RAK
21/05/2015 09:28
FLLYR
PRICE SENSITIVE
REL: 0928 HRS Rakon Limited
FLLYR: RAK: RAKON FY2015 Preliminary Results Announcement
Results for announcement to the market
Date: 21 May 2015
Rakon Limited (RAK)
Reporting period 12 months to 31st March 2015
Previous reporting period 12 months to 31st March 2014
Audited Amount NZ$000 % Change
Revenue from ordinary activities 131,417 -12%
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) 15,369a 304%
Profit from ordinary activities after tax attributable to security holders
3,190 b 104%
Net profit attributable to security holders 3,190 b 104%
Note a: includes share of Underlying EBITDA from associates and joint
ventures of $6,687,000 (March 2014: $4,487,000).
b: includes equity accounted earnings from associates and joint ventures of
$3,153,000 (March 2014: $1,647,000).
c: Further information regarding the disclosure and use of non-GAAP financial
information is disclosed at Note 3 (Notes to the audited Consolidated
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
21 MAY 2015 (RAK)
RAKON RETURNS TO PROFIT FROM TURNAROUND
o Return to net profit after tax (NPAT): FY2015 NZ$3.2 million NPAT vs
NZ$83.8 million net loss after tax in FY2014
o Significant turnaround in Underlying EBITDA1: profit of NZ$15.4 million in
FY2015 vs loss of NZ$7.5 million in FY2014
o Favourable effect of growth in Telecommunications resulting in second half
revenue increase
o Growth in margin dollars (and as a % of revenue): FY2015 NZ$41.8 million
(32%) vs NZ$28.7 million (19%) in FY2014
o Positive impact from Operating expense reduction following completion of
the structural change programme
o Favourable reporting impact to Tax expense from the calculation of Deferred
tax
NZD Millions, Audited FY2015 FY2014 % Change
Revenue 131.4 150.0 (12.4)
Underlying EBITDA1 15.4 (7.5) >100.0
Net profit after tax 3.2 (83.8) >100.0
Gross Profit 41.8 28.7 45.6
Operating expenses 46.2 56.6 (18.3)
Operating cash flow (3.6) 12.5 (>100.0)
Net debt 13.4 6.4 (>100.0)
1 A detailed reconciliation of Underlying EBITDA to net profit/(loss) after
tax, is included at Note 3 of the Audited Financial Statements.
Rakon Limited (NZX: RAK) ("Rakon" or "the Company") today reports an audited
net profit after tax for the full year ending 31 March 2015 ("FY2015") of
NZ$3.2 million. The turnaround to profit follows the significant strategic
efforts and structural changes implemented by the Company, having posting a
NZ$83.8 million net loss in the year ending 31 March 2014. The Company also
reports a significant increase in 'Underlying EBITDA' for FY2015 with a
profit of NZ$15.4 million compared to a loss of NZ$7.5 million in FY2014.
The Company was particularly pleased with its second half performance:
Revenue of NZ$70.0 million, Underlying EBITDA of NZ$11.1 million and NPAT of
NZ$6.6 million.
Brent Robinson, Rakon CEO, said "today we announce a turnaround in our
results with a return to profit. It is pleasing that the impact of our
significant structural realignment programme during FY2014-FY2015 has
resulted in this improvement in our financial results. Our strategy to focus
on higher margin products and markets has resulted in much improved operating
margins for the year, supported by a strong second half performance."
The closure of the Company's Lincoln, UK plant was successfully completed
during the year in line with plans and the manufacturing of those products is
now fully integrated into New Zealand. Mr Robinson said "the company has
benefited as expected from reduced operating expenses in the second half as a
result of the Lincoln closure".
Rakon has experienced growth in the Telecommunications market during FY2015.
New mobile phone 4G technology is driving new telecommunications
infrastructure, with Rakon capturing strong growth from 4G deployments of new
Base Station equipment. This growth contributed to an increase in earnings
from Rakon's joint venture, Centum Rakon India, up NZ$1.3 million for the
period to NZ$3.3 million. Rakon also captured significant growth in the Small
Cell Telecommunications market, as network operators invested to deploy the
supporting infrastructure needed to meet the demand on networks coming from
growth in data volumes.
Rakon reported bank borrowings of NZ$12.0 million and net debt of NZ$13.4
million. Net debt increased over the period in line with expectations as the
Company paid for restructuring initiatives provisioned in FY2014, including
cash outflows related to the Lincoln plant closure. Operating cash flows of
-NZ$3.6 million were impacted by the restructuring pay outs and growth in
working capital.
Revenue decreased over the prior period as the Company clearly signalled
following the exit from the Smart Wireless market in FY2014. Space and
Defence revenues increased in the second half of FY2015 with the delivery of
a number of key projects as planned. Following an increase in demand and the
transfer of manufacturing from the UK, the New Zealand manufacturing plant
had worked successfully over the second half to increase its throughput in
volumes.
Gross profit increased over the period due to mix and revenue growth coming
from higher margin business. The Company also benefited from a declining
NZD:USD exchange rate. The reported result includes a NZ$1.0 million benefit
from the gain on the sale of the Lincoln plant and a favourable benefit in
tax expense due to timing difference impacts of NZ$2.7 million taken up in
the Deferred tax asset.
While it is satisfying to return to profitability, the Directors have not
declared a dividend for FY2015 but will continue to assess this position in
the future based on it being fiscally prudent.
"Rakon is optimistic for prospects in FY2016 with the Company now benefiting
from the change in strategy. The Company will have a full year impact from
the Lincoln plant closure and operating platforms are now stable and capable
of accommodating the rates of growth that we have experienced in the
Telecommunications market during FY2015. New Zealand has started to invest in
resource again during the second half of FY2015 to cater for the additional
demand. The Company also expects to benefit from a lower average NZD:USD
exchange rate in the coming period", Mr Robinson said.
The Directors confirm that this FY2015 preliminary results announcement is
based on audited results. A detailed reconciliation of Underlying EBITDA to
net profit after tax, is included at Note 3 of the Audited Financial
Statements.
-ends-
Contact:
Brent Robinson
Chief Executive Officer
Rakon 027 898 7899
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 eight manufacturing plants including four joint ventures
plants and five research and development centres. Customer support centres
are located in 13 offices worldwide. Rakon is a public company listed on the
New Zealand stock exchange, NZSX, ticker code RAK.
Directors Declaration (NZX Listing Rules Appendix 1, 3.1 & 3.2)
The Directors declare that the selected consolidated financial information on
pages 4 to 20 has been prepared in compliance with applicable Financial
Reporting Standards and extracted from the audited 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
2.17 of the audited financial statements that form part of this announcement.
End CA:00264613 For:RAK Type:FLLYR Time:2015-05-21 09:28:08
