Codan Limited (CDA) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. My name is Graeme Barclay, and I'm the Chair of your company, privileged to be the Chair of your company and have been so since February 2023. We acknowledge the Kaurna people of the Adelaide Plains as the traditional custodians of the land where we are meeting on today. We pay our respects to elders past and present and recognize the enduring connection of Aboriginal and Torres Strait Islanders peoples to the country. As Chair of this meeting and on behalf of my fellow directors, I'm pleased to welcome you all to the 2026 Annual General Meeting of Codan Limited. It's just after 11:00 a.m., and we have a quorum, so I declare the meeting open. Today's meeting is a hybrid meeting. And in addition to company representatives and shareholders present here in the room, shareholders, proxy holders and guests can participate in the meeting 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 via the platform. It's my pleasure to introduce the current Board of Directors of Codan Limited to you, and I'll ask each director to acknowledge and raise their hand when I introduce them. Firstly, I'd like to introduce Kathy Gramp. Kathy was appointed to the Codan Board in November 2015 and is a member of the Audit and Risk Committee and a member of the People, Remuneration and Nomination Committee. Next, I'd like to introduce Sarah Adam Gedge, who was appointed on 1st of February 2023 and is Chair of the Audit and Risk Committee. Next, I'd like to introduce Heith Mackay-Cruise, who was appointed 1 March 2023 and is the Chair of the People, Remuneration and Nomination Committee and is standing for reelection at this meeting. And finally, our Managing Director and CEO, Alf Ianniello, who joined the Board in January 2022. We're also joined by Daniel Widera, who is Codan's Company Secretary. And I've asked Daniel to address some 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'll note the slide above displays to those attending virtually how to ask a question and how to vote on the virtual platform. Technical difficulties may or could arise during the meeting, and I note I have the discretion to determine the impact on the meeting and how the meeting should proceed if we experience any technical issues. And 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 meeting is affected. I declare voting open on all items of business. So the vote icon will appear for those voting online, and you can submit votes at any time. Nigel Bulling of Computershare Investor Services is appointed as the returning officer and to conduct the poll. As outlined in the Notice of Meeting, where your directors can express a view on the resolutions, your Board strongly recommends that shareholders vote for the resolutions. The notice of meeting and explanatory memorandum were released on the 18th of September 2026, and I propose to take those as read. So the format for today's meeting is an address, firstly, from myself as Chair and then an address from our CEO on Codan's strategy, financial performance in FY '26 and year-to-date and the near-term outlook. And we'll then move following those presentations to the formal resolutions to be voted on at today's meeting. And we'll take questions in relation to the resolutions as relevant, and there'll be an opportunity at the end of the formal business to have a general Q&A session on any other aspect of the business that shareholders want to get the opportunity to discuss. In terms of proxy votes, proxies have been received from 340 shareholders, representing 78% of the company's voting shares. As we get to each of the resolutions and prior to shareholders who haven't voted yet being asked to cast their vote, the proxy votes will be displayed on the overhead and online screens for shareholders' information. So before I ask Alf to address shareholders, I'd like to take a few minutes just to reflect on the progress that Codan has made over the 12 months to June '26 and how the 2027 financial year is shaping up so far. In FY '26, Codan had an outstanding year, achieving growth of 30% in group revenues to $875 million, which was a 67% growth in group EBIT of $244 million and a 69% growth in group NPAT to $175 million. Our Communications business comprising DTC and Zetron grew revenues to $506 million, up 22% compared to FY '25, and that was slightly above the top end of the targeted 15% to 20% range, driven primarily by strong demand for unmanned radio systems in the second half of the year. Segment profit also increased significantly to $156 million, which was a segment profit margin improvement to 31%. In May 2026, Codan announced the acquisition of Adaptive Dynamics, a U.S.