Slide 1: Robust, innovative technology: 2018 Half-Year Results & Update
For personal use only Robust, innovative technology 2018 Half-Year DONALD McGURK Managing Director & CEO Results & MICHAEL BARTON Chief Financial Officer Update SARAH EMMS Manager, Investor Relations 5 March 2018
Slide 2: Important Notice and Disclaimer
Important Notice and Disclaimer For personal use only 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 pres
Slide 3: Portfolio of technology solutions
For personal use only Portfolio of technology solutions Unique, protected intellectual property Robust, innovative Superior performance in harsh environments technology for global 58-year history of innovation markets Customers in 150 countries Global distribution network 3
Slide 4: Strategy - Build the Base Business
STRATEGY - BUILD THE BASE BUSINESS For personal use only Grow Radio business Transition to solutions provider Scale Tracking Win Australian defence contracts Stabilised and Invest in Tracking Radio and built baseline Acquisition business Broaden Metal Detection range Develop Defence Elect
Slide 5: Building the Base Business
BUILDING THE BASE BUSINESS DELIVERED IN FY18 For personal use only • Delivered Rivercom 911 LMR solution Transition to solutions provider • Released Cascade™ LMR platform (VHF) • Expanded HF Military offering • HF Sentry® military radio released and accepted by market Invest in Radio and Trackin
Slide 6: FY18 Half-Year Results
FY18 HALF-YEAR RESULTS Strong Result: well positioned for the second half For personal use only Half-year result Sales and net profit after tax significantly above base-level expectation Strong EBITDA margin of 29% Interim fully franked dividend 4.0 cents Continuing strong balance sheet Sales EBITDA
Slide 7: Dividend
DIVIDEND For personal use only Interim dividend 4.0 cents – 45% payout ratio Record date 15 March 2018 Payment date 3 April 2018 Board policy of paying out approximately 50% of base-level profit as dividends Outperformance will be rewarded with special dividends – declared annually 7
Slide 8: Business Units: A Portfolio of Technology Solutions
BUSINESS UNITS A PORTFOLIO OF TECHNOLOGY SOLUTIONS For personal use only METAL RADIO TRACKING DEFENCE DETECTION High Frequency Product design Recreation Proximity detection (HF) and development Advanced Land Mobile Radio Gold mining Tracking manufacturing (LMR) Through-life Countermine Task manageme
Slide 9: Radio Communications: Transitioning to Solutions Provider
RADIO COMMUNICATIONS TRANSITIONING TO SOLUTIONS PROVIDER For personal use only Radio Communications sales BASE LEVEL Annual base-level sales $65 million - $75 million Large HF projects can take us to the top of this range Expanding product range to grow base business Investing in new HF military Man
Slide 10: Radio Communications: Expanding Our HF Military Offering
RADIO COMMUNICATIONS EXPANDING OUR HF MILITARY OFFERING For personal use only Targeting larger Military market: Focus on developing-world militaries in Africa, Middle East, Asia, Eastern Europe & Latin America Sentry-H® Military Radio capability enhancement Smaller form factor, digital voice, high-e
Slide 11: Metal Detection: Broadening Product Range to Grow Base Business
METAL DETECTION BROADENING PRODUCT RANGE TO GROW BASE BUSINESS For personal use only Metal Detection sales Recreational: EQUINOX® release redefines recreational detecting $148m World’s best coin & treasure technology $99m Gold Mining: BASE LEVEL $73m Continuing strong demand for gold detectors in Af
Slide 12: EQUINOX: Our Most Significant Coin & Treasure Release Ever
EQUINOX ® OUR MOST SIGNIFICANT COIN & TREASURE RELEASE EVER For personal use only NEW Multi-IQ technology Simultaneous multi-frequency Adaptable for all target types and ground conditions Obsoletes all single frequency VLF detectors Mid-range coin & treasure detector Waterproof Wireless audio Lightw
Slide 13: Metal Detection: World's Best Coin & Treasure Technology
METAL DETECTION WORLD’S BEST COIN & TREASURE TECHNOLOGY For personal use only Recreational Detectors RRP $149 - $249 USD $259 - $499 USD $649 - $899 USD $999 USD $1499 USD $1549 USD $2499 USD 13
Slide 14: Metal Detection: Challenging Competitors at Lower Price Points
METAL DETECTION CHALLENGING COMPETITORS AT LOWER PRICE POINTS For personal use only Gold Detectors RRP $799 USD $3750 USD $2699 - $3999 USD $7999 USD entry – mid range – professional 14
Slide 15: Tracking Solutions: Proven, World Leading Technology
TRACKING SOLUTIONS PROVEN, WORLD LEADING TECHNOLOGY For personal use only Tracking people and Eliminating bottlenecks Highly accurate assets in real time to increase output awareness and alerts Delivered in the half: Signed Development and Marketing Agreement with Caterpillar Inc. Joint collaboratio
Slide 16: Defence Electronics: Building the Sales Opportunities Pipeline
DEFENCE ELECTRONICS BUILDING THE SALES OPPORTUNITIES PIPELINE For personal use only Prime Contractors Projects Leveraging defence capability in design and support of complex systems Australian partner for Defence Primes, Land 400 as required by Defence Industry Policy Land 400 SEA 5000 16 SEA 1000
Slide 17: Financial results
17 For personal use only Financial results
Slide 18: Strong First Half
STRONG FIRST HALF For personal use only Half Year Half Year Half Year Underlying business performance Dec 15 Dec 16 Dec 17 $m $m $m Revenue $65.0 $103.9 $94.7 Underlying business performance EBITDA $14.7 $37.1 $27.4 EBIT $9.0 $30.3 $20.9 Net interest ($0.8) ($0.5) ($0.2) Net profit before tax $8.2 $
Slide 19: Engineering Investment
ENGINEERING INVESTMENT For personal use only Engineering spend ($m) Engineering spend (% sales) FY18 projects on track, investing across all 3 divisions Engineering investment drives future growth Fundamental to our strategy of growing the base business 19
Slide 20: Balance Sheet
BALANCE SHEET For personal use only Strong balance sheet continues Small $4.4 million net debt position Investment in inventory to support product launches Unutilised bank facility available for strategic initiatives Dec-16 Jun-17 Dec-17 $m $m $m Receivables 15.5 20.6 20.5 Inventories 33.7 31.0 34.5
Slide 21: Change in Net Cash (Debt) Position
CHANGE IN NET CASH (DEBT) POSITION For personal use only Large catch up for FY17 tax payment Tax instalments normalised going forward Ended FY17 with high creditors, resulting in negative working capital movement in FY18 Net positive cash balance today 21
Slide 22: Key Ratios
KEY RATIOS For personal use only Underlying earnings per share (cents) Free cash flow ($m)2 Return on equity (%)1 Gearing (%)3 1Return on equity calculated as annualised underlying net profit after tax divided by total equity 2 Free cash flow = operating cash flow + interest – cash outflow for produ
Slide 23: Outlook FY18
OUTLOOK FY18 For personal use only First-half results exceeded base-level profitability Expecting Radio Communications to have a stronger second half and deliver FY18 sales in the range of $65 million to $75 million Minelab will benefit from EQUINOX® product launch and favourable seasonality factors