Codan Limited · ASX:CDA
Codan — FY2005 Earnings Presentation
45 slides from Codan's earnings presentation, Aug 18, 2005
Slide 1: Codan Limited Full Year Results to June 2005
Codan Limited Investor Presentation - Full Year Results to 30 June 2005 18th, 19th & 22nd August 2005 New Products and Investment for Growth Mike Heard David Hughes Managing Director Chief Finance & Information Officer
Slide 2: Contents
Contents Company Overview Products Customer types Full Year Results Financial Results and Dividend Highlights Maintaining Profit Capital Expenditure for Growth Outlook Environment Growth opportunities Questions New Products and Investment for Growth
Slide 3: Codan—The Company & Business
Codan—The Company & Business Australian company founded in 1959 Serving global markets for communications and broadcast products Listed in November 2003 Actual FY 05 Revenue $126.3m, Net Profit After Tax $16.2m Exports in excess of 90% of revenue, to over 150 countries Over 450 staff and 500 custome
Slide 4: Operations
Operations Design, manufacture and market our own core products Design and manufacturing in Adelaide, Brisbane and Melbourne Sales, Representation and Customer Services Offices in Australia, UK, USA, China and India Distributors, dealers, agents and service centres worldwide Head Office, finance, HR
Slide 5: Products
Products Codan provides value-added products for: Communications HF Radio Satellite Communications Digital Microwave Radio Television broadcasting (Codan Broadcast) Niche products for international niche markets Products for government, businesses and aid organisations Printed Circuit Boards (IMP Pr
Slide 6: Products
Products Codan is a “standard products” business not an “engineering projects” business Approximately 60 HF Radios per day Approximately 10 Satellite Communications product units per day Digital microwave radio volumes growing Different models and variants Associated accessories Production line manu
Slide 7: Products: HF Radio
Products HF Radio New Products and Investment for Growth
Slide 8: Products: HF Radio
Products HF Radio Radio transceivers, modems and accessories for land vehicle installed, base station and backpack applications New Products and Investment for Growth
Slide 9: Codan New Manpack HF Radio
Codan New Manpack HF Radio Lightweight Waterproof Excellent Radio Performance New Products and Investment for Growth
Slide 10: Products: Satellite Communications
Products C and Ku Band Transceivers, Block Up Converters and Solid State Satellite Communications High Power Amplifiers for satellite communications earth stations New Products and Investment for Growth
Slide 11: Codan New Release Satcom Product Family
Codan New Release Satcom Product Family Codan Ku-Band Transceiver Codan Ku-Band BUC New Products and Investment for Growth
Slide 12: Products: Digital Microwave Radio
Products Digital Microwave Radio Digital Microwave Radio (DMR) links for terrestrial communications including cellular telephone networks New Products and Investment for Growth
Slide 13: The New Codan Digital Microwave Radio Product Family
The New Codan Digital Microwave Radio Product Family Codan 8800 – Indoor Unit Codan 8800 - Outdoor Unit New Products and Investment for Growth
Slide 14: TV Broadcast Products
TV Broadcast Products • Interface Equipment • Signal Routers • Monitoring Equipment Equipment for the management, conversion, distribution and monitoring of digital and analogue, video and audio signals in a TV broadcast studio New Products and Investment for Growth
Slide 15: PROVIDEO and TALIA products
PROVIDEO modular interface products TALIA routers, control panels and audio monitoring bridges New Products and Investment for Growth
Slide 16: Customer types
Customer types Many government organisations—first and developing worlds Law enforcement and emergency service agencies Aid and humanitarian (NGO) agencies UN agencies Businesses—first and developing worlds Telecommunications service providers Telecommunications systems integrators TV and video broa
Slide 17: Financial Results FY05
Financial Results FY05 Year ended 30 June Audited Audited Audited Growth % 2005 2004 2003 2003 to 2005 Revenue HF Radio Communications 68.7 62.6 46.7 Satellite Communications 45.1 61.0 53.4 Digital Microwave Radio Comm’s 4.6 4.0 4.7 Total Communications Products 118.4 127.6 104.8 13.0% Broadcast Pro
Slide 18: Financial Results FY05: Operating Revenue
Financial Results FY05 Operating Revenue $160.0 $133.8 $140.0 $126.3 $113.1 $120.0 $104.6 $100.0 $ Million $80.0 $60.0 $40.0 $20.0 $- 2002 2003 2004 2005 New Products and Investment for Growth
Slide 19: Financial Results FY05
Financial Results FY05 Year ended 30 June Audited Audited Audited Growth 2005 2004 2003 % 2003 to 2005 Total Revenue 126.3 137.5 113.1 11.7% EBITDA 30.8 32.6 26.8 14.9% Depreciation (2.8) (2.6) (3.1) Amortisation of deferred R&D (3.8) (3.9) (3.6) EBITA 24.2 26.1 20.1 20.4% Amortisation of goodwill (
Slide 20: Financial Results FY05: Strong Currency Headwind
Financial Results FY05 Strong Currency Headwind Hedged exchange rate (USD to AUD1.00) FY05 $0.62 versus FY04 $0.54 Revenue impact A$9m, EBITDA impact A$3.9m, NPAT impact A$2.7m New Products and Investment for Growth
Slide 21: Financial Results FY05: EBITDA
Financial Results FY05 EBITDA $40.0 $35.0 $31.9 $30.8 $30.0 $26.8 $24.2 $ Million $25.0 $20.0 $15.0 $10.0 $5.0 $- 2002 2003 2004* 2005 * EXCLUDES IMPACT OF PROPERTY SALE New Products and Investment for Growth
Slide 22: Financial Results FY05: NPAT
Financial Results FY05 NPAT $20.0 $16.0 $16.2 $15.0 $11.1 $ Million $10.3 $10.0 $5.0 $- 2002 2003 2004* 2005 * EXCLUDES IMPACT OF PROPERTY SALE New Products and Investment for Growth
Slide 23: Financial Results FY05 Dividend
Financial Results FY05 Actual Actual Dividend 2005 2004 Earnings per ordinary share (cents) 10.0 10.3 (on issued capital at 30 June 2005 fully diluted) Interim dividend (cents) per ordinary share 2.5 2.5 (paid April, fully franked) Final dividend (cents) per ordinary share 3.5 3.0 Franking 100% 100%
Slide 24: Financial Results FY05
Financial Results FY05 Audited Audited Audited Audited 2005 2004 2005 2004 $m $m $m $m CURRENT ASSETS CURRENT LIABILITIES Cash 1.5 11.1 Accounts Payable 20.2 15.1 Receivables 22.8 14.4 Other 0.1 3.7 Inventories 15.4 12.2 Borrowings 3.4 0.3 Other 1.7 4.9 Provisions 5.4 8.2 41.4 42.6 29.1 27.3 NON-CUR
Slide 25: Highlights FY05
Highlights FY05 Maintained Profit After Tax (excluding property sale FY04) in a difficult environment Significant capital expenditure program to strengthen the company’s platform for future growth New Products and Investment for Growth
Slide 26: Maintaining Profit FY05
Maintaining Profit FY05 Maintained Profit After Tax (excluding property sale FY04) in an environment of: strong currency headwind continued strong demand for HF radio products arising from world security concerns and humanitarian needs reduced sales of satellite communications products arising from
Slide 27: Maintaining Profit FY05
Maintaining Profit FY05 Managed the difficult environment in FY05 via product cost reductions and strict control of expenses New Products and Investment for Growth
Slide 28: Maintaining Profit FY05: Operating Margins
Maintaining Profit FY05 Diligent management of the business in the medium term has resulted in: Continuous growth in operating margins (% to sales) over two years Audited Audited Audited 2005 2004 2003 Revenue 100.0% 100.0% 100.0% EBITDA 24.4% 23.7% 23.7% EBIT 17.8% 17.8% 16.6% NPAT 12.8% 12.1% 9.8%
Slide 29: Maintaining Profit FY05: NPAT Trend
Maintaining Profit FY05 Maintenance of cumulative business performance above 15% compound growth objective over the medium to long term NPAT Trend 20 18 16 14 $millions 12 10 8 6 4 1998 1999 2000 2001 2002 2003 2004 2005 2006 Financial Years Actual 15% Compound Growth Business Objective New Products
Slide 30: Capital Expenditure for Growth FY05
