P R E S S C O R P O R AT I O N L I M I T E D C h a i r m a n s S t a t e m e n t

Turnover
MK Millions
50,000 45,000 40,000

US$ Millions
350 300 250

Financial Highlights Mission and Values Statement Chairmans Statement Group Chief Executives Report Profiles of Directors and Management Five Year Group Financial Review Corporate Governance Directors Report Directors Responsibilities for the Financial Statements Independent Auditors Report Consolidated Statements of Financial Position Consolidated Statements of Comprehensive Income Consolidated Statements of Changes in Equity Notes to the Financial Statements Press Corporation Limited and its

3 4 7 13 28 32 34 39

35,000 30,000 25,000 20,000 15,000 10,000

200

150

100 50

5,000 0 05 06 07 08 09 0

CONTENTS

MK m 15,692 24,572 29,080 43,614 47,560 US$ m 135 187 208 310 325

41 42

Profit Attributable to Ordinary Shareholders

MK Millions
3,500

US$ Millions
25

43

3,000 20 2,500

44

2,000 1,500 1,000

15

45 49

10

5 500

Subsidiaries on the Malawi Stock Exchange 126

05

06

07

08

09

MK m 1,657 1,608 1,708 3,140 3,273 US$ m 14 12 12 22 22

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FINANCIAL HIGHLIGHTS
Group Summary (in millions) Turnover Attributable earnings Shareholders equity Share performance Basic earnings per share Cash retained from operations per share Net asset value per share (shareholders equity per share) Dividend per share Market price per share Price earnings ratio Number of shares in issue (in millions) Volume of shares traded (in thousands) Value of shares trades (in MK miilions) Financial statistics After tax return on equity (%) Financial gearing 14.76 17.05 16.34 16.40 (9.66) (3.95) 14.76 17.05 145.99 147.44 16.34 16.40 140.59 141.99 (9.66) (3.95) 320 2.45 163 6.0 120.2 3,528 475 306 4.17 205 7.4 120.2 9,475 2,067 4.56 (41.15) (20.49) (19.20) 0.00 (62.77) (77.02) 2.17 0.02 1.11 6.0 120.2 3,528 3.25 2.07 0.03 1.39 7.4 120.2 9,475 14.16 4.56 (41.15) (20.49) (19.20) 0.00 (62.77) (77.02) 27.23 108.52 27.67 78.79 (1.59) 37.73 0.18 0.74 0.19 0.53 (1.59) 37.73 47560 3273 38406 43614 3140 34653 9.05 4.24 10.83 326 22 263 310 22 235 5.01 0.38 11.93 Malawi Kwacha 2009 2008 Change % US Dollars 2009 2008 Change %

Average monthly exchange rates Year end exchange rates

Ordinary Shareholders Funds

MK Millions
45,000 40,000 250 35,000 30,000 25,000 150 20,000 15,000 10,000 50 5,000 0 05 06 07 08 09 0 100
2009

US$ Millions
300

200

MK m 8,366 12,722 13,546 34,653 38,406 US$ m 68 98 97 244 260

Exchange Rate (MK/US$) Average monthly exchange rate Year end exchange rate 2009 145.99 147.44 2008 140.59 141.99 2007 139.82 140.32 2006 131.55 139.32 2005 116.35 123.78

Annual Report

P R E S S C O R P O R AT I O N L I M I T E D C h a i r m a n s S t a t e m e n t

To be a leading Corporation acting ethically and responsibly in Malawi and the region generating real growth in shareholder value through diverse goods and services
C O R P O R AT E S O C I A L R E S P O N S I B I L I T I E S
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 Groups operations.

MISSION AND VALUES S TAT E M E N T

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 during the year by the Ethics Institute of South Africa.

I ntegrit y
Press Corporation Limited is committed to a policy of fair dealing and integrity in the conduct of its businesses. The Corporations 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.

E m plo y m ent e q u it y
Press Corporation Limiteds 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 individuals 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

2009

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.

Annual Report

E n v iron m ental m anage m ent

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.

P R E S S C O R P O R AT I O N L I M I T E D

Press Corporation Limited has embarked on the first phase of its Going Green campaign by enrolling various partners. The campaign includes tree planting and re-cycling as much waste paper as possible. One of Press Corporation Limiteds subsidiary companies continues its partnership with Government in conducting trials and tests for a flexi-fuel vehicle which can run on both petrol and ethanol.

S ocial in v est m ent

In recognition of its social responsibilities Press Corporation Limited is involved in social investment directly through the Corporate Head Office and indirectly through its subsidiary and associate companies, and makes donations in cash and in kind to organisations involved in serving the less privileged members of the community. To this end, apart from other donations, a notable contribution was one of MK20 million to a private hospital for it to acquire a dialysis machine. This amount was subscribed to by Press Corporation Limited and some subsidiary and associate companies. Press Corporation Limited also awards a cash prize to the student who completes the final stage of the ACCA programme at the Malawi College of Accountancy with the highest marks in the Strategic Financial Management paper.

H ealth facilities and H I V / A I D S P olic y

Press Corporation Limited has an HIV/AIDS Policy whose core objective is to promote the Companys responsibility for providing a healthy and equitable work environment for all employees, including those with HIV/AIDS. Members of staff at the Press Corporation Limited clinic have been trained to provide the appropriate counselling to employees who are diagnosed HIV positive. The clinic is fully equipped to provide free anti-retroviral therapy to employees of the Group, and on payment of a nominal fee, to the general public. This latter service to members of the general public is provided primarily as one way of fulfilling some of its social responsibilities.

