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ALARIS HOLDINGS LIMITED - Condensed Consolidated Results for the Financial Year Ended 30 June 2015

Release Date: 30/09/2015 16:10
Code(s): ALH     PDF:  
Wrap Text
Condensed Consolidated Results for the Financial Year Ended 30 June 2015

Alaris Holdings Limited
(formerly Poynting Holdings Limited)
Incorporated in the Republic of South Africa
(Registration number 1997/011142/06)
Share code: ALH ISIN: ZAE000201554
(“Alaris” or “the Company” or “the Group”)

CONDENSED CONSOLIDATED RESULTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2015

GROUP COMMENTARY

Highlights
•   Revenue from continuing operations increased by 102% from R95.9 million to R193.0 million. Aucom consolidated for a full
    12 months.

•   Normalised earnings per share from continuing businesses increased by 41% from 11.6 cents to 16.4 cents

•   Normalised earnings from continuing business increased by 64% from R12.2 million to R20.0 million

•   Robust financial performance (segmental PAT) from Alaris Antennas (R20.9 million) and Aucom (R7.3 million).

•   Loss from continuing operations after tax decreased from R86.1 million to R1.2 million.

•   Continuing earnings per share (EPS) decreased from negative 58.3 cents to negative 0.7 cents.

•   Continuing headline earnings per share (HEPS) increased from 6.1 cents to 18.2 cents.

•   Net tangible asset value per share decreased by 17% from 43.5 cents to 35.9 cents.

INTRODUCTION & COMPANY OVERVIEW

Alaris is a technology holding company listed on the JSE AltX since July 2008.

The Alaris Group consists of:

Alaris Antennas

The business designs and manufactures specialised broadband antennas as well as other related radio frequency products. Its
products sell in the electronic warfare, frequency spectrum monitoring, communication, test and measurement, and other
specialised markets. Its clients are located across the globe, mostly outside of South Africa (the Americas, Europe and Asia) and
operate mainly in the homeland security market space as well as system integrators and frequency spectrum regulators.

Aucom

The business provides end to end solutions for radio and TV broadcasters. It designs, sells and implements integrated broadcasting
systems and has specific expertise in digital television distribution, multiscreen as well as over-the-top (OTT) systems. It is well
positioned to assist broadcasters with the migration to digital television and radio services across Africa. A large increase is also
expected in private content providers, private TV companies and private broadcasters.
                                                                                                                        
RESULTS OVERVIEW


                                                                                                      Reviewed          Restated
R’000                                                                                             30 June 2015      30 June 2014
Reconciliation of comprehensive income

Normalised profit after tax 2
     Alaris Antennas                                                                                   20 944            16 214
     Aucom                                                                                              7 299            (3 302)
     Corporate and consolidation 1                                                                     (8 277)             (683)

Normalised profit after tax for continuing operations 2                                                19 966            12 229
                                      
     Contingent consideration asset 3                                                                  22 206                 -
                                                      
     Profit on disposal of discontinued operations 4                                                    2 395                 -
                                                  
     Losses incurred by discontinued operations 5                                                      (6 279)          (11 680)
                                                                 
     Legal and consulting costs for acquisitions and disposals 6                                      (10 070)           (3 257)
     Impairment of goodwill 7                                                                         (33 342)          (95 046)
Total comprehensive income                                                                             (5 124)          (97 754)
Continuing operations - Normalised earnings per ordinary share (cents)                                  16.41             11.58

Total comprehensive income for the Group was negative R5.1 million, compared to negative R97.7 million in the comparative
period. However, the financial results for the year include items which are not representative of the performance of the underlying
operations:
1.   Costs relating to shared services and fees associated with being a listed company are included in this segment. Net funding
     costs, including the interest paid on the PSG preference shares are included here.

2.   Refer to supplementary note 2 for calculation of normalised profit after tax.

3.   A contingent consideration asset was raised for the estimated value of recallable shares at the end of the earn out period
     which expires on 30 June 2016. The estimated number of shares recallable was based on the estimated cumulative
     performance of Aucom as a percentage of the cumulative earn out target to be achieved. This was valued at R22.2 million.
     Refer to supplementary note 5.

4.   The disposal of the Compart businesses resulted in a profit of R2.4 million. The Compart businesses were disposed of for a
     consideration of R35.8 million which was settled by the repurchase of 14 million shares at 256c per share. The Group’s net
     assets disposed of amounted to R33.4 million.

5.   The disposed Compart operations have been classified as discontinued and have been disclosed separately. The discontinued
     operations generated a loss of R6.3 million for the year up to December 2014 (June 2014: loss of R11.7 million). The
     discontinued operations loss of R6.3 million excludes the profit on disposal of the discontinued operations.

6.   Non-recurring legal and consulting fees amounted to R10.1 million due to the Compart disposal, RNS legal cost and the
     anticipated ARA acquisition. R3.3 million legal and consulting fees were incurred in 2014 for the Aucom acquisition.

