Good Corporate Governance - Namibia Breweries Limited

About ring forthe futureA NamibianinvestmentNBLtimelineGOOD CORPORATE GOVERNANCE (continued)King III and the NamCode recommend that themajority of Directors be independent. In thisregard, the NBL Board continues to depart fromthe recommendations in respect of the numberof independent Directors serving on NBL’sstatutory committees. NBL Directors, including theChairperson of the Board, continue to be appointedbased on their experience, competency, leadershipskills and strong business ethics, and it is theseattributes that are regarded as the main criteriafor appointment.The responsibilities of the Chairperson and the ChiefExecutive Officer remain separate, as recommendedby King III and the NamCode.In discharging their responsibilities, and underappropriate circumstances, all Directors are entitledto seek independent advice at Company expense.Established procedures require all Directors toinform the Board timeously of any actual orpotential conflicts of interest they may have inrelation to particular items of the business. Directorsare obliged to recuse themselves from discussionsor decisions on matters in which they have a conflictof interest. In general, Directors are required toavoid any direct or indirect interest that conflictsor may conflict with the Company’s interest.Mr Sven Thieme was re-elected as the Chairpersonof the Board at the prior year’s Annual GeneralMeeting (AGM) held on 3 December 2015, andtherefore continued to serve as a Non-executiveDirector, with Messrs Hendrik (Wessie) van derWesthuizen and Graeme Mouton being thetwo Executive Directors required for its properconstitution. At the AGM, Mr Sijbe Hiemstra,Governor Laura McLeod-Katjirua, andMr Didier Leleu resigned from the Board, butmade themselves available to be re-elected forthe next term. All Directors were re-elected bymajority vote.Four Directors resigned from the Board on1 December 2015 following the restructuring ofthe South African joint venture: Nick Blazquez,Philip Jenkins, Martin Kromat and Jeff Milliken.Sijbe Hiemstra resigned on 12 November 2015.Board CommitteesTo assist the Board with properly dischargingits duties, it delegates certain functions to thevarious Board Committees and to the LeadershipTeam. Each Board Committee acts within agreed,written terms of reference. The minutes of BoardCommittee meetings are provided to the Board.The Company Secretary is responsible forverifying that all Board Committees comply withstatutory, regulatory, NSX Listing Requirements andbest practice. Directors have accessto the Company Secretary at all times.The various established Board Committeesare set out below.NBL Board of DirectorsRemuneration and Nominations CommitteeAudit CommitteeRisk Committee62Namibia Breweries Limited Integrated Annual Report 2016

OperatingenvironmentManagingDirector’s ReportValue addedstatementGood corporategovernanceRemunerationreportAnnual financialstatementsA Senior Leadership Team is charged with implementing the Company’s strategies and objectives. ThisTeam is also responsible for ensuring that internal controls are in place and function effectively in order forthe Company to operate and to mitigate risk to such operation. The Board holds the Senior LeadershipTeam accountable for their activities, which are monitored and controlled through regular reports andperformance measurements.Attendance at Board and Committee meetings were as follows:AuditCommitteeBoard8Sep2Dec3MarNB Blazquez2AA––E EnderPPPPH-B GerdesPPPPPPPP GrüttemeyerPPPPPPPG Hanke––A––––S Hiemstra1AP––PJ Jenkins2––––M Kromat2––––AA–DFM LeleuAPPAAA–C-L ListPAPPL McLeod-KatjiruaPAAPJ Milliken2AA––G MoutonPPPPPPPR PirmezPPAPS ThiemePPAPL van der Borght––––H van der WesthuizenPPPPResigned 12 November 20152Resigned 1 December �P–P––PPP––P–PPPPPAPPPPPPP PresentA ApologiesStrategic Partnerships ❯❯63

