six months ended 30 september 2019 - novus holdings · novus holdings interim financial results...
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Novus Holdings Interim Financial Results 2020
SIX MONTHS ENDED30 SEPTEMBER 2019
Novus Holdings Interim Financial Results 2020
AGENDA
2
NOVUS HOLDINGS | 2019 INTERIM RESULTS
EXECUTIVEOVERVIEW
3
Novus Holdings Interim Financial Results 2020
OPERATING PROFIT (Excl. profit/ (loss) on disposal of assets and investments, impairments and reclassification of foreign currency translation reserve)
R146 m [Sep ’18: R228m](36%)
HEADLINE EARNINGS PER SHARE
29,4c [Sep ‘18: 49,4c] (40,5%)
REVENUE
R2 227 m [Sep ‘18: R2 297m](3,0%)
RESULTS SUMMARY
4EXECUTIVE OVERVIEW
Novus Holdings Interim Financial Results 2020 5
Novus Holdings Interim Financial Results 2020
GROUP INCOME STATEMENT KEY FEATURES [SIX MONTHS ENDED 30 SEP 2019]
6FINANCIAL REVIEW
2019 2018 % CHANGE (Rounded)
Revenue R2 227m R2 297m (3,0%) ▼
Gross profit R478m R599m (20,3%) ▼
Gross margin 21,4% 26,1% (4,7%) ▼
Overheads R332m R371m (10,5%) ▼
OPERATING PROFIT(Excl. profit/ (loss) on disposal of assets and investments, impairments and reclassification of foreign currency translation reserve)
R146m R228m (35,9%) ▼
OPERATING MARGIN(Excl. profit/ (loss) on disposal of assets and investments, impairments and reclassification of foreign currency translation reserve)
6,6% 9,9% (3,3%) ▼
HEADLINE EARNINGS PER SHARE(Cents)
29,4c 49,4c (40,5%) ▼
Novus Holdings Interim Financial Results 2020 7FINANCIAL REVIEW
CASH FLOW MOVEMENTS
SIX MONTHS ENDED 30 SEPTEMBER 2019
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Novus Holdings Interim Financial Results 2020 8FINANCIAL REVIEW
CAPEX OVERVIEW [EXCL. INTANGIBLES]
SIX MONTHS ENDED 30 SEPTEMBER 2019
9
31
12 18 17
83
104
72
3724
0
20
40
60
80
100
120
140
160
Maintenance Expansion
2015 20172016 2018 2019R’000
Novus Holdings Interim Financial Results 2020
Product CategoryVolume growth
/ (decline)
Magazines 17,6% ▼
Newspapers 1,4% ▼
Retail Inserts & Catalogues 6,4% ▼
Books & Directories 13,0% ▼
Publishing N/A
PRINT SEGMENT | Commentary
9FINANCIAL REVIEW
• Decline in print revenue of 6,3%.• Print gross profit margin decreased by
5,5% to 24,0%.• This segment has also seen operating
expenses measured as % of revenue decrease from 17,7% to 17,1%.
• Revenue and gross profit margin impacted by competiveness in Print segment.
• Timing variance on prior year of a major print project also impacted revenue and gross profit.
• Above inflationary raw material price increases.
• Volatile ZAR / EUR well managed.
R’000 FY16 FY17 FY18 FY19 FY20
1 955 6712 039 501
2 127 939
1 828 5341713 702
35
07
88
31
92
50
34
29
14
21
45
11
11
7 4
29
32,0%
28,2%
30,5%29,5%
24,0%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
0
500 000
1 000 000
1 500 000
2 000 000
2 500 000
Revenue Operating Profit exc. Capital Items Gross Profit
SIX MONTHS ENDED 30 SEPTEMBER 2019
Magazines9,1%
Books30,7%
Newspapers10,9%
Retail Inserts
& Catalogues26,0%
Publishing0,3%
Segment revenue split:
77% Non - Print
Novus Holdings Interim Financial Results 2020
PACKAGING SEGMENT |Commentary
10FINANCIAL REVIEW
R’000 FY16 FY17 FY18 FY19 FY20
56 076 57 017 93 575
359 113 382 252
43
45
98
31
13
03
4
28
22
0
34
26
6
31,0%
18,7%
26,1%
17,1% 17,1%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
0
500 000
1 000 000
1 500 000
2 000 000
2 500 000
Revenue Operating Profit exc. Capital Items Gross Profit
SIX MONTHS ENDED 30 SEPTEMBER 2019
• Packaging revenue contribution to the Group showed an increase of 6,4%.
• ITB revenue up on prior year by 15,7%.• Total Labels business revenue down on
prior year by 13,2% due to the disposal of the UV Flexo labels business.
• Gross margin remained flat year on year. Operating expenses down 7,2% due to exclusion of the UV Flexo business.
• Other costs well contained.
