Ladies and gentlemen, thank you for standing by, and welcome to Rakon's first half 2022 results and business update presentation. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. At which time, if you wish to queue for a question, you will need to press zero followed by one on your telephone. Please note that this conference is being recorded today, Thursday, the 25th of November, 2021. I would now like to turn the conference over to your speakers today, Mr. Brent Robinson, CEO and Managing Director, and Mr. Anand Rambhai, Chief Financial Officer. Thank you, gentlemen. Please go ahead. Good morning, everyone, and welcome to the first half presentation on our results. The agenda today will be, I'll go through our highlights and achievements, our strategy update, our operational performance and market update. Anand will do the financial overview, and then I'll come back and sum things up with some closing comments, and then we can have Q&A. Going to slide two. This year has been about delivery. The demand is there, the orders are in hand, but the challenge for us has been about delivering the product to the customer. So our focus has really been about capacity, supply chain, and managing the risks to deliver. I'll run through that. But first of all, on slide three, I'll go over our financial results. We're really pleased with this result. It's a record in many respects. The financial results really show the operating leverage we can get once we get past a certain point. With relatively stable overheads, we can see that the growth margin increases has really flowed to the bottom line. These are higher than expected. As we've released the supply chain risks, we've been upgrading our results, as you've seen. We've got the orders to hand, like I said, but it's really been about getting the materials, ramping up our production and the supply chain risks around that. I think we've done a great job in the first half, and the challenges still continue, however. You can see that working capital has increased. Cash is slightly down on where we finished last year. As I say, we've had to increase working capital, inventory's gone up and our debtors has gone up with the rapid growth that we've had. Going to slide four. The key achievements. We've had significant growth across all segments of the business. We've also captured good opportunity with the global chip shortages and TCXO shortages that we've encountered. However, 5G has been a key growth driver in our core business. We've held our competitive advantage in the radio heads, where we have cutting-edge products ahead of our competition. Also very proud of our supply chain management. We've worked really hard to mitigate some very challenging risks, and have done a really great job. We achieved record manufacturing performance out of New Zealand, reflecting our manufacturing innovation and ability to scale. With our manufacturing, as some of you know, we develop our own test equipment, manufacture, write our own software, and this has allowed us to be very agile and ramp up where others were unable to. I'm also impressed with our R&D. We've made some key achievements in the quest for high performance driven by market requirements. I'll come on to that a bit later. Go to slide five. We'd like to reframe our strategy a little bit. In the past few months, we've worked very hard to improve the way that we articulate our strategy to stakeholders to show clearly the key drivers and the success of value creation. We go to slide six. This is not a new strategy. We've just reframed it to make it clearer. We have four pillars that are central across our success. Three of these show our competitive advantage. Technology leadership to create solutions for our customers. Customer partnerships and enduring relationships. This is really key for us to be able to develop the technology. We learn from our customers what they need, and we create a solution for them. This is key. Also, our flexible, scalable operation supporting the profitable delivery of our products. The fourth is our core markets. This shows what our strategies are and where we like to focus. It is also important to have solid foundations. We do that with a value-driven culture, excellent financial management, sound disciplines around risk management. This also helps us capture new opportunities. We're going to slide seven. This is a reminder about the opportunity in front of us and the high-growth markets of where we play and our market share. If we look at the first triangle there, we believe that the serviceable addressable market for us is around $650 million. Each of these segments, high reliability, industrial and consumer, we play in the very high end of these segments, capturing the business which is most challenging, where there's less competition and our customers struggle to get solutions. This is where we like to play. If we roll forward to FY 2026, we believe that this particular SAM is gonna grow to over $1 billion. Due to our continuous innovation, we believe we'll actually capture more of this market. You can see that in the increased shaded areas of these various segments. In these segments are areas like space and defense, telecommunications, bridging between high reliability and industrial applications. The positioning also even bridging a wider variety, some of them are high reliability applications, including space into positioning into space, industrial applications, and the higher end of consumer applications that are challenging. This is where we are playing, and we see this as the high growth areas for our types of products. Now I'll give you a update on our operating performance and market update. Slide eight. Having reframed our strategy, we also thought that we'd expand our reporting format to show our progress against each of these strategic priority areas. This is to better show our investors how each of these areas are contributing to our performance. In this section, we'll provide a half-year performance update for each of the strategic areas of business. I'll take this presentation as read and just cover the key points. Going on to slide nine. Customer partnerships. We have long enduring relationships with our major customers, international agencies and international standards organizations. Actually, we participate in these standard bodies and help set the standards for the future. In that way, we get a first-hand look at what's going to be needed in the future, and also help structure the framework of the timing for various technologies of the future. We are an approved supplier to most tier one companies within our target markets. These partnerships are critical to our continued innovation and industry leadership. Staying close to these customers is absolutely critical, as I said before. We need to learn what their problems are, where they struggle, and try and come up with solutions for them. This is where we excite and delight our customers. You can see the globe on the right-hand side of the presentation there, some of the types of customers that we're dealing with in these core markets. We've made some great