Strategic Report Corporate Governance

Annual Report 2015 Financial Statements On the Stock Exchange

Press Corporation Limited Annual Report 2015 1 Dominant . Strong . Agile ANNUAL REPORT 2015 CONTENTS

Strategic Report Financial Highlights ...... 3 Corporate Social Responsibility...... 4 Vision, Mission Statement, Core Values...... 7 Chairman’s Report...... 8 Group Chief Executive’s Report...... 11 Business Overview...... 13 Five Year Group Financial Review...... 26

Corporate Governance Risk Overview...... 27 Profile of Directors...... 28

Profile of Management...... 32

Financial Statements Directors’ Report...... 36 Statement of Directors’ Responsibilities...... 37 Independent Auditors’ Report...... 38 Consolidated and Separate Statements of Financial Position...... 39 Consolidated and Separate Statements of Comprehensive Income...... 40 Statements of Changes in Equity...... 41 Consolidated and Separate Statements of Cashflows...... 43 Notes to the Consolidated and Separate Financial Statements...... 44

On the ...... 126

Administration...... 127 FINANCIAL HIGHLIGHTS

Malawi Kwacha Millions US Dollars Millions

2015 2014 Change % 2015 2014 Change % Strategic Report

Group Summary (in millions)

Turnover 161,136 136,787 17.80 283 301 (6.10) Attributable earnings 4,197 10,734 (60.90) 7 24 (68.83) Shareholders’ equity 91,698 74,731 22.70 138 157 (12.13)

Share performance

Basic earnings per share 34.92 89.30 (60.90) 0.06 0.20 (68.83) Cash retained from operations per share 340.87 268.68 26.87 0.51 0.56 (9.14) Net asset value per share (shareholders’ equity per share) 1085 889 22.03 1.63 1.87 (12.61)

Dividend paid per share 13.00 10.51 23.75 0.02 0.02 (11.38) Corporate Governance Market price per share 535.00 453.10 18.08 0.81 0.95 (15.44) Price earnings ratio 15.3 5.1 201.98 13.15 4.85 171.30 Number of shares in issue (in millions) 120.2 120.2 0.00 Volume of shares traded (in thousands) 2,117 1,244 70.18 Value of shares trades (in MK millions) 1,085 454 138.99 1.90 1.00 90.51

Financial statistics

After tax return on equity 13.35 28.93 (53.85) 0.02 0.06 (66.95) Gearing 7% 14% 48.41

Average monthly exchange rates 570.10 454.45 Year end exchange rates 664.40 475.80 Financial Statements

Turnover Profit Attributable Ordinary to Ordinary Shareholders Shareholders’ Funds

MK US$ Millions Millions

180,000 350 MK US$ MK US$ Millions Millions Millions Millions 160,000 300 12,000 35 100,000 250 140,000 90,000 On the Malawi Stock Exchange 250 10,000 25 120,000 80,000 200

200 70,000 100,000 8,000 20 60,000 150 80,000 150 6,000 15 50,000 60,000 40,000 100 100 4,000 10 30,000 40,000 20,000 50 50 20,000 2,000 5 10,000

0 0 0 0 0 0 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015

profit Attributable TO ORDINARY Turnover SHAREHOLDERSMK Millions US$ Millions Ordinary Shareholders’ funds 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 n MK’m 35,305 74,544 113,717 136,787 161,136 n MK’m 3,469 6,340 9,372 10,734 4,197 n MK’m 31,532 41,977 57,090 74,731 91,698 n US$’m 224 295 293 301 283 n US$’m 22 25 24 24 7 n US$’m 193 123 132 157 138

Exchange rate (MK/US$) 2011 2012 2013 2014 2015 Average monthly exchange rates 157.30 252.93 387.58 454.45 570.10 Year end exchange rates 163.80 342.06 433.10 475.80 664.40

Press Corporation Limited Annual Report 2015 53 Strategic Report

CORPORATE SOCIAL RESPONSIBILITY

Press Corporation Limited is a member of the UN Global Compact Network Corporate Governance and, by signing up, has endorsed the Global Compact Principles in terms of the Group’s operations.

race, colour, creed, gender, or any other criterion unrelated to

Financial Statements Integrity one’s capacity to do the job. Press Corporation Limited is committed to conducting its business in a transparent and Employees have the right to work in an environment which is ethical manner and pledges to be accountable free from any form of harassment or unlawful discrimination with to its customers, shareholders and society. As respect to race, colour, creed, gender, place of origin, political such, Press Corporation Limited expects all its persuasion, marital, family status or disability. employees to share its commitment to high moral, ethical and legal standards. Furthermore, Press Corporation Limited and its subsidiary companies have an HIV/AIDS Policy whose core objective is to Press Corporation Limited has an established multi- promote the Company’s responsibility for providing a healthy and departmental procurement committee and a procurement equitable work environment for all employees, including those

On the Malawi Stock Exchange manual which is in line with procurement best practice. Press with HIV/AIDS. Corporation Limited conducts all procurement processes in a transparent, accountable, fair and competitive manner. Our To this end, Press Corporation Limited has a fully equipped clinic suppliers are bound by the rules of this manual which prevents to provide free anti-retroviral therapy to employees of the Group them from being engaged in corrupt and fraudulent practises and on a nominal fee, to the general public. The members of as well as collusion. The manual also acts as a guide to staff staff at the clinic have been trained to provide the appropriate members to maintain the integrity of the Company by acting counselling to employees who are diagnosed with the HIV virus. fairly when dealing with suppliers. Environmental Management

Employment Equity and HIV/AIDS Policy Press Corporation Limited and its subsidiaries are committed to developing operational policies to Press Corporation Limited’s employment policy address the environmental impact of its business is based on a system of opportunities for all. activities by integrating pollution control, waste Employment equity seeks to identify, develop and management and rehabilitation activities into reward each employee who demonstrates the operating procedures. qualities of individual initiative, enterprise, hard work and loyalty in their jobs. Members of staff are encouraged to “reduce, re-use and re- cycle” paper. All waste paper is shredded and donated to a local Recruitment is on the basis of merit rather than an individual’s re-cycling organisation.

Press Corporation Limited Annual Report 2015 4 CORPORATECORPORATE SOC SOCIALIAL RESPONS RESPONSIBILITYIBILITY Strategic Report Corporate Governance

Carlsberg Malawi embraces pollution control and waste any possible leakage of fuel from damaging the environment. Financial Statements management by treating and returning waste water to the environment. The aim is to return 100% of the water used During the year, Press Corporation Limited through its in its processes. The Company constructed a waste water subsidiaries, continued to plant thousands of trees across the treatment plant in its new soft drink plant which treats all liquid Country in an attempt to reverse the effects of deforestation waste to acceptable limits before being discharged back to the which results in loss of soil fertility, change in rainfall patterns and environment. floods.

Carlsberg Malawi also has an ozone protection program in place which ensures that the Company does not use ozone depleting Community Engagement substances in its operations which include cooling systems, solvents and refrigeration gases. All ozone depleting gases e.g. As a responsible corporate citizen,the Group

R22, R12 were replaced by other ozone friendly gases, e.g. 134a. aims to give back to the communities in which On the Malawi Stock Exchange we operate. As a way of managing waste, both our ethanol producing Companies, Ethanol Company Limited (ETHCO) and Presscane In the first quarter of the year, the Country was Limited use ponds to withhold effluent from the ethanol hit by devastating floods due to heavy rains production. This byproduct called vinnase is naturally evaporated which left over 121,000 people homeless and without and the remaining sludge is used as a fertilizer supplement resulting in Malawi being declared a state of national disaster because of its richness in potassium. Part of this supplement is on 14 January 2015. In response, Press Corporation through it’s taken back to the sugar making Company (and applied in the Subsidiary and Associate Companies, donated assorted relief sugarcane fields) whose byproduct is molasses which is the items to the communities which were affected by the floods. ethanol production raw material.

The relief items included bottled water from Carlsberg to avoid a ETHCO also maximizes the use of steam from a renewable source (sugarcane bagasse steam from Dwangwa Sugar breakout of waterborne diseases, food stuffs, cash through the Corporation) as opposed to steam from coal which is a fossil fuel public private partnership dialogue, and through the Association in order to protect the environment. of Telecommunications Operators (ATOL).

Puma Energy uses only double-skinned tanks complete with Carlsberg Malawi together with The Coca-Cola Africa Foundation leakage detectors at all the underground tank installation sites to and US based charites, CitiHope International and MedShare prevent any product leaks into the ground. Selected retail sites donated medicines to Zomba Central Hospital and Mulanje are equipped with modern tanks and interceptors that prevent Mission Hospital in support of the victims of the flood crisis.

Press Corporation Limited Annual Report 2015 5 CORPORATE SOCIAL RESPONSIBILITY

ETHCO continued to freely deliver the dry sludge from the Maldeco Fisheries, a subsidiary of Press Corporation Limited Strategic Report ethanol production process to local small scale farmers in has also continued to run a fully-fledged clinic in Mangochi its community within a 20 km radius. This sludge is used as offering an array of services to the communities surrounding the a fertilizer supplement in their gardens hence reducing the Company premises, who in the past had to travel long distances communities’ fertilizer costs. to access medical care.

TNM, through the Ufulu @50 Promotion which entailed winners Carlsberg Malawi’s partnership project, ShareHope continued selecting a community project of their choice, carried out to bring hope to patients at hospitals such as Ekwendeni 30 projects during the year including: construction of early Mission, Queen Elizabeth Central and Zomba Central. Through childhood centres, classroom blocks, and procurement of school ShareHope, Carlsberg Malawi and partners, supported and desks and medical supplies. strengthened in-country healthcare systems by contributing medical supplies, medical equipment as well as the requisite

Corporate Governance TNM continued to sponsor YONECO, a nongovernmental training to operate and maintain the equipment in the long run. organization whose aim is the elimination of child abuse, During the year the beneficiary hospitals received 1 40-foot violence against children and exploitation of children in schools container of medical equipment. and communities in Malawi through the expansion of the Child Helpline Services in Malawi. TNM provides the Toll Free lines. Anti-Corruption

Social Press Corporation Limited conforms to Principle Ten of the UN Global Compact In furtherance to its commitment to the which states that Businesses should work community, Press Corporation Limited and its against corruption in all its forms, including subsidiary and associate Companies make extortion and bribery as well as other forms Financial Statements donations in cash and in kind to organisations of corruption. The principle gives guidelines involved in serving the less privileged members for companies to proactively develop policies of the society. During the year, donations were and concrete programmes to address corruption internally and made towards education, health and access to safe drinking within their supply chains. Companies are also challenged to water. work collectively and join civil society.

In a bid to reduce the patient to nurse ratio in Malawi, National Press Corporation Limited and its subsidiary companies continue has been sponsoring student nurses in CHAM (Christian to support one of the main objectives of the Business Action Health Association of Malawi) Colleges for a three year diploma Against Corruption (BAAC) which is to actively promote business course and 2015 marked their final year. All the 18 students who commitment to fighting corruption and foster widespread support were being sponsored will graduate in 2016. for the Business Code of Conduct and to pursue linkages with relevant national and regional business led anti-corruption On the Malawi Stock Exchange There has been a deliberate move by the Government and initiatives. several organizations to keep girls in school. TNM during the year launched an annual scholarship program for girls in partnership As an extension of the Group’s Fraud Policy, Press Corporation with Age Africa. Through the scholarships, TNM will pay for the Limited and its subsidiaries subscribe to Tip Offs Anonymous, girls’ upkeep and fees from form 1 through 4. Similarly, National a whistle blowing hotline service provided by Deloitte. This can Bank in partnership with Lions Club of Blantyre, contributed be used by those of the Group’s employees who may have towards the construction of girls dormitories to reduce incidences reservations about using the internal reporting mechanism of rape, early pregnancies and marriages. provided for in the Fraud Policy.

Health

As part of its corporate social responsibility, Press Corporation Limited has not limited its provision of health services to members of staff only, but has opened up its clinic to the general public. Due to increased demand of its services and to improve service delivery, the PCL Clinic relocated to much bigger and better premises at Trade Fair grounds, Blantyre, in the first quarter of the year.

Press Corporation Limited Annual Report 2015 6 Strategic Report To be the premier holding Company dominating every market it serves with strength and agility Corporate Governance

MISSION STATEMENT

To create and sustain industry-dominant businesses in order to generate real

growth in shareholder value Financial Statements and contribute to the socio- economic development of Malawi and the region

core values

Our core values are the PRICE we are committed to pay in conducting our business. People Centred Responsibility Integrity We treat our employees We believe in Ubuntu We commit to conduct and all our partners philosophy that states our business in a with dignity, fairness “I am because we are”. transparent and ethical On the Malawi Stock Exchange and respect, fostering We therefore commit manner and pledge to an environment where to share our success be accountable to our people can contribute, with communities and customers, shareholders innovate and excel. sustain the environment and society. we operate in.

Customer Value Excellence We strive to surpass We pursue excellence customers’ expectations through highly efficient and both internally and effective processes that externally. We are deliver goods and services therefore committed to of outstanding quality. enable our customers excel by: creating long- term relationships, being responsive and relevant, and delivering value consistently.

Press Corporation Limited Annual Report 2015 7 THE GENERAL ECONOMY Strategic Report CHAIRMAN’S REPORT The Malawi Economy registered a lower GDP growth of 3% in 2015 from a growth of 6% in 2014 and an average growth of 5% in the previous year. The marginal slowdown in growth was mainly attributable to reduced performance in the agricultural sector which is the driving force of the economy. The sector was affected mainly by the late onset of rains during the growing season and also by the floods which affected some parts of the country in the first quarter of 2015. The Economic Intelligence Unit of The Economist estimated that the agricultural sector grew 0.3% in 2015 from a growth of 6.1% in 2014.

Corporate Governance Severe power shortages in the year also adversely affected SMEs as well as the manufacturing and retail industries.

Tobacco production declined marginally 3.9 million tonnes in 2014. Results of the from 191.97 million kilograms to 190.72 Food Security Vulnerability Assessment kilograms. Average tobacco prices conducted by the Malawi Vulnerability declined by 7% from USD1.88 per Assessment Committee (MVAC) kilogram to USD1.76 due to oversupply estimated that a total of 2.8 million people of tobacco on the world market. Total (17% of the population) may not meet revenue from tobacco therefore at USD their annual food requirement during the 335.24 million was lower than USD 361.56 2015/2016 consumption year causing a Financial Statements million achieved in the previous year. maize deficit of 223,723 metric tonnes. Similarly, maize production also went down by 28% to 2.8 million tonnes from Total foreign exchange reserves increased by 9% during the year and closed at U$1,007 million translating to an import cover of 4.82 months compared to U$922 million in 2014 which however translated to 4.83 months import cover. In March 2015, the IMF Board approved the release of US$ 18 million under extended credit facility after Government had put in place prudent fiscal management conditions. On the Malawi Stock Exchange However, Malawi was declared off track in September 2015 due to fiscal policy slippages arising from overspending on the wage bill.

The average headline inflation at the beginning of 2015 was 21.9% which was lower than 23.8% in the last quarter of 2014 owing to effects of tight monetary policy, currency appreciation and lower international fuel prices. However this trend did not last long due to a Simon A Itaye depreciating currency and a sharp rise in food prices. Therefore inflation closed at 24.9% by December 2015 which was higher than the 24.2% in the same period the previous year. Shortage of maize due to adverse weather conditions and the floods which devastated some parts of the country was the main driver of the increase in inflation.

Press Corporation Limited Annual Report 2015 8 CHAIRMAN’S REPORT

EXCHANGE RATES AND MONEY of value from the 1,724,271,388 shares Strategic Report MARKET DEVELOPMENTS at a total consideration of MK10.8 billion Profit Before Tax transacted in the previous year. The Malawi Kwacha depreciated sharply MK25.589 against all the major currencies. The The Domestic Share Index (DSI) Kwacha registered a depreciation of decreased by 2.20% to close at 11,462.87 billion 28.39% (2014: 8.97%) against the United points from a gain of 18.99% and a (2014: MK34.190 billion) States Dollar, by 25.6%, (2014:3.35%) closing of 11,720 points. The Foreign against the British Pound. It also Share Index (FSI) on the other hand depreciated against the Euro and the increased by 0.14% to close at 1,762.13 South African Rand by 20.80% and 5.45% points from 1,759.61 points in 2014. (2014: appreciated by 3.78% and 4.69%) Net Profit Attributable to respectively. GROUP PERFORMANCE Ordinary Shareholders Corporate Governance The Reserve Bank of Malawi raised the 2015 was a tough year characterized benchmark interest rate (the Policy Rate) by high interest rates, high inflation, MK4.197 from 25% to 27% in late 2015 to contain low consumer spending and a deep billion inflationary pressures. The Liquidity devaluation of the Malawi Kwacha. (2014: MK10.734 billion) Reserve Requirement was adjusted Consequently the Group consolidated downwards from 15.5% to 7.5% in July profit before tax at MK25.589 billion 2015 which helped maintain (2014:MK34.190 billion) was 25% below lending rates as it countered the effect of prior year. the increase in the Policy Rate. DIVIDEND Net Interest Cost Financial Statements Treasury bill rates decreased on all tenors in the year under review. The An interim dividend for the year 2015 MK4.544 91-day tenor closed the year at 23.87% of MK480.8 million (2014: MK420.7 from 26.92% in 2014 while the 182-day million) representing MK4.00 per share billion (2014: MK2.452 billion) tenor and the 364-day tenor decreased (2014: MK3.50 per share) was paid on to 24.63% and 26.24% from 26.87% 30th October 2015 and the Directors and 27.02% respectively. Applications have proposed a final dividend for the during the year under review amounted to year 2015 of MK1021.7 million (2014: MK509 billion (MK430 billion in 2014). The MK1081.8 million) representing MK8.50 182 days paper accounted for the highest per share (2014: MK9.00 per share). Interim Dividend subscription rate at 34.2%, followed by This brings the total dividend for 2015 the 91 days paper at 33.9% and the 364 to MK1502.5 million (2014: MK1502.5 MK480.8 On the Malawi Stock Exchange days paper at 33.9%. The total Treasury million) representing MK12.50 per share bill maturities stood at MK408 billion (2014: MK12.50 per share). A resolution million against a total allotted amount of MK379 to approve the final dividend will be (2014: MK420.7 million) billion. tabled at the forthcoming Annual General Meeting. DEVELOPMENTS PROSPECTS FOR 2016 The Stock Market was bearish during the year under review and registered a Prospects for 2016 point to a continued negative return on of 2.17% subdued operating environment. (-29.94% in USD) down from 18.79% Although the currency is appreciating (8.14% in USD) achieved in 2014. The and is expected to stabilize in the short Malawi All Share Index (MASI) closed at term as the tobacco season starts, it is 14886.12 points in December 2015 from expected to continue depreciating in the 14562.53 points in the previous year. long term due to existing significant deficit Conversely, there was an increase in on the current account, weak inflows from traded volume as the market transacted foreign direct investment and continued a total of 2,355,317,369 shares at a suspension of budgetary support. This total consideration of MK48.5 billion will continue putting pressure on inflation. which was a 37% increase in terms of Likewise, interest rates are expected to volumes and a 349% increase in terms remain high due to anticipated continued

Press Corporation Limited Annual Report 2015 9 CHAIRMAN’S REPORT

borrowing by Government in the absence He chaired the Board from January 2013 Strategic Report Food prices are of foreign budgetary support. Food until his retirement. I wish to thank Mr prices are expected to be high due to the Chilingulo for his stewardship and the expected to be high due anticipated drop in agricultural production valuable leadership he provided to the to the anticipated drop in as a result of late rains for the 2015/2016 Board. agricultural production as growing season coupled with the El Nino weather that affected most parts Mr Chilingulo was replaced as Director a result of late rains for of the country. This will further worsen by Mr Patrick Khembo in accordance the 2015/2016 growing the already high inflation and reduce with the Company’s Memorandum and season coupled with consumer demand. Articles of Association. Mr Simon Itaye was elected Chairman of the Board in the El Nino weather that Building on the Group’s strength of its place of Mr Chilingulo. In May 2015,

Corporate Governance affected most parts of size and diversity, the focus will be to Mr Chris Kapanga, who represents the country. nurture and consolidate the Group’s on the Board, informed the existing businesses while continuing Company that he had been assigned by to explore the market for any profitable Old Mutual to oversee the company’s business opportunities. In this regard, operations in Ghana. During his absence, the Group has lined up action plans Mr Damien Kafoteka was appointed aimed at protecting market share and as Mr Kapanga’s alternate director. stopping the hemorrhage in the loss I welcome both Mr Khembo and Mr makers. The fixed telephone business Kafoteka and look forward to their is expected to break even once the contributions on the Board. restructuring process is completed and become profitable thereafter. The ethanol APPRECIATION Financial Statements manufacturing business is expected to be Building on the Group’s feedstock independent by 2018 after the I wish to thank my fellow Directors for implementation of feedstock production their counsel, Management and Staff strength of its size and project. The fish farming business is for their continued support, cooperation diversity, the focus expected to turnaround once the fish and dedication during the year. With their will be to nurture and growth problems are resolved and a support, the Company was able to face strategic partner is engaged. Similarly, and overcome difficult challenges during consolidate the Group’s the retail chain is expected to break the year as outlined in this Report. I look existing businesses while even in 2017 and become profitable forward to a successful year in 2016. continuing to explore the thereafter once the turnaround strategy market for any profitable is fully implemented. Discussions with

On the Malawi Stock Exchange international strategic partners for a business opportunities. complete turnaround of the retail chain business are underway. The Group will also continue exploring opportunities to invest in other sectors including power generation. SIMON A ITAYE MANAGEMENT OF THE COMPANY CHAIRMAN

Mr. John Biziwick joined the Company on 5th October 2015 as Group Operations Executive-Designate. Mr Biziwick will assume the position of Group Operations Executive upon the retirement of Mr Pius Mulipa on 31st March 2016. He joins the Company’s Executive Management.

THE BOARD OF DIRECTORS

Mr. Clement Chilingulo retired from the Board on 26th June 2015, having served on the Board as Director for 14 years.

Press Corporation Limited Annual Report 2015 10 GROUP CHIEF OVERVIEW EXECUTIVE’S Strategic Report The operating environment in 2015 was tough, characterized by a REPORT sharp depreciation of the Malawi Kwacha, high inflation, high interest rates, tight liquidity, and reduced consumer spending. The Malawi Kwacha depreciated by 43% due to continued appetite for imports with weak inflows from exports and direct foreign investments. This was compounded by the low discretional spending and the increase in food prices due to reduction in agriculture production as a result of floods that affected most parts of the Country during the 2014/15 growing season. The operating environment was further dampened by the liquidity squeeze resulting from the contractionary monetary policy adopted by Reserve Bank of Malawi to reduce pressure on inflation and

stabilize exchange rates. Corporate Governance

The Group consolidated profit before tax Similarly, net interest cost increased by was MK25.589 billion (2014: MK34.190 85% to MK4.544 billion (2014: 2.452 billion) representing a 25% drop on prior billion) due to the high interest rates year. Net profit attributable to ordinary that prevailed. The results were further shareholders was MK4.197 billion (2014: adversely affected by reduced gross MK10.734 billion). This represents a margins in three operations namely: the 61% decrease on prior year. Earnings Fast Moving Consumer Goods Segment per share also declined by 61%. This due to stock losses; the Fish Farming performance was after taking into business due to slow fish growth; and account a net exchange loss amounting the Energy Segment due to reduction

to K8.032 billion (2014; MK1.714 billion), in the price of ethanol occasioned by Financial Statements including a net exchange loss from equity reduction in global oil prices and increase accounted investments amounting to in the price of raw materials (molasses) MK2.348 billion (2014:MK648 million). due to the depreciation of the currency. The price of molasses is denominated in US Dollars

STRATEGIC DIRECTION

Press Corporation strategy Press Corporation Limited is focusing on growth through diversification. We are keen to maintain our leadership

role in the private sector by focusing on On the Malawi Stock Exchange and nurturing profitable operations to ensure consistent growth in their market share and maintain dominance in their respective sectors. To achieve this, the Group is implementing an aggressive Strategic Plan with five strategic pillars or focal areas, namely: Business Expansion, Competitive Advantage, Human Capital Development, Technological enhancement, and Corporate Social Responsibility.

Business Expansion PCL group companies will focus on Dr Mathews Chikaonda strategies to grow market share in existing markets, expand into new markets, innovate and develop new products and services.

The business expansion theme includes a market development focus in order to have a regional footprint. This will

Press Corporation Limited Annual Report 2015 11 GROUP CHIEF EXECUTIVE’S REPORT

spouses, where experts from different Strategic Report Science and Technology in Malawi Press Corporation Primary and Secondary Schools through organisations, as well as individuals, ‘’Press4Science’’ Programmes, Enhance made speeches and presentations in Limited will implement the positive impact(s) of our business line with the theme “90 90 90.” Thus technology focused activities on the environment in alignment the UNAIDS “Fast Track” ambitious new with ISO 14000. Press Corporation will global targets which state that by 2020, organizational also focus on improving total wellness of 90% of all people living with HIV will development employees and their families, and also know their HIV status; 90% of all people empower local communities through with diagnosed HIV infection will receive programmes and expertise sharing. sustained antiretroviral therapy; 90% of all enhance interaction people receiving antiretroviral therapy will The Group’s policies will continue to be have viral suppression. with players in local and anchored in the following framework:-

Corporate Governance Furthermore, Press Corporation Limited international knowledge n Hold at least a 50% equity in investments so as to influence key continued embarking on Employee development and decisions and overall strategy. Wellness Programs where the focus is on the total well-being of the employee. transfer centres. n Ensure that Group’s debt-equity ratio remains consistent with the The Company realises that there are Company’s risk policy. other lifestyle diseases which are equally

n Pay such dividends as take into dangerous but can be avoided or controlled account cash flows vis-à-vis potentially with lifestyle behavioural changes. encompass exports and foreign direct profitable investment opportunities for Training and development of staff investments in countries in the SADC growth and sustainability. continues to play an important role

region and beyond through acquisitions n Operate with reputable joint venture in the Company’s overall strategic or Greenfield investments. partners to take advantage of their plan in order to allow for the efficient management and technical expertise. delivery of services and also provide for Financial Statements Competitive Advantage n Maintain strict performance criteria effective succession planning. Training PCL is aiming to gain and maintain for investments and divest in Management and Leadership is competitive advantage by fostering underperforming assets in a timely encouraged at the senior and middle innovation, promoting differentiated manner. management levels. Other employees

products and services and improving n Conduct business in an continue to be sponsored on courses cost efficiency by streamlining the environmentally responsible relevant to their individual developmental business processes. manner and work with various needs in areas such as accounting, stakeholders, e.g. Government marketing and human resources. Human Capital Development and Donors in promoting sustainable PCL is poised to leverage the Human development. We continue to seek and recruit qualified

capital by improving employee n Build a successful team with a and young graduates into the Press resourcing, developing and maintaining culture of excellence by investing Group “Management Trainee” Program human capital through training, in leadership training for PCL’s which has been running for the past On the Malawi Stock Exchange mentorships and other capacity- employees. eleven (11) years. Upon completion of

building programs. The group will n Invest in people through training in their training, the Trainees are placed in continue improving employer-employee leadership in order to promote the various companies within the Group relationships. a culture of excellence, team to ensure that the Group has a reservoir work and innovation. of future managers and leaders.

Technological enhancement n Ensure diversity by employing more In order to build and enhance women in decision-making positions. In closing, I wish to sincerely thank Staff, technological development, PCL Management and the Board of Directors will intensify technology search and STAFF WELFARE AND DEVELOPMENT of Press Corporation Limited and all the development for products/services Group Companies, Subsidiaries and and processes. PCL will implement Press Corporation Limited continues Associates, for their unwavering support technology focused organizational to play its part in the fight against HIV/ during the year. We look forward to the development programmes and enhance AIDS in the workplace with all related future with great expectations to take the interaction with players in local and awareness activities being conducted Group to greater heights. international knowledge development during working hours. The Company and transfer centres. The Group will is founder-member and still an active acquire commercially proven technology member of the Malawi Business Coalition to be used for its processes to avoid Against HIV/AIDS (MBCA) which is inefficiencies. a private sector initiative. HIV/AIDS DR MATHEWS CHIKAONDA awareness events continued to be held Group Chief Executive Corporate Social Responsibility during the year. On World AIDS Day, PCL will Maintain Sustainability through the Group commemorated the day by Corporate Social Responsibility, promote holding an event for employees and their

Press Corporation Limited Annual Report 2015 12 BUSINESS Strategic Report OVERVIEW Corporate Governance

Carlsberg Malawi Ltd Ethanol Company Ltd Financial Statements

Macsteel Malawi Ltd Malawi Telecommunications Ltd Limbe Leaf Tobacco Company Ltd On the Malawi Stock Exchange

Puma Energy Malawi Ltd The Company Ltd TNM Ltd

Presscane Ltd Peoples Trading Centre Press Properties Ltd

Press Corporation Limited Annual Report 2015 13 BUSINESS OVERVIEW

Strategic Report NATIONAL BANK OF MALAWI Corporate Governance

George Partridge Chief Executive Officer

National Bank of Malawi (NBM) and its as a direct impact of the acquisition Financial Statements subsidiaries are engaged in the business of , both deposits and the Group Pre-tax Profit of commercial banking, stock broking, book at group level have grown fund management and pension fund significantly by 48% and 44% respectively, administration. In addition, NBM has a signifying the future earning potential of MK19.6 31% stake in UGI, a general short term the investment. billion company, as its associate. (2014: MK20.7 billion) During the year the Bank enhanced NBM Group Performance its mobile phone banking system The Bank registered a group pre-tax profit (Mo626ice) to include the ability to do of K19.6b (2014: K20.7b), representing in-country interbank transfers. The Bank a 5% reduction. This is against a played a leading role in the National background of a poor economic Switch, enabling its cardholders to have Acquired environment and the opportunity cost access to their accounts through all ATMs On the Malawi Stock Exchange of the outlay from internally generated whose banks are members of the switch. 97.05% resources used for the acquisition of Indebank, an ailing inadequately The Bank also finalised certification of of Indebank capitalized which its MasterCard acquiring through its ATM business has a huge potential. NBM network thereby enabling MasterCard continues to absorb Indebank’s post- card holders transact on the Bank’s ATMs acquisition losses pending full integration. and POS devices.

A high interest rate environment prevailed Priorities for 2016 through-out the year as part of a tight As part of the continuing efforts to of Indebank in 2015, the Bank’s other monetary policy regime. Consequently, enhance the performance of the Bank’s IT major objective is to ensure that there is a demand for credit was lower than systems, an upgrade assessment of the smooth integration of all of Indebank and anticipated resulting in lower than Bank’s T24 system was commissioned in its subsidiary operations by the end of the planned net interest and associated fee 2015 as a pre-requisite for the upgrade third quarter. income. The unfavourable operating of the main Banking platform from the environment increased the risk of bad current Release 9 to Release15. The NBM will be introducing additional card debts which caused the Bank to adopt a Project is underway with a go live date products as a commitment to the drive more conservative attitude in managing planned for mid-2017. Once completed, towards making payments cashless, the loan book. this upgrade is expected to enhance convenient, and easy. The Bank has efficiencies in terms of speed of customer plans to roll out products for The Bank has therefore shown service and quality of information. its customer segments under the Visa remarkable resilience in its performance and MasterCard brands to which the under the circumstances. However, Following NBM’s acquisition of 97.05% Bank is a Principal Member.

Press Corporation Limited Annual Report 2015 14 BUSINESS OVERVIEW

TNM LIMITED Strategic Report

and Mafco, Kasanga Bay and Mazizi Bay. For to thrive, a high quality and dependable mobile network complete with data capabilities is prerequisite. These additional sites are well equipped with high speed internet and data connectivity to help business and leisure tourists stay in touch.

A similar expansion drive was also Corporate Governance completed in the Commercial City of Blantyre during the first half of 2015. Under the Data Improvement Project, 53 3G sites were implemented; under the Douglas Stevenson Blantyre Project 36 new sites were put on Chief Executive Officer air; finally, 7 new sites went on air under the Blantyre-Zomba--Mzuzu Project.

Getting closer to the subscriber TNM’s efforts in network coverage TNM is a truly Malawian telecommunica- expansion were supported by improved tions company committed to maintaining customer services by among others Financial Statements a sustainable and profitable business. bringing products and services closer to The Company aims to continue investing customers. We accordingly increased our in an ICT infrastructure platform that in shop network to 21 outlets nationwide. turn is expected to spur economic growth The new shops provide more space and for building a great nation. therefore increase customer care touch points. They are fully branded with the Performance TNM thematic campaign; “It’s great” Service revenue grew 24% above last to give the customer improved Service Revenue year on the foundation of a number ambience. TNM is always striving to Grew by of factors, chief of which was the net improve the customer experience through subscriber base which grew by 17% over provision of a customer-friendly and centric environment by bringing services the previous year. This was driven by 24% On the Malawi Stock Exchange the implementation of various network closer to its valued customers. expansion and improvement projects. Despite these improvements in the One of the recent additions to its expenditure, growing business services, network, pre-tax profits grew only 3% wide shop network is the state of the and improving customer excellence. above prior year on account of higher art Hi-Tech Shop at Gateway Mall in operating costs occasioned by the Lilongwe. The Hi-Tech shop offers an TNM shall continue to pursue its footprint significant loss of value of the Malawi experiential platform to showcase latest expansion programme with four more Kwacha against the US Dollar. In addition, communications devices and services shops due to open during the first half of the same challenge led to the Company available through the TNM network. 2016 at Umodzi Park in Lilongwe, Balaka, incurring over three and a half times more These new shops among others offer all Mulanje and Salima. net foreign exchange losses than in the mobile money Mpamba transactions, sim prior year (MK1.496 billion: MK420million). card replacements, airtime purchases, Going forward, TNM’s vision is to general inquiries and other TNM related turn into a fully-fledged Information Highlights services. The shops have been opened Communication and Technology In the last quarter of 2015, TNM invested in Nchalo, Blantyre, Zomba, Lilongwe, (ICT) Company that delivers value in K2.6 billion to commission 37 new 3G Ntcheu, Kasungu ,Mangochi, Mzimba, mobile telecoms while also focusing network sites in the Lake Malawi districts Mzuzu and Karonga among others. on the customer and translating mobile of Salima and Mangochi. The new sites technology into everyday life for the have boosted coverage in the two tourist Priorities for 2016 customer. As a customer-centric attraction districts. TNM believes that Due to the macro-economic environment business, our service and product access to a quality network service will continuing to be unstable, attention in delivery hinges on responding to the help boost the tourism sector in Malawi. 2016 will be focused on reducing foreign needs of our customer and adding value The additional sites include Senga Bay debts, implementing only priority capital to their business and personal life.