Product CategoryVolume growth
/ (decline)
Labels – Gravure 14,4% ▲
Labels – UV Flexo Disposal
Flexible Plastic Packaging 7,9% ▲
Labels4,4%
Flexible Plastic
Packaging12,7%
Segment revenue split:
17,1%
Novus Holdings Interim Financial Results 2020
TISSUE SEGMENT | Commentary
11FINANCIAL REVIEW
R’000 FY16 FY17 FY18 FY19 FY20
71 010 79 99873 069 109 805 131 463
-29
55
-24
94
9
-23
84
1
-14
77
3
-56
19
15,4%
-11,6%
-20,1%
-2,0%1,4%
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
-500 000
0
500 000
1 000 000
1 500 000
2 000 000
2 500 000
Revenue Operating Profit exc. Capital Items Gross Profit
SIX MONTHS ENDED 30 SEPTEMBER 2019
• Revenue increased contributing 5,9% to Group revenue during the period (FY19: 4,8%).
• Gross profit margin improved by 3,4% turning positive.
• The operating loss in Tissue reduced by 62% (FY19: 38% improvement).
• Positive EBITDA.• Operating expenses reduced year-on-
year by 42%. • Operating expenses measured as % of
revenue decreased from 11,5% to 5,6% during the year.
Product CategoryVolume growth
/ (decline)
Tissue 8,1% ▲
Tissue5,9%
Segment revenue split:
5,9%
Novus Holdings Interim Financial Results 2020
• Diversified operations (Packaging and Tissue) increased revenue contribution from 20% to 23%.
• Gross profit significantly impacted by margin pressure in Print segment.
• Lost Print volumes is partially replaced by lower margin Packaging revenue.
• Operating overheads declined by 10,5%.• Overheads as a % of revenue reduced to
14,9% (2018: 16,1%).• Changes in seasonal cycle of operations
resulting in an anticipated better H2 contribution than prior year.
GROUP OVERVIEW
12FINANCIAL REVIEW
FY16 FY17 FY18 FY19 FY20R’000
2 082 7572 176 516
2 294 583 2 297 4522 227 417
35
21
78
30
41
33
33
21
07
22
79
58
14
60
76
31,4%
26,5%28,7%
26,1%
21,4%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
0
500 000
1 000 000
1 500 000
2 000 000
2 500 000
Revenue Operating Profit exc. Capital Items Gross Profit %
SIX MONTHS ENDED 30 SEPTEMBER 2019
Tissue5,9%
Group segments:
Print77,0%
Packaging17,1%
NOVUS HOLDINGS | 2019 INTERIM RESULTS
Novus Holdings Interim Financial Results 2020
OUTLOOK & SEGMENTAL FOCUS
14OUTLOOK
PR
INT
TISS
UE
PAC
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G
• Print will continue to drive operational efficiencies and to adjust capacity requirements, while focusing on retaining market share in a challenging environment.
• Respite in paper pricing in H2.
• Major project revenue recognition will manifest in H2.
• Preferred outcome for the Tissue operation is to exit.
• Remain committed to ensuring that this business' profitability continues to improve.
• Packaging is expected to contribute positively to the Group revenue in H2.
• ITB has stabilised after prior year challenges and looks to continued growth in H2 on this basis.
• Labels is expected to continue to grow with its extended product offering.
Continued focus on optimising resources to drive sustainable growth throughout the Group.
We remain exposed to a fluctuating and weak Rand, which could create further margin pressures going forward.
Net working capital reduction by circa R300m, resulting in favourable year-end net cash balance.
B-BBEE Level One rating ensures a competitive advantage when tendering for large contracts and projects.
GR
OU
P
GR
OU
P
Novus Holdings Interim Financial Results 2020 15OUTLOOK
FY20 REFINED FOCUS
Ensure optimal group capital structure and that operations are suitably sized for their respective markets
• Refine target linked KPI’s per facility on a monthly basis and take corrective measures where required.• Optimise net working capital by reducing stockholding and debtors’ book, as well as stretching trade creditors.• Ensure cash extracted in H2 is not re-absorbed.
Maintain and grow our market shares and positions ofstrength
• Continued focus on customer service and retention, as well as implementing business development and marketing initiatives.
• Defending and growing market share.• Target opportunities in the book market, which is showing some resurgence, leveraging our improved B-BBEE
score.
Drive operationalefficiencies
• Lean structures in place and more efficient management structures continue to be identified.• Further embed culture of innovation.• Continue to leverage market leading skills to drive operational efficiencies.• Continuously assess individual plant performance against targets, and remove excess capacity.• Continual drive on cost-saving initiatives.
Grow non-traditional printing businesses’ revenuecontribution
• Ongoing focus on improving the margins and profitability of non-traditional printing operations.• Ensure facilities are correctly sized in terms of industry best practice.• Material acquisitions will not be pursued. However, only smaller acquisitions that are closely aligned to current
or existing activities will be considered . • Continue to extract value out of packaging division.
Continue to transform ourbusiness
• Sustaining and optimising B-BBEE status.• All elements of the scorecard included in managements KPI’ to ensure alignment.
GROUP STRATEGY UPDATE
NOVUS HOLDINGS | 2019 INTERIM RESULTS