7.   The purchase consideration of Aucom was fixed when the transaction became unconditional and was paid for in shares. The
     purchase consideration was therefore impacted by the change in share price from 75 cents (the price when the transaction
     was originally negotiated) to 271 cents (the price when the transaction become unconditional and effective) resulting in
     goodwill being recognized of R148 million. Goodwill relating to the Aucom acquisition was impaired by R33.3 million (2014:
     R95 million) following an annual review of the estimated present value of future cash flows expected to be derived from the
     Cash Generating Unit (value in use), using a pre-tax rate of 21.1% and a terminal value growth rate of 3% from 2020. The
     recoverable amount of the CGU was estimated to be lower than its carrying amount resulting in a further impairment charge
     for the year.
                                                                                                                   
BUSINESS OVERVIEW

Alaris Antennas

The business continued to deliver sound growth with revenue increasing by 15% to R88.4 million (2014: R76.6 million) without a
deterioration in gross margins. Alaris Antennas continued to be a leader in product innovation, adding 155 (2014: 52) new products
to its portfolio in the past year to support top line growth.

Profit after tax is R20.9 million, 29% higher than recorded in the same period last year. Further investment during the 2015
financial year included growth in headcount from 77 to 87; moving from its old premises in Wynberg into a better suited fit for
purpose set of buildings in Centurion; investing into a new spray booth facility and upgrading the ERP system. This has set the
platform for further growth in the future.

Aucom

The actual performance was lower than expected mainly due to the delay of certain large orders for customers that were expected
to materialize in 2015. Revenue remained above R100 million with profit after taxation of R7.3 million. Should Aucom have been
consolidated for a full twelve months in 2014, revenue of R104 million with a profit after tax of R13.8 million would have been
recorded.

The business has strengthened its management team in areas of finance and operations to support the Chief Executive Officer
(CEO) and the sales team to focus on new business development.

National broadcasters in Africa are focusing on digital television (DTV) rollout projects and Aucom is considered a market leader
in Africa for the system integration of turnkey solutions for the digital migration projects.

Corporate and Consolidation

The results contain a number of additional costs which were incurred at the corporate and consolidation level. This is the first
year where the Group carried the full burden of the amortisation of intangibles in respect of the Aucom acquisition amounting to
R2.1 million as well as the interest on the PSG preference shares issued on 30 June 2014 at 8.64% per annum. A complex
accounting year-end in 2014 resulted in additional audit fees of R0.7 million being incurred, as well as the enhancement of the
head office team through the appointment of a chief operating officer and a new Group financial director. Legal and consulting
fees of R10.1 million were incurred in relation to the anticipated ARA acquisition and the Compart disposal.

Discontinued Operations

The Compart businesses were consolidated up to 31 December 2014. These operations recorded a loss of R6.3 million mostly as
a result of low gross margins.
                                                                                                                     
PROSPECTS

The disposal results in a more profitable and focused Group. It is important to note that the remaining businesses have the DNA
and innovation which Alaris (formerly Poynting) is known for and in which we have built a track record of innovating profitably.
The Group is now positioned around what it is good at.

The Group remains focused on achieving growth (organic and acquisitive) and improving profitability in the near term.

Alaris Antennas

The business has consistently grown turnover and profits since its establishment in 2005. The operational EBIT has grown with a
CAGR (Cumulative Annual Growth Rate) of more than 25% over the past ten years. Organic growth is stimulated and achieved
through the continuous drive towards adding of new and innovative products into the product portfolio. Further opportunities
for growth are achieved by adding new system houses, distributors and agents, diversifying territories and entering into new
market segments where the Company’s core competencies find application. Management believes the business has significant
potential for organic growth and acquisitive growth where there is a complimentary opportunity in markets and products.

The business has invested in capacity to enable growth that should be reflected in future results. The business continues to build
its confirmed future order book and pipeline that extends into the next financial year.

Aucom

The business continues to bid for significant digital infrastructure opportunities across the African continent and remains
optimistic that it will be successful in being awarded some of these opportunities. It is difficult to determine the timing of when
these bids will be awarded. Management continue to engage with the end customers and remain hopeful of near term successes.

The Group

The Group’s performance is dependent on a significant portion of revenue associated with long sales cycles coupled with that of
three to six month delivery cycles. In order to mitigate this, the Group continues to expand its regional and product diversity.

The current focus is to ensure the profitable organic growth of the Alaris Antennas and Aucom businesses and improve the working
capital generation of the Group. In light of the termination of the ARA merger agreement we will remain on the lookout to secure
a footprint into the US and Europe and further identify companies which fit the Company’s market profile and provide synergies
to the Group. Refer to the SENS announcement dated 11 September 2015 for further details on the termination of the ARA
transaction.


                                                                                                                      
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE
                                                                                                      Reviewed          Restated 2
R’000                                                                                                     2015                2014
Continuing Operations
Revenue                                                                                               193 034              95 862
Cost of sales                                                                                        (103 300)            (47 378)
Gross profit                                                                                           89 734              48 484
Operating expenses                                                                                    (71 982)            (37 993)
Trading operating profit 1                                                                             17 752              10 491
Finance income                                                                                          3 312                 797
Contingent consideration asset 2                                                                       22 206                   -
Impairment of goodwill                                                                                (33 342)            (95 046)
Finance costs                                                                                          (4 851)                (66)
Profit / (loss) before taxation                                                                         5 077             (83 824)
Taxation                                                                                               (6 317)             (2 250)
Loss from continuing operations                                                                        (1 240)            (86 074)

