guinness nigeria plc annual report 2012

3.Guinness Nigeria Plc | Annual Report & Financial Statements 2012

2012 2011 Change N’000 N’000 %

Results

Turnover 126,288,184 123,663,125 2Operating profit 22,861,423 26,538,501 (14)Profit before taxation 21,074,950 26,176,966 (19)Taxation 6,403,755 8,249,032 (22)Profit after taxation 14,671,195 17,927,934 (18)Declared dividend 14,749,255 12,168,136 21Proposed dividend 11,799,404 14,749,255 (20)Capital expenditure 23,322,970 12,215,027 91Shareholders’ funds 40,352,504 40,283,492 -

Data per 50 kobo share (in kobo)Basic earnings 995 1,216 (18)Declared dividend 1,000 825 21Net assets 2,736 2,731 -Stock exchange quotation at financial year end 22,600 24,500 (8)

The Directors recommend, subject to approval at the next Annual General Meeting, the payment of a final dividend of N11.8 billion (2011: N14.7 billion), which based on the number of ordinary shares in issue on 30 June 2012, represents a dividend of 800 kobo per ordinary share (2011: 1,000k). As an alternative, the Directors also recommend, subject to shareholder’s approval, an option of a scrip dividend, which at the current trading price, represents an option of 1 ordinary share for every 33 ordinary shares held by each shareholder. The dividend is subject to deduction of withholding tax at the applicable rate.

To qualify for the scrip dividend option, shareholders must complete and return their scrip dividend mandate form to the Company’s registrar no later than 15 October 2012. Explanatory Notes on the Scrip Dividend will accompany the Notice of Annual General Meeting and the Financial Statements.

Financial Highlights

4. Guinness Nigeria Plc | Annual Report & Financial Statements 2012

NOTICE IS HEREBY GIVEN that the 62nd Annual General Meeting of the Members of Guinness Nigeria Plc will be held at the Congress Hall of the Transcorp Hilton Hotel, Abuja FCT on 02 November 2012 at 11.00 O’clock in the forenoon to transact the following businesses:AgeNDA

ORDINARY BUSINeSS1. To receive the Report of the Directors, the Financial Statements for the year ended 30 June 2012 and the Report of the

Auditors thereon.2. To declare a dividend.3. To re-elect Directors.4. To authorise Directors to fix the remuneration of the Auditors.5. To elect Members of the Audit Committee.

SPeCIAL BUSINeSS6. To fix the remuneration of the Directors.7. To consider, and if thought fit, pass the following resolution as a special resolution:

“that Article 131 of the Company’s Articles of Association be and is hereby amended by deleting the current Article 131 and substituting in its place the following:

‘The balance sheet shall be signed by two Directors and the profit and loss account and the auditors’ report shall be attached thereto. A copy of such balance sheet and the profit and loss account together with a copy of the directors’ report, the auditors’ report, the audit committee’s report and every other document required by law to be annexed thereto which shall either be in printed or compact disk or other electronic format shall be sent to every Member of the Company, every debenture holder of whose address the Company is aware and other persons entitled to them by law and shall be published on the Company’s website at least twenty-one days before the meeting at which the same are to be laid before the Members of the Company and two copies of every such document shall at the same time be sent to the Director-General of the Nigerian Stock Exchange’.”

8. To consider, and, if thought fit, pass the following resolutions as ordinary resolutions:

a. “That in accordance with Articles 118 and 119 of the Company’s Articles of Association, the Board of Directors (“the Board”) be and are hereby authorized to offer, subject to the market conditions at the time, to shareholders entitled to receive cash dividends to elect to receive 1 ordinary share for every 33 ordinary shares held by them as at 5th October 2012 (“the New Ordinary Shares”) instead of the cash dividends (“the Scheme”). Details of how the Scheme will operate are set out in the Explanatory Note issued with this Notice. The New Ordinary Shares will be credited as fully paid and will, when issued, rank pari passu in all respects with the Company’s existing ordinary shares, including the right to receive all dividends declared after the date of issue.

b. The Directors are hereby authorized to take all necessary steps to give due effect to the above resolution according to its terms including registering the New Ordinary Shares with the Securities and Exchange Commission as well as listing the New Ordinary Shares on the floor of the Nigerian Stock Exchange.”

Notice of Meeting


Notes:

PROXYA Member of the Company entitled to attend and vote is entitled to appoint a proxy to attend and vote instead of him/her. A proxy need not also be a member. A form of proxy is enclosed and if it is to be valid for the purposes of the Meeting, it must be completed and deposited at the office of the Registrar, Zenith Registrars Limited, Plot 89A, Ajose Adeogun Street, Victoria Island, Lagos not less than 48 hours before the time for holding the Meeting.

CLOSURe OF RegISTeRThe Register of Members and Transfer Book will be closed from Monday, 8th October 2012 to Friday, 12th October 2012, both days inclusive for the purpose of updating the Register of Members.

eXPLANATORY NOTeSExplanatory Notes on the proposed resolutions to authorise a scrip dividend has been included in the Annual Report and Financial Statements posted to each Member. Any Member who is yet to receive the Explanatory Notes may obtain a copy from the Registrar, Zenith Registrars Limited, Plot 89A, Ajose Adeogun Street, Victoria Island, Lagos.

DIVIDeND WARRANTSIf the payment of the dividend/scrip dividend is approved, it is intended that the warrants and scrip certificates will be posted on 05 November 2012 to holders of shares whose names appear in the Register of Members on Friday, 5th October 2012.

AUDIT COMMITTeeIn accordance with Section 359(5) of the Companies and Allied Matters Act [cap C20, Laws of the Federation of Nigeria, 2004], a nomination (in writing) by any Member or a shareholder for appointment to the Audit Committee should reach the Company Secretary at least 21 days before the date of the Annual General Meeting.

Dated: 12 September 2012

By Order of the Board

SeSAN SOBOWALeCompany Secretary

RegISTeReD OFFICeThe Ikeja BreweryOba Akran Avenue Private Mail Bag 21071, Ikeja.


DirectorsB. A. Savage - ChairmanN. B. Blazquez (British) - Vice ChairmanS. Adetu (Appointed with effect from 1 July 2012) - Managing DirectorJ. O. Irukwu (SAN)B. E. GwadahB. J. Rewane M. A. Taylor (British) L. G. Nichols (Ms.) (British) Z. Abdurrahman (Mrs.) (Appointed with effect from 04 November 2011)R. J. O’Keeffe (Irish) (Appointed with effect from 09 February 2012)P. J. Jenkins (British) (Appointed with effect from 09 February 2012)Y. A. Ike (Ms.) (Appointed with effect from 26 April 2012)S. A. Baraz (British) (Resigned with effect from 04 November 2011)F. O. Agbonlahor (Resigned with effect from 09 February 2012)I. C. Mafeni (Mrs.) (Resigned with effect from 26 April 2012)D. M. Hainsworth (British) (Resigned with effect from 30 June 2012)

Company Secretary Sesan Sobowale

Independent AuditorsKPMG Professional Services(Chartered Accountants)KPMG TowerBishop Aboyade Cole StreetVictoria Island, Lagos.

Registrars and Transfer OfficeZenith Registrars LimitedPlot 89A, Ajose Adeogun StreetVictoria Island, Lagos.Tel: (01) 2708930, 2783973, 2784168

BankersCitibank Nigeria LimitedDiamond Bank PlcFirst Bank of Nigeria PlcFirst City Monument Bank PlcGuaranty Trust Bank PlcStanbic IBTC Bank PlcStandard Chartered Bank Nigeria LimitedUnion Bank of Nigeria PlcUnited Bank for Africa PlcZenith Bank Plc

Board of Directors & Corporate Information

Registered OfficeThe Ikeja BreweryOba Akran AvenueP.M.B. 21071Ikeja, Lagos

Registration NumberRC 771

Head Office24, Oba Akran AvenueP.M.B. 21071 IkejaTel: (01) 2709100Fax: (01) 2709338

Breweries

Ogba Brewery Benin Brewery Aba BreweryAcme Road, Industrial Estate Ogba Benin-Asaba Road Osisioma Industrial LayoutTel: (01) 2709100 Oregbeni Industrial Estate Aba, Abia StateFax: (01) 2709338 Ikpoba Hill, Benin City Tel: (01) 2709100 Tel: (01) 2709100 Fax: (01) 2709338 Fax: (01) 2709338


Babatunde A. Savage Chairman


IntroductionFellow shareholders, distinguished ladies and gentlemen, I am pleased to welcome you all to the 62nd Annual General Meeting of our Company and to present to you the financial statements and reports and review the performance of our Company in the course of the financial year ended 30 June 2012.

Chairman’s Statement

I wish to commend you fellow shareholders, for the support and co-operation that you have given to the Company and the Board over the years, especially in the 2012 financial year in spite of the quite challenging economic situation in the country and I trust we can count on your continued support.

Let me at this stage welcome the new Managing Director of Guinness Nigeria Plc, Mr. Seni Adetu, who took over from the immediate past Managing Director, Mr. Devlin Hainsworth, on 1st July 2012. This will be the first Annual General Meeting of the Company Mr. Adetu will be attending since his appointment. I wish him well in his new role and I am confident that he will steer the leadership of this great Company to deliver even more impressive results. I would also like to thank our immediate past Managing Director, Mr. Devlin Hainsworth, for his contributions to the growth of the Company during his tenure.

Before I proceed to more formal matters, I would like to highlight the key events in the operating environment that underscored our performance in 2012.

Business environmentThe business environment was very challenging as several factors impacted negatively on consumer purchasing power. Chief among these was the 40% fuel subsidy reduction and the consequent 49% hike in fuel pump price which led to a doubling of the prices of consumer goods, a 2.3% increase in inflation rate to 12.6% in January 2012 as well an increase in transportation costs by an average of 40%. These factors significantly put pressure on consumer disposable income and negatively affected overall business revenue and profitability in 2012.

According to the National Bureau of Statistics, the Nigerian economy grew by 6.37% in June 2012 compared to the 7.72% recorded in June 2011. The decline is attributable to a series of factors which include the six day fuel subsidy national strike in January 2012, the dampening effects of weak global oil demand especially from the United States, China and the Euro-zone, falling oil prices and weak aggregate domestic demand.

In addition, the growing security unrest in the northern part of Nigeria also significantly affected Nigeria’s economic performance. 2012 witnessed a growing insurgency of Boko Haram attacks, replacing militancy in the Niger Delta as the main security threat in the nation. The attacks have grown in sophistication; spreading across the northern and central belts of Nigeria and continue to be a major threat to political and economic stability.

The foreign exchange market recorded significant volatility during the 2012 financial year. The naira depreciated by 3.48% at the Dutch auction to N155.93/$1 in June 2012 as against N150.69/$1 in the corresponding period a year earlier. Other forex market segments recorded the same trend with the naira depreciating against the dollar by 2.81% to N164.5/$1 from N160/$1 at the parallel market.

On the bright side, Nigeria’s external reserves recorded a significant 16.84% accretion. As at the end of June 2012, external reserves averaged $37.26 billion compared to $31.89 billion in 2011. This is a 21-month high level which could cover an import bill of over 11 months.

The Brewing IndustryThe adverse economic factors in the year under review had a marked effect on the brewing industry. Total beer

consumption for the year ended on a downward trend, down by -7.4% and -0.6% in volume and value respectively against 2011. The decline was driven mainly by: increase in inflation from 10.2% in June 2011 to 12.9% in June 2012, naira depreciation by 3% and increase in interest rate from 10% to 12%. These impacted the cost of living and increased pressure on consumer disposable and discretionary income. Increased security concerns nationwide which restricted consumer consumption to safe locations and occasions, decrease in government expenditure resulting in reduced cash in circulation and the partial removal of petroleum subsidy in January 2012 which left a strain on consumer disposable income were other factors which affected performance in the industry during the year.

Although overall beer market declined, total Brand Guinness recorded some share gain during the year. Furthermore, despite stiff competition within the mainstream lager segment, your darling beer, Harp lager continued to sustain its positive momentum, as its 2012 performance grew ahead of last year. We saw the impact of the new consumer campaign “Best enjoyed with Harp”, and the launch of our exciting innovation, Harp Lime, on brand equity measures. The brand witnessed positive image and commitment shift as reported by the recent brand equity tracker.

Smirnoff Ice exhibited a strong growth in volume and value versus last year. This performance was driven by increase in brand advertising and awareness as a result of Smirnoff Midnight Circus, with positive impact on consumer affinity to the brand.

Our PerformanceIn spite of the challenges of the operating environment and keen competition in the brewing industry,


Chairman’s Statement

our performance over the review period was impressive and reflected our focus and determination to sustain the growth we have witnessed in the last few years. Turnover grew moderately by 2% from N124 billion in 2011 to N126 billion while post-tax profit was approximately N15 billion.

DividendKeeping in view our desire to sustain our investment in our brands and our people as well as the needs of our ongoing capacity expansion project, your Directors have recommended a dividend of 800 kobo per 50 kobo ordinary share. The Board has proposed that any shareholder who does not want to take his/her dividend in cash is entitled to take the same by way of scrip dividend. This is in line with our philosophy to give shareholders, who so desire, the option of further investing in the Company. We have made this recommendation for a number of reasons. First, to fulfill the commitment we made at last year’s AGM that we will carefully consider your request for a scrip/bonus issue. Second, as we all know, many of us who desire to acquire additional shares have been unable to do so because of the relatively small number of the Company’s shares available in the stock market for purchase. Thirdly, this option will save interested shareholders interest/dealings costs as they will be paying for the additional shares with their dividends.

Let me however stress that every shareholder will be entitled to their dividend as a default option. It is only those who elect in writing to have additional shares in lieu of the dividend they are entitled to that will be so treated. In other words, if you wish to be paid your dividend, you do not need to take any other steps.

InnovationThrough the tough economic terrain management continued to commit resources to support our brands and innovation resulting in increased marketing investments. Harp lime was launched in December 2011, Dubic Extra Lager in April 2012 and Malta Guinness Low Sugar in April 2012. Malta Guinness Low Sugar is set to address increased consumer focus on health and wellness and was officially endorsed by the leading English Premier League Club, Arsenal FC. These innovations reflect management’s commitment to brand building and portfolio growth to yield optimum shareholder value.

Corporate Social ResponsibilityGuinness Nigeria Plc is committed to conducting its business in a socially responsible manner and also to contributing to the communities in which it operates. During the year, donations amounting to N139.9 million were made to various charitable ventures in the areas of provision of safe drinking water, education, health and social infrastructure. New water

projects were concluded in Agoi-Ibami in Cross River State, Awba-Ofemili in Anambra State, and in Enugu, in Enugu State serving an aggregate population of 60,000 Nigerians. The company also launched the Safe Water for Africa (SWA) Partnership with the Diageo Foundation, Coca Cola, TY Danjuma Foundation and Water Health International. The project is a regional project which aims to provide water to 5 million people across the West African sub-region and other locations in Africa in the next 5 years.

Our support to our host communities also continued under the Guinness Nigeria engineering scholarship programme and the technical education sponsorship of indigent students to the Institute of Industrial Technology, Lagos (IIT). The Guinness Eye Hospitals in Onitsha and Lagos were renovated during the year and the Company also rehabilitated a community road in Aba, Abia State. Under the auspices of the employee-driven Friends of the Community (FOC) programme, employees of the Company carried out a mentoring session for students in 4 selected schools in Lagos and Benin. The focus of this project was to promote good reading culture among secondary school students in Nigeria. Employees also refurbished the roundabout adjacent to our Head office at Oba Akran Avenue, Ikeja, Lagos as part of their contribution to the beautification of the environment.

Guinness Nigeria Plc is committed to conducting its business in a socially responsible manner and also contributing to the communities in which it operates. During the year, donations amounting to N139.9 million were made to various charitable ventures in the areas of provision of safe drinking water, education, health and social infrastructure.

Harp Lime is a premium flavoured lager with a unique, clean, crisp refreshing taste. The addition of 100% Natural Lime flavour gives a unique crisp, refreshing taste that satisfies every single time. Harp Lime is Nigeria’s first flavoured beer and is a real crowd-pleaser for young and old alike. Available in a stylish elegant 300ml returnable bottle and 330ml can with 5.15% alcohol by volume.“Good Times. Best Enjoyed with HARP LIME”


I am happy to inform you that your Company won various recognitions for its social investments during the year. These included the SERA 2011 Award for the Most Socially Responsible Company (Fair Operating Practices), the SERA 2011 Award for the Most Socially Responsible Company (Labour Practices), Cool brands/SERA Award for Coolest CSR Story, 2011 and LEAD (Lagos State Enterprise) Grand Award for CSR (Health Sector).

As an alcohol beverage Company, we recognise that we have a special responsibility to promote the responsible use of alcohol. As part of our efforts to create a responsible drinking culture, our DRINKiQ site has been fully uploaded with Nigerian content. We carried out DRINKiQ training for officials of some regulatory bodies such as the National Agency for Food Drug Administration and Control (NAFDAC) and Standards Organisation of Nigeria (SON), 140 Distributors, a cross section of media practitioners from different organisations and all new employees to the business. Furthermore, we carried out innovative Responsible Drinking activations during brand promotion activities with about 813,000 consumers being exposed to these activations during the year.

Our PeopleWe believe strongly in people and recognize that our employees are our

strongest asset. We are committed to releasing the potentials of our employees and creating a world class working environment where we drive people to show exemplary performance and be the best at what they do. We invest in our people and have in place great talent retention schemes.

I am happy to inform you that your Company won the first ever “Best Place to Work in Nigeria Award and the Best Multinational Company in Nigeria Award” for 2011 which was presented by the Great Place to Work Institute, a global research and consulting firm which is most popular for producing the Fortune 100 Best Companies List in the United States and similar lists in 45 other countries.

I am confident that we have invested in the right people to take this Company through these challenging times and I would like to thank all our hardworking people for their contributions.

The FutureThe financial performance of our Company in the year under review was impacted by the factors I have mentioned earlier in this address. However, let me hasten to assure you that the Company’s strategy is sound. We now have ample capacity to continue to support market demand and we are able to make investment where appropriate and prudent. We have made deliberate choices in where

we are putting our investments as a business – in our brands and in our people. We are confident that these investments will yield dividends and improve total shareholder return in the years to come.

ConclusionDistinguished shareholders, let me at this point congratulate the management and all our very hardworking employees, for their commitment and efforts in producing a commendable result in spite of the challenging business environment.

I must also commend our parent company, Diageo Plc, for its continued support for Guinness Nigeria Plc. We look forward to more of that support for the future. I would also like to thank members of the Board of Directors for their continued commitment to the success of the Company.

Finally, I thank you our distinguished shareholders, for your continued support and for the confidence you have shown in the Board and management of Guinness Nigeria Plc.

Thank you and God bless you all.

