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Risk management

Risk philosophy

The group is committed to identifying and managing risk. As such, we apply appropriate corporate governance principles and relevant rules and regulations. The board is responsible for the governance of risk and is satisfied with the effectiveness of the risk management process. The risk committee monitors risk management and is responsible for assessing related plans and processes. A risk register is maintained of significant risks facing the group, and management’s actions to manage these risks within the board-approved ranges of tolerance are monitored.

As a leading publishing group operating in a competitive and ever-changing market, the group is exposed to a wide range of risks, some of which may have material consequences.

Identifying risks and drafting plans to manage these risks form part of each business unit’s business plan. These plans are assessed by the board annually.

Risk management policy

The group maintains a transparent risk profile by using a structured, formal and planned approach to risk management. The identification, management and reporting of risks are embedded in its business activities and processes. The group’s risk management policy applies to all operations where Media24 directly or indirectly has more than 50% ownership or management control. The policy applies to risks the group faces in executing its strategy, operations, reporting and compliance activities, and is reviewed annually. The risk committee is responsible for reviewing these processes. The group risk manager advises on, formulates, oversees and manages the risk management system and monitors the group’s risk profile, ensuring major risks are identified and reported at the appropriate level in the group.

Risk framework

The Media24 enterprise-wide risk management (ERM) framework is designed to ensure significant risks and related incidents are identified, documented, managed, monitored and reported in a consistent and structured manner across the group. It is modelled on the COSO ERM (the Committee of the Sponsoring Organisations of the Treadway Commission Framework for Enterprise-wide Risk Management), as well as the internationally accepted COBIT framework for information technology.

Material issues and how we manage these

This section identifies the main risks that may affect the group. It is not intended to provide an extensive analysis and discussion of all the group’s risks. Some risks are not within the control of the group and other factors, besides those listed, may affect the overall performance of the group. Despite the structured approach to risk identification in the group, some risks may be unknown at present and other risks currently regarded as immaterial, may become material in future.

At present the following major group risks are evident among a wide range of potential exposures:

  DESCRIPTION OF MATERIAL ISSUE HOW WE MANAGE THE ISSUE
Block The group operates in fiercely competitive and sometimes maturing markets.
Block Building unique relationships with customers through content, social media, special events and digital platforms. Media24 continuously explores ways to enhance the quality of its offering and explore new target markets.
Block Technology forms an integral part of our operations.
Block There is the risk that the group may be caught off guard by new technologies or start-ups or the speed of development.
Block The Media24 group operates in the media and entertainment industry in South Africa. It is therefore sensitive to local political and other events that may influence the local and global economy.
Block The group continuously focuses on and monitors its digital strategy on all digital and mobile platforms. Management teams focus on business and the diversification of business offerings, in terms of both product range and geographical location.
Block Shrinking circulation and advertising revenues in relation to printed publications.
Block Regular reader research to maintain quality of publications.
Block Stringent cost-control measures are in place.
Block There is a risk that our digital operations fail to reach the scale required to generate substantial profits.
Block Effective use of social media.
Block Investigate alternative revenue models.
Block A sudden unforeseen event could damage the group’s assets and interrupt day-to-day operations.
Block Precautionary measures are incorporated.
Block A comprehensive short-term insurance programme is in place.
Block Any adverse event (financial or otherwise) at a paper supplier or in the transport process may affect the supplier’s operations and result in loss of income to the group, due to the inability to produce/print its products.
Block Minimum stock levels of paper are maintained.
Block Media24 has more than one international supplier and South African suppliers are in place.
Block Insurance is in place in case of paper damage during transport.
Block Software problems in key applications resulting in interruption or delays in print and digital publishing.
Block Software issues could interrupt publishing, printing, distribution and online activities, resulting in loss of income.
Block Rigorous testing programmes are in place requiring business sign-off before implementation.
Block There is an ongoing quality assurance process.
Block Appropriate IT systems are in place to support the business.
Block A head of information was appointed in April 2014.
Block Availability of top talent, particularly in digital and ecommerce environments. The group could be unable to attract and retain top-quality staff.
Block Talent management strategies and uccession planning initiatives are in place.
Block Training programmes.
Block Initiatives such as Media in the classroom to raise media awareness at school level.
Block Grad24 initiative to promote media and Media24 at tertiary level.
Block An incident at our facilities, causing death or serious injury while on duty as a result of non-compliance with the South African Occupational Health and Safety Act, may lead to criminal liability, fines and penalties to the company, its directors and/or officers. Our journalists are regularly exposed to unsafe circumstances.
Block We perform regular health and safety reviews and staff training.
Block The consequences of non-compliance with relevant legislation are communicated to management and remedial action is taken where appropriate.
Block Protection is arranged for journalists when required.
Block Various external assurance providers access our control measures and risks.
Block Materials and energy used in operations may harm the environment. These include electricity, water, paper, fluids and harmful gases.
Block Our carbon footprint is measured.
Block Paper, as well as dust, is recycled where possible.
Block Waste is disposed of responsibly.
Block Regenerative thermal oxiders are in place.
Block Toluene is recycled at the Paarl Media gravure printing press.
Block The group has substantial foreign currency denominated input costs, specifically for procuring paper and printing equipment. Movements of the foreign currency against the South African rand are unpredictable and, if significant, may cause substantial losses.
Block The group has a policy in terms of which foreign currency risk is managed.
Block Media24’s financial success is highly dependent on advertising revenue.
Block The business plan is aimed at diversifying revenue streams and securing advertising revenue.
Block Interest rate increases will negatively affect cash flow.
Block There is a specific focus on working capital management, as well as a continued focus on efficiency gains across the traditional print businesses with the aim to maximise cash flow opportunities.
Block Our level of debt could adversely affect our business. Our ability to make payments on our debt will depend on our future operating performance, which is subject to many risks outside our control.
Block The group maintains a conservative approach to its debt profile, based on the adequacy of its internal free cash flow resources in servicing the debt and the level of investments it makes.
Block Media24 is required to comply with a range of regulation and legislation matters. Non-compliance with legislation could result in financial penalties.
Block A regulatory and legal compliance programme has been implemented in the group. This forms part of our operational targets in terms of suppliers and our workforce.
Block Active participation in regulatory matters.
Block Published articles might be defamatory and/or provide an inaccurate account of actual events. Defamation lawsuits can result in significant loss and reputational damage.
Block A much stricter press code is in place.
Block Editorial processes ensure the highest standards.
Block Legal counsel guides journalists and editors on articles that may be defamatory.
Block Short-term insurance is in place.
Block Newspapers have ombudsmen in place.
Block All Media24 publishing divisions subscribe to the South African Press Code and training is in place.