Table of Contents
What changed
Revenue rose 4.9% to NZ$180.3m, but every earnings and cash line moved the other way. PBT fell 25.1% to NZ$31.4m and NPAT fell 29.9% to NZ$23.2m, with Underlying EBITDA dropping to NZ$42.2m from NZ$54.4m. Operating cash flow collapsed 63.3% to NZ$11.1m while capex more than doubled to NZ$17.3m (9.6% of revenue vs 4.9%), pushing pre-lease free cash flow to negative NZ$6.2m from positive NZ$21.8m. Cash fell to NZ$21.7m from NZ$39.2m; gross borrowings also fell to NZ$5.2m from NZ$16.0m, so Rakon remains in a net cash position but a smaller one. Telecommunications is the dominant disclosed segment at 55.8% of revenue, with Positioning 18.7% and Space and Defence 16.0%; no prior-year segment split was provided.
What matters
- PBT is the cleaner read, and it is down 25.1%. The NPAT decline of 29.9% is amplified by the effective tax rate rising to 26.0% from 21.0%, with no unusual tax item disclosed. Either way, earnings fell materially on a revenue increase – operating leverage worked in reverse.
- Cash conversion deteriorated sharply. OCF/EBITDA fell to roughly 26% from 56%. Receivable days lengthened to 84.5 from 68.1 and inventory days edged up to 126.8 from 121.7; trade debtors grew 30.1% and inventories 9.2%, absorbing NZ$15.0m of operating working capital on the proxy available. Combined with a doubling of capex, this is why FCF flipped negative.
- Returns compressed. ROE dropped to 15.9% from 24.5%. The declared 1.5 cents final dividend (no prior-year comparator supplied) is small at 14.7% of NPAT but is not covered by pre-lease free cash flow this year.
Expectations
No formal guidance, forward-work metric or medium-term target was disclosed in the extracted materials, so there is no quantitative bar to measure the result against. On shape, FY23 was modestly second-half weighted on revenue (H2 NZ$93.2m vs H1 NZ$87.2m) but sharply first-half weighted on profit: H1 NPAT of NZ$16.0m implies only NZ$7.2m in H2, roughly 31% of the full year. That trajectory, together with the reversal in operating cash flow, argues the momentum into FY24 is weaker than the headline revenue growth suggests.
Quality of result
The result leans low-quality. The revenue uplift is real, but the earnings decline is not explained by any disclosed non-recurring item, no discontinued operation is involved, and the NPAT/PBT gap is a higher tax rate rather than a one-off. Underlying EBITDA fell NZ$12.2m on NZ$8.4m more revenue, implying genuine margin erosion from "increased investment in growth initiatives" and inflation as cited by the company. The cash picture is materially worse than the P&L: OCF fell three times faster than PBT, and the NZ$15.0m working-capital build (receivables plus inventories) plus a NZ$8.9m step-up in capex account for most of the cash swing. Currency was a tailwind, with NZ$3.3m added to the cash balance by FX. H2 profitability fading to about one-third of the full year is the clearest signal that the exit-rate is softer than the annual figure.
Unresolved
- Why did Underlying EBITDA fall so far on modest revenue growth – how much is structural investment and how much is inflationary cost that should normalise? No bridge from statutory profit to Underlying EBITDA was captured.
- Is the receivables stretch (up 16.4 days) customer-specific or sector-wide? No customer concentration disclosure was provided.
- With capex running near 10% of revenue and FCF negative, what is the expected capex profile and payback, and when does inventory unwind?
- Prior-year segment revenue was not supplied, so mix shift within Telecommunications, Positioning and Space and Defence cannot be assessed; segment profitability was not disclosed at all.
- The effective tax rate rose 5 percentage points with no stated cause.
This briefing cannot assess valuation, segment-level profitability, or FY24 direction because no NTA, segment margin, forward-work or guidance data were disclosed.
Key metrics
| Metric | FY23 | FY22 | Change |
|---|---|---|---|
| Revenue | $180.3m | $172.0m | +4.9% ↑ |
| Net profit after tax | $23.2m | $33.1m | -29.9% ↓ |
| Net cash inflow from operating activities | $11.1m | $30.2m | -63.3% ↓ |
| Final dividend per share | 1.5c | — | — |
| Operating profit | $33.3m | $41.4m | -19.5% ↓ |
| Profit before tax | $31.4m | $41.9m | -25.1% ↓ |
| Cash and cash equivalents | $21.7m | $39.2m | -44.6% ↓ |
| Total assets | $207.3m | $199.9m | +3.7% ↑ |
Reference: annolyse.ai/briefings/rak-fy23
Segment breakdown
| Segment | Current revenue | Prior revenue | Current result | Mix shift |
|---|---|---|---|---|
| Telecommunications | $100.6m | — | — | n/a |
| Space and Defence | $28.9m | — | — | n/a |
| Positioning | $33.8m | — | — | n/a |
Reference: annolyse.ai/briefings/rak-fy23
Analytical metrics
| Metric | FY23 | FY22 | Context |
|---|---|---|---|
| PBT growth | -25.1% | — | cleaner earnings measure |
| Effective tax rate | 26.0% | 21.0% | — |
| OCF / EBITDA (cash conversion) | 26.3% | 55.6% | deteriorated |
| FCF pre-lease | −$6.2m | $21.8m | −$28.0m |
| FCF post-lease | −$6.2m | $21.8m | −$28.0m |
| FCF / NPAT | -26.8% | 65.8% | complementary conversion metric |
| Capex % revenue | 9.6% | 4.9% | — |
| Capex | −$17.3m | $8.5m | −$25.8m |
| Debtor days | 84.5 | 68.1 | +16.4 days |
| Inventory days | 126.8 | 121.7 | +5.1 days |
| Operating working capital | $104.4m | $89.4m | +$15.0m absorbed |
| Trade debtors | $41.8m | $32.1m | +$9.7m |
| Net debt | −$16.5m | −$23.2m | +$6.8m |
| Net debt / EBITDA | -0.39x | -0.43x | Weakening |
| Gross borrowings | $5.2m | $16.0m | −$10.7m |
| Payout ratio vs NPAT | 14.7% | — | — |
| Payout ratio vs FCF pre-lease | -54.8% | — | not covered |
| ROE (annualised) | 15.9% | 24.5% | Weakening |
| HY23 share of FY23 revenue | 48.3% | — | Other half was 51.7% |
| HY23 share of FY23 EBITDA | 66.5% | — | Other half was 33.5% |
| HY23 share of FY23 NPAT | 69.0% | — | Other half was 31.0% |
| Profit from continuing operations | $23.2m | $33.1m | −$9.9m |
Reference: annolyse.ai/briefings/rak-fy23
This analysis was generated using Annolyse, an AI-powered tool that extracts and analyses NZX company announcements. The underlying data is extracted from official company filings and verified against source documents. This is general information only and does not constitute financial advice. The analysis may contain errors. Always read the original company filings and consult a licensed financial adviser before making investment decisions.