A nti - C orr u ption

Press Corporation Limited continues to support one of the main objectives of the Business Action Against Corruption (BAAC) which is to actively promote business commitment to fighting corruption and foster widespread support for the Business Code of Conduct and to pursue linkages with relevant national and regional business led anti-corruption initiatives. As an extension of the Companys Fraud Policy, the Company subscribed to Tip Offs Anonymous, a whistle-blowing hotline service provided by Deloitte. This can be used by those of the Groups employees who may have reservations about using the internal reporting mechanism provided for in the Fraud Policy.
Annual Report 2009

National Bank, during another successful year of growth, built in 2009 and opened in early 2010 a new and much acclaimed Mzuzu branch

P R E S S C O R P O R AT I O N L I M I T E D

T H E G E N E R A L E C O N O MY
The Malawi economy continued to register significant economic growth. In 2009 GDP grew by 7.6%. The growth is attributed to strong agricultural production, increased mining and quarrying, as well as the service sector. Agriculture remained to be the key driver of the GDP due to solid performance in the maize and tobacco sub sectors, following the continued success of governments farm input subsidy programme, good weather and successful irrigation schemes. Tobacco earnings stood at US$433.1 million with sales of 232.1 million kg. at US$1.87/kg in 2009, which was lower than 2008s US$472.4 million, with sales of 195.0 million kg at US$2.42/kg. The price differences were due to overproduction of tobacco in 2009. The mining sector also had a significant contribution subsequent to the uranium exports which started in the third quarter of 2009. The manufacturing sector which has been in decline over the past few years was further weighed down by shortages of foreign exchange and fuel, and also persistent electricity power cuts. Malawi experienced an acute shortage of foreign exchange as a result of demand for imports more than outstripping proceeds from exports. The foreign exchange shortage, coupled with transportation problems in the countrys major importation routes caused a shortage of fuel in the country in the months of November and December 2009. Inflation remained at a single digit figure of 8.4% despite shocks from fuel scarcity, the effects of which were offset by the solid harvest. This however was an increase from the previous years 8%. The Chairman of PCL, Dean C Lungu

C hair m an s S tate m ent

E X C H A N G E R AT E S A N D M A R K E T DEVELOPMENT
The Kwacha remained relatively stable for the first half of the year, trading at MK140/US$ for the better part of the year, however as a result of the excess demand for foreign exchange for imports, the Kwacha started to depreciate towards the end of the year to close at MK145/US$. Against the Rand, the Kwacha traded at MK15/ZAR in the first half year then later weakened to close at MK20/ZAR. The gross official reserves closed at a critical level of 1.0 months of import cover. The reserves had been depleted as a result of heightened demand of foreign exchange resulting from episodes of economic growth coupled with the importation of fuel and fertilisers, despite the high tobacco proceeds as well as uranium exports.
Annual Report 2009

P R E S S C O R P O R AT I O N L I M I T E D C h a i r m a n s S t a t e m e n t

M O N E TA R Y A N D F I S C A L P O L I C Y
The Central Bank maintained its tight monetary stance. The bank rate remained unchanged from December 2008 at 15% and the Liquidity Reserve Requirement was still at 15.5%. Commercial banks also maintained their lending and saving rates, on average at 19.6% and 2.8% respectively. There was a rise in treasury bills subscription to MK215.8billion from MK169.7 billion registered in the previous year. The development mirrored a rise in maturing treasury bills which recorded an annual increase of 27.4% from MK155.7billion in 2008 to MK198.4billion in 2009 causing the overpriced bills to be rejected and thereby keeping the yields relatively low.

STOCK MARKET DEVELOPMENTS

The global recession negatively affected the Malawi Stock Exchange activity through reduced foreign participation on the market. Both the Domestic Share Index (DSI) and the Foreign Share Index (FSI) dropped in points to 4087.19 and 314.21 from 4815.55 and 521.59 respectively; causing market capitalisation to close off relatively lower than the previous year.

OUTLOOK FOR 2010

Economic growth for 2010 is forecast to be at 6%. The growth is expected to be based on mainly mining, communication, accommodation and food services. In the Agriculture sector, tobacco production will be negatively affected following the erratic rainfall pattern and the harvest is estimated to be reduced. However, prices are likely to improve due to governments intervention on setting minimum prices as was the case in the last season and potential entry of Brazilian tobacco buyers.

GROUP PERFORMANCE
The year 2009 was a challenging year for the Press Group of companies. Earnings per share declined slightly from MK27.67 per share in 2008 to MK27.23 per share in 2009. Diluted earnings per share were also MK27.23 per share compared to MK26.12 for 2008 when a rights Issue was concluded in August of that year. Consolidated profit after tax of MK5, 670 million was
2009

achieved in 2009, compared to MK5, 663 million for 2008 (restated for the treatment of Telekom Networks Malawi Limited as a subsidiary instead of as an associate following the establishment of Press Corporations control). Profit attributable to equity holders of the parent company improved marginally from MK3, 140 million in 2008 to MK3, 273 million in 2009. An increase of 4.3% on prior years result. This performance was achieved in spite of persistent foreign exchange shortages, erratic fuel supply, coupled with the generally low discretionary spending power among the rural masses.

Annual Report

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MAJOR GROUP C O M PA N Y HIGHLIGHTS:

Maldeco Aquaculture Limited
The company faced a shortage of a key ingredient in the manufacture of fish feed during the year which negatively impacted on the growth of fish resulting in the company suffering a stock impairment loss of MK105.0 million. The shortage was due to unavailability of foreign exchange at the time the company needed to import the feed ingredient Supplies of the ingredient have now resumed.

