Rule), a general mandate be and is hereby given, authorizing the Company through the directors to procure goods, services and finances incidental and necessary for its day to day operations from related, interested companies or parties on competitive commercial terms consistent with the Company’s Transfer Pricing Policy.”

Dated 17 July 2019.BY ORDER OF THE BOARD

Muyiwa AyojimiCompany Secretary/General CounselFRC/2013/NBA/00000002667

22/36 Glover Road,lkoyi- Lagos.

Notice of Annual General Meeting

International Breweries Plc.

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Notes

1. ProxyA member entitled to attend and vote at the meeting can appoint a proxy in his/her stead. Such Proxy need not be a member of the company. A Proxy for a Corporation may vote on a show of hands or Poll. A Proxy Form is attached to the Annual Reports and Accounts. If the Proxy is to be valid for the purposes of the meeting, it must be completed, detached, with stamp duties and deposited with the Registrars, Apel Capital Registrars, 8 Alhaji Bashorun Street, off Norman Williams, S.W. Ikoyi, Lagos or the office of the Company Secretary, International Breweries Plc, registered office not later than 48 hours prior to the time of meeting.

2. Closure of Register and Transfer BooksThe Register of Members and Transfer Books will be closed from Monday 5 August, 2018 to Friday 9 August, 2019 (both dates inclusive) for updating the Register of Members.

3. Nomination to the Audit CommitteeIn accordance with Section 359 (5) of the Companies and Allied Matters Act, Cap.C20, Laws of the Federation of Nigeria, 2004, any member may nominate a Shareholder as a member of the Audit Committee by giving notice in writing of such nomination to the Company Secretary at least 21 days before the Annual General Meeting.

4. Change of AddressMembers are requested to notify the Registrars of changes, if any, in their registered addresses and or other details.

5. Unclaimed DividendMembers who are yet to claim their previous dividend(s) are advised to write to or call at the office of the Registrars, Apel Capital Registrars,

8 Alhaji Bashorun Street, off Norman Williams, S.W. Ikoyi, Lagos. Members are further urged to advise the Registrars of any change in their security records and also, open a CSCS account.

6. General Mandate CircularA circular on the resolution for shareholders’ approval of the general mandate for recurrent transactions with related parties which provides the rationale for the mandate sought is included in the Annual Report and Financial Statements.

7. Securities Holder’s RightsIn accordance with Rule 19.12 of the Nigerian Stock Exchange “NSE Rules”, shareholders and other holders of the Company’s securities have the right to ask questions not only at the meeting but can also do so in writing prior to the meeting. Such questions and/or concerns, arising from the Annual Report and Financial Statements may be submitted to the office of the Company Secretary, with a copy to the NSE.


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Brief History

International Breweries Plc was incorporated in December 1971 under the name International Breweries Limited.

The Company commenced production of its flagship product Trophy Lager in December 1978 with an installed capacity of 200,000 hectoliters per annum. In December 1982, the Company embarked on an expansion programme. The company was listed on the floor of the Nigerian Stock Exchange in April 1995.

In January 2012 SABMiller entered into a strategic alliance with the Castel group who were majority shareholders at the time.

In 2016, AB Inbev acquired SABMiller worldwide and by extension, their stakes in Africa. AB Inbev’s majority shareholding in Intafact Beverages Limited and Pabod Breweries Limited (companies with similar objects) were merged into International Breweries Plc through a scheme of merger sanctioned by the Court and Regulatory authorities in order to provide for the optimization of efficiencies, leverage on economies of scale and shareholder value creation amongst others.

This increased our production facilities to 4 breweries: In Osun State - Ilesa, Anambra State - Onitsha, Rivers State - Port Harcourt and recently Gateway brewery in Ogun State. The corporate headquarters of the Company is located in Lagos. Starting with just two brands, Trophy Lager and Beta malt, our brand offering now includes Budweiser, Hero

Lager, Castle lite, Grandmalt, Eagler Lager, Stella Artois and Eagle Stout.

In 2017, AB Inbev acquired SABMiller worldwide and by extension, their stakes in Africa. AB Inbev’s majority shareholding in Intafact Beverages Limited and Pabod Breweries Limited (companies with similar objects) were merged into International Breweries Plc

This increased our production facilities to 4 breweries: In Osun State - Ilesa, Anambra State - Onitsha, Rivers State - Port Harcourt and recently Gateway brewery in Ogun State.


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The Gateway Brewery is the biggest and

most recent brewery in West Africa. The

brewery which sits on an expanse of

land at the Flourgate Industrial Scheme, Ogun

State was built with state-of-the-art facilities. It

produces all our brands which helps to satisfy our

increasing consumer demand. The Brewery was

commissioned on August 28, 2018 by President

Mohammadu Buhari who was represented at

the event by Boss Mustapha, Secretary to the

Government of the Federation.

Green BreweringThe Gateway Brewery has extensive eco-

friendly components across its major operations.

Giving the power challenges in the country, we

devlivered plans to effectively surmount the

challenge and consistently grow the buisness.

The Gateway Brewery produces bio-gas from


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our byproducts to help power our boilers. The

brewery also utilizes Liquidfied Natural Gas

(LNG) to power our biolers. LNG is cleaner

(possesses low risk to health) and more efficient.

Our combined heat and power system makes

the brewery the most energy efficient in the

AB InBev Africa group. Being a green brewery

is equally important for our employees, the

community hosting the brewery and the

environment. Deploying renewable energy has

helped to lower considerably the concentration

levels of Carbon dioxide eliminating the risk of

asphyxiation, nausea and seizures which are

common with excessive levels of carbon dioxide

in the atmosphere. The Gateway Brewery was

built with the UN 2025 Sustainability Goals in

mind which is to ensure that “100% of our owned

electricity will be from renewable sources and a

25% reduction in CO2 emissions across our value

chain.

Biggest brewery site in West Africa. Sits on 45 acres of land in Sagamu, Ogun State. Commissioned on August 28 2018


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Aiding the development of AgricultureOne of the benefits of the new Gateway

Brewery is the contribution to the development

and growth of agriculture in Ogun State

and environs. A significant portion of raw

materials is locally sourced, there increasing

the production of raw materials like Maize in

and around Ogun State. This demand would

considerably increase the level of production

and in practical terms would mean more

cultivation by already existing farmers and a

window of opportunity for new entrants.

The spent grain from our production process

serves as the major raw material used in the

production of feed for Piggery farms. Spent

grain has the most value because of its high

levels of sugars and proteins. Given that these

are by products rather than waste products,

they can be recycled and reused in the food and

agricultural industries. As a result, the breweries

such as ours tend to be more environmentally

friendly when compared to other industries. The

collection of spent grain from our brewery would

enable these farms save a lot of money in making

feed available for their livestock animals and in so

doing maximize profits in the long run.

Mrs. Annabelle Degroot, Managing Director, a Stakeholder, the Chair-man of the Board, HRM Nnaemeka A. Achebe and the AB Inbev Global CEO, Mr. Carlos Brito


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Increased employment opportunities One of the advantages that emanates

from establishing factories is the employment of

the people in the locality. Our Gateway Brewery

has created 600 new direct jobs. We take our

recruitment exercise very seriously because we

are passionate to identify and nurture the best

talents we can find. We believe that our people

drive our success and performance in the market.

So we continuously hire people who will help to

build a company that will last. The Brewery has

also created well over 2,000 indirect jobs. These

people now have the wherewithal to provide for

their families while also providing income for the

government through taxes.

Improved route to marketIt is our vision to make our regional brands

into national brands. To this end, our Gateway

Brewery stands at a vantage point to aid in the

delivery of our products to distributors and

finally to the end-users in the most efficient and

effective way. It also possesses the capacity to

increase significantly our production numbers,

as we continuously strive to satisfy our teeming

consumers.

Former Governor of Ogun State, Senator Ibikunle Amosun and Mr. Boss Mustapha, Secretary to the Federal Government of Nigeria

From left, The Global CEO, AB Inbev, Mr. Carlos Brito, Secretary to the Federal Government, Mr. Boss Mustapha, Former Governor of Ogun State, Senator Ibikunle Amosun, Managing Director of IBPlc, Mrs. Annabelle Degroot and the Chairman of IBPlc, His Majesty, Nnaemeka Alfred Achebe.


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I nternational Breweries Plc. is committed to driving the tenets of sustainability across its value chain. We believe that

a successful business requires a healthy, natural environment, as well as thriving communities.

We are therefore committed to building a company that lasts, bringing people together for a Better World, now and for the next 100+ years. That’s why sustainability isn’t just part of our business, it is our business.

Water Stewardship

Climate Action

Circular packaging

Smart Agriculture

Our Nigerian operations are aligned to the UN 2025 Sustainability Goals and we are developing programmes on ground to contribute to these goals:


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SMART AGRICULTURE

CLIMATE ACTION

RESPONSIBLE DRINKING

WATER STEWARDSHIP

CIRCULAR PACKAGING

17 3

5

6

78

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13CLIMATEACTION

PARTNERSHIPSFOR THE GOALS

GOOD HEALTHAND WELL-BEING

GENDEREQUALITY

CLEAN WATERAND SANITATION

AFFORDABLE ANDCLEAN ENERGYDECENT WORK AND

ECONOMY GROWTH

RESPONSIBLECONSUMPTIONAND PRODUCTION

We are contributing to the UN Sustainable Development Goals, Nigeria’s sustainable development agenda and the country’s overall development through the building of resilient supply chains, productive communities and a healthier environment.

The diagram below illustrates our commitment to the UNSDGs.


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Supporting Communities

To achieve our objective of bringing people together for a better world, we work within the communities where we operate - and beyond - touching lives and investing in their socio-economic development.In relating positively with the people, the company as part of its corporate social responsibility, works with community representatives to identify interventions that will be beneficial to them and works with them to execute projects. The projects typically cut across our five CSR Pillars:

• Empowerment• Education• Health• Infrastructural support • Lifestyle (Responsible drinking).

Our Corporate Affairs & Sustainability

Managers regularly interact with host communities in the implementation of intervention activities. This has helped to foster unity of purpose.

A major aspect of our corporate citizenship is the employment of both direct and indirect employees from communities. The company presently employs 2,131 full time employees and provides over 5,000 indirect jobs.

Water Stewardship

We brew our beers at the highest level of water efficiency and we continually challenge ourselves to do even more.

Water is life. That’s why we’re improving water access and security in the communities where we live and work. We look beyond our own operations in order to

Host community at Gateway Plant


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improve high-risk watersheds in the areas where we operate. Our ultimate goal is to ensure water access and quality for both our communities and our breweries. To demonstrate this, we provided Solar-powered boreholes to beneficiaries in Ibadan and in Ilesa.

Likewise, we constructed two boreholes and presented them to the neighboring communities of our Gateway Brewery in Ogun State. The beneficiaries are the Logbara Community, as well as the Primary Health care centre, located in Owode Local Government Area of the state.

Our immediate communities also benefitted from enlightenment programmes during the World Water Day (WWD) promotion. In Port-Harcourt and Onitsha, we engaged in clearing of weeds around the rivers at our host communities, as a support in making

the water more available to the community as it is a source of their livelihood.

Our Water Leak campaign was aimed at identifying water leakages and promptly fixing them. Due to the success of the program, which was originally part of the World Water Day celebration, our sites have adopted it as part of the monthly reward and recognitions programme. This has resulted in the engagement of very enthusiastic individuals who report leaks and wastage and follow up to ensure they are addressed thereby contributing to the Site’s water reduction drive.

Investing in the health of our communities

Health is wealth. Based on the company’s quest to impact positively on our host communities. We embarked on the

Logbara community, Ogun State.


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renovation of the only Health Centre in Esa-Odo community.The renovation, which was done in conjunction with the “Ësa-Odo Community in Diaspora” included replacement of all doors and windows, repair of the damaged roof, tiling, painting, toilet refurbishment and repair of the electrical wiring system. The company also donated several hospital equipment and cots

Water is life. That’s

why we are improving water

access and security in the communities where

we live and work; and also are looking beyond our own

operations and improving high-risk watersheds in the areas where we operate. Our ultimate goal is to

ensure water access and quality for both our communities and

our breweries.

With our support, over 4,500 people within the community have access to improved healthcare.

To combat poor hygiene and to increase

access to sanitation, the company also constructed a 5-room toilet facility for the pupils of Omi-Asoro primary school. Over 150 pupils benefitted from this initiative. For many years, the school had been without toilets. This project has not only improved the lives of the students and their teachers, but has assisted in the prevention of germs, diarrhea and the protection of the health of the entire community.

Host community


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For the past three years, International Breweries has implemented a far reaching and impactful empowerment initiative: Kickstart. Kickstart (called Hero Kickstart in the South and Trophy Kickstart in the West), is aimed at creating a culture of entrepreneurship in young people by: enhancing participants’ business awareness and skills through training and mentorship.

Our Kickstart initiative also provides grants as start-up capital for new businesses or to support expansion of existing businesses while also providing post-investment support through coaching and mentoring.

Since it was launched, Kickstart has granted a total of N251,200,000 to 184 youths between 2016 to 2018.

Since it was launched, Kickstart has

granted a total of N251,200,000 to 116

youths between 2016 to 2018. In 2018

specifically, 71 youths across Nigeria were empowered with

a grant of N116,399,565 to start a brighter future of

owning their dream businesses.

Kickstarting a brigther future for Nigerian youths through entrepreneurship support

I was lucky I passed the screening and my story has changed for the better.

I am into bee farming. IBP Kickstart provided me with 50 beehives and today, I can boast a turnover of ten times. Because of the success recorded, I have been able to spread the business tentacles to other farmers in the community.

Aside expanding the business venture, we have also impacted the lives of our people through job creation. So many people are smiling to the banks now, through the help of

IBP kickstart”.

- Olumide Ogundimu

I got to know about Kickstart program on the social media and I applied.


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S/N NAME TYPE OF BUSINESS

1. Ike, Finian Eberechunkwu Paint Production

2. Okoye, Chukwunonso Livinus Production

3. Ugochukwu, Augustine Okoye Manufacturing

4. Ifeanyidike, Henry Ugochukwu Farming

5. Nwaji, Emmanuel Nnanna Farming

6. Nwogwugwu, Daniel Samuel Production

7. Eze, Calista Farming

8. Onyeka, Innocent Kenechukwu Cosmetic Production

9. Ajuluchukwu, Ikennaemmanuel Agric

10. Onjewu Paul Farming

11. Omega, Cynthia C. Production

12. Okosa, Emeka Furniture Making

13. Ugwu, Nwamaka Harriet Production/Cosmetology

14. Olademola, Soares Plantain Chips Production

15. Ijoma, Elizabeth Ihuoma Pharmaceutical

16. Iyowuna Sokari Davis Deaf Education

17. Menyuah, Vivian Chizoba Farming

18. Otue, Ernest Ifeatu Fashion

19. Onyema, Malachy Chukwunonso Biogas System

20. Otubelu, Udoka Riches Crude Palm Kernel Oil Production

21. Okoro, Uchechi Gideon Prosthesis & Orthotic Rehabilitation Centre

22. Okpalaeke, Emmanuel C. Spice Production

23. Nwobodo, Victor Chidera Music Production

24. Mbagwu, Victor Ugochukwu Laundry

25. Emezie, Blessing Osinachi Production

26. Akpem, Terese Shadrach Agriculture

27. Essumai, Michael Uzo Barber Shop

28. Nwani, Chidiebere Production

29. Chibueze, Elisha King IT

30. Ofili, Maxwell Madu Services

31. Efiogbere, Elvis Brown Agriculture

32. Orji, Nnenna Mary Fashion Designing

33. Mgbeoji, Chiomoma Ebuka Poultry

34. Oyuwe, Enema Chinyere Katherine Makeup Artist

KICKSTART BENEFICIARIES (2018)


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35. Aniebonam, Lawrence Ugo Trading Business

36. Francis, Jane Okwuchi Pure Water Production & Distribution

37. Anyanwu, Susan Chioma Fashion

38. Nweke, Jessica Chidinma Fashion Designing

39. Adeoye, Joy Opeyemi Catering

40. Aersaa, Nicholas Ngusha Travel Agent

41. Ubaji Angelica/Brown’s Cuisine Services

42. Ogoun, Grace Timinipre Health Services

43. Ogoko, Chioma Trading

44. Ifesinachi, Angela Adamma Poultry

45. Jamiu Ridwan Babatunde Plantain Farming

46. Oke Olayinka Adesoji Veterinary Products And Services

47. Omotoso Samuel Tope Poultry & Catfish Production

48. Temitayo Mary Balogun Fashion and Accessories

49. Adesina Eniola Tolulope Photography

50. Banji Abisola Olaitan Fashion Designing

60. Oladosu Sefiyat Dasola Beauty Salon and Production of Organic Hair Cosmetics

61. Dauda Saidat Omowumi Food Processing

62. Shobowale Abayomi Isaac Event Planning, Decorations and Special Effect

63. Alabi Olufunke Oyedara Dietary Business

64. Oke Ayoleke Zulkorinaeni Catfish Farming

65. Kolawole Elizabeth Olusade Catering and Pasteries

66. Adefirantan Eunice Anuoluwapo Shoemaking and Leather Works

67. Joshua Ajisope Garri Processing

68. Fagbamila Oluwatunmise Esther Event Decoration an Management Services

69. Isola Mobolaji Kehinde Bag Designer

70. Oguntoye Tosin Onaolapo Fashion Designing./Ready Made Clothing

71. Ayobami Fatokun Poultry Farming

72. Ayodele Tolulope Oluwatosin Internet Services

73. Olowookere Ifeoluwa ‘Dara Leather Works

74. Fadare Abiola Oluyemi Fashion Accessories Design And Production

75. Olamigoke Moyinoluwa Fashion School And Commercial Sewing

76. Oketade Alaba Ebenezer Piggery Farm

77. Oyewumi Bolanle Fashion Designing


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Promoting responsible drinking

As a company, we take alcohol responsibil ity very seriously, this is in l ine with our global commitment to reducing and preventing the harmful use of alcohol. We work hard to ensure that our beers are consumed responsibly by adults of legal drinking age of 18+.

Within the current year, the company embarked on a number of initiatives to enlighten both its internal and external stakeholders on the importance of responsible drinking. We are a membert of the Beer Sectorial Group (BSG) of the Manucaturing Association of Nigeria (MAN), a group commited to promoting campaigns on responsible drinking and sectorial concerns. We partnered with road safety marshals to inculcate the “Say NO to drinking and driving” initiative. This program includes the Driver Safety (Courteousness, Alertness, Responsive (Awake) and Ensure) C.A.R.E. campaign, carried out at every festive period. For example in Onitsha, the

plant engaged and educated haulage drivers and managers on the importance of safe driving with emphasis on zero tolerance for drinking and driving as well as drugs. In our Port-Harcourt and Ilesa plants, we also partnered with the Federal Road Safety Commission (FRSC) to drive responsible drinking by providing non-alcoholic drinks to participants during the awareness sessions.

Health, safety and environment are our business priorities

It’s our responsibility to ensure a culture in which safe behaviors are observed, and where people don’t cut corners – even with the best intentions.


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A commitment to Safety, Health and Environment, is the foundation of a sustainable business – hence the many initiaves across our operations to demonstrate our commitment to this way of l ife. We monitor our leading and lagging safety indicators with the aim of improving on our safety performance.

Our SHE programmes have been expanded to involve not only our employees but also our communities and stakeholders. In the year under review, our employees from Onitsha made a number of visits to distributors to engage them on safe work practices such as manual handling, compliance to safety procedures, road risk assessment was also carried out which helps to educate drivers on safe driving.

During the Safety Week and World Safety day in Port-Harcourt, the

Waste management initiatives in our

resulted in improved recycling rates from August 2018 to

by year-end.

Ilesa Plant

A focus on recycling at our plant


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company partnered with the Federal Road Safety Commission, FRSC, and the Federal Fire Service, to tutor employees and community leaders on ways to carry out personal risk assessments. We also flagged off the leadership behaviors and focus behaviors for departments, in a bid to aid easy report of safety incidents and observations (SIOs). At our Gateway Plant, our health and safety initiatives encompass

daily SIO by employees, contractors, partners and visitors. Safety awareness is consistent and continious on our sites to make the workplace a conducive environment.

Deserving workers are recognized and rewarded both in safety and environmental performance. As a result of our varying safety initiatives, there were no fatalities within our breweries under review.

We brew our beers at the highest level of water efficiency and we contin-ually challenge ourselves to do even more.


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COMES TO

B udweiser, the American-style pale lager and the most valuable beer brand in the world was first introduced in 1876 by Adolphus Busch and it is enjoyed in 74 countries. The global

expansion of the beer to countries like Nigeria and its sponsorship of the World Cup increased its sales portfolio worldwide by 5.3%.

History was made in March 2018 when Budweiser the King of Beers released a series of activities leading up to its official launch in April. As it is customary with Budweiser in terms of uniqueness and innovation in all its dealings, a never before seen commercial activity – A Cavalcade was organized in some of the most iconic streets of Lagos to heighten excitement and expectations.

Budweiser also introduced the Hand of the King contest which went viral on social media. The contest provided an immense platform to engage with potential consumers online. The successful contestants were invited to party with celebrities and influencers at ‘The Bud Hotel’ where Budweiser was officially unveiled. The Bud Hotel is our own unique concept of creating a hotel experience using Z-depth visual mapping effect.

