ANNUAL REPORT AND FINANCIAL STATEMENT 2009 Contents Yaliyomo 3-4 50th Anniversary Commemoration 5 Notice of Annual General Meeting 6 Tangazo la Mkutano wa Mwaka 9 Corporate Governance 11-12 Chairman’s Statement 13-14 Taarifa ya Mwenyekiti 16-17 Group Chief Executive’s Report 18-19 Ripoti ya Afisa Mkuu Mtendaji wa Kampuni 21-22 Corporate Social Responsibility 23-24 Human Resources 25 Board of Directors’ List 26-27 Board of Directors’ Profiles 28 Directors’ report 29 Taarifa ya Wakurugenzi 30 Statement of Directors’ responsibilities 32-33 Executive Team Profiles 34 Report of the Independent Auditor 36 Financial statements 36 Group profit and loss account 37 Group and Company balance sheet 38 Consolidated statement of changes in equity 39 Company statement of changes in equity 40 Group cash flow statement 42-69 Notes to the financial statements 70 Five year financial summary 70 Taarifa Fupi ya Kifedha ya Miaka Mitano 71 Principal shareholders and distribution of shareholding 75 Proxy form 76 Fomu ya Uwakilishi 1 ANNUAL REPORT AND FINANCIAL STATEMENT 2009 Content 50th Anniversary Commemoration The Aga Khan reviews printing quality of the Nation’s press during a visit in the mid - seventies. He is flanked by Managing Director, Stan Denman (left) and Technical Director, Vin durman (right) The Nation was founded by His Highness the Aga Khan as a voice – the economic development arm of the Aga Khan Development for the majority African population as it clamoured for independence. Network (AKDN). The move not only gave NMG a new source of After Uhuru, the newspaper became an effective voice of the people. corporate strength, but it also anchored the company in a broader As the Nation Media Group (NMG) marks its 50th anniversary, it development philosophy designed to bring excellence and best would be too limiting to perceive this occasion as a mere milestone practices to societies in the developing world. It also allowed in a history of a media organization, no matter how successful. The NMG to benefit from the Network’s significant experience in East Nation’s path has been closely entwined with the history of Kenya, Africa The Aga Khan Fund for Economic Development is neither East Africa, and the entire continent during a period filled with a charitable foundation nor a vehicle for wealth generation. It is a momentous developments. NMG itself has undergone a remarkable for profit, international development agency that, because of its transformation. From two struggling Kenyan newspapers, one in institutional background and social conscience, invests in projects, Kiswahili and one in English, half a century ago, the group has grown which will make a positive contribution to the quality of life for those into the largest multi-media enterprise in East and Central Africa. At who are impacted by their activities. The broader philosophy of the same time, the organization has evolved from a small private the Aga Khan Development Network is founded on the premise company into a publicly-traded corporation, one of the largest on that developing societies deserve the best and that settling for the Nairobi Stock Exchange, with a majority of its shares owned by less, though often tempting, is an increasingly dangerous option. individual East African shareholders. Our world is competitive: like other AKFED companies, the Nation Media Group must strive to meet world-class standards if it is to In 2003 His Highness the Aga Khan transferred his shares in thrive and grow in the globalized world of the 21st century NMG to the Aga Khan Fund for Economic Development (AKFED) 2 3 ANNUAL REPORT AND FINANCIAL STATEMENT 2009 50th Anniversary Commemoration Notice of Annual General Meeting The media in general and the Nation Group in particular can play a driven by an ethic of responsible service, maintain the confidence Notice is hereby given that the Forty Seventh Annual General registered as holders of the ordinary shares in the capital of the central role in the shaping of the region and the continent in the years of its reading, viewing, advertising and shareholding constituents. Meeting of the Shareholders of Nation Media Group Limited will be company at the close of business on 7th May 2010 at the rate of ahead, as part of the growing influence of civil society institutions in an As we celebrate 50 years of publishing, the biggest factor in the held at the Amphitheatre, Kenyatta International Conference Centre, one new fully paid ordinary share for every six ordinary shares Nation’s success is that the founders were genuine in their desire increasingly pluralistic environment. Indeed Kofi Annan, arbitrator of Nairobi on Wednesday 19 May 2010 at 2.00 p.m. for the following held by such holders