2 ANNUAL REPORT 2010 on theMalawiStockExchange Performance ofPress CorporationLimited Notes totheFinancialStatements Consolidated StatementsofCashflows of ChangesinEquity Consolidated Statements of Comprehensive Income Consolidated Statements of FinancialPosition Consolidated Statements Independent Auditors’Report for theFinancialStatements Statement ofDirectors’ Responsibilities Directors’ Report Corporate Governance Five Year Group FinancialReview Profiles ofDirectors andManagement Group ChiefExecutive’s Report Chairman’s Statement Mission andValues Statement Financial Highlights CONTENTS

118 49 48 45 44 43 42 41 39 35 34 29 14 6 4 3 Millions Millions 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 55,000 60,000 65,000 70,000 US$ ‘m US$ ‘m MK ‘m MK ‘m 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 5,500 6,000 5,000 500 MK MK Ordinary Shareholders 0 0 Profit Attributableto

24,572 1,608 187 06 12 06 29,080 1,708 208 12 07 07 Turnover 43,614 3,140 310 22 08 08 47,560 3,273 325 09 09 22 59,349 5,316 398 10 10 36 Millions US$ 0 5 10 15 20 25 30 35 40 Millions US$ 0 50 100 150 200 250 300 350 400 450 Year end exchange rates Yearexchange end Average monthly exchange rates exchange monthly Average Gearing After taxreturnonequity Financial statistics Value ofshares trades(inMKmiilions) Volume ofshares traded(inthousands) millions) (in issue in shares of Number Price earnings ratio Price earnings Market price per share per price Market Dividend per share per Dividend (shareholders’ equity per share) per equity (shareholders’ share per value asset Net Cash retained from operationspershare Basic earnings per share per earnings Basic Share performance Shareholders’ equity Shareholders’ Attributable earnings Attributable Turnover Group Summary(inmillions)

Year endexchangerates Average monthly exchangerates Exchange Rate(MK/US$)

FINANCIAL HIGHLIGHTS

Millions 10,000 15,000 20,000 25,000 30,000 35,000 40,000 US$ ‘m 5,000 MK ‘m 42,544 42,544 59,349 59,349 MK 1,119 5,316 5,316 Ordinary Shareholders’ 18.20 120.2 70.10 44.23 0 2010 18% 177 4.66 170 354 3.8

Malawi Kwacha 139.32 131.55 12,722 06 91 2006

13,546 97 07 38,406 38,406 47,560 47,560 115.22 3,528 3,273 3,273 14.76 120.2 27.23 Funds 2009 20% 475 2.45 163 320 21,522 6.0 152 08 140.32 139.82

2007 Change % 24,611 09 167 (62.81) (68.30) (35.79) (39.16) 23.26 89.83 89.83 10.77 10.77 62.43 62.43 10.77 10.77 62.42 62.42 24.79 24.79 28,187 7.38 7.38 4.29 4.29 0.00 0.00 187 10

141.99 140.59

Millions US$ 0 50 100 150 200 2008 150.80 150.80 149.12 149.12 0.12 1.18 3.80 1.13 1.13 0.03 0.03 2.35 2.35 0.46 0.30 0.30 2010 282 398 36 US Dollars

147.44 145.99 2009 147.44 147.44 145.99 145.99 0.10 3.25 5.93 1.11 1.11 0.02 0.02 2.17 2.17 0.78 0.19 0.19 2009 260 326 22

Change % 150.80 149.12 2010 (63.59) (35.88) (40.51) 20.52 85.60 85.60 59.02 59.02 59.01 59.01 22.17 22.17 1.97 1.97 8.31 8.31 8.31 8.31 3 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED Mission and Values Statement To be a leading Corporation acting ethically and responsibly in Malawi and the region

PRESS CORPORATION LIMITED PRESS CORPORATION generating real growth in shareholder value through diverse goods and services

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

In an attempt to ensure consistently high standards in the manner in which its operations are managed, Press Corporation Limited embarked on a continuing programme to certify several employees as Ethics Officers. Two employees were certified by the Ethics Institute of South Africa and they will in turn become trainers. The Corporate Head Office shall, through a designated office, monitor ethical standards in its subsidiary and associate companies.

Integrity Press Corporation Limited is committed to a policy of fair dealing and integrity in the conduct of its businesses. The Corporation’s commitment is based on the belief that business should be conducted honestly, fairly and legally. As such Press Corporation Limited expects all its employees to share its commitment to high moral, ethical and legal standards.

Employment equity Press Corporation Limited’s employment policy is based on a system of opportunities for all. Employment equity seeks to identify, develop and reward each employee who demonstrates the qualities of individual initiative, enterprise, hard work and loyalty in their jobs.

Employment is on the basis of merit rather than an individual’s race, colour, creed, gender, or other criterion unrelated to their capacity to do the job.

Employees in the Corporation have the right to work in an environment which is free from any form of harassment or unlawful discrimination with respect to race, colour, creed, gender, place of origin, political persuasion, marital or family status or disability.

Environmental management Press Corporation Limited is committed to developing operational policies to address the environmental impact of its business activities by integrating pollution control, waste management and rehabilitation activities into operating procedures. ANNUAL REPORT 2010

4 and HIV/AIDSPolicy paper isshredded anddonated toalocalre-cycling organisation Members ofstaff are encouragedto“reduce, re-use andre-cycle” paper. Allwaste and cleanerwater. tackling sewereffluent in the riversystemstoprovide thecommunitieswithsafer planting asmanytrees as possibleespeciallyalongrivercatchmentareas and in whichitoperates.Theprogramme includesgreening theCityofBlantyre by issues ofdeforestation, pollution andwastemanagementinthecommunities including thelocalauthorityandUniversityofMalawi’s Polytechnictotackle “Going Green” campaign, theCompanyhaspartnered withenvironmental experts To ensure environmental managementsustainabilityandasacontinuationofthe using the internal reportingusing theinternal mechanism provided forintheFraud Policy. be usedbythose oftheGroup’s employeeswhomayhavereservations about can This Deloitte. by provided service hotline blowing whistle a Anonymous, Offs Tip to subscribed Company the Policy, Fraud Company’s the of extension an As initiatives. anti-corruption led business regional the BusinessCodeofConductandtopursuelinkages withrelevant national and for support widespread foster and corruption fighting to commitment business promote actively to is which (BAAC) Corruption Against Action Business the of objectives main the of one support to continues Limited Corporation Press Anti-Corruption fulfilling someofitssocialresponsibilities. service tomembersofthegeneralpublicisprovided primarilyasonewayof of theGroup, andonpaymentofanominalfee,tothegeneralpublic.Thislatter The clinicisfullyequippedtoprovide free anti-retroviral therapytoemployees provide theappropriate counsellingtoemployeeswhoare diagnosedHIVpositive. Members ofstaff atthePress CorporationLimitedclinichavebeentrainedto environment forallemployees,includingthosewithHIV/AIDS. promote theCompany’s responsibility forproviding ahealthyandequitablework Press CorporationLimitedhasanHIV/AIDSPolicywhosecore objectiveisto H the highestmarksinStrategicFinancialManagementpaper. the finalstageofACCAprogramme attheMalawiCollegeofAccountancywith Press CorporationLimitedalsoawards acashprizetothestudentwhocompletes as patientsfrom otherpartsofthecountry. equipped andoperationaldialysisunitthatisservingthelocalcommunityaswell previous yearforittoacquire adialysismachine,thehospitalnowhasfully Following adonationofMK20millionthatwasmadetoprivatehospitalinthe to organisations involvedinservingthelessprivilegedmembersofcommunity. its subsidiaryandassociatecompanies,makesdonationsincashkind social investmentdirectly through theCorporateHeadOffice andindirectly through In recognition ofitssocial responsibilities, Press CorporationLimitedisinvolved in Social investment TH LT A E

S E I T I L I C A F

. 5 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED 6 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED The Chairman of PCL, of The Chairman DeanCLungu GBP inDecember 2009toMK235.4/GBP inDecember2010. Malawi Kwachaappreciated againsttheBritishPound Sterlingfrom MK237.32/ MK20.49/ZAR in2009toMK23.7/ZAR inDecember2010.Ontheotherhand, the Further, theMalawiKwachaalso depreciated againsttheSouth AfricanRandfrom excess demandforforeign exchangeforimportsexperienced duringtheperiod. with coupled season marketing tobacco 2010 the during earnings exchange foreign in drop the to due was This 2009. December in MK147.4/US$ from MK150.8/US$ to Dollar the against 2.3% by depreciated Kwacha Malawi The EXCHANGE RATES ANDMARKETDEVELOPMENT availability from theprevious growing seasonaswellhighproduction in2010. in 2009to5.06%2010.Thesaiddeclinefoodinflation wasduetohighmaize 7.33% of average an from inflation food in decline the of result a was This 2009. Inflation remained atasingle-digitlevel,decliningto7.4%in2010from 8.4%in year. the during exports uranium high the to attributed compared tothe12.3%achievedin2009.Thissuperiorperformancewaslargely 53.4% of growth tremendous a registered sector quarrying and mining The outages. power frequent with coupled exchange foreign and fuel of sector declined from 4.8% in 2009 to 4.2% in 2010 due to the continued shortage manufacturing GDP. The the to contributor biggest the remained still agriculture to US$410.60withsalesof216.7millionkilogramsin2010.Howeverat34%, 2009 in kilograms 232.1million of sales with US$434.03million from declined experiencedacrossrainfall patterns thecountryduringyear. Tobaccoerratic earnings to due mainly was This subsidy. fertiliser Government continued the despite Agricultural outputdeclinedfrom the10.6%growth registered in2009to6.6% growth. high exceptionally registering robust remained sector quarrying and mining The sectors. telecommunications and manufacturing agriculture, in 2009. This emanated from reduced growth in the the in growth reduced from emanated This 2009. in achieved 7.7% to compared 6.7% by grew economy The 2010. in growth (GDP) Product Domestic The Malawieconomyregistered adeclineinGross THE GENERALECONOMY CHAIRMAN’S STATEMENT the banks in the country. the banks inthecountry. Stock theMalawi of isalsotheheadquarters ExchangeThe city all of branches and offices boasts CBD its and Malawi of capital commercial the is Blantyre There were nonewlistingsontheMalawiStockExchangeduringyear2010. Index (MASI)closedat4953.09from 5154.95in2009. Share All Malawi The 2009. in 314.21 from 2010 in 351.92 to increased however, to closeat3922.61in2010from 4087.19in2009.TheForeign Share Index(FSI) points in dropped (DSI) index share Domestic The Exchange. Stock Malawi of the performance the in seen be still could recession global the of effects after The STOCK MARKETDEVELOPMENT 2010 compared to9.47%inDecember2009. base lendingratesclosingatanaverageof6.94%across alltenorsinDecember and rate bank the in drop the with line in decline to continued rates Bill Treasury Requirement remained at15.5%duringtheyear. competition fordepositsbetweencommercial banks.TheLiquidityReserve tight to due 3.33% from 3.75% to increased rate savings the However, cut. rate bank the following 15.4% by grew sector private to Credit 19.24%. of average also reduced theirbaselending ratestoanaverageof17.75%from theprevious bank ratefrom 15%to13% inAugust2010,followingwhichcommercial banks The MonetaryPolicyCommitteeoftheReserveBankimplementedacutin MONETARY ANDFISCALPOLICY months coverwithreserves ofUS$275millionin2009. 2.13 the to compared million US$391 at standing reserves with 2010 December in year the of close the at months 3.03 to rose cover import the However, cover. import three-months minimum the than less having country the in resulting year the of part most for challenge major a be to continued currency Foreign 7 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED 8 PRESS CORPORATION LIMITED shortage situation. exchange foreign the exacerbating thereby have aseriousnegativeimpactontheprice will developments these together, Taken 25%. Commission, tobaccoproduction isexpectedtoexceeddemandby banning ofadditivestoburleytobacco.According totheTobacco Control the to reference with particularly (FCTC) Control Tobacco on Convention Framework the on resolutions several of adoption the following 2011 in drop will tobacco for demand that are projections The season. growing 2010/2011 the during experienced pattern rainfall erratic the to due down go to anticipated is production maize and tobacco sector, agriculture the In sectors. estate real and retail and wholesale communication, mining, by mainly driven be to expected is growth The 6.1%. at be to forecast officially is 2011 for growth Economic ECONOMY THE – 2011 FOR OUTLOOK National Bank will open its magnificent new headquarters buildingin 2011.National headquarters Bankwillopen new its magnificent On the left, and immediately adjacent, is the Blantyre Reserve Bank branchOn theleft, andimmediately Reserve adjacent, istheBlantyre

9 PRESS CORPORATION LIMITED PRESS CORPORATION LIMITED PRESS CORPORATION

Inflation is projected to increase to 7.8% in 2011 compared to 7.4% in 2010 as a result of continued rising fuel prices on the international market, which will inevitably trickle down to the cost of commodities thereby increasing inflation.

The withholding of donor support by Malawi’s development partners will continue to put pressure on foreign exchange reserves despite the Extended Credit Facility from the IMF. Thus the foreign currency shortages are likely to continue in the short to medium term.

GROUP PERFORMANCE

2010 was a successful year for the Press Group of Companies. Earnings per share increased from MK27.23 in 2009 to MK44.23 in 2010. Consolidated profit after tax of MK7.742 billion was achieved compared to MK5.670 billion in 2009. The continued shortage of foreign currency and the erratic fuel supply created an unfavourable business environment for most of the businesses in the Group. The most affected were the Financial Services, the Telecommunications, and the Retail and Consumer Goods segments.

Notwithstanding the impact of the unfavourable economic conditions mentioned above, most companies performed well with some companies registering significant growth in earnings compared to 2009. The MK2.1 billion gain on the deemed disposal of the investment in the associated company also had a positive impact on earnings. ANNUAL REPORT 2010

10 In another effort to meet soaring demand for its products, work continues on the second bottling plant at BBGL, Lilongwe

An interim dividend of MK200 million (2009: MK241 million) for the year 2010 representing MK1.66 per share (2009: MK2.00 per share)

was paid on 27 October 2010. Directors have LIMITED PRESS CORPORATION proposed a final dividend for the year 2010 of MK360.6 million (2009: MK240.4 million) representing MK3.00 per share (2009: MK2.00 per share). A resolution to approve the final dividend will be tabled at the forthcoming Annual General Meeting.

MAJOR GROUP COMPANY HIGHLIGHTS:

National Bank of Malawi National Bank of Malawi implemented a new core banking software, T24 during the year. Further, in its strive to consolidate its operations and improve efficiencies, National Bank has invested in the construction of a new office complex and business centre which is expected to be completed in 2011.

Malawi Telecommunications Limited The company completed the second phase of the installation of the Fibre Optic Cable (FOC) project when Mzuzu was connected during the year. The third phase which covers the distance from Mzuzu to Salima via the lakeshore and down to Mangochi, Zomba and Blantyre is expected to be completed by the end of October 2011. Of the total 1,700 kilometres of the FOC backbone, 85% is already completed and commercialised.

Maldeco Fisheries A new fishing vessel arrived from Durban, South Africa, in the 4th quarter of 2010. The vessel which is planned to be officially commission in the second quarter of 2011 will have a significant impact on the performance of the division.

The Bottling and Brewing Group Limited(BBGL) The Bottling and Brewing Group Limited commissioned a MK2 billion-project to construct a combi-line bottling plant in Lilongwe and to upgrade the Mzuzu plant. The upgrade of the Mzuzu plant commenced and was completed during the year. The construction of the bottling plant in Lilongwe is expected to be completed in 2011. The investment will double the company’s production capacity. ANNUAL REPORT 2010

11 12 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED CHAIRMAN DEAN CLUNGU improvement intheGroup’s performanceandintheimplementationofitsstrategy. further to forward look and year the during dedication and cooperation support, continued their for staff and management Directors, fellow thank I Appreciation year. the during board the of composition the in changes no were There The BoardofDirectors Assignments. Special – Executive Group title job the under functions new assigned was years (8) eight past the for Controller Financial Group the been had who Sesani G A Mr This waspartoftheCompany’s successionplan.Effective from2010. thesamedate, October 1st from effect with Controller Financial Group of position the to promoted was Accountant Financial Group the hitherto was who Mafeni E Mrs Management oftheCompany Companies. Group the of most of operations the The continuingforeign exchange shortages,however, poseahugechallengefor realise thegrowth potential. and businesses the grow to is focus the term, medium to short the In fruition. and capacityexpansionsinitsvariousbusinesses.Theseare nowcomingto development infrastructure technologies, new in investments significant made has Business prospects for2011 lookpositive.Overthepastthree years,theGroup PROSPECTS FOR2011 The newest addition to the Maldeco Fisheries fleet fleet Fisheries Maldeco the to addition newest The arrived in the country in2010and, after proving inthecountry arrived trials, willbe commissionedin2011 PRESS CORPORATION LIMITED 14

PRESS CORPORATION LIMITED EXECUTIVE’S REPORT O R G performed particularlywellregistering significantgrowth over2009. segment products consumer and retail The segments. telecommunications and challenge forsomeofourbusinessesespeciallythoseinthefinancialservices huge a posed particular, in shortage currency foreign The supply. fuel erratic during theyear, characterisedbyanacuteforeign currency shortageand conditions macro-economic difficult despite achieved was performance This year. prior the on increase 62% a representing MK3.273), (2009: billion MK5.316 was shareholders ordinary to attributable profit Net 2009. on increase 37% a represents This 2010. December 31 ended year the for billion) MK5.670 (2009: billion MK7.742 achieved aconsolidatedprofit aftertaxof I ampleasedtoreport that thePress Group OVERVIEW U F E I H C P

Dr MAPChikaonda Dr Executive PCL, of Chief Group The the non-commissioningofnewvesselwhicharrivedinMalawifourth and breakdowns vessel frequent year, the of quarter first the during catches lower to due plan below however was performance This year. last above 28.3% The Company’s performancewasbetterthanlastyearwithprofit before taxat MALDECO FISHERIES(ADIVISIONOFTHEFOODSCOMPANY LIMITED) volumes whichshouldalsohelptoimprove thecompany’s cashflowin2011. harvest better and rates growth improved in result to expected is measures these of success The marketing. aggressive and fingerlings of management better such asimprovement inthe feedmanagementprocess, curtailingtheftoffish, implemented being are measures Various year. last suffered that to magnitude The companyregistered anoperatinglossbefore financechargesofsimilar early enoughtohaveanysignificantimpactontheresults fortheyear. in 2009.Growth ratesstarted toimprove in2010.Thishowever, didnotoccur company wasstrugglingtorecover from thepoorfishgrowth rateswhichstarted The year2010wasadifficult oneforMaldecoAquaculture Limitedasthe MALDECO AQUACULTURE LIMITED southern Lakeshore.southern The company startedcages withjust4on2004but further growth has been impeded through the lack of forex for essential essential for forex of lack the through impeded been has growth further cages in the waters of the the of waters the in cages has54chambo now Maldeco Aquaculture inputs in fish food.inputs infish resultedgrowth This in poor fish rates

15 PRESS CORPORATION LIMITED 16

PRESS CORPORATION LIMITED of plotsandtheremaining housesatChapimaHeights,followingthe sale the in increase expected an to due good look 2011 for Prospects been soldandtransferred tobuyers. had houses (21) twenty-one December end at as and year the during The firstphaseofChapimaHeightshousingproject wascompleted second halfof2011. 2011 andshouldtherefore contributemore totheyear’s catchvolumeduringthe The newvesselisexpectedtobecommissionedduringthesecondquarterof to reduce theamountofdown timeexperiencedin2010. expected is This maintenance. preventive of part as vessels the on checks regular Prospects for2011lookbetter asthecompanyhasputinplaceaprogramme of commissioned. quarter of2010.Thevesselisstillundergoingsomefinaltouchesbefore being provision of electricity and water to the area. area. the to water and electricity of provision 19% and25%overthe2009bookvalues. between of increases recorded properties commercial and Residential market. the on a result oftheincrease inproperty prices as revaluation property on gains substantial the for been not it had modest been have would performance company’s The PRESS PROPERTIES LIMITED efficiency levels being achieved compared to plans and levels achieved in in achieved levels and plans to compared achieved being levels efficiency higher much in resulted This processes. production to attention close paid and optimisation plant on focused management 2009, in exercise revamping the of phase second the completed Having 2010. in year good very a had company The ETHANOL COMPANY LIMITED mass inthecompany’s property portfolio. critical improving at aimed pipeline the in projects some has also company The previous year. with high production efficiencies, the company was able to produce produce to able was company the efficiencies, production high with coupled expected, was than molasses more slightly of receipt With actual 2009production of7.8millionlitres. and litres million 7.2 planned a against ethanol of litres million 8.4 complemented the high production efficiencies to earn the company company the earn to efficiencies production high the complemented Effective marketingprogrammes andpricingstrategies Management planstomaintaintheirefforts inproduction, salesand a profit before taxwhichwas62%abovelastyear’s results. company’s performancein2011. the on improve further to order in business the of areas other all Ethanol Company62%above rose the2009figure at profits sustained In ayearof andfocusedperformance,

17 PRESS CORPORATION LIMITED 18

PRESS CORPORATION LIMITED cooling towernowbeingmonitored andcontrolled from onecontrol room. This resulted inboilerwater levels,molassestankwatertreatment and year. the during out carried was re-engineering process and upgrade major A no petrol withwhichtoblend and,inanycase,theyearhadended. 10%) inthelastquarterbutthishadnoimpacton2010salesbecausethere was above budget.Theregulator (MERA)approved ablendingratioof20%(upfrom profit before taxwas7%abovebudgetduetoproduct pricesbeingsignificantly (very acuteinlastquarter)whichledtolowerblendingvolumes.Nevertheless, budgeted production (due to insufficient supply of molasses) and shortage of petrol Total salesvolumewas22%belowbudgetowingtoacombinationoflowerthan PRESSCANE LIMITED

of theexchangeratemanagementsystem. the economyare dramaticallychanged,keytowhichmustbetheresolution environment willalmostcertainlyremain thesameunlessdynamicsof of refrigeration, andthecomputerisationofstores. Theunfavourabletrading In addition,italsoimpactedonstore refurbishments, plannedreplacement exchange, whichnegativelyaffected theavailabilityofimportedproducts. The keyunderlyingproblem in2010wasthepersistentlackofforeign of unprofitable outletswere closed. consolidation ofsomeretail andwholesaleshopsintohybridstores. Anumber the with continued business the of segments different of rationalisation The adjustments andfrequent promotions were madetomaintainmarketshare. price as margins declining to led which competition increasing was There growth. Trading conditionsin2010were ratherunfavourable,resulting inmarginalreal GROUP PTC THE permanently thetwinproblems ofmolassesandcoalshortages. countries. Newsupplyinitiativesare beingexaminedinorder toresolve neighbouring from in brought be to had supplies supplementary Consequently, at peakproduction periods duetothelowcapacitiesoflocalproducers. supply short in also was coal molasses, of supply insufficient the to addition In group managed to consolidate some of its its of some consolidate to managed group growth at the PTC Group and imposed imposed and Group PTC the at growth retail andwholesale shops into popular unfavourable trading conditions, the the conditions, trading unfavourable While forex constraints inhibited inhibited constraints forex While

and successful hybrid storesand successfulhybrid

19 PRESS CORPORATION LIMITED PRESS CORPORATION LIMITED PRESS CORPORATION

In 2010 BP opened BP MALAWI LIMITED or refurbished several service stations The company reported exceptionally good results which were substantially above including this at plan and previous year despite the country experiencing acute shortages of fuel Kabula in central during the year. Turnover was 9% above plan and 19% above prior year with Blantyre profit after tax being 53% above plan and 75% above prior year. This robust performance was due to aggressive marketing of the company’s products. The company commissioned a new retail service station at Kabula in Blantyre and upgraded two older ones in Chikwawa and Ntchisi. This helped boost sales volumes.

Supply of fuel was a challenge due to scarcity of foreign exchange. By end of the year, the fuel industry had been under-supplied by 8.5% on delivered volumes and the stock position remained precarious for diesel, petrol and jet-fuel. The company has embarked on a programme of increasing storage capacity at its depots both in Blantyre and Lilongwe as one way of finding a sustainable solution to the problem.

BP Malawi is a 50/50 joint venture between BP South Africa and Press Corporation Limited. During the year under review, BP Africa announced to Governments and employees in Malawi, Namibia, Tanzania, Zambia and Botswana the sale of its fuel distribution business in the respective companies. In Malawi, this entailed the sale of 50% shareholding of BP Africa in BP Malawi. As at year end the share sale and purchase process had not been finalised, although a strategic partner with technical knowledge in fuel distribution and a recognised brand name in Africa and the world had been identified.

NATIONAL BANK OF MALAWI

In 2010, NBM concluded the renovation and re-branding programme with the refurbishment of Chichiri, Mangochi and Mulanje Service centres. Significant progress was made towards the completion of the construction of the new head office to which the bank will be moving in the course of 2011. ANNUAL REPORT 2010

20 In pursuance of one of its key strategic objectives of modernising its information technology systems, the bank, in the third quarter of 2010, successfully migrated from Bankmaster / Branchpower system which the bank had been using since 1997 to the new T24 system. The change is expected to bring a number of positive changes in the way the bank offers its products and services to customers by among others streamlining the delivery platform, enhancing capability to deliver on demand tailored products and services and providing non-stop customer access to self-service channels such as mobile banking (Mo626), POS Debit, and ATMs.

The operating environment was characterised by persistent liquidity challenges in both local and foreign currency. This situation affected negatively the bank’s underlining revenue from treasury operations, international trade commissions and net interest income from lending activities.

In 2011 the bank will focus on consolidating on the benefits of the I T platform changeover now that most of the teething challenges have been dealt with. NBM is also looking towards another major project, the movement to the new head office premises.

Having completed the refurbishment programme NBM looks to construct new small service centres throughout the country in pursuance of its objective of increasing areas of representation in selected growth areas. These centres will include the deployment of ATMs at all qualifying new places. The Bank is steadily investing in the modernisation of payment systems at point of sale and therefore is increasing its penetration and investments in the retail and wholesale sectors.

On the operating front, the shortage of foreign exchange is expected to continue with the resultant negative effects on manufacturing output and trading generally. Consequently these will pose challenges to the bank’s international trade and lending activities. Once assented to, the Pensions bill is expected to bring about enormous opportunities for the bank to grow its fund management business.

Another view of the new headquarters of National Bank to be opened in 2011 despite the chronic forex problems which had delayed completion

21 MALAWI TELECOMMUNICATIONS LIMITED

Net revenue for the year was 27% below budget due to continuing project delays; inability to purchase key network access equipment due to acute shortage of foreign

PRESS CORPORATION LIMITED PRESS CORPORATION exchange; service outage in Lilongwe which affected an old switch housing key clients; severe competition in the interconnection market.

The second phase of the Fibre Optic Cable (FOC) project is at an advanced stage, the cable having reached Mzuzu and an international connection made to a second under sea- cable through TTCL in Tanzania. With two international links through TDM in Mozambique, and Tanzania, the carriage of international traffic is now very reliable. The return ring of the FOC backbone (from Mzuzu to Blantyre through the lakeshore) is progressing very well; it is already past Salima with Salima town already commercialised.

Vandalism, albeit in its reduced state, still continues to disrupt service and network quality. More technical resources are being deployed to combat this malaise.

The Management and Technical Support Agreement (MTSA) with Detecon International GmbH was concluded at the end of the year, though some residual technical support has been retained for six months. The company is now managed entirely by local staff. Looking ahead into 2011, attention will be focused largely on revenue – generation, which will include bandwidth capacity management, network optimisation, customer recruitment, reduction of revenue leakage and staff training and motivation. Invariably, 2011 will be a year of consolidation in which the technical foundations now established will be used to generate greater revenues and expected profits.

The Regulator (MACRA), is considering the introduction of converged licenses, a development which will significantly change the telecom industry in Malawi. We await the unfolding of this matter with keen interest. ANNUAL REPORT 2010 The largest of MTL’s earth satellite dishes at Soche in Blantyre 22 MACSTEEL (MALAWI) LIMITED

Macsteel registered turnover which was 18% above previous year while after tax profits were 35% above previous year but just on budget. Challenges in 2010 included foreign exchange shortages and reduction in sales of reinforcement steel

due to lack of large scale construction projects. LIMITED PRESS CORPORATION

A significant sales growth of 31% above prior year was recorded in the roofing products whilst there was a 5% decline in reinforcement steel and wire products business. The sales growth in the roofing products was driven by increased efficiency in stock management, and improved retail sales to individuals following an advertising campaign that assisted in bringing awareness to customers of Macsteel’s quality products.

Outlook for 2011 remains positive due to acquisition of new machinery and refurbishment of old machines. The company has also introduced various marketing strategies to increase sales tonnage.

TNM LIMITED

The network expansion which has been on-going in the past two years continued in 2010, aimed at expanding coverage, capacities and redundancy in critical network elements. Key of the new additions were 70 new base stations, a new 3.5G network, a new post-paid billing system, a new media gateway installed in Lilongwe (for geographical redundancy), new microwave rings in Blantyre and Lilongwe for optimisation of transmission and traffic quality. Population and geographical coverage increased to 85% and 75% respectively. These improvements amounted to a capital expenditure of MK5.7 billion in 2010.

Revenue increased by 21% and EBITDA by 25%. The subscriber base grew by an average of 38% to over one million subscribers, market share grew to 37% from 33%. These gains will be consolidated in the coming year.

The economic environment was, however, very challenging and characterised by acute foreign exchange and fuel shortages. As a case in point, these shortages affected a number of base stations which run on diesel generators. ANNUAL REPORT 2010 TNM headquarters and part of their fleet 23 PRESS CORPORATION LIMITED PRESS CORPORATION ANNUAL REPORT 2010

24 BOTTLING AND BREWING GROUP LIMITED (BBGL)

Total sales volumes were 12% below budget owing to capacity and technical problems. However, net sales revenue was 5% above budget, the result of timely price adjustments and increasing efficiencies in distribution and product availability.

Net profit for the year grew significantly due to major efficiency gains in both direct LIMITED PRESS CORPORATION and indirect costs.

A new boiler, which arrived towards the end of the previous year, was installed and commissioned. A major project involving the installation of a new combi-line bottling plant has commenced in Lilongwe and is expected to be completed in the third quarter of 2011. This project will eliminate existing capacity constraints. During the year, PCL increased its shareholding from 44% to 49.57%, effectively attaining joint control with Carlsberg A/S, Denmark. As a result, the entity is now being proportionally consolidated in PCL (previously it was equity-accounted).

