Slide 1: Management Briefing & Site Tour Presentation
INNOVATION WHEREVER YOU ARE Management Briefing & Site Tour Presentation 23 May 2019
Slide 2: Important Notice and Disclaimer
IMPORTANT NOTICE AND DISCLAIMER Disclaimer This presentation has been prepared by Codan Limited (ABN 77 007 590 605) (Codan). The information contained in this presentation is for information purposes only and is not investment, financial product, legal or tax advice. This presentation contains summ
Slide 3: Introduction & Business Overview
INTRODUCTION & BUSINESS OVERVIEW Donald McGurk Managing Director & CEO Michael Barton CFO & Company Secretary 3
Slide 4: Codan
CODAN Our Purpose is to create long-term shareholder value through the design, development and manufacture of innovative technology solutions
Slide 5: Strong Shareholder Returns
STRONG SHAREHOLDER RETURNS Underlying Earnings per Share (cents) Tripled full-year underlying EPS since FY15 21% average return on equity Total Shareholder Return 277% over 3 years* Regular, increasing ordinary dividends 50% dividend payout ratio Outperformance rewarded with special dividends Divide
Slide 6: Business Units
BUSINESS UNITS A portfolio of innovative technologies for global markets METAL COMMUNICATIONS TRACKING DEFENCE DETECTION Proximity Advanced Tactical Recreation detection manufacturing Land Mobile Radio Gold mining Tracking (LMR) Countermine Task management 1970 (Tactical) Since 2012 (LMR) 2008 2012
Slide 7: Base Business
BASE BUSINESS Sales $180-200 million, NPAT $25-30 million Sales Outperformance can occur during periods of stronger demand for gold detectors in Africa and large communications projects Outperformance $ millions Metal Detection Base Business sales are comprised of: Metal Detectors for recreational m
Slide 8: Strategy
STRATEGY Diversify revenues, grow the base business Increase Tactical Military market share by transitioning from a product to a full solutions COMMUNICATIONS provider, incorporating strategic partnerships that complement our core product range Complete Cascade LMR development by FY21, a softwar
Slide 9: Global Footprint
GLOBAL FOOTPRINT Customers in 150 countries, exporting around 85% of sales $35m $44m $37m $17m $31m $91m $6m $37m New Brazil office FY18 sales 9
Slide 10: Innovation Is at Our Core
INNOVATION IS AT OUR CORE “Continued Innovation is the best way to beat the competition.” / THOMAS EDISON “If you always do what you always did, you will always get what you always got.” / ALBERT EINSTEIN 10
Slide 11: Codan Core Technologies
CODAN CORE TECHNOLOGIES Rugged Products, Solutions & Systems History of IP creation, innovation and exploitation Typical engineering investment: 10% of Sales Engineered for harsh environments 11
Slide 12: Business Update
BUSINESS UPDATE Sales have continued to exceed our expectations in the second half Second half result now expected to be as strong as the first half Full year underlying net profit after tax expected to be in the range of $42 million to $45 million Strong balance sheet continues with $29 million net
Slide 13: Tracking Solutions
TRACKING SOLUTIONS Rory Linehan Executive General Manager, Minetec 13
Slide 14: Tracking Solutions
TRACKING SOLUTIONS Data-driven underground mining automation Minetec: founded in 2000, acquired by Codan in 2012 Purchased for $6 million; invested heavily in product development Engineering teams in Adelaide and Perth Establishing distribution through Caterpillar dealer network Competitive advantag
Slide 15: Autonomous Operating System
AUTONOMOUS OPERATING SYSTEM Mine Maturity Model Minetec Enabling Technologies Level 3 Intelligent Mine Mine-wide information network Fully autonomous machines Process-like production Unmanned production process Level 2 Remote controlled production Real Time Mine Partial network information Automatic
Slide 16: Minetec
MINETEC STOP WORKING IN THE DARK Vision: to deliver best-in-class autonomous operating systems to enable the transformation of underground mining Strategic objectives: Deliver Olympic Dam and Tanami as our priority reference sites Make the Caterpillar Partnership work Collaborate to execute the deve
Slide 17: CAT MineStar for Underground
CAT MINESTAR™ FOR UNDERGROUND https://youtu.be/qN90D7APlsg 17
Slide 18: CAT MineStar for Underground
