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NOVUS HOLDINGS LIMITED - Novus Holdings Results for the year ended 31 March 2018

Release Date: 15/06/2018 16:30
Code(s): NVS     PDF:  
Wrap Text
Novus Holdings Results for the year ended 31 March 2018

Novus Holdings Limited
(Incorporated in the Republic of South Africa)
JSE share code: NVS
ISIN code: ZAE000202149
Registration number: 2008/011165/06
("Novus Holdings" or "the company" or "the Group")

NOVUS HOLDINGS RESULTS FOR THE YEAR ENDED 31 MARCH 2018
SALIENT FEATURES

                                                                                    2018            2017            Change
                                                                                   R'000           R'000                 %                    
Revenue                                                                        4 308 102       4 312 464             -0,1%
Gross profit                                                                   1 126 997       1 105 404             +2,0%
Margin                                                                             26,2%           25,6%
Operating profit                                                                 141 947         393 736            -63,9%
Operating profit - excluding impairments and profit/(loss) on disposal of assets 500 719         528 825             -5,3%
Operating margin                                                                    3,3%            9,1%
Operating margin - excluding impairments and profit/(loss) on disposal of assets   11,6%           12,3%
Profit after tax                                                                  71 103         256 827            -72,3%
Headline earnings                                                                328 734         354 083             -7,1%
Earnings per share (EPS) - cents                                                    22,0            80,4            -72,6%
Headline earnings per share (HEPS)- cents                                         102,9           110,8             -7,1%
Dividend per share - cents                                                          52,0            56,0             -7,1%
Free cash flow*                                                                  397 964         236 332            +68,4%
Cash conversion ratio^                                                            108,6%           77,5%            +31,1%
Debt to equity ratio                                                                4,1%            2,8%             +1,3%

* Cash generated from operations less capital expenditure spent on property, plant and equipment and intangibles (excluding
  profit/(loss) on disposal of assets), less taxation paid
^ Cash generated from operations less capital expenditure spent on property, plant and equipment and intangible assets,
  divided by operating profit, excluding impairments and profit/(loss) on disposal of assets.

EXECUTIVE CHAIRMAN'S REVIEW
The 2018 financial year has been a disruptive and base-setting year for Novus Holdings. It brings about the closure of many of
the uncertainties that have recently surrounded our business and as a Group we are excited about the opportunities we are
now exploring to sustainably grow our operations off the new base.

OPERATING ENVIRONMENT
The industry-specific declines in the printing industry have continued during the year under review. We managed to maintain
our print market share of approximately 65%, but have been unable to grow it given the fiercely competitive market.

The book printing sector is offering stability to our printing business with the Department of Basic Education (DBE) contract
volumes dampening to some extent, the directory volume decline we are experiencing.

The estimated R15 billion flexible plastics packaging industry also struggled during the year, but we believe that this sector
of the market provides us with real opportunities as we look to increase our current and relatively small market share in this
industry.

2018 FINANCIAL PERFORMANCE REVIEW
Group revenue of R4,308 million was broadly flat on prior year (2017: R4,312 million), with favourable exchange rate
positions keeping our gross profit margin of 26,2% in line with prior year.

PRINT
Print revenue was down 8,8% for the year under review, largely as a result of volume declines of 11,5% experienced during
the period. As the largest operational segment in the group, this had a material negative impact on the Group's earnings
(excluding retrenchment costs).

Volume declines were experienced across all printing categories, with magazines and newspapers faring the worst. In this
context, business development is a key focus for our management team.

Pleasingly, we have completed and delivered the DBE workbook order (60 million books per annum) for year 1 (of 3) with
this contract generating 17% of total printing revenue during the year under review. It should be noted that one of our main
competitors is still pursuing legal recourse insofar as the awarding of this contract to Novus Holdings and our partners are
concerned. As a management team we are comfortable that our legal position is robust and we will not allow this to distract
us from delivering successfully on this key contract.

Novus Print Solutions has successfully re-established itself after the move and has shown a turnaround of R25 million on an
operating profit level compared to the prior year. This business is now positioned to deliver further growth.
Impairments of R201,9 million were raised against print property, plant, equipment, intangibles and goodwill during the
financial year, as we restructure and right-size our print operations.

Subsequent to these impairments, plant and equipment in the print segment now make up 64% (2017: 75%) of the Group's
investment in plant and equipment.

