CODAFCODAFOTC
Loading
Alfonso Ianniello: 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.
Michael Barton: 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.
Alfonso Ianniello: 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.
Sam Wells: 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?
Michael Barton: 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.
Sam Wells: 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.?
Michael Barton: 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.
Sam Wells: 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?
Alfonso Ianniello: 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.
Sam Wells: 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?
Alfonso Ianniello: 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.
Sam Wells: 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?
Alfonso Ianniello: 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.
Sam Wells: Great. We'll move across to some of the analysts. First question comes from Josh Kannourakis at Barrenjoey.
Josh Kannourakis: 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?
Alfonso Ianniello: 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.
Josh Kannourakis: 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?
Alfonso Ianniello: 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.
Josh Kannourakis: 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?
Alfonso Ianniello: 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.
Josh Kannourakis: 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.
Alfonso Ianniello: 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.
Sam Wells: Next question comes from Mitch Sonogan at Macquarie.
Mitchell Sonogan: 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.
Alfonso Ianniello: 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?
Mitchell Sonogan: 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?
Alfonso Ianniello: 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.
Sam Wells: Next question comes from Evan Karatzas at UBS.
Evan Karatzas: 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?
Alfonso Ianniello: 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.
Evan Karatzas: 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?
Alfonso Ianniello: 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.
Sam Wells: We might just move on to the next question, please, from Tom Tweedie at Moelis.
Tom Tweedie: 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?
Michael Barton: 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?
Alfonso Ianniello: 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.
Tom Tweedie: 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?
Alfonso Ianniello: 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.
Tom Tweedie: 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?
Alfonso Ianniello: 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.
Sam Wells: Next live question comes from Cam Bell at Canaccord.
Cameron Bell: 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?
Michael Barton: 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.
Cameron Bell: 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?
Michael Barton: 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.
Cameron Bell: Okay. Sure. And then just last one for me. Is 25% tax rate the new norm?
Michael Barton: 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.
Cameron Bell: Okay. Great. And congratulations, Michael, on everything you've achieved over the last 22 years.
Michael Barton: 22 years, yes. Thanks, Cam.
Sam Wells: 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?
Michael Barton: 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.
Sam Wells: 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?
Alfonso Ianniello: 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.
Sam Wells: 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.
Alfonso Ianniello: 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.
Sam Wells: 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.