Wrap Text
Summarised audited results for the year ended 31 March 2016
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")
Summarised audited results for the year ended 31 March 2016
Salient features
2016 2015
R'000 R'000 %
Revenue 4 174 517 4 261 484 (2,0)
Gross profit 1 259 701 1 169 237 7,7
Gross margin 30,2% 27,4%
Operating profit 648 760 561 498 15,5
Operating profit - excluding impairments and profit/(loss) on disposal of assets 650 720 634 697 2,5
Operating margin 15,5% 13,2%
Operating margin - excluding impairments and profit/(loss) on disposal of assets 15,6% 14,9%
Profit after tax 448 268 364 804 22,9
Headline earnings 447 158 385 181 16,1
Earnings per share - cents 139,5 110,9 25,8
Headline earnings per share - cents 139,9 127,6 9,6
Final gross dividend per share - cents 70,0 64,0 9,4
Total gross dividend per share - cents 70,0 64,0 9,4
Free cash flow 327 860 450 880 (27,3)
COMMENTARY
Novus Holdings demonstrated its resilience this year, performing well despite tough market conditions. Low economic growth and suppressed consumer
confidence affected core business print volumes. However, the Group remains positive about the continued demand for print products while diversifying its
offering.
Current market conditions emphasise the importance of the Group's strategic focus on diversification and leveraging our core asset. Rather than pursuing
short-term gains, Novus Holdings remains committed to organic and acquisitive growth - the latter being determined by seeking the right quality assets at
the right price.
While global trends indicate a decreased demand for printed matter, Novus Holdings firmly believes that its loyal customer base, diversified and quality
product offerings and ability to innovate and offer unique propositions to an evolving market will ensure the Group's continued resilience and success. The
consolidation of existing assets and enhanced production efficiencies further ensure that the Group is able to maximise cash flows for investments in
sustainable growth assets.
Year in review
Novus Holdings achieved a strong set of financial results for the 2016 financial year. Operating profit excluding impairments and profit/(loss) on disposal
of fixed assets increased 2,5% to R650,7 million, and headline earnings per share increased 9,6% to 139,9 cents per share. Revenue declined to R4,17 billion
compared to R4,26 billion in 2015 due to downward pressure on print volumes. With print remaining our core business, it was pleasing to see an increased
operating margin, excluding impairments and profit/(loss) on disposal of fixed assets, of 15,6%, up 0,7% from last year's 14,9%.
A good hedging strategy, higher earnings due to an improved sales mix and continued success in efficiency drives, as well as the strong profitability and
performance by the Group's core business were additional highlights of the financial year.
The Group remains in the early stages of its growth phase - introduced by the diversification strategy, which constituted expansion into labels, flexible
packaging, tissue and, more recently, digital print. Unfortunately, plans for both labels and tissue proved to be too aggressive in year one, and we were
forced to delay the roll-out of these projects.
Strategic actions, such as the repositioning of management structures, have been implemented, and the negative returns are expected to improve in the next
year.
A new market in digital print also opened to Novus Holdings through the acquisition of Digital Print Solutions. The consolidation of Digital Print Solutions
and Paarl Media Paarl is expected to be completed mid-year 2016, and includes the installation of the first digital web press in South Africa. We are
confident that the Group's strategy of unlocking new markets through this process will be successful.
Financial performance
Despite experiencing reduced volumes, print profitability remained strong and Novus Holdings is committed to extending its leadership position and
preserving the cash flow and profitability of its core business activity.
This was supported by maximising returns through the consolidation of existing assets and enhanced production efficiencies. The Group is also focused on
matching operational capacity to market demand. This includes careful consideration of our footprint, and a continuous evaluation of operations to align
productive capacity to demand in order to retain margins. This will ensure the Group maximises returns on current equipment and infrastructure, without
incurring further inefficient capital expenditure.
