Codan Limited (CDA) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. My name is Graeme Barclay, and I'm the Chairman of your company. We acknowledge that we are meeting on the traditional country of the Kaurna people of the Adelaide Plains, and pay respect to elders past and present. We recognize and respect their cultural heritage, beliefs and relationship with the land. We acknowledge that they are of continuing importance to the Kaurna people living today. We also extend that respect to other aboriginal language groups and other first nations. As Chairman of this meeting and on behalf of my fellow directors, I'm pleased to welcome you to the 2023 Annual General Meeting of Codan Limited. It's now just after 11:00 a.m. and as a quorum is present, I will declare the meeting open. Before I go any further, I would be grateful if you could all please check that your mobile phones are turned to silent or switched off. Today's meeting is a hybrid meeting. In addition to company representatives and shareholders present with us here at the Adelaide Oval, 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 in addition, shareholders and proxy holders have the ability to ask questions and to submit votes. For those attending in person who wish to ask a question, you may raise your blue attendee card to ask a question when called upon to do so. And you may speak once you've been acknowledged by the Chairman of the meeting and been provided with a remote microphone. For those attending online, there are 2 methods to participate. Firstly, to ask a verbal question, please follow the instructions below the broadcast window on the virtual meeting platform, and the moderator will facilitate your participation at the appropriate time. Secondly, to ask a written question, please use the Q&A icon on the screen. Type your question in the text box and press submit. Written questions can be submitted online at any time during the meeting. I will ask that you identify the capacity in which you are attending the meeting when asking a question. Please note that while you can submit questions from now on, I won't address them until the relevant time in the meeting. Please also note that your questions may be moderated, or if there are multiple questions on the same topic, amalgamated and dealt with together. Further, whilst we may not be able to deal with all of your questions, I will ensure that all questions asked by shareholders, there will be a reasonable opportunity to provide a response, and that may involve 1 or 2 members of the executive team providing a detailed response where required. In terms of the voting procedure, voting today will be conducted by way of a poll on each item of business. In order to provide you with enough time to vote, I will shortly open voting for all resolutions. For shareholders and proxy holders who are attending in person, you would have been issued a blue attendee card with the voting details on the reverse side. I will advise the procedure on how to vote once the resolutions have been put to the meeting. For those attending virtually, if you're eligible to vote at this meeting, a vote icon will appear. Selecting this icon will bring up a list of resolutions and present you with voting options. To cast your vote, simply select one of the options. There is no need to press a submit or enter button as the vote is automatically recorded. You will receive a vote confirmation notification on your screen. You do, however, have the ability to change your vote up until the time that I declare that voting has been closed. For full details on how to log on and vote online, please refer to the user guide outlined in the Notice of Meeting. Unfortunately, technical issues or difficulties may arise during the course of the meeting. I note that I will have the discretion to determine whether and how the meeting should proceed in the event that a technical difficulty arises. If I'm required 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 has been affected. I now declare voting open on all items of business. The polling icon will soon appear. Please submit your votes at any time, and I will provide ample notice prior to the closing of voting. 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, your Board strongly recommends that shareholders vote for all resolutions. The notice of meeting and explanatory memorandum was distributed to all shareholders on the 20th of September 2023, and I propose to take those as read unless there are any objections. The format for today's meeting is to conduct the formal business of the meeting after a presentation from our CEO on the company's strategy, recent acquisitions, financial performance in financial year '23 and the near-term outlook. Before moving to the formal resolutions to be voted on at the meeting, there will be an opportunity for shareholders to ask questions. As I mentioned, my name is Graeme Barclay, and I became Chairman of your company on the 1st of February 2023, following the planned retirement of David Simmons, after 8 years as Chairman of Codan, and a total of 14 years as a non-Executive Director. And it's great to see David in person attending today's meeting. I'd like to formally acknowledge the significant contribution that David made over his long tenure as Chairman and as a Director. He presided over the development and growth of Minelab over the last decade to become a global leader in metal detection, and over the transformative Zetron and DTC acquisitions to create the requisite scale and a growth platform for Codan's Communications division. On behalf of the Board and the Codan employees, we again thank David for his leadership and contribution over a long period. Peter Leahy, another long-standing director, also with 14 years service, retired at last year's AGM, and we also thank Peter for his contribution over his long tenure. The retirements of David and Peter allowed us the opportunity to renew and refresh the Board. And we announced the appointment of Sarah Adam-Gedge and Heith Mackay-Cruise as nonexecutive Directors in February and March of this year following an external search process. Both are highly credentialed, bringing experience and expertise relevant to building a stronger Codan. It's my pleasure to introduce the current Board of Directors of Codan Limited to you. And I will ask each director to put their hand up as I introduce them. I will also ask Sarah and Heith as our new directors to make a short statement about the experience they bring to Codan, noting that their biographies were set out in the annual report. Firstly, I'd like to introduce Kathy Gramp. Kathy was appointed to the Codan board in November 2015, and is Chair of the Audit, Risk and Compliance Committee, and a member of the Remuneration and Nomination Committee. Next, I'd like to introduce Sarah Adam-Gedge, who was appointed on 1 Feb 2023, and as a member of the Audit, Risk and Compliance Committee. And as a new Director, Sarah is standing for election at today's meeting.

