Wrap Text
Summarised financial results for the year ended 31 March 2017
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 financial results for the year ended 31 March 2017
Salient features
R'000 2017 2016 Change
R'000 R'000 %
Revenue 4 312 464 4 174 517 3,3
Gross profit 1 105 404 1 259 701 (12,2)
Margin 25,6% 30,2%
Operating profit 393 736 648 760 (39,3)
Operating profit - excluding impairments and profit/(loss) on disposal of assets 528 825 650 720 (18,7)
Operating margin 9,1% 15,5%
Operating margin - excluding impairments and profit/(loss) on disposal of assets 12,3% 15,6%
Profit after tax 256 827 448 268 (42,7)
Headline earnings 354 083 447 158 (20,8)
Earnings per share - cents 80,4 139,5 (42,4)
Headline earnings per share - cents 110,8 139,9 (20,8)
Final gross dividend per share - cents 56,0 70,0 (20,0)
Total gross dividend per share - cents 56,0 70,0 (20,0)
COMMENTARY
This year proved to be a challenging year for Novus Holdings. The Group felt the effect of publishers and certain commercial clients reducing volumes to curb rising
input costs. Pricing pressure was compounded by competitors introducing additional capacity to compete for key accounts. In addition, the volatile exchange rate made
it difficult to positively match pricing points with the cost of raw materials, thereby placing further strain on print margins.
In response, Novus Holdings remained focused on maximising cash flow returns from its core printing business through the consolidation of its existing print assets
and by matching operational capacity to market demand. This ensures that the Group remains competitive within the print industry. It further safeguards Novus Holdings'
ability to tender for significant print contracts - an ability that the Group successfully demonstrated by, once again, being re-awarded the DBE workbook tender.
It was also a critical year for the Group as the business was strategically repositioned to face the challenges of the print industry and to leverage returns from
recent investments into tissue and labels as growth assets. The Group is on a focused drive to pursue additional revenue streams from its current diversification
projects and will continue to seek new opportunities in the form of acquisitions. This will ultimately lead to a Group reprofiled for sustainable growth.
Performance
Print segment
Print volumes remained under pressure, particularly magazine and newspaper volumes. These product categories witnessed volume declines of 11,3% and 9,9% respectively.
As these two categories contribute to just over 40% of the turnover for the Print segment, results were negatively affected by this decline. The retail inserts
and catalogue category also witnessed volume declines during the year of 6,7%, while the book and directory volumes were positive at 1,3% growth. Additional
educational work outside of the DBE workbook project boosted volumes in the second half of 2017. Looking ahead, the Group foresees that volume declines in Print will
continue. Therefore, the re-awarding of the DBE tender is significant in providing Novus Holdings with volume stability for books and directories. The decline in retail
products is expected to stabilise once consumer spend patterns improve.
The closure of Paarl Media Paarl and the relocation of its sheet-fed printing assets to Paarl Media Cape and Paarl Media KZN, as well as the amalgamation of Digital
Print Solutions to form Novus Print Solutions, proved unexpectedly disruptive to the business. However, Novus Print Solutions is now fully operational and is expected
to contribute to volume growth for books, which is its intended business model. The Group is in the process of disposing of the property in Paarl which is planned to
be realised in the 2018 financial year. The building was classified as a non-current asset held for sale at year-end.
The gross margin declined from 32,3% to 27,6% as it was negatively impacted by foreign exchange fluctuations. Gross margin was further impacted by:
- Outsourcing costs due to the Novus Print Solutions amalgamation;
- Repairs and maintenance costs exacerbated by foreign exchange fluctations;
- Additional production-related staff costs, predominantly resulting from temporary peaks in production of workbooks and other products.
Other segment
The labels division has seen substantial volume growth due to the packaging gravure press being operational for the full year, as well as the Group's subsequent entry
into the wraparound labels market and its growth in the wet-glue labels market through significant client tenders.