Novus Holdings performed well in the 2016 financial year, with headline earnings per share increasing by 9,6%. The Print segment contribution was
exceptional, with an operating margin excluding impairments and profit/(loss) on disposal of fixed assets of 17,5% (2015: 15,4%). However, the contribution
of the Other segment was disappointing, with an operating margin of -13,3% (2015: 4,4%). While overall revenue is down 2%, the Other segment increased by
17,6% and Print declined by 3,1%.
Group results were affected negatively by the losses incurred on the tissue and labels diversification projects. However, these offerings have been
refocused and potentially offer a significant swing in fortunes for the Group in the 2017 financial year. Despite a slow start, both increased contribution
to total revenue during the year. Tissue increased to 3,4% (2015: 2,7%) and labels increased to 2,7% (2015: 2,4%) of Group revenue. Management remains
confident that, once capacity is reached, both projects will add to overall Group profitability, with the target of contributing approximately 15% to Group
revenue.
Retail inserts and catalogues remained the highest contributors to revenue at 29,0% (2015: 28,6%). These products depend on the health of the retail
sector, which came under strain over the past year, and are also dependent on print media advertising spend.
Newsprint products contributed 21,9% (2015: 21,8%), and magazines 20,6% (2015: 22,5%), to the Group's revenue. These sectors continue to be a challenge.
Circulation figures indicate an effective annual decline of 1,8% and 6,1% in the circulation of newspapers and magazines respectively over the past five
years. The circulation of paid-for newspapers (which represents the majority of the newspaper market in tonnage) has been worst hit, declining at an
effective annual rate of 5,0% per year over the same period. Moreover, consumer spend on these products is discretionary and is predicted to come under
pressure as a result of constrained GDP growth.
Books and directories contributed 20,7% (2015: 21,6%) to the Group's revenue, thus remaining an important and strategic sector for us to provide our
printing services.
The most significant factors affecting the Group's financial performance were the following:
- Paper prices: The impact of the global oversupply of paper was still evident in the past year and this translated into marginal declines in euro
prices. Paper suppliers are continuously taking action to balance supply with demand. Novus Holdings imports approximately 50% of its
paper requirements by volume. The availability of local and foreign paper and the cost thereof is the single biggest factor impacting
the Group's ability to create value.
- Exchange rate: The ever present volatility of the rand impacted the gross profit margin. Novus Holdings takes forward cover to protect pricing on
contractual work and ensure price stability. This hedging strategy positively influenced the cost of imported paper this year against
the backdrop of a depreciating rand. However, while the Group benefited from this strategy during the 2016 financial year, lags in pricing
adjustments caused by contractual terms, the competitive nature of the market, and an underperforming exchange rate will likely result in
pressure on margins in the next financial year.
- Waste minimisation: Enhancing productivity and efficiency in a mature market is a primary objective of Novus Holdings. Improved press utilisation
and ongoing analysis of optimum productive capacity form part of a continuous programme to minimise waste across the Group's operations,
thereby protecting cash flows and profitability.
- Labels and tissue: A substantial swing from profit to loss across the two units when compared to 2015 has had an impact on the Group's financial
results for 2015/16.
Impairment
An impairment charge of R2,3 million (2015: R73,5 million) was taken on printing equipment which was no longer required.
Capital expenditure
The cash expenditure on property, plant and equipment was R236 million, of which R197 million related to expansion and diversification.
The R197 million expansion and diversification expenditure related to:
- Packaging gravure equipment to produce labels and other flexible packaging material
- Investment in the Correll Tissue plant
- Digital printing equipment
- Ballot production equipment
Changes in leadership
The challenge of driving diversification while optimising the business and integrating acquisitions, inevitably results in management and leadership
changes. This occurred in different parts of the business, including operational areas such as the diversification projects, executive team and board.
The most significant change resulted from Stephen van der Walt's decision to resign as chief executive officer in February 2016. Keith Vroon, chief
operating officer for Novus Holdings, was appointed as acting chief executive officer with effect from 31 March 2016. Keith began his career with the
Group in 2004 as chief financial officer, and was appointed as chief operating officer in 2012. An announcement regarding the permanent fulfilment of
this leadership role will be made following the Group's Annual General Meeting in August.
