Rakon LimitedR E S U LT SFY12
FY12 Financial Summary›   Revenue of NZ$178m down 5% on the prior year     •   Underlying revenue in US$144m up 4% on prio...
Financial Overview     NZD Millions                      FY12    FY11    FY10    FY09     Volumes (millions)              ...
Revenue Mix                               FY2011                    FY2012      High Reliability                14%       ...
Rakon Market Revenue Index         Smart Wireless Devices      SWD: Revenue up due to market growth and wining            ...
FX›   FY12                                     Spot FX Rates    •   Hedge gain of NZ$1.9 million    •   Revaluation loss o...
Revenue Bridge              250NZ$ Million              200                    19         14                              ...
EBITDA Bridge              35NZ$ Million              30                                        2                         ...
Market Update9
Rakon enabling connectivity everywhere     Rakon’s frequency control product range synchronises global telecoms     networ...
Smart Wireless Devices     DRIVING GLOBAL DEMAND         2012 Achievements & Highlights     •   RCC stage 1 complete and a...
Increasing number of products per device                                         Worldwide Smart Connected Device Shipment...
Rakon Crystal Chengdu     STAGE ONE COMPLETE     Now operating at 80% of Stage One capacity     RCC team now at 200     Pl...
Telecom Infrastructure     STRONGER MARKET POSITIONING FROM DESIGN WINS     DRIVING FUTURE REVENUE                        ...
Mobile Base Stations Forecast     (1000s)               Mobile Base Stations shipment forecast from 2011     3,000     2,5...
Heterogeneous Networks (LTE/3G/2G)     ›   The Het-Net is a combination of mobile base stations     ›   In high density ar...
Hi Reliability     DIVERSIFIED PRODUCT RANGE, MARKET SHARE AND CUSTOMER BASE         2012 Achievements & Highlights     • ...
Overview:     SCALING GLOBALLY TO CAPITALISE ON TECHNOLOGY AND MARKET LEADERSHIP     World Leader     Market leader in man...
Disclaimer     This presentation contains not only a review of operations, but also some     forward looking statements ab...
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Rakon 2012 Financial Year Results

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Rakon 2012 Financial Year Results Presentation

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  • 2012 Achievements & HighlightsMajor new design wins will support forward sales revenue/orders Established new customers and increased volume allocations from existing customersIndustry OutlookMarket growth down on expectations – knock on effect from Japanese earthquake and Eurozone recession.Telco infrastructure spend on Het-Nets and Small Cells to meet massive data demand and coverage issuesVolatility in infrastructure spend in short termLong design-in cycles and roll-outsStrengths & OpportunitiesStrengthened market positioning from design winsSupplier to all major manufacturers.Lower cost base with cutting edge technology improves and controls marginsMajor Telco infrastructure upgrades to 4G/LTE will support Rakon growth strategy
  • 2012 Achievements & HighlightsMajor new design wins will support forward sales revenue/orders Established new customers and increased volume allocations from existing customersIndustry OutlookMarket growth down on expectations – knock on effect from Japanese earthquake and Eurozone recession.Telco infrastructure spend on Het-Nets and Small Cells to meet massive data demand and coverage issuesVolatility in infrastructure spend in short termLong design-in cycles and roll-outsStrengths & OpportunitiesStrengthened market positioning from design winsSupplier to all major manufacturers.Lower cost base with cutting edge technology improves and controls marginsMajor Telco infrastructure upgrades to 4G/LTE will support Rakon growth strategy
  • Rakon 2012 Financial Year Results

    1. 1. Rakon LimitedR E S U LT SFY12
    2. 2. FY12 Financial Summary› Revenue of NZ$178m down 5% on the prior year • Underlying revenue in US$144m up 4% on prior year. • SWD & High Reliability up. Telco lower due to slowdown in operator spend.› Look through EBITDA of NZ$13.1m down on NZ$24.8m achieved in prior year • Significant impact of stronger NZ$. On a constant currency basis EBITDA is down ~NZ$2.5m on FY11. • Underlying product margins generally improved throughout FY12. • Operating costs increased due to the ramp up of Rakon’s Chengdu JV and the full year impact of the former Temex business. • Inclusive of NZ$2.2m amortisation of Temex IFRS FV inventory adjustment • EBITDA from Associates & Joint Ventures down NZ$2.7m on prior year. – Reduction in spending by Telco operators – Softer demand for consumer products (except SWD market)› Operating cash flow of NZ$7.9m up $12m on prior year • Improvement in working capital in the second half of FY12 through reduced inventory levels and improved terms of trade. • Resultant reduction in net debt.2
