Novus Holdings has reported higher interim earnings, thanks to improved profitability of the print segment and profits from derivative instruments held in Mustek within the packaging segment.
The group, one of SA’s largest print production and manufacturing operators, recently made a bid to take over technology group Mustek.
Novus reported a 3.3% increase in revenue to R2.09bn for the six months ended September, with the education and packaging segments increasing 10% and 10.1%, respectively. The print segment’s revenue decreased by 0.9%, but operating profit more than doubled to R86.3m.
Group operating profit rose to R196.4m from R168.6m a year ago and headline earnings per share increased to 59.36c from 28.77c, the company said in a statement on Friday.
The current period includes a profit of R59.7m from derivative instruments held in Mustek and a profit of R400,000 on the sale of property, plant and equipment.
The group said in the print division overall print volumes were down 5%; however, excluding the department of basic education (DBE) contract, volumes were down 10.7%. Book volumes, including DBE, were consistent with the previous year and comprised just more than 50% of the volumes for print. Volumes on newspapers, magazines and retail inserts all declined.
Revenue in the education segment increased 10% to R447.2m after the recording of income that was historically processed in the second half of the year. Historically, orders from the Limpopo province were placed during the second half; however, this year’s volumes are expected to be lower compared with the previous year.
“We are engaging with the [department of basic education] to understand their thinking on curriculum reform, but our expectation is that the full-year performance of the education segment will be lower than the prior year,” it said.
The group has finalised the acquisition of three divisions of Media24 — On the Dot (media supply chain management division), Community Newspapers (local news portfolio) and Soccer Laduma and Kick Off (football publication division) — for R40m. This acquisition will require an initial investment in working capital, but is expected to result in a contribution to group profits and earnings per share.
The group has made a mandatory offer for all of Mustek’s shares at either R13 cash per Mustek share, or R7 cash plus one Novus share, or two Novus shares for each Mustek share.
Mustek, valued at R866m on the JSE, is an assembler and distributor of ICT products and was established in 1987, with its brand portfolio including Acer, Asus, Samsung and Lenovo.
Novus said it had secured the department of basic education contract for two more years.
It will continue to optimise and restructure the print business, where an ongoing decline in print volumes places pressure on margins and the recovery of fixed costs.
“We expect that the curriculum update will negatively affect orders in the second half of the financial year, with the result that Maskew Miller Learning (MML) sales will decline from prior year,” it said.
The packaging segment successfully commissioned the expanded production capacity within the period, enabling them to grow market share and improve production efficiencies, it said.
Novus’ shares closed down 2.56% at R7.60 on Friday, giving it a market capitalisation of R2.6bn.
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