progress in developing new technology for these segments. Recently, we launched an ultra-low noise TCXO and VCXO product, which is going to be needed for 5G small cells in partnership with one of the key chipset suppliers for the global industry. These are products that no one else has been able to make, that Rakon has developed and been approved in reference designs that'll go out to the industry in the very near future. Looking at here, we had been working on a dual sourcing strategy. Ourselves to reduce risk, we've been putting in many dual sourcing to our supply chain. Some of our customers, after this global chip shortages, some of them have been really burnt relying on single source strategies for key components. I think there's going to be a real shift here globally to have dual source supply chains. That's what we've been working with ourselves, and we're seeing that as key for our customers as well. We've been working hard to put that in place. We've also seen inflation in our supply chains. We've seen costs go up in our own supply chains. Managing those costs and expectations of cost increase will also be our focus going forward. Of course, working very closely with our customers, make sure they understand why we may be increasing our prices and why these price increases have to be in place to sustain our business. Moving to slide 10. Technology innovation. Rakon is really recognized as a pioneer in delivering industry first for over 50 years. More and more, we are seeing that we're able to come out with products ahead of the market, ahead of our competitors. We have a portfolio of patented technology, and this gives a competitive moat against commoditization. We also strive to have that first-mover advantage. Once you're designed in, the cost for our customers to change is actually very high. We've got a saying around here at technology, "Once you're in, you're in." This business is very sticky. Once we've been designed in, unless we really make big mistakes in pricing or strategy or technology, they won't design you out. So far, we've seen very sticky customer base. If we look at the graph on the right, you can see we're also investing heavily in R&D, and that investment is growing year-on-year as our revenue grows. Typically, we've kept this around 10% or more of our revenue. This year it'll be no different, and we'll probably invest more in the second half than we did in the first half into things like XMEMS using our NanoQuartz technology and also our ASICs that we have been developing and continue to roll out. These are application-specific integrated circuits specific to our requirements that we design ourselves. Other things that we've been developing are NewSpace subsystem modules. We've even been getting funding from European Space Agency to develop these modules. R&D is still a key part of what we do, and that's going to be funding our future growth. If we go to slide 11, telecommunications, our core markets, we have seen sustained underlying growth in telecommunications. You can see from the graph on the right there the growth in telecommunications for the last 4.5 years. You can also see that in the first half of this year, in our core market, telecommunications is actually more than a full year for FY 2018. We're seeing nice, steady growth in telecommunications, and this is only the beginning of 5G. This is on the tail of 4G. We've still actually been growing our position, and now we're moving into 5G. We believe that that's only going to accelerate from here. Pleasingly also is there's been a steady improvement in gross margin percentage, and this has been driven from a swing from legacy products to our newer, higher value, high tech new products used in 5G. The growth outlook remains strong, very strong for us, and this is due to the accelerating rollout of 5G networks. I believe it'll take another 2-3 years before this 5G rollout actually peaks. Beyond that, it will be known as 6G. Also, data centers are gaining momentum. These data centers need to synchronize for modern communication. Actually hosting for telecommunication companies, they need to actually be synchronized down to a microsecond, and that's where Rakon comes in. All the telecom nodes, from switches to radio heads to even the satellites, all need to be synchronized down to one microsecond, and that's what we help do. We are the actual flywheel, the timekeeping piece that enables this. The data centers themselves have to synchronize down to this microsecond level as well if they wanna service telecommunications, and they surely do with things like edge computing and so forth. There's also other applications for synchronizing the data centers down to one microsecond, and these are financial transactions. Financial transactions now are happening at a rate of one microsecond granularity, so they actually have to know from one microsecond to the next when that transaction happens. This is also linked into security. The security of the data and the network is also relying on microsecond timing to keep secure. This is key for data centers, and Rakon is playing a major part in this, and it will continue. We now go on to slide twelve. Space and defense, also one of our core markets. What we're seeing here is the emerging of these low orbit satellites, termed LEO. These products, though they don't need to operate at the harshest environments like deep space, they also need to work though in quite severe conditions, surviving the launch and then being able to maintain their accuracy in space for five years. Rakon's had a long heritage in space and has been in many key programs, high profile programs like Rover. We've also been in industrial applications for communications, positioning on ground and in space for many years. With this heritage, we're very well-positioned to move further up the food chain and not only do components, but to do subsystems. That's what we've embarked on doing. We're developing transceivers to communicate from space to ground and from ground to space. Also, GNSS receivers, global positioning system receivers that are in space for the satellites. We're also developing a complete turnkey module for that as well as the transceiver. Also precision frequency distribution systems called MROs. These modules are new business for us. We recently attended a new space symposium in Europe, and our booth was absolutely full with enthusiastic people around these subsystems that we're developing. Traditionally, the satellite manufacturers such as Airbus have relied on their own capabilities to build these satellites. With the emergence of these LEO satellites going up in their thousands and tens of thousands, they don't really have the capacity to build such high volume. They're relying on developing their ecosystem to not only make components, but complete subsystems so they can put high volume satellites together. That's where we've been receiving funding from the European Space Agency to help the ecosystem develop in Europe. We're quite excited about the future for these satellite systems and are working very hard with our R&D teams to develop