Lead independent director, Uys Meyer, retired from the board in March, and we welcomed Christoff Botha as an independent non-executive director, effective
24 February 2016. Fred Robertson was elected as new lead independent director at the board meeting held on 8 June 2016.
Transformation
Achieving equity and gender transformation within the Group remains an imperative. We are committed to attaining a progressive work environment and will
strive to attract and retain an employee complement that represents local demographics fairly, both in terms of equity and gender.
This will be achieved in the short term by monitoring direct employment opportunities, and by identifying and growing existing talent within the Group.
In-house and external skills development programmes will support this goal and fast-track talented employees through the business.
Events after reporting date
The directors are not aware of any matter 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.
Dividends
The board approved a gross dividend No. 2 of 70 cents per share (2015: 64 cents). 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 10,50 cents per share, leaving shareholders who are not
exempt from dividends tax with a net dividend of 59,50 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, 30 August 2016
Trading ex dividend commences Wednesday, 31 August 2016
Record date Friday, 2 September 2016
Payment date Monday, 5 September 2016
Share certificates may not be dematerialised or rematerialised between Wednesday, 31 August 2016 and Friday, 2 September 2016, both dates inclusive.
Outlook
Novus Holdings continues to build a business foundation capable of generating a stable cash flow year after year. By balancing the allocation of cash flow
to our core business, growth investments, and shareholder returns, Novus Holdings is well positioned to attain sustained growth in the medium to long term.
In line with the Group's growth strategy, Novus Holdings is committed to managing operational risks to ensure our ability to leverage off existing assets
and projects. In addition, we will continue to investigate further opportunities that will position us well for sustainable growth into the future.
We will also continue to focus on transformation, equity and the well-being of our employees, and invest in equipment, technology and infrastructure. This
will ensure that Novus Holdings remains a market leader and retains its market share.
Appreciation
As a board, we would like to thank the management team for their continued hard work and dedication despite many changes and challenges this year. This
includes a very special word of thanks to Stephen van der Walt, who stepped down after 15 years with the Group. Stephen began his career with then Paarl
Media in 2000 as chief financial officer. He was appointed as chief operating officer in 2003 and became chief executive officer in 2005. Stephen made a
great contribution to the Group over his many years and was involved in Novus Holdings' listing on the JSE. We would like to wish him well in the future.
A further word of appreciation goes to all the board members who ensured that Novus Holdings benefited from leadership focused on securing value for all
shareholders. Their involvement, availability and enthusiastic responses are highly valued. We also pay tribute to outgoing director, Uys Meyer, who has
been a board member for 15 years and made a highly respected and valued contribution to the Group.
We continue on our journey to create value for all Novus Holdings shareholders as a leader in our industry.
