Auckland-based GPS component manufacturer Rakon has reported an increased net loss after tax of $13.6 million for the year ended 31 March 2017.
That compares with a loss of just $1.7 million in 2016. Revenue fell to $94.7 million from $112.7 million.
The result, however, includes non-recurring impairments of $6.6 million and restructure costs of $3 million. The company increased positive operating cash flow to $9.5 million from $7.3 million in 2016.
Rakon said a 16 per cent decrease in revenue from telecommunications was a major contributor to decrease in total sales volumes and revenue.
Debt of $4.5 million was reduced from $12.6 million in 2016.
Rakon managing director Brent Robinson said the company continued to be affected in its key telecommunications market by reduced demand from equipment makers, as global network operators delayed 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.
Rakon was the target of shareholder activists last year, who succeeded in removing a director from the board.
During the year Rakon targeted a 20 per cent reduction in operating costs, with an actual reduction of $8.9 million achieved before the impact of restructuring costs of $3 million.
The reduction in operating costs and the US$10 million proceeds that resulted from agreements signed with Siward Crystal Technology (“Siward”) allowed the Company to pay down a large portion of its debt.
“While the arrangement with Siward provided us an opportunity to improve our balance sheet position, the partnership brings further long term opportunities for both parties," Robinson said.
"This partnership will give both companies a broader range of products and alternative channels into new and existing markets."
Impairments of NZ$6.6 million included an impairment of goodwill of $1.9 million and an impairment of the investment in Centum Rakon India of $3.2 million. Rakon also increased inventory obsolescence provisions by $4.2 million.
“Although the result for 2017 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.