Rakon 2010 Interim Report

1

Table of contents

Table of contents 1

Unaudited Consolidated Interim Statement of Comprehensive Income 2

Unaudited Consolidated Interim Statement of Changes in Equity 3

Unaudited Consolidated Interim Balance Sheet 4

Unaudited Consolidated Interim Statement of Cash Flows 5 – 6

Notes to the Unaudited Consolidated Interim Financial Statements 7 – 14

Accountants Report 15

Directory 16

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2

Unaudited Consolidated Interim Statement of Comprehensive Income

Note

Unaudited Six Months ended

30 September 2009 ($000s)



Audited Year ended

31 March 2009 ($000s)

Continuing operations

Revenue 3 72,212 79,372 139,472

Cost of sales (49,317) (49,536) (86,292)

Gross profit 22,895 29,836 53,180

Other operating income 536 8 63

Operating expenses (26,256) (28,266) (55,670)

Other gains/(losses) – net 5 (4,763) 4,210 12,140

Operating (loss) profit (7,588) 5,788 9,713

Net finance (costs) 6 (755) (784) (2,140)

Share of profit of associates and joint venture 724 255 250

(Loss)/profit before income tax (7,619) 5,259 7,823

Income tax credit/(expense) 4 1,463 (3,281) (3,354)

Net (loss)/profit after tax (6,156) 1,978 4,469

Other comprehensive income:

Cash flow hedges 3,776 (1,762) (2,251)

Net investment hedge 3,365 - (3,846)

Currency translation differences (12,463) 3,864 5,527

Income tax relating to components of other comprehensive income

(2,143) 529 1,828

Other comprehensive (losses)/income for the period, net of tax

(7,465) 2,631 1,258

Total comprehensive (losses)/income for the period

(13,621) 4,609 5,727

(Losses)/Profit Attributable to:

Equity holders of the company (6,031) 1,995 4,520

Minority interests (125) (17) (51)

(6,156) 1,978 4,469

Total comprehensive (loss)/income attributable to:


Minority interest (121) (25) (56)

(13,621) 4,609 5,727

Earnings per share for (loss)/profit attributable to the equity holders of the Company:

Basic earnings per share (from continuing operations) (4.7) 1.6 3.6

Diluted earnings per share (from continuing operations) (4.7) 1.5 3.6 The accompanying notes form an integral part of these interim financial statements.

3

Unaudited Consolidated Interim Statement of Changes in Equity

Note

Share Capital

($000s)

Retained Earnings

($000s)

Other

($000s)

Equity

($000s)

Minority Interests

($000s)

Total Equity

($000s)

Balance at 1 April 2008 7 103,161 32,212 (3,536) 131,837 - 131,837

Net profit after tax for the half year ended

30 September 2008

- 1,995 - 1,995 (17) 1,978

Currency translation differences - - 3,872 3,872 (8) 3,864

Cash flow hedges, net of tax - - (1,233) (1,233) - (1,233)

Total comprehensive income for the half

year

- 1,995 2,639 4,634 (25) 4,609

Minority interest – newly acquired in

subsidiary

- - - - 57 57

Employee share schemes

- value of employee services - - 233 233 - 233

- proceeds from shares issued 17 - - 17 - 17

Balance at 30 September 2008 7 103,178 34,207 (664) 136,721 32 136,753


31 March 2009

- 2,525 - 2,525 (34) 2,491

Currency translation differences - - 1,660 1,660 3 1,663

Cash flow hedges, net of tax - - (343) (343) - (343)

Net Investment hedge - - (2,693) (2,693) - (2,693)


year

- 2,525 (1,376) 1,149 (31) 1,118




Balance at 31 March 2009 7 103,301 36,732 (1,748) 138,285 1 138,286

Net (loss) after tax for the half year ended

30 September 2009

- (6,031) - (6,031) (125) (6,156)

Currency translation differences - - (12,467) (12,467) 4 (12,463)

Cash flow hedges, net of tax - - 2,643 2,643 - 2,643

Net Investment hedge - - 2,355 2,355 - 2,355


year

- (6,031) (7,469) (13,500) (121) (13,621)



Issue of ordinary shares 13 29,426 - - 29,426 - 29,426

Share issuance cost (532) - - (532) - (532)

Balance at 30 September 2009 7 132,195 30,701 (9,102) 153,794 (120) 153,674 The accompanying notes form an integral part of these interim financial statements.

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2

Unaudited Consolidated Interim Statement of Comprehensive Income

Note





Audited Year ended

31 March 2009 ($000s)

Continuing operations

Revenue 3 72,212 79,372 139,472

Cost of sales (49,317) (49,536) (86,292)

Gross profit 22,895 29,836 53,180

Other operating income 536 8 63

Operating expenses (26,256) (28,266) (55,670)

Other gains/(losses) – net 5 (4,763) 4,210 12,140

Operating (loss) profit (7,588) 5,788 9,713

Net finance (costs) 6 (755) (784) (2,140)

Share of profit of associates and joint venture 724 255 250

(Loss)/profit before income tax (7,619) 5,259 7,823

Income tax credit/(expense) 4 1,463 (3,281) (3,354)

Net (loss)/profit after tax (6,156) 1,978 4,469

Other comprehensive income:

Cash flow hedges 3,776 (1,762) (2,251)

Net investment hedge 3,365 - (3,846)

Currency translation differences (12,463) 3,864 5,527

Income tax relating to components of other comprehensive income

(2,143) 529 1,828

Other comprehensive (losses)/income for the period, net of tax

(7,465) 2,631 1,258

Total comprehensive (losses)/income for the period

(13,621) 4,609 5,727

(Losses)/Profit Attributable to:


Minority interests (125) (17) (51)

(6,156) 1,978 4,469

Total comprehensive (loss)/income attributable to:


Minority interest (121) (25) (56)

(13,621) 4,609 5,727

Earnings per share for (loss)/profit attributable to the equity holders of the Company:

Basic earnings per share (from continuing operations) (4.7) 1.6 3.6

Diluted earnings per share (from continuing operations) (4.7) 1.5 3.6 The accompanying notes form an integral part of these interim financial statements.

