Codan confident despite profit decline; special dividend for shareholders

MAWSON Lakes communications company Codan posted a fall in its full year underlying net profit after tax, but has signalled confidence in its outlook to shareholders with a special dividend payout.

Donald McGurk: Stephen Laffer.

MAWSON Lakes communications company Codan posted a fall in its full year underlying net profit after tax, but has signalled confidence in its outlook to shareholders with a special dividend payout.

Underlying profit after tax was down 11 per cent to $39.8 million.

Statutory net profit was down to $41.5 million in what the company described was another strong year.

In recognition of its “continuing outperformance”, the company declared a special 4c dividend on top of its final dividend of 4.5c, both of which will be paid on September 14.

Chief executive Donald McGurk said the strong results were driven by gold detector sales into Africa, spread across its entire Minelab gold detector range.

“We continue to enter new markets and develop world-class, robust technology for our customers across more than 150 countries,” he said.

The focus of the group was on increasing the company’s earnings base to diversify the business and reduce volatility.

New initiatives included the agreement with global giant Caterpillar to integrate Codan’s Minetec products into an expanded Caterpillar Minestar solution for underground mines.

“Given the success of these initiatives, we are confident that Codan’s base-business sales have increased to $180 million — $200 million, delivering net profit after tax of $25 million — $30 million, a 20 per cent increase.

The company had a net cash position of $28 million at the end of June.

Revenue in its US-focused radio communications business fell to $56.5 million after the group missed out on delivering some large high-frequency radio projects before the year end and its Land Mobile Radios sales were also impacted by a slowdown in US government spending.

But the division has a strong order book entering FY19, which the company said positioned it well for the future.

It was also yet to win any significant orders for its defence electronics business and did not plan for any significant revenue in the current financial year.

A further business update will be provided at the annual meeting in October.

Shares were trading nearly 7 per cent higher at $3.25.