Press Corporation Limited Annual Report 2015 15 BUSINESS OVERVIEW

Strategic Report MALAWI TELECOMMUNICATIONS LIMITED

the telecommunication ecosystems. Specifically, the driver for growth and profitability rests on a multi-dimensional Wholesale revenue grew and integrated corporate restructuring by 50% and enterprise that optimally balances business strategy, business modeling, financial and revenue grew by 13% operational structures. year on year.

n MTL anchored the foundation of the Company’s turnaround strategy by Corporate Governance renewing the business strategy which by 13%, and Earnings from operations transforms the Company’s philosophy Before Interest Tax, Depreciation and from being a provider of communication Amortization increased by 25%. technologies to a provider of connectivity Dr Harry Gombachika solutions for greater customer experience Business Financial Performance Chief Executive Officer as follows: MTL’s performance in the strategic areas of enterprise solutions and wholesale n Shifted the focus of MTL’s business solutions was good. Wholesale revenue from infrastructure to customer value grew by 50% and enterprise revenue MTL is a limited liability Company which propositions. grew by 13% year on year. However, the offers a wide range of Information and n Designed the product/service Company struggled in the retail consumer Communications Technology (ICT) based roadmap to transform the Company solutions space and revenue year on year solutions to corporate businesses, Small Financial Statements offerings from individual products or decreased by 35%. Overall the operating and Medium Enterprises and consumers. services into integrated reliable revenue grew by 13% year on year. The range of products and services communication solutions.

offered to business customers and n Combined strategic positioning, The business refocused strategy resulted consumers include fixed voice, mobile activity fit, and operational efficiency in an increase in Earnings before interest voice and data services. and effectiveness. and tax by 25% year on year which was Employing approximately 509 employees slightly above inflation to close at K2.3 through its five major divisions namely n Secondly remodeled MTL’s business billion. Commercial, Technical, , by unbundling the business into three: Human Resource and Administration MTL infrastructure was mainly financed and Corporate, MTL is owned by Press n FOC backbone: this business by foreign debts and the foreign currency Corporation, the majority shareholder, provides secure, reliable, low-cost, exposure stood at $24 million as at 31 at 52.7% shareholding; Old Mutual high-speed bandwidth as a carrier December 2015. The depreciation of the

On the Malawi Stock Exchange at 16.1%; Nico Holdings at 9.0%; of carriers. The business is kwacha year on year against the major Investment Alliance at 2.2%; and the expected to run as an open foreign currencies resulted in a rise of Malawi Government holding 20%. access, private sector driven national exchange losses by more than 500% to communication backbone trading close at K4 billion. In order to abate the Telecommunications Industry under the name of Open Connect foreign currency exposure risk, the Board Driven by the continuous migration Limited (OCL) as an MTL subsidiary. of Directors approved a localization of of consumers from fixed telephony n Broadband and Telephony: provides the major foreign debts through a K15 to data-centric communications customer-centric, secure and billion corporate bond and the Company solutions, and the evolving business competitive data and voice services. is in the process of raising the corporate needs that are driving enterprises to n Co-siting: this business provides bond. move towards IT based service models, secure and reliable sites with the telecommunications industry in optimum coverage for broadcasters Strategic Direction Malawi continues to grow mainly in and telecoms. In the upcoming year, our job is to the mobile voice, mobile broadband, continue to focus intently on what we can fixed broadband, and Internet market 2015 highlights control: segments, consistent with global trends. During the year, operational processes

were reviewed in tandem with customer n Providing our customers with the Business model and strategy expectations; focused customer best service and most comprehensive Despite all the challenges the Country acquisition process and renewed MTL’s connectivity services solutions in the is facing, MTL is taking a more focused commitment to quality services through market, and

approach in determining products and Service Level Agreements (SLAs) and n Managing our costs and re-building services offerings on the market in active engagement with key customers. our brand. order to capture real opportunities in Year on year operating revenue increased

Press Corporation Limited Annual Report 2015 16 BUSINESS OVERVIEW

ETHANOL COMPANY LIMITED Strategic Report

EthCo Performance Overview

7,000 90%

6,000 80%

Millions 70% 5,000 60% 4,000 50% 3,000 40% 30% 2,000 20% 1,000 10%

0% Corporate Governance 2012 2013 2014 2015

50%. The market for Rectified Spirit is supplementing molasses as feedstock Lusubilo Chakaniza (Mrs) negligible and EthCo produces this for ethanol production. In 2016, EthCo General Manager product only on demand or as a matter of will concentrate on securing funding and plant design necessities. acquisition of the mill and revamping the fermentation section of the plant to Performance enable process efficiency improvement. Production volumes grew by 23% to 10.7 In addition, EthCo will explore prospects million litres (2014: 8.7 million litres). This for procuring feedstock on the basis of Ethanol Company Limited (EthCo) was was possible through the importation fermentables and consolidate its ENA established in 1982 as a limited liability of additional molasses from Sena in market position locally while strategizing Financial Statements Company in response to the 1970 energy Mozambique. The Company sold 9.8 on pricing models that will enable re- crisis. The Company is the pioneer of million litres (2014: 8.8 million litres) of establishment of its regional markets as molasses based ethanol production in this production, increasing its revenue the volumes grow from 2017. Malawi. The Company’s shareholding over 2014 performance by 20% to MK5.9 comprises PCL (66%); Indetrust (26%); billion (2014: MK4.96 billion). The volume Outlook and Dwangwa Sugar Corporation Ltd and revenue growth effort was however While it is expected that the fuel ethanol (8%). The total staff compliment currently overshadowed by rising costs of raw price may go up as global oil prices stands at 112 employees. Recently, the materials and spare parts due to the improve, the increase may remain low for Company invested in Carbon Dioxide and Malawi Kwacha depreciation and falling a greater part of the year. The local ENA Allied Products (CDAP) Limited, owning fuel ethanol prices following falling global market remains uncertain with the ban 30% shareholding. CDAP purifies the oil prices. There was hence a drop in issued by Government on liquor sachets carbon dioxide that is produced as a by- Profit Before Tax by 16% to MK1.7 billion and the enforcement of the use of plastic product in ethanol production at EthCo. (2014: MK2.06 billion). The Company bottle packaging. It is hence predicted On the Malawi Stock Exchange had a healthy cash position closing the that there may be a reduction in demand Products and services year 2015 with MK2.89 billion. for the product. With the emergence of The Company is Malawi’s sole producer other manufacturers in the region and of Extra Neutral Alcohol (ENA) that Highlights: tightening of tax structures in individual is used by the beverage alcohol and n the acquisition of a Gas countries, the export market remains pharmaceutical industries. Besides Chromatography machine for unfavorable. The volume expansion plans ENA, which is currently the Company’s analyzing Extra Neutral Alcohol (ENA) through additional feedstock will enable headline product, Fuel Ethanol (produced quality; competitive pricing of the product for the as anhydrous alcohol) and Rectified Spirit n the onset of operations by CDAP export market. are also produced for petrol blending by Limited in November 2015; oil companies and industrial applications n the maintenance of ISO 9001, These developments will occur against respectively. OHSAS 18001 and ISO 14001 a backdrop of rising costs of raw certifications for the Company’s materials, spare parts and other services The purified carbon dioxide that is Safety, Health, Environment and due to currency depreciation and produced by EthCo’s associate, CDAP Quality management system inflationary pressures. Management will Limited, is largely sold to the beverage ensure continual reviews and careful industry for bottling of fizzy drinks. Priorities and Strategies for 2016 implementation of the 2016 budget with The Company will be implementing prudence and agility, focusing on a Market Share an additional feedstock project that product mix that will ensure protection of EthCo holds a 15% share with the will enable processing of sugarcane the business margins. national requirement at 24 million litres. from small holder farmers in an The ENA market share stands just below EthCo owned mill to produce syrup,

Press Corporation Limited Annual Report 2015 17 BUSINESS OVERVIEW

Strategic Report PRESSCANE

Production, Sales Volume & Planty Utilisation 20,000,000 100%

80% 15,000,000 60% 10,000,000 40%

Corporate Governance 5,000,000 20%

- 0% 2011 2012 2013 2014 2015 Abel Chanje Chief Executive Officer Production in Kiloliters Sales in Kiloliters Plant Utilisation

Performance dynamics had a negative impact on 2016 Priorities The year in review has been marked the performance of the Company. The Following approval by the PressCane by a series of significant milestones in depreciation of Malawi Kwacha from July Board to expand production capacity, Financial Statements production, sales and operations. For the 2015 caused the cost of sales to increase Management is expecting the following: first time the Company produced a record by 89% from MK2.8 billion in 2014 to n Realization of higher sales volumes in 16 million litres, which was matched by MK5.3 billion in 2015. The increased cost 2016 and beyond subject to record sales volume of 17 million litres of sales was not matched by an increase availability of feedstock. representing attainment of 89% and 97% in fuel ethanol prices on account of n A greater proportion of rectified spirit of designed annual production capacity reducing global oil prices. The effect of in the product sales mix. and sales potential respectively. This these market induced dynamics was that n Expansion of the Distillery that will attainment was enabled by the plant the overall profitability of the Company in see its rated capacity rising from operating without stopping for the entire 2015 at MK2.6 billion was lower than that 60,000 litres per day to 90 000 production season. for 2014 (MK2.7 billion) by 3%. litres per day during the 2016 production season, representing an The higher production and sales 2015 Highlights additional 30 million litres per annum. volumes, however, did not translate into n 2015 was the first year since the n Laying the foundations for product On the Malawi Stock Exchange proportionately higher revenue, due to the Company came into operation in diversification with potential continued reduction of the regulated price 2004 that fuel ethanol was sold in investment in production of carbon for fuel ethanol in Malawi. Nevertheless, each of the twelve calendar months. dioxide as a major area of focus. sales revenue at MK 8.7 billion was 36% n The Company increased plant n Increased adoption of energy above last year’s MK6.4 billion. capacity utilization from previously efficiency technologies 69% to 89% in 2015 Business Processes and Strategy n Production efficiencies improved on Strategic Direction In terms of business processes, a account of staff dedication and better In order to produce the additional 30 number of factors underpinned these team work. million litres per annum the Company is developments, chief of which was the n The Company’s approach to Safety, implementing a project to independently supplementation of feedstock from Health, Environment, Quality produce the additional feedstocks. This Illovo’s Nchalo sugar mill with imports and Security (SHEQS) was project will involve the participation of from Companhia de Sena sugar mill in heightened by a new focus on out-grower village cooperatives to grow Marromeu, Mozambique. In addition Risk, following adoption of and supply sugar cane to PressCane for to the positive supply-side business a comprehensive Enterprise Risk the purpose of direct expression of juice processes, effective customer relations Management Framework during the as input into the production of ethanol. and efficient product delivery to markets year. Negotiations with cooperatives and the facilitated increased product demand. n The Company’s participation in acquisition of the plant and equipment for national debate on sugar industry that purpose are all in progress. Business Environment matters increased its recognition as and Industry Dynamics an integral player in the sugarcane The operating business environment value chain. in 2015 and attendant industry

Press Corporation Limited Annual Report 2015 18 BUSINESS OVERVIEW

PUMA ENERGY Strategic Report Corporate Governance

Dr Davies Lanjesi Managing Director

Puma Energy is a leading distributor as a result of image upgrade and of petroleum products in Malawi. Its improvements in retail dealers’ cash Net Profit Financial Statements business is in four segments which flow management. are; Retail, where it operates 58 service n Improved purchases in Aviation MK2.36 stations; Commercial segment where it owing to increased number of supplies various customers and resellers; both cargo and passenger flights and billion Aviation segment where it operates (2014: MK3.10 billion) increased frequency of flights. at Kamuzu International and Chileka n Improvements in Lubricants sales Airports; and Lubricants segments where volume to new customers acquired it supplies lubricating oils to distributors. by the distributors, and a response to incentives offered to them when Market Position n Continued pressure for reduction of Total demand for ground fuels, petrol, they exceed agreed targets Aviation product prices and margins.

diesel and paraffin in 2015 was at 299.37 n Proposed bulk importation may result On the Malawi Stock Exchange million litres which was 9% higher than Total operating cost at MK2.3billion was in high possibilities of interruptions of demand in 2014 which was at 275.42 equal to 2014 despite the high inflation fuel supply. rates (24.9% as at end December 2015. million litres. Puma is the market leader n High Inflation rates and unstable with 41% market share at the close of Net profit at MK2.36 billion was 27% lower exchange rates. 2015. than 2014 when it was MK3.10 billion. This was impacted by net inventory loss Priorities for 2016 Highlights for 2015 of MK627 million and foreign exchange Puma Malawi will focus on the following n Two refuellers for aviation business loss of MK533 million. The underlying net key priority areas;

were commissioned on 27th profit was therefore Mk3.52 billion which n Growing the Retail segment to November 2015 and these 10% higher than 2014. maximize revenue.

will improve efficiency in the aviation n Cost optimisation while maintaining business. Strategic Direction good customer service and quality n A total of 33 retail sites were In view of elusive macro-economic standards of operation.

upgraded in 2015. These sites stability in Malawi characterised by high n Stock monitoring at Retail service registered sales volume growth inflation rates, high interest rates and tight stations to ensure product availability.

following the upgrade. foreign exchange market, Puma Energy n Safe operations that will ensure no has implemented revenue maximisation harm to people and the environment.

Business and Performance Overview: and cost reduction survival strategies n Opening two new retail sites which A total of 122 million litres of fuel was including lobbying for margin increase will lead to growth in sales volume. sold in 2015, representing a 9% growth and a low cost investment strategy. n Training and accreditation of retail from 2014 sales volume. The increase in attendants on customer service performance was due to: Risk Areas for 2016 with the aim of attracting more n Improved sales in retail segment The following are key risk areas in 2016: customers to its retail sites.

Press Corporation Limited Annual Report 2015 19 BUSINESS OVERVIEW

Strategic Report PEOPLE’S TRADING CENTRE LIMITED Corporate Governance

Ken Mthunzi Chief Executive Officer

People’s Trading Centre Limited (PTC) is Performance the pioneer of food chain stores in Malawi Despite operating in an extremely difficult and it is currently the leading food retail environment, turnover during the year was ...a Spar Store was Financial Statements Company. Trading under the “Peoples” 9.2% above prior year and the Company Brand, it has a number of stores offering continues to reclaim market share in opened at City Centre wholesale as well as retail prices in all the industry. However, profit margins in Lilongwe on 29th segments of the retail market in Malawi. remained depressed, caused mainly by PTC operates under five categories of some local products which move in high August 2015. shops: volumes but provide low profit margin.

n Metro Stores and People’s Super Highlights Save shops- wholesale and /or retail In a strategic move to improve shop servicing country cities management and pave way for Spar shops, three outlets were closed down Expansion Strategy n People’s Express- convenience during the year. shops located in cities, urban and

On the Malawi Stock Exchange 7 new Spar stores peri-urban areas. Following the signing of Franchise n People’s Cash and Carry - wholesale Agreement with Spar International, a by 2017 shops in urban and peri-urban areas. Spar Store was opened at City Centre in n Spar – an international brand Lilongwe on 29th August 2015. currently operating only at the City Centre, Lilongwe since August 2015. Strategic Direction brand and enhance its level of innovation, PTC’s vision is to remain the leading competitiveness and service delivery to PTC is wholly owned by Press fast moving consumer goods distributor, its customers. Corporation Limited. Employing 1,763 saving its customers time and money. people in 2015, the Company had 85 PTC will, using its Spar International Outlook shops spread across the country as at franchise, develop service departments With erratic rainfall being experienced, 31st December 2015. which have so far remained almost the productive capacity of the economy insignificant parts of its business. These is likely to remain low. A significant Competitive Position service departments include home meal portion of PTC merchandise is imported. Malawi’s retail business is characterized replacements, butchery, bakery and fruit Therefore, prices of these products are by a few international and local chain and vegetables which provide higher likely to remain high on account of high stores and a lot of small retailers margins. Dollar/Kwacha exchange rates, which and hawkers. PTC strives to remain may lead to lower than anticipated sales competitive in its pricing while maintaining As an expansion strategy, PTC plans to volumes. However, this will be mitigated sufficient margins. Due to its country wide open 7 new Spar stores by the end of by the opening of new stores in strategic reach and strong brand name, Peoples, 2017 across the Country. The Company areas in the City of Blantyre in 2016. market share is now estimated at about is also planning to partner with a second 25%. international franchisor to improve the

Press Corporation Limited Annual Report 2015 20 BUSINESS OVERVIEW

MACSTEEL MALAWI LIMITED Strategic Report Corporate Governance

Rickey White Managing Director

Macsteel Malawi Limited has been operating under various names and Financial Statements shareholders since 1966. The Company is currently co-owned as a Joint Venture by Press Corporation Limited and Macsteel Service Centre (South Africa). Macsteel is the largest and leading manufacturer and distributor of steel, wire and roofing products to the construction industry in Malawi.

Performance The construction industry suffers most

during macro-economic instability from On the Malawi Stock Exchange reduced demand of its products and imported raw materials. The continued n The Malawi economy is volatile and devaluation of the Malawi Kwacha, a volatile and rapidly falling Kwacha Profit before tax growing inflation and subdued GDP have does damage to the real terms value negatively impacted the performance of of the Company’s business, and the the Company. contraction of real terms demand for 29% our products; higher than 2014 During 2015, Macsteel Malawi had an n Volatile steel prices have an impact additional challenge. Massive steel price on margins and profitability. reductions of up to 50%, rendered the Company’s stock expensive. By the end Priorities for 2016 and beyond of 2015, the “toxic stocks” had been Macsteel Malawi must build resilience cleared. The profit before tax for 2015 to the weak economy and volatile steel holding levels, increased cash sales was K175 million, 29% higher than 2014. prices. This Company intends to face and collecting debt timeously; these challenges by: n Improving operational efficiency and

Risks n Protecting working capital from cutting costs; Major risk areas that the Company faces the weakening Kwacha. As a hedging n Increasing volumes by investing in include the following: mechanism, stock levels are higher sales and marketing. n Lack of regulation in the steel market than foreign creditors;

makes Macsteel susceptible to unfair n Reducing debt and borrowings. The These strategies will enable Macsteel competition by those evading duties commercial banks base rate is Malawi to survive in the short term and and Value Added Tax, lack of quality currently 35%. Liquidity will have an explosive growth after the standards and corruption; be improved by reducing stock economy turns around.

Press Corporation Limited Annual Report 2015 21 BUSINESS OVERVIEW

Strategic Report CARLSBERG MALAWI LIMITED

communities which were affected by the In Q3 and Q4 Carlsberg started to floods. implement a series of Must Win Battles (MWB) to drive improvement and change Performance in the business which will lead to a Overall the business showed a 14% stronger 2016. volume decline in 2015 driven mainly by lack of product availability in the second Priorities for 2016 and third quarter of the year, combined Key priorities for 2016 entitled with Malawi’s high inflation levels. Profits “Renaissance 2016” are largely linked to were substantially down as a result of the Must Win Battles: (and a major contributing factor) the n Return the business to growth in Corporate Governance depreciation of the Malawi Kwacha. This sales and profitability had a big impact on the Company as n Increase OEE(overall efficiency of most of the raw materials are imported. equipment) and line availability - all key SKUs (packaging formats per Robin Walker type and size) in stock all of the time Chief Executive Officer n Ensure that a delivery culture is in place right across the Company

n 491 Plan effectively and think ahead +33% +19% To enable us to achieve these things we Officially opened on 14 December 1968, 412 have also made some key commitments Carlsberg Malawi Limited (CML) was the 356 to ensuring the business is properly first Carlsberg brewery outside Denmark. supported.

Financial Statements The idea to establish a Carlsberg brewery

in Malawi was initiated by a Danish n Committed to invest $5.5m in bottles 242 Foreign Minister who visited Malawi and crates to enable more effective during the independence celebrations and efficient use of production lines. 155 in 1966. Carlsberg Malawi now operates n Investment of $3m in a new from 4 sites across the Country with 7 carbonated PET production line to production lines supplying via 27 owned expand the range of products or contracted depots to enable all Malawi available to Malawi consumers. consumers to benefit from Carlsberg’s • Skills transfer from experts to local products. 2011 2012 2013 2014 2015 teams.

Market Position Strategic Direction Carlsberg Malawi is the leading beverage The main focus of the Business is to producer and distributer in Malawi with Key points that impacted our results consistently grow the product base in

On the Malawi Stock Exchange beer brands including Carlsberg Green, in 2015 : Malawi, broaden the product range and Stout, Special Brew, Chill and local n Kwacha devaluation to be able to offer Malawi’s consumers a power brand Kuche Kuche. The soft n Major line breakdowns in mid-year complete range of beverages from one drinks range includes Coca- Cola, Fanta, and into the peak season due to poor trusted supplier at reasonable prices. Sprite, Sobo squash and Quench still maintenance standards water, and the spirits range includes the n Shortage of glass bottles due to late Risk Iconic Malawi Gin, Malawi Vodka, Powers and insufficient ordering for 2015 Key risk items which are being managing Brandy, Powers No. 1 and Premier needs closely are : Brandy. n Poor market demand due to local n Late arrival of new bottles due to economy (GDP) growing much customs delays resulting in line Carlsberg Malawi holds 98% of the clear slower than rate of inflation and thus downtime. The Company continues beer market and 98% of the soft drinks reducing consumer spending power. to manage this closely to minimise market with around 20% of the local spirit n Major fraud issues that both the impact. market in glass. Malawi Gin is the best distracted senior management n Poor demand in the first half seller and is an export product as well. time and reduced profits in the which might get worse if the year. A detailed forensic audit was currency depreciates further. The Highlights for 2015 carried out by a major audit and Company has contingency plans 2015 was a tough year for Carlsberg accountancy firm and controls are in place to cover this financially albeit Malawi and for the Country as a whole. now tightened to prevent a it would negatively affect top The year started with floods which recurrence. line growth. devastated some parts of the Country especially in the Southern Region.The In the last 2 months of 2015 stock levels Overall the management is very hopeful Company continued to support the started to recover and sales improved about 2016 and look forward to reporting local economy by bottling water on the but poor seasonal demand prevented a a much stronger year and secure future in squash line and providing it free to local sufficient level of recovery. 1 years’ time.

Press Corporation Limited Annual Report 2015 22 BUSINESS OVERVIEW

THE FOODS COMPANY LIMITED Strategic Report

Competitive Environment Risk Areas There is now considerable competition The poor performance of the economy from small scale fish trawlers who have is affecting demand for products and improved the capacity of their fishing interest rate risks are having a substantial gears and are able to fish in deeper impact on the Company’s costs of waters just like TFCL. TFCL is increasing borrowing. its current value addition capacity (both freezing and smoking) and is introducing 2016 Outlook new lines of para-boiled and fried value The improvements in cold chain and Corporate Governance added products to differentiate itself on aquaculture management are expected the market. to significantly improve performance of the Company in 2016. However, with the The launch of centralized fresh fish poor performance of the economy and Jenara Ngwale deliveries and flexible approach to selling the impending drought, costs of raw Operations Manager depending on supply situation will help materials are expected to soar and will maintain competitiveness on the informal impact on the production costs of both markets. commercial livestock feed and fish feed.

For the farmed fish, there is also some Strategic Direction TFCL is the single largest commercial noticeable competition from neighboring The goal for the Aquaculture Division is to fishing Company and aquaculture countries. However, internal demand and grow Chambo production output to 2000 Financial Statements producer in Malawi with capacity to increased economic activities in these – 8000 tons per annum in the medium produce 50% of total farmed tilapia countries constrains high tilapia exports to long term to satisfy local demand and in the Country. TFCL operates three to the Malawi market. tap on regional export market. To achieve divisions; Maldeco Fisheries engaged this goal negotiations with a potential in capture fishing (Open Lake); Maldeco Performance Overview/ strategic and technical investment partner Aquaculture grows Chambo in ponds Highlights for 2015 are ongoing. and in cages; and Maldeco Feeds which Overall revenues were 6% below prior produces commercial livestock feed and year due to low fish catches and harvests The Company will procure efficient fishing fish feed for its farmed Chambo. as a result of unsettled weather patterns gear to reduce trawling costs in the which caused damage to fishing gear medium term for the Capture Fisheries Business Review and affected availability and movement of division. fish. Cold chain management challenges On the Malawi Stock Exchange Products and Customers also contributed to the overall reduction in 2016 Priorities TFCL processes and distributes fish fish revenues. The Company has ordered Aquaculture: build on the proven as fresh, frozen, smoked, filleted or a new flake ice plant with a capacity management systems that accelerate fast chunked to meet various customer of producing 20 tons of ice per day to growth rates of Chambo: the stocking preferences. There has been a noticeable improve its cold chain management. of all male fingerlings; double grading rise in demand for Maldeco Aquaculture of fingerlings; increased stocking weight Chambo fingerlings and these are sold Feed production was 21% above last year from 0.5g to 10g; increased stocking on demand to small and medium scale despite power and critical raw material densities from 80,000 to 130,000 and fish farmers across the Country. The Feed shortages. Livestock feed sales were expand the usage of floating fleet to Division produces all types of livestock 35% above prior year mainly as a result several cages and ponds. feed products including poultry, pig, of increased demand for Maldeco feed dog and sheep feed with poultry feed following price follower strategy and Feed business: maintain competiveness contributing over 90% of production and quality improvements. through continuous quality improvements sales. Strategies in aquaculture management and operational efficiencies. to accelerate fish growth through TFCL distributes its products through a selective stocking, double grading of Capture fisheries: maximise revenue network of distributor shops located in fingerlings and use of floating feed were through increased value added products. strategic townships and locations across implemented in the last quarter. the Country and through a network of chain stores.

Press Corporation Limited Annual Report 2015 23 BUSINESS OVERVIEW

Strategic Report Press properties limited Corporate Governance

Hlazo Nyirenda Operations Manager

Press Properties Limited (PPL) is in the volatile exchange rate, which pushed in Blantyre which is planned, demarcated real estate business and specialises up the cost of doing business and and is serviced with water, electricity and in property development, property subsequently affecting the performance tarmac roads. The Company is in the Financial Statements letting, property sales and property of the Company, mostly in the second process of finalising the construction of a management. The Company has a half of the year especially in plot sales at police unit in the area to enhance security. property portfolio comprising residential Chapima Heights and delayed payment properties i.e. The “Press Village” of rentals. Despite the harsh economic Strategic Direction situated in Namiwawa- an exclusive environment, the Company managed to and Outlook for 2016 low density residential area in Blantyre achieve the following: Generally, 2016 promises to be a

and the recently constructed Executive n Actual turnover was 62% above 2014 better year than 2015 because of the

apartments in Area 9, Lilongwe. It has n Pretax profit was 21% above 2014 completion of the Area 9 Project which is

also commercial (offices and shops) n The Company also recorded good expected to increase rentable space by and industrial properties for rent and the sales from Chapima Heights in terms 7,763.046 square metres and rentable Chapima Heights project in Blantyre, of credit sales. income by at least 40%.

which is developed land with plot n The Area 9 townhouses projects demarcations for development and sale. was completed and it is expected In 2016, MK 87 million rental income in On the Malawi Stock Exchange that this will increase the rentable write backs and MK 20 million in rental PPL has excelled as a property developer space by square metres and rental income is also expected. and manager of real estate since the income by at least 40% late 1960’s. Having well qualified and PPL will continue to aggressively sale dedicated employees in the property Competitive Environment plots at Chapima Heights. business, PPL has long been recognized The landscape has not changed for success and leadership in the much and real estate business is In the long term, the Company will residential real estate services market. still characterized by a few large continue implementing the medium term organizations on one hand, and many strategy which commenced in 2013, The Company mission statement is small to medium sized suppliers, mostly focusing on rebuilding the property clear and precise: To be the preferred individuals owning a couple of properties portfolio in order to increase the number real estate Company in Malawi with a for rent, family trusts and other smaller of rentable units, thereby improving the balanced portfolio of primely sited high companies working either individually or rental income base. The Company will quality and well maintained commercial, through estate agents, on the other hand. also seek to expand its income base by industrial and residential properties and focusing on property management for providing the most efficient property The establishment of new companies third parties and valuation rather than management services while maximizing which sell land, provide residential relying on rentable income alone. PPL will value of our shareholders. accommodation and in addition provide also continue to enhance its brand as the other property related services has also ultimate partner in property development Business and Performance Review made an impact in the property industry. and management and finally search for a In 2015 the general operating However, PPL has managed to gain strategic equity partner. environment was characterised by high competitive advantage by offering land inflation rates, high interest rates and for sale at the Chapima Heights project

Press Corporation Limited Annual Report 2015 24 BUSINESS OVERVIEW

LIMBE LEAF TOBACCO Strategic Report Corporate Governance

Rodney J Hagger Managing Director

Limbe Leaf Tobacco Company Limited is committed to the promotion and Financial Statements procurement of sustainably grown Malawi leaf tobacco, addressing the crop; the environment, the farmers; and the communities associated with production. From its roots in the 1960’s, Limbe Leaf Tobacco Company Limited has grown to become one of Malawi’s leading tobacco processors. The Company continues to invest in its agronomy operations and with the growers to enhance

such sustainability. The operations On the Malawi Stock Exchange of the Company involve the following processes: n Agronomic and sustainable tobacco support services for growers, Limbe Leaf’s smallholder programme rate of 24%. Total production at the end promoting good agricultural and and in Kasungu commercial forestry of December was slightly up, being 1% labour practices, forestry and the plantations respectively. above prior year. Pretax profits grew by environment, and food production. 161% over prior year mainly on account n Leaf procurement where tobacco Industry and Market Position of exchange variations. wrapped in hessian bales is The national tobacco crop for 2015 was 193 million Kilograms, being slightly Outlook purchased from contracted growers higher than the previous year. National Looking ahead, as preparations are and also on auction floors; volume purchased under contract was at underway for the 2016 sales season, the n Tobacco processing : where the 82% as compared to 75% in the previous change towards a more organized and midrib(backbone stem) is removed year. The Company’s share of the market credible trading system continues, with from each individual leaf (lamina) increased from 28% in the previous year good progress in many areas. However, n Tobacco exporting where tobacco to 31% for the reporting year. the weather has been abnormally dry, a is supplied to more than 60 countries situation attributed to the EL Nino weather across the world. Performance system. Despite the dry conditions, The annual trading results were reports indicate that crop volume Highlight significantly impacted by the movement estimates are still intact; therefore, the In the year under review, 511 and 410 in the local currency which by December situation may turn out better than it seems hectares of trees were planted under had resulted in an average devaluation at present.

Press Corporation Limited Annual Report 2015 25 - - 759 186 913 (560) (560) 4.66 2011 6,160 2,439 8,599 6,128 3,469 2,909 28.86 2,869 7,462 6,828 3,878 3,184 1,612 4,234 (2,471) MK’m (2,659) (9,016) (2,972) (4,509) (1,012) 35,305 18,174 13,665 48,450 59,535 31,532 16,384 59,535 17,779 (11,043) (17,025)

88 923 892 5.16 2012 9,830 3,421 4,048 (560) (560) 9,513 6,340 1,744 5,780 52.75 3,591 8,914 2,848 9,516 7,341 MK’m 74,544 13,251 27,903 17,050 63,774 79,062 41,977 17,148 17,001 79,062 32,387 14,444 (3,738) (3,173) (9,947) (1,615) (17,554) (10,853) (29,604)

- - 874 5.50 2013 5,915 (661) (661) (582) 9,372 8,923 8,711 77.97 3,096 3,461 MK’m 20,509 26,424 17,364 60,616 48,644 68,206 57,090 23,394 17,306 13,922 33,119 23,436 (9,060) (7,992) (3,242) (4,485) 113,717 (18,230) 101,251 101,251 (12,290) (11,972) (20,723) (17,092)

- - 1622 2014 6,802 4,779 9,471 89.30 3,270 10.51 1,698 2,934 6,606 MK’m 27,394 (7,319) 34,196 21,620 10,734 48,215 32,295 77,816 74,731 32,138 17,395 19,628 50,148 (1,263) (3,779) (1,263) (2,108) 136,787 125,962 125,962 (12,576) (10,886) (22,663) (15,920) (23,581) (24,900) Restated

- (575) (455) 2015 6,106 4,197 4,103 2,634 1,172 34.92 4,783 13.00 1,733 MK’m 19,488 25,594 12,244 64,306 40,973 89,820 91,698 38,710 10,150 32,835 64,579 (8,047) (1,563) (5,040) (1,563) (7,058) 161,136 142,291 142,291 (13,350) (17,248) (31,998) (23,333) (44,546) (49,726) (10,631)

ALENTS OWS

REHENSIVE INCOME EMENTS OF COMP ED STAT AT EMENTS OF CASH FL ED STAT AT EMENTS OF FINANCIAL POSITION ED STAT AT otal employment of capital GROUP FINANCIAL REVIEW FINANCIAL YEAR GROUP FIVE Profit before income tax and Share of profit of equity-accounted investees equity-accounted of profit of Share and tax income before Profit tax investees net of income Share of profit of equity-accounted Profit before income tax Turnover CONSOLID Income tax expense

Profit after income tax Attributable to non-controlling interests

Attributable to equity holders of the company Interest/Dividend received Dividend paid to ordinary shareholders Capital expenditure (Acquisition)/disposal of other investments Retained profit Interest and tax paid Cash generated from operations

INVESTING ACTIVITIES (Acquisition) /Disposalof subsidiaries net of cash plant and equipment Proceeds from sale of property, and investment properties Basic earnings per share (MK) ING ACTIVITIES OPERAT Cashflows from operating activities Cashflows (used in) investing activities FINANCING ACTIVITIES Dividends paid to non-controlling shareholders

Investment properties Property, plant and equipment Property, Non-controlling interest and borrowings Ordinary shareholders’ funds CONSOLID Dividend per share (MK) Dividends paid to shareholders of the company Net current liabilities CONSOLID Investment in equity accounted investees Other non-current assets Provisions Deferred tax liabilities Increase/(decrease) in borrowings T Total capital employed Total Cashflows from/(used in) financing activities NET INCREASE/(DECREASE) IN CASH & CASH EQUIV Press Corporation Limited Annual Report 2015 26

Strategic Report Corporate Governance Financial Statements On the Malawi Stock Exchange Strategic Report CORPORATE GOVERNANCE

Risk Overview

Our Approach to Risk Management select in pursuit of return, the risks that comprehensive It then presents its we accept but seek to minimise and report and recommendations to the Corporate Governance As a producer of various services the risks we seek to avoid or transfer, Board for discussion, approval and, if and products through our diversified including quantitative expressions of appropriate, re-rating of risks so as to range of portfolio investments, the the level of risk we can support (such as ensure that appropriate focus is placed management of risk lies at the heart the amount of capital we are prepared on the correct risks. As a result of the of our business, and effective risk to put at risk) is clearly spelt out. The regular reviews, changes required in the management capabilities represent a process is underway to ensure that the control environment are implemented key source of competitive advantage Risk Appetite policy is developed and by management to ensure, as far as for the Group. We generate shareholder completed in 2016). possible, that the Group’s risks are value by selectively taking exposure to either eliminated or mitigated risks that are adequately rewarded and The Group’s Enterprise Risk that can be appropriately managed. We Management (ERM) framework retain material risks only where these has adopted the three line defense Principal Risks and Uncertainties Financial Statements are consistent with our risk appetite and approach to risk management. The Financial Statements risk-taking altitude that seeks to create first line of defense are the business The Group faces a range of other risks value and maximize our shareholders’ and process owners whose activities which are managed through similar risk wealth. create and/or manage the risks that mitigation plans at the operational level, can facilitate or prevent the Group’s and are subject to regular management The Group adopted the Enterprise Wide objectives from being achieved. reporting and appropriate oversight. Philosophy of managing risks in 2012 The second line of defense is the Below is a summary of the key risks hence its risk management processes Group Risk Department tasked to under active review by the Group Risk seek to identify risks from both a support management by bringing Committee. top-down strategic perspective and a expertise, process excellence, and bottom-up business perspective. The managementmonitoring alongside n Strategy Execution failure or delay

Board has overall responsibility for risk the first line to help ensure thatrisk n Political and Regulatory Risks management, setting of risk appetite and control are effectively managed. n Operational Risk On the Malawi Stock Exchange and the tone for implementation of Internal audit then functions as our n Information Technology systems the risk management policy. Once third line providing assurance to senior n Fraud and Dishonesty these are in place it is then the management and the Board over n Intellectual Capital retention responsibility of Executive Management both the first and second lines’ efforts n Intellectual Capital retention to implement the Board’s policies on consistent with the expectations of n Financial Risks risk management. In support of the the Board of directors and Executive n Credit Risks adopted philosophy and as an effective Management. At the very pinnacle of n Interest Rate Risk means of giving visibility and control of all this, the framework makes it clear n Foreign Exchange Risk both financial and non-financial risks, a that while risk is the responsibility n Liquidity Risk

Group Enterprise Wide Framework was of everyone in the Group, the Board n Social, safety and environmental developed and adopted in May 2015. plays a critical role in implementing the The framework particularly articulates Company’s risk management structure Risk disclosures provided in line with the risk governance which includes and ensuring that there is a right “tone the requirements of International the development of risk policies and from the top” that permeates the whole Financial Reporting Standard 7 business standards, the setting up of Group. Financial Instruments: Disclosures (IFRS a risk oversight committee within the 7) and disclosures on capital required Board and provides clarity and detail on The Group Risk Committee meets by International Accounting Standard the roles and responsibilities and the four times a year and reviews the 1 Presentation of Financial Statements processes used to identify, measure, Group’s risk profile and any related (IAS 1) are included within Financial manage, monitor and report risks, risk assessments systematically Statements disclosures section. including the use of stress and scenario taking into account any changes testing. This is then linked to the risk which may have been recommended appetite framework where risks that we by management in relation to the

Press Corporation Limited Annual Report 2015 27 CORPORATE GOVERNANCE  PROFILE OF DIRECTORS

SIMON A ITAYE (58) Strategic Report B.Com, FCCA, MBA CHAIRMAN from 26/6/15 Appointed to the Board on 5/03/1998

Mr Itaye has extensive experience in audit, financial and strategic general management and is currently the Managing Director of Nampak Malawi Limited (NML). Mr Itaye was appointed Chairman of the Board on 26th June 2015. He is non-executive Chairman in Marsh Limited, Millennium Challenge Account- Malawi, Easy Loans Limited and Investments Alliance Limited. Corporate Gorvenance Governance

Clement S Chilingulo (62) LLB, FCIS CHAIRMAN until 26/6/15 Appointed to the Board on 07/02/2001

Mr Chilingulo has served in legal and company secretarial positions of several companies beginning with Press (Holdings) Limited where he rose to the position of Deputy Group Company Secretary. This was followed by Indebank and then Commercial Bank of Malawi (now Standard Bank) where he served as Legal Counsel & Company Secretary. From September 1997, he was Executive Secretary of Press Trust until his retirement on 31st March 2014. He retired from

Financial Statements the Board on 26th June 2015.

Patrick W Khembo (61) BSc (Agr.) DIRECTOR Appointed to the Board on 26/6/2015

Mr Khembo is an Agronomist and, until his retirement in 2015, was the Managing Director of Chemicals & Marketing Co which was previously known as ICI Malawi Ltd, a subsidiary of ICI Plc. He joined ICI Malawi Ltd in 1984 and was seconded to ICI Agrochemicals International headquarters based in Surrey, Investor Information On the Malawi Stock Exchange United Kingdom in 1989 where he was appointed Marketing Manager covering Angola, Malawi, Mozambique Zambia and Zimbabwe. In 1993 he was one of the two principle shareholders of the company following a management buyout that was carried out as a result of the voluntary liquidation of the company. Mr Khembo started his career in 1977 when he joined Shell Chemicals Malawi Ltd, a subsidiary of Shell Plc trading in agricultural and industrial chemicals as a Sales Representative. He has previously served and continues to serve on several boards including Standard Bank, Indebank, Cotton Council of Malawi, Malawi Human Rights Resource Centre, Legumes Development Trust and Blantyre Health Research & Training Trust among others.

Andrew G Barron (56) H N D Bus. DIRECTOR Appointed to the Board on 29/08/2000

Mr. Barron is a farmer and the Managing Director of Mbabzi Estates Limited and Lincoln Investments (Pvt) Limited, a position that he has held since 1989. He also has a number of other business interests and is a director at Malawi Property Investments Company Limited, New Capital Properties Limited, Capital Developments Limited, Auction Holdings Limited, Seed-Co Malawi Ltd, Plantation House Investments Limited and he chairs Malawi Leaf Ltd. He is an alternate councillor at the Tobacco Association of Malawi.

Press Corporation Limited Annual Report 2015 28 CORPORATE GOVERNANCE  PROFILE OF DIRECTORS

Chris A. Kapanga (56) Strategic Report Dip Bus Mgt., ACII, MBA, Chartered Insurer DIRECTOR Appointed to the on Board 26/08/2011

Mr Kapanga is a Chartered Insurer with over thirty years international experience in the insurance industry. He has held senior positions in various insurance companies in Malawi and South Africa. He is currently Chief Executive Officer of Old Mutual Ghana. He is also a director on a number of boards as a representative of Old Mutual. Corporate Governance

Dr. Bernard Zingano (68) PhD; RIBA; MIA DIRECTOR Appointed to the Board on 21/5/2013

Dr. Zingano is a Chartered Architect, but his Doctorate is in Mechanical Engineering related to Solar Energy. He is currently the Director and Senior Partner of Zingano and Associates. Prior to his setting up his practice he worked in the civil service for over 20 years, ascending to the post of Principal Secretary in the Ministry of Works and Supplies. Dr. Zingano is an accomplished researcher and author having published articles on architecture and solar energy in both local and international journals. He is a member of the Financial Statements Royal Institute of British Architects, Royal Society of Arts of London and World Renewable Energy Network and is Founder member of the Malawi Institute of Architects (MIA).

Patrick D Mhango (54) B.Soc Sc, MBA DIRECTOR Appointed to the Board on 1/4/2014

Mr Mhango is the Chief Executive Officer of Press Trust. He joined the Trust On the Malawi Stock Exchange in 2004 as Head of Operations and was promoted to his current position on 1st April, 2014. Prior to that, he worked as Operations Manager of Indefund Limited. He is an economist with extensive knowledge and experience in and general operations. By virtue of his position with Press Trust, he sits on the boards of several companies in which the Trust has invested. In his own right, he is currently a member of the Economics Association of Malawi (ECAMA) where he served as Treasurer General till July 2014. He is also a President of Rotary Club of Bwaila in Lilongwe.

Damien Kafoteka (52) FCCA, B Com Acc., Dip Bus ALTERNATE DIRECTOR Appointed to the Board on 25/5/2015

Mr Kafoteka is the Finance Director of Old Mutual (Malawi), a subsidiary of a leading international and asset Management Company. Mr Kafoteka’s career as a senior management accountant spans more than 20 years, having worked as Chief Finance Officer for companies such as Petroleum Importers Ltd, Southern Africa Institute for Media Entrepreneurial Development (SAIMED), Tambala Food Products, Malawi Pharmacies Ltd, and leading Malawi retail chain PTC/McConnell & Co.

Press Corporation Limited Annual Report 2015 29 CORPORATE GOVERNANCE

BOARD OF DIRECTORS are to review the annual and interim Internal control and risk Strategic Report financial statements and accounting management The Board of Directors is responsible to policies, the effectiveness of internal the shareholders for setting the direction controls over management information The Board of Directors is responsible for of the Group through the establishment and other systems of internal control, the the Group’s systems of internal controls. of strategic objectives and key policies. preliminary reported financial information, To fulfil its responsibilities, Management The Board meets quarterly, settles the and to discuss the auditors’ findings maintains accounting records and has strategic mission and is responsible for and recommendations. The external developed and continues to maintain the overall direction and control of the auditors are appointed each year based appropriate systems of internal Group. on recommendations of the Committee, control. The Group has established which is also responsible for fixing their a comprehensive process for the At 31 December 2015 the Board remuneration. In addition, it reviews the identification, review and consideration of consisted of six non-executive directors Corporation’s procedures and policies. risks at both Group and subsidiary level.

