We have extracted the Chairman’s Statement from the 2019 annual report for Guinness Ghana Breweries Limited (GGBL.gh), listed on the Ghana Stock Exchange:
Our cherished shareholders, invited partners, ladies and gentlemen, on behalf of the Board of Directors of this great company, I warmly welcome all of you to the 47th Annual General Meeting (AGM) of your business – Guinness Ghana Breweries PLC. I am honoured to be presenting this year’s annual report and financial statements to you here in Kumasi, following my appointment as Board Chairman on 12 September 2018. I feel obliged to officially introduce myself to you, especially our shareholders in Kumasi and those who were not present at our last AGM in Accra. You may recall my previous role as Chairman of the audit subcommittee. I am the immediate past Country Senior
Partner of PricewaterhouseCoopers (PwC) Ghana and a former member of the PwC Africa Governance Board. I hold a BSc (Administration) from the University of Ghana and an MA (Professional Accounting) from Loyola College, Maryland (USA). I am also a member of the American Institute of Certified Public Accountants and the Institutes of Chartered Accountants Ghana and Sierra Leone. I was recently honored with a D.Sc (honorary causa) by the University of Mines and Technology, Tarkwa.
As your new Chairman, I am currently focusing on:
- ensuring a sustainable performance and value creation for your company (i.e. delivering on our strategic priorities);
- ensuring that we maintain our best in class corporate governance structures and behaviours; and
- proactively engaging our stakeholders, especially our communities, staff, distributors and consumer
The only changes in the Board membership since the last AGM are that, Stephen Nirenstein has resigned and has taken on a new Managing Director role in our Diageo market in Ethiopia, and, we have welcomed Hina Nagarajan in his place. Hina was appointed onto the Board on 11 February 2019. Since 31 August 2018, she has held the role of Managing Director, Africa Emerging Markets – Diageo Plc, leading business operations across Ghana, Ethiopia, Cameroon, Indian Ocean, Angola and several other West and Central Africa countries. Her key responsibilities include Profit & Loss delivery, investment, category and innovation strategies, M&A as well as partnership opportunities. She is responsible for Corporate Governance and Compliance within all the business units in her region and leads over 1,400 people in her current role. She was previously the Senior Vice President – Regional Director of RB (Reckitt Benckiser) North Asia in 2015, leading business operations across China, Hong Kong and Taiwan.
Hina has an MBA from the Indian Institute of Management, Ahmedabad, India. Our cherished shareholders, ladies and gentlemen, in the period under review, your company saw a number of positive changes and with your kind permission, I will now provide the key highlights:
During the financial year, 2018 GDP growth was 6.3%, albeit down from 8.4% GDP growth reported in 2017. Inflation remained below 10%, although we note that there continues to be a divergence between food inflation and non-food inflation. There has been a rising trajectory of non-food inflation, taking it up to an average 10.5%. This has been driven by rising utility and commodity costs. In addition,
Ghana Cedi depreciation has fuelled inflation on imported items. In the fiscal year to June 2019, the Ghana Cedi to US Dollar rate cumulatively depreciated by 18%, compared with 2.4% depreciation over the comparative period ended June 2018. The Monetary Policy Committee kept the policy rate steady at 16% as at June 2019. The 91-day Treasury bill rate, which is the reference rate for our company loan, increased to 14.8% in June 2019 from 13.3% over the comparative period.
In F19, Guinness Ghana delivered strong sales of our premium non-alcoholic category, particularly as we commissioned our second PET plant in the Achimota Site to take advantage of the growth in one-way formats which consumers find more convenient. We also focused on growing market share especially in the lager category which led to re-innovation of our lower mainstream proposition brand, ABC lager beer.
We continued to reward our loyal consumers with the Guinness Foreign Extra Stout (FES) National Consumer Promotion called ‘1957 meets 1759’ to align with Ghana’s 62nd Independence anniversary. In line with our priority to grow spirits faster during the year, we executed a Black Friday activation with GAME and Shoprite which was a phenomenal success. We also held in-bar sampling experiential events on Johnnie Walker Red and confident mixing sessions to educate consumers on how to drink and to mix their favourite Johnnie Walker Scotch whisky. Bottom line growth was challenged by the significant Ghana Cedi devaluation, VAT regulation change which increased all our cost base by 5% and broader commodity inflation.
