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INTEGRATED ANNUAL REPORT 2018CONDENSED ANNUAL REPORT 2018

CONDENSED ANNUAL REPORT

2018

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•Novus_AR_PrintVersionV13.indd 101 2018/06/20 5:28 PM

INTEGRATED ANNUAL REPORT

1

INTEGRATED ANNUAL REPORT 2018

This 2018

Integrated

Annual Report

is supplemented

by our suite of

online reports,

which caters

for the diverse

needs of all our

stakeholders.

These reports can

be accessed online

on our Group

website www.

novus.holdings.

CONDENSED ANNUAL REPORT 2018

Condensed Annual Report

2018Extracovers.indd 1 2018/06/20 1:15 PM

3


2018

Responsible Business Report

Extracovers.indd 3 2018/06/20 1:15 PM


CONDENSED ANNUAL REPORT

2018

TISSUE


2018 Integrated Annual Report

2018 Condensed Annual Report

Responsible Business Report

REPORTING SUITE

2018 INTEGRATED ANNUAL REPORT

CONTENTS

ABOUT NOVUS HOLDINGS 04

ABOUT THIS REPORT 10

LEADERSHIP REPORT 14

PERFORMANCE REVIEW 20

BUSINESS OVERVIEW & OPERATING MODEL

What we do 27

Our business model at a glance 28

Our six capitals 30

Our products 32

Our support services 34

Our stakeholders 36

OPERATING ENVIRONMENT & MATERIAL MATTERS 42

OUR STRATEGY 56

FINANCIAL & OPERATIONAL REVIEWFinancial review 64

Summarised consolidated

financial statements 70

Operational review 74

Value-added statement 81

Five-year financial review 82

INVESTMENT CASE 86

GOVERNANCE Board of directors 94

Corporate Governance 96

Remuneration report 110

Social ethics report 132

Risk report 136

ANNUAL FINANCIAL STATEMENTS 142

SHAREHOLDER & CORPORATE INFORMATION

Shareholders’ disclosure 258

Corporate information 260

NOTICE OF ANNUAL GENERAL MEETING 264

Form of Proxy - odd lot other 284

APPENDICESCommonly referenced entities 306

Commonly referenced industry terms 307

Financial terms and ratios definitions 308

32

2018 INTEGRATED ANNUAL REPORT INTEGRATED ANNUAL REPORT 2018

NOVUS HOLDINGS

ABOUT

54


WHO WE ARE

Our Group comprises three divisions,

Novus Print, Novus Packaging and Novus

Tissue, and millions of people come into

contact with our products on a daily basis.

Read more about our Products and

Support services from page 32

At our core is Novus Print, a national

network of printing plants equipped

with the most technologically advanced

equipment, which ensures highly efficient

and fully automated production processes.

Our extensive print capabilities extend

from short- and medium- to long-run

requirements of all printed material –

magazines, retail inserts, catalogues, books,

newspapers, educational materials and

security products.

Novus Packaging offers customers a

portfolio of flexible packaging solutions and

reliable label printing with a sophisticated

range of in-line finishing options. Our

packaging gravure press, located at our

flagship Cape Town plant, furthermore

offers wet-glue and wrap-around label

solutions to our markets in Southern Africa

and further afield.

Novus Tissue’s ability to convert waste

paper into jumbo tissue wadding is a model

of production efficiency and is aligned with

our drive to have the least environmental

impact possible.

Our rich history, combined with a

continuous investment in high-quality

machinery and technology, provides us

with the perfect mix of innovation and

experience to operate profitably and

sustainably into the future.

OUR VALUES

We pride ourselves on our commitment to

quality, dedication to our craft, customer

service and environmentally responsible

business practices.

OUR VISION

Novus Holdings’ vision is to become

the leading commercial printing and

manufacturing operation in Africa, creating

ABOUTNOVUS HOLDINGSNovus Holdings Limited is one of the largest printing and manufacturing operations in Southern Africa, headquartered in Cape Town. We started as a small family-run business over a century ago and we are now listed on the Johannesburg Stock Exchange under the Business Support sector. (share code: NVS)

OUR KEY PERFORMANCE INDICATORS

STRATEGIC*

long-term value for all stakeholders while

maintaining the highest ethical standards in

our business practices.

We will achieve this vision through the

execution of our Strategy as detailed on

page 56 of this report.

KPI FY2018 FY2017 Change

Net Return on Total Assets** 1,9% 7,0% -5,1%

EBIT^ R523m R537m -3,0%50% of revenue from diversified businesses overthe medium term 16% 8% +8,0%

** This is a blended return rate composed of targeted returns on operational assets of 20% - 25% and a 9% targeted return rate on our property portfolio.

^ Excludes profit/(loss) on sale of assets, impairments and retrenchments.

Read about our Strategy from page 56

KPI FY2018 FY2017 ChangeRevenue R4,308m R4,312m -0,1%

Gross profit % 26,2% 25,6% +0,6%

Headline earnings R328,7m R354,1m -7,1%

Headline earnings per share (HEPS) 102,9cps 110,8cps -7,1%

Dividend per share 52cps 56cps -7,1%

Free cash flow R398,0m R236,3m +68,4%Cash conversion ratio 108,6% 77,5% 31,1%

Read our Financial Review from page 64

KPI FY2018 FY2017 ChangeB-BBEEE Level 4 Level 4 —

*Refer to the Appendix on page 308 for the definitions of these financial metrics

FINANCIAL*

TRANSFORMATIONAL

SHAREHOLDER & CORPORATEINFORMATION

ABOUT NOVUS

HOLDINGS

ABOUT THIS

REPORTLEADERSHIP

REPORTPERFORMANCE

REVIEW OUR

STRATEGY

FINANCIAL & OPERATIONAL

REVIEWINVESTMENT

CASE GOVERNANCE

ANNUAL FINANCIAL

STATEMENTS

OPERATING ENVIRONMENT &

MATERIAL MATTERS

BUSINESSOVERVIEW &

OPERATING MODEL

76


NOVUS HOLDINGS

OWNERSHIP PROFILE

* Media24 shareholding reduced from 61,2% to 17,5% of issued share capital on 26 September 2017 following the

implementation of the unbundling. Excluding treasury shares, this results in the 19% shareholding put forward as the

condition by Media24.

** Shares allocated to the Novus Holdings Share Trust and Latiano are currently treated as treasury shares.

Media24 Institutionalinvestors

Novus HoldingsShare Trust

Other non-publicinvestors

See page 36 for a more detailed analysis of our shareholders

17,5%* 74,5% 7,0%** 1,0%**

WHERE WE OPERATE

We have a network of specialised operations across South Africa, providing clients with access to

extensive resources and a comprehensive distribution network for large volume production.

In addition to these operations in key metropolitan areas, our flexible logistics solutions facilitate the

distribution of products and services both locally and the rest of sub-Saharan Africa.

HEATSET DIVISIONS

COLDSET DIVISIONS

PRINT TISSUEPACKAGING

Durban

Johannesburg

Bloemfontein

Port Elizabeth

Paarl

Cape Town

Novus Academy is asupporting service tothe Novus HoldingsGroup of companies.

*

CAPE TOWN

CAPE TOWN

CAPE TOWN

PAARL

CAPE TOWN

CAPE TOWN

JOHANNESBURG

PORT ELIZABETH

BLOEMFONTEIN

KWAZULU-NATAL

KWAZULU-NATAL

KWAZULU-NATAL

GAUTENG

LABELS DIVISIONS

PACKAGING DIVISIONS

GROUP STRUCTURE


ABOUT NOVUS

HOLDINGS

ABOUT THIS

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REPORTPERFORMANCE

REVIEW OUR

STRATEGY


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ANNUAL FINANCIAL

STATEMENTS


MATERIAL MATTERS

BUSINESSOVERVIEW &

OPERATING MODEL

98


THIS REPORT

ABOUT

1110


Page reference for supplementary information found elsewhere in this report.

Online reference for further information.

NAVIGATIONAL TOOLSThe following icons have been

applied throughout the report

to direct the reader to additional

information or cross-referenced

sections.

SCOPE AND BOUNDARY

The report is structured to cover the Group’s operations according to our three business segments:

Print (including gravure, heatset, coldset,

sheet-fed, security and digital printing)

Packaging (including labels and flexible

packaging)

Tissue (tissue manufacturing)

The content of this report is comparable

to the 2017 integrated report in terms

of the business operations covered, the

measurement methods applied and the

timeframes used for financial and non-

financial data. The financial and non-

financial data in this report primarily covers

the Group’s printing and manufacturing

operations in South Africa.

REPORTING GUIDELINES

The following frameworks and regulations

for financial and non-financial reporting

were applied to develop the report’s

content:

The King IVTM Report on Corporate

GovernanceTM for South Africa 2016

(King IVTM)

International Financial Reporting

Standards (IFRS)

Companies Act, 71 of 2008, as amended

JSE Listing Requirements

Broad-Based Black Economic

Empowerment (B-BBEE) Regulations of

the Department of Trade and Industry

(DTI)

The International Integrated Reporting

Council’s (IIRC) Integrated Reporting

(IR) Framework

We are improving our sustainability

reporting and initiated a process of

applying materiality to the Global

Reporting Initiative’s (GRI) Sustainability

Reporting Standards. We are identifying

the appropriate measurements to facilitate

sustainability reporting going forward. This

is expanded on in our Responsible Business

report available on our website.

TARGET AUDIENCE & MATERIALITY

This integrated report is primarily

prepared in the interest of Novus Holdings’

shareholders and the wider investment

community. It is, however, also relevant to

our other stakeholders.

See our Stakeholders on page 36

We apply the principle of materiality to

determine the information included in our

integrated report. We define a matter as

material when it could significantly impact

the Group’s ability to deliver products

that generate a sustainable return for

the providers of financial capital and or

materially impact value creation for all

our other stakeholders.

Our material matters and associated risks

and opportunities are described on

page 44.

These matters influence our strategy and

inform the content in this report.

FORWARD-LOOKING STATEMENTS

This integrated report contains statements

about Novus Holdings that are or may

be forward-looking. By their nature,

forward-looking statements involve risks

and uncertainties that relate to events and

depend on circumstances that may or may

not occur in the future. Novus Holdings

cautions that forward-looking statements

are not guarantees of future performance.

FEEDBACK

We welcome feedback from stakeholders

on the value and effectiveness of this

report. Any comments or requests for

additional information not covered

in this report can be directed to

[email protected] or on

+27 21 550 2500. Additional information

can also be accessed on the website at

www.novus.holdings.

DIRECTORS’ APPROVAL & ASSURANCE

This report is the result of combined

input from internal and external sources.

PricewaterhouseCoopers provided assurance of

the financial statements.

Other non-financial indicators were reviewed

by an internal process, which includes approval

by management. The

2018 Integrated Annual Report was reviewed

by the Audit Committee and recommended for

approval to the Board. Final approval for release

was granted on 13 June 2018 upon confirmation

from the Board that the integrated report offers

stakeholders the information required to make

considered evaluations about the performance

and sustainability of the Group.

NEIL BIRCH

Executive Chairman and incoming Chief

Executive Officer

BERNARD OLIVIER

Chairman of the Audit Committee

COMMONLY REFERENCED ENTITIES AND TERMS

To facilitate ease of use and understanding

of our integrated report, we include a list of

commonly referenced entities and industry

financial terms in the Appendices on page 307.

ABOUT THISWelcome to Novus Holdings Limited’s annual integrated report. This report, printed at Novus Print Solutions in Cape Town, provides an overview of and insights into our business model, the risks and opportunities we face, our strategy and our financial and operational performance for the year ended 31 March 2018.

REPORT


ABOUT NOVUS

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INTRODUCTION

The 2018 financial year has been a

disruptive and base-setting year for

Novus Holdings.

It brings about the closure of many of

the uncertainties that have recently

surrounded our business and as a Group

we are excited about the opportunities we

are now exploring to sustainably grow our

operations off the new base.

to maintain our print market share

of approximately 65%, but have been

unable to grow it given the fiercely

competitive market.

The book printing sector is offering

stability to our printing business with

the Department of Basic Education

(DBE) contract volumes dampening

to some extent the directory volume

decline we are experiencing.

The estimated R15 billion flexible plastics

packaging industry also struggled during

the year, but we believe that this sector

of the market provides us with real

opportunities as we look to increase our

current and relatively small market share

in the industry.

2018 HIGHLIGHTS AND LOWLIGHTS

Print

The impact of the Media24 agreement

allocation and pricing changes, as

announced on 26 March 2018, is material

and has changed the way we look

at our business.

We have been implementing mitigating

actions to cushion the impact, but the

renegotiated Media24 agreements will

have a negative impact on future revenue

of between R520 million and R560 million

per year. There will also be an overall

negative impact on the Group’s operating

margin as a result of these changes.

As a Board and management team we will

continue to look at how to effectively right-

size and manage our printing operations.

During the year under review we impaired

print infrastructure and intangibles and

goodwill of R201,9 million as part of our

right-sizing initiatives.

Packaging

ITB Plastics, one of the top five packaging producers

in the flexible packaging segment in South Africa,

was acquired for R224 million during the year.

The business has completed its earn-out phase and

is successfully integrating into the Group under the

continued stewardship of its original management team.

It is particularly pleasing that the ITB Plastics production

processes and the management culture, as assessed during

the due diligence, have proved to be closely aligned with

that of Novus Holdings.

We look forward to a full financial year’s contribution to

earnings in the 2019 financial period and prospects for

building on this key acquisition are strong.

Tissue

The tissue business continues to struggle to meet our

expectations and hurdle rates and we are reviewing

all our options, which may include the sale of operations

that no longer meet our targeted hurdle rates or are

loss making. Importantly, we are not investing further

or extending these operations at this stage.

Financial

Our operations were once again strongly cash generative,

converting 109% of operating profit to cash in FY2018,

and we ended the financial year with cash on hand of

R209 million.

OPERATING ENVIRONMENT

The operating environment in South Africa

remained challenging during the financial

year, with muted economic growth and

persistent political uncertainty being the

dominating themes. There was, however,

a cautious sense of optimism in the

country subsequent to the election of

a new president. This optimism has been

tempered somewhat by the fact that

South Africa’s economy shrank the most

it has in nine years in the first quarter of

the 2018 calendar year. This highlights

the reality that despite new leadership,

the structural challenges in the South

African economy persist and we expect

trading conditions to remain tough over the

medium term.

The change in political leadership

has supported the currency during the

second half of the year under review

and we saw the Rand strengthen to levels

last seen in 2015. In turn, this resulted

in a substantial positive foreign exchange

impact on our business.

The industry-specific declines in the

printing industry have continued during

the year under review. We managed

“Novus Holdings is a cash generative business with a strong balance sheet and a long track record in the printing and manufacturing industries. Combined with our footprint, networks and renewed focus we believe we are well positioned for future growth.” – Neil Birch

LEADERSHIPREPORT


ABOUT NOVUS

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As a business, a key financial differentiator

from our peers is the strength of our balance

sheet and gearing levels of only 4,1%. This

provides us with financial flexibility as we look

to diversify our revenue streams beyond print.

MANAGEMENT

In addition to a disruptive operational period

over these past 12 months, we also had senior

management changes, notably the departure

of Edrich Fivaz as Group CFO followed by the

Group CEO, Keith Vroon.

As announced, I will be fulfilling the CEO role,

effective 19 June 2018, and due care is being

taken to appoint a suitable CFO.

The Board has appointed the Lead Independent

Director, Mr Jan Potgieter, as the Acting

Chairman. He will continue in his role as Lead

Independent Director. The process is under

way to recruit an independent chairman with

relevant experience.

Beyond the executive management positions,

we are confident that we have some of the

most experienced operational management

in the industry. I believe it is our depth in

leadership and management that gives us the

edge as we forge ahead into a new chapter for

Novus Holdings.

The Board would like to thank both Keith

and Edrich for their valuable contribution

and commitment to Novus Holdings over the

last decade.

We are also pleased to announce that Ms

Noluvuyo Mkhondo has been appointed as

non-independent non-executive director with

effect from 15 December 2017. She brings

a wealth of experience with her and we look

forward to working together.

STRATEGY

In the context of our operating environment

and the opportunities and risks we face as a

business, the Board and management team

have identified two broad strategic themes.

Firstly, it is imperative that our cash

generative, core-printing business remains

the industry leader, as it provides us with the

platform from which to diversify and expand.

We must also ensure our operations are

the right size for the respective markets we

operate in and that we run them as efficiently

and innovatively as possible.

Secondly, we need to diversify our revenue

streams as our print operations’ revenue

decline on the back of a contracting

print industry. Cost containment is a key

element of this drive as we replace high-

margin print revenue with lower-margin

packaging revenue.

Novus Holdings is a good light to medium

industrial business and as a Group we have

deep experience and skills in the processes

required to run an industrial operation, from

the installation and running of industrial

equipment and plants to managing large

industrial capital expenditure projects.

Given the experience and these skill

sets and based on our market analysis,

the labels and packaging sector presents

a natural growth opportunity for

Novus Holdings.

It is important to note that the quality of

the management team in any acquisition

is a deal-breaker, as we continually look to

deepen and strengthen our executive and

operational management teams. Our due

diligence process includes the courting of

potential future management and early

engagement with the targets’ operational

management to identify areas requiring

potential support and growth areas.

We have a Return on Assets (ROA) hurdle rate

range of 20% - 25% for all acquisitions and

operational assets, and ultimately we have a

target to diversify our revenue streams by 50%

over the medium term. As noted elsewhere

in this report, 16% of our revenue in the

2018 financial year came from our diversified

operations, up from 8% in 2017.

TRANSFORMATION

Transformation is an industry challenge

and a focus for the Board and the executive

management team. We believe that

a diverse workforce, who is representative

of the society in which we operate, is critical

to the sustainability of our business.

We have achieved a Level 4 contributor rating

to ensure a B-BBEE Procurement Recognition

Level of 100% for our customers. Looking

ahead, we are committed to striving not only

to comply with, but also to truly embody

transformation, ensuring that the Group can

maximise its commercial prospects in South

Africa in a positive and sustainable way. We see

this as an ongoing commitment to our clients,

our staff and the communities in which we

operate.

GOVERNANCE

As a good corporate citizen Novus Holdings

will continue to meet all the requirements of

the JSE and generally accepted governance

standards for the absolute comfort of all our

stakeholders. We have developed robust

governance procedures since listing, which are

reviewed continuously, and active engagement

with all stakeholders will continue as we move

forward with our diversification strategy.

Apart from a limited number of key strategic

risks to the Group, most operational risks need

to be recognised and mitigated at operational

unit level. The Group will continue to provide

the framework for recognising risk and ensuring that

operational management takes ownership and builds

suitable mitigating processes and procedures.

DIVIDENDS

Our current dividend policy of 2x HEPS cover remains

unchanged, but will always be dependent on acquisition

opportunities and the cash requirements of the

business from time to time.

The Board approved a dividend of 52 cents per share

for the 2018 financial year.

OUTLOOK

We have provided guidance on the impact of the

renegotiated Media24 agreement on our revenue and

expect our Group margin to come under pressure, as

we continue to fill capacity in our packaging segment,

replacing higher margin printing revenue with lower

margin packaging and tissue revenue.

We recognise the need for an accelerated restructure

of our business, as the changes that have been taking

place in the past are simply not enough to keep pace

with the impact of a shifting operating landscape.

As a Board and management team we are focused on

cost cutting, business development, streamlining of

operations, innovating where possible and acquisitions

into diversified business interests in order to transform

Novus Holdings into a sustainable growth business

going forward.

Finally, we have emerged from an unsettling and

challenging period with a very strong balance

sheet. We are cash generative, enjoy strong market

share positions and are more focused than ever on

delivering value not only to our shareholders, but to

all our stakeholders.


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PERFORMANCEREVIEW

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2018 FINANCIAL PERFORMANCE REVIEW

Group revenue of R4,308 million

was broadly flat on prior year (2017:

R4,312 million), with favourable exchange

rate positions keeping our gross profit

margin of 26,2% in line with prior year.

Print

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. As the largest operational segment

in the Group, this had a material negative

impact on the Group’s earnings (excluding

retrenchment costs).

Volume declines were experienced across

all printing categories, with magazines

and newspapers faring the worst. In this

context, business development is a key

focus for our management team.

Pleasingly, we have completed and

delivered the Department of Basic

Education workbook order (60 million

books per annum) for year 1 (of 3), with

this contract generating 17% of total

printing revenue during the year under

review. It should be noted that one of

our main competitors is still pursuing

legal recourse in so far as the awarding

of this contract to Novus Holdings

and our partners is concerned. As a

management team we are comfortable

that our legal position is robust and we

will not allow this to distract us from

delivering successfully on this key contract.

Novus Print Solutions has successfully

re-established itself after the move and

has shown a turnaround of R25 million

on an operating profit level compared

to the prior year. This business is now

positioned to deliver further growth.

Impairments of R201,9 million were raised

against print property, plant, equipment,

intangibles and goodwill during the

financial year, as we restructure and

right-size our print operations.

Subsequent to these impairments, plant

and equipment in the print segment now

make up 64% (2017: 75%) of the Group’s

investment in plant and equipment.

Packaging

ITB Plastics contributed R265 million

of revenue in the second half of the

financial year following the acquisition

of this business in October 2017. This

acquisition has now been bedded down

and will contribute 12 months of revenue

in 2019, with the current year only

reflecting a disruptive six months’ worth

of revenue, during which multiple

operations were relocated and

consolidated into two adjacent sites in

isiThebe.

Paarl Labels successfully received an

increased allocation of labels from ABInBev

in July 2017. Paarl Labels also successfully

secured a significant allocation of wrap-

around labels from Coca-Cola Beverages

Africa in June 2017.

PERFORMANCEREVIEW

We furthermore added volume to wet-glue

and self-adhesive labels during the year,

with label revenue increasing by almost

62% during the 2018 financial year to

R210 million.

The 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.

Tissue

The tissue expansion project phase

ended in November 2017.

The tissue manufacturing mills (which

produce jumbo reels) are not yet optimised

in terms of production output and we

are currently in the process of improving

running speeds, reducing breakdowns and

increasing material efficiencies and product

quality. A significant increase of market

share is possible with increasing production

output and efficiency and this is the current

focus of the management team. Margins in

this segment are currently under duress.

We also reviewed the tissue conversion

operation (which converts jumbo reels

into the smaller products such as toilet

paper rolls or kitchen towels) as part of

the expansion project and it was decided

to exit this unprofitable operation in

August 2017.

2018 STRATEGIC REVIEW

Our strategic focus during the 2018

financial year has been on repositioning

our business (right-sizing), driving

efficiencies, cost reduction including

employee rationalisation, the mothballing

and closure of unprofitable operations

and maintaining our market shares and

positions of strength in the industry.

Our medium-term strategic key

performance indicator of Return on Assets

(ROA) was under pressure during the year

under review given the significant impact

that impairments to property, plant and

equipment, goodwill and other intangibles

had on our profit as we restructured and

resized our business.

Looking ahead to the 2019 financial year,

we forecast more than 20% of our revenue

will be generated by our growth or non-

traditional printing operations.


ABOUT NOVUS

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REVIEW

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STRATEGIC PRIORITIES AND FOCUS AREAS FOR THE YEAR AHEAD

We have clearly defined strategic

priorities and focus areas for the 2019

financial year, which address the risks

and opportunities we as a business are

facing. Key is the continued diversification

of our revenue streams away from print

segment, ultimately creating a Group that

derives 50% of its revenue from operations

other than traditional print.

Print strategic priorities and focus areas

Ensure that our print operations are

the appropriate size for the markets

we operate in.

Minimise capital investment into

this segment.

Focus on reducing costs.

Ensure we maintain our leading market

position through an aggressive and

focused sales and marketing drive,

where innovative solutions are sought

out to increase market share and ensure

customer retention.

Packaging strategic priorities and

focus areas

Focus on organic growth and filling

available capacity.

Leverage existing relationships

to grow market share in labels and

flexible packaging.

Focus on production and process

efficiencies.

Further acquisitions – we have identified

potential acquisition targets, which will

be pursued adhering to our strict capital

allocation framework and stretched

hurdle rates.

Tissue strategic priorities and focus areas

Focus on production efficiencies and

reducing downtime.

Focus on improving quality of product.

Optimise product mix.

Focus on growing sales.

Drive to monthly EBIT break-even.

Read about our Strategy from

page 56


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WHAT WE DO

Novus Holdings creates value by

converting raw materials and applying

print and other manufacturing

techniques, producing an increasingly

diversified range of paper and flexible

plastic packaging products.

Our application of technology,

specialist skills and efficient processes

enable us to produce large volumes

of high-quality products, within short

turnaround times.

We are furthermore able to deliver

to single or multiple customer

destinations in South Africa and the

rest of sub-Saharan Africa, through our

comprehensive distribution network.

These capabilities are underpinned by

our industry-leading customer service,

which we believe is a key differentiator

in the South African market.

OUR BUSINESS MODEL AT A GLANCE

We depict our business model in the

infographic on page 28 in line with the

International Integrated Reporting

Council (IIRC) framework guidance. This

representation of our business is a map

of, and reference to, the various elements

our story.

Our Capitals, as described on page 30,

represent the input into our business

model. These capitals or resources are

leveraged by our business model in order

to create outputs per capital and ultimately

outcomes or value creation per stakeholder

group as described on page 36.

Value is defined not only by our financial

performance, but also the shared value we

create for all our stakeholders, including

the communities in which we operate, over

the short (<3 years), medium (3-5 years)

and long (>5 years) term.


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OUTPUTS PER CAPITAL VALUE CREATED INPUTS PRODUCTION AND DISTRIBUTION ACTIVITIES

COMPETITIVEADVANTAGES

Tissue products

See

page 32

for details

of our

products

Flexible plastic packaging products Labels

See page 32 for details of our products

Retail inserts and catalogues Magazines Newspapers Books and directories Security printing

See page 32 for details of

our products

OPERATIONS

ESTABLISHED

GROWTH

FUNDING

WASTE PAPER

CURRENT TARGET

Custom finishing servicesLeading technology Commercialised wasteSustainable sourcing

PRODUCTS REVENUE SHARE

R398,0m free cash generated Retained earnings of R2 630m

Succession planning B-BBEE initiatives Employee training

Expanding network of and relationships with customers, suppliers, business partners and service providers

Use of raw materials (incl. paper and ink) and resources (water & electricity) in production

Responsible waste- management practices

Novus Holdings uses environmentally sustainable paper stock options and implements a range of sustainable production and manufacturing initiatives

Increased through expansion of operations (acquisition of new plants, new equipment and entry into new markets)

Decreased by consolidation

of plants

FINANCIAL

MANUFACTURED

HUMAN

SOCIAL & RELATIONSHIP

NATURAL

FINANCIAL

HUMAN

SOCIAL & RELATIONSHIP

NATURAL

84%

50%INTELLECTUAL

of Group

revenue

of Group

revenue

TARGET

TARGET

Customers High-quality products and services at

competitive prices supported by personalised and exceptional client service

Suppliers 2018 2017 Paid to suppliers (R’m) 2 894,8 2 915,6 Investment in enterprise 17,3 and supplier development (R’m)

Communities & Government 2018 2017 Corporate social 2,3 3,2 investment spend (R’m)

Read more in our Responsible Business

report on www.novus.holdings

Read more about our Stakeholders on page 36 Read more

about our

Capitals on

page 30

MANUFACTURED

OUR BUSINESS MODEL

SIX

CA

PIT

ALS

208 apprentices have successfully completed their trade tests at the Novus Academy since 2011

New skills and expertise brought into the Group as a result of diversification initiatives

INTELLECTUAL

PRINT

TISSUE

PACKAGING

4 plants

33 000 m2

floor space

720 employees

1 plant

12 000 m2 floor space

126 employees

of Group

revenue

16%

of Group

revenue

50%

8 plants

113 000 m2 floor space

1 498 employees

Employees 2018 2017 Employee benefits and 739,5 644,2 remuneration paid (R’m)

Skills development 23,7 18,1 spend (R’m)

% black staff 85,28% 80,80%

9,8

Shareholders 2018 2017 Headline earnings per 102,9 110,8

share (cents per share) Dividends paid per 52 56

share (cents per share)

Company’s tax paid (R’m) 169,2 188,5

Logistics Solutions


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CAPITAL DEFINITION NOVUS HOLDINGS CAPITAL

Human The skill and experience vested in our employees that

enable the Group to implement our strategy, deliver

products and thereby create value for stakeholders.

2 344 employees

117 years of combined executive

management industry experience

213 years of combined operational

management industry experience with

an average tenure of 14,22 years at

Novus Holdings

Social & relationship Novus Holdings’ relationships with our various

stakeholders are critical to our short- and long-term

sustainability. These relationships include a number of

key contracts and retail accounts, as well as partnerships

with local operators, which facilitate the distribution of

the Group’s products and services.

Social and relationship capital further extends to the

relationships that exist between the Group and our

employees, as well as the contributions Novus Holdings

makes to the long-term sustainability of the communities

in which we operate.

Diversified customer base spanning

retailers, newspapers, educational

institutes, leading magazine titles, book

publishers, food producers, soft drink

and alcoholic beverage manufacturers, to

name a few

Deep relationships with suppliers

Leader in sustainability and social

responsibility

Read more in our

Responsible Business report

on www.novus.holdings

Natural Novus Holdings relies on a secure supply of raw

materials for the production of our goods. This includes

paper, pulp, ink, water and energy.

We also recognise that our operations produce by-

products and waste that can impact the environment.

These include paper waste products, plates and copper

used in printing, as well as toluene from ink.

Our natural capital must be carefully managed to ensure

the future availability of critical input materials, as

well as the sustainability of the broader environment

impacted by Novus Holdings’ print production processes.

Carbon footprint − 98 387 tons of

CO2 Emissions

Pulp usage per annum − 4 144 tons

Water usage per annum −

534 619,972 litres

Electricity usage per annum −

92 001 463 kWh

Read more in our

Responsible Business report on

www.novus.holdings

OUR SIX CAPITALS

In line with King IV and the International Integrated Reporting Council (IIRC) framework, our six capitals

represent the stores of value, which are the inputs into our business model. These capitals are increased,

decreased or transformed by our activities, generating outputs per capital and ultimately outcomes or

value creation per stakeholder group.

CAPITAL DEFINITION NOVUS HOLDINGS CAPITAL

FinancialThe pool of funds available to invest and reinvest in

the Group, the revenue generated, the interest income

and a combination of long and short-term loans from

capital providers.

Financial capital enables the Group to invest in

diversified businesses and produce alternative

revenue streams, which will facilitate long-term

financial sustainability.

Read more about our Strategy on page 56

Equity: R2 791 million

Gearing: 4,1%

Retained earnings: R2 630 million

Intellectual

The intangibles, such as state-of-the-art technology

and industry expertise, which support Novus Holdings’

product and service offering. Intellectual capital enables

the Group to produce the highest-quality products for

our clients, on time and as specified.

Industry leading technology

Distribution logistics

Industry expertise

Manufactured

The factories, warehouses, distribution network and

general infrastructure throughout South Africa that

enable Novus Holdings to procure, import, manufacture

and deliver our products.

Unencumbered property portfolio

with a book value of R616 million on

31 March 2018

8 Print plants 113 000 m2 of floor space

140 000 tonnes per annum

1 Tissue plant 12 000 m2 of floor space

4 Packaging plants 33 000 m2 of floor space


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OPERATIONAL SEGMENT

PRODUCT CATEGORY EXAMPLES

Retail inserts and catalogues Brochures, leaflets and catalogues

Reports and calendars

Retail inserts for the majority of South

African retailers

Magazines Audit Bureau of Circulations (ABC)-

listed magazines

Trade magazines

Club magazines

Free-to-market magazines

Newspapers Daily, weekly and community

newspapers

Books and directories Workbooks for the Department of

Basic Education

Hardcover and softcover books for

leading publishers

Telephone directories

TISSUE

Tissue products Jumbo wadding

OUR PRODUCTS

Our operations are divided into three operational segments, which produce a variety of products.

Read more about our products and capabilities on www.novus.holdings

OPERATIONAL SEGMENT

PRODUCT CATEGORY EXAMPLES

PACKAGING

Labels Self-adhesive labels

Wet-glue labels

Wrap-around labels

Digital personalised labels

Flexible plastic packaging

products

‘Form fill and seal’ films for dry goods

(food and non-food)

Industrial bulk packaging

Retail check-out bags

Tamper-evident security bags

Courier envelopes

General plastic packaging

OTHER

Security products Election ballots and election materials

Examination materials and assessments

Any other security-related printing

PRINT


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OUR SUPPORT SERVICES

We support our product offering through a comprehensive range of services, which are available

nationally and in parts of Africa. These services ensure that the finished product is delivered to clients

as efficiently as possible, without any compromise on quality.

These services include: Digital integration: Digital integration of the pre-press departments provides for seamless transfer

of files between plants. This facilitates the printing of one product in different locations, on identical

platforms, where it best suits clients. It also reduces distribution costs and shortens turnaround times,

thereby minimising the Group’s carbon footprint.

Quality control: Extensive quality control to deliver crisp, full-spectrum colour reproduction over

millions of copies for heatset, coldset, digital and packaging gravure.

Comprehensive flexible logistics solutions: Comprehensive flexible logistics solutions facilitate the

distribution of products and services, both locally and internationally. Our streamlined processes,

bespoke software solutions and strict controls have been tried and tested to ensure successful delivery.

2018 2017

Magazines

15,6%

28,3%

19,4%

29,1%

21,9%

18,6%

4,1%

11,0%

23,3%20,7%

3,6% 3,1%0,6% 1,0%

Retail inserts and catalogues

Books and directories

Newspapers Tissueproducts

Labels and flexible

packaging

Securityproducts

REVENUE CONTRIBUTION PER PRODUCT CATEGORY

Print

84%of Revenue Growth

Operations

16%of Revenue


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STAKEHOLDER GROUPS

OURSTAKEHOLDERSNovus Holdings is part of a wider socio-economic ecosystem and we recognise that we are dependent on robust relationships with all our stakeholders.

HOW WE ENGAGE

In-person interaction through account managers

Through various brand awareness campaigns

Customer surveys to evaluate performance and areas for improvement

Quarterly customer newsletters and e-newsletters

Informative plant tours with knowledgeable key employees and account executives

Client hosting activities and engagements

MEASURING ENGAGEMENT OUTCOMES

Consolidated feedback received from customer surveys completed on a bi-annual basis

Face-to-face feedback sessions

Daily electronic/telephonic engagements with customers

WHAT WE KNOW IS IMPORTANT TO OUR CUSTOMERS

Quality products with fast turnaround times Exceptional

personalised service

Fair pricing Ongoing

implementation of faster, more advanced technology

Environmentally friendly practices that have the least impact on the environment and our communities

VALUE CREATED FOR CUSTOMERS

Novus Holdings is a business-to-business operation providing customers with quality print (magazines, retail inserts, catalogues, books, newspapers, educational materials or security products) and manufacturing (flexible plastic packaging, self-adhesive, wet-glue, wrap-around labels and jumbo wadding) products

CUSTOMERS

Our main groups of stakeholders include:

CUSTOMERS

This stakeholder group consists of retailers, publishers, governments, fast-moving consumer goods manufacturers (FMCGs) and a number of blue chip clients spanning multiple industries.

EMPLOYEES

Our employees are our most valuable assets. They are the custodians of our intellectual capital and provide us with a key competitive advantage.

COMMUNITIES & GOVERNMENT

The communities in which we operate are vital to our ongoing operations and we are committed to making a sustainable difference in these communities.

SUPPLIERS

This group comprises local and international raw material and print equipment suppliers.

SHAREHOLDERS AND INVESTMENT COMMUNITY

Novus Holdings has a broad range of institutional, and retail investors.

STAKEHOLDER ENGAGEMENT

Continuous engagement enables us to identify and act upon the matters that affect our stakeholders and

our business, improves our understanding of what is expected by our stakeholders and strengthens the

transparency and accountability through which we have established these valued relationships.

The Group’s ability to create long-term sustainable value relies on open, constructive and transparent

engagement with our stakeholders. As a business, we are committed to ensuring that relationships with

our stakeholders are nurtured and continue to deliver mutual benefits.

HOW WE ENGAGE

Annual general meetings

Results announcements and presentations

Group website Annual integrated

report Annual results

booklet Press releases Roadshows Shareholder and

potential investor one-on-one engagements

VALUE CREATED FOR SHAREHOLDERS

Headline earnings per share of 102,9 cents for the year under review

Dividend per share of 52 cents

Dividend yield of 13,9%*

Retained earnings of R2 630 million at 31 March 2018

SHAREHOLDERS AND INVESTMENT COMMUNITY

WHAT WE KNOW IS IMPORTANT TO OUR SHAREHOLDERS

Performance of Print, Media24 agreement and DBE workbook tender

Diversification strategy

Improved and sustainable return on assets

Good corporate governance

Capital allocation decipline

Remuneration report and perfor-mance conditions on Long -term incentive plans (LTI’s)


Voting outcomes at AGM

One-on-one feedback during investor meetings

Perception studies

* As at 22 June 2018


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HOW WE ENGAGE

Comprehensive induction programmes Training needs analysis through the Novus Academy Performance reviews and health checks through the Novus Academy Culture and climate surveys Internal communication channels Inclusive team meetings Interactive results presentations Entity and department events Annual Business Update Road Show hosted by the CEO

VALUE CREATED FOR EMPLOYEES

We employ 2 344 permanent employees, 85% of whom are black and 26% are women

As a responsible employer, we focus on creating an inclusive working environment where we actively develop and nurture talent. This is evident through the establishment of the Novus Academy, where 208 apprentices were trained since its opening in March 2011

In 2018, 13 apprentices successfully completed their trade tests and R23,7 million was spent on skills development

EMPLOYEES


Culture and climate survey results Feedback from performance reviews Complaints and compliments log Employee turnover rates Feedback and comments received in exit interviews Number of interactions received by the Whistle Blower Line Response rate for Employee Engagement Survey

WHAT WE KNOW IS IMPORTANT TO OUR EMPLOYEES

Maintaining the highest ethical standards

Providing a safe and productive work environment

Training, career development and wellness programmes

Open communication between all levels of employees

Competitive remuneration

HOW WE ENGAGE

Regular supplier meetings

Supplier performance reviews

Strategic partnerships

Plant visits and tours


Performance monitored against service level agreements

Supplier performance results

Number of interactions received by the Whistle Blower Line

WHAT WE KNOW IS IMPORTANT TO OUR SUPPLIERS

Fair pricing and transparent contracts and agreements

Responsible business practices

Mutually beneficial business relationships

Continuous job creation

SUPPLIERS

VALUE CREATED FOR SUPPLIERS

Novus Holdings creates value for suppliers by providing a market for paper and print related raw material. A total of R2 894,8 million was paid to suppliers in 2018

R9,8m was invested in Enterprise and Supplier development programmes this financial year, with the aim to ultimately convert these enterprises to suppliers

HOW WE ENGAGE

Mentorship programmes

Guidance on business management workshops

Basic start-up packs and equipment

Management courses for non-governmental organisations’ leaders

Renovations assistance at facilities

Financial aid Scholarship grants/

bursaries Apprenticeship

programmes

VALUE CREATED FOR COMMUNITIES AND GOVERNMENT

We firmly believe that education is a key facilitator of social upliftment. During the year under review R2,3 million was invested in 25 education-based projects, through Future Foundations, the Group’s SED initiative

The Group’s Bursary Fund Trust furthermore committed to investing over R2 million, in this last year, which sees six bursaries being awarded to students starting their studies in the 2017 academic year, and further financial support for 31 existing bursary holders

Total tax paid to Government amounted to R169,2 million in 2018

COMMUNITIES AND GOVERNMENT

WHAT WE KNOW IS IMPORTANT TO COMMUNITIES AND GOVERNMENT

Job creation in the communities in which we operate

Supporting communities and driving sustainable socio-economic development projects

Investment in sustainable projects that allow beneficiaries to empower themselves and ultimately others


Number of applications for socio-economic support through the Future Foundations and Novus Holdings websites

Continuous electronic/ telephonic engagements with socio-economic development organisations

Applications received for the Group’s bursary programme


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OPERATINGENVIRONMENT& MATERIAL MATTERS

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PRINT

There are an estimated 2 000 commercial

printing companies operating in South

Africa. The majority of these companies are

small, medium and micro enterprises, with

a further 1 000 companies providing pre-

press services, such as design and layout,

or post-press services, including finishing

and binding.

In terms of long and medium print runs,

Paarl Media and Paarl Coldset have the

largest market share in South Africa, while

the short runs and digital markets are

very fragmented.

Digitisation continues to have a profound

impact on South Africa’s printing industry.

Although the country’s printed packaging

segment is robust, demand for most

categories of publications in traditional

print format remains on a downward

trajectory. Consequently, many printing

companies (including Novus Holdings)

have diversified their services and

are increasingly adopting digital print

processes in order to remain relevant.

Global cost pressures also continue to

impact paper mills, and rising pulp prices

affect input costs for paper.

Another key challenge experienced by

South African printers is the high cost

of new technology, which is compounded

by foreign exchange volatility and high

import duties.

Further notable trends that have emerged in recent years include:

The convergence of traditional

and digital printing solutions

Higher levels of efficiency

On-demand printing with quicker

turnaround times

Declining print volumes, but increasingly

higher value printing

Growing demand for bespoke or

personalised printed content, as well

as mass customisation

A stronger focus on shorter print runs

Greater investment in new technologies

that deliver enhanced printing quality

Strong demand for features provided

by digital printing on packaging

In the context of this operating

environment, the print market has

witnessed consolidation through closures

and mergers. This has resulted in excess

capacity in the market, which in turn

creates pricing pressure. This trend is

anticipated to continue in the future.

However, notwithstanding the challenging

operating environment, we believe printing

services continue to perform a critical

role across all sectors of the South African

economy and that innovative companies

with scale, who have clear strategies, will

continue to succeed in this environment.

PACKAGING

The approximately R15 billion flexible

plastics packaging industry is cyclical,

price sensitive and fiercely competitive.

It is also fragmented, providing

opportunities for growth through

acquisitions and consolidation.

South African consumer confidence was

particularly depressed during the 2017

calendar year, as low economic growth

and political uncertainty weighed on

sentiment. The resultant declines in

consumer spending had pronounced

knock-on impacts on our clients, ultimately

dampening the demand for flexible plastic

products across the industry.

TISSUE

Two established players, who are

mainly active in the higher end of the

branded tissue and feminine-hygiene

markets, dominate the South African

tissue landscape.

These companies have been investing

in additional capacity and equipment

upgrades, which will potentially place

pressure on selling prices and margins

going forward.

A key further issue in the tissue market

is the availability of waste paper used for

tissue manufacturing, as declining print

volumes result in a decline in pulp available

for tissue production.

OPERATINGENVIRONMENT AND MATERIAL MATTERSENVIRONMENTOur operating environment gives rise to nine material matters, which are incorporated in our planning and strategy.

OPERATING ENVIRONMENT


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OUR MATERIAL MATTERS AND ASSOCIATED RISKS AND OPPORTUNITIES

The material matters arising from our operating environment are evident in our key risks

and opportunities and represent the issues that have the most impact on our ability to

sustainably create value.

These matters change over time as new trends and developments shape the macro

environment and our stakeholders’ needs evolve.

We determine and approach our material matters as follows:

The heat map below provides an overview of the assessment of Novus Holdings’ top nine material

matters and their associated risks, with the risks considered from an inherent risk perspective,

before considering mitigating efforts.

Identify all issues that have the

potential to impact on our earnings

sustainability and the ability to

create value for our stakeholders

The process of identifying potential

material matters is a Group-wide

responsibility requiring input from

all operations and taking into

account input and feedback from

all our stakeholders

The risks and opportunities that arise from our identified material matters inform

our long-term business strategies and targets, as well as short- to medium-term

business plans

We rank the issues identified

according to greatest relevance

in the current operating context

and highest potential to impact

significantly on the viability of

our business and relationships

with stakeholders

1. IDENTIFY 2. RANK

3. INCORPORATE IN PLANNING AND STRATEGY

Rare Unlikely Moderate Likely Almost certain

Min

or

Mo

der

ate

Seri

ou

sC

riti

cal

Maj

or

LIKELIHOOD

IMPA

CT

ON

NO

VU

S H

OLD

ING

S

19

3

8

4

6

5

7

2

MATERIAL MATTERS:1) Print media volumes in decline 2) Diversification of operations 3) Skills shortage and retention 4) Key contracts with major clients 5) Capacity use and efficiency 6) Security of supply of raw material, electricity and water 7) Exchange rate volatility and cost management 8) Employee health and safety 9) B-BBEE and transformation

SIX CAPITALSAN 18-MONTH TIME HORIZON


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PRINT MEDIA VOLUMES IN DECLINE

MATERIAL MATTER

Digital media migration and new

technology continue to have a material

impact on industry print volumes.

Global trends indicate that there is a

decreased requirement for printed matter

as electronic media and digital printing gain

market share from offset printing. There

is also a growing demand for high-volume

inkjet printing. These trends are also

evident in South Africa.

The latest Audit Bureau of Circulations of

South Africa (ABC) report for magazines

shows that industry circulations in

custom magazines reduced by 25,8% year-

on-year, while consumer magazines bucked

this trend and increased by 0,6% year-on-

year. (Novus Holdings operates in both of

these industry categories.)

A similar trend exists for newspapers as

this report shows year-on-year declines

in daily (-10,3%), weekend (-11,6%)

and weekly (-7,9%) newspaper copies

distributed. Even community newspapers

did not escape this trend, declining by

6,3% on a year-on-year basis. (Note that

these declines refer to number of copies

distributed, and as such do not reflect

pagination or size changes that could also

impact these numbers.)

Furthermore, a permanent switch from

48.8gsm to 45gsm, with a significant

improvement in quality, brought about

by the importing of newsprint, will see

an industry negative impact of -7,8% on

annual volumes by material weight. Though

not evident in full in the current volume

reduction, this will certainly come to

the fore during the 3rd and 4th quarters

of FY2019.

Risks

At 84% of total revenue, Print remains

a significant portion of our business. If

we are not able to maintain our print

market share and ultimately replace

the declining print revenue through the

diversification of our revenue streams,

the long-term sustainability of our

operations will be compromised and

shareholder expectations will not be met.

Opportunities

Our scale and client service capabilities

distinguish us from our peers. This will

enable us to maintain our market share

in this cash generative operational

segment.

The market for retail inserts remains

buoyant, and the book and education

markets are showing a positive

resurgence.

Our response

Service and products Servicing the current print client base

remains a priority. Our product offering,

which has been expanded through digital

printing (including continuous digital

inkjet printing), ideally positions us to

provide our customers with the widest

range of printing services.

These capabilities, along with aggressive

sales and marketing initiatives, enable

us to defend our market shares and

positions of strength.

Diversification and reducing capital

investment in print

We have reduced capital investment into

print and are targeting acquisitions in

the labels and packaging growth sectors.

We are also aiming to capture additional

market share through our footprint and

capacity expansion.

The investment in diversification initiatives aims to mitigate the impact of the structural industry declines on our core print business. Funding for these investments is sourced through internal reserves and external capital providers.

Risks

Inadequate due diligence on acquisition

targets can result in management

reaching the wrong conclusions,

resulting in incorrect capital allocation

decisions.

A shortage of capital could lead to the

suspension of projects and/or the loss

of acquisition opportunities. The recent

unbundling from Media24 as holding

company, as well as the renegotiated

printing agreement at lower volumes and

pricing levels, will reduce our debt ceiling

and potentially see higher risk ratings

attached to funding rates, which in turn

means more expensive funding.

Integration of acquired businesses

does not run smoothly and results in

unproductive or suboptimum results

from these operations.

Opportunities

Novus Holdings has a low-geared

balance sheet, which provides us with

the ability to gear for future acquisitions.

Strong cash flow and a high cash

conversion ratio further demonstrate

our ability to turn profits into cash and

service debt.

Our unencumbered property

portfolio provides additional options

to fund acquisitions.

Read more about our Investment Case

on page 86

Our response

We perform extensive due diligences on

all acquisitions, using both external and

internal resources. These due diligences

do not only focus on the financials of

the target companies, but also include

items such as compliance with laws

and regulations, taxation and industry

best practices. We further make use

of independent valuation experts to

scrutinise our investment thesis where

appropriate.

We actively engage various financial

institutions to keep them abreast of

developments within the Group, as well

1

DIVERSIFICATION OF OPERATIONSMATERIAL MATTER 2

Read more about our Products and

Support services from page 32

Read more about our Strategy

on page 56


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as the potential acquisition pipeline

in order to keep funding lines open,

creating the ability to trigger funding

mechanisms at relative short notice.

Property valuations are done regularly

to ensure that valuations are relevant.

Acquisitions are allocated to the

responsible Group executive to oversee

integration into the Group. Once the

Board approves a transaction, a project

plan is initiated to ensure successful

integration, linking all our main

business processes into the integration

project. Management of the acquired

company is furthermore included in our

monthly Exco meetings, where regular

reportbacks on business performance

are shared and evaluated.

Read more about our Strategy on

page 56

South Africa is facing a skills shortage, particularly of engineers and skilled trade workers. Low pass rates in science and mathematics have the knock-on effect of diminishing the available talent pool at tertiary institutions.

Risks

Novus Holdings’ operations are

technologically driven, with modern

systems and equipment. However,

manufacturing has become a less-

preferred career route, which has led

to a lack of critical skills. As we diversify

our revenue streams, the skills shortage

risk is compounded, as acquisitions could

require specialist skills not available in

the Group.

Production inefficiencies that arise

because of human error can lead to

production downtime, bottlenecks,

quality issues and a rise in human

resources costs. We also need to ensure

that the correct level of expertise is

involved at each stage of the production

process in order to maintain service

delivery levels to customers.

Due to the industry-wide skills shortage,

the risk exists that we are unable to

retain key employees.

The risk with any acquisition opportunity

is the exit of management shortly after

concluding the transaction, especially

in the absence of earn-out or remaining

minority interest (‘skin in the game’).

Opportunities

There is an opportunity to leverage

and develop existing skills across our

operations as we diversify in line with

our stated strategic priorities.

Diversification furthermore creates

the opportunity to acquire scarce skills

in the form of existing employees and

management in the acquisition targets.

Our response

The Novus Academy plays a significant

role in attracting and educating our talent

pipeline. It provides training for both

technical and non-technical functions,

which are aligned to international

curricula. Since 2011, the Novus

Academy has successfully trained 208

apprentices, 69 of whom have completed

their studies with an average pass mark

of 92%.

We are also focused on succession

planning on all levels. In 2017 we

implemented an employee-specific

personal development plan approach

to assist with performance management,

as well as to identify skills gaps in

relation to the operational requirements

of the business.

As we pursue acquisitions in growth

sectors, the transfer of knowledge and

skills will be prioritised in order to unlock

operational synergies. This will further

benefit the multi-skilling and upskilling

of the Novus Holdings’ workforce at

plant level.

In order to ensure we retain talent

post acquisition, previous owners or

management teams in target acquisitions

will be tied in through earn-outs, or

by settling with Novus Holdings’

equity shares.

Novus Holdings has major contracts with significant clients, which constitute a large portion of our revenue. These include, among others, the printing agreement with Media24, as well as the Department of Basic Education workbook tender.

Risks

A concentration risk exists because of the over-

dependence on a few clients. The impact of changes

to contract values or volumes on revenue and income

is currently being experienced post the Media24

agreement renegotiation.

Opportunities

A key strength of our business is its ability to deliver

on long-run print publication work with limited

competitors in the volume market. This strength assisted

the Group to successfully secure the Department of

Basic Education contract and this places us in a unique

position in the printing market in South Africa.

The packaging gravure press of the labels business

enables the Group to tender for significant

contracts in the carbonated soft drinks and alcoholic

beverages industries.

Our response

As a business-to-business company we continue to

maintain strong client relationships, supported by

exceptional client service, to ensure the Group remains

a trusted business partner. Proactive engagement with

major clients on their input costs ensures that cost-

efficient solutions can be implemented timeously.

We are actively looking for alternative markets in sub-

Saharan Africa to fill capacity and maintain economies

of scale, thereby reducing our reliance on a few key

accounts in South Africa. Simultaneously we are looking

to diversify our operations as per our stated strategy.


SKILLS SHORTAGE AND RETENTIONMATERIAL MATTER 3

KEY CONTRACTS WITH MAJOR CLIENTS

MATERIAL MATTER 4


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In order to extract the utmost value from machine time and labour hours, production has to be actively managed through troughs and peaks, avoiding idle time and thus managing our fixed cost base.

Risks

If we do not manage our manufacturing

capacity, as volumes decline or increase,

our operations become inefficient, which

impacts negatively on overall profitability

and Group Return on Assets.

An inability to manage fixed costs during

idle periods impacts negatively on

profitability and ultimately the Group

Return on Assets.

Opportunities

Manufacturing capacity headroom

enables us to tender for large contracts

and opportunities, as was the case with

the Department of Basic Education

contract, where our competitors could

not compete due to lack of scale.

Currently, capacity exists in all our

manufacturing operations and this is

indicative of the potential upside on

current throughput levels.

Our response

Matching production capacity to market

demand remains a priority and filling

capacity in our Packaging and Tissue

operations is a key strategic focus.

Enterprise resource planning (ERP)

systems have been implemented in

the Cape Town, Gauteng and KwaZulu-

Natal plants to assist with improved

efficiency drives.

We have also implemented incentive-

based remuneration by setting efficiency

targets in our plants.

Read more about our Strategy on

page 56

A constant, uninterrupted supply of raw materials is essential for our business. We import the vast majority of our print paper requirements, including that which is required for labels.

We rely predominantly on electricity for

our energy requirements and as a business

we use water in our manufacturing

processes, with water consumption at its

highest at the Correll Tissue plant.

Risks

A breakdown in the supply of raw material

could result in significant business

disruptions and the loss of revenue.

A failure of key infrastructure, including

power supply outages or water shortages,

could disrupt significant parts of the

business and result in lost revenue.

Rising electricity costs and the threat of

fluctuations in supply pose a risk to the

Group’s operations.

The current drought being experienced

across parts of South Africa,

predominantly in the Western Cape, and

the subsequent water restrictions could

impact on tissue production.

Opportunities

Managing these risks effectively

provides us with the opportunity to

distinguish ourselves from our peers

with stability of pricing and security and

quality of raw materials.

Our response

Raw material

We have long-standing supplier

agreements. Through our annual paper

tender process, the Group secures

tonnages at the start of the financial year.

This reduces our dependency on ad hoc

ordering and significantly reduces the

risk of running out of stock. We screen

all suppliers to ensure compliance with

quality (ISO) and sustainability practices.

To ensure a consistent supply of the

required quality and volume of waste to

the Group’s tissue operation, we

contracted a waste collecting company

to collect and sort waste from our

various printing plants.

Electricity

The Group has disaster recovery and

business continuity plans in place. These

are reviewed annually.

To mitigate risks associated with an

inconsistent electricity supply, we have

equipped all printing facilities with

generator capacity, which supplies

electricity to the site for the duration

of an outage.

Water

We have implemented a range of

water saving initiatives to measure

and decrease consumption of water

across our production processes.

Two reservoirs have been installed at

Novus Print Solutions and the Paarl

Media Cape plants respectively, which

will allow production to continue without

using an external water source.

A water treatment plant is also being

installed at the Paarl Media Cape plant,

with the capability of producing 207 000

litres of water per day. Paarl Coldset

Cape Town furthermore installed four

well points and a 275 000 litre back-up

water tank.

Read more about our sustainability

initiatives in our Responsible Business

report on www.novus.holdings

CAPACITY USE AND EFFICIENCY MATERIAL MATTER 5

SECURITY OF SUPPLY OF RAW MATERIAL, ELECTRICITY AND WATER

MATERIAL MATTER 6


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The Group finds itself in an industry that has historically struggled with transformation.

We recognise that in order to remain

relevant and a preferred supplier to many

of our customers, we need to transform our

business holistically from the composition

of our Board and Executive management

team to our people on the production floor.

Risks

Some of our customer contracts are

linked to minimum transformation

objectives, of which maintaining (at a

minimum) a Level 4 B-BBEE status is key.

Non-compliance would potentially lead

to contract cancellations.

From a workforce perspective, the

Group stands to incur penalties for not

achieving its transformation objectives

in terms of its employment equity plans.

Opportunities

We see transformation as a means to

not just correct historic imbalances, but

also to attract talent and bring different

perspectives into the workplace, thereby

increasing our relevance in the printing

and manufacturing industries.

Our response

Novus Holdings is a Level 4 B-BBEE

contributor.

We have over the past few years seen

various new projects come to life

through programmes launched as part of

our B-BBEE strategy.

This includes interest free

developmental loans to suppliers and

enterprises that in turn could potentially

become large suppliers, as well as

supporting non-profit organisations in

the communities in which we operate.

Read more about our B-BBEE strategy

in our Responsible Business report on

www.novus.holdings

Paper accounts for approximately 50% of our printing expenses and is predominantly imported and denominated in foreign currency.

Risks

Exchange rate fluctuations could

increase input costs of imported raw

materials, which cannot easily be

passed on to customers (particularly

in a scenario of extreme currency

devaluation). This can lead to lower

profitability.

Opportunities

We have the opportunity to provide our

customers with pricing stability through

a forward cover programme.

Our response

Effective forward exchange contracts

and policies are applied throughout

the year to provide the Group and our

customers with a level of protection from

major foreign currency fluctuations.

This gives our customers the ability

to forecast more accurately,

thereby building trust and ultimately

customer loyalty.

Our employees operate in a manufacturing environment with heavy machinery that can be potentially dangerous.

Risks

Accidents can result in lost production

time.

The contravention of health and safety

laws can result in closures or fines.

Serious injury or death caused by non-

compliance with relevant legislation may

lead to criminal liability and penalties.

Employee turnover can increase in an

environment, that is not viewed as safe.

Opportunities

We have an opportunity to distinguish

ourselves from peers in terms of our

employee offering, thereby attracting

and retaining talent.

Our response

We are focused on providing a safe and

productive working environment for

our employees with extensive employee

health and safety training programmes

in place.

We measure our year-on-year health

and safety performance against

internal targets, which is monitored at

the highest level by the Risk committee.

External independent audits are also

performed annually.

