audited_accounts2011

1A n n u a l R e p o r t a n d A u d i t e d F i n a n c i a l S t a t e m e n t s 2 0 1 1

Annual Report and Audited Financial Statements 2011

2 A n n u a l R e p o r t a n d A u d i t e d F i n a n c i a l S t a t e m e n t s 2 0 1 1


Table of ContentsKIM Officials 2

Notice of the Annual General Meeting 3

Minutes of the Annual General Meeting, 2010 4 – 9

Chairman’s Report 10

CEO’s Report 11

Corporate Information 12

Corporate Governance Report 14 – 15

Corporate Social Responsibility 16 –17

Report of the Council 18

Statement of Council's Responsibilities 20

Independent Auditor’s Report 21 – 22

Financial Statements:

Statement of Comprehensive Income 24

Statement of Financial Position 25

Statement of Changes in Accumulated Fund 26

Statement of Cash Flows 27

Notes to the Financial Statements 29 – 45

Proxy Form 47

Notes 48


Mrs Salome GitohoVice Chairperson

Mr Richard IsiahoCouncil Member

Esther JowiCouncil Member

Mr Wilson SoyCouncil Member

Mr Richard GikuhiCouncil Member

Alice OwuorCouncil Member

Prof David TK SeremCouncil Member

Mr Dan AwendoCouncil Treasurer

Mr Philip KisiaCouncil Member

Stella MuendoCouncil Ag. Secretary

Dr Jonathan CianoCouncil Member

Mr. Alfred LenanaChairman of Council

KIM Officials

Mr. David MuturiKIM Executive Director / CEO



Notice of the Annual General Meeting

Notice is hereby given that the 46th Annual General Meeting of the Kenya Institute of Management will be held on Friday, June 29th 2012 at the Intercontinental Hotel Nairobi at 4.00 p.m to transact the following business

1. To read the Notice convening the meeting.

2. ToconfirmtheMinutesofthe45thAnnualGeneralMeetingheldonMay,27th2011.

3. ToreceiveandadopttheExecutiveDirector’sReportfortheyearended31stDecember2011.

4. ToreceiveandadopttheChairman’sreportfortheyearended31stDecember2011.

5. Toreceive,considerandadopttheAnnualReportandFinancialStatementsfortheyearended31stDecember

2011.

6. TonotethatP.K.FKenyaCertifiedPublicAccountantsAuditorswillcontinueinofficeasAuditorsfortheInstitute

byvirtueofSection159(2)oftheCompaniesAct(Cap.486oftheLawsofKenya)andauthorizetheCouncilto

fixtheirremuneration.

7. ToreceivetheInstitute’sStrategicPlan2012-2016.

8. ToreceivetheresultsofthejustconcludedNationalandBranchelectionsandratifythoseelected.

9. ToconsideranyotherbusinessforwhichduenotificationwillhavebeenreceivedbytheSecretarytotheCouncil

fortyeight(48)hoursbeforetheAnnualGeneralMeeting.

Datedthe6thdayofJune2012

ByOrderoftheCouncil

STELLA K. MUENDO,

SECRETARYTOTHECOUNCIL


Minutes of the 45th Annual General Meeting

Present Council Members Registration No.Name:

1. Dr.ReubenMutiso 12022Chairman

2. DavidMuturi 42325ChiefExecutiveOfficer

3. RichardIsiaho 423184. SalomeGitoho 337075. AustinKapere 87506. ConstantineKandie 112027. JonasOkwaro 22000

Fellows:1. Dr.JJMageria 31

Chairman,BoardofFellows2. DrMwangiNgumo 082553. AdrianMuteshi 30924. JamesFoster 6115. JamesMurigu 129406. PeterKubebea 12677. AliceOwuor 088098. MichaelMKaranja 030489. MwaiwaKihu 180110. SultanAmri 0575311. NyabogaMoraraAnderea 05345

Members1 EngJohnMoguche,HSC 5361 2 GodfreyMakau 43104 3 GeoffreyLipale 429244 DuncanKabiru 117305 MichaelKaranja 30486 JohnMaguaNjoroge 429587 AnthonyKariuki 421738 ShadrackMutunga 292939 MohammedKatelo 4241010 MaryMIchangi 4287511 Joel Mukhanji 4286212 RogerKimuli 4237713 EdwardOgolla 2880814 GabrielJuma 4220915 MiritiE.M. 11714

16 JohnsonIreri 2875717 AlexanderOpicho 4239818 LeeKanyago 2365019 MugoMungai 0073520 LazaroKimanga 0386521 NimrodNKareko 3142922 KizitoOmolo 1655123 LucyOnyango 4331624 EmygdiusWanyama 4219225 AmosMwangiMaingi 4272626 MaxwellSande 4219227 PaulMunene 4266728 Dr.WilsonSoy 757029 FrancisOloo 4286430 JohnWekesaNdombi 3124131 FelixOnyango 2932032 AmosGayo 4311133 BernardSiero 2889134 SilasKatam 3381535 JuliusBarno 1207236 GeorgeKRutto 4275937 SamuelMaina 3278738 OkothBoniface 4219239 KarekoNimrod 3142940 NikasiusMMuverethi 0291741 SamuelNgeno 2798842 AggreyKivisi 2453343 Rev.CharlesOrodi 0554044 PatrickMulwa 4274145 MohamedGodana 4241046 KizitoMachani 2920047 MbarakSaidTwahir 761448 PraxedesOtieno 4263949 CharlesMurunga 33550 GraceAlinyo 4257051 Sang’anyiOmambiaJoseph 0578352 MwendaItumbiri 3393353 NdiranguNgunjiri 4299354 JudithRintari 4261355 BenOsuga 4277656 TomOdongo 4236757 AgnettaNyalita 4252558 LeonidaM.Mulindi 2068659 JosephOgutu 4224160 PamelaEng’airoO 4311861 HenryNjerenga 2201562 PriscahAndwah 33714

MINUTES OF THE 45TH ANNUAL GENERAL MEETING OF THE KENYA INSTITUTE OF MANAGEMENT HELD ON FRIDAY, 27TH MAY 2011, AT THE INTERCONTINENTAL HOTEL

STARTING AT 4.00 P.M.



63 PatrickMwangi 2691364 GordonOtienoOdundo 035065 HenryKerongo 2689566 GideonIndeche 0253267 OsborneKilasi 4257268 MisheckGuandaro 4303769 Prof.DavidSerem 4299470 OscarWaswa 2512071 KiprotichDK 3235272 MutukuNthuli 4230573 CornelA.Ragen 2596574 StephenIrungu 4323775 EstherJowi 4283176 EdwinAgwa 2929677 RogerKimuli 4237778 SKNguturi 4271979 ChristopherKipkemei 0004480 DavidMiya 4317381 LeonardSang 2363382 DavidKinyua 4246083 RichardGikuhi 07064

In attendance 1. KokaKoimburi&Tucker

Auditors2. StellaMuendo

CompanySecretary3. NicholasLetting

Director4. DavidMwaura Director5. LeahMunyao Director6. JosephOuma7. SelinaMakokha8. KimathiMuchiri9. CarolineKarangi10. EuniceNjenga11. JudithWambura12. BeatriceKarugo13. RuthKiilu

14. StephenKamau15. AnnWainaina16. JohnAmbeyi17. NaomiNashipae18. LilianKamande19. EzbonMwangi20. AOndeng21. JohnsonKSoi22. MercyMbochu23. EdwinMurithi24. DavidGathanju25. PaulMachoka26. HillaryMigoyi

AbsentwithApologiesName: Registration No. 1. Dr.MarangiMbogho 024102. JamesFoster 006113. StephenKilungya 142244. Mung’athiaFredrick 338925. EstherJowi 428316. MelvinAsava 424997. FrancisMugo 05135 8. SusanAddero 327609. PLOLumumba 4285010. JohnstoneMuchira 109811. IbrahimKibutu 2694012. LumitiProtusAtsali 1419413. Dr.V.Yamo 4250114. RaiserResourceGroup 42102

TheMeetingwascalledtoorderbytheChairmanoftheCounciloftheInstituteat4.30p.m.andopenedwitha wordofprayerbyMr.NicholasLetting.

MIN.1 /AGM/2011: READING OF THE NOTICE CONVENING THE MEETING



TheChairmaninvitedtheSecretarytoreadtheNoticeconveningthe45thAnnualGeneralMeetingoftheInstitute.

MIN. 2/AGM/2011: ADOPTION OF THE MINUTES OF THE LAST ANNUAL GENERAL MEETING

TheMinutesofthe44thAnnualGeneralMeetingheldonWednesday,the11thdayofAugust,2010,havingbeenearliercirculatedtoallmembers,wereconfirmedasatruerecordoftheproceedingsandadoptedonaproposalbyMr.MoraraAnderea,andsecondedbyMr.RuttoJosiahsubjecttothecorrectionoftheNameoftheChairmantoreadDr.Arch.ReubenMutiso.

MIN. 3/AGM/2011: ADOPTION OF THE CHAIRMAN’S REPORT ENDED 31ST DECEMBER 2010. TheChairmanreadtheCouncilReport,whichwasappendedtotheAnnualreportandformedpartthereof,ithadthefollowinghighlights:-

(i) Duringtheyearunderreview,theInstitutetookmanagementandleadershipcapacitybuildingservicestotheGambia,theDemocraticRepublicofCongo,SouthernSudan,RwandaandTanzaniatherebyachievingmassiveexpansionoutsideKenya.

(ii) TheOrganizationalPerformanceIndex(OPI),aglobalexcellencetool,wasformallylaunchedthusgivinganewstandingtotherespectedcompanyoftheyearAwards(COYA)asthenewyardstickfortheawards.

(iii) TheInstituteisnowgearedtotaketheOrganizationalperformanceIndex(OPI)totherestofAfrica.Tothisend,partnershipwithaTanzanianassociationhascommenced,anddialoguewiththeAfricaLeadershipForum(ALF)ofNigeriaisinprogress.

(iv) TheInstitutehasappliedforrecognitionofOrganizationalPerformanceIndexasaglobalexcellencemodelbytheGlobalExcellenceModel(GEM).

(v) ThefirstGovernance,LeadershipandManagementConventionwasheldinMombasa.TherewashighlevelparticipationbybusinessleadersandGovernmentofficials,bothlocalandfromGhana,Sudan,UgandaandNigeria.InthemonthofJune,therewasremarkableattendancebydistinguishedleaders,suchasH.EChiefOlusegunObasanjo,theformerPresidentoftheFederalRepublicofNigeriaLocalleaders,suchastheVicePresidentHon.KalonzoMusyokaamongstothers,werealsoinattendance.

(vi) TheInstitutehostedthe2ndEducationConferencebytheKIMSchoolofManagement.TherewasagoodregionalrepresentationfromtheGreatLakesCountries.ThepaperspresentedhavebeenpublishedtoformtheJournaloftheInstitute.ThejournalwillenrichthoughtsonthelinkagebetweeneducationandIndustry,whilealsoprovidingacademicandintellectualprofessionalgrowthandexcellence.

(vii) TheInstituteparticipatedactivelyintheConstitutionmakingfortheCountrybyorganizingandsponsoring15specialforumsaroundthecountry.ThiswasaimedatprovidingeducationandhelpKenyansunderstandthecontentsandtomakeindependentdecisionsinthereferendum.TheInstitutehaspositioneditselfstrategicallytomakeprofessionalinterventionsandprovideeducationintheimplementationprocessonthebasisofitscorecompetencesandbusinessfocus.

(viii) TheInstitutehascontinuedtoengagewiththeCommissionforHigherEducationowingtotheimpendingSponsorshipoftheManagementUniversity.TheLetterofInterimAuthorityisabouttobeissued,thusmakingthedreamoftheUniversityareality.

