Wrap Text
Unaudited Condensed Consolidated Results for the Six Months Ended 31 December 2015
Alaris 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”)
UNAUDITED CONDENSED CONSOLIDATED RESULTS
FOR THE SIX MONTHS ENDED 31 DECEMBER 2015
GROUP COMMENTARY
Highlights
- Cash generated from operations increased by 43% from R12.3 million to R17.6 million.
- Cash and cash equivalents increased by 34% from R74.4 million to R99.6 million.
- Strong confirmed order book for delivery in second half of the year.
- Results significantly boosted by net foreign exchange gains of R15.4 million.
WHAT WE ARE ALL ABOUT
Alaris Holdings Limited is a technology holding company listed on the JSE AltX since July 2008.
The Alaris Group consists of:
Alaris Antennas which designs, manufactures and sells specialised broadband antennas as well as other related radio
frequency products. Its products are used in the communication, frequency spectrum monitoring, test and
measurement, electronic warfare and other specialised markets. Clients are located across the globe, mostly outside of
South Africa (the Americas, Europe and Asia). Its clients are system integrators, frequency spectrum regulators and
players in the homeland security space.
Aucom which provides end–to–end solutions for radio and TV broadcasters. It designs, sells and implements integrated
broadcasting systems and has specific expertise in digital compression platforms for DDT, DTH and IPTV, signal
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 across Africa.
RESULTS OVERVIEW
Total comprehensive income for the Group was R1.6 million, compared to R2.5 million in the comparative period.
However, the financial results for both periods include items which are not representative of the performance of the
underlying operations.
Audited
year ended
Unaudited six months ended
Restated (1)
R’000 Dec 2015 Dec 2014 Jun 2015
Total comprehensive income 1 642 2 500 (5 124)
Contingent consideration asset (2) 3 954 - (22 206)
Profit on disposal of discontinued operations (3) - (2 395) (2 395)
Losses incurred by discontinued operations - 6 462 6 279
Legal and consulting costs for acquisitions and disposals (4) 2 679 953 10 070
Impairment of goodwill - - 33 342
Normalised profit after tax for continuing operations (5) 8 275 7 520 19 966
Alaris Antennas (6) 5 967 8 542 20 944
Aucom (6) (304) 271 7 299
Corporate and consolidation (7) 2 612 (1 293) (8 277)
Weighted average number of ordinary shares in issue 110 510 297 124 587 718 121 697 691
Continuing operations - Normalised earnings per ordinary share (cents) 7.49 6.04 16.41
1. The comparative numbers for 2014 were restated in line with the restatement disclosed in the 30 June 2015 annual
results. Refer to supplementary note 2.
2. 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. Based on
the current confirmed order book value, management believed that no further adjustment to the number of
recallable shares as at the end of June 2015 was needed. The number of recallable shares were revalued to R18.3
million from R22.2 million in June 2015 based on the decrease in the share price from 30 June 2015 to
31 December 2015. Refer to supplementary note 3 for more detail on the valuation.
3. The disposal of the Compart businesses resulted in a profit of R2.4 million in December 2014. Refer to 30 June 2015
year end results for detail of the disposal previously disclosed.
4. Non-recurring legal and consulting fees amounted to R2.7 million for the six months ended 31 December 2015
relating to the previous potential acquisitions that did not materialise.
5. 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. Net foreign exchange profits of R15 million has not been
excluded from the calculation.
6. The Alaris Antennas and Aucom businesses showed a decline in profits compared to the previous period. A low
order book at the beginning of the financial year impacted delivery volumes resulting in lower revenue.
7. R15 million of net foreign exchange profits have been recorded as part of other income as a result of the decline in
local currency versus the Dollar and Euro. Costs relating to shared services and fees associated with being a listed
company are also included in this segment. Net funding costs, including the interest paid on the PSG preference
shares of R2.3 million are also included here.
BUSINESS OVERVIEW
The underlying businesses didn’t perform well for the six month period. A slow start at Alaris Antennas and delays on
African projects at Aucom led to declines in revenue and profit. However, we ended the period with a strong order
book and confirmed orders in both businesses and are confident of an improved second half of the financial year.
