Codan LimitedInvestor Presentation - Half Year Results to 31 December 2004
28th February & 1st March 2005
Mike HeardManaging Director
David HughesChief Finance & Information Officer
25.1%24.3%% of Revenue
(3.5)(2.7)Tax
4.82*5.06Earnings per Share (cents)
(*Note: Based on closing number of shares)
12.4%13.3%% of Revenue
Half Year ended 31 December
Growth %20032004
5.0%7.88.2Net profit after tax
-3.5%11.310.9Net profit before tax
-2.2%
-5.1%
63.0
15.8
61.6
15.0
Total Revenue
EBITDA
Key Financial Information
Key Financial Information (continued)
61.6
58.01.52.1
2004
-2.2
-2.7+15.4
Growth %
63.0Total Revenue
59.61.32.1
Communications ProductsBroadcast ProductsPrinted Circuit Boards
2003 Revenue
Half Year ended 31 December
Note: Exchange rate impact on revenue negative $4m
Statement of Financial Position (Balance Sheet)
31 Dec 2004
$m
31 Dec 2004
$m Current Assets Current Liabilities Cash 5.3 Accounts Payable 15.3 Receivables 16.6 Other 3.0 Inventories 11.2 Borrowings 0.4 Other 4.8 Provisions 5.3 37.9 24.0 Non-Current Assets Non-Current Liabilities Investments 0.2 Borrowings 0.1 Property, Plant & Equipment 19.4 Provisions 6.8 Product Development 16.1 6.9 Goodwill 18.6 Other 3.4 Total Liabilities 30.9 57.7 Net Assets 64.7 Total Assets 95.6 Shareholders Equity Share Capital 23.0 Reserves 0.1 Retained Profits
Total Shareholders Equity
41.6
64.7
Key Financial Information (continued)
Dividend
Half Year Ended 31 Dec2004 2003
Earnings per ordinary share (cents) 5.06 4.82 (on issued capital at 31 December 2004 fully diluted)
Interim dividend (cents) per ordinary share 2.5 2.5(paid April, fully franked)
Franking 100% 100%
Record date 18 March 2005
Payment date 1 April 2005
Modest real growth in sales volume (approximately 4%) and NPAT (4.9%) after exceptional growth last year
Real sales growth offset by significant impact of exchange rate on revenue (approx $4m) and EBITDA (approx $2m)
EBITDA margins maintained against exchange rate pressure through product cost reductions and expense control
Continuing environment of world insecurity influencing sales
Strong cash position after major capital expenditure (approx $6m); continued control of working capital
Improved earnings per share and maintained fully franked dividend level
Hedge profile extended to December 2005 at an average rate of US$0.75
Good progress with factory expansion and business systems upgrade
Completion of development of two new products / product families; all to be released in the second half; outcome of targeted product development
Asset and technology acquisitions to extend product range for digital microwave radio and TV broadcast products
Half-Year Results to 31 December 2004Commentary
Codan New Manpack HF Radio
Lightweight
Excellent Radio Performance
Waterproof
Codan New Release Satcom Product Family
Codan Ku-Band Transceiver
Codan Ku-Band BUC
The New Codan Digital Microwave Radio Product Family
Codan 8800 - Outdoor Unit
Codan 8800 – Indoor Unit
PROVIDEO modular interface products
TALIA routers, control panels and audio monitoring bridges
Total Planned Budget = $4.7M
Expenditure to date = $1.8M
Codan Factory Expansion Project
Acc Testing
CommonKANBAN
LockUp Tool Cab
CONS.
CONS.
