ANNUAL REPORT 2024
Innovation wherever you are
Innovation wherever you are
Annual General Meeting
The Annual General Meeting of Codan Limited
will be held at:
11:00 am on Wednesday, 23 October 2024
The Courtside Room, The Drive, War Memorial Drive,
North Adelaide, South Australia
The meeting will also be held virtually
via an online platform at:
https://meetnow.global/MWTF2WY
Codan Limited
ABN 77 007 590 605
CONTENTS
CODAN FY24 SUMMARY
2
CODAN AT A SNAPSHOT
4
CHAIRMAN’S LETTER TO SHAREHOLDERS
6
CEO’S REPORT
10
METAL DETECTION
16
COMMUNICATIONS
22
ENVIRONMENT, SOCIAL AND GOVERNANCE REPORT
30
BOARD OF DIRECTORS
56
LEADERSHIP TEAM
58
FINANCIAL REPORT
60
ASX ADDITIONAL INFORMATION
127
CORPORATE DIRECTORY
129
CODAN | ANNUAL REPORT 2024 | 1
REPORT OF OPERATIONS
ESG
LEADERSHIP
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
CODAN LIMITED
Founded in 1959 and headquartered in South Australia,
Codan Limited (ASX:CDA) is an international company
that develops rugged and reliable electronics solutions
for government, corporate, NGO and consumer markets
across the globe.
Codan’s technologies include metal detection and communications.
We have approximately 900 employees located in Australia,
Canada, the USA, the United Kingdom, Ireland, the UAE,
Singapore, Denmark, Brazil, Mexico and India.
Our marketing reach embraces activity in over 150 countries,
with exports accounting for more than 85% of our sales.
CODAN FY24 SUMMARY
Group revenue of
$550.5 million
up 21% versus prior
corresponding period (pcp)
Net profit after tax (NPAT) of
$81.3 million
up 24% versus pcp
Communications revenue of
$326.9 million
up 19% versus pcp
Metal detection revenue of
$219.9 million
up 25%
versus pcp
Communications
orderbook of
$197.0 million
up 21%
versus pcp
Earnings
per share
45.0 cents
Underlying earnings
per share
36.3 cents
Annual dividend of
22.5 cents
fully franked
(interim 10.5 cents,
final 12.0 cents)
OPERATING
REVENUE
$550.5m
UNDERLYING
NPAT
$81.3m
EBITDA
$147.0m
270.8m
348.0m
437.0m
506.1m
550.5m
456.5m
2019
2020
2021
2022
2023
2024
78.6m
117.8m
158.8m
162.0m
116.8m
147.0m
2019
2020
2021
2022
2023
2024
2019
2020
2021
2022
2023
2024
45.7m
64.0m
97.3m
100.5m
65.5m
81.3m
Results for the year
ended 30 June
2024
% of
sales
2023
% of
sales
2022
% of
sales
2021
% of
sales
2020
% of
sales
2019
% of
sales
Revenue
Communications
$326.9m
59%
$274.5m
60%
$241.7m
48%
$95.5m
22%
$104.0m
30%
$77.6m
29%
Metal Detection
$219.9m
40%
$176.1m
39%
$262.3m
52%
$326.5m
75%
$236.4m
68%
$182.1m
67%
Other
$3.7m
1%
$5.9m
1%
$2.1m
0%
$15.0m
3%
$7.6m
2%
$11.1m
4%
Total revenue
$550.5m 100%
$456.5m 100%
$506.1m 100%
$437.0m 100%
$348.0m 100%
$270.8m 100%
EBITDA
$147.0m
26%
$116.8m
26%
$162.0m
32%
$158.8m
36%
$117.8m
34%
$78.6m
29%
EBIT
$113.9m
19%
$88.90m
19%
$137.4m
27%
$139.8m
32%
$89.6m
26%
$63.4m
23%
Interest
($9.4)m
($5.3)m
($1.7)m
($1.1)m
($0.6)m
($0.1)m
Net profit before tax
$104.5m
19%
$83.6m
18%
$135.7m
27%
$138.7m
32%
$89.0m
26%
$63.3m
23%
Taxation
($23.2)m
($17.4)m
($35.2)m
($41.4)m
($25.0)m
($17.6)m
Net profit after tax
$81.3m
$65.5m
$100.5m
$90.2m
$64.0m
$45.7m
Earnings per share,
fully diluted
45.0c
36.5c
55.6c
49.8c
35.3c
25.3c
Ordinary dividend
per share
22.5c
18.0c
28.0c
27.0c
18.5c
9.0c
Special dividend
per share
– c
– c
– c
– c
– c
5.0c
* Non-underlying income/(expenses) are considered to be outside of normal business activities of the group and for comparability reasons have been separately identified.
Underlying profit is a non-IFRS measure used by management of the company to assess the operating performance of the business. The non-IFRS measures have not been subject to audit.
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REPORT OF OPERATIONS
ESG
LEADERSHIP
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
$550M
Redmond
Monterrey
Florianopolis
Herndon
Knoxville
Chicago
Cork
Whiteley
Randers
Hampshire
Dubai
Penang
Gurugram
Singapore
Adelaide
Brisbane
Victoria
EUROPE
ASIA
AUSTRALIA
AFRICA
$83M
$153M
$42M
$57M
invested in R&D
10%
engineering % to sales
Invest in ourselves
Global sales
Total sales revenue
CODAN AT A SNAPSHOT
$231M
NORTH
AMERICA
SOUTH
AMERICA
$8M
Communications
59%
total
employees
900
engineers
Africa
$83M
Asia
$33M
Australia
$42M
Europe
$153M
North America
$231M
South America
$8M
250+
key manufacturing
sites
7
sales offices
15
Our global technology business
Business segment sales
Metal Detection
41%
$33M
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REPORT OF OPERATIONS
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FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
CHAIRMAN’S LETTER
TO SHAREHOLDERS
Dear Shareholders,
On behalf of the Codan Board and management team,
I am pleased to present our Annual Report for the year
ended 30 June 2024.
Year in Review
The FY24 year has been a successful year,
with Codan achieving strong growth in group
revenues (+21%), group EBIT (+29%) and group
NPAT (+24%). Pleasingly, each of our businesses
contributed to the significantly improved
financial performance in the past 12 months.
Our Communications business, comprising
Zetron and Tactical Communications, grew
both revenues and segment profit by 19%
over the pcp, and maintained their segment
profit margin at 25% whilst investing in new
engineering and sales capability required for
future growth. Pleasingly, the closing order
book of $197 million increased 21% over
the pcp, providing further confidence that
growth will continue to be achieved in FY25;
we continue to see significant opportunity for
these businesses to grow both organically and
inorganically in FY25. Our target for organic
revenue growth from Communications in FY25
remains in the 10 to 15% range.
Our Minelab business achieved aggregate
revenue of $220 million, up 25% compared
to pcp achieved organically, with an improved
segment profit margin at 35% versus 32% in
the pcp. Minelab’s African revenues improved
to $71 million (compared to $36 million in
the pcp), a pleasing result as the Sudan region
remains largely disrupted, so the improvement
is mainly from increased demand from West
Africa. Both Minelab Rest of the World (RoW)
and Countermine performed well in FY24 and
have identified growth opportunities for FY25.
In aggregate, we continue to target high single
digit growth in FY25 for Minelab RoW revenues.
We continue to believe that Minelab is a global
leader in gold detector technology, products
and capability. Accordingly, our strategy is
to continue to allocate capital to investing in
new product development that we expect
will enable Minelab to continue to lead the
market. Whilst no new products were launched
to the market in FY24, our engineering team
is working on a number of new technology
platforms that will come to market in FY26.
Financial Performance
In FY24, Codan achieved revenues, EBIT and
NPAT that were all significantly up compared to
pcp, and H2 also showed good growth across
all metrics compared to H1. Of the EBIT growth
of $26 million compared to pcp, $22 million
was achieved organically, an uplift of 24%
versus pcp.
Increase
over
FY23
FY24
$’M
FY24
H2
$’M
FY24
H1
$’M
FY23
$’M
Revenues
21%
550.5
284.6
265.9
456.1
EBIT
29%
113.9
59.5
54.4
88.0
Underlying
NPAT
24%
81.3
43.2
38.1
65.5
Dividend
Codan has a policy of distributing approximately
50% of its annual NPAT in dividends, and for
the current year this delivered total dividends
to shareholders of 22.5 cents fully franked,
comprising the interim dividend of 10.5 cents
and the final dividend announced in August
2024 of 12.0 cents. This represents an increase
of 22% compared to pcp.
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REPORT OF OPERATIONS
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FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Strategy & Acquisitions
Codan’s strategy of investing in ourselves,
strengthening our core businesses through sustained
engineering investment in innovation and product
development to maintain our competitive position
across all segments remains core to Codan’s success,
and we have a pipeline of new product development
projects under way in each of Minelab, Tactical
Communications and Zetron.
We have been clear that where we identify acquisition
opportunities that allow us to expand our addressable
markets, or cost effectively accelerate differentiated
product development, or fill technology gaps or
that provide complementary technologies and
capabilities, we will continue to pursue bolt-on
acquisitions where we believe the outcome will
be accretive for shareholders. We successfully
completed two bolt-on acquisitions during FY24
(Zetron UK and Wave Central) in line with our strategy,
and both businesses have been quickly integrated
and are meeting our expectations.
With net debt at $75 million at 30 June 2024,
we have a low debt to EBITDA ratio at 0.7 times,
existing banking facilities of $170 million (plus
$150 million accordion capacity, subject to approval),
providing us with the financial flexibility to pursue
on-strategy acquisition opportunities as they are
identified. We will continue to do so in FY25.
Our track record of successfully acquiring and
integrating businesses into Codan is a competitive
advantage and provides us with confidence we can
continue to create value for shareholders through
inorganic growth. This is evidenced by the financial
performance under Codan’s ownership of the 6
acquisitions we have completed over the past 3
years, which continued to improve during FY24.
We now estimate, based on current performance,
the effective acquisition multiple, in aggregate,
for these 6 acquired businesses is now approximately
3 times EBITDA, down from a 4-times multiple a
year ago. This reflects the profitable growth being
delivered under Codan’s ownership.
Our strategy to diversify earnings and create
value through the investment of capital in the
Communications business continues to work well,
with the added benefit that revenues and
profitability are now much more evenly balanced
across the group.
Capital Structure
Over the past 3 years, Codan has made 6 acquisitions
that have all been funded with a combination of
existing cash and/or debt. Our balance sheet remains
strong and, combined with our improved financial
performance, we currently have significant flexibility
to pursue our bolt-on acquisition strategy without
raising new equity or changing our dividend policy.
In the event that a compelling acquisition of scale
is identified we may need to reconsider Codan’s
appropriate long term capital structure, and this may
include new debt or equity capital at that time.
Shareholder Returns
FY24 has been an excellent year for Codan
shareholders, with EPS growing by 24% and
dividends per share growing 22% compared to
pcp. In addition, Codan’s share price increased
approximately 50% to $12.03 at 30 June 2024
compared to $8.03 at 30 June 2023.
Whilst the share price itself is outside our direct
control, we know that Codan’s financial performance
does influence our share price and in FY24 we
have successfully improved the quality of Codan’s
earnings and delivered significant profitable growth
balanced across each of our businesses. Both our half
and full year results in FY24 have exceeded market
expectations, and generally have exceeded the
targets set by the Board.
Our strategy and target addressable markets for
each of our businesses, how these businesses
are performing and how each is positioned for
growth into the future, is now better understood
by the investment community. We are pleased
with the revenue and profitability growth in each
of our businesses and we remain confident that
by continuing to successfully execute the Codan
strategy, and by delivering on our revenue and
earnings growth targets, that shareholder returns
will continue to increase.
To underline the importance of shareholder return
performance, a Relative Total Shareholder Return
performance metric was introduced into the FY24
long term incentive plan to better align executives’
remuneration with shareholder outcomes.
CHAIRMAN’S LETTER TO SHAREHOLDERS
Our track record of successfully acquiring and integrating
businesses into Codan is a competitive advantage and
provides us with confidence we can continue to create
value for shareholders through inorganic growth.
Executive Remuneration
As announced last year and as set out in detail in the
remuneration report, for FY24 and ongoing, we
made considerable changes to the remuneration
incentive structure and metrics that apply to the
CEO and other Executive KMP. I believe the changes
that were made have provided better alignment of
incentive rewards for our executive team, particularly
our CEO, with shareholders’ interests. In FY25 we will
continue to evolve the remuneration structure for our
CEO and other executive KMP to further incentivise
the achievement of superior returns for shareholders.
Codan’s People
These FY24 results could not have been achieved
without the expertise and efforts of our people
across the globe, for which I thank them on behalf
of shareholders. Under Alf’s leadership we are
continuing to build resilience in a long term culture
that reflects Codan’s values of a commitment to
excellence, continuous improvement and customer
satisfaction, as we believe this will benefit all of
Codan’s stakeholders over the long term.
In particular, on behalf of Codan’s Board, I thank Alf for
his leadership of Codan’s high calibre executive team,
for the clarity that he has brought to the development
of Codan’s strategy and for putting in place the
right people, processes and systems to execute the
strategy and position us for significant future growth
and value creation.
Thank you for your support
We really appreciate your support as shareholders in
Codan. Your Board and executive leadership team is
committed to accretively and sustainably building
shareholder returns by successfully executing on
Codan’s strategy, and we look forward to providing a
trading update at our FY24 AGM later this year.
Graeme Barclay
Chair
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FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
CEO’S REPORT
Dear Shareholders,
Thank you for your continued support and investment in Codan
during the 2024 financial year. On behalf of the Board of Directors,
I am pleased to present the Annual Report for the year ended
30 June 2024.
Codan has delivered a strong FY24 result. It is pleasing to see the
business deliver sustainable growth across the last three consecutive
halves with group revenues up 21%, EBIT up 29% and NPAT up 24%.
This result reflects strong organic growth, further supplemented by
the businesses acquired throughout the year. Pleasingly, the group
delivered organic EBIT growth of $22 million, up 25% over FY23.
Net debt increased $23.7 million during the
year to $75.4 million at 30 June 2024. This is
after paying $37.2 million cash consideration
for acquisitions, investing $40.0 million into
product development as well as funding
$36.3 million of dividends paid during the
year. Furthermore, the group has increased its
existing bank facility to $170 million (from $140
million), with additional capacity available of
$150 million subject to bank approval. These
facilities provide the Company with the financial
flexibility to support future inorganic growth
opportunities. Specifically, Codan continues to
seek Communications acquisition opportunities
which enhance the quality of the group’s
revenues and increase future earnings visibility.
The Group’s primary focus remains on
strengthening the business to achieve
sustainable, profitable growth for the future,
reinforcing a stronger Codan.
Communications
(Tactical & Zetron)
Communications delivered a strong FY24, with
revenues increasing 19% to $326.9 million
versus FY23, primarily attributed to Zetron’s
strong organic performance, bolstered by
the acquisition of two high-quality businesses
during the period (Zetron UK and Wave Central).
