RAK Half Year 2020 Results &Business Update Presentation

©2015 Rakon Limited
Financial Results & Business Update
HY2020 (6 months to September 2019)
© Rakon Limited 19 November 2019
Enabling the
Connected Future

1
Agenda
AgendaItemPresenter
HY2020 Financial Key PointsAnand Rambhai (CFO)
HY2020 Key AchievementsBrent Robinson (CEO, Managing Director)
MarketUpdateBrent Robinson
Q&A Session
Closing Comments and OutlookBrent Robinson
Brent
Robinson
Anand
Rambhai

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HY2020 Financial Key Points

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HY2020Key Points
NZ$-13.6m
NZ$4.0m
▼55%
Revenue of $56.9m vs. $53.3m in HY2019
Telecommunications continues to grow, up $7.9m
Global Positioning and Space & Defence both lower,
down $1.7m and $1.1m respectively
Net profit after tax of $1.3m vs. $2.0m in HY2019
Underlying EBITDA
1
of $6.9m vs. $5.9m in HY2019
Includes one-off impact of $1.5mfrom new lease
accounting standard (NZ IFRS 16)
Excluding this one-off impact, like-for-like Underlying
EBITDA is $0.5m lower at $5.4m
NZ$9.2m
+55%
NZ$5.9m
Notes:
All figures are presented in New Zealand dollars unless otherwise indicated
1
Refer to note B1 of the HY2020 unaudited consolidated financial statements for an explanation of how ‘Non-GAAP Financial Information’ is used, including a definition of
‘Underlying EBITDA’ and reconciliation to net profit after tax
Revenue
Net profit
Underlying
EBITDA
1
Up $3.6m
Down
$0.7m
Up
$1.0m

4
HY2020 Key Points
Contributing factors to the movement in net
profit
Flow through of higher revenue at gross margin
percentage of 46.1%
Share of Thinxtra’s losses no longer included
Higher costs from:
Rakon India integration costs (legal, consulting and
higher headcount)
R&D and other expenses (time on product
development, higher costs to build prototypes,
higher headcount and wage inflation)
FX gain in prior year wasn’t repeated; impact of
higher borrowings in foreign currency
Interest on higher average borrowings
Half-year on half-year $0.7m movement in net profit explained
HY19
net
profit
Gross
margin
ThinxtraRakon
India
R&D
and
other
expenses
Fx
gains /
losses
InterestHY20
net
profit

5
▼>100%
NZ$-13.6mNZ$4.0m
▼55%
Depreciation higher with NZ IFRS
16 Leases
Operating cash flow includes
$1.5m impact from adoption of
IFRS 16 Leases and lower growth
in inventory vs. prior half year
Capex in line with expectation,
variance due to phasing of spend,
prior half year had significant
spend in H2
Net debt higher from inventory
and capex growth
HY2020 Key Points
Notes
1
Refer to Note B1 of the HY2020 unaudited consolidated financial statements for an explanation of how ‘Non-GAAP Financial
Information’ is used, including a definition of ‘Underlying EBITDA’ and reconciliation to net profit after tax
NZD Millions
HY2020
HY2019
$ change
+better | -worse
Revenue
56.9
53.3
+3.6
Gross profit
26.3
24.6
+1.7
Operating expenses
25.1
23.5
-1.6
Underlying EBITDA
1
6.9
5.9
+1.1
Depreciation & amortisation
4.3
2.8
-1.5
Net profit/(loss) after tax
1.3
2.0
-0.7
Earnings
(cents per share
)
0.6
0.9
-0.3
Operating cash flow
3.4
(3.4)
+6.9
Capital expenditure
3.0
2.1
-1.0
Net debt
7.6
3.9
-3.8
Shares on issue at balance date
(millions)
229.1
229.1
-

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HY2020 Key Achievements

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HY2020 Key Achievements
Telecommunications segment growth
5G demand starting to generate revenue
New products delivered out of NZ
Half-year on half-year volume growth in India
Rakon India now fully integrated into the wider
group and operating independently with its own
management structure
Quartz MEMS development completed; registered
XMEMS
TM
and now ready for deployment in high
performance TCXO and OCXO products

