Any online audience? Can you hear us?
100%.
Ralph, Tinus, can you hear us?
Yes, Craig.
Yes.
I think this season can be a quick one.
Wait, I can hear you yet. Thank you.
Susan, maybe you want to clarify and take it from there.
Yeah, so.
Can you choose someone for your laptop, Craig? This is a good day.
Morning, can you hear us?
I can hear you, yes.
Thanks, Roxanne. We were just admitting a few more people at the last minute.
That's everyone, Craig.
Good morning, everybody. Thanks for joining us. The interim results presentation, I wanted to run you just through some highlights of the group. I guess the most significant change which happened just prior to our period close was the acquisition of Domestic Shares, which we'll touch on a bit later, and the process which we're going through there, and the implications, I guess, overall for Novus. But let me deal with the financial results first. Okay, so if we run through our business, on the print side, we've seen an improvement in our print business's performance. Education for the six-month stayed relatively flat and so did packaging. We did benefit during the period from a mark-to-market gain in derivative instruments, which was related to Domestic Shares.
They got it to an overall EBITDA for their six months of ZAR 394 million, which is a substantial improvement from the previous six months. But as I point out, it does include a derivative gain of ZAR 64 million. If I move on to the print business itself, you'll see in the previous period, we generated an EBITDA of ZAR 58 million, which has increased to ZAR 109 million. First, let's start off the impacts of load shedding. That assisted us. That cost is not in the business. But more importantly, I think our paper costs in general have normalized, which means that the drag which we experienced over the last couple of years from excessively high paper inventory at very high prices is now flushed through the system. And we're getting into a period where we've got a normal GP margin.
That said, there's significant pricing pressure in the market, and I think that's to be expected in an industry which you've got volume pressure. I guess our main competitor is trying to retain volumes, and that's got a pricing implication across the market. So what we're doing is we're focusing on our efficiencies and internal cost structures. Importantly, I think that we are standardizing paper types, processes, systems, etc., to assist us with margin pressure. What we are seeing in the market is that there's elevated credit risk. So some of our clients are experiencing financial difficulties. Print volumes are down. Advertising income is down. So we're cognizant of that, and we have to limit some of our orders as a result of the credit risk. There wasn't any significant capital expenditure, as you would expect in a business like this.
Most of our maintenance is maintenance, which in a sense replaces CapEx because we'll never replace the equipment which we've got here, especially the big pieces of equipment. We take that into account on our annual operating expenditure. Important for this business is that the Department of Basic Education did extend our print contract for a further two years, and this does supply us with significant volume in this business. We can see that the EBITDA contribution percentage of the second decreased from 20%-33%, which is a nice improvement from print following the difficulties in prior years. On the education side, the major surprise there was the decision by the Department of Basic Education on very short notice to decide to do a curriculum update. The difference between a curriculum update and a new curriculum is a gray area.
So here, they've made substantial changes or substantial requests for changes in the curriculum update. And they put, I guess, most of the publishers under significant pressure to, in a very short space of time, provide a full suite of books from Grade R to grade three. So to give you an indication, this is an enormous effort. It's an excess of 1,600 pieces of material that we had to produce for our submission cycle in terms of the subjects and languages which we wanted to participate. So that put excessive strain on the business, and we're incurring some cost in H1, which will also flow through to H2 for that submission. The submission is further, I guess, exacerbated by the department's decision to roll out coding and robotics in 2026. It will be the first year it's included in the classroom.
So the important thing about coding and robotics, it is compulsory for all children starting Grade R, and it will also be rolled out for grade one to three. So you've got a catch-up period, plus you've got the children starting in Grade R doing coding and robotics. So we produced the material and submitted it, but the stress on the education system, I think, is going to be enormous in order to train teachers, get the material out. This is something completely new. So doing this at the same time as a curriculum update was a decision which, I guess, surprised us all. Then during this period, we continue to invest in our AI platform, Masky. So our objective there is to still develop a fully-fledged online tutor. I think we're making progress. If we get it right, it'd be very valuable.
We've got no guarantee that we will get it right. We've got a good team in ByteFuse working on the problem, and if you look at somebody like Sam Altman, the one area which you pointed out or raised is the most potential for AI was in education, so we think that the ability to significantly improve outcomes through the use of technology is undisputed. Whether we participate in that process or not is uncertain, but we are continuing to invest in Masky, and I think we've seen good traction for the product. I think we just need to make sure that the full vision which we've got for the product is implemented, I guess, within the next two years, so that cost has partially hit us in H1. It'll come through in H2 as well.
