10 YEARS ON THE JSE ALARIS HOLDINGS LTD FINANCIAL YEAR END RESULTS 12 months ended 30 June 2018
AGENDA Slide# Financial Highlights 3 Operational Highlights 4 - 5 Reflection on 2018 6 Group Overview 7 - 16 Financial information 17 - 24 Growth Plan 25 - 27 Q&A 2
FINANCIAL HIGHLIGHTS Revenue from continuing operations increased by 17% from • R159.4 million to R187.1 million. Profit after tax from continuing operations increased by 43% from • R23.0 million to R32.9 million. Normalised earnings per share from continuing operations increased • by 100% from 15.2 cents to 30.5 cents. Net cash flow from operating activities increased by 229% from • R13.3 million to R43.8 million. Photo by: Johan Fuhri ( Senior Electronic Engineer) 3
OPERATIONAL HIGHLIGHTS • The Group’s focused strategy is bearing results through 3 core strategic objectives: • Sustainable organic growth over the past 10 years • Project Management Office implemented • Increase in synergies between Alaris Antennas and COJOT • Environmental Stress Screening equipment: installed to improve quality and customer service 4
US ACQUISITION Target company is resident in the US • US defence market • – 60% of global market – approved defence budget totaling $716 billion Purchase consideration for the Acquisition - US$2,750,000 • – an amount of US$2,062,500 - paid in cash – balance of US$687,500 - settled by issuing Alaris shares Maximum consideration shares is capped at 5,000,000 • Cash to be financed through excess cash and a loan of approximately • R15 million. Waiting for CFIUS (Committee on Foreign Investment in the US) approval • Other conditions precedent to be finalized subsequently • 5
REFLECTION ON 2018 CHALLENGES / ANOMALIES: POSITIVE DEVELOPMENTS: Implementation of Project • Precision engineering • Management Office to improve resulting in longer delivery project lifecycle time US defense spending is • Fluctuations on foreign • increasing exchange managed Increasing opportunities for • through hedging smart antennas with customers Mitigation of risks in project • Large orders in Europe & Asia • cycle resulted in a strong financial year Stronger interaction between • global teams Implementation of ESS • equipment Sales and support function • established in the US 6
GROUP OVERVIEW
GROUP OVERVIEW Technology holding company listed on the JSE AltX since July 2008 Alaris Holdings COJOT (Finland) Alaris Antennas (RSA) New Entity in USA (pending) 8
ALARIS ANTENNAS
WHAT DOES ALARIS ANTENNAS DO? Designs, develops, manufactures and sells specialised broadband • antennas and other Radio Frequency products About 90% of revenue received from exports • mainly Americas, Europe & Asia – Holds patents for several antenna designs • Own IP is a key strength • Customers are system integrators, frequency spectrum regulators, • test & measurement companies and players in the homeland security space 10
ALARIS ANTENNAS MARKET & TERRITORIES Presence No Presence 856 Products 10 Product categories 11
ALARIS ANTENNAS OFFERINGS Communication Jamming Direction finding Monitoring Masts Counter - RCIED Test & Meas. RF Electronics LPDA Services DF-A0201 – Man portable DF antenna 20 to 6000 MHz Designed for optimal direction finding performance while • minimising size and weight Base design was completed in 2012. It has attracted a great • amount of interest from existing and new customers for portable DF applications We add value to the customer by including with the antenna an • integrated RF electronic switch with compass and GPS DF-A0201 12
COJOT
WHAT DOES COJOT DO? • Designs, develops and manufactures innovative antenna products, serving public safety and military markets globally • Develops innovative broadband antennas to improve connectivity, coverage, and competitiveness of radio equipment deployed to save lives and protect property • Own brand and IP Manpack/Man Vehicle Portable Antennas • Supplying antenna Antennas technology in some of the most demanding Mobile Antennas 20 to 6000 MHz global environments Antenna Services Accessories 14
COJOT MARKET AND TERRITORIES 112 Products 5 Product categories 15
COJOT OFFERINGS WIDEBAND ANTENNAS FOR MILITARY APPLICATIONS ECM (Electronic Monitoring Smart antennas Communications Services Countermeasure) Switched Beam Antenna – SBA4450B Advanced beam switching technology for improved performance in tactical point-to-point and multipoint communication systems. • Significant coverage extension and more secure. • Serves various clients or moving objects • Lower installation costs and less complexity • Simple and field proven communication protocol for fast transceiver interaction SBA4450B 16