them. Moving on to slide 13. With the positioning market, you can see from the graph on the right there that our revenue has been decreasing the last four years. That's been a purposeful move as we've moved away from the commoditized space of the PNDs and wristwatches and so forth to more industrial applications like autonomous agriculture, mining, emergency beacons, and so forth. We believe that market is going to continue to accelerate to growth. We've done a really good job of rolling up a lot of that business and it's continued to grow for us. You can see that with the margin improvements that we've been making over the last three years. This year with the shortages in TCXOs has certainly boosted our revenue. You can see our first half was just under a full year last year, and that's been boosted by the shortages in TCXOs. It's also been boosted by the growth in our core business in that area with industrial positioning. We believe that the supply chain disruption has also made our customers revisit their suppliers and look at dual sourcing strategies. We believe a lot of this business will be ongoing for us. We've also been working to build our partnerships in manufacturing for lower cost with the likes of our partner Siward, so we can continue with this business in the longer term. Moving to slide 14. This business is emerging industries with the IoT market. You can see we've certainly had a big boost in this business this year. This is primarily off the back of the shortages in TCXOs, the global shortages in TCXOs, where we've received some significant orders from tier one IoT companies that we developed a specific product for. I'm very proud that we're able to actually develop a product from conception to completion within three months and delivered it to the customer and ramp up our manufacturing operations 60% in volume to meet this type of business. Though this business may not be ongoing, as I said earlier, diversification in the supply chain will also boost our ongoing business in this segment, where we've made new contacts, new customers, and again, leveraging our ongoing capability with our low-cost manufacturing partners. Some of this business will also continue. We've delivered most of the large order in the first half, and this will continue and go on to the second half of the financial year, but we'll have to see how much of that business actually carries on into the future. As I said, there's been a real disruption to the supply chain here, and we believe that Rakom will certainly be a part of it in the future. Going to slide 15. We certainly demonstrated the flexibility and scalability of our operations through these disruptions and the resilience that we have mitigating risks through our supply chain. We've been able to expand our capacity and our relationships with many suppliers through this disruption. We've successfully navigated through numerous supply chain issues, and we've had multiple strategies to mitigate these risks, building flexible, scalable manufacturing, extending product life cycles through low-cost manufacturing options. We've increased the New Zealand output some 60%, but that output is just not a one-trip wonder. We've actually put in place five new environmental chambers that can test high volume products. These chambers are also being constructed and put in place to deliver 5G TCXO and OCXO components as well. Though the capacity may not be used for the lower end, we're certainly gonna be using it ongoing for the higher end products that we're forecasting tremendous growth for. We've given our forecast going out six months to the end of this financial year. We believe that forecast is very solid, but there's still raw material constraints that we have in place. As those material constraints get mitigated, we will keep the market informed. Material supply is still extremely tight, though, and remains month-by-month management by teams here in New Zealand and in India. Also, our new Indian plant, a new plant that we're putting in place in India, we're now in the final stages of the design, and we'll be putting that out for tender very shortly. We're very excited about that, and it's a key part of our strategy moving forward to scale up. I'll now hand over to Anand, and he'll take you through some of the financials. Thanks, Brent. I'll now run through some of the financial information, starting with slide 17. This slide shows the total company revenue on the left and gross margin on the right over the last four and a half years. It will highlight some key observations. Firstly, starting on the left, annual revenue grew 8% per annum between FY 2018 and FY 2021, and this was predominantly from the global rollout of 5G. As existing 4G networks were initially upgraded and later as a new 5G network started to be built out. The latter 6-month period is shown on the bar labeled 1H 2022, and it's split here between core business and the business received from the global TCXO shortage. While the increase as a result of the TCXO shortage is significant, it's encouraging to see that the revenue from our core business continues to grow. Moving to the next graph on the right, this is the annual gross margin. As you can see, this has grown at roughly 11% per annum between FY 2018 and 2021, and this is mainly from revenue from telecommunications and also the improved product mix overall. Again, the later six-month period is labeled 1H 2022 on the right and shows the increased margin and margin percentage through a combination of higher revenue and better product mix, including operating leverage achieved for the six-month period just past. I'll now move to the next slide number 18. This slide explains the movement in net profit from last year's comparable period to this year's, and then how that net profit ends up in the NZD 26 million EBITDA number achieved in the first half. I'll work through from the left to right and highlight some key numbers. Firstly, last year's comparable profit was NZD 4.6 million. In the first six months of this year, we've seen 16 million gross margin increase from higher core margin, core telecommunications and positioning business, as well as the delivery of orders from the TCXO chip shortage. The next bar shows our share of Timemaker's increased profit with our 40% shareholding. Timemaker is a crystal manufacturer, a crystal blank manufacturer, and a key supplier for Rakon, and it continues to benefit from the increased global demand for consumer electronics. Operating expenses for the six-month period were broadly flat compared to the same period last year. However, within the movement there was some significant items, such as in the last year, there was NZD 1 million of redundancy costs, which didn't repeat this year, and also this year there was higher staff and other costs, other inflation-adjusted costs, which caused our operating costs to be higher. Next, finance costs were NZD 0.8 million higher, and this was really from the initial establishment fee for our NZD 10 million funding line and the five months of subsequent interest. We drew that NZD 10 million facility down in May