Lambert Retief Keith Vroon
Chairman Acting chief executive officer
Summary consolidated statement of financial position
as at 31 March
Audited Audited
2016 2015
R'000 R'000
ASSETS
Non-current assets 2 428 017 2 298 867
Property, plant and equipment 2 237 208 2 134 523
Goodwill 138 711 132 052
Other intangible assets 38 028 27 254
Loans and receivables 1 508 1 920
Derivative financial instruments - 75
Deferred taxation assets 12 562 3 043
Current assets 1 269 224 1 222 840
Inventory 325 276 325 714
Trade and other receivables 531 463 351 508
Related-party receivables 128 376 150 895
Loans and receivables 293 1 333
Derivative financial instruments 5 596 1 486
Current income tax receivable - 2 860
Cash and cash equivalents 278 220 389 044
TOTAL ASSETS 3 697 241 3 521 707
EQUITY
Capital and reserves attributable to the Group's equity holders 2 822 624 2 536 235
Share capital 606 040 606 040
Treasury shares (368 172) (368 172)
Other reserves (827 441) (872 575)
Retained earnings 3 412 197 3 170 942
Non-controlling interest - 30 480
TOTAL EQUITY 2 822 624 2 566 715
LIABILITIES
Non-current liabilities 360 276 408 975
Post-employment medical liability 3 486 4 133
Provisions 8 601 13 390
Long-term liabilities 19 473 80 636
Cash-settled share-based payment liability 6 239 12 061
Deferred taxation liabilities 270 521 267 015
Deferred income 51 956 31 740
Current liabilities 514 341 546 017
Current portion of long-term liabilities 61 014 71 149
Trade and other payables 384 612 317 385
Related-party payables 911 3 087
Cash-settled share-based payment liability 15 537 26 477
Current income tax payable 16 561 -
Derivative financial instruments 15 002 18 877
Bank overdrafts and call loans 11 442 107 203
Deferred income 9 262 1 839
TOTAL EQUITY AND LIABILITIES 3 697 241 3 521 707
Summary consolidated income statement
for the year ended 31 March
Audited Audited
2016 2015
R'000 R'000
Revenue 4 174 517 4 261 484
Cost of sales (2 914 816) (3 092 247)
Gross profit 1 259 701 1 169 237
Operating expenses (608 928) (534 255)
Other gains/(losses) (2 013) (73 484)
Operating profit 648 760 561 498
Finance income 20 688 12 572
Finance costs (31 048) (67 735)
Profit before taxation 638 400 506 335
Taxation (190 132) (141 531)
Net profit for the year 448 268 364 804
Attributable to:
Equity holders of the Group 445 764 334 904
Non-controlling interests 2 504 29 900
448 268 364 804
Earnings per share (cents):
Basic 139,5 110,9
Diluted 139,5 110,9
Summary consolidated statement of comprehensive income
for the year ended 31 March
Audited Audited
2016 2015
R'000 R'000
Profit for the year 448 268 364 804
Other comprehensive income
Items that may be subsequently reclassified to profit or loss
Hedging reserve 3 514 (4 388)
Net fair value (losses)/gains, gross (8) (711)
Net fair value (gains)/losses tax portion 2 199
Foreign exchange movement, gross 56 761 904
Foreign exchange movement, tax portion (15 893) (253)
Derecognised and added to asset, gross (11 215) 4 115
Derecognised and added to asset, tax portion 3 140 (1 152)
Derecognised and reported in cost of sales, gross (40 657) (10 484)
Derecognised and reported in cost of sales, tax portion 11 384 2 994
Items that will not be reclassified to profit or loss
Post-employment benefit obligations and provisions 981 (1 459)
Remeasurement of post-employment benefit obligations and provisions, gross 1 363 (2 026)
Remeasurement of post-employment benefit obligations and provisions, tax portion (382) 567
Total other comprehensive income, net of tax 4 496 (5 847)
Total comprehensive income for the year 452 763 358 957
Attributable to:
Equity holders of the Group 450 102 329 655
Non-controlling interests 2 661 29 302
452 763 358 957
Summary consolidated statement of changes in equity
for the year ended 31 March
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 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
Total comprehensive income for the year - - 4 338 445 764 2 661 452 763
Profit for the year - - - 445 764 2 504 448 268
Other comprehensive income - - 4 338 - 157 4 495
Share-based compensation movement - - 27 392 - 111 27 503
Dividends paid - - - (204 509) (848) (205 357)
Transactions with non-controlling interests - - 13 404 - (32 404) (19 000)
Balance as at 31 March 2016 - Audited 606 040 (368 172) (872 441) 3 412 197 - 2 822 624
Summary consolidated statement of cash flows
for the year ended 31 March
Audited Audited
2016 2015
R'000 R'000
Cash generated from operating activities 720 128 802 486
Finance income 20 688 12 572
Finance costs (18 079) (26 223)
Taxation paid (178 381) (173 239)
