Rakon HY2018 Preliminary Results Announcement

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Results for announcement to the market
Date: 16 November 2017
Rakon Limited (RAK)

Rakon Limited
Results for announcement to the market
Reporting period 6 months to 30
th
September 2017
Previous reporting period 6 months to 30
th
September 2016

Unaudited Amount NZ$000 % Change
Revenue from ordinary activities 48,278 +5%
Underlying EBITDA
c
(Earnings before interest, tax, depreciation,
amortisation, impairment, employee share schemes, non-controlling
interests, adjustments for associates and joint ventures share of
interest, tax & depreciation and other cash & non-cash items)
3,800
a
+487%
Profit/(loss) from ordinary activities after tax
attributable to security holders
908
b
+116%
Net profit/(loss) attributable to security holders 908
b
+116%
Note a: includes share of Underlying EBITDA from associates and joint ventures of $488,000
(September 2016: $419,000).
b: includes equity accounted earnings from associates and joint ventures of -$543,000
(September 2016: -$531,000).
c: Further information regarding the disclosure and use of non-GAAP financial information is
disclosed at Note 3 (Notes to the Unaudited Consolidated Interim Financial Statements) in this
results announcement.


Amount per security Imputed amount per security
Interim / Final Dividend Nil dividend proposed Nil dividend proposed
Record Date Not Applicable Not Applicable
Dividend Payment Date Not Applicable Not Applicable

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COMMENTS
16 November 2017

Return to profit for half year 2018; Full year earnings on track
 Net profit after tax of NZ$0.9 million vs Net loss of NZ$5.7 million in prior half year (HY2017)
 Revenue up 7% in USD currency basis on HY2017
 All key market segments showing growth vs. HY2017
 Strong positive operating cash flow of NZ$4.9 million for the half year period
 Net debt of NZ$0.3 million reduced from NZ$19.7 million in HY2017 and NZ$4.5 million at FY2017

NZD Millions, unaudited HY2018 HY2017 % Change
Revenue 48.3 46.0 5.1
Underlying EBITDA
1
3.8 0.6 > 100.0
Net profit/(loss) after tax 0.9 (5.7) > 100.0
Operating expenses 19.5 20.7 5.7
Operating cash flow 4.9 (0.6) > 100.0
Net debt 0.3 19.7 98.4
1
A detailed reconciliation of Underlying EBITDA to net profit/(loss) after tax, is included at Note B2 of the
unaudited Financial Statements.

An improved performance has seen global high technology company Rakon return to profit, posting a net
profit after tax of NZ$0.9 million on revenue of NZ$48.3 million for the half year ended 30 September
2017.
The company also reported Underlying EBITDA of NZ$3.8 million.
Rakon Managing Director Brent Robinson said that the company had achieved modest revenue growth
across the prior half year, with that growth also across all its key market segments of Telecommunications,
Global Positioning and Space & Defence. While the Telecommunications market remained subdued, the
company had continued to position itself for the future with strong sampling for two new product
platforms that can lead customer’s next generation technology requirements.
“It was pleasing to see both improved margins and a reduction in operating costs, where action had been
taken in recent years to improve results”.
The company had generated positive operating cash flow in the period of NZ$4.9 million that has helped
to reduce net debt to NZ$0.3 million.
Following the half year, the company had announced a partial sale of shares in its Thinxtra investment
that will generate a total consideration AU$3.0 million and a profit before costs of AU$1.8 million on its
initial investment. This gain along with a higher second half revenue forecast, meant the company was
expecting an increase in second half earnings vs. the first half result. Earnings guidance is maintained as,
expecting to report Underlying EBITDA in the range of between NZ$10.7 million and NZ$12.7 million.
The Directors confirm that this HY2018 preliminary results announcement is based on unaudited results
and that no dividend is declared for the first half.

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Brent Robinson
Chief Executive Officer & Managing Director

-ends-


Media Enquiries:
Louise Howe (Media Liaison)
021 206 0985
www.rakon.com




About Rakon
Rakon is a global high technology company and a world leader in its field. The company designs and
manufactures advanced frequency control and timing solutions for telecommunications, global
positioning and space and defence applications. Rakon products are found at the forefront of
communications where speed and reliability are paramount. The company’s products create extremely
accurate electric signals which are used to generate radio waves and synchronise time in the most
demanding communication applications. Rakon has five manufacturing plants including two joint
venture plants and has five research and development centres. Customer support centres are located in
ten offices worldwide.
Rakon is proud of its New Zealand heritage; it was founded in Auckland in 1967. It is a public company
listed on the New Zealand stock exchange, NZSX, ticker code RAK.

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Unaudited Consolidated Interim Statement of Comprehensive Income
For the period ended 30 September 2017


The accompanying notes form an integral part of these financial statements.
Unaudited six
Unaudited six
Audited year
months ended
months ended
ended
30 September
30 September
31 March
2017
2016
2017
Note
$000s
$000s
$000s
Continuing operations
Revenue
B3 b)
48,278
45,957
94,738
Cost of sales
(28,137)
(29,282)
(61,063)
Gross profit
20,141
16,675
33,675
Other operating income
B5 b)
688
1
4,363
Operating expenses
B4
(19,490)
(20,672)
(41,888)
Other gains/(losses) – net
492
(215)
439
Impairment
-
-
(6,594)
Operating profit/(loss)
1,831
(4,211)
(10,005)
Finance income
-
2
3
Finance costs
(227)
(689)
(1,435)
Share of losses of associates and joint venture
B8 b)
(543)
(531)
(2,054)
Profit/(loss) before income tax
1,061
(5,429)
(13,491)
Income tax expense
(153)
(269)
(67)
Net profit/(loss) for the period
908
(5,698)
(13,558)
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
(Decrease)/increase in fair va lue cash flow hedges
(313)
986
1,018
Increase/(decrease) in fair va lue currency translation differences
1,467
(3,943)
(3,567)
Income tax credit/(expense) relating to components of other
comprehensive income
88
(276)
40
Other comprehensive income/(losses) for the period, net of tax
1,242
(3,233)
(2,509)
Total comprehensive income/(losses) for the period
2,150
(8,931)
(16,067)
Profit/(loss) attributable to equity holders of the Company
908
(5,698)
(13,558)
Total comprehensive profit/(loss) attributable to equity holders of the
Company
2,150
(8,931)
(16,067)
Earnings per share for profit/(loss) attributable to the equity holders of
the Company from continuing operations
Cents
Cents
Cents
Basic earnings/(losses) per share
0.4


(3.0)


(6.9)


Diluted earnings/(losses) per share
0.4


(2.9)


(6.8)

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Unaudited Consolidated Interim Statement of Changes in Equity
For the period ended 30 September 2017


The accompanying notes form an integral part of these financial statements.
Share capital
Retained
earnings
Other reserves
Total equity
$000s
$000s
$000s
$000s
Balance at 31 March 2016
1 7 3 ,8 8 1
(6 9 ,6 6 0 )
(2 0 ,7 9 3 )
8 3 ,4 2 8
Net loss after tax for the half year ended 30 September 2016
-
(5 ,6 9 8 )
-
(5 ,6 9 8 )
Currency translation differences
-
-
(3 ,9 4 3 )
(3 ,9 4 3 )
Cash flow hedges, net of tax
-
-
7 1 0
7 1 0
Total comprehensive income for the half year
-
(5 ,6 9 8 )
(3 ,2 3 3 )
(8 ,9 3 1 )
Employee share schemes
Value of employee services
-
-
2 9
2 9
Balance at 30 September 2016
1 7 3 ,8 8 1
(7 5 ,3 5 8 )
(2 3 ,9 9 7 )
7 4 ,5 2 6
Net loss after tax for the half year ended 31 March 2017
-
(7 ,8 6 0 )
-
(7 ,8 6 0 )
Currency translation differences
-
-
3 7 6
3 7 6
Cash flow hedges, net of tax
-
-
3 4 8
3 4 8
Total comprehensive income for the half year
-
(7 ,8 6 0 )
7 2 4
(7 ,1 3 6 )
Contribution of equity, net of transaction costs
7 ,1 5 4
-
-
7 ,1 5 4
Employee share schemes
Value of employee services
-
-
1 3
1 3
Balance at 31 March 2017
1 8 1 ,0 3 5
(8 3 ,2 1 8 )
(2 3 ,2 6 0 )
7 4 ,5 5 7
Net profit after tax for the half year ended 30 September
2017
-
9 0 8
-
9 0 8
Contribution of equity, transaction cost
(1 1 )
-
-
(1 1 )
Currency translation differences
-
-
1 ,4 6 7
1 ,4 6 7
Cash flow hedges, net of tax
-
-
(2 2 5 )
(2 2 5 )
Total comprehensive loss for the half year
(1 1 )
9 0 8
1 ,2 4 2
2 ,1 3 9
Employee share schemes
Value of employee services
-
-
8
8
Balance at 30 September 2017
1 8 1 ,0 2 4
(8 2 ,3 1 0 )
(2 2 ,0 1 0 )
7 6 ,7 0 4

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Unaudited Consolidated Interim Balance Sheet
As at 30 September 2017