A key problem, however, remains the Major efficiency acute shortage of foreign exchange gains at BBGL and BBGL is affected even more allowed the severely since most raw materials company to are imported. Accordingly, the maximise profit performance in 2011 may be similar from heavily to 2010. marketing- dependent sales ANNUAL REPORT 2010

25 LIMBE LEAF TOBACCO COMPANY LIMITED

The tobacco crop size in 2010 was 5% lower than the previous year and there was a 3% (US$) average price increase over the prior year. Significant processing efficiency gains were achieved in the

PRESS CORPORATION LIMITED PRESS CORPORATION year, leading to large cost reductions in both of its processing facilities in Lilongwe and Limbe. Total processing throughput for 2010 was 15% above 2009.

Production (especially in Lilongwe) suffered significantly from frequent power interruptions and severe water shortages. In addition coal supplies continued to be sporadic due to capacity shortcomings at the mines. A major and continuing problem is the occurrence of non-tobacco – related materials (NTRM). The company has placed great focus on this problem by investing in advanced detection systems, but at great cost. Despite all these setbacks, the entity is securely back to profits.

STAFF WELFARE AND DEVELOPMENT

Press Corporation Limited continues to play its part in the fight against HIV/AIDS in the workplace with all related awareness activities being conducted during working hours. One such activity was held for members of staff and their spouses under the theme “Universal Human Rights – you have the right to be tested and know your status”

The Company still sits on the board of the Malawi Business Coalition Against HIV/AIDS (MBCA) and is an active member of this private sector initiative.

Training and Development of staff continues to play an important role in the company’s overall strategic plan in order to allow for the efficient delivery of services and also to provide for effective succession planning. Testimony to the success of such training and mentoring lies in the appointment in October of a serving member of staff to the position of Group Financial Controller. Training in Management and Leadership is encouraged at the middle and senior management levels and in this regard the company facilitates appropriate training for selected employees. Other employees’ continue to be sponsored on courses relevant to their individual developmental needs in areas such as accounting, marketing, and human resources. ANNUAL REPORT 2010

26 Market conditions for tobacco sales were difficult in 2010 with considerable evidence that local over-supply has impacted negatively on prices offered by buyers who operate in a world market for the crop. Despite this Limbe Leaf has achieved significant cost reductions at both its processing plants and returned to profit PRESS CORPORATION LIMITED PRESS CORPORATION ANNUAL REPORT 2010

27 The Management Trainee programme re-introduced in 2003 to ensure that the Group has a reservoir of future managers, continues with a mixture of candidates being drawn from those with a first degree and some with post graduate qualifications.

PRESS CORPORATION LIMITED PRESS CORPORATION STRATEGIC DIRECTION

Press Corporation Limited is keen to maintain its leadership role in the private sector. Divestiture of loss-making operations has helped stabilise the Group’s earnings and assisted in the Company being able to focus on the profitable operations to ensure that they grow market share.

Viable investment opportunities will continue to be explored in various sectors (e.g. tourism and energy) to strengthen the Group’s portfolio of investments and enhance its income stream.

The Group’s policies will continue to:-

• Hold at least a 50% equity stake in investments so as to influence key decisions and overall strategy • Ensure that the Group’s debt to equity ratio remains consistent with the Company’s risk policy • Pay such dividends as take into account cash flows vis-à-vis potentially profitable investment opportunities • Operate with reputable joint venture partners to take advantage of their management and technical expertise • Maintain strict performance criteria for investments and divest underperforming assets in a timely manner • Conduct business in an environmentally responsible manner and work with various stakeholders, e.g. Government and donors in promoting sustainable development

In conclusion, I wish to sincerely thank staff, management and the Board of Directors of Press Corporation Limited for their untiring support during the year and for the entire duration of my tenure of office.

DR M A P CHIKAONDA GROUP CHIEF EXECUTIVE ANNUAL REPORT 2010

28 DIRECTORS

Mr D C Lungu Chairman

Mr C S Chilingulo Appointments and Remuneration Committee Chairman

Mr J A Regout Audit Committee Member

Mr S A Itaye Audit Committee Chairman

Mr A Barron Appointments and Remuneration Committee Member

Mrs M Kachingwe Appointments and Remuneration Committee Member

Dr M A P Chikaonda Group Chief Executive

Mr P P Mulipa Group Operations Executive MANAGEMENT

Dr M A P Chikaonda Group Chief Executive

Mr P P Mulipa Group Operations Executive

Mr A G Sesani Group Financial Controller (until 30th September 2010)

Mrs E Mafeni Group Financial Controller (with effect from 1st October 2010)

Mrs A J Varela Group Projects Executive

Mr C J Evans Group Administration Manager/Company Secretary

29 PROFILE OF DIRECTORS and MANAGEMENT DIRECTORS

Dean C Lungu, Clement S Chilingulo, James A Regout, B.Sc., M.Sc. (Eng.) LL.B, FCIS M.Econ. Chairman PRESS CORPORATION LIMITED PRESS CORPORATION

Age 60 Age 58 Age 61 appointed to the Board on appointed to the Board on appointed to the Board on 22/2/96 7/2/2001 1/6/94

Mr Lungu is a registered Mechanical Mr Chilingulo has served in legal Mr Regout is a fund manager with Engineer who has held various and company secretarial positions wide experience and is presently senior appointments, including Chief of several companies starting with the External Investments Manager Executive of Maltraco Limited. He Press (Holdings) Limited where of Old Mutual Investment Group runs his own business comprising he rose to the position of Deputy (South Africa). He is responsible of Deans Engineering Company Group Company Secretary and for investments in Africa (ex Limited (DECO), CNL Engineering INDEBANK and Standard Bank South Africa) and global private Limited and Tapiwa Investments where he served as Legal Counsel equity. In Malawi Mr Regout holds Limited. Mr Lungu also sits on the / Company Secretary. Currently, directorships of, among others, Alexander Forbes Malawi Board. Mr he is Executive Secretary of Press Malawi Property Investment Lungu has held other directorships at Trust, a public trust which has Company Limited, National Bank Malawi Railways Limited (Chairman), extensive investments in all sectors of Malawi, FDH Financial Holdings Malawi Bureau of Standards, David of the Malawi economy. By virtue Limited, Malawi Telecommunications Whitehead & Sons and Intraco of his position with Press Trust, Mr Limited and Telekom Networks Services Limited (UK). Chilingulo sits on the Boards of Malawi Limited. several companies in which the Trust has invested. ANNUAL REPORT 2010

30 Simon A Itaye, Andrew G Barron, Maureen S T Kachingwe, B.Com., FCCA, MBA HND Bus MBA, LL.B (Hons) PRESS CORPORATION LIMITED PRESS CORPORATION

Age 53 Age 51 Age 44 appointed to the Board on appointed to the Board on appointed to the Board on 5/3/98 29/8/2000 31/8/2007

Mr Itaye has extensive experience in Mr Barron is a farmer and the Mrs Kachingwe is a lawyer currently audit, financial and strategic general Managing Director of Mbabzi Estates Director of Legal and Corporate management and is currently the Limited and Lincoln Investments Affairs with Sunbird Tourism Limited Managing Director of Packaging (Pvt) Limited, a position that he a company she has been with Industries (Malawi) Limited (PIM). has held since 1989. He also has a from 1994. Prior to this she was a He is non executive Chairman of number of other business interests Legal Practitioner for a private legal Investments Alliance Limited and in and is a director at Malawi Property firm between 1990 and 1993. Mrs Old Mutual Life Assurance Company Investments Company Limited, New Kachingwe has extensive experience (Malawi) Limited. Capital Properties Limited, Capital in corporate & labour law and has Developments Limited, Auction served on a number of corporate and Holdings Limited, Seed-Co Malawi professional boards. Ltd, Malawi Leaf Company Limited, Tobacco Investments Limited, Agricultural Trading Company Limited and Plantation House Investments Limited. He is an alternate Councillor at the Tobacco Association of Malawi. ANNUAL REPORT 2010

31 DIRECTORS AND MANAGEMENT

Dr Mathews A P Chikaonda, Pius P Mulipa, Andrew G Sesani, Director, B.A. (Hons), DIRECTOR, B.A., Dip (Mgt.), FCCA, CPA(M),

PRESS CORPORATION LIMITED PRESS CORPORATION Dip. Business, M.Sc. (Mgt.), Group Financial Controller MBA, Ph.D (Finance) Group Operations Executive (until 30th September 2010) GROUP CHIEF Executive

Age 55, Age 58, Age 62 appointed to the Board 1/4/02 appointed to the Board on 1/1/2008 Dr Chikaonda joined the Group on Mr Mulipa joined the Group as a Mr Sesani has been with the 1 April 2002 as Group Chief Executive. Management Trainee in 1977 initially company since October 2002. Prior to this, he served as an Assistant at Peoples Trading Centre Limited Between 1988 and 2000, he held Professor of Finance and an Associate and then at Hardware and General the positions of Group Management Professor of Finance (tenured) from 1988 Dealers and Tambala where he was Accountant, Deputy Group Financial to 1991, and 1992 to 1994, at Memorial appointed General Manager. In 1996 Controller and finally Group Financial University of Newfoundland in Canada he was promoted to a position of Controller with Press Corporation before serving as Deputy Governor of Assistant Group General Manager – Limited before leaving the employ the Reserve Bank of Malawi from August Foods at Press Corporation. In the of the company when it relocated 1994. In January 1995, Dr Chikaonda year 2000 he was responsible for the its head office from Lilongwe to was appointed Governor of the Reserve Industrial Division. In the year 2001, Blantyre. Prior to this, Mr Sesani held Bank of Malawi and served until March he was appointed as Group General senior accounting positions in Capital 2000 when he was appointed to the Manager – Business Development for City Development Corporation, Cabinet and served in the Government the Company. He is now the Group Import and Export Company of of Malawi as Minister of Finance and Operations Executive with effect Malawi Limited and Trans African Economic Planning until January 2002. from 25 September 2001. In his own Transport. He rejoined Press In his own right, Dr Chikaonda is a right, Mr Mulipa is a director of Real Corporation Limited on 1st October member of the National Advisory Council Insurance Company (Malawi) Ltd and 2002 as Group Financial Controller on Strategic Planning (Advisory to the Old Mutual Life Assurance Company and was later appointed Group Presidency) and a Director of Illovo Malawi Ltd. Executive (Special Assignments) ANNUAL REPORT 2010 Sugar (Malawi) Limited. effective from 1 October 2010.

32 Elizabeth Mafeni, Agnes J Varela, Charles J Evans, MBL, FCCA, CPA(M), B.Com. B.Soc. Science (MW), B.A.

Group Financial Controller M.Sc., (Banking and Money Group Administration LIMITED PRESS CORPORATION (from 1 October 2010) Management (USA)) Manager / Company Group PROJECTS EXECUTIVE Secretary

Age 43 Age 59 Age 60

Mrs Elizabeth Mafeni joined the Mrs Varela has extensive experience Mr Evans joined the Group as a Group in September 1999 as Chief in Development Banking and Project Management Trainee in November Accountant at Malawi Pharmacies Appraisal and Financing attained 1975. He worked in various Limited. In June 2000 she was from her long employment history subsidiary companies before being transferred to the Corporate Head with INDEBANK where she worked appointed substantively as a Training Office initially as Chief Accountant for 26 years before retiring as Chief Officer in 1977. He was transferred until 2003 when she was promoted Executive Officer in 2004. Mrs Varela to the Peoples Trading Centre Group to the position of Group Financial was appointed Group Projects in 1981 where he became Personnel Accountant. On 1 October 2010, Executive for the Company effective and Training Manager until 1991, she was promoted to the position 1 September 2005. when he was promoted to Press of Group Financial Controller. In her In her own right she is a Board Corporation first as deputy, then own right, Mrs Mafeni is Chairperson Member of AFROX Malawi Limited Manager of Manpower Development of the Bible Society of Malawi and and is the Norsad Agency Country in 1995. In January 2001 he was a board member of St. Andrews Advisor for Malawi. appointed Group General Manager - International High School. Human Resources. He was appointed Group Administration Manager / Company Secretary in September 2001. ANNUAL REPORT 2010

33 34 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES CASH &EQUIVALENTS NET (DECREASE)/INCREASEIN Cashflows (usedin)/from financingactivities (Decrease)/increase inborrowings Dividends paidtoshareholders ofthecompany Dividends paidtonon-controlling shareholders Proceeds from issueofshares FINANCING ACTIVITIES Cashflows (usedin)/from investingactivities and equipmentinvestmentproperties Proceeds from saleofproperty, plant Disposal/(acquisition) ofotherinvestments Acquisition ofsubsidiariesnetcash Capital expenditure Interest received INVESTING ACTIVITIES Cashflows from/(used in)operating activities Interest andtaxpaid Cash generatedfrom/(used in) operations Cash paidtosuppliers Cash receipts from customers OPERATING ACTIVITIES CONSOLIDATED STATEMENTS OFCASH FLOWS Total capitalemployed Deferred taxliabilities Provisions Loans andborrowings Non-controlling interest Ordinary shareholders’ funds Total employmentofcapital Net current liabilities Other non-current assets Investment inequityaccountedinvestees Investment properties Property, plantandequipment CONSOLIDATED STATEMENTS OFFINANCIAL POSITION Dividend pershare (MK) Basic earnings pershareBasic earnings (MK) Retained profit Dividend paidtoordinary shareholders Attributable toequityholdersofthecompany Attributable tonon-controlling interests Profit afterincometax Share ofprofit ofequity- Income taxexpense Profit before incometax Profit before incometax In millionsofKwacha for theyearended31December2010 FIVE YEARGROUPFINANCIALREIEW Turnover net ofincometax

GROUP STATEMENTS OF COMPREHENSIVEINCOME

accounted investees (15,093) (41,172) (19,741) 14,051 55,223 55,787 14,357 28,187 55,787 19,149 52,573 11,148 (2,704) (2,996) (1,531) (8,134) 10,901 59,349 (5,625) (2,426) (3,406) 8,426 5,700 2,934 4,609 3,231 44.23 4,756 5,316 7,742 MKm 2010 6,342 4.66 (905) (560) (560) 240 575 377 247 - -

(11,576) (26,280) (11,439) 13,849 18,066 44,346 49,775 13,795 24,611 49,775 16,923 39,520 (1,509) (1,750) (9,548) 47,560 (4,217) (2,397) (2,941) 2,792 3,477 2,217 5,675 1,989 2,782 27.23 2,978 3,273 5,670 8,611 MKm 2009 1,693 7,953 2.45 (295) (295) 536 166 169 658 - -

(10,050) (23,689) 13,046 36,735 45,861 13,131 21,522 45,861 12,565 32,340 43,614 (1,216) (2,219) (8,179) (3,575) (2,275) (2,523) (2,274) 1,997 9,471 4,411 2,023 4,774 1,331 1,900 27.67 2,667 3,140 5,663 7,369 7,937 MKm 2008 4.17 (518) (247) (473) (473) 225 568 123 61 -

(13,993) (11,168) 15,284 17,509 28,677 32,101 13,546 32,101 23,818 27,572 (7,690) (1,695) (4,997) (2,225) (2,316) (1,717) (1,589) 3,142 1,874 4,512 9,027 8,020 1,475 1,104 15.50 1,355 1,708 3,425 5,133 5,014 MKm 2007 3.20 (654) (353) (781) (353) (119) 637 480 315 74 -

(27,865) 24,324 29,690 12,722 29,690 22,822 24,572 (4,101) (3,501) (5,099) (1,558) (3,541) (1,473) (1,524) (1,364) 3,716 4,521 7,521 3,183 1,434 4,378 7,973 6,075 1,254 1,012 14.62 1,208 1,608 3,132 4,512 4,496 MKm 2006 (779) 3.64 (400) (405) (400) 604 624 (16) 61 - executive directors. TheChairman isanon-executivedirector andhasacastingvote. At 31December2010theBoard consistedofsixnon-executivedirectors andtwo the overalldirection andcontrol oftheGroup. The Board meetsquarterly, settlesthestrategicmissionandisresponsible for policies. key and objectives strategic of establishment the through Group the of direction the setting for shareholders the to responsible is Directors of Board The BOARD OFDIRECTORS CORPORATE GOVERNANCE 2010 the committee met twice; in March and August. August. and March in twice; met committee the 2010 December 31 ended year the In Itaye. A S Mr by chaired currently is It committee. this to access have auditors external The invitation. by meetings the attend Executive, theGroup FinancialController, andtheGroup AuditManager Internal Chief Group The year. the in twice than less no meets and member board The Committeecurrently comprisestwonon-executivedirectors andonenon- Audit Committee PRINCIPAL BOARDCOMMITTEESARE: 2010 andatthedateofthisreport are setoutonpage29. The namesoftheexecutiveandnon-executivedirectors inoffice at31December the Group pursuesitsinterests. which in communities the and suppliers customers, staff, Group’s the of interests The corporateboard isresponsible toshareholders, butitproceeds mindfulofthe with theCompany. Management whoare currently engagedonthirty-sixmonthservicecontracts Executive of members from Board whole the by appointed are Directors Executive Company. the in shares the of respectively 12.27% and 44.47% own Mutual Old and Trust Press 2010 December 31 At appointments are inaccordance withtheCompany’s ArticlesofAssociation. These directors. non-executive the of six appoint Mutual Old and Trust Press

35 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED 36 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED remuneration. Inaddition, it reviews thecorporation’s procedures andpolicies. recommendations oftheaudit committee,whichisalsoresponsible forfixingtheir on based year each appointed are auditors external The recommendations. and findings auditors’ the discuss to and information, financial reported control,management informationandothersystemsofinternal thepreliminary statements andaccountingpolicies,theeffectivenesscontrols ofinternal over The committee’s principalfunctionsare toreview theannualandinterimfinancial regulations. liability, lossandmaterialmisstatementwhilecomplyingwithapplicablelaws potential fraud, minimise and detect to and assets its of accountability maintain the integrityandreliability offinancialstatementsandtosafeguard, verifyand to as assurance, absolute not but reasonable provide to designed are control The directors report thattheGroup’s controls internal andsystemsof control. internal of systems appropriate maintain to continues and developed To fulfilitsresponsibilities, managementmaintainsaccountingrecords andhas controls. internal of systems Group’s the for responsible is Directors of Board The Internal controlandriskmanagement and November. August March, in times; three met Committee the review under year the During executive managementlevelbasedonthesefindings. and directors’ executive the at salaries approving and place market the in trends salary reviewing by effectiveness and responsibilities their with commensurate resources are bestutilisedandthatmembersofstaff are remunerated human Group’s the that ensure to is Committee the of function principal The Mr CSChilingulo. by chaired currently is It directors. non-executive three comprises Committee The Appointments andRemunerationCommittee against insidertradingbyallemployeesincludingmanagersanddirectors. byaSharebe governed Trading Policy, control aninternal mechanismtoguard Trading intheCompany’s securitiesontheMalawiStockExchangecontinuesto for Boardmatters decision. certain reserves specifically that place in is Authority” of “Limits formal A audits of financialstatementsthecompanyandsubsidiaries. statutory normal their of course the during systems control financial internal of aspects appropriate test and review auditors external Group’s the addition, In department. audit internal group the of head the from reports and reviews through continually monitored is operation in control internal of systems the of effectiveness The reproach. above is circumstances reasonable all in which manner a in conducted are practices business that ensuring in standards ethical highest the maintain to required are Employees technologies. software and hardware computer advanced of use comprehensive by and lines, reporting and duties authority, of segregation proper with personnel trained appropriately by monitored and themselves thatthesesystemsandprocedures are implemented,maintained of actualresults againstbudgets andforecasts. Thedirectors havesatisfied comparison the and disciplines forecasting and budgeting including procedures, and policies written with together Committee Executive the by implemented controlThe systemsofinternal are basedonestablishedorganisationalstructures stakeholders and the communities in which the Group operates. operates. Group the which in communities the and stakeholders theall-importantrelationshipsa detailedguidelinegoverning betweenthevarious provides code This affairs. its of conduct the in Group the throughout applied is fairly andlegally. TheBoard formally adoptedacomprehensive codeofethicsthat honestly, conducted be should business that belief fundamental the on based is commitment This businesses. their of conduct the in integrity and dealing fair of policy a to committed are subsidiaries its and Limited Corporation Press Code ofethics reviewed orapproved bytheBoard intheyearunderreview. contract any in indirectly or directly interest material any had has director No Directors’ interestsincontracts 37 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED PRESS CORPORATION LIMITED AND ITS SUBSIDiARIES CONSOLIDATED FINANCIAL STATEMENTS for the year ended 31 December 2010 directors’ report for the year ended 31 December 2010

The Directors have pleasure in presenting their report together with the audited consolidated financial statements of Press Corporation Limited for the year ended 31 December 2010.

Incorporation and Registered Office Press Corporation Limited is a company incorporated in Malawi under the Malawi Companies Act, 1984. It was listed on the Malawi Stock Exchange in September 1998 and as a Global Depository Receipt on the London Stock Exchange in July 1998.

The address of its registered office is: 7th Floor Chayamba Building P.O. Box 1227 Blantyre

Principal Activities of the Group and the Company

Press Corporation Limited is a diversified group with significant interests in the Malawi economy. Its LIMITED AND ITS SUBSIDIARIES PRESS CORPORATION subsidiary and joint venture companies operate in real estate and investments; food and beverages; brewery and soft drinks; retail and consumer products; financial services and telecommunications. Press Corporation Limited also has an associated company in the agro-industrial sector.

Financial Performance The results and state of affairs of the Group and the Company are set out in the accompanying consolidated statements of:- financial position, comprehensive income, changes in equity, cash flows, and notes to the financial statements.

Shareholding The shareholding structure at year end was as follows:- 2010 2009 % % Press Trust 44.47 44.47 Old Mutual 12.27 12.27 Deutsche Bank Trust Company America 21.46 19.27 Others 21.80 23.99 100.00 100.00

Dividends The net profit for the year of MK5.32 billion (2009: MK3.27 billion) has been added to retained earnings. An interim dividend of MK200 million (2009: MK241 million) representing MK1.66 per ordinary share (2009: MK2.00) was paid during the year. The directors have further proposed a final dividend for the year 2010 of MK360.6 million (2009: MK240.4 million) representing MK3.00 per share (2009: MK2.00) to be tabled at the forthcoming Annual General Meeting.

Directorate and Company Secretary The names of the Company’s directors and secretary as at 31 December 2010 are listed below:- Mr D C Lungu - Chairman (throughout the year) Dr M A P Chikaonda - Director / Group Chief Executive (throughout the year) Mr S A Itaye - Director (throughout the year) Mrs M S T Kachingwe - Director (throughout the year) Mr J A Regout - Director (throughout the year) Mr A G Barron - Director (throughout the year) Mr C S Chilingulo - Director (throughout the year) Mr P P Mulipa - Director (throughout the year) Mr C J Evans - Company Secretary (throughout the year) ANNUAL REPORT 2010

39 40 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES for theyearended31December2010 directors’ report (continued) Directorate andCompanySecretary(Continued) Mr DCLungu financial statements. Meeting tore-appoint themasauditorsinrespect of theGroup’s andCompany’s 31December2011 their willingnesstocontinueinoffice andaresolution willbeproposed attheforthcomingAnnualGeneral The companyauditors,KPMG,CertifiedPublicAccountantsandBusinessAdvisors(Malawi),haveindicated Auditors shares). Theoriginalshare optionschemeexpired. allocated tothescheme.Someemployeeshavesofarexercised theiroptionof134,896(2009: The Board approved anemployeeshare optionschemein2000and,accordingly, 4,404,250shares were Employee ShareOptionScheme retirement attheforthcomingAnnualGeneralMeeting, but,beingeligible,offers himselfforre-election. As pertherequirements oftheArticlesAssociation oftheCompany, oneofthedirectors isduefor 6 April2011 Chairman Group ChiefExecutive Dr MAPChikaonda Making judgmentsandestimatesthatare reasonable andprudent; • Selection ofsuitableaccountingpoliciesandapplyingthemconsistently; • Maintenance ofproper accountingrecords; • • In preparing thefinancialstatements,Directors accept responsibility forthefollowing: ensure thatthefinancialstatementscomplywithMalawiCompaniesAct,1984. which records accounting disclose withreasonable accuracyatanytimethefinancialpositionofCompanyandenablethemtoproper keep Company the that ensure to Directors the requires also Act The and inthemannerrequired bytheMalawiCompanies Act,1984. explanatory notes,andtheDirectors’ report, inaccordance FinancialReportingStandards, withInternational notes tothefinancialstatements,whichincludeasummaryofsignificantaccountingpoliciesandother statements ofcomprehensive income,changesinequityandcashflowsfortheyearthenended, Press CorporationLimited,comprisingthestatementoffinancialpositionat31December2010,and The Directors are responsible forthepreparation andfairpresentation ofthefinancialstatements for theyearended31December2010 E TAT S Chairman Mr DCLungu on 6April2011andare signedonitsbehalfby: The financialstatementsoftheCompany, asindicatedabove,were approved bytheBoard ofDirectors Approval ofthefinancial statements in accordance withapplicable financialreporting framework. The auditorisresponsible forreporting onwhethertheannualfinancialstatementsare fairlypresented financial statements. for theforeseeable future. Forthisreason,basisinpreparing theycontinuetoadoptthegoingconcern the a reasonable expectationthat theCompanyhasadequateresources tocontinue inoperationalexistence The Directors havemade an assessmentoftheCompany’s andhave abilitytocontinueasagoingconcern making and policies; accounting estimatesthatare reasonable inthecircumstances.accounting appropriate applying and selecting error; or fraud to due whether the preparation andfairpresentation ofthesefinancialstatementsthatare free from materialmisstatement, The Directors’ responsibility controls includesdesigning,implementingandmaintaininginternal relevant to error andformaintainingadequate accountingrecords andaneffective systemofriskmanagement. the preparation offinancial statementsthatare free from materialmisstatement,whetherduetofraudor The directors are alsoresponsiblecontrol forsuchinternal asthedirectors determineisnecessarytoenable • Compliance withapplicableaccountingstandards, whenpreparing financialstatements, that theCompanywillcontinueinbusiness. Preparation basisunlessitisinappropriate offinancialstatements onagoingconcern topresume subject toanymaterialdepartures beingdisclosedandexplainedinthefinancialstatements; M F O T N E D S E I T I L I B I S N O P S E R ’ S R O T C E R I Group ChiefExecutive Dr MAPChikaonda

41 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES 42 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES N L A O H E R A H S for theyearended31December2010 N I policies andotherexplanatorynotesassetoutonpages43to117. year thenended,andthenotestofinancialstatements,whichincludeasummaryofsignificantaccounting 2010, andtheconsolidatedstatementsofcomprehensive income,changesinequityandcashflowsforthe its and Limited Corporation Press of subsidiaries (‘theGroup’) whichcomprisetheconsolidatedstatementsoffinancialpositionasat31December statements financial separate and consolidated the audited have We Report ontheFinancial Statements 6 April2011 Blantyre, Malawi Certified PublicAccountants and BusinessAdvisors KPMG membersofthecompany.concerns with accordance in ended then year the FinancialReportingStandardsfor International andtheprovisions ofMalawiCompaniesAct, 1984,sofaras flows cash separate and consolidated and performance financial financial positionofPress CorporationLimitedat31December2010,andtheconsolidated andseparate In ouropinion,thesefinancialstatementspresent fairly, inallmaterialrespects, theconsolidatedandseparate Opinion opinion. We believethattheauditevidencewehaveobtainedissufficient andappropriate toprovide abasisforouraudit accounting of reasonableness the and used estimates madebymanagement,aswellevaluatingtheoverallpresentation ofthefinancialstatements. policies accounting of appropriateness the evaluating includes also for thepurposeofexpressing anopinionontheeffectiveness oftheentity’s control internal systems.Anaudit the financialstatementsinorder todesignauditprocedures thatare appropriate inthecircumstances, butnot controlassessments, weconsiderinternal systemsrelevant totheentity’s preparation andfairpresentation of risks ofmaterialmisstatementthefinancialstatements,whetherduetofraudorerror. Inmakingthoserisk financial statements.Theprocedures selecteddependonourjudgment,includingtheassessmentof An auditinvolvesperformingprocedures toobtainauditevidenceabouttheamountsanddisclosures inthe financial the whether assurance reasonable statements are free ofmaterialmisstatement. obtain to audit the perform and plan and requirements ethical with our auditinaccordanceStandards with International onAuditing.Thosestandards require thatwecomply Our responsibility istoexpress anopiniononthesefinancialstatementsbasedouraudit.We conducted Auditor’s Responsibility in reasonable are that estimates accounting the circumstances. making and policies; accounting appropriate applying and selecting fair presentation offinancial statementsthatare free from materialmisstatements,whetherduetofraudorerror; responsibility controls includes:designing, implementingandmaintaininginternal relevant tothepreparation and preparation offinancialstatements thatare free from materialmisstatement,whetherduetofraudorerror. This Malawi the by required manner the in controland Companies Act1984,andforsuchinternal asthedirectors determineisnecessarytoenablethe Standards, Reporting Financial International with accordance in Statements The company’s directors are responsible forthepreparation andfairpresentation ofthesefinancialstatementsFinancial the for Responsibility Directors’ KPMG D D KPMG Malawi, a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), aSwiss entity.KPMG Malawi, amemberfirmofthe KPMG networkofindependent memberfirmsaffiliated Cooperative(“KPMG International”), withKPMGInternational N E P E S S T I D U A T N E D I S B TION LI L N O I AT R O P R O C S S E R P F O S R E Blantyre, Malawi P.O. Box508 MASM House,LowerSclaterRoad Public AccountantsandBusinessAdvisors KPMG D Resident Partners: L.M.Gama,H.B.Nyirenda, B.J.Mwenelupembe d u S E I R A I E H T O T T R O P E R ’ S R O T I E-mail: Telefax: Telephone: [email protected] (265) 01820575 (265) 01820744/391 M E T I D

Retained earnings Other reserves Share premium Trade andotherpayables Loans andadvancestocustomers Other investments Share capital Equity Equity andliabilities Income taxpayable Investments inassociates Loans andadvancestocustomers Total assets Provisions Chairman Mr DCLungu on 6April2011andwere signedonitsbehalfby: Directors of Board the by issue for approved were Company and Group the of statements financial The Investments injointventures Biological assets

Loans andborrowings Total equityandliabilities Investments insubsidiaries Inventory Current assets Cash andcashequivalents Provisions Bank overdraft Current liabilities Total liabilities Investment properties

Income taxrecoverable Loans andborrowings Non-current liabilities

Intangible assets Deferred taxassets Assets classifiedasheldforsale Total equity Deferred taxliabilities Liabilities duetocustomers Returnable packaging Returnable Other investments Trade andother receivables Non-controlling interest Long termloansreceivable from group companies In millionsofKwacha for theyearended31December2010 CONSOLIDATED STATEMENTS OFFINANCIALPOSITION Independent auditors’ report isonpage42. The notesonpages 49-117 Trade andotherpayablestogroup companies Long termloanspayablestogroup companies Total equityattributabletoholdersofthecompany Trade andother receivables from group companies Property, plantandequipment Non-current assets Assets

are anintegral partoftheseconsolidatedfinancial statements.