Discontinued Operations 2
Revenue                                                                                                25 189              36 264
Cost of sales                                                                                         (14 871)            (14 611)
Gross profit                                                                                           10 318              21 653
Operating expenses                                                                                    (17 639)            (39 079)
Trading operating loss                                                                                 (7 321)            (17 426)
Finance income                                                                                            101                 217
Profit on disposal of discontinued operations                                                           2 395                   -
Finance costs                                                                                               -                 (96)
Loss before taxation                                                                                   (4 825)            (17 305)
Taxation                                                                                                  941               5 625
Loss from discontinued operations                                                                      (3 884)            (11 680)

Total comprehensive income                                                                             (5 124)            (97 754)
Weighted average number of ordinary shares in issue 2                                             121 697 690         105 610 733
Weighted average number of diluted ordinary shares in issue 2                                     168 826 621         112 562 575
Total operations - Basic earnings per ordinary share (cents) 2                                          (2.91)             (66.24)
Total operations - Diluted basic earnings per ordinary share (cents) 2                                 (13.52)             (86.83)
Total operations - Headline earnings per ordinary share (cents) 3                                       15.22               (1.83)
Total operations - Diluted headline earnings per ordinary share (cents)                                  5.39               (2.39)
Total operations - Normalised earnings per ordinary share (cents) 4                                     16.41               11.58
Continuing operations - Basic earnings per ordinary share (cents) 2                                     (0.70)             (58.33)
Continuing operations - Diluted basic earnings per ordinary share (cents) 2                            (11.22)             (76.46)
Continuing operations - Headline earnings per ordinary share (cents) 3                                  18.23                6.08
Continuing operations - Diluted headline earnings per ordinary share (cents)                             8.53                7.98
Continuing operations - Normalised earnings per ordinary share (cents) 4                                16.41               11.58
Discontinued operations - Basic earnings per ordinary share (cents) 2                                   (2.21)              (7.91)
Discontinued operations - Diluted basic earnings per ordinary share (cents) 2                           (2.30)             (10.38)
Discontinued operations - Headline earnings per ordinary share (cents) 3                                (3.01)              (7.91)
Discontinued operations - Diluted headline earnings per ordinary share (cents) 5                        (3.14)             (10.38)

1.   Trading operating profit / (loss) comprises sale of goods, rendering of services and directly attributable costs, but excludes
     investment income, fair value adjustments, impairment of goodwill and finance costs.

2.   Refer to supplementary note 3, 4.1, 4.2 and 4.3

3.   Refer to supplementary note 1.

4.   Refer to supplementary note 2.
                                                                                                                 
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE
                                                                                                      Reviewed          Restated 1

R’000                                                                                                    2015                2014
Assets
Non-Current Assets
Plant and equipment                                                                                    6 221               6 778
Goodwill                                                                                              22 115              55 457
Intangible assets                                                                                     13 408              24 707
Investment in joint venture                                                                                -               2 964
Deferred tax assets                                                                                    1 541                 280
Contingent consideration asset 1                                                                      22 206                   -
Other financial assets                                                                                 2 647                   -
                                                                                                      68 138              90 186
Current Assets
Inventories                                                                                            9 236              23 641
Other financial assets                                                                                 8 165               5 630
Current tax receivable                                                                                 1 665               3 191
Trade and other receivables                                                                           43 428              30 994
Cash and cash equivalents                                                                             74 386              85 871
                                                                                                     136 880             149 327
Total Assets                                                                                         205 018             239 513
Equity and Liabilities
Equity
Equity attributable to owners of the Company
Share capital and preference shares                                                                      897                 898
Share premium                                                                                        231 265             231 151
Share-based payment reserve                                                                              406                 123
Accumulated loss                                                                                    (117 242)            (76 279)
Total equity                                                                                         115 326             155 893
Liabilities
Non-Current Liabilities
Loans and borrowings                                                                                       -                 114
Preference share liability                                                                            50 111              50 111
Other financial liabilities                                                                              911                   -
Deferred tax liabilities                                                                               2 146               1 957
                                                                                                      53 168              52 182
Current Liabilities
Bank overdraft                                                                                             -                  50
Loans and borrowings                                                                                       -               1 908
Trade and other payables                                                                              30 002              27 168
Current tax payable                                                                                    1 138                   9
Provisions                                                                                             1 741               2 303
Other financial liabilities                                                                            3 643                   -
                                                                                                      36 524              31 438
Total Liabilities                                                                                     89 692              83 620
Total Equity and Liabilities                                                                         205 018             239 513
Number of ordinary shares legally in issue, less treasury shares                                 160 241 949         174 087 719
Net asset value per ordinary share (cents) 2                                                           71.97               89.55
Net tangible asset value per ordinary share (cents) 2                                                  35.94               43.50

1.   Refer to supplementary note 4.3 and 5.

2.   Net asset value is calculated by dividing total equity, by the number of ordinary shares legally in issue, being number of shares
     in issue less treasury shares. Net tangible asset value is calculated by dividing total equity less contingent consideration asset
     less goodwill and intangible assets by the same number of ordinary shares legally in issue.
                                                                                                                         
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE
                                                                                                     Reviewed          Restated 3