And then the obvious issue in terms of the education sector is that as soon as there's a curriculum update change, that the level of orders become erratic because some people decide not to order books. Even though the rollout is for a number of years, it does create some uncertainty in the ordering patterns, and we're already seeing that in MML. So the level of orders which we get for the year end of 2025, I think, will be quite a bit lower than those orders which we had in the prior years. So this business's performance in this uncertain period will be uncertain. Whether we're successful in terms of the submission or not is yet to be determined. In the past, they had included eight people or eight suppliers on their catalog. It's down to three.
We are engaging with the department to open it up to more participants, but that is a significant risk for the business. That's the education sector. On packaging, it's stable as we go. We've invested CapEx in this business, and we expect the effect of that CapEx to come through in the EBITDA for the 2026 financial year, not this financial year. That sector is also facing some pricing pressure. As you all know, the multinational conglomerates tend to centralize procurement, and we've seen some margin pressure there, and we probably elect to walk away from business rather than to pick up business at suboptimal margins, so we've made that decision, and in some instances, that's resulted in reduced revenue, but it's important for us to retain the margins which we enjoyed historically and rather go and find new business.
So the management team there, I think, have done a good job to protect margins and ensure that we generate a return on assets in that business, which is acceptable. And we've also transferred the labels business into packaging. So I think the process of selling labels and our labels capacity is better suited to the packaging team. So they're bedding that change down, and that'll also be a process which we roll out in the next two years to ensure that we grow our labels business. And I'm going to hand over to Craig for a brief overview of the financial results, and then we can do the questions.
Yeah. So you can see revenue is up 3.3%. So print was a bit under pressure on the revenue line with most of the type of products down except DBE.
But the overall revenue was up because of publishing the education segment doing better in that first half. As André said, some of the orders that traditionally happened in H2 came through in H1. Packaging also up on revenue. Gross profit looks good. That's coming largely from the print side. As André mentioned, the relief on paper pricing, or let's say the sins of the past, having been flushed out. Looking better on paper pricing. Load shedding as well. We only had ZAR 1.5 million of costs of load shedding as opposed to almost ZAR 10 million in the previous year. The gross margin improving. Overheads, the only one that's negative there on the screen. That went up. Including overheads, there was close to ZAR 30 million of additional credit risk provision. Last year, we had similar in September. That's almost like for like.
But also in there is the curriculum costs. As we mentioned, in the sense, we've got ZAR 15 million of curriculum costs in there. So if you take that out, then your costs are closer to flat year on year. So operating profits up 16%. That's purely from those three businesses. But then if you look from operating profit down to earnings per share, you see another jump. And that's where that ZAR 64 million benefit of the derivatives came in. So in other income last year, we had a ZAR 12 million profit on the sale of the building. And in this year, we've got ZAR 64, almost ZAR 65 million of derivative profits. So on the cash flow side, it looks a lot better on the 1st of October than the 30th of September. We were a little bit later this year on invoicing the DBE contract in print than the previous year.
Almost ZAR 600 million came in in October, most of that on the 1st of October. So that's sitting in that ZAR 769 million changes in working capital. So it would have looked a lot different if that had come in a day earlier. But otherwise, the cash flow, pretty standard items there with if we go from left to right, profit before tax, the non-cash items, the working capital, which has got that ZAR 600 million in, loan repayments shows us positive there because of the interest that we gained in the period, which exceeded the loan repayments. Then tax paid, acquisition of assets. That was minimal. The biggest expansion there was actually on the office renovation, making it more conducive for staff working. And then the dividends paid and then acquisitions of investments. And that's where we must take a setting in there.
on ZAR 310 million, but it could have looked a lot different. So if we look at the working capital, we've got the same story there. You'll see September is now excessive because of that ZAR 600 million. So we just put October in the graph as well, and you'll see it drops by almost exactly that ZAR 600 million if you look end of October versus end of September. So if we're looking at ZAR 700 million, that is higher than we were in March, which is expected at this time of the year. This is the seasonal time of the year. So we are still busy with volume two of DBE packaging education. Everybody is at the peak now. So if you compare it, if you compare October now to September 2023, you'll see there how we've managed to reduce working capital over the year.
This may be mainly paper inventory, which we reduced. Let's say our process to reduce the number of SKUs has also helped us reduce the total stock holding. I think that's a sustainable level going forward at this level of turnover. In terms of the outlook.
