Arasor International Limited

Results Presentation and Operational Update

February 2008

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Important Information

This presentation is provided to you for information purposes only and should not be construed as and shall not form part of an offer or solicitation to buy or sell securities or derivatives. It should not be considered as an offer or invitation to subscribe for or purchase any securities in the company or as an inducement to make an offer or invitation with respect to those securities. No agreement to subscribe for securities in the company will be entered into on the basis of this presentation.

To the maximum extent permitted by applicable laws, the Company makes no representation and can give no assurance, guarantee or warranty, express or implied, as to, and take no responsibility and assume no responsibility for, the authenticity, validity, accuracy, suitability or completeness of, or any errors in or omission, from any information, statement or opinion contained in this presentation.or any errors in or omission, from any information, statement or opinion contained in this presentation.

This presentation contains forward looking statements that are subject to risk factors associated with technology and manufacturing companies. It is believed that the expectations reflected in these statements are reasonable, but may be affected by a number of variables and changes in underlying assumptions which may cause results or trends to differ materially, including but not limited to: input price fluctuations, future product demand, currency fluctuations, industry competition, manufacturing risks, legislative, fiscal and regulatory developments, economic and financial market conditions in various countries and regions, political risks and cost estimates

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Contents

� Highlights

� Key Financial Results

- Corporate Strategy

- Wireless Network Group- Wireless Network Group

- Optical Transport Group

- Consumer Electronics

� Conclusion

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Highlights

� Revenue +295% to $117m

– Driven by sales of wireless telecoms equipment into Chinese & Indian national telcos

� Underlying NPAT of $(5.0)m loss, well ahead of $(19 .4)m guidance

– Reported NPAT of $(16.7)m incl $(10.7)m of Provision for Aged Accounts and $(1.3)m one-off Tax

– Underlying result compares well to original prospectus guidance of $85m and $(4.0)m loss

� H2 2007 profitable on an underlying basis $7.3M

– Gross margin up to 28.4% in H2 from 2.4% in H1

� Outlook for 2008 is exciting despite some headwinds

– Revenue growth of >90% expected for 2008 fuelled by continuing penetration of wireless and optical telecoms products into China and India

– Headwinds of FX, credit crunch and global slowdown, rising labour costs factored in

� Novalux acquisition cements opportunity in Consumer / Laser TV

– USD300M ZTEI Joint Venture to drive USD500m+ revenue opportunity by 2010

– Short term start up costs more than offset by 2009+ benefits

� Working Capital financing now in place

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2007 Results Strong

� Revenue growth of +295%

� H2 margins improved due to product mix and execution

– Shift from low margin CPE reception equipment to higher margin infrastructure / transmission equipment as per stated strategy. Continuing focus on cost control / production optimisation to drive margins

� Underlying NPAT of ($5.0)m versus revised guidance of ($19.4)m

– Original prospectus of NPAT of ($4.0)m on revenue of $85m

� Reported NPAT of ($16.7)m due to Aged Accounts / One-off Tax

(A$M) FY06 H1 2007 H2 2007 FY07 Revenue 29.6 37.0 80.0 117.0 Gross Margin 10% 2.4% 28% 20% Underlying NPAT (12.3) 7.3 (5.0) Reported NPAT (17.1) (14.1) (2.6) (16.7) Basic EPS (cps) (18.45) - - (15.55) Diluted EPS (cps) (18.45) - - (15.55)

Reported NPAT of ($16.7)m due to Aged Accounts / One-off Tax

– Provision for Aged Accounts of $10.7M: $10.4M not expected to be incurred in 2008

– One-off impact of $1.3m due to non-cash write off of tax asset

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Highlights - Overall Financial Performance

29.636.9

79.9

40

60

80

100

Revenue

$ m

illio

ns

3.4

29.6

-6.9

-17.1-14.1

-2.6

7.3

-12.3

-40

-20

0

20

FY05A FY06A H1 FY07A H2 FY07A

NPAT

Underlying NPAT$ m

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2007 Income Statement

2007 2006Note $'000 $'000

Revenue from operating activities 116,974 29,642

Cost of revenue from operating activities (93,028) (26,613) Gross Profit 23,946 3,029

Impairment of loan accounts to subsidiaries - - Other income 1,017 998 Bad and doubtful debts expense (11,429) (345) Research expenses (14,513) (11,953) Sales and marketing costs (5,250) (2,035) General and administration costs (8,844) (6,303)

Consolidated

777

General and administration costs (8,844) (6,303) Finance costs (979) (1,248)

Loss before income tax benefit (16,052) (17,857)