Tissue volumes have declined by 7% due to ongoing production interruptions on tissue mill one to enable project work and tie-ins with the recently commissioned second
tissue mill. The impact on volumes is therefore project related and does not reflect variances in the current demand, which remains buoyant. Impact on volumes should
settle in the short term.
The "Other" segment contributed to the lower gross margin. Material consumption improved on the back of more efficient production processes in the labels division,
which have been successfully bedded down. The Group is yet to see this benefit for the tissue division due to higher project spend. Repairs and maintenance increased
in comparison to the previous year, which has mostly been attributed to the tissue project. This is expected to improve in the upcoming financial year as the project
is completed.
The Group's operating expenses were well-controlled and improved to 13,4% of revenue (2016: 14,6%).
Impairments
An impairment charge of R138,6 million had a significant impact on the Group's operating profit. This impairment charge was spread across the Print and "Other" segments.
In Print, predominantly in the coldset division, an impairment charge of R109 million was recognised on excess printing capacity and related equipment that was no
longer required. While this impairment charge impacted Group results, Novus Holdings is satisfied that the level of impairment is balanced with the costs that have
been removed from the core business in order to increase capacity utilisation. The Group currently foresees minimal profit benefit from equipment sales.
The Group has previously invested in both tissue milling and converting equipment in its tissue operation. The investment to significantly expand capacity and improve
quality firmly positions the tissue business as a growing supplier of jumbo reel tissue wadding, which is showing greater prospects for the Group than the converting
facility. As a result, the Group has taken a conservative approach and proactively impaired the converting equipment to the value of R26,4 million.
Capital expenditure
The cash expenditure on property, plant and equipment for 2017 amounted to R244 million (2016: R236 million). Capital expenditure for the Print segment amounted to
R126 million. Expansion capital expenditure of R62 million in this division resulted from the digital press project equipment as well as building alterations to
accommodate the Novus Print Solutions operations on site in Montague Gardens. Maintenance capital expenditure for the division amounted to R64 million for the year,
which is in line with the Group's expectation.
Capital expenditure for the Other segment amounted to R118 million, with the majority related to the expansion of the tissue project. In the labels division, some
capital expenditure was incurred on finishing equipment to further expand the labels offering.
Changes to the board
Keith Vroon was appointed as chief executive officer (CEO) of the Group effective 29 July 2016, having performed the role of acting CEO since 16 February 2016. Following
Edward van Niekerk’s resignation as chief financial officer (CFO) and executive director of Novus Holdings effective 31 August 2016, Edrich Fivaz was appointed as the CFO
of the Group effective 1 September 2016.
Fred Robertson stepped down from the position of lead independent non-executive director effective 3 April 2017 to focus on other business interests. In his place,
previous independent non-executive director, Jan Potgieter, was appointed as lead independent non-executive director. Abduraghman (Manie) Mayman resigned as non-
executive director following his retirement as CFO at Media24. In his place, the Group welcomes Cindy Hess, who joined Media24 as CFO in November 2016. Cindy
previously held the position of CFO at Pioneer Foods.
Following the sad passing of Lambert Retief, who had served as chairman and non-executive director of the board since 2005, Neil Birch was appointed as an independent
non-executive director and chairman of the board effective 3 April 2017. The board is confident that Neil will add significant value in his role as chairman through
his extensive business and management experience.
Appreciation
Despite the many challenges and obstacles experienced during the year, the Group takes cognisance of the hard work and dedication that the management teams and
employees have shown. Novus Holdings extends a very special word of tribute to Lambert Retief, who sadly passed away in January 2017.
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.
Dividend
The board approved a gross dividend No. 3 of 56 cents per share (2016: 70 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 11.2 cents per share, leaving shareholders who are not exempt from dividends tax
with a net dividend of 44.8 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, 29 August 2017
Trading ex dividend commences Wednesday, 30 August 2017
Record date Friday, 1 September 2017
Payment date Monday, 4 September 2017
Share certificates may not be dematerialised or rematerialised between Wednesday, 30 August 2017 and Friday, 1 September 2017, both dates inclusive.