R’000                                                                                                    2015                2014
Net cash (used in) / from operating activities                                                          (927)              7 922
Net cash used in investing activities                                                                (10 242)            (16 354)
Net cash (used in) / from financing activities                                                        (2 469)             75 804
Net (decrease) / increase in cash and cash equivalents for the year                                  (13 638)             67 372
Cash disposed / acquired as part of business disposal / combination                                    2 332               6 626
Cash and cash equivalents at the beginning of the year                                                85 821              13 585
Effect of exchange rate movement on cash balances                                                       (129)             (1 762)
Total cash and cash equivalents at end of the year                                                    74 386              85 821

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE

                                 Share capital and           Share         Share based         Retained income         Total equity
                                        preference         premium             payment          / (accumulated
R’000                                       shares                             reserve                   loss)
Balance at 01 July 2013                         5          27 015                 123                  21 475               48 618
Total comprehensive income                      -              -                    -                 (97 754)             (97 754)
for the year
Issue of shares for cash                        1          25 279                   -                       -               25 280
Issue of preference shares 1                  889               -                   -                       -                  889
Issue of shares – for business                  3         178 857                   -                       -              178 860
combination
Balance at 30 June 2014 3-                    898         231 151                 123                 (76 279)             155 893
restated
Total comprehensive income for                  -               -                   -                  (5 124)              (5 124)
the year
Shares repurchased - Compart 2                 (1)              -                   -                 (35 839)             (35 840)
Share-based payment - new                       -               -                 397                       -                  397
issue of options
Share options exercised                         -             114                (114)                      -                    -
Balance at 30 June 2015                       897         231 265                 406                (117 242)             115 326

1.   Issue of 20.4 million preference shares at R51 million, of which R0.9 million is classified as equity. The preference
     shareholders have the option to convert their preference shares into ordinary shares at R2.50 in June 2017.

2.   Refer to supplementary note 3.

3.   Refer to supplementary note 4.3.
                                                                                                                     
SEGMENTAL ANALYSIS FOR THE YEAR ENDED 30 JUNE
                                                                                                     Reviewed          Restated 1
R’000                                                                                                    2015                2014
Continuing Operations
Segmental revenue
Alaris Antennas                                                                                       88 394              76 653
Aucom 2                                                                                              104 640              19 209
                                                                                                     193 034              95 862

Operating earnings before interest, tax, depreciation and amortisation 3
Alaris Antennas                                                                                       30 885              23 624
         
Aucom 2                                                                                                8 523              (4 997)
Corporate and consolidation                                                                          (12 546)             (3 439)
                                                                                                      26 862              15 188
Profit / (loss) for the year 4
Alaris Antennas                                                                                       20 944              16 214
Aucom 2                                                                                                7 299              (3 302)
Corporate and consolidation                                                                          (29 483)            (98 986)
                                                                                                      (1 240)            (86 074)

Normalised earnings profit / (loss) after tax for the year
Alaris Antennas                                                                                       20 944              16 214
Aucom 2                                                                                                7 299              (3 302)
Corporate and consolidation                                                                           (8 277)               (683)
                                                                                                      19 966              12 229                             
Discontinued Operations 1
Segmental revenue
Commercial                                                                                            19 835              32 426
CCS                                                                                                      847               3 796
New Business                                                                                           4 507                  42
Total Compart                                                                                         25 189              36 264
Operating earnings before interest, tax, depreciation and amortisation 3
Commercial                                                                                               527              (2 732)
CCS                                                                                                   (1 479)             (5 270)
New Business                                                                                            (903)             (3 633)
Total Compart                                                                                         (1 855)            (11 635)
Profit / (loss) for the year
Commercial                                                                                               428              (4 595)
CCS                                                                                                   (1 984)             (4 034)
New Business                                                                                          (2 328)             (3 051)
Total Compart                                                                                         (3 884)            (11 680)

1.   Refer to notes 3 and 4.1

2.   Consolidated from March 2014

3.   Operating EBITDA is EBITDA excluding contingent consideration asset raised

4.   Refer note 4.3

SEGMENTAL ANALYSIS FOR THE YEAR ENDED 30 JUNE (CONTINUED)
                                                                                                     Reviewed          Restated 1
                                            R’000                                                        2015                2014
Segment assets
Alaris Antennas                                                                                        93 722             54 879
Aucom                                                                                                  38 939             39 775
Discontinued operations                                                                                     -             40 876
Corporate and consolidation                                                                            72 357            103 983
                                                                                                      205 018            239 513
Segment liabilities
Alaris Antennas                                                                                       (13 721)           (14 285)
Aucom                                                                                                 (13 933)           (18 068)
Discontinued operations                                                                                     -            (12 075)
Corporate and consolidation                                                                           (62 038)           (39 192)
                                                                                                      (89 692)           (83 620)

1.   Refer to notes 3, 4.1 and 4.3

SUPPLEMENTARY NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2015

1. RECONCILIATION OF PROFIT / (LOSS) TO HEADLINE EARNINGS as at 30 June

                                                      Total Operations         Continuing Operations           Discontinued Operations
                                                                                                     
                                            Reviewed        Restated 1       Reviewed     Restated 1       Reviewed       Restated 1
                                                 2015             2014           2015         2014             2015             2014
R’000
Profit / (loss) from operations for the       (5 124)         (97 754)        (1 240)       (86 074)        (3 884)         (11 680)
year
Impairment of goodwill                        33 342           95 046         33 342         95 046               -               -
Profit on disposal of discontinued            (2 395)               -              -              -         (2 395)               -
operations
Tax on profit on disposal of                     976                -              -              -            976                -
discontinued operations
Earnings attributable to shares subject       (8 278)             770         (9 917)        (2 551)         1 639            3 321
to recall
Headline earnings / (loss) attributable
to ordinary shareholders                      18 521           (1 938)        22 185          6 421         (3 664)          (8 359)

