25-Sep-2024: Codan (CDA) today announced the acquisition of Kägwerks in the USA: Kägwerks-Acquisition-Announcement.PDF

This sounds like another good strategic acquisition that broadens Codan's capabilities within their Comms Division (specifically tactical communications) even further, and bought at a good price, with payments staggered to ensure they get what they pay for - which is how Codan tend to do their acquisitions:

Excerpt:

ACQUISITION CONSIDERATION AND FUNDING: The acquisition consideration consists of an upfront cash payment of approximately $33.6 million together with royalty payments for 5 years post-closing. The quantum of the royalty payments will be calculated based upon agreed annual sales target thresholds ranging from 1% to an upper limit of 5%, conditional also on minimum gross margins being achieved. In the short to medium term, Codan expects the royalty rate to be between 1% to 2%. To hit the upper end, Kägwerks will have to be successful in entering other Program of Records and significantly increase its international product sales. Royalty payments will be funded from operational cashflow. The upfront acquisition consideration will be funded from Codan’s existing debt facility, which has been increased from $170 million to $200 million. This increased debt facility will continue to provide financial flexibility to support future acquisition or growth initiatives.

Subject to government procurement cycles and purchase orders, under Codan’s ownership in the first 12 months we expect revenue to be in the range $49 million to $57 million. If this level of revenue is achieved, Codan estimate CY25 EBITDA in the range of $8 million to $11 million. Based on the expected range of revenue and EBITDA forecasts for CY25 the acquisition is priced at between 3.1 to 4.2 times EBITDA and will be earnings-per-share accretive immediately. Integration and acquisition related costs are expected to be approximately $1 million in FY25.

Beyond CY25 Codan expects that the combination of complementary capabilities and the successful development of the next generation of Kägwerks technology to position Tactical Communications to compete in the global military communications solutions market, this is expected to generate strong growth as new products are launched.

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I tend to read these announcements backwards, so I start with what they are paying, when, and how (as above) which was towards the end of the announcement, and then I go back to the reason they are buying:

Excerpt:

STRATEGIC RATIONALE: Codan’s Tactical Communications radio and wireless communications technologies have application across the core target markets of military, law enforcement, unmanned systems, humanitarian and broadcast. The acquisition of Kägwerks is consistent with Codan’s growth strategy to develop or acquire complementary IP and technologies, in this case the technology being acquired includes a radio agnostic dismounted communications solution. This enables Tactical Communications to broaden its offering as a full tactical military radio solutions provider and to build capability, credibility and scale in the core markets it operates in.

The acquisition of Kägwerks, with its associated intellectual property and products, positions Tactical Communications as a US soldier communications solutions provider, as it provides immediate credibility and name recognition for Tactical Communications to compete in the US military marketplace, including throughout the US DoD, special operations community, Customs and Border Protection, law enforcement and first responders. Further, Codan expect considerable sales opportunities will arise from leveraging Codan’s existing global distribution network with an international export version of the DOCKTM products.

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If you want more, there's a link to the full announcement at the top of this straw. I don't hold Codan in real-money portfolios at this point in time, but I've made plenty of money from the company by holding them in prior years, loading up when they were low (like below $5/share a couple of years ago) and trimming the position as they rose through and above $10. They're now over $15.70/share.

I only sold out because I sold up an entire portfolio (in which I held CDA) in June to change the investment structure, and never re-bought Codan afterwards because they looked expensive. Well, their share price hasn't dropped since then. They've gone from below $12 to now over $15.70/share. I've got to back these high quality companies, even when they look expensive. The Art of Execution. This one is a long term hold. Still wouldn't buy them up here though, as I said about PME since they were around $100/share - now around $170/share...

At least I hold both Codan and Pro Medicus here on Strawman.com.

19-Sep-2024: Codan will be added to the S&P/ASX200 Index in one week - i.e. from the open on Thursday 26th September 2024 due to the removal of Virgin Money UK PLC - see here: Virgin-Money-UK-PLC-to-be-removed-from-the-SPASX-200-Index.PDF

CODAN FY24 RESULTS

FY24 HIGHLIGHTS:

• Strong Group financial performance:
• Group revenue of $550.5 million, up 21% versus prior corresponding period (“pcp”);
• Earnings before interest and tax of $113.9 million, up 29% versus pcp; and
• Net profit after tax of $81.3 million, up 24% versus pcp.
• Strong Communications performance continues:
• Communications revenue of $326.9 million, up 19% versus pcp, segment profit of $80.5 million, up 19% versus pcp; and
• Expanding communications orderbook of $197 million, up 21% versus 30 June 2023.
• Strong metal detection performance:
• revenue of $219.9 million up 25% versus pcp, segment profit $77.9 million, up 37% versus pcp; and
• All divisions growing versus pcp.
• Net debt of $75.4 million as at 30 June 2024, having funded $37.2 million for acquisitions and $36.3 million of dividends paid during the year.
• Earnings per share of 45.0 cents, up 24% versus pcp.
• Annual dividend of 22.5 cents, fully franked (interim dividend 10.5 cents, final 12.0 cents) versus 18.5 cents in FY23.
• Results briefing was held at 11:00am AEST today, Thursday 22 August 2024.

