FLLYR: RAK: Rakon Limited 31 March 2010 Full Year Results

21 May 2010 9:01 am

RAK 21/05/2010 FLLYR

REL: 0901 HRS Rakon Limited

FLLYR: RAK: Rakon Limited 31 March 2010 Full Year Results

Rakon Limited Results for announcement to the market Reporting period Year ended 31st March 2010 Previous reporting period Year ended 31st March 2009

Amount NZ$000 % Change Revenue from ordinary activities 144,513 4% Earnings before interest, tax, depreciation, amortisation & share based payments 4,269a (77%) Earnings before interest & tax (4,384) a (144%) Net (loss)/profit after tax (5,361) a (220%) Note a: includes equity accounted earnings of NZ$2,542,000 (2009: $250,000).

Amount per security Imputed amount per security Interim / Final Dividend Nil Nil Record Date Not Applicable Not Applicable Dividend Payment Date Not Applicable Not Applicable

Comments

Rakon Limited (NZX: RAK) has announced a strong improvement in its financial results for the second half of the 2010 financial year. The company reported EBITDA of NZ$7.2 million and a net profit after tax of NZ$0.8 million for the second half of the year, a significant improvement on the first half net loss after tax of NZ$6.2 million. The full year result was in line with previous guidance with revenue of NZ$144.5 million, EBITDA of NZ$4.3 million and a net loss after tax of NZ$5.4 million.

Brent Robinson, Rakon Managing Director said, "As we expected our results in the second half of the year were much stronger as demand grew strongly across our entire business which helped deliver a NZ$7 million improvement in net result after tax. Despite the massive impact of the global financial market collapse of 2008 and 2009 we have also enhanced the capability of our global platform and broadened our product range significantly."

In the second half of the year demand for products targeted at consumer GPS were well above levels for the same period last year. Average sales prices also stabilised, after the significant erosion suffered in the early part of the year. Importantly Rakon increased its share of the smart phone market as significant production volumes began to ship to new tier one customers during March 2010.

Significant investment in new equipment is being made by telecommunications companies to deal with the massive increases in data traffic being generated by mobile devices such as the iPhone and Blackberry. Rakon has developed leading frequency control technologies for this market and is now seeing the benefits of that investment with demand for infrastructure applications growing strongly throughout the year. Recently Rakon has also begun to receive strong demand from the emerging femtocell market as infrastructure providers look for lower cost solutions to alleviate the "data crunch".

"Rakon now has a global business with an excellent portfolio of products for consumer and telecommunications applications. I am very pleased with the progress we have made over the past 3 years. Our strategy of expanding firstly into Europe and then into India and China, plus our investment in new technologies, puts us in a strong position to build strong bottom line growth now and in the future," Mr Robinson explained.

"Rakon's developments in China are continuing at a pleasing pace. Over the past 6 months Rakon has secured land and has finalised plans to begin construction of its new state of the art crystal manufacturing facility in Chengdu. We aim to begin commercial operations in July 2011 and look forward to this facility providing us with the platform we need to continue our growth, particularly for consumer applications like smart phones."

In addition Rakon's existing joint venture in China has performed ahead of expectations with strong growth and profitability.

Rakon closed the year with its balance sheet in strong shape with cash reserves of $46 million held to fund planned expansion particularly in China over the next 18 months.

Rakon considers it is well positioned in all of its markets for 2011. Whilst forecasting the timing of growth from new applications and products can be difficult Rakon is comfortable with the current range of brokers estimates for its 2011 year which projects EBITDA of between NZ$25 and NZ$30 million.

Directors Declaration (NZX Listing Rules Appendix 1, 3.1 & 3.2)

The Directors declare that the consolidated financial information on pages 4 to 16 has been prepared in compliance with applicable Financial Reporting Standards and extracted from audited financial statements. The auditors have issued an unqualified opinion on the financial statements. 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 note 2.17 of the financial statements that form part of this announcement.

Other Information

A. Dividends (NZX Listing Rules Appendix 1: 2.3(d))

Rakon Limited currently has adopted a policy that there will not be any dividend payments made for the foreseeable future and surplus funds will be retained in order to capitalise on immediate and future growth opportunities.

B. Net Tangible Assets per Security (NZX Listing Rules Appendix 1: 2.3(f)) 31 March 2010 31 March 2009 Net tangible assets $000 159,178 100,455 Number of ordinary securities 000 190,707 127,939 Net tangible asset backing per ordinary security $ 0.83 0.79

C. Control gained and lost over Entities (NZX Listing Rules Appendix 1: 2.3(g))

Rakon Limited has acquired the following entities during the period: N/A

D. Associates & Joint Ventures (NZX Listing Rules Appendix 1: 2.3(h))

Rakon Limited has the following associate entities and joint venture arrangements.

Shareholding Centum Rakon India Private Limited 49% Shenzhen Timemaker Crystal Technology Co, Limited 40% Chengdu Timemaker Crystal Technology Co, Limited (formerly Roye Crystal Technology (Shanghai) Co, Limited) 40% Shenzhen Taixiang Wafer Co, Limited 40% The contribution of Centum Rakon to Rakon Limited's net results from ordinary activities is a net profit after tax of $225,000.

The contribution of Timemaker, Chengdu Timemaker and Taixiang to Rakon Limited's net results from ordinary activities is a net profit after tax of $2,317,000.

E. Audit (NZX Listing Rules Appendix 1: 1.3(l))

The financial statements have been audited and will not be subject to any qualification.

F. Business Changes (NZX Listing Rules Appendix 1: 1.3(m))

There have not been any major changes or trends in Rakon's business subsequent to year end. End CA:00195154 For:RAK Type:FLLYR Time:2010-05-21:09:01:18

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