Corporate Gorvenance Governance and two executive directors. The At Group level, the Group Risk Manager Chairman is a non-executive director and APPOINTMENTS AND periodically submits his reports to the has a casting vote. REMUNERATION COMMITTEE directors.

Press Trust and Old Mutual appoint five The Committee comprises three non- The directors report that the Group’s of the non-executive directors. These executive directors. It is currently chaired internal controls and systems of appointments are in accordance with by Mr A G Barron. internal control are designed to provide the Company’s Articles of Association. reasonable but not absolute assurance, At 31 December 2015 Press Trust The principal function of the Committee as to the integrity and reliability of and Old Mutual owned 44.47% and is to ensure that the Group’s human financial statements and to safeguard, 14.3% respectively of the shares in the resources are best utilised and that verify and maintain accountability of Company. members of staff are remunerated its assets and to detect and minimise commensurate with their responsibilities fraud, potential liability, loss and material Financial Statements Executive Directors are appointed by the and effectiveness, by reviewing salary misstatement while complying with whole Board from members of Executive trends in the market place and approving applicable laws and regulations. Management. salaries at the executive directors’ and executive management level based on The systems of internal control are The Corporate Board is responsible these findings. based on established organisational to shareholders, but it proceeds structures implemented by the mindful of the interests of the Group’s During the year under review the Management together with written staff, customers, suppliers and the Committee met four times; in March, May, policies and procedures, including communities in which the Group pursues August, and November. budgeting and forecasting disciplines its interests. and the comparison of actual results RISK COMMITTEE against these budgets and forecasts. The names of the executive and non- The directors have satisfied themselves executive directors in office at 31 The Committee comprises of three that these systems and procedures Investor Information On the Malawi Stock Exchange December 2015 are set out on non-executive directors. Members of are implemented, maintained and Page 31. Executive Management also attend the monitored by appropriately trained Committee’s meetings. The Group Risk personnel with proper segregation of Manager and the Internal Audit Manager authority, duties and reporting lines, and PRINCIPAL BOARD attend on invitation. Dr B Zingano by comprehensive use of advanced COMMITTEES ARE: currently chairs the Committee. computer hardware and software technologies. Employees are required to AUDIT COMMITTEE The Committee was set up as part of maintain the highest ethical standards the Group’s overall risk strategy, with the in ensuring that business practices The Committee currently comprises principle objective of ensuring that there are conducted in a manner which in two non-executive directors and one are policies and strategies in place to all reasonable circumstances is above non-board member and meets no less manage all risks relating to all operations reproach. The effectiveness of the than twice in the year. The Group Chief of Press Corporation Limited and systems of internal control in operation Executive, the Group Financial Controller, companies within the Group. It is also is monitored continually through reviews and the Group Internal Audit Manager the Committee’s objective to ensure that and reports from the head of the Group attend the meetings by invitation. The Executive Management has adequate Internal Audit Manager. external auditors have access to this skills and knowledge and is competent Committee. It is currently chaired by Mr D to manage the identified and perceived In addition, the Group’s external auditors Kafoteka. In the year ended 31 December risks. review and test appropriate aspects of 2015 the Committee met three times; in internal financial control systems during March, August, and December. During the year, the Committee met the course of their normal statutory audits four times; in March, May, August and of financial statements of the Company The Committee’s principal functions November. and its subsidiaries.

Press Corporation Limited Annual Report 2015 30 CORPORATE GOVERNANCE

A formal “Limits of Authority” is in place Strategic Report that specifically reserves certain matters for Board decision.

Trading in the Company’s securities on DIRECTORS the Malawi Stock Exchange continues to AND MANAGEMENT be governed by a Share Trading Policy, an internal control mechanism to guard against insider trading by all employees including managers and directors.

DIRECTORS

Directors’ interests Corporate Governance in contracts Mr C S Chilingulo Chairman (Until 26/06/2016)

No director has had any material Mr S A Itaye Chairman (from 26/06/2015) interest directly or indirectly in any contract reviewed or approved by the Mr C A Kapanga Director Board in the year under review. All directors are required to complete a Mr D Kafoteka Alternate Director from 25/5/15 Declaration of Interest Form which is Audit Committee Chairman updated annually. Appointments and Remuneration Committee Member

Code of ethics Mr A G Barron Appointments and Remuneration Financial Statements Committee Chairman Press Corporation Limited and its Risk Committee Member subsidiaries are committed to a policy of fair dealing and integrity Dr B Zingano Risk Committee Chairman in the conduct of their businesses. Appointments and Remuneration This commitment is based on the Committee Member fundamental belief that business should be conducted honestly, Mr P D Mhango Audit Committee Member fairly and legally. The Board formally adopted a comprehensive code of Mr P W Khembo Risk Committee Member ethics that is applied throughout the Group in the conduct of its affairs. Mr D Kambalametore Audit Committee Member

This code provides a detailed On the Malawi Stock Exchange guideline governing the all-important Dr M A P Chikaonda Group Chief Executive relationships between the various stakeholders and the communities in Mr P P Mulipa Group Operations Executive which the Group operates.

Diversity EXECUTIVE MANAGEMENT

Press Corporation Limited continues Dr M A P Chikaonda Group Chief Executive with a gradual implementation of its policy on Gender Diversity which is Mr P P Mulipa Group Operations Executive modeled on the 30% Club. Currently female representation is at 25% at Mr J Biziwick Group Operations Executive- Group level. The aspiration of the Designate Group is to appoint more women to executive and non-executive Mrs E Mafeni Group Financial Controller directorships on the boards of Press Corporation Limited and its subsidiary Mr B M W Ndau Group Administration Executive and companies. Furthermore, the Group General Counsel is keen to improve the pipeline below board level, to widen the talent pool available to its businesses.

Press Corporation Limited Annual Report 2015 31 Press Corporation Limited Annual Report 2015 32

Strategic Report Corporate GorvenanceGovernance Financial Statements InvestorOn the Malawi Information Stock Exchange PROFILE OF MANAGEMENT Strategic Report

Dr Mathews A. P. Chikaonda (61) Pius P. Mulipa (62) John Biziwick (57) BA Finance & Economics (Hons), Diploma BA, Dip (Mgt.), MSc (Mgt.), B.Soc Sc(Economics), Msc in Business Studies (Distinction), MBA Executive Director (Economics).Group Operations (Finance), Ph.D (Finance) Group Operations Executive Executive-Designate Executive Director Group Chief Executive Mr Mulipa was born on 11th January, Mr John Biziwick was born on 13th June

1953. He joined the Group as a 1958. He joined the Group as Group Corporate Governance Dr. Chikaonda was born on 8th August, Management Trainee in 1977 initially Operations Executive-Designate on 5th 1954. He joined the Group in April 2002 at Peoples Trading Centre Limited and October, 2015. Prior to this, he worked as Group Chief Executive. Prior to this, he more latterly at Hardware and General as Commissioner General of the Malawi served as Assistant Professor of Finance Dealers, and Tambala where he was Revenue Authority from June 2012 to July and Associate Professor of Finance appointed General Manager. In 1996 he 2014. Before joining the MRA, Mr Biziwick (tenured) from 1988 to 1991, and 1992 to was promoted to the position of Assistant worked for NBS Bank as the Chief 1994, respectively, at Memorial University Group General Manager – Foods at Press Executive Officer from 2002 to 2012 and of Newfoundland in Canada before serving Corporation. In the year 2000 he was as Deputy General Manager (Operations) as Deputy Governor of the Reserve Bank responsible for the Industrial Division. from 2000 to 2002. Mr Biziwick began of Malawi from August 1994. In January In the year 2001, he was appointed his professional career in the Reserve 1995, Dr Chikaonda was appointed Group General Manager – Business Bank of Malawi which he joined in 1980 Governor of the Reserve Bank of Malawi Development for the Company. He is as an Economist. From 1980 to 2000 he and served in this post until March 2000 now the Group Operations Executive with worked in various departments including when he was appointed to the Cabinet and effect from 25 September 2001. In his the Research and Statistics, Foreign Financial Statements served in the Government of Malawi as own right, Mr Mulipa is a director of Old Exchange, Exchange Control, and Minister of Finance and Economic Planning Mutual Life Assurance Company Malawi International Operations. until January 2002. In his own right, Dr Ltd and the Malawi Revenue Authority. Chikaonda is a Director of Illovo Sugar (Malawi) Limited and is also a member of the Leadership Council and Director of the US- based Initiative for Global Development (IGD). On the Malawi Stock Exchange

Benard M.W. Ndau (43) LL.M (USA), LL.B (Hons). Group Administration Executive and General Counsel Elizabeth Mafeni (Mrs) (47) MBL, FCCA, CPA(M), BCom. Mr. Ndau was born on 12th January 1972. Group Financial Controller He joined the Group in December 2012 as Company Secretary/ Compliance Officer. Prior Mrs Elizabeth Mafeni was born on 26th to this, he served as Director of Regulatory October 1968. She joined the Group in Affairs at Airtel Malawi Ltd. Before joining Airtel, September 1999 as Chief Accountant at Mr Ndau worked as General Counsel of the Malawi Pharmacies Limited. In June 2000 Malawi Communications Regulatory Authority she was transferred to the Corporate (MACRA) from 2008 to 2011 and as Legal Head Office initially as Chief Accountant Counsel in the legal department of the World until 2003 when she was promoted to the Bank in Washington DC from 2005 to 2007. position of Group Financial Accountant. As Legal Practitioner, he worked for a private On 01 October 2010, she was promoted practice firm of Messrs Savjani & Co from to the position of Group Financial 1999 to 2004. In his own right, Mr. Ndau is a Controller. Fulbright Scholar and a part time post graduate lecturer in International Commercial Arbitration at the Law School of the University of Malawi, Chancellor College.

Press Corporation Limited Annual Report 2015 33 PRESS ION CORPORAT LIMITED Press Corporation Limited Annual Report 2015 34

Strategic Report Corporate Governance Financial Statements On the Malawi Stock Exchange Strategic Report Corporate Governance Financial Statements On the Malawi Stock Exchange 35 36 37 38 39 40 41 45 44 - 125 Annual Report 2015 Press Corporation Limited Directors’ Report Statement of Directors’ Responsibilities Independent Auditor’s Report Statements of Financial Position Statements of Comprehensive Income Statements of Changes in Equity Statements of Cashflows Notes to the Consolidated and Separate Financial Statements For the year ended 31 December 2015 For the year ended 31 December DATED CONSOLIDATED AND SEPARATE FINANCIAL EMENTS STAT DIRECTORS’ REPORT 31 December 2015

Strategic Report The Directors have pleasure in presenting their report together with the audited consolidated and separate financial statements of Press Corporation Limited for the year ended 31 December 2015.

INCORPORATION AND REGISTERED OFFICE DIVIDENDS

Press Corporation Limited is a company incorporated in Malawi The net profit attributable to owners of the Company for the under the Companies Act, 1984. It was listed on the Malawi year of K4.20 billion (2014: K10.73 billion) has been added to Stock Exchange in September 1998 and as a Global Depository retained earnings. An interim dividend of K481 million (2014: Receipt on the London Stock Exchange in July 1998. K421 million) representing K4 per ordinary share (2014: K3.5)

Corporate Governance was paid during the year. The directors have further proposed a The address of its registered office is: final dividend for the year 2015 of K1,022 million (2014: K1,082 7th Floor million) representing K8.50 per share (2014: K9) to be tabled at Chayamba Building the forthcoming Annual General Meeting. P.O. Box 1227 BLANTYRE DIRECTORATE AND COMPANY SECRETARY

PRINCIPAL ACTIVITIES OF THE GROUP The names of the Company’s directors and secretary are listed below:- Press Corporation Limited is a diversified Group with significant interests in the Malawi economy. Its subsidiary companies operate in real estate; energy; retail and consumer products; Mr. S.A. Itaye Chairman From July 2015 financial services and telecommunications. Press Corporation Mr C S Chilingulo Chairman Up to June 2015 Financial Statements Limited has two joint venture companies in the energy and consumer goods sectors, it also has two associates in the agro- Dr. M.A.P. Chikaonda Director / Group industrial and food and beverages sectors. Chief Executive Mr C A Kapanga Director Up to April 2015 FINANCIAL PERFORMANCE Mr. D. Kafoteka Director From May 2015

The results and state of affairs of the Group and the Company Mr. P. Khembo Director From June 2015 are set out in the accompanying consolidated and separate Mr. P.D Mhango Director financial statements which comprise of the statements of: Mr. A.G. Barron Director financial position; comprehensive income; changes in equity and cash flows and related notes to the financial statements. Dr. B. Zingano Director Mr. B.M.W. Ndau Company SHAREHOLDING

On the Malawi Stock Exchange Secretary

The shareholding structure at year end was as follows:-

2015 2014 % % ……………………...... …… …...... ………………………… Press Trust 44.47 44.47 Chairman Group Chief Executive Old Mutual Group companies 14.29 12.71 Deutsche Bank Trust Company America 22.34 22.37 Others 18.90 20.45

100.00 100.00

Press Corporation Limited Annual Report 2015 36 STATEMENT OF DIRECTORS’ RESPONSIBILITIES 31 December 2015

The Directors are responsible for the preparation and fair presentation of the Strategic Report consolidated and separate financial statements of Press Corporation Limited and its subsidiaries, comprising the statements of financial position at 31 December 2015, and the statements of comprehensive income, statements of changes in equity and statements of cash flows for the year then ended, and the notes to the financial statements, which include a summary of significant accounting policies and other explanatory notes, and the Directors’ report, in accordance with International Financial Reporting Standards, and in the manner required by the Companies Act, 1984. Corporate Governance

The Act also requires the Directors to ensure that the Company keeps proper accounting records which disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act, 1984.

In preparing the financial statements, the Directors accept responsibility for the following:

n Maintenance of proper accounting records; n Selection of suitable accounting policies and applying them consistently; n Making judgments and estimates that are reasonable and prudent; n Compliance with applicable accounting standards, when preparing financial statements; and n Preparation of financial statements on a going concern basis unless it is inappropriate to presume that the Company and the Group will continue in business. Financial Statements

The Directors are also responsible for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error and for maintaining adequate accounting records and an effective system of risk management.

The Directors’ responsibility includes designing, implementing and maintaining internal controls relevant to the preparation and fair presentation of these financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

The Directors have made an assessment of the Group’s ability to continue as a going concern and have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to

adopt the going concern basis in preparing the financial statements. On the Malawi Stock Exchange

The auditor is responsible for reporting on whether the annual financial statements show a true and fair view in accordance with the applicable financial reporting framework.

Approval of the financial statements

The financial statements of the Group and Company, as indicated above, were approved by the board of Directors on 27th May, 2016 and are signed on its behalf by

………………………………….. ……………………………………. Chairman Group Chief Executive

Press Corporation Limited Annual Report 2015 37 . : +265 (0) 1 822 277 : +265 (0) 1 820 506 : +265 (0) 1 821 229 : [email protected] Public Accountants First Floor INDEbank House Kaohsiung Road Tel Fax Email e conducted our audit in accordance i n P.O. Box 187 P.O. Blantyre Malaw ohmatsu ouche T Financial Advisory Financial n Consulting n Tax Tax n Press Corporation Limited Annual Report 2015 38 CA Kapenda MC Mwenelupembe (Mrs.) NT Uka JS Melrose VW Beza Partners: Associate of Deloitte Africa, a member of Deloitte T Audit Auditor’s Responsibility on these financial statements based on our audit. W Our responsibility is to express an opinion Opinion of the Group as of 31 December 2015, and of its In our opinion, the financial statements give a true and fair view of the financial position International Financial Reporting Standards and in financial performance and its cash flows for the year then ended in accordance with of the company accordance with the provisions of the Companies Act, 1984, so far as concerns the members Directors’ Responsibility for the Financial Statements with of these financial statements that show a true and fair view in accordance The Group’s directors are responsible for preparation as the and in the manner required by the Companies Act, 1984 and for such internal control International Financial Reporting Standards due the preparation of financial statements that are free from material misstatement, whether directors determine is necessary to enable to fraud or error. believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. We 2016 27th May, We have audited the separate and consolidated financial statements of Press Corporation Limited and its subsidiaries (the Group) statements of Press Corporation Limited audited the separate and consolidated financial have We of the statements of financial position as at 31 December 2015, and the statements as set out on pages 39 to 125, which comprise of in equity and the statements of cash flows for the year then ended, and a summary comprehensive income, statements of changes notes. significant accounting policies and other explanatory obtain audit evidence about the amounts and disclosures in the financial statements. An audit involves performing procedures to the judgement, including the assessment of the risks of material misstatement of The procedures selected depend on the auditor’s internal control relevant In making those risk assessments, the auditor considers or error. financial statements, whether due to fraud of the financial statements in order to design audit procedures that are appropriate to the entity’s preparation and fair presentation of expressing an opinion on the effectiveness of the entity’s internal control. An audit in the circumstances, but not for the purpose the accounting policies used and the reasonableness of accounting estimates made by also includes evaluating appropriateness of of the financial statements. directors, as well as evaluating the overall presentation Certified Public Accountants Blantyre, Malawi. with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the standards require that we comply with ethical requirements and plan and perform with International Standards on Auditing. Those the financial statements are free from material misstatement. audit to obtain reasonable assurance whether Emphasis of matter Without 52 to the financial statements which indicates that the financial statements for qualifying our opinion, we draw attention to note As explained in note 52, this is to reflect the the year ended 31 December 2015 which we signed on 4 April 2016 have been revised. effects of foreign currency retranslation of an associate. As at 31 December 2015 As at 31 December TORS’ REPORT REPORT ITORS’ AUD INDEPENDENT ED N LIMIT O PRESSRS OF EHO LDE HE SHAR TO T PORATI COR

Strategic Report Corporate Governance Financial Statements On the Malawi Stock Exchange Strategic Report Corporate Governance Financial Statements On the Malawi Stock Exchange ------39 1 4 31 68 66 13 422 588 990 340 465 461 394 845 2,804 1,878 2,097 9,063 23,271 3,327 28,801 - 108,800 21,680 25,474 108,800 101,048 137,601 137,601 102,912 5,654 107 1,112 136,489 - - 31/12/14

------Annual Report 2015 1 42 71 86 72 17 Company 134 680 260 778 3,071 1,050 1,878 2,097 1,324 Press Corporation Limited 16,777 22,301 5,876 35,239 72 1,571 - 119,348 29,363 28,313 111,148 112,900 119,348 6,102 154,587 153,016 As at 31 December 2015 As at 31 December - 31/12/15 - 154,587 , 2016 and were signed on In millions of Malawi Kwacha

- - - - - 1 36 12 342 200 712 427 3,304 3,035 3,619 2,097 6,561 5,698 3,096 1,212 4,133 1,669 22,451 57,090 10,036 17,306 18,577 11,527 32,342 34,152 12,710 16,252 68,206 20,767 3,461 36,415 58,022 143,894 118,343 4,928 181,753 80,484 23,394 262,237 262,237 Restated 118,541 160,986 31/12/13 DATED AND SEPARATE SEPARATE AND IDATED CONSOL

- - - - - 1 2 49 410 474 3,739 4,259 4,215 1,008 2,097 3,270 1,015 1,546 6,849 1,409 35,270 74,731 14,100 17,395 30,596 17,728 39,921 10,013 41,606 11,854 18,082 24,687 77,816 Group 19,093 1,698 106,869 42,037 327,923 N POS ITIO FINANCIAL EME NTS OF STAT 140,378 201,961 221,054 32,138 327,923 150,862 4,332 Restated 65,852 177,061 31/12/14

- - - - - 1 2 357 944 138 712 2,685 8,662 3,521 2,097 4,783 5,026 1,764 7,439 1,533 33,343 91,698 26,291 10,150 44,799 19,628 74,525 10,165 70,535 13,418 31,071 33,063 89,820 11,883 1,733 44,801 211,852 286,354 59,624 236,628 4,098 298,237 130,408 428,645 428,645 192,017 31/12/15 38,710

……………………………………… Chikaonda M.A.P. Dr.

9 35 36 33 34 27 31 21 30 32 30 29 26 28 27 25 24 20 23 10 22 17 18 13 11 12 14 15 18 19 20 21 10 16 17 Notes

Trade and other payables to Group companies Trade Customer deposits current liabilities Total Total liabilities Total Income tax payable and other payables Trade Total equity Total Total equity attributable to equity holders equity attributable Total of the company Non-controlling interest Total current assets current Total assets Total Total non-current liabilities Total Current liabilities Bank overdraft equity and liabilities Total Long term loans payable to Group companies Deferred tax liabilities Loans and borrowings Provisions Non-current liabilities Loans and borrowings Retained earnings Other reserves Income tax recoverable Equity and liabilities Equity Share capital Share premium Cash and cash equivalents ………………………………….. The financial statements of the Group and Company were approved for issue by the Board of Directors on 27th May The financial statements of the Group and Company were approved for issue by the Board its behalf by: S.A. Itaye Mr. statements. The notes on pages 44 to 125 are an integral part of these consolidated and separate financial Assets classified as held for sale Trade and other receivables - other Trade Other investments and other receivables-Group companies Trade Biological assets Current assets Inventories Loans and advances to customers Finance lease receivables Total non-current assets non-current Total Investment properties Goodwill Intangible assets Investments in subsidiaries Investments in joint ventures Finance lease receivables Group companies Loans receivable from Other investments Deferred tax assets Biological assets Investments in associates customers Loans and advances to Non-current assets and equipment plant Property, Assets

- - - 84 (23) 918 128 (668) 2014 2,788 6,935 6,912 4,750 3,456 2,788 2,296 (3,080) (1,422) (1,294) 21,851 2,788 - - - 2,788 - - 21,851 19,063 16,683 21,851 - Company

- - - - 70 209 2015 2,011 6,970 6,948 4,329 2,011 2,679 2,011 (22) (6,633) - - 12,111 2,011 (668) - - 12,111 12,111 10,100 16,733 (2,828) (1,720) (1,650) - -

- 753 2014 6,173 4,150 2,283 2,989 (2,585) 16,310 10,734 89.26 76,587 30,906 21,614 34,190 89.30 (5,801) (3,518) 10,886 21,620 136,787 29,531 13,221 29,531 7,911 19 6,802 (60,200) 21,620 6 (49,269) (12,576) Restated Group - (60) 2015 4,197 8,047 5,179 5,143 2,387 1,233 (2,365) 18,530 34.88 87,852 10,669 29,711 10,639 12,239 25,589 12,244 34.92 29,199 161,136 29,199 12,244 5 (73,284) (60,955) (12,615) (10,228) (13,350) 6,106 16,955

8 37 38 45 45 39 40 21 41 42 42 43 21 44 Notes

otal comprehensive income attributable to: otal comprehensive income for the year otal comprehensive income for the year For the year ended 31 December 2015 the year ended For T Owners of the Company Profit for the year Non-controlling interest Non- controlling interest Owners of the Company

Other comprehensive income: Continuing operations Direct trading expenses Revenue T Items that may be reclassified subsequently to profit or loss: Items that will not be reclassified subsequently to profit or loss: Profit for the year Gross profit

DATED AND SEPARATE SEPARATE AND IDATED CONSOL OME NSIVE INC REHE COMP EME NTS OF STAT Net change in fair value of available for sale financial assets esults from operating activities Results from operating Earnings per share Basic and diluted earnings per share (K) Continuing operations Basic and diluted earnings per share (K) T Distribution expenses Other operating income Profit attributable to: Revaluation of property, plant and equipment Revaluation of property, Share of other comprehensive income of equity accounted investments

Other comprehensive income for the year (net of tax) Income tax relating to items that may be reclassified subsequently to profit or loss Net finance costs Finance costs Finance income Administrative expenses

Profit from continuing operations Profit before income tax Share of results of equity-accounted investees Share of results of equity-accounted

Income tax relating to items that may not be reclassified Income tax relating to items that may not be subsequently to profit or loss Discontinued operations Income tax expense income tax) Profit from discontinued operations (net of Press Corporation Limited Annual Report 2015 40 In millions of Malawi Kwacha

Strategic Report Corporate Governance Financial Statements On the Malawi Stock Exchange Strategic Report Corporate Governance Financial Statements On the Malawi Stock Exchange 41 - - - - - otal 943 (514) 1,896 Equity (5,042) (6,603) 12,244 21,620 29 531 7,911 29,199 106,869 107,383 106,869 130,408 80,484 16,955 t

- - - - - 943 (698) Non- Annual Report 2015 8,047 10,886 (5,040) (3,779) interest 10,669 32,138 2,622 13,221 32,138 2,335 32,138 38,710 - 23,394 Press Corporation Limited controlling S OF EME NTS OF STAT

------In millions of Malawi Kwacha GES EQUITY GES IN CHAN 4,197 2,594 14,333 10,734 (1,563) 18,530 (514) (1,263) 74,731 75,245 74,731 91,698 57,090 16,310 5,576 to equity company holders of attributable Total equity Total For the year ended 31 December 2015 the year ended For

- 80 49 (63) 113 4,197 - (1,077) (2,821) 4,197 10,734 (514) (1,563) - 44,801 36,415 10,734 (1,263) 42,037 42,551 42,037 earnings - - - 63 (80) (49) (113) 1,077 5,415 Other etained r 18,577 - 30,596 30,596 5,576 5,576 30,596 44,799 - - reserves 14,333 14,333

------Share - - - - 2,097 2,097 2,097 2,097 - - premium 2,097 -

------capital - - - Issued 1 - 1 - 1 - 1 1

otal comprehensive income for the year otal comprehensive income for the year Other comprehensive income T Profit for the year to loan loss reserve Transfer alance at 1 January 2015 as restated Balance at 1 January Prior year adjustment (note 16) Prior year adjustment to loan loss reserve Transfer Reversal of accumulated depreciation

Balance at 1 January 2015 as previously stated Balance at 1 January Group 2015

Group Profit for the year T Other comprehensive income Depreciation transfer land and buildings Balance at 31 December 2014 Dividends to equity holders

Depreciation transfer land and buildings Dividends to equity holders Balance at 31 December 2015 Balance at 1 January 2014 2014 – restated Net reserve movement on THL deregistration Non-controlling Interest arising on business combination Non-controlling Interest arising on business Total 2,011 2,788 (1,563) (1,263) Equity 12,111 21,851 108,800 10,100 119,348 88,212 19,063 108,800 2,011 2,011 6,102 2,788 2,788 5,654 4,129 - (1,263) (1,563) 5,654 earnings Retained -

- - Other 10,100 19,063 10,100 111,148 81,985 101,048 - - reserves 101,048 19,063

- - - 2,097 2,097 Share - 2,097 - premium 2,097 ------1 1 1 1 - capital Issued

-

(CONTINUED) otal comprehensive income for the year otal comprehensive income for the year Company

2015 2015 Balance at 1 January Other comprehensive income Other comprehensive Profit for the year Dividends to equity holders T Balance at 31 December 2015 2014 Balance at 1 January 2014 Other comprehensive income Profit for the year T Dividends to equity holders Balance at 31 December 2014 For the year ended 31 December 2015 the year ended For GES GES CHAN EME NTS OF STAT QUITY IN E Press Corporation Limited Annual Report 2015 42 In millions of Malawi Kwacha

Strategic Report Corporate Governance Financial Statements On the Malawi Stock Exchange Strategic Report Corporate Governance Financial Statements On the Malawi Stock Exchange - - - - - 43 (96) (98) (61) 181 186 (735) (135) (233) 2014 OWS 6,678 4,629 1,069 (4,631) (1,307) (1,422) (3,464) (2,422) (1,263) 128 Company 2,260 ------Annual Report 2015 (22) (64) 172 (608) (375) 2015 6,405 6,249 Press Corporation Limited (1,029) (1,596) (3,339) (1,878) (3,441) (714) 70 (233) (1,563) In millions of Malawi Kwacha DATED AND IDATED CONSOL - - - (10) 2014 1,622 2,496 6,606 (6,039) (5,583) (8,720) (2,108) (3,779) 15,935 48,215 61,593 11,654 For the year ended 31 December 2015 the year ended For (23,254) (16,614) (23,581) (1,263) 2,283 (10,337) 54,987 Group 32,295 - - (52) (575) 2015 1,172 1,716 9,411 2,387 (2,761) (9,866) (7,058) (5,040) (1,563) SHF L CA EME NTS OF E STAT ARAT 11,640 64,306 40,973 50,962 61,593 (43,638) (11,786) (11,547) (14,435) (44,546) (10,631) SEP

49 27 Notes

Purchase of investment property Purchase / additions of other investments Purchase of intangible assets Proceeds on disposal of other investments et cash from/(used in) operating activities Net cash from/(used ash flows from investing activities Cash flows from investing and equipment plant Purchase of property, Interest paid Income taxes paid

Net cash outflow on acquisition of a sub-subsidiary (note 14) Net cash outflow on acquisition of a sub-subsidiary ash generated by/(used in) operations Cash generated by/(used

Proceeds from sale of investment property and property, plant and equipment plant and and property, Proceeds from sale of investment property Dividend received Interest received Net cash flow (used)/from investing activities Repayments of long term borrowings year Cash and cash equivalents at start of the Net cash flow (used)/from financing activities equivalents Net (decrease)/increase in cash and cash Cash flows from financing activities Long term borrowings received Loan proceeds from subsidiary companies ash and cash equivalents at end of the year Cash and cash equivalents at end of the Loans repaid to subsidiary companies Dividend paid Dividend paid to non-controlling interest . Under the , control is Consolidated Financial Statements . The control principle is applied in circumstances when voting Investments in subsidiaries, joint ventures and associates are measured at fair value in the company financial statements. Investments in subsidiaries, joint ventures and Property is measured at fair value. Financial instruments at fair value through profit or loss are measured at fair value. Financial instruments at fair value through less costs to sell. Biological assets are measured at fair value Investment property is measured at fair value.

presumed to exist where the company is exposed or has rights to variable returns from its involvement with the entity and has presumed to exist where the company is exposed or has rights to variable returns from the ability to affect those returns through its power over the entity holds less than a majority of voting rights rights or similar rights give an investor power including situations where the company that voting rights are not the dominant and in circumstances involving potential voting rights; when the entity is designed so and when the company has control over factor in deciding who controls the entity; in circumstances involving agency relations are included in the consolidated and separate financial The financial statements of subsidiaries specified assets of an entity. The consolidated and separate financial statements include all subsidiaries that are controlled by the Company The consolidated and separate financial statements include all subsidiaries that are Companies Act, 1984 and International Financial Reporting Standard 10, The methods used to measure fair values are discussed further in note 4. The methods used to measure fair values are and presentation currency Functional statements are presented in Malawi Kwacha, which is the functional currency of the These consolidated and separate financial as indicated, all financial information presented in Malawi Kwacha has been principal subsidiaries within the Group . Except rounded to the nearest million. Use of estimates and judgements to make judgements, estimates and The preparation of consolidated and separate financial statements requires management of assets, liabilities, income and assumptions that affect the application of accounting policies and the reported amounts expenses. Actual results may differ from these estimates. to accounting estimates are recognised in Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions the period in which the estimate is revised and in any future periods affected. Significant accounting policies n n n n n ing entity Report separate financial statements, and have been applied consistently by Group entities. Basis of consolidation Subsidiaries The accounting policies set out below have been applied consistently to all periods presented in these consolidated and The accounting policies set out below have been applied consistently to all periods presented Statement of compliance Reporting have been prepared in accordance with International Financial The consolidated and separate financial statements Act, 1984. Accounting Standards Board (IASB) and provisions of the Companies Standards (IFRSs) as issued by the International Going concern expectation that the Consolidated and Separate Financial Statements, a reasonable The directors have, at the time of approving Thus they to continue in operational existence for the foreseeable future. the Group and Compaany have adequate resources Statements. accounting in preparing the Consolidated and Separate Financial continue to adopt the going concern basis of Basis of measurement have been prepared on the historical cost basis except for the following The consolidated and separate financial statements items in the statement of financial position: Press Corporation Limited (‘the company’) is a company incorporated in Malawi under the Companies Act, 1984. It was listed in Malawi under the Companies Act, (‘the company’) is a company incorporated Press Corporation Limited Exchange in July Depository Receipt on the London Stock in September 1998 and as a Global on the Malawi Stock Exchange comprise the and for the year ended, 31 December 2015 and separate financial statements as at, 1998. The consolidated interest in individually as ‘Group entities’) and the Group’s (together referred to as ‘Group’ and company and its subsidiaries associates and joint ventures. with principal are disclosed in the directors’ report together office and principal place of business The address of its registered activities of the Group. S EME NT TAT S E FINANCIAL ARAT For the year ended 31 December 2015 the year ended For DATED AND IDATED HE CONSOL TO T NOTES SEP 2.4 2.5

Press Corporation Limited Annual Report 2015 44 3.1 i)

3. 2.2 2.3 2.1 2. ion preparat bASis of

1. In millions of Malawi Kwacha

Strategic Report Corporate Governance Financial Statements On the Malawi Stock Exchange Strategic Report Corporate Governance Financial Statements On the Malawi Stock Exchange 45 Annual Report 2015 Press Corporation Limited In millions of Malawi Kwacha For the year ended 31 December 2015 the year ended For , any non-controlling interests and -ends to the Company, management -ends to the Company, S EME NT TAT S E FINANCIAL ARAT SEP DATED AND IDATED HE CONSOL TO T NOTES , then such interest is measured at fair value at the date , the carrying amount is reduced to nil and recognition of , the carrying amount is reduced to nil and -accounted investee or as an available-for-sale financial asset -accounted investee or as an available-for-sale (Continued) which requires jointly controlled entities to be accounted using the equity controlled entities to be accounted using which requires jointly

Joint Arrangements (Continued) ransactions eliminated on consolidation Transactions in foreign currencies are translated to the respective functional currencies at the exchange rate ruling at the date of Transactions reporting date are translated to Malawi the transaction. Monetary assets and liabilities denominated in foreign currencies at the are measured in terms of historical cost Kwacha at the exchange rate ruling at that date. Non-monetary assets and liabilities that Non-monetary assets and liabilities in a foreign currency are translated using the exchange rate at the date of the transaction. Kwacha at exchange rates ruling at denominated in foreign currencies that are measured at fair value are translated to Malawi the dates the fair value was determined. Non-controlling interests in the net assets of consolidated subsidiaries are identified separately from the Group’s interest therein. Non-controlling interests in the net assets of consolidated subsidiaries are identified business combination and the non- Non-controlling interests consist of the amount of those interests at the date of the original controlling interest’s share of changes in equity since the date of the combination. Upon the loss of control, the Group derecognises the assets and liabilities of the subsidiary Intra-group balances and transactions, and any unrealised income and expenses arising from intra-Group transactions, are Intra-group balances and transactions, and from transactions with associates and eliminated in preparing the consolidated financial statements. Unrealised gains arising Unrealised losses are eliminated in jointly controlled entities are eliminated to the extent of the Group’s interest in the investee. the same way as unrealised gains, but only to the extent that there is no evidence of impairment. Any surplus or deficit arising on the loss of control is recognised in the other components of equity related to the subsidiary. profit or loss. If the Group retains any interest in the previous subsidiary that control is lost. Subsequently it is accounted for as an equity depending on the level of influence retained. The consolidated and separate financial statements include the Group’s share of the total recognised gains and losses of The consolidated and separate financial statements the date that significant influence commences until the date that significant associates on an equity accounted basis, from are initially recognized at cost which includes transaction costs. Associated influence ceases. Investments in associates or a subsidiary has a long-term interest and has significant influence, but companies are those entities in which the Company policies. Where associates have different year not control, over the financial and operating Jointly controlled entities are those entities over whose activities the Group has joint control, established by contractual the Group has joint control, established by are those entities over whose activities Jointly controlled entities jointly controlled and operating decisions. Accounting for unanimous consent for strategic financial agreement and requiring IFRS 11 entities is governed by the Group’s year are used after review for compliance with year-end that is coterminous with accounts for the year-end The Group’s investment includes goodwill identified at acquisition, net of any procedures and Group accounting policies. financial statements include the Group’s share of the profit or loss and other accumulated impairment losses. The consolidated investees. When the Group’s share of losses exceeds the carrying amount of comprehensive income of equity accounted that form part thereof the associate including any long-term interests statements from the date that control commences until the date that control ceases. that control commences until the date statements from the date further losses is discontinued except to the extent that the Group has incurred obligations or has made payment on behalf of the extent that the Group has incurred obligations or has made payment on behalf of the further losses is discontinued except to the associates. by external are measured at fair value. These are valued on regular basisvaluers. In the separate financial statements the investments method. initially recognised at cost which includes transaction costs. Investments in jointly controlled entities are are measured at fair value. These are valued on a regular basis by external In the separate financial statements, the investments valuers on behalf of the directors. Foreign currency Foreign l valuers. valued on a regular basis by externa statements the investments are measured at fair value. These are In the separate financial ing policies account Significant Foreign currency transactions Basis of consolidation Subsidiaries (Continued) Jointly controlled entities 3.2

i) vi) loss of control v) non-controlling interest iv) t iii) associates ii) i) 3. 3.1 . , -constructed assets urchased software that is integral to the functionality of the urchased software that is integral to the functionality (Continued) (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 plant and equipment is recognised in the carrying amount of the The cost of replacing a part of an item of property, and its cost can be measured reliably probable that the future economic benefit embodied within the part will flow to the Group When the use of a property changes from owner-occupied to investment property, the property is re-measured to fair value and the property is re-measured to to investment property, When the use of a property changes from owner-occupied or loss to the extent it reverses a previous impairment on the A gain is recognized in profit reclassified as investment property. is recognised in other comprehensive income and presented in Any remaining gain arising on re-measurement specific property. in the revaluation reserve Any loss is recognised in other comprehensive income and presented the revaluation reserve in equity. reserve relating to the specific property in equity to the extent that an amount had previously been included in the revaluation with any remaining loss recognized immediately in the profit or loss. plant and equipment are recognised in profit or loss as incurred. of property, servicing The costs of the day-to-day Land and buildings are measured at revalued amounts less accumulated depreciation and impairment losses. Items of plant Land and buildings are measured at revalued at cost less accumulated depreciation and impairment losses. Fishing vessels and equipment and motor vehicles are measured depreciation and impairment losses. are measured at revalued amounts less accumulated attributable to the acquisition of the asset. The cost of self Cost includes expenditures that are directly includes the cost of material and direct labour, any other costs directly attributable to bringing the asset to a working condition any other costs directly includes the cost of material and direct labour, and removing the items and restoring the site on which they are located when for its intended use, and the costs of dismantling asset or restore the site. P the Group has the obligation to remove the that equipment. related equipment is capitalised as part of which are utilized for the purchase and construction of qualifying assets are Interest and foreign exchange losses on loans in profit or loss. capitalized until when the asset is substantially ready for use after which they are recognised plant and equipment have different useful lives, they are accounted for as separate items When parts of an item of property, plant and equipment. (major components) of property, from plant and equipment are determined by comparing the proceeds Gains and losses on disposal of an item of property, plant and equipment, and are recognised net within other operating income in disposal with the carrying amount of property, the amounts included in the revaluation reserve are transferred to retained profit or loss. When revalued assets are disposed of, earnings. The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are and fair value adjustments arising on acquisition, of foreign operations, including goodwill The assets and liabilities operations are date. The income and expenses of foreign at exchange rates at the reporting translated to Malawi Kwacha transactions. at exchange rates at the dates of the translated to Malawi Kwacha presented in the foreign currency translation in other comprehensive income, and currency differences are recognised Foreign share of the then the relevant proportionate subsidiary, if the operation is a non-wholly-owned However, reserve in equity. that control, When a foreign operation is disposed of such is allocated to the non-controlling interests. translation difference foreign operation in the translation reserve related to that or joint control is lost, the cumulative amount significant influence part of its interest When the Group disposes off only or loss as part of the gain or loss on disposal. is reclassified to profit amount is the relevant proportion of the cumulative a foreign operation while retaining control, in a subsidiary that includes the Group disposes of only part of its investment in an associate or joint venture reattributed to non-controlling interests. When significant influence or joint control, the relevant proportion of the cumulative that includes a foreign operation while retaining amount is reclassified to profit or loss. from or payable to a foreign operation is neither planned nor likely in the When the settlement of a monetary item receivable and losses arising from such a monetary item are considered to form part of a net foreseeable future, foreign exchange gains in other comprehensive income, and presented in the translation reserve in investment in a foreign operation and are recognised equity. Property, plant and equipment Property, ing policies account Significant Subsequent costs sufficient regularity such that the Revaluations of property and Fishing vessels are carried out by independent valuers with Foreign currency Foreign Foreign operations S EME NT TAT S E FINANCIAL ARAT For the year ended 31 December 2015 the year ended For DATED AND IDATED HE CONSOL TO T NOTES SEP

