Wrap Text
Summarised audited results for the year ended 31 March 2015
Novus Holdings Limited
(Previously Paarl Media Group Proprietary Limited)
(Incorporated in the Republic of South Africa)
JSE share code: NVS
ISIN: ZAE000202149
(“Novus” or "the company”)
Summarised audited results for the year ended 31 March 2015
Salient features
R'000 2015 2014 Change
Revenue 4 261 484 3 968 755 7,4%
Gross profit 1 169 237 1 143 622 2,2%
Gross margin 27% 29%
Operating profit 561 498 649 023 (13,5%)
Operating profit excluding impairments and capital items 634 697 667 527 (4,9%)
Operating margin 13% 16%
Operating margin excluding impairments and capital items 15% 17%
Profit after tax 364 804 421 859 (13,5%)
Headline earnings 385 181 406 084 (5,1%)
Earnings per share cents 110,9 131,4 (15,6%)
Headline earnings per share cents 127,6 135,4 (5,8%)
Final gross dividend per share cents 64,0 0,0
Total gross dividend per share cents 64,0 0,0
Free cash flow 450 880 369 914 21,9%
Commentary
The 2015 financial year at Novus Holdings was dominated by the Group's decision to list on the JSE. The listing has significantly changed
the face of Novus Holdings: a new brand was introduced into the marketplace and a new corporate identity was created for the entire Group.
A more formal approach was initiated to stakeholders and governance. It was a deep and significant change, supported by a
well-managed process.
Novus Holdings' main purpose for the listing was to:
- enhance the profile of Novus Holdings' brand;
- provide a capital raising platform for funding to facilitate organic and acquisitive growth prospects;
- enable Novus Holdings to retain and attract key employees by affording them the opportunity to participate in the equity and future growth
of the business;
- allow institutions the opportunity to participate directly in Novus Holdings' equity; and
- increase transparency of Novus Holdings' businesses and assist in unlocking new business opportunities, particularly in sub-Saharan Africa.
The listing was substantially oversubscribed and the Novus Holdings investment case was well received by investors. It has enabled Novus
Holdings to broaden its shareholder base to include a range of investors, from institutional to private, who are predominantly geared towards
the long term.
During our roadshows to introduce the listing to investors and analysts, we were still challenged by entrenched perceptions about the
sustainability of the print industry. Novus Holdings' core business that serves the printed newspaper, magazine, book, catalogue and
retail leaflet markets, is in a mature phase and will be further challenged by an economy that is projected to have GDP growth of just
more than 2%.
This led Novus Holdings to adopt an aggressive diversification strategy over the past year, with a long-term objective of earning 50% of
revenue from previously non-core products and services. The foundation of this diversification strategy was laid with the purchase of the
tissue-manufacturing facility in Durban and the new packaging gravure offering to producers of fast-moving consumer goods.
TRENDS AND OPPORTUNITIES
Global print trends are playing out very differently in emerging markets such as South Africa and parts of Africa, compared to Europe and
the USA. In the latter markets, digital and television are the dominant communication channels. In emerging markets we are still dealing with
development issues such as literacy and democracy, which results in continuous strong demand for printed products.
We are following the development of formal retail in other parts of Africa with interest, especially where our local retailers are expanding,
as we believe that retailers will have to create infrastructure to penetrate new markets. This is potentially also a significant opportunity
for Novus Holdings.
We approach business in African countries with partnerships in mind, specifically with funders and with operators in the market. Novus
Holdings can offer experience, technology and scale, whereas local operators have a better understanding of the market dynamics and
distribution options. We believe that Novus Holdings can eventually offer a one-stop shop for any printing requirements in Africa.
RISK MITIGATION
The resilience of Novus Holdings' business is owed to its long-serving customer base, diversified product offerings, outstanding service and
the ability of the business to innovate and offer unique propositions to the market.
Novus Holdings is, for example, diversifying into other markets and products to mitigate the impact of low economic growth in South Africa,
where we face additional challenges in terms of political, social and infrastructure risk. Novus Holdings is geared to remain fully
operational in case of electricity supply interruptions with adequate short-term diesel supply. Even though the operational risk is
mitigated we envisage rising costs related to increased maintenance and running expenses.
