RAK Presentation HY2021 Results & Business Update

©2015 Rakon Limited
Financial Results & Business Update
HY2021 (6 months to September 2020)
© Rakon Limited 19 November 2020
Enabling the
Connected Future

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Agenda
AgendaItemPresenter
HY2021 Financial Key PointsAnand Rambhai (CFO)
HY2021 Key AchievementsBrent Robinson (CEO, Managing Director)
MarketUpdateBrent Robinson
Q&A Session
Closing Comments and OutlookBrent Robinson
Brent
Robinson
Anand
Rambhai

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HY2021Key Points
NZ$-13.6m
NZ$4.0m
▼55%
Revenue of $59.5m vs. $56.9m in HY2020
Q1 down due to COVID-19, Q2 up strongly driven by
Telecommunications
Global Positioning and Space & Defence both lower,
down $3.7m and $0.8m respectively
Net profit after tax of $4.6m vs. $1.3m in HY2020
Underlying EBITDA
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of $11.4m vs. $6.9m in
HY2020
NZ$9.2m
+55%
NZ$5.9m
Notes:
All figures are presented in New Zealand dollars unless otherwise indicated
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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
Revenue
Net profit
Underlying
EBITDA
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Up $2.6m
Up $3.3m
Up
$4.5m

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HY2021 Key Points
Contributing factors to the movement in net
profit
Gross Margin (GM)$ from higher revenue
Improved Timemaker earnings from demand for
consumer electronics
Centum (Ex Indian partner) administration fee
ceased Nov 2019
Higher tax on higher earnings
Review of debtors provision
Global resource realignment
COVID-19 related impacts
Travel
Temporary cost reductions (staff remuneration,
directors fees, rent)
Relief from governments (NZ, France, UK)
Half-year on half-year $3.3m movement in net profit explained
NZ$m

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▼>100%
NZ$-13.6mNZ$4.0m
▼55%
Capital expenditure
Prior year capacity expansion in India
Discretionary spend curtailed in
HY2021
Inventory growth
Buffer to cover global supply chain
uncertainty
Higherdemand for longer lead-time
products
Operating cash flow & net debt
Historic R&D tax credit received
Higher HY2021 earnings
HY2021 Key Points
Notes
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Refer to Note 4 of the HY2021 unaudited consolidated financial statements for an explanation of how ‘Non-GAAP Financial
Information’ is used, including a definition of ‘Underlying EBITDA’ and reconciliation to net profit after tax
Performance for the six months to SeptemberHY2021HY2020Change
Revenue59.556.9+2.6
Gross profit27.126.3+0.8
Operating expenses24.525.1-0.6
UnderlyingEBITDA
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11.46.9+4.5
Depreciation & amortisation4.34.3+0.0
Net profit after tax4.61.3+3.3
Earnings (cent per share)2.00.6+1.4
Operating cash flow7.93.4+4.5
Capital expenditure1.93.0-1.1
Change in financial position since March 2020Sep-20Mar-20Change
Inventory41.837.6+4.2
Net debt (excluding lease liabilities)2.87.9-5.1
NZ$m

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HY2021 Key Achievements

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HY2021 Key Achievements
Telecommunications segment growth
5G products delivered out of NZ providedstrongrevenuegrowth
Rakon awarded the major share of 5G Remote Radio Head(RRH)
business
Major Tier-1 cloud computing customer secured
XMEMS™
Design wins with strategic customers and their applications
Trademarked in key regions
Expanded TCXO and OCXO capacity in bothNZ andIndia for
5G growth
COVID-19
Initially severely impacted and strong actions taken to mitigate
All operations recovered well and continue to operate
normallyevenin the significantly affected regions of France and
India

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Market Update

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64%
Update
Despite COVID-19 disruptions, USD revenue was up 18% on the same period last
year
COVID-19 created a bubble of demand, particularly in the second quarter with
customers trying to secure safety stock
Very strong 5G demand from Asia
Outlook
Geopolitical pressure on China has disrupted supply and slowed down 5G
deployments in this market
The same issue is expected to push out 5G rollouts globally
COVID-19 is still creating uncertainty leading customers to have cautious
outlooks
Rakon’s products are still well-positioned for new 5G equipment and data
centres; Rakon has capacity to deliver, asdeployments gather momentum
Telecommunications
of Revenue
HY2020: 57%

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Global Positioning
Update
Overall Global Positioning revenue was down 38%
Predominantly due to Rakon continuing to focus on high-end positioning
and less on the higher volume, lower margin,commoditisedGNSS
1
business
Aviation market was down due to COVID-19
Emergency beacon market was also down as a result of supply chain
issues related to COVID-19
Outlook
Forecast is for recovery in the second half year as the industrial / precision
demand returns to normal levels, however some uncertainty still remains
10%
of Revenue
HY2020: 17%
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1
Global Navigation Satellite System

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Space & Defence
Update
Combined revenue for Space and Defence was down7% vs. HY2020
Space revenue was down mainly due to the phasing of orders and deliveries
Solid demand continues in the Defence market with revenue up vs. HY2020, with
good growth in Europe
Outlook
In line with previous years, deliveries are higher in the second half compared
to the first half and should result in a similar full year resultto FY2020
New business has been secured within the NewSpacesegment from a
LEO
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satellite network in Asia and revenue is expected to start flowing
through in the last quarter
of Revenue
HY2020: 22%
19%
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1
Low Earth Orbit

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Q&A

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Closing Comments and Outlook

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Closing Comments and Outlook
HY2021
Strong first half despite difficult start
Low Q1 and very strong Q2
Softer demand in
Telecommunications expected in
second half
COVID-19 creating global uncertainty
and cautiousinvestment in
infrastructure
Geopolitical instabilities disrupting
global supply chains
Year-on-year steady revenue growth
still expected for full year
Closing Comments
While COVID-19 worsens in France and
India, production continues at normal
levels
EBITDA guidance of $16–18m still valid
XMEMS™superior technology proven with
lead customers and plans to scale up now
commencing
High precision time and synchronisation
becoming a more criticalelement for
global technological development and
growth
Rakon's industry leading product portfolio
enables theserequirements

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www.rakon.com

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Rakon Limited
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8 Sylvia Park Road, Mt Wellington, Auckland 1060, New Zealand
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© 2019 Rakon Limited. All Rights Reserved. Unauthorised use or publication is expressly prohibited.


19 November 2020

RAK Presentation HY2021 Results & Business Update

The slides for the presentation from Rakon management by teleconference, scheduled for
11.00am (NZT) today, are attached to this announcement. A direct link to the presentation
material will be available on Rakon’s website (www.rakon.com) prior to the teleconference.

Attendees: To ensure you are placed in the teleconference when it begins, 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 followed by the # key.

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-Ends-

Contact:
Anand Rambhai
Chief Financial Officer
Louise Howe
Media Liaison
+64 9 571 9225 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 has 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.