Codan Limited · ASX:CDA
Codan — Investor Presentation (February 2024)
29 slides from Codan's investor presentation, Feb 21, 2024
Slide 1: FY24 Half-year investor presentation (ASX cover letter)
21 February 2024 Company Announcements Office Australian Securities Exchange Level 4 20 Bridge Street SYDNEY NSW 2000 Dear Sir/Madam FY24 Half-year investor presentation Please find attached a copy of Codan Limited’s investor presentation dated 21 February 2024 for release to the market. Yours faith
Slide 2: H1 FY24 Results
H1 FY24 Results RULTS Codan Limited 21st February 2024 1
Slide 3: Important Notice and Disclaimer
IMPORTANT NOTICE AND DISCLAIMER Disclaimer The historical information in this presentation is, or is based upon, information that has been released to the market. For further information, please see past This presentation has been prepared by Codan Limited (ABN 77 007 590 605) announcements released
Slide 4: Contents
CONTENTS RESULT HIGHLIGHTS BUSINESS UNITS • Tactical Communications | DTC • Zetron • Minelab STRATEGY OVERVIEW OUTLOOK AND SUMMARY APPENDIX 3
Slide 5: H1 FY24 Group Highlights
H1 FY24 GROUP HIGHLIGHTS • H1 FY24 revenue +26% and EBIT +31% versus prior corresponding period (“pcp”) due to ongoing operational leverage Revenue EBIT $265.9m $54.4m • Solid H1 result reflecting strong organic growth, complemented by contributions from acquired +26% vs. pcp +31% vs. pcp businesses
Slide 6: H1 FY24 Performance
H1 FY24 PERFORMANCE Profit & Loss Dec-23 Dec-22 $m $m Revenue • H1 FY24 net profit after tax of $38.1 million +24% Communications $153.6 $136.6 versus pcp Metal Detection $110.0 $73.8 Other $2.3 $1.4 • Balanced revenue split between Communications and Total Revenue $265.9 $211.8 Metal Detection EBIT
Slide 7: Financial Position
FINANCIAL POSITION Strong balance sheet Balance Sheet Dec-23 Jun-23 Change • Net debt increased to $82.5 million as at 31 December $m $m $m 2023, having paid: Receivables 74.9 71.0 3.9 • upfront cash consideration for acquisition of Inventories 118.4 121.4 (3.0) Eagle and Wave Central ($30.3 million
Slide 8: Change in Net Debt Position
CHANGE IN NET DEBT POSITION Changes in Net Debt (Dec-23 vs Jun-23, $m) 2 1. Upfront cash consideration for acquisition of Eagle and Wave Central 2. Property, Plant and Equipment capital expenditure 7
Slide 9: Engineering Investment
ENGINEERING INVESTMENT Invest in ourselves - strong pipeline of projects • Sustained engineering investment across segments Engineering spend Engineering Spend by ensures competitive position maintained ($m) Business Unit H1 • H1 FY24 engineering spend of $28 million, equating to H2 ~10% of Group re
Slide 10: Business Units
Business Units CODAN
Slide 11: Communications
COMMUNICATIONS • H1 FY24 Communications revenues increased 12.5% to $153.6 million (+14% normalised¹), in middle of 10-15% target range, driven by: • Zetron delivering a strong H1; • Complemented by acquisition of two high-quality businesses during H1 (Eagle and Wave Central) • Segment profit of $37
Slide 12: Tactical Communications
TACTICAL COMMUNICATIONS • Tactical Communications experienced geopolitical and market disruptions impacting African HF sales, while achieving growth in other key markets • Notable H1 customer wins include: • $8.5 million European-funded military program (unmanned); • $7.1 million Korean Mesh Communi
Slide 13: Acquisition of Wave Central
ACQUISITION OF WAVE CENTRAL Strong strategic fit, acquiring complementary technology and capability to accelerate growth SIGNIFICANTLY IMMEDIATELY STRENGTHENS DOMO EPS-ACCRETIVE 15YR EXISTING TACTICAL BROADCAST PARTNERSHIP GEOGRAPHIC BUILDING SCALE IN EXPANSION KEY TARGET MARKETS NEC / STRONG NORTH
Slide 14: Zetron
ZETRON • Zetron achieved significant growth in H1 FY24, due to: • Delivered revenue synergies from its expanded business; and • Securing major command and control system contracts in utilities, transport and public safety markets • Notable H1 customer wins include: • $9.5 million contract award with
Slide 15: Metal Detection