THE

NIGERIA

KING


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BudX debuts in Lagos and AbujaBudX is Budweiser’s trademarked creative platform geared towards the development of electronic music as a tool of social cohesion and empowerment. A first-of-its-kind, 2-day exclusive events were organized in Lagos and Abuja in celebration of electronic music and trend-setting African youth culture. Guests at both events had memorable sessions with Chi Modu, the legendary hip-hop photographer renowned for his work on many hip hop icons.

The opportunity to view a collection of never-before-seen images of hip-hop legends like Tupac, Eazy E, Notorious B.I.G, Nas, Snoop Dogg, alongside several other iconic images was a sheer delight for the guests.

BudX also had exciting capacity building masterclass sessions, panel discussions and live performances of artistes. The event had in attendance special and legendary artistes, such as MI, NaetoC, Ill Bliss and new generation artistes, such as Marz and Barzini, POE, Dremo, Dice Ailes, Kwesi Authur and an amazing assemble of some of the best DJs which included Aye, Smallz, DJ Yin, DJ Wayne among others.

The incredible Budweiser “against-gravity” photo studio/illusion room was an exciting

booth where guests were captured defying gravity at an upside-down Budweiser bar. The photo studio was extremely popular with guests, with many capturing their BUDX experience there. Guests also had the opportunity to shop exclusive limited-edition pieces inspired by BudX and Chi Modu by Nigerian street wear brands Garm Spot and Waffles n Cream. The experience was intriguing and worthwhile for the guests who attended the sessions.


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Lighting up the World Cup

The most popular sporting event across the continents of the world is the World Cup. The experience is awesome for those viewing at home and even more for those who watch the live matches. Football is a passion point for the world over and presents a unique opportunity for brands to connect with customers and consumers. Here in Nigeria, the World Cup afforded us, through our parent company’s sponsorship of the FIFA 2018 World Cup in Russia, a significant amount of airtime in front of a massive audience.

Leveraging on our global equity as the official Beer sponsor of the 2018 FIFA World Cup, Budweiser enhanced its premium positioning by connecting with football fans across the country when it organised over 2,500 activations and hosted 50 viewing parties in strategic locations across the country. These brought the unique taste of Budweiser to the lips of Nigerians most of whom were enjoying the King of Beers for the very first time. These samplings have helped in recruiting new and loyal consumers making Budweiser the fastest growing premium beer in Nigeria.

Budweiser also took its brand influencers to Russia to watch the Nigerian Super Eagles play live at the World Cup! It was an awesome experience for the influencers who kept their socail media followers abreast of all the happenings in Russia.

Budweiser

Spiritual Homes

Budweiser opened 24 amazing spiritual homes in premium hubs across key locations in Lagos city in 2018. The spiritual homes are tastefully branded to excellent standards, giving consumers an opportunity to experience the full breadth of Budweiser’s quality offerings in a relaxed but stimulating environment. The spiritual homes are where the brand brings its heritage, identity and meaning to life.


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Beta malt first launched in 1980s remains one of the best selling malt

drinks in Nigeria. In 2018, the volume of Beta malt produced increased by significantly when compared to the previous year. The malt is made from the finest natural ingredients such as barley malt, hops, caramel, vitamins and a host of others. Beta Malt elevates the food and dining experience of consumers.

In 2018, Beta malt launched a new and more appealing label that the nourishment derivable from consuming the brand. This new brand communication and attractive look has

THE ONLY WAY IS UP


30

positively impacted the perception of the brand which in-turn improved its patronage in the market.

Stock Keeping UnitsBeta Malt understands its consumers and how their needs ought to be met. This knowledge is based on its continuous research and understanding of local market dynamics. In October 2018, Beta malt added two new stock keeping units package to the already existing glass bottle and can.

Offering new ways to experience Beta maltWe got closer and created long lasting experiences for consumers through a series of activations organized in open markets, schools, events and online platforms. The activations were unique experiential promotional activities for the brand which helped it connect with consumers in ways they have not experience the brand before.

#Betamusicchallenge

We developed an online music contest to engage with our teeming consumers. Participants recorded individual songs using all our key words - Beta malt, Beta mind, nourishment just got better, Beta you and the only way is up. The recorded were uploaded on our Twitter platform using the hash tag #Betamusicchallenge, and tagging @betamaltng. The winner of the music challenge got a studio recording

session with one of Nigeria’s finest hip hop artiste, Ice Prince.

Beta Malt elevates

the food and dining experience of consum-ers.


31

GRAND MALT:

The Award Winning Malt Drink

M alt-based drinks have developed a reputation over decades for their nutritional value, a message that has

attracted consumers’ patronage in today’s climate of increasing health awareness. In this regard, Grand Malt our premium brand stands out in the marketplace for its quality and nourishment.

Grand Malt is a successive winner of taste and quality award at the international Monde Awards. Originally produced only in our Pabod Brewery in Port-Harcourt,

but now produced in all our brewery sites. Grand Malt took the bold step in extending its portfolio when it added two new Stock Keeping Units. This brings the total number of packaging of the brand to four unique SKUs.

Grand Malt is a successive winner of taste and quality...


33


34

One of the highlights of 2018 was the 40th anniversary

celebrations of our premium lager beer, Trophy. Trophy is

widely accepted as the ‘honourable’ beer that is deeply rooted

in socio-cultural values and loved by consumers because of its

distinctive taste and quality. The beer has remained a market

leader in its category.

Trophy was first brewed in 1978, becoming our very first brand

launched into the market. The beer has consistently been

brewed with high quality ingredients such as malted barley,

hops, maize and it is best known for its “Crisp Refreshing”

taste. Trophy is accessible because it has an affordable price

point and as a result, it is constantly recruiting new consumers

who throng recreational facilities to consume the product.

Trophy lager has gone through several metamorphosis

culminating in a series of enhancements of the bottle and label.

In 2012, Trophy introduced a can version as an alternative

stock keeping unit packaging.

brewed with high quality ingredients such as malted barley, hops, maize...


35

Trophy celebrated its

loyal consumers with a

sales promotion as part of

activities to celebrate its 40th

anniversary. The promotion

made loyal consumers

millionaires on a weekly basis.

Over 400 consumers were

rewarded with cash prizes

and consolation prizes. The

promotion tagged ‘Honourable

Millionaires Promo’ was our

way of saying thank you to our

consumers for staying true to

our brand all these years.

Trophy is a brand that would

continue to avail consumers

the best quality of beer in the

market.

Making consumers

millionaires


36

Hosting our loyal consumers to electrifying music performances by rave making artistes via concerts was another way Trophy celebrated its anniversary with loyal consumers. The concerts, organized in Ibadan and Ilesa were attended by thousands of our consumers.

Music is a passion point for Nigerians and it presents a unique way of connecting consumers with our brand. Music has a connector; reflects people’s reality, lifestyle, politics and issues in the community which makes it a perfect ally for Trophy, a beer that is deeply rooted in the socio-cultural values of the society.

Music is a connector; it reflects people’s reality

Connecting with consumers through

music concerts


37

THE BOARD

THE BOARD

Sunday Akintoye Omole is a member of the Association of Chartered and Certified Accountants U.K and holds an MBA specialization in Human Resources from Everest University, United States

of America. Mr. Omole has acquired wide working experience both locally and internationally. The scope of his working life include accounting, audit and tax practices, restructuring, commodities, futures market analysis, financial services and human resources management.Mr. Omole is on the Board of Directors of a few other Companies in Nigeria and the United States.

His Majesty Nnaemeka A. Achebe, Obi of Onitsha, had a 30-year career with the Royal Dutch Shell Petroleum Group of Companies in Nigeria and overseas.

He is the Chairman of the Anambra State Traditional Rulers Council and Chancellor of Ahmadu Bello University, Zaria. He was educated at Stanford and Columbia

Universities in the U.S.A and an alumni of the National Institute for Policy and Strategic Studies, Kuru. He is currently the Chairman of Unilever Nigeria Plc.

HIS MAJESTY NNAEMEKA A. ACHEBE

MR. SUNDAY AKINTOYE OMOLENon- Executive Director

Chairman

CFR, MNI


41

THE BOARD

MRS. ANNABELLE DEGROOTManaging Director

Prior to Annabelle’s appointment as

Managing Director, she served as Managing

Director, at Zambian Breweries. She

has about 20 years of experience in

Commercial, Audit and Finance functions in

her working career in the United Kingdom

and Zambia. She holds a Bachelor of Arts

degree in Economics and a Master of Arts

degree in Economics from Cambridge

University. Annabelle is a qualified

Chartered Accountant with the Institute of

Chartered Accountants, England and Wales

(ICAEW). She is a Fellow of the Zambian

Institute of Chartered Accountants (ZICA)

and the Institute of Directors, Nigeria.

Igwe Anugwu is a private entrepreneur. He holds a Diploma in Agricultural Engineering from the School of Agriculture, Umudike in Abia State.

He is a traditional ruler of the ancient Mbaukwu Kingdom in Anambra State and Member, State Traditional Rulers Council and the Elders Council of Anambra State. He is the holder of various congressional Honors, Proclamations and Keys from several cities in the United States of America and a director of the board of directors of

the World Conference of Mayors.

He is the Chairman of the Board of Directors of Julius Berger Services Nigeria Limited.

HRM IGWE PETER ANUGWU JP, OFR.Non-Executive Director

THE BOARD


42

Mr. Michael Ajukwu is an astute

professional with combined expertise and

contribution to Stakeholder engagement,

risk advisory, general management,

corporate finance spanning over three

decades.

He is currently an Independent Director

on the board of Sterling Bank Plc. He

served as an Executive Director, Corporate

Banking with United Bank for Africa. Mr.

Ajukwu has over 21 years of experience in

the banking industry with specialty in the

Energy and Multinational sector. He has

extensive business experience in Africa

and particularly in Nigeria.

He has been an Independent Non-

Executive Director at Tiger Brands Limited

and Sterling Bank Plc respectively. Mr.

Ajukwu holds a B.Sc. in Finance from the

University of Lagos and MBA in Accounting

and Finance from New York University

MR. MICHAEL AJUKWUNon-Executive Director

Abiye Tobin-West is a seasoned Public Sector Administrator with several years of experience. She is currently the Permanent Secretary of Ministry of Finance Incorporated (MOFI), Rivers State.

As an astute Public Administrator, Tobin-

West has cognate experience in corporate governance and served on several Boards of corporations as a Government representative. Some of which include the Board of Internal Revenue Service, Rivers State Tourism Development Authority, Rivers Microfinance Agency, Nigeria Engineering Works and RIVERSCOOP Limited.Abiye Tobin-West is a life member of Economic Society of Nigeria, a fellow of Chartered Institute of Taxation, and a member of Institute of Cost and Management Accountants.

ABIYE TOBIN-WESTNon-Executive Director

THE BOARD


43

Gbenga Awomolo currently an Executive Director (Operations) at Alumaco Plc and sits on the Board of several companies particularly in the manufacturing sector. He has worked in different capacities as an Investment Executive at Newco Investment

Limited, Nigeria, as an Immigration Consultant at Midwest Immigration Consultants, in the United States and as an Operations manager at Midwest Staffing Group, USA. He also holds a Law degree from the University of Wales, Cardiff.

MR. ZUBER MOMONIATFinance Director

MR. OLUGBENGA AWOMOLO Non - Executive Director

Zuber is a Chartered Accountant of close to two decades of cognate practice. He holds a National Diploma in Biotechnology from the Witwatersrand Technikon in South Africa, a BCom in Accounting as well as BCom Honours in Financial Accounting from the University of Witwatersrand in Johannesburg, South Africa.

Zuber began his accounting career with PriceWaterHouse Coopers “Pwc” in 2003 and went on to join the then SABMiller group as group reporting manager for SABMiller Africa and Asia and later Finance Manager for SABMiller Africa.

He was the Finance Manager at PABOD Breweries Limited (Subsidiary of ABInbev) from where he was appointed as the Finance Director of the Company.


44

THE BOARD

Andrew Murray is currently the Vice

President, Finance for AB InBev Africa,

leading the finance function across Africa

operations, based in Johannesburg, South

Africa. Andrew joined ABInBev in 2013 as

Director of Global M&A based in New York.

In 2015, Andrew worked in ABInBev’s global

Budgeting and Business Performance

group focused on the financial results and

budgeting at the global headquarters.

Prior to joining ABInBev, Andrew worked

at Bain & Company, a global management

consulting firm for approximately 7

years. Andrew has a BA in Mathematics

and Economics from Williams College

and an MBA from The Kellogg School of

Management (Northwestern University).

MR. ANDREW MURRAYNon-Executive Director

Richard Rivett-Carnac is the Mergers and Acquisitions Director for AB InBev Africa based in Johannesburg, South Africa.

Richard joined AB InBev from SABMiller

Plc. Group (“SABMiller”) where his previous roles were as the General Manager of The SAB Thrive Fund, District Manager of District Johannesburg Central (Sales and Distribution) and a manager in the Corporate Finance and Development team based in the United Kingdom focusing on global mergers and acquisitions for SABMiller.

Prior to joining SABMiller in London in 2009, Richard qualified as a Chartered Accountant (SA) in Johannesburg and then worked in London for seven years in Investment Banking.

MR. RICHARD RIVETT-CARNACNon-Executive Director


45

THE BOARD

Michael Daramola attended the prestigious Kings College Lagos. He studied Industrial Economics in the then Soviet Union in 1986. At different times he worked with L.M Ericsson Nigeria Limited and later, MicCom Cables & Wires. He was instrumental to

the setting up of an electro-mechanical company with advisory bodies in the U.K.

Otunba Daramola has considerable experience in the manufacturing industry and International Breweries Plc spanning almost two decades. He is a member of the National Economic Summit Group and serves on the boards of several Companies and Agencies in Nigeria.

GODWIN OCHE National Sales Director

OTUNBA MICHAEL DARAMOLACorporate Affairs Director

Godwin has a background in Chemical Engineering and holds a Post Graduate Diploma in Business Administration and an MBA from the Enugu State of Science and Technology Business School.

He is a member of the Nigerian Institute of Management and the Institute of Personnel Management.

Godwin brings with him to the Board, about two decades of sales and marketing experience with continental and merit awards. Prior to joining the Company, he

was the Trade and Marketing distribution area manager at British American Tobacco.

THE BOARD


46

Ayojimi is a Barrister and Solicitor of the Supreme Court of Nigeria with over 15 years of Law practice with considerable experience in providing experiential advisory in Corporate restructuring. He

was legal adviser to a handful of private companies and has practiced extensively before superior courts of record in Nigeria.

He is a member of the Institute of Chartered Secretaries and Administrators, Chartered Institute of Arbitrators, International Corporate Governance Network, Society for Corporate Governance, Nigerian Institute of Management and the Nigerian

Bar Association.

MUYIWA AYOJIMI Company Secretary/General Counsel

Olutoyin is a seasoned Consumer Goods and FMCG senior management professional with over 16 years of multi-national corporate experience in retail management & distribution, supply chain optimization, strategic development, operational planning, risk management, business development, product development, branding and marketing across the telecoms, management consulting & consumer goods /FMCG industries. She has held past senior roles including missions at

L’Oreal, MTN Nigeria & Accenture and most recently as Regional Director Anglophone West Africa at Danone ELN where she worked for the past 6 years. She is currently the Founder & CEO, Olori Beauty Enterprise LTD, an African multi-brand cosmetics manufacturing start-up, based out of Lagos, Nigeria. Toyin is also a Non-Executive Director at Afrinvest West Africa Limited. She holds a Bachelor of Science degree in Civil & Environmental Engineering from Temple University in Philadelphia, Pennsylvania and a Master of Business Administration degree from INSEAD (France & Singapore)

OLUTOYIN M. ODULATEIndependent Non-Executive Director

THE BOARD


47

I t gives me great pleasure to welcome you to the 42nd Annual General Meeting of our Company, International

Breweries Plc.

I am indeed honoured as this is the first meeting of our shareholders since my appointment as Chairman of the Board of International Breweries Plc.

2018 was transformational and marked the first full year of our new amalgamat-ed Company. We have built a formidable platform to project our value creation for our stakeholders and shareholders.

I sincerely thank our shareholders and my fellow directors for their lasting support

and commitment that ensured the suc-cessful birth of our strategic initiatives.

Global/Nigeria Economic Outlook

Globally, 2018 was a very positive year, riding on the back of robust growth notwithstanding fears of recession and economic slowdown. Commodity prices impacted investments and growth in many economies. The oil industry also performed below expectation.

On the local front, the economy started well in 2018, as it rode on the back of the outstanding capital market perfor-mances which grew by 42%, the third best in the world and the best in Africa.

Fellow Shareholders

CHAIRMAN’S STATEMENT


48

The early growth gave optimism that the year would be great. The optimism did not last though because by the end of the first quarter of the year, the growth spurt had dampened. This set the tone for the remainder of 2018, as growth became a see-saw, rising in one quarter and falling in the next. While the economy has exit-ed recession, growth remained subdued as recovery continued, driven mainly by non-oil receipts. Stability experienced in the macro environment allowed the economy to grow mar-ginally year-on-year. The Central Bank of Nigeria remained reso-lute to curtail inflation as it held the Monetary Policy Rate, the bench-mark rate, at 14% while bolstering stability and liquidity in the foreign exchange market.

In June, the Federal government signed into law a new tax regime for the industry. An incremental excise duty was introduced as part of government’s efforts to boost its declining income.

Operating Environment

In its assessment of the first quarter 2018, the Nigeria Bureau of Statistics (NBS) indicated that the country’s economic growth slowed to 1.95 percent in first quarter of 2018, from 2.11 percent record-ed in the fourth quarter of 2017. It stated that real GDP as at end March 2018 was N16.106 trillion as against the nominal GDP figure of N28.464 trillion.

According to the IMF World Economic Outlook report released in July 2018 the Nigerian economy was projected to grow by 2.1 per cent in 2018. However, due to unfavorable developments in the econo-my, this growth rate was downgraded to 1.9 per cent later in the year under review. This was specifically due to reductions in oil production and contractions in the agricultural sector, a consequence of the so-called farmers-herders clashes,

among others. Similarly, the Nigerian equities market was in decline due to political uncertainty, with investors losing over N700 billion as at Sep-tember 2018. These were clear signs of a troubled economy.

In the last quarter of 2018, the nation’s external reserves fell from $47.8 billion to $43.97 billion, indicating a seven-month

low, despite rising international oil prices.

Our business environment was certainly not immune to these macro-economic realities, which formed the bedrock of our numbers.

Business Performance/Results for

the year

Our core brands performed well in 2018. We leveraged our capacity expansion at the Gateway Plant in Ogun State to deepen market penetration. We also im-plemented a deliberate route to market


2018 was a very

positive year, riding on the back

of robust growth


49

plan to increase volume delivery.

The business delivered consistent top-line growth. Revenue growth increased significantly with continued premiumiza-tion and revenue management initiatives. However, our production expansion in-creased our gearing ratio thereby impact-ing on our profitability. The decisions of the Board on borrowings were desperate measures in desperate times and were in the interest of the Company. The Board is firmly committed to ensuring Return on Investments in no distant time.

We enjoyed healthy volume, revenue and market share growth even in unprecedented markets. Our frontline brands- , Trophy and Hero, continued to make new inroads into the hearts of consumers. Our premium beer-, Budwei-ser, delivered strong performance in line with the category expansion framework. Budweiser was the most “talked about” brand on digital and social media during the 2018 FIFA World Cup Russia™, with an estimated five billion social media impressions. It was the biggest commercial campaign in our company’s history, with activa-tions across more than 50 markets and 565,000 points-of-consumption. We were successful in building brand aware-ness in many of our new markets and are using this awareness to propel the brand toward future growth.

Our People

Our people remain our greatest strength. Several changes were made in the critical functions/departments as well as promo-tions during the year using the tools from our excellence program. Senior leader-ship positions were created to capture organic growth opportunities within our business. We have a brand-new team of Executive Directors in Marketing, Human Resources, Technical, Procurement, Trade and High-end marketing.

In line with our prin-ciples, employees are growing at the pace of their talent and being rewarded accordingly. Employees are also be-coming conversant with the new ways of working.

Corporate Social In-

vestments

The Corporate Social Investments undertaken

by the Company are contained in this Annual Report.

I would like to highlight one of our social investment initiatives, which is impacting positively on the environment in which we operate. Our Kickstart programme - an entrepreneurial project targeted at youths to support/kickstart their busi-ness dreams. In the year under review, 71 youths were empowered with a grant of N116,399,565 to start their businesses. A significant number of the applicants were graduates and the project sum award shows our commitment to sup-porting the government in the reduction

Our core brands

performed well in 2018.

We leveraged our capacity expansion at the Gateway Plant in Ogun

State



50

of unemployment in our Country.

I am therefore delighted that as a Com-pany, we have made measurable, positive impact on this front as this project will now wear a National look, being available to youths across the length and breath of Nigeria.

Our Company continues to be mindful of its partnership with host communities hence the time and resources we com-mitted to development projects in these areas.

Governance and the

Board

The Company has continued to imbibe and practice Corporate Governance rules as established by the business and Regula-tors. We have ensured that the company is responsibly managed and properly controlled. This is without limiting our vision or hampering swift management action. Our rules establish a framework of best practices, a way of thinking, and the modus operandi within and around the company ensures clarity and proper conduct.

