Codan Limited Aktie

Good morning, and welcome to Codan's H1 FY '26 Results Presentation. I'm Alf Ianniello, Managing Director and CEO. And joining me today is our CFO and Company Secretary, Michael Barton.

As announced this morning, after more than 22 years with Codan, Michael has informed us of his decision to retire at the end of August following our FY '26 full year results. Over that time, Michael has played a pivotal role in shaping Codan's financial discipline, capital allocation framework and acquisition strategy. On behalf of the Board and the broader team, I'd like to sincerely thank him for his contribution.

I'm also pleased to confirm that Kayi Li, currently our Deputy CFO, will succeed Michael as our Chief Financial Officer. With nearly 19 years at the business, including senior finance roles at Codan since 2013, Kayi has played an integral role in our financial strategy and operational execution. We are confident her experience will support a smooth and seamless transition.

In addition, Daniel Widera, our General Counsel and Joint Company Secretary, will become Codan's sole Company Secretary upon Michael's retirement. Michael will remain with the business for a structured 12-month transition period from August to ensure continuity and stability.

Before we begin, please take a moment to review our standard notice and disclaimer. Today, we'll begin with our H1 FY '26 performance highlights, followed by a detailed review of each of our segments being Communications and Metal Detection. We also highlight 2 products that contributed meaningfully during the half, demonstrating how our engineering investment is translating into commercial outcomes. We'll then revisit our strategy and near-term priorities before closing with our outlook for the remainder of FY '26.

Following our remarks, we'll move on to a live Q&A session, which will be hosted by Sam Wells from NWR. While Michael and I are working through the slides, you are welcome to submit written questions at any time [Operator Instructions]

For those newer to Codan, we're a global group of technology businesses focused on critical communications and detection. Our technologies are designed for mission-critical environments, keeping people connected, informed and safe in demanding and often remote conditions. We operate across defense, public safety, gold detection and recreational markets, supported by a global footprint and strong engineering capability. At our core, we focus on reliability, performance and long-term customer relationships, particularly in environments where failure is not an option.

Our strategy to build a stronger Codan remains consistent and disciplined. It is underpinned by sustainable organic growth, targeted and accretive acquisitions and continued engineering investment and strong operational execution. Diversification remains a key strength with Minelab delivering a strong cyclical performance and Communications positioned for structural long-term expansion driven by defense and public safety demands. Over time, this approach is building a more resilient and diversified earnings base with improved visibility and quality.

At a high level, our H1 results reflect consistent delivery against our strategic plan, underpinned by disciplined execution and favorable market conditions in several key regions. Communications delivered another period of consistent and high-quality growth, supported by strong defense demand and the integration of Kagwerks. Metal Detection delivered exceptional performance, particularly in Africa, where elevated gold prices supported demand. Importantly, this performance was achieved while continuing to invest in engineering, systems and people, ensuring that our growth remains sustainable and repeatable over the longer term.

Turning to the numbers. Group revenue increased by 29% to $394 million, reflecting strong organic growth and a full first half contribution from Kagwerks. EBIT increased by 52% and NPAT increased by 55% to $71 million, demonstrating strong operating leverage across the group. This reflects both revenue growth and improved product mix, particularly within Minelab. The Board declared a fully franked interim dividend of $0.195 per share, up 56% on the prior corresponding period, consistent with our disciplined capital management approach.

I will now hand over to Michael to step through the financial detail.

Thanks, Alf, and thanks for the kind words at the start of your presentation. Also, I'd just like to thank you for your support of the succession plan to Kayi and Daniel, much appreciated. And thank you for making the time under your leadership so enjoyable and so successful.

On to the numbers. So as highlighted, group revenue increased 29% during the half and pleasingly, the growth came from both our Communications and Metal Detection businesses. Our gross margins increased 58% and all profitability metrics were increased. Operating expenses increased primarily due to a targeted investment in shared services, higher performance-linked expenses, which are reflective of our strong results, product launch costs and the integration of Kagwerks for the full period.

Tax expense was slightly higher at 25% with more of our increased Metal Detection profits taxed here in Australia. NPAT margin improved to over 18%, reflecting improved profitability and operating leverage. We continue to actively manage our foreign exchange exposure through our hedging program with contracts in place to mitigate approximately half of the expected USD exposure in the second half. Overall, the financial result reflects both strong performance and continued investment in capability.

We closed the half with net debt of $88 million, an increase of $10 million compared to June, largely reflecting working capital investment to support growth and our increased activity levels. Leverage remains conservative at 0.4x EBITDA. With an undrawn debt facility of $140 million as well as an additional $150 million accordion capacity, we retain significant financial flexibility to pursue inorganic growth opportunities.

This slide illustrates the key drivers of our net debt movement during the half, including the investment in operating cash flow into working capital to drive growth, our dividend payments and continued investment in our engineering programs. Engineering investment during the half was $36 million, representing approximately 9% of Group revenue. This level of investment is consistent with our long-term approach and supports product development pipelines across both Communications and Metal Detection.

In Communications, investment is focused on advanced tactical platforms, next-generation waveforms and public safety applications. In Minelab, investment continues to support our product refresh cycles and our technology leadership. This sustained commitment to innovation underpins our organic growth trajectory.

And back to you, Alf, to take a closer look at our business units.

Thanks, Michael. We'll now move on to the business units. Communications revenue increased by 19% to $222 million. Segment profit increased 17% to $58 million, with margins broadly stable at 26% as we integrate Kagwerks and manage the challenging trading period in Zetron Americas. The orderbook increased by 19% to $294 million at the 31st of December, providing strong revenue visibility into H2 and beyond. We remain focused on progressing Communications margins towards our 30% target by FY '27 as integration benefits and scale efficiencies materialize.

DTC delivered strong growth, supported by defense demand and increased adoption of our unmanned system solutions. Revenue from unmanned systems increased 68% to $73 million. Approximately half of this unmanned revenue during the period related to operational defense application in conflict zones with the balance being driven by adoption of our technologies across non-conflict defense and security programs in Asia, the U.S. and Europe. Importantly, growth rates across both conflict and non-conflict markets were broadly consistent, reinforcing the structural expansion of the unmanned systems market.

Kagwerks contributed in-line with expectations and continues to integrate effectively, enhancing our position within U.S. military programs and strengthening our ecosystem offering. Our presence across the U.K., U.S. and Australia positions us well to capture long-term defense program across allied markets.

The BluSDR contributed meaningfully during the half and represents a strong example of our engineering capability translating into commercial success. It is an ultra-lightweight, high-performance software-defined radio platform designed for long-range, secure connectivity across unmanned and mobile applications and has proven particularly well suited for drone-based deployments. Its technical characteristics, including high output power, mesh networking capability and low size, weight and power reinforces DTC's competitive positioning in mission-critical communications.

Trading conditions for Zetron Americas were temporarily impacted by slower procurement cycles across the state and local agencies that we serve, which extended sales cycles and deferred order timing during the half. Early indications in the second half of the year are encouraging with trading conditions showing signs of improvement as funding approvals progress. Outside the Americas, EMEA and APAC markets delivered stable performance. We continue to invest in next-generation 911 capability and the SALUS platform to enhance recurring revenue streams and strengthen long-term customer retention.

Minelab's first half results were exceptional, with revenue up 46% versus prior corresponding period to $168 million. Segment margin expanded to 45%, reflecting a higher mix of gold detector sales and improved operating leverage. Africa delivered exceptional performance, supported by elevated gold prices and strong demand across West Africa. Rest of the world delivered high teens growth, which is an excellent result, reflecting continued strength across key recreational markets. Rest of world performance was supported by product innovation, retail expansion and the ongoing development of our direct-to-consumer platforms. This performance highlights both cyclical tailwinds and structural improvements in the business model.

During H1, we launched the Gold Monster 2000. It delivers enhanced sensitivity to ultrafine gold and improved depth and accuracy in mineralized ground, critical attributes in many of our core gold markets. Early customer feedback has been positive, supporting continued momentum as distribution scales up.

Now I'd like to move on to the strategy update section of today's presentation. Our strategy remains anchored in 3 core pillars: first, investing in ourselves, strengthening systems, process, people and product innovation; secondly, strengthening our core businesses, which means expanding addressable markets, improving revenue quality and increasing reoccurring revenue components; and thirdly, disciplined capital allocation, where we pursue strategically aligned and accretive acquisitions that enhance capability, scale and market penetration. Together, these pillars support sustainable, diversified earnings growth.

In DTC, we are expanding towards a full system solution provider model, continuing investment in the next generation of waveforms and ecosystem integrations.

In Zetron, we are focused on increasing reoccurring service revenue and expanding support contracts and also advancing next-generation command and control platforms.

And in Minelab, we continue product innovation, retail footprint expansion and channel development with another new detector scheduled for release shortly. These initiatives support both near-term performance and long-term structural improvement.

Now turning to our summary and outlook on Slide 23. Tying today's presentation together, market conditions remain positive in both Communications and Metal Detection, reflecting the diversified nature of the Group's portfolio and the quality of our business. Codan's strategy is to continue to invest in engineering programs to maintain product and technology leadership and to underpin long-term growth.

In Communications, elevated defense spending and ongoing geopolitical tensions globally continue to generate strong demand for our unmanned systems products. Communications is on track to deliver FY '26 revenue growth within a 15% to 20% target range, supported by strong underlying demand and the full year contribution from Kagwerks.

Minelab revenue in the second half of FY '26 to date is tracking in line with the strong first half performance. Based on Minelab's current trading conditions, we expect the second half performance to be at least in line with the first half, supported by favorable gold market conditions and a full 6-month contribution from recent product releases.

With balance sheet capacity and a disciplined approach to capital allocation, Codan remains well-positioned to continue investment in the business and pursue future acquisitions that fit our product and technology road maps, which enhance the quality, resilience and the diversification of our earnings. The company will continue to keep shareholders updated as FY '26 progresses.

Back to you, Sam.

As a reminder, the audience may ask questions to the management team. [Operator Instructions] There are a few pre-submitted questions, so I'll kick off with those before getting to the analysts.

Firstly, just on Communications margins. You've talked about the moderating pace of margin expansion within Communications. Can you elaborate on the path from current margins to the 30% target by the end of FY '26?

Yes. Thanks, Sam. Yes, remain -- we've been very consistent that we remain focused on margin expansion. We did improve organically in the half, which was good. And we've been really consistent also on our revenue expectations for Communications, the 15% to 20% range remains the focus. As we deliver that and we see further revenue growth to be within that range in the second half, we would expect to see more improvement at the margin line as well.

And on Zetron, can you elaborate on the early encouraging signs in trading conditions in the Americas business? And are there any meaningful near-term opportunities specifically in the U.S.?

Yes. I think we posted a really pleasing increase in our order book at the half. So quite -- I think we're up 16% versus June, 19% versus last December. So we do go into the second half of this year with a stronger order book than what we entered the first half. So that's pleasing and sets us up to be within that 15% to 20% range that I mentioned. And I think we're also seeing -- while not yet in the order book, we are seeing some increased activity in the pipeline also in the U.S. market, public safety market for us.

