2 0 1 2 A n n u a l R e p o r t

The Beer of The Bahamas

1 9 8 8 - 2 0 1 3

t h A n n i v e r s a r y

Vision Statement:

Commonwealth Brewery Limited is committed to being a stable, profitable, respected and viable

Bahamian beverage company which contributes on a continuous basis to the well-being of our

shareholders, employees, the Bahamian economy and society in general.

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Ta b l e O f C o n t e n t s

Introduction 2

Financial Highlights 3

Commonwealth Brewery Limited Directors’ Bios 4 - 5

Chairman’s Message 6

Managing Director’s Review 7 - 9

Management Discussion And Analysis 10 - 12

Executive Management Team 13

Corporate Responsibility 14 - 15

Environmental Sustainability 16 - 18

Heineken Overview 19

25 Years Of Kalik 20 - 21

List Of Stores 22

Advisors 23

Audited Financial Statements

Independent Auditors’ Report 24

Consolidated Statement of Financial Position 25

Consolidated Statement of Comprehensive Income 26

Consolidated Statement of Changes in Equity 27

Consolidated Statement of Cash Flows 28

Notes to Consolidated Financial Statements 29 - 50

Disclaimer: This Annual Report might from time to time contain forward-looking statements. Readers should be cautious in interpreting these statements.

Forward looking statements involve numerous assumptions and changes in these assumptions could cause actual results to differ materially from the expecta-

tions in those statements.

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I N T R O D U C T I O N

Celebrating For All The Right Reasons

Every anniversary calls for a celebration; three anniversaries in a single

year deserve extraordinary attention. Thus, this 2012 Commonwealth

Brewery Limited (CBL) annual report Celebrating for All the Right

Reasons marking three anniversaries is more than the standard

report of company results and projections. It is a celebratory docu-

ment, beginning with positive company performance and extending

to brands which brought it honour, and the country in which it is

honoured to operate.

Among the reasons for celebration: Fiscal 2012 January 1 - Decem-

ber 2012 marks the first full fiscal year Commonwealth Brewery was

a publicly-held company and financial results were strong despite a

still struggling economy.

Good results alone would not warrant a report entitled Celebrating…

The title helps us mark three anniversaries between 2012 and 2013:

25 years for Kalik, The Beer of The Bahamas, with its four interna-

tional awards for taste and quality and its millions of fans worldwide;

140 years for the Heineken brand, and we join with everyone in the

nation as The Bahamas celebrates its 40th anniversary of indepen-

dence.

In a broad perspective, it has been a short, but active and exciting

journey to the anniversaries of Commonwealth Brewery. What started

in 1986 as a private brewery to produce Heineken and Guinness

has evolved into a publicly-held industrial enterprise with over 380

employees, the largest network of liquor stores in The Bahamas with

54 company-owned retail outlets acting as distributors for 70+ brands

of beer, wine and spirits, including some of the most prestigious

labels of vodka, scotch, whiskey, gin, liqueurs, aperitifs, sherry, port

and cognac, in addition to non-alcoholic beverages. Its manufactur-

ing has grown from the initial two international brands to four labels

under the Kalik brand -- Kalik, Kalik Light, Kalik Gold and Kalik Lime

-- as well as the popular malt drink Vitamalt and the full line of Ron

Ricardo and Ole Nassau rums with their exotic tropical fruit flavors

and attractive souvenir-satisfying labels.

One hundred forty years since the first Heineken quenched a taster’s

thirst, forty years since the nation gained its independence and one

quarter of a century since the first Kalik rolled off the conveyor belt

and Commonwealth Brewery Limited is proud to be part of all three.

We invite you to Celebrate with us for All The Right Reasons.

“It is a celebratory document, beginning with positive company performance and extending to brands which brought the brewery honour, and the country in which we are honoured to operate.”

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BSD ‘000 2012 2011 2010 2009 2008

Volume (‘000 hectoliters)* 194 187 187 203 213

Revenue 118,468 113,409 109,376 111,833 113,831

Result from operating activities 19,297 17,278 19,943 16,104 14,747

Earning per share (cts) 0.64 0.58 0.74 0.57 0.46

Assets 73,280 72,008 76,967 83,363 83,165

Long term liabilities nil nil nil nil 1,652

Dividends 17,400 25,153 26,268 6,850 10,250

Capital expenditure 2,445 1,314 1,404 1,885 5,236

Employees (FTE) 381 390 384 390 408

* 1 hectoliter = 100 litres or 3,381 fl. oz. (US)

f i n a n c i a l h i g h l i g h t s

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Mr. Francis is a former governor of the Central Bank of The

Bahamas and brings a wealth of knowledge and experience to

the Board. He was previously the Chairman of The Bahamas

Telecommunications Company Limited (BTC) and has held

other chairmanships and posts in both governmental and private

organisations. He holds Bachelor’s (with special honours) and

Master’s degrees in Finance from New York University.

Mr. Pinotsis is the President and Managing Director of Commonwealth Brewery

Ltd. With more than 25 years of experience with Heineken NV, Mr. Pinotsis has

operated in various capacities within the company and around the world in sales,

export, brand development and management positions. He has been in Managing

Director positions for the last 15 years. He holds a Master of Science degree in

Naval Architecture and Shipyard Operations.

Mr. Archer is the immediate past President and Managing Director of the

Commonwealth Brewery Group. A certified public accountant, Mr. Archer spent

more than three years with KPMG in Boston before returning with the firm to

Nassau. Mr. Archer was employed by Commonwealth Brewery since 1989, hold-

ing a range of positions, including Financial Manager and Financial Controller of

Heineken’s regional office in Miami. He is the first and only Caribbean person

to receive the “Financial Manager for Heineken Worldwide” award. Mr. Archer

holds a Bachelor of Arts degree in Accounting from Florida Atlantic University.

Director and CEO of the National Insurance Board, Mr. Cargill

holds an MBA from the University of Miami. Mr. Cargill has both

local and international experience and held positions in commer-

cial banking and the petroleum industry prior to entering the

insurance industry and being recruited to head NIB.

C o m m o n w e a lt h B r e w e r y L i m i t e d

D i r e c t o r s ’ B i o s

Julian W. Francis, Chairman

Nico Pinotsis, President and Managing Director

LeRoy Archer

Algernon Cargill

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Mr. Fields is the Senior Vice President of Retail Services and Public Affairs for Kerzner

International and General Manager of Ocean Club Estate and Golf Course. A well-known

radio host with a diverse background, he serves as Director of the Bahamas Airport

Authority, Catholic Board of Education and Downtown Nassau Partnership. Mr. Fields is

the Founder and Chairman of the non-partisan, non-profit organisation We the People.

He holds a Bachelor’s degree in Government from St. John’s University in Minnesota

and a Master’s degree in Public Administration from the University of Georgia.

CFO of Americas Region Heineken in New York, Mr. van den Huijsen holds an MBA

from the Erasmus University. He has extensive financial experience, having worked

for Heineken NV in several countries. Prior to joining the company in 1996, Mr. van

den Huijsen was a senior consultant for Ernst & Young in The Netherlands. Mr. Van

den Huijsen was appointed Executive Director of Global Strategic Planning & Busi-

ness Control at Heineken Group in the fourth quarter of 2012.

Mr. Ubalijoro is the Managing Director of Heineken Caribbean & American

Export. He has had a varied career with Heineken since joining in 1990 as the

first African international trainee. In 1995, Eugene became Heineken USA’s first

Regional Marketing Manager for the Southeast Region. He has been a consultant

in Amsterdam, Commercial Manager in Sub Sahara Africa and Managing Director

in La Reunion. Mr. Ubalijoro holds a Bachelor’s degree in Business Administra-

tion from Georgetown University and an MBA from Université de Sherbrooke.

Ed Fields

Bart van den Huijsen

Eugene Ubalijoro

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C H A I R M A N ’S M E S S A G E

Dear Shareholders,

Once again, it is my distinct pleasure as

Chairman of Commonwealth Brewery Limited

to share with you news, results and the vision

of this exciting and dynamic company, and

to invite you to share with us as we celebrate

three very special anniversaries.

It was 25 years ago that the first bottle of Kalik rolled off the conveyor

belt for its official final product taste test and introduction to the

market. It was 40 years ago that The Bahamas achieved political

independence, and it was 140 years ago that the first Heineken was

produced.

Throughout this year, and intensifying as we approach July 10, we will

devote considerable time and resources to celebrating our country’s

independence. We at Commonwealth Brewery look forward to partici-

pating meaningfully in national events to recognize this important

milestone in the life of the Bahamian nation.

Celebrating yet another milestone in the history of Heineken also gives

us reason to feel pride. The brand is nowadays the most internation-

ally sold beer in the world with distribution in over 178 countries

across the globe.

In preparing to celebrate the brands and the business that make up

Commonwealth Brewery Limited, a BISX-listed company with more

than 3,000 local shareholders, I am also pleased to remind share-

holders of the depth and strength of our company. The business of

Commonwealth Brewery incorporates a 150,000 square foot brewery

at Clifton Pier, the wholesale distribution of beer, wine and spirits and

the network of the largest liquor chain in The Bahamas, comprised

of 54 stores from the northernmost island to near the southernmost

point. In addition to the full portfolio of Kalik brands -- Kalik, Light,

Gold and Lime -- the company produces Heineken and Guinness

beers, Vitamalt, a full range of Ron Ricardo rums and Ole Nassau and

represents 70-plus labels of spirits and wines.

Commonwealth Brewery Limited is the only business in the indus-

try that is publicly traded, sharing profits through dividend payouts

across a wide cross-section of our community, and contribut-

ing importantly to the ownership by Bahamians of a “piece of the

economy”. After nearly a quarter of a century of private ownership,

Commonwealth Brewery went public in March, 2011, offering 25% to

the public with the remaining shares held by Heineken International

BV. Some 15.1% of the company’s publicly-traded shares are now

held by Bahamian individual and institutional shareholders and the

remaining 9.9% of publicly-traded shares is held by the government

through the National Insurance Board.

At the conclusion of the second year of public ownership and the full

fiscal year which runs from January 1- December 31, I am pleased to

report that Commonwealth Brewery Limited performed well, affording

a dividend payment increase to $0.64 from the $0.58 per share as

paid out over 2011. Total revenue exceeded $118 million, an increase

of $5 million from 2011. Operating expenses also rose by more than

$2 million over the previous year, resulting in a net income increase

of $2.0 million.

While performance is paramount, we never lose sight of our broad

corporate responsibility, and our obligation to the environment.

Throughout this annual report “Celebrating for All the Right Reasons”,

you will see clear evidence of Commonwealth Brewery’s commitment

to both. Even during the height of economic challenges, our spon-

sorship levels to regattas and Junkanoo increased, and our support

for other national endeavors has remained consistent. Our dedica-

tion to the environment is evidenced by a further reduction of our

consumption of natural resources and an increase in the volume of

bottles processed by our recycling center. We continue to expand our

commitment to staff development, investing more in skills training,

new competencies and interpersonal development than ever, know-

ing that the success of a business depends, more than anything else,

on its people.