Notes

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

141,463 141,463 Group ChiefExecutive Dr MAPChikaonda 85,676 42,544 57,075 14,754 11,335 22,169 12,920 26,657 65,935 98,919 75,528 13,243 19,492 14,357 52,573 28,187 8,819 5,700 2,097 5,358 2,349 4,995 2,934 2,545 3,231 4,609 1,646 1,341 2,442 2010 800 810 575 728 281 323 10 1 ------Group 123,681 123,681 12,531 62,467 11,095 16,433 12,662 11,573 23,076 85,275 61,214 11,369 73,906 38,406 52,086 12,971 13,795 39,520 24,611 1,091 3,477 9,982 2,097 1,989 1,638 3,547 2,217 2,117 2,782 5,675 3,298 2009 770 541 199 193 1 6 ------54,370 13,555 40,815 37,698 17,528 54,370 32,601 54,080 12,585 11,034 40,815 1,019 2,097 3,170 2010 290 106 970 167 176 526 327 898 141 326 331 401 55 25 49 21 35 - - - 1 8 ------Company 35,907 49,596 49,596 33,287 10,728 48,738 38,868 38,868 7,759 2,097 5,920 8,940 1,392 9,779 2009 863 858 502 949

220 117 502 300 111 328 152 401 238 55 55 38 - - - 1 7 ------

43 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES 44 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES In millionsofKwacha for theyearended31December2010 CONSOLIDATED STATEMENTS OFCOPREHENSIVEINCO Net financeincome/(costs) Finance costs Results from operatingactivities Other operatingexpenses Administrative expenses Distribution expenses Gross profit Profit before incometax (net ofincometax) Share ofprofit ofequity-accountedinvestees Finance income Other operatingincome Direct tradingexpenses Revenue Continuing operations net oftax Other comprehensive income fortheyear, Income taxonothercomprehensive income from asubsidiary Excess liabilitiestakenoverontransferofabusiness Profit from continuingoperations Income taxexpense Owners oftheCompany Profit attributableto: Total comprehensive incomefortheyear Non-controlling interest of incometax Profit from discontinuedoperationsnet Discontinued operations Independent auditors’ report isonpage42. The notesonpages 49-117 Profit fortheyear Profit fortheyear Diluted earnings pershareDiluted earnings (MK) Owners oftheCompany Total comprehensive incomeattributableto: foreign operations Foreign currency translationdifferences for Other comprehensive income: Basic earnings pershareBasic earnings (MK) Continuing operations Non- controlling interest sale financialassets Net changeinfairvalueofavailablefor Revaluation ofproperty, plantandequipment Diluted earnings pershareDiluted earnings (MK) Total comprehensive incomefortheyear interest inacquiree Remeasurement tofairvalue ofpre-existing revalued property, plantandequipment Release ofrevaluation surplus ondisposalof Basic earnings pershareBasic earnings (MK) pershareEarnings are anintegral partoftheseconsolidatedfinancial statements. Notes 43 42 41 40 44 43 39 38 37 21 45 46 46 46 46 8 9

(18,942) (30,552) 28,797 59,349 11,140 ( 3,406) 1,092 (1,205) (3,424) (2,119) 2,297 9,801 3,652 6,771 7,734 5,316 2,426 44.16 7,742 7,742 44.16 4,136 1,771 44.23 2,635 44.23 6,771 2010 (282) 247 (602) (971) (21) 8 - - - Group (16,512) (25,427) 22,133 47,560 (1,099) (2,941) 8,369 4,125 8,578 5,798 5,637 3,273 2,397 5,670 5,670 3,384 2,414 5,798 26.96 26.96 27.23 27.23 2009 (278) 658 (615) (449) 166 128 133 95 33 (82) (24) 6 - - 2,507 1,791 (1,118) (3,275) 1,068 1,906 1,915 2,507 4,903 2,507 2010 (235) (169) 716 (183) 280 899 716 716 716 163 66 (9) ------Company 1,432 (1,009) (2,474) (3,759) (2,474) (4,774) (2,474) 1,541 1,641 1,658 1,440 1,285 1,285 1,285 1,285 2009 (223) (101) (155) (417) 909 122 (17) ------Balance at31December2010 Total transactionswithowners, recordeddirectlyinequity Dividends toequityholders Pre-acquisition reserves ofBottlingandBrewingGroupLimited Pre-acquisition reserves T Total comprehensiveincomefortheyear Total othercomprehensiveincome Income taxonothercomprehensiveincome Transfer duetodisposalofassets Re-measurement tofairvalueofpre-existinginterestinacquiree Reversal ofaccumulateddepreciation Transfer toloanlossreserve Revaluation surplusoninvestmentproperty Revaluation surplusonproperty Other comprehensive income: Profit fortheyear T Balance at 1 January 2010 Balance at1January 2010 GROUP

Independent auditors’report isonpage42. The notesonpages49-117 ransactions withowners, recorded directly inequity: otal comprehensive incomefortheyear: In millionsofKwacha for theyearended31December2010 CONSOLIDATED STATEMENTS OFCHANGESINEQUITY are anintegralpartoftheseconsolidated financialstatements. capital Issued Issued 1 1 ------

premium 2,097 2,097 Share ------(Note 30) reserves 11,335 2,068 (2,119) 2,068 1,489 9,982 Other (715) (529) (715) (100) (104) 613 35 - - Retained earnings 14,754 12,531 4,851 (2,628) (2,068) 5,316 (560) (465) (613) 104 (35) 79 - - - Total equity attributable holders of company to equity 28,187 24,611 4,136 (1,180) 5,316 (2,119) 1,489 (560) (560) (529) (21) - - - controlling 14,357 (2,073) (2,073) interest 13,795 2,635 2,426 Non- 209 (73) 282 - - - - - 42,544 (2,633) (2,633) 38,406 (2,119) 7,742 6,771 1,771 Equity (971) (602) Total (21) - -

45 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES 46 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES Balance at31December2009 Dividends toequityholders T Total comprehensiveincomefortheyear Total othercomprehensiveincome Income taxonothercomprehensiveincome Transfer duetodisposalofassets Reversal ofaccumulateddepreciation Depreciation transferonlandandbuildings Transfer toloanlossreserve Revaluation surplus/(deficit)onpropertiesandotherinvestments Foreign currencytranslationdifferencesforforeignoperations Other comprehensive income: Profit fortheyear T Balance at 1 January 2009 Balance at1January 2009 GROUP

Independent auditors’report isonpage42. The notesonpages49-117 ransactions withowners, recorded directly inequity: otal comprehensive incomefortheyear: (continued) In millionsofKwacha for theyearended31December2010 I L O S N O C D TE AT are anintegralpartoftheseconsolidated financialstatements. D A E TAT S M capital Issued Issued E N I S E G N A H C F O S T N E 1 1 ------

premium 2,097 2,097 Share ------(Note 30) reserves 10,025 9,982 Other (253) (43) (43) 120 109 29 (24) (30) - - 6 Retained earnings 12,531 3,427 3,273 9,399 (295) 154 (120) 253 30 (9) - - - Total equity attributable holders of company to equity 24,611 21,522 3,384 3,273 (295) 111 100 29 (24) 6 - - - controlling 13,795 interest 13,131 (1,750) u q 2,414 2,397 Non- 17 66 (49) - - - - - T I 38,406 34,653 Y (2,045) 5,798 5,670 Equity Total 128 95 (24) 51 6 - - - Balance at31December2009 Dividends toequityholders recorded directly inequity: owners, with Transactions Total comprehensive incomefortheyear Total othercomprehensive income taken overfrom subsidiary Net effect ofassetsandliabilities Income taxonothercomprehensive income for salefinancialassets available of value fair in change Net Other comprehensive income: Profit fortheyear Total comprehensive incomefortheyear: Balance at 1 January 2009 January 1 at Balance 2009 COMPANY Balance at31December2010 Dividends toequityholders recorded directly inequity: owners, with Transactions Total comprehensive income for the year the for income Totalcomprehensive Total othercomprehensive income Income taxonothercomprehensive income Surplus onrevaluation ofproperty for-sale financialassets Net changeinfairvalueofavailable Other comprehensive income: Profit fortheyear Total comprehensive incomefortheyear: Balance at1January2010 2010 COMPANY

In millionsofKwacha for theyearended31December2010 CONSOLIDATED STATEMENTS OFCHANGESINEQUITY Independent auditors’report isonpage42. The notesonpages49-117

are anintegralpartoftheseconsolidatedfinancialstatements.

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

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

35,907 (Note 30) 39,249 39,249 37,698 35,907 reserves 1,791 (3,342) (3,342) (4,774) (3,275) 1,432 1,791 4,903 Other 163 - - - - -

Retained earnings 1,285 1,019 863 863 (295) (417) (417) (560) 868 290 290 716 716 716 ------

38,868 41,637 41,637 40,815 38,868 1,791 (2,474) (3,759) (4,774) (3,275) 1,432 1,285 2,507 2,507 4,903 (295) (417) (560) 163 716 Total

47 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES 48 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES

In millionsofKwacha for theyearended31December2010 CONSOLIDATED STATEMENTS ofCASHFLOWS Cash receipts from customers Cash flowsfrom/(used in)operatingactivities

Independent auditors’report isonpage42. The notesonpages49-117 Cash paidtosuppliers Cash generatedby/(usedin)operations Interest paid Income taxespaid Net cashfrom /(usedin)operatingactivities Proceeds from saleofproperty, plantandequipment Cash flows(usedin)/from investingactivities Loans grantedtosubsidiarycompanies Loans recovered from subsidiarycompanies Interest received Acquisition ofshares insubsidiary Dividends received Proceeds from disposalofsubsidiary Acquisition ofjointventure net ofcashacquired Proceeds from otherinvestments Acquisition ofproperty, plantandequipment Acquisition ofreturnablepackaging Acquisition ofintangibleassets Acquisition ofinvestmentproperty Net cash(usedin)/from investing activities Proceeds from longtermborrowings –external Cash flowsusedinfinancingactivities Repayments oflongtermborrowings –external Dividend paidtonon-controlling shareholders Dividend paidtoshareholders oftheCompany Net cashusedinfinancingactivities Net (decrease)/ increase incashandequivalents Cash andcashequivalentsat1January Cash andcashequivalentsat31December Net movementinworkingcapital ADDITIONAL STATUTORY REQUIREMENT are anintegralpartoftheseconsolidatedfinancialstatements. Notes 18 18 43 14 37 10 11 12 13 31 31 50 27 8 9

(41,172) (13,578) 55,223 14,051 8,426 6,274 (2,238) (3,387) (8,134) (1,488) (1,531) (2,996) (2,704) (8,302) 6,049 8,978 2010 (560) (577) (876) 377 240 293 583 (62) - - - - - Group (26,280) (11,487) 44,346 18,066 13,849 (3,602) (9,548) (1,534) (1,750) (1,509) (8,820) 1,656 2,070 2,792 6,186 8,978 2009 (295) (615) 169 166 (80) 37 (9) ------( 1,091) (2,596) 2,164 1,826 1,573 2010 (183) (848) (560) 447 (432) (233) (198) (531) (366) (589) (49) 81 (56) (73) 55 66 - 2 ------Company (2,529) 2,477 1,560 1,308 2009 (295) 165 (223) (155) (430) (124) (510) (293) (578) (679) 544 122 194 199 248 447 (52) - - 9 - - - - - 2. together withprincipalactivitiesofthecompanyanditssubsidiariesjointventures. The address ofitsregistered office andprincipalplaceofbusinessare disclosedinthedirectors’ report to referred (together subsidiaries as ‘Group’ andindividuallyas‘Groupits entities’)andthe Group’s and interest inassociatesandjointventures. company the comprise at 2010 as December 31 statements ended financial year the for and consolidated The 1998. July in Exchange Stock London Global a the as on and Receipt 1998 September Depository in Exchange Stock Malawi the on listed was It 1984. Act, Companies Press CorporationLimited(‘thecompany’)isacompanyincorporatedinMalawiunderthe 1. In millionsofKwacha for theyearended31December2010 NOTES TOTHEFINANCIALSTATEMENTS Valuation Note ofinvestmentproperty - Computationofamortisationcharge Note13 - • Valuation ofproperty, Note12 plantandequipment - Valuation• offinancialinstruments - Note10 • Note6 • • financial the in recognised statements are describedinthefollowingnotes: amounts the on effect significant most applying the in have that judgments policies critical and accounting uncertainty estimation of areas significant about information particular, In are recognised intheperiodwhichestimateisrevised andinanyfuture periodsaffected. Estimates andunderlyingassumptionsare reviewed onanongoingbasis.Revisionstoaccountingestimates liabilities, incomeandexpenses.Actualresults maydiffer from theseestimates. and assumptionsthataffect theapplicationofaccountingpoliciesandreported amountsofassets, The preparation ofconsolidated financialstatementsrequires managementto make judgments,estimates 2.4 million. nearest the to rounded been functional company’s the is which and presentational currency.Kwacha, Exceptasindicated,allfinancialinformation presented inMalawiKwachahas Malawi in presented are statements financial consolidated These 2.3 The methodsusedtomeasure fairvaluesare discussedfurtherinNote4. Property ismeasured atfairvalue. • Investmentproperty ismeasured atfairvalue. • Biologicalassetsare measured atfairvaluelesscoststosell. • Financialinstrumentsatfairvaluethrough profit orlossare measured atfairvalue. • • for thefollowingmaterialitemsinstatementoffinancialposition: The consolidatedandseparatefinancialstatementshavebeenprepared onthehistoricalcostbasisexcept 2.2 provisions oftheMalawiCompaniesAct,1984. International with accordance in Financial ReportingStandardsAccounting (IFRSs)asissuedbytheInternational Board (IASB)and prepared been have statements financial separate and consolidated The 2.1 7 Contingentliabilities. - Utilisationoftaxlosses Note47 - Provisions Note45 - Valuation ofbiologicalassets • Note32 - Computationofimpairmentlossesonloansandadvances • Note23 - Valuation ofinvestmentsinassociates • Note17 - • Valuation ofinvestmentsinjointventures Note16 - • Note15 • • Basis ofpreparation Reporting entity Use ofestimatesandjudgments Functional andpresentationcurrency financial statements. Investments insubsidiaries,jointventures andassociatesare measured atfair valueinthecompany Basis ofmeasurement Statement ofcompliance

14

Valuation -

of

investments

in

subsidiaries

49 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES 50 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES In millionsofKwacha for theyearended31December2010 NOTES TOTHEFINANCIALSTATEMENTs the Group incursinconnection withabusinesscombinationare expensedasincurred. Costs related totheacquisition, otherthanthoseassociatedwiththeissueofdebtorequitysecurities,that relationships. Suchamounts are generallyrecognised inprofit orloss. The considerationtransferred doesnotincludeamountsrelated tothesettlementofpre-existing When theexcessisnegative,abargainpurchase gainisrecognised immediatelyinprofit orloss. Interest intheacquiree; andless • • Thefairvalueoftheconsideration transferred; plus • • For acquisitionsonorafter1January2010,theGroup measures goodwillattheacquisitiondateas: 2010 Acquisitions onorafter1January takes intoconsiderationpotentialvotingrightsthatcurrently are exercisable. operating policiesofanentitysoastoobtainbenefitsfrom itsactivities.Inassessingcontrol, theGroup which date, acquisition the at as is thedateonwhichcontrol istransferred totheGroup. Controlthefinancialand isthepowertogovern method acquisition the using for accounted are combinations Business pershare.material impactonearnings business combinations.Thechangeinaccountingpolicyhasbeenappliedprospectively andhashadno From 1January2010,theGroup hasappliedIFRS3 BusinessCombinations(2008)inaccountingfor i) Accountingforbusinesscombinations 2.5 2. prospectively pershare. andhashadnoimpactonearnings (2008) Statements Financial in accountingforacquisitions ofnon-controlling interests. Thechangeinaccounting policyhasbeenappliedSeparate and Consolidated 27 IAS applied has Group the 2010 January 1 From ii) Accountingforacquisitions ofnon-controlling interests incurred inconnectionwithbusinesscombinationswere capitalisedaspartofthecostacquisition. Transaction costs,otherthanthoseassociatedwiththeissueofdebtorequity securities,thattheGroup recognised immediatelyinprofit orloss. and contingentliabilitiesoftheacquiree. Whentheexcesswasnegative,abargainpurchase gainwas over theGroup’s interest intherecognised amount(generallyfairvalue)oftheidentifiableassets,liabilities For acquisitionspriorto1January2010,goodwillrepresents theexcessofcostacquisition 2010 Acquisitions priorto1January to pastand/orfuture service. with themarket-basedvalueofacquiree’s awards andtheextenttowhichreplacement awards relate combination. Thisdeterminationisbasedonthemarket-basedvalueofreplacement awards compared amount the of portion a or of theacquirer’sall replacementthen awards isincludedinmeasuringtheconsiderationtransferred inthebusiness services, past to relate and awards) (acquiree’s employees acquiree’s the When share-based payment awards (replacement awards) are required tobeexchangedforawards heldby or loss. Otherwise, subsequentchangestothefairvalueofcontingentconsiderationare recognised inprofit consideration isclassifiedasequity, itisnotremeasured and settlement isaccountedforwithinequity. Any contingentconsiderationpayableisrecognised atfairvaluetheacquisitiondate.Ifcontingent Basis ofpreparation (continued) assumed. The netrecognised amount (generallyfairvalue)oftheidentifiableassetsacquired andliabilities combination isachievedinstages,thefairvalueofexistingequity; The recognised amountofanynon-controlling interests intheacquiree; plusifthebusiness Change inaccountingpolicies

except asexplainedinnote2.5,whichaddresses changesinaccountingpolicies. consolidated andseparatefinancialstatements,havebeenappliedconsistentlybyGroup entities, The accountingpoliciessetoutbelowhavebeenappliedconsistentlytoallperiodspresented inthese 3. in interest the of amount carrying the the netassetsacquired atthedateoftransaction. over investment additional the of cost the which of subsidiary, excess a the in interests represented non-controlling of acquisition the on recognised was goodwill Previously, net the of amount proportionate a on assets ofthesubsidiary. based are interests non-controlling to such of adjustments result a The as recognised transactions. is goodwill no therefore and owners as capacity their in owners with Under thenewaccountingpolicy, acquisitionsofnon-controlling interests are accountedfor astransactions In millionsofKwacha for theyearended31December2010 NOTES TOTHEFINANCIALSTATEMENTS basis by external valuers. basis byexternal In theseparatefinancialstatements theinvestmentsare measured atfairvalue.These are valuedonregular except totheextentthatGroup hasincurred obligationsorhasmadepayment on behalfoftheassociates. amount oftheassociate,carrying amountisreduced tonilandrecognition offurther lossesisdiscontinued comprehensive incomeofequityaccountedinvestees.When theGroup’s share oflossesexceeds thecarrying losses. TheconsolidatedfinancialstatementsincludetheGroup’s share oftheprofit orlossandother policies. TheGroup’s investmentincludesgoodwillidentifiedatacquisition, netofanyaccumulatedimpairment management accountsare usedafterreview forcompliancewithyear-end procedures andGroup accounting control, overthefinancialandoperatingpolicies.Where associateshavedifferent year-ends totheCompany, long-term interest of20%ormore ofthevotingpowerinvesteeandhassignificantinfluence,butnot transaction costs.Associatedcompaniesare thoseentitiesinwhichtheCompanyora subsidiaryhasa that significantinfluenceceases.Investmentsinassociates are initiallyrecognised atcostwhichincludes associates onanequityaccountedbasis,from thedatethatsignificantinfluencecommences untilthedate The consolidatedfinancialstatementsincludetheGroup’s share ofthetotalrecognised gainsandlossesof iii) Associates regular valuers. basisbyexternal In theseparatefinancialstatements,investmentsare measured atfairvalue.Theseare valuedona joint control ceases. entities are combinedona line-by-linebasisfrom thedatethatjointcontrol commences untilthedatethat whereby attributableshare ofassets,liabilities,revenues, expensesandcashflows ofthejointly-controlled Investments injointlycontrolled entitiesare accountedforusingtheproportionate consolidationmethod, by contractualagreement andrequiring unanimousconsentforstrategicfinancialandoperatingdecisions. Jointly controlled entitiesare thoseentitiesoverwhoseactivitiestheGroup has jointcontrol, established ii) Jointlycontrolled entities regular valuers. basisbyexternal In theseparatefinancialstatementsinvestmentsare measured atfairvalue.Theseare valuedona that date the until commences control control ceases. that date the from statements financial consolidated the in included are presently exercisable orconvertibleare takenintoaccount.Thefinancialstatementsofsubsidiariesare not lessthanhalfofthedirectors ofthesubsidiarycompany. Inassessingcontrol, potentialvotingrightsthat benefits from itsactivities directly orindirectly; ortheCompanycanappoint, prevent theappointment,of where thefinancialandoperatingpoliciesofanentitysoastoobtain theCompanyhaspower togovern AccountingStandardsthe MalawiCompaniesAct,1984andInternational 27,control ispresumed toexist The consolidatedfinancialstatementsincludeallsubsidiariesthatare controlled bytheCompany. Under i) Subsidiaries 3.1 Significant accountingpolicies Basis ofconsolidation

51 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES 52 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES In millionsofKwacha for theyearended31December2010 NOTES TOTHEFINANCIALSTATEMENTs note 2.5forfurtherdetails. The Group haschangedits accountingpolicywithrespect toaccountingforbusinesscombinations.See vii) level ofinfluenceretained. accounted forasanequity-accountedinvesteeoravailable-for-sale financialassetdependingonthe subsidiary, then suchinterest ismeasured atfairvaluethedate thatcontrol islost.Subsequentlyit deficit or surplus Any subsidiary. arising onthelossofcontrolthe isrecognised inprofit orloss.IftheGroup retainsto anyinterest intheprevious related equity of components other the and interests controlling Upon thelossofcontrol, theGroup derecognises theassetsandliabilitiesofsubsidiary, anynon- vi) combination. the original businesscombinationandthenon-controlling interest’s share ofchangesinequitysincethedate Group’s equitytherein. Non-controlling interests consistoftheamountthoseinterests atthedateof Non-controlling interests inthenetassetsofconsolidated subsidiariesare identifiedseparatelyfrom the v) that there isnoevidenceofimpairment. in theinvestee.Unrealised lossesare eliminatedinthe samewayasunrealised gains,butonlytotheextent transactions withassociatesandjointlycontrolled entitiesare eliminatedtotheextentofGroup’s interest transactions, are eliminatedinpreparing theconsolidated financialstatements.Unrealised gainsarisingfrom Intra-group balancesandtransactions,anyunrealised incomeandexpensesarisingfrom intra-group iv) Transactions eliminatedonconsolidation 3.1 3. proportion of thecumulativeamountisreclassified toprofit orloss. venture thatincludesaforeign operationwhileretaining significantinfluenceorjointcontrol, therelevant to non-controlling interests. WhentheGroup disposes ofonlypartitsinvestmentinanassociateorjoint includes that subsidiary a in interest a foreign operationwhileretainingits control, therelevant proportionof ofthecumulativeamountisreattributed part only of disposes Group the When disposal. on loss or gain amount inthetranslationreserve related tothatforeign operationisreclassified toprofit orlossaspart ofthe foreign operationisdisposedofsuchthatcontrol, significantinfluenceorjointcontrol islost,thecumulative relevant proportionate share ofthetranslationdifference isallocatedto thenon-controlling interests. Whena currency translationreserve inequity. However, iftheoperationisanon-wholly-ownedsubsidiary, thenthe Foreign currency differences are recognised inothercomprehensive income,andpresented intheforeign transactions. expenses offoreign operationsare translatedtoMalawiKwachaatexchangeratesthedatesof on arising adjustments value fair and acquisition, are translatedtoMalawiKwachaatexchangeratesthereporting date.Theincomeand goodwill including operations, foreign of liabilities and assets The ii) instruments whichare recognised inothercomprehensive income. in theprofit orlossexcept fordifferences arisingfrom retranslation ofnon-monetaryavailable-for-sale dates thefairvaluewasdetermined.Foreign exchangedifferences arisingon translationare recognised foreign in denominated liabilities and currencies thatare measured atfairvalueareassets translatedtoMalawiKwachaatexchangeratesrulingthe Non-monetary transaction. the of date the at rate exchange the assets andliabilitiesthatare measured intermsofhistoricalcostaforeign currency are translatedusing the reporting dateare translatedtoMalawiKwachaattheexchangeraterulingthatdate.Non-monetary ruling atthedateoftransaction.Monetaryassetsandliabilitiesdenominatedinforeign currencies at Transactions in foreign currencies are translatedtotherespective functionalcurrencies attheexchangerate i) 3.2 Significant accountingpolicies(contined) Business combinations Loss ofcontrol Non-controlling interest Basis ofconsolidation(continued) Financial statementsofforeign operations Foreign currency transactions Foreign currency transferred annually, netofdeferred tax,from therevaluation reserve toretained earnings. the revaluation reserve. Anamountequivalenttotheadditionaldepreciation arisingfrom revaluations is to theprofit orlossexcepttotheextentthattheyrelate torevaluation surplusespreviously transferred to appropriate portionofthereserve istransferred to retainedRevaluationdecreases earnings. are charged Surpluses onrevaluations are accountedforintherevaluation reserve. Onrealisation oftheasset, at thereporting dateaseconomicconditionsdictate.Thebasisofvaluationusediscurrent marketvalue. such regularity sufficient with that thecarryingamountdoesnotdiffer materiallyfrom thatwhichwouldbedeterminedusingfairvaluesvaluers independent by out carried are plant and property of Revaluations iv) equipment are recognised inprofit orlossasincurred. Group anditscostcanbemeasured reliably. Thecostsoftheday-to-dayservicingproperty, plantand carrying the in recognised is amount oftheitemifitisprobable thatthefuture economicbenefitembodiedwithinthepartwillflowto equipment and plant property, of item an of part a replacing of cost The iii) recognised immediatelyin the profit orloss. previously beenincludedin therevaluation reserve relating tothespecificproperty, withanyremaining loss comprehensive incomeand presented intherevaluation reserve inequitytotheextentthatanamounthad comprehensive incomeand presented intherevaluation reserve inequity. Anylossisrecognised inother the extentitreverses aprevious impairment.Anygainarisingonre-measurement isrecognised inother measured tofairvalueand reclassified asinvestmentproperty. Againisrecognised inprofit orlossto When theuseofaproperty changesfrom owner-occupied toinvestmentproperty, theproperty isre- ii) earnings. retained to transferred are reserve revaluation net recognised are and within otheroperatingincomeinprofit orloss.Whenrevalued assetsareequipment, sold, theamountsincludedin and plant property, of amount carrying the with disposal from proceeds Gains andlossesondisposalofanitemproperty, plantandequipmentare determinedbycomparingthe separate items(majorcomponents)ofproperty, plantandequipment. When partsofanitemproperty, plantandequipmenthavedifferent usefullives,theyare accountedforas with dealt are they which after assets in theprofit orloss. related the of commissioning the until capitalised are assets qualifying Interest andforeign exchangelossesonloanswhichare utilizedforthepurchase andconstructionof of therelated equipmentiscapitalisedaspartofthatequipment. items andrestoring thesiteonwhichtheyare located. Purchased software thatisintegraltothefunctionality bringing theassettoaworkingconditionforitsintendeduse,andcostsofdismantlingremoving the constructed assetsincludesthecostofmaterialanddirect labour, anyothercostsdirectly attributableto Cost includesexpenditures thatare directly attributabletotheacquisitionofasset.Thecostself- losses. losses. Items of all plant and equipment are measured at cost less accumulated depreciation and impairment Land andbuildingsare measured atrevalued amountslessaccumulateddepreciation andimpairment i) 3.3 comprehensive income,andpresented inthetranslation reserve inequity. item are considered toformpartofanetinvestment inaforeign operationandare recognised inother nor likelyintheforeseeable future, foreign exchangegainsandlossesarisingfrom suchamonetary When thesettlementofamonetaryitemreceivable from orpayabletoaforeign operationisneitherplanned In millionsofKwacha for theyearended31December2010 NOTES TOTHEFINANCIALSTATEMENTS Revaluation Subsequent costs Reclassification toinvestmentproperties Recognition andmeasurements Property, plantandequipment

