REL: 0906 HRS Rakon Limited
HALFYR: RAK: Rakon Limited 30 Sept 2009 Financial Results Media Release
Rakon Half Year 2010 Results
Rakon Limited (NZX: RAK) has reported revenue of NZ$72.2 million for the
first half of the 2010 financial year. This is up 20% on the second half of
last financial year, but down 9% on the same period last year. Profit was up
slightly from guidance given in September, with EBITDA a NZ$2.9 million loss,
compared to previous guidance of a NZ$3 to NZ$4 million loss. The company
recorded a net loss after tax of NZ$6.2 million, which included equity
accounted profits from Rakon's investments in China and India. A continued
strong focus on working capital delivered a positive operation cash flow of
Demand for the NZ business, which has a significant focus on consumer GPS,
has recovered quite strongly and steadily throughout the first half of the
year. Revenue from the first half was up 30% sequentially when compared with
the second half of last year, although still down 20% on the same period last
year it is a good sign momentum is building.
Brent Robinson, Rakon Managing Director said the global downturn impacted the
NZ business in particular.
"As demand returned in the GPS sector, competition intensified and drove
sales prices down faster than expected. This coupled with material supply
constraints had a significant negative impact on the New Zealand business,"
Mr Robinson commented that results from its UK operations continue to be
strong, "As we noted at our recent capital raising our UK operations continue
to perform very well. Revenue is up 17% compared with the same period last
year and 10% sequentially when compared to the second half of the prior year.
Sales of our Pluto TCXOs into a broad range of applications have continued
to grow over the past 6 months."
Sales in the first half for Rakon's OCXO business out of France and India
were initially lower than forecast but demand increased steadily throughout
the first half of the year driving revenue above the same period in the prior
year and equal to the second half of the prior year.
The rapid appreciation in the NZ$ against the US$ and GBP also had a material
impact in the first half of 2010. This movement caused an FX loss on foreign
currency denominated receivables. This was partially offset by hedge gains
from forward exchange contracts. The net outcome was for the first half of
the current year Rakon incurred a FX loss of NZ$4.2 million against a gain of
NZ$4.2 million for the first half of the prior year.
Despite the first half loss Rakon advised there was no change in its
financial outlook for the current year of the forecast full year EBITDA of
NZ$4 to $8 million. A continuation of the recovery in Rakon's tradition GPS
market plus new GPS smartphone business and growth from the
telecommunications segment, including femtocells, underpins the expected
improvement. Mr Robinson noted Rakon anticipates providing a further update
to the market on its revenue growth and earnings projections for the full
year early in 2010.
Rakon's recent equity raising of NZ$66 million has been successfully
completed, enabling Rakon to proceed with its planned new facility in China.
Mr Robinson noted that Rakon was moving ahead with its plans to locate this
in Chengdu and that the company had entered into arrangements with the
Chengdu High Tech Zone, which he expected, would enable Rakon to obtain land
use consent in December and proceed with beginning to construct a facility in
"We have recently returned from a further visit to Chengdu to meet with our
partners, officials and potential employees and are extremely pleased with
progress and the opportunity in front of us" said Mr Robinson.
Mr Robinson said that like many companies Rakon has endured an extremely
tough period, but that despite the results for the first half of the year
Rakon has grown and enhanced its reputation and position as a leader in the
supply of frequency control solutions.
"As in any downturn the effort across the business to establish a strong
position for the future actually intensifies. Our strategies and tactics to
develop new opportunities in both consumer and infrastructure markets are
progressing well. We are confident this will begin to translate into
improved financial results in the second half of FY 2010 and beyond."
A conference call will be held by management at 11:00 am on Thursday 12
November, 2009. Dial in details and a link to supporting information is
New Zealand: 0800 450 585
Australia: 1800 554 798
China: 10800 2640 090
Hong Kong: 800 901 587
India: 000 800 100 6486
Japan: 0053 1250 084
Taiwan: 00801 615 166
UK: 0808 234 8407
USA: 1866 839 8029
Confirmation code: 7716005
Web link: http://www.rakon.com/investor/presentation
End CA:00187601 For:RAK Type:HALFYR Time:2009-11-12:09:06:36