this year. In the prior year, we also received NZD 2.3 million of one-off COVID-related assistance, and this was in New Zealand, France, and the U.K. As a result of these movements gets us to the NZD 19 million net profit number for the current period. In the next section of the graph shows the adjustments made to the NZD 19 million profit number to arrive at our NZD 26 million EBITDA number. As you can see, these adjustments are mainly interest, tax, and depreciation. I'll now move to the next slide number 19. Okay, this slide shows how the NZD 19 million net profit for the period turns into NZD 4.5 million of operating cash flow, and then how that operating cash flow translates into the overall change in our net cash position. The first half of the graph illustrates that once the non-cash items of depreciation and amortization are adjusted for, the other movements are related to higher working capital. That is debtors, creditors, and inventory. Increased working capital is needed to support the growth of the business, and inventory is also higher, as critical materials are secured to mitigate supply chain risks. The other relevant points are that, two point eight million was received in advance from a customer last year, which relates to invoices issued in this period. Although debtor balances are high, collection times are within normal parameters, and we don't anticipate collection issues with the quality of debtors and our historical low rate of write-offs. The second part of the graph shows how operating cash reduces with the purchase of land for the new Indian facility as well as the non-CapEx and lease payments. The result of all this means our net cash position at 30 September is NZD 1.5 million lower than at 31 March. As we roll forward, we expect the net cash position to improve as inventory growth plateaus and debtors are collected. I will now move to the next slide, number 20. This slide is a summary of our key financial metrics, and most of these have been explained. I'll expand on a couple that haven't been covered yet. First of all, other operating income, and this is about halfway down the table. It's NZD 1.8 million lower than last year because last year it included the one-off COVID-related assistance received in New Zealand, France, and the U.K. It's three lines further down, is capital expenditure, which was NZD 2.5 million higher than last year. Now, this included NZD 1.1 for the purchase of land in India and the rest of it was included some capacity expansion in New Zealand to support the higher levels of demand. I'll now move to the next slide. This is governance risks. I'll provide an update on our various items around governance and risks. Firstly, we're working on developing our environmental, social, and governance framework. This will demonstrate how the company uses its natural resources, manages its environmental impact and its social responsibility with respect to people and society. For example, things like diversity, privacy, human rights, and labor standards. The framework will also expand on how the company ensures there is robust corporate governance in place and how it will report its ESG progress. Okay, we also undertook an investor perception study during the period, which canvassed current, former, and potential new investors. The findings were used to formulate a new investor relations strategy, which is currently being implemented. Hopefully, you should notice some enhancements which provide a better understanding of what our business does and how it creates value and how it's performing. Next point is our dividend policy is being refreshed, and our refreshed policy should be in place before our full year results are released. We expect that dividend decisions should encompass factors like debt levels, future cash requirements to de-deliver growth, sustainable free cash flows, et cetera. For the interim results, the directors have resolved that no dividend be declared. Next point is COVID-19. This could still be a risk, significant risk to our organization. We are managing the risks very closely and with practices in place in all our significant places we operate that are generally beyond minimum requirements in each country. For example, in addition, in New Zealand, we are also rolling out Bluetooth tracing to mitigate against disruption. During this year, the board remuneration was addressed with an adjustment made to bring directors' fees into alignment with market rates. Before the change, directors' fees had remained the same for 10 years plus. We also, during the period, welcomed Steven Tucker as a new director, and he was appointed to the board effective first of October. As well as extensive governance experience across public and private organizations, Steven brings more than 20 years' experience at a senior executive level at Gallagher, a global New Zealand-based export company. Lastly, I'll just touch on foreign currency risk. Currency risk arises for Rakon because just about all our products are invoiced in currencies other than New Zealand dollars. Most critical risk is the translation of US dollar revenues into and costs into New Zealand dollars, and secondarily, euro receipts into New Zealand dollars. To mitigate this risk, we've got a comprehensive treasury policy and hedging program in place. This provides a level of exchange rate certainty for up to 24 months through the use of foreign currency derivatives, effectively locking in future exchange rates. Depending on what the spot rates do in the future, these derivatives will either be profitable or not profitable at their expiry date. For the New Zealand/EUR cross rate, we've got cover in place currently which protects around 82% of forecast exposures in the next 0-12 months, and 57% of exposures in the next 12-24 months. I will now hand back to Brent for closing comments. Thank you, Anand Rambhai. To conclude, here's a summary of what we have covered today. We have had a very strong first half. We have demonstrated sustained underlying growth, and we have successfully captured a market opportunity through a worldwide chip shortage. We've worked closely with our partners, adapted and scaled up our operations, and carefully managed our risks to ensure delivery. Following a strong September/October earnings, we upgraded our guidance to NZD 44 million-NZD 49 million year to date. Though second half growth is expected, it's anticipated it'll be below the third half level due to an ongoing supply chain risk not yet mitigated. The order book remains very strong, reflecting high demand for our high-performance products. There'll be an ongoing focus on delivery. I'm very excited about our product pipeline and looking forward to release these high-spec products that's gonna drive our networks for the future. There will start to be a further rollout of millimeter wave 5G, and we'll see this uptick in our demand further for our core business. Also, the low-orbit satellite market is hotting up, and Rakon is in a great position to capitalize on this. We are determined to maintain a strong financial position to ensure we can manage our risks