Financial results highlights for the year ended 31 March 2017:
- Revenue of R4,31 billion (2016: R4,17 billion)
- Operating margin excluding impairments and profit/(loss) on disposal of assets decreased to 12,3% (2016: 15,6%)
- Headline earnings per share decreased by 20,8% to 110,8 cents per share (2016: 139,9 cents)
- Dividend of 56 cents per share declared (2016: 70 cents)
- Cape Town, 12 June 2017 – Novus Holdings (NVS) has announced a 3% rise in revenue to R4,31 billion compared to R4,17 billion in the previous year. Headline earnings per share decreased by 20,8% to 110,8 cents per share.
Operating profit declined by 39% to R393,7 million as a result of a decline in volumes experienced by the Group’s Print segment, tough trading conditions and a volatile foreign exchange rate, exacerbated by an impairment charge of R138,6 million.
Operating expenses were well-controlled and improved to 13,4% of revenue (2016: 14,6%).
“The year proved challenging for the Group. However, we were able to focus on establishing a stable platform for the next growth phase as we continue to focus on leveraging our investments in tissue and labels and seeking new opportunities in the form of acquisitions,” said Keith Vroon, chief executive officer of Novus Holdings.
Revenue contributions and operations update
In the Group’s core print business, continued declines in magazines and newspapers combined with pricing pressure within the publication print market, impacted revenue. The retail inserts and catalogue category also witnessed volume declines, while the book and directory volumes increased marginally.
Overall the gross margin for Print declined from 32,3% to 27,6% as it was negatively impacted by foreign exchange fluctuations.
The Group however diversified its print offering and rationalised its geographic footprint through the establishment of Novus Print Solutions. While the project phase proved unexpectedly disruptive to the business, the operation is now fully functional and is expected to contribute to volume growth for books, which is its intended business model.
Novus Holdings was also successfully re-awarded the workbook printing contract from the Department of Basic Education (DBE) for a three-year period.
As for the Group’s diversification projects, the labels operation settled down well achieving profitability on the back of volume and efficiency increases while the implementation phase of the tissue project, which ran over into the 2017 financial year, significantly impacted the financial results.
A second tissue mill was successfully commissioned during the year, bolstering the tissue operation’s overall capacity and quality production, firmly positioning the business as a growing supplier of jumbo tissue reels, which is showing greater prospects for the Group than the converting facility.
Outlook
The Group anticipates continued pricing and volume pressures in the Print segment, and will actively manage costs through optimised capacity and consolidation.
“In the coming financial year, we expect improved returns resulting from the investments of the past few years. This includes operational profitability in the ‘Other’ segment (which includes labels, flexible packaging and tissue manufacturing) and Novus Print Solutions, as well as further acquisitions,” says Vroon.
“While the Group remains realistic about the challenges it faces, Novus Holdings is confident in its long-term strategy to grow while it continues to focus on driving value for its stakeholders,” concludes Vroon.
