Rakon FY2021 Results & Business Update Presentation

1
Agenda
Brent Robinson
Anand Rambhai
Highlights and achievements
Operatingperformance and market update
Financialoverview
Summary and outlook
Closing comments
Q&A
Brent Robinson (CEO, Managing Director)
Brent Robinson
Anand Rambhai(CFO)
Brent Robinson
Brent Robinson
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FY2021 –Key highlights and achievements
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Revenue
❑8% higher to $128m (2020: $119m)
Underlying EBITDA
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❑59% higher to $23.5m (2020: $14.8m)
Net profit after tax
❑142% higher to $9.6m (2020: $4.0m)
Operating cash flow
❑113% higher to $20.1m (2020: $9.4m)
Net cash/net debt
2
❑Improved by $12.9m
Financial results –highlights
-
20.0
40.0
60.0
80.0
100.0
120.0
140.0
20172018201920202021
Revenue by Market
TelecommunicationsGlobal PositioningSpace and DefenceOther
Notes :
All figures are presented in New Zealand dollars unless otherwise indicated
1
Refer to note 5of the FY2021 audited consolidated financial statements for an explanation of how ‘Non-GAAP Financial
Information’ is used, including a definition of ‘Underlying EBITDA’ and reconciliation to NPAT
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excluding NZ IFRS 16
$m

