ALARIS HOLDINGS LTD INTERIM FINANCIAL RESULTS For the 6 months - - PowerPoint PPT Presentation

ALARIS HOLDINGS LTD

INTERIM FINANCIAL RESULTS For the 6 months ended 31 December 2018

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

AGENDA

2

SUMMARY

• Revenue decreased by 17% from R102.6 million to R85.0 million.
• Alaris revenue declined owing to complex projects taking longer
• COJOT revenue was down compared to exceptional prior period
• 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:

• Cash payment: US$2,3 million (R30.2 million)
• Balance: US$0,7m was settled by issuing 4.9 million shares

 Majority of management will remain in business

4

REFLECTION ON INTERIM PERIOD

POSITIVE DEVELOPMENTS:

• Access to large US defence

market from mWAVE acquisition

• Increase in number of large
• rders and imminent
• pportunities
• COJOT retains focus on smart

antennas which are designed-in

• Stronger interaction between

global teams on joint

• pportunities
• Expanded product portfolio

CHALLENGES / ANOMALIES:

• Long sales cycles
• Larger projects with

specialized technological advances resulting in longer delivery time

• Mitigation of risks in project

cycle i.t.o. cost and time

• Deteriorating South African

supply chain

• Low margins at mWAVE for

part of their business

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

• 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

WHAT DOES ALARIS ANTENNAS DO?

9

ALARIS ANTENNAS MARKET & TERRITORIES

No Presence

879 Products 10 Product categories

Presence

10

13% 16% 29% 42%

Alaris Antennas sales by territory for H1 2019

Americas (13%) Asia and Middle East (16%) South Africa (29%) Europe and UK(42%)

Jamming Direction finding Masts Counter - RCIED RF Electronics LPDA Monitoring

ALARIS ANTENNAS OFFERINGS

Test & Meas. Communication 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

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COJOT

• 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
• Supplying antenna

technology in some of the most demanding global environments

Vehicle Antennas Manpack/Man Portable Antennas Antenna Accessories Services

WHAT DOES COJOT DO?

Mobile Antennas 20 to 6000 MHz

13

COJOT MARKET AND TERRITORIES

222 Products 5 Product categories 14

7% 26% 67%

COJOT sales by territory for H1 2019

Finland (7%) Asia and Middle East (26%) Rest of EU and UK (67%)

COJOT OFFERINGS

ECM (Electronic

Countermeasure)

Communications

Smart antennas

Services

Monitoring

WIDEBAND ANTENNAS FOR MILITARY APPLICATIONS

TA30512H

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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.

MWAVE

WHAT DOES mWAVE DO?

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• 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.

mWAVE MARKET AND TERRITORIES

7 Product categories 18

97% 2% 1%

mWAVE sales by territory for H1 2019

Americas (97%) Asia and Middle East (2%) Europe (1%)

mWAVE OFFERINGS

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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 Grid Antennas Custom Products Parabolic Antennas Radomes High Frequency Antennas

FINANCIALS

ALARIS GROUP REVENUE

21

42 36 85 103 85 46 96 75 84

• 20

40 60 80 100 120 140 160 180 200 2015 2016 2017 2018 2019 R'm

CONTINUING OPERATIONS REVENUE - 5 YEARS

December (H1) June (H2)

SEGMENT – ALARIS ANTENNAS

Unaudited six months ended Audited year ended R’000 Dec 2018 Dec 2017 Jun 2018 Revenue 53 943 62 713 121 968 Revenue growth y-o-y

• 14%
• 7%

(1%) PAT 9 367 15 492 32 541 PAT growth y-o-y

• 40%
• 26%

(7%) PAT margin 17% 25% 27%

42 36 67 63 54 46 81 56 59

• 20

40 60 80 100 120 140 2015 2016 2017 2018 2019 R'm

Alaris Antennas Revenue

December (H1) June (H2) 9 6 21 15 9 12 28 14 17

• 5

10 15 20 25 30 35 40 2015 2016 2017 2018 2019 R'm

Alaris Antennas PAT

December (H1) June (H2)

• Higher portion of precision

engineering projects, which took longer to complete

• Aim to secure design-in

solutions

• Investment in the project

management office to counter the impact of the more complex design processes on the large projects

• Slower order intake in first

half

• Profit margin impacted by

lower revenue

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SEGMENT – COJOT

• Lower first half vs the

exceptional comparative period

• Deliveries of several
• rders are scheduled

for 2nd half

• Margins impacted

from lower revenue Unaudited six months ended Audited year ended R’000 Dec 2018 Dec 2017 Jun 2018 Revenue 22 071 39 882 65 107 Revenue Growth y-o-y

• 45%

128% 79% PAT 3 579 11 763 14 945 PAT growth y-o-y

• 70%

383% 288% PAT Margin 16% 29% 23%

17 40 22 15 19 25

• 10

20 30 40 50 60 70 2016 2017 2018 2019 R'm

COJOT Revenue

December (H1) June (H2)