53 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES 54 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES In millionsofKwacha for theyearended31December2010 NOTES TOTHEFINANCIALSTATEMENTs The current estimatedusefullivesforthecurrent and comparativeperiodsare asfollows: of theleaseterm.Landisnotdepreciated. term andtheirusefullivesifthere isnoreasonable certainty thatthelesseewillobtainownershipbyend each of lives useful estimated the over part ofanitemproperty,basis plantandequipment.Leasedassetsare depreciated overtheshorter ofthelease line straight- a on loss or profit in recognised is Depreciation v) 3.3 3. incurred. economic benefitsembodied inthespecificassettowhichitrelates. Allotherexpenditure isexpensedas Subsequent expenditure oncapitalisedintangibleassets iscapitalisedonlywhenitincreases thefuture v) amortisation accumulated less cost and impairmentlosses.Theestimated usefulliveisfiveyears.(Current andcomparativeyears) at measured are Group the by acquired are that assets intangible Other iv) comparative years). Computer software isamortisedoveritsusefullife.Theestimatedlifefiveyears (Current and an as recognised is year one intangible assetandiscapitalisedonthebasisofcosts toacquire andbringto use thespecificsoftware. exceeding life economic probable a has that software computer Acquired iii) assets acquired overthecostofacquisition.Negativegoodwillisrecognised immediatelyinprofit orloss. Negative goodwillarisingonanacquisitionrepresents theexcessoffairvaluenetidentifiable ii) any assetincludinggoodwill,thatformspartofthecarryingamountequity-accountedinvestee. amount oftheinvestmentinassociateandanimpairmentlossonsuchisnotallocatedto less impairmentlosses.Inrespect ofassociates,thecarryingamountgoodwillisincludedin value oftheidentifiableassets,liabilitiesandcontingentacquired. Goodwillismeasured atcost Goodwill arisingonanacquisitionrepresents theexcessofcostacquisitionovernetfair i) 3.5 quantities ofreturnablepackagingincirculation attheendofperiod. packagingincustomers’handsmeasuredReturnable atdepositpriceisbasedonanestimateofthe calculation ofdepreciation: over theirestimatedusefullives,usingthestraight-linemethod.Thefollowinglivesare usedinthe cost ordepositvalue,lessdepreciation. Depreciation ischargedsoastowriteoff thecostordepositvalue packagingiscarriedinthestatementoffinancialpositionasanon-currentReturnable assetatthehigherof 3.4 each reporting date. The assets’residual values,usefullivesanddepreciation methodare reviewed andadjustedifappropriate, at Significant accountingpolicies(contined) Buildings Depreciation Property, plantandequipment(continued) Subsequent expenditure Other intangibleassets Computer software Negative goodwill Goodwill Intangible assets Bottles Crates Returnable packaging Motor vehicles Plant, furnitureandequipment 40 -50 2- 40 3- 5 - 5years - 20years years years years The fairvalueoffishheldforsaleisbasedonthemarketpricesimilarage,breed andgeneticmerit. transportation costs. in profit orloss.Coststosellincludeallcoststhatwouldbenecessarytheassetsincluding Biological assetsare measured atfairvaluelesscosts tosell,withanyresultant gainorlossrecognised 3.6 each at reviewed are values residual and reporting dateandadjustedifappropriate. lives useful methods, Amortisation use. for available are they that on astraight-linebasisovertheestimatedusefullivesofintangibleassetsotherthangoodwill,from thedate Amortisation isbasedonthecostofanassetlessitsresidual value.Amortisationischargedtoprofit orloss vi) In millionsofKwacha for theyearended31December2010 NOTES TOTHEFINANCIALSTATEMENTS lease are alsospread on astraight-linebasisovertheleaseterm. the termofrelevant lease.Benefitsreceived andreceivable asanincentivetoenterintooperating Rentals payableunderoperatingleasesare chargedtotheincomestatementonastraight-line basisover loss. or profit to charged are charges Finance of interest ontheremaining balanceoftheliability. apportioned betweenfinancechargesandreduction oftheleaseobligationsoastoachieve aconstantrate to liability corresponding The the lessorisincludedinstatementoffinancialposition asafinanceleaseobligation.Leasepaymentsare payments. lease minimum the of value present the at lower, or,if lease the of Assets heldunderfinanceleasesare recognised asassetsoftheGroup attheirfairvaluetheinception ii) amount oftheleasedassetandrecognised asanexpenseonastraight-linebasisovertheleaseterm. leases. Initialdirect costs incurred innegotiatingandarranginganoperatingleaseare addedtothecarrying Rental incomefrom operating leasesisrecognised onastraight-linebasisoverthetermofrelevant constant periodicrateofreturnonthecompany’s netinvestmentoutstandinginrespect oftheleases. net investmentintheleases.Financeleaseincomeisallocatedtoaccountingperiodssoasreflect a Amounts duefrom lessees underfinanceleasesare recognised asreceivables attheamountofGroup’s i) rewards ofownershiptothelessee.Allotherleasesare classifiedasoperating leases. Leases are classifiedasfinance leaseswhenthetermsofleasetransfersubstantiallyallrisksand 3.8 value atthedateofreclassification becomesitscostforsubsequentaccounting. When theuseofaproperty changessuchthatitisreclassified asproperty, plantandequipment,itsfair borrowing cost. attributable tobringingtheinvestmentproperty toaworkingconditionfortheirintendeduseandcapitalissed of selfconstructedinvestmentproperty includesthecostofmaterialanddirect labour, anyothercostdirectly Cost includesexpenditure thatisdirectly attributabletotheacquisitionofinvestmentproperty. Thecost fair valuewithanychangetherein recognised inprofit orloss. administrative purposes.Investmentproperty ismeasured atcostoninitialrecognition andsubsequentlyat both for or appreciation capital for but notforsaleintheordinary courseofbusiness,useinproduction orsupplyofgoodsservicesforor income rental earn to either held property is property Investment 3.7 Biological assets Amortisation The group asalessee The group asalessor Leases Investment property

55 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES 56 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES In millionsofKwacha for theyearended31December2010 NOTES TOTHEFINANCIALSTATEMENTs on the Group’s statement of financial position. Investment property held under an operating lease is is lease operating an recognisedunder ontheGroup’s held statementoffinancialpositionatitsfairvalue. property Investment position. financial of statement Group’s the on Other leasesare operatingleasesandexceptforinvestmentproperty, theleasedassetsare notrecognised with accordance in for accounted is the accountingpolicyapplicabletothatasset. asset the recognition, initial to Subsequent payments. lease minimum Leased assetsare measured atanamountequalto thelowerofitsfairvalueandpresent valueofthe iii) 3.8 3. financial assetsthatare equitysecurities,thereversal isrecognised directly inothercomprehensive income. financial assetsthatare debtsecurities,thereversal isrecognised inprofit orloss.Foravailable-for-sale impairment losswasrecognised. Forfinancialassetsmeasured atamortisedcost andavailable-for-sale An impairmentlossisreversed ifthereversal canberelated objectivelytoaneventoccurringafterthe profit orloss. financial assetrecognised previously inothercomprehensive incomeandpresented inequityistransferred to All impairmentlossesare recognised inprofit orloss.Anycumulativelossinrespect ofanavailable-for-sale credit characteristics. impairment losspreviously recognised inprofit orlossare assessedcollectivelyingroups thatshare similar between theacquisitioncost(netofprincipalrepayment andamortisation)current fairvaluelessany Individually significantfinancialassetsare testedforimpairmentonanindividualbasis. Thedifference calculated byreference toitscurrent fairvalue. the originaleffective interest rate.Animpairmentlossinrespect ofanavailable-for-sale financialasset is between itscarryingamount,andthepresent valueoftheestimatedfuture cashflowsdiscountedat An impairmentlossinrespect ofafinancialassetmeasured atamortisedcostiscalculatedasthedifference in decline prolonged or significant a its fairvaluebelowcostisobjectiveevidenceofimpairment. security, equity an in investment an for addition, In security. a for market not would Group the that consider otherwise,indicationsthatadebtororissuerwillenterbankruptcy,terms on thedisappearanceofanactive Group the to due amount an of restructuring debtor, a by delinquency Objective evidencethatfinancialassets(includingequitysecurities)are impaired canincludedefaultor future cashflowsofthatasset, thatcanbeestimatedreliably. impaired ifobjectiveevidence indicatesthatoneormore eventshavehadanegativeeffect ontheestimated determine whetherthere is anyobjectiveevidencethatitimpaired. Afinancialassetisconsidered tobe A financialassetnotcarriedatfairvaluethrough profit andlossisassessedateachreporting dateto i) 3.10 The costofitemstransferred from biologicalassetsistheirfairvaluelesscoststosellatthedateoftransfer. and sellingexpenses. value istheestimatedsellingpriceinordinary courseofbusiness,lesstheestimatedcostscompletion includes anappropriate share ofproduction overheadsbasedonnormaloperatingcapacity. Netrealisable to theirexistinglocationandcondition.Inthecaseofmanufactured inventoriesandworkinprogress, cost the first-in-first out principle, and includes expenditure incurred in acquiring the inventories and bringing them Inventories are measured atthelowerofcostandnet realisable value.Thecostofinventoriesisbasedon 3.9 Significant accountingpolicies(contined) Leased assets(where thegroup isthelessee) Leases (continued) Financial assets Impairment Inventories associate is tested for impairment as a single asset when there is objective evidence that the investment in in investment the that evidence an associatemaybeimpaired.objective is there when asset single a as impairment for tested is associate and therefore isnottestedforimpairmentseparately. Instead,the entire amountofinvestmentinthe Goodwill that forms part of the carrying amount of an investment in an associate is not recognised separately amortisation, ifnoimpairmentlosshadbeenrecognised. amount doesnotexceedthecarryingthatwouldhavebeendetermined,netofdepreciation or to used estimates the in change a determine therecoverable amount.Animpairmentlossisreversed onlytotheextentthatasset’sbeen has carrying there if reversed is loss impairment An exists. longer no or recognised inpriorperiods are assessedateachreporting dateforindications that thelosshasdecreased An impairmentlossinrespect ofgoodwillisnotreversed. Inrespect ofotherassets, impairmentlosses specific totheasset. value usingapre-tax discountratethatreflects current marketassessmentsofthetimevalueandrisks less coststosell.Inassessingvalueinuse,theestimatedfuture cashflowsare discountedtotheirpresent The recoverable amountofanassetorcashgeneratingunitisthegreater ofitsvalueinuseandfair the otherassetsinunit(group ofunits)onapro ratabasis. reduce thecarryingamountofanygoodwillallocatedtounitsandthenreduce thecarryingamountof in profit orloss.Impairmentlossesrecognised inrespect ofcashgeneratingunitsare allocatedfirstto inflows thatlargelyare independentfrom otherassets orgroup ofassets.Impairmentlossesare recognised recoverable amount.Acashgeneratingunitisthesmallestidentifiableassetgroup thatgeneratescash An impairmentlossisrecognised ifthecarryingamountofanassetoritscashgeneratingunitexceeds recoverable amountingisestimatedateachreporting date. For goodwillandintangibleassetsthathaveindefiniteusefullivesorare notyetavailableforuse,the indication ofimpairment.Ifanysuchexiststhentheasset’s recoverable amountisestimated. inventories anddeferred taxassets,are reviewed ateachreporting datetodeterminewhetherthere isany The carryingamountsoftheGroup’s non-financialassets,otherthanbiologicalinvestmentproperty, ii) In millionsofKwacha for theyearended31December2010 NOTES TOTHEFINANCIALSTATEMENTS from thestartofcomparativeperiod. comparative statementofcomprehensive incomeisrepresented asiftheoperationshadbeendiscontinued to beclassifiedasheldforsale,ifearlier. Whenanoperationisclassified asadiscontinuedoperation,the Classification asadiscontinuedoperationoccursupondisposal orwhentheoperationmeetscriteria acquired exclusivelywithaviewtoresale. business orgeographicalarea ofoperationsthathasbeendisposedorisheldforsale, orisasubsidiary A discontinuedoperationisacomponentoftheGroup’s business thatrepresents aseparatemajorlineof losses and gains to applies same The loss. on subsequentremeasurement. or profit in included are sale for held assets on losses Impairment the lowerofcarryingamountandfairvaluelesscoststosell. disposal group are brought up-to-dateinaccordance withapplicableIFRSs.Then,theyare recognised at Immediately before classification asheldforsale,themeasurement oftheassetsand/orcomponentsa in sale immediate for condition. available is present group) its disposal (or asset the and probable being as highly is regarded is sale the when condition only This met use. continuing through than rather transaction sale a through recovered Non-current assetsanddisposal groups are classifiedasheldforsaleiftheircarrying amountwillbe 3.11 Non-financial assets Non-current assetsheldfor saleanddiscontinuedoperations

57 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES 58 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES In millionsofKwacha for theyearended31December2010 NOTES TOTHEFINANCIALSTATEMENTs and at settlement date. Any changes in the fair value of the liability are recognised as personnel expense in in expense personnel as recognised are profit orloss. liability the of value fair the in changes Any date. settlement at and which in period the over liabilities, the employeesbecomeunconditionallyentitledtopayment. Theliabilityisremeasuredin ateachreporting date increase corresponding a with expense, an as recognised is cash, in The fairvalueoftheamountpayabletoemployeesinrespect ofshare appreciation rights,whichare settled that vest. the options.Theamountrecognised asanexpenseisadjustedtoreflect theactualnumberofshare options corresponding increase inequity, overtheperiodinwhichemployees becomeunconditionallyentitledto The grantdatefairvalueofoptionsgrantedtoemployeesisrecognised asanemployeeexpense,witha iv) as aresult ofpastservice provided bytheemployee,andobligationcanbeestimatedreliably. cash bonusorprofit sharing plansiftheGroup hasapresent legalconstructive obligationtopaythisamount related serviceisprovided. Aliabilityisrecognised fortheamountexpectedto be paidundershort-term Short-term employeebenefitobligationsare measured onanundiscountedbasisandare expensedasthe iii) then theyare discountedto theirpresent value. acceptances canbeestimatedreliably. Ifbenefitsare payablemore than12monthsafterreporting period, an made has Group offer encouragingvoluntary redundancy,the if itisprobable thattheoffer willbeaccepted,andthenumberof recognised are redundancies voluntary for benefits Termination redundancy. normal the before employment retirementterminate dateortoprovide terminationbenefitsasaresult ofanofferto madetoencouragevoluntary plan detailed formal a to withdrawal, of without possibility demonstrably, realistic committed is Group the when expense an as recognised are benefits Termination ii) benefit isdiscountedtodetermineitspresent value,andthefairvalueofanyrelated assetsisdeducted. of futureinreturnfortheirservicethecurrent benefitthatemployeeshaveearned andpriorperiods; The Group’s netobligationinrespect oflong-termemployeebenefitsotherthanpensionplansistheamount i) recognised asanassettotheextentthatacashrefund orareduction infuture paymentsisavailable. in expense benefit employee an as profit orlossintheperiodsduringwhichservicesare rendered byemployees.Prepaid contributionsare recognised are plans pension Obligations contribution amounts. defined to further pay to contributions for obligation constructive or legal no have contributions will and fixed pays entity entity an separate a which into under plan benefit post-employment a is plan contribution defined A been paid,thegroup hasnofurtherpaymentobligations. the payroll andare recognised asanexpenseintheprofit orlossasincurred. Oncethecontributionshave assets ofwhichare keptseparatefrom theGroup. ContributionstotheFundare basedonapercentage of The Group contributestoanumberofdefinedcontributionpensionschemesonbehalfitsemployees,the 3.12 3. the liability. The unwinding up of the discount is recognised as a discount. The unwinding of the discount is is discount the of unwinding The recognised asfinancecost. discount. a as recognised is to discount the of specific up risks the unwinding The appropriate, liability. where the and, money of value time the of assessments market current reflects effect the If obligation. the settle to is material,provisions are determinedbydiscountingtheexpectedfuture cashflowsatapre-taxrequired ratethat be will benefits economic of outflow an that probable is it and A provision isrecognised whentheGroup hasalegalorconstructiveobligationasresult ofapastevent, 3.13 Significant accountingpolicies(contined) Share-based paymenttransactions Short-term benefits Termination benefits Other longtermemployeebenefits Employee benefits Provisions probabilities. provision The sold. are services or is basedonhistoricalwarrantydataandaweightingofallpossibleoutcomesagainsttheirassociated products underlying the when recognised is warranties for provision A iii) recognises Group the established, is any impairmentlossontheassetsassociatedwithcontract. provision a Before contract. the with continuing of cost net expected is measured atthepresent valueofthelower expected costofterminatingthecontractand a contractare lowerthantheunavoidablecostofmeetingitsobligationsundercontract.Theprovision A provision foronerous contractsisrecognised whentheexpectedbenefitstobederivedbyGroup from ii) going activitiesoftheGroup are notprovided for. Future operatinglossesare notprovided for. plan, andtherestructuring haseithercommencedorbeenannouncedpublicly. Costsrelating totheon- A provision forrestructuring isrecognised whentheGroup hasapproved adetailedandformalrestructuring i) In millionsofKwacha for theyearended31December2010 NOTES TOTHEFINANCIALSTATEMENTS – thisistheex-dividenddate forequitysecurities. Dividend incomeforavailable-for-sale equitiesis recognised whentheright toreceive paymentisestablished iii) basis overthecommitmentperiod. not expectedtoresult inthedraw-downofaloan,loancommitmentfeesare recognised onastraight-line upon theoccurrence ofaspecificactsuchassale,placementorsyndication.When aloancommitmentis commission, placementfeesandsyndicationfees,are recognised astherelated servicesare performedor Fees andcommissionincome,includingaccountservicing fees,investmentmanagementsales Fees andcommissionare generallyrecognised onanaccrualbasiswhentheserviceshavebeenprovided. ii) work of surveys to reference by performed. assessed is completion of stage The date. reporting the at transaction the Revenue from servicesrendered isrecognised inprofit orlossinproportion tothestageofcompletion uncertainties regarding recovery oftheconsiderationdue,associatedcostsor thepossiblereturnofgoods. as areduction ofrevenue asthesalesare recognised. Norevenue isrecognised ifthere are significant discounts willbegrantedandtheamountcanmeasured reliably, thenthediscountisrecognised involvement withthegoodsandamountofrevenue canbemeasured reliably. Ifitisprobable that costs andpossiblereturnofgoodscanbeestimatedreliably, there isnocontinuingmanagement ownership havebeentransferred tothebuyer, recovery oftheconsideration isprobable, theassociated Revenue from thesaleof goods isrecognised inprofit orlosswhensignificant risksandrewards of consideration received or receivable, netofreturnsandallowances,tradediscountsvolumerebates. Revenue from thesaleof goods inthecourseofordinary activitiesismeasured atthefairvalueof i) Dividends are recognised whenthecompanyisentitledthereto. revenue excludessalesbetween group companies. respective companiesafter deductionofValue AddedTax (VAT) andcredit noteswhere applicable.Group Revenue represents amountsinvoicedorsalesotherwisemadeinthenormalcourseoftrade 3.14 Warranties Onerous contracts Restructuring Dividend income Fees andcommissions Goods soldandservicesrendered Revenue

59 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES 60 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES In millionsofKwacha for theyearended31December2010 NOTES TOTHEFINANCIALSTATEMENTs Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying qualifying a of production or construction asset are recognised inprofit orlossusingtheeffective interest method. acquisition, the to attributable directly not are that costs Borrowing recognised onfinancialassets,andlosseshedginginstrumentsthatare recognised inprofit orloss. foreign provisions, on discount of currency losses,changesinfairvalueoffinancialassetsatthrough profit orloss,impairmentlosses unwinding borrowings, on expense interest comprise expenses Finance method. interest effective the using accrues, it as recognised is foreign loss, or profit through value fair currency gains,andgainsonhedginginstrumentsthatare recognisedat through profit orloss.Interest income assets financial of value fair the in changes assets, financial Finance incomecomprisesinterest incomeonfundsinvested,gainsthedisposalofavailable-for-sale 3.15 Revenue onotherservicesisrecognised upontheperformanceofcontractualobligation. transferred tothepurchaser. Revenue onothersalesisrecognised onthedateallrisksandrewards associatedwiththesaleare iv) 3.14 3. in profit or loss except to the extent that it relates to a business combination, or items recognised directly in in directly recognised items or combination, equity orinothercomprehensive income. business a to relates it that extent the to except loss or profit in Income taxontheprofit orlossfortheyearcomprisescurrent anddeferred tax.Incometaxisrecognised 3.17 Equity instrumentsissuedbytheGroup are recorded attheproceeds received, netofdirect issuecosts. v) capitalisation orsubdivisionandthecorresponding figures forallearlierperiodsare adjustedaccordingly. been have shares equity new issued bywayofcapitalisationorsubdivision,theprofitWhere isapportionedovertheshares inissueafterthe employees. to granted options which share shares, and notes ordinary potential convertible dilutive comprise all of effects the for outstanding shares ordinary of number average share isdeterminedbyadjustingtheprofit orlossattributabletoordinary shareholders andtheweighted for theyearandweightedaveragenumberofshares inissuethroughout theyear. per Dilutedearnings pershareThe calculationofbasicearnings isbasedontheprofit orlossattributabletoordinary shareholders iv) divided bythenumberofordinary shareholders ontheregister ofshareholders onthedateofpayment. The calculationofdividendpershare isbasedontheordinary dividendsrecognised duringtheperiod iii) Dividends fortheyearthatare declared afterthereporting dateare dealtwithinnote46. Company’s shareholders. Dividends onordinary shares are recognised inequitytheperiodwhichtheyare approved bythe ii) deduction, netoftax,from theproceeds. Incremental costsdirectly attributabletotheissueofnewshares oroptionsare showninequityasa i) 3.16

Significant accountingpolicies(contined) Finance incomeandexpense Other revenue Revenue (continued) Income tax Equity instruments pershareEarnings Dividend pershare Dividends onordinary shares costs issue Share Share capitalanddividends liability topaytherelated dividend isrecognised. Additional incometaxesthatarisefrom thedistributionofdividendsare recognised atthesametimeas longer probable thattherelated taxbenefitwillberealised. utilised. Deferred taxassets are reviewed ateachreporting dateandreduced totheextentthatitisno to theextentthatitisprobable thatfuture taxableprofits willbeavailableagainst whichtheassetcanbe A deferred taxassetisrecognised forunusedtaxlosses,credits anddeductible temporarydifference current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously. and assets,theyrelate tothesametaxableentity, orondifferent taxentities,butthat intend tosettle Deferred taxassetsandliabilitiesare offset ifthere isalegallyenforceable righttooffset current taxliabilities substantively enactedatthereporting date. realisation orsettlementofthecarryingamountassetsandliabilities,usingtaxratesenacted in theforeseeable future. Theamountofdeferred taxismeasured basedontheexpectedmannerof investments insubsidiaries,associatesandjointventures totheextentthattheywillprobably notreverse combination business a not is that and thataffecttransaction neitheraccountingnortaxableprofit or loss,andtemporarydifferencesa relating toin liabilities or assets of recognition recognition initial initial the the on goodwill, arising of differences temporary taxable for: provided not are differences temporary and liabilitiesforfinancialreporting purposesandtheamountsusedfortaxationpurposes.Thefollowing Deferred taxrecognised inrespect oftemporarydifferences betweenthecarryingamountsofassets ii) years. or substantivelyenactedatthereporting date,andanyadjustmenttotaxpayableinrespect ofprevious Current incometaxistheexpectedpayableontaxableforyear, usingtaxratesenacted i) In millionsofKwacha for theyearended31December2010 NOTES TOTHEFINANCIALSTATEMENTS value recognised inprofit orloss. Financial instrument. hedging assets atfairvaluethrough profit orlossare subsequently measured atfair valuewithchangesinfair effective as designated are they unless trading for held as categorised for thepurposeofsellinginshorttermorifsodesignated bymanagement.Derivativesare also value through profit orlossatinception.Afinancialassetisclassifiedinthiscategoryifacquired principally This categoryhastwosub-categories:financialassetsheld fortrading,andthosedesignatedatfair i) expired orwhere theGroup hastransferred substantially allrisksandrewards ofownership. loss. Financialassetsare derecognised whentherightstoreceive cashflowsfrom thefinancialassetshave recognised atfairvalueplustransactioncostsforallfinancialassetsnotcarried through profit or Loans andreceivables are recognised whencashisadvancedtotheborrowers. Financialassetsare initially recognised ontrade-datewhichisthedateGroup commitstopurchase orselltheasset. Purchases andsalesoffinancial assetsatfairvaluethrough profit orlossandavailable-for-sale are classification ofitsfinancialassetsatinitialrecognition. through value fair at assets financial profit orloss;loansandreceivables; andavailable-for-sale financialassets.Managementdeterminesthe categories: following the in assets financial its classifies Group The 3.19 of therelated assets.Allother grantsofrevenue nature are credited totheprofit orlossintheyearofreceipt. liabilities asdeferred income andcredited totheprofit orlossonastraight-line basisovertheexpectedlives grantsrelatingGovernment tothepurchase ofproperty, plantand equipmentare includedinnon-current 3.18

Deferred tax Current incometax Financial assets at fair value through profit or loss loss or profit through value fair at assets Financial Financial assets Government grants

61 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES 62 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES In millionsofKwacha for theyearended31December2010 NOTES TOTHEFINANCIALSTATEMENTs on demand and form an integral part of the Group’s cash management are included as a component of cash cash of component a as and cashequivalentsforthepurposeofstatement flows. included are management cash Group’s the of part integral an form and demand on Cash andcashequivalentsare subsequentlymeasured atamortisedcost.Bankoverdrafts thatare payable term commitments. insignificant riskofchangesintheirfairvalue,andare usedbytheGroup inthemanagementofitsshort- and highlyliquidfinancialassetswithoriginalmaturitiesoflessthanthree months,whichare subjectto Cash andcashequivalentsincludenotescoinsonhand,unrestricted balancesheldwithcentralbanks vi) assets andare measured attheiramortisedcostlessimpairmentlosses(refer accounting policy3.10). Trade andother receivables compriseinter-branch accounts,interest receivables, staff advancesandother cash flowsdiscountedattheeffective interest ratecomputedatinitialrecognition. measured asthedifference betweentheasset’s carryingamountandthepresent value ofestimatedfuture in profit orlosswhenthere isobjectiveevidencethattheassetimpaired. The allowancerecognised is method. Appropriate allowances forestimatedirrecoverable amounts(i.e.impairmentlosses)are recognised Trade andother receivables are subsequentlymeasured atamortisedcostusingtheeffective interest iv) receive paymentisestablished. Dividends onavailable-for-sale equityinstrumentsare recognised inprofit orlosswhentheentity’s rightto available-for-sale financialassetscalculatedusingtheeffective interest methodisrecognised inprofit orloss. in othercomprehensive income shouldberecognised inprofit orloss.However, interest oninterest-bearing financial assetisderecognised orimpaired atwhichtimethecumulativegainorlosspreviously recognised fair valueofavailable-for-sale financialassetsare recognised inothercomprehensive income,until the These investmentsare subsequently measured atfairvalue.Gainsandlossesarisingfrom changesinthe sale are independentlyvaluedaseconomicconditionsdictated.Listedshares are carriedatmarketvalue. Shares inothercompaniesare treated astradeinvestmentsandunlistedshares classifiedasavailablefor financial assets. which or prices equity or rates exchange do notmeetthedefinitionoffairvaluethrough profit orloss,loansandreceivables orheld-to-maturity rates, interest in changes or liquidity for needs to response in sold Available-for-sale investmentsare thoseintendedtobeheldforanindefinite periodoftime,whichmaybe iii) iii) amortised costusingtheeffective interest methodless anyimpairmentlosses. a debtorwithnointentionoftradingthereceivable. Loansandreceivables are subsequentlymeasured at not quotedinanactivemarket.TheyarisewhentheGroup provides money, goodsorservicesdirectly to Loans andreceivables are non-derivativefinancialassets withfixedordeterminablepaymentsthatare ii) 3.19 3. on anetbasis,orrealise theassetsandsettleliability simultaneously. position financial of statement the in when there isalegallyenforceable righttooffset therecognised amountsandthere isanintentiontosettlereported amount net the and offset are liabilities and assets Financial 3.20

Significant accountingpolicies(contined) Cash andcashequivalents Trade andother receivables Available-for-sale Loans andreceivables Financial assets(continued) Offsetting financialinstruments These embeddedderivativesare measure atfairvaluewithchangesinrecognised inprofit orloss. related tothoseofthehost contractandthehostisnotcarriedatfairvaluethrough profit orloss. bond, are treated asseparatederivativeswhentheir economiccharacteristicsandrisksare notclosely Certain derivativesembeddedinotherfinancialinstruments,suchastheconversionoptionaconvertible is value fair when assets as carried positive andasliabilitieswhenfairvalueisnegative. are derivatives All appropriate. as models, pricing option and models markets, includingrecent markettransactions,andvaluationtechniques,includingdiscountedcashflow are subsequentlyremeasured attheirfairvalue.Fairvaluesare obtainedfrom quotedmarketpricesinactive Derivatives are initiallyrecognised atfairvalueonthe dateonwhichaderivativecontractisentered intoand 3.22 effective interest ratemethod.Securitieslenttocounterparties are alsoretained inthefinancialstatements. between difference The sale andrepurchase priceistreatedappropriate. asinterest andaccruedoverthelifeofagreements usingtheas customers, or banks other to advances and loans as recorded are deposits due to customers, as appropriate. Securities purchased under agreements to resell (‘reverse repos’) the counterpartyliabilityisincludedinamountsduetootherbanks,depositsfrom banks,otherdepositsor as statements financial the in pledged assetswhenthetransferee hastherightbycontractorcustomtosellrepledge thecollateral; reclassified are (‘repos’) agreements repurchase to subject sold Securities 3.21 In millionsofKwacha for theyearended31December2010 NOTES TOTHEFINANCIALSTATEMENTS equipment, and intangibleassetsotherthan goodwill. Segment capitalexpenditure isthetotalcostincurred duringtheyeartoacquire property, plantand (primarily theCompany’s headquarters),headoffice expenses,andincometaxassetsliabilities. as well as segment a to those thatcanbeallocatedon areasonable basis.Unallocated itemscomprisemainlycorporateassetsattributable directly items include CEO the to reported are that results Segment and assessitsperformance,forwhichdiscrete financialinformationisavailable. Group’s ChiefExecutiveOfficer (“CEO”)tomakedecisionsaboutresources tobeallocatedthesegment of theGroup’s othercomponents.Alloperatingsegments’ results are reviewed regularly bythe revenuesearn andincurexpenses,includingrevenues andexpensesthatrelate totransactionswithany An operatingsegmentisacomponentoftheGroup thatengagesinbusinessactivities from whichitmay 3.25 assets orincomeoftheGroup. These assetsandincomearisingthereon are excludedfrom thesefinancialstatements,astheyare not assets onbehalfofindividuals,trusts,retirement benefitplansandotherinstitutions. The Group commonlyacts astrusteesandinotherfiduciarycapacitiesthatresult intheholdingorplacingof 3.24 measured atamortisedcost, usingtheeffective interest method. Other liabilitiesare initially measured atfairvaluenetoftransactioncostsincurred, andare subsequently ii) interest method. value isrecognised inprofit orlossasinterest overtheperiodofborrowings usingtheeffective measured atamortisedcost; anydifference betweenproceeds netoftransactioncostsandtheredemption proceeds (fairvalueofconsideration received) netoftransactioncostsincurred. Theseare subsequently Customer depositsandliabilitiestootherbanksare recognised initiallyatfairvalue,beingtheirissue i) The accountingpoliciesadoptedforspecificfinancialliabilitiesare setoutbelow: 3.23

Financial liabilities liabilities Financial Derivative financialinstruments Sale andrepurchase agreements Segment reporting Fiduciary activities Other liabilities Customer depositsandliabilitiestootherbanks

63 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES 64 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES In millionsofKwacha for theyearended31December2010 NOTES TOTHEFINANCIALSTATEMENTs 3.27 Contingent Assets. less amortisationortheamountdeterminedinaccordance withIAS37Provisions, ContingentLiabilitiesand These are initiallymeasured atfairvalueandsubsequently atthehigherofamountinitiallyrecognised with accordance in due when payment make the originalormodifiedtermsofadebtinstrument. to fails debtor specified a because incurs it loss a for holder the A financialguaranteecontractisathatrequires theissuertomakespecifiedpaymentsreimburse 3.26 3. j) i) h) g) f) e) d) c) b) a) Group are: The otherchangesthatwillnothaveasignificantimpactontheconsolidatedfinancialstatementsof the potentialeffect ofthis revision. and theextentofimpacthasnotbeendetermined.TheGroup iscurrently intheprocess ofevaluating reporting periodsbeginning before 1January2012.TheGroup doesnotplanto adoptthisstandard early accounting continuestoapply. Priorperiodsneednotberestated ifanentityadoptsthestandard for flow cash contractual the and characteristics ofthefinancialasset.TheguidanceinIAS39onimpairmentassetsandhedge model business entity’s the on depends classification of basis The value. model andestablishestwoprimarymeasurement categoriesforfinancialassets:amortisedcostandfair IFRS 9FinancialInstruments-IFRSreplaces IAS39andretains butsimplifiesthemixedmeasurement 2013 Group’s the for mandatory consolidated financialstatementsandcouldchangetheclassificationmeasurement offinancialassets. becomes which Instruments, Financial 9 IFRS for except Group, the of financial consolidated these preparing statements. Noneoftheseisexpectedtohaveasignificanteffectin ontheconsolidatedfinancialstatements applied been not have and 2010, January 1 after beginning periods A numberofnewstandards, amendmentstostandards andinterpretations are notyeteffective forannual 3.28 current year. Where necessary, comparativefigures havebeenadjustedtoconformwithchangesinpresentation inthe

