REL: 0833 HRS Rakon Limited
FLLYR: RAK: FY2017 Preliminary Results Announcement
18 May 2017
Rakon Limited releases its preliminary financial results for FY2017. This
release includes 2 supporting attachments:
1. FY2017 Preliminary Results Announcement
2. FY2017 Preliminary Financial Statements
Tough trading conditions and restructuring results in loss for Rakon
o Net loss after tax of NZ$13.6m vs Net loss after tax of NZ$1.7m in FY2016
o Revenue NZ$94.7 million (FY2016 NZ$112.7 million)
o 16% decrease in revenue from Telecommunications major contributor to
decrease in total sales volumes and revenue
o The result includes non-recurring impacts for impairment of NZ$6.6m and
restructure costs of NZ$3.0m
o Net debt of NZ$4.5 million reduced from NZ$12.6 million in FY2016
o Increase in positive operating cash flow: FY2017 NZ$9.5 million vs NZ$7.3
million in FY2016
Tough trading conditions and restructuring costs has seen global high
technology company Rakon Limited post a net loss after tax of NZ$13.6 million
on revenue of NZ$94.7 million for the year ended 31 March 2017.
The company's Underlying EBITDA of NZ$4.0 million was in line with forecasts
issued earlier in the year.
Rakon Managing Director Brent Robinson said the company continued to be
affected in its key Telecommunications market segment by reduced demand from
equipment makers, as major global network operators had continued to delay
"While we experienced a lift in business in the Telecommunication market in
the final quarter, it was not enough to recover the reduced demand that had
negatively affected revenue in the first three quarters" he said.
During the year action was taken to address the impact of declined revenue on
earnings. The Company had targeted a 20% reduction in operating costs, with
an actual reduction of NZ$8.9 million achieved, before the impact of
restructure costs of NZ$3.0 million.
Mr Robinson said that key priorities during the year have been reducing
operating costs and balance sheet risk. The reduction in operating costs and
the US$10 million proceeds that resulted from agreements signed with Siward
Crystal Technology ("Siward") had allowed the Company to pay down a large
portion of its debt.
"While the arrangement with Siward provided us an opportunity to improve our
balance sheet position, the partnership brings further long term
opportunities for both parties. This partnership will give both companies a
broader range of products and alternative channels into new and existing
markets," he said.
In addition to the restructure costs incurred, other non-recurring items had
a negative impact on the result. Impairments of NZ$6.6 million were recorded,
which included an impairment of goodwill of NZ$1.9 million and an impairment
of the investment in Centum Rakon India of NZ$3.2 million, where value-in-use
calculations based on future forecasts did not support the full value of this
investment being retained. As revenue declined the Company has also increased
inventory obsolescence provisions during the year by NZ$4.2 million.
Mr Robinson said that Thinxtra had made excellent progress in the year with
the deployment of its Low Power Wide Area Network (LPWAN) that was being
purpose built for the Internet of Things (IoT). In FY2018 Thinxtra would
finalise its network deployment in Australia & New Zealand and move into a
revenue generating phase at the end of the financial year where deals for
over 1.5 million connections on the Sigfox network had already been signed
"Although the result for FY2017 is very disappointing, there has been a
number of achievements in the year that provide Rakon a stronger position
from which improved results can be achieved in the coming year. The Company
has lowered its operating cost base and has reduced risk as a result of the
debt reduction and the partnership formed with Siward. Engagement with key
customers is strong due to interest around new Rakon designs".
The Directors confirm that this FY2017 preliminary results announcement is
based on audited results.
Chief Executive Officer & Managing Director
Louise Howe (Media Liaison)
021 206 0985
End CA:00301335 For:RAK Type:FLLYR Time:2017-05-18 08:33:36