2013
CODAN
ANNUAL
REPORT
CODAN CORE
VALUES
Codan has always been, and
continues to be, a ‘values’-driven
company. Our values act as
a foundation for our future success
and are ingrained in our culture.
They speak to what Codan is,
set the benchmark as to how
we will behave and hold ourselves
accountable for our actions.
Through extensive consultation
with staff, we have updated our
values to ensure that they are
relevant and a reflection of who
we are today. Our refreshed
values embrace our great people,
great products and outstanding
strategic leadership.
CONTENTS
4
/ HIGHLIGHTS
6
/ CHAIRMAN’S AND CEO’S REPORT
10 / GLOBAL LOCATIONS
11 / OPERATIONS
22 / BOARD OF DIRECTORS
26 / LEADERSHIP TEAM
31 / FINANCIAL REPORT
106 / ASX ADDITIONAL INFORMATION
108 / CORPORATE DIRECTORY
Codan Limited
ABN 77 007 590 605
Annual General Meeting
The Annual General Meeting of Codan Limited
will be held at 11:00 am on Wednesday,
23 October 2013 at the Hilton Adelaide hotel,
233 Victoria Square, Adelaide, South Australia.
Codan Limited 2013 Annual Report 1
• Show determination
to take the right action to
achieve sustained results
• Demonstrate the courage to
commit and follow through,
no matter the situation
2
Codan Limited 2013 Annual Report 3
Codan Limited 2013 Annual Report 3
FY13
HIGHLIGHTS
4
$244.3m
TOTAL
REVENUE
13c
ANNUAL
DIVIDEND
$45.4m
NET PROFIT
AFTER TAX
• Highest reported profit of $45.4 million
• Earnings per share of 25.8 cents
• Annual dividend increased to 13 cents
• Strong growth of metal detector sales into
new markets
• Major new product release in Radio
Communications
• Strategic acquisition of land mobile
radio business
• Delivery of key mining technology reference
sites by Minetec
• Inclusion in the ASX 300 index
Codan Limited
Founded in 1959, Codan Limited (ASX:CDA)
is a group of electronics-based businesses
that capitalise on their fundamental design
and manufacturing skills to provide best-in-
class electronics solutions to global markets.
Our success has been driven by our ability
to optimise the development and manufacture
of sophisticated electronics products and
associated software, which has enabled us
to deliver cost-effective solutions to a range
of customers in the communications, metal
detection and mining technology markets.
We work closely with our customers to seek
innovative ways to solve their problems and
add value to their operations.
The Codan brands are internationally
established and well regarded in the markets
we serve. Our customers include gold
prospectors, metal detection hobbyists,
aid agencies, miners, businesses and
governments, including public safety,
military and security organisations.
Our plan for growth is based on enhancing
our unique intellectual property, putting
that know-how into an expanding range
of electronic-based product solutions, and
then leveraging our operational excellence
and marketing capability across the world.
We continue to seek out opportunities to grow
the business organically and by acquisition.
The business has approximately 420
employees located in Australia, Canada,
USA, UK, Ireland, China and UAE. Our
marketing reach, largely through a long-
established network of staff and dealerships
across the world, embraces activity in over
150 countries.
Operating revenue
EBITDA
NPAT
FY13 HIGHLIGHTS
$244.3m
Note
$132.4m
$189.3m
$169.6m
$179.4m
2009
2010
2011
2012
2013
For year ended 30 June
REVENUE
Communications
Metal detection
Mining technology
Other
Total revenue
EBITDA
EBIT
Interest
Net profit before tax
Tax
Net profit after tax
Earnings per share
Dividend per share
Return on equity
Gearing
2009
2010
2011
2012
2013
$29.4m
2009
$12.8m
$56.1m
$44.0m
$51.7m
2010
2011
2012
2013
$76.3m
$31.1m
$23.4m
$27.9m
$45.4m
2013
%
of sales
$58.0m
$166.3m
$14.5m
$5.5m
24%
68%
6%
2%
2012
$66.4m
$98.6m
$9.3m
$5.1m
%
of sales
37%
55%
5%
3%
2011
$69.8m
$92.1m
%
of sales
2010
%
of sales
2009
%
of sales
41%
54%
$70.1m
$106.6m
37%
56%
$77.3m
$41.7m
$7.7m
5%
$12.6m
7%
$13.4m
$244.3m
100%
$179.4m
100%
$169.6m
100%
$189.3m
100%
$132.4m
$76.3m
$64.7m
($1.7)m
$63.0m
($17.6)m
$45.4m
25.8c
13.0c
41%
17%
1
2
31%
26%
26%
19%
$51.7m
$43.2m
($3.4)m
$39.8m
($11.9)m
$27.9m
17.0c
9.5c
37%
17%
29%
24%
22%
16%
$44.0m
$35.0m
($3.0)m
$32.0m
($8.6)m
$23.4m
14.3c
9.0c
34%
26%
26%
21%
19%
14%
$56.1m
$45.8m
($3.1)m
$42.7m
($11.6)m
$31.1m
18.8c
8.0c
48%
32%
30%
24%
23%
16%
$29.4m
$21.5m
($4.6)m
$16.9m
($4.1)m
$12.8m
7.9c
6.5c
20%
48%
58%
32%
10%
100%
22%
16%
13%
10%
Notes:
1. Return on equity is calculated as net profit after tax divided by average equity
2. Gearing is calculated as net debt divided by the sum of net debt and equity
The financial information shown above reflects the underlying business performance. Non-underlying income/(expenses) are considered to be outside of the normal
business activities of the group. For 2013, the net impact of non-recurring items on the profits of the company were immaterial. Non-recurring items in the prior year related
to the disposal of a discontinued operation and acquisition costs.
Codan Limited 2013 Annual Report 5
CHAIRMAN’S
AND CEO’S
REPORT
6
Net debt increased from $16 million
to $25 million during the year, primarily
as a result of higher investment in working
capital and the acquisition of Daniels
Electronics in Canada. The increase
in working capital has been largely due
to a planned increase in gold detector
inventories which has allowed the
company to move to a sea freight model
and which has resulted in significant
freight savings and ensured that we
are well positioned to supply product
during periods of peak demand.
The equity raising we undertook during
the year to partly fund the Daniels
acquisition led to a marked improvement
in the liquidity of our shares. This, in
combination with strong profit growth,
led to Codan’s inclusion in the ASX 300
index. These events have served to
broaden our share register and create
a more normalised trading environment
for investors.
Our balance sheet remains strong,
and we are energetically pursuing
opportunities to broaden and further
diversify the business through a
combination of internal technology
and product development, identification
of adjacent products and markets, and
new acquisitions that look for the gaps
in technology and know-how that will
open opportunity for the future and
continue to create value for shareholders
over the medium to long term.
The company has had a very successful
year despite operating in an environment
of economic uncertainty, and this serves
to remind us that we must remain
vigilant and continuously challenge
each other to ensure that we do not
become complacent. We have a clearly
defined strategy for the future, have great
products and people, and have moved
to raise profitability to new levels over
the past few years.
The metal detection business has again
performed very well during the year,
eclipsing the previous record sales result
achieved in FY10. A significant investment
in business development during the past
two years, involving dedicated people and
increased marketing and travel budgets,
has served to significantly broaden
the international footprint for our
metal detection business.
Sales of our gold detector products into
Africa grew significantly during the year
as we began to see benefits from the
business development work designed to
open up new markets for our products
in many new African countries. Our
gold detector business now spans all
continents as we successfully take our
world’s-best metal detection technology
to new markets in Central and Latin
America and Asia Pacific, as well as
growing sales in our traditional Australian,
US and European markets.
Although gold machines were the star
of the show again this year, sales of our
coin and treasure products also grew
significantly as a direct result of a major
new product release and an extensive
marketing campaign. Minelab products
are considered to be the best in the world,
and we continue to move even further
ahead of our competitors as a result of
the relentless pursuit of new leading-edge
technologies from our applied research
Dr David Klingner
Chairman
Mr Donald McGurk
Managing Director
and CEO
Codan had an outstanding year in 2013.
Sales of $244.3 million were an all-time
record and the net profit after tax of
$45.4 million was the highest in the
company’s history and nearly double
the profit achieved in FY12.
This has enabled the company to declare
a fully franked final dividend of 7 cents
per share, following on from the 6 cents
per share fully franked interim dividend,
making a total dividend of 13 cents per
share for the full year, an increase of 37%
from the total dividend of 9.5 cents per
share for FY12.
capability and the significant investment
in engineering to package that technology
into our metal detectors.
We are currently working on three new
major product platforms that each have
exciting and unique technology and
features, and that will ensure that we
continue to be the number one metal
detection company in the world for
many years to come.
Our radio communications business
has had a tough year, with the troubled
economic conditions being experienced
throughout the world bringing about
tightening of US budgets and delays
to major programs in the US and across
emerging world markets in Africa and
Central Asia.
In response to the difficult conditions,
the acquisition of Daniels Electronics is
a critical first step to broaden our business
beyond High Frequency (HF) radio and to
enable Codan to participate in the global
Land Mobile Radio (LMR) market space,
which is significantly larger than the HF
market. We will further diversify our radio
communications business by adding new
partners, products and technologies that
leverage off our HF and LMR products.
This will enable Codan to enter higher
growth markets and act as a prime in
certain LMR programs to become a more
profitable and comprehensive supplier
of communications solutions globally.
The new Envoy™ software-defined radio
was successfully released to the market
during the year and is designed to provide
a future-proofed HF solution to our
customers. The new Envoy™ radio has
positioned Codan ahead of its competitors
and will form the foundation of our HF
business growth strategy during the next
few years. In addition to this, we seek to
capitalise on the strong contract vehicles
in the North American market, developed
by Daniels to grow existing and new
product solutions in North America and
take them into the international market,
by utilising our extensive global
distribution network.
After a slower start than we had originally
anticipated, the recently acquired
Minetec business has made good
progress in bringing its “game-changing”
communications-based technologies to
market. Minetec’s best-in-class solutions
are aimed at improving mine productivity
and mine safety for blue-chip mining
companies to improve their performance.
Minetec has successfully installed its
collision avoidance and mine simulation
solutions into a number of key customer
reference mines, and is continuing to
aggressively market to other local and
international mining organisations.
Despite significant competition, we
consider Minetec is better placed to offer
a suite of completely integrated, cost-
effective products with significantly higher
specifications than our competitors. This
is made possible because the designs
are developed and manufactured in-house
and all intellectual property is owned
by Minetec.
Codan has consistently delivered
exceptional returns to its shareholders
over many years, averaging over 30%
return on shareholders’ funds during the
past five years. Although the business
can be lumpy on a year-by-year basis,
due mainly to the nature of the markets
in which we operate, the company has
been able to progressively increase
the dividends paid since the company
was floated in 2003, demonstrating
our commitment and intent to reward
shareholders for their support.
Codan has consistently
delivered exceptional
returns to its shareholders
over many years, averaging
over 30% return on
shareholders’ funds during
the past five years.
As always, Codan’s people continue to
be our greatest strength. We have created
a culture in the organisation that seeks
to continually challenge and improve
every aspect of our business, we have
hard-working and dedicated people right
across the world and we are pleased to
say that the business is in great hands.
We sincerely thank everyone for their
contribution and support during FY13
as we look forward to the year ahead.
CHAIRMAN’S AND CEO’S REPORT
Dr David Klingner
Chairman
Mr Donald McGurk
Managing Director and CEO
Codan Limited 2013 Annual Report 7
8
• Commit to defining and
achieving ambitious goals
• Drive continuous improvement
and embrace change
• Encourage our colleagues
and teams to achieve their
full potential
Codan Limited 2013 Annual Report 9
Codan Limited 2013 Annual Report 9
GLOBAL
LOCATIONS
Codan has operations around the world.
VICTORIA
CHICAGO
ROCHESTER
LONDON
BEIJING
CORK
DUBAI
PENANG
PERTH
ADELAIDE
CODAN DISTRIBUTION
CODAN OFFICES
MANUFACTURING CENTRES
10
OPERATIONS
Codan Limited 2013 Annual Report 11
Codan Limited 2013 Annual Report 11
RADIO
COmmUNICATIONS
Codan Radio Communications is a leading
international designer and manufacturer
of premium High Frequency (HF) and Land
Mobile Radio (LMR) communications
systems. We deliver our capability
worldwide for the security, military,
humanitarian and public safety markets.
Our mission is to deliver the world’s-best
radio communication solutions, at an
affordable price, to all of our customers.
With more than 50 years in the business,
Radio Communications has garnered
a reputation for reliability and customer
satisfaction, producing innovative and
industry-leading technology solutions.
12
• Acquisition of LMR business
• Release of Envoy™ software-defined
HF radio
• More advanced product features
• Multi-year contract awards
with all major UN agencies
• Consolidated presence in emerging
markets
• Integrated LMR business, generating
supply chain efficiencies and reduced
product costs
• Compete more broadly in the
LMR market and expand
internationally
• Develop strategic technology
road-map for higher growth
markets
• Evolve and enhance Envoy™
product platform
• Deliver sales and profit growth
RADIO COMMUNICATIONS
CASE STUDY
Cutting-edge technology for
Fiji Meteorological Services
When the Fiji Meteorological Service
(METServices) decided they needed
new cutting-edge technology to
assist with their early warning weather
system, they turned to the Codan
Envoy™ for the solution. From 12
remote locations, the Codan Envoy HF
radio enables meteorological service
stations to send in their numeric
weather codes every 3 hours to Nadi
headquarters. In the past this was
carried out by voice communications
only. Now METServices have the ability
to send this information using voice,
radio text message and HF email,
giving them greater flexibility and more
reliable transfer of weather conditions
across their coverage area.
With over 3,000 square miles of
weather coverage required, the Codan
Envoy™ provides METServices with
a guaranteed communication link
for transmitting the frequent weather
information and radar imagery via
email. The reliable HF link ensures
METServices receive every code
clearly, guaranteeing their early
warning weather system is reliable,
robust and always available amidst the
most devastating weather conditions.
Codan Limited 2013 Annual Report 13
Codan Limited 2013 Annual Report 13
Codan has developed
a very strong brand name
and a reputation for product
excellence in its established
markets worldwide.
In August 2012, Codan acquired 100% of Daniels Electronics Ltd, a leading North American-based designer, manufacturer and supplier of LMR communications systems. The acquisition delivered on Codan’s stated strategy of growing market share and diversifying the Radio Communications’ product offering beyond HF. The acquisition of an established market leader in the LMR industry has enabled Codan Radio Communications to offer LMR solutions in conjunction with its HF products, leveraging Codan’s strong brand and dealer networks to drive international sales growth for HF and LMR, particularly in the developing world. As a result of the integration of the two businesses, Radio Communications has generated supply chain efficiencies, reduced product costs and implemented a more effective organisational structure. The redesign of the sales team has resulted in a more integrated sales channel for our LMR and HF products, and the opportunity to become more relevant in the communications industry by moving higher up the value chain to position Codan as a prime contractor for selected programs.The acquisition of the LMR capability will enhance our ability to focus on organic growth this year. Our result, despite the combination of tough economic conditions and a dependence on US-government funding, demonstrates our customers’ belief in our delivery and value for money. We expect the business to grow, as markets previously delaying orders release large opportunities for programs in Africa and Central Asia. There are a number of positives as we look forward to FY14. We have made significant progress integrating the new LMR business and are now leveraging off our international distribution network, which is expected to result in an expansion of our sales into new international markets. We are looking to build on our Foreign Military Sales successes with the US government in Central Asia and Africa to further support HF radios and systems for the Afghan National Police, the Kazakhstan border guards and other countries in the regions that are now looking to expand their Codan-installed radio networks. Radio Communications was awarded a significant LMR public safety contract in Australia, and was successful on a bid to support search and rescue in Australasia, providing an integrated transportable system including the new Envoy™ HF radio and LMR interoperability. The integrated product delivery represents a unique and differentiated product offering from Radio Communications.Codan was also awarded an order to deliver vehicle and man-portable HF systems with secure voice and data in support of peacekeeping operations in Africa. The recent renewal of our contracts with all of the major UN agencies has positioned us as the radio of choice for humanitarian operations and, given the current level of political instability in Africa, has seen this segment of our business grow during the past 12 months, partially offsetting the delays experienced with major project awards in our security and military markets. We grew our market presence in Latin America, with an initial contract award following the placement of sales representatives conducting business development activities in the region. Following its launch in June 2012, the new Envoy™ software-defined radio has received strong support from the humanitarian, security and public safety markets after the delivery of products for acceptance testing. Sales continue to grow for Envoy™ as customers recognise the value proposition and its unique features. Work will be ongoing to entrench this best-in-class product in our markets as the new standard in HF. The Envoy™ will also receive a range of enhanced software features and capabilities during the next 12 months as we continue to drive customer expectations.Codan has developed a very strong brand name and a reputation for product excellence in its established markets worldwide, and we will seek to capitalise on these attributes as we develop a strong foundation for medium to long-term growth in our Radio Communications business.
METAL DETECTION
Minelab is the world leader in providing
metal detection technologies to small-scale
gold miners, hobbyists and prospectors,
and for demining and military needs.
A record sales and profitability year was
achieved in FY13, with strong growth
recorded across traditional markets and
significant growth in the small-scale gold
markets across Africa, and Central and
Latin America.
WHY we do what we do:
We change people’s fortunes.
HOW we do it:
By creating innovative technologies
and products that allow people to
explore every surface of the planet
and discover what lies beneath,
knowing our experts are supporting
them every step of the way.
WHAT we do:
We make the world’s best metal
detectors.
14
• Record sales and profits achieved
• Expanded gold detector sales into
more regions
• Increased marketing support in
new and established markets
• Fast-tracked extensive product
development road-map
• Successful launch of flagship
CTX 3030 treasure detector
• Action taken against counterfeiters
• Expand gold detector sales
into even more regions
• Grow large retail chain
customer base
• Continue with exciting new
product developments
• Win key demining projects
Small-scale gold mining
Minelab’s world-leading gold-finding
metal detection technology continues
to drive strong interest from small-scale
gold miners around the world.
The record profitability in FY13 has been
largely driven by the ongoing growth of
metal detector sales into the small-scale
gold mining fields, particularly in Africa.
As reported by the board in June 2013,
some of these markets have been impacted
by civil unrest and political instability.
While uncertainty in the markets into
which we sell can impact the level of metal
detectors sold, there are a number of other
factors that influence the general level
of demand for gold detectors in Africa.
The primary driver of demand for gold
detection machines in Africa is the
adoption of metal detection technology
by the large number of small-scale gold
miners, and the demonstrated success
they have in finding gold. These small-
scale gold miners have previously used
traditional and often environmentally
damaging mining techniques to find gold.
Minelab’s world-leading metal detectors
are revolutionising the way gold is found
by these miners.
Climate and religious events also impact
metal detector sales into Africa. From
April to June, West Africa experiences
its wet season and North East Africa
experiences its hottest months, with
average temperatures of over 40 degrees.
These extreme weather months do impact
the number of small-scale miners who
are prospecting, and therefore lead to
a lower level of demand for detectors
over this period. Ramadan, which
currently occurs in July and August, also
reduces the number of miners prospecting
for gold during this period.
Small-scale gold miners in Africa are
searching for gold as their primary income
source, and therefore another variable to
the number of detectors sold is the price
of gold which, although not at its recent
record high, still rewards prospectors
well. Our analysis of Minelab’s previous
years’ sales history shows little correlation
between gold detectors sold and the price
of gold, however it is clear that a high gold
price is a positive factor for the business.
The recent fall in the value of gold may
influence the short-term buying decisions
of miners in Africa. However, the longer-
term underlying demand from small-scale
gold miners in Africa is not expected to
be materially impacted by a fall in the price
of gold as has occurred in recent months.
Minelab has been dealing with the threat
of counterfeit products for a number
of years, and a number of key actions
continue to be taken to minimise the
impact of counterfeits in the African
market. These key actions include
increasing the use of security labels
and a new SMS verification system
to give customers the ability to ensure
that they are buying a genuine Minelab
metal detector. The company has also
conducted a number of successful
raids on counterfeit operations, seizing
counterfeit products and having charges
laid against the counterfeit operators.
During FY13, the operations of Minelab
have been re-organised to increase the
number of staff and resources that are
dedicated to this small-scale gold mining
market. With strong business development
activities now occurring in a number of
countries across Africa, Central and Latin
America, and Asia, Minelab is well placed
to continue with the development of this
gold mining segment.
Hobbyists and Prospectors
Minelab continues to successfully sell
metal detectors into the mainly developed
world economies of Australia, United
States, Europe and Asia for individuals
who metal detect for the fun of it and for
whom metal detecting is an interest, a
hobby and a sport. These metal detectors
include those aimed at finding gold and
those that are for the detection of coin and
treasure such as jewellery and artefacts.
This part of the Minelab business
represents approximately one third of the
total Minelab business and has achieved
strong and steady growth in recent years,
as the hobby of metal detection becomes
increasingly familiar and accepted across
the world and Minelab continues to take
market share from competitors.
Minelab successfully released the CTX
3030 all-terrain treasure detector in June
2012, and this product has set a new
standard, with integrated GPS, wireless
audio, a high-resolution colour display
and improved target recognition in a fully
waterproof platform.
Minelab continues to invest in growing
this consumer market, and excellent
progress has been made with large retail
chains across the globe to have them
carry and promote our metal detectors
to their customers.
Countermine
Minelab’s detectors are also considered
to be the best in the world for locating
landmines and explosive remnants of war.
Consequently, Minelab has become the
detector of choice for many humanitarian
demining organisations and military and
government bodies.
Minelab’s countermine detectors are
manufactured in Adelaide and exported
to more than 55 countries around the
world where landmines remain a threat.
These include Angola, Sri Lanka, Vietnam,
Mozambique, Colombia, Lebanon and
Afghanistan, just to name a few.
Darren Mitry
(Smolensk, Russia)
Darren made significant
discoveries over the course
of 18 days of snorkelling and
wading with his Excalibur – a
large haul of valuable gold rings!
Robert Lukacevic
(Florida, USA)
Robert saved his own life and
the lives of countless others
using his Minelab Countermine
detector to find and
decommission over a thousand
mines, grenades and explosives from around
churches, schools and kindergartens in the
clean-up of war torn Croatia.
Apanga Teme
(AFR, Burkina Faso)
Apanga has changed his and
his family’s future - in one hour,
using his X-TERRA 705, he
found a nugget in the same area
where they had been panning
for gold for the last 3 weeks without success.
METAL DETECTION
CASE STUDY
The Ballarat Nugget
The story of the GPX 5000 find!
When one of Cordell Kent’s regular
gold prospecting clients walked
through the door of The Mining
Exchange Gold Shop in Ballarat on
Wednesday 16th January, he could
never have predicted that this was the
moment he’d been waiting for over the
last 20 years…
“We had a general greeting and then
he looked at me with a smile and
a glint in his eye. He said, ‘Mate,
I found a good one’.” This massive
gold nugget, weighing slightly more
than five kilograms (177 ounces),
is potentially worth upwards of half
a million dollars to a collector. It was
discovered, 60 centimetres below
the surface, in gravelly soil, using
a Minelab GPX 5000 state-of-the-art
gold detector.
Mr Kent said, “I’ve got no doubt there
will be a lot of people who will be very
enthusiastic about the goldfields again;
it gives people hope. There’s nothing
like digging up money; it’s good fun.”
Codan Limited 2013 Annual Report 15
Codan Limited 2013 Annual Report 15
mINING
TECHNOLOGY
Minetec supplies cutting-edge products,
systems and technology to the mining
industry. This technology is aimed at
improving mine productivity and safety.
• Successfully installed pilots with
blue-chip mining customers
• Established relationships with additional
key mining customers
• Major investment in product and
technology road-map
• Commercialised products and solutions
16
• Transition business from
product development stage
to a commercial entity
• Deliver on the value proposition
to key mining customers
• Expand customer base
• Invest in new products and
technologies
Prior to Minetec involvement at Toguraci,
mine activities were based on manual
procedures using whiteboards and Excel
spreadsheets. Mine crews, organised
in shifts, were assigned specific
responsibilities within the mining cycle.
These activities were dependent on each
other and often resulted in crews not
achieving their objectives due to another
crew’s delay or failure to complete tasks.
Consequently, mine development and
production was inconsistent and very
difficult for supervisors to manage.
Minetec’s SMARTS™ Control (MMC) system
In April 2013, the Toguraci mine
implemented Minetec’s SMARTS™,
a Mine Management & Control (MMC)
system fully integrated with underground
mine infrastructure, communications and
tracking capabilities. The implementation
of SMARTS™ provided powerful
enhancement of mining processes,
through simulations for long-term
and short-term planning, to achieve
mining development goals. Since its
implementation, SMARTS™ has achieved
critical acclaim, and has proven its
ability to significantly increase efficiency
and meet mining production targets.
In addition to achieving Newcrest’s
outlined objectives, SMARTS™ has also
improved site communications, safety,
accountability and on-site coordination.
MINING TECHNOLOGY
Minetec and Newcrest have worked
closely together to ensure that SMARTS™
was adopted by staff and adapted to the
mine’s specific needs and objectives to
ensure maximum effectiveness.
Delivered as a suite of Minetec products,
including Mine Office™, Trax+Tags™ and
ELF™, the complete Minetec SMARTS™
solution has provided Toguraci with
optimised planning capability, centralised
data acquisition and reporting, real-time
situation awareness for traffic management
and a complete underground mine
communication infrastructure for digital
voice and Wi-Fi. Minetec’s SMARTS™
solution is unparalleled in the market place,
providing a one-of-a-kind complete mine
management solution.
Mine Map of Toguraci Gold Mine
“Such a system strives to make all levels
of tasks in the mine measurable and all
personnel in the mine accountable. I really
like the transparency. Whether in my office,
or in the muster area, at mine control or
at home in Melbourne, I can see at
a glance what is going on in the mine.
I can see status reports and real-time icons
of machines and personnel moving about
the mine. It is a new world.”
John Lean
Mine Manager, Toguraci Gold Mine
Codan Limited 2013 Annual Report 17
Codan Limited 2013 Annual Report 17
CASE STUDY
Minetec Toguraci
SMARTS™ solution
Aerial view of Toguraci Gold Mine
Toguraci is an underground gold mine
located on Halmehera Island, in the Republic
of Indonesia, approximately 2,450 kilometres
north east of the capital, Jakarta. Opened in
2011 with an expected mine life of at least
five years, Toguraci is part of the Gosowong
family of gold mines, owned by PT Aneka
Tambang (25%) and Newcrest (75%),
an Australian gold mining company with
operations in Australia and around the world.
The acquisition of Perth-based mining communications and technology company, Minetec Pty Ltd, in January 2012 has allowed Codan to enter the mining communications and technology services industry. This industry offers significant opportunities for further growth, and Minetec provides an ideal foundation to this strategy.The Minetec business continues to transition from the development of “game-changing” communications-based technologies that improve mine productivity and mine safety to having the technology installed in mining environments. Over the year, much progress has been achieved by having the technology installed into a key customer reference mine, but more work is still required for the mining industry to recognise the “game-changing” qualities of this technology.The communications technologies developed by Minetec are well suited to underground hard rock mining and, as a result, the customer base of Minetec includes gold mining companies. The recent fall in the price of gold has caused a number of key customers to reassess their operations and capital spending, and this is impacting the current performance of this business unit.There are three key points which indicate the mining technology sector is well placed for growth in future years. Firstly, the turbulence of commodity prices, skills shortages and need for cost reductions are driving the mining industry to seek productivity improvements, and an increased use of mining-related technology will drive this. Secondly, the ongoing demand for commodities by emerging economies is forcing miners to expand from surface mining to underground operations, and Minetec’s technologies are well suited to an underground mine environment. Finally, Australia is considered the world’s most innovative mining technology community, and Minetec will be well placed to take advantage of this.
• Respect others’ views and willingly
consider new ideas
• Treat others with dignity
• Speak and act honestly and ethically
at all times
• Provide and receive open and
constructive feedback regularly
18
Codan Limited 2013 Annual Report 19
Codan Limited 2013 Annual Report 19
OUR PEOPLE,
VALUES AND
PROCESSES
Core Values
All employees across the company have
been engaged in refreshing the core
values under which we operate. These
core values underpin our core purpose
of delivering superior shareholder value
by growing a lasting and innovative
organisation that consistently creates
outstanding customer experiences.
OPENNESS & INTEGRITY
CAN-DO
“Can-do to me means that we are solution
orientated... it's very easy for us to get into
a room and all talk about problems but if
you've got a can-do attitude we can focus
on the solutions."
Romeo Lauriello
Customer Service Technician
Codan Radio Communications
“When there’s openness and integrity,
people feel valued and their opinions
respected, they have confidence and feel
comfortable to voice their concerns.”
Laura Forni
Creative Services Coordinator
Codan Radio Communications
HIGH PERFORMING
CUSTOMER DRIVEN
“What customer driven means to me is,
ensuring that every single sale that we make
to a customer is a sale that I can use as
a reference for another customer.”
Ben Pearce
Director of Sales
Codan Radio Communications
“A high performing value is about
focusing on goals, on setting and achieving
ambitious, aggressive goals... it’s also about
creating a team around you, to help you
achieve more than you could as a group
of individuals.”
Phil Beck
Engineering Operations Manager
Minelab
20
Manufacturing
Codan’s ability to manufacture high-level,
high-quality electronics products and
associated software remains a sustainable
competitive advantage in its future
growth. The company is committed to
pursuing ongoing efficiencies, flexibility
and investment in its supply chain and
production capabilities for global markets.
Record demands for gold prospecting
products and the commencement of the
integration of the newly acquired land
mobile radio operations in Canada have
ensured a busy and successful FY13 for
manufacturing operations.
While FY12 saw a significant increase
in throughput at Codan’s Australian and
Malaysian facilities, the FY13 increases
were greater again in response to
increased global demand.
Codan’s Adelaide facility remains integral
to the company’s operations, serving as
a technology hub, particularly for new
product development. To ensure that the
company has the in-house capability to
develop advanced intellectual property-
sensitive product prototypes, an additional
$0.5 million was invested in state-of-the-
art surface-mount assembly equipment
during FY13, equipping Codan with
some of the most advanced electronics
prototyping capability in Australia.
To ensure the company remains cost
competitive in international markets,
Codan has a relationship with one of the
world’s leading sub-contract electronics
manufacturers, Plexus, in Malaysia.
The partnership with Plexus, a US-
owned company specialising in defence,
aerospace and medical electronics
manufacturing, ensures that Codan’s
well-proven manufacturing processes
and exceptional performance, quality
and delivery standards continue.
Codan has adopted stringent testing
and quality control procedures, and
both Codan and Plexus maintain
quality assurance systems approved
to International Standard ISO9001.
Continuous improvement
Continuous improvement is a key strategy
in the company’s commitment to supplying
high-quality electronics solutions,
competitive pricing, excellent customer
service and on-time delivery.
14 years ago, Codan introduced the
Codan Production System, its own highly
successful version of lean manufacturing,
which harnesses the ideas and creativity
of all employees in order to generate
continuous improvement in systems,
processes and culture. The implementation
of thousands of individual initiatives has
enabled Codan to dramatically lower
product costs and reduce delivery
lead times.
A new chapter in continuous improvement
is being driven through Codan’s
Business Excellence Program, which was
established in FY13. The objectives of the
program are three-fold:
• to define, analyse and solve problems
and challenges within the business, where
there is not currently a clear solution;
• to continue to drive and build upon a
systematic continuous improvement and
business excellence process and ethos
throughout the entire business; and
• to identify, develop and prepare
capable employees for leadership roles
into the future.
A Lean Six Sigma methodology will
be employed to solve problems in a
systematic way that will result in bottom-
line business improvement.
This program will deliver measurable
business improvement in FY14.
Occupational Health and Safety
Codan is committed to a vision of zero
harm to all persons in all areas of the
business and the environment during
the manufacturing, distribution, use
and disposal of our products. We are
particularly conscious of employee
exposure to critical risk, especially with
respect to our employees venturing to
all corners of the globe and to remote
locations. Codan engages experts in this
field to ensure the safety of its travellers.
Environment
While the business is a “low-impact
industry” from an environmental point
of view, Codan continues to look at ways
to minimise its effect on the environment.
In FY13, Codan engaged leading Adelaide
architectural and engineering firms to
design its new world-class headquarters
to be built at its current address in
Newton. The design includes a new
two-storey, energy-efficient office and
OUR PEOPLE, VALUES AND PROCESSES
engineering building, and extensive
renovations to its existing manufacturing
facilities. The new facilities are designed
to be open and airy and to provide a
creative and exciting environment for staff
as they develop Codan’s technology of
the future. The facility is planned to be
completed in FY15.
Codan Limited 2013 Annual Report 21
Dr David Klingner
B.Sc (Hons), PhD, FAusIMM
Chairman, Independent
Non-Executive Director
Dr Klingner was appointed by the
board as Chairman in May 2007. Dr
Klingner has been a director with Codan
since December 2004. Dr Klingner, a
geologist, was previously employed by
Rio Tinto in a number of senior roles
involving business leadership, project
development and worldwide exploration
activities, gaining extensive experience
in the establishment and management
of overseas operations. He is a former
chairman of Coal & Allied Industries Ltd,
Bougainville Copper Limited, the World
Coal Institute and Energy Resources
of Australia Limited. He was appointed
Chairman of the board of Turquoise
Hill Resources Ltd (formerly Ivanhoe
Mines Ltd), Canada in May 2012.
BOARD OF
DIRECTORS
22
Mr Donald McGurk
HNC (Mech Eng), MBA, FAICD
Managing Director and
Chief Executive Officer
Mr McGurk was appointed to the
board as Director in May 2010, and
was appointed as Managing Director
in November 2010. Mr McGurk
joined Codan in December 2000
and had executive responsibility for
group-wide manufacturing until his
transition into the role of CEO. In
addition to his manufacturing role,
from 2005 to 2007 Mr McGurk held
executive responsibility for sales of
the company’s communications
products, and from 2007 to 2010,
executive responsibility for the
business performance of the
company’s HF radio products.
Mr McGurk came to Codan with
an extensive background in change
management applied to manufacturing
operations, and held senior
manufacturing management
positions in several industries.
Mr McGurk holds a Masters
Degree in Business Administration
from Adelaide University and
completed the Advanced
Management Program at Harvard
University in 2010. He is a member
of the South Australian Government’s
Advanced Manufacturing Council
and a board member of the
Phoenix Society.
Mr Peter Griffiths
B.Ec (Hons), CPA, FAICD
Independent Non-Executive Director
Mr Griffiths was appointed to the Codan
board in July 2001. He is a former senior
executive of Coca-Cola Amatil Limited,
with 10 years of experience working in
Central and Eastern Europe and South
East Asia. He had previously held the
positions of Company Secretary, Chief
Financial Officer and Managing Director
of C-C Bottlers Limited and held board
positions in Australia, New Zealand
and the USA. Mr Griffiths is a Certified
Practising Accountant and a former
President of the South Australian branch
of the Financial Executives Institute,
as well as State and Federal President
of the Australian Softdrink Association
Ltd. Mr Griffiths has also been a
director of several not-for-profit
organisations.
Mr David Klingberg AO
FTSE, BTech (Civil), DUniSA, FIEAust,
FAusIMM, FAICD
Independent Non-Executive Director
Mr Klingberg was appointed to the
board in July 2005. He is an engineer
with extensive national and international
experience, having been Managing
Director of Kinhill Limited from 1986
to 1998, where he played a major role
in developing the small, Adelaide-
based group into one of the largest and
most successful firms of professional
engineers in Australia and South East
Asia. Mr Klingberg was Chancellor of
the University of South Australia for
10 years, retiring in 2008. His private
sector and government appointments
include Chairman of Centrex Metals
Limited and directorships of Snowy
Hydro Limited and E & A Limited,
and he is a former chairman of
Barossa Infrastructure Limited. He is
a member of the board of Invest in SA
and a former chairman of the South
Australian Premier’s Climate Change
Council. He is a patron of the Cancer
Council of South Australia and the
St Andrew’s Hospital Foundation. In
2009 David was made an Officer of the
Order of Australia for his contributions
to governance policy in the tertiary
education sector and to commercial
and economic development and
infrastructure projects.
BOARD OF DIRECTORS
Codan Limited 2013 Annual Report 23
Mr David Simmons
BA (Acc)
Lt-Gen Peter Leahy AC
BA (Military Studies), MMAS, GAICD
Independent Non-Executive Director
Independent Non-Executive Director
Mr Simmons was appointed to the board
in May 2008. Mr Simmons has worked
in the manufacturing industry throughout
his career and has extensive financial
and general management experience.
Mr Simmons joined Hills Industries
Limited in 1984, where he was appointed
Finance Director in 1987 and Managing
Director in 1992. He retired from Hills
Industries Limited in June 2008.
He is Chairman of Commercial
Motor Vehicles Group and a board
member of Lighting Investments
Australia Holdings Pty Ltd,
Thomsons Lawyers and Detmold
Group. He is a former director
of Gunns Limited and a former
chairman of the SA Government
Economic Development Board,
Korvest Ltd and Innovate SA.
Lieutenant General Leahy was
appointed to the board in September
2008. He retired from the Army in July
2008 after a 37-year career and 6 years
as Chief of Army. His distinguished
service was recognised with his
2007 appointment as Companion of
the Order of Australia. Since leaving
the Army he has been appointed as
Professor and Foundation Director
of the National Security Institute at
the University of Canberra. He is
a member of the Defence South
Australia Advisory Board, a
director of the Kokoda Foundation
and a director of Electro Optic
Systems Holdings Limited.
Lieutenant General Leahy holds
a Master of Military Arts and Science
from the US Army Command and
General Staff College, where he
also served as an instructor, and
is a graduate of the Australian
Institute of Company Directors.
BOARD OF
DIRECTORS
24
Mr Scott Davies
LLB
Independent Non-Executive Director
Mr Davies was appointed to the board in
May 2011. In July 2011 he was appointed
to the position of Global Head of
Infrastructure for AMP Capital Investors.
A commercial lawyer by profession,
Mr Davies was Chief Executive
Officer of Macquarie Communications
Infrastructure Group, a leading
global provider of communications
infrastructure, from 2002 to 2009. Prior to
that, Mr Davies held roles with Macquarie
Capital and Hambros Bank, where he
gained valuable experience in relation to
business development and mergers and
acquisitions. Mr Davies is an alternate
director of Australia Pacific Airports
Corporation Limited and a former
director of the DUET Group.
Mrs Corinne Namblard
PhD (Pol Sci), HEC CAP
Independent Non-Executive Director
Mrs Namblard was appointed to the
board in August 2011. Mrs Namblard
has more than 30 years of experience in
large projects in finance, infrastructure
and related industries and has worked in
the USA, Canada, Australia and Europe.
Most recently Mrs Namblard was Chief
Executive Officer of Galaxy Fund, a
dedicated transportation infrastructure
equity fund. Prior to that, Mrs Namblard
spent 19 years with Banque Nationale de
Paris, rising to the role of Vice President
and Head of Financial Advisory in the
Project Finance team, before becoming
the Executive Vice President of leading
international French engineering
firm, Egis Group, where she led their
worldwide strategy and business
development activities. Mrs Namblard
has previously held a number of board
positions including Flinders Ports Pty
Ltd, Qantas Airways Ltd and Chair of
the Geneva-based United Nations PPP
Alliance. She also sits on the Council
of the University of South Australia, is
a member of the Economic Development
Board of South Australia and a director
of Invest in SA.
BOARD OF DIRECTORS
Codan Limited 2013 Annual Report 25
LEADERSHIP
TEAm
Mr Donald McGurk
HNC (Mech Eng), MBA, FAICD
Managing Director and
Chief Executive Officer
Mr Michael Barton
BA (Acc), CA
Chief Financial Officer and
Company Secretary
Donald was appointed to the board as
Director in May 2010, and was appointed
as Managing Director in November 2010.
Mr McGurk joined Codan in December
2000 and had executive responsibility
for group-wide manufacturing until his
transition into the role of CEO.
For more details of Mr McGurk’s
qualifications and experience please
see page 22.
Michael holds a Bachelor of Arts in
Accountancy from the University of South
Australia and is a member of the Institute
of Chartered Accountants in Australia.
He was appointed to the position of
Company Secretary in May 2008.
Reporting to the Chief Financial Officer,
Mr Barton had responsibility for the areas
of Finance and Business Systems across
the Codan group. In September 2009,
Mr Barton was appointed to the position
of Chief Financial Officer and Company
Secretary, and has responsibility for the
financial control and reporting across the
Codan group. Prior to joining Codan in
May 2004, he was a senior manager with
KPMG Chartered Accountants.
Mr Peter Charlesworth
BEE (Hons), MBA, GAICD
Executive General Manager, Minelab
Peter holds a Degree in Electrical
and Electronic Engineering with First
Class Honours and a Masters Degree
in Business Administration, both from
Adelaide University, and is a Graduate
Member of the Australian Institute of
Company Directors. He was appointed
General Manager of the subsidiary,
Minelab Electronics Pty Ltd, in 2008
following the Codan acquisition of Minelab
that same year. Peter joined Codan in
2003 as General Manager of Engineering,
and then held various roles such as New
Business Manager and HF Radio Business
Development Manager. Prior to Codan,
he was a business unit manager at Tenix
Defence - Electronic Systems Division and
he has worked in the electronics industry
for more than 20 years.
26
Mr Paul McCarter
BEng (Hons), MBA, CEng, MIET
Mr Andrew (Andy) Sheppard
BSc (Eng), BSc (Hons), CEng
Executive General Manager,
Codan Radio Communications
Paul is an entrepreneurial
director and communications
professional with over 24 years of
experience in the technology and
communications sectors. He served
12 years in the military as a Royal
Signals Officer, and has since held
executive positions in operations,
strategy, marketing and general
management with several large
multinational companies, including
British Telecom, Racal, Thales and
Cobham. He has a Bachelor Degree
in Software Engineering, a Masters
Degree/MBA from London Business
School, and is a Chartered Engineer
with the IET. Prior to Codan, Paul
was Managing Director of the
Technology Group, and the Group
Managing Director of Tactical
Communications and Surveillance
International at Cobham. Paul is
actively involved in charity work
for expeditions and is Sir Ranulph
Fiennes’ communications and
technology advisor.
General Manager, Minetec
Andy took up his position at
Minetec in 2013, having spent
5 years as Vice President and
General Manager of Codan
Radio Communications, based
in Rochester, NY, USA, with
responsibility for North America,
Latin America, Europe, Middle
East, Central Asia and the
global UN and Humanitarian
business. Prior to Codan, Andy
worked at Harris Corporation,
McDowell Research and L-3
Communications. Andy spent
20 years as a communications
officer in the British Army,
serving worldwide in a number
of operational theatres. Andy is
a Chartered Engineer and holds
advanced degrees in Telecomms
Systems Engineering and in
Systems Management.
Mr Matthew Csortan
BEng (Mech Eng) (Hons),
MEng (Mfg Mgmt)
General Manager Group
Operations
Matthew holds a Degree
in Mechanical Engineering
with Honours and a Masters
Degree in Manufacturing
Management, both from the
University of South Australia.
In 2009, he was appointed
Codan’s General Manager for
Group Operations. Matthew
joined Codan in 1999 and held
various roles in manufacturing
and production, until his
appointment as Production
Manager of Communications
Products in 2004. In 2006,
Matthew became Manufacturing
Manager of Codan, and was
appointed General Manager of
Parketronics in 2008. Prior to
joining Codan, Matthew gained
experience in manufacturing and
project engineering through his
employment at Gerard Industries
and ASC Engineering.
Mr Allan Morichaud
MSc (Economics), MBA
General Manager Corporate
Development & Systems
Allan holds a Masters Degree in
Science (Economics) from the
University of Copenhagen, and
a Masters Degree in Business
Administration from Adelaide
University. Allan joined Codan in
2008 as Senior Business Analyst,
and soon became the Manager for
IT and Business Analysis. He was
appointed General Manager for
Business Systems and Analysis in
2009, followed by General Manager
Corporate Development & Systems
in early 2012. Prior to joining
Codan, Allan was Finance Manager
at Hardi Australia, and both Finance
Manager and Business Analyst
during his five years working for
Copenhagen Airports in Denmark.
LEADERSHIP TEAM
Mr Simon Porter
B.App.Sci (Physio), MBA
General Manager Human
Resources & Business
Excellence
Simon holds a Bachelor of Applied
Science in Physiotherapy from
the University of South Australia
and an MBA from the University
of Adelaide. Prior to joining
Codan in 2010, Simon served
as the General Manager, Human
Resources at Clipsal Australia,
with executive roles in Quality and
Customer Satisfaction, as well as
in Health, Safety & Environmental
Management. From May 2012 to
January 2013, Simon acted as
the General Manager of Minetec,
leading the operational review and
integration of the newly acquired
company. Simon continues to act
in the role as General Manager,
Human Resources and is now
also responsible for leading the
Business Excellence function,
which is focussed upon driving
an enterprise-wide continuous
improvement and business
excellence program.
Codan Limited 2013 Annual Report 27
28
• Engage with target customers
to build long-term relationships
that will develop and enhance
brand loyalty
• Exceed customers’ / internal
stakeholders’ expectations today
and into the future with innovative
and focussed solutions
Codan Limited 2013 Annual Report 29
Codan Limited 2013 Annual Report 29
30
FINANCIAL
REPORT
FOR THE YEAR ENDED
30 JUNE 2013
32
/ DIRECTORS’ REPORT
51
/ LEAD AUDITOR’S INDEPENDENCE DECLARATION
52
/ CONSOLIDATED INCOME STATEMENT
53 / CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
54 / CONSOLIDATED BALANCE SHEET
55 / CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
56 / CONSOLIDATED STATEMENT OF CASH FLOWS
57
/ NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
103 / DIRECTORS’ DECLARATION
104 / INDEPENDENT AUDITOR’S REPORT
106 / ASX ADDITIONAL INFORMATION
108 / CORPORATE DIRECTORY
Codan Limited 2013 Annual Report 31
Codan Limited 2013 Annual Report 31
DIRECTORS’
REPORT
Codan Limited and
its Controlled Entities
32
The directors present their report together
with the financial statements of the
group comprising Codan Limited (“the
company”) and its subsidiaries for the
financial year ended 30 June 2013 and
the auditor’s report thereon.
DIRECTORS
The directors of the company at any time
during or since the end of the financial
year are:
Dr David Klingner
Donald McGurk
Peter Griffiths
David Klingberg AO
David Simmons
Lt-Gen Peter Leahy AC
Scott Davies
Corinne Namblard
Details of directors and their qualifications
and experience are set out on pages 22
to 25.
COMPANY SECRETARY
Mr Michael Barton BA (Acc), CA
Mr Barton was appointed to the position of
Company Secretary in May 2008. Reporting
to the Chief Financial Officer, Mr Barton
had responsibility for the areas of Finance
and Business Systems across the Codan
group. In September 2009, Mr Barton was
appointed to the position of Chief Financial
Officer and Company Secretary, and has
responsibility for the financial control and
reporting across the Codan group. Prior
to joining Codan in May 2004, he was
a senior manager with KPMG Chartered
Accountants.
DIRECTORS’ MEETINGS
The number of directors’ meetings of
the company, and of meetings of board
committees held, and the number of
those meetings attended by each of
the directors of the company during
the financial year are:
CORPORATE GOVERNANCE
STATEmENT
This statement outlines the main corporate
governance practices in place throughout
the financial year, which comply with
the ASX Corporate Governance Council
recommendations, unless otherwise stated.
Board of Directors
Role of the board
The board’s primary role is the protection
and enhancement of long-term
shareholder value.
To fulfil this role, the board is responsible
for the overall corporate governance of the
group, including formulating its strategic
direction, approving and monitoring
the annual plan, budget and capital
expenditure, setting senior executive
and director remuneration, establishing
and monitoring the achievement of
management’s goals and ensuring the
integrity of risk management, internal
Board meetings
Board Audit, Risk and Compliance
Committee meetings
Remuneration Committee
meetings
DIRECTOR
Dr G D Klingner
Mr D S McGurk
Mr P R Griffiths
Mr D J Klingberg
Mr D J Simmons
Lt-Gen P F Leahy
Mr S W Davies
Mrs C S Namblard
A
12
12
11
11
12
12
11
12
B
12
12
12
12
12
12
12
12
A
-
-
4
4
-
-
-
4
B
-
-
4
4
-
-
-
4
A
1
-
-
-
1
1
-
-
B
1
-
-
-
1
1
-
-
A - Number of meetings attended B – Number of meetings held during the time the director held office during the year
control, legal compliance and management
information systems. It is also responsible
for approving and monitoring financial and
other reporting.