The accompanying notes form an integral part of these financial statements.
Unaudited sixUnaudited sixAudited year
months endedmonths endedended
30 September30 September31 March
201720162017
Note$000s$000s$000s
Assets
Current assets
Cash and cash equiva lents3,5663,1113,305
Trade and other receiva bles22,82426,50628,249
Assets classified as held for saleB6 b)2,090-1,969
Derivatives – held for trading65-2
Derivatives – cash flow hedges676334179
Inventories26,28129,07824,286
Current income tax asset104796
Total current assets55,51259,07658,086
Non-current assets
Derivatives – cash flow hedges673-115
Trade and other receiva bles2,1661,8121,365
Property, plant and equipment11,11316,03812,745
Intangible assets10,78013,1169,467
Investment in associates B8 b)11,60213,52812,004
Interest in joint ventureB8 b)3,4516,3513,722
Deferred tax asset6,5606,4716,692
Total non-current assets46,34557,31646,110
Total assets101,857116,392104,196
Liabilities
Current liabilities
Bank overdraftB7 b)1,3623,7993,229
BorrowingsB7 b)2,52618,9214,530
Trade and other payables15,65215,35615,246
Derivatives – held for trading--1
Derivatives – cash flow hedges168418225
Provisions464639910
Deferred revenueB5 b)1,847-2,534
Current income tax liability-134-
Total current liabilities22,01939,26726,675
Non-current liabilities
Derivatives – cash flow hedges159--
BorrowingsB7 b)196431
Provisions2,9222,1202,909
Deferred tax liabilities3441524
Total non-current liabilities3,1342,5992,964
Total liabilities25,15341,86629,639
Net assets76,70474,52674,557
Equity
Share capital181,024173,881181,035
Other reserves(22,010)(23,997)(23,260)
Accumulated losses(82,310)(75,358)(83,218)
Total equity76,70474,52674,557

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Unaudited Consolidated Interim Statement of Cash Flows
For the period ended 30 September 2017

The accompanying notes form an integral part of these financial statements.
Unaudited sixUnaudited sixAudited year
months endedmonths endedended
30 September30 September31 March
201720162017
Note$000s$000s$000s
Operating activities
Cash provided from
Receipts from customers52,12450,10898,179
Income tax refund-389231
R&D grants received1,405-1,327
Siward technology license agreement--6,877
Other income received-141
53,52950,498106,655
Cash was applied to
Payment to suppliers and others(29,622)(28,868)(54,112)
Payment to employees(18,668)(21,313)(41,174)
Interest paid(248)(605)(1,449)
Income tax paid(62)(324)(417)
(48,600)(51,110)(97,152)
Net cash flow from operating activities4,929(612)9,503
Investing activities
Cash was provided from
Sale of property, plant and equipment-168
-168
Cash was applied to
Purchase of property, plant and equipment(255)(838)(2,586)
Purchase of intangibles(688)(861)(1,157)
Investment in shares and associates-(4,629)(4,629)
(943)(6,328)(8,372)
Net cash flow from investing activities(943)(6,312)(8,364)
Financing activities
Cash was provided from
Issuance of share capital--7,195
Proceeds from borrowings-6,9116,911
-6,91114,106
Cash was applied to
Share issuance cost(11)-(41)
Repayment of principal on borrowings(2,016)-(14,411)
Cash was applied to financing activities(2,027)-(14,452)
(2,027)6,911(346)
Net increase/ (decrease) in cash and cash equivalents1,959(13)793
Effects of exchange rate changes on cash and cash equiva lents169(114)(156)
Cash and cash equiva lents at the beginning of the year76(561)(561)
Cash and cash equivalents at the end of the period2,204(688)76
Composition of cash and cash equivalents
Cash and cash equiva lents3,5663,1113,305
Bank overdraftB7 b)(1,362)(3,799)(3,229)
Total cash and cash equivalents2,204(688)76

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Unaudited Consolidated Interim Statement of Cash Flows
For the period ended 30 September 2017


Asset and liabilities arising from financing activities


The accompanying notes form an integral part of these financial statements.
Unaudited six
Unaudited six
Audited year
months ended
months ended
ended
30 September
30 September
31 March
2017
2016
2017
Note
$000s
$000s
$000s
Reconciliation of net profit/(loss) to net cash flows from operating activities
Reported net profit/(loss) after tax
908
(5,698)
(13,558)
Depreciation expense
1,336
1,730
3,491
Amortisation expense
971
1,070
2,118
Impairment
-
-
6,594
Increase/(decrease) in estimated doubtful debts
7
-
(69)
Provision for restructure
-
322
3,043
Employee share based expense
8
29
42
Movement in foreign currency
(16)
(476)
418
Monetised cash flow hedge, net of tax
(941)
980
1,096
Deferred revenue
̶ Siward technology license agreement
(687)
-
2,534
Share of profit and dividends from joint venture and associates
543
531
2,054
Deferred tax
-
381
294
Loss on disposal of property, plant and equipment
12
(5)
330
Loss on disposal of intangibles
-
-
-
Total items cash flow adjusted for
1,233
4,562
21,945
Impact of changes in working capital items
Trade and other receivables
5,424
1,659
363
Provision for restructure
(420)
(307)
(2,402)
Inventories
(1,995)
752
5,544
Trade and other payables
(307)
(1,879)
(2,505)
Tax provisions
86
299
116
Total impact of changes in working capital items
2,788
524
1,116
Net cash flow from operating activities
4,929
(612)
9,503
Other asset
Cash/ bank
overdraft
Finance
lease due
within 1
year
Finance
lease due
after 1 year
Borrowings
due within
1 year
Total
$000s
$000s
$000s
$000s
$000s
Reconciliation of changes in asset and liablities arising from
financing activities
Balance as at 1 April 2017
76
(30)
(31)
(4,500)
(4,485)
Cash flows
1,959
4
12
2,000
3,975
Foreign exchange changes
169
-
-
-
169
Balance as at 30 September 2017
2,204
(26)
(19)
(2,500)
(341)
Liabilities from financing activities
Unaudited six months ended 30 September 2017

