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Edited Transcript of RAK.NZ earnings conference call or presentation 18-Nov-20 10:00pm GMT

·29 min read

Half Year 2021 Rakon Ltd Earnings Call Mt. Wellington, Auckland Nov 19, 2020 (Thomson StreetEvents) -- Edited Transcript of Rakon Ltd earnings conference call or presentation Wednesday, November 18, 2020 at 10:00:00pm GMT TEXT version of Transcript ================================================================================ Corporate Participants ================================================================================ * Anand Rambhai Rakon Limited - CFO * Brent John Robinson Rakon Limited - CEO, MD, CTO & Executive Director ================================================================================ Conference Call Participants ================================================================================ * Jason Familton Accident Compensation Corporation - Equity Analyst * Kevin Arscott * Michael Walter Daniel Wairahi Trust - Co-Owner ================================================================================ Presentation -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- Ladies and gentlemen, thank you for standing by, and welcome to the Rakon's Half Year 2021 Results and Business Presentation. (Operator Instructions) Please note that this conference is being recorded today, Thursday, the 19th of November 2020. I would now like to hand the conference over to the speakers today, Mr. Brent Robinson, CEO Managing Director; and Mr. Anand Rambhai, Chief Financial Officer. Thank you, gentlemen. Please go ahead. -------------------------------------------------------------------------------- Anand Rambhai, Rakon Limited - CFO [2] -------------------------------------------------------------------------------- Good morning, and welcome to our half-year results presentation. My name is Anand Rambhai, and I will run through the financial results for the 6 months ended June 30, 2020, then pass over to Brent Robinson, who will take you through the key achievements for the period and provide a market update. We move through to Slide #2. Okay. The snapshot compared to the same period last year, revenue was up $2.6 million, after-tax profit was up $3.3 million, EBITDA was up $4.5 million. Over the 6-month period, net debt reduced by $5.1 million to $2.8 million. In the next few slides, I'll explain the key movements. Revenue for the period was up 4.6% to $59.5 million. This is explained as follows: The first quarter revenue was down with manufacturing at Rakon's plants in New Zealand and India, either restricted or shut down due to COVID in April, and this was partially offset at the time by the French operations, which continue to operate through the period and recorded slightly higher revenue compared to the same period last year. Second quarter revenue was higher than the same period last year, and this perk was predominantly out of New Zealand and from major telecommunications customers likely building up their inventories due to perceived future uncertainties. From a market segment perspective, for the 6 months, telecommunications was up strongly, offset by lower Global Positioning and Space and Defence business being lower. Net profit overall was improved on the better higher revenue, lower operating costs, COVID-related cost savings and government relief. I'll provide more detail on the next slide, which I'll move to now. Okay. This slide provides an explanation of the $4.6 million net profit after tax result compared to the $1.3 million reported for the same period last year. So firstly, the gross margin was $800k higher from higher overall revenue. The next bar relates to Rakon's 40% investment in Timemaker. Over the period, Timemaker's earnings have grown as worldwide demand for consumer electronics grows. The next bar shows the cost savings from no longer needing to pay for administration services, which had been provided by our previous joint venture partner in India. This charge ceased in November 2019. Tax expense is also higher this year on the back of higher first half performance. And during the period, we refreshed the debtors provision and took into account the write-off of a long-standing receivable for about $250,000. Okay? The next bar relates to an ongoing staff realignment cost program and predominantly relates to 6 French employees, 4 who have left the business and 2 who are expected to leave before year-end. The last -- or the next 3 bars on the slide, all relate to COVID and show the impact of the significant measures taken in March and April, including a temporary 20% reduction in salaries, a 50% reduction in directors' fees, reductions in rent as well as government assistance received in New Zealand, U.K. and France. I'll now move to Slide #4. This slide summarizes some of the other key metrics, and I'll touch on the pertinent items not already covered. So capital expenditure for the period was $1.1 million lower and that was due to cash flow being consumed in the first half of the period as well as in the period prior or the equivalent period spending was higher in India from a CapEx perspective on infrastructure and IT spend in terms of infrastructure, so -- sorry, and in terms of CapEx expansion in India. So some catch-up on CapEx expenditure is expected before year-end. So inventory has also grown over the period by $4 million higher. And this is explained with reference to stocking up for key manufacturing items such as gold, which we've taken the decision to take more stock of to help ensure against future supply chain disruptions. There's also higher demand for longer lead time products, also necessitating higher inventory. So inventory is expected to reduce over time with the adoption internally of a new supply chain and segmentation model. Okay, improving overall operating cash flow is from higher earnings and also the receipt of a high -- historic $1.7 million R&D tax credit, which was also received during the period, but related to a prior period's tax credit. Once capital expenditure and lease payments are taken into account, this means net debt reduces by $5.1 million over the period since March 2020. So I'll now pass to Brent to take you through the key achievements. -------------------------------------------------------------------------------- Brent John Robinson, Rakon Limited - CEO, MD, CTO & Executive Director [3] -------------------------------------------------------------------------------- Good morning, everyone. Slide 6, key achievements. The Telecommunication segment has grown predominantly off the back of 5G delivered out of New Zealand with providing strong revenue growth. Rakon has also been awarded the major share of 5G remote radio heads. This business is expected to continue to grow, and Rakon is very well positioned to expand its business on the back of this. We also secured a major Tier 1 cloud computing customer that we've been chasing for several years. And the beginning of that business, and that's expected to grow very nicely in the future for us as well. The XMEMS, this is a technology that Rakon has developed. It's really the future of quartz crystals for us. We've had some strategic design wins there with customers and their applications. We've also registered the trade market in key regions globally, and we're continuing to reach to it in further regions also. With the amount of design wins that we've had and design-ins, we've expanded our TCXO and OCXO capacity in both New Zealand and Australia for the growth that we're expecting in 5G. As with COVID, as Anand mentioned, initially, we were severely impacted. But with the strong actions taken, we've managed to mitigate it quite well through the first half anyway. With salary cuts, directors' fees. We also took the opportunity to refresh our strategic plan through the COVID lockdown. All operations recovered well and continue to operate normally, even in the significantly infected areas such as France and India, we've managed to keep the operations open. Many measures have been taken to keep our employees safe but I'm pleased to say we've managed to keep operating and satisfactory servicing all our customers. If I turn to Slide 8 on a bit more detail on Telecommunications. This was 64% of our revenue. So that's grown from the previous year of 50 -- 57%. So it's nice growth in telecom as you see. Despite the disruptions with COVID-19, U.S. revenue was up 18% from the same period last year. I would say that COVID created a bubble in demand we saw in the second quarter. We believe that many of our customers were really panic buying securing stock, making sure that they had a position going forward as the components that we manufacture are key for their equipment. We also saw very strong demand for 5G out of Asia with one very large customer. The outlook for this, however, isn't as strong as the geopolitical pressure on China has disrupted the supply chain and slowed down 5G deployment in this market. So we've seen 5G really slow down in China off the back of the U.S. tensions against Huawei. However, Huawei seems to have quite a lot of stock. And they're continuing to order, but we've got a cautious outlook for them going into next year. The same issue was expected to push out 5G rollouts globally. As we know, Huawei was designed into many networks globally. And many of these networks have realigned their plans, and this has caused a delay in 5G rollout. But fortunately, Rakon is also a key supplier to the other suppliers, and we are expected this -- we are expecting the slack to be taken up. However, this will no doubt cause some delay. We're also seeing quite a bit of uncertainty with our other customers as the situation phases through. But more recently, we have seen these customers becoming more bullish in their outlook and their ordering patterns. Rakon's products are still very well positioned for 5G equipment and data centers. And we also now have the capacity to deliver the growth that we've been expecting, as these deployments gather momentum at the end. Go to Page 9, Global Positioning. Overall, Global Positioning revenue was down 38%, and this has been predominantly due to Rakon continuing to focus on high-end positioning and less on the higher volume, lower margin commoditized GNSS business. Now just recently, there has been further disruption in the industry of global positioning in these types of markets with a large player at a company called AKM that we believe will be affecting the industry. So this is going to probably be a net positive for Rakon, but it's early days thus far. It's only just happened. And we are not sure exactly how that's going to play out. But with Rakon being one of the only companies globally that has a GPS grade chip ourselves that we've developed, we're expecting business in a positive light from that. The Aviation market is also down due to COVID. Basically, with the lack of international travel orders for new planes from Boeing and such, our customers and many of our customers have been affected by this COVID-19 in this sector. Emergency beacons was also slow for us but this was really a result