The near term outlook is dependent to a significant degree on

economic recovery, about which we remain hopeful. As I did last

year, I wish to point to our continuing concern regarding - the ability

to operate on a level playing field, where all in the industry pay taxes,

duties and fees at comparable rates.

At this time, as we celebrate a trio of anniversaries, I wish to extend

personal appreciation to our customers for their support, our consum-

ers for continuing to prefer our brands, the management and staff in

the brewery, distribution centre, affiliated facilities and in wholesale

and retail establishments for their service and to you, our sharehold-

ers, for your loyalty. We will continue to do all we can to earn your

trust.

Julian W. Francis

Chairman

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In 2012 the trading environment for

Commonwealth Brewery Limited showed

signs of a moderate recovery. An increase in

tourist arrivals affected consumer spending

patterns positively. The beer market grew and

Commonwealth Brewery benefited through

increased sales volume. This enabled the

company despite the continuous increas-

ing costs of doing business to deliver strong financial results, and

maintain our commitments to investing in human resources and

marketing. We continued to focus on enhancing operational excel-

lence, strengthening our brand portfolio, and making sure that we

retain and extend the preference and loyalty for our brands with our

consumers and increase the value we add to our customers.

Financial Performance

Revenue increased by $5.0 million largely driven by beer sales

volume growth in the domestic market. Our export volumes declined

in 2012 because the company had to pass on price increases due

to continuously increasing input costs. Three specific areas fuelled

the higher cost of sales: import duties on raw materials and bottles,

higher shipping and local transportation costs and increases in

energy tariffs. Combined, they resulted in the need to increase our

pricing, making us less attractive than our regional competitors in the

US market. The sales volumes of wines and spirits in the domestic

market remained stable.

The increase in revenue becomes especially noteworthy given the

reality that operating expenses grew by $ 2.1 million. As mentioned

the costs of input materials continued to rise in 2012. Excise tax paid

increased due to higher beer sales. Costs in general, however, were

well under control. Operating expenses as % of revenue improved

slightly from 86% to 84%. Overall the favorable top line development

led to a positive impact on results from operating activities.

Net income amounted to $19.3 million or 64 cents per share. This

represents a growth of 11.5% compared to 2011. The cash genera-

tion remained strong. The company generated $22.3 million net cash

from operations before changes in working capital. This was partially

utilized for investments and working capital needs. Commonwealth

Brewery’s balance sheet per 31 December 2012 remained debt free.

The company paid a $7.5 million interim dividend related to 2012 in

December.

M a n a g i n g D i r e c t o r ’ s R e v i e w

“At Commonwealth Brewery we believe it is important to create a balance between people, profit and planet. It is key that long term growth should come in a responsible way.”

Vitamalt, sponsor of CARIFTA 2012 Swimming Championship.

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Marketing Programs

Our marketing programs in 2012 featured well-branded, well-covered

and well-supported key events that were well received by the public.

Kalik Pop the Top again excited consumers in the summer months.

Kalik, The Beer of The Bahamas, also strengthened its support

towards Junkanoo and the native sloop regattas.

Activities around Heineken in 2012 were for a large part centered

around the relationship with the latest James Bond Movie ‘Skyfall’

where, through various promotional activities, consumers could win a

variety of prizes including tickets for the unique eye-catching premiere

at the Mall of Marathon where over 400 leading business and civic

personalities, customers and press experienced the premiere of

‘Skyfall’ the Heineken way.

Heineken also increased its presence with various events amongst

others through a rugby sponsorship that was signed in late 2012

and the bright green Heineken bus that became an instant traveling

status symbol for private parties or groups enjoying a night out.

Guinness achieved a new record by winning, for the third year in a

row, the regional quality award for brewing the best Guinness in the

Caribbean, testimony once again to the quality of the products that

leave our brewery.

Guinness celebrated with founder Arthur Guinness Day and Guinness

Greatness street parties. Vitamalt backed CARIFTA and a basketball

series, Budweiser hosted NFL nights and Hennessy and Absolut both

aligned with art and artistry.

Community Programs

The company continued to support the work of a large number of

organizations directly or indirectly. Amongst others were The Bahama

Red Cross, The Bahamas Blood Bank, The Bahamas Cancer Society,

The Heart Foundation, The Aids Foundation, The National Youth

Council and the Royal Bahamas Police Force. Commonwealth

Brewery funded a scholarship at St. Andrews School and supported

a number of other educational institutions at specific events. The

company supported the 7th Annual Outreach Summer Youth Camp

organized by the Z-Bandit Junkanoo and Community Organization.

These and many other organizations received donations in money or

in kind in order to help defray costs and make initiatives feasible to

improve our local community.

Safety Health and Environment

At Commonwealth Brewery we believe it is important to create a

balance between people, profit and planet. It is key that long term

growth should come in a responsible way. Therefore all at Common-

wealth Brewery are working hard to contribute to a greener, happier

and healthier society.

I am proud to inform you that by continuously focusing on adherence

to safety policies and procedures we were also able to reduce the

number of accidents at the workplace this year. Also with regards to

the environment, the usage of energy and water has been reduced

taking care of the scarce resources of our planet while our Bottle

Recycle Centre, collected more bottles from the market than in

2011.

People

Currently over 98% of our total employee base is Bahamian.

Commonwealth Brewery recruited six new professionals in order

to improve customer service and quality of commercial execution.

These and other measures were taken in order to strengthen our role

as supplier of choice for alcoholic beverages. The company contin-

ued also to invest in the skills and competencies of existing staff. Our

front line managers enrolled in a program that taught them the skills

required to be successful leaders in an increasingly complex and

fast changing competitive landscape. We also continued our valuable

wine training program that we believe will have long-term benefits.

An increasing number of store clerks are more knowledgeable than

ever to assist customers with selecting their wines of choice. Due

to popular demand the company enlarged the scope of our training

program even to include customers.

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As stated last year the success of a company depends on the commit-

ment and skills of its employees. Our results in 2012 were solid. I

would like to thank the entire team for their contribution to these

results.

Outlook for 2013

We remain cautiously optimistic for the calendar and fiscal year

ahead, but see a potentially tougher competitive environment down

the road that will need to be addressed. Although the economic

climate is showing signs of recovery, competition is increasing, not in

the least through an increase of parallel imports as well as due to a

more fragmented spirits and wine market. The announced introduc-

tion of a Value Added Tax by Government in 2014 will require careful

management, if severe price disruption to our domestically manufac-

tured, as well as our imported products, is to be avoided. We will seek

to collaborate closely with Government in this regard.

We will have to step up efforts to defend our leading position as

supplier of choice. As stated last year that means we need to continue

to earn brand preference among consumers by satisfying existing

customers, wholesale and retail, and by winning new customers. We

will continue to focus on these objectives in our marketing programs

and all our operating processes.

Renovations are underway at several of our best-located stores,

including Harbour Bay Shopping Centre in Nassau which should be

finalized by the time this report is out and more projects in upgrad-

ing our retail stores are slated, demonstrating our commitment to

enhancing the shopping experience for customers.

“In 2013 Kalik, The Beer of The Bahamas, will celebrate its 25th Anniversary. This mile-stone both for the brand as well as the company will not pass unmarked.”

In 2013 Kalik, The Beer of The Bahamas, will celebrate its 25th Anni-

versary. This milestone both for the brand as well as the company will

not pass unmarked. Various activities have been planned to celebrate

this memorable event.

We will also be celebrating the 140th anniversary of the Heineken

brand throughout this year and finally, we look forward to playing a

role in activities and celebrations to commemorate the 40th indepen-

dence anniversary of the Commonwealth of The Bahamas.

Here we invite you our customers, consumers and shareholders to

celebrate with us and toast to the continued success of Common-

wealth Brewery and the brands you love.

Nico Pinotsis

President & Managing Director

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Costs were overall under control. The increase in excise duties and

taxes ($1.2 million), distribution and marketing expenses ($0.7

million), repair & maintenance ($0.3 million) and royalties ($0.1

million) were partially offset by savings in bad debt expenses ($0.1

million) and occupancy expenses ($0.1 million). Excise duties and

taxes increased $1.2 million directly driven by higher sales volume

of beer, while distribution and marketing expenses increased due

to higher investments in the marketing of our brands. These cost

increases are related to the higher sales volume realized. Repair

& maintenance expenses were impacted by higher cleaning costs

and to a lesser extent by preventive maintenance on equipment that

was not part of the maintenance plan in 2011 (bottle recycle center,

canning line). Utilities stayed stable. Although the rates increased,

Commonwealth Brewery managed to offset this to a large extent by

realizing higher efficiency in utilization.

At the end of 2012 Commonwealth Brewery remained debt free with

$11.8 million in cash and equivalents following a $7.5 million interim

dividend payment to shareholders in December 2012.

In many ways 2012 was an exceptional year with a high level of

domestic activities and tourist arrivals especially in the first half of the

year. The trend remained positive in the second half of the year, but

at a clearly lower pace.

Results from Operations

Results from operations amounted to $19.3 million, close in line with

net income. The company has limited finance costs.

Due to successful promotions and marketing campaigns Common-

wealth Brewery managed to reverse the declining sales volume trend

that started in 2010. Volume grew 4% compared to 2011. Average

revenue per hl increased to $611, up 0.6 % year-over-year, mainly

due to price increases to compensate for increases charged by

suppliers, which were partially offset by a sales mix that featured a

higher growth of products with a relative low price per liter.

The results per reportable segment in note 24 of the consolidated

financial statements show a solid growth of revenue in all segments.

As a result of the revenue growth, net income in both wholesale and

retail increased respectively 34% and 38%. Net income in produc-

tion went down 9% as result of amongst other higher input costs

(raw/packaging materials, transport costs). Revenue from exporting

Kalik to the USA declined 20% due to the competitive landscape in

the USA market, where beers from other Caribbean nations have a

price advantage due to lower production costs.

Management Discussion and Analysis

This management discussion and analysis (MD&A) should be read

in conjunction with the audited consolidated financial statements for

the year end December 31 2012 and related notes. The consolidated

financial statements have been prepared in accordance with Interna-

tional Financial Reporting Standards and are expressed in Bahamian

dollars. This MD&A is dated March 5th 2013.

Financial Performance

Revenue in 2012 grew $5.0 million or 4.5% mainly driven by sales

volume, which grew from 187 khls (or 2.08 million nine liter cases)

to 194 khls (or 2.16 million nine liter cases) in 2012. Commonwealth

Brewery’s beer portfolio contributed significantly to this volume

growth. Sales volume benefitted from higher tourist arrivals in 2012

(spring break was excellent), especially in the first quarter and from

a higher level of activities in the domestic market. Due to the strong

revenue performance net income grew to $19.3 million, which repre-

sented an increase of $2.0 million or 11.5% over 2011.

Other income declined $1.0 million, which is mainly due to a combi-

nation of non-recurring losses in 2012 and non-recurring gains in

2011. These non-recurring items ($0.7 million) include reimburse-

ments from suppliers for claims and loss on disposal of impaired

assets. Commonwealth Brewery also received less proceeds from

own organized events, rent and franchise fees in 2012.

M a n a g e m e n t D i s c u s s i o n a n d A n a l y s i s

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Consolidated Statement of Financial Position

Cash and cash equivalents amounted to $11.8 million at December

31, 2012 (+4% compared to 2011). This is the remaining balance

after the company paid $7.5 million interim dividend in December

2012.