Collectively, the acquisitions contributed
revenues of $31 million and the businesses
remain on track to achieving their year two
investment objectives.
Pleasingly, organic revenue growth from the
Communications segment exceeded the
target 10% to 15% range, after normalising
for revenues from the large Communications
project delivered in FY23 (approximately
$20 million).
Communications segment profit grew 19%
and totalled $80.5 million, which reflects a 25%
segment profit margin.
Communications’ orderbook grew to
$197 million at 30 June 2024 (+21% versus
30 June 2023). Pleasingly, this increase has
been achieved in both the newly acquired
and existing businesses.
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ADDITIONAL INFORMATION
Our dedication to high performance is
evident in the quality of our products,
the efficiency of our processes, and
the commitment of our employees.
Tactical Communications delivered a solid result
with strong growth in the unmanned systems and
broadcast markets, which more than offset the
softness in HF due to geopolitical factors in Africa.
Some notable wins include a $8.5 million European-
funded unmanned military program, $7.1 million
South Korean military mesh communications
contract and several contract awards in Broadcast for
live event news coverage, college and professional
sports. Tactical continues to benefit from its leading
MESH radio technology, which demonstrates
exceptional performance in harsh and contested
environments. Specifically, the business excels
in providing compact, lightweight and efficient
solutions, optimising size, weight and power for
a diverse set of customers. Following Codan’s
acquisition of Wave Central in December 2023,
the business integrated well and delivered results
in line with expectations during the first 7 months
of ownership. Near-term, the focus for Tactical
Communications is to successfully complete
the development of our radio waveform and to
be accepted into longer-term defence-related
communications programs in North America.
Zetron outperformed expectations during the
year as the business continues to deliver revenue
growth from its expanded footprint. Zetron’s growth
continues to be driven by customers seeking to
benefit from the integrated and complete command
and control solution which is offered across the public
safety, utilities and transport markets. Some notable
wins include a $10.0 million contract with one of the
largest utilities providers in the Midwest region of the
US, $3.5 million upgrade with Kitsap County, a $2.0
million Queensland Rail project upgrade, the renewal
of a London Underground recurring services contract
as well as multiple awards in Iowa, North Carolina,
Arizona, Missouri, West Virginia and New Jersey.
Zetron continues to invest in the next generation
of products and solutions, which will also be able to
serve the growing NG911 public safety market.
During the year, Zetron successfully completed the
integration of Zetron UK, with the business exceeding
our year one acquisition expectations. With the
business now successfully integrated, Zetron has
shifted its focus towards executing its FY25 growth
plans, consistent with the previously announced
investment objective.
Metal Detection
Minelab’s revenue of $219.9 million for FY24 reflects
a 25% increase versus FY23, all achieved organically.
As a result of enhanced operating leverage, Minelab’s
segment profit margin increased to 35% during the
year, versus 32% in the prior year.
During FY24, rest of world performance benefited
from full year revenues driven by the release of
the Manticore, Equinox 700|900 and X-Terra Pro
products, alongside an expansion of retail channel
points of distribution across North America and
Europe. While sales softened in specific regions, such
as Australia, the business remains focused on sales
growth via expansion of storefronts with leading
retailers, along with enhancing market position using
platforms such as Amazon and Minelab eCommerce
channels. These efforts are expected to support
further growth into FY25 and beyond.
Minelab Africa delivered an improved FY24 result,
with revenues of approximately $70 million,
increasing half on half as well as versus FY23. Despite
the Sudan region of North Africa still being largely
disrupted, it was pleasing to observe an improvement
in revenues in West Africa which have generally
returned to pre-covid levels. Additionally, as supply
chains have normalised, Minelab has successfully
reduced inventory holdings by approximately
$15 million over the course of FY24.
Countermine continues to generate strong
performance, following the delivery of several
Government contracts to support humanitarian
demining efforts in Ukraine. Countermine’s
established relationships with global NGOs
supporting this effort is underpinned by its proven
track record of detector performance.
CEO’S REPORT
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ADDITIONAL INFORMATION
ESG Initiatives
Over the past year, Codan has made significant
strides in embedding our Environment, Social,
and Governance (ESG) Framework across the
organisation. Our efforts focus on aligning initiatives
with ESG principles, particularly around climate
change. We’ve partnered with environmental
consultants to assess our carbon footprint,
identifying opportunities to reduce Scope 1 and
2 emissions, and are on track to meet Australia’s
mandatory climate-related disclosures legislation.
We’re committed to refining our data collection
practices and ensuring that our reduction
targets are achievable. We’ve also implemented
capacity-building programs for our Board,
executives, and key stakeholders to assess risks
and opportunities across our value chain. Our
Social pillar emphasises community impact, with
ongoing initiatives to support diversity in STEM
fields and community programs for disadvantaged
groups. Notable efforts include the launch of the
Codan Founders Scholarship, continued support
for STEM scholarships for women, and various
charitable events, including our sponsorship of
Youth Opportunities, and the Variety Bash. Our
environmental commitment extends to planting 500
native trees with Hills Biodiversity at the Mt Barker
Springs Water Reserve. Our team is proud of these
contributions and remains dedicated to advancing
our ESG goals in the future.
Our People
Our employees are the cornerstone of our success,
and we are committed to nurturing a positive and
inclusive workplace. The appointment of Marjolijn
Woods as Chief Human Resources Officer has
strengthened our HR initiatives, including training
and development programs, wellness initiatives,
and recognition schemes. Our focus on employee
well-being and growth is central to our mission of
becoming an employer of choice.
This year, we have also relaunched our core
values to better reflect Codan’s commitment to
excellence, continuous improvement, and customer
satisfaction. Our customer-driven approach ensures
we understand our customers’ needs, exceed their
expectations, and build long-lasting relationships.
Trust and integrity are fundamental to our business;
we uphold the highest ethical standards and make the
right choices, even when faced with challenges.
Our dedication to high performance is evident in
the quality of our products, the efficiency of our
processes, and the commitment of our employees.
We foster a culture of continuous learning by setting
ambitious goals and pushing ourselves to surpass
expectations. Additionally, we embrace a “can-do”
attitude, encouraging our team to think creatively,
take calculated risks, and view challenges as
opportunities for growth.
Our values are not just words on a wall but guiding
principles that shape our decisions and interactions.
By embracing these values, we create a culture
of excellence, collaboration, and integrity that
sets Codan apart in the industry and helps shape
our future.
On behalf of the Board and leadership, I extend my
heartfelt gratitude to our employees, shareholders,
and stakeholders for their unwavering support.
Looking ahead, we are optimistic about Codan’s
future. We will continue to invest strategically in
our core business areas, as we remain dedicated to
delivering long-term shareholder value. With our
collective efforts, I am confident that we will achieve
even greater success and build a brighter future
for Codan.
Thank you once again for your trust and support.
Sincerely,
Alf Ianniello
Managing Director and CEO
CEO’S REPORT
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ADDITIONAL INFORMATION
Minelab is a world leading producer of in-ground metal detection
technologies for coin and treasure hunting, gold prospecting and
humanitarian and military demining. Our focus on investment in
product development through our world class engineering team,
coupled with our ongoing innovation in design and production
quality, ensure that we continue to deliver exceptional products.
Our local presence via our operations across many countries, along with the rich diversity of our team,
ensures that we remain steadfast in our uniting purpose; to deliver innovative technology and exceptional
support to all detectorists, the world over.
Our extensive product range is designed to exceed expectations and delight our customers at all levels,
whether a novice recreational hobbyist or an experienced specialist detectorist. From the thrill of that first
find through to conquering new frontiers for the seasoned adventurer, our coin and treasure portfolio
delivers. For our gold prospecting community, ongoing technology enhancements enable improved
yields, which support livelihoods and transform communities. With an intense focus on performance
gains in landmine and unexploded ordnance detection we aim to continually drive safer environments
for communities and operators around the world.
METAL DETECTION
FY24 Summary
• Minelab had successful launches of several
new products including the X-TERRA ELITE®
(a waterproof, simultaneous multi-frequency
detector with customisation options) and the
X-TERRA VOYAGER® (a user-friendly, ready to go
full detector kit for category entrants).
• Our direct to consumer sales channels experienced
further development, including the launch of
the www.usa.minelab.com e-commerce website.
Continuing support for our dealers and consumers
was driven by the creation of dedicated Amazon
storefronts in the USA and Europe.
• African gold detector sales into countries other
than Sudan have returned to pre-pandemic levels.
• Countermine achieved an exceptional result,
including supply of significant detector volumes
into Ukraine to assist in major demining efforts,
saving lives and reducing injuries.
• A range of consumer facing initiatives has been
initiated to foster a highly engaged community of
detectorists with a view to further strengthening
brand affinity.
• Significant progress has been realised in
commercial system development to improve the
interactive experience for sales channel partners
and end-users.
FY25 Objectives
• Expanding our product range and storefront
presence in both physical and digital retail
channels in North America and Europe.
• Driving additional growth in both marketplace
and proprietary e-commerce channels.
• Ongoing development of an exciting suite of new
products to strengthen our offerings to the Rest
of World, Africa and Countermine divisions.
• Continuing to focus on new territory development
in all primary markets.
• Building on current strategies to enhance
our commercial systems to yield improved
experiences for sales channel partners and
end‑users.
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REPORT OF OPERATIONS
ESG
LEADERSHIP
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Rest of World Region
The enhancement of our range via the recent launch of the
X-TERRA ELITE® and the X-TERRA VOYAGER®, coupled with
commercial progress in digital environments, will ensure
that we can drive continued growth in this large addressable
market. Through our initiatives to create an exceptional
experiential ecosystem for our consumers and sales channel
partners, we aim to increase end user engagement and
foster long term, mutually beneficial relationships for all
stakeholders.
Our presence in North America continues to expand via
ranging increases and store front growth with leading
retail partners. This expansion, in conjunction with further
advances in both marketplace as well as proprietary digital
channels, continues to drive sustained regional results.
In Europe, we remain focused on share growth via digital
platforms as well as physical retail.
Further, our close collaboration with our dealer network,
supported by increasing brand awareness and breakthrough
new products, will drive additional regional success.
In Latin America, marketplace and proprietary digital
channels will remain a cornerstone for continued
development. Strategies to drive expansion into
gold prospecting regions will also add to anticipated
market results.
Following on domestic entity establishment, the Indian
market has experienced rapid dealer network and digital
channel growth. This market will remain a focus given
significant and ongoing potential.
Australia and New Zealand will continue to be developed
via strong support for both the traditional dealer and major
retail channels.
African Region
Our resolute commitment to ongoing technology
enhancements for the artisanal mining segment continues
to yield regional results. Expansions in the team, along with
dealer network partnership, have enhanced our ability
to drive growth and development in various regions of
the continent. Along with improving performance in the
established West African markets, encouraging progress
in Central and East Africa has been experienced. We are
highly motivated by the meaningful difference our detectors
can make in improving livelihoods and prosperity gains for
entire communities.
Countermine
Our countermine detectors are high performance
machines used to detect landmines, unexploded ordnance,
improvised explosive devices and explosive remnants
of war. The range includes dual sensors (metal detection
capability combined with ground penetrating radar) along
with additional detectors designed for various threat
identification challenges.
Our strong relationships with global humanitarian demining
NGOs and military organisations have been built upon our
proven track record of detector performance supported by
exceptional customer service. We are proud of the crucial
role our equipment and staff play in assisting with ongoing
global efforts to clear the world of the scourge of landmines.
METAL DETECTION
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REPORT OF OPERATIONS
ESG
LEADERSHIP
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
THE MASTERS OF METAL
Minelab has traditionally sponsored and attended a variety
of metal detecting events to showcase its products and
to introduce users to the people behind the product.
We recognise that we want to pay that same attention to
more users in more regions. We have embarked on new
programs that interact more deeply with a much greater
proportion of our global user base. This includes initiatives
in the digital space to deliver improved experiences to our
online visitors and to develop an online metal detecting
companion application, as well as raising the stakes in our
physical events.
The “Masters of Metal” is designed to take metal
detecting events to the next level, building a competitive
tournament style event throughout the eastern United
States. The positive feedback from this first year has been
overwhelming.
Masters of Metal brings a sporting competitiveness to
metal detecting, combining several skills based events
into an exciting weekend of activities. A Minelab first,
detectorists are invited to enter in teams of four and
engage in an adrenaline fuelled battle to demonstrate
their metal detecting prowess.
Run between August and October 2023, with regional
play-offs in New York, Arkansas, and Florida, 30 teams
competed in three separate challenges each testing
their speed, precision, and accuracy – key skills in metal
detecting. These challenges, coined “Identify the Target,”
“Token Hunt” and “Claim Jumper,” saw competitors
racing the clock to detect, identify and retrieve dozens
of specific targets amongst the bottle caps and pull tabs
commonly found in public fields.
Top teams in each region earned the opportunity,
and a cash prize contribution, to compete in the final
championships held in Alabama in November 2023.
The finals saw a huge turnout of competitors and
spectators, with each member of the winning team
taking home a brand new Minelab MANTICORE® detector.
Following the overwhelming success of Masters of Metal
2023, the plan is to expand the competition to reach more
of our global community.
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REPORT OF OPERATIONS
ESG
LEADERSHIP
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Codan Communications, through the Tactical and Zetron
businesses, offers a full suite of solutions to its addressable
markets. With customers in more than 150 countries across all
seven continents, Codan Communications continues to enhance
its world-class design, development, and implementation
capability. With more than 65 years in the business, Codan has
earned a reputation for quality, reliability, and high customer
satisfaction, by producing innovative, interoperable, and
industry-leading technology.
FY24 Summary
• Zetron outperformed expectations, as the
business continues to deliver revenue synergies
from its expanded footprint.
• Experienced strong growth in the Tactical
unmanned systems market.
• Successful acquisitions of Wave Central and
Eagle Newco (now rebranded as Zetron).
• New opportunities in live event news coverage,
college and professional sports, film production,
and unmanned applications in the growing
remote production broadcast market.
• $10m deal for ACOM® Command & Control
with one of the largest utilities providers in the
Midwest region of the US.
FY25 Objectives
• Deliver Eagle Newco (now rebranded as Zetron)
and Wave Central FY25 investment targets.
• Development of Tactical’s radio waveform
to target longer-term defence-related
communications programs.
• Continue to deliver broadcast solutions for
high-profile events such as Formula E, Le Mans
24-hour, UEFA Euro 2024, Eurovision, and the
Paris 2024 Olympics.
• Ongoing investment into Zetron’s next
generation of products and solutions.
Tactical Communications
Our mission is to be the tactical communications partner
to our key customers in our core markets: Military,
Unmanned Systems, Law Enforcement and Intelligence,
Broadcast, Commercial and NGO. Through our
commitment to innovation and excellence, we design,
develop and deliver robust and resilient communication
solutions and technologies that ensure mission success
by enabling our customers to get and remain connected
wherever they are, when it matters most.
Tactical Communications has enjoyed another year of
growth in the unmanned systems (drones) market where
the DTC BluSDR™ is increasingly the radio of choice
for mid-range air platforms for military applications
globally. Our presence in the military radio market has
been significantly enhanced with the delivery of an
integrated soldier solution, building upon the successful
implementation of our US solution the previous year.
