CDA's share price probably got lumbered together with Gold, which explained its recent declines. While metal detection is an important component of its revenue base, the company continues to see growth in that segment, and the recent drop in gold price is not going to suddenly impact the interest in metal detection.
CODAN (CDA)
CHIEF EXECUTIVE OFFICER’S ADDRESS TO SHAREHOLDERS
Thank you David. I would like to say a few words ahead of a more informal discussion with our business unit leaders to hear their thoughts and insights on innovation, strategy and the steps we are taking to future-proof our business. As mentioned previously, FY20 was another record year for your company as we significantly increased sales and profitability across both Metal Detecting and Communications. We are now really starting to reap the benefits of our increased spend on new product development and our geographic expansion across all of our business units.
The transition from a product-centric business to a complete solutions provider in Communications has been driven by our customers’ desire to partner with providers who can solve and manage their increasingly complex communications requirements. We are continuing our innovation journey by investing more in data solutions
. Technologies like video, that are today widely utilised in the developed world, will become more relevant and affordable as time passes, enabling us to leverage our comprehensive distribution network to offer such solutions in places like Africa, Central Asia, the Middle East and Asia Pacific.
Codan’s ongoing product development is today being complemented by strategic partnerships with key technology suppliers in order to further broaden our solutions offering. Our strategy is to increase the intellectual property that we own in these emerging communications technology markets so that we can better meet the future requirements of our global customer base and maximise our share of profit margins.
We continue to accelerate the pace of innovation in Minelab. Over the past two years we have moved from simultaneously developing three new metal detecting products to six, which has increased the frequency of new product releases to the market. Revenue and profit growth in Minelab have been driven by both gold and recreational detector sales as we continue to out-innovate, out-market and ultimately out-compete our competitors. The decision to introduce Multi-IQ® technology into our recreational metal detectors, coupled with a geographical expansion strategy, has delivered strong growth over the past 24 months and is expected to serve us well in the future. We now have a number of market-leading gold detectors selling into an ever-increasing number of regions. While the Minelab business as a whole performed well in FY20, the outperformance was evenly spread between sales of GPZ 7000®, Gold Monster® and SDC 2300® gold detectors into artisanal markets, strongly complemented by sales of the Equinox® and Vanquish® coin and treasure detectors into our rapidly expanding recreational market. We continue to see the relationship between Minetec and Caterpillar strengthen. We have now successfully integrated Minetec’s high-precision tracking capability into the CAT MineStar® solution, and we are now receiving orders from a number of mine sites that we have been jointly working on. Our combination of cash on hand and cash generation underwrites our investment in new product innovation.
As a result of the strategic initiatives being implemented in the business, Codan remains well positioned for another successful year in FY21. Demand for our metal detection products remains strong, and this year Minelab will benefit from a full year of Vanquish® sales and the launch of a new gold detector. While elements of our business remain difficult to forecast, particularly during these unprecedented times, we have made an excellent start to the year. We have delivered a first quarter result ahead of our record FY20 run rate, and we see that momentum continuing into the second quarter. At this stage, we expect that last year’s record first-half result of $30 million will be exceeded in this half.