of the supply chain and issues getting components during COVID-19, but this situation is also [recent]. So the outlook for the second half is positive. We believe that this business is returning and as said, with this AKM fire, I think there's quite a lot of opportunity to fill a void that has been created there. Go to Page 10. Space and Defence. Combined revenue for Space and Defence was down 7.5% versus FY '20 or first half of FY '20. Space revenue was down mainly to due with phasing of orders. Just recently, that's certainly starting to correct. We're seeing solid demand from Space and Defence with revenue up versus first half last year with good growth in Europe. With the outlook, the outlook is in line with the previous years. Deliveries are higher in the second half compared to the first half as we see in every year. And this should result in a similar result to 2020. New business has been secured in a new space segment and the low orbit satellite market, the LEOs from Asia, and revenue is expected to start flowing from these major wins in the last quarter of this financial year. So I'd like to open it up for questions. ================================================================================ Questions and Answers -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- (Operator Instructions) Your first question comes from the line of Jason Familton from ACC. -------------------------------------------------------------------------------- Jason Familton, Accident Compensation Corporation - Equity Analyst [2] -------------------------------------------------------------------------------- Hope you can hear me. Just a couple for me. The first one is just on -- I'm wondering what you've been seeing out there around supply chains, access to shipping, your freight, what impact that may have had on costs, I guess, in the first half and how that's looking out into the second half? -------------------------------------------------------------------------------- Anand Rambhai, Rakon Limited - CFO [3] -------------------------------------------------------------------------------- Yes. So in terms of supply chain issues, the main issue we had in the first half was getting hold of gold, and that was in the height of COVID. So gold is a key component in our manufacturing process. So apart from that, surprisingly, supply chain was not a big issue for us. What we did see was higher shipping rates, but they didn't have a big impact on our cost base because our products are pretty small in size. -------------------------------------------------------------------------------- Brent John Robinson, Rakon Limited - CEO, MD, CTO & Executive Director [4] -------------------------------------------------------------------------------- We have seen slow deliveries by a couple of weeks, but nothing really material. So we've had to hold a little bit more inventory in some areas. But as Anand said, these gold targets that we use in our process are key. So we had trouble moving them around because of the high value. So we've had to keep an extra set of gold targets in stock. That's nearly $1 million. So that adds up. So that's been the major effect. -------------------------------------------------------------------------------- Jason Familton, Accident Compensation Corporation - Equity Analyst [5] -------------------------------------------------------------------------------- Okay. And then just looking at, clearly, the first half has been a very strong result. And especially when you look at what you've guided to for the full year. And if you take out, I guess, the COVID-related cost phase, you sort of get to sort of more normalized number of [$7.6] million. I mean, to so that -- even if you're deliver there in the second half, you're going to be above the top end of the guidance. I'm just trying to understand the caution around the bottom end of the guidance. And I assume that's what you're seeing in the telco and the bubble in demand you may have seen in Q2. But can you just talk to, I guess, why the cautiousness around the guidance at this stage of the year? -------------------------------------------------------------------------------- Anand Rambhai, Rakon Limited - CFO [6] -------------------------------------------------------------------------------- Yes. It's just the general uncertainty we're seeing from some of our big customers. So for example, one of the key points for us is the annual negotiation process that happens, which covers a calendar year. So we're going through that at the moment. And this is with our significant Tier 1 telecommunications customers. So last year, we had a pretty good share in the business. This year, it will still be good, but it may not be as good as last year. So we're just a bit more cautious about what the second half is going to be like. Having said that, there's both positive and negative pressures out there, but it's -- it is difficult for us to provide definitive guidance at this point in time. I mean, we're closely looking at it. So we'll be updating as soon as we need to, to the market. But where we stand today, it's sort of difficult. -------------------------------------------------------------------------------- Brent John Robinson, Rakon Limited - CEO, MD, CTO & Executive Director [7] -------------------------------------------------------------------------------- Yes. Jason, it's just really the uncertainty we have at the moment. How Tier 1 telecommunications customers have been quite cautious as well, we believe. But as I said, we have seen very recently, more activity