#1CODAN 19 August 2021 Company Announcements Office Australian Securities Exchange Level 4 20 Bridge Street SYDNEY NSW 2000 CODAN LIMITED | ABN 77 007 590 605 Technology Park | 2 Second Avenue | Mawson Lakes SA 5095 | Australia PO Box 35 | Salisbury South SA 5106 | Australia Dear Sir/Madam FY21 full-year investor presentation Please find attached a copy of Codan Limited's investor presentation dated 19 August 2021 for release to the market. Yours faithfully MCata Michael Barton Company Secretary On behalf of the Board This announcement was authorised for release to the market by the Board of Directors. Codan is a technology company that develops robust technology solutions to solve customers' communications, safety, security and productivity problems in some of the harshest environments around the world. FOR ADDITIONAL INFORMATION, PLEASE CONTACT:- Michael Barton Company Secretary & CFO Codan Limited (08) 8305 0392 Kayi Li Manager, Investor Relations Codan Limited (08) 8305 0392 AL MINELAB EC CODAN DTC COMMUNICATIONS ZETRON Minelab Electronics, Codan | Domo Tactical Communications, and Zetron are members of Codan Limited. +61 (0)8 8305 0311 WWW.CODAN.COM.AU#2FY21 FULL YEAR RESULTS AND UPDATE CAM MULTICAME C CODAN G56#3IMPORTANT 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 summary information about the current activities of Codan and its subsidiaries. The information in this presentation does not purport to be complete nor does it purport to contain all the information that a prospective investor may require in evaluating a possible investment in Codan. This presentation should be read in conjunction with Codan's other periodic and continuous disclosure announcements lodged with the Australian Securities Exchange (ASX), which are available at www.asx.com.au. Statements in this presentation are made only as of the date of this presentation unless otherwise stated and the information in this presentation remains subject to change without notice. Codan is not responsible for providing updated information to any prospective investors. Past performance information given in this presentation is given for illustrative purposes only and should not be relied upon as (and is not) an indication of future performance. 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 announcements released to ASX. This presentation may contain forward-looking statements with respect to the financial condition, results of operations, business of Codan and certain plans and objectives of the management of Codan. Actual outcomes may differ materially from forward-looking statements. Forward-looking statements, opinions and estimates provided in this presentation are likely to involve uncertainties, assumptions, contingencies and other factors. As a result, unknown risks may arise, many of which are outside the control of Codan. Forward-looking statements including projections, guidance on future earnings and estimates are provided as a general guide only and should not be relied upon as an indication or guarantee of future performance. Codan disclaims any intent or obligation to update publicly any forward-looking statements, whether as a result of new information, future events or results or otherwise. Should you have any specific queries in respect of this disclaimer please contact Codan directly. CODAN 2#4FY21 FULL YEAR SUMMARY Highest full-year sales in the company's history Record statutory net profit after tax of $90.2 million, an increase of 41% Underlying net profit after tax of $97.3 million, an increase of 52% Underlying Earnings per share of 54.0 cents, up 52% . Return on equity of 36% Excellent cash generation, close to zero net debt after funding circa $174 million for acquisitions Sales Underlying EBITDA Underlying NPAT Underlying EPS $437.0m Increased by 26% $158.8m Increased 35% CODAN $97.3m Increased by 52% 54.0 cents Increased by 52% 3#5INCREASED DIVIDEND Final dividend 16.5 cents • Final dividend 16.5 cents per share Full year dividend 27.0 cents (Interim: 10.5 cents) Full Year Dividend (Cents) • Increasing dividends reflect strength of business • Interim dividend will be paid: 14.0 Record date 26 August 2021 • Payment date 10 September 2021 FY19 18.5 FY20 27.0 FY21 "The board expects to continue its policy of paying shareholders in the order of 50% of our full year profits as dividends" CODAN 4#6FY21 FULL YEAR GROUP SALES A strong year for Codan -8% 22% CODAN 13% Group Sales $437m 75% +38% Metal Detection Communications Tracking Solutions 26% increase in sales over FY20 Metal Detection sales growth 38%: • • Growth in Recreational (42%), Gold Mining (37%) and Countermine (34%) Increased distribution into big box retailers Communications