REL: 0951 HRS Rakon Limited
HALFYR: RAK: Rakon HY08 Preliminary Announcement Financial Results
Results for announcement to the market
Reporting period 6 months to 30th September 2007
Previous reporting period 6 months to 30th September 2006
Amount NZ$000 % Change
Revenue from ordinary activities 89,912 +78%
Earnings before interest, tax, depreciation, amortisation & share based
payments 12,439 +22%
Earnings before interest & tax 8,495 +1%
Net profit after tax 5,743 +5%
Amount per security Imputed amount per security
Interim / Final Dividend Nil Nil
Record Date Not Applicable Not Applicable
Dividend Payment Date Not Applicable Not Applicable
Total revenue has grown 78% to NZ$ 89.9m compared to the same period last
year. EBITDA overall increased 22% to NZ$ 12.4m on the same period. This
result takes account of all global business acquired at the end of the
previous financial year and the impacts of the globally weakening US$. In
particular the high NZ$ to US$ has had an adverse effect.
New Zealand revenue grew 32% on a US$ basis over the same period last year,
but when converted to NZ$ this growth was reduced to 12%. Revenue & EBITDA
would be NZ$7.7m and NZ$4.6m higher than reported if the NZ$/US$ cross rate
had remained the same as it was for the same period last year. Similarly,
revenue & EBITDA would be NZ$ 5.0m and NZ$ 2.0m higher, if the NZ$/US$ cross
rate had been in line with the rates assumed by us in determining the
projected ranges communicated to the market in May 2007.
Growth in New Zealand sales revenue and EBITDA was underpinned by sales
volume growth of 53%. Sales growth plus cost and productivity gains equated
to NZ$ 9.4m increase at the EBITDA level compared to the same period last
year. This was partially offset by volume related price reductions of NZ$
4.0m to produce a net benefit of NZ$ 5.4m of EBITDA. The impact of this was
reduced by FX (as noted above) and higher indirect costs as a result of the
expanded global operation, for which we have invested considerably in
building a worldwide infrastructure to develop and capture future growth.
The financial performance of the UK based manufacturing and trading business
has pleasingly been in line with expectations. However Rakon's operations in
France have posed a particular problem where the manufacturing and logistics
performance has not been able to keep pace with the very strong customer
demand. Since the Annual Meeting this situation has been thoroughly reviewed
resulting in a further charge of NZ$ 0.7m to cover for scrap inventory.
Action plans for considerable improvement have been put in place.
The unaudited net surplus after tax of NZ$ 5.7m for six months ended 30
September 2007 is up 5% on the same period last year. Higher non cash
depreciation and amortization costs due to the significantly expanded
business, and the impact of IFRS reduced the 22% EBITDA variance. Further
details on the IFRS related impacts are available in the financial statements
that form part of this Announcement.
Forecasting the full year has been made more difficult by the dramatic
weakening of the US$ and the increased volatility of the NZ$/US$ cross rate.
Rakon's FX cover is well within its policy limits but despite this conditions
may compound to make it difficult to achieve the forecast range mentioned at
the Annual Meeting of EBITDA NZ$ 27m - 32m.
Business demand remains strong and Rakon's plans for manufacturing in China
are in action. It is anticipated that we will be able to report progress on
that and other initiatives during the second half of this fiscal year.
Directors Declaration (NZX Listing Rules Appendix 1, 3.1 & 3.2)
The Directors declare that the consolidated financial statements on pages 4
to 27 have been prepared in compliance with applicable Financial Reporting
Standards. 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 2.20 of the financial statements that form part of this
End CA:00156959 For:RAK Type:HALFYR Time:2007-11-19:09:51:16