Malawi Telecommunications Limited

The company completed the first phase of the Fibre Optic Backbone project when the cities The Groups share of associated companys results was MK658.0 million. An increase of 15.8% on the previous year result of MK568.0 million (restated).This was due to very strong performance by the Bottling and Brewing Group Limited. Limbe Leaf maintained its profit trend following the companys recovery from losses in its agronomy projects which were booked in 2007. An interim dividend of MK120.0 million (MK1.0 per share) was paid on 30 October 2009. Directors have approved the payment of a second interim dividend for the year 2009 of MK120.2 million (MK1.00 per share) payable on 30th April 2010. Directors have proposed a final dividend for the year 2009 of MK240.4 million (MK2.00 per share). A resolution to approve the final dividend will be tabled at the forth coming Annual General Meeting. of Blantyre and Lilongwe were connected during the year. Work on the project is progressing with the aim of getting the City of Mzuzu connected to the backbone in the first half of the year 2010. See map above.

Ethanol Company Limited

The company completed the second phase of its plant revamping project during the year thereby enabling the company to increase its production of high quality extra neutral alcohol, with much improved production efficiencies.
Annual Report 2009

P R E S S C O R P O R AT I O N L I M I T E D C h a i r m a n s S t a t e m e n t

P rospects for 2 0 1 0
As the world economy is beginning to show signs of recovery and the improved prospects of foreign exchange availability in Malawi, 2010 should offer better prospects for most of the Press Group companies.

Management of the Company

There were no changes in the management team during the year.

The Board of Directors

There were no changes in the composition of the board during the year.

P R E S S C O R P O R AT I O N L I M I T E D C h a i r m a n s S t a t e m e n t

A ppreciation
I thank fellow Directors, management and staff for their continued support, cooperation and dedication during the year and look forward to further improvement in the Groups performance and in the implementation of its strategy.

Dean C. Lungu Chairman

National Banks

magnificent new

headquarters, next

to the Reserve Bank in Blantyre, will be completed in 2010

Maldeco Aquaculture now has 42 farmed chambo

cages in southern Lake Malawi and given only an to supply a major part of Malawis protein needs

assurance of vital imported inputs, holds the potential

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OVERVIEW
Press Group registered consolidated profit after tax of MK5,670 million in 2009, compared to MK5, 663 million for 2008 (restated for the treatment of Telekom Networks Malawi Limited as a subsidiary instead of as an associate following the establishment of Press Corporations control). Profit attributable to owners of the parent company improved marginally from MK3,140 million in 2008 to MK3,273 million in 2009. These results were achieved against a background of erratic fuel supplies and persistent shortages of

gro u p chief exec u ti v e s report

foreign exchange which negatively impacted on some of the Groups operations especially the Food and Beverages segment, the telecommunications segment and, the fuel distribution business. The financial services segment however, had a very successful year, and recorded strong earnings growth over the previous year and so did the Ethanol producing companies.

MALDECO AQUACULTURE LIMITED

The company registered its best performance in terms of fingerling production and tonnage harvested. Tonnage harvested also increased by 85% from the previous year. Sales however were 50% below budget mainly because the company could not import fishmeal, an essential ingredient for producing fish feed due to shortage of foreign currency. This resulted in huge biomass loses because the fish could not grow as expected. Fish was left in cages for more than the usual harvest time of 13 months hoping it would grow but was discovered that even after 13 months the fish was still smaller than the normal harvest size and had to be sold at a reduced price. Consequently the company incurred a loss of MK115 million made of MK71 million on fish sold at a reduced price and MK40 million valuation loss on fish that was still in inventory at end of the year. The outlook for the company is however still promising as most of the teething problems have been resolved and the company has now managed to build up good stock levels of fishmeal and other raw materials needed for production of fish feed.
2009

PCL Group Chief Executive,

Dr Mathews A P Chikaonda

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 ALDECO FISHERIES (A DIVISION M OF THE FOODS COMPANY LTD)

The companys performance was marginal due to low fish catches. Catches were 18% below budget and 13% below prior year due to abnormal weather conditions and a shortage of diesel. For a period of five months the lake was rough and temperatures too cold for normal fishing resulting in low catches and volume loss. In addition, during last quarter of the year, the country experienced massive stock outs of fuel due to shortage of foreign currency to pay for imported fuel. As the company relies on diesel to run its fishing vessels, fishing activities were suspended and this also accounted for the below budget and prior year fish catches. Profits for the year were therefore much lower than budget and prior year. Maldeco Fisheries is likely to do well next year as the project to expand trawl fishing further up Lake Malawi through the development of a new fishing landing site and construction of a new fishing vessel are all at an advanced stage. The new site is now operational and the fishing vessel is expected to be commissioned during second quarter of 2010. Assuming normal weather conditions the project is expected to enhance financial viability of the company as it is budgeted to add 1,000 metric tonnes of fish to the current catch volumes of 3,500 metric tonnes.

PRESS PROPERTIES LIMITED

2009

Although turnover was below budget due to delays in finalising the Chapima Heights Project, the company still performed well during the period under review due to gains on property revaluations especially after revaluation of its freehold plots in Area 9 in Lilongwe. In addition, the company achieved higher than expected income from its property management and valuation activities, interest income as well as higher than expected occupancy levels and rentals for all its properties.

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The electrification of Chapima Heights

Press Properties Limiteds development has been back on track

badly delayed but is now

Completion of the first phase of the Chapima Heights housing project was again delayed due to continued difficulties encountered with the provision of electricity and water to the project area. The first phase of the project is now almost at completion stage and some houses are expected to be handed over to clients during the first quarter of 2010. Prospects for 2010 look bright due to financial benefits expected from the sale of Chapima Heights houses and Lilongwe Area 9 plots.

ETHANOL COMPANY LIMITED

The year 2009 was in many respects a very good year for Ethanol Company Limited. In spite of insufficient supply of molasses the company registered higher than budget and better than prior year performances in almost all areas of operations whilst at the same time successfully concluding Phase II of the Plant Revamp Project which had commenced in 2008. Profit before tax was 21% above budget and 84% above prior year. The outstanding performance was mainly due to improved operating efficiencies due to the plant revamp project, good market intelligence, aggressive pricing on both local and export market for the companys products and consistent cost control efforts applied during the course of the year. The quality of the companys three main products Extra Neutral Alcohol (ENA), Absolute Alcohol (AA) and Rectified Alcohol (RA) was also more stable and within acceptable quality performance levels. Prospects for 2010 look bright due mainly to an attainment of a more efficient plant operation and already secured vibrant export market.
2009

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2009

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PRESSCANE LIMITED
Turnover and profits were both below budget owing largely to a combination of a pump price reduction on petrol which resulted in the reduction of the price of fuel ethanol, and also loss of sales which arose from a sudden shortage of petrol on the market towards the end of the year. The installation of a Process Logic Control was completed during the year and production processes are now in very stable condition. A new effluent pond which was under construction was also completed. Export sales were robust, mainly to East Africa, and export volumes in the year amounted to around 60% of total production. In general, the entity is now on a sound footing and prospects for 2010 are good.

THE PTC GROUP

The PTC Group registered a sales turnover which was 18% above the previous year and after tax profits were 12% above the previous year. This achievement was in spite of some significant challenges which included foreign exchange shortages, frequent power outages and the rationalisation of three outlets. Significant sales growth was recorded in all the large urban / semi urban wholesale outlets, and a large portion of these sales were occasioned by increasing sales from in-store bakeries and butcheries. A total of six new bakeries were installed in Mwanza, Dedza, Chitipa, Mzimba, Rumphi and at the head office in Blantyre. New stores were opened in Chitipa, Jenda, Blantyre and Lilongwe. A number of significant store upgrades were done and the exercise is still ongoing so that the company can continue to maintain its leading position in the face of growing competition particularly from single operators. Outlook for 2010 remains positive.

BP MALAWI LIMITED
Sales volumes were 7% below budget and 6.8% above the previous year. Similarly, sales turnover was 30% below budget and just about the same as prior year. The under budget performance in volume and turnover was attributed to delays in fuel uplift by one major customer and fuel supply shortages. The company however produced modest results as profit before tax was 10% below budget and 25% above prior year.
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P R E S S C O R P O R AT I O N L I M I T E D G r o u p C h i e f E x e c u t i v e s R e p o r t

During the year, fuel supply was a challenge and erratic for all the petroleum oil distribution companies because of problems of shortage of foreign currency. Logistical challenges in storage and transportation both at international ports of Beira and Dar-es-Salaam and locally also affected availability of fuel. Although the supply situation eased to some extent the stock levels for the company remained depressed at the end of the year. For sustainable and long term solution, the company needs to increase capacity to contain sufficient stocks.

NATIONAL BANK OF MALAWI

Even though there were a number of challenges in the banking sector, chief of which was the acute shortage of foreign exchange, the Bank still performed very well, achieving a pre-tax profit of 23% above the previous year. In Mzuzu, operations moved to a newly constructed branch in December 2009 and the project cost the Bank MK700 million. In addition, four branches (Chichiri, Zomba, Balaka, Kasungu) were upgraded by year end in the continuing effort to maintain the good image of the bank and its leadership position. The implementation of a new banking system was commenced in 2009 and a switchover from the old system to the new system will be done in April 2010. A mobile banking platform was also launched during the year. The Bank is well positioned to take on emerging challenges as well as new business prospects. Outlook for 2010 is positive.

Another view of National flagship service centre

2009

Banks new Mzuzu

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2009

FIBRE OPTIC NETWORK NOW IN MALAWI

Construction of a US$ 24 million high-capacity digital backbone ring network using optical fibres commenced in 2008. A southern ring with a bandwidth capacity of 10 Gb per second links Blantyre to Lilongwe via Balaka and Dedza, continuing to Salima, Mangochi and Zomba, and returning to Blantyre. A northern ring with a bandwidth capacity of 2.5 Gb per second will link Lilongwe to Mzuzu via Kasungu and Mzimba, continuing to Dwangwa and Salima, and returning to Lilongwe. This optical fibre network enables MTL to meet the rapidly growing demand for new broadband services, and will also serve as backbone for the next generation and wireless networks. Besides serving as the national super-highway, the optical fibre backbone also provides international connectivity via Mozambique to the SEACOM and EASSy submarine cable systems as well as South Africa. Links to Zambia and Tanzania are also envisaged. The route between Blantyre and Lilongwe, as well as the link to Mozambique, were inaugurated in October 2009 and the network was opened by H.E. the President Bingu wa Mutharika at a ceremony in Blantyre on December 7th. The route to Mzuzu is expected to be completed by mid 2010, while completion of the remaining sections of the ring network is planned for early 2011. Besides satisfying MTLs bandwidth requirements, the new network will also allow MTL to provide transmission capacity and internet connectivity to other operators and internet service providers. In 2009 MTL expanded the CDMA network by adding 24 base transmitter stations throughout Malawi - doubling the existing capacity to meet fast increasing demand for telephony services and internet. A new microwave link from Mzuzu to Karonga and the border with Tanzania has now established microwave spur links to several areas throughout Malawi, including the new uranium mine at Kayelekera. This is a significant step in modernising the telecommunication networks in the Northern Region. A very modern specialist network was also installed by MTL at key centres to provide high quality and reliable data services to its business customers throughout Malawi.

M A L AW I T E L E C O MMU N I C AT I O N S LIMITED
Revenue for the year was 20% below budget owing to significant project delays which resulted in several revenue generating platforms not being in place. This included the Fibre Optic Cable (FOC) project and the expansion of the Code Division Multiple Access (CDMA) network. The first phase of the FOC Project (connecting Blantyre and Lilongwe and also an outward connection to Mozambique) was completed late December. In addition, the doubling of the CDMA network capacity was also completed end December. The FOC link to Mzuzu and back through the lakeshore is under installation but it is unlikely that all the linkages to complete the project will be done by the end 2010, and it is expected that some work will spill over into 2011. However, the FOC link between Blantyre and Lilongwe and to the outside world has already occasioned the ability for MTL to roll out several new products to both old and new customers. Further, the expansion of the CDMA network has created the capacity to recruit an additional 30,000 subscribers. Vandalism, though reduced, continues to negatively affect network quality and financial resources as a lot of money is wasted on repeated network repairs instead of using the funds to expand to new areas. Nevertheless, the completion of Phase 1 of the FOC Project and the expansion of the CDMA network will form a solid foundation for 2010.
Annual Report 2009

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P R E S S C O R P O R AT I O N L I M I T E D G r o u p C h i e f E x e c u t i v e s R e p o r t

MACSTEEL MALAWI LTD

The year under review was a difficult year for the company due to price reductions which resulted in low margins, selling at lower than cost and stock write offs. Profit before tax was 4% below budget and 49% below previous year results. During the year, imported steel prices went down by about 60% and unfortunately the company had a huge carryover of expensive stock bought in the previous year when prices of steel were high due to shortage of steel in South Africa. The company had to reduce prices in order to sell the slow moving expensive stock. Profitability of the company therefore declined as the company pursued the policy of operating with reduced margins. The previous year, the companys outstanding performance was due to stock profits. In order to improve its sales and financial performance, the company is aggressively looking for new products and formulating new marketing and pricing strategies which are expected to be implemented from 2010.

TNM LIMITED
The network upgrade and expansion continued in 2009, though this effort was significantly slowed down due to foreign exchanges shortages. General Packet Radio Service (GPRS) services were launched earlier in the year, enabling the company to develop solutions for corporate and individual needs. In December 2009, TNM became the first mobile operator to launch 3G Services in Malawi, thus enabling it to offer cutting-edge services such as video calls, video and music streaming and high speed wireless internet access. Many new products are now on offer, especially targeting the youth. By the end of the year, 40 new base stations were rolled out (the plan was to roll out 70, the balance to be rolled out in 2010). A new technical centre was completed in Lilongwe and it houses a back-up switch which will ensure service continuity in case of emergency. An aggressive handset subsidy program, buttressed by the network expansion
2009

and upgrades, resulted in the customer base growing by 58% to just under 820,000 subscribers by December 2009. The outlook for 2010 is good.

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P R E S S C O R P O R AT I O N L I M I T E D ah i ri m nx s Su ta nt G r o uC ph C e faE ec t itve em se R eport

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THE BOTTLING AND BREWING GROUP LIMITED

This was a year of consolidation for the group following the high volume (27%) and profit growth in the previous year. A total of 43 trucks were replaced during the year, being phase 2 of an ambitious truck replacement program according to which some 125 trucks will be replaced over 3 years. A new pasteuriser was installed at the brewery, replacing one which was over 30 years old. A new boiler was received later in the year and it is expected to be commissioned in early 2010. Warehouse space was increased in all the three regional plants, the result of ever increasing trading activity. Further, at year-end, a decision was made to upgrade the Mzuzu plant and to install a new combi-line in Lilongwe at a total cost of US$13 million. A new family of Carlsberg beers (Stout, Special Brew, Classic and Elephant) was launched in April 2009, following the direct customer Beer Selection Campaign conducted in 2008. The aim was to refresh and re-energise the beer portfolio. The group entered the fruit-juice market with the launch of Coca-Cola branded (Five Alive) juices in five flavours (Apple, Tropical, Berries, Citrus and Pineapple), and the response has been very good. Outlook for 2010 is very promising.

LIMBE LEAF TOBACCO COMPANY

Although the crop size was 19% higher than the previous year, this volume was below what was expected and the lower than expected output was occasioned by a significant reduction in the Burley crop. The lower volumes led to increased prices at the end of the season. Factory processing volumes for own tobacco and for external clients was 24% above last year, but this was 7% below budgeted volumes. The below budget performance is attributed to a timing difference arising from the fact that sales are now recognised only when the product is on board a ship. This leads to some sales being recorded later in the year. In terms of prices, the 19% volume increase led to a 26% price drop compared to the previous year. The companys market share improved slightly to 32.4% from 31.2% in the year before. The company is now firmly back to profit owing to greater efficiencies being achieved, helped by a continued focus on cost reductions. Outlook for next year looks good.
Annual Report 2009

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P R E S S C O R P O R AT I O N L I M I T E D G r o u p C h i e f E x e c u t i v e s R e p o r t

S T R AT E G I C DIRECTION
Press Corporation Limited is keen to maintain its leadership role in the private sector. Divestiture of lossmaking operations has helped stabilise the Groups 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 Groups portfolio of investments and enhance its income stream. Training and Development of staff continues to play an The Groups policies will continue to be:  Hold at least a 50% equity stake in investments so as to influence key decisions and overall strategy  Ensure that the Groups debt to equity ratio remains consistent with the Companys risk policy  Pay such dividends as take into account cash flows vis--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
2009

S TA F F W E L F A R E A N D 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 outreach activity was held at an orphanage in Bvumbwe in an effort to get the Company to go beyond monetary donations. 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.

important role in the Companys overall strategic plan in order to allow for the efficient delivery of services and also to provide for effective succession planning. Training in Management and Leadership is encouraged at the senior level and over the past year four members of staff have undergone training offered by the British Council in this respect. Other employees continue to be sponsored on courses relevant to their individual developmental needs in areas such as accounting, marketing, and human resources. 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.

