Slide 1: FY20 half-year investor presentation
3 March 2020 Company Announcements Office Australian Securities Exchange Level 4 20 Bridge Street SYDNEY NSW 2000 Dear Sir FY20 half-year investor presentation Please find attached a copy of Codan Limited’s investor roadshow presentation dated 3 March 2020 for release to the market. Yours faithfully
Slide 2: FY20 Half-Year Results and Update
FY20 HALF-YEAR RESULTS AND UPDATE Donald McGurk Managing Director & CEO Michael Barton Chief Financial Officer Kayi Li Investor Relations 3 MA RCH 2 02 0 1
Slide 3: Important notice and disclaimer
IMPORTANT NOTICE AND DISCLAIMER 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 presentation contains summ
Slide 4: Robust, innovative technology for global markets
Robust, innovative technology for global markets • Portfolio of technology solutions: • Metal Detection • Communications • Tracking • Unique, protected intellectual property • Superior performance in harsh environments • 60-year history • Customers in 150 countries 3
Slide 5: FY20 half-year summary
FY20 HALF-YEAR SUMMARY • Highest half-year profit in the company’s history • Record Communications sales, up 65% and segment profit up 62% over prior first half • Metal detection sales in the first half exceeded $100 million for the first time • Interim dividend 7.5 cents, fully franked • Strong bal
Slide 6: Growing dividends
GROWING DIVIDENDS Interim dividend 7.5 cents • 7.5 cent interim dividend • Increasing dividends reflect strength of business • Interim dividend will be paid: • Record date 27 February 2020 • Payment date 12 March 2020 “The board expects to continue its policy of paying shareholders in the order of 5
Slide 7: Growth in sales
GROWTH IN SALES Diversified portfolio Group Sales • Record first-half financial result • 34% increase in sales over FY19 H1 • Strong performance driven by: • Strong demand for gold detectors in Africa across multiple products • Large communications project wins 6
Slide 8: FY20 H1 global footprint
FY20 H1 GLOBAL FOOTPRINT Customers in 150 countries, exporting around 85% of sales WROCLAW $15m $12m $41m CODAN OFFICES MANUFACTURING/ ROTTERDAM WAREHOUSES $84m ENGINEERING TEAMS $3m $16m AUCKLAND ITAJAI 7
Slide 9: Business units
BUSINESS UNITS 8
Slide 10: Metal detection
METAL DETECTION Products & Markets RECREATION GOLD MINING COUNTERMINE Coin & Treasure, Gold Detectors Handheld Gold Detectors Landmine Detectors Key markets — Australia, USA, Key markets — Africa, Asia Pacific, Market — countries impacted by Europe, Russia Latin America war — past and present Users:
Slide 11: Metal detection
METAL DETECTION Metal Detection Sales Record first half – 22% growth in sales and 33% increase in segment profit in the 1st half Gold Mining: • Continuing strong demand for gold detectors in Africa, across multiple gold detector products • Gold Monster is now entry level detector of choice for artis
Slide 12: Metal detection: continual innovation and geographic expansion
METAL DETECTION Continual innovation and geographic expansion Poland New Zealand Gold detector Warehouse Warehouse Coin & treasure detector New detector Countermine FY15 FY16 FY17 FY18 FY19 FY20 FY21 Netherlands 5 key products Brazil Office Warehouse currently Gold detector under development Coin &
Slide 13: Multi-IQ simultaneous multi frequency
MULTI-IQ® SIMULTANEOUS MULTI FREQUENCY Product features • All Soils (including beach) — measure the ground with multiple frequencies. • All Targets, All Orientations, All the Time — e.g. low frequencies large coins, high frequencies small coins and coins on edge. • Reliable Discrimination — multiple
Slide 14: Recreational products
RECREATIONAL PRODUCTS Expanding MULTI-IQ® technology across the range RECREATIONAL DETECTOR RANGE USD RRP ex tax/shipping $99 - $249 $199 - $499 $649 - $899 $1499 $1549 $2499 HOBBYIST - ENTHUSIAST - SPECIALIST - EXPERT 13