respectively and further that such shares the post-election reconciliation agreement in Kenya, acknowledged to have an independent media group. Over the years, the group purposes: shall not qualify for the payment of the final dividend for the year the group’s work in mobilizing the forces of civil society in the cause has maintained high governance standards that have seen its media 2009 declared by this meeting” of stability. Commemorative occasions also present an excellent outlets through challenging times. As we march into the future, our opportunity to look toward the future. NMG has had an impressive promise to Kenya on behalf of Nation staff is that we will stay true to ORDINARY BUSINESS record of past achievement, dealing successfully over five decades our stake-holder’s vision and leave a worthy legacy. 1. To receive the financial statements for the year ended 31 7. “That the Directors be and are hereby authorized to register and with a wide variety of challenges and opportunities, and emerging December 2009, and the chairman’s, directors’ and auditors’ cross list the company’s shares on the Uganda Stock Exchange; as what some have called a journalistic “Mzee” of East Africa. But reports thereon. the Dar es Salaam Stock Exchange and the Rwanda Stock now, NMG’s future depends on a continuous ability to learn and to Exchange and are authorized to do and effect all acts and things adapt, to attract leaders and employees of the highest quality, and, 2. To confirm the payment of the interim dividend of Shs.1.50 per required to give effect to this resolution.” share (60%) and to approve the payment of a final dividend of ERA OF EXPANSION Shs.4.00 per share (160%) on the ordinary share capital in respect 8. To delete the wording of the existing Article 155 and to replace of the year ended 31st December 2009. with the following new wording: 3. T o confirm and authorise the directors to fix the remuneration of “A notice may be given by the Company to any member either the auditor, PricewaterhouseCoopers. personally or by sending it by post, fascimille or electronic mail to the member’s registered postal address, to the member’s fascimille 4. To elect and re-elect the following directors: In accordance with or to the member’s designated electronic mail address. A notice Article 96 of the Company’s Articles of Association, Dr. Y Jetha, sent by post shall be deemed to be effective by properly addressing, a director appointed on 24th September 2009 and Mr Richard prepaying and posting the notice and shall be deemed to have been Dowden, a director appointed on 16th March 2010, retire and being received within seven days of posting. A notice sent by fascimille or eligible, offer themselves for election. electronic mail shall be deemed if sent to the member’s designated fascimille number or electronic mail address to have been received In accordance with Article 110 of the Company’s Articles of on the date of dispatch of the notice as confirmed by the recipient’s Association, Mr W D Kiboro and Mr S Gitagama, retire by rotation fascimille number or confirmation of the dispatch to the members 1960s Nation cover: 1970s Nation cover: 1970s Nation cover: The title was reversed in Italic capitals and The masthead changed to Clarendon, A new slogan was introduced: and being eligible, offer themselves for re-election. designated electronic mail address.” centered in a block on the front page. no longer reversed and with Daily or The newspaper that serves the Nation. Sunday in upper and lower case. SPECIAL BUSINESS By order of the Board To consider and if thought fit, to pass the following resolutions as J C Kinyua Special Resolutions. Secretary 16 March 2010 5. “That Dr M J Aliker, a director who retires in accordance with Note: A member entitled to attend and vote may appoint a proxy to Article 101 of the Company’s Articles of Association and who is over attend and vote on his behalf. Such proxy need not be a member the age of 70 years, shall not withstanding that fact, be re-elected of the Company. To be valid, proxy forms must be deposited at as a director of the Company for a further period of one year.” the Company’s registered office not less than 48 hours before the appointed time of the meeting. 6. “That subject to the approval of the Capital Markets Authority and the Nairobi Stock Exchange, the sum of Kshs. 59,421,050 being part of the amount now standing to the credit of the revenue reserves of the company, be capitalized and that the same be applied in making payment in full at par for 23,768,420 ordinary 1980s Nation cover: 2000s Nation cover: 2000s Nation cover: Ahead of its time, a modular style The friendly face of a Nation that A new typeface was adopted shares of Kshs.