3.3 Press Corporation Limited Annual Report 2015 46 iv) revaluation iii) ii) reclassification to investment properties i) recognition and measurements ii) 3. 3.2 In millions of Malawi Kwacha

Strategic Report Corporate Governance Financial Statements On the Malawi Stock Exchange Strategic Report Corporate Governance Financial Statements On the Malawi Stock Exchange 47 - -line Annual Report 2015 , net of deferred tax, Press Corporation Limited In millions of Malawi Kwacha For the year ended 31 December 2015 the year ended For S EME NT TAT S E FINANCIAL ARAT SEP DATED AND IDATED HE CONSOL TO T NOTES , plant and equipment. Significant components of individual , plant and equipment. Significant components (Continued) 2- 40 years 3- 5 years 40 - 50 years

(Continued) Amortisation is based on the cost of an asset less its residual value. Amortisation is charged to profit or loss on a straight Amortisation is based on the cost of an asset less its residual value. Amortisation is charged basis over the estimated useful lives of intangible assets, from the date that they are available for use. Amortisation methods, basis over the estimated useful lives of intangible assets, from the date that they are available Goodwill is not amortised but is useful lives and residual values are reviewed at each reporting date and adjusted if appropriate. reviewed for impairment annually as outlined in note 3.9 below. Goodwill arising on an acquisition represents the excess of the fair value of the consideration transferred, the recognized amount the excess of the fair value of the consideration transferred, the recognized amount Goodwill arising on an acquisition represents and, in a business combination achieved in stages, the fair value of existing of any non-controlling interests in the acquiree and contingent liabilities acquired. equity interest in the acquiree over the net fair value of the identifiable assets, liabilities amount of goodwill is included in the Goodwill is measured at cost less impairment losses. In respect of associates, the carrying carrying amount of the investment in the associate. Depreciation is based on the cost of an asset less its residual value. Depreciation is recognised in profit or loss on a straight Depreciation is based on the cost of an asset from the revaluation reserve to retained earnings. from the revaluation reserve each item of property line basis over the estimated useful lives of a useful life that is different from the remainder of that asset, that component is assets are assessed and if a component has the date they are ready for use. Leased plant and equipment are depreciated from Items of property, depreciated separately. the lease term and their useful lives if there is no reasonable certainty that the Group assets are depreciated over the shorter of land is not depreciated. term. Freehold will obtain ownership by the end of the lease carrying amount does not differ materially from that which would be determined using fair values at the reporting date as be determined using fair values at the reporting not differ materially from that which would carrying amount does are accounted for market value. Surpluses on revaluations dictate. The basis of valuation used is current economic conditions On disposal of to the gross carrying amount on revaluation. Accumulated depreciation is eliminated in the revaluation reserve. decreases are is transferred to retained earnings. Revaluation of the reserve related to the specific asset the asset, the portion to the revaluation to revaluation surpluses previously transferred or loss except to the extent that they relate charged to the profit from revaluations is transferred annually to the additional depreciation arising reserve. An amount equivalent Motor vehicles at each reporting depreciation method are reviewed and adjusted if appropriate,date. The assets’ residual values, useful lives and Plant, furniture and equipment The estimated useful lives for the current and comparative periods are as follows: The estimated useful lives for the current and Buildings ing policies account Significant embodied in the specific asset to which it relates. All other expenditure is expensed as incurred. embodied in the specific asset to which it relates. All other expenditure is expensed Amortisation Subsequent expenditure the future economic benefits Subsequent expenditure on capitalised intangible assets is capitalised only when it increases Acquired computer software that has a probable economic life exceeding one year is recognised as an intangible asset and is Acquired computer software that has a probable economic life exceeding one year is Computer software is amortised over its capitalised on the basis of the costs to acquire and bring to use the specific software. useful life. The estimated useful life is five years (current and comparative years). Other intangible assets amortisation and impairment Other intangible assets that are acquired by the Group are measured at cost less accumulated losses. The estimated useful life is five years (current and comparative years). Goodwill Depreciation and equipment plant Property, 3.4 intangible assets

v) iv)

iii) ii) computer software i) v) iv) revaluation (Continued) 3. 3.3 . , if lower, , if lower, -line basis -in-first . . -line basis over the term of the relevant (Continued) A financial asset not carried at fair value through profit and loss is assessed at each reporting date to determine whether there is A financial asset not carried at fair value through profit and loss is assessed at each if objective evidence indicates that one any objective evidence that it is impaired. A financial asset is considered to be impaired asset, that can be estimated reliably or more events have had a negative effect on the estimated future cash flows of that Assets held under finance leases are recognised as assets of the Group at their fair value at the inception of the lease or Assets held under finance leases are recognised the asset is accounted for in accordance at the present value of the minimum lease payments. Subsequent to initial recognition, is recognised in the statement of with the accounting policy applicable to that asset. The corresponding liability to the lessor finance charges and reduction of the financial position as a finance lease obligation. Lease payments are apportioned between of the liability lease obligation so as to achieve a constant rate of interest on the remaining balance Finance charges are recognised in profit or loss. Rentals payable under operating leases are recognised as an expense on a straight are also spread on a straight lease. Benefits received and receivable as an incentive to enter into an operating lease on the Group’s statement of financial over the lease term. Investment property held under an operating lease is recognised position at its fair value. is based on the first Inventories are measured at the lower of cost and net realisable value. The cost of inventories them to their existing location and out principle, and includes expenditure incurred in acquiring the inventories and bringing an appropriate share of production condition. In the case of manufactured inventories and work in progress, cost includes Net realisable value is the estimated selling price in the ordinary course of overheads based on normal operating capacity. business, less the estimated costs of completion and selling expenses. at the date of transfer The cost of items transferred from biological assets is their fair value less costs to sell Amounts due from lessees under finance leases are recognised as receivables at the amount of the Group’s net investment Amounts due from lessees under finance leases to accounting periods so as to reflect a constant periodic rate of return on the in the leases. Finance lease income is allocated of the leases. company’s net investment outstanding in respect of the relevant leases. Initial direct costs basis over the term on a straight-line Rental income from operating leases is recognised lease are added to the carrying amount of the leased asset and recognised incurred in negotiating and arranging an operating basis over the lease term. as an expense on a straight-line Investment property is property held either to earn rental income or for capital appreciation or for both, but not for sale in the ordinary ordinary the in sale for not but both, for or appreciation capital for or measured income is rental property earn to either Investment held purposes. property is administrative property for or Investment services or goods of supply or production in use business, of course recognised in profit or loss. and subsequently at fair value with any change therein at cost on initial recognition investment the bringing to attributable directly cost other any The cost of self-constructed to the acquisition of the investment property. Cost includes expenditure that is directly attributable labour, direct and material of cost the includes property investment of date the use and capitalised borrowing costs. property to a working condition for their intended at value fair its equipment, and plant property, as reclassified is it that such changes property a of use the When accounting. reclassification becomes its cost for subsequent ing policies account Significant Financial assets include all costs that would be necessary to sell the assets including transportation costs. be necessary to sell the assets including include all costs that would merit. of fish of similar age, breed and genetic held for sale is based on the market price The fair value of fish to/ the terms of the lease transfer substantially all the risks and rewards of ownership Leases are classified as finance lease when as operating leases. from the Group. All other leases are classified Biological assets are measured at fair value less costs to sell, with any gain or loss recognised in profit or loss. Costs to sell any gain or loss recognised in profit or measured at fair value less costs to sell, with Biological assets are S EME NT TAT S E FINANCIAL ARAT For the year ended 31 December 2015 the year ended For DATED AND IDATED HE CONSOL TO T NOTES SEP 3.8 inventories

3.9 impairment Press Corporation Limited Annual Report 2015 48 i) ii) the group as a lessee i) the group as a lessor 3.6 investment property 3.7 leases

3.5 biological assets 3. In millions of Malawi Kwacha

Strategic Report Corporate Governance Financial Statements On the Malawi Stock Exchange Strategic Report Corporate Governance Financial Statements On the Malawi Stock Exchange , 49 Annual Report 2015 Press Corporation Limited In millions of Malawi Kwacha For the year ended 31 December 2015 the year ended For , any subsequent recovery in the fair S EME NT TAT S E FINANCIAL ARAT SEP DATED AND IDATED HE CONSOL TO T NOTES (Continued)

(Continued)

vailable-for-sale financial assets value of an impaired available for sale security is recognised in other comprehensive income. value of an impaired available for sale security The carrying amounts of the Group’s non-financial assets, other than biological assets, investment property, inventories, deferred inventories, The carrying amounts of the Group’s non-financial assets, other than biological property, assets, investment assets held for sale within the scope of IFRS 5 are reviewed at each reporting tax assets, income tax, assets and non-current of impairment. If any such indication exists then the asset’s or cash generating date to determine whether there is any indication recoverable amount of an asset or cash generating unit is the greater of its value in unit’s recoverable amount is estimated. The cash flows are discounted to their present use and its fair value less costs to sell. In assessing value in use, the estimated future value and the risks specific to the asset. value using a pre-tax discount rate that reflects current market assessments of the time the recoverable amount is goodwill and intangible assets that have indefinite useful lives or that are not yet available for use, For estimated at each reporting date. unit exceeds its recoverable amount. An impairment loss is recognised if the carrying amount of an asset or its cash generating that largely are independent from A cash generating unit is the smallest identifiable asset group that generates cash inflows losses recognised in respect of other assets or group of assets. Impairment losses are recognised in profit or loss. Impairment allocated to the units and then to reduce cash generating units are allocated first to reduce the carrying amount of any goodwill the carrying amount of the other assets in the unit (group of units) on a pro rata basis. losses recognised in prior An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment or no longer exists. An impairment periods are assessed at each reporting date for indications that the loss has decreased amount. An impairment loss loss is reversed if there has been a change in the estimates used to determine the recoverable amount that would have been is reversed only to the extent that the asset’s carrying amount does not exceed the carrying determined, net of depreciation or amortisation, if no impairment loss had been recognised. recognized separately and therefore Goodwill that forms part of the carrying amount of an investment in an associate is not Instead, the entire amount of investment in the associate is tested for impairment as a is not tested for impairment separately. be impaired. single asset when there is objective evidence that the investment in an associate may An impairment loss in respect of an available-for-sale financial asset are recognised by reclassifying the losses accumulated financial asset are recognised by reclassifying An impairment loss in respect of an available-for-sale The cumulative loss that is reclassified from equity to profit or loss is the difference in other reserves in equity to profit or loss. repayment and amortization and the current fair value, less any impairment between the acquisition cost, net of any principal financial in subsequent period, the fair value of the impaired available-for-sale If, loss recognized previously in profit or loss. related objectively to an event occurring after the impairment loss was recognised, assets increases, and the increase can be reversal recognised in profit or loss. However then the impairment loss is reversed, with the restructuring of an amount due to the Group on terms that the Group would not consider otherwise, indications that a debtor would not consider otherwise, indications due to the Group on terms that the Group restructuring of an amount in an equity In addition, for an investment of an active market for a security. the disappearance or issuer will enter bankruptcy, evidence of impairment. in its fair value below its cost is objective a significant or prolonged decline security, asset measured at amortised cost is calculated as the difference between its An impairment loss in respect of a financial the estimated future cash flows discounted at the original effective interest rate. carrying amount, and the present value of was reflected in an allowance account. When an event occurring after the impairment Losses are recognized in profit or loss and to decrease, the decrease in impairment loss is reversed through profit or loss. recognised causes the amount of impairment tested for impairment on an individual basis. The difference between the acquisition Individually significant financial assets are and current fair value less any impairment loss previously recognised in profit cost (net of principal repayment and amortisation) that share similar credit characteristics, excluding assets considered individually or loss are assessed collectively in groups significant. Objective evidence that financial assets (including equity securities) are impaired can include default or delinquency by a debtor are impaired can include default or delinquency financial assets (including equity securities) Objective evidence that Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered through a sale Non-current assets and disposal groups are classified as held for sale if their carrying only when the sale is highly probable transaction rather than through continuing use. This condition is regarded as being met ing policies account Significant Financial assets by a are impaired can include default or delinquency financial assets (including equity securities) Objective evidence that (Continued) a not consider otherwise, indications that to the Group on terms that the Group would restructuring of an amount due debtor, in an In addition, for an investment of an active market for a security. the disappearance bankruptcy, debtor or issuer will enter objective evidence of impairment. decline in its fair value below its cost is a significant or prolonged equity security,

3.10 non-current assets held for sale and discontinued operations iii) non-financial assets ii) a

i) 3. 3.9 impairment -term cash bonus or profit sharing plans if the

, it is probable that the offer will be accepted, and . Termination benefits for voluntary redundancies are benefits . Termination . Costs relating to the on-going activities of the Group are (Continued) (Continued) ermination benefits operating losses are not provided for. Future not provided for. A provision for restructuring is recognised when the Group has approved a detailed and formal restructuring plan, and the A provision for restructuring is recognised when the Group has approved a detailed and restructuring has either commenced or has been announced publicly Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is employee benefit obligations are measured on an undiscounted Short-term provided. A liability is recognised for the amount expected to be paid under short result of a past event, and it is probable A provision is recognised when the Group has a legal or constructive obligation as a is material, provisions are determined by that an outflow of economic benefits will be required to settle the obligation. If the effect assessments of the time value of money discounting the expected future cash flows at a pre-tax rate that reflects current market The unwinding up of the discount is recognised as finance cost. and, where appropriate, the risks specific to the liability. Termination benefits are recognised as an expense when the Group is committed demonstrably, without realistic possibility Group is committed demonstrably, benefits are recognised as an expense when the Termination date or to provide termination of withdrawal, to a formal detailed plan to terminate employment before the normal retirement benefits as a result of an offer made to encourage voluntary redundancy recognised if the Group has made an offer encouraging voluntary redundancy If benefits are payable more than 12 months after the reporting period, the number of acceptances can be estimated reliably. then they are discounted to their present value. service provided by the employee, and Group has a present legal constructive obligation to pay this amount as a result of past the obligation can be estimated reliably. The Group’s net obligation in respect of long-term employee benefits other than pension plans is the amount of future benefit The Group’s net obligation in respect of long-term service in the current and prior periods; that benefit is discounted to determine its that employees have earned in return for their assets is deducted. present value, and the fair value of any related Immediately before classification as held for sale, the measurement of the assets and/or components of a disposal group are of the assets and/or components of a as held for sale, the measurement Immediately before classification amount and fair they are recognised at the lower of carrying accordance with applicable IFRSs. Then, brought up-to-date in value less costs to sell. to gains and losses on in profit or loss. The same applies initial classification as held for sale are included Impairment losses on of any cumulative impairment loss. Gains are not recognised in excess subsequent remeasurement. business or that represents a separate major line of is a component of the Group’s business A discontinued operation with a view to for sale, or is a subsidiary acquired exclusively operations that has been disposed or is held geographical area of resale. occurs upon disposal or when the operation meets the criteria to be classified as held Classification as a discontinued operation operation, the comparative statement of comprehensive When an operation is classified as a discontinued for sale, if earlier. had been discontinued from the start of the comparative period. income is represented as if the operations contribution pension schemes on behalf of its employees, the assets of which The Group contributes to a number of defined on a percentage of the payroll and are recognised as an are based to the Fund are kept separate from the Group. Contributions Once the contributions have been paid, the Group has no further payment obligations. expense in the profit or loss as incurred. benefit plan under which an entity pays fixed contributions into a separate A defined contribution plan is a post-employment obligation to pay further amounts. Obligations for contributions to defined entity and will have no legal or constructive as an employee benefit expense in profit or loss in the periods during which services contribution pension plans are recognised are rendered by employees. Provisions ing policies account Significant Short-term benefits Other long term employee benefits and the asset (or disposal group) is available for immediate sale in its present condition. group) is available for immediate sale and the asset (or disposal Employee benefits S EME NT TAT S E FINANCIAL ARAT For the year ended 31 December 2015 the year ended For DATED AND IDATED HE CONSOL TO T NOTES SEP

3.12 Press Corporation Limited Annual Report 2015 50 i) restructuring iii) ii) t i) 3. 3.10 for sale and discontinued operations non-current assets held In millions of Malawi Kwacha 3.11

Strategic Report Corporate Governance Financial Statements On the Malawi Stock Exchange Strategic Report Corporate Governance Financial Statements On the Malawi Stock Exchange . 51 Annual Report 2015 Press Corporation Limited In millions of Malawi Kwacha -sale financial assets, For the year ended 31 December 2015 the year ended For S EME NT TAT S E FINANCIAL ARAT SEP DATED AND IDATED HE CONSOL TO T NOTES (Continued)

(Continued)

Dividend income for available-for-sale equities is recognised when the right to receive payment is established – this is the ex- Dividend income for available-for-sale dividend date for equity securities. Fees and commission are generally recognised on an accrual basis when the services have been provided. and commission are generally recognised on an accrual Fees investment management fees, sales commission, placement and commission income, including account servicing fees, Fees as the related services are performed or upon the occurrence of a specific act fees and syndication fees, are recognised result in the draw-down of a loan, loan such as a sale, placement or syndication. When a loan commitment is not expected to basis over the commitment period. commitment fees are recognised on a straight-line Revenue from the sale of goods in the course of ordinary activities is measured at the fair value of the consideration received or of ordinary activities is measured at the fair value of the consideration received or Revenue from the sale of goods in the course discounts and volume rebates. receivable, net of returns and allowances, trade in profit or loss when significant risks and rewards of ownership have been Revenue from the sale of goods is recognized the associated costs and possible return of goods can be recovery of the consideration is probable, transferred to the buyer, can be measured is no continuing management involvement with the goods and the amount of revenue there estimated reliably, then the discount is recognised amount can be measured reliably, If it is probable that discounts will be granted and the reliably. recognized. No revenue is recognised if there are significant uncertainties regarding as a reduction of revenue as the sales are costs or the possible return of goods. recovery of the consideration due, associated in profit or loss in proportion to the stage of completion of the transaction at the Revenue from services rendered is recognised reporting date. A provision for onerous contracts is recognised when the expected benefits to be derived by the Group from a contract are benefits to be derived by the Group from contracts is recognised when the expected A provision for onerous the present value the contract. The provision is measured at cost of meeting its obligations under lower than the unavoidable contract. Before a the expected net cost of continuing with the cost of terminating the contract and of the lower of the expected on the assets associated with the contract. the Group recognises any impairment loss provision is established, companies in the normal course of trade of the respective invoiced or sales otherwise made Revenue represents amounts Group Group revenue excludes sales between and credit notes where applicable. (VAT) Added Tax after deduction of Value companies . is entitled thereto. Dividends are recognised when the company changes in the fair value of financial assets at fair value through profit or loss, foreign currency gains, and gains on hedging changes in the fair value of financial assets at fair value through profit or loss, foreign as it accrues, using the effective interest instruments that are recognised through profit or loss. Interest income is recognised method. provisions, foreign currency losses, Finance expenses comprise interest expense on borrowings, unwinding of discount on losses recognised on financial changes in fair value of financial assets at fair value through profit or loss, and impairment or production of a qualifying asset are assets. Borrowing costs that are not directly attributable to the acquisition, construction recognised in profit or loss using the effective interest method. Finance income comprises interest income on funds invested, gains on the disposal of available-for Finance income comprises interest income on funds invested, gains on the disposal Revenue ing policies account Significant Premium on foreign agreed. Premium on spot foreign exchange deals are recognised as income when the deal is exchange deals Other revenue the sale are transferred to the purchaser Revenue on other sales is recognised on the date all risks and rewards associated with Dividend income Fees and commissions Goods sold and services rendered Revenue on other services is recognised upon the performance of the contractual obligation. Finance income and expense Provisions Onerous contracts 3.13

iv) v) iii) ii) 3.14 i)

ii) 3. 3.12 . , using tax rates enacted or substantively . Diluted earnings per share is determined by adjusting . Diluted earnings per share is determined . (Continued)

(Continued) The Group classifies its financial assets in the following categories: financial assets at fair value through profit or loss; loans and The Group classifies its financial assets in the following categories: financial assets financial assets. Management determines the classification of its financial assets at initial receivables; and available-for-sale recognition. A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary difference to the extent that it is A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary Deferred tax assets are reviewed at probable that future taxable profits will be available against which the asset can be utilised. tax benefit will be realised. each reporting date and reduced to the extent that it is no longer probable that the related the same time as the liability to pay the Additional income taxes that arise from the distribution of dividends are recognised at related dividend is recognised. Deferred tax recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial Deferred tax recognised in respect of temporary differences are not provided for: reporting purposes and the amounts used for taxation purposes. The following temporary of assets or liabilities in a taxable temporary differences arising on the initial recognition of goodwill, the initial recognition taxable profit or loss, and temporary transaction that is not a business combination and that affect neither accounting nor extent that the Group is able to control differences relating to investments in subsidiaries, associates and joint ventures to the in the foreseeable future. The amount the timing of the reversal of the temporary difference and they will probably not reverse of the carrying amount of assets and of deferred tax is measured based on the expected manner of realisation or settlement liabilities, using tax rates enacted or substantively enacted at the reporting date. current tax liabilities and assets, and Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset and assets on a net or on different tax entities, but that intend to settle current tax liabilities they relate to the same taxable entity, basis or their tax assets and liabilities will be realised simultaneously the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the the profit or loss attributable to ordinary shareholders which comprise convertible notes and share options granted to employees. Where effects of all dilutive potential ordinary shares, of capitalisation or subdivision, the profit is apportioned over the shares in issue new equity shares have been issued by way corresponding figures for all earlier periods are adjusted accordingly after the capitalisation or subdivision and the The calculation of basic earnings per share is based on the profit or loss attributable to ordinary shareholders for the year and The calculation of basic earnings per share issue throughout the year the weighted average number of shares in Financial assets ing policies account Significant Share capital and dividends Deferred tax Equity instruments recorded at the proceeds received, net of direct issue costs. Equity instruments issued by the Group are comprises current and deferred tax. Income tax is recognised in profit or loss except Income tax on the profit or loss for the year or items recognised directly in equity or in other comprehensive income. to the extent that it relates to a business combination, on the taxable income for the year Current income tax is the expected tax payable the proceeds. in which they are approved by the directors. shares are recognised in equity in the period Dividends on ordinary Dividend per share by the number of recognised during the period divided per share is based on the ordinary dividends The calculation of dividend of payment. on the register of shareholders on the date ordinary shareholders Earnings per share Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from or options are shown in equity as a deduction, attributable to the issue of new shares Incremental costs directly Dividends on ordinary shares and expense Finance income Share issue costs enacted at the reporting date, and any adjustment to tax payable in respect of previous years. enacted at the reporting date, and any adjustment S EME NT TAT S E FINANCIAL ARAT For the year ended 31 December 2015 the year ended For DATED AND IDATED HE CONSOL TO T NOTES SEP 3.17 3.15 Press Corporation Limited Annual Report 2015 52 ii) 3.16 income tax i) current income tax v)

iv) iii) ii) i) 3. 3.14 In millions of Malawi Kwacha

Strategic Report Corporate Governance Financial Statements On the Malawi Stock Exchange Strategic Report Corporate Governance Financial Statements On the Malawi Stock Exchange 53 Annual Report 2015 Press Corporation Limited In millions of Malawi Kwacha For the year ended 31 December 2015 the year ended For S EME NT TAT S E FINANCIAL ARAT SEP DATED AND IDATED HE CONSOL TO T NOTES -term commitments. (Continued) Cash and cash equivalents Trade and other receivables Cash and cash equivalents include notes and coins on hand, unrestricted balances held with central banks and highly Cash and cash equivalents include notes and coins on hand, unrestricted balances held in of changes risk to insignificant subject which are months, than three of less maturities with original assets liquid financial their fair value, and are used by the Group in the management of its short Trade and other receivables are subsequently measured at amortised cost using the effective interest method. Appropriate and other receivables are subsequently measured Trade (i.e. impairment losses) are recognised in profit or loss when there is allowances for estimated irrecoverable amounts the asset’s The allowance recognised is measured as the difference between objective evidence that the asset is impaired. future cash flows discounted at the effective interest rate computed at carrying amount and the present value of estimated initial recognition. accounts, interest receivables, staff advances and other assets and are and other receivables comprise inter-branch Trade losses (refer accounting policy 3.9). measured at their amortised cost less impairment Cash and cash equivalents are subsequently measured at amortised cost. Bank overdrafts that are payable on demand Cash and cash equivalents are subsequently measured at amortised cost. Bank overdrafts and form an integral part of the Group’s cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows. vailable-for-sale Available-for-sale investments are those intended to be held for an indefinite period of time, which may be sold in response to Available-for-sale do not meet the definition of fair value needs for liquidity or changes in interest rates, exchange rates or equity prices or which through profit or loss, loans and receivables or held-to-maturity financial assets. independently valued as economic Shares in other companies and unlisted shares classified as available for sale and are conditions dictate. Listed shares are carried at market value. from changes in the fair value of available- These investments are subsequently measured at fair value. Gains and losses arising financial assets are recognised in other comprehensive income, until the financial asset is derecognised or impaired for-sale income should be recognised in profit at which time the cumulative gain or loss previously recognised in other comprehensive financial assets calculated using the effective interest method is available-for-sale interest on interest-bearing or loss. However, equity instruments are recognised in profit or loss when the entity’s recognised in profit or loss. Dividends on available-for-sale right to receive payment is established. of financial position when there is a legally Financial assets and liabilities are offset and the net amount reported in the statement

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active Loans and receivables are non-derivative financial of trading the goods or services directly to a debtor with no intention money, market. They arise when the Group provides measured at amortised cost using the effective interest method less any receivable. Loans and receivables are subsequently impairment losses. other receivables and cash and cash equivalents. Loans and receivables comprise trade and This category has two sub-categories: financial assets held for trading, and those designated at fair value through profit or loss trading, and those designated at fair value sub-categories: financial assets held for This category has two in the short term or principally for the purpose of selling asset is classified in this category if acquired at inception. A financial are also categorised as held for trading unless they are designated as effective if so designated by management. Derivatives value through profit or loss are subsequently measured at fair value with changes in hedging instrument. Financial assets at fair fair value recognised in profit or loss. Purchases and sales of financial assets at fair value through profit or loss and available-for-sale are recognised on trade-date are recognised on Purchases through profit or loss and available-for-sale and sales of financial assets at fair value when cash the asset. Loans and receivables are recognised the Group commits to purchase or sell which is the date on which all financial assets at fair value plus transaction costs for Financial assets are initially recognised is advanced to the borrowers. cash flows from the derecognised when the rights to receive through profit or loss. Financial assets are not carried at fair value substantially all risks and rewards of ownership. expired or where the Group has transferred financial assets have Offsetting financial instruments b) a) ing policies account Significant Financial assets at fair value through profit or loss Financial assets (Continued) 3.18

iii) a ii) loans and receivables i)

3.17 3. , plant and equipment, investment (Continued)

(Continued) The Group commonly acts as trustees and in other fiduciary capacities that result in the holding or placing of assets on behalf of The Group commonly acts as trustees and in other fiduciary capacities that result in individuals, trusts, retirement benefit plans and other institutions. as they are not assets or income of the These assets and income arising thereon are excluded from these financial statements, Group. from which it may earn revenues and An operating segment is a component of the Group that engages in business activities of the Group’s other components. All incur expenses, including revenues and expenses that relate to transactions with any Officer (“CEO”) to make decisions operating segments’ operating results are reviewed regularly by the Group’s Chief Executive which discrete financial information is about resources to be allocated to the segment and assess its performance, and for available. as well as those that can be Segment results that are reported to the CEO include items directly attributable to a segment (primarily the Company’s headquarters), allocated on a reasonable basis. Unallocated items comprise mainly corporate assets head office expenses, and income tax assets and liabilities. Other financial liabilities comprise loans and borrowings, overdrafts and trade and other payables. Other liabilities are initially Other financial liabilities comprise loans and at amortised cost, using the effective measured at fair value net of transaction costs incurred, and are subsequently measured interest method. cancelled or expire. The Group derecognises a financial liability when its contractual obligations are discharged, Customer deposits and liabilities to other banks are recognised initially at fair value, being their issue proceeds (fair value of Customer deposits and liabilities to other banks incurred. These are subsequently measured at amortised cost; any difference consideration received) net of transaction costs and the redemption value is recognized in profit or loss as interest over the period of between proceeds net of transaction costs the borrowings using the effective interest method. Securities sold subject to repurchase agreements (‘repos’) are reclassified in the financial statements as pledged assets in the financial statements as to repurchase agreements (‘repos’) are reclassified Securities sold subject is included repledge the collateral; the counterparty liability the right by contract or custom to sell or when the transferee has Securities or deposits due to customers, as appropriate. banks, deposits from banks, other deposits in amounts due to other or customers, as as loans and advances to other banks to resell (‘reverse repos’) are recorded purchased under agreements life of the agreements is treated as interest and accrued over the between sale and repurchase price appropriate. The difference are also retained in the financial statements. rate method. Securities lent to counterparties using the effective interest on the date on which a derivative contract is entered into and are subsequently Derivatives are initially recognised at fair value recent market values are obtained from quoted market prices in active markets, including remeasured at their fair value. Fair discounted cash flow models and option pricing models, as appropriate. All transactions, and valuation techniques, including value is positive and as liabilities when fair value is negative. derivatives are carried as assets when fair instruments, such as the conversion option in a convertible bond, are treated Certain derivatives embedded in other financial characteristics and risks are not closely related to those of the host contract and as separate derivatives when their economic through profit or loss. These embedded derivatives are measured at fair value with the host contract is not carried at fair value or loss. changes in fair value recognised in profit Fiduciary activities Segment reporting Segment capital expenditure is the total cost incurred during the year to acquire property ing policies account Significant Other liabilities Financial assets Financial Offsetting financial instruments (Continued) Offsetting financial the assets and an intention to settle on a net basis, or realise the recognised amounts and there is enforceable right to offset settle the liability simultaneously. agreements Sale and repurchase Derivative financial instruments Financial liabilities financial liabilities are set out below: The accounting policies adopted for specific property and intangible assets other than goodwill. S EME NT TAT S E FINANCIAL ARAT For the year ended 31 December 2015 the year ended For DATED AND IDATED HE CONSOL TO T NOTES SEP 3.23 3.23 Press Corporation Limited Annual Report 2015 54 ii) i) customer deposits and liabilities to other banks 3. 3.18 In millions of Malawi Kwacha 3.19 3.20 3.21 3.18

Strategic Report Corporate Governance Financial Statements On the Malawi Stock Exchange Strategic Report Corporate Governance Financial Statements On the Malawi Stock Exchange 55 Annual Report 2015 Press Corporation Limited In millions of Malawi Kwacha For the year ended 31 December 2015 the year ended For S EME NT TAT S E FINANCIAL ARAT SEP DATED AND IDATED HE CONSOL TO T NOTES (Continued) Provisions, Contingent Liabilities and Contingent Assets. Revenue from Contracts with Customers Financial Instruments Recognise revenue when (or as) the entity satisfies a performance obligation. Allocate the transaction price to the performance obligations in the contract Determine the transaction price Identify the performance obligations in the contract Identify the contract(s) with a customer IFRS 15 specifies how and when an IFRS reporter will recognise revenue as well as IFRS 9 issued in November 2009 introduced new requirements for the classification IFRS 9 Standard, Amendment or interpretation FRS 15 requiring such entities to provide users of financial statements with more informative, relevant disclosures. The standard provides a single, principles based five-step model to be applied to all contracts with customers. The core principle of IFRS 15 is that an entity will recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This core principle is delivered in a five-step model framework: 9 was subsequently amended in and measurement of financial assets. IFRS classification and measurement of October 2010 to include requirements for the financial liabilities and for derecognition, and in November 2013 to include the new requirements for general hedge accounting. Another revised version of IFRS 9 was issued in July 2014 mainly to include impairment requirements for financial assets and limited amendments to the classification and measurement requirements by introducing a ‘fair value through other comprehensive income’ (FVTOCI) measurement category for certain simple debt instruments. • • • • • In the current year, the Group has adopted those new and revised Standards and Interpretations issued by the International the Group has adopted those new and revised Standards and Interpretations issued In the current year, Financial Reporting Interpretations Committee of the International Accounting Accounting Standards Board and the International and are effective for annual reporting periods beginning on or before 1 Standards Board that are relevant to its operations January 2015. and Interpretations did not have a significant impact on the financial The adoption of these new and revised Standards statements of the company. statements, the following relevant Standards and Interpretations were in issue but At the date of authorisation of these financial not yet effective: A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a to make specified payments to reimburse contract is a contract that requires the issuer A financial guarantee or modified terms of a when due in accordance with the original a specified debtor fails to make payment loss it incurs because debt instrument. amortisation or higher of the amount initially recognised less at fair value and subsequently at the These are initially measured in accordance with IAS 37 the amount determined ing policies account Significant on or after 1 January 2018 Annual period beginning on or after 1 January 2018 nterpretations affecting amounts reported and/or disclosed in the financial statements Standards and Interpretations affecting amounts reported Standards and Interpretations in issue, not yet effective Effective date Financial guarantee contracts Financial guarantee Annual period beginning

3.26

3.25 revised Reporting Standards adoption of new andInternational Financial 3.24 3.