METAL DETECTION • H1 FY24 Minelab revenue of $110.0 million, +49% versus pcp • As a result of operating leverage, Minelab increased segment profit margin to 34% (H1 FY23: 31%) • RoW¹ revenues remain remarkably resilient, despite challenging macroeconomic environment • Continued revenue contribution
Slide 16: Strategy Update
Strategy Update 15
Slide 17: Strategy Overview
STRATEGY OVERVIEW Codan’s renewed growth strategy focused on three core pillars that drive long-term value VEST IN OURSELVES NED CA PITAL ALL OCA IN LI TIO IP SC N DI GETTING QUALITY OF ACQUISITIONS THAT EVERYTHING RIGHT TOPLINE CREATE VALUE • Continued focus across people, • Global opportunity - On
Slide 18: Near Term Strategy
NEAR TERM STRATEGY Successful execution will see a more-balanced, integrated and sustainable Codan Enhanced offering as full Expansion and growth of systems Promote new products & expand solutions provider and support contracts channels to market • Increasing awareness and capabilities of DTC • Incr
Slide 19: Outlook & Summary
Outlook & Summary CODAN
Slide 20: Group Outlook
GROUP OUTLOOK When considering the outlook for the balance of FY24: • Communications continues to target full year revenue growth between 10 to 15%, versus FY23¹, while overall growth expected to exceed 15% with the benefit of H1 acquisitions; and • Minelab is targeting H2 result similar to H1, with
Slide 21: Building a Stronger Codan
BUILDING A STRONGER CODAN Our success in “building a stronger Codan” is underpinned by both financial and operational objectives GLOBAL OPPORTUNITY AND EXCEPTIONAL CULTURE DIVERSIFIED EARNINGS Large, globally addressable market, notably Fosters collaboration and inclusivity, inspiring within develop
Slide 22: Appendix
Appendix CODAN
Slide 23: Globally Diversified Technology Company
GLOBALLY DIVERSIFIED TECHNOLOGY COMPANY Codan develops and manufactures innovative lifesaving, mission critical communications and detection technology for individuals, communities and governments. 150+ Countries where Codan products & solutions sold 800+ Global employees, >30% engineering Codan’s c
Slide 24: Recent History / Evolution
RECENT HISTORY / EVOLUTION Codan’s recent history is marked by three distinct periods Revenue ($m) 506 Metal Detection 437 457 Communications 348 52% 39% 271 266 77% 69% 42% 70% 48% 61% 31% 58% 30% 23% FY19 FY20 FY21 FY22 FY23 H1 FY24 Pre-COVID COVID era A Stronger Codan Reliance on metal detection
Slide 25: Leadership Team
LEADERSHIP TEAM Alf Ianniello Michael Barton Marjolijn Woods Managing Director Chief Financial Officer Chief Human and CEO and Company Secretary Resources Officer Ben Harvey Paul Sangster Scott French Daniel Hutchinson Executive General Executive General Manager, Executive General Executive General
Slide 26: ESG Initiatives
ESG INITIATIVES ENVIRONMENT SOCIAL GOVERNANCE University scholarship TCFD alignment, support: Women in STEM, Female directors exceeds ESG Reporting Founders PhD ASX benchmark Stakeholder engagement Investment and Core values and ethical around climate related development in our people business pract
Slide 27: Tactical Communications Primary Markets
TACTICAL COMMUNICATIONS Communications solutions that enable customers to be connected Favourable market fundamentals: • Increasing global military and defence spend in the Five PRIMARY MARKETS MILITARY Eyes Intelligence community1 • Smart and safe city initiatives, growing adoption of Internet of T
Slide 28: Zetron Primary Market
ZETRON True end-to-end mission critical solutions provider Favourable market fundamentals: PRIMARY MARKET • Government funding environment ~US$10-15 billion Next PUBLIC SAFETY Generation 911 funding, upgrading emergency response communications • Long term contracts – recurring revenue stream • Techn
Slide 29: Minelab Primary Markets
MINELAB Delivering market-leading, innovative detectors Favourable market fundamentals: RECREATION / • Emerging awareness of recreational metal detection PROFESSIONAL • Shift in consumer preference towards direct-to- consumer and eCommerce channels PRIMARY MARKETS • Continued geographic expansion –