Outlook
Novus Holdings anticipates continued pricing and volume pressures in the Print segment, and will actively manage costs through optimised capacity and consolidation.
By stabilising and growing the newer divisions, the Group expects to gradually overcome declining print revenue streams. In the labels business, the focus will be
on adding volume and creating scale for an already established and efficient platform. Similarly, Novus Holdings will focus on adding volume and efficiency to
its tissue business.
The Group expects improved returns in 2018 resulting from the investments made over the past few years. This includes operational profitability in the “Other” segment
and Novus Print Solutions, as well as further acquisitions. The latter will take the form of strategic and synergistic business combinations to enhance competitiveness.
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.
Results presentation
Shareholders are advised that Novus Holdings will be hosting their results presentation at Crystal Towers, Century City at 10h30 (SA time) on Monday, 12 June 2017.
A live audio webcast will also be available at 10h30 (SA time) on Monday, 12 June 2017. The webcast is available for viewing at http://www.corpcam.com/Novus12062017.
Once concluded, a recording of the webcast will be available on the Group’s website at www.novus.holdings.
Renewal of cautionary announcement
In reference to the renewal of the cautionary announcement issued on 3 May 2017, Novus Holdings' shareholders are advised that on 7 June 2017 the Competition Commission
made recommendation to the Competition Tribunal to approve the large merger between Novus Holdings and flexible packaging solutions manufacturer and supplier,
ITB Manufacturing, without conditions.
Further to the above proposed transaction, Novus Holdings remains in negotiations with respect to another potential acquisition as advised in the cautionary announcements
released on 15 March 2017 and 3 May 2017.
If successfully concluded, both proposed acquisitions may have a material effect on the Company’s securities. Accordingly, shareholders are advised to continue to exercise
caution when dealing in Novus Holdings shares until further announcements are made in this regard.
Neil Birch Keith Vroon
Chairman Chief executive officer
SUMMARISED AUDITED CONSOLIDATED FINANCIAL STATEMENTS
Summary consolidated statement of financial position
as at 31 March
Audited Audited
2017 2016
R'000 R'000
ASSETS
Non-current assets 2 356 990 2 428 017
Property, plant and equipment 2 102 674 2 237 208
Goodwill 155 419 138 711
Other intangible assets 42 250 38 028
Available-for-sale financial assets 3 000 -
Loans and receivables 3 050 1 508
Deferred taxation assets 50 597 12 562
Current assets 1 242 561 1 269 224
Inventory 342 330 325 276
Trade and other receivables 478 439 531 463
Related-party receivables 126 958 128 376
Loans and receivables - 293
Derivative financial instruments 1 462 5 596
Current income tax receivable - -
Cash and cash equivalents 229 968 278 220
Non-current asset held for sale 63 404 -
TOTAL ASSETS 3 599 551 3 697 241
EQUITY
Capital and reserves attributable to the Group's equity holders 2 882 839 2 822 624
Share capital 606 040 606 040
Treasury shares (368 172) (368 172)
Other reserves (804 465) (827 441)
Retained earnings 3 449 436 3 412 197
Non-controlling interest (374) -
TOTAL EQUITY 2 882 465 2 822 624
LIABILITIES
Non-current liabilities 371 171 360 276
Post-employment medical liability 2 987 3 486
Provisions 17 045 8 601
Long-term liabilities 60 436 19 473
Cash-settled share-based payment liability 3 139 6 239
Deferred taxation liabilities 242 429 270 521
Deferred income 45 135 51 956
Current liabilities 345 915 514 341
Provisions 2 177 -
Current portion of long-term liabilities 20 090 61 014
Trade and other payables 288 848 384 612
Related-party payables 1 154 911
Cash-settled share-based payment liability 9 422 15 537
Current income tax payable 120 16 561
Derivative financial instruments 16 520 15 002
Bank overdrafts and call loans 2 744 11 442
Deferred income 4 840 9 262
TOTAL EQUITY AND LIABILITIES 3 599 551 3 697 241
Summary consolidated income statement
for the year ended 31 March
Audited Audited
2017 2016
R'000 R'000
Revenue 4 312 464 4 174 517
Cost of sales (3 207 060) (2 914 816)
Gross profit 1 105 404 1 259 701