PA & Filter Test
RF IF and NGT PCB Assembly
NGT Module PA & Filter Assembly
PA Assy Bench
RF/IF Assy
Handload (N
ew)
TNPx4
TNPx4
HF Acc Materials
HF Acc Materials 5582 Materials
5582 Materials HF ACC Matl HF ACC Matl
HF Acc Assy 1
HF Acc Test
HF Acc Assy 2
HF Acc Assy 3
TestRack
Drying Rack
Pressure TestTest Bench
NVATW/Board
SchedularDocumentationCleaning Stuffs
RF/IF, App Proc, Audio Components
Test Rack
ACCESSORIES
Shared Processes
NVATW/Board
SchedularDocumentationCleaning Stuffs
MPM
Sur
face
Mou
nt L
ine
MicroscopeRework Station
Hot Plate & Solder Pot,
PCB Cleaning
Wire Strip
EMPLOYEE DEVELOPMENT
Non
Con
form
ance
NVATW/Board
SchedularDocumentationCleaning Stuffs
HF Acc Materials
HF Acc Materials 5582 Materials NGT Trx & X3 Assy
5582 Assy 1NVAT
W/Board Schedular
DocumentationCleaning Stuffs
File
s
Non
Con
form
ance
Training Materials
5582 Assy 2
HH Cont Assy
5582 Assy 3
SOLDERING TRAINING
Misc Assy 5582 Assy
CONSUMABLES
SOLDERING TRAINING
KANBAN
KANBAN
KANBAN
ERSA 330TF WAVE SOLDER
& OFFLOAD
Stake & Stand Offs
NVATW/Board
SchedularDocumentation
Cleaning Stuffs
Leed Cutter
NC
Wave
WIP
Equipment To fix
Preventative Maintenance
Bench
Meeting
Factory HUB
BRADY PRINTER
9350 Trolley
Final Assy
Test Rack
Test Rack
Test Rack
Cond.
Trolley
Cond.
Trolley
Base Mounting Stud Assy
9350 Trolley
9350 Trolley
Spill Tray
CoilWIP Coil &
Conductor Assy
PCB Material PCB 1
Shroud Assy
9350 T
rolley
9350 T
rolley
Test Cage 01
9350 Trolley
Team Leaders
Desk
Motor Assy Stage 1
Motor Assy Stage 2
9350
Kan
Ban
Consumables 9350
Kan
Ban
RF/IF S
MT
PC
B
RF/IF Assy RF/IF Assy RF/IF Assy
SM
T P
CB
sS
MT
PC
B a
nd J
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PA Assy Bench
9350
scr
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(2
Bin
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Rivets PA Assy Bench
PA Assy Bench
Nitro Cell
Fly P
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Assembly
9350 K
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Con
d.T
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on
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Trol
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Nitro
Bath
Com
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NVATW/Board
SchedularDocumentationCleaning Stuffs
Filter Components SMT PCBs
Ove
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Com
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Empties & SMT PCB's
UDC 4UDC 4
UD
C 2
EN
VIR
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TRO
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UD
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EN
VIR
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TRO
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REWORK RACKNVATW/Board
SchedularDocumentationCleaning Stuffs
F/G
T
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F/G
T
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F/G
T
rolle
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F/G
T
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PCB ASSY RACK PCB ASSY RACKRF AUTO TEST AND
TUNING RACKCP/FILTER ASSY
RACK TUNING RACK
VO
SC
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TEST GEAR
UDC 5UDC 5
PREP
UD
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PR
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UD
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S2
MA
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UDC FILTERUDC FILTER
UD
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UD
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STA
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2
Systems Bench
Rework
Consolidation Bench
HF
F/G
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T
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CMR Materials
NVATW/Board
SchedularDocumentationCleaning Stuffs
Rework
CMR Rework
CM
R C
omponents
Test Rack
Test Rack
Systems MaterialsCMR Materials
HF F/Goods Trolley
HF F/A Bench
TUNING
SSPA MTO
BUC MTO
BUC Material
5700, 5900 CP/FILTER
ASSY
SPARE PARTS
5700, 5900 PCB ASSY
UDC MODULETest Jigs
5700, 5900 PCB ASSY
5700, 5900 PCB ASSY
SM PCBsSM PCBs
SSPA Matl
LP/MP PCB ASSY
SMPS Test TUNING
AW
AIT
. IN
SP
RF AUTO 1 RF AUTO 2 TUNING TUNINGTUNING
NVATW/Board
SchedularDocumentationCleaning Stuffs
NV
AT
W/B
oard
S
ched
ular
Doc
umen
tatio
nC
lean
ing
Stuf
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SSPA 1
SSPA 2
SSPA 3
SSPA 4
BUC ModuleGROWTH
BU
C M
ater
ial
SSPA MODULE
NVATW/Board Schedular
DocumentationCleaning Stuffs
BUC 5
BUC Convertor TuningGrowth
BUC Material
BU
C R
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k
NV
AT
W/B
