continually growing to be the best company in Africa Annual Report and Accounts 2009
Contents Financial Highlights Quick Read Notice of the Annual General Meeting Board of Director’s Safaricom’s Executive Committ
03 Financial Highlights Safaricom Awards Africom Best solution for rural services Africom Changing lives award AI Best African
04 Quick read CHIEF EXECUTIVE’S REPORT With weak economic conditions, Safaricom produced strong results with revenue growing by
OUR PEOPLE – The pillar of our business New products launched include: Voice SMS, Mobile Advertising, Missed Call Alert and SIM
06 Quick read THE SAFARICOM FOUNDATION corporate social responsibility This year, the Safaricom Foundation celebrates five years
M-PESA – The success story continues Customer Acquisition M-PESA’s success story can largely be attributed to the service’s abi
08 Notice of the Annual General Meeting 6. To consider and, if thought fit, to pass the following as a Special resolution:“That
09 Notes 1. member entitled to attend and vote at this meeting is entitled to appoint a proxy to attend and vote in his stead.
continually growing our products
12 Board of Directors Mr. Nicholas Nganga Chairman Mr. Nganga joined the Board of Safaricom Ltd. on 6 May, 2004 and was elected
Mr. Morten Lundal Non Executive Director Mr. Morten Lundal is the Vodafone Regional CEO for Central Europe and Africa. He joine
14 Board of Directors Mr. Timothy Harrabin Non Executive Director Mr. Tim Harrabin joined the Board of Safaricom on 1st Decembe
BOARD OF DIRECTORS SHAREHOLDING IN SAFARICOM LTD.: Shareholding Mr. Nicholas Ng’ang’a Mr. Michael Joseph Mr. Joseph Kinyua Ms.
16 Safaricom’s Executive Committee Michael Joseph Chief Executive Officer Betty Mwangi Thuo Chief New Products & Services Officer
17 Chairman’s Commentary I am pleased to present to you our Annual Report and Accounts for the financial year ended 31 March 200
18 Chairman’s Commentary The Committee operates against Terms of Reference which were approved by the Board and reports back to
19 Chief Executive’s Report I am pleased to announce a strong set of results for the financial year ended 31 March 2009 despite
20 Chief Executive’s Report We are implementing best practice in customer service through tracking and collecting of customer f
21 Our People - the pillar of our business Safaricom staff remains the key to our future, and throughout the year our efforts w
continually growing our technology
24 Our People - the pillar of our business We will also continue to develop our existing talent in line with the changing lands
25 The Safaricom Foundation Corporate Social Responsibility This year, the Safaricom Foundation celebrated five years of working
26 The Safaricom Foundation Corporate Social Responsibility Environmental Conservation: Providing sustainable support for the p
27 M-PESA - The success story continues Customer Acquisition M-PESA’s success story can largely be attributed to the service’s
28 M-PESA The success story continues To bring M-PESA closer to the customer, we have increased our distribution network with p
29 M-PESA - The success story continues KShs Billions 140.00 120.00 100.00 80.00 60.00 40.00 20.00 0.00 Apr May Jun Jul Aug Sep
continually growing our company
Financial Statements for the year ended 31 March 2009
32 Director’s Report Directors The directors who held office during the year and to the date of this report were: N Nganga M Jos
33 Statement of Directors’ Responsibilities The Companies Act requires the directors to prepare financial statements for each fin
34 Report of the Independent Auditor Report on the consolidated financial statements to the members of Safaricom Limited We have
35 Consolidated Profit and Loss Account Year ended 31 March Notes 2009 KShs’000 70,479,587 (32,788,307) 37,691,280 16,270 (2,424
36 Consolidated Balance Sheet CAPITAL AND RESERVES Share capital Share premium Retained earnings Proposed dividend Attributable
37 Company Balance Sheet 31 March Notes CAPITAL & RESERVES Share capital Share premium Retained earnings Proposed dividend Tota
38 Consolidated Statement of changes in Equity Attributable to equity holders of the Company Notes Year ended 31 March 2008 At
39 Company Statement of changes in Equity Notes Year ended 31 March 2008 Share capital KShs’000 Share premium KShs’000 Retained
40 Consolidated Cash Flow Statement Year ended 31 March Notes Operating activities Cash generated from operations Interest rece