Thank you, Graeme, and good morning, everyone. I appreciate the opportunity to join the Codan Board, and also to address the meeting. And I thought I'd provide a brief summary of my background, bringing out some areas that hopefully are very relevant to Codan. So I have a 35-year career across technology, consulting and finance, and started my career as a chartered accountant. For the last 20 years of my executive career before becoming a professional nonexecutive director, I held leadership roles in global digital and technology companies, including 12 years at IBM, as managing partner. Prior to that, I was a partner at both PwC Consulting and Arthur Andersen, where I started out as an auditor. In the last 15 years of my executive career, I've led businesses ranging in size from $50 million to $900 million and employing up to 6,000 people. I've got significant experience in driving growth across different industries and countries, having worked both locally and globally in both business-to-business and business-to-consumer go-to-market environments, and have deep expertise engaging with large-scale customers. As a non-executive director, I have a particular interest in using digital technologies to support business growth and also to help organizations become more efficient, as well as applying innovative and leading-edge capabilities to become the preferred partner to our customers and to industry. In terms of my current listed board portfolio, in addition to Codan, I'm on the Board of 3 other companies. These companies are Austal Limited. Austal is a global shipbuilding company, and builds large vessels, large ships, largely for defense, but also for the commercial ferry market. At Austal, I'm a non-executive director, and I'm also the lead independent director, which is referred to at Austal as Deputy Chair, and I'm the lead independent director to address the fact that the Chairman is not independent. And I've been on the Board of Austal for 6 years. I'm also on the Board of Bravura Solutions Limited. Bravura is a global wealth and superannuation platform company, and I'm a non-executive director at Bravura. I've recently joined the Board of Emeco Holdings Limited. Emeco is a mining equipment services company based in Australia, and I'm a non-executive director. And as I mentioned, also the fourth board is Codan. On those 3 boards, Austal, Emeco and Bravura, I chair the Audit and Risk Committee as I have a strong finance and audit background in addition to my digital and technology expertise that I mentioned earlier. My involvement in unlisted or not-for-profit Boards is aligned to my personal interests of sports, technology and finance. So I very much look forward to the opportunity to bring value to the Codan Board and would welcome any questions at the appropriate time. Thank you.

Thank you, Sarah. Next, I'd like to introduce Heith MacKay-Cruise, who was appointed on the 1st of March 2023, and is a member of the Remuneration and Nomination Committee, and as a new Director, Heith is standing for election at today's meeting. Heith?

Thank you, Graeme. It's an honor and privilege to stand before you today to seek election, to join your Codan Board. So why am I here? Over the past 25 years, I have become attracted to those organizations with a significant addressable market and targeting international growth. My experience, leading global and local organizations in media, education and technology sectors with a true growth mindset has become my sweet spot. So what experience might I bring to your Board to complement the skills of my fellow directors. Firstly, my understanding of technology businesses, as the current chair of Straker Limited, and the previous Chair of hipages Limited. Secondly, my strategy and M&A experience comes from my time as the Global Chief Executive of a private education company, Study Group, as well as leading the ACP Media business in New Zealand. And thirdly, my exposure to capital markets, having been involved in ASX and private equity-owned companies throughout my career. My governance experience as a director of the ASX listed Southern Cross Media Limited and also Straker Limited, together with my role as a National Director on the Board of the Australian Institute of Company Directors further complements my skill set. And finally, I believe that I have the passion, capacity and commitment to assist the team, drive growth and shareholder value for Codan. Thank you in advance for your support.