-based engineering company specializing in the development of anti-jamming and interference mitigation technologies critical to the resilience of tactical communications. The acquisition of Adaptive Dynamics completed early in the FY '27 year and is now being integrated into our DTC business. The Communications segment ended FY '26 with a closing order book of $380 million, up 50% compared to June 2025, achieved by a strong uplift in order intake across both DTC and Zetron and providing a leading indicator for continued growth in the current FY '27 year. That indicator of strong demand from June has continued with elevated levels of demand for unmanned products from conflict regions in the first 3 months of FY '27, leading to the trading performance upgrade that we announced on the 29th of September. Our Minelab business had an exceptional year in FY '26, growing revenues by 42% compared to FY '25 and profit increasing by 65% compared to FY '25 an amount of $162.4 million for that year. Segment profit margin improved to 45%, up from 39% in FY '25, driven by revenue growth, product mix and operating leverage. Performance was strong across the business with Minelab Africa increasing revenue by 60% compared to FY '25 and Minelab's Rest of the World business lifting revenue by 32% compared to FY '25. And Minelab successfully launched 4 new products in FY '26 in the gold, recreational and Countermine markets, including the new flagship GPZ 8000 Gold detector, the Gold Monster 2000, the Vanquish 60 and Countermine's MDS-20 detector. Bringing new products to market reflects Minelab's global technology leadership and continuing investment in its product portfolio and positions FY '27 to be another year of strong growth. In terms of strategy, the clarity of our strategy of building a stronger Codan has delivered exceptional growth over the past 3 or 4 years, and we remain focused on the 3 core pillars of that strategy that drive long-term value, invest in ourselves, strengthen our core businesses 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 markets. Pillar 2 is to strengthen our core businesses through sustained engineering investment in product development to maintain our competitive position across all segments. And Pillar 3 is to diversify earnings and create value through the allocation of capital to inorganic growth of the communications business. We are partway through the process to reset the strategy for the next phase of Codan's growth, but we envisage retaining the 3-pillar framework that has served us well over the past 3 years to assess our strategic options including strengthening our systems, processes and people, sustaining engineering investment in innovation and product development to maintain our competitive position across all segments and geographic expansion into new and adjacent markets, primarily within developed markets. We will evaluate the allocation of capital where we see compelling returns, whether in R&D, market development, operational capability or in inorganic growth opportunities as we seek to build a larger, more resilient and diversified earnings base for Codan, where we identify acquisition opportunities that allow us to expand our addressable markets, cost effectively accelerate differentiated product development or fill technology gaps or provide complementary technologies and capabilities, we will continue to pursue these opportunities where we believe the outcome will be accretive for shareholders. Our interest remains primarily on inorganic opportunities for our communications businesses. We require capital flexibility to be able to take advantage of inorganic opportunities as they arise, and this means that our capital structure will need to evolve to meet our future funding needs, depending on the scale of that capital requirement. And that brings me to the balance sheet. Our balance sheet at 30 June showed a very strong position. We're actually in a net cash position with $35 million in cash and substantial debt funding capacity, including an undrawn $250 million total debt facility and a further $150 million in accordion capacity available subject to bank approval. That capacity provides us with near-term liquidity and flexibility to act decisively on inorganic opportunities as they arise if they're of that scale. Shareholder returns. This FY '26 result was another excellent year for Codan shareholders. Earnings per share grew by 69% compared to FY '25, increasing to $0.965 per share and fully franked -- full year fully franked dividends totaled $0.485, an increase of 70% compared to FY '25. In addition, Codan's share price has risen from $20.11 at 30 June 2025 to $62.69 being last night's closing price. The market capitalization of your company is now approximately $11.4 billion. We were pleased to announce in September that Codan had been included in the ASX 100 Index for the first time in our history. Executive remuneration, the structure and outcomes for FY '26 were set out in considerable detail in the remuneration report. The STI outcomes for the CEO and other executive KMP reflected the group's exceptional performance during the year. And for FY '27, we've simplified the long-term incentive structure by combining the long-term and superior performance incentive plans into a single plan and increasing the weighting of relative TSR from 11% to 25% and the other 75% of the long-term incentive scheme will continue to be based on compound annual growth in earnings per share over the 3-year performance period. Your Board believes these changes strengthen the link between executive remuneration, shareholder returns and the group's long-term performance. It's also worth highlighting that last month, we announced that revised remuneration terms have been agreed with Codan's CEO. Codan Group performance under Alf's leadership over the past 4 years has been exceptional. And we, therefore, wanted to ensure Alf's commitment to Codan for the next 4 years at least, and that is what the new arrangements do. They provide significantly higher performance goals linked to higher remuneration, largely at-risk performance-related and paid in equity instruments. These arrangements were externally benchmarked as part of the process. And we believe that the new package aligns Alf with shareholder outcomes for the medium to long term. I do wish to advise shareholders that Alf has indicated an intention to sell up to approximately 43,000 shares between now and the end of the calendar year. And the Board has approved the proposed sale in principle, which must occur within permitted trading windows and would be subject, as always, to Codan's share trading policies. The proposed sale is to meet personal tax obligations and other personal financial commitments. As MD and CEO, I believe Alf remains committed to Codan's long-term growth, and he will retain a significant shareholding of approximately 177,000 shares in Codan together with a significant number of performance rights, whose vesting is tied to achieving performance targets over the coming years. A couple of comments in relation to the group auditor. So since listing on the ASX in 2003, KPMG has acted as Codan's auditor. We've been satisfied with KPMG's performance over that period, and we have no concerns over audit quality or independence. Given the Parliamentary Joint Committee inquiry into whistleblower and misconduct allegations involving KPMG, I can confirm we are also satisfied that none of the recent concerns over access to private and confidential information impacts Codan or Codan information in any way. Whilst audit firm rotation has not been mandated by ASIC or treasury, we have formed a view that it is good practice that Codan seek tenders for the provision of external audit services, which we intend to do in the second half of the FY '27 year. And if there is to be a change, it would likely to be implemented for the FY '28 year. We will keep shareholders informed at the appropriate stage of that process. The outstanding FY '26 results could not have been achieved without the significant contribution, expertise and effort of Codan's people across the globe. Our more than 1,100 employees are the cornerstone of our success, and we are committed to nurturing a positive and inclusive workplace. On behalf of the Board, I thank Codan's high-caliber executive team led expertly by Alf and all Codan employees around the world for their hard work and contribution to the results achieved during the last financial year and the FY '27 year-to-date. I also thank my fellow directors for their diligence, hard work, wise counsel and collaborative approach. And finally, to our shareholders, we appreciate you have a choice of how and where you invest, and we thank you for your continuing support of and investment in Codan. Please welcome your Managing Director, Alf Ianniello, for his address.