FINANCIALS
ALARIS GROUP REVENUE 18
SEGMENT – ALARIS ANTENNAS Audited Audited More precision engineering • year year projects in the mix, resulting ended ended in fewer deliveries and invoicing delays. R’000 Jun 2018 Jun 2017 Profit margin impacted by • Revenue 121 968 123 044 lower revenue and Revenue growth (1%) 5% investment in highly skilled PAT 32 541 34 946 staff and project PAT growth (7%) 3% management office PAT margin 27% 28% 19
SEGMENT – COJOT Audited Pleased with 79% revenue Audited • year year growth ended ended Several larger orders • Benefits of scaling revenue • R’000 Jun 2018 Jun 2017 to cover fixed overhead Revenue 65 107 36 306 costs Accumulated PAT – 68% of • Revenue growth 79% 145% purchase price (net of PAT 14 945 3 854 cash) PAT growth 288% -26% PAT margin 23% 11% 20
SEGMENT – CORPORATE & CONSOLIDATION Audited Audited year year ended Ended R’ 000 Jun 2018 Jun 2017 Loss after tax (14 567) (15 798) Main costs before tax : 1. Net foreign exchange gains of R0.9 million (2017: R3.8 million losses). 2. The repayment of the PSG Alpha preference shares on 3 July 2017 resulted in minimal interest being paid compared to the R5.0 million in the comparative period. 3. Employee costs, cost of the share incentive option scheme, including ad-hoc equity settled bonus, incentive bonusses for Group executives and board fees totaling R12 million (2017: R6.8 million). 4. Legal and consulting fees including the costs to be listed on the JSE, advisory fees and group audit fees totaling R4 million (2017: R2.0 million). This includes advisory cost associated with the US acquisition. 21
STATEMENT OF PROFIT AND LOSS – CONTINUING OPERATIONS Satisfactory Audited Audited • year year performance with ended ended revenue increasing by R’000 June 2018 June 2017 17% Continuing Operations Operating profit • Revenue 187 075 159 350 increased by 14%, helped by reduced net Cost of sales (53 589) (44 042) foreign exchange losses Gross profit 133 486 115 308 Discontinuation of • Other income 738 212 preference share Operating expenses (91 502) (78 204) interest Trading operating profit 42 722 37 316 Lower average tax rate • Finance income 380 740 owing to COJOT Finance costs (392) (4 907) contributing approx. Profit before taxation 42 710 33 149 35% of profits at a 20% Taxation (9 791) (10 147) tax rate and R3.2m S11D tax benefit Profit from continuing operations 32 919 23 002 Shares in issue reduced • Weighted average number of 116 116 771 153 985 264 ordinary shares in issue HEPS: Continuing operations 28,35 14.94 22
STATEMENT OF FINANCIAL POSITION Audited Audited Inventory increased • year year mainly from more ended ended R’000 June 2018 June 2017 open engineering Assets projects, these will be Non-Current Assets invoiced in the new Plant and equipment 6 619 5 793 year. Goodwill 26 582 24 902 High invoicing in the • Intangible assets 12 782 12 381 last month of the Deferred tax assets 2 539 3 252 period. 48 522 46 328 R51m PSG preference • Current Assets shares repaid 3 July Inventories 19 080 13 592 2017 Current tax receivable 1 194 2 967 Trade and other receivables 35 151 27 782 Cash and cash equivalents 51 679 65 083 107 104 109 424 Total Assets 155 626 155 752 Total equity 116 328 77 830 Total Liabilities 39 298 77 922 Total Equity and Liabilities 155 626 155 752 Net Asset Value per ordinary share 100.18 67.03 23
CASH FLOW Audited Audited Net cash from year year • ended ended operating activities increased by 229% R’000 June 2018 June 2017 Non-cash items • Profit before taxation 42 710 41 644 consist mainly of depr, Adjusted for non-cash items 10 909 (2 560) amort, share-based Working capital changes (1 621) (6 703) payments and foreign Cash generated from operations 51 998 32 381 exchange Net finance cost (83) (3 825) movements on Taxation paid (8 140) (15 265) consolidation R51m PSG preference Net cash from operating activities 43 775 13 291 • shares repaid 3 July Net cash used in investing activities (5 957) (22 962) 2017 and Net cash used in from financing (49 778) (19 695) activities discontinuation of Cash and cash equivalents at the preference share 65 083 94 481 beginning of the year interest Effect of exchange rate movement on (1 444) (32) cash balances Total cash and cash equivalents at end 51 679 65 083 of the year 24
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