The overall results were helped significantly by a foreign exchange gain from foreign currency held for an acquisition
that did not materialise and the subsequent weakening of the Rand. The normalised numbers shown in our results do
not remove this gain owing to consistency with previous periods.
Despite the slower performance in this six month period, cash flow was healthy. Cash flow from operating activities
increased by 43% to R17.6 million versus R12.3 million in the comparative period. Working capital management has
improved. There was a material amount of income received in advance on orders achieved toward the end of the
period. Our cash position increased to R99.6 million, a R25.2 million improvement from June 2015.
Alaris Antennas
The business started the financial year with a low order book value, resulting in a slow first quarter. Revenue decreased
by 15% to R36.1 million (2014: R42.4 million). Despite this, operating EBITDA margins slightly increased compared to the
previous period. Profit after tax was R6.0 million, 30% lower than the comparable period.
Despite the slow performance in this period, there is a strong confirmed order book for delivery in the next six months.
We are confident of a better second half and still optimistic of growth for the full financial year.
Alaris Antennas continued to be a leader in product innovation, adding 50 (2014: 36) new products to its portfolio in the
past six months to support future top line growth.
Further investment during these last six months included growth in headcount from 87 to 94; mainly investing in
engineering resources as well as starting a new Specialised Production and Electronics Facility. These expansions
support our strategy to deliver high quality products to our customers within the committed timelines.
Aucom
A decrease in revenue to R17.8 million (2014: R33.1 million) was as a result of certain larger orders in Africa being
delayed by clients. Despite this, we have an increased amount of confirmed orders and expect a healthy second half
of the financial year.
The business invested in the implementation of an internationally authorised support and maintenance centre. This will
support anticipated increases in service level agreements, which bring recurring revenue streams to the business. This
investment ensures local job creation and enables the transfer of specialised skills in South Africa.
Corporate and Consolidation
In addition to the shared services costs and fees associated with being a listed company, this segment carried several
additional items:
- Legal and consulting fees of R2.7 million were incurred in relation to the prior potential acquisitions that did not
materialise.
- The contingent consideration asset value was revalued following the decrease in share price, resulting in a
charge in the Statement of Profit and Loss of R3.9 million.
- In line with the international acquisition strategy of the Group foreign currency was accumulated to settle the
purchase price of future acquisitions. As a result of the deterioration of the Rand versus the Dollar and Euro, net
foreign exchange profits of R15 million were recognised in these results.
Discontinued Operations
The Compart businesses were consolidated up to 31 December 2014 and are therefore included in the comparative
numbers. These operations recorded a loss of R3.9 million for the year ended June 2015. Refer to 30 June 2015 year end
results for details of the disposal previously disclosed.
PROSPECTS
The Group remains focused on achieving growth (organic and acquisitive) and improving profitability in the near term.
Alaris Antennas
The business has grown turnover and profits since its establishment in 2005. Organic growth is stimulated and achieved
through understanding customers’ needs and adding new innovative products to the portfolio. Further opportunities for
growth are achieved by adding new system houses, distributors and agents. We are also 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 further invested in technical capacity through the expansion of skills in the sales and engineering
teams. This enables growth that should be reflected in future results. The implementation of the Specialised Production
and Electronics Facility will support our aim to deliver high quality products within the promised timelines.
Aucom
The business continues to bid for significant Digital Terrestrial Television / Digital Terrestrial Transmission infrastructure
opportunities across the African continent and is well positioned to obtain these opportunities. The focus on private
broadcasters in Africa has reaped great successes recently with some larger deals being awarded to Aucom for
delivery in the next six months.
The Group
A significant portion of the Group’s performance is associated with long sales cycles and three to six month delivery
timeframes. 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 further
improve working capital management of the Group.
The Group is in the process of finalising the acquisition of a company based in Europe as per the SENS announcement
issued on 4 March 2016. This international expansion is an important part of the Group’s global strategy and is a major
stepping stone to achieve the anticipated future growth.