Good morning, ladies and gentlemen. I'm delighted to welcome you all to the 2026 Codan Annual General Meeting. It's my fifth as CEO of the company. It's a pleasure to see so many familiar faces here in person and also acknowledge those shareholders joining us online. As Graeme highlighted, FY '26 was an exceptional year for Codan, achieving growth of 30% in group revenues, 67% in group EBIT and 69% in group NPAT. Within our Communications business, revenue from defense customers represented 58% of the segment total, up from 38% in FY '25, underscoring the increasing importance of this vertical to Codan. DTC delivered an outstanding performance with revenue from high-growth unmanned sector more than doubling in FY '26 versus the prior year to approximately $215 million. Key order wins for Zetron included a $19 million contract with one of the largest utilities on the U.S. East Coast and an $11 million mission-critical services contract with the U.K. ESN network. Minelab's Rest of the World business achieved significant growth in FY '26, driven primarily by strong uptake of the GPZ 8000 as well as the Gold Monster 2000, and it's also meaningfully expanded its distribution footprint and retail presence in Australia and North America. Minelab Africa delivered revenue growth across all regions, driven by the successful launch of the Gold Monster 2000. User feedback for both the GPZ 8000 and Gold Monster 2000 has been resoundingly positive, in particular, for their performance in highly challenging and previously explored areas. Our strategy, building a stronger Codan was executed and completed 18 months ahead of schedule and work has begun on the second iteration of this strategy. Our focus remains clear: sustainable organic growth in both Minelab and Communications, disciplined capital allocation and continued investment in innovation and our people. On the people side, we have invested in critical hires to strengthen capability in key areas. We also continue to develop internally to deepen our leadership bench and improve succession planning across the business. The group continues to concentrate on areas where Codan can differentiate and lead. Our acquisition of Adaptive Dynamics, which completed at the end of July 2026 is expected to meaningfully enhance DTC's U.S.-based technical capabilities in unmanned systems and strengthen its ability to compete for next-generation U.S. and allied defense programs. Our focus is now on integrating Adaptive Dynamics electronics warfare capabilities across DTC suite of unmanned products. In FY '26, Codan invested approximately $76 million in engineering across its businesses, representing around 9% of group revenues. This investment ensures the group remains at the forefront of innovation and product development, supports our competitive positioning and drives our organic growth strategy. Our investment continues to be focused on future technologies, including multi-waveform radios, AI-enabled dismounted soldier ecosystems, next-generation cloud-based command and control capabilities and new detection products across recreational, gold and military markets. In FY '26, ongoing innovation across our BluSDR range led to DTC securing its first orders for the sale of radios into multiple programs of records for U.S. military initiatives to drive sovereignty. Codan continues to strengthen its environmental, social and governance initiatives, and we remain deeply committed to living our values and maintaining an exceptional culture. Regarding the environment, FY '26 marked an important milestone for Codan as our first year of mandatory climate-related financial reporting. We have strengthened the collection of Scope 1, Scope 2 and Scope 3 emissions data, assessed climate-related risk and opportunities, engage with suppliers and conducted climate scenario analysis. With respect to social initiatives, we continued our long-standing support for a range of organizations, including Variety, Youth Opportunities, KickStart for Kids, Hutt Street Centre and Catherine House. From an education perspective, we deepened our investment in STEM through university scholarships, student mentoring and industry engagement. Also in FY '27, we awarded the inaugural Codan Founders' PhD scholarship, which is a significant milestone for us and acknowledgment of the legacy of our founders. We also continued our support for Yalari and indigenous education scholarships. Our values, customer-driven, trust and integrity, high performing and can-do are guiding principles that shape our discussions, decisions and interactions. By embracing these values, we create a culture of excellence, collaboration and integrity that brings out the best in our people and sets Codan apart in the industry. On the 29th of September 2026, Codan released a trading update for the first half of FY '27 and an updated communications outlook statement for the full year of FY '27. This update highlighted the outstanding trading conditions we are experiencing in the first half of FY '27. Regarding the Communications segment, Codan continues to experience unprecedented levels and pace of demand for unmanned systems in conflict areas. Outside of conflict areas, Codan now expects the Communications segment to deliver first half FY '27 revenue growth above 20%. With the strength of trading and order intake year-to-date FY '27, Codan now expects the Communications segment to deliver first half FY '27 revenue of between $410 million and $420 million. This compares to $221.8 million for the first half of FY '26 and $506.2 million for the full year of FY '27. The elevated level and mix of demand is expected to generate significant operating leverage, resulting in first half FY '27 EBIT margin for the segment in the order of 40% compared to 26% in the first half FY '26 and 31% in the full year of FY '26. With respect to Minelab, the first half FY '27 revenue run rate is tracking slightly above the second half of FY '26. This is driven by the demand for the recently launched GPZ 8000 and Gold Monster 2000 detectors, a favorable gold price and the continued expansion of its Rest of the World business. At a group level, based on order visibility across the remainder of the second quarter of FY '27 and subject to final product mix and shipments, Codan currently expects to achieve NPAT for the first half of FY '27 of not less than $162 million versus $71.2 million in the first half of FY '26 and $175.2 million in the full year of FY '27 -- '26, sorry. Regarding the full year FY '27 outlook for Communications segment, while current indications are that the elevated sales orders momentum may continue into the second half, order visibility in conflict regions is low. And it's too early to determine whether the elevated demand and margin experienced in the first half of FY '27 will continue into the second half of FY '27. Balancing all these factors, Codan is currently targeting full year FY '27 revenue growth for the Communications segment to be at the upper end of the previously announced 30% to 40% range compared to the full year of FY '26. In closing, FY '26 was another year of strong execution for Codan. We continue to innovate, invest in our people and in product development and focus on understanding our customers' needs and exceeding their expectations. This success was underpinned by our people. And on behalf of the Board and the leadership team, I thank all our employees for their dedication to high performance, the quality of our products and the way they support our customers. I would also like to thank our executive team for their strategic vision, work ethic and commitment. This year also marked the retirement of Michael Barton as Codan's Financial Officer and Company Secretary on the 31st of August 2026. Michael is here today with a big grin on his face. And I thank him for his outstanding and steadfast contribution to Codan over 22 years of service. Finally, I'd like to thank our shareholders for their support and investment in Codan. Together, we're all building a stronger Codan. Thank you.

