NOVUS HOLDINGS LIMITED - Withdrawal of Cautionary Announcement Media24 Printing Agreements

Withdrawal of Cautionary Announcement – Media24 Printing Agreements

Novus Holdings Limited
(Incorporated in the Republic of South Africa)
JSE share code: NVS
ISIN: ZAE000202149
Registration number: 2008/011165/06
(“Novus Holdings”, “the Company”)


WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT – MEDIA24 PRINTING AGREEMENTS


Shareholders of Novus Holdings (“Shareholders”) are referred to the announcements released by the
Company on the Stock Exchange News Service dated 03 October 2017, 15 December 2017 and 31 January
2018 in relation to the termination of the existing printing agreements between Novus Holdings and
Media24 Proprietary Limited (“Media24”) (“Previous Agreements”) and the release of a cautionary
announcement (“Cautionary Announcements”).

On 26 March 2018 Novus Holdings signed new printing agreements with Media24 (“New Agreements”),
which is expected to have a substantial adverse impact on Novus Holdings earnings and headline earnings
for the financial year commencing 01 April 2018. The material commercial terms of the New Agreements
were concluded on 11 December 2017 when Media24 notified Novus Holdings that it had been successful
in respect of a portion of its printing proposal submitted to Media24 pursuant to the request for proposal
for all of Media24’s print requirements. The notification constituted an acceptance of a portion of Novus
Holdings proposal and agreement on the material commercial terms of the proposal submitted by Novus
Holdings to Media24.

The conclusion of the material commercial terms of the New Agreements was prior to the effective date
of the amendment of the JSE Limited’s Listings Requirements which will in future result in certain
agreements with related parties falling within the scope of Section 10 of the JSE Limited’s Listings
Requirements.

The purpose of this announcement is to provide Shareholders with an overview of the terms of the New
Agreements together with an indication of the financial impact thereof and to withdraw the cautionary
announcements.


  1. Terms of the New Agreements

   The New Agreements will commence on 01 April 2018 and terminate on 31 March 2021. The New
   Agreements may however be renewed for a further three year period, at the instance of Media24.

   In terms of the New Agreements, Novus Holdings will be printing approximately 58% of the
   aggregate Media24 printing requirements (approximately 76% of magazine and approximately 50%
   of newspaper requirements of Media24), by volume, as contemplated in the request for proposal of
   Media24. Novus Holdings will, inter alia, continue to print all the national weekly magazines for
   Media24. In terms of newspaper printing, Novus Holdings will continue to print all newspaper titles
   printed in the Western Cape, Eastern Cape and the Free State. Novus Holdings has exclusivity with
   regards to providing the printing services of the agreed publications.

   The New Agreements include warranties standard for contracts of this nature. In addition, Novus
   Holdings is required to maintain a Level 4 BEE rating, as defined in the Codes of Good Practice on
   Black Economic Empowerment published in terms of the Broad-Based Black Economic
   Empowerment Act No 53 of 2003, for the duration of the New Agreements.

   The printing prices payable to Novus Holdings have been reduced substantially compared to the
   Previous Agreements. Future yearly price escalations will be determined through a pre-agreed
   formula.

2. Financial impact of the New Agreements

   Shareholders are advised that the following financial information or statements contained in this
   announcement have not been reviewed or reported on by Novus Holdings’ independent auditors.
   The financial impact of the New Agreements and the preparation thereof, which is the responsibility
   of the directors of Novus Holdings, have been prepared for illustrative purposes only, and because
   of their nature, may not give a fair reflection of the Company’s financial position and results of
   operations, nor the effect and impact of the New Agreements on Novus Holdings going forward.

   The New Agreements are not expected to have a material impact on Novus Holdings’ revenue for
   the financial year ending 31 March 2018, however it is expected to have a material financial impact
   for the financial year commencing 1 April 2018.

   In the past approximately 21% of Novus Holdings’ revenue related to printing for Media24. On the
   assumption that the New Agreements were in place for the financial year ended 31 March 2018
   (“FY18”) on a pro-forma basis revenue for the 12 months ended FY18 would have reduced with
   approximately R520 million to R560 million due to the change in the volume allocated and pricing
   terms of the New Agreements (“Reduced Revenue”). R260 million to R280 million of the Reduced
   Revenue relates to the price differential and R260 million to R280 million of the Reduced Revenue
   relates to the volume differential between the Previous Agreements and the New Agreements.

   Management have commenced a number of initiatives to reduce the impact of reduced volumes
   and margins, which includes the closing of the Pietermaritzburg plant and decommissioning of a
   number of printing presses which will reduce certain costs accordingly (“Initiatives”). These
   Initiatives are expected to reduce the total impact on Novus Holdings’ earnings post 01 April 2018.
   Novus Holdings remains committed to its diversification and growth plans and its historic dividend
   cover ratio.

   Further details on the impact of the New Agreements and the Initiatives on earnings will be provided
   in a trading update to be released on or before 30 April 2018.

3. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT

   With reference to the cautionary announcement issued on 15 December 2017 and the subsequent
   renewal of the cautionary announcement on 31 January 2018, Shareholders are hereby advised that
   caution is no longer required when dealing in the Company’s securities.

  4. SPECIAL WEBCAST

      Shareholders are advised that the company is hosting a live webcast at 12h00 (SA time) on
      Tuesday, 27 March 2018, in order to update the market on impact, strategic direction and to
      answer general questions.

      The webcast details are: http://www.corpcam.com/Novus27032018. Refer to the Company
      website for further details.

      The webcast presentation will also be available on the Company website.

Cape Town
26 March 2018

Sponsor: Investec Bank Limited

Date: 26/03/2018 04:20:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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