Alaris Holdings Limited releases robust financial results FY15

Centurion, 30 September 2015.

Local JSE AltX listed technology holding company, Alaris Holdings (Alaris), released their results today which shows that their recent restructuring and streamlined operations is delivering robust financial performance. Previously known as Poynting Holdings, Alaris increased their revenue by 102% from R95.9 million in 2014 to R193.0 million in 2015.

Highlights:

  • Normalised earnings per share from continuing businesses increased by 41% from 11.6 cents to 16.4 cents
  • Normalised earnings from continuing business increased by 64% from R12.2 million to R20.0 million
  • Loss from continuing operations after tax decreased from R86.1 million to negative R1.2 million.
  • Continuing earnings per share (EPS) decreased from negative 58.3 cents to negative 0.7 cents.
  • Continuing headline earnings per share (HEPS) increased from 6.1 cents to positive 18.2 cents.
  • Net tangible asset value per share increased by 17% from 43.5 cents to 35.9 cents.
  • The Group changed its name and identity from Poynting to Alaris in May 2015 after the selling off of the commercial activities in December 2014, reducing the complexity of the business significantly.

“As with the financial results for 2014, this year’s results include items and IFRS reporting requirements which are not representative of the true performance of the underlying operations of the group.” says group CEO, Juergen Dresel.

The biggest distortion is the complex accounting treatment of the African Union Communications (Aucom) contingent consideration shares for which a contingent consideration asset was raised for the estimated value of recallable shares at the end of the earn out period which expires on 30 June 2016. This was valued at R22.2 million.

Other items include non-recurring legal and consulting fees amounting to R10.1 million due to the Compart disposal, RNS legal cost and the anticipated ARA acquisition. On the other hand, the disposal of the Compart businesses resulted in a profit of R2.4 million. These businesses were disposed of for a consideration of R35.8 million which was settled by the repurchase of 14 million shares at 256 cents per share. The Group’s net assets disposed of amounted to
R33.4 million.

Management has prepared normalised numbers removing IFRS distortions to allow comparison to previous period results. The commentary should be read with care to understand underlying company performance.

Segmental Overview

Alaris Antennas, which designs and manufactures specialised broadband antennas as well as other related radio frequency products, continued to deliver good growth, with revenue increasing by 15% to R88.4 million from R76.6 million in 2014 without deterioration in gross margin. Profit after tax (PAT) also increased by 29% from R16.2 million last year to R20.9 million in 2015. Alaris Antennas continued to be a leader in product innovation, adding 155 new products to its portfolio compared to 52 in 2014. Further investment during this financial year included growth in headcount from 77 to 87, moving from its old premises in Wynberg into a far more fit for purpose set of buildings in Centurion, investing into a new spray booth facility and upgrading the ERP system. This has set the platform for further growth in the future.

Specialising in the design and implementation of integrated broadcasting systems, Aucom, posted results that were lower than expected mainly due to the delay of certain large orders for customers that were expected to materialize in 2015. Revenue remained above the R100 million with PAT of R7.3 million. The business has strengthened its management team in areas of finance and operations to support the Chief Executive Officer (CEO) and the sales
team to focus on new business development.

The discontinued Compart businesses were consolidated up to 31 December 2014. These operations recorded a loss of R6.3 million mostly as a result of low margins.

Termination of Antenna Research Associates (ARA) merger agreement

In a SENS announcement released on the 11th of September 2015, it was announced that Alaris has exercised its right to terminate the ARA merger agreement. Not all the conditions, as specified in the ARA merger agreement, were fulfilled by ARA prior to the end date as specified in that agreement, and efforts to negotiate revised terms to address risks raised in light of the unfulfilled conditions were not successful. “We regret the termination, especially
considering the significant resources that were devoted to this acquisition. Management believes it was in the best interest of Alaris and its Shareholders to terminate the Merger Agreement in light of the uncertainties created by the conditions that were not fulfilled and the inability to address the risks resulting therefrom.” Dresel states.

Prospects

Alaris Antennas has consistently grown turnover and profits since its establishment in 2005. The operational EBIT has grown with a CAGR (Cumulative Annual Growth Rate) of more than 25% over the past 10 years.

For Alaris Antennas, organic growth is stimulated and achieved through the continuous drive towards adding new and innovative products into their portfolio. Further opportunities for growth are achieved by adding new system houses, distributors and agents, diversifying territories and entering into new market segments where the Company’s core competencies find application.

Management believes the business has significant potential for organic growth and acquisitive growth where there is a complimentary opportunity in markets and products. “The business has invested in capacity to enable growth that should be reflected in future results and continues to build its confirmed future order book and pipeline that extends well into the next financial year.” Dresel remarks.

Considered a market leader, Aucom continues to bid for significant digital infrastructure  opportunities across the African continent and remains optimistic that it will be successful in being awarded some of these opportunities. It is difficult to determine the timing of when these bids will be awarded. Management continue to engage with the end customers and remain hopeful of near term successes.

“The current focus is to ensure the profitable organic growth of our Alaris Antennas and Aucom businesses and improve the working capital generation of the Group.” says Dresel and concludes: “In light of the termination of the ARA merger agreement we will remain on the lookout to secure a footprint into the US and Europe and further identify companies which fit the Company’s market profile and provide synergies to the Group.”

For media related enquiries and interview opportunities with Alaris CEO, Juergen
Dresel, please contact:
Elsjené Burger
Marketec on behalf of Alaris Holdings
E-mail: elle@marketec.co.za or investor@alarisholdings.com
Mobile: 082 717 2164