RAK
19/11/2015 08:58
HALFYR
PRICE SENSITIVE
REL: 0858 HRS Rakon Limited
HALFYR: RAK: Rakon HY2016 Preliminary Results Announcement
Results for announcement to the market
Date: 19 November 2015
Rakon Limited (RAK)
Rakon Limited
Results for announcement to the market
Reporting period 6 months to 30th September 2015
Previous reporting period 6 months to 30th September 2014
Unaudited Amount NZ$000 % Change
Revenue from ordinary activities 57,990 -6%
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) 6,210a 46%
Profit/(loss) from ordinary activities after tax attributable to security
holders 1,080 b 132%
Net profit/(loss) attributable to security holders 1,080 b 132%
Note a: includes share of Underlying EBITDA from associates and joint
ventures of $343,000 (September 2014: $3,518,000).
b: includes equity accounted earnings from associates and joint ventures of
-$732,000 (September 2014: $1,777,000).
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
19 NOVEMBER 2015 (RAK)
IMPROVED INTERIM PROFITABILITY DURING A PERIOD OF TOUGHER MARKET CONDITIONS
o Improvement in net profit after tax: HY2016 NZ$1.1 million net profit vs
HY2015 NZ$3.4 million net loss.
o Growth in first half Underlying EBITDA* earnings: NZ$6.2 million in HY2016
vs NZ$4.3 million in HY2015.
o 6% decline in NZD reported revenue for HY2016 vs HY2015, stalling further
profit growth.
o Strong improvement shown in positive operating cash flow: HY2016 NZ$5.3
million vs HY2015 $(0.0) million.
o FY2016 profit expectations reaffirmed to be similar to FY2015 results for
both Underlying EBITDA and NPAT.
NZD Millions, Unaudited HY2016 HY2015 % Change FY2015
Revenue 58.0 61.4 (5.5) 131.4
Underlying EBITDA* 6.2 4.3 45.6 15.4
Net profit/(loss) after tax 1.1 (3.4) >100.0 3.2
Operating cash flow 5.3 (0.0) >100.0 (3.6)
Bank borrowings 12.0 11.8 (1.7) 12.0
Net debt 9.7 8.2 (18.9) 13.4
* 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 profit after tax for the half year ending 30 September 2015
("HY2016") of NZ$1.1 million, an improvement from the NZ$3.4 million net loss
incurred in the half year ending 30 September 2014 ("HY2015"). The Company
also reported an improvement in HY2016 'Underlying EBITDA' to NZ$6.2 million,
an increase of NZ$1.9 million vs HY2015.
Rakon experienced a slowdown in the key Telecommunications market during the
period, as network operators delayed their investment decisions in next
generation infrastructure. Revenue of NZ$58.0 million for HY2016 was down 6%
vs HY2015 on a NZ dollar basis. The slowdown was mainly impacted in the macro
base station telecommunication market and this has adversely affected the
results of Rakon's Indian joint venture, Centum Rakon India ("CRI"). HY2016
Underlying EBITDA for CRI of $0.4m was down against the NZ$3.0 million
reported for HY2015.
Brent Robinson, Rakon CEO, said "while the improvement in half year profit is
pleasing, a prolonged slowdown in telecommunication's spend over the first
half, has resulted in profits growing slower than we were expecting over this
period".
The Company had continued the trajectory of improving its margins on a
consolidated basis, improving from 28% in HY2015 to 41% in HY2016. Mr
Robinson said that "the improvement in margins has resulted from changes in
product mix, technology transition and currency benefit. The strategy
previously implemented to focus on better product and operating margins is
evident in this result."
While Rakon had experienced a slowdown in the macro base station market,
other areas of the Telecommunications market such as small cells had
continued to grow over the prior period. This growth combined with the
consolidation efficiencies from the transfer of manufacturing operations from
the United Kingdom into New Zealand, had resulted in a significant growth in
profits for the NZ business unit.
Rakon reported positive operating cash flows for the period of NZ$5.3
million, that had helped reduce net debt to NZ$9.7 million, down from NZ$13.4
million at the end of FY2015. As the Company has increased earnings from
entities under full ownership, this has had a positive impact on operating
cash flow for the period.
The Company is forecasting higher profitability over the second half of
FY2016 compared to first half, with a slow return expected in the
Telecommunications market and an increase in Space & Defence revenues
expected to result from the delivery of key projects timed during the second
half of FY2016.
"The company is expecting only a modest improvement to the tough market
conditions in Telecommunications encountered during the first half. Following
the recent periods of structural change and operational consolidation,
Rakon's operations have been very stable in the current financial year and
the Company is well poised to take advantage of markets returning".
Rakon reaffirms its FY2016 earnings guidance to be similar to FY2015 results
- Underlying EBITDA of NZ$15.4 million and NPAT of NZ$3.2 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
About Rakon
Rakon is a global high technology company and a world leader in its field.
The company design and manufacture advanced frequency control and timing
solutions. Rakon has five manufacturing plants including two joint venture
plants and has five research and development centres. Customer support
centres are located in ten offices worldwide. Rakon is a public company
listed on the New Zealand stock exchange, NZSX, ticker code RAK.
End CA:00273683 For:RAK Type:HALFYR Time:2015-11-19 08:58:35