So we're very pleased that Heith and Sarah have joined the Board. Finally, your Managing Director and CEO, Alf Ianniello, who joined the Board in January 2022. For the sake of completeness, I bring to shareholders' attention that I am retiring my position as a Director by rotation. And being eligible, I'm standing for re-election at today's meeting. We're also joined by Michael Barton, who will act as Company Secretary for this meeting. Michael was appointed to the position of Chief Financial Officer and Company Secretary in September 2009. I've asked Michael to address some administrative matters during the course of today's meeting, and to also read out any shareholder questions that we received prior to and at today's meeting, and we'll hand over to him at the appropriate time. As mentioned, there will also be the opportunity for variable questions before we address the AGM resolutions. And when Michael does step up to provide that assistance, he's going to stay seated because he's actually on crutches today. So we'll get him to stay in position. Proxies have been received from 481 members representing over 63% of the company's voting shares. These will be reported to the ASX for each resolution. After discussion of each resolution and before putting the resolution to a vote, the proxy votes will be displayed on the overhead screens for members information. Ladies and gentlemen, in combination with the presentation from Alf, I'd now like to update you on Codan's business over the past 12 months, and how the 2024 financial year is shaping up so far. So around the time of last year's AGM, it had become apparent that Minelab's revenues from the sale of gold detectors into Africa was being significantly disrupted due to the military coup in Sudan. The dislocation of Minelab's largest market in Africa continued throughout the whole of FY '23, and is continuing with no sign of improvement in FY '24. Minelab African revenues in FY '23 were 70% lower than that had been achieved in FY '22. And this was a disappointing outcome. Offsetting this was how the rest of the Codan businesses performed in FY '23, and what was and is a challenging macro environment. Minelab Rest of the World and Countermine achieved aggregate revenues equal to the levels achieved in FY '22. And our communications business comprising Zetron and Tactical Communications grew revenues by 14% over FY '22. And importantly, improved the segment profitability contribution to 25%, which was an improvement of 21% over the prior year. Our second half EBIT performance at $46.5 million was a 12% uplift on the first half. And our full year revenues were 10% down, at $457 million, and we delivered EBIT and statutory NPAT of $88 million and $67.7 million, down on FY '22, but slightly better than rebased market expectations. We renewed our debt facilities for the medium term. Net debt was at $52 million at 30th of June, and we saw continuing operating cash flow improvements in the second half of FY '23. As a result, we, therefore, have a strong balance sheet with low leverage. We remain committed to our clearly articulated 3-pillar strategy: invest in ourselves, strengthen our core business, and disciplined capital allocation, relevant to both the metal detection and communications businesses. Therefore, we are continuing to allocate capital, to develop our pipeline of new products, to strengthen our core business, and to accelerate our growth through the acquisition of businesses and technologies that fit with and/or accelerate our strategy and product development road maps. During FY '23, we acquired GeoConex. And in August, we announced we had completed the acquisition of Eagle, which provides Zetron with scale in the U.K. command and control market, and a growth platform in the U.K. and certain European markets. We will continue to review opportunities to grow inorganically where these make sense. Shareholders will appreciate that the Codan business has evolved very considerably over the past 2 or 3 years. Following the Zetron, DTC, BWC and GeoConex acquisitions, coupled with the organic revenue growth achieved in communications, our Minelab African revenues in FY '23 represent less than 10% of group revenues. These acquisitions have been accretive for shareholders. As using the current financial performance under Codan's ownership, we now estimate that they have been acquired on an EBITDA multiple of 4x or 4 times. With the diversification of the Codan group through the expansion of the communications business and consequent changes in the organizational and executive structure, capital feedback from stakeholders, the Board has taken the opportunity to evolve the remuneration incentive and retention structure that applies to our executive team, and particularly our CEO from FY '24 onwards. My philosophy here is to start to wait a greater proportion of executive remuneration to being at risk, being based on medium- to long-term outcomes, and to being equity-based to bring greater alignment with shareholder outcomes. You will see the changes we have implemented outlined in the remuneration report and in the resolutions to grant our CEO equity rights for both short- and long-term performance outcomes under today's resolutions are consistent with this philosophy, and are fully explained in the remuneration report, and in the Notice of Meeting and explanatory memorandum. Codan's shares have traded in a wide range during the 12 months since last year's AGM. And whilst the share price itself is outside our direct control, we acknowledge that Codan's financial performance and prospects do materially influence the share price. And our financial performance in FY '23 was below our expectations for the reasons already outlined. Other than Minelab's performance in Africa, I am pleased with the progress we're making, with revenue and profitability growth metrics in each of Zetron, Tactical Communications and Minelab Rest of the World. Your Board and executive team remain focused on shareholder return performance and note that a relative shareholder return metric has been implemented into the long-term incentive plan commencing in FY '24. And I thank Codan executive team led very effectively by Alf, and all Codan employees for their efforts and contribution during FY '23 and FY '24 year-to-date to building a stronger Codan. Finally, to you, our shareholders, we appreciate that you have a choice how and where you invest, and we thank you for your interest and investment in Codan. Please now welcome your Managing Director, Alf Ianniello, for his address.

