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Corporate governance

The board of directors manages the group’s business with integrity and by applying appropriate corporate governance practices.

Introduction

Media24 is a leading media group in Africa. It is a subsidiary of Naspers Limited, a company listed on the JSE Limited’s stock exchange (JSE) and the London Stock Exchange (LSE). Media24 complies with the Listings Requirements of the JSE, as well as legislation applicable to publicly listed companies in South Africa (where applicable to a subsidiary of a company listed on the JSE) and the guidelines in the King Code and Report on Corporate Governance for South Africa 2009 (King III).

Compliance with the applicable JSE and LSE listings requirements is monitored by the audit committee of the board. The board’s audit, risk, human resources and remuneration, nomination, and safety, health and environment committees fulfil key roles in ensuring good corporate governance. The group uses independent external advisers to monitor regulatory developments to enable management to make recommendations to the Media24 board on matters of corporate governance.

Application of and approach to King III

The board and its committees must ensure that the principles and practices contained in King III are applied and embedded in the governance practices of companies in the group.

A disciplined reporting structure ensures that the Media24 Holdings board is fully apprised of subsidiary activities, risks and opportunities. All subsidiaries and controlled entities in the group are required to subscribe to the relevant principles of King III. Business and governance structures have clear approval frameworks. Compliance, as well as progress, is monitored by the Media24 audit and risk committees and reported to the Media24 board.

For a review of Media24’s application of King III, click here.

Business ethics statement

The group’s code of business ethics and conduct was revised during the year and is available at www.media24.com.

This code applies to all directors and employees in the group. Ensuring that group companies adopt appropriate processes and establish supporting policies and procedures is an ongoing mandate. Management focuses on policies and procedures that address key ethical risks, such as conflicts of interest, accepting inappropriate gifts, and acceptable business conduct.

The human resources and remuneration committee acts as the overall custodian of business ethics. The disciplinary codes and procedures of the various companies are used to ensure compliance with the policies and practices that underpin the overall code of business ethics and conduct. Unethical behaviour by senior staff members, as well as the manner in which the company’s disciplinary code was applied in such instances, is reported to this committee.

Media24 is committed to conducting its business on the basis of compliance with the law, with integrity and with proper regard for ethical business practices. Whistle-blowing facilities are in place, enabling all employees to anonymously report unethical conduct in the workplace.

Compliance framework

Media24 has a legal compliance programme that involves preparing and maintaining inventories of material laws and regulations applicable to each business unit; implementing policies and procedures based on these laws and regulations; establishing processes to control and supervise compliance and mitigate risks; monitoring compliance; implementing effective training and awareness programmes and reporting to the various boards and management in the group on the effectiveness of compliance efforts.

Media24’s general manager of legal and regulatory affairs is the chair of the legal compliance committee and reports on the progress of this committee to the risk committee of the board.

The board

Composition

The details of directors as at 31 March 2015 are set out here. Messrs Neil van Heerden and Lourens Jonker retired on 31 March 2015 and 30 June 2015, respectively, and the details do not appear on this list of directors. Mr Steve Pacak who resigned on 30 June 2015 is also excluded from this list.

Media24 has a unitary board, which fulfils overseeing and controlling functions. The board has a charter evidencing a clear division of responsibilities. Most board members are non-executive directors and independent of management. To ensure no one individual has unfettered powers of decisionmaking and authority, the roles of chair and chief executive are separate, ensuring a clearly defined division of responsibilities.

As at 31 March 2015 the board comprised eight independent non-executive directors, one non-executive director and two executive directors. Five directors (45,5%) were from previously disadvantaged groups and five directors (45,5%) were female. Messrs Koos Bekker and Trevor Petersen were appointed as non-executive directors subsequent to the year-end on 1 April 2015 and 1 July 2015 respectively.

The chair

The chair, Prof Rachel Jafta, is an independent non-executive director. Mrs Ruda Landman was re-appointed in the role of lead independent director on 7 November 2014 and deals with all matters not dealt with by the independent non-executive chair.

The chief executive

The chief executive reports to the board and is responsible for the day-to-day business of the group and the implementation of policies and strategies adopted by the board. Chief executives of the various businesses assist her in this task. Board authority conferred on management is delegated through the chief executive, in accordance with approved authority levels.

Orientation and development

An induction programme is held for new members of the board and key committees. This programme, tailored to the specific needs of individual appointees, involves industry and company-specific orientation and includes meetings with senior management. The company secretary supports the chair with the induction and orientation of directors and arranges specific training where required.

Conflicts of interest

Potential conflicts are appropriately managed to ensure that candidate and existing directors have no conflicting interests between their obligations to the company and their personal interests. Any interest in contracts with the company must be formally disclosed and documented. Directors must also adhere to a policy on trading in Naspers securities that was adopted by Media24.

