ALARIS HOLDINGS LTD INTERIM FINANCIAL RESULTS For the 6 months ended 31 December 2018
AGENDA Slide# Summary 3 Operational Highlights 4 Reflection on interim period 5 Group Overview 6 - 19 Financial information 20 - 28 Growth Plan 29 - 32 Q&A 2
SUMMARY Revenue decreased by 17% from R102.6 million to R85.0 million. • Alaris revenue declined owing to complex projects taking longer o COJOT revenue was down compared to exceptional prior period o Normalised earnings for the Group decreased by 64% from R21.7 • million to R7.8 million The US acquisition was successfully concluded and consolidated • with an effective date of 1 October 2018. 3
OPERATIONAL HIGHLIGHTS The Group’s focused strategy is being implemented through 3 core strategic objectives: mWAVE acquisition effective 1 October 2018 and initial integration processes commenced Purchase consideration: o Cash payment: US$2,3 million (R30.2 million) o Balance: US$0,7m was settled by issuing 4.9 million shares Majority of management will remain in business 4
REFLECTION ON INTERIM PERIOD CHALLENGES / ANOMALIES: POSITIVE DEVELOPMENTS: Long sales cycles Access to large US defence • • market from mWAVE acquisition Larger projects with • specialized technological Increase in number of large • advances resulting in orders and imminent longer delivery time opportunities Mitigation of risks in project COJOT retains focus on smart • • cycle i.t.o. cost and time antennas which are designed-in Deteriorating South African Stronger interaction between • • supply chain global teams on joint opportunities Low margins at mWAVE for • part of their business Expanded product portfolio • 5
GROUP OVERVIEW
GROUP OVERVIEW Technology holding company listed on the JSE AltX since July 2008 Alaris Holdings Alaris Antennas (RSA) COJOT (Finland) mWave (USA) 7
ALARIS ANTENNAS
WHAT DOES ALARIS ANTENNAS DO? Designs, develops, manufactures and sells specialised broadband • antennas and other Radio Frequency products About 70% of revenue received from exports for this half • 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 9
ALARIS ANTENNAS MARKET & TERRITORIES Presence No Presence Alaris Antennas sales by territory for H1 2019 Americas (13%) 13% 16% 42% Asia and Middle East (16%) South Africa (29%) 29% Europe and UK(42%) 879 Products 10 Product categories 10
ALARIS ANTENNAS OFFERINGS Communication Jamming Direction finding Monitoring Masts Counter - RCIED Test & Meas. RF Electronics LPDA Services OMNI-A0246 – Wideband HF Antenna System 1 – 30 MHz, 7.5 kW Designed for strategic applications to transmit very high power. • Antenna system combines high power RF antenna design with • control system/automation design. EMI countermeasure design was required to ensure the two subsystems are isolated from each other. The system implements semi-automated mechanics to lift the • antenna in and out of its shelter and hoist it to its fully deployed16m length at the push of a button. OMNI-A0246 11
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 13
COJOT MARKET AND TERRITORIES COJOT sales by territory for H1 2019 7% Finland (7%) 26% Asia and Middle East (26%) 67% Rest of EU and UK (67%) 222 Products 5 Product categories 14
COJOT OFFERINGS WIDEBAND ANTENNAS FOR MILITARY APPLICATIONS ECM (Electronic Monitoring Smart antennas Communications Services Countermeasure) Adaptive Handheld VHF/UHF Antenna, TA30512H Low profile antenna with superior gain performance. • Fast tuning to a new frequency band allows the antenna • to be used in different applications. Supports very wide transmission bandwidths. • Control integrated to the connector to optimize the • performance at the required frequency. TA30512H 15
MWAVE
WHAT DOES mWAVE DO? Designs, manufactures and supports a wide range of standard and • custom microwave antenna products for commercial, government and defense applications. Specialises in parabolic grids, solid parabolic and wide band feed • assemblies Antenna product range covers VHF to 100 GHz • frequency range Own IP • Own outdoor antenna test range is used to • support new antenna development & production verification Offers third party testing for its customers. • 17