1.   Refer supplementary note 4.1 and 4.3

2.   RECONCILIATION OF PROFIT / (LOSS) TO NORMALISED EARNINGS as at 30 June

                                                                      Total Operations                 Continuing Operations
                                                                   Reviewed        Restated 1        Reviewed       Restated 1
                                                                       2015              2014            2015             2014
R’000
Profit/(loss) from operations for the year                          (5 124)          (97 754)         (1 240)         (86 074)
Impairment of goodwill                                              33 342            95 046          33 342           95 046
Contingent consideration asset raised 2                            (22 206)                -         (22 206)               -
Legal and consulting costs for acquisitions and disposal            10 070             3 257          10 070            3 257
Loss on discontinued operations                                      3 884            11 680               -                -
Normalised earnings                                                 19 966            12 229          19 966           12 229

Normalised earnings is calculated by adjusting profit for the fair value adjustment of the contingent consideration asset, goodwill
impairment, loss on discontinued operations and profit (net after tax) on disposal of Compart and legal and consulting fees for
acquisitions and disposals.

Normalised earnings per share is calculated by dividing normalised earnings by the weighted average number of ordinary shares
in issue.

1.   Refer to supplementary note 4.3

2.   Refer to supplementary note 5
                                                                                                                         
SUPPLEMENTARY NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 June 2015

3. DISPOSAL OF LOSS MAKING SUBSIDIARIES (DISCONTINUED OPERATIONS)

As announced on SENS on 22 December 2014 the Company entered into an implementation agreement (“Implementation
Agreement”) with, inter alia, its former CEO, Dr Andries Petrus Cronje Fourie (“Dr Fourie”) and the trustees for the time being of
the Andries Petrus Cronje Fourie Trust (“the Trust”), whereby the Company disposed of its interests in Poynting Antennas
Proprietary Limited (“Poynting Antennas”) (excluding the profitable Poynting DS and Poynting SS divisions) as well as Poynting
Direct Proprietary Limited (“Poynting Direct”), Poynting Hong Kong Limited (“Poynting HK”) and a non-controlling interest in
CrunchYard Holdings Proprietary Limited (“CrunchYard”) (“the Composite Sale”) to an entity controlled by Dr Fourie
(“NewCo”)(the “Composite Transaction”).

In terms of the Implementation Agreement, the Composite Sale purchase consideration was settled through the specific
repurchase of 14 000 000 Alaris Holdings shares (“the Specific Repurchase”).

In terms of the Composite Sale, NewCo acquired all the shares and loan claims in Poynting Antennas, Poynting Direct, Poynting
HK and CrunchYard from the Company for a purchase consideration of R35 840 000 (which is equal to the 30 day volume weighted
average trading price per share of the Company, on 1 December 2014, being R2.56, multiplied by 14 000 000) (“Purchase
Consideration”) which Purchase Consideration would remain outstanding on loan account (“NewCo Loan”).

NewCo pledged to the Company 14 000 000 ordinary shares which it held in the Company, as security for NewCo’s obligations
pursuant to the NewCo Loan.

Approval of applicable regulatory bodies and shareholders was received and the Purchase Consideration was settled through the
Specific Repurchase by the Company, on loan account, of 14 000 000 shares held by NewCo in the Company (“Alaris Holdings
Loan”), whereafter such shares were cancelled; and the NewCo Loan and the Alaris Holdings Loan were set-off.
                                                                                                                  
SUPPLEMENTARY NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 June 2015

3. DISPOSAL OF LOSS MAKING SUBSIDIARIES (DISCONTINUED OPERATIONS) (continued)

Identifiable net assets and liabilities disposed of                                                          31 December 2014
                                                                                                                        R'000

Plant and equipment                                                                                                    2 472
Intangible assets                                                                                                      8 640
Investments                                                                                                            3 459
Inventories                                                                                                           11 981
Trade and other receivables                                                                                            7 946
Cash and cash equivalents                                                                                             (2 332)
Deferred tax assets                                                                                                      943
Current tax assets                                                                                                     1 509
Other financial liabilities                                                                                              (37)
Trade and other payables                                                                                              (1 136)
Total identifiable net assets disposed                                                                                33 445
Profit on disposal                                                                                                     2 395

Total consideration                                                                                                   35 840

4.   RESTATEMENT OF COMPARATIVES

4.1  The disposal of the loss making operations and classification thereof as discontinued required certain allocations to be
     reviewed as part of the split of the business. Subsequent to the disposal the business changed the segmental reporting within
     the business to reflect the new segments in which management regularly reviews business performance and allocate
     resources to segments in future.

4.2  Shareholders are advised that during the preparation for the 2015 audit it came to the Company’s attention that the earnings
     per share calculations (basic earnings per share, diluted earnings per share, headline earnings per share and diluted headline
     earnings per share) were incorrectly reported on for the unaudited six month period to 31 December 2014 and the audited
     full year to 30 June 2014.