8
Market Update

9
Update
USD revenue is up 25% on the same period last year
Deliveries of new products from Rakon NZ into 5G Remote Radio Heads has
gathered momentum in Asia, resulting in revenue growth when compared to
HY2019
Revenue from products for network equipment grew 50% compared to
HY2019
4G & 4.5G mobile base station business has slowed, impacting Rakon India
which is down HY2020 vs. HY2019
Outlook
Expecting 4G & 4.5G mobile base station demand to be down in the second
half, but expecting 5G base stations to start deploying in Q4 of FY2020
Markets in Asia still leading 5G deployment. Other regions are expected to
ramp in the first or second half of next calendar year
Rakon has increased market share with all Tier One customers and is well
positioned for next calendar year
Core network infrastructure to support 5G synchronisation standards will
continue to grow, with increased demand for products from both Rakon
India and Rakon NZ
Telecommunications
57%of Revenue
+11% on HY19

10
Global Positioning
Update
Overall Global Positioning revenue was down 15%
Less demanding specification requirements has resulted in Rakon shedding some
of its high volume GNSS business
Industrial high precision GNSS has also been down with demand from the heavy
equipment industry in decline in the US, in line with global uncertainty
Emergency beacon market revenue was up 40% vs. HY2019, with a new
frequency requirement now being introduced and deployed
Outlook
Competitive pressure from low-cost GNSS module makers in Asia, will
increase price pressure in the high volume market
With Rakon’s focus on preserving margin, top line revenue may decline further
The emerging autonomous car market is bringing new applications and
opportunities for Rakon’s technology and products
17%
of Revenue
-4% on HY19
10

11
Space & Defence
Update
Combined revenue for Space and Defence was similar to HY2019
Space revenue was up, with a significant delivery into China for the first phase of
products for Low Earth Orbit (LEO) satellites, indicating the potential of this ‘New
Space’ market
Space revenue (USD) grew 19% for products out of Rakon France
Defence revenue (USD) was down 10% for products out of Rakon France and Rakon
NZ
Mainly due to less demand from the US
Outlook
Demand for traditional geostationary satellites is expected to weaken as market
segments transition toward LEO satellites
FY2020 Q4 deliveries from Rakon France are expected to be high, in line with yearly
trends and are needed to meet the full year result forecast
Defence spending in the US is predicted to be stronger in the second half of FY2020
Rakon India is positioned well to continue growth, with localised supply into the
Space and Defence market in India, but it will take time to materialise
of Revenue
-4% on HY19
22%
11

12
Q&A

13
Closing Comments and Outlook

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14
Closing Comments and Outlook
HY2020
Overall revenue and margin growth
Underpinned by strong volumes
in Telecommunications
Rakon India now independently
operating from former JV partner
A number of one-off costs in first
six month period
Closing Comments
Final payment to former JV partner
for Indian operations
Delays in 5G roll-out disappointing
but dominant share allocations from
key Tier One customers for next
calendar year
Key focus is on production efficiencies
and expanding capacity for new 5G
products

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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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12 November 2019


Rakon HY2020 Results Announcement Date & Teleconference Details

Rakon Limited (RAK) will release its results announcement for the half year ended 30
September 2019 to the market at around 9.00am on Tuesday 19 November 2019.

The announcement will be followed by a presentation from 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 teleconference in time for the start, we
recommend you dial in 5 minutes prior to the start time of the teleconference. Dial the
appropriate access number from the list below and enter the Participant Pin Code
28985613#. Further contact numbers are available on the website. (www.rakon.com)


Country:

Toll Free Access

Toll Access
New Zealand: 0800 452 257 +64 9 307 1606
Australia: 1800 093 431
China: 800 803 6107 +86 400 669 0013
France: 0800 913 497 +33 170 489 682
United Kingdom: 0800 026 1552 +44 203 194 0564
United States: 1 877 788 9032

Participant Pin Code: 28985613#.


-Ends-

Contact:
Anand Rambhai
Chief Financial Officer
+64 9 571 9225

Louise Howe
Media Liaison
021 206 0985