Fluctuating exchange rate risk is managed through forward cover.
FINANCIAL PERFORMANCE
The 2015 financial results for the Group were solid and in line with the numbers communicated to the market during the listing roadshows. The
Group had a market capitalisation of R5,8 billion at 31 March 2015, revenue of R4,26 billion, and net profit after tax generated for the year
was R365 million.
Highlights for the past financial year include the acquisition of the Correll Tissue plant and tissue pulping facility. We have also made a
breakthrough into the high-volume wet glue label market that serves the fast-moving consumer goods sector. Further optimisation was achieved
through the amalgamation of two commercial printing facilities in KwaZulu-Natal and the establishment of a commercial unit in Gauteng that
offers a hybrid heatset and coldset printing solution.
A lowlight for Novus Holdings was absorbing the costs related to the fluctuating exchange rate as there is always a lag in the recovery of
these costs. The further closure of magazines, the decline in daily newspaper circulation and the domino effect of African Bank's collapse
affected revenue in some of our core product categories.
Retail inserts and catalogues had the highest contribution to revenue at 29%. These products depend on the health of the retail sector,
which was under pressure following major strikes and the drop in unsecured loans. Novus Holdings' newly established commercial facility was
created specifically for this sector, based on projected growth and the opportunity for Novus Holdings to gain market share through existing
relationships. We expect retail to be resurgent in 2016 and expect that this will gain further momentum with demand in the rest of Africa
picking up.
Revenues from magazines are almost all under printing contracts between Novus Holdings and numerous publishers and contribute 23% to Group
revenue. This sector has been under pressure in the past five years, which was characterised by magazine closures, reduced pagination,
grammage and circulation as well as the migration to digital platforms, mostly due to economic pressure. We expect the current conditions
to stabilise in 2016.
The newsprint business has been the most challenging of late, with a constant decline in volumes. It contributed 22% to total revenue. The
subdued growth trend in English weekend newspapers and an overall decline in Afrikaans daily volumes are expected to continue into 2016.
The largest contributor in the books and directories category is the education workbook tender for the Department of Basic Education (DBE).
The workbook volumes have remained consistent whereas text book demand has decreased due to the curriculum cycle. A new tender with the DBE,
related to the workbooks project, is expected to come up for renewal at the end of the 2015 calendar year. Given the Group's success in
delivering the tender during previous years, Novus Holdings is reasonably confident that it will have continued involvement as long as the
DBE supports this initiative.
The directory market is characterised by long-term contracts for directories in South Africa, Namibia and Botswana. It is the only category
that has been significantly impacted by the migration to digital platforms. Books and directories contributed 22% to total revenue and are
expected to deliver consistent revenue in the 2016 financial year.
Labels delivered 45% growth in its contribution to total revenue in the past year, albeit off a low base. Excellent growth is expected in
this category following renewed focus and investment.
The full effect of the acquisition of Correll Tissue will only be visible in the ensuing financial years, with additional investment expected
to drive solid growth in this category from 2017 onwards.
IMPAIRMENT
An impairment charge of R73,5 million was passed in 2015 relating to the following:
Printing equipment (R29,0 million) and Buildings (R31,4 million)
A detailed assessment was done on printing equipment and buildings to remove inefficient and underutilised capacity and to evaluate the best
geographic fit. The identified items will be phased out and disposed of. The carrying values were accordingly impaired to realisable values.
These impairments resulted from a recent change in product focus and management's planned future use of the assets.
Inserting and other equipment (R13,1 million)
The inserting equipment was previously used in a leaflet distribution business that was closed down. The equipment was not suitable to use
in the existing business and has been impaired to realisable value.
GOVERNANCE AT NOVUS HOLDINGS
Novus Holdings has developed an entrenched governance and reporting system with specific strengths in areas such as internal audit and
financial controls. In preparation for listing, the board reviewed its entire governance structure. This included the board's composition,
especially considering independence and diversity. As a result, we have appointed five new independent non-executive directors and took leave
of two of our previous board members. During the past year, the board also established a new social and ethics committee and reviewed all
board and committee charters.
This listing was primarily driven by the executive management team and its network of advisors and service providers, but the board and key
stakeholders were continuously updated and consulted during the process.