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Notes to the Unaudited Consolidated Interim Financial Statements
A. General information
Rakon Limited (‘the Company’) and its subsidiaries (‘the Group’) design and manufacture frequency control solutions for a wide range of
applications. Rakon has leading market positions in the supply of crystal oscillators to the telecommunications, global positioning and space
& defence markets. The Company is a limited liability company incorporated and domiciled in New Zealand. It is registered under the
Companies Act 1993 with its registered office at 8 Sylvia Park Road, Mt Wellington, Auckland.
The financial statements of the Group have been presented in New Zealand dollars unless otherwise indicated and have been approved for
issue by Rakon’s Board of Directors (‘the Board’) on 16 November 2017.
B. Calculation of key numbers
B1. Basis of preparation
The Company is registered under the Companies Act 1993 and is a Financial Markets Conduct reporting entity under Part 7 of the Financial
Markets Conduct Act 2013. The interim financial statements of the Group have been prepared in accordance with the requirements of Part
7 of the Financial Markets Conduct Act 2013 and the NZX (Main Board) Listing Rules.
These consolidated interim financial statements for the period ended 30 September 2017 have been prepared in accordance with New
Zealand Generally Accepted Accounting Practice (NZ GAAP). They comply with New Zealand equivalents to International Financial Reporting
Standards (NZ IFRS), other New Zealand accounting standards and authoritative notices that are applicable to entities that apply NZ IFRS.
The consolidated financial statements also comply with International Financial Reporting Standards (IFRS). The Group is a profit-oriented
entity for the purposes of complying with NZ GAAP. These financial statements comprise Rakon and its subsidiaries.
The financial statements have been prepared on a historical cost basis, except for the following:
- available-for-sale financial assets, financial assets and liabilities (including derivative instruments) – measured at fair value, and
- assets held for sale – measured at fair value less cost of disposal.
The preparation of financial statements in accordance with NZ IFRS requires management to make judgements, estimates and assumptions
that affect the application of policies and reported amounts of assets and liabilities, income and expenses. Actual results may differ from
these estimates. This interim financial report does not include all the notes of the type normally included in an annual financial report.
Accordingly, this report should be read in conjunction with the annual report for the year ended 31 March 2017 and any public
announcements made by the Company during the interim reporting period. The accounting policies applied are consistent with those of
the annual report for the year ended 31 March 2017. There are no new standards, amendments and interpretations adopted by the Group
as of 1 April 2017.
B2. Segment information
The chief operating decision maker assesses the performance of the operating segments based on a non-GAAP measure of ‘Underlying
EBITDA’ defined as:
“Earnings before interest, tax, depreciation, amortisation, impairment, employee share schemes, non-controlling interests, adjustments for
associates and joint ventures’ share of interest, tax & depreciation, loss on disposal of assets and other cash and non-cash items (Underlying
EBITDA)”, refer note B2 c).
Underlying EBITDA is a non-GAAP measure that has not been presented in accordance with GAAP. The Directors present Underlying EBITDA
as a useful non-GAAP measure to investors, in order to understand the underlying operating performance of the Group and each operating
segment, before the adjustment of specific cash and non-cash items and before cash impacts relating to the capital structure and tax
position. Underlying EBITDA is considered by the Directors to be the closest measure of how each operating segment within the Group is
performing. Management uses the non-GAAP measure of Underlying EBITDA internally, to assess the underlying operating performance of
the Group and each operating segment.
Underlying EBITDA as non-GAAP financial information has been extracted from the financial statements for the period. Except for Underlying
EBITDA, other information provided to the chief operating decision maker is measured in a manner consistent with GAAP. The Directors
provide a reconciliation of Underlying EBITDA to net profit or loss for the period, refer note B2 c).
B2 a) Accounting policy
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The
chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been
identified as the Managing Director, Sales and Marketing Director and Chief Financial Officer.