Income tax benefit/(expense) 3 (1,274) 16

Loss from ordinary activities after income tax benefit (17,326) (17,841)

Loss attributable to minority interest 639 779

Loss attributable to members of the parent entity (16,687) (17,062)

Earnings per share: Cents Cents

Basic earnings per share 4 (15.55) (18.45)Diluted earnings per share (15.55) (18.45)

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2007 Balance Sheet

2007 2006Note $'000 $'000

CURRENT ASSETSCash and cash equivalents 5 7,467 10,276Trade and other receivables 86,506 20,669Inventories 3,035 3,809Other current assets 2,840 5,057

TOTAL CURRENT ASSETS 99,848 39,811

ConsolidatedCURRENT LIABILITIESTrade and other payables 39,060 9,644Short-term borrowings 6 4,740 82Unearned income 230 -

TOTAL CURRENT LIABILITIES 44,030 9,726

NON-CURRENT LIABILITIESLong-term borrowings 6 10,090 11,359Long-term provisions 47 -Unearned income 320 -

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NON-CURRENT ASSETSAvailable-for-sale investments 48 70Deferred tax assets - 635Property, plant and equipment 17,513 14,400Other receivables 741 953Other financial assets - -Intangible assets 36,550 16,382

TOTAL NON-CURRENT ASSETS 54,852 32,440

TOTAL ASSETS 154,700 72,251

Unearned income 320 -

TOTAL NON-CURRENT LIABILITIES 10,457 11,359

TOTAL LIABILITIES 54,487 21,085

NET ASSETS 100,213 51,166

EQUITYShare capital 146,842 74,036Reserves (8,858) (1,289)Retained earnings (40,902) (24,215)Parent interests 97,082 48,532Minority interests 3,131 2,634

TOTAL EQUITY 100,213 51,166

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2007 Cash Flow Statement

2007 2006$'000 $'000

Receipts from customers 40,921 10,070Payments to suppliers and employees (89,269) (46,906)Finance costs (993) (1,041)Interest received 468 400Other income 522 598

NET CASH USED IN OPERATING ACTIVITIES (48,351) (36,879)

Consolidated

CASH FLOWS FROM OPERATING ACTIVITIES

Proceeds from issue of shares 46,686 51,348Transaction costs of issue of shares (2,128) (2,067)Increase in minority interest in subsidiaries 1,136 2,065Payment of finance lease liabilities - (237)Proceeds from borrowings 7,344 1,226Repayment of borrowings (2,684) -

CASH FLOWS FROM FINANCING ACTIVITIES

999

Net cash acquired from business combinations 8 1,459 -Purchase of property, plant and equipment (3,694) (2,795)Purchase of available-for-sale investments - (33)Purchase of intangible assets - (2,032)

Payments on amounts due from related parties (743) (643)

Payments of notes receivable to related parties - (997)Loan to wholly-owned subsidiaries - -

(2,978) (6,500)NET CASH USED IN INVESTING ACTIVITIES

CASH FLOWS FROM INVESTING ACTIVITIES 50,354 52,335

Net increase/(decrease) in cash and cash equivalents (975) 8,956Net foreign exchange differences (1,834) (300)Cash at the beginning of the reporting period 10,276 1,620

CASH AT THE END OF THE REPORTING PERIOD 7,467 10,276

NET CASH PROVIDED BY FINANCING ACTIVITIES

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2008 Outlook

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2008 Guidance

($’000 AUD) FY 2008Pre Novalux *

FY 2008Incl. Novalux

Revenues $240m $227m

NPAT $30M $17 - 20m

*Date: Nov 2007

� ARR profitable in H2 2007 on an underlying basis

– On track to be operational cash flow positive in Q1 2008

� Start up cost incorporating Novalux circa $6.7M

� FX-effect from AUD strength of $3.3m

� Product mix continues to trend to higher margin products

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Guidance including Novalux

20

25

30

35• AUD/USD $0.82 to

$0.92 diff = $3.3M

• Start up costs for Novalux circa $6.7M

Guidance range $17-20M

$ m

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5

10

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Guidance pre-Novalux

FX Novalux start-up costs

Guidance incl.Novalux

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Rationale for Novalux acquisition

� Novalux acquired for USD19m total consideration

– ARR optical chips + Novalux laser chips = laser source for Laser TV, projectors and industrial applications

– Novalux acquisition doubles ARR revenue opportunity in Consumer / Laser TV market

– Secures supply chain for major global brands (e.g. Sony, Mitsubishi, Kodak)

� ZTEI Joint Venture to provide up to $300m financing to scale up large scale manufacturing