starting to -- starting the more bullish approach from them starting to appear as well. But the major one is the uncertainty around Huawei. It's hard to tell what their stockholding is against what their consumption is and what other component shortages they may strike. So we've just really put a cautious approach in there. We've been a major supplier to them for their 5G radio heads. We've had the lion's share of that business. And whether they're able to get the chips for the radio heads to carry on. It's hard to say. They've been very closed-lipped, as you can imagine, about this type of thing as well. -------------------------------------------------------------------------------- Jason Familton, Accident Compensation Corporation - Equity Analyst [8] -------------------------------------------------------------------------------- Okay. And then just a final one for me. With the currency getting back to 0.69, how should we think about -- you see any currency benefit in the first half and any headwinds you might have in the second and the hedging position at the moment? -------------------------------------------------------------------------------- Brent John Robinson, Rakon Limited - CEO, MD, CTO & Executive Director [9] -------------------------------------------------------------------------------- Yes. So in the first half, the currency, average currency was something around 0.6450. We've had high levels of hedging in place. So it's a story. We haven't been able to benefit significantly from the lowest currency points because of our hedging. But equally, now where we are today, we're not totally exposed to the higher currency rates either. So over time, if you look out a year, 1.5 years, then those kind of headwinds will start to fight us more and more. But for the next 6 months, we're pretty well covered in terms of our hedging. And therefore, our currency and our -- we're hedged at close to 0.65, 0.66 at least for the next 6 months. So it provides a bit of guidance, I suppose, in terms of currency risk. It's just longer to -- medium to long term, where we need to consider our hedging and what we need to do to maintain profitability. -------------------------------------------------------------------------------- Operator [10] -------------------------------------------------------------------------------- Our next question is from the line of Mike Daniel from Wairahi Investments Limited. -------------------------------------------------------------------------------- Michael Walter Daniel, Wairahi Trust - Co-Owner [11] -------------------------------------------------------------------------------- Thank you, guys. One main question. Where's the operations manager? Is he still stuck in Iran or Iraq or wherever he was? -------------------------------------------------------------------------------- Anand Rambhai, Rakon Limited - CFO [12] -------------------------------------------------------------------------------- Yes. He's still in Turkey, but he's due to fly on the 17th. He was finally got through but then backlogged to find a quarantine hotel that would take them. -------------------------------------------------------------------------------- Michael Walter Daniel, Wairahi Trust - Co-Owner [13] -------------------------------------------------------------------------------- Okay. The other question is similar to Jason on your forecasting, it's quite confusing. There's all sorts of mixed messages going on in here. And I think it would be in the interest of everybody, if you could sort of in the near term, firm up or otherwise on your guidance because the uncertainty you talk about, it's a bit hard to see the uncertainty inside all these messages that are here. Especially the one with the fire the other day. I really think it would be helpful because otherwise, the market -- the investors are just going to say, well, were they going to be in no man's land, and I would expect some reaction to that. -------------------------------------------------------------------------------- Brent John Robinson, Rakon Limited - CEO, MD, CTO & Executive Director [14] -------------------------------------------------------------------------------- Yes. I understand that, Mike. The fire is very new. So how that plays out is a little bit unclear. We're trying to get our heads around it ourselves. And once we do, if we need to change our guidance, we certainly will. So that is certainly a space to watch. But as I said, I believe it's going to be a net-net positive for us. Fortunately, no one was hurt in the fire and -- but it's a major disruption. Just to give you a perspective on a day supply, AKM supply 70%, I would say, of the world's TCXO chips that really compete with our own chips that we make. So there's only really one other company, Ipsen, that does their own chip. So there's going to be severe shortages of TCXOs globally. It's not really in the media yet, but I believe it will have a substantial effect on Rakon's second half, and that's really only sort of coming to light as we've been writing this release. So I just wanted to give everyone a heads-up. That this major event has happened, and it's something to watch and look into. And we'll be giving a market update as soon as we get a better picture of what it really means for us. -------------------------------------------------------------------------------- Operator [15] -------------------------------------------------------------------------------- Our next question is from the line of Kevin Arscott from Iconic Investments Limited. -------------------------------------------------------------------------------- Kevin Arscott, [16] -------------------------------------------------------------------------------- Congratulations on a pretty good result. So well done. I've just got a couple of things. At no time in the presentation and even in the annual presentation, is mentioned about [Finastra]. And you've made a significant investment in that company. And I think it's sort of a little bit untoward that there was no mention about what it's doing, the plan, the timing of what might happen and sort of valuation. I know it's recorded in the notes to the accounts. But you've put a significant amount of shareholder money in that investment. And I think there should be some note or some commentary around that investment as to what's happening there because as has been alluded to in terms of the presentation. -------------------------------------------------------------------------------- Anand Rambhai, Rakon Limited - CFO [17] -------------------------------------------------------------------------------- Yes. So I'll just cover those points off. So in terms of the met investment, it's roughly about $3 million that's on our balance sheet. And that also is pretty close to the cash number that is sitting there in terms of what we've invested in [Finastra]. The valuation hasn't changed since what we determined for the March accounts just been. And that's based on the latest information we've received from Finastra over the period. Their AGM is later this month, so we'll be attending that, and we'll have a better idea of their plans. But in terms of an update from them, high level, they are still planning to [announce the --] announce that they're still planning to do an IPO next year. And that will -- theoretically, that will be positive for Rakon. If that happens, assuming that the price they achieve on IPO is greater than the $3.60, which we are holding the share there. So as far as we know, their plans are still progressing as expected towards that IPO. Their results that have just come in for the last financial year were pretty close to what they had forecasted for that year. So things were on track. -------------------------------------------------------------------------------- Kevin Arscott, [18] -------------------------------------------------------------------------------- Okay. No, that's good. So gentlemen, I just -- so if there's a realization of [Finastra] at some stage in the future, the increased investment in the working capital by the company in the last 6 months with stock going up significantly. The ASP sort of facilities are going down. And hopefully, there's a sort of a finance cost gain there in terms of line fees and everything else that you might pay. It would appear that you're going to move into sort of a cash position sooner rather than later. And there is sort of commentary around sort of the possible -- 50% sort of dividend payment. So do you believe that, that is possible for this year? Or are you sort of -- are you planning that? Or are you sort of is there something that could happen that might jeopardize that low bank debt situation and possibly movement into a cash position? -------------------------------------------------------------------------------- Brent John Robinson, Rakon Limited - CEO, MD, CTO & Executive Director [19] -------------------------------------------------------------------------------- Well, we've still got plans to expand our operations as 5G continues to roll out, like we're expecting a great future. We're also continuing to develop our XMEMS production process, which is going to take further investment. So as said, when the Board thinks that's fiscally prudent, we'll be announcing a dividend. But my feeling is it won't be this year. -------------------------------------------------------------------------------- Kevin Arscott, [20] -------------------------------------------------------------------------------- Okay. Yes. It just seems there's a lot of stakeholders in this business, and the poor shareholders have haven't had a feed for a long, long time or no feed. And the directors and staff and all other stakeholders are doing very, very well. We've sort of seen a financial strong balance sheet, a very strong cash flow and debt sort of low movement to a possible cash position. And the statement about 50% in the latest release, well, that's sort of -- if it's not going to be this year, then why is it in the release? -------------------------------------------------------------------------------- Brent John Robinson, Rakon Limited - CEO, MD, CTO & Executive Director [21] -------------------------------------------------------------------------------- Well, it's just really a restatement of our policy. -------------------------------------------------------------------------------- Kevin Arscott, [22] -------------------------------------------------------------------------------- Okay. So you don't believe, Brent, that the situation will -- your -- in terms of CapEx going forward. Which is really the only thing that sort of might change here. You don't believe that you're going to be in a strong cash position at the 31 March in terms of your plans on CapEx. -------------------------------------------------------------------------------- Brent John Robinson, Rakon Limited - CEO, MD, CTO & Executive Director [23] -------------------------------------------------------------------------------- Yes. It's really, what we want to use that cash for and plans that we haven't announced