The board has delegated responsibility
for operation and administration of the
company to the managing director.
Board processes
To assist in the execution of its
responsibilities, the board has established
a Remuneration Committee and a Board
Audit, Risk and Compliance Committee.
These committees have written mandates
and operating procedures, which are
reviewed on a regular basis. The board
has also established a framework for
the management of the group, including
a system of internal control, a business
risk management process and the
establishment of appropriate ethical
standards.
The full board currently holds ten
scheduled meetings each year, plus
strategy meetings and any extraordinary
meetings at such other times as may
be necessary to address any specific
significant matters that may arise.
The agenda for meetings is prepared in
conjunction with the chairman, managing
director and company secretary. Standing
items include the managing director’s
report, occupational health and safety
report, financial reports, strategic matters,
governance and compliance. Submissions
are circulated in advance. Executives are
regularly involved in board discussions,
and directors have other opportunities,
including visits to business operations, for
contact with a wider group of employees.
Director and executive education
The group has a process to educate new
directors about the nature of the business,
current issues, the corporate strategy and
the expectations of the group concerning
performance of directors. Directors
also have the opportunity to visit group
facilities and meet with management to
gain a better understanding of business
operations. Directors are given access
to continuing education opportunities
to update and enhance their skills and
knowledge.
The group also has a process to educate
new executives upon taking such positions.
This process includes reviewing the group’s
structure, strategy, operations, financial
position and risk management policies.
It also familiarises the individual with the
respective rights, duties, responsibilities
and roles of the individual and the board.
Independent professional advice and access to
company information
Each director has the right of access to
all relevant company information and to
the company’s executives and, subject to
prior consultation with the chairman, may
seek independent professional advice from
a suitably qualified adviser at the group’s
expense. The director must consult with
an adviser suitably qualified in the relevant
field. A copy of the advice received by
the director is made available to all other
members of the board.
Composition of the board
The composition of the board is
determined using the following principles:
• a broad range of expertise both
nationally and internationally;
• a majority of non-executive directors;
• directors having extensive knowledge
of the group’s industries and/or
extensive expertise in significant
aspects of financial management
or general management;
• a non-executive director as chairman;
• enough directors to serve on various
committees without overburdening the
directors or making it difficult for them
to fully discharge their responsibilities;
and
• at each annual general meeting, one-
third of the directors and any other
director who has held office for three
years or more since last being elected
must stand for re-election (except for
the managing director).
The board’s policy is to seek a diverse
range of directors who have a range
of ages and genders which mirrors the
environment in which the group operates.
An independent director is a director who
is not a member of management (a non-
executive director) and who:
• holds less than five percent of the
voting shares of the company and
is not an officer of, or otherwise
associated, directly or indirectly, with
a shareholder of more than five percent
of the voting shares of the company;
• has not within the last three years been
employed in an executive capacity by
the company or another group member,
or been a director after ceasing to hold
any such employment;
DIRECTORS’ REPORT
• within the last three years has not been
a principal or employee of a material
professional adviser or a material
consultant to the company or another
group member;
• is not a material supplier or customer of
the company or another group member,
or an officer of or otherwise associated,
directly or indirectly, with a material
supplier or customer;
• has no material contractual relationship
with the company or another group
member other than as a director of the
company; and
• is free from any interest and any
business or other relationship that
could, or could reasonably be perceived
to, materially interfere with the director’s
ability to act in the best interests of the
company.
The board is regularly addressing
succession in order to ensure that its
composition going forward is appropriate.
Nomination Committee
The ASX Corporate Governance Council’s
“Principles of Good Corporate Governance
and Best Practice Recommendations”
recommend the establishment of a
nomination committee. The role of
nomination of proposed directors
is conducted by the full board.
Codan Limited 2013 Annual Report 33
DIRECTORS’
REPORT
Codan Limited and
its Controlled Entities
34
CORPORATE GOVERNANCE
STATEMENT (continued)
Remuneration report - audited
Remuneration Committee
The Remuneration Committee reviews
and makes recommendations to the
board on remuneration packages and
policies applicable to the managing
director, senior executives and directors
themselves. It is also responsible for share
schemes, incentive performance packages,
superannuation entitlements, retirement and
termination entitlements and fringe benefits
policies.
The members of the Remuneration
Committee during the year were:
• Mr D J Simmons (Chairman)
Independent Non-Executive Director
• Dr G D Klingner
Independent Non-Executive Director
• Lt-Gen P F Leahy
Independent Non-Executive Director
The managing director is invited to
Remuneration Committee meetings,
as required, to discuss executives’
performance and remuneration packages
Principles of remuneration
Key management personnel comprise the
directors and executives of the group. Key
management personnel have authority and
responsibility for planning, directing and
controlling the activities of the group.
Remuneration levels are competitively set to
attract and retain appropriately qualified and
experienced executives. The Remuneration
Committee may obtain independent advice
on the appropriateness of remuneration
packages, given trends in comparative
companies both locally and internationally.
Remuneration packages can include a mix
of fixed remuneration and performance-
based remuneration.
The remuneration structures explained
below are designed to attract suitably
qualified candidates, and to effect the
broader outcome of increasing the group’s
net profit. The remuneration structures take
into account:
• the overall level of remuneration for each
director and executive;
• the executive’s ability to control the
relevant segment’s performance; and
• the amount of incentives within each key
management person’s remuneration.
Certain executives may receive incentive
payments based on the achievement of
performance hurdles. The performance
hurdles relate to measures of profitability.
The bonus payable to certain executives
may relate to the qualitative performance
of the executive against objectives agreed
as part of the budget and strategic
planning processes. The potential incentive
payable to certain executives is based
on up to 60% of the executives’ fixed
salary inclusive of superannuation, but
can exceed this level if performance
hurdles are exceeded.
These performance conditions have been
established to encourage the profitable
growth of the group. The board considered
that for the year ended 30 June 2013 the
above performance-linked remuneration
structure was appropriate.
Total remuneration for all non-executive
directors, last voted upon by shareholders
at the 2010 AGM, is not to exceed
$850,000 per annum. Non-executive
directors do not receive any performance-
related remuneration nor are they issued
options on securities. Directors’ fees cover
all main board activities and membership
of committees.
Service contracts
It is the group’s policy that service contracts
for key management personnel are unlimited
in term but capable of termination on one
to six months’ notice, and that the group
retains the right to terminate the contract
immediately by making payment in lieu of
notice. The group has entered into a service
contract with each key management person.
The key management personnel are
also entitled to receive on termination of
employment their statutory entitlements
of accrued annual and long service leave,
as well as any entitlement to incentive
payments and superannuation benefits.
Performance rights
At the 2004 AGM, shareholders approved
the establishment of a Performance Rights
Plan (Plan). The Plan is designed to provide
nominated executives with an incentive to
maximise the return to shareholders over
the long term, and to assist in the attraction
and retention of key executives.
The number of performance rights
issued represents 40% of the nominated
executives’ fixed pay divided by the
volume weighted average of the company’s
share price in the five days after the release
of the group’s annual results.
Details of performance rights granted to executives during the year are as follows:
Number of
performance
rights granted
during year
Grant
date
Fair value
per right at
grant date
(cents)
Exercise
price per
right
(cents)
Expiry
date
Number of
rights vested
during year
DIRECTORS
Mr D S McGurk
EXECUTIVES
Mr M Barton
Mr P D Charlesworth
Mr K J Kane
139,981
5 November 2012
177.4
66,211
90,988
72,790
5 November 2012
5 November 2012
5 November 2012
177.4
177.4
177.4
-
-
-
-
30 June 2016
30 June 2016
30 June 2016
30 June 2016
-
-
-
-
Details of vesting profiles of performance rights granted to executives are detailed below:
Performance rights granted
Number
Date
Percentage
vested in year
Percentage
forfeited in year
Financial years in which shares
will be issued if vesting achieved
DIRECTORS
Mr D S McGurk
EXECUTIVES
Mr M Barton
Mr P D Charlesworth
Mr K J Kane
132,850
136,733
161,551
139,981
23 October 2009
14 December 2010
7 November 2011
5 November 2012
64,675
76,414
66,211
132,850
88,877
105,008
90,988
84,006
72,790
14 December 2010
7 November 2011
5 November 2012
23 October 2009
14 December 2010
7 November 2011
5 November 2012
7 November 2011
5 November 2012
100%
-
-
-
-
-
-
100%
-
-
-
-
-
-
100%
-
-
100%
-
-
-
100%
-
-
100%
100%
2013
n/a
2015
2016
n/a
2015
2016
2013
n/a
2015
2016
n/a
n/a
DIRECTORS’ REPORT
The performance rights granted on 5 November
2012 become exercisable if certain performance
requirements are achieved. The performance
requirements are based on growth of the group’s
earnings per share over a three-year period using
the group’s earnings per share for the year ended
30 June 2012 as the base. For the maximum
available number of performance rights to vest,
the group’s earnings per share must increase in
aggregate by at least 15% per annum over the
three-year period from the base earnings per share.
The threshold level of the group’s earnings per
share before vesting is an increase in aggregate of
10% per annum over the three-year period from
the base earnings per share. A pro-rata vesting
will occur between the 10% and 15% levels of
earnings per share for the three-year period.
If achieved, performance rights are exercisable
into the same number of ordinary shares in the
company.
In relation to the performance rights granted on 23
October 2009, the performance requirements were
based on cumulative annual compounding growth
of the group’s earnings per share over a three-year
performance period, with a maximum earnings
per share target of 29.551 cents per share. As the
maximum earnings per share target was exceeded,
on 6 August 2012 the board determined that the
performance rights would immediately become
qualifying performance rights, exercisable at any
time during the 12 months ended 6 August 2013.
All of the rights were exercised, and shares were
issued on 22 August 2012.
The performance rights granted on 14 December
2010 lapsed on 30 June 2013, as the three-year
aggregate performance target was not reached.
Mr Kane’s performance rights lapsed on 29 March
2013 upon his separation from the company.
Codan Limited 2013 Annual Report 35
DIRECTORS’
REPORT
Codan Limited and
its Controlled Entities
CORPORATE GOVERNANCE STATEMENT (continued)
Remuneration report - audited (continued)
Directors’ and senior executives’ remuneration
Details of the nature and amount of each major element of the remuneration paid or payable to each director of the company and other key
management personnel of the group are:
Directors
Year
Salary & fees
Short-term
incentives
Other short
term
Post-employment
and superannuation
contributions
NON-EXECUTIVE
Dr G D Klingner
Mr P R Griffiths
Mr D J Klingberg
Mr D J Simmons
Lt-Gen P F Leahy
Mr S W Davies
Mrs C S Namblard
Total non-executives’ remuneration
EXECUTIVE
Mr D S McGurk
Total directors’ remuneration
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
$
172,562
165,000
102,596
94,050
86,281
82,500
91,510
87,500
86,281
82,500
86,281
82,500
86,281
75,625
711,792
669,675
$
488,644
489,173
1,200,436
1,158,848
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
469,401
334,910
469,401
334,910
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
-
-
-
-
$
15,531
14,850
-
4,050
7,766
7,425
8,236
7,875
7,766
7,425
7,766
7,425
7,766
6,806
54,831
55,856
$
16,470
20,000
71,301
75,856
36
Other long
term
Termination
benefits
Performance
rights
Total
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
17,635
12,211
17,635
12,211
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
-
-
-
-
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
96,864
87,151
96,864
87,151
$
188,093
179,850
102,596
98,100
94,047
89,925
99,746
95,375
94,047
89,925
94,047
89,925
94,047
82,431
766,623
725,531
$
1,089,014
943,445
1,855,637
1,668,976
Proportion of
remuneration
performance related
Value of performance
rights as proportion of
remuneration
%
%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
%
52.0
44.7
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
%
8.9
9.2
-
-
DIRECTORS’ REPORT
Mrs Namblard was appointed as a
director on 1 August 2011.
Codan Limited 2013 Annual Report 37
CORPORATE GOVERNANCE STATEMENT (continued)
Remuneration report - audited (continued)
Directors’ and senior executives’ remuneration (continued)
Executive Officers
Year
Salary & fees
Short-term
incentives
Other short
term
Post-employment
and superannuation
contributions
Mr M Barton (Chief Financial Officer
and Company Secretary)
Mr P D Charlesworth (Executive
General Manager, Minelab)
Mr K J Kane (President and Executive
General Manager, Radio Communications)
Mr P McCarter (Executive General
Manager, Codan Radio Communications)
Total executive officers’ remuneration
$
$
228,038
222,026
219,013
158,412
331,745
378,788
317,516
238,150
$
-
-
-
-
208,046
-
100,606
264,579
147,965
51,783
96,713
-
-
864,542
600,814
100,606
801,108
544,527
51,783
2013
2012
2013
2012
2013
2012
2013
2013
2012
$
20,332
19,437
16,470
15,200
-
-
-
36,802
34,637
DIRECTORS’
REPORT
Codan Limited and
its Controlled Entities
38
Other long
term
Termination
benefits
Performance
rights
Total
Proportion of
remuneration
performance related
Value of performance
rights as proportion of
remuneration
$
7,908
5,626
11,721
9,258
(9,466)
5,585
-
10,163
20,469
$
-
-
-
-
$
45,817
41,222
62,962
56,648
$
524,121
443,710
801,686
636,772
295,210
(26,272)
568,124
-
-
26,272
496,184
-
96,713
295,210
82,507
1,990,644
-
124,142
1,576,666
%
51.1
45.0
55.1
46.3
(4.6)
35.1
-
-
-
%
8.7
9.3
7.9
8.9
(4.6)
5.3
-
-
-
DIRECTORS’ REPORT
Mr Kane ceased employment with Codan
on 29 March 2013. Costs associated
with the relocation of Mr Kane and his
family back to the USA, his contracted
notice period and an appropriate share of
entitlements are included in termination
benefits. Mr McCarter was appointed
to the position of Executive General
Manager, Codan Radio Communications
on 3 June 2013.
Short-term incentives which vested during
the year are as follows: Mr D S McGurk
100%, Mr M Barton 100% and Mr P D
Charlesworth 100%.
The remuneration amounts disclosed
above have been calculated based on the
expense to the company for the financial
year, therefore items such as annual
leave and long service leave, taken and
provided for, have been considered. As
a result the remuneration disclosed may
not equal the salary package as agreed
with the executive in any one year.
Other than performance rights, no
options or shares were issued during
the year as compensation for any key
management personnel.
Codan Limited 2013 Annual Report 39
DIRECTORS’
REPORT
Codan Limited and
its Controlled Entities
40
CORPORATE GOVERNANCE STATEMENT (continued)
Remuneration report - audited (continued)
Corporate Performance
As required by the Corporations Act 2001 the following information is presented:
2013
$
2012
$
2011
$
2010
$
2009
$
Net profit after tax
Dividends paid
Share price at 30 June
Change in share price at 30 June
45,416,716
20,343,012
23,146,736
14,773,138
21,792,328
13,952,408
14,394,218
11,490,222
12,006,000
10,532,955
1.52
0.12
1.40
0.20
1.20
(0.26)
1.46
0.82
0.64
0.04
Board Audit, Risk and
Compliance Committee
The Board Audit, Risk and Compliance
Committee has a documented charter,
approved by the board. All members must
be non-executive directors. The chairman
may not be the chairman of the board. The
committee advises on the establishment
and maintenance of a framework of internal
control and appropriate ethical standards
for the management of the group.
The members of the Board Audit, Risk
and Compliance Committee during the
year were:
• Mr P R Griffiths (Chairman)
Independent Non-Executive Director
• Mr D J Klingberg
Independent Non-Executive Director
• Mrs C S Namblard
Independent Non-Executive Director
The external auditors, the managing
director and the chief financial officer are
invited to Board Audit, Risk and
Compliance Committee meetings at the
discretion of the committee.
The responsibilities of the Board, Audit,
Risk and Compliance Committee include
reporting to the board on:
• reviewing the annual and half-year
financial reports and other financial
information distributed externally. This
includes approving new accounting
policies to ensure compliance with
Australian Accounting Standards
and generally accepted accounting
principles, and assessing whether the
financial information is adequate for
shareholder needs;
• assessing management processes
supporting external reporting;
• assessing corporate risk assessment
processes;
• assessing and establishing an
appropriate internal audit function;
• establishing procedures for selecting,
appointing and, if necessary, removing
the external auditor;
• assessing whether non-audit services
provided by the external auditor
are consistent with maintaining the
external auditor’s independence; the
external auditor provides an annual
independence declaration in relation to
the audit;
• assessing the adequacy of the internal
control framework and the company’s
code of ethical standards;
• monitoring the procedures to ensure
compliance with the Corporations Act
2001 and the ASX Listing Rules and all
other regulatory requirements; and
• addressing any matters outstanding
with auditors, Australian Taxation
Office, Australian Securities and
Investments Commission, ASX and
financial institutions.
The Board Audit, Risk and Compliance
Committee reviews the performance of the
external auditors on an annual basis and
meets with them during the year to:
• discuss the external audit plan,
identifying any significant changes in
structure, operations, internal controls
or accounting policies likely to affect
the financial statements, and to review
the fees proposed for the audit work to
be performed;
• review the half-year and preliminary
final report prior to lodgement with the
ASX, and any significant adjustments
required as a result of the auditor’s
findings, and to recommend board
approval of these documents prior
to announcement of results;
• review the results and findings
of the auditor, the adequacy of
accounting and financial controls,
and monitor the implementation
of any recommendations made; and
• as required, organise, review and report
on any special reviews or investigations
deemed necessary by the board.
Risk Management
Material business risks arise from such
matters as actions by competitors,
government policy changes, the impact
of exchange rate movements on the price
of raw materials and sales, difficulties
in sourcing raw materials, environment,
occupational health and safety,
property, product quality, interruptions
to production, changes in international
quality standards, financial reporting
and the purchase, development and
use of information systems.
Oversight of the risk management system
The board has in place a number of
arrangements and internal controls
intended to identify and manage areas
of significant business risk. These include
the establishment of committees, regular
budget, financial and management
reporting, established organisational
structures, procedures, manuals and
policies, external financial and safety
audits, insurance programs and the
retention of specialised staff and
external advisers.
The Board Audit, Risk and Compliance
Committee considers risk management
in order to ensure risks are identified,
assessed and appropriately managed.
The committee reports to the board
on these matters on an ongoing basis.
Risk management and compliance and control
The group strives to ensure that its
products are of the highest standard.
Towards this aim it has certification
to AS/NZS ISO 9001.
The board is responsible for the overall
internal control framework, but recognises
that no cost-effective internal control
system will preclude all errors and
irregularities. Comprehensive practices
have been established to ensure:
• capital expenditure and revenue
commitments above a certain size
obtain prior board approval;
• financial exposures are controlled,
including the use of derivatives;
• occupational health and safety
standards and management systems
are monitored and reviewed to achieve
high standards of performance and
compliance with regulations;
• business transactions are properly
authorised and executed;
• the quality and integrity of personnel;
• financial reporting accuracy and
compliance with the financial reporting
regulatory framework; and
• environmental regulation compliance.
Quality and integrity of personnel
Appraisals are conducted at least
annually for all senior employees.
Training and development and
appropriate remuneration and incentives
with regular performance reviews create
an environment of co-operation and
constructive dialogue with employees
and senior management.
Financial reporting
The managing director and the chief
financial officer have provided assurance
in writing to the board that the company’s
financial reports are founded on a sound
system of internal compliance and control
and risk management practices which
implements the policies adopted by the
board. This declaration includes stating
that the financial reports present a true
and fair view, in all material respects,
of the company’s financial condition and
operational results and are in accordance
with relevant accounting standards. This
statement is required annually.
Monthly actual results are reported against
budgets approved by the directors, and
revised forecasts for the year are prepared
regularly.
DIRECTORS’ REPORT
Environmental regulation
The group’s operations are not subject
to significant environmental regulation
under either Commonwealth or State
legislation. However, the board believes
that the group has adequate systems
in place for the management of its
environmental requirements, and is
not aware of any breach of those
environmental requirements as they
apply to the group.
Internal audit
The Board Audit, Risk and Compliance
Committee is responsible for determining
the need for an internal audit function
for the group. The committee has
implemented an internal audit function
whereby internal control reviews are
completed on the high risk areas of the
business as identified on the company’s
risk register.
Assessment of effectiveness of risk
management
The managing director and the chief
financial officer have declared, in writing
to the board, that the financial reporting
risk management and associated
compliance and controls have been
assessed and found to be operating
efficiently and effectively. Operational
and other compliance risk management
processes have also been assessed and
found to be operating efficiently and
effectively. All risk assessments covered
the whole financial year and the period up
to the signing of the annual financial report
for all material operations in the group.
Codan Limited 2013 Annual Report 41
DIRECTORS’
REPORT
Codan Limited and
its Controlled Entities
42
CORPORATE GOVERNANCE
STATEMENT (continued)
Ethical standards
All directors, managers and employees are
expected to act with the utmost integrity
and objectivity, striving at all times to
enhance the reputation and performance of
the group. Every employee has a nominated
supervisor to whom they may refer any
issues arising from their employment. The
company continues to review and confirm
its processes for seeking to ensure that it
does not trade with parties proscribed due
to illegal or undesirable activities.
Conflict of interest
Directors must keep the board advised,
on an ongoing basis, of any interest that
could potentially conflict with those of
the company. The board has developed
procedures to assist directors to disclose
potential conflicts of interest.
Where the board believes that a significant
conflict exists for a director on a board
matter, the director concerned does not
receive the relevant board papers and is
not present at the meeting whilst the item
is considered.
Code of conduct
The group has advised each director,
manager and employee that they must
comply with the entity’s code of conduct.
The code of conduct covers the following:
• aligning the behaviour of the board
and management with the code of
conduct by maintaining appropriate
core company values and objectives;
• fulfilling responsibilities to shareholders
by delivering shareholder value;
after the half-year results are released
to the ASX:
• fulfilling responsibilities to clients,
customers and consumers by
maintaining high standards of
professionalism, product quality
and service;
• acting at all times with fairness, honesty,
consistency and integrity;
- between 1 July and the close of
trading on the next ASX trading day
after the full-year results are released
to the ASX;
- during any additional blackout periods
imposed by the board from time to
time; or
• employment practices such as
occupational health and safety and
anti-discrimination;
- whilst in possession of price-sensitive
information not yet released to the
market;
• responsibilities to the community,
such as environmental protection;
• an additional approval process for
directors, officers and executives;
• responsibilities to the individual in
respect of the use of confidential
information;
• compliance with legislation including
compliance in countries where the legal
systems and protocols are significantly
different from Australia’s;
• conflicts of interest;
• responsible and proper use of company
property and funds; and
• reporting of unlawful behaviour.
Trading in general company securities
by directors and employees
The key elements of the company’s Share
Trading Policy are:
• identification of those restricted from
trading – directors, officers, executives
and senior managers may acquire shares
in the company, but are prohibited from
dealing in company shares:
- between 1 January and the close of
trading on the next ASX trading day
• raising the awareness of legal
prohibitions in respect of insider trading;
• prohibiting short-term or speculative
trading in the company’s shares; and
• identification of processes for unusual
circumstances where discretion may
be exercised in cases such as financial
hardship.
The policy also details the insider trading
provisions of the Corporations Act 2001
and is reproduced in full on the company’s
website and in the announcements
provided to the ASX.
Communication with shareholders
The board provides shareholders with
information in accordance with Continuous
Disclosure requirements, which include
identifying matters that may have a material
effect on the price of the company’s
securities, notifying them to the ASX,
posting them on the company’s website
and issuing media releases.
The group’s performance against the Diversity and Equity Policy objectives is as follows:
DIRECTORS’ REPORT
Gender Representation
Board representation
Executive & senior
management representation
Group representation
Group graduate program
30 June 2013
30 June 2012
Female (%) Male (%)
Female (%)
Male (%)
14%
18%
26%
0%
86%
82%
74%
100%
14%
17%
30%
0%
86%
83%
70%
100%
The board has the following initiatives
in place to progress the objectives of
its Diversity and Equity Policy:
• qualified candidates considered for
any new board, executive or senior
management positions will include both
genders;
• a target of at least 30% female
candidates interviewed for all salaried
positions in the group;
• an equal balance of genders in the
Group Graduate Program; and
• the provision of an Accelerated
Leadership Development Program for
identified female employees and senior
managers.
The objective of achieving an equal
balance of genders in the Group Graduate
Program was not achieved in the current
year as, of the 45 applicants for the
position, only one was female.
The board will report on progress in
achieving its objectives on an annual basis.
In summary, the Continuous Disclosure
policy operates as follows:
• the managing director and the chief
financial officer and company secretary
are responsible for interpreting the
company’s policy and where necessary
informing the board. The chief financial
officer and company secretary is
responsible for all communications
with the ASX. Reportable matters are
promptly advised to the ASX;
• the annual report is provided via the
company’s website and distributed to
all shareholders who request a copy.
It includes relevant information about the
operations of the group during the year,
changes in the state of affairs and details
of future developments;
• the half-yearly report contains
summarised financial information and
a review of the operations of the group
during the period. The half-year reviewed
financial report is lodged with the
ASX, and sent to any shareholder who
requests it;
• all announcements made to the market,
and related information (including
information provided to analysts or the
media during briefings), are placed on
the company’s website after they are
released to the ASX; and
• the full texts of notices of meetings and
associated explanatory material are
placed on the company’s website.
All of the above information, including that
of the previous years, is made available on
the company’s website.
The board encourages full participation of
shareholders at the Annual General Meeting
to ensure a high level of accountability and
identification with the group’s strategy and
goals. The external auditor is requested
to attend the annual general meetings to
answer any questions concerning the audit
and the content of the auditor’s report.
The shareholders are requested to vote
on the appointment and aggregate
remuneration of directors, the granting
of performance rights to directors and
changes to the Constitution. A copy of the
Constitution is available to any shareholder
who requests it.
Diversity
The board is strongly committed to the
principles of diversity and to promoting
a culture that supports the development
of a diverse mix of employees throughout
all levels of the organisation. It is considered
that this will ensure the achievement of an
appropriate blend of diversity at board,
executive and senior management levels
within the group.
The board has established a group Diversity
and Equity Policy, which is available on the
company’s website.
The key elements of the policy include:
• ensuring all positions are filled by the
best candidates with no discrimination
by way of gender, age, ethnicity and
cultural background; and
• annual assessment by the board of
board gender diversity objectives and
performance against objectives.
Codan Limited 2013 Annual Report 43
DIRECTORS’
REPORT
Codan Limited and
its Controlled Entities
44
OPERATING AND FINANCIAL
REVIEW
Codan is a group of electronics-based
businesses that capitalise on their
fundamental design and manufacturing
skills to provide best-in-class electronics
solutions to global markets. Codan
employs approximately 450 people,
located in Australia, USA, UK, Ireland,
Canada, China and United Arab Emirates,
and has a network of dealerships across
the world.
Our marketing reach embraces over 150
countries and our customers include gold
prospectors, metal detection hobbyists,
aid agencies, miners, businesses and
governments, including public safety,
military and security organisations. We
work closely with our customers to seek
innovative ways to solve their problems
and add value to their operations.
FY13 highlights
• Highest reported profit of $45.4 million
• Earnings per share of 25.8 cents
• Annual dividend increased to 13 cents
• Strong growth of metal detector sales
into new markets
• Major new product release in Radio
Communications
• Strategic acquisition of land mobile radio
business
• Delivery of key mining technology
reference sites by Minetec
• Inclusion in the ASX 300 index
The board of Codan Limited has announced
a net profit after tax of $45.4 million for the
year ended 30 June 2013 compared to the
prior year of $23.1 million, an increase of
97% over FY12 and an increase of 46%
over the previous highest underlying profit
recorded by the company.
Dividend
The company announced a final dividend of
7 cents per share, fully franked, bringing the
full year dividend to 13 cents compared to
9.5 cents for FY12, an increase of 37%. The
dividend has a record date of 13 September
2013 and will be paid on 1 October 2013.
Codan has a long history of delivering a
sustainable and progressive fully franked
dividend payment to shareholders. Since
the company listed in November 2003, the
company’s yearly dividend has increased
from 5.5 cents per share to 13.0 cents per
share for the year ended 30 June 2013.
The board’s objective is to pay a dividend
that is considered sustainable and that
has a payout ratio of at least 50%.
Financial Performance
The record revenue and profitability of
the company in FY13 has been driven
by the spike in growth of metal detector
sales into the small-scale gold mining
fields of Africa. Profitability margins have
increased over the prior year as the sale
of Minelab’s highly valued metal detectors
represents a greater proportion of sales.
The company also continues to leverage its
continuous improvement culture to reduce
manufacturing costs.
The increase over the prior year in
Engineering and Sales and Marketing
expense has been partly driven by the
acquisition of Minetec in January 2012 and
Daniels in August 2012. However, investing
in the business is the foundation of our
growth strategy and we continue to invest
at record levels in the development of the
next wave of our technologies. Sales and
marketing expenses have increased as a
result of the higher business activity over
the year and as we continue to invest in
broadening the markets and customer
base that we serve.
Net borrowings increased over the year by
$9 million to $25 million, which compares
to the company’s total available bank
facilities of $85 million. The increase in
net borrowings was the result of a higher
investment in inventory and the acquisition
of Daniels Electronics.
Our metal detection inventory levels at the
end of the prior year were critically low
resulting in product shortages and delivery
delays to our customers so there has been
an investment in gold detector inventory.
This has allowed the company to move
to a sea freight distribution model, with
significant freight savings, and to ensure
that we are well positioned to supply
product during periods of peak demand.
The acquisition of Canadian based
company, Daniels Electronics Limited, a
leading designer, manufacturer and supplier
of land mobile radio communications
solutions, was completed in August 2013.
The $24 million acquisition was partly
funded from a successful capital raising
of $17 million.
REVENUE
Communications
Metal detection
Mining technology
Other
Total Revenue
UNDERLYING BUSINESS PERFORMANCE
EBITDA
EBIT
Interest
Net profit before tax
Underlying net profit after tax
Non-recurring income/(expenses) after tax:*
Net profit after tax
Underlying earnings per share, fully diluted
Dividend per share
DIRECTORS’ REPORT
FY13
FY12
$m % of sales $m % of sales
58.0
166.3
14.5
5.5
24%
68%
6%
2%
66.4
98.6
9.3
5.1
37%
55%
5%
3%
244.3
100%
179.4
100%
76.3
64.7
(1.7)
63.0
45.4
45.4
25.8 cents
13.0 cents
31%
26%
26%
19%
51.7
43.2
(3.4)
39.8
27.9
(4.8)
23.1
17.0 cents
9.5 cents
29%
24%
22%
16%
* Non-underlying income / (expenses) are considered to be outside of normal business activities of the group and for comparability reasons
have been separately identified. The methodology of identifying and quantifying these items is consistently applied from year to year.
Underlying profit is a non-IFRS measure used by management of the company to assess the operating performance of the business. The
non-IFRS measures have not been subject to review or audit. For the year ended 30 June 2013, the net impact of non-recurring items on
the profits of the company were immaterial. Non-recurring items in the prior year related to the disposal of a discontinued operation and
acquisition costs; refer to the 2012 Annual Report for a full reconciliation.
The company has commenced the
redevelopment of its engineering facility
and corporate head office at Newton,
South Australia. This $10 million dollar
investment in FY14 is a statement of the
company’s commitment to advanced
manufacturing and the desire to attract
the best people to the business.
Codan remains committed to maintaining
a significant advanced manufacturing
centre of excellence in Adelaide. In recent
years, increased investment has been
made in engineering, product design,
business development and marketing,
where employee numbers have grown from
approximately 160 to 190 during the past
12 months.
In order to remain globally competitive,
Codan must continually seek opportunities
to increase the productivity and flexibility
of its operations. As the company strives
to become even more competitive,
outsourcing of more high-volume, low-
complexity products to our manufacturing
partner in Malaysia has become necessary.
This is expected to deliver savings of
at least $2 million per annum from our
Australian and Canadian operations. Our
Adelaide facility remains an essential part
of our overall manufacturing strategy
by providing a world-class environment
for new product development, low-
volume, high-complexity production and
manufacturing of security and military
products.
Codan Limited 2013 Annual Report 45
DIRECTORS’
REPORT
Codan Limited and
its Controlled Entities
46
OPERATING AND FINANCIAL
REVIEW (continued)
Financial Performance (continued)
An update on the trading conditions being
experienced by each of the company’s key
business units is as follows:
Metal Detection
Over the past four years, Minelab has
delivered excellent financial results, with
FY13 being another record sales and
profit year. While all areas of the Minelab
business have grown over this period, it
has been the sale of metal detectors into
the small-scale gold mining markets of
Africa that has dominated the results.
As reported by the board in June 2013,
some of these markets have been
impacted by civil unrest, which contributed
to the lower sales level experienced in the
last two months of FY13. There are also a
number of other factors that influence the
general level of demand for gold detectors
in Africa.
The primary driver of demand for gold
detection machines in Africa is the
adoption of metal detection technology
by small-scale gold miners and the
success they have in finding gold. These
small-scale gold miners have previously
used primitive and environmentally
damaging mining techniques to find gold.
Minelab’s world-leading metal detectors
are revolutionising the way that gold
is found by these miners.
Climate and religious events, such as
Ramadan which currently occurs in July/
August, also impact metal detector sales
in Africa. From April to June, West Africa
experiences its wet season and North East
Africa experiences its hottest months, with
average temperatures over 40 degrees.
These extreme weather months impact the
number of prospectors and therefore lead
to lower demand for gold detectors over
this period.
Another variable which may affect the
number of detectors sold is the price
of gold which, although not at its recent
record high, still rewards prospectors
well. Our analysis of Minelab’s previous
years’ sales history shows little correlation
between the number of gold detectors
sold and the price of gold; however, it
is clear that a high gold price is a positive
factor for the business.
A number of key actions have been
taken which we believe have significantly
reduced the impact of gold machine
counterfeits, including the use of security
labels and SMS systems to give comfort
to customers that they are buying
a genuine Minelab metal detector.
During FY13, the operations of Minelab
have been reorganised to increase the
number of staff and resources that are
dedicated to this small-scale gold mining
market. With strong business development
activities now occurring in a number
of countries across Africa, Central and
Latin America, and Asia, Minelab is well
placed to continue with the medium-term
development of this gold mining segment.
In addition to the sale of gold detectors
into Africa, Minelab continues to sell
metal detectors into the developed world
economies of Australia, United States,
Europe and Asia. This part of the Minelab
business represents approximately one
third of Minelab sales and has achieved
strong and steady growth in recent years.
Minelab continues to invest in growing this
consumer market, and excellent progress
has been made with large retail chains
across the globe to have them carry
and promote our metal detectors
to their customers.
Radio Communications
Our radio communications business had
a tough year, with the troubled economic
conditions being experienced throughout
the world bringing about tightening of US
budgets and delays to major programs
in the US and across emerging world
markets in Africa and Central Asia.
In response to the difficult conditions,
the acquisition of Daniels Electronics is
a critical first step to broaden our business
beyond High Frequency (HF) radio and to
enable Codan to participate in the global
Land Mobile Radio (LMR) market space,
which is significantly larger than the HF
market. We will further diversify our radio
communications business by adding new
partners, products and technologies that
leverage off our HF and LMR products.
This will enable Codan to enter higher
growth markets and act as a prime in
certain LMR programs to become a more
profitable and comprehensive supplier
of communications solutions globally.
Codan has developed a very strong
brand name and a reputation for product
excellence in its established markets
worldwide, and we will seek to capitalise
on these attributes as we develop a strong
foundation for medium to long-term growth
in our Radio Communications business.
Mining Technology
Minetec supplies industry-leading
communications systems to the mining
industry, aimed at improving mine
productivity and safety. Minetec’s
innovative product solutions provide
an ideal platform to enter this market
and grow future revenues.
The Minetec business continues to
transition from the development of
“game-changing” communications-
based technologies that improve mine
productivity and safety, to installing the
technology in a number of blue-chip mine
reference sites. More work is still required
for the mining industry to recognise the
safety and productivity improvements
delivered by these solutions.
After a slower start than we had originally
anticipated, Minetec is well positioned to
deliver its best-in-class solutions to blue-
chip mining companies to improve their
performance.
As a result of the integration of the two
businesses, Radio Communications
has generated supply chain efficiencies,
reduced product costs and implemented
a more effective organisational structure.
The integrated product delivery represents
a unique and differentiated product
offering from Radio Communications.
There are a number of positives as we look
forward to FY14. We have made significant
progress in integrating the new LMR
business and are now leveraging off our
international distribution network, which
is expected to result in an expansion of
our sales into new international markets.
The recent renewal of our contracts with
all of the major UN agencies has positioned
us as the radio of choice for humanitarian
operations and, given the current level of
political instability in Africa, has seen this
segment of our business grow during the
past 12 months, partially offsetting the
delays experienced with major project
awards in our security and military markets.
Following its launch in June 2012, the
new Envoy™ software-defined radio
has received strong support from the
humanitarian, security and public safety
markets, after the delivery of products for
acceptance testing. Sales continue to grow
for Envoy™ as customers recognise the
value proposition and its unique features.
Work will be ongoing to entrench this
best-in-class product in our markets as
the new standard in HF. The Envoy™ will
also receive a range of enhanced software
features and capabilities during the next
12 months as we continue to get out in
front of and drive customer expectations.
Outlook
The Minelab business remains strong,
although the previous record level of gold
detector sales into the African market is
being temporarily depressed by a number
of external factors. The key fundamentals
of our metal detection business are
stronger than ever as we continue to
develop and expand our markets across
the world.
Radio Communications has broadened
its business through the acquisition of
Daniels Electronics and will further diversify
by adding new partners, products and
technologies that leverage the existing
business and position it to move into
higher growth markets. Like our efforts with
Minetec, the benefits of our actions will
develop over the medium to longer term.
Our sales can sometimes be volatile,
particularly as gold discoveries can
occur at any time and anywhere, and
communications projects can often have
long lead times. In FY12, our second half
was significantly stronger than the first
and we carried that momentum into FY13,
resulting in sales and profits much higher
than previous levels. While sales and
profits were lower in the second half of
FY13, particularly late in the year, we still
delivered the second best half-year result
in Codan’s history.
We enter FY14 without the record level
of sales momentum of gold detectors,
and therefore we expect to return to profit
levels more consistent with the first half of
both FY11 and FY12, with net profit in the
range of $10 million to $12 million. While
we remain confident of delivering another
DIRECTORS’ REPORT
good result in FY14, it’s still early in the
year and therefore we plan to provide a
further business update at the company’s
annual general meeting in October 2013.
We continue to pursue opportunities to
broaden and further diversify the business
through the development of internal
technologies, product development and
identification of adjacent products and
markets. We seek acquisitions that look
for the gaps in technology and know-how
that will open opportunity for the future
and create value for shareholders over
the medium to long term.
Codan Limited 2013 Annual Report 47
DIRECTORS’
REPORT
Codan Limited and
its Controlled Entities
48
DIVIDENDS
Dividends paid or declared by the company to members since the end of the previous financial year were:
DECLARED AND PAID DURING THE YEAR
ENDED 30 JUNE 2013:
Final 2012 ordinary
Interim 2013 ordinary
DECLARED AFTER THE END OF THE YEAR:
Final 2013 ordinary
Cents per share
Total amount
$000
Franked Date of payment
5.5
6.0
7.0
9,727
10,616
100%
100%
2 October 2012
2 April 2013
12,385
100%
1 October 2013
All dividends paid or declared by the company since the end of the previous financial year were fully franked.
EVENTS SUBSEQUENT TO
REPORTING DATE
There has not arisen in the interval between
the end of the financial year and the date
of this report any item, transaction or
event of a material and unusual nature
likely, in the opinion of the directors of
the company, to affect significantly the
operations of the group, the results of
those operations, or the state of affairs
of the group, in future financial years.
LIKELY DEVELOPMENTS
The group will continue with its strategy
of continuing to invest in new product
development, to seek opportunities
to further strengthen profitability by
expanding into related businesses
offering complementary products and
technologies, and to identify acquisition
opportunities that fit our strategy of further
diversification.
Further information about likely
developments in the operations of the
group and the expected results of those
operations in future financial years has
not been included in this report because
disclosure of the information would be
likely to result in unreasonable prejudice
to the group.
DIRECTORS’ INTERESTS
The relevant interest of each director in
the shares issued by the company as
notified by the directors to the Australian
Securities Exchange in accordance with
S205G(1) of the Corporations Act 2001,
at the date of this report is as follows:
Ordinary shares
Dr G D Klingner
Mr D S McGurk
Mr P R Griffiths
Mr D J Klingberg
Mr D J Simmons
Lt-Gen P F Leahy
Mr S W Davies
Mrs C S Namblard
534,983
312,517
199,416
120,908
-
57,708
12,420
-
by the auditor is compatible with, and did
not compromise, the auditor independence
requirements of the Corporations Act 2001
for the following reasons:
•
all non-audit services were subject to
the corporate governance procedures
adopted by the company and have
been reviewed by the Board Audit, Risk
and Compliance Committee to ensure
that they do not have an impact on the
integrity and objectivity of the auditor;
and
• the non-audit services provided do
not undermine the general principles
relating to auditor independence as
set out in APES 110 Code of Ethics
for Professional Accountants, as they
did not involve reviewing or auditing
the auditor’s own work, acting in
a management or decision-making
capacity for the company, acting
as an advocate for the company
or jointly sharing risks and rewards.
Refer page 51 for a copy of the auditor’s
independence declaration as required under
Section 307C of the Corporations Act.
Details of the amounts paid or payable to
the auditor of the company, KPMG, and
its related practices for audit and non-audit
services provided during the year are
as follows:
INDEMNIFICATION AND
INSURANCE OF OFFICERS
Indemnification
The company has agreed to indemnify the
current and former directors and secretaries
of the company and certain controlled
entities against all liabilities to another
person (other than the company or a related
body corporate) that may arise from their
position as directors and secretaries of the
company and its controlled entities, except
where the liability arises out of conduct
involving a lack of good faith. The Deed of
Access, Indemnity and Insurance stipulates
that the company and certain controlled
entities will meet the full amount of any such
liabilities, including costs and expenses.
Insurance premiums
The directors have not included details of
the nature of the liabilities covered or the
amount of the premium paid in respect of
the directors’ and officers’ liability and legal
expenses insurance contracts, as such
disclosure is prohibited under the terms of
the contract.
NON-AUDIT SERVICES
During the year KPMG, the company’s
auditor, has performed certain other
services in addition to their statutory duties.
The board has considered the non-audit
services provided during the year by the
auditor and is satisfied that the provision
of those non-audit services during the year
STATUTORY AUDIT
Audit and review of financial reports (KPMG Australia)
Audit of financial reports (overseas KPMG firms)
SERVICES OTHER THAN STATUTORY AUDIT
Other assurance services
Due diligence and corporate finance services
Other
Other services
Taxation compliance services (KPMG Australia)
Taxation compliance services (overseas KPMG firms)
DIRECTORS’ REPORT
Consolidated
2012
$
2013
$
242,450
37,091
279,541
181,300
33,581
214,881
312,503
12,000
268,215
346,519
939,237
272,239
38,229
144,799
100,807
556,074
Codan Limited 2013 Annual Report 49
DIRECTORS’
REPORT
Codan Limited and
its Controlled Entities
ROUNDING OFF
The company is of a kind referred to in ASIC
Class Order 98/100 dated 10 July 1998
and, in accordance with that Class Order,
amounts in the financial report and directors’
report have been rounded off to the nearest
thousand dollars, unless otherwise stated.
This report is made with a resolution of the
directors:
Dr G D Klingner
Director
D S McGurk
Director
Dated at Newton this
21st day of August 2013.
50
LEAD AUDITOR’S INDEPENDENCE DECLARATION
LEAD AUDITOR’S
INDEPENDENCE
DECLARATION
FOR THE YEAR ENDED
30 JUNE 2013
Codan Limited and
its Controlled Entities
Lead auditor’s independence declaration under Section 307C of the Corporations Act 2001
To: the directors of Codan Limited
I declare that, to the best of my knowledge and belief, in relation to the audit for the financial year ended 30 June 2013 there have been:
(i) no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and
(ii) no contraventions of any applicable code of professional conduct in relation to the audit.
Codan Limited 2013 Annual Report 51
CONSOLIDATED INCOME STATEMENT
Note
Consolidated
2013
$000
2012
$000
CONTINUING OPERATIONS
Revenue
Cost of sales
Gross profit
Administrative expenses
Sales and marketing expenses
Engineering expenses
Net financing costs
Other (expenses) / income
Profit before tax
Income tax expense
Profit from continuing operations
DISCONTINUED OPERATION
Satellite communications operating
results, net of income tax
Profit for the period
Earnings per share for profit attributable to the ordinary
equity holders of the company:
Basic earnings per share
Diluted earnings per share
Earnings per share from continuing
operations:
Basic earnings per share
Diluted earnings per share
3
6
7
9
4
29
29
29
29
233,836
(90,722)
143,114
(19,116)
(42,029)
(15,741)
(1,941)
(766)
63,521
(17,749)
45,772
160,732
(63,301)
97,431
(15,032)
(29,986)
(8,117)
(3,236)
459
41,519
(12,346)
29,173
(355)
45,417
(6,027)
23,146
25.9 cents
25.8 cents
26.1 cents
26.0 cents
14.1 cents
14.0 cents
17.8 cents
17.7 cents
The consolidated income statement is to be read in conjunction with the notes to and forming part of the financial statements set out on pages 57 to 102.
CONSOLIDATED
INCOmE
STATEmENT
FOR THE YEAR ENDED
30 JUNE 2013
Codan Limited and
its Controlled Entities
52
CONSOLIDATED
STATEMENT OF
COMPREHENSIVE
INCOmE
FOR THE YEAR ENDED
30 JUNE 2013
Codan Limited and
its Controlled Entities
Profit for the period
Items that may be reclassified subsequently to profit or loss
Changes in fair value of cash flow hedges
less tax effect
Changes in fair value of cash flow hedges, net of income tax
Exchange differences on translation of foreign operations
Recognised through sale of discontinued operation
Other comprehensive income for the period, net of income tax
Total comprehensive income for the period
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Note
21
21
21
Consolidated
2013
$000
2012
$000
45,417
23,146
(2,087)
626
(1,461)
3,697
979
3,215
48,632
(150)
45
(105)
(413)
(555)
(1,073)
22,073
The consolidated statement of comprehensive income is to be read in conjunction with the notes to and forming part of the financial statements set out on
pages 57 to 102.
Codan Limited 2013 Annual Report 53
CONSOLIDATED
BALANCE
SHEET
AS AT 30 JUNE 2013
Codan Limited and
its Controlled Entities
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventory
Current tax assets
Equipment held for sale
Other assets
Total current assets
NON-CURRENT ASSETS
Property, plant and equipment
Product development
Intangible assets
Total non-current assets
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Loans and borrowings
Current tax payable
Provisions
Total current liabilities
NON-CURRENT LIABILITIES
Other payables
Loans and borrowings
Deferred tax liabilities
Provisions
Total non-current liabilities
TOTAL LIABILITIES
Net assets
EQUITY
Share capital
Reserves
Retained earnings
Total equity
CONSOLIDATED BALANCE SHEET
Note
Consolidated
2013
$000
10
11
12
9
13
14
15
16
17
18
9
19
18
9
19
20
21
8,638
21,137
43,336
226
-
2,244
75,581
19,940
27,498
88,519
135,957
211,538
29,357
201
11,370
10,448
51,376
600
33,641
332
857
35,430
86,806
124,732
41,873
34,953
47,906
124,732
2012
$000
23,081
22,785
11,979
75
1,747
2,206
61,873
18,238
23,286
66,886
108,410
170,283
33,186
113
4,226
9,469
46,994
2,747
39,168
1,196
769
43,880
90,874
79,409
24,839
(2,935)
57,505
79,409
54
The consolidated balance sheet is to be read in conjunction with the notes to and forming part of the financial statements set out on pages 57 to 102.
CONSOLIDATED
STATEMENT OF
CHANGES IN
EQUITY
FOR THE YEAR ENDED
30 JUNE 2013
Codan Limited and
its Controlled Entities
2013
Balance as at 1 July 2012
Profit for the period
Performance rights expensed
Change in fair value of cash flow hedges
Reserves through sale of discontinued operation
Exchange differences on translation of foreign
operations
Transfers to and from reserves
Transactions with owners of the company
Dividends recognised during the period
Issue of share capital, net of issue costs
Employee share plan, net of issue costs
Balance at 30 June 2013
2012
Balance as at 1 July 2011
Profit for the period
Performance rights expensed
Change in fair value of cash flow hedges
Reserves through sale of discontinued operation
Exchange differences on translation of foreign
operations
Transactions with owners of the company
Dividends recognised during the period
Balance at 30 June 2012
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Consolidated
Share
capital
$000
24,839
Translation
reserve
$000
(3,271)
Hedging
reserve
$000
336
Profit
reserve
$000
-
-
204
-
-
-
-
-
-
-
-
-
(1,461)
979
3,697
-
-
-
-
Retained
earnings
$000
57,505
45,417
-
-
-
-
Total
$000
79,409
45,417
204
(1,461)
979
3,697
-
-
-
-
-
34,673
(34,673)
-
25,043
1,405
(1,125)
34,673
68,249
128,245
-
16,660
170
16,830
41,873
-
-
-
-
-
-
-
-
-
-
-
-
(20,343)
(20,343)
-
-
16,660
170
(20,343)
(3,513)
1,405
(1,125)
34,673
47,906
124,732
Consolidated
Share
capital
$000
24,609
Translation
reserve
$000
(3,199)
Hedging
reserve
$000
1,337
Profit
reserve
$000
-
-
230
-
-
-
-
-
-
341
(413)
24,839
(3,271)
-
-
24,839
(3,271)
-
-
(105)
(896)
-
336
-
336
-
-
-
-
-
-
-
-
Retained
earnings
$000
49,132
23,146
-
-
-
-
Total
$000
71,879
23,146
230
(105)
(555)
(413)
72,278
94,182
(14,773)
(14,773)
57,505
79,409
The consolidated statement of changes in equity is to be read in conjunction with the notes to and forming part of the financial statements set out on pages 57 to 102.
Codan Limited 2013 Annual Report 55
Note
25(II)
CASH FLOWS FROM OPERATING ACTIVITIES
Cash receipts from customers
Cash paid to suppliers and employees
Interest received
Interest paid
Income taxes paid
Net cash from operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of a subsidiary
Proceeds from disposal of property, plant and equipment
Payments for capitalised product development
Payments for intellectual property
Acquisition of property, plant and equipment
Acquisition of intangibles (computer software and licences)
Proceeds from disposal of discontinued operation
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Drawdowns/(repayments) of borrowings
Issue of share capital
Dividends paid
Net cash used in financing activities
Net increase/(decrease) in cash held
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate fluctuations on cash held
Cash and cash equivalents at the end of the financial year
25(I)
CONSOLIDATED STATEMENT OF CASH FLOWS
Consolidated
2013
$000
2012
$000
258,221
(209,498)
206
(1,896)
(10,751)
36,282
(23,417)
1,060
(10,248)
(3,669)
(4,340)
(1,706)
-
(42,320)
(5,439)
16,660
(20,343)
(9,122)
(15,160)
23,081
717
8,638
169,272
(115,201)
245
(3,626)
(10,613)
40,077
(7,004)
1,277
(10,330)
(1,523)
(2,429)
(1,349)
8,606
(12,752)
1,887
-
(14,773)
(12,886)
14,439
8,643
(1)
23,081
The consolidated statement of cash flows is to be read in conjunction with the notes to and forming part of the financial statements set out on pages 57 to 102.
CONSOLIDATED
STATEMENT OF
CASH FLOWS
FOR THE YEAR ENDED
30 JUNE 2013
Codan Limited and
its Controlled Entities
56
Net cash from operating activities
25(II)
CASH FLOWS FROM OPERATING ACTIVITIES
Cash receipts from customers
Cash paid to suppliers and employees
Interest received
Interest paid
Income taxes paid
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of a subsidiary
Proceeds from disposal of property, plant and equipment
Payments for capitalised product development
Payments for intellectual property
Acquisition of property, plant and equipment
Acquisition of intangibles (computer software and licences)
Proceeds from disposal of discontinued operation
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Drawdowns/(repayments) of borrowings
Issue of share capital
Dividends paid
Net cash used in financing activities
Net increase/(decrease) in cash held
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate fluctuations on cash held
Cash and cash equivalents at the end of the financial year
25(I)
Consolidated
Note
2013
$000
258,221
(209,498)
206
(1,896)
(10,751)
36,282
(23,417)
1,060
(10,248)
(3,669)
(4,340)
(1,706)
-
(42,320)
(5,439)
16,660
(20,343)
(9,122)
(15,160)
23,081
717
8,638
2012
$000
169,272
(115,201)
245
(3,626)
(10,613)
40,077
(7,004)
1,277
(10,330)
(1,523)
(2,429)
(1,349)
8,606
(12,752)
1,887
-
(14,773)
(12,886)
14,439
8,643
(1)
23,081
NOTES TO
AND FORMING
PART OF THE
FINANCIAL
STATEmENTS
FOR THE YEAR ENDED
30 JUNE 2013
Codan Limited and
its Controlled Entities
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING
POLICIES
Codan Limited (the “company”) is a
company domiciled in Australia and is a
for-profit entity. The consolidated financial
report of the company as at and for the
year ended 30 June 2013 comprises the
company and its subsidiaries (together
referred to as the “group” and individually
as “group entities”). The financial report
was authorised for issue by the directors
on 21 August 2013.
(a) Statement of compliance
The financial report is a general purpose
financial report which has been prepared
in accordance with Australian Accounting
Standards (AASBs) (including Australian
Interpretations) adopted by the Australian
Accounting Standards Board (“AASB”) and
the Corporations Act 2001.
The consolidated financial report of
the group complies with International
Financial Reporting Standards (IFRSs) and
interpretations adopted by the International
Accounting Standards Board (IASB).
(b) Basis of preparation
The consolidated financial report is
prepared in Australian dollars (the
company’s functional currency and the
functional currency of the majority of the
group) on the historical costs basis except
that derivative financial instruments are
stated at their fair value.
A number of new standards, amendments
to standards and interpretations,
effective for annual periods beginning
after 1 July 2013, were available for early
adoption, and have not been applied in
preparing these consolidated financial
statements. None of these standards is
expected to have a significant effect on
the consolidated financial statements of
the group, except for AASB 9 Financial
Instruments, which could change the
classification and measurement of financial
assets. The amendments to AASB 119
Employee Benefits alter the definitions for
short-term and long-term benefits which
may impact the current versus non-current
split, and require leave not expected to
be taken within a year to be discounted,
which might impact the valuation of the
group’s employee benefits. AASB 119 will
become mandatory for the group’s 2014
consolidated financial statements, while
AASB 9 is expected to become mandatory
in the following year.
The group is of a kind referred to in ASIC
Class Order 98/100 dated 10 July 1998
and, in accordance with the Class Order,
amounts in the financial report have been
rounded off to the nearest thousand
dollars, unless otherwise stated.
Use of estimates and judgements
The preparation of a financial report in
conformity with Australian Accounting
Standards requires management to make
judgements, estimates and assumptions
that affect the application of policies and
reported amounts of assets, liabilities,
income and expenses. These estimates
and associated assumptions are based
on historical experience and various
other factors that are believed to be
reasonable under the circumstances, the
results of which form the basis of making
the judgements about carrying values of
assets and liabilities that are not readily
apparent from other sources. Actual
results may differ from these estimates.
Estimates and underlying assumptions are
reviewed on an ongoing basis. Revisions
to accounting estimates are recognised
in the period in which the estimate is
revised and in any future periods affected.
The estimates and judgments that have
a significant risk of causing a material
adjustment to the carrying amounts of
assets within the next financial year relate
to impairment assessments of non-current
assets, including product development
and goodwill.
Changes in accounting policies
For the year ended 30 June 2013
the group has not changed any of its
significant accounting policies.
The accounting policies set out below
have been applied consistently to all
periods presented in these consolidated
financial statements, and have been
applied consistently by group entities.
(c) Basis of consolidation
Subsidiaries are entities controlled by the
group. Control exists when the group has
the power, directly or indirectly, to govern
the financial and operating policies of an
entity so as to obtain benefits from its
activities. In assessing control, potential
voting rights that currently are exercisable
are taken into account. The financial
statements of subsidiaries are included in
the consolidated financial statements from
the date control commences until the date
control ceases.
Codan Limited 2013 Annual Report 57
NOTES TO
AND FORMING
PART OF THE
FINANCIAL
STATEmENTS
FOR THE YEAR ENDED
30 JUNE 2013
Codan Limited and
its Controlled Entities
58
1. SIGNIFICANT ACCOUNTING
POLICIES (continued)
(c) Basis of consolidation (continued)
The accounting policies of subsidiaries
have been changed when necessary to
align them with the policies adopted by
the group.
Unrealised gains and losses and inter-
entity balances resulting from transactions
with or between subsidiaries are
eliminated in full on consolidation.
Business combinations are accounted
for using the acquisition method as at
the acquisition date, which is the date
on which control is transferred to the
group. Transaction costs, other than
those associated with the issue of debt
or equity securities, that the group incurs
in connection with a business combination
are expensed as incurred.
Upon the loss of control, the group
derecognises the assets and liabilities
of the subsidiary, and non-controlling
interests and the other components of
equity related to the subsidiary. Any
surplus or deficit arising on the loss
of control is recognised in the income
statement.
(d) Revenue recognition
Revenues are recognised at the fair value
of the consideration received or receivable,
net of the amount of goods and services
tax (GST) payable to taxation authorities.
Sale of goods
Revenue from the sale of goods is
measured at the fair value of the
consideration received or receivable (net
of rebates, returns, discounts and other
allowances). Revenue is recognised
when the significant risks and rewards of
ownership pass to the customer, recovery
of the consideration is probable, the
associated costs and possible return of
goods can be estimated reliably, there is
no continuing management involvement
with the goods and the amount of revenue
can be measured reliably. Control usually
passes when the goods are shipped to
the customer.
Construction contracts
Contract revenue includes the initial
amount agreed in the contract plus any
variations in contract work, claims and
incentive payments, to the extent that it
is probable that they will result in revenue
and can be measured reliably. As soon as
the outcome of a construction contract
can be estimated reliably, contract revenue
is recognised in the income statement
in proportion to the stage of completion
of the contract. Contract expenses are
recognised as incurred unless they create
an asset related to future contract activity.
The stage of completion is assessed by
reference to professional judgement of
work performed. When the outcome of a
construction contract cannot be estimated
reliably, contract revenue is recognised only
to the extent of contract costs incurred
that are likely to be recoverable. An
expected loss on a contract is recognised
immediately in the income statement.
Rendering of services
Revenue from rendering services is
recognised in the period in which the
service is provided.
(e) Expenses
Operating lease payments
Payments made under operating leases
are recognised in the income statement
on a straight-line basis over the term of
the lease. Lease incentives received are
recognised in the income statement as
an integral part of the total lease expense,
and are spread over the lease term.
Finance lease payments
Minimum lease payments are apportioned
between the finance charge and the
reduction of the outstanding liability. The
finance charge is allocated to each period
during the lease term so as to produce a
constant periodic rate of interest on the
remaining balance of the liability.
Net financing costs
Net financing costs include interest
paid relating to borrowings, interest
received on funds invested, unwinding of
discounts, foreign exchange gains and
losses, and gains and losses on hedging
instruments that are recognised in the
income statement. Qualifying assets are
assets that take more than 12 months to
get ready for their intended use or sale.
In these circumstances, borrowing costs
are capitalised to the cost of the qualifying
assets. Interest income and borrowing costs
are recognised in the income statement
on an accruals basis, using the effective-
interest method. Foreign currency gains
and losses are reported on a net basis.
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
(f) Foreign currency
Foreign currency transactions are translated
to Australian dollars at the rates of exchange
ruling at the dates of the transactions.
Monetary assets and liabilities denominated
in foreign currencies at the reporting date
are translated to Australian dollars at the
foreign exchange rate ruling at that date.
Foreign exchange differences arising on
translation are recognised in the income
statement, except for differences arising
on the retranslation of a financial liability
designated as a hedge of a net investment
in a foreign operation, or qualifying cash
flow hedges, which are recognised in other
comprehensive income and presented
within equity, to the extent that the hedge
is effective.
Foreign operations
The assets and liabilities of foreign
operations, including goodwill and fair-
value adjustments arising on acquisition,
are translated to Australian dollars at
the foreign exchange rates ruling at
the reporting date. Equity items are
translated at historical rates. The income
and expenses of foreign operations are
translated to Australian dollars at the
foreign exchange rates ruling at the dates
of the transactions. Foreign exchange
differences arising on translation are taken
directly to the foreign currency translation
reserve until the disposal, or partial
disposal, of the foreign operations.
Foreign exchange gains and losses arising
from a monetary item receivable or payable
to a foreign operation, the settlement of
which is neither planned nor likely in the
foreseeable future, are considered to
form part of a net investment in a foreign
operation and on consolidation they are
recognised in other comprehensive income,
and are presented within equity in the
foreign currency translation reserve.
Foreign currency differences arising on
the retranslation of a financial liability
designated as a hedge of a net investment
in a foreign operation are recognised
directly in other comprehensive income to
the extent that the hedge is effective, and
are presented within equity in the hedging
reserve. To the extent that the hedge is
ineffective, such differences are recognised
in the income statement. When the hedged
part of a net investment is disposed of, the
associated cumulative amount in equity
is transferred to the income statement as
an adjustment to the income statement
on disposal.
(g) Derivative financial instruments
The group has used derivative financial
instruments to hedge its exposure to
foreign exchange and interest rate
movements. In accordance with its
policy, the group does not hold derivative
financial instruments for trading purposes.
However, derivatives that do not qualify
for hedge accounting are accounted for
as trading instruments. Derivative financial
instruments are recognised initially at fair
value. Attributable transaction costs are
recognised in the income statement when
incurred. Subsequent to initial recognition,
derivative financial instruments are
stated at fair value. The gain or loss on
remeasurement to fair value is recognised
immediately in the income statement
unless the derivative qualifies for
hedge accounting.
Hedging
On initial designation of the hedge, the
group formally documents the relationship
between the hedging instrument
and hedged item, including the risk
management objectives and strategy
in undertaking the hedge transaction,
together with the methods that will be
used to assess the effectiveness of the
hedging relationship.
Where a derivative financial instrument is
designated as a hedge of the variability
in cash flows of a highly probable
forecasted transaction, the effective
part of any gain or loss on the derivative
financial instrument is recognised
directly in comprehensive income and
presented within equity. When the forecast
transaction subsequently results in the
recognition of a financial asset or liability,
then the associated gains and losses that
were recognised directly in equity are
reclassified into the income statement.
When a hedging instrument expires or
is sold, terminated or exercised, or the
entity revokes designation of the hedge
relationship but the hedged forecast
transaction is still expected to occur,
the cumulative gain or loss at that point
remains in equity and is recognised in
accordance with the above policy when
the transaction occurs. If the hedged
transaction is no longer expected to
take place, then the unrealised gain or
loss recognised in equity is recognised
immediately in the income statement.
(h) Taxation
Income tax expense on the income
statement comprises a current and
deferred tax expense. Income tax expense
is recognised in the income statement
except to the extent that it relates to items
recognised directly in equity, or in other
comprehensive income.
Current tax expense is the expected tax
payable on the taxable income for the year
using tax rates enacted or substantially
enacted at the reporting date, adjusted
for any prior year under or over provision.
The movement in deferred tax assets
and liabilities results in the deferred tax
expense, unless the movement results
from a business combination, in which case
the tax entry is recognised in goodwill, or
a transaction has impacted equity, in which
case the tax entry is also reflected in equity.
Deferred tax assets and liabilities arise from
temporary differences between the carrying
amount of assets and liabilities for financial
reporting purposes and the amounts used
for taxation purposes.
Deferred tax assets and liabilities are
offset if there is a legally enforceable
right to offset current tax liabilities and
assets, and they relate to income taxes
levied by the same tax authority on the
same taxable entity, or on different tax
entities, but they intend to settle current tax
liabilities and assets on a net basis, or their
tax assets and liabilities will be realised
simultaneously.
A deferred tax asset is recognised for
unused tax losses, tax credits and
deductible temporary differences to the
extent that it is probable that future taxable
profits will be available against which the
temporary difference can be utilised.
Codan Limited 2013 Annual Report 59
NOTES TO
AND FORMING
PART OF THE
FINANCIAL
STATEmENTS
FOR THE YEAR ENDED
30 JUNE 2013
Codan Limited and
its Controlled Entities
60
1. SIGNIFICANT ACCOUNTING
POLICIES (continued)
(h) Taxation (continued)
Deferred tax assets are reviewed at each
reporting date and are reduced to the
extent that it is no longer probable that the
related tax benefit will be realised.
Tax consolidation
The company is the head entity in the
tax consolidated group comprising all
the Australian wholly owned subsidiaries.
The company recognises the current tax
liability of the tax consolidated group. The
tax consolidated group has determined
that subsidiaries will account for deferred
tax balances and will make contributions
to the head entity for the current tax
liabilities as if the subsidiary prepared its
tax calculation on a stand-alone basis.
The company recognises deferred tax
assets arising from unused tax losses of
the tax consolidated group to the extent
that it is probable that future taxable
profits of the tax consolidated group will
be available against which the asset can
be utilised.
Any subsequent period adjustments to
deferred tax assets arising from unused tax
losses as a result of revised assessments
of the probability of recoverability, are
recognised by the head entity only.
(i) Goods and services tax
Revenues, expenses and assets are
recognised net of the amount of GST,
except where the amount of GST incurred
is not recoverable from the Australian
Taxation Office (ATO). In these
circumstances the GST is recognised as
part of the cost of acquisition of the asset
or is expensed.
Receivables and payables are stated
with the amount of GST included. The
net amount of GST recoverable from, or
payable to, the ATO is included as a current
asset or liability in the balance sheet.
Cash flows are included in the Statement
of Cash Flows on a gross basis. The GST
components of cash flows arising from
investing and financing activities which are
recovered from, or payable to, the ATO are
classified as operating cash flows.
(j) Cash and cash equivalents
Cash and cash equivalents comprise
cash balances and call deposits with an
original maturity of three months or less.
Bank overdrafts form an integral part of
the group’s cash management and are
included as a component of cash and
cash equivalents for the purpose of the
Statement of Cash Flows.
(k) Trade and other receivables
Trade debtors are to be settled within
agreed trading terms, typically less than
60 days, and are initially recognised
at fair value and then subsequently at
amortised cost, less any impairment
losses. Impairment of receivables is not
recognised until objective evidence is
available that a loss event may occur.
Significant receivables are individually
assessed for impairment. Non-significant
receivables are not individually assessed,
instead impairment testing is performed by
considering the risk profile of that group
of receivables. All impairment losses are
recognised in the income statement.
(l) Inventories
Raw materials and stores, work in progress
and finished goods are measured at the
lower of cost (determined on a first-in
first-out basis) and net realisable value.
Net realisable value is the estimated selling
price in the ordinary course of business,
less the estimated costs of completion
and selling expenses. In the case of
manufactured inventories and work in
progress, costs comprise direct materials,
direct labour, other direct variable costs
and allocated factory overheads necessary
to bring the inventories to their present
location and condition.
(m) Project work in progress
Project work in progress represents the
gross unbilled amount expected to be
collected from customers for project
work performed to date. It is measured
at cost plus profit recognised to date less
progress billings and recognised losses.
Cost includes all expenditure related
directly to specific projects. Project work
in progress is presented as part of other
assets in the balance sheet for all projects
in which costs incurred plus recognised
profits exceed progress billings.
(n) Intangible assets
Product development costs
Expenditure on research activities,
undertaken with the prospect of gaining
new scientific or technical knowledge and
understanding, is recognised in the income
statement as an expense when incurred.
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
Expenditure on development activities,
whereby research findings are applied
to a plan or design for the production
of new or substantially improved products,
is capitalised only if development costs
can be measured reliably, the product
is technically and commercially feasible,
future economic benefits are probable and
the group intends to and has sufficient
resources to complete development and
to use or sell the asset.
The expenditure capitalised includes the
cost of materials, direct labour and an
appropriate proportion of overheads that
are directly attributable to preparing the
asset for its intended use less accumulated
amortisation and accumulated impairment
losses. Other development expenditure
is recognised in the income statement
when incurred.
Goodwill
All business combinations are accounted
for by applying the acquisition method and
goodwill may arise upon the acquisition
of subsidiaries. Goodwill is stated at cost,
less any accumulated impairment losses.
It is allocated to cash-generating units
and is not amortised but is tested annually
for impairment.
Measuring goodwill
The group measures goodwill as the fair
value of the consideration transferred
including the recognised amount of any
non-controlling interest in the acquiree,
less the net recognised amount (generally
fair value) of the identifiable assets
acquired (including intangible assets) and
liabilities assumed, all measured as of the
acquisition date.
Consideration transferred includes
the fair values of the assets transferred,
liabilities incurred by the group to the
previous owners of the acquiree, and
equity interests issued by the group.
Consideration transferred also includes
the fair value of any contingent
consideration and share-based
payment awards of the company.
Contingent liabilities
A contingent liability of the acquiree is
assumed in a business combination only
if such a liability represents a present
obligation and arises from a past event,
and its fair value can be measured reliably.
Non-controlling interest
The group measures any non-controlling
interest at its proportionate interest in the
identifiable net assets of the acquiree.
Transaction costs
Transaction costs that the group incurs
in connection with a business combination,
such as finder’s fees, legal fees, due
diligence fees, and other professional and
consulting fees, are expensed as incurred.
Licences and other intangible assets
Licences and other intangible assets
that are acquired by the group, which
have finite useful lives, are stated at
cost, less accumulated amortisation
and accumulated impairment losses.
Expenditure on internally generated
goodwill and brands is recognised
in the income statement as incurred.
Subsequent expenditure
Subsequent expenditure is capitalised
only when it increases the future economic
benefits embodied in the specific asset
to which it relates. All other expenditure,
including expenditure on internally
generated goodwill and brands, is
recognised in the income statement
as incurred.
Amortisation
Amortisation is calculated on the cost
of the asset, less its residual value.
Amortisation is charged to the income
statement on a straight-line basis over the
estimated useful lives of intangible assets,
other than goodwill, from the date that
they are available for use. The estimated
useful lives in the current and comparative
periods are as follows:
Product development,
licences and intellectual
property:
2 - 15 years
Computer software:
3 - 7 years
Amortisation methods, useful lives and
residual values are reviewed at each
reporting date.
(o) Property, plant and equipment
Owned assets
Items of property, plant and equipment
are measured at cost, less accumulated
depreciation and impairment losses. Cost
includes expenditures that are directly
attributable to the acquisition of the
asset. The cost of self-constructed assets
includes the cost of materials, direct labour
and any other costs directly attributable
to bringing the asset to a working
condition for its intended use, the costs
of dismantling and removing the items
and restoring the site on which they are
located, and capitalised borrowing costs.
Purchased software that is integral to the
functionality of the related equipment is
capitalised as part of that equipment.
Land and buildings that had been revalued
to fair value prior to the transition to AIFRS,
being 1 July 2004, are measured on the
basis of deemed cost, being the revalued
amount at the date of that revaluation.
Gains and losses on disposal of an item
of property, plant and equipment are
determined by comparing the proceeds
from disposal with the carrying amount
of property, plant and equipment and are
recognised net within “other income” or
“other expenses” in the income statement.
When parts of an item of property, plant
and equipment have different useful lives,
they are accounted for as separate items
(major components) of property, plant and
equipment.
Subsequent costs
The cost of replacing part of an item
of property, plant and equipment is
recognised in the carrying amount of
the item if it is probable that the future
economic benefits embodied within the
part will flow to the group and its cost can
be measured reliably. The carrying amount
of the replaced part is derecognised.
The costs of the day-to-day servicing
of property, plant and equipment are
recognised in the income statement
as incurred.
Codan Limited 2013 Annual Report 61
NOTES TO
AND FORMING
PART OF THE
FINANCIAL
STATEmENTS
FOR THE YEAR ENDED
30 JUNE 2013
Codan Limited and
its Controlled Entities
62
1. SIGNIFICANT ACCOUNTING
POLICIES (continued)
(o) Property, plant and equipment
(continued)
Leased assets
Leases in terms of which the group assumes
substantially all the risks and rewards of
ownership are classified as finance leases.
Upon initial recognition, the leased asset is
measured at an amount equal to the lower
of its fair value and the present value of the
minimum lease payments. Subsequent to
initial recognition, the asset is accounted for
in accordance with the accounting policy
applicable to that asset.
Other leases are operating leases and the
leased assets are not recognised in the
balance sheet.
Depreciation
Depreciation is calculated on the
depreciable amount, which is the cost
of an asset, less its residual value.
Depreciation is charged to the income
statement on property, plant and
equipment on a straight-line basis over
the estimated useful life of the assets.
Capitalised leased assets are amortised
on a straight-line basis over the term of
the relevant lease, or where it is likely
the group will obtain ownership of the
asset, the life of the asset. Land is not
depreciated.
The main depreciation rates used for each
class of asset for current and comparative
periods are as follows:
Buildings
4%
Leasehold property
33%
Plant and equipment
5% to 40%
Depreciation methods, useful lives and
residual values are reviewed at each
reporting date.
(p) Impairment
The carrying amounts of the group’s
assets, other than inventories and deferred
tax assets, are reviewed at each reporting
date to determine whether there is any
indication of impairment. A financial asset
is considered to be impaired if objective
evidence indicates that one or more
events have had a negative effect on the
estimated future cash flows of that asset.
If any such impairment exists, the asset’s
recoverable amount is estimated.
For goodwill and intangible assets that
have an indefinite useful life or are not yet
available for use, the recoverable amount
is estimated annually.
The recoverable amount of assets is the
greater of their fair value less costs to sell
pre-tax, or their value-in-use. In assessing
value-in-use, the estimated future cash
flows are discounted to their present value
using a pre-tax discount rate that reflects
current market assessments of the time
value of money and the risks specific
to the asset. For an asset that does not
generate largely independent cash inflows,
the recoverable amount is determined
for the cash-generating unit to which the
asset belongs.
The group’s corporate assets do not
generate separate cash inflows. If there is
an indication that a corporate asset may
be impaired, then the recoverable amount
is determined for the cash-generating units
to which the corporate asset belongs.
An impairment loss is recognised
whenever the carrying amount of an asset
exceeds its recoverable amount. A cash-
generating unit is the smallest identifiable
asset group that generates cash inflows
that are largely independent from other
assets or groups of assets. Impairment
losses are recognised in the income
statement. Impairment losses recognised
in respect of cash-generating units are
allocated first to reduce the carrying
amount of any goodwill and then to reduce
the carrying amount of the other assets
in the cash-generating unit on a pro-rata
basis.
An impairment loss in respect of goodwill
is not reversed. In respect of other assets,
impairment losses recognised in prior
periods are assessed at each reporting
date for any indications that the loss
has decreased or no longer exists. An
impairment loss is reversed if there has
been a change in the estimate used to
determine the recoverable amount. An
impairment loss is reversed only to the
extent that the asset’s carrying amount
does not exceed the carrying amount
that would have been determined, net
of depreciation or amortisation, if no
impairment loss had been recognised.
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
(q) Payables
Liabilities are recognised for amounts to
be paid in the future for goods or services
received. Trade accounts payable are
normally settled within 60 days.
(r) Interest bearing borrowings
Interest bearing borrowings are recognised
initially at their fair value less attributable
transaction costs. Subsequent to initial
recognition, interest bearing borrowings
are stated at amortised cost, with any
difference between cost and redemption
value being recognised in the income
statement over the period of the
borrowings on an effective-interest basis.
(s) Employee benefits
Wages, salaries and annual leave
Liabilities for employee benefits for wages,
salaries, incentives and annual leave
represent present obligations resulting
from employees’ services provided to the
reporting date, calculated at undiscounted
amounts based on remuneration rates that
the group expects to pay as at the reporting
date, including related on-costs such as
workers’ compensation insurance and
payroll tax.
Long service leave
The provision for employee benefits for long
service leave represents the present value of
the estimated future cash outflows resulting
from the employees’ services provided
to the reporting date. The provision is
calculated using expected future increases
in wage and salary rates, including related
on-costs, and expected settlement dates
based on turnover history, and is discounted
using the rates attaching to Commonwealth
Government bonds at the reporting date
which most closely match the terms of
maturity of the related liabilities.
Defined contribution superannuation plans
A defined contribution plan is a post-
employment benefit plan under which
an entity pays fixed contributions into
a separate entity and will have no legal
or constructive obligation to pay further
amounts. The group contributes to defined
contribution superannuation plans and
these contributions are expensed in the
income statement as incurred.
(t) Provisions
A provision is recognised when there is a
present legal or constructive obligation as
a result of a past event, it can be estimated
reliably, and it is probable that a future
sacrifice of economic benefits will be
required to settle the obligation. Provisions
are determined by discounting the expected
future cash flows required to settle the
obligation at a pre-tax rate that reflects the
current market assessments of the time
value of money and the risks specific to the
liability. The unwinding of the discount is
recognised as a finance cost.
Dividends
A provision for dividends payable is
recognised in the reporting period in which
the dividends are declared.
Restructuring and employee termination benefits
A provision for restructuring is recognised
when the group has approved a detailed
and formal restructuring plan, and the
restructuring either has commenced or has
been announced publicly. Future operating
costs are not provided for.
Warranty
A provision is made for the group’s
estimated liability on all products sold and
still under warranty, and includes claims
already received. The estimate is based on
the group’s warranty cost experience over
previous years.
Onerous contracts
A provision for onerous contracts is
recognised when the expected benefits to
be derived by the group from a contract
are lower than the unavoidable cost of
meeting its obligations under the contract.
The provision is measured at the present
value of the lower of the expected cost of
terminating the contract and the expected
net cost of continuing with the contract.
(u) Share capital
Ordinary shares
Ordinary shares are classified as equity.
Incremental costs directly attributable to
the issue of ordinary shares and share
options are recognised as a deduction
from equity, net of any tax effects.
(v) Share-based payment transactions
Share-based payments in which the
group receives goods or services
as consideration for its own equity
instruments are accounted for as equity-
settled share-based payment transactions,
regardless of how the equity instruments
are obtained from the group.
The grant-date fair value of share-based
payment awards granted to employees
is recognised as an employee expense,
with a corresponding increase in equity,
over the period that the employees
unconditionally become entitled to the
awards. The amount recognised as an
expense is adjusted to reflect the number
of awards for which the related service
and non-market vesting conditions are
expected to be met.
(w) Discontinued operations
Classification as a discontinued operation
occurs on disposal or when the operation
is determined to be held for sale, if earlier.
When an operation is classified as a
discontinued operation, the comparative
income statement is re-presented as if the
operation had been discontinued from the
start of the comparative year.
Codan Limited 2013 Annual Report 63
2. DIVIDENDS
i. An ordinary final dividend of 5.5 cents per share, franked to 100% with
30% franking credits, was paid on 2 October 2012
ii. An ordinary interim dividend of 6.0 cents per share, franked to 100% with
30% franking credits, was paid on 2 April 2013
iii. An ordinary final dividend of 5.0 cents per share, franked to 100% with
30% franking credits, was paid on 3 October 2011
iv. An ordinary interim dividend of 4.0 cents per share, franked to 100% with
30% franking credits, was paid on 2 April 2012
Consolidated
2013
$000
9,727
10,616
-
-
20,343
2012
$000
-
-
8,207
6,566
14,773
Subsequent events
Since the end of the financial year, the directors declared an ordinary final dividend of 7.0 cents per share, franked to 100% with 30%
franking credits. Based upon the shares on issue at 30 June 2013, the dividend would be $12,384,827 and is expected to be paid on
1 October 2013. The financial effect of this dividend has not been brought to account in the financial statements for the year ended
30 June 2013 and will be recognised in subsequent financial reports.
Dividend franking account
Franking credits available to shareholders for subsequent financial years (30%)
22,104
13,856
The franking credits available are based on the balance of the dividend franking account at year-end, adjusted for the franking credits
that will arise from the payment of the current tax liability. The ability to utilise the franking account credits is dependent upon there being
sufficient available profits to declare dividends. Based upon the above assumed dividend, the impact on the dividend franking account
of dividends proposed after the balance sheet date but not recognised as a liability is to reduce it by $5,307,783 (2012: $3,869,155).
NOTES TO
AND FORMING
PART OF THE
FINANCIAL
STATEmENTS
FOR THE YEAR ENDED
30 JUNE 2013
Codan Limited and
its Controlled Entities
64
i. An ordinary final dividend of 5.5 cents per share, franked to 100% with
30% franking credits, was paid on 2 October 2012
ii. An ordinary interim dividend of 6.0 cents per share, franked to 100% with
30% franking credits, was paid on 2 April 2013
iii. An ordinary final dividend of 5.0 cents per share, franked to 100% with
30% franking credits, was paid on 3 October 2011
iv. An ordinary interim dividend of 4.0 cents per share, franked to 100% with
30% franking credits, was paid on 2 April 2012
Consolidated
2013
$000
9,727
10,616
-
-
20,343
2012
$000
-
-
8,207
6,566
14,773
Franking credits available to shareholders for subsequent financial years (30%)
22,104
13,856
3. SEGMENT ACTIVITIES
The group determines and presents
operating segments based on the
information that is internally provided to the
CEO, who is the group’s chief operating
decision-maker.
An operating segment is a component
of the group that engages in business
activities from which it may earn revenues
and incur expenses, including revenues and
expenses that relate to transactions with
any of the group’s other components. All
operating segments’ results are regularly
reviewed by the group’s CEO to make
decisions about resources to be allocated to
the segments and assess their performance,
and for which discrete financial information
is available.
Segment results that are reported to the
CEO include items directly attributable
to a segment as well as those that can
be allocated on a reasonable basis.
Unallocated items comprise mainly
corporate assets (primarily the company’s
headquarters and cash balances), head
office expenses and income tax assets and
liabilities.
Segment capital expenditure is the total
cost incurred during the period to acquire
property, plant and equipment, and
intangible assets other than goodwill.
The group’s primary format for segment
reporting is based on business segments.
Business segments
Two or more operating segments may
be aggregated into a single operating
segment if they are similar in nature.
The group comprises four business
segments. The communications
equipment segment includes the design,
development, manufacture and marketing
of communications equipment. The metal
detection segment includes the design,
development, manufacture and marketing
of metal detection equipment. The mining
technology segment includes the design,
manufacture, maintenance and support of a
range of electronic products and associated
software for the mining sector. The “other”
business segment includes the manufacture
and marketing of printed circuit boards.
Geographical segments
In presenting information on the basis of
geographical segments, segment revenue
has been based on the geographic location
of the invoiced customer. Segment assets
are based on the geographic location of
the assets.
The group has manufacturing and corporate
offices in Australia and Canada, with
overseas representative offices in the United
States of America, England, India, China,
United Arab Emirates and Ireland.
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
Codan Limited 2013 Annual Report 65
3. SEGMENT ACTIVITIES (continued)
Information about reportable segments
REVENUE
External segment revenue
Discontinued operation (refer Note 4)
Inter-segment revenue
Total segment revenue
RESULT
Segment result before loss on disposal of discontinued operation
Loss on disposal of discontinued operation
Segment result
Unallocated corporate expenses and other income
Profit from operating activities
Income tax expense
Net Profit
NON-CASH ITEMS INCLUDED ABOVE
Depreciation and amortisation
Unallocated depreciation and amortisation
Total depreciation and amortisation
ASSETS
Segment assets
Unallocated corporate assets
Consolidated total assets
Communications
Metal detection
2013
$000
47,581
10,500
-
58,081
8,891
-
8,891
2012
$000
47,674
18,665
-
66,339
13,582
(2,586)
10,996
2013
$000
166,258
-
-
166,258
2012
$000
98,639
-
-
98,639
78,645
41,966
-
-
78,645
41,966
3,041
2,980
7,035
3,587
56,951
33,078
113,658
85,478
NOTES TO
AND FORMING
PART OF THE
FINANCIAL
STATEmENTS
FOR THE YEAR ENDED
30 JUNE 2013
Codan Limited and
its Controlled Entities
66
Communications
Metal detection
Mining technology
2013
$000
47,581
10,500
-
8,891
-
8,891
2012
$000
47,674
18,665
-
13,582
(2,586)
10,996
2013
$000
2012
$000
166,258
98,639
-
-
-
-
-
-
78,645
41,966
58,081
66,339
166,258
98,639
2013
$000
14,480
-
-
14,480
(2,577)
-
(2,577)
2012
$000
9,330
-
-
9,330
501
-
501
Other
2013
$000
5,517
-
369
5,886
172
-
172
2012
$000
5,089
-
358
5,447
73
-
73
Segment result before loss on disposal of discontinued operation
78,645
41,966
3,041
2,980
7,035
3,587
247
165
150
149
56,951
33,078
113,658
85,478
14,885
15,690
2,621
1,985
REVENUE
External segment revenue
Discontinued operation (refer Note 4)
Inter-segment revenue
Total segment revenue
RESULT
Loss on disposal of discontinued operation
Segment result
Unallocated corporate expenses and other income
Profit from operating activities
Income tax expense
Net Profit
Depreciation and amortisation
Unallocated depreciation and amortisation
Total depreciation and amortisation
ASSETS
Segment assets
Unallocated corporate assets
Consolidated total assets
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
Elimination
Consolidated
2013
$000
-
-
(369)
(369)
-
-
-
-
-
2012
$000
-
-
(358)
(358)
-
-
-
-
-
2013
$000
2012
$000
233,836
10,500
-
244,336
85,131
-
85,131
(22,117)
63,014
(17,597)
45,417
10,474
1,169
11,643
160,732
18,665
-
179,397
56,122
(2,586)
53,536
(18,586)
34,950
(11,804)
23,146
6,881
1,660
8,541
188,115
23,423
211,538
136,231
34,052
170,283
The group derived its revenues from
a number of countries. The three
significant countries where revenue
was 10% or more of total revenue
were Australia totalling $29,972,235
(2012: $22,426,735), the United
States of America totalling
$38,041,994 (2012: $41,412,244)
and Turkey totalling $86,682,585
(2012: $29,780,874).
The group’s non-current assets,
excluding financial instruments
and deferred tax assets, were
located as follows: Australia
$114,193,645 (2012: $110,163,547),
the United States of America
$220,232 (2012: $161,043),
Ireland $594,559 (2012: $485,992),
United Kingdom $93,421 (2012:
$102,712) and Canada $20,854,850
(2012: $nil).
Codan Limited 2013 Annual Report 67
4. DISCONTINUED OPERATION
Effective 30 June 2012, Codan sold its satellite communications assets to Communications & Power Industries Canada Inc and its related
corporate entities (collectively CPI). The sale consisted of Codan’s Australian-based satellite communications assets and 100% of the
shares of Locus Microwave, Inc.
Through most of this financial year, Codan assisted CPI with manufacturing, training and support to ensure continuous supply to
customers.
RESULTS OF DISCONTINUED OPERATION
Revenue
Expenses
Loss from operating activities
Tax
Loss from operating activities, net of tax
Non-operating activities, net of tax
Loss on sale of discontinued operation
Transaction and restructure costs relating to sale
Loss for the year
Basic earnings/(loss) per share (cents)
Diluted earnings/(loss) per share (cents)
CASH FLOWS FROM/(USED IN) DISCONTINUED OPERATION
Net cash from operating activities
Net cash used in investing activities
Net cash from financing activities
Net cash flows for the year
Consolidated
2013
$000
2012
$000
10,500
(11,007)
(507)
152
(355)
-
-
(355)
(0.2)
(0.2)
224
-
-
224
18,665
(21,898)
(3,233)
652
(2,581)
(2,850)
(596)
(6,027)
(3.7)
(3.7)
2,004
(1,485)
-
519
NOTES TO
AND FORMING
PART OF THE
FINANCIAL
STATEmENTS
FOR THE YEAR ENDED
30 JUNE 2013
Codan Limited and
its Controlled Entities
68
RESULTS OF DISCONTINUED OPERATION
Revenue
Expenses
Tax
Loss from operating activities
Loss from operating activities, net of tax
Non-operating activities, net of tax
Loss on sale of discontinued operation
Transaction and restructure costs relating to sale
Loss for the year
Basic earnings/(loss) per share (cents)
Diluted earnings/(loss) per share (cents)
CASH FLOWS FROM/(USED IN) DISCONTINUED OPERATION
Net cash from operating activities
Net cash used in investing activities
Net cash from financing activities
Net cash flows for the year
Consolidated
2013
$000
10,500
(11,007)
(507)
152
(355)
-
-
(355)
(0.2)
(0.2)
224
-
-
224
2012
$000
18,665
(21,898)
(3,233)
652
(2,581)
(2,850)
(596)
(6,027)
(3.7)
(3.7)
2,004
(1,485)
-
519
5. ACQUISITION OF A SUBSIDIARY
On 20 August 2012, the company acquired
all of the shares in Canadian-based land
mobile radio company, Daniels Electronics
Ltd (Daniels), for an upfront cost of CAD
$25 million (approximately AUD $24 million),
with the possibility of CAD $2 million
(approximately AUD $1.9 million) in
additional payments if certain earn-out
targets are achieved to the end of calendar
year 2013. The acquisition of Daniels is
consistent with Codan’s stated strategic
goal to expand the radio communications
business by investing in adjacent markets
and technologies. Codan’s extensive
international distribution network is
expected to deliver significant growth
opportunities to the Daniels business,
which was focussed on the North
American market.
From the acquisition date, Daniels has been
consolidated within the group’s results and
reported in the communications segment
in Note 3. The following summary provides
current estimates of the major classes of
consideration transferred, the expected
recognised amounts of assets acquired
and liabilities assumed and the estimated
goodwill at the acquisition date.
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
ESTIMATED FAIR VALUE OF CONSIDERATION TRANSFERRED
Cash paid on completion
Completion adjustments
Contingent consideration, at net present value
ESTIMATED FAIR VALUE OF IDENTIFIABLE ASSETS ACQUIRED AND LIABILITIES ASSUMED, ON A PROVISIONAL BASIS
Trade and other receivables
Inventories
Other assets
Property, plant and equipment
Intangible assets
Trade and other payables
Provisions
Taxes payable
ESTIMATED GOODWILL AS A RESULT OF THE ACQUISITION
Estimated fair value of consideration
Less estimated fair value of identifiable net assets assumed
This goodwill is not expected to be deductible for tax purposes.
$000
24,192
(446)
1,685
25,431
3,450
3,690
164
857
1,210
(2,434)
(503)
(355)
6,079
25,431
(6,079)
19,352
Contingent consideration
The earn-out payable (capped at CAD
$2.0 million) to the former shareholders
is contingent on the achievement of profit
targets over a two-year period.
As at 30 June 2013, the current forecast
results indicate that the earn-out is unlikely
to be paid and therefore, in accordance
with accounting standards, the liability
recognised on acquisition has been
brought to account as income.
Acquisition-related costs
During the year the group incurred
acquisition-related costs of $399,000
relating to external legal fees, consulting
and due diligence costs, and impaired
brand name and other intangible assets of
$510,000. The due diligence costs have
been included as administrative expenses
within the consolidated income statement,
while the impairment has been included in
other expenses. No other acquisition-related
costs were incurred.
Contribution to year-end results
Since acquisition, Daniels has contributed
approximately $12.1 million in revenue and
about $0.7 million in profit before tax. Had
Daniels been part of the group for the entire
12 months, contributed revenue would have
been approximately $15.2 million and profit
before tax would have been approximately
$1.2 million.
Codan Limited 2013 Annual Report 69
NOTES TO
AND FORMING
PART OF THE
FINANCIAL
STATEmENTS
FOR THE YEAR ENDED
30 JUNE 2013
Codan Limited and
its Controlled Entities
6. EXPENSES
Net financing costs:
Interest income
Net foreign exchange (gain) / loss
Interest expense
Depreciation of:
Buildings
Leasehold property
Plant and equipment
Amortisation of:
Product development
Intellectual property
Computer software
Licences
Personnel expenses:
Wages and salaries
Other associated personnel expenses
Contributions to defined contribution superannuation plans
Increase in liability for long service leave
Increase in liability for annual leave
Additional expenses disclosed:
Impairment of trade receivables
Operating lease rental expense
(Gain)/loss on sale of property, plant and equipment
Acquisition, integration and restructuring
70
Consolidated
2013
$000
(206)
251
1,896
1,941
531
15
1,906
2,452
4,430
3,694
615
452
9,191
40,804
3,134
3,128
336
2,314
49,716
504
2,265
(42)
1,784
2012
$000
(245)
(147)
3,628
3,236
524
49
1,813
2,386
2,728
1,899
1,194
335
6,156
36,166
2,555
2,569
1,250
2,077
44,617
267
1,515
34
2,228
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
7. OTHER EXPENSES / (INCOME)
Insurance recoveries
Mining technology earn-out liability no longer required
Communications earn-out liability no longer required
Impairment of building
Provision for onerous contract
Provision for legal dispute
Impairment of mining technology product development
Impairment of acquired communications brand name
Other expenses/(income)
Consolidated
2013
$000
(1,009)
(2,465)
(1,789)
1,100
1,310
1,450
1,606
510
53
766
2012
$000
(256)
-
-
-
-
-
-
-
(203)
(459)
Codan Limited 2013 Annual Report 71
NOTES TO
AND FORMING
PART OF THE
FINANCIAL
STATEmENTS
FOR THE YEAR ENDED
30 JUNE 2013
8. AUDITOR’S REMUNERATION
Audit services:
KPMG Australia - audit and review of financial reports
Overseas KPMG firms - audit of financial reports
Other services:
KPMG Australia - taxation services
KPMG Australia - other assurance services
Overseas KPMG firms - taxation services
KPMG related practices - due diligence and corporate finance services
Codan Limited and
its Controlled Entities
9. INCOME TAX
A. INCOME TAX EXPENSE
Current tax expense:
Current tax paid or payable for the financial year
Adjustments for prior years
Deferred tax expense:
Origination and reversal of temporary differences
Total income tax expense in income statement
Income tax expense from continuing operations
Income tax recovery from discontinuing operation
72
Consolidated
2013
$
2012
$
242,450
37,091
268,215
12,000
346,519
312,503
1,218,778
181,300
33,581
144,799
38,229
100,807
272,239
770,955
Consolidated
2013
$000
17,672
(185)
17,487
110
17,597
17,749
(152)
17,597
2012
$000
10,205
269
10,474
1,330
11,804
12,346
(542)
11,804
Reconciliation between tax expense and pre-tax net profit:
The prima facie income tax expense calculated at 30% on the profit from ordinary
activities (including discontinued operations)
Decrease in income tax expense due to:
Additional deduction for research and development expenditure
Over/(under) provision for taxation in previous years
Non-assessable income
Sundry items
Increase in income tax expense due to:
Non-deductible expenses
Non-deductible overseas losses
Effect of tax rates in foreign jurisdictions
Capital loss through sale of discontinued operation
Income tax expense
B. CURRENT TAX LIABILITIES / ASSETS
Balance at the beginning of the year
Acquired through business combination
Net foreign currency differences on translation of foreign entities
Income tax paid
Adjustments from prior year
Current year's income tax paid or payable on operating profit
Disclosed in balance sheet as:
Current tax asset
Current tax payable
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
Consolidated
2013
$000
2012
$000
18,904
10,485
961
185
1,276
63
16,419
1,010
-
168
-
17,597
(4,151)
(250)
(6)
10,751
185
(17,672)
(11,144)
226
(11,370)
(11,144)
703
(269)
-
17
10,034
557
437
-
776
11,804
(3,776)
-
21
10,613
(804)
(10,205)
(4,151)
75
(4,226)
(4,151)
Codan Limited 2013 Annual Report 73
NOTES TO
AND FORMING
PART OF THE
FINANCIAL
STATEmENTS
FOR THE YEAR ENDED
30 JUNE 2013
Codan Limited and
its Controlled Entities
9. INCOME TAX (continued)
C. DEFERRED TAX LIABILITIES
Provision for deferred income tax comprises the estimated expense
at the applicable rate of 30% on the following items:
Expenditure currently tax deductible but deferred and amortised for accounting
Sundry items
Hedging reserve
Difference in depreciation of property, plant and equipment
Set-off of tax in relation to deferred tax assets:
Payments for intellectual property not currently deductible
Provisions for employee benefits not currently deductible
Provisions and accruals not currently deductible
10. CASH AND CASH EQUIVALENTS
Petty cash
Cash at bank
Consolidated
2013
$000
2012
$000
8,605
(25)
(482)
(242)
(2,939)
(2,104)
(2,481)
332
28
8,610
8,638
6,962
(71)
382
(246)
(1,748)
(2,089)
(1,993)
1,196
30
23,051
23,081
74
11. TRADE AND OTHER RECEIVABLES CURRENT
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
Trade receivables
Less: Provision for impairment losses
Other debtors
12. INVENTORY
Raw materials
Work in progress
Finished goods
13. OTHER ASSETS
Prepayments
Net foreign currency hedge receivable
Project work in progress
Other
Consolidated
2013
$000
23,196
(2,424)
20,772
365
21,137
4,861
10,489
27,986
43,336
573
-
785
886
2,244
2012
$000
22,516
(506)
22,010
775
22,785
3,224
5,401
3,354
11,979
907
670
498
131
2,206
Codan Limited 2013 Annual Report 75
NOTES TO
AND FORMING
PART OF THE
FINANCIAL
STATEmENTS
FOR THE YEAR ENDED
30 JUNE 2013
Codan Limited and
its Controlled Entities
14. PROPERTY, PLANT AND EQUIPMENT
Freehold land and buildings at cost
Accumulated depreciation
Leasehold property at cost
Accumulated amortisation
Plant and equipment at cost
Accumulated depreciation
Capital work in progress at cost
Total property, plant and equipment
Reconciliations
Reconciliations of the carrying amounts for each class of property,
plant and equipment are set out below:
Freehold land and buildings
Carrying amount at beginning of year
Additions
Impairment of building
Disposals
Depreciation
Carrying amount at end of year
Leasehold property improvements
Carrying amount at beginning of year
Acquisitions through entity acquired
Additions
Disposals
Depreciation
76
Net foreign currency differences on translation of foreign entities
Carrying amount at end of year
Consolidated
2013
$000
15,554
(6,239)
9,315
532
(386)
146
31,281
(22,350)
8,931
1,548
19,940
10,508
438
(1,100)
-
(531)
9,315
109
45
5
-
(15)
2
146
2012
$000
15,182
(4,674)
10,508
494
(385)
109
25,158
(17,700)
7,458
163
18,238
10,869
163
-
-
(524)
10,508
153
17
-
(6)
(49)
(6)
109
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
Consolidated
2013
$000
2012
$000
9,457
880
2,218
23
(1,747)
(1,497)
(1,813)
(63)
7,458
212
(49)
163
18,238
Plant and equipment
Carrying amount at beginning of year
Acquisitions through entity acquired
Additions
Transfers
Transfer to equipment held for sale
Disposals
Depreciation
Net foreign currency differences on translation of foreign entities
Carrying amount at end of year
Capital work in progress at cost
Carrying amount at beginning of year
Additions, net of transfers
Carrying amount at end of year
Total carrying amount at end of year
15. PRODUCT DEVELOPMENT
Product development at cost
Accumulated amortisation
Reconciliation
Carrying amount at beginning of year
Capitalised in current period
Disposals
Impairment of mining technology product development
Amortisation
7,458
847
2,512
-
-
(120)
(1,906)
140
8,931
163
1,385
1,548
19,940
60,508
(33,010)
27,498
23,286
10,248
-
(1,606)
(4,430)
27,498
50,269
(26,983)
23,286
20,340
10,330
(4,656)
-
(2,728)
23,286
Codan Limited 2013 Annual Report 77
16. INTANGIBLE ASSETS
Goodwill
Intellectual property at cost
Accumulated amortisation
Computer software at cost
Accumulated amortisation
Licences at cost
Accumulated amortisation
Total intangible assets
Reconciliations
Goodwill
Carrying amount at beginning of year
Acquisitions through entity acquired
Adjustment on prior year's acquisition
Net foreign currency differences on translation of foreign entities
Intellectual property
Carrying amount at beginning of year
Acquisitions through entity acquired
Additions
Amortisation
Net foreign currency differences on translation of foreign entities
Impairment of acquired Communications brand name
NOTES TO
AND FORMING
PART OF THE
FINANCIAL
STATEmENTS
FOR THE YEAR ENDED
30 JUNE 2013
Codan Limited and
its Controlled Entities
78
Consolidated
2013
$000
83,130
11,790
(10,417)
1,373
12,125
(11,301)
824
3,979
(787)
3,192
88,519
62,748
19,352
(253)
1,283
83,130
742
1,210
3,608
(3,694)
17
(510)
1,373
2012
$000
62,748
6,875
(6,133)
742
11,463
(10,182)
1,281
2,450
(335)
2,115
66,886
53,957
8,791
-
-
62,748
402
246
1,993
(1,899)
-
-
742
Computer software
Carrying amount at beginning of year
Acquisitions through entity acquired
Additions
Transfers from capital work in progress
Amortisation
Disposals
Net foreign currency differences on translation of foreign entities
Licences
Carrying amount at beginning of year
Acquisitions
Amortisation
The following segments have significant carrying amounts of goodwill:
Mining technology
Metal detection
Communications
Goodwill
The recoverable amount of a cash-
generating unit is the higher of its fair value
less costs to sell and its value-in-use. The
value-in-use calculations use cash flow
projections based on the oncoming year’s
budget. Key assumptions for future years
relate to sales, gross margin and expense
levels. Sales are based on management
assessments which allow for future growth.
