Slide 1: ASX cover letter for investor presentation
25th June 2009 For personal use only Company Announcements Australian Securities Exchange Limited Dear Sir/Madam Please find attached a copy of a Codan Limited (ASX:”CDA”) investor presentation to be given today. Yours Sincerely CODAN LIMITED Rick Moody Company Secretary Tel: +61 (0)8 8305 0311 Fax:
Slide 2: Investor Presentation
Codan Limited For personal use only Investor Presentation 25 June 2009 Mike Heard Managing Director Ri k M Rick Moody d Chief Financial Officer
Slide 3: Contents
Contents For personal use only What is Codan’s Core Business? .............................................2 What are Codan Codan’s s Current Business Segments? Segments?....................3 3 Recent History............................................................................7 Balance sheet
Slide 4: What is Codan's Core Business?
What is Codan’s Core Business? For personal use only “Clever Products for Global Niche Markets” Clever Products • Innovative products of our own design • High intellectual property content, high value add • Exceptional performance, reliability and support • Electronics products preferably Global Nic
Slide 5: What are Codan's Current Business Segments? HF Radio
What are Codan’s Current Business Segments? For personal use only 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 → back-up emergency communica
Slide 6: Current Business Segments: Satellite Communications Microwave Radio
What are Codan’s Current Business Segments? For personal use only Satellite Communications Microwave Radio (Satcom) • Microwave radio portion of satellite communications earth stations • Used in networks for telecommunications over satellite; for public infrastructure and private networks for govern
Slide 7: Current Business Segments: Minelab Metal Detection
What are Codan’s Current Business Segments? For personal use only 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 8: Current Business Segments: Other
What are Codan’s Current Business Segments? For personal use only 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 manufa
Slide 9: Recent History
Recent History For personal use only NPAT Sales 18.0 140 88 US cents 16.0 54 US cents 88 US cents 130 14.0 54 US cents 12.0 120 AUD AUD 10.0 110 m.A m.A 8.0 6.0 100 4.0 90 2.0 00 0.0 80 FY03 FY04 FY05 FY06 FY07 FY08 FY09(E) FY03 FY04 FY05 FY06 FY07 FY08 FY09(E) Underlying NPAT in FY08 and FY09 FY09(
Slide 10: Recent History: HF Performance
Recent History For personal use only HF Performance • Post 9/11 “war on terror” demand (e.g. police and border guard in Iraq and Afghanistan, embassies worldwide)) drove HF sales to a ppeak in FY04 at more than 50% above pre 9/11 levels • This exceptional demand declined thereafter • Simultaneously
Slide 11: Recent History: Satcom Performance
Recent History For personal use only Satcom Performance • Since FY03 Codan has more than doubled the annual number of units of Satcom products sold; we believe our market share has grown • However in that time: → The strengthening AUD (Codan (Codan’s s hedged positions were 54 US cents/AUD in FY04 a
Slide 12: Codan Response to Satcom Performance Challenges
Recent History For personal use only Codan Response to Satcom Performance Challenges The release during FY09 of major new products for the transportable rapid deploy market The acquisition in May 2009 of Locus Microwave: • Small US private company • Retained the three founders, each with more than 2
Slide 13: Balance sheet
Balance sheet For personal use only HY09* 09 • Implementing initiatives to $m strengthen the balance Working Capital sheet Receivables $17.8 Inventories $20.8 • Cash positive prior to Accounts Payable ($23.3) dividends and acquisitions Total Working Capital $15.3 Property, Plant & Equipment Property
Slide 14: Borrowings
Borrowings For personal use only Debt funding: • 3 year evergreen • Negative pledge • Covenants Key Bankratios covenants and key ratio HY09* Net debt to EBITDA ( h ll nott exceed (shall d 3.0 3 0 times) ti ) 2 28 2.28 EBIT / net interest (shall exceed 2.5 times) 4.10 Net debt / (net debt + equity) 5
Slide 15: Balance Sheet - current initiatives
Balance Sheet - current initiatives (prudent capital management) For personal use only z Share Purchase Plan and Employee p y Share Plan ((raised $1.3m)) z Strengthen internal debtor management practice z Reduction in inventory y levels z Realise the value of surplus assets: g surplus Land and build
Slide 16: Minelab Integration Initiatives
Minelab Integration Initiatives For personal use only z Implement SAP across the business: • All Adelaide based purchasing for the Codan group will be centrally managed on SAP providing improved purchasing power and therefore reduced product costs and inventory holdings. z Consolidate manufacturing:
Slide 17: Dividends
Dividends For personal use only • Fully franked dividend of 6.5 cents per share has been maintained through the period of low growth • At current share price a dividend yield of approximately 10% • Future dividends to be determined by the Board 15
Slide 18: Current Status / Future Strategy
Current Status / Future Strategy For personal use only • HF growing: protection, security and military markets • Strategies in place for Satcom growth • Minelab Mi l b metal t l detection d t ti growing i • Global recession causes short term uncertainty • Exposure to USD being structurally managed (
Slide 19: Locus Acquisition: Satellite Communications
Locus Acquisition For personal use only 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
Slide 20: Locus Acquisition: Satellite Communications
Locus Acquisition For personal use only Satellite Communications • Earth stations are made up p of modems, microwave radios and antennas • Codan supplies the microwave radio (RF Subsystem) portion of earth stations Modems (Indoor) Antenna (With radio mounted) Codan Radio
Slide 21: Locus Acquisition: Codan's Business in C & Ku Band
Locus Acquisition For personal use only 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 microwave radios in these frequency bands
Slide 22: Locus Acquisition: Locus - X-Band
Locus Acquisition For personal use only 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
Slide 23: Locus Acquisition: Overview of Locus
Locus Acquisition For personal use only 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
Slide 24: Locus Acquisition: Overview of Locus
Locus Acquisition For personal use only 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 communicati
Slide 25: Locus Acquisition: Overview of the C, Ku and X-band Markets
Locus Acquisition For personal use only Overview of the C, Ku and X-band Markets • Codan’s C and Ku-band global market for microwave radios is approximately US$100 million per annum with low to moderate growth • Recently the US, European and Australian governments have invested in new X-band X band
Slide 26: Locus Acquisition: The Strategic Fit of Locus
Locus Acquisition For personal use only 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