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Chief executive's report

There has never been a more exciting time to be in the media industry. Digital platforms offer content creators the opportunity to connect with audiences anytime, anywhere, get instant feedback, enrich their own offering with user-generated content and to offer additional content streams such as video.

With broadband remaining slow and expensive in South Africa, devices and access to data limited to a relatively small part of the population, and digital advertising not filling the gap left by declining advertising revenue in print media, it does, however, remain a challenge to find new business models that work.

Therefore, while journalism and content remain at the heart of Media24, the company continues to diversify its portfolio to attract new revenue streams that will ensure long-term sustainability.

In the past year advertising revenue, still our most important source of income, took another knock as advertisers cut back even further on marketing budgets and continued to shift their spend away from print. Publishers also saw a general decline in newspaper and magazine circulation. Like media companies worldwide, Media24 was thus faced with the double blow of tough economic conditions and structural changes to the industry.

While revenue grew 5% to R8,2bn, trading profit of R519m was 5% weaker year on year. Cost savings and further improvements to operating efficiencies couldn’t fully mitigate the impact on the bottom line. In addition, we stepped up investments in new growth areas.

Even so, there were many highlights in the past year. On the operational side, digital audiences and content consumption across all platforms, most notably mobile, exploded. We expanded further into the rest of Africa, diversified and expanded our printing operations, grew our newspaper footprint and subscriber base, launched several new products and established our first fully fledged ecommerce business. Our news, magazine and books divisions again scooped all the major industry prizes for journalistic and publishing excellence.

Sustainable development

Media24 connects users to content, advertising, products and services and means of communication through print, digital and ecommerce platforms.
We regularly review our progress in building a balanced, sustainable organisation and identifying areas for improvement.

The board is ultimately responsible for ensuring that sustainable development is integrated into our business strategy. The board delegates implementation of the sustainability policy to management, with oversight vesting in the audit and risk committees. Operationally, sustainable development forms part of our risk management processes.

The board is also responsible for the integrity of integrated reporting. The audit committee oversees sustainability issues and assists the board in its review by ensuring the information in the integrated annual report is accurate and reliable when compared to the financial results.

In line with our previous integrated annual reports, Media24 will continue to record the group’s social, environmental and economic impact on the communities in which we operate.

Managing sustainability

The Media24 board determines the business strategy and is responsible for overseeing the group’s performance. Our management team provides leadership and implements agreed-upon strategies, as guided by our code of ethics and business conduct. Our sustainable development framework flows from our core values and a clear understanding of the key issues and concerns of material stakeholders. This links directly to our risk management processes, which integrate financial and non-financial risk identification, management and monitoring.

Significant divestitures and acquisitions

During the course of the year Media24 purchased 100% of the shareholding of I-Net Bridge, a leading provider of financial information to professional investors. On 1 August 2013 Paarl Media acquired 100% of the share capital of Intrepid Printers Proprietary Limited to expand its printing capacity and increase our market share in the KwaZulu- Natal area.

Our people

Esmaré WeidemanWe continuously aim to attract, develop and retain the best talent to maintain our competitive advantage. We salute the unremitting passion, commitment and excellence of our editorial, sales, commerce and technical teams. People are our most valuable asset.

Investing for future growth

As much as we celebrate the centenary of Naspers, our founding company, in December 2014, Media24 is geared for the future. The structural change in the media landscape necessitates an appetite for investment and a long-term view. As a management team, we will continue to focus on driving further efficiencies in our traditional media businesses, while at the same time investing in high-growth areas in print, digital media, ecommerce, both locally and in the rest of Africa, to position the business for future growth.

We continue to seek long-term success to deliver value to our shareholders, and continue to make a positive contribution to the communities in which we operate. Here’s to another 100 years!

Esmaré Weideman
Chief executive

12 June 2014