In the year under review and owing to the merger, a new Board emerged. The pro-file and constitution of the directors on the Board reflects the corporate gallantry with which the company would be steered in the years ahead. The ratification of appointment as Director of (Mr. Andrew

Murray, Mr. Richard Rivett-Carnac and Ms. Olutoyin Odulate will be proposed at this annual general meeting. I am delighted at these appointments, particularly the fact that we now have an Independent Non-Executive Director on our board.

I would like to acknowledge my predeces-sor Mr. Sunday Akintoye Omole, who led the board of International Breweries PLC prior to its merger with Intafact Beverag-es Limited and Pabod Breweries Limited. Permit me to also express my sincere appreciation to the men and women who

have exited the Board following our merger for their strategic vision and cooperation during the process.

Future Outlook

Trading conditions are expected to be broad-ly unchanged with further growth in our markets but no more

than modest improvements in consumer spending in some of our areas of oper-ation. We will continue to develop and differentiate our brand portfolios, taking opportunities to improve sales mix and ensure affordability. Focus will be main-tained on cost effectiveness, including synergy delivery and on expanding our globally-managed procurement systems. Healthy cash generation will again be a priority. We will target investments in production capacity, marketing and sales capability and business systems in order to drive medium-term growth. I urge you to believe and support the new dream that our Company has come to represent

71 youths were empowered

with a grant of N116,399,565 to start their businesses.



51

in this market. We have all it takes to take the lead and this will form the crux of our business drive as the years emerge.

Conclusion

I thank all our employees on behalf of the Board. You are the greatest strength of our Company. Your inspiration and energy are indispensable to making International Breweries Plc a great place to work. We are never completely satisfied with our results and 2018 was no exception. We will build upon the learnings of this year to ensure we continue opening and closing gaps to create sustainable, long-term, profitable growth.

As a consumer-centric Company, we are relentlessly committed to exploring new products and opportunities to excite con-sumers in Nigeria.

Thank you.

His Majesty Nnaemeka Alfred Achebe CFR, MNI

OBI OF ONITSHA

CHAIRMAN

FRC/2013/NIM/00000001568


52

Launched into the Nigerian

market in August 2012, Hero

Lager beer has walked its way

into the hearts of consumers

in the South Eastern region

where it was christened ‘Oh

Mpa’ in reverence to its re-

freshing taste. Mpa means

Father in Igbo language. In

clearer terms, “Oh Mpa” mean

a beer that is ahead of its

peers.

Hero continues to soar


53

Hero knighted

On May 12, 2018 one of the most iconic events in South Eastern Nigeria took place in the King’s Courtyard, Ikpeazu Stadium, Onitsha, Anambra State. Hero, our premium lager was knighted with a new red crown cork and given the title Mmanya Ejiri Mara Igbo meaning the beer that identifies with the Igbos. Red cap adornment is of high importance in the Eastern part of Nigeria as it represents the peak of achievement, societal status and recognition for any individual or brand.

Since its commercial launch in 2012, Hero has quickly become the most

popular beer brand in the east and its cultural affinity with the people is unmatched. The epoch making

event drew the attendance of traditional and community leaders, corporate bodies, public figures, trade partners, distributors and members of the

general public.

His Royal Highness, Igwe Achebe, represented by Engineer Okey Ononye, Onowu Iyase of Onitsha, gave the royal blessing for the commencement of the red cap ceremony which culminated in drinking some refreshing pints of the newly knighted beer by the guests in attendance.


54

Rewarding loyal consumers

During the yuletide season, Hero demonstrated its special connection with loyal consumers when it executed one of the biggest ever giveaways aimed at rewarding consumers of legal drinking age of 18+. The promo tagged “HEROnaires Mega promo” doled out gifts

of N1 million weekly for 17 weeks. The promo also gave consolation prizes of N50, 000 each to numerous consumers. In all, the promo impacted the lives and homes of 500 loyal consumers.

Hero Music Fiesta – The Bridge Edition

One of the ways Hero stays connected with its loyal consumers in the eastern part of the country is through musical concerts. Musical concerts have been a recurring activity executed for the excitement and fun of our consumers. Popular music artistes who fit in our brand purpose perform at these concerts. On Friday, November 23, 2018 the Chuba Ikpeazu Stadium in Onitsha came alive as popular Nigerian music artistes took to the stage to thrill the crowd at the fourth edition of the Hero Lager fiesta. Duncan Mighty, Timaya, Harrysong, Omawunmi, Reekado Banks and Rudeboy were some of the music stars that performed to celebrate Hero Lager.


55

Not for Sale to Persons Under the Age of 18.

CASTLE LITE MADE FOREXTRA COLD NEW TECHNOLOGY

P316 Castle Lite Nigeria_PSL Launch_A2_2_G.indd 1 2017/09/20 11:46 AM


57

FINANCIAL STATEMENTS


The Directors have the pleasure of submitting their report together with the Audited Financial Statements for the period ended 31 December 2018.

1. Legal form

International Breweries Plc was incorporated as a Private Limited Liability Company on 22 December, 1971 and became a public limited liability Company on 26 April, 1994. The Company is a part of the AB InBev Group (The largest Brewer in the World).

2. Principal activities

The principal activities of the Company continue to be brewing, packaging and marketing of alcoholic and non-alcoholic beverages.

3. Operating summary

The Company’s results for the year ended 31 December 2018 are set out on page 16. The loss for the year has been transferred to retained earnings. The summarised results are presented below:

2018 2017

N’000 N’000

Net revenue 120,610,825 36,527,807

Loss before tax (8,049,312) (3,233,711)

Tax credit 4,183,014 4,628,936

(Loss)/profit for the year (3,866,298) 1,395,225

Total comprehensive (loss)/income for the year (4,064,440) 874,084

4. Dividend declaration

The Board maintains a dividend policy which guides its decision on dividend declaration. The Directors therefore resolved not to recommend the payment of a dividend for the period ended 31 December, 2018 (31 December 2017: nil). The Board views this decision as appropriate in the circumstances and in the future interest of the Company owing to the current gearing ratio.

5. Directors

The names of the directors at year end/date of this report are as set out in the corporate information page. The following directors served during the year under review but resigned before 31 December, 2018: Mr. Michael Oerlemans, Mr. Gustav Van Heerden, Mr. Christopher Tyne, Mrs. Afolake Lawal and Mr. Phillip Redman.

The following Directors Mr. Akintoye Omole, Mrs. Annabelle Degroot, Mr. Zuber Momoniat and Mr.


58

Folorunsho Awomolo (who is over 70yrs, special notice having been received by the Company in accordance with Section 256 of the Companies and Allied Matters Act, Cap. C20, Laws of the Federation, 2004) who were the longest serving, retired by rotation and being eligible have offered themselves for re-election in line with the Articles of Association.

Mr. Andrew Murray was appointed on 23 October, 2018, Mr. Richard Rivett-Carnac was appointed with effect from 31 December, 2018 to fill the casual vacancy the exit of Mr. Phillip Redman created on the Board effective 31 December, 2018. Ms. Olutoyin Odulate was appointed as an Independent non-executive director on 18 April, 2019.

Details of the Directors Interest in the Company’s Shares during the year as set out below:

December 2018 December 2017

Number Number

Direct holding

HRM Igwe Nnaemeka Alfred Ugochukwu Achebe 40,732,127 40,732,127

Mr. Sunday Akintoye Omole 72,647 72,647

Michael Onochie Ajukwu 69,750,522 65,000,000

Indirect holding

Mr. Sunday Akintoye Omole (through Cardinal Investment Nigeria limited)

968,087 968,087

Mr.Folorunsho Awomolo (through Newco Investment Company Limited)

106,904,126 106,904,126

6. Directors’ interest in contracts

The directors have complied with the provisions of Section 277 of the Companies and Allied Matters Act, Cap.20 LFN 2004 at the date of this report.

7. Corporate Governance

This report describes the Directors’ approach to Corporate Governance and how the board applied the Codes on Corporate Governance and other applicable Regulations.

The Directors are committed to maintaining the best standard which they believe is pivotal to the discharge of their stewardship expectations. The Board is aware of the new National Code on Corporate Governance and has begun the application of the 28 principles as enshrined in the Code. The Company’s conviction is that Corporate Governance practices should be accorded a



59


more practical approach in enhancing company ideals and management performance.

In fulfilment of the SEC Code and the National Code, the Company has appointed an Independent non-executive director.

The Company “Issuer” maintains prompt compliance with regulatory filings in line with good Corporate practice. However, pursuant to the provisions of Rule 1.1.5 Rules of filing of Accounts and Treatment of default filing, Rulebook of The Exchange (Issuer’s Rules), the 2017 Audited Financial Statements was filed on 4 April, 2018. The Issuer paid the sum of one hundred thousand naira (N100,000) as default fees on the late filing of the said Account. This disclosure is made in this Annual Report and Accounts as mandated by the Nigerian Stock Exchange.”

(i) Leadership and effectiveness

Board of Directors: Composition, Independence and Renewal As at the date of this report, the Board composed of the Chairman, Eight Non-Executive Directors and Four Executive Directors.

The Board considers its directors as at year end and as at the time of this report as independent for the purpose of their contributions to the invaluable integrity, corporate wisdom and experience towards the board and committees’ deliberations and decisions. The board is therefore satisfied with the performance and continued independence of judgment of each of the directors.

The ratification of appointment as directors of Mr. Andrew Murray, Mr. Richard Rivett-Carnac and Ms. Olutoyin Odulate will be proposed at this Annual General Meeting.

(ii) The Board’s Operation

Board meetings and attendance The Board of directors met during the period under review. Individual director’s attendance at these meetings is as set out in the table below. In the few instances where a director was unable to attend a board or committee meeting, his or her alternate attended in his stead and any comments which they had on matters set out in the agenda for consideration at such meeting was given in advance to the chairman of the meeting.


60

Names of Directors Dates of meeting

26/02/18 19/03/18 30/05/18 11/6/18 19/07/18 23/10/18 27/11/18No. of

Meetings Attended

HRM Igwe Nnaemeka Alfred Achebe (Chairman) (ADY) - - Y Y Y Y Y 5/7

Mr. Akintoye Omole Y Y Y Y Y Y Y 7/7

Mrs. Annabelle Degroot(Managing Director) Y Y Y Y Y Y N 6/7

Igwe Peter Anugwu (ADY) - - Y Y Y Y Y 5/7

Mr. Michael Ajukwu (ADY) - - Y Y Y Y Y 5/7

Mr. Zuber Momoniat(Finance Director) Y Y Y Y Y Y Y 7/7

Ms. Abiye Tobin-West (ADY) - - Y Y Y Y Y 5/7

Mr. Olugbenga Awomolo Y‡ Y‡ Y‡ Y‡ Y‡ Y‡ Y‡ 7/7

Mr. Phillip Redman (RDY) - - Y Y Y N N 3/7

Mr. Andrew Murray (ADY) - - N N N Y Y 2/7

Otunba Michael Daramola (ADY) - - N Y Y Y Y 4/7

Mr. Godwin Oche (ADY) - - Y Y Y Y N 4/7

Mr. Richard Rivett-Carnac (ADY) - - - - - - - 0/7

Mrs. Afolake Lawal (RDY) Y Y - - - - - 2/7

Y (ADY)(RDY)

- ‡

N

Operation of the boardThe board sets the strategic objectives and delegates to management, the detailed planning and implementation of those policies. The board thereafter monitors compliance of the actualization of the set policies and objectives through quarterly reports to the board and its committees, enabling directors to explore and interrogate specific issues for feedback, in greater detail. The board and its committee meetings are held in an atmosphere of robust, constructive and intellectual debate of issues with sincerity of purpose, integrity and mutual respect.

Matters of exclusive preserveThe board has a schedule of matters as contained in an approval grid which is dealt with exclusively by the board. This includes but not limited to the approval of Financial Statements; annual expenditure/budget plan; material investment or disposals and the Company’s business strategy.

- Present - Appointed during the year– Resigned during the year- Not a member of the Board as at that date- Alternate Director- Absent



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The board governs through its established Committees. Each Committee or standing committee has specific written terms of reference and committee charters. All Committee Chairmen or their representatives, report to the board and their decision extracts are included in the board packs circularized to all the board members two weeks before their meetings.

Risk and the Board of DirectorsThe Company’s Board of Directors is ultimately responsible for the Company’s risk management system and for reviewing its effectiveness. The Company, through its training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations. The risk management system is designed to manage, rather than eliminate, the risk of failure to achieve business objectives and there is an ongoing process in place for identifying, assessing, managing, monitoring and reporting on the significant risks faced by the Company.

The Company’s Audit Committee oversees how management monitors compliance with the Company’s risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The Internal Audit function has been expanding in line with our Global Risk Management structure. The activities and capabilities of the new initiative are far more improved than the traditional internal audit functions. The new structure will develop business insights, improve our operations and manage risks in a smart and proactive way using analytical techniques supported by a strong team.

The process has been established for the period under review up to the approval of the Annual Reports and Accounts. The principal risks and uncertainties facing the company as set out in note 4.

Conflict of interest The directors are aware and advised to avoid situations where they have, or can have, a direct or indirect interest that conflicts, or may possibly conflict with the Company’s interests and encouraged to make full disclosures. In accordance with the Companies and Allied Matters Act 2004 and the Company’s Articles of Association, the board can authorize potential conflicts of interest that may arise and to impose such limit or conditions as it may deem fit. There were however, no actual or potential conflicts of interest which were required to be authorized by the board during the period ended 31 December 2018.

The Roles of Executive and Non-Executive DirectorsThe Executive Directors are responsible for proposing strategy and for making and implementing operational decisions. Non-executive Directors complement the skills and experience of the executive Directors, bringing independent judgment and making inputs through their knowledge and experience of other businesses and sectors.

Information dissemination and trainingThe Company Secretary is responsible for advising the board, through the chairman, on issues of Corporate Governance. The secretariat supplies the Board and its Committees with full and timely information through meeting packs and other neccessary resources to enable directors prepare adequately for their meetings and take informed decisions.

The company is committed to continuing development of Directors in order to build on their expertise and develop an ever more detailed understanding of the business and the ever changing legal and regulatory environment.



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Other AppointmentsNon-Executive Directors may serve on the Boards of other companies in order to widen their experience and knowledge for the company’s benefit. Directors ensure that their effectiveness on the Board is not compromised by their external commitments. The board is pleased that Directors commit enough time to their duties and that they have sufficient time to fulfil their respective obligations to the Company.

Board, Committee and Director performance evaluationThe Board subscribes to performance evaluation processes in line with best practice and as prescribed by the National Code on Corporate Governance. A formal evaluation of the board’s performance was carried out for the year ended 31 March, 2017. The board considers its performance in the year under review as satisfactory and largely in compliance with prescribed codes of corporate governance. The board would be due for an independent assessment by the next financial year.

The Company SecretaryThe Company Secretary who acts as secretary to the board and its committees attended all the meetings during the year under review.

(iii) The Board Committees

The Audit Committee

The audit committee chaired by Mr.Oladepo Adesina met during the period under review. The members representing the shareholders are Mr. Moses Ijayekunle and Mr. Adetunji Ajani Babajide. Mr. Michael Ajukwu, Abiye Tobin-West and Mr. Olugbenga Awomolo represent the Board. The External Auditors, The Global Risks Management Manager, Internal Control Manager and the Finance Director attended the committee meetings by invitation. The work of the committee during the period included Audit matters and reviews. The audit committee reports all activities and makes recommendations to the board. During the period under review, the audit committee discharged its responsibilities as they are defined in the committee’s terms of reference and has ensured that applicable standards of governance and compliance are adhered to.

The Internal Control/Global Risks functions have direct access to the committee, primarily through its chairman. The functions enjoy the benefit of adapting the workings and processes of approved International and best practice templates for improved efficiency.



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Analysis of attendance of meetings of Audit Committee members for the period

Name of Audit Committee Members Date Number of meetings attended

Total

8/02/18 19/03/18 18/07/18 22/10/18

Mr.Oladepo Adesina - (Chairman/Shareholder) Y Y Y Y 4/4

Mr. Moses Ijayekunle - ( Member/Shareholder) Y Y Y Y 4/4

Mr. Adetunji Ajani Babajide - Y Y Y Y 4/4

Mrs. Afolake Lawal - (Resigned 23/5/18) Y Y - - 2/4

Mr. Michael Ajukwu - (Member/Director)- (Appointed 30/05/18) - Y Y Y 3/4

Ms. Abiye Tobin-West - (Appointed 30/05/18) - Y Y Y 3/4

Mr. Gbenga Awomolo Y N Y Y 3/4

- Not a member of the Committee as at that date.N - AbsentY - Present

The Governance/Remuneration/Nomination Committee

The name of the Governance Committee was changed by the Board on 30 May, 2018 to Governance/Remuneration/Nomination Committee in order to streamline the processes of the Board Committee. The Committee is charged with the overall responsibility of ensuring that all governance reviews and strategic plans on remuneration and nomination are complied with.

The committee consist of Mr. Michael Ajukwu, Mr. Akintoye Omole, Abiye Tobin-West and Mr. Phillip Redman.

Analysis of attendance of meetings of Governance Committee members for the period

Name of governance/ remuneration/ nomi-nation committee member Date Number of meet-

ings attended

18/07/18 16/10/18 Total

Mr. Michael Ajukwu (Chairman) Y Y 2/2

Mr. Akintoye Omole Y Y 2/2

Mr. Phillip Redman Y N 1/2

Ms. Abiye Tobin-West - Y 1/2

- Not a member of the Committee as at that dateN - AbsentY - Present



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The Risk Management/Sustainability Committee

The name of the Committee was changed by the Board on 30 May, 2018 from Risk Management/Remuneration Committee to Risks Management/Sustainability Committee to streamline the processes of the Board Committees. The Committee provides focus on Risks and Sustainability, at all times, taking into cognizance established best practices. The Committee in that wise assists the Board in its oversight of the risk profile, risk management framework, risk strategy and the Sustainability framework for the Company. The Risks Management/Remuneration Committee is composed of three members: Mr. Olugbenga Awomolo, Mr. Akintoye Omole and Mr. Phillip Redman. The Committee held two meetings during the year.

Analysis of attendance of meetings of Risk Management/Remuneration Committee members

Name of governance/ remuneration / nomina-tion committee member Date

Number of meetings attended

18/07/18 16/10/18 Total

Mr. Olugbenga Awomolo (Chairman) Y Y 2/2

Mr. Akintoye Omole Y Y 2/2

Mr. Phillip Redman Y N 1/2

N - AbsentY - Present



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8. Share capitalDuring the year, the number of the Company’s issued ordinary share capital remained at 8,595,861,936 (2017: 8,595,861,936) ordinary shares. Details of share capital are shown in the report.

Active shareholders range - summary position as at 31 December 2018

Range No of share-holders Holders % Holders

Cum. Units Units % Units Cum.

1 - 1000 18,216 45.37% 18,216 9,864,604 0.12% 9,864,604

1001 - 5000 14,574 36.30% 32,790 36,393,201 0.42% 46,257,805

5001 - 10000 4,644 11.57% 37,434 39,353,490 0.46% 85,611,295

10001 - 50000 2,181 5.43% 39,615 48,537,075 0.56% 134,148,370

50001 - 100000 261 0.65% 39,876 17,647,079 0.21% 151,795,449

100001 - 500000 166 0.41% 40,042 33,950,163 0.39% 185,745,612

500001 - 1000000 32 0.08% 40,074 26,024,218 0.30% 211,769,830

1000001 - 9999999999 76 0.19% 40,150 8,384,092,106 97.54% 8,595,861,936

Grand total 40,150 100% 288,197 8,595,861,936 100%

Substantial Shareholding

The particulars of the shareholders that held more than 5% of the issued and fully-paid share capital of the Company as at 31 December, 2018 and at the date of this report are as follows:

Name Holding %

Brauhaase International Management GMBH. 2,377,579,013 27.66

AB InBev Nigeria Holdings BV 4,072,100,915 47.37


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Shareholding by category:

Category of shareholder No. of shareholder Number Of Shares Held Percentage holding (%)

Individuals 39,501 635,442,468 7.39

Institutional Investors

Corporate 560 842,645,016 9.80

Institution 12 124,000 0.00

Pensioner 31 62,200,672 0.72

Tax Free 3 462,552 0.01

State & Local Govt 11 605,103,027 7.04

Foreign Shareholder

Portfolio Investor 32 6,449,884,201 75.03

Total 40,150 8,595,861,936 100

Purchase of own sharesThe Company did not purchase any of its own shares during the period under review.