(ix) TheMemorandumandArticlesofAssociationwererevisedandadopted.BoththeCouncilandBranchelectionswereheldonthebasisofthereviseddocument.Thealignmentofthebranchstructureandnetwork,andtheharmonization,isalsotobedoneunderthenewgovernancestructures.



(x) TheinstitutehasparticipatedinCorporateSocialResponsibilityinterventionswhichincludedbookdonationstoschoolsfortheneedy,blooddonationsandenvironmentalconservationexercise.

TheChairman’sReportwasadoptedonaproposalbyMrs.SalomeGitohoandsecondedbyMr.MwaiwaKihu.

MIN 4/AGM/2011: ADOPTION OF THE EXECUTIVE DIRECTORS REPORT FOR THE YEAR ENDED 31ST DECEMBER 2010

TheExecutiveDirectorreadtheManagementreportasappendedtotheAnnualReportandAuditedFinancialstatementsfortheyear2010.ThemainhighlightsofthereportandFinancialStatementswere:-

(i) Thatasamembershiporganization,themanagementhasembarkedonqualitymembershipservicewithemphasisonContinuousProfessionalDevelopment(CPD)andothervariousactivitiesandeventsinallbranchesacrosstheCountry.

(ii) TheManagementhascontinuedtoidentifygapsandtodevelopsoastoprovidesolutionstocustomersinthecorebusinessofgovernance,leadershipandmanagement.

(iii) TheManagementhasplacedemphasisonefficiencyandeffectivenessincustomercareandservice.(iv) TheManagementMagazinehasbeenrevampedandre-launchedtomakeittheEastAfrica’spremierbusiness

managementandleadershipmonthly.Thishasnotonlyservedmembersasareliableforumformanagementandleadership,buthasalsoraisedtheInstitute'sprofileandrespectability.

(v) Therehavebeenpublicforumsformembersacrossthecountry.InNairobi,therewereseven(7)publicforums,anannualdinnerandagolftournamentinadditiontotheotheractivities,suchasthegraduationattheschoolofManagement,avibrantconference,theconvention,theCOYA/galanight,theKABA.TheaverageisonekeyeventinNairobipermonth,withseveralothersatthebranches.

(vi) Theinstitutehasenteredintopartnershipsandcollaborationswithlike-mindedInstitutions.TheAfricaLeadershipForumofNigeriahasjoinedwiththeInstitutetosupporttheconvention,andtheUniversityofSouthAfricahascollaboratedwithKIMtogetintoanarrangementtoofferDoctorateprogramsinBusinessLeadership.

(vii) Onthefinancialplatform,theInstitutehascontinuedtoembraceprudentfinancialandbusinessmanagementpracticeswithaturnoverof20%growthcomparedtothepreviousyear.Thegrowthisdrivenbyincreaseinstudentnumbers,professionalfeesfromCentreforEnterpriseDevelopmentandadvertisementsalesfromMediaServicesUnit.TheturnoverstoodatKshs.962MillionwithasurplusofKshs.75MillionupfromKshs.66Millionrepresentinganimprovementof14%.

(viii) Thedirectcostsincreasedby20%fromthepreviousyear.Thisincreaseisattributabletolecturersfeesasaresultofanincreaseinstudentnumbers.Intermsofcoststoturnover,therewasthereforeaslightincreasefrom35%to37%.Staffbenefitsandmembershipreservesincreasedby74%asaresultofprovidingforanadditionalKshs.9.6Millioninstaffbenefits.

(ix) Accumulatedrevenuegrewby24%followingaNetsurplusofKshs.75millionachieved.

OnaproposalbyMr.RichardGikuhiandsecondedbyMr.JosephNyututheReportwasAdopted.



MIN. 5/AGM/2011: ADOPTION OF THE AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER 2010.

TheFinancialStatementswerepresentedtoMembersbytheHonoraryTreasurer,aCouncilmember,whoisthechairmanofFinanceCommittee.Ithadthefollowinghighlights:-

(i) Thetotalrevenueincreasedby20%owingtoincreaseinstudentregistration,feesearnedbythebusiness

units,consultancies,andmemberssubscriptions.

(ii) Directcostsincreasedby26%.ThiswasattributedtoincreaseinLecturersfees,printingandstationery,

examinationcosts,advertisingandpublishing,accommodation,graduationexpenses,telephoneand

postageamongmanyothers.

(iii) TheGrossprofitincreasedby18%owingtotheInstitute'sabilitytogenerateincome.

(iv) Administrativeexpensesincreasedby30%duetoincreasedsalariesandwages,staffwelfare

development,medicalscheme,staffInsurance,anddirectors'remuneration.

(v) Surplusfortheyearhadincreasedwith13%andthesamewasexpectedtocontinuegoingupsince

turnoverhasalsoincreasedwithnewbusinessesandinnovations.

(vi) OtherexpensesamountedtoKshs.229,085,500in2010ascomparedto219,800,957in2009.

(vii) TheNoncurrentassetshaveincreasedto246Million,upfrom208Millionin2009,whereascurrentAssets

haveincreasedfrom250millionto335millionin2010,makingthetotalassetstobe381millionin2010.

(viii) Thetotalcurrentliabilitiesincreasedfrom143millionto191millionin2010.

(ix) ThetotalaccumulatedFundhadincreasedfrom315millionto390million.

MIN. 6/AGM/2011: BALANCE SHEET AND ACCOUNTS UPTO 31ST DECEMBER 2010

ArepresentativefromKOKAKOIMBURI&CO.CertifiedPublicAccountantsreadtheIndependentAuditorsReportanddulyconfirmedthat:-

(i) TheFinancialstatementsoftheInstitutehadbeenauditedinaccordancewiththeInternationalFinanceReportingStandardsandtheProvisionsoftheCompaniesAct.

(ii) TheFinancialstatementsgaveatrueandfairviewoftheFinancialstateofaffairsoftheInstitute.

(iii) TheAuditorstookthechancetoexpresstheirgratitudetoManagementfortheopportunitytoservethemsincetheywereretiring.

OnaproposalbyMsAliceOwourandsecondedbyMrJonasOkwaro,theAuditedAccountsfortheInstitutefortheyearended31stDecember2010aspresentedbytheAuditorswereadopted.

Comments

(i) ThedecreaseofrevenuefromtheJitihadaprojectfromKshs.17millionto1millionwasquestionedbymembers.ItwascomplainedthattheGovernmenthaddelayedinsigningthesecondphaseofthecontract.

(ii) TheBarclaysBankcashdepositwasexplainedfromtheperspectiveofthependingCourtcasewithKenyaRe-Insurance,whichnecessitatedashorttermdepositwiththeBank.

(iii) TheManagementwascommendedforthegoodfinancialrecordsandanauditjobwelldone.



MIN. 7/AGM/2011: NATIONAL AND BRANCH NOMINATION AND ELECTION PROCESS

Thereturningofficer,Dr.JJMageria,theChairman,BoardofFellowsreadthereportoftheconcludedNationalandBranchelections.Themainhighlightswere:-

(i) Theprocesswasdonewithgreatprofessionalism.

(ii) Onlinevotingwastimesavingandwouldbemoreencouragedinfuture.

(iii) Theprocesswasfair,freeandaboveboardwithnosuspicionatall.

PursuanttotheprovisionsoftheArticleofAssociation,thenamesofthesuccessfulcandidateswerepresentedtotheAnnualGeneralMeetingforratification.

OnaproposalbyMrJuliusBarnoandsecondedbyMrSammyMainathereportwasadopted.

MIN. 8/AGM/2011 – APPOINTMENT OF AUDITORS

TheCouncilsoughtauthorityfromthememberstoappointandfixtheremunerationofthenewAuditors,thetermofthecurrentAuditorshavingexpired.OnaproposalbyMrMwaiwaKihiu,secondedbyMrFrancisOlooitwasadoptedandauthoritygranted.

MIN. 9/AGM/2011 – REPORT ON COUNCIL EXPENSES.

Themanagementreportedthat:-

(i) TheCouncilmemberswerenotpaid,butonlygivenanallowanceforexpensesthatareincurredinfuel,

transportandre-imbursement,andonretreatsforstrategicplanning.

(ii) Thecouncilwascommendedfortheprofessionalismexhibitedandthetransparencyandaccountabilityin

mindingtheaffairsoftheInstitute.

(iii) TheextraordinarydrivebyCouncilmemberstoattendmeetingswascommentedandtheexemplaryservice

offeredtotheInstituterecognized.

Therebeingnootherbusinessthemeetingendedat6.00P.M

CONFIRMED______________________________________CHAIRMAN

DATE____________________________________________


Chairman’s Report

I am pleased and privileged to present to you my inaugural report for the period that ended 31 December 2011 as the Chairman of the governing Council of the Institute. Since its inception in 1954, the Institute has continued to

steer good practices in management and leadership in the country and beyond through various platforms. I am happy to report that during the period under review, the Institute recorded commendable achievements despite the dynamic business environment we operated in.

I report with contentment that the Council is at the forefront of championing good corporate governance. The Institute enjoys excellent relationships with Members, the Council, the Management and other stakeholders. Last year, one third of Council members retired and new members were nominated and elected. The process was conducted on an electronic platform. Elections held both at branch and national level were conducted with greater efficiency and effectiveness. Further, the Council went through a vigorous evaluation process to determine how well it was carrying its responsibilities and to identify any gaps and strategies to develop areas that needed improvement.

In the same vein, the Council and the Institute is committed to establishing a centre of excellence. The centre will provide Members and stakeholders cutting edge services that will promote excellent governance, leadership and management practices.

Members, you are informed that our membership threshold at the branch level is defined by 150 paid up members as provided for in our MAA. With this in mind, there is a need for the Institute to consider re-aligning its branches to fit into the new dispensation. In all instances, we will be guided by the need to create a national access to Institute services with special focus on the needs of every county, viability of the branch, and demand for Institute services from its members.

Last year, after many years of pursuing the dream of establishing a comprehensive management, leadership and governance oriented university, the Institute as the sponsor witnessed the birth of the Management University of Africa. The University was granted the Letter of Interim Authority by the Commission for Higher Education on the 2nd September 2011. This was followed by the installation of the founding Chancellor Dr. Arch. Reuben Mutiso, the Vice Chancellor Prof. Jude Mathooko and the inauguration of the Board of Trustees and Council of the University.

As the sponsor, the Institute is committed to nurturing the new University and supporting it throughout its formative years. While the task may appear daunting, it is not impossible. I am pleased to report that the Institute bequeathed key assets to the University, worth KShs. 360 million. Among the fixed assets that were transferred include an ultra modern management centre with state of the art classrooms and information and communication technology facilities,

conducive for research and learning in a world class and efficient e n v i r o n m e n t . In addition, the Institute handed over some of its key staff members to see the University set off. I am delighted to report that the University took off in earnest with its first intake in January 2012.

You will recall the Institute launched an annual continental forum under the Patronage of H.E Olusegun Obasanjo, former President of the Republic of Nigeria. The Second Annual Africa Governance, Leadership and Management convention was held in Mombasa in August. The forum was graced by two former statesmen, H.E Olusegun Obasanjo, Former President of the Republic of Nigeria and H.E Thabo Mbeki, former President of the Republic of South Africa. As was expected, the event was a great success, attended by renowned business leaders and government officials across Africa. The Third Annual Africa Governance, Leadership and Management convention is scheduled this August. Towards this front, we have made contacts with the Africa Union with the intention of working together to disseminate the convention output.

I am glad to announce the inaugural KIM Annual Manager’s Conference. This will be an annual platform bringing together managers of various businesses and organizations to interrogate global management practices. The knowledge shared will help them excel in their managerial responsibilities and offer leadership to their teams for overall organizational productivity.