Trade receivables, inventories and accounts payable third parties/

related parties were up compared to 2011. Working capital items

were higher due to a higher level of sales activity than in the previous

year. Outstanding accrued liabilities reduced compared to 2011.

Property, plant and equipment and intangible assets declined respec-

tively $0.4 million (1%) and 0.2 million (42%). In 2012 the company

continued to execute a prudent investment program at a level below

depreciation, although commercial and supply chain investments

were prioritized.

Retained earnings increased due to the solid net income generated in

2012, which exceeded the amounts related to final dividend of 2011

and the interim dividend of 2012.

Liquidity

Commonwealth Brewery’s cash flow generation from operating activi-

ties in 2012 amounted to $20.3 million of which $2.4 million was used

for investments. The remaining cash flow was mainly allocated to

dividend payout. Cash flow from operating activities was $0.8 million

lower than in 2011 due to higher working capital requirements, which

are linked to a higher sales activity. Net cash from operations before

working capital changes was up $1.7 million. Under stable market

conditions the company normally does not experience major fluctua-

tions in liquidity. The company does not employ derivative financial

instruments and is free of long term debt. The liquidity risk of the

company is described in notes 14 and 23(c) of the disclosures to

the consolidated financial statements and relates mainly to accounts

payable obligations and operating leases. The company’s approach

to managing liquidity is to ensure, as far as possible, that it will always

have sufficient liquidity to meet its liabilities and other commitments

when due, under both normal and stressed conditions, without

incurring unacceptable losses or risking damage to the company’s

reputation.

The table below provides an aging analysis of Commonwealth Brew-

ery’s contractual obligations at December 31, 2012.

Contractual obligations 2012 Payment due by period

(all figures in $) Total < 1 year 1-2 years 2-5 years > 5 years

Long term debt NIL NIL NIL NIL NIL

Capital leases NIL NIL NIL NIL NIL

Operating leases 5,625,666 1,820,405 1,242,774 1,689,145 873,342

Purchase obligations NIL NIL NIL NIL NIL

Accounts payable and accrued expenses 13,202,341 13,202,341 NIL NIL NIL

Total contractual obligations 18,828,007 15,022,746 1,242,774 1,689,145 873,342

M a n a g e m e n t D i s c u s s i o n a n d A n a l y s i s

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Capital Resources

At December 31, 2012, Commonwealth Brewery had $361,763

commitment of capital resources in place amongst others related to

the upgrade of retail stores. The company generates sufficient cash

from operations for its needs. In 2012 the Group had access to $1

million overdraft facilities with local banks for contingency purposes.

At December 31, 2012 these facilities were not in use. In view of the

robust cash flow development and in order to fine-tune the short-term

facilities and related bank charges, the level of overdraft facilities was

reduced to $1 million in 2012. Commonwealth Brewery agreed on

termination and release of all collateral with the banks.

With effect from January 1st, 2011 the dividend policy of Common-

wealth Brewery is 100% of net income. The frequency and payout

ratio for any dividend remains the discretion of the Board of Direc-

tors and is subject to ratification at the Annual General Meeting of

shareholders.

Should the company need funding for large investment projects, the

company has the option to initiate long-term debt.

Off Balance Sheet Arrangements

As of December 31, 2012 the company had no off balance sheet

arrangements with any parties. Note 14 of the consolidated financial

statements lists the commitments and contingent liabilities of the

company. The majority of commitments relate to lease contracts for

commercial real estate, most of which are short-term with duration of

1 to 5 years. The main contingent liabilities are related to Customs

bond guarantees and standby letters of credit. Commonwealth Brew-

ery reached agreement with a number of suppliers to cancel letters

of credit.

Transactions with Related Parties

Commonwealth Brewery has a number of transactions and agree-

ments with other entities of the Heineken Group in place. These

transactions and agreements relate to the secondment of senior

employees, purchasing of raw and packaging materials, supply chain

consultancy, transport of products, bottling, trademark licensing, IT

services and management services. The amounts related to these

transactions are specified in note 15 to the consolidated financial

statements.

In 2012 the IT service charges from Heineken Group Companies

increased. This was for a substantial extent due to a shift towards

use of global network services that were made available through

the Heineken Group as opposed to direct purchase from third party

contractors like in prior years. Commonwealth Brewery’s total out-

of-pocket IT expenses in 2012 increased by $0.3 million. This was

among other factors linked to the upgrade of the local infrastructure

to improve connectivity between retail stores and head-office as well

as a number of projects to upgrade application software.

Critical Accounting Estimates

Note 3 of the consolidated financial statements details the significant

accounting policies of Commonwealth Brewery. Management consid-

ers none of these accounting policies to be critical, meaning that the

policies require the company to make assumptions about matters

that are highly uncertain and that different estimates are reasonably

likely to occur from period to period, which could have a material

impact on financial results.

Note 8 details the assumption used to test impairment on goodwill

annually. The company carries net $4.5 million goodwill, resulting

from the acquisition of 100% ownership interest in Butler & Sands

Company Limited in the year 2000. Goodwill by its nature is subject

to the risk of impairment if key assumptions like the projected sales

volume of acquired wine and spirit brands change. However using

reasonable expectations only a limited change in key assumptions

would occur, and this would not cause a material impact on results.

Changes in Accounting Policies

Commonwealth Brewery has not applied new standards or report-

ing policies in the current period. As described in note 3(u) of the

consolidated financial statements, the company does not plan to

adopt IFRS 9 Financial Instruments before 2015 and the extent of

the impact has not yet been determined.

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E x e c u t i v e M a n a g e m e n t T e a m

Pictured left to right: Top Row - Remi den Broeder, Brewery Manager; Lino Villareal, Group Marketing Manager and Brent Ferguson, Group Sales

Manager Middle Row - Shun Chou, Group Financial Manager and Christiane Jung, Group Human Resources Manager Front Row - Nico Pinotsis,

Managing Director and Dennis Hanna, Retail and Distribution Manager

- Lino Villarreal

Group Marketing Manager

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C o r p o r at e R e s p o n s i b i l i t y

Education

Commonwealth Brewery for many years has been supporting indi-

viduals and educational institutions in numerous ways.

In order to further strengthen these initiatives, the Company

announced the establishment of an education trust at the Kalik 25th

Anniversary Celebration Launch in February 2013. The Common-

wealth Brewery Limited Education Trust will seek to nurture youth

development by providing scholarships to Bahamian college students

and educational equipment to local schools. More specifically the

purpose of this Trust is to facilitate the continuance and maintenance

of scholarships for the purpose of providing encouragement and

practical assistance to eligible students and to provide educational

equipment to secondary, tertiary or technical schools.

Charity

Commonwealth Brewery is actively committed to its corporate and

social responsibilities and participates in a variety of community

initiatives. In 2012 the company’s contribution increased significantly

as more charitable and non-profit entities were assisted. Common-

wealth Brewery places much emphasis on areas that impact overall

community development with a focus on health and education. Such

affiliations are intricately aligned to our values and principles.

“The Bahamas Red Cross Society acknowledges and is grateful for

the support of our corporate sponsor Commonwealth Brewery Ltd.

Thanks to their consistent donations, we can do more, do it better

and reach further in serving the most vulnerable amongst us.” Ms.

Caroline Turnquest, Director General, The Bahamas Red Cross.

Commonwealth Brewery strives to foster good corporate relations with

its communities and particular attention is given to programs and

organizations that share its value for excellence and social perfor-

mance. To this end, it views goodwill as an essential factor not only in

its business but also in nation building.

“Commonwealth Brewery has been a most consistent and generous

corporate donor to the Princess Margaret Hospital Blood Bank for

more than two decades. We at the Princess Margaret Hospital Blood

Bank are truly grateful for your continuous support. Your donations

of Vitamalt and Guinness have impacted thousands of patients,

their families and indeed the general Bahamian community.” Mr.

Everette Miller, Supervisor, Blood Bank/Transfusion Medicine, Prin-

cess Margaret Hospital.

“Our business affords us the opportunity to assist others in pursuing their goals...”

Vitamalt essay competition 2012, Abaco’s winner receiving a laptop.

- Silbert Ferguson

Chairman of Junkanoo Corporation New Providence Limited

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The company’s charitable contributions for 2012 included amongst

others The Bahamas Red Cross, The St. Andrew’s Scholarship

Foundation, The Cancer Society of The Bahamas, Princess Margaret

Hospital Blood Bank, The Sir Victor Sassoon (Bahamas) Heart Foun-

dation and The Bahamas Aids Foundation.

Sponsorships

In 2012, Commonwealth Brewery’s sponsorship program focused

primarily on cultural and sports partnerships. In the area of sports,

Commonwealth Brewery sponsored amongst others rugby (The

Bahamas Rugby Union), swimming (Bahamas Swim Federation

Carifta 2012), track and field (Government Secondary Schools Sports

Association Track and Field Meet), basketball (Carlos Reid Basketball

Camp), and boating (Blind Boat Challenge).

Following its global sponsorship strategy the Heineken brand spon-

sored for the first time locally The Bahamas Rugby Union.

“Heineken’s sponsorship is the most significant since the union’s

more than forty year inception in The Bahamas.” Steven Johnson,

Chairman, The Bahamas Rugby Union,

By continually supporting cultural festivities such as Junkanoo, Regat-

tas, Local Festivals and Homecoming across most major islands,

Kalik has become synonymous with local culture and a symbol of

national pride. In 2012 Kalik signed on as the platinum sponsor of

the Junkanoo Corporation New Providence Limited (JCNP) for the

next three years; subsequently earning the distinction as title sponsor

for several major categories in both Boxing Day and New Year’s Day

parades.

“Kalik has always supported our local culture and many different

areas of Junkanoo.” Silbert Ferguson, Chairman of Junkanoo Corpo-

ration New Providence Limited.

Guinness and Vitamalt have both been strong supporters of commu-

nity activities, Guinness in particular with music, having sponsored

several major musical events. Vitamalt has been an active partner

sponsoring an assortment of sporting events as well as creating spon-

sorship opportunities in the field of education. The Vitamalt Essay

competition provided primary students from New Providence, Abaco

and Grand Bahama with the opportunity to win computers and cash

prizes for themselves and their schools while simultaneously assisting

participating students to improve their writing and language skills.

“Commonwealth Brewery is not only proud of its 2012 sponsorships

but also excited about the opportunities that such investments allowed

in the promotion of local culture, education and sports development

across the Country.” Lino Villarreal, Group Marketing Manager

“Kalik has always supported our local culture and many different areas of Junkanoo.”

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E n v i r o n m e n ta l S u s ta i n a b i l i t y

Commonwealth Brewery’s electricity consumption decreased from

22.4 kWh/hl in 2011 to 19.9 kWh/hl in 2012, surpassing the target

of 22.1 kWh/hl. Improvements on packaging line efficiencies and

the introduction of an energy saving team in the cellars area have

resulted in an 11.2 % decrease of electricity consumption.

Water consumption at Commonwealth Brewery decreased from

6.3 hl/hl in 2011 to 5.9 hl/hl in 2012. The target of 6.2 hl/hl was

achieved.