3

Unaudited Consolidated Interim Statement of Changes in Equity

Note

Share Capital

($000s)

Retained Earnings

($000s)

Other

($000s)

Equity

($000s)

Minority Interests

($000s)

Total Equity

($000s)

Balance at 1 April 2008 7 103,161 32,212 (3,536) 131,837 - 131,837


30 September 2008

- 1,995 - 1,995 (17) 1,978

Currency translation differences - - 3,872 3,872 (8) 3,864

Cash flow hedges, net of tax - - (1,233) (1,233) - (1,233)


year

- 1,995 2,639 4,634 (25) 4,609

Minority interest – newly acquired in

subsidiary

- - - - 57 57




Balance at 30 September 2008 7 103,178 34,207 (664) 136,721 32 136,753


31 March 2009

- 2,525 - 2,525 (34) 2,491

Currency translation differences - - 1,660 1,660 3 1,663

Cash flow hedges, net of tax - - (343) (343) - (343)

Net Investment hedge - - (2,693) (2,693) - (2,693)


year

- 2,525 (1,376) 1,149 (31) 1,118




Balance at 31 March 2009 7 103,301 36,732 (1,748) 138,285 1 138,286

Net (loss) after tax for the half year ended

30 September 2009

- (6,031) - (6,031) (125) (6,156)

Currency translation differences - - (12,467) (12,467) 4 (12,463)

Cash flow hedges, net of tax - - 2,643 2,643 - 2,643

Net Investment hedge - - 2,355 2,355 - 2,355


year

- (6,031) (7,469) (13,500) (121) (13,621)



Issue of ordinary shares 13 29,426 - - 29,426 - 29,426

Share issuance cost (532) - - (532) - (532)

Balance at 30 September 2009 7 132,195 30,701 (9,102) 153,794 (120) 153,674 The accompanying notes form an integral part of these interim financial statements.

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4

Unaudited Consolidated Interim Balance Sheet

Note

Unaudited as at


Unaudited as at


Audited Year as at

31 March 2009 ($000s)

Assets Current assets Cash and cash equivalents 13,781 5,285 8,907 Trade and other receivables 30,580 39,115 30,603 Derivatives – held for trading - 101 - Derivatives – cash flow hedges 2,971 626 959 Inventories 36,438 44,870 41,221 Current income tax asset 1,819 - 1,727 Total current assets 85,589 89,997 83,417 Non-current assets Trade and other receivables 3,202 707 3,306 Investment in shares 743 743 743 Property, plant and equipment 9 43,639 42,807 44,535 Intangible assets 10 34,314 39,859 37,831 Investment in associate 16,679 16,130 19,996 Interest in joint venture 3,959 4,379 4,854 Total non-current assets 102,536 104,625 111,265 Total assets 188,125 194,622 194,682 Liabilities Current liabilities Bank overdraft - 6,177 6,913 Borrowings 189 786 2,171 Trade and other payables 24,287 20,909 19,437

Derivatives – held for trading 151 - - Derivatives – cash flow hedges 78 1,524 1,831 Provisions 152 - 174 Current income tax liabilities - 4,437 - Other liabilities 5,910 - - Total current liabilities 30,767 33,833 30,526 Non-current liabilities Bank borrowings - 8,000 7,864 Other liabilities - 12,855 15,351 Provisions 2,339 2,201 2,256 Deferred tax liabilities 4 1,345 980 399 Total non-current liabilities 3,684 24,036 25,870 Total liabilities 34,451 57,869 56,396 Net assets 153,674 136,753 138,286

Equity Share capital 7 132,195 103,178 103,301 Reserves (9,102) (664) (1,748) Retained earnings 30,701 34,207 36,732 153,794 136,721 138,285 Minority interest (120) 32 1 Total equity 153,674 136,753 138,286

The accompanying notes form an integral part of these interim financial statements.

5

Unaudited Consolidated Interim Statement of Cash Flows

Note


30 September 2009

($000s)


30 September 2008

($000s)

Audited Year ended

31 March 2009

($000s) Operating activities Cash was provided from Receipts from customers 68,250 84,136 146,007 Interest received 93 129 188 Other income received 703 8 310 R&D tax refund 1,728 - - 70,774 84,273 146,505 Cash was applied to Payments to suppliers and others (41,985) (50,942) (80,731) Payments to employees (23,678) (22,269) (40,630) Interest paid (897) (651) (2,123) Income tax paid (544) (1,354) (6,390) (67,104) (75,216) (129,874) Net cash flow from operating activities 3,670 9,057 16,631 Investing activities Cash was provided from Sale of property, plant and equipment 313 665 519 Sale of net assets - 921 921 313 1,586 1,440 Cash was applied to Purchase of property, plant and equipment 9 (4,027) (9,146) (14,126) Purchase of intangibles (467) (658) (1,149) Investment in shares - (743) (743) Investment in associate - (2,672) (2,672) Issuance of loan to joint venture - (2,466) (2,927) (4,494) (15,685) (21,617) Net cash flow from investing activities (4,181) (14,099) (20,177) Financing activities Cash was provided from Issue of ordinary shares 13 23,351 17 140 Proceeds from borrowings 218 - 214 23,569 17 354 Cash was applied to Repayment of principal on borrowings (9,847) (2,477) (1,252) Share issuance costs (532) - - (10,379) (2,477) (1,252) Net cash flow from financing activities 13,190 (2,460) (898) Net increase (decrease) in cash and cash equivalents

12,679 (7,502) (4,444)

Foreign currency translation adjustment (892) 115 (57) Cash and cash equivalents at the beginning of the period

1,994 6,495 6,495

Cash and cash equivalents at the end of the period

13,781 (892) (1,994)

Composition of cash and cash equivalents Cash and cash equivalents 13,781 5,285 8,907 Bank overdraft - (6,177) (6,913) 13,781 (892) (1,994)


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4

Unaudited Consolidated Interim Balance Sheet

Note

Unaudited as at


Unaudited as at


Audited Year as at

31 March 2009 ($000s)

Assets Current assets Cash and cash equivalents 13,781 5,285 8,907 Trade and other receivables 30,580 39,115 30,603 Derivatives – held for trading - 101 - Derivatives – cash flow hedges 2,971 626 959 Inventories 36,438 44,870 41,221 Current income tax asset 1,819 - 1,727 Total current assets 85,589 89,997 83,417 Non-current assets Trade and other receivables 3,202 707 3,306 Investment in shares 743 743 743 Property, plant and equipment 9 43,639 42,807 44,535 Intangible assets 10 34,314 39,859 37,831 Investment in associate 16,679 16,130 19,996 Interest in joint venture 3,959 4,379 4,854 Total non-current assets 102,536 104,625 111,265 Total assets 188,125 194,622 194,682 Liabilities Current liabilities Bank overdraft - 6,177 6,913 Borrowings 189 786 2,171 Trade and other payables 24,287 20,909 19,437

Derivatives – held for trading 151 - - Derivatives – cash flow hedges 78 1,524 1,831 Provisions 152 - 174 Current income tax liabilities - 4,437 - Other liabilities 5,910 - - Total current liabilities 30,767 33,833 30,526 Non-current liabilities Bank borrowings - 8,000 7,864 Other liabilities - 12,855 15,351 Provisions 2,339 2,201 2,256 Deferred tax liabilities 4 1,345 980 399 Total non-current liabilities 3,684 24,036 25,870 Total liabilities 34,451 57,869 56,396 Net assets 153,674 136,753 138,286