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
Unaudited six months ended Audited year
ended
Restated (1)
R’000 Dec 2015 Dec 2014 Jun 2015
Continuing Operations
Revenue 53 895 75 437 193 034
Cost of sales (23 061) (34 107) (103 300)
Gross profit 30 834 41 330 89 734
Other income (2) 15 325 465 898
Operating expenses (35 357) (33 191) (72 880)
Trading operating profit (3) 10 802 8 604 17 752
Finance income 936 1 605 3 312
Contingent consideration asset (3 954) - 22 206
Impairment of goodwill - - (33 342)
Finance costs (2 341) (1 565) (4 851)
Profit before taxation 5 443 8 644 5 077
Taxation (3 801) (2 077) (6 317)
Profit / (loss) from continuing operations 1 642 6 567 (1 240)
Discontinued Operations
Revenue - 25 189 25 189
Cost of sales - (15 477) (14 871)
Gross profit - 9 712 10 318
Operating expenses - (15 875) (17 639)
Trading operating loss - (6 163) (7 321)
Finance income - 38 101
Profit on disposal of discontinued operations - 2 395 2 395
Finance costs - (1 279) -
Loss before taxation - (5 009) (4 825)
Taxation - 942 941
Loss from discontinued operations - (4 067) (3 884)
Total comprehensive income 1 642 2 500 (5 124)
Weighted average number of ordinary shares in issue 110 510 297 124 587 718 121 697 691
Weighted average number of diluted ordinary shares in issue 156 489 936 164 183 083 168 826 621
Total operations - Basic earnings per ordinary share (cents) 1.03 1.44 (2.91)
Total operations - Diluted earnings per ordinary share (cents) 5.05 2.87 (13.52)
Total operations - Headline earnings per ordinary share (cents) 1.03 0.06 15.22
Total operations - Diluted headline earnings per ordinary share 5.05 1.41 5.39
(cents)
Total operations - Normalised earnings per ordinary share (cents) 7.49 6.04 16.41
Continuing operations - Basic earnings per ordinary share (cents) 1.03 3.77 (0.70)
Continuing operations - Diluted earnings per ordinary share (cents) 5.05 5.35 (11.22)
Continuing operations - Headline earnings per ordinary share (cents) 1.03 3.77 18.23
Continuing operations - Diluted headline earnings per ordinary share 5.05 5.35 8.53
(cents)
Continuing operations - Normalised earnings per ordinary share 7.49 6.04 16.41
(cents)
1. The comparative numbers for 2014 were restated in line with the restatement disclosed in the 30 June 2015 annual
results. Refer to supplementary note 2.
2. In line with the international acquisition strategy of the Group, foreign currency was accumulated to settle the
purchase price of future acquisitions. As a result of the deterioration of the Rand versus the Dollar and Euro,
significant net foreign exchange profits of R15 million were recognised and reflect in other income.
3. Trading operating profit comprises sale of goods, rendering of services and directly attributable costs, but excludes
investment income, fair value adjustments, impairment of goodwill and finance costs.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited six months ended Audited year
ended
Restated (1)
R’000 Dec 2015 Dec 2014 Jun 2015
Assets
Non-Current Assets
Plant and equipment 6 956 5 463 6 221
Goodwill 22 115 55 457 22 115
Intangible assets 11 465 13 900 13 408
Deferred tax assets 7 468 - 1 541
Contingent consideration asset (2) - - 22 206
Other financial assets - - 2 647
48 004 74 820 68 138
Current Assets
Inventories 14 030 12 056 9 236
Other financial assets 8 955 3 500 8 165
Current tax receivable 179 3 236 1 665
Contingent consideration asset (2) 18 251 - -
Trade and other receivables 51 176 85 843 43 428
Cash and cash equivalents 99 582 75 843 74 386
192 173 180 478 136 880
Total Assets 240 177 255 298 205 018
Equity and Liabilities
Equity
Equity attributable to owners of the Company
Share capital and preference shares 897 898 897
Share premium 229 226 231 151 231 265
Share-based payment reserve 1 379 123 406
Accumulated loss (115 600) (73 779) (117 242)
Total equity 115 902 158 393 115 326
Liabilities
Non-Current Liabilities
Preference share liability 50 111 50 111 50 111
Other financial liabilities - - 911
Deferred tax liabilities 1 853 3 852 2 146
51 964 53 963 53 168
Current Liabilities
Loans and borrowings 843 157 96
Trade and other payables 58 036 40 953 29 906
Current tax payable 5 974 - 1 138
Provisions 3 985 1 832 1 741
Other financial liabilities 3 473 - 3 643
72 311 42 942 36 524
Total Liabilities 124 275 96 905 89 692
Total Equity and Liabilities 240 177 255 298 205 018
Number of ordinary shares legally in issue, less treasury shares 159 825 752 174 087 718 160 241 949
Net asset value per ordinary share (cents) (3) 72.52 90.98 71.97
Net tangible asset value per ordinary share (cents) (2) 40.09 51.14 35.94
1. The comparative numbers for 2014 were restated in line with the restatement disclosed in the 30 June 2015 annual
results. Refer to supplementary note 2.