Independent advice

Individual directors may, after consulting with the chair or the chief executive, seek independent professional advice, at the expense of the company, on any matter connected with the discharge of their responsibilities as directors.

Board meetings and attendance

The board meets at least four times a year, and when required by circumstances. The executive committee attends to urgent matters that cannot be postponed until the next scheduled board meeting. The board held five meetings during the past financial year. Non-executive directors meet at least once annually without the chief executive, the director responsible for the finance function and the chair, to discuss the performance of these individuals. Details of attendance at meetings are provided here.

Evaluation

The nomination committee carries out the annual evaluation process. The performance of the board and its committees, as well as the chair of the board, with reference to their respective mandates in terms of the board charter and the charters of its committees, is appraised. The committees perform self-evaluations against their charters for consideration by the board.

In addition, the performance of each director is evaluated by the other board members, using an evaluation questionnaire. The chair of the nomination committee discusses the results of the evaluation with each director and agrees to any training needs or areas requiring attention by that director. Where a director’s performance is not considered satisfactory, the board will not recommend his/her re-election.

A consolidated summary of the evaluation is reported to and discussed by the board, including any actions required. The lead independent director leads the discussion of the performance of the chair, with reference to the results of the evaluation questionnaire, and provides feedback to the chair.

Board committees

While the whole board remains accountable for the performance and affairs of the company, it delegates certain functions to board committees and management to assist in properly discharging its duties. Appropriate structures for these delegations are in place, accompanied by monitoring and reporting systems.

Each committee acts within agreed, written terms of reference. The chair of each committee reports at each scheduled board meeting. The chair of each committee is a non-executive director and is required to attend annual general meetings to answer questions. The established board committees in operation during the financial year were the audit, risk, human resources and remuneration, nomination, and safety, health and environment committees. The board is satisfied that the committees properly discharged their responsibilities over the past year. Details of attendance at meetings appear here.

Internal control systems

As part of the overall management of risk, the group operates a system of internal controls in all material subsidiaries and joint ventures to prevent and detect any risk materialising and to address any adverse consequences thereof. The group’s system of internal controls is designed to provide reasonable, and not absolute, assurance on the achievement of company objectives, including integrity and reliability of the financial statements; safeguarding, verifying and maintaining accountability of its assets; and detecting fraud, potential liability, loss and material misstatement, while complying with regulations. For those entities in which Media24 does not have a controlling interest, the directors representing Media24 on these boards seek assurance that significant risks are managed and systems of internal control are effective.

All control systems have shortcomings, including the possibility of human error or flouting of control measures. Even the best internal control system therefore only provides partial assurance over risk mitigation. Management regularly reviews risks and the design and effectiveness of the internal control system to address these, assisted by work and reports from internal audit on the adequacy and operational effectiveness of controls, which may indicate opportunities for improvement. The external auditor also considers elements of the internal control system as part of its audit and communicates deficiencies when identified.

The board reviewed the effectiveness of controls for the year ended 31 March 2015, principally through a process of management self-assessment, including formal confirmation in the form of representation letters by executive management. Consideration was given to input from the risk management process as well as reports from internal audit and the external auditor. Where necessary, programmes for corrective actions have been initiated. Nothing has come to the attention of the board, external or internal auditors to indicate any material breakdown in the functioning of internal controls during the year under review.

Internal audit

An internal audit function is in place throughout the group. The head of internal audit reports to the chair of the Media24 audit committee, with administrative reporting to the director responsible for the finance function. A large part of the internal audit fieldwork is outsourced.

Non-audit services

The group’s policy on non-audit services provides guidelines on dealing with audit, audit-related, tax and other non-audit services that may be provided by Media24’s independent external auditor to group entities. It also sets out services that may not be performed by the independent external auditor.

IT governance

Information technology (IT) governance is integrated in the operations of the Media24 businesses. Management of each subsidiary and business unit is responsible for ensuring effective IT governance. Internal audit provides independent assurance to the audit committee on the effectiveness of IT governance.

Company secretary

The company secretary, Ms Lurica Klink, is responsible for providing the board with guidance on discharging its responsibilities in terms of legislation and regulatory requirements. Directors have unlimited access to the advice and services of the company secretary. She plays an active role in the company’s corporate governance and ensures that in accordance with the pertinent laws, the proceedings and affairs of the board, the company itself and, where appropriate, shareholders are properly administered. She is also the company’s compliance officer as defined in the Companies Act and delegated information officer. The company secretary monitors directors’ dealings in Naspers shares and ensures adherence to closed periods. She attends all board and committee meetings.

Shareholders

The board encourages shareholders to attend the annual general meeting, notice of which is contained in this integrated annual report, where shareholders have the opportunity to put questions to the board, management and the chairs of the various board committees.

The company’s website, www.media24.com, provides the latest and historical financial and other information, including financial reports.