PACKAGING
ITB Plastics contributed R265 million of revenue in the second half of the financial year following the acquisition of this
business in October 2017. This acquisition has now been bedded down and will contribute 12 months of revenue in 2019,
with the current year only reflecting a disruptive six months' worth of revenue, during which multiple operations were
relocated and consolidated into two adjacent sites in isiThebe.

Paarl Labels received an increased allocation of labels from ABInBev in July 2017. We also successfully secured a significant
allocation of wrap-around labels from Coca-Cola Beverages Africa in June 2017. Paarl Labels furthermore added volume to
wet-glue and self-adhesive labels during the year, with label revenue increasing by almost 62% during the 2018 financial year
to R210 million.

The EBIT contribution of R27 million from our labels business more than doubled over the year and we are confident that this
business will increase its contribution to our bottom line over the medium to long term.

TISSUE
The tissue expansion project phase ended in November 2017.

The tissue manufacturing mills (which produce jumbo reels) are not yet optimized in terms of production output and we are
currently in the process of improving running speeds, reducing breakdowns and increasing material efficiencies and product
quality. A significant increase of market share is possible with increasing production output and efficiency and this is the
current focus of the management team. Margins in this segment are currently under duress.

We have revised the tissue business model following the final implementation of the operations. This resulted in impairments
of R170,2 million to the tissue division in order to value it in line with the expected medium-term results.

We also reviewed the tissue conversion operation (which converts jumbo reels into the smaller products such as toilet paper
rolls or kitchen towels) as part of the expansion project and it was decided to exit this unprofitable operation in August 2017.

CAPITAL EXPENDITURE
Maintenance capex incurred during the year under review tracked in line with expectations and prior year, while expansion
capex mostly related to the completion of the tissue project, as well as additional label finishing capacity introduced into the
Group.

In line with our stated strategy to diversify the Group's revenue streams away from printing, capex in the printing operations
is limited largely to maintenance spend, with proactive maintenance programs aiming to extend the useful lives of assets.

Due to the completed Tissue capex programme, the business was able to increase free cash flow by 68,4% to R398 million
and had R209 million cash and cash equivalents at the end of the financial year. This, combined with low gearing levels, give the Group
tremendous optionality as we seek to drive value going forward.

MANAGEMENT AND CHANGES TO THE BOARD
In addition to a disruptive operational period over these past 12 months, we also had senior management changes, notably
the departure of Edrich Fivaz as Group CFO followed by the Group CEO, Keith Vroon.

As announced, I will be fulfilling the CEO role, effective 15 June 2018, and due care is being taken to appoint a suitable CFO.

Beyond the executive management positions, we are confident that we have some of the most experienced operational
management in the industry. I believe it is our depth in leadership and management, that gives us the edge as we forge ahead
into a new chapter for Novus Holdings.

The Board would like to thank both Keith and Edrich for their valuable contributions and commitment to Novus Holdings
over the last decade.

We are also pleased to annouce that Ms. Noluvuyo Mkhondo has been appointed as non-independent
non-executive director with effect from 15 December 2017. She brings a wealth of experience with her and we look
forward to working together.

APPOINTMENT OF COMPANY SECRETARY
In terms of paragraph 3.59 of the JSE Limited Listings Requirements, shareholders are advised that Kilgetty Statutory
Services Proprietary Limited has been appointed company secretary of Novus Holdings with effect from 14 June 2018.

STRATEGY
In the context of our operating environment and the opportunities and risks we face as a business, the Board and
management team have identified two broad strategic themes.

Firstly, it is imperative that our cash generative, core-printing business remains the industry leader, as it provides us with
the platform from which to diversify and expand. We must furthermore ensure that our operations are the right size for the
respective markets we operate in and that we run them as efficiently and innovatively as possible.

Secondly, we need to diversify our revenue and income streams as our print operations' revenue decline on the back of a
contracting print industry. Cost containment is a key element of this drive as we replace high-margin print revenue with
lower-margin packaging revenue.

Novus Holdings is a good light to medium industrial business and as a Group we have deep experience and skills in the
processes required to run an industrial operation, from the installation and running of industrial equipment and plants to
managing large industrial capital expenditure projects.