And on Minelab Africa, an exceptional set of numbers within the Minelab business. How should we think about the sustainability of this performance, particularly in the context of 45% segment profit?

I think when you're looking at Minelab, I don't want to make it just an African discussion. We had a rest of the world high teens growth rate, really reflecting great execution from the Minelab team at a distribution, e-com level and direct-to-customer approach and new releases of great product. And then when you look at Africa, obviously, the gold price has been a tailwind for Minelab and then our great products have been a tailwind for Minelab. So the 45% is an exceptional number in its own right, and we believe it's maintainable in the future.

And just moving to unmanned. You printed some extraordinary numbers within the unmanned business. Can you help us understand how sustainable these opportunities are, particularly within the defense landscape?

Yes, it's really interesting. If you wind back 12 months, 18 months throughout these calls, we've referred to an unmanned market growing at 30% per annum globally. This is just increasing. The environment and the ecosystems in defense are very different today than they were previously. Our solutions back right into those unmanned platforms. And our ability to perform in conflicted environments well has really created a halo effect into other markets, hence, highlighting the success of the BluSDR-90, which was really born over the last 18 months through very high exposure to very conflicted environments. So we think the unmanned space over time will continue to be a significant tailwind for Codan.

Got you. And just shifting to some of those non-conflict opportunities you referenced in the presentation. Can you just elaborate on those? And where are the bulk of the revenues coming from in terms of specific applications?

Yes. So I won't talk about the specific applications. I'll talk more about the market -- the geographic markets that we are looking at. So if you look at, we did call out, we've started to see some positive work in the U.S., positive work in APAC, positive work in Europe. So if they're not in a conflicted environment at the moment, they're probably preparing for pre-conflict, I would say. So -- and again, let's take a step back and just reflect on the technology that we put in market, and that technology fundamentally is selling itself in these other markets at the moment.

Great. We'll move across to some of the analysts. First question comes from Josh Kannourakis at Barrenjoey.

First, congrats, Michael, and wishing you all the best on the transition of your new steps and congrats to Kayi as well on the step-change in role. Good to see.

Just jumping on to the first question just around regional exposure. So you did mention a bit of a step-up in terms of activity in the U.S. I know there's a lot of hoops to jump through in terms of getting into those programs and historically comms being dominated by a couple of those big local players. Is that a new incremental thing? Can you just give us some more detail on how recent that is? And maybe just specifically around the U.S., what you think the opportunity is across the broader comms space? And then obviously, specifically, unmanned as well?

Yes. I think when we look at comms in the U.S., we probably look at the dismounted soldier solution within the Kagwerks acquisitions and the unmanned solution giving us some good dialogue with potential U.S. customers. So there's a lot of -- as always, with these platforms, they're not plug-and-play. They are plug significant testing and evaluation and then you get an order. So we are comfortable that we're having the right dialogue with the right organizations, either at a defense department level or Tier 1s into the defense department. So that is positive.

The other areas that we're actually having positive traction is APAC, and I won't go into the specific countries, but also there's been an uptick in European defense spend, and there's been some sort of shadowing of that application of that funding into unmanned systems and the DTC product category itself.

Got it. That's really helpful, Alf. And just in terms of -- so just to understand it within the U.S. specifically because I guess my understanding was more that a lot of your volumes and things historically have been outside of that region. So you're sort of from a military perspective, within the sort of evaluation phase at the moment for that. So that's probably in terms of potential upside, that's significant if you can get through that. And -- but then on the other side, you're seeing traction in some of the nonmilitary sort of settings also. Is that the way to sort of read it through?

Yes, that's right. If you look at what we've seen over the last couple of months, we've been heavily involved in the border with our communications. So that's with government departments, not defense related. We are also heavily working with other sort of peripheral government departments in the U.S. that require our solution that in some ways, isn't defense related, it's more public safety related in theory, keeping the American public safe. So yes, and that's a great thing with the product categories. We can actually put it into dismounted soldier solutions, unmanned solutions, public safety solutions.

Great. And just in terms -- I know you don't want to go into specific countries for obvious regions, but there's been some very large funding packages allocated to areas like Taiwan and in that sort of region. There's also a lot more flagged in terms of progressive step-up. How early in the journey do you think you are? Are you sort of -- do you have the right connectivity in place to capture what will obviously be a significant step-up in this broader region?

I would suggest, as we've said in the U.S., we are all part of the right conversations happening in APAC and EMEA being Europe. So yes, we're definitely having the right discussions with the right levels of people.

Awesome. Final one from me. Just on M&A. I mean, obviously, it's been a pretty tumultuous environment across the software space. Defense on the other side has obviously has been a lot more favorable in terms of all the trends you've talked about. Can you maybe just talk about when you're thinking about it now the lens, how you're sort of seeing that in terms of the opportunities within both maybe comms and -- within comms within the tactical side, but also Zetron, especially with some of the potential in software, the AI-related disruption as well.

Yes. I think when you look at Codan and you look at our comms, the good thing we make products with software on it. So the -- any AI application is just an enhancements to the product and the end user, and that's how we actually see that. But we have pipelines of M&A targets. As you clearly mentioned, in the defense world, it's pretty hot at the moment. Multiples are far higher than we've seen in the past. People on the line would clearly know that we are very prudent when it comes to acquisitions about multiple and accretion levels. So we've been involved in processes. Some have worked. And then as in the past and the ones that we've been unfortunate on has been really the fact that we didn't believe we could extract the right value for it. But the process continues. We've invested heavily in structure at Codan. So we've got the right people working on it. We're looking heavily on how to enhance our technology road maps and our market positioning.

So it's definitely a space where you just need to continue to be active in and ensure that you buy well and you can extract value for the future. So that's where we're at, Josh.

Next question comes from Mitch Sonogan at Macquarie.

And yes, congratulations to you, Michael and also Kayi as well. Just echoing Josh's comments. Just the first one, just on the outlook for Metal Detection or Minelab second half revenue to be at least in line with the strong first half. Just trying to get a little bit more color on that because obviously, you had pretty strong sequential growth. You've got, as you said, good gold conditions in that market and also still benefiting from new product releases. So just trying to understand what sort of visibility you have at the moment, how we should think about the second half potential upside risks.

Yes. Well, it's interesting if we talk about Minelab, that's probably the first time we've actually ever given a forward-looking number in Minelab. So yes, we've had a strong first half, right? We've got a lot of tailwinds either from a gold perspective -- gold price perspective, new product introduction, great performance in recreational. We sit here today, and we never comment on seasonality in Africa because we don't know. So we're not going to be a fact-based about that. But we do sit here today that we're saying there's the same tailwinds that existed in H1 exist in H2. And so I guess that's what our commentary was about, so okay?

Yes. And just in terms of -- obviously, you called out Africa being quite strong. But do you mind just giving a bit more color on other regions where you might have seen some big outperformance and other areas that you are more positive on the next 6 to 12 months as well?

Yes. I think I'll call out Australia. I think our work we've done in Australia has been exceptional on repositioning the way we go to market, big tick, some great work in APAC, big tick, LatAm, big tick. And then you've got Africa and Europe. We have been consistent in our approach either at a recreational level with e-comm, the marketplaces, the distribution point increases and new product introductions. So when I look at Minelab, it's very hard to fault anything they're doing in any market at the moment. And the most important thing is I'm as excited as with the gold detection and the gold sales as I am with the rest of the world sales because that high teens growth in a fairly flat consumer market is fantastic. So it just shows that where we're spending our money away from product development, it's working.

Next question comes from Evan Karatzas at UBS.

Just can we dive into Zetron a bit here. One of your larger competitors, Motorola, I mean they've been delivering some pretty consistent strong growth over recent quarters to their command center business. Can you maybe just speak to why you think there's such a discrepancy there to what you've seen in the U.S.? And anything you can, I guess, elaborate on around that order book for Zetron explicitly and how that's changed relative to 6 months ago, how you entered the year as well?

Yes. Good question. I think when you look at Motorola in the command and control space and you look at us, I don't think we're comparing apples-to-apples consistently on product offering. There's probably a bit more rolled up in that space of Motorola.

And secondly, they're a Tier 1, Tier 2 player. We're a Tier 3, Tier 4 player. The way the funding and the grants work for Tier 3, Tier 4 are slightly different than they are in Tier 1, Tier 2. So -- and I think we also need to analyze Zetron over the last 4 years of Codan ownership, it's been well above market growth rate. So it's been an amazing acquisition for Codan.

And so looking forward, what are we seeing in January, Feb when you -- just going further to what Michael said, yes, orders are being unlocked, so that they're pushing into the order book. There's far more activity in the pipeline. So the activity levels have come up from H1. It's a financial year. I think let's have a chat at the end of H2 and where these orders have rolled through. And let's not get away from the fact that we have entered H2 with an order book that is higher than most times. So that's the marketplace that public safety, it is.

Also, let's not -- also let's understand the fact that we've been doing well in APAC and EMEA as well from a Zetron perspective, so.

Yes. Okay. No, all fair points. And just sort of coming back around to the DTC, the tactical comms, just around those investments you've been making, especially for contested environment, some of those new product releases, have they now been released into market? And then you can talk to about how early take-up or reception has been? And then also how that helps when you spoke about from a strategic sense with that expansion into your other growth regions like North America, Europe, Asia as well?

Yes. From a product perspective, I think the DTC product category is quite set. The feature content involves from market feedback. And that's the sort of the strength that we've had. We've been able to feed back those technical requirements from the field back into our product really quickly, either enhancing current product or creating new product like the SDR-90. So at the moment, we're heavily focused on feature content for the SDR range. And also we're heavily focused on feature content for the Kagwerks range as well. So probably less form factor changes, but more on feature content for the environment that these products work in.

We might just move on to the next question, please, from Tom Tweedie at Moelis.

Just the first one on Kagwerks. Are you able to give us a sense of the revenue contribution for the half for that business? And also just the color on the pipeline for program of record RFPs?

Yes. If I'd just give you the revenue range when we acquired that business, I think we were expecting high $40s million revenues into the low 50s. And I think we've commented, Tom, that it's been -- it's met our expectations. So it's been in that range over its first, what, 13 months of ownership. And Alf, do you want to talk about pipeline?

Yes. So when you look at, we've been heavily invested in supplying the Nett Warrior program, doing some international BD on other Army opportunities that we're looking at. I think what I've seen, which is very pleasing for us from a Kagwerks perspective is there's an evolution of movement from the standard DOCK Lite product, which is the base version to the DOCK Ultra product, which is the version with the radio and the AI technology and the edge computing technology. So that's what we're seeing happening in the Nett Warrior program itself. So that is significantly positive for us. And then like everything, we'll just keep doing the BD efforts with the other defense opportunities in the U.S. and internationally.

Very helpful. Just on Minelab and that side of the business, you called out detector launches. In the release, you've also mentioned one new detector to launch shortly. Just stepping back, can you remind us what the expectations are in the pipeline there over, say, the next 12-18 months for further models to come to market?