Additionally in 2012 Commonwealth Brewery placed greater empha-

sis on the protection of the environment and as a result achieved the

following:

· Non-recycled industrial waste production decreased from 4.95

kg/hl in 2011 to 4.32 kg/hl.

· Total CO2 emissions from our brewery facility decreased from

21.7 kg CO2/hl in 2011 to 18.1 kg CO2/hl.

· The bottle recycle rate at the company’s recycle centre was

increased by 12% vs. 2011.

The objective for 2013 is to keep increasing energy, water and waste

efficiencies thus staying in line with continuous improvement goals

and according to the company’s value of operating in a sustainable

way.

In order to serve our consumers a

refreshing beer, cooling is essential,

however cooling also represents a

significant part of our total carbon

footprint and we aim to reduce its

impact by ensuring that old fridges

are replaced with ‘green fridges.‘

A ‘green fridge’ has three main char-

acteristics: the use of hydrocarbon

refrigerant, LED illumination and an

energy management system. As of

2012 all of the new fridges acquired

by Commonwealth Brewery had all

of the above green specifications.

Brewing a Better Future

Commonwealth Brewery Ltd. has fully adopted Heineken’s global

sustainability program ‘Brewing a Better Future’.

“At Commonwealth Brewery, we believe it is crucial that every day we

make a conscious effort to reevaluate the way we conduct business.

For us, paramount is our reduction of energy, water and waste while

optimizing production efficiencies. It is important to have a balance

between people, profit and planet and this should be reflective in our

daily activities at CBL.”

As a business it is vital to ensure that growth comes in a responsible

way. Therefore, we are all working hard to contribute to a greener,

happier and healthier society.” Nico Pinotsis, Managing Director

‘Brewing a Better Future’ is a comprehensive, integrated strategy for

creating a more sustainable company and future. Heineken’s long-

term aspiration is to be the world’s greenest brewer – an aspiration that

we view as a continuous journey which we will continue to measure as

we progress. It is based on three strategic imperatives around which

we have built our commitments and programs:

1. To continuously IMPROVE the environmental impact of our

brands and business

2. To EMPOWER our people and the communities in which we

operate

3. To positively IMPACT the role of beer in society.

Commonwealth Brewery’s sustainability initiatives follow these three

strategic imperatives.

Improve

Commonwealth Brewery’s focus is to increase the energy and water

efficiency of its brewery, offices and warehouses. The company made

good progress and achieved the goals set for 2012 which are in line

with continuous improvement goals.

Thermal energy consumption of Commonwealth Brewery decreased

from 182 MJ/hl in 2011 to 163 MJ/hl in 2012, so the target of 177

MJ/hl was achieved. The implementation of several energy saving

activities such as installing a smart brewing system in the brew house,

temperature optimization on bottle washers and improvements on

packaging line efficiencies have resulted in a 10.4% decrease of

thermal energy consumption.

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Empower

Commonwealth Brewery’s goal is to achieve an accident free work

environment and a safe working culture. In meeting this goal, the

company focuses on accident reduction by implementing safety

procedures and continuously providing the necessary training to its

employees and the people it works with.

In 2012, the number of accidents was reduced by 48% vs. 2011,

and the number of lost working days by 50%. This reduction was the

result of the development and implementation of additional safety

standards and procedures.

Impact

Beer is a natural product enjoyed by hundreds of millions of people

around the world. It is, can and should be a legitimate part of a

healthy balanced lifestyle when consumed in moderation.

Responsible Consumption

When consumed in moderation, Commonwealth Brewery believes

that alcohol can be part of a positive lifestyle. The company also

believes it is part of its responsibility to inform consumers about the

risks of excessive consumption, drinking and driving and under-

age consumption. To do this, Commonwealth Brewery places great

emphasis on making sure that all the advertising and promotions

of its brands, as well as of the brands it represents, run according

to the Heineken Responsible Commercial Communication Code,

which promotes responsible consumption. It is equally important for

Commonwealth Brewery to continuously educate its employees on its

Internal Alcohol Policy.

In 2012 Commonwealth Brewery strengthened its efforts in this

aspect by including “responsible consumption” messages on all of

the company’s beer primary packaging.

Safety data on production unit Unit 2010 2011 2012

Parameters (absolute values)

Fatalities of company & contractor personnel Cases 0 0 0

Permanent disabilities of company personnel Cases 0 0 0

Accidents of company personnel Cases 21 17 9

Accidents of contractor personnel Cases 0 0 0

Lost working days of company personnel Days 212 141 70

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“For us, paramount is our reduction of energy, water and waste while optimizing production efficiencies.”

20100

50

100

150

200

MJ/hl beer

Specific thermal energy consumption

Actual Performance Target

2011 2012

199182

163177

20100

5

10

15

20

25

30

24.522.4

19.922.1

kWh/hl beer

Specific electricity consumption

Actual Performance Target

2011 2012

20100.0

1.0

2.0

3.0

4.0

5.0

6.0

7.06.1 6.3

5.96.2

hl/hl beer

Specific water consumption

Actual Performance Target

2011 2012 2010 2011 20120

5

10

15

20

25

21

17

9

Number of Accidents of company personnel

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H E I N E K E N O V E R V I E W

“Heineken has the broadest geographical presence of all brewers, operating in more than 170 countries worldwide.”

Heineken International B.V. is a company incorporated on November

19, 1959 and existing under the laws of the Netherlands. It currently

holds 75% of the issued and outstanding shares in Commonwealth

Brewery either directly or through a nominee. Heineken International

B.V. is a holding company and a wholly owned subsidiary of Heineken

N.V. Heineken N.V. is a company incorporated on January 11, 1873

and existing under the laws of the Netherlands. Today, Heineken

is Europe’s largest brewer and the world’s third largest brewer by

volume.

Heineken has the broadest geographical presence of all brewers,

operating in more than 170 countries worldwide. With total consoli-

dated volume of 145.9 million hectoliters in 2010, the company

produces beer in more than 70 countries through its 140 breweries

and through other brewers under license.

Heineken N.V. shares are listed on Euronext Amsterdam and options

on these shares are traded on the Euronext.Liffe options exchange.

For further information pertaining to Heineken, please visit: www.

heinekeninternational.com.

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This year marks an important milestone for Commonwealth Brewery

and the Commonwealth of the Bahamas with the celebration of 25

years of brewing Kalik. The original Bahamian beer, Kalik has main-

tained its place as the favorite beer of The Bahamas since the first

sip. From the moment the first bottle of Kalik rolled off the bottling

line, Bahamian beer drinkers were elated. They now had a beer that

not only was their own, they had one that was produced at inter-

national standards but still possessed a Bahamian fare. From the

beginning Kalik was reminiscent of what Bahamians loved and held

dear about their country – the abundance of sun and sea, the sounds

and sights of Junkanoo and Regatta, spending time with family and

friends - sheer exhilaration of island life.

2 5 Y E A R S O F k a l i k

“Here’s to you, KALIK

The Beer of The Bahamas.

”2

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The Story Behind the Brand

In 1985 Commonwealth Brewery Ltd. located on the western tip of

New Providence bottled its first batch of beer, Heineken and Guin-

ness were the first two brands brewed, however the need for a Baha-

mian beer was overwhelming. Bahamian beer drinkers yearned for a

beer of their own; one that could make them proud and they got just

that when Kalik was introduced.

Bahamian beer lovers were chosen by Commonwealth Brewery to

define the beer’s taste profile and select the symbols which represent

our Bahamian culture. The cowbells were instrumental in coining the

name of the beer, Kalik, derived from the sound that emanates from

the cowbell used during The Bahamas’ iconic Junkanoo celebrations.

Two of the pioneers among Bahamian women in the art of brew-

ing, original master brewers Sophia Dames and Marcia Wright, were

responsible for the brewing of the first Bahamian beer.

When the first Kalik rolled off the line those who waited took a deep

breath in anticipation, however no one could have fathomed what lay

ahead. Once Bahamians tasted Kalik there was no doubt in anyone’s

mind that this new beer was a winner and was here to stay. This

significant moment in Commonwealth Brewery’s history cemented

the fact that now Bahamians not only had a brewery that could

produce international quality beers but they also had The beer of

The Bahamas. Our country, thanks to Commonwealth Brewery had

accomplished a remarkable feat - Kalik was a beer that was locally

brewed and could rival any internationally produced beer.

With much expectation and excitement Kalik was launched on Arawak

Cay in 1988 and took off very well, from the beginning its taste was

enjoyed by Bahamians and Tourists alike. In 1990, just two years

after inception, Kalik received a Monde Selection Gold Medal from

Belgium’s prestigious International Institute for Quality Selections

(IIQS). Subsequently, Kalik had the distinction of earning a Monde

Selection Gold Medal for three consecutive years.

Since the birth of Kalik in 1988, the Kalik Family has grown to include

Kalik Regular, Kalik Gold, Kalik Light and Kalik Lime. In 1992 Kalik

Gold was introduced as an extra strong beer and The Official Beer of

The Bahamas Quincentennial. This limited edition beer celebrated

the 500th anniversary of Columbus’ landing in the new world. Due

to overwhelming reception, Commonwealth Brewery now produces

Kalik Gold permanently. Kalik Light, a distinctively savory light beer

was introduced in 1997 in response to consumer requests for a Baha-

mian light beer, and in 2011 Kalik Lime was added. The refreshing

taste of Kalik Lime has a hint of lime and offers an exciting, new twist

on a great Bahamian tradition.

Commonwealth Brewery looks forward with much excitement to the

next 25 years of Kalik not only as The Beer of The Bahamas, but

also as a significant partner and contributor to the promotion and

enhancement of Bahamian culture. Like the sentiment shared in

1988, Kalik will continue to be a symbol of pride for Bahamians.

Here’s to you, KALIK

The Beer of The Bahamas.

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L I S T O F S T O R E S

Abaco

Butler & Sands (A&K) Marsh Harbour

Beverage Depot (AB1) Marsh Harbour

Butler & Sands (Spanky’s) Treasure Cay

Andros

Beverage Depot Lowe Sound

Central Beverage Depot Fresh Creek

Beverage Depot Mangrove Cay

Beverage Depot (A4) South Andros

Bimini

Butler & Sands Alice Town

Cat Island

Beverage Depot (Two Corners) New Bight

Eleuthera

Beverage Depot Rock Sound

Butler & Sands Governor’s Harbour

Beverage Depot (Pyfrom’s) Governor’s Harbour

Beverage Depot Bluff

Butler & Sands Jean’s Bay

Beverage Depot Harbour Island

Butler & Sands (Bayside) Harbour Island

Exuma

Beverage Depot (B.G.S.) George Town

Butler & Sands (John Marshall) George Town

Grand Bahama

Burns House Queens Highway

Ole Nassau Int’l Airport

Beverage Depot Churchill Square

Butler & Sands RND Shopping Centre

Ole Nassau Freeport Arcade

Beverage Depot Plaza Liquor THM

Butler & Sands Seahorse Plaza

Ole Nassau (House of Rum) Port Lucaya

Beverage Depot Eight Mile Rock

Butler & Sands West End

Long Island

Beverage Depot Queen’s Highway

New Providence

Butler & Sands Cable Beach

Butler & Sands J.F. Kennedy Drive

Beverage Depot (Henrea Carlette) Cable Beach

Beverage Depot (Saunders Beach) West Bay Street

Beverage Depot (I Need A Liquor) West Bay Street

Ole Nassau (Esquire Liquors) Bay Street

Burns House (Tippsters #2) Carmichael Road

Ole Nassau Bay Street

Ole Nassau (THM Emporium) Woodes Rogers Wharf

Burns House (Express Macy’s) East & Fowler Streets

Ole Nassau (Maury Roberts) Bay Street

Beverage Depot (Captain’s Cabin) East Bay Street

Butler & Sands (The Caves) West Bay Street

Butler & Sands Harbour Bay

Shopping Plaza

Butler & Sands Shirley Street

Beverage Depot (Budget) Bernard Road

Beverage Depot Marathon Mall

Beverage Depot (The Deck) Fox Hill Road

Butler & Sands East West Highway

Beverage Depot Independence

Shopping Centre

Domestic Bar LPIA/Family

Islands Section

Ole Nassau (Int’l Departure) LPIA/Non-U.S.