sales reduced by 8%: • . As previously reported Tactical Communications business impacted by COVID-19 Another record year achieved in LMR DTC and Zetron acquired to strengthen Communications Divestment of Tracking Solutions (Minetec) 5#7STRATEGIC GROWTH PLAN Transforming lives through innovation, wherever you are Organic Growth Stengthen the Core Leverage Technologies Invest in Ourselves Acquisition Targets Growth by Acquisition $ Expansion: Product Development: • Strong pipeline of future projects Geographic footprint Products to solutions Voice to Data to Video H • Technology Council: Communications • Tracking/Sensing Data analytics • • Video of Technology, Innovation & Suc STRATEGY Success Acquisition Criteria: Adjacent markets Technology focus Scale Core Values О CODAN Customer Driven Can Do High Performing Openness & Integrity 6#8FY21 STRATEGIC ACHIEVEMENTS $ Invest in Ourselves Invested in excess of $30 million in product development; ~30% of employees are engineers ☑Strengthen the Core Added video, command and control technologies; Established Mexico office CODAN Leverage Technologies Continue to explore opportunities to further develop and deploy Codan's technologies Acquisition Targets ☑ Acquired DTC and Zetron 7#9CODAN LIMITED OVERVIEW Innovation wherever you are ZETRON. 150+ around the world Sell to over 150 countries 208 700+ employees 10 sites across the globe: around the world MINELAB MINELAB CODAN DTC MINELAB MINELAB ZETRON, DTC MINELAB DTC MINELAB AUSTRALIA BRAZIL CANADA DENMARK IRELAND 米 MEXICO SINGAPORE UAE UK USA The Codan group consists of the following brands: C CODAN COMMUNICATIONS MINELAB ZETRON. DTC ZETRON 8#10FY21 GLOBAL FOOTPRINT Customers in 150 countries, exporting around 85% of sales CODAN $107m $8m $203m $54m $11m $54m CODAN OFFICE CODAN OFFICE (INC. ENGINEERING) MANUFACTURING/ WAREHOUSES 9#11$millions ALL MINELAB METAL DETECTION Metal Detection Sales 182 236 FY19 FY20 FY21 CODAN 327 • Record performance - 38% growth in sales Strong growth across all markets Gold Mining: • • Continuing strong demand in artisanal mining, across all price points Gold Monster® is now entry level detector of choice for artisanal miners GPX6000Ⓡ production now reaching targeted levels Recreational: VANQUISHⓇ coin & treasure detectors exceeded expectations Continue geographic and big box retail expansion Countermine: 34% increase in sales against FY20 • Released new MF5Ⓡ single sensor Countermine detector 10 10#12ALL= MINELAB METAL DETECTION Supply Chain to Goals Approach Measurements Continual supply and demand reviews. Reach targeted inventory levels across all key product lines in FY22. Supply Chain Minimise supply chain disruptions from Government restrictions or component shortages. Invest in increased manufacturing capacity and inventory holdings. CODAN#13GPX TM GPX High performance Easy to use Lightweight Collapsible Waterproof RRP USD $5,999 POWERED BY GEO SENSE-PI™M#14COMMUNICATIONS Strengthened Communications segment by adding DTC and Zetron into our portfolio Tactical Communications: Business impacted by COVID-19 - Government contract deferrals and travel restrictions $millions Communications Sales . Delivered our largest ever order of Sentry HF radio units to an African military customer 78 Land Mobile Radio (LMR): CODAN COMMUNICATIONS 104 96 . Another record year delivering multiple systems projects Integration for both acquisitions proceeding in line with approved plans FY19 FY20 FY21 CODAN 13#15TACTICAL COMMUNICATIONS VHF / UHF NETWORK CONNECTIVITY C пиримли INTEROPERABILITY MESH / IP VIDEO DTC Domo Tactical Communications CODAN 100000 HF SEAM SATCOM INTEGRATION Expanding our voice product offering to video and data driven solutions CODAN COMMUNICATIONS 14#16DTC & TACTICAL Integration plan Integrate sales and marketing teams Leverage routes to market CODAN DTC COMMUNICATIONS MILITARY MARKETS Operate under both brands Offer end to end integrated solutions FULL SYSTEMS SOLUTIONS STRATEGIC PARTNERSHIPS Expecting DTC to deliver FY22 EBITDA $14 million CODAN ADJACENT MARKETS 15#17PUBLIC SAFETY COMMUNICATIONS Strategic fit of Zetron with LMR The Alert The Public The Intake, Triage, and Coordination Command and Control ZETRON 心 DATA REPORTING LOCATION MAPPING & ANALYTICS AUTOMATED ALERTING Voice/Text/Messaging CALL TAKING Video/Broadband/loT & HANDLING COMPUTER AIDED DISPATCH DISPATCH f Social Media The Delivery The Response Mission Critical Wireless Communications First Responders and Field Personnel Voice LMR Data Broadband CODAN The Emergency Response Continuum AvIII 16#18ZETRON & LMR Integration plan Integrate into one business Offer full suite of mission critical solutions Operate under the Zetron brand Capitalise