Yes. So we've released already an upgraded recreational detector, a new countermine detector and obviously, the Gold Monster 2000, great launches, great tech, keep moving forward. We've got a high, high-end gold detector coming out in the next couple of weeks, which is the GPZ, GPX range updates first time in almost a decade. So it will be -- it's probably anxiously being awaited by the users globally.

Post that, the Minelab team has a road map on enhancing detection out 12 to 18-24 months. So -- and that's across recreational and gold and countermine, which is really the key areas. So there's no shortage of ideas from our Minelab. They are very good at creating products that exceptionally -- work exceptionally well in market. So like we always say, our ability to move that IP from an idea to a product is really the Codan superpower.

Awesome. And then one final one. You made a comment earlier around the distribution for Gold Monster 2000 still expanding. Are you able to give us a sense of -- is that in terms of key markets that you've still yet to properly launch the detector in? Or is there still more distribution to go in the second half? Can you give us a sense of what that comment related to?

Yes. I think that comment relates to launching a product. When you launch a product, we launched at the back probably in middle of Q2. So you're just ramping up supply chains, you're ramping up product to get into market. So at the moment, we're just in the ramp-up stage of Gold Monster 2000. So the scale up is to -- you just scale up production over time and you get into the supply chain into your customer base as more markets. And that's what that comment is about. So we are well on the way now, and that will continue over the next 12 to 18 months, I would suggest.

Next live question comes from Cam Bell at Canaccord.

Just a couple of quick questions. So the Metal Detection comments you gave in the second half, flat revenue. Is it fair to say that with flat revenue, we can expect similar margins in the second half?

I think, Sam (sic) [ Cam ], we used the words at least rather than flat. So yes, in terms of the commentary on H2. At these revenue levels, we think 45% contribution margin out of Minelab is outstanding. We don't -- at these revenue levels, that would remain our expectation. I think it's fair to say at this level of revenue and that level of profitability, we are looking to reinvest in that business to continue the revenue growth that we've seen. So 45%, if that's what the contribution margin is in H2, that would be a fantastic result.

Yes. Okay. I might stick with just 2 quick ones for you, Michael, to continue off on those. You might not miss these style of questions in a few months' time. Last half, you had a bunch of M&A costs unallocated. Is it fair to say there were some of those semi potentially nonrecurring M&A costs in this half?

Yes, probably not to the same extent. But yes, we did have M&A activity and ongoing integration costs across the business. We don't really call them out as one-off, Cam, because the business continues to evolve, and we continue to invest in different areas of the business to improve what we do. So the costs we've incurred in the first half is a fair representation of that cost base going forward.

Okay. Sure. And then just last one for me. Is 25% tax rate the new norm?

Yes. I think with this mix of product, then yes, we're going to be in the mid-20s, whether it's 24%, 25%. But yes, I think we're in that range. Our Minelab business performing at this level, highly profitable. All that IP is generated here in Australia. We pay all of our -- majority of our Minelab taxes here in Australia at $0.30. So that caused that rate just to go up a percentage point or 2.

Okay. Great. And congratulations, Michael, on everything you've achieved over the last 22 years.

22 years, yes. Thanks, Cam.

And maybe just one last question here from James Lennon at Petra. Can we expect Codan's typical seasonal movement in working capital to repeat in FY '26, i.e., a wind down of working capital as the financial year progresses?

Yes. Historically, that has been the case, Sam. Look, we have had an increase in working capital over the first half. A lot of that was just activity related and the timing of that activity. So -- and we've had a really strong start to the year, the second half, a really strong start from a cash collection point of view. So some of that has unwound to start the second half. So yes.

And just one final question. What is DTC and Zetron revenue for the half? And would you consider disclosing DTC and Zetron revenue going forward?

I think we get asked that question a lot. And I think when we did the full year presentation for '25, we started talking about public safety ecosystems, defense ecosystems, unmanned, how it all comes together. If you see here today as Codan compared to 4 years ago, our Comms divisions are converging with the products that we have and how they work in market, right?

So I guess a short answer to that is that we probably won't because a lot of our thinking is around public safety, which is heavily linked to Zetron, but there is creeping in on DTC products for that as that ecosystem evolves and not dissimilar to the defense ecosystem where you have unmanned systems, you have dismounted soldier solutions and you've got our standard core products in HF. So I guess the answer is that I see more converging rather than diverging today than I did probably 4 years ago.

Okay. Great. Thank you. We're just going through the hour. So I think that's all the time we have for live Q&A. If there are any follow-ups or unanswered questions, please feel free to reach out to us directly. And maybe with that, I'll just pass it back to you, Alf and Michael, for any closing comments.

Yes. Thanks, Sam. First, I'd just like to thank everyone for joining us today and the continued support you have for Codan as an organization. I think today, it just continually demonstrates our consistent approach in running Codan, our consistent strategy, our investment in product development, our investment in people and processes. We've actually steered into very good markets through M&A. So we sit here today, highly confident in our strategy, highly confident on our skills and execution and delivery and above all, that consistent approach. So I'd just like to thank everybody and we'll provide updates as we see fit for the rest of H2.

Great. Thank you very much for joining today's Codan's First Half FY '26 Results Call. Enjoy the rest of your day. Thank you, and good-bye.

Good morning. Good morning, ladies and gentlemen. My name is Graeme Barclay, and I am the Chair of your company. We acknowledge the Kaurna people of the Adelaide Plains as the traditional custodians of the land we are meeting on today. We pay our respects to Elders past and present and recognized the enduring connection of Aboriginal and [ Torres trader ] Peoples to country.

As Chair of this meeting and on behalf of my fellow directors, I'm pleased to welcome you to the 2025 Annual General Meeting of Codan Limited. It's just after 11:00 a.m. and as a quorum is present, I declare the meeting open.

Today's meeting is a hybrid meeting in addition to the company representatives and shareholders present, in the room with us here at the drive, shareholders, proxy holders and guests can participate in the meeting virtually via Computershare's online virtual meeting platform. Virtual attendees can watch a live webcast of the meeting, and shareholders and proxy holders can ask questions and submit votes. As previously mentioned, my name is Graeme Barclay, and I became the Chair of your company on the first of February 2023. It's my pleasure to introduce the current Board of Directors of Codan to you, and I will ask each director to acknowledge or put their hand up as I introduce them.

Firstly, I'd like to introduce Kathy Gramp. Kathy was appointed to the Codan board in November 2015, and and as Chair of the Audit and Risk Committee and a member of the Remuneration and Nomination Committee. Next, I'd like to introduce Sarah Adam-Gedge who was appointed on first of February 2023 and and as a member of the Audit and Risk Committee. Sarah is retiring by rotation in accordance with the company's constitution and is standing for reelection.

Next, I'd like to introduce Heith MacKay-Cruise, who was appointed on the first of March 2023 and as a member of the Remuneration and Nomination Committee. Finally, our Managing Director and CEO, Alf Ianniello, who joined the Board in January 2022.

We're also joined by Michael Barton, who will act as the Company Secretary for this meeting. Michael was appointed to the position of CFO and Company Secretary in September 2009. I I've asked Michael to address some of the administrative matters in relation to voting procedures for today's meeting and to read out any shareholder questions that we received prior to or during today's meeting. And I'll ask him to do that at the appropriate time.

You will note the slide displays to those attending virtually how to ask a question and how to vote on the virtual platform. Technical difficulties could arise during the meeting. And I note that I have the discretion to determine whether and how the meeting should proceed if we experience such technical issues. If I have to exercise this discretion, I will have regard to the number of shareholders impacted and the extent to which participation in the business of the meeting is affected.

I now declare voting on all items of business to be open.

[Voting]

The vote icon will soon appear for those voting online. You may submit your votes at any time. I appoint Nigel Bulling of Computershare Investor Services to be the returning officer and to conduct the poll. As outlined in the notice of meeting, where your directors are able to express a view on resolutions, your Board strongly recommends that shareholders vote for the resolutions. The notice of meeting and explanatory memorandum was distributed to all shareholders on the 19th of September 2025, and I propose to take them as read.

The format for today's meeting is an address from myself as Chair an address from our CEO on Codan strategy, financial performance in FY '25 and year-to-date and the near-term outlook. We'll then move to the formal resolutions to be voted on at the meeting following which there will be an opportunity for shareholders to ask general questions. Proxies have been received from 415 members, representing over 75% of the company's voting shares. These will be reported to the ASX for each resolution. As we get to each of the resolutions and prior to shareholders being asked to cast their votes, the proxy votes will be displayed on the overhead screens for members information.

Before Alf address, I'd like to take a few minutes to reflect on the progress that Codan has made over the past 12 months and how the 2026 financial year is shaping up so far. As I said, I extend a warm welcome to all shareholders attending today's meeting, and I consider it a privilege to be the Chair of your company. The FY '25 year has been another successful year for Codan, achieving 22% growth in group revenues 28% growth in group EBIT and 27% growth in group NPAT, net profit after tax. Each of our businesses contributed to the improved financial performance in the past 12 months.

Our communications business comprising Zetron and DTC grew revenues to $413 million, up 26% on the prior year and grew segment profit to $108 million. Importantly, segment profit margins improved to 27%, up from 25% in the prior year as revenue scaled and cash generation also improved. Assisting the group's net leverage position at year-end. The closing order book increased to $253 million, up 28% over the prior period order book of $197 million which is a strong lead indicator of continuing growth for the current FY '26 year.

With the successful acquisition of Kagwerks in FY '25, together with the investment in sales and engineering capability, at both DTC and Kagwerks during FY '25, we continue to see significant opportunity for these businesses to grow, both organically and inorganically in FY '26.

Our Minelab business achieved a 16% increase in aggregate revenue to $254.8 million achieved organically with segment profit growing 26% to $98 million and segment margins improving to 39%, up from 35% in the prior year, reflecting the higher margins achieved on gold detectors and the operational leverage this business has as revenue scales. Supported by the high gold price, which has continued into FY '26, Minelab Africa had a strong year booking a 64% increase in revenue to $115 million, reflecting broad demand across the region other than from [ Sudan ], which remains largely disrupted. We were pleased Minelab rest of World revenues exceeded FY '24 levels in a challenging consumer market, reflecting extension in both our retail distribution and e-commerce channels. Countermine's performance was below what was achieved in FY '24 as global funding for humanitarian projects became tighter.

And this prompted us to plan to reposition our product development efforts towards military applications. We remain committed to our clearly articulated 3-pillar strategy. invest in ourselves, strengthen our core business and disciplined capital allocation. Pillar 1 is to invest in ourselves by continuing to build business development, engineering, development and operational capability around the globe so that we are well positioned to win new business in large growing addressable target markets. Pillar 2 is to strengthen our core businesses. through sustained engineering investment in product development to maintain our competitive position across all segments remains core to Codan success. And we have a pipeline of new product development projects underway in each of Minelab, DTC and Zetron. Minelab has 4 new detectors scheduled for release during the current year, which will have a positive impact on FY '26 revenues although the full year benefit of these releases will not be seen until FY '27.

