Rakon HY2019 Preliminary Results Announcement

15 NOVEMBER 2018 Strong first half performance Global high tech company Rakon Limited ('Rakon') continues its positive performance, having posted a net profit after tax of $9.2m1 (HY2018: $0.9m) and Underlying EBITDA of $5.9m (HY2018: $3.8m) for the six months to 30 September 2018. Included in net profit after tax is a one off gain of $7.2m from a change in the classification of the company's investment in Thinxtra Pty Limited ('Thinxtra'). Managing Director Brent Robinson said that, disregarding the Thinxtra gain, it was pleasing to see the growth in Rakon's core business with higher sales and margin from the Telecommunications and Defence market segments. Mr Robinson noted, in particular, the increase in forecast demand from the Telecommunications market with the continuing roll out of 4/4.5G and 5G infrastructure. The challenge for Rakon is to capture the demand and deliver to customers' requirements. "The acquisition of Centum Rakon India ('CRI') which is a key part of the Group's manufacturing strategy, was completed in May 2018 and it was pleasing to see the turnaround in its profit performance under Rakon's control," he said. Net debt was $3.9m at 30 September 2018 with increases in inventory and capital expenditures. These increases have been predominantly to: o meet higher forecast demand from the Telecommunications market o enable the launch of key new products for the Telecommunications market o put in place infrastructure to allow CRI to operate independently from Rakon's previous joint venture partner o purchase electronic components to mitigate supply risk due to industry shortages Mr Robinson said the appointments of a new Chair, Director and Company Secretary have refreshed the leadership and governance group. In June 2018 the accounting treatment of Rakon's investment in Thinxtra changed with the effect that it is now recognised at fair value. Fair value was calculated on the basis of an independent external valuation report, resulting in the one-off gain of $7.2m. The company reports total equity of $96.0m and net asset backing per share of $0.42. The Directors confirm that the HY2019 preliminary results announcement is based on unaudited results. 1 All amounts are in NZD unless otherwise indicated. -ends- Contact: Brent Robinson (CEO) 09 571 9201 Anand Rambhai (CFO) 09 571 9225 Media Enquiries: Louise Howe (Media Liaison) 021 206 0985 www.rakon.com End CA:00326882 For:RAK Type:HALFYR Time:2018-11-15 09:29:51