With these changes implemented the board's focus in the next year will be to ensure that all members are exposed to and familiar with the
business operations, plants, products, technology and key members of management. This will bring the necessary alignment and insights to
evaluate and consider any future strategic opportunities.
EMPLOYEES
The success of the Novus Holdings growth strategy is dependent on the availability and commitment of employees with the appropriate skills
and competencies. We continue investing in the recruitment, training and retention of employees with the profile to match our requirements.
Therefore, the Novus Academy remains a key component of our business model.
The listing and the integration of new business units into the Group in the past year required very specific change management and
communication interventions to ensure that we maintain operational standards and align employees with the Group's ambitions. Novus Holdings
has an entrepreneurial background the kind of spirit that we would like to protect and apply in a larger future environment.
We also continue optimising our employee practices:
- During the year, risk benefits of the existing retirement and provident funds were pooled together to offer employees improved risk benefits
and lower cost.
- A new remuneration strategy was developed to support the attraction and retention of critical talent and to serve as motivator for
continuous learning and performance improvement.
BLACK ECONOMIC EMPOWERMENT
Novus Holdings has a long track record in empowerment through the Novus Academy and ownership initiatives. Empowerment milestones included the
share acquisition by the Mineworkers' Investment Company Empowerment Fund (MICEF), and subsequently Welkom Yizani and Kurisani Investments.
Procurement remains a challenge as the Group has to increasingly source paper internationally. The equipment and technology that we require
are also not available in South Africa. With these limitations the Group's focus has been in the two areas of control and impact: skills
development and socio-economic development.
Going forward, Novus Holdings will continue contributing to the B-BBEE scorecard by increasing black employees in management positions and by
achieving an even higher score on skills development, which are critical elements on the amended B-BBEE scorecard.
EVENTS AFTER REPORTING DATE
In line with Novus Holdings' strategy to repositioning our printing offering through digital print, it acquired 100% of the share capital of
Victory Ticket 376 Proprietary Limited trading as Digital Print Solutions for a consideration of R7,9 million. The effective date of the
acquisition was 1 May 2015.
APPOINTMENT OF COMPANY SECRETARY
In terms of paragraph 3.59 of the JSE Limited Listings Requirements, shareholders are advised that Gernus Swanepoel has been appointed
company secretary of Novus Holdings with effect from 1 July 2015.
DIVIDENDS
The board approved a gross dividend No. 1 of 64 cents per share (2014: nil) for the year ended 31 March 2015. The source of the dividend
is from distributable reserves and paid in cash. The dividend declared is subject to dividend withholding tax at 15%. The tax payable is
9,6 cents per share, leaving shareholders who are not exempt from dividends tax with a net dividend of 54,4 cents per share.
Novus Holdings' shares in issue as at the date of this declaration is 347 332 454. The income tax reference number is 9656/360/15/4.
Last day to trade (cum dividend) Friday, 28 August 2015
Trading ex dividend commences Monday, 31 August 2015
Record date Friday, 4 September 2015
Payment date Monday, 7 September 2015
Share certificates may not be dematerialised or rematerialised between Monday, 31 August 2015 and Friday, 4 September 2015, both dates
inclusive.
OUTLOOK
Novus is focused on the strategy outlined in the pre-listing statement and will continue to be cautious and discerning when considering
future opportunities.
As a board, we constantly monitor the most important indicators within our sphere of operations. The Group has a strong financial position
and significant capacity to raise debt, which will be taken into consideration when appropriate opportunities emerge.
APPRECIATION
As a board, we would like to welcome our new shareholders and look forward to a long and rewarding relationship with them.
We want to thank management as well as external teams that completed the listing process with such success. We recognise the efforts of
the executive team who supported the entire Novus Holdings Group through the changes that had to be implemented during the past year.
A special word of thanks to the previous board, who brought the Group to a new phase in its history, with specific reference to
Salie de Swardt who served as director for 15 years (including four years as chairman) and Nicol Retief as a director for 14 years.
Your continued interest and commitment to the Group albeit on the sidelines is much appreciated.
Lastly, we want to thank the new board for joining us on the journey forward to create value for all Novus Holdings shareholders as a
leader in our industry.