and are properly resourced to capture all these opportunities in front of us. We're very focused on growth. I hope this presentation has been enlightening. I'll now open the floor to questions. Thanks very much. Thank you, sir. Ladies and gentlemen, we will now begin the question and answer session. As a reminder, if you wish to queue for a question, please press zero followed by one on your telephone keypad and wait for your name to be announced. That is zero followed by one on your telephone keypad. Thank you. Your first question is from the line of James. Please kindly introduce yourself before asking the question. Thank you. Yes. Good morning. James Lindsay, Forsyth Barr. Congratulations, gents on a very solid first half. Just really one question from me, just with regard to the CapEx associated with India, and your views about further expanding the New Zealand operation and just maybe if you're able to scope that into dollar values for CapEx for the second half and maybe into next year. Thanks. I'll do the Indian discussion first. The reason why we are moving to a new facility is because our existing lease is coming up for renewal, and we've been told that we won't be renewed. We've been through the process of looking at the best options for the company. The conclusion was that we would buy and build our own facility in India, and that would give us room to expand, but it would also give us a longer term place that we can use and we have security over to put our lower cost, higher volume products effectively. That's the reason for moving. In terms of where we're up to, we've acquired the land for NZD 1.1 million so far, and we're looking forward to doing the design and starting construction over the next year and a half. With completion in a year and a half's time. The quantum of that build, we're going through the design process at the moment, so we're not sure exactly what that's gonna be. But we have allowed for that in our planning in terms of our funding capacity, and you know, to make sure we can finish the project. In terms of the New Zealand facility. In New Zealand, we have ramped up in this past year to deliver the higher levels of business. We're not looking at significant ramping up for existing products in New Zealand, but what we are doing over the next year and a half also in New Zealand is investing into our X-band capability. That means we're putting in new equipment and developing refined processes to enable that technology to be commercialized. That's also been encompassed into our longer term funding plans. Thanks much. Maybe if I could just follow on, just with regards to, the closing of the borders here in New Zealand and your ability to get R&D staff and staff in the operations. Has that been a wee bit of a hindrance? Not really. We've managed to secure the people we need. In fact, since the borders have been closed, I think we've employed another three or maybe four PhD engineers into our team. I guess the labor market is tight, but as far as our engineering and what we need to support the extra load there, we've managed okay. It's tight around operational staff and our staff here are continuously working overtime, but hopefully that'll start to ease. It hasn't slowed us down to this point. Thanks much. Thank you, sir. Thank you. Your next question is from the line of Mr. Michael Daniel from Wairahi Investments Limited. Please go ahead. Great result and presentation, guys. Congratulations. Just had a question on 5G and where it is at now. You say in 2-3 years' time it should peak, but where is it now? Are we 10% through, 20% through, or halfway through? Is it gonna go for 6 years or how long is it gonna go for before you think that the network is completed? Hi, Mike. I think we're only at the small percentage beginning of the rollout, maybe 10% or something like that complete. It's really at the beginning stage. A lot of the rollout that we've seen so far, though 5G comes up on your phone, it's actually a 4G network with some 5G software. In New Zealand and most of the globe haven't really initially started to roll out 5G yet. China would probably be the most advanced, and we've participated there as well. It's very early days in 5G, and you know, I think it'll probably peak closer to the three or four. Two could be a bit optimistic, but it's going to be an extended rollout. I would say that 5G is gonna be rolling out for the most of this decade. Could you explain to us what is involved with the 5G? Is it just a repeater or whatever they're called, have to be set every lamp post or every 100 miles or what? With the Rakon bit in it, I don't think we all don't quite understand what bits go into where and that are produced by Rakon. Well, 5G network is quite different to 4G, and there's gonna be a real densification of the actual radio head antennas. That's where we see the major growth is in the actual radio heads themselves. That's where we've actually got a clear competitive advantage. We don't really see any competition yet, though it will come. Is that actually in the radio head? Traditionally, a radio head has been about two kilometers apart. Once we get into this new millimeter wave, the millimeter wave, 5G doesn't actually go through buildings. They're going to be inside, outside, and they could be every 100 meters apart. This is where the densification for 5G is going to be very different to 4G. Then you actually gotta hook up all those various radio heads into the network. There's various nodes, switches and so forth, that also need to be synchronized to one microsecond. It's all through the network, from the core, all the way through the backhaul, front haul, and then the radio heads. It's computing. All this requires synchronization, and that's where our products are needed. It is a very big opportunity, and it's very early days at the moment. What are the barriers to entry for every other man and his dog to hop in? Well, the specifications. Nokia. They are at a new level. They are much more stringent than they were before. A radio head in 4G didn't actually require a OCXO, an oven-controlled crystal oscillator. They just required what's called a VCXO. Those VCXOs are 1,000 times less accurate than an oven-controlled oscillator. Several orders of magnitude more accuracy required in each radio head. The barriers to entry there are very difficult. We've spent over 10 years developing our oven-controlled oscillator IC, integrated circuit, the ASIC that sits in the core of our product. The rest of the market is now trying to copy that, but we spent many years developing that with our U.K. team and here in New Zealand with the platforms. We think that we've got quite an advantage. Yeah, the competitors will be working on it. They will be able to make it at some point. That's when we'll come out with our next level of stability and performance, which will be needed for higher data rates. Because the data rates are gonna continuously go up and up. Even though it's 5G, there's gonna be various flavors of 5G. As we go higher in data rates, they'll require higher and higher performance products from the likes of