mWAVE MARKET AND TERRITORIES mWAVE sales by territory for H1 2019 2% 1% Americas (97%) Asia and Middle East (2%) 97% Europe (1%) 7 Product categories 18
mWAVE OFFERINGS Parabolic High Frequency Radomes Custom Products Grid Antennas Antennas Antennas HRP3 – 800: 3FT/0.9m high performance parabolic antenna, 71-86 GHz. • This 3 foot diameter 80 GHz antenna was designed based on firm requests from manufacturers to increase path length. • The design includes the option to attach to an antenna positioner to maintain path alignment. Services HRP3-800 19
FINANCIALS
ALARIS GROUP REVENUE CONTINUING OPERATIONS REVENUE - 5 YEARS 200 180 160 84 140 75 120 R'm 100 - 96 80 46 60 103 85 85 40 42 20 36 0 2015 2016 2017 2018 2019 December (H1) June (H2) 21
SEGMENT – ALARIS ANTENNAS Audited Higher portion of precision • Unaudited six months year engineering projects, ended which took longer to ended complete R’000 Dec 2018 Dec 2017 Jun 2018 Aim to secure design-in • Revenue 53 943 62 713 121 968 solutions Revenue growth y-o-y -14% -7% (1%) Investment in the project • management office to PAT 9 367 15 492 32 541 counter the impact of the PAT growth y-o-y -40% -26% (7%) more complex design PAT margin 17% 25% 27% processes on the large projects Slower order intake in first • Alaris Antennas PAT Alaris Antennas Revenue 40 half 140 35 Profit margin impacted by • 120 30 lower revenue 100 14 56 59 25 17 80 81 R'm R'm 20 28 46 60 15 12 40 67 63 21 54 10 42 20 36 15 5 9 9 - 6 2015 2016 2017 2018 2019 - 2015 2016 2017 2018 2019 December (H1) June (H2) December (H1) June (H2) 22
SEGMENT – COJOT Lower first half vs the • Unaudited six months Audited exceptional ended year ended comparative period R’000 Dec 2018 Dec 2017 Jun 2018 Deliveries of several • Revenue 22 071 39 882 65 107 orders are scheduled for 2 nd half Revenue Growth y-o-y -45% 128% 79% Margins impacted • PAT 3 579 11 763 14 945 from lower revenue PAT growth y-o-y -70% 383% 288% PAT Margin 16% 29% 23% COJOT PAT COJOT Revenue 16 70 14 3 60 12 25 50 10 40 R'm R'm 8 30 19 6 12 20 40 4 22 10 1 17 15 5 2 4 - 2 2016 2017 2018 2019 - 2016 2017 2018 2019 December (H1) June (H2) December (H1) June (H2) 23
SEGMENT – mWAVE Consolidated into • Unaudited six Group effective 1 months ended October 2018 R’000 Dec 2018 Low contribution from • Revenue 9 029 short 3 month timeframe PAT 146 Should be assessed • over 12 month period PAT Margin 2% Positive about • opportunities in the US market 24
SEGMENT – CORPORATE & CONSOLIDATION Unaudited six months Audited year ended ended R’ 000 Dec 2018 Dec 2017 Jun 2018 Loss for the period (6 687) (5 630) (14 567) Main costs before tax : Net foreign exchange gains of R0.5 million (Dec 2017: R0.1 million loss) • Employee costs, cost of the share incentive option scheme for Group • executives and board fees totalling R4.0 million (Dec 2017: R5.0 million) Legal and consulting fees including the costs to be listed on the JSE, advisory • fees, group audit fees and legal fees for the mWAVE acquisition totalling R2.9 million (Dec 2017: R1.1 million) 25
STATEMENT OF PROFIT AND LOSS Unaudited six months Results of combined • Audited ended operations lower December December R’000 June 2018 due to larger 2018 2017 opportunities with Revenue 85 043 102 595 187 075 longer sales and Cost of sales (27 699) (27 770) (53 589) delivery cycles Gross profit 57 344 74 825 133 486 COJOT had an • Other income 585 63 738 exceptional Operating expenses (49 896) (47 344) (91 502) performance in Trading operating profit 8 033 27 544 42 722 comparative period Finance income 180 140 380 mWAVE contributed • 11% revenue, at low Finance costs (81) (265) (392) gross margin. Profit before taxation 8 132 27 419 42 710 Average tax rate of • Taxation (1 727) (5 794) (9 791) 21% (R&D tax Profit for the period 6 405 21 625 32 919 rebate) Weighted average number of 118 436 265 116 116 771 116 116 771 mWAVE acquisition • ordinary shares in issue partially settled by HEPS 5,41 18.62 28,35 issuing 4.9 million shares (weighted from 1 Oct) 26
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