Lambert Retief Stephen van der Walt
Chairman Chief executive officer
Summary consolidated statement of financial position as at 31 March
Audited Audited
2015 2014
R'000 R'000
ASSETS
Non-current assets 2 298 867 2 255 728
Property, plant and equipment 2 134 523 2 150 677
Goodwill 132 052 86 701
Other intangible assets 27 254 14 920
Loans and receivables 1 920 2 784
Derivative financial instruments 75 646
Deferred taxation assets 3 043
Current assets 1 222 840 905 116
Inventory 325 714 333 509
Trade and other receivables 351 508 287 861
Related-party receivables 150 895 180 130
Loans and receivables 1 333 500
Derivative financial instruments 1 486 4 504
Current income tax receivable 2 860
Cash and cash equivalents 389 044 98 612
TOTAL ASSETS 3 521 707 3 160 844
EQUITY
Capital and reserves attributable to the Group's equity holders 2 536 235 2 085 069
Share capital 606 040 1
Treasury shares (368 172)
Other reserves (872 575) (750 970)
Retained earnings 3 170 942 2 836 038
Non-controlling interest 30 480 121 536
TOTAL EQUITY 2 566 715 2 206 605
LIABILITIES
Non-current liabilities 408 975 404 372
Post-employment medical liability 4 133 3 949
Provisions 13 390 11 106
Long-term liabilities 80 636 62 895
Cash-settled share-based payment liability 12 061 8 767
Deferred taxation liabilities 267 015 287 935
Deferred income 31 740 29 720
Current liabilities 546 017 549 867
Current portion of long-term liabilities 71 149 172 382
Trade and other payables 317 385 266 719
Related-party payables 3 087 1 849
Cash-settled share-based payment liability 26 477 28 898
Current income tax payable 7 072
Derivative financial instruments 18 877 11 662
Bank overdrafts and call loans 107 203 59 810
Deferred income 1 839 1 475
TOTAL EQUITY AND LIABILITIES 3 521 707 3 160 844
Summary consolidated income statement for the year ended 31 March
Audited Audited
2015 2014
R'000 R'000
Revenue 4 261 484 3 968 755
Cost of sales (3 092 247) (2 825 133)
Gross profit 1 169 237 1 143 622
Operating expenses (534 255) (476 122)
Other expenses (73 484) (18 477)
Operating profit 561 498 649 023
Finance income 12 572 7 313
Finance costs (67 735) (59 007)
Share of net loss of associate (872)
Profit before taxation 506 335 596 457
Taxation (141 531) (174 598)
Net profit for the year 364 804 421 859
Attributable to:
Equity holders of the Group 334 904 394 083
Non-controlling interests 29 900 27 776
364 804 421 859
Earnings per share (cents)
Basic 110,9 131,4
Diluted 110,9 131,4
Headline earnings per share (cents)
Basic 127,6 135,4
Diluted 127,6 135,4
Earnings
Net profit attributable to shareholders 334 904 394 083
Headline adjustments (net of tax and non-controlling interest) 50 277 12 001
(Loss)/profit on sale of property, plant and equipment (213) 6 870
Insurance proceeds (13)
Impairment in value of property, plant and equipment 50 490 4 642
Loss on sale of associate 502
Headline earnings 385 181 406 084
Number of ordinary shares in issue at year end 347 332 454 300 000 000
Weighted average number of shares
Shares for earnings and diluted earnings per share adjusted for weighting 301 927 811 300 000 000
Summary consolidated statement of comprehensive income for the year ended 31 March
Audited Audited
2015 2014
R'000 R'000
Profit for the year 364 804 421 859
Other comprehensive income
Items that may be subsequently reclassified to profit or loss
Hedging reserve (4 388) (410)
Net fair value (losses)/gains, gross (711) 2 503
Net fair value losses/(gains), tax portion 199 (701)
Foreign exchange movement, gross 904 (27 267)
Foreign exchange movement, tax portion (253) 7 635
Derecognised and added to asset, gross 4 115 40
Derecognised and added to asset, tax portion (1 152) (11)
Derecognised and reported in cost of sales, gross (10 484) 24 154
Derecognised and reported in cost of sales, tax portion 2 994 (6 763)
Items that will not be reclassified to profit or loss
Post-employment benefit obligations and provisions (1 459) (1 291)
Remeasurement of post-employment benefit obligations and provisions, gross (2 026) (1 793)
Remeasurement of post-employment benefit obligations and provisions, tax portion 567 502
Total other comprehensive income, net of tax (5 847) (1 701)
Total comprehensive income for the year 358 957 420 158
Attributable to:
Equity holders of the Group 329 655 392 410
Non-controlling interests 29 302 27 748
