Slide 1: Codan Investor Presentation 2016
CODAN INVES TOR PRESENTATION 2016 For personal use only DONALD MCGURK Managing Director & CEO MICHAEL BARTON Chief Financial Officer SARAH EMMS Manager, Investor Relations 6 September 2016
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: Technologies for Global Markets
TECHNOLOGIES FOR GLOBAL MARKETS For personal use only Headquartered in South Australia, Codan is an international company that develops rugged and reliable electronics solutions for government, corporate, NGO and consumer markets across the globe Our purpose is to create long term shareholder value
Slide 4: Delivering Shareholder Value Over the Long Term
DELIVERING SHAREHOLDER VALUE OVER THE LONG TERM For personal use only Shareholder value We succeed by: ‐ Developing unique, high value technology ‐ Delivering superior product performance in the harshest conditions ‐ Solving customers’ safety, security and productivity problems ‐ Creating multiple r
Slide 5: Global Footprint – 85% of Sales Exported
GLOBAL FOOTPRINT – 85% OF SALES EXPORTED For personal use only FY16 – closed London office, moved sales resources to Dubai FY16 sales by location $25M $20m $32m$15M $38m $46m $20m $35 m $10m $10m $11m $45m $20M $50m $52m $55M $2m $2m $30m $30m $5M $26m $15M 5
Slide 6: FY16 Overview
FY16 OVERVIEW CONTINUED PROFIT AND DIVIDEND GROWTH For personal use only Annual results Underlying net profit of $21.1 million – up 67% Statutory net profit of $15.5 million – up 24% Underlying earnings per share of 11.9 cents, up 68% Annual fully franked dividend of 6.0 cents, up 71% Net debt cut b
Slide 7: Business Unit Update
TITLE A Title B BUSINESS UNIT UPDATE For personal use only Bullet A Bullet B Bullet C Bullet D Bullet E
Slide 8: Radio Communications
RADIO COMMUNICATIONS Best in class, reliable, user friendly and cost-effective solutions For personal use only Technology platforms Major Competitors Long Range Digital Radio (HF) ‐ Infrastructure free, long range radio communications Barrett Communications (Aus), Datron (US), ‐ Used by security, pe
Slide 9: Radio Communications: Becoming More Relevant in Large Global Markets
RADIO COMMUNICATIONS Becoming more relevant in large global markets For personal use only Long range digital radio (HF) Land mobile radio (VHF, UHF) New product development directed at Military 2 New LMR product suite will address this broader market in FY18 Project based revenues can be variable US
Slide 10: Radio Communications FY16 Summary and FY17 Objectives
RADIO COMMUNICATIONS For personal use only FY16 Summary FY17 Objectives Best result in seven years Complete new LMR product suite for release in FY18 Segment contribution increased 15% Grow sales of new SentryTM, StratusTM and CycloneTM products LMR year-on-year revenue growth circa 50% Increase sal
Slide 11: FY17 Product Releases
FY17 PRODUCT RELEASES New family of military radios For personal use only Codan’s expanded range of tactical products for Military 2 market Sentry-V , a military handheld tactical VHF radio – released June 2016 TM Sentry-H , a military base and mobile HF radio – launching in Sept 2016 TM Military fe
Slide 12: Metal Detection
METAL DETECTION Minelab – the world’s best hand-held metal detector company For personal use only Coin & Treasure Detectors Major Competitors Key markets - Australia, USA, Europe, Russia First Texas Products (US), Garrett Electronics (US), RRP from US$179 to US$2,749 Whites Electronics (US), XP (Fra
Slide 13: Metal Detection FY16 Summary and FY17 Objectives
METAL DETECTION For personal use only FY16 Summary FY17 Objectives Successfully launched GPZ 7000® gold detector in Continue product innovation while expanding Africa routes to market Strong African gold detector sales in second half New product releases to drive sales: Revenue increased 35% to $99
Slide 14: New Product Releases Drive Revenue Growth
METAL DETECTION New product releases drive revenue growth For personal use only Major platform upgrades result in large initial surges in demand Existing customers upgrade to new products Three to five year development cycle for major technology platforms Results in high return on investment 14
Slide 15: Planned Product Releases in FY17
PLANNED PRODUCT RELEASES IN FY17 For personal use only GPZ 7000® 19” Super-D coil Targeted release 1H FY17 Additional purchase for those who already own a GPZ 7000® High value accessory Significant depth increase over standard 14” coil Deeper detection (average +30%) More ground coverage Less ground