Equity Share capital 7 132,195 103,178 103,301 Reserves (9,102) (664) (1,748) Retained earnings 30,701 34,207 36,732 153,794 136,721 138,285 Minority interest (120) 32 1 Total equity 153,674 136,753 138,286


5


Note


30 September 2009

($000s)


30 September 2008

($000s)

Audited Year ended

31 March 2009

($000s) Operating activities Cash was provided from Receipts from customers 68,250 84,136 146,007 Interest received 93 129 188 Other income received 703 8 310 R&D tax refund 1,728 - - 70,774 84,273 146,505 Cash was applied to Payments to suppliers and others (41,985) (50,942) (80,731) Payments to employees (23,678) (22,269) (40,630) Interest paid (897) (651) (2,123) Income tax paid (544) (1,354) (6,390) (67,104) (75,216) (129,874) Net cash flow from operating activities 3,670 9,057 16,631 Investing activities Cash was provided from Sale of property, plant and equipment 313 665 519 Sale of net assets - 921 921 313 1,586 1,440 Cash was applied to Purchase of property, plant and equipment 9 (4,027) (9,146) (14,126) Purchase of intangibles (467) (658) (1,149) Investment in shares - (743) (743) Investment in associate - (2,672) (2,672) Issuance of loan to joint venture - (2,466) (2,927) (4,494) (15,685) (21,617) Net cash flow from investing activities (4,181) (14,099) (20,177) Financing activities Cash was provided from Issue of ordinary shares 13 23,351 17 140 Proceeds from borrowings 218 - 214 23,569 17 354 Cash was applied to Repayment of principal on borrowings (9,847) (2,477) (1,252) Share issuance costs (532) - - (10,379) (2,477) (1,252) Net cash flow from financing activities 13,190 (2,460) (898) Net increase (decrease) in cash and cash equivalents

12,679 (7,502) (4,444)

Foreign currency translation adjustment (892) 115 (57) Cash and cash equivalents at the beginning of the period

1,994 6,495 6,495

Cash and cash equivalents at the end of the period

13,781 (892) (1,994)

Composition of cash and cash equivalents Cash and cash equivalents 13,781 5,285 8,907 Bank overdraft - (6,177) (6,913) 13,781 (892) (1,994)


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30 September 2009

($000s)

Unaudited Six Months ended 30 September

2008 ($000s)

Audited Year ended

31 March 2009

($000s)

Reconciliation of net (loss)/profit to net cash flows from operating activities

Reported net (loss)/profit after tax (6,156) 1,978 4,469

Items not involving cash flow

Depreciation expense 3,295 3,012 6,350

Amortisation expense 516 1,098 1,691

(Decrease)/increase in estimated doubtful debts (108) (130) 131

Employee share based payments 115 250 525

Movement in foreign currency 75 (1,915) (74)

Deferred tax - - (70)

(Gain)/loss on disposal of property, plant and equipment

- 48 26

Goodwill impairment - 292 292

Share of profit of associate and joint venture (724) (255) (250)

3,169 2,400 8,621

Impact of changes in working capital items

Trade and other receivables (2,320) 3,332 5,601

Inventories 2,349 (1,690) 2,203

Trade and other payables 6,907 1,110 (820)

Tax provisions (279) 1,927 (3,443)

6,657 4,679 3,541

Net cash flow from operating activities 3,670 9,057 16,631

7

Notes to the Unaudited Consolidated Interim Financial Statements

1. General information

Rakon Limited (“the Company”) and its subsidiaries (together “the Group”) is a world leader in the development of frequency control solutions for a wide range of applications. Rakon has leading market positions in the supply of crystal oscillators to the GPS, telecommunications network timing/synchronisation, and aerospace markets.

The Company is a limited liability company incorporated and domiciled in New Zealand. It is registered under the Companies Act 1993 and is an issuer in terms of the Securities Act 1978. The Company is listed on the New Zealand Stock Exchange.

These consolidated interim financial statements have been approved for issue by the Board of Directors on 12 November 2009.

2. Summary of significant accounting policies

2.1. Basis of preparation

This condensed consolidated interim financial information for the six months ended 30 September 2009 has been prepared in accordance with NZ IAS 34, Interim Financial Statements (“NZ IAS 34”). The condensed consolidated interim financial information should be read in conjunction with the annual financial statements for the year ended 31 March 2009, which have been prepared in accordance with NZ IFRS.

2.2. Accounting policies

The accounting policies applied are consistent with those of the annual financial statements for the year ended 31 March 2009, as described in those annual financial statements with the addition of the following:

Segment Reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Managing Director, Marketing Director and the Chief Operating Officer.

The Group has adopted the following new and amended IFRSs as of 1 April 2009:

NZ IFRS 8 ‘Operating Segments’ (effective from 1 January 2009)

The Group has applied NZ IFRS 8 Operating Segments from 1 April 2009. NZ IFRS 8 replaces NZ IAS 14 Segment Reporting. NZ IFRS 8 requires ‘a management approach’ under which segment information is presented on the same basis as that used for internal reporting purposes. Operating segments are now reported in a manner that is consistent with the internal reporting provided to the chief operating decision maker. Comparatives have been restated.

IAS 1 (Revised) ‘Presentation of Financial Statements’ (effective from 1 January 2009)

The revised standard requires some changes to the disclosure of income statement and movements in equity as income and expense items currently shown in equity will need to be disclosed separately. The Group has elected to present this information in the statement on comprehensive income.

3. Segment Information

The chief operating decision maker assesses the performance of the operating segments based on a measure of adjusted earnings before interest, tax, depreciation and amortisation (EBITDA). Interest income and expenditure are not included in the result for each operating segment that is reviewed by the chief operating decision maker. Except as noted below, other information provided to the chief operating decision maker is measured in a manner consistent with that in the financial statements.

The segment information provided to the chief operating decision maker for the reportable segments for the half year ended 30 September 2009 is as follows:

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6



30 September 2009

($000s)


2008 ($000s)

Audited Year ended

31 March 2009

($000s)

Reconciliation of net (loss)/profit to net cash flows from operating activities

Reported net (loss)/profit after tax (6,156) 1,978 4,469

Items not involving cash flow

Depreciation expense 3,295 3,012 6,350

Amortisation expense 516 1,098 1,691

(Decrease)/increase in estimated doubtful debts (108) (130) 131

Employee share based payments 115 250 525

Movement in foreign currency 75 (1,915) (74)

Deferred tax - - (70)

(Gain)/loss on disposal of property, plant and equipment

- 48 26

Goodwill impairment - 292 292

Share of profit of associate and joint venture (724) (255) (250)

3,169 2,400 8,621

Impact of changes in working capital items

Trade and other receivables (2,320) 3,332 5,601

Inventories 2,349 (1,690) 2,203

Trade and other payables 6,907 1,110 (820)

Tax provisions (279) 1,927 (3,443)

6,657 4,679 3,541

Net cash flow from operating activities 3,670 9,057 16,631

7

Notes to the Unaudited Consolidated Interim Financial Statements

1. General information

Rakon Limited (“the Company”) and its subsidiaries (together “the Group”) is a world leader in the development of frequency control solutions for a wide range of applications. Rakon has leading market positions in the supply of crystal oscillators to the GPS, telecommunications network timing/synchronisation, and aerospace markets.

