The company also issued a trading statement warning that its earnings per share for the year ended March 31 might fall by between 42% and 45% and its headline earnings per share by between 20% and 23%.
The JSE on Thursday confirmed to Moneyweb that it was investigating “unsound governance of a breath-taking nature” as alleged by Charl Kocks, governance expert at Ratings Africa.
Kocks on Wednesday welcomed the JSE interventions, but also called for sanctions against the responsible Novus and Media24 directors.
Kocks on April 18 alleged that Novus failed to disclose before the company’s listing in March 2015 that 31% of Novus’ revenue was dependent on the life of its non-executive director Lambert Retief. The 31% relates to exclusive printing contracts with Media24, which according to Novus currently represent 25% of company revenue.
Retief passed away in January and Novus then informed the market that the company’s Restated Management Agreement with Retief had come to an end as a result. It added: “Media24 thereby has the right to terminate the existing contractual printing agreement with Novus Holdings on six months’ written notice. Novus Holdings and Media24 are currently engaged in negotiations around the renewal or extension of the printing agreements and are in the process of finalising new terms.”
Novus in April announced that it has reached in principle an agreement with Media24 and would announce further detail in due course.
On Tuesday Novus made a U-turn, stating: “Contrary to the January Announcement, Media24’s and Novus Holdings’ respective rights and obligations under the Restated Management Agreement remain in effect, in accordance with the terms of the Restated Management Agreement.”
Novus continues to state that according to the parties’ interpretation the fact that Retief ceased to be a party to the Restated Management Agreement gave Media24 the right to terminate the printing agreements. “However, Media24 has not terminated and has subsequently waived, without derogating from any of its other termination rights, any right that it may have had to terminate” the printing agreements following Retief’s death.
The Restated Management Agreement and printing agreements therefore remain in effect “on the terms as disclosed in Novus Holdings’ pre-listing statement”, the company said on Tuesday.
This is exactly what Ratings Afrika called for as “the only course of action in these circumstances that would be fair to the company and its shareholders, given the grossly inadequate disclosure in respect of this agreement in the PLS (Pre-listing statement).”
Andre Visser, general manager of Issuer Regulation at the JSE told Moneyweb its main objective in this matter is to ensure that investors have the correct information pertaining to the agreements. “After engagement with the company and their sponsor the JSE instructed the company to release a Sens announcement to clarify the position. This has now been done and the company has released a Sens announcement to state the correct facts.”
Kocks however says Ratings Afrika’s concerns regarding the original content of the PLS and the possible lack of veracity on p57 of that statement, still remain.
“We hope that the directors of Novus Holdings and of Media24 who were jointly responsible for the PLS being issued with this shortcoming and subsequently allowed the indication of termination of the agreements on some interpretation that is difficult to comprehend, will acknowledge their error and be subjected to sanction. The unsound governance should have been averted at that level and possibly even above” he says.
