Slide 1: Investor Presentation: FY14 Half Year Results
INVESTOR PRESENTATION For personal use only FY14 Half Year Results Donald McGurk Managing Director and CEO Michael Barton Chief Financial Officer 3 March 2014
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 p purposes p onlyy and is not investment,, financial product, p , legal g or tax advic
Slide 3: Overview: Half year results
OVERVIEW For personal use only Half year results Half year revenue reduced to $61.1 million due to depressed gold detector sales in African markets Underlying net profit decreased from $27.4 million to $4.5 million Interim fully franked dividend of 1.5 cents per share Costs reduced to suppor
Slide 4: Best-in-class electronics solutions for global markets
BEST IN CLASS ELECTRONICS SOLUTIONS BEST-IN-CLASS FOR GLOBAL MARKETS For personal use only Codan is a group of electronics‐based businesses that capitalise on their fundamental design and manufacturing skills to provide best‐in‐class electronics solutions to global markets Our core products are
Slide 5: The baseline business
THE BASELINE BUSINESS For personal use only Historically, Codan has been a circa $150M baseline business supplemented by surges in demand for gold detectors during gold rushes Our O strategy t t iis tto profitably fit bl grow thi this b baseline li b business i while hil maximising i i i profits
Slide 6: Delivering on strategic objectives
DELIVERING ON STRATEGIC OBJECTIVES growing baseline business organically and by acquisition For personal use only During FY14 1H: Continued to monitor opportunities but focus has been on the core businesses Diversify Expanding Radio Communications into complementary, higher growth, emerging tech
Slide 7: Metal Detection
METAL DETECTION For personal use only Historically, metal detection has been a circa $70 ‐ 80M baseline business with surges in demand for gold detectors during gold rushes in developing countries While Whil we cannott predict the nextt gold di t th ld rush, h we are growing i baseline b li dema
Slide 8: Metal Detection: Markets
METAL DETECTION Markets For personal use only New market development continues in Africa, CALA, AsiaPac Small‐scale gold Sales contracted in FY14 1H as African markets mining continued to be impacted by climate, political instability, second hand machines, counterfeit sales and less significant
Slide 9: Metal Detection: Digital marketing for consumer markets
METAL DETECTION For personal use only Using digital marketing to develop consumer markets – 1.5 million YouTube hits and counting https://www.youtube.com/watch?v=s7_AC_QlOkE&list=PL‐wOIlBb‐BIceOg49rjLmYRL004yTzfxq 9
Slide 10: Radio Communications
RADIO COMMUNICATIONS For personal use only Radio Communications has reliably been a circa $50M projects business1, HF sales predominantly into developing world, heavily driven by first world government funding LMR sales currently dominated by North America, dependent upon US government spendin
Slide 11: Radio Communications: Markets
RADIO COMMUNICATIONS Markets For personal use only Released second major EnvoyTM upgrade S Strong order d b book k to commence second dhhalf lf High Smartphone capability well received Frequency Radio ((HF)) Seeing opportunities for networked HF/LMR product Greater focus on US, CALA and Mi
Slide 12: Mining Technology: Building an international dealer network
MINING TECHNOLOGY Building an international dealer network For personal use only Transitioned to a business model based on proprietary, high margin, core technology products for global miners Established E t bli h d reference f sites it for f SMARTS and d Safe S f Detect D t t with ith blue bl c
Slide 13: Mining Technology: Mining Transformation
MINING TECHNOLOGY Mining Transformation For personal use only Minetec’s suite of products provides the underpinning technology and force multiplier for mining transformation Conventional Mechanised Autonomous Mining Mining g Mining g 13
Slide 14: Mining Technology: Testimonials
MINING TECHNOLOGY Testimonials For personal use only Our customers said: “I congratulate Minetec on having the best underground communications technology and the only technology that actually works” “Whether in my office, or in the muster area, at mine control, or my home in Melbourne, I can see at
Slide 15: FY14 1H Profit and Loss
FY14 1H PROFIT AND LOSS For personal use only Total revenue of $61.1 million, compared to record $135.9 million in the previous corresponding period Significantly reduced demand for metal detection products in Africa Underlying net profit of $4.5 million, compared to record $27.4 million in th
Slide 16: FY14 1H Profit and Loss: Underlying business performance
FY14 1H PROFIT AND LOSS For personal use only Underlying business performance Half Year Dec 13 Half Year Dec 12 Administrative expenses Engineering expenses ($ millions) ($ millions) $m % to sales $m % to sales Revenue $61.1 100% $135.9 100% Underlying business performance EBITDA $11.3 18% $45.8 34%
Slide 17: Capital Position
CAPITAL POSITION For personal use only Net borrowings well inside the Company’s debt facility of $85 million Net debt increased from $25 million to $65 million since June 2013, as a result of: – payment for excess metal detector inventory – payment of FY13 tax bill – payment of FY13 final divide
Slide 18: Dividends
DIVIDENDS For personal use only Fully franked dividends (cents) Interim dividend 1.5 cents per share Record date 14 March 2014 Payment date 1 April 2014 Expect dividend payout ratio of at least 50% 18
Slide 19: Key Ratios
KEY RATIOS For personal use only Underlying earnings per share (cents) Free cash flow ($m)2 1H14 Return on equity (%)1 Gearing (%)3 1Return R t on equity it calculated l l t d as previous i 12 month th underlying d l i NPAT / average equity it over th the previous i 12 months th 2 Free cash flow = o
Slide 20: Codan (CDA) – Key Drivers
K D CODAN (CDA) – Key i Drivers For personal use only Exposure to global markets Activity in 150 countries across the globe Long history of success in emerging markets Superior technology and market‐leading brands Development and manufacture of sophisticated electronics products and software Patente
Slide 21: Outlook
OUTLOOK For personal use only Codan has a solid baseline business from which to grow Supplementing this with heavy investment in new product development and entry into adjacent markets Leveraging key technologies to many markets and customers across the globe Focused on achieving a stronger