RAK
13/11/2014 09:17
HALFYR
REL: 0917 HRS Rakon Limited
HALFYR: RAK: RAKON HY2015 Preliminary Results Announcement
Rakon Limited
Results for announcement to the market
Reporting period 6 months to 30th September 2014
Previous reporting period 6 months to 30th September 2013
Unaudited Amount NZ$000 % Change
Revenue from ordinary activities 61,371 -24%
Underlying EBITDA c (Earnings before interest, tax, depreciation,
amortisation, impairment, employee share schemes, non-controlling interests,
adjustments for associates and joint ventures share of interest, tax &
depreciation and other non-cash items) 4,265a 191%
(Loss)/profit from ordinary activities after tax attributable to security
holders (3,368) b 92%
Net (loss)/profit attributable to security holders (3,368) b 92%
Note a: includes share of Underlying EBITDA from associates and joint
ventures of $3,518,000 (September 2013: $2,870,000).
b: includes equity accounted earnings from associates and joint ventures of
$1,770,000 (September 2013: $1,365,000).
c: Further information regarding the disclosure and use of non-GAAP financial
information is disclosed at Note 3 (Notes to the Unaudited Consolidated
Interim Financial Statements) in this results announcement.
Amount per security Imputed amount per security
Interim / Final Dividend Nil dividend proposed Nil dividend proposed
Record Date Not Applicable Not Applicable
Dividend Payment Date Not Applicable Not Applicable
COMMENTS
13 NOVEMBER 2014 (RAK)
RAKON INTERIM RESULT DEMONSTRATES POSITIVE IMPACT OF STRATEGIC REALIGNMENT
INITIATIVES
- Improvement in unaudited net loss after tax: HY2015 NZ$3.4 million vs
NZ$45.7 million in HY2014
- Turnaround in Underlying EBITDA*: profit of NZ$4.3 million in HY2015 vs
loss of NZ$4.7 million in HY2014
- Favourable effect of growth in Telecommunications
- Lower net debt mainly from improved working capital efficiencies and
reduced capital spend
- Reaffirm FY2015 earnings guidance of Underlying EBITDA of between NZ$10
million to NZ$15 million
NZD Millions, Unaudited HY15 HY14 % Change FY14
Revenue 61.4 80.5 (23.7) 150.0
Underlying EBITDA* 4.3 (4.7) (>100.0) (7.5)
Net loss after tax (3.4) (45.7) (92.6) (83.8)
Operating cash flow (0.0) 7.8 (>100.0) 12.5
Bank borrowings 11.8 36.9 (68.0) 10.9
Net debt 8.2 27.1 (70.0) 6.4
* A detailed reconciliation of Underlying EBITDA to net loss after tax, is
included at Note 3 of the Unaudited Interim Financial Statements.
Rakon Limited (NZX: RAK) ("Rakon" or "the Company") today reports an
unaudited net loss after tax for the half year ending 30 September 2014
("HY2015") of NZ$3.4 million, a significant improvement from the NZ$45.7
million net loss incurred in the half year ending 30 September 2013.
Pleasingly, HY2015 'Underlying EBITDA' was a profit of NZ$4.3 million
compared to a loss of NZ$4.7 million in HY2014.
Brent Robinson, Rakon CEO, said "the result is in line with our expectations
for the first half of FY2015. The positive impact of our significant
structural realignment programme taking place over 2013-2014 is starting to
show through in our financial results. While revenues have declined as
planned, it is pleasing to see that our strategy to focus on better product
and operating margins is taking effect."
The Company's closure of its Lincoln, UK plant has been completed within our
targeted timeframe and the manufacturing capability has been transferred to
New Zealand resulting in increased efficiencies. While the first half result
continued to carry the Lincoln plant operating expenses, Mr Robinson said
"the company will now benefit from reduced operating expenses in the second
half as a result of the closure".
Rakon has experienced growth in the Telecommunications market following on
from FY2014. New mobile phone 4G technology is driving new telecommunications
infrastructure, with Rakon capturing strong growth from 4G deployments of new
Base Station equipment. Growth in Telecommunications contributed positively
to the profitability of all key business units, including an increase in
earnings contribution from Rakon's joint venture, Centum Rakon India.
Rakon reported borrowings of NZ$12.0 million and net debt of NZ$8.2 million.
Net debt was considerably below the company's internal forecast for 30
September 2014 due to a combination of working capital and cash management
improvements and reduced capital spend. Operating cash flows of -NZ$30k were
NZ$3.6 million before adjusting for cash outflows relating to FY2014
restructuring.
The Company is forecasting higher profitability over the second half of
FY2015 compared to the first half of FY2015, as a result of a number of
factors including continued growth that is expected in the Telecommunications
market and a reduction in operating costs following the Lincoln plant
closure. In addition, Rakon expects increased Space and Defence revenues as a
result of the delivery of key projects timed during the second half of FY2015
and the company expects to see the benefits flowing through from an improved
NZD:USD exchange rate and a strong hedge position.
"The company is now positioned to take advantage of the structural
realignment programme and return to profit with the second half outlook for
stronger profitability. Rakon has already significantly reduced its operating
expenses compared to FY2014 which will further reduce in the second half. The
company will focus on increasing throughput in manufacturing volumes in New
Zealand following the transfer of production from the UK as well as the
increased product demand, to take further advantage of the Telecommunications
growth that we are experiencing", Mr Robinson said.
Rakon reaffirms its FY2015 earnings guidance of Underlying EBITDA of between
NZ$10 million to NZ$15 million.
The Directors confirm that this HY2015 preliminary results announcement is
based on unaudited results. A detailed reconciliation of Underlying EBITDA to
net loss after tax, is included at Note 3 of the Unaudited Interim Financial
Statements.
-ends-
Contact:
Brent Robinson
Chief Executive Officer
Rakon 021 206 0985
www.rakon.com
Directors Declaration (NZX Listing Rules Appendix 1, 3.1 & 3.2)
The Directors declare that the selected consolidated financial information on
pages 4 to 16 have been prepared in compliance with applicable Financial
Reporting Standards and extracted from the unaudited interim financial
statements. The accounting policies the Directors consider critical to the
portrayal of the company's financial condition and results which require
judgements and estimates about matters which are inherently uncertain are
disclosed in note 2 of the unaudited consolidated interim financial
statements that form part of this announcement.
End CA:00257600 For:RAK Type:HALFYR Time:2014-11-13 09:17:58