CAT MINESTAR™ FOR UNDERGROUND Integrated solution for mine operations and equipment management – fleet management, material tracking, autonomous mining Existing CAT Solution Existing Minetec Solution for UNDERGROUND 18
Slide 19: Newmont Tanami
NEWMONT TANAMI First trial of Minestar™ for Underground Newmont Tanami mine: Gold mine (ca. US$750m) 1500 people (surface and underground) 104 UG Machines 180km Tunnels Trial completed March 2019, validating the value proposition 19
Slide 20: Fleet Management System: BHP Olympic Dam
FLEET MANAGEMENT SYSTEM BHP Olympic Dam Contract awarded in May 2018: 650+ vehicles and 1000 miners Contract extended in December 2018 to include underground communications and tracking (Wi-Fi WASP) Fleet Management System incorporates: Proximity detection: vehicle to vehicle & vehicle to personnel
Slide 21: Communications
COMMUNICATIONS Paul Sangster Executive General Manager, Tactical Communications 21
Slide 22: Communications
COMMUNICATIONS Robust, dependable communications solutions Tactical and Land Mobile Radio solutions HF developed in-house Daniels Electronics (LMR) acquired by Codan in 2012 Engineering teams in Adelaide (Tactical) and Canada (LMR) Offices in Adelaide, Dubai, Washington DC, Victoria Canada Markets:
Slide 23: Communications
COMMUNICATIONS Military NGO’s Domestic Security Public Safety Remote Land Management Tactical Communications Markets Purpose-built communications solutions for maximum reliability and ruggedness Customers: developing world militaries in Africa, Land Mobile Radio Markets Middle East, Asia, Eastern Eu
Slide 24: Tactical Communications
TACTICAL COMMUNICATIONS Addressable market USD $1.9 billion market for Man-portable, stationary and vehicular communications Including: High Frequency (HF) Very High Frequency (VHF) Mesh Network Interoperability Satcom Integration Source: Strategic Defence Intelligence, March 2018 24
Slide 25: What Is Tactical Communications?
TACTICAL COMMUNICATIONS WHATtoISfull Expand A TACTICAL COMMUNICATIONS? communications offering, including voice, data and video: CodanCommunications Tactical products – Sentry HF radio, Sentry HF Manpack, RIOS interoperability switch - Modern tactical Strategic partnerships with original equipment m
Slide 26: Land Mobile Radio
LAND MOBILE RADIO Strong base business in remote mountain top repeaters since 1967 Systems Solution (Cascade) under development: A first responder communications solution Software-defined VHF P25 base station/repeater for networked communications solution Best value solution in the market: Affordabi
Slide 27: Metal Detection
METAL DETECTION Peter Charlesworth Executive General Manager, Minelab Mark Lawrie Chief Engineer 27
Slide 28: Metal Detection
METAL DETECTION World’s best metal detecting technologies Minelab: founded in 1989, acquired by Codan in 2008 Sales have grown at 16% CAGR since acquisition (FY08 – FY18) Opened new global markets and broadened the product line Offices in Adelaide (engineering & sales), Dubai, USA, Ireland, Brazil E
Slide 29: Metal Detection
METAL DETECTION INNOVATIVE TECHNOLOGY EXCEPTIONAL SUPPORT DETECTORISTS WORLD OVER TREASURE HUNTER ARTISINAL MINER VISION STATEMENT ADVENTURER 2 -) PERFORMANCE /A71AV and
Slide 30: Products and Markets
METAL DETECTION Products and markets Coin & Treasure, Gold Detectors Hand-held Gold Detectors Land Mine Detectors Key markets - Australia, USA, Europe, Key markets – Africa, Asia Pacific, Market – countries impacted by war – Russia Latin America past and present Users: Users: Users: Treasure hunters
Slide 31: Metal Detection Offices – Global Distribution
METAL DETECTION 5 offices – global distribution Key Artisanal Gold Markets: Africa South America Key Recreational Markets: Australia North America Europe 31
Slide 32: Geographic Expansion – Latin America
METAL DETECTION Geographic expansion – Latin America The market: 1.4 million artisanal and small scale miners in Latin America and ~450,000 in Brazil* Around 17% of total annual gold production comes from Latin America** Minelab do Brasil Ensure consistent supply and lower end-user prices Establishe
Slide 33: Product Range
PRODUCT RANGE Newest technologies: ZVT, Multi-IQ Page 33
Slide 34: Multi-IQ / Simultaneous Multi-Frequency
MULTI-IQ / SIMULTANEOUS MULTI-FREQUENCY Product features ALL SOILS (including Beach) — measure the ground with multiple frequencies ALL Targets, All Orientations, All the Time — e.g. low frequencies, large coins, high frequencies small coins and coins on edge RELIABLE Discrimination — multiple