Cash generated from operating activities 544 356 615 596
Cash flows from investment activities
Property, plant and equipment acquired (236 187) (168 056)
Proceeds from government grants 33 508 4 286
Proceeds from sale of property, plant and equipment 2 914 2 743
Purchase of intangible assets (15 117) (17 340)
Insurance proceeds 996 -
Loans and receivables advanced - (787)
Loans and receivables repaid 1 454 818
Acquisition of subsidiaries/businesses (50 484) (103 844)
Cash utilised in investing activities (262 916) (282 180)
Cash flows from financing activities
Proceeds from share issue - 1 044 895
Repayment of long-term loans (72 146) (190 377)
Proceeds from long-term loans - 100 000
Acquisition of non-controlling interests (19 000) -
Repurchase of shares - (1 044 895)
Dividend paid (205 357) -
Cash utilised in financing activities (296 503) (90 377)
Net increase/(decrease) in cash and cash equivalents (15 063) 243 039
Cash and cash equivalents at beginning of the year 281 841 38 802
Cash and cash equivalents at end of the year 266 778 281 841
Notes to the summary consolidated financial statements
for the year ended 31 March 2016
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, flexible packaging and tissue manufacturing)
2. Basis of presentation
The summary consolidated financial statements are prepared in accordance with the Listings Requirements of the JSE Limited, for preliminary reports, and
the requirements of the Companies Act, No. 71 of 2008, as amended (Companies Act) applicable to summary financial statements. The JSE 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 chief financial officer, Edward 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 19: Employee Benefits 1 July 2014
Amendment to IFRS 8: Operating Segments 1 July 2014
Annual Improvements 2010-2012 cycle 1 July 2014
Annual Improvements 2011-2013 cycle 1 July 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, 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 2015.
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) to allocate resources to the segments and to assess their performance. The CODM was identified as the
executive committee that makes strategic decisions.
The executive committee identified four operating segments based on its business by service or product. Two operating segments meet the quantitative
thresholds for separate reporting. However, they are similar in nature and meet the aggregation criteria in terms of paragraph 12 of IFRS 8 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 two operating segments do not meet the quantitative threshold for separate reporting and are
combined in "Other", comprising the Labels division that prints flexible labels and Paarl Tissue Proprietary Limited, which manufactures tissue paper.
Printing Other Eliminations Total
R'000 R'000 R'000 R'000
2016
External revenue 3 918 108 256 409 - 4 174 517
Intersegmental revenue 20 239 - (20 239) -
Total revenue 3 938 347 256 409 (20 239) 4 174 517
Profit attributable to equity holders of the company 487 337 (41 573) - 445 764
Additional disclosure
Property, plant and equipment additions 131 003 146 479 - 277 482
Capital commitments 24 285 66 366 - 90 651
Impairment of assets 2 039 284 - 2 323
Total assets 3 674 290 520 727 (497 776) 3 697 241
Total liabilities 831 337 541 056 (497 776) 874 617
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
Property, plant and equipment additions 117 514 143 259 - 260 773
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
8. Transactions with non-controlling interest
On 30 September 2015, the Group acquired an additional 16% of its subsidiary Paarl Media Paarl Proprietary Limited from Kurisani Investments Proprietary
Limited for a consideration of R19 million. Paarl Media Paarl Proprietary Limited is now wholly-owned by the Group.
The effect of the above transaction can be summarised as follows:
2016
R'000
Carrying amount of non-controlling interest 32 404
Purchase consideration paid (19 000)
Amount credited to equity 13 404
9. Earnings per share
Basic earnings per share
Earnings per share is calculated using the weighted average number of ordinary shares in issue during the period 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 to employees and directors are antidilutive.
Headline earnings per share
Headline earnings per share is calculated using the weighted average number of ordinary shares in issue during the period and is based on the earnings
attributable to ordinary shareholders, after excluding those items as required by Circular 2/2013 issued by the South African Institute of Chartered
Accountants (SAICA).
Audited Audited
2016 2015
R'000 R'000
Calculation of headline earnings
Earnings
Net profit attributable to shareholders 445 764 334 904
Adjustments (net of tax and non-controlling interest): 1 394 50 277
- Loss/(profit) on sale of property, plant and equipment 438 (213)
- Insurance proceeds (717) -
- Impairment in value of property, plant and equipment 1 673 50 490
Headline earnings 447 158 385 181
Number of ordinary shares in issue at year end 347 332 454 347 332 454
Weighted average number of shares
Shares of earnings per share adjusted for weighting 319 545 857 301 927 811
Earnings per ordinary share (cents)
Basic 139,50 110,92
Diluted 139,50 110,92
Headline earnings per share (cents)
Basic 139,94 127,57
Diluted 139,94 127,57
10. Business combinations
For the year ended 31 March 2016
Acquisition of the share capital of Victory Ticket 376 Proprietary Limited
On 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 R7,4 million.
The acquisition was a result of the Group's diversification strategy, equipping Novus Holdings with the ability to print "on demand" books and small
batches of high quality material within short turnaround times.
Goodwill of R6,7 million relates to expected synergies resulting from the Group's ability to offer a more complete printing offering to existing clients.
None of the goodwill recognised is expected to be deductible for income tax purposes.
2016
R'000
Fair value of assets and liabilities acquired
Property, plant and equipment 115
Investments and loans 848
Net current assets/(liabilities) 682
Long-term liabilities (848)
Identifiable assets and liabilities at acquisition date 797
Goodwill 6 659
Total purchase consideration 7 456
Consideration as at acquisition date
Total purchase consideration 4 833
Amount owing in respect of acquisition 2 623
7 456
Cash flow
Cash consideration paid in respect of Digital Print Solutions (4 833)
Cash in entity - Digital Print Solutions 1 204
Payment in respect of the prior year acquisition of Correll Tissue (46 855)
Cash flow on acquisition (50 484)
Acquisition related costs of R0,05 million have been included in profit and loss.
Revenue of R9,7 million and a profit after tax of R0,05 million have been included in the consolidated statement of comprehensive income since the
acquisition date. The Group's revenue and profit after tax would have been R4 175,4 million and R448,3 million respectively if the acquisition had occurred
at the beginning of the reporting period.
11. Financial risk management and financial instruments
11.1 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 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 2016.
There have been no material changes in the Group's financial risk management objectives and policies since the previous financial year.
11.2 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 Total
Quoted prices
in active
markets for Significant
identical other Significant
assets or observable unobservable
liabilities inputs inputs
R'000 R'000 R'000 R'000
At 31 March 2016
Assets
Interest rate swap - 109 - 109
Foreign exchange contracts - 5 487 - 5 487
- 5 596 - 5 596
Liabilities
Foreign exchange contracts - 15 002 - 15 002
At 31 March 2015
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
- 18 877 - 18 877
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 other assets and liabilities is a reasonable approximation of their fair values.
12. Related-party transactions
Related-party transactions similar to those disclosed in the Group's annual financial statements for the year ended 31 March 2015 took place during the
financial year.
13. Capital commitments and contingencies
Authorised capital expenditure
Audited Audited
2016 2015
R'000 R'000
Authorised capital expenditure
Already contracted for but not provided for
- Property, plant and equipment 90 651 57 479
Operating leases - as lessee (expense)
Minimum lease payments due
- within one year 4 068 427
- in second to fifth year inclusive 14 109 48
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 the reporting date
The directors are not aware of any matter 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.
DIRECTORATE
Independent non-executive directors
Fred Robertson (lead independent director)
Christoffel Botha
Gugulethu Dingaan
Bernard Olivier
Jan Potgieter
Sandile Zungu
Non-executive directors
Lambert Retief (chairman of the board)
Esmare Weideman
Abduraghman (Manie) Mayman
Executive directors
Keith Vroon (acting chief executive officer)
Edward van Niekerk (chief financial officer)
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
Date: 08/06/2016 01:34:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