Given the experience and these skill sets and based on our market analysis, the labels and packaging sector presents a natural
growth opportunity for Novus Holdings. It is important to note that the quality of the management team in any acquisition is
a deal-breaker, as we continually look to deepen and strengthen our executive and operational management teams. Our due
diligence process includes the courting of potential future management and early engagement with the targets' operational
management to identify areas requiring potential support and of growth.

We have a target to diversify our revenue streams by 50% over the medium term. In the 2018 financial year 16% of our
revenue came from our diversified operations, up from 8% in 2017.

DIVIDEND
Our current dividend policy of 2x HEPS cover remains unchanged, but will always be dependent on acquisition opportunities
and the cash requirements of the business from time to time.

The Board approved a dividend No. 4 of 52,0 cents per share (2017: 56,0 cents). The source of the dividend is from
distributable reserves and paid in cash. The dividend declared is subject to dividend withholding tax at 20,0%. The tax payable
is 10,4 cents per share, leaving shareholders who are not exempt from dividends tax with a net dividend of 41,6 cents per
share.

Novus Holdings has 347 332 454 shares in issue as at the date of this declaration. The income tax reference number is
9656/360/15/4.

Salient dates for payment of the dividend:
Last day to trade (cum dividend) Tuesday, 04 September 2018
Trading ex dividend commences Wednesday, 05 September 2018
Record date Friday, 07 September 2018
Payment date Monday, 10 September 2018

Share certificates may not be dematerialised or rematerialised between Wednesday, 5 September 2018 and Friday, 7
September 2018, both dates inclusive.

OUTLOOK
We have provided guidance on the impact of the renegotiated Media24 contract on our Revenue and expect our Group
margin to come under pressure as we continue to fill capacity in our packaging segment, replacing higher margin printing
revenue with lower margin packaging and tissue revenue.

We recognise the need for an accelerated restructure of our business as the changes that have been taking place in the past
are simply not enough to keep pace with the impact of a shifting operating landscape.

As a Board and management team we are focused on cost cutting, streamlining of operations, innovating where possible and
acquisitions into diversified business interests in order to transform Novus Holdings into a sustainable growth business going
forward.

Finally, we have emerged from an unsettling and challenging period with a very strong balance sheet. We are cash generative,
enjoy strong market share positions and are more focused than ever to deliver value not only to our shareholders, but to all
our stakeholders.

EVENTS AFTER REPORTING DATE
The directors are not aware of any matters or circumstance arising since the end of the financial year that would significantly
affect the operations of the Group or the results of its operations.

Any forecast information has not been reviewed or reported on by the Group' auditors.

RESULTS PRESENTATION
Shareholders are advised that Novus Holdings will be hosting their results presentation via live audio webcast at 10h30 (SA
time) on Wednesday, 20 June 2018.

The webcast is available for listening at https://www.corpcam.com/Novus20062018.

Once concluded, a recording of the webcast will be available on the Group's website at https://ww.novus.holdings.

Neil Birch
Executive Chairman

15 June 2018
Cape Town
Sponsor: Investec Bank Limited

SUMMARY CONSOLIDATED STATEMENT OF FINANCIAL POSITION
for the year ended 31 March

                                                                               AUDITED
                                                                         2018           2017
                                                                        R'000          R'000
ASSETS
Non-current assets                                                  2 253 283      2 356 990
Property, plant and equipment                                       1 919 115      2 102 674
Goodwill                                                              173 054        155 419
Other intangible assets                                                30 790         42 250
Available-for-sale financial assets                                     3 090          3 000
Loans and receivables                                                   6 517          3 050
Deferred taxation assets                                              120 717         50 597

Current assets                                                      1 520 199      1 242 561
Inventory                                                             474 675        342 330
Trade and other receivables                                           702 154        478 439
Related-party receivables                                                   -        126 958
Derivative financial instruments                                          731          1 462
Current income tax receivable                                           8 000              -
Cash and cash equivalents                                             243 948        229 968
Non-current asset held for sale                                        90 691         63 404
TOTAL ASSETS                                                        3 773 482      3 599 551

EQUITY AND LIABILITIES
Capital and reserves attributable to the Group's equity holders     2 787 087      2 882 839
Share capital                                                         606 040        606 040
Treasury shares                                                      (368 172)      (368 172)
Other reserves                                                        (80 596)      (804 465)
Retained earnings                                                   2 629 815      3 449 436
Non-controlling interest                                                3 672           (374)
TOTAL EQUITY                                                        2 790 759      2 882 465

LIABILITIES
Non-current liabilities                                               374 163        371 171
Post-employment medical liability                                       2 634          2 987
Provisions                                                             17 557         17 045
Long-term liabilities                                                  99 252         60 436
Cash-settled share-based payment liability                              1 845          3 139
Deferred taxation liabilities                                         221 357        242 429
Deferred income                                                        31 518         45 135

Current liabilities                                                   608 560        345 915
Provisions                                                              4 538          2 177
Current portion of long-term liabilities                               16 254         20 090
Trade and other payables                                              521 519        288 848
Related-party payables                                                      -         1 154
Cash-settled share-based payment liability                              7 092          9 422
Current income tax payable                                                  -            120
Derivative financial instruments                                       21 055         16 520
Bank overdrafts                                                        35 332          2 744
Deferred income                                                         2 770          4 840
TOTAL EQUITY AND LIABILITIES                                        3 773 482      3 599 551

SUMMARY CONSOLIDATED INCOME STATEMENT
for the year ended 31 March

                                      AUDITED
                                  2018         2017
                                 R'000         R'00
Revenue                      4 308 102    4 312 464
Cost of sales               (3 181 105)  (3 207 060)
Gross profit                 1 126 997    1 105 404

Operating expenses            (626 278)    (576 579)
Other gains /(losses) - net   (358 772)    (135 089)
Operating profit               141 947      393 736

Finance income                  12 948       13 433
Finance costs                  (52 894)     (45 688)
Profit before taxation         102 001      361 481

Taxation                       (30 898)    (104 654)
Net profit for the year         71 103      256 827

Attributable to:
Equity holders of the Group     70 418      256 819
Non-controlling interest           685            8
                                71 103      256 827

Earnings per share (cents)
Basic                            22,04        80,37
Diluted                          22,04        80,37

SUMMARY CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 March

                                                                                             AUDITED
                                                                                          2018      2017
                                                                                         R'000     R'000
Profit for the year                                                                     71 103   256 827

Other comprehensive income

Items that may be subsequently reclassified to profit or loss

Hedging reserve                                                                          (1 498)     (12)
Net fair value (losses) / gains , gross                                                      -      (109)
Net fair value (gains) / losses, tax portion                                                 -        31
Foreign exchange movement, gross                                                        18 368   (18 122)
Foreign exchange movement, tax portion                                                  (5 143)    5 075
Derecognised and added to asset, gross                                                   1 699     9 425
Derecognised and added to asset, tax portion                                              (476)   (2 639)
Derecognised and reported in cost of sales, gross                                      (22 147)    8 787
Derecognised and reported in cost of sales, tax portion                                  6 201    (2 460)

Foreign currency translation reserve                                                    (1 942)   (1 855)
Exchange loss arising on translating foreign operations, gross                          (2 697)   (2 577)
Deferred tax relating to loss arising on translating foreign operations, tax portion       755       722

Fair value reserve                                                                          65         -
Net fair value (losses) / gains , gross                                                     90         -
Net fair value (gains) / losses, tax portion                                               (25)        -

Items that will not be reclassified to profit or loss

Post-employment benefit obligations and provisions                                         640       660
Remeasurement of post-employment benefit obligations and provisions, gross                 730       917
Remeasurement of post-employment benefit obligations and provisions, tax portion           (90)     (257)

Total other comprehensive income, net of tax                                            (2 735)   (1 207)
Total comprehensive income for the year                                                 68 368   255 620

Attributable to:
Equity holders of the Group                                                             67 683   255 612
Non-controlling interest                                                                   685         8
                                                                                        68 368   255 620


SUMMARY CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March

AUDITED
                                                     Share                                                                           
                                                   capital                                                        Non-                                                                                                                                                                                                       
                                                       and       Treasury     Total other       Retained   controlling       Total                                                                        
                                                   premium          share        reserves       earnings      interest      equity                                                                          
                                                     R'000          R'000           R'000          R'000         R'000       R'000                                 
Balance as at 1 April 2016                         606 040       (368 172)       (827 441)     3 412 197             -   2 822 624
Total comprehensive income for the year                  -              -          (1 207)       256 819             8     255 620
Profit for the year                                      -              -               -        256 819             8     256 827
Other comprehensive income                               -              -          (1 207)            -              -      (1 207)

Transactions with owners:
Share based compensation movement                        -              -          28 285             -              -      28 285
Transfer from share based compensation reserve           -              -          (4 102)         4 102             -           -
Dividends paid                                           -              -               -       (223 682)            -    (223 682)
Transactions with non-controlling interests              -              -               -             -          (382)       (382)
Total transactions with owners                           -              -          24 183       (219 580)         (382)   (195 779)

Balance as at 31 March 2017                        606 040       (368 172)       (804 465)     3 449 436          (374)  2 882 465

Total comprehensive income for the year                  -              -          (2 735)        70 418           685      68 368
Profit for the year                                      -              -             -          70 418           685      71 103
Other comprehensive income                               -              -          (2 735)            -             -      (2 735)

Transactions with owners:
Share based compensation movement                        -              -          15 007              -             -      15 007
Other movements                                          -              -             491             13             -         504
Transfer from share based compensation reserve           -              -         (18 331)        18 331             -           -
Dividends paid                                           -              -              -       (178 946)             -    (178 946)
Transfer to/from non distributable reserves              -              -         729 437       (729 437)            -           -
Transactions with noncontrolling interests               -              -               -              -         3 361       3 361
Total transactions with owners                           -              -         726 604       (890 039)        3 361    (160 074)

Balance as at 31 March 2018                        606 040       (368 172)        (80 596)     2 629 815         3 672   2 790 759


SUMMARY CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 March

                                                                     AUDITED                
                                                                 2018        2017           
                                                                R'000       R'000                      
Cash generated from operating activities
Cash generated from operations                                683 632     661 829
Finance income                                                 12 948      13 433
Finance costs                                                 (18 254)    (11 718)
Taxation paid                                                (169 226)   (188 513)
Cash generated from operating activities                      509 100     475 031

Cash flows from investment activities
Property, plant and equipment acquired                       (138 065)   (243 719)
Proceeds on sale of property, plant and equipment              21 424      15 098
Purchase of intangible assets                                  (1 887)     (8 363)
Insurance proceeds                                              2 086           -
Loans and receivables advanced                                 (3 448)     (4 512)
Loans and receivables repaid                                      227         263
Acquisition of subsidiaries/businesses                       (202 149)     10 785
Cash utilised in investing activities                        (321 812)   (230 448)

Cash flows from financing activities
Repayment of long-term loans                                  (26 950)    (60 455)
Dividends paid                                               (178 946)   (223 682)
Cash utilised in financing activities                        (205 896)   (284 137)

Net decrease in cash and cash equivalents                     (18 608)    (39 554)
Cash and cash equivalents at the beginning of the year        227 224     266 778
Cash and cash equivalents at the end of the year              208 616     227 224


NOTES TO THE SUMMARY CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 March 2018

1 REPORTING ENTITY
The financial data in the summary consolidated financial statements covers the Group's comprehensive
commercial printing and manufacturing operations in South Africa. Revenue derived from African business
interests outside of South Africa is not yet material enough to warrant increased geographical reporting
boundaries. The report is structured to cover the operations according to two business segments:
- Printing (including gravure, heatset, coldset, sheet-fed and digital)
- Other (including labels, flexible packaging, tissue manufacturing together with other non-print products)

2 BASIS OF PREPARATION
The summary consolidated financial statements for the year ended 31 March 2018 have been prepared in
accordance with the requirements of the JSE Limited (JSE) Listings Requirements for preliminary reports,
and the requirements of the Companies Act, applicable to summary financial statements. The Listings
Requirements require preliminary reports to be prepared in accordance with the framework concepts
and the measurement and recognition requirements of International Financial Reporting Standards (IFRS)
and the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial
Pronouncements as issued by the Financial Reporting Standards Council and to also, as a minimum, contain
the information required by IAS 34 - Interim Financial Reporting. The accounting policies applied in the
preparation of the consolidated financial statements, from which the summary consolidated financial
statements were derived, are in terms of IFRS and are consistent with those accounting policies applied in
the preparation of the previous consolidated annual financial statements.

3 PREPARATION
The preparation of the summary consolidated financial statements was supervised by the Group acting
chief financial officer, Edrich Fivaz CA(SA). Any reference to future financial performance included in this
announcement, has not been reviewed or reported on by the Company's auditor.

4 AUDITOR'S REPORT
This summarised report is extracted from audited information, but is not itself audited. The annual financial
statements were audited by PricewaterhouseCoopers Inc., who expressed an unmodified opinion thereon.
The audited annual financial statements and the auditor's report thereon are available for inspection at the
Company's registered office.

The directors take full responsibility for the preparation of the preliminary report and the financial
information has been correctly extracted from the underlying annual financial statements.

5 ACCOUNTING POLICIES
The accounting policies applied in the preparation of these summary consolidated financial statements
conform to IFRS and are consistent with those accounting policies applied in the preparation of the
previous consolidated annual financial statements.

The following new accounting standards and amendments to IFRSs became effective and were adopted by
the Group during the current financial year:
                                            Effective date:
                                            Years beginning
                                                on or after
Standard/Interpretation
Amendment to IAS 12: Income taxes           01 January 2017
Amendment to IAS 7: Cash flow statements    01 January 2017

The relevance of these amendments to the published standards has been assessed with respect to the Group's
operations and it was concluded that, other than additional presentational disclosures required, they did not have
a material impact on the Group.

6 USE OF ESTIMATES AND ASSUMPTIONS
In preparing these summary consolidated financial statements, the significant judgements made by
management in applying the Group's accounting policies and the key sources of estimation uncertainty
were the same as those that applied to the consolidated annual financial statements for the year ended 31
March 2018, as well as the prior year.

7 SEGMENT INFORMATION
IFRS 8: Operating Segments require operating segments to be identified on the basis of internal reports
about components of the Group that are regularly reviewed by the chief operating decision-maker
(CODM) to allocate resources to the segments and to assess their performance. The CODM has been
identified as the executive committee that makes strategic decisions.

The executive committee has identified five operating segments based on its business by service or
product. Two operating segments meet the quantitative thresholds for separate reporting. They are
however similar in nature and meet the aggregation criteria in terms of IFRS 8 paragraph 12 as they
have similar profit margins, production processes, customers and suppliers. They are aggregated into the
"Printing" segment, which comprises printing of books, magazines, newspapers and related products. The
remaining three operating segments do not meet the quantitative threshold for separate reporting, and are
combined in "Other", which comprises the Labels division that prints labels, Novus Packaging Proprietary
Limited which manufactures tissue paper, ITB Manufacturing Proprietary Limited which produces flexible
packaging product and any other non-print related transactions in the year.
 
                                                                                Elimi-
                                                       Printing       Other    nations         Total                                           
                                                          R'000       R'000      R'000         R'000                                            
2018
External revenue                                      3 634 322     673 780          -     4 308 102
Inter-segmental revenue                                  13 875      17 747    (31 622)            -
Total Revenue                                         3 648 197     691 527    (31 622)    4 308 102

Profit attributable to equity holders of the company    229 997    (159 579)         -        70 418

Additional disclosure
Property, plant and equipment additions                  51 417     102 112          -       153 529
Capital commitments                                       1 754      18 080          -        19 834
Impairment of PPE, goodwill and intangible assets      (201 985)   (170 166)         -      (372 151)
Total assets                                          3 692 691   1 005 544   (924 753)    3 773 482
Total liabilities                                       713 111   1 194 365   (924 753)      982 723

2017
External revenue                                      3 986 504     325 960          -     4 312 464
Inter-segmental revenue                                  11 514      32 783    (44 297)            -
Total Revenue                                         3 998 018     358 743    (44 297)    4 312 464
 
Profit attributable to equity holders of the company    360 887    (104 068)         -       256 819

Additional disclosure
Property, plant and equipment additions                 112 985     166 430          -       279 415
Capital commitments                                       4 023      42 784          -        46 807
Impairment of PPE, goodwill and intangible assets      (108 998)    (29 644)         -      (138 642)
Total assets                                          3 685 512     634 549   (720 510)    3 559 551
Total liabilities                                       642 023     795 573   (720 510)      717 086

8 EARNINGS PER SHARE
Basic earnings per share
Earnings per share is calculated using the weighted average number of ordinary shares in issue during the
year and is based on the net profit attributable to ordinary shareholders. For the purpose of calculating
earnings per share, treasury shares are deducted from the number of ordinary shares in issue. Diluted
earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding
to assume conversion of all dilutive potential ordinary shares and is based on the net profit attributable to
ordinary shareholders, adjusted for the after-tax dilutive effect. Currently, the share options granted and
vested under equity settled schemes to participating employees and directors are considered anti-dilutive.