Slide 35: Masterclass
see Appendix Multi-IQ Simultaneous Multi-Frequency Technology MASTERCLASS PERFORMANCE /ASIaN/s ad hich
Slide 36: Recreational Products
RECREATIONAL PRODUCTS Expanding EQUINOX® technology across the range RECREATIONAL DETECTOR RANGE Growing the base business: new product releases have grown the recreational business by 40% New product coming soon USD RRP ex $99 - $249 $259 - $499 $649 - $899 $999 $1499 $1549 $2499 tax/shipping 36 HO
Slide 37: Gold Mining
GOLD MINING Products to service all types of prospectors GOLD DETECTOR RANGE Released in: 2017 2014 2010 2015 USD RRP $799 $3750 $2699 - $3999 $7999 ex tax/shipping ENTRY - MID RANGE - PROFESSIONAL 37
Slide 38: GPZ 7000 Gold Detector
GPZ 7000® GOLD DETECTOR Flagship Minelab product Premium gold detector using ZVT technology Recommended retail price USD $7,999 Highest ground penetration available Up to 40% depth improvement over GPX 50001 High return on investment Released: Feb 2015 in Australia, US, Europe October 2015 in Africa
Slide 39: Countermine
COUNTERMINE Simultaneous multi-frequency dual sensor detector Metal Detection (Multi-IQ) tuned to land mines Ground Penetrating Radar (GPR) Entering production Q2 2019 Delivering 1st 52 units to international customers 39
Slide 40: Defence Electronics
DEFENCE ELECTRONICS Leveraging Codan’s defence manufacturing capability Established July 2016 Australian Industry Capability (AIC) supplier for sub-contract manufacture and support contracts Invested $1.6 million in manufacturing equipment for future contract fulfilment Approved partner for: Rheinme
Slide 41: Thank you
Thank you 41 Ea CODAN
Slide 42: Appendix: Masterclass Multi-IQ
Appendix = I > a Multi-IQ Simultaneous Multi-Frequency Technology MasterClass PERFORMANCE /ASIaN/s ad hich
Slide 43: Multi-IQ: What It Means for the Treasure Hunter
Minelab’s Multi-IQ provides simultaneous multi-frequency Multi-IQ What it means for the Treasure Hunter scanning of the soil DESIGNED FOR SPEED ALL TARGETS Cover more ground in dense iron clutter ALL THE TIME 1 Bring home more of 4 the treasure you want to find RELIABLE ALL SOILS DISCRIMINATION 3 2
Slide 44: Simultaneous Multi-Frequency
Simultaneous Multi-Frequency ALL TARGETS ALL THE TIME Bring home more of the treasure you want to find 4 44
Slide 45: Selectable Multi-Frequency
Multi-Frequency What counts, and what doesn’t? Selectable Single-Frequency? Multi-Frequency is the future …having access to multiple frequencies at once gives a detector a lot of possibilities… 45
Slide 46: Single-Frequency 5 kHz
Single-Frequency 5 kHz High Conductivity Low Conductivity Single frequency 5kHz will preferentially detect large targets 46
Slide 47: Single-Frequency 10 kHz
Single-Frequency 10 kHz High Conductivity Low Conductivity Single frequency 10kHz will preferentially detect medium sized targets 47
Slide 48: Single-Frequency 20 kHz
Single-Frequency 20 kHz High Conductivity Low Conductivity Single frequency 20kHz will preferentially detect small targets 48
Slide 49: Simultaneous Multi-Frequency
Simultaneous Multi-Frequency High Conductivity Low Conductivity Multi-IQ simultaneously receives all frequencies so you can find all the targets, all the time 49
Slide 50: Reliable Discrimination
Discrimination RELIABLE 1 DISCRIMINATION Know when to dig 50
Slide 51: Discrimination
Discrimination Primary Frequency Detectorists choose a primary operating frequency to detect the targets they want to find, but it also sees the soil. In soil, especially in mineralised soil or when the target is deeper, target identification can become unreliable and the audio response may not give
Slide 52: Discrimination
More frequencies allows the detector to separate soil responses from the metal target responses. This results in Discrimination more accurate identification of the type of metal target. Primary Frequency Second Frequency 52
Slide 53: Salt Water Performance
Salt Water Performance ALL SOILS Fields, Parks, Beaches, Goldfields 3 Go Anywhere 53
Slide 54: Salt Water Performance
Salt Water Performance Primary Frequency Detectorists choose a primary operating frequency to detect the targets they want to find, but it also sees the salt water. Over wet beach sand, and especially when submersed in sea-water, target identification is very difficult and you may miss many targets.