We have also established key partnerships with a US
Government laboratory to develop a cutting-edge
multi-waveform communications solution for Federal
Government customers. Near-term, the focus is to
successfully develop Tactical’s radio waveform to target
longer-term defence-related communications programs.
The acquisition of Wave Central LLC by Domo Broadcast
Holdings LLC, completed in December 2023, has
leveraged Wave Central’s strong reputation and
market-leading system integration capabilities to drive
growth in North America. This acquisition enhances
Domo Broadcast’s global market share within the
broadcast business, creating new opportunities in
live event news coverage, college and professional
sports, film production, and unmanned applications
in the growing remote production broadcast market.
We continue to build on the Tactical Communications
Division’s past successes in the Broadcast market,
delivering broadcast solutions for high-profile events
such as Formula E, Le Mans 24-hour, UEFA Euro 2024,
Eurovision, and the Paris 2024 Olympics.
COMMUNICATIONS
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REPORT OF OPERATIONS
ESG
LEADERSHIP
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Zetron
The core mission of Zetron is to provide communications
solutions that help save lives and enable critical operations
in Public Safety, Utilities, Transportation, and other
industries where uninterrupted, always on, always ready
communications are non-negotiable.
During FY24, Zetron outperformed growth expectations
across key markets, achieving new annual highs in orders,
revenue and contribution.
Zetron’s excellent year would not have been possible
without tremendous go-to-market advancements made
in all Zetron-targeted geographic and vertical markets.
Global sales operations integration and key focus on
selling solutions helped growth across all key markets.
The enhanced alignment between regional products and
systems sales teams in North America, has resulted in more
customers now opting to purchase our complete solutions,
which include both Land Mobile Radio (LMR) and Command
and Control (C&C) offering. For example, Madison County,
closed in FY24, included Zetron’s LMR infrastructure with
MAX Dispatch® and MAX Call Taking®, Zetron’s anchor
Emergency Response solutions in North America.
Highlighting the year was a $10m deal for ACOM® Command
& Control with one of the largest utilities providers in the
Midwest region of the US. Other major strategic sales
included Transylvania County, Madison County in public
safety, Queensland Rail – an ACOM® system sold to one of
the largest rail transportation networks in Australia, Ashghal
Qatar – a key government public works win that builds on
Zetron’s growing presence in the Middle East, and London
Underground – an annual recurring services revenue
renewal for the largest rail network in the UK.
Following the acquisition of GeoConex in February 2023,
a Computer Aided Dispatch (CAD) provider and long-time
Zetron reseller, Codan announced the acquisition of Eagle
Newco, a UK based command and control provider, in
August 2023. By the end of FY24, substantial strides were
made in completing the integration plans of both GeoConex
and Eagle (now Zetron), enabling Zetron to begin realising
the acquisition objectives of these transactions.
Research and development investments in Zetron solutions
contributed to key milestone advancements in Zetron’s core
LMR and C&C technology portfolios.
COMMUNICATIONS
Zetron’s next generation MT-5 LMR platform includes
advanced system management tools and additional
functionality, which will continue to meet the evolving
demands of the global LMR market.
Furthermore, efforts have been made to introduce Zetron
European solutions, namely Stream and Workforce
Management into the North American market, scheduled
for completion in FY25.
In Command and Control, Zetron was awarded a contract
for a Mission Critical – Push to Talk (MCPTT) audio, data,
and video communications system to Public Transport
Authority of Western Australia (PTA), with 52 ACOM®
Command & Control positions. This will be the first fully
MCx-capable railway communications network deployed in
Australia, meaning it serves multiple mission critical services
such as voice, data and video, allowing operators and first
responders to communicate and exchange important
incident information via multiple data formats across a
Nokia 4.9G/5G private wireless system.
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REPORT OF OPERATIONS
ESG
LEADERSHIP
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Breaking New Ground in Mission-Critical
Navigation Solutions for Unmanned Systems
In rapidly evolving modern warfare, the heavy reliance on Global Navigation Satellite Systems (GNSS)
and Global Positioning System (GPS) for navigation has become a critical vulnerability. GNSS jamming
and spoofing are increasingly common, posing significant risks to these systems’ functionality in
real world scenarios. This threat underscores the urgent need for resilient, alternative navigation
(ALTNAV) solutions that can ensure accurate navigation and time synchronization even when GNSS
is compromised.
Recognising this need, Domo Tactical Communications (DTC) has partnered with Inertial Labs, Inc.
(INL), a pioneer in GNSS-independent navigation solutions, to develop a groundbreaking integrated
solution for unmanned systems. The collaboration resulted in the development of a product that
merges DTC’s Mobile Ad-hoc Network (MANET) Mesh with MeshUltra™ waveforms and INL’s inertial
navigation system (INS), creating an unparalleled solution designed to excel in the most demanding
GNSS contested environments.
Initial customer feedback indicates significant improvements in operational reliability and
navigational accuracy in GNSS denied environments. This pioneering approach not only mitigates
the risks associated with GNSS vulnerabilities, but also sets a new standard for resilient, reliable
navigation solutions in the defence and unmanned systems industries.
As DTC and INL continue to refine and enhance their integrated solutions, they remain at the
forefront of innovation, ensuring that unmanned systems can navigate and communicate effectively,
regardless of the challenges posed by modern warfare.
COMMUNICATIONS
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REPORT OF OPERATIONS
ESG
LEADERSHIP
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Building An Integrated System for Efficiency,
Reliability and Accuracy
Morgan County E-911’s journey from paper and hardware based systems to a fully integrated
Next Generation 9-1-1 platform with Zetron’s MAX solutions spans over two decades.
Morgan County E-911 provides round the clock 9-1-1 services in and around Morgan County in Eastern
Tennessee. Beginning in 2005, the agency transitioned from cumbersome manual and paper based
systems to Zetron’s MAX GIS Mapping, GeoConex Computer Aided Dispatch (CAD) and MAX Call Taking®.
However, the agency was still relying on a button base dispatch system that had reached end of life and
needed to be replaced.
Most recently, Morgan County replaced the button base system with MAX Dispatch®, which integrates
seamlessly with the previously installed suite of MAX solutions. The team also updated their MAX Call
Taking® system for Next Generation 9-1-1 capabilities.
With these upgrades and Zetron’s recent acquisition of GeoConex, Morgan County now has a fully
integrated Next Generation 9-1-1 system. The system gives dispatchers the features and functions they
need to get resources to the field rapidly and accurately, with reliability that makes all the difference
in emergency situations. The resulting efficiency improvements, ease of use, and reduced stress have
all made the transition to Zetron’s MAX Solutions a game changer for the Morgan County team and
communities they serve.
When Matthew Brown joined Morgan County E-911 in 2003 as a Dispatcher, he and fellow dispatchers
worked in a highly manual, paper based environment. Today, as the agency’s Director, he has been a part
of tremendous and instrumental changes in how the rural county’s emergency communications operate
after a multi-year phased implementation of a fully integrated suite of Next Generation 9-1-1 technologies
sourced from Zetron.
Brown, who has been Director of Morgan County E-911 since 2010, recalls the days of paper complaint
cards, radio logs and maps. “We didn’t have a computer generated map at all. We had printed map
books and a wall map that weren’t updated frequently. The information would get outdated
really quickly.” he said.
Serving an area of more than 500 square miles and 21,000+ residents in the Cumberland Mountains
of Eastern Tennessee, the 14 full time employees of Morgan County E-911 provide around the clock
emergency communications support to public safety agencies across the county and participating cities
– including law enforcement, fire, rescue and emergency medical services in which they would typically
handle 200 to 350 calls per day.
Brown is pleased with the next generation Zetron systems he and his team rely on to serve Morgan
County. One of the biggest benefits he sees is the ease of use for dispatchers, which relieves stress and
helps them get resources out to the field more efficiently. He also notes that the glitch free integration of
everything is a huge factor, as is the ease of updating information on the back end and making on the fly
changes, such as, adding a new officer to the system moments before they go on duty.
COMMUNICATIONS
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REPORT OF OPERATIONS
ESG
LEADERSHIP
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
ENVIRONMENT, SOCIAL & GOVERNANCE REPORT
ESG Framework
ENVIRONMENT
Review our global environmental footprint to establish the timeframe and
financial implication of making a GHG net zero statement.
Support initiatives that create a positive environmental impact both in
business operations and in the wider community.
SOCIAL
Encourage, promote and develop all students, regardless of gender, age,
family status, culture, ethnicity or religion to pursue a career in STEM.
Target Community Programs that assist disadvantaged groups within
the communities our businesses operate.
Empower and support a connected and high-performing workforce to
deliver long term value creation.
GOVERNANCE
Remain committed to conducting business in an honest, ethical and
accountable way and in accordance with our core values.
Upholding a strong governance program, including a Sustainability Council,
dedicated to identifying and managing risks, issues and opportunities that
are important to our business and stakeholders for long term value.
CEO’s Statement
I am pleased to present our annual Environment,
Social and Governance (ESG) report, which outlines
the actions taken that demonstrate our continued
commitment to sustainable practices, community
enhancement and corporate governance. Our
efforts this past year reflect a dedication to not
only improving our operational performance but
also improving sustainability and ensuring positive
impacts in the communities where we operate.
Codan endeavours to enhance the well-being of
the communities we are part of. A notable highlight
was our Tree Planting Day, during which our
employees and volunteers successfully planted
500 trees, contributing to local biodiversity and
environmental health.
Our engagement with the United Nations Global
Compact (UNGC) remains an important part of our
ESG strategy. This allows us to leverage the resources
and expertise offered by the UNGC to deepen
our knowledge and improve our practices. This
partnership supports our ongoing efforts to align
our operations with globally recognised sustainability
principles. It also allows us to interact with peer
organisations to reinforce that we are top of class
with our initiatives.
In addition to the continued support of charities with
whom we have been aligned for many years, this year
we are proud to have provided financial support to
two additional remarkable local charities: Catherine
House and Youth Opportunities. Our contributions
to Catherine House have helped provide essential
services and support to women experiencing
homelessness, offering them a safe place and the
resources needed to rebuild their lives. Similarly, our
support for Youth Opportunities has empowered
young people with the skills, confidence, and
opportunities they need to succeed in life.
These partnerships are integral to our mission of
fostering strong, resilient communities, and we are
humbled to contribute to their vital work.
Understanding and managing our greenhouse gas
(GHG) emissions is critical to our environmental
responsibility. We continue to engage with external
specialists to assist us with a comprehensive exercise
to rebaseline our GHG footprint for FY23 and to
calculate FY24. This rebaselining ensures that
our reporting is transparent and reflects our true
environmental impact, allowing us to set more precise
targets for future reductions. We also engaged with
internal stakeholders to identify and investigate
GHG reduction opportunities and prepare for the
transition to mandatory climate-related reporting.
This proactive approach ensures that we remain at
the forefront of sustainability practices and are well
prepared to meet regulatory requirements.
The Codan Founders PhD Scholarship program is,
at the time of writing this statement, actively seeking
its first candidate through a detailed application
process. We are resolute in our belief that investing
in education, innovation and research is pivotal to
driving long-term, sustainable growth.
We are proud of the strides we have made this year.
Our commitment to ESG principles is a continuous
journey, and we are dedicated to making meaningful
and measurable progress. We will continue to work
diligently to meet our sustainability goals, enhance
our community relationships, and uphold the highest
standards of corporate responsibility.
Thank you for your continued support as we strive to
make a lasting, positive impact on our world.
Sincerely,
Alf Ianniello
Managing Director and CEO
About this Report
This ESG Report seeks to provide information
regarding the material aspects of Codan’s
sustainability practises across Codan and its
controlled entities during the financial year ended
30 June 2024 (FY24). The ESG Report (Report) is
published on 20 September 2024 and forms part of
Codan’s Annual Report.
This Report has been prepared in accordance with
the Global Reporting Initiative (GRI) Standards:
Core option. For a full list of disclosures referenced
in this Report, please refer to the GRI Content Index
available within the ESG report. The information
contained within this report has been compiled
with the contribution of various leaders across the
business and has been approved by the Codan
Board. Please note this Report has not been
externally assured.
We welcome any feedback and questions you may
have on the information presented and encourage
you to contact us at sustainability@codan.com.au.
List of Material topics
Environment
Social – Our People
Social – Our Community
Governance – Corporate Governance Statement
Governance – Business Ethics / Behaviour
Governance – Our Supply Chain
Governance – Cyber Security
Governance – Tax
All data referenced in this report is in AUD unless otherwise specified.
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ESG
LEADERSHIP
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
REPORT OF OPERATIONS
Climate Change
Codan remains committed to doing its part
to mitigate climate change and adapt to a
changing world.
Codan supports the goals of the Paris Agreement to
limit the global temperature rise this century to well
below 2°C above pre-industrial levels and to strive to
limit this to 1.5°C.
In accordance with this commitment and in
conjunction with the Environment pillar of Codan’s
ESG Framework, Codan is taking a diligent approach
to understand its emissions profile and the actions
required to reduce emissions.
In FY24 Codan:
• engaged external consultants to calculate the
emissions associated with Codan’s businesses
and provide a baseline for global operations;
• developed an understanding of the largest
sources of those emissions and assessed
opportunities for emissions reductions;
• finalised a list of actions and timelines for
emissions reduction opportunities;
• took additional steps to enhance Codan’s
governance of climate-related issues; and
• continued Codan’s progressive alignment with
the recommendations of the TCFD for effective
management of climate-related risks and
opportunities.
TCFD Disclosures
Progressing from TCFD towards ISSB
IFRS Sustainability Standards
Codan is continuing to use the Task Force on
Climate-Related Financial Disclosures (TCFD)
Recommendations to structure its climate related
disclosures in FY24. TCFD recommendations
emerged as the leading global framework for
companies and investors to assess climate-related
risks and opportunities. The TCFD framework
has been used as the backbone for the inaugural
International Sustainability Standards Board (ISSB)
International Financial Reporting Standards (IFRS)
Sustainability Standards – IFRS S1 and IFRS S2 - which
set a new global baseline for general sustainability and
climate-related disclosures.
The incoming regime for mandatory climate-
related reporting in Australia will be based on IFRS
S1 and S2 and implemented by new Australian
Sustainability Reporting Standards. Given these
standards are yet to be finalised, Codan is using the
TCFD Recommendations to progress its maturity
in the practice and quality of climate-related
disclosures. Once the Australian Sustainability
Reporting Standards are finalised, Codan will
assess what additional actions are required to meet
these provisions.
In FY24, Codan advanced along the planned
milestones of its TCFD Roadmap. Detail of the actions
taken in FY24 are provided in the sections below
on Governance, Strategy, Risk Management,
Metrics and Targets.
Governance
Codan is committed to responsible and effective
governance, which promotes the integrity and
efficiency of our business and maximises shareholder
value. In accordance with the Governance pillar
of Codan’s ESG Framework, we aim to uphold a
strong governance program including the utilisation
of a Sustainability Council. Codan is dedicated
to identifying and managing risks, issues and
opportunities that are important to its business
and stakeholders, which will assist in creating long
term value.