Headline earnings per share
Headline earnings per share is calculated using the weighted average number of ordinary shares in issue
during the year and is based on the earnings attributable to ordinary shareholders, after excluding those
items as required by Circular 2/2015 issued by the South African Institute of Chartered Accountants
(SAICA).

                                                                       AUDITED
                                                                 2018           2017                     
                                                                R'000          R'000                      
Calculation of headline earnings
Earnings
Net profit attibutable to shareholders                         70 418        256 819
Adjustments (net of tax):                                     258 316         97 264
- Profit on sale of property, plant and equipment              (8 131)        (2 558)
- Insurance proceeds                                           (1 502)             -
- Impairment in value of property, plant and equipment        213 931         99 822
- Impairment in value of intangible assets                      8 963              -
- Impairment in value of goodwill                              45 055              -

Headline earnings                                             328 734        354 083

Number of ordinary shares in issue                        347 332 454    347 332 454
Weighted average number of shares                         319 545 857    319 545 857

Earnings per ordinary share (cents)
Basic                                                           22,04          80,37
Diluted                                                         22,04          80,37

Headline earnings per ordinary share (cents)
Basic                                                          102,88         110,81
Diluted                                                        102,88         110,81

9 BUSINESS COMBINATIONS
2018
With effect from 1 October 2017, the Group acquired 100% of the share capital of ITB Manufacturing
Proprietary Limited for a purchase consideration of R224 million. The acquisition will enable the Group to
expand into packaging and goodwill of R80,2 million relates to the expected benefits to be derived from a
larger customer base operating in a growth sector. The goodwill will not be deductible for tax purposes.

                                                                2018
                                                               R'000
Fair value of assets and liabilities acquired
Property, plant and equipment                                188 630
Intangible assets                                              6 709
Inventory                                                     74 371
Trade and other receivables                                   75 577
Trade and other payables                                     (73 517)
Cash and cash equivalents                                      2 682
Bank overdraft                                               (24 831)
Current tax payable                                             (364)
Deferred taxation                                            (40 158)
Long term liabilities                                        (62 282)
Identifiable assets and liabilities at acquisition date      146 817
Non controlling interest                                      (3 361)
Goodwill                                                      80 212
Total purchase consideration                                 223 668

Contingent consideration                                      43 668
Cash paid                                                    180 000
Total purchase consideration                                 223 668

Cash flow
Cash consideration paid in respect of ITB Manufacturing
Proprietary Limited                                         (180 000)
Cash in entity acquired                                        2 682
Bank overdraft in entity acquired                            (24 831)
Cash flow on acquisition                                    (202 149)

Acquisition-related costs of R1,1 million that were not directly attributable to the issue of shares are
included in profit or loss and in operating cash flows in the statement of cash flows.

Revenue of R264,9 million and a profit after tax of R7,4 million have been included in the consolidated
statement of comprehensive income since acquisition date.

The Group's revenue and profit after tax would have been R4 553,9 million and R72,3 million respectively if
the acquisition had occurred at the beginning of the reporting period. Included in the profit after tax of the
subsidiary prior to being consolidated were non-recurring moving and transaction costs. The contingent
consideration is limited to R43,7 million, of which R42 million was paid on 1 June 2018 with the remainder
to be paid at a later date.

2017
With effect from 21 September 2016, the Group acquired 97.74% of the share capital of International
Printing Group Limitada for a purchase consideration of R0,3 million. This consideration was settled by
converting a portion of the debt owed to the Group, to equity in International Printing Group Limitada.
Details of this business combination were disclosed in note 30 of the group's annual financial statements
for the year ended 31 March 2017.

10 FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS
10.1 Financial risk factors
The Group's activities expose it to a variety of financial risks: market risk (including currency risk, fair
value interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk.
The summary consolidated Group financial statements do not include all financial risk management
information and disclosures required in the annual financial statements; they should be read in
conjunction with the Group's annual financial statements as at 31 March 2018.

10.2 Fair value estimation
The table below analyses financial instruments carried at fair value, by valuation method. The
different levels have been defined.