, Business regarding impairment testing of a cash-generating regarding impairment

Accounting for Acquisitions of Interests in Joint Operations (Continued) Specifically, the amendments state that the relevant principles on the amendments state that Specifically, Impairment of Assets (Continued) at cost, in accordance with IFRS 9 (or IAS 39 for entities that have not yet adopted IFRS 9), or using the equity method as described in IAS 28 Investments in Associates and Joint Ventures. understandability of its financial statements by An entity should not reduce the understandability of its financial statements obscuring material information with or by aggregating immaterial information material items that have different natures or functions. An entity need not provide a specific required by an IFRS if the disclosure information resulting from that disclosure is not material. In the other comprehensive income section of a statement of profit or loss and other comprehensive income, the amendments require separate disclosures for the share of other and joint ventures comprehensive income of associates accounted for not be reclassified subsequently to using the equity method that will profit or loss and those that will be reclassified subsequently to profit or loss. ndments to IFRS 11 provide guidance on how to account for the acquisition guidance on how to account for the The amendments to IFRS 11 provide Amendments to IAS 27: Equity Method in Separate Financial Statements Amendments to IAS 1 Disclosure Initiative IFRS 16 Leases Amendments to IFRS 11 Amendments to IFRS The amendments focus on separate financial statements and allow the use of the allow an entity to the amendments equity method in such statements. Specifically, account for investments in subsidiaries, joint ventures and associates in its separate financial statements: • • • Basically the same accounting must be applied to each category of investments and the amendments also clarifies that when a parent ceases to be an investment entity from the date when it should account for the change or becomes an investment entity, the change in status occurs. Combinations. 3 constitutes a business as defined in IFRS of a joint operation that The amendments to IAS 1 give some guidance on how to apply the concept of The amendments to IAS 1 give some guidance materiality in practice. • • • IFRS 16 specifies how an IFRS reporter will recognise, measure, present and disclose IFRS 16 specifies how an IFRS reporter will model, requires lessees to recognise leases. The standard provides lessee accounting lease term is 12 months or less or the assets and liabilities for all leases unless the to classify leases as operating or underlying assets as a low value. Lessors continue accounting substantially unchanged from finance, with IFRS 16’s approach to lessor IAS 17 its predecessor, unit to which goodwill on acquisition of a joint operation has been allocated) should be on acquisition of a joint operation has been unit to which goodwill applied to the formation of a joint operation applied. The same requirements should be to the joint operation by one of the if and only if an existing business is contributed parties that participate in the joint operation. the relevant information required by IFRS 3 A joint operator is also required to disclose and other standards for business combinations. accounting for business combinations in IFRS 3 and other standards (e.g. IAS 12 combinations in IFRS 3 and other standards accounting for business of deferred taxes at the time of acquisition regarding the recognition Income Taxes and IAS 36 Standard, Amendment or interpretation on or after 1 January 2016 Annual period beginning ing policies account Significant on or after 1 January 2016 on or after 1 January nterpretations in issue, not yet effective in issue, not yet and Interpretations Standards Effective date or after 1 January 2016 on or after 1 January 2019 Annual period beginning on Annual period beginning Annual period beginning Annual period beginning S EME NT TAT S E FINANCIAL ARAT For the year ended 31 December 2015 the year ended For DATED AND IDATED HE CONSOL TO T NOTES SEP

Press Corporation Limited Annual Report 2015 56

3. 3.26 In millions of Malawi Kwacha

Strategic Report Corporate Governance Financial Statements On the Malawi Stock Exchange Strategic Report Corporate Governance Financial Statements On the Malawi Stock Exchange 57 Annual Report 2015 , prudently and , the amendments Press Corporation Limited . The fair values are In millions of Malawi Kwacha , gains and losses resulting from For the year ended 31 December 2015 the year ended For . S EME NT TAT S E FINANCIAL ARAT SEP DATED AND IDATED HE CONSOL TO T NOTES

Sale or Contribution of Assets between an . In making their judgement, the directors considered the (Continued) (Continued) The amendments to IFRS 10 and IAS 28 deal with situations where there is a sale or contribution 10 and IAS 28 deal with situations where The amendments to IFRS Specifically investor and its associate or joint venture. of assets between an that does not contain resulting from the loss of control of a subsidiary state that gains or losses is accounted for using the with an associate or a joint venture that a business in a transaction to the extent of the unrelated in the parent’s profit or loss only equity method, are recognised venture. Similarly investors’ interests in that associate or joint the remeasurement of investments retained in any former subsidiary (that has become an the remeasurement of investments retained for using the equity method) to fair value are associate or a joint venture that is accounted loss only to the extent of the unrelated investors’ recognised in the former parent’s profit or interests in the new associate or joint venture. Investor and its Associate or Joint Venture Amendments to IFRS 10 and IAS 28 Amendments to IFRS Standard, Amendment or interpretation

elekom Networks Malawi (TNM) as a subsidiary of Press Corporation Limited (PCL) The directors anticipate that other than IFRS 15 and IFRS 9, these Standards and Interpretations in future periods will have no The directors anticipate that other than IFRS instruments whilst IFRS 9 will impact the measurement of financial of the company. significant impact on the financial statements IFRS 15 will affect recognition of revenue. The directors of the Company assessed whether or not the Group has control over TNM based on whether the Group has The directors of the Company assessed whether or not the Group has control over TNM the practical ability to direct the relevant activities of TNM unilaterally In valuing the Company’s investments in unlisted companies, consideration is given to the sustainability of dividend streams, In valuing the Company’s investments in unlisted companies, consideration is given to growth in dividends and net assets of the investments concerned, together maintainable earnings, projected cost of equity,the engaged the services of a with recent or proposed transactions in the shares concerned or similar shares. The Company professional valuer who valued the unlisted investments at 31 December 2015. of and dispersion of the shareholdings Group’s absolute size of holding in TNM of 41.31% (2014: 41.31%) and the relative size Group has a sufficiently dominant voting owned by the other shareholders. After assessment, the directors concluded that the over TNM. interest to direct the relevant activities of TNM Limited and therefore the Group has control An external, independent valuation company, having appropriate recognised professional’s qualifications and recent experience having appropriate An external, independent valuation company, every year in the location and category of property being valued, values the Group investment property without compulsion. is based on the market price. The fair The fair value of fish older than 9 months, being the age at which it becomes marketable, make-up. The fair value of fingerlings value of mother fish is based on the market price of fish of similar age, breed and genetic is based on the present value of the net cash flows expected to be realised at maturity for on the date of the valuation based on market values, being the estimated amount for which a property could be exchanged marketing wherein the parties had each between a willing buyer and a willing seller in an arm’s length transactions after proper prudently and without compulsion. acted knowledgeably, The fair value of property recognised subsequent to initial recognition is based on market values. The market value of property The fair value of property recognised subsequent could be exchanged on the date of valuation between a willing buyer and a willing is the estimated amount for which a property marketing wherein the parties had each acted knowledgeably seller in an arm’s length transaction after proper A number of the Group’s accounting policies and disclosures require the determination of fair value, for both financial and non- A number of the Group’s accounting policies measurement and/or disclosure purposes based on the Fair values have been determined for financial assets and liabilities. information about the assumptions made in determining fair values is disclosed in following methods. Where applicable, further the notes specific to the asset or liability. ing policies account Significant Determination of T Valuation of unlisted investments Biological assets Property Determination of fair values nterpretations in issue, not yet effective in issue, not yet and Interpretations Standards 2016 on or after 1 January Effective date Annual period beginning 3.

iv) iv) iii) investment property ii) i)

4. on uncertainty es of estimati critical accounting judgements and key sourc 4.1

3.27

, the liquidity reserve was equivalent to 54.39% (2014: (Continued)

(Continued) Liquidity Ratio I - Net liquidity (total liquid asset less suspense accounts in foreign currency) divided by total deposits Liquidity Ratio I - Net liquidity (total liquid asset less suspense accounts in foreign currency) must be at least 30%. Cashflows arising from collateral realisation crystallise at an average period of 12 months and arise at the end of the 12 Cashflows arising from collateral realisation they are assumed to be nil. months period. Where cashflows are doubtful, no collateral in place, expected future cashflows are assumed to be nil. Where there is a borrowing agreement but by any tangible asset (by companies or individuals except bank Unsupported guarantees which are not backed flows; and guarantees) are assumed to result in nil cash there is no repayment agreement i.e. in instances of unsanctioned borrowing No cash flows are assumed to arise where limits. for example exceeding authorised overdraft As a complement to Section 38 of the Banking Act, 2009, the Reserve Bank of Malawi had issued the following guidelines on the As a complement to Section 38 of the Banking Act, 2009, the Reserve Bank of Malawi management of liquidity as at the reporting date: 61.31%) of total customer deposits. bearing assets and contingent liabilities. The Bank’s available capital is required to be a minimum of 10% (2014: 10%) of its risk assets and contingent liabilities. At the end of the year the Bank’s available capital was 20% (2014: 21.9%) of its risk bearing In accordance with Section 38 of the Banking Act, 2009, the Reserve Bank of Malawi has established the following requirements In accordance with Section 38 of the Banking Act, 2009, the Reserve Bank of Malawi as at the reporting date related to the Group’s banking business: Bank of Malawi equivalent to not less The Group’s banking business is required to maintain a liquidity reserve with the Reserve than 15.5% (2014: 15.5%) of total customer deposits. At the end of the year Significant judgment is required in determining the provision for income taxes. There are many transactions and calculations Significant judgment is required in determining the provision for income taxes. There anticipated tax audit issues based on for which the ultimate tax determination is uncertain. The Group recognizes liabilities for matters is different from the amounts estimates of whether additional taxes will be due. Where the final tax outcome of these tax assets and liabilities in the period in that were initially recorded, such differences will impact the current and deferred income which such determination is made. The Group reviews its financial assets to assess impairment at least on a quarterly basis. The impairment evaluation is done on a quarterly basis. The impairment financial assets to assess impairment at least The Group reviews its collectively. both individually and If there is evidence of impairment exists for these loans. significant loans whether objective The Group assess individually between the amount of loss is calculated as the difference an impairment loss has been incurred, the objective evidence that of estimated future cash flows. If the Group determines that no objective evidence loan’s carrying amount and the present value loans, it includes the loan in a group of loans with similar credit characteristics and of impairment exists for individually significant collectively assess them for impairment. account has remained unpaid for over three months after attaining sub- In the assessment of individual loans, if a borrower’s repayment in full is highly improbable, provisioning is warranted depending on the standard status and on which collection of collateral if any. estimated recoverable amount of the pledged it has recorded two cummulative monthly instalments arrears or for those An account attains a sub-standard status when an instalment has been missed. or yearly, biannually payable quarterly, makes collective evaluation of impairment by using estimated default rates based In determining the collective loss, the Group of financial asset. on historical loss experience of each group a) b) c) d) utory requirements Stat Prudential aspects of bank liquidity • Liquidity reserve requirement flows, discounted at the market rate of interest at the reporting date. the market rate of interest at the reporting flows, discounted at assumptions used: Key Fair value, which is determined for disclosure purposes, is calculated on the present value of future principal and interest cash value of future principal and interest cash purposes, is calculated on the present value, which is determined for disclosure Fair Determination of fair values Determination of fair S EME NT TAT S E FINANCIAL ARAT For the year ended 31 December 2015 the year ended For DATED AND IDATED HE CONSOL TO T NOTES SEP Press Corporation Limited Annual Report 2015 58

5.2 Act, 2009 capital adequacy requirement as per Section 10(1) of the Banking 5.3 5.1 5. 4.3 income taxes

4.2 financial assets impairment losses on

4.1 vi) non-derivative financial liabilities 4. nts and accounting judgeme ritical c on uncertainty timati KEy sources of es In millions of Malawi Kwacha

Strategic Report Corporate Governance Financial Statements On the Malawi Stock Exchange Strategic Report Corporate Governance Financial Statements On the Malawi Stock Exchange 59 Annual Report 2015 Press Corporation Limited In millions of Malawi Kwacha -statement of financial position For the year ended 31 December 2015 the year ended For S EME NT TAT S E FINANCIAL ARAT -weighted assets are determined according -weighted assets are determined according SEP DATED AND IDATED HE CONSOL TO T NOTES , creditor and market confidence and to sustain

(Continued)

of collection) divided by total deposits must be at least 20%. of collection) divided

Total capital (Tier 2), which consists of revaluation reserves and general provisions, when such general provisions have 2), which consists of revaluation reserves and general capital (Tier Total of Malawi. Supplementary capital must not exceed core capital i.e. shall be received prior approval of the Reserve Bank limited to 100% of total core capital. Core capital (Tier 1) which consists of ordinary share capital, share premium, retained profits, 60% of after-tax profits in the 60% of after-tax 1) which consists of ordinary share capital, share premium, retained profits, Core capital (Tier less any unconsolidated investment in financial companies. current year (or less 100% of current year loss), on statement of financial position assets plus risk- risk-weighted 2) of not less than 15% of its total A total capital (Tier position items. of financial weighted off-statement Liquidity Ratio II - Net liquidity (total liquid assets less suspense accounts in foreign currency and in the course accounts in foreign currency and cheques liquidity (total liquid assets less suspense Liquidity Ratio II - Net on statement of financial position assets plus risk- 1) of not less than 10% of total risk-weighted A core capital (Tier position items. of financial weighted off-statement Banking operations are categorised as either trading book or banking book and risk Banking operations are categorised as either to specified requirements that seek to reflect the varying levels of risk attached to assets and off to specified requirements that seek to reflect exposures. for establishing and maintaining at all times an adequate level of capital. The The Board of Directors of the bank is responsible Group’s policy is to maintain a strong capital base so as to maintain investor return is also recognised and the Group future development of the business. The impact of the level of capital on shareholders’ with greater gearing and the recognises the need to maintain a balance between the higher returns that might be possible advantages and security afforded by a lower gearing position. capital requirements throughout the The Group and individually regulated operations have complied with all externally imposed period. The Group also complied with these requirements in prior years. period. There have been no material changes in the Group’s management of capital during the The Reserve Bank of Malawi sets and monitors capital requirements for the Group’s banking business as a whole. Regulatory for the Group’s banking business as a Malawi sets and monitors capital requirements The Reserve Bank of maintained will the Reserve Bank of Malawi, which if not the minimum amount of capital required by capital requirement is supervisory intervention. usually permit or require The Reserve Bank of Malawi requires the Group’s banking business to maintain a In implementing current capital requirements, assets. The minimum capital ratios are as follows: prescribed ratio of total capital to total risk-weighted • The Group’s banking business regulatory capital is analysed into two tiers: The Group’s banking business regulatory capital • • • liquidity ratio II was 54.39% (2014: 61.31%). ratio I was 54.45% (2014: 61.50%) and the Bank’s liquidity At the end of the year, Regulatory capital • uirements utory req Stat

5.4

5.

202 467 613 2014 1,076 26,542 27,226 (396) 37,620 9,116 21.9% 15.9% 171,764 171,764

11 613 467 2015 1,530 13.4% 19.8% 40,800 11,654 27,605 33,707 (7,182) 205,837 205,837

(Continued)

(Continued)

Strategic risk Credit risk; Liquidity risk; Market risk; and Currency risk otal risk-weighted assets otal risk-weighted assets expressed as a percentage of risk-weighted tier 1 capital Total Capital ratios assets expressed as a percentage of total risk-weighted regulatory capital Total T assets Risk-weighted Retail bank, corporate bank and treasury Total regulatory capital Total Revaluation reserve Revaluation reserve The Group’s banking business regulatory capital position at 31 December was as follows: business regulatory capital position at 31 December The Group’s banking The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management framework. The Board of Directors has overall responsibility for the establishment and oversight of strategy and requires that management The Board develops the risk appetite and risk tolerance limits appropriate to the Group’s within the agreed parameters. The maintains an appropriate system of internal controls to ensure that these risks are managed the Audit Committee and the Board delegates risk related responsibilities to three Board Committees: The Risk Committee, and monitoring Group risk management Appointments and Remuneration Committee, which are all responsible for developing Available for sale reserve Available Unconsolidated investments 2 capital Tier Loan loss reserve Share premium Retained earnings Ordinary share capital Tier 1 capital Tier Financial risk management uirements utory req Stat Overview The Group has exposure to the following risks from its transactions in financial instruments: • • • • • the Group’s objectives, policies and This note presents information about the Group’s exposure to each of the above risks, Group’s management of capital. processes for identification, measurement, monitoring and controlling risk, and the process and relies both on individual The Group’s approach to risk management is based on a well-established governance balances stringent corporate responsibility and collective oversight, supported by comprehensive reporting. This approach oversight with independent risk management structures within the business units. S EME NT TAT S E FINANCIAL ARAT For the year ended 31 December 2015 the year ended For DATED AND IDATED HE CONSOL TO T NOTES SEP

Press Corporation Limited Annual Report 2015 60 risk management framework 6. 5. capital 5.4 Regulatory In millions of Malawi Kwacha

Strategic Report Corporate Governance Financial Statements On the Malawi Stock Exchange Strategic Report Corporate Governance Financial Statements On the Malawi Stock Exchange 61 . . In Annual Report 2015 Press Corporation Limited . In millions of Malawi Kwacha For the year ended 31 December 2015 the year ended For S EME NT TAT S E FINANCIAL ARAT SEP DATED AND IDATED HE CONSOL TO T NOTES

(Continued) (Continued) rade and other receivables policies in their specified areas. All Board Committees have non-executive members and report regularly to the Board of members and report regularly to areas. All Board Committees have non-executive policies in their specified Directors on their activities. to set appropriate and analyse the risks faced by the Group, policies are established to identify The Group’s risk management are reviewed Risk management policies and systems and to monitor risks and adherence to limits. risk limits and controls, a disciplined and services offered. The Group strives to maintain in market conditions, products and regularly to reflect changes their roles and obligations. in which all employees understand constructive control environment, procedures, and the Group’s risk management policies and responsible for monitoring compliance with The Risk Committee is Risk Committee relation to the risks faced by the Group. The of the risk management framework in for reviewing the adequacy Internal Audit Department which undertakes both regular and ad-hoc reviews of risk is assisted in these functions by the Group results of which are reported to the Risk Committee. management controls and procedures, the Group if a customer or counterparty to a financial instrument fails to meet its Credit risk is the risk of financial loss to the from the Group’s receivables from customers, loans and advances, investment contractual obligations, and arises principally securities and cash and cash equivalents. Loans and advances are non-derivative financial assets with fixed or determinable payments that are not quoted in an active Loans and advances are non-derivative financial assets with fixed or determinable in the near term. market and that the Group’s banking business does not intend to sell immediately or substantially all of the risks and rewards When the Group’s banking business is the lessor in a lease agreement that transfers loans and advances. incidental to ownership of an asset to the lessee, the arrangement is presented within enters into an agreement to resell the asset When the Group’s banking business purchases a financial asset and simultaneously arrangement is accounted for as a loan or (or a substantially similar asset) at a fixed price on a future date (“reverse repo”), the advance, and the underlying asset is not recognised in the Bank’s financial statements. The Group limits its exposure to credit risk by only investing in liquid securities and only with counterparties that have a good The Group limits its exposure to credit risk by only investing in liquid securities and only a track record of profitable business credit rating and ventures into profitable businesses. Given these high credit ratings, management, the Group does not expect any counterparty to fail to meet its obligations. The Group has established a credit policy under which each new customer is analysed individually for creditworthiness before The Group has established a credit policy terms and conditions are offered. The Group’s review includes external ratings, the Group’s standard payment and delivery which represents Purchasewhen available, and in some cases bank references. limits are established for each customer, approval from the credit control department; these limits are reviewed regularly the maximum open amount without requiring Customers that fail to meet the Group’s benchmark creditworthiness may transact with the Group only on a prepayment or cash creditworthiness may transact with the Group only on a prepayment or cash Customers that fail to meet the Group’s benchmark basis. transacting with the Group for many years, and losses have occurred infrequently Most of the Group’s customers have been monitoring customer credit risk, customers are grouped according to their credit characteristics, including whether they are an monitoring customer credit risk, customers aging profile, maturity and existence industry, end-user customer, whether they are a wholesale, retail or individual or legal entity, on a restricted customer list, and future of previous financial difficulties. Customers that are graded as “high risk” are placed sales are made on a prepayment or cash basis. The Group does not require collateral in respect of credit sales. losses in respect of trade and The Group establishes an allowance for impairment that represents its estimate of incurred that relates to individually significant other receivables. The main components of this allowance are a specific loss component exposures. nt risk manageme Financial However, geographically there is no concentration of credit risk. geographically However, The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer The Group’s exposure to credit risk is influenced 6.1 credit risk iii) loans and advances ii) investments

i) t 6. risk management framework - - - - 4 465 461 107 , 2014 1,037 2,300 3,337 2,300

- - - - 72 72 . 2015 1,324 2,970 1,468 4,438 2,970 - Company - - 2014 3,438 7,323 41,330 17,728 66,293 17,391 65,852 20,829 198,526 219,355 Restated Group

- - 2015 5,028 8,151 76,068 19,628 20,257 59,624 25,285 103,598 267,069 292,354

(Continued)

(Continued) otal recognised financial instruments otal credit exposure otal unrecognised financial instruments in normal circumstances, there would be no intention of settling net, or of realising the financial assets and settling the financial in normal circumstances, there would be no intention of settling net, or of realising the the financial assets are not offset against the respective financial liabilities for financial Consequently, liabilities simultaneously. liabilities in form of cash deposits amounting to K2,849 million the Group had financial reporting purposes. As at end of the year, of default will be offset against such (2014: K2,467 million) held as security for some loans and advances which in the event loans and advances. and loan facilities extended to its The Group’s credit risk is primarily attributed to credit sales made to customers, overdraft for impairment. The specific customers. The amounts presented in the statement of financial position are net of provisions evidence that the asset is impaired. provision represents allowances for estimated irrecoverable amounts when there is objective other Government 2013, the Government of Malawi issued promissory notes to settle its exposure and several In February The total exposure of the Group to these Guaranteed loans, including interest, up to the effective date of the promissory notes. 2013 was K16.9 billion. The Group accepted the promissory notes to settle Government Guarantee loans as at 1 February notes are in blocks with the longest certificate maturing 2013. The promissory Government Guarantee loans effective 1 February during each quarter in 2016. The notes attract interest at the rate of earliest 91 day treasury bill yield plus 2% In respect of certain financial assets, the Group has legally enforceable rights to offset them with financial liabilities. However In respect of certain financial assets, the Group has legally enforceable rights to offset The Group’s banking business deposits its cash with the Reserve Bank of Malawi and other highly reputable banks in and Bank of Malawi and other highly reputable business deposits its cash with the Reserve The Group’s banking outside Malawi. are registered stocks are limited because the counterparties with banks, treasury bills and local The credit risks on balances ratings. institutions with high credit Trade and other receivables – Group companies Trade Other Investments Gross maximum exposure Long term loans receivable – Group and other receivables Trade

Loans and advances to customers Guarantees and performance bonds Letters of credit T Finance lease receivables Cash and cash equivalents T T Exposure of credit risk collateral or other credit enhancements. credit risk without taking into account any Maximum exposure to to credit risk by class of financial instrument. Financial instruments include The table below shows the maximum exposure under IAS39 Financial instruments: recognition and measurement as well as other financial instruments defined and recognized maximum exposure is shown gross, before the effect of mitigation through the use of financial instruments not recognised. The master netting and collateral agreements. nt risk manageme Financial Net exposure to credit risk without taking into account any collateral or other credit enhancements S EME NT TAT S E FINANCIAL ARAT For the year ended 31 December 2015 the year ended For DATED AND IDATED HE CONSOL TO T NOTES SEP a) Press Corporation Limited Annual Report 2015 62 iv) cash and cash equivalents 6. 6.1 credit risk In millions of Malawi Kwacha b)

Strategic Report Corporate Governance Financial Statements On the Malawi Stock Exchange Strategic Report Corporate Governance Financial Statements On the Malawi Stock Exchange 63 - 971 2014 4,026 3,055 3,738 2,035 (1,703) 66,293 14,819 45,413 60,232 Annual Report 2015 680 (319) 2015 Press Corporation Limited 6,825 5,041 1,784 1,999 (1,319) 75,006 96,412 21,406 103,598 In millions of Malawi Kwacha be such a deposit or salary at

For the year ended 31 December 2015 the year ended For S EME NT TAT S E FINANCIAL ARAT SEP DATED AND IDATED HE CONSOL TO T NOTES

(Continued) limit at least once a month. For personal accounts, there should personal accounts, there should limit at least once a month. For

at least once every fortnight that will swing the account into a credit balance or at least decrease in exposure to at least once every fortnight that will swing the account into a credit balance or at least (Continued)

least once a month. the situation is unauthorised overdrawn accounts with no limit or in excess of marked limits the Group ensures that For regularised within a month (30 days). below 50% of the marked initiated corporate and business accounts with overdraft facilities, the Group ensures that it receives customer For deposits ii.

Total carrying amount carrying amount Total

Impaired loans and advances that it is probable that it will be unable Impaired loans and advances are loans and advances for which the Group determines /advances agreement(s). These loans are to collect all principal and interest due according to the contractual terms of the loan graded 9 in the Group’s internal credit risk grading system. due but not impaired loans Past due but the Group believes that These are loans and advances where contractual interest or principal payments are past the stage of collection of amounts impairment is not appropriate on the basis of the level of security/collateral available and/or system. owed to the Group. These are graded 7 and 8 in the Group’s internal credit risk grading Neither past due nor impaired loans to fully recover the estimated future These are performing loans that have no indication of impairment and the Group expects cash flows. These are graded 1 to 6 in the Group’s internal credit risk grading system. In ensuring this, the Group puts in place the following credit quality measures; i. Neither past due nor impaired Grade 1-3 Low risk Grade 4-6 Fair risk Grade 4-6 Fair Carrying amount Collective impairment Carrying amount Grade 7: Watch list Grade 7: Watch Past due but not impaired Past Grade 8: sub-standard Carrying amount Allowance for impairment Loans and advances Individually impaired Grade 9: Impaired Group The credit quality of loans and advances is managed by the Group using internal credit rating. The table below shows the credit using internal credit rating. The table below and advances is managed by the Group The credit quality of loans rating system. advances, based on the Group’s credit quality of the loans and nt risk manageme Financial 6. 6.1 credit risk c) and advances credit quality of loans

Net 2,035 680 , cash,

(1,703) (1,319)

allowance for

3,738 1,999 Loans and advances to customers Gross impairment

(Continued) (Continued)

(Continued) For loans, be they repayable monthly, quarterly, biannually or yearly, the Group expect the amount due to be settled on the Group expect the amount biannually or yearly, quarterly, loans, be they repayable monthly, For of 30 days. any arrears is cleared before the expiry the agreed date and that after is expected to be made 1 month (30 days) from seasonal facilities, full repayment Where the exposure emanates . or balloon arrangements are in place or expiry date just as is the case where bullet end of the selling period Grade 9: Individually impaired The Group holds collateral against loans and advances to customers in the form of mortgage interests over property The Group holds collateral against loans and advances to customers in the form of mortgage of fair value are based on the equities, registered securities over assets, guarantees and other forms of collateral. Estimates when a loan is individually assessed value of collateral assessed at the time of borrowing, and generally are not updated except when securities are held as part of as impaired. Collateral generally is not held over loans and advances to banks, except reverse repurchase and securities lending activity. Grade 9: Individually impaired 31 December 2014

Write-off policy Write-off related allowances for impairment losses) when it is determined that the loans The Group writes off a loan balance (and any after considering information such as the occurrence of significant changes in are uncollectible. This determination is reached that the borrower/issuer can no longer pay the obligation, or that proceeds from the borrower/issuer’s financial position such the entire exposure. collateral will not be sufficient to pay back and net (of allowances for impairment) amounts of individually impaired assets by Set out below is an analysis of the gross risk grade. iii. iv. Allowance for impairment its loan portfolio. represents its estimate of incurred losses in an allowance for impairment losses that The Group establishes loss component that relates to individual significant exposures and collective The components of this allowance are a specific allowance based on sector performance. Group 31 December 2015 nt risk manageme Financial S EME NT TAT S E FINANCIAL ARAT For the year ended 31 December 2015 the year ended For DATED AND IDATED HE CONSOL TO T NOTES SEP Press Corporation Limited Annual Report 2015 64 6. 6.1 credit risk In millions of Malawi Kwacha

c) and advances credit quality of loans

Strategic Report Corporate Governance Financial Statements On the Malawi Stock Exchange Strategic Report Corporate Governance Financial Statements On the Malawi Stock Exchange - 65 25 368 2014 1,586 8,951 2,467 4,196 3,841 701 2,655 13,426 25,107 142 58,155 60,810

1 25 392 361 452 Annual Report 2015 2015 1,206 9,693 2,849 5,488 4,325 1,036 11,485 28,577 Press Corporation Limited 63,478 64,684 In millions of Malawi Kwacha

For the year ended 31 December 2015 the year ended For S EME NT TAT S E FINANCIAL ARAT SEP DATED AND IDATED HE CONSOL TO T NOTES (Continued) (Continued)

(Continued) An estimate of the fair value of collateral and other security enhancements held against financial assets is shown below: held against financial assets is value of collateral and other security enhancements An estimate of the fair nt risk manageme Financial Total Residential property Group impaired Against individually Motor vehicles Commercial property Cash

Against the rest of the loan book Motor vehicles Commercial property Residential property Cash Equities Treasury bill Treasury Mortgages over farmland Bank guarantees Total Grand total Collateral repossessed properties in an orderly fashion. The proceeds are used to reduce or repay the It is the Group’s policy to dispose of repossessed does not occupy repossessed properties for its business. outstanding loan balance. In general the Group 6. 6.1 credit risk c) and advances credit quality of loans

2 % 26 17 24 30 100 2014 1,590 18,097 11,239 16,335 67,996 20,235 1 500

5 3 % 29 14 21 28 100 2015 5,169 3,368 30,395 14,484 22,042 29,778 105,236

reasury and Financial Institutions . An analysis of concentrations of credit risk at . An analysis of concentrations (Continued) (Continued)

(Continued) Loans and advances to customers Loans and advances Concentration by sector Wholesale and retail The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient cash to meet its The Group’s approach to managing liquidity is to ensure, as far as possible, that it will losses or risking damage to the liabilities when due, under both normal and stressed conditions, without incurring unacceptable Group’s reputation. T The daily management of liquidity of the Group’s banking business is entrusted with the Credit quality of good credit standing, enters into master netting manage the level of credit risk, the Group deals with counterparties To other financial agreements provide for the net agreements wherever possible, and when appropriate, obtains collateral. Master netting assets settlement of contracts with the same counterparty in the event of default. its financial liabilities as they fall due. Liquidity risk is the risk that the Group will encounter difficulty in meeting obligations from assets. Liquidity risk arises from financial liabilities that are settled with cash or other financial Credit quality of monitored on an on-going basis. In The risk that counterparties to trading instruments might default on their obligations is investment securities fair value and the volatility of the fair monitoring credit risk exposure, consideration is given to trading instruments with a positive value of trading instruments. profile of their financial assets and Division (TFID). TFID receives information from other business units regarding the liquidity TFID then maintains a portfolio of liabilities and details of other projected cash flows arising from projected future business. liquid investment securities, loans and advances to banks and other inter- liquid assets, largely made up of short-term short-term The liquidity requirements of business bank facilities, to ensure that sufficient liquidity is maintained within the Group as a whole. Other Personal Agriculture Manufacturing Concentration by sector percentage

Finance and insurance Wholesale and Retail Other The Group monitors its banking business concentrations of credit risk by sector banking business concentrations of credit The Group monitors its below: the reporting date is shown Personal Agriculture Manufacturing Finance and insurance Management of liquidity risk nt risk manageme Financial S EME NT TAT S E FINANCIAL ARAT For the year ended 31 December 2015 the year ended For DATED AND IDATED HE CONSOL TO T NOTES SEP 6.2 liquidity risk

Press Corporation Limited Annual Report 2015 66 i)

In millions of Malawi Kwacha 6. 6.1 credit risk c) and advances credit quality of loans

Strategic Report Corporate Governance Financial Statements On the Malawi Stock Exchange Strategic Report Corporate Governance Financial Statements On the Malawi Stock Exchange 67 or 59% 2014 62% 65% 62%

Annual Report 2015 72% 54% 54% 65% 2015 Press Corporation Limited In millions of Malawi Kwacha .

For the year ended 31 December 2015 the year ended For S EME NT TAT S E FINANCIAL ARAT SEP DATED AND IDATED HE CONSOL TO T NOTES (Continued)

(Continued) The key measure used by the Group for managing liquidity risk is the ratio of net liquid assets to deposits from customers. F The key measure used by the Group for managing as including cash and cash equivalents and investment securities for which there this purpose net liquid assets are considered from banks, other borrowings and commitments maturing within the next month. is an active and liquid market less any deposits Group’s compliance with the liquidity limit established by the but not identical, calculation is used to measure the A similar, Group banking business ratio of net liquid assets to deposits from customers at Reserve Bank of Malawi. Details of the reported period were as follows: the reporting date and during the reporting units are funded through deposits from customers. Any short-term fluctuations are funded through treasury activities such as fluctuations are funded through treasury deposits from customers. Any short-term units are funded through agreements and others. facilities, repurchase inter-bank local regulatory limits on a daily basis. of all operating units of the Group with TFID monitors compliance covering testing is conducted under a variety of scenarios is monitored and regular liquidity stress The daily liquidity position and approval and procedures are subject to review severe market conditions. All liquidity policies both normal and more units. A liquidity position of both the Group and operating Committee (ALCO). Daily reports cover the by Asset and Liability is submitted regularly to ALCO any exceptions and remedial action taken, summary report, including nt risk manageme Financial Exposure to liquidity risk Management of liquidity risk (Continued) Maximum for the period Minimum for the period for the period Average At 31 December ii) i) 6. 6.2 liquidity risk

990 340 680 3,071 4,682 2,928 4,259 8,662 453 6,465 6,813 31,495 36,441 134 211,402 140,378 211,852 amount 290,298 35,270 33,343 Carrying

340 680 Total 3,777 1,791 8,361 4,516 4,259 8,662 453 134 9,107 55,055 58,803 10,945 235,305 140,721 213,109 313,917 35,270 33,343 - - - - - 3 22 Over 1,791 5,916 2,117 1 year 7,707 2,117 36,703 36,725 32,229 - - 32,232 ------3 -12 1,939 3,777 1,889 2,809 1,939 5,666 15,132 17,941 23,371 17,248 - - 42,325 1,706 - months - - - - - 506 510 1- 3 959 1,946 2,013 453 134 644 12,220 49,436 35,324 50,574 13,237 35,270 months ------340 680 1,274 4,259 1,190 8,662 340 18,400 680 125,670 131,203 188,786 160,534 1 month Less than

(Continued)

(Continued) otal financial liabilities otal financial liabilities otal financial liabilities otal financial liabilities Trade and other payables Trade T Trade and other payables Trade Loans and borrowings Loans and borrowings Long-term loans to Group companies Bank overdraft Trade and other payables to Group companies Trade T At 31 December 2014 Company At 31 December 2015 Bank overdraft Loans and borrowings Liabilities to customers At 31 December 2014 – restated Bank overdraft and other payables Trade T T Trade and other payables Trade Loans and borrowings Liabilities to customers Bank overdraft Group At 31 December 2015 The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact including estimated interest payments and contractual maturities of financial liabilities, The following are the of netting agreements:- nt risk manageme Financial S EME NT TAT S E FINANCIAL ARAT For the year ended 31 December 2015 the year ended For DATED AND IDATED HE CONSOL TO T NOTES SEP

Press Corporation Limited Annual Report 2015 68 6. 6.2 liquidity risk In millions of Malawi Kwacha

Strategic Report Corporate Governance Financial Statements On the Malawi Stock Exchange Strategic Report Corporate Governance Financial Statements On the Malawi Stock Exchange 69 9,596 8,662 76,058 59,624 36,441 33,343 32,835 290,298 299,894 111,749 211,852 19,628

------34 -term Annual Report 2015 164 34 - 198 198 OTHEr tOTAL Press Corporation Limited

- - - - - In millions of Malawi Kwacha 100 747 ZAR 1,077 977 80 250 997 For the year ended 31 December 2015 the year ended For

- - - - - 61 S EME NT TAT S E FINANCIAL ARAT 8,124 (1,168) EURO 8,445 8,384 1,489 9,613 SEP DATED AND IDATED HE CONSOL TO T NOTES - - - - - 30 GBP 3,337 220 3,117 3,117 - 3,307

- - - 550 USD 44,761 11,446 83,332 40,301 48,699 23,187 (38,571) 3,910

MK 8,662 58,883 71,448 13,254 76,058 32,835 2,852 20,158 193,205 151,131 242,076 48,871 (Continued)

otal financial assets otal financial liabilities nt risk manageme Financial Market Risk Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity and commodity exchange rates, interest rates and equity that changes in market prices, such as foreign Market risk is the risk of market risk holdings of financial instruments. The objective future cash flows or the value of its prices will affect the Group’s the return on risk. acceptable parameters, while optimising and control market risk exposures within management is to manage

T Trade and other receivables Trade imbalances. not hedged as those currency positions are considered to be long-term in nature. The Group’s investments in subsidiaries are currency positions: The Group had the following significant foreign The Group is exposed to currency risk mainly on borrowings that are denominated in a currency other than the functional are denominated in a currency other than to currency risk mainly on borrowings that The Group is exposed South African Rand (ZAR) and in (GBP), Euro and (USD), Great British Pound Dollars primarily U.S. currencies of Group entities, in the financial services sector. foreign exchange deals denominated in foreign currencies, the Group ensures that its net exposure In respect of other monetary assets and liabilities selling foreign currencies at spot rates when necessary to address short is kept to an acceptable level by buying or Net balance open position Trade and other payables Trade Financial liabilities Cash and cash equivalents Finance leases, loans and advances to customers Group Customers deposits T Bank overdraft Loans and borrowings Other investments At 31 December 2015 Financial assets Investments in joint ventures and associates Currency risk 6.3 6. a)

72 680 3,071 2,928 1,324 4,259 (6,752) 134 6,813 41,330 19,628 73,616 65,852 31,495 146,633 153,446 151,978 211,402 35,270 17,728 218,154 140,378 72 ------36 203 - - 1,759 1,759 - - - - 1,556 167 OTHEr tOTAL ------617 584 774 332 1 1 - ZAR - 1 190 157 285 ------789 - - - - - 3,128 1,006 1,795 2,273 855 (1,333) EURO ------GBP - - - 3,719 4,001 4,047 3,585 328 134 46 ------35 35 USD 35 - - 62,358 21,940 22,860 1,011 45,811 34,536 20,193 (16,547) 7,629

72 MK 680 3,071 2,928 1,324 4,259 36,562 41,330 99,616 11,302 134 6,813 19,628 50,756 146,597 36 153,410 151,978 141,377 15,692 163,968 26,200 22,591 (Continued)

(Continued) (Continued) otal financial liabilities otal financial assets otal financial liabilities otal financial assets Long term payable group Loans and borrowings and other payables Trade T Net balance open position Cash and cash equivalents Trade and other receivables – Group companies Trade T Financial liabilities Bank overdraft Trade and other receivables Trade Financial assets Investments in joint ventures associates and subsidiaries Company At 31 December 2015 Net balance open position T Cash and cash equivalents Other Investments Group (Continued) – restated At 31 December 2014 Financial assets and associates Investments in joint ventures Trade and other receivables Trade Finance leases, loans and advances Finance leases, loans to customers Customers deposits T Financial liabilities Bank overdraft Loans and borrowings and other payables Trade nt risk manageme Financial Market Risk S EME NT TAT S E FINANCIAL ARAT For the year ended 31 December 2015 the year ended For DATED AND IDATED HE CONSOL TO T NOTES SEP Press Corporation Limited Annual Report 2015 70 a) currency risk 6. 6.3 In millions of Malawi Kwacha

Strategic Report Corporate Governance Financial Statements On the Malawi Stock Exchange Strategic Report Corporate Governance Financial Statements On the Malawi Stock Exchange - - 71 4 2 990 340 461 465 2014 4,682 135,246 - 129,818 6,465 453 136,283 107 ------3 - - - - - Annual Report 2015 2015 OTHEr tOTAL Press Corporation Limited ------

In millions of Malawi Kwacha ZAR - - - - -

------For the year ended 31 December 2015 the year ended For Company - - - - - 3 EURO S EME NT TAT S E FINANCIAL ARAT 2014 1,606 (3,411) 2 ------SEP DATED AND IDATED HE CONSOL TO T NOTES GBP - - - - - 22 (117) 2015 ------(3,857) 8 USD - - 24 Group

24 24

4 MK 990 340 461 465 4,682 6,465 453 135,246 129,794 136,259 83

(Continued)

(Continued) (Continued) otal financial liabilities otal financial assets

Net balance open position

T Trade and other payables Trade Loans and borrowings Long term payable group Financial liabilities

Bank overdraft T Cash and cash equivalents Trade and other receivables – Group companies Trade and other receivables Trade Investments in joint ventures associates Investments in joint ventures and subsidiaries Financial assets – Group Long term loans receivable At 31 December 2014 Foreign currency had weakened/strengthened by 10% against its major trading currencies, with all At the reporting date, if the Malawi Kwacha sensitivity as follows, mainly as a result of foreign profit for the year would have been higher/lower other variables held constant, post-tax exchange gains/losses: Company United States Dollar Great British Pound Euro South African Rand This analysis is based on foreign currency exchange rate variances that the Group considered to be reasonably possible at the This analysis is based on foreign currency exchange rate variances that the Group considered reporting date. nt risk manageme Financial Market Risk

a) currency risk 6. 6.3

7,323 8,662 8,151 17,728 66,293 65,852 41,330 19,628 9,596 33,343 36,441 19,628 59,624 76,058 32,835 218,154 290,298 211,852 299,894 103,598 amount Carrying

Total 7,323 8,662 8,151 17,728 66,293 65,852 41,330 19,628 9,596 33,343 36,441 19,628 59,624 76,058 32,835 218,154 290,298 211,852 299,894 103,598

------216 Non- 68,605 17,728 31,249 19,628 33,559 33,343 81,268 19,628 28,805 32,835 47,709 interest sensitive

------3 Over 6,849 1,409 7,439 1,533 1 year 24,687 23,182 15,958 39,140 15,955 30,168 32,945 ------404 652 3 - 12 45,768 31,762 13,602 35,331 33,868 16,427 69,199 17,441 50,245 18,302 months

------70 60 1 - 3 9,844 1,855 52,836 16,603 26,319 57,483 36,743 34,888 94,226 11,912 26,031 56,223 months

------974 Less than 8,662 4,788 18,000 18,000 11,273 170,170 160,534 16,061 1 month (154,109) (Continued)

(Continued) otal financial assets otal financial liabilities otal financial assets The Group adopts a policy of ensuring that between 40 and 60 percent of its exposure to changes in interest rates on of its exposure to changes in interest of ensuring that between 40 and 60 percent The Group adopts a policy rate basis. borrowings is on a fixed Exposure of interest profile gap items. A summary of the Group’s maturity an interest rate risk on off balance sheet The Group does not bear rate risk-non-trading portfolio is as follows: position on non-trading portfolio T Finance lease receivables Trade and other receivables Trade Loans and advances to customers Cash and cash equivalents Other Investment At 31 December 2014 - restated Financial assets Investments in joint ventures and associates Interest sensitivity gap T Trade and other payables Trade Financial liabilities Bank overdraft Loans and borrowings Customer deposits Finance lease receivables T Trade and other receivables Trade Loans and advances to customers Cash and cash equivalents Other Investment Group At 31 December 2015 Financial assets Investments in joint ventures and associates nt risk manageme Financial Market Risk S EME NT TAT S E FINANCIAL ARAT For the year ended 31 December 2015 the year ended For DATED AND IDATED HE CONSOL TO T NOTES SEP Press Corporation Limited Annual Report 2015 72

b) nterest rate risk i 6. 6.3 In millions of Malawi Kwacha

Strategic Report Corporate Governance Financial Statements On the Malawi Stock Exchange Strategic Report Corporate Governance Financial Statements On the Malawi Stock Exchange

73 72 72 134 680 3,071 6,813 2,928 1,324 4,259 35,270 31,495 amount 146,633 6,752 153,446 211,402 151,978 140,378 Carrying

72 72 134 680 Annual Report 2015 Total 3,071 6,813 2,928 1,324 4,259 35,270 31,495 146,633 6,752 153,446 211,402 151,978 140,378 Press Corporation Limited

------In millions of Malawi Kwacha 72 134 134 159 Non- 35,429 35,270 33,176 151,916 152,050 151,978 interest sensitive For the year ended 31 December 2015 the year ended For

------19 S EME NT TAT S E FINANCIAL ARAT Over 1,048 1,048 (1,048) 1 year 17,414 17,395 - 15,531 SEP DATED AND IDATED HE CONSOL TO T NOTES ------4,481 3,071 1,410 1,324 2,650 3 - 12 1,324 (3,157) 13,695 11,045 32,073 months

------72 470 470 72 (398) 1 - 3 1,781 39,016 13,820 12,039 months

------680 680 Less

than 1,115 4,259 (680)

131,044 125,670 (113,044) 1 month (Continued)

(Continued) (Continued) otal financial liabilities otal financial assets otal financial liabilities Trade and other payables Trade T Interest sensitivity gap

Trade and other payables to Group companies Trade Trade and other receivables Trade T Loans and borrowings Company At 31 December 2015 Trade and other receivables – Group companies and other receivables – Group Trade Financial liabilities Bank overdraft Interest sensitivity gap Financial assets Investments in subsidiaries joint ventures and associates Cash and cash equivalents T Trade and other payables Trade Loans and borrowings Customer deposits Group - restated At 31 December 2014 Financial liabilities Bank overdraft nt risk manageme Financial Market Risk

b) nterest rate risk i 6. 6.3

4 990 453 340 107 461 465 848 2014 2014 6,465 4,682 2,897 3,745 57,946 amount 129,818 136,283 135,246 16,964 74,910 Carrying

4 453 990 340 461 465 107 Total 2015 2015 6,465 4,682 3,102 1,244 4,346 62,034 24,886 86,920 129,818 136,283 135,246

- - - - - 453 453 461 465 Non- 135,719 136,172 135,246 interest sensitive

------4 4 Over 2,830 2,830 (2,826) 1 year ------990 2,379 1,389 3 - 12 (2,379) months

------803 463 107 340 107 (696) 1 - 3 months

------Less than 1 month (Continued)

(Continued)

(Continued) otal financial liabilities otal financial assets Other market price risk listed on the Malawi Stock Exchange. equity securities Equity price risk arises from available-for-sale it to price risk. As at 31 December 2015, the Company had the followings financial assets that exposed Interest sensitivity gap Trade and other payables to Group companies Trade and other payables Trade T

Loans and borrowings Trade and other receivables – Group companies Trade and other receivables Trade T Financial liabilities Bank overdraft Financial asset Investment in National Bank of Malawi Financial asset Company At 31 December 2014 Investments in subsidiaries joint ventures and associates Cash and cash equivalents Investment in National Bank of Malawi Networks Malawi Limited Investment in Telekom variables held constant, the At 31 December 2015, if the share price had weakened/strengthened by 5% with all other profit for the year would have been higher/lower as follows: Company’s post-tax Investment in Telekom Networks Malawi Limited Investment in Telekom Financial assets Long term loans receivable-Group

The analysis is performed on the same basis for 2015 and 2014 and assumes that all other variables remain the same. The analysis is performed on the same basis for 2015 and 2014 and assumes that all nt risk manageme Financial Market Risk S EME NT TAT S E FINANCIAL ARAT For the year ended 31 December 2015 the year ended For DATED AND IDATED HE CONSOL TO T NOTES SEP

c) Press Corporation Limited Annual Report 2015 74

b) nterest rate risk i 6. 6.3 In millions of Malawi Kwacha

Strategic Report Corporate Governance Financial Statements On the Malawi Stock Exchange Strategic Report Corporate Governance Financial Statements On the Malawi Stock Exchange 75 Fair 7,568 4,259 8,662 8,827 value 35,270 32,955 41,330 65,852 17,728 33,343 39,363 59,624 19,628 76,152 69,850 202,328 211,852 293,220 271,014 106,783 140,378 212,862 Annual Report 2015 Total 7,323 4,259 8,662 8,151 35,270 31,495 41,330 65,852 17,728 33,343 36,441 59,624 19,628 76,058 66,293 198,526 211,852 290,298 267,059 103,598 amount 140,378 211,402 carrying Press Corporation Limited

------In millions of Malawi Kwacha cost 4,259 8,662 35,270 31,495 41,330 33,343 36,441 73,773 - - 41,330 73,773 211,852 290,298 140,378 211,402 Amortised For the year ended 31 December 2015 the year ended For

------S EME NT TAT S E FINANCIAL ARAT 2,285 - - - - 2,285 - - - for sale SEP Available DATED AND IDATED HE CONSOL TO T NOTES

------and 7,323 8,151 - - Loans 65,852 17,728 59,624 19,628 66,293 157,196 191,001 103,598 receivables

36 34 17 27 30 18 27 24 20 36 34 27 30 17 27 24 20 18

notes (Continued)

ccounting classifications and fair values ccounting classifications A liabilities, and their of each class of financial assets and out the Group’s and company’s classification The table below sets fair values: Financial assets and liabilities Financial assets and Customer deposits Trade and other payables Trade Loans and advances to customers Financial liabilities Bank overdraft Loans and borrowings Finance lease receivables Financial assets Cash and cash equivalents Trade and other receivables Trade Other investments Customer deposits At 31 December 2014 – restated Trade and other payables Trade Financial liabilities Bank overdraft Loans and borrowings Loans and advances to customers

Financial assets Cash and cash equivalents Trade and other receivables Trade Other investments Finance lease receivables Group At 31 December 2015 nt risk manageme Financial

6.4 6.