Novus Holdings has never been found

guilty of contravening health and safety

legislation and we intend to retain this

track record going forward.

EXCHANGE RATE VOLATILITY AND COST MANAGEMENT

MATERIAL MATTER 7 B-BBEE AND TRANSFORMATIONMATERIAL

MATTER 9

EMPLOYEE HEALTH AND SAFETYMATERIAL MATTER 8


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OUR STRATEGY

5756


It is important to note that the strategic

key performance indicators, as discussed

here, also form part of our management’s

performance scorecard, thereby ensuring

that management reward is aligned with

our shareholder interests.

OUROur strategy has been developed to address the key risks and leverage the key opportunities we as a business are facing in the context of our operating environment.

Read more about our Operating

environment and material matters

on page 42

See our Remuneration report on

page 110

OUR FOUR MEDIUM-TERM STRATEGIC PRIORITIES:

EBIT MOVEMENT:FY2017 TO FY2018

The Group’s growth divisions (tissue and packaging) achieved mixed results during the year, but in total improved its EBIT by R42m from FY2017.

STRATEGY

3

STRATEGIC PRIORITY

STRATEGIC KPIs FY2018 FY2017 Commentary

1 Ensure that our operations are the right size for the respective markets we operate in

Net Return on total Assets (ROA)

1,9% 7,0% We are targeting a Net Return ontotal Assets (ROA) of 16%-20%* over the medium-term. Net profit for the year, as was the case in the prior year, was significantly impacted by impairments to property, plant and equipment, goodwill and other intangibles, which greatly reduced ROA.

2 Maintain and grow our market shares and positions of strength

EBIT** R523m R537m

EBIT for the year reduced by R14 million from FY2017.

The lower revenue levels experienced during the year have negatively impacted operating profit in print, reducing EBIT by R55m.

The Group’s growth divisions (tissue and packaging) achieved mixed results during the year, but in total improved their EBIT by R42m from FY2017. The operating loss in tissue reduced by R9m from FY2017, while labels improved EBIT by R13m from FY2017.

The addition of ITB Plastics boosted EBIT by R16m, with Africa projects improving EBIT by R3m compared to FY2017.

3 Drive operational efficiencies

STRATEGIC PRIORITY

STRATEGIC KPIs FY2018 FY2017 Commentary

4 Diversify revenue streams

50% of revenue from diversified businesses over the medium term

16% 8% The consolidation of ITB Plastics, together with good growth in the labels division, saw the growth operations contribute 16% of the Group’s revenue. Had ITB Plastics been consolidated for the full 12-month period, the contribution of the growth operations to the Group’s revenue would have been at 20%.

* This is a blended return rate composed of targeted returns on operational assets of 20%-25% and a 9% targeted return rate on our property portfolio.

** Excludes profit/(loss) on sale of assets, impairments and retrenchments.

EB

IT F

Y2

01

7

EB

IT F

Y2

01

8

Pri

nt

Tis

sue

Lab

els

ITB

Pla

stic

s

Afr

ica

53

7

52

3

-55

+9

+13

+16

Growth operations:

+R42m

+3

R’m


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STRATEGIC PRIORITIES 1 TO 3 PER OPERATING SEGMENT

Strategic priorities 1 to 3 apply to all our operations and we have developed specific focus areas for each

strategic priority per operational segment.

We also link each specific strategic focus area to the material matters it addresses.

PRINT TISSUE PACKAGING

Strategicpriority

Strategic focus areas for 2019

Associated material matters





1 Match operational capacity to market demand through continuous evaluation of operations and match equipment type to market trends

Print volumes in decline Capacity use and efficiency Key contracts with major

clients Security of supply of raw

material, electricity and water

Exchange rate volatility and cost management

Tissue business is currently being assessed to ensure it delivers in line with our targeted return metrics

Capacity use and efficiency Capital availability

Fill available production capacity and grow organically

Capacity use and efficiency Security of supply of raw


1 Reduce capital investment into existing operations to a minimum

Print volumes in decline Capital availability Capacity use and efficiency

Focus on growing sales Drive to monthly EBIT

break-even (EBITDA break-even achieved)

Capacity use and efficiency Investments for organic growth, including digital capacity introduction

Business model focused on growing through acquisitions that yield synergy and volume benefits

Capital availability Skills shortage and retention Capacity use and efficiency

2 Aggressive sales and marketing share drive

Print volumes in decline Capacity use and efficiency B-BBEE and transformation Skills shortage and retention

Fill capacity through sales and marketing drive

Capacity use and efficiency Introduce new products Leverage existing

relationships to grow market share in labels/flexible packaging

Capacity use and efficiency Skills shortage and retention B-BBEE and transformation

2 Stabilise and maintain print operations results

Print volumes in decline Capacity use and efficiency Key contracts with major

clients Security of supply of raw


Exchange rate volatility and cost management

3 Implement cost control measures

Print volumes in decline Capacity use and efficiency Exchange rate volatility and

cost management

Focus on production and process efficiencies and rebase central costs

Capacity use and efficiency Exchange rate volatility and

cost management

Focus on production and process efficiencies

Capacity use and efficiency Exchange rate volatility and

cost management


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STRATEGIC PRIORITY 4 – DIVERSIFY OUR REVENUE STREAMS

Some 16% of Novus Holdings’ revenue

for the year under review was derived

from our growth operations, up from 8%

in the prior year.

As noted in this report, the printing

industry is in a state of structural decline

(See our Operating environment & material matters on page 42) and it is our stated

intention to diversify the Group away from

printing into growth markets, particularly

where our current skill sets and national

footprint can be leveraged.

Our skill sets and target sectorOur board and executive and operational

management teams have deep experience

and skills in:

Running an industrial operation and large

industrial capital expenditure projects.

Procurement of bulk raw materials both

locally and globally.

Delivery in terms of bespoke customer

needs.

Managing currency risk, shipping, stock

holding and distribution.

Given these skill sets and based on our

market analysis, packaging and labels is

a sector of the market we are looking to

diversify into. The technology of applying

ink to substrate during material conversion

is a core competence in printing and aligns

well with the production of labels and

packaging. Potential acquisitions, where

we have an existing skill set and reach, are

being investigated and are at various stages

of due diligence.

The quality of the management team

in any acquisition is a deal-breaker,

as we constantly look to deepen and

strengthen our executive and operational

management teams, especially as we

enter new segments.

The value we addAs part of any acquisition, we implement

support structures to support the

entrepreneurial competencies present

in the acquisition target. The Novus

Holdings framework of treasury,

human resource development, relevant

compliance knowledge and a pool of

general technical competence are great

assets to bring to any acquisition.

Our hurdle rates and diversification targetWe have developed a stringent capital

allocation framework for our business,

which we apply to both new and existing

operations, critically assessing the

positioning of assets and associated returns.

We have a Return on Assets (ROA)

target hurdle rate range of 20%-25% for

all acquisitions and ultimately we aim to

generate 50% of our revenue from our

growth or diversified operations over the

medium term.

FundingDiversifying acquisitions will be funded

from our cash reserves and debt.


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FINANCIAL & OPERATIONAL REVIEW

6564


FINANCIALREVIEWKPI FY2018 FY2017 Change Commentary

Revenue R4,308m R4,312m -R0,004m Printing revenues (84% of overall revenue) remained under pressure due to volume declines on all product categories with a tonnage decline of 11,5%.

The acquisition of ITB Plastics (ITB) resulted in an additional R265m being contributed by the packaging segment, with our growth operations increasing their contribution to overall revenue to 16%, up from 8% in the prior year.

Read more in the Operational Review from

page 74

Gross profit %

26,2% 25,6% +0,6% Favourable exchange rate positions aided the GP%, while benefits of FY2017 capacity reductions impacted positively on the current year’s employee costs and depreciation charge.

This was offset slightly by retrenchment costs incurred during March 2018.

Additional volume throughout the labels division as well as inclusion of ITB improved the packaging GP%, albeit not at the levels currently achieved in the printing segment.

Tissue delivered a disappointing result, as it is not yet operating at full capacity.

Headline earnings

R328,7m R354,1m -R25,4m or -7,1%

Headline earnings normalise the earnings for the year by excluding the impairments of R372m (2017: R139m) incurred on property, plant and equipment, goodwill and other intangibles, insurance proceeds received and any profits/losses incurred on the sale of equipment.

Year-on-year decline is largely as a result of declining revenues and operating profits earned in the print segment.

Headline earnings per share (HEPS)

102,9cps 110,8cps -7,9cps or -7,1%

KPI FY2018 FY2017 Change Commentary

Dividend per share

52cps 56cps -4cps or -7,1%

It is our stated dividend policy to pay dividends equalling 50% of HEPS (2x HEPS cover)

The Board approved this dividend to be paid to shareholders on 10 September 2018.

Free cash flow

R398,0m R236,3m +68,4% Free cash flow generated by the business remained strong during the 2018 financial year.

The improvement over prior year was driven by a reduction in capital expenditure on property, plant and equipment, as well as intangibles (net of proceeds on sale).

Read more about Capital Expenditure on

page 66

Cash conversionratio

108,6% 77,5% + 31,1% Improvement over prior year driven by a reduction in capital expenditure on property, plant and equipment, as well as intangibles (net of proceeds on sale).

Earnings pershare (EPS)

22,0cps 80,4cps -58,4cps or -72,6%

Earnings for the year include the effect of impairments to the value of R372m (2017: R139m) incurred on property, plant and equipment, goodwill and other intangibles. These amounts were offset marginally by profit on sale of equipment.

Read more about Impairments on page 68

FINANCIAL KEY PERFORMANCE INDICATORS

OPERATIONAL KEY PERFORMANCE INDICATOR

KPI FY2018 FY2017 Change CommentaryOperating profit % - excluding profit/(loss) on sale of assets and impairments

11,6% 12,3% - 0,7% Operating profit % for the year decreased by 0,7%. While on the whole operating expenses were well contained, certain once-offs (retrenchment costs, non-repeat of reversal of provision for doubtful debt) saw operating expenses increase by 8,6% during the year. If these once-offs were removed, the normalised inflationary increase in operating expenses would have been 4,0%.

Management continues to focus on removing unnecessary overheads from the business.

Read more about the individual operating segments’ performance in our Operational Review

from page 74 Refer to the Appendices on page 308 for the definitions of these financial metrics


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REVENUE PER SEGMENT

CAPITAL EXPENDITURE

Maintenance CAPEX incurred during the year under review tracked in line with

expectations and prior year, while expansion CAPEX mostly related to the completion of

the tissue project, as well as additional label finishing capacity introduced into the Group.

In line with our stated strategy to diversify the Group’s revenue streams away from

printing, CAPEX in the printing operations is limited largely to maintenance spend,

with proactive maintenance programmes aiming to extend the useful lives of assets.

FY2019 CAPEX is expected to be in line with the FY2018 spend, with disposals of

properties in Paarl and Pietermaritzburg reducing the net spend further.

ACQUISITION OF ITB PLASTICS

ITB Plastics was acquired for a total

consideration of R224 million, including

an earn-out amount of R44 million.

This transaction was financed from

cash reserves.

It should be noted that the business was

acquired while it was embarking on a

CAPEX programme to increase capacity

by 20%-30%, the benefit of which has not

materialised fully yet.

Comparing ITB Plastics’ asset turnover

ratio to that of its peers, both listed and

unlisted, we are comfortable that ITB

Plastics is a well-capitalised business.

INTEREST AND TAX

Finance costs consist of interest charges on

finance leases, overdrafts and loans, as well

as foreign exchange costs associated with

foreign exchange contracts.

Interest charges increased with the

consolidation of ITB Plastics’ results.

Foreign exchange costs increased in line

with extended forward positions taken

during the year to secure pricing stability

for customers at favourable rates.

An effective tax rate of 30,3% (2017:

29,0%) was applicable during the current

year. The expectation is that the rate will

continue to be in excess of 28% due to

non-deductible share-based compensation

charges. However, certain prior year

corrections on deferred tax increased

the current year percentage compared

to prior year.

SegmentFY2018

R’000% of Group

RevenueFY2017

R’000% of Group

Revenue

Print 3 634 322 84% 3 986 505 92%

Flexible Packaging 264 873 6% — 3%

Labels 210 151 5% 129 796

Tissue 174 576 4% 154 515 4%

Other 24 180 1% 41 648 1%

Total 4 308 102 4 312 464

Read more about the revenue of each of our operating segments in our Operational Review

from page 74

2012 2013 2014 2015 2016 2017 2018

CAPEX OVERVIEW (EXCLUDING INTANGIBLES)

Expansion Maintenance

LONG-TERM DEBT-EQUITY RATIO

7519

0

58

96

7217

9

80

88

56

180

64

180

62

76

2012 2013 2014 2015 2016 2017 2018

Long-term debt Debt-equity ratio

61,2%

34,1%

10,7%

5,9%

2,9% 2,8%4,1%

88

8

610

23

5

152

116

80

81

DEBT

During the year under review the ITB

Plastics acquisition introduced additional

debt of R56 million into the Group.

Looking ahead, our low gearing level

of 4,1% provides us with flexibility as we

look to diversify our revenue streams

in line with our stated strategic intent.

We will be gearing up our balance sheet

for acquisitions, and potentially look to

leverage our unencumbered property

portfolio as a source of funding as well.


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IMPAIRMENTS

The following impairments have been raised during the year as we right-size our operations.

Property, plant & equipment Intangibles Goodwill Total

Print Buildings Other assets Total

R28,9mR143,4mR172,3m R12,4m R17,2m R201,9m

Tissue Buildings Other assets Total

R50,5mR74,3m

R124,8m R45,4m R170,2mTotal Group Buildings

Other assets Total

R79,4mR217,7mR297,1m R12,4m R62,6m R372,1m

Print

Coldset

The renegotiated Media24 printing

agreements have resulted in the need

to impair several cash generating units

(CGU) within the segment.

The majority of the print work

previously performed at Paarl Coldset

Pietermaritzburg was lost to competitors

and as a result a decision was taken to close

the unprofitable Pietermaritzburg facility.

All assets at this CGU were impaired

down to what we expect to receive in

the market on a sale of the equipment and

the building. Employees at this location

were all retrenched effective

31 March 2018.

The Paarl Coldset Johannesburg facility

was right-sized effective 31 March 2018,

and involved the mothballing of unutilised

equipment as well as the retrenchment

of employees.

A further review of the impact of

pricing on the future cash flows of the

Coldset CGU indicated that additional

impairments were required for this

segment, resulting in goodwill and certain

assets being impaired.

Total impairment as a result of the above amounted to

R140,7 million on buildings and production equipment

and R17,2 million on goodwill.

Heatset

Production equipment and intangibles of R7,7 million

and R12,4 million respectively were earmarked for

impairment during the year. These related to items

identified as redundant. We also impaired properties

housing our printing operations, resulting in impairment

to buildings of R23,9 million.

Tissue

We have revised the tissue business model following

the final implementation of the operations.

This resulted in impairments of R170,2 million to the

tissue division in order to value it in line with the expected

medium-term results.

Management is currently assessing whether this business

is able to achieve the target return on investment, failing

which we would consider selling this investment to

another, more suitable, owner.

PROPERTY

Our unencumbered property portfolio

had a book value of R616 million at

31 March 2018. We obtained independent

valuations during the year under review

of our property portfolio, confirming

that the aforementioned carrying value

is appropriate.

We are in the process of selling a building in

Paarl (book value R63 million and reported

as an asset held for sale at the year end)

and expect the transaction to complete

post year-end.

The building in Pietermaritzburg has also

been put on the market and has been

classified as held for sale.

OUTLOOK

Print

We expect the declines in magazine and

newspaper volumes to continue as an

industry trend.

Pressure on results is expected in FY2019

due to the Media24 print agreement

renegotiation. Measures have been

taken to right-size the operations in

FY2018 resulting in retrenchment

accruals and impairments.

The reduction in higher margin print

revenue is expected to have a negative

impact on our overall Group margins

going forward.

Tissue

Our tissue segment will have the ability to

operate at full capacity in FY2019, with no

planned disruptions in the year ahead.

Large components of input cost

infrastructure, such as gas, electricity and

steam installations, as well as depreciation,

are expected to reduce per tonne as production output

increases, which is expected to impact positively on results

in FY2019.

Packaging

Labels

We will focus on filling capacity not only on our gravure,

but also our newly implemented digital label press.

The digital press has opened a new market for our labels

business and business development initiatives in this

market will be ramped up in FY2019.

ITB Plastics

The inclusion of ITB Plastics for 12 months in our results

should have a positive impact on our results in FY2019.

Filling capacity through leveraging the entrepreneurial

spirit of the ITB Plastics’ management team will be a key

focus for the year ahead.

We also expect margins to improve as the operations

operate closer to full capacity.


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GROUP

2018R’000

2017R’000

ASSETSNon-current assets 2 253 283 2 356 990 Property, plant and equipment 1 919 115 2 102 674 Goodwill 173 054 155 419 Other intangible assets 30 790 42 250 Investments in subsidiaries — — Available-for-sale financial assets 3 090 3 000 Loans and receivables 6 517 3 050 Deferred taxation assets 120 717 50 597

Current assets 1 520 199 1 242 560 Inventory 474 675 342 330 Trade and other receivables 702 154 478 439 Related party receivables — 126 958 Derivative financial instruments 731 1 462 Current income tax receivable 8 000 — Cash and cash equivalents 243 948 229 968 Non-current assets held for sale 90 691 63 404 TOTAL ASSETS 3 773 482 3 599 551

EQUITYCapital and reserves attributable to the Group’s equity holders 2 787 087 2 882 839 Share capital 606 040 606 040 Treasury shares (368 172) (368 172)Other reserves (80 596) (804 465)Retained earnings 2 629 815 3 449 436 Non-controlling interest 3 672 (374)TOTAL EQUITY 2 790 759 2 882 465

LIABILITIESNon-current liabilities 374 163 371 170 Post-employment medical liability 2 634 2 987 Provisions 17 557 17 045 Long-term liabilities 99 252 60 436 Cash-settled share-based payment liability 1 845 3 139 Deferred taxation liabilities 221 357 242 429 Deferred income 31 518 45 135

Current liabilities 608 560 345 915 Provisions 4 538 2 177 Current portion of long-term liabilities 16 254 20 090 Trade and other payables 521 519 288 848 Related party payables — 1 154 Cash-settled share-based payment liability 7 092 9 422 Current income tax payable — 120 Derivative financial instruments 21 055 16 520 Bank overdrafts and call loans 35 332 2 744 Deferred income 2 770 4 840 TOTAL EQUITY AND LIABILITIES 3 773 482 3 599 551

STATEMENT OF FINANCIAL POSITIONas at 31 March

SUMMARISED CONSOLIDATED FINANCIAL STATEMENTS

Goodwill acquired through the ITB acquisition of R80m. Impairments were recognised in coldset printing operation

of R17m (resulting from the Media24 renegotiated printing agreement and resultant impact on the valuation), as well

as the tissue operation of R45m (resulting from an updated valuation based on anticipated results to be achieved from

this investment).

Inventory increased with the introduction of ITB into the Group (R61m), while the requirement to import newsprint

paper into the coldset printing operation has led to higher stockholding. Increased activity at the label printing

operation also required the Group to extend stock positions. The Group’s inventory days as a result increased from

39 days to 54 days.

Trade and other receivables increased as a result of expanding packaging and tissue operation where terms with

customers are typically in excess of those in the printing segment. Debtors’ days for the Group increased from

45 days to 52 days.

At year-end we were in the process of concluding the sale of a property in Paarl (R63m carrying value), while a further

building in Pietermaritzburg has been classified as held for sale during the year (R27m).

Accounting for the effect of the unbundling transaction (from Media24) in terms of IFRS3 (business combinations)

have resulted in a transfer between other reserves and retained earnings (R729m).

Long-term liabilities increased with the acquisition of ITB (R41m long-term debt). These loans relate to acquired

production equipment, and are payable over a remaining five-year period.

Deferred income (LT and ST) reduced as grants received in advance are recognised according to the related asset’s

utilisation. A portion of the amount recognised was accelerated during the year as a result of impairments.

Trade and other payables increased significantly from FY2017. The print segment increased its payables by R177m.

The requirement to import newsprint (noted under inventory above), as well as an abnormally low payables balance

at the end of the previous financial year, has resulted in this increase. The current year also includes an amount for

ITB (R55m), with a further amount accrued on the acquisition price (earn-out component of R44m). Creditors’ days

for the Group increased from 29 days to 55 days.

Increase to the deferred tax asset mostly reflects unutilised tax losses in the tissue division. It is anticipated that these

will be utilised over the medium term.

Impairment of assets incurred at both the printing operations (R172m) and tissue operation (R125m). Further

significant movements include acquisitions of property, plant and equipment (PPE) of R154m, while ITB Plastics’ (ITB)

PPE of R189m was brought on as a result of the acquisition. Depreciation charge for the year was R191m.


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GROUP

2018R’000

2017R’000

Revenue 4 308 102 4 312 464 Cost of sales (3 181 105) (3 207 060)

Gross profit 1 126 997 1 105 404

Operating expenses (626 278) (576 579)

Other gains/(losses) – net (358 772) (135 089)

Operating profit 141 947 393 737

Finance income 12 948 13 433

Finance costs (52 894) (45 688)

Profit before taxation 102 001 361 481

Taxation (30 898) (104 654)

Net profit for the year 71 103 256 827

Attributable to:

Equity holders of the Group 70 418 256 819

Non-controlling interests 685 8

71 103 256 827

Earnings per share (cents):

Basic 22,04 80,37

Diluted 22,04 80,37

SUMMARISED CONSOLIDATED FINANCIAL STATEMENTS (CONT.) SUMMARISED CONSOLIDATED FINANCIAL STATEMENTS (CONT.)

INCOME STATEMENTfor the year ended 31 March

STATEMENT OF CASH FLOWSfor the year ended 31 March

Printing revenues remained under

pressure from volume declines on

product categories with a tonnage

decline of 11,5%. The acquisition of ITB

resulted in an additional R265m being

contributed by the packaging segment.

Cash generated from

operations remained on

par with FY2017 through

an improved working

capital outflow of R35m

(2017: R74m). Reduced

outflow on taxation was

as a result of reduced

levels of taxable income

in the Group.

Acquisitions of PPE

were incurred on

expansion (2018: R76m

vs 2017: R180m) and

maintenance (2018:

R62m vs 2017: R64m).

The majority of the

expansion CAPEX

(R63m) related to the

labels, packaging and

tissue segment, with

completion of the tissue

project (R46m) and

expansion of labels

offering (R14m). The

Group is committed to

keeping maintenance

CAPEX spend as low as

possible, with current

spend remaining within

guidance levels.

The acquisition of ITB

Plastics for R224m was

effective 01 October

2017. The acquisition

was subject to a further

earn-out amount that

has been calculated

on a formula linked to

sustainable earnings

(EBIT). The amount was

paid after year-end.

However, at year-end

a provision of R44m

(in trade and other

payables) was made in

the accounts as a liability

in terms of the final

purchase price.

Favourable exchange rate positions

aided the GP%, while benefits of

FY2017 capacity reductions impacted

the current year employee costs and

depreciation charge. This was offset

slightly by retrenchment costs incurred

during March 2018. Additional volume

throughput in the labels division, as

well as six months’ contribution from

ITB, improved the packaging and labels

GP%, albeit not at the levels currently

achieved in the printing segment.

Tissue delivered a disappointing result.

Operating expenses increased by 8,6%

during the year. However, this included

certain once-offs (retrenchment costs,

non-repeat of reversal of provision for

doubtful debt), which, once removed,

results in a normalised inflationary

increase of 4,0%. As a % of revenue,

however, this metric has increased to

14,5% from the prior year’s 13,4%.

Management continues to focus on

removing unnecessary overheads

from the business.

This amount includes impairments

to the value of R372m (2017: R139m)

incurred on property, plant and

equipment, goodwill and other

intangibles. These amounts were

offset by profit on sale of equipment.

Finance costs consist of interest charges on finance leases, overdrafts

and loans, as well as foreign exchange costs associated with FEC

contracts. Interest charges increased with the acquisition of ITB, which

introduced additional gearing into the business. Foreign exchange

costs increased in line with longer forward positions taken during

the year to secure pricing stability for customers.

Loan obligations in existence at 31 March 2017 were settled during

the year, resulting in a decreased repayment amount.

Payment of dividend no. 3 of 56 cents per share (2016: 70 cents per

share) declared on 08 June 2017.

An effective tax rate of 30,3% (2017: 29,0%) was applicable during the

current year. The expectation is that the rate will be in excess of 28%

due to non-deductible share-based compensation charges, however,

certain prior year corrections on deferred tax increased the current

year percentage.

GROUP

2018R’000

2017R’000

Cash generated from operating activities

Cash generated from operations 683 632 661 829

Finance income 12 948 13 433

Finance costs (18 254) (11 718)

Taxation paid (169 226) (188 513)

Cash generated from operating activities 509 100 475 031

Cash flows from investment activities

Property, plant and equipment acquired (138 065) (243 719)

Proceeds from sale of property, plant and equipment 21 424 15 098

Purchase of intangible assets (1 887) (8 363)

Insurance proceeds 2 086 —

Loans and receivables advanced (3 448) (4 512)

Loans and receivables repaid 227 263

Acquisition of subsidiaries/businesses (202 149) 10 785 Cash (utilised)/generated in investing activities (321 812) (230 448)

Cash flows from financing activities

Repayment of long-term loans (26 950) (60 455)

Dividend paid (178 946) (223 682)

Cash utilised in financing activities (205 896) (284 137)Net (decrease)/increase in cash and cash equivalents (18 608) (39 554)Cash and cash equivalents at beginning of the year 227 224 266 778 Cash and cash equivalents at end of the year 208 616 227 224


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OPERATIONAL

REVIEWFOR THE YEAR ENDED 31 MARCH 2018

PRINT

PRINT PERFORMANCE

Overview

The Print segment’s revenue contribution to the Group reduced to 84,4% during the year

(92,4% in prior year) due to our growth operations increasing their contribution from prior

year.

There has been a significant variance between H1 and H2 Print performance due to the

seasonality of the Department of Basic Education (DBE) contract. In FY2017, the DBE

project work was spread evenly between the two halves of the year, however the full print

run was completed in H1 of FY2018.

The renegotiation of the Media24 print agreements and the resultant impact on the Print

segment results going forward, have led to mitigating actions taken in FY2018, which have

resulted in retrenchment accruals and impairments, as detailed in the Financial Review on

page 64.

Encouragingly Novus Print Solutions more than doubled its gross profit during the year

and returned to a positive EBIT after an extremely disruptive FY2017. With operations

stabilised, turnaround times improved and client confidence returned, and we believe this

business is geared to capitalise on a stronger book market.

FY2018R’000

FY2017R’000 % Change Commentary

Revenue 3 634 322 3 986 505 -8,8% Driven by volume declines of 11,5% across product categories

Gross profit 1 042 560 1 101 101 -5,3% The gross profit margin in Print increased as result of:

Improving exchange rates impacting paper imports.

Alternative sources of newsprint paper yielding pricing benefits.

Benefit of costs removed from business in FY2017 (coldset depreciation savings), offset marginally by retrenchment accruals in March 2018.

Operating profit excluding profit/(loss) on sale of assets and impairments

505 145 575 300 -12,2% The lower revenue levels experienced during the year have negatively impacted operating profit in Print. In addition, this segment has also seen operating expenses measured as % of revenue increase from 13,2% to 15,0%.

This increase of 1,8% has been mainly as a result of:

Rising employee costs (including retrench-ment costs) in spite of reducing revenue levels. The average increase in employee costs (excluding retrenchments) was 3,2% and thus below CPI. However, this out-stripped revenue growth. Retrenchment costs placed further downward pressure on operating profit %.

Additional storage areas required at printing facilities.

Expenses on marketing and promotions increased by 4,5% as efforts to retain and attract clients intensify.

Increased amounts incurred on professional and legal fees relating to the Department of Basic Education contract as well as on investigations, due diligences and contracting related to diversification initiatives.

Reductions in participants in historical schemes yielded a benefit on share based compensation expenses.

GROSS PROFIT %

OPERATINGPROFIT %

27,6%

14,4%

28,7%

13,9%

+1,1%

-0,5%


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PRINT REVENUE TISSUE

TISSUE PERFORMANCE

Revenues in the Print segment declined by 8,8% compared to prior year, while volumes declined by 11,5%

across product categories compared to prior year, with the most significant volume declines on magazines

and newspaper publications.

Overview

The tissue operations continue to struggle and the business model was re-evaluated at the start of

FY2018. As a result the converting operation was discontinued and sold effective August 2017.

In addition, the refurbishment and upgrade of tissue mill one meant that some capacity was lost during the

latter part of the 2017 calendar year.

We are, however, heartened by the fact that revenue increased by 13,0% over the period, despite the fact

that the current year tonnage output was only 40%-50% of total capacity.

There has been an improvement in the gross profit % from prior year. However, progress has been slow

and the tissue operations delivered negative gross profit.

YoyGrowth/(Decline)

VALUE

2018Share of

Group Revenue

2018 Actual

Revenue R’000

2017 Share of

Group Revenue

2017 Actual

RevenueR’000

YoyGrowth/(Decline)

VOLUME

MagazinesRetail inserts and cataloguesBooks and directoriesNewspapers

-19,6%-2,8%-6,1%

-10,3%

15,6%28,3%21,9%18,6%

670 7781 218 160

944 528800 857

19,4%29,1%23,3%20,7%

834 7111 253 7401 005 634

892 360

-18,1%-5,7%-6,2%

-19,9%

Total Printing -8,8% 84,4% 3 634 322 92,4% 3 986 505 -11,5%

Magazine volumes remained under

pressure, declining by 18,1% over the

period. Declines were mostly as a result

of specific Media24 title closures during

FY2017, but the printing operating

environment remains constrained.

Retail inserts volumes declined by 5,7%

over the period. However, this category

remains an area where we are confident

about our ability to continue delivering

stable volumes going forward.

Books and directories’ volumes declined

by 6,2% from prior year. This was

predominantly as a result of a 3,8% decline

in print revenue on the DBE contract.

Directories volumes declined by 10,7%

from prior year. We see this decline

continuing as advertisers find alternative

(mostly electronic) means to market.

Other books’ volumes remained stable

over the period.

Newspaper volumes declined by 19,9%

over the period as a result of print work lost

to competitors on aggressive pricing, whilst

some work was turned away due to credit

concerns.

Printing revenue from customers outside

of South Africa was R65m (2017:R49m).

Although no significant singular Africa print

project was performed during the year,

business development initiatives in the

region are ongoing. Concerns around the

ability of the various African governments

to fund (mostly educational) projects

remain the biggest stumbling block and risk

in the region.

FY2018R’000


Revenue 174 576 154 515 13,0% Improved performance driven by increased capacity utilisation as tonnage increased by 49%.

Gross profit (18 964) (24 306) 22,0% The gross profit margin in Tissue segment improved slightly but remained negative.

Operating at levels of below 50% capacity utilisation, this has hampered profitability and the ability to achieve break-even on a gross and operating margin level.


(52 186) (62 292) 16,2% The operating loss in theTissue reduced mar-ginally from FY2017. The division managed to reduce operating expenses from the pre-vious year. However this result is still lagging the original projections. Operating expenses measured as % of revenue decreased from 24,6% to 19,0% during the year.

This decrease of 5,6% has been mainly as a result of:

Reduced property costs, as well as marketing and promotions related expenditure. Both expense categories related to the converting operation sold during August 2017.

Increased provisions for bad debts were made in FY2018 for potential bad debt expenses on new customers, as this division seeks additional revenue to fill capacity.

-15,7%

-40,3%

-10,9%

-29,9%

+4,8%

+10,4%

GROSS PROFIT %

OPERATINGPROFIT % Read more about our Operating

environment and material matters on

page 42


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PACKAGING

Overview

Our packaging division consists of our labels printing operations and ITB Plastics. We

acquired ITB Plastics during the year under review and it is consolidated in our results

from 1 October 2017.

Labels

The Labels division had a very positive year after securing further clients in the beverage

market, enabling it to extend its reach into different product ranges.

Additional capacity still exists on its printing press operations and additional finishing

equipment was acquired during the year to open up further product markets.

Sales outside of South Africa of R45 million (FY2017: R41 million) were achieved,

predominantly in wet glue labels for alcoholic beverage application.

Towards the end of FY2018, a new digital label press was acquired, which was installed

during April 2018. This introduces the ability to produce smaller run work, opening up

capacity on current equipment. This project also opens the Labels division up to the

fast moving consumer goods (FMCG) market. The expected capital expenditure for this

initiative will be approximately R20 million in FY2019.

FY2018R’000


Revenue 210 151 129 796 61,9% Focus on business development initiatives results in revenues increasing by 61,9% from prior year.

Gross profit 51 856 23 806 117,83% Management continues extracting efficiencies through improved production processes.

This is typically achieved at higher levels of capacity utilisation, and as a result there is a strong focus on business development.


27 857 13 415 107,66% The division achieved strong operating profit growth during the year, as both of its flexible and gravure printing divisions increased throughput over the period. This was achieved in spite of operating expenses measured as % of revenue increasing from 8,0% to 11,4% during the year.

This increase of 3,4% has been mainly as a result of:

The non-repeat of a prior year reversal of a provision for bad debt. This effectively resulted in a negative expense (or profit) in the 2017 financial year, which subse-quently returned to normal levels during FY2018.

Staff costs (including share based compensation) experienced below- inflationary increases during the year, and thus benefited the expense ratio due to the significant increase in revenues.

18,3%

10,3%

24,7%

13,3%

+6,4%

+3,0%

GROSS PROFIT %

OPERATINGPROFIT %

LABELS PERFORMANCE


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Packaging – ITB Plastics

This business generated satisfactory revenue for the six months it was part of the Group, despite the fact

that it had a disruptive year due to the relocation of equipment to a consolidated location (previously

housed in a number of separate buildings). This is expected to bring about a more effective production

process and result in lower costs going forward.

The muted economic environment also impacted revenue, as we noted turnover declines throughout

the industry. Consumer confidence was particularly grim in the second half of the 2017 calendar year,

normally ITB Plastics’ busy period.

Pleasingly, ITB Plastics kept its operating costs flat year on year on a normalised basis. (Excluding the

once off costs related to the move). Importantly, this has not been at the expense of the quality of output.

Across all key quality measures, ITB Plastics has been able to maintain the standards it historically set.

2018R’000 Commentary

Revenue 264 873 Six months of revenue

Gross profit 37 075 Gross profit levels at 14,0% are lower than elsewhere in the Group. However, this is in part explained by the disruptive equipment move that took place during the year.

The introduction of additional capacity, set to increase total extrusion capacity by 20%, was installed during the year. The full capacity levels have not yet been achieved, and thus put additional strain on the GP%.


14 369 Expenses as % of revenue at 8,6% are significantly below the Group aver-age. This is expected given the lower GP% associated with this business. The period’s EBIT also contains moving costs of R1,6 million, which is not expected to repeat subsequent to the move completion in June 2018. It is the intention of the Group to grow this business without adding further costs.

14,0%

5,4%

GROSS PROFIT %

OPERATINGPROFIT %

OTHER

Security products

Revenue

Projects for the supply of voter registrations and election

candidate campaigns generated R24,2 million of revenue

during the year under review.

Security products remain a focus for the Group. However

clients’ ability to fund these projects and to guarantee

payment remain a stumbling block.

Gross profit

Gross profit of R7,8 million was achieved

on these projects, with input costs being

various consumables from local and

overseas sources.

EBIT of R5,5 million was recognised on

these projects in the 2018 financial year.

ITB PLASTICS PERFORMANCE VALUE-ADDED STATEMENT FOR THE YEAR ENDED 31 MARCH

Group2018

R’000 %

Group2017

R’000 %

Revenue 4 308 102 4 312 464 Cost of generating revenue (2 894 832) (2 915 647)Value added 1 413 270 1 396 816 Finance income 12 948 13 433 Wealth created 1 426 218 100,0 1 410 249 100,0

Wealth distribution:

Employees

Salaries, wages and benefits 729 505 51,15 644 208 45,68

Providers of capital 189 436 13,28 231 996 16,45 Dividends to shareholders 178 946 12,55 223 682 15,86 Finance costs 10 490 0,74 8 314 0,59

Governments

Total tax paid 169 226 11,87 188 513 13,37

Reinvested in the Group 338 052 23,70 345 532 24,50 Depreciation and amortisation 198 645 13,93 207 567 14,72 Impairments 372 151 26,09 138 642 9,84 Retained earnings (232 745) (16,32) (677) -0,05

Wealth distributed 1 426 218 100,0 1 410 249 100,0


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Profit PerformanceR’000

Actual2018

Actual2017

Actual2016

Actual2015

Actual2014

Revenue 4 308 102 4 312 464 4 174 517 4 261 484 3 968 755

Growth -0,1% 3,3% -2,0% 7,4% 7,7%

Gross profit 1 126 997 1 105 404 1 259 701 1 169 237 1 143 622

Margin 26,2% 25,6% 30,2% 27,4% 28,8%

Operating profit 141 947 393 736 648 760 561 498 649 023

Operating profit excl. impairments & p/l on disposal of assets

500 719 528 825 650 720 634 697 667 527

Margin 3,3% 9,1% 15,5% 13,2% 16,4%

Margin excl. impairments & p/l on disposal of assets

11,6% 12,3% 15,6% 14,9% 16,8%

Profit for the period after tax 71 103 256 827 448 268 364 804 421 859

Margin 1,7% 6,0% 10,7% 8,6% 10,6%

Margin excl. impairments & p/l on disposal of assets

7,6% 8,2% 10,8% 9,8% 11,0%

Non-controlling interests 685 8 2 504 29 900 27 776

Attributable income 70 418 256 819 445 764 334 904 394 083

Financial position

Assets

Property, plant, equipment and intangibles

1 949 905 2 144 924 2 275 238 2 161 777 2 165 597

Goodwill 173 054 155 419 138 711 132 052 86 701

Other non-current assets 9 607 6 050 1 507 1 995 3 430

Deferred taxation asset 120 717 50 597 12 562 3 043 -

Current assets excluding cash 1 185 560 949 189 991 003 833 796 806 504

Cash 243 948 229 968 278 220 389 044 98 612

Non-current assets held for sale 90 691 63 404 - - -

3 773 482 3 599 551 3 697 241 3 521 707 3 160 844

Equity and liabilities

Ordinary shareholder interest 2 787 087 2 882 839 2 822 624 2 536 235 2 085 069

Non-controlling interests 3 672 -374 - 30 480 121 536

Deferred taxation liability 221 357 242 429 270 521 267 015 287 935

Other non-current liabilities 53 554 68 306 18 326 61 324 53 542

Long-term debt (including shareholder loans)

99 252 60 436 19 473 80 636 62 895

Short-term debt 16 254 20 090 61 014 71 149 172 382

Current liabilities 556 974 323 081 493 841 367 665 317 675

Bank overdrafts 35 332 2 744 11 442 107 203 59 810

3 773 482 3 599 551 3 697 241 3 521 707 3 160 844

Summary financial position – debt and working capitalDebt (term loans, finance leases, shareholder loans)

115 506 80 526 80 487 151 785 235 277

Effective debt/(cash) {debt less cash} -93 110 -146 698 -186 291 -130 056 196 475

Net working capital 648 218 648 303 584 055 481 168 504 034

FIVE-YEAR FINANCIAL REVIEW

Cash flow informationR’000

Actual2018

Actual2017

Actual2016

Actual2015

Actual2014

Cash generated from operations 683 632 661 829 720 128 802 486 777 283

Purchase of property, plant, equipment and intangibles

-139 952 -252 082 -251 304 -185 396 -260 588

Proceeds on sale of non-current assets, government grants, insurance

23 510 15 098 37 417 7 029 24 925

Taxation paid -169 226 -188 513 -178 381 -173 239 -171 706

Free cash flow 397 964 236 332 327 860 450 880 369 914

Acquisition/(disposals) of subsidiaries, associates and investments

-205 370 6 536 -68 030 -103 813 -91 709

Dividends received - - - - 3

Net loan and net finance costs -32 256 -58 740 -69 537 -104 028 -422 429

Dividends paid -178 946 -223 682 -205 357 - -

Net cash flow -18 610 -39 554 -15 063 243 039 -144 221

Opening cash 227 224 266 778 281 841 38 802 183 023

Closing cash 208 616 227 224 266 778 281 841 38 802

Performance per share (cents)

EPS – basic 22,04 80,37 139,50 110,92 131,36

EPS – basic diluted 22,04 80,37 139,50 110,92 131,36

HEPS – basic 102,88 110,81 139,94 127,57 135,36

HEPS – basic diluted 102,88 110,81 139,94 127,57 135,36

Net asset value 872,20 902,17 883,32 793,70 695,02

Note: for 2014, 300 milion shares have been used in the calculation for comparability to 2015. Media24 were issued capitalisation shares in 2015 giving 300 million total shares. Media24 was the sole shareholder from 2012 to 2014.

Ratios

Liquidity 2,50 3,59 2,24 2,24 1,65

Solvency 3,84 5,02 4,23 3,69 3,31

Debt to equity 4,1% 2,8% 2,9% 5,9% 10,7%

Net return on equity 2,5% 9,0% 16,6% 15,3% 21,1%

Net return on total assets (average assets)

1,9% 7,0% 12,4% 10,9% 14%

Operating return on net assets (average assets)

17,5% 17,8% 22,5% 22,9% 25%

Debtors’ days 52,18 44,95 50,61 37,75 37,75

Creditors’ days 52,49 28,95 42,35 33,18 30,44

Stock days 54,46 38,96 40,73 38,45 43,09

Interest cover 7,78 33,60 35,88 21,38 17,16

Cash conversion ratio 109% 77% 72% 97% 77%


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INVESTMENTCASE

8786


INVESTMENTCASENovus Holdings is a cash generative business with a strong balance sheet and leading market shares. Combined with our scale and reach, this positions us well for future growth.

Novus Holdings is a market leader with a 65% market share in the high-volume, high-

quality print market in South Africa.

We are also growing our market shares in the Packaging and Tissue industries as we

expand our operations as part of our diversification strategy.

There are very few national and other African competitors that can offer the same

portfolio of products and services and our national network of plants allows us to attract

a diverse customer base from across South Africa and sub-Saharan Africa.

Little threat is posed by new entrants into the market due to high barriers to entry, such

as extensive capital investment and specialised skills and experience requirements.

Due to our scale, favourable terms can furthermore be negotiated with suppliers,

supporting our profitability.


Close to R4 billion in capital expenditure since 2000 has ensured that our facilities are

equipped with modern technology to facilitate business opportunities, including the

acceptance of projects on tight deadlines with complex operating requirements.

Our capital expenditure programme has ensured we have capacity headroom, which limits

the incremental costs of production and enables us to tender for large contracts such as

the Department of Basic Education workbook tender, for which we print on average

60 million workbooks per year.

Our facilities are well-maintained through regular routine and preventative maintenance

programmes, thereby minimising or delaying replacement capital expenditure.

We also continually focus on enhancing our product portfolio through relocations and

entity consolidations in order to optimise efficiency and logistics.

an

Our capital expenditure programme over the last few years has set the base for lower

capital investment requirements going forward, particularly in the print and tissue

segments.

Consequently, strong cash flow generation and cash conversion provide our Group with

the requisite platform to fund acquisitions and greenfield operations, as well as the ability

and flexibility to pay dividends.

% 2018 2017

Cash generated from operations less CAPEX R’m 524 410

Operating profit excl. impairments & p/l on

disposal of assets R’m 491 529

Cash conversion ratio % 107% 107%

CASH CONVERSION RATIO14 SPECIALISED OPERATIONS

NATIONALLYCUMULATIVE FACTORY FLOOR SPACE

(158 000 M2)

Strong market position and scale in an industry that benefits from

operational leverage1

Well located world-class production facilities (with capacity headroom) on

predominantly company-owned properties, located in close proximity to

end markets and major economic hubs nationally 2

History of strong cash flow generation and cash conversion3

HISTORY OF STRONG CASH FLOW GENERATION

Cas

h g

ener

ated

an

d O

per

atin

g p

rofit

(R’m

)

2012 2013 2014 2015 2016 2017 2018

800 120%

100%

80%

60%

40%

600

400

200

Cas

h c

on

vers

ion

rat

io

Cash generated from operations less CAPEX

Operating profit excl. impairments & p/l on disposal of assets

Cash conversion ratio


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8988


Cash on hand and net cash positionSince our listing we have steadily reduced our debt and ended the last four financial years

with over R200 million cash on hand.

We are a cash generative business with

a history of paying dividends.

2018 2017

Cash on hand (net of overdrafts) R’m 209 227

Net cash (cash position at banks, less any long-term debt) R’m 93 147

Our low level of third party debt provides us with an opportunity to enhance our capital

structure through gearing.

Novus Holdings furthermore owns a large unencumbered property portfolio, in prime

industrial areas in key metropolitan areas, which adds to our gearing capacity.

The aforementioned provide our shareholders with the comfort that there will be no

capital calls in the foreseeable future.

Our management team helped establish Novus Holdings as the leader in the

South African printing and manufacturing industry.

Our executive management team has 117 years of combined experience in the printing

and manufacturing industries, while our operational management has an average

tenure of 14,22 years with the Group.

Management operates with a great degree of autonomy and operational independence,

allowing for quicker decision-making. Management and shareholders’ interests are

aligned through participation in the Employee Share Ownership Plan.

Read more in our Remuneration report on page 110

GROUP GEARING

PROPERTY PORTFOLIO WITH A BOOK VALUE OF

AT 31 MARCH 20184,1% (2017:2,8%)

DIVIDEND YIELD AT 22 JUNE 201813,9% OF COMBINED EXECUTIVE

MANAGEMENT INDUSTRY EXPERIENCE

OF COMBINED OPERATIONAL MANAGEMENT INDUSTRY EXPERIENCE

117 YEARS 213 YEARS

R616 MILLION

Dividend history4

Low financial leverage and unencumbered

property portfolio5

Strong management team with extensive experience in the printing and manufacturing industries6

HEADLINE EARNINGS VS DIVIDEND PAID

Hea

dlin

e ea

rnin

gs

and

div

iden

ds

pai

d (

R’m

) 500 150

100

50

0

400

300

200

100

-

Div

iden

d p

aid

(ce

nts

per

sh

are)

2012 2013 2014 2015 2016 2017 2018

CASH ON HAND

Cas

h b

alan

ces

on

han

d a

nd

net

cas

h/(

deb

t) (

R’m

)

400

200

(200)

(400)

(600)

(800)

-2012 2013 2014 2015 2016 2017 2018

Cash on hand (net of overdrafts) Net cash/(debt)

Headline earnings

Dividend paid (dividends paid relate to prior year headline earnings)

Dividend per share


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By leveraging our capabilities in acquiring value-enhancing businesses and establishing

greenfield operations, we intend to diversify our operations and revenue streams,

thereby ensuring that we are positioned to create sustainable value for shareholders

into the future.


Growth opportunities through the accretive acquisitions and greenfield

opportunities, both in our traditional business and other diversified

operations7

We have a loyal, diversified and long-standing customer base that depends on our reliable

and high-quality printing, manufacturing and distribution capabilities. The Group’s ability

to operate under tight deadlines, while maintaining a high standard of production, has

resulted in significant goodwill being built with customers over a number of years.

Our diversified product offerings furthermore ensure that we can cater for an expanded

customer base, which includes national retailers, newspapers and magazines titles,

governments, alcohol, soft drink and food producers, and multi-national consumer

goods manufacturers.

Strong customer base8

OF REVENUE CURRENTLY GENERATED BY DIVERSIFIED OPERATIONS UP FROM 8% IN 2017

OF REVENUE FROM DIVERSIFIED OPERATIONS OVER MEDIUM TERM

16%50%TARGET OF


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GOVERNANCE

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BOARD OF DIRECTORSNEIL BIRCH (57)Executive Chairman and

incoming Chief Executive

Officer

BSc (Hons) (Eng)

Neil holds a BSc (Hons) degree

in Mechanical/ Industrial

Engineering from the

University of Witwatersrand and entered the printing

and packaging industry in 1986. He was appointed

as the group managing director of Lithotech in 1989

and went on to become the chief executive officer at

Bidvest Paperplus from 2006 until 2016.

Appointed to the Board on 03 April 2017

JAN POTGIETER (49)Lead Independent Non-

Executive Director and

incoming Acting Chairman

BCompt (Hons), CTA, CA(SA)

Jan is a chartered accountant,

chief executive officer of

Italtile and non-executive

director of Fortress Income-Fund. He has extensive

senior-level experience in the retail and supply chain

sectors through his role as financial director and chief

executive officer of Massdiscounters (a division of

Massmart Holdings). He has also served as a business

manager at Clover SA and spent seven years at

SABMiller in senior financial roles.

Appointed to the Board on 23 February 2015

CHRISTOFFEL BOTHA (58)Independent Non-Executive

Director

BCom (Law), LLB, Qualified

Chartered Accountant

Christoffel has a background

in corporate finance,

strategic investment management and private

equity investment. In 2000, he co-founded Treacle

Private Equity, a private equity firm. He has served

on a number of boards spanning a number of

industries. These include Datacentrix Limited, IST

Holdings Limited, Comair Limited, KreditInform

(Pty) Limited, Malbak Motor Holdings (Pty) Limited,

Tek Corporation Limited, Teraco (Pty) Limited and

Robertson & Caine (Pty) Limited.


SANDILE ZUNGU (51)Independent Non-Executive

Director

BSc (Mech Eng), MBA

Sandile is a non-executive

director of, among others,

Grindrod Limited, EOH

Limited and Innovation

Group. He serves on the Presidential BEE Advisory

Council and represented South Africa on the BRICS

Business Council. Sandile was a member of the

World Economic Forum in his capacity as Young

Global Leader. A few of the notable positions he has

previously held include chairman of Barnard Jacobs

Mellet Holdings and Denel, and executive director of

New Africa Investments.


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NOLUVUYO MKHONDO (34)Non-Independent Non-

Executive Director

BAcc (Hons), CA(SA), MBA

Noluvuyo is a seasoned

investment banking

and corporate finance

professional, with extensive experience in Merger

and Acquisition execution, investment evaluation

and strategic long term financial planning. She

has a Bachelor of Accountancy degree from Wits

University, and an MBA from London Business

School. She also serves as an executive director of

Value Capital Partners.

Appointed to the Board on 15 December 2017

LULAMA MTANGA (47)Independent Non-

Executive Director

BA (Social Sciences), LLB,

Postgraduate Diploma

in European Community

Competition Law

Specialising in competition

law, Lulama is a director at Lulama Mtanga Legal

Consultancy and a former director at Bowman

Gilfillan Inc. She has extensive experience in

advising on notification of local and international

transactions under the Competition Act in South

Africa in various sectors. She was the first lawyer

at Bowman Gilfillan Inc. and one of the first

lawyers in South Africa to advise on cross-border

competition law merger regulations in the African

continent.

Appointed to the Board on 15 July 2017

BERNARD OLIVIER (64)Independent Non-Executive

Director

BCom (Acc), CTA, CA(SA), Senior

Management Programme (USB)

Bernard is a chartered

accountant. He was an assurance

partner at the Johannesburg

office of PricewaterhouseCoopers (PwC), for more

than 29 years. He also fulfilled numerous roles in the

management, regulatory affairs and governance of PwC.

Bernard was on the Independent Regulatory Board for

Auditors’ inspection committee, and was PwC South

Africa’s registered liaison partner with the US Public

Company Accounting Oversight Board.


*At the forthcoming annual general meeting, Mr Bernard Olivier will retire as an Independent Non-Executive Director. Novus Holdings would like to thank Mr Bernard Olivier for all his valuable contributions during his tenure as a Director.

9796


COMMITMENT AND APPROACH

Novus Holdings strives to achieve the

highest standards of corporate governance

in all its operations and relationships

with key stakeholders, while allowing

purpose and discipline to guide the Group’s

performance. Having a strong ethical base

is of critical importance to Novus Holdings.

For this reason, the Group’s governance

structures are aligned with the JSE Listing

Requirements and the Companies Act,

71 of 2008, while the Group remains

committed to the full implementation of

the newly launched King IV.

The Board understands and accepts its

responsibility to safeguard and represent

the interests of all stakeholders of the

Group in achieving a successful and

sustainable business that ensures the

achievement of the Group’s strategic

objectives.

The full Governance Report

is available online at

www.novus.holdings

BOARD OF DIRECTORS

The Board provides leadership and

strategic direction to the Group. While

the Board delegates the responsibility

of running the business to the Chief

Executive Officer, the Board and the

Chairman ultimately remain responsible

for the sustainable management of Novus

Holdings, the implementation of its

strategy and its key policies. The Board

is also responsible for approving Novus

Holdings’ financial objectives and targets.

One of the focal points of the Board is to act

as a custodian of the corporate governance

systems of Novus Holdings.

In accordance with the Board Charter,

there is a clear division of responsibilities at

Board level to ensure a balance of power and

authority, such that no one individual has

unfettered powers of decision making.

Average age (<45, 46-55, >55 years)

In accordance with Novus Holdings’ board

charter, the Group has a unitary board

structure that includes a lead independent

director. The Board consisted of eight

members at year-end, which comprised

two executive directors and six non-

executive directors. Five of the non-

executive directors are also independent.

The Board is structured to ensure that no

individual director has unrestricted powers

of decision-making.

The Novus Holdings Board acts at all times

in the best interests of Novus Holdings and

takes ultimate responsibility for the Group.

The Novus Holdings Board has an approved

Board Charter, which includes details such

as the roles and responsibilities of the

Board, its Directors and the composition

of the Board. The Novus Holdings Board

is mandated in terms of it’s Charter. The

Board is satisfied that it has fufilled its

responsibilities in accordance with its

Charter this year.

CHAIRMAN OF THE BOARD

The Board is chaired by Jan Potgieter, who

is also the lead independent non-executive

director. The Chairman is responsible for

providing leadership to the Board and

overseeing the efficient operation thereof

and has been tasked with ensuring effective

governance practices. The Chairman is

considered to be independent.

NON-EXECUTIVE DIRECTORS

With their diverse backgrounds, each of

the non-executive directors brings a unique

set of skills and expertise to the board to

ensure that a multi-faceted approach and

sound judgement are applied.

The Board is satisfied that its composition

reflects the appropriate mix of knowledge,

skills, experience, diversity and

independence.

EXECUTIVE DIRECTORS

Novus Holdings’ executive directors

are involved in the day-to-day business

activities of the Group and are responsible

for ensuring that the decisions of the Board

are implemented in accordance with the

mandates given by the Board. The CEO,

Neil Birch, is responsible for leading the

implementation and execution of the

approved strategy, policy and operational

planning of the Group, as well as ensuring

that the day-to-day affairs of the Group are

appropriately supervised and controlled.

COMPANY SECRETARY

The company secretary is responsible

for providing the Board with guidance

on discharging its responsibilities in

terms of legislation and regulatory

requirements. Directors have unlimited

access to the advice and services of the

company secretary, who attends all board

and Committee meetings. The company

secretary ensures that, in accordance with

pertinent laws, the proceedings and affairs

of the board, the company itself and, where

appropriate, shareholders are properly

administered. The company secretary is

also the company’s delegated information

officer. The company secretary ensures

adherence to closed periods for trading in

Novus Holdings’ shares.

Following the resignation of Marlene

McConnell in her capacity as company

secretary, Kilgetty Statutory Services

CORPORATE GOVERNANCE REPORT


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14+14+72+N14%

14%

72%

Non-Executive Director (1)

Independant Non-Executive Director (5) Executive Directors (1)

28+72+N28%

72%

Men (5) Women (2)

43+57+N43%

57%

White (4) Black (3)

COMPOSITION AND SIZE

9998


(Proprietary) Limited was appointed as

company secretary by Novus Holdings

effective 14 June 2018. Novus Holdings

is in the process of recruiting a suitable

in-house candidate to fill the vacancy of

company secretary.

In terms of the JSE Listing Requirements,

the Board is required to consider and

satisfy itself, on an annual basis, as to

the competence, qualifications and

experience of the company secretary. The

Board conducted a formal evaluation of

the company secretary during the year

and is satisfied that Kilgetty Statutory

Services has the necessary competence,

Board Director 08-Jun-17 17-Aug-17 09-Nov-17 15-Mar-18

NW Birch (Executive Chairman) ü ü ü ü

CG Botha ü ü ü ü

GP Dingaan Apology ü ü Resigned

E Fivaz ü ü ü ü

CJ Hess ü ü Resigned Resigned

N Mkhondo - - - ü

HL Mtanga - ü Apology ü

BJ Olivier ü ü ü ü

JN Potgieter ü Apology ü ü

KA Vroon ü ü ü ü

E Weideman ü ü Resigned Resigned

SDM Zungu ü Apology ü ü

Audit Committee Director

07-Jun-17 13-Sep-17 08-Nov-17

BJ Olivier (Chairman) ü ü ü

CG Botha ü ü ü

GP Dingaan ü ü ü

Risk Committee Director

07-Jun-17 08-Nov-17

GP Dingaan (Chairman) ü ü

CG Botha ü ü

E Fivaz ü ü

CJ Hess ü Resigned

KA Vroon ü ü

BOARD COMMITTEES

The Novus Holdings Board is supported

by the six Board Committees. These

Committees have delegated responsibility

to assist in specific matters, and report to

the Novus Holdings Board following their

meetings. The delegated responsibility and

the powers, limits and authorities attached

to Board Committees are approved by the

Novus Holdings Board, and such powers,

limits and authorities are limited as

determined by the Novus Holdings Board

from time to time. Each Committee has its

own charter or terms of reference that

sets forth its purpose, composition and

duties.

The Board Committees report to the

Board on their respective directives and

deliverables in accordance with each

Committee’s Board-approved charter on

a continual basis. The Committee charters, along with an

annual work plan relevant for each of the Committees, are

reviewed annually.

AUDIT COMMITTEE

The Audit Committee acts in compliance with section

94(7) of the Companies Act. The non-statutory functions

of this Committee are to assist the Board with discharging

its duties related to the safeguarding of the assets of

Novus Holdings, the operation of adequate systems, the

formulation of internal controls and control processes, and

the review and preparation of accurate financial reporting

and statements that are in compliance with all applicable

legal requirements, corporate governance and accounting

standards.

