RAK HY2021 Results Announcement

Results announcement







Results for announcement to the market
Name of issuer Rakon Limited (RAK)
Reporting Period 6 months to 30 September 2020
Previous Reporting Period 6 months to 30 September 2019
Currency NZD

Amount (000s) Percentage change
Revenue from continuing
operations
$59,534 +4.6%
Total Revenue $59,534 +4.6%
Net profit/(loss) from
continuing operations
$4,641 +246%
Total net profit/(loss) $4,641 +246%
Interim/Final Dividend
Amount per Quoted Equity
Security
No dividends are proposed to be paid.
Imputed amount per Quoted
Equity Security
Not Applicable
Record Date Not Applicable
Dividend Payment Date Not Applicable
Current period Prior comparable period
Net tangible assets per
Quoted Equity Security
$0.40 $0.36
A brief explanation of any of
the figures above necessary
to enable the figures to be
understood
Please refer to the accompanying comments and the unaudited
interim financial statements released in conjunction with this
announcement
Authority for this announcement
Name of person

authorised
to make this announcement
Maureen Shaddick, Company Secretary
Contact person for this
announcement
Anand Rambhai, Chief Financial Officer
Contact phone number (09) 571 9225
Contact email address anand.rambhai@rakon.com
Date of release through MAP

19/11/2020

Unaudited financial statements accompany this announcement.

---

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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© 2015 Rakon Limited. All Rights Reserved. Unauthorised use or publication is expressly prohibited.



19 NOVEMBER 2020

RAK HY2021 RESULTS ANNOUNCEMENT COMMENTARY

Rakon announces its half-year financial result to 30 September 2020



Rakon Limited (‘Rakon’) achieved a net profit after tax of $4.6m
1
(HY2020: $1.3m) and Underlying EBITDA
2
of
$11.4m (HY2020: $6.9m) for the six months to 30 September 2020.

Despite the initial effects of Covid-19 being severe, a strong first half-year result was achieved due to prompt
mitigation actions in Q1 and increased demand in Q2.

From late March through April 2020, manufacturing at Rakon’s plants in New Zealand and India was restricted
or shut down. Strong actions were taken across Rakon’s global operations to protect the business including
agreeing reductions in staff salaries, directors’ fees and rents, cutting discretionary expenditure and obtaining
government relief where eligible. This response, combined with a bubble of high demand in the
Telecommunications segment from July onwards, produced a robust first half-year earnings result. Earnings
growth is not expected to continue at the same rate for the remainder of FY2021 and Rakon’s full year
guidance of $16m – $18m Underlying EBITDA as issued in August 2020 remains valid.

Telecommunications revenue was 19% higher than the same period last year and now makes up 64% of
Rakon’s total revenue. The increase in demand in Q2 was mainly out of the New Zealand business as many Tier
1 customers managed their supply chain risks through building safety stock. In the second half of FY2021 with
ongoing economic uncertainty from geopolitical tensions and Covid-19, mobile network operators appear
cautious about their 5G deployment plans and therefore growth in the Telecommunications segment is
expected to be less pronounced in this period.

Revenue from the Global Positioning segment continued to trend down in the first half as the high volume, low
margin GNSS (global navigation satellite system) business continued to decline. Revenue was also lower from
aviation customers who were impacted by Covid-19. The Global Positioning segment is expected to improve in
the second half of FY2021 as demand for emergency beacon and agricultural applications returns and Rakon
continues to focus on its high margin, precise positioning products.

The Space & Defence segment was lower than the same period last year with lower space revenue due to the
phasing of orders partially offsetting higher defence revenue out of Europe. Overall, the Space & Defence
segment is expected to improve in the second half and exceed the full year FY2020 revenue recorded. Key
contributions are expected from new business supplying into a low earth orbit satellite deployment and
growth in the domestic Space business in India.

