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

 

Scoop Business: Alex Swney Pleads Guilty To $2.5M Fraud Charge

Alex Swney, former chief executive of the Auckland city centre business association Heart of the City, has pleaded guilty to dishonestly using documents to obtain $2.5 million. More>>

ALSO:

Petrol Burns Prices: Second Consecutive Quarterly Fall For CPI

The consumers price index (CPI) fell 0.3 percent in the March 2015 quarter, following a 0.2 percent fall in the December 2014 quarter, Statistics New Zealand said today. The last time the CPI showed two consecutive quarterly falls was in the December 1998 and March 1999 quarters. More>>

ALSO:

Scoop Business: NZ Broadcasters Launch Battle Against Global Mode ISPs

New Zealand broadcasters have confirmed they’ve launched legal proceedings against internet service providers who give customers’ access to “global mode”, which allows customers access to offshore online content, claiming it breaches the local content providers’ copyright. More>>

ALSO:

Sanford: Closure Of Christchurch Mussel Processing Plant Confirmed

The decision comes after a period of consultation with the 232 staff employed at the Riccarton site, who were told on 9 April that Sanford was considering the future of mussel processing in Christchurch. Recent weather patterns had impacted on natural spat (offspring) supply... More>>

ALSO:

Price Of Cheese: Dairy Product Prices Fall To The Lowest This Year

Dairy product prices fell in the latest GlobalDairyTrade auction, hitting the lowest level in the 2015 auctions so far, as prices for milk powder and butter slid amid concern about the outlook for commodities. More>>

ALSO:

Houston, We Have An Air Route: Air New Zealand To Fly Direct To The Heart Of Texas

Air New Zealand will fly its completely refitted Boeing 777-200 aircraft between Auckland and Houston up to five times a week opening up the state of Texas as well as popular nearby tourist states such as Louisiana and Florida. More>>

ALSO:

Scoop Business: Reserve Bank’s Spencer Calls On Govt To Rethink Housing Tax

The Reserve Bank has urged the government to take another look at a capital gains tax on investment in housing, allow increased high-density development and cut red tape for planning consents to address an over-heated Auckland property market. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news