4 31 72 72 680 134 340 422 990 107 461 465 Fair 9,063 3,154 4,894 1,324 7,039 value 3,071 16,777 22,301 23,271 6,677 112,900 153,446 136,283 102,912 4 31 72 72 680 134 340 422 990 107 461 465 Total 9,063 2,928 4,682 1,324 16,777 22,301 3,071 23,271 6,465 6,813 112,900 153,446 136,283 amount 102,912 carrying

------31 680 134 340 422 990 cost 2,928 4,682 - - 3,071 6,813 - - 6,465 Amortised

------9,063 16,777 22,301 23,271 - for sale 112,900 151,978 102,912 135,246 Available ------4 72 72 107 461 465 and 1,468 1,037 1,324 - Loans - - receivables

14 14 15 27 35 30 34 15 27 35 32 30 34 24 16 16 27 23 27 23 24 19

notes

(Continued) (Continued)

Investments in subsidiaries Investments in subsidiaries Investments in joint ventures

Financial liabilities Bank overdraft Loans and borrowings and other payables Trade and other payables to group companies Trade Investments in joint ventures

Financial liabilities Bank overdraft Loans and borrowings and other payables Trade and other payables to group companies Trade Long term loans payable to group companies Trade and other receivables Trade Investments in associates

Investments in associates Financial assets Cash and cash equivalents Company At 31 December 2015 Trade and other receivables – Group Trade At 31 December 2014 Financial assets Cash and cash equivalents and other receivables – Group Trade and other receivables Trade Loans receivables – Group nt risk manageme Financial Financial assets and liabilities assets and liabilities Financial S EME NT TAT S E FINANCIAL ARAT For the year ended 31 December 2015 the year ended For DATED AND IDATED HE CONSOL TO T NOTES SEP

Press Corporation Limited Annual Report 2015 76

and fair values (Continued) accounting classifications 6. 6.4 In millions of Malawi Kwacha

Strategic Report Corporate Governance Financial Statements On the Malawi Stock Exchange Strategic Report Corporate Governance Financial Statements On the Malawi Stock Exchange 77 Total 3,154 3,154 39,363 191,762 39,363 8,827 76,152 106,783 - - - - - Annual Report 2015 - Level 3 - Press Corporation Limited - In millions of Malawi Kwacha 3,154 3,154 39,363 39,363 Level 2 8,827 76,152 191,762 106,783 For the year ended 31 December 2015 the year ended For

------S EME NT TAT S E FINANCIAL ARAT - - Level 1 SEP DATED AND IDATED HE CONSOL TO T NOTES

20 30 30 18 17 Notes

(Continued) (Continued)

basis (but fair value disclosures are required) basis (but fair value and financial the carrying amounts of financial assets the following table, the directors consider that Except as detailed in their fair values. the consolidated financial statements approximate liabilities recognised in Fair value hierarchy of financial assets and financial liabilities that are not measured at fair value on a recurring and financial liabilities that are not value hierarchy of financial assets Fair Financial liabilities Loans and borrowings Group At 31 December 2015 Financial assets Other investments Company At 31 December 2015 Financial liabilities Loans and borrowings Finance lease receivables Loans and advances to customers

nt risk manageme Financial Financial assets and liabilities assets and liabilities Financial

6. 6.4

Total 9,063 23,271 22,301 16,777 2,285 6,349 135,246 102,912 151,978 112,900 , either 9,063 23,271 22,301 16,777 - - Level 3 60,336 28,002 65,058 25,980 - - - - 2,285 6,349 - - - - Level 2 - - - - 74,910 86,920 Level 1 - - 74,910 86,920

16 15 14 20 20 16 15 14 Notes

(Continued) (Continued)

quoted prices (unadjusted) in active markets for identical assets or liabilities; in active markets for identical assets quoted prices (unadjusted) for the asset or liability prices included within Level 1 that are observable inputs other than quoted directly (i.e., as prices) or indirectly (i.e., derived from prices) ; and or indirectly (i.e., derived from prices) ; and directly (i.e., as prices) inputs for the asset or liability that are not based on observable market data (unobservable inputs). liability that are not based on observable market inputs for the asset or Level 1: Level 2: Level 3: Fair value hierarchy Fair have been by valuation method. The different levels financial instruments carried at fair value, The table below analyses defined as follows: • • ccounting classifications and fair values (Continued) Accounting classifications • Investments in associates Investments in subsidiaries At 31 December 2014 Investments in joint ventures Government promissory notes At 31 December 2014 Government promissory notes Company At 31 December 2015 Investments in associates Group At 31 December 2015 Investments in joint ventures Investments in subsidiaries nt risk manageme Financial Financial assets and liabilities assets and liabilities Financial S EME NT TAT S E FINANCIAL ARAT For the year ended 31 December 2015 the year ended For DATED AND IDATED HE CONSOL TO T NOTES SEP Press Corporation Limited Annual Report 2015 78

6. 6.4 In millions of Malawi Kwacha

Strategic Report Corporate Governance Financial Statements On the Malawi Stock Exchange Strategic Report Corporate Governance Financial Statements On the Malawi Stock Exchange 79 Annual Report 2015 Relationship of unobservable inputs to fair value N/A The higher the revenue growth rate and pre-tax operating margin the higher the fair value. The higher the weighted average cost of capital and the discount the lower the fair value. The higher the earnings value. fair the higher the weighted the higher The capital of cost average and the discount the lower the fair value. The higher the earnings value. fair the higher the The higher the weighted average cost of capital and the discount the lower the fair value. The more favourable the accounting policies used in a particular economic environment, the higher the value. The more favourable the accounting policies used in a particular economic environment, the higher the value. The higher the revenue growth rate and pre-tax operating margin the higher the fair value. The higher the weighted average cost of capital and the discount the lower the fair value. Press Corporation Limited In millions of Malawi Kwacha For the year ended 31 December 2015 the year ended For S EME NT TAT S E FINANCIAL ARAT SEP DATED AND IDATED HE CONSOL TO T NOTES Long term revenue growth rate and pre- tax operating margin taking into account management’s knowledge of market conditions of the specific industries. average cost of capital of 37.64% Weighted determined using a capital asset pricing model and a discount for lack of marketability determined by reference to the share price of listed entities in similar industries of 8%.

Significant unobservable input(s) Significant unobservable N/A Long term revenue growth rate and pre- tax operating margin taking into account management’s knowledge of market conditions of the specific industries. average cost of capital of 38.75% Weighted determined using a capital asset pricing model and a discount for lack of marketability determined by reference to the share price of listed entities in similar industries of 8%. Current value of of earnings (Net Operating as Taxes (NOPLAT) Profit Less Adjusted free cash flow to establish the total value of sustainable earnings, capitalized using a price earning ratio of 12% based on the company’s peers or close proxy that publicly trades discounted by 46% to reflect the non- tradeability nature of Puma Energy stocks. Current value of of earnings (Net Operating as Taxes (NOPLAT) Profit Less Adjusted free cash flow to establish the total value of sustainable earnings, capitalized using a price earning ratio ranging from 11% to 18% based on the company’s peers or close proxy that publicly trades discounted by a range of 30% to 45% to reflect the non-tradeability nature of respective companies stocks. Accounting policies judgements and assumptions for recognition and measurement of asset and liabilities Accounting policies judgements and assumptions for recognition and measurement of asset and liabilities aluation V technique(s) and key input(s) Stock market share prices Discounted cashflow Maintanable earnings Maintanable earnings Net asset values of the company Net asset values of the company Discounted cash flow (Continued) Level 3 Level 3 Level 3 Level 3 Level 3 Fair value hierarchy Level 1 Level 3 15,583 10,587 759 17,415 8,304 2014 74,910 7,688

15,957 7,742 1,127 18,238 15,650 2015 86,920 6,344 Fair value as at Fair nt risk manageme Financial Fair value measurements Fair Investment in Macsteel Investment in Malawi Telecommunications Limited, The Foods Company Limited and Press Properties Limited Investment in Limbe Company Leaf Tobacco Investment in Peoples Investment in Peoples Centre Limited, Trading Ethanol Company Limited, Presscane Limited, Manzinzi Bay Limited, Malawi Pharmacies Limited. Investment in Puma Investment in Carlsberg Malawi Limited Asset Investment in National Bank of Malawi and Networks Telekom Malawi Limited 6.5 6.

- 66.0 50.1 2014 51.49 52.70 52.70 41.31 100.0 100.0 100.0 100.0

- 66.0 50.1 2015 51.49 52.70 41.31 100.0 100.0 100.0 100.0 . Segment profit , associated companies and , associated companies Proportion of ownership interest -segment pricing is determined on an arm’s -segment pricing is determined on an arm’s . Performance is measured based on segment . Performance Matiki industrial complex, NBM Building, Blantyre Lamya House, Blantyre Livingstone towers, Blantyre Dwangwa Mwitha Village, Chikwawa PTC House, Blantyre PTC Namiwawa, Blantyre Chayamba Building, Blantyre Mithechi Village, Mangochi Mangochi Monkeybay, Principal place of operation the Group held by Ethanol manufacturer Financial Services Information and Communication Information and Communication Ethanol manufacturer and development Investment property Supermarket chain Property investment Holding company Manufacturer and distributor of food products Associates and voting power

Principal Activity

joint ventures. These segments are: Financial Services, Telecommunication, Energy, Consumer Goods, and All Other Reportable Consumer Goods, and Energy, segments are: Financial Services, Telecommunication, joint ventures. These Segments. can be allocated on to a segment as well as those that and liabilities include items directly attributable Segment results, assets loans, borrowings earning assets and revenue, interest bearing items mainly comprise income a reasonable basis. Unallocated and expenses, and corporate assets and expenses. incurred during the year to acquire segment assets that are expected to be used Segment capital expenditure is the total cost for more than one year. segment is included below Information regarding the results of each reportable management reports that are reviewed by the Group’s CEO profit after income tax, as included in the internal believes that such information is the most relevant in evaluating the results of is used to measure performance as management operate within these industries. Inter certain segments relative to other entities that length basis. in each of the Group’s reportable segments: The following summary describes the operations Name The Group has five reportable segments, as described below, which are the Group’s strategic business units. The strategic which are the Group’s segments, as described below, The Group has five reportable technology separately because they require different products and services, and are managed business units offer different Executive Officer (CEO) reviews internal strategic business units, the Group’s Chief each of the For and marketing strategies. on at least a quarterly basis. management reports of business among its subsidiary five operating industries based on the type The Group recognises Ethanol Company Limited Financial Services segment National Bank of Malawi segment Telecommunications Malawi Telecommunications Limited (MTL) Malawi Telecommunications Limited Networks Malawi Telekom Energy segment Presscane Limited Manzinzi Limited Consumer Goods segment Centre Limited Trading People’s The All other Segments Press Properties Limited Press Corporation Limited Company Limited The Foods g segments Operatin S EME NT TAT S E FINANCIAL ARAT For the year ended 31 December 2015 the year ended For DATED AND IDATED HE CONSOL TO T NOTES SEP Press Corporation Limited Annual Report 2015 80 7. In millions of Malawi Kwacha

Strategic Report Corporate Governance Financial Statements On the Malawi Stock Exchange Strategic Report Corporate Governance Financial Statements On the Malawi Stock Exchange 81 39.6 42.0 50.0 50.0 2014 100.0 100.0

Annual Report 2015 39.6 42.0 50.0 50.0 2015 100.0 100.0 Press Corporation Limited In millions of Malawi Kwacha For the year ended 31 December 2015 the year ended For Proportion of Proportion ownership interest ownership S EME NT TAT S E FINANCIAL ARAT SEP DATED AND IDATED HE CONSOL TO T NOTES Makata, Blantyre Alimaunde industrial area, Standard bank building, Lilongwe Blantyre Limbe, Raynor Avenue, Blantyre Johanesberg Blantyre rading (Pty) Limited which is incorporated in South Africa. rading (Pty) Limited which is incorporated in Principal place of operation held by the Group Beverage Fuel & Oil distributor Fuel manufacturer and distributor processors Tobacco Steel processors and merchants Dormant Dormant voting power and Principal Activity (Continued)

entures

Name

Carlsberg Malawi Limited Puma Energy Malawi Limited Associates Company Limited Limbe Leaf Tobacco Joint V Macsteel Malawi Limited

Discontinued Operations (Pty) Limited Press Trading Malawi Pharmacies Limited in Malawi except for Press T All the Group companies are incorporated Discontinued Operations of re-organisation and restructuring, others were discontinued after they became Some operations were discontinued as part above are the ones that have been retained for future use as vehicles for new unprofitable. The dormant companies shown projects. Jointly Controlled Entities companies, Puma Energy Malawi Limited and Macsteel (Malawi) Limited are 50% owned by the Company and 50% owned Two and carried at fair value in the separate by technical partners. These have been equity accounted for in the Group accounts IFRS 11 Joint arrangements. This is in compliance with financial statements of the Company. Geographical segment presentation (Proprietary) Limited, a dormant company incorporated in All operations of the Group are in Malawi except for Press Trading South Africa, and therefore geographical segment presentation has not been made. Information about major customers ten percent or more of the total The Group revenues are earned from several range of customers none of which constitute Group’s revenues. g segments Operatin 7. Total 6,106 (3,883) (4,949) 61,881 46,748 29,711 11,883 9,016 17,248 (10,228) (13,350) 169,968 286,354 298,237 5 192,017 236,628 12,244 428,645 61,339 161,136 All 467 (363) 7,751 7,284 2,565 6,106 4,583 7,148 135 other (797) 924 (4,949) (3,176) (1,229) (2,503) - 5 42,118 2,528 44,646 2,439 segments

- (54) 400 (418) (382) 9,255 9,655 1,312 6,987 8,299 279 (1,761) 39,218 39,218 583 goods (2,561) 39,164 - - - Consumer - - - 886 720 3,216 2,977 3,697 4,899 745 335 (1,321) 14,729 14,729 8,036 2,781 12,935 14,729 - - - Energy

- - 650 7,768 (2,374) (9,467) (2,914) 61,522 12,552 46,502 54,270 63,619 14,923 6,287 78,542 60,872 59,148 11,705 - - 171

unications Telecomm------430 3,291 1,980 12,650 (1,092) (6,230) 46,748 46,748 18,880 45,656 80,069 223,037 223,467 204,154

services

284,223

Financial

(Continued)

Inter-group revenue Inter-group Total revenues Total Investment income dividend received from Investment income dividend received from subsidiary companies Revenue from external customers Interest income Services Segment results Results from operating activities 2015 Revenue Sales Net finance (costs)/income Share of profit of equity accounted investment - Share of profit of equity accounted investment Current liabilities Consolidated total liabilities Income tax expense Profit for the year Non-current assets Other information Capital additions Assets Current assets Consolidated total assets Liabilities Non-current liabilities Profit from discontinued operations Statement of financial position Depreciation and amortisation g segments Operatin S EME NT TAT S E FINANCIAL ARAT For the year ended 31 December 2015 the year ended For DATED AND IDATED HE CONSOL TO T NOTES SEP

Press Corporation Limited Annual Report 2015 82

7. In millions of Malawi Kwacha

Strategic Report Corporate Governance Financial Statements On the Malawi Stock Exchange Strategic Report Corporate Governance Financial Statements On the Malawi Stock Exchange

83 Total 6,802 (4,145) (4,372) (3,518) 54,951 40,120 30,906 19,093 7,666 (12,576) 50,233 50,233 145,304 221,054 150,862 177,061 327,923 201,961 22,663 21,620 136,787 6

All (288) (422) Annual Report 2015 6,598 6,967 4,201 9,039 6,802 286 2,864 4,838 other 928 526 (4,372) (3,586) (2,274) 369 28,585 31,449 6 2,307 Press Corporation Limited segments

- - - - In millions of Malawi Kwacha 41 856 281 1,505 6,191 7,537 660 193 (1,469) 35,941 (1,147) goods - 35,941 35,941 7,696 - 8,393 Consumer For the year ended 31 December 2015 the year ended For - - - - S EME NT TAT S E FINANCIAL ARAT 766 402 4,079 4,353 7,479 3,449 994 326 (1,517) 11,396 11,832 11,396 2,964 - Energy 11,396 SEP 4,215 - DATED AND IDATED HE CONSOL TO T NOTES

- - - 1,016 (2,270) (3,539) (2,929) 50,880 49,864 12,307 56,613 13,292 69,905 26,318 10,891 4,981 5,839 - 48,610 37,209 16,453

unications Telecomm------2,379 1,880 3,628 (1,587) (6,137) 40,120 40,120 38,533 19,575 59,806 147,235 159,819 13,438 Financial

services Restated

207,041 162,198

(Continued)

2014 Revenue Sales revenues Total Interest income Services revenue Inter-Group Investment income dividend received from subsidiary companies Revenue from external customers Segment results Results from operating activities

Net finance (costs)/income Non-current assets Current assets Assets Consolidated total assets Current liabilities Liabilities Non-current liabilities Consolidated total liabilities Income tax expense Share of profit of equity accounted investment - Share of profit of equity accounted investment Depreciation and amortisation Statement of financial position Profit for the year Profit from discontinued operations Other information Capital additions g segments Operatin

7. - (5) 11 (429) (808) Total 2014 4,588 4,197 6 (1,609) (1,708) (2,879) (3,178) 94,412 16,614 14,435 6 1 1 109,853 109,920 5,007 128,575 - - - 3 3 9 5 (6) 11 201 (429) (335) 2015 5,509 6,113 6,380 5,509 5,608 (1,609) (2,905) (6,984) 6,040 - work in progress Group

capital

------525 5,287 5,995 1,655 5,287 1,359 (1,432) (2,363) Motor 5,739 - vehicles

- - - - 425 (758) and 2,439 7,657 4,182 6,348 Plant (1,027) 69,350 58,269 69,300 168 77,653 furniture equipment

- -

(57) (85) 466 922 (808) 4,588 3,046 1,094 1,120 29,774 24,035 29,757 and 4,839 39,143 Land buildings

Surplus on revaluation Balance at 31 December 2014 Transfer to intangibles Transfer Transfer to investment properties Transfer Balance at 31 December 2015 to asset held for sale Transfer Surplus on revaluation Acquisitions through business combinations (note 14) Transfers between classes Transfers Balance at 1 January 2014 Additions Disposals between classes Transfers

Balance at 1 January 2015 Additions Disposals Basic earnings per share (MK) Diluted earnings per share (MK) Cash flows from discontinued operation Net cash from operating activities Expenses of tax Profit for the year net Cost or valuation Revenue Group esults from discontinued operations Results from discontinued

on ued operati Discontin S EME NT TAT S E FINANCIAL ARAT For the year ended 31 December 2015 the year ended For DATED AND IDATED HE CONSOL TO T NOTES SEP

Press Corporation Limited Annual Report 2015 84

plant and equipment 9. property,

8. In millions of Malawi Kwacha

Strategic Report Corporate Governance Financial Statements On the Malawi Stock Exchange Strategic Report Corporate Governance Financial Statements On the Malawi Stock Exchange 85 331 178 (230) (425) Total 7,666 9,015 (1,869) (2,050) 32,037 26,206 38,755 32,104 89,820 77,816 ------Annual Report 2015 - - Capital work in - 6,040 5,509 Press Corporation Limited - progress In millions of Malawi Kwacha

- - - - 922 3,224 3,218 1,143 Motor (1,088) 3,224 3,058 2,681 2,063 (1,137) vehicles For the year ended 31 December 2015 the year ended For - S EME NT TAT S E FINANCIAL ARAT (63) 315 178 and 5,963 6,897 Plant 28,424 22,928 SEP (957) DATED AND IDATED HE CONSOL TO T NOTES 34,479 28,474 43,174 40,876 Furniture (732) Equipment

- 16 60 406 389 560 and (230) (362) Land 1,196 (5) 1,218 37,925 29,368 - buildings (Continued)

Impairment losses recognised in profit or loss Eliminated on revaluation Balance at 31 December 2014 Balance at 1 January 2014 Eliminated on disposal of assets 2015 Balance at 1 January Depreciation expense Eliminated on revaluation Depreciation expense Carrying amounts At 31 December 2015 Impairment losses recognised in profit or loss Accumulated depreciation and impairment At 31 December 2014 Balance at 31 December 2015 Eliminated on disposal of assets Impairment losses recognised in the year the Group carried out a review of the recoverable amount of its telecommunications equipment. These assets During the year, of an impairment loss of K178 million are used in the Group’s telecommunication segment. The review led to the recognition in use as they become obsolete and no which has been recognised in profit and loss. The impaired equipment were no longer down to zero. The impairment losses have future cash flows are expected to arise from these assets. These assets were written been included in profit or loss in the Administrative expenses.

d equipment plant an operty, 9. pr

96 64 85 (25) (19) 274 115 285 121 (221) (132) Total 1,159 1,119 1,119 1,148 370 274 778 845

- 5 25 73 24 73 18 31 249 101 (3) (201) Sc (Hons) Land 75 42 (108) - 24 Motor 49 33 vehicles rank, qualified - 56 50 97 90 (20) (24) 458 494 250 494 184 244 250 and Plant (32) 512 (19) 328 184 Furniture Equipment

------9 - 15 85 452 552 552 561 and - Land 561 - 552 aluations were carried out based on the market buildings

. There has been no change in the valuation technique this (Continued)

Balance at 1 January 2014 Additions Additions Balance at 1 January 2015

Surplus on revaluation Disposals Balance at 31 December 2015 Accumulated depreciation and impairment Cost or valuation 2015 Balance at 1 January Company Depreciation expense Disposals Balance at 31 December 2014 Balance at 1 January 2014 Eliminated on disposal of assets Balance at 31 December 2015 Depreciation expense The useful lives used in the calculation of depreciation have been disclosed in note 3.3. Schedule 3, Section 16, are maintained Registers of land and buildings giving details required under the Companies Act 1984, for inspection by members or their duly at the respective registered offices of each company within the Group and are open authorised agents. at the date of revaluation, less any The Group’s land and buildings are stated at their revalued amounts being the fair value measurements of the Group’s land subsequent accumulated depreciation and subsequent impairment losses. The fair value and buildings were performed by qualified valuers as detailed below year. revalued by Don Whayo, Bsc (Est. Certain land and buildings for Press Properties were professionally and independently Man), Dip (Urb Man), BA, MRICS, (Malawi) Limited at 31 December MSIM a chartered valuation surveyor with Knight Frank prices for similar were carried out based on the market comparable approach that reflects recent transaction 2015. Valuations properties in similar geographical locations. 2015 by Knight F Land and buildings relating to the banking business were fair valued as at 31 December 2015 by J Kantema B independent valuers. Land and buildings for Indebank were revalued as at 31 December Admin, BSc, an independent registered chartered valuation surveyor of Real Property and Development Consultants. The MSIM date of 31 October 2015. Out of the K1,398 revalued amounts were assumed to approximate the fair values as at the acquisition income to reverse decreases in million total revaluation surplus, K15 million was credited to the statement of comprehensive of K1,383 million was credited to the fair values previously charged to the statement of comprehensive income and the balance revaluation reserve through the statement of other comprehensive income. V similar geographical locations. comparable approach that reflects recent transaction prices for similar properties in At 31 December 2014 Carrying amounts At 31 December 2015 Eliminated on disposal of assets Balance at 31 December 2014

S EME NT TAT S E FINANCIAL ARAT For the year ended 31 December 2015 the year ended For DATED AND IDATED HE CONSOL TO T NOTES SEP

Press Corporation Limited Annual Report 2015 86

d equipment plant an operty, 9. pr In millions of Malawi Kwacha

Strategic Report Corporate Governance Financial Statements On the Malawi Stock Exchange Strategic Report Corporate Governance Financial Statements On the Malawi Stock Exchange

87 2 48 (54) (88) 145 2014 37,925 49 51 51 Annual Report 2015

Group 2 51 42 (65) Press Corporation Limited 112 140 138 140 2015 In millions of Malawi Kwacha Fair value as at 31/12/2015 Fair

For the year ended 31 December 2015 the year ended For

- S EME NT TAT S E FINANCIAL ARAT Level 3 .

SEP DATED AND IDATED HE CONSOL TO T NOTES Fair value hierarchy Fair Level 2 37,925

- Level 1 (Continued)

The company estimates the weight of the fish that is in cages or ponds through sampling. This estimate is used to The company estimates the weight of the fish that is in cages or ponds through sampling. determine the projected harvest, which takes into account a factor of mortality The projected harvest is valued using average selling price based on fish categories. The projected harvest is valued using average selling price based on fish categories. The cost to harvest is estimated and this includes cost of feed, both starter and grower and all direct costs to be incurred to The cost to harvest is estimated and this includes cost of feed, both starter and grower produce the fish. and the costs to be incurred to The value of the fish is then the difference between the value of the projected harvest harvest. In determining the value of fish, the following procedures are used: • • • • Land and buildings

Balance at 1 January Increase due to birth Decrease due to sales Increase/ (decrease) due to death and changes in fair value Balance at 31 December Non-current biological assets Current biological assets Balance at 31 December and fingerlings. As at 31 December 2015 and 2014 biological assets held for sale comprised of fish Land and buildings relating to Malawi Telecommunications Limited were revalued as at 31 December 2015 by Simeon D. Banda December 2015 by Simeon D. Limited were revalued as at 31 to Malawi Telecommunications Land and buildings relating Bsc (Hons) MSIM MRICS in association with Sam M. Nhlane (Hons) Surveyor of SFS Property Consultants Chartered Quantity on the market were carried out based of SMN Property Professionals. Valuations Surveyor Valuation Lond, MSIM Registered similar properties in similar geographical locations. that reflects recent transaction prices for comparable approach December 2015 were performed Company Limited as at 31 land and buildings relating to the Foods Revaluation of freehold Independent Registered Surveyor of SMN Property Professionals, by Samuel Nhlane BSc a Chartered Valuation (Hons), MSIM, out based on the market comparable approach were carried Valuations the company. Surveyor who is not related to Valuation geographical locations. prices for similar properties in similar that reflects recent transaction under plant, furniture and equipment were revalued on a Company Limited, included Fishing vessels belonging to The Foods E. MSc. (Shipping Management Tech). Singini December 2015 by O. depreciated replacement cost basis as at 31 properties fair value hierarchy as at 31 December 2015 are as follows: Details of the Groups information about the

There were no transfers between Level 1 and Level 2 and Level 3. The fair value of the lands and buildings was determined There were no transfers between Level 1 and using transaction prices of similar properties. d equipment plant an operty, 9. pr

10. ical assets biolog

427 427

2014 1,015 1,015 588

427 2015 4,011 1,015 5,026 1,015 140 Fair value as at 31/12/2015 value as at Fair - Level 3 140 Level 2

air value hierarchy . - Level 1 (Continued) 588 588 588

Mortality – Mortality for cages is assumed at 75% (2014: 85%) and for the ponds assumed at 64% (2014: 70%) based for the ponds assumed at 64% (2014: 70%) cages is assumed at 75% (2014: 85%) and Mortality – Mortality for on experience and history. as per harvest records. selling price based on fish categories selling price – Current Average Average weight per fish – Average harvest weight achieved during the year is used as basis for calculating biomass. harvest weight achieved during the year Average – weight per fish Average • • are as fair value hierarchy as at 31 December 2015 biological assets and information about Details of the company’s follows: Assumptions • Fish stocks F There were no transfers between Level 1 and Level 2 during the year There were no transfers between Level 1 and

Acquisition through business combination is made up of K427 million which arose in the acquisition of 50% shares in Opening goodwill amounting to K1,015 million and K588 million which Centre from a joint venture partner which resulted in 100% ownership in the company Trading People’s Networks Malawi Limited acquired Burco Electronics Limited. arose when Telecom cash-generating units; The opening goodwill has been allocated for impairment testing purposes to the following Consumer goods segment Opening balance TNM Business services unit Consumer goods segment in use calculation which uses cash flow The recoverable amount of this cash generating unit is determined based on a value period, and a discount rate of 31.71% per projections based on financial budgets approved by the directors covering a ten-year annum. unit will grow at a long term growth rate Cashflow projections during the budget period are based on the assumption that the rate. Inflation was expected to be of 19%. The growth was determined as a product of the return to equity and their retention any reasonably possible change in the around 12% in the longterm with long term real GDP of 6%. The directors believe that carrying amount to exceed the aggregate key assumptions on which recoverable amount is based would not cause aggregate recoverable amount of the cash-generating unit. S EME NT TAT S E FINANCIAL ARAT For the year ended 31 December 2015 the year ended For DATED AND IDATED HE CONSOL TO T NOTES SEP Press Corporation Limited Annual Report 2015 88 In millions of Malawi Kwacha ical assets olog 10. Bi

11. GOODWill

Strategic Report Corporate Governance Financial Statements On the Malawi Stock Exchange Strategic Report Corporate Governance Financial Statements On the Malawi Stock Exchange 89 - 90 429 251 otal (163) 2,671 15,026 18,304 ------Annual Report 2015 and 1,648 trade 1,648 marks t Patents Press Corporation Limited In millions of Malawi Kwacha

- - - - 2,832 1,091 2,163 (1,760) Work in Work For the year ended 31 December 2015 the year ended For progress

- - - - S EME NT TAT S E FINANCIAL ARAT 90 326 169 585 costs SEP DATED AND IDATED HE CONSOL TO T NOTES Capitalised development

- 429 251 (163) 1,591 1,580 10,220 13,908 software computer (Continued) Group Cost 2015 Balance at 1 January 2015 Transfer between classes Transfer from PPE (note 9) Transfer TNM Business services unit TNM Business services The recoverable amount of this cash generating unit is determined based on a value in use calculation which uses cash flow based on a value in use calculation which of this cash generating unit is determined The recoverable amount rate of 23% per covering a five-year period, and a discount financial budgets approved by the directors projections based on annum. in the first budget assumption that the unit will grow at 20% during the budget period are based on the Cashflow projections of the unit based The growth was estimated by directors the long term the growth rate of 10% is expected. year and thereafter in believe that any of market developments. The directors of the cash generating unit and their expectations on past performance aggregate carrying amount is based would not cause in the key assumptions on which recoverable reasonably possible change unit. aggregate recoverable amount of the cash-generating amount to exceed the Goodwill acquired during the year National Bank of Malawi acquired 97.05% of the issued equity of Indebank On 31 October 2015, one of the Group’s subsidiaries million. The goodwill arising on acquisition of K4,011 million (refer to note Limited. The purchase consideration was K6,590 December 2015. In accordance with IAS 36 Impairment of Assets paragraph 84, 14) has been provisionally recorded as at 31 will be carried out in 2016 and disclosed in the 2016 financial statements. The the purchase price allocation valuation exercise cash generating units as at the reporting date as some transitional and operational goodwill balance has not been allocated to issues are yet to be finalised. Disposal during the year Acquisition through business combination (note 14) Addittions from internal developments Balance at 31 December 2015 Addittions from separate acquisitions

C

ible assets 12. intang 11. goodwill - (7) 169 otal 5,282 1,708 7,867 2,169 3,172 4,886 1,721 15,026 1,003 3,172 11,854 13,418

- - - - - 69 and 234 165 trade 1,648 marks t 69 69 1,648 1,414 1,579 Patents

- - - - 169 828 - - 1,835 2,832 2,163 - 2,832 - Work in Work progress

- - - - 326 240 322 323 1 costs 322 82 262 4 326 Capitalised development

- (7) 2,806 1,708 5,706 1,929 2,781 4,329 1,555 2,781 852 10,220 9,579 7,439 software computer

(Continued) Balance at 31 December 2014 Addittions from separate acquisitions Addittions from internal developments Transfer from PPE (note 9) Transfer Group 2014 2014 Balance at 1 January 2014 Balance at 1 January 2014 Balance at 31 December 2015 Amortisation expense Balance at 31 December 2014 2015 Balance at 1 January 2015 Accumulated amortisation and impairment Amortisation expense Carrying amounts Disposal during the year At 31 December 2015

At 31 December 2014

Development costs are all internally generated. to MK169 million. These have been capi Included in 2014 work in progress is internally generated development cost amounting There are no internally generated costs in work in progress at the end of 2015. talised in the current year. The useful lives used in the calculation of amortisation have been disclosed in note 3.4.