Codan Limited (“ASX:CDA”, “Codan”, “Group” or “the Company”), the Australian-based technology company, today announced its full year results for the period ended 30 June 2024 (“FY24”).

Commenting on the results, Chief Executive, Alf Ianniello, said:

“Codan has delivered a strong FY24 result, with Group revenues up 21%, EBIT up 29% and NPAT up 24%. It is pleasing to see the business deliver sustainable growth across the last three consecutive halves. Our primary focus remains on strengthening the business to achieve sustainable, profitable growth for the future, reinforcing a stronger Codan.

"Our Communications segment remains core to our future growth and continues to perform strongly, with revenues up 19% versus pcp. Communications continues to strengthen its position in the market as a solutions provider, with the orderbook growing 21% to $197 million versus 30 June 2023. The Zetron UK and Wave Central businesses acquired during the reporting period are performing well with integration activities now complete. Our strategy remains to continue to invest in the Communications segment to drive revenue growth, enhance predictability and capitalise on opportunities in large addressable growth markets.

Our metal detection business also delivered a strong FY24, with each of Minelab’s divisions delivering increased revenues, collectively up 25% versus FY23. Our strategy remains to invest in metal detection technologies and distribution channels, to drive revenue growth and enhance financial returns.”

Click here to view the full results release

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Problems? What problems? All good here. [Back on track!]

Codan up over $14/share today and have been as high as $14.56. Pity I reduced my exposure here on SM yesterday...

Very good company with quality management. Not sure if they're cheap up here however, but they do seem to know how to keep growing.

Results Presentation

Disclosure: Held here, but sold out of real-money portfolio in June (unfortunately).

29-Nov-2023: Codan have made an Acquisition-Announcement.PDF this morning. They are paying an upfront cash payment of $9.1 million plus additional payments of up to $12.2 million if certain earn-out targets are achieved over the next 3 years. The acquisition consideration will be funded from Codan’s existing debt facility, so there will be no CR.

Codan's wholly owned subsidiary, Domo Broadcast Holdings LLC, has entered into a binding agreement to acquire 100% of the shares of Wave Central LLC (Wave Central), with completion to occur on 1 December 2023. Wave Central’s founders and senior management have all joined Codan’s Tactical Communications Broadcast division, Domo Broadcast, and will remain in the Wave Central business. Wave Central is a leading North American systems integrator of wireless broadcast equipment and creates industry specific products integrated with Domo Broadcast’s technology for sports, cinema and broadcast applications. Their product portfolio consists primarily of wireless video camera links and high-quality broadcast products using core Domo Broadcast technology. Wave Central has been Domo Broadcast’s primary distribution channel into the North American market for 15 years.

This is another smart acquisition by a top-quality management team at Codan. As usual, the acquisition is small, it's a good fit, it adds capability within an area of core competency, and much of the acquisition cost is dependent on the acquired company continuing to perform within expectations as part of the larger Codan business. And, again, the people who built this company up are coming across with the company and will continue to run it.

The market seems a little unsure about this so far, based on the Codan share price movement today (no real strong move either way), but they have been in an upward trajectory lately, and I don't see this announcement derailing that uptrend in any way.

Another good acquisition!

10-Oct-2023: I received this email today: Domo Tactical Communications (DTC) and TrellisWare Technologies Partner to Deliver Multiple Waveform Capabilities to a Single Tactical Radio

I hold Codan shares and I've been impressed by the way they've growns their Comms Division while their Metal Detection (Minelab) division has experienced some headwinds (various issues in Sudan and other parts of Africa, Afghanistan, Russia/Ukraine, etc.). They have always found a way to grow, and they have proven recently that when one division faces headwinds, they can still grow their other division at a decent rate.

Interestingly, this news (in that email) does not appear to have been released to the ASX announcements platform this week, so probably had little to do with today's +2.89% SP rise, unless people who already hold Codan and are also on their email list were topping up...

It's a good looking graph, and we weren't saying that 11 months ago when they were trading at around $4/share.

Perspective, it's a wonderful thing:

So, still good, and certainly a superb 12 month chart, but that 5 year share price chart shows how far they have fallen, i.e. by about -80% from around $20 to around $4. I don't think they're currently worth $20/share, and they also weren't worth $20 share in 2021 when they got up there, but I think they'll certainly be worth $20/share in the future. They had too much growth already priced in during the first half of 2021, but they are now back to somewhere between cheap and reasonably priced, IMO. I'm happy to have them as my largest position here, and also either the largest or second largest position in my two largest real life (or real money) portfolios (one of which is my SMSF). Very well run, and they design, build and sell quality products that people need and buy. Lots to like!

08-Aug-2023: Late in the day, Codan released this: Canaccord-Investor-Presentation.PDF which they will present at the Cannacord Annual Growth Conference in Boston MA (Massachusetts) on Thursday 10th August (Wednesday night our time).

The deck is 16 slides, so here's a sample; just the cover page and 8 slides:

As you can see - they're really pushing their Comms division, and Zetron in particular (end-to-end mission critical comms solutions). Comms has now overtaken Metal Detection (Minelab) in terms of group revenue contribution as well as earnings, and Comms will continue to be the main driver of growth for the foreseeable future I would expect. Minelab will have good years and bad years but Comms will be more stable with continued and more dependable growth, in my opinion.