Ensuring excellence in Governance
Shareholders, ladies and gentlemen, Guinness Ghana is committed to achieving the highest standards of corporate governance, corporate responsibility and risk management in the conduct of our business. Guinness Ghana is also committed to carrying out its business responsibly and in accordance with all laws and regulations which its business is subject to. Thus, in the year under review, all aspects of your company’s operations were conducted in compliance with applicable laws and regulations and the company’s code of business conduct and other related policies. Quarterly Board and audit committee meetings were held, and the nominations committee also met twice. I am also happy to inform you that in addition to the external audit carried out by PwC, the company also satisfactorily underwent two internal audits.
Engagement with Communities
As a socially responsible company, we continued to deliver safe accessible water to vulnerable and water stressed communities. A total amount of GH¢ 345,520 was invested in Waterhealth centres to provide potable water to over 100,000 beneficiaries in communities in the Northern region where we source local raw materials for production. We also continue to work with local farmers and aggregators to support our action plan to create awareness and address specific risks associated with child labour issues across our supply chains. This is to ensure that these aggregators and farmers become partners in driving child labour awareness in the various farming communities we source our local raw materials.
To reduce our environmental impact and creating the enabling environment for progressive conversations around plastics, together with our peers and through the Ghana Recycling Initiative by Private Enterprise GRIPE coalition (known as GRIPE), we engaged stakeholders on the sustainable management of plastics to unlock enormous economic value for Ghana. GRIPE also formed the base model for a broader Alliance of Plastics Recycling in Africa led by Diageo and Unilever and signed by Coca Cola amongst other multinationals in Kigali, Rwanda in February 2019.
Furthermore, in line with our ambition to create a positive role for alcohol in society and discourage drink-driving, we launched the 6th edition of our annual road safety campaign – “Twa Kwano Mmom” (“Go the distance”) which has been running since 2012. During the campaign, a total of 33,683 drivers participated in the campaign and 40,000 breathalyzer tests were conducted on commercial drivers. In the year under review, we scaled this programme up with the following activities;
- training for over 150 MTTD (Motor Traffic & Transport Department) officials in Accra and Kumasi on drink drive and road traffic regulations to support our ambition to tackle drink driving through initiatives and partnerships which impact misuse;
- signing of a Memorandum of Understanding with Multimedia Group, Ghana’s largest media outlet to promote safety on Ghana’s roads; and
- transitioned the “Drink Drive Programme” to “Join the Pact” and dialed it up on social media through influencers in December to amplify our work in this area.
During the year under review, to enhance our leadership in promoting responsible drinking, we signed a Memorandum of Understanding with the Driver and Vehicle Licensing Authority (DVLA), the first of its kind in Ghana (indeed, Africa and the world) and have also partnered the DVLA to roll out a drink driving awareness e-learning module into the national driver’s test.
I am happy to announce that our quest to become the best performing, most trusted and respected consumer goods company in Ghana, is also being recognized by various awards programmes. During the financial year, we won 16 awards, including two internal awards competed among our global Diageo peers. Guinness Ghana won three awards at the Ghana Beverage Awards:
- Beer of the year – Guinness FES
- Cider/RTD of the year – Orijin
- International beer of the year- Heineken
At the Ghana Corporate Social Responsibility (CSR) Excellence Awards, Guinness Ghana was adjudged Best Company in Safety and Well-being and CSR Manufacturing Company of the Year. Ghana was adjudged Most Outstanding market for Malta Guinness when Diageo hosted the Guinness Africa Summit in Nairobi, Kenya. At the same awards, our iconic Guinness FES won the Quality Champion of the year. At the Sustainability and Social Investment Awards, Guinness Ghana won the Best Company in Social Enterprising Project award, Best Company in Project Supporting Local Content and Best Company in Environment Sustainability Project. These are just some of the prestigious awards our company won through the sustained effort and hard work of the staff who are relentlessly pushing the boundaries to be more, win more and live more.
Nananom, shareholders, ladies and gentlemen, I am delighted to cap what has been another positive year with a GH¢ 9 million (GH¢ 0.0293 per share) dividend proposal for your approval at this AGM.
I wish to thank you for your continued support to the business over the years. As we have commenced a new financial year, and despite the current uncertainties in both the global and local markets which are adversely impacting especially our forex exposures, I would like to assure you that we will continue to strive to be the best performing, most trusted and respected consumer products company in Ghana, as we have the right people and a clear strategy to deliver another impactful financial year.
Once again, on behalf of your new Board, let me thank you, our shareholders for keeping faith with us, our staff for their hard work, passion and commitment, our key distributors, and last but not the least, our consumers for making our investments and efforts all worthwhile.