Pillar 3 is to diversify earnings and create value through the allocation of capital to inorganic growth of the communications business, which has worked well to date and remains an important focus for FY '26. During FY '25, we successfully completed the Kagwerks acquisition in line with our strategy, which expanded our relevance in the U.S. defense ecosystem and enabled access to the funded net warrior program of record. We've been clear that where we identify acquisition opportunities that allow us to expand our addressable markets. Our cost effectively accelerate differentiated product development or fill technology gaps or that provide complementary technologies and capabilities we will continue to pursue these opportunities where we believe the outcome will be accretive for shareholders.

With net debt at $78.3 million at 30 June, we have a low debt-to-EBITDA ratio of less than 0.5x. Recently renewed banking facilities of $250 million plus $150 million accordion capacity subject to approval provides us with the financial flexibility to pursue small- to medium-sized on-strategy acquisition opportunities as they are identified. FY '25 has been an excellent year for Codan shareholders with EPS growing by 27% and dividends per share also growing by 27% compared to the prior year. In addition, Codan's share price has risen more than 2.5x from $12.03 at 30 June 2024 to $34 being the closing share price yesterday. And the market capitalization of your company is now approximately $6.1 billion.

So turning to executive remuneration. And there are a couple of resolutions on the resolution list today in relation to this. The remuneration structure and outcomes for FY '25 are set out in detail in the remuneration report. You will note that we have continued to make changes to the remuneration structure to motivate the executive team to achieve superior performance with an equity-based superior performance incentive scheme for our CEO and executive team, which we introduced in FY '25 to further align their remuneration to shareholder outcomes. For FY '26, we've increased the EPS compound annual growth targets by an additional 3% per annum for the LTI and SPI schemes. The SPI scheme -- superior performance incentive scheme [indiscernible] greater than 24% at the top end of the range for the FY '25 to FY '27 period. We see this very close alignment of executive reward -- executive reward with shareholder returns is an important principle that we'll continue to guide how your board structures executive remuneration. The outstanding results we have achieved in FY '25 don't just happen. They are the collective outcome of all of the excellent work done by more than 1,000 employees globally.

And on behalf of the Board and myself, I thank the Codan executive team led very effectively by Alf and all Codan employees around the world. For their efforts and contribution during FY '25 and the FY '26 year-to-date to building a stronger Codan.

Thank you to my Board colleagues for their hard work wisdom and collegiate approach. And finally, to our shareholders, we appreciate you have a choice how and where you invest. And we thank you for your continuing support of an investment in Codan.

Please now welcome your Managing Director for his address.

Good morning, ladies and gentlemen, It's a pleasure to welcome you to the 2025 Codan Annual General Meeting, my fourth as the CEO. I'm pleased to see so many familiar faces here in person, and I also extend a warm welcome for those joining us online. Thank you for your continued support and engagement with Codan. Your presence today reflects the strong interest and commitment of our shareholders in the company's future. And I appreciate the opportunity to share Codan's progress and outlook. FY '25 was another strong performance for Codan. In what remains a challenging global environment, our teams executed with discipline and focus and delivering record results.

At a group level, revenue grew 22% with net profit after tax up 27%, achieved alongside improved cash generation and disciplined capital allocation. Communication was the standout performer, delivering 26% revenue growth with segment profit up 34%. Defense is now 38% of communications revenue, reflecting our continued focus on long-term high-value markets such as unmanned systems and soldier worn technologies. Our order book grew 28%, providing a strong foundation heading into FY '20. Minelab also delivered a strong year, revenue up 16%, with segment profit margins increasing to 39%. Particularly pleasing was the growth in Africa, where revenues exceeded $115 million, up 64%, supported by strong demand and favorable conditions in key artisanal gold markets. Looking ahead, 4 new product launches are scheduled in FY '26, really positioning Mine lab for another exciting year of growth. We declared a fully franked dividend of [ $28.05 ] increase of 27% over last year, reflecting both the strength of our results and our confidence in the future. Our strategy remains clear. Building a stronger Codan through sustainable growth, disciplined acquisitions and continued investment in innovation and people. The group continues to focus on areas where Codan can differentiate and lead. Strengthening our foundations in communications, accelerating Minelab's product leadership and investing in systems, people and culture that allow us to scale sustainably.

During FY '25, Codan completed the acquisition of Kagwerks, a U.S.-based leader in operator warn soldier systems. Integration into DCC is progressing well and Kagwerks provides access to the net Warrior program of record, further strengthening our U.S. defense ecosystem. Together with DTC's tactical mesh networking and Zetron's Commander control solutions, Codan now is positioned as a full system provider in defense and public safety communications. This acquisition exemplifies Codan's disciplined approach to strategic growth -- it's targeted capability enhancing and aligned with long-term customer needs. Beyond acquisitions, Codan invested approximately $69 million in engineering across its 3 businesses. Representing around 10% of group revenues. This investment ensures that the group remains at the forefront of innovation and product development supporting long-term competitiveness. Importantly, our investment is increasingly directed towards future technologies, multi-waveform radios, AI-enabled soldier systems, next-generation commander control platforms and a new range of metal detectors.

These capabilities not only expand our addressable market opportunities, they deepen customer relationships by embedding Codan more directly into mission-critical operations. Codan also took important steps to enhance organizational scalability. The appointment of Peter [indiscernible] as group Chief Operating Officer, is strengthening operational execution across our businesses and advancing our IT and AI initiatives. These changes ensure Codan remains agile and resilient while maintaining the discipline and efficiency that underpin sustainable shareholder value growth. Codan is proud of its progress in sustainability, governance and culture during FY '25.

On the environment, Codan has established systems to measure scope 1, 2 and 3 emissions. Ensuring that future targets are both ambitious and credible. Codan is taking a measured approach, building robust data and capability before setting long-term commitments that are operationally achievable. On the social front, Codan continues to support education, innovation and community initiatives from scholarships and STEM programs to global kit cleanup efforts. Our long-standing involvement in initiatives such as the variety Bash, along with new programs such as Codan's multiyear indigenous scholarships and targeted SEM opportunities reflect our commitment to the community where we operate.

Codan success continues to be underpinned by its values, customer focus, trust, high performance and [ can do ] attitude. These values guide how our teams operate how we engage with our customers and how we deliver on our commitments. They remain central to Codan's culture and provide the foundation for sustained performance and long-term value creation. So moving to the outlook. The conditions observed at the 30th of June 2025 have largely continued into FY '26, supporting Codan's growth outlook across both Communications and Minelab elevated defense spending and ongoing geopolitical tensions continue to support demand across our Communications markets. The business remains on track to deliver 15% to 20% revenue growth for FY '26, with first half growth expected at the upper end of this range. Noting that the first half of FY '25 included Kagwerks for only one month following the acquisition. Zetron's business in the U.S. continues to be affected by government shutdown and funding delays. In September 2025, Codan received purchase orders under the Nett Warrior program the Kagwerks totaling approximately $24.5 million. With delivery scheduled across both the first and second halves of FY '26. These will contribute to overall divisional growth throughout the whole year. Sustained growth in the gold price continues to support Minelab with demand for gold detectors in Africa running above what was seen in the second half of FY '25.

As a result, Minelab's overall revenues for the first quarter of FY '26 have exceeded the monthly average achieved in FY '25 by 16%. While revenues in Africa are typically weighted to the second half, it's too early to determine whether that same seasonality were core this year. With continued balance sheet capacity, our renewed $250 million debt facility and a disciplined approach to capital allocation. Codan remains well positioned to continue investing in the business. And pursue future acquisitions that enhance the quality and predictability of our revenues.

In closing, FY '25, was a year of strong delivery for Codan underpinned by the dedication of our people. I would like to thank our employees around the world for their commitment our executive leadership team for their strategic vision and our shareholders for your continued trust and support. Together, we are building a stronger Codan, one that is diversified, innovative and well positioned for sustained growth. Thank you.

Many thanks, Alf. So let's turn to the formal business of the meeting. So before moving on to the various resolutions, I'm going to ask Michael to briefly run through the voting procedure.

Thanks, Graeme. There's 2 options available for shareholders today. Firstly, if you're voting in person, shareholders were given a blue or pink admission card when they registered for the meeting. The pink card being issued to joint shareholders, where one of the joint shareholders has already been issued with a blue admission card. For attendees who are voting in person, persons entitled to vote on the poll are all shareholders, representatives and attorneys of shareholders, proxy holders who hold a blue attendee card. On the reverse of your blue attendee card is your voting paper and the instructions.

Attached to proxy holders attendee card is a summary of proxy votes with details of the voting instructions. By completing the voting paper, you are deemed to have voted in accordance with those instructions. In respect of any open votes, a proxy holder may be entitled to cast, you need to mark a box beside the motion to indicate how you wish to cast your open votes. Shareholders need to mark a box beside the motion to indicate, how you wish to cast your votes. A Computershare representative will collect your completed voting paper at the appropriate time during the meeting. And note that it's only persons who are shareholders or holders of a blue or pink card who are entitled to address this meeting.

If you're voting online, for shareholders and proxy holders who are eligible to vote, select the vote icon and all resolutions will be activated with voting options. Cast your vote, simply select one of the options. There's no need to hit a submit or an enter button. The vote is automatically recorded. You will receive a vote confirmation notification on your screen. Voting of all items of business today will be by poll, and you can change your vote, right up to the time until the Chairman declares voting closed. Back to you, Graeme.

Okay. Thanks, Michael. So in addition to those procedures outlined by Michael, the notice of meeting provides details of the motions to be put to this meeting. And I will give shareholders the opportunity to ask questions or comment as we get to each of the motions. The first motion relates to the financial statements and reports. And it's to receive, consider and discuss the company's financial statements and the report of the directors and auditor for the year ended 30 June 2025. We're not required to formally adopt these documents by way of a resolution of shareholders.

However, I would be pleased to take comments or questions from shareholders on this item. The notice of meeting invited shareholders to submit written questions to the auditor if the questions are relevant to the conduct of the audit, the preparation and content of the auditor's report, the accounting policies adopted by the company in relation to the preparation of the financial statements and the independence of the auditor in relation to the conduct of the audit. Codan's auditors are represented by KPMG partner, Mr. Neil Edri Wira is present and available to answer questions where appropriate.

I can advise the meeting that we've not received any written questions for the auditor. So I invite shareholders and proxy holders attending if they have any questions in relation to this motion. So nothing in the room. There was one question submitted through the online system, not directly relevant to the annual report, but I will take it at this point given it was asked under this resolution.And it relates to the impact of tariffs on the company's business. And I think that's much more a forward-looking question on a backward-looking question on the 2025 annual report, but I might just get a couple of comments on the impact of tariffs from us?

Thanks, Graeme. So when you're looking at tariffs with respect to Codan, it's really the exposure sits in North America, obviously, and really in Zetron and Minelab, any of the product that we import. So with Zetron, Zetron being a public safety organization is largely exempt due to a treaty between Mexico, the U.S. and Canada. So we're not experiencing any issues with tariffs there. And with respect to Minelab, the U.S. volume represents approximately 10% of their total turnover. And when you look at the impact, the guys in Minelab have done a very good job in either making amendments into the supply chain or just adequately lifting their prices in market. So -- at this point in time, we would suggest that tariffs, we have a very -- it won't be a material impact to the performance of Codan as a group.