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B2 b) Segment results


NZ
UK
France
China
̶
T
'
maker
1
India
̶
Centum
Rakon
2
Australia
̶
Thinxtra
6
Other
3
Total
$000s
$000s
$000s
$000s
$000s
$000s
$000s
$000s
Sal es to external cus tomers
32,072
-
16,206
-
-
-
-
48,278
Inter-s egment s al es
90
-
-
-
-
-
19
109
Segment revenue
32,162
-
16,206
-
-
-
19
48,387
Underl yi ng EBITDA
3,953
815
(1,327)
1,389
371
(1,272)
(129)
3,800
Depreci ati on and amorti s ati on
1,297
251
675
-
-
-
84
2,307
Income tax (expens e)/credi t
-
(91)
14
-
-
-
(76)
(153)
Total as s ets
4
48,275
3,164
29,828
8,798
3,451
5,608
2,733
101,857
Inves tment i n as s oci ates
-
-
-
8,798
-
-
2,804
11,602
Inves tment i n j oi nt venture
-
-
-
-
3,451
-
-
3,451
Addi ti ons of property, pl ant,
equi pment and i ntangi bl es
690
164
198
-
-
-
-
1,052
Total l i abi l i ti es
5
13,004
482
11,197
-
-
-
470
25,153
NZ
UK
France
C
h
i
n
a


̶
T
'
maker
1
I
n
d
i
a


̶

Centum
Rakon
2
A
u
s
t
r
a
l
i
a


̶

Thinxtra
6
Other
3
Total
$000s
$000s
$000s
$000s
$000s
$000s
$000s
$000s
Sal es to external cus tomers
30,270
-
15,687
-
-
-
-
45,957
Inter-s egment s al es
49
-
-
-
-
-
(7)
42
Segment revenue
30,319
-
15,687
-
-
-
(7)
45,999
Underl yi ng EBITDA
292
1,039
(1,574)
809
531
(921)
471
647
Depreci ati on and amorti s ati on
1,756
336
792
-
-
-
(84)
2,800
Income tax expens e
-
(136)
-
-
-
-
(133)
(269)
Total as s ets
4
58,730
6,884
28,993
8,268
6,351
5,260
1,906
116,392
Inves tment i n as s oci ates
-
-
-
8,268
-
5,260
-
13,528
Inves tment i n j oi nt venture
-
-
-
-
6,351
-
-
6,351
Addi ti ons of property, pl ant,
equi pment and i ntangi bl es
1,208
277
247
-
-
-
-
1,732
Total l i abi l i ti es
5
34,598
659
7,937
-
-
-
(1,328)
41,866
Unaudited six months ended 30 September 2017
Unaudited six months ended 30 September 2016

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1
Includes Rakon Limited’s 40% share of investment in Chengdu Shen-Timemaker Crystal Technology Co. Limited, Chengdu Timemaker
Crystal Technology Co. Limited and Shenzhen Taixiang Wafer Co. Limited, refer note B8.
2
Includes Rakon Limited’s 49% share of investment in Centum Rakon India Private Limited, refer note B8.
3
Includes investments in subsidiaries, Rakon Financial Services Limited, Rakon UK Holdings Limited, Rakon Investment HK Limited, and
Rakon HK Limited.
4
The measure of assets has been disclosed for each reportable segment as it is regularly provided to the chief operating decision maker
and excludes intercompany balances eliminated on consolidation.
5
The measure of liabilities has been disclosed for each reportable segment as it is regularly provided to the chief operating decision maker
and excludes intercompany balances eliminated on consolidation.
6
Includes Rakon Limited’s 33% share of investment in in Thinxtra Pty Limited, refer to note 0.
The year to 31 March 2017 includes one off restructure costs in New Zealand of $817,000 and $2,242,000 in France, and income from a
technology license agreement with Siward of $4,343,000 in the New Zealand segment.
B2 c) Reconciliation of Underlying EBITDA to net profit/(loss) for the period




NZ
UK
France
C
h
i
n
a


̶
T
'
maker
1
I
n
d
i
a


̶

Centum
Rakon
2
Australia -
Thinxtra
6
Other
3
Total
$000s
$000s
$000s
$000s
$000s
$000s
$000s
$000s
Sal es to external cus tomers
61,297
-
33,441
-
-
-
-
94,738
Inter-s egment s al es
111
-
7
-
-
-
(23)
95
Segment revenue
61,408
-
33,448
-
-
-
(23)
94,833
Underl yi ng EBITDA
4,579
1,952
(4,149)
1,101
956
(2,100)
1,693
4,032
Depreci ati on and amorti s ati on
3,484
638
1,646
-
-
-
(159)
5,609
Impai rment
789
160
635
-
3,164
-
1,846
6,594
Income tax credi t/(expens e)
313
(264)
28
-
-
-
(144)
(67)
Total as s ets
4
52,292
6,452
30,248
7,930
3,722
4,074
(522)
104,196
Inves tment i n as s oci ates
-
-
-
7,930
-
4,074
-
12,004
Inves tment i n joi nt venture
-
-
-
-
3,722
-
-
3,722
Addi ti ons of property, pl ant,
equi pment and i ntangi bl es
2,795
449
569
-
-
-
-
3,813
Total l i abi l i ti es
5
18,918
432
8,241
-
-
-
2,048
29,639
Audited year ended 31 March 2017
Unaudited sixUnaudited sixAudited year
months endedmonths endedended
30 September30 September31 March
201720162017
Continuing operations$000s$000s$000s
Underlying EBITDA3,8006474,032
Depreciation and amortisation(2,307)(2,800)(5,609)
One off cash gains realised on derivatives closed out941(1,361)(1,096)
Employee share schemes(8)(29)(42)
Finance costs ̶ net(227)(687)(1,432)
Adjustment for associates and joint venture share of interest, tax and
depreciation
(1,032)(980)(2,079)
Impairment--(6,594)
Loss on asset sales/disposal(12)(4)(296)
Other non ̶ cash items(94)(215)(375)
Profit/(loss) before income tax1,061(5,429)(13,491)
Income tax expense(153)(269)(67)
Net profit/(loss) for the period908(5,698)(13,558)