The Audit Committee also addresses statutory

and regulatory issues, including the nomination for

appointment, removal and replacement of the external

auditors. The Audit Committee is satisfied with Edrich

Fivaz’s current expertise, experience and performance as

Novus Holdings’ CFO since his appointment in September

2016. The Committee furthermore reviewed and reported

to the Board on the expertise, resources and experience of

the company’s finance function.

Meetings and attendance for the Audit Committee were

as follows during the year:

This Committee comprises three independent non-

executive directors. The Chairman of the Committee is

BJ Olivier. As a result of GP Dingaan’s resignation from

the Board, HL Mtanga was appointed as replacement.

CG Botha will take over from BJ Olivier upon his

retirement at the August 2018 AGM. This Committee

will be merging with the Risk Committee after the

June 2018 meeting to form the Audit and Risk Committee.

For further information, refer to the

Audit Committee Report in the annual

financial statements page 143

RISK COMMITTEE

The Risk Committee assists the Board

in ensuring that there is an effective

risk management process in place that

identifies and monitors the management

of the key risks facing Novus Holdings

in an integrated and timely manner. This

includes ensuring that emerging risks are

identified and managed, assessing whether

all new business opportunities have been

appropriately considered from a risk

perspective, reviewing the adequacy of the

Group’s insurance portfolios and reviewing

the impact that significant litigation

could have on the Group. The Committee

regularly reviews Novus Holdings’ overall

compliance with significant laws and

regulations.

Meetings and attendance for the Risk

Committee were as follows during the year:

CG Botha was appointed as Chairman of

this Committee following GP Dingaan’s

resignation. This Committee will be

merging with the Audit Committee after

the June 2018 meeting to form the Audit

and Risk Committee.


Risk Report on page 136

qualifications and experience to carry

out the required responsibilities of a

secretary of a public company. The Board is

furthermore satisfied that an arm’s-length

relationship exists between the company

secretary and the Board. The directors

are satisfied that the company secretary

provides a central source of guidance and

advice to the Board as well as the company

on matters of good governance. The

company secretary also acts as secretary

for the Committees of the Board.

Board meetings and attendance record for

the year under review:


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REMUNERATION COMMITTEE

The Remuneration Committee ensures

that there is a Group-wide adoption

of remuneration policies, which are

aligned with the Group’s strategy and

performance in the long- and short-

term. The Remuneration Committee is

also responsible for ensuring that the

remuneration strategy is market-related

and competitive, determining specific

remuneration packages for senior

executives of the Group and ensuring

that remuneration for executives, which

includes their short- and long-term

incentives, is based on their performance.

The Remuneration Committee also ensures

that the disclosure of the directors’

remuneration is accurate, complete and

transparent.

Meetings and attendance for the

remuneration Committee were as follows

during the year:

The Remuneration Committee comprises

three independent non-executive directors.

The chairman of this Committee is

BJ Olivier and its members are CG Botha

and SDM Zungu. NW Birch resigned from

this Committee following the October

2017 meeting, as he became executive

director and was no longer eligible to be a

member of the Remuneration Committee.


Remuneration Report on page 110

Remuneration Committee Director

15-May-17 15-Sep-17 25-Oct-17 14-Mar-18

BJ Olivier (Chairman) ü ü ü ü

NW Birch ü ü ü ü

CG Botha — ü Apology ü

JN Potgieter ü ü Apology Resigned

SDM Zungu ü ü ü ü

Nominations Committee Director

07-Jun-17 15-Sep-17 28-Nov-17 14-Mar-18

JN Potgieter (Chairman) Apology ü ü ü

NW Birch ü ü ü ü

CJ Hess ü ü Resigned Resigned

BJ Olivier ü ü ü ü

E Weideman Apology Apology Resigned Resigned

SDM Zungu — — — ü

SOCIAL AND ETHICS COMMITTEE

The Social and Ethics Committee ensures

that the Group meets its obligations in

terms of section 72 and regulation 43

of the Companies Act. It monitors the

Group’s activities with regard to matters

of social and economic development, good

corporate citizenship, the environment,

health and public safety, consumer

relationships, employment, and codes

of best practice.

The Social and Ethics Committee is

mandated and authorised by the Novus

Holdings Board to fulfil the following

monitoring and evaluation roles:

Transformation, focusing on Black

Economic Empowerment and

Employment Equity;

Compliance with relevant social, ethical

and legal requirements of the Group as

well as best practice codes;

Risk and Compliance as it relates to

ethical behaviour within the Group; and

Environmental sustainability and

corporate social investment.

Meetings and attendance for the Social

and Ethics Committee were as follows

during the year:

Social and Ethics committee Director

07-Jun-17 08-Nov-17

HL Mtanga (Chairman) ü ü

NW Birch — ü

GP Dingaan Apology Resigned

CJ Hess ü Resigned

JN Potgieter — ü

E Weideman ü Resigned

SDM Zungu — ü

NOMINATIONS COMMITTEE

The focus of the Nominations Committee is

to evaluate the Board and the Committees

in terms of their effectiveness. This

Committee has also been mandated to

review the composition and size of the

Board in the context of Novus Holdings’

strategy.

There are currently three independent

non-executives on this Committee,

together with the executive chairman of

the Board. This Committee is responsible

for identifying individuals qualified to

be elected as members of the Board and

Board Committees, recommending such

individuals to the Board for appointment

in terms of the MOI and policy, as well

as to establish procedures to ensure

that the selection of individuals for such

recommendation is transparent.

Meetings and attendances for the

nominations Committee was as follows

during the year:

INVESTMENT COMMITTEE

The focus of the Investment Committee

is aligned with the Group’s strategy to

expand and diversify its business. The

Investment Committee is mandated with

seeking new opportunities for the Group.

This Committee is focused on ensuring

that such investments and acquisitions are

strategically aligned with the business of

selling manufactured products into South

Africa and other African territories.

The Committee is comprised of NW Birch

(Committee chairman), HL Mtanga and

SDM Zungu. The Investment Committee

does not have a formal meeting schedule

and meets as often as is required or

desirable, having regard to the matters that

fall within its mandate. The major focus for

the year was the acquisition of ITB Plastics,

as well as the evaluation of other potential

acquisition targets.

BOARD EVALUATION

The Board charter makes provision for

the evaluation to assess the effectiveness

and performance of the Board and

its Committees on an annual basis.

An in-house self-evaluation process

was undertaken, assessing the 2018

performance of the Board, its various

Committees as well as the chairman of

the Board, CEO and company secretarial

function. The Board is satisfied that

the evaluation process is improving it’s

performance and effectiveness.

APPOINTMENTS AND DIVERSITY POLICY

In terms of the policy adopted by the Board

on diversity, in considering the composition

of the Board, cognisance was taken of the

gender and racial mix in order to represent

the demographics of the markets in which

it operates and to promote race diversity

at the level of the Board. During the year

under review, the Board welcomed the

appointment of Ms Lulama Mtanga and Ms

Noluvuyo Mkhondo to the Board.


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INDEPENDENCE AND CONFLICTS OF INTEREST

The independent non-executive directors

are fully independent of management and

are free to make their own decisions. They

enjoy no benefits from the company other

than their fees. They are free from any

business or other relationship which could

be seen to interfere materially with the

individual’s capacity to act in

an independent manner.

The company’s non-executive directors

are appointed to provide an independent

perspective with the relevant industry

experience, and to complement the skills

and experience of the executive directors in

assessing strategy, performance, risk,

key performance areas and conduct.

Principle Application of the principle

LEADERSHIP, ETHICS AND CORPORATE CITIZENSHIP

Principle 1: Leadership

The governing body should lead ethically and

effectively.

The Novus Board of Directors is the governing

body and is committed to the good corporate

governance principles as set forth in King IV.

A code of ethics has been adopted by the Board.

The code is intended to focus the Board and each

director on areas of ethical risk, and it fosters

a culture of honesty and accountability that all

directors ascribe to.

Principle 2: Organisational values and ethics

The governing body should govern the ethics

of the organisation in a way that supports the

establishment of an ethical culture.

The Board has taken responsibility for creating

and maintaining an ethical corporate culture and

ensures that the ethical standards that have been

set are adhered to in all aspects of the business.

There is a code of ethics in place that is applicable

to employees. The Board, with the assistance of

the Social and Ethics Committee, oversees the

management of ethics and monitors the Group’s

activities to ensure they are in line with the code

of ethics.

Principle 3: Responsible corporate citizenship

The governing body should ensure that the

organisation is and is seen to be a responsible

citizen.

The Board has delegated to the Social and Ethics

Committee the responsibility for the monitoring

and reporting of social, ethical, transformational

and sustainability practices that are consistent

with good corporate citizenship.


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STRATEGY, PERFORMANCE AND REPORTING

Principle 4: Strategy, implementation and performance

The governing body should appreciate that

the organisation’s core purpose, its risks

and opportunities, strategy, business model,

performance and sustainable development are

all inseparable elements of the value creation

process.

The Board approves and monitors the

implementation of the strategy and business

plans for each of the various segments within

the Group. The Board, assisted by the Risk

Committee, reviews key risks and opportunities

impacting on the achievement of its strategic

objectives.

The Board, in determining strategy, considers

the six capitals in directing the Group’s inputs

and activities towards sustainable and positive

outputs and outcomes. The value creation

process is set out on page 30 of the Integrated

report. Information on material matters and risks

and opportunities can be found on page 44 of

the integrated report.

Principle 5: Reports to the stakeholders to make informed assessments

The governing body should ensure that reports

issued by the organisation enable stakeholders to

make informed assessments of the organisation’s

performance, and its short-, medium- and long-

term prospects.

The Board is assisted by the Audit Committee

in reviewing and approving the integrated

report. The report is prepared in line with

recognised local and international guidelines

including International Financial Reporting

Standards (IFRS), the International Integrated

Reporting Council’s (IIRC) Integrated Reporting

(IR) Framework, the reporting principles

contained in King IV and the JSE Limited Listing

Requirements. The integrated report, including

the annual financial statements, provides a

comprehensive view of the Group’s performance.


GOVERNING STRUCTURES AND DELEGATION

Principle 6: Role of the governing body

The governing body should serve as the focal

point and custodian of corporate governance in

the organisation.

The Board has an approved charter, which

it reviews annually. The Board’s role and

responsibilities are articulated in the Board

charter. The Board is the focal point and

custodian of corporate governance, both in

terms of how its role and responsibilities are

documented and the way it executes its duties

and responsibilities.

The acting Chairman of the Board is Jan

Potgieter, the lead independent non-executive

director. To strengthen the independence of the

chairman.

Principle 7: Composition of the governing body

The governing body should have the appropriate

balance of knowledge, skills, experience,

diversity and independence for it to discharge its

governance role and responsibilities objectively

and effectively.

The Nominations Committee considers, on a

regular basis, the composition of the Board

in terms of the balance of skills, experience,

diversity, independence and knowledge needed

to discharge the Board’s role and responsibility.


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Principle 8: Committees of the governing body

The governing body should ensure that its

arrangements for delegation within its own

structures promote independent judgement, and

assist with balance of power and the effective

discharge of its duties.

The Board has six Committees that assist it

in discharging its duties and responsibilities

as follows:

Audit Committee

Risk Committee

Remuneration Committee

Nominations Committee

Social and Ethics Committee

Investment Committee

The Committees operate in accordance with

written charters, which are reviewed and

approved by the Board annually. The Committees

meet regularly, and feedback on meetings is

provided to the Board by the various chairmen

of the Committees.

Principle 9: Evaluations of the performance of the governing body


evaluation of its own performance and that of its

Committees, its chair and its individual members

support continued improvement in

its performance and effectiveness.

Formal assessments of the effectiveness of the

Board, Board Committees, executive chairman,

directors and Group company secretary are

conducted annually under supervision of the

Nominations Committee.

External formal assessments take place every

second year, while internal assessments are

conducted in between. Details of the outcome

of the current year’s internal assessment are

contained in the Governance section of the

integrated report on page 101

Principle 10: Appointment and delegation to management


appointment of, and delegation to, management

contribute to role clarity and the effective

exercise of authority and responsibilities.

The CEO operates under a normal employment

contract applicable to all employees. The CEO

does not have other professional commitments

and a formal succession plan is in place for the

CEO.

The delegation of authority framework is in place

and is updated on a regular basis, contributing

to role clarity and effective exercise of authority.

and is updated on a regular basis, contributing to

role clarity and effective exercise of authority.


GOVERNANCE OF FUNCTIONAL AREAS

Principle 11: Risk governance

The governing body should govern risk in a way

that supports the organisation in setting and

achieving its strategic objectives.

The Board, supported by the Risk committee, is

ultimately responsible for the governance of risk.

The role of the Risk committee is to ensure that

the Group has implemented an effective policy

and plan for risk management that enhances the

Group’s ability to achieve its strategic objectives.

A risk register of significant risks facing the

Group is maintained, and actions to manage

these risks within defined tolerances

are monitored.

The Risk committee oversees the development

and annual review of a policy and plan for

risk management and recommends these for

approval to the Board. Management designs,

implements and monitors the risk management

plan and is accountable for embedding the risk

management process in the business. Mitigating

controls are formulated to address the risks,

and the Board is kept up to date on progress

on the risk management plan. The day-to-day

responsibility for management of the risk

management plan rests with management.

During the 2018 financial year, membership

of the Audit and Risk committees overlapped

with Ms GP Dingaan and Mr CG Botha, thereby

ensuring there was co-ordination in respect of

the evaluation and reporting of risks. After the

June 2018 meeting, these two committees will

be merging to form a combined Audit and Risk

committee.


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Principle 12: Technology and information governance

The governing body should govern technology

and information in a way that supports

the organisation setting and achieving its

strategic objectives.

The Risk Committee is responsible for

information and technology governance in

accordance with King IV. The Committee

oversees the implementation of IT governance

mechanisms, IT frameworks, policies, procedures

and standards to ensure the effectiveness and

efficiency of the Group’s information systems.

Principle 13: Compliance governance

The governing body should govern compliance

with applicable laws and adopted, non-binding

rules, codes and standards in a way that supports

the organisation being ethical and a good

corporate citizen.

The Board is responsible for the Group’s

compliance with applicable laws. The Board

has delegated the responsibility for

implementing compliance to management. The

Board is assisted by the Risk Committee

in monitoring compliance.

Principle 14: Remuneration governance


organisation remunerates fairly, responsibly and

transparently so as to promote the achievement

of strategic objectives and positive outcomes in

the short, medium and long term.

The remuneration report and remuneration

policy set out on page 110 of the integrated

report have been designed to give effect to the

Group’s strategic objectives. These strategic

objectives are to attract and retain key talent

and to motivate and reward employees

appropriately to ensure they achieve key

organisational objectives.


The governing body should ensure that assurance

services and functions enable an effective control

environment, and that these support the integrity

of information for internal decision-making and

of the organisation’s external reports.

The Group has recently implemented a combined

risk assurance model, which was co-ordinated

and managed by internal audit (an outsourced

model with internal resources). Combined

assurance across the Group is overseen by the

Audit Committee.

The Board has delegated to the Audit Committee

oversight of, inter alia, effectiveness of the

Group’s assurance services with focus on

combined assurance including external audit,

internal audit and the finance function.

Three times a year, the Audit Committee receives

a detailed report on the progress of the internal

audit function against its annual risk based plan.

The Audit Committee report is contained in the

annual financial statements.

STAKEHOLDER RELATIONSHIPS

Principle 16: Stakeholders

In the execution of its governance role and

responsibilities, the governing body should adopt

a stakeholder-inclusive approach that balances

the needs, interests and expectations

of material stakeholders in the best interests

of the organisation over time.

The Board has approved a stakeholder

framework and engagements with stakeholders

are in accordance with the framework.

Details of stakeholder relationships and

stakeholder engagements are included on pages

36 to 39of the integrated report.


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The Board is committed to transparency and disclosure of relevant information to all

stakeholders. Refer to the Stakeholder section on page 36 of this report.

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REMUNERATION

REPORTPART 1: BACKGROUND STATEMENTIt is with great pleasure that I present Novus Holdings’ remuneration report for the year ended 31 March

2018, which report is aligned with the King IVTM Report on Corporate Governance (King IVTM) as well as

the Johannesburg Stock Exchange (JSE) Listings Requirements.

This report sets out the remuneration philosophy, policy, principles, and salient features, which are

mainly applicable to the chief executive officer (CEO), executive directors and Executive Committee

(Exco), non-executive directors and senior management. In line with King IVTM, the overarching theme

of the remuneration policy is to give effect to the Remuneration Committee’s direction on fair,

responsible and transparent remuneration. Where appropriate we have also addressed, at a high

level, remuneration arrangements for other employees. As in previous years, the remuneration policy

continues to be guided by Novus Holdings’ business strategy of diversification to reduce the reliance

on the core business of printing.

More details on the progress made in realising the business strategy can be found in our Group growth

strategy and business model report on page 28 of this report.

Context

Novus Holdings has been through several substantial changes in FY2018, not the least of which has been

the change in shareholding at Group level, restructuring the traditional print businesses by combining

the heatset and coldset management structure, and revisiting business plans of businesses affected by

the Media24 printing agreement renegotiation. The Group continues to focus on extending its leadership

position in the printing industry, while actively pursuing acquisition and diversification opportunities.

The Group’s financial results have been affected by the termination of the existing printing agreements

between Novus Holdings and Media24 (Pty) Ltd through retrenchment costs and impairments. Some of

the highlights of the 2018 financial results are illustrated below.

More detail on our annual performance is set out in the Financial review on page 64 of this report.

This year, we welcomed Neil Birch as the executive chairman of the board and Nono Mkhondo and

Lulama Mtanga as non-executive directors, and we look forward to their contribution to the Group.

Neil’s remuneration arrangements as executive chairman are explained in part 2 of this report. We

bid farewell to Gugu Dingaan, Esmare Weideman, Manie Mayman and Cindy Hess who resigned

as non-executive directors in the year under review. We are grateful for their service and valuable

contribution to the Group.

As discussed earlier in the report, Keith Vroon and Edrich Fivaz resigned from their roles as CEO and

CFO respectively. Neil Birch has subsequently been appointed CEO with effect from 19 June 2018

and Novus Holdings is in the process of recruiting an independent executive chairman. Neil’s

remuneration arrangements have yet to be finalised.

Forward-looking changes to the remuneration policy

The activities of and the decisions made by the Remuneration Committee in the 2018 financial year, are

summarised below.

The first allocation of awards in terms of the Share Appreciation Rights (SAR) scheme and Restricted

Share Plan (RSP) were approved and made during the 2018 financial year.

The Remuneration Committee discussed and streamlined the metrics that form part of the balanced

scorecards for executive directors and reviewed the basis of calculating their remuneration based

thereon.

Short-term Incentives (STIs) – The Annual Cash Incentive (ACI) scheme rules, targets, allocations, and

payments and the second-tier bonuses for sales executives for the 2018 financial year were finalised.

The targets for the ACI scheme were changed from EBIT for all divisions to headline earnings for the

participants in the Group division and EBIT for participants in the other divisions.

Discretionary bonuses for heatset and coldest ACI participants and participants of the ad-hoc and

production bonus schemes were also considered and approved.

Increases in the guaranteed packages for executives and senior management were considered and

approved.

Shareholder feedback on the remuneration policy for the 2018 financial year was considered, and

addressed in this report (more specifically, the use of the dilution limit and performance conditions on

Long-Term Incentives [LTIs]).

The remuneration report for the 2018 financial year was reviewed and approved.

The remuneration policy, philosophy, strategy, and policies for the Group were reviewed to ensure that

they are in line with King IVTM and market best practice.

The outcomes of the 2017/2018 remuneration policy were reviewed to ensure that the set objectives

of the policy had been achieved.

The aggregate pay mix for the executive directors was reviewed to ensure that it meets the Group’s

needs and strategic objectives.

The Remuneration Committee ensured that all benefits, including retirement benefits and other

financial arrangements, were justified and correctly valued.

The Group’s incentive schemes, and the vesting schedules, were reviewed to ensure that they continue

to contribute to shareholder value and that they were administered in terms of the plan rules.

An appropriate increase for non-executive director fees was considered and approved for the 2019

financial year (to be tabled before shareholders for approval at the 2018 Annual General Meeting).

The terms of executive directors’ service agreements, as well as those for key managers in the business,

were reviewed against market practice and the needs of the business.

-0,1%REVENUE

-5,3%

OPERATINGPROFIT*

-7,1%

HEADLINE EARNINGS PER

SHARE

R

*Excluding impairments and profit/(loss) on disposal of assets


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The chairman of the Remuneration Committee attended the 2017 Annual General Meeting to answer

any queries regarding the forward-looking remuneration policy or its implementation in the 2017

financial year.

The Remuneration Committee considered the current industry and general best practice trends in

remuneration, with input from its independent advisors where appropriate.

The succession plan for the key positions in the Group was reviewed in line with best practice and the

long-term business strategy of Novus Holdings.

The forward-looking changes to the remuneration policy, which may apply from the 2019 financial year

onwards, are set out below.

Element of the remuneration policy Forward-looking change Rationale

Restraints of trade Restraints of trade matched with RSP awards

The Remuneration Committee may make RSP awards to qualifying key managers in the business and make the awards subject to a contractual restraint of trade for the manager.

Long-term incentive Prospective performance conditions for SARs

The Remuneration Committee has tasked its independent advisors to provide it with market practice regarding prospective performance conditions for SAR awards. The introduction of these performance conditions is a rule change that we require shareholder approval for (see special resolution 6.2 in the notice to the AGM). Details of the performance conditions currently under consideration are included in part 2 of this report.

Shareholder concern Response from the Remuneration Committee

Awards under the Novus Holdings Share Trust do not require the satisfaction of predetermined performance conditions prior to vesting. The achievement of performance conditions should be supported by an appropriate vesting profile commensurate with the level of performance achieved.

The Remuneration Committee has reviewed market best practice pertaining to performance conditions, as well as looking at what is appropriate for Novus Holdings. The disclosure of the proposed changes to the LTI is set out in part 2 of the report.

Novus Holdings should consider performance conditions and targets, which measure operational returns more than cost of capital, plus an appropriate margin.

The Remuneration Committee considered market trends, the conditions most relevant to Novus Holdings’ industry, and other relevant information received from their external advisors in determining appropriate performance conditions. See part 2 of the report for further details.

The total number of shares that can be utilised under the LTI schemes is beyond the recommended limit.

The shareholder-approved dilution limit is 10% of issued share capital, which is higher than general market practice in South Africa of 5%.

The Remuneration Committee has taken the decision to revise the overall dilution limit down to 5% of issued share capital. The dilution limit for individuals will remain at 1%. The Remuneration Committee has disclosed the use of the dilution limit in part 3 of the report.

STI disclosure should improve, to show the threshold, target and stretch earning potentials.

The disclosure of the earning potentials for the ACI scheme is set out in part 2 of the report.

Vesting of RSP awards should only begin after three years (i.e. they should not vest in years 1, 2, 3 and 4).

The vesting profile for RSPs was approved by the requisite majority of shareholders at the 2016 Annual General Meeting. The Remuneration Committee is of the view that the vesting profile is appropriate to Novus Holdings’ business model. The RSPs are also only awarded to employees below Exco level.

The Remuneration Committee is confident that the remuneration policy and philosophy will achieve

its objective of furthering the company’s long-term business strategy of decreasing its reliance on the

printing business and diversifying its operations.

During the year, the Remuneration Committee received advice and guidance from PwC on various

matters concerning remuneration governance and is satisfied that PwC is a sufficiently independent

and objective remuneration advisor. Novus Holdings uses PwC’s REMeasure® to grade executives,

senior management, management and specialists jobs, and REMchannel® to determine and benchmark

their remuneration accordingly.

Shareholder engagement

We engaged with shareholders regarding the remuneration policy and the implementation report,

both of which received a favourable vote of 95,93% at the 2017 Annual General Meeting (with 4,07%

of shareholders voting against the policy and the implementation report respectively, whilst 12,60%

abstained from voting on each resolution).

The following comments were raised through engagement with investors and analysts:

Voting

As was the case in 2017, we will put our remuneration policy (as set out in part 2) and our implementation

report (as set out in part 3) to two separate non-binding shareholder votes at the Annual General Meeting

that will be held on 17 August 2018. More detail around the voting procedures is set out in part 2 of

this report, as well as in our remuneration policy document. Once again, we look forward to receiving

your endorsement of both resolutions, and we also encourage you to proactively engage with us on our

remuneration policy and how we can further drive the pursuit of shareholder value creation.

Bernard Olivier

Chairman: Remuneration Committee


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PART 2: REMUNERATION POLICYRemuneration philosophy

The remuneration policies are designed to achieve the alignment between Novus Holdings’ business

strategy and the behaviour of the CEO, executive directors and Exco, non-executive directors and senior

management and to ensure that the right skills are attracted and retained. Furthermore, it aims to ensure

short-term success and long-term sustainability, while maintaining and reinforcing entrepreneurship

and team spirit – key points of Novus Holdings’ corporate culture. Novus Holdings aims to reward

employees in a manner that is fair, responsible, and transparent, is reflective of both company and

individual performance and that rewards each employee in line with their individual contribution to

the company’s success.

Novus Holdings’ strategic objectives are set out in the integrated report. The composition of each

remuneration package reflects and rewards the achievement of these objectives.

The remuneration policy is available on the Novus Holdings website at www.novus.holdings/governance.

Key principles of the remuneration policy

To create a performance culture and align the interests of management with the interests of stakeholders

through value creation, the reward strategy is geared to make a sizeable percentage of total pay at risk

and link it to the achievement of targets that are based on company and individual performance. The

policy strives to achieve a fair and sustainable balance between the guaranteed package, STIs and LTIs.

Governance and the Remuneration Committee

The Remuneration Committee is a subcommittee of the board and operates under terms of reference,

which the board reviews annually. It was established to ensure that our remuneration practices support

Novus Holdings’ strategic aims and in doing so attract and retain executives and employees at all levels

successfully, while complying with all relevant legal and regulatory requirements. The Remuneration

Committee also evaluates and remunerates the CEO and oversees the evaluation and remuneration of

executives, non-executive directors and senior management, which is ultimately approved by the board

and shareholders.

The Remuneration Committee is responsible for overseeing and recommending to the board for approval

the Novus Holdings reward philosophy, policy, remuneration mix and the implementation thereof. Until

Neil Birch’s appointment as executive chairman on 1 October 2018, all the members of the Remuneration

Committee were independent non-executive directors. During the 2019 financial year the nomination

committee will review the members of the Remuneration Committee.

The Remuneration Committee actively engages with independent advisors and stakeholders to ensure

that the remuneration philosophy, policy, strategy and practices are aligned with best practice and the

strategic imperatives of Novus Holdings.

The remuneration structure for employees below senior management is determined and approved by the

respective Group executives after consultation with the CEO and the Group executive: human resources

in terms of a mandate that it receives from the Remuneration Committee.

The Remuneration Committee chairman formally reports to the board on the proceedings of the

Remuneration Committee and attends the Annual General Meeting to respond to any shareholder

questions relating to the reward strategy and remuneration paid during the year.

Members of the Remuneration Committee

The members of the Remuneration Committee for the 2018 financial year were:

Member Designation

Mr BJ Olivier (chairman)** Independent non-executive directorMr C Botha*** Independent non-executive directorMr SDM Zungu Independent non-executive directorMr N Birch * Independent non-executive director and

subsequently executive chairman

* Served on the Remuneration Committee as an independent non-executive director from 03 April 2017 to 30 September 2017 and from 1 October to present as executive chairman.

** Will be retiring as independent non-executive director after the AGM on 17 August 2018.*** Will become chairman of the Remuneration Committee with effect from 17 August 2018.

The CEO, CFO, the Group executive: human resources, and certain members of the Board attend

Remuneration Committee meetings by invitation. However, they do not participate in the voting process,

nor are they involved when matters relating to their own remuneration are discussed. PwC has been

engaged as Novus Holdings’ independent advisor and attends Remuneration Committee meetings

in an advisory capacity as and when required. The company secretary acts as the secretary to the

Remuneration Committee.

The Remuneration Committee attendance record for the 2018 financial year is set out on page 99

of the Corporate Governance report.

Responsibilities and duties of the Remuneration Committee

The responsibilities of the Remuneration Committee are summarised as follows:

Annual review of the Group’s reward philosophy, strategy, and policies (including recruitment, retention

and termination policies) for executives to enable the Group to attract and retain executives and

directors who will create value for shareholders.

Oversee the implementation of a remuneration policy that promotes the achievement of strategic

objectives and encourages individual performance.

Annual review of the basis of calculation of the remuneration paid to executives to ensure that it is

reasonable when considering the measurement of performance against predetermined and agreed

criteria.

Ensure that any remuneration policies fairly and responsibly reward executives, considering the

performance of the Group, the performance of each executive and prevailing remuneration trends in

the market.

Review the outcomes of the implementation of the remuneration policy to determine whether the set

objectives are being achieved.

Ensure that the mix of fixed and variable pay, in cash, shares and other elements, meets the Group’s

needs and strategic objectives.

Satisfy itself as to the accuracy of recorded performance measures that govern the vesting of

incentives.

Ensure that all benefits, including retirement benefits and other financial arrangements, are justified

and correctly valued.

Consider the evaluation results of the CEO’s performance and other executives, both as directors and

as executives, in determining remuneration.


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Select an appropriate comparator group when comparing remuneration levels.

Regularly review incentive schemes presented by management to ensure continued contribution to

shareholder value and that these are administered in terms of the rules.

Consider the appropriateness of early vesting of share-based schemes on termination of employment.

Advise on the fees payable to non-executive directors.

Oversee the preparation and recommend the remuneration report to be included in the integrated

report to the board.

Ensure that the remuneration policy and implementation report are put to separate non-binding

advisory votes at the Annual General Meeting.

Determine the policy for and scope of service agreements for members of the executive committee,

termination payments and remuneration commitments for new appointments.

Review (at least annually) the terms and conditions of executive directors’ service agreements.

Consider the quorum of the committee and ensure that the chairman of the committee or, in his/

her absence, an appointed deputy, attends the Annual General Meeting or similar forums to answer

questions about the remuneration strategy and policy.

Review of current industry and general best practice in remuneration.

Review the succession plan for the CEO and other executives on an annual basis.

The key activities of the Remuneration Committee in the year are set out in the chairman’s letter

on page 111 - 112 of the integrated report.

Remuneration mix and package design

The remuneration policy follows the internationally recognised practice of combining guaranteed

packages with STIs and other incentives to construct a competitive remuneration package that aligns

employee behaviour with the achievement of Group objectives. LTIs are awarded at the Remuneration

Committee’s discretion, and the committee considers, on an annual basis, whether LTIs should be

awarded to executives and key managers in the Group. The remuneration mix places a significant portion

of the total remuneration package at risk to yield significant returns based on performance. That said,

remuneration is also aligned with the company’s internal risk management policy and does not encourage

excessive risk-taking by executives.

The scenario graphs illustrate (on a total remuneration basis) the potential remuneration, which can be

earned by executive directors at below minimum, on-target, and maximum company performance. Please

note that due to the forthcoming changes in Novus Holdings’ management team for which incumbents and

their remuneration has yet to be finalised, the information included below is based on the remuneration

structure of the outgoing CEO and CFO. The graphs have been prepared in line with the King IV™

guidance notes.

100%CEO

CFO

Guaranteed Package Total

MINIMUM (R’000)

3 715

0 1000 2000 3000 4000 5000

100% 2 173

28% 42% 31%CEO

CFO

Guaranteed Package Cash STI LTI

MAXIMUM (R’000)

32% 35% 34%

0 2 500 5 000 7 500 10 000 12 500 15 000

13 374

6 893

51% 38% 11%CEO

CFO

Guaranteed Package Cash STI LTI

ON-TARGET (R’000)

56% 31% 13%

0 2 000 4 000 6 000 8 000

7 344

3 848

Fair and responsible remuneration

The Remuneration Committee is committed to ensuring that the remuneration paid to executives

is fair and responsible in the context of overall employee remuneration in the company. To this end,

the Remuneration Committee has implemented several measures to give effect to fair and responsible

remuneration, which are set out in this report.

The Remuneration Committee has also taken a decision to make sure that salary increases for executives

are moderate – this is expanded on in the internal wage gap section below.

Internal wage gap

Novus Holdings is sensitive to the wage disparities between the highest and lowest earners within the

Group. As part of our arrangements to ensure that remuneration paid to executives is fair and responsible,

Novus Holdings calculates and compares its internal Gini coefficient against that of South Africa’s

workforce (see below). When determining the annual guaranteed package increases for executives,

Novus Holdings considers the average salary increase levels for middle management and general

employees. Increases that exceed those for middle management and general employees will only be

made where it is necessary to align the pay packages of executives with the relevant market benchmarks.

Minimum wage

Novus Holdings recognises the fact that, due to the high levels of unemployment in South Africa,

employees typically experience high dependency ratios, which forces them to use their wages to support

many dependants. Higher wages for low-wage workers would therefore benefit both the employed

and the unemployed. In this regard, Novus Holdings ensures that it complies with legislation governing

minimum wage and equal pay, as may be applicable from time to time.

The minimum wage payable is reviewed annually and approved by the Remuneration Committee.

The new minimum wage is then effective from 1 April of every year.

The minimum wage for the different sectors is set as follows:

PrintingPackaging and labels

Tissue and paper manufacturing

01 April 2017 – 31 March 2018 R5 000 R3 500 R3 50001 April 2018 – 31 March 2019 R5 225 R3 600 R3 600


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Wages payable to learners participating in training programmes are either governed by legislation or are

contractually agreed upon with the relevant sector education and training authority, and thus they will not

fall within the ambit of the minimum wages set out above. These categories of learners are excluded from

the minimum wage policy.

Equal pay for work of equal value

Novus Holdings takes proactive steps to identify and progressively address any unjustifiable differences

in remuneration paid to employees at the same level (i.e. employees doing work that is the same or

substantially the same, or work that is of equal value).

Gini coefficient

During the previous financial year, the Remuneration Committee requested that PwC measure its internal

Gini coefficient against the national statistics for Novus Holdings’ industry, as well as for the general

market (all industries). This figure has been considered by the Remuneration Committee, and it will be

used to measure the progress made in addressing any internal remuneration inequities that may arise.

Other reward strategy principles

The guaranteed package, ACI opportunity levels (on-target and outperformance) and LTI expected value

levels for the financial year ended 31 March 2018 are set out below:

Management level

Market position for guaranteed

package

Maximum On-target

ACI earning potential (as a

% of guaranteed package)

Maximum Outperformance

ACI earning potential (as a

% of guaranteed package)

Annual SAR expected

value (as a % of guaranteed

package)

CEO 50th percentile 85% 170% 75%Exco 50th percentile 65% 130% 35%Senior management 50th percentile 35% 70% 25%

SAR awards were made to the CEO, executive directors, Exco, senior management and select members

of middle management on 29 September 2017. In addition, SAR awards were made to the executive

chairman on 05 December 2017.

The guaranteed package, together with the maximum ACI amount and LTI expected value amount,

achieves pay levels that are in line with the market-related pay mix on benchmarked positions.

The CEO, executive directors and Exco do not participate in the RSP. RSPs will be awarded on a case-by-

case basis to key talent below Exco level.

Summary of elements of remuneration policy

The table below summarises the different elements of the remuneration policy, the strategic link behind

each element, and gives a brief description for each aspect of the policy.

Remuneration component

Strategic intent and drivers Detail

Guaranteed package (total cost of employment)

Primarily to remunerate: For skills of the individual Market positioning Cost of living increases

The guaranteed package reflects individual competence and is reviewed annually, with performance-based salary adjustments effective from 1 April each year.

Benefits and allowances

Benefits Integrated approach to wellness, driving employee engagement

Allowances Comply with legislation Contractual agreement

Benefits Benefits include, but are not limited to, membership of a retirement plan (provident or pension fund) and health insurance, disability, and death cover, to which contributions are made by both the company and the employee. The contributions form part of the guaranteed package.

Allowances Allowances are offered in line with statutory requirements and agreements with employees, and form part of the guaranteed package.

STIs ACI ACIs are primarily meant to remunerate for performance at the following levels:

Group Division Team Individual

Second-tier incentivesAd hoc and production bonuses

Top-down bonus pool. For divisional executives, Group and divisional performance, are also considered.

EBIT growth and individual performance scores influence the bonus payments.

Payments are subject to clawback. Sales, marketing, and business development

with reference to sales targets. Exceptional performance and the

achievement of performance conditions.

LTIs Used for: Retention Long-term performance Ownership Wealth creation

Note that RSPs are only awarded to employees below Exco

Consists of the SAR and RSP. Awards were made from the 2018 financial year onwards, as set out in this report.

The granting of options under the Share Option scheme through the Novus Holdings Share Trust is a legacy arrangement. Awards made from the Trust were subject to continued employment with the Group.


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Guaranteed package

The guaranteed package comprises a base salary, compulsory benefits (i.e. retirement, health insurance

and medical aid – see below) and allowances (i.e. car and subsistence – see below). A full total reward

benchmarking exercise is conducted by the Remuneration Committee (in consultation with its

independent advisors) every three financial years to realign the remuneration packages of all employees

to the relevant market benchmarks. Interim adjustments are made (where appropriate) on an annual basis

in line with inflation. Remuneration is also adjusted on an incremental basis based on:

– the results of a formal bi-annual performance assessment;

– the delivery of a formal portfolio of evidence; and

– the results of an agreed programme being monitored by a mentor/coach.

Employees whose guaranteed packages exceed the pay scale for their particular grade receive two thirds

of their normal annual increase until their remuneration is phased into the appropriate salary band. This

was disclosed in part 1 of the 2017 remuneration report.

Benefits and allowances

Benefits include, but are not limited to, membership of a retirement plan (provident and pension fund)

and health insurance, disability, and death cover, to which contributions are made by both the company

and the employee. The contributions towards the benefits form part of the guaranteed package.

Allowances are offered in line with statutory requirements and co-determined substantive agreements.

These include travel allowances for executives, and reimbursive travel payments. Allowances form part

of the guaranteed package, whereas any reimbursive payments fall outside of the guaranteed package.

STIs

STIs comprise the ACI scheme, second tier bonuses for sales executives and ad hoc and production

bonuses for employees who do not participate in the ACI scheme.

ACI schemeThe salient features of the ACI scheme are set out below.

The scheme is a self-funded bonus pool arrangement.

ACI payments are dependent on the achievement of targeted levels of performance.

The applicable targets for headline earnings (Group Division) and EBIT (Other Divisions) were more

than the budgeted amounts.

At Paterson D3 band and above, as well as selected line management and specialists (at the discretion

of the CEO), employees participate in the ACI (total of 61 participants).

The incentive pools comprise Novus Holdings (at Group level), Heatset, Coldset, Africa, Tissue and

Labels (at divisional level). Where a participant is required to focus on both overall Group and divisional

performance, a portion of the bonus will be drawn from the Novus Holdings Group pool and a portion

from the divisional pool(s). The CEO is responsible for determining the allocations between the Group

and the divisional pool(s), which is based on the participants’ roles and responsibilities and the need to

encourage the Novus Holdings team culture.

The threshold performance level for the ACI is set at 85% (0% bonus pool) of the target, with linear

vesting from 85% to 100% of target (100% bonus pool at achieving target) and at 117,8% of target for

outperformance (200% stretch bonus pool).

The objective of the ACI is to drive performance to exceed target and not just achieve it. On exceeding

the target, 20% of the beyond target figure is added to the on-target bonus pool. At 117,8% of target,

the bonus pool grows to 200%. The table below sets out the participants’ share in the beyond target

bonus pool, based on their performance against their individual evaluation scorecards.

Female employees on maternity leave for part of the financial year participate fully in the ACI scheme.

On-target performance

Performance score On-target performance modifier

80% and above 100%Between 50% and 79% Actual percentage achieved on individual performance scorecardBelow 50% 0%

Outperformance

Performance score On-target performance modifier

100% (outstanding) 150%90% (exceeds expectations) 125%80% (meets material expectations) 100%70% (meets some expectations, with development) 50%Below 70% 0%

There are second-tier sales incentives for sales executives, which are subject to specific performance

conditions that drive the behaviours necessary to encourage outperformance.

Performance conditionsThe following table sets out the performance conditions for the ACI, and the link to the integrated

reporting capitals that Novus Holdings uses or affects.

Performance condition Link to integrated reporting capitals

EBIT or headline earnings Financial capital: meeting our budgeted results ensures that we have an unencumbered financial position, which serves as a solid base to raise capital with which the Group can, in conjunction with cash reserves, fund diversification.

Please note, all final ACI amounts are dependent on the quantum of the bonus pool available, as Novus

Holdings operates a fully flexible bonus pool. Therefore, where a threshold bonus pool is available, all

participants’ final ACIs will be adjusted downwards. For an on-target bonus pool, the final ACI will depend

upon the relative performance scores of all ACI participants. For a stretch bonus pool, participants’ final

ACIs may be increased pro rata to the larger bonus pool available (depending on the relative performance

scores of all ACI participants).

The ACI formula is set out below.

Pro-forma STI = Total Guaranteed Pay x On-target STI % x Performance %


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On-target earning potentials – ACIThe 2019 on-target earning potentials is the same as in previous years (see table on page 118). These

percentages are reviewed annually based on past performance and expectations for the following year.

Employment equity and skills development, working capital, cash flow management and productivity

targets are included in all the participants’ individual balanced scorecards.

Ad hoc bonuses, production bonuses and secondary incentivesEmployees who do not participate in the Group ACI and who perform beyond their responsibilities

may be awarded an ad hoc bonus however, ad hoc bonuses are limited to 13th cheques. This ad hoc

bonus is not contractually agreed upon. Executives must nominate potential recipients to the CEO for

approval. Wherever the ad hoc bonuses exceed a 13th cheque, the employee will need to participate

in the ACI scheme.

Employees in production positions who do not participate in the Group ACI and who make a major

contribution to the achievement of production efficiency receive recognition for their efforts; however,

production bonuses are limited to 13th cheques. Production bonuses are not guaranteed, and executives

responsible for operating divisions must nominate recipients to the CEO for approval. Wherever the

production bonuses exceed a 13th cheque, the employee will need to participate in the ACI scheme.

Second-tier incentives are comparable to a commission structure (subject to a maximum level) and are

used to reward sales, marketing, and business development executives for exceptional performance

with reference to sales achieved. They are proposed to the Remuneration Committee by the CEO. These

bonuses are considered against the participants’ guaranteed package and variable remuneration awards

received (if any).

Performance conditions to qualify for such ad hoc and production bonuses and secondary incentives were

finalised by the Remuneration Committee during the year.

Risk adjustmentsClawback will be implemented on ACI payments post vesting at the discretion of the Remuneration

Committee. The events giving rise to clawback include fraud and employee misconduct. The clawback

period runs for one year after the ACI payment was made. Should one of the trigger events occur, the

Remuneration Committee will proceed against the participants for the pre-tax value of the ACI payment.

The Deferred Bonus Plan (DBP)

A new DBP is being proposed at the upcoming AGM. If approved the first year of operation will be the

2019 financial year.

The intention of the DBP is to incentivise, retain and motivate participants to deliver Novus Holdings’

business strategy over the long-term.

Executive directors, Exco and senior management are eligible to participate in the DBP. The

Remuneration Committee can exercise its discretion to add participants.

In terms of the DBP, a portion of the participant’s STI is paid out in cash, and a portion is automatically

deferred and delivered as bonus shares.

The bonus shares are registered in the name of the participant shortly after the award, but the shares

are subject to disposal and forfeiture restrictions until vesting date. The vesting of bonus shares is

subject to remaining in employment.

The number of bonus shares awarded to participants will be based on a percentage of the annual bonus

that is deferred; usually on a pre-tax basis. Therefore, if no bonus is received in a year, the employee will

not be eligible to receive an award of bonus shares (as there is nothing to defer).

The DBP has no prospective performance conditions (as the performance will be tested “on the way in”

based on the performance-linked STI awarded to a participant).

The awards vest over a two-year period (cliff vesting). This plan is subject to the same company and

individual limits as the Novus Holdings Share Trust rules, being 5% and 1% respectively, with the share

trust settlement rules also being applicable.

LTIs

Novus Holdings operates a SAR and RSP as set out below.

The SAR Executive directors, Exco and senior management are eligible to participate in the SAR. The first awards

were made in the 2018 financial year. In terms of the SAR, employees receive shares equal to the

increase in the value of a certain number of shares between the award date and the exercise date.

The Remuneration Committee considers participation on an annual basis, as well as the quantum of the

award. The number of SARs allocated to each participant is primarily based on the employee’s annual

salary, grade, performance, retention and attraction considerations, as well as market benchmarks.

The SAR awards vest in equal tranches on the third, fourth and fifth anniversaries of the grant date.

For the 2020 financial year onwards, in line with best practice, the Group is introducing performance

conditions into the SARs. The rules of the scheme have been adapted to allow for the inclusion of

performance conditions and as such will be voted on during the upcoming Annual General Meeting of

shareholders. Performance conditions will be measured over a three year period.

Given that the first awards with performance conditions will not be made until the 2020 financial year

(subject to approval at the AGM), the Remuneration Committee has yet to finalise the exact details

of the performance conditions. It has however, had a number of discussions and the performance

conditions under consideration are set out in the table below. In setting the performance conditions the

Remuneration Committee will act in good faith to ensure they are appropriate for Novus Holdings, in line

with strategy and sufficiently stretching so as to drive the desired performance outcomes.

Vesting is also subject to the continued employment of the participants during the employment period.

Performance condition WeightingThreshold

(30% vests)Target

(65% vests)Stretch

(100% vest)

HEPS 40% CPI + 4% p.a. CPI + 6% p.a. CPI +8% p.a.

ROCE 30%Actual ROCE of

base yearActual ROCE of

base year + 0,4%Actual ROCE of

base year + 0,9%

Relative TSR 30%Median of peer

group —

Upper quartile of peer group or

above

Performance targets

The RSP Key employees with critical and scarce skills are eligible to participate in the RSP.

Executive directors and Exco of the Group will not participate in the RSP.


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The Remuneration Committee considers participation on an annual basis, as well as the quantum of the

award. The number of RSPs allocated to each participant is primarily based on the employee’s annual

salary, grade, performance, retention, and attraction considerations, as well as market benchmarks.

The awards vest in equal tranches on the first, second, third and fourth anniversaries of the grant date.

In terms of the RSP, participants are awarded conditional rights over shares on an annual basis, the

vesting of which are conditional upon the continued employment of the participants throughout the

employment period determined by human resources and the Remuneration Committee.

Legacy LTI schemes

Historic LTI schemes are set out below. Currently, no allocations are being made in terms of these LTI

schemes. Please refer to the previous section (LTIs) for details on Novus Holdings’ active LTI schemes.

Name of scheme Details

Legacy phantom SAR schemes (currently being phased out)

As part of the total reward philosophy of the Paarl Media Group (Proprietary) Limited prior to listing and becoming Novus Holdings Limited, two phantom share option schemes were established, namely the Paarl Media Holdings (Proprietary) Limited SAR plan and the Paarl Coldset (Proprietary) Limited SAR plan.

The phantom schemes will be phased out entirely by September 2019.

Novus Holdings Limited Share Option Scheme

The Novus Holdings Limited Share Trust was established and registered in South Africa to provide employees with the means to own shares in the Group.

In terms of the rules of the scheme, participants may pay for their option shares at any time after acceptance of the option, but the scheme shares will, on the basis that the purchase price has been paid in full, only be released and delivered to participants in three equal tranches in years 3, 4 and 5.

Early termination of employment

Bad leaversEmployees who terminate employment due to resignation, dismissal or retirement under circumstances

that would otherwise lead to dismissal will be treated as bad leavers and will forfeit all unvested awards

under the share incentive schemes.

Good leaversPro rata vesting of the SAR and RSP applies where the employee resigns from the company due to ill

health, retirement, disability, death, retrenchment or any other circumstance that the Remuneration

Committee may deem applicable. Pro rata vesting of unvested LTI instruments will be based on the

time employed from the award date until the early vesting date and where relevant the achievement

of performance conditions.

Dilution limit

Historically, Novus Holdings had an approved dilution limit of 10% of shares in issue. However, following

a review of the share plans, and in light of investor feedback, going forward the Company will work within

a maximum limit of 5% of shares in issue across all share plans. The individual limit will remain at 1% of the

shares in issue. The Remuneration Committee will act prudently in using the dilution limit. To date 7% of

issued shares have been made available to the Share Trust (of which only a portion has been utilised

for share plan allocations).

The use of the dilution limit in the 2018 financial year is set out in part 3 of this report.

Executive directors contracts

None of the executive directors are on fixed-term contracts. The individuals serving on the Exco are not

under any contractual restraints of trade, although the Remuneration Committee may, at its discretion,

negotiate a restraint of trade as part of an outgoing executive’s mutual separation agreement (where

doing so would be beneficial to the company). The standard notice period for executives was one month

but has subsequently been revised to three months for all new executive appointments. RSP awards

matched with restraints of trade may be made to key managers to retain them in the business.

Novus Holdings does not have any agreements in place that provide for ex gratia or other lump sum

payments to executives on severance, retirement or change of control. There is also no waiver of

performance conditions for incentive schemes in the event of a change of control, however, the unvested

LTIs and ACIs may be paid to participants pro rata to the period served.

New appointments

New appointments are not awarded sign-on bonuses as a matter of course, although the Remuneration

Committee reserves the right to do so where appropriate. Any incentives awarded to new appointees

are made as compensation for the indicative value of any awards forfeited from their previous employer.

As applicable, the Remuneration Committee may subject such awards to vesting periods, performance

conditions and holding periods, considering the conditions of the forfeited award from the appointee’s

previous employer.

Non-executive directors

Non-executive directors are appointed for an indefinite period and are subject to rotation in line with the

company’s memorandum of incorporation. For the proposed re-election of non-executive directors, the

board considers their previous performance.

Non-executive directors are paid a base fee and a committee fee. The fee structure is evaluated on a

regular basis based on independent non-executive fee surveys and considering the profile or size of Novus

Holdings and its non-executive directors’ responsibilities. Proposed increases in fees are determined by

the Remuneration Committee (members of the Remuneration Committee do not determine their own

fee levels – management makes recommendations to the board regarding their proposed fee increases).

When determining the increase levels, the remuneration increases across the Group are considered.

Non-executive directors do not receive any payments linked to company performance (i.e. STIs and LTIs).

Fees are paid in cash. Non-executive directors are reimbursed for their reasonable travel and subsistence

expenses in line with the reimbursement policy for employees. They do not have any service contracts

with the Group. Non-executive directors’ fees are benchmarked against the market for companies of

a similar size in a similar sector, tabled before the board for approval, and thereafter are proposed to

shareholders for approval.

In line with the Companies Act, 71 of 2008, the proposed fees are tabled before shareholders for approval

by special resolution at the Annual General Meeting. The proposed fees are set out in part 3 of this report.


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The table below sets out the proposed 2019 non-executive directors’ fee levels per position as compared

to the 2018 fee levels, which were approved by shareholders at the 2017 Annual General Meeting, and

the percentage increase for each position. The board proposed a 4% increase for all positions to apply

to the 2020 financial year. Please see the special resolution 1 on page 275 for proposed non-executive

directors’ fees.

Executive Chairman Remuneration arrangements

Mr Birch was appointed as the Executive Chairman of the Group on 01 October 2017. As part of

his remuneration package agreed on appointment, he receives a guaranteed package of R1 200 000.

In addition it was agreed Mr Birch would participate in the SAR and received his first award in

December 2017.

Following Mr Birch’s appointment as CEO effective 19 June 2018, the board has deemed it necessary

to revisit his remuneration package. The details of the revised remuneration package have not yet been

finalised and will be disclosed in next year’s remuneration report.

Non-binding vote

The remuneration policy for the 2019 financial year contained in part 2 of the remuneration report

will be tabled for a non-binding vote for shareholder endorsement at the Annual General Meeting, to

be held on 17 August 2018.

Voting and shareholder engagement

As explained in part 1 (the background statement), if 25% or more of the shareholders exercising their

rights vote against either the remuneration policy or the implementation report, the Remuneration

Committee will engage with the shareholders regarding their reasons for voting against the resolution(s).

The methods of shareholder engagement are set out in Novus Holdings’ remuneration policy.

PART 3: IMPLEMENTATION OF REMUNERATION POLICY FOR THE YEAR ENDED ON 31 MARCH 2018

Compliance with the remuneration policy

The Remuneration Committee is satisfied that Novus Holdings complied with the remuneration policy in

the 2018 financial year, and there were no material deviations from it.

Company performance versus average growth in executive remuneration

The table below compares certain company performance measures against the average executive

guaranteed package increase percentages over the past three financial years. Novus Holdings’ financial

performance for the 2018 financial year is contextualised in the Financial review from page 70 of the

Integrated report.

2018 %

2017 %

2016 %

Average increase in executive guaranteed package levels (%) 4 4,95 6,0Growth in headline earnings (%) (7,1) (20,8) 16,1Net return on equity (%) 2,5 9,0 16,6

Internal wage gap

Novus Holdings remains sensitive to the internal wage gap, in line with the principle of fair and

responsible remuneration.

The increase in salaries for general staff was between 5% and 6,5%, compared to a fairly modest increase

of 4% for executive directors. The average guaranteed pay increase percentages over the past three

financial years are compared in the graphic below.

2018

2017

2016

Other staff Executive directors

0% 2,00% 4,00% 6,00% 8,00%

2017/18 2018/19 2019/20

Chairman Member Chairman Member Chairman Member

Board of directors 1 050 000 1 278 250 1 102 500 292 162 1 146 600 303 848Audit committee 166 950 83 475 175 298 87 648 182 310 91 154Risk committee 111 300 55 650 116 865 58 432 121 540 60 769Remuneration committee 133 560 66 780 140 238 70 119 145 848 72 924Nominations committee 21 000 10 500 22 050 11 025 22 932 11 466Social and ethics committee 111 300 55 650 116 865 58 432 121 540 60 769Investment committee 21 000 10 500 22 050 11 025 22 932 11 466

1 Only remuneration related to role as Chairman.


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ACI outcomes

Group performanceThe table below sets out the performance target and actual performance for the Group headline earnings

performance condition for the 2018 financial year.

Threshold Target Stretch ActualActual as

% of awardHeadline earnings R312m R367m R367+ R329m 89,6%

Executive directorFY2018 STI

Amount

Actual STI as percentage of

guaranteed package %

On-target ACI earning

potential percentage of

guaranteed package %

KA Vroon Rnil 0 75%E Fivaz Rnil 0 55%

Number of SARs Strike price

CEO* 625 023 R6.54CFO* 356 408 R6.54Executive Chairman 364 742 R6.65

*These awards were subsequently cancelled due to resignations.

Opening balance 19 207 815 5,53%LTI awards/allocations made to participants in the year 1 551 494 0,45%Forfeited/lapsed (shares reverted back to the Share Trust) -5 960 638 -1,72%Closing balance 14 798 671 4,26%

Individual performance is based on a balance scorecard of performance measures that includes items such

as employment equity and skills development, working capital, cash flow management and productivity

targets.

The table below demonstrate the ACI outcomes in the 2018 financial year for the executive directors.

Due to his resignation, Edrich Fivaz was not eligible for an ACI payment as he was not in employment

on the date of payment. With regard to Keith Vroon, the Remuneration Committee determined that no

bonus will be payable.

Divisional performanceDivisional performance for the ACI is measured against pre-agreed EBIT performance targets. For the

2018 financial year Headset, Coldset, Tissue and Africa did not achieve their targets. The labels division

did achieve their target.

Overall ACI outcomesDue to overall company performance during the year, the total ACI pool payment was calculated to be

R2 561 982 (2017: R4 530 368).

Discretionary bonuses, ad hoc bonuses, production bonuses and secondary incentives

As set out above, there was no ACI bonus pool generated for ACI participants in Headset, Coldset, Tissue

and Africa. The Remuneration Committee however, was cognisant of recognising the effort of employees

considering the challenging circumstances faced during the 2018 financial year and therefore accepted a

proposal from the CEO to create discretionary bonus pools for these divisions. The CEO, in conjunction

with the divisional executive subsequently determined, based on individual performance the value of

bonuses to be distributed to individuals. The total value of discretionary bonuses in the 2018 financial

year amounted to R4 951 639 (2017: Rnil ).

The total value of ad hoc and production bonuses in the 2018 financial year amounted to R551 425

(2017: R583 000) and R1 685 482 (2017: R1 879 965) respectively.

The total value of second-tier sales incentives in the 2018 financial year amounted to R2 051 728

(2017: R1 217 747).

Long-term incentive outcomes

The first tranche of the share options granted on 31 March 2015 vested on 31 March 2018. The

strike price of the award is R13.25 and based on a year-end share price of R4.58 the intrinsic value

of the award is zero. As such, no value is reported under the LTI column in the executive director

remuneration table below.

Long-term incentive awards made in the year

The first awards under the SAR and RSP were made in the 2018 financial year. Details of the awards made

to executive directors are contained in the table below.

The table below sets out the usage of the dilution limit for Novus Holdings’ share schemes in the 2018

financial year.

Details and categories of share awards made to Novus Holdings’ executive directors are contained in

note 16 in the annual financial statements on page 217.

Executive directors’ remuneration table

The tables below set out the total remuneration earned by the executive directors. In the 2018 financial

year, Novus Holdings regarded its executive directors and executive chairman as its prescribed officers

as defined in the Companies Act, 71 of 2008, read with the Companies Regulations, 2011.


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Executive directors

Fees for services

as director R’000

Remuneration R’000

Pension fund

R’000

Short-term incentive

R’000

Long-term incentive1

R’000

Total remuneration

in FY2018 R’000

Mr KA Vroon2 — 3 331 383 — 895 3 714Mr N Birch3 1 050 600 — — 1 650Mr E Fivaz4 — 1 998 174 — 220 2 172

1 As set out above, the share options that vested during the year are underwater and as such the value is nil. 2 Resigned as CEO on 15 June 2018. ³ Appointed as executive chairman on 01 October 2017, and subsequently as CEO following Keith Vroon’s

resignation as CEO on 15 June 2018. 4 Resigned as CFO on 31 March 2018.