The Company is a limited liability company incorporated and domiciled in New Zealand. It is registered under the Companies Act 1993 and is an issuer in terms of the Securities Act 1978. The Company is listed on the New Zealand Stock Exchange.

These consolidated interim financial statements have been approved for issue by the Board of Directors on 12 November 2009.

2. Summary of significant accounting policies

2.1. Basis of preparation

This condensed consolidated interim financial information for the six months ended 30 September 2009 has been prepared in accordance with NZ IAS 34, Interim Financial Statements (“NZ IAS 34”). The condensed consolidated interim financial information should be read in conjunction with the annual financial statements for the year ended 31 March 2009, which have been prepared in accordance with NZ IFRS.

2.2. Accounting policies

The accounting policies applied are consistent with those of the annual financial statements for the year ended 31 March 2009, as described in those annual financial statements with the addition of the following:

Segment Reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Managing Director, Marketing Director and the Chief Operating Officer.

The Group has adopted the following new and amended IFRSs as of 1 April 2009:

NZ IFRS 8 ‘Operating Segments’ (effective from 1 January 2009)

The Group has applied NZ IFRS 8 Operating Segments from 1 April 2009. NZ IFRS 8 replaces NZ IAS 14 Segment Reporting. NZ IFRS 8 requires ‘a management approach’ under which segment information is presented on the same basis as that used for internal reporting purposes. Operating segments are now reported in a manner that is consistent with the internal reporting provided to the chief operating decision maker. Comparatives have been restated.

IAS 1 (Revised) ‘Presentation of Financial Statements’ (effective from 1 January 2009)

The revised standard requires some changes to the disclosure of income statement and movements in equity as income and expense items currently shown in equity will need to be disclosed separately. The Group has elected to present this information in the statement on comprehensive income.

3. Segment Information

The chief operating decision maker assesses the performance of the operating segments based on a measure of adjusted earnings before interest, tax, depreciation and amortisation (EBITDA). Interest income and expenditure are not included in the result for each operating segment that is reviewed by the chief operating decision maker. Except as noted below, other information provided to the chief operating decision maker is measured in a manner consistent with that in the financial statements.

The segment information provided to the chief operating decision maker for the reportable segments for the half year ended 30 September 2009 is as follows:

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8

Unaudited Six Months ended 30 September 2009 NZ UK France China Other1 Total

(000’s) (000’s) (000’s) (000’s) (000’s) (000’s)

Segment revenue 40,149 18,643 12,323 - 1,097 72,212 EBITDA excluding FX & associates & joint venture

(558) 4,846 (2,893) - (333) 1,062

Foreign exchange gains/(losses) 2

(3,032) (1,495) (413) - 216 (4,724)

Share of profit/ (loss) from associates & joint venture

- - - 994 (270) 724

EBITDA (3,590) 3,351 (3,306) 994 (387) (2,938) Depreciation and amortisation

(3,060) (217) (292) - (242) (3,811)

Income tax credit/(expense) 1,371 (745) (18) - 855 1,463 Total assets3 96,364 36,229 22,770 16,679 16,083 188,125 Total liabilities4 15,283 4,752 7,572 5,910 934 34,451

Audited year ended 31 March 2009 NZ UK France China Other1 Total

(000’s) (000’s) (000’s) (000’s) (000’s) (000’s)


127 8,399 (4,177)5 - 1,420 5,769


6,578 4,173 1,195 - 564 12,510


- - - 678 (428) 250

EBITDA 6,705 12,572 (2,982)5 678 1,556 18,529 Depreciation and amortisation

(5,584) (710) (709) - (1,038) (8,041)

Income tax credit/(expense) (424) (1,221) (61) - (1,648) (3,354) Total assets3 88,255 40,381 29,208 19,996 16,842 194,682 Total liabilities4 23,291 9,022 7,234 15,351 1,498 56,396


(000’s) (000’s) (000’s) (000’s) (000’s) (000’s)


5,179 4,650 (2,337)5 - (1,599) 5,893


2,755 678 412 - 410 4,255


- - - 372 (117) 255

EBITDA 7,934 5,328 (1,925)5 372 (1,306) 10,403 Depreciation and amortisation

(2,652) (335) (401) - (722) (4,110)

Income tax credit/(expense) (1,800) (1,377) (16) - (88) (3,281) Total assets3 97,649 36,996 25,037 16,130 18,810 194,622 Total liabilities4 29,976 8,610 3,700 12,855 2,728 57,869

1 Includes Investments in subsidiaries, Rakon Financial Services Ltd, Rakon UK Holdings Ltd, Rakon Europe Limited, Rakon Mauritius Ltd (including investment in Centum Rakon India Private Ltd) and Rakon HK Ltd. 2 Does not include foreign exchange gains or losses recognised directly in sales and costs of sales. 3 Excludes intercompany receivable balances eliminated on consolidation. 4 The measure of liabilities has been disclosed for each reportable segment as it is regularly provided to the chief operating decision-maker and excludes intercompany payable balances eliminated on consolidation. 5 Includes non-recurring gain on sale of equipment and intellectual property to Centum Rakon India Private Limited.

9

A reconciliation of adjusted EBITDA to (loss)/profit before tax is provided as follows:

Unaudited Six Months

ended 30 September

2009


2008

Audited Year ended

31 March 2009

($000s) ($000s) ($000s)

EBITDA for reportable segments (2,551) 11,709 16,973

Other segments EBITDA (387) (1,306) 1,556

Depreciation and amortisation (3,811) (4,110) (8,041)

Employee share schemes (115) (250) (525)

Finance costs – net (755) (784) (2,140)

Income tax (credit)/expenses 1,463 (3,281) (3,354)

(Loss)/Profit before tax (6,156) 1,978 4,469

Breakdown of the revenue from all sources is as follows:


ended 30 September

2009


2008

Audited Year ended

31 March 2009

($000s) ($000s) ($000s)

Sales of goods 71,708 79,372 133,604

Revenue from services 504 - 5,868

72,212 79,372 139,472

The Group’s trading revenue is derived in the following regions.