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DateAuthorised (N) Issued and fully paid up (N)

Increase Cumulative Increase Cumulative Considerations

1971 - 4,500,000 - 4,500,000 Cash

1978 1,000,000 5,500,000 - 4,500,000

1980 - 5,500,000 1,000,000 5,500,000 Cash

1981 2,500,000 8,000,000 1,300,000 6,800,000 Bonus

1981 - 8,000,000 1,100,000 7,900,000 Cash

1982 - 8,000,000 100,000 8,000,000 Bonus

1982 2,000,000 10,000,000 1,000,000 9,000,000 Bonus

1983 - 10,000,000 1,000,000 10,000,000 Bonus

1985 5,000,000 15,000,000 2,000,000 12,000,000 Bonus

1986 - 15,000,000 3,000,000 15,000,000 Bonus

1988 5,000,000 20,000,000 3,000,000 18,000,000 Bonus

1989 - 20,000,000 2,000,000 20,000,000 Bonus

1991 30,000,000 50,000,000 5,000,000 25,000,000 Bonus

1992 - 50,000,000 15,841,770 40,841,770 Cash

1993 - 50,000,000 2,709,846 43,551,616 Cash

1995 100,000,000 150,000,000 2,496,000 46,047,616 Cash

1995 - 150,000,000 51867000 97,914,616 Cash

1996 - 150,000,000 204,000 98,118,616 Cash

1998 - 150,000,000 213,000 98,331,616 Cash

1999 - 150,000,000 51,608,000 149,939,616 Cash

2001 110,000,000 260,000,000 60,384 150,000,000 Cash

2002 - 260,000,000 106,457,341 256,457,341 Cash

2007 1,240,000,000 1,500,000,000 - 256,457,341

2008 - 1,500,000,000 800,000,000 1,056,457,341 Cash

2009 - 1,500,000,000 - 1,056,457,341

2012 500,000,000 2,000,000,000 574,805,874 1,631,263,215 Cash

2014 - 2,000,000,000 15,861,425 1,647,124,640 Bonus

2017 2,300,000,000 4,300,000,000 2,650,806,320 4,297,930,960 Consolidation

Share capital history


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9. Corporate Social Responsibility

During the period under review, the Company’s corporate social responsibility towards its immediate and surrounding communities, especially in respect of community development, health and education, the environment and other social welfare, was again demonstrated in the various projects executed during the year and donations both in cash and in the Company’s products to various institutions and community centres. In response to the rising unemployment population among the youths in Nigeria, one of the major projects carried out by the Company during the year is the continuation of the Youth Enterprise Development Initiative tagged “KICK START” initiated in 2016. The Kick Start program is aimed at creating a culture of entrepreneurship among young people by promoting business awareness and material support through the development of business skills by training; providing grants as start-up capital for new businesses or grants to support expansion of existing businesses; and providing post investment support through mentoring and coaching. The amount expended on the program as at 31 December, 2018 was N116,399,565 (2017: N36.248 million). Other beneficiaries of the corporate social responsibility program of the Company are as listed below. This excludes gifts in Company products during the year.

It is worthy of note that corporate social responsibility initiative was extended to the Gateway Brewery despite its infancy stage of operations.

Community projects and donations during the year included the following:

Description/projects N’000

Renovation and donation of equipment to Primary Health Care Centre, Esa-Odo in Osun State. 4,000

Built a five-room convenience with water facility for Omi-Asoro Primary, Ilesa, Osun-State 2,900

Construction of Solar Powered Borehole for Ilashe Community 2,500

Construction of Solar Powered Borehole for the Christian Mission School for the Deaf, in Ibadan-Oyo State. 2,500

Construction of two Solar Powered Boreholes for two Communities in Sagamu Ogun State. 6,400

Kick-Start youth empowerment programme in the Eastern States 86,500

Kick-Start youth empowerment programme in the South Western States 29,900

134,700

The Company’s policy is not to make donations to political organisations in the country and in compliance with section 38(2) of the Companies and Allied Matters Act Cap C 20, Laws of the Federation of Nigeria 2004, the Company did not make any dona-tion or gift to any political party, political association or for any political purpose during the year under review.


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10. Ethical business conductThe International Breweries Code of Business Conduct and Ethics as adopted from AB InBev, sets out high ethical standards with which all Company’s employees are expected to comply, and forms part of the wider programme of policies and procedures throughout the Company. The Company personnel are committed to conducting business in a way that is fair, ethical and within the framework of applicable laws and regulations. During the course of the year, the Company’s policies and procedures were reviewed in light of related ‘adequate procedures’ guidance, and developing corporate best practice, and a number of enhancements made.

11. Employment, environmental and health safety policiesThe Company sustained the most of its workforce post-merger and reinvigorated the work space with new employees. The people team designed and continually reviewed employment policies to attract, retain and motivate the highest quality of staff. Management is committed to an active equal opportunities policy, from recruitment and selection, through training and development, appraisal and promotion to retirement. It is the Company’s policy to ensure that everyone is treated equally, regardless of gender, colour, nationality, ethnic origin, race, disability, marital status, religion or trade union affiliation. In the year under review. The Company is committed to its new policy on diversity and inclusion as it understands that the benefit of employing the right balance in people of different tribes, genders, creeds and backgrounds. The Company is ever committed to sustaining its policies and programmes on occupational health and safety to ensure a safe working environment for all its employees, suppliers, consumers and visitors to our sites. We have revised our policies on health and safety to enshrine world class manufacturing practices.

12. Research and developmentTo ensure improved overall operational effectiveness, considerable emphasis is placed on research and development in the Company’s technical activities, through the AB InBev Group. This enables the Company to develop new products, packaging, processes and new manufacturing capabilities.

13. Going concern and auditThe directors are satisfied that International Breweries Plc is a going concern. In accordance with Section 357(2) of the Companies and Allied Matters Act, Cap. C20 LFN 2004, Messrs. PricewaterhouseCoopers “PwC” (Chartered Accountants) have indicated their willingness to continue as auditors to the Company. A resolution will be proposed at the Annual General Meeting to authorise the directors to fix their remuneration.

14. Financial RiskInformation on the Company’s financial risk management objectives and policies and details of its exposure to price risk, credit risk, liquidity risk and cash flow risk are contained in note 4 to the financial statements.

The directors are responsible for the management of the business of the Company and may exercise all the powers vested in them by the Company subject to the Articles of Association and relevant statutes.


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15. Events after the reporting periodThere are no events which could have had a material effect on the state of affairs of the Company as at the balance sheet date being 31 December, 2018 which have not been adequately disclosed in these financial statements.

16. Stakeholder EngagementWe are a Company of owners and the continuing need for engagement is key to our success. The Company knows its stakeholders and proactively engages with them in regular and constructive discusses thereby managing the change communications at required times to ensure shared value for all. The effective engagement of a broad spectrum of stakeholdes was reflective of the cooperation enjoyed on the timely and successful completion of the merger process within the period under review.

17. Complaints Management PolicyComplying with the rules of the Securities and Exchange Commission on framework for complaints management, the Company and its Registrars provide responses within its framework to shareholder issues and concerns.

This framework also provides the opportunity for shareholder feedbacks on matters that can affect its corporate existence.

18. Dealing PolicyInternational Breweries Plc has in place a Securities Trading Policy “The Policy” which guides the Board and Employees when effecting transactions in the Company’s shares. The Policy provides for periods for Dealing in Shares and other Securities, established communication protocols on periods when transactions are not permitted to be effected on the Company’s shares (Close Period) as well as disclosure requirements when effecting such transactions.The Company complied with the Nigerian Stock Exchange Rules regarding this Policy in the year under review.

By Order of the Board:

Muyiwa AyojimiCompany Secretary/General CounselLagos-Nigeria.FRC/2013/NBA/0000000266730 June 2019


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Information in respect of General Mandate

In accordance with the Rules on Transactions with Related Parties recently issued by the Nigerian Stock Exchange, the Company is seeking the renewal of the general mandate from shareholders as per item 7 on the Agenda for the Annual General Meeting slated for 20 August 2019.

The aggregate value of all transactions entered into with related companies during the financial year as stated in this Annual Report and Accounts is more than 5% of the latest net tangible assets or the issued share capital of the Company.

In order to ensure smooth operations, the Company will continue to procure goods and services and engage in other transactions that are necessary for its operations from related companies in the next financial year and hereby seek a general mandate from the shareholders for the related company transactions of trading nature and those necessary for the day-to-day operations, that are more than 5% of the latest net tangible assets or the issued shares capital of the Company. Relevant items for the consideration of the shareholders are stated below:

(i) The class of interested persons with which the company will be transacting during the next financial year are AB InBev, its subsidiaries and associated companies;

(ii) The transactions with the related companies are transactions of trading nature and those necessary for the day-to-day operations;

(iii) The rationale for the transactions is that they are indispensable to the operations of the Company, cost effective and makes the products of the Company to be competitive;

(iv) The method and procedure for determining transaction prices are based on the transfer pricing policy;

(v) PwC, the transfer pricing consultants of the Company, gave opinion that the method and procedure in (iv) above are enough to ensure that the transactions shall be carried out on normal commercial terms and shall not be prejudicial to the interest of the issuer and its minority shareholders;

(vi) The Company confirms that the transfer pricing method and procedure for determining the transaction prices as earlier reviewed by PwC are adequate;

(vii) The Company shall obtain a fresh mandate from shareholders if the method and procedure is inappropriate.

General Mandate Circular


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Audit Committee Report

INTERNATIONAL BREWERIES PLC

REPORT OF THE AUDIT COMMITTEE

In accordance with the provisions of Section 359(6) of the Companies and Allied Matters Act, Cap. C20 LFN 2004, we the members of the Audit Committee of International Breweries Plc, having carried out our statutory functions under the Act, hereby report as follows:-

(a) That the accounting and reporting policies of the Company are in accordance with legal requirements and acceptable ethical practices.

(b) That the scope and planning of both the external and internal audit for the year ended 31 December, 2018 are satisfactory and reinforce the company’s internal control systems.

(c) That having reviewed the External Auditors’ findings and recommendations on management matters, we are satisfied with management responses thereon.

Finally, we acknowledge the co-operation of management, staff and the external auditors - Messrs PwC Nigeria in the conduct of our duties.

Dated this 30th of June, 2019.

Members of the Audit Committee1. Mr. Oladepo Adesina - Shareholder (Chairman)

2. Mr. Moses Ijayekunle - Shareholder Member

3. Mr. Ajani Adetunji - Shareholder Member

4. Ms. Abiye Tobin-West - Director Member

5. Mr. Michael Ajukwu - Director Member

6. Mr. Olugbenga Awomolo - Director Member

Mr. Oladepo Adesina FRC/2013/NIM/00000003678

Chairman


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The Companies and Allied Matters Act requires the directors to prepare financial statements for each financial year that give a true and fair view of the state of financial affairs of the Company at the end of the year and of its profit or loss. The responsibility includes:

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

b. designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatements, whether due to fraud or error; and

c. preparing the Company’s financial statements using suitable accounting policies supported by reasonable and prudent judgements and estimates that are consistently applied.

The Directors accept responsibility for the Annual Financial Statements, which have been prepared using appropriate accounting policies supported by reasonable and prudent judgements and estimates, in conformity with International Financial Reporting Standards and the requirements of the Companies and Allied Matters Act.

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

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

HRM Nnaemeka Alfred Achebe, CFR,MNI Mrs. Annabelle DegrootChairman DirectorFRC/2013/NIM/00000001568 FRC/2017/IODN/0000001809730 June 2019 30 June 2019

Statement of Directors’ Responsibilities


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Report on the audit of the financial statements

Our opinion

In our opinion, International Breweries Plc’s (“the company ‘s”) financial statements give a true and fair view of the financial position of the company as at 31 December 2018 , and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards and the requirements of the Companies and Allied Matters Act and the Financial Reporting Council of Nigeria Act.

What we have audited

International Breweries Plc’s financial statements comprise:

• the statement of profit or loss and other comprehensive income for the year ended 31 December 2018;

• the statement of financial position as at 31 December 2018;

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

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

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

Basis for opinion

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

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

Independence

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

Key audit matters

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

Independent Auditors’ Report

To the Members of International Breweries Plc


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Key audit matters How our audit addressed the key audit matter

Impairment on trade receivables - N1.9 billion (notes 2.3.3(a), 2.10, 3a and 17.1)

We adopted a substantive approach to test the impairment on financial assets. Specifically, we:

At 31 December 2018, the company’s trade receivable balance is N25.5 billion.

• Evaluated methodology adopted for calculating ECL on trade receivables;

We focused on impairment on financial assets because the directors made significant and subjective judgement in determining the amount of loss allowance.

• Checked that benchmarked default patterns have been appropriately considered to determine the loss rates for lifetime ECL for trade receivables;

The adoption of IFRS 9 “Financial Instruments” introduced the expected credit loss (ECL) model, which requires significant judgement.

• Assessed the reasonableness and reliability of the source.of the benchmarked patterns applied;

The directors have adopted the simplified approach using the provision matrix to determine the loss allowance for trade receivables.

• Checked mathematical accuracy of formulae applied in the ECL calculation by recalculating the historical default rate and the lifetime ECL;

Significant judgement exercised by the directors include:• Methodology used to determine the loss rates

for the calculation of the lifetime ECL; and

• Checked management methodology for evaluating the impact of macroeconomic factors on the loss rates and performed regression analysis on the historically adopted loss rate and applicable historical macro-economic variables;

• Incorporation of forward looking information such as inflation rate, unemployment rate and crude oil prices in determining the ECL.

• Checked the historical macroeconomic information used to their source and the reliability of that source;

• Checked the presentation and disclosure of trade receivables in the financial statements.

Valuation of employee benefits obligation - N2.5 billion (notes 2.2 4ii, 3b and 21)

We adopted a substantive approach to test the employee benefits obligation . We carried out the following procedures:

Provision is made for gratuities due to staff upon disengagement based on their years of service and current emoluments as contained in the staff conditions of service . The Company makes provisions for gratuity for employees that have spent at least 5 years of continuing service in the Company.

• Evaluated the independent actuary’s competence, capabilities and objectivity;

• Assessed the methodologies used and the appropriateness of the key assumptions based on our knowledge of the industry;

The liability recognised in the statement of financial position is based on the actuarial valuation of the present value of the obligation. We also focussed on this area due to the sensitivity of the assumptions used in determining the value of the obligation.

• Evaluated the appropriateness of the financial and demographic assumptions used in determining the value of the obligation based on our review of independent information;


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The present value of the obligation depends on a number of factors that are determined on an actuarial basis using a number of assumptions.

• Checked the underlying employee information used by the valuer to the employee information obtained directly from management; and

Financial and demographic assumptions are made in estimating actuarial pension liabilities. Financial assumptions include determining discount rate.

• Checked the presentation and disclosure of the post-retirement benefits in the financial statements .

In determining the appropriate discount rate , the Company considered the interest rates of Federal Government of Nigeria bonds that are denominated in the currency which the benefits will be paid and that have terms to maturity approximating the terms of the related pension obligation.

Demographic assumptions examine the age of the employees who qualify for the benefit, the expected maturity profile , their current salary, expected salary increases as well as the head count of employees.

Other information

The directors are responsible for the other information. The other information comprises: CorporateInformation, Report of the Directors, Statement of Directors’ Responsibilities, Statement of Value Added and Five-Year Financial Summary (but does not include the financial statements and our auditor’s report thereon), which we obtained prior to the date of this auditor’s report, and the other sections of the International Breweries Plc 2018 Annual Report, which are expected to be made available to us after that date.

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

In connection with our audit of the financial statements, our responsibility is to read the other informationidentified above and, in doing so, consider whether the other information is materially inconsistent with thefinancial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated .

If, based on the work we have performed on the other information that we obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

When we read the other sections of the International Breweries Plc 2018 Annual Report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance .

Responsibilities of the Directors and those charged with governance for the financial statements

The directors are responsible for the preparation of the financial statements that give a true and fair view


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

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

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

Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

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

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

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

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

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

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


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

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

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

Report on other legal and regulatory requirements

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

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

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

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

For : PricewaterhouseCoopers 30 June 2019Chartered AccountantsLagos, Nigeria

Engagement Partner: Udochi MuogilimFRC/2013/ICAN / 00000003209


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Statement of profit or loss and other comprehensive income

12 Months ended 31 December

2018


2017

Restated

Note N’000 N’000

Revenue 5 120,610,825 36,527,807

Cost of sales 6 (73,270,580) (22,819,921)

Gross profit 47,340,245 13,707,886

Administrative expenses 7 (15,883,120) (3,446,657)

Marketing and promotion expenses 8 (20,966,060) (6,086,720)

Net impairment charge on financial assets 17.4 (236,392) (1,130,244)

Other income 9 807,494 123,387

Other losses - net 10 (3,166,112) (2,451,305)

7,896,055 716,347

Finance income 11 84,265 532,971

Finance cost 11 (16,029,632) (4,483,029)

Finance costs - net (15,945,367) (3,950,058)

Loss before tax (8,049,312) (3,233,711)

Income tax credit 12 4,183,014 4,628,936

(Loss)/profit for the year (3,866,298) 1,395,225

Other comprehensive income:

Items that will not be subsequently reclassified to profit or loss:

Remeasurements of post employment benefits obli-gations (198,142) (521,141)

Other comprehensive loss for the year (198,142) (521,141)

Total comprehensive (loss)/income for the year (4,064,440) 874,084

Basic and diluted (loss)/earnings per share (Naira) 25 (0.45) 0.16

The notes on pages 85 to 134 and other National disclosures on pages 135 to 137 are an integral part of these Financial Statements


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2018


2017

12 Months ended 1 April 2017

Restated Restated

ASSETS Note N’000 N’000 N’000

Non-current assets

Property, plant and equipment 14 243,373,657 190,181,908 31,575,208

Intangible assets 15 467,506 432,592 45,738

Other receivables 17 45,684 1,481,590 -

Derivative financial Instruments 18 656,500 - -

Deferred tax assets 12 189,618 - -

244,732,965 192,096,090 31,620,946

Current assets

Inventories 16 19,857,541 16,204,786 3,835,324

Trade and other receivables 17 28,330,564 15,750,189 6,938,722

Cash and cash equivalents 19 17,357,850 8,098,186 1,165,203

Current tax assets 12 - -

65,545,955 40,053,161 11,939,249

Total assets 310,278,920 232,149,251 43,560,195

LIABILITIES

Non-current liabilities

Deferred tax liabilities 12 - 4,155,359 3,155,876

Borrowings 22 153,738,160 18,170,989 -

Employee benefit obligations 21 2,500,402 2,571,384 998,902

156,238,562 24,897,732 4,154,778

Current liabilities

Trade and other payables 20 53,994,967 95,520,290 12,778,432

Borrowings 22 63,438,877 69,871,674 11,987,582

Current tax liabilities 12 1,445,591 2,634,192 1,422,602

118,879,435 168,026,156 26,188,616

Total liabilities 275,117,997 192,923,888 30,343,394


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EQUITY

Share capital 23 4,297,931 4,297,931 1,647,125

Share premium 24 6,160,731 6,160,731 6,160,731

Other reserves 1,360,756 1,360,756 1,360,756

Employee benefit reserves (1,555,357) (1,357,215) -

Retained earnings 24,896,862 28,763,160 4,048,189

Total equity 35,160,923 39,225,363 13,216,801

Total equity and liabilities 310,278,920 232,149,251 43,560,195

The Financial Statements were approved and authorised for issue by the Board of Directors on 30 June 2019 and were signed on its behalf by:

) HRM Nnaemeka Alfred Achebe, CFR,MNI (Chairman)

FRC/2013/NIM/00000001568

) Mrs. Annabelle Degroot (Director)

FRC/2017/IODN/00000018097

) Mr. Alexander Chukwuma Atuona (Country Finance Manager)

FRC/2019/ ICAN/00000019271

) Mr. Zuber Momoniat (Director)

FRC/2018/IODN/00000018772

The notes on pages 85 to 134 and other National disclosures on pages 135 to 137 are an integral part of these Financial Statements


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Statement of Changes in Equity

Share capital

Share Premium

Other reserves

Employee benefit

reserves

Retained (losses)/ earnings

Total equity

Notes N’000 N’000 N’000 N’000 N’000 N’000

Balance at 1 April 2017 1,647,125 6,160,731 1,360,756 - 4,710,148 13,878,760

Correction of error 29 - - - - (661,959) (661,959)

1 April 2017 - Restated 1,647,125 ,160,731 1,360,756 - 4,048,189 13,216,801

Profit for the year - - - 1,395,225 1,395,225

Other comprehensive loss - - - (521,141) - (521,141)

Total comprehensive income for the year - - - (521,141) 1,395,225 874,085

Transactions with owners in their capacity as owners:

Issue of shares 2,650,806 - - - (2,650,806) -

Group reorganisation 13 - - - (836,074) 25,970,552 25,134,478

Balance at 31 December 2017 4,297,931 6,160,731 ,360,756 (1,357,215) 28,763,160 39,225,363

Balance at 1 January 2018 4,297,931 6,160,731 1,360,756 (1,357,215) 28,763,160 39,225,363

Impact of IFRS 9 and IFRS 15 (net of tax) - - - - - -

At 1 January 2018 - Restated 4,297,931 6,160,731 1,360,756 (1,357,215) 28,763,160 39,225,363

Loss for the year - - - - (3,866,298) (3,866,298)

Other comprehensive loss - - - (198,142) - (198,142)

Total comprehensive loss for the year - - - (198,142) (3,866,298) (4,064,440)

Transactions with owners in their capacity as owners: - - - - - -

Balance at 31 December 2018 4,297,931 6,160,731 1,360,756 (1,555,357) 24,896,862 35,160,923

On the adoption of IFRS, the ravalued amount of land and building was recognised as deemed cost. The accretion on revalua-tion of land and building is recognised within other reserves. The notes on pages 85 to 134 and other National disclosures on pages 135 to 137 are an integral part of these Financial State-ments


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Statement of cash flow


2018


2017

Note N’000 N’000

Cash flows from operating activities

Cash (used in)/ generated from operations 26 (28,874,806) 46,415,631

Income tax paid 12 (1,350,564) -

VAT paid - (1,613,250)

Employee benefits paid 21 (1,143,895) (12,764)

Net cash (outflow)/inflow from operating activities (31,369,265) 44,789,617

Cash flows from investing activities

Acquisition of property, plant and equipment 14 (69,772,968) (43,217,673)

Acquisition of intangible asset 15 (102,326) (396,714)

Proceeds from disposal of property, plant and equipment - 500,445

Interest income 11 84,265 532,971

Net cash outflow from investing activities (69,791,029) (42,580,971)

Cash flows from financing activities

Proceed from borrowings 22 254,798,160 20,832,300

Repayment of borrowings 22.1 (150,313,251) (10,567,977)

Interest paid 11 (2,684,784) (21,281,238)

Net cash inflow from financing activities 101,800,125 (11,016,915)

Net increase/(decrease) in cash and cash equivalents 639,831 (8,808,269)

Cash and cash equivalents at the beginning of the year (11,668,416) (2,860,147)

Cash and cash equivalents at the end of the year 19.1 (11,028,585) (11,668,416)

The notes on pages 85 to 134 and other national disclosures on pages 135 to 137 are an integral part of these Financial Statements


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1. General information

These Financial Statements are the Financial Statements of International Breweries Plc (“the Company”). The Company was incorporated in Nigeria as a private limited liability company on 22 December 1971 under the Companies and Allied Matters Act, and is domiciled in Nigeria. The Company became a public limited liability company on 26 April, 1994. The address of its registered office is: 22/36 Glover road, Ikoyi, Lagos, Nigeria

The principal activities of the Company are brewing, packaging and marketing of beer, alcoholic flavoured/ non-alcoholic beverages and soft drinks.