Executive directorsRemuneration

R’000

Pension fund

R’000

Short-term incentive

R’000

Long-term incentive1

R’000

Total remuneration

in FY2018 R’000

Mr KA Vroon 3 185 354 — — 3 539Mr E van Niekerk2 2 258 98 — 490 2 846Mr E Fivaz3 1 550 127 — 222 1 899

1 Number of SARs and options exercised during the year under review multiplied by the share price on exercise date less the price of the SAR and options at grant date.

2 Resigned as CFO on 31 August 2016.3 Appointed as CFO on 1 September 2016.

YEAR ENDED 31 MARCH 2018

YEAR ENDED 31 MARCH 2017

Termination arrangements

CFOMr Fivaz’s final date of employment was 31 March 2018. In line with the plan rules all outstanding LTI

awards lapsed on his departure. The Remuneration Committee have chosen to exercise their discretion

to allow the SAR awards from 2014 (being 13 336 of instruments) to vest early on his termination and

be exercised.

CEOMr Vroon’s final date of employment is 30 June 2018. In line with his contract he will be paid two months’

salary in lieu of notice. Mr Vroon’s outstanding SAR awards granted in 2014, 2015 and 2018, of which

the total number of instruments is 2 118 670 will lapse in line with the plan rules. The Remuneration

Committee has chosen to exercise its discretion to allow the SAR awards from 2012 and 2013 (being

70 004 of instruments) to vest early on his termination and be exercised.

Non-executive directors’ fees

The table below sets out the fees paid to individual non-executive directors in the 2018 financial year.

Fees paid in 2018 R’000Non-executive director

Ms E Weideman * —Mr M Mayman 1 —Ms GP Dingaan ~ 487Mr SDM Zungu 353Mr BJ Olivier 589Mr F Robertson † 139Mr JN Potgieter ^ 294Mr CG Botha 478Ms N Mkhondo ‡ —Ms L Mtanga ** 300Ms C Hess ‹ —Mr N Birch # —

* Resigned from the Board on 29 September 2017.1 Retired from the Board on 03 April 2017.~ Resigned from the Board on 31 January 2018.† Retired from the Board on 03 April 2017.^ Appointed as Lead Independent Director on 03 April 2017.‡ Appointed to the Board on 15 December 2017.** Appointed to the Board on 15 July 2017.‹ Resigned from the Board on 29 September 2017.# Appointed as the independent non-executive chairman of the Board from 03 April 2017 to 30 September

2017, refer to Executive director table for disclosure of fees paid to him.

Non-binding vote

The implementation report for the 2018 financial year will be tabled for a non-binding vote for

shareholder endorsement at the Annual General Meeting, to be held on 17 August 2018.

Approval

This Remuneration Report was approved by the Remuneration Committee on 13 June 2018.

Bernard Olivier

Chairman: Remuneration Committee

14 June 2018


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The Remuneration Committee has approved the prospective fee levels for non-executive directors based

on inflation and the outcome of a survey by independent advisors, which is based on the role fulfilled and

committee responsibilities.

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REPORTOF THE SOCIAL AND ETHICS COMMITTEECOMPOSITION AND ATTENDANCE AT COMMITTEE MEETINGSThe composition of the Committee and attendance of meetings are set out on page 100.

FUNCTIONS OF THE SOCIAL AND ETHICS COMMITTEEThe role, functions and responsibilities of the Committee are prescribed by the Companies Act,

71 of 2008, as detailed in the Committee’s terms of reference, which are reviewed by the board annually.

In executing its duties, the Committee is responsible for monitoring and overseeing:

Ethics;

Social and Economic Development;

Good corporate citizenship;

Customer relations;

Environment, health and public safety;

Broad-Based Black Economic Empowerment;

Labour and employee engagement; and

Compliance with applicable laws and regulations.

HIGHLIGHTS AND ACTIVITIES OF THE 2018 FINANCIAL YEARIntroduction

Novus Holdings has sought to align its business with the principles and recommended practices of

the King IV Report on Corporate Governance (“King IV”). The Group remains guided by the King IV

recommended practices as well as other applicable laws, and regulations and industry standards.

Organisation-wide Ethics

In 2018, large emphasis was placed on embedding organisation-wide ethics in accordance with the Novus

Holdings’ Code of Business Ethics and Conduct. In this regard, continuous ethics awareness campaigns

and the proactive monitoring of the fraud anonymous tip-off line to identify and address areas of concern

were utilised to foster a good ethical culture in the Group.

Novus Holdings continued to address conflicts of interests throughout the Group, which included

the adoption and implementation of a Gift Policy to ensure responsible and ethical business practices

throughout the Group.

Further to the above, the results from the employee engagement surveys were reviewed and a corrective

action plan was implemented by the executive team to address areas of concern. The Committee closely

monitored the corrective action plan implemented by the Executive.

Good Corporate Citizenship

With the assistance of the Audit Committee, the Committee reviewed compliance with legislation

and/or regulations which were within the remit of the Committee’s mandate. This included, inter alia,

Competition Law and Anti-bribery Law (“ABC”) and Competition Law.

In 2018, priority was placed on preventing corruption and fraud. An anti-bribery and corruption (“ABC”)

programme was implemented via the roll-out of a facilitated preliminary risk assessment process and

formulation of an appropriate ABC policy. Specific focus was placed on risks attributable to doing

business in Africa. Tip-offs were reviewed to establish areas of concern and whether action was taken

to resolve matters.

Broad-Based Black Economic Empowerment (B-BBEE)

During the year under review and given the unbundling by Media24, the Committee continued to

monitor progress made with regard to the Group’s transformation activities, as measured by the generic

scorecard issued by the Department of Trade and Industry (DTI), to track its Broad-based Black Economic

Empowerment scoring. This included continued focus on the Group’s wide-reaching skills development

programmes for its employees as well as enterprise and supplier development.

In relation to employment equity and skills development, the Committee continued to monitor progress

against its targets in relation to the Group’s employment equity plan and skills development plan in

accordance with the short-, medium- and long-term strategy of Novus Holdings.

The unbundling by Media24 resulted in the renegotiation of the printing agreement that the Group had

with Media24. Although the Group still retained a significant part of the printing agreement, this was

at revised prices and the renegotiation resulted in the loss of some of the printing services that were

previously conducted by the Group. Both of these put a significant pressure on the Group’s business

forcing the Group to consider embarking on section 189 retrenchments. One of the effects of the

retrenchments was an inevitable negative impact on some of the successes that the Group had achieved

on its employment equity and skills development targets. As a result, the ways, in which employment

equity and skills development targets can be improved will be closely monitored by the Committee and

will be one of its key focus areas for the year ahead.

Environment, Health and Safety

During the year under review and with the assistance of the Risk Committee, the Committee continued

to monitor environmental, health and safety aspects in accordance with the short-, medium- and long-

term strategy of the Group. Apart from the water pressure at its Western Cape operations, no significant

environmental, health and safety issues arose during this financial year. With regards to the water

challenge at its Western Cape operations, the Group was able to rely on the existing borehole water

supply and the Committee approved a water treatment project. This fully sufficiently addressed and

abated any challenges in this regard.


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CSI Programmes

In 2014, Novus Holdings established its Future Foundations initiative as the umbrella under which our

socio-economic development (SED) and corporate social investment (CSI) projects are covered. At the

heart of this initiative, is the idea of providing a hand up, not a hand-out. This initiative supports projects

that provide beneficiaries with the right tools to empower themselves in order to inspire others and

positively transform their communities.

We encourage each of our entities to take ownership of driving social investment activities in

their surrounding communities. All projects are governed by central guidelines and primarily focused

on education.

The Future Foundations initiative provides support through the following forms:

financial aid

mentorship

guidance on business management

basic start-up packs and equipment

management courses for the NGO leader/s

much-needed renovations assistance at facilities

scholarship grants

apprenticeship programmes

corporate bursaries

For more information on our CSI initiative please view our Responsible Business Report online at

www.novus.holdings.

Labour and Employee Engagement

During 2018, the Committee reviewed the outcomes of the plans implemented to ensure compliance with

recently amended labour legislation in South Africa, including ensuring equal pay for work of equal value,

in furtherance of the Group’s objectives of promoting equality, preventing discrimination and creating

decent employment.

KEY AREAS OF FOCUS FOR THE 2019 FINANCIAL YEARKey areas of focus for the 2019 financial year will include the following:

Ensuring the fostering of a good ethical culture by monitoring progress on the corrective action plan

emanating from the results of the employee engagement survey;

Ongoing monitoring of compliance with the ABC legislation and other compliance aspects relevant to

the Group;

Monitoring ways in which the Group’s B-BBEE, employment equity targets and skills development can

be improved; and

Monitoring the effectiveness of compliance management.


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CONCLUSIONDuring the period under review, the Committee has discharged its responsibilities appropriately.

Management has confirmed that there has been no material non-compliance with legislation nor

regulations, that are within the remit of the Committee’s mandate. In addition, there were no

infringements of the relevant governance codes that were reported.

The Committee reviewed the results of its evaluation and is of the view that the evaluation was

effective and assists in improving the Committee’s performance.

Lulama Mtanga

Chairman: Social and Ethics Committee

29 June 2018

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REPORT OF THE RISK COMMITTEE

COMPOSITION AND ATTENDANCE AT COMMITTEE MEETINGSThe composition of the Committee and attendance of meetings are set out on page 99.

FUNCTIONS OF THE RISK COMMITTEEThe role, functions and responsibilities of the Committee are as detailed in the Committee’s terms of

reference which is reviewed by the Board annually.

HIGHLIGHTS AND ACTIVITIES OF THE 2018 FINANCIAL YEARRisk management and combined assurance

The Novus Holdings Board is responsible for the governance of risk and mandates the Risk Committee to

monitor risk management, which includes the assessment of risk management processes and plans. A risk

register of significant risks facing the Group is maintained, and actions to manage these risks within the

board-approved ranges of tolerance are monitored.

The Novus Holdings enterprise-wide risk management framework is designed to ensure that significant

risks and related incidents are identified, documented, managed, monitored and reported in a

consistent and structured manner across the Group. This framework is modelled on the Committee

of the Sponsoring Organisations of the Treadway Commission Framework for Enterprise-wide Risk

Management (COSO ERM), as well as the internationally accepted COBIT framework for the governance

of information technology. The risk management process is subject to continual improvement.

As a leader in print and manufacturing, operating in a competitive and dynamic market, the Group is

exposed to a wide range of risks. Identifying risks and drafting plans to manage these risks on both

a strategic and an operational level form part of each division’s business plan.

During the past year, Novus Holdings undertook various risk control assessments at all of its facilities,

which were used to improve the risk management processes at each site.

An integral part of the risk-control process is the commitment, guidance and leadership provided by the

senior management at site level, including regular auditing by the Novus Holdings Group SHERQ manager.

External risk audits are conducted annually. The risk control audits included an on-site survey of each

operation and a detailed document review, covering the following disciplines:

Management/risk control organisation

Fire defence

Engineering practices

Security

Emergency planning

Motor fleet (including forklifts)

Risk management and material matters

The material matters identified on page 44 of the integrated report, all stem from risks identified in

the businesses through the implementation of its Combined Assurance Model (CAM). These risks are

reviewed and revised at least annually by the Risk Committee of the Board.

Combined Assurance at Novus Holdings

A CAM, that maps the significant risks facing Novus Holdings to the various sources of assurance being

provided, was developed during the year. The CAM enables Novus Holdings to take a holistic view of the

assurance being provided across the various lines of defence, over the significant risks, as well as the level

of assurance being provided (i.e. more than one party, independent assurance, etc.). The CAM also enables

an organisation to deploy assurance resources where more assurance is required or to reduce assurance

in areas where there is possible over assurance and duplication of efforts.

The CAM will continue to evolve, refine and mature as management imbeds it into operations. As part of

this maturing process, management is in the process of developing a Combined Assurance Framework for

Novus Holdings which is aligned with the CAM that has been developed.

As recommended by the King IV report on Corporate Governance, the Board should oversee that a CAM

is applied which incorporates and optimises the various assurance services and functions. In addition,

the Board should oversee that the CAM effectively covers the organisation’s significant risk through

the combination of various assurance service providers and functions, including management, risk

management and compliance, internal audit and external audit.

The CAM details the three lines of defence which is mapped to the risk profile of the organisation.

The cross reference will then detail the assurance coverage. Judgement can be made on over or

under assurance and adjustments may be made accordingly. The CAM can also be used for reporting

processes. An annual process must be developed to evaluate and report to management on the adequacy,

effectiveness and efficiency of the development and implementation of the combined assurance

framework. The CAM should be approved by the Audit and Risk Committees on an annual basis.

The CAM identified three key risk categories:

High inherent risk scores;

High residual risk scores; and

Risks where the inherent score is significantly reduced by the control processes implemented by

management.


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For these three categories, the typical desired level of assurance is a minimum of two levels of assurance

(i.e. management or the Board, and one independent assurance provider). The model then allows for less

important risks to be assured by management with a lower level of assurance required (i.e. only provided

by management or the Board).

Certain risks, although they may fall into the three categories noted above, are monitored by management

or the Board and due to their nature cannot be assured by an independent party – such risks have been

identified in the CAM.

CONCLUSIONDuring the period under review, the Committee was satisfied that it has discharged its responsibilities

appropriately. The Committee reviewed the results of its evaluation and is of the view that the evaluation

was effective and assists in improving the Committee’s performance.

Christoffel Botha

Chairman: Risk Committee

29 June 2018

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ANNUALFINANCIAL STATEMENTS

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STATEMENT OF RESPONSIBILITY BY THE BOARD OF DIRECTORSFOR THE YEAR ENDED 31 MARCH 2018

REPORT OF THE AUDIT COMMITTEE

The annual financial statements of the Group and the Company are the responsibility of the directors of

Novus Holdings Limited. In discharging this responsibility, they rely on the management of the Group to

prepare the annual financial statements presented on pages 158 to 254 in accordance with International

Financial Reporting Standards (IFRS) and the South African Companies Act No 71 of 2008, as amended.

As such, the annual financial statements include amounts based on judgements and estimates made by

management. The information given is comprehensive and presented in a responsible manner.

The directors accept responsibility for the preparation, integrity and fair presentation of the annual

financial statements and are satisfied that the systems and internal financial controls implemented by

management are effective.

The directors believe that the Company and Group have adequate resources to continue operations as

a going concern in the foreseeable future, based on forecasts and available cash resources. The financial

statements support the viability of the Group and the Company. The preparation of the financial results

was supervised by the acting chief financial officer, Edrich Fivaz CA (SA).

The independent auditing firm PricewaterhouseCoopers Inc., which was given unrestricted access to

all financial records and related data – including minutes of all meetings of shareholders, the board of

directors and Committees of the board – has audited the annual financial statements. The directors

believe that all representations made to the independent auditors during their audit were valid and

appropriate. PricewaterhouseCoopers Inc.’s Audit Report is presented on page 150.

The annual financial statements were approved by the Board of directors on 14 June 2018 and are signed

on its behalf by:

NW Birch

Executive Chairman

The Audit Committee has pleasure in submitting this report, as required by section 94 of the South

African Companies Act No 71 of 2008 (“the Act”).

FUNCTIONS OF THE AUDIT COMMITTEE

The Audit Committee has adopted formal terms of reference, delegated to it by the board of directors,

as its Audit Committee charter. The Audit Committee has discharged the functions in terms of its charter

and ascribed to it in terms of the Act as follows:

Reviewed the year-end financial statements, culminating in a recommendation to the Board to adopt

them. In the course of its review the Audit Committee:

– takes appropriate steps to ensure that the financial statements are prepared in accordance

with International Financial Reporting Standards (IFRS) and in the manner required by the

Companies Act of South Africa;

– considers and, when appropriate, makes recommendations on internal financial controls;

– deals with concerns or complaints relating to accounting policies, internal audit, the auditing

or content of annual financial statements, and internal financial controls; and

– reviews legal matters that could have a significant impact on the organisation’s financial

statements.

Reviewed the external audit reports on the annual financial statements;

Approved the internal audit charter and audit plan;

Reviewed the internal audit and risk management reports and, where relevant, recommendations being

made to the Board;

Evaluated the effectiveness of risk management, controls and the governance processes;

Verified the independence of the external auditors, nominated PricewaterhouseCoopers Inc.

as the auditors for 2018 and noted the appointment of Mr Viresh Harri as the designated auditor;

Approved the audit fees and engagement terms of the external auditors;

Determined the nature and extent of allowable non-audit services and pre-approved the contract

terms for the provision of non-audit services by the external auditors.

MEMBERS OF THE AUDIT COMMITTEE AND ATTENDANCE AT MEETINGS

The Audit Committee consists of the non-executive directors listed hereunder and meets at least three

times per annum in accordance with the Audit Committee charter. All members act independently as

described in section 269A of the Companies Act. During the year under review three meetings were held.

– BJ Olivier (Chair) – BCom (Acc), CTA, CA (SA)

– CG Botha – BCom (Law), LLB, Qualified Chartered Accountant

– HL Mtanga – BA (Social Sciences), LLB, Postgraduate Diploma in European Community Competition Law

INTERNAL AUDIT

The Audit Committee has oversight of the Group’s financial statements and reporting process, including

the system of internal financial control. It is responsible for ensuring that the Group’s internal audit

function is independent and has the necessary resources, standing and authority in the organisation to

discharge its duties. The audit Committee oversees co-operation between internal and external auditors,

and serves as a link between the Board of directors and these functions. The head of internal audit reports

functionally to the chair of the Audit Committee and administratively to the chief financial officer.

CERTIFICATE BY THE COMPANY SECRETARY In terms of section 88(2)(e) of the Companies Act No 71 of 2008, as amended, we, Kilgetty Statutory

Services Proprietary Limited, in our capacity as company secretary of Novus Holdings Limited, confirm

that for the year ended 31 March 2018, the company has lodged with the Companies and Intellectual

Property Commission, all such returns as are required of a public company in terms of the Companies Act

and that all such returns and notices are, to the best of our knowledge, true, correct and up to date.

Kilgetty Statutory Services Proprietary Limited

Company secretary

14 June 2018


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Based on the review of the Group’s system of internal controls and risk management, and considering

the information and explanations given by management and discussions with the external auditor on the

results of the audit, nothing has come to the attention of the Audit Committee that caused it to believe

that the Group’s system of internal controls and risk management is not effective, and that the internal

financial controls do not form a sound basis for the preparation of reliable financial statements.

COMBINED ASSURANCE

The Group has recently implemented a combined assurance model (CAM). This process was co-ordinated

by internal audit. Combined assurance across the Group is overseen by the Audit Committee. The CAM

draws from the risk management process and assesses the adequacy of assurance being provided using

the five lines of defence model. The CAM is being embedded through the Group with the objective of

optimising the assurance regime.

ATTENDANCE

The internal and external auditors, in their capacity as auditors to the Group, attended and reported

at all meetings of the Audit Committee. Executive directors and relevant senior managers attended

meetings by invitation.

CONFIDENTIAL MEETINGS

Audit Committee agendas provide for confidential meetings between the Audit Committee members and

the internal and external auditors.

EXTERNAL AUDITORS

In assessing the auditors’ independence, the Audit Committee considered guidance contained in King IV

as well as IRBA publications and the related commentary thereon. PricewaterhouseCoopers Inc. has been

auditor of the Group for 24 years and Mr Viresh Harri has been the designated auditor for two years.

The Board sets a policy that governs the level and nature of non-audit services, which requires pre-

approval by the Audit Committee for all non-audit services. In determining the independence of the

external auditors, the Audit Committee considers the level and types of non-audit services provided,

as well as other enquiries and representations. The Audit Committee is satisfied that the auditors do

not, except as external auditor or in rendering permitted non-audit services, receive any remuneration

or other benefits from the Group. The approved audit fee accounts for four audit partners in order to

perform the 22 statutory audits. The total non-audit services for the 2018 financial year performed by and

paid to PricewaterhouseCoopers Inc. amounted to R0,6 million (2017: R1,7 million). In addition, the Audit

Committee has satisfied itself that the auditors’ independence was not prejudiced by any consultancy,

advisory or other work undertaken or as a result of any previous appointment as auditor.

The prospect of mandatory audit firm rotation was also considered by the Audit Committee during

the current financial year. As required by the Companies Act, the Audit Committee has satisfied itself

that Novus Holdings Limited’s external auditor, PricewaterhouseCoopers Inc., was independent of the

company, as set out in sections 90(2)(c) and 94(8) of the Companies Act, and is thereby able to conduct its

audit functions without any undue influence from the Company.

The Audit Committee has considered the relevant audit quality indicators, including the audit firm’s

system of quality control. It noted that PricewaterhouseCoopers Inc. was subject to a review of its

quality control practices in terms of International Standard on Quality Control by the IRBA. No legal

or disciplinary proceedings have been concluded against the firm in the past seven years. The Audit

Committee was satisfied with the quality of the audit concluded and has nominated, for reappointment

at the annual general meeting, PricewaterhouseCoopers Inc. as the external auditor of Novus Holdings

Limited for the financial year ending 31 March 2019 and Mr V Harri as the designated individual

registered auditor who will undertake the audit on behalf of PricewaterhouseCoopers Inc.

PricewaterhouseCoopers Inc., being the audit firm, as well as Mr V Harri, being the Group’s individual

auditor for the 2018 financial year, have been accredited on the JSE list of auditors in terms of the criteria

in the JSE Listing Requirements. As required by section 3.84(g)(iii) of the JSE Listing Requirements, the

Audit Committee has satisfied itself that PricewaterhouseCoopers Inc. and Mr V Harri are suitable for

reappointment as audit firm and individual auditor, respectively, by considering, inter alia, the information

stated in paragraph 22.15(h) of the JSE Listing Requirements.

During the year under review the Audit Committee reviewed a representation by the external auditors

and, after conducting its own review, confirmed the independence of the auditors.

The Audit Committee is satisfied that in discharging its duties in terms of its mandate, together with the

robust internal PricewaterhouseCoopers Inc. independence processes, PricewaterhouseCoopers Inc.’s

independence is maintained and has not been impacted by tenure. The PricewaterhouseCoopers Inc.

internal independence processes include periodic internal quality reviews as well as those conducted by

IRBA; the rotation of the group audit partner and key component audit partners at least every five years;

independence training and monitoring of non-audit services.

SIGNIFICANT AREAS OF JUDGEMENT

Many areas within the financial statements that require judgement form an integral part of the financial

statements. The Audit Committee has assessed the significance of the assets and liabilities on the

statements of financial position and relating items that require significant judgement and the following

key audit matters are highlighted:

Valuation of goodwill and intangible assets

The Group tests annually whether goodwill has suffered any impairments, in accordance with the

accounting policy stated in notes 1.1 and 1.5. The Audit Committee was in agreement with the

impairment of the goodwill and the intangible assets and that the carrying values of the goodwill and

intangible assets are fairly stated. Further details are provided in notes 3 and 4.

Valuation of Property, Plant and Equipment

The Group evaluates the carrying values of property, plant and equipment for impairment whenever

circumstances indicate that the carrying value of such assets might not be recoverable in accordance

with the accounting policy stated in notes 1.1 and 1.4. The Audit Committee was in agreement with

the impairment of items of property, plant and equipment after consideration of the cash flows,

growth rates and discount rates of the cash generating units under review. Further details are

provided in note 2.


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DIRECTORS’ REPORT TO THE SHAREHOLDERSThe Board has pleasure in reporting on the activities and financial results for the year under review:

NATURE OF THE BUSINESS

Novus Holdings Limited was incorporated in 2008 under the laws of the Republic of South Africa. Our

principal operations are in print media, printing on packaging and the manufacture of tissue paper. These

activities are conducted primarily in South Africa.

FINANCIAL REVIEW

Novus Holdings’ performance for the 2018 financial year is down on the previous year. Overall revenue is

down by 0,1% in 2018 to R4,308 billion (2017: R4,312 billion). However, gross profit margin increased by

0,53%, mostly due to the positive impact of foreign exchange fluctuations and the ability to recover this

from clients. This was offset slightly by retrenchment costs incurred during March 2018.

Printing revenues (84,4% of overall revenue) remained under pressure due to volume declines on all

product categories with a tonnage decline of 11,5%.

The Other segment revenues increased by 105,8% from 2017 and currently represent 15,7% (2017: 7,7%)

of Group revenues. The acquisition of ITB Manufacturing Proprietary Limited resulted in an additional

R265 million being contributed by this segment in the current year.

In both the Print and Other segments we experienced the impact of impairments. A total charge

of R372,2 million (2017: R138,6 million) was recognised in the financial results for the Group.

The Group delivered a profit after tax of R71,1 million (2017: R256,8 million).

The annual financial statements on pages 158-254 set out fully the financial position, results of

operations, changes in equity and cash flows of the Group for the financial year ended 31 March 2018.

SHARE CAPITAL

The authorised share capital at 31 March 2018 was 3 000 000 000 ordinary no par value shares.

There were no changes to the issued share capital during the year and remains at 347 332 454 ordinary

no par value shares.

PROPERTY, PLANT AND EQUIPMENT

At 31 March 2018, the Group’s investment in property, plant and equipment amounted to R1,919 billion,

compared with R2,103 billion in the prior year. The Group impaired property, plant and equipment to

the value of R297,1 million (2017: R138,6 million) in the current year. Details are reflected in note 2

of the annual financial statements. Capital commitments at 31 March 2018 amounted to R19,8 million

(2017: R46,8 million).

DIVIDENDS

The Board recommends that a dividend of 52 cents (2017: 56 cents) per listed ordinary share be declared.

The Group engages with internal technical experts in assessing the appropriateness of estimated useful

lives in accordance with the accounting policy stated in note 1.1. The Audit Committee was in agreement

with the procedures followed to determine the appropriate economic useful lives that are a true reflection

of the future economic use of the applicable assets. Further details are provided in note 2.

EXPERTISE AND EXPERIENCE OF CHIEF FINANCIAL OFFICER AND THE FINANCE FUNCTION

In terms of the JSE Listing Requirements, the Audit Committee performs an annual evaluation of the

financial reporting function in the Group. The Audit Committee was satisfied that the financial reporting

function had appropriate resources, skills, expertise and experience. The Audit Committee also confirmed

that it is and was satisfied that Mr E Fivaz, the acting Group chief financial officer, possesses the

appropriate skills, expertise and experience to meet the responsibilities required for that position during

his service

as such.

DISCHARGE OF RESPONSIBILITIES

The Audit Committee determined that during the financial year under review it had discharged its

legal and other responsibilities as governed in the Board approved charter. The Board concurred with

this assessment.

ANNUAL REPORT

Annual financial statements

After review of the annual financial statements for the year ended 31 March 2018, the Audit

Committee is of the opinion that, in all material respects, they comply with the relevant provisions of

the Companies Act and IFRS as issued by the IASB, and fairly present the results of operations, cash

flow and the financial position. On this basis, the Audit Committee recommended that the Board of

directors approve the annual financial statements for the year ended 31 March 2018.

Integrated annual report

The Audit Committee reviewed this report, taking cognisance of material factors and risk that may

impact the integrity thereof, and recommended that the Board of directors approve the integrated

annual report for the year ended 31 March 2018.

BJ Olivier

Chairman: Audit Committee

14 June 2018


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GROUP

In compliance with the order of the South African Competition Tribunal on 03 August 2017, Media24

divested itself of the majority of its shareholding in Novus Holdings to Naspers Limited, retaining a non-

controlling minority stake of 17,48% of the issued share capital (19,00% excluding treasury shares). The

subsequent unbundling of Novus Holdings’ shares was successfully completed on 26 September 2017.

The name, country of incorporation and effective financial percentage interest of the holding company in

each of Novus’s principal subsidiaries are disclosed in note 5 to the annual financial statements. Details

relating to significant acquisitions and divestitures in the Group during the year are highlighted in note 30

to the annual financial statements.

BORROWINGS

The company has unlimited borrowing powers in terms of its memorandum of incorporation.

EVENTS AFTER REPORTING DATE

The Group has commenced the implementation of a corporate reorganisation in an attempt to align

segments and divisions with the operational reporting structure. Through this process, the Group

envisages that it will also achieve a more streamlined legal organogram. The series of transactions does

not have an impact on the consolidated financial statements of the Group, as they are merely reorganising

the entities in the organogram.

The directors are not aware of any other matters or circumstances arising since the end of the financial

year that would significantly affect the operations of the Group or the results of its operations.

DIRECTORS AND AUDITOR

The following changes in directors took place during the current year:

Effective 03 April 2017, Mr Abduraghman Mayman resigned as independent non-executive director and

Mr Fred Robertson as interim chairman and lead independent non-executive director.

Effective 15 July 2017, Ms Lulama Mtanga was appointed as an independent non-executive director of

Novus Holdings. She will further serve as chairman of the Social and Ethics Committee and member of the

Investment Committee.

In accordance with the order of the Competition Tribunal, Ms Esmaré Weideman and Ms Cindy Hess

(both being non-independent, non-executive members of the Board nominated by Media24) resigned as

directors of Novus Holdings on 29 September 2017.

Effective 01 October 2017, Mr Neil Birch’s designation as chairman has changed from independent non-

executive to executive chairman of the Group.

Following Mr Neil Birch’s change in designation, Mr Jan Potgieter took the role of lead independent non-

executive director.

Ms Noluvuyo Mkhondo has been appointed as non-independent non-executive director with effect from

15 December 2017.

Ms Gugulethu Dingaan has resigned as an independent non-executive director, with effect from

31 January 2018.

Mr Edrich Fivaz has resigned effective 31 March 2018 but remained as acting chief financial officer up to

the date of issue of these financial statements.

Effective 15 June 2018, Mr Keith Vroon has resigned as chief executive officer. Mr Neil Birch, the current

executive chairman of the board, will fulfil the role as chief executive officer and chairman.

PricewaterhouseCoopers Inc. will continue in office as auditor in accordance with section 90(6) of the

South African Companies Act 2008, 71 of 2008.

DIRECTORS’ INTERESTS AND EMOLUMENTS

Particulars of the emoluments of directors and their interests in the issued share capital of the company

and in contracts are disclosed in notes 16, 31 and 37 to the annual financial statements.

Signed on behalf of the Board

NW Birch KA Vroon

Executive Chairman Chief Executive Office

14 June 2018 14 June 2018


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As part of designing our audit, we determined materiality and assessed the risks of material misstatement

in the consolidated and separate financial statements. In particular, we considered where the directors

made subjective judgements; for example, in respect of significant accounting estimates that involved

making assumptions and considering future events that are inherently uncertain. As in all of our audits,

we also addressed the risk of management override of internal controls, including, among other matters,

consideration of whether there was evidence of bias that represented a risk of material misstatement due

to fraud.

Materiality

The scope of our audit was influenced by our application of materiality. An audit is designed to

obtain reasonable assurance whether the financial statements are free from material misstatement.

Misstatements may arise due to fraud or error. They are considered material if, individually or in

aggregate, they could reasonably be expected to influence the economic decisions of users taken on the

basis of the consolidated financial statements.

Based on our professional judgement, we determined certain quantitative thresholds for materiality,

including the overall Group materiality for the consolidated financial statements as a whole as set out in

the table on the following page. These, together with qualitative considerations, helped us to determine

the scope of our audit and the nature, timing and extent of our audit procedures, and to evaluate the effect

of misstatements, both individually and in aggregate, on the financial statements as a whole.

INDEPENDENT AUDITOR’S REPORTTO THE SHAREHOLDERS OF NOVUS HOLDINGS LIMITED

Report on the audit of the consolidated and separate financial statements

OUR OPINION

In our opinion, the consolidated and separate financial statements present fairly, in all material respects,

the consolidated and separate financial position of Novus Holdings Limited (the Company) and its

subsidiaries (together the Group) as at 31 March 2018, and its consolidated and separate financial

performance and its consolidated and separate cash flows for the year then ended in accordance

with International Financial Reporting Standards (IFRS) and the requirements of the Companies Act of

South Africa.

What we have audited

Novus Holdings Limited’s consolidated and separate financial statements set out on pages 158 to 254

comprise:

the consolidated and separate statements of financial position as at 31 March 2018;

the consolidated and separate income statements for the year then ended;

the consolidated and separate statements of comprehensive income for the year then ended;

the consolidated and separate statements of changes in equity for the year then ended;

the consolidated and separate statements of cash flows for the year then ended; and

the notes to the financial statements, which include a summary of significant accounting policies.

BASIS FOR OPINION

We conducted our audit in accordance with International Standards on Auditing (ISAs). Our

responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the consolidated and separate financial statements section of our report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for

our opinion.

Independence

We are independent of the Group in accordance with the Independent Regulatory Board for Auditors Code of Professional Conduct for Registered Auditors (IRBA Code) and other independence requirements

applicable to performing audits of financial statements in South Africa. We have fulfilled our other ethical

responsibilities in accordance with the IRBA Code and in accordance with other ethical requirements

applicable to performing audits in South Africa. The IRBA Code is consistent with the International Ethics

Standards Board for Accountants Code of Ethics for Professional Accountants (Parts A and B).

OUR AUDIT APPROACH

Overall Group materiality Overall Group materiality: R26,2 million, which represents 5% of

average adjusted consolidated profit before tax for the past three

years.

Group audit scope There are four components within the Group, which operated mainly

in Cape Town, Johannesburg, Durban, Pietermaritzburg, Pinetown

and Isithebe during the year.

All these components were subjected to a full scope audit.

Key audit mattersApplicable to both the consolidated and separate financial statements:

Impairment consideration of goodwill and impairment consideration

of investments in subsidiaries.

Recoverable amounts and assigning appropriate useful economic lives

OVERVIEW

Materiality

Groupaudit scope

Key auditmatters


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How we tailored our Group audit scope

We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion

on the consolidated financial statements as a whole. We took into account the structure of the Group, the

accounting processes and controls, and the industry in which the Group operates.

The Group mainly consists of four components, namely Coldset, Heatset, Tissue and Packaging. Coldset

and Heatset operate mainly in Cape Town, Johannesburg and Pinetown. Tissue operates in Durban

and Packaging (ITB Manufacturing) operates in Isithebe. We performed a full scope audit on all four

components either due to their financial significance, specific risks identified in the component or the

component being acquired during the year.

In establishing the overall approach to the Group audit and in order to issue our audit opinion on the

consolidated financial statements of the Group, we determined the extent of the work that needed to be

performed by us, as the Group engagement team, and the component audit teams operating under our

instructions. The component teams consisted of a PwC network firm and a non-PwC network firm. Where

the work was performed by component auditors, we determined the level of involvement necessary in the

audit work at those components to be able to conclude whether sufficient appropriate audit evidence has

been obtained as a basis for our opinion on the Group financial statements as a whole.

KEY AUDIT MATTERSKey audit matters are those matters that, in our professional judgement, were of most significance in our

audit of the consolidated and separate financial statements of the current period. These matters were

addressed in the context of our audit of the consolidated and separate financial statements as a whole,

and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

OVERALL GROUP MATERIALITY R 26,2 million

HOW WE DETERMINED IT 5% of average adjusted consolidated profit before tax of the

past three years.

RATIONALE FOR THE MATERIALITY

BENCHMARK APPLIED

We chose average profit before tax as the benchmark because,

in our view, it is the benchmark against which the performance

of the Group is most commonly measured by users. The

Group has been affected by the downturn in the market as

well as the rationalisation of their plant and equipment usage.

We therefore adjusted the average profit before tax for

significant impairment losses. We chose 5% as the quantitative

materiality, which is consistent with quantitative materiality

thresholds used for profit-oriented companies in this sector.

KEY AUDIT MATTER

Impairment consideration of goodwill and impairment consideration of investment in subsidiaries (applicable to both the consolidated and separate financial statements)

Refer to notes 1.1(a), 1.5, 3, 5 and 20 to

the consolidated and separate financial

statements.

Goodwill amounts to R173 million as at

31 March 2018 and represents 5% of the

total consolidated assets of the Group. The

impairment charge for goodwill amounted to

R63 million, which relates to Paarl Tissue and

Paarl Coldset.

The significant Cash Generating Units

containing goodwill identified by management

are:

ITB (R80 million) and

Intrepid Printers (R31 million)

Investments in subsidiaries amounted to

R1,23 billion as at 31 March 2018. The wholly

owned subsidiaries are:

Paarl Media Holdings Proprietary Limited

(R1 billion) and

Paarl Coldset Proprietary Limited

(R187 million).

An impairment charge of R66 million was

recognised during the year, which relates to

Paarl Coldset Proprietary Limited.

Our audit procedures included:

Evaluating the valuation methodology used by

management in determining the recoverable

value and considering whether the value in use

or the fair value less costs to sell of the Cash-

generating Units was appropriate and consistent

with the requirements of International

Accounting Standard (IAS) 36 Impairment of

Assets and IFRS 13 Fair Value Measurement;

Where a value in use model was applied for

valuation purposes, our evaluation, including

the use of our valuations expertise, involved

the assessment of management’s forecasted

future cash flows and the performance of

sensitivity analyses in respect of management’s

assumptions;

Where the fair value model was applied for

valuation purposes, our evaluation involved

the assessment of the reasonableness of

assumptions applied in the model by assessing

the independent valuer’s valuations on property,

and assessing a market participant’s ability to

generate cash flows in using the assets. We also

assessed the completeness of costs included in

the cash flow forecasts to ensure that all costs

that are expected to be incurred to operate

the Cash-generating Unit on its own have been

included in the forecasts;

HOW OUR AUDIT ADDRESSED THE KEY AUDIT MATTER


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KEY AUDIT MATTER KEY AUDIT MATTER

Management conducts annual impairment

tests of the Cash-generating Units containing

goodwill and on the investments in

subsidiaries to assess the recoverability

of the carrying value.

Management has determined the recoverable

value using the discounted cash flow model for

all Cash-generating Units. As disclosed in note

3 to the consolidated financial statements,

there are a number of key judgements and

estimates made in determining the inputs

in these cash flow models, which include:

Earning before Interest, Taxation,

Depreciation and Amortisation (EBITDA);

Discount rates applied to the

projected future cash flows; and

Terminal growth rates.

We considered this a matter of most

significance to our audit due to the magnitude

of these balances and higher degree of

estimation uncertainty relating to the key

judgements and estimates.

Recoverable amounts and assigning appropriate useful economic lives and residual values to items of plant and machinery (applicable to the consolidated financial statements only)

Refer to notes 1.1(b), 1.4 and 2 to the

consolidated financial statements.

The Group has plant and machinery with an

aggregate carrying value of R1,3 billion as at

31 March 2018, consisting mainly of printing,

packaging and tissue machinery.

For plant and machinery, the current year

depreciation charge amounts to R153 million

and the current year impairment charge

amounts to R215 million.

The carrying value of these items is dependent

upon significant management judgement,

including:

Estimated useful economic lives;

Estimated residual values; and

Estimated recoverable amount.

For the above reason this has been

determined as a matter of most significance

to our audit.

Evaluating the reasonability of management’s

discount rate by performing a recalculation of

the discount rate and benchmarking the cost

of capital of the Cash-generating Unit against

industry-specific market information available

for similar companies, as well as considering

territory-specific factors. In our evaluation of the

discount rate used we made use of our valuations

expertise;

Recalculating the value in use and fair value

less costs to sell calculations performed

by management;

Assessing the reasonability of the terminal

growth rates used by management by comparing

them to the industry average long-term growth

rates; and

Assessing the assumptions underlying projected

future cash flows, which include revenue

estimates, volume growth rates, operating

margins, working capital requirements

and tax cash outflows used in the models

by understanding the process followed by

management to determine these forecasts

and agreeing the forecasted information to

management-approved budgets and business

plans. We analysed these projections against

historical performance and found the projections

to be in line with past performance.

Our audit procedures included:

Enquired from management regarding the

plant and machinery being abandoned or

decommissioned and identified the Group

of assets to be impaired;

Obtaining an understanding of the methodologies

used by management’s internal engineering

expert to assess the useful lives, residual values

and realisable values;

Evaluating the internal engineering experts’

competence, capabilities and objectivity based on

the individuals’ years of experience and training,

through inspection of documentation such as

curricula vitarum;

Discussing with an independent external expert

to assess management’s repairs and maintenance

philosophy and the approach followed by

management to estimate the remaining useful

lives of plant and machinery;

Assessing the relevance of the input data used

by management, and on a sample basis agreeing

with the input data used to estimate the carrying

values to underlying documentation e.g. supplier

quotations/invoices;

Evaluating the assumptions used in the

discounted cash flows to the lowest level of

Cash-generating unit by inspecting approved

budgets and historical performance. This included

revenue estimates, operating margins, tax cash

outflows, working capital requirements, growth

rates and discount rates, used by management to

determine the recoverable amount of assets and

any impairment charges; and

Comparing the market values to correspondence

from manufacturers of the same equipment

or similar types of equipment in order to

assess the recoverable amounts of assets and

impairment charges.




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OTHER INFORMATIONThe directors are responsible for the other information. The other information comprises the information

included in the Annual Financial Statements of Novus Holdings Limited and the Integrated Annual Report, which

includes the Directors’ Report to the shareholders, Report of the Audit Committee and the Certificate by

the Company Secretary as required by the Companies Act of South Africa. Other information does not

include the consolidated and separate financial statements and our auditor’s report thereon.

Our opinion on the consolidated and separate financial statements does not cover the other information

and we do not express an audit opinion or any form of assurance conclusion thereon.

In connection with our audit of the consolidated and separate financial statements, our responsibility is

to read the other information identified above and, in doing so, consider whether the other information

is materially inconsistent with the consolidated and separate financial statements or our knowledge

obtained in the audit, or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other

information, we are required to report that fact. We have nothing to report in this regard.

RESPONSIBILITIES OF THE DIRECTORS FOR THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTSThe directors are responsible for the preparation and fair presentation of the consolidated and

separate financial statements in accordance with International Financial Reporting Standards and

the requirements of the Companies Act of South Africa, and for such internal control as the directors

determine is necessary to enable the preparation of consolidated and separate financial statements that

are free from material misstatement, whether due to fraud or error.

In preparing the consolidated and separate financial statements, the directors are responsible for

assessing the Group and the Company’s ability to continue as a going concern, disclosing, as applicable,

matters related to the going concern and using the going concern basis of accounting unless the directors

either intend to liquidate the Group and/or the Company or to cease operations, or have no realistic

alternative but to do so.

AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTSOur objectives are to obtain reasonable assurance about whether the consolidated and separate financial

statements as a whole are free from material misstatement, whether due to fraud or error, and to issue

an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not

a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement

when it exists. Misstatements can arise from fraud or error and are considered material if, individually or

in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on

the basis of these consolidated and separate financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional

scepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the consolidated and separate financial

statements, whether due to fraud or error, design and perform audit procedures responsive to those

risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The

risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from

error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override

of internal control.

Obtain an understanding of internal control relevant to the audit in order to design audit procedures

that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the

effectiveness of the Group’s and the Company’s internal control.

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting

estimates and related disclosures made by the directors.

Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and,

based on the audit evidence obtained, whether a material uncertainty exists related to events or

conditions that may cast significant doubt on the Group’s and the Company’s ability to continue as a

going concern. If we conclude that a material uncertainty exists, we are required to draw attention in

our auditor’s report to the related disclosures in the consolidated and separate financial statements

or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit

evidence obtained up to the date of our auditor’s report. However, future events or conditions may

cause the Group and/or Company to cease to continue as a going concern.

Evaluate the overall presentation, structure and content of the consolidated and separate financial

statements, including the disclosures, and whether the consolidated and separate financial statements

represent the underlying transactions and events in a manner that achieves fair presentation.

Obtain sufficient appropriate audit evidence regarding the financial information of the entities or

business activities within the Group to express an opinion on the consolidated financial statements. We

are responsible for the direction, supervision and performance of the Group audit. We remain solely

responsible for our audit opinion.

We communicate with the directors regarding, among other matters, the planned scope and timing of

the audit and significant audit findings, including any significant deficiencies in internal control that we

identify during our audit.

We also provide the directors with a statement that we have complied with relevant ethical requirements

regarding independence, and communicate with them all relationships and other matters that may

reasonably be thought to bear on our independence and, where applicable, related safeguards.

From the matters communicated with the directors, we determine those matters that were of most

significance in the audit of the consolidated and separate financial statements of the current period and

are therefore the key audit matters. We describe these matters in our auditor’s report unless law or

regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we

determine that a matter should not be communicated in our report because the adverse consequences of

doing so would reasonably be expected to outweigh the public interest benefits of such communication.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

In terms of the IRBA Rule published in Government Gazette Number 39475 dated 4 December 2015, we

report that PricewaterhouseCoopers Inc. has been the auditor of Novus Holdings Limited for 24 years.

PricewaterhouseCoopers Inc.

Director: V Harri

Registered Auditor

Cape Town

14 June 2018


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GROUP COMPANY

Notes2018

R’0002017

R’0002018

R’0002017

R’000

ASSETSNon-current assets 2 253 283 2 356 990 1 231 157 1 297 121 Property, plant and equipment 2 1 919 115 2 102 674 — — Goodwill 3 173 054 155 419 — — Other intangible assets 4 30 790 42 250 — — Investments in subsidiaries 5 — — 1 231 157 1 297 121 Available-for-sale financial assets 3 090 3 000 — — Loans and receivables 6 517 3 050 — — Deferred taxation assets 6 120 717 50 597 — —

Current assets 1 520 199 1 242 560 94 134 Inventory 7 474 675 342 330 — — Trade and other receivables 8 702 154 478 439 — — Related party receivables 31 — 126 958 — — Derivative financial instruments 33 731 1 462 — — Current income tax receivable 8 000 — 1 Cash and cash equivalents 9 243 948 229 968 93 134 Non-current assets held for sale 10 90 691 63 404 — —TOTAL ASSETS 3 773 482 3 599 551 1 231 251 1 297 255

EQUITYCapital and reserves attributable to the Group’s equity-holders 2 787 087 2 882 839 1 053 823 1 128 728 Share capital 11 606 040 606 040 606 040 606 040 Treasury shares 11 (368 172) (368 172) (368 172) (368 172)Other reserves 12 (80 596) (804 465) — 862 819 Retained earnings 2 629 815 3 449 436 815 955 28 041 Non-controlling interest 3 672 (374) — — TOTAL EQUITY 2 790 759 2 882 465 1 053 823 1 128 728

LIABILITIESNon-current liabilities 374 163 371 171 — — Post-employment medical liability 13 2 634 2 987 — — Provisions 14 17 557 17 045 — — Long-term liabilities 15 99 252 60 436 — — Cash-settled share-based payment liability 16 1 845 3 139 — — Deferred taxation liabilities 6 221 357 242 429 — — Deferred income 18 31 518 45 135 — —

Current liabilities 608 560 345 915 177 428 168 527 Provisions 14 4 538 2 177 — — Current portion of long-term liabilities 15 16 254 20 090 — — Trade and other payables 17 521 519 288 848 — —Related party payables 31 — 1 154 177 428 168 527 Cash-settled share-based payment liability 16 7 092 9 422 — — Current income tax payable — 120 — — Derivative financial instruments 33 21 055 16 520 — — Bank overdrafts and call loans 9 35 332 2 744 — — Deferred income 18 2 770 4 840 — — TOTAL EQUITY AND LIABILITIES 3 773 482 3 599 551 1 231 251 1 297 255

STATEMENTS OF FINANCIAL POSITIONAS AT 31 MARCH

INCOME STATEMENTSFOR THE YEAR ENDED 31 MARCH

GROUP COMPANY

Notes2018

R’0002017

R’0002018

R’0002017

R’000

Revenue 19 4 308 102 4 312 464 185 502 269 717 Cost of sales (3 181 105) (3 207 060) — —

Gross profit 1 126 997 1 105 404 185 502 269 717

Operating expenses (626 278) (576 579) (1) (1)

Other gains/(losses) – net 20 (358 772) (135 089) (65 964) —

Operating profit 21 141 947 393 736 119 537 269 716

Finance income 22 12 948 13 433 88 110

Finance costs 23 (52 894) (45 688) — —

Profit before taxation 102 001 361 481 119 625 269 826

Taxation 24 (30 898) (104 654) (24) (30)

Net profit for the year 71 103 256 827 119 601 269 796

Attributable to:

Equity-holders of the Group 70 418 256 819 119 601 269 796

Non-controlling interests 685 8 — —

71 103 256 827 119 601 269 796

Earnings per share (cents):Basic 25 22,04 80,37 — —

Diluted 25 22,04 80,37 — —


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STATEMENTS OF COMPREHENSIVE INCOMEFOR THE YEAR ENDED 31 MARCH

STATEMENTS OF CHANGES IN EQUITYFOR THE YEAR ENDED 31 MARCH

GROUP COMPANY

Notes2018

R’0002017

R’0002018

R’0002017

R’000

Profit for the year 71 103 256 827 119 601 269 796

Other comprehensive incomeItems that may be subsequently reclassified to profit or loss

Hedging reserve 12 (1 498) (12) — —

Net fair value (losses)/gains, gross — (109) — —

Net fair value (gains)/losses, tax portion — 31 — —

Foreign exchange movement, gross 18 368 (18 122) — —

Foreign exchange movement, tax portion (5 143) 5 075 — —

Derecognised and added to asset, gross 1 699 9 425 — —

Derecognised and added to asset, tax portion (476) (2 639) — —

Derecognised and reported in cost of sales, gross (22 147) 8 787 — — Derecognised and reported in cost of sales, tax portion 6 201 (2 460) — —

Foreign currency translation reserve 12 (1 942) (1 855)Exchange loss arising on translating foreign operations, gross (2 697) (2 577) — — Deferred tax relating to loss arising on translating foreign operations, tax portion 755 722 — —

Fair value reserve 65 Net fair value (losses)/gains, gross 90 – — —

Net fair value (gains)/losses, tax portion (25) – — —

Items that will not be reclassified to profit or loss

Post-employment benefit obligations and provisions 13,14 640 660 — —

Remeasurement of post-employment benefit obligations and provisions, gross 730 917 — — Remeasurement of post-employment benefit obligations and provisions, tax portion (90) (257) — —

Total other comprehensive income, net of tax (2 735) (1 207) — —

Total comprehensive income for the year 68 368 255 620 119 601 269 796

Attributable to:Equity-holders of the Group 67 683 255 612 119 601 269 796

Non-controlling interests 685 8 — —

68 368 255 620 119 601 269 796

COMPANY Notes

Sharecapital R’000

Treasuryshares R’000

Otherreserves

R’000

Retainedearnings

R’000 Total

R’000

Balance as at 1 April 2016 606 040 (368 172) 862 819 1 378 1 102 065

Total comprehensive income for the year — — — 269 796 269 796

Profit for the year — — — 269 796 269 796

Other comprehensive income — — — — —

Transactions with owners:

Dividends paid 29,2 (243 133) (243 133)

Balance as at 31 March 2017 606 040 (368 172) 862 819 28 041 1 128 728

Total comprehensive income for the year — — — 119 601 119 601

Profit for the year — — — 119 601 119 601

Other comprehensive income — — — — —


Dividends paid 29,2 — — — (194 506) (194 506)Transfer to/from non- distributable reserves — — (862 819) 862 819 —

Balance as at 31 March 2018 606 040 (368 172) — 815 955 1 053 823

Notes 11 11 12


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GROUP Notes

Share capital

and premium

R’000

Treasuryshares R’000

Existing control

business combination

reserve R’000

Share-based

compen-sation

reserve R’000

Hedgingreserve

R’000

Actuarial reserve

R’000

Foreign-currency

translationreserve

R’000

Fair valuereserve

R’000

Total other

reserves R’000

Retainedearnings

R’000

Attributableto equity-

holders of the Group

R’000

Non-controlling

interest R’000

Totalequity R’000

Balance as at 1 April 2016 606 040 (368 172) (857 897) 32 692 (1 758) (478) — — (827 441) 3 412 197 2 822 624 — 2 822 624

Total comprehensive income for the year — — — — (12) 660 (1 855) — (1 207) 256 819 255 612 8 255 620

Profit for the year — — — — — — — — — 256 819 256 819 8 256 827

Other comprehensive income — — — — (12) 660 (1 855) — (1 207) — (1 207) — (1 207)


Share based compensation movement — — — 28 285 — — — — 28 285 — 28 285 — 28 285

Transfer from share based compensation reserve — — — (4 102) — — — — (4 102) 4 102 — — —

Dividends paid 29,2 — — — — — — — — — (223 682) (223 682) — (223 682)

Transactions with non-controlling interests 30 — — — — — — — — — — — (382) (382)

Total transactions with owners — — — 24 183 — — — — 24 183 (219 580) (195 397) (382) (195 779)

Balance as at 31 March 2017 606 040 (368 172) (857 897) 56 875 (1 770) 182 (1 855) — (804 465) 3 449 436 2 882 839 (374) 2 882 465 Total comprehensive income for the year — — — — (1 498) 640 (1 942) 65 (2 735) 70 418 67 683 685 68 368

Profit for the year — — — — — — — — — 70 418 70 418 685 71 103

Other comprehensive income — — — — (1 498) 640 (1 942) 65 (2 735) — (2 735) — (2 735)


Share based compensation movement — — — 15 007 — — — — 15 007 — 15 007 — 15 007

Transfer from share based compensation reserve — — — (18 331) — — — — (18 331) 18 331 — — —

Dividends paid 29,2 — — — — — — — — — (178 946) (178 946) — (178 946)

Other movements — — — 491 — — — — 491 13 504 — 504

Transfer to/from non-distributable reserves — — 729 437 — — — — 729 437 (729 437) — — — —

Transactions with non-controlling interests 30 — — — — — — — — — — — 3 361 3 361

Total transactions with owners — — 729 437 (2 833) — — — — 726 604 (890 039) (163 435) 3 361 (160 074)

Balance as at 31 March 2018 606 040 (368 172) (128 460) 54 042 (3 268) 822 (3 797) 65 (80 596) 2 629 815 2 787 087 3 672 2 790 759

Notes 11 11 12 12 12 12 12 12 12 30

STATEMENTS OF CHANGES IN EQUITYFOR THE YEAR ENDED 31 MARCH


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164

NOTES TO THE ANNUAL FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 MARCH 2018

GROUP COMPANY

Notes2018

R’0002017

R’0002018

R’0002017

R’000

Cash generated from operating activities

Cash generated from operations 27 683 632 661 829 194 402 243 162

Finance income 22 12 948 13 433 88 110

Finance costs 23 (18 254) (11 718) — —

Taxation paid 28 (169 226) (188 513) (25) (10)

Cash generated from operating activities 509 100 475 031 194 465 243 262

Cash flows from investment activities

Property, plant and equipment acquired 2 (138 065) (243 719) — —

Proceeds from sale of property, plant and equipment 21 424 15 098 — —

Purchase of intangible assets 4 (1 887) (8 363) — —

Insurance proceeds 2 086 — — —

Loans and receivables advanced (3 448) (4 512) — —

Loans and receivables repaid 227 263 — —

Acquisition of subsidiaries/businesses 30 (202 149) 10 785 — —

Cash utilised in investing activities (321 812) (230 447) — —

Cash flows from financing activities

Repayment of long-term loans (26 950) (60 455) — —

Dividend paid 29,2 (178 946) (223 682) (194 506) (243 133)

Cash utilised in financing activities (205 896) (284 137) (194 506) (243 133)Net (decrease)/increase in cash and cash equivalents (18 608) (39 553) (41) 129 Cash and cash equivalents at beginning of the year 227 224 266 778 134 5 Cash and cash equivalents at end of the year 9 208 616 227 224 93 134

ACCOUNTING POLICIESThe principal accounting policies applied in the preparation of these annual financial statements are set out

below. These policies have been consistently applied to all the years presented, unless otherwise stated.

1. Basis of preparation

The annual consolidated and separate financial statements of Novus Holdings Limited have been

prepared in accordance with the requirements of the JSE Limited Listing Requirements and

the Companies Act No 71 of 2008. The Listing Requirements require the financial statements

to be prepared in accordance with the framework concepts, the measurement and recognition

requirements of International Financial Reporting Standards (IFRS) and the interpretations issued

by the International Financial Reporting Interpretations Committee (IFRIC), the SAICA Financial

Reporting Guides as issued by the Accounting Practices Committee and Financial Pronouncements

as issued by the Financial Reporting Standards Council. The financial statements have been prepared

under the historical cost convention, as modified by the revaluation of certain financial assets and

financial liabilities (including derivative instruments) at fair value through profit or loss.

The preparation of financial statements in conformity with IFRS requires the use of certain critical

accounting estimates. It also requires management to exercise its judgement in the process of applying

the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or

areas where assumptions and estimates are significant to the consolidated financial statements, are

disclosed in note 1.1.

These financial statements incorporate accounting policies that have been consistently applied

to all years presented, with the exception of the implementation of the following standards,

interpretations and amendments to published standards that became effective and were

adopted by the Group during the current financial year:

The relevance of these amendments to the published standards has been assessed with respect to the

Group’s operations and it was concluded that, other than the additional presentational disclosures

required, they did not have a material impact on the Group.

Standard/Interpretation: Effective date:

Years beginning on or after

Amendment to IAS 12: Income taxes 01 January 2017

Amendment to IAS 7: Cash flow statements 01 January 2017


STATEMENTS OF CASH FLOWSFOR THE YEAR ENDED 31 MARCH


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1. Basis of preparation (continued)

Standards, interpretations and amendments to published standards which are not yet effective

Management considered all new accounting standards, interpretations and amendments to IFRS that

were issued prior to 31 March 2018, but not yet effective on that date. Management is in the process

of assessing the impact of these standards, interpretations and amendments on the reported results

of the Group. The standards that are applicable to the Group, but that were not implemented early, are

the following:

Standard/Interpretation: Effective date:

Years beginning on or after

Amendment to IFRS 2: Share-based payments 01 January 2018

IFRS 9: Financial instruments* 01 January 2018

IFRS 15: Revenue from contracts with customers* 01 January 2018

IFRS 16: Leases 01 January 2019

Annual improvements 2014-2016 01 January 2018

* Management is in the process of assessing the impact of standards issued but not yet effective that may

have a significant impact on the Group and has identified the following standards that will likely have an

impact:

The Group intends to adopt the standard using the modified retrospective approach, which means that the

cumulative impact of the adoption will be recognised in retained earnings as of 01 April 2018 and that

comparatives will not be restated.