I am pleased to report that the Council commissioned the implementation of the Enterprise Resource Planning (ERP) to improve service delivery in our Branch network. The process is ongoing. We envisage a highly effective Institute at the cutting edge of technology once the project is fully implemented

Lastly, I wish to attribute our success in the past year to our unwavering commitment to our vision and to the support of our Members, the Governing Council, Management and Staff.

Thank you very much and God bless you.

Alfred LenanaChairman, KIM Council


I am glad to present to you the Institute’s Annual Report. This report reaffirms our strategic visionary thrust to become a distinguished continental hub of excellence in organizational and business management practices.

As a professional membership organization, we are driven by our mission to steer and champion excellence, integrity and competitiveness in individuals and organizations throughout Africa and beyond.

I am pleased to report that during the period under review, the Institute has registered tremendous growth in revenue through prudent use of resources and innovativeness. Our membership base has grown incredibly. This has been as a result of reinventing our service excellence strategies to consolidate our exceptional performance. In the same stride, our students’ population continues to grow yearly. This growth can be attributed to the efforts made in refurbishing and relocating some of our branches to spacious and modern premises. In addition, our computer labs have been up-scaled and equipped to state of the art facilities countrywide. Last year, the Institute achieved Kshs. 1billion turnover. This was a 10% growth in turnover against an economic background of high inflation, high interest rates and economic crunch.

In the same year, the Institute was ranked as the top business school in the country according to the study conducted by Webometrics, a Spanish research firm. Webometrics is an independent public research organization that aims at promoting the web presence of business schools and MBA granting institutions worldwide. Web presence measures the activity and visibility of institutions and reflects the commitment of institutions to standards in dissemination of knowledge. The ranking summarizes the global performance of the schools and provides useful information for candidate students and scholars. This was not a mean achievement.

Our staff remains dedicated and committed to our vision and mission. We have put mechanisms in place to create good working environment. Enhanced staff welfare and training is a strategy that has enabled us to attract and retain some of the best and brightest brains in the industry.

We continue to seek and build strategic alliances with like-minded individuals and organizations in our pursuit to positioning the Institute as a hub of excellence. To achieve this, we strive to enrich our product offering. We have introduced new programmes, including Institutional Governance and Leadership Excellence programme, Women in Governance, Monitoring and Evaluation, Health and Safety, the Six Sigma and Kaizen Programmes which will be launched in the current year.

Our Business Intelligence and Research Unit has played a key role in informing new product development and product improvement through feasibility studies, new product research, market analysis and tracking services. Besides this, the Unit has achieved major outstanding milestones in the area of research. A number of research activities have been carried out and findings published. These include, the Tristat report, Perception of Women in Leadership Positions

in Kenya and KIM Alumni traceability survey.

The membership services have been revamped to include the Continuous P r o f e s s i o n a l D e v e l o p m e n t (CPD) activities geared towards enhancing members’ participation and development. These activities include trainings, networking and monthly management forums.

The OPI tool has continued to attract interest among Kenyan organizations and in the region. The tool was introduced in Rwanda and was well received. The OPI in partnership with the German Development Cooperation (GIZ) under a Public Private Partnership implemented the OPI model in 30 companies in Rwanda. A gala night was held in November last year to celebrate the winners.

I am pleased to report that the Institute was awarded a four year contract by KEPSA to train approximately 16,000 youth on life skills. KEPSA was identified by the World Bank to champion Kenya Youth Empowerment Project (KYEP). The programme saw youths participate in internships and mentorship programmes. In the same vein, the Institute signed up the second phase of the JITIHADA project as the lead consultants. JITIHADA Business Plan Competition is a national initiative of the Micro Small and Medium Enterprises (MSME) Competitiveness Project of the Ministry of Industrialization.

We reviewed our strategic plan rolling over for a period of five years, 2012-2016. The review process was also informed by the Organizational Performance Index report and the risk management framework that KIM took part in. The Institute underwent an intensive exercise to identify core risks exposures that could affect its operations. This is in addition to the fact that the Institute is ISO registered in compliance with the ISO 9001: 2008 Standards. We further underwent a surveillance audit to keep us in check and are now living the ISO spirit.

Our commitment to good corporate governance and corporate social responsibility has remained solid. In the period under review, we gave back in numerous ways to the society. These activities have continued to make visible positive impacts on the wellbeing of our Members and stakeholders.

Lastly, I want to recognize the Members, the Council, Management and staff of the Institute for their continued guidance and support in what has again been another successful year, and request that these be sustained.

David MuturiChief Executive Officer

CEO’s Report


Corporate Information

COUNCIL MEMBERS : Mr.AlfredLenana - Chairman : Dr.ArchReubenM.Mutiso - FormerChairman(Retired27thMay2011) : Ms.SalomeGitoho - ViceChairperson : Mr.DanAwendo - HonoraryTreasurer : Mr.RichardIsiaho - CouncilMember : Mr.RichardK.Gikuhi - CouncilMember : Mr.PhilipKisia - CouncilMember : Ms.EstherJowi - CouncilMember : Dr.JonathanCiano - CouncilMember : Ms.AliceOwour - CouncilMember : Prof.TuikongD.K.Serem - CouncilMember : Dr.WilsonSoy - CouncilMember : Mr.RichardNdubai - CouncilMember(AppointedFebruary2012) : Ms.RoseBosoboriOsoro - CouncilMember(AppointedFebruary2012) : Mr.DavidMuturi - ExecutiveDirector/CEO : StellaMuendo - CompanySecretary : Eng.SamuelMuchemi - CouncilMember(Retired27thMay2011) : Eng.MichaelS.M.Kamau - CouncilMember(Retired27thMay2011) : Mr.PeterKubebea - CouncilMember(Retired27thMay2011) : Mr.JosiahK.A.Rutto - CouncilMember(Retired27thMay2011) : Mr.AustinKapere - CouncilMember(Retired27thMay2011) : Mr.JonasOkwaro - CouncilMember(Retired27thMay2011) : Mr.HenryN.Njerenga - CouncilMember(Retired27thMay2011) : Mr.OscarWaswa - CouncilMember(Retired27thMay2011) : Mr.JuliusK.Barno - CouncilMember(Retired27thMay2011) : Mr.SamuelK.Maina - CouncilMember(Retired27thMay2011) : Ms.ConstantineKandie -CouncilMember(Retired27thMay2011) REGISTERED OFFICE : ManagementCentre : SouthC,OffPopoRoad : P.O.Box43706-00100 : NAIROBI AUDITORS : PKFKenya : CertifiedPublicAccountants : P.O.Box14077,00800 : NAIROBI INSTITUTE SECRETARY : StellaK.Muendo : S.K.MuendoandCompanyAdvocates : Standard/WaberaStreet : P.O.Box14191-00100 : NAIROBI : KENYA PRINCIPAL PLACE OF BUSINESS : LutherPlaza,2nd&3rdfloors : UhuruHighway/NyerereRoadJunction : P.O.Box43706-00100 : NAIROBI


Corporate Information (Continued)

PRINCIPAL BANKERS : BARCLAYS BANK OF KENYA LIMITED QueenswayHouse P.O.Box30011-00100 NAIROBI

: COMMERCIAL BANK OF AFRICA LIMITED WaberaStreetBranch P.O.Box30437-00100 NAIROBI

: COOPERATIVE BANK OF KENYA LIMITED UniversityWayBranch P.O.Box60800-00200 NAIROBI

: ECOBANK EcobankTowersBranch P.O.Box49584-00100 NAIROBI

: EQUITY BANK WestlandsBankBranch P.O.Box75104-00200 NAIROBI

: KCB RWANDA SA AvenueDELaPaix P.O.Box5620 KIGALI RWANDA

: ECO BANK RWANDA SA ParcelleNo.314,AveDeLaPaix BP3268 KIGALI RWANDA

ADVOCATES : S. K. MUENDO AND COMPANY ADVOCATES Standard/WaberaStreet P.O.Box14191-00100 NAIROBI KENYA

NYAKUNDI & COMPANY ADVOCATES 3rdFloor,CollegeHouse P.O.Box50913-00100 NAIROBI KENYA


Corporate Governance Report

COMMITMENT TO CORPORATE GOVERNANCEThe Kenya Institute of Management is committed togood corporate governance. The Institute pursuesprofessional standards and norms in handling itsbusiness relationships, which are directed towardsenhancingtheperformanceofitsbusinesstothebenefitof its customers, members, employees, partners andother stakeholders. We promote a culture that valuesandrecognizesthehighestethicalstandardsaswellaspersonalandcorporate integrity.TheCouncilmembersandemployeesareexpectedtoactwithintegrityinlinewithourmandateofpromotingexcellenceandintegrityinthepracticeofmanagement.

The KIM Council is responsible for the governanceof the Institute, while the members are responsiblefor the election of the Council through the AnnualGeneral Meeting. Adherence to corporate governanceprinciples is articulated in the Institute’s Memorandumand Articles of Association (MAA), which outlines therole of management, Council and members in themanagementoftheInstitute.TheCounciloftheInstituteseeks toadhere to,andcomplywith, thePrinciples forCorporateGovernanceinKenyaandtheSampleCodeofBestPracticeforCorporateGovernanceasotherwisemodifiedbyglobaldevelopments.

TheCouncilmeetsandconductsbusiness,adjournsorregulatestheirmeetingsastheydeemfitinaccordancewiththeMAAwithatleastonemeetingeveryquarter.

The following are the key aspects of the Institute’sapproach to corporate governance:

MEMBERS’ RESPONSIBILITIESThemembers’roleingovernanceistoelecttheCouncil,appointexternalauditorsandholdtheCounciltoaccountfortheattainmentoforganizationalobjectives.Membersare expected to act jointly and severally uphold goodconduct and remain committed to the ideals of theInstitute.

THE COUNCIL’S RESPONSIBILITIESThe Council is responsible for the governance of theInstituteandgivespolicyguidanceinallstrategicaffairsoftheInstituteonbehalfofthemembers.TheCouncilisresponsibleforconductingsuchbusinessoftheInstitutewith integrity and in accordance with the MAA andgenerally accepted corporate practices, by upholdingtransparency, accountability and responsibility. Todischargeitsmandateeffectively,theCouncildelegatesits authority to Council committees, which then meetquarterly andwhenever the needarises.Theauthorityoftheday-to-dayrunningoftheInstituteisdelegatedtotheExecutiveDirectorwith thehelpof threeexecutivedirectorsandamanagementteam.

COMPOSITION OF THE COUNCILTheCouncilshallconsistofnot less thannineandnotmore than 13members with the twelve (12)Councilmembers elected by or ratified at theAnnual GeneralMeeting;andtheChiefExecutiveOfficer.Outofthe12councilmembers,seven(7)areelectedbythemembersatageneralmeeting,whiletheotherfive(5)membersarenominatedfromthebranchlevelandratifiedattheAnnualGeneralMeeting.InaccordancewiththeInstitute’sMAA,theCouncilmayco-optuptothreeadditionalmembersatanygiventimeiftheCouncilisoftheopinionthatsuchco-opted members possess knowledge and skills thattheCouncilneedstoresourceupon.

TERMS OF SERVICEElected Members of Council shall serve for a term ofthreeyearsandareeligible for re-election fora furtherthree-year term.NoMemberofCouncil shall serve formorethantwocontinuoustermsofthreeyears.However,theymaybeeligible for re-electionafter stayingout oftheCouncilforonetermofthreeyears.AteveryAnnualGeneralMeetingoftheInstitute,athirdofthemembersoftheCouncilshallbeexpectedtoretirefromoffice.

SEPARATION AND DISTRIBUTION OF POWERS BETWEEN THE COUNCIL AND MANAGEMENTThe roles of the Council andmanagement are clearlydefinedandseparated.TheCouncilhasfullresponsibilityfor the oversight, direction and control of the Institute.Theresponsibilityof implementingstrategyandday-to-dayoperationsoftheInstituteisdelegatedbytheCounciltotheExecutiveDirector,andthemanagementteam.