I also like that they're not only presenting in the USA to global investors, but they've tailored the presentation to the USA and made it relevant to them.

Disclosure: Codan is the largest position in my biggest real life portfolio and the second largest position in my SMSF (behind NST), and Codan is also the largest position here in my SM virtual portfolio (currently representing 15.5% of my SM portfolio), so you could say I'm bullish on Codan, and was even more bullish when they were trading at sub-$5 for most of the last quarter of last year and the beginning of January this year; they got down to $3.64 at one point in December! Lately they've been trading in a range of between $7.50 and $8/share, and they still look like good value here to me. But I already hold plenty.

Their latest acquisition once again makes strategic sense and adds to their current capabilities. Great management. Great company. And now they're doing a bit of self-promotion in the US - which can only help their sales and their share price I reckon. I'll be watching on Thursday to see if there's any SP spike (they present this in Boston on Thursday).

04-May-2023: Investor-Presentation.PDF

CDA is off a few (2 to 3) cents today on the back of this Investor Presentation at the 2023 Macquarie Conference (link above). That could possibly be due to the following slide which suggests they are on target (based on their FY2023 H1 results) to approximately match FY21 but be below the record results they achieved in FY22:

No change to the investment thesis. Still a great company that has succesfully diversified their revenue into two distinct areas, Metal Detection and Communications (Comms). They have managed to grow their Comms division very nicely over the past couple of years.

It will be interesting to see how the record high gold price affects the sales of their Minelab gold detectors over the next year or two.

Disclosure: I hold Codan shares. They are either my largest or second largest position (along with NST) in all of my major portfolios, and here on SM as well.

05-March-2023: I was particularly impressed with a few company's reports during February, and Codan's wasn't one of them, not because they didn't meet my expectations, but because they did. It was a solid report, as I expected it would be, so a solid tick. The ones that impressed me more were the ones that did exceed my expectations, and the best one of those for my money was Lycopodium - and I've added significantly more to my LYL position since their report and ahead of their ex-div date. I've discussed the LYL report and dividend in my 23-Feb update to my LYL valuation (which in my case is a "price target" rather than an IV - intrinsic valuation - and I raised it again) - which you can find here. [Scroll down for the 23rd Feb update, towards the end of it.]

In terms of reports which beat the market's low expectations, here are 3 companies that I believe fall into that category (including Codan) with links to their announcements and presentations. If you click on the company name, you'll get taken to their "investors" webpage.

1. Macquarie Telecom (MAQ):  Announcement, Presentation.
2. Aussie Broadband (ABB): Announcement, Presentation.
3. Codan (CDA): Announcement, Presentation, GeoConex Acquisition Announcement.

The relative share price improvements since the day BEFORE they reported up to Friday (3rd March) - so their share price movement since they reported - is +9.2%, +15% and +6.3%. The LYL SP has moved up +9.9% since they reported.

Only one of them has gone ex-div since they reported, and that company is Codan who went ex-div on Feb 23rd for a 9c/share FF (fully franked) dividend, so if you add that 9c to their current share price (of $5.59), you get a gain of +8% (instead of +6.3%) since the day before they posted their results. And the franking credits are a bonus on top - if you can use them.

Codan are still plenty down in share price terms on where they were a few years ago, but all they can do is continue to successfully navigate through the headwinds and tailwinds that they face. The share price will take care of itself over time.

Codan’s Metal Detection business (Minelab) is not growing as it was in previous years due mostly to unrest in Sudan and other parts of Africa, but their Comms (Communications) division is going really well and has now powered ahead of their Metal Detection division in terms of revenue generation.  

Disclosure: I'm a happy holder of Codan, Lycopodium, Aussie Broadband and Macquarie Telecom both in real life and here in my virtual Strawman.com portfolio.

P.S. - see here for my thoughts on MAQ and their H1 report.

Including this:

That's the 5 year return (not annualised) on equal investments in MAQ, NXT (NextDC, data centre manager), TNT (Tesserent, a cybersecurity company) and TLS (Telstra being Australia's largest Telco), without any dividends. TNT and NXT don't pay dividends. MAQ haven't paid dividends since 2018 (because they are reinvesting profits back into the business to facilitate growth) and even if you add in Telstra's dividends, they don't come anywhere near the +255% return that MAQ has provided, and with MAQ you get exposure to all of the themes/industries that the other 3 companies provide exposure to individually. I created that graph on Feb 21st, on the evening that MAQ reported their results, and MAQ's SP has risen +9% since then, so the variance has only become greater now.

21-Sep-2022: Codan released their 2022 Annual Report today. You can view the ASX copy by clicking here or they should upload it to the Annual Reports section of their website within the next couple of days: https://codan.com.au/investor-centre/annual-reports/

This image was interesting:

Notice the brand of the unit that is sending the video and audio of this Fox Sports interview with Australian Men's Cricket Test Team Captain Pat Cummins wirelessly to the broadcast van? Yep, DTC. Owned by Codan, and DTC won Codan's largest ever contract in FY22.