Gross margins and expense levels are
largely consistent with past experience.
A terminal value has been determined at the
conclusion of five years assuming a growth
rate of 3.0%. Pre-tax discount rates of 12%
to 13% (2012: 12% to 16%) have been used
in discounting the projected cash flows.
In assessing the recoverable amount of the
Mining Technology business, a number of
valuation scenarios have been considered.
The recoverable amount has been estimated
to exceed the business unit’s carrying
amount of $14 million by $7 million. Given
the products and technologies developed
by this business are at the early stage
of adoption by the mining industry, the
key variable to the recoverable amount
assessments is the level of future sales.
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
Consolidated
2013
$000
1,281
17
177
49
(615)
(87)
2
824
2,115
1,529
(452)
3,192
8,538
53,957
20,635
83,130
2012
$000
2,217
83
199
73
(1,194)
(97)
-
1,281
1,300
1,150
(335)
2,115
8,791
53,957
-
62,748
If, from the current low sales base, growth
averages less than 16% per annum, the
business unit may be impaired unless the
expense base of the business was reduced.
Intellectual Property
Subsequent to the acquisition of Minelab
Electronics Pty Ltd by Codan Limited in
2008, Minelab Electronics Pty Ltd acquired
ownership of the intellectual property that
forms the basis for its metal detection
products. The consideration payable under
the agreement is based on the sales of
metal detection products over a ten-year
period. An asset in relation to the acquired
intellectual property will be recognised as
Minelab Electronics Pty Ltd becomes liable
to the payments under the contract.
Licences
The company entered into a licence
agreement on 30 June 2011 with
a leading provider of advanced technology
for high frequency radio communication
products. Over a three-year period, licence
payments will be made as technology
is delivered to the company. The licenced
technology will allow the company access
to implementations of next-generation
radio waveforms for high-speed data
transmission, automatic link establishment
and digital voice.
Codan Limited 2013 Annual Report 79
NOTES TO
AND FORMING
PART OF THE
FINANCIAL
STATEmENTS
FOR THE YEAR ENDED
30 JUNE 2013
Codan Limited and
its Controlled Entities
17. TRADE AND OTHER PAYABLES
CURRENT
Trade payables
Other payables and accruals
Net foreign currency hedge payable
18. LOANS AND BORROWINGS
CURRENT
Finance lease liabilities
NON-CURRENT
Cash advance
Finance lease liabilities
The group has access to the following lines of credit:
Total facilities available at balance date:
Multi-option facility
Commercial credit card
Cash advance facility
Facilities utilised at balance date:
Multi-option facility
Commercial credit card
Cash advance facility
80
Consolidated
2013
$000
13,909
13,719
1,729
29,357
201
201
33,559
82
33,641
10,000
200
75,000
85,200
2,371
13
33,559
35,943
2012
$000
14,884
18,302
-
33,186
113
113
38,879
289
39,168
10,000
120
75,000
85,120
3,039
8
38,879
41,926
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
Facilities not utilised at balance date:
Multi-option facility
Commercial credit card
Cash advance facility
Consolidated
2013
$000
7,629
187
41,441
49,257
In addition to these facilities, the group has access to cash at bank and short-term deposits of $8,638,000 as set out in note 10.
WEIGHTED AVERAGE INTEREST RATES:
Cash at bank
Short-term deposits
Bank overdraft
Cash advance
19. PROVISIONS
CURRENT
Employee benefits
Warranty repairs
Other
NON-CURRENT
Employee benefits
Reconciliation of warranty provision
Carrying amount at beginning of year
Provisions made during the year
Payments made during the year
Consolidated
2013
%
1.84
3.51
Consolidated
2013
$000
6,296
2,842
1,310
10,448
857
2,760
846
(764)
2,842
2012
$000
6,961
112
36,121
43,194
2012
%
2.28
4.16
9.50
5.56
2012
$000
6,709
2,760
-
9,469
769
2,846
1,216
(1,302)
2,760
Bank Facilities
Facilities are supported by interlocking
guarantees between the company and
its subsidiaries. The facilities have a term
of three years expiring July 2014, and
are subject to compliance with certain
financial covenants over that term. The
facilities are currently being renewed,
which is expected to be completed
by November 2013.
Codan Limited 2013 Annual Report 81
NOTES TO
AND FORMING
PART OF THE
FINANCIAL
STATEmENTS
FOR THE YEAR ENDED
30 JUNE 2013
Codan Limited and
its Controlled Entities
82
20. SHARE CAPITAL
SHARE CAPITAL
Opening balance (164,145,980 ordinary shares fully paid)
Performance rights expensed
Issue of share capital, net of $619,000 in issue costs
Issue of share capital through employee share plan, net of $4,000 in issue costs
Closing balance (176,926,104 ordinary shares fully paid)
24,839
204
16,660
170
41,873
Consolidated
2013
$000
2012
$000
24,609
230
-
-
24,839
Terms and conditions
Holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at
shareholders’ meetings. In the winding up of the company, ordinary shareholders rank after all creditors and are fully entitled to any
proceeds on liquidation.
21. RESERVES
Foreign currency translation
Hedging reserve
Profit reserve
Foreign currency translation
The foreign currency translation reserve records the foreign currency differences arising
from the translation of foreign operations.
Balance at beginning of year
Reserves recognised through sale of discontinued operation
Net translation adjustment
Balance at end of year
Hedging reserve
The hedging reserve comprises the effective portion of the cumulative net change in fair
value of cash flow hedging instruments (net of tax) related to hedged transactions that
have not yet occurred.
Balance at beginning of year
Reserves recognised through discontinued operation
Gains/(losses) on cash flow hedges taken to/from hedging reserve
Balance at end of year
1,405
(1,125)
34,673
34,953
(3,271)
979
3,697
1,405
336
-
(1,461)
(1,125)
(3,271)
336
-
(2,935)
(3,199)
341
(413)
(3,271)
1,337
(896)
(105)
336
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
Consolidated
2013
$000
Profit reserve
The profit reserve comprises Codan Limited’s accumulated profits.
Balance at beginning of year
Current year profit after tax attributed to the parent entity
Balance at end of year
22. COMMITMENTS
I. CAPITAL EXPENDITURE COMMITMENTS
Aggregate amount of contracts for capital expenditure on property, plant and
equipment and intangibles:
Within one year
One year or later and no later than five years
II. NON-CANCELLABLE OPERATING LEASE EXPENSE AND OTHER COMMITMENTS
Future operating lease commitments not provided for in the financial
statements which are payable:
Within one year
One year or later and no later than five years
Later than five years
III. FINANCE LEASE AND HIRE PURCHASE PAYMENT COMMITMENTS
Within one year
One year or later and no later than five years
Later than five years
Less: future finance charges
Finance lease and hire purchase liabilities provided for in the
financial statements:
Current
Non-current
-
34,673
34,673
3,348
800
4,148
2,796
6,769
1,227
10,792
218
91
-
309
(26)
283
201
82
283
2012
$000
-
-
-
1,281
2,180
3,461
1,515
1,220
297
3,032
151
309
-
460
(58)
402
113
289
402
The group leases property under non-
cancellable operating leases expiring from
one to ten years. Leases generally provide
the group with a right of renewal, at which
time all terms are renegotiated. Lease
payments comprise a base amount and an
adjustment for the consumer price index.
Finance leases and hire purchase
agreements are entered into as a means
of funding the acquisition of plant and
equipment. Repayments are generally fixed
and no leases have escalation clauses
other than in the event of payment default.
No lease arrangements create restrictions
on other financing transactions.
Codan Limited 2013 Annual Report 83
NOTES TO
AND FORMING
PART OF THE
FINANCIAL
STATEmENTS
FOR THE YEAR ENDED
30 JUNE 2013
Codan Limited and
its Controlled Entities
84
23. ADDITIONAL FINANCIAL
INSTRUMENTS DISCLOSURE
Financial risk management
Overview
The group has exposure to the following
risks from its use of financial instruments
• credit risk
•
liquidity risk
• market risk
• operational risk
This note presents information about the
group’s exposure to each of the above
risks, its objectives, policies and processes
for measuring and managing risk, and
its management of capital. Further
quantitative disclosures are included
throughout these consolidated financial
statements.
The board of directors has overall
responsibility for the establishment
and oversight of the risk management
framework. The Board Audit, Risk and
Compliance Committee is responsible
for developing and monitoring risk
management policies. The committee
reports regularly to the board on its
activities.
Risk management policies are established
to identify and analyse the risks faced by
the group, to set appropriate risk limits
and controls, and to monitor risk and
adherence to limits. Risk management
policies and systems are reviewed
regularly to reflect changes in market
conditions and the group’s activities.
The group, through its training and
management standards and procedures,
aims to develop a disciplined and
constructive control environment in which
all employees understand their roles and
obligations.
The Board Audit, Risk and Compliance
Committee oversees how management
monitors compliance with the group’s
risk management policies and procedures
and reviews the adequacy of the risk
management framework in relation to
the risks faced by the group.
(a) Credit risk
Credit risk is the risk of financial loss
to the group if a customer or counterparty
to a financial instrument fails to meet
its contractual obligations, and arises
principally from the group’s receivables
from customers.
The credit risk on the financial assets
of the consolidated entity is the carrying
amount of the asset, net of any impairment
losses recognised.
The group minimises concentration of
credit risk by undertaking transactions with
a large number of customers in various
countries. As at 30 June 2013, the group
had one customer with a trade receivable
balance of greater than $2 million.
Trade and other receivables
The group’s exposure to credit risk
is influenced mainly by the individual
characteristics of each customer.
The demographics of the group’s
customer base, including the default
risk of the industry and country in which
customers operate, has less of an
influence on credit risk.
The group has established a credit policy
under which each new customer is
analysed individually for credit worthiness
before the group’s standard payment and
delivery terms and conditions are offered.
Goods are sold subject to retention of
title clauses, so that in the event of non-
payment the group may have a secured
claim. The group does not normally require
collateral in respect of trade and other
receivables.
The group has established an allowance
for impairment that represents its estimate
of incurred losses in respect of trade and
other receivables. The main components
of this allowance are a specific loss
component that relates to individually
significant exposures, and a collective
loss component established for groups
of similar assets in respect of losses that
have been incurred but not yet identified.
Guarantees
Group policy is to provide financial
guarantees only to wholly owned
subsidiaries.
The carrying amount of the group’s financial assets represents the maximum credit exposure. The group’s maximum exposure to credit
risk at the reporting date was:
Carrying amount
Consolidated
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
Cash and cash equivalents
Trade and other receivables
Forward exchange contracts used for hedging
Note
10
11
13
2013
$000
8,638
21,137
-
The group’s maximum exposure to credit risk for trade receivables at the reporting date by geographic region was:
Australia / Oceania
Europe
Americas
Asia
Africa / Middle East
Impairment losses
The aging of the group’s trade receivables at the reporting date was:
5,958
3,362
6,133
1,847
5,896
23,196
2012
$000
23,081
22,785
670
6,194
4,253
4,641
5,730
1,698
22,516
Not past due
Past due 0-30 days
Past due 31-120 days
More than 120 days
Consolidated
Gross
2013
$000
14,999
2,622
3,499
2,076
23,196
Impairment
2013
$000
(182)
(86)
(11)
(2,145)
(2,424)
Gross
2012
$000
18,460
2,358
1,255
443
22,516
Impairment
2012
$000
(181)
(10)
(65)
(250)
(506)
Trade receivables that are not past due have been reviewed, taking into consideration letters of credit held and the credit assessment
of the individual customers. The impairment recognised is considered appropriate for the credit risk remaining.
Codan Limited 2013 Annual Report 85
NOTES TO
AND FORMING
PART OF THE
FINANCIAL
STATEmENTS
FOR THE YEAR ENDED
30 JUNE 2013
Codan Limited and
its Controlled Entities
86
23. ADDITIONAL FINANCIAL INSTRUMENTS DISCLOSURE (continued)
(a) Credit risk (continued)
The movement in the allowance for impairment in respect of trade receivables during the year was as follows:
Balance at 1 July
Provision for legal dispute
Impairment loss recognised as an expense
Trade receivables written off to the allowance for impairment
Balance at 30 June
(b) Liquidity risk
Consolidated
2013
$000
506
1,450
504
(36)
2,424
2012
$000
365
-
268
(127)
506
Liquidity risk is the risk that the group will not be able to meet its financial obligations as they fall due. The group’s approach to
managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under
both normal and stressed conditions and without incurring unacceptable losses or risking damage to the group’s reputation.
Refer to note 18 for a summary of banking facilities available.
The following are the contractual maturities of financial liabilities:
30 June 2013
Non-derivative financial liabilities
Trade and other payables
Finance leases
Cash advance
Derivative financial liabilities
Net foreign currency hedge payable
30 June 2012
Non-derivative financial liabilities
Trade and other payables
Finance leases
Cash advance
Carrying
amount
Contractual
cash flows
12 months
or less
1-5 years
More than
5 years
$000
$000
$000
$000
$000
28,228
283
33,559
62,070
1,729
1,729
35,933
402
38,879
75,214
(28,228)
(309)
(34,806)
(63,343)
(1,729)
(1,729)
(35,933)
(460)
(42,266)
(78,659)
(27,628)
(218)
(1,247)
(29,093)
(1,729)
(1,729)
(33,186)
(151)
(1,693)
(35,030)
(600)
(91)
(33,559)
(34,250)
-
-
(2,747)
(309)
(40,572)
(43,628)
-
-
-
-
-
-
-
-
-
-
(c) Market risk
Profile
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
Market risk is the risk that changes in
market prices, such as foreign exchange
rates, interest rates and equity prices, will
affect the group’s income or the value of
its holdings of financial instruments. The
objective of market risk management is to
manage and control market risk exposures
within acceptable parameters, while
optimising the return.
The group enters into derivatives, and
also incurs financial liabilities, in order to
manage market risks. All such transactions
are carried out within the policy set by the
board. Generally the group seeks to apply
hedge accounting in order to manage
volatility in the income statement.
The net fair values of monetary financial
assets and financial liabilities not readily
traded in an organised financial market are
determined by valuing them at the present
value of the contractual future cash flows
on amounts due from customers (reduced
for expected credit losses), or due to
suppliers. The carrying amount of financial
assets and financial liabilities approximates
their net fair values.
At the reporting date, the interest rate profile of the group’s interest-bearing financial instruments was:
Carrying amount
Consolidated
FIXED RATE INSTRUMENTS
Financial assets
Financial liabilities
VARIABLE RATE INSTRUMENTS
Financial assets
Financial liabilities
Cash flow sensitivity
2013
$000
-
(309)
(309)
8,638
(33,559)
(24,921)
2012
$000
-
(460)
(460)
23,081
(38,879)
(15,798)
If interest rates varied by 100 basis points for the full financial year, then based on the balance of variable rate instruments held
at the reporting date, profit and equity would have been affected as shown below. This analysis assumes that all other variables,
in particular foreign currency rates, remain constant. The analysis is performed on the same basis for 2012.
30 JUNE 2013
Variable rate instruments
30 JUNE 2012
Variable rate instruments
Profit / (loss) before tax
Reserve
100 bp
increase
$000
100 bp
decrease
$000
100 bp
increase
$000
100 bp
decrease
$000
(249)
249
(158)
158
-
-
-
-
Codan Limited 2013 Annual Report 87
23. ADDITIONAL FINANCIAL INSTRUMENTS DISCLOSURE (continued)
(c) Market risk (continued)
Currency risk
The group is exposed to currency risk on sales, purchases and balance sheet accounts that are denominated in a currency other than
the respective functional currencies of group entities, primarily the Australian dollar (AUD). The currencies in which these transactions
are denominated are primarily USD, EUR, CAD and GBP.
The group enters into foreign currency hedging instruments or borrowings denominated in a foreign currency to hedge certain anticipated
highly probable sales denominated in foreign currency (principally USD and EUR). The terms of these commitments are less than 12 months.
As at the reporting date, the group has entered into effective collar and forward exchange cash flow hedge instruments which will limit the
foreign exchange risk on USD $40,000,000 of FY14 cashflows. The collars give protection above parity and participation down to 91 cents,
while forward exchange contracts have been entered into at 97 cents.
The group’s exposure to foreign currency risk (in AUD equivalent) after taking into account hedge transactions at reporting date was
as follows:
30 JUNE 2013
Cash and cash equivalents
Trade receivables
Trade payables
Gross balance sheet exposure
Hedge transactions relating to balance sheet exposure
Net exposure at the reporting date
30 JUNE 2012
Cash and cash equivalents
Trade receivables
Trade payables
Cash advance
Gross balance sheet exposure
Hedge transactions relating to balance sheet exposure
Net exposure at the reporting date
Consolidated
Euro
$000
GBP
$000
USD
$000
703
355
(293)
765
-
765
797
246
(217)
-
826
-
826
43
2
(44)
1
-
1
94
14
(51)
-
57
-
57
4,567
12,663
(10,004)
7,226
(1,855)
5,371
7,021
11,997
(9,270)
(7,879)
1,869
(3,925)
(2,056)
CAD
$000
668
924
(195)
1,397
-
1,397
-
-
-
-
-
-
-
NOTES TO
AND FORMING
PART OF THE
FINANCIAL
STATEmENTS
FOR THE YEAR ENDED
30 JUNE 2013
Codan Limited and
its Controlled Entities
88
Sensitivity analysis
Given the foreign currency balances included in the balance sheet as at reporting date, if the Australian dollar at that date strengthened
by 10%, then the impact on profit and equity arising from the balance sheet exposure would be as follows:
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
Consolidated
Reserve Credit (debit)
$000
Profit/(loss) before tax
$000
2013
EUR
GBP
USD
CAD
2012
EUR
GBP
USD
CAD
-
-
812
-
812
-
-
974
-
974
(70)
-
(590)
(127)
(786)
(75)
(5)
529
-
449
A 10% weakening of the Australian dollar against the above currencies at 30 June would have had the equal but opposite effect on the
above currencies to the amounts shown above, on the basis that all other variables remain constant.
(d) Fair value hierarchy
The group’s financial instruments carried at fair value have been valued by using a “level 2” valuation method. Level 2 valuations are
obtained from inputs, other than quoted prices, that are observable for the asset or liability either directly or indirectly. At the end of
the current year, financial instruments valued at fair value were limited to net foreign currency hedge payables of $1,729,000, for which
an independent valuation was obtained from the relevant banking institution.
Codan Limited 2013 Annual Report 89
24. GROUP ENTITIES
Name
PARENT ENTITY
Codan Limited
CONTROLLED ENTITIES
IMP Printed Circuits Pty Ltd
Codan (UK) Ltd
Codan (Qld) Pty Ltd
Codan (US) Inc
Codan Radio Communications Pty Ltd
(previously Codan Telecommunications Pty Ltd)
Daniels Electronics Ltd*
Codan Radio Communications ME JLT**
Minetec Pty Ltd
Minetec Wireless Technologies Pty Ltd
Minelab Electronics Pty Ltd
Minelab Americas Inc (previously Minelab USA Inc)
Minelab International Ltd
Parketronics Pty Ltd
Codan Holdings US Inc
Codan Executive Share Plan Pty Ltd
Country of
incorporation
Class of
share
Interest held
2013
Interest held
2012
%
%
Australia
Ordinary
Australia
England
Australia
Ordinary
Ordinary
Ordinary
United States of America
Ordinary
Australia
Canada
United Arab Emirates
Australia
Australia
Australia
United States of America
Ireland
Australia
United States of America
Australia
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
-
-
100
100
100
100
100
100
100
100
* On 20 August 2012, the company acquired all of the shares in Daniels Electronics Ltd in an arm’s length transaction. The financial
result of the group’s interest in this entity has been accounted for from this date. Refer to note 5.
