Novus Holdings, the listed packaging, printing and publishing company, reported a big turnaround for the year to March 31 as headline earnings per share shot up to 78.8 cents from a 7.4 cents loss per share at the same time a year before.
The share price closed 4.96% lower on Friday at R5.60, but the price is nevertheless 81% higher than where it traded 12 months ago.
A dividend of 50 cents per share was declared, versus none paid the previous year. In 2022, headline earnings per share came to 53.2 cents.
Revenue for the past year increased by 24% to R3.96 billion. Earnings before interest tax depreciation and amortisation increased to R628.8m from R131.7m. Operating profit increased to R393.5m from R6.9m.
The group’s directors said that operating profit and revenue had increased due to the inclusion of the Maskew Miller Learning (MML) acquisition for 12 months in the Learning segment, and because operating profit at both the print and packaging segments increased.
MML had a R810m impact on revenue for the 12 months. The print and packaging segments both saw slight declines in revenue. The decline of print revenue in retail, inserts and catalogues, was offset by gains in books and newspapers.
The increase in operating profit to R393.5m from R6.9m and gross profit margin improvement was attributable to a R264m operating profit from MML and improved profitability in both print and packaging.
Overhead costs were “well contained”. The inclusion of MML for 12 months resulted in an overall 25% increase, year on year, from R593m to R743m. Load shedding costs were R17m (2023: R29m). Retrenchment costs were R1m (R12m).
In the print segment, revenue was stable at R2.42bn (R2 38bn), while operating profit improved from an operating loss of R31.1m to an operating profit of R55m. Overall sales tonnages decreased by 9.1%.
The retail, inserts and catalogues category saw the largest decrease in tonnage, Magazines showed a small decrease and books and newspapers both showed tonnage increases.
In the packaging segment revenue was stable at R656.8m (R659.4m), while operating profit improved 9.6% to R67.5m.
The education segment included revenue for the 12 months versus only four months in the previous financial year – it increased significantly to R966.2m from R156.3m and the operating profit margin increased from 20.8% to 27.3%.
The cash balance ended at R871.4m. Net cash after debt was R461.1m. Capital and interest repayments on the outstanding loan balance in the period amounted to R132.2m (R32.4m).
Capital expenditure amounted to R108.1m (R48.9m). Shares repurchased came to R46m, and R12m was spent on the acquisition of integrity control systems in the packaging segment.
“The group will continue to optimise the print business, where a decline in print volumes places pressure on margins and fixed costs recovery,” Novus directors said.
They said the costs to maintain and operate their print infrastructure required constant attention to mitigate the reduction in print volumes.
The MML business had been structured to grow beyond just books, and MML launched an AI-enabled platform, Maski. Maski would initially be used to support the users of the MML textbooks, but in time would be expanded to provide a broader service offering.
The acquisition of Bytefuse, an AI technology business had been concluded. Bytefuse specialises in the training and integration of large language models into business applications, and a large number of Bytefuse personnel were focused on the development of Maski.
The investment in Maski and the cost to respond to the recent request from the Department of Basic Education for submissions of revised material for Grade 1 to Grade 3 was expected to reduce MML profits in the 2025 year.
ITB, the packaging business, invested R63m to expand production capacity and replace ageing equipment.
BUSINESS REPORT