oard
S
ched
ular
Doc
umen
tatio
nC
lean
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tuffs
BUC 6
BUC ModuleAssy BUC LO PSU
Assy TestC Half Test
BUC 3
BUC 2
BUC 1
BUC 4
UDC
LP/MP SSPA Tuning
HPSSPA Tuning
TUNINGPCB REWORK
F/A
RE
WO
RK
UDC 1
UDC 2
UDC3
UDC 2
UDC3
UDC 1
HPSSPA Tuning
SS
PA
SM
PS
3
SS
PA
SM
PS
2
SS
PA
SM
PS
1
LP/MP SSPA Tuning
Cha
mbe
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NVATW/Board
SchedularDocumentationCleaning Stuffs
HPSSPA Tuning
UD
C F
/A
ST
AG
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HPSSPA Tuning
PRODUCT AWAITING OVEN
Che
st F
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erSSPA Material
LP/MP SSPA Tuning
LP/MP SSPA Tuning
Buc Tuning
Buc Tuning
BUC 5
BU
C A
ssyBUC 6
BU
C A
ssy
BU
C A
ssy
Buc Tuning
BUC MaterialBUC Material
Buc Tuning
LBU
C C
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Hal
fLB
UC
Com
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H
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Buc Tuning
MB
UC
C
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MB
UC
C
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MB
UC
C
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MB
UC
C
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on H
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Seal & Test
LBU
C C
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on
Hal
fLB
UC
Com
mon
H
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Buc Tuning
CMR Manual TestCMR Manual Test
NGT Module JB & Handset
DT Cons & Fan F/A
Test Rack
RF/IF Test Bench
NGT Rework
RF
/IF W
IP
RF/IF AssyRF/IF Test Bench RF/IF Test Bench
NGT Rework
NVATW/Board
SchedularDocumentationCleaning Stuffs
Filter PCBFilter PCB
PA Components
Was
te
Dis
posa
l
Re
wo
rk
CMR Front Panel Assy
CMR PCB Assy Test
Rack
CMR Module
Hset pcb Assy
SMT PCB
NVATW/Board
SchedularDocumentationCleaning Stuffs
Handset P
CB
s
Hset Assy Test Rack
PA & Filter TestPA & Filter Test WIP
SMT PCB
Empty BinsSMT PCB & Components
JBox
PC
BsJBox
PCBsJBox, PCB &
Fan
CMR MTO
Test R
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HF F/A Bench
NGT SR App Proc NGT SR App Proc
NGT Voice Audio
NGT Voice App Proc
NGT SRX App Proc
NGT SR Audio
Handset
Was
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Dis
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HF
F/G
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T
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HF
F/G
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T
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NVATW/Board
SchedularDocumentationCleaning Stuffs
HF F/Goods Trolley
Cus
tom
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CMR Rework
HF
F/G
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T
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Partial Builds & Special Order
WIP
HF F/Goods Trolley
Cus
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Test R
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HF
F/G
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T
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HF
F/G
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T
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HF
F/G
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T
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HF
F/G
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T
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NGT MTOPA and Filter
Junction Box & Fan Assembly
Junction Box & Fan Assembly
Junction Box & Fan Assembly
JBox Bench
NGT SRX Audio
Handset Handset
HF F/A Bench
NG
T F/
A
Mat
eria
ls
Finished DT Cons & FansNVATW/Board
SchedularDocumentationCleaning Stuffs
HF
F/G
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T
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Cus
tom
isin
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Test
Rack
HF
F/G
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T
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NGT Rework
HF
F/G
oods
T
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HF
F/G
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T
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Systems Bench
Electric H
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Leak Test
BOX
SSPA Accept/Sealing
UDC Finished Goods
Seal & Test
NGT SRx and CMR Finished oods
Warranty / Misc
BUC Finished Goods
HF Acc Finished Goods
Satcom Acc Finished Goods
SSPA Finished Goods
Display Unit
Product Line Sign Post
Consolidation Materials
HF
F/G
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T
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U