on Next Generation 911 911 ((p) EMERGENCY CALL TAKING ZETRON. DISPATCH INTEROPERABILITY FIRE STATION ALERTING Expecting Zetron to deliver FY22 EBITDA $8 million CODAN MAPPING AND LOCATION 館 器口 LMR 17#19CODAN DIC. AO CA • • Sale of Minetec to Caterpillar: Sale price $18 million up-front cash 5-year earn out and supply agreement Settled 1 July 2021 MINETEC 18#20FINANCIAL RESULTS STAFF CODAN CODAN Re DALIS P CODAN MONELAB 19#21RECORD FY21 PERFORMANCE Profit & Loss FY21 FY20 $m $m Change % Underlying NPAT ($m) Revenue Metal Detection $326.5 $236.4 38% 56 Communications $95.5 $104.0 -8% Tracking Solutions $15.0 $7.6 97% Total Revenue $437.0 $348.0 26% 34 Underlying EBITDA $158.8 $117.8 35% Underlying EBIT $139.8 $89.6 56% 24 Net interest ($1.1) ($0.6) Net profit before tax $138.7 $89.0 56% Underlying net profit after tax $97.3 $64.0 52% 22 41 30 22 Statutory net profit after tax $90.2 $64.0 41% FY19 FY20 FY21 H1 H2 Record sales and profits, despite strong AUD appreciation Strong demand for Metal Detectors across all markets • Sales growth translated to NPAT, economies of scale Investment in manufacturing capacity and inventory to minimise supply disruption and reduce freight costs CODAN 20 20#22ENGINEERING INVESTMENT Strong pipeline of projects Engineering spend ($m) 29.0 31.0 32.6 FY19 FY20 FY21 CODAN Engineering by Business Unit Return on Equity¹ 2% 44% 8% of Sales 54% Metal Detection Communications Tracking Solutions ¹Return on equity = rolling 12 month net profit after tax divided by average equity 29% 28% 36% FY19 FY20 FY21 21#23CASH GENERATION Net Cash/(Debt) Balance ($m) 38 FY19 93 FY20 172 (174) FY21* 18 Acquisitions Sale of Minetec *Cash position at 30 June 2021 before funding DTC and Zetron acquisition Excellent cash generation - close to zero net debt at 30 June after funding $174m for acquisitions Proceeds from Minetec were received 1 July 2021 • Expect further inventory investment in FY22 CODAN 22#24FY22 OUTLOOK Well positioned for FY22: • . • • strong start to the year and in line with FY21 run-rate; demand for our metal detection products remains strong; Minelab will benefit from a full year of GPX6000Ⓡ sales; Communications segment to include a full year of the acquired DTC and Zetron - FY22 will be a year of integration for these two new businesses; and uncertainty around Tactical Communications and supply chain due to COVID-19 still exists. Donald McGurk has advised the Board that it is his intention to retire from his role as Managing Director of Codan sometime within the next 9-12 months. Donald will remain as Managing Director until such time as a successor is appointed to ensure a smooth transition. We will update shareholders on FY22 trading at the Company's virtual AGM. CODAN 23#25Appendix Y 24#26A MINELAB METAL DETECTION Products & Markets RECREATION Coin & Treasure, Gold Detectors - Key markets Australia, USA, Europe, Russia Users: • Treasure hunters Adventurers • Gold prospectors • • Archaeologists Beach & deep-sea detectors GOLD MINING Handheld Gold Detectors Key markets - Africa, Asia Pacific, Latin America Users: Small-scale artisanal miners Gold prospectors CODAN COUNTERMINE Landmine Detectors Market - countries impacted by war past and present Users: • Demining organisations Governments • Defence & security forces 25 25#27GOLD PRODUCTS Products to service all types of prospectors وحش الذهب ١٠٠٠ GOLD MONSTER 1000 USD RRP ex tax/shipping $899 CODAN ENTRY GOLD DETECTOR RANGE NEW RELEASE 50C SDC2300 $3299 GPX Series $3999 MID RANGE GPX 6000* $5999 AL= MINELAB GP GP 7000 PROFESSIONAL $7999 26#28RECREATIONAL PRODUCTS Expanding MULTI-IQ® technology across the range RECREATIONAL DETECTOR RANGE Multi-IQ Simultaneous Multi-Frequency Technology All Targets, All Soils, All the Time. GO FIND SERIES VANQUISH EQUINOX Ser Series Λ MINELAB EXCALIBUR II E-TRAC CTX 3030 $1499 $1549 SPECIALIST EXPERT USD RRP ex tax/shipping HOBBYIST $99 - $249 $199 - $499 ENTHUSIAST $649 - $899 CODAN $2499 27 22#29DTC PRODUCTS, SOLUTIONS & MARKETS Diverse Portfolio to Address various Markets DTC VIDEO Audio & Low Latency Video Transmission/Receive, Broadcast & supporting Surveillance DTC MIMO/MESH Addresses challenges of increased operations with limited available RF spectrum SPECTRONIC. • Law Enforcement • Tactical Communications • TV Broadcast (US Army, International MoDs and DoDs) • Live Sports CODAN • National Security • Unmanned Systems CORP TEN INTERNATIONAL SURVEILLANCE Audio and video capabilities to support surveillance operations COMMAND AND CONTROL C2 location & associated Meta-data collection creating a cohesive operational view for the user 1303.32 • Law Enforcement National Security Intelligence Law Enforcement • Defence 28