Thanks, Alf. That takes us to the formal aspects of the meeting, and I'll ask Danny to come up and run through the voting procedure, and then I'll be back.

Thanks, Graeme. So shareholders were given a blue or pink admission card when they registered for the meeting. Pink admission cards have been 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 and proxy holders who hold blue attendee cards. On the reverse of your blue attendee card is your voting paper and instructions. Attached to proxy holder's attendee card is a summary of proxy votes, which details 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 in the room will collect your completed voting paper at the appropriate time during the meeting. Please note that only persons who are shareholders or holders of blue or pink cards are entitled to address this meeting. In terms of 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. To cast your vote, simply select one of the options. There is no need to hit a submit or enter button as the vote is automatically recorded. You will receive a vote confirmation notification on your screen. Voting on all items of business will be by poll, and you can change your vote up until the time the Chairman declares voting closed. I'll pass back to Graeme now.

Thanks, Danny. So I'll now turn to the business agenda for this AGM. The first item is to receive, consider and discuss the company's financial statements and report of the directors and auditor for the year ended 30 June 2026. We're not required to formally adopt these documents by way of a resolution of shareholders. However, I would be pleased to take any 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 auditor is represented by Julie Clear of KPMG, who is present and available to answer questions where appropriate. I don't think there's any questions for Julie online. Is there any questions for Julie in the room? Just wait for the microphone Thanks, Robert.

Robert Ken with [indiscernible]. Regarding the audit report, I note that the only significant audit amount, whatever, listed in the audit report was revenue recognition. Now I would have thought -- I always think of Codan as mainly a manufacturing business. You shipped the goods and you recognize the revenue. Do you have a significant amount of long-term contract work in progress that would mean that revenue recognition was a big issue?

I'll let Julie comment in a moment, but we do have systems sales activity that we do contract with customers and the delivery of that system is progressive. It's not simply shipping and delivering a single product. So yes, there are system sales across the business. One other question in the room.

My name is Tony Greco, just here representing the Australian Shareholders' Association. We're holding proxies for 50 shareholders of approximately 246,000 shares. Just want to acknowledge the great performance of Codan and thank yourself, the Board, all the employees for the great work that they've done this year. I think all our ASA members are very happy with the performance, very happy with the increased dividend. So looking forward to the next year as well. We intend to vote in favor of all resolutions that are put forward this morning.