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Covid-19 has highlighted our agility and responsiveness
Increased demand for our industry-leading products and
platforms
Improved market share and strengthened partnerships, with
key contract wins
Rapid deployment of new product designs to capture market
opportunities
Ongoing adaption and upscaling of worldwide operations
through disruptions
Well-managed supply chain to ensure delivery
FY2021 achievements reflect our strengths
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Operating performance and market update
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Employee safety paramount
❑Stringent protection measures in place across all sites
Rapid organisationalresponse
❑Emergency response plans deployed for all levels of the pandemic
❑Operations adapted to the lockdown conditions of each country –enabling
delivery of essential products and services while protecting staff
Covidgovernment assistance
❑Ensured continued employment of staff until production levels resumed
❑Mitigated impacts of lost orders and reduced production over first quarter
❑Received in NZ, UK, France
Covid-19
Safety of our people prioritised while continually adapting our operations
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India update
❑Recent outbreak has impacted Rakon India operations
❑Strict measures in place to minimisetransmission risk and enhance safety:
▪Limiting staff numbers on site, physical distancing, daily temperature testing and
deep clean of premises, registered nurse on site & bi-weekly doctor visits, higher
risk staffvaccinated
❑The majority of Rakon India’s 500-strong workforce have remained Covid
free to date:
▪However 18 staff infected and in good health
▪Sadly one death of a long-serving staff member
❑Cautious optimism as total cases in India have been declining
Covid-19 (cont.)
Safety of our people prioritised while continually adapting our operations
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Our People
❑Commitment and resilience of our global team enabled operations to get back
up and running quickly
❑Effectively operating through restrictions
New products and technologies
❑Rapid deployment of new product designs to capture opportunities stemming
from worldwide chip shortages
❑XMEMS®wins –designed into strategiccustomers’applications
❑XMEMS® registered as a trademark in keyregions
Manufacturing
❑Increased capability to scale quickly
❑New equipment built and software enhanced to deliver new products
Supply chain
❑Disruptions in supply chain managed through strong networks and relationships
allowing the fulfilment of growing demand
Operating highlights
Strong result reflects the capability and strong ‘can do’ culture of our team
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Overview
❑Revenue $77 million, up18%on FY2020
❑Increased 5G demand as operators deploy new networks and enhance existing
infrastructure
Achievements
❑Substantial contribution from new 5G products (Mercury+™)
❑Strong datacentre growth –driven by precise timing requirements for many
applications, including distributed processing, security and financial transactions
❑Major new cloud computing customer secured
❑Design-in wins for new products delivering 5G millimetre wave
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capability,
enabling wireless 5G high-speed broadband
❑Increased design wins for proprietary chip (Pluto®) products amidst global chip
shortages
Outlook
❑5G deployments expected to accelerate
❑Design-in opportunities progressing –Edge computing, datacentres, open radio
access networks (O-RAN)
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❑5G millimetre wave technology starting to deploy
Telecommunications
Increased 5G demand driving revenue growth
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Next generation frequencies that enable new applications
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Mobile networks that are more intelligent, open, virtualised and fully interoperable
Perc enta g e of revenue
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Overview
❑Revenue $30m, up 7% on FY2020
❑Driven primarily by French and Indian space business
❑Defence segment growth from previous year consolidated
Achievements
❑Rakon designed/manufactured products on board NASA’s Mars Perseverance Rover
❑Initial deliveries into a major NewSpace LEO
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satellite constellation
❑Growth in local Indian space business including: India’s 3
rd
moon mission; India’s
first solar mission
Outlook
❑Strong order book for Space expected to deliver continued growth
❑Further NewSpace LEO orders expected
❑Defence business remains robust
▪Design-in opportunities leveraging Rakon’s XMEMS® technology
Space & Defence
Momentum building in NewSpace
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1
Refers to a gl obal ly emergi ng pri vate s pacefl i ght i ndus try. Includes aeros pace compani es and ventures
worki ng to devel op fas ter, better and cheaper acces s to s pace and s pace technol ogi es
2
Low Earth Orbi t
Perc enta g e of revenue
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Overview
❑Revenue $14 million, down $4.9m on FY2020
❑Anticipated revenue decline in low-margin business but improved Gross Margin %
❑Growth in higher-margin precision industrial applications (agriculture/mining)
❑Covid-19 negatively impacted aeronautical and emergency beacon markets
Achievements
❑Significant orders captured as result of global TCXO shortages –multi-year contracts
delivering from FY2022
❑Growing share of agriculture/mining segments as automation becomes standard
Outlook
❑Global TCXO shortage will boost FY2022 revenue
▪Longer term supply expected to stabilise
▪Significant business expected to be maintained as customers diversify their supplier base
❑Growing automation in industrial applications, such as factories (Industry 4.0), agriculture,
mining
❑Consolidating position in the emerging autonomous vehicle market
❑Aeronautical and beacon segments expected to recover as local/global travel returns
Positioning
Mixed segment performance but strong FY2022 outlook
Perc enta g e of revenue
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Financial overview
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Financial performance
Notes
1
Referto Note5oftheFY2021auditedconsolidatedfinancialstatementsforanexplanationofhow‘Non-GAAPFinancial
Information’isused,includinga definitionof‘Underlying EBITDA’and reconciliationtonetprofitaftertax
2
excluding NZ IFRS 16
Strong earnings and cash flow
-
50
100
150
20172018201920202021
Revenue
(15)
(5)
5
15
20172018201920202021
N PAT
$m
-
10
20
30
20172018201920202021
U nderlying EBITDA
Performance for the 12 months to March
FY2021
FY2020
variance
% change
Revenue
128.3
119.0
+9.3
+8%
Gross profit
58.9
52.0
+6.9
+13%
Gross margin %
45.9%
43.7%
+2.2 ppts
Operating expenses
49.0
48.1
+0.9
+2%
Other operating income
2.6
0.0
+2.6
n/a
Net profit after tax
9.6
4.0
+5.7
+142%
Underlying EBITDA
1
23.5
14.8
+8.7
+59%
Earnings (cents per share)
4.2
1.8
+2.4
+133%
Net cash / (net debt)
2
as at 31 March
5.0
(7.9)
+12.9
+164%
Capital expenditure for the 12 months
5.1
4.6
+0.5
+10%

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Flow through of higher revenue drives margin
growth
Lower inventory obsolescence provided for
improves year-on-year margin
Timemakerbenefits from global consumer
electronics demand
Operating costs include one-off redundancy
costs & higher R&D spend (including XMEMS®
and chip development)
16% higher year on year NZD/USD closing rate
drives FX loss
Year-on-yearincrease innetprofitexplained
Summary movement in net profit after tax
Year-on-year revenue & margin growth drives earnings
$m
Change in gross margin