INFORMATION TO THE COUNCILTheCounciliscontinuouslyappraisedontheoperationsof theInstitutethroughregularreports fromthevariousmanagementandCouncilcommittees;reportsfromtheExecutiveDirectorandotherformalevents.

CONFLICT OF INTERESTThe Institute has put in place elaborate policies andframeworks for monitoring transactions with Councilmembersandrelatedpartiestoensurethatanyconflictof interest is addressed appropriately and any suchtransactions are disclosed in the financial statementsandatallappropriatelevels. COMMITTEES OF THE INSTITUTEThe Council delegates some of its authorities,powers,discretion,andduties tocommittees toensureorganizational effectiveness in decision making andimplementation, but reserves unto itself the primaryfunctionsandresiduepowersoffinaldecision.

COMMITTEES OF THE COUNCILTheMAAempowerstheCounciltosetupthefollowingstandingcommittees:


Corporate Governance Report

The General Purposes Committee,whose function istoadvisetheCouncilonallpolicymattersandtoensurethat there issufficientco-ordination,harmonizationandconsensusonmajorstrategicissuesoftheInstituteandbetweenthevariouscommitteesandprogrammesoftheInstitute.Thecompositionofthiscommitteeisasfollows:Chairperson,ViceChairpersonofCouncil,Allchairmenof committees, Treasurer, Council Secretary, and theChiefExecutiveOfficer/ExecutiveDirector.

The Membership Development Committee, whosekeyresponsibilitiesaretherecruitment,admission,grading,upgrading,developmentanddisciplineofthemembers.The Committee ismade up of two co-optedmembersand three members representing the branches. Thebranchrepresentativesorganize themselves inclustersof three branches,with each cluster appointing one oftheirnumberasarepresentative.

The Finance and Investment Committee:toseetotheappropriateutilizationof Institute’sfinancesandadvisetheCouncilonthefinancialandinvestmentaffairsoftheInstitute.

The Human Resources Development Committee. Thekey responsibilities is toexercise oversightof theframework governing the human resource policiesand to monitor, evaluate, andmake recommendationsto the Council with respect to policies and strategicmatters related to thehuman resourcesandpersonnelissues;andparticularlysoastoensurethattheInstitutecomplies with all relevant regulations, standards andcodesofpractice;occupationandenvironmentalhealthandsafetylegislation.ThemandateofthecommitteeistoensuretheproperdevelopmentandwelfareofInstitutestafftoensurethatitattracts,maintainsandretainsthehighestqualityandcalibresofhumanresources.

The Audit and Governance Committee: The keyresponsibilitiesaretoexerciseoversightonbehalfofthecouncil and in accordancewith powers delegated to itby theCouncil, over theaudit compliance,disclosure,audit,andgovernancearrangementsoftheInstituteandreportthereontotheCouncil.ThecommitteecomprisesofindependentmembersoftheCouncil,whichensuresthatgoodgovernancepracticesarebeingfollowed.Theofficers of the Board – the Chairman, Vice-chairman,Secretary and Treasurer- are not be members of theCommittee.TheChiefExecutiveOfficerattendsall theopensessionsofthecommittee,butmaynotattendanyclosedsessionsifthecommitteesodecides.

Business Committee: The key responsibilities areto advice the Council on all matters relevant to thetechnical business activities of the Institute. TheBusinessCommitteeischargedwiththeresponsibilityofensuringharmony,consistencyandtechnicaladequacyin theplanningand implementationof all thebusinessactivitiesoftheInstitute,particularlysoastoensurethatthe activities promote the image and reputation of theInstituteasacentreofexcellence inManagementandenhancethestandards,understandingandknowledgeintheart,scienceandpracticeofmanagement. ADVISORY BODIES, AD HOC AND TECHNICAL COMMITTEESInadditiontoitsstandingcommittees,theCouncilmayatanytimeappointadvisoryboardsoradhoccommitteesand technical advisory committees, consisting of suchpersonsastheCouncilmayselecttoconsiderorreportonanyspecificmatterormatters.

The Board of FellowsThe Board is only comprised of Fellows and shall notexceed eleven members in total. The business of theBoardistoadviseCouncilonallmajorstrategicissuesoftheInstitute;SupportCouncilinpublicrelations,fund-raisingandnationalaffairs;andhandleanyotherissuesrequestedbytheCounciland/oraGeneralMeetingofthemembers.

Technical Advisory CommitteesRecommends to the Council the establishment oftechnicaladvisorycommitteesasaredeemedrelevanttotheneedsoftheInstitute.

CONDUCT OF BUSINESS AND PERFORMANCE REPORTINGThe institute’s business is conducted in accordancewith clearly formulatedstrategy,annualbusinessplansand budgets, which set out very clear objectives andmeasurementindicators.Performanceagainstobjectivesis reviewed and discussed monthly and quarterlyby management team and shared with the variouscommittees.Inthisframework,performancetrendsandprojectionsaswellasactualperformanceagainsttargetsarecloselymonitoredandevaluated.

Inordertoentrenchthecultureofperformancemonitoringandreporting,theCounciloftheInstitutehasputinplaceCouncil and individual Council member performanceevaluation onanannualbasis. It isexpected that thisprocess will be cascaded to the branch committeesduringthenextfinancialyear.


Corporate Social Responsibility Report

KIM’s commitment to Corporate Social Responsibility (CSR) is grounded in the values that define our community: humanity, humility, integrity and excellence. Using our branch networks, our CSR has strengthened its ability to effectively support the communities.

The Institute's desire is to share its strength for the common good towards building and sustaining strong communities, environmental stewardship and global human rights.We partner with communities in the following ways:

Visitation to the elderly home in Thiogio, Kikuyu Mzee Ngina celebrates 100 years

Nelly Muluka from Redcross receives a cheque from KIM staff

Football matchesOfafa Jericho students celebrate victory after a football match during a leadership forum

Students receive book donations from our branch networks countrywide

Students receive book donations from our branch networks countrywide

Developing young leaders through career talks in high schools

Embu branch staff spend time with children with HIV


CSR REPORT 2011

Corporate Social Responsibility Report

KIM Alumni spend time with the elderly KIM staff serves food they prepared for the elderly

Staff participating in the Stanchart Marathon

Staff, lecturers and students donate blood at the annual KIM Blood Donation Drive

Students from various schools receive book donations from our branch networks countrywide

Tree planting in Naivasha

Annual charity Manager’s Golf Tournament where funds were raised towards pallative treatment


Report of the Councilfor the year ended 31 Dec 2011

TheCouncilsubmittheirreportandtheauditedfinancialstatementsfortheyearended31December2011.ItdisclosesthestateofaffairsoftheInstitute. PRINCIPAL ACTIVITY TheInstitutedealswiththeprovisionofservicestomembersintheareasofmanagement,developmentthroughtraining,researchandconsultancy. RESULTS 2011 2010 Shs Shs Surplusfortheyear 70,786,736 84,616,694 ACCUMULATED FUND TheaccumulatedfundbalanceoftheInstituteissetoutinnote17ofthesefinancialstatements. COUNCIL Themembersofthecouncilwhoheldofficetothedateofthisreportareshownonpage1.InaccordancewiththeInstitute'sArticlesofAssociation,twodirectorsaredueforretirementbyrotation. INDEPENDENT AUDITOR PKFKenyawasappointedduringtheyearandcontinuesinaccordancewithSection159(2)oftheCompaniesAct(Cap.486). BY ORDER OF THE COUNCIL

DIRECTOR NAIROBI _______________________2012


ORGANISATIONAL PERFORMANCE INDEX (OPI), OUR INNOVATIONCOMPANY OF THE YEAR AWARDS (COYA), OUR INNOVATIONKIM ANNUAL BUSINESS AWARDS (KABA), OUR INNOVATION

Innovating towards driving excellence and global competitiveness in African organizations


TheCompaniesAct(Cap.486)requirestheCounciltopreparefinancialstatementsthatgiveatrueandfairviewof

thestateofaffairsoftheInstituteasattheendofthefinancialyear,andoftheresultsforthatyear.Italsorequires

theCounciltoensurethattheInstitutemaintainsproperaccountingrecords,whichdisclosewithreasonable

accuracythefinancialpositionoftheInstitute.TheCouncilisalsoresponsibleforsafeguardingtheassetsofthe

Institute.

TheCouncilaccepttheresponsibilityforthefinancialstatements,whichhavebeenpreparedusingappropriate

accountingpoliciessupportedbyreasonableandprudentjudgementsandestimates,consistentwithpreviousyears,

andinconformitywithInternationalFinancialReportingStandardsandtherequirementsoftheCompaniesAct(Cap.

486).TheCouncilisoftheopinionthatthefinancialstatementsgiveatrueandfairviewofthestateofthefinancial

affairsoftheInstituteasat31December2011andofitsoperatingresultsfortheyearthenended.TheCouncil

furtherconfirmtheaccuracyandcompletenessoftheaccountingrecordsmaintainedbytheInstitute,whichhave

beenrelieduponinthepreparationofthefinancialstatements,aswellasontheadequacyofthesystemsofinternal

financialcontrols.Thefinancialstatementshavebeenpreparedonagoingconcernbasis,whichisdependenton

thecontinuedfinancialsupportfromshareholdersandotherrelatedparties.

ApprovedbytheboardofCouncilon19thApril2012andsignedonitsbehalfby:

_____________________ ___________________

COUNCILMEMBER COUNCILMEMBER

Statement of Council’s Responsibilitiesfor the year ended 31 Dec 2011


Independent Auditor’s ReportTo the members of Kenya Institute of Management

Report on the Financial Statements We have audited theaccompanyingfinancialstatementsofKenyaInstituteofManagementsetoutonpages7to23whichcomprisethestatementoffinancialpositionasat31December2011,andthestatementofcomprehensiveincome,thestatementofchangesinmembers'funds,andthestatementofcashflowsfortheyearthenended.Italsocontainsasummaryofsignificantaccountingpoliciesandotherexplanatoryinformation. Council's responsibility for the financial statementsTheCouncil isresponsible for thepreparationoffinancialstatementsthatgiveatrueandfairview inaccordancewithInternationalFinancialReportingStandardsandtheCompaniesAct,Cap486,andforsuchinternalcontrolasmanagementdeterminesisnecessarytoenablethepreparationoffinancialstatementsthatarefreefrommaterialmisstatement,whetherduetofraudorerror.

Auditor’s responsibilityOurresponsibilityistoexpressanopiniononthesefinancialstatementsbasedonouraudit.WeconductedourauditinaccordancewithInternationalStandardsonAuditing.Thosestandardsrequirethatwecomplywithethicalrequirementsandplanandperformtheaudittoobtainreasonableassuranceaboutwhetherthefinancialstatementsarefreefrommaterialmisstatement.Anaudit involvesperformingprocedures toobtainaudit evidenceabout theamountsanddisclosures in thefinancial statements.Theproceduresselecteddependon theauditor’s judgment, including theassessmentoftherisksofmaterialmisstatementofthefinancialstatements,whetherduetofraudorerror.Inmakingthoseriskassessments,theauditorconsidersinternalcontrolrelevanttotheentity’spreparationandfairpresentationof thefinancial statements inorder todesignauditprocedures thatareappropriate in thecircumstances,butnotforthepurposeofexpressinganopinionontheeffectivenessoftheentity’sinternalcontrol.Anauditalsoincludesevaluatingtheappropriatenessofaccountingpoliciesusedandthereasonablenessofaccountingestimatesmadebymanagement,aswellasevaluatingtheoverallpresentationofthefinancialstatements. Webelievethat theauditevidencewehaveobtained issufficientandappropriate toprovideabasis forourauditopinion.

Opinion Inouropinion,theaccompanyingfinancialstatementsgiveatrueandfairviewofthefinancialpositionof theKenyaInstituteofManagementasat31December2011,andofitsfinancialperformance and its cash flows for the yearthen ended in accordance with International Financial Reporting Standards and the requirements of the KenyaCompaniesAct.