In August through to November 12, 2017, ABInBev acquired 72.17% of SABMiller shares in International Breweries Plc in a series of transactions which resulted in ABInBev acquiring controlling interests in the company. On November 13, 2017, a merger arrangement was consummated between International Breweries Plc and two other entities namely, Intafact Beverages Limited and Pabod Breweries Limited all controlled by AB Inbev.

2. Summary of accounting policies

2.1. Introduction to summary of significant accounting policiesThe principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

2.2. Basis of preparationThe financial statements for the year ended 31 December 2018 have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). Additional information required by national regulations is included where appropriate.. The financial statements comprise the statement of profit or loss and other comprehensive income, the statement of financial position, the statement of changes in equity, the statement of cash flows and the notes to the financial statements. The financial statements have been prepared in accordance with the going concern principle under the historical cost concept except for the following:

� Certain financial assets and liabilities – measured at amortised cost

� Derivative instruments – measured at fair value

� Employee benefit liability - measured at present value

All values are rounded to the nearest thousand, except when otherwise indicated. The financial statements are presented in thousands of Naira.


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The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Company’s accounting policies. Changes in assumptions may have a significant impact on the financial statements in the period the assumptions changed. Management believes that the underlying assumptions are appropriate and that the Company’s financial statements therefore present the financial position and results fairly. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 3.

2.3. Going concernThe financial statements have been prepared on a going concern basis. The directors have no doubt that the company will be in existence after 12 months. The directors do not intend to cease operations or stop any of the production lines. The Company has just completed a merger and completed the construction of its new plant in Sagamu. It is strategically positioned for success in the future. Although it recorded a loss in the year ended 31 December 2018, it continues to grow in quality and number.

2.3. Changes in accounting policy and disclosures

2.3.1. New standards, amendments, interpretations adopted by the CompanyA number of new standards and amendments to standards and interpretations are effective for annual periods beginning after 1 January 2019, are being adopted by the Company. The Company’s assessment of the impact of these new standards and interpretations is set out below.

- IFRS 9 Financial instruments- IFRS 15 Revenue from contracts with customers

The impact of the adoption of these standards and the new accounting policies are disclosed in note 2.3.3.

a. IFRS 16 - ‘Leases’, (effective date- 1 January 2019)This standard sets out the principles for the recognition, measurement, presentation and disclosure of leases. The objective is to ensure that lessees and lessors provide relevant information in a manner that faithfully represents those transactions. It will result in almost all leases being recognised on the balance sheet by lessees, as the distinction between operating and finance leases is removed. Under the new standard, an asset (the right to use the leased item) and a financial liability to pay rentals are recognised. The only exceptions are short-term and low-value leases. A lessee is required to recognise a right-of-use asset representing its right to use the underlying leased asset and a lease liability representing its obligation to make lease payments. It also substantially carries forward the lessor accounting requirements in IAS 17. The Company does not intend to adopt the amendments before its effective date and is currently assessing the full impact of this standard on its financial statements.

b. Amendment to IAS 19 - Plan Amendment, Curtailment or Settlement (effective date - 1 January 2019)This amendment specifies how companies determine pension expenses when changes to a


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defined benefit pension plan occur. IAS 19 Employee Benefits specifies how a company accounts for a defined benefit plan. When a change to a plan—an amendment, curtailment or settlement—takes place, IAS 19 requires a company to remeasure its net defined benefit liability or asset. The amendments require a company to use the updated assumptions from this remeasurement to determine current service cost and net interest for the remainder of the reporting period after the change to the plan. Until now, IAS 19 did not specify how to determine these expenses for the period after the change to the plan. By requiring the use of updated assumptions, the amendments are expected to provide useful information to users of financial statements. The Company does not intend to adopt the amendments before its effective date and is yet to assess the full impact of the amendments on its financial statements.

c. IFRIC 23 Uncertainty over income tax treatment (effective date - 1 January 2019)These amendments were issued in June 2017. IAS 12 Income taxes specifies requirements for current and deferred tax assets and liabilities. An entity applies the requirements in IAS 12 based on applicable tax laws. It may be unclear how tax law applies to a particular transaction or circumstance. The acceptability of a particular tax treatment under tax law may not be known until the relevant taxation authority or a court takes a decision in the future. Consequently, a dispute or examination of a particular tax treatment by the taxation authority may affect an entity’s accounting for a current or deferred tax asset or liability.

This Interpretation clarifies how to apply the recognition and measurement requirements in IAS 12 when there is uncertainty over income tax treatments. In such a circumstance, an entity shall recognise and measure its current or deferred tax asset or liability applying the requirements in IAS 12 based on taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates determined applying this Interpretation. The Company does not intend to adopt the amendments before its effective date and is yet to assess the full impact of the amendments on its financial statements.There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the Company.

2.3.2. Changes in accounting policiesThis note explains the impact of the adoption of IFRS 9: Financial Instruments and IFRS 15: Revenue from Contracts with Customers on the Company’s financial statements.

Impact on the financial statementsThe Company has adopted IFRS 9 as issued by the IASB in July 2014 with a date of transition of 1 January 2018, which resulted only in changes in accounting policies as there was no adjustment to the amounts previously recognized in the financial statements. The Company did not early adopt IFRS 9 in previous periods.

As permitted by the transitional provisions of IFRS 9, the Company elected not to restate comparative figures. Where this option is elected, any adjustment to the carrying amounts of financial assets and liabilities at the date of transition will be recognized in opening retained earnings on 1 January 2018 in the statement of changes in equity. Consequently, for notes disclosures, the consequential amendments to IFRS 7 disclosures will also only be applied to the current period.



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The comparative period notes disclosures repeat those disclosures made in the prior year. The Company has elected to adopt the provision matrix approach as a practical expedient for the calculation of expected credit loss on trade receivables on the adoption of IFRS 9. The IFRS 9 general model has been applied on all other financial assets at amortised cost.

The Company has also adopted IFRS 15: Revenue from Contracts with Customers using the modified retrospective method, with the effect of applying this standard recognised at the date of initial application (1 January 2018). Accordingly, the information presented for 2017 financial year has not been restated but is presented, as previously reported, under IAS 18 and related interpretations. The impact on the Company’s balances as at 1 January 2018 as a result of the adoption of IFRS 15 was immaterial and has therefore not been recognised.

(a.) IFRS 9 Financial instruments – Impact of adoptionThe new financial instruments standard, IFRS 9 replaces the provisions of IAS 39. The new standard presents a new model for classification and measurement of assets and liabilities, a new impairment model which replaces the incurred credit loss approach with an expected credit loss approach, and new hedging requirements. The Company does not apply hedge accounting.

The adoption of IFRS 9: Financial Instruments from 1 January 2018 resulted in changes in accounting policies and the adjustments to the classification of financial assets in the financial statements. The new accounting policies are set out in notes below.

i. Classification and measurement

(i.) Financial assetsOn 1 January 2018 (the date of initial application of IFRS 9), the Company’s management assessed the classification of its financial assets which is driven by the cash flow characteristics of the instrument and the business model in which the asset is held. The Company’s financial assets include cash and cash equivalents, trade receivables, amount due from related parties, staff receivables and other receivables as at the transition date. The Company’s business model is to hold these financial assets to collect contractual cash flows and to earn contractual interest. For cash and cash equivalents, interest is based on prevailing market rates of the respective bank accounts in which the cash and cash equivalents are domiciled.

Financial assets were previously classified as loans and receivables and are now classified as financial assets at amortised cost under IFRS 9.

The changes in the classification and measurement requirements of IFRS 9 only resulted in a nomenclature change as the effect on the carrying amount of the financial assets and the opening retained earnings as at 1 January 2018 was insignificant.

(ii.) Financial liabilitiesThere is no change in the classification and measurement rules of financial liabilities between IAS 39 and IFRS 9, except in the recognition of fair value gains or losses due to changes in the Company’s own credit risk for financial liabilities measured at fair value through profit or loss. The Company does not have any financial liabilities measured at fair value through profit or loss, hence no impact on adoption of the new Standard.



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The adoption of IFRS 9 eliminates the policy choice on the treatment of gain or loss from the refinancing of a borrowing. Day one gain or loss can no longer be deferred over the remaining life of the borrowing but must now be recognised at once. No retrospective adjustments have been made in relation to this change as at 1 January 2018.

ii. Impairment of financial assetsUnder IFRS 9, the Company is required to revise its previous impairment methodology under IAS 39 for each of these classes of assets. The following are the Company’s financial assets that are subject to IFRS 9’s new expected credit loss model: - Trade receivables - Amount due from related parties - Staff receivables - Other receivables - Cash and cash equivalents

a.) Trade receivablesThe Company applies the IFRS 9 simplified approach in measuring the expected credit losses (ECL) which uses a lifetime expected loss allowance for all trade receivables. Trade receivables represent the amount of receivable from customers for the sale of the Company’s products. The expected credit loss rate for this receivable is determined using a provision matrix approach.

The provision matrix approach is based on the historical credit loss experience observed according to the behavior of customers over the expected life of the receivable and adjusted for forward-looking estimates of relevant macroeconomic variables. The macroeconomic variables considered are inflation rate and gross domestic product (GDP).

The loss allowance determined under IFRS 9 was not materially different from the loss allowance already recognised by the Company, therefore, no adjustments have been made to the carrying amounts of trade receivables.

b.) Other financial assets at amortised costThe Company applies the IFRS 9 general approach in measuring the expected credit losses (ECL) on all other receivables. A day one provision will now be required on these instruments. The three stage model will require monitoring of credit risk to determine when there has been a significant increase. The ECL has been calculated using the Probability of default (PD), Loss Given Default (LGD) and Exposure at Default (EAD). The 3 stage model also incorporates forward looking estimates. There were no provision recognised on cash and cash equivalents, amount due from related parties, staff receivables and other receivables as the identified loss was immaterial.

(b.) Impact of adoption (IFRS 15 - Revenue from Contracts with Customers) The Company has adopted IFRS 15 Revenue from Contracts with Customers from 1 January 2018 which resulted in changes in its accounting policies. The adoption did not result in



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adjustments to the amounts recognised in the financial statements.

IFRS 15 introduces a five-step model for recognising revenue to depict transfer of goods or services. The model distinguishes between promises to a customer that are satisfied at a point in time and those that are satisfied over time. In accordance with the transition provisions in IFRS 15, the Company has adopted the new rules using the modified retrospective approach and has not restated comparatives for the 2017 financial year. There was no significant impact on the Company’s retained earnings at the date of initial application, 1 January 2018. The adoption of IFRS 15 and IFRS 9 by the Company had no impact on the statement of cash flows.

2.4 Revenue recognition (Policy applicable from 1 January 2018) IFRS 15 ‘Revenue from Contracts with Customers’ has been adopted with effect from 1 January

2018. The Accounting policy is updated to reflect the terminology in the new standard but it has had no effect on financial information reported in the current or comparative periods.

Sale of goods

Revenue from the sale of the Company’s products is recognised when control of the products is transferred, being at a point in time when the products leave the warehouse. Payment of the transaction price is due immediately. Revenue is measured at the fair value of the consideration received or receivable, net of Value Added Tax, excise duties, returns, customer discounts and other sales-related discounts. Revenue from the sale of products is recognised in profit or loss when the contract has been approved by both parties, rights have been clearly identified, payment terms have been defined, the contract has commercial substance, and collectability has been ascertained as probable. Collectability of customer’s payments is ascertained based on the customer’s historical records, guarantees provided, the customer’s industry and advance payments made if any. The methodology and assumptions used to estimate rebates and returns are monitored and adjusted regularly in the light of contractual and legal obligations, historical trends, past experience and projected market conditions. Market conditions are evaluated using wholesaler and other third-party analysis, market research data and internally generated information. Revenue also includes co-packaging income derived from the use of the company‘s facilities for the production of products of other companies under a co-packaging arrangement.

It is the Company’s policy to sell its products to the customer with a right of return within 14 days. Therefore, a refund liability (included in trade and other payables) and a right to the returned goods (included in other current assets) are recognised for the products expected to be returned. Accumulated experience is used to estimate such returns at the time of sale at a portfolio level (expected value method). The number of products returned has been steady for years, therefore, it is highly probable that a significant reversal in the cumulative revenue recognised will not occur. The validity of this assumption and the estimated amount of returns are reassessed at each reporting date.



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Revenue recognition (Policy applicable until 31 December 2017)

Sale of goods Revenue from the sale of products in the ordinary course of business is measured at the fair value of the consideration received or receivable, net of VAT, excise duties, returns, customer discounts and other sales-related discounts. Revenue from the sale of products is recognised in profit or loss when the amount of revenue can be measured reliably, the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return of products can be estimated reliably, and there is no continuing management involvement with the products.

The methodology and assumptions used to estimate rebates and returns are monitored and adjusted regularly in the light of contractual and legal obligations, historical trends, past experience and projected market conditions. Market conditions are evaluated using wholesaler and other third-party analyses, market research data and internally generated information. Turnover also includes co-packaging income derived from the use of the company‘s facilities for the production of products of other companies under a co-packaging arrangement. The same recognition criteria also apply to the sale of by-products and waste (such as spent grains) with exception that this is included within other income.

2.5 Other incomeOther income constitutes gains from the sale of assets, net of taxes; proceeds from the sale of by-products; interest on deposits and others. These various sources of income are recognised in profit or loss when ownership has been transferred to the buyer.

2.6 Segment reportingPerformance of operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The board of directors of the Company has appointed a strategic steering committee which assesses the financial performance and position of the Company, and makes strategic decisions. The steering committee, which has been identified as being the chief operating decision maker, consists of the chief executive officer, the chief financial officer and the manager for corporate planning. No business or geographical segment information is reported as the Company‘s primary geographical segment is Nigeria. Presently, 100 percent of the Company‘s sales are made in Nigeria. Also, identical risks and returns apply to all Company products.

2.7 Foreign currency translation

(a.) Functional and presentation currencyItems included in the financial statements of the Company are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The functional currency and presentation currency of the Company is the Nigerian Naira (N).



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(b.) Transactions and balancesForeign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Monetary items denominated in foreign currency are translated using the closing rate as at the reporting date. Foreign exchange gains and losses resulting from the settlement of foreign currency transactions and from the translation at exchange rates of monetary assets and liabilities denominated in currencies other than the company’s functional currency are recognized in profit or loss within other gains/(losses) - net.

2.8 Income and deferred taxThe tax for the period comprises income, education and deferred taxes. Tax is recognised in the statement of comprehensive income, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is recognised in other comprehensive income or directly in equity. The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the statement of comprehensive income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. Education tax is computed at 2% of the assessable profits. The Company’s liability for income and education taxes are calculated using tax rates that have been enacted or substantively enacted under the Companies Income Tax Act and the Education tax Act at the statement of financial position date.

Deferred tax is recognised, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the reporting date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled. Deferred tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. The carrying amount of deferred tax assets is reviewed at each statement of financial position date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

2.9 LeasesLeases are classified as either finance or operating leases. The company has no finance leases.Leases in which a significant portion of the risks and rewards of ownership are retained by another party, the lessor, are classified as operating leases. Payments, including prepayments, made under operating leases (net of any incentives received from the lessor) are charged to the profit or loss on a straight-line basis over the period of the lease. When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor



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by way of penalty is recognised as an expense in the period in which termination takes place.

2.10 Financial instruments

(a.) Financial assetsi.) Recognition and derecognitionThe Company recognises a financial asset in the statement of financial position when it becomes a party to the contractual provisions of the instrument. The Company derecognises a financial asset when the rights to receive cash flows from the financial assets have expired or have been transferred and the Company has transferred substantially all the risks and rewards of ownership.

ii.) ClassificationFrom 1 January 2018, the Company classifies its financial assets into the following measurement categories:

- those to be measured subsequently at fair value (either through OCI or through profit or loss), and

- those to be measured at amortised cost. The Company’s financial assets consists of debt instruments and derivative financial instruments. The classification of the Company’s debt instruments depends on the Company’s business model for managing the financial assets and the contractual terms of the cash flows.

The Company reclassifies debt instruments when and only when its business model for managing those assets changes. The Company classifies its financial assets as those to measured at amortised cost except derivatives classified as those to be measured at fair value through profit or loss (see 2.11).

iii.) MeasurementAt initial recognition, the Company measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition of the financial asset. Subsequently the Company’s debt instruments are measured at amortised cost. The Company’s financial assets include trade receivables, intercompany receivables, other receivables and cash and cash equivalents.

Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. Interest income from these financial assets is included in finance income using the effective interest rate method. Any gain or loss arising on derecognition is recognised directly in profit or loss and presented in other gains/(losses) together with foreign exchange gains and losses. Impairment losses are presented as separate line item in the statement of profit or loss.

iv.) Impairment of financial assetsFrom 1 January 2018, the Company assesses on a forward looking basis the expected credit losses (ECL) associated with its debt instruments carried at amortised cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk. The measurement of ECL reflects an unbiased and probability-weighted amount



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that is determined by evaluating a range of possible outcomes, time value of money and reasonable and supportable information that is available without undue cost or effort at the reporting date, about past events, current conditions and forecasts of future economic conditions. The Company applies the simplified approach to determine impairment of its trade receivables. The simplified approach requires expected lifetime losses to be recognised from initial recognition of the trade receivables. This involves determining the expected loss rates which is then applied to the gross carrying amount of the trade receivables to arrive at the loss allowance for the period. See note 4.3a for further details.

Accounting policy applied until 31 December 2017The Company has applied IFRS 9 retrospectively, but has elected not to restate comparative information. As a result, the comparative information provided continues to be accounted for in accordance with the Company’s previous accounting policy.

i.) ClassificationThe Company classifies its financial assets as loans and receivables. The Company does not hold financial assets in any other financial instrument category except for derivative financial assets carried at fair value through profit or loss (FVTPL). The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of financial assets at initial recognition.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. The Company’s loans and receivables comprise trade receivables, amount due from related parties, staff receivables and cash and cash equivalents, and are included in current and non current assets depending on their contractual settlement date. They are classified as current if they are to be settled within one year and non-current if they are to be settled after one year.

ii.) Recognition and measurementLoans and receivables are initially recognised at fair value and subsequently carried at amortised cost using the effective interest rate less any impairment.

iii.) Derecognition of financial assetsFinancial assets are derecognised when the contractual rights to receive the cash flows from these assets have ceased to exist or the assets have been transferred and substantially all the risks and rewards of ownership of the assets are also transferred (that is, if substantially all the risks and rewards have not been transferred, the Company tests for control to ensure that continuing involvement on the basis of any retained powers of control does not prevent derecognition).

iv.) Impairment of financial assetsThe Company assesses at the end of each reporting period whether there is objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.



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Evidence of impairment may include indications that the debtors or a group of debtors are experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation, and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.

For loans and receivables category, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in the profit or loss statement.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor’s credit rating), the reversal of the previously recognised impairment loss is recognised in the profit or loss.

(b.) Financial liabilities The Company’s policy on financial liabilities have been consistently applied to the each period.

i.) Recognition and derecognitionThe Company recognises a financial asset in the statement of financial position when it becomes a party to the contractual provisions of the instrument. The Company derecognises a financial liability when it is extinguished i.e. when the obligation specified in the contract is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised immediately in the statement of profit or loss.

ii.) ClassificationFinancial liabilities are classified as either financial liabilities at amortised cost of financial liabilities at fair value through profit or loss. The Company’s financial liabilities are classified as financial liabilities at amortised cost. The Company has no financial liabilities in any other category. Management determines the classification of financial liabilities at initial recognition. The Company’s financial liabilities include trade payables, amount due to related parties and accrued expenses. They are classified as current liabilities if payment is within one year or less. Otherwise, they are classified as non-current liabilities.

iii.) MeasurementFinancial liabilities are recognized initially at fair value, net of any transaction costs. Subsequently, they are measured at amortised cost using the effective interest method.