2. Net asset value is calculated by dividing total equity, by the number of ordinary shares in issue, being number of
shares legally 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.
3. Refer to supplementary note 3.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited six months ended Audited year
ended
Restated
R’000 Dec 2015 Dec 2014 (1) Jun 2015
Profit before taxation 5 443 3 635 252
Adjusted for non-cash items (4 205) 720 21 167
Working capital changes 16 362 7 966 (14 663)
Cash generated from operations 17 600 12 321 6 756
Net finance cost (1 405) (1 201) (1 438)
Taxation paid (3 696) 1 274 (6 245)
Net cash from / (used in) operating activities 12 499 12 394 (927)
Net cash used in investing activities (3 114) (23 718) (10 242)
Net cash from / (used in) financing activities 756 (1 865) (2 469)
Net increase / (decrease) in cash and cash equivalents for the year 10 141 (13 189) (13 638)
Cash disposed / acquired as part of business disposal / combination - 2 332 2 332
Cash and cash equivalents at the beginning of the year 74 386 85 821 85 821
Effect of exchange rate movement on cash balances 15 055 879 (129)
Total cash and cash equivalents at end of the year 99 582 75 843 74 386
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share capital Share Share based Retained Total equity
and premium payment income /
R’000 preference reserve (accumulated
shares loss)
Six months ended 897 231 265 406 (117 242) 115 326
Balance at 1 July 2015
Total comprehensive income - - - 1 642 1 642
for the period
Repurchase of treasury shares – Poynting - (964) - - (964)
Empowerment Trust
Movement in share based payment - - 973 - 973
reserve
Transfer of shares to treasury shares - new - (1 075) - - (1 075)
issue of options
Balance at 31 December 2015 897 229 226 1 379 (115 600) 115 902
Balance at 1 July 2014 898 231 151 123 (76 279) 155 893
Total comprehensive income for the - - - 2 500 2 500
period
Balance at 31 December 2014 – restated1 898 231 151 123 (73 779) 158 393
Year ended
Balance at 1 July 2014 898 231 151 123 (76 279) 155 893
Total comprehensive income for the year - - - (5 124) (5 124)
Shares repurchased - Compart (1) - - (35 839) (35 840)
Share-based payment - new issue of - - 397 - 397
options
Share options exercised - 114 (114) - -
Balance at 30 June 2015 897 231 265 406 (117 242) 115 326
1. The comparative numbers for 2014 were restated in line with the restatement disclosed in the 30 June 2015 annual
results. Refer to supplementary note 2.
SEGMENTAL ANALYSIS
Unaudited six months ended Audited year
ended
Restated (1)
R’000 Dec 2015 Dec 2014 Jun 2015
Continuing Operations
Segmental revenue
Alaris Antennas 36 125 42 380 88 394
Aucom 17 770 33 057 104 640
53 895 75 437 193 034
Operating earnings before interest, tax, depreciation and
amortisation (2)
Alaris Antennas 10 762 12 298 30 885
Aucom (638) 784 8 523
Corporate and consolidation 5 001 (2 432) (12 546)
15 125 10 650 26 862
Profit / (loss) for the year
Alaris Antennas 5 967 8 542 20 944
Aucom (304) 271 7 299
Corporate and consolidation (4 021) (2 246) (29 483)
1 642 6 567 (1 240)
Normalised earnings profit / (loss) after tax for the year (3)
Alaris Antennas 5 967 8 542 20 944
Aucom (304) 271 7 299
Corporate and consolidation 2 612 (1 293) (8 277)
8 275 7 520 19 966
Discontinued Operations
Segmental revenue
Compart - 25 189 25 189
Operating earnings before interest, tax, depreciation and
amortisation (1)
Compart - (4 280) (1 855)
Profit / (loss) for the year
Compart - (4 067) (3 884)
1. The comparative numbers for 2014 were restated in line with the restatement disclosed in the 30 June 2015 annual
results. Refer to supplementary note 2.