Slide 15: Gold products
GOLD PRODUCTS Products to service all types of prospectors GOLD DETECTOR RANGE USD RRP ex tax/shipping $799 $3750 $2699 - $3999 $7999 ENTRY - MID RANGE - PROFESSIONAL 14
Slide 16: Communications
COMMUNICATIONS Tactical Communications Markets Purpose-built communications solutions for maximum reliability and ruggedness Land Mobile Radio Markets • Customers: developing world militaries in Africa, Middle East, Asia, Eastern Robust, interoperable, dependable wireless systems Europe & Latin Amer
Slide 17: Communications
COMMUNICATIONS Record first half for both Tactical and LMR - sales up 65%, segment profit up 62% over prior 1st half Tactical Communications: Communications Sales • Delivered two major contracts (Kenyan & Philippines) • 135% increase in sales to military customers over prior 1st half • Sentry® Milit
Slide 18: Tactical communications
TACTICAL COMMUNICATIONS Strategy for growth • Penetrating the global tactical Mil2 market – increasing our addressable market • Forming strategic partnerships that complement our core product range • Transitioned to a full solutions provider Short Range Short Range “Larger military programs can (Voi
Slide 19: Land mobile radio
LAND MOBILE RADIO Cascade – Software defined radio based on P25 Standard Fully interoperable first responder communications solution with leading edge performance and reliability Software defined VHF P25 base station/repeater for networked communications$21m $48m solution Best value solution for the
Slide 20: Tracking solutions
TRACKING SOLUTIONS Caterpillar collaboration: • Awarded purchase order to supply hardware associated with the implementation of the Minestar® system into Newmont’s Tanami mine • Commenced commissioning of Minestar® system into a large block cave mine in Indonesia • Established joint Tiger Team to in
Slide 21: Technology council
TECHNOLOGY COUNCIL Leverage core technologies/applications Rugged Products, Solutions & Systems • History of IP creation, innovation and exploitation • Explore opportunities to grow the business both internally and externally • Focus on developing world markets • Core applications: • Communications
Slide 22: Financial results
Financial Results 21
Slide 23: Record first half
RECORD FIRST HALF Half Year Half Year Half Year Underlying NPAT ($m) Underlying business performance Dec 17 Dec 18 Dec 19 $m $m $m Revenue $94.7 $128.4 $171.0 Underlying business performance EBITDA $27.4 $38.0 $54.0 EBIT $20.9 $30.4 $43.7 Net interest ($0.2) - ($0.3) Net profit before tax $20.7 $30.
Slide 24: Engineering investment
ENGINEERING INVESTMENT Significant investment in product development Engineering spend ($m) Engineering spend (% sales) $102m • Record engineering investment to drive future growth $35m • Significant pipeline of future projects 23
Slide 25: Balance sheet
BALANCE SHEET Dec-18 Jun-19 Dec-19 Strong balance sheet $m $m $m Receivables 21.1 19.0 20.6 • Debt-free since 2017, $51 million net Inventories 43.7 36.7 35.4 cash position Payables (36.3) (44.2) (39.1) • Strong cash conversion Total working capital 28.5 11.5 16.9 Property, plant & equipment 17.3 17
Slide 26: Key ratios
KEY RATIOS Debt free, strong cash generation Underlying earnings per share (cents) Free cash flow ($m)2 Return on equity (%) 1 Net cash (debt) ($m) 1Return on equity = underlying net profit after tax divided by total equity 2Free cash flow = operating cash flow + interest – cash outflow for all prod
Slide 27: FY20 outlook
FY20 OUTLOOK Well positioned for H2: • Strong backorders for Vanquish™, to be delivered in H2 • Continued strength of gold detecting sales, run-rates consistent with first half • Communications delivered $21 million large contracts in H1 – which may not be repeated in second half • Difficult to fore