Thank you. Are there any other questions, Michael? In relation to that item. Okay. We'll now move on to the ordinary business of the meeting. And as set out in the Notice of Meeting and in the sample proxy form, as Chair of the meeting, all undirected proxies will be voted in favor of each of the resolutions. So resolution 1 is the adoption of the remuneration report. For the year ended 30 June 2025. Section 250 are subsection 2 of the Corporations Act requires that the remuneration report be adopted at the AGM. Please note that the vote on this resolution is advisory only and does not bind the directors or the company.

Please note that the details of the proxy votes are shown on the slide or on the online screen. Does any member wish to speak to the proposed resolution, ask a question or make a comment. Is there any questions online? So no questions or comments. You are invited to lodge your vote for Resolution 1 as an ordinary resolution. And for those voting online follow the instructions that Michael outlined earlier.

[Voting]

Resolution 2, is for the reelection of Sarah Adam-Gedge as a director. In accordance with clause 9.3 of the company's constitution it's been agreed that Sarah will retire, and being eligible, offer herself for reelection at this Annual General Meeting. Accordingly, Resolution 2 provides for the reelection of Sarah as a Director of the company. All directors unanimously support this resolution. Details of -- the proxy votes are shown on the overhead screen and on the online screen. And before you lodge your vote, I would like to invite Sarah to address the meeting regarding her reelection. Then we'll open it up for questions and comments before votes are cast.

Well, thank you, Graeme, and good morning, everyone. I appreciate the opportunity to address the meeting and to outline my background and experience. I joined the Codan Board in February 2023, almost 3 years ago, during which time the company has continued to perform well. I bring over 30 years of experience in digital and technology, operational leadership as CEO for organizations locally and globally, significant customer relationship management and sales expertise as well as governance experience to the table. From a digital and technology perspective, the last 20 years of my prior executive career was in leadership roles of global IT companies such as IBM and Publicis Sapient. This has involved helping companies improve the products and services that they offer to their customers. and improving operational performance through the use of technology. This is relevant to Codan as Codan designs, builds, integrates and delivers technology-enabled solutions to its communications and metal detection customers. I'm a chartered accountant, fellow, and have a keen interest in and currently studying cybersecurity, which, together with my early career at PwC and Arthur Anderson brings strong commercial finance and risk experience.

My commercial experience includes customer engagement with both large-scale corporate and government customers, including [ defense ], as well as in the business to consumer, retail and online channels. I'm a full-time professional nonexec director, and I currently serve on 3 ASX listed boards, which are Emeco Holdings, Bravura Solutions and Aussie Broadband. In February 2025, are retired as Deputy Chair and Non-Exec Director of the Global Defense contractor Oster Limited after 8 years on that Board. As recently announced in November, I will also transition from the Board of Emeco, which is a Perth-based mining services company to join the Board of GrainCorp.

I have extensive experience in international markets in both my executive and Board career, including the U.S., Latin America, Asia and parts of Africa. This global perspective, together with my digital and cyber experience, strong commercial finance and customer relationship management skills, and my diverse Board portfolio experience will be areas that I hope to continue to contribute to Codan to deliver shareholder value. And I look forward to continuing to contribute to the future success of the company, working alongside my Board colleagues and with the management team and thank shareholders for their support. Thank you. And I'll pass back to you, Graeme Barclay.

Can I open up this resolution to questions. Is there anything online, Michael? Any comments or questions? Questions or comments in the room Stephen?

My name is Stephen Howie. I'm a corporate proxy representative for the Australian Shareholders' Association. Representing 57 shareholders and who hold about 290,000 shares in Codan. Thank you very much, Sarah, for your address to shareholders. You have quite a depth of experience. I'd like to make a comment, if I can, Graeme. This experience has communicated to shareholders. Codan's current Board skill matrix reflects the collective skills and experience of your Board members and is included in your governance statements. The Australian Shareholders Association has a preference for the disclosure of each of the directors assessed skills and competencies.

And for this information to be included in the annual report. Will Codan reconsider the format of the Board skill matrix and included in the annual report in future. As it will assist shareholders when voting on reelection of directors.

Thank you. A good question, Stephen. And we continuously are looking to improve in the way that we're engaging with our shareholders. So thank you for that observation. We have had the opportunity to sort of liaise directly with the Australian shareholders association on a number of issues. This has been one of them. And we acknowledge that we could improve -- how we disclose the skill set of our directors to shareholders. In the past, we've taken the view that the collective metrics of the skills, and it's really the collective that's important to shareholders. Together with the quite detailed biographies that we included in our annual report sets out the individual contributions of those directors by acknowledging that we could go 1 step further. And as you've just heard from Sarah, she brings a huge number of skills to the Board that are not particularly reflected in the biography. So we thank you for your suggestion, and we will consider.

Are there any other questions or comments on this resolution? Okay. Let's move to casting -- shareholders can cast their votes on this resolution, please?

[Voting]

Given the proxy votes received, which represent roughly 75% of the company's issued shares. I have great pleasure in passing resolution to an advance of all the other votes being counted, but to reelect Sarah as a Director of the company.

Resolution 3 relates to the approval of the grant of performance rights to Alf and the proxy totals are now displayed overhead and on the online screen. You're invited to lodge your vote for resolution 3 as an ordinary resolution. This relates to the long-term incentive award to your Managing Director and CEO. It's an equity-based incentive plan focused on multiyear performance delivered for shareholders with 67% of the award linked to growth in the earnings per share and 33% linked to relative total shareholder returns measured over a 3-year period. This structure creates strong alignment with shareholder outcomes, whilst also supporting the retention of executive KMP, including Alf. In FY '24, the Board increased the required EPS compound annual growth targets from a range of 2% to 8% at entry and 13% at maximum -- sorry, from 2% to 8%. 8% to 13% at maximum. And these targets were retained for the FY '25 LTI plan. For this year's plan and the resolution that shareholders have been asked to vote on, the targets for the EPS compound annual growth rate component have increased to 11% entry and 16% at maximum, with a higher starting base level using the FY '25 EPS of [ $57.01 ] per share as the starting benchmark. As required under ASX Listing Rule 10.14, shareholder approval is sought for this issue of performance rights to a director. It is your Board's belief that this creates direct alignment with shareholders' interests and enables our CEO to participate in the significant shareholder value that will be created by performance in this range.

Further details in relation to the share plan rules, rationale, the performance hurdles and the mechanics of how the incentive scheme operates were set out in the explanatory memorandum. Does any member wish to speak on the proposed resolution. So are there any questions or comments online? Nothing online? Any shareholders or members of proxy holders in the room, any questions or comments on this resolution. So there being no questions or comments, I now move to the members to cast their votes for Resolution 3 in respect of approving the grant of performance rights to Alf for his long-term incentive.

[Voting]

Resolution 4 relates to the approval of the grant of performance rights in relation to the superior performance incentive scheme. Proxy votes are now shown on the overhead and online screen, and you're invited to lodge your vote for Resolution 4 as an ordinary resolution. So this is to approve rights to Alf in relation to the superior performance scheme that I mentioned during my address. And this is to incentivize and motivate Alf and the management team to deliver superior performance in the range of 17% to 24% in compound annual growth in earnings per share over the FY '25 to FY '27 period. The proposed superior performance incentive would result in the potential to earn up to an additional $1 million of remuneration through the issue of performance rights. So it's equity based, not cash-based, calculated in the manner described in the explanatory memorandum and requires to be fully earned. 24% increase in earnings per share each year between FY '25 to FY '27. As required under ASX Listing Rule 10.14, shareholder approval is sought for this issue of performance rights to a director.

And again, creates direct alignment with shareholders' interest by directly linking additional reward to the superior performance delivered to shareholders. Are there any questions in relation to this resolution? Okay. So there have been no questions or comments. And I move that the members cast their votes for Resolution 4 in respect of the grant of performance rights in relation to the superior performance incentive.

[Voting]

W Now that is the last of the resolutions of the formal business for the meeting. I'll pause for a few minutes to allow those online and those in the room to finalize their voting. And whilst we do that, I'm happy to open the floor to any general Q&A, so not related to the resolutions, but anything that shareholders would like to either comment on or ask the Board or the management team, general Q&A. Anything online? Anything in the room? Thank you .

I was wondering if the gold price as any material [indiscernible]

We get asked that question quite a bit. We believe there's been a link between increased gold detector sales and obviously, the gold price. We've never actually aligned that sort of -- we really never quantified it. But obviously, it's given us some significant tailwinds in Africa. And so an elevated gold price will help the sale of the current gold detectors we have in the ones that have come out in the future. So we're quite unique as an organization because as we're diversified, you have exposure to gold and you have exposure to at the moment, and those themes are quite positive for us. But to draw a direct link, I don't think we've got enough data to say that.

I think it's positive. I think that's definitely. You want to bring a microphone for you, Joseph. And everyone can hear.

[indiscernible] shareholder. I've already voted. My question is about the capital structure and in a way that we are fund the company from a debt to equity point of view. Now Codan uses debt on its balance sheet. And although it's relatively cheap, debt is always subject to some clause or bank panic attack. I was wondering, considering the company's share price, I think it's roughly 50x earnings or something like that, that it might be worthwhile funding some of our future projects using an equity capital raise if it's cheap to do so rather than being subject to a bank panic attack [indiscernible] one of the covenants for some random reason. First, second dividends. Australians really, really, really love frank dividends. But if we can retain earnings at very high rates of return, would you consider keeping the dividend where it is, and I'm sure this company can grow its earnings in the future, and retain earnings and use that as a means of funding our growth rather than asking banks for money. That's -- it's a capital management question and it's a dividend policy question. Can any of the Board or the Chairman of Managing Director, probably not Managing Director, but the Board have any comments on that sort of?

Yes, I'm happy to take this question.

Capital management and dividend policy?

Yes, happy to take it -- take the first pass at answering that. As you've observed, the level of debt that we have in the business is minimal. So I think it's under half a turn of EBITDA in terms of the sort of net debt that we're carrying in the business. So whilst we looking at future funding on an ongoing basis, we don't feel that the position today, we're exposed. The -- we've got a very -- I'm not going to say it's kind of -- we've got terms under our debt facilities that are -- don't give rise to the sort of concerns that you that you're raising. So that's the first point.

The second point is that the whole question of what our future capital structure should be will be driven a little bit by both the organic use of capital. So kind of what we're using internally. I've talked about $69 million worth of reinvested engineering capital, which we expect to continue to invest that kind of resource -- capital resource into continuing to maintain the R&D spend in engineering. But where this really will get quite a lot of board attention is for our future inorganic strategy. So for acquisitions of -- if we took a large correct. So I mean, I think we've said -- we've been very clear that the dividend policy of paying out roughly 50% of the net profits of the business is our current policy.