     The total profits, cash generated by the business and the total amount of shares legally in issue were correctly reported and
     management believes that given the distortions in the financial statements following the Aucom transaction, these remain
     the most appropriate indicators to consider when evaluating business performance. The reason for the restatement primarily
     relates to the accounting complexities arising from the Aucom transaction, specifically the way the contingent consideration
     shares subject to recall and the earnings attributable thereto are treated in the respective per share calculations. 

     As detailed in the circular to shareholders dated 31 January 2014, Alaris acquired Aucom for a purchase price of R49.5 million,
     which purchase price was settled by the issue of 66 million Alaris Shares (at the share price of 75 cents per share), of which
     49.5 million shares are subject to a three year cumulative profit warranty of R38 million. The 66 million shares were issued to
     the vendors on the effective date of which 49.5 million shares were subject to ‘recall’ and were held in trust pending the
     release to the vendors as they meet their profit guarantees. IFRS requires the 49.5 million shares subject to recall, together
     with the related earnings attributable thereto, to be disregarded from the respective basic and headline earnings per share
     calculations. In respect of the diluted earnings per share calculations, IFRS requires the number of shares to be issued to be
     based on the position at the reporting date, rather than taking into account the expectations about the future.


SUPPLEMENTARY NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                                                                                                     
For the year ended 30 June 2015)

4.   RESTATEMENT OF COMPARATIVES (continued)

4.3  Based on feedback received from the JSE during its pro-active monitoring panel and after careful deliberation with our auditors
     the Company has decided to restate the 30 June 2014 numbers to no longer reflect the contingent consideration liability and
     acquisition reserve for the Aucom shares that are recallable under the contract. As a consequence the contingent
     consideration liability (R143.6 million), acquisition reserve (R134.1 million) and the fair value adjustment loss of R9.4 million
     was reversed in the 30 June 2014 numbers.

The impact of 4.2 and 4.3 is reflected in the tables below.

                                                                                                        30 June 2014
                                                                                               Restated           As previously
                                                                                                                        reported
Total operations
       Basic earnings per share (cents)                                                         (66.24)             (101.59)
       Diluted earnings per share (cents)                                                       (86.83)              (85.94)
       Headline earnings per share (cents)                                                       (1.83)              (11.48)
       Diluted headline earnings per share (cents)                                               (2.39)               (2.38)
       Net asset value per ordinary share (cents)                                                89.55                84.15
       Net tangible asset value per ordinary share (cents)                                       43.50                38.10
Continuing operations
       Basic earnings per share (cents)                                                         (58.33)              (90.51)
       Diluted earnings per share (cents)                                                       (76.46)              (75.67)
       Headline earnings per share (cents)                                                        6.08                (0.41)
       Diluted headline earnings per share (cents)                                                7.98                 7.89

Previously Alaris also reported ‘adjusted headline earnings from continuing operations per share’ where, in addition to the
headline earnings adjustment for goodwill impairment relating to Aucom, the Aucom contingent share consideration fair value
adjustment was disregarded. Alaris has decided to discontinue the use of adjusted headline earnings from continuing operations.
The Group will, going forward, disclose the ‘normalised earnings from continuing operations’ and the total number of shares
legally in issue to further assist shareholders in understanding the underlying Group performance.

SUPPLEMENTARY NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 June 2015)

4.   RESTATEMENT OF COMPARATIVES (continued)

     For further information, the following tables provide the numerators and denominators that are used in the per share
     calculations above:


     Number of shares- restated (millions)                                                                   30 Jun 2014
     Total shares legally in issue, as per share register                                                          176.6
     Total shares legally in issue, net of treasury shares                                                         174.1
     Weighted average number of shares in issue                                                                    105.6
     Diluted weighted average number of shares                                                                     112.6


                                                                                                                Restated
     Total operations - R’000                                                                                30 Jun 2014
     Profit after tax                                                                                           (97 754)
     Less (earnings)/loss attributable to shares subject to recall                                               27 795
     Basic earnings                                                                                             (69 959)
     Add back earnings/(loss) attributable to shares subject to recall                                          (27 795)
     Add back interest cost on PSG Private Equity Preference Shares                                                  12
     Diluted earnings                                                                                           (97 742)

     Profit after tax                                                                                           (97 754)
     Impairment of goodwill                                                                                      95 046
     Headline earnings (incl. portion attributable to shares subject to recall)                                  (2 708)
     Less (earnings)/loss attributable to shares subject to recall                                                  770
     Headline earnings                                                                                           (1 938)
     Add back earnings/(loss) attributable to shares subject to recall                                             (770)
     Add back interest cost on PSG Private Equity Preference Shares                                                  12
     Diluted Headline earnings                                                                                   (2 696)


     Continued operations - R’000                                                                            30 Jun 2014
     Profit after tax                                                                                           (86 074)
     Less (earnings)/loss attributable to shares subject to recall                                               24 474
     Basic earnings                                                                                             (61 600)
     Add back earnings/(loss) attributable to shares subject to recall                                          (24 474)
     Add back interest cost on PSG Private Equity Preference Shares                                                  12
     Diluted earnings                                                                                           (86 062)