Total Revenues by destination


30 September 2009

($000s)


2008 ($000s)

Audited Year ended

31 March 2009

($000s)

Region

Asia 41,388 42,846 73,347

North America 14,448 16,266 31,449

Europe 13,943 18,564 31,769

Others 2,433 1,696 2,907

72,212 79,372 139,472

Revenue is allocated above based on the country in which the customer is located.

4. Income Taxes

Current tax

Current tax expense for the interim periods presented is the expected tax payable on the taxable income for the period, calculated as the estimated average annual effective income tax rate applied to the pre-tax income of the interim period.

Deferred tax

The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amounts of the assets and liabilities, using the estimated average annual effective income tax rate for the interim periods presented.

�

8


(000’s) (000’s) (000’s) (000’s) (000’s) (000’s)


(558) 4,846 (2,893) - (333) 1,062


(3,032) (1,495) (413) - 216 (4,724)


- - - 994 (270) 724

EBITDA (3,590) 3,351 (3,306) 994 (387) (2,938) Depreciation and amortisation

(3,060) (217) (292) - (242) (3,811)

Income tax credit/(expense) 1,371 (745) (18) - 855 1,463 Total assets3 96,364 36,229 22,770 16,679 16,083 188,125 Total liabilities4 15,283 4,752 7,572 5,910 934 34,451

Audited year ended 31 March 2009 NZ UK France China Other1 Total

(000’s) (000’s) (000’s) (000’s) (000’s) (000’s)


127 8,399 (4,177)5 - 1,420 5,769


6,578 4,173 1,195 - 564 12,510


- - - 678 (428) 250

EBITDA 6,705 12,572 (2,982)5 678 1,556 18,529 Depreciation and amortisation

(5,584) (710) (709) - (1,038) (8,041)

Income tax credit/(expense) (424) (1,221) (61) - (1,648) (3,354) Total assets3 88,255 40,381 29,208 19,996 16,842 194,682 Total liabilities4 23,291 9,022 7,234 15,351 1,498 56,396


(000’s) (000’s) (000’s) (000’s) (000’s) (000’s)


5,179 4,650 (2,337)5 - (1,599) 5,893


2,755 678 412 - 410 4,255


- - - 372 (117) 255

EBITDA 7,934 5,328 (1,925)5 372 (1,306) 10,403 Depreciation and amortisation

(2,652) (335) (401) - (722) (4,110)

Income tax credit/(expense) (1,800) (1,377) (16) - (88) (3,281) Total assets3 97,649 36,996 25,037 16,130 18,810 194,622 Total liabilities4 29,976 8,610 3,700 12,855 2,728 57,869

1 Includes Investments in subsidiaries, Rakon Financial Services Ltd, Rakon UK Holdings Ltd, Rakon Europe Limited, Rakon Mauritius Ltd (including investment in Centum Rakon India Private Ltd) and Rakon HK Ltd. 2 Does not include foreign exchange gains or losses recognised directly in sales and costs of sales. 3 Excludes intercompany receivable balances eliminated on consolidation. 4 The measure of liabilities has been disclosed for each reportable segment as it is regularly provided to the chief operating decision-maker and excludes intercompany payable balances eliminated on consolidation. 5 Includes non-recurring gain on sale of equipment and intellectual property to Centum Rakon India Private Limited.

9

A reconciliation of adjusted EBITDA to (loss)/profit before tax is provided as follows:


ended 30 September

2009


2008

Audited Year ended

31 March 2009

($000s) ($000s) ($000s)

EBITDA for reportable segments (2,551) 11,709 16,973

Other segments EBITDA (387) (1,306) 1,556

Depreciation and amortisation (3,811) (4,110) (8,041)

Employee share schemes (115) (250) (525)

Finance costs – net (755) (784) (2,140)

Income tax (credit)/expenses 1,463 (3,281) (3,354)

(Loss)/Profit before tax (6,156) 1,978 4,469

Breakdown of the revenue from all sources is as follows:


ended 30 September

2009


2008

Audited Year ended

31 March 2009

($000s) ($000s) ($000s)

Sales of goods 71,708 79,372 133,604

Revenue from services 504 - 5,868

72,212 79,372 139,472

The Group’s trading revenue is derived in the following regions.

Total Revenues by destination


30 September 2009

($000s)


2008 ($000s)

Audited Year ended

31 March 2009

($000s)

Region

Asia 41,388 42,846 73,347

North America 14,448 16,266 31,449

Europe 13,943 18,564 31,769

Others 2,433 1,696 2,907

72,212 79,372 139,472

Revenue is allocated above based on the country in which the customer is located.

4. Income Taxes

Current tax

Current tax expense for the interim periods presented is the expected tax payable on the taxable income for the period, calculated as the estimated average annual effective income tax rate applied to the pre-tax income of the interim period.

Deferred tax

The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amounts of the assets and liabilities, using the estimated average annual effective income tax rate for the interim periods presented.

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10

5. Other gains/(losses) – net


30 September 2009

($000s)


ended 30 September

2008 ($000s)

Audited Year ended

31 March 2009 ($000s)

Gain on disposal of intangibles, plant and equipment 47 1,662 3,118

Cost attributable to investment in joint venture and sale of intangibles, plant and equipment

(83) (999) (2,575)

Cost attributable to investments in associates and subsidiaries

(3) (416) (621)

Goodwill impairment loss - (292) (292)

(39) (45) (370)

Foreign exchange gains/(losses) - net

Forward foreign exchange contracts

- held for trading (151) 101 146

- net foreign exchange gains (391) - 389

(Losses)/gains on revaluation of foreign denominated monetary assets and liabilities1

(4,182) 4,154 10,684

Ineffectiveness on cash flow hedges - - 1,291

(4,724) 4,255 12,510

(4,763) 4,210 12,140 1 Includes realised and unrealised gains/(losses) arising from accounts receivable and accounts payable. Hedge accounting is sought on the initial sale of goods and purchase of inventory, subsequent movements are recognised in trading foreign exchange.

6. Net Finance (costs)/income


30 September 2009

($000s)


ended 30 September

2008 ($000s)

Audited Year ended

31 March 2009 ($000s)

Financial income

Interest income on current and short-term bank accounts 142 126 175

Financial expenses

Interest expense on bank borrowings (371) (651) (1,383)

Interest expense on other borrowings (526) (259) (932)

(755) (784) (2,140)

11

7. Share Capital

Number of shares Ordinary Shares

($000s)

At 1 April 2008 126,791,417 103,161

Shares issued -

- employee share option scheme 52,493 17

At 30 September 2008 126,843,910 103,178

Shares issued -

- redemption of redeemable ordinary shares to ordinary shares 58,944 94


At 31 March 2009 126,920,790 103,301

Shares issued -

- ordinary shares (note 13) 25,587,862 28,894

At 30 September 2009 152,508,652 132,195

At 30 September 2009, 1,018,519 redeemable ordinary shares were on issue and held in trust on behalf of participants in the Rakon Share Growth Plan: (31 March 2009: 1,018,519, 30 September 2008: 1,077,463).