2. Operating EBITDA is trading operating profit per Statement of Profit and Loss excluding depreciation and
amortisation.
Unaudited six months ended Audited year
ended
Restated (1)
R’000 Dec 2015 Dec 2014 Jun 2015
Trading operating profit 10 802 8 604 17 752
Depreciation and amortisation 4 323 2 046 9 110
Operating earnings before interest, tax, depreciation and 15 125 10 650 26 862
amortisation
3. The foreign exchange gain reflected in other income on the Statement of Profit and Loss was not adjusted for in
normalized earnings in line with the definition thereof.
Unaudited six months ended Audited year
ended
R’000 Restated
Dec 2015 Dec 2014 Jun 2015
Segment assets
Alaris Antennas 69 550 76 149 93 722
Aucom 68 918 39 756 38 939
Corporate and consolidation 101 709 139 393 72 357
240 177 255 298 205 018
Segment liabilities
Alaris Antennas (51 513) (26 064) (13 721)
Aucom (49 217) (17 778) (13 933)
Corporate and consolidation (23 545) (53 063) (62 038)
(124 275) (96 905) (89 692)
SUPPLEMENTARY NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the six months 31 December 2015
1. RECONCILIATION OF PROFIT / (LOSS) TO HEADLINE EARNINGS
Total Operations Continuing Operations
Unaudited six months Audited Unaudited six months Audited
ended year ended ended year ended
Restated Restated
R’000 Dec 2015 Dec 2014 Jun 2015 Dec 2015 Dec 2014 Jun 2015
Profit / (loss) from operations for 1 642 2 500 (5 124) 1 642 6 567 (1 240)
the year
Impairment of goodwill - - 33 342 - - 33 342
Profit on disposal of discontinued - (2 395) (2 395) - - -
operations
Tax on profit on disposal of - - 976 - - -
discontinued operations
Earnings attributable to shares (508) (30) (8 278) (508) (1 867) (9 917)
subject to recall
Headline earnings attributable to 1 134 75 18 521 1 134 4 700 22 185
ordinary shareholders
2. RESTATEMENT OF COMPARATIVES
The shareholders are hereby reminded that aspects around the treatment of the Aucom transaction were
incorrectly reported on for the unaudited six month period to 31 December 2014 and the audited full year to 30
June 2014. The June 2014 numbers were reported as restated during the 30 June 2015 annual report and results
announcement. The 31 December 2014 numbers are hereby reported as restated on the same principles for the
below two items:
2.1 The earnings per share calculations (basic earnings per share, diluted earnings per share, headline earnings per
share and diluted headline earnings per share)
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.
2.2 Treatment of recallable shares as contingent consideration asset - the Company restated 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 of R118.3 million, the
acquisition reserve of R134.1 million and the positive fair value adjustment of R25.2 million was reversed in the
31 December 2014 numbers.
The impact of 2.1 and 2.2 is reflected in the tables below.
Dec 2014
Restated As previously
reported
Total operations
Basic earnings per share (cents) 1.44 22.27
Diluted earnings per share (cents) 2.87 1.27
Headline earnings per share (cents) 0.06 20.34
Diluted headline earnings per share (cents) 1.41 0.05
Net asset value per ordinary share (cents) 90.98 100.08
Net tangible asset value per ordinary share (cents) 51.14 60.24
Continuing operations
Basic earnings per share (cents) 3.77 25.53
Diluted earnings per share (cents) 5.35 3.33
Headline earnings per share (cents) 3.77 25.53
Diluted headline earnings per share (cents) 5.35 3.33
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 continue to disclose the ‘normalised earnings from continuing
operations’ and the total number of shares legally in issue as reported on in June 2015 to further assist shareholders in
understanding the underlying Group performance.