Mr. B. A. SavageChairmanSigned on 12 September 2012

Malta Guinness is fortified with Water, Sucrose, Maize, Sorghum, Barley Malt extract, Sorghum Malt, Caramel, Hops, 11 Vitamins, etc it remains the favourite Malt drink in Nigeria for Goodness, Energy & Vitality. For those who desire a vibrant lifestyle, Malta Guinness is the brand of choice, full of nourishment. “Malta Guinness energizes me to live everyday to the full”

I am happy to inform you that your Company won the first ever “Best Place to Work in Nigeria Award and the Best Multinational Company in Nigeria Award” for 2011 which was presented by the Great Place to Work Institute, a global research and consulting firm which is most popular for producing the Fortune 100 Best Companies List in the United States and similar lists in 45 other countries.


The Directors are pleased to present to members their Report together with the Financial Statements of the Company for the year ended 30 June 2012.

Legal form and Principal ActivitiesGuinness Nigeria Plc, a public company currently quoted on the Nigerian Stock Exchange, was incorporated on 29 April 1950 as a trading company importing Guinness Stout from Dublin. The Company has since transformed itself into a manufacturing operation and its principal activities continue to be brewing, packaging and marketing of Guinness Foreign Extra Stout, Guinness Extra Smooth, Malta Guinness, Harp Lager, Gordon’s Spark, Smirnoff Ice, Satzenbrau Pilsner Lager, Top Malt, Harp Lime Lager, Dubic Lager and Malta Guinness Low Sugar.

Operating ResultsThe following is a summary of the Company’s operating results:

2012 2011 N’000 N’000

Turnover 126,288,184 123,663,125 Operating profit 22,861,423 26,538,501Net interest expense (1,786,473) (361,535)Profit before Taxation 21,074,950 26,176,966Taxation (6,403,755) (8,249,032)Profit after Taxation 14,671,195 17,927,934Declared Dividend (14,749,255) (12,168,136)

DividendThe Directors recommend, subject to approval at the next Annual General Meeting, the payment of a final dividend of N11.8 billion (2011: N14.7 billion), which based on the number of ordinary shares in issue on 30 June 2012, represents a dividend of 800 kobo per ordinary share (2011: 1,000k). As an alternative, the Directors also recommend, subject to shareholder’s approval, an option of a scrip dividend, which at the current trading price, represents an option of 1 ordinary share for every 33 ordinary shares held by each shareholder. The dividend is subject to deduction of withholding tax at the applicable rate.

To qualify for the scrip dividend option, shareholders must complete and return their scrip dividend mandate form to the Company’s Registrar no later than 15 October 2012. Explanatory Notes on the Scrip Dividend will accompany the Notice of Annual General Meeting and the Financial Statements.

Board ChangesSince the last Annual General Meeting, Messrs. S. A. Baraz, F. O. Agbonlahor, I. C. Mafeni (Mrs.) and D. M. Hainsworth have resigned from the Board. On your behalf, we wish to thank them for their invaluable contributions to the Company during their tenures.

Directors’ Reportfor the year ended 30 June 2012

SNAPP a naturally refreshing apple-flavoured alcoholic drink made with the choicest ingredients that give SNAPP its unmistakably sophisticated, crispy, naturally refreshing taste. SNAPP suits every taste and occasion, a perfect choice for the modern, classy woman looking for feminine & sophisticated alcoholic beverage. SNAPP has 5% alcoholic content and is packaged in an attractive clear 30cl bottle with a gold & green label.“It starts with a SNAPP”


To fill the vacancies created by these resignations Mrs. Z. Abdurrahman, Mr. P. J. Jenkins, Mr. R. J. O’Keeffe, Mr. S. Adetu and Ms. Y. A. Ike were appointed to the Board. In accordance with the Articles and the provisions of the Companies and Allied Matters Act, Mrs. Z. Abdurrahman, Mr. P. J. Jenkins, Mr. R. J. O’Keeffe, Mr. S. Adetu and Ms. Y. A. Ike will retire at the forthcoming Annual General Meeting and, being eligible, hereby offer themselves for re-election.

The Directors to retire by rotation are Messrs. N. B. Blazquez and B. J. Rewane and, being eligible, hereby offer themselves for re-election.

Directors and their interestsThe interests of Directors in the issued share capital of the Company as recorded in the Register of Members and/or notified by the Directors for the purpose of Section 275 of the Companies and Allied Matters Act and in compliance with the listing requirements of the Nigerian Stock Exchange are as follows:-

As at As at 30 June 2012 30 June 2011 No. of shares No. of shares

Mr. B. A. Savage 601, 263 601,263Dr. N. B. Blazquez Nil NilMr. S. Adetu (Appointed with effect from 01 July 2012) Nil NilMr. D. M. Hainsworth (Resigned with effect from 30 June 2012) Nil NilProf. J. O. Irukwu 488,865 607,866Mr. B. E. Gwadah 2,082 2,082Mr. B. J. Rewane 16,944 16,944Mr. M. A. Taylor Nil NilMs. L. G. Nichols Nil NilMrs. Z. Abdurrahman (Appointed with effect from 04 November 2011) Nil NilMr. R. J. O’Keeffe (Appointed with effect from 09 February 2012) Nil NilMr. K. J. Jenkins (Appointed with effect from 09 February 2012) Nil NilMs. Y. A. Ike (Appointed with effect from 26 April 2012) Nil NilMr. S. A. Baraz (Resigned with effect from 04 November 2011) Nil NilMr. F. O. Agbonlahor (Resigned with effect from 09 February 2012) 7,665 7,665Mrs. I. C. Mafeni (Resigned with effect from 26 April 2012) 10,350 10,350

Directors’ Interest in ContractsNone of the Directors has notified the Company for the purpose of Section 277 of the Companies and Allied Matters Act of any declarable interest in contracts in which the Company is involved.

Shareholding and Substantial ShareholderThe issued and fully paid-up share capital of the Company is 1,474,925,519 ordinary shares of 50 kobo each. The register of members shows that only one company, Guinness Overseas Limited (a subsidiary of Diageo Plc) with 678,958,195 shares (2011: 678,958,195 shares) and 46% shareholding (2011: 46% shareholding) held more than 10% interest in the Company. Diageo Plc also owns another shareholder of the Company, Atalantaf Limited, with 114,613,969 shares (2011: 114,613,969 shares) and a shareholding of 8% (2011: 8%). Total shareholding of Diageo Plc was 54% at year end (2011: 54%).

Malta Guinness Low Sugar is the drink of choice for those who care about their health and wellbeing and follow a healthy lifestyle regime but still want the refreshment and top of the world goodness, energy and vitality that Malta Guinness provides. Malta Guinness Low Sugar contains the same nourishment & goodness of Malta Guinness classic with the same taste notes but with low sugar. Available in 33cl bottle and can.


Dubic Extra Lager is a premium value lager with 40 years of pure Nigerian heritage. It is made of a proudly Nigerian traditional recipe. Contains 5% alcohol by volume and available in a 600ml returnable bottle.“YOU DESERVE A DUBIC”

Directors’ Report

Corporate governance ReportIn Guinness Nigeria Plc, our actions and interactions with our consumers, customers, employees, government officials, suppliers, shareholders and other stakeholders reflect our values, beliefs and principles. Our business is largely self-regulated and we pride ourselves as leading our peers in the industry and Nigeria in this regard. In addition to self-regulation, we are committed to conducting business in line with international best practice, in accordance with applicable laws and regulations in Nigeria and the requirements of the Nigerian Stock Exchange as well as in compliance with the Code of Corporate Governance in Nigeria, 2011.

To further sustain our commitment to good corporate governance, ethical business standards and the values of integrity, honesty and fairness, Guinness Nigeria Plc signed up to the Convention on Business Integrity in September 2011.

The Company complied with these corporate governance requirements during the year under review as set out below.

Board of DirectorsThe Board is responsible for the oversight of the business, long-term strategy and objectives, and the oversight of the Company’s risks while evaluating and directing the implementation of controls and procedures including, in particular, maintaining a sound system of internal controls to safeguard shareholders’ investments and the Company’s assets.

There are currently four (4) regularly scheduled Board meetings during each fiscal year.

Composition of the Board of Directors and Procedure for Board AppointmentsThe Board consists of the Chairman, 9 non-executive directors and 2 executive directors. The non-executive directors are independent of management and are free from any constraints, which may materially affect the exercise of their judgement as directors of the Company.

All directors are selected on the basis of certain core competencies including experience in marketing, general operations, finance, strategy, human resources, technology, media or public relations, finance or accounting, retail, consumer products, international business/markets, logistics, product design, merchandising or experience as a Chief Executive Officer or Chief Financial Officer. In addition to having one or more of these core competencies, candidates for appointment as directors are identified and considered on the basis of knowledge, experience, integrity, diversity, leadership, reputation, and ability to understand the Company’s business.

Separation of the positions of Chairman and Managing DirectorThe positions of the Managing Director and that of the Chairman of the Board are occupied by different persons and the Managing Director is responsible for implementation of the Company’s business strategy and the day-to-day management of the business.

Schedule of Matters Reserved for the BoardThe matters reserved for the Board of Directors of the Company include the following:

1. Strategy and Management - Input into the development

of the long-term objectives and overall commercial strategy for the Company.

- Oversight of the Company’s operations.

- Review of performance in the light of the Company’s strategy, objectives, business plans and budgets and ensuring that any necessary corrective action is taken.

- Extension of the Company’s activities into new business or geographic areas.

- Any decision to cease to operate all or any material part of the Company’s business.

2. Structure and capital - Changes relating to the

Company’s capital structure including reduction of capital, share issues (except under employee share plans) and share buy backs.

- Major changes to the Company’s corporate structure.

- Changes to the Company’s management and control structure.

- Any changes to the Company’s listing or its status as a publicly listed company.

3. Financial reporting and controls - Approval of preliminary

announcements of interim and final results.


- Approval of the annual report and accounts, including the corporate governance report.

- Approval of the dividend policy.

- Declaration of the interim dividend and recommendation of the final dividend.

- Approval of any significant changes in accounting policies or practices.

- Approval of treasury policies including foreign currency exposure.

4. Internal controls Ensuring maintenance of a sound

system of internal control and risk management including:

- receiving reports from the Finance and Risk Committee on, and reviewing the effectiveness of, the Company’s risk and control processes to support its strategy and objectives;

- undertaking an annual assessment of these processes through the Finance and Risk Committee; and

- approving an appropriate statement for inclusion in the annual report.

5. Contracts - Major capital projects. - Contracts which are material

strategically or by reason of size, entered into by the Company in the ordinary course of business, for example bank borrowings and acquisitions or disposals of fixed assets of amounts above the threshold reserved for Executive Directors under the Schedule of Limits and Authorities.

- Contracts of the Company which are not in the ordinary

course of business (for example loans and repayments, foreign currency transactions) and major acquisitions or disposals of amounts above the thresholds reserved for Executive Directors under the Schedule of Limits and Authorities.

- Major investments including the acquisition or disposal of interests of more than (5) percent in the voting shares of any company or the making of any takeover offer.

6. Communication - Approval of resolutions and

corresponding documentation to be put forward to shareholders at a general meeting.

- Approval of all circulars and listing particulars and approval of documents such as circulars about scrip dividend procedures.

- Approval of press releases concerning matters decided by the Board.

7. Board membership and other appointments

- Changes to the structure, size and composition of the Board, following recommendations from the Governance and Remuneration Committee.

- Ensuring adequate succession planning for the Board and senior management following recommendations from the Governance and Remuneration Committee.

- Appointments to the Board, following recommendations by the Governance and Remuneration Committee.

- Approval of appointment of the Chairman of the Board

following recommendations by the Governance and Remuneration Committee.

- Appointment of Non-Executive Directors including Independent Directors following recommendations by the Governance and Remuneration Committee.

- Membership and Chairmanship of Board committees.

- Continuation in office of directors at the end of their term of office, when they are due to be re-elected by shareholders at the Annual General Meeting and otherwise as appropriate.

- Continuation in office of Non-Executive Directors at any time.

- Appointment or removal of the Company Secretary following recommendations by the Governance and Remuneration Committee.

- A p p o i n t m e n t , reappointment or removal of the external auditor to be put to shareholders for approval, following the recommendation of the Finance and Risk Committee.

- Appointments to boards of subsidiaries.

8. Remuneration - Approval of the

remuneration policy for the Directors, Company Secretary and other senior executives following recommendations by the Governance and Remuneration Committee.

- Approval of the remuneration of the Non-Executive Directors, subject to the Articles of Association and shareholder

Top Malt is enriched with nutrition for the body and mind. Top Malt is uncompromising on international quality standard and is the choice product for price sensitive consumers who need affordable nourishment every day. Top Malt comes in 30cl bottle pack only. Top Malt...our own, our pride.


approval as appropriate following recommendations by the Governance and Remuneration Committee. - The introduction of new share incentive plans or major changes to existing plans, to be put to shareholders for

approval following recommendations by the Governance and Remuneration Committee.

9. Delegation of Authority- The division of responsibilities between the Chairman and the Chief Executive, which should be in writing.- Approval of terms of reference of Board committees.- Receiving reports from Board committees on their activities.

10. Corporate governance matters- Undertaking a formal and rigorous review of its own performance, that of its committees and individual Directors.- Determining the independence of Directors.- Considering the balance of interests between shareholders, employees, customers and the community.- Review of the Company’s overall corporate governance arrangements.- Receiving reports on the views of the Company’s shareholders.

Induction and TrainingThe Company has in place a formal induction program for newly appointed Directors. As part of this induction, each new Director is provided with core materials and asked to complete a series of introductory meetings to become knowledgeable about the Company’s business and familiar with the senior management team.

The Governance and Remuneration Committee is in charge of evolving a continuing education programme to ensure existing Directors stay current with the Company’s business and objectives as well as relevant industry information and other external factors such as corporate governance requirements and best practices. As part of the programme, Directors are encouraged to periodically attend appropriate continuing education seminars or programmes which would be beneficial to the Company and the Directors’ service on the Board.

Performance evaluation processThe Governance and Remuneration Committee oversees a formal evaluation process to assess the composition and performance of the Board, each committee, and each individual Director on an annual basis. The assessment is conducted to ensure the Board, committees, and individual members are effective and productive and to identify opportunities for improvement and skill set needs.

As part of the process, each member completes a detailed and thorough questionnaire. While results are aggregated and summarized for discussion purposes, individual responses are not attributed to any member and are kept confidential to ensure honest and candid feedback is received. The Governance and Remuneration Committee reports annually to the full Board with its assessment. Directors will not be nominated for re-election unless it is affirmatively determined that the Director is substantially contributing to the overall effectiveness of the Board.

A summary of the 2012 Performance evaluation results show that the Chairman was well rated by other Directors of the Company and the Board was found to be generally healthy and effective. Areas where specific attention must be paid were highlighted. The evaluation also concluded that the critical Management-Board interface should be in the design and implementation of the Company’s strategy.

Directors’ Report

GUINNESS FOREIGN EXTRA stout is a finely crafted, powerfully-flavoured beer with a uniquely rich, rewarding taste and mouthfeel. It is one of the world’s most unique beers and the world’s most popular stout. Guinness was first brewed in Nigeria in 1962 and is now sold in 120 countries and brewed in 25 countries across the world. It is a beer like no other, the most full flavoured of all, skilfully brewed by select craftsmen with extra hops, roasted barley and a special yeast for that famous cream head, natural bite and bold masculine taste. Served cold and with a perfect pour, Guinness is a beer truly made of more.


Attendance at Board MeetingsThe Board held 4 meetings during the 2012 financial year. The following table shows membership and the attendance of Directors at the Board meetings in the 2012 financial year:

S/N Directors 9/09/2011 4/11/2011 9/02/2012 26/04/2012 Total No. of Meetings Attended

1 B. A. Savage P P P P 42 N. B. Blazquez P P AWA P 33 D. M. Hainsworth P P P P 44 S. Adetu NYA NYA NYA NYA None5 J. O. Irukwu, SAN P P P P 46 B. E. Gwadah P P P P 47 S. A. Baraz P P R R 2 9 F. O. Agbonlahor P P AWA (R) R 29 B. J. Rewane P P P P 410 I. C. Mafeni (Mrs.) P P P AWA (R) 311 M. A. Taylor P P P P 412 L. G. Nichols (Ms.) P P P P 413 J. J. Van Lierop AWA R R R None14 Z. Abdurrahman (Mrs.) NYA P P P 315 R. J. O’Keeffe NYA NYA AAM P 116 P. J. Jenkins NYA NYA AAM P 117 Y. A. Ike (Ms.) NYA NYA NYA AAM (P) 1

*** P – Present A – Absent AWA – Absent with Apology R – Resigned AAM – Appointed At Meeting NYA – Not Yet Appointed

Board CommitteesAs at the date of this report, the Company has in place, the following Board Committees.

executive CommitteeFormerly known as the General Purposes Committee, this Committee comprises all the Executive Directors of the Company and has delegated responsibility for all businesses, which should be dealt with expeditiously and is not of such a nature as to necessitate consideration by a full meeting of the Directors. In particular, the Committee exercises the approval powers vested in the Board of Directors in the Company’s Schedule of Limits and Authorities in between meetings of the Board of Directors.

The Board of Directors amended the charter of the committee, and its membership now comprises all members of the Guinness Nigeria Leadership Team from time to time. It was also renamed the Executive Committee.

HARP is one of Nigeria’s most exceptional beers. Triple filtered for a crisp, smooth, unforgettable taste, master brewers take extra care in this unique brew using the highest quality barley, sorghum, and hops. Delivering excellence in every drop, Harp is a four time medalist in the international Le Monde awards for superior quality. It’s no wonder the best moments in life are best enjoyed with Harp; and best enjoyed with friends!


Directors’ Report

Finance and Risk CommitteeThe Finance and Risk Committee is responsible for monitoring the integrity of the financial statements of the Company and reviewing the effectiveness of the Company’s internal control and risk management system, among others. The Committee comprises four Non-Executive Directors selected to provide a wide range of financial, commercial and international experience. Members of the Committee who served during the year are:

Professor J. O. Irukwu, SAN - ChairmanMr. B. J. Rewane - MemberMr. P. J. Jenkins - MemberMs. Y. A. Ike - MemberMr. S. A. Baraz - Member (Resigned with effect from 04 November 2011)Mr. B. E. Gwadah - Member

Mr. S. A. Baraz resigned his membership of the Board and ceased to be a member of the Committee effective 04 November 2011. Also, as part of the corporate governance requirement to refresh the Board and our Committees, Mr. B. E. Gwadah ceased to be a member of the Committee as at 9 February 2012. Mr. P. J. Jenkins and Ms. Y.A. Ike were appointed to fill the vacancies created by these changes.

The Committee met five times during the year with an additional meeting with the Company’s external auditors, KPMG Professional Services, in the absence of management. The Committe also met with the Controls and Governance Manager in the absence of management.

The following table shows the attendance of the members of the Committee at the meetings:

Directors 8/09/2011 3/11/2011 7/02/2012 23/04/2012 18/06/2012 Total No.of Meetings AttendedJ. O. Irukwu P P P P P 5P. J. Jenkins NYA NYA NYA P AWA 1B. J. Rewane P P P P P 5S. A. Baraz P P R R R 2B. E. Gwadah P P P LTC LTC 3Y. A. Ike (Ms.) NYA NYA NYA NYA P 1

P – PresentA - AbsentAWA – Absent with ApologyR – ResignedLTC – Left the Committee

Each of the Committee’s meetings was attended by the Commercial Director/Chief Financial Officer, the Financial Controller, the Controls and Governance Manager, the Legal Adviser and the Head of Security. The engagement partner of the external auditors, KPMG Professional Services, was also present with other key members of her team. Other senior management staff of the Company are invited to attend to brief the Committee on agenda items related to their areas of responsibilities.