About ring forthe futureA NamibianinvestmentNBLtimelineGOOD CORPORATE GOVERNANCE (continued)Audit CommitteeThe Audit Committee comprises three DirectorszzH-B Gerdes (Chairperson);zzP Grüttemeyer (O&L representative); andzzE van Lokven (Heineken representative)The NBL Audit Committee continues to depart fromthe recommendations in respect of the number ofindependent Directors serving on the Committee.The Audit Committee members, including theChairperson, are appointed based on theirexperience, competency, leadership skills and strongbusiness ethics, and it is these attributes that areregarded as the main criteria for appointment.The Committee’s terms and reference, as set outin an Audit Committee Charter, and approved bythe Board, is to review the Company’s financialstatements, the appropriateness of the Company’saccounting and disclosure policies, compliance withInternational Financial Reporting Standards, andthe effectiveness of internal controls.The Committee considered and recommended aninternal audit charter for approval by the Board.The Company’s external and internal auditors,Finance Director, Managing Director and the O&LGroup’s Chief Executive Officer attend AuditCommittee meetings by invitation. The Committeeinvites other members of the NBL Senior LeadershipTeam as required. The auditors, both internal andexternal, attended all Audit Committee meetingsduring the year under review.The Audit Committee roles includezzmonitoring the integrity of financial statementsand making recommendations to the Board;zzreviewing NBL’s policies and practicesconcerning business conduct and ethics,including whistleblowing reports received viathe Tip-Offs Anonymous hotline; andzzassisting the Board to discharge itsresponsibility to:}}}}}}}}}}safeguard NBL’s assets;operate adequate and effective systems ofinternal control, financial risk managementand governance;review financial information andshareholder reporting;monitor compliance with laws andregulations; andprovide oversight of the external and internalaudit functions and appointments.The Board is satisfied that the Committee compliedwith its legal, regulatory or other responsibilities.Remuneration and Nominations CommitteeThe Committee comprises the following Directors:zzR Pirmez (Chairperson and Heinekenrepresentative);zzP Grüttemeyer (O&L representative); andzzB Mukuahima (O&L representative).The Remuneration and Nominations Committee’smain responsibilities, as set out in its Boardapproved terms of reference, include monitoringthe appropriateness of the Company’sRemuneration Policy and ensuring a formal andtransparent process exist in respect of appointingnew Directors to the Board. In fulfilling this function,the Committee is required to:zzreviewing internal and external auditreports and monitoring that correctiveactions are performed,zzAssess the necessary and desirablecompetencies of prospective Board membersbased on merit and objective criteria. In doingso, candidates from a wide range of backgroundsare to be considered, in keeping with thedynamics and diversity of the country.zzproviding a communication channel betweenthe Board, the internal and external auditors andother assurance providers;zzReview Board nominations from shareholdersand to provide recommendations to the Boardin respect of such nominations.zzassisting the Board, in conjunction with the RiskCommittee, to monitor the effectiveness of therisk management process, including fraud andcorruption, information technology-related items,and compliance with risk standards adopted bythe O&L Group;zzEnsure that, on appointment to the Board, Nonexecutive Directors receive a formal letter ofappointment setting out clearly what is expectedof them in terms of their time commitment,Committee service (if any), and involvementoutside Board meetings.zzensuring integrated reporting takes place;zzreviewing and monitoring the internal audit plan;64Namibia Breweries Limited Integrated Annual Report 2016