Significant accountingpolicies(contined) Comparative information Financial guaranteecontracts beginning onor after1July2010). IFRIC 19ExtinguishingFinancial LiabilitieswithEquityInstruments(effective forannualperiods for annualperiodsbeginning on orafter1January2011). Interaction -November2009 Amendmentswithrespect tovoluntaryprepaid contributions (effective IFRIC 14IAS19-TheLimiton aDefinedBenefitAsset,MinimumFundingRequirements andtheir Annual 2010 Improvements toIFRSs(effective forannualperiodsbeginningonorafter1January 2011). May from resulting Amendments - Programmes Loyalty Customer 13 IFRIC (effective forannualperiodsbeginningonorafter1February2010) IAS 32FinancialInstruments:Presentation -Amendmentsrelating toclassificationofrightsissues Annual Improvements toIFRSs(effective forannualperiodsbeginningonorafter1July2010). IAS 27ConsolidatedandSeparateFinancialStatements- Amendmentsresulting from May2010 beginning onorafter1January2011). IAS 24RelatedPartyDisclosures -Reviseddefinitionofrelated parties(effective forannualperiods Annual 2010 May Improvements toIFRSs(effective forannualperiodsbeginningonorafter1January2011). from resulting Amendments - Statements Financial of Presentation 1 IAS financial assets(effective forannualperiodsbeginningonorafter1July2011). IFRS 7FinancialInstruments:Disclosures -Amendmentsenhancingdisclosures abouttransfersof Annual 2010 May Improvements toIFRSs(effective forannualperiodsbeginningonorafter1January2011). from resulting Amendments - Disclosures Instruments: Financial 7 IFRS IFRSs (effective forannual periodsbeginningonorafter1July2010). IFRS 3BusinessCombinations-Amendmentsresulting from May2010AnnualImprovements to New standardsandinterpretationsnotyetadopted and interest cashflows,discountedatthemarketrateofinterest atthereporting date. Fair value,whichisdeterminedfordisclosure purposes,iscalculatedonthepresent valueoffuture principal v) prudently andwithoutcompulsion. in anarm’s lengthtransactionsafterproper marketingwherein thepartieshadeachactedknowledgeably, property couldbeexchanged foronthedateofvaluationbetweenawillingbuyerandseller property everyyear. Thefairvaluesare basedonmarketvalues, being theestimatedamountforwhicha and recent experienceinthe locationandcategoryofproperty beingvalued,valuestheGroup investment independentvaluationcompany,An external, havingappropriate recognised professional’s qualifications iv) maturity. at realised be to genetic make-up.Thefairvalueoffingerlingsisbasedonthepresent valueofthenetcashflowsexpected market price.Thefairvalueofmotherfishisbasedonthepricesimilarage,breed and The fairvalueoffisholderthan9months,beingtheageatwhichitbecomesmarketable,isbasedon iii) plant, equipment,fixtures andfittingsisbasedonthequotedmarketpricesforsimilaritems. wherein marketing proper after the partieshadeachactedknowledgeably, prudentlyandwithoutcompulsion.Themarketvalueofitems transaction length arm’s an in seller willing valuation a of and date buyer the on willing a exchanged be between could property a which for amount estimated the is property of value The fairvalueofproperty recognised subsequentto initialrecognition isbasedonmarketvalues.The ii) observable markets. modification orrepacking) orbasedonavaluationtechniquewhosevariablesincludeonlydatafrom by comparisonwithotherobservablecurrent markettransactionsinthesameinstrument(i.e.without fair valueoftheconsiderationgivenorreceived) unlessthefairvalueofthatinstrumentisevidenced The bestevidenceofthefairvalueaderivativeatinitialrecognition isthetransactionprice(i.e. i) assumptions madeindeterminingfairvaluesisdisclosedthenotesspecifictoassetorliability. or disclosure purposesbasedonthefollowingmethods.Where applicable,furtherinformationaboutthe both for value, fair of financial andnon-financialassetsliabilities.Fairvalueshavebeendeterminedformeasurement and/ determination the require disclosures and policies accounting Group’s the of number A 4.1 . 4 In millionsofKwacha for theyearended31December2010 NOTES TOTHEFINANCIALSTATEMENTS reviewed regularly toreduce anydifferences betweenlossestimatesandactualexperience. The methodologyandassumptions usedforestimatingboththeamountandtimingof future cashflowsare when portfolio the in those to similar scheduling itsfuture cashflows. impairment of evidence objective and characteristics risk credit with with correlate that conditions defaults onassetsinthegroup. Managementusesestimatesbasedonhistoricalloss experienceforassets economic local or national or group, in a in change borrowers adverse of an status been has payment there the that indicating data observable include may evidence This portfolio. cash flowsfrom aportfolioofloansbefore thedecrease canbeidentifiedwithanindividualloaninthat to as judgements makes Group the whether there isanyobservabledataindicatingthatthere isameasurabledecrease intheestimatedfuture loss, or profit the in recorded be should loss impairment an whether The Group reviews itsloanandreceivables toassessimpairmentatleastonaquarterlybasis.Indetermining 4.2

sources ofestimation uncertainty C Impairment losses on loans and receivables receivables and loans on losses Impairment Non-derivative financialliabilities Investment property Biological assets Property, plantandequipment Derivatives Determination offairvalues L A C I T I R

O C C A u G N I T N d u j E G m S T N E

N A k d e y

65 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES 66 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES In millionsofKwacha for theyearended31December2010 NOTES TOTHEFINANCIALSTATEMENTs e) d) c) b) a) Key assumptionsused: 4.2 . 4 • following guidelinesonthemanagementofliquidityasat reporting date: As acomplementtoSection27oftheBankingAct,2009, theReserveBankofMalawihadissued 5.3 bearing assetsandcontingentliabilities. contingent liabilities.AttheendofyearBank’s availablecapitalwas22.3%(2009:21.8%)ofitsrisk The Bank’s availablecapitalisrequired tobeaminimumof10%(2009:10%)itsriskbearingassetsand 5.2 liquidity reserve wasequivalent to31.7%(2009:15.5%)oftotalcustomerdeposits. Malawi of Bank Reserve the equivalent tonotlessthan15.5%(2009:15.5%)oftotalcustomerdeposits.Attheendyear,with the reserve liquidity a maintain to required is business banking Group’s The 5.1 following requirements asatthereporting daterelated totheGroup’s bankingbusiness: In accordance withSection 27oftheBankingAct,2009,ReserveBankMalawihasestablished 5. deferred incometaxassets andliabilitiesintheperiodwhichsuchdeterminationismade. matters isdifferent from theamountsthatwere initiallyrecorded, suchdifferences willimpact thecurrent and audit tax anticipated for liabilities issues basedonestimatesofwhetheradditionaltaxeswillbedue.Where thefinaltaxoutcomeofthese recognises Group The uncertain. is determination tax ultimate the which in required is judgement determining theworldwideprovision forincometaxes.There are manytransactions andcalculationsfor Significant jurisdictions. numerous in taxes income to subject is Group The 4.3 32% (2009:35%). At theendofyear, theBank’s liquidityratioIwas 31%(2009:35%)andliquidityratioIIwas •

(continued) k C Statutor year inwhichtheyare expected. Cash flowsarisingfrom securityrealisation havebeen assumedtoariseattheendofcalendar repayments are erraticorunpredictable; and No cashflowsare assumedtoarisewhere there isnorepayment agreement andnosecurity Unsupported guaranteesare assumedtoresult innil cashflows; doubtful totalfuture estimatedcashflowsare assumed tobenil; Where there isanagreement butnosecurityinplaceandcashflowsthesubsequentyearsare period; the of end the at arise to assumed Cash flowsarisingfrom repayment agreement are aggregated overyearlyintervalsof12monthsand Impairment lossesonloansandreceivables(continued) Liquidity Prudential aspectsofbankliquidity Capital adequacyrequirementasperSection15(2)oftheBanking Act, 2009 Liquidity reserve requirement Income taxes and chequesinthecourseofcollection)dividedbytotaldeposits mustbeatleast20%. Netliquidity(totalliquidassetslesssuspenseaccountsinforeign currency Liquidity RatioII- divided bytotaldepositsmustbeatleast30%. e L A C I T I R y

Ratio O S

u I

- S E C R

O C C A y requirements

Net

liquidity

F O u

(total G N I T N

I T S E

liquid

m asset d u j TION O I AT

less

E G suspense u m S T N E AINT N I TA R E C N

accounts

in N A

foreign d

currency) y

• • capital minimum The follows: assets. as are ratios risk-weighted total to capital total of ratio prescribed a banking Group’s maintain the to requires business Malawi of Bank Reserve The requirements, capital current implementing In Malawi, whichifnotmaintainedwillusuallypermitorrequire supervisoryintervention. a whole.Regulatorycapitalrequirement istheminimum amountofcapitalrequired bytheReserveBankof The ReserveBankofMalawisetsandmonitorscapitalrequirements fortheGroup’s bankingbusinessas 5.4 In millionsofKwacha for theyearended31December2010 NOTES TOTHEFINANCIALSTATEMENTS • • The Group’s regulatory capitalisanalysedintotwotiers: There havebeennomaterialchangesintheGroup’s managementofcapitalduringtheperiod. capital imposed externally requirementsall throughout theperiod.TheGroup alsocompliedwiththeserequirements inprioryears. with complied have operations regulated individually and Group The a secondcapitalposition. the higherreturnsthatmightbepossiblewithgreater gearingandtheadvantagessecurityafforded by on capital of level the of impact The shareholders’ returnisalso recognised andtheGroup recognises theneedtomaintainabalancebetween business. the of development future sustain to and confidence market capital. TheGroup’s policyistomaintainastrong capitalbasesoastomaintaininvestor, creditor and The Board ofDirectors isresponsible forestablishingandmaintainingatalltimes anadequatelevelof assets andoff-statement of financialpositionexposures. determined according tospecified requirements thatseektoreflect thevaryinglevelsofriskattachedto Banking operationsare categorised aseithertradingbookorbankingandrisk-weightedassetsare A assets plusrisk-weightedoff-statement offinancialpositionitems. 1)ofnotlessthan6%totalrisk-weightedonstatementfinancialposition A core capital(Tier Regulatory capital Total investment infinancialcompanies. of after-tax profits inthecurrent year(orless100%ofcurrent yearloss),lessanyunconsolidated 1)whichconsistsofordinaryCore share capital(Tier capital,share premium, retained profits, 60% assets plusrisk-weightedoff-statement offinancialpositionitems. not exceedcore capitali.e. shallbelimitedto100%oftotalcore capital. provisions havereceived priorapproval oftheReserveBankMalawi.Supplementary capitalmust

total

capital

capital

(Tier

(Tier

2),

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of

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of

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67 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES 68 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES In millionsofKwacha for theyearended31December2010 NOTES TOTHEFINANCIALSTATEMENTs Total 1capitalexpressed asapercentage Tier ofrisk-weightedassets Total regulatory capitalexpressed asapercentage oftotalrisk-weightedassets Capital ratios Total risk-weightedassets Retail bank,corporatebankandtreasury Risk-weighted assets Total regulatory capital Revaluation reserve Loan lossreserve Tier 2capital Unconsolidated investments Retained earnings Share premium Ordinary share capital Tier 1capital The Group’s bankingbusinessregulatory capitalpositionat31Decemberwasasfollows: 5.4 5. and report regularly totheBoard of Directors ontheiractivities. Group risk management policiesintheirspecified areas. AllBoard Committeeshavenon-executive members Liability (ALCO),Credit andSecurityCommittees,which are allresponsible fordevelopingandmonitoring Appointments andRemuneration Committee,inadditiontoManagementCommitteessuch astheAssetand risk delegates Board The related responsibilities tothree Board Committees,theCreditparameters. Committee,theAuditCommitteeand agreed the within managed are risks these that internal ensure of to system controls appropriate an maintains management that requires and strategy Group’s the to risk Group’s the of oversight and management framework.TheBoard developstheriskappetiteandtolerancelimits appropriate establishment the for responsibility overall has Directors of Board The units. business approach balancesstringentcorporateoversightwithindependentriskmanagementstructures withinthe both onindividualresponsibility andcollectiveoversight,supportedbycomprehensive reporting. This The Group’s approach process toriskmanagementisbasedonawell-establishedgovernance andrelies Risk managementframework capital. of management Group’s objectives, policiesandprocesses foridentification,measurement, monitoringandcontrolling risk,andthe This notepresents information abouttheGroup’s exposure toeachoftheaboverisks,Group’s Operationalrisk. Marketrisk;and • Liquidityrisk; • Credit risk; • • The Group hasexposure tothefollowingrisksfrom itstransactionsinfinancial instruments: Overview 6. Statutor Financial riskmanageent Regulatory capital(continued) y requirements(continued)

18.30% 22.30% 53,536 53,536 11,953 8,984 1,684 9,807 2010 (241) 462 597 467 17.50% 21.80% 10,240 45,584 45,584 7,344 1,654 8,211 2009 (162) 375 563 466 of whichare reported totheAuditCommittee. Division Compliance and Risk the by which undertakesbothregular andad-hocreviews of riskmanagementcontrols andprocedures, theresultsfunctions these in assisted is risks Committee the Audit to The relation Group. in the by framework faced management risk the of adequacy the reviewing policies for and management risk procedures, Group’s and the with compliance monitoring for responsible is Committee Audit The employees understandtheirroles andobligations. offered. TheGroup strivestomaintainadisciplinedandconstructivecontrol environment, inwhichall policies andsystemsare reviewed regularly toreflect changesinmarketconditions,products andservices to setappropriate risklimitsandcontrols, andtomonitor risksandadherence tolimits.Riskmanagement The Group’s riskmanagementpoliciesare establishedtoidentifyandanalysetherisksfacedbyGroup, In millionsofKwacha for theyearended31December2010 NOTES TOTHEFINANCIALSTATEMENTS of investments. investments. of The Group establishesanallowanceforimpairmentthatrepresents itsestimateofincurred lossesinrespect obligations. a trackrecord ofprofitable businessmanagementdoesnotexpectanycounterpartytofailmeetits that haveagoodcredit ratingandventures intoprofitable businesses.Giventhesehighcredit ratings, The Group limitsitsexposure tocredit riskbyonlyinvestinginliquidsecuritiesandwithcounterparties ii) determined basedonhistoricaldataofpaymentstatistics for similarfinancialassets. assets inrespect oflossesthathavebeenincurred butnotyetidentified.Thecollectivelossallowanceis that component loss specific a are relates toindividuallysignificantexposures, andacollectivelosscomponentestablishedforgroups ofsimilar allowance this of components main The receivables. other and trade of The Group establishesan allowance forimpairmentthatrepresents itsestimate ofincurred lossesinrespect The Group doesnotrequire collateralinrespect ofcredit sales. prepayment orcashbasis. that are gradedas“highrisk” are placedonarestricted customerlist,andfuture salesare madeona end-user customer, industry, agingprofile, maturity andexistenceofprevious financialdifficulties. Customers credit their to according characteristics, includingwhethertheyare anindividualorlegalentity,grouped are whethertheyare awholesale,retail or customers risk, credit customer monitoring In infrequently. occurred Most oftheGroup’s customershavebeentransactingwiththeGroup forovermanyyears,andlosseshave Group’s benchmarkcreditworthiness maytransactwiththeGroup onlyonaprepayment orcashbasis. approval requiring without from thecredit control department;theselimitsare reviewedamount regularly. open Customersthatfailtomeetthe maximum the represents which customer, each for established are Group’s reviewratings,whenavailable,andinsomecasesbankreferences. includesexternal Purchase limits creditworthiness before theGroup’s standard paymentanddeliverytermsconditions are offered. The The Group hasestablished acredit policyunderwhicheachnewcustomerisanalysedindividuallyfor However, geographically there isnoconcentrationofcredit risk. The Group’s exposure tocredit riskisinfluencedmainlybytheindividualcharacteristicsofeachcustomer. i) loans customers, from receivables Group’s and advances,investmentsecuritiescashequivalents. the from principally arises and obligations, contractual its meet to Credit riskistheoffinanciallosstoGroup ifa customerorcounterpartytoafinancialinstrumentfails 6.1 Investments Trade andotherreceivables Credit risk

69 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES 70 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES Total credit exposure Total unrecognised financialinstruments Loan commitmentsandothercredit facilities Gurarantees and performance bonds performance and Gurarantees Total recognised financialinstruments Cash and cash equivalents cash and Cash Loans and advances to customers to advances and Loans Trade and other receivables other Trade and assets financial Available-for-sale Group - receivable loans term Long Gross maximumexposure In millionsofKwacha for theyearended31December2010 NOTES TOTHEFINANCIALSTATEMENTs The Group’s policyisnottoprovide financialguaranteestoanyofitssubsidiaries. v) counterparties are institutions withhighcredit ratings. The credit risksonbalances withbanks,treasury billsandlocalregistered stocksare limitedbecausethe banks inandoutsideMalawi. The Group’s bankingbusinessdepositsitscashwiththeReserveBankofMalawiandotherhighlyreputable iv) in recognised not is asset underlying the Bank’sthe and financialstatements. advance, or loan a as for accounted is arrangement the repo”), an into enters agreement toresell theasset(orasubstantiallysimilar asset)atafixedpriceonfuture date(“reverse simultaneously and asset financial a purchases business banking Group’s the When within presented is arrangement the loans andadvances. lessee, the to asset an of ownership to incidental rewards and risks When theGroup’s bankingbusinessisthelessorinaleaseagreement thattransferssubstantiallyallofthe in or immediately sell to intend the nearterm. not does business banking Group’s the that and market active an in quoted Loans andadvancesare non-derivativefinancialassetswithfixedordeterminablepaymentsthatare not iii) 6.1 6. collateral and netting master of agreements. use the through mitigation of effect the before gross, shown is exposure The tablebelowshowsthemaximumexposure tocredit riskbyclassoffinancialinstrument.Themaximum Maximum exposure tocredit riskwithouttakingintoaccountanycollateralorothercredit enhancements. 6.1 a)

Financial riskmanageent(continued) Guarantees Guarantees Cash andcashequivalents Loans andadvances Credit risk(continued) Exposure ofcreditrisk

96,346 11,869 84,477 39,577 19,492 16,589 7,607 8,819 4,262 2010 -

Group 88,117 11,453 11,453 76,664 11,095 11,095 35,738 35,738 12,971 12,971 16,860 7,992 3,461 3,461 2009 - -

53,982 53,982 53,299 2010 106 176 401 - - - -

Company 49,437 49,437 49,437 49,437 48,185 48,185 2009 502 502 349 349 401 401 - - - - irrecoverable amountswhenthere isobjectiveevidencethattheassetimpaired. of provisions forimpairmentasshownabove.Thespecificprovision represents allowancesforestimated facilities extendedtoitscustomers.Theamountspresented inthestatementoffinancial positionare net The Group’s credit riskisprimarilyattributedtocredit salesmadetocustomers,overdraft andotherloan equivalents cash and Cash Trade and other receivables other Trade and Available-for-sale financial assets financial Available-for-sale Long term loans receivable - group - receivable loans term Long At 31December2009 equivalents cash and Cash Trade andother receivables Available-for-sale financialassets group - receivable loans term Long At 31December2010 COMPANY equivalents cash and Cash customers to advances and Loans Trade and other receivables other Trade and Available-for-sale financialassets At 31December2009 Cash andcashequivalents credit riskrelating totherespective financialassetsismitigatedasfollows: offset againsttherespective financialliabilitiesfor reporting purposes.However, the exposure to financial assetsandsettlingtheliabilitiessimultaneously. Consequently, thefinancialassetsare not financial with them offset to rights liabilities. However, innormalcircumstances, thereenforceable wouldbenointentionofsettlingnet,orrealising the legally has Group the assets, financial certain of respect In b) 6.1 In millionsofKwacha for theyearended31December2010 NOTES TOTHEFINANCIALSTATEMENTS Loans andadvancestocustomers Trade andotherreceivables Available-for-sale financialassets At 31December2010 GROUP  Net exposure to credit risk without taking into account any collateral or other credit credit other or collateral any account into enhancements taking without risk credit to exposure Net

Carrying amount 49,437 49,437 48,185 48,185 53,982 53,982 53,299 76,664 11,095 11,095 12,971 35,738 35,738 16,860 84,477 84,477 39,577 19,492 16,589 8,819 502 502 106 106 349 349 401 401 176 401 401

Offset ------

credit risk exposure 49,437 49,437 48,185 48,185 53,854 53,854 53,171 76,664 11,095 11,095 35,738 12,971 16,860 84,477 84,477 39,577 19,492 16,589 8,819 502 502 106 106 349 349 401 401 176 401 401 Net to

71 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES 72 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES In millionsofKwacha for theyearended31December2010 NOTES TOTHEFINANCIALSTATEMENTs borrower/issuer can no longer pay the obligation, or that proceeds from collateral will not be sufficient sufficient be exposure. not entire will the back collateral pay to from proceeds that or obligation, the pay longer no can borrower/issuer information considering after such astheoccurrencereached ofsignificantchangesintheborrower/issuer’s is financialpositionsuch thatthe determination This uncollectible. are loans the that determined The Group writesoff aloanbalance(andanyrelated allowancesforimpairmentlosses)whenitis Write –off policy exposures. significant individual to relates losses initsloanportfolio.Themaincomponentsofthisallowance are aspecificloss componentthat The Group establishesanallowanceforimpairmentlossesthatrepresents itsestimateofincurred Allowance forimpairment and/or thestageofcollectionamountsowedtoGroup. Group believesthatimpairment isnotappropriate onthebasisoflevelsecurity/collateralavailable These are loansandadvances where contractualinterest ofprincipalpayments are pastduebutthe Past duebutnotimpaired loans /advances agreement(s). These loansare graded8to9intheGroup’s credit internal riskgradingsystem. that itwillbeunabletocollectallprincipalandinterest dueaccording tothecontractualtermsofloan Impaired loansandadvances are loansandadvancesforwhichtheGroup determines thatitisprobable Impaired loansandadvances Past duecomprises: Total carryingamount Neither pastduenorimpaired Past duebutnotimpaired Carrying amount Individually impaired Loans andadvances GROUP below showsthecredit qualityoftheloansandadvances,basedonGroup’s credit ratingsystem. The credit qualityofloansandadvancesismanagedbytheGroupcredit usinginternal rating.Thetable 6.1 c) 6.1 6. Financial riskmanageent(continued) 30 –60days Grade 4-6Fairrisk Grade 1-3Lowrisk Grade 7:Watch list Allowance forimpairment Gross amount Grade 9:Impaired Grade 8:Impaired Credit qualityofloansandadvances Credit risk(continued) 25,493 39,577 13,746 2010 (599) 483 335 934 451 3 3

18,930

35,738 16,696 2009

(461) 111 572 385 187

1 1

impaired assetsbyriskgrade. Set outbelowisananalysisofthegross andnet(ofallowancesforimpairment)amountsofindividually In millionsofKwacha for theyearended31December2010 NOTES TOTHEFINANCIALSTATEMENTS for itsbusiness. reduce orrepay theoutstandingloanbalance.IngeneralGroup doesnotoccupyrepossessed properties to used are proceeds The fashion. orderly an in properties repossessed of dispose to Group’s the policy is It Collateral repossessed Bank guarantees guarantees Government Equities Cash Residential property Commercial property Motor vehicles Against individuallyimpaired GROUP below: shown An estimateofthefairvaluecollateralandothersecurityenhancementsheldagainstfinancialassetsis securities and repurchase activity. reverse of lending part as held are securities when except banks, to advances and loans are notupdatedexceptwhen aloanisindividuallyassessedasimpaired. Collateralgenerallyisnotheldover Estimates offairvalueare basedonthevalueofcollateralassessedattimeborrowing, andgenerally over property, cash,equities,registered securitiesoverassets,guaranteesandotherformsofcollateral. The Group holdscollateral againstloansandadvancestocustomersintheformofmortgageinterests Total Grade 9:Individuallyimpaired Grade 8:Individuallyimpaired 31 December2009 Total Grade 9:Individuallyimpaired Grade 8:Individuallyimpaired 31 December2010 GROUP Total

Gross Loans andadvancestocustomers 483 572 385 187 934 451

Allowance for Impairment 12,963 34,832 3,208 7,318 6,016 4,758 2010 (258) (136) (499) (461) (325) (241) 513 56

11,463 11,463 30,493 2009 2,861 3,124 7,358 4,975 225 111 435 210 473 239 Net 51 60

73 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES 74 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES In millionsofKwacha for theyearended31December2010 NOTES TOTHEFINANCIALSTATEMENTs Manufacturing agreements provide forthenetsettlementofcontractswithsamecounterpartyineventdefault. master nettingagreements wherever possible,andwhenappropriate, obtains collateral.Masternetting To managethelevelofcredit risk,theGroup dealswithcounterpartiesofgoodcredit standing,entersinto Credit qualityofotherfinancial assets fair valueandthevolatilityoftradinginstruments. going basis.Inmonitoringcredit riskexposure, considerationisgiventotradinginstrumentswithapositive The riskthatcounterpartiestotradinginstrumentsmightdefaultontheirobligationsismonitored onanon- Credit qualityofinvestment securities Personal Other Finance andInsurance Wholesale andretail Agriculture Concentration bysectorpercentage

Wholesale andRetail Personal Finance andInsurance Agriculture Concentration bysector Other Manufacturing of credit riskatthereporting dateisshownbelow: concentrations of analysis sector. An by risk credit of concentrations business banking its monitors Group The 6.1 c) 6.1 6. Financial riskmanageent(continued) Credit qualityofloansandadvances(continued) Credit risk(continued) 39,577 10,244 19,782 3,349 2,922 3,248 Loans and advances advances and Loans 2010 50.0 25.9 100 8.1 0.1 8.5 7.4 32 % to customers 35,738 18,545 1,468 4,679 7,280 1,603 2,163 2009 51.9 13.1 20.4 100 6.1 4.1 4.4 % Minimum fortheperiod Maximum fortheperiod Average oftheperiod At 31December date andduringthereporting periodwere asfollows: of thereported Group bankingbusinessratioofnetliquidassetstodepositsfrom customersatthereporting to measure theGroup’s compliance withtheliquiditylimitestablishedbyReserveBankofMalawi.Details borrowings andcommitments maturingwithinthenextmonth.Asimilar, butnotidentical,calculationisused and investmentsecuritiesforwhichthere isanactiveandliquidmarketlessanydepositsfrom banks,other from customers.Forthispurpose netliquidassetsare considered asincluding cashandequivalents The keymeasure usedby theGroup formanagingliquidityriskistheratioofnetliquidassetstodeposits ii) remedial and exceptions any action taken,issubmittedregularly toALCO. including report, summary A units. operating and Group the both of position subject toreview andapproval byAssetandLiabilityCommittee(ALCO).Dailyreports covertheliquidity scenarios coveringbothnormalandmore severe marketconditions.Allliquiditypoliciesandprocedures are The dailyliquiditypositionismonitored andregular liquiditystress testingisconducted underavarietyof TFID monitorscomplianceofalloperatingunitstheGroup withlocalregulatory limitsonadailybasis. such asinter-bank facilities,repurchase agreements andothers. funded through depositsfrom customers.Anyshort-term fluctuationsare fundedthrough treasury activities sufficient liquidityismaintainedwithintheGroup asa whole.Theliquidityrequirements ofbusinessunitsare liquid investmentsecurities,loansandadvancestobanksotherinter-bank facilities,toensure that future business.TFIDthenmaintainsaportfolioofshort-termliquidassets,largelymadeup profile oftheirfinancialassetsandliabilitiesdetailsotherprojected cashflowsarisingfrom projected Division (TFID)atHeadOffice. TFIDreceives information from otherbusinessunitsregarding theliquidity The dailymanagementofliquiditytheGroup’s bankingbusinessisentrustedwithandFinancialInstitutions incurring without conditions, stressed and unacceptable lossesorriskingdamagetotheGroup’s normal reputation. both under due, when liabilities its meet to cash sufficient The Group’s approach tomanagingliquidityisensure, asfarpossible,thatitwillalwayshave i) financial assets. financial its from obligations meeting in liabilities astheyfalldue.Liquidityriskarisesfrom financialliabilitiesthatare settledwithcashorother difficulty encounter will Group the that risk the is risk Liquidity 6.2 In millionsofKwacha for theyearended31December2010 NOTES TOTHEFINANCIALSTATEMENTS Exposure toliquidityrisk Management ofliquidityrisk Liquidity risk 2010 27% 36% 32% 31% 2009 34% 53% 41% 34%

75 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES 76 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES In millionsofKwacha for theyearended31December2010 NOTES TOTHEFINANCIALSTATEMENTs excluding theimpactofnettingagreements:- The followingare thecontractualmaturitiesoffinancialliabilities,includingestimatedinterest paymentsand 6.2 6. South African Rand. Rand. African South currency otherthanthefunctionalcurrencies ofGroup entities,primarilyU.S.Dollars(USD),Euro and The Group isexposedtocurrency riskonsales,purchases andborrowings thatare denominatedina 6.3 a) within acceptableparameters,whileoptimisingthereturn on risk. instruments. Theobjectiveofmarketriskmanagementisto manageandcontrol market riskexposures equity andcommoditypriceswillaffect theGroup’s future cashflowsorthevalueofitsholdingsfinancial Market riskisthethatchangesinmarketprices,such asforeign exchangerates, interest ratesand 6.3

Bank overdraft At 31December2010 GROUP Loans andborrowings Liabilities tocustomers Trade andotherpayables Total financialliabilities Bank overdraft Bank At 31December2009 Loans and borrowings and Loans Liabilities tocustomers Liabilities to other banks other to Liabilities Trade andother payables Total financialliabilities Bank overdraft At 31December2010 COMPANY Loans andborrowings Trade and other payables other Trade and Total financial liabilities Totalfinancial Bank overdraft Bank At 31December2009 Loans and borrowings and Loans Trade andother payables Total financialliabilities Financial riskmanageent(continued) Liquidity risk(continued) Currency risk Market risk

1 month 41,317 49,881 45,621 51,547 6,019 3,551 2,545 2,117 2,117 Less 188 188 213 213 220 275 than 258 258 25 55 55 ------

months 13,985 18,748 4,035 6,372 6,909 537 728 1-3 4 4 - - - - 4 ------

months 12,115 15,509 10,871 12,602 1,621 1,773 1,638 1,638 3-12 522 522 522 502 502 502 93 ------