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B3. Revenue
B3 a) Accounting policy
Revenue comprises the fair value of amounts received and receivable by the Group for goods and services supplied in the ordinary course
of business. Revenue is stated net of goods and services tax (or value added tax) collected from customers. Revenue from the sale of goods
is recognised in the statement of comprehensive income when the significant risks and rewards of ownership have been transferred to the
buyer and the amount can be measured reliably. Revenue from services rendered is recognised in the statement of comprehensive income,
in proportion to the stage of completion of the transaction at the reporting date.
B3 b) Breakdown of revenue by goods and services
Revenue from all sources is as follows:

B3 c) Breakdown of revenue by market segment

Unaudited six
months ended
30 September
2017
$000s
Unaudited six
months ended
30 September
2016
$000s
Audited year
ended 31
March
2017
$000s
Telecommunications 21,657 21,088 42,380
Global Positioning 13,152 11,838 24,142
Space and Defence 10,335 9,596 21,776
Other 3,134 3,435 6,440
Total revenue by market segment 48,278 45,957 94,738
B4. Operating expenses



Unaudited sixUnaudited sixAudited year
months endedmonths endedended
30 September30 September31 March
201720162017
$000s$000s$000s
Sales of goods47,86845,03193,283
Revenue from services4109261,455
Total revenue48,27845,95794,738
Unaudited sixUnaudited sixAudited year
months endedmonths endedended
30 September30 September31 March
201720162017
$000s$000s$000s
Operating expense by function
Selling and marketing costs4,4394,7218,723
Research and development5,2925,6969,947
General and administration9,75910,25523,218
Total operating expenses19,49020,67241,888

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B5. Other operating income
B5 a) Breakdown of other operating income

B5 b) Investment by Siward Crystal Technology Company Limited (‘Siward’) and attribution of
proceeds
Siward is a Taiwan based crystal manufacturer which is listed on the Taiwan Stock Exchange. In February 2017 Siward paid US$10m cash in
return for 38,016,681 new fully paid ordinary shares of Rakon and rights arising from a technology license agreement. Siward has taken up
one new appointment to Rakon’s board. Of the US$10m proceeds, NZ$7.2m was attributed to the new fully paid ordinary shares based on
an independent valuation report. The balance of NZ$6.9m was allocated to the technology license agreement.
The $6.9m attributed to the technology license agreement is recognised as revenue on the basis of the stage of completion of the
transaction. This involves judgement in assigning value to each of the four key technologies to be transferred and allocation of these
between technology transfer and deployment.
During the period a further $687,000 (31 March 2017: $4.34m) is recognised on the basis of further work completed with a remaining
balance at reporting date of $1,847,000 recognised as deferred revenue.
B6. Assets classified as held for sale
B6 a) Accounting policy
Current assets are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than
through continuing use and a sale is considered highly probable. They are measured at the lower of their carrying amount and fair value
less costs to sell, except for assets such as deferred tax assets, assets arising from employee benefits, financial assets and investment
property that are carried at fair value and contractual rights under insurance contracts, which are specifically exempt from this requirement.
An impairment loss is recognised for any initial or subsequent write-down of the asset to fair value less costs to sell. A gain is recognised for
any subsequent increases in fair value less costs to sell of an asset, but not in excess of any cumulative impairment loss previously
recognised. A gain or loss not previously recognised by the date of the sale of the current asset is recognised at the date of derecognition.
Current assets are not depreciated or amortised while they are classified as held for sale. Interest and other expenses attributable to the
liabilities of a disposal group classified as held for sale continue to be recognised.
Current assets classified as held for sale are presented separately from the other assets in the balance sheet.
B6 b) Land and buildings at Argenteuil, France

During the year a conditional agreement for the sale of land and buildings at Argenteuil, France was entered into. In March 2017 the
Directors consider the contract was sufficiently progressed to consider the sale highly likely and the land and buildings were reclassified as
held for sale and measured at the lower of their carrying amount and fair value less costs to sell. The fair value of the land was based on the
sale price in the agreement which was higher than the carrying amount, therefore no change to the carrying amount was made. A condition
of the sale is an approved building consent for use on the site, which was not issued as at 30 September 2017.