Inventory levels were higher at 30 September 2020 than at 31 March 2020 due to increasing customer
demand for longer lead-time products and carrying safety stock as a mitigation for potential supply chain
interruptions.
NZ$m
1
, unaudited
HY2021
HY2020
% change
Revenue
59.5
56.9
+5%
Underlying EBITDA
2
11.4
6.9
+64%
Net profit after tax
4.6
1.3
+246%
Operating expenses
24.5
25.1
-3%
Operating cash flow
7.9
3.4
+131%
1
All figures are presented in New Zealand dollars unless otherwise indicated
2
Refer to note 4 of the HY2021 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

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Net debt improved by $5.1m to $2.8m over the six-month period due to strong operating cash flows and lower
capital expenditure. Operating cash was $7.9m driven by the half-year earnings and historic R&D tax credits
received during the period.

The Directors confirm that the HY2021 results announcement is based on unaudited results.

The Directors have declared that no dividend is to be paid for the interim period to 30 September 2020. 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.
The Directors declare that the unaudited consolidated interim financial statements which accompany this
announcement have been prepared in compliance with applicable Financial Reporting Standards. 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 and in the annual report for the year ended
31 March 2020.
-ends-
Brent Robinson
Chief Executive Officer & Managing Director

Contact:
Anand Rambhai (CFO)
09 571 9225

Media Liaison:
Louise Howe
021 206 0985


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. Its three core markets are Telecommunications,
Global Positioning and Space and Defence. 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 three manufacturing plants and six research and development centres. Customer support personnel
are located in sixteen 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, NZX, ticker code RAK.
www.rakon.com

---

Rakon Ltd
Interim Financial Statements
September 2020

2

Table of Contents
Unaudited Consolidated Interim Statement of Comprehensive Income ..................................................... 3
Unaudited Consolidated Interim Statement of Changes in Equity .............................................................. 4
Unaudited Consolidated Interim Balance Sheet .......................................................................................... 5
Unaudited Consolidated Interim Statement of Cash Flows ......................................................................... 6
Notes to the Unaudited Consolidated Interim Financial Statements .......................................................... 8
Directory ..................................................................................................................................................... 14

3

Unaudited Consolidated Interim Statement of Comprehensive Income
For the period ended 30 September 2020


The accompanying notes form an integral part of these financial statements.


Unaudited six Unaudited six Audited year
months ended months endedended
30 September 30 September 31 March
202020192020
Note $000s$000s$000s
Continuing operations
Revenue559,534 56,912 118,980
Cost of sales(32,431) (30,652) (66,947)
Gross profit27,103 26,260 52,033
Other operating income90828
Other gains/(losses) – net72,28729(438)
Operating expenses6(24,459) (25,099) (48,081)
Operating profit5,0211,1983,542
Finance income1188
Finance costs(418)(532) (1,063)
Share of net profits of associate9996753797
Profit before income tax5,6101,4273,284
Income tax (expense)/credit (969)(85)696
Net profit for the period attributable to equity holders of the Company4,6411,3423,980
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Increase/(decrease) in fair value cash flow hedges7,874 (3,465) (7,247)
Cost of hedging(27)173570
(Decrease)/increase in fair value currency translation differences(3,219)2,5474,140
Income tax (expense)/credit relating to components of other comprehensive income(2,204)9702,029
Item that will not be reclassified subsequently to profit or loss
Changes in fair value of equity investments at fair value through other comprehensive
income – Thinxtra
206133 (1,632)
Other comprehensive income/(losses) for the period, net of tax 2,630358 (2,140)
Total comprehensive income for the period attributable to equity holders of the Company7,2711,7001,840
Earnings per share attributable to the equity holders of the Company from continuing
operations
CentsCentsCents
Basic earnings per share2.0 0.6 1.8
Diluted earnings per share2.0 0.6 1.8

4

Unaudited Consolidated Interim Statement of Changes in Equity
For the period ended 30 September 2020

The accompanying notes form an integral part of these financial statements.