Independent Auditor’s Report

To the members of Kenya Institute of Management (Continued)

Report on other legal requirementsAsrequiredbytheCompaniesAct(Cap.486),wereporttoyou,basedonouraudit,that: (i) we have obtained all the information and explanationswhich to the best of our knowledge and belief were

necessaryforthepurposesofouraudit;

(ii) inouropinion,properbooksofaccounthavebeenkeptbythecompany,sofarasappearsfromourexaminationofthosebooks;and

(iii) thecompany'sstatementoffinancialpositionandstatementofcomprehensiveincomeandretainedearningsareinagreementwiththebooksofaccount.

CertifiedPublicAccountants

PINNO.P051130467R NAIROBI ___________________________2012 292/12


OUR BELIEF, A BETTER KENYAOUR DREAM, A DEVELOPED AFRICA

Creating platforms for continental dialogue on the African Renaissance


Statement of Comprehensive Incomefor the year ended 31 Dec 2011 - Continued

2011 2010 (Restated) Note Shs Shs Revenue 1 1,053,767,949 960,746,202Directcosts 2 (395,883,511) (352,008,115) Grossprofit 657,884,438 608,738,087

Otherincome 534,960 1,198,161

658,419,398 609,936,248 Administrativeexpenses (395,072,469) (371,713,544)

Otheroperatingexpenses (192,560,193) (153,606,010) (587,632,662) (525,319,554) Totalsurplusfortheyear 70,786,736 84,616,694

Othercomprehensiveincome: Revaluationsurplus 248,046,360 - Totalcomprehensiveincomefortheyear 318,833,096 84,616,694

Thesignificantaccountingpoliciesonpages29to33andthenotesonpages34to43formanintegralpartofthefinancialstatements. Reportoftheindependentauditor-pages21and22.


Statement of Financial Positionfor the year ended 31 Dec 2011 - Continued

As at 31 December Restated Note 2011 2010 2009 RESERVES Shs Shs Shs Accumulatedsurplus 460,945,200 390,158,464 315,149,189Specialreserves 20,443,899 22,629,619 13,022,200RevaluationReserve 248,046,360 - - Members funds 729,435,459 412,788,083 328,171,389 REPRESENTED BY Non-current assets Property,plantandequipment 6 498,963,811 220,657,568 197,111,074Prepaidoperatingleaserentals 7 - - -Intangibleassets 8 4,232,858 4,715,987 4,599,080Organizationalperformanceindex(OPI) 9 7,149,190 5,949,934 5,850,000InvestmentinMUA 10 82,208,576 14,271,283 - 592,554,435 245,594,772 207,560,154Current assetsTradeandotherreceivables 11 320,032,268 265,036,322 174,816,607Cashandcashequivalents 12 11,478,794 48,788,734 57,045,776 331,511,062 313,825,056 231,862,383Current liabilities Tradeandotherpayables 13 127,592,325 84,140,488 71,784,375Provisionsandaccruals 14 3,743,039 1,774,668 2,831,150Bankoverdraft 15 63,294,674 60,716,589 36,635,623 194,630,038 146,631,745 111,251,148 Netcurrentassets 136,881,024 167,193,311 120,611,235 729,435,459 412,788,083 328,171,389 Thefinancialstatementsonpages7to23wereauthorisedforissuebytheBoardofDirectorson

______________________2012andweresignedonitsbehalfby: _____________________ ___________________COUNCILMEMBER COUNCILMEMBER Thesignificantaccountingpoliciesonpages29to33andthenotesonpages34to43formanintegralpartofthefinancialstatements. Reportoftheindependentauditor-pages21and22.


Statement of Changes in Accumulated Fundfor the year ended 31 Dec 2011 - Continued

Accumulated Special Revaluation Surplus Reserves Reserve TotalAs at 31 December 2010 Note Shs Shs Shs Shs Aspreviouslystated 315,149,189 - - 315,149,189 Prioryearadjustments: Provisionsreversed 14 13,022,200 - - - Specialreserves - Membersservice 14 (8,286,578) 8,286,578 - -- Staffseparation 14 (4,735,622) 4,735,622 - - Restatedbalance 315,149,189 13,022,200 - 328,171,389

Transferfortheyear (9,607,419) 9,607,419 - Totalcomprehensiveincome 84,616,694 - - 84,616,694 Atendofyear 390,158,464 22,629,619 - 412,788,083 As at 31 December 2011 Atstartofyear 399,765,883 - - 399,765,883Prioryearadjustments: - Specialreserves (9,607,419) 22,629,619 - 13,022,200 Restatedbalance 390,158,464 22,629,619 - 412,788,083 Utilisedduringtheyear - (2,185,720) - (2,185,720) Totalcomprehensiveincome 70,786,736 - 248,046,360 318,833,096Atendofyear 460,945,200 20,443,899 248,046,360 729,435,459 Thesignificantaccountingpoliciesonpages29to33andthenotesonpages34to43formanintegralpartofthefinancialstatements. Reportoftheindependentauditor-pages21and22.


Statement of Cash Flowsfor the year ended 31 Dec 2011 - Continued

2011 2010 Note Shs ShsCashflowsfromoperatingactivities: Cashfromoperations 16 89,613,371 41,964,550Adjustmentfor:Interestreceived (214,417) (1,158,737) Netcashfromoperatingactivities 89,398,954 40,805,813

Investing activities CashpaidforPurchaseofpropertyandequipment (66,148,170) (52,756,096)CashpaidonOrganizationalperformanceindex(OPI) (1,199,256) (5,949,934)Cashpaidaspre-operatingexpenses-KIMuniversity (59,187,297) (14,271,283)Purchaseofintangibleassets (1,330,953) (2,138,045)Proceedsfromsaleofproperty,plantandequipment 550,000 812,800 Netcashusedininvestingactivities (127,315,676) (74,302,558) Financing activities Interestreceived 214,417 1,158,737 Netdecreaseincashandcashequivalents (37,702,305) (32,338,008)

Movement in cash and cash equivalents:- Cashandcashequivalentsatthebeginningoftheyear (11,927,855) 20,410,153Decrease (37,702,305) (32,338,008) Atendofyear 12 (49,630,160) (11,927,855) Thesignificantaccountingpoliciesonpages29to33andthenotesonpages34to43formanintegralpartofthefinancialstatements. Reportoftheindependentauditor-pages21and22.


OUR HISTORY, OUR HERITAGEOUR HORIZON, OUR POTENTIAL

Since 1954 and Going Strong


Notes to the Financial Statementsfor the year ended 31 Dec 2011 - Continued

SIGNIFICANT ACCOUNTING POLICIES Theprincipalaccountingpoliciesadoptedinthepreparationofthesefinancialstatementsaresetoutbelow.Thesepolicieshavebeenconsistentlyappliedtoalltheyearspresented,unlessotherwisestated. a) Basis of preparation Thefinancialstatementshavebeenpreparedunderthehistoricalcostconvention,exceptasindicatedotherwise

below,andareinaccordancewithInternationalFinancialReportingStandards(IFRS).

(i) New and amended standards adopted by the Institute TherearenoIFRSsorIFRICinterpretationsthatareeffectiveforthefirsttimeforthefinancialyearbeginning

onorafter1January2011thatwouldbeexpectedtohaveamaterialimpactontheInstitute.

(ii) New standards, amendments and interpretations issued but not effective for the financial year beginning 1 January 2011 and not adopted in advance of the effective date.

IFRS9,‘Financialinstruments’,addressestheclassification,measurementandrecognitionof financial assets and financial liabilities. IFRS 9 requires financial assets to be classified into two principalmeasurementcategories:'thosemeasuredasatfairvalueandthosemeasuredatamortisedcost.TheinstituteisyettoassessIFRS9’sfullimpactandintendstoadoptIFRS9nolaterthantheorafter1January2015.

IFRS13, ‘Fairvaluemeasurement’,aimsto improveconsistencyandreducecomplexitybyprovidingaprecise

definitionoffairvalueandasinglesourceoffairvaluemeasurementanddisclosurerequirementsforuseacrossIFRSs.Therequirements,whicharelargelyalignedbetweenIFRSsandUSGAAP,donotextendtheuseoffairvalueaccounting,butprovideguidanceonhowitshouldbeappliedwhereitsuseisalreadyrequiredorpermittedbyotherstandardswithinIFRSsorUSGAAP.TheinstituteisyettoassessIFRS13’sfull impactandintendstoadoptIFRS13nolaterthantheaccountingperiodbeginningonorafter1January2012.

b) Key sources of estimation uncertainty Thedirectorshavemadenoassumptionsandthereare,intheiropinion,noothersourcesofestimationuncertainty

attheendofthereportingperiodthathaveasignificantriskofresultinginamaterialadjustmenttothecarryingamountofassetsandliabilitieswithinthenextfinancialyear.

c) Revenue recognition Revenuecomprisesthefairvalueoftheconsiderationreceivedorreceivablefortheprovisionofservicesinthe

ordinarycourseofbusinessandthestatednetofrebatesanddiscounts.TheInstitutionrecognisesrevenuewhenitcanbereliablymeasured,itisprobablethatfutureeconomicbenefitswillflowtotheentityandwhenthespecificcriteriahavebeenmetfortheInstitute'sactivities.Theamountofrevenueisnotconsideredtobereliablymeasureduntilallcontingenciesrelatingtothesalehavebeenresolved.TheInstitutebasesitsestimatesonhistoricalresults,takingintoconsiderationthetypeofcustomer,typeoftransactionandspecificsofeacharrangement.

i) Tuitionfeesareaccountedforovertheperiodtowhichtheyrelate. ii) Grantsanddonationsarecreditedtoprofitorlossuponreceiptandanyunutilisedfundsarecarriedforward

asadvancereceipts.



SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

d) Property and equipment

Allpropertyandequipmentisinitiallyrecordedatcostandthereafterstatedathistoricalcostlessdepreciation.

Subsequentcostsareincludedintheasset’scarryingamountorrecognisedasaseparateasset,asappropriate,onlywhen it isprobablethat futureeconomicbenefitsassociatedwith the itemwillflowtothe instituteandthecostcanbereliablymeasured.Thecarryingamountof thereplacedpart isderecognised.Allotherrepairsandmaintenancearechargedtothestatementofcomprehensiveincomeduringthefinancialperiodinwhichtheyareincurred.

Depreciationiscalculatedonthereducingbalancebasistowritedownthecostofeachasset,toitsresidualvalue

overitsestimatedusefullifeusingthefollowingannualrates:

Rate% Buildings 2.00 Equipment 12.5 Furniture,fittings 12.5 Managementfilmsandlibrarybooks 20.0 Motorvehicles 25.0 Computers,copiersandfaxes 30.0 Theassetsresidualvaluesandusefullivesarereviewedandadjustedifappropriate,ateachstatementoffinancial

positiondate. Gains and losses on disposal of property, plant and equipment are determined by reference to their carrying

amountandaretakenintoaccountindeterminingoperatingprofit.

e) Impairment of non-financial assets Assetsthathaveanindefiniteuseful lifearenotsubjecttoamortisationandaretestedforimpairmentannually.

Assetsthataresubjecttoamortisationarereviewedforimpairmentwhenevereventsorchangesincircumstancesindicatethatthecarryingamountmaynotberecoverable.

Animpairmentlossisrecognisedfortheamountbywhichtheasset’scarryingamountexceedsitsrecoverableamount.The recoverableamount is thehigherofanasset’s fairvalue lesscosts tosellandvalue inuse.Forthepurposesofassessing impairment,assetsaregroupedat the lowest levels forwhich thereareseparatelyidentifiablecashflows(cash-generatingunits).