I have also highlighted their 30% ROE there and their record results. It's worth noting that despite people continuing to forecast that Codan is a business in decline, they show little evidence of that. Their year-on-year growth has been excellent. Revenue and earnings continue to increase, year after year.

Alf's CEO Report was also worth a read:

You can click on those images to make them larger, or use the link at the top of this straw to view the original document (their FY22 Annual Report, released today).

I won't go on... I'll wrap this up with this overview of the business:

Comms will probably eclipse Metal Detection in the near term, but Metal Detection will resume it's growth again at some point also. Comms is doing VERY well. Note that they spent $46 million on R&D in FY22, equivalent to 9% of their sales (operating revenue, which was $506.1m). This is a high quality company with a high ROE and top shelf management who are very well placed within their chosen industries of metal detection and communications, paying a good dividend yield, and reinvesting in themselves as well via strong Research and Development so that they remain at the cutting edge. There's really not too much to dislike, just the share price trajectory really. Codan remains a major position in all of my major real life portfolios, and I also hold Codan here in my SM virtual portfolio. Happy to load up down here and trim the positions when they get positively re-rated by the market again.

22-2-2022: [all the twos] Subsequent to Donald McGurk informing the Codan Board last year that he wished to retire sometime within the next 9 to 12 months (from that announcement in August 2021), Mr Alfonzo (Alf) Ianniello, most recently CEO of Adelaide-HQ'd privately-owned packaging company Detmold Group for 14 years, was appointed to the Codan Board on 06-Jan-2022 as their new MD and CEO.

Mr Alfonzo (Alf) Ianniello

Mr Ianniello led global manufacturing and sales businesses, the Detmold Group for 14 years. His career began as a defence systems engineer in 1995 with British Aerospace, where he stayed until 1999. In 1999, He travelled and worked in the USA to begin an eight-year tenure with automotive components manufacturer Schefenacker. He progressed from Customer Engineer and Branch Manager roles to become Engineering Director in 2001, Vice President of Global Engineering in 2004, and eventually Managing Director of the company's Australian division in 2005. As Managing Director, He oversaw Schefenacker's operations in South Australia and New South Wales, producing parts for Australian, American and Japanese vehicle manufacturers and sister companies in Europe and the USA. Mr Ianniello was on the Detmold Board for 14 years. During this time, he has also held Board positions with SME's, Tertiary Institutions and Local Government. He resigned from Detmold in December 2020, and completed his employment in July 2021. He attended the Wharton Business School Global CEO Program at the University of Pennsylvania in 2012.

Source: Commsec

The Codan website has a shorter version of the same information - see here: Leadership Team | CODAN

Further Reading:

Codan unearths yet another record result (Adelaide Advertiser)

Codan appoints new CEO - Defence Connect

Detmold Group - Our Story - Latest News

Reports are that Alf doesn't see anything that needs fixing at Codan, so he intends to continue to run the company as Donald did before him, and to continue to promote the strong supportive company culture that Donald was so passionate about.

I am a Codan shareholder, and have been for years.

The company is currently in the doghouse with the market, because of geopolitical issues in Sudan (was a strong market for Codan's Minelab Gold Detectors) and Afghanistan (previously a country where a decent chunk of Codan's Communications division equipment ended up), plus Donald McGurk retiring. He was a very popular CEO and MD. The company itself haven't set a foot wrong, and they've just reported yet another record half. The market hasn't yet twigged that both Sudan and Afghanistan are minor setbacks for a company such as Codan that sells metal detection and communications equipment all over the planet. And they've had plenty of setbacks before and handled them all beautifully. And the company is more than just the man at the top. They haven't twigged yet, but given enough reports, they will eventually.

19-Aug-2021:  Codan (CDA) have announced this morning (along with their cracking results) that their MD & CEO, Donald McGurk, has advised the Board that it is his intention to retire from his role as Managing Director of Codan sometime within the next 9-12 months.  Donald will remain as Managing Director until such time as a successor is appointed to ensure a smooth transition.  I believe this is the main reason why Codan is being sold down today on this really good result.

19-Aug-2021:  Codan (CDA), a company which I do hold in RL but has never been included in my SM portfolio have just released their FY2021 results:

FY21 FULL YEAR SUMMARY

• Highest full-year sales in the company’s history
• Record statutory net profit after tax of $90.2 million, an increase of 41%
• Return on equity of 36%
• Excellent cash generation, close to zero net debt after funding circa $174 million for acquisitions
• Sales revenue was $437m, up 26%
• Underlying EBITDA was $158.8m, up 35%
• Underlying NPAT was $97.3m, up 52%
• Underlying EPS was 54.0 cents, up 52%

I love it when a company has another good year, i.e. an even better year on the back of a really good year, and they not only increase their revenue once again, but they also increase their profits by substantially MORE than their revenue increased by, in percentage terms.  Better margins once again.  ROE of 36% is outstanding for a manufacturing business like this that designs and sells metal detectors and communication equipment.  Codan has been one of my top 3 best performing companies over the past 3 years, and they show no signs of slowing down yet.

Codan also have a very positive company culture which is driven by their CEO and MD, Donald McGurk.  They have a can do attitude and work collaboratively across their divisions and job roles, helping each other out without any of that "That's not my job" rubbish.  A great Adelaide success story, selling the world's best (Minelab) gold detectors to the world.  

