Local JSE AltX listed technology holding company, Alaris Holdings (Alaris), released their half year results on the 6th of March. The continuing operations performed well in the first half of the period resulting in robust profit growth compared to a slow start in the comparative period.
Highlights:
- The revenue from continuing operations increased by 135% from R36.1 million to R84.7 million
- Profit after tax from continuing operations increased by 37.8% from R2.7 million to R12.9 million
- Normalised earnings from continuing operations increased by 40% from R9.3 million to R13.0 million
- COJOT business acquired on 1 May 2016 contributed profit after tax of R2.4 million for the six months
- Planned disposal of the Aucom business through a specific repurchase of shares
- New product range called MIDAS
“Despite the results being impacted by a net foreign exchange loss of R2.9 million compared to net gains of R15 million in the comparative period, normalised earnings from continuing operations was up 40%”, says group CEO, Juergen Dresel.
Segmental Overview
Alaris Antennas, which designs and manufactures specialised broadband antennas as well as other related radio frequency products, continued to deliver healthy growth, with revenue increasing by 86% from R36.1 million to R67.3 million. Profit after tax (“PAT”) increased by 249% from R6.0 million to R20.8 million.
Alaris Antennas continued to be a leader in product innovation, adding 44 (Dec 2015: 50) new products to its portfolio in the six months to support future top line growth. “To support the Company’s client-centric approach, the Group has employed highly skilled staff in specialised areas. This supports our strategy to deliver high quality products to our customers within the committed timelines”, Dresel remarks.
African Union Communications (Aucom) specialising in the design and implementation of integrated broadcasting systems, managed to deliver healthy growth on last year’s revenue with an increase of 125% from R17.8 million to R40.1 million. The strategy of Alaris is to focus on development, manufacturing and selling RF products to global niche markets. Aucom does not fit this strategy and therefore the board decided to sell the Aucom subsidiary. The transaction has been agreed in principle and the transaction is progressing according to plan. The business is disclosed as a discontinued operation and will continue to be consolidated until the effective date of the disposal transaction.
COJOT Oy, a Finnish based company which develops innovative broadband antennas to improve connectivity, coverage and competitiveness of radio equipment which is deployed to save lives and protect property, contributed revenue of R17.5 million and a profit after tax of R2.4 million. “The integration of the COJOT business into the Group is progressing well. There are already roughly R1 million intersegment sales generated in the Group by cross selling the products of the two underlying businesses into the customer base of both companies”, says Dresel.
Prospects
Alaris Antennas has consistently grown turnover and profits since its establishment in 2005. For Alaris Antennas, organic growth is stimulated and achieved through understanding customers’ needs and adding new innovative products to the portfolio. We are also diversifying territories and entering new market segments where the Company’s core competencies find application. “We have projects that are under way to improve our operational scalability. This is to ensure that we remain agile and are able to adapt to our clients’ needs as the business grows, while still delivering excellent quality on time” says Dresel.
Having our products designed locally by our team of engineers and manufactured at our premises in Centurion, distinguishes the business from value added resellers and makes us competitive in the global market. This results in approximately 80% of our revenue from exports.” Dresel remarks.
COJOT is a customer intimate business where new product development is centered around the customer’s needs. COJOT launched a new product range called MIDAS. This product range is a set of antennas (vehicle, manpack and handheld) which automatically adapts to the radios it is connected to. Typically, it provides improved range and better link quality. About €0.7 million was invested into this product range over the past 6 years.
Samples are currently placed with several radio manufacturers worldwide. The success of this product could significantly boost growth of the COJOT business over time. The business is complemented by partnerships with contract manufacturers and a professional service provider network to enable sustainable growth.
The current focus is to finalise the Aucom disposal and ensure profitable organic growth of both Alaris Antennas and COJOT. “The two businesses are complimentary and the combined operations will allow existing customers to receive an improved service as well as an expanded product portfolio”. mentioned Dresel.
“International expansion remains an important part of the Group’s global strategy and we will remain on the lookout for further opportunities to increase our global footprint”, says Dresel and concludes.