Slide 1: FY19 Results and Strategy Presentation
FY19 RESULTS For personal use only AND STRATEGY PRESENTATION Donald McGurk Managing Director & CEO Michael Barton Chief Financial Officer Kayi Li Investor Relations 3 SEPTEM BER 2 0 1 9 1
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: Robust, innovative technology for global markets
For personal use only 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 4: FY19 Summary
FY19 SUMMARY For personal use only • Record sales year with another special dividend • Returned $27 million to shareholders through ordinary and special dividends, 50% payout ratio • Strong balance sheet - $38 million net cash • $29 million invested in engineering (11% of sales) 4
Slide 5: Growing Dividends
GROWING DIVIDENDS Ordinary dividend up 6% + Special Dividend For personal use only • 5.0 cent final ordinary dividend (4 cent interim) • 2.5 cent final special dividend (2.5 cent interim) • Increasing ordinary dividends reflect growth in base-business earnings • Special dividends reflect performance
Slide 6: Strong Shareholder Returns
STRONG SHAREHOLDER RETURNS For personal use only • 250% increase in underlying EPS since FY15 • 23% return on equity • Total shareholder return 236% over 3 years* Earnings per Share (cents) Return on Equity 6 * to 30 June 2019, assuming reinvested dividends.
Slide 7: Business Units
BUSINESS UNITS A portfolio of innovative technologies for global markets For personal use only 7
Slide 8: FY19 Global Footprint
FY19 GLOBAL FOOTPRINT Customers in 150 countries, exporting around 85% of sales For personal use only $48m $21m $63m $102m $2m $35m 8
Slide 9: Growth in Base Business
GROWTH IN BASE BUSINESS Sales $200- $220 million / NPAT $28-33 million use only Sales Base-business sales up 24% since FY17 $271 m For personal$ millions $226 m $230 m • Outperformance driven by: • Strong demand for gold detectors in Africa • Large communications project wins Base- Outperformance bu
Slide 10: Strategy
STRATEGY Diversify revenues, grow the base business For personal use only Delivered in FY19 • Grew recreational detector • Strengthened offering to tactical • Integrated Minetec technology business – EQUINOX® success military market – Sentry® into Caterpillar Minestar® • Developed new VANQUISH™ coin
Slide 11: Leverage Core Technologies
LEVERAGE CORE TECHNOLOGIES Rugged Products, Solutions & Systems For personal use only • History of IP creation, innovation and exploitation • Established CTO role and Technology Council • Align opportunities to grow the business both internally and externally 11
Slide 12: Business Units
For personal use only BUSINESS UNITS 12
Slide 13: Metal Detection: Products & Markets
METAL DETECTION Products & Markets For personal use only 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 — p
Slide 14: Metal Detection
METAL DETECTION FY19 For personal use only FY20 Goals • Highest ever sales at $182 million • Release new VANQUISH™ coin & treasure detector in Q1 • Increased base business by a further 18% • Capitalise on strong gold detector demand • A full year of new EQUINOX® sales • Continue geographic and retai
Slide 15: Multi-IQ Simultaneous Multi Frequency
MULTI-IQ® SIMULTANEOUS MULTI FREQUENCY Product features For personal use only • 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 Dis
Slide 16: Recreational Products
RECREATIONAL PRODUCTS Expanding EQUINOX® technology across the range For personal use only RECREATIONAL DETECTOR RANGE • Growing the base business: new product releases have grown the recreational business by 40% • Next new product…VANQUISH™…coming soon USD RRP ex tax/shipping $99 - $249 $259 - $499
Slide 17: Gold Products
GOLD PRODUCTS Products to service all types of prospectors For personal use only GOLD DETECTOR RANGE USD RRP ex tax/shipping $799 $3750 $2699 - $3999 $7999 ENTRY - MID RANGE - PROFESSIONAL 17
Slide 18: Countermine
COUNTERMINE Simultaneous multi-frequency dual sensor detector For personal use only • Metal Detection (Multi-IQ®) tuned to landmines • Ground Penetrating Radar (GPR) • Entering production Q2 2019 • Delivering first 52 units to international customers • Engineering partly funded by Australian governm