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2.11 Derivatives

Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured to their fair value at the end of each reporting period. Changes in the fair value of any derivative instrument recognised immediately in profit or loss and are included in other gains/(losses) - net.

2.12 Offsetting financial instruments

Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally enforceable right is not contingent on future events and is enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counterparty.

2.13 Trade receivables

Trade receivables are amounts due from customers for products sold in the ordinary course of business. If collection is expected in one year or less (or in the normal operating cycle of the business if longer), they are classified as current assets. If not, they are presented as non-current assets. Trade receivables are recognised initially at fair value and subsequently measured at amortised cost, using the effective interest rate method less provision for impairment.

2.14 Cash and cash equivalents

In the statement of cash flow, cash and cash equivalents includes cash in hand, bank deposits repayable on demand, other short-term highly liquid investments that are readily convertible to known amounts of cash and which are subject to insignificant risk of changes in value and bank overdraft. Bank overdrafts are shown within borrowings in current liabilities on the statement of financial position.

2.15 Trade payables

Trade payables are obligations to pay for services that have been acquired in the ordinary course of business from suppliers. Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method. Trade payables are classified as current liabilities if payment is due within one year (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities.

2.16 Borrowings

Borrowings are recognised initially at fair value, net of transaction costs and are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the period of the borrowings



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using the effective interest method. Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months from the reporting date. Borrowings are removed from the statement of financial position when the obligation specified in the contract is discharged, cancelled or expired.

2.17 Borrowing costs

General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

2.18 Provisions

Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are not recognised for future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small. Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as interest expense.

2.19 Property, plant and equipment

All categories of property, plant and equipment are stated initially at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to the acquisition of the assets. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the profit or loss during the financial period in which they are incurred.

Depreciation of assets commences when assets are available for use. Depreciation is charged on a straight line basis at annual rates which are expected to write off the cost of the assets over their anticipated useful lives. The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. The principal annual rates used which are consistent with those of the previous years are:



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Asset category Useful life

Building 22 - 55 years

Plant and machinery 5 - 50 years

Vehicles, furniture & equipment

-Vehicles 4 - 10 years

-Furniture and equipment 5 - 30 years

Gains and losses on disposal of property, plant and equipment are determined by comparing sales proceeds with the carrying amounts and taken into account in determining operating profit. These gains or losses are recognised within “other losses - net” in the profit or loss.

Returnable containers

Returnable containers are reflected at cost. Provisions are made for breakages and losses in trade to write off the cost over the expected useful life of the container. This period is shortened where appropriate by reference to market dynamics. The total landed cost of new bottles and crates are also recognised in returnable containers. Amortisation of containers is calculated on a straight line basis over the expected useful lives from the date that available for use. It is calculated to reflect the estimated pattern of consumption of the future economic benefits embodied in the asset and recognised in the profit or loss at the following rates:

Bottles 6years

Crates 7years

2.20 Deposits by customers

Returnable containers in circulation are recognised within property, plant and equipment. A corresponding liability is recognised in respect of the obligation to repay the customers deposits. Deposits paid by customers for branded returnable containers are reflected in the statement of financial position within current liabilities.

2.21 Intangible assets

Computer softwareAcquired computer software licenses are stated at cost less amortisation and any impairment losses. Costs includes the purchase price (net of any discounts and rebates) and other directly



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attributable cost of preparing the asset for its intended use. Direct expenditure which enhances or extends the performance of computer software beyond its specifications and which can be reliably measured, is added to the original cost of the software. Costs associated with maintaining the computer software are recognised as an expense when incurred.

Amortisation is calculated on the straight-line method to allocate the cost of the intangible assets over their estimated useful lives. The computer software has an estimated useful life of 5 years.

2.22 Impairment of non-financial assets

Non-financial assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised in the profit or loss for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs of disposal and value in use. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.

For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period. The reversal is recognised in the profit or loss in the period in which it occurs and the carrying value of the asset is increased. The increase in the carrying value of the asset should not exceed the amount it would have been had the original impairment not occurred.

2.23 Inventories

Inventories are stated at the lower of cost and net realisable value. Cost of inventories is determined using weighted average cost method. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs of disposal. The cost of inventories consist of purchase costs, conversion costs and all other costs incurred in bringing them to their present location and condition.

i.) Raw materialsRaw materials and other bought-in components are measured using the purchase price, import duties, transport, dock charges and other costs directly attributable to its acquisition less trade discounts, rebates and other similar items.

ii.) Work in progress and finished goodsFinished goods and work in progress are measured using standard costs based on weighted average and include cost of raw materials, direct costs and an appropriate portion of production overheads based on normal operating capacity.

iii.) Goods in transitGoods ordered, shipped and awaiting delivery are recognised as goods in transit and are stated at the purchase price plus other incidental costs incurred to date.



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iv.) Spares, fuel and lubricantsSpare parts and servicing equipment are usually carried as inventory and recognised in profit or loss as consumed. However, major spare parts and stand-by equipment qualify as property, plant and equipment when the Company expects to use them during more than one period but only at the point of issue. Similarly, if the spare parts and servicing equipment can be used only in connection with an item of property, plant and equipment, they are accounted for as property, plant and equipment.

2.24 Employee benefits

i.) Short term employee benefitsShort term employee benefit obligations are measured on an undiscounted basis and are expensed as the related services are provided. The Company recognises wages, salaries, social security contributions, bonuses and other allowances for current employees in the profit or loss as the employees render such services. A liability is recognised for the amount expected to be paid under short-term benefits if the Company has a present legal or constructive obligation to pay the amount as a result of past service provided by the employee and the obligation can be estimated reliably.

ii.) Other long-term employee benefit obligationsThe Company’s obligation in respect of long term employee benefits, other than pension plans, is the amount of future benefit the employees have earned in return for their service in the current and prior periods. The benefit is discounted to determine its present value, and the fair value of any related assets is deducted. The discount rate is the yield at the statement of financial position date on high quality rated corporate bonds that have maturity dates approximating the terms of the Company’s obligations. The obligation is calculated using the projected credit unit method. Any actuarial gains and losses are recognised in the profit or loss in the period in which they arise. The Company recognises a liability and an expense for long term service awards where cash is paid to the employee at certain milestone dates in the employee’s career with the Company. The Company also provides 1% of employees gross salary as disability/death in service insurance benefits under the Employee Compensation Act 2010. The charge represents the Company’s obligations under the scheme. The charge is recognised in the profit or loss of the year of incidence.

iii.) Post employment obligations

- Defined contribution plan

A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. In line with the provisions of the Nigerian Pension Reform act 2004, the Company instituted a defined contribution scheme for its employees. The scheme is funded by fixed contributions from the employees and the Company at the rate of 8% and 10% of remunerations respectively. The funds are invested outside the Company through Pension Fund Administrators (PFAs) preferred by the employees. The Company has no legal or constructive obligations to pay further contributions if the fund does not hold



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sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. The matching contributions made by the Company to the relevant PFAs are recognised as employee benefit expenses in the profit or loss when the costs become payable in the reporting periods during which the employees have rendered services in exchange for those contributions. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.

- Defined benefit plan

A defined benefit plan is a pension plan that is not a defined contribution plan. The Company makes an unfunded provision for retirement benefit entitlements due to staff upon disengagement based on their years of service and current emoluments as contained in the staff conditions of service. No other post employment benefit arrangement exists between the Company and the current or past employees. The liability or asset recognised in the statement of financial position in respect of defined benefit pension plans is the present value of the defined benefit obligation at the end of the reporting period. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method.

The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension obligation. Where there is no deep market in such bonds, the market rates on government bonds are used. The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation. This cost is included in employee benefit expense in the statement of profit or loss.

Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in other comprehensive income. They are included in other reserves in the statement of changes in equity and in the statement of financial position. Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognised immediately in profit or loss as past service costs.

2.25 Statement of cash flows

The statement of cash flows shows the changes in cash and cash equivalents arising during the period from operating activities, investing activities and financing activities. The cash flows from operating activities are determined using the indirect method. Profit before tax is therefore adjusted by non-cash items, such as depreciation of property, plant and equipment and amortisation of intangible assets. In addition, all income and expenses from cash transactions that are attributable to investing or financing activities are eliminated.

2.26 Share capital

The Company has only one class of shares; ordinary shares. Ordinary shares are classified as equity. When new shares are issued, they are recorded as share capital at their par value. Any amounts in excess of the par value is recognised in share premium within equity. Incremental costs directly attributable to the issue of new ordinary shares or options are shown in equity as a deduction, net of tax, from the proceeds.



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2.27 Common control transactions

Business combinations in which all of the combining entities or businesses are ultimately controlled by the same party or parties both before and after the business combination (and where that control is not transitory) , are referred to as common control transactions. The accounting policy for the acquiring entity would be to account for the transaction at book values in its consolidated financial statements.

The book values of the acquired entity are the consolidated book values as reflected in the group annual financial statements of the selling entity The excess of the cost of the transaction over the acquirer’s proportionate share of the net asset value acquired in common control transactions, will be allocated to retained earnings in equity. Where comparative periods are presented, the financial statements and financial information are not restated.

2.28 Comparatives

Except when a standard or an interpretation permits or requires otherwise, all amounts are reported or disclosed with comparative information.

3. Critical accounting estimates, judgements and errors

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Company’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed herein.

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results.

a.) Impairment of financial assetsThe loss allowances for financial assets are based on assumptions about risk of default and expected loss rates. The Company uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on the Company’s past history, existing market conditions as well as forward looking estimates at the end of each reporting period. Details of the key assumptions and inputs are disclosed in note 4.3 (a) on credit risk.Sensitivity of the expected credit loss to a 5% inverse and positive change to each forward-looking macro variables, with all other variables held constant is N15.5 million.

b.) Defined benefit obligationThe present value of the pension obligations depends on a number of factors that are determined on an actuarial basis using a number of assumptions. The assumptions used in determining the net cost for pensions include the discount rate. Any changes in these assumptions will impact the carrying amount of pension obligations.



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The Company determines the appropriate discount rate at the end of each year. This is the interest rate that should be used to determine the present value of estimated future cash outflows expected to be required to settle the pension obligations. In determining the appropriate discount rate, the Company considers the interest rates of Federal Government bonds that are denominated in the currency in which the benefits will be paid and that have terms to maturity approximating the terms of the related pension obligation.Other key assumptions for pension obligations are based in pasgt or current market conditions. Addtional information is disclosed in note21.

c.) Deferred taxationThe Company is subject to income taxes within Nigeria, which does not require much judgment in terms of provision for income taxes but a certain level of judgment is required for recognition of the deferred tax assets. Management is required to assess the ability of the Company to generate future taxable economic earnings that will utilize the deferred tax assets. Assumptions over the generation of future taxable profits depends on management’s estimates of future cash flows. This estimate of future taxable income is based on forecast cash flows from operations.

4. Financial risk managemnet

4.1 Financial risk factors

This note explains the Company’s exposure to financial risks and how these risks could affect the Company’s future financial performance.

The Company’s activities expose it to a variety of financial risks; market risk (foreign exchange risk and interest rate risk), credit risk and liquidity risk. The Company analyses each of these risks individually as well as on an interconnected basis and defines strategies to manage the economic impact on the Company’s performance in line with its financial risk management policy. Management meets on a frequent basis and is responsible for reviewing the results of the risk assessment, approving recommended risk management strategies, monitoring compliance with the financial risk management policy and reporting to the board of directors.

4.2 Derivatives

Derivatives are only used for economic hedging purposes. They are classified and measured at fair value through profit or loss. They are presented as current assets or liabilities to the extent they are expected to be settled within 12 months after the end of the reporting period.The Company has the following derivative instruments:

Non-current asset 31 December 2018 31 December 2017

N’000 N’000

Over the counter (OTC) forward contracts 656,500 -



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4.3 Credit risk

Credit risk refers to the risk of a counterparty defaulting on its contractual obligations resulting in financial loss to the Company. The Company’s credit risk arises from cash and cash equivalents, trade and other receivables, and favourable derivative financial instruments.

The management of the Company has credit policies in place to monitor the exposure to credit risk on an ongoing basis. Under the credit policies all customers requiring credit over a certain amount are reviewed and prospective credit customers analysed individually for creditworthiness before the Company’s payment and delivery terms and conditions are offered. Credit limits are established for qualifying customers and these limits are regularly reviewed. Customers that fail to meet the Company’s creditworthiness standards are allowed to transact business with the Company only on a cash basis.

The estimates of deductible allowances for incurred losses on impairment in respect of trade and other receivables are established by the Company. The main components of this allowance are a specific loss component that relates to individually significant exposures and customers with outstanding amounts but who have not placed orders for a period of one year or more. The collective loss allowance is determined based on historical data of payment statistics.

In monitoring customer credit risk, customers are grouped according to their credit mappings, including whether they are individual or corporate entities, whether they are key distributors or retail distributors and the verification of the existence of previous financial difficulties.

Below is a breakdown of the Company’s financial assets that are exposed to credit risk and the maximum credit risk exposure.

Maximum Exposure

31 December 2018 31 December 2017

Cash/ Cash equivalent (note 19) N’000 N’000

17,357,850 8,098,186

Trade receivables - Gross (note 17.2) 27,420,322 15,071,383

Other financial assets 1,871,168 868,526

Total assets bearing credit risk 46,649,340 24,038,095

(a) Impairment losses

(i) Trade receivables

The Company applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade receivables. To measure the expected credit losses, trade receivables have been grouped based on days past due. The expected loss rated are



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based on the payment profiles of sales and the corresponding historical credit losses experienced. The historical loss rates are adjusted to reflect current and forward looking information on macroeconomic factors affecting the ability of the customers to settle the receivables. The Company has identified GDP growth rate and inflation rate in Nigeria to be the most relevant factors, and accordingly adjusts the historical loss rates based on expected changes in these factors.

Set out below is the information about the credit risk exposure on the Company’s trade receivables as at 31 December 2018 using a provision matrix:

31 December 2018

Trade receivables

A Band B Band C Band D Band Total

Days past due 0 - 30 days 31 - 60 days 61 - 90 days 91 - 120 days

N’000 N’000 N’000 N’000 N’000

Estimated total gross carrying amount at default

11,166,537 7,725,393 4,216,271 4,312,121 27,420,322

Expected credit loss rate 0.50% 1.50% 3.00% 36.72%

Expected credit loss 55,833 115,881 126,488 1,583,558 1,881,760

Trade receivables are written off when there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment plan with the Company, and a failure to make contractual payments for a period of greater than 120 days past due. Impairment losses on trade receivables are presented as net impairment losses on the face of the statement of profit or loss. Subsequent recoveries of amounts previously written off are credited against the same line item.

1 January 2018

Trade receivables

A Band B Band C Band D Band Total

Days past due 0 - 30 days 31 - 60 days 61 - 90 days 91 - 120 days

N’000 N’000 N’000 N’000 N’000

Estimated total gross carry-ing amount at default 9,199,563 1,226,004 648,839 3,969,562 15,043,967

Expected credit loss rate 0.50% 1.50% 3.00% 87.13%

Expected credit loss 45,998 18,390 19,465 3,458,504 3,542,357



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(ii) Other financial assets at amortised costAs at 31 December 2018, other financial assets at amortised cost include cash and cash equivalents, amount due to related parties and other receivables. The Company expects the total amount to be recovered. The identified impairment loss on these financial assets are immaterial and have not been recognised.

An aged analysis of trade receivables as at 31 December 2017 is presented as follows: 31 December 2017

Trade receivables N’000

Neither past due nor impaired 7,388,782

- 1 - 30 days 2,542,992

- 30 - 60 days 1,511,742

- 60 - 90 days 85,510

Total past due but not impaired trade receivables 4,140,244

- 60 - 90 days 570,249

- 90 - 180days 465,438

Above 180 days 2,506,670

Impairment (3,542,357) -

Total trade receivables - Net 11,529,026

Reconciliation of impairment provision is disclosed in note 17.4.

Individual receivables which are known to be uncollectible are written off by reducing the carrying amount directly. Other receivables are assessed collectively to determine whether there is objective evidence that an impairment has been incurred but not yet been identified. For these receivables the estimated impairment losses are recognised in a separate provision for impairment. The Company considers that there is evidence of impairment if any of the following indicators are present:

- significant financial difficulties of the debtor,- probability that the debtor will enter bankruptcy or financial reorganisation, and - default or delinquency in payments (more than 30 days overdue).

Receivables for which an impairment provision was recognised are written off against the provision when there is no expectation of recovering additional cash.



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(b) Credit quality of financial assets

An analysis of the credit quality of cash and cash equivalents that are neither past due nor impaired is presented as follows:

Credit quality of cash and cash equivalents 31 December 2018

31 December 2017

Credit Ratings N’000 N’000

AAA 12,165,039 5,885,998

AA 1,926,764 1,461,376

A 191,649 128,686

BBB 2,538,045 13,711

BB -26,252 510,994

B 154,855 -

Other 407,750 97,422

17,357,850 8,098,186

Definitions of ratings

AAA‘AAA’ ratings denote the lowest expectation of default risk. They are assigned only in cases of exceptionally strong capacity for payment of financial commitments. This capacity is highly unlikely to be adversely affected by foreseeable events.

AAA financial institution of good condition and strong capacity to meet its obligations with expectations of very low default risk. It indicates very strong capacity for payment of financial commitments. This capacity is not significantly vulnerable to foreseeable events.

AA financial institution of good condition and strong capacity to meet its obligations. Adverse changes in the environment (macro-economic, political and regulatory) will result in a medium increase in the risk attributable to an exposure to this financial institution. However, financial condition and ability to meet obligations as and when due should remain largely unchanged.

BBB‘BBB’ ratings indicate that expectations of default risk are currently low. The capacity for payment of financial commitments is considered adequate, but adverse business or economic conditions are more likely to impair this capacity.

BB‘BB’ ratings indicate an elevated vulnerability to default risk, particularly in the event of adverse changes in business or economic conditions over time; however, business or financial flexibility exists that supports the servicing of financial commitments.

B‘B’ ratings indicate that material default risk is present, but a limited margin of safety remains. Financial condition is weak but obligations are still met as and when due. Has more than one major weakness and may require external support which may not be assured. Adverse changes in the environment (macro-economic, political and regulatory) will increase risk significantly.

Others This indicates financial institutions or other counterparties with no available ratings and cash in hand.

(c) Credit concentration

There are no significant concentrations of credit risk, whether through exposure to individual customers, specific industry sectors and/or regions.



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4.4 Liquidity risk

(a) Management of liquidity riskCash flow forecasting is performed by the Finance Manager to monitor the Company’s liquidity requirements and to ensure it has sufficient cash to meet operational needs. Such forecasts take into consideration the Company’s committed plans and internal and administrative cash flow requirements.

The Company has incurred indebtedness in the form of trade payables. The Company evaluates its ability to meet its obligations on an ongoing basis. Based on these evaluations, the Company devises strategies to manage its liquidity risk.

Prudent liquidity risk management implies that sufficient cash is maintained and that sufficient funding is available through an adequate amount of committed credit facilities. Surplus cash held by the Company over and above the balance required for working capital management are transferred to the treasury unit and invested in short term fixed deposit accounts.

(b) Maturities of financial liabilities

Below is the analysis of the Company’s financial liabilities into relevant maturity groupings based on the remaining period at the reporting date.

The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant.

31 December 2018 Less than3 months 3 months - 1 year Above 1 year Total

N’000 N’000 N’000 N’000

Trade payables (note 20) - 11,925,626 - 11,925,626

Borrowings (note 22) 28,386,435 35,052,442 153,738,160 217,177,037

Accrued expenses (note 20) - 16,780,264 - 16,780,264

Amount due to related parties (note 27) - 20,714,990 - 20,714,990

Unclaimed dividends 175,963 - - 175,963

28,562,398 84,473,322 153,738,160 266,773,880

31 December 2017 Less than3 months 3 months - 1 year Above 1 year Total

N’000 N’000 N’000 N’000

Trade payables (note 20) - 39,358,862 - 39,358,862



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Borrowings (note 22) 8,561,718 30,976,012 161,556,781 201,094,511

Accrued expenses (note 20) - 6,359,315 - 6,359,315

Amount due to related parties (note 27) - 44,349,369 - 44,349,369

Unclaimed dividends 147,489 - - 147,489

8,709,207 121,043,558 161,556,781 291,309,546

4.5 Market risk

(i.) Foreign exchange risk

Foreign exchange risk is the risk that the financial results of the Company will be adversely impacted by unfavourable changes in exchange rates to which the Company is exposed. The Company is exposed to risks resulting from fluctuations in foreign currency exchange rates. A change in the value of any such foreign currency could have an effect on the Company’s cash flow and future profits. The Company is exposed to exchange rate risk to the extent of balances and transactions denominated in foreign currency.

Foreign currency denominated balances 31 December 2018

31 December 2017

N’000 N’000

Cash and cash equivalents 1,468,329 -

Trade and other payables (32,054,668) (46,858,153)

Borrowings (424,000) -

(31,010,339) (46,858,153)

Sensitivity analysis for foreign exchange risk

Foreign exchange risks arise from future commercial transactions and recognised assets. The Company makes payments and receipts primarily in Nigerian Naira. The Company is exposed to exchange rate risks to the extent of balances and transactions denominated in a currency other than the Naira. The Company’s significant balances are denominated in US Dollars, however, the company has balances in South African Rand, Euro and Pounds.