Slide 16: Minelab Engineering Team
MINELAB ENGINEERING TEAM World class product development For personal use only View this video at: https://www.youtube.com/watch?v=f‐zgVwbatcg 16
Slide 17: New Hand Held Detector for Australian Defence Force
NEW HAND HELD DETECTOR FOR AUSTRALIAN DEFENCE FORCE For personal use only $6.7m development contract awarded by Australian Defence Force in August 2016 Combining Minelab’s new multiple frequency continuous wave metal detection technology with advanced ground penetrating radar Dual sensor in compact
Slide 18: Recent News – Significant Gold Nugget Find
RECENT NEWS – SIGNIFICANT GOLD NUGGET FIND 145oz, A$250,000 value For personal use only August 2016 Found with a GPZ 7000® in a worked-over area of Central Victoria, Australia Validates the GPZ® technology in the Australian market “About 12 inches below the ground, I could just barely make out the t
Slide 19: Tracking Solutions
TRACKING SOLUTIONS For personal use only Minetec delivers the world’s most accurate underground tracking system with integrated software for efficient mine management A single platform for safety & productivity solutions in underground mines The most accurate and reliable tracking of assets and peop
Slide 20: Tracking Solutions FY16 Summary and FY17 Objectives
TRACKING SOLUTIONS Delivering on major contracts for fully operational mines For personal use only FY16 Summary FY17 Objectives Products deployed in six operating mines Focus on underground hard-rock gold, copper and Technology proven and delivering diamond mines in Australia and South Africa operat
Slide 21: Minetec Products Deployed in Operating Mines
TRACKING SOLUTIONS Minetec products deployed in operating mines For personal use only Underground gold mine, Indonesia Underground copper mine, Utah, USA Underground gold mine, Papua New Guinea Rio Tinto Argyle Diamond mine, WA Underground gold mine, NSW Underground platinum mine, Saracen Mineral Ho
Slide 22: Financial Results
For personal use only 22 Financial results
Slide 23: Continuing Profit Growth
CONTINUING PROFIT GROWTH For personal use only Continued revenue and EBITDA growth Final dividend 4.0 cents, record date 15 September 2016, payment date 4 October 2016 Full year dividend 6.0 cents – 50% payout ratio FY16 - 40% FY16 - 18% Revenue EBITDA* EBITDA revenue $ millions $ millions growth gr
Slide 24: Underlying NPAT
UNDERLYING NPAT Improving profit margins For personal use only 67% growth in underlying NPAT on 18% sales growth in FY16 due to strong gold detector and radio communication margins without significantly growing expenses FY16 non-recurring expenses: $21.1 Restructuring expenses incurred as a result o
Slide 25: Continuing Improvement in EBITDA and EBIT Margins
CONTINUING IMPROVEMENT IN EBITDA AND EBIT MARGINS For personal use only Underlying business performance FY16 FY15 $m % to sales $m % to sales Revenue $169.5 100% $143.9 100% Underlying business performance EBITDA $41.9 25% $29.9 21% EBIT $29.2 17% $19.3 13% Net interest ($1.7) ($2.5) -2% Net profit
Slide 26: Engineering Investment
ENGINEERING INVESTMENT Continuing our commitment to innovative product development For personal use only Engineering spend ($m) Engineering spend (% sales) Investment in new product development maintained at historically high levels Once-off additional $5 million approved for investment in LMR over
Slide 27: Strong Balance Sheet
STRONG BALANCE SHEET For personal use only Continuing improvement $47.9 million cash generated from operations over the year as profitability increased and working capital investment improved Net debt reduced $28 million in the second half, to $12.6 million; well within debt facility of $85 million
Slide 28: Key Ratios
KEY RATIOS For personal use only Underlying earnings per share (cents) Free cash flow ($m)2 Return on equity (%)1 Gearing (%)3 1Return on equity calculated as underlying net profit after tax divided by total equity 2 Free cash flow = operating cash flow + interest – cash outflow for product developm
Slide 29: Outlook for FY17
OUTLOOK FOR FY17 For personal use only Radio Communications expected to deliver result similar to that of FY16 Minelab expected to deliver moderate sales growth outside Africa and while strong, the African component of Minelab sales remains difficult to forecast Minetec expected to deliver a small f