Positive company culture is something that is often underappreciated by investment analysts, however one investment management company, WCM, who are based in Laguna Beach, California, and invest in global companies (and manage the ASX-listed WQG "WCM Global Growth" LIC, which I hold shares in) have built their business around analysing company cultures.  WCM invest in companies that have positive company cultures that support competitive advantages (moats) that are increasing or getting stronger over time.  For more info, see here:  https://strawman.com/reports/WQG/all

18-Feb-2021:  Half Yearly Report and Accounts   plus   FY21 half-year investor presentation

RECORD FIRST-HALF RESULT

Highlights

• Highest half-year profit in the company’s history
• Net profit after tax of $41.3 million, a 36% increase
• Group sales of $194 million, a 14% increase against FY20 record first half
• Interim dividend of 10.5 cents, fully franked
• Earnings per share of 22.8 cents, up 36%

Australian-based technology company, Codan Limited (ASX:CDA), today announced statutory net profit after tax of $41.3 million for the half year ended 31 December 2020.

Directors announced an interim dividend of 10.5 cents per share, fully franked. This dividend has a record date of 25 February 2021 and will be paid on 11 March 2021.

The Board expects to continue its policy of paying shareholders in the order of 50% of our full year profits as dividends, and shareholders will continue to be rewarded for the strong performance of the company.

Chief Executive, Donald McGurk, said, “I am pleased to announce that our strategy to strengthen and invest in our core business through innovation and geographical expansion continues to deliver exceptional results.”

“The strong performance was driven primarily by our metal detection business, with significant growth across both gold and recreational markets.”

Cash generation was excellent, resulting in a net cash position of $111 million at 31 December 2020. Our strategy to invest in production capacity to meet demand has seen an increase in inventory during the period. Over the coming months, we expect inventory levels to further increase, which will serve three purposes:

1. Ensure we can meet the continued high level of demand for our metal detectors;
2. Minimise air freight expense, by maximising sea freight; and
3. Mitigate the risk of any production challenges posed by the pandemic

Outlook

Whilst it is too early to determine if our traditional second-half weighting of sales will occur this year, there are a number of factors that are relevant when considering the outlook for FY21:

• As recently announced, we expect to settle the DTC transaction by end of April 2021 and commence integrating this new technology business within Tactical Communications;
• Demand for our metal detection products remains strong, with January achieving $35 million in sales;
• The new GPX6000 gold detector has been very well received, with meaningful sales expected from Q4; and
• The Communications business enters the second half with a strong order book.

The Board is not in a position to provide full year profit guidance at this point; however, we will continue to keep shareholders updated as the year progresses.

--- click on the links above for much more ---

[I hold CDA shares.  Codan has been one of my best performing investments ever.  A great company!]

16-Feb-2021:  Domo Tactical Communications (DTC) Acquisition Announcement

Codan Limited (ASX: “CDA”) has entered into an agreement to acquire 100% of the shares in US-based company, Domo Tactical Communications (DTC), from a Private Equity company. DTC is an established technology provider for high bandwidth wireless communications with specialist capabilities in MIMO Mesh networks (next generation software defined networks where multiple antennas stream data to and from devices across a network that is self-forming and self-healing). DTC is a trusted and long term supplier into more than 20 key United States government agencies as well as the “Five Eyes” intelligence communities.

DTC’s MIMO Mesh products provide wireless transmission of video and other data applications to predominantly first world customers, including Military and Special Forces, Intelligence Agencies, Border Control, First Responders and Broadcasters. DTC is headquartered in the US, with locations in the UK and Denmark and has around 140 employees.

The acquisition comprises an upfront payment of USD 88 million (approx. AUD 114 million), with the possibility of an additional payment of up to USD 16 million if certain earn-out targets are achieved in calendar year 2021. The acquisition is on a cash free, debt free basis and is expected to complete by 30 April 2021, subject to a number of US and UK regulatory conditions typical for transactions of this nature.

In the first full year of Codan’s ownership, DTC is expected to contribute approximately AUD 90 million of sales, AUD 14 million in EBITDA and AUD 9 million profit before tax. It will be earnings-per-share accretive from day 1. As a result of the transaction, Codan will acquire total assets approximately equal to the purchase price with no change to Codan’s shareholder equity.

The acquisition will be fully funded from existing cash reserves. Our current banking facility provides sufficient ongoing financial flexibility.

Chief Executive, Donald McGurk, said “The acquisition of DTC is consistent with Codan’s well publicised strategic growth plan for our Tactical Communications business. This is focussed on providing total communications solutions by transitioning from a traditional voice only platform via the addition of data and video communication capabilities. This acquisition fills a technology gap and will be able to leverage Codan’s global distribution channels into the developing world. Importantly this transaction will be accretive for Codan shareholders from the outset.

Codan has been successfully doing business in North America for over 20 years and this acquisition represents a continuation of our growth in this strategically important region. Total employee numbers in North America will grow from 120 to 140 as a result of this acquisition, with the majority focussed on product development and software engineering.

