FY2018 Results & Business Update Presentation

©2015 Rakon Limited
Enabling the connected future
FY2018 Financial Results
& Business Update
©2018 Rakon Limited 17 May 2018

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Agenda FY2018
AgendaItemPresenter
FY2018 Financial Key PointsSimon Bosley (Chief FinancialOfficer)
FY2018 Key AchievementsBrent Robinson (CEO, Managing Director)
MarketUpdateBrent Robinson
Q&A Session
Closing Comments and OutlookBrent Robinson
Brent
Robinson
Simon Bosley

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FY2018 Financial Key Points

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FY2018 Key Points
▼>100%
NZ$-13.6mNZ$4.0m
▼55%
Strong earnings result in FY2018
Net profit after tax of NZ$10.0 million vs. net loss of NZ$13.6
million in FY2017
Underlying EBITDA
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of NZ$12.1 million vs. NZ$4.0 million in FY2017
(NZX guidance to be between NZ$10.7 million and NZ$12.7 million)
Revenue turned to growth
Revenue up 7% on a NZD reported basis, with growth coming from:
Space & Defence revenue up 29%.
Global Positioning revenue up 9%.
Significant increase in gross profit
Revenue growth and a mix of business from higher margin markets
and products contributed to a gross profit amount increase of 29%
▲174%
NZ$10.0m
▲200%
NZ$12.1m
Net Profit
Underlying
EBITDA
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Note: The release of FY2018 results is based on audited financial statements
1
Refer to Note B of the 2018 Financial Statements for an explanation of how ‘Non-GAAP Financial Information’ is used, including adefinition of Underlying
EBITDA and reconciliation to NPAT
▲29%
▲9%

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FY2018 Key Points
▼>100%
NZ$-13.6mNZ$4.0m
▼55%
Several contributing factors to the strong FY2018 profit
result
A return to profitable trading in core business
A number of value accretive gains that include:
A gain from the sale of the France property of NZ$2.1 million
A gain from the partial sale of Thinxtra shares of NZ$1.9
million
A reported net dilution gain in Thinxtra of NZ$4.8 million,
relating to Rakon’s equity accounted share of an increase in
the company’s net assets, following capital introduced at a
premium
A strong positive movement in the cash position
Closing net cash of NZ$7.4 million vs. net debt of NZ$4.5
million in FY2017
Strong operating cash flow of NZ$7.9 million
Proceeds from the sale of assets and investments of
NZ$7.9 million
Finance costs down NZ$0.9 million from reduced debt

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▼>100%
NZ$-13.6mNZ$4.0m
▼55%
Volumes increased, with
revenue increasing at a higher
rate due to the mix of business
Operating costs in line in NZD,
but lower on a local currency
basis with an appreciating EUR
and GBP
Depreciation & amortisation
decline continues due to past
years lower capex trend
Business need for capital
expenditure remained low
Borrowings were permanently
reduced from positive operating
and investing cash flows, with a
movement over the year from
net debt to net cash
FY2018 Key Points

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FY2018 Key Achievements

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FY2018 Key Achievements
Siward technology transfer
Commitments regarding the technology transfer license
mostly now complete
Siward now in production and partnering with Rakon on key
component supply, mitigating previous risk
Partnership well established and ready to be leveraged for
the benefit of both parties
Centum Rakon India
Buyout of JV partner Centum Electronics completed on 2 May
2018 for US$5.5 million; Rakon now has 100% ownership
Strategic decision in line with the company’s manufacturing
strategy to have a low-cost operating platform
A platform suitable for future growth
Key support agreement reached with Centum Electronics to
provide services for up to 18 months while Rakon
implements its ownership integration plan
All control and decision-making now with Rakon