Thank you, Graeme. I'm delighted to welcome you all to the 2023 Codan Annual General Meeting, my second AGM as CEO. It's a pleasure to be here today and see so many familiar and friendly faces. And I'd also like to acknowledge those shareholders joining online. . Firstly, we need to take care of a procedural matter, please take note of our standard disclaimer. So the focus of the presentation today will be, firstly, Mike mention of changes to the Codan executive leadership team. I will then share a brief overview of our strategic direction, and provide a brief recap of our full year 2023 results, near-term priorities and first half FY '24 company outlook. I'll begin by introducing your leadership team. So I may ask the leadership team to stand quickly here at the front. So feel free to ask them a question after the presentation, but we have Daniel, Marjolijn, Peter, Scott, Paul and Ben. So take a seat, guys. You'll be familiar with most of our executive leadership team if you followed our story. But there are some fresh faces to introduce today. Marjolijn Woods has been with us for more than 5 years, and was promoted to the position of Chief Human Resource Officer in January this year. She brings strong people and culture experience to the position, and essentially understands the journey Codan is on, and the skills and personalities needed to achieve our strategic objectives. A key aspect of this is fulfilling our mandate to invest in ourselves by diversifying knowledge and thought leadership across the organization. Daniel Hutchinson has recently joined us as Executive General Manager of Strategy, Corporate Development and M&A. Daniel has 2 decades of investment banking and corporate advisory experience in advising global technology and growth companies on strategic transactions. His appointment to the leadership team reflects our growing confidence in expanding Codan's business through targeted strategic acquisitions that complement our existing technology products and markets. Lastly, Peter Charlesworth has advised that he'll be transitioning to retirement. Ben Harvey has been promoted to succeeding as Minelab Executive General Manager, effective of this month. Ben has been instrumental in growing our Rest of the World business, and an internal successor to Peter, will ensure a seamless transition. I have great confidence that Ben will build on Peter's great work. Peter leaves a lasting legacy at Codan and will remain with us in a part-time Chief Technology Officer position for the next 12 months. On behalf of the Board and the Codan community, I'd like to thank Peter for his contribution for the last 20 years. We are a company that firmly believes in structure following strategy, and each Codan appointment is aligned to delivering on our strategy to invest in ourselves, strengthen the core business and continue with disciplined capital management. We are proud to have such strong leadership at Codan, and I would like to thank them for their commitment, hard work and efforts, particularly over the recent years. Codan has remained resilient and is committed to our strategy, which evolves as we incorporate recent learnings. 3 core pillars underpin this strategy, and these were specifically designed to drive long-term sustainable growth and value for shareholders. The first is investing in ourselves, which I define as getting everything right internally. To intertwine people, processes and systems in a way that drive improvements in core metrics. We are making an exceptional effort to ensure our future talent and hiring pools are reflective of our current and future needs and to ensure we have the right structure, people and roles to deliver on the strategic growth plan. A plan that not only demands technical expertise but also thought leadership. And this will ensure we maximize all possible opportunities by promoting diverse and divergent thinking. Secondly, strengthen our core business. As you have just heard, the challenges we all face today are no longer as linear as they were in the past, so we must constantly seek to improve the quality of our top line. This involves breaking new ground in pursuing geographic and business unit diversification, while pushing and finding ways to expand our suite of products and services into growing global addressable markets. Central to these ambitions is developing stable, reoccurring and predictable revenue streams. The third circle, disciplined capital allocation. It is important that the opportunities presented from Codan's core businesses are complemented and enhanced by an inorganic growth strategy. This approach has the potential to rapidly increase market share revenue or benefit from cost synergies. Central to our expansion position is pursuing strategically aligned and accretive acquisitions. Specifically, this means targeting opportunities that fill a technology gap or offer enhanced scale or increase market penetration. Our recent GeoConex and Eagle acquisitions are both reflective of our pursuit of bolt-on acquisitions. But only opportunities considered complementary to our existing technologies, offering secured pathways into emerging technologies are being considered. At the full year results, we detailed the motivations for the Eagle acquisition. Beyond the expansion opportunities and highly complementary technology, we assess the U.K.-based carve-out acquisition as a strong strategic fit to Zetron. Eagle was a well-positioned asset that added over 100 control rooms in the U.K. to Zetron's portfolio, which provides mission-critical communications and workforce management solutions. It also provided immediate access to the U.K. public safety market at a scale, and presents a solid platform to leverage our expanding presence in 5 European countries outside of the U.K. We are particularly excited about what this acquisition represents. For context, Eagle solutions are currently used by more than 2/3 of police forces in the U.K. as well as by major transportation hubs and airports. This includes Dubai International Airport and the London Underground. The acquisition provides access to new geographical markets and complementary technologies, some of which will be applicable to our existing North American markets. It develops and diversifies our markets through new international growth opportunities across the public safety and transportation sector. In terms of its customer base, the acquisition provides exposure to numerous high-quality customers. Support and service contracts make up 45% of Eagle's existing $21 million revenue, which is in line with our objective to create a more sustainable and predictable revenue base. The acquisition is expected to be EPS accretive from year 2, given the fact it is a carve-out, and we have entered a transitional service agreement with the vendor, and expect integration to be completed at the end of this financial year. It is through these types of acquisitions that Codan will be able to maximize and unlock full potential of the business, which provides confidence for future investment decisions as we continue to build strong track records of acquisitions. Over the last 12 months across the organization, we have taken significant strides in embedding our environment, social and corporate governance framework. The framework is important because it creates value and makes us an employer of choice for best-in-class recruits, demanding purposeful work. From an environmental perspective, we joined the United Nations Global Compact, UNGC, because we are a responsible company and want to meet global challenges head on and to lead the way through these changing times for others to follow. The UNGC is a commitment to implement universal sustainability principles developed to support UN goals and we are entrenching these into our strategy, culture and day-to-day operations at our company. As a member of the UNGC, we sit alongside global entities who are world leaders in corporate sustainability. Socially, STEM is a focus area for Codan. And in recent months, we have been able to see tangible outcomes delivered to encourage diversity and inclusion for students to pursue a career in STEM. We are delighted to be honoring the Codan founders with a long-term commitment with the University of Adelaide to fund multiple PhD research scholarships that could span the research fields of AI, electronic engineering, signal processing and geophysics. These scholarships will provide Codan with exclusive access to the very best engineering talent. And as a result, exclusive access and rights to unique and valuable intellectual property with the intention to continue to enhance innovation wherever you are. The ESG report contained within our annual report provides greater detail on the progress made on the initiatives linked to the framework. We would encourage shareholders to view this, and we look forward to communicating progress against our initiatives during the coming year. Despite the uncertain geopolitical environment and challenging global macroeconomic factors, Codan has delivered a stronger second half result with group revenues up 16% versus the first half. In this financial year, Codan has become a stronger business as it has reduced its reliance on Africa, while enhancing its diversification, with the strong communications segment performance. The management team is focused on building a stronger Codan by leveraging its strength of innovative product development with diversifying our earnings and pointing our resources towards large global addressable markets in communications. Group revenue came in at approximately $457 million, down 10% on last year. The group delivered a statutory impact of $67.7 million, while the underlying NPAT was $65.5 million, down 33% and 35%, respectively. This was primarily as a result of ongoing and significant disruption in our Minelab African market. This was partially offset by strong organic revenue growth within Communications, up 14% versus FY '22 towards the upper end of our target range. And Minelab Rest of the World recreational detector sales supported by new innovative product releases. With strong growth from our Communications business and the decline of the African metal detection market, our Communications business delivered 60% of the group's FY '23 revenue. This is consistent with the building a stronger Codan strategy to diversify earnings and have a more balanced, stable and predictable revenue base. I'm proud to announce that our Communications business had an excellent year, with both Tactical Communications and Zetron achieving strong growth, and our total communication revenue was up 14% year-on-year, while the targeted range was between 10% to 15%. The Communications segment profit margin came in at 25%, which was our target, and an increase on FY '22 result of 21%. As of the 30th of June, our Communications forward order book was $163 million, an increase of 9% year-on-year. The success of our Communication business is a snapshot of Codan's strategic focus working. By targeting large and growing addressable markets, we increased segment revenues from developed markets and government customers. We are focused on enhancing the quality of revenues to increase stability across the organization. A large part of this is the engineering investment in our technology platform. This not only further enhances our value proposition to customers, it positions Codan as a true end-to-end solution provider and allows us to enter new geographies and adjacent markets. During the year, there were also a considerable investment directed towards strengthening sales teams and ensuring resources and expertise are in place to pursue opportunities in key growth markets. Minelab revenues reduced to $176 million from $262 million in FY '22. This is predominantly due to the continued disruption of the Northeast African market. However, it is pleasing to see pre-COVID trade levels now returning to other countries in Africa. It is important to note that all key Minelab markets delivered stronger half-on-half results, with revenues growing 38% in H2 compared to H1. Minelab segment contribution margin was also stable versus the first half at 32%. The Rest of the World recreational detector revenues remained remarkably resilient, growing 9% versus last year, with the main contributor being the new release [indiscernible], X-TERRA PRO, EQUINOX 700 and 900 detectors, delivering exceptional results in a challenging consumer market. Countermine also contributed to FY '23 strong result, with these technologies being used to demine in countries such as Ukraine. We are proud that through our technology, we are able to support humanitarian efforts. The successful execution of the near-term strategy, we see a more balanced, integrated and sustainable Codan. This is consistent with our aspiration to continue to deepen and strengthen our strategic priorities. Our core pillar to our strategy is to invest in ourselves. Codan continues to invest approximately $45 million into developing the next generation of technology and products. This investment is evenly split across our core businesses. Tactical Communications continues to enhance its offering as a full solutions provider. In the near term, they are focused on developing an industry-first multi-waveform radio solution in partnership with TrellisWare Technologies. The TrellisWare waveform is a scalable, low throughput offering, which is considered a standard in the Five Eyes communities. In contrast, DTC uses a token waveform technology, which has a high throughput to provide reliable video communications. This allows soldiers to switch between waveforms for effective, reliable communications and meet their precise location and mission needs. The multi-waveform radio expands our ability to participate in significant long-term soldier modernization programs across the U.S. military and the Five Eyes community. Zetron continues its expansion and growth of systems and support contracts. And a key focus in FY '24 is to continue to integrate the recently acquired Eagle and GeoConex. Minelab continues to focus on promoting the recently launched detectors and expand channels to market by e-commerce and geographic expansion. At the full year results briefing, we made a comment that communication, excluding Eagle, is targeting to deliver 10% to 15% revenue growth in FY '24 after normalizing for the impact of the large communications projects delivered in FY '23, which was approximately $20 million. The Zetron business is having another strong half, and the Eagle integration is progressing well, and is performing in line with our expectations. In the first half of FY '24, our traditional HF markets in Africa are being impacted by the geopolitical challenges being experienced in that part of the world. However, we remain excited about the medium-term growth prospects of our overall Tactical Communication business as we release our next generation of radios that will allow us to participate in significant long-term programs. At the full year results briefing, it was stated that Minelab's Rest of the World recreational market will continue high single-digit percentage growth in FY '24. Overall, Minelab has exceeded our expectations with first half FY '24 revenues, currently expected to be in line with the second half of FY '23, which will be approximately 40% uplift on the first half of FY '23. However, as a business, we must continue to work hard and plan as we navigate through geopolitical and global macroeconomic changes. Our values, organizational culture, hard work and positive outlook are at the foundation of our focus to build a stronger Codan. These attributes build confidence, engender adaptability and help us deliver on our strategic plans and ambitions. Our people demonstrated courage and tenacity in FY '23 after guiding Codan efficiently and productively through the volatility of the COVID era and through the myriad of challenges caused by global geopolitical issues. To improve the quality of our business, as all of this was playing out, is a testament to the planning that has been -- that has brought the company so far, and signals a bright future as we continue to strive to become a stronger Codan and to generate sustainable value for shareholders. I'd like to recap some of the key points made in today's presentation. Codan is a global business that will continue to leverage our creativity, and we have confidence in our ability to expand into new and adjacent markets. We are confident the strategic initiatives currently in place will position Codan to further grow revenue and earnings and market share. We have secured a more diverse earnings base across our businesses. We have significantly reduced our reliance on Africa as we lay the foundations elsewhere to secure more predictable revenue streams. And we seek to further strengthen the balance sheet with a focus on improved working capital, growing operating cash flows and flexibility from available undrawn debt facilities. Finally, on behalf of the Board, I'd like to acknowledge the significant efforts of our people and thank them for their contribution in helping Codan achieve our FY '23 results. And to thank you all, our shareholders, for your continued support and investment in Codan, and wish you well for the remainder of the year. I'd like to now pass back to Graeme.

