FY2018 Preliminary Results Announcement

17 May 2018 Rakon Limited releases its preliminary financial results for FY2018. This release includes two supporting attachments: 1. FY2018 Preliminary Results Announcement 2. FY2018 Preliminary Financial Statements Strong profit posted from improvement in core business and other gains o Net Profit after tax of NZ$10.0 million vs Net loss after tax of NZ$13.6 million in FY2017 o Revenue NZ$101.1 million (FY2017 NZ$94.7 million) o 7% increase in total revenue with Space & Defence market as major contributor o Non-recurring gains included in profit result o Net cash of NZ$7.4 million an improvement from NZ$4.5 million of net debt in FY2017 o Positive operating cash flow of NZ$7.9 million A return to profit in core business and other gains has seen global high technology company Rakon Limited ("Rakon" or the "Company") post a net profit after tax of NZ$10.0 million on revenue of NZ$101.1 million for the year ended 31 March 2018. The company's Underlying EBITDA of NZ$12.1 million was in line with forecasts issued earlier in the year, to report Underlying EBITDA of between NZ$10.7 million to NZ$12.7 million. Rakon Managing Director Brent Robinson said the company had achieved growth in two of its three core markets, Space & Defence and Global Positioning, which has contributed to a 7% increase in total revenue. "It is pleasing to see our revenue growing again, with the increase in Space & Defence coming from an improved product offering to both new and existing markets". The strong profit result includes a number of non-recurring gains: o A gain from the sale of the property in France of NZ$2.1 million, with cash proceeds of NZ$4.5 million. o A gain from the partial sale of shares in Thinxtra of NZ$1.9 million, with cash proceeds of NZ$3.2 million. o A net dilution gain on Thinxtra shares of NZ$4.8 million, resulting from an equity accounted net asset gain following Thinxtra's successful capital raising. During the year the company had achieved solid progress with strategic objectives regarding manufacturing partnerships and platforms. The transfer of a technology license to Siward was mostly complete and following balance date the company had announced a subsequent event, completing a buy-out of 51% of the shares of Centum Rakon India for US$5.5 million. "The acquisition of Centum Rakon India is a pivotal strategic decision that gives us the opportunity to grow profits. Having total ownership and full decision-making control means that we can leverage the benefits that this established low cost manufacturing platform offers". With the company achieving positive operating and investing cash flows in the period, the balance sheet moved from a net debt position to having NZ$7.4 million in net cash. This allowed Rakon to complete the acquisition of Centum Rakon India after balance date from its own resources. Although the company had achieved a flat revenue performance (USD currency basis) in its core market of Telecommunications, margins had improved. "The technology and solution design requirements for next generation 5G telecommunication networks and applications is becoming clearer, with Rakon well positioned with its product and technology offering". The Company announces today that Chair Mr. Bryan Mogridge will retire at the 2018 Annual Shareholders Meeting (ASM). Mr. Mogridge signalled at the 2016 ASM that he would retire before his next re-election. Mr. Mogridge is to be replaced as Chair by Mr. Bruce Irvine, who will be seeking re-election at the 2018 ASM. Mr Irvine has been a director of Rakon since 2006 and has been the Chair of the Audit & Risk Committee during that period. Currently a search is under way via the firm Sheffield, to seek interest for a replacement director. The company reports total equity of NZ$87.1 million with a net asset backing per share of NZ$0.38. The Directors confirm that this FY2018 preliminary results announcement is based on audited results. Brent Robinson Chief Executive Officer & Managing Director -ends- Contact: Simon Bosley (Chief Financial Officer) 09 571 9206 Media Enquiries: Louise Howe (Media Liaison) 021 206 0985 www.rakon.com End CA:00318088 For:RAK Type:FLLYR Time:2018-05-17 09:26:37