yet. -------------------------------------------------------------------------------- Kevin Arscott, [24] -------------------------------------------------------------------------------- Okay. So if you've got plans then is it sort of -- is the benefit of those plans going to flow through into this financial year? Or are they sort of in 2, 3, 4 years' time? -------------------------------------------------------------------------------- Brent John Robinson, Rakon Limited - CEO, MD, CTO & Executive Director [25] -------------------------------------------------------------------------------- Longer-term plans. The XMEMS is a new development for us. We think it's extremely strategic. And we'll be investing in to expand its production as demand builds. At the moment, we've got more or less a preproduction process that we've been developing, but it really needs to be firmed up with more robust, higher volume production equipment. -------------------------------------------------------------------------------- Kevin Arscott, [26] -------------------------------------------------------------------------------- And can you balance that with a return back to shareholders? Or are you saying no to that? -------------------------------------------------------------------------------- Brent John Robinson, Rakon Limited - CEO, MD, CTO & Executive Director [27] -------------------------------------------------------------------------------- Of course, but in the longer term. -------------------------------------------------------------------------------- Operator [28] -------------------------------------------------------------------------------- Our next question is from the line of [Jacob Brown]. -------------------------------------------------------------------------------- Unidentified Analyst, [29] -------------------------------------------------------------------------------- Sorry, it's [Fergus Brown]. Congratulations on a good first half, and I agree with a lot of the other comments that people have made. I've got a couple of questions that haven't been covered. First one is, I noticed that France was profit. Has an EBIT loss of about $3.556 million after the depreciation is also included in there. Why is this and what's going to be done to try and eliminate that problem in the future? -------------------------------------------------------------------------------- Anand Rambhai, Rakon Limited - CFO [30] -------------------------------------------------------------------------------- Yes. I suppose if you look at -- if you compare the period-on-period results, you really need to look at -- really need to -- it's the way that, that notice is written. You really need to add France and India together because it's effectively the same business. If you add them together, you get close to a 0 number, and that's actually better than the comparative in the prior period. So it's a story of improvement even though that France number by itself looks the opposite. It's a little bit misleading, and we're looking to moving forward, looking to clarify that note. So it does separate out the business units a bit better. -------------------------------------------------------------------------------- Unidentified Analyst, [31] -------------------------------------------------------------------------------- Right. But we obviously want to get -- we don't want to have these sort of losses because it's dragging down the overall profit. So you might want to get those things into the right place, don't wait. Pretty quickly. -------------------------------------------------------------------------------- Anand Rambhai, Rakon Limited - CFO [32] -------------------------------------------------------------------------------- Absolutely. And you can see in the results [would be --] staff realignment one-off costs coming through. So we've got a plan on getting to that point. Now recognize that each business unit has to contribute, has to pay its share. -------------------------------------------------------------------------------- Unidentified Analyst, [33] -------------------------------------------------------------------------------- Second question got of the cloud computing opportunity. I mean, how big is that for Rakon going forward? Or how big is that internationally for the whole market? -------------------------------------------------------------------------------- Brent John Robinson, Rakon Limited - CEO, MD, CTO & Executive Director [34] -------------------------------------------------------------------------------- At the moment, the TAM is probably in the range of $50 million. So it's a reasonably sizable opportunity for us. We have a very nice product offering going into that arena. What it is about is these data centers in the future require synchronization down to a microsecond in time that -- so they could -- so their data centers can do distributed processing and also processing for banks for telecommunication. All this needs very, very precise timing. And data moves in these large data centers like Amazon, Google, Microsoft all to move towards synchronizing. So at the moment, very few of these data centers are synchronized to 1 microsecond. But we believe there's is going to be a strong move towards that as time rolls on. -------------------------------------------------------------------------------- Unidentified Analyst, [35] -------------------------------------------------------------------------------- I guess my third question, which I was just adding here. I mean, we've got obviously this opportunity, which is worth about $50 million. And we've