Operating expenses (576 579) (608 928)
Other gains/(losses) - net (135 089) (2 013)
Operating profit 393 736 648 760
Finance income 13 433 20 688
Finance costs (45 688) (31 048)
Profit before taxation 361 481 638 400
Taxation (104 654) (190 132)
Net profit for the year 256 827 448 268
Attributable to:
Equity holders of the Group 256 819 445 764
Non-controlling interests 8 2 504
256 827 448 268
Earnings per share (cents):
Basic 80,4 139,5
Diluted 80,4 139,5
Summary consolidated statement of comprehensive income
for the year ended 31 March
Audited Audited
2017 2016
R'000 R'000
Profit for the year 256 827 448 268
Other comprehensive income
Items that may be subsequently reclassified to profit or loss
Hedging reserve (12) 3 514
Net fair value (losses)/gains, gross (109) (8)
Net fair value (gains)/losses tax portion 31 2
Foreign exchange movement, gross (18 122) 56 761
Foreign exchange movement, tax portion 5 075 (15 893)
Derecognised and added to asset, gross 9 425 (11 215)
Derecognised and added to asset, tax portion (2 639) 3 140
Derecognised and reported in cost of sales, gross 8 787 (40 657)
Derecognised and reported in cost of sales, tax portion (2 460) 11 384
Foreign currency translation reserve (1 855) -
Exchange loss arising on translating foreign operations, gross (2 577) -
Deferred tax relating to loss arising on translating foreign operations, tax portion 722 -
Items that will not be reclassified to profit or loss
Post-employment benefit obligations and provisions 660 981
Remeasurement of post-employment benefit obligations and provisions, gross 917 1 363
Remeasurement of post-employment benefit obligations and provisions, tax portion (257) (382)
Total other comprehensive income, net of tax (1 207) 4 495
Total comprehensive income for the year 255 620 452 763
Attributable to:
Equity holders of the Group 255 612 450 102
Non-controlling interests 8 2 661
255 620 452 763
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 2015 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
Transactions with owners:
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)
Total transactions with owners - - 40 796 (204 509) (33 141) (196 854)
Balance as at 31 March 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
Summary consolidated statement of cash flows
for the year ended 31 March
Audited Audited
2017 2016
R'000 R'000
Cash generated from operating activities
Cash generated from operations 661 829 720 128
Finance income 13 433 20 688
Finance costs (11 718) (18 079)
Taxation paid (188 513) (178 381)
Cash generated from operating activities 475 031 544 356
Cash flows from investment activities
Property, plant and equipment acquired (243 719) (236 187)
Proceeds from government grants - 33 508
Proceeds from sale of property, plant and equipment 15 098 2 914
Purchase of intangible assets (8 363) (15 117)
Insurance proceeds - 996
Loans and receivables advanced (4 512) -
Loans and receivables repaid 263 1 454
Acquisition of subsidiaries/businesses 10 785 (50 484)
Cash utilised in investing activities (230 448) (262 916)
Cash flows from financing activities
Repayment of long-term loans (60 455) (72 146)
Acquisition of non-controlling interests - (19 000)
Dividend paid (223 682) (205 357)
Cash utilised in financing activities (284 137) (296 503)
Net decrease in cash and cash equivalents (39 554) (15 063)
Cash and cash equivalents at beginning of the year 266 778 281 841
Cash and cash equivalents at end of the year 227 224 266 778
Notes to the summary consolidated financial statements
for the year ended 31 March 2017
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 and tissue manufacturing)
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, 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 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
Standard/Interpretation on or after
Amendments to IFRS 10: Consolidated Financial Statements 1 January 2016
Amendments to IFRS 11: Joint Arrangements 1 January 2016
Amendments to IAS 1: Presentation of Financial Statements 1 January 2016
Amendments to IAS 16 and IAS 38: Clarification of acceptable methods of depreciation and amortisation 1 January 2016
Amendments to IAS 27: Separate financial statements 1 January 2016
Annual Improvements 2012-2014 cycle 1 January 2016
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 2016.