Partial payments received from Rakon Share Growth Plan participants of $153,000 at 30 September 2009 are recorded within trade and other payables (31 March 2009: $153,000 and 30 September 2008: $162,000).

Subsequent to 30 September 2009 a further 37,179,939 shares were issued; refer to note 13 for further details.

8. Dividends

The Group’s current dividend policy is that no dividend will be paid as all profits are to be reinvested into the business.

9. Capital expenditure

Unaudited Six Months Ended 30 September

2009 ($000s)


Ended 30 September

2008 ($000s)

Audited Year Ended

31 March 2009 ($000s)

Opening net book value 44,535 36,675 36,675

Additions 4,027 9,146 14,126

Disposals (313) (665) (3,389)

Depreciation (3,295) (3,012) (6,350)

Other movements (1,315) 663 3,473

Closing net book value 43,639 42,807 44,535

Amounts committed to capital expenditure subsequent to the end of the interim period total $802,000.

�0

10

5. Other gains/(losses) – net


30 September 2009

($000s)


ended 30 September

2008 ($000s)

Audited Year ended

31 March 2009 ($000s)

Gain on disposal of intangibles, plant and equipment 47 1,662 3,118

Cost attributable to investment in joint venture and sale of intangibles, plant and equipment

(83) (999) (2,575)

Cost attributable to investments in associates and subsidiaries

(3) (416) (621)

Goodwill impairment loss - (292) (292)

(39) (45) (370)

Foreign exchange gains/(losses) - net

Forward foreign exchange contracts

- held for trading (151) 101 146

- net foreign exchange gains (391) - 389

(Losses)/gains on revaluation of foreign denominated monetary assets and liabilities1

(4,182) 4,154 10,684

Ineffectiveness on cash flow hedges - - 1,291

(4,724) 4,255 12,510

(4,763) 4,210 12,140 1 Includes realised and unrealised gains/(losses) arising from accounts receivable and accounts payable. Hedge accounting is sought on the initial sale of goods and purchase of inventory, subsequent movements are recognised in trading foreign exchange.

6. Net Finance (costs)/income


30 September 2009

($000s)


ended 30 September

2008 ($000s)

Audited Year ended

31 March 2009 ($000s)

Financial income

Interest income on current and short-term bank accounts 142 126 175

Financial expenses

Interest expense on bank borrowings (371) (651) (1,383)

Interest expense on other borrowings (526) (259) (932)

(755) (784) (2,140)

11

7. Share Capital

Number of shares Ordinary Shares

($000s)

At 1 April 2008 126,791,417 103,161

Shares issued -


At 30 September 2008 126,843,910 103,178

Shares issued -

- redemption of redeemable ordinary shares to ordinary shares 58,944 94


At 31 March 2009 126,920,790 103,301

Shares issued -

- ordinary shares (note 13) 25,587,862 28,894

At 30 September 2009 152,508,652 132,195

At 30 September 2009, 1,018,519 redeemable ordinary shares were on issue and held in trust on behalf of participants in the Rakon Share Growth Plan: (31 March 2009: 1,018,519, 30 September 2008: 1,077,463).

Partial payments received from Rakon Share Growth Plan participants of $153,000 at 30 September 2009 are recorded within trade and other payables (31 March 2009: $153,000 and 30 September 2008: $162,000).

Subsequent to 30 September 2009 a further 37,179,939 shares were issued; refer to note 13 for further details.

8. Dividends

The Group’s current dividend policy is that no dividend will be paid as all profits are to be reinvested into the business.

9. Capital expenditure

Unaudited Six Months Ended 30 September

2009 ($000s)


Ended 30 September

2008 ($000s)

Audited Year Ended

31 March 2009 ($000s)

Opening net book value 44,535 36,675 36,675

Additions 4,027 9,146 14,126

Disposals (313) (665) (3,389)

Depreciation (3,295) (3,012) (6,350)

Other movements (1,315) 663 3,473

Closing net book value 43,639 42,807 44,535

Amounts committed to capital expenditure subsequent to the end of the interim period total $802,000.

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12

10. Intangible assets

Goodwill

($000s) Trademarks

($000s) Patents ($000s)

Order backlogs

($000s) Software

($000s)

Product development

($000)

Assets under construction

($000) Total

($000s) At 1 April 2008 Cost 31,734 653 4,152 1,186 3,865 1,587 565 43,742 Accumulated amortisation - (464) (470) (915) (2,667) - - (4,516) Net book value 31,734 189 3,682 271 1,198 1,587 565 39,226 Half year ended 30 September 2008 Opening net book value 31,734 189 3,682 271 1,198 1,587 565 39,226 Foreign exchange differences 1,786 5 238 7 7 71 - 2,114 Additions - - - - 199 274 185 658 Disposals (679) - - - (74) - (753) Impairment charge (292) - - - - - - (292) Amortisation charge - (194) (213) (278) (413) - - (1,098) Amortisation reversal on disposals - - - - 4 - - 4 Closing net book amounts 32,549 - 3,707 - 921 1,932 750 39,859 At 30 September 2008 Cost 32,549 658 4,390 1,193 3,997 1,932 750 45,469 Accumulated amortisation - (658) (683) (1,193) (3,076) - - (5,610) Net book value 32,549 - 3,707 - 921 1,932 750 39,859 Half year ended 31 March 2009 Opening net book value 32,549 - 3,707 - 921 1,932 750 39,859 Foreign exchange differences (1,677) (2) (245) (2) (3) (67) - (1,996) Additions - - - - 558 7 - 565 Disposals - - - - - - - - Impairment charge - - - - - - - - Amortisation charge - 2 (230) 2 (315) (56) - (597) Amortisation reversal on disposals - - - - - - - - Transfer of finished goods - - - - 193 180 (373) - Closing net book amounts 30,872 - 3,232 - 1,354 1,996 377 37,831 At 31 March 2009 Cost 30,872 656 4,145 1,191 4,745 2,052 377 44,038 Accumulated amortisation - (656) (913) (1,191) (3,391) (56) - (6,207) Net book value 30,872 - 3,232 - 1,354 1,996 377 37,831 Half year ended 30 September 2009 Opening net book value 30,872 - 3,232 - 1,354 1,996 377 37,831 Foreign exchange differences (3,152) - (172) - (4) (140) - (3,468) Additions - - - - - 282 185 467 Amortisation charge - - (167) - (304) (45) - (516) Closing net book amounts 27,720 - 2,893 - 1,046 2,093 562 34,314 At 30 September 2009 Cost 27,720 656 3,973 1,191 4,741 2,194 562 41,037 Accumulated amortisation - (656) (1,080) (1,191) (3,695) (101) - (6,723) Net book value 27,720 - 2,893 - 1,046 2,093 562 34,314

13

11. Impairment tests for goodwill

Goodwill is allocated to the Group's cash generating units (CGUs) identified according to country of operation.