Codan took a number of steps in FY24 to enhance
climate-related governance mechanisms and to
develop subject command in climate-related issues
at Board and Management levels.
ESG REPORT
ENVIRONMENT
Metrics
& Targets
Risk
Management
Strategy
Governance
CODAN’S TCFD ROADMAP
Commit to TCFD
alignment
Consider position
statement on
climate change and
net zero
Further articulation
of risks,
opportunities
and impacts
Initial identification
of risks, opportunities
and impacts
Build executive
capacity through
Sustainability
Council
Integrate climate
risks into risk
management
system
Build
management
capacity
Explore emissions
reduction
opportunities
Gap analysis of risk
management
system
Disclose Scope
1, 2 and 3
emissions
Build Board
capacity
Designate
responsibility at
Board level for
oversight of
climate-related
risks
Adopt
science-based
targets
Strengthen
climate governance
through
Sustainability
Council
Develop emissions
reduction targets
Test resilience
through
scenario analysis
FY23
FY25
and beyond
FY24
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LEADERSHIP
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
REPORT OF OPERATIONS
CODAN | ANNUAL REPORT 2024 | 33
ESG REPORT ENVIRONMENT
Board oversight
In FY24, all members of the Board attended a session
on climate-related risks, reporting and directors’
duties. This session was conducted to build Board
capacity as part of the implementation of Codan’s
TCFD Roadmap.
The Codan Board has overall responsibility for
the oversight of group risks and opportunities,
including sustainability and climate-related issues.
The Audit and Risk Committee (ARC) is responsible
for developing and monitoring risk management
policies implemented by management. The Board
has delegated responsibility to the ARC for all
sustainability and climate-related risks. The ARC
reports regularly to the Board on its activities.
Amendments were introduced to the ARC Charter in
FY24 to specify that the ARC assists the Board in its
oversight of financial and non financial risks including
climate-related risks and other ESG factors.
The ARC Charter also allocates responsibility to the
ARC for reviewing and recommending to the Board
any reporting to shareholders on matters considered
material, including reporting on any material
information about climate-related risks.
Other governance mechanisms have been
introduced in FY24 to strengthen the way in which
climate-related risks are overseen by the Board.
Quarterly updates are provided to the Board by the
General Counsel and Joint Company Secretary on all
ESG initiatives, with a focus on climate-related actions.
In FY24, these quarterly updates have also kept the
Board informed of developments in mandatory
climate-related reporting in Australia and the actions
planned in FY24 and FY25 to prepare Codan for
compliance with the new reporting requirements.
In addition to quarterly updates, the Board is
informed of ESG and climate-related news as
required.
Other climate related matters considered by the
Board in FY24 were:
• the budget for planned actions in FY25 to prepare
Codan for mandatory climate related reporting;
and
• expenditure for measures that contribute to
immediate or near term emissions reductions
such as installation of additional solar panels
and EV charging facilities.
Codan’s General Counsel and Joint Company
Secretary has reported to the ARC on the progress of
FY24 targets under the TCFD Roadmap. The ARC will
also review and approve the actions required to realise
opportunities for emissions reduction.
Management
Management is responsible for the implementation
of Codan’s group risk management policies and
procedures, including the implementation of Codan’s
ESG Framework and the recommendations of the
Sustainability Council.
In accordance with its Terms of Reference, the
Sustainability Council has an explicit responsibility to
have regard to the physical risks of climate change for
Codan’s businesses and the risks and opportunities
that may be material for Codan as the world
transitions to a low carbon economy. Additionally,
the Sustainability Council is committed to achieving a
high standard of environmental performance and has
oversight of the policies and operational controls of
environmental, health and safety, and social risks.
Members of the Sustainability Council include
Codan’s General Counsel and Joint Company
Secretary and Chief Human Resources Officer
(CHRO). In FY24, management representatives
from our overseas communications businesses were
added as members of the Sustainability Council.
The council also includes representatives from
facilities, supply chain, and Minelab business units,
ensuring that the council is appropriately represented
from all parts of the business.
In FY24, a capacity building session was held with
the Sustainability Council to build subject command
in climate-related risks and opportunities and
developments in climate related reporting.
As outlined in its Terms of Reference, the Council
has 4 formal meetings each year and the meetings
for FY24 were all well attended.
The CHRO is the executive representative on the
Sustainability Council. The CHRO reports any material
ESG and climate-related issues to the executive team.
The General Counsel is the chair of the Sustainability
Council and reports directly to the CEO and CFO on all
ESG matters.
Strategy
In FY24, Codan invested significant time and
resources to analyse Codan’s emissions profile.
External consultants facilitated engagement with
representatives from Codan’s business units, supply
chain, facilities and logistics functions. Codan also
engaged with its contract manufacturers. The
objective was to explore the risks and opportunities of
reducing the emissions associated with each business
and function.
Findings from this analysis have informed Codan’s
understanding of the specific activities that can
reduce emissions in Codan’s operations and value
chain. Further detail is provided below in the section
on “Opportunities to Reduce Emissions”.
In FY25, Codan will continue to develop this analysis.
This will inform Codan’s strategic decision making and
approach to the development of emissions reduction
targets and other measures to support the transition
to a low carbon future.
Climate-related risks and opportunities
In FY23, Codan undertook an initial assessment
of climate-related risks and opportunities relevant
for its business, starting with a focus on contract
manufacturing. The initial assessment found
the following:
Physical risks
Risks are event driven (acute) and longer term shifts in
climate patterns (chronic). The physical risks relevant
to Codan’s use of contract manufacturing sites
include extreme weather events (acute) and sea level
rise (chronic) resulting in flooding which could hinder
access to production sites and disrupt distribution.
Transition risks
Risks that are driven by policy, legal, technology and
market changes to mitigate and adapt to climate
change. The transition risks relevant to Codan’s use of
contract manufacturing sites, which are low impact
risks, include:
• market risks from rising energy costs resulting in
increased production costs; and
• policy risks from carbon pricing resulting in
increased production costs.
Opportunities
The TCFD also defines categories for climate-related
opportunities that may arise for companies in the
transition to a lower carbon economy. The initial
assessment of opportunities conducted in FY23
related to:
• resource efficiency – potential collaboration
with contract manufacturers to investigate
opportunities to reduce operating costs by
improving efficiency across production processes;
and
• products – innovation to develop new products
using more recycled materials.
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REPORT OF OPERATIONS
Resilience
In FY23, Codan commenced the process of engaging
with contract manufacturers on energy and resource
efficiency, emissions reduction plans and adaptation
of their sites to physical risks. In FY24, Codan had
discussions with our two largest manufacturers,
Venture Corporation Limited (Venture) and Plexus
Corporation (Plexus). Plexus is a member of the
UNGC and shares Codan’s public commitment to
building a better world through sustainable and
responsible business practices. In FY24, Plexus
installed solar panels on its facility which contributed
to reduced emissions for Codan’s manufacturing.
Venture has group wide green manufacturing
initiatives that include:
• implementation of restriction of hazardous
substances (RoHs) directive with RoHs certified
equipment in its facilities;
• implementation of Ozone Depleting Substance
(ODS) FREE Process Verification Scheme;
• control and management of emissions, noise
and wastewater discharge in all of its facilities;
• establishment of waste management systems
and recycling programs;
• resource conservation programs on the use of
water, power, paper and other materials in its
manufacturing facilities and offices; and
• promulgation of Venture’s Environmental Policy
and its programmes.
Initiatives that were achieved by both manufacturers
in FY24 include:
• maintenance of ISO 14001 Environmental
Management Systems certification;
• reducing emissions on the Codan production lines;
• no reporting of any environmental related
incidents; and
• ongoing alignment with Codan’s Modern Slavery
and Human Rights Policy.
In FY25, Codan intends to conduct a more detailed
assessment of climate-related risks and opportunities
across Codan’s businesses and value chain. This will
enable Codan to reach conclusions on the risks and
opportunities that can reasonably be expected to
affect Codan’s prospects. Climate-related scenarios
will be used to further analyse the short, medium and
long-term impacts of risks and opportunities and
the implications for Codan’s strategy and planning.
Codan expects to continue this work into FY26
and beyond.
Risk Management
The Board has overall responsibility for the
establishment and oversight of Codan’s risk
management system.
Risk management policies are established to identify
and analyse the risks faced by the Codan group, to set
appropriate limits and controls, and to monitor risk
and adherence to limits. Risk management policies
and systems are reviewed regularly to reflect changes
in market conditions and Codan’s activities.
The ARC oversees how management monitors
compliance with Codan’s group risk management
policies and procedures and reviews the adequacy
of the Risk Management Framework in relation to
group risks.
Certain climate-related physical and transition risks
are addressed in the Codan Group Risk Register.
These relate to business continuity, interruption of
material supply, technology risk, reputation, and
policy risks. Controls include the ongoing review
of Codan’s Business Continuity Plan, continued
investment in R&D, governance of ESG issues through
the Sustainability Council and the ESG Framework,
and continued public reporting of Codan’s
sustainability performance.
As part of Codan’s commitment to increasing
alignment with the TCFD recommendations, and
to prepare Codan for compliance with mandatory
climate-related financial reporting in future years,
Codan intends to develop processes to ensure that
climate-related risks are identified and managed
as part of Codan’s risk management system.
In the coming years, Codan intends to undertake
a gap analysis of the existing risk management
system and recommendations for integrating
climate-related risk.
Metrics and Targets
Codan engaged external consultants to assess
and calculate the Scope 1, 2 and 3 emissions for
its Australian operations in FY23. This emissions
data was included in Codan’s FY23 Annual Report.
In FY24, Codan re-engaged the same external
consultants to assess and calculate Scope 1, 2 and
3 emissions on a consolidated basis for the Codan
group. Emissions data for FY23 was also rebaselined
which is detailed below.
The FY24 carbon footprint assessment for Codan
follows the operational control approach under
the GHG Protocol guidelines and covers Scope 1,
2 and 3 emissions for Codan’s global operations.
Consequently, the Scope 1 and 2 emissions
disclosed are related to all Australian and overseas
facilities. Scope 3 emission disclosures are based on
upstream and downstream emissions in the value
chain and all emission sources are included to the
extent deemed relevant under the GHG Protocol’s
guidance. Please note that the activities and emission
sources included for Scope 1 and 2 GHG emissions
differ from those presented in the FY23 Annual
Report. This is because the FY23 Annual Report does
not include the emissions activity relevant for the
rebaselining exercise.
Codan and external consultants also conducted an
analysis of the opportunities for emissions reduction
across Codan’s businesses. Further detail is provided
below in the section on “Opportunities to reduce
emissions”.
Emissions data
The FY24 assessment follows the standards and
guidelines of:
• the Greenhouse Gas Protocol (GHG Protocol); and
• GHG reporting standards recommended by
the TCFD.
The FY24 assessment has expanded to include
Codan’s global operations and therefore includes
relevant Scope 1, 2 and 3 emissions from overseas
operations that form part of the company’s value
chain both upstream and downstream.
FY23 Rebaseline
In an effort to refine the carbon footprint for FY23
as published in Codan’s FY23 Annual Report,
a rebaselining exercise was conducted to account
for the following:
• the initial baseline footprint focused on Australian
operations which has been expanded to
encompass global Codan emissions;
• embodied impact from materials was
recategorised from “Processing of Sold Products”
to “Purchased Goods and Services” to align with
the GHG Protocol’s guidance; and
• Zetron’s emissions from purchased goods and
services (embodied materials) and use of sold
products.
Codan’s global carbon footprint calculations for FY23
decreased by 21% as a result of the rebaselining
exercise. This is a more accurate assessment of
Codan’s carbon footprint for FY23 and over time,
we expect that there will be further adjustments
of the calculated GHG footprint as we refine our
data collection and calculation process. Codan’s
intention is to provide the most accurate data as
can be reasonably determined using best practice.
All further references to the FY23 footprint, are to
the rebaselined FY23 footprint.
Table 1 : Rebaselined footprint summary
Emissions
Scope
FY23 Annual Report
Footprint
(tCO2-e)
Rebaselined
FY23 Footprint
(tCO2-e)
%
Change
1
260
1,433
451%
2
716
948
32%
3
66,135
50,601
- 23%
TOTAL
67,111
52,982
- 21%
ESG REPORT ENVIRONMENT
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Emissions Boundaries
The purpose of an emissions boundary is to define the
organisational and operational boundaries for a GHG
inventory, indicating which GHG emissions sources
and activities are included in the inventory, and those
that are excluded. The emissions boundary is a key
component of GHG accounting and reporting, as it
helps ensure that the inventory is comprehensive
and consistent with recognised GHG accounting
standards, such as the GHG Protocol.
This report presents Codan’s initial proposed
Emissions Boundary (Figure 1) which provides
a basic indication of the GHG Protocol emissions
categories that are included or excluded from the
carbon footprint.
Figure 1: Codan’s Emissions Boundary
Outside emissions boundary
(excluded)
• Downstream leased assets
• Franchises
• Investments
Inside emissions boundary
(included)
Scope 1
• Company facilities
• Company vehicles
Scope 2
• Company facilities electricity
Scope 3
• Business travel
• Capital Goods
• Upstream Transport and Distribution
• Downstream Transport and Distribution
• Employee commuting
• Upstream leased assets
• Processing of sold products
• Use of sold products
• End of Life treatment of sold products
• Purchased goods and services
• Waste generated in operations
• Fuel & Energy related activities
(not accounted for in Scope 1 & 2)
Total Emissions FY24
Codan’s total GHG emissions assessed for FY24 is
54,357 tCO2-e.
Figure 2: Breakdown of GHG Emissions by Scope
1.9%
Scope 2
2.7%
Scope 1
Scope 3
95.4%
Table 2: Total GHG Emissions by Scope
Scope
FY24 (tCO2-e)
FY23 (tCO2e)
1
1,485
1,433
2
1,037
928
3
51,835
50,601
TOTAL
54,357
52,982
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0
10,000
20,000
30,000
40,000
50,000
60,000
tCO2-e
FY24 emissions (tCO2e)
Financial Year
FY23 emissions (tCO2e)
Upstream Leased Assets
0.22%
End of life treatment of sold products
0.36%
Fuel & Energy related activities
0.84%
(not accounted for in Scope 1 & 2 emissions)
Employee commuting
1.78%
Waste generated in operations
3.18%
Upstream transportation & distribution
3.78%
Processing of sold products
4.05%
Downstream transportation & distribution
4.44%
Business travel
10.43%
Use of sold products
6.29%
Capital goods
23.49%
Purchased goods and services
36.45%
Company facilities (Electricity)
1.91%
Company facilities (HV equip)
0.00%
Company facilities (Refrigerants)
0.89%
Company vehicles
1.03%
Company facilities (Gas)
0.79%
Figure 3: Year on Year GHG Emissions by GHG
Protocol Category (tCO2e). Percentages shown
are of total emissions for FY24.
tCO2-e
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
FY24 emissions (tCO2e)
FY23 emissions (tCO2e)
Financial Year
Avoided
Emissions
Overseas - Grid, voluntary 100% renewables - avoided
Mawson Lakes - on-site solar - emissions avoided
Brisbane Office - Jurisdictional LRET - emissions avoided
Mawson Lakes - Jurisdictional LRET - emissions avoided
Overseas - Grid sourced (location based)
Brisbane Office - Residual grid
Mawson Lakes - Residual grid
Figure 5: Scope 2 Emissions by Source (tCO2e)
sections above line show avoided emissions
from renewable.
tCO2-e
0
200
400
600
800
1,000
1,200
1,400
1,600
FY24 emissions (tCO2e)
Financial Year
FY23 emissions (tCO2e)
Fugitive emissions - Refrigerants - Overseas 30.67%
Transport fuel - Overseas
29.09%
Gas use - Overseas
24.20%
Fugitive emissions - Refrigerants - Australia
2.08%
Transport fuel - Australia
8.94%
Gas use - Australia
4.99%
Figure 4: Scope 1 GHG Emissions by Source.