DTC’s products are complementary to Codan’s Tactical Communications solutions and serve similar markets and customers. A number of key members of our Tactical Communications sales team have previously worked in the MIMO Mesh and surveillance markets, and therefore have significant experience in this industry segment”.

Codan’s President for Tactical Communications, Paul Sangster, said “DTC is an important strategic acquisition for us and brings complementary capabilities to our existing tactical communications solutions. We will be able to add immediate value by integrating DTC’s and Codan’s sales and marketing teams as we open up new geographic routes to market. Over the long term our combined engineering capabilities will allow us to bring unique communications solutions to a diverse global customer base from military to security to broadcasting”.

Codan looks forward to working with all DTC staff to affect a seamless integration into the Codan group. DTC is well known to Codan and we believe that there is excellent cultural alignment.

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[I hold CDA shares, and they have been one of my best performing investments ever, over a number of years.]

09-Sep-2020:  Codan wins significant contract

Codan wins significant contract to supply tactical communications equipment in Africa

Codan Communications, a division of Codan Limited, designs and manufactures mission-critical communications equipment for global military and public safety applications. Its solutions allow customers to save lives, enhance security and support peacekeeping activities worldwide.

The Codan Communications division has won a contract with a large African government to supply tactical communications equipment. The contract has a value in the order of USD $10 million for the supply of Sentry-HTM radios and accessories, and we expect this order to be delivered in the second half of FY21. The customer intends to deploy Sentry-HTM radios for national security purposes in military operations in a country-wide program. The contract is a one-off purchase, and there are no material conditions that are required to be satisfied prior to delivery.

The customer has an investment-grade credit rating with a stable outlook, and our longstanding policy of mitigating credit risk either through a letter of credit or appropriate credit insurance will be followed.

This is a significant contract for Codan, as it reinforces our strength in providing such equipment to the African market and enhances our strategy to successfully penetrate the security and military sector globally.

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[I hold Codan shares.  The majority of their revenue comes from their Minelab metal detectors.  The make the best gold detectors in the world.  However their second division - Communications - is important also, and when both divisions are firing - as they are at the present time - it's a very good time to be a shareholder.]

20-Aug-2020:  Full Year Financial Report and Announcement   and   Investor Presentation

I hold Codan shares.  They are best known for making and selling the world's best metal detectors - Minelab - the ones used by all of those prospectors in shows like "Aussie Gold Hunters".  They sell heaps of gold detectors here in Australia but their sales are mostly to overseas customers, and they are particularly popular in Africa and South America.  I have owned them off and on for years, but I have now held them continuously since July 2018 when I purchased two parcels - for $2.90, then for $2.84/share.  They closed yesterday at $8.98, and they're up around +12% today on these excellent results (yet again) and trading at over $10/share.

I have NEVER added them to my Strawman.com scorecard, because when I started using Strawman, I considered that Codan had already had a good run (they had already doubled) and there were better opportunities in other companies.  Over the past couple of years, I have trimmed my Codan position a number of times as they have just kept on rising.  They are now three and a half times my average price paid for the ones I hold.  I figure if I was to add them to my Strawman scorecard, that would probably mark the peak and they'd probably fall from there.  After all, I'm not buying more of them up here, so it seems counterintuitive to be adding them to my scorecard here...

However, I'm not selling.  I'm happy to keep trimming, to keep the position size appropriate, and to lock in some profits, but I'm not going to fully exit a quality company like Codan that just keeps on going up.

The rising global gold price hasn't done them any harm at all, and the fact that they are the market leaders in hand-held detectors.  However, they have other strings to their bow.  They have a substantial communications division, and they also make mine detectors that are used by mine sweepers and other people in areas of the world where prior and current conflicts have resulted in areas having buried mines - the deadly explosive ones - sometimes years after the conflicts are over.  Their remote radio communications equipment is also used by humanitarian services organisations in remote areas as well as miners and the military in various countries.

I like everything about Codan actually, including that they were started here in Adelaide, South Australia, where I am based, by a couple of university friends, that they have grown the company so successfuly, and that they are still headquartered here - having recently relocated from Newton into a much bigger facility in the Mawson Lakes Industrial Estate.  I also like their management and strong collaborative culture, which was highlighted last year in an interview I watched where Roger Montgomery (who also likes Codan a lot) was interviewing Codan's CEO & MD, Donald McGurk, who has proven to be an excellent manager.

It's probably a good idea to also note that they currently have everything going for them, particularly the gold price, but also that they have managed to land some very large communications contracts for a couple of years running now, and there is no guarantee that this dream run will last, or - if it does - for how long.  However, I'm happy to have a ticket on this ride, and I'm enjoying it a lot - while it does last.

Full Year Result 2020

Codan Delivers Record Sales, Profit and Dividend

Highlights

• Record statutory net profit after tax of $64.0 million, increased by 40%
• Highest full-year sales of $348 million in the company’s history
• Record sales achieved in both Metal Detection and Communications
• Annual dividend of 18.5 cents, fully franked (interim 7.5, final 11.0)
• Earnings per share of 35.5 cents, up 39%
• Strong balance sheet continues – $92.8 million net cash

Australian-based technology company, Codan Limited (ASX:CDA), today announced a record statutory net profit after tax of $64.0 million for the year ended 30 June 2020.

Directors announced a final dividend of 11.0 cents per share, fully franked, bringing the full-year dividend to 18.5 cents, up 32%. This dividend has a record date of 28 August 2020 and will be paid on 11 September 2020.

“Despite the pandemic challenges in FY20, Codan has had a very strong 12 months and has delivered another record profit year. This was driven by the strength of gold detector sales into the artisanal gold mining market, continued growth in sales of our recreational metal detectors and several major contracts delivered by the Communications business."

Chief Executive, Donald McGurk, said, “As a result of our strategy to further diversify our revenues by releasing more new products, transitioning to a full solutions provider and broadening our geographic footprint, we were pleased to see that demand across all of our international markets was more evenly distributed. In FY20 we:

• released our second simultaneous multi-frequency (Multi-IQ® ) coin and treasure detector series, VANQUISH® ;
• progressed the development of our new GPX replacement gold detector, to be released in FY21;
• significantly increased our Minelab retail footprint across North America, Europe and Asia Pacific and expanded the geographic reach of our gold detectors;
• expanded our market share in the defence communications sector through the successful launch of Sentry® Software Defined Manpack;
• successfully delivered multiple large-scale systems projects in Communications, validating our transition to a full solutions provider;
• completed and delivered the first release of the Cascade™ software-defined networked communications solution;
• restructured Minetec’s cost base in order to return the business to profitability; and
• through the pandemic, we validated that we have the right manufacturing systems and processes in place which enabled us to maintain supply in very challenging circumstances.

As a result of these initiatives, the business is well placed to deliver another strong performance in FY21.

--- click on links at the top for more ---

[I hold CDA shares]

17-June-2020:  Trading Update and Cash Position

Market Like!!

Trading Update and Cash Position

In our last trading update, we disclosed that our sales were down 20% in April against our record first-half run rates. At the time, our Malaysian-based contract manufacturers were operating at lower capacities due to COVID-19 restrictions.   
 
In early May, the Malaysian Government removed restrictions on their manufacturing sector. Since then our supply partners have increased their production capacity and are now supplying product at pre-pandemic levels. 
 
Demand has remained strong for our metal detectors across both our recreational and gold mining markets, and May was a particularly strong month for our Communications business, with a $7 million project delivered by our Tactical Comunications division. As a result, the group had a record sales month in May and has returned to operating at similar levels to the record first-half run rate. 
 
Cash generation has been excellent, and the balance sheet has further strengthened to circa $85 million net cash. 
 
Although we continue to operate in very uncertain times, Codan will deliver a record profit this year in the order of $63 million net profit after tax.

--- ends ---

Disclosure:  Yep, I hold CDA Shares.  Another good exposure to a rising gold price, via the manufacturers of the world's very best gold detectors - Minelab.

23-Apr-2020:  5:44pm:  Trading Update and Cash Position

03-Sep-19:  Codan Investor Presentation

Note:  Codan are about to be added to the S&P/ASX 300 Index as from the 23rd of this month (September 2019).

04-March-2019:  Codan (CDA) has this morning released a presentation, titled "Codan:  Innovation Wherever You Are:  2019 Half-Year Results and Update" - see here.

Disclosure:  I hold Codan shares, although I don't think I ever got around to adding them to my Strawman scorecard.

03-March-2020:  Codan FY20 half-year investor presentation

26-Aug-2019:  Codan Full Year Financial Report and Announcement

Full Year Result 2019 
 
Codan Delivers Record Sales and Profit - Announces Special Dividend 
 
Highlights

• Record sales of $271 million
• Record statutory net profit after tax of $45.7 million
• Annual dividend of 9.0 cents, fully franked  (interim 4.0, final 5.0)
• Annual special dividend of 5.0 cents, fully franked  (interim 2.5, final 2.5)
• Base-business sales re-rated to $200-220 million, up from $180-200 million
• Base-business NPAT re-rated to $28-33 million, up from $25-30 million
• Strong balance sheet continues – $37.5 million net cash     

 
Australian-based technology company, Codan Limited (ASX:CDA), today announced a record statutory net profit after tax of $45.7 million for the year ended 30 June 2019. 
 
Directors announced a final dividend of 5.0 cents per share, fully franked, bringing the full-year dividend to 9.0 cents, up 6%. This dividend has a record date of 30 August 2019 and will be paid on 13 September 2019.  
 
In recognition of the continuing outperformance of the company, the Directors have also announced a final special dividend of 2.5 cents per share for the second half, bringing the full-year special dividend to 5.0 cents which will be paid with the final dividend. 
 
“Codan delivered a record profit in FY19, driven by a consistent level of gold detector sales into Africa, strong growth in sales of our recreational metal detectors and a successful transition into systems and solutions for our Communications business."

Chief Executive, Donald McGurk, said, “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. To that end, in FY19 we:

• progressed development of our second simultaneous multi-frequency (Multi-IQ®) coin and treasure detector, the VANQUISH™, to be released in the first half of FY20;
• established a Minelab sales and distribution centre in Brazil to increase market penetration in the key gold detecting regions of Latin America;
• completed development of the new Sentry® Military Manpack, further expanding our communications offering to the military market; and
• integrated Minetec’s high-precision tracking capability into Caterpillar’s Minestar® underground solution for hard-rock mines.  