SATZENBRAU is a premium pilsner lager at an affordable price. With heritage tracing back to the Bohemian Kingdom, it is extra matured to give a rich taste with complex malts and a spicy, floral Saaz hop bouquet. Available in a handy, trendy 45cl returnable bottle with 5.13% alcohol by volume.


During the year, the Committee received briefing on various financial reporting developments and the Code of Corporate Governance 2011. The Committee reviewed the Company’s quarterly financial reports, the annual reports and accounts, the auditors’ recommendations on internal controls, the management letter and draft letter of representation before recommending their approval to the Board. The Committee also reviewed the critical accounting policies, judgements and estimates applied in the preparation of the financial reports. Similarly, the Committee reviewed reports on key risks affecting the Company’s operations and the related controls and assurance processes designed to manage and mitigate such risks.

The Committee reviews the plans of both the internal and external auditors and approves the plan at the beginning of the year. The Committee has considered the proposed audit fee structure for the 2013 financial year and has recommended to the Board a suitable fee for the external auditors, subject to approval of shareholders at the Annual General Meeting.

The Board was kept updated and informed at its regular quarterly meetings of the activities of the Finance and Risk Committee through the minutes of the Committee and verbal updates provided to the Board by the Chairman of the Committee which is included as a regular item on the agenda of Board meetings.

governance and Remuneration CommitteeThe Governance and Remuneration Committee, (formerly known as Nomination and Remuneration Committee) is charged with instituting a transparent procedure for the appointment of new directors to the Board of Directors and making recommendations to the Board regarding the tenures and the re-appointment of Non-Executive Directors on the Board. The Committee comprised of the following members during the financial year:

Dr. N. B. Blazquez - ChairmanMr. D. M. Hainsworth - Member (Resigned with effect from 30 June 2012)Mrs. Z. Abdurrahman - MemberMrs. I. C. Mafeni - Member (Resigned with effect from 26 April 2012)

The Committee met twice during the financial year. The following table shows the attendance of the members of the Committee at the meetings:

Members 8/09/11 27/01/2012N. B. Blazquez P P D.M. Hainsworth P AI. C. Mafeni (Mrs.) P PZ. Abdurrahman (Mrs.) NYA NYA

P - PresentA - AbsentNYA - Not Yet Appointed

Mrs. I. C. Mafeni resigned her membership of the Board and the Committee in the course of the year while Mrs. Z. Abdurrahman was appointed a member of the Committee. The name of the Committee was changed from Nomination and Remuneration Committee to Governance and Remuneration Committee, with the approval of the Board.

Audit CommitteeThe Company has an Audit Committee set up in accordance with the provisions of the Companies and Allied Matters Act. It comprises of an equal number of directors and ordinary shareholders elected at each Annual General Meeting. The Committee evaluates annually, the independence and performance of external auditors, and also reviews with management and the external auditors the annual audited financial statements before its submission to the Board. During the year, management presented to the Committee the IFRS implementation plan of the business. The Committee approved the audit plan and scope of the external auditors for the financial year and reviewed quarterly and half yearly financial results before presentation to the Board. The Committee also receives interim and final audit presentations from the external auditors. The members of the Statutory Audit Committee during the 2012 financial year are as follows:

GUINNESS EXTRA SMOOTH has all the character of Guinness with an Extra Smooth finish. It is easy to drink, with a smooth malty taste created by millions of fine swirling bubbles, combined with a bittersweet harmony of hops and roasted barley. It is rich and deliciously satisfying and brewed with extra care for the young and discerning. The smoothness of GES is enjoyed all over by Men and Women alike. Truly smooth, Pure Guinness.


Mr. G. O. Ibhade - Chairman/ShareholderDr. M. O. Ojinka - ShareholderMr. A. N. Ezechukwu - ShareholderMr. B. E. Gwadah - DirectorMr. P. J. Jenkins - DirectorMr. S. A. Baraz - Director (Resigned with effect from 04 November 2011)Mr. F. O. Agbonlahor - Director (Resigned with effect from 09 February 2012)Mrs. I. C. Mafeni - Director (Resigned with effect from 26 April 2012)

The Committee met five (5) times during the year. The following table shows the attendance of the members of the Committee at the meetings:

Members 6/09/2011 31/10/2011 13/02/2012 23/04/2012 18/06/2012 Total No. of Meetings Attended

Mr. G. O. Ibhade P P P P P 5 Dr. M.O. Ojinka P P P P P 5Mr. A.N. Ezechukwu P P P P P 5Mr. B. E. Gwadah P P P P P 5Mr. P. J. Jenkins NYA NYA AWA P AWA 1Mr. F. O. Agbonlahor P P R R R 2Mrs. I. C. Mafeni NYA NYA AWA AWA R NoneMr. S. A. Baraz NYA NYA R R R None

P – PresentAWA – Absent with ApologyR – ResignedNYA – Not Yet Appointed

Code of Business Conduct and Corporate governance guidelines for DirectorsOur purpose and values are clearly stated in the Diageo Code of Business Conduct which defines the way we work together and perform as a business. We want to constantly demonstrate our commitment to not just being one of the Nigeria’s most trusted and respected companies but also a highly respected Company globally. We ensure that our customers, consumers, shareholders, government and the communities we operate, trust that we understand our responsibility as the world’s premium leading drinks business and that we behave accordingly.

Our reputation is critical to our long term commercial success and business sustainability. We all have a responsibility to ensure that we do the right thing and in so doing, protect the Company’s reputation. Our values guide us when taking decisions and agreeing priorities. Employees and all third parties are mandated to imbibe our values and comply with them.

As part of our continued drive to embed a culture of Compliance and Ethics in our Company, we host and celebrate the Pathway of Pride event which is an annual mandatory Ethics/Integrity Awareness programme for all Guinness Nigeria Plc employees.

The Board of Directors is guided by a Corporate Governance Guidelines. These guidelines have been developed to help the Board fulfil its responsibility to the shareholders and to ensure that the Board will have the necessary authority and practices in place to review and evaluate the Company’s business operations as appropriate and to make decisions that are in the best interest of the Company, its shareholders and other key stakeholders.

Dealings in Securities CodeThe Board has approved the Dealings in Securities Code, which prescribes a code of behaviour by Directors and senior employees, as well as those in possession of market sensitive information. Affected persons are prohibited from dealing in the Company’s securities during closed periods and mandated to obtain consent to deal from appropriate senior executives of the Company. A Code Manager has also been designated to ensure adherence to the provisions of the Code.

Statement of Company’s Risk Management Policies and Practices The Board has the responsibility of ensuring the maintenance of a sound system of internal control and risk management and regularly receives reports from the Finance and Risk Committee on the effectiveness of the Company’s risk and control processes to support its strategy and objective. In compliance with the requirements of the Code of Corporate Governance issued by the Securities and Exchange Commission in 2011, we provided assurance during the financial year that risk

Directors’ Report


management control and compliance systems are operating efficiently and effectively in all respects in Guinness Nigeria Plc. Our aim is to manage risk and to control our business and financial activities cost effectively, and in a manner that enables us to exploit profitable business opportunities in a disciplined way, avoid or reduce risks that can cause loss, reputation damage or business failure.

Specifically, our risk management objectives are to:

- Identify and maximize the benefit from new opportunities, challenges and initiatives; - Avoid unnecessary and reasonably foreseeable losses of, or damage to, our reputation, our brands, or our economic

profit; - Take appropriate risk for appropriate return in line with our values, risk culture and risk appetite; - Prioritize appropriately between different opportunities and risks; and- Provide the assurance that we understand and are effectively managing our risks required for the best corporate

governance.

In managing our risks during the year, we observed the following procedures: - A risk assessment is done as an integral part of our business planning process and updated on a regular basis. The risks

and the mitigating actions are reviewed regularly at monthly risk management committee meetings of the executive management.

- Controls Assurance and Risk Management (CARM) process is done on an annual basis to enable the Company meet the requirement of the Sarbanes Oxley Act 2002. As a subsidiary of Diageo Plc, which has United States listing, compliance with the Sarbanes-Oxley Act is mandatory for Guinness Nigeria Plc.

- An effective Internal Audit function exists to carry out risk based audit of operations reporting regularly to the Finance and Risk Committee of the Board.

- On a monthly basis we capture and communicate risks and opportunities against plan through the Business Performance Management process.

- Regular review and monitoring of the overall risk and control environment of the business is done by the Finance and Risk Committee of the Board.

Sustainability ReportAt the core of our business strategy in Guinness Nigeria Plc is a firm believe that the impact that we have on the society and our environment is as important as the financial performance that we report every year. Our sustainability and responsibility strategy therefore focuses on alcohol in society, water, environmental sustainability, community and people. In the year ended 30 June 2012, Guinness Nigeria Plc prioritized the provision of water within its environmental and community programmes.

Alcohol in SocietyGuinness Nigeria Plc has been part of the social and cultural life of communities throughout Nigeria for over fifty years. Our brands play a positive role in social occasions and celebrations for those who choose to drink. Guinness Nigeria Plc recognizes that alcohol misuse causes serious problems for individuals, communities and society. We work to market our brands responsibly to adults and support programmes and policies that create a more positive role for alcohol in society. During the year, we had a 5% increment on awareness levels of our Responsible Drinking (RD) campaign based on research work conducted by an independent and external agency.

Our environment and systems for the Diageo Marketing Code (DMC) compliance across all promotional, marketing, digital and innovation activities will actively be maintained and we strive to achieve 90% compliance of DMC on all marketing activities. All marketing activities have Responsible Drinking activations embedded in their core. The Nigerian government is currently engaged in a dialogue with Guinness Nigeria Plc and the industry in this area and we recognize that we can make a positive contribution to addressing misuse of alcohol.

Guinness Nigeria Plc runs several programmes to address alcohol misuse, with a focus on drink driving, underage drinking and excessive consumption. We have partnerships, with varying stakeholders like the Lagos State Ministry of Health, Federal Road Safety Corp and the Lagos State Ministry of Transportation, which aim at creating awareness to combat drink driving and associated risk factors of excessive consumption of alcohol. Guinness Nigeria Plc continues to spearhead the alcohol industry’s self-regulation and to make significant input to shape the development of a National Alcohol Policy with input from the industry.


WaterWater is a vital ingredient of our brands. It therefore makes sense that it is also a focus for our environmental and community programmes. Our key initiative in this area is the Water of Life scheme, in which we establish mini water works for selected local communities to give them access to clean water. We do this with support from the Diageo Foundation. Over one million Nigerians have benefited so far under this programme.

Some of the water projects that we have built under this scheme are located in Iju in Lagos State, Oregbeni in Benin City, Edo State, Iperu-Remo in Ogun State, Owode in Ibadan, Oyo State, Ikpayongo in Benue State, Egbeluowo and Odeukwu communities in Aba, Abia State, Eleme in Rivers State, Onitsha in Anambra State, Odigbo in Ondo State, Nsude in Enugu State, Isu Ekiti in Ekiti State, Jebba in Kwara State, Agoi-Ibami in Cross Rivers State and Awba Ofemili, Anambra State where we made use of solar powered water filtration system.

In April 2012, Guinness Nigeria Plc launched a unique partnership with Coca-Cola, Nigerian Bottling Company, the TY Danjuma Foundation and Water Health International to further expand access to clean water to additional five million beneficiaries across Nigeria and the West African sub-region.

CommunitiesWe are proud of our record of supporting Nigerian communities, particularly those which play host to our production sites. Members of these communities include our employees, consumers and commercial partners. Therefore, encouraging their sustainability contributes to Guinness Nigeria’s long term viability. Community investment is not simply a matter of making charitable donations, though we do contribute to philanthropic causes where appropriate. For us, the challenge is much more about using human and financial resources to create positive and long term change within our communities. To ensure that our efforts have an impact, we concentrate on a number of focus areas - health, education and sports.

HealthThe health sector is a key focus of our social investment policy. We have made some interventions in establishing and sustaining the Guinness Eye Hospitals in Lagos and Onitsha. We have continued to give support to these eye hospitals in the year under review in order to maintain them as centres of excellence for eye care and ophthalmological training not only in Nigeria but across the West African sub-region. In the 2012 financial year, we gave the hospitals a face–lift thereby making them more patient-friendly.

In support of the fight against the spread of HIV/AIDS, the Company has consistently celebrated the World’s AIDS day with Awareness walks, free lectures and VCT testing for members of its host communities.

educationGuinness Nigeria Plc has established a scholarship scheme for young school leavers in its host communities in Lagos, Edo and Abia states for the study of Engineering. The scheme is being implemented in collaboration with the Nigerian Society of Engineers.

We also promote technical education by sponsoring indigent students to the Institute of Industrial Technology, Lagos (IIT). Ten students have gone through this programme in the last year.

employee Community ProgramFriends of the Community Programme (FOC) is an initiative of the employees of Guinness Nigeria Plc. Under this initiative, employees of the Company carry out sustainability activities within its host communities thereby impacting positively in the area of social, medical and educational needs.

Directors’ Report

SMIRNOFF ICE is the number one selling Ready To Drink (RTD) in Nigeria and in the world. Its heritage goes back to 1864 when Piotr Arseneevich Smirnoff opened a distillery in Russia. A premium refreshing drink for those fun and high-energy moments, Smirnoff Ice offers a taste experience unlike any other. An extraordinary drink for extraordinary nightlife. Available in an attractive 30cl returnable bottle and 33cl can with 5.5% alcohol by volume.


In the year under review, the FOC renovated a roundabout in the Ogba Community, Lagos, tutored students of selected schools in Lagos and Benin on how to imbibe a healthy reading culture, and donated books both to them as individuals as well as to the school libraries. The FOC has also visited numerous orphanages and schools of children with special needs to donate stationeries and food items.

SportsGuinness Nigeria Plc has continually shown commitment to investing in youth development through our sponsorships of sporting events. The annual sponsorship of the Guinness Cup Golf Tournaments in Lagos and Benin respectively are an example of this.

DonationsDuring the year donations amounting to N139.9 million (2011: N50.8million) were made to various charitable ventures.

=N=Water of Life, Agoi-Ibami, Cross River 12,715,500 Water of Life, Awba-Ofemili, Anambra State 19,448,025Water of Life, Enugu, Enugu state 3,373,040Safe Water for Africa Project 75,192,308Scholarship to students-Egbeluowo Community, Abia State 75,000Scholarship to students-Odeukwu Community, Abia State 50,000Scholarship to students-Ogba Community, Lagos State 200,000Scholarship to students-Oregbeni Community, Edo State 450,000Renovation of Guinness Eye Centre, Onitsha, Anambra State 4,861,000Renovation of Guinness Eye Centre, LUTH, Lagos State 3,360,000Maintenance of Water of Life Projects 17,583,725Community road rehabilitation Aba, Abia State 2,600,000 139,908,598

In accordance with Section 38(2) of the Companies and Allied Matters Act, the Company did not make any donation or gift to any political party, political association or for any political purpose in the course of the year under review.

Anti Corruption DriveAt Guinness Nigeria Plc, we do not tolerate bribery or corruption in any form. We know that our reputation is built on the way we operate and how we conduct ourselves as a business. By ensuring our interactions are transparent, fair and consistent with our values, we can protect that reputation and support our long term business success. To reinforce this stand and create greater simplicity in this area, we have launched an Anti-Corruption Policy. The Policy applies to all employees and third parties acting for or on behalf of Guinness Nigeria Plc.

The policy extends the principles on bribery and corruption in our Code of Business Conduct by consolidating some of our existing principles that could expose us to the risk of bribery and corruption as well as bringing in new content on dealings with our third party business partners. It also provides guidance on political and charitable contributions such as: 1. Gifts and entertainment.2. Dealing with government officials.3. Conflicts of interest.4. Relationships with third parties.5. Political, community and charitable contributions.

Malta Guinness is fortified with Water, Sucrose, Maize, Sorghum, Barley Malt extract, Sorghum Malt, Caramel, Hops, 11 Vitamins, etc it remains the favourite Malt drink in Nigeria for Goodness, Energy & Vitality. For those who desire a vibrant lifestyle, Malta Guinness is the brand of choice, full of nourishment. “Malta Guinness energizes me to live everyday to the full”


environmental PolicyAt Guinness Nigeria Plc, we recognise that our management of environmental issues is important to our stakeholders and is fundamental to the long-term sustainability of the Company.

Our aim is to achieve and maintain environmental sustainability – a condition where our business causes neither long-term critical depletion of natural resources nor lasting damage to species, habitats, biodiversity or the climate. Our stance in this area is contained our Environment Policy. The tables below shows some environmental projects adopted in our breweries in 2012 financial year. Our focus is on adoption of options with the most benefit or least damage to the environment, in order to minimize environmental impact of the Company’s operations:

Lagos Brewery

Project Name Description environmental Benefit TypeAbsorption chiller Recycling of heat from the Water Use Reduction exhaust of the gas generators to generate cold water Energy Use Reduction

Cross flow filtration Cross flow filtration system replaces Waste to landfill reduction the kieselghur filtration. The old filter generates lots of kieselghur and filter sheets wastes

Installation of new gas generator Natural gas is a cleaner fuelto replace diesel generators and emits less greenhouse Reduction in green house gas gases for the same energy output compared to diesel generators

Installation of new DAL New DAL plants and tanks are Water Use Reductionplants and tanks more water and energy efficient Energy Use Reduction

Benin Brewery

Project Name Description environmental Benefit TypeAutomation of fridge plant Water savings: The ponds were Energy Use Reductioncondenser water level float using the float system. The modification used low and high Water Use Reduction level transmitters to regulate the water level in the ponds - Dumping Waste Reduction of water has stopped.

Modification of CO2 compressor Installation of variable speed drive Water Use Reductionfrom the original direct motor that will guarantee improved CO2drive to VSD(Variable speed drive) collection Energy Use Reduction

Directors’ Report

SNAPP a naturally refreshing apple-flavoured alcoholic drink made with the choicest ingredients that give SNAPP its unmistakably sophisticated, crispy, naturally refreshing taste. SNAPP suits every taste and occasion, a perfect choice for the modern, classy woman looking for feminine & sophisticated alcoholic beverage. SNAPP has 5% alcoholic content and is packaged in an attractive clear 30cl bottle with a gold & green label.“It starts with a SNAPP”


environmental SustainabilityGuinness Nigeria Plc uses a wide range of resources in its business. Some like fuel are finite, others like cereals are vulnerable to the effects of climate change. The Company is focused on reducing the environmental impact of its operations. Environmental Impact Assessments (EIA) are usually carried out before the commencement of new projects and environmental audits are conducted with the recommendations from these audits being duly implemented. In this way, we ensured that, even though the Company was undergoing a large scale capacity expansion programme, our activities did not impact negatively on the environment during the year under review.