1 year 4,609 4,609 5,675 5,675 1,474 7,149 1,392 1,392 1,392 Over 898 898 898 ------

22,169 57,075 88,747 52,086 16,433 78,207 2,545 6,958 2,117 2,117 7,313 7,313 1,424 1,637 1,637 1,894 1,894 2,169 Total 188 188 220 258 258 25 55 55

Carrying 22,169 amount 57,075 88,747 52,086 16,433 78,207 2,545 6,958 2,117 2,117 7,313 7,313 1,424 1,637 1,637 1,894 1,894 2,169 188 188 220 258 258 25 55 55

The Group hadthefollowingsignificantforeign currency positions: long-term innature. The Group’s investmentsinsubsidiariesare nothedgedasthosecurrency positionsare considered tobe when rates spot at currencies foreign necessary toaddress short-termimbalances. selling or buying by level acceptable an to kept is exposure net its In respect ofothermonetaryassetsandliabilitiesdenominatedinforeign currencies, theGroup ensures that In millionsofKwacha for theyearended31December2010 NOTES TOTHEFINANCIALSTATEMENTS

Available-for-sale financialassets Financial assets At 31December2010 GROUP Cash andcashequivalents Loans andadvancestocustomers Trade andotherreceivables Total financialassets Bank overdraft Financial liabilities Loans andborrowings Liabilities tocustomers Trade and other payables other Trade and Total financialliabilities Net balanceopenposition Available-for-sale financial assets financial Available-for-sale Financial assets At 31December2009 GROUP Cash and cash equivalents cash and Cash Loans and advances to customers customers to advances and Loans Trade andother receivables Total financialassets Bank overdraft Bank Financial liabilities Loans and borrowings and Loans Liabilities tocustomers Liabilities to other banks banks other to Liabilities Trade andotherpayables Total financialliabilities Net balanceopenposition

18,409 75,536 11,840 13,274 35,077 50,028 13,313 68,323 16,860 30,744 30,744 12,755 68,921 45,525 62,381 7,313 8,776 2,545 2,437 8,562 8,562 2,117 2,117 2,698 2,698 6,540 K’m 201 201 MK

(10,673) 17,930 11,458 8,292 8,292 (5,264) 2,024 4,500 7,257 3,917 5,721 1,036 1,036 4,994 4,994 6,194 2,547 2,547 4,939 3,941 USD 712 164 K’m 21 31 - - - - -

GBP K’m 479 480 512 558 364 364 385 331 402 46 46 21 62 (78) (17) - 1 9 ------

EURO 1,074 1,199 337 337 270 (346) (272) K’m 674 728 737 914 914 927 912 54 13 17 17 ------

(1,533) 1,492 1,492 1,672 136 ZAR K’m 186 213 126 130 130 139 53 53 87 10 17 34 44 9 ------

OTHER 1,095 184 (512) (997) K’m 128 131 263 604 128 128 775 576 576 335 43 89 89 98 9 4 ------

16,589 39,577 19,492 84,477 57,075 22,169 22,169 88,747 16,860 16,860 11,095 11,095 35,738 35,738 12,971 76,664 52,086 16,433 78,207 TOTAL (4,270) (1,543) 8,819 2,545 6,958 2,117 2,117 7,313 7,313 K’m 258 258

77 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES 78 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES Other currencies South AfricanRand Euro Great BritishPound United StatesDollar as follows,mainlyaresult offoreign exchangegains/losses: trading major its against 5% by currencies, withallothervariablesheldconstant,post-taxprofit fortheyearwouldhavebeenhigher/lower weakened/strengthened had Kwacha Malawi the if date, reporting the At sensitivity currency Foreign

Net balanceopenposition Total financialliabilities Trade andother payables Loans and borrowings and Loans Bank overdraft Bank Financial liabilities Total financial assets Totalfinancial Trade andother receivables Cash and cash equivalents cash and Cash Available-for-sale financial assets financial Available-for-sale Long term loans receivable - Group - receivable loans term Long At 31December2009 Net balanceopenposition Total financialliabilities Trade andotherpayables Loans andborrowings Bank overdraft Bank Financial liabilities Total financialassets Trade andotherreceivables Cash andcashequivalents Available-for-sale financialassets Long term loans receivable - Group - receivable loans term Long Financial assets At 31December2010 COMPANY

In millionsofKwacha for theyearended31December2010 NOTES TOTHEFINANCIALSTATEMENTs 6.3 a) 6.3 6. Financial riskmanageent(continued) Currency risk(continued) Market risk(continued)

48,660 49,437 49,437 48,185 48,185 53,486 53,967 53,299 349 161 K’m 777 220 502 502 502 401 401 481 188 268 106 401 401 MK 55 55 25 25

(1,156) 1,156 1,156 USD K’m ------7,098 ------2010

340 230 84 52 GBP K’m Group ------

EURO 1,019 3,501 2009 K’m 663 181 11 ------

(1,392) 1,392 1,392 ZAR K’m 15 15 15 ------2010

769 OTHER 10 - - - Company K’m ------

47,268 49,437 49,437 48,185 48,185 52,345 53,967 53,299 TOTAL 2,169 1,894 1,894 1,637 1,424 2009 220 349 188 176 K’m 926 502 502 401 401 106 401 401 55 55 25 25 - - - - Group’s maturityprofile gappositiononnon-tradingportfolioisasfollows: The Group doesnotbearaninterest rateriskonoff statementoffinancialpositionitems.Asummarythe Exposure ofinterest raterisk-non-tradingportfolio rates onborrowings isonafixedratebasis. The Group adoptsapolicyofensuringthatbetween40and60percent ofitsexposure tochangesininterest 6.3 b) In millionsofKwacha for theyearended31December2010 NOTES TOTHEFINANCIALSTATEMENTS

Available-for-sale financialassets Financial assets At 31December2010 GROUP Cash andcashequivalents Loans andadvancestocustomers Trade andother receivables Total financialassets Bank overdraft Financial liabilities Loans andborrowings Liabilities tocustomers Trade and other payables other Trade and Total financialliabilities Interest sensitivitygap Available-for-sale financialassets Financial assets At 31December2009 Cash andcashequivalents Loans and advances to customers customers to advances and Loans Trade and other receivables other Trade and Total financialassets Bank overdraft Bank Financial liabilities Loans and borrowings and Loans Liabilities tocustomers Liabilities to other banks other to Liabilities Trade andotherpayables Total financialliabilities Interest sensitivitygap Interest raterisk

1 month (23,469) (41,769) 19,496 42,965 46,360 40,420 43,985 9,952 4,591 3,676 5,272 2,545 1,088 3,056 3,056 2,117 2,117 Less than 596 447 447 258 258 ------

(13,294) months 16,334 13,985 3,040 6,438 6,372 2,545 2,349 4,727 1,174 1,174 6,372 537 537 495 1-3 66 ------

months 17,654 12,465 26,542 24,811 14,710 21,454 21,454 5,189 1,731 2,944 3,913 1,276 4,095 1,638 1,638 3-12 993 993 93 ------

13,748 14,941 13,848 14,505 12,663 12,663 1 year 1,193 5,675 8,173 1,185 5,675 5,675 Over 436 696 497 ------

sensitive interest 29,346 23,066 25,245 16,433 12,118 22,169 16,860 16,433 9,540 8,385 8,385 6,280 8,812 5,143 2,545 Non 897 ------

88,747 22,169 22,169 84,477 76,664 76,571 16,589 39,577 19,492 57,075 16,860 11,095 35,738 35,738 12,971 12,971 50,450 16,433 (4,270) 8,819 2,545 6,958 2,117 2,117 7,313 7,313 Total 258 258 93

Carrying 88,747 amount 84,477 76,664 76,571 16,589 39,577 19,492 57,075 22,169 22,169 16,860 11,095 35,738 35,738 12,971 12,971 50,450 16,433 (4,270) 8,819 2,545 6,958 2,117 2,117 7,313 7,313 258 258 93

79 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES 80 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES In millionsofKwacha for theyearended31December2010 NOTES TOTHEFINANCIALSTATEMENTs Exposure ofinterest raterisk-non-tradingportfolio (Continued) 6.3 b) 6.3 6.

Long term loans receivable - Group - receivable loans term Long Financial assets At 31December2010 COMPANY Available-for-sale financialassets Cash andcashequivalents Trade andotherreceivables Total financialassets Bank overdraft Bank Financial liabilities Loans and borrowings and Loans Trade andother payables Total financialliabilities Interest sensitivitygap Group - receivable loans term Long Financial assets At 31December2009 Available-for-sale financial assets financial Available-for-sale Cash and cash equivalents cash and Cash Trade and other receivables other Trade and Total financialassets Bank overdraft Financial liabilities Loans and borrowings and Loans Trade and other payables other Trade and Total financialliabilities

Interest sensitivitygap Financial riskmanageent(continued) Interest raterisk(continued) Market risk(continued)

1 month Less than 106 106 106 25 81 (55) 55 55 55 25 ------

months 268 (268) 495 268 495 495 495 1-3 ------

months (1,156) 1,156 1,156 3-12 (502) 502 502 502 ------

1 year 1,392 1,392 1,392 Over (991) 401 401 401 401 401 401 401 ------

sensitive interest 53,565 48,541 53,299 53,287 48,185 48,185 48,321 176 188 349 349 Non 188 220 220 220 7 7 ------

53,982 53,982 49,437 53,299 52,345 48,185 48,185 47,268 1,637 2,169 1,424 1,424 1,894 1,894 Total 176 188 349 349 220 220 401 401 106 401 401 502 502 55 55 25 25

Carrying amount 53,982 53,982 49,437 53,299 52,345 48,185 48,185 47,268 1,637 2,169 1,424 1,424 1,894 1,894 176 188 349 349 220 220 401 401 106 401 401 502 502 25 25 55 55 Investment in Telecom Networks Malawi Malawi Telecom in Networks Investment

Investment inNationalBankofMalawi Financial asset constant, theCompany’s post-taxprofit fortheyearwouldhavebeenhigher/lowerasfollows: At 31December2010,iftheshare pricehadweakened/strengthened by5%withallothervariablesheld

Investment inTelecom NetworksMalawi Investment inNationalBankofMalawi Financial asset As at31December2010,theCompanyhadfollowingsfinancialassetsthatexposedittopricerisk. Equity priceriskarisesfrom available-for-sale equitysecuritieslistedontheMalawiStockExchange. 6.3 c) In millionsofKwacha for theyearended31December2010 NOTES TOTHEFINANCIALSTATEMENTS audit. The results of Internal Audit reviews are discussed with the management of the business unit to which which to unit business the of management they relate, withsummariessubmittedtotheAuditCommittee andseniormanagementoftheGroup. the with discussed are reviews Audit internal by Internal of results undertaken The reviews audit. periodic of programme a by supported is standards Group with Compliance Safeguarding assetsagainstlossordamage. Riskmitigation,includinginsurancewhere thisiseffective; and • Ethicalandbusinessstandards; • Prevention ofbusinessdisruptionandsystemfailures anddevelopmentofcontingencyplans; • Requirements forthereporting ofoperationallossesandproposed remedial action; • • Documentationofcontrols andprocedures; • Compliancewithregulatory andotherlegalrequirements; • Requirements forthereconciliation andmonitoringoftransactions; • • • the followingareas: Audit CommitteebythedevelopmentofoverallGroup standards forthemanagementofoperationalriskin assigned toseniormanagementwithineachbusinessunit.Thisresponsibility issupportedbytheGroup’s The primaryresponsibility for thedevelopmentandimplementationofcontrols toaddress operationalriskis initiative andcreativity. damage totheGroup’s reputation withoverallcosteffectiveness andavoidcontrol procedures thatrestrict The Group’s objectivesistomanageoperationalrisksoasbalancetheavoidanceoffinanciallossesand Operational risksarisefrom alloftheGroup’s operationsandare facedbyallbusinessentities. arising from legalandregulatory requirements andgenerallyacceptedstandards ofcorporatebehaviour. with associated causes of variety wide a the Group’s from processes, personnel, technologyandinfrastructure, marketandliquidityriskssuchasthose arising loss indirect or direct of risk the is risk Operational 6.4

Operational risk risk Operational Other market pricerisk and procedures toaddress therisksidentified; Requirements fortheperiodicassessmentofoperationalrisksfaced,andadequacy ofcontrols transactions; Requirements forappropriate segregation ofduties,includingtheindependent authorisationof

Note 14 14

19,772 19,772 14,102 5,670 1,573 1,573 2010 2010 615 615 958

20,411 20,411 13,931 6,480 1,475 1,475 2009 2009 562 562

913

81 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES 82 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES In millionsofKwacha for theyearended31December2010 NOTES TOTHEFINANCIALSTATEMENTs legislation laundering and ReserveBankofMalawiregulations anddirectives. anti-money country’s the to adheres and procedures including and policies policies Customer laundering Your Know anti-money adopted has Group The areas. both in imposed being requirements management) are managedwithinthecompliancefunctionandthere are increasingly onerous legislative Money launderingcontrol andoccupationalhealthsafety(includingaspectsofenvironment risk compliance risk. regimes, andtheExecutivemanagementremains responsible foroverseeingthemanagementofGroup’s Chief ExecutiveandtheChairmanofBoard. TheGroup issubjecttoextensivesupervisoryandregulatory Compliance isanindependentcore riskmanagementactivity, whichalsohasunrestricted accesstothe 6.5 6. liabilities, andtheirfairvalues: The tablebelowsetsouttheGroup’s andcompany’s classificationofeachclassfinancialassetsand Accounting classificationsandfairvalues 6.6

Cash and cash equivalents cash and Cash Financial assets At 31December2010 GROUP Trade and other receivables other Trade and Other investments Other Loans andadvancestocustomers

Bank overdraft Bank Financial liabilities Loans and borrowings and Loans Liabilities due to customers to due Liabilities Trade andother payables

Cash andcashequivalents Financial assets At 31December2009 Trade and other receivables other Trade and Other investments Other Loans and advances to customers to advances and Loans

Bank overdraft Bank Financial liabilities Loans and borrowings and Loans Trade andotherpayables Liabilities duetocustomers

Financial riskmanageent(continued) Compliance risk Financial assetsandliabilities

Note 27 25 20 17 27 31 35 33 27 25 20 17 27 31 33 35

receivables 19,492 19,492 67,888 67,888 39,577 11,095 12,971 12,971 35,738 35,738 59,804 59,804 8,819 8,819 Loans and ------

Available 16,589 16,589 for sale 16,589 16,589 16,860 16,860 ------

Amortised 22,169 57,075 57,075 88,747 88,747 16,433 50,708 76,571 2,545 2,545 6,958 6,958 2,117 2,117 7,313 7,313 cost ------

carrying 19,492 19,492 16,589 16,589 39,577 84,477 84,477 22,169 amount 57,075 57,075 88,747 88,747 11,095 12,971 12,971 16,860 35,738 35,738 76,664 16,433 50,708 76,571 8,819 8,819 2,545 2,545 6,958 6,958 2,117 2,117 7,313 7,313 Total

84,477 84,477 22,169 19,492 19,492 16,589 16,589 39,577 57,075 57,075 88,747 88,747 11,095 12,971 12,971 17,559 17,559 35,738 35,738 76,664 76,664 16,433 50,708 76,571 8,819 8,819 2,545 2,545 6,958 6,958 2,117 2,117 7,313 7,313 value Fair In millionsofKwacha for theyearended31December2010 NOTES TOTHEFINANCIALSTATEMENTS

Cash andcashequivalents Financial assets At 31December2010 COMPANY Trade andotherreceivables Long-term receivables -Group Investments inassociates Investments injointventure Investments insubsidiaries

Bank overdraft Financial liabilities Loans andborrowings Trade andotherpayables Long termloanspayablegroup

Cash and cash equivalents cash and Cash Financial assets At 31December2009 Trade and other receivables other Trade and Long-term receivables - Group - receivables Long-term Other investments Other Investments in associates in Investments Investments injointventures Investments in subsidiaries in Investments

Bank overdraft Bank Financial liabilities Loans and borrowings and Loans Trade andother payables Long term loans payable group payable loans term Long

Level1: • follows: as defined been have The tablebelowanalysesfinancialinstrumentscarriedatfair value,byvaluationmethod.Thedifferent levels Fair valuehierarchy • • Level 2: Level 3:

quoted prices(unadjusted)inactivemarketsforidenticalassets orliabilities; (i.e., derived from prices); and and prices); from derived (i.e., for theassetorliability, eitherdirectly (i.e.,asprices)orindirectly inputs otherthanquotedpricesincludedwithinLevel1that are observable inputs fortheassetorliabilitythatare notbasedonobservablemarketdata (unobservable inputs).

Note 27 25 18 16 15 14 27 31 33 34 27 25 18 20 16 15 14 27 31 33 34

receivables Loans 1,252 1,252 106 176 401 683 502 502 349 349 401 401 and ------

Available for sale 17,528 32,601 53,299 33,287 33,287 48,185 48,185 3,170 5,920 5,920 8,940 38 38 ------

Amortised 1,637 1,637 1,474 1,894 1,894 2,497 328 328 cost 167 220 21 25 55 55 - - - - -

------

carrying amount 17,528 32,601 53,982 33,287 33,287 49,437 49,437 1,637 1,637 3,170 1,474 5,920 5,920 8,940 1,894 1,894 2,497 Total 328 328 106 176 401 167 502 502 349 401 401 220 21 25 38 38 55 55

17,528 32,601 53,982 33,287 33,287 49,437 49,437 1,637 1,637 3,170 1,474 5,920 5,920 8,940 1,894 1,894 2,497 value 328 328 106 176 401 167 502 502 349 349 401 401 220 Fair 21 25 38 38 55 55

83 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES 84 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES

Investments insubsidiaries Investments injointventures Investments in associates in Investments Other investments At 31December2009

Investments insubsidiaries Investments injointventures Investments inassociates At 31December2010 COMPANY Other investments At 31December2009 Other investments At 31December2010 GROUP In millionsofKwacha for theyearended31December2010 NOTES TOTHEFINANCIALSTATEMENTs 6.6 6. maintained fortheprotection oftradenamesorotherreasons. associated companiesmake up theInvestmentdivision.Inaddition,anumberofdormant subsidiariesare The Companymonitorstheperformanceofitsinvestments byallocationtofiveindustriesasbelow. The that operatewithintheseindustries.Inter-segment pricingisdeterminedonan arm’s lengthbasis. such informationisthemostrelevant inevaluatingtheresults ofcertainsegmentsrelative tootherentities reviewed bytheGroup’s CEO.Segmentprofit isusedtomeasure performanceasmanagementbelievesthat based onsegmentprofit beforemanagementreports incometax,asincludedintheinternal thatare Information regarding theresults ofeachreportable segmentisincludedbelow. Performanceismeasured expected tobeusedformore thanoneyear. Segment capitalexpenditure isthetotalcostincurred duringtheyeartoacquire segmentassetsthatare revenue, interest bearingloans,borrowings andexpenses,corporateassets andexpenses. can beallocatedonareasonableassetsand basis.Unallocateditemsmainlycompriseincomeearning Segment results, assetsand liabilitiesincludeitemsdirectly attributabletoasegmentaswellthosethat products, Realproperty andinvestments,Telecommunication andFinancialservicesactivities. operating five ventures industries, basedonthetypeofbusiness.Thesesegmentsare Foodandbeverage,Retailconsumer joint and companies associated subsidiary, its among recognises group The CEO reviewsmanagementreports internal onatleastaquarterlybasis. require different technologyandmarketingstrategies.Foreachofthestrategicbusinessunits,Group’s The strategicbusinessunitsoffer different products andservices,are managedseparatelybecausethey The Group has5reportable segments,asdescribedbelow, whichare theGroup’s strategicbusinessunits. 7. Financial riskmanageent(continued) Operating segments Financial assetsandliabilities(Continued)

Note 14 15 16 20 14 15 16 20 20

20,411 20,411 20,411 Level 1 19,772 19,772 ------

48,185 48,185 12,876 Level 2 33,527 12,829 17,528 16,860 16,589 8,940 5,920 5,920 3,170 38

Level 3 ------

48,185 48,185 33,287 53,299 32,601 17,528 16,860 16,589 8,940 5,920 5,920 3,170 Total 38 Industry The followingsummarydescribestheoperationsineachofGroup’s reportable segments: In millionsofKwacha for theyearended31December2010 NOTES TOTHEFINANCIALSTATEMENTS The FoodsCompanyLimited Food &Beverage

Maldeco Aquaculture Limited Limbe LeafTobacco CompanyLimited Ethanol CompanyLimited Retail &ConsumerProducts People’s Trading Centre Limited Centre Trading People’s BP MalawiLimited Macsteel MalawiLimited Presscane Limited Bottling andBrewing Group Limited National BankofMalawiLimited Financial Services Press Properties Limited Real Property andInvestment Press CorporationLimited Telecom HoldingsLimited Telecommunications

Telekom NetworksLimited Press Trading (Pty)Limited Discontinued Operations Press andShire ClothingLimited PGI Limited National PoultryLimited Malawi PharmaciesLimited Hardware andGeneralDealersLimited necessary legalprocesses are completed vehicles fornewprojects, thosethatare considered surplustorequirements willbederegistered afterthe after theybecameunprofitable. Whileafewofthedormantcompanieswillberetained forfuture useas Some operationswere discontinued aspartofre-organisation andrestructuring, otherswere discontinued

% shareholding 100.0 62.63 100.0 100.0 100.0 100.0 100.0 51.52 100.0 32.27 100.0 42.0 66.0 50.0 50.0 50.0 50.1 50.0 49.6 -

Nature ofbusiness Manufacturer anddistributor of foodproducts Fish farming Tobacco processors Ethanol manufacturer Supermarket chain chain Supermarket Fuel &Oildistributor Steel processors Ethanol manufacturer Beverage manufacturer anddistributor Finanacial Services Property investmentanddevelopment Holding Company Holding companyforMalawi Telecommunications Limited(MTL) Mobile Telecommunications Dormant Dormant Dormant Dormant Dormant Dormant

85 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES 86 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES In millionsofKwacha for theyearended31December2010 NOTES TOTHEFINANCIALSTATEMENTs incorporated inSouthAfrica,andtherefore geographical segmentpresentation hasnotbeenmade. All operationsofthegroup are inMalawiexceptfor Press Trading (Proprietary) Limited,adormantcompany Geographical segmentpresentation in JointVentures. have beenproportionally consolidatedasJointlyControlled Entitiesinaccordance withIAS31-Investments partners exceptforBBGLwhichis49.6%ownedbythecompanyandatechnicalpartner. These (“BBGL”) andMacsteel(Malawi)Limitedare 50%ownedbytheCompanyandtechnical Four companies,People’s Trading Centre Limited,BPMalawiBottlingandBrewing Group Limited Entities Controlled Jointly 7.

Sales Revenue 2010 Interest income Services Total revenues Inter-group revenue evenue from external customers Revenue fromexternal Operating profits Segment results Net finance(costs)/income Share ofprofitassociates–group Income taxexpense Gain onsaleofdiscontinuedoperations, netoftax Profit fortheyear Capital additions Other information Depreciation andamortisation Non-current assets Assets Statement offinancialposition Current assets Consolidated totalassets Non-current liabilities Liabilities Current liabilities Consolidated totalliabilities Cash flowsfrom/usedinoperating activities Cash flows Cash flows(usedin)/frominvesting activities Cash flows(usedin)/fromfinancing activities Operating segments(continued) Investment property & 2,704 1,363 4,067 1,159 1,716 498 906 327 125 (156) 557 (600) Real 469 967 493 479 (61) (10) 31 4 - - -

beverages 1,390 1,955 Food 607 (253) 101 565 130 120 (216) 860 860 260 236 645 881 and (56) (72) (80) 48 - - - - consumer products 32,766 Retail & 39,340 39,340 (6,574) 16,848 2,283 7,447 (1,116) (1,613) 3,532 2,326 9,401 2,524 6,771 9,295 4,189 (460) 930 (90) - - - - Financial services 27,774 52,620 80,394 64,562 66,058 (1,649) 9,874 9,874 9,550 5,078 3,429 5,026 1,496 1,519 1,298 (324) (910) 997 - - - - - Telecomm- unication 12,179 15,928 15,928 15,472 32,873 36,451 18,679 3,578 (7,390) 1,458 7,327 2,808 6,500 8,166 (456) 342 (703) (413) (55) - - - - company Holding 1,398 (1,091) 1,951 1,386 1,748 1,328 2,290 (432) (244) (808) 362 962 (41) 247 48 72 54 89 89 8 - - - 141,463 65,935 40,758 16,426 67,058 59,349 15,093 75,528 13,243 85,676 98,919 14,051 (7,709) (3,406) (8,134) (2,996) 9,874 9,801 1,092 7,742 4,894 Total 247 8 In millionsofKwacha for theyearended31December2010 NOTES TOTHEFINANCIALSTATEMENTS

Sales Revenue 2009 Interest income Services Total revenues Inter-group revenue evenue from external customers Revenue fromexternal Operating profits Segment results Net financecosts Share ofprofitassociates–group Income taxexpense Gain onsaleofdiscontinuedoperations, netoftax Profit fortheyear Capital additions Other information Depreciation andamortisation Non-current assets Assets Statement offinancialposition Current assets T Non-current liabilities Liabilities Current liabilities Consolidated totalliabilities Cash flowsfrom/(usedin)operatingactivities Cash flows Cash flows(usedin)/frominvestingactivities Cash flows(usedin)/fromfinancingactivities otal consolidatedassets Investment property & 3,988 1,074 (1,833) 2,795 6,783 1,159 2,233 1,292 123 156 182 (171) (164) Real 210 242 (54) 111 87 36 6 - - - beverages 1,682 Food 862 846 611 (187) (188) 862 862 226 (72) 836 419 192 and (23) (42) 15 82 (7) - - - - - consumer products 23,510 Retail & 24,872 24,872 10,060 (1,362) 5,961 1,915 1,230 4,099 7,037 7,411 1,763 (839) (519) 677 173 (616) 374 (69) - - - - Financial services 47,269 71,308 56,243 24,039 58,782 7,735 (1,821) (1,794) (1,559) 7,893 7,893 5,693 3,872 3,575 2,539 7,200 (158) 716 - - - - - Telecomm- unication 15,582 15,582 15,247 27,266 31,050 14,084 3,784 7,941 (6,356) 1,066 6,760 2,659 6,143 4,379 1,517 (335) (299) (291) 476 - - - - continued 2,154 2,179 2,798 1,419 1,074 (208) (540) (169) 619 (867) Dis- (48) 658 293 735 48 50 30 (18) 50 98 33 - - 123,681 47,560 62,467 25,871 15,753 49,517 11,567 61,214 11,369 73,906 85,275 13,849 (1,957) (2,941) (9,548) (1,508) 7,893 8,369 5,670 3,599 Total (449) 658 33

87 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES 88 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES In millionsofKwacha for theyearended31December2010 NOTES TOTHEFINANCIALSTATEMENTs Loss onsaleofdiscontinuedoperations Diluted earnings pershareDiluted earnings pershareBasic earnings Profit fortheyear Results from operatingactivities,netofincometax Expenses Revenue Results from discontinuedoperations Net cashfrom discontinuedoperation Net cashfrom investingactivities dISCONTINuedoperation 8. of assetsacquired andliabilitiesassumed attheacquisitiondate: The followingsummarises themajorclasses of considerationtransferred, andtherecognised amounts to theGroup’s results. million MK895 of profit and billion MK8.8 of revenue contributed BBGL 2010 December 31 to months 12 the In The companyisinthebusiness ofimportation,manufacture anddistributionofbeverages. the simultaneousacquisitionofaninvestmentinajointlycontrolled entity. This changeinownershiphaseffectively resulted inadeemeddisposaloftheinvestmentassociateand Company previously accountedfortheinvestmentasaninassociateusing equityaccounting. investment bytheCompanytoproportional consolidationunderIAS31Interests inJointVentures. The as ajointlycontrolled entity. Thisclassificationhasresulted inthechangeofmethodaccountingfor remaining shares inequalproportions haseffectively resulted intheinvestment inBBGLbeingclassified the minoritiesinequalproportions. Theacquisitionoftheadditionalshares andtheintentiontoacquire the It istheintentionoftwoshareholders toacquire theremaining 0.86%currently stillbeingheldby 2010. December 31 at as each This hasresulted inboththe CompanyandCarlsbergBreweries AShavingshareholding of49.57% the twocompaniesinequalproportions. to issued were shares The shareholders. minority the from (BBGL) Limited Group Brewing and Bottling totaling 11,308,136atthecostofMK35eachrepresenting atotalof11.31%theissuedcapital shares additional acquired AS Breweries Carlsberg with together Company the review, under year the During 9.1 9. residual assetsofPGIDivision. Thegroup discontinuedoperationsofthedivisioninNovember2008. Results from discontinued operationsrelate tothedisposalproceeds, andincidental coststhereon, from Consideration received, satisfied incash Net identifiableassetsandliabilities Inventory Motor vehicles Effect ofdisposalonthe financialpositionoftheGroup isasfollows: Net cashfrom/( used)inoperatingactivities Cash flowsfrom discontinuedoperation Acquisition ofajointl Acquisition y controlledentit 2010 0.7 0.7 (16) 24 8 8 - - - - - 8 8 - Group

0.27 2009

0.27 (182) 243 (28) 33 (27) 61 45 18 52 37 65 13

Property, plantandequipment Returnable packaging Returnable 9.2 In millionsofKwacha for theyearended31December2010 NOTES TOTHEFINANCIALSTATEMENTS Fair valueofpre-existing interest inBBGLatacquisition 9.5 Goodwill Fair valueofexistinginterest inacquiree Total considerationtransferred goodwill arisingonacquisitionofnon-controlling interest. In compliancewithitsgroup policyonacquisitionofnoncontrolling interests, the Group haswrittenoff the 9.4 Net cashinflow Less: cashandequivalentsacquired Consideration paidincash 9.3 an pending provisionally determined impairment review.been has trademarks) and (patents assets intangible of value fair The Total identifiablenetassetsacquired Income taxpayable packagingincustomers’hands Returnable Related partypayables Provisions Payables andaccruals Deferred revenue Deferred tax Severance pay Borrowings Finance lease Cash andcashequivalents Taxation recoverable Related partyreceivables Receivables Inventories Other investments Intangible assets Gain Carrying amount(equityaccounted) Fair valueofidentifiablenetassets statement ofcomprehensive income(seenote43). date transferred toprofit orloss),whichhasbeenrecognised intheseconsolidatedfinancialstatementsthe acquisition at investee equity-accounted of value carrying billion MK1.661 less billion (MK3.78 billion MK2.119 The remeasurement to fairvalueoftheGroup’s existing44%interest intheacquiree resulted inagainof

