Novus Holdings recently reported its financial results highlights for the year ended 31 March 2018, which include an increase of 0,6% in gross profit to 26,2% for the FY2018 (2017: 25,6%), thanks to favourable exchange rates. Group revenue remains in line with the previous year at R4,308 million (2017: R4,312 million).
The group was able to maintain its print market share despite a tough operating environment.
‘We experienced an unsettling and challenging period, but have a very strong balance sheet. The group remains focused on streamlining its operations, innovating where possible, and acquisitions into diversified business interests in order to ensure the sustainability of the business,’ said Neil Birch, Novus Holdings’ executive chairman.
The group’s free cash flow has improved by 68.4% to R398,0 million (2017: R236,3 million) and its cash conversion ratio has increased to 108,6% for the FY2018, up by 31,1% (2017: 77,5%).
Print revenue was down 8,8% for the year under review, largely as a result of volume declines of 11,5% experienced during the period. However, the contract with the Department of Basic Education to deliver workbooks (60 million books per annum) generated 17% of total printing revenue during the year under review.
‘In addition, Novus Print Solutions has successfully shown a turnaround of R25 million on an operating profit level compared to the prior year,’ said Birch.
He added that ITB Plastics contributed R265 million in revenue to the second half of the year, while Paarl Labels showed a revenue increase of almost 62% during the year.
‘The earnings before interest and taxes (EBIT) contribution of R27 million from our labels business more than doubled over the year and we are confident that this business will increase its contribution to our bottom line over the medium to long term.’
Birch said that 16% of the group’s revenue in the 2018 financial year came from its diversified operations, up from 8% in 2017.
‘We recognise the need for an accelerated restructure, given the impact of a shifting operating landscape,’ said Birch.
Novus Holdings expects the renegotiated Media24 contract to put pressure on the group’s margin during the FY2019. However, it is firmly focussed on cost containment as it works to replace higher margin printing revenue with packaging revenue.
‘I believe that we have the right leadership and operational management team in place who have the institutional knowledge and experience to help forge a new chapter for Novus Holdings. We are cash generative, enjoy strong market share positions and are more focused than ever to deliver value not only to our shareholders, but to all our stakeholders,’ Birch concluded.