    3. 3. Financial Overview NZD Millions FY12 FY11 FY10 FY09 Volumes (millions) 86.9 75.3 54.8 45.3 Revenue 178.3 189.3 144.5 139.5 EBITDA (look through) 13.1 24.8 5.9 18.5 Depreciation & Amortisation 10.1 9.1 8.7 8.3 Profit After Tax (0.4) 8.5 (5.4) 4.5 Earnings (cents per share) (0.1) 4.7 (3.4) 3.6 Operating Cash Flow 7.9 (4.1) 1.0 16.6 Capital Expenditure 22.4 47.7 8.5 15.3 Cash Reserves 12.4 22.0 45.9 2.0 Debt 33.5 20.0 4.2 15.4 Shares on issue at balance date 191.0 191.0 189.7 126.9 (millions)3
    4. 4. Revenue Mix FY2011 FY2012 High Reliability 14% 20% SWD 14% 34% 38% Other 9% 21% Positioning Telecom 19% 25% 6% More diverse revenue base due to growth in sales into SWD and High Reliability markets4
    5. 5. Rakon Market Revenue Index Smart Wireless Devices SWD: Revenue up due to market growth and wining new business with Tier 1 and Tier 2 manufacturers.800600 Telecom: Revenue lower from deferral in spending of telecoms operators. Improvement after quiet period to400 continue as CAPEX required to support massive data demands from sales of smartphones.200 0 High Reliability: Revenue up and in line with expectations driven by good performance from Temex 2010 2011 2012 business acquired in August 2010. Telecom Infrastructure High Reliability200 400150 300100 200 50 100 0 0 2010 2011 2012 2010 2011 20125
    6. 6. FX› FY12 Spot FX Rates • Hedge gain of NZ$1.9 million • Revaluation loss of NZ$0.4 million FY12 FY11 Var % NZ$/US$ 0.807 0.734 0.073 10%› FY13/FY14 Hedging NZ$/GBP 0.505 0.471 0.034 7% • US$/NZ$: 64% of next 24 months covered with mix of FEC NZ$/EUR 0.586 0.555 0.033 6% (~0.78)/Collars (0.82/0.75) NZ$/JPY 63.89 62.79 1.10 2% • US$/GBP: 34% of next 24 months covered with mix of FEC GBP/US$ 1.597 1.557 0.040 3% (~1.57)/Collars (1.57/1.53) EUR/US$ 1.377 1.322 0.055 4%6
    7. 7. Revenue Bridge 250NZ$ Million 200 19 14 9 14 4 5 10 3 0 150 100 193 180 50 - Revenue NZ sales NZ sales NZ FX & UK sales UK sales UK FX & FR sales FR FX & Intercoy Revenue FY11 volume price/mix sales volume price/mix sales volume & sales sales FY12 hedging hedging price/mix hedging › NZ: Volume gains in from increase in SWD sales exceed price/mix changes but more than offset by unfavourable FX impact › UK: Volume down and unfavourable FX impact partially offset by favourable mix › France: Volume and mix favourable due to full year impact of former Temex business but partially offset by unfavourable FX impact 7
    8. 8. EBITDA Bridge 35NZ$ Million 30 2 4 25 5 20 1 9 3 6 15 2 2 3 1 3 25 2 10 13 5 - e GM A UK UK & A NZ e NZ e EBITD FY11 rch sales pric… sales pric… and… Sale inta… Oth… profi… EBITD FY12 Franc Resea Share Volum Volum nment grants Gover NZ FX UK FX Other FX Selling of of › NZ: Volume gains in from increase in SWD sales. Price/mix reductions largely offset by costs reductions and operational gains. Unfavourable FX impact. › UK: Volume down and unfavourable FX impact partially offset by favourable mix. › France: Volume and mix favourable due to full year impact of former Temex business but partially offset by unfavourable FX impact. › Indirect costs up. R&D and Government grants up. JV and associate earnings down. 8
    9. 9. Market Update9
    10. 10. Rakon enabling connectivity everywhere Rakon’s frequency control product range synchronises global telecoms networks end-to-end: TCXO+ HiRel TCXO+ OCXO TCXO TCXO+ VCXO XTAL+ VCXO VCXO XTAL VCXO Undersea to repeater and switch Copper to switch Wireless to Base station Satellite link HiRel OCXO+ XTAL+ Fibre switch & microwave Microwave link Copper Wireless to handset TCXO+ TCXO+ TCXO+ TCXO+ OCXO TCXO VCXO VCXO VCXO XTAL10
    11. 11. Smart Wireless Devices DRIVING GLOBAL DEMAND 2012 Achievements & Highlights • RCC stage 1 complete and almost fully ramped to installed capacity • Expanding Tier 1 customer base • Leading supplier to Tier 2 Chinese SWD sector • Now delivering multiple frequency control parts per device Industry Outlook • Massive global volume growth including rapid adoption in China • Recession proof market due to huge global demand • Demand moving ahead of supply for leading edge components Strengths & Opportunities • Leading edge competitive and of scale Chinese facility • Strengthened Chip-set partnerships driving opportunities with Tier 1 customers • Leveraging strong position with Telecom customers to penetrate their SWD divisions11
    12. 12. Increasing number of products per device Worldwide Smart Connected Device Shipments, 2010- GPS Camera 2016 (Unit Millions) Modem FM Tuner 2000 1800 1600 1400 Millions 1200 BT/WiFi/NFC 1000 800 600 400 200 0 Smartphones PC Tablets Source: IDC12