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) Dec 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 124.6
Diluted weighted average number of shares 164.2
Restated
Total operations - R’000 Dec 2014
Profit after tax 2 500
Less (earnings) attributable to shares subject to recall (711)
Basic earnings 1 789
Add back earnings attributable to shares subject to recall 711
Add back interest cost on PSG Private Equity Preference Shares 2 217
Diluted earnings 4 717
Profit after tax 2 500
Profit on sale of Compart (2 395)
Headline earnings (incl. portion attributable to shares subject to recall) 105
Less (earnings)/loss attributable to shares subject to recall (30)
Headline earnings 75
Add back earnings/(loss) attributable to shares subject to recall 30
Add back interest cost on PSG Private Equity Preference Shares 2 217
Diluted Headline earnings 2 322
Continued operations - R’000 Dec 2014
Profit after tax 6 567
Less (earnings)/loss attributable to shares subject to recall (1 867)
Basic earnings 4 700
Add back earnings/(loss) attributable to shares subject to recall 1 867
Add back interest cost on PSG Private Equity Preference Shares 2 217
Diluted earnings 8 784
Profit after tax 6 567
Less (earnings)/loss attributable to shares subject to recall (1 867)
Headline earnings 4 700
Add back earnings/(loss) attributable to shares subject to recall 1 867
Add back interest cost on PSG Private Equity Preference Shares 2 217
Diluted Headline earnings 8 784
3. 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 30 June 2014 financial statements and the 31 December
2014 half year results, consistent with the judgements made in that year that all shares would be issued.
In the 2015 financial year we recognised 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.
Valuation of the contingent consideration asset
Management have considered a number of indicators to determine the fair value of the contingent consideration
shares. This included the 30 day Volume Weighted Average Price up to 31 December 2015 as well as the bid price
available on 31 December 2015 by reference to the opening share price on 1 January 2016 and has valued the
contingent consideration asset in respect of the contingent consideration shares at 180 cents per share, as per the
closing price at 31 December 2015. Based on the current confirmed order book, the number of recallable shares were
estimated to be the same as at 30 June 2015.
The contingent consideration asset is a level 1 instrument as at 31 December 2015. The negative movement of the
contingent consideration asset recognised in profit and loss amounted to R3.9 million.
A change of 10% in the share price would have increased/(decreased) the fair value of contingent consideration asset
at the reporting date and therefore equity and profit or loss would have changed by R0.4 million (2014: n/a). This
analysis assumes that all other variables remain constant.
4. STATEMENT OF COMPLIANCE
Alaris Holdings Limited is a South African registered company. These condensed consolidated interim financial
statements comprise of the Company and its subsidiaries.
The condensed consolidated interim financial statements for the six months ended 31 December 2015 are prepared in
accordance with International Financial Reporting Standard, (IAS) 34 Interim Financial Reporting, the SAICA Financial
Reporting Guides as issued by the Accounting Practices Committee and Financial Pronouncements as issued by
Financial Reporting Standards Council and the requirements of the Companies Act of South Africa. The accounting
policies applied in the preparation of these interim financial statements are in terms of International Financial Reporting
Standards and are consistent with those applied in the previous annual financial statements.
5. BASIS OF PREPARATION
The accounting policies applied in the preparation of the condensed consolidated interim financial statements are in
terms of IFRS and are consistent with those applied in the previous consolidated annual 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
- IFRS 16 - Leases
- IFRS 9 – 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
Management is in the process of reviewing the impact of the above standards and interpretations in issue not yet
effective.
The condensed consolidated interim 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 interim 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.
The condensed consolidated interim financial statements were prepared under the supervision of the Group Financial
Director, Gisela Heyman CA(SA).
6. SUBSEQUENT EVENTS
The Group is in the process of finalising the acquisition of a company based in Europe as per the SENS announcement
issued on 4 March 2016. This international expansion is an important part of the Group’s global strategy and is a major
stepping stone to achieve the anticipated future growth.
7. 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.
8. DIRECTORATE
Mr Andries Mellet was appointed as alternate non-executive director on 8 October 2015. No further changes to the
board took place during the period under review, up to and including the date of this report.
By order of the board
Juergen Dresel Gisela Heyman
Group Chief Executive Officer Group Financial Director
8 March 2016
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*^, Andries Mellet^@,
Gisela Heyman (Financial Director)
*Independent ^Non-executive #German @Alternate
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 Capital
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: 08/03/2016 10:35:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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