(ii) IFRS 9 Financial Instruments (effective 01 January 2018)

IFRS 9 addresses the classification, measurement and derecognition of financial assets and financial liabilities,

introduces new rules for hedge accounting and a new impairment model for financial assets. Although IFRS

9 changes the classification of certain financial instruments, the measurement of the Group’s financial assets

and liabilities is expected to remain unchanged under the new principles. Trade receivables, loans and other

receivables are all held to collect principle and interest only and will continue to be measured at amortised cost

in future. Similarly, borrowings and trade and other payables will continue to be measured at amortised cost.

The Group has one available-for-sale investment, currently measured at fair value through other comprehensive

income, and the intention is to also choose the fair value through other comprehensive income options under

IFRS 9. Accounting for derivative financial instruments remains unchanged. The Group does not expect that

the new expected credit-loss impairment model will significantly change the provision for impairment of trade

receivables, since the amounts are not material to the Group.

1.1 Critical accounting estimates and assumptions

The Group makes estimates and assumptions concerning the future and these accounting estimates

are an integral part of the preparation of financial statements. The resulting accounting estimates

will, by definition, seldom equal the related actual results. The estimates and assumptions that have a

significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within

the next financial year are as follows:

a) Estimated impairment of goodwill and intangible assets

The Group tests annually whether goodwill has suffered any impairments, in accordance with

the accounting policy stated in note 1.5. The recoverable amounts of Cash-generating Units are

determined as being the higher of the value-in-use or fair value less costs to sell. Calculation of these

amounts requires the use of estimates. Further details are provided in note 3.

b) Property, plant and equipment

The estimated useful economic lives of property, plant and equipment are based on management’s

judgement and experience. Management engages with internal technical experts in assessing the

appropriateness of estimated useful lives and recoverable amounts of property, plant and equipment.

When management identifies that actual useful economic lives differ materially from the estimates

used to calculate depreciation, that charge is adjusted prospectively. Due to the significance of

property, plant and equipment investment to the Group, variations between actual and estimated

useful economic lives could impact operating results both positively and negatively, although

historically few changes to estimated useful economic lives have been required. The Group is

required to evaluate the carrying values of property, plant and equipment for impairment whenever

circumstances indicate, in management’s judgement, that the carrying value of such assets may not be

recoverable. An impairment review requires management to make subjective judgements concerning

the cash flows, growth rates and discount rates of the Cash-generating Units under review.


NOTES TO THE ANNUAL FINANCIAL STATEMENTS (CONTINUED)FOR THE YEAR ENDED 31 MARCH 2018

(i) IFRS 15 Revenue from Contracts with Customers (effective 01 January 2018)

The IASB has issued a new standard for the recognition of revenue. This will replace IAS 18,

which covers contracts for goods and services, and IAS 11, which covers construction contracts.

The new standard is based on the principle that revenue is recognised when control of a good

or service transfers to a customer. The standard permits either a full retrospective or a modified

retrospective approach for the adoption.

Management has assessed the effects of applying the new standard on the Group’s financial

statements and has identified the following areas that will be affected:

The new standard requires that the total consideration received must be allocated between the

separate performance obligations required to be fulfilled in terms of the sales arrangements

and, as such, consideration is allocated to printing/packaging revenue as per below and

distribution revenue once these products have been delivered to the customer.

Printing and packaging revenue that will be recognised once the performance obligation has

been met, which occurs once the job is completed and ready for delivery and not when risks and

rewards of ownership transfer upon delivery as required under IAS 18 Revenue. This will result

in earlier recognition of a portion of revenue related to these revenue streams. The Group

estimates that revenue will increase by R33,7 million, deferred tax liability by R9,4 million and

retained earnings by R6,3 million on 01 April 2018.

The application of IFRS 15 may further result in the identification of separate performance

obligations in relation to customer contracts, which could affect the timing of the recognition of

revenue going forward.

Management has assessed the impact of the standard on its tissue revenue and other revenue

streams and concluded that these will not be materially impacted.


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1.1 Critical accounting estimates and assumptions (continued)

c) Revenue recognition and allowance for doubtful receivables

At each reporting date, the company and each of its subsidiaries evaluate the recoverability of trade

receivables and record allowances for doubtful receivables based on experience. These allowances

are based on, among other things, a consideration of actual collection history. The actual level of

receivables collected may differ from the estimated levels of recovery, which could impact operating

results positively or negatively.

1.2 Basis of consolidation

Subsidiaries

Subsidiaries are all entities (including structured entities) over which the Group has control. The

Group controls an entity when the Group is exposed to, or has rights to, variable returns from its

involvement with the entity and has the ability to affect those returns through its power over the

entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group.

They are deconsolidated from the date that control ceases.

The Group applies the acquisition method to account for business combinations. The consideration

transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities

incurred to the former owners of the acquiree and the equity interests issued by the Group. The

consideration transferred includes the fair value of any asset or liability resulting from a contingent

consideration arrangement. Acquisition-related costs are expensed as incurred. Identifiable assets

acquired and liabilities and contingent liabilities assumed in a business combination are measured

initially at their fair values at the acquisition date. The Group recognises any non-controlling interest

in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the non-controlling

interest’s proportionate share of the recognised amounts of the acquiree’s identifiable net assets.

If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s

previously held equity interest in the acquiree is remeasured to fair value at the acquisition date; any

gains or losses arising from such remeasurement are recognised in profit or loss.

Any contingent consideration to be transferred by the Group is recognised at fair value at the

acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed

to be an asset or liability is recognised in accordance with IAS 39 either in profit or loss or as a

change to other comprehensive income. Contingent consideration that is classified as equity is not

remeasured, and its subsequent settlement is accounted for within equity.

The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree

and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value

of the identifiable net assets acquired is recorded as goodwill. If the total of consideration transferred,

non-controlling interest recognised and previously held interest measured is less than the fair value of

the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognised

directly in the income statement.

1.2 Basis of consolidation (continued)

Intercompany transactions, balances and unrealised gains on transactions between Group companies

are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the

impairment of the transferred asset. When necessary, amounts reported by subsidiaries have been

adjusted to conform with the Group’s accounting policies.

Non-controlling interests in the results and equity of subsidiaries are shown separately in the

consolidated income statement, statement of comprehensive income, statement of changes in equity

and statement of financial position.

The investments of Novus Holdings Limited in the ordinary shares of its subsidiaries are carried at cost

less impairment losses in the separate financial statements.

Common control transactions

Business combinations in which all of the combining entities or businesses are ultimately controlled by

the same party or parties both before and after the business combination (and where that control is

not transitory) are referred to as common control transactions. The accounting policy for the acquiring

entity is to account for the transaction at book value (predecessor values) in its consolidated financial

statements. The book value of the acquired entity is the consolidated book value as reflected in the

consolidated financial statements at the highest level of common control. The excess of the cost of the

transaction over the acquirer’s proportionate share of the net asset value acquired is allocated to the

“existing control business combination reserve” in equity. Where comparative periods are presented,

the financial statements and financial information presented are not restated.

Changes in ownership interests in subsidiaries without change of control

The Group treats transactions with non-controlling interests that do not result in loss of control as

transactions with equity owners of the Group. A change in ownership interest results in an adjustment

between the carry amounts of the controlling and non-controlling interests to reflect their relative

interests in the subsidiary. Any difference between the amount of the adjustment to non-controlling

interests and any consideration paid or received is recognised within the “existing control business

combination reserve” in equity.

Disposal of subsidiaries

When the Group ceases to have control, any retained interest in the entity is remeasured to its fair

value at the date when control is lost, with the change in carrying amount recognised in profit or loss.

The fair value becomes the initial carrying amount for the purposes of subsequently accounting for the

retained interest as an associate, joint venture or financial asset. In addition, any amounts previously

recognised in other comprehensive income in respect of that entity are accounted for as if the Group

had directly disposed of the related assets or liabilities. This may mean that amounts previously

recognised in other comprehensive income are reclassified to profit or loss.




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The Group applies the component approach whereby parts of some items of property, plant and

equipment may require replacement at regular intervals. The carrying amount of an item of property,

plant and equipment will include the cost of replacing the part of such an item when that cost is

incurred, if it is probable that future economic benefits will flow to the Group and the cost can be

reliably measured. The carrying amount of those parts that are replaced is derecognised on disposal

or when it is withdrawn from use and no future economic benefits are expected from its disposal. Each

part of an item of property, plant and equipment with a cost that is significant in relation to the total

cost of the item is depreciated separately.

Major leasehold improvements are amortised over the shorter of their respective lease periods and

estimated useful economic lives.

1.5 Intangible assets

Goodwill

Goodwill is initially measured at cost, being an amount representing the excess of the consideration

transferred, the amount of any non-controlling interests in the acquiree and the acquisition-date fair

value of any previously held equity interest over the fair value of the identifiable assets acquired and

liabilities assumed. If this consideration is lower than the fair value of the net assets of the acquiree

(a bargain purchase), the difference is recognised in profit or loss.

Goodwill arising on acquisition of subsidiaries is included in “Goodwill” in the statement of financial

position. Goodwill is not amortised but is tested for impairment annually or more frequently if events

or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated

impairment losses. Impairment losses on goodwill are not reversed. Gains and losses on the disposal

of an entity include the carrying amount of goodwill relating to the entity sold.



Item Average useful life

Buildings 8 - 50 years

Plant and machinery 3 - 25 years

Furniture and fixtures 3 - 10 years

Motor vehicles 4 - 5 years

Office equipment 1 - 10 years

IT equipment 2 - 5 years

1.3 Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the

chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating

resources and assessing performance of the operating segments, has been identified as the executive

committee that makes strategic decisions.

1.4 Property, plant and equipment

Property, plant and equipment are stated at cost, being the purchase cost plus any cost to prepare the

assets for their intended use, less accumulated depreciation and any accumulated impairment losses.

Cost includes transfers from equity of any gains/losses on qualifying cash flow hedges relating to

foreign currency property, plant and equipment acquisitions. Property, plant and equipment, with the

exception of land, are depreciated in equal annual amounts over each asset’s estimated useful life to

their residual values. Land is not depreciated, as it is deemed to have an indefinite life.

Depreciation periods vary in accordance with the conditions in the relevant industries, but are subject

to the following range of useful lives:

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as

appropriate, only when it is probable that future economic benefits associated with the item will flow

to the Group and the cost of the item can be measured reliably. All other repairs and maintenance

are charged to profit or loss during the financial period in which they are incurred. The cost of major

renovations is included in the carrying amount of the asset when it is probable that future economic

benefits will flow to the Group and the cost can be reliably measured. Major renovations are

depreciated over the remaining useful economic life of the related asset.

Items of property, plant and equipment are reviewed for indicators of impairment at least annually.

Where indicators of impairment are identified, the carrying values of property, plant and equipment

are reviewed to assess whether or not the recoverable amount has declined below the carrying

amount. In the event that the recoverable amount of the asset is lower than its carrying amount, the

carrying amount is reduced and the reduction is charged to profit or loss.

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of

each reporting period. An asset’s carrying amount is written down immediately to its recoverable

amount if the asset’s carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount

and are recognised within “Other gains/(losses)” in profit or loss.

Work in progress is defined as assets still in the construction phase and not yet available for use. These

assets are carried at initial cost and are not depreciated. Depreciation on these assets commences

when they become available for use and depreciation periods are based on management’s assessment

of their useful lives.


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1.5 Intangible assets (continued)

Goodwill is allocated to Cash-generating Units for the purpose of impairment testing. The allocation is

made to those Cash-generating Units or groups of Cash-generating Units that are expected to benefit

from the business combination in which the goodwill arose. The units or groups of units are identified

at the lowest level at which goodwill is monitored for internal management purposes. An impairment

test is performed by assessing the recoverable amount of the Cash-generating Unit to which the

goodwill relates. Where the recoverable amount of the Cash-generating Unit is less than the carrying

amount, an impairment loss is recognised.

Trademarks, licences and customer contracts

Separately acquired trademarks and licences are shown at historical cost. Trademarks, licences and

customer contracts acquired in a business combination are recognised at fair value at the acquisition

date. They have a finite useful life and are carried at cost less accumulated amortisation. Amortisation

is calculated using the straight-line method to allocate the cost of trademarks and licences over their

estimated useful lives of two to five years.

Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and

bring to use the specific software. These costs are amortised over their estimated useful lives of two to

five years.

Computer software

Costs associated with maintaining computer software programmes are recognised as an expense as

incurred. Development costs that are directly attributable to the design and testing of identifiable

and unique software products controlled by the Group are recognised as intangible assets when the

following criteria are met:

It is technically feasible to complete the software product so that it will be available for use;

Management intends to complete the software product and use or sell it;

There is an ability to use or sell the software product;

It can be demonstrated how the software product will generate probable future economic benefits;

There are adequate technical, financial and other resources to complete the development; and

The expenditure attributable to the software product during its development can be reliably

measured.

Directly attributable costs that are capitalised as part of the software product include the software-

development employee costs and an appropriate portion of relevant overheads.

Other development expenditures that do not meet these criteria are recognised as an expense as

incurred. Development costs previously recognised as an expense are not recognised as an asset in

a subsequent period.

Computer software is amortised on the straight-line method over its estimated useful life (three

to 10 years) when available for use.

Work in progress is defined as intangible assets still in the development phase and not yet available

for use. These assets are tested annually for impairment and carried at cost less accumulated

impairment losses while still being developed. Amortisation on these assets commences when

they become available for use and amortisation periods are based on management’s assessment

of their useful lives.

1.6 Financial assets

The Group classifies its financial assets in the following categories: at fair value through profit or loss,

loans and receivables and available-for-sale financial assets. The classification depends on the purpose

for which the financial assets were acquired. Management determines the classification of its financial

assets at initial recognition.

Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss are financial assets held for trading. A financial

asset is classified in this category if acquired principally for the purpose of selling in the short term.

Derivatives are also categorised as held for trading unless they are designated as hedges. Assets in this

category are classified as current assets if expected to be settled within 12 months, otherwise they are

classified as non-current.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that

are not quoted in an active market. They are included in current assets, except for maturities greater

than 12 months after the end of the reporting period. These are classified as non-current assets.

Available-for-sale financial assets

Investments are designated as available-for-sale financial assets if they do not have fixed maturities

and fixed or determinable payments, and management intends to hold them for the medium to long

term. Financial assets that are not classified into any of the other categories (at fair value through

profit or loss and loans and receivables) are also included in the available-for-sale category. The

financial assets are presented as non-current assets unless they mature, or management intends to

dispose of them within 12 months of the end of the reporting period.

Recognition and measurement

Regular purchases and sales of investments are recognised on trade date – the date on which the

Group commits to purchase or sell the asset. Investments are initially recognised at fair value plus

transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets

carried at fair value through profit or loss are initially recognised at fair value and transaction costs

are expensed in the income statement. Financial assets are derecognised when the rights to receive

cash flows from the investments have expired or have been transferred and the Group has transferred

substantially all risks and rewards of ownership. Available-for-sale investments and financial assets at

fair value through profit or loss are subsequently carried at fair value.

Loans and receivables are carried at amortised cost using the effective interest rate method.




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1.6 Financial assets (continued)

Gains or losses arising from changes in the fair value of the “financial assets at fair value through profit

or loss” category are presented in the income statement within “Other gains/(losses)” in the period

in which they arise. Changes in the fair value of financial assets classified as available-for-sale are

recognised in other comprehensive income. When these financial assets classified as available-for-sale

are sold or impaired, the accumulated fair value adjustments recognised in equity are included in the

income statement as “Other gains/(losses)”.

Offsetting financial instruments

Financial assets and liabilities are offset and the net amount reported in the statement of financial

position when there is a legally enforceable right to offset the recognised amounts and there is an

intention to settle on a net basis or realise the asset and settle the liability simultaneously.

Impairment of financial assets

The Group assesses at the end of each reporting period whether there is objective evidence that a

financial asset or group of financial assets is impaired. A financial asset or a group of financial assets

is impaired and impairment losses are incurred only if there is objective evidence of impairment as a

result of one or more events that occurred after the initial recognition of the asset (a “loss event”) and

that loss event (or events) has an impact on the estimated future cash flows of the financial asset or

group of financial assets that can be reliably estimated.

(a) Assets carried at amortised cost

Evidence of impairment may include indications that the debtors or a group of debtors is experiencing

significant or delinquency in interest or principal payments, the probability that they will enter

bankruptcy or other financial difficulty, default reorganisation, and where observable data indicates

that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or

economic conditions that correlate with defaults.

For the loans and receivables category, the amount of the loss is measured as the difference between

the asset’s carrying amount and the present value of estimated future cash flows (excluding future

credit losses that have not been incurred) discounted at the financial asset’s original effective interest

rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in the

consolidated income statement. If a loan or held-to-maturity investment has a variable interest rate,

the discount rate for measuring any impairment loss is the current effective interest rate determined

under the contract. As a practical expedient, the Group may measure impairment on the basis of an

instrument’s fair value using an observable market price.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can

be related objectively to an event occurring after the impairment was recognised (such as an

improvement in the debtor’s credit rating), the reversal of the previously recognised impairment

loss is recognised in profit or loss.

(b) Assets classified as available-for-sale

The Group assesses at the end of each reporting period whether there is objective evidence that a

financial asset or a group of financial assets is impaired. In the case of equity investments classified as

available-for-sale, a significant or prolonged decline in the fair value of the security below its cost is

also evidence that the assets are impaired. If any such evidence exists for available-for-sale financial

assets, the cumulative loss – measured as the difference between the acquisition cost and the current

fair value, less any impairment loss on that financial asset previously recognised in profit or loss – is

removed from equity and recognised in the income statement. Impairment losses recognised in the

income statement on equity instruments are not reversed through the income statement.

Derivative financial instruments and hedging activities

Derivatives are initially recognised at fair value on the date a derivative contract is entered into and

are subsequently remeasured to their fair value at the end of each reporting period. The accounting

for subsequent changes in the fair value depends on whether the derivative is designated as a hedging

instrument and, if so, the nature of the item being hedged. The Group designates certain derivatives

as either:

(a) hedges of the fair value of recognised assets or liabilities or a firm commitment (fair value

hedges), or

(b) hedges of a particular risk associated with the cash flows of recognised assets and liabilities

and highly probable forecast transactions (cash flow hedges).

The Group documents at the inception of the hedging transaction the relationship between hedging

instruments and hedged items, as well as its risk-management objectives and strategy for undertaking

various hedging transactions.

The Group also documents its assessment, both at hedge inception and on an ongoing basis, of

whether the derivatives that are used in hedging transactions have been and will continue to be

highly effective in offsetting changes in fair values or cash flows of hedged items.

The fair values of various derivative instruments used for hedging purposes are disclosed in the

income statement. The full fair value of a hedging derivative is classified as a non-current asset or

liability when the remaining maturity of the hedged item is more than 12 months, and as a current

asset or liability when the remaining maturity of the hedged item is less than 12 months. Trading

derivatives are classified as a current asset or liability.

(a) Fair value hedge

Changes in the fair value of derivatives that are designated and qualify as fair value hedges are

recorded in the income statement, together with any changes in the fair value of the hedged asset or

liability that are attributable to the hedged risk. The Group only applies fair value hedge accounting

for hedging fixed interest risk on borrowings. The gain or loss relating to the effective portion of

interest rate swaps hedging fixed rate borrowings is recognised in the income statement within

“Finance costs”.




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1.6 Financial assets (continued)

If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount

of a hedged item for which the effective interest method is used is amortised to profit or loss over the

period to maturity.

Derivative financial instruments and hedging activities (continued)

(b) Cash flow hedge

The effective portion of changes in the fair value of derivatives that are designated and qualify as

cash flow hedges is recognised in other comprehensive income and accumulated in reserves in equity.

The gain or loss relating to the ineffective portion is recognised immediately in the income statement

within “Other gains/(losses)”.

Amounts accumulated in equity are reclassified to profit or loss in the periods when the hedged item

affects profit or loss (for example, when the forecast sale that is hedged takes place). The gain or loss

relating to the effective portion of interest-rate swaps hedging variable rate borrowings is recognised

in the income statement within “Finance income/cost”. However, when the forecast transaction that is

hedged results in the recognition of a non-financial asset (for example, inventory or fixed assets), the

gains and losses previously deferred in equity are transferred from equity and included in the initial

measurement of the cost of the asset. The deferred amounts are ultimately recognised in cost

of goods sold in the case of inventory or in depreciation in the case of fixed assets.

When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for

hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is

recognised when the forecast transaction is ultimately recognised in the income statement. When a

forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in

equity is immediately reclassified to the income statement within “Other gains/(losses)”.

1.7 Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is determined using the first-

in, first-out (FIFO) method. The cost of finished goods and work-in-progress comprises raw materials,

direct labour, other direct costs and related production overheads (based on normal operating

capacity). It excludes borrowing costs. Net realisable value is the estimated selling price in the

ordinary course of business less the estimated costs of completion and the estimated costs necessary

to make the sale. Costs of inventories include the transfer from equity of any gains/losses on qualifying

cash flow hedges for purchases of raw materials. Provisions are made for obsolete, unusable and

unsaleable inventory and for latent damage first revealed when inventory items are taken into use

or offered for sale.

1.8 Trade and other receivables

Trade receivables are amounts due from customers for merchandise sold or services performed in

the ordinary course of business. If collection is expected in one year or less (or in the normal operating

cycle of the business if longer), they are classified as current assets. If not, they are presented as

non-current assets.

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost

using the effective interest method, less provision for impairment. A provision for impairment of trade

receivables is established when there is objective evidence that the Group will not be able to collect

all amounts due according to the original terms of receivables. The amount of the provision is the

difference between the carrying amount and the estimated recoverable amount.

1.9 Cash and cash equivalents

In the consolidated statement of cash flows, cash and cash equivalents include cash in hand, deposits

held at call with banks, other short-term highly liquid investments with original maturities of three

months or less that are readily convertible to known amounts of cash and which are subject to an

insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown separately

within current liabilities on the statement of financial position.

1.10 Non-current assets held for sale

Non-current assets (or disposal groups) are classified as assets held for sale when their carrying

amount is to be recovered principally through a sale transaction and a sale is considered highly

probable. They are stated at the lower of carrying amount and fair value less costs to sell.

1.11 Share capital

Ordinary shares are classified as equity.

Incremental costs directly attributable to the issue of new ordinary shares or options are shown in

equity as a deduction, net of tax, from the proceeds.

Where any Group company purchases the company’s equity share capital (treasury shares), the

consideration paid, including any directly attributable incremental costs (net of income taxes) is

deducted from equity attributable to the company’s equity-holders until the shares are cancelled or

reissued. Where such ordinary shares are subsequently reissued, any consideration received, net of

any directly attributable incremental transaction costs and the related income-tax effects, is included

in equity attributable to the company’s equity-holders.

1.12 Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are

subsequently carried at amortised cost. Any difference between the proceeds (net of transaction

costs) and the redemption amount is recognised in profit or loss over the period of the borrowings

using the effective interest method.

Borrowings are removed from the statement of financial position when the obligation specified

in the contract is discharged, cancelled or expires.




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1.13 Employee benefits

Retirement benefits

The Group provides retirement benefits for its full-time employees, primarily by means of monthly

contributions to a number of defined contribution pension and provident funds in the countries

in which the Group operates. The assets of these funds are generally held in separate trustee-

administered funds. The Group’s contributions to retirement funds are recognised as an expense

in the period in which employees render the related service.

Medical-aid benefit

The Group’s contributions to medical-aid-benefit funds for employees are recognised as an expense

in the period during which the employees render services to the Group.

Post-employment medical-aid benefit

Some Group companies provide post-employment healthcare benefits to their retirees. The

entitlement to post-employment healthcare benefits is subject to the employee remaining in service

up to retirement age and completing a minimum service period. The expected costs of these benefits

are accrued over the minimum service period. Independent qualified actuaries carry out annual

valuations of these obligations. All actuarial remeasurements resulting from experience adjustments

and changes in actuarial assumptions are recognised immediately in other comprehensive income. The

actuarial valuation method used to value the obligations is the projected unit credit method. Future

benefits are projected using specific actuarial assumptions and the liability to in-service members is

accrued over their expected working lifetime. These obligations are unfunded.

1.14 Share-based payments

The Group grants share options, share appreciation rights (SARs) and restricted shares (RSPs) to its

employees under a number of equity compensation plans. The Group has recognised an employee-

benefit expense in the income statement, representing the fair value of share options/SARs/RSPs

granted to the Group’s employees. A corresponding credit to equity has been raised for equity-settled

plans, whereas a corresponding credit to liabilities has been raised for cash-settled plans. The fair

value of the options/SARs/RSPs at the date of grant under equity-settled plans is charged to income

over the relevant vesting periods, adjusted to reflect actual and expected levels of vesting. For cash-

settled plans, the Group remeasures the fair value of the recognised liability at each reporting date

and at the date of settlement, with any changes in fair value recognised in profit or loss for the period.

A share-option scheme/SAR/RSP is considered equity-settled when the option/gain is settled by the

issue of shares. They are considered cash-settled when they are settled in cash or any other asset, i.e.

not by the issue of shares. Each share trust deed, SAR and RSP plan rules, as appropriate, indicates

whether the option/gain is to be settled by the issue of shares or not.

1.15 Current and deferred income tax

The tax expense for the period comprises current and deferred tax. Tax is recognised in the income

statement, except to the extent that it relates to items recognised in other comprehensive income or

directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in

equity, respectively.

The current income-tax charge is calculated on the basis of the tax laws enacted or substantively

enacted at the balance-sheet date in the countries where the company and its subsidiaries operate

and generate taxable income. Management periodically evaluates positions taken in tax returns with

respect to situations in which applicable tax regulation is subject to interpretation. It establishes

provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred income tax is recognised on temporary differences arising between the tax bases of assets

and liabilities and their carrying amounts in the consolidated financial statements. However, deferred

tax liabilities are not recognised if they arise from the initial recognition of goodwill; deferred income

tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other

than a business combination that at the time of the transaction affects neither accounting nor taxable

profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or

substantively enacted by the balance-sheet date and are expected to apply when the related deferred

income-tax asset is realised or the deferred income-tax liability is settled.

Deferred income-tax assets are recognised only to the extent that it is probable that future taxable

profit will be available against which the temporary differences can be utilised.

Deferred income-tax liabilities are provided on taxable temporary differences arising from

investments in subsidiaries, associates and joint arrangements, except for deferred income-tax liability

where the timing of the reversal of the temporary difference is controlled by the Group and it is

probable that the temporary difference will not reverse in the foreseeable future. Generally the Group

is unable to control the reversal of the temporary difference for associates, only where there is an

agreement in place that gives the Group the ability to control the reversal of the temporary difference

not recognised.

Deferred income-tax assets are recognised on deductible temporary differences arising from

investments in subsidiaries, associates and joint arrangements only to the extent that it is probable the

temporary difference will reverse in the future and there is sufficient taxable profit available against

which the temporary difference can be utilised.

Deferred income-tax assets and liabilities are offset when there is a legally enforceable right to

offset current tax assets against current tax liabilities and when the deferred income taxes assets

and liabilities relate to income taxes levied by the same taxation authority on either the same taxable

entity or different taxable entities where there is an intention to settle the balances on a net basis.

The normal South African company tax rate used for the year ending 31 March 2018 is 28% (2017:

28%). Deferred tax assets and liabilities have been calculated using the 28% (2017: 28%) rate, being

the rate that the Group expects to apply to the periods when the assets are realised or the liabilities

are settled. Capital gains tax is calculated as 80% (2017: 80%) of the company tax rate. The tax rate

utilised for the Group’s foreign operation is 32%, being the statutory tax rate in Mozambique, the

country in which the entity operates. Local income tax as per note 24 refers to taxation applicable to

the country in which the subsidiaries operate.




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1.16 Dividends withholding tax (DWT)

Shareholders are subject to DWT on dividends received, unless they are exempt in terms of the

amended tax law. DWT is levied at 20% (2017: 20%) of the dividend received. The DWT is categorised

as a withholding tax, as the tax is withheld and paid to tax authorities by the company paying the

dividend or by a regulated intermediary and not the beneficial owner of the dividend.

1.17 Provisions

Provisions for restructuring costs and legal claims are recognised when: the Group has a present

legal or constructive obligation as a result of past events; it is probable that an outflow of resources

will be required to settle the obligation; and the amount has been reliably estimated. Restructuring

provisions comprise lease-termination penalties and employee-termination payments. Provisions are

not recognised for future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required in

settlement is determined by considering the class of obligations as a whole. A provision is recognised

even if the likelihood of an outflow with respect to any one item included in the same class of

obligations may be small.

Provisions are measured at the present value of the expenditures expected to be required to settle

the obligation using a pre-tax rate that reflects current market assessments of the time value of

money and the risks specific to the obligation. The increase in the provision due to passage of time

is recognised as interest expense.

1.18 Trade and other payables

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary

course of business from suppliers. Accounts payable are classified as current liabilities if payment is

due within one year or less (or in the normal operating cycle of the business if longer). If not, they are

presented as non-current liabilities.

Trade payables are recognised initially at fair value and subsequently measured at amortised cost

using the effective interest method.

1.19 Revenue

Revenue comprises the fair value of the consideration received or receivable for the sale of goods

and rendering of services in the ordinary course of the activities. Revenues are recognised upon

completion of the services and delivery of the related product and customer acceptance. The

recognition of print services, packaging and tissue revenue is based upon delivery of the product to

the distribution depot and acceptance by the distributor or the customer, or where the customer is

responsible for the transport of the customers’ products, acceptance by the customer or its nominated

transport company. Revenues from distribution services are recognised upon delivery of the product

to the customer and acceptance thereof.

Where print and distribution services are provided to the same client, the terms of each separate

contract are consistent with contracts where an unrelated party provides one of the services. Revenue

is recognised separately for print and distribution services, as the contracts are separately negotiated,

based on fair value for each service. Revenue is net of returns and allowances, trade discounts and

volume rebates.

Revenue for the Company comprises dividends received from subsidiaries and is recognised

as revenue when the right to receive payment is established.

1.20 Other income

Interest and dividends received on financial assets are included in “Finance income” and “Other

gains/(losses)” respectively. Interest is accrued using the effective interest method and dividends are

recognised when the right to receive payment is established.

1.21 Dividend distribution

Dividend distribution to the Company’s shareholders is recognised as a liability in the Group’s financial

statements in the period in which the dividends are approved by the Board of directors.

1.22 Leases

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor

are classified as operating leases. Payments made under operating leases (net of any incentives

received from the lessor) are charged to the income statement on a straight-line basis over the period

of the lease.

The Group leases certain property, plant and equipment. Leases of property, plant and equipment

where the Group has substantially all the risks and rewards of ownership are classified as finance

leases. Finance leases are capitalised at the lease’s commencement at the lower of the fair value of

the leased property and the present value of the minimum lease payments.

Each lease payment is allocated between the liability and finance charges. The corresponding rental

obligations, net of finance charges, are included in other long-term payables. The interest element of

the finance cost is charged to the income statement over the lease period so as to produce a constant

periodic rate of interest on the remaining balance of the liability for each period. The property, plant

and equipment acquired under finance leases are depreciated over the shorter of the useful life of the

asset and the lease term.

1.23 Foreign-currency translation

(a) Functional and presentation currency

Items included in the financial statements of each of the Group’s entities are measured using

the currency of the primary economic environment in which the entity operates (“the functional

currency”). The consolidated financial statements are presented in South African Rands (ZAR),

which is the Group’s presentation currency.




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1.23 Foreign-currency translation (continued)

(b) Transactions and balances

Foreign-currency transactions are translated into the functional currency using the exchange rates

prevailing at the dates of the transactions or valuation where items are remeasured. Foreign-exchange

gains and losses resulting from the settlement of such transactions and from the translation at year-end

exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in

profit or loss, except when deferred in other comprehensive income as qualifying cash flow hedges.

(c) Foreign subsidiary

The results and financial position of the Group’s only foreign operation, International Printing

Group Limitada (which does not have a currency of a hyperinflationary economy and has a functional

currency different from the presentation currency), are translated into the presentation currency

as follows:

Assets and liabilities are translated at the closing rate at the date of the statement of financial position;

Income and expenses for the statement of profit or loss and statement of comprehensive income are

translated at average exchange rates (unless this is not a reasonable approximation of the cumulative

effect of the rates prevailing on the transaction dates, in which case income and expenses are

translated at the dates of the transactions); and

All resulting exchange differences are recognised in other comprehensive income within the foreign-

currency translation reserve (FCTR).

On consolidation, exchange differences arising from the translation of the net investment in this foreign

entity are recognised in other comprehensive income in the foreign-currency translation reserve. When

a foreign operation is sold, the associated exchange differences are reclassified

to profit or loss, as part of the gain or loss on sale.

Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated

as assets and liabilities of the foreign operation and translated at the closing rate.

1.24 Government grants

Grants from the Government are recognised at their fair value where there is a reasonable assurance

that the grant will be received and the Group will comply with all attached conditions. Government

grants relating to costs are deferred and recognised in the income statement over the period necessary

to match them with the costs that they are intended to compensate.

Government grants relating to property, plant and equipment are included in non-current liabilities

as deferred income (note 18) and are credited to the income statement on a straight-line basis over the

expected lives of the related assets.

1.25 Related parties

Individuals or entities are related parties if one party has the ability, directly or indirectly, to control or

jointly control the other party or exercise significant influence over the other party in making financial

and/or operating decisions. Key management personnel are defined as all directors of Novus Holdings

Limited as well as members of the Novus Holdings Limited Executive Committee and certain members of

senior management.




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2018 INTEGRATED ANNUAL REPORT INTEGRATED ANNUAL REPORT 20182018 INTEGRATED ANNUAL REPORT INTEGRATED ANNUAL REPORT 2018

NOTES TO THE ANNUAL FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2018

2 PROPERTY, PLANT AND EQUIPMENT

Land and

buildings R’000

Plant and

machinery R’000

Vehicles, computers

and office equipment

R’000

Work- in-

progress R’000

Total R’000

Cost 861 160 2 962 086 158 902 172 608 4 154 756

Accumulated depreciation and impairment (186 179) (1 603 040) (128 329) —

(1 917 548)

Net book value at 01 April 2016 674 981 1 359 046 30 573 172 608 2 237 208

Additions – cash 3 595 52 304 13 644 174 176 243 719

Additions – other — 35 696 — — 35 696

Disposals — (11 260) (211) — (11 471)

Reclassifications — (30) (35) (102) (167)

Depreciation (21 167) (161 932) (17 166) — (200 265)

Transfers from work-in-progress 66 289 132 764 4 484 (203 537) —

Impairment (1 793) (136 528) (321) — (138 642)

Transferred to “held for sale” (63 404) — — (63 404)

Net book value at 31 March 2017 658 501 1 270 060 30 968 143 145 2 102 674

Cost 847 932 3 086 081 174 654 143 145 4 251 812

Accumulated depreciation and impairment (189 431) (1 816 021) (143 686) — (2 149 138)

Additions – cash 1 344 11 815 9 927 114 979 138 065

Additions – other — 15 464 — — 15 464

Disposals 1 (10 374) 242 — (10 131)

Reclassifications (52) 48 5 (255) (254)

Depreciation (21 454) (152 715) (16 751) (190 920)

Transfers from work-in-progress 84 474 157 641 411 (242 526) —

Impairment (79 626) (215 138) (2 362) — (297 126)

Acquisition of subsidiaries 3 612 177 588 3 253 4 177 188 630

Transferred to “held for sale” (27 287) — — — (27 287)

Net book value at 31 March 2018 619 513 1 254 389 25 693 19 520 1 919 115

Cost 899 629 3 439 197 188 765 19 520 4 547 111

Accumulated depreciation and impairment (280 116) (2 184 808) (163 072) — (2 627 996)

2 PROPERTY, PLANT AND EQUIPMENT (continued)“Additions – other” relates to non-cash acquisitions made during the year. The non-cash acquisitions relate

primarily to assets where risks and rewards had transferred in the year.

Reclassifications during the prior year included property, plant and equipment items that were previously

classified in inventory and other asset categories on the statement of financial position. Reclassifications in the

current year relate to items reclassified to other asset categories.

Leased assets: “Land and buildings” and “plant and machinery” include assets with carrying values of R3,2 million

(2017: R3,8 million) and R59,1 million (2017: R64,4 million) respectively for assets where the Group is a lessee

under a finance lease. Refer to note 15 for more details.

The Group recognised an impairment of property, plant and equipment of R297,1 million (2017: R138,6 million).

R172,3 million of the impairment relates to the “Printing” segment and R124,8 million (2017: R29,6 million)

relates to the “Other” segment. The impairment loss was included in “Other gains/(losses)” in the income

statement.

The current year impairments related to the following:

Printing The renegotiated Media24 printing agreements have resulted in the need to impair several assets within

the Coldset division. Print work previously performed at Paarl Coldset Pietermaritzburg and Paarl Coldset

Johannesburg was lost to competitors and as a result a decision was taken to close the unprofitable

Pietermaritzburg facility. Assets in this facility were impaired by R38,0 million to a recoverable amount of

R34,0 million. The recoverable amount was determined with reference to the assets’ fair value less costs to

sell, which is what we expect to receive in the market on a sale of the equipment and the building. The Paarl

Coldset Johannesburg facility was right-sized effective 31 March 2018, and involved mothballing of unutilised

equipment. This resulted in assets being impaired by R97,5 million to a recoverable amount of R89,8 million.

The impact of pricing on the future cash flows of the Coldset CGU (including goodwill) was evaluated, indicating

further impairments were needed to this Cash-generating Unit, and as a result goodwill (see note 3) and certain

assets were also impaired by R5,4 million to its recoverable amount of R163,4 million.

Total impairment as a result of the above amounted to R140,9 million on buildings and production equipment

and R17,2 million on goodwill (note 3).

Production equipment in the Heatset plants was identified as redundant during the year. This has resulted

in these assets being impaired by R7,7 million to its recoverable amount of R0,2 million. Further to this, the

Group also evaluated its investment in properties housing its printing operations, resulting in an impairment to

buildings of R23,9 million to a recoverable amount of R66,5 million. The recoverable amount was based on fair

value less costs to sell, which was determined based on a market valuation of the property. Cashgenerating Units

(including goodwill) in Heatset were evaluated for impairment and no further impairment was required.


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Other

TissueThe Group has reassessed the tissue business model following the implementation of the revised operations.

Management assessed the recoverability of the individual assets as well as the Cash-generating Units (including

goodwill) from this revised business model. This resulted in asset and goodwill impairments of R124,8 million

(2017: R29,6 million) and R45,4 million (2017: Rnil) respectively , to the tissue division.

The recoverable amounts of the impaired assets and Cashgenerating Units (including goodwill) were determined

by reference to either the asset’s fair value less costs to sell or value in use. Where assets were impaired to its

recoverable amount based on fair value less cost to sell as and where inputs were available, the inputs used

were market values of these assets obtained from manufacturers of the same equipment or similar types

of equipment. Where the market values were not obtainable, the recoverable amounts were estimated by

management with the use of internal technical experts and given that these are unobservable inputs, the fair

value of these assets was classified as level 3 fair value. Where there was no market considered for the specific

asset and there is no value in use, this asset was impaired in full. Where fair value less costs to sell was used,

if one or more of the inputs were changed to a reasonable possible alternative assumption, there would be no

further significant impairments that would have to be recognised.

Where assets were impaired to its recoverable amount based on value in use, the value in use was based on

discounted cash flow calculations. The cash flow calculations were based on three- to five-year forecasts and

extrapolated into the future using long term average industry growth rates. If the discount rate increased by 2%

or the growth rate decreased by 2%, this would not change the impairment charge.

There were no reversals of impairments in the current year.

At 31 March 2018, the Group has pledged property, plant and equipment of R2,2 million (2017: R68,2 million) as

security against certain finance leases.

NOTES TO THE ANNUAL FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2018

2 PROPERTY, PLANT AND EQUIPMENT (continued)

2018R’000

2017R’000

Cost

Opening balance 155 419 138 711 Acquisition of subsidiaries 80 212 16 708 Closing balance 235 631 155 419

Accumulated impairment

Opening balance — —Impairment 62 577 —Closing balance 62 577 —

Net book value 173 054 155 419

Impairment testing of goodwill

The Group has allocated its goodwill to various Cash-generating Units. The recoverable amounts of these Cash-

generating Units have been determined based on either a value-in-use calculation or fair value less costs to

sell, where more appropriate. The value-in-use is based on discounted cash flow calculations. The Group based

its cash flow calculations on three- to five-year budgeted and forecast information approved by the Board of

directors and extrapolated over the forecasted years. Long-term average growth rates were used to extrapolate

the cash flows into the future. These rates were also compared to the average long-term industry growth rates

for reasonableness. The discount rates used are pre-tax and reflect specific risks relating to the relevant Cash-

generating Units in which they operate. Prior year discount rates disclosed were post tax with the rate of 12,2%

disclosed for 2017. This was amended in the current year to reflect the pre-tax discount rates used.

3 GOODWILL


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3 GOODWILL (continued)The Group allocated goodwill to the following Cash-generating Units:

The impairment charge of R62,6 million arose in both the Printing and Other segments. The goodwill in

Paarl Coldset and Paarl Tissue was impaired in full by R17,2 million and R45,4 million respectively, with the

recoverable amounts of these Cash-generating Units amounting to R187,4 million and R20,4 million at year end.

Refer to note 2 for further details on the nature of these impairments.

Goodwill represents the above Cash-generating Units’ ability to generate future cash flows, which is a direct

result of various factors, including technological innovations, the quality of the workforce acquired, supplier

relationships and possible future synergies.

The following assumptions were used for Cash-generating Units where goodwill was considered significant,

except for goodwill recognised on new acquisitions in the current year (see note 30) :

Intrepid Printers

Average EBITDA growth rate of 19%, ranging between R23 million - R34 million per year.

Average capital expenditure for maintenance of R4 million per year.

ITB Manufacturing (Proprietary) Ltd

Average EBITDA growth rate (excluding once-off capacity increase related to capital expenditure in calendar

year of transaction) of 12%, ranging between R73 million and R113 million per year.

Average capital expenditure for maintenance of R15 million per year.

If one or more of the inputs were changed to a reasonable possible alternative assumption, except for Intrepid

Printers’ goodwill, there would be no further significant impairments that would have to be recognised. If the

discount rate increased by 3%, this would have resulted in an impairment of this goodwill by R6,6 million. If the

growth rate decreased by 3%, this would have resulted in an impairment of this goodwill by R1,2 million, with all

other assumptions remaining constant.

NetbookvalueR’000

Basis ofdeterminationof recoverable

amount

Discountrate

applied tocash flows

Growth rate

Cash-generating Unit

At 31 March 2018

Paarl Media Cape 14 008 Value in use 13,4% 2%Paarl Coldset — Value in use 13,4% 0%Paarl Media Holdings 24 596 Value in use 13,4% 3%Intrepid Printers 30 871 Fair value less

costs to sell

13,4% 3%

Paarl Tissue — Value in use 13,4% 2%Digital Print Solutions 6 659 Value in use 13,4% 2%International Printing Group Limitada 16 708 Value in use 13,4% 6%ITB Manufacturing Proprietary Limited (note 30) 80 212 Value in use 13,4% 2%

173 054

At 31 March 2017

Paarl Media Cape 14 008 Value in use 13,2% 2%Paarl Coldset 17 226 Value in use 13,2% 2%Paarl Media Holdings 24 596 Value in use 13,2% 3%Intrepid Printers 30 871 Value in use 13,2% 2%Paarl Tissue 45 351 Value in use 13,2% 6%Digital Print Solutions 6 659 Value in use 13,2% 2%International Printing Group Limitada 16 708 Value in use 13,2% 6%

155 419


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4 OTHER INTANGIBLE ASSETS

Patents, trademarks and

other rightsR’000

Computersoftware

R’000

Work-in-progress

R’000Total

R’000

Cost 412 83 611 1 356 85 379

Accumulated amortisation and impairment (407) (46 944) — (47 351)

Net book value at 01 April 2016 5 36 667 1 356 38 028

Additions — 5 885 2 478 8 363

Disposals — (75) (75)

Transfers from work-in-progress — 3 936 (3 936) —

Reclassification — 83 102 185

Amortisation (1 017) (6 285) — (7 302)

Acquisition of subsidiaries 3 051 — — 3 051

Net book value at 31 March 2017 2 039 40 211 — 42 250

Cost 3 463 93 351 — 96 814

Accumulated amortisation and impairment (1 424) (53 140) — (54 564)

Additions — 1 494 393 1 887

Transfers from work-in-progress — 393 (393) —

Reclassification — 117 — 117

Amortisation (2 079) (5 646) — (7 725)

Impairment — (12 448) — (12 448)

Acquisition of subsidiaries 6 709 — — 6 709

Net book value at 31 March 2018 6 669 24 121 — 30 790

Cost 10 172 94 362 — 104 534

Accumulated amortisation and impairment (3 503) (70 241) — (73 744)

5 INVESTMENTS IN SUBSIDIARIES The following information relates to the Group’s financial interest in its significant subsidiaries, over which the

Group has control through its direct and indirect interests in respective intermediate holding companies and

other entities:

All subsidiaries, except for Novus Holdings Share Trust which, has a year-end of 28 February, and International

Printing Group Limitada (incorporated in Mozambique), which has a year-end of 31 December, share the same

financial year-end as Novus Holdings Limited and are incorporated in South Africa.

Name of company Nature of business

Effectiveinterest

2018

Effectiveinterest

2017

Companycarryingamount

2018R’000

Companycarryingamount

2017R’000

Unlisted % %

Direct interestsPaarl Media Holdings Proprietary Limited Printing 100,0 100,0 1 043 782 1 043 782

Paarl Coldset Proprietary Limited Printing 100,0 100,0 187 375 253 339

Latiano 554 Proprietary LimitedInvestment holding company 100,0 100,0 * *

Novus Packaging Holdings Proprietary LimitedInvestment holding company 100,0 100,0 * *

Novus Holdings Share TrustInvestment holding entity 100,0 100,0 * *

Leif 663 Proprietary LimitedInvestment holding company 100,0 100,0 * *

Novus Ventures Proprietary LimitedInvestment holding company 100,0 100,0 * *

1 231 157 1 297 121

Indirect interestsMacleary Investments 456 Proprietary Limited Dormant 100,0 100,0

Paarl Media Paarl Proprietary Limited Printing 100,0 84,0

Paarl Media Proprietary Limited Printing 100,0 100,0

Paarl Labels Proprietary Limited Printing 100,0 100,0

Marano Investments Proprietary Limited Dormant 100,0 100,0

Intrepid Printers Proprietary Limited Dormant 100,0 100,0

Paarl Labels Africa Proprietary Limited Dormant 100,0 100,0Novus Packaging Proprietary Limited Printing, Packaging and

Tissue manufacturing100,0 100,0

Victory Ticket 376 Proprietary Limited t/a Digital Print Solutions Printing 100,0 100,0

International Printing Group Limitada Retail 97,7 97,7

ITB Manufacturing Proprietary Limited Packaging 100,0 0,0Isithebe Contracting Services Proprietary Limited Packaging 100,0 0,0

Molakai Investments Proprietary Limited Packaging 100,0 0,0

Monospec Proprietary Limited Packaging 100,0 0,0

Plaslope Proprietary Limited Packaging 70,0 0,0

* The carrying amounts of these investments are less than R1 000.

The impairment charge in the current year of R12,4 million (2017: Rnil) which occurred in the Printing

segment relates to components of software deemed to be redundant. These components were impaired

to a recoverable amount of RNil. The average remaining useful life of computer software is eight years.

The Company's investment in Paarl Coldset Proprietary Limited was impaired to its recoverable amount,

which was determined with reference to the value in use calculation, in the current year. Refer to notes 2

and 3 for further details on impairments which are directly related to this investment.


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193192


6 DEFERRED TAXATIONThe deferred tax assets and liabilities and movement thereon are attributable to the following items:

2018

Opening balance

R’000

Charged to income

R’000

Charged to other

comprehen-sive income

R’000

Acquisition of subsidiary

R’000

Closing balance

R’000

Deferred taxation assetsProperty, plant and equipment 3 042 33 556 — — 36 598

Receivables and other current assets 904 724 — — 1 628

Provisions and other current liabilities 12 749 (1 206) (227) 1 816 13 132

Income received in advance 88 61 — 32 181

Tax losses carried forward 48 458 41 228 — 510 90 196

Capitalised finance leases 140 4 800 — — 4 940

Derivative assets 3 930 1 782 — — 5 712

Hedging reserve 582 (3 691) 1 489 — (1 620)

Share-based compensation 3 516 (798) — — 2 718

Other — 1 616 — — 1 616

73 409 78 072 1 262 2 358 155 101

Deferred taxation liabilitiesProperty, plant and equipment (258 930) 51 507 — (39 836) (247 259)

Intangible assets (570) 295 — (2 673) (2 948)

Receivables and other current assets (5 902) (408) — (7) (6 317)

Translation reserves 722 916 — — 1 638

Hedging reserve (561) (20) — — (581)

Other — (154) (120) — (274)

(265 241) 52 136 (120) (42 516) (255 741)

Net deferred taxation (191 832) 130 208 1 142 (40 158) (100 640)

Note 24 30


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6 DEFERRED TAXATION (continued)Deferred income-tax assets are recognised for tax losses carried forward to the extent that the realisation of

the related benefit through future taxable profits is probable. The deferred tax assets relate mainly to carried-

forward tax losses of Novus Packaging Proprietary Limited (previously known as Paarl Tissue Proprietary

Limited). The subsidiary has incurred tax losses over the last four years following the acquisition of the business.

They relate mainly to costs of integrating the operations and delays in the expansion project of the business.

The Group has concluded that the deferred tax assets will be recoverable using the estimated future taxable

income based on approved business plans and budgets for the subsidiary. The subsidiary is expected to utilise the

deferred tax assets from the year 2023 onwards based on the above estimates.

Deferred tax assets and liabilities are offset when the income tax relates to the same fiscal authority and there is

a legal right to offset at settlement. The following amounts are shown in the consolidated statement of financial

position:

GROUP

2018R’000

2017R’000

Deferred tax assets 120 717 50 597

Deferred tax liabilities (221 357) (242 429)

(100 640) (191 832)

GROUP COMPANY

2018R’000

2017R’000

2018R’000

2017R’000

Raw materials (paper, ink and plates) 347 078 239 425 — —Finished products, trading inventory and consumables 92 896 61 366 — —

Work-in-progress 39 808 48 641 — —

Gross inventory 479 782 349 432 — —Less: Provision for slow-moving and obsolete inventories (5 107) (7 102) — —

Net inventory 474 675 342 330 — —

The total provision charged to the income statement to write inventory down to net realisable value

amounted to R2,2 million (2017: R1,6 million), and reversals of these provisions amounted to R4,2 million

(2017: R3,6 million). The reversals of provisions relates mainly to obsolete inventory in the Other segment of

R3,6 million (2017:R3,0 million) which was either sold or could subsequently be used in production.

The cost of inventories recognised as an expense and included in “costs of goods sold” amounted to

R2 102 million (2017: R2 129 million).

7 INVENTORY

2017

Opening balance

R’000

Charged to

incomeR’000

Charged to other

comprehen-sive income

R’000

Acquisition of subsidiary

R’000

Closing balance

R’000

Deferred taxation assetsReceivables and other current assets 2 948 (2 044) — — 904

Provisions and other current liabilities 21 790 (8 784) (257) — 12 749

Income received in advance 1 042 (954) — — 88

Tax losses carried forward 16 907 31 551 — — 48 458

Capitalised finance leases 411 (271) — — 140

Derivative assets (1 215) 5 145 — — 3 930

Hedging reserve 582 — — — 582

Share-based compensation 6 096 (2 580) — — 3 516

48 561 22 063 (257) — 70 367

Deferred taxation liabilitiesProperty, plant and equipment (304 914) 49 026 — — (255 888)

Intangible assets (113) 397 — (854) (570)

Receivables and other current assets (1 834) (4 068) — — (5 902)

Translation reserves — — 722 — 722

Hedging reserve 341 — (902) — (561)

(306 520) 45 355 (180) (854) (262 199)

Net deferred taxation (257 959) 67 418 (437) (854) (191 832)

Note 24 30

A summary of the Group’s recognised tax losses carried forward at 31 March and the expected dates of

utilisation are set out below. The tax losses are within the South African tax jurisdiction.


6 DEFERRED TAXATION (continued)

GROUP

2018R’000

2017R’000

Utilised within two to five years 322 129 173 063

322 129 173 063

The ultimate outcome of additional taxation assessments may vary from the amounts accrued. However,

management believes that any additional taxation liability over and above the amount accrued would not

have a material adverse impact on the Group’s income statement and statement of financial position.


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8 TRADE AND OTHER RECEIVABLESAs at 31 March 2018, trade receivables of R136,4 million (2017: R72,6 million) were past due but not impaired.

These relate to a number of independent customers for whom there is either no recent history of default or, if

defaults were noted, where management have assessed the outstanding balances to be recoverable by taking

into account the debtor’s financial position, past experience and other factors. The ageing analysis of these trade

receivables, after provisions for impairments were raised, is as follows:

GROUP COMPANY

2018R’000

2017R’000

2018R’000

2017R’000

Neither past due nor impaired 521 847 346 530 — —

Past due:

30 days and older 107 507 47 801 — —

60 days and older 11 520 7 605 — —

90 days and older 9 678 11 047 — —

120 days and older 7 682 6 149 — —

658 234 419 132 — —

The credit risk of trade receivables that are neither past due nor impaired can be assessed by reference to their

customer type. Trade receivables, neither past due nor impaired by type of customer, are categorised and ranked

by concentration of risk as follows:

GROUP COMPANY

2018R’000

2017R’000

2018R’000

2017R’000

Listed South African companies 214 107 121 320 — —

Government/parastatals 13 015 24 681 — —

South African corporates 268 125 198 642 — —Corporates in the rest of Africa 26 600 1 887 — —

521 847 346 530 — —

8 TRADE AND OTHER RECEIVABLES (continued)

GROUP COMPANY

2018R’000

2017R’000

2018R’000

2017R’000

Trade accounts receivable, gross 673 350 430 407 — —

Less: Provision for impairment of receivables (15 116) (11 275) — —

658 234 419 132 — —

Prepayments 23 959 22 233 — —

Staff debtors 931 599 — —

VAT receivable 295 7 955 — —

Sundry deposits 6 460 4 960 — —

Other receivables 12 275 23 560 — —

702 154 478 439 — —

The Group’s maximum exposure to credit risk at the reporting date is the carrying value of the receivables

mentioned above. The Group does not hold any form of collateral as security relating to trade receivables.

The movement in the allowance account for impairment of trade receivables during the year was as follows:

GROUP COMPANY

2018R’000

2017R’000

2018R’000

2017R’000

Provision for impairment of trade receivables

Opening balance 11 275 26 660 — —

Provision for impairment 12 720 7 918 — —

Unused amounts reversed (4 014) (7 325) — —

Provisions utilised (5 115) (15 978) — —

Acquisition of business 250 — — —

Closing balance 15 116 11 275 — —

The ageing of the provision per age class is presented below:

GROUP COMPANY

2018R’000

2017R’000

2018R’000

2017R’000

30 days and older 1 125 2 016 — —

60 days and older 405 921 — —

90 days and older 410 335 — —

120 days and older 13 176 8 003 — —

15 116 11 275 — —


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11 SHARE CAPITAL

GROUP COMPANY

2018R’000

2017R’000

2018R’000

2017R’000

Authorised3 000 000 000 ordinary no par value shares (2017: 3 000 000 000 ordinary no par value shares) — — — —

Issued347 332 454 ordinary no par value shares (2017: 347 332 454 ordinary no par value shares) 606 040 606 040 606 040 606 040

Treasury shares

Shares held as treasury shares (368 172) (368 172) (368 172) (368 172)

Treasury shares

Treasury shares include 24 313 272 ordinary shares issued to the Novus Holdings Share Trust in respect of

options allotted to selected employees and 3 473 325 ordinary shares issued to Latiano 554 Proprietary Limited

in respect of the options previously allotted to Mr LP Retief in his capacity as non-executive chairman and

director of the Company. Mr Retief’s options have been cancelled during the prior financial year and these shares

remain within the legal entity, Latiano 554 Proprietary Limited.

Unissued share capital

The directors of the Company have unrestricted authority until, the next annual general meeting, to allot

and issue up to 10%, amounting to 34 733 245 shares, of the unissued ordinary shares of the Company. This

authority was granted subject to the provisions of the South African Companies Act No 71 of 2008 and the

JSE Listing Requirements.


9 CASH AND CASH EQUIVALENTS

10 NON–CURRENT ASSETS CLASSIFIED AS HELD FOR SALEIn March 2017, management took a decision to sell land and buildings in Paarl where the previous Paarl Media

Paarl business was located. These land and buildings were therefore reclassified as held for sale. Delays in

transfer resulted in this property still being carried as held for sale at year-end. Transfer is expected to be

completed by July 2018. In the current year, the Paarl Coldset Pietermaritzburg building was classified as held

for sale.

CASH AND CASH EQUIVALENTS CONSIST OF:

GROUP COMPANY

2018R’000

2017R’000

2018R’000

2017R’000

Bank balances 243 948 229 968 93 134

Cash and cash equivalents 243 948 229 968 93 134

Bank overdrafts (35 332) (2 744) — —

208 616 227 224 93 134

Total amount of undrawn facilities available for

future operating activities and commitments 508 066 612 731 — —

Note2018

R’0002017

R’000

Opening balance 63 404 —

Transfers from property, plant and equipment 2 27 287 63 404

Closing balance 90 691 63 404

In accordance with IFRS 5, the land and buildings were measured at the lower of its carrying amount and fair

value less costs to sell at the time of the reclassification.


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GROUP COMPANY

2018R’000

2017R’000

2018R’000

2017R’000

Other reserves in the statement of financial

position comprise the following:

Existing control business combination reserve (128 460) (857 897) — 862 819

Share-based compensation reserve 54 042 56 875 — —

Hedging reserve (3 268) (1 770) — —

Actuarial reserve 822 182 — —

Foreign-currency translation reserve (3 797) (1 855) — —

Fair value reserve 64 — — —

(80 596) (804 465) — 862 819

The existing control business combination reserve is used to account for transactions with non-controlling

shareholders in terms of the economic entity model, whereby the excess of the cost of the transactions over the

acquirer’s interest in previously recognised assets and liabilities is allocated to this reserve in equity. This reserve

is also used in common control transactions (where all of the combining entities in a business combination are

ultimately controlled by the same entity) where the excess of the cost of the transactions over the acquirer’s

proportionate share of the net assets acquired is allocated to this reserve. Any reserves relating to transactions

which occurrred while the Group was under common control of Media24 Proprietary Limited have been

transferred to retained earnings in the current year.

The fair value of equity settled share options, SARs and RSPs issued to employees is accounted for in the share-

based compensation reserve over the vesting period. The reserve is adjusted at each year-end when the entity

revises its estimates of the number of share options, SARs and RSPs that are expected to become exercisable. It

recognises the impact of the revision of original estimates, if any, in the income statement, with a corresponding

adjustment to this reserve in equity for equity-settled plans.

The hedging reserve relates to the changes in the fair value of derivative financial instruments and the relevant

underlying hedged items. It hedges forecast transactions or the foreign-currency part of firm commitments.

The changes in fair value are recorded in the hedging reserve until the forecast transaction or firm commitment

results in the recognition of a non-financial asset or liability, when such deferred gains or losses are included in

the initial measurement of the non-financial asset or liability.

The actuarial reserve relates to actuarial gains or losses on the post-employment medical liability, as well as the

provisions for pensioner gratuities.

Exchange differences arising on translation of the foreign controlled entity are recognised in other

comprehensive income and accumulated in the foreign-currency translation reserve. The cumulative amount

is reclassified to profit or loss when the net investment is disposed of.

The fair value reserve relates to gains or losses on the revaluation of available-for-sale financial assets.

NOTES TO THE ANNUAL FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 MARCH 2018

12 OTHER RESERVES 13 POST-EMPLOYMENT MEDICAL LIABILITY

The employees of the Group participate in a post-retirement medical-benefit scheme. The obligation of the

Group to pay medical-aid contributions after retirement is no longer part of the conditions of employment

for new employees. A number of pensioners and current employees, however, remain entitled to this benefit.

The entitlement to this benefit for current employees is dependent on the employees remaining in service

until retirement age and completing a minimum service period.

The Group provides for post-retirement medical-aid benefits on the accrual basis determined each year by way

of a valuation. The key assumptions and the valuation methods are described below. The directors believe that

adequate provision has been made for future liabilities.

Key assumptions and valuation method

The actuarial valuation method used to value the liabilities is the Projected Unit Credit Method prescribed by

IAS 19 “Employee Benefits”. Future benefit values are projected using specific actuarial assumptions and the

liability for in-service members is accrued over the expected working lifetime.

The most significant assumptions used for the current and previous valuations are outlined below:

2018 2017

Discount rate 9,7% 9,8%

Health-cost inflation 8,5% 9,2%

Expected retirement age 60 60

Membership discontinued at retirement 0% 0%

It is assumed that current in-service members would retire on their current medical-scheme option

and that there would be no change in options on retirement.

Actuarial assumptions are generally more suited to estimating the future experience of larger groups

of individuals. The overall experience of larger groups is less variable and is more likely to tend to the

expected value.

2018R’000

2017R’000

Opening balance 2 987 3 486

Current service cost 106 129

Interest cost 293 363

Employer benefit payments — (1)

Remeasurements (752) (990)



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13 POST-EMPLOYMENT MEDICAL LIABILITY (CONTINUED)A sensitivity analysis is presented below to show the effect of a one percentage point decrease or increase in the

rate of healthcare-cost inflation:

14 PROVISIONSThe long-service and retirement gratuity provisions were determined based on management’s estimates and

assumptions as below. The Group has an obligation to pay the benefits relating to the long-service bonus for

current employees. However, the obligation to settle benefits relating to the retirement gratuity provision is

limited to a group of employees who still remain entitled to these benefits. The remeasurements relating to the

long-service bonus provision are recognised in profit or loss and the remeasurements relating to the retirement

gratuity provision are recognised in other comprehensive income.

Key assumptions and valuation method

The actuarial valuation method used to value the provisions is the Projected Unit Credit Method as prescribed

by IAS 19 “Employee Benefits”.

The most significant assumptions used for the current and previous valuations are outlined below:

GROUP

2018 Assumption

8,50% -1% +1%

Healthcare-cost inflationAccrued liability 31 March 2 634 2 271 3 084

% change -13,8% 17,1%

Current service cost and interest cost 399 343 468

% change -14,0% 17,3%

2017 Assumption

9,20% -1% +1%

Healthcare-cost inflation

Accrued liability 31 March 2 987 2 667 3 372

% change -10,7% 12,9%


% change -11,4% 14,0%

2018 2017

Discount rate 8,5% 8,8%

Normal salary increase rate 5,0% 5,0%

Expected retirement age 60 or 65 60

The discount rate and the normal salary increase rate assumptions should be considered in relation to each other.

14 PROVISIONS (CONTINUED)Long-service bonus

As per the Group’s remuneration policies’ a long-service bonus is paid to qualifying employees at the following

intervals:

10 years of uninterrupted service - 50% of one month’s total cost to company




The accrued liability is determined on the basis that each employee’s long-service benefit accrues uniformly over

the period to which the benefit becomes payable.

2018R’000

2017R’000




Employer benefit payments (1 768) (916)

Remeasurements 910 4 387


A sensitivity analysis is presented below to show the effect of a one percentage point decrease or increase in the salary increase rate:

GROUP

2018 Assumption

5% -1% +1%

Normal salary increase rate


% change -4,5% 4,7%

Current service cost and interest cost 1 612 1 528 1 702

% change -5,2% 5,6%

2017 Assumption

5% -1% +1%


Accrued liability 31 March 8 879 8 515

% change -4,1% 4,3%


% change -3,9% 5,1%


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14 PROVISIONS (CONTINUED)Retirement gratuity

The retirement gratuity is paid to qualifying employees in the event of retirement (normal, early and ill-health) at

the age of 55 years or older and with at least 15 years of continued service at retirement.

The accrued liability was calculated by taking a pro-rata proportion of the total calculated value. This proportion

is based on the past service of members relative to their prospective total service.

2018R’000

2017R’000




Reclassifications from other current liabilities 2 969 —

Employer benefit payments (92) (453)

Remeasurements 19 75


A sensitivity analysis is presented below to show the effect of a one percentage point decrease or increase in the salary increase rate:

GROUP

2018 Assumption

5% -1% +1%



% change -6,3% 6,9%


% change -7,3% 7,7%

2017 Assumption

5% -1% +1%



% change -7,8% 8,6%


% change -9,1% 10,2%

14 PROVISIONS (continued)Other provisions

Other provisions include an amount of R5,8 million (2017: R6,3 million) relating to costs provided in terms

of an onerous lease contract.

2018R’000

2017R’000

Long-service bonus provision 9 633 8 879

Retirement gratuity provision 6 692 3 166

Other provisions 5 770 7 177

Total provisions 22 095 19 222

Non-current provisions 17 557 17 045

Current provisions 4 538 2 177

22 095 19 222

15 LONG-TERM LIABILITIES

2018R’000

2017R’000

Total liabilities 60 035 63 504

Less: Current portion (1 576) (3 068)

Interest-bearing: Capitalised finance leases 58 459 60 436

Total liabilities 55 471 17 022

Less: Current portion (14 678) (17 022)

Interest-bearing: Loans and other liabilities 40 793 —

Net long-term liabilities 99 252 60 436

Capitalised finance leases Currency of balance: South African Rand Type of lease: Lease of printing and tissue-manufacturing equipment Weighted average year-end interest rate: 9,83% Final repayment dates: 2030 − 2036

Total provisions


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207206



15 LONG-TERM LIABILITIES (continued) 2018

R’0002017

R’000

Payable within one year 7 407 9 114

Payable within two to five years 29 629 30 058

Payable later than five years 87 097 93 644

124 133 132 816

Future finance costs on finance leases (64 098) (69 312)

Present value of finance-lease liabilities 60 035 63 504

Present value


Payable within two to five years 8 098 7 744

Payable later than five years 50 361 52 692

Present value of finance-lease liabilities 60 035 63 504

Loans and other liabilities

Currency of balance: South African Rand

Rand Merchant Bank loan — 17 022

Year-end interest rate: 9,058% (3-month JIBAR +1,7%)

Final repayment date of loan: July 2017

Mercantile Bank Limited 50 356 —

Weighted average year-end interest rate: 9,94% linked to prime lending rate —

Final repayment dates: 2020 − 2022 —

Wesbank − a division of First Rand Bank Limited 4 871

Weighted average year-end interest rate: 11,15% linked to prime lending rate

Final repayment dates: 2020 − 2021

ABSA Bank Limited 244

Year-end interest rate: 10,00% linked to prime lending rate

Final repayment date: 30 April 2019 55 471 17 022

2018R’000

2017R’000

Repayment terms of loans


Payable within two to five years 40 793 —

55 471 17 022

Interest-rate profile of long-term liabilities (long- and

short-term portion, including capitalised finance leases)

Loans at fixed rates (1 − 12 months) 1 576 —

Loans at fixed rates (more than 12 months) 58 459 —

Loans linked to variable rates 55 471 80 526

115 506 80 526

2018R’000

2017R’000

Net debt

Cash and cash equivalents 243 948 229 968

Liquid investments (i) 3 090 3 000

Borrowings − repayable within one year (including overdraft) (ii) (51 586) (22 834)

Borrowings − repayable after one year (ii) (99 252) (60 436)

Net debt 96 200 149 698

Cash and liquid investments 247 038 232 968

Gross debt − fixed interest rates (95 367) (66 248)

Gross debt − variable interest rates (55 471) (17 022)

Net debt 96 200 149 698

(i) Liquid investments comprise available-for-sale investments.(ii) Borrowings include finance leases, loans and liabilities and bank overdrafts.

15.1 NET-DEBT RECONCILIATIONThis section sets out an analysis of net debt and the movements in net debt for each of the periods

presented.


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209208



16 SHARE-BASED PAYMENTSThe Group operates a number of share incentive plans, share appreciation rights (SARs) and restricted share

(RSP) schemes.

All share options are granted with an exercise price of not less than 100% of the market value or fair value of

the respective company’s shares on the date of the grant. All SARs are granted with an exercise price of not less

than 100% of the fair value of the SARs on the date of the grant. All unvested share options/SARs are subject to

forfeiture upon termination of employment. All cancelled options/SARs are options/SARs cancelled by mutual

agreement between the employer and employee.

All RSPs are granted with an exercise price of nil. All unvested RSPs are subject to forfeiture upon termination

of employment and cancelled RSPs are cancelled by mutual agreement between the employer and employee.

The share-based payment liabilities and reserves at 31 March are as follows:

2018R’000

2017R’000

Note

Share-based payment liability

Non-current liability 1 845 3 139

Current liability 7 092 9 422

8 937 12 561

Share-based compensation reserve

Balance as at 31 March 12 54 042 56 875

Income statement

Share-based compensation charge 21 20 955 28 068

16 SHARE-BASED PAYMENTS (continued)The following significant share incentive plans were in operation during the financial year:

Date of incorporation

Maximum awards

permissible #

Vesting period

Period to expiry from

date of offer

IFRS 2 classification

Share Trusts

Novus Holdings Share Trust 11 March 2015 10% * 6 years Equity settled

LP Retief share option*** 27 February 2015 1% * *** Equity settled

Share appreciation rights schemesPaarl Coldset Proprietary Limited 10 March 2010 5% * ** Cash settledPaarl Media Holdings Proprietary Limited 10 March 2010 5% * ** Cash settledNovus Holdings Limited Share Appreciation Rights Plan 23 September 2016 10% * 6 years Equity settledNovus Holdings Limited Restricted Share Plan 23 September 2016 10% **** 6 years Equity settled

Notes:# The percentage reflected in this column is the maximum percentage of the respective companies issued/notional

share capital that the applicable trust may hold and subsequently allocate to participants subject to the following, where applicable.

* One-third vests after each of years three, four and five.** Period to expiry from date of offer is five years and 14 days.*** These options were cancelled during the prior year.**** One-quarter vests in years one to four.


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211210



16 SHARE-BASED PAYMENTS (continued)Movements in the share trust incentive plan are as follows:

2018 2017

Novus Holdings Share Trust

SharesOutstanding 01 April 15 525 430 20 173 565

Forfeited (2 225 078) (4 648 135)

Cancelled (53 175) —

Outstanding 31 March 13 247 177 5 525 430

R R

Weighted average exercise priceOutstanding 01 April 13,25 13,25

Forfeited 13,25 13,25

Outstanding 31 March 13,25 13,25

Movements in the share trust incentive plan are as follows:

2018 2017

LP Retief share option

SharesOutstanding 01 April — 3 473 325

Cancelled — (3 473 325)

Outstanding 31 March — —

R R

Weighted average exercise priceOutstanding 01 April — 13,25

Cancelled — (13,25)

Outstanding 31 March — —

2018 2017

Paarl Coldset (Pty Limited

SARsOutstanding 01 April 600 005 1 153 337

Exercised (183 330) (386 663)

Forfeited (20 002) (166 669)

Outstanding 31 March 396 673 600 005

R R


Exercised 15,97 10,56



Weighted average share price of options taken up during the yearSARs 183 330 386 663

Weighted average SAR price (R) 20,73 19,37

2018 2017


SARsOutstanding 01 April 1 000 009 1 813 349

Exercised (353 327) (533 334)

Forfeited (33 336) (280 006)

Outstanding 31 March 613 346 1 000 009

2018R

2017R


Exercised 32,72 30,14



Weighted average share price of options taken up during the yearSARs 353 327 533 334

Weighted average SAR price (R) 48,19 45,04

16 SHARE-BASED PAYMENTS (continued)Movements in the share appreciation rights (SARs) plans are as


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2018 2017

Novus Holdings Limited Restricted Share PlanOutstanding 01 April — —

Granted 71 808 —

Outstanding 31 March 71 808 —


16 SHARE-BASED PAYMENTS (continued)Movements in the share appreciation rights (SARs) plans are as follows (continued):

2018 2017

Novus Holdings Limited Share Appreciation Rights Plan

SARsOutstanding 01 April — —

Granted 5 653 525 —

Forfeited (534 933) —

Outstanding 31 March 5 118 592 —

R R

Weighted average exercise priceOutstanding 01 April — —

Granted 6,55 —

Forfeited 6,54 —

Outstanding 31 March 6,55 —

SHARE OPTIONS OUTSTANDING

SHARE OPTIONS CURRENTLY AVAILABLE

Exercise prices

Number outstanding at 31 March

Weighted average

remaining contractual

life (years)

Weighted average exercise price (R)

Exercisable at 31 March


2018 13,25 13 247 177 3 13,25 4 415 265 13,25

13 247 177 13,25 4 415 265 13,25

2017

13,25 15 525 430 4 13,25 — —15 525 430 13,25 — —


SARS OPTIONS OUTSTANDING

SARS OPTIONS CURRENTLY AVAILABLE

Exercise prices


Weighted average


life (years)




2018 6,54 4 753 850 5.50 6,54 — —

6,65 364 742 5.68 6,65 — —

5 118 592 6,55 — —

Novus Holdings Limited Restricted Share Plan

RESTRICTED SHARES OUTSTANDING

RESTRICTED SHARES CURRENTLY AVAILABLE

Exercise prices


Weighted average


life (years)




2018 — 71 808 5.50 — — —

71 808 — — —

16 SHARE-BASED PAYMENTS (continued)Share option allocations outstanding to be implemented at 31 March by exercise price for the Group’s significant

share incentive plans.

Novus Holdings Share Trust

Weighted average exercise price is Rnil.


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215214



16 SHARE-BASED PAYMENTS (continued)SARs allocations outstanding to be implemented at 31 March by exercise price for the Group’s significant SARs:

Paarl Coldset Proprietary Limited

SARS OUTSTANDING

SARS CURRENTLY AVAILABLE

Exercise prices


Weighted average


life (years)

Weighted average exercise

price (R)


Weighted average exercise

price (R)

2018 18,68 396 673 0,70 18,68 233 327 18,68

396 673 18,68 233 327 18,68

2017

10,41 60 033 0,01 10,41 60 003 10,41

18,68 540 002 1,70 18,68 159 994 18,68

600 005 17,85 219 997 16,42


SARS OUTSTANDING

SARS CURRENTLY AVAILABLE

Exercise prices


Weighted average


life (years)




2018 36,07 613 346 0,62 36,07 316 654 36,07

613 346 36,07 316 654 36,07

2017

24,96 106 671 0,01 24,96 106 671 24,96

36,07 893 338 1,61 36,07 226 657 36,07

1 000 009 34,88 333 328 32,51

16 SHARE-BASED PAYMENTS (continued)There were options granted under the Novus Holdings Limited Share Appreciation Rights Plan during the

financial year.

This weighted average fair value was calculated using the Bermudan binomial option pricing model, using the

following inputs and assumptions:

Notes* The weighted average expected volatility is determined using historical share price of Novus Holdings Limited.# Based on zero-rate bond yields at perfect fit.

2018 2017


Weighted average fair value at measurement date 1,35 —

Assumptions:Weighted average SAR price 6.55 —

Weighted average exercise price 6.55 —

Weighted average expected volatility (%)* 33,43 − 33,74 —

Weighted average option life (years) 6,00 —

Weighted average risk-free interest rate (%)# 7,26% − 8,51% —

Weighted average annual suboptimal rate (%) 100 —

Weighted average vesting period (years) 4,00 —

Novus Holdings Limited Restricted Share Plan

Weighted average fair value at measurement date 4,98 —

Assumptions:Weighted average SAR price 6,54 —

Weighted average exercise price — —

Weighted average expected volatility (%)* 33,43 —

Weighted average option life (years) 6,00 —

Weighted average risk-free interest rate (%)# 7,23% —

Weighted average annual sub-optimal rate (%) 100 —

Weighted average vesting period (years) 2,5 —


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217216


2018

Director SAR/Share Scheme Date of

award

Number of instruments

awarded

Offer price

(R)

Outstanding at 31 March

2017

Accepted during

the year

Exercised during the

year

Price on exercise date (R)

Increase in value R’000

Cancelled/forfeited

during the year


2018

Indicative value of

unvested and/or unexercised

options(R’000)#

KA Vroon

Paarl Coldset 22/03/2012 40 000 10,41 26 667 — (26 667) 21 275 — — —

Paarl Coldset 02/07/2013 20 000 18,68 20 000 — — — — — 20 000 41

Paarl Coldset 26/03/2014 70 000 18,68 70 000 — — — — — 70 000 144

Paarl Media Holdings 22/03/2012 40 000 24,96 26 667 — (26 667) 48 619 — — —

Paarl Media Holdings 02/07/2013 50 000 36,07 50 000 — — — — — 50 000 606


Novus Holdings Share Trust 31/03/2015 1 910 329 13,25 1 910 329 — — — — — 1 910 329 —Novus Holdings Limited Share Appreciation Rights Plan 29/09/2017 625 023 6,54 — 625 023 — — — — 625 023 —

895 1 639

E Fivaz

Paarl Coldset 26/03/2014 20 000 18,68 20 000 — (6 666) 20,73 14 — 13 334 27

Paarl Media Holdings 26/03/2014 20 000 36,07 20 000 — (6 666) 48,19 81 — 13 334 162

Novus Holdings Share Trust 31/03/2015 764 131 13,25 764 131 — — — — (764 131) — —Novus Holdings Limited Share Appreciation Rights Plan 29/09/2017 356 408 6,54 — 356 408 — — — (356 408) — —

94 189

N BirchNovus Holdings Limited Share Appreciation Rights Plan 05/12/2017 364 742 6,65 — 364 742 — — — — 364 742 —


16 SHARE-BASED PAYMENTS (continued)The directors of Novus Holdings Limited have the following share trust and SARs:

# The indicative value of outstanding options/SARs was calculated based on the number of instruments held by the

individual at year-end share price (or SAR valuation) less the instrument’s strike (or option) price. Only indicative

gains were disclosed.

The following share prices (or SAR valuations) were applicable at year-end:

Paarl Media Holdings SAR − R48,19

Paarl Coldset SAR − R20,73

Novus Holdings Limited − R4,58


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219218



16 SHARE-BASED PAYMENTS (continued)The directors of Novus Holdings Limited have the following share trust and SARs:

2017

Director SAR/Share Scheme Date of

award

Number of instruments

awarded

Offer price

(R)


2016

Accepted during

the year

Exercised during the

year

Price on exercise date (R)

Increase in value

R’000

Cancelled/orfeited

during the year


2017

Indicative value of

unvested and/or

unexercised options

(R’000)#

KA Vroon

Paarl Coldset 22/03/2012 40 000 10,41 26 667 — — — — — 26 667 239

Paarl Coldset 02/07/2013 20 000 18,68 20 000 — — — — — 20 000 14

Paarl Coldset 26/03/2014 70 000 18,68 70 000 — — — — — 70 000 48




Novus Holdings Share Trust 31/03/2015 1 910 329 13,25 1 910 329 — — — — — 1 910 329 —

— 1 913

E Fivaz

Paarl Coldset 31/03/2011 10 000 8,33 10 000 — (10 000) 19,37 110 — — —

Paarl Coldset 26/03/2014 20 000 18,68 20 000 — — — — — 20 000 14

Paarl Media Holdings 31/03/2011 6 668 28,31 6 668 — (6 668) 45,04 112 — — —


Novus Holdings Share Trust 31/03/2015 764 131 13,25 764 131 — — — — — 764 131 —

222 193

E van Niekerk

Paarl Coldset 31/03/2011 30 000 8,33 10 000 — (10 000) 19,37 110 — — —



Novus Holdings Share Trust 31/03/2015 1 041 997 13,25 1 041 997 — — — — (1 041 997) — —

490 —

LP Retief LP Retief share option 27/02/2015 3 473 325 13,25 3 473 325 — — — — (3 473 325) — —

# The indicative value of outstanding options/SARs was calculated based on the number of instruments held by the

individual at year-end share price (or SAR valuation) less the instrument’s strike (or option) price. Only indicative

gains were disclosed.

The following share prices (or SAR valuations) were applicable at year-end:

Paarl Media Holdings SAR − R45,04

Paarl Coldset SAR − R19,37

Novus Holdings Limited − R8,55


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17 TRADE AND OTHER PAYABLES

GROUP COMPANY

2018R’000

2017R’000

2018R’000

2017R’000

Trade payables 357 674 191 561 — 2

Personnel accruals 22 367 5 255 — —

Accrued leave pay 21 669 19 705 — —

Accrued bonus 20 702 18 615 — —

Accrued expenses 40 393 44 466 — —

Value-added tax 13 045 9 246 — —

Amounts owing in respect of business combinations 43 668 — — —

Other current liabilities 2 003 — — —

521 519 288 848 — 2

The fair values of trade and other payables approximate their carrying values.

18 DEFERRED INCOMEDeferred income consists of Government grants received. GROUP COMPANY

2018R’000

2017R’000

2018R’000

2017R’000

Opening balance 49 975 61 218 — —

Included in profit or loss (15 687) (11 243) — —

Closing balance 34 288 49 975 — —

Non-current liability portion 31 518 45 135 — —

Current liability portion 2 770 4 840 — —

34 288 49 975 — —

On 26 March 2016, a grant of R4,3 million and on 20 October 2015, a grant of R15,2 million, in respect of production equipment, was received from the Department of Trade and Industry (DTI) in terms of the Manufacturing Competitiveness Enhancement Programme (MCEP). On 28 February 2013, a grant of R33,2 million was received from the DTI and a further R16,3 million was received on 1 October 2015. This was in terms of the MCEP. The grant was provided on condition that the related capital-expenditure project was an expansion and not a replacement of the project that burned down at Paarl Media Paarl, and that the transfer of machinery and labour between these projects would not be allowed for the duration of the approval of the grant.

On 3 November 2011, a grant of R1,4 million was received from the DTI in terms of the Enterprise Investment Programme (EIP).

19 REVENUE

19.1 REVENUE PER SEGMENT CATEGORY

20 OTHER GAINS/(LOSSES)

GROUP COMPANY

2018R’000

2017R’000

2018R’000

2017R’000

Printing revenue 3 791 503 4 077 159 — —

Tissue revenue 170 436 154 428 — —

Packaging revenue 264 873 — — —

Waste sales 35 842 35 370 — —

Other revenue 45 448 45 507 185 502 269 717

4 308 102 4 312 464 185 502 269 717

GROUP COMPANY

2018R’000

2017R’000

2018R’000

2017R’000

Print 3 634 322 3 986 505 — —

Flexible packaging 264 873 — — —

Labels 210 151 129 796 — —Tissue 174 576 154 515 — —

Other non-print revenue 42 180 41 648 185 502 269 717

4 308 102 4 312 464 185 502 269 717

GROUP COMPANY

2018R’000

2017R’000

2018R’000

2017R’000

Profit on sale of property, plant and equipment 11 293 3 553 — —

Impairment of investment (note 5) — — (65 964) —Impairment of property, plant and equipment (note 2) (297 126) (138 642) — —

Impairment of goodwill (note 3) (62 577) — — —

Impairment of intangible assets (note 4) (12 448) — — —

Insurance proceeds 2 086 — — —

(358 772) (135 089) (65 964) —


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21 EXPENSES BY NATURE

GROUP COMPANY

2018R’000

2017R’000

2018R’000

2017R’000

Operating profit includes the following items:

Depreciation classification

Cost of providing goods 152 716 161 933 — —

Selling, general and administrative costs 38 204 38 332 — —

190 920 200 265 — —

Amortisation classification

Cost of providing goods 5 353 5 608 — —

Selling, general and administrative costs 2 372 1 694 — —

7 725 7 302 — —

Operating leases

Buildings 14 195 13 472 — —

14 195 13 472 — —

Auditor’s remuneration

Fees 5 225 4 575 — —

Prior year (over)/under provision (147) 633 — —

Tax fees 240 1 125 — —

All other fees 393 562 — —

5 711 6 895 — —

Foreign-exchange profits

On capitalisation of forward exchange

contracts in hedging transactions (20 295) (9 229) — —

(20 295) (9 229) — —

Advertising expense 6 973 8 168 — —

Cost of inventories sold 2 102 428 2 129 157 — —

Employee costs

Salaries, wages and bonuses 620 697 537 482 — —

Retirement benefit costs (defined contribution plan) 44 905 61 697 — —

Medical-aid-fund contributions 21 933 28 163 — —

Post-retirement benefits 1 029 492 — —

Share-based compensation charge 20 955 28 068 — —

Long-service and retirement gratuities 4 388 5 541 — —

Training costs 10 418 10 534 — —

724 325 671 977 — —

22 FINANCE INCOME

23 FINANCE COSTS

GROUP COMPANY

2018R’000

2017R’000

2018R’000

2017R’000

Bank 12 506 13 406 88 110

Other 442 27 — —

12 948 13 433 88 110

GROUP COMPANY

2018R’000

2017R’000

2018R’000

2017R’000

Net loss from foreign-exchange translation and fair value adjustments on derivative financial instruments 34 640 33 970 — —

Bank 10 490 8 314 — —

Other 7 764 3 404 — —

Interest paid 18 254 11 718 — —

52 894 45 688 — —


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225224



24 TAXATION

GROUP COMPANY

2018R’000

2017R’000

2018R’000

2017R’000

Major components of the income-tax expense

Current 161 106 172 072 24 30

Local income tax − current period 161 048 168 635 24 30

Local income tax − prior years 58 3 437 — —

Deferred (130 208) (67 418) — —

Local income tax − current period (120 654) (60 694) — —

Local income tax − prior years (9 554) (6 724) — —

30 898 104 654 24 30

Reconciliation of the income-tax expense

Reconciliation between the accounting profit and

the income-tax expense

Accounting profit 102 001 361 481 119 625 269 826

Tax at the applicable tax rate of 28% (2017: 28%) 28 560 101 215 33 495 75 551

Tax effects of adjustments on taxable income

Non-deductible expenses* 19 084 10 878 18 470 —

Non-taxable income** (4 742) (3 550) (51 941) (75 521)

Prior year adjustments (9 496) (3 286) — —

Other taxes (2 508) 2 485 — —

Previously unrecorded assessed loss*** — (3 920) — —

Adjustments for entities with foreign taxes — 832 — —

30 898 104 654 24 30

Effective tax rate 30,3% 29,0% 0,0% 0,0%

* Non-deductible expenses relate mainly to equity settled share-based compensation charges on the employee share-incentive plans and include the impairment of goodwill in the current year. The Company includes the impairment of the investment in Paarl Coldset Proprietary Limited.

** Non-taxable income mainly includes exempt income relating to Government grants recognised by the Group and exempt dividends in the Company.

*** This relates to the previously unrecognised assessed loss in International Printing Group Limitada.

25 EARNINGS PER SHAREBasic earnings per share

Earnings per share are calculated using the weighted average number of ordinary shares in issue during the

period and are based on the net profit attributable to ordinary shareholders. For the purpose of calculating

earnings per share, treasury shares are deducted from the number of ordinary shares in issue. Diluted earnings

per share are calculated by adjusting the weighted average number of ordinary shares outstanding to assume

conversion of all dilutive potential ordinary shares and are based on the net profit attributable to ordinary

shareholders, adjusted for the after-tax dilutive effect. Currently, the share options granted and vested under

equity settled schemes to participating employees and directors (see note 16) are considered anti-dilutive.

Headline earnings per share

Headline earnings per share are calculated using the weighted average number of ordinary shares in issue during

the period and are based on the earnings attributable to ordinary shareholders, after excluding those items as

required by Circular 2/2015 issued by the South African Institute of Chartered Accountants (SAICA).

2018

GrossR’000

TaxationR’000

NetR’000

Earnings

Net profit attributable to shareholders 70 418

Adjustments 358 772 (100 456) 258 316

Profit on sale of property, plant and equipment (11 293) 3 162 (8 131)

Insurance proceeds (2 086) 584 (1 502)Impairment in value of property, plant and equipment 297 126 (83 195) 213 931

Impairment in value of intangible assets 12 448 (3 485) 8 963

Impairment in value of goodwill 62 577 (17 522) 45 055

Headline earnings 328 734


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227226


2017

GrossR’000

TaxationR’000

NetR’000

Earnings

Net profit attributable to shareholders 256 819

Adjustments 135 089 (37 825) 97 264

Profit on sale of property, plant and equipment (3 553) 995 (2 558)

Impairment in value of property, plant and equipment 138 642 (38 820) 99 822

Headline earnings 354 083


25 EARNINGS PER SHARE (continued)

2018 2017

Number of ordinary shares in issue at year-end 347 332 454 347 332 454

Weighted average number of shares

Shares for earnings per share adjusted for weighting 319 545 857 319 545 857

Earnings per ordinary share (cents)

Basic 22,04 80,37

Diluted 22,04 80,37

Headline earnings per share (cents)

Basic 102,88 110,81

Diluted 102,88 110,81

26 SEGMENTAL ANALYSISIFRS 8: Operating Segments requires operating segments to be identified on the basis of internal reports about

components of the Group that are regularly reviewed by the chief operating decision-maker (CODM) to allocate

resources to the segments and to assess their performance. The CODM has been identified as the Executive

Committee that makes strategic decisions.

The executive committee has identified five operating segments based on its business by service or product.

Two operating segments meet the quantitative thresholds for separate reporting. They are, however, similar in

nature and meet the aggregation criteria in terms of IFRS 8 paragraph 12, as they have similar profit margins,

production processes, customers and suppliers. They are aggregated into the “Print” segment, which comprises

printing of books, magazines, newspapers and related products.

The remaining three operating segments do not meet the quantitative threshold for separate reporting, and

are combined in “Other”, which comprises the Labels division that prints labels; Novus Packaging Proprietary

Limited, which manufactures tissue paper; ITB Manufacturing Proprietary Limited, which produces flexible

packaging products and any other non-print-related transactions in the year.

Revenue, other than to related parties, of approximately R665,4 million (2017: R660,2 million) is derived from a

single external customer. These revenues are attributable to the Print segment. The total revenue from external

foreign customers is R156,8 million (2017: R150,3 million).


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229228


2018Printing

R’000OtherR’000

EliminationsR’000

TotalR’000

External revenue 3 634 322 673 780 — 4 308 102

Intersegmental revenue 13 875 17 747 (31 622) (0)

Total revenue 3 648 197 691 527 (31 622) 4 308 102

Cost of sale of goods (2 469 989) (584 669) 31 622 (3 023 036)

Selling, general and administrative expenses (509 169) (76 533) — (585 702)

Other losses (193 845) (164 927) — (358 772)

EBITDA 475 194 (134 602) — 340 592

Depreciation (157 746) (33 174) — (190 920)

Amortisation (6 149) (1 576) — (7 725)

Operating profit 311 299 (169 352) — 141 947

Finance income 56 080 279 (43 411) 12 948

Finance costs (42 343) (53 962) 43 411 (52 894)

Profit before taxation 325 036 (223 035) — 102 001

Taxation (95 030) 64 132 — (30 898)

Profit after taxation 230 006 (158 903) — 71 103

Non-controlling interest (9) (676) — (685)Profit attributable to equity-holders of the company 229 997 (159 579) — 70 418

Additional disclosure

Property, plant and equipment additions 51 417 102 112 — 153 529

Capital commitments 1 754 18 080 — 19 834

Impairment of assets (201 985) (170 166) — (372 151)

Total assets 3 692 691 1 005 544 (924 753) 3 773 482

Total liabilities 713 111 1 194 365 (924 753) 982 732


26 SEGMENTAL ANALYSIS (continued)

2017 Printing

R’000OtherR’000

EliminationsR’000

TotalR’000

External revenue 3 986 504 325 960 — 4 312 464

Intersegmental revenue 11 514 32 783 (44 297) —

Total revenue 3 998 018 358 743 (44 297) 4 312 464

Cost of sale of goods (2 750 092) (333 724) 44 297 (3 039 519)

Selling, general and administrative expenses (488 861) (47 692) — (536 553)

Other losses (101 479) (33 610) — (135 089)

EBITDA 657 586 (56 283) — 601 303

Depreciation (177 836) (22 429) — (200 265)

Amortisation (5 929) (1 373) — (7 302)

Operating profit 473 821 (80 085) — 393 736

Finance income 69 152 3 078 (58 797) 13 433

Finance costs (35 908) (68 577) 58 797 (45 688)

Profit before taxation 507 065 (145 584) — 361 481

Taxation (146 170) 41 516 — (104 654)

Profit after taxation 360 895 (104 068) — 256 827

Non-controlling interest (8) — — (8)Profit attributable to equity-holders of the company 360 887 (104 068) — 256 819

Additional disclosure

Property, plant and equipment additions 112 985 166 430 — 279 415

Capital commitments 4 023 42 784 — 46 807

Impairment of assets (108 998) (29 644) — (138 642)

Total assets 3 685 512 634 549 (720 510) 3 559 551

26 SEGMENTAL ANALYSIS (continued)

* Eliminations on total assets and liabilities relate to intercompany receivables and payables.


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231230



27 CASH GENERATED FROM OPERATIONS

GROUP COMPANY

Notes2018

R’0002017

R’0002018

R’0002017

R’000

Profit before tax 102 001 361 481 119 625 269 826

Adjusted for: 616 128 374 674 65 876 (110)Depreciation of property, plant and equipment 2 190 920 200 265 — —

Amortisation of intangible assets 4 7 725 7 302 — —Impairment of property, plant and equipment 2 297 126 138 642 — —

Impairment of intangible assets 4 12 448 — — —

Impairment of goodwill 3 62 577 — — —

Impairment of investment 5 — — 65 964 —Profit on disposal of property, plant and equipment 20 (11 293) (3 553) — —

Finance income 22 (12 948) (13 433) (88) (110)

Finance costs 23 18 254 11 718 — —Movement in provisions for inventory write-down (1 995) (2 087) — —

Post-retirement medical liability expense 13 399 492 — —Long-service and retirement gratuity expense 21 4 388 5 541 — —Payments against provisions and post-retirement medical liability (1 860) (1 370) — —

Reversal of bad-debt provision 3 591 (15 385) — —

Share-based payment expense 21 20 955 28 068 — —

Share-based compensation payments (8 799) (15 496) — —

Foreign-exchange movements 34 640 33 970 — —

Changes in working capital (34 497) (74 326) 8 901 (26 554)

Inventories (61 817) (15 049) — —

Trade and other receivables (27 343) 70 835 — —

Trade and other payables 54 663 (130 112) 8 901 (26 554)

683 632 661 829 194 402 243 162

28 TAX PAID

29.1 DIVIDENDSThe Board of directors has proposed and approved on 14 June 2018 that a dividend of 52 cents (2017: 56 cents)

per ordinary share be paid to shareholders on 10 September 2018. The Company will pay a total dividend

of approximately R166 million based on the number of shares in issue.

29.2 DIVIDENDS PAID

GROUP COMPANY

2018R’000

2017R’000

2018R’000

2017R’000

(Owing)/receivable at the beginning of the year (120) (16 561) — 20

Current tax for the year recognised in profit or loss (161 106) (172 072) (24) (30)

Owing/(receivable) at the end of the year (8 000) 120 (1) —

(169 226) (188 513) (25) (10)

GROUP COMPANY

2018R’000

2017R’000

2018R’000

2017R’000

Dividends declared and paid by Novus Holdings Limited (178 946) (223 682) (194 506) (243 133)

(178 946) (223 682) (194 506) (243 133)


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233232



30 BUSINESS COMBINATIONS2018

With effect from 01 October 2017, the Group acquired 100% of the share capital of ITB Manufacturing

Proprietary Limited for a purchase consideration of R224 million. The acquisition will enable the Group to

expand into packaging and goodwill of R80,2 million relates to the expected benefits to be derived from a larger

customer base operating in a growth sector. The goodwill will not be deductible for tax purposes.

30 BUSINESS COMBINATIONS (continued)2017

With effect from 21 September 2016, the Group acquired 97,74% of the share capital of International Printing

Group Limitada for a purchase consideration of R0,3 million. This consideration was settled by converting a

portion of the debt owed to the Group to equity in International Printing Group Limitada.

The acquisition will enable the Group to expand its existing geographical footprint for label sales and goodwill of

R16,7million relates to the expected benefits to be derived from a larger customer base. The goodwill will not be

deductible for tax purposes.Notes

2018R’000

Fair value of assets and liabilities acquired

Property, plant and equipment 2 188 630

Intangible assets 4 6 709

Inventory 74 371

Trade and other receivables 75 577

Trade and other payables (73 517)

Cash and cash equivalents 2 682

Bank overdraft (24 831)

Current tax payable (364)

Deferred taxation 6 (40 158)

Long-term liabilities (62 282)

Identifiable assets and liabilities at acquisition date 146 817

Non-controlling interest (3 361)Goodwill 3 80 212

Total purchase consideration 223 668

Contingent consideration 43 668

Cash paid 180 000

Total purchase consideration 223 668

Cash flow

Cash consideration paid in respect of ITB Manufacturing Proprietary Limited (180 000)

Cash in entity acquired 2 682

Bank overdraft in entity acquired (24 831)

Cash flow on acquisition (202 149)

Acquisition-related costs of R1,1 million that were not directly attributable to the issue of shares are included in profit or loss and in operating cash flows in the statement of cash flows.

Revenue of R264,9 million and a profit after tax of R7,4 million have been included in the consolidated statement of comprehensive income since acquisition date. The Group’s revenue and profit after tax would have been R4 553,9 million and R72,3 million respectively if the acquisition had occurred at the beginning of the reporting period. Included in the profit after tax of the subsidiary prior to being consolidated were non-recurring moving and transaction costs. The contingent consideration is limited to R43,7 million, of which R42 million was paid on 01 June 2018, with the remainder to be paid at a later date.

Notes2017

R’000

Fair value of assets and liabilities acquired

Cash and cash equivalents 13 408

Trade and other receivables 3 424

Trade and other payables (35 852)

Deferred taxation 6 (854)

Intangible asset 3 051

Identifiable assets and liabilities at acquisition date (16 823)

Non-controlling interest 381

Goodwill 3 16 708

Total purchase consideration 266

Cash flow

Cash consideration paid in respect of Digital Printing Solutions (2 623)

Cash in entity acquired − International Printing Group Limitada 13 408

Cash flow on acquisition 10 785


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235234



31 RELATED PARTIESThe Group entered into transactions and has balances with a number of related parties including shareholders

and entities under common control. Transactions that are eliminated on consolidation as well as profits or

losses eliminated through application of the equity method are not included. There are changes to the related

parties that exist at year-end, as Media24 divested itself of the majority of its shareholding in Novus Holdings to

Naspers Limited, retaining a non-controlling minority stake of 17,48%. This therefore changed the relationships

with the ultimate holding company and holding company, which were disclosed in 2017. All transactions were

reported for common controlled entities within the Naspers Group until 26 September 2017.

The balances and transactions with related parties are summarised below:

GROUP COMPANY

2018R’000

2017R’000

2018R’000

2017R’000

Related party balances

Trade receivables

Media24 Proprietary Limited — 92 509 — —

Subsidiaries of holding companyNew Media Publishing Proprietary Limited — 20 950 — —Natal Witness Printing Company Proprietary Limited — 4 636 — —

Other — 8 863 — —

Holding company and its subsidiaries — 126 958 — —

Total related party receivables — 126 958 — —

The above receivables from related parties are non-interest-bearing, are unsecured and are provided on standard credit terms. The maximum exposure to credit risk at the reporting date is the fair value of each class of loan mentioned above. The Group does not hold any collateral as security.

31 RELATED PARTIES (continued)

GROUP COMPANY

2018R’000

2017R’000

2018R’000

2017R’000

Related party balances

Loans payable

SubsidiaryPaarl Media Proprietary Limited — — 177 428 168 527

Trade payables

Subsidiary of ultimate holding companyMedia24 Proprietary Limited — 1 154 — —

Total related party payables — 1 154 177 428 168 527

The loan from Paarl Media Proprietary Limited is non-interest-bearing and is payable on demand. The above trade payables are non-interest-bearing, are unsecured and are extended at standard credit terms.

GROUP COMPANY

2018R’000

2017R’000

2018R’000

2017R’000

Purchases from related parties

Holding companyMedia24 Proprietary Limited 55 162 — —

55 162 — —


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237236




GROUP COMPANY

2018R’000

2017R’000

2018R’000

2017R’000

Sales to related parties

Media24 Proprietary Limited 450 188 985 496 — —

Subsidiaries of holding companyNew Media Publishing Proprietary Limited 32 955 102 673 — —Natal Witness Printing Company Proprietary Limited 21 935 40 258 — —

Nasou Via Afrika Proprietary Limited 1 647 9 057 — —

CT Media Publications Proprietary Limited 1 859 23 157 — —

Other 14 826 33 428 — —

Ultimate holding company and its subsidiaries 523 410 1 194 069 — —

Joint ventures and associates of holding companyRodale & Touchline Publishers Proprietary Limited 5 414 13 838 — —

Other 2 479 4 988 — —

7 893 18 826 — —

Total sales to related parties 531 303 1 212 895 — —

The Group receives revenue from a number of its related parties mainly for the printing of magazines, newspapers and books.

Directors’ emoluments

ExecutiveR’000

Non-executive

R’000Total

R’000

2018

Salaries 5 929 3 688 9 617

Incentive bonuses — 4 914 4 914

Pension contributions 557 311 868

Fees for services as director 1 050 2 640 3 640

Total 7 536 11 553 19 089

The detail of directors’ participation in share/SARs schemes is included in note 16.

The individual directors received the following remuneration and emoluments:


Fees for services

as director

R’000SalaryR’000

Bonus andperformance-

relatedpayments

R’000

Pensioncontributions

R’000Total

R’000

Executive directors

Mr NW Birch* 1 050 600 — — 1 650

Mr KA Vroon*** — 3 331 — 383 3 714

Mr E Fivaz** — 1 998 — 174 2 172

1 050 5 929 — 557 7 536

Notes * Appointed as Executive Chairman on 01 October 2017. Included in the above were fees paid for his role as non-

executive chairman of the Board amounting to R1,05 million.** Resigned on 31 March 2018.*** Resigned on 15 June 2018.

Fees forservices as

directorR’000

SalaryR’000


relatedpayments

R’000


R’000Total

R’000


Mr C Botha 478 — — — 478

Ms E Weideman*** — 1 770 2 251 166 4 187

Ms C Hess*** — 1 816 1 131 137 3 084

Mr A Mayman& — 102 1 532 8 1 642

Ms GP Dingaan* 487 — — — 487

Mr SDM Zungu 353 — — — 353

Mr BJ Olivier 589 — — — 589

Mr F Robertson# 139 — — — 139

Mr JN Potgieter 294 — — — 294

Ms L Mtanga** 300 — — — 3002 640 3 688 4 914 3 11 11 553

Notes# This was an amount paid in respect of the 2017 financial year for Mr Robertson’s role as interim Chairman of the

Board and was approved at the AGM of 18 August 2017.& Retired from the Board on 03 April 2017.* Resigned from the Board on 31 January 2018.** Appointed to the Board on 15 July 2017.*** Remuneration paid by Media24 Proprietary Limited in respect of services rendered in their capacity as directors of

Media24 Proprietary Limited, and not as directors of Novus Holdings Limited. This included remuneration until the date Ms E Weideman and Ms C Hess resigned from the Board, which was effective 29 September 2017.


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Directors’ emoluments

ExecutiveR’000

Non-executive

R’000Total

R’000

2017

Salaries 6 993 6 666 13 659

Incentive bonuses — 5 090 5 090

Pension contributions 579 555 1 134

Fees for services as director — 4 147 4 147

Total 7 572 16 458 24 030

The individual directors received the following remuneration and emoluments:

SalaryR’000


relatedpayments

R’000


R’000Total

R’000

Executive directors

Mr E van Niekerk# 2 258 — 98 2 356

Mr KA Vroon* 3 185 — 354 3 539

Mr E Fivaz** 1 550 — 127 1 677

6 993 — 579 7 572

Notes* Appointed as acting chief executive officer on 16 February 2016; appointed as chief executive officer on

28 July 2016.** Appointed as chief financial officer on 01 September 2016.# Resigned from the Board on 31 August 2016.

Fees forservices as

directorR’000

SalaryR’000


relatedpayments

R’000


R’000Total

R’000


Mr LP Retief** 1 319 — — — 1 319

Mr CG Botha# 408 — — — 408

Ms E Weideman*** — 3 321 2 429 304 6 054

Mr A Mayman***, # — 1 872 1 532 140 3 544

Ms CJ Hess*, *** — 1 473 1 129 111 2 713

Ms GP Dingaan 451 — — — 451

Mr SDM Zungu 329 — — — 329

Mr BJ Olivier 561 — — — 561

Mr F Robertson 750 — — — 750

Mr JN Potgieter 329 — — — 329

4 147 6 666 5 090 555 16 458

Notes* Appointed on 23 March 2017.** Payments to Mr LP Retief include payments for services in terms of a management agreement with the Group.

Mr Retief ceased to be a non-executive director on 25 January 2017. # Retired from the Board on 03 April 2017.*** Remuneration paid by Media24 Proprietary Limited in respect of services rendered in their capacity as directors

of Media24 Proprietary Limited, and not as directors of Novus Holdings Limited.



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241240




GROUP COMPANY

2018R’000

2017R’000

2018R’000

2017R’000

Authorised capital expenditure

Already contracted for but not provided for

− Property, plant and equipment 19 834 46 807 — —

Operating leases − as lessee (expense)

Minimum lease payments due

− within one year 18 479 5 486 — —− in second to fifth year inclusive 50 046 12 841 — —

− later than five years 31 436 — — —

The Group leases manufacturing and office space and equipment under various non-cancellable operating leases. Certain contracts contain renewal options and escalation clauses for various periods of time.

33 FINANCIAL RISK MANAGEMENT All of the Group’s financial assets are classified as “loans and receivables” and are carried at amortised cost,

apart from derivatives, which are held for hedging purposes. Similarly, all of the Group’s financial liabilities are

classified as “other financial liabilities” and are carried at amortised cost apart from derivatives, which are held

for hedging purposes.

Capital-risk management

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going

concern, so that it can continue to provide adequate returns for shareholders.

The Group sets the amount of capital in proportion to risk. The Group manages the capital structure and makes

adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying

assets. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid

to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. The Group does

not have a formal targeted debt-to-equity ratio.

Financial risk factors

The Group’s activities expose it to a variety of financial risks: market risk (including currency risk, interest-rate

risk and price risk), credit risk and liquidity risk.

The Group’s overall risk-management programme focuses on the unpredictability of financial markets and seeks

to minimise potential adverse effects on the Group’s financial performance. The Group uses derivative financial

instruments to hedge certain risk exposures. Risk management is carried out by a central treasury department

(Group treasury) under policies approved by the directors. Group treasury identifies, evaluates and hedges

financial risks in close co-operation with the Group’s operating units. The directors provide written principles

for overall risk management, as well as written policies covering specific areas, such as foreign exchange risk,

interest-rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments,

and investment of excess liquidity.

Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability

of funding through an adequate amount of committed credit facilities and the ability to close out market

positions. In terms of the Memorandum of Incorporation of the Group, no limitation is placed on its borrowing

capacity. The facilities expiring within one year are subject to renewal at various dates during the next year.

The Group had the following unutilised borrowing facilities at 31 March:

GROUP COMPANY

2018R’000

2017R’000

2018R’000

2017R’000

On call 508 066 612 731 — —

32 COMMITMENTS

Key management compensation

The total of executive directors’ and key management emoluments amounted to R65,7 million (2017:

R68,1 million), comprising short-term employee benefits of R59,0 million (2017: R58,6 million) and share-based

payments of R6,7 million (2017: R9,5 million). Comparatives have not been restated to account for the change in

the composition of key management.

No other remuneration is paid to executive directors. Remuneration is earned for services rendered in

conducting the business of the Group.


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33 FINANCIAL RISK MANAGEMENT (continued)The following analysis details the Group and Company’s non-derivative financial liabilities and derivative

financial assets/(liabilities), which will be settled on a gross basis, using working capital and unused credit

facilities, into relevant maturity groupings based on the remaining period at the statement of financial position to

the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.

Balances due within 12 months equal their carrying balances, as the impact of discounting is not significant.

Group

Carrying amount

R’000

Contractual cash flows

R’000

0 to 12 months

R’0001 to 5 years

R’000

Over 5 yearsR’000

Non-derivative financial liabilities

At 31 March 2018

Interest-bearing: Loans and other 55 471 66 135 17 577 48 558 —Interest-bearing: Capitalised finance lease 60 035 124 133 7 407 29 629 87 097

Trade payables 357 674 357 674 357 674 — —Accrued expenses and other current liabilities 108 429 108 429 108 429 — —

Bank overdrafts 35 332 35 332 35 332 — —

616 941 691 703 526 419 78 187 87 097

Group

Carryingamount

R’000

Contractualcash flows

R’000

0 to 12 months

R’0001 to 5 years

R’000Over 5 years

R’000

At 31 March 2017

Interest-bearing: Loans and other 17 022 24 458 19 579 4 879 —Interest-bearing: Capitalised finance lease 63 504 132 816 9 114 30 058 93 644

Trade payables 191 561 191 561 191 561 — —Accrued expenses and other current liabilities 49 721 49 721 49 721 — —

Related party balances 1 154 1 154 1 154 — —

Bank overdrafts 2 744 2 744 2 744 — —

325 706 402 454 273 873 34 937 93 644

33 FINANCIAL RISK MANAGEMENT (continued)

Company

Carrying amount

R’000


R’000

0 to 12 months

R’0001 to 5 years

R’000

Over 5 yearsR’000

At 31 March 2018


177 428 177 428 177 428 — —

At 31 March 2017


168 527 168 527 168 527 — —

Group

Carrying amount

R’000


R’000

0 to 12 months

R’0001 to 5 years

R’000

Over 5 yearsR’000

Derivative financial assets/ (liabilities)

At 31 March 2018

Forward exchange contracts

− Outflow (20 324) 415 849 415 849 — —

− Inflow — (436 173) (436 173) — —

(20 324) (20 324) (20 324) — —

At 31 March 2017

Forward exchange contracts

− Outflow (15 058) (364 468) (364 468) — —

− Inflow — 349 410 349 410 — —

(15 058) (15 058) (15 058) — —

Interest-rate risk

As part of the process of managing the Group’s fixed and floating borrowings mix, the interest-rate characteristics

of new borrowings and the refinancing of existing borrowings are positioned according to expected movements in

interest rates. Where appropriate, the Group uses derivative instruments, such as interest-rate swap agreements,

purely for hedging purposes.

At 31 March 2018, if the Group’s interest rates on Rand-denominated borrowings had been 1% higher/lower with

all other variables held constant, post-tax profit for the year would have been R0,5 million (2017: R0,1 million)

lower/higher, mainly as a result of higher/lower interest expense on floating rate borrowings.


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33 FINANCIAL RISK MANAGEMENT (continued)Credit risk

The Group is exposed to credit risk relating to the following assets:

Available-for-sale investments and loans

There is no concentration of credit risk within investments and loans, and management monitors the

credit risk regularly.

Trade and other receivables

Trade receivables consist primarily of invoiced amounts from normal trading activities. The majority of trade

receivables consist of receivables within the Print segment. Various credit checks are performed on new debtors

to determine the quality of their credit history. These checks are also performed on existing debtors with long-

overdue accounts. Furthermore, current debtors are monitored to ensure they do not exceed their credit limits.

Cash deposits and derivative assets

The Group is exposed to certain concentrations of credit risk relating to its cash and current investments. It

places its cash and current investments mainly with major banking groups and high-quality institutions that have

high credit ratings. The Group’s treasury policy is designated to limit exposure to any one institution and invests

its excess cash in low-risk investment accounts. As at 31 March 2018, the Group held the majority of its cash,

deposits and derivative assets with local banks with a “Baa3” credit rating or higher (Moody’s International’s

Long-term Deposit rating). The counterparties that are used by the Group are evaluated on a continuous basis.

Foreign exchange

The Group is exposed to foreign exchange risk arising from various currency exposures, primarily with respect

to the Euro and the US Dollar. As the Group acquires a significant portion of the materials used in the printing

process internationally, depreciation of the local currency against the Euro or US Dollar adversely affects the

Group’s earnings and its ability to meet cash obligations. The Group makes use of forward exchange contracts

to hedge its exposure to foreign currency risk. The Group generally covers forward 38% to 100% of firm

commitments in foreign currency for up to one year.

Management has set up a policy to manage its foreign exchange risk against its functional currency. The Group

companies are required to hedge their foreign exchange risk exposure with the Group treasury. To manage their

foreign exchange risk arising from future commercial transactions and recognised assets and liabilities, entities’

in the Group use forward contracts, transacted with financial institutions. Foreign exchange risk arises when

future commercial transactions or recognised assets or liabilities are denominated in a currency that is not the

entity’s functional currency.

The Group has classified its forward exchange contracts relating to forecast transactions and firm commitments

as cash-flow hedges, and states them at fair value. The transactions relate mainly to the acquisition of inventory

items. The Group separates the interest element and the spot price element of a forward exchange contract.

The interest element is accounted for in finance cost (refer to note 23). The spot price element is designated as

the hedging instrument in a cash-flow hedge, with the cumulative gain or loss recognised in the initial carrying

amount of inventory and therefore recognised in cost of goods sold when the inventory is sold. Refer to note 21

for amounts recognised in cost of goods sold.

A cumulative after-tax loss of R3,3 million (2017: R1,8 million) has been deferred in a hedging reserve at

31 March 2018. This amount is expected to realise over the next year. Changes in the fair value of forward

exchange contracts that economically hedge monetary liabilities in foreign currencies and for which no hedge

accounting is applied are recognised in the income statement. Both the changes in fair value of the forward

contracts and the foreign exchange gains and losses relating to the monetary items are recognised in profit

and loss. The fair value of all forward exchange contracts at 31 March 2018 was a liability of R20 million

(2017: R15 million).

The ineffective portion recognised in the profit or loss that arises from cash-flow hedges amounts to a gain

of Rnil (2017: Rnil).

The notional principal amounts of the outstanding forward exchange contracts for import purchases and export

sales transactions at 31 March 2018 were R436,1 million (2017: R364,4 million).

The hedged highly probable forecast transactions denominated in foreign currency are expected to occur at

various dates during the next 12 months.

At 31 March 2018, if the currency had weakened/strengthened by 10% against the US Dollar and Euro

with all other variables held constant, comprehensive income for the year would have been R31,1 million

(2017: R23,9 million) higher/lower, mainly as a result of foreign exchange gains or losses on translation of

US Dollar- and Euro-denominated trade receivables and foreign exchange contracts.



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Total FECs outstanding at year-end (commitments to buy foreign exchange maturing within one year)

GROUP

2018R’000

2017R’000

Total FECs outstanding at year-end (maturing within one year)

Denominated in Euro 26 207 22 985

Rand value 409 652 350 254

Denominated in US Dollars 2 151 879

Rand value 26 521 11 983

Denominated in British Pounds — 9

Rand value — 147

Denominated in Swiss Francs — 147

Rand value — 2 038

GROUP

2018R’000

2017R’000

Derivative financial assets − Current portion

Foreign exchange contracts 731 1462

731 1 462

Derivative financial liabilities − Current portion

Foreign exchange contracts 21 055 16 520

21 055 16 520

R R

Exchange rates used for conversion of foreign items were:

Euro 14,59 14,27

US Dollar 11,83 13,37

British Pound 16,64 16,67

Swiss Franc 12,37 13,35

The Group reviews its foreign currency exposure, including commitments, on an ongoing basis. The Group expects its foreign exchange contracts to hedge foreign exchange exposure.

