Stalled sales have impact on Rakon result

Rakon posted a wider full-year loss after sales fell 16 per cent 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 $1.7m a year earlier. Sales fell to $94.7m from $112.7m, while cost of sales recorded a more modest decline to $61m from $64.8m.

The latest results include impairments of about $6.6m, of which $3.2m was against the carrying value of its 49 per cent-owned Centrum Rakon India Private JV, which Rakon said reflected value- i n- 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 $4.2m, it said. Restructuring costs amounted to $3m and among other one-time items was a $1.9m impairment of goodwill.

The decline in sales reflected a 16 per cent drop revenue f rom telecommunications, it said. Positives in the year included a reduction in net debt to $4.5m from $12.6m and an increase in positive operating cash flow to $9.5m from $7.3m, 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. “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.” —

Jonathan Underhill