Download - Rakon 2012 Financial Year Results
Rakon Limited
R E S U L T S
FY12
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
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 (millions)
191.0 191.0 189.7 126.9
3
20%
21%
6%19%
34%
14%
14%
9%
25%
38%
High Reliability
SWD
Other
Positioning
Telecom
Revenue Mix
FY2011 FY2012
More diverse revenue base due to growth in sales into SWD and High Reliability markets
4
Rakon Market Revenue Index
SWD: Revenue up due to market growth and wining new business with Tier 1 and Tier 2 manufacturers.
Telecom: Revenue lower from deferral in spending of telecoms operators. Improvement after quiet period to continue as CAPEX required to support massive data demands from sales of smartphones.
High Reliability: Revenue up and in line with expectations driven by good performance from Temex business acquired in August 2010.
5
2010 2011 20120
200
400
600
800
Smart Wireless Devices
2010 2011 20120
50
100
150
200
Telecom Infrastructure
2010 2011 20120
100
200
300
400
High Reliability
FX
› FY12• Hedge gain of NZ$1.9 million
• Revaluation loss of NZ$0.4 million
› FY13/FY14 Hedging
• US$/NZ$: 64% of next 24 months
covered with mix of FEC
(~0.78)/Collars (0.82/0.75)
• US$/GBP: 34% of next 24 months
covered with mix of FEC
(~1.57)/Collars (1.57/1.53)
Spot FX Rates
FY12 FY11 Var %
NZ$/US$ 0.807 0.734 0.073 10%
NZ$/GBP 0.505 0.471 0.034 7%
NZ$/EUR 0.586 0.555 0.033 6%
NZ$/JPY 63.89 62.79 1.10 2%
GBP/US$ 1.597 1.557 0.040 3%
EUR/US$ 1.377 1.322 0.055 4%
6
Revenue Bridge
› 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
Reven
ue F
Y11
NZ sale
s vo
lume
NZ sale
s pr
ice/m
ix
NZ FX &
sale
s he
dging
UK sale
s vo
lume
UK sale
s pr
ice/m
ix
UK FX &
sale
s he
dging
FR sale
s vo
lume
& pric
e/m
ix
FR FX &
sale
s he
dging
Inte
rcoy
sale
s
Reven
ue F
Y12 160,000
170,000
180,000
190,000
200,000
210,000
220,000
192577180061
18,882
3,582 9,815 441
14083.6017658394
9438.74921269738
14202.7751559067 4807.6969259324
3
2704.41355867011
EBITDA Bridge
› 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
EB
IT...
NZ
Vo.
..
NZ
sal
...
NZ
FX
UK
V...
UK
sal
...
UK
FX
Fra
n...
Res
ea...
Gov
ern.
..
Sal
e of
...
Sel
ling.
..
Oth
e...
Sha
re o
...
EB
IT...
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
24839.8039273561
13085.8689979458
4,269
1,4802,459
2,070
3,0971,092
1,732
1804.68970116807
5120.23839768449
8742.96859127746
3159.36933949635
6361.7942342763.3335439302
8
9
Market Update
Rakon enabling connectivity everywhere
Wireless to Base station
OCXOVCXO
TCXOXTAL
Copper to switch
TCXO+VCXO
Undersea to repeater and switch
HiRelXTAL+
TCXO+VCXO
TCXO+VCXO
TCXO+ OCXOVCXO
TCXOXTAL
TCXO+VCXO
HiRel OCXO+XTAL+
TCXO+VCXO
Fibre switch & microwave Microwave link
TCXO+
Wireless to handsetCopper
Sate
llite
link
Rakon has never been better positioned!
Rakon’s frequency control product range synchronises global telecoms networks end-to-end:
10
Smart Wireless Devices
11
DRIVING GLOBAL DEMAND
• 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
2012 Achievements & Highlights
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
divisions
Increasing number of products per device
GPS
Modem
BT/WiFi/NFC
Camera
FM Tuner
0
200
400
600
800
1000
1200
1400
1600
1800
2000
Smartphones PC Tablets
Mill
ion
s
12
Source: IDC
Worldwide Smart Connected Device Shipments, 2010-2016 (Unit Millions)
Rakon Crystal Chengdu
13
STAGE ONE COMPLETE
Now operating at 80% of Stage One capacity
RCC team now at 200
Planning next stage
Telecom Infrastructure
STRONGER MARKET POSITIONING FROM DESIGN WINSDRIVING FUTURE REVENUE
• Acquired new tier one customers and increased share allocations from existing customers
• Major design wins in key technology to support massive mobile data growth
• Rakon’s new VCXO/XO product range now delivering in volume and expanding our market share
2012 Achievements & Highlights
Industry Outlook
• Operator infrastructure spending constrained• Telco investment in Het-Nets and Small Cells a solution to meet
massive mobile data demand and coverage issues• Major Telco infrastructure upgrades to 4G/LTE will support Rakon
growth strategy
Strengths & Opportunities
• Strengthened market positioning from design wins• 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 cycles
14
2010 2011 2012 2013 2014 20150
1
2
3
4
5
6
7
Mobile Data Exabytes per Month
Mobile Base Stations Forecast
2010 2011 2012 2013 2014 2015 -
500
1,000
1,500
2,000
2,500
3,000
Global Population Mobile Coverage by Technology Estimates
Forecast (CY) GSM WCDMA LTE CDMA Growth
2010 85% 35% 3% 80%2011 86% 38% 4% 81% 6%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 survey
Rapid Smartphone growth is driving both, demand for mobile data coverage and new technologies to increase data speed
Source: Credit Suisse Estimates 2011
(1000s) Mobile Base Stations shipment forecast from 2011
15
Heterogeneous Networks (LTE/3G/2G)
Macro Cells provide general coverage
Operator deployed indoor and outdoor Small Cells
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 explosion
› The Het-Net is a combination of mobile base stations› In high density areas, there will be up to 10-20 Smalls
Cells per Macro Cell footprint› Every cell uses a high stability frequency product
16
17
Hi Reliability
DIVERSIFIED PRODUCT RANGE, MARKET SHARE AND CUSTOMER BASE
• 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
2012 Achievements & Highlights
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 qualified
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 industry
Complete Range
Full range of frequency control solutions: OCXO, VCXO, TCXO, XO, Crystal, SAW, Module, Tuning Fork
World Leader
Market leader in many markets, including consumer, automotive, telecom, defence and space
18
Overview:
SCALING GLOBALLY TO CAPITALISE ON TECHNOLOGY AND MARKET LEADERSHIP
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
Limited's 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 company's website and contain additional information about
matters which could cause Rakon Limited's 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
20