358 957 420 158
Summary consolidated statement of changes in equity for the year ended 31 March
ATTRIBUTABLE TO EQUITY HOLDERS OF THE GROUP
Non-
Share capital Treasury Total other Retained controlling Total
and premium shares reserves earnings interest equity
R'000 R'000 R'000 R'000 R'000 R'000
Balance as at 1 April 2013 Audited 1 (751 291) 2 443 246 93 788 1 785 744
Total comprehensive income for the year (345) 392 792 27 711 420 158
Profit for the year 394 083 27 776 421 859
Other comprehensive income (345) (1 291) (65) (1 701)
Share-based compensation movement 666 37 703
Balance as at 31 March 2014 Audited 1 (750 970) 2 836 038 121 536 2 206 605
Total comprehensive income for the year (5 227) 334 904 29 280 358 957
Profit for the year 334 904 29 900 364 804
Other comprehensive income (5 227) (620) (5 847)
Share-based compensation movement 1 131 22 1 153
Share capital issued 1 428 172 1 428 172
Share issue expenses (15 105) (15 105)
Cancellation of repurchased shares (1 044 895) (1 044 895)
Shares issued to entities controlled
by the Group (368 172) (368 172)
Transactions with non-controlling
interests 237 867 (117 509) (120 358)
Balance as at 31 March 2015 Audited 606 040 (368 172) (872 575) 3 170 942 30 480 2 566 715
Summary consolidated statement of cash flows for the year ended 31 March
Audited Audited
2015 2014
R'000 R'000
Cash generated from operating activities 802 486 777 283
Finance income 12 572 7 313
Finance costs (26 223) (59 007)
Taxation paid (173 239) (171 706)
Dividends received 3
Cash generated from operating activities 615 596 553 886
Cash flows from investment activities
Property, plant and equipment acquired (168 056) (250 953)
Proceeds from Government grants 4 286
Proceeds from sale of property, plant and equipment 2 743 4 401
Proceeds from the sale of non-current assets held for sale 20 500
Purchase of intangible assets (17 340) (9 635)
Insurance proceeds 24
Cash movement in associate loan 1 046
Loans and receivables advanced (787) (851)
Loans and receivables repaid 818
Acquisition of subsidiaries/businesses (103 844) (91 904)
Cash utilised in investing activities (282 180) (327 372)
Cash flows from financing activities
Proceeds from share issue 1 044 895
Repayment of long-term loans (190 377) (181 623)
Proceeds from long-term loans 100 000 100 000
Repayment of related-party loans (302 865)
Repurchase of shares (1 044 895) -
Proceeds from related-party loans 13 753
Cash utilised in financing activities (90 377) (370 735)
Net increase/(decrease) in cash and cash equivalents 243 039 (144 221)
Cash and cash equivalents at beginning of the year 38 802 183 023
Cash and cash equivalents at end of the year 281 841 38 802
Notes to the summary consolidated financial statements for the year ended 31 March 2015
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 (which includes heatset, coldset and commercial)
Other (which includes labels and tissue manufacturing)
Financial reporting for the Other division incorporates 10 months' revenue (R116,3 million) following the acquisition of the Correll
Tissue plant from 1 June 2014 and the commencement of the new wet glue label operation (revenue of R22,5 million).
2. BASIS OF PRESENTATION
The summary consolidated financial statements are prepared in accordance with the requirements of the JSE Limited (JSE) Listings
Requirements for preliminary reports, and the requirements of the Companies Act, as amended 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
These summary consolidated financial statements were prepared by BF Meyers, CA(SA), under the supervision of the chief financial officer,
E van Niekerk, 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
Standard/Interpretation on or after
Amendments to IAS 32: Financial Instruments Presentation Offsetting financial assets and financial liabilities 1 January 2014
Amendments to IAS 36: Impairment of Assets Recoverable amount for non-financial disclosures 1 January 2014
Amendments to IAS 39: Financial Instruments Novation of derivatives and continuation of hedge accounting 1 January 2014
IFRIC 21: Levies 1 January 2014
The relevance of these amendments to the published standards has been assessed with respect to the Group's operations and it was
concluded that, that, other than the 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 2014.