– ARR provides technology and proprietary IP– ARR provides technology and proprietary IP

– ZTEI providing equity and customer expertise, China Development Bank providing more than USD200m in funding

– Joint Venture company becomes major ARR customer in the Consumer / Laser TV space

� Business plan for Novalux / Consumer JV is compelling

– Objective 2010: 6m laser sources and 2.4m light engines

– Revenue target for JV 2010 of USD500M

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Corporate Strategy

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Market Focus

10Gb/s DWDM TXP

GPON/WDM-PON+

Wireless Backhaul

CPE/ Terminal+

Laser Projection

Interactive Display+

Optical Transport Wireless Network Consumer Optics

Become Market Leader in Three Application Verticals

GPON/WDM-PON CPE/ Terminal Interactive Display

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Growth Strategy 2008

� Capitalise on opportunities to secure market leadership position

- Focus on growing revenues in fast growing emerging markets (China and India)

� Leverage assets for horizontal and vertical growth

- Expand existing applications

- Move up the value supply chain

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- Move up the value supply chain

� Invest in R&D and production

- Introduce innovative customer solutions

- Further realize economies of scale� Significantly enhance the existing company profile and operations

through implementing active acquisition strategy

FOCUS ON PROFITABILITY 2008!

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CY2008 General Outlook

� Positives

– Strong wireless revenue

– Shift to higher margin products

– Ramp up of optical networking revenue

– Supply chain established in Consumer / Laser TV market

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– Supply chain established in Consumer / Laser TV market

– Diversification by region, customers and applications

� Challenges

- FX AUD vs USD

- Manufacturing cost increases

- Global credit tightening and potential IT spending slowdown

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Wireless Network Group

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• Next Generation Wireless Infrastructure Equipment

• Drive Demand for Wireless Terminal

• Focus in Developing Market

Charter for Wireless Solution BU

• Focus in Developing Market

• Control Design and Out source Manufacturing

• Win the Battle of Short Product Cycle

• Continuous Cost Reduction

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Wireless Base Station Wireless Backhaul CPE/Terminals

WiMax 802.16d BSROF Backhaul WLL Terminal

Wireless Product Suite

WiMax 802.16d Mini BS

2/2.5G Handset

3G/WiFi/WiMax Handset

WiMax CPE

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Optical Transport Group

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Development Initiatives

� Modulator

– Landing Ship 10G modulator for pluggable tunable transponder

– 10G Dual drive, and other derivatives

– 40G/100G programs essential higher revenue and margin

� Transponder

– Differential with other suppliers by “Customization”

– MFF today, and SFF and XFP-E pluggable next

– 40G program

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� Radio over fiber system (Shanghai and MTV)

� Ultra-long Haul System

– Network management and improved integration capabilities

� WDM PON core technology, and patents

� High power fiber laser

– Product integration with AOFR expertise

� Fiber Sensors

� New opportunities – region, application and JV

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SubsystemSubsystemSubsystem

Optical network product suite

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Consumer Electronics Group

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Market Opportunity

� Display: Demo of RPTV, LCD and plasma replacement

� Projection: demo of pico, cinema and cell phone

� Industrial; replacement of neon source and large scale

� Acquisition of Novalux and JV with ZTEI establishes value chain

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� Doubled our TAM to $2B for display chips (optical a nd laser) and therefore 2X revenue opportunity

� 3X revenue opportunity by integration into laser so urce

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Value Chain has formed

Components Integrators Brands

Arasor ARR/ZTEI Mitsubishi

Novalux Oerlikon Sony

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Discrete other Young Optics JVC

Seiko Epson Kodak

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Key Milestones to Date

� High revenue growth focused on demand for ARR product and bandwidth � Official Supplier Beijing Olympics, revenue with BSNL locked in to 2010

� Announced acquisitions of Xalted Networks, Bandwidth Foundry, AOFR and Novalux

� Value chain in Consumer / Laser TVs established

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– USD$300M JV with ZTEI in China to manufacture light engines and laser sources (Target 2.4M and 6M produced annually by 2010)

– ARR provides optical and laser chips

– Customers for JV being documented

– External financing via China Development Bank

� Revenue Delivered: ’05 $3M ���� ’06 $30M ���� ’’07 07 $$117117MM

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Display applicationsDisplay applicationsDisplay applications

In the In the In the cinema…cinema…cinema…

In your In your In your home…home…home…

In your In your In your car…car…car…Image courtesy Image courtesy Image courtesy MicrovisionMicrovisionMicrovision

In your In your In your pocket…pocket…pocket…

In yourIn yourIn yourphone…phone…phone…

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