International Departure

Ole Nassau (Sammy’s) LPIA/Family

Islands Section

Heineken Duty Free Shop LPIA/U.S.

International Departure

The Heineken Bar LPIA/U.S.

International Departure

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A D V I S O R S

Auditors

KPMG

Montague Sterling Centre, East Bay Street

P.O. Box N-123

Bankers

Citibank

110 Thompson Boulevard

P.O. Box N-8158

First Caribbean International Bank

Shirley Street

P.O. Box N-7125

Legal Counsel

Higgs & Johnson

Ocean Centre, Montagu Foreshore, East Bay Street

P.O. Box N-3247

Registrar & Transfer Agents

Bahamas Central Securities Depository

2nd Floor, Fort Nassau Centre, British Colonial Hilton

P.O. Box EE-15672

Registered Office

Commonwealth Brewery Limited

c/o Higgs & Johnson Corporate Services Ltd.

Ocean Centre, Montagu Foreshore, East Bay Street

P.O. Box N-3247

Corporate Office

Clifton Pier

P.O. Box N-4936

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To the Shareholders of Commonwealth Brewery Limited

We have audited the accompanying consolidated financial statements of Commonwealth Brewery Limited (“the Company”), which comprise

the consolidated statement of financial position as at December 31, 2012, the consolidated statements of comprehensive income, changes

in equity and cash flows for the year then ended and notes, comprising a summary of significant accounting policies and other explanatory

information.

Management’s responsibility for the consolidated financial statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with Inter-

national Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of

consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accor-

dance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the

audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements.

The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the consolidated financial

statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation

and fair presentation of the consolidated 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 internal control. An audit also includes evaluating the

appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the

overall presentation of the consolidated financial statements.

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

Opinion

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as at Decem-

ber 31, 2012, and its financial performance and cash flows for the year then ended in accordance with International Financial Reporting

Standards.

March 5, 2013

I N D E P E N D E N T A U D I T O R S ’ R E P O RT

KPMG

PO Box N-123

Montague Sterling Centre

East Bay Street

Nassau, Bahamas

Telephone +1 242 393 2007

Fax +1 242 393 1772

Internet www.kpmg.com.bs

KPMG, a Bahamian partnership and a member firmof the KPMG network of independent member firmsaffiliated with KPMG lnternational Cooperative(“KPMG” international), a Swiss entity.

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Note(s) 2012 2011

Assets

Current Assets:

Cash and cash equivalents 4 $ 11,848,434 11,359,313

Trade receivables 5 2,859,718 1,786,488

Prepaid expenses and other assets 6, 15 2,013,603 2,126,341

Inventories 7 16,804,392 16,402,004

Total current assets 33,526,147 31,674,146

Non-current Assets:

Goodwill 8 4,487,242 4,487,242

Property, plant and equipment 9 35,002,959 35,388,064

Intangible assets 10 263,831 458,957

Total non-current assets 39,754,032 40,334,263

Total assets 24 $ 73,280,179 72,008,409

Liabilities and Equity

Current Liabilities:

Accounts payable and accrued expenses 11, 15 $ 13,202,341 13,847,253

Total current liabilities 24 13,202,341 13,847,253

Equity:

Share capital 12 150,000 150,000

Share premium 12,377,952 12,377,952

Contributed surplus 16,351,369 16,351,369

Revaluation surplus 13 4,269,587 4,269,587

Retained earnings 26,928,930 25,012,248

Total equity 60,077,838 58,161,156

Commitments and contingencies 4, 14

Total liabilities and equity $ 73,280,179 72,008,409

See accompanying notes to consolidated financial statements.

These consolidated financial statements were approved for issue on behalf of the Board of Directors on March 5, 2013 by:

Director Director

Consolidated Statement of Financial Position C O M M O N W E A LT H B R E W E R Y L I M I T E DDecember 31, 2012, with corresponding figures for 2011 (Expressed in Bahamian dollars)

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Note(s) 2012 2011

Income:

Revenue 24 $ 118,468,483 113,409,201

Other income 16 367,364 1,316,560

Total income 118,835,847 114,725,761

Operating expenses:

Raw materials, consumables and services 7, 15, 17 80,881,348 79,062,744

Personnel costs 15, 18 15,830,588 15,504,317

Depreciation 9 2,632,278 2,666,036

Amortisation 10 195,126 214,181

Total operating expenses 99,539,340 97,447,278

Results from operating activities 19,296,507 17,278,483

Finance income 20,175 41,836

Net and total comprehensive income 24 $ 19,316,682 17,320,319

Basic and diluted earnings per share 19 $ 0.64 0.58

See accompanying notes to consolidated financial statements.

Consolidated Statement of Comprehensive Income C O M M O N W E A LT H B R E W E R Y L I M I T E DYear ended December 31, 2012, with corresponding figures for 2011 (Expressed in Bahamian dollars)

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Note(s) 2012 2011

Cash flows from operating activities

Net income $ 19,316,682 17,320,319

Adjustments for:

Depreciation 9 2,632,278 2,666,036

Amortisation 10 195,126 214,181

Bad debt expense 5, 6 (57,411) 97,113

Provision for obsolescence 7 – 162,504

Loss on disposal of property, plant and equipment 16 197,922 12,674

Loss on disposal of vehicles 15 – 88,315

Finance income (20,175) (41,836)

Net cash from operations before changes in working capital 22,264,422 20,519,306

Changes in non-cash working capital 21 (1,950,381) 562,841

Net cash from operating activities 20,314,041 21,082,147

Cash flows from financing activities

Dividends paid 20 (17,400,000) (25,153,387)

Net cash used in financing activities (17,400,000) (25,153,387)

Cash flows from investing activities

Additions to property, plant and equipment 9 (2,445,095) (1,314,743)

Proceeds from sale of property, plant and equipment – 150,842

Interest received 20,175 41,836

Net cash used in investing activities (2,424,920) (1,122,065)

Net increase/(decrease) in cash and cash equivalents 489,121 (5,193,305)

Cash and cash equivalents, beginning of year 11,359,313 16,552,618

Cash and cash equivalents, end of year 4 $ 11,848,434 11,359,313

See accompanying notes to consolidated financial statements.

Consolidated Statement of Cash Flows C O M M O N W E A LT H B R E W E R Y L I M I T E DYear ended December 31, 2012, with corresponding figures for 2011 (Expressed in Bahamian dollars)

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1. General information

Commonwealth Brewery Limited (“CBL” or “the Company”) was incorporated under the laws of The Commonwealth of The Bahamas

on November 17, 1983 and commenced trading in March 1987. The consolidated financial statements of the Company comprise the

Company and its subsidiaries (together referred to as “the Group” and individually as “Group entities”). The principal activity of the Group

is the production of alcoholic and non-alcoholic beverages, liquor importation, distribution and sales. The Company’s principal place of

business and registered office is located at Clifton Pier, Nassau, Bahamas. Effective May 24, 2011, the Company’s shares were listed on

The Bahamas International Securities Exchange.

The Company is a subsidiary of Heineken International B.V. (“Heineken”). Heineken is incorporated under the laws of The Netherlands

and its corporate office is located at Tweede Weteringplantsoen 21, 1017 ZD, P. O. Box 28, 1000 AA Amsterdam, The Netherlands.

The ultimate parent of CBL is Heineken N.V. located at the same address. 75% of shares of the Company are owned by Heineken and

remaining 25% are owned by the Bahamian public.

2. Basis of preparation

(a) Statement of compliance

These consolidated financial statements are prepared in accordance with International Financial Reporting Standards (IFRS).

(b) Basis of measurement

These consolidated financial statements are prepared under the historical cost convention, except for land and buildings included

in property, plant and equipment which are carried at revalued amounts.

(c) Functional and presentation currency

These consolidated financial statements are presented in Bahamian dollars, the Group’s functional and reporting currency. The

Bahamian dollar is the currency of the country where the Group entities are domiciled and is the prime operating currency.

(d) Use of estimates and judgements

The preparation of consolidated financial statements in conformity with IFRS requires management to make judgements, estimates

and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and

expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the

period in which the estimates are revised and in any future periods affected.

Information about critical judgements in applying accounting policies that have the most significant effect on the amounts recogn-

ised in the consolidated financial statements is included in the following notes:

Note 5 Trade receivables

Note 6 Prepaid expenses and other assets

Note 7 Inventories

Note 8 Goodwill

Note 9 Property, plant and equipment

Note 10 Intangible assets

Note 14 Commitments and contingencies

Note 23 Financial instruments and associated risks

Notes to Consolidated Financial Statements C O M M O N W E A LT H B R E W E R Y L I M I T E DYear ended December 31, 2012 (Expressed in Bahamian dollars)

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3. Significant accounting policies

Following is a summary of the significant accounting policies which have been applied consistently by the Group in preparing these

consolidated financial statements.

(a) Basis of consolidation

The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences

to the date that control ceases. Subsidiaries are entities controlled by the Group. Control is the power to govern the financial and

operating policies of an entity so as to obtain benefits from its activities. Where necessary, adjustments are made to the financial

statements of subsidiaries to bring their accounting policies into line with those adopted by the Group. All intra-group transactions,

balances, income and expenses and unrealised income and expense arising from inter-group transactions are eliminated in full on

consolidation.

Non-controlling interests in subsidiaries are identified separately from the Group’s equity therein. The carrying amount of non-

controlling interests is the amount of these interests at initial recognition plus the non-controlling interest’s share of subsequent

changes in equity. Total comprehensive income is attributed to non-controlling interests even if it results in the non-controlling

interests having a deficit balance.

When a controlling interest in a subsidiary is disposed of, the difference between the proceeds from the disposal and the carrying

amount of the Group’s interest in the subsidiary’s assets and liabilities, plus the carrying amount of goodwill related to the subsidiary

disposed of, is recognised in net income as a gain or loss on disposal.

Changes in the Group’s interests in subsidiaries that do not result in a loss of control are accounted for as equity transactions. The

carrying amounts of the Group’s interests and the non-controlling interests are adjusted to reflect the changes in their relative inter-

ests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of

the consideration paid or received is recognised directly in equity and attributed to owners of the Company.

