Slide 1: Investor Presentation: FY12 full year results, Daniels acquisition and capital raising
For personal use only I Investor t Presentation P t ti FY12 full year results, acquisition of Daniels Electronics and up to $17.5 million capital raising Donald McGurk Kevin Kane Managing Director and CEO General Manager, Radio Communications Michael Barton Peter Charlesworth Chief Financial Officer
Slide 2: Important Notice and Disclaimer
Important Notice and Disclaimer For personal use only This presentation (Presentation) has been prepared by Codan Limited (ABN 77 007 590 605) (Codan). The Presentation is in relation to a placement to certain institutional and sophisticated investors (Placement) whereby new fully paid ordinary shar
Slide 3: Overview
Overview For personal use only Annual results Record reported net profit of $23.1 million Underlying net profit increased by 19% to $27.9 million Continued growth of metal detector sales and major new product release Major new Radio Communications products released Acquisition of Minetec b
Slide 4: Overview (cont.): Acquisition of Daniels Electronics and capital raising
Overview (cont.) For personal use only Acquisition of Daniels Electronics and capital raising Codan has agreed to acquire 100% of Daniels Electronics Ltd (Daniels), a leading North American based designer, manufacturer and supplier of land mobile communications systems ― Delivers on Codan’s stated
Slide 5: For personal use only
For personal use only 1 FY12 Annual Results and divisional commentary 2 Overview of Daniels Electronics and acquisition rationale 3 D t il off th Details the Off Offer 4 Key risks 5
Slide 6: Best-in-Class Electronic Solutions Directed at Global Markets
Best-in-Class Electronic Solutions Directed at Global Markets For personal use only Codan is a leading designer and manufacturer of radio communications communications, metal detection and mining technology products ― Founded in 1959 ― Head office in Adelaide, South Australia with 500 staff world
Slide 7: Delivering on Strategic Objectives
Delivering on Strategic Objectives For personal use only Divestment of non-core business, satellite communications assets Diversification Acquisition of Minetec, a provider of Acquisition communications and technology solutions to the mining sector Tiime for return Risk Acquisition of Daniels
Slide 8: Extensive Global Presence and Distribution Network
Extensive Global Presence and Distribution Network For personal use only 8
Slide 9: Radio Communications
Radio Communications For personal use only Over 50 years of experience in developing high frequency radio solutions and support Product offering includes portable, vehicular and base station receivers and associated accessories ― Solutions vary from basic voice communications to data, email, GPS
Slide 10: Radio Communications (cont.)
Radio Communications (cont.) For personal use only FY12 result commentary FY13 objectives Sales and profitability for radio communication products increased over prior year Integrate Daniels business ― Margin performance improved due to higher value-add solutions C Consolidate lid t presence i
Slide 11: Metal Detection
Metal Detection For personal use only “World’s World s best metal detection technologies” technologies New release CTX3030 Products and systems for the consumer, mine clearance and artisanal gold mining markets Accelerated level of new product development to drive future growth Continue to g
Slide 12: Metal Detection (cont.)
Metal Detection (cont.) For personal use only FY12 result commentary FY13 objectives Strong divisional result Well positioned for another strong year ― Sales and profitability increased by 7% and 13% respectively over prior year Business development has resulted in increased sales of gold dete
Slide 13: Mining Communications and Technology
Mining Communications and Technology For personal use only Recently R l acquired i d Mi Minetec represents strong strategic i fifit with ihC Codan’s d ’ core competencies i Perth-based provider of enterprise wide communications and technology solutions for the mining sector Specialised undergr
Slide 14: Mining Communications and Technology (cont.)