Efficient water management is a challenge our business had voluntarily taken upon itself because of the realization that our business is largely dependent on water. Significant improvement on water usage of approximately 9.5% was made in the 2012 financial year when compared to the usage in the 2011 financial year representing a notable improvement in water efficiency. This improvement was due to the following water reduction strategies put in place by the Company - installation and use of absorption chillers in Ogba, optimization of cleaning water in process areas, behavioural change/mindset around cleaning through awareness and training, prompt curing of visible water leaks and Cleaning-In-Place (CIP) optimisation.

On Green House Gas Reduction (GHG), the Company recorded a marginal improvement of 3.5% on its GHG. This again was driven by optimization of the gas generators, effective production planning strategies on utilities usage, good utilities and asset care utilities, regular review of heat balance and temperature control.

By implementing waste management strategies, the Company recorded 43.69% over the 2011 financial year figures on waste to landfill, beer membrane filtration for Kieselghur removal, reuse and recycling of waste (e.g. spent yeast for pig farmers and for compost plant), waste segregation for all brewery waste, and effective broken bottle removal from sites for recycling.

Malta Guinness Low Sugar is the drink of choice for those who care about their health and wellbeing and follow a healthy lifestyle regime but still want the refreshment and top of the world goodness, energy and vitality that Malta Guinness provides. Malta Guinness Low Sugar contains the same nourishment & goodness of Malta Guinness classic with the same taste notes but with low sugar. Available in 33cl bottle and can.


Health and SafetyGuinness Nigeria Plc is committed to managing an Occupational Health and Safety system that promotes a safe working environment for all employees, contractors, customers and visitors to our sites. In Guinness Nigeria Plc, Occupational Health and Safety has equal importance with all other business activities. In 2007, Diageo launched her Zero Harm Strategy to ensure that every one working or visiting our sites goes home safely everyday and everywhere. This is in line with the Diageo purpose of celebrating life everyday, everywhere.

Our aim as a Company is to create a proactive safety culture in which all our employees believe that all injuries and occupational illnesses are foreseeable and preventable and we act in a manner that demonstrates their personal commitment to this aim. Valuing each other is one of our values and this starts with every employee being passionate about keeping each other safe; obsessively committed to preventing every single injury and recognizing the benefits of safe behavior and celebrating safety success.

In the 2012 financial year, the Severe and Fatal Injury Prevention Programme (SFIPP) was launched. This programme aims to eliminate fatal and severe injuries from our supply and demand operations. The safety golden rules were also introduced to guide employees in their day to day behavior while performing their duties. Our First Aid and minor accident record continue to trend downward when compared against previous years. We recorded a 30% reduction in First Aid injuries in supply operations and a 25% reduction in road traffic accidents in our demand operation for the year under review. Lost time accidents for non full time employees continue to be an area of focus. Our aim is to have zero lost time accident.

S/N Type of Incident No. of Incidents Comments1 Occupational Illnesses Nil No Occupational Illness was Reported2 First Aid Injuries 59 Operations and Project Falcon3 Lost Time Accidents 6 All non-full time employees.4 3rd Party Fatality 2 Road Traffic Accidents5 Employee Fatality 1 Road Traffic Accident

All efforts are geared towards providing a safe and conducive working environment for employees. To this end, there is a written health and safety policy supported by systems and procedures for ensuring that safe working practices are followed in the performance of all Company functions. The Company has a Corporate Safety Department in place to monitor and guide compliance with safety regulations. In the event of accidents or ailments occurring at the work place, there are adequate provisions for medical care in our clinics which are well stocked and competently managed by qualified staff. Furthermore, all employees of the Company are provided free medical care in designated hospitals.

Combating the global challenge on HIV/AIDS, Malaria and TuberculosisGuinness Nigeria Plc has a robust HIV/AIDS, Tuberculosis and Malaria (ATM) Workplace Policy which is the bed rock of our programme to address ATM issues and other wellness and health programmes. The key elements of the Policy include:

• Prevention• Protection• Testing• CareandSupport

The programme is targeted not only at the entire workforce but also our supply chain partners. The fulcrum of mitigating ATM is the dynamic peer health education programme put in place by the management. Trained peer educators disseminate information and skills to their colleagues on how to prevent, protect and provide support for those infected. Another innovative way we reach out to the workforce is through well packaged health messages on employees’ pay slips, distribution of insecticide-treated bed nets (ITNs), artemisinin-based combination therapies (ACTs) to treat malaria and intermittent preventative treatment for pregnant women (IPTp).

Directors’ Report

Dubic Extra Lager is a premium value lager with 40 years of pure Nigerian heritage. It is made of a proudly Nigerian traditional recipe. Contains 5% alcohol by volume and available in a 600ml returnable bottle.“YOU DESERVE A DUBIC”


In addition, relevant support materials on ATM are distributed as are monthly online tips on current health issues, one-on-one counselling, bi-annual comprehensive health screening for early diagnosis and prompt treatment of chronic conditions and close monitoring of those with hypertensive/diabetic conditions. The Company also procures and distributes packs of condoms which are conspicuously placed in female/male conveniences.

The Company provides HCT counselling / testing and employees are encouraged to know their HIV status. We are considering special events such as Family Days to further reach out to employees and their family members with information on how to prevent and identify signs and symptoms of ATM, and how to go about treatment if tested positive. As a result of these initiatives, stigma and discrimination has been reduced to the barest minimum and we are working towards Zero New Infection and Zero stigmatization for all employees in the Company.

Guinness Nigeria Plc is an active member of the Nigerian Business Coalition against AIDS (NIBUCCA). NIBUCCA is the workplace voice against HIV/AIDS and in this partnership, the Company continues to play a leading role in workplace HIV/AIDS prevention. We also provide HIV counselling and testing to our host communities during the celebration of the World AIDS Day, the World Malaria Day and the World Tuberculosis Day.

employment and employees(a) Training and Development It is our policy to equip all employees with the skills and knowledge required for successful performance of their jobs.

This entails identifying the training needs of our employees and prioritising implementation of plans to address such needs consistent with the requirements of the business.

(b) Dissemination of Information In order to maintain a shared perception of our goals, we are committed to communicating information to employees in

as fast and effective a manner as possible. We consider this critical to the maintenance of team spirit and high employee morale.

Circulars and newsletters are published in respect of significant corporate issues. Information is exchanged by different groups of employees at Joint Consultative Committee meetings. A good communications link with the workforce is also maintained through regular meetings between Union Representatives and Management.

(c) Employment of Physically Challenged Persons Guinness Nigeria Plc is an equal opportnity employer and does not discriminate on any grounds. Thus, we provide

employment opportunities to physically challeged persons. However, this actually goes beyond the need to ensure that there is no discrimination against such persons, but driven by a deep conviction that even in disability, there could be immense ability. At year end, we have five (5) (2011:three (3)) physically challenged persons in our employment.

employment equity, gender Polices & PracticesOur resourcing policy ensures equity and is free from discriminatory bias of gender, ethnic origin, age, marital status, gender, sexual orientation, disability, religion and other diversity issues. We have carried out employment processes across all levels in line with this practice.

Staff Diversity, employee Development & Training InitiativesIn the year under review we had a staff strength of 1,429 (1,219 Males and 210 Females). We have on-boarded our new joiners through the corporate induction programme, equipped our new managers through the New Manager programme and built people manager capability using the Managing Self and the Coaching essentials tools amidst various functional trainings. Our people are encouraged and supported to be members of Professional institutions. As a result of our continued employee development initiatives, we have internally promoted 88 people across levels and functions and 11 people have taken on international assignments within the Diageo Group.

Harp Lime is a premium flavoured lager with a unique, clean, crisp refreshing taste. The addition of 100% Natural Lime flavour gives a unique crisp, refreshing taste that satisfies every single time. Harp Lime is Nigeria’s first flavoured beer and is a real crowd-pleaser for young and old alike. Available in a stylish elegant 300ml returnable bottle and 330ml can with 5.15% alcohol by volume.“Good Times. Best Enjoyed with HARP LIME”


Acquisition of Own SharesThe Company did not purchase any of its own shares during the year (2011: Nil).

Fixed AssetsInformation relating to changes in fixed assets is given in Note 10 to the financial statements.

DistributionThe Company’s products are distributed through numerous distributors who are spread across the country. The Company also has a distributor located in the United Kingdom.

Post Balance Sheet eventsThere are no post balance sheet events, which could have had a material effect on the financial position of the Company as at the balance sheet date or the financial results for the year then ended on that date, which has not been adequately provided for.

Royalty and Technical Services AgreementIt has been the practice for the Company to maintain a close relationship with Diageo Plc as technical partner and adviser. In this capacity, we receive technical and commercial support from certain members of the Diageo group under a Technical Services Agreement and Trademark and Quality Control Agreement in respect of Guinness Foreign Extra Stout, Guinness Extra Smooth, Harp Lager, Harp Lime Lager, Malta Guinness, Malta Guinness Low Sugar, Gordon’s Spark, Smirnoff Ice and Satzenbrau Pilsner Lager.

Independent AuditorsMessrs. KPMG Professional Services were the Company’s Independent Auditors during the year under review. The Independent Auditors’ report was signed by Mrs. Oluwatoyin Atinuke Gbagi, a partner in the firm, with Institute of Chartered Accountants of Nigeria (ICAN) membership number ‘17186’.

Messrs. KPMG Professional Services have indicated their willingness to continue in office as auditors in accordance with Section 357(2) of the Companies and Allied Matters Act, 1990.

12 September 2012

By Order of the Board

SeNI ADeTUManaging Director/Chief Executive Officer

Directors’ Report

HARP is one of Nigeria’s most exceptional beers. Triple filtered for a crisp, smooth, unforgettable taste, master brewers take extra care in this unique brew using the highest quality barley, sorghum, and hops. Delivering excellence in every drop, Harp is a four time medalist in the international Le Monde awards for superior quality. It’s no wonder the best moments in life are best enjoyed with Harp; and best enjoyed with friends!


Board of Directors in Profile

Mr. Babatunde Abayomi Savage - ChairmanMr. Savage holds a Bachelor of Science degree from the University of Ibadan. He had his accountancy training with Coopers & Lybrand (now PricewaterhouseCoopers) from 1978 to 1983. Mr. Savage has attended various overseas management trainings including a stint at Cranfield School of Management and the Harvard Business School. He is a Fellow of both the Institute of Chartered Accountants of Nigeria (ICAN) and the Chartered Institute of Taxation of Nigeria (CITN).

Mr. Savage joined the Board of Guinness Nigeria Plc in 1996. He was the Company’s Director of Finance and later Corporate Planning Director. He was appointed the Corporate Affairs Director in 1998 and the Deputy Managing Director in 2005.

Upon his retirement from the Company in June 2009, Mr. Savage was appointed Chairman of the Board of Directors of the Company with effect from 1st July 2009.

He is the Chairman of the Council of the International Chamber of Commerce (ICCN) and a member of Council of the Manufacturers Association of Nigeria (MAN). He resides in Nigeria.

Dr. Nick Blazquez - Vice ChairmanDr. Blazquez was appointed as a director of the Company in September 2004 and Vice-Chairman in February 2006. He is the President of Diageo Africa and a member of the Diageo Executive Committee. He has worked for Diageo for 20 years in a number of senior roles in Asia and Europe. He is also the Chairman of Private Investors in Africa and a Non-Executive Director of Mercy Corps.

He holds a Bachelor of Science degree from the University of Aberdeen and a PhD from the University of Bristol. Dr. Blazquez is the Chair of the Governance and Remuneration Committee.

Dr. Blazquez resides in the United Kingdom.

Mr. Seni Adetu - Managing Director/CeOMr. Seni Adetu holds Bachelor of Science degree in Chemical Engineering from the University of Lagos, Nigeria and a Post-Graduate degree, MBA (with specialization in Marketing) from the same University.

He began his career as a Brand/Sales Manager with John Holt Plc and later joined Coca-Cola Nigeria Ltd, where he enjoyed a highly successful 14 year career. While at Coca-Cola, he held various senior positions which include Marketing Director and later General Manager, Coca-Cola West Africa. His responsibilities covered various markets across Africa including Kenya and Ghana. He also served as the Commercial Director for Nigerian Bottling Company PLC.

In 2006, Mr. Adetu joined Diageo and was appointed Managing Director of Guinness Ghana Breweries Limited (GGBL) where he led the integration of Guinness Ghana and Ghana Breweries Limited, creating a winning culture and driving a strong market share growth.

He moved on to become the Group Managing Director of East African Breweries Ltd in 2009, a position he held until his appointment as Managing Director for Guinness Nigeria Plc with effect from 1 July 2012. He resides in Nigeria.


Professor J. O. Irukwu, SAN - Non-executive Director (NeD)Professor Irukwu holds MBA and Ph.D. degrees as well as several honorary doctorate degrees. He is a Fellow of the Corporation of Insurance Brokers, a past president of the West African Insurance Companies Association and the Founding President of the Professional Reinsurers Association of Nigeria. He is a Professor of Law and Insurance

A Senior Advocate of Nigeria, Professor Irukwu is also a past president Ohaneze Ndigbo, a socio-cultural group representing the third largest ethnic group in Nigeria. Professor Irukwu joined the Board of the Company as a Non-Executive Director in December 1996.

Professor Irukwu is the current Chair of the Finance and Risk Committee of the Board. He resides in Nigeria.

Mr. Bitrus edward gwadah - Non-executive Director (NeD)Mr. Bitrus Gwadah has an honours degree in Law and was admitted to the Nigerian Bar as a Barrister and Solicitor.

He was Managing Director/CEO, NIDB Trustees Limited, a subsidiary of Nigerian Industrial Development Bank Limited. In addition to being a Director of Guinness Nigeria, he is also engaged in private legal practice and consultancy. He joined the Board of Guinness Nigeria in 2000 as a Non-Executive Director.

Mr. Gwadah represents the Board on the statutory Audit Committee. He also served on the Finance and Risk Committee of the Board. He resides in Nigeria.

Mr. Bismarck Jemide Rewane - Non-executive Director (NeD)Mr. Bismarck Rewane graduated from the University of Ibadan with a Bachelors and Honours degree in Economics (1972). He worked at several blue-chip financial institutions within Nigeria and abroad holding various senior management positions.

Between 1981 and 1989, he was with International Merchant Bank Nigeria Limited and held such positions as General Manager, Assistant General Manager, Head of Development Finance Manager & Divisional and Credit Manager. He was also with the First National Bank of Chicago, Barclays Bank of Nigeria and Barclays Bank International Plc, United Kingdom.

An Associate of the Institute of Bankers, (England & Wales), Mr. Rewane has served on the board of several organisations, including Navgas (a Vitol Group subsidiary), NLNG Prize Award Foundation, UNIC Insurance Plc, Nigeria Economic Summit Group, UBA Custodian Limited, Virgin Nigeria Airways Limited, Fidelity Bank Plc, First City Monument Bank Plc and Top Feeds Nigeria Limited.

Mr. Rewane joined the Board of Guinness Nigeria Plc as a Non-Executive Director in 2008. He is a member of the Finance and Risk Committee and resides in Nigeria.



Mrs. Zainab Abdurrahman - Non-executive Director (NeD)Mrs. Zainab Abdurrahman holds an honours degree in Economics from the Ahmadu Bello University, Zaria specializing in Finance, Operations Research, Statistics, Project Evaluation, Accounting and Economic Analysis. She joined the Nigerian National Petroleum Corporation (NNPC) in 1979 where she held a number of increasing leadership responsibilities including Managing Director, Group General Manager, NNPC Retail Limited in charge of NNPC Petrol Stations – Land and Floating, General Manager, Investment Division, Manager Domestic Investment and Finance and Head, Domestic and International Investments. She also represented the interest of NNPC on the Boards of 2 Joint Venture trading companies and the Committee on the Review of the Joint Operating Agreements and Production Sharing Contracts in the Upstream Sector, among several important assignments.

Mrs. Abdurrahman retired from the NNPC in 2009 and now runs a private business. She was appointed to the Board as a Non-Executive Director on 4th November 2011.

Mrs. Abdurrahman is a member of the Board’s Governance and Remuneration Committee. She resides in Nigeria.

Ms. Lisa gillian Nichols- Commercial Director (executive Director)Ms. Lisa Nichols joined Diageo in September 1992 as Financial Analyst, IDV, Asia Pacific based in London. From there, she subsequently worked in Dubai, Beirut, Kingston Jamaica, Chicago, Budapest and London in several positions of increasing leadership responsibilities in finance, audit and general management roles spanning market finance director, financial control, treasury, financial planning and reporting and global audit and risk.

Ms. Nichols has been the Global Business Support Director Africa and a member of the Diageo Africa executive team for the last one year and, in this role, was responsible for strategy, decision support, business development and new business ventures.

Ms. Nichols holds a BA (Hons.) degree in Mathematics from the Oxford University and is an associate member of the Chartered Institute of Management Accountants (ACMA). She has lived and operated successfully across many parts of the world and speaks French, basic German and basic Hungarian in addition to English. She joined Guinness Nigeria Plc as the Commercial Director with effect from 1st August 2011 and was appointed to the Board on 9th September 2011. She resides in Nigeria.

Mr. Mark A. Taylor-Non-executive Director (NeD)Mr. Mark A. Taylor graduated from the University College of Birmingham and began his early career at De Vere Hotels in 1990 as a Graduate Trainee. He proceeded to Carlsberg – Tetley Brewing Ltd (1993) and IDV Morgan Furze (1994) as Trade Market Executive and Trade Market Manager respectively before joining Diageo Plc as Commercial Development Director in 1998. Mark has attended various international management training institutions including Glendenning Management Consultancy and London Business School.

Mr. Taylor has over 20 years of international experience which spans developing, implementing and embedding both commercial and sales strategy, change management, delivery of business plan, inspirational leadership, building positive relationship, political understanding and influencing etc. Mr. Taylor was appointed Commercial Director, Diageo Africa in April 2011 and to the Board of Guinness Nigeria Plc as a Non-Executive Director on 1st June 2011. He resides in the United Kingdom.


Ms. Yvonne Ike - Non-executive Director (NeD)Ms. Yvonne Ike holds a Bachelor of Science Degree in Economics. She started her career as an auditor with Ernst and Young International and has been an FSA registered representative since 1994. She was a Managing Director at JP Morgan, where she spent 15 years of her career until 2009.

Ms. Ike is an internationally regarded investment banker credited with pioneering a number of groundbreaking transactions in West Africa region. She has more than 18 years experience in financial services, including capital markets operations and fixed-income, derivatives and equities products. Over the course of her career, she has led senior teams in New York, Geneva, Hong Kong, Nigeria and South Africa.

She is presently the CEO West Africa, Renaissance Group (Investment Banking).

Ms. Ike was appointed to the Board as a Non-Executive Director on 26th April 2012 and is a member of the Board’s Finance and Risk Committee. She resides in Nigeria.

Mr. Philip John Jenkins- Non-executive Director (NeDMr. John Jenkins obtained an honours degree in Accounting and Financial Analysis from the University of Newcastle-Upon-Tyne. Mr. Jenkins is a senior finance professional with a 20 year record of success in blue chip, sales, marketing and manufacturing environments, he is a member of the institute of Chartered Accountants.

Mr. Jenkins worked as the head of Finance in UK Brewing (UK subsidiary of S&N). He later became the Finance Director of Scottish Courage National Sales, another UK subsidiary of S&N. He was appointed the Corporate Development Manager of S&N Plc in August 2003 in which role he was responsible for group strategic planning and execution of key corporate development projects. He further worked as the Programme Director for S&N Plc before joining Diageo Plc in 2008. This is outside other commercial finance and internal and external audit roles he has held. He was the Business Development Director of Diageo Plc until his recent appointment as the Finance Director of Diageo Africa earlier in the year.

Mr. Jenkins was appointed to the Board as a Non-Executive Director on 9th February 2012. He is a member of the Finance and Risk Committee and also represents the Board on the Audit Committee. He resides in England.

Mr. Rory John O’Keeffe - Non-executive Director (NeDMr. John O’Keeffe holds a Bachelor of Commerce degree from the University College Cork, Ireland specializing in Economics & Marketing. He joined Diageo Plc in 1994 and he has held a number of leadership responsibilities including Brand Manager, Diageo Ireland, New Product Development Manager, Diageo Ireland, Guinness Brand Manager, Diageo Ireland (based in Dublin), Marketing & Innovation Manager, Diageo Jamaica, Marketing Director, Diageo Jamaica/Caribbean, Marketing Director, Diageo Nordics, Commercial & Innovation Director, Diageo Nordics, General Manager, Diageo Sweden & Finland, Managing Director Diageo Russia & CIS markets (based in Moscow) and Managing Director Diageo Russia & Eastern Europe. Mr. O’Keefe is presently the Global Category Director Beer and Baileys for Diageo Plc. He resides in Ireland.

Mr. O’Keeffe was appointed to the Board as a Non-Executive Director on 9th February 2012. He resides in Republic of Ireland.



Sesan Sobowale - Company SecretaryMr. Sesan Sobowale qualified as a Solicitor and advocate of the Supreme Court of Nigeria and was admitted to the Bar in December 1990. Sesan’s over 14 years of commercial legal experience spanned several of Nigeria’s leading commercial law firms including G. M. Ibru & Co., Udo-Udoma & Bello-Osagie and the Law Union. Sesan is an Associate member of the Chartered Institute of Taxation of Nigeria and the Institute of Chartered Secretaries and Administrators (Nigeria and UK).

Mr. Sobowale was appointed Regulatory Advisor at Nigeria’s MTN Nigeria Communications Limited in August 2004 from where he was appointed as Legal Adviser in Guinness Nigeria Plc on 18th April 2005.

He was appointed by the Board as Company Secretary in September 2006 and resides in Nigeria.


The guinness Leadership Team

Seni Adetu- Managing Director/Chief executive Director

Lisa Nichols- Commercial Director

Udo Anya- Sales Director

Austin Ufomba- Marketing and Innovation Director

Cephas Afebuameh- Supply Chain Director

Felix enwemadu- gM Spirits

Sesan Sobowale- Corporate Relations Director/Company Secretary

Wale Adediran- Human Resources Director

Naturally Refreshing Taste

It starts with a SNAPP

18+DRINK RESPONSIBLYWWW.DRINKiQ.COMThe SNAPP word and associated LOGOS are Trademarks. © Diageo Great Britain Limited 2012

TM

C

M

Y

CM

MY

CY

CMY

K

34196_5by4.ai 1 31/05/2012 11:38


guinness Leadership Team


Supporting Our Communities

guinness eye Hospitals now a sight to behold!

Guinness Nigeria Plc demonstrated its passion for community involvement and humanitarian service by giving the Guinness Eye Centre at the Lagos University Teaching Hospital (LUTH) and in Onitsha a much needed face lift. The walls were beautifully repainted, furniture and fittings were replaced and an external signage which gave more visibility to the eye centre was placed at the entrance. These were geared towards fostering a stronger partnership as well as sustaining the Eye Centre as a centre of excellence in eye care.

Water of Life

Guinness Nigeria Plc, under its Water of Life Scheme, completed projects in: Ise-Ekiti in Ekiti State; Nsude in Enugu State; Awba-Ofemmili in Anambra State and Jebba in Kwara State. These projects provide for an additional fifty thousand people within the communities. This focus on water is in line with our sustainability agenda and is Guinness Nigeria and Diageo’s contribution to resolving the global problem while aligning with the UN Millennium Development Goal to “halve by 2015 the number of people without sustainable access to safe drinking water and sanitation”.

employee Community Service

Guinness Nigeria employees, under the arm of Friends of the Community (FOC), an employee driven charitable initiative, ‘went the extra mile’ by donating bed sheets to the patients of the recently refurbished Guinness Eye Hospital in Lagos. FOC also gave the Oba Akran Avenue roundabout a facelift by painting it in a project tagged “Rejig”.

Students of 4 selected schools each in Lagos and Benin were not left out in the FOC activities as they were educated on the need to imbibe a healthy reading culture .The school libraries were equipped with approved up-to-date- reading materials to enhance their reading culture while the students each received books as gift items.

Executive Governor of Ekiti State, Dr. John Kayode Fayemi tasting a sample of the Water at Ekiti on 25th November 2011.


From left to right: Mr. Sesan Sobowale, Corporate Relations Director, Guinness Nigeria Plc; The Chief Medical Director (CMD) of LUTH, Prof. Akin Oshibogun; Mrs. Adrianne Nwagwu, Head, Sustainability & Responsibility Guinness Nigeria Plc at the commissioning of the newly refurbished Guinness Eye Center in LUTH.

1st ever solar powered water filtration system in Awba- Ofemmili in Anambra State.

Enugu State Commissioner of Water Resources, Honourable Charles Ajah cutting the tape at the fetching point in Enugu.

Sameer Mithal, Executive Vice President WHI; Thelma Ekiyor, Executive Director, TY Danjuma Foundation; Kelvin Balogun, MD, Coca Cola Nigeria; Sarah Ochekpe, Minister of Water Resources; Devlin Hainsworth, Former MD, Guinness Nigeria Plc; Segun Ogunsanya, MD, Nigerian Bottling Company and Naabia Ofosu -Amaah, WHI.

guinness Nigeria Plc joins forces with students to ‘get to Zero’ to mark World AIDS Day

Guinness Nigeria Plc supported World Aids Day by educating over 3000 students in Lagos and Benin on the need to ‘Get to Zero’: Zero Discrimination, Zero AIDS related deaths and Zero New infections. A film show and talk was given to them to enlighten them on the realities of the scourge of AIDS.

Safe Water For Africa (Nigeria)

In April 2012, Guinness Nigeria launched a unique partnership with Coca-Cola, Nigerian Bottling Company, the TY Danjuma Foundation and Water Health International (WHI) to provide sustainable safe water access to 5 million people in Africa by 2015. The project also aims to reduce the prevalence of water borne-diseases across Nigeria.


Smirnoff Midnight Circus Calabar Festival

Promoting Responsible Drinking in the SocietyDuring the month long Calabar Festival, the Company brought its commitment to Responsible Drinking (RD) to all festival goers through a successful responsible drinking activation. At each event during the festival, and in the Guinness sponsored festival village, free branded water was provided to consumers to educate them about the importance of alternating alcoholic beverages with water. Pledge Boards bearing the message “I Drink Responsibly; I will not drink and Drive” were dotted throughout the festival village. At the Harp Rhythm Unplugged and Smirnoff Midnight Circus events, the Company also partnered with the popular taxi company, Metro Taxis, to provide N500 discounts on all taxis booked at the event venue. Free discount vouchers were given to consumers which resulted in over 90 trips booked with Metro Taxis.

Harp Rhythm UnpluggedThe Harp Rhythm Unplugged is an annual entertainment event. Five high profile shows were held in Lagos, Ibadan, Port Harcourt and Abuja featuring a wealth of Nigerian musicians and comedians. Guitar competition preceded the events and winners got the chance to perform with renowned guitarist at the events. The newest addition to the Harp family, Harp Lime was also up for sampling at the live music show held in Lagos in December 2011.

The Smirnoff Midnight CircusThe Smirnoff Brand brought the circus to town and first treated some lucky Lagosians to an unforgettable experience. It did not stop there, the Smirnoff Midnight Circus also made stops in Port Harcourt and Calabar. The Smirnoff Midnight Circus was truly an unforgettable event that took Lagos, Port Harcourt and Calabar by storm.

Calabar FestivalGuinness Nigeria Plc was the official sponsor of the month long Calabar Festival held in December 2011.

easter Beer CarnivalThe Easter Beer Carnival was designed to create an experiential platform for our consumers where they can sample all brands in the Guinness portfolio. There were local acts, games and promos/raffle draws where consumers won instant prizes.

giving Consumers a WOW experience

Harp Rhythm Unplugged

Jill Scott signing the RD Pledge Board at the Baileys Event held during the Calabar Festival.

Governor Liyel Imoke of Cross River State signing the RD Pledge Board at the Calabar Beer Village during the opening of Calabar Festival 2011.


Calabar Festival easter Beer Carnival

Harp Rhythm Unplugged

Governor Liyel Imoke of Cross River State signing the RD Pledge Board at the Calabar Beer Village during the opening of Calabar Festival 2011.

A delighted consumer signing the RD Pledge Board at the Smirnoff Midnight Circus event.

RD Pledge Board at the Smirnoff Midnight Circus event.


Satisfying our Consumers

Investing in our People

Malta guinness Low Sugar Launch

In response to the growing demand from consumers in Nigeria for a low sugar variant of Malta Guinness, Malta Guinness Low Sugar was launched in May 2012. With a great taste and no compromise on quality, Malta Guinness Low Sugar is a drink of choice for those who are particular about their health and wellbeing as well as follow a healthy lifestyle regime while still enjoying the refreshment and top of the world goodness, energy and vitality that Malta Guinness provides.

Malta Guinness Low Sugar is endorsed by the leading Premier League Club, Arsenal FC.

guinness Nigeria Plc is the Best Place to Work in Nigeria

On Thursday, 19th April 2012, at a prestigious event in Lagos attended by a host of blue-chip companies operating in Nigeria, Guinness Nigeria Plc was adjudged the “Best Place to Work in Nigeria” by the Great Place to Work Institute (GPTWI) after being shortlisted as one of the ‘Top 10 Companies to work for in Nigeria’. At the same event, the Company also won the coveted award for “Best Multinational Company to work for in Nigeria”.

The Great Place To Work® Institute is a global research and consulting firm which is best known for producing the Fortune 100 Best Companies list in the U.S and similar lists in 45 other countries. The Institute defines great workplaces as companies where employees trust the people they work with; take pride in their work; and enjoy the relationship with the people they work with.

Improving Stakeholder RelationsMedia Tour of Ogba Brewery

Key media in Nigeria were taken on a tour of the Ogba Brewery on Tuesday, 28th February 2012. This gave us the opportunity to showcase the capacity expansion project and new brew house to the media.

Brewing Manager, Harrison Omamogho who represented the Ogba Brewery Plant Manager, Tunde Adegbola took the journalists on a fully guided tour around the newly commissioned Brew House and the new production lines, explaining production details and responding to questions about our products.


Dubic extra Lager Launch

Dubic Extra Lager a much loved brand in Aba, first brewed in 1986, a beer of the people, brewed for the people with over 20 years of heritage was re-launched in April 2012 and expanded in its new distinctive royal purple colour.

Dubic has taken local connection with consumers to a whole new level through its sponsorship of both the Enyimba FC of Aba and the Shooting Stars FC of Ibadan.

guinness Nigeria launches New Harp Lime Lager

Guinness Nigeria added a new flavored beer, Harp Lime® to its portfolio of world class brands. Typical of the Company’s innovative approach, Harp Lime® which combines the quality taste of Harp® lager and the distinct tinge of lime is Nigeria’s first 100% natural flavored beer.

The beer packaged in 300ml bottle and 330ml Can variant, launched on the 20th of December 2011, has since been enjoying unprecedented acceptance by Lager consumers across the country.

Diageo Africa Business Reporting AwardsThe Diageo Africa Business Reporting Awards (DABRA) was initiated in 2004 and is in its ninth year. The Awards celebrate the journalists and media outlets who have delivered excellent business journalism from and about Africa. Entries this year were received from 27 countries, with two-thirds of entries published in the African media. This year, Miss Ella-Marcelle Olamiju of National Mirror won in the Best Tourism Feature category with her article titled ‘South African commercial shows Nigeria still in search of global brand identity’ From left to right: Sesan Sobowale, Corporate Relations

Director, Guinness Nigeria Plc; Miss Ella-Marcelle Olamiju of National Mirror; Mr. Wale Adediran, Human Resources Director, Guinness Nigeria Plc at the presentation of the award for Best Tourism Feature.

Miss Ella-Marcelle Olamiju of National Mirror displaying her award.


From Left to right: Mr. Alli Adebayo, Guinness Nigeria Plc Project Falcon Lead; Faith Oluwatunbi, Assistant Company Secretary, Guinness Nigeria Plc; Tunde Adegbola, Ogba Brewery Plant Manager; Dr. M.O. Ojinka, Mr. A.N. Ezechukwu, Mr. G.O Ibhade and Mr. B.E. Gwadah, members of the Audit Committee; Mr. Cephas Afebuameh, Supply Chain Director, Guinness Nigeria Plc.

Audit Committee Tour of Ogba Brewery

Lagos Country Club presents guinness Nigeria with Award

Lagos Country Club presented Guinness Nigeria Plc with an Award in recognition and appreciation of its outstanding contributions to the growth and development of the Club.

Guinness Nigeria Plc also sponsored the Astroturf Tournament at the Club.

guinness Nigeria Signs On to the Convention on Business Integrity (CBi)

Guinness Nigeria Plc, as a Company that stands out amongst its peers, in September 2011, signed on to the Convention on Business Integrity (CBi). Guinness Nigeria Plc in its decision to join the Convention on Business Integrity (CBi) will continue to preach what it greatly believes in and move the society towards a visible zero tolerance for corruption, while also underscoring the importance of good governance.

Prior to joining CBi, Guinness Nigeria Plc, has always met the primary condition of the Convention’s membership, which is the commitment to good corporate governance and subsequently agreeing to abide by the ethical standards outlined in CBi’s Code.

Proud of What We Do

61st Annual general Meeting of guinness Nigeria Plc held at Shell Hall, Muson Centre, Marina, Lagos on 4 November 2011.


Diageo Plc executives Visit Nigeria

In September 2011, Diageo Plc Executives visited Nigeria. During their stay, they visited a Water of Life Project in Lagos, conducted a tour of the capacity expansion project at the Ogba Brewery and were hosted to a dinner by the British High Commissioner, among other activities.

61st Annual general Meeting of guinness Nigeria Plc held at Shell Hall, Muson Centre, Marina, Lagos on 4 November 2011.

Guinness Nigeria Plc’s Five-A-Side team led by the Human Resources Director, Mr. Wale Adediran. Mr. Innocent Nwaononiwu receiving an award from the Club.


FinancialStatements


In compliance with Section 359(6) of the Companies and Allied Matters Act, we have -

(a) reviewed the scope and planning of the audit requirements;

(b) reviewed the external Auditors’ Memorandum of Recommendations on Accounting Policies and Internal Controls together with Management Responses; and

(c) ascertained that the accounting and reporting policies of the Company for the year ended 30 June 2012 are in accordance with legal requirements and agreed ethical practices.

In our opinion, the scope and planning of the audit for the year ended 30 June 2012 were adequate and the Management Responses to the Auditors’ findings were satisfactory.

Mr. g. O. IbhadeChairman, Audit Committee

10 September 2012

Members of the Audit Committee

Mr. G. O. Ibhade - Shareholder/ChairmanDr. M. O. Ojinka - ShareholderMr. N. Ezechukwu - ShareholderMr. B. E. Gwadah - DirectorMr. P.J. Jenkins - DirectorMrs. I.C. Mafeni - Director (resigned with effect from 13 April 2012)Mr. F.O. Agbonlahor - Director (resigned with effect from 09 February 2012)Mr. S. A. Baraz - Director (resigned with effect from 04 November 2011)

Report of the Audit Committee


The directors accept responsibility for the preparation of the annual financial statements set out on pages 51 to 71 that give a true and fair view in accordance with Statements of Accounting Standards applicable in Nigeria and in the manner required by the Companies and Allied Matters Act of Nigeria.

The directors further accept responsibility for maintaining adequate accounting records as required by the Companies and Allied Matters Act of Nigeria 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.

The directors have made an assessment of the Company’s ability to continue as a going concern and have no reason to believe the Company will not remain a going concern in the year ahead.

SIGNED ON BEHALF OF THE BOARD OF DIRECTORS BY:

____________________________ ___________________________Signature Signature

SENI ADETU LISA NICHOLS Name Name

12 September 2012 12 September 2012____________________________ ____________________________Date Date

Statement of Directors’ Responsibilities

for the year ended 30 June 2012


Independent Auditor’s Report

Report on the Financial Statements

We have audited the accompanying financial statements of guinness Nigeria Plc (“the Company”), which comprise the balance sheet as at 30 June 2012, and the profit and loss account, statement of cash flows and value added statement for the year then ended, and the statement of accounting policies, notes to the financial statements and the five year financial summary, as set out on pages 51 to 71.

Directors’ Responsibility for the Financial StatementsThe directors are responsible for the preparation of financial statements that give a true and fair view in accordance with Statements of Accounting Standards applicable in Nigeria and in the manner required by the Companies and Allied Matters Act of Nigeria, 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.

Auditor’s ResponsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with international Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgment including the assessment of the risks of mateiral misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation

KPMG Professional Services, a Partnership established under Nigeria law, is a member of KPMG International Cooperative (“KPMG International”); a swiss entity. All rights reserved.

Registered in Nigeria No BN 986925

Abayomi D. Sanni Adebisi O. Lamikanra Adekunle A. ElebuteAdetola P. Adeyemi Adewale K. Ajayi Ajibola O. OlomolaAyodele H. Othihiwa Ayo L. Salami Chibuzor N. AnyanechiGoodluck C. Obi Joseph O. Tegbe Kabir O. OkunlolaOladapo R. Okubadejo Oladimeji I. Salaudeen Olumide O. OlayinkaOluseyi T. Bickersteth Oluwatoyin A. Gbagi Tayo I. OgungbenroVictor U. Onyenkpa

To the Members of guinness Nigeria Plc

of the financial statements 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 entity’s inernal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements.

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

OpinionIn our opinion, the financial statements give a true and fair view of the financial position of guinness Nigeria Plc as at 30 June 2012, and of its financial performance and cash flows for the year then ended in accordance with Statements of Accounting Standards applicable in Nigeria and in the manner required by the Companies and Allied Matters Act of Nigeria.

Report on Other Legal and Regulatory Requirements

Compliance with the Requirements of Schedule 6 of the Companies and Allied Matters Act of NigeriaIn our opinion, proper books of account have been kept by the Company, so far as appears from our examination of those books and the Company’s balance sheet and profit and loss account are in agreement with the books of account.