31 December 2018

31 December 2017

Impact on profit or loss N’000 N’000



109

5% increase in exchange rates (1,550,517) (2,342,908)

5% decrease in exchange rates 1,550,517 2,342,908

(ii.) Interest rate risk

The Company’s main interest rate risk arises from long-term borrowings with variable rates, which expose the Company to cash flow interest rate risk. The Company is exposed to interest rate risk to the extent of balances and transactions.

Sensitivity analysis for interest rate riskBelow is the likely impact of changes in the interest rates:

31 December 2018

31 December 2017

Impact on profit or loss N’000 N’000

5% increase in interest rates 801,482 224,151

5% decrease in interest rates (801,482) (224,151)

(iii.) Price risk

This is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk). The Company is not exposed to price risk

4.6 Capital management

The Company’s objectives when managing capital are to safeguard its ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders, and to maintain an optimal capital structure. The Company monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings (including ‘current and non-current borrowings’ as shown in the statement of financial position) less cash and cash equivalents. Total capital is calculated as the sum of all equity components on the statement of financial position.

The gearing ratios were as follows:



110

31 December 2018 31 December 2017

N’000 N’000

Borrowings (note 22) 217,177,037 88,042,663

Cash & Cash equivalent (note 19) (17,357,850) (8,098,186)

Net debt 199,819,187 79,944,477

Total equity 35,160,923 39,225,363

Total capital 234,980,110 119,169,840

Gearing ratio 85% 67%

4.7 Fair value

IFRS 13 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable input reflect market data obtained from independent sources; unobservable inputs reflect the Company’s market assumptions.

At the reporting date, the Company valued its derivatives as measured at fair value in the level 2 fair value hierarchy. The carrying amounts of all other financial assets and liabilities at the reporting date approximate their fair values.

4.8 Offsetting financial assets and financial liabilities

There are no offsetting arrangements. Financial assets and liabilities are settled and disclosed on a gross basis.

5 Revenue 31 December 2018

31 December 2017

N’000 N’000



111

Net revenue from contracts with customers 120,610,825 36,527,807

The group derives revenue from the transfer of goods and services at a point in time.

Disaggregation of revenue from contracts with customers 31 December 2018

31 December 2017

N’000 N’000

Key accounts 7,433,934 -

Distributors 113,176,891 36,527,807

120,610,825 36,527,807

6 Cost of sales 31 December 2018

31 December 2017

N’000 N’000

Materials consumed and allocated overheads 55,523,367 19,034,878

Employee benefit expenses 2,374,127 554,774

Technical management fees 2,780,263 717,224

Amortisation of container 7,677,725 1,460,282

Depreciation - plant machinery 4,915,098 1,052,763

73,270,580 22,819,921

7 Administrative expenses 31 December 2018

31 December 2017

N’000 N’000

Employee benefit expenses 4,588,953 1,280,691

Other staff related costs 2,148,042 419,372

Staff recruitment and training expenses 215,374 100,581

Audit fee 59,609 28,838

Corporate social responsibilities & donations 116,400 75,075

Business running costs 4,391,995 536,113

Depreciation 4,295,335 986,941

Amortisation 67,412 19,045

15,883,120 3,446,657



112

The Company paid the sum of one hundred thousand naira (N100,000) as default fees on late filing of its 2017 audited financial statements. This amount has been presented within business running costs in administrative expenses.

7.1 Depreciation expense 31 December 2018

31 December 2017

N’000 N’000

Reported in cost of sales 12,592,823 1,052,763

Reported in administrative expenses 4,295,335 986,941

16,888,158 2,039,704

8 Marketing, promotion and distribution expenses

31 December 2018

31 December 2017

N’000 N’000

Transportation and distribution 11,223,003 3,271,726

Employee benefit expense 1,883,552 896,516

Advertising and promotion 7,859,505 1,918,478

20,966,060 6,086,720

8.1 Employee benefits expenses 31 December 2018

31 December 2017

N’000 N’000

Salaries and wages 7,778,096 2,420,854

Defined contribution 193,765 40,741

Defined benefit 874,771 270,386

Employee benefit expenses 8,846,632 2,731,981

8.2 Employee benefit expenses 31 December 2018

31 December 2017

N’000 N’000

Reported in cost of sales 2,374,127 554,774

Reported in administrative expenses 4,588,953 1,280,691

Reported in marketing, promotion and distribution expenses 1,883,552 896,516

8,846,632 2,731,981



113

9 Other income 31 December 2018

31 December 2017

N’000 N’000

Waste and scrap sales 32,351 6,298

Fair value gain on derivatives 759,485 -

Sundry income 15,658 117,089

807,494 123,387

10 Other losses - net 31 December 2018

31 December 2017

N’000 N’000

Net foreign exchange loss (2,101,267) (2,030,962)

Loss on disposal of asset - (6,959)

Net foreign exchange loss (1,064,845) (413,384)

(3,166,112) (2,451,305)

10.1 Net foreign exchange loss - realised 31 December 2018

31 December 2017

N’000 N’000

Foreign exchange gain - realised (1,885,633) -

Foreign exchange loss - realised 3,986,900 2,030,962

2,101,267 2,030,962

10.2 Net foreign exchange loss - unrealised 31 December 2018

31 December 2017

N’000 N’000

Foreign exchange gain - unrealised - -

Foreign exchange loss - unrealised 1,064,845 413,384

1,064,845 413,384

11 Finance income and costs 31 December 2018

31 December 2017

N’000 N’000

Finance income

Interest income 84,265 532,971

Finance costs

Interest expense on borrowings (16,029,632) (4,483,029)

Finance costs - net (15,945,367) (3,950,058)



114

12 Current income tax and deferred tax

31 December 2018

31 December 2017

N’000 N’000

12.1 Current income tax

Income tax - -

Education tax 161,963 129,884

Total current income tax 161,963 129,884

Deferred income tax credit to profit or loss (4,344,977) (4,758,820)

Total credit to profit or loss (4,183,014) (4,628,936)

12.2 Reconciliation of effective tax rate 31 December 2018

31 December 2017

N’000 N’000

Profit before tax (8,049,312) (3,233,711)

Tax at Nigeria corporation tax rate of 30% (2017: 30%) (2,414,794) (970,113)

Education tax at 2% of assessable profit 161,963 129,884

Expense giving rise to permanent difference (1,930,183) (3,788,707)

(4,183,014) (4,628,936)

Provision for income tax is computed on the basis of Companies Income Tax rate of 30% in accordance with the provisions of Companies Income Tax Act. Education tax represents 2% of assessable profit in accordance with the provisions of the Education Tax Act.

12.3 Current income tax (asset)/liability 31 December 2018

31 December 2017

N’000 N’000

At 1 January 2,634,192 1,422,602

Provision for the year 161,963 129,884

Payment during the year (1,350,564) -

Group reorganisation - 1,081,706

At 31 December 1,445,591 2,634,192



115

12.4 Deferred income tax

Deferred taxes are calculated on all temporary differences using the liability method and an effective tax rate of 30%. Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. The analysis of deferred tax (assets) and deferred tax liabilities is as follows:

31 December 2018

31 December 2017

N’000 N’000

Deferred tax assets:

-Deferred tax assets to be settled within 12 months 189,618 20,298,380

189,618 20,298,380

Deferred tax liabilities:

-Deferred tax liabilities to be settled after more than 12 months - 24,453,739

Deferred assets/(liabilities) - net 189,618 (4,155,359)

Deferred tax assets Tax losses Employee benefits Provisions Others Total

The gross movement on the deferred income tax account is as follows: N’000 N’000 N’000 N’000 N’000

At 31 December 2017 819,460 227,461 - 18,647,997 19,694,918

(Charged)/credited to profit or loss 40,718,967 (227,461) 1,398,329 (18,307,247) 23,582,588

At 31 December 2018 41,538,427 - 1,398,329 340,750 43,277,506

Deferred tax liabilitiesProperties,

plant and equipment

Other Prop-erties, plant and equip-

ment

Total

The gross movement on the deferred income tax account is as follows: N’000 N’000 N’000

At 31 December 2017 24,275,600 178,139 24,453,739

(Charged)/credited to profit or loss 19,171,412 (178,139) 18,993,273

At 31 December 2018 43,447,012 - 43,447,012



116

31 December 2018

31 December 2017

The gross movement on the deferred income tax account is as follows: N’000 N’000

At 1 January (4,155,359) (8,914,179)

Credit to profit or loss 4,344,977 4,758,820

At 31 December 189,618 (4,155,359)

13 Group reorganisation

In August through to November 12, 2017, AB InBev acquired 72.17% of SABMiller shares in International Breweries Plc in a series of gobal transactions which resulted in AB InBev acquiring controlling interests in the company. On November 13, 2017, a merger arrangement was consummated between International Breweries Plc and two other entities namely, Intafact Beverages Limited and Pabod Breweries Limited all controlled by AB Inbev.

The predecessor value method of accounting for the merger was adopted as the three companies are under common control and the control is not transitory as enunciated in IFRS 3 which scopes out of its purview, business combinations by such companies under common control. The scheme of merger clearly states that the merged entities are categorized as business combinations under common control (BCUCC). The identified basis for categorizing the merged entities as under common control includes:

• The merged entities are ultimately controlled by ABInBev• The common control is not transitory,• Consequent upon the merger, ABInBev possesses the power to govern the

financial and operating policies of the merged entities for the purposes of obtaining benefits from the Company‘s activities.

• The extent of non controlling interest in each of the merged entities, both before and after the business combination is not significant as to determine whether the combination involves entities under common control.

Under the predecessor value method adopted, goodwill is not recognised on acquisition. The net tangible and intangible assets acquired and liabilities assumed in the acquisition of Pabod Breweries Limited and Intafact Beverages Limited was deemed to be the purchase price on the acquisition date and presented in the common control reserve transferred to retained earnings on consolidation. As at 31 December 2017, the Company incurred a total sum of N897million on acquisition related costs, consisting mainly of filing fees and professional services fees. These amounts have been reflected in the respective expense accounts in the statement of profit or loss and other comprehensive income.



117

Restated

Intafact Pabod Total Remeasure-ment Total

Assets N’000 N’000 N’000 N’000 N’000

Property, plant and equipment 86,881,854 42,752,699 129,634,553 (1,139,716) 128,494,837

Deferred tax asset - 1,786,642 1,786,642 - 1,786,642

Trade and other receivables 8,138,986 5,948,499 14,087,486 - 14,087,486

Inventories 6,731,556 3,413,145 10,144,701 - 10,144,701

Cash and cash equivalents 1,036,415 2,575,862 3,612,277 - 3,612,277

Total Assets 102,788,811 56,476,847 159,265,658 (1,139,716) 158,125,942

Liabilities

Deferred tax liabilities 7,245,988 - 7,245,988 - 7,245,988

Employee benefit liability - - - 793,719 793,719

Borrowings 31,342,983 37,277,953 68,620,936 - 68,620,936

Trade and other payables 38,081,112 17,168,004 55,249,116 - 55,249,116

Current tax liabilities 1,026,434 55,272 1,081,706 - 1,081,706

Total liabilities 77,696,517 54,501,228 132,197,745 793,719 132,991,464

Net assets transferred 25,092,294 1,975,619 27,067,913 (1,933,435) 25,134,478

The purchase transaction accounted for under the predecessor values method of accounting which requires, among other items, that assets and liabilities assumed be recognized in the combined statement of financial position at the previous carrying value as of the acquisition date. Therefore, the combined statement of financial position for the period after the acquisition includes the following price allocation based on the previous financial costs.



118

Land and buildings

Plant and machinery

Vehicles, furniture and

equipment

Returnable containers

Assets in course of

construction

Total

N’000 N’000 N’000 N’000 N’000 N’000

Cost:

As at 1 January 2018 25,434,810 75,708,486 6,758,894 38,437,054 65,217,977 211,557,221

Additions - - - - 69,772,968 69,772,968

Transfers from asset in course of construction

21,202,119 73,560,955 2,645,321 21,998,136 (119,406,531) -

Write off - (763,086) (2,452,752) - - (3,215,838)

Disposals - - - - - -

As at 31 December 2018 46,636,929 148,506,355 6,951,463 60,435,190 15,584,414 278,114,351

As at 1 April 2017 3,446,302 21,444,687 1,432,152 9,271,793 4,975,194 40,570,128

Group reorganisation 12,331,707 29,894,233 3,506,646 18,749,796 64,012,455 128,494,837

Additions 212,001 1,088,660 358,064 9,886,870 31,672,078 43,217,673

Reclassification 9,444,800 23,281,290 1,497,273 1,218,387 (35,441,750) -

Disposals - (384) (35,241) (689,792) - (725,417)

As at 31 December 2017 25,434,810 75,708,486 6,758,894 38,437,054 65,217,977 211,557,221

Accumulated Depreciation

As at 1 January 2018 410,414 6,902,535 999,477 13,062,887 - 21,375,313

Depreciation for the year 923,751 5,804,037 2,482,645 7,677,725 - 16,888,158

Write off - (763,086) (2,452,752) (306,939) - (3,522,777)

Disposals - - - - - -

As at 31 December 2018 1,334,165 11,943,486 1,029,370 20,433,673 - 34,740,694

As at 1 April 2017 278,019 5,413,961 607,636 2,695,304 - 8,994,920

Depreciation for the year 132,395 1,488,814 415,382 3,114 - 2,039,705

Impairment - - - 10,558,701 - 10,558,701

Disposals - (240) (23,541) (194,232) - (218,013)

As at 31 December 2017 410,414 6,902,535 999,477 13,062,887 - 21,375,313

Net book value

At as 31 December 2018 45,302,764 136,562,869 5,922,093 40,001,517 15,584,414 243,373,657

At as 31 December 2017 25,024,396 68,805,951 5,759,417 25,374,167 65,217,977 190,181,908

At as 1 April 2017 3,168,283 16,030,726 824,516 6,576,489 4,975,194 31,575,208

14. Property, Plant and Equipment



119


Intangible assets relate to computer software programme licenses acquired by the Company. These costs are amortised to profit or loss using the straight-line method over their estimated useful lives. The costs are amortised to “administrative expenses” in the profit or loss.

15. Intangible assets31 December

201831 December

2017

Computer software Cost N’000 N’000

Opening balance 480,493 83,779

Additions 102,326 396,714

As at 31 December 582,819 480,493

Accumulated amortisation

Opening balance 47,901 28,856

Charge for the year 67,412 19,045

As at 31 December 115,313 47,901

Net book value 467,506 432,592

16. Inventories"31 December

2018""31 December

2017"

N'000 N'000

Raw materials 9,500,425 7,026,464

Spares parts, fuel and lubricants 3,716,848 2,764,866

Production in progress 4,508,624 1,066,096

Consumables 73,817 91,033

Finished products 1,997,732 2,763,912

Stationeries 60,095 2,492,415

19,857,541 16,204,786

16.1 Spares parts, fuel and lubricants"31 December

2018""31 December

2017"

N'000 N'000


Provision for obsolete inventory (528,201) -

3,716,848 2,764,866


120


17. Trade and other receivables "31 December 2018"

"31 December 2017"

N'000 N'000


Provision for obsolete inventory (528,201) -

3,716,848 2,764,866

17.1 Trade receivables 27,420,322 15,071,383

Impairment provision on trade receivables (1,881,760) (3,542,357)

Net trade receivables 25,538,562 11,529,026

17.2 Other financial assets at amortised cost (2017: other loans and receivables)

Amount due from related parties (note 27) 275,284 623,403

Staff receivables - 23,739

Other receivables 1,595,884 221,384

1,871,168 868,526

17.3 Non-financial assets

Deposit for supplies - 1,663,642

Prepayments 966,518 3,170,585

966,518 4,834,227

Total trade and other receivables 28,376,248 17,231,779

" 31 December 2018 "

"31 December 2017"

N'000 N'000

Current 28,330,564 15,750,189

Non current 45,684 1,481,590

28,376,248 17,231,779

17.4 Impairment provision analysis " 31 December 2018 "

"31 December 2017"

N'000 N'000

Opening balance 3,542,357 112,215

Reorganisation - 2,309,925

3,542,357 2,422,140

Write-off during the year (1,896,989) (10,027)

Increase in allowance 236,392 1,130,244

Balance at 31 December 1,881,760 3,542,357


121

18 Derivative asset"31 December

2018""31 December

2017"

N'000 N'000

OTC forward contract 656,500 -

Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequent-ly remeasured to their fair value at the end of each reporting period through profit or loss.

19 Cash and cash equivalents" 31 December

2018 "" 31 December

2017 "

N'000 N'000

Cash in hand 4,945 8,996

Cash at bank 7,779,616 8,089,190

Restricted cash* 9,573,289 -

17,357,850 8,098,186

The company classifies its cash on hand and in bank, and investments in short term liquid instruments as cash and cash equivalents.

*Restricted cash is collateral deposit held by the bank till the maturity date of forward contracts.

19.1 Reconciliation to cash flow statement

The above figures reconcile to the amount of cash shown in the statement of cash flows at the end of the financial year as follows:

"31 December 2018"

"31 December 2017"

N'000 N'000

Balances as above 17,357,850 8,098,186

Bank overdraft (28,386,435) (19,766,602)

Balances per statement of cash flows (11,028,585) (11,668,416)

20. Trade and other payables" 31 December

2018 "" 31 December

2017 "

N'000 N'000

Trade payable 11,925,626 39,358,862

Accrued expenses 16,780,264 6,359,315

Customers' deposit - 3,159,025

Amount due to related parties 20,714,990 44,349,369

Other payable 4,398,124 2,146,230

Unclaimed dividends 175,963 147,489

53,994,967 95,520,290



122

20.1 Other payables " 31 December 2018 "


N'000 N'000

Other provisions 1,002,597 1,053,562

Excise duty 1,621,501 368,361

VAT payable 444,325 724,307

WHT Payable 1,329,701 -

4,398,124 2,146,230

Trade payables are unsecured and are usually paid within 30 days of recognition. The carrying amounts of trade and other payables are considered to be the same as their fair values, due to their short-term nature.

21. Employee benefits obligation

International Breweries Plc operates contributory pension scheme under the Nigerian Pension Reform Act, 2014. Contributions are through appointed Pension Fund Administrators that provide pension benefits for employees upon retirement.

Provision is made for gratuities due to staff upon disengagement based on their years of service and current emoluments as contained in the staff conditions of service. The Company makes provisions for gratuity for employees that have spent at least 5 years continuing service in the Company. The mandatory retirement age for all staff is 60 years.

For pension, the Company’s legal or constructive obligation for these plans is limited to the contributions.. Contribution is based on total emoluments (basic salary, transport, housing and meal allowances).

Expected contributions to post-employment benefit plans for the year ending 31 December 2019 are N71.2 million.



123

21.1 Amount recognised in the statement of financial position

Movement in the present value of the defined benefit obligation

"31 December 2018"

"31 December 2017"

"31 March 2017"

N'000 N'000 N'000

Defined benefit obligation at 1 January 2,571,384 998,902 424,859

Current service costs 511,444 109,402 590,058

Interest cost 363,327 160,984 -

Amount recognised in the profit or loss 874,771 270,386 590,058

Remeasurement gain due to assumption changes (496,672) (498,220) -

Remeasurement loss due to experience adjustment 694,814 1,019,361 -

Remeasurements losses recognised in other comprehensive income 198,142 521,141 -

Contributions:

Benefits paid by the plan (1,143,895) (12,764) (16,015)

Group reorganisation - 793,719 -

Defined benefit obligation at 31 Decem-ber 2,500,402 2,571,384 998,902

21.2 Actuarial assumption and sensitivity analysis

a Actuarial assumption " 31 December 2018 "


" 31 March 2017 "

*Discount Rate 15.75% 14.25% 16.00%

Average Long-term Rate of Future Salary Increases (p.a.)

12% 12% 12%

Mortality in Service

Turnover Rates

4.0% up to 29yrs

3% from 30 to 39yrs

2% from 40 to 44yrs

1% from 45 to 54yrs

0% above 54 yrs

Actuarial Cost Method Projected Unit Credit



124

The liability duration of the Gratuity Plan is estimated at 16.51 years (2017: 14.94 years). We have compared this with the modified duration of the closest FGN bond as at 30th November 2018 which was 5.91 years with a gross redemption yield of about 15.74 %. We have therefore adopted a discount rate of 15.75% (2017: 14.25%)

b Sensitivity analysis

Reasonable possible changes at the reporting date to one of the relevant actuarial assumptions, holder other assumptions constant, would have affected the defined benefit obligation by the amounts shown below:



" 31 March 2017 "

N'000 N'000 N'000

Basic assumptions 2,500,402 2,571,384 998,902

Discount rate +1% 2,177,686 2,268,427 901,911

-1% 2,888,227 2,933,266 1,111,870

Salary increase +1% 2,910,561 2,950,733 1,120,083

-1% 2,156,102 2,250,213 893,855

Age Rated Up by 1 year 2,501,896 2,571,360 999,691

Age Rated Down by 1 year 2,499,031 2,571,379 998,185

The sensitivity analysis does not take account of the full distribution of cash flows expected under the plan, it does provide an approximation of the assumptions shown. The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period.

c Risk exposure

Through its defined benefit, the group is exposed to a number of risks, the most significant of which are detailed below:

Inflation risks Some of the Company’s pension obligations are linked to salary inflation, and higher inflation will lead to higher liabilities (although, in most cases, caps on the level of inflationary increases are in place to protect the plan against extreme inflation).

