REL: 1017 HRS Rakon Limited
FORECAST: RAK: Rakon Market Update 8 May 2014
8 MAY 2014 (RAK)
RAKON MARKET UPDATE
Rakon Limited (NZX:RAK) ("Rakon") advises the market that it expects to
report a Net Loss After Tax (NLAT) for the year ended 31 March 2014 of -$79.9
million (previous guidance of NLAT of -$59 million to -$55 million).
Rakon confirms that FY2014 'Underlying EBITDA' guidance remains unchanged at
between -$8 million to -$5 million and it has met its target of reducing bank
borrowings below $12 million at 31 March 2014.
The increase in NLAT results from non-cash adjustments relating to impairment
of goodwill, accelerated depreciation on Property Plant & Equipment (PP&E)
and the finalisation of the impairment relating to the Equity Sale of RCC
completed in the second half of FY2014.
Rakon announced plans on 5 March 2014 to close its Lincoln, UK plant,
transferring all manufacturing to New Zealand in FY2015. Following the annual
testing for impairment of goodwill undertaken at the FY2014 financial year
end, the value-in-use calculation for the New Zealand cash generating unit
does not support the carrying amount of UK goodwill once transferred. A total
goodwill impairment of $15.0 million is expected.
Further to the financial year end testing for impairment, certain PP&E assets
have been assessed as having a reduced useful life, resulting in an
acceleration of depreciation of $7.4 million being brought forward into
The Directors note that market guidance is provided based on unaudited
results. Rakon will release its preliminary results announcement for FY2014
to the market on 22 May 2014.
Chief Financial Officer
Rakon (09) 571 9206
Disclosure of Non-GAAP Financial Information:
Rakon has used 'Underlying EBITDA' as a measure of non-GAAP financial
information in this announcement and it is defined as:
"earnings before interest, tax, depreciation, amortisation, impairment, loss
on disposal of assets, employee share schemes, non-controlling interests,
adjustments for associates and joint ventures share of interest, tax &
depreciation, and other non-cash items."
'Underlying EBITDA' is a non-GAAP measure, with its presentation not being in
accordance with GAAP. The Directors present 'Underlying EBITDA' as a useful
non-GAAP measure to investors, in order to understand the underlying
operating performance of the Group and each operating segment, before the
adjustment of specific non-cash charges and before cash impacts relating to
the capital structure and tax position. 'Underlying EBITDA' is considered by
the Directors to be the closest measure of how each operating segment within
the Group is performing. Management uses the non-GAAP measure of 'Underlying
EBITDA' internally, to assess the underlying operating performance of the
Group and each operating segment. The use of 'Underlying EBITDA' in this
guidance announcement is a forecast and has not been extracted from the
audited financial statements for the full year.
End CA:00250222 For:RAK Type:FORECAST Time:2014-05-08 10:17:45