(b) Financial instruments

Classification

Financial instruments include financial assets and financial liabilities. Financial assets that are classified as loans and receivables

include cash held with banks and trade and other receivables. Financial liabilities that are not at fair value through profit or loss

include accounts payable and accrued expenses and bank loans.

Recognition

The Group recognizes financial instruments initially at the trade date, which is the date when it becomes a party to the contractual

provisions of the instruments.

Measurement

Financial instruments are measured initially at fair value plus, in the case of a financial asset or financial liability not at fair value

through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the financial asset or financial

liability. Transaction costs on financial assets and financial liabilities at fair value through profit or loss are expensed immediately,

while on other financial instruments they are amortised.

Subsequent to initial recognition, financial assets and financial liabilities not at fair value through profit or loss are carried at amor-

tised cost using the effective interest method, less in the case of financial assets, impairment losses, if any.

Notes to Consolidated Financial Statements C O M M O N W E A LT H B R E W E R Y L I M I T E DYear ended December 31, 2012 (Expressed in Bahamian dollars)

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3. Significant accounting policies (continued)

(b) Financial instruments (continued)

Derecognition

The Group derecognises a financial asset when the contractual rights for cash flows from the financial asset expire or it transfers the

financial asset and the transfer qualifies for derecognition in accordance with International Accounting Standard 39.

The Group derecognises a financial liability when the obligation specified in the contract is discharged, cancelled or expired.

(c) Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and cash held with banks.

(d) Accounts receivable

Accounts receivable are stated at amortised cost net of an allowance for doubtful accounts.

(e) Inventories

Inventories are stated at the lower of cost and net realizable value. Cost is determined using the weighted average method and

includes expenditure incurred in acquiring the inventories, production costs and other costs incurred in bringing them to their

existing location and condition. In the case of finished goods and work-in-progress, cost includes an allocation of those production

overhead costs that relate to bringing the inventories to their present location and condition. Net realisable value is the estimated

selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

(f) Goodwill

Goodwill is carried at cost less accumulated amortisation and impairment losses. Goodwill arising on the acquisition of the Group’s

100% ownership interest in Butler & Sands Company Limited and its subsidiaries in the year 2000 represents the excess of the cost

of acquisition over the net fair value of the identifiable assets and liabilities of Butler & Sands Company Limited and its subsidiaries

recognised at the date of acquisition less accumulated amortisation thereon to December 31, 2004, at which time amortisation

ceased and goodwill was deemed to have an indefinite useful life. Thereafter, goodwill is tested for impairment annually.

(g) Property, plant and equipment

Items of property, plant and equipment are carried at cost less accumulated depreciation and impairment losses, except land and

buildings, which are carried at revalued amounts. The directors review the carrying value annually. Whenever the directors deter-

mine that the carrying value differs materially from the fair value, an independent valuation is obtained and the land and buildings

are revalued.

The surplus on revaluation is recorded in equity and is transferred to retained earnings when the revalued asset is derecognised.

When an item of property, plant and equipment is revalued, accumulated depreciation is eliminated against the gross carrying

amount of the asset.

Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes

the cost of materials and direct labour and any other costs directly attributable to bringing the asset to a working condition for its

intended use.

When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major

components) of property, plant and equipment.

Notes to Consolidated Financial Statements C O M M O N W E A LT H B R E W E R Y L I M I T E DYear ended December 31, 2012 (Expressed in Bahamian dollars)

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3. Significant accounting policies (continued)

(g) Property, plant and equipment (continued)

The cost of replacing a part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is

probable that the future economic benefits embodied within the part will flow to the Group and its cost can be measured reliably.

The carrying amount of the replaced part is derecognised. The costs of the day-to-day servicing of property, plant and equipment

are recognised in the consolidated statement of comprehensive income as incurred.

Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal

with the carrying amount of property, plant and equipment, and are recognised net within other income in the consolidated state-

ment of comprehensive income.

Depreciation is calculated on the depreciable amount, which is the cost of an asset, or other amounts substituted for cost, less its

residual value.

Depreciation is recognised in the consolidated statement of comprehensive income on a straight-line basis over the estimated useful

lives of the items of property, plant and equipment, since this most closely reflects the expected pattern of consumption of the future

economic benefits embodied in the asset.

The estimated useful lives of property, plant and equipment are as follows:

Land No depreciation

Buildings 15 to 40 years

Leasehold improvements Over the lease term

Plant & machinery 5 to 30 years

Furniture, fixtures & equipment 3 to 25 years

Vehicles & transportation equipment 5 years

Capital work in progress No depreciation

Depreciation methods, useful lives and residual values are reviewed at each reporting date and are adjusted, if appropriate.

(h) Intangible assets

Acquired computer software licenses are capitalized on the basis of the costs incurred to acquire and bring to use the specific soft-

ware. The computer software is carried at cost less accumulated amortisation and any accumulated impairment losses. Amortisation

is computed on the straight-line method over an estimated useful life of up to five years.

(i) Impairment

Financial assets

Financial assets other than receivables, which are reviewed on a continuous basis, are assessed at each reporting date to determine

whether there is any objective evidence of impairment. A financial asset is considered to be impaired if objective evidence indicates

that one or more events have had a negative effect on the estimated future cash flows of that asset.

An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying

amount and the present value of the estimated future cash flows discounted at the original effective interest rate.

Notes to Consolidated Financial Statements C O M M O N W E A LT H B R E W E R Y L I M I T E DYear ended December 31, 2012 (Expressed in Bahamian dollars)

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3. Significant accounting policies (continued)

(i) Impairment (continued)

Financial assets (continued)

Financial assets are tested for impairment on an individual basis. All impairment losses are recognised in the consolidated statement

of comprehensive income.

An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recog-

nised.

Non-financial assets

The carrying amounts of the Group’s non-financial assets other than inventories are reviewed at each reporting date to determine

whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated. The recov-

erable amount of goodwill is estimated each year at the same time. An impairment loss is recognised if the carrying amount of the

asset or its related cash generating unit (“CGU”) exceeds its estimated recoverable amount. The recoverable amount of an asset or

CGU is the greater of its value in use and its fair value less costs to sell. Value in use represents the present value of estimated future

cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life.

Impairment losses are recognised in the consolidated statement of comprehensive income except for revalued assets where the

impairment loss is first applied to the revaluation surplus and any excess is recognised in the consolidated statement of compre-

hensive income. Impairment loss recognised in respect of a CGU is allocated first to reduce the carrying amount of any goodwill

associated with the CGU and then to reduce the carrying amount of other assets in the CGU on a pro-rata basis.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods

are assessed at each reporting date for any indication that the loss has decreased or no longer exists. An impairment loss is reversed

if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the

extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined net of depreciation

or amortisation, if no impairment loss had been recognised except for assets normally carried at revalued amounts.

(j) Related parties

(a) A person or a close member of that person’s family is related to a reporting entity if that person:

(i) has control or joint control over the reporting entity;

(ii) has significant influence over the reporting entity; or

(iii) is a member of the key management personnel of the reporting entity or of a parent of the reporting entity.

(b) An entity is related to a reporting entity if any of the following conditions applies:

(i) The entity and the reporting entity are members of the same group (which means that each parent, subsidiary and

fellow subsidiary is related to the others).

(ii) One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of

which the other entity is a member).

(iii) Both entities are joint ventures of the same third party.

(iv) One entity is a joint venture of a third entity and the other entity is an associate of the third entity.

(v) The entity is a post-employment benefit plan for the benefit of employees of either the reporting entity or an entity

related to the reporting entity. If the reporting entity is itself such a plan, the sponsoring employers are also related to the

reporting entity.

(vi) The entity is controlled, or jointly controlled by a person identified in (a).

(vii) A person identified in (a)(i) has significant influence over the entity or is a member of the key management personnel of

the entity (or of a parent of the entity).

Notes to Consolidated Financial Statements C O M M O N W E A LT H B R E W E R Y L I M I T E DYear ended December 31, 2012 (Expressed in Bahamian dollars)

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3. Significant accounting policies (continued)

(k) Leases

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership

to the lessee. All other leases are classified as operating leases.

Rental income and expense from operating leases are recognised in the consolidated statement of comprehensive income on a

straight-line basis over the term of the relevant lease. Initial direct costs, if incurred, in negotiating and arranging an operating lease

are recognised on a straight-line basis over the lease term.

(l) Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of shares are recognised as a deduction

from equity.

(m) Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable

that the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The

amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the

reporting period, taking into account the risks and uncertainties surrounding the obligation.

Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present

value of those cash flows. When some or all of the economic benefits required to settle a provision are expected to be recovered

from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount

of the receivable can be measured reliably.

(n) Foreign currencies

Transactions in foreign currencies are translated into Bahamian dollars at exchange rates prevailing on the transaction dates.

Monetary assets and liabilities denominated in such currencies at the year-end date are translated at the rates prevailing at that date.

Any differences arising on translation are recognised as exchange gains/losses within other income in the consolidated statement

of comprehensive income.

(o) Revenue recognition

Products sold

Revenue from the sale of products in the ordinary course of business is measured at the fair value of the consideration received

or receivable net of customer discounts and other sales related discounts. Revenue from the sale of products is recognised in the

consolidated statement of comprehensive income when the amount of revenue can be measured reliably, the significant risks

and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and

possible return of products can be estimated reliably and there is no continuing management involvement with the products.

Services

Revenue from services, which is included in miscellaneous income, is recognised in the consolidated statement of comprehensive

income when the services are rendered.

Notes to Consolidated Financial Statements C O M M O N W E A LT H B R E W E R Y L I M I T E DYear ended December 31, 2012 (Expressed in Bahamian dollars)

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3. Significant accounting policies (continued)

(p) Employee benefits

Defined contribution plans

A defined contribution plan is a pension plan under which the Group pays fixed contributions to the fund. The Group has no legal or

constructive obligation to pay further contributions. Contributions to the Group’s defined contribution pension plans are recognised

as an employee benefit expense in the consolidated statement of comprehensive income in the periods during which services are

rendered by employees.

Short-term employee benefits

Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided.

A liability is recognised for the amount expected to be paid under short-term benefits if the Group has a present legal or constructive

obligation to pay this amount as a result of past service provided by the employees and the obligation can be estimated reliably.

(q) Finance income

Finance income is accrued on a daily basis using the effective interest rate method.

(r) Earnings per share

Earnings per share are based on consolidated net income attributable to owners of the Company divided by the weighted average

number of ordinary shares outstanding during the year.

(s) Dividends

Dividends are recognised as a liability in the period in which they are declared.

(t) Operating segments

Business segments are components of an enterprise about which separate financial information is available that is evaluated regu-

larly by management in deciding how to allocate resources and in assessing performance.

Generally, financial information is required to be reported on the basis that is used internally for evaluating segment performance

and deciding how to allocate resources to segments.

For management purposes, the Group is currently organized into three business segments: (i) Wholesale (ii) Retail and (iii) Produc-

tion. These divisions are the basis on which the Group reports its operating segment information.