23

2 12 4 5 1 3

• 2

4 6 8 10 12 14 16 2016 2017 2018 2019 R'm

COJOT PAT

December (H1) June (H2)

SEGMENT – mWAVE

• Consolidated into

Group effective 1 October 2018

• Low contribution from

short 3 month timeframe

• Should be assessed
• ver 12 month period
• Positive about
• pportunities in the US

market Unaudited six months ended R’000 Dec 2018 Revenue 9 029 PAT 146 PAT Margin 2% 24

SEGMENT – CORPORATE & CONSOLIDATION

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) Unaudited six months ended Audited year ended R’000 Dec 2018 Dec 2017 Jun 2018 Loss for the period (6 687) (5 630) (14 567) 25

STATEMENT OF PROFIT AND LOSS

• Results of combined
• perations lower

due to larger

• pportunities with

longer sales and delivery cycles

• COJOT had an

exceptional performance in comparative period

• mWAVE contributed

11% revenue, at low gross margin.

• Average tax rate of

21% (R&D tax rebate)

• mWAVE acquisition

partially settled by issuing 4.9 million shares (weighted from 1 Oct)

Unaudited six months ended Audited R’000 December 2018 December 2017 June 2018 Revenue 85 043 102 595 187 075 Cost of sales (27 699) (27 770) (53 589) Gross profit 57 344 74 825 133 486 Other income 585 63 738 Operating expenses (49 896) (47 344) (91 502) Trading operating profit 8 033 27 544 42 722 Finance income 180 140 380 Finance costs (81) (265) (392) Profit before taxation 8 132 27 419 42 710 Taxation (1 727) (5 794) (9 791) Profit for the period 6 405 21 625 32 919 Weighted average number of

• rdinary shares in issue

118 436 265 116 116 771 116 116 771 HEPS 5,41 18.62 28,35

26

STATEMENT OF FINANCIAL POSITION

• Goodwill and

intangible assets increased - mWAVE purchase price allocation

• Inventories

increased (mWAVE)

Unaudited six months ended Audited R’000 December 2018 December 2017 June 201 Assets Non-Current Assets Plant and equipment 7 351 7 301 6 619 Goodwill 51 213 24 749 26 582 Intangible assets 18 681 12 247 12 782 Deferred tax assets 1 688 3 802 2 539 78 933 48 099 48 522 Current Assets Inventories 25 124 16 560 19 080 Current tax receivable 5 678 1 108 1 194 Trade and other receivables 38 841 48 882 35 151 Cash and cash equivalents 18 458 31 542 51 679 88 101 98 092 107 104 Total Assets 167 034 146 191 155 626 Total Equity 133 365 99 938 116 328 Total Liabilities 33 669 46 253 39 298 Total Equity and Liabilities 167 034 146 191 155 626 Net Asset Value per ordinary share 110.14 86.07 100.18

27

CASH FLOW

• Provisional taxes paid

in December 2018 based on stronger FY18 profits

• mWAVE acquisition

partly paid in cash R30m

• 64% cash in hard

currency

Unaudited six months ended Audited R’000 December 2018 December 2017 June 2018 Profit before taxation 8 132 27 419 42 710 Adjusted for non-cash items 3 911 5 011 10 909 Working capital changes (9 262) (14 453) (1 621) Cash generated from operations 2 781 17 977 51 998 Net finance cost 96 (125) (83) Taxation (paid) / received (5 755) 508 (8 140) Net cash (used in) / from

• perating activities

(2 878) 18 360 43 775 Net cash used in investing activities (31 391) (3 856) (5 957) Net cash from / (used in) financing activities 94 (49 853) (49 778) Cash and cash equivalents at the beginning of the year 51 679 65 083 65 083 Effect of exchange rate movement on cash balances 954 (1 912) (1 444) Total cash and cash equivalents at end of the year 18 458 27 822 51 679

28

GROWTH PLAN

FOCUS AREAS FOR GROWTH

• Finalise integration of mWAVE into the Group and improve their

gross margin

• Establishing Alaris USA as a division of mWAVE
• Further organic growth through technological advances in

engineering solutions and focus on smart antennas

• Diversified territorial sales channels, allowing us to be closer to
• ur customers

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FOCUS AREAS FOR GROWTH (continued)

• Focus on design-in solutions to benefit from repeat orders
• Utilise broader supply chain available through international

divisions

• Placing more importance on upfront project assessments with

increased effort on understanding the technical risks, scope, pricing and timelines.

31

ALARIS INVESTMENT ATTRIBUTES

• Alaris, COJOT and mWAVE hold their own IP and registered patents
• Continued acquisitive growth with increased global footprint
• Access to large US defence market through mWAVE acquisition
• Majority of customers are international with more than 80% export

based revenue in hard currency

• Local manufacturing
• Stable and proven track record of 18 years in the industry
• 11 years listed on the JSE AltX

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THANK YOU Q & A