Non-financial assets that sufferedan impairmentare reviewed forpossible reversalof the impairmentateach

reporting date. f) Financial instruments Financial assets and financial liabilities are recognisedwhen the institute becomes a party to the contractual

provisionsoftheinstrument.Managementdeterminesallclassificationoffinancialassetsatinitialrecognition.

- Financial assets Financialassetsareinitiallyrecognisedatfairvalueplustransactioncostsforallfinancialassetsnotcarriedatfair

valuethroughprofitorloss.Financialassetscarriedatfairvaluethroughprofitorlossareinitiallyrecognisedatfairvalueandtransactioncostsareexpensedinprofitorloss.




f) Financial instruments (continued) - Financial assets (continued) Theinstitute'sfinancialassetsinclude: Loans and receivables:financialassetswithfixedordeterminablepaymentsthat arenotquotedinanactive

market.Suchassetsareclassifiedascurrentassetswherematuritiesarewithin12monthsofthereportingdate.Allassetswithmaturitiesgreater than12monthsafter thereportingdateareclassifiedasnon-currentassets.Subsequenttoinitialrecognition,theyarecarriedatamortisedcostusingtheeffectiveinterestmethod.Changesinthecarryingamountarerecognisedinprofitorloss.

Purchases and sales of financial assets are recognised on the trade date i.e. the date onwhich the institute

commitstopurchaseorselltheasset. Financialassetsarederecognisedwhentherightstoreceivecashflowsfromtheassetshaveexpiredorhavebeen

transferredandtheinstitutehastransferredsubstantiallyallrisksandrewardsofownership.

Afinancialassetisimpairedifitscarryingamountisgreaterthanitsestimatedrecoverableamount.Impairmentoffinancialassetsisrecognisedinthestatementofcomprehensiveincomeunderadministrativeexpenseswhenthereisobjectiveevidencethattheinstitutewillnotbeabletocollectallamountsduepertheoriginaltermsofthecontract.Significantfinancialdifficultiesoftheissuer,probabilitythattheissuerwillenterbankruptcyorfinancialreorganisation,defaultinpaymentsandaprolongeddeclineinfairvalueoftheassetareconsideredindicatorsthattheassetisimpaired.

Theamountoftheimpairmentlossiscalculatedasthedifferencebetweentheassetscarryingamountandthe

presentvaluesofexpectedfuturecashflows,discountedatthefinancialinstrument'seffectiveinterestrate.

Subsequentrecoveriesofamountspreviouslywrittenoff/impairedarecreditedtoprofitorloss/othercomprehensiveincomeintheyearinwhichtheyoccur.

Gains and losses on disposal of assetswhose changes in fair valuewere initially recognised in profit or lossaredeterminedbyreferencetotheircarryingamountandaretakenintoaccountindeterminingoperatingprofit/(loss).Ondisposalofassetswhosechangesinfairvaluewereinitiallyrecognisedinequity,thegains/lossesarerecognised in thereserve,where the fairvalueswere initially recognised.Anyresultantsurplus/deficitafter thetransferofthegains/lossesaretransferredtoretainedearnings.

- Financial liabilities Theinstitute'sfinancialliabilities,whichincludetradeandotherpayables,provisions,accrualsandborrowingsfall

intothefollowingcategory: Other financial liabilities:Theseare initiallymeasuredat fairvalueandsubsequentlymeasuredatamortised

cost,usingtheeffectiveinterestratemethod. All financial liabilities are classifiedas current liabilities unless the institute hasanunconditional right to defer

settlementoftheliabilityforatleast12monthsafterthereportingdate.

Financialliabilitiesarederecognisedwhen,andonlywhen,theinstitute'sobligationsaredischarged,cancelledorexpired.




g) Cash and cash equivalents Forthepurposesofthecashflowstatement,cashandcashequivalentscomprisecashinhandanddepositsheld

atcallwithbanks. h) Taxation TheInstituteistaxexemptundertheprovisionsoftheIncomeTaxAct.

i) Accounting for leases Leasesofproperty,plantandequipment,wheretheInstituteassumessubstantiallyall therisksandrewardsof

ownership,areclassifiedasfinanceleases.Financeleasesarecapitalisedatcost.Eachleasepaymentisallocatedbetweentheliabilityandfinancecharges.Theinterestelementischargedtotheprofitorlossovertheleaseperiod.Suchproperty,plantandequipmentisdepreciatedoveritsusefullife.

Leasesofassetsunderwhichasignificantportionoftherisksandrewardsofownershipareeffectivelyretainedbythelessorareclassifiedasoperatingleases.Paymentsmadeunderoperatingleasesarechargedtotheprofitorlossonastraightlinebasisovertheperiodofthelease.

The Institute as a lessor Assetsleasedtothirdpartiesunderoperatingleasesareincludedinproperty,plantandequipmentinthebalance

sheet. Leasedassetsarerecordedathistoricalcostlessdepreciation.

Depreciationiscalculatedonthestraightlinebasistowritedownthecostofleasedassetstotheirresidualvalues

overtheirestimatedusefullifeusingannualratesconsistentwiththenormaldepreciationpoliciesforsimilarassetsunderproperty,plantandequipment.

Gainsandlossesondisposalofleasedassetsaredeterminedbyreferencetotheircarryingamountandaretaken

intoaccountindeterminingoperatingprofit. j) Translation of foreign currencies TransactionsinforeigncurrenciesduringtheyearareconvertedintoKenyaShillingsatratesapplicableonthe

transactiondates.AssetsandliabilitiesatthebalancesheetdatewhichareexpressedinforeigncurrenciesaretranslatedintoKenyaShillingsattheratesofthatdate.Theresultingdifferencesfromconversionandtranslationaredealtwithintheincomestatementintheyearinwhichtheyarise.

k) Retirement benefit obligations Employeeentitlements togratuityand longserviceawardsare recognisedwhen theyaccrue toemployees.A

provisionismadefortheestimatedliabilityforsuchentitlementsasaresultofservicesrenderedbyemployeesupto the reporting date.

TheInstituteoperatesadefinedcontributionstaffretirementbenefitschemefor itspermanentandpensionable

employees.Thescheme isadministeredbyan insurancecompany.The Institute'scontributions to thedefinedcontributionretirementbenefitschemearechargedtoprofitorlossintheyeartowhichtheyrelate.TheInstitutehasnofurtherpaymentobligationsoncethecontributionshavebeenpaid.




l) Special reserves Special funds are those held for a designated purpose. The funds are created by transferring the authorised

amountfromtheaccumulatedreservestospecialreserves.Subsequentlyanyexpenditurerelatedtodesignatedactivityaredebiteddirectlytothisfund.Includedinthespecialreservesarethefollowingreserves:-

i) Staff separation reserves Staffseparationreserverelatestoageneralprovisionof1%ofthegrossincomemadetocaterforanylikely

staffseveranceandretirementbenefit. ii) Members' service funds Members'servicefundssetasidebythemanagementtocaterforthemembers'trainingcosts.

m) Comparatives Wherenecessary,comparativefigureshavebeenadjustedtoconformwithchangesinpresentationinthecurrent

year.


Notes to the Financial Statementsfor the year ended 31 Dec 2011

NOTES (CONTINUED) 2011 2010

1. Revenue Shs Shs

Tuitionfees 799,117,167 727,687,192 ExecutiveMBAfees 51,476,453 65,615,759 Members'subscription 31,729,852 25,350,963 Professionalfees 90,639,160 89,580,099 OPIandCompanyoftheyearawardgalanight 11,058,268 11,720,616 Sundryincome 9,785,955 4,141,761 Directory/managementjournalincome 19,635,404 16,662,880 Graduationincome 10,331,378 12,706,033 JitihadaNationalBusinessPlanCompetition 6,291,375 1,371,000 Donations 5,000,000

Businessbeyondborders-(Rwanda&Sudan) 18,702,937 5,909,899

1,053,767,949 960,746,202 2. Direct costs

Lectures'fees 166,919,660 166,121,958 Printingandstationery 28,841,218 29,906,020 Facilitatorsfees 39,238,835 32,584,603 JKUATfacilitationandadministrationexpenses 20,921,410 11,404,300 Examinationcost 11,420,742 17,574,070 Advertisingandpublicity 42,748,947 26,834,803 Managementjournalexpenses 18,591,970 13,735,296 Coursemealsandaccommodation 37,392,059 30,175,422 Companyoftheyearawardexpenses 4,727,691 2,722,709 Telephoneandpostage 13,603,200 11,401,018 Graduationexpenses 4,874,441 2,120,998 Hireofequipment 5,943,566 6,519,589 Coursephotographs 490,262 610,929 Trophies 169,510 296,400

395,883,511 352,008,1153. Other operating income

Interestincome 214,417 1,158,737 (Loss)/gainondisposalofproperty,plantandequipment (20,270) 39,424 Foreignexchangegain 340,813 -

534,960 1,198,1614. Operating profit

Thefollowingitemshavebeenchargedinarrivingatthe operatingsurplusfortheyear: Depreciationonproperty,plantandequipment(Note6) 35,440,182 28,436,227 Amortisationofintangibleassets(Note8) 1,814,082 2,138,045 Auditor'sremuneration 1,019,763 460,000 (Loss)/gainondisposalofproperty,plantandequipment (20,270) 39,424 Staffcosts(Note5) 283,485,114 271,696,004

5. Staff costs

Salariesandwages 214,691,626 214,797,521 NationalSecuritySocialFund 595,800 567,400 Staffmedicalandwelfare 27,201,857 21,438,421 Pensioncosts-Definedcontributionplan 18,952,722 18,191,023 Otherstaffcosts 22,043,109 16,701,639

283,485,114 271,696,004


NO

TES

(CO

NTI

NU

ED)

6.

Pro

pert

y an

d eq

uipm

ent

Ye

ar e

nded

31

Dec

embe

r 201

1

Libr

ary

Furn

iture

, bo

oks

and

Free

hold

Pr

epai

d

Mot

or

fixtu

re a

nd

man

agem

ent

Com

pute

r

land

ope

ratin

g le

ase

Bui

ldin

g ve

hicl

es

equi

pmen

t fil

ms

ha

rdw

are

To

tal

Shs

Shs

Shs

Shs

Shs

Shs

Shs

Shs

Costatstartofyear

30,746,569

-

62,065,710

13,864,841

139,016,005

41,985,926

48,697,998

336,377,049

Reclassified(note7)

-

377,593

--

-

-

-

377,593

Additions

--

4,253,266

-

39,683,331

3,325,155

18,886,418

66,148,170

Disposals

--

-

(3,200,000)

-

-

-

(3,200,000)

Surplusonrevaluation

54,253,431

898,979

182,404,452

-

--

-

237,556,862

Atendofyear

85,000,000

1,276,572

248,723,428

10,664,841

178,699,336

45,311,081

67,584,416

637,259,674

C

ompr

isin

g

Cost

30,746,569

377,593

66,318,976

10,664,841

178,699,336

45,311,081

67,584,416

399,702,812

Valuation

54,253,431

898,979

-182,404,452

-

-

-

-

85,000,000

1,276,572

248,723,428

10,664,841

178,699,336

45,311,081

67,584,416

637,259,674

D

epre

ciat

ion

Accum

ulatedatstartofyear

--

9,547,339

7,124,416

45,352,943

19,493,082

34,370,143

115,887,923

Reclassified(note7)

-87,723

-

--

-

-87,723

Elim

inatedonrevaluation

-(90,584)

(10,398,912)

-

-

-

-

(10,489,496)

Disposals

--

-

(2,630,469)

-

-

-

(2,630,469)

Chargefortheyear

-

6,085

2,095,192

1,542,724

16,668,299

5,163,600

9,964,282

35,440,182

Atendofyear

-3,224

1,243,619

6,036,671

62,021,242

24,656,682

44,334,425

138,295,863

N

et b

ook

valu

e85,000,000

1,273,348

247,479,809

4,628,170116,678,094

20,654,399

23,249,991

498,963,811

Freeholdland,buildingsandprepaidoperatingleasewereprofessionallyvaluedon12thand26thSeptember2011respectivelybyTysonsLimitedonthebasisof

openmarketvalue.

