Thursday 18 May 2017 10:33 AM
Rakon full-year loss widens on 16% sales drop, impairment of Indian JV
By Jonathan Underhill
May 18 (BusinessDesk) - Rakon posted a wider full-year loss after sales fell 16 percent and the company recognised an impairment against its Centrum Rakon India joint venture.
The net loss widened to $13.6 million in the 12 months ended March 31, from $1.7 million a year earlier. Sales fell to $94.7 million from $112.7 million, while cost of sales recorded a more modest decline to $61 million from $64.8 million.
The latest results include impairments of about $6.6 million, of which $3.2 million was against the carrying value of its 49 percent-owned Centrum Rakon India Private Ltd JV, which Rakon said reflected value-in-use calculations based on future forecasts that "did not support the full value of this investment being retained". As revenue declined the company also increased inventory obsolescence provisions during the year by $4.2 million, it said. Restructuring costs amounted to $3 million and among other one-time items was a $1.9 million impairment of goodwill.
The decline in sales reflected a 16 percent drop revenue from telecommunications, it said. Positives in the year included a reduction in net debt to $4.5 million from $12.6 million and an increase in positive operating cash flow to $9.5 million from $7.3 million, it said.
Managing director Brent Robinson said Rakon continued to suffer from reduced demand from equipment makers in the telecommunications sector "as major global network operators had continued to delay infrastructure investment."
"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. Key priorities in the latest year were reducing operating costs and balance sheet risk, he said.
“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," Robinson said.
Rakon shares fell 7 percent to 19.5 cents and have fallen 29 percent in the past 12 months.