Share capital
Retained
earningsOther reservesTotal equity
$000s$000s$000s$000s
Balance at 31 March 2019
181,024 (69,855) (21,153) 90,016
Net profit after tax for the half year ended 30 September 2019 - 1,342 - 1,342
Currency translation differences
- - 2,547 2,547
Cash flow hedges, net of tax
- - (2,322) (2,322)
Changes in fair value of equity investments at fair value through other
comprehensive income – Thinxtra
- - 133 133
Total comprehensive income for the half year
- 1,342 358 1,700
Balance at 30 September 2019
181,024 (68,513) (20,795) 91,716
Net profit after tax for the half year ended 31 March 2020
- 2,638 - 2,638
Currency translation differences
- - 1,593 1,593
Cash flow hedges, net of tax
- - (2,326) (2,326)
Changes in fair value of equity investments at fair value through other
comprehensive income - Thinxtra
- - (1,765) (1,765)
Total comprehensive income for the half year
- 2,638 (2,498) 140
Balance at 31 March 2020
181,024 (65,875) (23,293) 91,856
Net profit after tax for the half year ended 30 September 2020
- 4,641 - 4,641
Currency translation differences
- - (3,219) (3,219)
Cash flow hedges, net of tax
- - 5,643 5,643
Changes in fair value of equity investments at fair value through other
comprehensive income – Thinxtra
- - 206 206
Total comprehensive income for the half year
- 4,641 2,630 7,271
Balance at 30 September 2020
181,024 (61,234) (20,663) 99,127

5

Unaudited Consolidated Interim Balance Sheet
As at 30 September 2020

The accompanying notes form an integral part of these financial statements.
Unaudited six Unaudited six Audited year
months ended months endedended
30 September 30 September 31 March
202020192020
Note$000s$000s$000s
Assets
Current assets
Cash and cash equivalents9,9645,3505,086
Trade and other receivables36,113 35,531 42,379
Inventories41,765 44,796 37,624
Derivative financial instruments7655827
Financial asset at fair value through profit and loss83192
Current income tax asset299726889
Total current assets88,989 86,480 86,007
Non-current assets
Property, plant and equipment18,093 19,528 18,924
Intangible assets8,3178,7019,003
Investment in associate
9
12,211 11,356 11,714
Right-of-use assets8,1748,9179,730
Trade and other receivables2,8802,1862,702
Financial asset at fair value through other comprehensive income – Thinxtra
8
3,1244,6822,918
Derivative financial instruments30075-
Deferred tax asset6,9297,3249,246
Total non-current assets60,028 62,769 64,237
Total assets149,017 149,249 150,244
Liabilities
Current liabilities
Bank overdraft
10
5,800 12,704 12,848
Borrowings
10
6,673280145
Lease liabilities2,4892,5302,741
Trade and other payables25,038 25,357 22,252
Provisions810257714
Derivative financial instruments2983,3815,040
Deferred consideration on acquisition – Rakon India-1,938-
Deferred income – government wage subsidy--2,000
Total current liabilities41,108 46,447 45,740
Non-current liabilities
Borrowings
10
324--
Lease liabilities5,3826,1516,704
Provisions2,8383,4152,918
Derivative financial instruments511,3182,840
Deferred tax liabilities187202186
Total non-current liabilities8,782 11,086 12,648
Total liabilities49,890 57,533 58,388
Net assets99,127 91,716 91,856
Equity
Share capital181,024 181,024 181,024
Other reserves(20,663) (20,795) (23,293)
Accumulated losses(61,234) (68,513) (65,875)
Total equity99,127 91,716 91,856

6

Unaudited Consolidated Interim Statement of Cash Flows
For the period ended 30 September 2020

The accompanying notes form an integral part of these financial statements.