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

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P R E S S C O R P O R AT I O N L I M I T E D G r o u p C h i e f E x e c u t i v e s R e p o r t

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2009

P R E S S C O R P O R AT I O N L I M I T E D Directors Profiles

DIRECTORS
Mr D C Lungu

DIRECTORS
D e a n C L u n g u, B. S c. , M . S c. ( E n g . ) Chairman J a m e s A R e g o u t, M.Econ.

Chairman

Mr S A Itaye

 Audit Committee Chairman

Mr J A Regout

Audit Committee member

Mr C S Chilingulo

 Appointments and Remuneration Committee, Chairman

Mr A Barron

 Appointments and Remuneration Committee member

Mrs M Kachingwe

 Appointments and Remuneration Committee member

Dr M A P Chikaonda

Age 59 appointed to the Board 22/2/96

Mr Lungu is a registered Mechanical Engineer who has held various senior appointments, including Chief Executive of Maltraco Limited. He runs his own

Age 60 appointed to the Board on 1/6/94

Mr. Regout is a fund manager of wide experience and is presently the External Investments Manager of Old Mutual Investment Group (South Africa). He is responsible for investments in Africa (ex South Africa) and global private equity. In Malawi Mr Regout holds directorships of, among others, Malawi Property Investment Company Limited, National Bank of Malawi, FDH Financial Holdings Limited, Malawi Telecommunications Limited and Telekom Networks Malawi Limited.

Group Chief Executive

Mr P P Mulipa

 Group Operations Executive

MANAGEMENT
Dr M A P Chikaonda

business comprising of Deans Engineering Company Limited (DECO), CNL Engineering Limited and Tapiwa Investments Limited. Mr. Lungu also sits on the Alexander Forbes Malawi Board. Mr Lungu has held other directorships at Malawi Railways Limited (Chairman), Malawi Bureau of Standards, David Whitehead & Sons and Intraco Services Limited (UK).

Group Chief Executive

Mr P P Mulipa

 Group Operations Executive

Mr A G Sesani
2009 Annual Report

 Group Financial Controller

Mr C J Evans

 Group Administration Manager/Company Secretary

Mrs A J Varela

Group Projects Executive

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P R E S S C O R P O R AT I O N L I M I T E D Directors Profiles

S i m o n A I tay e , B. C o m . , F C C A , M B A

Andrew G Barron, HN D B u s

Maureen S T Kachingwe, MBA, LL.B (Hons)

Age 52 appointed to the Board on 5/3/98

Mr Itaye has extensive experience in audit, financial and strategic general management and is currently the Managing Director of Packaging Industries (Malawi) Limited (PIM). He is a director in Investments Alliance Limited and in Old Mutual Life Assurance Company (Malawi) Limited.

Age 50 appointed to the Board 29/8/2000

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

Age 43 appointed to the Board on 31/8/2007

Mrs Kachingwe is a lawyer currently Director of Legal and Corporate Affairs with Sunbird Tourism Limited a company she has been with from 1994. Prior to this she was a Legal Practitioner for a private legal firm between 1990 and 1993. Mrs Kachingwe has extensive experience in corporate & labour law and has served on a number of corporate boards as well as professional bodies and currently serves as a Director on the Institute of Directors Board.
2009

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P R E S S C O R P O R AT I O N L I M I T E D Directors and Management Profiles

DIRECTORS
C l e m e n t S C h i l i n g u l o, L L . B, F C I S

D I R E C T O R S and m anage m ent

D r M at h e w s A P C h i k a o n d a , D i r e c to r , B. A . ( H o n s ) , D i p. B u s i n e ss, MBA, Ph.D (Finance) GROU P C HIE F E x e c u t i v e P i u s P M u l i pa , B. A . , D i p ( M g t. ) , M . S c . ( M g t. ) , G r o u p Op e r at i o n s Executive

Age 57 appointed to the Board on 7/2/2001

Mr Chilingulo has served in legal and company secretarial positions of several companies starting with Press (Holdings) Limited where he rose to the position of Deputy Group Company Secretary and INDEBANK and Standard Bank where he served as Legal Counsel/ Company Secretary. Currently, he is Executive Secretary of Press Trust, a public trust which has extensive investments in all sectors of the Malawi economy. By virtue
2009

Age 54, appointed to the Board 1/4/02

Dr Chikaonda joined the Group on 1 April 2002 as Group Chief Executive. Prior to this, he served as an Assistant Professor of Finance and an Associate Professor of Finance (tenured) from 1988 to 1991, and 1992 to 1994, respectively, at Memorial University of Newfoundland in Canada before serving as Deputy Governor of the Reserve Bank of Malawi from August 1994. In January 1995, Dr Chikaonda was appointed Governor of the Reserve Bank of Malawi and served in this post until March 2000 when he was appointed to the Cabinet and served in the Government of Malawi as Minister of Finance and Economic Planning until January 2002.

