Owners approve NMG share split

Nation Media Group shareholders Thursday approved a historic share split.

This will see its units of ownership divided into two. The move is aimed at making the stock, whose sustained good performance has seen it trade at one of the highest prices at the Nairobi Stock Exchange, affordable.

“The split will make our shares affordable to the investing public,” Dr Martin Aliker, the group’s new chairman, told the shareholders at the company’s 45th annual general meeting.

After the split, the price of the share, which is currently trading at an average of Sh330 per share, will come down to about Sh165.

It will also increase the group’s authorised share capital from 120 million ordinary shares of Sh5 each to 240 million ordinary shares of Sh2.50 each.

The AGM also approved the establishment of an  Employee Share Ownership Plan (Esop) through which employees will get a chance to become shareholders of the firm.

Some four million shares of Sh2.50 each will be allocated to the Esop scheme, which will be administered by a trustee.

“We need to retain and motivate our staff to improve their productivity and, therefore, create value for our shareholders,” said Dr Aliker, who succeeded the long-serving, Mr Hannington Awori, as chairman.

However, the Esop is still subject to the approval of the Capital Markets Authority, NSE and the Kenya Revenue Authority.

Mr Linus Gitahi, the Group CEO, had earlier introduced Dr Aliker to the shareholders.

During the meeting, Mr Gitahi announced that the group recorded a 39 per cent growth in pre-tax profit for the year ending December 31, 2007.

Rise in revenue

The pre-profit increased from Sh1.1 billion in 2006 to Sh1.6 billion in 2007 while the profit after tax grew by 39 per cent from Sh783 million in 2006 to Sh1.1 billion last year.

A diversified business portfolio saw revenue increase by Sh1.3 billion or 21 per cent from Sh6.3 billion recorded in 2006 to Sh7.6 billion last year.

Mr Gitahi attributed the improved performance of the region’s biggest multimedia concern to a good business environment, a strong economy and growth in market share both in advertising and circulation.

Also, good rating of the firm’s radio and television units contributed to the group’s revenue growth.

“This combined well with significant savings on input costs arising from a strong Kenyan shilling against other major currencies and strict cost management,” Mr Gitahi told the shareholders at the Kenyatta International Conference Centre.

The shareholders also approved a Sh7.50 per share (150 per cent) final dividend. With the Sh3 per share interim dividend already paid out in September last year, the total dividend becomes Sh10.50, one of the highest at the NSE.

Mr Aliker, however, warned of a threat to the group’s interests in Tanzania by a Bill that seeks to limit foreign ownership in the media industry to 30 per cent.

NMG has a 60 per cent stake in Mwananchi Communications Limited, its Tanzanian subsidiary.

The group was actively exploring the possibility of extending its footprint to Rwanda and Burundi, but added that the latter’s use of French as the national language could pose challenges.

Mr Gitahi said capital expenditure during the year was aligned to achieving efficiency in the print operations and distribution of the group’s products.

A total of Sh446.7 million was invested with much of it spent on the upgrading the printing plant while Sh103 million was used to put up a new device to increase the group’s colour printing capacity.

New additions

The group’s divisions performed impressively as new additions to the stable, including the Business Daily and Daily Metro joined its growing portfolio.

The group’s subsidiaries include Nation Newspapers Division, Nation Marketing and Publishing Limited, Nation Broadcasting Division and Nation Carriers Division.

Others are Mwanachi Communications of Tanzania, Monitor Publications Limited in Uganda, East African Magazines Limited and NTV Uganda.