Unaudited six Unaudited six Audited year
months ended months endedended
30 September 30 September 31 March
202020192020
$000s$000s$000s
Operating activities
Cash provided from
Receipts from customers60,987 61,816 116,396
R&D grants received1,7061,2191,557
Government Covid-19 assistance2,287--
Interest received11(5)36
64,991 63,030 117,989
Cash was applied to
Payment to suppliers and others(31,813) (34,515) (58,364)
Payment to employees(24,452) (24,633) (48,860)
Interest paid(414)(453)(918)
Income tax paid(386)-(446)
(57,065) (59,601) (108,588)
Net cash flow from operating activities7,9263,4299,401
Investing activities
Cash was provided from
Sale of property, plant and equipment-4244
-4244
Cash was applied to
Purchase of property, plant and equipment(1,241) (2,404) (3,753)
Purchase of intangibles(619)(678)(774)
Purchase of shares in Centum Rakon India Private Limited-- (2,148)
(1,860) (3,082) (6,675)
Net cash flow from investing activities(1,860) (3,040) (6,631)
Financing activities
Cash was provided from
Proceeds from borrowings6,740--
6,740--
Cash was applied to
Lease liabilities payments(1,367) (1,531) (3,078)
Cash was applied to financing activities(1,367) (1,531) (3,078)
Net cash flow from financing activities5,373 (1,531) (3,078)
Net Increase/(decrease) in cash and cash equivalents11,439 (1,142)(308)
Effects of exchange rate changes on cash and cash equivalents487570(672)
Cash and cash equivalents at the beginning of the year(7,762) (6,782) (6,782)
Cash and cash equivalents at the end of the period4,164 (7,354) (7,762)
Borrowings(6,997)(280)(145)
Net debt (excluding lease liabilities) at the end of the period(2,833) (7,634) (7,907)
Breakdown of net debt (excluding lease liabilities) at the end of the period
Cash and cash equivalents9,964 5,350 5,086
Bank overdraft(5,800) (12,704) (12,848)
Borrowings
(6,997)(280)(145)
Net debt (excluding lease liabilities) at the end of the period(2,833) (7,634) (7,907)

7

Unaudited Consolidated Interim Statement of Cash Flows
For the period ended 30 September 2020

The accompanying notes form an integral part of these financial statements.


Unaudited six Unaudited six Audited year
months ended months endedended
30 September 30 September 31 March
202020192020
$000s$000s$000s
Reconciliation of net profit to net cash flows from operating activities
Reported net profit after tax4,6411,3423,980
Adjustments for
Depreciation and amortisation expense4,3444,3268,823
Interest expenses--164
Provisions provided16(26)415
Movement in foreign currency(1,163)4501,612
Share of net profits of associate(996)(753)(797)
Deferred tax movement-66(919)
Gain on disposal of property, plant and equipment-(42)-
2,2014,0219,298
Change in operating assets and liabilities
Decrease/ (increase) in trade and other receivables3,8693,265 (4,594)
Increase/(decrease) in provisions16(212)171
(Increase)/decrease in inventories(4,341) (3,986)3,020
Increase/(decrease) in trade and other payables950(836) (2,146)
Decrease/(increase) in tax provisions590(165)(328)
Total impact of changes in working capital items1,084 (1,934) (3,877)
Net cash flow from operating activities7,9263,4299,401

8

Notes to the Unaudited Consolidated Interim Financial Statements
1. General information ........................................................................................................................ 9
2. Statement of accounting policies .................................................................................................... 9
3. Impact of Covid-19 ........................................................................................................................... 9
4. Segment information ....................................................................................................................... 9
5. Revenue ......................................................................................................................................... 11
6. Expenditure included in net profit ................................................................................................. 12
7. Other gains/(losses) — net ............................................................................................................ 12
8. Investment in Thinxtra ................................................................................................................... 12
9. Interests in associate ..................................................................................................................... 12
10. Borrowings ..................................................................................................................................... 13
11. Contingencies ................................................................................................................................ 13
12. Subsequent events ........................................................................................................................ 13