Age 57, appointed to the Board on 1/1/2008

Mr Mulipa joined the Group as a Management Trainee in 1977 initially at Peoples Trading Centre Limited and more latterly at Hardware and General Dealers and Tambala where he was appointed General Manager. In 1996 he was promoted to a position of Assistant Group General Manager Foods at Press Corporation. In the year 2000 he was responsible for the Industrial Division. In the year 2001, he was appointed as Group General Manager Business Development for the Company. He is now the Group Operations Executive with effect from 25 September 2001. In his own right, Mr Mulipa is a director of Real Insurance Company (Malawi) Ltd and Old Mutual Life Assurance Company Malawi Ltd.

of his position with Press Trust, Mr Chilingulo sits on the Boards of several companies in which the Trust has invested.

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P R E S S C O R P O R AT I O N L I M I T E D Management Profiles

Manage m ent
Andrew G Sesani, F C C A , C PA ( M ) , Group Financial C o n t r o ll e r A g n e s J Va r e l a , B. S o c. S c i e n c e ( M W ) , M . S c. , ( B a n k i n g a n d M o n e y Management (USA)) G r o u p P RO J E C T S EXE C UTIVE C h a r l e s J E va n s, B. A . G r o u p Adm i n i s t r at i o n M a n a g e r / C o mpa n y S e c r e ta r y

Age 61
Mr Sesani has been with the company since October 2002. Between 1988 and 2000, he held the positions of Group Management Accountant, Deputy Group Financial Controller and finally Group Financial Controller with Press Corporation Limited before leaving the employ of the company when it relocated its head office from Lilongwe to Blantyre. Prior to this, Mr Sesani held senior accounting positions in Capital City Development Corporation, Import and Export Company of Malawi Limited and Trans African Transport. He rejoined Press Corporation Limited on 1st October 2002 as Group Financial Controller.

Age 58
Mrs Varela has extensive experience in Development Banking and Project Appraisal and Financing attained from her long employment history with INDEBANK where she worked for 26 years before retiring as Chief Executive Officer in 2004. Mrs Varela was appointed Group Projects Executive for the Company effective 1st September 2005. In her own right she is a Board Member of AFROX Malawi Limited and is the Norsad Agency Country Advisor for Malawi.

Age 59
Mr. Evans joined the Group as a Management Trainee in November 1975. He worked in various subsidiary companies before being appointed substantively as a Training Officer in 1977. He was transferred to the Peoples Trading Centre Group in 1981 where he became Personnel and Training Manager until 1991, when he was promoted to Press Corporation first as deputy, before assuming the position of Manpower Development Manager in 1995. In January 2001 he was appointed Group General Manager - Human Resources. He was appointed Group Administration Manager/ Company Secretary in September 2001.
Annual Report 2009

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P R E S S C O R P O R AT I O N L I M I T E D A N D I T S S U B S I D i A R I E S

FIVE YEAR GROUP FINANCIAL REVIEW

for the year ended 31 December 2009 In millions of Kwacha

2009 MKm

2008 MKm Restated

2007 MKm

2006 MKm

2005 MKm

fi v e y ear gro u p financial re v iew

GROUP STATEMENTS OF COMPREHENSIVE INCOME Turnover 47,560 43,614 29,080 24,572 Profit of the Company and its subsidiaries before taxation 7,953 7,369 5,133 4,512 Share of associated companies profit/loss after taxation 658 568 (119) (16) Profit before taxation 8,611 7,937 5,014 4,496 Income tax expense (2,941) (2,274) (1,589) (1,364) Profit after taxation 5,670 5,663 3,425 3,132 Attritutable to non-controlling interests (2,397) (2,523) (1,717) (1,524) Attributable to equity holders of the company 3,273 3,140 1,708 1,608 Dividend to ordinary shareholders (295) (473) (353) (400) Retained profit 2,978 2,667 1,355 1,208 Basic earnings per share 27.23 27.67 15.50 14.62 Dividend per share 2.45 4.17 3.20 3.64 GROUP STATEMENTS OF FINANCIAL POSITION Property plant and equipment 39,520 32,340 23,818 22,822 Investment properties 2,782 1,900 1,104 1,012 Investment in associated companies 1,989 1,331 1,475 1,254 Other investments 16,923 12,565 8,020 6,075 Net current assets (11,439) (2,275) (2,316) (1,473) Total Employment of Capital 49,775 45,861 32,101 29,690 Ordinary shareholders funds 24,611 21,522 13,548 12,722 Minority interests 13,795 13,131 9,027 7,973 Loans 5,675 4,774 4,512 4,378 Provisions 2,217 2,023 1,874 1,434 Deffered tax 3,477 4,411 3,142 3,183 Total Capital Employed 49,775 45,861 32,103 29,690 GROUP CASHFLOW STATEMENTS OPERATING ACTIVITIES Cash receipts from customers and Group companies Cash paid to suppliers and Group companies Cash generated from/(utilised by) operations Interset and tax paid Cashflows (to)/from operating activities INVESTING ACTIVITIES Interest and dividend received Capital expenditure Investments in shares and loans (Acquisition)/Disposal of other investments Sale of property plant and equipment and investment properties Cashflows from/(to) investing activities FINANCING ACTIVITIES Proceeds from issue of shares Dividends paid Increase/(decrease) in borrowings Cashflows from (to) financing activities NET (DECREASE)/INCREASE IN CASH & CASH EQUIVALENTS

15,692 2,649 742 3,391 (1,148) 2,243 (586) 1,657 (223) 1,434 15.06 2.03

6,328 885 1,620 3,100 364 12,297 8,366 2,492 940 499 12,297

42,596 (27,085) 15,511 (4,217) 11,294

35,519 (23,689) 11,830 (3,575) 8,255

27,896 (11,168) 16,728 (2,225) 14,503

23,919 (27,865) (3,946) (1,558) (5,504)

16,042 (14,430) 1,612 (1,032) 580

166 (11,576) 0 1,693 169 (9,548)