But we've been very clear in saying that if a large event, possibly an acquisition or some other quite significant sort of capital commitment that the company makes, we would review that. And so your point is that is capital that we could potentially retain within the business, if that make sense to help us kind of grow the business in a different way. So capital structures on the Board agenda very, very regularly. And it's in the context of how we're growing the business that we look at that. So good questions.

I'll take 1 more and then Mike close the voting. So for those that haven't voted, just let's wrap up the kind of voting piece.

Thank you. My name is Mark Greaves, I'm a shareholder from Team Invest in Sydney. And it's really pleasing to be over here in Adelaide. Can we talk about organic growth and inorganic growth? I know that your R&D spend is significant. And that keeps you in front of where you need to be to add to what you've got. But the -- this company has been extraordinarily successful in making acquisitions to the extent that 3 and 4 years ago, with the purchase of Zetron, et cetera, it really changed the look at this company forever. How confident is the Board and Alf in finding the next lot of acquisitions, to be right.

Do you want to you go.

We are confident. We've invested in structure and process. So we didn't have that a couple of years ago. So Daniel Hutchinson joined and he's put together a structure around that in the process. We've got a very clear filter on what we're looking at. We've been very, very open about our inorganic ambitions in the communications space, both for DTC and Zetron, we are confident that we will find something. We have been involved in processes and we've agreed on value or we've disagreed on value. And so some things have moved forward over the time and some things haven't. So yes, I'm quite confident that we'll continue that inorganic path. But it would never come at the expense of our organic growth targets of 10% to 15% in Comms.

So we need to keep that momentum going. But I think we've got firepower. So we think we can use it. And we've got really good global reach in our leads, Paul and Scott who reside in Northern Hemisphere. They have great exposure to what's happening in the major markets.

I echo that. There's a lot of opportunity. And the key for us is to make sure that it's on strategy and really we can acquire and integrate and then leverage the capabilities that we've acquired. As you say, I think -- the last 4 years, we've been very successful in doing that and building -- that combined Zetron and DTC, a very strong communications business that we did not have 4 years ago, and that's been a great driver and a real engine for creating shareholder value over the last 4 years. So we're continuing to be very active in looking for the right opportunities, but we're being selective.

Can I just check, have all the votes been cast.

Still collecting.

Still collecting. Okay. Well, maybe I'll -- can I declare the poll closed.

[indiscernible]

That's fine. Please collect all -- please collect and ask you to collect all the votes. So after the votes have been counted, the results of today's poll will be released to the ASX and displayed on the company's website. Okay. I'm going to close the meeting. If there's no other general Q&A.

Ladies and gentlemen, that does conclude the formal business of this AGM. Thank you again for your attendance, and thank you again for your support of Codan. I declare the meeting closed, and I invite you to stay for some refreshments and the opportunity to meet and chat with directors and the management team. Thank you very much.

Good morning, everyone, and welcome to Codan's Full Year FY '25 Results Webinar. My name is Sam Wells from NWR, and joining me from Codan today is Managing Director and CEO, Alf Ianniello; as well as CFO and Company Secretary, Michael Barton.

Following a brief summary of the results released to the ASX this morning, investors and research analysts will have an opportunity to ask questions. [Operator Instructions]

And with that, over to you, Alf and Michael.

Thanks, Sam. Good morning, and welcome everyone to Codan's FY '25 results Presentation. My name is Alf Ianniello, and I'm Codan's Managing Director and CEO. Also joining me today is our CFO and Company Secretary, Michael Barton.

Before we proceed, please take note of our standard notice and disclaimer. Today's presentation will take us through some of our key result highlights, detailing the performance of each of Codan's 3 business units.

Unique to today's presentation, we want to highlight how our 2 communication businesses are increasingly working together. We walk through 2 case studies, one in defense and in public safety that bring to life the synergies across our ecosystems and show how we're converging into a single stronger communications platform. We will also update you on our current strategy, reiterating some focus areas within each of our 3 business units before tying it all together with some summary comments and key themes for FY '26.

For many on today's call, the building a stronger Codan slide should be familiar. The Board and the executive team has spent significant time reviewing our businesses and refining our core organizational values, culture and positive outlook. From this, our leadership team has collectively developed a laser-focused plan to build a stronger Codan, which is underpinned by financial, operational and strategic objectives.

At its heart, building a stronger Codan is about sustainable growth, making prudent acquisitions and developing ecosystems across our communication businesses and fundamentally continuing to invest in our people. Importantly, our diversification strategy is a key strength. We have great businesses serving very different markets. Minelab remains an exceptional business, while Communications is positioned for strong long-term growth.

Fast forward to today, we believe our financial and operational results are a testament to our strategy. With our disciplined approach and a strengthened balance sheet, Codan is well positioned to pursue future opportunities from a position of confidence. As we look ahead, we remain committed to building a stronger Codan, investing in innovation and broadening our capabilities, and most importantly, delivering long-term value to our shareholders.

FY '25 was a year of strong performance for Codan, and we are pleased to report that we achieved significant growth across the Group. In an environment of ongoing global uncertainty, our teams executed on their plans with focus, delivering improved revenue, earnings and cash generation.

At a Group level, we delivered over AUD 674 million of revenue, up 22%, reflecting strong organic growth together with the contribution from our Kagwerks acquisition. Net profit after tax grew 27% to AUD 103.5 million. And as the slide illustrates, all profitability metrics increased year-on-year.

Notably, this was after expensing some non-recurring acquisition due diligence costs, of which Michael Barden will touch upon on the following slide. Additionally, the Board declared annual dividends of AUD 0.285 fully franked, also up 27% versus last year.

I will now pass it over to Michael to run through the financials in more detail.

Thanks, Alf. Good morning, everyone, and thanks again for taking the time to join our call today. As Alf touched upon, we're really proud of these financial results. They underscore our strong operational execution across each of our business segments.

First, taking a look at the Communications business. FY '25 revenue grew by 26% to AUD 413 million and we delivered a segment profit of close to AUD 108 million, which was up 34% on FY '24. Within Minelab, revenues also grew double-digit, up 16% to AUD 255 million and segment profit was 26% higher at AUD 98 million.

Group NPAT margins increased to above 15% from 14.8% in the prior year. The profitability metrics this year are after expensing around AUD 5 million of pretax non-recurring acquisition pursuit and due diligence costs. That includes our Kagwerks acquisition that we acquired in December and other opportunities we evaluated, but chose not to pursue.

As we've said before, our M&A strategy is focused on complementary communications technologies, particularly in North America and across unmanned systems, soldier systems and the public safety sector. We take a disciplined approach. If due diligence doesn't stack up, valuations are stretched or market conditions change, we're comfortable walking away, and that's exactly what you saw this year.

Prudent capital allocation with Codan only pursuing those acquisitions that are strategically aligned and which create long-term value. The increase in Group expenses this year reflects the integration of acquired entities into the Group's cost base and higher short-term incentives aligned with the improved performance.

Also, we've continued to invest to ensure the successful integration of acquired companies and the implementation of core systems and processes that will provide future scalability. Equally, sales and marketing expenses include greater investment in go-to-market, customer-facing teams and initiatives aimed at delivering further growth across our key markets.

We turn to our balance sheet. Net debt finished the year at AUD 78 million, which was up AUD 3 million on June last year, and that's after funding AUD 36 million for acquisitions during the year. Importantly, our second half performance was strong. We reduced net debt by AUD 46 million from December to June. This was driven by cash generation and disciplined working capital management.

We took our net debt to EBITDA ratio to below 0.5x. Net working capital reduced by AUD 5 million. This reflects higher inventory to support our growth and also the addition of the Kagwerks business, and that was offset by an increase in our payables.

Subsequent to year-end, Codan increased and extended its existing bank facility to AUD 250 million from AUD 170 million and we have a further AUD 150 million in accordion capacity available subject to bank approval. The facility now matures in September 2028. These facilities provide Codan with further financial flexibility to pursue future inorganic growth initiatives.

We continue to assess acquisitions that enhance the quality and predictability of our revenues. We have a primary focus on opportunities in the communications markets that complement our technologies, accelerate our product road maps or extend our customer portfolio as well as providing longer-term earnings visibility.

As outlined, this slide illustrates the changes to our net debt position throughout the year, noting the key movements we've already touched on in the previous slide. During the year, we have continued our engineering investment across our business units, investing a total of AUD 69 million, approximately 10% of revenues, in line with prior periods.

Our engineering spend is increasingly focused on Communications and its key growth markets. Recent acquisitions, including Kagwerks, have added to this with the Kagwerks engineering team contributing AUD 4 million in the 7 months to June '25. We have a global team of highly skilled engineers and research scientists. And through product development, we ensure our competitive position is maintained.

Back to you, Alf, as we take a closer look at our 3 businesses.

Thanks, Michael. So we'll now move into the business unit summaries. For any of you who are more recent to our story, our Communications business designs and manufactures mission-critical communication solutions for global military, public safety and commercial applications.

In FY '25, Communications revenue grew 26% to AUD 413.5 million, driven primarily by organic growth of 19%, well above our targeted 10% to 15% range. Revenue from defense customers now represents 38% of total Communications revenue, and this vertical is a long-term target market.

Communications segment profit increased by 34% to AUD 107.9 million, while segment profit margins, excluding Kagwerks, expanded to 27%, up from 25% in the prior corresponding period, reflecting operating leverage as the business continues to scale.

The company remains focused on achieving additional operating leverage, targeting a 30% Communications segment profit margin by the end of FY '27, while we continue to invest in product development to support longer-term growth.

Lastly, our Communications order book grew AUD 253 million as at the 30th of June, 2025, plus 28% versus 30th of June, 2024. This provides a great foundation heading into FY '26.

DTC, formerly Tactical Communications, delivered an exceptionally strong result in FY '25, underpinned by growing global defense expenditure, particularly in unmanned systems and continued momentum in law enforcement verticals. The business continues to benefit from its leading MESH radio technology and solutions, which offers robust high-performance communication in harsh and contested environments.

Specifically, DTC's compact, lightweight and power-efficient solutions remain well suited to mission-critical use cases where size, weight and power are critical to operational performance. This is particularly relevant in unmanned systems, where DTC delivered approximately AUD 100 million in revenue during FY '25, more than doubling the prior year's result.

As global defense budgets increase, DTC's presence in the U.K., U.S. and Australia provides a strategic advantage in capturing long-term communications programs across North America, the Five Eyes alliances and other NATO-aligned markets. We have a strong pipeline of opportunities underpinning our continuing investment in the DTC platform.

In December 2024, Codan acquired Kagwerks, a U.S. leader in operator-worn communication systems. Kagwerks provides a lightweight soldier-worn network dock that integrates multiple tactical technologies into a single user-friendly platform. This acquisition has strengthened Codan's position in the global military communications market by expanding its presence in the U.S. defense ecosystem. And it provides access to the funded Nett Warrior Program of Record.

Kagwerks delivered AUD 24 million in revenue in our 7 months of ownership during FY '25. In the short term, revenue timing will depend on the Nett Warrior program given the project-based nature of the business. Importantly, integration into DTC is progressing well. We've made new senior hires to strengthen the sales teams, which is enabling expansion into DTC's broader North American customer base and driving further adoption into international markets.