OperatingenvironmentManagingDirector’s ReportValue addedstatementzzDefine and implement procedures for the annualstatement of disclosure of any conflict of interestand the annual statement of compliance.zzGive full consideration to succession planningin the course of its work, taking into accountthe challenges and opportunities facing theCompany and, therefore, what skills andexpertise are needed on the Board in the future.zzKeep under review the structure, size andcomposition (including the skills, knowledgeand experience) of the Board, and makerecommendations to the Board with regardto any changes, subject to the provisions ofthe Company’s Articles of Association and theNamibia Companies Act, 2004 (No. 28of 2004).zzConsider and, if appropriate, makerecommendations to the Board regarding}}}}the tenure of Non-executive Directors onthe Board; andthe reappointment of any Non-executiveDirector at the conclusion of his or herspecified term of office.zzApprove and, if in the interest of the Company,ensure that all employment agreements betweenthe Company and the Directors are limited tothree or five-year periods, if applicable, providedsuch agreements are renewable.zzAction any other duties or responsibilities expresslydelegated to the Committee by the Board.Read more about remuneration in the reporton page 68.Risk CommitteeThe Risk Committee has an independent andadvisory role with accountability to the AuditCommittee. The purpose of the Risk Committeeis to assist the Board of Directors to fulfil itsresponsibilities relating tozzthe governance of risk;zzthe assessment and review of credit, market,fiduciary, liquidity, reputational, operational,fraud, strategic, technology, data-security,and business-continuity risks; andzzmonitoring the overall risk profileThe Directors who serve on the Risk Committeeare ultimately responsible for the Company’s riskmanagement system. The system is designedto manage risk rather than to eliminate it. On aGood corporategovernanceRemunerationreportAnnual financialstatementsmonthly basis, risks are identified, assessed anddiscussed within the different business functions.These risks are closely managed, monitored andmitigated. Reports on the top key risks, along withtheir respective mitigation plans, are delivered ateach Board meeting as well as at Audit Committeemeetings and monthly business review meetings.The minutes of this Committee are made available toand discussed at Audit Committee meetings as well.The Risk Committee compriseszzH van der Westhuizen (Chairperson);zzG Mouton;zzNBL Senior Leadership Team; andzzO&L Group Risk Manager.No undue, unexpected or unusual risks weretaken in the past year and no material losses wereexperienced as a result of such risks. The Board issatisfied with the effectiveness of the Company’srisk management processes.Internal controlsNBL’s internal controls are designed and operatedto support the identification, evaluation andmanagement of risks affecting the Company, aswell as the business environment in which itoperates. Internal control systems are in place toprovide the Senior Management Team and theBoard with reasonable assurance as to the integrityand reliability of the financial statements.Continuous management reviews, a review ofinternal financial controls, and a review of externalparties providing internal audits, test whether thebusiness complies with internal control proceduresand policies. Experienced and qualified employeesare appointed as control champions throughout thebusiness functions to review and evaluate financialas well as technical controls.Any deficiencies are recorded, monitored regularly,and reported to the Senior Leadership Team. Thishas proven to be a very successful approach tocritically evaluating and improving internal controlpolicies and procedures. The internal audit functionwas outsourced to the auditing firm Ernst & Young.The internal audit programme is founded on a threeyear risk-based approach. The internal audit planis approved by the Audit Committee and regularlyreviewed by the Risk and Compliance Department.Strategic Partnerships ❯❯65