     Profit after tax                                                                                           (86 074)
     Impairment of goodwill                                                                                      95 046
     Headline earnings (incl. portion attributable to shares subject to recall)                                   8 972
     Less (earnings)/loss attributable to shares subject to recall                                               (2 551)
     Headline earnings                                                                                            6 421
     Add back earnings/(loss) attributable to shares subject to recall                                            2 551
     Add back interest cost on PSG Private Equity Preference Shares                                                  12
     Diluted Headline earnings                                                                                    8 984

SUPPLEMENTARY NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 June 2015

5. CONTINGENT CONSIDERATION IN RESPECT OF AUCOM ACQUISITION

Contingent consideration

Of the 66 million shares issued, 49.5 million shares were held as guarantee, to be released to the sellers as profit warranties are
met for the years ended 30 June 2014, 30 June 2015 and ending 30 June 2016, or recalled if warranties are not met in aggregate.

No contingent consideration asset was raised in the restated 2014 financial statements, consistent with the judgements made in
that year that all shares would be issued.

In the 2015 financial year we recognise a contingent consideration asset equal to the estimated claw-back of the original purchase
price paid to the Aucom vendors should profit warranties not be achieved.

Financial instruments carried at fair value

The fair value of a financial instrument is the price that would be received for the sale of an asset or paid for the transfer of a
liability in an orderly transaction between market participants at the measurement date.

The existence of published price quotations in an active market is the best evidence of fair value and, where they exist, they are
used to measure the financial asset or financial liability. A market is considered to be active if transactions occur with sufficient
volume and frequency to provide pricing information on an ongoing basis. Financial instruments fair valued using quoted prices
would generally be classified as level 1 in terms of the fair-value hierarchy.

The carrying values of other financial assets and liabilities, trade and other receivables and payables and loans and borrowings
approximate their fair value.

Fair value hierarchy

Fair value measurements are categorised into different levels in the fair value hierarchy based on inputs to valuation techniques
used. The different levels are defined as follows:
.   Level 1:  Quoted prices (unadjusted) in active markets for identical assets or liabilities.
.   Level 2:  Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly
              (i.e. as prices) or indirectly (i.e. derived from prices).
.   Level 3:  Inputs for the asset or liability that are not based on observable market data (unobservable inputs).

SUPPLEMENTARY NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 June 2015

5. CONTINGENT CONSIDERATION IN RESPECT OF AUCOM ACQUISITION (continued)

Valuation of the contingent consideration asset

In terms of IFRS 13.24, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction in the principal (or most advantageous) market at the measurement date under current market conditions (i.e. an exit
price) regardless of whether that price is directly observable or estimated using another valuation technique.

Management have considered a number of other indicators to determine the fair value of the contingent consideration shares.
This included the 30 day Volume Weighted Average Price up to 30 June 2015, the impact of the Compart disposal on the share
price post the effective date as well as the bid price available on 30 June 2015 by reference to the opening share price on 1 July
2015 and has valued the contingent consideration asset in respect of the contingent consideration shares at 219 cents per share,
as per the closing price at 30 June 2015.

The contingent consideration asset is a level 1 instrument as at 30 June 2015. The contingent consideration asset recognised in
profit and loss amounted to R22.2 million.

A change of 10% in the fair value of contingent consideration asset at the reporting date would have increased/(decreased) equity
and profit or loss by R2.2 million (2014: nil). This analysis assumes that all other variables remain constant.

6. STATEMENT OF COMPLIANCE

Alaris Holdings Limited is a South African registered company. These condensed consolidated financial statements comprise of
the Company and its subsidiaries.

The condensed consolidated financial statements for the year ended 30 June 2015 have been prepared in accordance with the
requirements of the JSE Limited Listings Requirements for provisional reports and the requirements of the Companies Act of South
Africa. The JSE Listings Requirements require provisional reports to be prepared in accordance with the framework concepts and
the measurement and recognition requirements of International Financial Reporting Standards (IFRS) and the SAICA Financial
Reporting Guides as issued by the Accounting Practices Committee and Financial Pronouncements as issued by the Financial
Reporting Standards Council and to also, as a minimum, contain the information required by IAS 34 – Interim Financial Reporting.

7. BASIS OF PREPARATION

The accounting policies applied in the preparation of the condensed consolidated financial statements are in terms of IFRS and
are consistent with those applied in the previous consolidated financial statements. The following standards and interpretations
were in issue but not yet effective:

•   IAS 16 and IAS 38 – Clarification of acceptable methods of depreciation and amortization
•   IFRS 15 – Revenue from contracts with customers
•   IFRS9 – Financial instruments
•   Improvement project to IFRSs 2012-2014 cycle:
         o IFRS 5 – non-current assets held for sale and discontinued operations: changes in method of disposal
         o IFRS 7 – Financial instrument disclosure
         o IAS 19 – Employee benefits
         o IAS 34 – Interim financial reporting
•   IFRS10, IFRS12 and IAS 28 – Investment entities: applying the consolidation exception
•   IAS 1 – Disclosure initiative
                                                                                                              
SUPPLEMENTARY NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 June 2015

7. BASIS OF PREPARATION (continued)

The impact of the above standards and interpretations in issue not yet effective have not been quantified. However the impact of
IFRS 15 – revenue from contracts with customers, is expected to have a significant impact in the financial year 2019.