Moving on to Zetron. Zetron EMEA and Asia Pacific performed strongly in FY '25, delivering growth within our targeted 10% to 15% range. Key highlights include a 10-year AUD 14 million nationwide public safety contract in Australasia, alongside several smaller wins such as ACOM adoption by a major U.K. airline and a CallTouch deployment on a key rail corridor linking London to South Wales.

We're encouraged by Zetron's enhanced scale and presence within EMEA following the integration of acquired and legacy businesses. Within the United States market, while growing revenues versus FY '24, growth was adversely impacted by ongoing government reviews and delays in funding for government-funded agency opportunities. This moderated our second half performance and near-term momentum.

Despite this, Zetron recently secured a 10-year AUD 19 million contract with one of the largest utilities on the U.S. East Coast, servicing 3.3 million customers. Additionally, the business secured an AUD 11 million ACOM system contract with a large Atlanta-based airline.

The business continues its focus on innovation and customer-driven solutions with ongoing R&D investment to deliver seamless integrated user experiences. Again, for anyone new to the Codan story, Minelab is the world leader in the handheld metal detection industry for recreational, gold prospecting and demining markets.

During FY '25, Minelab achieved full year revenue of AUD 254.8 million, up 16% versus FY '24. Pleasingly, segment profit margin increased to 39%, up from 35%, driven by the benefits of scale and supported by a revenue mix of higher-margin products, particularly from a higher portion of gold detector products sold.

Minelab Africa delivered a strong full year performance with revenue of approximately AUD 115 million, up both year-on-year and half-on-half by 64% and 54%, respectively. This result reflects demand from across the region, excluding Sudan, and it's underpinned by further business development initiatives to grow our presence across new and existing markets.

While we haven't historically linked gold detected demand directly to gold price movements, we suspect the current elevated gold price is creating supportive demand in key artisanal markets. Minelab's Rest of the World business maintained revenues versus the PCP, which we consider to be a great outcome in what remains quite a challenging consumer conditions.

This performance reflects our focus on growing both physical and e-commerce channels and leveraging Minelab's leadership. Minelab continues to invest in growing market share through the ongoing investment in its product road maps, new technology platforms and expansion of its retail footprint in the U.S. and Europe.

These positions -- these initiatives position us well for future growth with 4 new products scheduled for release in FY '26. The moderation of humanitarian aid by the U.S. government administration resulted in lower sales of Minelab's countermine products in FY '25. In response, the business is undergoing a strategic shift to reposition towards more military base applications for which there is a growing need.

So the first of the new product launches, Minelab has recently soft launched the Gold Monster 2000 as illustrated on the slide. This new gold detector retailing at approximately twice the price of the Gold Monster 1000 is positioned as a premium entry-level product and will be released to customers in Q1 of FY '26. As a result, we're expecting it to contribute to Minelab's growth in FY '26.

So before we move into the case studies, we just wanted to provide a bit of a background that as Codan has through product development and acquisition, the public safety and the defense ecosystems have become quite relevant. And our products within those acquisitions have become quite relevant to the point where they are fundamental to creating situational awareness.

So as we move into each of the ecosystem diagrams, the Codan or DTC Zetron products are highlighted in green. So in the defense ecosystem, our software-defined radio MESH products connect soldiers, uncrewed systems, sensors, vehicles, ships and coalition partners. It is low latency, resilient. And if one link drops out, the network simply reroutes around it.

Kagwerks brings that MESH right down to the operator. Radios and soldier-worn devices are pulled straight into the picture. When satellites are degraded or denied, HF keeps the traffic moving. HF is harder to jam across wide areas and works without fixed infrastructure. That makes it critical to carrying essential voice and tactical information traffic when the other communication paths are constrained.

Codan's strength is its ability to build sovereign multi-waveform networks such as MeshUltra and MeshUltra-X that interoperate by design and keep working when conditions are at their worst. This positions us as the trusted backbone for our partners.

In the public safety area, Zetron offers mission-critical communication solutions. Its dispatch, telephony, computer-aided dispatch and land mobile radio solutions enable critical communications around the world from airports and train systems to police, fire and ambulance services.

Given the importance of uninterrupted communications, Zetron uses additional technologies to provide networks on demand for disaster recovery and tactical deployment. The same advantages DTC provides in the defense sector can also be applied to public safety, especially with the emergence as drones as first responders.

When a disaster occurs, public wireless networks are often degraded or unavailable. DTC radios can provide a deployable bridge right from the disaster area to the control room. Additionally, there are indoor areas with no satellite or wireless coverage. DTC solutions can provide the critical link right from the underground car park to the network outside. Combined, this allows both the control operator and the person in the field to be connected at any time.

This crossover between DTC's field networking and Zetron's control systems is a deliberate outcome of our acquisition strategy and product development strategy. We are not running separate businesses in silos. We are creating integrated interoperable solutions that expand our addressable markets and deepen our customer relationships and positions Codan as a leader in both defense and public safety communications. The case studies highlight how our core technologies from DTC, Zetron and Kagwerks work together in defense and public safety ecosystems.

I'll now pass back over to Michael to take you through the strategy and ESG updates.

Thank you, Alf. While this slide may look familiar, it is slightly different from what we've presented previously. Specifically, we're focused on identifying where we've executed against our 3 key strategic pillars: investing in ourselves, strengthening our core business and disciplined capital allocation, all of which to drive long-term value across the organization. And we're providing specific FY '25 achievements, and I'll just mention a few of them.

Firstly, we've recently appointed a new Group COO for Codan, Pieter Guichelaar, and we've welcomed him to our leadership team. We're excited with what Pieter can bring to Codan and he is already driving efforts to strengthen our operational execution and the alignment across our business units, also helping us build the scalability that we need for future growth. Under his leadership, we're investing further in IT and AI capabilities to improve efficiency, unlock insights and support a more integrated Codan.

We've also expanded commercial capability across defense, unmanned and public safety markets as well as strengthening our product suite, helping to secure a strong forward order book, which includes AUD 155 million of revenue that is scheduled for delivery in FY '26.

Lastly, we've acquired Kagwerks to further enhance our solutions offering and drive long-term revenues through the Nett Warrior Program of Record. Beyond this, we continue to seek strategically aligned opportunities, while maintaining a strong balance sheet. Our near-term objectives are focused on executing key initiatives across each business.

In DTC, we're shifting to be a full solutions provider. We're launching a multi-waveform radio in the second half of FY '26 through our Trellisware partnership. And we're integrating Kagwerks to strengthen soldier systems and connected edge capabilities.

For Zetron, we're building market share in public safety and increasing the predictability of reoccurring revenues, including the launch of our service-based emergency response platform and a next-generation CAD solution in the U.K. In Minelab, we'll release 4 next-generation detectors across recreational, gold and countermine markets. And we'll expand our retail footprint in North America and Europe and continue to strengthen our e-commerce and channel engagement.

Alongside delivering strong financial results, we continue to make meaningful contributions in our communities and to our sustainability agenda. On the social side, we've supported education, innovation and community initiatives from long-standing programs like our 36 years of Variety Bash sponsorship to expanding STEM opportunities, cultural scholarships and global cleanup efforts.

On climate, our priority has been building a strong system to measure and capture data across Scope 1, 2 and 3 emissions. This ensures that when we set targets, they're not just ambitious, but are also credible based on reliable and consistent information. We've made significant progress in this area and it positions us well to both set and track future climate targets with confidence.

And now Alf will close with our summary and outlook.

Thanks, Michael. Tying today's presentation together, the Group continues to deliver on the strategy of building a stronger Codan. Our strategic pillars, as outlined earlier, will continue to guide and focus and continue to guide our focus moving forward.

Looking ahead to FY '26, our Communications business continues to target long-term sales growth of 10% to 15% per year. As we've shown in FY '24 and '25, this range can be exceeded. With around AUD 155 million of FY '26 revenue already secured in the order book, increased defense spending and continued growth in unmanned systems and a first full year of Kagwerks, we're well positioned to deliver growth in the 15% to 20% range in FY '26.

Minelab enters FY '26 in a strong position, building on the momentum of excellent growth delivered in FY '25. FY '26 is shaping up to be an exciting year with 4 new product releases scheduled across the recreational gold and countermine product ranges. These launches, combined with current favorable macroeconomic conditions in key regions such as West Africa, positions the business to capture further demand and deliver continued growth.

We believe Codan is well positioned for sustained growth and supported by current favorable market conditions for our defense-related communication products and our gold detectors, we expect to continue to grow the revenue and profitability of our high-performing businesses and deliver long-term value to shareholders.

With a strong balance sheet and a disciplined approach to capital allocation, the Group remains well placed to execute on strategic acquisitions. The recently renewed $250 million debt facility provides increased flexibility and funding capacity to support future inorganic growth initiatives. We look forward to providing our next business update at the Annual General Meeting on the 22nd of October, 2025.

And with that, this draws us to an end of our presentation, and I'll pass back to Sam for Q&A. Thank you.

Great. Thank you, Alf, and thank you, Mike. [Operator Instructions] A couple of pre-submitted questions first. On Communications margin, what's required to hit the 30% Communications segment profit margin by the end of FY '27? And is there upside or will you reinvest for growth above that level?

Yes. Good question. Thanks, Sam. I think it's a fine balance. I think what's required is our continual growth rates are required. And we have, as mentioned in the presentation, we have a path forward on that. And also the continued release of market-leading products and the sound acquisitions we've made to create more platform and solution-based offerings for our customers. So we've had the 2% increase year-on-year. And I think if you put acquisitions, product releases and continued organic growth, that will bode us well for the increase in margin.

Great. And just on unmanned, can you give us any color as to the composition of the AUD 100 million you referenced? How has this strong growth in unmanned influenced your defense strategy, if at all, in FY '26?

Yes. The unmanned space, either air, ground or sea, is definitely an emerging space, both in defense and public safety. It's a market that is growing at 30%, 35% CAGR globally away from what Codan is doing. So when you look at our strategic intent, obviously, it is influencing our product development road maps for DTC, which is important in the software-defined radio programs.

And then when we're looking at acquisition road maps, we are heavily focused in how we actually complement that unmanned space with our products and other products. So it's definitely front of mind. And having a product as DTC has, has enabled us to double that revenue over the last 12 months.

Great. And just on comms forward order book, while it was up I think 28% year-on-year, it's only modestly up versus December. How should we think about this?

Yes. And order books are a point in time. If we actually did the order book 5 days later, we would have booked the AUD 20 million order in the U.S. and that would have changed the metric significantly. So the order book struck on June 30. When you look at the order book, as said in the presentation, it gives us a lot of confidence going into FY '26. It's a strong order book. So yes, a couple of days here or there, that number would have been far larger.

Great. And we'll maybe move now to Mitch Sonogan at Macquarie.

Just following on from the unmanned there, the revenue pretty much doubling or doubling year-on-year. Can you maybe just give any more color in terms of overall demand trends that you're seeing there? What visibility do you have looking into FY '26? And maybe just any broader discussions you might be having outside of the existing customer base?