Thank you, Alf. That was great. So I'll now turn to the formal business of the meeting. And before moving on to the various motions, I'll ask Michael to briefly run through the voting procedure.

Thanks, Graeme. There's 2 options available to shareholders. Firstly, voting in person. Shareholders were given a blue or pink admission card when they registered for the meeting. The pink admission cards have been issued to joint shareholders, where one joint shareholders already been issued with a blue card. For attendees who are voting in person, you're entitled to vote on a poll with all shareholders, representatives and attorneys of shareholders and proxyholders who hold a blue attendee card. On the reverse of your blue attendee card is your voting paper and the instructions. Attached to a proxy holder's attendee card is a summary of proxy votes, which details your 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 they wish to cast their votes. A Computershare representative will collect your completed voting paper at the appropriate time during the meeting. Please note that only persons who are shareholders or holders of a blue or pink card are entitled to address this meeting. The second option is for those people voting online today. For shareholders and proxy holders who are eligible to vote, select the vote icon on all -- and all resolutions will be activated with voting options. To cast your vote, simply select one of those options. There is no need for you to submit or enter a button, the vote will automatically be recorded. You will receive a vote confirmation notification on your screen. Voting on all items of business will be by poll. You have the ability to change your vote up until time the chair declares voting closed. I pass back to you, Graeme.