We mentioned the Media24 transaction. It's relatively small for the group, but quite a bit of work to do there. We do publish community newspapers, mainly in the Western and Southern Cape. Got a couple of newspapers in Bloemfontein. It's a good business. It's, I think, a solid business that will be around for a long time. Community newspapers still play a very important role in local advertising. It's nice to be able to pick up a footprint like that. We've also included two sports assets being Soccer Laduma and Kick Off magazine. They mainly digital focused.
Interesting to build that skill in the group. And the team there seems to be very well positioned, a good reputation in the market. And then we've got the distribution business, which comes with it, which, as you all know, distribution is tough. So with the decision of Media24 to reduce the print allocations and print titles, this business needs to be restructured, which the process is ongoing. And we're working with management to be able to implement that within the next five to six months. By the time we get to our financial year end, we hope that the technology systems, the processes, the location of staff, etc., will all have been finalized for the period. The difficulty in taking over this business on the 1st of November is that November, December typically are your important advertising months.
So it's not an ideal time to transition these businesses, especially because the sales function is a centralized function. But we're dealing with those issues. And by March, I think that we'll have a stable and integrated business. Then I'm going to first drop to the outlook, the third bullet point there. So as we mentioned, we expect the second half in education to be much more difficult than the first half for the reasons which we indicated. We will continue to invest in Maskew, and we've got a big push to be able to get to a substantial update in our product when the learners come back to school in the new year. So we expect quite a few product improvements to be released in the February-March timeframe. Our product at the moment is focused on a WhatsApp interface, which I think is the right decision.
And we'll probably be supplementing that with an app going forward. But for now, I think that the features which we've got at the moment are fairly simple features, even though we generate assessments. But come February and March, I expect to see a much more substantial product. And then whether this product's successful and what the revenue streams are, I guess, is still to be determined. But if we get it right, it'd be very valuable. If I deal with the second bullet point, which is the Mustek acquisition, I guess this is a surprise to many people. I think we've been debating for a long time where we go with Novus going forward and whether it stays relatively focused or whether we expand it into a wider and broader investment vehicle. And ultimately, we decided that it should be a broader investment vehicle.
It's got its downside if you look at things like investment holding company discounts. That's the obvious question which you'll get, and we've all seen the stats. You get big discounts, but my view is that if we start adding and continue to add value to the underlying investments, that discount is probably not as big as people make it out to be, and if the discount remains big, you just buy back your share, so for us, I think in balancing all the positives and negatives, we decided that probably we should put domestic acquisition in Novus, so we just have a 35%. We're busy with a minority offer. I like the business. I've known Hein and the team for many years. I think that if you look at our acquisition price, let's say on balance, just below ZAR 13.
And the earnings potential of that business in a sustainable year, I think that they'll generate a great return on our investment cost of ZAR 13. Their tangible NAV is ZAR 24. So if they get to deliver a good ROA on that tangible NAV, it'd be a great investment for us. So the management team's stable. The business is stable. It's been around for a long time. It's got a great footprint. They've got an excess of 3,000 clients. They do credit extension. It's a business which I think their client base is very sticky. And I think it suits Novus given the stability and breadth of its offering. So expect us to get some criticism for this from some people. But on balance, the only thing which I can say is it wasn't an ill-considered decision.
We thought about it long and hard, and I still think it's the right thing for us to do. So that's our outlook and just some background. Let me deal with questions now, if there are any.
From Charles Bowles. Thanks for the presentation. Can you give us some insight into your thinking as to why you made the acquisition for Media24? Is your competitor opposed to this as a result of the loss of access to the logistics business?
Hi, Charles. First, I think that the community assets are good assets to buy. So just if I look at it as a standalone business, the community assets and their footprint and the ability to still drive advertising income is a good asset to own. We do print for that asset. So it's got benefits on that side.
I do think that that hopefully in future just improves the margins and the efficiency of the operations. I think that our competitor has raised concerns about access to the On the Dot business. Obviously, On the Dot will continue to provide services to the entire market and that On the Dot will operate as it used to operate in the past. There's no reason to change and facility change because logistics businesses are a volume business. They've made various submissions to the Competition Commission. The Competition Commission approved the merger with very little conditions. We were very pleased with that outcome. Clearly, we think it's a well-reasoned and well-considered decision. I don't think you could make any other decision. That said, our competitor has submitted papers, and we're in the process of dealing with those through the appropriate legal forums.
But our focus at the moment is to make sure those businesses are transitioned and implemented and operating efficiently. And I think that in the end, it'll turn out to be a very good acquisition for us. There's no other questions. All right. Thank you, everybody. Thanks for attending, and thanks for your time. Thanks very much. Bye.