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FY2018 Key Achievements
France property sale
Completed in March 2018, the result of a number of years
of work to have the property rezoned for sale
Achieved NZ$4.5 million in sale proceeds, with a reported
gain-on-sale of NZ$2.1 million
Research & Development
Technology requirements and solution designs for next
generation 5G telecommunication networks and
applications becoming clearer
Rakon well positioned with product and technology offering
based on prior year’s R&D roadmap
Mercury/Mercury+ ASIC based OCXOs attractive to customers
Strong R&D focus in FY2018 in readiness for
telecommunication market opportunities ahead
Governance
Board focus on new NZX Governance Code released in 2017

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Market Update

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Market Update –Telecommunications
Telecommunications revenue remained flat on a US$ basis
in FY2018 vs FY2017 despite the first half growth
The small cell market in Taiwan was down in the second half
4G small cell demand has not replaced the 3G small
cells as anticipated
Opportunity with products from Centum Rakon India has
not been capitalised on
Tier One equipment manufacturers have been focused on
5G and Rakon has been very actively involved supporting
this development activity
Waiting for these customers to shift to an
implementation phase

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Market Update –Global Positioning
FY2018 Global Positioning Tier One customer volume and
revenue both grew
Precise positioning demand for industrial &
autonomous applications grew 25% in FY2018
In China, with the localised positioning satellite
network, Rakon’srevenue increased 30%
The emergency locator beacon market grew 25% in
FY2018
Personal locator beacon a growth market
Rakon dominant global supplier
Positioning embedded into wide area, low power IoT
applications is a big opportunity for TCXOs, if the price can
be competitive

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Market Update –Space & Defence
Revenue from Rakon’s Space market grew 20% in FY2018
50% of the Space growth came from China.
Defence revenue grew 25% in FY2018, mainly from the US
region
Centum Rakon India’s local Space & Defence business in
India grew beyond US$1 million in FY2018
The micro satellite Low Earth Orbit (LEO) networks present
opportunities for high volume and new value-add product
development

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Q&A

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Closing Comments and Outlook

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Closing Comments and Outlook
FY2018
A strong profit result has been delivered
from a return in the core business along
with a number of other gains
Revenue bottomed out in FY2017 and
started a growth recovery in FY2018
The acquisition of Centum Rakon India is
strategic and significantly important to
growing future profit
Balance sheet stability has been achieved
with the movement into a net cash
position
FY2019 Outlook
We expect core business to grow
The successful execution of the
integration of Centum Rakon India (CRI)
into Rakon is a key priority in FY2019
Focus on profit turnaround of CRI
A number of key R&D product
developments to shift into mass
production during FY2019
The Board will continue to assess ‘fair
value accounting’ of the investment in
Thinxtra, with a potential upside to
FY2019 reported profit
The Directors will continue to monitor the
cash requirements of the business in
consideration of a dividend

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www.rakon.com

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Rakon Limited
T +64 9 573 5554, F +64 9 573 5559
8 Sylvia Park Road, Mt Wellington, Auckland 1060, New Zealand
Private Bag 99943, Newmarket, Auckland 1149, New Zealand
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11 May 2018


Rakon FY2018 Result Announcement Date & Teleconference Details

Rakon Limited (RAK) will release its preliminary result announcement for the year ended 31 March
2018 to the market at around 9.00am on Thursday 17 May 2017. This will be followed by a
presentation by management at 11.00am by teleconference. A direct link to presentation material
which will be referred to by management, will be available on Rakon’s website (www.rakon.com) prior
to the teleconference.

Attendees: To ensure you are placed into the conference in time for the start, we recommend you dial
in 5 minutes prior to the start time of the conference. Dial one of the following access numbers listed
below and enter the PIN code followed by the # key:


Participant Pin Code: 35513101#

Country: Toll Free Access
New Zealand: 0800 452 257
Australia: 1800 093 431
China: 800 803 6107
India: 1800 266 9688
France: 0800 913 497
Germany: 0800 627 0771
United Kingdom: 0800 026 1552
United States: 1877 788 9032





Contact:
Simon Bosley
Chief Financial Officer
(09) 571 9206