Percentages shown are of total emissions
for FY24.
kWh
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
9,000,000
FY24 activity (kWh)
FY23 activity (kWh)
Financial Year
Overseas - Transport fuel
21.29%
Overseas - Gas use
24.50%
Australia - Transport fuel
6.54%
Australia - Gas use
4.27%
Overseas - Grid sourced electricity (location based)
14.44%
Overseas - Residual non-renewable grid sourced electricity 0.00%
Overseas - Grid voluntary 100% renewable electricity
12.59%
Australia - Residual non-renewable grid sourced electricity
11.21%
Australia - Jurisdictional LRET
2.58%
Australia - BTM solar consumed
2.53%
Figure 6: Scope 1 and 2 Energy Use (kWh).
Percentages shown are of total activity
for FY24.
0
5,000
10,000
15,000
20,000
25,000
Purchased goods and services
Capital Goods
Business Travel
Use of sold products
Downstream transportation & distribution
Upstream transportation & distribution
Processing of sold products
Waste generated in operations
Employee commuting
Fuel & Energy related activities
(not accounted for in Scope 1 & 2 emissions)
End of life treatment of sold products
Upstream leased assets
Financial Year
FY24 emissions (tCO2e)
FY23 emissions (tCO2e)
Figure 7: Scope 3 Emissions by GHG Protocol Category.
Figure 3 shows the year-on-year variation of total
emissions between FY23 and FY24, and breakdown
by GHG Protocol category. Overall, emissions have
increased by 2.6% from FY23 to FY24, noting that
FY24 was a year of significant growth for Codan with
revenues up over 20% versus FY23.
Scope 1 Emissions
The Scope 1 GHG emissions for Australian facilities
are from:
• 56% transport fuel;
• 31% natural gas; and
• 13% fugitive emissions of refrigerants.
The Scope 1 GHG emissions for overseas facilities
are from:
• 36% fugitive emissions of refrigerants;
• 35% transport fuel; and
• 29% natural gas use.
Emissions increased during FY24 when compared
to FY23, however, there was an improvement in
data quality where invoices were used to calculate
emissions for some overseas sites. Activity from other
overseas locations were estimated using the same
assumptions from FY23.
Scope 2 Emissions
Electricity consumed at Mawson Lakes was
1,028,705kWh during FY24 of which 35% was
renewable electricity sourced from solar generated
on site and the grid.
Overall, electricity use at Mawson Lakes decreased
by 3.1% when compared to FY23, however, residual
non-renewable electricity consumption increased by
0.5%. The remaining electricity consumed in Australia
was 279,074kWh in Brisbane, of which 18.7% was
renewable electricity sourced involuntarily from the
jurisdictional LRET portion of the grid.
The combined voluntary and involuntary emissions
avoided total 686 tCO2e for FY24. This is due to
69% of consumption being sourced from renewable
electricity sources. The breakdown of these emissions
avoided are:
• 165 tCO2e for on-site solar at Mawson Lakes;
• 354 tCO2e for grid purchased 100% renewable
electricity at DTC UK in Whiteley; and
• 167 tCO2e for the jurisdictional LRET portion
of the grid in Australia.
During FY24, there was an improvement in data
quality and emission factors for a number of overseas
sites which were either estimated or not included last
year and may explain the increase in these emissions.
Scope 3 Emissions
Purchased goods and services are the biggest driver
of Scope 3 emissions, resulting in 38% of total scope
3 emissions for FY24. Key activities within purchased
goods and services include embodied impact of
materials and spend on office equipment and low
value assets.
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Opportunities to reduce emissions
Working with external consultants over the course
of FY24, Codan completed an assessment of
emissions reduction opportunities. The assessment
involved the participation of internal stakeholders
representing the key functions of Codan’s business
activities. Stakeholder sessions were conducted
with Codan business units, as well as supply chain,
facilities and logistics functions. The purpose of these
discussions was to explore the risks and opportunities
in relation to reducing the emissions associated with
each business and function. In addition, discussions
took place with Plexus and Venture on the risks and
opportunities related to reducing emissions from
Codan’s use of contract manufacturing.
Findings from this process led to the preparation
of a list of priority actions to reduce emissions.
The stakeholder groups were re-engaged to review
these actions and discuss feasibility and timelines.
Additional discussion took place with Codan’s CEO
and CFO to consider the operational implications
of the actions and timeframes and confirm which
actions to recommend to the ARC for approval.
The opportunities for emissions reduction that are
under consideration for the short term include:
• installation of additional electric vehicle charging
stations at the Mawson Lakes office;
• creation of an Uber “Business Corporate Account”
to utilise electric and low emission vehicles when
on business travel;
• use of renewable energy electricity packages for
all offices;
• increase percentage of sea freight used compared
to air freight; and
• use electric, hybrid or low carbon vehicles when
replacing existing fleet vehicles.
On review and approval by the ARC in FY25, Codan
will start taking the necessary actions to realise these
opportunities. These are the actions that have been
identified in the short term. We recognise that there
is more that will be required in the future, and we will
continue to investigate and assess other opportunities.
Additional analysis and monitoring will be conducted
so that Codan has sufficient data to develop and set
public emissions reduction targets.
In relation to DTC’s UK operations, a carbon reduction
plan was established in FY23 to meet stakeholder and
regulatory expectations in the UK. The DTC carbon
reduction plan was reviewed and updated in FY24.
Ongoing monitoring of the DTC carbon reduction
plan will form part of Codan’s overall monitoring of
the implementation of emissions reduction actions
across the group.
Ongoing environmental management
Our global head office is located in the Technology
Park precinct of South Australia and houses
approximately 230 staff (Head Office). It is currently
awarded a 5.0 star NABERS energy rating. The fit for
purpose space is fitted with solar panels and electric
vehicle charging stations providing free energy
to staff. We maintain an effective Environmental
Management System that is integral to our business
process and is accredited to AS/NZS ISO 14001
Environmental Management Systems.
All waste (including all business and production
waste) produced by Head Office totalled 62 MT was
100% diverted from landfill in FY24 with 6.74 MT
recycled. Head Office separates waste for collection
by type including food waste and organics, e-waste,
cardboard, batteries and secure documents.
Head office had a total water consumption of 9926kl
which was all taken from city water services.
In FY24, Codan introduced a new Environment and
Biodiversity Policy which recognises the importance
of biodiversity conservation and protection. Codan is
monitoring the voluntary corporate reporting trends
on nature and biodiversity risk, and the uptake of the
Taskforce on Nature-related Financial Disclosures
(TNFD) Recommendations. As these reporting
practices emerge, Codan will determine whether to
commence voluntary reporting using the TNFD.
We are mindful of our indirect environmental
impact within our supply chain. Our Supplier Code
of Conduct encourages our suppliers to develop
a more sustainable business by minimising their
environmental impact. Our two largest contract
manufacturers (Plexus and Venture) are accredited
with ISO 14001 Environmental Management
Systems. Both have confirmed their sites reported
no environmental incidents for FY24.
Codan products are RoHS certified. The goal of RoHS
is to reduce the environmental effect and health
impact of electronics. The legislation’s primary
purpose is to make electronics manufacturing safer
at every stage of an electronic device’s life cycle.
Codan products are also fitted with a Waste Electrical
and Electronic Equipment (WEEE) Sticker which
encourages consumers to dispose of the product
thoughtfully when at the end of its life cycle.
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Our People
Our Core Values have been a long-standing set of
shared principles that shape the culture in the Codan
community and contribute to our people achieving
our organisational goals. In April 2024 we relaunched
our Core Values, which included some small changes
to reflect the organisation we are today, and the
organisation we aspire to be. The statements that
accompany each value were refined to reflect a
stronger employee focus.
In relaunching the Core Values through our inaugural
CEO e-communication, our employees were able to
hear from our CEO who shared his observations and
aspirations for the Core Values to shape the future
of Codan.
“We recognise the vital importance of
our Core Values in shaping the future of
Codan. They are not just words on a wall,
they are the guiding principles that inform
our decisions, shape our interactions, and
shape our identity as a company.
By embracing these Core Values, we create
a culture of excellence, collaboration and
integrity that sets us apart. Together, we
will strive for excellence, build enduring
relationships with our customers and each
other, and continue to innovate and lead in
our industry.”
Alf Ianniello – Codan CEO
We also had the privilege to interview employees
from across our global organisation and capture their
sentiments and perspectives of the Core Values in
their work and personal lives. Despite the growth that
the business has seen in recent years, it was clear that
the Core Values bring us together and reflects all our
people in all our offices globally. This was summed
up by our Chief Human Resources Officer (CHRO):
“Regardless of which office you work in,
which region you live, or which of our
businesses you’re part of. Whether you’re
a long tenured employee or just starting
your journey with us, I’m looking forward
to seeing new ways our Core Values are
reflected in how you do your work,
and how you interact with each other
and with our customers.”
Marjolijn Woods – Codan CHRO
Engagement Survey
In September 2023, we launched a company-
wide Employee Engagement Survey with 85%
participation. Our engagement score, which is a
measure of people’s connection and commitment
to the company and its goals, was 72% favourable.
A significant contributor to this score, was that 85%
of our employees reported they would recommend
Codan as a great place to work.
Our employee footprint has grown enormously
since our previous employee survey, and it was
important to validate what is important to our current
workforce. While the engagement score was strong,
we had key areas for action and work continues to
progress these at all levels of the business. The key
Codan Group actions are for our leadership to provide
strong communication of a vision, greater access to
career opportunities, and confidence in our leaders to
take action following the survey.
Some of the activities to address these actions,
include the development of an Internal
Communications Framework, which offers a clearly
defined structure and schedule for communications
to all levels and regions throughout the organisation.
The Internal Communications Framework includes
the CEO e-communication used to relaunch the Core
Values mentioned above. For career growth, we
have launched a global newsletter promoting internal
vacancies, greater focus on development objectives
in the performance review process, and a new talent
and succession planning framework. A reward and
recognition program is also under development.
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Diversity, Equity and Inclusion (DEI)
Research shows that a diverse workforce is strongly
linked to high performing teams, and we see evidence
of that at Codan across our global workforce. Work
has commenced to develop DEI strategy which will
include broad consultation with employees through
focus groups and stakeholder interviews. This project
will enable us to continue to ensure that our people
continue to reflect diversity in our business, through
gender, age, family status, culture, race, ethnicity,
sexuality, religion and beliefs. We are also committed
to providing an environment where all our employees
can succeed and meet their potential, feel part of a
team and contribute to Codan’s success.
Health and Wellbeing
Our Health & Fitness Improvement Program
is an initiative to provide health and wellbeing
opportunities and activities to our employees.
This was held again in our Head Office location and
was also offered in our global offices, where the
program was tailored to reflect the local culture,
environment and climate.
Our Head Office location at Mawson Lakes offered
the opportunity to attend sessions including the very
popular ergonomic assessments for workstations,
skin checks, 1-on-1 nutrition consultations, short
health checks for blood glucose and blood pressure,
and seated massages. There was also a series of
seminars from health professionals, covering topics
including work life balance, stress management,
resilience, and financial wellness. One key activity that
has sustained beyond the 12-week program are the
walking groups at lunch time and after work, which
sees our objective to build new connections and
providing support to colleagues in action.
Our Zetron division organised a team from each of
their global offices to participate in the “911der”
Women Virtual 5K walk, to support a community
providing mental health and wellness resources,
training, career development, outreach, and research
to 911 responders. The Zetron office in Victoria
(Canada) launched a health initiative for employees
providing a selection of fresh fruit daily which has
been welcomed.
In the Zetron UK office, a wellness day was
coordinated onsite with several activities on offer
including zinc taste testing, an education session
on sleep, as well as body composition testing,
which measured factors including fat, muscle, BMI,
metabolic rate and age. This was followed by a session
with a qualified nutritionist where the results were
discussed in detail by providing the opportunity for
employees to learn and understand their health risk
factors, metabolic age, and most importantly, what
steps they can take in terms of nutrition and other
habits to bring about improvements.
Development and Learning
Codan’s in-house mentoring program remains a key
development opportunity in the organisation with
strong interest from employees across the group for
both the mentor and mentee roles. This program
is a meaningful way to connect our employees
across regions and business units, while offering the
opportunity for learning from others’ experience and
perspectives. Many relationships between mentors
and mentees have sustained beyond the mentoring
program, while also providing real opportunities
for collaboration that would otherwise not have
been possible.
A key project has been our Human Resources
Information System (HRIS) which is due to be
launched early in FY25. This project will enable
us to move from using disparate systems to a
single platform to deliver performance, talent and
succession, and learning and development to our
global workforce. The HRIS will allow us to capture
inputs more securely and consistently, and track
progress against development activities to ensure
development and succession outcomes are realised.
Our framework for succession planning and talent
mapping has been developed and was piloted earlier
this year, bringing a more focused and structured
approach to this activity.
FY24
FY23
Learning & Development ($000)
658
306
Gender
representation
FY24
FY23
Female
%
Male % Female
%
Male %
Board
40%
60%
40%
60%
Senior Executive
17%
83%
17%
83%
Senior
Management
24%
76%
24%
76%
Other
24%
76%
26%
74%
Whole workforce
24%
76%
25%
75%
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In addition to the scholarships that Codan provides
through a number of South Australian institutions,
we have also fostered our long standing relationships
with local universities to provide meaningful work
experience for future engineers in our Head Office
location. Codan offers selected candidates a four
year apprenticeship at Head Office, and also offers
internships across the business.
Zetron Canada continues to partner with the
University of Victoria, with 5 co-op students currently
undertaking placements. The co-op program has a
strong history of resulting in permanent employment
for students post-graduation. The Zetron US and
Brisbane offices both currently have an intern within
their marketing and engineering teams respectively.
DTC UK continue their established four year
apprenticeship framework, which offers a
qualification at the end of the tenure to school
leavers across a number of disciplines. This is also
complemented by their ongoing focus to include
graduate positions in the workforce profile,
providing an internal talent pipeline.
Codan continued their support of the South
Australian Node of the Australian National Fabrication
Facility (ANFF-SA) Microengineering School,
hosting industry tour groups to showcase career
opportunities in manufacturing.