12 September 2012Lagos, Nigeria

KPMG Professional Services Telephone 234 (1) 271 8955KPMG Tower 234 (1) 271 8599Bishop Aboyade Cole Street Fax 234 (1) 462 0704Victoria Island Internet www.ng.kpmg.comPMB 40014, FalomoLagos


A summary of the principal accounting policies, all of which have been consistently applied throughout the current and preceding years, is set out below:a. Basis of Preparation of Financial StatementsThe financial statements are prepared under the historical cost convention as modified by the revaluation of certain leasehold land and buildings, plant and machinery. b. TurnoverTurnover represents the value of beer, ready-to-drink and malt beverages despatched to third parties, net of Value Added Tax (VAT) and discounts.

c. Fixed AssetsFixed assets are stated at cost or valuation less accumulated depreciation. Cost includes expenditure directly attributable to the acquisition of the fixed asset. When parts of an item of fixed assets have different useful life, they are accounted for as separate items of fixed assets. Costs relating to fixed assets under construction or in the process of installation are disclosed as assets in progress.

Borrowing costs that are directly attributable to qualifying fixed assets are capitalised. Qualifying fixed assets are those that necessarily take a substantial period of time to build. Capitalisation of borrowing costs continues up to the date that the assets are available for use in production.

d. Depreciation of Fixed AssetsDepreciation is calculated to write off the cost or valuation of fixed assets on a straight-line basis over the expected useful life of each asset. The principal annual rates used for this purposes are:

Leasehold land and buildings - 2% or period of lease (whichever is lower) Plant and machinery

- Heavy - 5%- Light - 10%- Chillers and generators - 33.33%

Furniture and equipment - 20%Motor vehicles - 25%

Depreciation is not calculated on fixed assets until they are available for use.

Assets in progress are not depreciated. The attributable cost of each asset is transferred to the relevant asset category immediately the asset is available for use and depreciated accordingly.

Gains or losses on disposal of fixed assets are included in the profit and loss account.

e. Intangible AssetsIntangible assets are recognised if, and only if, it is probable that the expected future economic benefits that are attributable to the assets will flow to the Company and the cost of the assets can be measured reliably.

Intangible assets that are acquired by the Company and have finite useful lives are measured at cost less accumulated amortisation and accumulated impairment losses. Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates.

Intangibles are amortised on a straight line basis over their estimated useful lives from the date that they are available for use, since this most closely reflects the expected pattern of consumption of the future economic benefits embodied in the asset. Amortisation is recognised in the profit and loss account.

The estimated useful lives for intangible assets are as follows:• ComputerSoftware–SAP - 5½years• ComputerSoftware–Others - 3years

f. StocksStock is valued at the lower of cost and net realisable value and is stated net of allowances for obsolete, slow moving or defective items, where appropriate. Cost incurred in bringing each stock item to its present location and condition is derived as follows:

Statement of Accounting Policies


i. Raw materials, Packaging materials - Purchase cost on a weighted average basis (excluding bottles and crates) and including transportation and applicable engineering spares clearing charges.

ii. Finished products and - Average cost of direct materials and labour products in process plus the appropriate amount attributable to production overheads based on normal production capacity.

iii. Bottles and crates - Deposit value which is deemed to be the net realisable value

iv. Stock in transit - Purchase cost incurred to date.

Weighted average and average cost are reviewed periodically to ensure they consistently approximate historical cost.

Changes in the valuation of bottles and crates (principally as a result of changes in the deposit value) are taken to the profit and loss account to the extent that changes do not exceed historical costs.

Net realisable value is based on estimated normal selling price less further costs expected to be incurred to completion and disposal.

g. DebtorsDebtors are stated after deduction of allowances for debts considered bad or doubtful of recovery. Sale of debtor balances to third parties is recorded as a reduction to the debtor balance when there is no recourse to the Company. Loss on the sale of debtor balances is recorded in the profit and loss account as part of interest expense.

h. ProvisionsA provision is recognised only if, as a result of a past event, the Company has a present legal or constructive obligation that can be reliably estimated, and it is probable that an outflow of economic benefits will be required to settle the obligation.

i. Restructuring A provision for restructuring is recognised when the Company has approved a detailed and formal restructuring plan and the restructuring has either commenced or been formally communicated to its employees.

ii. Onerous ContractsA provision for onerous contracts is recognised when the expected benefits to be derived by the Company from a contract are lower than unavoidable costs of meeting obligations under the contract. The provision is measured at the present value of the lower of expected costs of terminating the contract and the expected net costs of continuing with the contract. Before a provision is established, the Company recognises any impairment loss on the assets associated with that contract.

i. Foreign CurrenciesTransactions denominated in foreign currencies are converted into Naira and recorded at the exchange rates ruling on the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are re-converted into Naira at the rates of exchange ruling at the balance sheet date or where appropriate, at the contracted rate of exchange if the balance is to be settled at a contracted rate. Any gain or loss arising from a change in exchange rates, subsequent to the dates of transactions, is included as an exchange gain or loss, in the profit and loss account.

j. employees Benefitsi. PensionIn line with the provisions of the Pension Reform Act 2004, the Company instituted a defined contribution pension scheme for its management and non-management staff. Staff contributions to the schemes are funded through payroll deductions while the Company’s contribution is charged to the profit and loss account. The Company contributes 10% and 12% for management and non-management staff respectively while employees contribute 7.5% of their insurable earnings (basic, housing and transport allowance).

ii. Gratuity(a). Defined Benefit SchemeLump-sum benefits payable upon retirement or resignation of employment are fully accrued over the service lives of management and non-management staff under this scheme. Employees under the defined benefit scheme are those who had served a minimum of 5 years on or before 31 December 2008 when the scheme was terminated. Independent actuarial valuations are performed periodically on a projected unit credit basis. Actuarial gains or


losses and curtailment gains or losses arising from valuations are charged in full to the profit and loss account. The Company ensures that adequate arrangements are in place to meet its obligation under the scheme.

(b). Defined Contribution SchemeThe Company has a defined contribution gratuity scheme for management and non-management staff which is funded. Under this scheme, a specified amount is contributed by the Company and charged to the profit and loss account over the service life of the employees.

iii. Long Service AwardsLong service awards are payable upon completion of certain years in service and accrued over the service lives of the employees. The charge to the profit and loss account is based on independent actuarial valuation performed using the projected unit credit method. Actuarial gains or losses arising from the valuation are charged in full to the profit and loss account.

k. Income TaxIncome tax expenses/credits are recognised in the profit and loss account.

Current income tax is the expected amount of income tax payable on taxable profits for the year determined in accordance with the Companies Income Tax Act (CITA) using statutory tax rates at the balance sheet date and any adjustment to tax payable in respect of previous years.

Tertiary education tax is assessed at 2% of assessable profits while capital gains tax is assessed at 10%, where applicable, of the capital gain.

l. Deferred TaxationDeferred taxation, which arises from differences in the timing of recognition of items in the accounts and by tax authorities, is calculated using the liability method. Deferred tax is provided on all temporary differences at the rates of tax likely to be in force at the time of reversal.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the assets can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised. Deferred tax is charged to the profit and loss account except to the extent that it relates to a transaction that is recognised directly in equity.

m. Leasesi. Where the Company is the lesseeLeases in terms of which the Company assumes substantially all the risks and rewards of ownership are classified as finance leases. At the beginning of the lease term, the leased asset is measured at an amount equal to the fair value of the leased asset less the present value of unguaranteed or partially guaranteed residual value, which would accrue to the lessor at the end of the term of the lease. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset. Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term of the lease when the lease adjustment is confirmed. Other leases are classified as operating leases and are not recognised in the Company’s balance sheet. Payments made under operating leases are recognised in the profit and loss account on a straight line basis over the term of the lease.

ii. Where the Company is the lessor When assets are held subject to a finance lease, the transactions are recognised in the books of the Company at the net investments in the lease. Net investment in the lease is the gross investment in the lease discounted at the interest rate implicit in the lease. The gross investment is the sum of the minimum lease payments plus any residual value payable on the lease. The discount on lease is defined as the difference between the gross investment and the present value of the asset under the lease. The discount is recognised as unearned in the books of the Company and charged to the profit and loss account as they are earned over the life of the lease at a basis that reflects a constant rate of return on the Company’s net investment in the lease.

When assets are held subject to an operating lease, the assets are recognised as fixed assets based on the nature of the asset and the Company’s normal depreciation policy for that class of asset applies. Lease income is recognised


Statement of Accounting Policies

on a straight line basis over the lease term. All indirect costs associated with the operating lease are charged as incurred to the profit and loss account.

n. ImpairmentThe carrying values of the Company’s assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indications exist, the asset’s recoverable amount is estimated. An impairment loss is recognised whenever the carrying value of an asset exceeds its recoverable amount.

Impairment losses are recognised in the profit and loss account except where they relate to previously revalued assets, in which case, they are recognised directly against any revaluation surplus to the extent that an amount is included in the revaluation reserve account for the related assets, with any remaining loss recognised in the profit and loss account.

o. Revaluation ReserveSurpluses/deficits arising on the revaluation of individual fixed assets are credited/debited to a non-distributable reserve known as the revaluation reserve. Revaluation deficits in excess of the amount of prior revaluation surpluses on the same assets are charged to the profit and loss account.

On disposal of a previously revalued fixed asset, an amount equal to the revaluation surplus attributable to that asset is transferred from the revaluation reserve to general reserve.

p. Cash and Cash equivalentsFor the purpose of reporting cash flows, cash and cash equivalents include cash on hand, cash balances with banks, bank overdrafts and short-term deposits with original maturities of three months or less.

q. Unclaimed DividendsUnclaimed dividends are amounts payable to shareholders in respect of dividend previously declared, which have remained unclaimed by the shareholder. In compliance with section 385 of the Companies and Allied Matters Act of Nigeria, dividends unclaimed after twelve (12) years are transferred to general reserve.

r. government grantExport expansion grants, which compensate the Company for expenses incurred in making exports, are recognised when there is reasonable assurance that they will be received and the Company has complied with the conditions associated with the grant.

s. Interest expenseInterest expense comprises interest on borrowings and bank charges and is recognised in the profit and loss account.

t. Interest IncomeInterest income comprises interest on funds invested. Interest income is recognised in the profit and loss account, when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably.

u. Short-term InvestmentsShort-term investments are valued at the lower of cost and market value. The carrying amount is determined on an item by item basis. The amount by which cost exceeds market value is charged to the profit and loss account.

Realised gains and losses on disposal of short-term investments are recognised in the profit and loss account.

v. Segment ReportingA segment is a distinguishable component of the Company that is engaged either in providing related products or services (business segment), or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and returns that are different from those of other segments.

Segment information is required to be presented in respect of the Company’s business and geographical segments, where applicable. The Company’s primary format for segment reporting is based on geographical segments. The geographical segments are determined by management based on the Company’s internal reporting structure.

Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.


Profit and Loss Accountfor the year ended 30 June 2012

Note 2012 2011 N’000 N’000

TURNOVER 2 126,288,184 123,663,125Cost of Sales (70,088,245) (68,619,520) GROSS PROFIT 56,199,939 55,043,605

Advertising and promotion expenses (11,182,679) (9,790,639)Distribution expenses (13,424,380) (11,327,533)Administrative expenses (9,522,147) (8,196,926)Other income 3 790,690 809,994

OPERATING PROFIT 22,861,423 26,538,501

Interest income 4(a) 306,990 203,315Interest expense 4(b) (2,093,463) (564,850)

PROFIT BEFORE TAXATION 5 21,074,950 26,176,966

Taxation 7(a) (6,403,755) (8,249,032) PROFIT AFTER TAXATION 14,671,195 17,927,934

APPROPRIATION:

Transfer to general reserve 23 14,671,195 17,927,934 Earnings per share (kobo) 9 995 1,216 Declared dividend per share (kobo) 9 1,000 825

The Directors recommend, subject to approval at the next Annual General Meeting, the payment of a final dividend of N11.8 billion (2011: N14.7 billion), which based on the number of ordinary shares in issue on 30 June 2012, represents a dividendof 800 kobo per ordinary share (2011: 1,000k). As an alternative, the Directors also recommend, subject to shareholder’s approval, an option of a scrip dividend, which at the current trading price, represents an option of 1 ordinary share for every 33 ordinary shares held by each shareholder. The dividend is subject to deduction of withholding tax at the applicable rate.

To qualify for the scrip dividend option, shareholders must complete and return their scrip dividend mandate form to thecompany’s Registrar no later than 15 October 2012. Explanatory Notes on the Scrip Dividend will accompany the Notice of Annual General Meeting and the Financial Statements.

The accounting policies on pages 51 to 54 and accompanying notes on pages 58 to 69 form an integral part of these financial statements.


Note 2012 2011 N’000 N’000

NON-CURReNT ASSeTSFixed assets 10 63,709,332 46,098,557Intangible assets 11 679,792 1,031,280Long term debtors and prepayments 12 522,072 675,476 TOTAL NON-CURReNT ASSeTS 64,911,196 47,805,313 CURReNT ASSeTSStocks 13 21,998,519 17,381,132Debtors and prepayments 14 10,852,303 18,133,997Short-term investment - 774,000 Cash and cash balances 15 4,772,154 8,080,590 TOTAL CURReNT ASSeTS 37,622,976 44,369,719

CURReNT LIABILITIeSCreditors and accruals 16 (24,425,994) (26,290,156)Taxation 7(b) (5,189,181) (6,324,044)Dividend payable 8 (4,452,710) (3,921,648)Bank overdraft 17 (4,928,916) - NeT CURReNT (LIABILITIeS)/ASSeTS (1,373,825) 7,833,871

TOTAL ASSeTS LeSS CURReNT LIABILITIeS 63,537,371 55,639,184

NON-CURReNT LIABILITIeSDeferred taxation 18 (11,584,733) (10,282,960)Finance lease obligation 20(a) (8,513,058) (1,332,933)Gratuity and long service awards 19(a) (3,087,076) (3,739,799) NeT ASSeTS 40,352,504 40,283,492

CAPITAL AND ReSeRVeSShare capital 21 737,463 737,463Share premium 1,545,787 1,545,787Revaluation reserve 22 3,392,339 3,524,134General reserve 23 34,676,915 34,476,108 SHAReHOLDeRS’ FUNDS 40,352,504 40,283,492

SIGNED ON BEHALF OF THE BOARD OF DIRECTORS BY:

SENI ADETU ) ) DirectorsLISA NICHOLS )

Approved by the Board of Directors on 12 September 2012


Balance Sheetas at 30 June 2012


Note 2012 2011 N’000 N’000

Cash Flows from Operating ActivitiesOperating profit before working capital changes 24 28,481,172 31,093,371Working capital changes:Increase in stocks (4,617,387) (1,228,426)Decrease/(increase) in debtors and prepayments 7,280,647 (4,684,959)Decrease/(increase) in long term debtors and prepayments 153,404 (232,946)Decrease in deposits for imports - 375,534Increase in creditors and accruals* 1,276,982 4,752,160 32,574,818 30,074,734

Gratuity paid 19(b) (433,470) (216,822)Long service awards paid 19(c) (85,699) (70,606)Income tax paid 7(b) (6,231,075) (6,219,973)VAT paid (4,600,334) (4,036,560) Net cash provided by operating activities 21,224,240 19,530,773 Cash Flows from Investing ActivitiesInterest received 302,267 205,490Short term investments - (774,000)Liquidation of short-term investments 774,000 -Purchase of fixed assets (13,530,170) (9,730,410)Proceeds from sale of fixed assets 310,380 411,380 Net cash used in investing activities (12,143,523) (9,887,540) Cash Flows from Financing ActivitiesInterest paid 4(b) (2,093,463) (564,850)Dividends paid 8 (14,071,121) (13,199,123)Payment of finance lease obligation 20(a) (1,153,485) (503,856) Net cash used in financing activities (17,318,069) (14,267,829) Net decrease in cash and cash equivalents (8,237,352) (4,624,596)Cash and cash equivalents, beginning of year 8,080,590 12,705,186 Cash and cash equivalents, end of year (156,762) 8,080,590 Cash and Cash equivalentsThis comprises:Cash at bank and in hand 15 3,028,744 3,558,019Short-term deposits with banks 15 1,743,410 4,522,571Bank overdraft (4,928,916) - (156,762) 8,080,590

* Value Added Tax (VAT) paid of N4.60 billion (2011: N4.04 billion) shown separately above has been adjusted for in deriving the movement in creditors and accruals.


Statement of Cash Flowsfor the year ended 30 June 2012


Notes to the Financial Statementsfor the year ended 30 June 2012

1. Reporting entity Guinness Nigeria Plc, a public Company was incorporated on 29 April 1950, as a trading company importing

Guinness Stout from Dublin. The Company has since transformed itself into a manufacturing operation and its principal activities continue to be brewing, packaging, marketing and selling of Guinness Foreign Extra Stout, Guinness Extra Smooth, Malta Guinness, Malta Guinness Low Sugar, Harp Lager, Harp Lime Lager, Gordon’s Spark, Smirnoff Ice, Satzenbrau Pilsner Lager, Dubic Lager and Top Malt.