Life expectancy The majority of the plans’ obligations are to provide benefits for the life of the member, so increases in life expectancy will result in an increase in the plans’ liabilities. This is particularly significant in the Company’s plan, where inflation-ary increases result in higher sensitivity to changes in life expectancy.



125

22. Borrowings

During the year, there was a term loan facility agreement with Zenith bank and Citibank. The Zenith bank loan amounting to N30 billion with a maturity date for the facility obtained to be one year from the date of the financial close (i.e. the date upon which the Lender has confirmed to the obligors that all of the conditions precedent to utilization, in which case, the borrower has received all of the documents and other evidences required in form and substance satisfactory to the lender).

Citibank loan of $424m was obtained during the year with maturity date of May 2021. The Company has entered into non deliverable forward contracts to mitigate the forex risk on the contractual interest and principal repayments.

Interest rates on the Company’s loans range from 21% to 23%. The Company’s borrowings are for a period ranging from one year to three years.

"31 December 2018"

"31 December 2017"

N'000 N'000

(a) Current

Bank overdrafts 28,386,435 19,766,602

Term bank loan 35,052,442 50,105,072

63,438,877 69,871,674

(b) Non Current "31 December 2018"

"31 December 2017"

N'000 N'000

Term bank loan 153,738,160 18,170,989

22. Movement in borrowings (excluding bankdrafts)

"31 December 2018"

"31 December 2017"

N'000 N'000

At 1 January 68,276,061 8,123,632

Reorganisation - 49,888,106

Addition 254,798,160 20,832,300

Accrued interest 16,029,632 4,483,029

Repayment (150,313,251) (15,051,006)

188,790,602 68,276,061



126

23. Share capital "31 December 2018"

"31 December 2017"

N'000 N'000

Authorised:

8,600,000,000 Ordinary shares of 50 kobo each 4,300,000 4,300,000

Issued and fully paid:

8,595,861,920 Ordinary shares of 50 kobo each 4,297,931 4,297,931

24. Share premium"31 December

2018""31 December

2017"

N'000 N'000

Balance as at 31 December 6,160,731 6,160,731

25. Earnings per share

Basic earnings per share (EPS) is calculated by dividing the profit after taxation by the weighted average number of ordinary shares in issue at the end of the reporting period.



(Loss)/profit attributable to shareholders (N'000) (3,866,298) 1,395,225

Weighted average number of ordinary shares in issue ('000) 8,595,862 8,595,862

Basic and diluted (loss)/earnings per share (Naira) (0.45) 0.16

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. There were no potentially dilutive shares at the reporting date (2017: Nil), hence the basic and diluted earnings per share have the same value.



127

26 Cash generated from operating activities

"31 December 2018"

"31 December 2017"

26.1 Reconciliation of cash generated from operations N'000 N'000

Loss before tax (8,049,312) (3,233,711)

Adjustment for non cash items:

Depreciation of property, plant and equipment (note 14) 16,888,158 2,039,704

Amortisation of intangible assets (note 15) 67,412 19,045

Fair value gain on derivatives (note 10) 656,500 -

Interest income (84,265) (532,971)

Interest expense 16,029,632 4,483,029

Impairment of property, plant and equipment (note 14) - 10,558,701

Employee benefit expense (note 21.1) 874,771 270,386

Loss on disposal of property plant and equipment (note 26.2) - 6,959

Impairment loss on financial assets 236,392 1,130,244

Unrealised exchange loss (note 11) 1,064,845 -

Changes in working capital:

(Increase)/decrease in trade and other receivables (11,380,861) 6,406,263

Increase in inventories (3,652,755) (2,224,761)

(Decrease)/increase in trade and other payables (41,525,323) 27,492,742

Net cash generated from operations (28,874,806) 46,415,631



128


26.2An analysis of loss on disposal of property, plant and equipment is shown below:

"31 December 2018"

"31 December 2017"

N'000 N'000

Proceeds from disposal of Property, plant and equipment - 500,445

Net book value of property, plant and equipment disposed (note 14) - (507,404)

Loss on disposal of property plant and equipment - (6,959)

26.3 Reconciliation to cashflows: Changes in working capital

Trade receivables Inventories Trade payables

2017 N'000 N'000 N'000

Movement per the statement of financial position 8,811,467 12,369,462 82,741,858

Impairment of financial assets (1,130,244) - -

Non cash adjustment: Reorganisation (14,087,486) (10,144,701) (55,249,116)

Movement per statement of cash flows (6,406,263) 2,224,761 27,492,742

27. Related parties

The company’s related parties include the ultimate parent company, AB InBev, SAB-Miller Finance BV and SAB-Miller Plc a subsidiary of AB InBev; its group entities; the directors, their close family members and employees who are able to exert a significant influence on the company’s operating policies. These may also include key management personnel having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly.

Brauhaase International Management GMBH and its ultimate holding company as at 31 December, 2018 held an equity interest of 72.17% in International Breweries Plc.

During the year, transactions with companies related to the ultimate holding company were in respect of the following:


129


a) Rendering of services" 31 December

2018 "" 31 December

2017 "

N'000 N'000

Amount due from parent 275,284 -

Amount due from fellow subsidiaries - 623,403

Total receivables from related parties 275,284 623,403

Amount due to parent - -

Amount due to fellow subsidiaries 20,714,990 44,349,369

Total payables to related parties 20,714,990 44,349,369

All outstanding balances with these related parties are priced on arm‘s length basis and are to be settled within the agreed periods. None of the balances are secured and do not bear interest.

b) Key management compensation

Key Management Personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly. These persons make up the board of directors. The compensation paid or payable to key management for employee services is shown below:

"31 December 2018"

"31 December 2017"

N'000 N'000

The emoluments of the highest paid director 18,591 7,854

Salaries and other short term employee benefits 62,456

Post - employment benefits 5,681

68,137 -

The emoluments of the directors were within the bands stated below:

"31 December 2018"

"31 December 2017"

Number Number

0 - 5,000,000 - 3

5,000,001 - 15,000,000 6 3

Above 15,000,000 1 -

7 6

The directors who did not earn emolument waived their right to receive emolument.


130


28 Employees

i) The average number of persons (excluding directors) employed by the Company during the year was as follows:

"31 December 2018"

"31 December 2017"

Number Number

Management 436 126

Non-management 1,813 1,322

2,249 1,448

ii) The table below shows the number of employees (excluding directors), who earned over N400,000 as emoluments in the year and were within the bands stated.

"31 December 2018"

"31 December 2017"

Number Number

400,000 - 1,500,000 28 11

1,500,000 - 3,000,000 877 585

3,000,001 - 4,500,000 831 668

Above 4,500,000 513 184

2,249 1,448

29 Restatements for error

To enhance the comparability of information and correct prior period error, changes were made to the presenta-tion and amount of certain items in the financial statements. The restated financial statement line items are shown below:

Opening period 31 March 2017 Reclassification Remeasurement 1 April 2017 (Restated)

N'000 N'000 N'000 N'000

Non current assets

Property, plant and machinery (note a) 31,748,068 - (172,860) 31,575,208

Non current liabilities

Employee benefit obligation (note b) 509,803 - 489,099 998,902

Other payables (note c) 136,522 (136,522) - -

Current Liabilities

Employee benefit (note d) 165,438 (165,438) - -


131

Trade and other payables(note c & d) 12,476,472 301,960 - 12,778,432

13,288,235 - 489,099 13,777,334

Equity

Retained earnings 4,710,148 - (661,959) 4,048,189

13,749,685 - - 13,749,685

Comparative period 31 December 2017 Reclassification Remeasurement 31 December

2017 (Restated)

N'000 N'000 N'000 N'000

Non current assets

Property, plant and machinery (note a) 191,554,977 - (1,373,069) 190,181,908

Non current liabilities

Employee benefit obligation (note b) 793,826 - 1,777,558 2,571,384

Other payables (note c) 147,489 (147,489) - -

Current Liabilities

Employee benefit (note d) 544,620 (544,620) - -

Trade and other payables(note c & d) 5,814,695 692,109 - 6,506,804

Current tax liabilities 2,634,192 - 1,553,746 4,187,938

9,934,822 - 3,331,304 13,266,126

Equity

Retained earnings

- Adjustment on container amor-tisation (1,180,420) 1,180,420 - -

- Pre-merger tax provisions (1,081,705) 1,081,705 - -

- Group reorganisation 29,330,038 (2,262,125) (1,097,361) 25,970,552

- Opening retained earnings 4,710,148 - (661,959) 4,048,189

- Profit for the year 1,429,318 - (1,587,838) (158,520)

Other reserves -

- Group reorganisation - - (836,074) (836,074)

- Reserve for the year - - (521,141) (521,141)

35,469,504 - (4,704,373) 28,503,006

146,150,651 - - 148,412,776



132

Statement of profit or loss and other comprehensive income

31 December 2017 Remeasurement 31 December

2017 (Restated)

N'000 N'000 N'000

Administrative expenses

Employee benefit expense (note b) 1,307,092 (26,401) 1,280,691

Depreciation (note a) 926,449 60,492 986,941

Income tax expense 129,884 1,553,746 1,683,630

Other comprehensive income

Remeasurements of post employment benefits(note b) - (521,141) (521,141)

Notes to the restatement

a) Property, plant and equipment (PPE): Depreciation relating to prior periods were charged in the current year ended 2018. PPE has been adjusted to correctly reflect the the appropriate net book value as at 31 March 2017 and 31 December 2017. This resulted in an increase in PPE of N172million and N1.3billion in the opening and comparative periods respectively.

b) Employee benefit obligation: The Company engaged of an actuary to determine the Company’s obligation under the defined benefit scheme. Adjustments have been made t appropriately reflect the balances per the actuarial valu-ation report for the opening and comparative periods.

c) Non current other payables representing unclaimed dividend has been reclassified to current trade and other pay-ables as these dividends as payable on demand in the opening and comparative period.

d) Amounts payable to employees was presented on the face of the statement of financial position as employee ben-efit. The Company has reclassified these amounts in opening and comparative periods to trade and other payables.

29 Contingent liabilities and commitments

At the statement of financial position reporting date, there was legal claims of N15.12 billion (2017: nil) against Inter-national Breweries Plc for which the law suits have not been concluded as at year end arising.

The Company is rigourously defending these claims in court and expects a favourable outcome.

The Company had no capital commitments as at 31 December 2018 (2017: nil). However, the company entered into a contractual commitment of N394.59 million (USD 1,083.5m) in respect of project in Sagamu which will be executed in 2019.

Operating lease commitments - the Company as a lessee.



133

The Company leases office spaces and residential buildings under cancellable operating lease agreements. The lease terms are between 1 and 5 years, and the majority of lease agreements are renewable at the end of the lease period at market rate. Prepaid amounts are recognised as current in trade and other receivables (note 17).

30. Events after the reporting period

There were no significant events after the reporting period, which could have had a material effect on the state of affairs of the Company as at 31 December 2018 that have not been adequately provided for or disclosed in the financial statements.

31. Non-audit services

During the year and upon obtaining board approval, PricewaterhouseCoopers was engaged to perform tax compliance, transfer pricing and FIRS tax audit services respectively. The agreed fee for the engagement was N36 million ($100,000).



134

12 Months ended December 2018


N’000 % N’000 %

Revenue 120,610,825 36,527,807

Less: bought in materials and services (87,918,204) (31,665,257)

Other gains/(losses) 807,494 123,387

Value added 33,500,115 100 4,985,937 100

Applied as follows:

To pay employees:

Wages, salaries and other benefits 8,846,632 26.4 2,731,981 54.8

To pay government:

Tax credit (4,183,014) (12.5) (4,628,936) -92.8

To provide for enhancement of assets and growth:

Depreciation of plant, property and equipment 16,888,158 50.4 2,039,704 40.9

Net Interest 15,945,367 47.6 3,950,058 79.2

Amortisation of intangible asset 67,412 0.2 19,045 0.4

(Loss)/Profit for the year (4,064,440) (12.1) 874,084 17.5

Value added 33,500,115 100 4,985,937 100

This statement represents the distribution of the wealth created through the use of the Company’s assets by its own and employees’ efforts.

Statement of Value Added


135

----------------------12 months----------------------------


9 Months ended December 2017 31 March 2017 31 March 2016 31 March 2015

Financial result N’000 N’000 N’000 N’000 N’000

Revenue 120,610,825 36,527,807 32,711,218 23,269,364 20,649,295

Gross profit 47,340,245 13,707,886 15,164,459 10,708,935 9,061,478

Net operating expenses (39,444,190) (12,991,539) (7,080,034) (5,567,823) (4,426,217)

Operating profit 7,896,055 716,347 8,084,425 5,141,112 4,635,261

Net finance (costs)/income (15,945,367) (3,950,058) (5,192,676) (1,484,286) (1,819,707)

(Loss)/profit before taxation (8,049,312) (3,233,711) 2,891,749 3,656,826 2,815,554

Income tax expense 4,183,014 4,628,936 (1,857,392) (1,004,078) (869,064)

(Loss)/Profit for the year (3,866,298) 1,395,225 1,034,357 2,652,748 1,946,490

Basic & diluted (loss)/earnings per share (Naira)

(0.45) 0.16 0.31 0.81 0.59

(Loss)/Earnings per share (EPS) is calculated by dividing the profit attributable to equity holders of the company by the weighted average number of ordinary shares outstanding at the end of the reporting period.

Five-year Financial Summary


136

Five-year Financial Summary Continued

----------------------12 months----------------------------


9 Months ended December 2017 31 March 2017 31 March 2016 31 March 2015

Financial position N’000 N’000 N’000 N’000 N’000

Capital employed:

Ordinary share capital 4,297,931 4,297,931 1,647,125 1,647,125 1,647,125

Share premium 6,160,731 6,160,731 6,160,731 6,160,731 6,154,725

Retained earnings 24,896,862 28,763,160 4,048,189 4,828,779 2,107,317

Other reserves 1,360,756 1,360,756 1,360,756 1,360,756 1,360,756

Employee benefit reserves (1,555,357) (1,357,215) - - -

Total equity 35,160,923 39,225,363 13,216,801 13,997,391 11,269,923

Represented by:

Non-current assets 244,732,965 192,096,090 31,620,946 22,841,925 18,795,469

Current assets 65,545,955 40,053,161 11,939,249 10,640,181 10,477,785

Current liabilities (118,879,435) (168,026,156) (26,188,616) (15,846,886) (9,975,208)

Non-current liabilities (156,238,562) (24,897,732) (4,154,778) (3,637,829) (8,028,123)

Net assets 35,160,923 39,225,363 13,216,801 13,997,391 11,269,923

Net assets per share (Naira) 4.09 4.56 4.01 4.25 3.42

Net assets per share is calculated by dividing net assets of the company by the number of ordinary shares outstanding at the end of the reporting period.


137

NOTES


138

Dear Sir,

As a shareholder of International Breweries Plc . We seek below information for ourrecords:

SURNAME:

+234 (1) 293 2121+234 (0) 704 612 6698

8, Alhaji Bashorun Street,O� Norman Williams Crescent,S.W. Ikoyi Lagos

SHAREHOLDER INFORMATION FORM

FIRST NAME:

OTHERNAME:

POSTAL ADDRESS:

EMAIL ADDRESS:

MOBILE NUMBER:

Thank you

Yours faithfully

INTERNATIONALBREWERIES PLC.

Shareholder’s Signature / Date Joint Shareholder’s Signature / Date

Kindly return the duly completed to8, Alhaji Bashorun Street,O� Norman Williams Crescent,SW, Ikoyi, Lagos

Company Seal (If Corporated)

Declaration:

I hereby declare that the information I have provided is true and coreect and I shall be held liable for any mis information.

Shareholder’s Signature

[email protected]

Email: Address :Tel : Website:

FIRST FO

LD H

ERE

SECOND FOLD HERE

Apel Capital Registrars Limited8, Alhaji Bashorun StreetOff Norman Williams CrescentSouth West IkoyiLagos

THIRD FOLD HERE

+234 (1) 293 2121+234 (0) 704 612 6698

8, Alhaji Bashorun Street,O� Norman Williams Crescent,S.W. Ikoyi Lagos

[email protected]

Email: Address :Tel : Website:

E- DIVIDEND MANDATE ACTIVATION FORM

A�xCurrentPassort

To be stamped by Banker

Write your name at the back ofyour passport photograph

Only Clearing banks are acceptable

Please complete all section of this form to make it eligible for processingand return to the address below

Instructions

The Registrar,

Apel Capital & Trust Ltd.8, Alhaji Bashorun StreetO� Norman Williams Str, S.W Ikoyi Lagos.

I\We hereby request that henceforth, all my\our Dividend Payment(s) due tome\us from my\our holdings in all the companies ticked at the right handcolumn be credited directly to my \ our bank detailed below:

Bank Verification Number

Bank Name

Bank Account Number

Account Opening Date

Shareholder Account Information

Surname / Company’s Name First Name Other Names

Address :

City State Country

Previous Address (If any)

CHN (If any)

Mobile Telephone 1 Mobile Telephone 2

Email Address

Signature(s) Company Seal (If applicable)

Joint\Company’s Signatories

TICK NAME OF COMPANY SHAREHOLDER’SACCOUNT NO.

AIICO BALANCED FUND

ANINO INT’L PLC

CHAPEL HILL DENHAMMONEY MARKET FUND

FIRSTALUMINIUM PLC

INTERLINKEDTECHNOLOGIES PLC

INTERNATIONALBREWERIES PLC

LASACO ASSURANCE PLC

LEAD UNITTRUST SCHEME

MASS TELECOMINNOVATION PLC

NCR (NIGERIA) PLC

NEM INSURANCE PLC

PARAMOUNT EQUITY

PHARMA DEKO PLC

THE INITIATES PLC

FIRST FO

LD H

ERE

SECOND FOLD HERE

Apel Capital Registrars Limited8, Alhaji Bashorun StreetOff Norman Williams CrescentSouth West IkoyiLagos

THIRD FOLD HERE

42nd Annual General Meeting to be held in the Conference Hall, Green Legacy Resort, Presidential Boulevard Road, Oke-Mosan, Abeokuta, Ogun State on Tuesday 20 August, 2019 at 10.a.m.

I/We of

being a member/members of

International Breweries Plc hereby appoint or failing him, the Chairman of the meeting as my/our proxy to act and vote for me/us and on my/our behalf at the Annual General Meeting of the Company to be held on 20 August 2019.

Dated this day of 2019

Shareholder Signature

*Delete as necessaryThe Proxy Form should be completed and sent to the address overleaf if the member will be attending the meeting

NOTES:

1 A member (shareholder) who is unable to attend an Annual General Meeting is allowed by law to vote by proxy and this Proxy Form has been prepared to enable such shareholder exercise the right to vote despite not physically present at the meeting

2. The Chairman of the meeting has been entered on the form to ensure that someone will be at the Meeting to act as your proxy but if you wish you may insert in the blank space on the form (marked **) the name of any person whether member (shareholder) of the Company or not who will attend the Meeting and vote on your behalf instead of the Chairman of the meeting.

3. Please sign this Proxy Form and post or deliver it to reach the Registrars – Apel Registrars 8 Alhaji Bashorun Street, Off Norman Williams, SW Ikoyi-Lagos not later than 48hrs to the time of holding the meeting on 20 August, 2019; If executed by a Corporation the form must be sealed with the Common Seal orunder the hand of an officer of attorney duly authorized.

4. The proxy must produce the Admission Card (below) to the meeting

PROXY FORM

No. of Shares

To ratify the appointment ofMr. Andrew Murray as a Director

To ratify the appointment ofMr. Richard Rivett-Carnac as a Director

To ratify the appointment ofMs. Olutoyin M. Odulate

To re-electMr. Folorunsho Awomolo as a Director

To re-electMr. Sunday Akintoye Omole as a Director

To re-electMrs. Annabelle Degroot as a Director

To re-electMr. Zuber Momoniat as a Director

To authorize the Directors to fix theremuneration of the Independent Auditors

To elect members ofthe Audit Committee

To fix the remuneration of the Directors

To authorize the Company to procure goodsand services necessary for its operationsfrom related Companies in compliancewith the NSE Rules

Please indicate with an “x” in the appropriate box how you wish your votes to be cast onthe resolutions referred to above. Unless otherwise instructed the proxy will vote or abstainfrom voting at his discretion.

ADMISSION CARD

International Breweries Plc 42nd Annual General MeetingPLEASE ADMIT THE SHAREHOLDER NAMEDON THIS CARD OR HIS DULY APPOINTED PROXYTO THE ANNUAL GENERAL MEETING TO BE HELD AT THE AUDITORIUM,GREEN LEGACY HOTEL, PRESIDENTIAL BOULEVARD ROAD,OKE-MOSAN, ABEOKUTA,OGUN STATEON TUESDAY 20 AUGUST 2019AT 10.00 A.M.

ADDRESS OF SHAREHOLDER

NAME OF SHAREHOLDER

NUMBER OF SHARES

SIGNATURE OF SHAREHOLDER/PROXY

THIS CARD must be completed, signed, torn off and retained for admission to the meeting.

SIGNED

Muyiwa AyojimiCompany Secretary/General Counsel

INTERNATIONAL BREWERIES PLC

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