WHS
We maintain an effective Work Health and Safety
System that is integral to our business processes
and are accredited to OHSAS 18001 and AS/NZS
4801 Occupational Health and Safety Management
Systems. FY24 reporting is now extended to
capture all global locations, with all Codan sites
encouraged to report near misses and incidents.
Our positive reporting culture allows us to anticipate
and proactively address safety concerns.
Workplace Health
& Safety Statistics
FY24
FY23
Lost Time Injuries
1
1
Near Misses
3
1
Incidents
49
15
Fatalities
0
0
Our Community
Employing over 200 engineers across
the Codan group, STEM disciplines are
a large part of our business operations.
To further future proof our talent pipeline,
an ongoing commitment is to encourage,
promote, and develop all students,
regardless of gender, age, family status,
culture, ethnicity, and religion to pursue
a career in STEM. Across all our offices,
we have continued to engage with
local universities, including exhibiting
at various career fairs and networking
events to promote and discuss the career
opportunities we have available within the
Codan Group.
In November 2023, Codan, in
collaboration with the University of
Adelaide, officially launched the Codan
Founders Scholarship program.
Codan is extremely proud to honour and continue
to build the legacy established by our founders;
Mr Ian Wall, Mr Jim Bettison and Mr Alastair Wood.
Their legacy at Codan is integral to our people and
the success of our business, with an ever present
commitment to innovation and growth. Each of our
founders were pioneers in engineering excellence,
delivering innovative products that truly made a
difference in the world. In working with the University
of Adelaide, where each of our founders began their
journeys, we aim to honour the impact they had
as engineers and innovators. The PhD program is
a multi-year commitment, each of which will take
approximately three years to complete. We aim
to develop projects with the University for each of
these scholarships across our core business units and
their respective technology and product offerings.
Through the program, we are seeking to attract and
introduce elite students to the way in which Codan’s
world class engineering teams operate. As part of
the program, the students will spend time at Codan
to work with and experience our engineering teams
in action. This is an integral part of the program, to
ensure genuine cross learning between Codan and
the PhD students. Codan values the importance of
innovation and development of novel Intellectual
Property in creating life changing products for its
customers. In partnering with an esteemed institution
like the University of Adelaide, with its world leading
Faculty of Sciences, Engineering and Technology, we
are confident that our investment will allow us access
to the most highly talented students with whom we
can partner to develop more groundbreaking and
innovative technologies.
Codan continues to support the Undergraduate
STEM Scholarship for Women with the University
of South Australia. Available to second year female
students enrolled in a full-time or part-time eligible
STEM undergraduate program, the scholarship is
valued at up to $15,000 over three years. It also
provides a paid work experience component to
complement the financial assistance and extend the
scholarships value by providing practical work based
experience, mentoring, and a potential pathway
to employment. Codan also participated in the
University of South Australia STEM Girls Academy
Creative Challenge. The challenge is based on the
problem solving mindset “Design Thinking” and
combines a series of steps which can guide you to
think as a designer, sparking ideas that can lead
to innovation. Through the STEM Girls Academy,
students learn this methodology in a series of
workshops, where they are guided and mentored by
industry professionals to solve a problem presented
to them. Codan’s challenge workshops were led by
Vanessa Nery, Technical Author at Domo Tactical
Communications and Joey MacDougall, In-House
Legal Counsel at Codan.
We also continued to support the Codan Playford
Trust honours scholarship. The $10,000 scholarship
is awarded annually to an outstanding student
commencing third year, fourth year or Honours in
electronic engineering, signal processing or physics,
with an interest in sensing systems. The successful
applicant has the opportunity to undertake paid
work experience at Codan. The aim is to help the
student develop skills and knowledge and enhance
their industry experience. The students will work
on projects in a collaborative environment, actively
contributing and drawing on the experience of others.
Pictured: Jessica Gallagher, University of Adelaide Deputy Vice-Chancellor External Engagement
and Codan Managing Director and CEO Alf Ianniello.
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ADDITIONAL INFORMATION
REPORT OF OPERATIONS
ESG REPORT SOCIAL
Codan hosted its fourth annual charity golf day in South
Australia, where key stakeholders were invited to register
a team to participate in a fun filled day on the course.
Over $112,000 was raised inclusive of key stakeholder
and Codan donations, and this amount was donated and
distributed evenly amongst three chosen charities, namely:
Variety, Hutt St Centre and KickStart for Kids.
This year, Codan was proud to extend its support to
Catherine House, South Australia’s only homelessness
and recovery service for women. Catherine House
provides crisis and long term accommodation, mental
health programs, access to education and employment
opportunities and other support services to women
experiencing homelessness in the state. Over $2,000
was raised for Catherine House through donations by
employees at an International Women’s Day morning tea
held at our Mawson Lakes headquarters, in addition to the
investment that Codan made to its programs.
Aligning with our ESG commitment to support initiatives
that create a positive environmental impact on the wider
community, Codan partnered with Hills Biodiversity to
plant 500 native trees and plants at the Mt Barker Springs
Water Reserve in the Adelaide Hills. Thirty years ago,
the Mt Barker Springs site, also known as Drovers’ Rest,
was thriving with native grasses, forbs and sedges.
Recently the land has been heavily grazed, reducing native
vegetation and enabling exotic plants to thrive and the
soil to degrade. A significant regeneration project is now
underway at the site, led by Hills Biodiversity, which is
focused on restoring the native grassland and enhancing
the local biodiversity of Mt Barker Springs. Contributing to
this important restoration project was a fulfilling experience
for our employees.
Codan is a proud major sponsor of Youth
Opportunities. Youth Opportunities supports
young people to develop the lifelong skills, habits
and confidence to thrive. Through this sponsorship,
Codan will provide 40 young people in Northern
Adelaide the opportunity to participate in the Youth
Opportunities Elevate Personal Leadership Pathway
program, and award 2 Educational Scholarships.
This wellbeing and leadership program offered to
Year 10 students, will help them to develop the skills
to overcome adversity, build resilience and optimism,
and prepare for their future while also providing
access to opportunities which reduce barriers to
achieving their potential.
“My main career goal is to become a
successful lawyer, assisting people and
communities in need of legal support.
Receiving this laptop is life changing for me.
Having a laptop will make it easier for me
to follow my student studies and work on
assignments, research, and projects.
It will enable me to invest more time in
my education, personal development,
and community engagement efforts.
By supporting my education, the laptop will
directly contribute to my goal of becoming
a lawyer. The laptop’s impact will benefit
not only me but also those I’m committed to
helping. This support will help me achieve
my career aspirations and empower me
to become a more impactful leader in
my community.”
Zainab, Salisbury High school,
Codan Educational Scholarship Recipient.
Being a socially conscious and responsible organisation is a part of Codan’s
corporate identity. Our mission is to target community programs that assist
disadvantaged groups within the communities our businesses operate.
Each year, Zetron holds an annual “Shoot for the
Stars” golf tournament, benefiting Behind the Badge
foundation. All proceeds from the event go directly
to the Behind the Badge Foundation, an organisation
supporting the agencies, families, and communities
of law enforcement officers that are seriously injured
or killed in the line of duty.
Shoot for the Stars has grown each year and become
engrained in Zetron culture, with many employees
contributing as volunteers and supporters.
Over 11 years, Zetron Shoot for the Stars events
have raised more than $400,000 for the foundation.
“Everyday law enforcement works on behalf
of our communities to serve and protect us
all and we are honoured to play a small part
in helping survivors of line of duty tragedies
and their families through the amazing
work of the Behind the Badge Foundation.
Over the years, Shoot for the Stars has
become so much more than a one day event
for us. It’s an important gathering that
brings together our employees, partners,
and community to show our pride and
appreciation for those who sacrifice
so much to serve.”
Scott French, Zetron President
and Executive General Manager.
Codan is a long-time proud supporter of Variety -
the Children’s Charity (Variety). 2024 marks our
36th year of gold sponsorship of the Variety Bash,
Australia’s largest and longest running charity
motoring event through the Australian outback.
Codan participates in the event with its own Variety
Bash vehicle and oversees the radio communications
in the lead up to the event. In addition, Codan
is responsible for manning the control centre to
facilitate the communication and tracking of all
official vehicles, mobile workshops and mobile
doctors, for a safe and successful Variety Bash.
Codan employees conduct site surveys ahead of
the Variety Bash to ensure the remote site provides
reliable communications along the Variety Bash
route, as well as provide HF radio operator training,
assist with radio installations and attend Variety
Bash meetings.
FY24
FY23
Donations ($000) inclusive of product donations
387
230
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FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
REPORT OF OPERATIONS
ESG REPORT
GOVERNANCE
Corporate Governance
Statement
Codan’s corporate governance statement, which
was approved by the Board on 21 August 2024,
is available on the company’s website and may be
accessed at https://codan.com.au/who-is-codan/
corporate-governance/
Business Ethics/Behaviour
Codan’s Code of Conduct provides a framework for
employee conduct, with guidance around expected
and acceptable standards of behaviour that are
aligned with our Core Values, and which allow us to
work together to achieve the goals of the business.
The Code of Conduct and Core Values are included in
induction packs for new starters.
An essential part of our culture of “Trust & Integrity”,
one of Codan’s four Core Values, is underpinned
by our “Speak Up” culture. This culture encourages
staff to raise issues or conduct that concerns them.
Our “Speak Up” culture is reinforced by our Code
of Conduct, Core Values and Whistleblower
Protection Policy. We take all reports of harassment,
discrimination, bullying and any form of misconduct
very seriously. Our grievance procedure facilitates
the appropriate investigation and resolution of
complaints. There were no workplace grievances
registered globally during FY24.
At Codan, we take compliance seriously. We have
a strong, fit for purpose compliance program run
by our in house Legal & Compliance department.
Staff training is a critical part of this program and is
compulsory for all employees and forms part of our
induction program. This induction includes training
on Anti-Bribery and Anti-Corruption (ABAC), Modern
Slavery, Whistleblower Protection and Code of
Conduct. Our training program is risk-appropriate,
with additional tailored training sessions conducted
for staff in high-risk roles.
ABAC remains a material topic for our business,
as we acknowledge some of our businesses operate
in high-risk environments. Our ABAC program and
ABAC Policy is reviewed annually to ensure it remains
fit for purpose and in line with best in practice anti-
bribery compliance programs. Key aspects of the
program involve a risk driven due diligence process
for third party business partners, regular training for
high-risk staff and a selection of third parties, and an
approval based gratuities register. Internal audits are
conducted on high-risk transactions.
Codan’s sanctions compliance program is a
groupwide approach that uses enhanced due
diligence measures, external resources, monitoring
and approval procedures to ensure we meet our
global sanctions obligations.
Codan’s modern slavery program is continually
reviewed in line with our Modern Slavery and Human
Rights Policy. To seek continual best practice,
Codan has also joined the UNGC’s Modern Slavery
Communities of Practice, which allows discussions
across different industries and organisation size,
to share ideas. Codan produces a Modern Slavery
Statement designed to meet the disclosure
requirements of the Australian Modern Slavery Act
2018 (Cth). In undertaking its risk assessment with
respect to Modern Slavery, Codan has again identified
that its main risk lies with its major third-party contract
manufacturers. Presently, this includes Venture
and Plexus. Both are based in Penang, Malaysia and
manufacture more than 60% of Codan product.
Codan’s supply and procurement team are in regular
contact with Plexus and Venture and have undertaken
numerous discussions around their approaches to
modern slavery. Codan’s Supply Chain Manager and
Legal Counsel also visited both sites to conduct an
in-person audit, following on from the in-person audit
conducted in FY23. These audits allowed us to see
first hand that our contract manufacturers share the
same expectations with respect to modern slavery
compliance.
We have a Supplier Code of Conduct and Supplier
Terms and Conditions that include Modern Slavery
clauses. In FY24, the Supplier Code of Conduct was
revised to include requirements for suppliers to
abide by Codan’s Conflict Mineral Policy and comply
with the International Labour Organisation (ILO)
Declaration on Fundamental Principles and Rights
at work. We have systems in place to carry out daily
online searches on our highest risk suppliers for any
adverse media, including modern slavery topics,
and to date we have had no adverse “hits”. Codan is
not aware of any supplier non-compliance with social
expectations or any contractor fatalities in FY24.
FY25
Target
FY24
Actual
FY23
ABAC Policy violations
NIL
NIL
NIL
ABAC Internal audits
2
2
2
Sanction breaches and
fines
NIL
NIL
NIL
Modern Slavery breaches
NIL
NIL
NIL
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FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
REPORT OF OPERATIONS
ESG REPORT GOVERNANCE
Our Supply Chain
Codan has an extensive global supply chain in place,
sourcing product and material from most regions
in the world. We partner with suppliers who meet
stringent quality standards, are innovative and work
in safe and responsible ways. Our dealings with our
suppliers reflect Codan’s core values, and as such,
we have built collaborative, honest and trusting
relationships which have resulted in reliable supply
over the long term.
Our supply chain is responsive to the changing needs
of our customers and markets. All Codan suppliers
must provide agility, flexibility and speed to market.
At the end of our supply chain are global distribution
centres located in the UAE, USA, Malaysia, Poland,
Brazil, Mexico, India and Australia, which ensure
product is regionally distributed for the fastest
route to market.
Codan Group supplier spend
36%
Asia
26%
North America
8%
Australia /
New Zealand
30%
Europe
Codan has 1,000 active suppliers across the Codan
Group, with supplier spend circa $161 million across
mostly electronic components, as well as cables,
antennas, plastics and packaging.
Cyber Security
As a global technology company, safeguarding our
intellectual property and confidential information is
paramount to maintaining trust with our customers,
suppliers and partners. As the probability of
cyber-attacks increases the risks and becomes
more complex, Codan has adopted a risk-based
framework to protect our assets. Cyber risks are
regularly reported to the Codan Board and Audit
and Risk Committee. Relevant organisational policies
and standard operating procedures are in place
and are regularly reviewed to ensure they remain
commensurate with the external risk.
During FY24, Codan completed penetration testing
and regular vulnerability assessments to highlight
potential system vulnerabilities. Continued staff
awareness training as well as rolling this program out
to recently acquired companies.
In FY24, Codan had no known major security
incidents or events that resulted in loss of confidential
information or intellectual property.
Tax
As part of our commitment to meeting our global
taxation obligations in a transparent and open
manner, we conduct our tax affairs within a robust
tax risk management policy and framework overseen
by the Board.
Codan’s tax governance process is documented in
our Tax Risk Management Policy and Framework.
This framework is based on the philosophy of
managing tax risk through a well-planned approach
built around the following principles:
• a transparent and accountable relationship
with local country tax authorities;
• the payment of the legally correct amount of
tax in a timely manner;
• the systematic identification of significant tax
sensitive transactions ahead of time;
• the documentation of tax processes to facilitate
review and minimise the impact of changes in
personnel;
• defined channels for the reporting of tax
information to the Board;
• internal controls, with effectiveness of those
controls assessed on a regular basis;
• Codan should not enter any transaction where
there is a material risk that any legislative general
anti-avoidance provisions will be applied by a
Court; and
• Codan will not promote tax exploitation schemes.
