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Chair's report

Rachel Jafta

We present the Media24 integrated annual report to stakeholders.

Overview

The report has been prepared in line with the recommendations of King III (revised guidelines on corporate governance in South Africa).

While Media24 faced tough trading conditions over the past year, we stepped up investment in high-growth areas and continued to serve the communities in which we work. Our publishing divisions – Lifestyle (previously Magazines), News, Books and 24.com’s digital media channels – continue to produce quality educational and literary content and all Media24’s businesses play an active role in empowering communities through various initiatives. We continued our efforts to support businesses that create employment and contributed substantially to the development of skills in journalism and related media fields. More details of the group’s financial results are in the financial review of this report.

Media companies worldwide are in transition. Traditional revenue sources are declining and many media companies are struggling to adapt. Media24 was one of the forerunners in investing in new areas close to our core expertise and actively optimising our cost base. These new businesses are showing good results and while print and digital media remains at the heart of what we do, we are diversifying the company for future growth.

Welkom Yizani

Welkom Yizani shares started trading on 9 December 2013. This brought to an end the seven-year retention period of the scheme and enabled existing shareholders to trade their shares while new qualifying shareholders can now buy shares. As at 31 March 2015 Welkom Yizani had 94 310 shareholders.

Dividend

The board recommends that a dividend of R144,8m (2014: R144,8m) be declared to shareholders of Media24 Holdings. If approved by shareholders at the annual general meeting on Monday 31 August 2015, dividends will be payable to shareholders recorded in the books on Monday 31 August 2015 and will be paid on or about Thursday 3 September 2015.

Welkom Yizani will receive a dividend of R21,7m (2014: R21,7m). Welkom Yizani will in turn declare a preference dividend of R17,4m (2014: R17,4m) in terms of the preference share agreement. The balance of the dividend received by Welkom Yizani, less expenses, will be declared as a dividend to its ordinary shareholders. As a result, a dividend of R4,3m (2014: R4,3m) will, subject to shareholder approval at the annual general meeting on 31 August 2015, be declared by Welkom Yizani.

The dividend will be declared from income reserves. The amount subject to the dividend tax of 15% is 29 cents per Welkom Yizani ordinary share. Dividend tax will amount to 4 cents per Welkom Yizani ordinary share. As a result, Welkom Yizani ordinary shareholders will receive a net dividend of 25 cents per ordinary share (2014: 25 cents per ordinary share).

The board further recommends that a special dividend of R100m (2014: Rnil) be declared to shareholders of Media24 Holdings. If approved by shareholders at the annual general meeting on Monday 31 August 2015, dividends will be payable to shareholders recorded in the books on Monday 31 August 2015 and will be paid on or about Thursday 3 September 2015. Welkom Yizani will also receive a special dividend of R15m (2014: Rnil).

Welkom Yizani will in turn declare a special preference dividend of R12m (2014: Rnil) and a special ordinary dividend of R3m (2014: Rnil), subject to shareholder approval at the annual general meeting on 31 August 2015.

The special dividend will be declared from income reserves. The amount subject to the dividend tax of 15% is 21 cents per Welkom Yizani ordinary share. Dividend tax will amount to 3 cents per Welkom Yizani ordinary share. As a result, Welkom Yizani ordinary shareholders will receive a net special dividend of 18 cents per ordinary share (2014: Rnil). In terms of the latest tax legislation, the Welkom Yizani preference shareholder is a company that is a resident in South Africa and accordingly dividend tax need not be withheld in respect of dividends.

The board recommends the special dividend on a once-off basis. It is specifically recommended to allow the Welkom Yizani ordinary shareholders to share in the proceeds of the Novus Holdings listing.

Governance

Governance is essential for our stakeholders. The board manages the group’s business with integrity and by applying appropriate corporate governance practices. Several Media24 subsidiaries are managed by independent boards of directors, all with similar governance practices that comply with the necessary governance and regulatory requirements. A disciplined reporting structure ensures that the Media24 Holdings board is apprised of subsidiary activities, risks and opportunities. Detailed strategies and business plans are reviewed annually, spanning the financial and non-financial elements of each subsidiary and division in the group. Measuring performance against predetermined targets underpins management’s remuneration. We continually evaluate areas where governance can be strengthened at a corporate and subsidiary level. The impact of the Companies Act No 71 of 2008, as amended (“the Companies Act”), as well as the King III code, remained a focus over the past year. Further details about our application of the King III principles are available at www.media24.com.

Regulatory environment in which we operate

The big regulatory challenges for the year ahead remain competition law investigations and compliance with the Protection of Personal Information Act (POPI). The Protection of State Information Bill (the Secrecy Bill), which has been referred to the President for signature, remains dormant. Parliament has yet to deliberate on a report by the Print and Digital Media Transformation Task Team (PDMTTT) on transformation of the industry, as well as the Press Freedom Commission’s report on media regulation. The state of transformation in print media will feature prominently in the deliberations of Parliament’s Portfolio Committee on Communications in the 2015 calendar year.

Legislation to restrict the advertising of liquor is still in limbo. Only once the draft legislation is referred to Parliament will Media24 be able to participate in the public consultation process. It is still too early to predict what restrictions will be put on print media.

It seems that 2015 will be the year for a thorough regulatory overhaul of online media, internet services and convergence matters. Between the Minister of Communications and the Minister of Telecommunications and Postal Services, a draft national online regulation policy has been released for comment and the Film and Publications Board is reviewing its online content regulations. A broadcasting policy review is also underway, which will be of importance to online video content. The Electronic Communications Act, as well as the Electronic Communications and Transactions Act will also be reviewed.

Directors

In terms of the company’s memorandum of incorporation, one third of directors retire annually and reappointment is not automatic. Profs Rachel Jafta and Debra Meyer and Mrs Ruda Landman, who retire by rotation, are eligible and offer themselves for re-election. Shareholders will be asked to consider the re-election of said directors at the upcoming annual general meeting, notice of which is contained in this integrated annual report.

Prof Russel Botman sadly passed away on 28 June 2014. He made a substantial contribution on various fronts. We miss him and remember him with great appreciation for being the “mensch” he was.

Messrs Neil van Heerden and Lourens Jonker retired as directors on 31 March 2015 and 30 June 2015 respectively. Mr Steve Pacak also resigned on 30 June 2015. We are grateful to the departing directors for their dedicated service and commitment to the Media24 boards of directors. We wish them well with their future endeavours.

Messrs Koos Bekker and Trevor Petersen were appointed as directors on 1 April 2015 and 1 July 2015 respectively. Shareholders will be asked to confirm their appointment as directors at the annual general meeting. View brief biographical details of all the directors.

The board recommends that shareholders appoint Messrs Salie de Swardt and Trevor Petersen and Mrs Jo-Ann Held as audit committee members. Shareholders will be asked to consider their appointment at the annual general meeting. Their brief biographical details also appear here.

I would like to thank my fellow board members for their continued support. We also recognise the commitment, passion and excellence of Media24’s management team and all our employees and wish them well for the new financial year.

Rachel Jafta
Chair

19 June 2015