Revaluationsurplusonrevaluedassetsam

ountingtoShs.248,046,359havebeenrecognisedinthestatem

entofchangesinmem

bers’funds.

No

tes

to t

he F

inan

cial

Sta

tem

ents

for

the

year

end

ed 3

1 D

ec 2

011


No

tes

to t

he F

inan

cial

Sta

tem

ents

for

the

year

end

ed 3

1 D

ec 2

011

NO

TES

(CO

NTI

NU

ED)

6.

Pro

pert

y an

d eq

uipm

ent (

cont

inue

d)

Ye

ar e

nded

31

Dec

embe

r 201

1

Libr

ary

Furn

iture

, bo

oks

and

Free

hold

Pr

epai

d

Mot

or

fixtu

re a

nd

man

agem

ent

Com

pute

r

land

ope

ratin

g le

ase

Bui

ldin

g ve

hicl

es

equi

pmen

t fil

ms

ha

rdw

are

To

tal

Shs

Shs

Shs

Shs

Shs

Shs

Shs

Shs

Costatstartofyear

29,348,972

-61,053,930

11,020,980

109,056,289

34,321,709

42,865,572

287,667,452

Reclassified(note7)

-

377,593

-

-

-

-

-

377,593

Additions

1,397,597

-

1,011,780

6,890,361

29,959,716

7,664,217

5,832,426

52,756,097

Disposals

--

-(4,046,500)

--

-(4,046,500)

Atendofyear

30,746,569

377,593

62,065,710

13,864,841

139,016,005

41,985,926

48,697,998

336,754,642

D

epre

ciat

ion

Accum

ulatedatstartofyear

--

8,475,535

8,150,732

31,972,506

14,021,656

28,229,633

90,850,062

Reclassified(note7)

83,909

Disposals

--

-(3,273,124)

--

-(3,273,124)

Chargefortheyear

-3,814

1,071,804

2,246,808

13,380,437

5,592,854

6,140,510

28,436,227

Atendofyear

-87,723

9,547,339

7,124,416

45,352,943

19,614,510

34,370,143

116,013,165

N

et b

ook

valu

e30,746,569

289,870

52,518,371

6,740,425

93,663,062

22,371,416

14,327,855

220,657,568



NOTES (CONTINUED) 2011 2010

7. Prepaid Operating Lease Shs Shs

Cost Atstartofyear Reclassifiedtopropertyandequipment - 377,593

- (377,593) Atendofyear

- - Amortisation

Atstartofyear - 83,909 Chargefortheyear -

Reclassifiedtopropertyandequipment - (83,909)

Atendofyear - -

Net book value - -

PrepaidoperatingleaserentalrelatetothecostsincurredtotransferplotLR209/11320,whichwasdonatedbytheGovernmentofKenyatotheInstitute.ItisleasedfromtheGovernmentofKenyaforaperiodof99yearsfrom1March1987.TheuseisrestrictedtoKenyaInstituteofManagement.

Duringtheyear,thepre-paidoperatingleasewasreclassifiedtoproperty,plantandequipment.AsperIAS17Lease,landelementscanbeclassifiedasafinanceleaseifsignificantrisksandrewardsassociatedwiththelandduringtheleaseperiodwouldhavebeentransferredfromthelessortothelesseedespitetherebeingnotransferoftitle.

8. Intangible assets 2011 2010

Shs Shs Cost

Atstartofyear 12,415,311 10,277,266 Additions 1,330,953 2,138,045 Atendofyear 13,746,264 12,415,311 Amortisation

Atstartofyear 7,699,324 5,678,186 Chargefortheyear 1,814,082 2,021,138

Atendofyear 9,513,406 7,699,324

Net book value 4,232,858 4,715,987

Intangibleassetsconsistofcomputersoftwaredevelopmentcostsandspecificcomputersoftwarelicenses.Theseareamortisedonthereducingbalancemethodtowritethemoffovertheirexpectedusefullivesattherateof30%p.a.

9. Organizational Performance Index (OPI) 2011 2010 Shs Shs Atstartofyear 5,949,934 - Additions 1,199,256 5,949,934

Atendofyear 7,149,190 5,949,934 ThisrelatestoexpensesincurredinthedevelopmentoftheOPIassessmenttool,whichhasbeenpatented

byKenyaInstituteofManagement.OPIisaninnovativeexcellencemodeltoenablethedevelopmentofworldclassprocessesandinnovationcapability.Itisatoolthatassesestheeffectivenessandcompetitivenesofanorganisationalstrategy.Itdoesnothaveadefiniteusefullifeandiscontinuallybeingdevelopedandrefinedtocopewiththechangesinbusinesspractices.Itsusefullifeisnotdependentonthelifeofotherassetsoftheinstitute.Thecopyrightlicenceofthisassetdoesnothaveanexpirydate.



NOTES: (CONTINUED)

10. Investment-MUA 2011 2010 Shs Shs

Atstartofyear 14,271,283 - Additions 59,187,297 14,271,283 TransferofsponsorshipofMUAlecturersfromotherreceivables(Note11) 8,749,996 -

Atendofyear 82,208,576 14,271,283

InvestmentsrelatestoexpensesincurredintheestablishmentofManagementUniversityofAfrica(MUA)locatedinSouthC.Thishasbeenrecognisedatcost.

ThecompanywasincorporatedinSeptember2011andstartedoperationsinJanuary2012.Nofinancialstatementshavebeenpreparedforthesubsidiary.

Thefirstfinancialstatementswillbepreparedfortheperiodending31December2012.Consequently,consolidatedfinancialstatementshavenotbeenpreparedforthegroupasat31stDecember2011.

2011 201011. Trade and other receivables Shs Shs

Tradereceivables 96,311,333 73,211,977 Less:impairmentprovisions (21,346,552) (21,346,552) 74,964,781 51,865,425 Studentfeesreceivables 190,286,688 167,418,193 Prepaymentsandotherreceivables 48,155,556 33,860,109 Staffreceivables 15,375,239 11,892,595 Transferofsponsorshipoflecturerstoinvestments(Note10) (8,749,996) -

320,032,268 265,036,322 Movementinimpairmentprovisions

Atstartofyear 21,346,552 18,259,687 Additions - 3,086,865

Atendofyear 21,346,552 21,346,552

Intheopinionofthecouncil,thecarryingamountsoftradeandotherreceivablesapproximatetotheirfairvalue.

Thecompany'screditriskarisesprimarilyfromtradereceivablesandstudentdebtors.Thecouncilareoftheopinionthatthecompany'sexposureislimitedbecausethedebtiswidelyheld.

Thecarryingamountsoftheinstitute'stradeandotherreceivablesarealldenominatedinKenyaShilling.

Tradereceivablesthatareagedpast90daysareconsideredpastdue.

Asof31December2011,tradereceivablesamountingtoShs49,085,793werepastduebutnotimpaired.Theserelatetoanumberofindependentcustomersforwhomthereisnorecenthistoryofdefault.Theageinganalysisofthesetradereceivablesisasfollows:

Yearended31December2011 1 - 3 month 4 - 12 months Total Shs Shs Shs

Tradereceivables - 74,964,781 74,964,781 Otherreceivablesandprepayments 245,067,487 - 245,067,487

245,067,487 74,964,781 320,032,268



NOTES: (CONTINUED)

11. Trade and other receivables (continued)

Individuallyimpairedreceivablesmainlyrelatetocustomers,whoareinunexpectedlydifficulteconomicsituations.Thesehavebeenfullyprovidedforasstatedabove.

Theotherclasseswithintradeandotherreceivablesdonotcontainimpairedassets.

Themaximumexposuretocreditriskatthereportingdateisthefairvalueofeachclassofreceivablementioned

above.Theinstitutedoesnotholdanycollateralassecurity.

12. Cash and cash equivalents 2011 2010

Shs Shs

Cashatbankandinhand 11,478,794 48,788,734

Forthepurposesofcashflowstatement, cashandcashequivalentscomprisethefollowing:

Cashandbankbalances 11,478,794 48,788,734 Bankoverdraft(Note15) (63,294,674) (60,716,589) (51,815,880) (11,927,855)

Thecarryingamountsoftheinstitute'scashandcashequivalentsarealldenominatedinKenyaShilling.

Theinstitute'scashandbankbalancesareheldwithamajorKenyanfinancialinstitutionand,insofarasthedirectorsareabletomeasureanycreditrisktotheseassets,itisdeemedtobelimited.

13 Trade and other payables 2011 2010

Shs Shs

Tradepayables 51,496,797 28,997,281 Otherpayablesandaccruals 76,095,528 55,143,207

127,592,325 84,140,488

Intheopinionofthecouncilthecarryingamountoftradeandotherpayablesapproximatetotheirfairvalue.

Thecarryingamountsoftheinstitute'stradeandotherpayablesarealldenominatedinKenyaShilling. Thematurityanalysisoftheinstitute'stradeandotherpayablesisasfollows:

Year ended 31 December 2011 1 to 3 month 4 to 12 months Total Shs Shs Shs Tradepayables - 51,496,797 51,496,797 Otherpayablesandaccruals 76,095,528 - 76,095,528 76,095,528 51,496,797 127,592,325


14. P

rovi

sion

s an

d ac

crua

ls

C

harg

e to

Res

tate

d

A

t

A

s pr

evio

usly

ch

ange

s in

B

alan

ce

at s

tart

of

Cha

rge

for

Am

ount

en

d of

Stat

ed

equi

ty

recl

assi

fied

th

e ye

ar

the

year

pa

id

the

year

Shs

Shs

Shs

Shs

Shs

Shs

Shs

StaffSeparationReserve

14,343,041

(14,343,041)

-

-

--

-

Provisionfordoubtfuldebts

21,346,552

-

(21,346,552)

-

--

-

Staffleaveaccrual

1,774,668

-

-

1,774,668

1,968,371

-3,743,039

Mem

bers'service

8,286,578

(8,286,578)

-

-

--

-

45,750,839

(22,629,619)

(21,346,552)

1,774,668

1,968,372

-

3,743,039

-Staffseparationreserverelatestoageneralprovisionof1%ofthegrossincomemadetocaterforanylikelystaffseveranceandretirem

entbenefit.

-Mem

bers'servicefundsrelatestoprovisionmadebythemanagem

enttocaterforthemem

bers'trainingcosts.

A pr

ior y

ear a

djus

tmen

t has

bee

n fo

r the

follo

win

g:-

-

Theselfseparationreservesandmem

bersserviceprovisionofS

hs22,629,619hasbeenreversedandaspecialreservecreatedforthesam

e.Aliabilitycanonlybe

recognisedwherethereisanobligationbytheorganisationtopay.Thepaymentsoutofthesetw

ofundsissoleyatthediscretionofthemanagem

ent.

-

Provisionfordoubtfuldebtshasreclassifiedtotradeandreceivables.Thereisnoliabilityasthereisnoobligationtopay.Thisisaprovisionforimpairm

entontrade

receivables

20

11

2010

15. B

orro

win

gs

Sh

s Sh

s

Cur

rent

Bankoverdraft(Note12)

-CooperativeBank

11,188,264

-

-BarclaysBank

50,946,068

60,716,589

-

Bookoverdraft

1,160,342

-

Totalborrowings

63,294,674

60,716,589

No

tes

to t

he F

inan

cial

Sta

tem

ents

for

the

year

end

ed 3

1 D

ec 2

011



NOTES: (CONTINUED)

Thebankoverdraftintheyearwassecuredbythefollowing:

- AfirstchargeofpropertyL.R.No.KJD/KISAJU/4555inthenameofKenyaInstituteofManagementLimitedin favourofCooperativeBankofKenya. - AfirstchargeofpropertyL.R.No209/11320inthenameofKenyaInstituteofManagementLimited RegisteredandstampedtocoverKShs30minfavourofBarclaysBankofKenya.