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Financial position
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20
40
60
80
100
120
20172018201920202021
Increase in net assets over last 5 y ears
Strengthened balance sheet provides some buffer, and capacity to support revenue growth
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Financial position as at 31 March
FY2021
FY2020
change
Total assets
154.4
150.2
+4.1
Total liabilities
50.4
58.4
-7.9
Net assets/equity
103.9
91.9
+12.1
Equity to total assets
67%
61%
+6.2%
Net cash / (net debt)
1
5.0
(7.9)
+12.9
Derivatives
3.2
(7.9)
+11.0
Inventory
37.7
37.6
+0.1
Notes
1
excluding NZ IFRS 16
$m

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Summary and outlook
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A strong FY2021 result
❑Built on the progress made in recent years
❑Playing to our strengths
❑A world-wide Rakon team effort
Covid has highlighted our agility
❑Extremely testing first quarter and continued challenges
❑But new opportunities have emerged and technological change has
accelerated
Solid foundations
❑Global platform of R&D, manufacturing and sales
❑Agility to scale up/down to meet market demand and profitably capture
opportunities
❑Prudent risk management and conservative financial management
Well positionedto capture growth opportunities
Summary
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Solid revenue growth expected
❑Continued expansion in 5G, data centres and NewSpace
❑Global TCXO shortage will boost FY2022 revenue
❑Strong forward order flow
Operational and R&D focus
❑Cutting-edge pipeline of new chips and product platforms; Millimetre wave and O-RAN
❑Increased manufacturing capability (in-house/contract partners) including further
investment in XMEMS®
Risk management
❑Actively diversifying internal and external supply chains
❑India’s Covid situation improving; not expected to materially impact FY22 guidance
Strong financial position and funding lines in place
❑Funding for future growth opportunities
❑A buffer for adverse events/economic shocks
Confirm FY2022 Underlying EBITDA guidance of $27 –$32m
Looking ahead
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Q&A
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Appendices
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The XMEMS
®
Difference
Rakon’s advanced resonator technology made with its
NanoQuartz™photolithography microfabrication process on
quartz wafers, delivering unprecedented resonator and
oscillator performance
❑Delivering best-in-class stabilities, phase noise, smallest
platforms in the industry
❑Creating new products not possible with conventional
mechanical processing methods
This technology coupled with Rakon’s innovative proprietary
semiconductor ASICs and IP, enabling
true5GmmWavecommunicationatmaximum bandwidth
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Cloud computing: Allows users to have on-demand availability of a
remote computer system’s resources for improved computing power or
data storage (usually located quite far from the user, such as in another
country)
Datacentres: Usually a building that is used to hold a computer system
and other components to backup data
Design-in: An opportunity that allows Rakon’s product to be used as
the reference component for certain customer reference designs (a
technical blueprint of a system intended to be used by customers)
Edge computing: Allows users to have on-demand availability of a
remote computer system’s resources for improved computing power or
data storage (usually located close to the user, such as within the same
city)
5G: 5
th
generation of the telecommunications standard, providing 10 to
1000 times better performance in many different applications
❑5G millimetre wave (mmWave) technology: The equipment that
enables higher frequency data transmission in 5G
New space/ New space LEOs: Refers to the commercial space sector
for mainly low earth orbit (LEO) satellites
Mercury™/ Mercury+™: Rakon’s proprietary integrated circuit used in
OCXOs to achieve clock variations to less than 1 billionth of a second,
enabling precision timing in 5G applications
Glossary
NASA: National Aeronautics and Space Administration, U.S.A.
(Government agency)
OCXO: Oven Controlled Crystal Oscillator. A crystal oscillator that uses a
miniaturised oven to keep its internal temperature constant
O-RAN: Mobile networks that are more intelligent, open, virtualised and
fully interoperable
Pluto®: Rakon’s proprietary integrated circuit used in TCXOs to achieve
clock variations to less than 100 millionth of a second, enabling higher data
rates in 5G applications
TCXO: Temperature Compensated Crystal Oscillator. A crystal oscillator
with additional circuitry to remove frequency variations due to
temperature change
Tier-1 customers: recognised key players within their respective industries,
that make up a significant market share
XMEMS®: Crystal Micro-Electro-Mechanical System. Rakon’s advanced
quartz-based resonator technology. It is made with Rakon’s NanoQuartz™
microfabrication process, delivering unprecedented resonator and
oscillator performances
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