Unaudited six
Unaudited six
Audited year
months ended
months ended
ended
30 September
30 September
31 March
2017
2016
2017
$000s
$000s
$000s
Dividend income
1
1
1
Other income
-
-
19
Income from technology license agreement with Siward
687
-
4,343
Total other operating income
688
1
4,363
Unaudited sixUnaudited sixAudited year
months endedmonths endedended
30 September30 September31 March
201720162017
$000s$000s$000s
Current asset held for sale
Land & building2,090-1,969
2,090-1,969

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B7. Borrowings
B7 a) Accounting policy
Interest bearing borrowings are recognised initially at fair value, net of transaction costs incurred. Subsequent to initial recognition, interest
bearing borrowings are measured at amortised cost with any difference between the proceeds (net of transaction costs) and the redemption
amount, recognised in the statement of comprehensive income over the period of the borrowings, using the effective interest method.
Arrangement fees are amortised over the term of the loan facility.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12
months after reporting date.
B7 b) Breakdown of borrowings

B7 c) Bank borrowings
On 8 May 2017 Rakon renewed its facilities with ASB maintaining the following lines of credit:
 $6.2m cash advance facility with ASB. The interest rate is reset every 30 – 90 days and interest is payable based on the bank bill
rate for that interest period, the term funding premium and the applicable margin. The drawn down balance at reporting date
was $2.5m and the facility expiry date is May 2018.
 $7.8m overdraft limit. Interest is payable at the ASB Corporate Indicator Rate plus applicable margin.
Facilities are secured by a general security deed over all the present and future assets and undertakings of the Group and the Group has
agreed to certain capital requirements, restrictions on dividend distributions and capital expenditure. The financial covenants include net
tangible assets to total tangible assets, net debt to EBITDA and EBITDA to interest. Interest is based on wholesale market interest rates, a
bank margin and an applicable line fee.
Bank overdrafts and borrowings are secured by first mortgage over all the undertakings of Rakon Limited and any other wholly owned
present and future subsidiaries.
The carrying amount of the Group’s cash advance facility is denominated in NZD.
B8. Interests in associates and joint venture
B8 a) Accounting policy
Associates are entities over which the Group has significant influence but not control, generally accompanying a shareholding of between
20% and 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting and are initially
recognised at cost.
Joint arrangements are classified as either joint operations or joint ventures. The classification depends on the contractual rights and
obligations of each investor, rather than the legal structure of the joint arrangement. The Group’s joint venture is accounted for using the
equity method.
Under the equity method of accounting, the investments are initially recognised at cost and adjusted thereafter to recognise the Group’s
share of the post-acquisition profits or losses of the investee in profit or loss, and the Group’s share of movements in other comprehensive
income of the investee in other comprehensive income. Dividends received or receivable from associates and joint ventures are recognised
as a reduction in the carrying amount of the investment. When the Group’s share of losses in an equity-accounted investment equals or
exceeds its interest in the entity, including any other unsecured long-term receivables, the Group does not recognise further losses, unless
it has incurred obligations or made payments on behalf of the other entity. Unrealised gains on transactions between the Group and its
associates and joint ventures are eliminated to the extent of the Group’s interest in these entities. Unrealised losses are also eliminated
unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of equity accounted investees have
been changed where necessary to ensure consistency with the policies adopted by the Group.

Unaudited six
Unaudited six
Audited year
months ended
months ended
ended
30 September
30 September
31 March
2017
2016
2017
$000s
$000s
$000s
Current
Obligations under finance lease
26
10
30
Bank overdrafts
1,362
3,799
3,229
Bank borrowings
2,500
18,911
4,500
Current borrowings
3,888
22,720
7,759
Non-current
Obligations under finance lease
19
64
31
Non-current borrowings
19
64
31

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B8 b) Breakdown of associates and joint venture
Set out below are the associates and joint venture of the Group. The entities listed below have share capital consisting solely of ordinary
shares, which are held directly by the Group. The country of incorporation or registration is also their principal place of business, and the
proportion of ownership interest is the same as the proportion of voting rights held.


1
The Group has a 40% interest in three related companies: Chengdu Shen-Timemaker Crystal Technology Co. Limited, Chengdu Timemaker
Crystal Technology Co. Limited and Shenzhen Taixiang Wafer Co. Limited, which provide products and services to the frequency control
products industry.
2
The Group has a 49% interest in Centum Rakon India Private Limited (‘CRI’), a joint venture which provides products and services to the
frequency control industry.
3
The Group has a 33% interest in Thinxtra Pty Limited (‘Thinxtra'), an 'Internet of Things' business, refer note B8 c).
B8 c) Investment in Thinxtra
Thinxtra Pty Limited (‘Thinxtra') is an 'Internet of Things' (or ‘IoT’) business that started in 2016. Thinxtra's focus is on establishing an IoT
network in Australia, New Zealand and Hong Kong and providing products, services and solutions enabling connectivity of devices to the
network. Thinxtra’s business model is based on subscription for access to the network, platform solutions and the sale of IoT products.
Further information is available at www.thinxtra.com.
During the period Rakon’s shareholding reduced from 42.3% to 33% as Thinxtra continued to raise capital with new shares being issued.
The Directors have concluded that Rakon does not have control over Thinxtra and continues to be accounted for as an associate. See also
note B10.
The Group commenced equity accounting its investment in Thinxtra from December 2015.