Rakon. Thank you. Thank you, sir. Your next question is from the line of Kevin Haskett from Iconic Investment Limited. Please go ahead. Thank you. Good day, gentlemen. Well done on the result. It's well received and really appreciate all the efforts. Just in terms of my question is only one, and I just focus on the forecast EBITDA that you've made to the market. Just in terms of the fact that you've made NZD 26.4 in the first half, and you've said in your statement that the revenue for the second half will be higher, subject to the supply requirements. But you've got significant inventory increase, and you're two months through the financial or the second half now. It's not rocket science to sort of say that you could be sort of increasing that forecast if your supply requirements are all fine. It looks like you're being very conservative on that forecast with a sort of NZD 44 million-NZD 49 million sort of range. Can you just provide some color in terms of how you're tracking for the, you know, October, November? I know September, October was very strong, October, November. In terms of the inventory requirements, then you're saying your orders on hand are very strong. It would appear that you're gonna blow away the forecast. When can we expect an update on that? Because it seems that, you know, the previous updates have been sort of very short and it's sort of increasing, you know, quite frequently. Yeah, 31 March isn't too far away. Yeah, okay. I understand your concern there, but the reason why is quite simple: it only takes one component to stop us delivering on certain products. Though we're holding inventory, and we've been needing to hold this inventory, we've been increasing our inventory to mitigate risk for sure. Still, there are still some key components that are outstanding for us to secure. It's a domino effect. If we don't get those components, the others are basically useless to us. You know, though we need to buy them, we need to get them all. As we've secured those components, you've got to understand it's very tight out there on getting these components. As we've secured those components, we've upgraded our results. We're sorry about upgrading so frequently, but we're in very uncertain times here and unprecedented times where these products, you know, suppliers, sorry, say they're gonna deliver, then they don't. It's very uncertain times. As we're actually getting the components to hand, we're able to say, "Okay, we can. We know we're able to deliver this revenue, that revenue." It's really releasing those forecast results to the market as we're securing the product. You know, if we were able to get all the product that we need, we'd be over NZD 55 million EBITDA. You know, we can't actually see us getting all that stuff. We're releasing those results as we secure it. Is that answer clear to you? Brent, when would you sort of anticipate that you'll have a good idea on that for the 31 March numbers? Because you don't release your sort of 31 March result until, you know, a month and a half after 31 March. When have you got a feel for when you anticipate that you will know? Yeah. We'll have a fair idea on the new year. Yeah. That'll have to be January, February or March. January, February timeframe, more like February. You know, we'll know then. We'll need the components in hand to actually deliver because, you know, we've got a manufacturing cycle as well. Okay. I'm sorry I can't be clearer, but it's unprecedented times out there. I've never seen this type of uncertainty in all my years in electronics. You know, we're seeing large car companies taking features out of their cars like GPS and entertainment systems because they can't get the same chips that we're chasing. Yeah, sure. It's only strong relationships with our customers who've actually come to our aid as well, and suppliers that we've done as well as we have. I appreciate your comments on the 55 because it looks sort of way over the 49. Has the supply issue eased or has it sort of increased in the last 6 months? In some areas it's eased, but in some key areas it's still very, very tight. You know, we're taking this up at CEO level with some of the world's largest chip suppliers. You know, that's the level that we're at, trying to. Hmm Secure these chips. It's not so bad for the chips that we have in New Zealand, because we design and make our own chips. With our Indian products, they are using off-the-shelf type chips, the same ones that VW and Mercedes are chasing to deliver their cars. You know, that's the level that we're playing at there. Okay. Just another question, is there any update on Thinxtra? No real news to date. I mean, they are still planning to IPO. You know, we get shareholder updates every quarter and every half year. Yeah, they've been trucking along. They've changed the CEO. As far as we know, they're still on track for an IPO, as expected kind of thing. The timing of that? I know. Well, I think they originally said it was this year sometime, but it's likely, it's gonna be next year sometime. Okay. Yeah. They've got a new CEO in place, and I think he's looking for a bit of breathing space before they IPO. Mm. It's still their intention. Okay. Thanks, Brent. Thank you, sir. Your next question is from the line of Richard Burton from Forsyth Barr. Please go ahead. Thank you. It's a very good result. Kevin Haskett really asked my major question about the forecasting. My follow-up to that question would be, you talk about this chip business that you got on top of AKM from the factory fire in Japan, and you say you've got the orders in hand for this year, and so they will expect some of that to be slipping into next year. Given that you said you have orders or your customers are planning 6-18 months ahead, when do you think you'll be able to know how that's going to come into the first 6 months of next year when you start forecasting further out? Well, I think you know, the market seems to be a bit hung up on this TCXO shortage. How that's gonna play out is still a little bit murky, but we'll have a clearer idea obviously in the new year as supply for TCXOs is expected to stabilize. But from what we know from our customer feedback, they're still requiring ongoing support from Rakon because they require more than one supplier. So what that percentage is, I think we'll have a fairer idea as we move into the new financial year. At the beginning or at the end of this financial year, March sort of April timeframe, we'll have a much clearer idea about that. Really it's our ongoing core business and growth in our core business. I think is the for me is the more exciting outlook for Rakon, is the growth in our core business and 5G, new space and so forth. I think this look once we get on towards the end of next year, we'll look back and yes, there was a bit of a bubble, but it won't be long before I believe we'll surpass that with our core business. Thank you. Thank you, sir. Your next question is from the line of Fergus Brown. Please introduce your company before asking the question. Thank you. Yeah. I'm just a shareholder. Anyway, just looking at the tax rates, obviously the tax is quite low at the moment. I was just wondering, is there still significant tax losses in the company as far as what tax you'll be paying in the future years and when you would think you'd be paying a standard, say, 28% tax rate? Lastly, how does that implicate imputation credits? Have you got any imputation credits available for the dividends that you're thinking of doing after the financial year 2022? Have you got any imputation credits available from the past that you can use there? Okay. In terms of our tax structure, we at the moment from our past years' results, you can see that we pay a little bit of tax every year. That tax is paid in firstly in India, where India is a contract manufacturer, and secondly, a little bit in the U.K. That's where we're paying tax at the moment. In France, we've got significant tax losses, and they're not recognized on our balance sheet at all at the moment. France is in a small taxable income situation in most years, and that kind of oscillates between a tax payable, tax loss situation. The New Zealand business is the bigger question. New Zealand has had tax losses, which we are currently using up this year. Coming next year, we will likely be paying tax in New Zealand. Those losses are fully recognized on our balance sheet, so they're baked into our balance sheet asset numbers. In terms of imputation credits, we've currently got about 11 million historical imputation credits available to us, NZD 11 million worth. That, you know, will be a consideration in terms of dividend thinking around dividend. Okay. That's good. The second question's about interest costs and debt. Obviously you've got your commitments with your development in India, but you're obviously gonna have some pretty good cash flows as you get your stock stabilizers and your IR starts to come in. Can you effectively use your surplus or your net cash position to basically reduce interest costs in the business or not? Yeah. We will be looking to do that. The story is, we really took the debt facility we hadn't secured or we didn't know necessarily what the first six months of this year was gonna be like and what the rest of this year is gonna be like. We were making sure that we could fund our capital requirements and hence we undertook that debt facility. Once we've completed this year, our cash position should be quite reasonably positive. We will have options in terms of what we do with that debt facility and how else we use it or not. That'll obviously impact our interest expense going through. All right, well, thank you very much. I think you guys have done an amazing job, and I personally think the business is still very undervalued, so well done. Thanks very much. Thanks, Fergus. Thanks. Thank you, sir. We have a follow-up question from the line of Michael Daniel from Wairahi Investments Limited. Please go ahead. Thank you. Thank you. Just sort of another couple. The first one is you're changing the dividend policy or you're relooking at it, but the promises made by the chairman, they still stand, don't they? I think I'm not sure that they were completely promises. They were indications that depending on what the year would look like, we would consider the dividends question at that time. I think that's still valid, that's still the position. In line with that, we did recognize that our dividend policy was a little bit out of date, and we did a bit of refreshing to give a bit of certainty as to you know, when and why we would pay a dividend. We've also got to remember that Rakon's never paid a dividend, so this would be a bit of a steep change for us. Yes, at the AGM, he said if the EBITDA forecast was met, upper end, which was, I think back then, about NZD 40 million or a bit less, then he would be recommending a dividend. I'm sure I heard those words, and everybody clapped and were very happy people. Is that changing or not? I'm just sort of reading between the lines. I'm wondering if there's a bit of a back off, because if there is, I don't think there'll be very many happy shareholders. No, I think our position is the same as it's been at the AGM. It's just we wanna provide a bit more clarity in terms of when we will pay a dividend and why. You know, the position is the same. We've got to be careful and consider things like, you know, is it fiscally prudent if we have to go into debt to pay a dividend? So there's a few things to just tick off before we can get to that conclusion that we will definitely do it. Yeah. Okay. I think the sooner the better you clarify that, the better. Moving on to Thinxtra. Thinxtra indicated that they would be having an IPO. I think I read in Street Talk, it's nearly two years ago, and they were first in line for the new year, 2020. Now, a lot has happened since then, but a lot of companies have listed on the ASX. Have you sort of inquired as to what really is going on in that company? Because it sounds very strange that it keeps on being put off. Are they not meeting targets, or are there things that you as a shareholder and representing us as shareholders need to be delving into a bit more and jumping up and down? Yeah. It's good timing actually, 'cause we've got the AGM for Thinxtra tomorrow, which we'll be attending. But the story is that the Thinxtra IPO, really their plan was prefaced on building up the business model and showing enough of a, you know, putting enough runners on the board and having a mature enough model to be able to IPO. Because of COVID, that didn't happen. They weren't able to meet their rollout plans in terms of their IoT network and bring on the level of customers and devices and bring on, therefore, the level of revenue and recurring revenue. That's why it was delayed. We can understand why, and it's a question of whether we still believe the outlook. Do we believe the opportunity that they're presenting to us? Is it, you know, is it still robust? At this stage, we think it's still valid, and they seem to be doing a reasonable job in rolling out that strategy. You know, time will tell. It's, as a company, we're probably one of the small few that have done reasonably well out of our initial investment because remember we sold shares at, you know, NZD 12-NZD 15 a couple of years ago. We now hold a smaller amount of shares, but potentially if they IPO, they could be worth a bit more than what we're holding them for. It depends on the price. Okay. I'll hopefully we'll get some feedback from the AGM and you might share that with us with the shareholders. Last question. There still seems to be a dearth of institutional shareholders. In fact, one has been selling for the last five years on your register. Do you know why? We've as part of our perception study, we've you know, gone through the process of who our shareholders are, who our target shareholders should be, you know, how do we engage with the investment community better? You know, we are actively rolling out a program to target various sectors a bit better than we have in the past. We're hoping that shareholder balance on our register will you know, move around a little bit, and maybe there will be some more institutions coming on board in the future, hopefully. We're trying to address the balance of what's on our shareholder register at the moment. Okay. Thanks, and well done. Great result. Thanks, Mike. Thank you very much. Your next question is from the line of Tony Morgan. Please introduce your company name before asking your question. Thank you. Yeah, just another small shareholder. Congratulations, gentlemen, on executing in this very difficult market environment. The first question I've got is just can you give us some indication of the split between new product and legacy product in your sales? And within that, just explain where we are up to in the XMEMS rollout of that design. Is that being designed into current products or is that really, you know, going into the future? I just want to see where the XMEMS is in current and in the future rollout of revenue. I'll answer the XMEMS thing, and then I'll get Anand to attempt the split. With the XMEMS products, we had started rolling those out into actual production applications for some of our key customers in very demanding applications and high-performance specifications. We are actually delivering that product at the moment, but it's still quite small volumes. We've actually been also seeding the market with it into new projects that are starting and will be running for the next sort of five years. We've seen a lot of interest in the specifications that we've been able to offer using the XMEMS, and the samples that we've sent out have been very well received. The few applications that are starting to use XMEMS products has been very successful. I've got a lot of faith in the XMEMS using our trademark NanoQuartz process that will be the future for Rakon. We're able to test specifications that were unobtainable before and now are obtainable. Yeah, there's a lot of future for XMEMS. As far as the split between new products and legacy products, that's a little bit harder to answer. I'll see if Anand's got any statistics that are fingertip. Yeah, it's a difficult one to explain. It's probably easier if I could get the data together, and then I could go through it. I can talk to it broadly. Our product portfolio is made up of a significant number of legacy products. These legacy products, you know, they tend to last. Our products tend to last for anywhere between 5, 15, 20 years. Some of these products are still in play, and we're using them at the moment, and we're developing at the moment. We're putting a new spin on them. They're still being sold as new applications. For example, in the positioning segment, which has, you know, increased in core business terms in this last six months, some of that is with our legacy Pluto products. It is not just, it's not a conclusion that we can say that just 'cause it's an old product, it's going to tail off, not necessarily. That's one aspect. The other aspect is that, yes, we have got new products coming on board, like our Mercury+ type products, which have been released in the last two years. You know, that product is one of the reasons why our telecommunications segment is going up in terms of revenue, but also is going up in terms of margin percentage. There's an increase there, but there's a base level of business in telecommunications, which is also serviced by our legacy products, which have been around for a very long time. It is a difficult one to answer, and the life cycles are different between product ranges as well. I'm not sure that I've helped you any, but it's a reality of our business. No, that's good. The thought I have is that really, the XMEMS is for obviously for the, when we get to the real deal and millimeter wave. Would that be correct? Well, I think there'll be some millimeter wave applications that use it, but our current OCXO and TCXOs and VCXOs can deal with millimeter wave. As the QAM goes higher with more data, it is quite possible that XMEMS will be used for that as well. Previously you've been stating that XMEMS is the future of Rakon. I'm just actually a little bit struggling. Where does it kick in then? Well, as I say, millimeter wave goes to a higher QAM, which is more channels per frequency. Ah. They'll require higher and higher stability and lower and lower phase noise products. To do that, the crystal becomes extremely important in the solution. It'll kick in with those. In other applications in precision positioning, when there's G sensitivity, it gets quite technical, Tony. Absolutely. Okay. Okay, that gives us a little bit of feedback. That's all right. The second question I've got is just can you clarify the rollout of the new Indian operation? Is that going to be an expansion of your current facility? Is that going to do more of production and manufacturing R&D from like what New Zealand is doing? Can you give us an indication of it there? Because we haven't really had a good understanding so far. Well, Anand pointed out, you know, the key reason for moving is because our leases have run out at our current facilities. As you know, they're spread over multiple sites. The idea is to consolidate into one facility and build a state-of-the-art facility that we can expand into with production from New Zealand and also France. As we move forward, we want to extend the life cycle of some of the products that we're making here in New Zealand, so we can sit a lower price point out of India. Yes, it will be an extension of what we're doing here and an extension of what we're doing in France, because what we're doing in France with the space and defense business is mainly contained to Europe. By moving some of these products to India, it'll give us a lower cost point and be able to open us up into U.S. markets better than we are today. Okay. That's exactly the point, actually, with my next question is, yeah, because we haven't really heard much about space and defense, and especially, I suppose, defense in the U.S., about the pressure of having a manufacturing presence in the U.S.A. Are you saying that if you've got this, more of a manufacturing, low cost in India, you'll get more business in the U.S.A.? I believe so. Because our price point from Europe into the U.S. isn't low enough, so we're mainly contained into Europe and non-ITAR type business. Are we seeing then that in actual fact in the space and defense, it's not just a ultimate. It's a gross margin story, but we should see that actually growing more, especially as obviously with the low orbiting satellites as well. Would that be correct? Yeah. That's our vision. Okay. That's great. Okay. Okay. That's good. That's the end of my questions at the moment. Thank you. Thanks, Tony. Thank you, sir. There are no further questions at this point. I would like to hand the floor back to your speakers for any closing please. Go ahead, gentlemen. Thank you. Okay. Well, thanks very much for your time today. I hope our presentation has helped you understand Rakon a little bit more. We look forward to an exciting second half and onwards. Thanks very much. Thank you, sir. Ladies and gentlemen, that concludes our teleconference for today. You may all disconnect. Thank you.