225 (8,179) 0 (2,219) 123 (10,050)

315 (4,997) (1,695) (7,690) 74 (13,993)

624 (3,501) (4,101) 7,521 61 604

546 (1,194) (33) 1,205 116 640

Annual Report

2009

0 (295) 1,341 1046 2,792

1997 (473) (247) 1277 (518)

0 (353) 480 127 637

0 (400) 4,521 4121 (779)

0 (223) (171) (394) 826

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P R E S S C O R P O R AT I O N L I M I T E D Co hra ir atn ec ne t C p om ra es GS ot va etre nm an

MTLs Stadium Road Exchange in Blantyre handles much of the telecommunications countrys national and international

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Annual Report

2009

P R E S S C O R P O R AT I O N L I M I T E D Corporate Governance

BOARD OF DIRECTORS
The Board of Directors is responsible to the shareholders for setting the direction of the Group through the establishment of strategic objectives and key policies. The Board meets quarterly, settles the strategic mission and is responsible for the overall direction and control of the Group. At 31 December 2009 the Board consisted of six non-executive directors and two executive directors. The Chairman is a non-executive director and has a casting vote.

C O R P O R AT E G O V E R N A N C E

Press Trust and Old Mutual appoint six of the non-executive directors. These appointments are in accordance with the Companys Articles of Association. At 31 December 2009 Press Trust and Old Mutual own 44.47% and 12.27% respectively of the shares in the Company. Executive Directors are appointed by the whole Board from members of Executive Management who are currently engaged on thirty-six month service contracts with the Company. The corporate board is responsible to shareholders, but it proceeds mindful of the interests of the Groups staff, customers, suppliers and the communities in which the Group pursues its interests. The names of the executive and non-executive directors in office at 31 December 2009 and at the date of this report are set out on page 28.

P R I N C I P A L B O A R D C O MM I T T E E S A R E :
Audit Committee
The Committee currently comprises two non-executive directors and one non-board member and meets no less than twice in the year. The Group Chief Executive, the Group Financial Controller, and the Group Internal Audit Manager attend the meetings by invitation. The external auditors have access to this committee. It is currently chaired by Mr S A Itaye. In the year ended 31 December 2009 the committee met twice; in March and August.

2009

The committees principal functions are to review the annual and interim financial statements and accounting policies, the effectiveness of internal controls over management information and other systems of internal control, the preliminary reported financial information, and to discuss the auditors findings and recommendations. The external auditors are appointed each year based on recommendations of the audit committee, which is also responsible for fixing their remuneration. In addition, it reviews the corporations procedures and policies.

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P R E S S C O R P O R AT I O N L I M I T E D Corporate Governance

Appointments and Remuneration Committee

The Committee comprises three non-executive directors. It is currently chaired by Mr C S Chilingulo. The principal function of the Committee is to ensure that the Groups human resources are best utilised and that members of staff are remunerated commensurate with their responsibilities and effectiveness by reviewing salary trends in the market place and approving salaries at the executive directors and executive management level based on these findings. During the year under review the Committee met four times; in February, March, May and November. At the Bottling and Brewing Groups Carlsberg Sobo plant in Blantyre a total of 43 trucks were replaced

Internal control and risk management

The Board of Directors is responsible for the Groups systems of internal controls. To fulfil its responsibilities, management maintains accounting records and has developed and continues to maintain appropriate systems

during 2009 the second

phase of an ambitious truck replacement programme in which 125 trucks are to be replaced over three years

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Annual Report

2009

PCL has seen its massive investment in plant and equipment at

P R E S S C O R P O R AT I O N L I M I T E D C h a i r m a n s S t a t e m e n t

Presscanes Chikwawa rewards in a difficult

operation begin to bring trading year, especially potential

in realising huge export

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2009

P R E S S C O R P O R AT I O N L I M I T E D C h a i r m a n s S t a t e m e n t

of internal control. The directors report that that the Groups internal controls and systems of internal control are designed to provide reasonable but not absolute assurance, as to the integrity and reliability of financial statements and to safeguard, verify and maintain accountability of its assets and to detect and minimise fraud, potential liability, loss and material misstatement while complying with applicable laws and regulations. The systems of internal control are based on established organisational structures implemented by the Executive Committee together with written policies and procedures, including budgeting and forecasting disciplines and the comparison of actual results against these budgets and forecasts. The directors have satisfied themselves that these systems and procedures are implemented, maintained and monitored by appropriately trained personnel with proper segregation of authority, duties and reporting lines, and by comprehensive use of advanced computer hardware and software technologies. Employees are required to maintain the highest ethical standards in ensuring that business practices are conducted in a manner which in all reasonable circumstances is above reproach. The effectiveness of the systems of internal control in operation is monitored continually through reviews and reports from the head of the group internal audit department. In addition, the Groups external auditors review and test appropriate aspects of internal financial control systems during the course of their normal statutory audits of financial statements of the company and subsidiaries. A formal Limits of Authority is in place that specifically reserves certain matters for Board decision. During the year ended 31 December 2009, the Board of Directors approved a Share Trading Policy, an internal control mechanism to guard against insider trading by all employees including managers and directors.

Directors interests in contracts

No director has had any material interest directly or indirectly in any contract reviewed or approved by the Board in the year under review.
2009

Code of ethics
Press Corporation Limited and its subsidiaries are committed to a policy of fair dealing and integrity in the conduct of their businesses. This commitment is based on the fundamental belief that business should be conducted honestly, fairly and legally. The Board formally adopted a comprehensive code of ethics that is applied throughout the Group in the conduct of its affairs. This code provides a detailed guideline governing the all-important relationships between the various stakeholders and the communities in which the Group operates.

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