Alaris posts promising interim results; focuses on organic growth, US opportunities

26th February 2018

By: Schalk Burger

Creamer Media Senior Deputy Editor

     

Font size: - +

AltX-listed specialist antenna firm Alaris Holdings has posted a 67% year-on-year increase in profit after tax to R21.6-million for the six months ended December 31.

Revenue increased by 21% to R102.6-million, headline earnings a share from continuing operations increased by 125% to 18.62c and net cash from operating activities increased by R33.3-million from an outflow of R14.9-million to an inflow of R18.4-million for the six months under review.

The operations performed satisfactorily in the six months under review, compared with the prior comparative period.

A slower six months for Alaris Antennas was made up for by a strong performance at Finland-based broadband antennas subsidiary COJOT, Alaris group CEO Jürgen Dresel said on Monday.

The 21% year-on-year increase in revenue and a 31% year-on-year increase in operating profit were aided by reduced net foreign exchange losses, while the 67% growth in profit after tax was assisted by the discontinuation of the PSG preference share interest and a lower effective tax rate.

“Our focus is to ensure profitable organic growth for Alaris Antennas and COJOT. Both are strongly focused on research and development and hold exploitable patented technologies that can be monetised into the future.

“Processes to capitalise on synergies between Alaris and COJOT, including cross-selling opportunities, will remain a priority in the short- to medium-term to maximise its full potential,” Dresel added.

The two businesses are complementary. As such, the design and development of new products from the combined skill sets of the two companies will provide more competitive features.

“International expansion is an important part of the group’s global strategy and management will remain on the lookout for further opportunities to increase the global footprint with specific focus on the United States,” he noted.

Meanwhile, the group’s cash position at December 31, was R27.8-million. The cash generated by operating activities, together with cash on hand from the prior year, was used to repay the R51-million preference shares owing to PSG Alpha Investments on July 3, 2017, following a decision by them not to convert to equity.

Cash flow from operating activities improved to R18.4-million compared with an outflow of R14.9-million for the comparative period.

The earnings a share from continuing operations increased by 125%, helped by a 26% reduction in the weighted average shares in issue.

Revenue from Centurion-based Alaris Antennas decreased by 7% from R67.3-million to R62.7-million and profit after tax decreased by 26% from R20.8-million to R15.5-million.

“The lower revenue for the period is a function of the product mix with a higher proportion of precision engineering projects. These take more time, requiring development of new products and customisation of existing intellectual property. This resulted in fewer deliveries compared to the prior period. These projects will be delivered in the second half of the financial year,” Dresel assured shareholders.

The decrease in profit is owing to lower revenue and higher employee costs. Alaris invested in highly skilled staff in specialised areas to support a client-centric approach and focus on quality. This included expansion in engineering resources, quality and testing, as well as an investment in specialised production and machine shop resources.

Alaris Antennas added 33 new products to its portfolio in the six-month period to support future revenue growth. Owning and developing intellectual property has proven to be a competitive advantage during the period, in addition to creating a barrier to entry.

About 90% of Alaris Antennas’ revenue is derived from exports, which provides a strong justification to increase Alaris’ footprint globally.

“The company is expanding its geographies by entering into new market segments where core competencies can be leveraged. Management believes the business has significant potential for organic and acquisitive growth where there is a complementary opportunity in markets and products,” highlighted Dresel.

Additionally, COJOT grew its revenue by 128% to R39.9-million and its profit after tax by 383% to R11.8-million.

Revenue was bolstered by several larger European orders including a portion of the €1-million order received in June 2017. Although there is a healthy order backlog for the second half, Alaris expects it to be lower than in the first half.

Alaris’ objective of becoming the preferred supplier of innovative radio-frequency products locally and internationally is gaining momentum with sustainable organic growth and strategic acquisitions.

African telecommunications services subsidiary Aucom was classified as a discontinued operation in the prior period. Normalised earnings of R21.7-million were calculated by adjusting profit for the loss on discontinued operation on the disposal of Aucom, as well as legal and consulting fees for acquisitions and disposals.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

Comments

The content you are trying to access is only available to subscribers.

If you are already a subscriber, you can Login Here.

If you are not a subscriber, you can subscribe now, by selecting one of the below options.

For more information or assistance, please contact us at subscriptions@creamermedia.co.za.

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION