RAK Rakon

[Sideshow Bob]

Very similar to last year.....31st of March means limited impact of C19.

https://www.nzx.com/announcements/355387RAK FY2020 Results Announcement

29/6/2020, 10:13 amFLLYR

RAK FY2020 RESULTS ANNOUNCEMENT
29 June 2020
Steady revenue growth, strong cash flow & promising future

High technology company Rakon Limited (‘Rakon’ or the ‘Group’) is pleased to post net profit after tax of $4.0m (2019: $3.4m), and Underlying EBITDA of $14.8m (2019: $13.3m) for the year ended 31 March 2020. Rakon has exceeded its earlier guidance of $12m to $14m for 2020, reflecting a much stronger than expected finish to the year from a higher share of business in the Telecommunications segment.

Reported Underlying EBITDA for the year to 31 March 2020 includes a positive impact of $3.1m from the adoption of IFRS 16 Leases.
Momentum continues to build in the Telecommunications market and Rakon’s new Mercury+, Neptune and Mercury ultra-stable frequency control products have gone into the early deployment of 5G in South Korea, China and the US. Rakon products are designed into all of the major global suppliers of 5G technology, so remains well placed for future growth.

Managing Director Brent Robinson said recent global events caused by the Covid-19 pandemic demonstrate more than ever the need for high performing telecommunications infrastructure. Rakon is confident the demand for 5G will accelerate with increasing global expectation for highly reliable, high-speed communications and data transfer. The call for high performance frequency control products is also emerging for autonomous vehicle and health applications and continues to evolve in the Space and Defence and Global Positioning markets. Rakon’s strategy is to be first to market and world leading for frequency control solutions.

Rakon’s revenue was higher from data centre customers, as they invested to meet growing world-wide data needs. Further expansion into this industry will continue to be a focus in the coming year. Revenue from Global Positioning was lower due to price competition within a particular high volume, low margin segment. Rakon continues to move away from low margin consumer products.

Space and Defence also saw lower revenue for the year due predominantly to the phasing of long-term projects. However, Rakon remains confident and well placed in the Space and Defence market and is exploring new opportunities for its products to capitalise in the new space sector where there is growing use of low earth orbit satellites replacing traditional geo orbital satellites.

During the year, the inventory obsolescence provision rose by $3.3m. Consumption of slow moving products was lower than expected and a more aggressive view was taken. Actions continue in the coming year to streamline and reduce exposure to slow moving products.

Reported operating cash flow was $9.4m for the year however included $3.1m relating to IFRS 16 Leases. Overall net debt was $7.9m (2019: $7.7m) and included the final $2.1m payment for the acquisition of Rakon India. Rakon Group now owns 100% of its manufacturing business in India. This is a cornerstone in Rakon’s manufacturing strategy and also provides a solid footprint for expansion into the India market.

During the year ended 31 March 2020, Rakon continued to focus on developing its photolithography microfabrication process for the NZ manufacturing plant. “The recently announced XMEMS NanoQuartz technology which competes with silicon based technology has been well received” said Brent Robinson.

Covid-19 has had a negative short-term impact on the Group with the New Zealand and Indian manufacturing operations severely restricted for periods of time, however the medium to long term effects are not expected to be materially adverse. Some of Rakon’s business was recognised as essential and continued or resumed operations during the Covid-19 lockdowns. All manufacturing is forecast to return to full production by the end of June 2020.

Brent Robinson said “Covid-19 could have been much worse for Rakon and I am immensely proud of the way our team responded to safeguard the future of the company”.

The Board of Directors has declared that no dividend is to be paid for 2020. Rakon maintains a dividend policy such that it will pay a dividend of up to 50% of the after tax profit, if considered fiscally appropriate. The payment of dividends is subject to the approval of Rakon’s bank, ASB Bank, under its facility arrangement.
The Directors confirm that this 2020 results announcement is based on audited results which are not subject to any qualification.

Brent Robinson
Chief Executive Officer & Managing Director
-ends-

[winner69]

Hey Bob ...they say they have a ‘promising future’

[Sideshow Bob]

Hey Bob ...they say they have a ‘promising future’

Don't you know W69, they've been saving on marketing and comms since 2006 when they floated.....cut & paste mate!

PE of circa 20.....sure there are worse companies out there??

[SPC]

Well that statement is true. They have been promising the future since the day the Robinsons listed the family business.
Im still waiting...14 years and counting..

[Lola]

Well that statement is true. They have been promising the future since the day the Robinsons listed the family business.
Im still waiting...14 years and counting..

But they still have a dividend policy!!! Unbelievable. The ASB has to approve any dividend so why would you bother having such a thing let alone continuing to announce it.? These guys are in La La land.

[Shareguy]

Another terrible result from Rakon, what a surprise. A Profit to be ashamed of. Increased costs, increased stock write-offs. Excuses ,excuses, excuses. Once again no dividend for the poor loyal shareholders. They certainly take the award for one of the worst performing companies on the NZX and I don’t expect any changes from there. Poorly managed with lack of governance by directors.. And they wonder why it’s not covered by the main brokers... SELL

[moimoi]

RAK appears to spend $10M - $14M p.a on R&D to create net profit of -$5M - + $5M.

The benefit of RAK's fantastic IP and decades of know how appears to accrue to the behemoth telecommunications companies not RAK shareholders.

Does anyone know if RAK is included in any of the international 5G orientated ETF's?

@ Mike Daniels..Did anything come of the suggestion to "market" the company to international investors.?

Pricing for the product hardly covers costs of R&D and production suggesting an industry ripe for consolidation...

[wilba]

Rakon took the mickey out of "Mike Daniels".

If you read the original letter it is "Mike Daniel", who I am 95% sure would be the former long time CEO of FPH.

[SPC]

Yes and I've posted previously, considering the overhead in plant, people, land, buildings,R&D, international law and tax compliance costs, opportunity cost of all the above etc etc...and all they can make ocassionly is a couple of million?.
This isn't a worth the cost. It doesn't even make sense as a business. They may be advancing the technology of the telecommunication industry but they can't make a buck our of it. Sounds like charity to me. How can the Robinsons be proud of this?. More money in baked beans than this.

[BlackPeter]

Yes and I've posted previously, considering the overhead in plant, people, land, buildings,R&D, international law and tax compliance costs, opportunity cost of all the above etc etc...and all they can make ocassionly is a couple of million?.
This isn't a worth the cost. It doesn't even make sense as a business. They may be advancing the technology of the telecommunication industry but they can't make a buck our of it. Sounds like charity to me. How can the Robinsons be proud of this?. More money in baked beans than this.

Well, it always was a nice little money spinner for the Robinsons. Outstanding management packages (CEO and CMO - lol), great board fees, and I am sure they don't travel economy when they extend their loss making empire in some other bits of the world. Why would it be the problem of the Robinsons if the shareholders get out empty handed?