 
“Given these initiatives, our strong performance in FY19 and our continuing investment in new product development, we have increased Codan’s base-business sales to a range of $200 million - $220 million, delivering NPAT in the range of $28 million - $33 million. This equates to an 11% increase in base-business sales and profitability.”

Profit margins have remained strong despite the business significantly diversifying its product mix.

Continuing strong cash generation resulted in a net cash position of $37.5 million at 30 June 2019.  

--- click on link above for more ---

Disclosure:  I hold Codan (CDA) shares.

20-Feb-2020:  Half Yearly Report and Accounts

I hold Codan shares, but I've been trimming them on the way up.  I wouldn't be buying them up here!  This is an example of no matter how good your results are, if the market had been expecting even MORE, you will get sold down.  CDA are down around -5% to -6% today, despite posting the following results:

RECORD FIRST-HALF RESULT

• Highest half-year profit in the company’s history
• Net profit after tax of $30.4 million, up 37%
• Interim dividend of 7.5 cents, fully franked
• Earnings per share of 16.8 cents, up 37%
• Communications sales increased 65% over the prior first half, with record sales being achieved by both Tactical Communications and LMR
• Metal Detection sales in the first half exceeded $100 million for the first time, due to continuing strong demand for gold detectors
• $51 million net cash position at 31 December 2019 

Directors announced an interim dividend of 7.5 cents per share, fully franked.  The dividend has a record date of 27 February 2020 and will be paid on 12 March 2020.

The Board expects to continue its policy of paying shareholders in the order of 50% of our full year profits as dividends, and shareholders will continue to be rewarded for the strong performance of the company.

Chief Executive, Donald McGurk, said, “The results for the first half have been outstanding across the business, with both Codan Communications and Minelab achieving record first-half results.

“The strong performance was driven by the continued strength of gold detector sales in Africa across multiple products, coupled with several major contracts delivered in the Communications business.

“We are pleased that our strategy to diversify our revenues and broaden our addressable markets is continuing to deliver results.”

--- continues [click on link above for more] ---

I note that Codan's CEO (Donald McGurk) sold $350,000 worth of shares on December 20th at prices ranging from $7.01 to $7.23, and while that was really just a trim - he still holds 612,424 CDA shares (worth around $5m) plus another 280,143 performance rights - it  can  sometimes signal that management believe that the company is fully valued at those prices.  CDA's SP continued its stellar run right up to $8.48 yesterday, being their highest ever closing price, and they briefly traded as high as $8.64 yesterday (intra-day), being their highest price they've ever achieved.  There wasn't much upside from there!  This is a very good result!  The market may have been expecting even more, however that's the market's fault, not Codan's.  Codan have delivered on their guidance and they've done everything right as far as I can see.  They always give conservative forward guidance, always warning that these really good years aren't necessarily going to be repeated.  They've had a lot go right for them this past year.  They make the best (Minelab) gold detectors in the world, and they've been selling them in an environment of record gold prices.  They've landed some impressive communications equipment supply contracts as well.  They can't guarantee that all that will happen again during the next 6 or 12 months.  They've been in an upgrade cycle, and they've been bid up aggressively because they've been growing strongly.  I like the company, but I last purchased CDA shares at $2.88.  I wouldn't be buying them at over $7.  They've had a little reality check today and look to be settling around the $8 mark, which is fine.  I'm not selling here.  My current weighting to Codan is fine.  But I'm certainly not buying more at these prices.

11-Dec-2018:  Codan:  ASX CEO Connect Presentation released today - see here.

Codan produce the world's best hand-held metal detectors, especially gold detectors - under the Minelab brand, so if we have a bear market where the price of gold goes up, CDA might do quite well.

29 July 2019:  AustralianMining.Com.Au:  Prospector discovers massive 2kg gold nugget near Ballarat

A two-kilogram gold nugget has been dug up on the outskirts of famous Central Victorian gold rush city Ballarat.

The happy prospector, a retiree who wished to remain anonymous, discovered the 63-ounce specimen using a metal detector.

Mark Day, who operates metal detector retailer Gold Ballarat, said there had already been offers of $160,000 for the nugget that the prospector has named “You Wouldn’t Believe It.”

“I’ve been in this business for 25 years and this is the biggest find we have seen by one of our customers – that they’ve told me about anyway,” he joked.

The man was using a Minelab GPX45000 detector and had recently come into Day’s store to upgrade the coil to one that was more sensitive.

A short while later, the prospector phoned Day and asked if he was interested in buying some ‘big gold.’

“I said I wasn’t a buyer and asked him what he meant by big. He said two kilos and I just said, ‘You’ve got to be kidding’,” Day said.

“When he showed me the nugget here in the store he was shaking like a leaf. He didn’t know what to do with it. He hadn’t slept in three days.

--- click on link above for more ---

Minelab is owned by Codan (CDA).  They make the best gold detectors on earth, without a doubt.  

Disclosure:  I hold Codan shares, bought at $2.87 and $2.88.  They closed at $3.92 today.  They're not on my Strawman.Com scorecard, but not all of my personal holdings are.  It's been a good 12 months for Codan!