Slide 19: Communications: Tactical Communications Markets
COMMUNICATIONS For personal use only 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, dependable wireless systems for Europe &
Slide 20: Communications
COMMUNICATIONS FY19 FY20 Goals For personal use only • Strong year, sales up 37% • Continue transition to full communications solutions provider • Completed Sentry® Military Manpack • Form strategic partnerships to broaden offering • Successfully transitioned into tactical military sector • Complete
Slide 21: Tactical Communications: Tactical Solutions Portfolio
TACTICAL COMMUNICATIONS Tactical Solutions Portfolio For personal use only Land Mobile Radio Markets HF MANPACK / VEHICULAR VHF HANDHELD & SOLDIER RADIO INTEROPERABILITY • Smaller, lighter, digital voice, encryption • Operational efficiency & awareness for • RIOS provides interoperability between •
Slide 22: Land Mobile Radio: Cascade
LAND MOBILE RADIO Cascade – Software defined radio based on P25 Standard For personal use only First responder communications solution Software-defined VHF P25 base station/repeater for networked communications solution Best value solution for the market: $48m $21m $63m • Affordability • Dependabili
Slide 23: MineStar for Underground, powered by Minetec
MineStar ® for Underground, powered by Minetec For personal use only Minetec enablers: • Real-time sub-metre tracking • Precise employee location for better safety • Precise equipment location to improve productivity • High speed data (video back-haul) • Digitalisation of mining information • Traffi
Slide 24: Tracking Solutions
TRACKING SOLUTIONS FY19 FY20 Goals For personal use only • Integrated Minetec into CAT Minestar ® • Maximise BHP Olympic Dam opportunity and other key • Completed trial at Newmont’s Tanami mine reference sites • Commenced CAT dealer education & training • Leverage CAT dealer network to grow sales •
Slide 25: Fleet Management System: BHP Olympic Dam
FLEET MANAGEMENT SYSTEM BHP Olympic Dam For personal use only • Contract for Fleet Management System awarded in May 2018 • Installation complete • Working through site and user acceptance testing • Extended in December 2018 to include underground enabling communication infrastructure (Wi-Fi WASP) •
Slide 26: Financial Results
For personal use only Results Financial 26
Slide 27: Another Strong Year
ANOTHER STRONG YEAR Underlying NPAT Underlying business performance FY17 FY18 FY19 For personal use only $m $m $m Revenue $226.1 $229.9 $270.8 Underlying business performance EBITDA $75.6 $70.4 $78.6 EBIT $61.5 $53.7 $63.4 Net interest ($0.8) ($0.5) ($0.1) Net profit before tax $60.7 $53.2 $63.3 Und
Slide 28: Engineering Investment
ENGINEERING INVESTMENT Engineering spend ($m) Continuing to invest in ourselves For personal use only • Engineering investment will drive future growth • Fundamental to our strategy of growing the base business • Increased Minelab development projects from three to five • Established Technology Coun
Slide 29: Balance Sheet
BALANCE SHEET For personal use only Jun-18 Dec-18 Jun-19 Strong balance sheet $m $m $m • $62 million cash generated from Receivables $29.8 $21.1 $19.0 Inventories $31.6 $43.7 $36.7 operations, strong cash conversion Payables ($46.3) ($36.3) ($44.2) • Debt-free since 2017, $37.5 million Total working
Slide 30: Key Ratios
KEY RATIOS Debt free, strong cash generation For personal use only Underlying earnings per share (cents) Free cash flow ($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 – cas
Slide 31: Strategy: FY20 Goals
STRATEGY Diversify revenues, grow the base business For personal use only FY20 Goals • Release new Vanquish coin & • Increase tactical military market • Leverage Caterpillar treasure detector share by delivering more full distribution to significantly scale • Maintain dominant market position soluti
Slide 32: FY20 Outlook
FY20 OUTLOOK For personal use only Base business sales and profitability increased • Sales range: $200 million to $220 million • NPAT range: $28 million to $33 million Potential to again exceed base business sales and profit in FY20 • Expect a stronger second half in FY20 due to normal seasonality: