THE BOTTOM LINE
Novus share price gets the collywobbles all over again
After the departure of senior executives, shareholders don’t yet seem to believe things can’t get worse
Investors seem to instinctively mark the Novus Holdings share price down when they see it has issued a SENS statement.
As Novus’s statements go, the one issued on Monday was almost upbeat. It’s all relative of course. The latest news is that the decline in basic earnings per share for the year ended 31 March 2018 will only be between 70.1% and 75.1%. At the end of April Novus issued a trading statement warning shareholders basic earnings per share would be down by at least 75%.The slight improvement is due to marginally improved cash flows included in the impairment testing models applied by the group.
Without the massive impairments forced on the company by the loss of a big chunk of the Media24 printing contract Novus’s financial 2018 results would have been reasonable.
But it wasn’t just Media24-related impairments that knocked the results. The tissue division, which was expected to be a useful contributor to earnings, has proved to be a disappointment. This is certainly a knock to the shareholders who were hoping tissue would compensate for some of the losses at the printing division. No doubt they will be bracing themselves for financial 2019, which is when the effect of the lost Media24 business hits earnings.
Given these grim events it’s hard to know whether shareholders have been comforted or spooked by recent executive departures. The chief financial officer departed in March, and has not yet been replaced. The company secretary left a few days later and there’s still no permanent replacement. Most recently came news that CEO Keith Vroon has resigned with effect from June 15.
Seeing the share price moves, shareholders don’t yet believe things can’t get worse.