2. Turnover and Operating Profit The analysis of turnover and operating profit by geographical area is as follows:

Turnover Operating profit 2012 2011 2012 2011 N’000 N’000 N’000 N’000

Nigeria 125,637,911 123,307,459 22,581,577 26,434,399 Export 650,273 355,666 279,846 104,102 126,288,184 123,663,125 22,861,423 26,538,501

3. Other Income 2012 2011 N’000 N’000

Operating lease income (Note 10(d)) 402,671 450,089 Gain on disposal of fixed assets 168,719 322,938 Sundry income 219,300 36,967 790,690 809,994

4. Interest (a) Interest income: 2012 2011 N’000 N’000

Interest on short-term deposits 282,189 178,384 Interest on treasury bill 23,185 3,669 Interest on loan - 14,515 Other interest income 1,616 6,747 306,990 203,315

(b) Interest expense: 2012 2011 N’000 N’000 Interest on overdraft 791,119 61,923 Finance lease charges 661,194 202,130 Finance costs 476,926 237,923 Other interest expense 164,224 62,874 2,093,463 564,850


5. Profit Before Taxation Profit before taxation is arrived at after charging/(crediting):

2012 2011 N’000 N’000

Staff costs (Note 6(a)) 8,242,215 7,117,637 Directors’ emoluments (Note 6(d)) 79,213 92,270 Auditor’s remuneration 29,236 26,578 Depreciation of fixed assets (Note 10 (a)) 5,393,836 4,499,168 Amortisation of intangible asset (Note 11) 351,587 350,800 Write-off/(write-back) of fixed assets 176,599 (104,768) Actuarial gain on gratuity (124,015) (628,090) Actuarial (gain)/loss on long service award (555,816) 393,340 Royalties and technical service fees (Note 29(a)) 2,373,419 3,553,873 Gain on disposal of fixed assets (168,719) (322,938) Gain on foreign exchange, net (273,832) (345,225) Plant hire costs 523,068 177,774 Operating lease rentals 3,384,923 2,960,738

6. Staff Costs and Directors’ emoluments

2012 2011 N’000 N’000 (a) Staff costs - Salaries, wages and allowances 7,559,989 6,423,755 - Pension fund contribution 447,600 384,487 - Gratuity charge/(write back) (Note 19 (b)) 176,865 (377,521) - Defined contribution charge 368,180 176,787 - Long service award (write back)/charge (Note 19 (c)) (310,419) 510,129 8,242,215 7,117,637

(b) Average number of persons employed: 2012 2011 Number Number

Operations and Technical 814 687 Sales and Distribution 419 388 Commercial 97 88 Corporate Affairs and Human Resources 54 51 Marketing 22 23 1,406 1,237



(c) The number of employees of the Company whose duties were wholly or mainly discharged in Nigeria, received annual remuneration (excluding pension costs and certain benefits) in the following ranges:

2012 2011 Number Number

N 500,000 and below 2 2 N 500,001 - N1,000,000 44 31 N1,000,001 - N1,500,000 100 61 N1,500,001 - N2,000,000 94 38 N2,000,001 - N2,500,000 24 29 N2,500,001 - N3,000,000 72 155 N3,000,001 - N3,500,000 211 181 N3,500,001 - N4,000,000 170 171 N4,000,001 - N4,500,000 141 138 N4,500,001 - N5,000,000 118 94 N5,000,001 - N5,500,000 88 52 N5,500,001 - N6,000,000 57 61 N6,000,001 - N6,500,000 51 37 N6,500,001 - N7,000,000 43 25 N7,000,001 - N7,500,000 28 19 N7,500,001 - N8,000,000 15 17 N8,000,001 - N8,500,000 19 18 N8,500,001 - N9,000,000 17 17 N9,000,001 - N9,500,000 22 16 N9,500,001 - N10,000,000 9 4 N10,000,001 and above 81 71 1,406 1,237

(d) Emoluments of directors of the Company who discharged their duties wholly or mainly in Nigeria (exclusive of certain benefits, gratuity and pension) are as follows:

2012 2011 N’000 N’000

Fees paid to Non-Executive Directors 8,433 8,262 Fees and emoluments paid to the Chairman 19,182 16,379 Emoluments paid to Executive Directors 51,598 67,629 79,213 92,270 The emoluments (excluding pension contributions and certain benefits) of the highest paid Director amounted to 25,843 31,424

The table below shows the number of Directors of the Company (excluding the Chairman) whose remuneration excluding certain benefits, gratuity and pension contributions (in respect of services to the Company) fell within the bands shown below:

2012 2011 Number Number N N 100,001 - 1,000,000 2 - 1,000,001 - 2,000,000 2 6 2,000,001 - 3,000,000 3 - 4,000,001 - 5,000,000 - 3 7,000,001 - 8,000,000 1 1 10,000,001 - 30,000,000 2 2 10 12


7. Taxation The tax charge is based on the profit for the year after adjusting for certain items of expenditure and income

which are not deductible or chargeable for tax purposes and comprises:

2012 2011 N’000 N’000 (a) Tax charge (per profit and loss account) Income tax 4,586,932 5,688,771 Tertiary education tax 515,050 608,914 Capital gains tax - 24,493 Charge for the year (Note (b)) 5,101,982 6,322,178 Deferred tax charge (Note 18) 1,301,773 1,926,854 6,403,755 8,249,032

2012 2011 N’000 N’000 (b) Tax liability (per balance sheet) Balance, beginning of year 6,324,044 6,229,669 Charge for the year (Note (a)) 5,101,982 6,322,178 Payment during the year (6,231,075) (6,219,973) Withholding tax credit notes utilised (5,770) (7,830) Balance, end of year 5,189,181 6,324,044

8. Dividend Payable 2012 2011 N’000 N’000

Balance, beginning of year 3,921,648 4,952,635 Declared dividend (Note (a)) 14,749,255 12,168,136 Write-back of statute-barred unclaimed dividend (Note 23) (147,072) - Payments during the year (14,071,121) (13,199,123) Balance, end of year 4,452,710 3,921,648

(a) Dividend declared represents ordinary dividend declared at the Annual General Meeting held on 4 November 2011 amounting to N14,749 million in respect of the 2011 financial year (2010 financial year: N12,168 million) (Note 23).

Subject to approval by shareholders at the next Annual General Meeting, the Directors propose an ordinary dividend of 800 kobo per share (2011: 1,000 kobo per share) on the issued share capital of 1,474,925,519 ordinary shares of 50 kobo each being the number of ordinary shares in issue and ranking for dividend. As an alternative, the Directors also recommend an option of a scrip dividend, which at the current trading price, represents an option of 1 ordinary share for every 33 ordinary shares held by each shareholder. The dividend is subject to deduction of withholding tax at the applicable rate. To qualify for the scrip dividend option, shareholders must complete and return their scrip dividend mandate form to the Company’s registrar no later than 15 October 2012.

(b) Analysis of dividend payable is as follows: 2012 2011 N’000 N’000

Held with Registrar (Note 14(a)) 2,738,234 2,053,648 Held as Treasury bill - 774,000 Held in a separate bank account (Note 15 (a)) 1,714,476 1,094,000 Balance, end of year 4,452,710 3,921,648



9. Basic earnings and Declared Dividend per Share Basic earnings and declared dividend per share are based on profit after taxation of N14,671 million (2011:

N17,928 million) and declared dividends of N14,749 million (2011: N12,168 million) respectively and on 1,474,925,519 (2011: 1,474,925,519) ordinary shares of 50 kobo each, being the number of ordinary shares in issue and ranking for dividend.

10. Fixed Assets (a) The movement on these accounts during the year was as follows:

Leasehold Plant and Furniture Motor Assets in Land and Machinery and Vehicles Progress Total Buildings Equipment N’000 N’000 N’000 N’000 N’000 N’000 Cost or Valuation: At 1 July 2011 8,796,636 42,108,438 2,406,809 4,978,709 13,837,964 72,128,556 Additions 5,718 359,411 45,283 22,103 22,890,455 23,396,970 Transfers 5,970,807 21,720,959 318,707 1,115,293 (29,125,766) - Reclassifications (Note 11) - - (3,555) - - (3,555) Write-offs (19,413) (2,275,855) (1,543,025) (707,654) - (4,545,947) Disposals - (222,712) (2,023) (389,760) - (614,495) At 30 June 2012 14,753,748 61,690,241 1,222,196 5,018,691 7,602,653 90,287,529

Depreciation: At 1 July 2011 1,408,890 19,240,533 1,980,464 3,400,112 - 26,029,999 Charge for the year 251,669 4,089,470 246,330 806,367 - 5,393,836 Reclassifications (Note 11) - - (3,456) - - (3,456) Write-offs (16,121) (2,105,109) (1,540,464) (707,654) - (4,369,348) Disposals - (96,582) (578) (375,674) - (472,834) At 30 June 2012 1,644,438 21,128,312 682,296 3,123,151 - 26,578,197

Net Book Value: At 30 June 2012 13,109,310 40,561,929 539,900 1,895,540 7,602,653 63,709,332 At 30 June 2011 7,387,746 22,867,905 426,345 1,578,597 13,837,964 46,098,557

(b) Certain leasehold land and buildings, plant and machinery were revalued on 2 January 1997 by Messrs Knight Frank (Nigeria) – Chartered Surveyors, on the basis of their depreciated replacement cost. The values were incorporated in the books at that date. Surpluses arising on revaluation were credited to the fixed assets revaluation reserve. Additions subsequent to revaluations are stated at cost. Fixed assets are revalued periodically as dictated by prevailing economic conditions. The net book value of revalued assets included in the above was as follows:

Leasehold Land and Plant and Buildings Machinery Total N’000 N’000 N’000

Net Book Value of revalued assets at 30 June 2012 1,080,930 617,343 1,698,273 Net Book Value of revalued assets at 30 June 2011 1,118,085 788,762 1,906,847


(c) Included in fixed assets are motor vehicles and plant and machinery purchased under finance lease arrangements (Note 20) as follows:

Motor Plant and Vehicles Machinery Total N’000 N’000 N’000

Cost 2,391,201 10,239,301 12,630,502 Accumulated depreciation (777,947) (1,169,394) (1,947,341) Net book value 1,613,254 9,069,907 10,683,161

(d) Included in fixed assets are motor vehicles, which the Company has leased out to third parties under operating lease arrangements. The cost of these vehicles was N3,061 million (2011: N2,609 million) with corresponding accumulated depreciation charges of N1,863 million (2011: N1,612 million) at the balance sheet date. Income from these operating lease arrangements during the year was N402.7 million (2011: N450.1 million) (Note 3).

(e) Included in fixed asset costs are assets purchased during the year amounting to N2,737 million (2011: N2,988 million) that had not been paid for, which are included in creditors and accruals.

11. Intangible Assets

2012 N’000

At Cost: At 1 July 2011 2,624,211 Write-offs (540,231) Reclassification (Note 10(a)) 3,555 At 30 June 2012 2,087,535 Ammortisation: At 1 July 2011 1,592,931 Charge for the year 351,587 Write-offs (540,231) Reclassification (Note 10(a)) 3,456 At 30 June 2012 1,407,743 Net Carrying Amount At 30 June 2012 679,792 At 30 June 2011 1,031,280



12. Long-Term Debtors and Prepayments 2012 2011 N’000 N’000

Due from employees (Note (a)) 274,523 332,091 Long-term prepayments 247,549 343,385 522,072 675,476

(a) Amount due from employees represents the long term component of loans granted to employees which are secured by their gratuity benefits. No interest is charged on these loans.

13. Stock 2012 2011 N’000 N’000

Finished products 2,667,228 1,554,751 Products in process 810,704 815,689 Raw and Packaging materials 6,407,505 5,182,370 Empty bottles and crates 7,519,951 7,219,299 Engineering spares 2,573,286 2,299,431 Stock in transit 2,019,845 309,592 21,998,519 17,381,132

14. Debtors and Prepayments 2012 2011 N’000 N’000

Trade debtors 4,471,619 11,032,758 Other debtors (Note (a)) 3,069,358 3,693,993 Operating lease receivable 1,180,595 1,009,062 Interest receivable 6,166 1,443 Export expansion grant receivable 504,265 345,551 Prepayments 1,313,668 1,170,225 Pre-lease interest 73,135 44,619 Amount due to related companies (Note 29(a)) 233,497 836,346 10,852,303 18,133,997

(a) Included in other debtors is an amount of N2,738 million (2011: N2,054 million) which represents dividends held with the Registrar. (Note 8(b)).


15. Cash and Bank Balances 2012 2011 N’000 N’000

Cash at bank and in hand 3,028,744 3,558,019 Short-term deposits 1,743,410 4,522,571 4,772,154 8,080,590

(a) Included in cash and bank balances are unclaimed dividends amounting to N1,714 million (2011: N1,094 million) held in a separate bank account in accordance with guidelines issued by the Securities and Exchange Commission. This amount is restricted from use by the Company. (Note 8(b)).

16. Creditors and Accruals 2012 2011 N’000 N’000

Trade creditors 12,280,193 12,461,032 Other creditors 3,491,179 3,247,677 Pension payable (Note (a)) 136 3,418 Accruals 3,805,801 3,547,741 Amount due to related companies (Note 29(a)) 2,466,937 6,359,005 Finance lease obligations - current portion (Note 20(a)) 2,381,178 671,283 24,425,994 26,290,156

(a) The balance on the pension payable account represents the amount due to the Pension Fund Administrators which is yet to be remitted as at year end. The movement on this account during the year was as follows:

2012 2011 N’000 N’000

Balance, beginning of year 3,418 20,165 Charge for the year 791,071 637,280 Payment during the year (794,353) (654,027) Balance, end of year 136 3,418

17. Bank Overdraft Bank overdraft comprises various facilities obtained by the Company for working capital requirements.

Total available facility at year end amounted to N39.5 billion (2011: Nil) at market related interest rates. The overdrafts are secured by a negative pledge on the Company’s assets.

18. Deferred Taxation The movement on the deferred tax account was as follows: 2012 2011 N’000 N’000

Balance, beginning of year 10,282,960 8,356,106 Charge for the year (Note 7(a)) 1,301,773 1,926,854 Balance, end of year 11,584,733 10,282,960



19. gratuity and Long Service Awards (a) Gratuity and long service awards comprise:

2012 2011 N’000 N’000

Gratuity (Note (b)) 2,417,971 2,674,576 Long service awards (Note (c)) 669,105 1,065,223 3,087,076 3,739,799

Employee gratuities and long service awards provisions are based on independent actuarial valuation done by HR Nigeria Limited using the projected unit credit basis. The principal assumptions i.e. discount rates, average pay increases and average rates of inflation used for the purpose ranged between 10% and 14% per annum. The defined benefit gratuity scheme for management and non-management staff was discontinued and frozen on 31 December 2008.

(b) Actuarial valuation was done for the defined benefit gratuity scheme as at 30 June 2012. The movement on the gratuity provision account was as follows:

2012 2011 N’000 N’000

Balance, beginning of year 2,674,576 3,268,919 Charge/(write-back) for the year (Note 6(a)) 176,865 (377,521) Payments during the year (433,470) (216,822) Balance, end of year 2,417,971 2,674,576

The charge for the year is made up of interest charges and actuarial gain of N301million and N124

million respectively (2011: N251 million and N628 million).

(c) The movement on the provision for long service awards was as follows:

2012 2011 N’000 N’000

Balance, beginning of year 1,065,223 625,700 (Write-back)/charge for the year (Note (6(a)) (310,419) 510,129 Payment during the year (85,699) (70,606) Balance, end of year 669,105 1,065,223

Included in the long service awards write-back are interest charges and actuarial gain of N310 million and N556 million respectively (2011: N48 million and actuarial loss of N393 million) during the year.

20. Finance Lease Obligation (a) The movement in finance lease obligation was as follows:

2012 2011 N’000 N’000

Balance, beginning of year 2,004,216 1,799,455 Finance lease obtained during the year 10,043,505 708,617 Payments made during the year (1,153,485) (503,856) Balance, end of year 10,894,236 2,004,216

Current portion (Note 16) (2,381,178) (671,283) Non current portion of finance lease obligations 8,513,058 1,332,933

The leases are secured by legal ownership of the leased assets. The lease agreements stipulate that the Company may exercise the option to own the leased assets after the lease period.


(b) Commitments for future minimum lease payments on finance leases are as follows:

Future Present value of value of minimum minimum lease lease payments Interest payments 2012 N’000 N’000 N’000

Between 0-1 year 3,904,361 1,523,183 2,381,178 Between 1- 2 years 3,647,422 1,157,257 2,490,165 Between 2- 3 years 3,087,480 802,083 2,285,397 Between 3- 4 years 4,187,786 450,290 3,737,496 14,827,049 3,932,813 10,894,236

21. Share Capital 2012 2011 N’000 N’000

Authorised: 2.5 billion ordinary shares of 50k each 1,250,000 1,250,000 Called up, allotted and fully paid: 1,474,925,519 ordinary shares of 50k each 737,463 737,463

22. Revaluation Reserve This represents the surplus arising on revaluation of certain finance leasehold properties, plant and

machinery. The movement on the account was as follows:

2012 2011 N’000 N’000

Balance, beginning of year 3,524,134 3,296,114 Surplus on re-instated assets - 324,575 Transfer to general reserve - assets disposed (Note 23) (131,795) (96,555) Balance, end of year 3,392,339 3,524,134

23. general Reserve 2012 2011 N’000 N’000

Balance, beginning of year 34,476,108 28,619,755 Transfer from revaluation reserve (Note 22) 131,795 96,555 Declared dividend (Note 8(a)) (14,749,255) (12,168,136) Write-back of statute barred unclaimed dividend (Note 8) 147,072 - Transfer from profit and loss account 14,671,195 17,927,934 Balance, end of year 34,676,915 34,476,108



24. Operating Profit Before Working Capital Changes 2012 2011 N’000 N’000

Profit after taxation 14,671,195 17,927,934 Adjusted for: Taxation 6,403,755 8,249,032 Interest income (306,990) (203,315) Interest expense 2,093,463 564,850 Operating profit 22,861,423 26,538,501 Adjusted for: Depreciation of fixed assets 5,393,836 4,499,168 Reinstatement of previously impaired assets - (104,768) Amortisation of intangible assets 351,587 350,800 Write-offs of fixed assets 176,599 - Gain on disposal of fixed assets (168,719) (322,938) Charge/(write-back) of gratuity 176,865 (377,521) (Write-back)/charge of long service awards (310,419) 510,129 28,481,172 31,093,371

25. Capital Commitments Capital expenditure commitments at year end authorised by the Board comprise:

2012 2011 N’000 N’000

Contracted 3,083,150 2,747,562 Not contracted 22,291,061 7,850,432 25,374,211 10,597,994

26. Non-cancellable Operating Lease Commitments Operating lease rentals (where the Company is the lessee) are payable as follows:

2012 2011 N’000 N’000

Less than one year 2,856,000 2,856,000 Between one and two years 2,380,000 2,856,000 Between two and three years - 2,380,000 5,236,000 8,092,000


27. Contingent Liabilities (a) Contingent liabilities at the balance sheet date arising in the ordinary course of business from assessment

raised by government agencies, which are being contested and guarantees to third parties amounted to N13,540 million (2011: N11,325 million). No material loss is expected to arise from these assessments and guarantees, thus no provision has been made in these financial statements.

(b) No provision has been made in the financial statements for contingent capital gains tax of N48 million (2011: N55 million) which might arise on disposal of revalued leasehold land and buildings at their present net book values as it is not the Directors’ present intention to sell these assets.

(c) The Company is subject to various claims arising in the normal course of business. Contingent liabilities in respect of pending litigation and other possible claims amounted to N1,712 million (2011: N2,794 million) as at 30 June 2012. In the opinion of the Directors and based on legal advice, no material loss is expected to arise from these claims, thus no provision has been made in these financial statements.

28. Ultimate Holding Company The ultimate holding Company is Diageo Plc, a company incorporated in the United Kingdom.

29. Transactions with Related Companies (i) Diageo Group: The Company sources certain raw materials, engineering spares and fixed assets from companies related to its

ultimate holding Company, Diageo Plc. Additionally, the Company pays Technical Service fees and Royalties to companies within the Diageo Group. At the year end, the total amount due to companies within the Diageo Group was N2,467 million (2011: N6,359 million) (Note 16), of which N689 million (2011: N1,538 million) represents unpaid Technical Service fees and Royalties. The charge for Technical Service fees and Royalties for the year is disclosed in Note 5.

Similarly, the Company incurs certain expenses on behalf of related companies, such as staff exchange programmes, workshops and training. At the year end, the total amount receivable from other companies within the Diageo Group was N233 million (2011: N836 million) (Note 14).

In addition, the Company has a Management Service Agreement (MSA) with Diageo Brands Nigeria Limited (DBN), a wholly owned subsidiary of Diageo Brands B.V. resident in Nigeria wherein it provides corporate relations, finance and accounting support services, human resources, marketing, legal and regulatory, serviced warehouse rental and logistic support. Total amount charged to DBN amounted to N610 million (2011: N875 million).

Furthermore, included as a reduction to staff costs are recharges of costs related to twenty-seven (27) employees (2011: thirty (30) employees) seconded to DBN amounting to N302 million (2011: N119 million).

(ii) Others: The Company leases its head office premises from Odua Investments Ltd., a shareholder on an annual basis.

