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

 

BusinessDesk: APN's NZME Sees Future In Paywalls, Growth In Digital Sales

APN News & Media has touted a single newsroom concept for its NZME unit in New Zealand, similar to what Germany's Die Welt uses, saying an 'integrated sales proposition' is helping it win market share, including ... More>>

Labour Party: Global Milk Prices Now Lowest In 6 Years

The latest fall in the global dairy price has brought it to the lowest level in six years and shows there must be meaningful action in tomorrow’s Budget to diversify the economy, says Labour’s Finance spokesperson Grant Robertson. “Dairy prices ... More>>

BusinessDesk: NZ Inflation Expectations Creep Higher In June Survey

May 19 (BusinessDesk) - New Zealand businesses lifted their expectations for inflation over the next two years, sapping any immediate pressure on the Reserve Bank to cut interest rates, and prompting the kiwi dollar to jump higher. More>>

BusinessDesk: Lower Fuel Costs Drive Down NZ Producer Input, Output Prices

May 19 - Producer input and output prices fell in the first quarter, mainly reflecting lower fuel costs and weakness in prices of meat and dairy products. More>>

Media: Fairfax Media NZ Announces Senior Editorial Team

Fairfax Media New Zealand has today confirmed its new editorial leadership team, as part of a transformation of its newsrooms aimed at enhancing local and national journalism across digital and print. More>>

Science: Flavonoids Reduce Cold And Cough Risk

Flavonoids reduce cold and cough risk Research from the University of Auckland shows eating flavonoids – found in green tea, apples, blueberries, cocoa, red wine and onions – can significantly reduce the risk of catching colds and coughs. The research, ... More>>


BusinessDesk: RBNZ House Alert Speech The Catalyst For Government Action

Prime Minister John Key all but conceded that pressure from the Reserve Bank of New Zealand for concerted action on rampant Auckland house prices was one of the main catalysts for the government's weekend announcements about tightly ... More>>

BusinessDesk: How To Fall Foul Of The New Housing Tax Rules: Tips From IRD

Just because you rented out your investment property doesn't absolve you from paying tax, says the Inland Revenue Department in a summary of commonly made mistakes by non-professional property investors when it comes to their tax liability.More>>

Legal: Superdiversity Law, Policy And Business Stocktake Announced

Mai Chen, Managing Partner at Chen Palmer New Zealand Public and Employment Law Specialists and Adjunct Professor of Law at the University of Auckland, today announced the establishment ... More>>

Housing: More House Price Gains Expected

House price expectations remain high, with a net 56% of respondents expecting house prices will increase. Fears of higher interest rates are fading, consistent with the RBNZ’s signals this year. Affordability and a lack of houses for ... More>>

TDDA: State-Of-The-Art Drug Testing Laboratory To Open In Auckland

World leading drug testing agencies, The Drug Detection Agency (TDDA) and Omega Laboratories, open New Zealand laboratory More>>

Network: Bigpipe Launches Ultra-Fast Broadband Into Wellington

Bigpipe Launches Ultra-Fast Broadband into Wellington Naked broadband provider Bigpipe has extended its national reach, announcing today, the launch of its unlimited UFB offering into Wellington. The Spark Venture business is giving Wellingtonians the ... More>>

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news