S EME NT TAT S E FINANCIAL ARAT For the year ended 31 December 2015 the year ended For DATED AND IDATED HE CONSOL TO T NOTES SEP C

Press Corporation Limited Annual Report 2015 90

ible assets 12. intang In millions of Malawi Kwacha

Strategic Report Corporate Governance Financial Statements On the Malawi Stock Exchange Strategic Report Corporate Governance Financial Statements On the Malawi Stock Exchange 91 - - 35 (80) 537 otal 63 394 28 457 - - - 129 (80) Annual Report 2015 - 49 49 - work in 2014 progress t Press Corporation Limited - - - In millions of Malawi Kwacha 35 408 28 63 408 345 software For the year ended 31 December 2015 the year ended For computer

22 63 (7) 457 otal S EME NT TAT S E FINANCIAL ARAT (163) 56 - 316 260 SEP DATED AND IDATED HE CONSOL TO T NOTES

- - 22 49 71 - - 71 work in 2015 progress t - - 63 (7) 245 408 189 56 (163) software

omputer C

(Continued)

Balance at 31 December have been disclosed in note 3.4. The useful lives used in the calculation of amortisation externally generated and they comprise of costs relating to the SAP ERP and SAP Intangibles relating to the company are all Business Planning and Consolidation. Disposal during the year Amortisation charge for the year Carrying amounts Disposal during the year Addittions from separate acquisitions Balance at 31 December Balance at 1 January Accumulated amortisation and impairment Cost Company Balance at 1 January

assetsible 12. intang

- 10 52 otal (127) (132) (131) 2014 3,270 3,270 4,783 3,096 4,631 1,609 86,849 110 4,783 102,912 11,432 296 ------1 1 31/12/2015 . There has land t 1 - - - 1 - leasehold 2015 9,988 Undeveloped 102,912

- - - (6) 112,900

Company 45 291 291 297 (131) (100) 87 192 4,783 - Undeveloped freehold land Fair value as at Fair

------(97) (100) 1,384 1,384 1,343 Level 1 level 2 level 3 130 1,417 141 land and buildings Leasehold

- 7 10 (26) (30) 100 1,594 1,594 1,455 1,609 (107) land and Freehold buildings 155 3,173

The Group’s Investment properties are stated at their revalued amounts being the fair value at the date of revaluation. The fair The Group’s Investment properties are stated properties were performed by qualified valuers as detailed below value measurements of the Group’s Investment this year. been no change in the valuation technique were professionally and independently revalued by Don Whayo, Bsc (Est. Investment properties relating to Press Properties Man), Dip (Urb Man), BA, MRICS, 31 December (Malawi) Limited at Knight Frank MSIM a chartered valuation surveyor with approach that reflects recent transaction prices for similar were carried out based on the market comparable 2015. Valuations properties in similar geographical locations. tRegisters of land and buildings giving details required under the Companies Act 1984, Schedule 3, Section 16, are maintained a - the respective registered offices of each company within the Group and are open for inspection by members or their duly autho rised agents. ow: Details of the Group’s investment properties and information about the fair value hierarchy as at 31 December 2015 are as foll Investment properties Gain/(loss) on property revaluation Additions during the year Balance at 1 January 2015 Balance at 1 January Balance at 31 December There were no transfers between Level 1 and Level 2 during the year. Disposals Surplus on revaluation Additions during the year Balance at 31 December 2014 Disposals Balance at 31 December 2015 Balance at 1 January 2014 Plant and Equipment from Property, Transferred Group Increase in fair value and other additions Acquisitions Balance at 1 January Reclassified as held for sale between classes Transfer S EME NT TAT S E FINANCIAL ARAT For the year ended 31 December 2015 the year ended For DATED AND IDATED HE CONSOL TO T NOTES SEP Press Corporation Limited Annual Report 2015 92 14 nts in subs investme idiaries

rties tment prope 13. inves In millions of Malawi Kwacha

Strategic Report Corporate Governance Financial Statements On the Malawi Stock Exchange Strategic Report Corporate Governance Financial Statements On the Malawi Stock Exchange ------93 979 150 466 6,590 4,372 2,777 received Dividend transferred

2 Consideration Annual Report 2015 2014 4,340 4,536 5,281 8,518 3,450 1,856 16,964 57,946 Press Corporation Limited 19 102,912 PCL share In millions of Malawi Kwacha Value/cost Fair

------For the year ended 31 December 2015 the year ended For 97.05% 526 Interest acquired 1,244 4,949 3,179 S EME NT TAT S E FINANCIAL ARAT received Dividend SEP DATED AND IDATED HE CONSOL TO T NOTES

2 19 5,283 2,989 5,632 1,115 7,302 3,638 2015 24,886 62,034 112,900 PCL share Value/cost Fair of acquisition Effective date 31 October 2015

(Continued) activity Principal Commercial banking The investments are analysed as follows: The investments are

Peoples Trading Centre Limited Trading Peoples (Proprietary) Limited Press Trading Entity Indebank Limited Malawi Telecommunications Limited Malawi Telecommunications Malawi Limited Networks Telecom Presscane Limited National Bank Capital Markets Limited on behalf of the Directors as at 31st Investments in subsidiaries were valued by Markets Limited). Maintenable earnings valuation method was used for unlisted December 2015 (2014: National Bank Capital Limited which Company Limited and Malawi Telecommunications the Foods investments except for Press Properties Limited, are listed on the Networks Malawi Limited and National Bank of Malawi Telekom were valued using net assets valuation method. market values and were valued at stock market prices. Malawi Stock Exchange and are quoted at Sub-subsidiary acquired during the year a growth strategy for the one of the Groups’ subsidiary National Bank of Malawi acquired Indebank Limited as During the year, Medium Enterprise business and offer special packages to start ups, project and bank. Indebank will strengthen Small and to materialize the acquisition was cash. development finance. The consideration transferred Below are acquisition details; Manzinzi Bay Limited Company Limited The Foods Ethanol Company Limited National Bank of Malawi National Bank of Malawi Press Properties Limited ment IN SUBS invest IDIARIES

14.

5 133 4,197 6,015 2,597 15 9,282 743 224 1,503 661 6,590 6,590 (3,522) 17,554 943 (6,015) 251 212 4,011 575 23,457 19 935 3 522 . The dispute remains (Continued)

ssets acquired and liabilities recognised as at the date of acquisition: liabilities recognised as at the date of Assets acquired and ment IN SUBS invest IDIARIES Assets Intangible assets Property, plant and equipment Property, Treasury and Reserve Bank of Malawi Bills and Reserve Bank Treasury Investment in associate Loans and advances Other assets Deferred tax Investment property Cash and cash equivalent Current income tax liability Total assets Total Liabilities Deposits Other liabilities Deferred tax Loans Less: Fair value of identifiable net assets acquired Less: Fair Goodwill arising on acquisition (note 11) Total liabilities Total Net assets Non-Controlling Interest (NCI) recognized at the acquisition date was by reference to The non-controlling interest of 2.95% (ESOP) K943 million. the net asset value of the NCI amounting to Goodwill arising on acquisition Consideration transferred Non-controlling interest Net cash outflow on acquisition of subsidiary Consideration paid in cash Less: cash and cash equivalent balances acquired Net cash outflow Impact of acquisition on the results of the Group business generated by Indebank Limited. Included in the profit for the year is a loss of K232 million attributable to the additional Revenue for the year includes K701 million in respect of Indebank Limited. from continuing operations would Had business combination been affected at 1 January 2015, the total income for the Group have been increased by K4,200 million. Shareholders dispute at Presscane Limited the company The shareholders are involved in a dispute over the capital contributions made towards await the completion of the litigation unresolved, efforts to settle the matter out of court have been unsuccessful and the parties in 2005 has not been adopted by process. An independent consultant’s verification of the respective contributions undertaken the shareholders. S EME NT TAT S E FINANCIAL ARAT For the year ended 31 December 2015 the year ended For DATED AND IDATED HE CONSOL TO T NOTES SEP Press Corporation Limited Annual Report 2015 94

14. In millions of Malawi Kwacha

Strategic Report Corporate Governance Financial Statements On the Malawi Stock Exchange Strategic Report Corporate Governance Financial Statements On the Malawi Stock Exchange - - 95 274 973 969 250 2014 1,942 6,435 3,423 3,410 1,109 1,953 - 1,880 2,154 8,987 1,359 1,942 7,034 - - - - - 199 926 923 501 Presscane (730) (229) 2015 1,849 1,849 1,786 1,985 8,797 4,338 4,320 2,556 8,087 Annual Report 2015 10,643 49.90% 49.90% 49.90% Press Corporation Limited 700 502 234 909 468 (269) 2014 1,377 4,961 2,775 1,429 1,313 2,400 (26) (718) 1,600 2,102 326 6,305 1,351 3,905 34.00% In millions of Malawi Kwacha - Ethanol 790 521 269 807 415 806 216 232 (790) 2015 1,222 3,947 1,193 1,222 1,714 6,291 5,932 3,021 1,556 2,344 34.00% For the year ended 31 December 2015 the year ended For - - 945 498 447 S EME NT TAT S E FINANCIAL ARAT (632) (799) 2014 9,313 2,890 5,461 4,901 47.3% 10,361 26,800 (3,057) 1,930 2,875 4,316 12,355 21,668 31,116 SEP DATED AND IDATED HE CONSOL TO T NOTES MTL - - 571 497 174 (843) (172) 2015 3,153 5,294 3,234 2,903 (3,214) (6,367) (3,355) (3,012) 25,642 26,213 32,350 11,425 27,056 47.30% 929 2014 1,908 2,538 5,243 5,855 8,321 2,165 3,078 58.7% 40,517 15,001 3,717 29,814 (12,769) 5,243 23,819 26,357 9,793 39,607 1,485 - TNM - 2015 5,414 3,012 6,264 1,768 2,020 7,445 5,414 6,464 9,187 2,236 3,178 4,980 23,168 30,613 50,097 36,136 (3,686) 10,128 58.70% (10,686) (Continued) 2014 5,393 2,616 2,379 7,496 7,062 14,558 40,120 22,800 21,480 31,101 61,240 48.51% (11,381) 17,510 2,952 (9,560) 227,934 181,274 183,653 166,694 10,160

430 2015 6,187 3,001 6,892 6,494 13,386 46,748 28,220 26,586 53,277 80,660 48.51% (43,541) (8,204) 2,423 308,547 253,311 1,532 253,741 227,887 NBM 15,809

ment IN SUBS invest IDIARIES

Dividends declared Total comprehensive income Total Other comprehensive income Non-controlling interest share Dividends paid to non-controlling interests Total assets Total Current liabilities Profit/(loss) after tax Total liabilities Total Revenue Equity attributable to owners of the company Non-controlling interest Profit attributable to owners of the company Profit/ (loss) attributable to non-controlling interest Net cash flows from operating activities Net cash flows from investing activities Net cash flows from financing activities

Summarised below is financial information of subsidiaries with material non-controlling interest before elimination of intercompany material non-controlling interest before elimination financial information of subsidiaries with Summarised below is transactions: 14. Non-current assets Non-current liabilities Current assets Net cash inflow/outflow

- - 1 48 95 (48) (36) 274 989 (138) (244) 2014 2014 2,133 4,181 95 2,528 2,254 8,304 759 3,374 8,074 2,301 1,073 9,063 9,063 - - - Company 23 (44) (89) (51) 120 379 (109) (355) 2015 2015 2,045 4,976 2,504 2,125 3,424 7,714 9,063 1,991 1,433 120 15,650 1,127 16,777 16,777 - Macsteel

- (2) 56 377 532 (396) (864) 2014 2014 1,275 9,687 3,100 1,123 1,212 6,177 1,657 6,643 423 1,546 (1,333) 85,639 3,100 10,574 10,042 12,820 (1,323) 1,546 Group - - 244 460 371 (525) (957) uma Energy Malawi Limited was valued using uma Energy Malawi Limited was valued using 2015 2015 1,000 2,134 2,361 2,361 1,764 1,304 1,546 7,184 1,241 6,635 1,764 (1,075) (1,023) 10,450 82,348 11,211 10,840 13,819

Puma

Movement during the year Macsteel Limited Total PumaEnergy Malawi Limited Increase in fair value recognised in other comprehensive income Increase in fair value recognised in other comprehensive At beginning of the year Dividends Share of profits At end of the year

Dividends received from the joint ventures during the year Foreign exchange loss Foreign Income tax expenses Interest expenses Interest income Depreciation and amortisation Profit from continuing operations Cash and cash equivalents Current financial liabilities Total comprehensive income Total Revenue Total liabilities Total Non-current liabilities Current liabilities a) investment at the year end b) Total Assets Total Current assets maintainable earnings model whereas Macsteel was valued using discounted cash flow method in the separate financial maintainable earnings model whereas Macsteel statements of the company. of joint ventures as at 31 December 2015 and for the year then ended: Summarised below is the financial information Group Investments in joint ventures were valued by National Bank of Malawi Capital Markets Limited (2014: National Bank of Malawi Investments in joint ventures were valued by at 31 December 2015. P Capital Markets Limited) on behalf of the Directors Non –current assets ventures nts in joint investme S EME NT TAT S E FINANCIAL ARAT For the year ended 31 December 2015 the year ended For DATED AND IDATED HE CONSOL TO T NOTES SEP

Press Corporation Limited Annual Report 2015 96

15. In millions of Malawi Kwacha

Strategic Report Corporate Governance Financial Statements On the Malawi Stock Exchange Strategic Report Corporate Governance Financial Statements On the Malawi Stock Exchange - - 97 423 2014 2014 2,655 4,261 1,079 15,583 19,010 19,010 7,688 23,271 - 23,271

- - Annual Report 2015 Company 460 (970) Macsteel 2015 2015 2,557 1,433 15,957 23,271 23,271 Press Corporation Limited 6,344 22,301 - 22,301 In millions of Malawi Kwacha

- 50% For the year ended 31 December 2015 the year ended For 2014 2014 6,545 1,123 2,246 (1,173) 13,094 12,710 12,710 4,988 18,082 18,082 - Restated S EME NT TAT S E FINANCIAL ARAT Group Puma - SEP DATED AND IDATED HE CONSOL TO T NOTES

50% (514) (693) 2015 2015 5,472 1,304 2,608 25,599 18,596 18,082 13,682 31,071 31,071

(Continued)

Company (LLTC) Limbe Leaf Tobacco Carlsberg Malawi Limited At beginning of the year as previously stated Prior year adjustment At beginning of the year as restated Share of comprehensive income Movement during the year Dividend Total Increase in fair value recognised in other comprehensive income recognised in the consolidated financial statements: recognised in the consolidated Reconciliation of the above summarised financial information to the carrying amount of the interest in the joint venture to the carrying amount of the interest in the above summarised financial information Reconciliation of the

b)

on behalf of the directors as at 31 Investments in associates were valued by National Bank of Malawi Capital Markets Limited, financial statements. December 2015 (2014: National Bank of Malawi Capital Markets Limited) in the company at Group level, these were accounted for using the equity method. However, the Group changed its policy in relation to depreciation of bottles and crates. According to IAS 8 ‘Accounting During the year, Changes in Accounting Estimates and Errors’, any effect of such change need to be accounted for restrospectively as Policies, has led to the decrease in investment in such comparative figures have been restated to reflect this change. The restatement 2014. associates as at 31 December 2014 and the share of profit from associates for the year

a) investment at the year end arrying amount of the Group’s interest in the joint venture Carrying amount of the Group’s interest

at end of the year

Proportion of the Group’s ownership interest in the joint venture Proportion of the Group’s Group Net assets of the joint venture Net assets of the joint

ventures nts in joint investme 16. es ssoinvestment in a ciat

15.

426 2014 4,421 3,837 2,674 4,988 12,580 19,436 49,749 26,337 23,663 38,917 20,701 18,216 39.65% Restated D WI LT

182 CARLSBERG 2015 5,472 3,356 1,219 2,491 13,801 21,422 49,528 27,369 24,878 41,170 21,818 19,352 39.65% MALA

2014 9,340 6,907 1,028 4,843 31,184 80,236 22,484 11,279 11,205 53,668 29,753 23,915 13,094 41.99% 2015 1,348 6,095 25,599 60,964 10,017 35,935 75,174 50,257 37,704 12,553 68,563 42,658 41.99% 111,221 lltc

(Continued)

Proportion of the Group’s ownership interest in the joint venture Proportion of the Group’s ownership interest recognised in the consolidated financial statements: Net assets of the associate Reconciliation of the above summarised financial information to the carrying amount of the interest in associates Reconciliation of the above summarised financial Non-current financial liabilities Current financial liabilities Cash and cash equivalents Profit from continuing operations Revenue Total liabilities Total Current liabilities Non-current liabilities Total assets Total Summarised below is the financial information of the associates as at 31 December 2015 and for the year then ended: as at 31 December 2015 and for the year the financial information of the associates Summarised below is Current assets

Non-current assets es nt in assoinvestme ciat S EME NT TAT S E FINANCIAL ARAT For the year ended 31 December 2015 the year ended For DATED AND IDATED HE CONSOL TO T NOTES SEP carrying amount of the Group’s interest in the associate

Press Corporation Limited Annual Report 2015 98

16. In millions of Malawi Kwacha

Strategic Report Corporate Governance Governance Financial StatementsStatements On the Malawi Stock Exchange Strategic Report Corporate Governance Governance Financial StatementsStatements On the Malawi Stock Exchange 99 219 309 537 (976) (219) (310) 2014 1,590 1,339 1,976 2,062 (1,302) (1,404) (1,703) 67,996 20,235 45,136 16,335 11,239 31,762 18,097 11,547 24,687 67,996 67,020 67,996 500 1,344 1,703 22,860 67,996 24,687 66,293 816 41,606 976 66,293

Group Annual Report 2015 20 (20) 933 976 (933) 2015 3,368 2,981 5,169 1,397 1,564 3,464 1,638 1,703 2,702 (1,965) (1,564) (2,725) (1,638) 40,301 29,778 64,935 22,042 31,806 14,484 50,245 30,395 70,535 23,185 33,063 Press Corporation Limited 104,303 105,236 105,236 105,236 103,598 103,598 105,236

In millions of Malawi Kwacha

For the year ended 31 December 2015 the year ended For S EME NT TAT S E FINANCIAL ARAT

SEP DATED AND IDATED HE CONSOL TO T NOTES

mature as follows:

o customers ances t

Finance and insurance Manufacturing Agriculture After one year Others Personal accounts Personal Between three months and one year Between three months Wholesale and retail Within three months d adv oans an Provision for impairment of interest from impaired loans and advances Interest income is no longer charged to profit and loss once the loan is classified as sub-standard (grade 8 and 9 as disclosed Interest income is no longer charged to profit and loss once the loan is classified as under note 6.1 above).

- United States dollar denominated -

Analysis of gross loans by currency Malawi Kwacha denominated - - Transferred to profit or loss Transferred - -

- Debts previously written off nalysis of gross loans and advances by sector: Analysis of gross loans and advances by - At the end of the year Short term loans are due to Gross loans and advances - Analysis of recoveries Movement of provision for impairment of interest from impaired loans and advances Movement of allowance for impairment losses Net loans are split into: Specific provisions Interest in suspense Recovered during the year Balance at the end of the year Charged during the year Written off during the year At the beginning of the year Recovered during the year Applied against advances Suspended during the year At the beginning of the year Long term loans Allowance for impairment losses Allowance for impairment Net loans and advances Gross loans and advances to customers at amortised cost Gross loans and advances l

17.

5 (1) 474 474 2014 2014 2014 7,323 7,323 7,323 7,323 4 6,849 6,849 n/a - 4 4 - - 4 (4) 712 712 Group 2015 2015 2015 7,439 8,151 8,151 8,151 8,151 7,439 - - n/a

Present value of Present value 519 minimum lease payments 2014 7,323 7,451 11,399 (3,948) (128) 10,880 Company

(48) 857 2015 8,199 8,151 Minimum lease (3,743) 11,085 11,942

payments

anies

ables

ables from group comp

Balance at 31 December Summary of inter-company loans Summary of inter-company Movement during the year was as follows: Balance at 1 January Provision for impairment has been fully provided at the end of the year. The loan The loans are unsecured and were payable within a year.

Limited Malawi Telecommunications

Current finance lease receivable Current finance lease Non-current finance lease receivable Non-current finance lease Not later than one year years Later than one year and not later than five

Less; unearned finance income Present value of minimum lease payments receivable Present value of minimum lease payments The base lending rate for Group’s banking subsidiary as at 31 December 2015 was 34% (2014: 40%) and the US Dollar The base lending rate for Group’s banking interest rate of 8.97% (2014: 9.0%). The finance lease receivables are secured denominated loans were granted at an average by the leased assets. to overdraft and other loan facilities extended to its customers. The amounts The Group’s credit risk is primarily attributed are net of provisions for impairment allowances as shown above. The specific presented in the statement of financial position for estimated irrecoverable amounts when there is objective evidence that the allowance for impairment represents allowances asset is impaired. Allowance for uncollectible lease payments lease receiv Finance S EME NT TAT S E FINANCIAL ARAT For the year ended 31 December 2015 the year ended For DATED AND IDATED HE CONSOL TO T NOTES SEP Press Corporation Limited Annual Report 2015 100 19. ans receiv lO

18 In millions of Malawi Kwacha

Strategic Report Corporate Governance Governance Financial Statements StatementsStatements On the Malawi Stock Exchange Strategic Report Corporate Governance Governance Financial Statements StatementsStatements On the Malawi Stock Exchange ------101 2014 2014 9,351 7,933 7,933 ------

- 22,209 13,602 1,314 23,523 570 23,523

------Annual Report 2015 582 235 2015 2015 28,827 29,409 11,101 18,073 29,409 40,023 40,023 Press Corporation Limited In millions of Malawi Kwacha

- 756 653

For the year ended 31 December 2015 the year ended For 9.7% 2014 2014 1,409 7,933 6,349 3,525 Group 21.0% 26.8% 23,523 13,602 34,011 26,319 23,254 39,921 41,330 41,330 41,330 (15,935)

S EME NT TAT S E FINANCIAL ARAT verage

SEP DATED AND IDATED HE CONSOL TO T NOTES 591 942 2,285 25% 9.7% 2015 2015 29,409 18,302 41,330 1,533 40,023 56,223 43,638

74,525 76,058 76,058 11,640) 4,341 76,058 interest rate A 23.3% ( Group Company Group 2,730

Between three months and one year Between three months Between one year and five years Between one year and Non – maturing investments Non – maturing investments Within three months

- - - -

Opening balance ii) urrent C investments i) Long term investments Movement Money market deposits Government of Malawi Bills and Reserve Bank of Malawi bonds Government of Malawi Bills and Reserve Bank Additions Total other investments are due to mature as follows: other investments are due to mature Total Government of Malawi promissory note Disposals Other Total other investments Total Closing balance Other movements Total investments Total Government of Malawi bills and Government of Malawi Treasury Bills Government of Malawi Treasury Reserve Bank of Malawi bonds The bills are due to mature as follows: - Within three months - Between three months and one year - Over one year Money market deposits Government of Malawi bills and Reserve Bank of Malawi bonds are denominated in Malawi Kwacha and are held to maturity Government of Malawi bills and Reserve Bank of Malawi bonds are denominated in Malawi Balances with discount houses Money market deposits are denominated in Malawi Kwacha and are held to maturity and mature within one month after the Money market deposits are denominated in Malawi Kwacha and are held to maturity reporting date. The deposits earned an average interest rate of 25% (2014: 24%).

comprises of the following:

20 ments Other invest

a)

reserve Bank of Malawi bonds

b)

- 845 (759) 2014 2014 3,566 2,116 (1,386) 6,349 4,233 6,349 368 2,634 (21,680)

Net Group

- 93 716 (767) (772) 2015 2,285 2,192 2015 3,618 2,285 (430) 2,365 (28,313)

199 454 (759) 2014 (1,614) (1,698) (21,680) 22 Liabilities

138 (772) 2015 1,101 (2,222) (1,733) (28,313) 22

- - 228 646 2014 2014 3,112 91 day bill rate plus 2% treasury 346 4,332 Assets

- 578 Interest rate 2015 1,455 2,517 (452) 4,098 2015 91 day bill rate plus 2% treasury

(Continued)

In February 2013, the Government of Malawi issued promissory notes to settle its exposure and several other Government 2013, the Government of Malawi issued promissory In February total exposure of National Bank of Malawi to these Government Guarantee loans Guaranteed loans, including interest. The Guaranteed loans was K16.9 billion. The Bank accepted the promissory notes to settle the Government 2013 as at 1 February maturing in 2017 representing 25% of the whole investment. This 2013. The Bank sold off the certificate effective 1 February as an available for sale asset. The remaining promissory notes are in blocks meant that the whole portfolio has been designated The face value of the closing book was K2,285million (2014:K6,349 million). The with the longest certificate maturing in 2016. future of the value present net computing the by determined has been fair value The at fair value. presented has been investment method. This fair value presentation resulted in a K191 million decrease (2014: K203 cash flows using the effective interest rate the face value. The loss has been recognised in other comprehensive income. million increase) in value when compared with The cumulative fair value increase is K11 million. bill yield during each quarter plus 2%. Interest of K1,291 91 day Treasury The notes attract interest at the rate of the earliest in the statement of comprehensive income. million (2014: K2,116 million) has been recognised in Malawi Kwacha. Government promissory notes are denominated The note has a nominal the bank acquired another promissory note from the market at a cost of K71 million. During the year, 2016. 18 February value of K96 million and its maturity date is available for sale financial assets and loans carried at amortised cost. The financial assets are held to maturity, Government promissory notes Government promissory Investment properties Government promissory notes Government promissory x assets/(liabilities) Deferred ta Group plant and equipment Property, The stocks are due to mature as follows: The stocks are due to - Within three months Provisions value of loss carried forward Tax assets/(liabilities) Tax Company - associates and subsidiaries in investments and Property - Between three months and one year - Between one and five years Un-realised exchange differences S EME NT TAT S E FINANCIAL ARAT For the year ended 31 December 2015 the year ended For DATED AND IDATED HE CONSOL TO T NOTES SEP c)

Press Corporation Limited Annual Report 2015 102 21.

20 ments Other invest In millions of Malawi Kwacha

Strategic Report Corporate Governance Governance Financial Statements StatementsStatements On the Malawi Stock Exchange Strategic Report Corporate Governance Governance Financial Statements StatementsStatements On the Malawi Stock Exchange 103 (52) (52) 845 716 (430) (772) (767) (759) 2014 3,566 3,618 (1,386) 368 2,634 2,365 2,818 9,395 (28,261) (28,313) (21,628) (21,680) Closing balance - - - - - 157 Annual Report 2015 697 2,645 - - 2015 (2,105) - during closing 5,204 17,340 2,296 (6,633) Occured Press Corporation Limited 2,296 income balance (6,633) - in other - In millions of Malawi Kwacha reorganisation

------comprehensive 2014 (437) (437) 4,369 15,825 -

ax losses expire after 6 years. These For the year ended 31 December 2015 the year ended For Company - - Recognised business (52) (52) S EME NT TAT S E FINANCIAL ARAT Acquired on combination (21,628) (21,680) (23,924) (23,976) balance

Opening ------SEP

DATED AND IDATED HE CONSOL TO T NOTES 753 1,233 - 1,233 753 income - 2015 Group in other 10,352 34,892 Recognised comprehensive

52 (13) (18) 246 623 (129) (177) (1,479) (283) (1,065) (798) or loss 345 in profit

(Continued) Recognised 23 368 845 442 (657) (759) (741) 1,467 2,400 2,634 3,566 (1,386) balance Opening

Total liabilities Total Tax value or loss carried forward value or loss carried Tax Company follows:- Movement of net deferred tax liabilities is as Other items

Total liabilities Total Tax value or loss carried forward value or loss carried Tax Other items Provisions Investment properties

Movement of net deferred tax asset/(liabilities) is as follows:- Movement of net deferred 2015 Investment in subsidiaries and associates Property Provisions 2014 plant and equipment Property, Investment properties 2015 plant and equipment Property, Group

2014 Investment in subsidiaries and associates Property Un-recognised deferred tax asset

Unrecognised deferred tax assets The following deferred tax assets have not been recognised in the financial statements: losses Related Tax it is not probable that future taxable profit Deferred tax assets have not been recognised in respect of these tax losses because from. T will be available against which the concerned company can utilise the benefits there Centre and The Trading Peoples Limited, Malawi Telecommunications losses relate to Press Corporation Limited Company, Company Limited. Foods x assebilities) ts/(lia ed ta Deferr

21. - - - 8 5 5 29 30 22 (40) 104 431 291 505 2014 2014 10 461 465 13 44 - - - - - 8 9 92 30 39 72 106 415 199 415 2015 2015 3 72 - 17 97 1,324 ------105 426 2013 2014 Company 7,357 5,640 2,545 1,195 - - . 12,043 (516) 6 10,013 4,782 11,527 Restated Company ------68 187 802 (861) Group 2014 2015 7,875 7,507 2,035 1,830 10,165 18,589 8,450 17,728 Restated anies Group 557 (814) 2015 2,169 7,354 10,362 20,442 19,628

ables (other) ables from group comp

Press Properties Limited Finished goods Malawi Telecommunications Limited Malawi Telecommunications Trade receivables Trade Raw materials and consumables Malawi Networks Telecom Prepayments in progress Work Centre Trading Peoples

Goods in transit Other receivables Letters of credit Inventory of K1 billion (2014: K1.1 billion) has been written off in profit and loss during the year (2014: K1.1 billion) has been written off in Inventory of K1 billion Ethanol Company Limited The cost of inventories recognised as an expense includes K112 million (2014: K165 million) in respect of write-downs of The cost of inventories recognised as an expense no reversal of such write-downs and all inventories are expected to be recovered inventory to net realisable value. There were within twelve months. The foods company Other Provision for doubtful debts

The amounts due from related party companies are denominated in Malawi Kwacha, are interest free and are payable within 30 days. The average credit period on sales of goods and services is 30 days except for international incoming receivables whose credit The average credit period on sales of goods and services is 30 days except for international these periods. The Group has period is 60 days. No interest is charged on the trade and other receivables settled beyond on past payments pattern or settlement provided fully for all receivables over 120 days, except those deemed recoverable based for based on the estimated and other receivables between 30 days and 120 days are provided agreements in place. Trade economic conditions. recoverable amounts determined by reference to past default experience and prevailing of counter parties and customers and There is no significant concentration of credit risk, with exposure spread over a number they are unrelated. the potential customers credit quality and Before accepting any new customers, the Group performs an internal assessement of defines credit limits by customer. S EME NT TAT S E FINANCIAL ARAT amounts due from related party companies

For the year ended 31 December 2015 the year ended For DATED AND IDATED HE CONSOL TO T NOTES SEP Press Corporation Limited Annual Report 2015 104 24. trade and other receiv 23. d other receiv trade an

22. NVENTORIES i In millions of Malawi Kwacha

Strategic Report Corporate Governance Governance Financial Statements StatementsStatements On the Malawi Stock Exchange Strategic Report Corporate Governance Governance Financial Statements StatementsStatements On the Malawi Stock Exchange - - 105 (25) 200 888 370 516 861 2014 2013 2014 10,286 808 1,416 528 (9,860) 426 1,008 the LCs Annual Report 2015 - (12) (35) 802 131 944 442 861 As a result Group Group (195) Group 2015 2014 2015 Press Corporation Limited 1,008 3,052 3,494 18,193 (17,391) 814 In millions of Malawi Kwacha

For the year ended 31 December 2015 the year ended For S EME NT TAT S E FINANCIAL ARAT SEP DATED AND IDATED HE CONSOL TO T NOTES

(Continued) Provisions, Contingent Liabilites and Contingent Assets,

Accounting Policies, Changes in Accounting Estimates and Errors. other) ables (

Letters of credit as previously stated Reclassified as contingent asset Letters of credit as re-stated without cash upfront are contingent liabilities and should be disclosed off balance sheet. The error has been accounted for without cash upfront are contingent liabilities restrospectively in accordance with IAS 8 comparative figures have been restated. The restatement has resulted in a decrease of trade and other receivables in 2014 and restatement has resulted in a decrease of trade and other receivables in 2014 and comparative figures have been restated. The has been no impact on equity for both years. A reconciliation for the restatement is 2013 by K17.4 billion and K9.9 billion. There shown below: Prior year adjustment – letter of credits types of letters of credit (LCs) to customers: Cash upfront LCs and LCs without The Banking business of the Group offers two been carrying both types of LCs on the balance sheet as other assets and other cash upfront. Over the years the Bank has with IAS37 liabilities. This was an error as in accordance Property At the beginning of the period Trade receivables disclosed above include amounts (see below for aged analysis) that are past due at the end of the reporting aged analysis) that are past due at the end above include amounts (see below for receivables disclosed Trade period for which the Group has not recognised an allowance for doubtful debts because there has not been a significant change amounts are still considered recoverable. in credit quality and the that are past due but not impaired Age of trade receivables Reclassified from investment property Disposed during the period 30 -120 days Reclassified from PPE Over 120 days Provision previously recognised in statement of comprehensive income written off Provision previously recognised in statement Balance at end of the year Movement in the allowance for doubtful debts Balance at beginning of the year Impairment (reversal)/charge recognised in the year Impairment (reversal)/charge recognised in

25. Asset class ified as held for sale

24. her receiv rade and ot t

- - - 25 40 26 26 81 107 0.01 (340) 66 - (233) 2014 2014 2014 2,500 - 1 1 - - - - 1 1 25 66 58 20 14 72 0.01 (680) (608) 2015 2015 2015 2,500 86 - Group and Company

Company Company

26 42 342 373 2014 2014 410 6,835 - 20,457 27,395 65,852 (4,259) 61,593 10,792 Group

21 88 410 357 (162) 2015 2015 1,558 2,836 Group (8,662) 18,160 26,425 10,645 59,624

alents

Number (millions) Nominal value per share (K) Nominal value (K million) Number (millions) Nominal value (K million) otal income tax recoverable Share capital - Authorised ordinary share capital - - Issued and fully paid Opening balance Reserve Bank of Malawi - - Current credit Bank balances Cash paid (received) Placement with other banks Tax transfer Tax T Call deposits Cash on hand Cash and cash equivalents Bank overdrafts statement of cash flows 50,962 Cash and cash equivalents as shown in the are denominated in Malawi Kwacha and United States Dollars are non-interest Balances held at Reserve Bank of Malawi which 5. bearing and are regulated as disclosed in Note billion with Ecobank (2014: Nil) and K400 million with FMB Bank (2014:K400 million) The Company has banking facilities of K1.1 These are unsecured facilities. both due for renewal on 30 November 2016. S EME NT TAT S E FINANCIAL ARAT

For the year ended 31 December 2015 the year ended For DATED AND IDATED HE CONSOL TO T NOTES SEP Press Corporation Limited Annual Report 2015 106 28.

27. d cash equiv cash an

26. ble ra x recove ncome ta i In millions of Malawi Kwacha

Strategic Report Corporate Governance Governance Financial Statements StatementsStatements On the Malawi Stock Exchange Strategic Report Corporate Governance Governance Financial Statements StatementsStatements On the Malawi Stock Exchange

107 84 10 63 (49) (80) 132 (113) (100) Total 2,990 5,415 2,191 1,077 3,027 (6,633) 44,799 10,639 81,985 16,683 18,577 16,733 385 30,596 30,596 635 101,048 111,148 101,048 2,296 ------10 18 Annual Report 2015 116 (100) 3,940 4,066 3,984 4,066 Other - - - - Press Corporation Limited

------In millions of Malawi Kwacha 63 - - 1,077 1,077 - - 1,140 1,077 - - reserve Loan loss For the year ended 31 December 2015 the year ended For

------` S EME NT TAT S E FINANCIAL ARAT 110 110 110 110 3,953 2,990 6,943 - - 10,639 6,943 - SEP 17,582 - DATED AND IDATED HE CONSOL TO T NOTES reserve Translation

------84 (49) (80) 132 (131) 1,475 2,191 3,027 14,508 81,875 16,683 16,733 18,510 (6,633) 635 22,093 100,938 111,038 18,510 385 100,938 reserve 2, 296 Revaluation

Balance at 31 December 2014 Deferred tax on revaluation Group 2014 Balance at beginning of the year Income tax on other comprehensive income Income tax on other comprehensive income Balance at 31 December 2015 Share of equity accounted investments translation reserves Share of equity accounted investments translation 2014 Balance at 1 January 2014 value gain on investments Fair Revaluation of property plant and equipment Income tax on other comprehensive income Income tax on other comprehensive income Share of equity accounted investments translation reserves Share of equity accounted investments translation Net change in fair value of available for sale financial asset Net change in fair value of available for sale Net reserve movement on THL deregistration Transfer to loan loss reserve Transfer land and buildings Depreciation Transfer Revaluation of property Reversal of accumulated depreciation financial asset Net change in fair value of available for sale of Property, Release of revaluation surplus on disposal Plant and Equipment Fair value gain on investments Fair Deferred tax on revaluation Balance at 31 December 2015 Balance at 31 December 2014 Company 2015 Balance at 1 January 2015 to loan loss reserve Transfer Depreciation Transfer land and buildings land and Depreciation Transfer Revaluation of property Group 2015 of the year Balance at beginning ing interests non-controll ing ves – exclud Other reser

29. 39 Total 1,050 2,804 7,507 2,928 1,878 17,395 26,291 36,441 10,150 2,643 4,682 1,878 14,100 31,495 17,356 ------39 535 8,538 5,003 2,507 3,042 5,042 10,704 13,746 13,580

Unsecured

- 2,928 5,562 1,050 1,878 2,804 1,878 5,000 2,108 7,108 4,682 17,915 15,587 22,695 12,353 12,353 (Continued) Secured

orrowings oans and b ing interests non-controll ing ves – exclud Other reser 2015 2014 Company

Due within 1 year or less Due within 1 year or less Due within 1 year or less Due between 1 and 5 years Due between 1 and 5 years More than 5 years More than 5 years Due between 1 and 5 years 2014 Due between 1 and 5 years Due within 1 year or less Terms and debt repayment schedules Terms and debt repayment schedules Terms and debt repayment schedules Terms and debt repayment schedules For Group, the revaluation reserve relates to revaluation of property whereas for company only, the revaluation reserve the revaluation company only, to revaluation of property whereas for Group, the revaluation reserve relates For the associates and joint ventures and comprises of property and investments in subsidiaries, relates to revaluation until the reserves are not distributable to shareholders in the fair value at the date of valuation. These cumulative increase through use. when consumed property, in the instance of revalued have been disposed of or, relevant revalued assets reserves Translation statements of arising from the translation of the financial comprises all foreign exchange differences The translation reserve foreign operations. Loan loss reserve losses as required by the Reserve Bank of Malawi which are above the This relates to excess of provisions for impairment impairment loss allowed by IAS 39. Other reserves capital redemption reserve and capital profits. The other reserves for the Group comprise Revaluation reserve Group 2015 L S EME NT TAT S E FINANCIAL ARAT For the year ended 31 December 2015 the year ended For DATED AND IDATED HE CONSOL TO T NOTES SEP Press Corporation Limited Annual Report 2015 108 In millions of Malawi Kwacha

30.

29.

Strategic Report Corporate Governance Governance Financial Statements StatementsStatements On the Malawi Stock Exchange Strategic Report Corporate Governance Governance Financial Statements StatementsStatements On the Malawi Stock Exchange - - - 3 109 705 676 399 278 209 800 216 102 5,000 1,125 1,029 1,071 2,902 7,017 3,339 2,902 2,928 13,254 23,187 36,441 26 2,928 26 11,544 31/12/15 ------5 77 63 34 20 17 Annual Report 2015 540 251 124 289 124 124 829 - - 238 124 accrual Press Corporation Limited ------In millions of Malawi Kwacha 57 367 986 4,360 - - 2,950 4,360 - Exchange interest at fluctuations For the year ended 31 December 2015 the year ended For

------(3) (21) S EME NT TAT S E FINANCIAL ARAT (253) (223) (180) (400) (431) (4,219) (1,261) (1,851) (2,596) (5,647) (2,260) (1,851) (1,878) (27) (360) (9,866) (1,878) (27) SEP DATED AND IDATED HE CONSOL TO T NOTES ------3 212 209 212 - - - - Through business combination repayments

------420

5,000 5,420 3,991 3,991 - - - 9,411 - Drawdowns

- - - - 3 At 97 678 223 966 180 159 685 1,048 1,539 1,200 4,629 1,101 4,636 5,582 4,629 4,682 (Continued) 11,301 20,194 31,495 8,716 53 53 4,682

01/01/15

ings orrow

b oans and otal local borrowings otal foreign borrowings otal borrowings otal local borrowings otal borrowings FDH Bank Limited Commercial debt FMB – EIB Development Fund Kuwait Malawi Government NORDIC Development Fund Leasing and Finance Company Standard Bank – MWK Loan Standard Bank Led syndicated Loan syndicated Led Bank Standard borrowings Foreign Libyan Government Reserve Bank of Malawi NBM commercial paper Press Corp MTN coupon loan financing ZTE Vendor Huawei deferred payment DANIDA loan DANIDA Group Movement in borrowings Local borrowings Belgium Government Syndicated loan – NBM CM Malawi Government T Netherlands FMO Bank PTA T T Company MTN coupon Standard Bank of Malawi Limited T T L

30.