** On 27 June 2013, the company incorporated a new entity within the Dubai Multi Commodities Centre to establish a Dubai-based
office. As at the end of the financial year there have been no operations within this entity.
NOTES TO
AND FORMING
PART OF THE
FINANCIAL
STATEmENTS
FOR THE YEAR ENDED
30 JUNE 2013
Codan Limited and
its Controlled Entities
90
25. NOTES TO THE STATEMENT OF CASH FLOWS
I. Reconciliation of cash
For the purposes of the statement of cash flows, cash includes cash on hand and at bank and short-term deposits, net of outstanding bank
overdrafts. Cash as at the end of the financial year as shown in the statement of cash flows is reconciled to the related items in the balance
sheet as follows:
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
Petty cash
Cash at bank
Short-term deposits
Consolidated
2013
$000
28
8,610
-
8,638
2012
$000
30
23,051
-
23,081
Codan Limited 2013 Annual Report 91
NOTES TO
AND FORMING
PART OF THE
FINANCIAL
STATEmENTS
FOR THE YEAR ENDED
30 JUNE 2013
Codan Limited and
its Controlled Entities
92
25. NOTES TO THE STATEMENT OF CASH FLOWS (continued)
II. Reconciliation of profit after income tax to net cash provided by operating activities
Profit after income tax
Add/(less) items classified as investing or financing activities:
Insurance recoveries
(Gain)/loss on sale of non-current assets
Loss on sale of discontinued operation
Performance rights and employee share plan expensed
Add/(less) non-cash items:
Depreciation of:
Buildings
Leasehold property
Plant and equipment
Impairment of building
Amortisation
Impairment of mining technology product development
Impairment of acquired communications brand name
Increase/(decrease) in income taxes
Increase/(decrease) on net assets affected by translation
Consolidated
2013
$000
2012
$000
45,417
23,146
(1,009)
(42)
-
374
531
15
1,906
1,100
9,191
1,606
510
6,491
(717)
-
34
2,850
230
524
49
1,813
-
6,156
-
-
439
1
Net cash from operating activities before changes in assets and liabilities
65,373
35,241
Change in assets and liabilities during the financial year:
Reduction/(increase) in receivables
Reduction/(increase) in inventories
Reduction/(increase) in other assets
Increase/(reduction) in trade and other payables
Increase/(reduction) in provisions
Net cash from operating activities
5,411
(27,663)
(544)
(6,859)
565
36,282
(7,698)
7,641
329
3,312
1,252
40,077
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
26. EMPLOYEE BENEFITS
Aggregate liability for employee benefits, including on-costs:
Current - other creditors and accruals
Current - employee entitlements
Non-current - employee entitlements
The present values of employee entitlements not expected to be settled within 12 months
of the reporting date have been calculated using the following weighted averages:
Assumed rate of increase in wage and salary rates
Discount rate
Settlement term
Consolidated
2013
$000
2012
$000
4,993
6,296
857
12,146
4,220
6,709
769
11,698
4.00%
3.55%
4.00%
2.95%
10 years
10 years
Codan Limited 2013 Annual Report 93
NOTES TO
AND FORMING
PART OF THE
FINANCIAL
STATEmENTS
FOR THE YEAR ENDED
30 JUNE 2013
Codan Limited and
its Controlled Entities
94
26. EMPLOYEE BENEFITS (continued)
Performance Rights Plan
At the 2004 AGM, shareholders approved
the establishment of a Performance Rights
Plan (Plan). The Plan is designed to provide
executives with an incentive to maximise the
return to shareholders over the long term,
and to assist in the attraction and retention
of key executives.
Performance rights issued in financial
year 2010
The group’s earnings per share over the
three year period to 30 June 2012 exceeded
the performance target and therefore the
remaining 374,396 shares were issued to
the relevant executives on 22 August 2012.
Performance rights issued in financial
year 2011
The company issued 358,652 performance
rights in December 2010 to certain
executives. The fair value of the rights was
on average $1.11 based on the Black-
Scholes formula. The model inputs were:
the share price of $1.46, no exercise price,
expected volatility 48%, dividend yield
5%, a term of three years and a risk-free
rate of 5.6%. The total expense/recovery
recognised as employee costs in 2013 in
relation to the performance rights issued
was a recovery of $188,456 (2012: $96,076
expense).
The group’s earnings per share over the
three-year period to 30 June 2013 has not
met the performance target and therefore
these performance rights have lapsed and
no shares will be issued.
Performance rights issued in financial
year 2012
The company issued 426,979 performance
rights in November 2011 to certain
executives. The fair value of the rights was
on average $0.98 based on the Black-
Scholes formula. The model inputs were:
the share price of $1.31, no exercise price,
expected volatility 41%, dividend yield 7%,
a term of three years and a risk-free rate of
4.3%. Due to the departure of an executive,
84,006 performance rights have been
cancelled. The total expense recognised as
employee costs in 2013 in relation to the
performance rights issued was $134,261
(2012: $133,531).
The performance rights become exercisable
if certain performance thresholds are
achieved. The performance threshold is
based on growth of the group’s earnings
per share over a three-year period. For
executives to receive the total number of
performance rights, the group’s earnings
per share must increase by at least 15% per
annum over the three-year period.
Performance rights issued in financial
year 2013
The company issued 369,970 performance
rights in November 2012 to certain
executives. The fair value of the rights was
on average $1.77 based on the Black-
Scholes formula. The model inputs were:
the share price of $2.25, no exercise price,
expected volatility 37%, dividend yield
4.2%, a term of three years and a risk-
free rate of 3.1%. Due to the departure of
an executive, 72,790 performance rights
have been cancelled. The total expense
recognised as employee costs in 2013 in
relation to the performance rights issued
was $197,643.
The performance rights become exercisable
if certain performance thresholds are
achieved. The performance threshold is
based on growth of the group’s earnings
per share over a three-year period. For
executives to receive the total number of
performance rights, the group’s earnings
per share must increase by at least 15%
per annum over the three-year period.
Additional performance rights issued in
financial year 2013
The company issued 93,320 performance
rights in December 2012 to an employee.
The fair value of the rights was on average
$1.95 based on the Black-Scholes formula.
The model inputs were: the share price of
$2.37, no exercise price, expected volatility
38.3%, dividend yield 4.01%, a term of two
years and a risk-free rate of 3.3%. The total
expense recognised as employee costs in
2013 in relation to the performance rights
issued was $60,549.
The performance rights become exercisable
if the employee remains with the group
until 31 December 2014, and there is no
performance hurdle.
If achieved, performance rights are
exercisable into the same number of
ordinary shares in the company. No
performance rights have been issued
since the end of the financial year.
27. KEY MANAGEMENT PERSONNEL DISCLOSURES
Key management personnel compensation
The key management personnel compensation included in “personnel expenses” (refer note 6) is as follows:
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
Short-term employee benefits
Post-employment benefits
Share-based payments
Other long term
Termination benefits
Consolidated
2013
$
2012
$
3,235,799
3,239,564
108,103
179,371
27,798
295,210
110,493
211,293
32,680
134,147
3,846,281
3,728,177
Individual directors’ and executives’ compensation disclosures
Information regarding individual directors’ and executives’ compensation, and some equity instruments disclosures as permitted by
Corporations Regulation 2M.3.03, is provided in the remuneration report section of the directors’ report.
Apart from the details disclosed in this note, no director has entered into a material contract with the group since the end of the previous
financial year and there were no material contracts involving directors’ interest existing at year-end.
Codan Limited 2013 Annual Report 95
27. KEY MANAGEMENT PERSONNEL DISCLOSURES (continued)
Equity holdings and transactions
The movement during the reporting period in the number of ordinary shares of Codan Limited, held directly, indirectly or beneficially by key
management personnel, including their personally related entities is as follows:
Directors
Dr G D Klingner
Mr D S McGurk
Mr P R Griffiths
Mr D J Klingberg
Mr D J Simmons
Lt-Gen P F Leahy
Mr S W Davies
Mrs C S Namblard
Specified executives
Mr M Barton
Mr P D Charlesworth
Mr K J Kane
Mr P McCarter
Held at
1 July 2012
Purchases
467,840
147,667
148,065
66,765
-
44,065
-
-
5,000
172,797
3,500
n/a
67,143
32,000
51,351
54,143
-
13,643
12,420
-
-
7,143
7,143
-
Received on
exercise of
rights
-
132,850
-
-
-
-
-
-
-
132,850
-
-
Sales
Held at
30 June 2013
-
-
-
-
-
-
-
-
-
-
-
-
534,983
312,517
199,416
120,908
-
57,708
12,420
-
5,000
312,790
n/a
-
Mr K J Kane ceased employment on 29 March 2013. Mr P McCarter was appointed to the position of Executive General Manager,
Codan Radio Communications on 3 June 2013.
NOTES TO
AND FORMING
PART OF THE
FINANCIAL
STATEmENTS
FOR THE YEAR ENDED
30 JUNE 2013
Codan Limited and
its Controlled Entities
96
Directors
Dr G D Klingner
Mr D S McGurk
Mr P R Griffiths
Mr D J Klingberg
Mr D J Simmons
Lt-Gen P F Leahy
Mr S W Davies
Mrs C S Namblard
Specified executives
Mr M Barton
Mr P D Charlesworth
Mr K J Kane
Mr P McCarter
Held at
1 July 2012
Purchases
Received on
Sales
Held at
30 June 2013
exercise of
rights
132,850
-
-
-
-
-
-
-
-
-
-
67,143
32,000
51,351
54,143
13,643
12,420
-
-
-
-
7,143
7,143
132,850
467,840
147,667
148,065
66,765
44,065
-
-
-
5,000
172,797
3,500
n/a
-
-
-
-
-
-
-
-
-
-
-
-
534,983
312,517
199,416
120,908
57,708
12,420
-
-
5,000
312,790
n/a
-
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
Directors
Dr G D Klingner
Mr D S McGurk
Mr P R Griffiths
Mr D J Klingberg
Mr D J Simmons
Lt-Gen P F Leahy
Mr S W Davies
Mrs C S Namblard
Specified executives
Mr M Barton
Mr R R Carpenter
Mr P D Charlesworth
Mr K J Kane
Held at
1 July 2011
Purchases
467,840
1,000
138,065
66,765
-
44,065
-
n/a
5,000
-
26,130
-
-
-
10,000
-
-
-
-
-
-
-
-
3,500
Received on
exercise of
rights
-
146,667
-
-
-
-
-
-
-
-
146,667
-
Sales
Held at
30 June 2012
-
-
-
-
-
-
-
-
-
-
-
-
467,840
147,667
148,065
66,765
-
44,065
-
-
5,000
-
172,797
3,500
Mrs C S Namblard was appointed as a director on 1 August 2011.
Mr R R Carpenter ceased employment on 30 June 2012 as a result of the sale of the company’s satellite communications assets.
Codan Limited 2013 Annual Report 97
27. KEY MANAGEMENT PERSONNEL DISCLOSURES (continued)
Performance rights
The movements during the reporting period in the number of performance rights held directly, indirectly or beneficially by key management
personnel, including their personally related entities is as follows:
Specified executives
Mr D S McGurk
Mr M Barton
Mr P D Charlesworth
Mr K J Kane
Mr P McCarter
Specified executives
Mr D S McGurk
Mr M Barton
Mr P D Charlesworth
Mr K J Kane
Held at
1 July 2012
431,134
141,089
326,735
84,006
n/a
Held at
1 July 2011
416,250
64,675
368,394
-
Issued
Vested
Lapsed
Held at
30 June 2013
139,981
132,850
66,211
90,988
72,790
-
-
132,850
-
-
136,733
64,675
88,877
156,796
-
301,532
142,625
195,996
n/a
-
Issued
Vested
Lapsed
Held at
30 June 2012
161,551
76,414
105,008
84,006
146,667
-
146,667
-
-
-
-
-
431,134
141,089
326,735
84,006
Other transactions with the company or its controlled entities
There have been no loans to key management personnel during the financial year.
From time to time, directors and specified executives, or their personally related entities, may purchase goods from the group.
These purchases occur within a normal employee relationship and are considered to be trivial in nature.
NOTES TO
AND FORMING
PART OF THE
FINANCIAL
STATEmENTS
FOR THE YEAR ENDED
30 JUNE 2013
Codan Limited and
its Controlled Entities
98
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
28. OTHER RELATED PARTIES
All transactions with non-key management personnel related parties are on normal terms and conditions.
Companies within the group purchase materials from other group companies. These transactions are on normal commercial terms.
Loans between entities in the wholly owned group are repayable at call and no interest is charged.
29. EARNINGS PER SHARE
The group presents basic earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable
to ordinary shareholders of the company by the weighted average number of ordinary shares outstanding during the period. Diluted EPS is
determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding
for the effects of all dilutive potential ordinary shares, which comprise performance rights granted to employees.
Net profit used for the purpose of calculating basic and diluted earnings per share
45,417
Consolidated
2013
$000
2012
$000
23,146
The weighted average number of shares used as the denominator number for basic earnings per share was 175,095,002 (2012: 164,145,980).
The calculation of diluted earnings per share at 30 June 2013 was based on profit attributable to shareholders of $45.4 million and a weighted
average number of ordinary shares outstanding after adjustment for the effects of all dilutive potential ordinary shares of 176,039,493 (2012:
165,155,514 ).
30. NET TANGIBLE ASSET / LIABILITY PER SHARE
Net tangible asset/(liability) per share
2013
5.1 cents
2012
(5.8 cents)
Codan Limited 2013 Annual Report 99
NOTES TO
AND FORMING
PART OF THE
FINANCIAL
STATEmENTS
FOR THE YEAR ENDED
30 JUNE 2013
Codan Limited and
its Controlled Entities
100
31. CAPITAL MANAGEMENT
The board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future
development of the business. The board of directors monitors the level of dividends paid to ordinary shareholders and the overall return
on capital.
The board seeks to maintain a balance between the higher returns that might be possible with higher levels of borrowings, and the
advantages and security afforded by a sound capital position. This approach has not changed from previous years.
During the year the group’s gearing level improved as net debt levels remained low and new share capital was issued.
Neither the company nor any of its subsidiaries are subject to externally imposed capital requirements.
32. DEED OF CROSS GUARANTEE
Pursuant to ASIC Class Order 98/1418 (as amended) dated 13 August 1998, the wholly owned subsidiary listed below is relieved from the
Corporations Act 2001 requirements for preparation, audit and lodgement of financial reports and directors’ report.
It is a condition of the Class Order that the company and its subsidiary enter into a Deed of Cross Guarantee. The effect of the Deed is that the
company guarantees to each creditor payment in full of any debt in the event of the winding up of the subsidiary under certain provisions of the
Corporations Act 2001. If a winding up occurs under the provisions of the Act, the company will only be liable in the event that after six months
any creditor has not been paid in full. The subsidiary has also given similar guarantees in the event that the company is wound up.
Minelab Electronics Pty Ltd is the only subsidiary subject to the Deed. Minelab Electronics Pty Ltd became a party to the Deed on 22 June
2009, by virtue of a Deed of Assumption.
A summarised consolidated income statement and a consolidated balance sheet, comprising the company and controlled entity which is a
party to the Deed, after eliminating all transactions between the parties to the Deed of Cross Guarantee, is set out as follows:
Summarised income statement and retained earnings
Profit before tax
Income tax expense
Profit after tax
Retained earnings at beginning of the year
Retained earnings at end of the year
2013
$000
25,933
(18,648)
7,285
40,120
27,062
2012
$000
26,195
(11,013)
15,182
39,711
40,120
Balance sheet
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventories
Equipment held for sale
Other assets
Total current assets
NON-CURRENT ASSETS
Investments
Property, plant and equipment
Product development
Intangible assets
Deferred tax assets
Total non-current assets
Total assets
CURRENT LIABILITIES
Trade and other payables
Other liabilities
Current tax payable
Provisions
Total current liabilities
NON-CURRENT LIABILITIES
Loans and borrowings
Deferred tax liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Share capital
Reserves
Retained earnings
Total equity
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
2013
$000
5,017
36,354
20,107
-
2,046
63,524
26,388
16,941
28,720
57,195
7,069
136,313
199,837
23,864
26,660
12,474
7,787
70,785
15,000
8,766
757
24,523
95,308
104,529
42,986
34,481
27,062
104,529
2012
$000
16,904
17,458
7,713
1,747
1,031
44,853
21,087
15,890
23,641
57,351
6,255
124,224
169,077
29,185
14,109
4,091
8,545
55,930
38,879
7,735
631
47,245
103,175
65,902
25,951
(169)
40,120
65,902
Codan Limited 2013 Annual Report 101
33. PARENT ENTITY DISCLOSURES
As at, and throughout, the financial year ending 30 June 2013, the parent company of the group was Codan Limited.
Result of parent entity
Profit for the period
Other comprehensive income
Total comprehensive income for the period
Financial position of parent entity at year-end
Current assets
Total assets
Current liabilities
Total liabilities
Total equity of the parent entity comprising:
Share capital
Reserves
Retained earnings
Total equity
Company
2013
$000
34,673
(387)
34,286
50,999
168,021
51,349
71,473
42,986
33,392
20,171
96,549
2012
$000
17,573
(893)
16,680
32,226
141,447
31,276
74,472
25,951
78
40,946
66,975
NOTES TO
AND FORMING
PART OF THE
FINANCIAL
STATEmENTS
FOR THE YEAR ENDED
30 JUNE 2013
Codan Limited and
its Controlled Entities
102
DIRECTORS’
DECLARATION
Codan Limited and
its Controlled Entities
DIRECTORS’ DECLARATION
In the opinion of the directors of Codan Limited (“the company”):
(a) the consolidated financial statements and notes, set out on pages 52 to 102, are in accordance with the Corporations Act 2001,
including:
(i) giving a true and fair view of the financial position of the consolidated entity as at 30 June 2013 and its performance, as
represented by the results of its operations and its cash flows, for the financial year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and
(b) the financial report also complies with International Financial Reporting Standards as disclosed in Note 1(a);
(c) the remuneration disclosures that are contained in the Remuneration report in the Directors’ report comply with Australian Accounting
Standards AASB 124 Related Party Disclosures, the Corporations Act 2001 and the Corporations Regulations 2001;
(d) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable;
(e) there are reasonable grounds to believe that the company and the group entity identified in Note 32 will be able to meet any
obligations or liabilities to which they are or may become subject to by virtue of the Deed of Cross Guarantee between the company
and the group entity pursuant to ASIC Class Order 98/1418; and
(f)
the directors have been given the declaration required by Section 295A of the Corporations Act 2001 by the chief executive officer
and the chief financial officer for the financial year ended 30 June 2013.
Dated at Newton this 21st day of August 2013.
Signed in accordance with a resolution of the directors:
Dr G D Klingner
Director
D S McGurk
Director
Codan Limited 2013 Annual Report 103
INDEPENDENT
AUDITOR’S
REPORT
To the members
of Codan Limited
104
Independent auditor’s report to the members of Codan Limited
Report on the financial report
We have audited the accompanying financial report of Codan Limited (the company), which comprises the consolidated statement of financial
position as at 30 June 2013, and consolidated income statement and consolidated statement of comprehensive income, consolidated statement
of changes in equity and consolidated statement of cash flows for the year ended on that date, notes 1 to 33 comprising a summary of significant
accounting policies and other explanatory information and the directors’ declaration of the Group comprising the company and the entities
it controlled at the year’s end or from time to time during the financial year.
Directors’ responsibility for the financial report
The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance with
Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable
the preparation of the financial report that is free from material misstatement whether due to fraud or error. In note 1(a), the directors also state,
in accordance with Australian Accounting Standard AASB 101 Presentation of Financial Statements, that the financial statements of the Group
comply with International Financial Reporting Standards.
Auditor’s responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian
Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and
plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures
selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether
due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of the financial
report that gives a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the
financial report.
We performed the procedures to assess whether in all material respects the financial report presents fairly, in accordance with the Corporations
Act 2001 and Australian Accounting Standards, a true and fair view which is consistent with our understanding of the Group’s
financial position and of its performance.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.
Auditor’s opinion
In our opinion:
(a) the financial report of the Group is in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the Group’s financial position as at 30 June 2013 and of its performance for the year ended
on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001.
(b) the financial report also complies with International Financial Reporting Standards as disclosed in note 1(a).
Report on the remuneration report
We have audited the Remuneration Report included in page 34 to 40 of the directors’ report for the year ended 30 June 2013. The
directors of the company are responsible for the preparation and presentation of the remuneration report in accordance with Section
300A of the Corporations Act 2001. Our responsibility is to express an opinion on the remuneration report, based on our audit
conducted in accordance with auditing standards.
Auditor’s opinion
In our opinion, the remuneration report of Codan Limited for the year ended 30 June 2013, complies with Section 300A of the
Corporations Act 2001.
INDEPENDENT AUDITOR’S REPORT
Codan Limited 2013 Annual Report 105
Additional information required by the Australian Stock Exchange Limited Listing Rules not disclosed elsewhere in this report is set out below.
ASX ADDITIONAL
INFORMATION
Shareholdings as at 14 August 2013
Substantial Shareholders
The number of shares held by substantial shareholders and their associates are set out below:
Codan Limited and
its Controlled Entities
Shareholder
I B Wall and P M Wall
Interests associated with Starform Pty Ltd, Pinara Pty Ltd and Pinara Group Pty Ltd
Interests associated with Kynola Pty Ltd and Warren Glen Pty Ltd
National Nominees Limited
Distribution of equity security holders
Number of
shares held
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 - over
Total
Number of
ordinary shares
34,808,151
23,927,636
12,320,566
12,151,253
Number of equity
security holders
Ordinary shares
1,523
2,454
947
891
70
5,885
The number of shareholders holding less than a marketable parcel of ordinary shares is 505.
Securities Exchange
Other Information
On-Market Buy-Back
The company is listed on the Australian
Securities Exchange. The home exchange
is Sydney.
Codan Limited, incorporated and domiciled
in Australia, is a publicly listed company
limited by shares.
There is no current on-market buy-back.
106
Twenty largest shareholders
Name
I B Wall and P M Wall
National Nominees Limited
Starform Pty Ltd
Kynola Pty Ltd
Dareel Pty Ltd
Griffinna Pty Ltd
J P Morgan Nominees Australia Limited
Citicorp Nominees Pty Limited
M K and M C Heard
G Bettison
A Bettison
Orley Pty Ltd
Warren Glen Pty Ltd
Bond Street Custodians Limited
Mitranikitan Pty Ltd
HSBC Custody Nominees (Australia) Limited
Pinara Group Pty Ltd
RBC Investor Services Australia Nominees Pty Limited
BNP Paribas Nominees Pty Ltd
J A Uhrig
Total
Offices and officers
Company Secretary
Mr Michael Barton BA (ACC), CA
ASX ADDITIONAL INFORMATION
Number of ordinary
shares held
34,808,151
12,151,253
11,404,224
9,118,356
8,854,251
8,276,003
6,221,487
5,997,074
4,764,585
3,562,125
3,562,124
3,420,812
3,202,210
2,806,395
2,522,458
1,924,945
1,537,502
1,662,440
1,560,979
1,365,143
Percentage of
capital held
19.7%
6.9%
6.4%
5.2%
5.0%
4.7%
3.5%
3.4%
2.7%
2.0%
2.0%
1.9%
1.8%
1.6%
1.4%
1.1%
0.9%
0.9%
0.9%
0.8%
128,722,517
72.8%
Principal registered office
Location of share registry
81 Graves Street
Newton South Australia 5074
Telephone: (08) 8305 0311
Facsimile: (08) 8305 0411
Internet address: www.codan.com.au
Computershare Investor Services Pty Limited
GPO Box 1903
Adelaide South Australia 5001
Codan Limited 2013 Annual Report 107
CORPORATE
DIRECTORY
Codan Limited and
its Controlled Entities
Directors
Dr David Klingner (Chairman)
Mr Donald McGurk (Managing Director and Chief Executive Officer)
Mr Peter Griffiths
Mr David Klingberg AO
Mr David Simmons
Lt-Gen Peter Leahy AC
Mr Scott Davies
Mrs Corinne Namblard
CORPORATE DIRECTORY
Company Secretary
Mr Michael Barton
Principal registered office
81 Graves Street
Newton South Australia 5074
Auditor
KPMG
151 Pirie Street
Adelaide South Australia 5000
Location of share registry
Computershare Investor Services Pty Limited
GPO Box 1903
Adelaide South Australia 5001
108
www.codan.com.au