Thanks, Michael. So in addition to the voting procedures outlined by Michael, the notice of meeting provides details of the motions to be put to the meeting. And I will give shareholders the opportunity to ask questions and comment on each motion. As Chairman and I have received proxies from a number of shareholders, I now advise that all proxies given to me will be voted in favor of each resolution, as was outlined in the Notice of Meeting. So I'll now turn to the business agenda for the Annual General Meeting. The first item is to receive, consider and discuss the company's financial statements and the report of the directors and auditor for the year ended 30 June 2023. 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. I note that Codan's auditor, Mr. Chris Hollis of KPMG, is present and is also available to answer questions where and if appropriate. I can advise the meeting that we've not received any written questions for the auditor in advance of the meeting. This is, of course, the right time for shareholders to ask questions about this item of business, if any.

Yes, thank you. Yes. My question is addressed to Alf, and is in relation to the company's financial performance. The decline in profit for FY '23 has been attributed to the decline in Minelab and in turn, the military coup in Sudan. Well, military coups in Africa are nothing new, are they? They're going on all the time. It's a concern to me that whilst the revenue compared with FY '22 was down only $50 million, which was roughly 10%, why was the company's pretax profit down by over 30%? Can all of that be attributed to the African situation? Or are there other factors at work? And in turn, what is the expectation for our financial performance for FY '24? Will the situation in Africa continue to impact our financial performance? And if not, what differences will exist?

I'll break the question up because there's a few things in there. So I think we need to go back a few steps. So pre-COVID, Minelab and Codan was traveling at a certain rate. During COVID, we had a significant uplift of gold detection sales into Northern Africa. And that created a significant demand, obviously, significant volumes, significant profitability. I would suggest, over those 2 years, when the profitability was at $100 million, it was inflated. And that market dynamic was not going to continue. The military coup, there's a lot of military coups in Africa. The military coup in Sudan has a lot of variables in it. Once that actually occurred, it shut down the gold fields. And we had no ability to sell product into the goldfields, number one. Secondly, post-COVID, a lot of people moved out [indiscernible] mining. At the moment, the military coup then moved into a civil war. So Sudan, as we've made comment in our presentations, is still not a place we're selling product into. So we believe in FY '24, and as in the back end of FY '23, there will be no sales in Sudan. However, in Northwest Africa, where is Burkina Faso [indiscernible] in those countries, we're back to a running rate pre-COVID. When we talk about gold detection at the time, that would be one of the most profitable parts of our organization hence a significant impact to profitability. So just to wrap it up, the Comms division has continued to perform well, and we believe it will continue to perform well. All other elements of Minelab, being The Rest of the World, Countermine, and Northwest Africa are performing in line with expectation. It's just Sudan, we don't see that coming back, and we're not planning for that. So I don't believe there will be further disruption from what we see today. Africa is a very dynamic place, and sales into Africa are hard to estimate. We don't believe there'll be further impact on sales. I hope that answers the question.