9

1. General information
Rakon Limited (the Company) and its subsidiaries (the Group) are a global technology company that design and manufacture leading 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 and is
listed on the New Zealand Stock Exchange (NZX code: RAK). The address of its registered office is 8 Sylvia Park Road, Mt Wellington, Auckland.
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 Listing Rules.
The unaudited consolidated interim financial statements have been approved for issue by Rakon’s Board of Directors (the Directors) on 19
November 2020.
2. Statement of accounting policies
These consolidated interim financial statements for the half-year reporting period ended 30 September 2020 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,
in particular NZ IAS 34 Interim Financial Reporting. 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 of the Group have been presented in New Zealand dollars and has been rounded to the nearest thousands unless otherwise
indicated.
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.
The accounting policies applied are consistent with those set out in the annual report for the year ended 31 March 2020.
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 2020 and any public announcements made by the Company during the
interim reporting period.
3. Impact of Covid-19
Covid-19 has had a negative short-term impact to the Group with the New Zealand and Indian operations severely restricted for periods of time.
Immediate actions taken included: reduction in salaries, directors fees, and rents; as well as accessing government assistance available in various
jurisdictions. In the July to September period the Company experienced an increase in customer demand particularly in the telecommunications
infrastructure market, with customers likely increasing their buffer stocks to counter future uncertainty due to both Covid-19 and general geo-
political risk.
4. Segment information
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, Chief Operating Officer and Chief Financial Officer.
The chief operating decision maker also assess 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)’.
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.

10

Segment results
Information related to each reportable segment is set out below.




1
Includes Rakon Limited’s 40% share of investment in Chengdu Timemaker Crystal Technology Co. Limited and Shenzhen Taixiang Wafer Co. Limited.
2
Includes investments in subsidiaries, Rakon Financial Services Limited, Rakon UK Holdings Limited, Rakon Investment HK Limited, and Rakon HK
Limited.
3
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.
4
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.


NZUKFranceIndia
China ̶
T'maker
1
Other
2
Total
$000s$000s$000s$000s$000s$000s$000s
Sales to external customers37,992- 20,586 866- 90 59,534
Inter-segment sales214-5 14,493- (411) 14,301
Segment revenue38,206- 20,591 15,359- (321) 73,835
Underlying EBITDA8,887 1,178 (4,932) 4,159 1,871 200 11,363
Depreciation and amortisation2,105 333 1,057 784- 65 4,344
Income tax (expense)/credit
- (181) 16 (755)- (49) (969)
Total assets
3
68,682 2,471 37,612 26,027 12,211 2,014 149,017
Investment in associates---- 12,211- 12,211
Additions of property, plant, equipment and intangibles1,479 89 143 233-- 1,944
Total liabilities
4
20,547 1,443 18,620 8,671- 609 49,890
Unaudited six months ended 30 September 2020
NZUKFranceIndia
China ̶
T'maker
1
Other
2
Total
$000s$000s$000s$000s$000s$000s$000s
Sales to external customers35,626- 20,589 697-- 56,912
Inter-segment sales354-- 11,696- (23) 12,027
Segment revenue35,980- 20,589 12,393- (23) 68,939
Underlying EBITDA6,505 857 (2,331) 849 1,387 (331) 6,935
Depreciation and amortisation1,878 321 1,255 837- 35 4,326
Income tax (expense)/credit67 (107) 16-- (61) (85)
Total assets
3
72,120 3,182 33,456 27,103 11,356 2,033 149,249
Investment in associates---- 11,356- 11,356
Additions of property, plant, equipment and intangibles
1,644 248 188 952-- 3,032
Total liabilities
4
35,832 1,396 11,512 7,754- 1,040 57,533
Unaudited six months ended 30 September 2019
NZUKFranceIndia
China ̶
T'maker
1
Other
2
Total
$000s$000s$000s$000s$000s$000s$000s
Sales to external customers70,382- 45,764 2,834-- 118,980
Inter-segment sales499-- 21,923- (117) 22,305
Segment revenue70,881- 45,764 24,757- (117) 141,285
Underlying EBITDA9,634 1,813 (1,690) 3,169 2,214 (353) 14,787
Depreciation and amortisation3,972 648 2,236 1,838- 129 8,823
Income tax (expense)/credit1,012 (186) 31-- (161) 696
Total assets
3
71,021 3,130 36,364 25,341 11,714 2,674 150,244
Investment in associates---- 11,714- 11,714
Additions of property, plant, equipment and intangibles
2,587 480 635 920-- 4,622
Total liabilities
4
36,131 1,385 12,426 7,544- 902 58,388
Audited year ended 31 March 2020