Proportion of fair values of net identifiable assets acquired and liabilities assumed at the the at assumed liabilities and acquired acquisition: assets of date identifiable net of values fair of Proportion Gain arisingfrombusiness combination Goodwill Net cashinflow onacquisitionofBottlingandBrewingGroupLimited Notes 9.3 9.2 9.3 16 9.2 10 11 15 15 15 32 33 21 32 31 31 12 43

(3,636) 3,636 2,119 (1,022) (1,661) 3,164 1,041 1,309 3,780 3,780 2010 (124) (433) (339) (198) (797) (165) (202) 198 491 491 342 293 331 447 (10) (55) (21) 18 2 1

89 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES 90 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES At 31 December 2008 December 31 At At 31 December 2009 December 31 At At 31December2010 Carrying amounts Balance at31December2009 Impairments losses Impairments Reclassified asheldforsale(Note36) Released ondisposal Eliminated onrevaluation Depreciation charge for the year the for charge Depreciation Balance at1January2009 Balance at31December2010 Impairments losses Impairments Transfer tointangible assets(note22) Released ondisposal Eliminated onrevaluation Depreciation charge for the year the for charge Depreciation Balance at 1 January 2010 January 1 at Balance Accumulated depreciationandimpairmentlosses Balance at31December2009 Surplus on revaluation on Surplus Transfer toinvestment properties Transfers between classes between Transfers Disposals Additions Balance at1January2009

Balance at31December2010 Surplus on revaluation on Surplus Transfer tointangibleassets(note22) Reclassified asheldforsale(note36) Transfers between classes between Transfers Disposals Additions Acquisition through business combination business through Acquisition Balance at1January2010 Cost orvaluation GROUP

In millionsofKwacha for theyearended31December2010 NOTES TOTHEFINANCIALSTATEMENTs 10.  Property, plantandequipment

buildings

13,015 13,015 14,262 14,262 6,470 6,470 7,755 7,755 1,320 1,247 1,247 1,320 1,320 9,075 9,075 1,995 1,995 6,998 6,998 1,655 1,655 1,890 1,890 1,544 1,544 9,075 9,075 (292) (217) (205) Land 637 637 184 184 528 528 230 230 188 188 119 119 303 303 (27) (11) and (2) (8) ------

equipment furniture & 19,104 19,104 22,196 22,196 27,260 27,260 12,762 12,762 32,190 32,190 26,469 26,469 40,022 40,022 32,190 32,190 9,994 2,670 2,670 7,365 7,365 3,355 3,355 9,994 9,994 4,578 4,578 1,237 1,237 5,929 5,929 1,478 1,478 1,293 1,293 Plant, (210) (388) (371) (493) (66) (18) (94) 43 43 11 11 (4) ------

vehicles 1,739 1,739 2,104 2,104 3,017 3,017 1,128 1,839 1,839 1,128 1,128 3,232 3,232 1,061 1,061 2,587 2,587 4,856 4,856 1,767 1,767 3,232 3,232 Motor (309) (285) (416) (426) 589 589 848 848 996 996 283 283 ------

progress 10,030 10,030 work in (6,573) (7,819) Capital 5,027 5,027 7,465 7,465 9,281 9,281 7,524 7,524 9,070 9,070 5,027 5,027 9,346 9,346 7,524 7,524 (433) 59 59 59 65 65 59 59 44 44 6 6 ------

32,340 32,340 39,520 39,520 52,573 52,573 12,501 15,913 15,913 12,501 12,501 52,021 52,021 11,487 11,487 41,081 41,081 68,486 68,486 13,578 13,578 52,021 52,021 (1,124) 3,443 3,443 8,741 8,741 4,581 4,581 1,655 1,655 3,164 3,164 (309) (210) (399) (577) (217) (518) (804) Total 739 739 188 188 (68) (45) 17 17 (4) - - The fairvalueswere determinedbytheuseofdepreciated replacement costs. Townsend asat31December2008. QS, FRICS,MSIMandMr. W.H. Mkandawire, MBADIP-Real estates,MSIM,qualifiedvaluersofTurner and MSIM, ARICSaqualifiedvaluerandfactorybuildingscivil workswere valuedbyMr. T.T. Msowoya,DIP Land andbuildingscivilworksinPressCane Limitedwere valuedbyMr. SimeonBandaBSc(Honours), revalued at31December2010byCBRichard Ellis,Property Consultantsonanopenmarketbasis. with carryingvalueofMK3.3million(2009:MK2.2billion)relating toMalawiTelecommunications Limitedwere buildings and Land basis. value market current a valuer, on qualified a MSIM, ARICS, Mullock, Chris by 2010 value ofMK3.8million(2009:MK3.1billion)relating tobankingactivitieswere lastrevalued at31December Associates asat31December2010onanopenmarketvalue basis.Somelandandbuildingswithcarrying by Griffin R.P. Baloyi,Bsc(Hon),MRICS,MSIM,achartered valuationsurveyorofGriffin Baloyiand Some landandbuildingswithacarryingvalueofK296million were professionally andindependentlyrevalued inspection bymembersortheirdulyauthorisedagents. 16, are maintainedattherespective registered offices ofeachcompanywithintheGroup andare openfor Registers oflandandbuildingsgivingdetailsrequired undertheCompaniesAct1984,Schedule3,Section At 31December2008 At 31December2009 At 31December2010 amounts Carrying Balance at31December2009 Released ondisposal Depreciation chargeforthe year Balance at1January2009 Balance at31December2010 Released ondisposal Depreciation chargeforthe year Balance at1January2010 Accumulated depreciationandimpairmentlosses Balance at31December2009 Disposals Additions Balance at1January2009 2009 Balance at31December2010 Surplus onrevaluation Disposals Additions Balance at1January2010 Cost orvaluation 2010 COMPANY

In millionsofKwacha for theyearended31December2010 NOTES TOTHEFINANCIALSTATEMENTS

buildings Land 180 180 163 and 17 17 17 17 17 ------equipment furniture & Plant, 107 114 163 107 82 68 81 39 74 20 68 64 (6) (7) (7) (8) - - - - vehicles Motor 133 179 134 133 69 37 65 (45) (46) 96 82 34 37 (6) (8) - - 9 - - Total 331 477 163 152 105 156 146 105 257 293 257 (13) (16) 17 (51) (53) 54 17 73 -

91 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES 92 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES Balance at31December2009 Amortisation chargefortheyear Balance at1January2009 2009 Balance at31December2010 Transfers from PPE(Note10) Amortisation chargefortheyear Balance at1January2010 2010 Accumulated amortisationandimpairmentlosses Balance at1January2009 At 31December2010 amounts Carrying Acquisition duringtheyear Balance at31December2010 Balance at1January2009 2009 Released ondisposal Balance at31December2010 Depreciation chargeforthe year Accumulated depreciationandimpairmentlosses Transfers from PPE(Note10) Balance at31December2010 Acquisition duringtheyear Disposals Acquisition through business combinations Additions Balance at1January2010 2010 Cost GROUP Acquisition through businesscombinations Cost orvaluation GROUP

In millionsofKwacha for theyearended31December2010 NOTES TOTHEFINANCIALSTATEMENTs 11. Telecom HoldingsLimitedandfillingstationsinBPMalawiLimited. of Malawi,headoffice renovation ofsomeequipments ofMalawiTelecommunications Limited,asubsidiaryof Included inthecapitalworkprogress isworkpresently beingcarriedoutonconstructionofNationalBank Capital workinprogress 10.  12. Returnable packaging Property, plantandequipment(continud) Intangible assets Computer Software 2,132 749 141 942 108 424 766 608 824 749 834 942 41 34 - Patents and Trademarks 18 18 1 1 ------

Development Bottles Costs 169 169 596 108 704 (117) (117) 326 225 326 377 444 ------Progress Work in Crates 745 797 110 164 200 597 52 54 52 ------2,640 1,341 1,501 1,041 (117) Total Total 994 210 942 108 160 804 876 (117) 749 141 608 749 834 277 577 942 35 18 Balance at31December2009 Surplus onrevaluation Additions duringtheyear Work inprogress comprisesthecostsrelated totheSAPSoftware Project. Reclassification from PPE Balance asat31December Balance at1January2009 Additions duringtheyear Balance at31December2010 Balance at1January Work inprogress Surplus onrevaluation COMPANY Disposals At 31December2008 Additions duringtheyear At 31December2009 Balance at1January2010 GROUP At 31December2010 Carrying amounts

In millionsofKwacha for theyearended31December2010 NOTES TOTHEFINANCIALSTATEMENTS inspection bymembersortheirdulyauthorisedagents. 16, are maintainedattherespective registered offices ofeachcompany withintheGroup andare openfor Registers oflandandbuildingsgivingdetailsrequired undertheCompaniesAct1984,Schedule3,Section valuation surveyorwithKnightFrank(Malawi)Limitedat31 December 2010onanopenmarketvaluebasis. independently revalued byDonWhayo,BSc(Est.Man),Dip(UrbBA,MRICS, MSIM,achartered Certain investmentproperties withcarryingvalueofMK2.5billion(2009:MK2.3 were professionally and value basis. a chartered valuationsurveyorofGriffin BaloyiandAssociatesat31December2010onanopenmarket Some investmentproperties were professionally revalued byGriffin R.P. Baloyi,BSc(Hon),MRICS,MSIM, 13. Investment properties Computer buildings Software Freehold land and 1,478 1,310 1,310 1,308 156 180 226 193 217 937 (22) 10 -

Patents and Trademarks Leasehold buildings land and 1,462 1,038 1,038 143 372 886 17 52 - - 9 - -

Development Undeveloped freehold Costs 433 357 290 (204) land 433 157 61 76 - - - - -

Undeveloped leasehold Progress Work in 2010 land 164 49 49 1 1 1 - - - - 1 - - - - - 3,231 1,646 2,782 1,900 2,782 2009 Total Total 656 613 226 193 (226) 217 62 9 - - -

93 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES 94 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES Malawi Limitedwhichare listedontheMalawiStockExchangeandare atquotedmarketvalues. Limited whichwasrevalued bythedirectors, andTelecom NetworksMalawiLimitedandNationalBankof of thedirectors, asat31December 2010inthecompanyfinancialstatementsexceptforTelecom Holdings Investments insubsidiarieswere independentlyrevalued byDeloitte,CertifiedPublicAccountants,onbehalf

National Poultry Limited Poultry National Press Trading (Proprietary) Limited Trading (Proprietary) Press Telecom Networks Malawi Limited Malawi TelecomNetworks Telecom Holdings Limited TelecomHoldings PressCane Limited PressCane Ethanol Company Limited Company Ethanol PGI Limited PGI

Hardware &GeneralDealersLimited The investmentsare analysedasfollows: Maldeco Aquaculture Limited Balance at31December The Foods Company Limited Company Foods The Decrease infairvalue Manzizi Bay Limited Bay Manzizi Acquisition ofshares inPressCane Limited Press Properties Limited Properties Press In millionsofKwacha for theyearended31December2010 NOTES TOTHEFINANCIALSTATEMENTs Balance at1January . 4 1 National Bank of Malawi of Bank National

I n v

T S E

m

S T N E

N I

s u I S B (PCL Share) d 32,601 32,601 14,102 S E I R A I 5,670 6,069 1,460 1,280 2,500 value 982 517 Fair 19 - - 2 - - 2010

Dividend received 1,140 1,140 1,005 42 93 ------

(PCL Share) 33,287 33,287 32,601 33,287 13,931 13,931 6,480 6,480 6,338 6,338 1,140 1,140 1,720 1,720 2,203 2,203 value 2010 (686) 907 907 517 Fair 19 19 12 12 10 8 8 2 2 - COMPANY 2009

Dividend received 33,287 39,946 (7,169) 1,009 1,009 2009 510 864 864 74 74 71 71 ------these were accountedforusingequitymethod. of thedirectors asat31December2010inthecompany financialstatements.However, ongroup level, Investments inassociateswere independentlyrevalued byDeloitte,CertifiedPublic Accountants,onbehalf Company LimitedandBottling&Brewing CompanyLimitedrespectively. The companyhada42%(2009:42%)and49.6%(2009:44%) equityinterest inLimbe LeafTobacco At theendofyear Increase infairvalue interest inacquiree (note9.5) existing of value fair Transferof

of thedirectors, asat31December 2010inthecompanyfinancialstatements. Investments injointventures were independentlyrevalued byDeloitte,Certified PublicAccountants,onbehalf Share ofprofit

At beginningoftheyear b) Movementduringtheyear The investmentsare analysedasfollows: Bottling andBrewing Group Limited

Balance at31December Macsteel Limited Bottling &Brewing Group Limited Increase infairvalue Transfer offairvalueexistinginterest inacquiree (note16) Acquisition ofshares inBottlingandBrewing Group Limited Limbe LeafTobacco CompanyLimited a) Investmentattheyearend Limited Malawi BP Balance at1January 15. In millionsofKwacha for theyearended31December2010 NOTES TOTHEFINANCIALSTATEMENTS 16. Limited Trading Centre Peoples Investments injointentures Investments inassociates

(PCL Share) 17,528 17,528 9,600 (1,661) 1,989 5,278 1,940 value 2010 2010 575 575 247 710 575 Fair - -

Group Dividend received 1,989 1,331 1,989 1,661 2009 658 686 686 118 400 328 75 93

- -

(PCL Share) 17,528 3,170 1,030 3,170 4,610 (3,780) 8,940 8,940 5,920 5,000 5,000 3,170 8,940 3,780 3,460 3,460 value 2010 2010 2009 480 198 Fair - - - COMPANY

Company Dividend received 8,940 1,695 5,920 5,220 5,920 3,780 2,140 7,245 2009 2009 700 551 551 438 438 38 75 75 - - - - -

95 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES 96 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES At theendof year Recovered duringtheyear Suspended duringtheyear Applied againstadvances Total loansandadvancesonwhichinterest issuspended At thebeginningofyear Movement ofinterestinsuspense

Interest insuspense

- Financeandinsurance - Manufacturing - Agriculture - Personalaccounts - Others - Wholesaleandretail Analysis ofgross loansand advancesbysector: Balance attheendofyear Recovered duringtheyear Written off duringtheyear Charged duringtheyear At thebeginningofyear Movement ofallowanceforimpairmentlosses

Short termloans Long termloans Net loansaresplitinto:

- Afteroneyear - Betweenthree monthsand oneyear Profit - Within three months - Within Gross loansandadvances are duetomature asfollows: Revenue Net loansandadvances Liabilities Allowance forimpairmentlosses In millionsofKwacha for theyearended31December2010 NOTES TOTHEFINANCIALSTATEMENTs Assets Gross loansandadvancestocustomers . 7 1 The associates’financialstatementsincludethefollowing: 16.

L Investments inassociates (continued) S N A O

N A d a v d S E C N A

O T

c

u O T S m S R E

39,927 39,929 14,265 40,175 20,480 10,244 39,577 26,657 12,920 15,794 19,840 39,577 20,567 23,487 39,929 1,337 2,922 3,248 3,249 9,869 2010 2010 (248) (352) 248 937 (102) 288 155 352 206 307 (93) 32 (78) (83) GROUP GROUP 23,076 12,662 35,738 36,045 36,200 17,303 35,738 12,662 36,045 22,779 35,231 22,241 31,071 36,045 2,164 2,765 4,679 1,602 7,280 3,172 (155) 2009 2009 (307) 155 573 307 (116) (120) (124) 247 144 276 208 604 (53) amounts whenthere isobjective evidencethattheassetisimpaired. as shownabove.Thespecificallowanceforimpairmentrepresents allowancesforestimatedirrecoverable The amountspresented in thestatementoffinancialpositionare netofprovisions forimpairmentallowances The Group’s credit riskisprimarily attributedtooverdraft andotherloanfacilitiesextendedtoitscustomers. finance leasereceivables are secured bytheleasedassets. and theUSDollardenominatedloanswere givenatanaverageinterest rateof8.6%(2009:9.4%).The The baselendingrateforGroup’s bankingsubsidiaryasat31December2010was17.75%(2009:19.5%) Net investmentinfinanceleases Specific allowanceforimpairment

Unearned financeincomeonleases Unearned Gross investment–finance leasereceivables Loans andadvancestocustomersincludethefollowingfinanceleasereceivables: Finance leasereceivables United Statesdollardenominated Malawi Kwachadenominated Analysis ofgross loansbycurrency Transferred toprofit orloss Debts previously writtenoff Interest insuspense Specific allowanceforimpairmentloss Analysis ofrecoveries Maldeco Aquaculture Limited In millionsofKwacha for theyearended31December2010 NOTES TOTHEFINANCIALSTATEMENTS Balance at31December Loans recovered Loans grantedduringtheyear Balance at1January Movement duringtheyearwasasfollows: loans inter-company of Summary . 8 1 The loansare unsecured andpayablewithinfiveyears.Interest ischargedatmarketrates.  from groupcopanies L G N O

R E T m S N A O L

I E C E R v S E L B A

35,427 4,500 3,719 3,720 4,522 2010 2010 (802) 401 401 326 155 401 (55) 93 78 55 (1) COMPANY GROUP 31,051 4,994 3,533 3,556 4,414 2009 2009 (858) 265 401 401 (544) 434 116 124 821 (23) 53

97 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES 98 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES Government ofMalawiandReserveBankBillsareGovernment denominatedinMalawiKwacha.

- Betweenthree monthsandoneyear - Within three months - Within The billsare duetomature asfollows: Malawi Bills ofMalawiandReserve Bankof Government a) Total investments Totalinvestments

Other Reserve BankofMalawiBonds Government ofMalawiLocalRegisteredGovernment Stock Money marketdeposits Bank ofMalawiBills ofMalawiandReserve Government Comprises ofthefollowing: Total otherinvestments The loansare unsecured andpayablewithinfiveyears. Interest ischargedatmarketrates.

- Within three months - Within year one and months three Between - ii) Currentinvestments Press Poultry-adivisionoftheFoodsGroup Limited Telekom HoldingsLimited

National PoultryLimited - Between one year and five years years five and year one Between - The FoodsCompanyLimited - Non–maturinginvestments i) Longterminvestments Total otherinvestmentsare duetomature asfollows: In millionsofKwacha for theyearended31December2010 NOTES TOTHEFINANCIALSTATEMENTs Maldeco FisheriesLimited . 9 1 . 0 2   Government ofMalawiandReserve BankofMalawibillsGovernment companies L O G N O R E H T

R E T

N I v m T S E S N A O L

m

S T N E

pa 20(c) 20(b) 20(a)

y E L B A 10.10% 7,800 2,892 7,800 2,432 1,074 2,854 5,358 2,926 2,442 2,006 Average interest rate 2010 2010 436 543 437

Group O T 11.70% 14,871 14,871 11,573

3,004 7,478 1,015 1,345 8,806 4,095 4,095 3,298 1,184 2,114 O R G 2009 2009 701

u p 2,854 1,852 1,002 2,854 2010 2010 2010 326 289 20 COMPANY ------9 8 - - - - -

Company Company 3,583 8,806 5,223 8,806 2009 2009 2009 328 289 38 38 38 38 38 20 38 3 - - - - 9 7 - - - - Reserve BankofMalawiBondsare denominatedinMalawiKwacha.

- Betweenoneandfiveyears - Betweenthree monthsand oneyear - Within three months - Within The stocksare duetomature asfollows: Reserve BankofMalawiBonds c) ofMalawiLocalRegisteredGovernment Stocksare denominatedinMalawiKwacha.

- Betweenoneandfiveyears - Betweenthree monthsandoneyear - Within three months - Within The stocksare duetomature asfollows: Government ofMalawiLocalRegisteredGovernment Stocks b) In millionsofKwacha for theyearended31December2010 NOTES TOTHEFINANCIALSTATEMENTS and associates Property andinvestmentsinsubsidiaries Deferred taxassetsandliabilities are attributabletothefollowing: 21. Deferred tax assets/(liabilities) Property, plantandequipment GROUP Investment properties Provisions Other items Tax value of loss carried forward carried loss Taxof value Tax assets/(liabilities) COMPANY Reserve BankofMalawiBonds Government ofMalawiLocalRegisteredGovernment Stocks

2010 121 800 188 491 Assets - - -

2009 10.0% 15.5% 770 110 571 89 89 Average interest rate 2010 - - -

(11,034) (5,700) (3,852) (1,218) 2010 (630) Liabilities - 10.0% 17.2% -

2009 (7,759) (1,936) (3,477)

2009 (371) (205) (889) (76)

1,074 1,074 1,074 2010 (11,034) 543 436 107 543 (3,852) (4,900) 2010 121 (630) (727) - - - 188 Company Net

(7,759) (1,826) (2,707) 1,345 2009 1,015 1,015 1,345 (371) (889) 2009 366 170 13 13 512 333 170 512 663

99 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES 100 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES expire after6years. taxable profit willbeavailableagainstwhichthecompanycanutilisebenefitsthere from. Tax losses Deferred taxassetshavenotrecognised inrespect ofthesetaxlossesbecauseitisnotprobable thatfuture Tax losses Deferred taxassetshavenotbeenrecognised inrespect ofthefollowing: Unrecognised deferred taxassets Investment insubsidiaries 2009

Property Investment insubsidiariesandassociates 2010 COMPANY Total (liabilities)/assets Tax value or loss carried forward carried loss Taxor value Other items Deferred government grants government Deferred Provisions Investment properties Property, plantandequipment 2009 Total liabilities Tax valueorlosscarriedforward Other items Provisions Investment properties

Property, plantandequipment 2010 GROUP

In millionsofKwacha for theyearended31December2010 NOTES TOTHEFINANCIALSTATEMENTs Movement ofnetdeferred taxliabilitiesisasfollows:- 21. Deferred tax assets/(liabilities)(contin ued)

Opening balance (9,191) (7,759) (7,759) (3,359) (1,161) (2,343) (2,707) (1,826) 407 407 (109) (152) (889) (371) 366 13 (1) -

combinations Acquisition business through 189 (797) (696) (290) ------

------

Recognised and loss in profit (1,134) (794) 557 (394) (219) (178) (259) 272 475 422 858 (81) - - - - 1 1

comprehensive Recognised in other income 3,648 1,432 2010 (3,275) (3,230) (602) (602) (45) 95 COMPANY 95 ------

balance (11,034) (10,989) Closing 5,300 2009 (7,759) (2,707) (1,826) (4,900) (3,852) 121 (889) (371) (727) (630) 366 188 (45) 13 13 -

Allowance forimpairmentlosses At 31December2010biologicalassetsheldforsalecomprisedoffishandfingerlings.

Balance at31December Other receivables Other Goods intransit division ofTheFoodsCompany Limited. which wasnotfitforitsintended purposes.Theinventoriesassetsheldforsalerelate toadiscontinued The property, plantandequipmentassetsheldforsalerelate toacranepurchased byMacsteelLimited Letters ofcredit Changes infairvaluelesscoststosell Telecom HoldingsLimited Work inprogress Cheques incourseofcollection Decrease duetosales Manzinzi BayLimited Raw materialsandconsumables Property, plantandequipment(Note10) Balances duefrom otherbanks Increase duetobirth PressCane Limited 23.  Trading stock 22.  In millionsofKwacha for theyearended31December2010 NOTES TOTHEFINANCIALSTATEMENTS Inventories (Note22) 26.  Trade receivables 25.  Press Properties Limited Amounts duefrom related partycompanies . 4 2 Balance at1January  Biological assets Inventories Assets classifiedashel for sale Trade anotherreceiv T companies A R d e

N A d R E H T O

I E C E R 19,492 20,326 4,995 4,256 3,531 1,164 2,027 9,515 1,641 3,024 v 2010 (834) 281 163 (219) 299 199 10 S E L B A ables (external) 2 4 - - 6 - - - - - Group 12,971 13,619 3,715 3,547 3,801 1,109 3,488 1,615 2,591 2009 (648) 199 133 (227) (158)

690 347 237 O R F 24 6 - - - 6 - - - - m

2010 141 O R G 141 141 35 27 8 3 - - - - 4 1 8 ------Company u p 2009 111 111 238 111 209 10 10 7 5 - - - - 4 7 ------101 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES 102 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES

- Nominalvalue(MKmillion) secured byBoard ResolutionandLetterofAgreement toborrow. The CompanyhasbankingfacilitiesofMK228milliondueforrenewal on30November2011.Thiswas Balances heldatReserveBankofMalawiare non-interest bearingandare regulated asdisclosedinNote5. At thebeginningandendofyear in thestatementofcashflows shown as equivalents cash and Cash

Bank overdrafts - Number(millions) Cash andcashequivalents At thebeginningandendofyear paid fully and Issued Cash onhand - Nominalvalue(MKmillion) Call deposits Bank balances - Nominalvaluepershare (MK) In millionsofKwacha for theyearended31December2010 NOTES TOTHEFINANCIALSTATEMENTs Reserve BankofMalawi 27.  At theendofyear 29.Share premium - Number(millions) Authorised ordinary share capital 28. share capital Cash andcashequiv alents 6,274 2,551 (2,545) 8,819 1,545 2,120 2,603 2010

Group

11,095 8,978 2,461 (2,117) 1,759 1,420 5,455 2009

2,097 2,500 2010 2010 Group andCompany 0.01 106 101 81 (25) 25 1 1 - - - 1 1 5 - Company 2,500 2,097 2009 2009 0.01 447 502 495 25 (55) 1 1 - - - 1 1 7 - Balance at31December2009 Deferred taxonrevaluation Revaluation deficitoninvestments Balance at1January2009 2009 Balance at31December2010 Deferred taxonrevaluation Revaluation surplusonproperty Revaluation surplusoninvestments Balance at1January2010 2010 COMPANY

Reversal ofaccumulateddepreciation

for foreign operations Foreign currency translationdifferences Pre-acquisition reserves forBBGL Depreciation transferofbuildings Balance at31December2009 Balance atthebeginningofyear 2009 Reversal ofaccumulateddepreciation Transfer toloan lossreserve disposal ofassets Transfer toretained dueto earnings Balance at31December2010 Transfer toloanlossreserve Transfer toduedisposalofassets Balance atthebeginningofyear 2010 GROUP interest inacquiree Fair valuegainsandlossesoninvestments Revaluation ofproperty, plantandequipment 30.  In millionsofKwacha for theyearended31December2010 NOTES TOTHEFINANCIALSTATEMENTS Income taxonothercomprehensive income Revaluation ofproperty, plantandequipment Income taxonothercomprehensive income Remeasurement tofairvalueofpre-existing OTHER RESER VES Revaluation

reserve 8,693 (2,119) 9,443 9,612 9,443 1,489 (529) (253) (104) (100) 613 (30) 89 29 (4) - - - -

Revaluation Translation reserve reserve 35,629 38,971 37,420 35,629 (4,774) (3,275) 1,432 4,903 163 112 106 112 112 - - 6 ------

Translation Loan loss reserve reserve 110 110 110 110 406 286 120 441 406 35 ------Loan loss reserve 2,068 2,089 Other 168 168 168 168 21 21 21 ------35,907 39,249 37,698 35,907 10,025 11,335 (4,774) 1,432 (3,275) (2,119) 4,903 2,068 9,982 9,982 1,489 (529) Total Total (253) (104) (100) 163 120 613 (30) 35 89 29 (4) 6 103 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES 104 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES

Due within1yearorless Due between2and5years Terms anddebtrepaymentschedules 2009

Due within1yearorless Due between2and5years Terms anddebtrepaymentschedules 2010 COMPANY

Due within1yearorless

Due between2and5years More than5years 2009

Due within1yearorless

Due between2and5years More than5years 2010 GROUP In millionsofKwacha for theyearended31December2010 NOTES TOTHEFINANCIALSTATEMENTs The otherreserves forthegroup comprisecapitalredemption reserve andcapitalprofits. Other reserves IAS 39requirements. This relates toexcessofprovisions forimpairmentlosses whichare abovethoseimpairmentlossallowedby Loan lossreserve financial the of translation the from statements offoreign operations. arising differences exchange foreign all comprises reserve translation The Translation reserves been have assets revalued relevant the disposed ofandwhenconsumedthrough use. until shareholders to distributable not are reserves These valuation. subsidiaries, associatesandjointventures andcomprisescumulativeincrease inthefairvalueatdateof The revaluation reserve relates torevaluation ofproperty, plantandequipmentinvestmentsin Revaluation reserve 30.  31.  OTHER RESER Loans andborrowings VES (continued)

Secured 3,543 1,894 1,392 1,424 5,671 1,186 4,485 4,873 1,649 3,224 2,964 502 526 898 942 260 Unsecured 1,642 1,190 2,085 1,385 452 592 700 949 598 436 ------1,894 1,392 1,424 7,313 1,638 5,675 4,135 1,540 6,958 2,349 4,609 3,913 Total 502 526 898 696 T Development BankofSouth Africa Foreign borrowings T Standard BankLimited NBS BankLimited COMP T Total foreignborrowings EIB Bank NORSAD Development BankofSouth Africa Libyan Government PTA Bank Foreign borrowings T Standard Bank NBS Bank Malawi Government National BankofMalawi FMB –USDLoan FMB –MWKLoan Belgium Government Kuwait DevelopmentFund NORDIC DevelopmentFund DANIDA loan Local borrowings Movement inborrowings GROUP

In millionsofKwacha for theyearended31December2010 NOTES TOTHEFINANCIALSTATEMENTS

otal borrowings otal localborrowings otal borrowings otal localborrowings ANY 01/01/10 1,894 1,201 7,313 3,064 1,201 1,472 4,249 345 601 693 499 194 763 246 560 100 663 653 584 46 71 At 8 -

combinations Acquisition business through 195 195 177 18 ------Draw-downs 584 556 364 97 95 28 28 ------Repayments (1,488) (1,064) (393) (531) (106) (425) (272) (153) (424) (106) (225) (381) (246) (23) (70) (28) (12) (4) - - - - - fluctuations Exchange 120 120 15 61 61 61 47 (3) ------Interest accrual 234 183 51 46 18 77 63 20 ------5 5 ------30/12/10 1,424 1,156 6,958 3,367 1,156 1,704 3,591 434 413 268 227 400 550 740 716 604 41 27 46 88 76 At 4 - 105 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES 106 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES

31. Loans and borrowings (continued)

Loans analysis In millionsofKwacha for theyearended31December2010 NOTES TOTHEFINANCIALSTATEMENTs GROUP 2010 Agreed date Agreed date Due Due Interest Repayment redemption redemption in within Over Lender’s name Currency rate terms Security commences finishes 1 year 2 -5 year 5 years