Alf, another question over.

Right. Mr. Chairman, my name is Robert [indiscernible], shareholder. During Alf's presentation, he addressed very briefly the issue of Zetron and Eagle. Codan historically has been a manufacturing company, doing hardware and obviously, software that the company is in. But I was a bit shocked to see the 100 control centers that you seem to have acquired with Eagle. It was out of my 50 years' experience as an investor, I've got a sort of a horror whenever I see an Australian company investing overseas because some quite large, [ Bunnings, NAV, ] there are a number of large Australian corporates, much larger than Codan, who've invested overseas, and [indiscernible] knows. So that's one big problem. You are 10.5 hours time zone difference from the U.K. The other problem is that you're investing in these control centers, you're investing in human resources type situation or facility services. And I've also noticed that when engineering companies try to take over and run human resources type companies, like control runs, they also end up having a problem, and I can give you examples of that, but I won't. How exactly do you intend to control the facilities in the U.K. from Adelaide? And what sort of experienced staff have you got for running control centers with large numbers of employees? I mean, okay.

Okay. Again, there's a number of elements to that question, and I'll kind of break it up, and I'll get a couple of the executives to address the specifics around what the Eagle acquisition is, and what we mean by command and control room business. And I think we'll get that clarity, Scott, just -- you're going to kind of talk to that in a second. On the general point about an Australian company, Australian companies and Codan in particular, investing overseas. Actually I think, one of Codan's great successes has been its ability to export technology and IP and distribute product internationally. The growth opportunities for our business are overseas. More than 90% of the revenues that Codan generates are generated outside of Australia. And that's where the growth opportunity is in, in first world, Northern Hemisphere markets in particular. And in particular, for our radio communications business, the vast majority of those opportunities are outside of Australia. So that's the reason why we're investing capital offshore. So that's the first point. The kind of growth, we see the growth opportunity, we see the returns opportunity from investing capital, owning and operating businesses internationally. The next part of your question is, well, those -- how do we ensure that we've got our arms around those businesses that we've got the right visibility, transparency, the right management team, frankly, in place, working with the corporate team and driving those businesses forward. And I've got confidence that the executives that we've got in place, coupled with a lot of international travel by our corporate executives and our CEO, and including by our Board, and regular contact with, and deep contact with the executives running those businesses, that we've got a good understanding of where we're at, what the opportunities are, where we should line up resources behind those businesses, and where we shouldn't invest. So that's how I can answer the general point. I think we've got a track record. And the point I made in my address around the acquisition economics that we've achieved to date, on money that we've invested in the communications sector over the last 2 or 3 years, I think it's self-evident that we've created value for shareholders to this point. But it's not a given that -- we'll continue to identify new opportunities to continue to expand that business. And if and when we do, we'll give that the appropriate kind of risk, risk assessment, appropriate diligence and make sure we've got the right leadership group driving those businesses forward. On the specific question around command and control, I might get our MD for the Zetron business to address that concern because I think it's pretty straightforward to address.

Yes. So I think there might have been a misperception. So when we acquired Eagle, what we acquired was a company that was delivering technology, service and software to 100 control rooms within the U.K. So we didn't actually acquire control rooms.

Yes, I think that's a key point. We're not staffing and running and operating control rooms. And I've got a personal experience of similar to your own, where that's a tough place to be. Okay, one more?

Thank you, Mr. Chairman. My name is [ Ray Miles ], a shareholder and a member of the Teaminvest Group in Australia, of which a number of our Adelaide representatives are here today. And I'd just like to thank you Alf for coming to our meeting in April and presenting to us. A couple of commendations just to preface my question, sir. Thank you to the Board. I think the new remuneration report you produced this year is very good, great step forward. I commend you on that. And also commend Alf in the way the leadership team is growing, and the fact that you've been able to bring people through the company rather than all external appointments, I think, shows a sign of strength as well. My question really to help, I think I asked it last year as well, is I would like to see a few more metrics in -- up in the top end of the report, rather than down the bottom. In particular, about the way in which the percentage for each segment has developed and the return on capital that each segment generates. One has to go to notes on the accounts, Page 92 of the annual report, to find enough data to be able to work that out yourself. And I think, it has helped shareholders of [indiscernible] that was a little bit higher up. And I'm just wondering also whether with the growth of the 2 arms of Communications, whether at some stage, you see any interest in splitting that into 2, so that again, shareholders can see the role of performance of DTC and Zetron.