11

Reconciliation of Underlying EBITDA to net profit for the year

5. Revenue
The Group predominately operates in one segment, its primary business being the design, manufacture, marketing and the sale of frequency control
solutions. There is one main revenue stream, which is the sale of manufactured finished products.
Market segment
The Group’s products are used in the telecommunications, global positioning and space & defence markets.

Geographical segment
The Group’s trading revenue is derived in the following regions. Revenue is allocated based on the country in which the customer is located.







Unaudited six Unaudited six Audited year
months ended months endedended
30 September 30 September 31 March
202020192020
Continuing operations$000s$000s$000s
Underlying EBITDA11,3636,935 14,787
Depreciation and amortisation(4,344) (4,326) (8,823)
Finance costs – net(407)(525) (1,055)
Adjustment for associates and joint venture share of interest, tax and depreciation(875)(649) (1,447)
Other non-cash items(127)(8)(178)
Profit before income tax5,6101,427 3,284
Income tax expense(969)(85)696
Net profit for the period4,6411,342 3,980
Unaudited six Unaudited six Audited year
months ended months endedended
30 September 30 September 31 March
202020192020
$000s$000s$000s
Telecommunications38,375 32,176 65,167
Global Positioning5,9979,698 18,915
Space and Defence11,414 12,258 28,230
Other3,7482,7806,668
Total revenue by market segment59,534 56,912 118,980
Unaudited six Unaudited six Audited year
months ended months endedended
30 September 30 September 31 March
202020192020
$000s$000s$000s
Asia34,061 30,470 60,474
North America12,403 12,546 26,959
Europe11,863 12,509 29,073
Others1,2071,3872,474
Total revenue by region59,534 56,912 118,980

12

6. Expenditure included in net profit
Additional information in respect of expenses included in the Unaudited Consolidated Interim Statement of Comprehensive Income is as follows.
Operating expenses by function

7. Other gains/(losses) — net



1
Includes realised and unrealised gains/(losses) arising from accounts receivable and accounts payable.
2
The eligible New Zealand wage subsidy, UK government funded furlough and French government assistance.
8. Investment in Thinxtra
Thinxtra Pty Limited (‘Thinxtra') is an 'Internet of Things' (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.
Rakon was one of the founding members of Thinxtra in 2016, and has a 6.9% ownership interest at 30 September 2020 (September 2019: 17.8%)
Rakon had decided not to participate in additional capital raisings which resulted in Rakon’s ownership interest diluting.
The previous valuation of retained investment in Thinxtra used for the 31 March 2020 financial statements was based on information available to
June 2020. The Directors reviewed new information and observations available since June 2020 and concluded that the valuation of A$2.9m or
A$3.64 per share as at 31 March 2020 is still appropriate.
9. Interests in associate
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.
Breakdown of interest in associate

Unaudited six Unaudited six Audited year
months ended months endedended
30 September 30 September 31 March
202020192020
$000s$000s$000s
Selling and marketing costs4,4325,2149,585
Research and development6,6456,312 13,888
General and administration13,382 13,573 24,608
Total operating expenses24,459 25,099 48,081
Unaudited six Unaudited six Audited year
months ended months endedended
30 September 30 September 31 March
202020192020
$000s$000s$000s
(Loss)/gain on disposal of property, plant, equipment and intangibles(24)3433
Government Covid-19 assistance
2
2,287--
Foreign exchange gains/(losses) – net
Foreign exchange contracts and hedges676448(29)
Revaluation of foreign denominated monetary assets and liabilities
1
(652)(453)(442)
Total foreign exchange gains/(losses) – net24(5)(471)
Other gains/(losses) – net2,28729(438)
Unaudited six Unaudited six Audited year
months ended months endedended
30 September 30 September 31 March
202020192020
Chengdu Timemaker Crystal Technology Co. LtdAssociate China40%40%40%
Shenzhen Taixiang Wafer Co. LtdAssociate China40%40%40%
Name of entity
% of ownership interest
Country of
incorporation
Nature of
relationship