Slide 55: Salt Water Performance
More frequencies allows the detector to separate Salt Water Performance saltwater responses from the metal target responses. This results in more accurate identification of the type of metal target. Primary Frequency Second Frequency 55
Slide 56: Recovery Speed
Recovery Speed Designed for Speed 2 Cover more ground in dense iron clutter 56
Slide 57: Recovery Speed
Recovery Speed You can change the recovery speed depending on the environment and what you are hunting for…. Slower gives better depth * Turn it down if you’re looking for large metal objects Low Recovery Speed Faster givesseparation better target Medium Recovery Speed * Recovery Speed 5-6 results i
Slide 58: Recovery Speed
Recovery Speed Designed for Speed 2 Cover more ground in dense iron clutter
Slide 59: Iron Bias
It’s easy to identify coins or ferrous trash when they Iron Bias are located separately. Iron bias provides a control to handle the varieties of combinations of these two. Sounds like a BAD TARGET Sounds like a GOOD TARGET Ferrous Trash Coins
Slide 60: Iron Bias
Here’s an example of some ferrous trash combined Iron Bias with a coin and how this straddles the boundary between a bad and good target indication. Sounds like a BAD TARGET Sounds like a GOOD TARGET Ferrous Trash Ferrous Trash & Coin Coins
Slide 61: Iron Bias
Another example that sits on this boundary is a Iron Bias modern screw/bolt that contains ferrous materials as well as a geometry that appears like a coin. Sounds like a BAD TARGET Sounds like a GOOD TARGET Ferrous Trash Ferrous Trash & Coin Coins Complex Ferrous Objects
Slide 62: Iron Bias
The Iron Bias control provides a dividing line that Iron Bias determines what is a good versus bad target. Here, a setting of 3 will provide a balanced response. Sounds like a BAD TARGET Sounds like a GOOD TARGET Ferrous Trash Ferrous Trash & Coin Coins Complex Ferrous Objects Iron Bias: 3
Slide 63: Iron Bias
A low Iron Bias setting will call coins mixed with ferrous Iron Bias junk a good target, but it will also identify complex ferrous targets as good targets sometimes. You get more targets, but you also get more false alarms. Sounds like a BAD TARGET Sounds like a GOOD TARGET Ferrous Trash Ferrous Tra
Slide 64: Iron Bias
A high Iron Bias setting will call coins mixed with ferrous junk a bad target and it will ignore complex ferrous targets. You get less false Iron Bias alarms, but you may also get less targets overall. It’s up to the user to dial in what Iron Bias settings works best for them. Sounds like a BAD TARG
Slide 65: Summary
fg Summary Summary
Slide 66: Multi-IQ: What It Means for the Treasure Hunter
Minelab’s Multi-IQ provides simultaneous multi-frequency Multi-IQ What it means for the Treasure Hunter scanning of the soil DESIGNED FOR SPEED ALL TARGETS Cover more ground in dense iron clutter ALL THE TIME 1 Bring home more of 4 the treasure you want to find RELIABLE ALL SOILS DISCRIMINATION 3 2