(u) Standards and interpretations effective in the current period

A number of new standards, amendments to standards and interpretations are effective for annual periods beginning after January

1, 2012, and have not been applied in preparing these consolidated financial statements. None of these is expected to have a

significant impact on the consolidated financial statements of the Group except for IFRS 9 Financial Instruments, which becomes

mandatory for the Group’s 2015 consolidated financial statements and could change the classification and measurement of financial

assets. The Group does not plan to adopt this standard early and the extent of the impact has not been determined.

Notes to Consolidated Financial Statements C O M M O N W E A LT H B R E W E R Y L I M I T E DYear ended December 31, 2012 (Expressed in Bahamian dollars)

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4. Cash and cash equivalents

2012 2011

Cash on hand $ 49,968 57,230

Cash held with banks 11,798,466 11,302,083

Cash and cash equivalents $ 11,848,434 11,359,313

The Company has an overdraft facility of $1,000,000 (2011: $1,000,000). As at December 31, 2012 and 2011, $Nil of the overdraft

facility had been utilized. This facility bears interest at the rate of Bahamian prime plus 0.625% per annum (2011: Bahamian prime plus

1.50% per annum). The facility is secured by unlimited guarantee of Burns House Limited (“BHL” or “Principal Subsidiary”).

BHL had a secured overdraft facility of $3,000,000 up to December 31, 2011 with no specific terms of repayment which bore interest at

the rate of Bahamian prime plus 0.625% per annum. This facility was not renewed in 2012, which resulted in termination and release

of all collateral.

Notes to Consolidated Financial Statements C O M M O N W E A LT H B R E W E R Y L I M I T E DYear ended December 31, 2012 (Expressed in Bahamian dollars)

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5. Trade receivables

2012 2011

Trade receivables, gross $ 3,288,898 2,705,508

Allowance for doubtful debts (429,180) (919,020)

$ 2,859,718 1,786,488

Aging analysis of trade receivables, gross, as at December 31:

2012 2011

Current $ 2,265,015 1,585,814

Past due but not impaired 594,703 200,674

Past due and impaired 429,180 919,020

$ 3,288,898 2,705,508

Movement in the allowance for doubtful debts:

2012 2011

Balance at beginning of the year $ 919,020 786,907

Increase in allowance – 132,113

Reversal of allowance (120,905) –

Amounts written off as uncollectible (368,935) –

Balance at end of the year $ 429,180 919,020

Maximum exposure to credit risk for trade receivables at December 31, by geographic region:

2012 2011

The Bahamas $ 2,779,956 1,494,992

United States of America 79,762 291,496

Balance at end of the year $ 2,859,718 1,786,488

Notes to Consolidated Financial Statements C O M M O N W E A LT H B R E W E R Y L I M I T E DYear ended December 31, 2012 (Expressed in Bahamian dollars)

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6. Prepaid expenses and other assets

2012 2011

Other receivables - third parties $ 1,395,288 1,353,414

Prepaid expenses 933,734 875,408

Staff loans 193,805 343,249

2,522,827 2,572,071

Allowance for doubtful debts (509,224) (445,730)

$ 2,013,603 2,126,341

Movement in the allowance for doubtful debts created for other receivables - third parties is as follows:

2012 2011

Balance at beginning of the year $ 445,730 480,730

Increase in allowance 63,494 –

Amounts recovered during the year – (35,000)

Balance at end of the year $ 509,224 445,730

7. Inventories

2012 2011

Goods bought for resale $ 13,102,917 11,996,166

Raw materials and packaging 2,602,567 2,040,637

Finished goods 200,024 751,427

Work-in-progress 120,117 146,853

Spare parts 531,715 528,188

Other stock items 716,922 1,443,827

17,274,262 16,907,098

Provision for obsolescence (469,870) (505,094)

$ 16,804,392 16,402,004

Notes to Consolidated Financial Statements C O M M O N W E A LT H B R E W E R Y L I M I T E DYear ended December 31, 2012 (Expressed in Bahamian dollars)

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7. Inventories (continued)

Movement in the provision for obsolescence:

2012 2011

Balance at beginning of the year $ 505,094 802,688

Increase in provision – 162,504

Inventories written off (35,224) (460,098)

Balance at end of the year $ 469,870 505,094

As outlined in Note 17, the cost of inventories recognised as an expense during the year was $43,850,764 (2011: $43,981,742).

8. Goodwill

Goodwill comprises the following:

2012 2011

Cost $ 6,363,448 6,363,448

Accumulated amortisation (1,876,206) (1,876,206)

Balance at end of the year $ 4,487,242 4,487,242

Goodwill is tested for impairment annually. The recoverable amount of the CGU which includes the goodwill is based on a value in use

calculation. The value in use has been determined by discounting the future cash flows generated from the continuing use of the CGU.

The key assumptions used for the value in use calculations are as follows:

· Cash flows are projected based on actual operating results and the three year business plan. Cash flows for a further two year

period are projected using expected annual growth rates.

· Cash flows after the first five years were projected using expected annual long-term inflation, based on external sources, in

order to calculate the terminal recoverable amount.

· Weighted average cost of capital (“WACC”) is applied in determining the recoverable amount of the CGU.

The WACC, expected growth rate and the expected long-term inflation rate are as follows:

WACC 9.89%

Expected annual long-term inflation 2.42%

Expected growth rate 1.18%

The values assigned to the key assumptions represent management’s assessment of future trends in the wine & spirits industry and are

based on both external and internal sources (historical data). A limited change in key assumptions will not lead to a materially different

outcome. Based on the value in use calculation management has determined that there has not been any impairment in the carrying

amount of goodwill as at December 31, 2012 and 2011.

Notes to Consolidated Financial Statements C O M M O N W E A LT H B R E W E R Y L I M I T E DYear ended December 31, 2012 (Expressed in Bahamian dollars)

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$ 6,

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,959

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20

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41

9.

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nt:

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$ 6,

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8 31

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,336

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53

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1,35

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1 35

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,064

9. Property, plant and equipment (continued)

The latest revaluation of land and buildings was done on December 31, 2010 by a qualified independent appraiser, Robin Brownrigg,

using the income approach, except for one property where the cost basis was used. Had there been no revaluation, the carrying value of

land would have been $1,689,070 (2011: $1,689,070) and of buildings would have been $6,172,242 (2011: $7,082,767).

10. Intangible assets

Intangible assets consist of computer software as follows:

2012 2011

Cost:

Balance at January 1 and December 31 $ 3,277,317 3,277,317

Accumulated amortisation:

Balance at January 1 $ 2,818,360 2,604,179

Amortisation 195,126 214,181

Balance at December 31 $ 3,013,486 2,818,360

Net Book Value $ 263,831 458,957

11. Accounts payable and accrued expenses

Accounts payable and accrued expenses comprise the following:

2012 2011

Accounts payable - third parties $ 7,645,274 5,886,566

Accounts payable - related parties 1,525,438 1,240,052

Accrued liabilities 4,031,629 6,720,635

$ 13,202,341 13,847,253

12. Share capital

Authorised, issued and fully paid share capital at December 31:

No. of shares Amount

2012 and 2011:

Ordinary shares of $0.005 each 30,000,000 $ 150,000

Notes to Consolidated Financial Statements C O M M O N W E A LT H B R E W E R Y L I M I T E DYear ended December 31, 2012 (Expressed in Bahamian dollars)

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13. Revaluation surplus

As discussed in Note 9, the latest revaluation of land and buildings was carried out by an independent appraiser on December 31,

2010 which resulted in a surplus of $2,566,757. The remaining amount relates to previous revaluations including those done in the

pre-acquisition period for BHL.

2012 2011

Balance at January 1 and December 31 $ 4,269,587 4,269,587

14. Commitments and contingencies

Commitments - The Group’s commitments on operating leases are as follows:

Less than 1 - 2 2 - 5 More than Total 1 year years years 5 years

2012 $ 1,820,405 1,242,774 1,689,145 873,342 5,625,666

2011 $ 1,931,110 1,460,132 1,606,571 247,704 5,245,517

Commitments and contingencies other than lease commitments are as follows:

At December 31, the Group was contingently liable under customs bond guarantees totalling $341,500 (2011: $805,100).

At December 31, the Group was contingently liable under standby letters of credit totalling $522,000 (2011: $1,288,500).

At December 31, the Group had capital commitment of $361,763 (2011 - $344,562).

Pending Litigation - Legal proceedings are pending against the Group in the ordinary course of business. Management considers that the

aggregate liability resulting from these proceedings will not be material.

15. Balances and transactions with related parties

For the purpose of this note, affiliates include other Heineken group entities and directors. Additional related party transactions are

disclosed in other notes to the consolidated financial statements.

2012 2011

Balances with parent (Heineken)

Accounts payable $ 652,615 1,083,167

Notes to Consolidated Financial Statements C O M M O N W E A LT H B R E W E R Y L I M I T E DYear ended December 31, 2012 (Expressed in Bahamian dollars)

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15. Balances and transactions with related parties (continued)

2012 2011

Transactions with parent (Heineken)

Know-how fee $ 439,110 399,108

Royalties 438,946 414,318

IT related fee 478,519 58,857

Directors’ fee – 32,300

Dividends paid 13,050,000 5,625,000

Balances with affiliates

Other receivables – 34,985

Accounts payable 872,823 156,885

Transactions with affiliates

Purchases of inventories 763,072 639,614

IT related fee 860,329 593,700

Supply chain fee 134,505 151,125

Directors’ fee 78,000 28,000

Loss on disposal of vehicles – 88,315

IT related fees, supply chain fee and other fees are charged by Heineken and other Heineken group entities as incurred.

Compensation of key management personnel

During the year, key management personnel received compensation amounting to $1,543,095 (2011: $2,002,981), including short-term

employee benefits of $1,309,949 (2011: $1,929,516), and post employment benefits of $233,146 (2011: $73,465).

Included in key management costs are costs relating to a Long Term Incentive Plan. This is a share based plan which provides senior

employees of Heineken NV shares based on the performance of the Heineken Group as a whole. The amount recognised in personnel

cost amounted to $18,615 (2011: $51,526).

16. Other income

2012 2011

Exchange loss $ (96,584) (85,648)

Loss on disposal of property, plant and equipment (197,922) (12,674)

Miscellaneous income 661,870 1,414,882

$ 367,364 1,316,560

Notes to Consolidated Financial Statements C O M M O N W E A LT H B R E W E R Y L I M I T E DYear ended December 31, 2012 (Expressed in Bahamian dollars)

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17. Raw materials, consumables and services

2012 2011

Cost of inventories (including related import duties) $ 43,850,764 43,981,742

Excise duties and taxes 14,106,360 12,877,498

Distribution and marketing expenses 5,740,590 5,091,157

Occupancy expenses 3,034,360 3,148,533

Utilities 3,513,740 3,521,784

Royalties 1,887,615 1,809,565

Bad debt expense (57,411) 97,113

Insurance 1,133,328 1,170,106

Repairs and maintenance 1,994,123 1,689,815

Know-how fee 439,110 399,108

Other expenses 5,238,769 5,276,323

Total $ 80,881,348 79,062,744

With effect from May 18, 2010, the Company entered into an agreement with Heineken to pay 0.4% per annum of revenue to Heineken

as a know-how fee.