    13. 13. Rakon Crystal Chengdu STAGE ONE COMPLETE Now operating at 80% of Stage One capacity RCC team now at 200 Planning next stage13
    14. 14. Telecom Infrastructure STRONGER MARKET POSITIONING FROM DESIGN WINS DRIVING FUTURE REVENUE Mobile Data Exabytes per 2012 Achievements & Highlights Month • Acquired new tier one customers and increased share allocations 7 from existing customers • Major design wins in key technology to support massive mobile data 6 growth • Rakon’s new VCXO/XO product range now delivering in volume and expanding our market share 5 4 Industry Outlook • Operator infrastructure spending constrained 3 • Telco investment in Het-Nets and Small Cells a solution to meet massive mobile data demand and coverage issues 2 • Major Telco infrastructure upgrades to 4G/LTE will support Rakon growth strategy 1 Strengths & Opportunities 0 • Strengthened market positioning from design wins 2010 2011 2012 2013 2014 2015 • Supplier to all major manufacturers • Lower cost base with cutting edge technology improves and controls margins • Long design-in cycles and roll-outs – but long revenue and product life cycles14
    15. 15. Mobile Base Stations Forecast (1000s) Mobile Base Stations shipment forecast from 2011 3,000 2,500 2,000 1,500 1,000 500 Source: - Credit Suisse Estimates 2011 2010 2011 2012 2013 2014 2015 Global Population Mobile Coverage by Technology Estimates Rapid Smartphone growth is Forecast (CY) GSM WCDMA LTE CDMA Growth driving both, demand for mobile data coverage and new 2010 85% 35% 3% 80% technologies to increase data 2011 86% 38% 4% 81% 6% speed 2012 87% 40% 7% 82% 7% 2013 89% 44% 12% 83% 11% 2014 90% 52% 18% 83% 16% 2015 91% 63% 22% 84% 17% Source: Rakon estimates from customer survey15
    16. 16. Heterogeneous Networks (LTE/3G/2G) › The Het-Net is a combination of mobile base stations › In high density areas, there will be up to 10-20 Smalls Macro Cells provide general coverage Cells per Macro Cell footprint Operator deployed indoor and outdoor Small Cells › Every cell uses a high stability frequency product Enterprise deployed Small Cells User deployed Femto Cells Het-Nets solutions manages congestion, greatly increases capacity and coverage – Small Cells are becoming a major technology solution to meet the mobile data explosion16
    17. 17. Hi Reliability DIVERSIFIED PRODUCT RANGE, MARKET SHARE AND CUSTOMER BASE 2012 Achievements & Highlights • Hi-Rel business meeting expectations but revenue flat until 2013 • Temex acquisition embedded and rebranded Rakon • New product platforms developed also targeting lower cost for performance • Renewed customer confidence generating new opportunities Industry Outlook • Growth particularly with emerging countries (incl. BRIC) • Expanding radar applications • Aging radar system retrofits Strengths & Opportunities • Established an enhanced position with existing customers • High barriers of entry to competition • Significant in-roads in commercial satellites • Cross-selling opportunities realised from the global sales force • Long term revenues expected but design-in life cycles also long • Additional space grade products getting ESA qualified17
    18. 18. Overview: SCALING GLOBALLY TO CAPITALISE ON TECHNOLOGY AND MARKET LEADERSHIP World Leader Market leader in many markets, including consumer, automotive, telecom, defen ce and space Complete Range Full range of frequency control solutions: OCXO, VCXO, TCXO, XO, Cryst al, SAW, Module, Tuning Fork Global Presence Over 2300 staff in 9 manufacturing plants and 14 sales offices Innovation Track record of technology leadership and first-to-market in the Frequency Control Products industry18
    19. 19. Disclaimer This presentation contains not only a review of operations, but also some forward looking statements about Rakon Limited and the environment in which the company operates. Because these statements are forward looking, Rakon Limiteds actual results could differ materially. Although management and directors may indicate and believe that the assumptions underlying the forward looking statements are reasonable, any of the assumptions could prove inaccurate or incorrect and, therefore, there can be no assurance that the results contemplated in the forward looking statements will be realised. Media releases, management commentary and investor presentations are all available on the companys website and contain additional information about matters which could cause Rakon Limiteds performance to differ from any forward looking statements in this presentations. Please read this presentation in the wider context of material previously published by Rakon Limited.19
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