The reviewed condensed consolidated results have been presented on the historical cost basis except for the contingent
consideration, which is fair valued. These results are presented in Rand, rounded to the nearest thousand, which is the functional
currency of Alaris and the Group presentation currency. These reviewed provisional condensed consolidated results incorporate
the financial statements of the company, its subsidiaries and companies that, in substance, are controlled by the Group. Results
of subsidiaries are included from the effective date of acquisition up to the effective date of disposal. All significant transactions
and balances between Group enterprises are eliminated on consolidation.

These condensed consolidated financial statements have been reviewed by the Group’s auditors, KPMG Inc, and their unmodified
review report is available for inspection at the Company’s registered office.

The auditor’s report does not necessarily report on all of the information contained in this announcement. Shareholders are
therefore advised that in order to obtain a full understanding of the nature of the auditor’s engagement they should obtain a copy
of the auditor’s report together with the accompanying financial information from the Company’s registered office.

The condensed consolidated financial statements were prepared under the supervision of the Group Financial Director, Gisela
Heyman CA(SA).

8. SUBSEQUENT EVENTS

Shareholders are referred to the SENS announcement dated 11 September 2015 regarding the termination of the acquisition
agreement of 100% of the issued share capital of Antenna Research Associates Inc (“the ARA acquisition”). Shareholders are
hereby advised that not all the conditions, as specified in the ARA merger agreement, were fulfilled by ARA prior to the end date
as specified in that agreement, and efforts to negotiate revised terms to address risks raised in light of the unfulfilled conditions
were not successful.

Accordingly, Alaris has exercised its right to terminate the ARA merger agreement.

Alaris regrets the termination, especially considering the significant resources that were devoted to this acquisition. Management
however, believes it was in the best interest of Alaris and its Shareholders to terminate the Merger Agreement in light of the
uncertainties created by the conditions that were not fulfilled and the inability to address the risks resulting therefrom. Alaris has
however, used the experience to improve its understanding of the United States regulatory landscape and will continue to explore
opportunities to further penetrate the United States market to bring value to Alaris and its shareholders.

9. GOING CONCERN

The directors have made an assessment of the ability of the company to continue as a going concern and have no reason to believe
that the business will not be a going concern in the year ahead.
                                                                                                                     
SUPPLEMENTARY NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 June 2015

10. DIRECTORATE

During the period under review, up to and including the date of this report, the following changes to the board took place.
1.   Mr Johan Ebersohn resigned as Financial Director on 10 September 2014.
2.   Mr John von Gottberg was appointed as Financial Director on 10 September 2014 and resigned on 31 May 2015.
3.   Mr Zuko Kubukeli resigned as Independent Non-Executive Director on 8 April 2015.
4.   Mr Andries Mellet resigned on 24 October 2014.
5.   Mr Nico de Waal was appointed as Non-Executive Director on 24 October 2014.
6.   Dr André Fourie resigned as Chief Executive Officer and Director on 19 December 2014.
7.   Mr Richard Willis was appointed as Independent Non-Executive Director on 1 February 2015.
8.   Mrs Gisela Heyman was appointed as Financial Director on 1 June 2015.
9.   Mr Juergen Dresel was appointed as interim Chief Executive Officer on 19 December 2014 and as Chief Executive Officer on
     25 June 2015.

By order of the board

Juergen Dresel                                        Gisela Heyman
Group Chief Executive Officer                         Group Financial Director

30 September 2015
Johannesburg
                                                                                                                   
ALARIS HOLDINGS LIMITED
(incorporated in the Republic of South Africa)
www.alarisholdings.co.za

Directors
Coen Bester*^ (Chairman), Nico de Waal^, Jürgen Dresel # (CEO), Villiers Joubert, Richard Willis*^, Gisela Heyman (Financial
Director)
*Independent ^Non-executive #German

Business address and registered office
1 Travertine Avenue, N1 Business Park, Old Johannesburg Road, Centurion, 0157
(Private Bag X4, The Reeds, Pretoria, 0166)

Designated Adviser
Merchantec Proprietary Limited
Registration Number 2008/027362/07
2nd Floor, North Block, Hyde Park Office Tower, Corner 6th Rd and Jan Smuts Ave, Hyde Park, 2196
(PO Box 41480, Craighall, 2024)

Company Secretary
Merchantec Proprietary Limited

Transfer Secretaries
Computershare Investor Services Proprietary Limited
Registration Number 2004/003647/07
Ground Floor, 70 Marshall Street, Johannesburg, 2001
(PO Box 61051, Marshalltown, 2107)

Auditors
KPMG Inc.

Bankers
Standard Bank

PRINCIPAL SUBSIDIARIES

Alaris Antennas Proprietary Limited
Registration Number 2013/048197/07

Alaris Antennas Division
Managing Director: Jürgen Dresel
1 Travertine Avenue, N1 Business Park, Old Johannesburg Road, Centurion, 0157
Tel +27 (0)11 034 5300
African Union Communications Proprietary Limited
Registration Number 1999/000409/07

Aucom Division
Managing Director: Villiers Joubert
394 Cliff Avenue, Waterkloof Ridge X2, Pretoria
Tel +27 (0)12 001 867039




                                                                                                                  
Date: 30/09/2015 04:10:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
 the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, 
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
 information disseminated through SENS.

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