41 Notes Interpretations effective in 2009 In 2009, the following new interpretations became effective for the first time but ha
42 (continued) (c) Functional currency and translation of foreign currencies (i) Functional and presentation currency Items inc
43 (continued) A loyalty programme, Bonga, was introduced in January 2007 to both pre-pay and post-pay subscribers. In this sch
44 (continued) (g) Intangible assets (i) Goodwill Goodwill represents the excess of the cost of an acquisition over the fair va
45 (continued) (i) Accounting for derivative financial instruments and hedging activities Derivatives, which comprise solely for
46 (continued) (l) Receivables (p) Employee benefits (i) Retirement benefit obligations The Group operates a defined contribution
47 (continued) 3 Critical accounting estimates and judgements Estimates and judgements are continually evaluated and are based
48 (continued) Notes 3 Critical accounting estimates and judgements (continued) (iii) Critical judgement on going concern The G
49 (continued) Notes 4 Financial risk management (continued) Credit risk Credit risk is managed on a Group-wide basis. Credit r
50 (continued) Notes 4 Financial risk management (continued) Credit risk The amount that best represents the Group’s and Compan
51 (continued) Notes 4 Financial risk management (continued) 31 March 2008 - Group Fully performing KShs’000 611,691 292,694 1,
52 (continued) The table below analyses the Group’s and the Company’s financial liabilities that will be settled on a net basis
53 (continued) The Company’s focus is to minimise funds tied up in working capital, whilst ensuring that the Company has suffici
54 Notes (continued) 5 Analysis of sales by category Group 2009 KShs’000 58,795,295 9,097,022 2,310,037 277,233 70,479,587 2008
55 (continued) Notes 8 Expenses by nature The following items have been charged in administrative, distribution and other expen
56 Notes 10 Income tax expense (continued) Group 2009 KShs’000 5,247,990 (480,723) 4,767,267 2008 KShs’000 6,315,491 (223,617)
57 (continued) Notes 12 Dividends per share No interim dividend was paid during the year (2008: Nil). The directors recommend p
58 Notes (continued) 14 Borrowings The borrowings are made up as follows: Group 2009 KShs’000 Non-current Bank borrowings Share
59 (continued) Notes 15 Deferred income tax Deferred income tax is calculated using the enacted income tax rate of either 27% o
60 Notes (continued) 15 Deferred income tax (continued) Year ended 31 March 2008 - Group 1.4.2007 KShs’000 Deferred income tax
61 (continued) Notes 16 Property, plant and equipment (a) Group Network infrastructure KShs’000 55,452,777 (20,412,506) 35,040,
62 Notes 16 Property, plant and equipment (continued) (b) Company Network infrastructure KShs’000 76,089,044 (28,675,374) 47,41
63 (continued) Notes 17 Intangible assets (cont’d) (a) Group Year ended 31 March 2009 Opening net book amount Additions Acquisi
64 Notes (continued) 18 Investment in subsidiaries (at cost) The Group’s interest in its subsidiaries, all of which are unliste
65 (continued) Notes 20 Receivables and prepayments Group 2009 KShs’000 4,367,389 (557,425) 3,809,964 1,411,247 2,506,184 1,282
66 Notes 22 Cash and cash equivalents (continued) For the purposes of the cash flow statement, cash and cash equivalents compris
67 Notes (continued) 25 Related party transactions At 20 December 2007, the company had two shareholders: Government of Kenya (
68 Notes (continued) 25 Related party transactions (continued) M PESA Holding Company Limited, which is controlled by directors
69 (continued) Notes 25 Related party transactions (continued) iii) Key management compensation Group 2009 KShs’000 433,174 5,1
70 Notes (continued) TEAMS (The East African Marine System) is an initiative spearheaded by the Government of Kenya to link the
71 (continued) Notes 29 Business combination On 31 August 2008, the Company acquired 51% of the issued share capital of One Com
72 Notes (continued) 30 Prepaid operating lease rentals – Group and Company Prepaid operating lease rentals relate to payments
73 Principal Shareholders The ten largest shareholdings in the company and the respective number of shares held at 31 March 200
74 Index B Board of Director’s 12 N 08 Notice of the Annual General Meeting 41 Notes C Chief Executive’s Report 19 Chairman’s C
75 Proxy Form I/WE OF Being a member of the above Company, hereby appoint: OF OF failing whom, the Chairman of the Meeting, as
continually growing our people