A geographical-level summary of the goodwill allocation is presented below:

Unaudited as at

30 September 2009

($000s)

Unaudited as at

30 September 2008

($000s)

Audited as at

31 March 2009 ($000s)

New Zealand 8,573 10,067 9,548 United Kingdom 16,891 19,798 18,778 France 564 671 636 India – OCXO products transferred from France 1,692 2,013 1,910 Goodwill recognised in Intangible assets 27,720 32,549 30,872 Goodwill recognised in Investment in associates – China 10,860 11,133 13,833 Goodwill recognised in Investment in joint venture – India 3,860 3,785 4,430

The recoverable amount of a CGU is determined based on value-in-use calculations.

At 30 September 2009 goodwill was reviewed for indicators of impairment; the results for the period for New Zealand have been worse than predicted, due to the global recession and aggressive pricing by competitors. The New Zealand results are predicted to improve with significant recovery occurring during the remainder of the current financial year and the subsequent year returning to the basis which was previously used to test for goodwill impairment. The results of the business in France and India for the period have also been marginally worse than predicted due to slower than anticipated growth due to the global recession; however revenue growth is forecast to improve in line with prior expectations in the remainder of the current year and ensuing years. The Directors do not consider that these events indicate an impairment in the carrying value of goodwill at 30 September 2009. A full impairment test will be performed at the year end.

During the year the Group adopted NZ IFRS 8 and changed its operating segments. As a result France is considered to be a separate cash generating unit. Goodwill has been reallocated based on a relative value approach.

On 2 June 2008 the majority of Rakon Europe’s net assets were sold for $1.8 million including goodwill of $679,000 and deferred settlement of $888,000. The remaining goodwill of $292,000 was written off from the United Kingdom CGU.

12. Contingent liabilities

The Group has contingent liabilities in respect of legal claims arising in the ordinary course of business.

It is not anticipated that any material liabilities will arise from the contingent liabilities.

13. Share issues and subsequent events

On 22 September 2009 Rakon announced an equity raising to fund business expansion in particular the planned construction of a manufacturing facility in China. The equity raising comprised five elements:

A placement of 869,565 ordinary shares to Warren Robinson & Trusts Limited (trustees for Ahuareka Trust) for $1.15 per share which was completed and for which proceeds totalling $1,000,000 were received on 29 September 2009.

A placement of 5,282,452 ordinary shares for $1.15 per share in partial settlement of the deferred consideration payable by Rakon in respect of its acquisition of Etimes Holdings Limited (since renamed Rakon Investment HK Limited) in July 2008.

An unconditional placement of 19,435,844 ordinary shares to institutions for $1.15 per share which was completed and for which proceeds totalling $22,351,221 were received on 29 September 2009.

A conditional placement of 18,825,025 ordinary shares to institutions for $1.15 per share which was approved by shareholders in a special meeting on 12 October 2009. The shares were issued to shareholders and proceeds totalling $21,648,779 were received by Rakon on 16 October 2009.

��

12

10. Intangible assets

Goodwill

($000s) Trademarks

($000s) Patents ($000s)

Order backlogs

($000s) Software

($000s)

Product development

($000)

Assets under construction

($000) Total

($000s) At 1 April 2008 Cost 31,734 653 4,152 1,186 3,865 1,587 565 43,742 Accumulated amortisation - (464) (470) (915) (2,667) - - (4,516) Net book value 31,734 189 3,682 271 1,198 1,587 565 39,226 Half year ended 30 September 2008 Opening net book value 31,734 189 3,682 271 1,198 1,587 565 39,226 Foreign exchange differences 1,786 5 238 7 7 71 - 2,114 Additions - - - - 199 274 185 658 Disposals (679) - - - (74) - (753) Impairment charge (292) - - - - - - (292) Amortisation charge - (194) (213) (278) (413) - - (1,098) Amortisation reversal on disposals - - - - 4 - - 4 Closing net book amounts 32,549 - 3,707 - 921 1,932 750 39,859 At 30 September 2008 Cost 32,549 658 4,390 1,193 3,997 1,932 750 45,469 Accumulated amortisation - (658) (683) (1,193) (3,076) - - (5,610) Net book value 32,549 - 3,707 - 921 1,932 750 39,859 Half year ended 31 March 2009 Opening net book value 32,549 - 3,707 - 921 1,932 750 39,859 Foreign exchange differences (1,677) (2) (245) (2) (3) (67) - (1,996) Additions - - - - 558 7 - 565 Disposals - - - - - - - - Impairment charge - - - - - - - - Amortisation charge - 2 (230) 2 (315) (56) - (597) Amortisation reversal on disposals - - - - - - - - Transfer of finished goods - - - - 193 180 (373) - Closing net book amounts 30,872 - 3,232 - 1,354 1,996 377 37,831 At 31 March 2009 Cost 30,872 656 4,145 1,191 4,745 2,052 377 44,038 Accumulated amortisation - (656) (913) (1,191) (3,391) (56) - (6,207) Net book value 30,872 - 3,232 - 1,354 1,996 377 37,831 Half year ended 30 September 2009 Opening net book value 30,872 - 3,232 - 1,354 1,996 377 37,831 Foreign exchange differences (3,152) - (172) - (4) (140) - (3,468) Additions - - - - - 282 185 467 Amortisation charge - - (167) - (304) (45) - (516) Closing net book amounts 27,720 - 2,893 - 1,046 2,093 562 34,314 At 30 September 2009 Cost 27,720 656 3,973 1,191 4,741 2,194 562 41,037 Accumulated amortisation - (656) (1,080) (1,191) (3,695) (101) - (6,723) Net book value 27,720 - 2,893 - 1,046 2,093 562 34,314

13

11. Impairment tests for goodwill

Goodwill is allocated to the Group's cash generating units (CGUs) identified according to country of operation.

A geographical-level summary of the goodwill allocation is presented below:

Unaudited as at

30 September 2009

($000s)

Unaudited as at

30 September 2008

($000s)

Audited as at

31 March 2009 ($000s)

New Zealand 8,573 10,067 9,548 United Kingdom 16,891 19,798 18,778 France 564 671 636 India – OCXO products transferred from France 1,692 2,013 1,910 Goodwill recognised in Intangible assets 27,720 32,549 30,872 Goodwill recognised in Investment in associates – China 10,860 11,133 13,833 Goodwill recognised in Investment in joint venture – India 3,860 3,785 4,430

The recoverable amount of a CGU is determined based on value-in-use calculations.