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 has been identified as the executive
committee that makes strategic decisions.
The executive committee has identified four operating segments based on its business by service or product. Two operating segments meet the quantitative thresholds
for separate reporting. They are however similiar 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 two operating segments do not meet the quantitative threshold for separate reporting, and are combined in "Other", which comprises the Labels
division that prints flexible labels, Paarl Tissue Proprietary Limited which manufactures tissue paper and any non-print related transactions in the year.
Printing Other Eliminations Total
R'000 R'000 R'000 R'000
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 47 867 42 784 - 90 651
Impairment of assets (108 998) (29 644) - (138 642)
Total assets 3 685 512 634 549 (720 510) 3 599 551
Total liabilities 642 023 795 573 (720 510) 717 086
2016
External revenue 3 918 108 256 409 - 4 174 517
Inter-segmental 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
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 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 2/2015 issued by the South African Institute of Chartered Accountants (SAICA).
Audited Audited
2017 2016
Calculation of headline earnings R'000 R'000
Earnings
Net profit attributable to shareholders 256 819 445 764
Adjustments (net of tax and non-controlling interest): 97 264 1 394
- (Profit)/loss on sale of property, plant and equipment (2 558) 438
- Insurance proceeds - (717)
- Impairment in value of property, plant and equipment 99 822 1 673
Headline earnings 354 083 447 158
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 319 545 857 319 545 857
Earnings per ordinary share (cents)
Basic 80,4 139,5
Diluted 80,4 139,5
Headline earnings per share (cents)
Basic 110,8 139,9
Diluted 110,8 139,9
9. BUSINESS COMBINATIONS
For the year ended 31 March 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 R265 505.
This consideration was settled by converting a portion of the debt owed to the Group, to equity in International Printing Group Limitada.
The acquisition will enable the Group to expand its existing geographical footprint for label sales and goodwill of R16,7 million relates to the expected benefits to
be derived from a larger customer base.
2017
R'000
Fair value of assets and liabilities acquired
Cash and cash equivalents 13 408
Trade and other receivables 3 424
Trade and other payables (35 852)
Deferred taxation (854)
Intangible asset 3 051
Identifiable assets and liabilities at acquisition date (16 823)
Non controlling interest 381
Goodwill 16 708
Total purchase consideration 266
Cash flow
Cash consideration paid in respect of Digital Print Solutions (2 623)
Cash in entity acquired - International Printing Group Limitada 13 408
Cash flow on acquisition 10 785
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 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.
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 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 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
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
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.
Available for sale financial assets - the use of quoted market prices or dealer quotes for similar instruments.
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 amounts of the other financial assets and liabilities, is a reasonable approximation of their fair values.
11. RELATED-PARTY TRANSACTIONS
Related-party transactions similar to those disclosed in the Group's annual financial statements for the year ended 31 March 2016 took place during the financial
year.
12. CAPITAL COMMITMENTS AND CONTINGENCIES
Audited Audited
2017 2016
R'000 R'000
Authorised capital expenditure
Already contracted for but not provided for
- Property, plant and equipment 46 807 90 651
Operating leases - as lessee (expense)
Minimum lease payments due
- within one year 5 486 4 068
- in second to fifth year inclusive 12 841 14 109
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.
13. 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
Neil Birch
Christoffel Botha
Gugulethu Dingaan
Bernard Olivier
Jan Potgieter
Sandile Zungu
Non-executive directors
Esmare Weideman
Cindy Hess
Executive directors
Keith Vroon (CEO)
Edrich Fivaz (CFO)
Company secretary
Kilgetty Statutory Services Proprietary Limited
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
Sponsor: Investec Bank Limited
Auditor: PricewaterhouseCoopers Inc. Cape Town
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: 09/06/2017 03:18:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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