Mining Communications and Technology (cont.) For personal use only FY12 result commentary FY13 objectives Sales of $9.3 million delivered contribution of $0.5 million in the six months to Successfully commission 30 June 2012 technology to key customers Scale-up the business to meet Industry
Slide 15: FY12 Annual Result
FY12 Annual Result For personal use only Total revenue of $179 $179.4 4 million (5 (5.8% 8% increase over FY11) Driven by increase in sales in Metal Detection division and acquisition of Mining Communication and Technology Division Decrease in revenue for Communication Products division due to
Slide 16: FY12 Profit and Loss
FY12 Profit and Loss For personal use only Reported net profit of $23.1 $23 1 million is a record for the company (6 (6.2% 2% increase over FY11) Underlying net profit of $27.9 million (19.1% increase on FY11) Final dividend of 5.5 cents per share, fully franked, bringing full year dividend to
Slide 17: Capital Position
Capital Position For personal use only Strong balance sheet position with significant debt facilities available ― Net borrowings decreased by $10 million with strong cash flows in the second half, the sale of Satellite Communications assets and acquisition of Minetec ― Require substantial investme
Slide 18: Key Ratios
Key Ratios For personal use only U d l i earnings Underlying i per share h (cents) ( t ) Di id d per share Dividend h (cents) ( t ) 18.8 17.0 9.5 9.0 14.3 8.0 6.5 65 7.9 FY09 FY10 FY11 FY12 FY09 FY10 FY11 FY12 Return on equity (%)1 Gearing (%)2 48.1% 48.0% 36.9% 34.2% 31.9% 26.1% 20 4% 20.4% 16.9% %
Slide 19: For personal use only
For personal use only 1 Overview of Codan 2 Overview of Daniels Electronics and acquisition rationale 3 Details of the Offer 4 Key risks 19
Slide 20: Daniels Electronics Limited
Daniels Electronics Limited For personal use only Daniels has a 60-year history as a leading designer designer, manufacturer and Daniels LMR products supplier of land mobile radio (LMR) communications ― Predominantly serves public safety, natural resource, transportation and other commercial marke
Slide 21: Markets and Distribution
Markets and Distribution For personal use only Existing High Frequency (HF) radios provide long range communications Sales by b industry ind str segmentation (CY11) without the need for intermediate infrastructure Commercial 4% LMR systems provide short to medium range communications for areas w
Slide 22: Markets and Distribution (cont.)
Markets and Distribution (cont.) For personal use only Codan’s Codan s global distribution network can significantly enhance the sale of Daniels products 22
Slide 23: Markets and Distribution (cont.)
Markets and Distribution (cont.) For personal use only Significant market opportunity for Codan in the emerging world Land mobile radio market Significant growth opportunity $14 Current installed base is primarily analogue Africa – transition to digital will drive growth $12 Many countries con
Slide 24: Integration
Integration For personal use only Codan has significant experience in integrating new businesses and management teams into the Codan Group Daniels has a stable management team with a focus on customer satisfaction and extensive experience in the radio, electronics and high tech industry Strong
Slide 25: Transaction Rationale
Transaction Rationale For personal use only Opportunity to offer LMR to Codan’s current customer base especially emerging markets Ability to leverage distribution networks Interoperability and low power consumption technologies are ideal for emerging international markets and North-American di
Slide 26: For personal use only
For personal use only 1 Overview of Codan 2 Overview of Daniels Electronics and acquisition rationale 3 Details of the Offer 4 Key risks 26
Slide 27: Offer Overview
Offer Overview For personal use only Institutional placement to raise up to $12.5 $12 5 million A share purchase plan will also be offered to eligible Australian and New Zealand shareholders ― Shareholders will be able to acquire up to a maximum of $10,000 of New Shares ― New Shares will be issu
Slide 28: Offer Pricing
Offer Pricing For personal use only New shares will be issued at a fixed price of $1 $1.40 40 per new share Shares will rank equally with existing Codan shares Shares issued under the placement and share purchase plan will be entitled to the final FY12 dividend of 5 5.5 5 cents per share Key o
Slide 29: Indicative Timetable
Indicative Timetable For personal use only Record date for share purchase plan 7pm, Friday, 3 August 2012 Institutional bookbuild opens 10am, Tuesday 7 August 2012 Sydney institutional investor roadshow Tuesday, 7 August 2012 M lb Melbourne iinstitutional tit ti l iinvestor t roadshow d h W d Wednes
Slide 30: For personal use only
For personal use only 1 Overview of Codan 2 Overview of Daniels Electronics and acquisition rationale 3 Details of the Offer 4 Key risks 30
Slide 31: Key Risks
Key Risks For personal use only This section disc discusses sses the ke key risks attaching to an in investment estment in shares in Codan Codan, which hich ma may affect the ffuture t re operating and financial performance of Codan and the value al e of Codan shares (before and after the proposed a
Slide 32: Key Risks (cont.)
Key Risks (cont.) For personal use only 6 Litigation 6. Codan is subject to the usual business risk that disputes or litigation may arise from time to time in the course of its business activities. Codan will endeavour to mitigate its litigation risk through insurance and commercial practices. Howev
Slide 33: Key Risks (cont.)
Key Risks (cont.) For personal use only 5 Decline in economic acti 5. activity it The environment in which Codan operates is currently experiencing challenging conditions due to volatility in consumer sentiment and underlying demand. These conditions have arisen largely as a result of uncertainty ab
Slide 34: Key Risks (cont.): Acquisition risks
Key Risks (cont.) For personal use only Acq isition risks Acquisition In relation to the proposed acquisition by Codan of Daniels Electronics, the following is a non-exhaustive list of the associated acquisition risks: 1. Reliance on information provided Codan undertook a due diligence process in re