18. Employee pension plans

In 1997, the Company commenced a defined contribution pension plan. In accordance with the terms of the plan both employer and

employees are required to contribute 5% of the participants’ earnings to the plan. Employees are permitted to make additional contribu-

tions in order to increase their retirement benefits. The Company’s contribution to the plan included in personnel costs was $92,900

(2011: $152,568).

Employees are eligible to become participants of the plan upon the completion of a probationary period, provided they have attained

the age of 18 years. The plan is mandatory for all employees who joined the Company after January 1, 1997 and optional for those who

joined prior to January 1, 1997.

BHL has a defined contribution plan for eligible employees. The employees contribute 5% (2011: 4% up to March 1 and 5% thereafter) of

gross salary, and BHL contributes 5% (2011: 4% up to March 1 and 5% thereafter) of eligible earnings. BHL’s contribution to the pension

costs net of forfeitures in respect to the plan for the year included in personnel costs amounted to $286,472 (2011: $246,277).

Notes to Consolidated Financial Statements C O M M O N W E A LT H B R E W E R Y L I M I T E DYear ended December 31, 2012 (Expressed in Bahamian dollars)

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19. Basic and diluted earnings per share

The calculation of basic and diluted earnings per share is based on the consolidated net income attributable to owners of the Company

divided by the weighted average number of ordinary shares outstanding during the year.

2012 2011

Net income attributable to owners of the Company $ 19,316,682 17,320,319

Weighted average number of shares 30,000,000 30,000,000

Basic and diluted earnings per share $ 0.64 0.58

20. Dividends

Dividends declared and paid by the Company amounted to $17,400,000 (2011: $25,153,387) including interim dividends of $7,500,000

(2011: $7,500,000).

21. Changes in non-cash working capital

2012 2011

Change in trade receivables $ (952,325) (659,576)

Change in prepaid expenses and other assets 49,244 (387,700)

Change in inventories (402,388) (1,264,673)

Change in accounts payable and accrued expenses (644,912) 2,874,790

$ (1,950,381) 562,841

22. Principal subsidiary and other significant operating subsidiaries

The following significant operating subsidiaries, all of which are incorporated in The Bahamas, are owned by the Company.

Percentage (%) Owned

2012 2011

Burns House Limited 100 100

Butler & Sands Company Limited 100 100

Kerland Limited 100 100

Todhunter-Mitchell Distillers Limited 100 100

Todhunter-Mitchell Wines & Spirits Limited 100 100

Wholesale Wines and Spirits Limited 100 100

Notes to Consolidated Financial Statements C O M M O N W E A LT H B R E W E R Y L I M I T E DYear ended December 31, 2012 (Expressed in Bahamian dollars)

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23. Financial instruments and associated risks

The Board of Directors has established a risk management framework whose primary objective is to protect the Group from events that

hinder the sustainable achievement of the Group’s performance objectives.

There are a number of risks inherent in the drinks industry that the Board has identified and manages on an ongoing basis. Among these

risks, the more significant are market, credit and liquidity. In accordance with IFRS 7, Financial Instruments, the Group presents qualita-

tive information about its exposure to risk and the objectives, policies and processes for measuring and managing these risks. Further

quantitative disclosures are included throughout this note.

(a) Market risk

Market risk is the risk that future changes in market conditions such as foreign exchange rates and interest rates will affect the

Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and

control market risk exposures within acceptable parameters, while optimizing the return on risk.

Currency risk

The Group is party to financial instruments or enters into transactions denominated in currencies other than its functional currency.

Consequently, the Group is exposed to risks that the exchange rate of its currency relative to other foreign currencies may change in

a manner that has an adverse effect on the value of that portion of the Group’s assets or liabilities denominated in currencies other

than the Bahamian dollar. Raw materials, packaging and finished products are purchased principally from Europe and are payable

in Euro. The Group does not hedge against movements in foreign currency exchange rates.

The Group’s total net liability exposure to fluctuations in foreign currency exchange rates (B$ vs. Euro) at December 31 was

$700,935 (2011: $478,887).

The average exchange rate between the B$ and the Euro was B$1 = Euro 0.78 (2011: B$1 = Euro 0.72). The spot rate at December

31, was B$1 = Euro 0.76 (2011: B$1 = Euro 0.77).

Sensitivity analysis

A 10 percent strengthening of the B$ against the Euro at December 31, would have increased equity and net income by approxi-

mately $70,094 (2011: $47,889). This analysis assumes that all other variables, in particular interest rates, remain constant. A 10

percent weakening of the B$ against the Euro at December 31, would have had the equal but opposite effect on equity and net

income of the amounts shown above, on the basis that all other variables remain constant.

Interest rate risk

Interest rate risk refers to the risk of loss due to adverse movements in interest rates. The Group’s interest rate risk arises from

long-term borrowings and its banking facilities. The Group manages its exposure to fluctuations in interest rates by linking its cost of

borrowing to prevailing domestic or international interest rates.

Interest rates on all facilities are tied to the Bahamian prime rate, which at the reporting date was 4.75% percent per annum and

stayed stable in 2012.

The Group believes that interest rate risk is minimal as the Group does not have any outstanding loans and has not utilised its

overdraft facility as outlined in note 4.

Notes to Consolidated Financial Statements C O M M O N W E A LT H B R E W E R Y L I M I T E DYear ended December 31, 2012 (Expressed in Bahamian dollars)

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23. Financial instruments and associated risks (continued)

(b) Credit risk

Credit risk is the risk that a counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered

into with the Group.

The Group’s maximum exposure to credit risk is as follows:

2012 2011

Cash held with banks $ 11,798,466 11,302,083

Trade receivables, net 2,859,718 1,786,488

Other receivables, net 886,064 907,684

Staff loans 193,805 343,249

$ 15,738,053 14,339,504

Management actively monitors the aging of receivables and establishes an allowance as circumstances warrant. The Group does not

anticipate any losses in excess of the allowance for doubtful accounts as a result of this exposure.

Cash at bank amounting to $11,798,466 (2011: $11,302,083) was deposited with regulated financial institutions. Accordingly

management considers this to bear minimal credit risk.

(c) Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to

managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities and other commit-

ments when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the

Group’s reputation.

A maturity analysis of financial liabilities is as follows:

At December 31, Carrying Contractual On 6 months 6 - 12 1 - 2 2 - 5 More than2012 Amount cash flows demand or less months years years 5 years

Accounts payable

and accrued expenses $ 13,202,341 13,202,341 - 13,202,341 - - - -

$ 13,202,341 13,202,341 - 13,202,341 - - - -

At December 31, Carrying Contractual On 6 months 6 - 12 1 - 2 2 - 5 More than2011 Amount cash flows demand or less months years years 5 years

Accounts payable

and accrued expenses $ 13,847,253 13,847,253 - 13,847,253 - - - -

$ 13,847,253 13,847,253 - 13,847,253 - - - -

Notes to Consolidated Financial Statements C O M M O N W E A LT H B R E W E R Y L I M I T E DYear ended December 31, 2012 (Expressed in Bahamian dollars)

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24. Segment information

The Group has adopted IFRS 8 for reporting Operating Segments. IFRS 8 requires operating segments to be identified on the basis of

internal reports about components of the Group that are regularly reviewed by the chief operating decision maker in order to allocate

resources to the segments and to assess their performance. This standard has been applied to all years presented in the consolidated

financial statements. Information regarding the Group’s reportable segments is presented below.

The Group’s revenue from operations by reportable segment is as follows:

Segment revenue

2012 2011

Wholesale $ 101,507,447 97,748,759

Retail 36,017,347 33,900,768

Production 51,140,342 48,451,544

$ 188,665,136 180,101,071

Inter-segment revenue

2012 2011

Wholesale $ 19,836,775 19,220,741

Retail – –

Production 50,359,878 47,471,129

$ 70,196,653 66,691,870

Revenue from external customers

2012 2011

Wholesale $ 81,670,672 78,528,018

Retail 36,017,347 33,900,768

Production 780,464 980,415

$ 118,468,483 113,409,201

The Group’s net income by reportable segment is as follows:

2012 2011

Wholesale $ 5,854,089 4,376,597

Retail 4,879,976 3,540,657

Production 8,582,617 9,403,065

$ 19,316,682 17,320,319

Notes to Consolidated Financial Statements C O M M O N W E A LT H B R E W E R Y L I M I T E DYear ended December 31, 2012 (Expressed in Bahamian dollars)

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24. Segment information (continued)

The Group’s assets by reportable segment are as follows:

2012 2011

Wholesale $ 22,061,785 21,633,550

Retail 4,678,702 3,850,260

Production 30,626,772 28,662,249

Total segment assets 57,367,259 54,146,059

Unallocated 15,912,920 17,862,350

Total assets $ 73,280,179 72,008,409

For the purposes of monitoring segment performance and allocating resources between segments, the only assets allocated by segment

are trade and other receivables, inventories and property, plant & equipment.

The Group’s liabilities by reportable segment are as follows:

2012 2011

Wholesale $ 7,685,121 7,065,074

Retail 862,814 1,319,896

Production 4,654,406 5,462,283

$ 13,202,341 13,847,253

The Group’s additions to property, plant and equipment by reportable segment are as follows:

2012 2011

Wholesale $ 465,375 273,419

Retail 303,122 481,445

Production 1,676,598 559,879

$ 2,445,095 1,314,743

The Group’s revenue from external customers by geographical location from operations from its major products and services are as

follows:

2012 2011

Bahamas $ 117,688,019 112,428,786

United States 780,464 980,415

$ 118,468,483 113,409,201

Notes to Consolidated Financial Statements C O M M O N W E A LT H B R E W E R Y L I M I T E DYear ended December 31, 2012 (Expressed in Bahamian dollars)

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24. Segment information (continued)

Included in revenues arising from direct sales from the Group’s wholesale segment to its customers is $27,814,995 (2011: $18,773,406)

which arose from sales to the Group’s top five customers.

25. Fair values of financial instruments

The carrying values of financial assets and liabilities are considered to approximate their fair values due to the following reasons:

(a) immediate or short-term maturity; and/or

(b) interest rates approximate current market rates

The fair values of cash and cash equivalents, trade and other receivables, accounts payable and accrued expenses are not considered

to be materially different from their carrying values due to their short-term nature.

26. Capital management

The Group is not subject to externally imposed capital requirements except that under The Companies Act 1992, the Group may not

declare and pay a dividend if there are reasonable grounds for believing that:

(a) the Group is unable or would, after the payment of dividends be unable to meet its liabilities as they become due; or

(b) the realisable assets of the Group will be less than the sum of its total liabilities and outstanding share capital.

There were no changes in the Group’s approach to capital management during the year.

With effect from January 1, 2011 the Group’s policy is to distribute 100% of consolidated net income as dividends subject to the provi-

sions of the The Companies’ Act 1992 as outlined above. The frequency of the payout is at the discretion of the Board of Directors and

is subject to approval at the annual shareholders’ meeting.

Notes to Consolidated Financial Statements C O M M O N W E A LT H B R E W E R Y L I M I T E DYear ended December 31, 2012 (Expressed in Bahamian dollars)

Commonwealth Brewery Limited

Clifton PierP.O. Box N-4936

Nassau, Bahamas

Produced by DP&A, Nassau, Bahamas