------3 97 53 685 678 223 966 180 159 1,539 1,048 1,200 4,629 5,582 4,629 4,636 1,101 53 4,682 - 4,682 20,194 31,495 - 11,301 8,716 31/12/14 ------5 1 20 77 63 31 21 - - - 52 218 - - - 166 accrual

------16 15 (12) (33) 386 (163) - (29) - - - - 792 1,030 1,001 Exchange interest at fluctuations

------(7) (8) (8) (46) (28) (28) (36) (27) (18) (164) (145) (264) (407) (487) (35) (1,174) (2,797) (487) (1,757) (522) (27) (8,720) (448) (2,800) (879) (5,920)

------714 180 681 4,629 1,200 4,629 4,250 4,629 - - 4,629 - - 6,723 4,931 11,654 Drawdowns repayments

------2 7 8 8 At

92 46 28 28 80 18 80 88 164 665 157 471 440 971 903 448 487 487 144 575 2,713 8,803 8,348 2,319 7,241 20,101 27,342 01/01/14

(Continued)

ings orrow

b oans and otal local borrowings otal foreign borrowings otal borrowings otal local borrowings otal borrowings Group Movement in borrowings Local borrowings Belgium Government CDH Bank Limited loan DANIDA FDH Bank Limited FDH Bank Limited FMB – MWK Loan FMB – USD FDH Bank Limited FMB – EIB FMB – USD Loan Development Fund Kuwait Standard Bank – MWK Loan Standard Bank Led syndicated Loan Malawi Government Press Corp MTN coupon loan NBS Bank Limited NORDIC Development Fund Leasing and Finance Company Leasing and Finance Company NBS Bank Limited NBM commercial paper NBS Bank Limited Standard Bank – MWK Loan T borrowings Foreign Development Bank of South Africa PTA Bank PTA Standard Bank of Malawi Limited T T Company NBS Bank Limited MTN coupon Netherlands FMO T borrowings Foreign Development Bank of South Africa Libyan Government T ZTE Vendor financing ZTE Vendor Huawei deferred payment L S EME NT TAT S E FINANCIAL ARAT For the year ended 31 December 2015 the year ended For DATED AND IDATED HE CONSOL TO T NOTES SEP

Press Corporation Limited Annual Report 2015 110

30. In millions of Malawi Kwacha

Strategic Report Corporate Governance Governance Financial Statements StatementsStatements On the Malawi Stock Exchange Strategic Report Corporate Governance Governance Financial Statements StatementsStatements On the Malawi Stock Exchange

111

Total

- 1,050 1,878

Annual Report 2015

- 1,050 1,852 2017 2015 shares TNM Quarterly 364TB+4% Kwacha Malawi

Press Corp MTN coupon loan coupon MTN Corp Press Press Corporation Limited

- - 26 2016 2010 asset Related Quarterly 35 Kwacha Malawi Limited Malawi of Bank Standard

In millions of Malawi Kwacha Company - 2015 - Company

Total 7,507 2,643 26,291

For the year ended 31 December 2015 the year ended For

Bank PTA - - 11,543 2016 2009 Debenture Quarterly 8 Dollars US

FMO Netherlands - - 3,340 2016 2012 None Yearly ½ 9 Dollar US

S EME NT TAT S E FINANCIAL ARAT

payment deferred Huawei 2,507 - 4,510 2021 2015 None Quarterly 7% Dollars US

financing Vendor ZTE - - 1,071 2015 2012 financed Asset yearly ½ 9

SEP Dollars US DATED AND IDATED HE CONSOL TO T NOTES

Government Libyan - - 216 - - offset Dividend - - Dollars US

- - 26 2016 2010 asset Related Quarterly 35 Kwacha Malawi Loan MWK – Bank Standard

- - 278 2016 2012 Debenture Annually 35 Kwacha Malawi loan Syndicated led Bank Standard

- 315 84 2020 2015 Guarantee PCL Quarterly 364TB+4% Kwacha Malawi capital NBM – loan Syndicated

- 63 966 2018 2003 Government yearly ½ 15 Kwacha Malawi Fund Development NORDIC

- 1,050 1,852 2017 2015 shares TNM Quarterly 364TB+4% Kwacha Malawi loan coupon MTN Corp Press

- 400 400 2017 2015 shares PCL Quarterly 364TB+4% Kwacha Malawi paper commercial NBM

- 3 - None yearly ½ 10 Kwacha Malawi Malawi of Bank Reserve

- 209 - None yearly ½ 3 Kwacha Malawi Government Malawi

- 54 1,071 2017 2003 Government yearly ½ 15 Kwacha Malawi Fund Development Kuwait

Limited Bank FDH Kwacha Malawi resolution Board Monthly 38 - 343 333 2018 2014

loan DANIDA Kwacha Malawi Government yearly ½ 4 - 184 521 2020 2004

debt Commercial Quarterly 364TB+4% Kwacha Malawi 5,000 - - 2019 2015 None

Government Belgium Kwacha Malawi Government yearly ½ 8 - 22 80 2020 2003

(Continued)

name Lender’s

Group - 2015 - Group

analysis Loans

ings orrow

rate Interest Currency years 5 years -5 2 year 1 finishes commences Security terms

Repayment redemption redemption in Due within Over

date date Due

Agreed Agreed b oans and L 30.

Total

- 2,804 1,878

- 2,777 1,852 2017 2015 shares TNM Quarterly 364TB+4% Kwacha Malawi loan coupon MTN Corp Press

- 27 26 2016 2010 asset Related Quarterly 34 Kwacha Malawi Limited Malawi of Bank Standard

Company - 2014 - Company

Total 39 17,356 14,100

Bank PTA - 7,132 1,584 2018 2009 Debenture Quarterly 8 Dollars US

FMO Netherlands - 2,379 3,202 2016 2012 None Yearly ½ 9 Dollar US

payment deferred Huawei - 2,228 2,408 2016 2015 None Quarterly 7% Dollars US

financing Vendor ZTE - 786 316 2015 2012 financed Asset yearly ½ 9 Dollars US

Government Libyan - - 159 - - offset Dividend - - Dollars US

- 27 26 2016 2010 asset Related Quarterly 34 Kwacha Malawi Loan MWK – Bank Standard

- 278 1,261 2016 2012 Debenture Annually 35 Kwacha Malawi Loan MWK – Bank Standard

- - 180 2015 2015 None off One 35% Kwacha Malawi Company Finance and Leasing

- 94 872 2018 2003 Government yearly ½ 15 Kwacha Malawi Fund Development NORDIC

- 2,777 1,852 2017 2015 shares TNM Quarterly 364TB+4% Kwacha Malawi loan coupon MTN Corp Press

- 800 400 2017 2015 shares PCL Quarterly 364TB+4% Kwacha Malawi paper commercial NBM

- - 3 2014 1999 None yearly ½ 8.5 Kwacha Malawi Government Malawi

Fund Development Kuwait Kwacha Malawi Government yearly ½ 15 - 95 953 2017 2003

Loan USD – FMB Dollars US Monthly 10 - - 223 2015 2011 None

Limited Bank FDH Kwacha Malawi resolution Board Monthly 38 - 554 124 2018 2014

loan DANIDA Kwacha Malawi Government yearly ½ 4 35 184 466 2020 2004

Government Belgium Kwacha Malawi Government yearly ½ 8 4 22 71 2020 2003

(Continued)

Lender’s name Lender’s

Group - 2014 - Group

analysis Loans

ings orrow

Currency rate Interest terms Security commences finishes years -5 2 year 1 years 5

Repayment redemption redemption in Due within Over

date date Due

Agreed Agreed b oans and L S EME NT TAT S E FINANCIAL ARAT For the year ended 31 December 2015 the year ended For DATED AND IDATED HE CONSOL TO T NOTES SEP Press Corporation Limited Annual Report 2015 112 30. In millions of Malawi Kwacha

Strategic Report Corporate Governance Governance Financial Statements StatementsStatements On the Malawi Stock Exchange Strategic Report Corporate Governance Governance Financial Statements StatementsStatements On the Malawi Stock Exchange

113 - - Annual Report 2015 Press Corporation Limited In millions of Malawi Kwacha For the year ended 31 December 2015 the year ended For S EME NT TAT S E FINANCIAL ARAT und, Kuwait Fund for Arab Economic for Arab Economic Fund und, Kuwait SEP DATED AND IDATED HE CONSOL TO T NOTES The Government of the Kingdom of Denmark made available The Government of the Kingdom of Denmark Kroners (DKK) to the Government of Malawi a grant of Danish of the preparatory 79,000,000 to support the implementation Under sector. programme to support the Telecommunications made Article 13 of the Bilateral Agreement, the Government Limited (then Malawi available to Malawi Telecommunications Corporation) a loan amounting to and Telecommunications Posts 3.5% per annum and DKK53,200,000. The loan bears interest at loan is unsecured, but ranks in arrears. The is payable half-yearly repayable over 20 pari passu with future loan facilities and it is years from the date of receipt of all equipment. the Com In the addendum signed in June 2006 between was fixed at pany and the Government of Malawi, the loan at 3.5% per an K920,947,960.94 and interest was maintained num. and is repayable half- The loan bears interest at 15% per annum ranks pari passu yearly in arrears. The loan is unsecured, but over 17 years from with future loan facilities and it is repayable the date of receipt of all equipment. 2006 between It was agreed in the addendum signed in June the Company and Government of Malawi to fix the loan at K627,159,500 and the interest was set at 7.5% per annum. The loan bears interest at 7% per annum and is repayable half- yearly in arrears. The loan is unsecured, but ranks pari passu with future loan facilities and is repayable over 16 years including a 4-year grace period. It was agreed in the addendum signed in June 2006 between the Company and Government of Malawi to fix the loan at K918,457,716.39 and the interest was put at 15% per annum. The loan bears interest at 7.5% per annum and is repayable in arrears starting from 31 March 2005. The loan is half-yearly unsecured, but ranks pari passu with future loan facilities and it is repayable over 15 years. It was agreed in the addendum signed in June 2006 between the Company and Government of Malawi to fix the loan at K88,701,816.63 with interest rate maintained at 7.5% per annum. The loan is interest free and unsecured. There are no repayment terms. (Continued) ings orrow b oans and Libyan Government Government of Belgium Kuwait Fund for Arab Economic Development Fund Kuwait Nordic Development Fund Government of Malawi/Kingdom of Denmark L Government of Malawi Guaranteed Loans Government of Malawi Development F borrowed funds from Denmark, Nordic The Government of Malawi Development and Belgium Government to finance the development of telecommunications services in terms of bilateral of telecommunications services in terms Government to finance the development Development and Belgium Government for servicing the loans, through the on lent to the Group. The Group is responsible agreements, which were are guaranteed by the Government of Malawi. of Malawi. These loans In June 2006, the Group agreed with the Government of Malawi to convert to Malawi Kwacha the loans on lent to the company at the foreign currency exchange rates ruling as at April 2003 and revise some of the interest rates. rates ruling as at April 2003 and revise the foreign currency exchange terms applicable to the loans are shown below: interest rates and repayment Security,

a) 30.

- 63 186 691 990 2014 Total 2,765 927 990 4,215 3,089 3,521 3,619 4,026 (1,961) (4,474) (3,430) 3,521 3,521 4,215 4,215 4,215

------83 18 511 691 846 714 990 846 Company (990) (439) (221) 2015 Other 846 511 511 511 - 3,677 2,787 2,429 2,898 3,988

(3,209) 2,429 bonus (4,035) Group 2,429 3,677 3,677 3,677

7 - 27 20 27 219 246 246 246 - claim

Legal - 27 27

anies

comp ble to group aya oans p

visions Pro Group 2015 Balance at the beginning of the year Additions during the year Movement Opening balance Provision acquired in business combination Reclassified to short term Provision used in the year Charge for the year Presscane Limited Repayments National bank of Malawi Closing balance at market investment rates plus 1% margin. The loans are unsecured and attract interest Balance as at the end of the year Due within 1 year or less Balance at the end of the year 2014 Balance at the beginning of the year Charge for the year Provision used in the year Due within 1 year or less Balance as at the end of the year Balance at the end of the year S EME NT TAT S E FINANCIAL ARAT For the year ended 31 December 2015 the year ended For DATED AND IDATED HE CONSOL TO T NOTES SEP

Press Corporation Limited Annual Report 2015 114

32.

31. ng term l lO In millions of Malawi Kwacha

Strategic Report Corporate Governance Governance Financial Statements StatementsStatements On the Malawi Stock Exchange Strategic Report Corporate Governance Governance Financial Statements StatementsStatements On the Malawi Stock Exchange

- 115 393 109 588 668 (393) (517) (709) Total 2014 68 - 588 71 71 588 588 -

- - -

68 Annual Report 2015 668 (694) 2015 42 ------Other - - Press Corporation Limited In millions of Malawi Kwacha

17 393 588 - (393) (517) 71 71 588 588 2014 3,304 588 bonus Group 12,276 3,739 (11,858) For the year ended 31 December 2015 the year ended For -

- - 2 S EME NT TAT S E FINANCIAL ARAT (79) 2015 Group Company 3,739

------claim 2,685 Legal SEP 10,461 DATED AND IDATED HE CONSOL TO T NOTES (11,438) - -

ble aya (Continued)

visions The provision for legal claims represents estimated amounts which may be required to settle legal and other related The provision for legal claims represents course of business. The provision is based on legal advice from the claims made against the Group in the ordinary which the Group is facing. Group’s attorneys on the outcome of claims incentive pay to eligible employees. The estimate has been made on the basis The provision for Group bonus represents policies and may vary as a result of final operating results of the Group. of rules govering Group’s performance incentive accrued benefits and Levy provision. Employees benefits provided amount Other provisions includes employees related based was provision Levy of service. conditions company legal and existing based on liability from expected was derived existing legal framework governing respective levies. i. ii. iii. 2014 Company 2015 Pro Provision made during the year Due within 1 year or less Balance at the beginning of the year out during the year Paid Opening balance Provision made during the year Provision made during Current charge Balance at the beginning of the year Balance at the beginning out during the year Paid Balance at the end of the year Due within 1 year or less Balance at the end of the year Cash paid Prior period charge Tax transfer Tax Total payables Total

33. x p income ta

32.

- - - - 1 9 3 36 14 308 2013 2014 4 31 9,860 2014 78 422 (9,860) - Provisions,

- 6 39 - 89 134 2015 3 1 3 1 14 16 2014 2015 17,391 2,746 3,071 Company (17,391) 287

213 668

2013 9,467 12,103 22,451 Restated 673 2014 5,228

19,330 10,039 35,270 Restated

Group Company Group 599 2015 Accounting Policies, Changes in Accounting Estimates and 3,347 18,811 10,586 33,343

anies , the LCs are contingent liabilities and should be disclosed off balance sheet. The , the LCs are contingent liabilities and should ables y bles to group comp aya

. As a result comparative figures have been restated. The Letters of credit have been disclosed under contingent liabilities, . As a result comparative figures have been

Contingent Liabilites and Contingent Assets error has been corrected restrospectively in accordance with IAS 8 error has been corrected restrospectively in Errors Letters of credit as previously stated Reclassified as contingent liability Letters of credit as re-stated note 46 below. The restatement has resulted in a decrease of trade and other payables in 2014 and 2013 by K17.4 billion and The restatement has resulted in a decrease of trade note 46 below. for both years. A reconciliation for the restatement is shown below: K9.9 billion. There has been no impact on equity The average credit period on purchases of certain goods is 30 days. No interest is charged on the trade payables that are over The average credit period on purchases of policies in place to ensure that all payables are paid within the pre-agreed credit due. The Group has financial risk management terms. of credit (LCs) to customers. Over the years the Bank has been carrying both The Banking business of the Group offers letters assets and other liabilities. This was an error as in accordance with IAS37 types of LCs on the balance sheet as other Liabilities to other banks other pa Trade and Malawi Telecommunications Limited Malawi Telecommunications Manzinzi Networks Limited Telekom National bank of Malawi Amounts due to related party companies Press Properties Limited Mcsteel Limited PressCane Limited Ethanol Company Limited

Trade payables Trade Others Accruals S EME NT TAT S E FINANCIAL ARAT

For the year ended 31 December 2015 the year ended For DATED AND IDATED HE CONSOL TO T NOTES SEP

Press Corporation Limited Annual Report 2015 116

35. trade and other p

34. In millions of Malawi Kwacha

Strategic Report Corporate Governance Governance Financial Statements StatementsStatements On the Malawi Stock Exchange Strategic Report Corporate Governance Governance Financial Statements StatementsStatements On the Malawi Stock Exchange

117 180 332 2014 4,277 3,585 2,273 9,161 58,270 17,635 23,711 35,884 34,536 13,382 139,182 36 40,762 77,494 140,378 40,762 1,196 140,378 140,378 1,196 140,378 Annual Report 2015

34 Group Press Corporation Limited 747 2015 2,247 9,155 2,015 3,117 8,124 2,638 88,793 27,402 32,986 62,671 98,430 15,888 67,605 18,759 62,671 209,605 211,852 211,852 In millions of Malawi Kwacha 211,852 211,852 For the year ended 31 December 2015 the year ended For 50,649 S EME NT TAT S E FINANCIAL ARAT SEP DATED AND IDATED HE CONSOL TO T NOTES

209,214 139,182

Manufacturing Agriculture accounts Personal Within three months Between three months and one year Finance and insurance Others Wholesale and retail

otal liabilities to customers are payable as follows: Interest bearing deposits Non-interest bearing deposits Deposit accounts Savings accounts currency accounts* Foreign Current accounts * The foreign currency denominated account balances as at 31 December were as follows:- US Dollar denominated - - GBP denominated Euro denominated ZAR denominated ------Other currencies The interest rate on foreign currency accounts averaged 0.5% (2014:0.5%)

analysis of deposits by sector t analysed by interest risk type: 36. its tomer depos cUS

------23 10 257 2014 23 - 6,678 6,935 918 908 ------

1 22 306 2015 22 - 6,664 6,970 209 208 - - 7 89 295 412 181 2014 Company 1,866 3,773 1,344 1,316 1,052 50,007 48,246 38,534 34,776 6,173 1,978 218 2,585 21,651 60,200 - 136,787 Group

- 87 87 89 170 398 185 218 2015

1,695 4,661 1,564 5,179 2,365 56,787 58,694 45,655 41,904 73,284 3,051 26,719 161,136 -

Sundry income is comprised of income earned from non-core business activities of the Group. These include co-siting Sundry income is comprised of income earned from non-core business activities of Group companies that are not in income, leased circuit rentals, board members fees and rental income generated by property business, among others. Services Sales Marketing and publication Net gains from trading in foreign currencies Interest Cost of sales Interest expense Recoveries from impaired loans and advances Investment income – dividend Investment income – Selling expenses Direct service costs Fair value adjustment of investment property Fair value adjustment of other assets Fair Carriage outwards Other Profit on disposal of property, plant and equipment Profit on disposal of property, Profit on disposal of available for sale financial assets Profit on disposal of available for sale financial Sundry income S EME NT TAT S E FINANCIAL ARAT

For the year ended 31 December 2015 the year ended For DATED AND IDATED HE CONSOL TO T NOTES SEP

Press Corporation Limited Annual Report 2015 118 40. Distribution expenses

g income 39. Other operatin 38. Direct trading expenses

nue 37. Reve In millions of Malawi Kwacha

Strategic Report Corporate Governance Governance Financial Statements StatementsStatements On the Malawi Stock Exchange Strategic Report Corporate Governance Governance Financial Statements StatementsStatements On the Malawi Stock Exchange ) - 2 119 83 42 51 47 85 66 31 45 (39) 402 261 168 139 2014 1,546 128 3 (1,383) (1,294 (1,422) 237 3,080 -

- - - -

- 59 11 53 53 93 40 39 Annual Report 2015 70 539 115 135 165 142 282 (148) 2015 1,172 2,828 (1,572) (1,650) (1,720) Press Corporation Limited In millions of Malawi Kwacha

- 1 743 123 933 545 `280 2014 1,377 1,390 1,507 1,174 1,899 2,403 3,638 8,402 (2,121) (1,237) Company 18,879 163 2,283 (3,518) (2,443) (5,801) 49,269 8,095 For the year ended 31 December 2015 the year ended For

S EME NT TAT S E FINANCIAL ARAT 6 4 Group 963 363 216 188 950 2015

1,208 1,285 2,387 1,680 1,681 1,543 1,606 3,351 4,282 8,959 (4,268) (1,455) (6,892) SEP 24,487 10,570 DATED AND IDATED HE CONSOL TO T NOTES 60,955 (12,615) (10,228)

current year fees prior year fees other professional services fees & expenses executive directors’ remuneration - - - - -

The principal group pension scheme is the Press Corporation Limited Group Pension and Life Assurance Scheme covering and Life Assurance The principal group pension scheme Corporation Limited is the Press Group Pension is a defined contribution all categories of employees with 3,414 (2014: 2,752) members as at 31 December 2015. The Fund Under this arrangement employer’s liability is limited to the pension by its Trustees. fund and is independently self-administered contributions. Finance income and costs Auditors’ remuneration Auditors’ remuneration Interest income on bank deposits Net foreign exchange gain Other Loans Bank overdrafts Directors’ emoluments Directors’ emoluments

Foreign exchange loss Foreign borrowing costs capitalised amounted to K86 million (2014: K50 million). The Group weighted average During the year, capitalisation rate on funds borrowed is 26% per annum (2014: 30% per annum). Personnel costs Personnel

Pension contribution costs Pension Legal and professional fees Stationery and office expenses Security services Motor vehicle expenses Bad debts Repairs and maintenance Depreciation and amortisation

Other

liability for defined contribution obligations

interest expense

interest income 42.

41. ve expenses inistrati aDM

net finance costs

------% 30 (13) 668 668 2014 2014 - 17 668 ------

% 30 668 2015 2015 668 668 (5) 25 . - -

% 17 30 668 (345) Company 2014 2014 2,265 2,249 2,216 6,802 Company 11,608 628 12,576 283 5 35 12,293 72 Restated

2 % 30 Group 634 798 Group 2015 2015

3,666 1,718 6,106 1,065 22 52 11,615 88 12,285 267 668 13,350

During the year, the Group changed its policy in relation to depreciation of bottles and crates. According to IAS 8 ‘Accounting the Group changed its policy in relation to depreciation of bottles and crates. According During the year, to be accounted for restrospectively as Changes in Accounting Estimates and Errors’, any effect of such change need Policies, to reflect this change. The restatement has led to the decrease in investment in such comparative figures have been restated share of profit from associates for the year 2014. associates as at 31 December 2014 and the The effective tax rate at company level is below the standard tax rate of 30% because the income tax charge is in respect of tax The effective tax rate at company level is below the standard tax rate of 30% because on dividend income at a rate of 10%. This tax is deducted at source. Act it is not possible to transfer tax losses from one subsidiary to another or obtain Group relief. Under the Malawi Taxation The Group has estimated tax losses of K34.9 billion (2014:K15.8 billion). These include capital losses, which can be set off The Group has estimated tax losses of K34.9 billion (2014:K15.8 billion). These include deferred tax liabilities, which would arise against future capital gains. Where relevant, these tax losses have been set off against to agreement by the Malawi Revenue Authority and losses are subject on the disposal of revalued assets at carrying value. Tax in the same company are available for utilisation against future taxable income, including capital gains, only Limbe Leaf Tobacco Company Limited Limbe Leaf Tobacco investees ity accounted s from equ result Share of

Carlsberg Malawi Limited Current year at 30% (2014:30%) based on taxable profits Current year at 30% (2014:30%) based on PumaEnergy (Malawi) Limited Under-provisions for prior years Under-provisions Macsteel Malawi Limited

Final tax on dividend received from associates, subsidiaries and joint ventures ventures joint and subsidiaries associates, from received dividend on tax Final Deferred tax expense Tax losses Tax Origination and reversal of temporary differences Income tax expense average tax rate applicable to profits of the Group and Company as follows: Standard tax rate The tax on the Group’s and Company’s profit before tax differs from theoretical amount that would arise using the weighted The tax on the Group’s and Company’s profit before tax differs from theoretical amount Permanent differences Permanent Effective tax rate S EME NT TAT S E FINANCIAL ARAT

For the year ended 31 December 2015 the year ended For DATED AND IDATED HE CONSOL TO T NOTES SEP

Press Corporation Limited Annual Report 2015 120

44. x expense ta income

43. In millions of Malawi Kwacha

current tax expense

reconciliation of effective tax rate

Strategic Report Corporate Governance Governance Financial Statements StatementsStatements On the Malawi Stock Exchange Strategic Report Corporate Governance Governance Financial Statements StatementsStatements On the Malawi Stock Exchange

- - - 121 2014 2014 2,300 - 21,614 2,300 - (10,886) 120.2 89.30 120.2 89.30 89.26 89.26 10,734 10,728 Restated

- - -

Annual Report 2015 2015 2015 2,970 34.92 34.92 120.2 4,197 34.88 34.88 4,192 Group 120.2 - 12,239 2,970 (8,047) - Press Corporation Limited In millions of Malawi Kwacha

- 213 2013 1,356 5,580 18,909 15,653 1,900 9,860 Restated For the year ended 31 December 2015 the year ended For Company

S EME NT TAT S E FINANCIAL ARAT 52 2014

1,177 2,488 SEP 28,218 20,829 3,386 DATED AND IDATED HE CONSOL TO T NOTES 3,724 17,391 Restated olicies, Changes in Accounting Estimates and Errors Group

- 297 2015 1,891 4,265 4,731

31,441 25,285 20,257

million) and a weighted average number of ordinary shares outstanding average number of ordinary shares outstanding K10,734 million) and a weighted

Foreign guarantees Foreign Legal and other claims Net deficit on NBM Pension Fund Pension Net deficit on NBM payable Tax Total contingent liabilities Total and credits issued by National Bank of Guarantees and performance bonds represent acceptances, guarantees, indemnities default on the part of the relevant Malawi to non-Group entities which would crystallize into a liability only in the event of guarantees made by the parent company for bank loans taken by the the guarantees represents the company, For counterparty. Centre Limited. Trading Limited, Press Properties Limited and Peoples Company Limited, Malawi Telecommunication Foods the years has been erroneously carrying As highlighted above under note 24 and 34, the Banking business of the Group over are contingent liabilities. The error has Letter of Credits on its balance sheet as other assets and other liabilities and yet they been accounted for retrospectively in accordance with IAS 8 Accounting P As a result comparative figures have been restated. hence disclosed here as contingent liability. ordinary course of business, the Legal and other claims represent legal and other claims made against the Group in the to the Group in the event that legal outcome of which is uncertain. The amount disclosed represents an estimate of the cost are not expected to give rise to a proceedings find the Group to be in the wrong. In the opinion of the directors the claims significant cost to the Group. Contingent liabilities Basic earnings per share (K) Number of shares in issue Diluted earnings per share (K) Profit from continuing operations Non-controlling interest Weighted average number of ordinary shares Weighted Profit attributable to owners of the company Profit attributable to Local guarantees and performance bonds Letters of credit Diluted earnings per share (from continued operations) (MK) Diluted earnings per share (from continued operations) (MK) Basic earnings per share (from continuing Calculation of basic earnings per share and diluted earnings per share is based on the profit attributable to ordinary share is based on the profit attributable to per share and diluted earnings per Calculation of basic earnings million (2014: shareholders of K4,197 million (2014:120.2 million). during the year of 120.2

(b) (c) (a)

46.

45. per share earnings and diluted per share ic earnings bAS

- 2014 2014 13,499 - - 1,100 14,599 - , have been 109 109 orbes. As per the 2015 2015 13,644 1,187 14,831 - Purchases of goods 2014 2014 3,818 Company 4,490 4,490 20,829 24,647 Group 392 Sale of goods 2015 2015 4,848 5,240 15,099 36,275 21,176

(Continued) arties

Trading transactions the Group entered into the following trading transactions with related parties that are not members of the Group; During the year, Balances and transactions between the company and its subsidiaries, which are related parties of the Company Balances and transactions between the company and its subsidiaries, which are related between the Group and other related eliminated on consolidation and are not disclosed in this note. Details of transactions parties are disclosed below. Associates of the Group Joint ventures of the Group Authorised and contracted for Authorised but not yet contracted for

These commitments are to be funded from internal resources and long term loans. These commitments are to be funded from ital commitments Capital liabilities Contingent

actuarial valuation, the General Fund had a surplus of K2,596 million (December 2014: K1,903 million) and the Special Fund had K1,903 million) and the Special Fund a surplus of K2,596 million (December 2014: had General Fund actuarial valuation, the of such deficit. million.) thus confirming the non-existence (December 2014: deficit of K4,391 a surplus of K1 830 million in the 2015 annual financial statements. nor contingent liability has been recognized Therefore, no liability had a defined benefit scheme. The old still was based on the old rules when the Fund The above position on the Special Fund for the now fully defined contribution scheme. rules fell away with the ushering in of new rules Limited have with Ltd and Carlsberg Malawi Networks Limited, Limbe Leaf Tobacco to disputes that Telecom liability relates Tax and billion whereas Limbe Leaf Tobacco Networks Limited potential liability is K1.8 Telecom the Malawi Revenue Authority. in a tax payable of K5.6 billion (2014:K9.1 billion) and PCL’s portion of the liability Carlsberg Malawi Limited in total may result amounts to K2.3 billion (2014: K3.7 billion). The National Bank of Malawi Pension Fund used to run a hybrid defined contribution scheme and in oder to comply with the new new with the to comply oder and in contribution scheme to run a hybrid defined used Fund of Malawi Pension National Bank The actuaries, hybrid fund, it was being valued by independent a fully defined contribution scheme. As a Act, it became Pension and the had a surplus of K1,903 million valuation of December 2013, the General Fund As per the actuarial Alexander Forbes. a which was disclosed in prior year as million thus giving a net deficit of K2,488 million had a deficit of K4,391 Special Fund contingent liability. F done by independent actuaries, Alexander valuation as at 31 December 2014 was In 2015, a new actuarial S EME NT TAT S E FINANCIAL ARAT For the year ended 31 December 2015 the year ended For DATED AND IDATED HE CONSOL TO T NOTES SEP Press Corporation Limited Annual Report 2015 122 48. ed p rElat

47. (e)

(d) 46. In millions of Malawi Kwacha

Strategic Report Corporate Governance Governance Financial Statements StatementsStatements On the Malawi Stock Exchange Strategic Report Corporate Governance Governance Financial Statements StatementsStatements On the Malawi Stock Exchange

123 449 528 2014 2014 1,012 1,999 . 35 320 2,319 Annual Report 2015 592 869 54 2015 2015 1,515 2,934 235 3,169 Press Corporation Limited rust, in the current or In millions of Malawi Kwacha Amounts owed to related parties related 608 For the year ended 31 December 2015 the year ended For 2014 2014 1,056 3,482 818 1,426 192 4,730 Company S EME NT TAT S E FINANCIAL ARAT SEP DATED AND IDATED HE CONSOL TO T NOTES related parties 83 Group 252 460 543 urchases were made at market price. 2015 2015 1,473 7,065 5,340 Amounts owed by

(Continued) arties

Post employment benefit Post

Directors remuneration expenses more fully disclosed in note 41. Directors’ emoluments are included in administrative of key management personnel during the year was as follows: The remuneration of directors and other members Compensation of relatives control 0.01% (2014: 0.01%) of the voting shares of the Company Directors of the Company and their immediate key management personnel Associates of the Group Salaries and benefits for key management The following balances were outstanding at the end of the reporting period; were outstanding at the end of the reporting The following balances

Joint ventures of the Group Sale of goods to related parties were made at the Group’s usual list prices. P Sale of goods to related parties were made will be settled in cash. No guarantees have been given or received. No expense The amounts outstanding are unsecured and years for doubtful debts in respect of the amounts owed by related parties. has been recognised in the current or prior with the ultimate controlling entity of the Group, Press T There were no material related party transactions prior financial period. 48. ed p lat rE - - - - - (6) (12) (17) (25) 149 195 438 (128) (101) 1082 2014 2014 3,456 1,422 1503 (6,678) (1,307) 421 - 120.2 - 12.50

- - - - 1 (4) (70) 119 393 481 (517) (863) (288) 2015 2015 2,679 1,720 2,050 1,022 120.2 1,503 12.50 (6,249) - - (1,029)

- - - 596 (181) (638) 2014 Company Group and Company 9,000 5,801 1,896 2,959 3,659 (6,802) (2,283) (3,452) (2,478) 34,190 - (15,889) 21,837 Restated . Following the revision, the Group’s share of . Following

48,215 - - - (218) (152) (694) (828) Group 2015 4,156 (6,106) (2,387) (1,927) (1,900) (9,022) 25,589 11,011 12,615 71,474 64,306 (37,305)

es g activiti om operatin ows fr

Gross share of profit from equity accounted investments Gross share of profit of investment property and property, (Profit)/ loss on sale plant and equipment Profit before income tax Profit before income Adjustments for: Depreciation and amortization Finance costs Finance income capital changes: Working Increase in inventories Fair value adjustments and unrealised forex losses Fair Net reserves effect on inclusion of MTL Investment income (dividends) (Decrease)/Increase in provisions other comprehensive income has increased by K11 billion resulting in the increase of the Group’s total comprehensive income other comprehensive income has increased by K11 billion resulting in the increase of to K428 billion and total equity has increased from assets have increased from K417 billion from K18 billion to K29 billion. Total K119 billion to K130 billion. The financial statements for the year ended 31 December 2015 which were approved by the directors on 1 April 2016 have been The financial statements for the year ended 31 December 2015 which were approved made to take into account the effects of revised following information that became available after the approval. The revision was retranslation of an associate whose functional currency is the United States Dollar Increase in Loans and advances to customers Increase in Finance lease receivables Increase/(Decrease) in trade and other payables - Group Increase/(Decrease) in trade and other payables Increase in customer deposits (Decrease)/Increase in trade and other payables (Increase)/Decrease in trade and other receivables (Increase)/Decrease in trade and other receivables (Increase)/Decrease in trade and other receivables - Group (Increase)/Decrease in trade and other receivables capital acquired on acquisition of a sub-subsidiary Working Cash generated by/(used in) operations Subsequent events ements Revision of financial stat Dividend per share shareholders at the Annual General Meeting. The directors have proposed a dividend of K8.50 per share as disclosed in note 50. This dividend is subject to approval by The directors have proposed a dividend of K8.50 per share as disclosed in note 50. This Interim dividend Final dividend Number of ordinary shares in issue (million) Dividend per share (K) The proposed final dividend for the year is K1,022 million (2014: K1,082 million) representing K8.50 per share (2014: K9). The proposed final dividend for the year is K1,022 million (2014: K1,082 million) representing S EME NT TAT S E FINANCIAL ARAT

For the year ended 31 December 2015 the year ended For DATED AND IDATED HE CONSOL TO T NOTES SEP

Press Corporation Limited Annual Report 2015 124 52. 51. 50.

49. ash fl c In millions of Malawi Kwacha

Strategic Report Corporate Governance Governance Financial Statements StatementsStatements On the Malawi Stock Exchange Strategic Report Corporate Governance Governance Financial Statements StatementsStatements On the Malawi Stock Exchange 125 2014 475.8 575.4 738.4 41.0 24.2 Annual Report 2015 43.4 24.9 2015 664.4 726.6 985.4 Press Corporation Limited In millions of Malawi Kwacha

For the year ended 31 December 2015 the year ended For S EME NT TAT S E FINANCIAL ARAT SEP DATED AND IDATED HE CONSOL TO T NOTES

45.3 707.9 791.5 20.9% 1,041.6

Exchange rates as at 31 December Exchange rates as at Dollar Kwacha/United States Kwacha/Euro Kwacha/British Pound Rand Kwacha/South African Inflation rates as at April 2016 Kwacha/Rand Kwacha/US Dollar Kwacha/Euro Inflation rates as at 31 December (%) At the time of signing these Consolidated and separate financial statements, the exchange rates had moved to:- At the time of signing these Consolidated and Kwacha/GBP The average of the year-end buying and selling rates of the major foreign currencies affecting the performance of the company currencies affecting the performance buying and selling rates of the major foreign The average of the year-end Index which represents an official the increase in the National Consumers Price together with below, and Group are stated measure of inflation.

53. ange rates h and exc ion iNFLAT ON THE MALAWI STOCK EXCHANGE Strategic Report

% of total shares in number of Shareholding number of issue shares range shareholders %

Press Trust 44.47% 53,475,249 1,000,000 + 10 0.65% Deutsche Bank Trust Company America 22.34% 26,860,500 10,001 - 1,000,000 72 4.65% Old Mutual Life assurance (Malawi) Limited 14.29% 17,183,104 5,001 - 10,000 33 2.13% Others 18.90% 22,736,860 1 - 5,000 1,435 92.57%

Corporate Governance Total 120,255,713 1,550 100.00%

2015 2014 2013 2012 2011

Share Market

Total number of shares in issue 120,255,713 120,255,713 120,255,713 120,255,713 120,255,713

Malawi Stock Exchange (MSE) Market statistics

Financial Statements Market capitalization at 31 December (MKm) 64,337 54,488 34,273 22,608 21,646 Market capitalization at 31 December (US$’m) 96.83 114.52 79.13 66.09 132.15

Subscription price at listing MK14.89

Last traded price 31 December (MK per share) 535.00 453.10 285.00 188.00 180.00

Highest (MK per share) 535.00 453.10 285.00 188.00 180.00

On the Malawi Stock Exchange Lowest (MK per share) 453.10 285.00 188.00 176.00 153.00 Net asset value (NAV) per share 1,084.93 889.09 669.58 396.41 353.94 Value of shares traded (MKm) 1,085.00 454.00 1,688.00 152.00 176.67 Earnings per share % 34.92 89.30 77.97 28.86 44.23 Dividend yield % 2.43 2.32 2.59 1.51 1.51

Press Corporation Limited Annual Report 2015 126 ADMINISTRATION

Company Secretary Press Corporation Limited B.M.W. Ndau Reg. No. 2395 P.O. Box 1227 Registered Office: Blantyre 6th and 7th Floors, Chayamba Building Tel: +265 1 833 569 Victoria Avenue Fax: +265 1 824 656 P.O. Box 1227 Email: [email protected] Blantyre [email protected] Transfer Secretaries Independent Auditors Financial management Services Deloitte Legal Department Certified Public Accountants National Bank of Malawi P.O. Box 187 P.O Box 1438 Blantyre Blantyre Tel: +265 1 822 277 Tel: 265 1 820 900 Fax: +265 1 821 229 Fax: +265 1 820 464 Email: [email protected] Email: [email protected]

Legal Advisors LOndon Depository Savjani & Company Deutsche Bank Trust Company Americas P.O. Box 2790 Winchester House Blantyre 1 Great Winchester Street Tel: +265 1 824 555 London EC2N 2DB Fax +265 1 821 064 Tel: +44 20 7545 3312 Email: [email protected] Fax: +44 20 7547 6073 Email: [email protected] Bankers National Bank of Malawi Location of Listing Victoria Service Centre Malawi Stock Exchange and P.O. Box 947 London Stock Exchange as a Blantyre Global Depository Receipt

www.presscorp.com

Press Corporation Limited Annual Report 2015 127 NOTES

Press Corporation Limited Annual Report 2015 130

Strategic Report Corporate Governance Corporate Gorvenance

back cover

Financial Statements Financial Statements Investor Information On the Malawi Stock Exchange

Press Corporation Limited Annual Report 2015 132