SA company Codan’s record profit brings dividend windfall for investors
A record full year profit for an Adelaide company has led to another windfall for shareholders in the form of a second special dividend.
Adelaide technology company Codan will pay investors a second special dividend to mark its stellar full year financial performance.
For the 12 months to June 30, the Mawson Lakes-based business reported a record after-tax profit of $45.7 million, up 10 per cent from the previous financial year, and record sales of $271 million, up 18 per cent.
Underlying net profit after tax was up 15 per cent at $45.7 million, higher than the $39.8 million in the previous financial year.
In recognition of the continuing performance of the company, the directors announced a higher final dividend of 5c and a special dividend of 2.5c, to be paid on September 13.
Consistent gold detector sales into Africa, strong growth in the sales of recreational metal detectors and a successful transition into systems and solutions in its communications business helped deliver the record profit, chief executive Donald McGurk said.
“Profit margins have remained strong despite the business significantly diversifying its product mix.
“We continue to invest heavily in new products and have expanded into new markets in order to broaden the company’s sales and reduce earnings volatility,” he said.
Codan’s base-business sales have now grown to a range of $200 million to $220 million, delivering net profit after tax in the range of $28 million -$33 million, a 11 per cent increase in base-business sales and profitability.
Specifically, the communications equipment business, which caters to demand within global military and public safety applications, saw sales rise 37 per cent to $78 million with profit up a massive 147 per cent to $16.7 million.
Its Minelab business, a market leader in handheld metal detectors, posted its highest ever sales of $182 million.
Minetec, which makes tracking and safety solutions for underground mines and has an exclusive development and marketing arrangement with global giant Caterpillar Inc, failed to meet its revenue target of $15 million and made a small loss.
The defence electronics business, established in July 2016, has only been awarded small contracts to date and is not expected to generate significant revenue in the current financial year.
“Codan has the ability to surprise on the upside as a result of increased demand for gold detectors and large project wins in our communications division, both of which are difficult to predict,” the company said.
Gold detector sales in the first half in FY19 were boosted by a new product launch and the opening of a new market for gold detecting in the Middle East.
The company did not expect to repeat the same sales performance in the current first half.
Codan did not provide profit guidance for the current financial year.
Shares in Codan were trading nearly three per cent higher at $4.49 in noon trade.