The Board has delegated oversight of Codan’s
taxation affairs and the framework to the Audit
and Risk Committee. The framework requires the
Committee to attest to the Board on a yearly basis
that it has effective policies and processes in place
to manage tax risk.
The CFO has overall responsibility for the group’s
taxation affairs, including enforcing policies and
implementing strategies approved by the Board,
developing and implementing systems that identify,
assess, manage and monitor tax risks, monitoring the
appropriateness, adequacy and effectiveness of tax
risk management systems and reporting on tax risk
and management to the Board.
The CFO is also responsible for the maintenance of
in-house tax resources with appropriate qualifications
and experience in taxation matters, to oversee
that Codan’s obligations globally are discharged in
a legally correct and timely basis and that the tax
risk management controls set out in the framework
operate in an effective and robust manner.
The framework requires management to consult with
reputable local country external tax advisors where
appropriate to ensure compliance with local country
obligations. KPMG is engaged to review the numbers
disclosed in the “Tax Note” in the Annual Report each
year, as part of the half-year review and full-year audit.
We apply arms’-length principles to our international
related party dealings, engaging with external
advisors with appropriate expertise to ensure our
compliance with transfer pricing laws globally.
As part of our commitment to our tax risk
management policy and framework, we adopted
the recommendations of the Board of Taxation’s Tax
Transparency Code with effect from 30 June 2021.
To this end, the board has directed that each year the
Annual Report should contain sufficient information
to comply with Part A of the Code. The Part A
disclosures required of Codan by the Code are:
• Codan’s Australian and global effective tax rates;
• a reconciliation of the accounting profit to income
tax expense;
• a reconciliation from income tax expense to
current year income tax payable; and
• identification of material temporary and
non-temporary differences.
The Part A financial information can be found in the
Taxation Note (Note 7) of the Notes to the Financial
Report on page 99 of this Annual Report. As Codan’s
business has continued to diversify, and in line with
the success of our communications business, the
activities and assets which generate our income have
become more balanced and spread across the globe.
In FY24, we paid $7.1 million corporate income tax in
Australia which is approximately a third of our global
corporate income tax contribution. Our shareholders
continue to benefit from the generation of Australian
franking credits from Australian tax paid.
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ADDITIONAL INFORMATION
REPORT OF OPERATIONS
GRAEME BARCLAY
MAICD, F Fin, CA, MA (Hons)
Chair, Chair of Remuneration and Nomination Committee
Graeme is a former CEO and Chartered Accountant with more than 35 years’ experience in professional services,
investment banking, broadcast infrastructure and telecommunications.
Over the past 20 years Graeme has held Executive Chairman or Group CEO roles at BAI Communications, Transit
Wireless LLC (New York), Nextgen Networks, Metronode data centres and Axicom group (formerly Crown Castle
Australia), and for 8 years during this period was also an executive director in Macquarie Group’s infrastructure team.
In these roles, Graeme was responsible for all aspects of strategy, M&A, sales and business development, contract
delivery and operations, as well as implementing the appropriate capital structure and raising equity and third-party
debt for these businesses in Australia, UK, Hong Kong, Singapore, Canada, USA and New Zealand.
Over the past 20 years in these businesses, Graeme led and completed more than 20 acquisition and divestment
transactions including the sale of Nextgen Networks to Vocus for $820 million in 2016 and the sale of Metronode
to Equinix for $1.04 billion in 2018. In his role as Chairman of Uniti Group Limited (ASX: UWL), he led the company
from a market capitalisation of $30 million at IPO in February 2019 to the successful divestment via a Scheme of
Arrangement to a consortium of investors led by HRL Morrison and Brookfield Asset Management at an enterprise
value of $3.8 billion in August 2022.
Included in his prior board appointments are: Arqiva Limited (institutionally owned UK telecommunications
infrastructure group), Chairman of the main Board and of the Audit and Risk Committee for Nextgen group (Ontario
Teachers’ Pension Plan majority owned fibre network and data centre owner), NED and member of the Audit and
Risk Committee of Axicom Group (institutionally owned mobile tower operator), and Chairman of Uniti Group
Limited (ASX:UWL) (fibre to the premise network owner).
Graeme was appointed to the Codan Board in 2015 and became Chairman in February 2023.
Graeme holds an honours economics degree, is a Chartered Accountant, a fellow of FINSIA and a member of AICD.
ALF IANNIELLO
Wharton GCP, GradCertMgmt, BEng (Electronics)
Managing Director and Chief Executive Officer
Alf Ianniello joined Codan as Chief Executive Officer and Managing Director in January 2022. Having held numerous
global executive leadership roles in his career – spanning three decades – Alf has considerable expertise across
packaging, defence and automotive industries.
Prior to joining Codan, Alf was Chief Executive Officer of Detmold Group for 14 years. Throughout this tenure,
Alf identified growth opportunities and opened new markets and product lines to position the Australian
family-owned and operated business as a global leader in the provision of sustainable packaging products.
In a highly competitive market, Alf was responsible for significant expansion in Detmold’s profitability and
development, and under his stewardship, Alf successfully positioned Detmold as an employer of choice,
given his focus on fostering positive culture, developing individuals and promoting teamwork.
After earning a Bachelor of Engineering (Electronic Engineering) in 1994, Alf began his career as a Design and
Production Engineer with British Aerospace Australia. He then spent 7 years with Schefenacker Vision Systems,
as a Customer Engineer and Branch Manager in the USA, before moving to the organisation’s Australian division
in 2000 as Project Manager. In 2007, Alf was appointed Schefenacker’s Australian Managing Director.
Known for his ability to leverage innovation and organisational capabilities, Alf has managed major facilities across
Australia, China, Vietnam, Philippines, India, Singapore, Dubai, Indonesia, US, UK, Germany and South Africa.
Alf attended the Wharton Business School Global CEO Program at the University of Pennsylvania in 2012.
He also holds a Graduate Certificate in Management and Bachelor of Engineering (Electronic Engineering)
from the University of South Australia and graduate of the Australian Institution of Company Directors.
KATHY GRAMP
BA (Acc), FCA, FAICDLife
Independent Non-Executive Director
Chair of Board Audit and Risk Committee
Kathy was appointed to the Board of Codan in November 2015. She has had a long and distinguished executive career and over
25 years of board experience across a diverse range of complex organisations and industry sectors. She has significant experience
as Chair of Audit & Risk Committees.
Prior to joining Codan, Kathy was CFO of Austereo Ltd. She joined Austereo in 1989 and retired in June 2011. In that time the
company grew from 2 radio stations to the largest commercial radio network in Australia, and the leader in Digital and Online Media.
Leadership roles and responsibilities included business planning & re-engineering, debt & equity raising, acquisitions & integration,
capital investment, major IT projects, corporate governance, risk management, financial management, tax & accounting,
change management and investor & key stakeholder relations. Further experience was gained through exposure to international
markets such as Greece, UK, USA, South Africa, Argentina, Malaysia, and New Zealand.
Kathy was a Director of Uniti Group Limited (ASX:UWL), Chair of the Audit & Risk Committee and member of the Nomination &
Remuneration Committee until August 2022. Uniti, a diversified provider of telecommunication services, listed in February 2019 and
through acquisition and organic growth, increased its enterprise value from around $30 million at the time of listing to $3.8 billion in
August 2022 when the business was sold to a consortium of financial investors. She was a Director of QANTM IP Limited (ASX: QIP),
appointed 11 May 2022 and also served as Chair of the Audit and Risk Committee until August 2024. QANTM is the owner of a group of
leading intellectual property and trademark services businesses operating in Australia, New Zealand, Singapore, and Malaysia.
Kathy holds a BA Accounting, is a Chartered Accountant and a Life Fellow of the Australian Institute of Company Directors and is a
member of Chief Executive Women.
SARAH ADAM-GEDGE
BBus (Acc), CA, GAICD, Member IoD (NZ)
Independent Non-Executive Director
Sarah was appointed to the Board in February 2023. She has expertise in digital and technology businesses with an executive
background that includes 12 years at IBM Global Business Services, and 8 years as CEO of Avanade Australia, Publicis Sapient Australia
and Wipro Limited Australia and New Zealand.
Sarah has extensive international experience as a result of leadership roles in global information technology companies, and significant
experience driving growth initiatives, working with customers and in different markets. Prior to joining IBM, Sarah was a Consulting
Managing Partner at PWC, and Audit and Business Consulting Partner at Arthur Andersen.
She is a Director of Austal Limited (ASX: ASB) where she serves as Deputy Chair, Bravura Solutions Ltd (ASX:BVS) and Emeco Holdings
Ltd (ASX: EHL). She is also on the Board of private companies including Kinetic IT Pty Ltd and Cricket Australia.
Sarah is a Chartered Accountant, a graduate of the Australian Institute of Company Directors, and currently mentors for the Minerva
Network and CAANZ.
HEITH MACKAY-CRUISE
BA (Econ), FAICD
Independent Non-Executive Director
Heith was appointed to the Board in March 2023 and has been involved in the media, education and technology sectors over the past
25 years. Heith is currently the non-executive Chair of Southern Cross Media Group Limited (ASX:SXL) and is also a non-executive
National Director of the Australian Institute of Company Directors.
Heith is a previous non-executive Chair of Straker (ASX:STG), LiteracyPlanet, hipages Group (ASX:HPG) and the Vision Australia
Foundation as well as a previous non-executive Director of LifeHealthcare and Bailador Technology Investments (ASX:BTI). In Heith’s
prior executive career, he was the founding CEO of Sterling Early Education, the Global CEO and Managing Director of Study Group,
and CEO for PBL Media New Zealand. Heith also held senior executive positions with Australian Consolidated Press and worked in
sales and marketing roles for PepsiCo around Australia.
Heith is a mentor with Kilfinan Australia, a Fellow of the Australian Institute of Company Directors and has a Bachelor of Economics
degree from the University of New England.
BOARD OF DIRECTORS
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FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
REPORT OF OPERATIONS
ESG
ALF IANNIELLO
Wharton GCP, GradCertMgmt, BEng (Electronics)
Managing Director and Chief Executive Officer
Alf Ianniello joined Codan as Chief Executive Officer and Managing Director in January 2022.
Having held numerous global executive leadership roles in his career – spanning three decades – Alf has
considerable expertise across packaging, defence and automotive industries.
Prior to joining Codan, Alf was Chief Executive Officer of Detmold Group for 14 years. Throughout this tenure,
Alf identified growth opportunities and opened new markets and product lines to position the Australian
family-owned and operated business as a global leader in the provision of sustainable packaging products.
In a highly competitive market, Alf was responsible for significant expansion in Detmold’s profitability and
development, and under his stewardship, Alf successfully positioned Detmold as an employer of choice,
given his focus on fostering positive culture, developing individuals and promoting teamwork.
After earning a Bachelor of Engineering (Electronic Engineering) in 1994, Alf began his career as a Design
and Production Engineer with British Aerospace Australia.
He then spent 7 years with Schefenacker Vision Systems, as a Customer Engineer and Branch Manager
in the USA, before moving to the organisation’s Australian division in 2000 as Project Manager. In 2007,
Alf was appointed Schefenacker’s Australian Managing Director.
Known for his ability to leverage innovation and organisational capabilities, Alf has managed major facilities
across Australia, China, Vietnam, Philippines, India, Singapore, Dubai, Indonesia, US, UK, Germany and South
Africa.
Alf attended the Wharton Business School Global CEO Program at the University of Pennsylvania in 2012.
He also holds a Graduate Certificate in Management and Bachelor of Engineering (Electronic Engineering)
from the University of South Australia and graduate of the Australian Institution of Company Directors.
MICHAEL BARTON
BA (Acc), FCA
Chief Financial Officer and Company Secretary
Michael joined Codan in May 2004 as Group Finance Manager after a 14-year career with KPMG in their
assurance division. He was appointed Company Secretary in May 2008 and in September 2009, Michael was
promoted to the position of Chief Financial Officer and Company Secretary. Michael leads a team responsible
for managing Codan’s financial operations as well as legal and commercial matters, investor relations,
information technology and business systems.
He holds a Bachelor of Arts in Accountancy from the University of South Australia and is a fellow of Chartered
Accountants Australia and New Zealand.
SCOTT FRENCH
BSc
President and Executive General Manager, Zetron
Scott was appointed to the role of President and Executive General Manager, Codan Critical Communications
in February 2019.
With the acquisition of Zetron in 2021, GeoConex in 2022 and Eagle Ltd in 2023, Scott is now leading Zetron
worldwide, headquartered in the USA with operations in Canada, UK, US and Australia. Scott came to Codan
highly recommended for his lateral thinking, strategic approach to business and for his strong leadership.
He brings a wealth of experience gained from 30+ years with world-class organisations including Motorola,
Panasonic, Zetron and Codan which have a strong history of providing technology solutions that enable
improved communications.
During his time at Motorola, Scott made the transition from engineering leadership to overall go-to-market
leadership for several lines of business, helping to transform Motorola into a solutions provider beyond land
mobile radio (LMR). Throughout his journey, Scott gained significant experience in wireless technologies
including broadband, solution delivery and services. At Panasonic, he continued his leadership by transforming
the company from product to solutions sales, with focus on mobile devices and security, before assuming the
role of General Manager, Americas for two years with Zetron, a command and control company.
Following the acquisitions of Zetron, GeoConex and Eagle, Zetron is now a global leader in command and
control solutions for public sector, transportation and utilities. In addition, Scott served as Vice Chairman on the
state and local Board of Directors of TechAmerica, representing both Motorola and Panasonic, and was also the
Chair of the State and Local Government and Education Executive Council of IT Alliance for Public Sector.
Scott holds a Bachelor of Science in Industrial and Systems Engineering from Virginia Tech, and undertook
MBA studies with a focus on leadership at Loyola University Maryland.
PAUL SANGSTER
BS, Chicago Booth AMP
President and Executive General Manager, Tactical Communications
Paul Sangster is the Executive General Manager of the Tactical Communications segment for Codan and has over 25 years of industry
experience. He is responsible for business strategy, financial performance and operational execution covering a broad portfolio of
products and services. Prior to leading the Tactical Communications segment, he led the global business development efforts for the
Communications Division. Paul joined Codan in 2013.
Prior to Codan, Paul spent 12 years at Cobham Tactical Communications and Surveillance as the Vice President of Sales and Marketing,
based in Washington DC.
He holds a Bachelor of Science in Management Studies from the University of Maryland, Global Campus. He also completed the
Executive Development Program and the Advanced Management Program at University of Chicago’s Booth Business School.
BEN HARVEY
BA, MBA, AMP
President and Executive General Manager, Minelab (Appointed 1 October 2023)
Ben joined Codan in 2017 as the Minelab Vice-President, General Manager for the Americas and Europe, driving significant and sustained
growth in these regions.