Thanks, Tony. Just dealing with the specific resolution in relation to the financial statements. Are there any other questions for Julie? Okay. We'll move on to the ordinary business of the meeting. And as set out in the notice of meeting and sample proxy form, I, as Chair, will exercise any undirected proxies in accordance with the proxy appointment and the applicable voting exclusions. The first resolution is in relation to the adoption of the remuneration report for the year ended 30 June 2026. Section 250R(2) of the Corps Act requires that the remuneration report be adopted at the Annual General Meeting. Please note that the vote on this resolution is advisory only and does not bind the directors of the company. So the proxy votes for this resolution are shown on the screen, on the overhead and on the online screen. Are there any questions on the remuneration report? Anything online? Anything in the room? Okay. No questions. So please lodge your vote for Resolution 1 as an ordinary resolution. Virtual attendees, please select the vote icon on your screen and cast your vote, simply select one of the options. Resolution 2 is the reelection of myself. And I'll ask Sarah to take the chair for this. It's inappropriate for me to chair on the item.

Thanks, Graeme. Okay. In accordance with clause 9.3 of the company's constitution, Graeme is required to retire and being eligible, has offered himself for reelection at this Annual General Meeting. Accordingly, Resolution 2 provides for the reelection of Mr. Barclay or Graeme as a Director of the company. And other than Graeme, the directors recommend shareholders vote in favor of this resolution. Please note that the details of the proxy votes are shown on the overhead and online screen. And I'd like to invite Graeme to address the meeting regarding his reelection. Do you want to do it from there, Graeme or up here?

Look, thank you for the opportunity to address this resolution. I joined the Codan Board in 2015 and became Chair in 2023. Over that period, Codan has transformed into a defense electronics technology company with global relevance and built the leading gold and metal detector company in the world. Particularly since 2023, the company has grown substantially in scale and performance and has delivered exceptional returns to shareholders over that period. In the past 3 years, shareholder returns exceeded 480% and Codan ranked #1 in its peer group for relative total shareholder return. The increase in market cap has taken Codan into the ASX 100 for the first time in its 60-year history, and I'm proud of these achievements. I bring extensive and varied executive leadership experience to the role. I've worked as CEO or Chair in the telecommunications infrastructure sector for the past 25 years, including in broadcast and mobile towers, managed services, wholesale fiber and subsea cables, data centers and fiber-to-the-premise businesses. I've led large-scale global M&A transactions along with sourcing the requisite capital to be able to close a number of deals to support the strategy of these various companies. I've worked with institutional capital providers for most of the last 25 years, successfully grown value for investors by building stronger, more profitable businesses and successfully executed exit transactions. Some of my experience is in the public market in addition to Codan. A good example is the experience I had as Chairman of Uniti Group Limited, which went through an IPO under my chairship and as an ASX-listed company between 2019 and 2022, undertook 10 acquisitions in that period, and the company was sold for $3.8 billion of enterprise value and a successful exit for investors. I'm also a chartered accountant with a finance background, so I have a strong understanding and a keen focus on numbers, commercial metrics, operational performance and risk-adjusted returns on capital invested. So to summarize, my contribution to your Board is a combination of knowledge of the Codan business, its strategy and people, technology and telecommunications industry and public markets experience, coupled with M&A, capital markets, commercial and contract skills and my experience as an executive. If reelected, my focus is to continue to create value for investors, working closely and collegiately with my Board colleagues and with Alf and the management team, and I would appreciate your support. Thank you.

Thanks, Graeme. Does any member wish to speak or ask a question on the proposed resolution? And if you do, if you could just raise your pink or blue card. Are there any questions online, Danny?

We do, Sarah. We have one question for you, Graeme. Are you planning to serve your full 3-year term and can you describe for us your dealings with the founding families, from a shareholder here.

In terms of the full term, that will depend on a number of things. It was very important to ensure that we had longevity of our CEO for the next period. And I think, provides the opportunity to work through Board succession over the next 3 years. The exact timing of that will be worked out with my Board colleagues. In terms of the founding shareholder families, yes, I do have a direct regular and ongoing dialogue with representatives of those 2 major shareholding families, and I meet with them on a reasonably regular basis.

Thanks, Graeme. Danny, anything else on that? Okay. Well, there being no further questions or comments, I ask shareholders in the room to cast their votes on resolution 2 as an ordinary resolution. And I'll now pass back to Graeme.