Unaudited six
Unaudited six
Audited year
months ended
months ended
ended
30 September
30 September
31 March
2017
2016
2017
Chengdu Shen-Timemaker Crystal
Technology Co. Ltd
1
Associate
China
-
40%
40%
Chengdu Timemaker Crystal
Technology Co. Ltd
1
Associate
China
40%
40%
40%
Shenzhen Taixiang Wafer Co. Ltd
1
Associate
China
40%
40%
40%
Thinxtra Pty Limited
3
Associate
Australia
33%
46%
42%
Centum Rakon India Private Ltd
2
Joint
venture
India
49%
49%
49%
Unaudited six
Unaudited six
Audited year
Unaudited six
Unaudited six
Audited year
months ended
months ended
ended
months ended
months ended
ended
30 September
30 September
31 March
30 September
30 September
31 March
2017
2016
2017
2017
2016
2017
$000s
$000s
$000s
$000s
$000s
$000s
Chengdu Shen-Timemaker Crystal
Technology Co. Limited
1
-
6,219
5,370
Chengdu Timemaker Crystal
Technology Co. Limited
1
8,383
1,647
2,157
Shenzhen Taixiang Wafer Co. Limited
1
416
402
403
Total Timemaker Group
8,799
8,268
7,930
769
433
24
Thinxtra Pty Limited
3
2,803
5,260
4,074
(1,271)
(938)
(2,123)
Total carrying amount of associates
11,602
13,528
12,004
(502)
(505)
(2,099)
Centum Rakon India Private Limited
2
3,451
6,351
3,722
(41)
(26)
45
Total carrying amount of equity
accounted associates and joint venture
15,053
19,879
15,726
(543)
(531)
(2,054)
Name of entity
% of ownership interest
Net investment
Equity accounted losses
Country of
incorporation
Nature of
relationship

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B8 d) Investment in Timemaker
In June 2017 Chengdu Shen-Timemaker Crystal Technology Co. Limited and Chengdu Timemaker Crystal Technology Co. Limited were
merged with the merged entity being Chengdu Timemaker Crystal Technology Co. Limited.
B9. Contingencies
It is not anticipated that any material liabilities will arise from the contingent liabilities.
B10. Events after reporting date
B10 a) Partial sale of investment in Thinxtra
On 12 October 2017 the conditional sale of 199,242 shares in Thinxtra was announced for A$3m. After the completion of the sale Rakon
expects to hold 785,407 shares, representing approximately 18.3% - 21.7% depending on the number of share options exercised by other
parties.
There have been no other subsequent events after 30 September 2017.

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Other Information
A. Dividends (NZX Listing Rules Appendix 1: 2.3(d))
The Board of Directors has declared that no dividend is to be paid for the interim period to 30 September
2017. 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.
B. Net Tangible Assets per Security (NZX Listing Rules Appendix 1: 2.3(f))

30 September 2017 30 September 2016
Net tangible assets $000 65,924 61,410
Number of ordinary securities 000 229,055 191,039
Net tangible asset backing per ordinary
security $
0.29 0.32
C. Control gained and lost over Entities (NZX Listing Rules Appendix 1: 2.3(g))
Rakon Limited has gained or lost control over the following entities during the period:
During the period there was no change in control through new entities gained or existing entities lost.
D. Associates & Joint Ventures (NZX Listing Rules Appendix 1: 2.3(h))
Rakon Limited has the following associate entities and joint venture arrangements.

Shareholding
Centum Rakon India Private Limited 49%
Thinxtra Pty Limited 33%
Chengdu Shen-Timemaker Crystal Technology Co. Limited 40%
Shenzhen Taixiang Wafer Co, Limited 40%
The contribution of Centum Rakon to Rakon Limited’s net results from ordinary activities is a net loss after tax
of $41,000 (30 September 2016: loss $26,000). The contribution of Thinxtra to Rakon Limited’s net results
from ordinary activities is a net loss after tax of $1,271,000 (30 September 2016: loss $938,000). The
contribution of Chengdu Shen-Timemaker and Shenzhen Taixiang to Rakon Limited’s net results from ordinary
activities is a net profit after tax of $769,000 (30 September 2016: $433,000).
E. Audit (NZX Listing Rules Appendix 1: 1.3(l))
The financial statements are unaudited.
F. Business Changes (NZX Listing Rules Appendix 1: 1.3(m))
There have been no major changes or trends in Rakon Limited’s business, either during the period or
subsequent to the half year end.
G. Directors Declaration (NZX Listing Rules Appendix 1, 3.1 & 3.2)
The Directors declare that the selected consolidated financial information has been prepared in compliance
with applicable Financial Reporting Standards and extracted from the unaudited interim financial statements.
The accounting policies the Directors consider critical to the portrayal of the company’s financial condition and
results which require judgements and estimates about matters which are inherently uncertain are disclosed in
each note of the unaudited consolidated interim financial statements that form part of this announcement.