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Rakon Continues On Growth Path

1 September 2006

Rakon Continues On Growth Path

Rakon is on track for a good result for the first 6 months of the 2007 fiscal year.

This follows on from a strong finish to its 2006 financial year which saw it post a net profit after tax of $4.8m, up 65% on the previous year.

At the company's first AGM since listing on the NZX in May, Rakon chairman Bryan Mogridge said the projected 6 month result had come about through strong demand for the company's products coupled with a favourable USD exchange rate that had been cemented in with previously reported hedging strategies.

Mr Mogridge added, "This locked in exchange position should see Rakon exceed its full year EBIT forecast by almost $3m if volumes finish in line with the prospectus."

Rakon's prospectus, released in April this year, forecast a net profit after tax of $7.2m - a 50% increase over the 2006 result.
Mr Mogridge said any extra profit above the FX generated gain would rely upon continued strong demand in the second six months of the year.

However, Mr Mogridge cautioned against reading too much into Rakon's first six month's result as a guide to the full year.

He said it was too early to ascertain whether demand would continue at its current level, with reliance on customers' retail product sales determining the re-order level.

Rakon Managing Director, Brent Robinson, also commented that demand was strong and added the company was on track to achieve the forecast reductions in material costs.

Mr Robinson said the company's cash position was strong, with working capital better than forecast due to good management in all areas. Rakon's capital programmes are progressing and he noted that the Board is considering accelerating investment in some areas to optimise market opportunities.

ENDS

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