Yes. When you look at unmanned, a lot of our unmanned solutions go into drone solutions. When we look at visibility, we have visibility probably out for H1 of order book. And when you look at the diverse customers, one of the key aspects of unmanned for us is that our technology has been used in contested environments, and it's worked.

So the ability for us to gain technical reputation, as I would say, to then push that into other markets has been probably one of the key positives from this. So definitely, it's a growing market. Definitely, we've got the right product. We have evolved the product from all the lessons learned we've had over the last 12 months. And we have -- and we are working with new partners globally. We have representation of sales across the globe for unmanned systems.

Yes, great. Final question, which is just a sneaky 2-parter there. But obviously, with Africa doing very well in Minelab, yes, just keen to understand if that segment margin in the high-30s. Is that what we should expect in FY -- sorry, FY '26?

And then just for Michael, just on the unallocated costs, up pretty materially. Obviously, you talked to some of that throughout the presentation, but just keen to understand what we should be expecting in FY '26 as well? Congrats on the result.

No worries, Mitch.

Yes, on Minelab, the margin they achieved in FY '25 was excellent in the high-30s. And some of that improvement does come from the gold detectors that we do sell into Africa. So you're right, Mitch, we've had an uplift as a result of that mix in products. So that continues. We'll continue to see Minelab post really strong margin results like they achieved in FY '25.

In terms of the administration costs, yes, we've called out a higher level of due diligence, acquisition-related costs. We've had those costs in the last few years given the acquisitions that we've made. And I think all those cost, history is probably the best guide, Mitch, just to the cost base that we currently have in the organization.

So we'd expect those numbers to be consistent going forward, albeit we did call out that AUD 5 million that's larger than what it's been historically. So there might be some normalization in relation to that component. But the rest of the costs they're really the run rate going forward into FY '26.

Next question comes from Elijah at Goldman Sachs.

Congratulations on the results. Just a couple for me. Maybe just starting with Kagwerks. Can you sort of talk to, I guess, if that original guidance for calendar year '25 revenue of AUD 49 million to AUD 57 million is in play and if that ties into the FY '26 comms growth guidance?

So Part A of that question, as mentioned in the presentation, the guidance for the first 12 months is heavily predicated on the release of orders by the Nett Warrior Program offers, which we believe those orders will be seen in the next probably a month or so and then they'll provide a building schedule for the next -- for the remainder of the financial year.

And then that will come down to whether we can actually ramp up the supply chain in a quick enough fashion to actually deliver and generate that range. So we just need to review that over the next 4 weeks. But in saying that the orders are there, it's a timing issue for a release of orders. The second question about the guidance of 15% to 20%, that does include Kagwerks.

I might just squeeze one in on just acquisitions. Balance sheet, obviously, very well set up, and you've talked to opportunities for a while. Can you maybe sort of talk to, I guess, what you're seeing on the ground? Like is it quite harder with the valuation rerate across the sector? And maybe talk to some of the opportunities you sort of walked away from?

Yes. I think when you look at our acquisition strategies, if you look at the Zetron sort of strategy, it's either we're increasing our seats. So looking at alternate Zetrons or adding value to the seat, so looking for more bolt-ons. So I guess that gives you a bit of color of things that we would be looking at in the Zetron space.

When you're looking at DTC, we were heavily focused on creating a presence in defense market in the U.S. That still remains an aim. We're heavily focused on looking at the appropriate integration solutions to our solutions for unmanned systems. So that fundamentally paints a picture for the DTC world. And on the question of things that we had looked at or looking at, they all are part of that sort of environment.

Next question from Evan at UBS.

Yes. There we go. Okay. Just 3 questions, if I can. DTC, 2 on DTC. First one, I'm just keen to hear your thoughts, Alf, just around the potential, I guess, changing competitive dynamics with Motorola coming into the market, taking over Silvers, especially, I guess, in relation to how a very U.S. recognized business is being perceived in the EU, sorry, just how that's all playing out?

Yes, it's interesting. Obviously, Silvers is a major competitor to us in the software-defined radio space or MESH network space. They are actually, again, the addition of Silvers to Motorola complements them as a solution provider, no different to us. If you look at Motorola and you look at the Codan Group today in comms, where our offerings are very similar. Obviously, the scale is a little bit different. And obviously, they are a major player.

We're still digesting that acquisition, Evan. We're still digesting whether it's a play for defense or it's a play for federal networks. Although that slide that we presented in the public ecosystem is quite busy, the addition of MESH networks in the public safety space gives the ability to put networks in without infrastructure. So -- and then with the emergence of drones as a first responder, which is an emerging theme as well, which we're well placed for, I think Motorola with their investment in BRINC as well a point into that. So we're digesting it. It's another competitive point we need to have a look at.

I guess your point on Motorola being a large U.S.-based organization, I guess we need to wait and see what impact that has in the EU. Technology is technology. So the best technology usually wins irrespective of where it comes from. That's my personal view. So -- but yes, it was an interesting acquisition, a real expensive one for them. And it really just demonstrates that the technology is a good one, that MESH technology.

Yes. Okay, good. And then just also interested one more on DTC, an update into how your medium-term strategy of, I guess, embedding the broader DTC business into the U.S. DoD or general defense budget programs is looking? Maybe you can also touch on the Trellisware product release and how that may help as well, please?

Yes. So if you look at the first -- I guess, the largest step forward we've done in the U.S. defense has been through the Kagwerks acquisitions. Now that considering that the Kagwerks products do have MESH radios in them and they're agnostic, they're not always DTC. We're part of far more discussions for the next generation of comms, right, than we've ever been. So when I look at activity and I look at pipeline, it's the best we have seen in DTC.

If you overlay the opportunity with the dual waveform radio with Trellis, I think that just further enhances the probability of win in some of those opportunities that we're discussing. We probably won't see a Trellisware prototype until Q3, Q4 next year -- in this financial year, sorry. So -- but the program is still moving forward.

Yes. No, it sounds pretty interesting there. Okay. Just final one here on Zetron. Any perspectives you can give around and just how you're feeling about the growth rate for Zetron in FY '26? Any comments around how that weighted pipeline for Zetron is also shaping up, I guess, relative to this time last year as well, noting the comments you said around the U.S., too?

Yes. So when you look at Zetron, Zetron has been a stunning acquisition for Codan and its growth in the first couple of years have been excessively high. It's really come back to market growth rates now and that's fundamentally due to new administration and things.

From a momentum perspective, I think we'll have to break FY '26 into a year of 2 halves. I perceive that the first half will be very similar to H2 FY '25, and we'll have a pickup going through. Activity hasn't slowed, pipelines haven't slowed. It's just general timing and a level of at times bureaucracy that we've been caught in.

But on the flip side, what's been really pleasing through the growth in EMEA. So EMEA previously to the acquisition of Zetron Limited or the NEC Group out of the U.K. has been quite slow. So the ability to sell some of our product from Zetron into those areas where we weren't present before is really pleasing. So the 10% to 15% growth rates there are great. We'll still grow in Zetron. We just need to -- it will probably be a tale of 2 halves this year.

Next question comes from Tom at Moelis.

Yes. Just a follow-up on the margin profile side of it. In the Communications business, if we think about it ex the sort of one-off costs, this 30% target end of FY '27, should we be thinking -- or is there any reason that we should have some sort of investment into FY '26 and sort of weight that margin expansion into '27 or should it be fairly linear between where we are now point in time and where the target date is?

I would go linear from a -- if you overlay investment ideas that we have.

Brilliant. And my second question is just on the Gold Monster 2000. Pretty clear, it's twice the price. Just wanted to get a sense maybe using the 1000 as a proxy, what's the sort of ramp profile in volumes you guys would be looking at over, say, the next 1, 2 or 3 years?

I'll divert to Michael. He's got far more history than me on the gold releases.

It's the highest volume gold machine that we sell. And into Africa, we've sold 200,000 units over -- well, that's probably been in market for 10 years. So it's a significant step-up in technology. Is it going to replace all the Gold Monsters that we've sold historically? No, but are we expecting to sell good volumes of that detector into Africa and into other artisanal mining areas? Yes. We think it's going to be a really strong performer for us.

Next question comes from Cameron at Canaccord.

So you've done well. You've ticked off most of the questions I actually had, but there was one that was a follow-on to Tom's on the Gold Monster. So you've talked about the price increases roughly doubling. How do the costs compare for you guys?

Production costs? I think we'll see this detector continue to be really high-margin product for us as all our gold machines are. It's in the same range.

Same range of cost of production or same range of margin?

Same range of margin that we make on our gold detectors.

Next question is from Jason at Taylor Collison. Just back on the African business, broadly speaking, how much of that business is Gold Monster versus GPZ 7000 versus other products?

Yes. So we have 3 core product ranges that we sell into Africa, the GPZ, top of the range, GPX, mid-range and then the Gold Monster that's been the entry level. The proportions aren't exact, but they all represent a significant proportion. It's not quite 1/3, 1/3, 1/3, but they all represent a significant portion of that market. It's not one that dwarfs the others. So yes, it's a major part of what we sell into Africa.

Okay, great. And another one from Jason. Capitalized product development costs have increased AUD 90 million over the last 4 years. How should we think about the amortization step into FY '26 given new detectors as well as the DTC and Zetron upgrades also slated for the year?

Yes. I think you'll see the trend that we've had in the past continuing, perhaps a bit of acceleration on top of that. I think those costs went up about AUD 4 million this year. So we expect it to be slightly higher in FY '26 and beyond. But the growth in amortization, you're going to see that continue into FY '26 and '27.

Okay, great. And just one more question here. Can you -- from Josh at Barrenjoey, sorry. Can you talk through the expected remilitarization of European nations and NATO and your view on DTC's positioning in those contracts? Are you investing in sales incrementally ahead of these opportunities or is the sales team rightsized given the demand?

Yes, good question. As mentioned in the commentary, DTC has a significant presence in Europe already. We are part of discussions with different defense departments across Europe at the moment.

So do we think it's a tailwind? We do. Are we part of the right discussions? We are. The thing with defense, it's always long procurement cycles. But I guess the key thing with all of this, we're well represented in Europe, we've got the right products and we're part of the dialogue. And so I think we believe that will be a tailwind into the future if it's not FY '26, FY '27, FY '28.

Great. Thank you. That wraps up the Q&A session for today. And maybe just with that, Alf and Michael, I'll pass it back to you for any closing comments.

Yes. Thank you, Sam. Firstly, I'd like to take the opportunity to thank everyone for their interest today. I think today's presentation is a representation of the strong business that Codan is. It's a representation that we're executing our strategy well. We've been prudent in capital allocation and how we run the business. And I think also the presentation today gives you a level of insight in our strategic directions, either being Minelab or our Communications division.

So we thank you for your time. We also think that we've provided some clarity on FY '26. And like I said, we will update the community at the AGM this year in October. So thank you very much for your time. Really appreciate it.

Great. Thanks very much for joining today's Codan FY '25 results webinar. Enjoy the rest of your day. Thank you, and goodbye.