Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Rakon backs strategy to boost depressed share price

Rakon backs strategy to boost depressed share price

By Paul McBeth

May. 22 (BusinessDesk) - Rakon, whose shares have shed 86 percent of their value over the past five years, says its new strategy should deliver a boost to the company's depressed share price, and anticipates positive earnings in the 2015 financial year.

The shares were unchanged at 22 cents, a discount to the net tangible asset of 36 cents per share, valuing Rakon at $42 million. The Auckland-based company said its 2014 annual loss more than doubled to $83.8 million as it took a $33 million loss on the sale of its Chinese investment, wrote down the value of its UK business, recognised faster depreciation costs and faced $7.2 million in restructuring costs.

Rakon is in the process of exiting the smart wireless device market, which didn't deliver big enough margins, and anticipates strong growth in the telecommunications sector as 4G mobile networks are developed around the world. The company forecasts underlying earnings before interest, tax, depreciation and amortisation of between $10 million and $15 million in 2015 as a result of those changes, compared to an underlying Ebitda-loss of $7.5 million in the 12 months ended March 31.

"We need to put some results on the board that will bring confidence back to the market," chief financial officer Simon Bosley told a conference call. "I can understand some segments of the market need time to be sure of this plan."

Rakon is shifting manufacturing from the UK and France to New Zealand and India as part of a wider restructuring effort that will reduce the company's global workforce by 45 percent.

Managing director Brent Robinson told analysts the company is focused on growing shareholder value and aims to achieve a return on equity of more than 12 percent going out to the 2018 financial year.

In September, chairman Bryan Mogridge said Rakon intends to start paying dividends of up to 50 percent of net profit from the end of the 2015 financial year, having previously steered clear of a cash return to shareholders, arguing it was creating more value by retaining earnings to let it capitalise on growth opportunities.

Rakon generated more cash than it spent from operations in 2014, with an inflow of $12.5 million compared to an outflow of $2.7 million in 2013. As at March 31, it held cash and equivalents of $4.8 million.

The company held bank debt of $10.9 million at the end of the financial year, down from $36.1 million a year earlier, and will lift its total facility to $22 million to help fund its restructuring.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Prefu Roundup: Forecasts Revised, Surplus Intact

The National government heads into the election with its Budget surplus target broadly intact, delivering a set of economic and fiscal forecasts marginally revised from May to reflect weaker commodity prices and a lower tax take. More>>

ALSO:

Convention Centre: Major New SkyCity Hotel And Laneway For Auckland

Today SKYCITY Entertainment Group Limited revealed plans to build a new hotel and pedestrian laneway of bars, restaurants and boutique shopping on land it owns in the Nelson and Hobson Streets block, expanding the SKYCITY Entertainment Precinct. More>>

ALSO:

Igniting The Spark: Bringing The Digital Enabler To Life

Changing a name is, relatively speaking, the easy part of a re-invention. Changing a culture, getting all the ducks in a row, turning yourself inside-out to become customer-inspired is a much bigger challenge. More>>

ALSO:

Ebola And NZ: Targeted Screening At Airport But Risk Low

The risk of any cases of Ebola in New Zealand remains very low, but health and border authorities are well prepared... anyone arriving in New Zealand who in the last three weeks has visited countries affected will be screened for symptoms of the disease. More>>

ALSO:

Scoop Business: Brewer Seeking Crowd-Funding Cancels Shareholders’ Dividends

Shareholders in Renaissance Brewing company, the first business to seek equity through crowd-funding in New Zealand, have cancelled their claim on $147,000 of accumulated earnings “to make Renaissance a more attractive investment opportunity.” More>>

ALSO:

It's Spark Now:
Why Telecom Wanted To Change

New Zealand led the world when Chorus demerged from Telecom. It gave us a telecommunications industry structure where the network is completely separated from the products and services it delivers. The changes brought about a new market dynamic and it dramatically changed Telecom’s role. More>>

ALSO:

Glass Half Empty: Dairy Prices Fall To Lowest Since 2012

Dairy product prices slumped to the lowest level since October 2012 in the latest GlobalDairyTrade auction, paced by whole milk powder and cheddar. More>>

ALSO:

Get More From Scoop

 
 
Computer Power Plus

Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news