Capital Expenditure for Growth FY05 Total capital program $20.5m Infrastructure Expanded and Upgraded Factory Enterprise Wide Business System Acquisitions New DMR Technology and Product Range Operations and Technology of Talia Sound & Vision Internal Product Development New Manpack HF Radio New Sate
Slide 31: Capital for Infrastructure
Capital for Infrastructure Factory Expansion Project (91% Floor Space Increase) Total planned expenditure $4.7m Expenditure to date $3.8m Status new floor space fully in use completing refurbishment of old floor space Business Systems Project Total planned expenditure $4.6m Expenditure to date $3.8m
Slide 32: Codan Factory Expansion Project
Codan Factory Expansion Project New Products and Investment for Growth
Slide 33: Capital for Acquisitions
Capital for Acquisitions New DMR Technology and Product Range Technology enabling the manufacture and ongoing development of a complete new cost effective product range Market launch March 05 New Products and Investment for Growth
Slide 34: The New Codan Digital Microwave Radio Product Family
The New Codan Digital Microwave Radio Product Family Codan 8800 – Indoor Unit Codan 8800 - Outdoor Unit New Products and Investment for Growth
Slide 35: Capital for Acquisitions
Capital for Acquisitions Operations and Technology of Talia Sound & Vision Complementary Product Range Launched “Codan Broadcast” globally in March 05 Worldwide export distribution agreement with Ross Video of Canada New Products and Investment for Growth
Slide 36: PROVIDEO and TALIA products
PROVIDEO modular interface products TALIA routers, control panels and audio monitoring bridges New Products and Investment for Growth
Slide 37: Capital for Internal Product Development
Capital for Internal Product Development New Manpack HF Radio launched March 2005 New satellite communications product family launched progressively through FY05 New Products and Investment for Growth
Slide 38: Codan New Manpack HF Radio
Codan New Manpack HF Radio Lightweight Waterproof Excellent Radio Performance New Products and Investment for Growth
Slide 39: Codan New Release Satcom Product Family
Codan New Release Satcom Product Family Codan Ku-Band Transceiver Codan Ku-Band BUC New Products and Investment for Growth
Slide 40: Outlook: Environment
Outlook Environment General recovery in world telecommunications Strong global demand for digital microwave radio The effect of the environment of world security concerns is becoming more difficult to predict Ongoing global demand for TV broadcast equipment arising from digital TV rollout Strengthen
Slide 41: Outlook: Communications Products Opportunities
Outlook Communications Products Opportunities Redeployment of resource from product development to sales and marketing Market penetration by new HF, Satcom and DMR product families Demand for more satellite communications products in key private network markets Re-stocking by aid agencies of HF radi
Slide 42: Outlook: Broadcast Products Opportunities
Outlook Broadcast Products Opportunities Continued marketing of the “Codan Broadcast” brand Growth arising from expanded product range Continued penetration of Asian markets via Codan distribution network Increased sales in North America and globally via the Ross Video distribution agreement Ongoing
Slide 43: Outlook: Printed Circuit Boards Opportunities
Outlook Printed Circuit Boards Opportunities Continued growth in Australian and NZ market share via focus on quality, delivery and service Benefits to customers arising from strategic partnership with an Asian manufacturer New Products and Investment for Growth
Slide 44: Outlook – In Summary
Outlook – In Summary Growth opportunities for all product groups enhanced by new products released last year. Nonetheless expected profit growth in FY06 could be limited if the Australian Dollar remains strong. Expect to maintain our corporate objective of 15% compound growth over the medium to long
Slide 45: Thank you for your support of Codan
Thank you for your support of Codan Any Questions? New Products and Investment for Growth