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Pro
duct
Lin
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Pos
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CMR Front Panel Assy
Test Rack
CMR PCB Assy
Con
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Waste
F/Goods Trolley
Con
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Sat
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C
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Tro
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WasteWaste
F/Goods Trolley
F/Goods Trolley
Whip Antenna
9350 Trolley
Hon
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Wei
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Work Station Work Station File
s
LIB
RA
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, FO
RM
S &
M
SD
S S
HE
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S
Files
9350 T
rolley
9350 T
rolley
9350 T
rolley
9350 Trolley
9350 Trolley
9350 Trolley
9350 Trolley
9350 Trolley
9350 T
rolley
9350 T
rolley
9350 T
rolley
9350 T
rolley
9350 T
rolley
9350 T
rolley
9350 T
rolley
9350 T
rolley
9350 T
rolley
9350 T
rolley
HPSSPA ASSY
HPSSPA ASSY
HPSSPA ASSY
Inspection
HPSSPA ASSY
HPSSPA ASSY
AWAIT. TEST
BR
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Mat
l
SS
PA
S2
Mat
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PR
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SSPA S1 Matl
Graphite Extraction
DISPATCH & PRE-CONSOLIDATION
NGT SR Audio
RF/IF PCB RF/IF PCB RF/IF PCB
PA and FilterPA and FilterPA and FilterPA and Filter
HP SSPA
x2
HP SSPA
x2
HP SSPA
x2
Display Unit
Product Line Sign Post
HPPA OVEN
Satcom Acc Finished Goods
LIB
RA
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, F
OR
MS
&
MS
DS
SH
EE
TS
Anti Static StationAnti Static Station
HF
F/G
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T
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HF
F/G
oods
T
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HF
F/G
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T
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Nibbler
BR
AD
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PR
INTE
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BU
C R
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SSPAMatl
SSPAMatl
SSPA Sealing
Com
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Sys/MainTest
BRICK TANK
HP F/A
HP
Ta
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HP
Ta
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HP
Ass
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SSPA Rework/Warranty
LP/MP SSPA Tuning
LP/MP SSPA Tuning
Rew
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BOX
9350 Final Assembly
9350 Sub Assembly
9350 Tank
SSPA Matl
SSPA SMT PCBs
SSPA Matl
Cust Service Trolley
HP SSPA
x2
HP SSPA
x2
HP SSPA
x2
HP SSPA
x2
HP SSPA
x2
HPSSPA Sealing
UDC Accept/Sealing
BUC Accept/Sealing
BU
C R
ack
x5 E
mpt
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tora
ge
BUC Accept/Sealing
Satcom Post Oven & Parts Racks
Satcom Post Oven & Parts Racks
Satcom Post Oven & Parts Racks
Satcom Post Oven & Parts Racks BER
Testing
ENVIRO TEST
AC
CE
PT
AN
CE
HP
Ass
yT
rolle
y
HP
Ass
yT
rolle
y
HP
Ass
yT
rolle
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LockersIndirect Staff
ESDTester
Desolder &Microscope
Handset
Fan Options
D-C
onsole PC
Bs
RF/IF PCB
SM
T PC
Bs
Rew
ork
PC
Bs
SM
T P
CB
s
Kits
Rework
ACC System Test
NVATW/Board
SchedularDocumentationCleaning Stuffs
Codan Factory Expansion Project
Codan Factory Expansion Project
Codan Factory Expansion Project
Codan Factory Expansion Project
Opportunities for growth
Communications Products
Little change in the market environmentMajor new product launches in all three product groups to stimulate growthExceptional capability to deliver on short lead timesStrengthened sales & marketing team
Opportunities for growth
Broadcast Products
Acquisition of Talia product rangeLaunch of Codan BroadcastAsian distribution network in placeExport sales growing
Outlook
Challenges
Appreciation of the Australian Dollar reduces AUD revenue and profit
Hedge rate 62 US cents in FY05 vs 54 US cents in FY04Additional hedging in place for first half FY06 at 75 US cents
Capital products business – demand can fluctuate from year to yearStrong business periods may be offset by weaker subsequent periods
Outlook
Second half performance will depend onthe strength of orders, March to May, aided by new product launches.
Codan’s objective is to maximise shareholder value by delivering 15% compound growth over the medium to long term.
Thank you for your support of Codan
Any Questions?