Maturitybasedontherepaymentstructureoftheborrowingsisasfollows:

Intheopinionofthecouncil,thecarryingamountofthebankoverdraftapproximatetothefairvalue.Theeffectiveinterestratefortheyearandattheyearendwas24%.Thefacilityissubjecttoreviewbythebankfromtime to time.

16. Cash from operations 2011 2010

Shs Shs Reconciliationofsurplustocashfromoperations:

Surplusfortheyear 70,786,736 75,009,275 Adjustments for:

Depreciation 35,434,097 28,432,412 Amortizationofprepaidoperatingleaserentals 6,085 3,814 Amortizationofintangibleassets 1,814,082 2,021,138 Profit/(loss)ondisposalofproperty,plantandequipment 20,270 (39,424)

Cashgeneratedfromoperations 108,061,270 105,427,215 Changesinworkingcapital

Tradeandotherreceivables (54,995,946) (87,456,580) TransferofreceivablestoMUAinvestment (8,749,996) - Tradeandotherpayables 43,329,672 12,356,113 Provisionsandaccruals

1,968,371 11,637,802

Cashflowfromoperatingactivities 89,613,371 41,964,550

17. Related party transactions

2011 2010 Shs Shs i) Keymanagementcompensation

Salariesandothershorttermbenefit 26,685,000 24,540,000

AlistingofthemembersoftheCouncilandtheexecutivedirectorsareshownonpage1oftheannualreport.

18. Contingent liabilities KenyaInstituteofManagementisapartytoanindustrialcourtcasewheretheformerExecutiveDirectorisaclaimantforwrongfulterminationofemployment.IntheopinionoftheInstitute'slawyers,itisunlikelythattheclaimagainsttheInstitutewillsucceed.



NOTES: (CONTINUED)

19. Commitments

Contractualcommitmentsfortheacquisitionofproperty,plantandequipment

Atthereportingdate,thesecommitmentswereasfollows: 2011 2010 Shs Shs

Property,plantandequipment 139,086,000 522,085,300 Operatingleasecommitments-asalessee

Theinstituteleasesvariouspropertiesundernon-cancellableoperatingleaseagreements. Theleasetermsarebetween1and6yearsandthesearegenerallyrenewableattheendofthetenureofthe

lease.

Thefutureminimumleasepaymentspayableundernon-cancellableoperatingleasesareasfollows:

2011 2010 Shs Shs Payablewithinoneyear 128,568,969 108,156,011 Payablebetweensecondandfifthyear 514,275,876 484,538,929 Payableafterfiveyears - 29,460,973 642,844,845 622,155,913

20. Risk management objectives and policies

Financial risk management

TheInstitute'sactivitiesexposeittoavarietyoffinancialrisks:marketrisk,creditriskandliquidityrisk.

TheInstitute'soverallriskmanagementprogrammefocusesontheunpredictabilityoffinancialmarketsand

seekstominimisepotentialadverseeffectsonthe’sfinancialperformance.RiskmanagementiscarriedoutbythemanagementunderpoliciesapprovedbytheCouncil.Managementidentifies,evaluatesandhedgesfinancialrisksincloseco-operationwithvariousdepartmentalheads.Thecouncilprovideswrittenprinciplesforoverallriskmanagement,aswellaswrittenpoliciescoveringspecificareas,suchasmarketrisk,creditriskandinvestmentofexcessliquidity.

(a) Market risk

- Foreign exchange risk

TheInstituteoperateswhollywithinKenyawithanofficeinRwanda.Itsassetsandliabilitiesare reportedinthelocalcurrency.Althoughsomereceivableswereheldinforeigncurrency,itheldnosignificant foreigncurrencyexposureasat31December2011.

(b) Credit risk Creditriskarisesfromcashandcashequivalents,anddepositswithbanksandfinancialinstitutions,aswell

ascreditexposurestocustomers,includingoutstandingreceivables.



NOTES: (CONTINUED)

20. Risk management objectives and policies (continued)

Financialriskmanagement(continued)

(b) Credit risk (continued) Ifcustomersareindependentlyrated,theseratingsareused.Otherwise,ifthereisnoindependentrating, managementassessesthecreditqualityofthecustomer,takingintoaccounttheirfinancialposition,past experienceandotherfactors.

Individuallimitsaresetbasedoninternalorexternalinformationinaccordancewithlimitssetbythe management.Theutilisationofcreditlimitsisregularlymonitored.

Nocreditlimitswereexceededduringthereportingperiod,andmanagementdoesnotexpectanylosses fromnon-performancebythesecounterparties.

Noneofthefinancialassetsthatarefullyperforminghasbeenrenegotiatedinthelastyear.

Exposuretothisriskhasbeenquantifiedineachfinancialassetnoteinthefinancialstatementsalongwith anyconcentrationofrisk.

(c) Liquidity risk Cashflowforecastingisperformedbythefinancedepartmentoftheinstitutebymonitoringtheinstitute’s liquidityrequirementstoensureithassufficientcashtomeetoperationalneedswhilemaintainingsufficient headroomonitsundrawncommittedborrowingfacilitiesatalltimessothatthedoesnotbreachborrowing limitsorcovenants(whereapplicable)onanyofitsborrowingfacilities. Prudentliquidityriskmanagementimpliesmaintainingsufficientcashandmarketablesecurities,the availabilityoffundingthroughanadequateamountofcommittedcreditfacilitiesandtheabilitytocloseout marketpositions.Duetothedynamicnatureoftheunderlyingbusinesses,theinstitute'smanagement maintainsflexibilityinfundingbymaintainingavailabilityundercommittedcreditlines.

AdisclosureoftheundrawnfacilitiesisasperNote15.Thisistheinstitute'sliquidityreserve.

Notes15and13disclosethematurityanalysisofborrowingsandtradeandotherpayablesrespectively.

21. Capital management

Internally imposed capital requirements TheInstitute'sobjectiveswhenmanagingcapitalare:

- tosafeguardtheentity’sabilitytocontinueasagoingconcern,sothatitcancontinuetobenefitallthe stakeholders. - tomaintainastrongassetbasetosupportthedevelopmentofbusiness. - tomaintainanoptimalcapitalstructuretoreducethecostofcapital.

22. Business segments and centres TheInstitutehasbranchesinNairobi,Mombasa,Kisumu,Nakuru,Thika,Nyeri,Eldoret,Embu,Kericho,

EldamaRavine,Machakos,Kisii,Meru,Nyahururu,Naivasha,Kakamega,Narok,Kapsabet,Chuka,Nyanyuki,KabarnetandRwanda.TheInstitute'sactivitiesincludetraininginmanagementdevelopment,provisionofmembershipservices,managementconsultancyservicesandothersundryactivitiesallaimedatdevelopinggoodmanagementpractices.Trainingaccountsforabout90%ofthetotalincomeoftheInstitute.

23. Incorporation TheKenyaInstituteofManagementisincorporatedinKenyaasacompanylimitedbyguaranteeandregistered

undertheKenyaCompaniesAct(Cap486).

24. Presentation currency ThefinancialstatementsarepresentedinKenyaShillings(Kshs).



SCHEDULE OF OTHER INCOME AND EXPENDITURE 2011 2010

1. OTHER INCOME Shs Shs Interestincome 214,417 1,158,737

(Loss)/gainondisposaloffixedassets (20,270) 39,424Foreignexchangegain 340,813 -

Totalotherincome 534,960 1,198,161

2. ADMINISTRATIVE EXPENSES

Employment: Salariesandwages 213,791,496 214,797,521

Medicalscheme 22,020,704 18,066,727 Pensioncosts-Definedcontributionplan 18,952,722 18,191,023 Nightoutallowances 10,932,075 8,550,677 Casuallabourandovertime 7,662,240 4,633,290 Staffwelfareanddevelopment 5,181,153 3,371,694 StaffInsurance 3,448,794 3,517,672 NSSF 595,800 567,400 Bonuses 900,130 -

Total employment costs 283,485,114 271,696,004

Other administration expenses: Directorsremunerations 26,685,000 24,540,000

Travelingexpenses 22,643,987 16,482,455 Provisionfordoubtfuldebts - 3,086,865 Cleaningservices 13,201,200 11,256,264 Postageandtelephone 9,046,424 9,470,381 Generalofficeexpenses 9,921,749 9,546,097 Bankchargesandinterestonoverdraft 9,166,763 7,585,521 Councilexpenses 7,853,298 7,897,116 Motorvehicleexpenses 2,012,860 2,655,788 Entertainment 4,966,092 4,349,810 Subscriptions 1,673,637 464,050 Legalandsecretarialexpenses 1,661,246 631,620 Auditfees 1,019,763 460,000 Corporatesocialresponsibility 923,866 1,096,522 StudentWelfare&Alumni 811,470 495,051 Total other administration expenses 111,587,355 100,017,540 Totaladministrationexpenses 395,072,469 371,713,544 3. OTHER OPERATING EXPENSES

Establishment:

Rentandrates 128,568,969 101,048,808

Depreciationandproperty,plantandequipment 35,440,181 28,432,412 Securityexpenses 10,687,903 9,210,475 Lightandwater 6,788,925 5,952,090 Repairsandmaintenance 4,336,276 4,032,070 Tradelicense 2,453,785 1,583,597 Propertyandgeneralinsurance 2,470,072 1,321,606 Amortizationofintangleassets 1,814,082 2,021,138 Amortizationofoperatingleaserentals - 3,814 192,560,193 153,606,010


0

200

400

600

800

2007 2008 2009 2010 2011

177 258

328 412

729

Total Reserves 2007-2011 in Kshs millions

0

200

400

600

800

1000

1200

2007 2008 2009 2010 2011

472 592

793

961 1054

Total Turnover 2007 - 2011 in Kshs millions


Notes


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ere

Proxy Form

THE 46th ANNUAL GENERAL MEETING OF THE KENYA INSTITUTE OF MANAGEMENT LIMITED

FRIDAY JUNE 29TH 2012

APPOINTMENT OF PROXY

ProxiesmustbereceivedbytheInstitutelSecretaryatleast48hoursbeforetheAnnualGeneralMeeting.

I…………………………………………………………………………………………..beingapaidupmemberoftheKenya

InstituteofManagementLimited(MemberNo……………..)andbeingunabletoattendthe46thAnnualGeneral

Meetinginperson,herebyappointMr./Mrs./Miss……………………………………………………………...........................

Membernumber…………………………andfailinghim/her……………………………………………………………

………………………………………………………...........................Membernumber……………………….tovoteon

mybehalfatthe46thAnnualGeneralMeetingtobeheldontheFriday,June29th,2012at4.00p.moratany

adjournmentthereof.

SIGNED………………………………………………… DATE…………………………………………

NOTE: All persons appointed as proxies must be members of the Institute in good standing and must have paid up the current year subscriptions.The proxies must be on the original form, photocopies will not be accepted.

FOR OFFICIAL USE ONLY

Attendance slip46th Annual General Meeting - Kenya Institute Of ManagementDetails of Proxy

Name…………………………………………………………………….Membership No………………….............

Signature………………………………………………………………. Date…………………………………………


Notes


KIM Head OfficeLuther Plaza, 2nd and 3rd Floor • Uhuru Highway / Nyerere Road Junction. P. O. Box 43706, 00100 Nairobi, Kenya • Tel: (254 020) 2445600, 2445555

Email: [email protected] • Website: www.kim.ac.ke

audited_accounts2011

Documents

e n t s

u d i t e d f i n

r e p o r t

annual report

annual general meetingnotice

ceos report

chairmans report

corporate governance