At 30 September 2009 goodwill was reviewed for indicators of impairment; the results for the period for New Zealand have been worse than predicted, due to the global recession and aggressive pricing by competitors. The New Zealand results are predicted to improve with significant recovery occurring during the remainder of the current financial year and the subsequent year returning to the basis which was previously used to test for goodwill impairment. The results of the business in France and India for the period have also been marginally worse than predicted due to slower than anticipated growth due to the global recession; however revenue growth is forecast to improve in line with prior expectations in the remainder of the current year and ensuing years. The Directors do not consider that these events indicate an impairment in the carrying value of goodwill at 30 September 2009. A full impairment test will be performed at the year end.

During the year the Group adopted NZ IFRS 8 and changed its operating segments. As a result France is considered to be a separate cash generating unit. Goodwill has been reallocated based on a relative value approach.

On 2 June 2008 the majority of Rakon Europe’s net assets were sold for $1.8 million including goodwill of $679,000 and deferred settlement of $888,000. The remaining goodwill of $292,000 was written off from the United Kingdom CGU.

12. Contingent liabilities

The Group has contingent liabilities in respect of legal claims arising in the ordinary course of business.

It is not anticipated that any material liabilities will arise from the contingent liabilities.

13. Share issues and subsequent events

On 22 September 2009 Rakon announced an equity raising to fund business expansion in particular the planned construction of a manufacturing facility in China. The equity raising comprised five elements:

A placement of 869,565 ordinary shares to Warren Robinson & Trusts Limited (trustees for Ahuareka Trust) for $1.15 per share which was completed and for which proceeds totalling $1,000,000 were received on 29 September 2009.

A placement of 5,282,452 ordinary shares for $1.15 per share in partial settlement of the deferred consideration payable by Rakon in respect of its acquisition of Etimes Holdings Limited (since renamed Rakon Investment HK Limited) in July 2008.

An unconditional placement of 19,435,844 ordinary shares to institutions for $1.15 per share which was completed and for which proceeds totalling $22,351,221 were received on 29 September 2009.

A conditional placement of 18,825,025 ordinary shares to institutions for $1.15 per share which was approved by shareholders in a special meeting on 12 October 2009. The shares were issued to shareholders and proceeds totalling $21,648,779 were received by Rakon on 16 October 2009.

��

14

A Share Purchase Plan (SPP) under which eligible shareholders were entitled to apply for up to $15,000 worth of shares. The SPP opened on 1 October 2009 and closed on 19 October 2009. 18,354,914 ordinary shares at a price of $1.15 were issued to applicants and proceeds totalling $21,107,000 were received on 23 October 2009.

On 1 October 2009 Rakon requested the ASB Bank Limited to reduce facility arrangements agreed between Rakon and ASB. The equity raising summarised above enabled Rakon to settle the outstanding term loan of $7,864,418 on 28 September 2009 and reduced the overall facility limited by a further $24,950,000 with a consequent reduction in financing costs. No penalties were incurred in relation to the early settlement of the loan and the ASB agreed to the amended arrangement. As a consequence Rakon now has a combined facility included overdraft, committed cash advance, foreign exchange and trade lines totalling $24,725,000. The lines are substantially undrawn as at 12 November 2009.

14. Seasonality of business

The development, manufacture and sale of electronic components for timing reference and frequency control products are subject to seasonal fluctuation pre-empting end use purchase demand. The peak period is generally in the September to November period.

��

14

A Share Purchase Plan (SPP) under which eligible shareholders were entitled to apply for up to $15,000 worth of shares. The SPP opened on 1 October 2009 and closed on 19 October 2009. 18,354,914 ordinary shares at a price of $1.15 were issued to applicants and proceeds totalling $21,107,000 were received on 23 October 2009.

On 1 October 2009 Rakon requested the ASB Bank Limited to reduce facility arrangements agreed between Rakon and ASB. The equity raising summarised above enabled Rakon to settle the outstanding term loan of $7,864,418 on 28 September 2009 and reduced the overall facility limited by a further $24,950,000 with a consequent reduction in financing costs. No penalties were incurred in relation to the early settlement of the loan and the ASB agreed to the amended arrangement. As a consequence Rakon now has a combined facility included overdraft, committed cash advance, foreign exchange and trade lines totalling $24,725,000. The lines are substantially undrawn as at 12 November 2009.

14. Seasonality of business

The development, manufacture and sale of electronic components for timing reference and frequency control products are subject to seasonal fluctuation pre-empting end use purchase demand. The peak period is generally in the September to November period.

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16

Directory

Registered Office

Rakon Limited One Pacific Rise Mt Wellington Auckland 1060 Telephone: +64 9 573 5554 Facsimile: +64 9 573 5559 Website: www.rakon.com

Mailing Address

Rakon Limited Private Bag 99943 Newmarket Auckland 1149

Directors

Bryan Mogridge Brent Robinson Bruce Irvine Peter Maire Darren Robinson Warren Robinson

Principal Lawyers

Bell Gully PO Box 4199 Shortland Street Auckland 1140

Auditors

PricewaterhouseCoopers Private Bag 92162 Auckland 1142

Share Registrar

Computershare Investor Services Limited Private Bag 92119 Auckland 1142 Telephone: +64 9 488 8700 Facsimile: +64 9 488 8787 Website: www.computershare.co.nz

Bankers

ASB Bank PO Box 35 Shortland Street Auckland 1140

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16

Directory

Registered Office

Rakon Limited One Pacific Rise Mt Wellington Auckland 1060 Telephone: +64 9 573 5554 Facsimile: +64 9 573 5559 Website: www.rakon.com

Mailing Address

Rakon Limited Private Bag 99943 Newmarket Auckland 1149

Directors

Bryan Mogridge Brent Robinson Bruce Irvine Peter Maire Darren Robinson Warren Robinson

Principal Lawyers

Bell Gully PO Box 4199 Shortland Street Auckland 1140

Auditors

PricewaterhouseCoopers Private Bag 92162 Auckland 1142

Share Registrar

Computershare Investor Services Limited Private Bag 92119 Auckland 1142 Telephone: +64 9 488 8700 Facsimile: +64 9 488 8787 Website: www.computershare.co.nz

Bankers

ASB Bank PO Box 35 Shortland Street Auckland 1140

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Rakon 2010 Interim Report

Documents

net of tax

s unaudited

s equity

total comprehensive

net profit

s total equity

income tax creditexpense

operating income