                                                Level 1          Level 2           Level 3         Level 4
                                          Quoted prices
                                              in active      Significant
                                            markets for            other       Significant
                                       identical assets       observable      unobservable
                                         or liabilities           inputs            inputs
                                                  R'000            R'000             R'000           R'000

At 31 March 2018
Assets
Available for sale financial assets                   -            3 090                 -           3 090
Foreign exchange contracts                            -              731                 -             731 
                                                      -            3 821                 -           3 821

Liabilities
Contingent consideration                              -                -             43 668          43 668
Foreign exchange contracts                            -            21 055                 -          21 055
                                                      -            21 055             43 668         64 723

At 31 March 2017
Assets
Available for sale financial assets                   -           3 000                   -           3 000
Foreign exchange contracts                            -            1 462                  -           1 462
                                                      -            4 462                  -           4 462

Liabilities
Foreign exchange contracts                            -           16 520                  -          16 520
                                                      -           16 520                  -          16 520


Valuation techniques used to derive Level 2 fair values

Foreign exchange contracts- In measuring the fair value of foreign exchange contracts, the Group makes use of
market observable quotes of forward foreign exchange rates on instruments that have a maturity similar to the
maturity profile of the Group's foreign exchange contracts. Key inputs used in measuring the fair value of foreign
exchange contracts include current spot exchange rates, market forward exchange rates, and the term of the
Group's foreign exchange contracts.

Available -for-sale financial assets - the use of quoted market prices for similar instruments.

Valuation techniques and key inputs used to measure significant Level 3 fair values

Contingent consideration - expected cash outflows are estimated and calculated based on the terms of the purchase
agreement (see note 9). The amount is determined based on a multiple of sustainable earnings of the acquired
business for the year 1 March 2017 to 28 February 2018.

The carrying amounts of the other financial assets and liabilities are a reasonable approximation of their fair
values.

11 IMPAIRMENT OF PROPERTY, PLANT AND EQUIPMENT, GOODWILL AND INTANGIBLE ASSETS
The Group recognised an impairment of property, plant and equipment of R297,1 million (2017: R138,6
million. R172,3 million (2017: R109 million) of the impairments relates to the Printing segment and
R124,8 million (2017: R29,6 million) relates to the Other segment.

Goodwill and intangible assets impaired amounted to R75,0 million (2017: Rnil) of which R29,6 million
(R2017: Rnil) relates to the Printing segment and R45,4 million (2017: Rnil) to the Other segment.

These impairment losses have been included in "Other gains/(losses)" in the income statement.

12 RELATED PARTY TRANSACTIONS
The Group entered into transactions and has balances with a number of related parties including
shareholders and entities under common control. Transactions that are eliminated on consolidation as
well as profits or losses eliminated through application of the equity method are not included. There are
changes to the related parties which exist at year end as Media24 divested itself of the majority of its
shareholding in Novus Holdings to Naspers Limited, retaining a non-controlling minority stake of 17.48%
of issued share capital. This therefore changed the relationships with the ultimate holding company
and holding company which were disclosed in 2017. All transactions have been reported for common
controlled entities within the Naspers Group until 26 September 2017.

13 CAPITAL COMMITMENTS AND CONTINGENCIES
Commitments relate to amounts for which the Group has contracted, but that have not yet been
recognised as obligations in the statement of financial position.

                                                        AUDITED             
                                                    2018        2017                  
                                                   R'000       R'000              
Authorised capital expenditure
Already contracted for but not provided for
- Property, plant and equipment                   19 834      46 807

Operating leases - as lessee (expense)
Minimum lease payments due
- within one year                                 18 479       5 486
- in second to fifth year inclusive               50 046      12 841
- later than five years                           31 436           -
                                                 119 795      65 135

The Group leases manufacturing and office space as well as equipment under various non-cancellable
operating leases. Certain contracts contain renewal options and escalation clauses for various periods of
time.

14 EVENTS AFTER REPORTING DATE
The Group has commenced the implementation of a corporate reorganisation in an attempt to align
segments and divisions with the operational reporting structure. Through this process, the group
envisages that it will also achieve a more streamlined legal organogram. The series of transactions does
not have an impact on the consolidated financial statements of the Group, as they are merely reorganising
the entities in the organogram.

The Group made the following name changes to subsidiaries within the Group. This included the
following:
- Novus Packaging Proprietary Limited was changed to Novus Packaging Holdings Proprietary Limited and
- Paarl Tissue Proprietary Limited was changed to Novus Packaging Proprietary Limited.

The directors are not aware of any matters or circumstances arising since the end of the financial year
and the date of this report.

Date: 15/06/2018 04:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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