34 FAIR VALUE ESTIMATION OF FINANCIAL INSTRUMENTSThe fair values, which approximate the carrying values, net gains and losses recognised in profit and loss, total

interest income, total interest expense and impairment of each class of financial instrument, are as follows:

31 March 2018

GROUP

Carrying value

R’000

Net gains/(losses)

recognised in profit and loss

R’000

Total interest income

R’000 Impairment

R’000

Assets

Available-for-sale financial assets 3 090 — — —

Loans and receivables 6 517 — — —

Receivables and loans 671 440 — 442 8 706

Trade receivables 658 234 — 417 8 706

Other receivables 13 206 — 25 —

Derivative financial instruments 731 — — —

Foreign exchange contracts 731 — —

Cash and cash deposits 243 948 — 12 506 —

Total 925 727 — 12 948 8 706

Carrying value

R’000

Net gains/(losses)

recognised in profit and loss

R’000

Total interest expense

R’000 Impairment

R’000

Liabilities

Long-term liabilities 99 252 — 6 373 —

Interest-bearing: Capitalised finance leases 58 459 — 6 373 —

Interest-bearing: Loans and other 40 793 — — —

Short-term payables and loans 457 989 (6 788) 4 288 —

Interest-bearing: Capitalised finance leases 1 576 — — —

Interest-bearing: Loans and other 14 678 — 2 897 —

Trade payables 357 674 (6 788) 1 391 —

Accrued expenses and other current liabilities 84 061 — — —

Derivatives 21 055 (5 975) — —

Foreign exchange contracts 21 055 (5 975) — —

Bank overdrafts and call loans 35 332 — 7 593 —

Total 613 628 (12 763) 18 254 —


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34 FAIR VALUE ESTIMATION OF FINANCIAL INSTRUMENTS (continued)

31 March 2017

GROUP

Carrying value

R’000

Net gains/(losses)

recognised in profit and

loss R’000

Total interest income

R’000 Impairment

R’000

Assets

Available-for-sale financial assets 3 000 — — —

Loans and receivables 3 050 — — —

Receivables and loans 570 249 — 2 753 593

Trade receivables 419 132 — 2 753 593

Other receivables 24 159 — — —

Related party receivables 126 958 — — —

Derivative financial instruments 1 462 54 — —

Foreign exchange contracts 1 462 54 — —

Cash and cash deposits 229 968 — 10 680 —

Total 807 729 54 13 433 593

Carrying value

R’000

Net gains/(losses)

recognised in profit and

loss R’000

Total interest expense

R’000 Impairment

R’000

Liabilities

Long-term liabilities 60 436 — 4 681 —

Interest-bearing: Capitalised finance leases 60 436 — 1 228 —

Interest-bearing: Loans and other — — 3 453 —

Short-term payables and loans 257 271 20 226 1 244 —

Interest-bearing: Capitalised finance leases 3 068 — 76 —

Interest-bearing: Loans and other 17 022 — — —

Trade payables 191 561 20 226 1 168 —

Accrued expenses and other current liabilities 44 466 — — —

Related party payables 1 154 — — —

Derivatives 16 520 (63 479) — —

Foreign exchange contracts 16 520 (63 479) — —

Bank overdrafts and call loans 2 744 — 4 860 —

Total 336 971 (43 253) 10 785 —

34 FAIR VALUE ESTIMATION OF FINANCIAL INSTRUMENTS (continued)The table below analyses financial instruments carried at fair value, by valuation method. The different levels

have been defined as follows:

Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for

identical assets or liabilities.

Level 2 fair value measurements are those derived from inputs other than quoted prices included within level

1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from

prices). The fair value of financial instruments that are not traded in an active market (for example, derivatives

such as interest-rate swaps, foreign exchange contracts and certain options) is determined through valuation

techniques. These valuation techniques maximise the use of observable market data where it is available and

rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument

are observable, the instrument is included in level 2.

Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or

liability that are not based on observable market data (unobservable inputs).

At 31 March 2018 GROUP

Level 1 R’000

Level 2 R’000

Level 3 R’000

Total R’000

Assets

Available-for-sale financial assets — 3 090 — 3 090

Foreign exchange contracts — 731 — 731

— 3 821 — 3 821

Liabilities

Contingent consideration — — 43 668 43 668

Foreign exchange contracts — 21 055 — 21 055

— 21 055 43 668 64 723

At 31 March 2017 GROUP

Level 1 R’000

Level 2 R’000

Level 3 R’000

Total R’000

Assets

Available-for-sale financial assets — 3 000 — 3 000


— 4 462 — 4 462

Liabilities


— 16 520 — 16 520


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34 FAIR VALUE ESTIMATION OF FINANCIAL INSTRUMENTS (continued)Valuation techniques and key inputs used to measure significant level 2 fair values

Foreign exchange contracts − in measuring the fair value of foreign exchange contracts the Group makes use of

market observable quotes of forward foreign exchange rates on instruments that have a maturity similar to the

maturity profile of the Group’s foreign exchange contracts. Key inputs used in measuring the fair value of foreign

exchange contracts include current spot exchange rates, market forward exchange rates, and the term of the

Group’s foreign exchange contracts.

Available-for-sale financial assets − the use of quoted market prices for similar instruments.

Valuation techniques and key inputs used to measure significant level 3 fair values

Contingent consideration – expected cash outflows are estimated and calculated based on the terms of the

purchase agreement (see note 30). The amount is determined based on a multiple of sustainable earnings of the

acquired business for the period 01 March 2017 to 28 February 2018.

Price risk

The Group is not exposed to significant price risk.

35 FINANCIAL INSTRUMENTS BY CATEGORYFinancial instruments disclosed in the statement of financial position include interest-bearing borrowings,

financial assets, cash and cash equivalents, trade and other receivables and trade and other payables.

The following is a summary of financial-instrument categories applicable to the Group:

Financial assets

Financial assets at

amortised cost

R’000

Fair value through

profit or loss

R’000

Assets at FVOCI R’000

Total R’000

2018

Available-for-sale financial assets — — 3 090 3 090

Loans and receivables 6 517 — — 6 517

Trade and other receivables 671 440 — — 671 440

Derivative financial instruments — 731 — 731

Cash and cash equivalents 243 948 — — 243 948

921 905 731 3 090 925 726

2017

Available-for-sale financial assets — — 3 000 3 000

Loans and receivables 3 050 — — 3 050

Trade and other receivables 443 291 — — 443 291

Related party receivables 126 958 — — 126 958

Derivative financial instruments — 1 462 — 1 462

Cash and cash equivalents 229 968 — — 229 968

803 267 1 462 3 000 807 729


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Financial liabilities

Financial assets at

amortised cost

R’000

Fair value through

profit or loss

R’000

Assets at FVOCI R’000

Total R’000

2018

Long-term liabilities 115 506 — — 115 506

Trade and other payables 466 103 — — 466 103


Bank overdrafts 35 332 — — 35 332

616 941 21 055 — 637 996

2017

Long-term liabilities 80 526 — — 80 526

Trade and other payables 241 282 — — 241 282

Related party payables 1 154 — — 1 154


Bank overdrafts 2 744 — — 2 744

325 706 16 520 — 342 226

35 FINANCIAL INSTRUMENTS BY CATEGORY (continued)

36 ANALYSIS OF SHAREHOLDERS

Size of holdings

Number of shareholders

Number of shares

owned

1 − 1 000 43 350 2 664 532

1 001 − 50 000 2 568 19 197 964

50 001 − 100 000 86 6 151 615

100 001 − 10 000 000 134 110 162 792

10 000 001 and above 8 209 155 551

46 146 347 332 454

The following shareholders hold 5% or more of the issued share capital of the company:

Name % held

Number of shares

owned

Media24 Proprietary Limited 17,48% 60 713 713

Prudential Portfolio Managers 13,56% 47 103 452

Value Capital Partners 10,72% 37 250 735

Investec Asset Management Limited 8,98% 31 207 151

Novus Holdings Share Trust 7,00% 24 313 272

36 ANALYSIS OF SHAREHOLDERS (continued)Public shareholder spread

To the best of the knowledge of the directors, the spread of public shareholders in terms of section 4.25 of the

JSE Limited Listing Requirements at 31 March 2018 was 69,58%, represented by 46 142 shareholders holding

241 681 267 shares in the company. The non-public shareholders of the company comprising three shareholders

representing 105 651 187 ordinary shares are analysed as follows:

ShareholderNumber of

shares% of issued

share capital

Media24 (Proprietary) Limited 60 713 713 17,48%Novus Holdings Share Trust 24 313 272 7,00%

Caxton & CTP Publishers & Printers Limited 17 150 877 4,94%

Latiano 554 (Proprietary) Limited 3 473 325 1,00%

105 651 187 30,42%

37 DIRECTORS’ INTERESTS IN SHARE CAPITAL AND TRANSACTIONSOther than as disclosed in notes 16 and 31, no director of the Company nor any director of any of its subsidiaries

has or had any beneficial interest, directly or indirectly, in any transaction which is, or was, material to the

business of Novus Holdings Limited and which was effected by Novus Holdings Limited during the current

financial year or the immediately preceding financial year or in respect of any previous financial year that

remains in any respect outstanding or unperformed.

None of the directors had any direct interest in Novus Holdings Limited ordinary shares on 31 March 2018.

Detail of directors’ participation in share/SARs schemes is included in note 16.

Directors’ interests in shares

As at 31 March 2018

Direct Indirect Total

Executive

− KA Vroon 1 910 329 625 023 2 535 352

− E Fivaz* — — —

− NW Birch — 364 742 364 742

Total 1 910 329 989 785 2 900 094 * E Fivaz resigned effective 31 March 2018. He had a direct interest in 764 131 shares through the Novus Holdings

Share Options Scheme for the duration of his appointment in the 2018 financial year.


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Directors’ interests in shares

As at 31 March 2017

Direct Indirect Total

Executive

– KA Vroon 1 910 329 — 1 910 329

– E Fivaz 764 131 — 764 131

– E van Niekerk* — — —

2 674 460 — 2 674 460

Non-executive

– LP Retief** — — —

2 674 460 — 2 674 460

* E van Niekerk resigned effective 31 August 2016. He had a direct interest in 1 041 997 shares through the Novus Holdings Share Options Scheme for the duration of his appointment in the 2017 financial year.

** LP Retief passed away on 25 January 2017. He had a direct interest in 3 473 325 shares through an option scheme for the duration of his appointment in the 2017 financial year.

37 DIRECTORS’ INTERESTS IN SHARE CAPITAL AND TRANSACTIONS (continued)

38 EVENTS AFTER REPORTING DATEThe Group has commenced the implementation of a corporate reorganisation in an attempt to align segments

and divisions with the operational reporting structure. Through this process, the Group envisages that it will

also achieve a more streamlined legal organogram. The series of transactions does not have an impact on the

consolidated financial statements of the Group, as they are merely reorganising the entities in the organogram.

The Group made the following name changes to subsidiaries within the Group. This included the following:

− Novus Packaging Proprietary Limited was changed to Novus Packaging Holdings Proprietary Limited; and

− Paarl Tissue Proprietary Limited was changed to Novus Packaging Proprietary Limited.

The directors are not aware of any other matters or circumstances arising since the end of the financial year and

the date of this report.


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SHAREHOLDER& CORPORATE INFORMATION

259258


STOCK EXCHANGE PERFORMANCEDISCLOSURE IN INTEGRATED REPORT

ANALYSIS OF SHAREHOLDERSAT 29 MARCH 2018

2018 2017 2016 2015 ¹

Number of shares in issue 347 332 454 347 332 454 347 332 454 347 332 454

Number of shares traded 253 446 860 26 782 883 38 891 803 314 360

Value of shares traded R1 546 597 675 R292 178 386 R512 735 188 R5 261 013

Market price (cents per share)

− Closing price 458 855 1 150 1 680

− High 870 1 275 1 870 2 500

− Low 337 652 901 1 600

Price − earnings ratio (HEPS) 4,6 7,8 8,2 13,2

¹ Novus Holdings listed on 31 March 2015. Therefore, the 2015 statistics above reflect only one day of trading on the JSE.

Top 15 shareholdersNumber of

shares ²Percentage of issued shares

Cumulative percentage of issued shares

Media24 ¹ 60 713 713 17,48% 17,48%

Prudential Portfolio Managers 47 103 452 13,56% 31,04%

Value Capital Partners ¹ 37 250 735 10,72% 41,76%

Investec Asset Management 31 207 151 8,98% 50,74%

Novus Holdings Share Trust ¹ 24 313 272 7,00% 57,74%

Allan Gray 17 213 760 4,95% 62,69%

Caxton & CTP Publishers & Printers 17 150 877 4,93% 67,62%

Public Investment Corporation 15 514 994 4,46% 72,08%

Bateleur Capital 13 853 342 3,98% 76,06%

Electus Equity Specialists 13 322 657 3,83% 79,89%

Sanlam Investment Management 8 424 761 2,42% 82,31%

Visio Capital Management 5 010 906 1,44% 83,75%

PSG Asset Management 4 664 224 1,34% 85,09%

Eskom Pension and Provident Fund 4 391 096 1,26% 86,35%

Latiano 554 (Proprietary) Limited ¹ 3 473 325 1,00% 87,35%

¹ Directors, employees and related parties² Shareholding inclusive of treasury shares

Number of shareholders

Percentageof total

shareholders

Number ofshares in

issue 1

Percentageof issued

share capital

Shareholder spread

1 − 1,000 43 350 93,95% 2 664 532 0,83%

1,001 − 50,000 2 568 5,56% 19 197 964 6,01%

50,001 − 100,000 86 0,19% 6 151 615 1,92%

100,001 − 10,000,000 133 0,29% 106 689 467 33,39%

10,000,001 and above 7 0,01% 184 842 279 57,85%

Total 46 144 100,00% 319 545 857 100,00%

Distribution of shareholders per category

Individuals 43 411 94,08% 18 490 502 5,79%

Private companies 1 154 2,50% 81 316 550 25,45%

Public companies - 0,00% - 0,00%

Nominees and trusts 446 0,97% 2 336 308 0,73%

Banks 51 0,11% 2 287 849 0,72%

Insurance companies 60 0,13% 9 437 072 2,95%

Pension funds and medical-aid societies 378 0,82% 57 656 776 18,04%Collective investment schemes and mutual funds 644 1,39% 148 020 800 46,32%

Total 46 144 100,00% 319 545 857 100,00%

Public and non-public shareholdings

Public 46 143 100,00% 258 832 144 81,00%

Non-public 1 0,00% 60 713 713 19,00%

Total 46 144 100,00% 319 545 857 100,00%

Beneficial shareholdings

Media24 (Proprietary) Ltd 60 713 713 19,00%

Caxton & CTP Publishers & Printers 17 150 877 5,37%

Total 77 864 590 24,37%

¹ Number of shares in issue net of treasury shares.


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CORPORATE INFORMATIONNOVUS HOLDINGS LIMITED

(Incorporated in the Republic of South Africa)

Registration number: 2008/011165/06

JSE share code: NVS

ISIN: ZAE000202149

REGISTERED OFFICE 10 Freedom Way, Milnerton, Cape Town 7441

PO Box 37014, Chempet 7442

NON-EXECUTIVE DIRECTORS

Lulama Mtanga

Christoff Botha

Bernard Olivier

Jan Potgieter

Sandile Zungu

Noluvuyo Mkhondo (non-independent)

EXECUTIVE DIRECTOR Neil Birch (Executive Chairman)

INVESTMENT BANK AND SPONSOR

Investec Bank Limited, 2nd Floor,

100 Grayston Drive, Sandown, Sandton 2196

PO Box 785700, Sandton 2146

TRANSFER SECRETARY

Link Market Services South Africa (Proprietary)

Limited, 13th Floor, Rennie House, 19 Ameshoff

Street, Braamfontein 2001

PO Box 4844, Johannesburg 2000

INDEPENDENT REPORTING ACCOUNTANTS AND AUDITORS

PricewaterhouseCoopers Incorporated,

5 Silo Square,

V&A Waterfront,

Cape Town

8002

PO Box 2799,

Cape Town

8000


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ANNUAL GENERALMEETING

265264


NOTICE OF ANNUAL

GENERAL MEETINGNOVUS HOLDINGS LIMITED (being a profit company in terms of the Companies Act, 71 of 2008

and registered under registration number 2008/011165/06 – “the Company”)

NOTICE IS HEREBY GIVEN OF THE ANNUAL GENERAL MEETING OF SHAREHOLDERS, TO BE HELD

AS FOLLOWS

Place: 10 Freedom Way, Marconi Beam, Montague Gardens (the registered office of the Company)

Date: Friday, 17 August 2018

Time: 10h00

CONVENED PURSUANT TO CLAUSE 24.2 OF THE MEMORANDUM OF INCORPORATION OF

THE COMPANY (MOI) IN ACCORDANCE WITH SECTION 61(7), IN CONJUNCTION WITH SECTION

62(1)(A), OF THE COMPANIES ACT, 71 OF 2008, AS AMENDED (the Companies Act)

1. INTRODUCTION AND EXPLANATORY NOTES 1.1 Purpose – the Company proposes:

1.1.1 for the purpose of the Annual General Meeting (i) to present the directors’ report and

the audited annual financial statements of the Company for the immediate preceding

financial year, an Audit Committee report, Risk Committee report and the social and

Ethics Committee report (if any); (ii) to consider and, if approved, to adopt with or

without amendment, the resolutions set out below; and (iii) to consider any matters

raised by the shareholders of the Company, with or without advance notice to the

Company; and, more particularly the matters set out below;

1.1.2 to confirm the appointment of a number of executive directors;

1.1.3 to elect and approve the appointment of a number of directors;

1.1.4 to elect and approve the appointment of the Audit Committee;

1.1.5 to place a certain number of the authorised share capital of the Company under

the control of the directors of the Company;

1.1.6 to acquire/repurchase the Company’s own securities;

1.1.7 to adopt and approve an Addendum to the Novus Holdings Share Trust (being

the existing share scheme for employees – “ESOP” – and the additional employee

incentive scheme in the form of a share appreciation rights scheme – “SAR Scheme

No.1” – and a restricted stock plan scheme –“RSP Scheme”), having the effect that

the maximum number of shares available for allocation to participants under these

schemes and any other share incentive scheme of the Company or any direct or

indirect subsidiary of the Company shall be limited to 5% (five per cent) of the issued

share capital of the Company, being 17 366 622 (seventeen million three hundred

and sixty six thousand, six hundred and twenty two) shares at the record date, which

number will increase by virtue of any subdivision of shares or decrease by virtue of

any consolidation of shares, as the case may be, all of which documents together

with the trust deed and the existing schedules thereto governing the ESOP and the

SAR Scheme No.1 and the RSP Scheme lie open for inspection at the registered

office of the Company during normal business hours for a period of not less than

14 (fourteen) days prior to the Annual General Meeting in accordance with the Listing

Requirements (defined below), and signed by any director or the secretary

of the Company on the first page thereof for identification purposes;

1.1.8 to adopt and approve as two additional schedules to the Novus Holdings Share

Trust (being the existing share scheme for employees –“ESOP”), viz. an additional

employee incentive scheme in the form of a share appreciation rights scheme

coupled to performance criteria (“SAR Scheme No.2 – Performance Criteria”) and

a deferred bonus share plan scheme (“Deferred Bonus Scheme”), in the form of

the two schedules respectively to the trust deed governing the ESOP, all of which

documents together with the trust deed and the existing schedules thereto governing

the ESOP and the SAR Scheme No.1 and the RSP Scheme lie open for inspection at the

registered office of the Company during normal business hours for a period of not less

than 14 (fourteen) days prior to the Annual General Meeting in accordance with the

Listings Requirements (defined below), and signed by any director or the secretary of

the Company on the first page thereof for identification purposes;

1.1.9 to adopt and approve the implementation of the Odd-lot Offer to shareholders of

the Company holding less than 100 shares in the Company at the close of business

on Friday, 7 September 2018 (or such other date as approved by the JSE) according

to the terms and conditions of the Odd-lot Offer contained in the Circular hereinafter

mentioned and subject to the memorandum of incorporation of the Company read

with the Listing Requirements of the JSE, and accordingly the Company has prepared

a circular that is attached to this Notice (‘’Circular”) for purposes of the Odd-lot

Offer with the assistance of the advisors listed in the Circular, in the form of the

Circular that lies for inspection at the registered office of the Company during normal

business hours for a period of not less than 14 (fourteen) days prior to the Annual

General Meeting in accordance with the Listing Requirements (defined below), and

signed by any director or the secretary of the Company on the first page thereof for

identification purposes;

1.1.10 to approve the directors’ remuneration;


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1.1.11 to approve ancillary matters, all as set in the further resolutions hereunder; and

1.1.12 to authorise any director or secretary of the Company to sign and give effect to

the resolutions set out hereunder.

1.2 Attendance and voting – the shareholders are notified that:

1.2.1 Identification of shareholders – participants at the Annual General Meeting

must provide satisfactory identification in accordance with section 63(1) of the

Companies Act and the person presiding at the Annual General Meeting must be

reasonably satisfied that the right of any person to participate in and vote (whether

as shareholder or as proxy for a shareholder) has been reasonably verified – forms

of identification include valid identity documents, driver’s licences and passports.

1.2.2 Appointment of proxy – a shareholder of the Company who is entitled to attend the

Annual General Meeting and to vote thereat is entitled in accordance with the MOI

of the Company to appoint one proxy to attend the Annual General Meeting on his/

her behalf, to participate and speak and vote thereat in the place of the shareholder

and/or appoint a person/s to exercise voting rights in accordance with section 57(1) of

the Companies Act.

1.2.3 Status of proxy – a proxy need not also be a shareholder of the Company and

a shareholder is entitled to appoint one proxy only.

1.2.4 Proxy form – a form of proxy, which includes the relevant instructions for its

completion, is attached for the use of holders of certificated shares and “own name”

dematerialised shareholders who wish to be represented at the Annual General

Meeting. Completion of a form of proxy will not preclude such a shareholder from

attending and voting (in preference to that shareholder’s proxy) at the Annual

General Meeting. Holders of dematerialised shares, other than “own name”

dematerialised shareholders, who wish to vote at the Annual General Meeting, must

instruct their Central Securities Depository Participant (CSDP or participant) or

broker accordingly in the manner and cut-off time stipulated by their CSDP or broker.

The form appointing a proxy and the authority (if any) under which it is signed must

reach the transfer secretaries of the Company (Link Market Services South Africa

[Proprietary] Limited, 13th Floor, Rennie House, 19 Ameshoff Street, Braamfontein

2001 or PO Box 4844, Johannesburg 2000) by no later than 10h00 on Wednesday,

15 August 2018 (i.e. at least 48 hours before the commencement of the Annual

General Meeting or adjourned meeting at which the proxy intends to exercise that

shareholder’s rights). A form of proxy is enclosed with this Notice. The form of proxy

may also be obtained from the registered office of the Company.

1.2.5 Electronic participation – the Company will not provide for electronic participation

at the Annual General Meeting.

1.2.6 All resolutions put to the vote shall be decided by a polled vote in accordance with

clause 26.3 of the memorandum of incorporation of the Company.

1.3 Interpretation – it is recorded that words and phrases defined anywhere in the text of this

document shall have the meaning throughout this document, unless specifically provided

otherwise. “Listing Requirements” mean the Listing Requirements of the JSE (“JSE” meaning

the JSE Limited, registration number 2005/022939/06, a licensed financial exchange in terms

of the Financial Markets Act, 19 of 2012, or any exchange that operates as its successor

exchange). “King IVTM Report” means the King IV Report on Corporate GovernanceTM for

South Africa, 2016.

2. RECORD DATE AND REQUISITE QUORUM AND MAJORITY FOR THE RESOLUTIONS TO BE PASSED AT THE ANNUAL GENERAL MEETING OF SHAREHOLDERS

2.1 The record date for the Annual General Meeting (being the date used for the purpose

of determining which shareholders are entitled to participate in and vote at the meeting)

is Friday, 10 August 2018.

2.2 The requisite quorum is determined, subject to the Companies Act, in accordance with

clause 24.4.1 of the MOI, read in conjunction with the definition of “shareholder” in

clause 1.1.26 of the MOI, to count the number of shareholders for purposes of a quorum.

2.3 For the special resolutions set out hereunder to be passed, it must be supported by at least

75% of the voting rights exercised on this special resolution of all shareholders present at the

Annual General Meeting. As regards special resolution numbers 5 and 6, in addition to the

requirements of the Companies Act, in terms of paragraph 14.1 of Schedule 14 of the Listing

Requirements such a resolution must in any event be supported by at least 75% of the voting

rights of all shareholders present at the Annual General Meeting and cast on this resolution

in addition to the requirements of a special resolution in terms of the Companies Act, but

excluding any votes exercised in respect of any treasury shares held by the Group and any

shares held by the Novus Holdings Share Trust.

2.4 For ordinary resolution number 9 set out hereunder to be passed, it must be supported by

at least 75% of the voting rights exercised on this ordinary resolution of all shareholders

present at the Annual General Meeting.

2.5 For the ordinary resolutions set out hereunder (except for ordinary resolution number 9)

to be passed, it must be supported by more than 50% of the voting rights of all shareholders

present at the Annual General Meeting, exercised on each of these ordinary resolutions

respectively.

2.6 In respect of the endorsements regarding the remuneration policy and the implementation

report by way of non-binding advisory votes in accordance with the King IVTM Report, not

more than 25% of the votes exercised must be exercised against either or both these reports,

failing which, the measures prescribed by the Listing Requirements (to be amended) shall

be implemented.

2.7 The special resolutions and ordinary resolutions accordingly passed at the Annual General

Meeting of shareholders are set out hereunder.


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3. INTEGRATED ANNUAL REPORT AND NO CHANGE STATEMENT AND APPOINTMENT OF CHAIRPERSON

3.1 Integrated annual report – the integrated report of the Company for the financial year

ended 31 March 2018 is available on www.novus.holdings or on request during normal

business hours at the registered office of the Company, 10 Freedom Way, Marconi Beam,

Montague Gardens (contact person Sonet Stemmet) and in Johannesburg at the sponsor

of the Company, Investec Bank Limited, 2nd Floor, 100 Grayston Drive, Sandown, Sandton

2196, South Africa (contact person Robert Smith). In particular, reference is also made to the

remuneration payable to the non-executive directors and members of the Board committees

as contained in this integrated report that has been approved at the Annual General Meeting

held on 18 August 2017 for the three financial years ending respectively on 31 March 2017

and 31 March 2018, as well as 31 March 2019, and as supplemented in terms of special

resolution number 1 below.

3.2 No change statement – other than the facts and developments reported on in the integrated

report and annual financial statements, there have been no material changes in the affairs or

financial position of the Company and its subsidiaries since the date of signature of the audit

report and up to the date of this Notice.

3.3 Chairperson and lead independent director – since the retirement of Uys Meyer as director

on 17 March 2016, who also served as the lead independent director, this position has been

filled by the Board of directors of the Company by the appointment of Fred Robertson as the

lead independent director. He then also served as acting chairperson from 12 July 2016 as

a result of the medical leave of absence of Lambert Phillips Retief. Following the passing

away of Lambert Phillips Retief on 25 January 2017 and Fred Robertson’s retirement on

3 April 2017, the positions of chairperson and lead independent director have respectively

been filled by the Board of directors of the Company by the appointment of Neil William Birch

as Executive Chairman and Jan Naudé Potgieter as lead independent director, who both still

serve in these capacities respectively.

4. ORDINARY RESOLUTION NUMBER 1 – CONSIDERATION AND ACCEPTANCE OF FINANCIAL STATEMENTS

Resolved that, the financial statements of the Company and the Group for the 12 (twelve) months

ended 31 March 2018 (as approved by the Board of directors of the Company) and the reports of

the directors, the auditor and the audit committee be considered and accepted.

Note: The condensed financial results for the year ended 31 March 2018 form part of this Notice. A

copy of the full annual financial statements of the Company for the financial year ended 31 March

2018 can be obtained from www.novus.holdings or on request during normal business hours at the

registered office of the Company, 10 Freedom Way, Marconi Beam, Montague Gardens (contact

person Sonet Stemmet) and in Johannesburg at the sponsor of the Company, Investec Bank Limited,

2nd Floor, 100 Grayston Drive, Sandown, Sandton (contact person Robert Smith).

5. ORDINARY RESOLUTION NUMBER 2 – APPOINTMENT OF AUDITOR Resolved that, on the recommendation of the Company’s audit committee, the firm

PricewaterhouseCoopers Inc. as independent registered auditor of the Company be appointed

(noting that Viresh Harri is the individual registered auditor of that firm who will undertake

the audit) for the period until the next Annual General Meeting of the Company.

Note: The audit committee of the Company has satisfied itself that PricewaterhouseCoopers

Inc. (including the individual registered auditor who undertakes the audit) is independent as

contemplated by the South African independence laws and the applicable rules of the International

Federation of Accountants (IFAC) and nominated the reappointment of PricewaterhouseCoopers

Inc. as independent registered auditor to the Company, to report on the financial year ending

31 March 2019, until the conclusion of the 2019 Annual General Meeting. Furthermore, the audit

committee has, in terms of paragraph 3.86 of the Listing Requirements, considered and satisfied

itself that PricewaterhouseCoopers Inc., the reporting accountant and individual auditor are

accredited to appear on the JSE List of Accredited Auditors, in compliance with section 22 of

the Listing Requirements.

6. ORDINARY RESOLUTION NUMBER 3 – CONFIRMATION OF APPOINTMENT OF EXECUTIVE DIRECTOR

Resolved that, in accordance with clause 33.1 of the MOI read in conjunction with clause

30.2.1 of the MOI and pursuant to the authority granted in terms of clause 30.2.5 of the MOI, the

appointment of the executive directors on an individual basis, who do not retire by rotation but

whose appointment must be confirmed at each Annual General Meeting, be and is hereby confirmed

and approved, the names and particulars of which directors and the respective dates of their

appointment are as set out hereunder –

6.1 ORDINARY RESOLUTION NUMBER 3.1 – Appointment of Neil William Birch as executive

director, being the Executive Chairman and Chief Executive officer of the Company.

Note: As the chief operating officer of the Company, Keith Anthony Vroon (appointed 01 October

2008) served as an alternate director to the executive directors, and as director and chief

executive officer since 31 March 2016, in the interim as acting chief executive officer, which acting

appointment was made permanent by the Board of directors of the Company effective from 12

July 2016, but has now resigned effective 15 June 2018 and in compliance with paragraph 3.84(c)

of Section 3 of the Listing Requirements Neil William Birch will act as Chief Executive Officer and

furthermore will continue to act as Executive Chairman.

General Note re Ordinary Resolution Number 3: In the interest of good corporate governance

and in compliance with paragraph 3.84 of Section 3 of the Listing Requirements the executive

directors are reappointed annually albeit they do not rotate in accordance with the memorandum of

incorporation of the Company. The Board of Directors of the Company unanimously recommends

the approval of the appointment of the executive director in question on the above mentioned basis.

Neil’s abridged curriculum vitarum appears in the integrated report.


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7. ORDINARY RESOLUTION NUMBER 4 – CONFIRMATION OF APPOINTMENT OF NON-EXECUTIVE DIRECTORS

Resolved that, in accordance with clause 30.2.7 of the MOI read in conjunction with clause 30.2.1

of the MOI, the appointment of the directors, the name and particulars and the date of appointment

are as set out hereunder, to fill a vacancy, be and is hereby confirmed in a vote on an individual basis

in respect of each director, as set out hereunder –

7.1 ORDINARY RESOLUTION NUMBER 4.1 – Appointment of Lulama Mtanga as non-executive

director (appointed 15 July 2017)

7.2 ORDINARY RESOLUTION NUMBER 4.2 – Appointment of Noluvuyo Mkhondo as

non-executive director (appointed 15 December 2017)

Note: The above two directors, being eligible for appointment, have been appointed by the Board

of directors of the Company, which appointments in time filled the vacancies left by the retirement

of Esmaré Weideman and Cindy Hess on 29 September 2017 and the retirement of Gugu Dingaan

on 31 January 2108, all of which has become effective on the aforesaid respective dates. The Board

of directors of the Company recommends the election of both these directors. Their abridged

curriculum vitarum appear in the integrated report.

8. ORDINARY RESOLUTION NUMBER 5 – RE-ELECTION OF NON-EXECUTIVE DIRECTOR

Resolved that, in accordance with clause 30.3.4.1 of the MOI read in conjunction with clause

30.3.4.2 of the MOI, the election and appointment of directors, who retire by rotation and, being

eligible, offer themselves for re-election, be and is hereby approved in a vote on an individual basis

in respect of each director, the names and particulars of which directors and the respective dates

of their election and appointment are as set out hereunder –

8.1. ORDINARY RESOLUTION NUMBER 5.1 – Re-election of Christoffel Botha as non-executive

director (appointed 24 February 2016)

Note: One-third of the number of directors in office are subject to rotation and the directors to

retire in each year shall be those who have been longest in office since their last election, but as

between persons who were elected as directors on the same day, those to retire shall, unless they

otherwise agree among themselves, be determined by lot. The abridged curriculum vitarum appear

in the integrated report. The Board of directors of the Company unanimously recommends the

approval of the election and appointment of the director in question. Bernard John Olivier also

retires by rotation on 17 August 2018, and although being eligible, did not offer himself for re-

election.

9. ORDINARY RESOLUTION NUMBER 6 – APPOINTMENT OF AUDIT COMMITTEE

Resolved that, as required in terms of section 94(2) of the Companies Act and as recommended

by the King Report on Corporate Governance for South Africa 2016, the election and appointment

of independent non-executive directors as members of the audit committee, whose names and

particulars and the respective dates of appointment are as set out hereunder, be and is hereby

approved in a vote on an individual basis in respect of each of the aforementioned audit committee

members, namely –

9.1 ORDINARY RESOLUTION NUMBER 6.1 – Reappointment of Christoffel Botha (appointed

as director – 24 February 2016)1

9.2 ORDINARY RESOLUTION NUMBER 6.2 – Appointment of Lulama Mtanga (appointed

as director – 15 August 2017)1

Note: The Board of directors of the Company unanimously recommends the approval of the

reappointments of the audit committee members in question, and is satisfied that all of them are

suitably skilled and experienced independent non-executive directors and that they collectively

have sufficient qualifications and experience in all necessary disciplines to fulfil their duties,

as contemplated in regulation 42 of the Regulations 2011 to the Companies Act. They have a

comprehensive understanding of financial reporting, internal financial controls, risk management

and governance processes within the Company, as well as International Financial Reporting

Standards and other regulations and guidelines applicable to the Company. They keep up to date

with developments affecting their required skill set. Their abridged curriculum vitarum appear in

the integrated report.

1 Subject to his/her re-election as director pursuant to ordinary resolutions numbers 4 and 5 above.


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10. ORDINARY RESOLUTION NUMBER 7 – ENDORSEMENT OF THE NOVUS HOLDINGS REMUNERATION POLICY AND IMPLEMENTATION REPORT

Resolved, by way of a non-binding advisory vote, to endorse the Company’s remuneration policy

(excluding the remuneration of the non-executive directors and the members of statutory and

Board committees for their services as directors and members of committees – considering

paragraph 3.1 above) and the Implementation report as required in terms of the King IVTM Report,

as set out in the Remuneration report forming part of the, Integrated report to be endorsed

separately in respect of each of the aforementioned matters, namely –

10.1 ORDINARY RESOLUTION NUMBER 7.1 – Endorsement of the remuneration policy

10.2 ORDINARY RESOLUTION NUMBER 7.2 – Endorsement of the Implementation report

Note: The King IVTM Report includes definitive disclosure requirements (and the Listing

Requirements as well, to be amended), dealing with boards and directors, that require companies to

table their remuneration policy and the Implementation report every year for shareholders

in a non-binding advisory vote at the Annual General Meeting. This vote enables shareholders to

express their views on the remuneration policies adopted for, among others, executive directors

and on their implementation. The remuneration policy is contained under the heading “Part 2:

Remuneration Policy” in the Remuneration report. The Implementation report is contained under

the heading “Part 3: Implementation of Remuneration Policy for the year ended on 31 March

2018” in the Remuneration report. The remuneration policy deals with, inter alia, the Company’s

approach to remuneration governance, reward philosophy and strategy and guidelines on the

various components making up the remuneration packages of employees of the Company including

the remuneration arrangements in place for the non-executive directors. Please note that the

remuneration to be paid to non-executive directors for their services as directors will require the

approval of the shareholders of the Company by special resolution (see paragraph 3.1 above), in

terms of the Companies Act, such remuneration having been benchmarked in relation with other

similar-sized public-listed companies in South Africa. This ordinary resolution number 7 is of an

advisory nature only and failure to pass this resolution will at the moment therefore not have any

legal consequences relating to existing arrangements. However, the Board will take the outcome

of the vote into consideration and in the event of 25% or more of the votes exercised being against

either or both endorsements, the Company will extend an invitation to dissenting shareholders

to engage with the Company when considering the remuneration policy in the remuneration of,

among others, executive directors, and the remuneration of the directors in any event needs to be

approved pursuant to special resolution number 1.

11. ORDINARY RESOLUTION NUMBER 8 – GENERAL ISSUE OF SHARES Resolved that, in terms of section 38, as read with section 40, of the Companies Act and clause 7.7

of the MOI, the Company be and is hereby authorised, by way of a general authority, to proceed

with the issue of unissued ordinary no par value shares in the authorised ordinary share capital

of the Company –

i. limited to 10% (ten percent) of the issued ordinary share capital of the Company on the

record date of this Annual General Meeting, amounting to 34 733 245 shares of the

Company’s issued ordinary share capital of the Company on the record date;

ii. subject thereto that a rights issue that may be undertaken by the Company, be included

in the above 10% limitation that will also apply to such rights issue;

iii. which shares be and are hereby placed under the control of the directors until the next

Annual General Meeting of the Company; and

iv. the directors be and are hereby authorised to allot and issue any such shares as they

may deem fit, subject to the Companies Act, the MOI of the Company and the Listing

Requirements.

Note: The reason for this Ordinary Resolution is that the Board of directors requires authority

to issue ordinary no par value shares from time to time as may be required, inter alia, as part

of the Company’s fundraising exercises and to maintain a healthy capital-adequacy ratio.

12. ORDINARY RESOLUTION NUMBER 9 – GENERAL ISSUE OF SHARES FOR CASH Resolved that subject to Ordinary Resolution Number 8 being approved and included in the number

of unissued ordinary no par value shares referred to in Ordinary Resolution Number 8 above, in

terms of section 38, as read with section 40, of the Companies Act and clauses 7.7 and 7.8 of the

MOI, the Company be and is hereby authorised, as a general approval and authority to allot and

issue ordinary no par value shares and options or convertible securities that are convertible into

an existing class of equity securities for cash without restriction, as the directors may deem

fit, subject to compliance with the Companies Act, the MOI of the Company and the Listings

Requirements, provided that –

i. this general approval shall expire at the date of the Company’s next Annual General Meeting

in 2019 or 15 (fifteen) months from the date of this meeting of shareholders, whichever is

the earlier;

ii. any such issue will be securities of a class already in issue, or limited to such securities

or rights that are convertible into a class already in issue;

iii. the securities will be issued only to public shareholders (as defined in the Listing

Requirements) and not to related parties;

iv. during the period permitted in terms of this general approval the general issue of securities

of a specific class will, in any financial year not exceed, in the aggregate, 10% (ten percent) of

the issued ordinary share capital of the Company on the record date of this Annual General

Meeting in that class at the record date, amounting to 34 733 245 shares of the Company’s

issued ordinary share capital of the Company on the record date, it being recorded that

ordinary no par value shares issued in terms of Ordinary Resolution Number 8 above will


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Note: The reason for this Ordinary Resolution is that the Board of directors requires authority

to issue ordinary no par value shares for cash as may be required as part of the Company’s normal

fundraising exercises and to maintain a healthy adequacy ratio.

13. ORDINARY RESOLUTION NUMBER 10 – APPROVAL OF THE IMPLEMENTATION OF THE ODD-LOT OFFER

Resolved that, subject to passing of Special Resolution Number 7 below, the directors are hereby

authorised to make and implement the Odd-lot Offer to shareholders of the Company holding less

than 100 (one hundred) shares in the Company at the close of business on Friday, 7 September 2018

(or such other date as approved by the JSE) according to the terms and conditions of the Odd-lot

Offer contained in Annexure 1 that forms part of this Notice, and subject to the memorandum of

incorporation of the Company read with the Listing Requirements.

Note: The reason for this Ordinary Resolution Number 10 is to obtain the authority of shareholders

in order for the Company to make and implement the Odd-lot Offer. The effect of Ordinary

Resolution Number 10 is that the Company will be authorised to make and implement the

Odd-lot Offer and reduce the number of shareholders causing an administrative burden and

costs to the Company.

diminish the number of ordinary no par value shares that may comprise the 10% (ten percent) of

ordinary no par value shares that can be issued as contemplated in Ordinary Resolution Number 8

above and this Ordinary Resolution Number 9;

v. in determining the price at which an issue of equity securities may be made in terms of

this general authority, the maximum discount permitted will be 10% (ten percent) of the

weighted average traded price of the equity securities as measured over the 30 (thirty)

business days prior to the date that the price of the issue is agreed between the Company

and the party subscribing for the securities – the JSE will be consulted for a ruling if the

Company’s securities have not traded on the JSE in such 30 (thirty) business-day period;

and

vi. upon any issue of ordinary shares which, together with prior issues of ordinary shares

during the same financial year, will constitute 5% (five percent) or more of the total

number of ordinary shares in issue prior to that issue, the Company shall publish an

announcement in terms of section 11.22 of the Listing Requirements.

2017/18 2018/19 2019/20

Chairman Member Chairman Member Chairman Member

Board of directors R1 050 000 R278 250 R1 102 500 R292 162 R1 146 600 R303 848Audit committee R166 950 R83 475 R175 298 R87 648 R182 310 R91 154Risk committee R111 300 R55 650 R116 865 R58 432 R121 540 R60 769Remuneration committee R133 560 R66 780 R140 238 R70 119 R145 848 R72 924Nominations committee R21 000 R10 500 R22 050 R11 025 R22 932 R11 466Social and ethics committee R111 300 R55 650 R116 865 R58 432 R121 540 R60 769Investment committee R21 000 R10 500 R22 050 R11 025 R22 932 R11 466

14. SPECIAL RESOLUTION NUMBER 1 – REMUNERATION OF DIRECTORS Resolved that, in accordance with sections 66(8) and (9) of the Companies Act, the payment of

remuneration to non-executive directors of the Company in office for their services as directors

and the remuneration to members of the respective committees of the Company, be and is hereby

approved and sanctioned as set out below:

The effect of the resolution will be that the aforementioned payment of remuneration of non-

executive directors and committee members of the Company for their services as such for the

period until 31 March 2019 will in aggregate align with the already approved remuneration, and

that the remuneration for the period until 31 March 2020 will be newly approved.

14.1 SPECIAL RESOLUTION NUMBER 1.1 − Approval of Remuneration of Executive Chairman

Resolved that, in accordance with sections 66(8) and (9) of the Companies Act, the payment

of remuneration to the Executive Chairman of the Company in office for his services acting in

both capacities, be and is hereby approved.

14.2 SPECIAL RESOLUTION NUMBER 1.2 − Approval of Remuneration of Directors (other than

Executive Chairman) and the Committee Members

Resolved that, in accordance with sections 66(8) and (9) of the Companies Act, the payment

of remuneration to the Directors (other than Executive Chairman) and the Committee

Members of the Company in office for their services acting in their respective capacities, be

and is hereby approved.


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17. SPECIAL RESOLUTION NUMBER 4 – GENERAL AUTHORITY TO ACQUIRE (REPURCHASE) SHARES

Resolved that, the Company or any of its subsidiaries be and is hereby authorised, in terms

of section 48, as read with section 46, of the Companies Act and clause 21 of the MOI, by way

of a general authority, to approve the repurchase from time to time of its own issued ordinary

shares by the Company, or approve the purchase of ordinary shares in the Company by any of

its subsidiaries, in either instance upon such terms and conditions and in such amounts as the

directors of the Company may from time to time determine, but always subject to the provisions

of the memorandum of incorporation and the Listing Requirements, being that:

any such acquisition of ordinary shares shall be effected through the order book operated by

the JSE trading system and done without any prior understanding or arrangement between the

Company and the counterparty (reported trades are prohibited);

this general authority shall be valid until the Company’s next Annual General Meeting, provided

that it shall not extend beyond 15 (fifteen) months from the date of passing of this Special

Resolution Number 4;

an announcement will be published as soon as the Company or any of its subsidiaries has

acquired ordinary shares constituting, on a cumulative basis, 3% (three percent) of the number

of ordinary shares in issue prior to the acquisition pursuant to which the aforesaid 3% (three

percent) threshold is reached, and for each 3% (three percent) in aggregate acquired thereafter,

containing full details of such acquisitions;

acquisitions of shares in aggregate in any one financial year may not exceed 20% (twenty percent)

of the Company’s ordinary issued share capital as at the date of passing of this Special Resolution

Number 4, nor may any subsidiary hold more than 10% (ten percent) of the Company’s issued

share capital at any one time;

in determining the price at which ordinary shares issued by the Company are acquired by it

or any of its subsidiaries in terms of this general authority, the maximum premium at which

such ordinary shares may be acquired will be 10% (ten percent) of the weighted average of the

market value at which such ordinary shares are traded on the JSE over the 5 (five) business days

immediately preceding the date of repurchase or purchase (as the case may be) of such ordinary

shares by the Company or any of its subsidiaries;

the Company has been given authority by its memorandum of incorporation;

at any 1 (one) point in time, the Company may only appoint 1 (one) agent to effect any repurchase

on the Company’s behalf; and

it is not permissible for the Company and/or its subsidiaries to repurchase or purchase (as the

case may be) any shares during a prohibited period as defined by the Listing Requirements, unless

a repurchase programme is in place where dates and quantities of shares to be traded during the

prohibited period are fixed and full details of the programme have been submitted to the JSE in

writing prior to the commencement of the prohibited period.

Note: The reason for and effect of this Special Resolution Number 4 is to grant the Company

a general authority in terms of the Listing Requirements for the repurchase by the Company,

or a purchase by a subsidiary of the Company, of the Company’s issued shares.

15. SPECIAL RESOLUTION NUMBER 2 – FINANCIAL ASSISTANCE IN TERMS OF SECTION 44

Resolved that, the Board may, subject to section 44 of the Companies Act and the MOI, authorise the

Company to generally provide direct or indirect financial assistance as contemplated by section 44

of the Companies Act by way of loan, guarantee, the provision of security, or otherwise to any person

(including a director or prescribed officer of the Company) for the purpose of, or in connection with,

the subscription for any option, or any securities, issued or to be issued by the Company, or any related

or interrelated company to the Company, or for the purchase of any securities of the Company, or any

related or interrelated company, provided that no such financial assistance may be provided at any time

in terms of this authority after the expiry of 2 (two) years from the date of the adoption of this Special

Resolution Number 2 or the date of the Annual General Meeting of the Company to be held in 2019,

whichever is the earlier.

Note: The reason for and effect of this Special Resolution Number 2 is to, in terms of section 44 of the

Companies Act read with the Listing Requirements, in so far as may be necessary, grant the directors of

the Company the authority to provide financial assistance to the potential recipients as set out in the

resolution. This authority shall include and also apply to the granting of financial assistance to Novus

Holdings Share Trust for purposes of ESOP and the abovementioned SAR Schemes and RSP Scheme

as well as the Deferred Bonus Scheme (if approved) and participants thereunder (which may include

directors, future directors, prescribed officers of the Company or of a related or interrelated company)

in accordance with the terms and conditions of these aforementioned employee incentive schemes.

16. SPECIAL RESOLUTION NUMBER 3 – FINANCIAL ASSISTANCE IN TERMS OF SECTION 45

Resolved that, the Board may, subject to section 45 of the Companies Act and the MOI, authorise the

Company to generally provide direct or indirect financial assistance as contemplated by section 45 of

the Companies Act to any related or interrelated company or corporation, or to a member of a related

or interrelated corporation; provided that no such financial assistance may be provided at any time in

terms of this authority after the expiry of 2 (two) years from the date of the adoption of this Special

Resolution Number 3 or the date of the Annual General Meeting of the Company to be held in 2019,

whichever is the earlier.

Note: The reason for and effect of this Special Resolution Number 3 is to, in terms of section 45 of the

Companies Act read with the Listing Requirements in so far as may be necessary, grant the directors of

the Company the authority to provide financial assistance to the potential recipients

as set out in the resolution.

General note: Both sections 44 and 45 of the Companies Act provide, among others, that the particular

financial assistance must be provided only pursuant to a special resolution of the shareholders, adopted

within the previous 2 (two) years, which approved assistance either for the specific recipient, or

generally for a category of potential recipients, and such recipient falls within that category, the Board

of directors of the Company must be satisfied that:

i. immediately after providing the financial assistance, the Company would satisfy the solvency and

liquidity test as contemplated in section 4 of the Companies Act; and

ii. the terms under which the financial assistance is proposed to be given are fair and reasonable to

the Company.


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18. SPECIAL RESOLUTION NUMBER 5 – APPROVAL OF AMENDMENT TO THE ESOP

Resolved that, in terms of sections 38 and 40, as read with section 41(1) but subject to section 97,

of the Companies Act and clause 7.7 of the MOI, to the extent required to give effect to the Novus

Holdings Share Trust (“the share option scheme”), in compliance with clause 13 of the trust deed in

respect of the share option scheme read with paragraphs 14.1 and 14.2 of the Listing Requirements,

the terms of the “Addendum to the Novus Holdings Share Trust” as approved by the JSE in writing

be and are hereby approved, in the form of the “Addendum to the Novus Holdings Share Trust”

(being the existing share scheme for employees – “ESOP” – and the additional employee incentive

scheme in the form of a share appreciation rights scheme – “SAR Scheme No. 1” – and a restricted

stock plan scheme – “RSP Scheme”), having the effect that the maximum number of shares available

for allocation to participants under these schemes and any other share incentive scheme of the

Company or any direct or indirect subsidiary of the Company shall be limited to 5% (five per cent)

of the issued share capital of the Company, being 17 366 622 (seventeen million three hundred

and sixty six thousand, six hundred and twenty two) shares at the record date, which number will

increase by virtue of any subdivision of shares or decrease by virtue of any consolidation of shares,

as the case may be, all of which documents together with the trust deed

and the existing schedules thereto governing the ESOP and the SAR Scheme No. 1 and the RSP

Scheme lay open for inspection at the registered office of the Company.

Note: The reasons for and effect of this Special Resolution Number 5 are to, in terms of the

Companies Act read with the Listing Requirements in so far as may be necessary, approve the

amendment to the trust deed pertaining to the share option scheme as set out in this Special

Resolution Number 5, and accordingly the number of shares placed under the control of the

directors until the next Annual General Meeting of the Company for purposes of allotment and

issue under the share option schemes of the Company in force governed in terms of the Novus

Holdings Share Trust deed, subject to the Companies Act, the MOI of the Company and the Listing

Requirements will henceforth be limited to the abovementioned lower number of issued shares,

subject to the adoption of this Special Resolution Number 5.

General Note: Share Purchases

The directors have no specific intention at present for the Company to repurchase/purchase any

of its shares, but consider that such a general authority should be put in place should an opportunity

present itself to do so during the financial year, which is in the best interests of the Company and

its shareholders.

Before entering the market to effect the general repurchase/purchase (Special Resolution Number

4) the directors, having considered the effects of the repurchase/purchase of the maximum number

of ordinary shares in terms of the aforegoing authority, will ensure that for a period of 12 (twelve)

months after the date of the notice of the Annual General Meeting:

the Company and its subsidiaries (“the Group”) will be able, in the ordinary course of business, to

pay their debts;

the assets of the Group, fairly valued in accordance with International Financial Reporting

Standards, will exceed the liabilities of the Group;

the share capital and the reserves of the Group will be adequate for ordinary business purposes;

and

the working capital of the Group will be adequate for ordinary business purposes.


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Note: The reasons for and effect of this Special Resolution Number 6 is to, in terms of the

Companies Act read with the Listing Requirements in so far as may be necessary, grant the

directors of the Company through the ESOP the authority to establish the SAR Scheme No. 2

– Performance Criteria and the Deferred Bonus Scheme as additions to the options already

granted under the ESOP and the additional employee incentive scheme in the form of a share

appreciation rights scheme – “SAR Scheme No. 1” – and a restricted stock plan scheme –

“RSP Scheme” – and authority to grant the respective rights to eligible employees determined

by the Board of directors of the Company, in accordance with the rules respectively governing

the SAR Scheme No. 2 – Performance Criteria and the Deferred Bonus Scheme read with

the terms and conditions of the ESOP to the extent required. The rules governing the SAR

Scheme No. 2 – Performance Criteria and the Deferred Bonus Scheme have been approved

by the JSE in writing in accordance with Schedule 14 of the Listing Requirements and the

Salient Features of the SAR Scheme No. 2 – Performance Criteria and the Deferred Bonus

Scheme are contained in Annexure 2. The summary of the Salient Features of these schemes

is not exhaustive of all the terms and shareholders should review the full trust deed of the

ESOP together with the schedules governing the SAR Scheme No. 1 and the RSP Scheme as

well as the newly added SAR Scheme No. 2 – Performance Criteria and the Deferred Bonus

Scheme should they require further information in relation thereto.

19. SPECIAL RESOLUTION NUMBER 6 – APPROVAL OF AMENDMENT TO THE ESOP BY THE ADDITION OF FURTHER SCHEMES

19.1 SPECIAL RESOLUTION NUMBER 6.1 – Amendment of ESOP by the addition of

further Schemes

Resolved that, in terms of sections 38 and 40, as read with section 41(1) but subject to

section 97, of the Companies Act and clause 7.7 of the MOI, to the extent required to give

effect to the Novus Holdings Share Trust (being the existing share scheme for employees –

“ESOP” – and the additional employee incentive scheme in the form of a share appreciation

rights scheme – “SAR Scheme No. 1” – and a restricted stock plan scheme – “RSP Scheme”)

in compliance with clause 13 of the trust deed governing the ESOP, read with paragraphs

14.1 and 14.2 of the Listing Requirements, an additional employee incentive scheme to the

ESOP, the SAR Scheme No. 1 and the RSP Scheme, in the form of a share appreciation rights

scheme coupled to performance criteria (“SAR Scheme No. 2 – Performance Criteria”) and

a deferred bonus share plan scheme (“Deferred Bonus Scheme”), in the form of the two

schedules respectively to the trust deed governing the ESOP, be and is hereby approved, all of

which documents, as tabled at the Annual General Meeting and that lay open for inspection

at the registered office of the Company, the chairperson of the Company be and is hereby

authorised to sign upon its approval for identification and registration purposes.

19.2 SPECIAL RESOLUTION NUMBER 6.2 – Grant of rights under SAR Scheme No. 2 –

Performance Criteria

Resolved that, the directors of the Company through the ESOP be and are hereby authorised

to grant share appreciation rights coupled to performance criteria (“SARs – Performance

Criteria”) under this SAR Scheme No. 2 to executive directors and senior management

(being part of the “employees” as defined in the trust deed of the ESOP) at nil consideration

for the grant, and the vesting and exercise of the SARs or in respect of the settlement of

SARs be furthermore in accordance with and subject to the rules governing the SAR Scheme

No. 2 as set out in the applicable schedule to the ESOP read in conjunction with the terms

and conditions of the ESOP, to be settled at the preference of the Board of directors of the

company in its discretion primarily in ordinary no par value shares of the Company and only

as fallback in cash, after vesting upon fulfilment of the applicable employment conditions

and period in conjunction with the applicable performance criteria, and exercise by the

participant of his SARs (in addition to any shares issued in terms of any other authority given

to the directors, but subject to the limitations in respect of the maximum number of shares

of the Company available under all employee incentive schemes in force and the limit of

participation applicable to each participant as set out in the ESOP and confirmed in respect

of the SAR Scheme No. 2), and furthermore upon the terms, conditions and timeframes as

are contained in the trust deed governing the ESOP read with the rules governing the

SAR Scheme No. 2.

19.3 SPECIAL RESOLUTION NUMBER 6.3 – Grant of rights under the Deferred Bonus Scheme

Resolved that, the directors of the Company through the ESOP be and are hereby authorised

to grant conditional rights to deferred bonus shares under the Deferred Bonus Scheme to

executive directors and senior management (being part of the “employees” as defined in

the trust deed of the ESOP) at nil consideration for the grant as a mandatory and automatic

deferral mechanism of a portion of an employee’s annual bonus if elected by the employee

to participate, and the vesting of the bonus shares or in respect of the settlement of the bonus

shares be furthermore in accordance with and subject to the rules governing the Deferred

Bonus Scheme as set out in the applicable schedule to the ESOP read in conjunction with the

terms and conditions of the ESOP, to be settled at the preference of the board of directors

of the Company in its discretion, primarily in ordinary no par value shares of the Company

and only as fallback in cash, after automatic vesting upon fulfilment of the applicable

employment conditions and period (in addition to any shares issued in terms of any other

authority given to the directors, but subject to the limitations in respect of the maximum

number of shares of the Company available under all employee incentive schemes in force

and the limit of participation applicable to each participant as set out in the ESOP and

confirmed in the Deferred Bonus Scheme), and furthermore upon the terms, conditions

and timeframes as are contained in the trust deed governing the ESOP read with the rules

governing the Deferred Bonus Scheme.


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20. SPECIAL RESOLUTION NUMBER 7 – IMPLEMENTATION OF THE ODD-LOT OFFER IN TERMS OF THE SPECIFIC AUTHORITY TO REPURCHASE SHARES FROM THE ODD-LOT HOLDERS

Resolved that, subject to passing of Ordinary Resolution Number 10 above, the Company is hereby

authorised by way of a specific authority in terms of section 48 of the Companies Act read with

clause 22 of the Company’s memorandum of incorporation and in accordance with the Listing

Requirements, to acquire, at the offer price per share pursuant to the Odd-lot Offer, details of which

are contained in the Annexure (1) that forms part of the Notice, the shares of those Odd-lot Holders

holding fewer than 100 shares in the Company, who elect, pursuant to the Odd-lot Offer,

to sell their Odd-lot Holdings or who do not make an election to retain their Odd-lot Holdings.

Note: The reason for this Special Resolution Number 7 is to obtain a specific approval in terms

of section 48 of the Companies Act, the Listing Requirements and the Company’s memorandum

of incorporation for the acquisition by the Company, from the Odd-lot Holders of their Odd-lot

Holdings as proposed in the Odd-lot Offer Circular. The effect of this Special Resolution Number 7

is that the Company will be authorised to acquire these shares in terms of the Odd-lot Offer from

the Odd-lot Holders who elect to sell their Odd-lot Holding or who do not make an election. The

effect of the Odd-lot Offer, if implemented, will further be that the Odd-lot Holdings repurchased

by the Company will be cancelled and form part of the authorised share capital of the Company.

21. ORDINARY RESOLUTION NUMBER 11 – SIGNING POWERS Resolved that, any director of the Company and, where applicable, the company secretary, be

and is hereby authorised to do all such things, sign all such documentation and take all such actions

as may be necessary to implement the abovementioned special and ordinary resolutions, hereby

ratifying, allowing and confirming all and whatsoever the director and, where applicable, the

company secretary, shall lawfully do or cause to be done or might have done in the premises

by virtue of these present.