Okay. Resolution 3 is the reelection of Heith Mackay-Cruise as a Director of the company. In accordance with Clause 9.3 of the company's constitution, Mr. Mackay-Cruise is required to retire and being eligible has offered himself for reelection at this AGM. Resolution 3 provides for that reelection of Heith as a Director of the company. Other than Heith, the directors recommend shareholders vote in favor of the resolution. And the votes of the proxy -- the proxy votes are shown on the overhead and on the online screen. And before I ask shareholders that haven't voted to vote, I'm going to ask Heith to address the meeting.

Thank you, Chair. Good morning, everyone. I'm Heith Mackay-Cruis, and I'm seeking your support for my reelection. I joined your Board in March of 2023 and earlier this year, was made Chair of the People, Remuneration and Nomination Committee. I'm proud to be involved with Codan, a business that over the past 3 years has delivered a total shareholder return of 486%. I bring 3 things to your Board. First, leadership experience in international consumer businesses from PepsiCo to PBL Media to the Global CEO of Study Group, a private tertiary education operation across 70 locations worldwide. Second, major transactions and capital markets. I've held multiple Chair and Board appointments on both listed and private equity boards, each with major transactions. Most recently, I led Southern Cross Media's merger with Seven West Media. This experience supports Codan's disciplined approach to acquisitions. Third, technology, cyber risk and governance. I chair the private equity-owned Orro, which provides secure networks and cybersecurity to enterprise and government clients across Australia and New Zealand. I also bring contemporary governance as a National Director on the Board of the Australian Institute of Company Directors. I am committed to building a stronger Codan, and I'd be grateful for your support. Thank you.

Well, we do have one question. So Heith, if you can address this, you obviously resigned as Chair of Southern Cross Media within months of taking the job earlier this year. Can you please comment for the shareholders here what happened and whether you picked up any learnings and how you'll apply them around the Codan Board table?

Thank you to the shareholder that asked the question. Just to qualify, I was on the Board for 6 years and Chair for the previous 2, and I led the instigation of the acquisition, which was a merger as previously described. I decided to step down as part of Board succession, which was clearly amplified and notified to the market. And my learnings, I think, at the end of the day, the merger of the 2 of the largest media companies in Australia was the most significant media merger in the past 20 years for the country, a very significant transaction and a lot of complicated aspects to do with the merger, which those learnings get applied to the way we think about any of the acquisitions we do here at Codan.

Okay. Can I ask shareholders to cast their votes in relation to Resolution 3 as an ordinary resolution. And we can now move to the special business of the meeting. Resolution #4 is the approval of the grant of performance rights to Alf. And this is for his short-term incentive under the Codan Limited share rights plan. This plan is designed to focus the CEO on the creation of sustainable shareholder value. At least 60% of any short-term incentive awarded to Alf for FY '27, FY '28 and FY '29 would be delivered through performance rights. The maximum number for FY '27 is 54,752 rights and the maximum number for each of FY '28 and FY '29 will be calculated on the same basis when we know what the appropriate share price is at the relevant time. So as required under ASX Listing Rule 10.14, shareholder approval is sought for the issue of these performance rights to a director. The Board will assess performance against profitability, cash flow and nonfinancial objectives before determining any award. Further details in relation to the plan rules and performance measures were set out in the explanatory memorandum. So now added to the screen, the proxy votes in relation to this item. Does any member wish to speak on the proposed resolution? Do we have any questions in the room or online? Okay. So there being no questions, I move that -- I'm sorry, my apologies.

Mr. Chairman, John [indiscernible], shareholder. With tax considerations, are these performance rights likely to continue to have the same value in the future?

It's unlikely given what's going on with the CGT rules that apply. So for the holder, they'll have to navigate the changed environment, the changed tax environment.

The obvious question that follows is whether in fairness, the performance rights conditions may have to be changed in the future.

