Nation Media Group #ticker:NMG shareholders are set to receive an interim dividend payout of Sh1.50 per share for the first half of the year, which was adversely affected by the high outstanding government debt that cut into the company’s profit.
The Government Advertising Agency (GAA) owes the Nation Media Group (NMG) Sh856 million in unpaid advertisement revenue, the company said when releasing its half year financial performance.
About 85 per cent, or Sh726 million of the government debt, is overdue.
NMG’s half-year net profit dropped by 35.5 per cent to Sh529.2 million from Sh819.8 million in the same period last year, weighed by Sh291.6 million provisions for bad debt largely owed by the government.
The debt that the government owes the media industry through GAA has hit Sh3 billion, an alarming level which prompted the Director of Public Prosecutions (DPP) Noordin Haji on August 9 to order a probe into why the cash has not been paid.
“We are seeing the level of impunity in the government where they take services and goods from average wananchi (citizens) and do not pay those debts. It’s criminal and unacceptable …and yet we pay taxes so that the government can run their functions,” said NMG chairman Wilfred Kiboro at an investor briefing in Nairobi, adding that many industries are hard hit by the government’s debt defaults.
Terming the GAA a bad idea that should be abolished, Mr Kiboro said the government has much bigger problems and projects to worry about “and should not be competing with small advertising agencies over a Sh7 billion budget.’’
The NMG chairman also criticised the government’s constant harassment of the media, citing this week’s arrest and assault on Nation journalists covering the construction of a beach hotel that appears to have blocked public access to the sea.
“As Nation Media Group we pledge to our consumers, partners and stakeholders that we remain independent, steadfast and true to our values, and we will constantly try to do whatever it is to fight for the common man because that’s the right thing to do and that’s how we will positively influence the society,” said Mr Kiboro.
It will be the first time since 2011 that NMG shareholders will be pocketing less than Sh2.50 interim dividend.
“If I was certain that we can collect the over Sh800 million that we are owed today, we would have declared a dividend of Sh2.50 or more, but we wait and see,” said Mr Kiboro.
Mr Kiboro added that discussions with the Treasury and ICT ministry have started, but there was nothing on the table yet, raising suspicion that the budgeted advertisement revenue could have been diverted elsewhere.
Turnover in the six-month period was Sh4.92 billion, 6.7 per cent drop from Sh5.27 billion in the same period last year.
Print business, which is battling digital disruption, contributed about 80 per cent of the revenue, followed by broadcast at 15 per cent, while the share of digital business was five per cent.
“The first quarter (which saw the shutdown of NTV Kenya for one week) was the most difficult one, we noticed a very big improvement in the second quarter,” said NMG chief executive Stephen Gitagama.
“For the third quarter and fourth quarters, the signs are good. We expect improvement in our overall performance.”
NMG has invested heavily in digital media platforms, which are tipped to be the group’s next revenue growth frontier with the underway monetisation of the various new media channels.
34m unique users
The NMG digital platforms now have a reach of close to 34 million unique monthly users.
The company is diversifying into the music industry with the launch of new products such as LitMusic, a record label for artists, whose offering will be expanded into events management, music and video production, merchandising, Mr Gitagama said.
The label and Buzz, an e-commerce-enabled experiential platform for movies, events and retailers, will also be replicated in Uganda and Tanzania.
The Group has partnered with a Tanzanian shareholder in compliance with ownership rules that require media companies to be at least 51 per cent locally owned.