About ring forthe futureA NamibianinvestmentNBLtimelineGOOD CORPORATE GOVERNANCE (continued)During the reporting year, the following internalaudits were performed:zzInventory ManagementzzPayroll ManagementzzProductionzzWithholding TaxeszzFixed Assets AccountingMedium risk findings were reported and resolved.All findings and recommendations are recorded onan audit tracker and closely monitored by theSenior Leadership Team.The Risk and Compliance Department is responsiblefor ensuring that corrective actions are taken andrecommendations implemented.Ernst & Young also performs internal follow-up auditsand reports independently to the Audit Committeeand then to the Senior Management Team on thefindings and recommendations it identifies. Both theinternal and external auditors have unlimited accessto the Chairperson of the Audit Committee.There is a strong drive within NBL to uphold thehighest technical and operational standards. Fire andsafety policies and procedures are regularly reviewedand tested so that they continue to be compliant.Each manager within his/her function is evaluatedconstantly on the health and safety ratings achievedduring these audits. By strictly following thisprogramme, NBL has managed to improve its healthand safety standards for employees, contractors,suppliers and other providers of service to NBL.Unfortunately, an employee of a contractorexperienced a fatal fall during repairs andmaintenance at the brewery in May 2016.Management reviewed the tender process for externalcontractors to ensure inclusion of an appropriateHealth and Safety Plan. Management further reemphasised the importance of health and safety to allexternal contractors, employees and visitors alike.For the past six financial years, an annual insuranceaudit has been performed by Alexander ForbesInsurers. The main plant is audited on an annualbasis, while depots are audited on a rotational basis.During the reporting year, the NBL main plant,66Namibia Breweries Limited Integrated Annual Report 2016Oshakati and Swakopmund depots were audited.NBL received a 3 Star rating (81%) by AlexanderForbes Insurance in respect of its overall compliancewith local and international insurance standards.Stakeholder communications, ethics andthe Tip-Offs Anonymous hotlineNBL’s Board is aware of the importance ofcommunicating the Company’s activities to allstakeholders in a balanced and comprehensivemanner. Each key stakeholder group thereforehas a business owner who is the individual in NBLprimarily accountable for managing the relationshipand regularly engaging with the stakeholder orstakeholder group concerned.Shareholder communications take the form ofanalyst presentations where NBL announces itsinterim and final financial results. The Company alsopublishes and reports on details of its performance(including its interim and final financial results) intwo local daily newspapers. Other Company noticesand publications occur, on its website, where itsmost recent financial and historical information isavailable, including its annual reports.The Audit Committee is responsible for embeddinga culture of high ethical standards. The Committeeperiodically reviews the Company’s Code ofEthics and the Company’s programme to monitorcompliance therewith. Employees have severalmeans available to them to raise their concerns andmake recommendations or obtain feedback fromthe Senior Leadership Team. One such avenue is theworkplace forum within the different functions, whichis held on a weekly or fortnightly basis. At theseforums, employees have the opportunity to discussmatters of concern to them. If an employee is notcomfortable with airing their views at these forums,they can contact the Tip-Offs Anonymous hotline.The hotline is administrated by independent serviceprovider, Deloitte & Touche. During the past year,17 tips were reported to hotline (total O&L Group)and six of these were followed by an internal NBLinvestigation.NBL invites all shareholders to attend its AGM andalso facilitates participation by way of focusedproxy solicitation.

OperatingenvironmentManagingDirector’s ReportValue addedstatementGood corporategovernanceRemunerationreportAnnual financialstatementsShareholding analysis for 30 June20162015206 529 000206 529 000957 033521 16023 473 49710 473 755Market price (cents per share)2 5502 045Closing price (cents per share)2 5502 0453.023.472 5512 045Earnings yield percentage (HEPS)7.3%9.1%Price: earnings ratio (HEPS)13.710.9Number of shares in issueNumber of shares tradedValue of shares traded (N )Dividend yield (percentage)Bid price (cents per share)Public and non-public shareholdingsNumber ofPercentage ofshareholders total shareholdersPublic1 55099.9483 908 70240.6310.06122 620 29859.371 551100.0206 529 000100.0Non-public (Holding company)TotalNumber ofPercentage ofshares in issue issued share capitalDistribution of shareholders per categoryNumber ofPercentage ofshareholders total shareholdersCorporate BodiesNominee CompaniesPrivate individuals462.96123 481 37259.7919812.7774 507 11436.081 28282.667 363 4293.56251.611 177 0850.571 551100.0206 529 000100.0TrustsTotalNumber ofPercentage ofshares in issue issued share capitalShareholder spread (by beneficial owner)Number ofPercentage ofshareholders total shareholdersNumber ofPercentage ofshares in issue issued share capital1 – 1 00099764.28472 9200.231 001 – 50 00051333.083 093 8931.5050 001 – 100 000140.90980 2670.47100 001 – 10 000 000251.6118 718 9269.0620.13183 262 99488.731 551100.0206 529 000100.010 000 001 and aboveTotalStrategic Partnerships ❯❯67

Annual financial statements Ernst Ender (73) Qualifications and experience: Two-year postgraduate commercial traineeship with AC Toepfer . within the Heineken Group and other reputable international corporates, Lieven holds the position of