By Morris Aron

Employees of Standard Group Limited (SGL) will soon have a chance to own part of the company, following approval of its employer share ownership programme by the board of directors and the Capital Markets Authority.

SGL’s board of directors has recommended payment of a scrip dividend Sh0.50 per share for the financial year ended December 31.

Making the announcement when releasing the company’s 2009 financial results at the Standard Centre yesterday, Group Deputy Chairman and Strategy Adviser Paul Melly said structures for implementing the ESOP are in place.

"We received the approvals from the regulating body, and are finalising the operational framework for the ESOP," he said. "The full details on the process will, however, be communicated in April," added Melly.

Strong cash flow

SGL beat a hostile trading environment to post profits of Sh376 million on the back of a strong cash flow from operations in years.

This was against pre-tax profits of Sh428 million over the same period in 2008. A weaker shilling, the lingering effects of the 2008 post-election violence, drought, global economic downturn and high food and fuel prices combined to play havoc with the economy. Many advertisers scaled down their advertising budgets, while the depreciating shilling led to a rise in newsprint costs.

Statistics indicate that on average, the value of the shilling compared to the US dollar has risen to an average of Sh78 to the dollar compared to Sh70 to the dollar a year ago, an average of 10 per cent depreciation.

Despite the challenging period, The Group achieved a four per cent reduction in operating costs, from Sh1.86 billion in 2008 to Sh1.78 billion in 2009. Circulation also rose significantly in 2009. The period marked the end of the first phase of a strategic transformation of the multimedia company that began five years ago. This has increased shareholder equity by 336 per cent, to Sh1.26 billion last year from Sh289 million in 2004.

In addition, investment in new assets grew by 490 per cent, from Sh391.7 million in 2004, to Sh1.92 billion in 2009. "We are very happy with the results that have been achieved, coming on the backdrop of a harsh economic environment witnessed in Kenya and throughout the world," said the Group Chairman, Robin Sewell. He added that on its present course, the company would be debt-free by the end of 2012. SGL is optimistic of profitability as it reaps from the advantages associated with converging its operations at the new Standard Centre headquarters on Mombasa Road, Nairobi. "Synergies derived from operating in one environment offer a better platform for savings, and more profitability," said Melly.

Also coming soon is a radio station, completing a 360-degree offering of print and digital services from the firm that also owns Kenya’s premier television station KTN, Standard Newspapers and Publisher Distribution Services (PDS).

SGL also has a strong web portal (www.standardmedia.co.ke), expanding its scope of advertising options for clients.