Fair question, John, and we'll take that under advisement and we'll consider it. My immediate reaction, though, would be that we've just been through the exercise of re-benchmarking what is a pretty significant change in the remuneration of the CEO. I'm going through the same exercise for the executive team to make sure that we can lock in the team that's delivered a fantastic performance for the company for at least the medium term. So I don't envisage that, but we'll take it under consideration. Okay. Let's move to members considering and if thought, passing resolution 4. So you're invited to lodge your votes for Resolution 4 as an ordinary resolution. Resolution 5 relates to the grant of performance rights to Alf for the long-term incentive plan. And Resolution 5 is to approve the issue of 63,878 performance rights for his FY '27 long-term incentive award. So the structure of this incentive is that it's equity-based. It's focused on multiyear performance delivered for shareholders with 75% of the award linked to growth in EPS, so compound annual growth in EPS and 25% linked to relative TSR measured over the period FY '27 to FY '29. And as I outlined in my address, I believe this structure creates strong alignment with shareholder outcomes whilst also supporting the retention of Alf as the CEO of our business. For FY '27, the Board has consolidated the previous long-term incentive and superior performance incentive plans into a single long-term incentive plan, which we have recalibrated as set out in the explanatory memorandum. This plan requires compound annual growth rates of 13% at threshold, 16% at target and 22% at max using the FY '26 base EPS of $0.965 per share as the starting benchmark. As required under ASX Listing Rule 10.14, shareholder approval is sought for the issue of these performance rights to Alf as a director. And as I've noted, I believe this creates a significant alignment of Alf with shareholders. The details of the proxy votes are now on the screen, online and overhead. Are there any questions or anybody like to speak to this resolution? Are there any questions online?

Nothing.

Okay. I've asked shareholders to lodge their votes for Resolution 5 in respect of the approving of the grant of performance rights to Alf for the long-term incentive. Resolution 6 relates to the remuneration of nonexecutive directors, and it's to approve the increase in the pool -- fee pool for nonexecutive directors from $1.2 million to $1.8 million per annum. Notwithstanding current NED fees are within the limits of the current pool, the Board is seeking approval to an increase in accordance with ASX Listing Rule 10.17 and Clause 9.9(a) of the company's constitution. We believe it's appropriate and reasonable to seek more headroom to attract and retain directors with the necessary skills and to provide flexibility to add Board members as the company grows. If approval is not obtained, the current fee level will remain as it currently is at $1.2 million per annum. As the nonexecutive directors have an interest in this resolution, the Board has refrained from making a recommendation and the applicable voting exclusions are set out in the notice of meeting. The proxy votes that have been received in relation to this resolution are set out on the online screen and on the overhead. Does any member wish to speak to this resolution? Thanks, John?

If my calculation is correct, this is a 50% increase. Could you give a little history over the remuneration for nonexecutive directors over perhaps the last 3 years and whether this is seen to just give head space for more than 1 future year. In other words, the sort of longer-term relationship between nonexecutive remuneration and the shareholders' positions.

Yes. So I think a couple of things to respond to that. One is that the fee levels paid to nonexecutive directors is something that is benchmarked externally, and we benchmark that on a regular basis. So we want to make sure that the fees being paid to nonexecutive directors are market-based and have a reference to that external exercise. That's not the issue here. The issue here is that we are a small Board with 4 nonexecutive directors. And as this company continues to grow in scale and complexity, I think there's an acknowledgment that whilst a small Board has been very effective to date that we're going to need to add some additional capability and some additional skills around the Board table. And this increase gives us the ability to do both things. One is pay market-based fees and also to increase the number and capability and skills of directors that we have on the Board. Are there any other questions? Is there anything online? Okay. So I would now move that members consider and if thought fit, pass Resolution 6 to approve the increase in nonexecutive director fee pool and you're invited to lodge your votes for Resolution 6 as an ordinary resolution. I'll just pause for a minute or so to allow those online time to finalize their votes. And then we're going to move to a general Q&A around the business, where the business is at and where the business is headed. [Voting]