Codan Limited · ASX:CDA
Codan — FY2009 Earnings Presentation
33 slides from Codan's earnings presentation, Sep 7, 2009
Slide 1: ASX Company Announcement cover letter
7 September 2009 Company Announcements Australian Securities Exchange Limited Dear Sir/Madam We attach a series of slides, for presentation to investors and analysts, for immediate release to the market. Yours Sincerely CODAN LIMITED Rick Moody Company Secretary Tel: +61 (0)8 8305 0311 Fax: +61 (0)8
Slide 2: Codan Limited Full Year Results to 30 June 2009
Codan Limited Full Year Results to 30 June 2009 September 2009 Mike Heard Managing Director Ri k M Rick Moody d Chief Financial Officer
Slide 3: Contents
Contents Highlights 2 Business segments / product groups 5 Financial overview 9 Balance Sheet - current initiatives 14 Key initiatives in FY09 17 HF Achievements 18 Minelab integration update 20 Locus Microwave acquisition 24 FY10 Outlook 31 1
Slide 4: Highlights
Highlights • Growth of 22% in underlying earnings per share despite the global recession • Underlying profit as per guidance • Strong net cash flow from operating activities of $25 $25.7m, 7m up fro $17m last year • Strengthened g balance sheet • Full year dividend maintained at 6.5 cents per share
Slide 5: Share price development 18 months (ASX Index)
Share price development 18 months ASX 50 Index Codan ASX 50 Index 3
Slide 6: Share price development 18 months (ASX Small Cap Index)
Share price development 18 months ASX Small Cap Index Codan ASX Small Cap Index 4
Slide 7: Business Segments: HF Radio
What are Codan’s Current Business Segments p and Product Groups? Communication Products – High Frequency (HF) Radio • Products and systems for remote area long distance radio communications • Used for: → rapid network deployment → communications without the need for transmission infrastructure → bac
Slide 8: Business Segments: Satellite Communications
What are Codan’s Current Business Segments p and Product Groups? Communication Products - Satellite Communications RF Subsystem (Satcom) • RF Subsystem portion of satellite communications earth stations • U Usedd iin networks t k ffor telecommunications over satellite; sate te; for o pub public c in
Slide 9: Business Segments: Minelab Metal Detection
What are Codan’s Current Business Segments p and Product Groups? Minelab Metal Detection Metal detection products and systems for Consumer and Countermine markets Consumer: Detection of gold nuggets, coins, treasure and artefacts by serious hobbyists hobbyists, semi semi- professional prospectors
Slide 10: Business Segments: Other
What are Codan’s Current Business Segments p and Product Groups? Other • Codan Broadcast – Signal routers and signal management products for TV broadcast studios • IMP Printed Circuits – Manufacture and importing of bare printed circuit b boards d for f Australian A t li and d NZ electronics manufac
Slide 11: Financial overview: Sales
Financial overview Sales Full year results FY09 FY08 $m % $m % Revenue Communication Products $77.3 58% $83.4 76% Metal Detection $41.7 32% $16.2* 15% Other $13 3 $13.3 10% $10 3** $10.3 9% Total revenue $132.4 100% $109.9 100% * Includes 4 months of Metal Detection ** Includes 4 months of Parketron
Slide 12: Financial overview: P&L
Financial overview P&L Full year results FY09 FY08 $m % $m % Total revenue $132.4 100% $109.9 100% Underlying business performance EBITDA $29.4 22.2% $24.3 22.2% EBIT $21.5 16.2% $17.0 15.4% Interest ($4.6) ($2.2)* Net profit before tax $16.9 12.8% $14.8 13.4% Net profit after tax $12 8 $12.8 9 7% 9
Slide 13: Financial overview: Ratios
Financial overview Ratios FY09 FY08 Return on net operating assets (average) 17.5% 20.5%* Return on equity (average) 20.9% 15.8% Underlying earnings per share 7.9 cents 6.5 cents Earnings per share 7.4 cents 0.6 cents * Includes 4 months net operating assets of the Minelab and Parketronics acquisiti
Slide 14: Financial overview: Dividends
Financial overview Ratios FY09 FY08 Interim dividend per ordinary share 3.0 cents 3.0 cents Final dividend per ordinary share 3.5 cents 3.5 cents Total dividend per ordinary share 6.5 cents 6.5 cents Franking 100% 100% Record date 16 September 2009 Payment date 1 October 2009 12
Slide 15: Financial overview: Historical performance
Financial overview Historical performance $m , operating perform ance FY05 FY06 FY07 FY08* FY09* Sales 125.4 117.3 121.6 109.9 132.4 EBITDA 30.7 20.0 24.2 24.3 29.4 Profit after tax 16.2 8.5 11.2 10.5 12.8 *Underlying profit 13
Slide 16: Balance sheet: current initiatives
Balance sheet - Current initiatives (prudent capital management) z Share Purchase Plan and Employee p y Share Plan (raised ( $ $1.3m). ) z Reduction in inventory levels by $4.2m. z Realise the value of surplus assets: g surplus Land and buildings p to Codan ggroup’s p medium term requirements will b
Slide 17: Balance sheet
Balance sheet FY09 FY08 $m Working Capital Receivables $15.3 $18.3 Inventories $14.2 $18.4 Accounts Payable ($17.5) ($18.1) Total Working Capital $12.1 $18.6 Property, Plant & Equipment $23.2 $25.0 Systematically targeted effort Product Development $15.2 $12.5 Intangible Assets $77 2 $77.2 $73 2 $73
Slide 18: Balance sheet: Funding and covenants
Balance sheet Funding Funding: • 3 year evergreen • Negative pledge • Covenants • Closing net debt $59.1m Bank covenants FY09 FY08 Net debt / EBITDA* 2.1x 2.1x ((shall not exceed 3.0 times)) EBIT / Net Interest** 4.4x 7.7x (shall exceed 2.5 times) Key ratio FY09 FY08 Net Debt / (Net Debt + Equity) 5
Slide 19: Key Initiatives in FY09
Key Initiatives in FY09 Summary √ • Strengthening market positions in all products • HF radio growth from new Codan markets • Consolidation of Satellite Communications • Imminent launch of important new products √ √√ • Consolidating outsourcing to Malaysia • Significant cost reductions on outsourced
Slide 20: HF Achievements: foundation for growth
HF Achievements Created the foundation for growth z Codan has maintained global market leadership in its traditional HF markets: z Aid z Humanitarian z Government and Business z Supplemented by an aggressive Push into New Markets: z Military and security z Protection and peacekeeping z Market launch
Slide 21: HF Achievements: success from new markets
HF Achievements Significant Success in FY09 from the new markets z A very compelling Value Proposition: z The right products z The right channels channels, influencers and teaming partners z The right pricing strategy z The right culture z Have been very well received and accepted by new customers z
Slide 22: Minelab Integration Update: Strategic fit
Minelab Integration Update Strategic g fit z Strategic fit exceeds expectations: z Both design, manufacture and market internationally high value added products into global niche markets z Both have world leading technology and invest 6 – 8% of turn- over into R&D z Strongly culturally aligned; both
Slide 23: Minelab Integration Update: Key synergies
Minelab Integration Update Keyy synergies y g Our Achievements in FY09 z Manufacturing z Codan was manufacturing in 6 different sites Minelab Torrensville manufacturing site has been consolidated into Codan’s Newton manufacturing site √ Minelab Ireland manufacturing site will be outsourced by Decemb
Slide 24: Minelab Integration Update: Key synergies
Minelab Integration Update Keyy synergies y g Our Achievements in FY09 z Finance / IT / Commercial Leverage Codan’s investment in Enterprise Resource Planning (ERP) system to Minelab Restructure Head Office / Divisional back-office functions ERP system has been implemented into Parketronics √ √
Slide 25: Minelab Integration Update: Key synergies
Minelab Integration Update Key synergies Our Achievements in FY09 z Sales & Marketing z Leverage common marketing services across the larger group √ z Leverage common aid/humanitarian and military markets • In progress. Several customers are buying both metal detectors and HF radios √ z Military mar
Slide 26: Locus Acquisition: Satellite Communications
Locus Acquisition Satellite Communications • Telecommunications is provided over fibre optic cable and copper wire, terrestrial wireless (e.g. mobile phones) and satellite • Satellite communications requires communication between earth stations and a satellite 24
Slide 27: Locus Acquisition: Earth stations and RF Subsystem
Locus Acquisition Satellite Communications • Earth stations are made up p of modems, RF Subsystems y and antennas • Codan supplies the RF Subsystem portion of earth stations Modems (Indoor) Antenna (With RF Subsystem mounted) Codan RF Subsystem 25
Slide 28: Codan's Business in C & Ku Band
Locus Acquisition Codan’s Business in C & Ku Band • Commercial and government satellite communications typically occurs over two frequency bands, C and Ku-band • Codan is a market leader for RF Subsystems in these frequency bands 26
Slide 29: Locus - X-Band
Locus Acquisition Locus - X-Band • Another frequency band, X-band, has long been reserved for military applications • X-band is now being opened up for general government as well as military applications, and is a significant growth area for satellite communications • Locus has products, technology
Slide 30: Overview of Locus
Locus Acquisition Overview of Locus • US private company located in State College Penn • Annual revenue approx approx. US$2 million; 17 staff • Three founders each with in excess of 25 years’ experience in RF and microwave engineering products for the satellite communications industry 28
Slide 31: Overview of Locus: products and preferred supplier
Locus Acquisition Overview of Locus • Supplies X-band microwave products targeted at US government satellite communications systems y • Locus has already been selected as a preferred supplier to US organisations that have been appointed to establish X-band satellite communications i ti systems t ffo
Slide 32: The Strategic Fit of Locus
Locus Acquisition The Strategic Fit of Locus • Immediate entryy into global g X-Band BUC market → the same System Integrators (our customers) will sell X band as C and Ku band • Leverage L t maximise to i i market k t share h off Ku-Band K B d sales l ini G Governmentt markets k t globally, and the
Slide 33: Outlook
Outlook Summary Key Initiatives • HF growing: protection, security and military markets • Strategies in place for Satcom growth in continuing difficult market • Minelab metal detection growing • Global recession causes short term uncertainty • Exposure to USD being structurally managed (e.g. outsour