DANIDA Danish Kroner 3.5% ½ Yearly Government 2004 2018 201 184 219 NORDIC Development Fund Malawi Kwacha 7.5% ½ Yearly Government 2003 2018 455 167 94 Kuwait Development Fund Malawi Kwacha 15% ½ Yearly Government 2003 2017 429 216 95 Belgium Government Malawi Kwacha 7.5% ½ Yearly Government 2005 2020 28 22 26 Libyan Government Malawi Kwacha - Dividends offset - - - 46 - - PTA US Dollar 7.0% Quarterly Debenture 2009 2015 259 1,342 103 NORSAD US Dollar 7.5% ½ yearly Debenture 2007 2011 27 - - Malawi Government Malawi Kwacha 8.5 ½ yearly - 1999 2014 2 2 - Standard Bank Malawi Limited Malawi Kwacha 17.50% Monthly Related assets - - 4 - - Standard Bank Malawi Limited Malawi Kwacha 17.50% Quarterly “ 2010 2013 12 14 - Standard Bank Malawi Limited Malawi Kwacha 17.50% Quarterly Debenture 2010 2013 98 58 - Standard Bank Malawi Limited Malawi Kwacha 17.75% Quarterly PCL Guarantee 2008 2015 176 51 - NBS Bank Limited Malawi Kwacha 15.75% Monthly Debenture 2007 2016 1 15 - NBS Bank Limited Malawi Kwacha 17.50% Monthly Buildings 2008 2014 37 298 8 NBS Bank Limited Malawi Kwacha 21.00% Monthly Buildings 2010 2015 12 22 7 FMB Limited US Dollars 9% Monthly TNM Shares 2010 2015 116 434 - Development Bank of South Africa US Dollars Libor ½ yearly NBM shares 2008 2015 338 674 144 EIB Bank US Dollars 9.50% ½ yearly None 2010 2015 91 343 - FMB Limited Malawi Kwacha - Monthly Debenture 2010 2015 20 68 - 2,349 3,913 696 COMPANY 2010

Standard Bank of Malawi Limited Malawi Kwacha 17.75% Quarterly PCL Guarantee 2008 2015 176 51 - NBS Bank Limited Malawi Kwacha 17.5% Monthly Buildings 2010 2014 12 22 7 Development Bank of South Africa US Dollars Libor ½ yearly NBM shares 2008 2015 338 674 144 526 747 151 31. Loans and borrowings (continued)

Loans analysis GROUP 2010 Agreed date Agreed date Due Due Interest Repayment redemption redemption in within Over Lender’s name Currency rate terms Security commences finishes 1 year 2 -5 year 5 years

DANIDA Danish Kroner 3.5% ½ Yearly Government 2004 2018 201 184 219 NORDIC Development Fund Malawi Kwacha 7.5% ½ Yearly Government 2003 2018 455 167 94 Kuwait Development Fund Malawi Kwacha 15% ½ Yearly Government 2003 2017 429 216 95 Belgium Government Malawi Kwacha 7.5% ½ Yearly Government 2005 2020 28 22 26 Libyan Government Malawi Kwacha - Dividends offset - - - 46 - - PTA US Dollar 7.0% Quarterly Debenture 2009 2015 259 1,342 103 NORSAD US Dollar 7.5% ½ yearly Debenture 2007 2011 27 - - Malawi Government Malawi Kwacha 8.5 ½ yearly - 1999 2014 2 2 - Standard Bank Malawi Limited Malawi Kwacha 17.50% Monthly Related assets - - 4 - - Standard Bank Malawi Limited Malawi Kwacha 17.50% Quarterly “ 2010 2013 12 14 - Standard Bank Malawi Limited Malawi Kwacha 17.50% Quarterly Debenture 2010 2013 98 58 - Standard Bank Malawi Limited Malawi Kwacha 17.75% Quarterly PCL Guarantee 2008 2015 176 51 - NBS Bank Limited Malawi Kwacha 15.75% Monthly Debenture 2007 2016 1 15 - NBS Bank Limited Malawi Kwacha 17.50% Monthly Buildings 2008 2014 37 298 8 NBS Bank Limited Malawi Kwacha 21.00% Monthly Buildings 2010 2015 12 22 7 FMB Limited US Dollars 9% Monthly TNM Shares 2010 2015 116 434 - Development Bank of South Africa US Dollars Libor ½ yearly NBM shares 2008 2015 338 674 144 EIB Bank US Dollars 9.50% ½ yearly None 2010 2015 91 343 - FMB Limited Malawi Kwacha - Monthly Debenture 2010 2015 20 68 - 2,349 3,913 696 COMPANY 2010

Standard Bank of Malawi Limited Malawi Kwacha 17.75% Quarterly PCL Guarantee 2008 2015 176 51 - NBS Bank Limited Malawi Kwacha 17.5% Monthly Buildings 2010 2014 12 22 7 Development Bank of South Africa US Dollars Libor ½ yearly NBM shares 2008 2015 338 674 144 526 747 151

31. Loans and borrowings (continued) In millionsofKwacha for theyearended31December2010 NOTES TOTHEFINANCIALSTATEMENTS

Loans analysis GROUP 2009 Agreed date Agreed date Due Due Interest Repayment redemption redemption in within Over Lender’s name Currency rate terms Security commences finishes 1 year 2 -5 year 5 years

Danida Danish Kroner 3.5% ½ Yearly Government 2004 2018 127 184 264 Nordic Development Fund Malawi Kwacha 7.5% ½ Yearly Government 2003 2018 115 167 135 Kuwait Development Fund Malawi Kwacha 15% ½ Yearly Government 2003 2017 149 216 147 Belgium Government Malawi Kwacha 7.5% ½ Yearly Government 2005 2020 15 22 31 Libyan Government Malawi Kwacha - Dividends offset - - - 45 - - PTA US Dollar 7.0% Quarterly Debenture 2009 2015 252 1,009 188 Norsad US Dollar 7.5% ½ yearly Debenture 2007 2011 58 37 - Malawi Government Malawi Kwacha 8.5% ½ yearly - 1999 2014 1 2 1 National Bank of Malawi Malawi Kwacha 19% Monthly Buildings - - 148 42 - Standard Bank Malawi Limited Malawi Kwacha 5% Quarterly PCL Guarantee 2008 2015 176 225 - Standard Bank Malawi Limited Malawi Kwacha 19% Quarterly “ 2010 2013 100 158 - NBS Bank Limited Malawi Kwacha 20% Monthly Buildings - - - 329 209 NBS Bank Limited Malawi Kwacha 21% Monthly Buildings 2008 2014 11 22 18 National Bank of Malawi Malawi Kwacha 20% Monthly Buildings 2010 2015 24 136 10 Norsad Agency US Dollars 5% ½ yearly PCL guarantee - - 15 427 - FMB Limited US Dollar 9% ½ yearly TNM Shares 2010 2015 75 448 36 Development Bank of South Africa US Dollar Libor ½ yearly NBM shares 2008 2015 315 630 492 Tiger Brands Industries South African Rand - - PCL Guarantee - - - - 13 FMB Limited Malawi Kwacha - Monthly Debenture 2010 2015 13 80 6 1,638 4,135 1,540 COMPANY 2009

Standard Bank Malawi Limited Malawi Kwacha 21% Quarterly PCL Guarantee 2008 2015 176 323 - NBS Bank Limited Malawi Kwacha 21% Monthly Buildings 2008 2014 11 165 18 Development Bank of South Africa US Dollars Libor ½ yearly NBM shares 2008 2015 315 394 492 502 882 510 107 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES 108 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES In millionsofKwacha for theyearended31December2010 NOTES TOTHEFINANCIALSTATEMENTs Kingdom ofDenmark ofMalawi/ Government Security, interest ratesandrepayment termsapplicabletotheloansare shownbelow: of theinterest rates. on lenttothecompanyatforeign currency exchange ratesrulingasatApril2003andrevise some In June2006,theGroup agreedofMalawitoconvertKwachatheloans withtheGovernment Malawi. of servicing theloans,throughofMalawi.Theseloansare theGovernment guaranteedby services intermsofbilateralagreements, whichwere onlenttotheGroup. TheGroup isresponsible for tofinancethedevelopmentoftelecommunicationsArab EconomicDevelopmentandBelgiumGovernment ofMalawiborrowedThe Government fundsfrom Denmark,Nordic DevelopmentFund,KuwaitFundfor a) 31. Nordic DevelopmentFund Libyan Government ofBelgium Government Economic Development Kuwait FundforArab Loans andborrowings(continued) Government ofMalawiGuaranteedLoans

Government of Malawi, the loan was fixed at MK920, 947,960.94 and interest interest was maintainedat3.5%perannum. and 947,960.94 MK920, at fixed was loan the Malawi, of Government In theaddendumsignedinJune2006betweenCompanyand it isrepayable over20years from thedateofreceipt ofallequipment. in arrears. Theloanisunsecured, butranksparipassuwithfuturehalf-yearly loanfacilitiesand payable is and annum per 3.5% at interest bears loan 200,000.The Posts andTelecommunicationsMalawi Corporation)aloanamountingtoDKK53, (then Limited Telecommunications Malawi to available made Government Telecommunications sector. UnderArticle13oftheBilateralAgreement, the support theimplementationofpreparatory programme tosupportthe ofMalawiagrantDanishKronesGovernment (DKK)79,000,000to  The loanisinterest free andunsecured. There are norepayment terms. maintained at7.5%perannum. ofMalawitofixtheloanatMK88,701,816.63with interestand Government rate It wasagreed intheaddendumsignedJune2006betweenCompany with future loanfacilitiesanditisrepayable over15years. pasu pari ranks but unsecured, is loan The 2005. March 31 from starting The loanbearsinterest at7.5%perannumandisrepayable half-yearlyinarrears put at15%perannum. ofMalawitofixtheloan atMK918,457,716.39andtheinterestGovernment was It wasagreed intheaddendumsignedJune2006betweenCompanyand repayable over16yearsincludinga4-yeargraceperiod. The loanisunsecured, but ranksparipassuwithfuture loanfacilitiesandis The loanbearsinterest at 7%perannumandisrepayable half-yearlyinarrears. at 7.5%perannum. ofMalawitofixtheloanatMK627,159,500andinterestGovernment wasset It wasagreed intheaddendum signedinJune2006betweentheCompanyand is it and repayable over17yearsfrom thedateofreceipt ofallequipment. facilities loan future with passu pari ranks but unsecured, is loan The The loanbearsinterest at 15%perannumandisrepayable half-yearlyinarrears. The Government oftheKingdomDenmarkmadeavailableto The Government

Balance attheendofyear Due within1yearorless Due between2and5years Balance attheendofyear Provision madeduringtheyear Paid outduringtheyear Transfer from Press ManagementServices Balance atthebeginningofyear 2009 Balance attheendofyear Due within1yearorless Due between2and5years Balance attheendofyear Provision madeduringthe year Paid outduringtheyear Balance atthebeginningofyear 2010 Company

Balance asattheendofyear Due within1yearorless Due between2and5years Balance attheendofyear Provision usedintheyear Provision fortheyear Balance atthebeginningofyear 2009 Balance asattheendofyear Due within1yearorless Due between2and5years Balance attheendofyear Provision usedintheyear Provision fortheyear Acquisition through businesscombinations Balance atthebeginningofyear 2010 GROUP 32. In millionsofKwacha for theyearended31December2010 NOTES TOTHEFINANCIALSTATEMENTS Provisions claims Legal 11 11 12 11 (5) - 6 - -

Severance 1,970 1,706 2,774 1,970 (202) 466 671 165 pay (32)

Severance Group bonus (504) (739) 300 213 327 300 592 590 506 191 269 592 pay 88 31 69 (1) (4) -

bonus Group Other (117) (361) 117 102 105 176 176 117 185 282 264 685 390 143 185 (90) (33) -

(1,067) 2,758 2,217 2,758 1,338 2,487 3,692 2,934 3,692 1,336 2,758 Total Total 117 503 176 327 (121) 541 728 (809) 4 300 417 190 213 105 503 207 417 377 (91) 1 7 109 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES 110 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES In millionsofKwacha for theyearended31December2010 NOTES TOTHEFINANCIALSTATEMENTs a) The keyassumptionsunderlyingthecomputationofseveranceallowanceare asfollows: on anannualbasis. rates ofdeaths,retirements, resignations anddismissals.Theamountprovided isthesubjectofreview existing employmentlaw. Theactualliabilitytobeincurred willdependonanumberoffactorsincluding The provision includesalleligibleemployeesoftheGroup andisbasedonthecurrent interpretation of 32. severance payprovision. The combinedeffect oftheseamendmentsislikelytoresult inthereversal ofthesignificantportion As atthetimefinancialstatementswere signed,theBillwasnotyetassentedtoby thePresident. d) c) b) a) Pension Act.TheAmendmenthadtheeffect of: Subsequent toyear-end on1March 2011,the MalawiParliamentpassedanAmendmenttothe the MinisterofLabourhadnotyetsetdateonwhichamendedActbecomeeffective. As atthetimefinancialstatementswere signed,theBillwasassentedtobyPresident but c) iii) ii) i) b) iii) ii) i) a) amendment hasbeentoredefine thecircumstances underwhichSeverancePayispayable. The MalawiParliamentin2010passedtheAmendmenttoEmploymentAct.impactofthis e) d) c) b) Provisions (Continued) Projected deathinservice from 7.5%to10%oftheemployees’pensionableincome. Changing oftheminimummandatorycontributionrequirements foremployersandeligibleemployees Reduction oftheminimumyearsserviceneededtoqualify forretirement from 25yearsto20;and Reduction oftheminimumretirement age,originallysetat55years,to50; individuals theyhaveemployedforatleast12months; mandatory pensioncontributions.Employerswillberequired tomakepensioncontributionsfor Establishment ofanationalpensionfundtowhichemployersandemployeeswillmakeperiodic, termination, theformula hasbeenrevisedwiththeintroductionofanewband. While thecalculationofseverance payisstillbasedonthefinalearningsatemployment Death. When thecontracthascometoanend;and On normalretirement (includingretirement onmedicalgrounds); Severance allowance isnotapplicableinthefollowing scenarios:- On unfairdismissalbytheemployer. Redundancy; and Retrenchment; Severance allowance now payableonlyinthefollowing circumstances: Resignation anddismissalrate Discount rate Mortality Retirement age - - - - - 12.5% pafrom theageof20reducing to0%from age50 1% (marketratesof11%lesswageinflation10%) SA 85/90Heavy 60 years 2%

The interest rateonforeign currency accountsrangedfrom 0.50% to4%(2009:0.50% 4%)

Other currencies ZAR denominated Euro denominated GBP denominated US Dollardenominated * Theforeign currency accountsbalancesasat31Decemberwere asfollows:-

- Others - Financeandinsurance - Manufacturing - Agriculture - Personalaccounts - Wholesaleandretail Analysis ofdepositsbysector

- Betweenthree monthsand oneyear - Within three months - Within Total liabilitiestocustomersare payableasfollows:

Non-interest bearingdeposits Interest bearingdeposits Analysed byinterest risktype:

Deposit accounts Savings accounts Others

Foreign currency accounts* Accruals Other Letters ofcredit Current accounts Telecom HoldingsLimited . 4 3 Trade payables 33. In millionsofKwacha for theyearended31December2010 NOTES TOTHEFINANCIALSTATEMENTS 35.  Press Properties Limited Amounts duetorelated partycompanies  companies T Trade anotherpa Liabilities duetocustomers A R d e

N A d R E H T O

pa y y S E L B A ables 22,169 11,086 3,540 4,012 3,531 2010 - - - -

Group

O T

16,433 2,985 2,562 3,389 7,497 2009

O R G - - - -

u 57,075 15,764 57,075 36,033 57,075 55,302 57,075 56,165 24,416 5,721 4,166 1,773 p 7,047 2,656 3,898 3,806 6,516 9,848 7,047 2010 2010 910 167 167 737 512 43 21 34 18 1 2 - - - Company Group 52,086 52,086 30,390 52,086 51,692 52,086 51,184 16,266 21,288 6,844 6,245 4,970 1,754 3,987 4,424 4,687 8,277 6,255 2009 2009 394 902 929 340 220 220 16 ------111 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES 112 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES The fairvalueofexercised share optionsasat31December2010isMK23million(2009:MK28million). Options notexercised atyear end

Options grantedtoemployees Options Investment income-dividend Direct servicecosts Services Number ofshares released andfullypaid Interest expense Number ofshares allocated toemployeesatbeginningoftheyear Shares so inwhatmode. expired inDecember2006 andtheBoard iscurrently reviewing thepositionwhethertoreinstate itandif 134,896 share atapriceof K14.54pershare. Theoptionwastobeexercised within5years.Thisscheme of shareholders on13July2000.Asaresult ofimplementing thisscheme,employeeshavetakenup An employeeshare optionschemewasapproved by shareholders atanextra-ordinary generalmeeting Equity compensationbenefit Limited. Underthisarrangementemployer’s liabilityislimitedtothepensioncontributions. The Fundisadefinedcontributionfundandindependentlyadministered byNICOLifeInsuranceCompany Scheme coveringallcategoriesofemployeeswith2,183(2009:2,646)membersasat31December2010. The principalgroup pensionschemeisthePress Corporation LimitedGroup PensionandLifeAssurance Liability fordefinedcontributionobligations The expenseisrecognised intheoperatingexpenselineitemprofit orloss. Interest Number ofshares subject tothescheme In millionsofKwacha for theyearended31December2010 NOTES TOTHEFINANCIALSTATEMENTs Contributions toadefinedcontributionplan 36. Cost ofsales 38. Direct tradingexpenses Sales 37. Employee benefits Revenu 30,552 59,349 15,972 27,596 33,827 1,153 1,803 9,550 2010 367 -

Group 47,560 25,427 15,326 22,605 24,509 1,116 1,706 7,725 2009 297 -

4,269,354 4,404,250 4,404,250 4,404,250 134,896 1,915 1,826 2010 41 48 9 - 9 - - Company 4,269,354 4,404,250 4,404,250 4,404,250 134,896 1,658 1,560 2009 17 48 17 50

-

- -

Other Depreciation andamortisation Repairs andmaintenance Bad debts Motor vehicleexpenses Security services Stationery andoffice expenses Legal andprofessional fees Pension contributioncosts Personnel costs Management fees

Royalty fees Share ofprofits from associatesinNBMLtd

-executivedirectors’ remuneration Sundry income Fair valueadjustmentofotherassets Other Directors’ emoluments-fees &expenses

Operating leaseincome Fair valueadjustmentofinvestmentproperty Other Carriage outwards -otherprofessional services Property rental income Recoveries from impaired loansandadvances Staff training Selling expenses -prioryearfees Bad debtsrecovered Profit/(loss) ondisposalofproperty, plantandequipment Net gainsfrom dealinginforeign currencies 39. In millionsofKwacha for theyearended31December2010 NOTES TOTHEFINANCIALSTATEMENTS Traveling costs 42. Auditors’ remuneration -current yearfees 41. Marketing andpublication 40. Distribution costs Other operating income Other operating expenses Administrative expenses

18,942 2,750 3,652 3,424 4,131 1,372 6,707 1,512 1,504 2010 119 307 880 591 460 254 367 636 202 106 501 282 120 613 191 170 326 819 206 130 974 212 41 (41) 40 91 6 3 - Group 16,512 2,621 3,235 1,204 6,120 4,125 1,099 1,808 2009 177 112 180 (189) 403 718 420 434 173 297 607 102 540 278 159 562 158 317 433 270 280 107 559 38 16 95 17 38 3 - 1,118 2010 319 469 280 213 54 16 86 21 15 51 32 13 68 18 22 (1) - - - - 2 ------

Company 1,009 2009 197 161 425 909 887 30 13 18 11 60 33 15 23 11 20 - - - - - 8 7 ------113 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES 114 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES Net financeincome/(costs)

Income taxexpense Other

Loans Origination andreversal oftemporarydifferences Bank overdrafts Interest expense Utilisation oftaxlosses Deferred taxexpense Bottling andBrewing Group Limitedfrom equityaccountingtoproportional consolidation(notes9,22and23). controlled entity. Asaresult ofthischangetheCompanyhaschanged itsmethodofconsolidationthe in theBottlingandBrewing Group Limitedtakingtheirshareholding to49.57% effectively makingitajointly shareholding 6% additional an acquired AS Carlsberg partner venture joint its with together Company The subsidiaries and joint ventures ventures joint and subsidiaries associates, from received dividend on tax Final Other

in acquiree (note9) interest pre-existing of value fair to Remeasurement Adjustments forprioryearunder-provision Bottling andBrewing Group Limited In millionsofKwacha for theyearended31December2010 NOTES TOTHEFINANCIALSTATEMENTs Interest incomeonbankdeposits Interest income 43. based ontaxableprofits (2009:30%) 30% at year Current Current taxexpense 45. income tax expense Limbe LeafTobacco CompanyLimited 44. Finance incomeandcosts Share ofresults from associates

3,406 2,297 (1,205) 1,092 2,612 2,119 2,555 2010 (295) 794 713 247 (486) (424) 139 247 39 27 81 30 -

Group 2,941 3,498 3,549 2009 (557) (633) (140) (449) (615) (414) (165) 166 658 427 148 231 18 (36) 76 89 -

2010 (169) (235) (157) 183 183 183 (66) 45 (12) 66 21 ------

Company 2009 (101) 155 (223) (208) 122 155 155 155 155 122 (13) (2) ------or obtaingroup relief. Under theMalawiTaxation Actitisnotpossibletotransfertaxlossesfrom onesubsidiarytoanother or utilisationagainstfuture taxableincome,includingcapitalgains,onlyinthesamecompany. carrying value.Tax lossesare subjecttoagreement bytheMalawiRevenueAuthorityandare availablef have beensetoff against deferred taxliabilities,whichwouldariseonthedisposalofrevalued assetsat include capitallosses,whichcanbesetoff againstfuture capitalgains.Where relevant, thesetaxlosses The Companyisestimatedtohavetaxlossesofapproximately MK3.3billion(2009:MK5.3billion).These

subsidiaries andjointventures Effects offinaltaxondividendsfrom associatesand

Unutilised taxablelosses

Underprovisions inprevious periods Non-controlling interest Profit from continuingoperations Non deductibleexpenses Income notsubjecttotax Diluted earnings pershareDiluted earnings (MK) results fortheyear taxable on based (2009:30%) 30% at tax Current Number ofshares inissue Profit attributable to owners of the company the of owners to attributable Profit Profit before incometax using theweightedaveragetaxrateapplicabletoprofits oftheGroup andCompanyasfollows: The taxontheGroup’s andCompany’s profit before taxdiffers from theoretical amountthatwouldarise Reconciliation ofeffective taxrate Weighted average number of ordinary shares ordinary of number average Weighted Basic earnings pershareBasic earnings (MK)

In millionsofKwacha for theyearended31December2010 NOTES TOTHEFINANCIALSTATEMENTS Diluted earnings pershareDiluted earnings (from continuedoperations) pershareBasic earnings (from continuingoperations) shares outstandingduring theyearof120.2million(2009:million). ordinary shareholders ofMK5,316million(2009:MK3,273million)andaweightedaveragenumberordinary pershareCalculation ofbasicearnings anddilutedisbasedontheprofit attributableto . 6 4  earnings pershare B C I S A

S G N I N R A E

R E P

E R A H S 11,140 3,406 3,342 2010 27 (99) 81 30 25

Group N A

2,941 2,573 8,578 d d 2009 (140) (131) 474 76 89

L I u 5,308 120.2 44.16 (2,426) E T 7,734 44.23 120.2 44.23 5,316 44.16 2010 2010 183 270 899 (87) - d - - -

Company Group 3,240 (2,397) 5,637 27.23 120.2 1,440 27.23 27.23 3,273 3,273 120.2 120.2 26.96 26.96 2009 2009

(277) 155 432

- - - - 115 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES 116 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES not expectedtogiveriseasignificantcosttheGroup. event thatlegalproceedings findtheGroup tobeinthewrong. Intheopinion of thedirectors theclaimsare outcome ofwhichisuncertain.Theamountdisclosedrepresents anestimateofthecosttoGroup inthe Sundry legalclaimsrepresent legalclaimsmadeagainsttheGroup intheordinary courseofbusiness,the Sundry legalclaims part oftherelevant counterparty. National BankofMalawiwhichwouldcrystallizeintoanassetandaliabilityonlyintheeventdefaulton Guarantees andperformancebondsrepresent acceptances, guarantees,indemnitiesandcredits issuedby Guarantees andperformancebonds Total contingent liabilities Totalcontingent Sundry legalclaims Corporate expenses These commitmentsare to befundedfromresources internal andlongtermloans. Interest income Local guaranteesandperformancebonds Sales withingroup companies In millionsofKwacha for theyearended31December2010 NOTES TOTHEFINANCIALSTATEMENTs Foreign guarantees 47. Loans grantedtogroup companies December 31 at As Details oftransactionsbetweentheGroup andotherrelated partiesare disclosedbelow Total remuneration isincludedinadministrativeexpensesmore fullydisclosedinnote41. Executive officers are alsoeligibletoparticipateintheGroup’s share optionprogramme (refer note36). Directors oftheCompanyandtheirimmediaterelatives control 0.22%ofthevotingshares oftheCompany. Transactions withDirectors andExecutiveOfficers Press Trust, duringbothperiods. There were nomaterialrelated partytransactionswiththeultimatecontrolling entityoftheGroup, with and ventures joint its Directors andExecutive Officers. associates, subsidiaries, its with relationship party related a has Group The 49. Authorised butnotyetcontractedfor for contracted and Authorised 48. Contingentliabilities related parties Capital commitments

17,802 10,206 3,423 2,498 1,322 1,176 2,099 7,596 2010 925 324 40 55

Group

12,179 4,540 5,370 5,620 5,620 1,080 3,764 1,099 6,809 6,809 2009 437 776 870 49 Kwacha/South AfricaRand Kwacha/British Pound Kwacha/Euro share (2009:MK2.00). The proposed finaldividend fortheyearisK360.6million(2009:K240.4million)representing MK3.00per Kwacha/United States Dollar States Kwacha/United At thetimeofsigningtheseconsolidatedfinancialstatements, theexchangerateshadmovedto:- Inflation rates as at 31 December (%) December 31 at as rates Inflation Dividend pershare (MK) South African Rand (ZAR) Rand African South Number ofordinary shares inissue(million) British Pound (GBP) Pound British

Euro Interim dividend(current) United States Dollar ( USD) ( Dollar States United Final dividend(prior)

ventures owedtheGroup MK893million(2009:MK890 million). joint date reporting the at and basis arm’s an length at Group the from goods purchased ventures Joint Joint ventures nil) MK (2009: balance significant any Group the owe not Associates purchased goodsfrom theGroup atanarm’s lengthbasisandatthereporting dateassociatesdid Associates Other related partytransactions In millionsofKwacha for theyearended31December2010 NOTES TOTHEFINANCIALSTATEMENTS as disclosedinnote32above. provision pay severance to relating issue the from apart statements financial consolidated these in disclosures Subsequent tothereporting date,nosignificanteventshave occurred necessitating adjustmentstoor 52. Exchange ratesasat31December. National the in increase Consumers PriceIndexwhichrepresentsthe anofficial measure ofinflation. with together below, stated are group and company the of performance The averageoftheyear-end buyingandsellingratesofthemajorforeign currencies affecting the 51. Second interimdividend(prior) 50. Dividen pershare

Subsequent e vents Inflation andexchange rates

248.8 217.3 120.2 235.4 202.8 150.8 150.8 150.8 4.66 23.2 2010 2010 Group andCompany 23.7 MK 560 200 240 120 6.3

120.2 237.3 237.3 212.6 212.6 147.4 147.4 2.45 2009 2009 20.5 20.5 MK 295 121 174 7.6 7.6 -

117 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES 118 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED AND ITS SUBSIDIARIES In millionsofKwacha for theyearended31December2010 ON THEMALAWI STOCKEXCHANGE PERFORMANCE OFPRESSCORPORATION LIMITED Dividend yield% Earnings pershareEarnings % Value ofshares traded(MKm) Net assetvalue(NAV) pershare Lowest (MKpershare) Highest (MKpershare)

31 December(MKpershare) Last tradedprice Subscription priceatlistingMK14.89 Market capitalisationat31December(US$’m) Market capitalisationat31December(MKm) Malawi StockExchange(MSE)Marketstatistics Total numberofshares inissue Share Market Total Others Old MutualLifeassurance(Malawi)Limited Shareholdings Deutsche BankTrust CompanyAmerica Press Trust 120,255,713 totalshares 176.67 353.94 153.00 170.00 170.00 135.57 20,443 in issue 100.00 44.23 21.81 12.27 21.46 44.47 2.74 2010 % of

120,255,713 120,255,713 26,224,829 14,749,855 25,805,780 53,475,249 Number 475.00 319.52 120.00 205.00 163.00 147.44 19,602 shares 27.23 1.51 2009 of 10,001 -1,000,000 1,001 -10,000 120,255,713 Shareholding 1,000,000 + 2,067.42 1 -1,000 319.52 195.00 225.00 205.00 175.34 24,652 27.23 range 1.92 2008

110,234,502 shareholders Number 894.09 205.21 210.00 161.05 10,638 96.50 1,744 1,059 1.56 7.58 2007 568 107 99 10 of 110,234,502 588.68 187.74 100.00 15.15 50.00 96.50 50.00 76.34 5,512 60.72 32.57 3.76 2006 6.14 0.57 % SHAREHOLDER’S IAR Press CorporationLimitedwebsite: Blantyre P OBox947 ServiceCentreVictoria National BankofMalawi Bankers Email :[email protected] Tel: +2651824555Fax:821064 Blantyre P OBox2790 Savjani &Company Legal Advisors Email :[email protected] Tel :+2651820744Fax:575 Blantyre P OBox508 Public Accountants&BusinessAdvisors KPMG Independent Auditors [email protected] Email :[email protected] Tel :+2651833569Fax:824656 Blantyre P OBox1227 C JEvans Company Secretary Administration Final Interim DIVIDENDS: preliminary results announcements. and interim of release to prior periods two-month for operate directors and employees PCL’s in by trading on shares restraints ethics, on code company the with accordance In Annual FinancialStatements Preliminary announcement ofannualresults, fortheyear Announcement ofresult, for half-yeartoJune Reports Annual GeneralMeeting-Jne June September Declared

Y ANDADMINISTRATION www.presscorp.com Global DepositaryReceipt London StockExchangeasa Malawi StockExchangeand Location ofListing [email protected] Email :[email protected] Fax +442075476073 Tel :+442075453312 London EC2N2DB Street1 Great Winchester House Winchester Deutsche BankTrust CompanyAmericas London Depositary Tel :+2651820900Fax:464 Blantyre P OBox1438 National BankofMalawi Securities Department Transfer Secretaries Blantyre P OBox1227 AvenueVictoria 6th and7thFloors,ChayambaBuilding Registered Office: Reg. No.2395 Limited. Corporation Press Email :[email protected] - June - March - September August October Paid Paid

119 ANNUAL REPORT 2010 PRESS CORPORATION LIMITED NOTES PRESS CORPORATION LIMITED PRESS CORPORATION ANNUAL REPORT 2010

120