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The definitions and interpretations commencing on page 286 of this Annexure apply to this section “Action

required by Novus Shareholders”.

This Annexure is important and requires your immediate attention. The action you need to take is set out

below. If you are in any doubt as to what action to take, please consult your broker, CSDP, banker, attorney,

accountant or other professional advisor immediately. If you have disposed of all of your Novus Shares,

this Annexure should be handed to the purchaser to whom, or the CSDP, broker or other agent through

whom, the disposal was effected.

The Annual General Meeting of Novus Shareholders will be held at 10 Freedom Way, Marconi Beam,

Montague Gardens (registered address of the Company) on Friday, 17 August 2018, at 10h00, at which

Novus Shareholders will be requested to consider and, if deemed fit, to pass, with or without modification,

the Resolutions set out in the Notice of Annual General Meeting to which this Annexure is attached.

ACTIONS REQUIRED BY NOVUS SHAREHOLDERS IN RESPECT OF THE ANNUAL GENERAL MEETINGShareholders are referred to the Notice of Annual General Meeting to which this Annexure 1 is attached

for the actions required by Shareholders in respect of the Annual General Meeting.

ACTIONS REQUIRED BY NOVUS SHAREHOLDERS IN RESPECT OF THE ODD-LOT OFFERIf you own fewer than 100 Shares in total as at the close of business on Friday, 07 September 2018, you

are an Odd-lot Holder.

If you are an Odd-lot Holder you must choose to either:

sell your Odd-lot Holding to Novus, at the Offer Price; or

retain your Odd-lot Holding.

Those Odd-lot Holders who do not make an election by completing the attached Form of Election and

Surrender for the Odd-lot Offer and returning it to the Transfer Secretaries to be received by no later

than 12h00 on Friday, 07 September 2018 will automatically be regarded as having accepted the Odd-

lot Offer and chosen to receive the Cash Consideration.

1. IF YOU ARE A CERTIFICATED ODD-LOT HOLDER 1.1 You must complete the Form of Election and Surrender for the Odd-lot Offer (blue) and select

one of the two choices to either sell or retain your Odd-lot Holding.

1.2 If you choose to retain your Odd-lot Holding you must make sure that you complete the

Form of Election and Surrender for the Odd-lot Offer (blue) and return it to the Transfer

Secretaries at the address set out in that form to be received by no later than Friday,

07 September 2018. If the Transfer Secretaries do not receive your completed form in time,

you will automatically be regarded as having accepted the Odd-lot Offer and you will receive

the Cash Consideration.

1.3 If any Documents of Title of Certificated Odd-lot Holders have been lost or destroyed and the

Odd-lot Holder concerned produces evidence to this effect to the satisfaction of the Transfer

Secretaries and Novus, then the Transfer Secretaries, subject to obtaining Novus’s consent,

may dispense with the surrender of such existing Documents of Title against provision of

an acceptable indemnity.

2. IF YOU ARE A DEMATERIALISED ODD-LOT HOLDER WITH OR WITHOUT ‘OWN NAME’ REGISTRATION

2.1 Your CSDP or broker is obliged to contact you in the manner stipulated in the agreement

concluded between you and your CSDP or broker to ascertain what choice you wish to make

in terms of the Odd-lot Offer and thereafter to advise the Transfer Secretaries of such choice.

2.2 If you have not been contacted, you should contact your CSDP or broker and furnish them

with your instructions relating to your choice.

2.3 If your CSDP or broker does not obtain instructions from you regarding your choice, they will

be obliged to act in accordance with the provisions contained in the agreement concluded

between you and your CSDP or broker.

2.4 You must NOT complete the Form of Election and Surrender for the Odd-lot Offer (blue).

ANNEXURE 1 - INFORMATION IN RESPECT OF THE ODD-LOT OFFER

2018

Record date to receive Notice of Annual General Meeting Friday, 22 June

Integrated Annual Report (together with Notice of Annual General Meeting) distributed to shareholders on

Friday, 29 June

Announcement relating to the issue of the Integrated Annual Report (together with Notice of Annual General Meeting) released on SENS on

Friday, 29 June

Last day to trade in order to be eligible to attend and vote at the Annual General Meeting

Monday, 06 August

Record date to determine which Shareholders are entitled to attend and vote at the Annual General Meeting

Friday, 10 August

Last day to lodge forms of proxy for the Annual General Meeting (by 10h00) Wednesday, 15 August

Annual General Meeting at 10h00 Friday, 17 August

Results of Annual General Meeting released on SENS Friday, 17 August

Odd-lot Offer opens at 09h00 Tuesday, 21 August

Finalisation announcement (including the final Offer Price) released in the press on or before

Wednesday, 29 August

Last date to trade in order to participate in the Odd-lot Offer Tuesday, 04 September

Shares trade “ex” the Odd-lot Offer Wednesday, 05 September

Form of Election and Surrender for the Odd-lot Offer (blue) to be received by the Transfer Secretaries by 12h00 on

Friday, 07 September

Odd-lot Offer closes at 12h00 on Friday, 07 September

Record date for the Odd-lot Offer (to determine which Shareholders are entitled to participate in the Odd-lot Offer) at close of business on

Friday, 07 September

The definitions and interpretations commencing on page 286 of this Annexure 1 apply mutatis mutandis to

this section:

SALIENT DATES AND TIMES


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2018

Implementation of the Odd-lot Offer takes effect on Monday, 10 September

Dematerialised Odd-lot Holders who have accepted the Odd-lot Offer or are deemed to have accepted the Odd-lot Offer will have their accounts held at their CSDP or broker credited with the Offer Price on

Monday, 10 September

Payments of the Offer Price to Certificated Odd-lot Holders who have accepted the Odd-lot Offer on

Monday, 10 September

Results of the Odd-lot Offer released on SENS on Monday, 10 September

Cancellation and termination of listing of Novus Shares repurchased in terms of the Odd-lot Offer expected on or about

Thursday, 13 September

Notes:

1. The above dates and times are subject to change. Any changes will be published on SENS.

2. All times quoted in this Annexure are local times in South Africa.

3. Dematerialised Odd-lot Holders are requested to notify their duly appointed CSDP or broker of their

election by the cut-off time stipulated by their CSDP or broker. This will be an earlier date than the closing

date of the Odd-lot Offer.

4. In the case of Certificated Odd-lot Holders who choose the Cash Consideration, payment will be made

either by:

4.1 electronic funds transfer into the bank accounts of the Odd-lot Holders on or about Monday,

10 September 2018, if such holders’ banking details have been provided in the relevant Form of

Election and Surrender; or

4.2 by cheque, which will be posted at the risk of the Odd-lot Holders on Monday, 10 September 2018, if

such holders’ banking details have not been provided in the relevant Form of Election and Surrender.

5. Those Odd-lot Holders who do not make an election will automatically be regarded as having chosen and

accepted the Cash Consideration.

6. If the Annual General Meeting is adjourned or postponed, Forms of Proxy submitted for the initial Annual

General Meeting will remain valid in respect of any adjournment or postponement of the Annual General

Meeting unless the contrary is stated on such Forms of Proxy.

7. Share certificates may not be dematerialised or rematerialised between Wednesday, 5 September 2018

and Friday, 7 September 2018, both days inclusive.

DEFINITIONS AND INTERPRETATIONS

In this Annexure, unless the context indicates a contrary intention, an expression which denotes any

gender includes the other genders, any reference to a natural person includes a juristic person and vice

versa, the singular includes the plural and vice versa and the following expressions bear the meanings

assigned to them, below:

“Annexure” or “Annexure 1” all documents contained in this Annexure 1 attached to the Notice of Annual General Meeting;

“Annual General Meeting” the annual general meeting of Shareholders to be held at 10 Freedom Way, Marconi Beam, Montague Gardens (registered address of the Company) on Friday, 17 August 2018, at 10h00;

“Board” or “Directors” the Board of directors of Novus;

“Business Day” any day other than a Saturday, Sunday or an official public holiday in South Africa;

“Cash Consideration” the cash Offer Price to be received by: Odd-lot Holders who elect to sell their Shares or who do not make an election;

“Certificated Odd-lot Holders” Odd-lot Holders who hold Certificated Shares;

“Certificated Shareholders” Shareholders who hold Certificated Shares;

“Certificated Shares” shares which have not yet been dematerialised, title to which is represented by a share certificate or other Documents of Title;

“Common Monetary Area” South Africa, the Republic of Namibia and the Kingdoms of Lesotho and Swaziland;

“Companies Act” the Companies Act, No. 71 of 2008, as amended;

“Condensed Annual Report” Novus’s condensed annual report for the year ended 31 March 2018. A copy of the condensed annual report is being sent to Shareholders who have indicated that they would like to receive financial information in respect of the Company, together with this Notice of Annual General Meeting;

“CSDP” Central Securities Depository Participant;

“DBE Contract” a contract awarded by the South African Department of Basic Education (DBE) to print, bind and distribute workbooks to schools across South Africa for a three-year period, being the 2018, 2019 and 2020 academic years;

“Dematerialised Shareholders” holders of Dematerialised Shares;

“Dematerialised Shares” Shares which have been incorporated into the Strate system and which are no longer evidenced by share certificates;

“Documents of Title” share certificates, certified transfer deeds, balance receipts or any other documents of title to Shares acceptable to the Board;

“Exchange Control Regulations” the Exchange Control Regulations, 1961, as amended, issued in terms of section 9 of the Currency and Exchanges Act, No. 9 of 1933, as amended;

“Financial Markets Act” the Financial Markets Act, No. 19 of 2012, as amended;

“Form of Election and Surren-der for the Odd-lot Offer”

form of election and surrender for use by Certificated Odd-lot Holders in order for such Shareholders to sell or retain their Odd-lot Holding (blue);

“Form of Proxy” the Form of Proxy (grey) for use by Certificated Shareholders and Dematerialised Shareholders with “own name” registration to appoint a proxy to represent such shareholders at the Annual General Meeting;

“Income Tax Act” the Income Tax Act, No. 58 of 1962;

“Integrated Annual Report” Novus’s integrated annual report for the year ended 31 March 2018. An electronic copy of the integrated annual report is available on the Company’s website, https://novus.holdings/investor-relations/;

“JSE” the exchange, licensed under the Financial Markets Act, operated by the JSE Limited (registration number 2005/022939/06), a public company incorporated under the laws of South Africa and licensed as an exchange under the Financial Markets Act;

“Last Practicable Date” the last practicable date prior to the finalisation of this Annexure, being 13 June 2018;

“Link Market Services” or “Transfer Secretaries”

Link Market Services South Africa (Proprietary) Limited (registration number 2000/007239/07), a private company incorporated under the laws of South Africa;

“Listing Requirements” the Listings Requirements of the JSE;

“Major Subsidiary” a subsidiary that represents 25% or more of total assets or revenue of the consolidated Group based on the latest published interim or year-end financial results;

“Notice of Annual General Meeting”

the notice of the Annual General Meeting of Shareholders forming part of this Condensed Annual Report;

“Novus” or “the Company” or “Group”

Novus Holdings Limited (registration number 2008/011165/06), a public company incorporated under the laws of South Africa;

“Novus Shareholders” or “Shareholders”

holders of Shares;

“Odd-lot Holders” Shareholders holding an Odd-lot Holding as at the record date of the Odd-lot Offer;


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1. INTRODUCTIONIn order to reduce the substantial and ongoing costs of administration connected with a large number

of Odd-lot Holders, and to provide them with a cost-free method of realising their investment in the

Company, the Board would like to propose the implementation of an Odd-lot Offer.

The purpose of this Annexure 1 is to furnish the Company’s Shareholders with all the relevant information

relating to the Odd-lot Offer to enable Shareholders at the Annual General Meeting to inter alia consider,

and if deemed fit, approve, with or without amendment, the Resolutions necessary to implement the Odd-

lot Offer in terms of the Notice of Annual General Meeting to which this Annexure 1 is attached.

As at the Last Practicable Date, approximately 35 074 Shareholders (Odd-lot Holders), being 79,3% of the

total number of Shareholders, hold fewer than 100 Shares each in the issued share capital of Novus. These

Shareholders hold approximately 744 410 Shares in aggregate, which constitutes approximately 0,21% of

the total number of Novus Shares in issue.

The Shareholders from whom Shares will be purchased in terms of the Odd-lot Offer are all Shareholders

who hold in aggregate fewer than 100 shares as at the Odd-lot Offer Record Date.

2. ODD-LOT OFFER ELECTION CRITERIAIn terms of the Odd-lot Offer, Odd-lot Holders may:

Elect to sell their Odd-lot Holding for the Cash Consideration; or

Elect to retain their Odd-lot Holding.

Those Odd-lot Holders who do not make an election will automatically be regarded as having chosen to

sell their Odd-lot Holding for the Offer Price.

3. TERMS OF THE ODD-LOT OFFER 3.1 Mechanism for the Odd-lot Offer

“Odd-lot Holding” an aggregate shareholding of fewer than 100 ordinary Shares;

“Odd-lot Offer” the offer to Odd-lot Holders to repurchase all of their Shares at the Offer Price;

“Odd-lot Offer Record Date” The date and time at which Odd-lot Holders must be recorded in the register in order to participate in the Odd-lot Offer, which is expected to be Friday, 07 September 2018;

“Offer Price” The offer price of R4,0273, being the volume weighted average traded price of Novus’s Shares on the JSE for the 30 trading days immediately prior to the Last Practicable Date, plus a 5% premium;

“Resolutions” Ordinary Resolution Number 10 and Special Resolution Number 7 set out in the Notice of Annual General Meeting to which this Annexure is attached;

“Shares” Ordinary shares of no par value in the Company’s issued share capital;

“South Africa” the Republic of South Africa; and

“Strate” Strate Proprietary Limited (registration number 1998/022242/07), a private company incorporated under the laws of South Africa, a central securities depository licensed in terms of the Financial Markets Act and responsible for the electronic clearing and settlement system provided to the JSE.

3.1.1 Subject to the fulfilment of the Odd-lot Offer conditions precedent in paragraph 5

below, Odd-lot Holders who hold fewer than 100 Shares at the close of business on

the Odd-lot Offer Record Date will be afforded the opportunity to take part in the

Odd-lot Offer.

3.1.2 The Shares of those Odd-lot Holders who elect to accept the Cash Consideration

under the Odd-lot Offer will be repurchased at the Offer Price. Any such

repurchase will be regarded as a specific repurchase of Shares in terms of the Listing

Requirements.

3.1.3 Odd-lot Holders who do not make an election will automatically be regarded as

having elected to sell their Odd-lot Holding, without any further action on their part

and without any further notice to them and their Shares will be repurchased at the

Offer Price. Any such repurchase will be regarded as a specific repurchase of Shares in

terms of the Listing Requirements.

3.1.4 Odd-lot Holders may elect to retain their Odd-lot Holdings and will remain Odd-lot

Holders post the implementation of the Odd-lot Offer.

3.1.5 The Odd-lot Holdings repurchased by Novus shall be cancelled and form part of the

authorised share capital of Novus after the termination of the listing of these Novus

Shares thus repurchased.

3.2 Odd-lot Offer Record Date

The record date is the close of business on Friday, 7 September 2018. If a Shareholder holds

fewer than 100 Shares on the record date, such Shareholder is an Odd-lot Offer Holder and,

as such, is entitled to take part in the Odd-lot Offer.

3.3 Odd-lot Offer Last Day to Trade

Shareholders are advised that the last date to trade in order to take part in the Odd-lot Offer

will be Tuesday, 4 September 2018. Any Shareholder who sells down to below 100 Shares

after Tuesday, 4 September 2018 will not be treated as an Odd-lot Holder for the purposes

of the Odd-lot Offer. If an Odd-lot Holder acquires additional Shares by close of business on

Tuesday, 4 September 2018 and the Odd-lot Holder’s shareholding at the close of business

on Friday, 7 September 2018 exceeds 99, such Shareholder will not be treated as an Odd-lot

Holder.

4. THE OFFER PRICEThe Offer Price comprises a Cash Consideration of R4,0273 per Odd-Lot Share, equivalent to the

volume weighted average price at which Novus Shares traded for the 30 (thirty) days preceding the Last

Practicable Date, plus a 5% (five percent) premium. Shareholders who choose the Cash Consideration will

receive the product of the Offer Price multiplied by the number of Novus Shares held by them on the Odd-

lot Offer Record Date.

5. CONDITIONS PRECEDENTThe implementation of the Odd-lot Offer is subject to the fulfilment of the conditions precedent that the

Resolutions relating to the Odd-lot Offer contained in the Notice of Annual General Meeting attached to

and forming part of this Annexure are duly passed.

6. COMPULSORY SALE OF ODD-LOT HOLDINGS 6.1 Novus will repurchase the Odd-lot Holdings of any Odd-lot Holder who does not make an

election or who chooses the Cash Consideration.


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6.2 Those Odd-lot Holders who do not make an election will automatically be regarded as having

chosen and accepted the Cash Consideration.

7. TRANSACTION COSTS 7.1 Save as set out in paragraph 7.4 below, Odd-lot Holders will not have to bear any transaction

costs.

7.2 The transfer costs of Odd-lot Holders who sell their holdings to Novus will be borne by Novus.

7.3 Novus, by proposing the Odd-lot Offer, is therefore making it possible for the Odd-lot Holders

who wish to dispose of their shareholding to do so in a cost-effective manner.

7.4 The Cash Consideration payable to Odd-lot Holders will constitute a “distribution” in terms

of the Companies Act and thus also a “dividend” as defined in section 1 of the Income Tax Act.

The Cash Consideration will give rise to a liability for dividends tax in accordance with the

Income Tax Act in the event that any Odd-lot Holder does not qualify for an exemption from

the dividends tax.

7.5 In the event that any Odd-lot Holder does not qualify for an exemption from the dividends

tax, Novus will withhold the relevant portion from the Cash Consideration in relation to a

particular Shareholder in order to make payment of such liability for dividends tax.

8. ELECTION AND SURRENDER PROCEDURE 8.1 Odd-lot Holders may choose to either:

8.1.1 Sell their Odd-lot Holdings to Novus at the Offer Price; or

8.1.2 Retain their Odd-lot Holdings. If such Shareholders want to retain their Odd-lot

Holding they have to make this election. Those Odd-lot Holders who do not make

an election will automatically be regarded as having chosen and accepted the Cash

Consideration.

8.2 The choice made by Odd-lot Holders is final and may not be withdrawn once made.

8.3 Certificated Odd-lot Holders must complete the attached Form of Election and Surrender for

the Odd-lot Offer (blue) and return it to Link Market Services, to be received by no later than

12h00 on Friday, 07 September 2018.

8.4 Dematerialised Odd-lot Holders should instruct their CSDP or broker as to what action they

wish to take in the time and manner stipulated in the agreement entered into between them

and their CSDP or broker. Dematerialised Odd-lot Holders must NOT return their respective

forms to Link Market Services.

8.5 If any Documents of Title of Certificated Odd-lot Holders have been lost or destroyed and

the Odd-lot Holder concerned produces evidence to this effect to the satisfaction of Link

Market Services and Novus, then Link Market Services, subject to obtaining Novus’s consent,

may dispense with the surrender of such existing Documents of Title against provision of an

acceptable indemnity.

8.6 Receipts for the surrender of Documents of Title of Certificated Odd-lot Holders will be

issued only on request. In compliance with the Listing Requirements, lodging agents are

requested to prepare special transaction receipts, if required.

8.7 In the event of an Odd-lot Holder not making an election to retain his Odd-lot Holding it must

be drawn to his attention that his share certificates will no longer be good for delivery after

the last day to trade in respect of the Offers, other than to receive the proceeds of the sale of

such Shares (being the Offer Price), upon surrender.

8.8 Subject to the implementation of the Odd-lot Offer, it will be necessary for Certificated Odd-

lot Holders who have elected to sell their Odd-lot Holdings (as the case may be), either by

completing the relevant option set out in the appropriate Form of Election and Surrender for

the Odd-lot Offer or by not responding, to submit all existing Documents of Title under cover

of the attached Form of Election and Surrender for the Odd-lot Offer to Link Market Services.

8.9 Securities transfer tax, if any, will be paid by Novus.

8.10 Nominee companies will be treated as a single Shareholder, but should a nominee company

choose to dispose of Odd-lot Holdings on behalf of principals whose shareholdings constitute

Odd-lot Holdings, it may do so by applying in writing to Link Market Services, giving details

of the number of Shares involved, such application to be received by no later than 12h00 on

Friday, 7 September 2018.

8.11 For those Odd-lot Holders who choose the Cash Consideration, all Forms of Election and

Surrender for the Odd-lot Offer, received by Link Market Services by no later than 12h00 on

Friday, 7 September 2018, will be processed and payment will be made by electronic funds

transfers into the Shareholders’ bank accounts on or about Monday, 10 September 2018, if

such Shareholders have provided the banking details on the Form of Election and Surrender

for the Odd-lot Offer. Alternatively, if the Shareholders have not provided their banking

details on the Form of Election and Surrender for the Odd-lot Offer, cheques will be posted on

or about Monday, 10 September 2018, by ordinary post, to the respective Shareholders at the

risk of such Shareholders.

8.12 In respect of Dematerialised Odd-lot Holders who elect to participate in the Odd-lot Offer, or

in the case of Odd-lot Holders who fail to make an election, their accounts held at their CSDP

or broker will be credited with the cash amount on or about Monday, 10 September 2018.

9. FINANCIAL EFFECTS AND SOURCE OF FUNDS 9.1 The repurchase of Shares pursuant to the Odd-lot Offer will reduce the share capital of the

Company as detailed in paragraph 16 and increase the expenses of Novus.

9.2 Assuming the maximum number of 744 410 Shares are repurchased in terms of the Odd-

lot Offer, the financial cost is expected to be approximately R3 000 000 (excluding transfer

costs), plus transaction costs of approximately R575 000.

9.3 Novus’s existing cash resources will be utilised to satisfy all cash requirements arising out of

the Odd-lot Offer.

10. ADEQUACY OF CAPITALHaving considered the possible effects of repurchasing Shares in terms of the Odd-lot Offer, the Directors

are of the opinion that:

10.1 The solvency and liquidity requirements of section 4 read with section 48 of the Companies

Act have been met in respect of the Odd-lot Offer and, since the test was performed, there

have been no material changes to the financial position of the Group;

10.2 Novus will be able in the ordinary course of business to pay its debts for a period of 12 months

after the date of the approval of the Annexure;

10.3 The assets of Novus will be in excess of the liabilities of Novus for a period of 12 months

after the date of the approval of the Annexure. For this purpose, assets and liabilities will be

recognised and measured in accordance with the accounting policies used in the latest


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audited consolidated annual financial statements;

10.4 The share capital and reserves of Novus will be adequate for ordinary business purposes for

a period of 12 months after the date of the approval of the Annexure; and

10.5 Working capital of Novus will be adequate for ordinary business purposes for a period of

12 months after the date of the approval of this Annexure.

11. NON-RESIDENT SHAREHOLDERS 11.1 All transactions arising from the provisions of this Annexure shall be governed by and be

subject to the laws of South Africa. The Odd-lot Offer may be affected by the laws of the

relevant jurisdictions of foreign Shareholders. Such foreign Shareholders should acquaint

themselves with and observe any applicable legal requirements of such jurisdictions in

relation to all aspects of this Annexure that may affect them.

11.2 The release, publication or distribution of this Annexure in jurisdictions other than South

Africa may be restricted by law and therefore any persons who are subject to the laws of

any jurisdiction other than South Africa should acquaint themselves with, and observe,

any applicable requirements. Any failure to comply with the applicable requirements may

constitute a violation of the securities laws of any such jurisdiction.

11.3 It is the responsibility of any foreign Shareholder to satisfy himself as to the full observation

of the laws and regulatory requirements of the relevant jurisdiction in connection with

the Odd-lot Offer, including the obtaining of any governmental, exchange control or other

consent or the making of any filings which may be required, the compliance with other

necessary formalities, the payment of any issue, transfer or other taxes or requisite payments

due in such jurisdiction. The Odd-lot Offer are further subject to any other applicable laws

and regulations, including the Exchange Control Regulations.

11.4 Any foreign Shareholder who is in doubt as to his position, including, without limitation, his

tax status, should consult an appropriate independent professional advisor in the relevant

jurisdiction without delay.

12. EXCHANGE CONTROL REGULATIONSThe following is a summary of the Exchange Control Regulations. It is intended as a guide only and is

not a comprehensive statement of the Exchange Control Regulations which apply to Shareholders.

Shareholders who have any queries regarding the Exchange Control Regulations should contact their

own professional advisors without delay.

12.1 Emigrants from the Common Monetary Area

12.1.1 The Cash Consideration is not freely transferable from South Africa and must be dealt

with in terms of the Exchange Control Regulations.

12.1.2 The Cash Consideration due to an Odd-lot Holder who is an emigrant from South Africa,

whose registered address is outside the Common Monetary Area and whose Documents

of Title have been restrictively endorsed under the Exchange Control Regulations, will

be deposited in a blocked account with the Odd-lot Holder’s authorised dealer in foreign

exchange in South Africa (controlling the Odd-lot Holder’s blocked assets in accordance

with his instructions), against delivery of the relevant Documents of Title.

12.1.3 The authorised dealer releasing the relevant Documents of Title in terms of the Odd-lot

Offer must countersign the relevant attached Form of Election and Surrender for the

Odd-lot Offer, thereby indicating that the Cash Consideration will be placed directly in its

control.

12.1.4 The attached Form of Election and Surrender for the Odd-lot Offer makes provision

for the details of the authorised dealer concerned to be provided.

12.2 All other non-residents of the Common Monetary Area

12.2.1 The Cash Consideration due to an “own-name” Odd-lot Holder who is a non-resident

of South Africa and who has never resided in the Common Monetary Area, whose

registered address is outside the Common Monetary Area and whose Documents

of Title have been restrictively endorsed under the Exchange Control Regulations,

will be deposited with the authorised dealer in foreign exchange in South Africa

nominated by such Odd-lot Holder. It will be incumbent on the Odd-lot Holder

concerned to instruct the nominated authorised dealer as to the disposal of the Cash

Consideration against delivery of the relevant Documents of Title.

12.2.2 The relevant Form of Election and Surrender for the Odd-lot Offer attached to this

Annexure makes provision for the nomination required in terms of paragraph 12.2.1

above. If the information regarding the authorised dealer is not given in terms

of paragraph 12.2.1 above, the Cash Consideration will be held in trust by Novus for

the Odd-lot Holders concerned pending receipt of the necessary information

or instruction.

12.2.3 All CSDPs and brokers with whom Shares have been dematerialised should note that

they are required to comply with the Exchange Control Regulations set out above.

13. PROHIBITED PERIODNovus will not undertake the Odd-lot Offer during a prohibited period as defined in the Listing

Requirements.

14. MEMORANDUM OF INCORPORATIONThe Memorandum of Incorporation of Novus provides the Directors with the authority to make and

implement the Odd-lot Offer and the repurchase of its own Shares in accordance with the Listing

Requirements.

15. MATERIAL CHANGESThere have been no negative material changes in the financial or trading position of Novus since the

publication of Novus’s annual financial statements for the year ended 31 March 2018.

16. SHARE CAPITAL 16.1 The authorised and issued share capital of Novus before the implementation of the Odd-lot

Offer is as follows:

Number of Shares R’000

Authorised share capital

Shares of no par value 3 000 000 000Issued share capital prior to the implementation of the Odd-lot Offer

Shares of no par value 347 332 454 606 040

Treasury Shares 27 786 597 368 172


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16.2 The authorised and issued share capital of Novus after the implementation of the Odd-lot

Offer is as follows:Number of

Shares R’000

Authorised share capital

Shares of no par value 3 000 000 000Issued share capital prior to the implementation of the Odd-lot Offer

Shares of no par value 346 588 044 603 040

Treasury Shares 27 786 597 368 172

18. DIRECTORS’ BENEFICIAL INTERESTThe beneficial interest in Shares held by all the Directors of Novus as at the Last Practicable Date are

set out below:

DirectorNumber of Shares

held directlyNumber of Shares

held indirectlyTotal number of

Shares held

Executive

N Birch — 364 742 364 742

K Vroon1 1 910 329 625 023 2 535 352

E Fivaz2 — — —

Total 1 910 329 989 765 2 900 094

1 K Vroon resigned effective 15 June 2018. 2 E Fivaz resigned effective 31 March 2018. He had a direct interest of 764 131 Shares through the Novus Holdings

Share Option scheme.

19. MAJOR SHAREHOLDERSAs far as the Directors are aware, as at the Last Practicable Date, the following Shareholders hold 5%

(five percent) or more of the issued Shares of the Company.

Name of Shareholder % heldNumber of Shares

owned

Media24 (Proprietary) Limited 17,48% 60 713 713

Prudential Portfolio Managers 13,56% 47 103 452

Value Capital Partners 10,72% 37 250 735

Investec Asset Management Limited 8,98% 31 207 151

Novus Holdings Share Trust 7,00% 24 313 272

17. DIRECTORS 17.1 The full names, ages, business address and capacities of the Directors of Novus Holdings and

its major subsidiaries are set out below:

Full Name Age Capacity Company Business Address

Neil Birch 57 Chief executive officer Novus Holdings Ltd 10 Freedom Way, Marconi Beam, Montague Gardens

Jan Potgieter 49 Acting chairman, Lead, Independent non-executive director

Novus Holdings Ltd 10 Freedom Way, Marconi Beam, Montague Gardens

Sandile Zungu 51 Independent non-executive director


Christoffel Botha 58 Independent non-executive director


Bernard Olivier 64 Independent non-executive director


Noluvuyo Mkhondo 34 Non-independent, non-executive director


Lulama Mtanga 47 Independent non-executive director


Michael Ehret 54 Director of Major Subsidiary

Paarl Media Holdings (Pty) Ltd

10 Freedom Way, Marconi Beam, Montague Gardens

Nicolaas Grobbelaar

57 Director of Major Subsidiary



Peter Metcalfe 54 Director of Major Subsidiary



Paul de Bruin 53 Director of Major Subsidiary

Paarl Media (Pty) Ltd 10 Freedom Way, Marconi Beam, Montague Gardens

Pieter le Roux 64 Director of Major Subsidiary


Kelvin Pillay 42 Director of Major Subsidiary


Craig Wright 44 Director of Major Subsidiary


Conrad Rademeyer 45 Director of Major Subsidiary


Ralph Ruthford 46 Director of Major Subsidiary


17.2 An abridged curriculum vitae for each of the Directors of Novus Holdings Ltd is set out in the

Integrated Annual Report.

20. LITIGATIONShareholders are referred to press articles regarding the DBE Contract. Last communication from Novus

to the market was in the investor update on 27 March 2018, where it was announced that “this process

concluded on 28 February 2018 in a High Court decision upholding the Novus Holdings contract”. He

continued to state that “Caxton has resolved to apply for leave to appeal”. Save for the DBE contract,

there are no legal or arbitration proceedings (including any such proceedings that are pending or

threatened) of which Novus is aware, which may have, or have during the 12 months preceding the Last

Practicable Date, had a material effect on the financial position of the Group.

21. EXPERTS’ CONSENTSThe Sponsor, corporate and legal advisors and the Transfer Secretaries whose names appear in this

Annexure have given and have not, prior to the formal approval of this Annexure by the JSE, withdrawn

their written consents to the inclusion of their names, and acting in the capacities stated.


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Rand

Transfer Secretaries’ fee – Link Market Services 290 000

Sponsor fee – Investec 250 000

Legal fees – Van Der Spuy & Partners 25 000

Documentation fee – JSE 9 800

Printing costs Part of Condensed Annual Report

Total 574 800

ANNEXURE 2 - SALIENT FEATURES OF SHARE APPRECIATION RIGHTS PLAN (PERFORMANCE CRITERIA)

AND DEFERRED BONUS SHARE PLAN

INTRODUCTIONNovus Holdings Limited (“Novus” or “the Company”) does have an existing employee share ownership

plan (“ESOP”) entailing a share option scheme, being established pursuant to the Novus Holdings Share

Trust (“Novus Trust”), and furthermore including a Share Appreciation Rights Plan without Performance

Criteria (“SAR Scheme No. 1”) as well as a Restricted Share Plan (“RSP Scheme”), both of which have been

implemented since 2016.

Novus intends to adopt two more share plans, namely the Novus Holdings Limited Share Appreciation

Rights Plan (SAR Scheme: Performance Criteria – “SAR Scheme No. 2”) and the Novus Holdings Limited

Deferred Bonus Share Plan (“DBP Scheme”) (collectively referred to as “these Share Plans”) in terms

of Schedule 1.1 (“SAR rules”) and Schedule 3 (“RSP rules”), being further supplemental to the Novus

Holdings Share Trust Deed (“Trust Deed”) in addition to Schedule 1 as regards the SAR Scheme No. 1 and

Schedule 2 as regards the RSP Scheme.

The Company reviewed its remuneration structure over time and recognised a need for long-term

incentive plans which, in the instance of both the SAR Schemes mentioned above, are less dilutive than

options and that they drive the behaviours of increasing shareholder value. It is also an incentive to

deliver long-term Company performance conditions. As regards the existing RSP Scheme, it is in line with

emerging best practice and is intended to incentivise the performance of and retain critical and in some

instances scarce key talent as well, and could in future be utilised also in conjunction with appropriate

restraint of trade undertakings by employees. The DBP Scheme is intended to operate as a mandatory

bonus deferral mechanism, as determined by the Company’s human resources and remuneration

committee from time to time (“RemCom”), in respect of those employees electing to participate in the

DBP Scheme.

Executive directors and senior management, being part of the “employees” as defined in the Trust Deed,

will be eligible for participation in all the above-mentioned Schemes (Executives of the group — as defined

in the Trust Deed — could therefore participate in the RSP Scheme in future as well).

The SAR Scheme No. 2 provides eligible employees with the opportunity to be granted rights (“share

appreciation rights” or “SARs”) to receive shares equal to the increase in the value of a certain number

of shares between the date of grant and the exercise date by the participant. Vesting of SARs will further

be subject to the continued employment of such employees for the employment period, subject to the

employment conditions and also performance criteria as referred to in Schedule 1.1 and as adapted being

merited by business conditions and market circumstances determined from time to time by the RemCom.

The DBP Scheme provides eligible employees with the opportunity to be granted conditional rights

over shares on an annual basis, the vesting of which is automatic but conditional upon the continued

employment of such employees for the employment period.

Under all the above-mentioned Share Plans eligible employees will be in a position to share in the success

of the Company with the shareholders.

23. DIRECTORS’ RESPONSIBILITY STATEMENTThe Directors, whose names are set out in the “Corporate Information” section of the Condensed

Annual Report, collectively and individually accept full responsibility for the accuracy of the information

contained in this Annexure which relates to Novus and, in this regard, certify that, to the best of their

knowledge and belief, there are no facts that have been omitted which would make any statement false

or misleading, and that all reasonable enquiries to ascertain such facts have been made and that this

Annexure contains all information required by the Listing Requirements.

24. DOCUMENTS AVAILABLE FOR INSPECTIONThe following documents, or copies thereof, will be available for inspection at the registered office of

Novus and at the offices of Investec Bank at the addresses referred to in the “Corporate Information”

section of this Integrated Annual Report, during normal office hours from the date of issue of this Notice

of Annual General Meeting, until the Annual General Meeting:

24.1 The Memorandum of Incorporation of Novus;

24.2 The audited annual financial statements of Novus for the 2016, 2017 and 2018 financial years;

24.3 Consent letters referred to in paragraph 21 above;

24.4 A copy of the Integrated Annual Report; and

24.5 A copy of this Condensed Annual Report, including all annexures hereto.

By order of the Board

N BIRCH

SIGNED IN CAPE TOWN ON 14 JUNE 2018 BY N BIRCH ON BEHALF OF ALL OF THE

DIRECTORS OF NOVUS HOLDINGS LIMITED

22. EXPENSES OF THE ODD-LOT OFFERNovus’s preliminary expenses relating to the Odd-lot Offer, which have been incurred or which are

expected to be incurred, including the fees payable to professional advisors, are anticipated to amount to

approximately R575 000, excluding VAT, and include the following:


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PURPOSEThe existing Share Plans, as well as the two additional Share Plans, will be primarily used to incentivise,

motivate and retain executives, senior management and key employees and in particular through the

granting of SARs in terms of the SAR Scheme No. 2 and Bonus Shares in terms of the DBP Scheme.

Details regarding the types of instruments

The salient terms of the SARs in terms of the SAR Scheme No. 2 and the Bonus Shares in terms of the DBP

Scheme are:

SARs in terms of SAR Scheme No. 2: Regular, annual granting of conditional rights to receive shares in

the Company’s share capital equal to the increase in the value of a certain number of shares between

the date of grant and the exercise date, the determination of the SARs to vest being subject to the

satisfaction of performance criteria on completion of the performance period and any employment

condition determined by RemCom, and thereafter capable of being exercised by the participant after

such vesting.

Bonus Shares in terms of DBP Scheme: Regular, annual granting of bonus shares with reference to the

Company’s share capital on a one-to-one share basis upon vesting, which are conditional and restricted

by reason of the vesting thereof being subject to the satisfaction of any employment condition and

employment period if applicable, as determined by RemCom.

The extent and nature of the employment condition(s) and employment period(s) applicable to the

SAR Scheme and the DBP Scheme and furthermore the performance criteria in case of the SARs are

determined by RemCom, subject to the applicable provisions of Schedule 1.1 and Schedule 3 respectively,

and will specifically be included in each letter of grant to eligible employees. Besides the applicable

employment period, the employment condition applicable to both these Share Plans is the requirement

for continued employment of the participant by any employer company within the Company from the date

of grant to the vesting date.

PARTICIPANTS As regards the SAR Scheme No. 2 and the DBP Scheme, eligible employees will include executive directors

and senior management of any employer company within Novus. Once a grant is made to an eligible

employee, such employee shall become a “participant” for purposes of the Novus Trust.

RemCom will consider:

participation of employees on an annual basis; and

market benchmarks and circumstances and the potential short-term incentive in case of the DBP

Scheme, in determining if any grants should be made as well as the quantum thereof.

Participation in these Share Plans is not an automatic condition of employment, and RemCom through

the trustees of Novus Trust retains absolute discretion to make a grant to any employee in terms of these

Share Plans.

RIGHTS OF PARTICIPANTS In terms of these Share Plans, participants will not be entitled to any shareholder rights before settlement

with the shares in Novus (if applicable). In the case of SARs, settlement would only be within 30 (thirty)

days after the exercise of the SARs after the relevant dates of vesting and for the Bonus Shares granted

in terms of the DBP Scheme, settlement will take place within 30 (thirty) days after the respective vesting

dates.

BASIS AND LEVEL OF GRANTS In line with the requirements of King Code on Corporate Governance for South Africa, 2016 (“King IV”)

as well as best practice, regular annual grants of Bonus Shares in case of the DBP Scheme and of SARs

in case of the SAR Scheme No. 2 will be made on a consistent basis to ensure long-term shareholder

value creation.

The number of Bonus Shares in case of the DBP Scheme and of SARs in case of the SAR Scheme

No. 2, granted to participants annually, will primarily be based on the employee’s annual salary, grade,

performance, retention and attraction considerations, as well as market benchmarks, and furthermore

by taking into account the particular circumstances at that time, e.g. company affordability, retention

considerations and company performance, and furthermore, in the case of the DBP Scheme, the potential

annual short-term incentive to which an employee could become entitled during the financial year as

determined by the rules of the Company’s short-term incentive policy and framework. In the case of the

DBP Scheme, the number of Bonus Shares granted will then become a mandatory deferral mechanism in

lieu of part of the annual bonus and with reference to the market value (as defined in the Trust Deed) of

the Company’s shares on date of grant.

Annual allocations will thus be benchmarked and set to a market-related level of remuneration, while

considering the overall affordability thereof to the Company.

PERFORMANCE CRITERIA AND EMPLOYMENT CONDITIONS IN RESPECT OF THE SAR SCHEME NO. 2 The performance criteria as contained in Schedule 1.1 will be applied for the time being by RemCom,

subject to adaptation by RemCom, inter alia, to other earnings, return type and/or strategic measures

if such adapted appropriate performance criteria are required at the discretion of RemCom, taking

account of and as merited by business conditions and market circumstances, and in conjunction with

the performance period and the applicable employment conditions and employment period of the

participant in question in relation to the SARs granted at the time of the letter of grant in question, and

where considered necessary, in consultation with shareholders. These will be fully agreed with the eligible

employees in terms of the letter of grant. All provisions relating to performance criteria, performance

periods, employment conditions and employment periods as detailed in Schedule 1.1 to the Trust Deed

are in alignment with the terms set out in the Trust Deed.

PERFORMANCE CRITERIA AND VESTING APPLICABLE TO THE SAR SCHEMEThe performance criteria are in all instances measured over the first 3 (three) years from the date of

grant accepted by a participant, being the performance period. At the end of this period of 3 (three) years,

subject to testing pursuant to the performance criteria, the number of SARs to vest is determined. The

number of SARs thus determined will then vest one third (1/3) per annum from the third, fourth and fifth

anniversary dates from the date of grant and to the extent not exercised on the sixth anniversary of the

date of grant the SARs in question shall automatically lapse. As mentioned above, these performance

criteria will be subject to adaptation as determined by RemCom.


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EMPLOYMENT CONDITION IN RESPECT OF THE DBP SCHEMEShould RemCom determine in respect of a Financial Year of the Company to grant Bonus Shares and

to the extent that the employees concerned elect to participate, then in terms of the letter of grant the

employment conditions and employment periods of the employees in question will be fully agreed with

the eligible employees, and where considered necessary, in consultation with shareholders. All provisions

relating to employment conditions and employment periods as detailed in Schedule 3 to the Trust Deed

are in alignment with the terms set out in the Trust Deed.

VESTING APPLICABLE TO THE DBP SCHEMESubject to the employment conditions and employment period being fulfilled, the Bonus Shares will

automatically vest 2 (two) years from the date of grant and be settled accordingly.

MANNER OF SETTLEMENTThe rules of both these Share Plans are flexible in order to allow for settlement in any of the following

manners:

by way of a market purchase of shares;

use of treasury shares (including, for the avoidance of doubt, shares held from time to time by Novus

Trust);

issue of shares; and

cash settlement (as a fallback position).

The exact method of settlement shall be determined by RemCom in consultation with the trustees of

Novus Trust in terms of the dilution limits set out in the Trust Deed and the business cycle of the Company.

LIMITS AND ADJUSTMENTSAs at the date of implementation of both these Share Plans, the maximum number of shares held for

purposes of ESOP together with shares which may at any one time be allocated in terms of all the Share

Plans mentioned under the Introduction, shall not exceed 17 366 622 shares, being 5% (five percent) of

the issued share capital of the Company (“Company Limit”), which aligns with clause 4.1 of the Trust Deed

(as amended to this lower number of shares from 34 733 245 shares simultaneously with the adoption of

both these Share Plans). This is also in line with market best practice.

Shares issued by the Company or shares held in a treasury company account or in terms of the provisions

of the Trust Deed, used to settle any of these above-mentioned Share Plans, will be included in the

Company Limit. Grants made in terms of the Share Plans, which do not result in the settlement of shares

to a participant as a result of the forfeiture thereof, will be excluded in calculating the Company Limit.

Similarly in line with the Trust Deed, any shares purchased from time to time in the market for purposes of

settlement of the Share Plans will be excluded.

The Trustees of Novus Trust, in conjunction with RemCom, must, where required, adjust the Company

Limit (without the prior approval of shareholders in a general meeting), to take account of a subdivision or

consolidation of the shares of the Company.

The maximum number of shares which may be allocated to an individual in respect of all vested and

unvested grants in terms of any of the above-mentioned Share Plans may not exceed 3 473 325 shares

as at the date of implementation in these Share Plans (“Individual Limit”). This is in line with market best

practice and aligns with the provisions of clause 6.3 of the Trust Deed. The trustees of Novus Trust may,

where required, adjust the Individual Limit to take account of a capitalisation issue, a special distribution,

a rights issue or reduction in capital of the Company in line with the Trust Deed. Such adjustment should

give a participant entitlement to the same proportion of equity capital as that to which he was previously

entitled.

In line with the Trust Deed the issue of shares as consideration for an acquisition, and the issue of shares

for cash or a vendor consideration placing will not be regarded as a circumstance that requires any

adjustment to the Company Limit or Individual Limit. Also in line with the Trust Deed, grants in terms of

the SAR Scheme No. 2 or DBP Scheme (as in the case of grants in terms of the SAR Scheme No. 1 or RSP

Scheme) which are not subsequently settled to a participant as a result of the forfeiture thereof will revert

back to the respective Scheme, as relevant.

The Auditors of the Company or the accounting experts referred to in the Trust Deed shall confirm to the

JSE in writing that any such adjustment has been properly calculated on a reasonable and equitable basis,

in accordance with the rules of these Share Plans respectively and must be reported on in the Company’s

financial statements in the year during which the adjustment is made.

CONSIDERATION ON SETTLEMENTIn respect of neither the SAR Scheme No. 2 or DBP Scheme (as in the case of grants in terms of the SAR

Scheme No. 1 or RSP Scheme) the participant will give any consideration for the grant, the vesting and

exercise or in respect of the settlement in the case of SARs (SAR Scheme No. 1 and SAR Scheme No. 2)

or as regards the vesting and settlement of Restricted Shares in the case of the RSP Scheme or as regards

the vesting and settlement of Bonus Shares in case of the DBP Scheme.

Settlement will be for the account and expense of the employer company concerned.

TERMINATION OF EMPLOYMENT “Bad leavers” As regards the DBP Scheme, participants terminating employment due to resignation or lawful dismissal

on grounds of misconduct, poor performance, dishonest behaviour or fraudulent conduct or on the basis

of abscondment will be classified as “bad leavers” and will forfeit all grants of Restricted Shares not vested.

As regards the SAR Scheme No. 2 (as in the case of the SAR Scheme No. 1), all vested SARs must be

exercised by bad leavers (as referred to above in respect of the DBP Scheme), on or before the date

of termination of employment – to the extent that they have not been so exercised on the date of

termination of employment, they will be forfeited. All SARs not vested on the relevant date will also be

forfeited on the date of termination of employment.

In the event of both SAR Scheme No. 2 (as in the case of the SAR Scheme No. 1) a participant must be in

the employment of an employer company for a period of at least 12 (twelve) months, failing which, all the

above-mentioned rights as regards SARs shall be forfeited on the date of termination of employment. This

requirement is not applicable to the DBP Scheme by reason of the relatively short vesting period.


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“Good leavers” Participants terminating employment due to death, ill-health, permanent disability, redundancy

retrenchment, retirement according to normal retirement age, jurisdictional issues or, with the approval

of the directors, prior to the normal retirement age (except to the extent that the termination constitutes

“bad leaver” termination as set out above), or the sale of a subsidiary company, will be classified as “good

leavers” and the following treatment will apply:

as regards the Bonus Shares in the case of the DBP Scheme, a portion of the participant’s unvested

grants of restricted shares shall vest on the date of termination of employment. This portion will reflect

the number of months served since the date of grant to the date of termination of employment over the

total number of months in the employment period. The remainder will lapse.

As regards SARs in the case of SAR Scheme No. 2 (being also applicable to SAR Scheme No.1):

– for vested but unexercised SARs on the date of the termination of employment, the participant

may exercise such SARs within a period of 2 (two) months following the date of termination of

employment; and

– unvested SARs will vest proportionally, provided that the participant has been in employment

for twelve (12) months or longer. The portion which shall vest on the date of termination of

employment will reflect the number of months served since the date of grant to the date of

termination of employment over the total number of months in the employment period, pro-rated

to the extent to which the performance criteria have been met. The remainder will lapse.

CHANGE OF CONTROL In the event of a change of control of the Company occurring before the vesting date applicable to the SAR

Scheme No. 2 or the DBP Scheme (as in the case of both SAR Scheme No. 1 and the RSP Scheme),

a portion of the grant will vest as set out below.

In respect of the DBP Scheme and SAR Scheme No. 2, for the portion of the grant which shall vest, the

trustees of Novus Trust in conjunction with RemCom will calculate the number of complete months

served since the date of grant to the change of control date, over the total number of months in the period

applicable to the vesting of the Bonus Shares or the SAR (as the case may be) before it respectively lapses

(and in the case of the SARs will also determine whether and the extent to which the performance criteria

have been satisfied by reference to the immediately preceding Financial Year).

The portion of the grant in respect of the DBP Scheme and SAR Scheme No. 2 which does not vest as a

result of the change of control will, except on the termination of the DBP Scheme or SAR Scheme No. 2,

continue to be subject to the terms of the letter of grant, unless the trustees of Novus Trust, in conjunction

with RemCom, determine otherwise.

Grants of SARs in the case of SAR Scheme No. 2 or Bonus Shares in the case of the DBP Scheme (as

in the case of both the SAR Scheme No. 1 and the RSP Scheme) will not vest as a consequence of an

internal reconstruction or similar event which is not a change of control as defined in the rules of all the

Share Plans applicable to the Novus Trust. In this case the trustees of Novus Trust, in conjunction with

RemCom, shall make such adjustment to the number of grants, or, inter alia, convert such grants into

grants in respect of shares in one or more of the other companies, provided that such adjustment should

give a participant entitlement to the same proportion of equity capital as that to which he was previously

entitled.

VARIATION OF SHARE CAPITALIn the event of a variation in share capital such as the Company being placed in final liquidation for the

purposes of reorganisation or being a party to a scheme of arrangement or amalgamation as contemplated

in the Companies Act affecting the structure of its share capital or reduce its share capital (including the

acquisition of its own shares) or splitting or consolidating its shares or being a party to a reconstruction

or being a party to any similar transaction or process or in the event of the Company making distributions

to shareholders as contemplated in the Companies Act (other than a dividend paid in the ordinary course

of business out of the current year’s retained earnings), participants shall continue to participate in these

Share Plans. The trustees of Novus Trust may make such adjustment to the grant or take such other action

to place participants in no worse a position than they were prior to the happening of the relevant event

and to provide that the fair value of the grant immediately after the event is materially the same as the fair

value of the grant immediately before the event, in line with the Trust Deed read with Schedule 1.1 and

Schedule 3 respectively.

LIQUIDATIONIf the Company is placed into liquidation, other than for purposes of reorganisation, any grants of Bonus

Shares or SARs shall ipso facto lapse as from the date of liquidation. Therefore, any unvested Bonus Shares,

unvested SARs or vested and unexercised SARs will lapse.

AMENDMENT The existing provisions of the Trust Deed as regards amendments to Schedule 1.1 or Schedule 3 shall also

be applicable to these Share Plans.

GENERAL These Share Plans are supplemental to the Existing ESOP (like the SAR Scheme No.1 and the RSP

Scheme). The Trust Deed shall be applicable to all the Share Plans, and should it be found that any of

these Share Plans and the Trust Deed contain conflicting provisions, the provisions governing these

Share Plans shall prevail for purposes of these Share Plans only and the Trust Deed shall be deemed

to be amended to the extent necessary to remove any conflict and to reconcile with the terms and

conditions governing these Share Plans respectively.

Words and phrases defined in the text of this document shall have the defined meaning throughout this

document, unless specifically provided otherwise. Any words or phrases not defined herein shall have

the meaning as defined in the Trust Deed read with Schedule 1.1 and Schedule 3 respectively.


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APPENDICES

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APPENDICESNovus Print Novus Print is a market leader in print manufacturing and offers an array of

paper-based products. This division has a national network of specialised plants all equipped with the most advanced technology to ensure that highquality printing of almost any format is delivered on time.

Paarl Media, a subsidiary of Novus Print, is able to produce short- to high-volume magazines, retail inserts, catalogues and brochures and offer quick make-ready and flexible formats from A4, A5, tabloid, broadsheet and delta sizes. Paarl Media has plants based in Cape Town, Gauteng and KwaZulu-Natal.

Novus Print Solutions, a subsidiary of Novus Print, provides both short and medium print runs to the publishing, book and commercial market. By combining digital print with traditional litho products, Novus Print Solutions offers products ranging from glossy magazines, to trade paperbacks and personalised tabloids.

Paarl Coldset, a subsidiary of Novus Print, offers fast, economical printing on uncoated paper and caters for large and smaller print runs in broadsheet, tabloid and quarter-fold formats for both high pagination and thinner products. Paarl Coldset has plants based in Cape Town, Johannesburg, Port Elizabeth, Bloemfontein and Pietermaritzburg.

Novus Packaging As the labelling and packaging division of Novus Holdings, Novus Packaging produces self-adhesive labels, wet-glue labels, wrap-around labels and flexible plastic packaging. This division services the wine, beverage, petrochemical and broader FMCG markets using advanced technology and finishing techniques to help set products apart in the marketplace.

Paarl Labels, a subsidiary of Novus Packaging, offers customers a portfolio of specialised label printing solutions, with the capability to produce self-adhesive labels for the beverage, food, personal care and petrochemical markets; wet-glue labels for the beverage industry and wrap-around labels for the carbonated soft- drink and bottled-water markets.

Novus Holdings acquired ITB Plastics (now a subsidiary of Novus Packaging) in October 2017. ITB Plastics produces a wide range of flexible plastic packaging solutions including automated packaging films for dry goods (both food and non-food), industrial bulk packaging for polymers and chemicals, retail check-out bags, tamper-evident security bags, courier envelopes and general flexible plastic packaging.

Novus Tissue Novus Tissue, the Group’s primary tissue manufacturing plant, allows the Group to expand its manufacturing operations in the paper industry by harnessing the potential of waste paper currently produced by the Group’s extensive printing operations, in the production of tissue paper.

Correll Tissue, a subsidiary of Novus Tissue, is a producer of tissue paper for domestic and industrial uses through the effective use of waste paper from printing operations, virgin pulp and recycled paper from other sources. The plant also supplies parent reels to tissue converters.

COMMONLY REFERENCED ENTITIES

COMMONLY REFERENCED INDUSTRY TERMS

Coldset The printing process in which the ink dries naturally through evaporation from and absorption into paper. This method is used for printing newspapers and retail inserts, and makes use of paper reels as input.

Digital printing or continuous digital inkjet technology (CDIT)

A method of printing using digital techniques in which the data and images are printed directly from a computer onto paper. In the case of the continuous digital inkjet printer, a continuous stream of electrically charged ink drops is fired towards the surface. The desired image is created by deflecting unwanted drops.

Finishing Once printed, a final finished product is produced through varnishing or any other decorative processes, including cutting, folding, trimming, gathering and/or binding, which are applied to the product after printing.

Flexographic printing

Flexography is a method of direct rotary printing that uses resilient relief image plates of rubber or photopolymer material. This process is used to print self-adhesive labels for the wine, beer, spirit, cosmetic, petrochemical, and food and beverage markets.

Flexible plastics Packaging products which include retail check-out bags, tamper-evident security bags, courier envelopes, and food and non-food bags, which are supplied to the retail and industrial sectors.

Heatset The printing process in which the ink is dried by running the printed paper through an oven immediately after the ink is applied by the printing unit. This method is used for printing high-volume commercial work, magazines and catalogues, and makes use of paper reels as input.

Offset A process in which a lithographic plate is used to make an inked impression on a rubber blanket that transfers it to the paper being printed, instead of being made directly on the paper. Heatset web offset printing provides cost-effective, high-quality production for commercial quantities.

Packaging gravure

A method of printing with engraved copper cylinders on powerful gravure presses that provide crisp, full-spectrum colours with registration that holds true over millions of copies. Gravure is ideally suited to high-volume production of wet-glue labels and other product-diversification initiatives, including in-mould labels and flexible packaging (for example shrink sleeves and wrap-arounds).

Publication gravure

A method of printing with engraved copper cylinders on powerful gravure presses that provide crisp, full-spectrum colours with registration that holds true over millions of copies. Ideally suited to high-volume production of publications and commercial products, including weekly, fortnightly and monthly magazines, catalogues and brochures.

Publisher An entity (person or company) that establishes what editorial content is needed and who the target market is for specific books, periodicals, magazines and computer software, and processes advertising revenues and placed print work.

Personal protective equipment

Personal protective equipment refers to protective clothing, helmets, goggles or other garments or equipment designed to protect the wearer’s body from injury or infection.

Sheet-fed offset A printing press that feeds sheets of paper, rather than a continuous paper roll or web.


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FINANCIAL TERMS AND RATIOS DEFINITIONS

Cash-conversion ratio

Cash generated from operations less capital expenditure spent on property, plant and equipment and intangible assets, divided by operating profit, excluding impairments and profit/(loss) on disposal of assets.

Creditor days Trade and other payables plus related-party payables divided by cost of sales (inclusive of VAT) multiplied by 365 days.

Debt to equity ratio

Total borrowings divided by total equity.

Debtor days Trade and other receivables plus related-party receivables divided by revenue (inclusive of VAT) multiplied by 365 days.

EBIT The core earnings metric of the Group – earnings before interest and tax.

Free cash flow Cash generated from operations less capital expenditure spent on property, plant and equipment and intangibles (excluding profit/(loss) on disposal of assets), less taxation paid.

Headline earnings

Headline earnings are a measurement of Novus Holdings’ earnings based solely on operational and capital investment activities. It specifically excludes any items that may relate to retrenchment costs, sales of assets, or accounting write-downs.

Interest cover Operating profit divided by interest expense (related-party interest, loans and overdrafts, interest-rate swaps).

Liquidity ratio Current assets divided by current liabilities.

Net asset value per share

Attributable equity divided by issued shares excluding treasury shares.

Net working capital

Inventory, trade and other receivables, related-party receivables less trade and other payables, short-term cash-settled share-based payment liability and related-party payables.

Net return on equity

Net income after taxation divided by average total equity.

Operating assets Property, plant and equipment, goodwill and intangible assets.

Operating return on net assets

Operating profit excluding impairments and profit/(loss) on disposal of assets divided by average operating assets and average net working capital.

Return on assets Net income after taxation divided by average total assets.

Solvency ratio Total assets divided by total liabilities.

Stock days Inventory divided by cost of sales (exclusive of VAT) multiplied by 365 days.


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2018 INTEGRATED ANNUAL REPORT TISSUEPACKAGINGPRINT

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