During the year, the Company renewed the lease for a thirty-six month (2011: twelve month) period effective September 2011 at an amount of N66 million (2011: N18 million).

30. Segment Reporting The Company’s primary geographical segment is Nigeria. Over 99% (2011: 99%) of the Company’s sales are made in

Nigeria. Also, all of the Company’s products have identical risks and returns. No further business or geographical segment information is therefore reported.

31. Post Balance Sheet events There are no significant post balance sheet events, which could have had a material effect on the financial position

and performance of the Company as at 30 June 2012, which have not been adequately provided for or disclosed in the financial statements.

32. Comparative Figures To ensure consistency, certain prior year comparative amounts have been reclassified to conform to the current

year’s presentation format.


2012 % 2011 % N’000 N’000

Turnover 126,288,184 123,663,125Bought in materials and services - Imported (32,936,331) (24,921,059)- Local (47,808,175) (50,964,967) Value added by operating activities 45,543,678 47,777,099

Interest income 306,990 203,315Other income 790,690 809,994 Value added 46,641,358 100 48,790,408 100

Distribution of Value AddedTo Government as:Taxation 6,403,755 14 8,249,032 17Excise duties 9,485,307 20 10,080,987 21

To Employees:Salaries, wages and fringe benefits 8,242,215 18 7,117,637 15

To Providers of Finance:Interest expense 2,093,463 4 564,850 1

Retained in the Business:To replace fixed assets 5,393,836 12 4,499,168 9To replace intangible assets 351,587 1 350,800 1To pay proposed dividend 11,799,404 25 14,749,255 30To augment Reserve 2,871,791 6 3,178,679 7 46,641,358 100 48,790,408 100

Value added represents the additional wealth which the Company has been able to create. The statement shows the allocation of that wealth between government, employees, providers of finance and that retained in the business.

Value Added Statementfor the year ended 30 June 2012


2012 2011 2010 2009 2008 N’000 N’000 N’000 N’000 N’000

Results

Turnover 126,288,184 123,663,125 109,366,975 89,148,207 69,172,852Operating Profit 22,861,423 26,538,501 20,786,191 19,806,485 15,799,575

Profit before taxation 21,074,950 26,176,966 19,988,735 18,991,762 17,092,950Profit after taxation 14,671,195 17,927,934 13,736,359 13,541,189 11,860,880Dividend declared (14,749,255) (12,168,136) (11,061,941) (18,879,045) (6,637,165

employment of FundsFixed assets 63,709,332 46,098,557 38,244,541 35,897,959 36,733,310Intangible assets 679,792 1,031,280 1,382,080 1,806,834 1,311,466Long term debtors and prepayments 522,072 675,476 442,530 399,293 533,823Net current (liabilities)/assets (1,373,825) 7,833,871 7,679,348 4,622,693 10,759,465 Deferred taxation (11,584,733) (10,282,960) (8,356,106) (8,093,952) (7,886,464) Finance lease obligation (8,513,058) (1,332,933) (1,298,655) - -Gratuity and long service awards (3,087,076) (3,739,799) (3,894,619) (3,108,126) (4,589,043) Total Net Assets 40,352,504 40,283,492 34,199,119 31,524,701 36,862,557

Funds employedShare capital 737,463 737,463 737,463 737,463 737,463 Share premium 1,545,787 1,545,787 1,545,787 1,545,787 1,545,787 Revaluation reserve 3,392,339 3,524,134 3,296,114 3,303,146 3,737,615 General reserve 34,676,915 34,476,108 28,619,755 25,938,305 30,841,692 Shareholders’ Funds 40,352,504 40,283,492 34,199,119 31,524,701 36,862,557

Per 50k share data:Basic earnings per share 995k 1,216k 931k 918k 804k Declared dividend per share 1,000k 825k 750k 1,280k 450k Net assets 2,736k 2,731k 2,319k 2,137k 2,499k

Five - Year Financial Summary


Share Capital HistoryThe share capital history of the Company is as shown below. The issued and paid-up share capital of the Company as at 30 June 2012 is:

AUTHORISED SHARE CAPITAL ISSUED AND FULLY PAIDDATE VALUE (N) SHARES VALUE(N) SHARES CONSIDERATION 31-08-72 3,000,000 6,000,000 3,000,000 6,000,000 Conversion to Naira14-12-72 5,000,000 10,000,000 5,000,000 10,000,000 Scrip Issue (2:3)30-03-76 8,000,000 16,000,000 8,000,000 16,000,000 Scrip Issue (3:5)05-11-76 10,000,000 20,000,000 10,000,000 20,000,000 Public Issue11-03-77 15,000,000 30,000,000 15,000,000 30,000,000 Scrip Issue (1:2)28-09-78 25,000,000 50,000,000 25,000,000 50,000,000 Scrip Issue (2:3)21-02-80 37,500,000 75,000,000 37,500,000 75,000,000 Scrip Issue (1:2)25-02-82 50,000,000 100,000,000 50,000,000 100,000,000 Scrip Issue (1:3)15-03-84 75,000,000 150,000,000 75,000,000 150,000,000 Scrip Issue (1:2)13-03-84 100,000,000 200,000,000 100,000,000 200,000,000 Scrip issue (1:3)26-07-90 150,000,000 300,000,000 150,000,000 300,000,000 Scrip Issue (1:2)18-07-90 200,000,000 400,000,000 180,000,000 360,000,000 Rights Issue(1:5)29-09-95 350,000,000 700,000,000 270,000,000 540,000,000 Right Issue (1:2)02-01-97 350,000,000 700,000,000 339,519,721 679,039,441 Conversion of ICLS to shares19-06-97 400,000,000 800,000,000 350,519,721 679,039,441 16-07-97 400,000,000 800,000,000 350,733,576 701,467,151 Scrip Dividend to Shares 13-07-98 400,000,000 800,000,000 353,982,125 707,964,249 Scrip Dividend to Shares 20-11-02 1,000,000,000 2,000,000,000 353,982,125 707,964,249 Increase in authorised share capital20-11-03 1,000,000,000 2,000,000,000 89,970,207 1,179,940,415 Bonus issue (2:3) 16-11-06 1,000,000,000 2,000,000,000 737,462,759 1,474,925,519 Bonus issue (1:4) 10-07-08 1,250,000,000 2,500,000,000 737,462,759 1,474,925,519 Increase in authorised share capital

Substantial Interest in Shares:According to the Register of Members, the following persons held more than 5% of the issued share capital of the Company on 30 June 2012.

Shareholders Number of Shares Percentage

Guinness Overseas Limited 678,958,195 46.03%Atalantaf Limited 114,613,969 7.77%

Shareholders’ Information


Statistical Analysis of Shareholdinga) The shares of the Company are held in the ratio of 46% by Nigerians and 54% by offshore investors.b) The Company’s issued shares of 1,474,925,519 as at year end are held by shareholders as follows:

Range Holders Holders % Holders Units Units % Units Cumulative Cumulative1 - 1,000 29,327 40.92% 29327 11,896,271 0.81% 11,896,2711,001 - 5,000 30,111 42.02% 59438 77,329,803 5.24% 89,226,0745,001 - 10,000 6,878 9.60% 66316 49,741,990 3.37% 138,968,06410,001 - 50,000 4,484 6.26% 70800 85,062,877 5.77% 224,030,94150,001 - 100,000 434 0.61% 71234 30,764,065 2.09% 254,795,006100,001 - 500,000 348 0.49% 71582 75,212,168 5.10% 330,007,174500,001 - 1,000,000 32 0.04% 71614 22,805,843 1.55% 352,813,0171,000,001 - 999,999,999 53 0.07% 71667 1,122,112,502 76.08% 1,474,925,519

71,667 100.00% 1,474,925,519 100.00%

Ten – Year Dividend History

Dividend in the last ten years

Year Profit After Taxation Dividend Proposed (N) Dividend per Share (k)

2003 6,636,335,000 5,604,717,000 4752004 7,913,503,000 6,194,687,000 5252005 4,859,019,000 3,539,821,000 3002006 7,440,102,000 4,719,762,000 4002007 10,691,060,000 6, 637,164,836 4502008 11,860,880,000 8, 849, 553,000 6002009 13, 541, 189, 000 11,061,941,393 7502010 13, 736, 359, 000 12, 168, 135,531 8252011 17,927,933,821 14,749,255,190 1,000

2012** 14,671,194,963 11,799,404,152 800

** Dividend has not been declared by shareholdersDividends declared were gross as they were subject to deduction of withholding tax at the appropriate rates.

Unclaimed Dividends and Share CertificatesMembers are hereby informed that some dividend warrants and share certificates have been returned to the Registrars’ office unclaimed because the addresses could not be traced. This notice is to request all affected shareholders to contact:

(a) In the case of unclaimed dividends The Company Secretary Guinness Nigeria Plc 24, Oba Akran Avenue P.M.B. 21071, Ikeja, Lagos. Tel: 01-2709100, 08024790564 www.guinness-nigeria.com E-mail: [email protected]

(b) In the case of share certificates The Registrar Zenith Registrars Limited Plot 89A, Ajose Adeogun Street, Victoria Island, Lagos. Tel: 01-2708930, 2783973, 2754165 E-mail: [email protected], [email protected]

Those applying to the Company Secretary for payment of unclaimed dividends should also include either the original dividend warrants or Photostat copies of their certificates to facilitate payment.

The Company Secretary’s officeGuinness Nigeria Plc24, Oba Akran Avenue, Ikeja, Lagos

www.guinness-nigeria.com

www.guinness-nigeria.com

DRINK RESPONSIBLYWWW.DRINKiQ.COM 18+

Proxy Form

Admission Card

62nd Annual General Meeting of the Members of Guinness Nigeria Plc to be held at the Congress Hall of the Transcorp Hilton Hotel, Abuja FCT on 02 November 2012 at 11.00 O’clock

I/We* ……………….………………………………………………………………………………………………………….......................................

Being a member/members of Guinness Nigeria Plc, hereby appoint ......……………………………………………….......................

NUMBER OF SHARES RESOLUTION FOR AGAINSTTo declare a dividend. To re-elect as Director, Dr. N. B. Blazquez. To re-elect as Director,Mr. B. J. Rewane. To elect as Director, Mr. S. Adetu. To elect as Director, Mr. R. J. O’Keeffe. To elect as Director, Mr. P. J. Jenkins. To elect as Director, Mrs. Z. Abdurrahman. To elect as Director, Ms. Y. A. Ike.To fix the remuneration of the auditors.To fix the remuneration of the Directors. To elect members of the Audit Committee.To approve a scrip dividend. To amend the Articles of Association of the Company.

Please indicate with an “X” in the appropriate box how you wish your votes to be cast on the resolution set out above. Unless otherwise instructed, the proxy will vote or abstain from voting at his discretion.

or failing him, Mr. B.A. Savage, or failing him Mr. S. Adetu or failing him Dr. N.B. Blazquez 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 Friday, 2 November 2012 and at any adjournment thereof.

Dated this ……….. day of ………..… 2012

Shareholder’s signature …………………………...............

*Delete as necessary

1) A member (shareholder) entitled to attend and vote at the Annual General Meeting is entitled to appoint a proxy in his stead. All proxies should be deposited at the Registered Office not less than 48 hours before the time of holding the Meeting.

2) In the case of joint shareholders, any of such may complete the form, but the names of all joint shareholders must be stated.

3) If the Shareholder is a corporation, this form must be under its common seal or under the hand of an officer or attorney duly authorised.

4) Provision has been made on this form for some Directors of the Company to act as your proxy, but if you wish, you may insert in the blank spaces on the form (marked **) the name of the person whether a member of the Company or not, who will attend the Meeting and vote on your behalf instead of any of the Directors. The proxy must produce the admission card sent with the Notice of the Meeting to obtain entrance to the meeting.

5) The proxy must produce the Admission Card sent with the Notice of Meeting to obtain entrance to the meeting.

PLEASE ADMIT

…………………………………………………………………................................. Name of ShareholderTo the Annual General Meeting of Guinness Nigeria Plc whichwill be held at the Congress Hall of the Transcorp Hilton Hotel, Abuja FCT on 02 November 2012 at 11.00a.m This admission card must be produced by the Shareholder or his Address of Shareholderproxy in order to obtain entrance to the Annual General Meeting. Number of Shares Held

Sesan SobowaleCompany Secretarywww.guinness-nigeria.com

If you wish to participate in the Guinness Nigeria PLC Scrip Dividend Scheme (the “Scheme”) and hold your shares in certificated form please complete, sign and return this form to the Registrars, Zenith Registrars Limited, Ajose Adeogun Street, Victoria Island, Lagos. If you wish to participate in the Scheme and hold your shares in the Central Securities Clearing System, please include your CSCS Account Number in the relevant Section of this Form and return it to the Registrars.

If you wish to receive your dividends in cash you do not need to complete any forms or take any action.

To the Directors of Guinness Nigeria PLC (the “Company”)

I/We, the undersigned, being the registered holder(s) of ordinary shares in the Company, confirm that I/we have read and understood the Explanatory Notes on the Scheme which was issued with the Notice of Annual General Meeting and the Annual Reports and Financial Statements and is available on the Company’s website, and wish to participate in the Scheme.

By signing this mandate, I/we elect to receive an allotment of ordinary shares in respect of the 2012 dividend in respect of which a scrip dividend (applicable to the full number of ordinary shares registered to me/us) has been offered, on the terms outlined in the Explanatory Notes and the Articles of Association of the Company, until this Mandate is revoked by me/us in writing to Zenith Registrars Limited at the address below.

I/We authorise you to send a definitive share certificate, in respect of new shares allotted to me/us pursuant to this mandate.

Name in Block Capitals of main holder:

Signature of main holder:

Name in Block Capitals of joint holder(s):

Signature of joint holder(s):

Date:

Shareholder Reference or Account Number (this can be found on your share certificate)

CSCS CHNO:

CSCS Clearing House No:

Stockbroker’s Name:

Shareholder’s Telephone No:

In the case of joint holders ALL must sign. In the case of a company, this Form should be executed under the common seal (or otherwise executed as a deed) or be signed by a duly authorised official whose capacity should be stated. All enquiries regarding this Form should be addressed to Zenith Registrars Limited, 89A Ajose Adeogun Street, Victoria Island, Lagos, Nigeria (Telephone: 01-2708930-4, 2704168, 2783973. Email: [email protected]).

To be effective for the 2012 dividend you must complete and return your mandate so as to be received by the Company’s Registrar no later than 15 October 2012.

Scrip Dividend Mandate Form

explanatory NotesReSOLUTION TO APPROVe AN OFFeR OF A SCRIP DIVIDeND IN LINe WITH ARTICLe 119 OF THe ARTICLeS OF ASSOCIATION OF THe COMPANY (ReSOLUTION 8)

One of the businesses on the agenda of the 62nd Annual General Meeting is a resolution to authorise the directors to offer to shareholders of the Company a Scrip dividend whereby the dividend approved at the AGM (net of withholding tax) may be used by interested shareholders to acquire additional shares in the Company, subject to the approval of the appropriate authorities.

The notes below provide further information on the scrip dividend option and explains how interested shareholders can make their election.

1. What is the scrip dividend proposal all about? A scrip dividend issue provides shareholders with the option of receiving their dividend in the form of shares in the

company instead of cash. Participation is optional and shareholders will automatically receive the cash option unless they elect otherwise by completing and returning the Scrip Dividend Mandate Form (“the Mandate Form”) to the Company’s Registrars, Zenith Registrars Limited on or before 4.30 p.m. on Monday, 15th October 2012. Submission of the Mandate Form can be either by hard copy or it can be scanned electronically to the Registrars at their email addresses.

2. Who is eligible to take up the option? All shareholders in the Register of Members as at the time the Register of Members is closed for the year which is on

Friday, 5th October 2012)

3. How do I participate in the scrip dividend scheme? You will need to elect to receive scrip dividend by completing the Mandate Form in the Annual Report or which can

be obtained from the Registrars or the Company Secretary’s office and returning the form to the Registrar before the specified due date (i.e. Monday, 15th October 2012). The default option is to pay the cash dividend to shareholders who have not submitted a duly completed Scrip Dividend Mandate Form by the stipulated date. In other words, if you do not wish to convert your dividend to additional shares in the Company, you do not need to take any other steps.

4. What is the deadline to take up the option? As specified in the Annual report and the information released to the stock exchange, this is by 4.30 p.m. on Monday,

15th October 2012.

5. Who should I contact to get more information on the implications of the scrip? If you have any additional queries or require further information please contact our Registrars, Zenith Registrars

Limited using the contact details below:

Zenith Registrars 89A, Ajose Adeogun Street Victoria Island, Lagos Tel: 2708930, 2783973 or 2784168. Email: [email protected]; [email protected]

6. How many new shares will I receive? The amount of new ordinary shares you are entitled to receive will be calculated on the basis of your total cash dividend

entitlement in Naira net of the appropriate withholding tax. As no fraction of a new ordinary share will be issued, any residual cash balance will be paid to you by the Company through the Registrars.

7. When will I get my share certificate? Subject to the new shares being admitted to trading on the Nigerian Stock Exchange, your new share certificate will be

posted to you on or about the same date as dividend warrants are posted (or payment is otherwise made) to shareholders who are taking the dividends in cash.

8. How will I know how many shares I have received? Once your new shares have been issued, a statement will be sent to you along with your new share certificate (where

relevant), showing the number of new ordinary shares issued, the reference share price, and the total cash equivalent of the new ordinary shares. If your cash dividend entitlement is insufficient to acquire at least one new share, your statement will explain that no new shares have been issued and will inform you that your total dividend will be paid to you in the usual way irrespective of your election. CSCS members will have their accounts credited directly with new ordinary shares on the dividend payment date or as soon as practicable thereafter and will receive a statement as above.

9. What is the deadline for election to participate in the scrip dividend scheme? For your notice to be effective for the scrip dividend, it should be received by Zenith Registrars before 4:30 p.m. on

Monday, 15th October 2012.

10. What if I sell or buy shares after I elect to participate in the scrip dividend scheme? Your scrip dividend election will be deemed to be cancelled in relation to any shares you sell or transfer to another

person, but only with effect from the registration of the relevant transfer. If you have bought any additional ordinary shares and they are registered prior to the record date for the payment of dividend, the additional shares will be covered by your existing scrip dividend election. Your election will also terminate immediately on receipt of notice of your death. If a joint shareholder dies, the election will continue in favour of the surviving joint shareholder(s) (unless and until cancelled by the surviving joint shareholder(s)).

11. Does the scrip dividend scheme apply to ordinary shares held in joint names? Yes, but for scrip dividend elections made using the Scrip Dividend Mandate Forms, all joint shareholders need to sign.

12. What happens if I have more than one holding? If your shares are registered in more than one holding, each holding will require a separate election. If you would like to

combine your holdings, please contact Zenith Registrars Limited at the contact address indicated.

13. What do I do if I have any questions about the scrip dividend scheme or need help? Please read these explanatory notes carefully. If you have any additional queries or require further information please

contact our Registrars, Zenith Registrars Limited using the contact details below:

Zenith Registrars Limited 89A, Ajose Adeogun Street Victoria Island, Lagos Tel: 2708930, 2783973 or 2784168. Email: [email protected]; [email protected]