13


The Group has a 40% interest in two related companies: Chengdu Timemaker Crystal Technology Co. Limited and Shenzhen Taixiang Wafer Co.
Limited, which provide products and services to the frequency control products industry.
10. Borrowings
The Group is reliant on its bank facilities and equity as the principal sources of capital management.
ASB
At 30 September 2020 a $7.7m combined trade facility and a $3.3m overdraft facility was in place.
On 26 May 2020 the facilities with ASB were extended and the Company agreed to reduce the combined trade facility as follows:
 Up to 29 June 2020: $13.2m
 From 30 June 2020 to 30 September 2020: $11.2m
 From 1 October 2020 to 31 December 2020: $7.7m
 From 1 January 2021: $5.7m
During the period the Company operated within its facility limits and was in compliance with all required financial covenants. The facility limits are
currently being reviewed with ASB.
Borrowings balance

The bank borrowings include a €3.5m French government backed loan that was made available to Rakon France for an initial term of 12 months
with an option to extend for up to a further five years at the end of the first 12 months. This loan has certain restrictions that limits it to be used for
working capital/treasury support for the French business only. Interest is payable at zero percent for the initial 12 months along with a guarantee
fee of 0.25%. There are no covenants on the loan and no additional security is required.
11. Contingencies
There are no new material contingent liabilities.
12. Subsequent events
There were no subsequent events post 30 September 2020.





Unaudited six Unaudited six Audited year Unaudited six Unaudited six Audited year
months ended months ended ended months ended months endedended
30 September 30 September 31 March 30 September 30 September 31 March
20202019 2020202020192020
$000s$000s$000s$000s$000s$000s
Chengdu Timemaker Crystal Technology Co. Ltd11,768 10,917 11,259
Shenzhen Taixiang Wafer Co. Ltd443439455
Total Timemaker Group12,211 11,356 11,714996753797
Name of entity
Net investment
Equity accounted profits
Unaudited six Unaudited six Audited year
months ended months endedended
30 September 30 September 31 March
202020192020
$000s$000s$000s
Current
Other borrowings450280145
Bank overdrafts5,800 12,704 12,848
Bank borrowings6,223--
Current borrowings12,473 12,984 12,993
Non-current
Other borrowings324--
Non-current borrowings324--

14

Directory
Registered Office
Rakon Limited
8 Sylvia Park Road
Mt Wellington
Auckland 1060
Telephone: +64 9 573 5554
Facsimile: +64 9 573 5559
Website: www.rakon.com

Mailing Address
Rakon Limited
Private Bag 99943
Newmarket
Auckland 1149
Directors
Bruce Irvine
Keith Oliver
Brent Robinson
Yin Tang Tseng
Lorraine Witten
Keith Watson
Principal Lawyers
Bell Gully
PO Box 4199
Shortland Street
Auckland 1140
Auditors
PricewaterhouseCoopers
Private Bag 92162
Auckland 1142
Share Registrar
Computershare Investor Services Limited
Private Bag 92119
Victoria Street West
Auckland 1142

Managing Your Shareholding Online:
To change your address, update your payment instructions
and to view your investment portfolio, including transactions, please visit:
www.investorcentre.com/nz
General enquiries can be directed to:
enquiry@computershare.co.nz
Telephone: +64 9 488 8777
Facsimile: +64 9 488 8787
Bankers
ASB Bank
PO Box 35
Shortland Street
Auckland 1140