got the 5G opportunity, which is worth about $40 million a year, globally. And then we've got other opportunities that you're obviously developing with some of your other products. How quickly is it going to be before we start to see these revenue numbers and obviously, significantly increased profit starting to come through the Rakon on the bottom line? -------------------------------------------------------------------------------- Brent John Robinson, Rakon Limited - CEO, MD, CTO & Executive Director [36] -------------------------------------------------------------------------------- Well, we were honestly believing that this year would be a lot more than it is. But with COVID hitting, it's -- as I said, it slowed things down [a bit for us and] caused quite a lot of disruption. And then there's this geopolitical situation with China and the U.S., which has also created quite a lot of turbulence and uncertainty. But putting that aside, if we look over a 3-year period, I believe Rakon is very well positioned for growth. -------------------------------------------------------------------------------- Unidentified Analyst, [37] -------------------------------------------------------------------------------- Right. So are you going to try and get that story out to the market a bit more? Or I know you're trying to do, obviously, with this sort of thing. But maybe a little bit more information or maybe some investment companies could start to maybe cover and cover some of this information in the marketplace? Because there isn't a lot more that's being done as far as the investment bankers basically putting information out to the market, I guess. -------------------------------------------------------------------------------- Brent John Robinson, Rakon Limited - CEO, MD, CTO & Executive Director [38] -------------------------------------------------------------------------------- Yes, we're certainly trying to get more attention on the work that we're doing and the outlook that we have. But we certainly don't want to overcook it as well in these times that are uncertain. We've been there and done that before, and we're trying to take a more cautious approach. -------------------------------------------------------------------------------- Unidentified Analyst, [39] -------------------------------------------------------------------------------- Congratulations. It's a great first half, and let's hope that you can start to execute on all those opportunities. -------------------------------------------------------------------------------- Operator [40] -------------------------------------------------------------------------------- There are no further questions at this point. I would now like to hand the floor back to Mr. Robinson and Mr. Rambhai for any closing remarks. -------------------------------------------------------------------------------- Brent John Robinson, Rakon Limited - CEO, MD, CTO & Executive Director [41] -------------------------------------------------------------------------------- Thank you. For my closing comments, yes, we've had a strong first half despite difficult conditions. We had a low Q1 and a strong Q2, and demand has been looking to be softer than we were expecting in the second half. But it's quite volatile out there. And day by day, things are getting stronger and stronger. And certainly, this fire is going to make a difference as well. So the COVID-19 has created global uncertainty and caution in investments. We've seen that networks are quite conservative when there's any global turbulence so these are operators like Vodafone and such, they are quite cautious when there's any global turbulence and really investment is slow. So I think we're seeing the effect of that in one direction, and then we're seeing the rollout of 5G pulling in the other direction. So it does make it difficult to forecast. And also, coupled with this global instability and disruption on the supply chains and so forth with the U.S. and China. It's hard to predict exactly how the year is going to play. But we're expecting, through all that, a steady year-on-year growth for the full year. While COVID-19 worsens in France and India, production is continuing at our factories as normal. We have very good measures in place to keep COVID at bay in those facilities. And we're considered essential supplies in both India, France and New Zealand. So our operations will be continuing. EBITDA guidance for the full year at this stage is we're keeping that the same at $16 million to $18 million. But with any situation develops, we'll be updating the market accordingly. And I am expecting to do that. XMEMS, our superior technology has been well-proven with some leading customers in these and key applications. So as I said, we have decided to invest further into that technology and expand our manufacturing capabilities. High-precision timing and synchronization is becoming more critical, a more critical element for global technology development and growth. And Rakon is key in delivering this type of technology globally. With our industry-leading product portfolio, we are well positioned for growth. So thank you very much for attending the call today, and we'll keep you updated on any developments. Thank you very much, everyone. -------------------------------------------------------------------------------- Operator [42] -------------------------------------------------------------------------------- Ladies and gentlemen, that does conclude our meeting for today. Thank you for participating. You may all disconnect. Thank you.