7. SEGMENT INFORMATION
IFRS 8: Operating Segments requires 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) in order 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 three operating segments based on its business by service or product. However, two operating
segments have been combined in one reportable segment as they are similar in nature and meet the aggregation criteria in terms of
IFRS 8 paragraph 12. The reportable segments are "Printing" that comprises printing of books, magazines, newspapers and related
products and "Other" that comprises Paarl Labels Proprietary Limited, which prints self-adhesive labels and Paarl Tissue Proprietary
Limited, which manufactures tissue paper.
Printing Other Eliminations Total
R'000 R'000 R'000 R'000
2015
External revenue 4 043 480 218 004 4 261 484
Intersegmental revenue 15 750 15 (15 765)
Total revenue 4 059 230 218 019 (15 765) 4 261 484
Profit attributable to equity holders of the company 339 861 (4 957) 334 904
Additional disclosure
Capital commitments 40 196 17 283 57 479
Impairment of assets 72 796 741 73 537
Total assets 3 445 753 299 883 (223 929) 3 521 707
Total liabilities 884 969 293 952 (223 929) 954 992
2014
External revenue 3 898 384 70 371 3 968 755
Intersegmental revenue 132 26 (158)
Total revenue 3 898 516 70 397 (158) 3 968 755
Profit attributable to equity holders of the company 387 957 6 126 394 083
Additional disclosure
Capital commitments 30 875 289 31 164
Impairment of assets 7 379 7 379
Total assets 3 121 943 38 901 3 160 844
Total liabilities 926 228 28 011 954 239
8. TRANSACTIONS WITH NON-CONTROLLING INTEREST AND SHARE ISSUES
On 23 February 2015, Adbait Proprietary Limited's shareholding in Paarl Media Holdings Proprietary Limited and Paarl Coldset
Proprietary Limited were exchanged for 19 545 857 shares in Novus Holdings Limited. As this was a transaction with
non-controlling interests, it was accounted for in equity.
Novus repurchased 26,7% of Media24's shareholding. This equates to 80 000 000 shares which were cancelled and became authorised but
unissued shares.
24 313 272 ordinary shares were issued to the Novus Holdings Share Trust (ESOP) in respect of options allotted to selected employees
and 3 473 325 ordinary shares were issued to Latiano 554 Proprietary Limited (Latiano) in respect of the options allotted to
Mr LP Retief in his capacity as non-executive chairman and director of the Company. Both the shares issued to the ESOP and to Latiano
are considered to be treasury shares.
9. ACQUISITION OF SUBSIDIARIES
For the year ended 31 March 2015
Acquisition of the business of Correll Tissue Proprietary Limited
On 1 June 2014, the Group acquired the entire business of Correll Tissue Proprietary Limited for a consideration of R144,3 million.
The acquisition was a result of management's diversification strategy.
Goodwill of R45,3 million relates to expected synergies resulting from the Group's use of waste paper generated at its existing
printing plants as an input in the tissue manufacturing process. None of the goodwill recognised is expected to be deductible for
income tax purposes.
2015
R'000
Fair value of assets and liabilities acquired
Property, plant and equipment 92 717
Inventory 8 620
Trade and other receivables 16 273
Trade and other payables (13 070)
Finance lease liability (5 640)
Identifiable assets and liabilities at acquisition date 98 900
Goodwill 45 351
Total purchase consideration 144 251
Consideration as at acquisition date
Total purchase consideration 144 251
Amount owing in respect of acquisition (40 407)
103 844
Acquisition-related costs of R0,3 million have been included in profit and loss.
Revenue of R116 million and a loss of R7,9 million have been included in the consolidated statement of comprehensive income since
the acquisition date.
The Group's revenue and profit would have been R4 284,7 million and R363,2 million respectively if the acquisition had occurred at
the beginning of the reporting period.
10. FINANCIAL RISK MANAGEMENT
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.
All of the Group's financial assets are classified as "loans and receivables" and are carried at amortised cost, apart from derivatives,
which are held for hedging purposes. Similarly, all of the Group's financial liabilities are classified as "other financial liabilities"
and are carried at amortised cost apart from derivatives which are held for hedging purposes.
The summary consolidated financial statements do not include all risk management information and disclosure required in the annual
financial statements and should be read in conjunction with the group's annual financial statements as at 31 March 2015.
There have been no changes in the group's financial risk management objectives and policies since the previous financial year.
The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined
as follows:
Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or
liabilities.
Level 2 fair value measurements are those derived from inputs other than quoted prices included within level 1 that are observable for
the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). The fair value of financial
instruments that are not traded in an active market (for example, derivatives such as interest rate swaps, foreign exchange contracts
and certain options) is determined through valuation techniques. These valuation techniques maximise the use of observable market
data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair
value an instrument are observable, the instrument is included in level 2.
Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are
not based on observable market data (unobservable inputs).
Level 1 Level 2 Level 3 Total
R'000 R'000 R'000 R'000
At 31 March 2015
Group
Assets
Interest rate swap 116 116
Foreign exchange contracts 1 445 1 445
1 561 1 561
Liabilities
Foreign exchange contracts 18 877 18 877
At 31 March 2014
Assets
Interest rate swap 699 699
Foreign exchange contracts 4 451 4 451
5 150 5 150
Liabilities
Interest rate swap 129 129
Foreign exchange contracts 11 533 11 533
11 662 11 662
Valuation techniques and key inputs used to measure significant 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.
Interest rate swaps The fair value of the Group's interest rate swaps is determined through the use of discounted cash flow
techniques using only market observable information. Key inputs used in measuring the fair value of interest rate swaps include spot
market interest rates, contractually fixed interest rates, counterparty credit spreads, notional amounts on which interest rate swaps
are based, payment intervals, risk-free interest rates, as well as the duration of the relevant interest rate swap arrangement.
The carrying amount of the financial assets and liabilities is a reasonable approximation of their fair values.
Financial instruments disclosed in the statement of financial position include interest-bearing borrowings, financial assets, cash and
cash equivalents, trade and other receivables and trade and other payables.
11. RELATED-PARTY TRANSACTIONS
Related-party transactions similar to those disclosed in the Group's annual financial statements for the year ended 31 March 2014 took
place during the financial year.
12. CAPITAL COMMITMENTS AND CONTINGENCIES
Authorised capital expenditure
2015 2014
R'000 R'000
Authorised capital expenditure
Already contracted for but not provided for
Property, plant and equipment 57 479 31 164
Operating leases as lessee (expense)
Minimum lease payments due
within one year 427 693
in second to fifth year inclusive 48 886
The Group leases office space and equipment under various non-cancellable operating leases. Certain contracts contain renewal options
and escalation clauses for various periods of time.
13. Events after the reporting date
With effect from 1 May 2015, the Group acquired 100% of the share capital of Victory Ticket 376 Proprietary Limited trading as
Digital Print Solutions for a consideration of R7,9 million.
Directorate
Independent non-executive Directors
Uys Meyer (Lead independent Director)
Sandile Zungu
Bernard Olivier
Fred Robertson
Jan Potgieter
Gugulethu Dingaan
Non-executive Directors
Lambert Retief (Chairman of the Board)
Esmaré Weideman
Manie Mayman
Executive Directors
Stephen van der Walt (CEO)
Edward van Niekerk (CFO)
Keith Vroon (COO)*
* Alternative executive director
Company Secretary
Bradley Meyers
Company information
Novus Holdings registered office:
10 Freedom Way, Milnerton, Cape Town, 7441
Listing:
Johannesburg Stock Exchange (JSE)
Transfer secretary:
Link Market Services South Africa Proprietary Limited, 13th Floor, Rennie House, 19 Ameshoff Street, Braamfontein, 2001
Sponsor:
Investec Bank Limited
Auditor:
PricewaterhouseCoopers Inc. Paarl
Administrative information
Novus Holdings Limited
(Incorporated in the Republic of South Africa)
("Novus Holdings" or "the company" or "the Group")
Registration number: 2008/011165/06
JSE share code: NVS
ISIN code: ZAE000202149
www.novus.holdings
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