Ben brings a wealth of commercial acumen to Codan as evidenced by his more than thirty years of experience spanning Fortune 500
leaders such as Newell Brands and Masco Corporation, as well as private equity and entrepreneurial organisations. During his career,
Ben has held various roles of increasing responsibility across business development, marketing and general management disciplines
with a particular focus on the retail consumer space. Ben is a globally minded, highly impactful executive with a proven track record
for generating breakthrough results via strategic development and implementation across diverse geographies and verticals.
Ben holds a Bachelor of Arts degree in International Business from Adrian College as well as a Masters of Business Administration from
Wayne State University. In addition, Ben completed the Advanced Management Program at Harvard Business School in 2022.
MARJOLIJN WOODS
BASc, GradDipHRM
Chief Human Resource Officer
Marjolijn joined Codan in 2018 and was appointed to the role of Chief Human Resource Officer in January 2023.
Prior to this appointment, Marjolijn was the Global Human Resources Director for Codan | Domo Tactical Communications
and has extensive experience with people and culture.
She holds a Bachelor of Applied Science from Deakin University and a Graduate Diploma Human Resource Management
from the University of South Australia.
DANIEL HUTCHINSON
BCom (Hons), LLB (Hons)
Executive General Manager – Strategy, Corporate Development and M&A
Daniel brings almost two decades of investment banking and corporate advisory experience to Codan. Prior to his appointment,
Daniel was a Managing Director at MA Moelis Australia (the Australian affiliate of Moelis & Company) where he advised on numerous
M&A and capital markets transactions for Australian and international technology and industrials companies.
He also holds advisory panel positions for various Australian based growth companies.
Daniel holds a Bachelor of Commerce (Hons) and a Bachelor of Laws (Hons) from the University of Queensland.
LEADERSHIP TEAM
CODAN | ANNUAL REPORT 2024 | 59
58 | CODAN | ANNUAL REPORT 2024
LEADERSHIP
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
REPORT OF OPERATIONS
ESG
FINANCIAL REPORT
For the year ended 30 June 2024
DIRECTORS’ REPORT
62
LEAD AUDITOR’S INDEPENDENCE DECLARATION
81
CONSOLIDATED INCOME STATEMENT
82
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
83
CONSOLIDATED BALANCE SHEET
84
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
85
CONSOLIDATED STATEMENT OF CASH FLOWS
86
CONSOLIDATED ENTITY DISCLOSURE STATEMENT
87
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
88
DIRECTORS’ DECLARATION
121
INDEPENDENT AUDITOR’S REPORT
122
CODAN | ANNUAL REPORT 2024 | 61
60 | CODAN | ANNUAL REPORT 2024
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
REPORT OF OPERATIONS
ESG
LEADERSHIP
DIRECTORS’ REPORT
The directors present their report together with the financial statements of the group
comprising Codan Limited (“the Company”) and its subsidiaries for the financial year
ended 30 June 2024 and the auditor’s report thereon.
DIRECTORS
The directors of the Company at any time during or since the end of the financial year are:
Graeme Barclay
Alf Ianniello
Kathy Gramp
Sarah Adam-Gedge
Heith Mackay-Cruise
Details of directors and their qualifications and experience are set out on pages 56 to 57.
COMPANY SECRETARY
Mr Michael Barton BA (Acc), FCA
Michael joined Codan in May 2004 as Group Finance Manager
after a 14-year career with KPMG in their assurance division. He was
appointed Company Secretary in May 2008 and in September
2009, Michael was promoted to the position of Chief Financial
Officer and Company Secretary. Michael leads a team responsible
for managing Codan’s financial operations as well as legal and
commercial matters, investor relations, information technology
and business systems. He holds a Bachelor of Arts in Accountancy
from the University of South Australia and is a fellow of Chartered
Accountants Australia and New Zealand.
Mr Daniel Widera LLB/LP, Harvard PLD
Daniel joined Codan in March 2013 as Senior Legal Counsel after
spending the previous 8 years of his career as a corporate lawyer,
both in private practice and in-house. He was appointed General
Counsel and Joint Company Secretary of Codan in September
2022. Daniel leads a team responsible for Codan’s global legal
and compliance function, as well as managing the group ESG
program. He holds a Bachelor of Laws and Legal Practice from
Flinders University and completed the Program for Leadership
Development at Harvard Business School in 2023.
DIRECTORS’ MEETINGS
The number of directors’ meetings (including meetings of committees of directors)
and number of meetings attended by each of the directors of the Company during
the financial year are set out below:
Board
meetings
Audit and Risk
Committee
meetings
Remuneration
and Nomination
Committee
meetings
Director
A
B
A
B
A
B
Mr A Ianniello
15
15
Mr G R C Barclay
15
15
6
6
4
4
Ms K J Gramp
15
15
6
6
4
4
Ms S Adam-Gedge
15
15
6
6
Mr H Mackay-Cruise
15
15
4
4
A – Number of meetings attended
B – Number of meetings held during the time the director held office during the year
REMUNERATION REPORT – AUDITED
Key messages from Chair of Remuneration
and Nomination Committee
Dear Shareholders,
I am pleased to present the Codan Group remuneration report
for FY24. During FY23 I became Chair of the Remuneration and
Nomination Committee (RNC) and, as reported in last year’s
remuneration report, we took the opportunity to review the
remuneration strategy and framework as it had operated in prior
years and to make changes for FY24 and onwards.
FY24 Remuneration Framework
As part of designing the revised remuneration strategy and
framework to apply from FY24, we engaged with key stakeholders
and external independent advisors in order to better understand
how Codan should attract, retain and motivate the high calibre
executive leaders and team members we require to execute on
our strategy and to deliver superior returns for our shareholders.
The organisational structure of the Codan group has evolved
considerably over recent years, so we believed that FY24 was
a year to evolve the incentive remuneration structure for our
Executive KMP. The remuneration report sets out the details
of these changes. The most significant changes that were
implemented in FY24 are as follows:
• STI for Executive KMP was no longer based on a single Group EBIT
metric. Instead, it was based on a scorecard approach including
targets for revenue growth, profitability and free cash flow, order
book growth and delivery against sustainability and safety targets;
• These performance metrics were tailored for each Executive
KMP to reflect the specific areas of their responsibility, weighted
to those metrics that an Executive has the greatest ability to
influence;
• For each of the STI performance metrics, the Board set a minimum
performance threshold (below which no STI applies for that
metric), an on-target performance level (which reflected the FY24
annual plan approved by the Board) and a stretch target that is
typically greater than 110% of the on-target performance level;
• A cap of a maximum of 100% of fixed remuneration applies to all
STI payments to Executive KMP (previously no cap applied);
• LTI continues to be based on EPS growth, but with amendments
made to how the base line is set. We increased the target range
considerably to require compound annual growth of between 8%
at threshold, 10.5% at target and 13% at maximum (from between
2% and 8%) with a 67% weighting. We introduced a Relative Total
Shareholder Return performance measure in FY24, with a 33%
weighting, that requires performance above the 50th percentile at
threshold 62.5 percentile at target and above the 75th percentile
at maximum, compared to peer group performance; and
• We reviewed the incentive structure for the CEO and made a
number of important changes to apply for three financial years
FY24 to FY26, with the intent to better align the CEO’s target and
maximum incentives with the interests of shareholders.
The changes to the FY24 remuneration framework and to
the CEO’s remuneration are more fully set out at in the ‘FY24
Remuneration Structure Changes and Outcomes’ section of the
Remuneration Report.
These changes provided our Executive KMP with the ability to
influence the outcome of their STI performance more directly,
with performance metrics that reflect the key value drivers for
Codan and most importantly, in combination with the changes
to the LTI structure and metrics, better aligns reward outcomes
for Executive KMP with our shareholders. Our intent remains
to ensure we have a reward structure that will incentivise and
motivate Executive KMP to deliver sustainably superior returns
for our shareholders into the future. During FY25 we will continue
to consider further changes to the way our Executive KMP are
incentivised to remain employed by Codan and motivated to
deliver even greater returns to shareholders.
FY24 Remuneration Structure and Outcomes
As reported in last year’s remuneration report the fixed salary
of our CEO has been fixed until FY26 (other than changes to
statutory payments) and other Executive KMP had their fixed
remuneration reviewed during the year with increases made in line
with relevant market conditions.
A significantly improved financial performance was achieved in
FY24 versus FY23 with revenues increasing by 21% to $551 million,
EBIT increasing by 29% to $114 million, and NPAT increasing 24%
to $81 million. This improved financial performance has flowed
through to the variable remuneration outcomes of our Executive
KMP in FY24.
The FY24 STI plan was based on a scorecard approach that set
targets for revenue growth, profitability, free cash flow, order
book growth, and delivery against sustainability and safety
targets. With all segments of our business delivering improved
financial performance in FY24 it is pleasing to report that each
Executive KMP has been awarded STI payments for FY24.
This follows the FY23 year where no STI payments were
awarded to Executive KMP.
The FY24 LTI plan is an equity rights plan that has two
performance measures, measured over a three-year period FY24
to FY26. Firstly, EPS growth, which requires compound annual
growth over the three-year measurement period of between
8% at threshold and 13% at maximum, with a 67% weighting.
Secondly, a Relative Total Shareholder Return performance
measure, with a 33% weighting, that requires performance above
the 50th percentile at threshold and above the 75th percentile
at maximum, compared to peer group performance, over the
three-year measurement period. FY24 is the first year of the
measurement period for the FY24 LTI plan so the final outcome
will be dependent on performance in FY25 and FY26, but it is
worth noting that in FY24 EPS growth of 24% was achieved and
Codan’s share price increased from $8.03 to $12.03.
Prior to FY24, the LTI plan was based on a single metric of EPS
growth. During FY24, the FY22 LTI plan performance rights have
fully vested for Executive KMP following the end of the three-
year performance period on 30 June 2024 as the aggregate EPS
achieved over the performance period was 136.9 cents which
is above the 133.7 cents required to achieve 100% vesting of
performance rights into shares.
Graeme Barclay
Chair, Remuneration and Nomination Committee
CODAN LIMITED AND ITS CONTROLLED ENTITIES
CODAN LIMITED AND ITS CONTROLLED ENTITIES
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
REPORT OF OPERATIONS
ESG
LEADERSHIP
62 | CODAN | ANNUAL REPORT 2024
CODAN | ANNUAL REPORT 2024 | 63
Key Management Personnel
This report has been prepared in accordance with section 300A of
the Corporations Act 2001 (Cth)(Act) and Accounting Standards.
It outlines our remuneration strategy for the financial year ended
30 June 2024 and gives detailed information on the remuneration
arrangements of Key Management Personnel (KMP).
KMP are those who have authority and responsibility for planning,
directing, and controlling the Group’s activities, either directly or
indirectly. The table below shows the KMP covered by the FY24
Remuneration Report.
Name
Position
Term
Country of Residence
Non-Executive Directors
Current
Graeme Barclay
Chair
Full Year
Australia
Sarah Adam-Gedge
Non-Executive Director
Full Year
Australia
Kathy Gramp
Non-Executive Director
Full Year
Australia
Heith Mackay-Cruise
Non-Executive Director
Full Year
Australia
Executive KMP
Current
Alf Ianniello
Chief Executive Officer and Managing Director
Full Year
Australia
Michael Barton
Chief Financial Officer and Company Secretary
Full Year
Australia
Peter Charlesworth
Executive General Manager, Minelab
Until 30 September 2023 Australia
Ben Harvey
Executive General Manager, Minelab
From 1 October 2023
USA
Scott French
Executive General Manager, Zetron
Full Year
USA
Paul Sangster
Executive General Manager, Tactical
Communications
Full Year
USA
Executive Remuneration Structure
Codan’s remuneration framework for Executive KMP is in place
to support our strategy and drive sustainable outperformance.
Our remuneration framework must be globally competitive to
attract, motivate, retain, and mobilise our top talent across our
businesses. This has become increasingly important as each
of Codan’s businesses continue to grow, both organically and
through acquisition, in countries outside of Australia.
Remuneration packages are competitively set to attract and
retain appropriately experienced and qualified executives and
include a mix of fixed remuneration and performance-based
remuneration. Shareholder alignment is created through the
performance-based incentives provided to executives, including
equity-based remuneration.
Fixed remuneration is reviewed annually and gives our Executive
KMP a competitive fixed salary and related benefits. Fixed salary
levels reflect the executive’s experience, capability, performance
and potential and is set in relation to market conditions and
relevant benchmarks. Executive KMP are eligible for certain
benefits in line with our policies in each jurisdiction that we
operate. Typically, these include retirement contributions (such as
statutory superannuation) and basic insurances (such as disability,
life and medical) where it is local market practice for employees
in those countries. We may also provide benefits to support the
global mobilisation of our executive talent.
Our Executive KMP remuneration framework has two variable
components, being a short-term incentive plan (STI) and a long-
term incentive plan (LTI).
The STI plan focusses the executive team on delivering the
financial and strategic priorities relevant to the financial year.
The plan motivates Executive KMP to achieve financial and
operational targets and rewards them for outperformance.
The LTI plan is equity based and rewards Executive KMP for
creating long term shareholder value by delivering long term
earnings growth and share price performance above peers.
The Remuneration and Nomination Committee reports to
the Codan Board and has responsibility for the structure of
remuneration paid to KMP, can reference trends in comparative
companies both locally and internationally and may obtain
independent advice on the appropriateness of remuneration
packages and incentive structures.
In FY24 the Committee engaged the services of Ernst & Young
to provide advice on the executive remuneration structure and
remuneration related public disclosure. No recommendations
in relation to the remuneration of KMP were provided to the
Committee or Board.
FY24 Executive KMP Remuneration Changes
and Outcomes
During FY23, a new Chair was appointed to the Board and to
the Remuneration and Nomination Committee and the Board
underwent a renewal process. These changes led to a review
of the Executive KMP remuneration framework and metrics to
provide further alignment with shareholders’ interests. The Board
considered it appropriate to redesign the executive remuneration
framework for both STI and LTI to apply in FY24 and beyond
to better support the future growth of the Company, better
align reward outcomes for the CEO and other Executive KMP to
shareholder outcomes, while retaining the core philosophy and
principles outlined above.
CEO Remuneration
In conjunction with the changes set out below that have been
made to the Executive KMP STI and LTI framework and metrics,
the Board considered it important to address the relatively low
incentive package available to the CEO, and the particularly low
percentage of long-term equity-based incentive remuneration.
Acknowledging that the lower incentive package is partially offset
by relatively higher fixed remuneration and a cash (as opposed
to equity based) STI that was negotiated when Mr Ianniello was
recruited to the CEO role in January 2022, the Board nonetheless
wanted to implement changes to the CEO remuneration package
to create better alignment with shareholders. Essentially through
a combination of fixing fixed remuneration until FY26 (other
than changes to statutory payments), setting higher vesting
performance requirements to achieve remuneration incentives at
target and maximum for LTI and increasing in the value of equity-
based incentives, particularly at maximum.
The STI available in FY24 has been reduced to 25% at target
performance and 50% at maximum, with at least 50% of STI to
be paid in equity, and 50% in either cash or equity at the CEO’s
election.
Noting the higher EPS growth targets that apply for the FY24 LTI
plan and the introduction of a Relative Total Shareholder Return
metric, the LTI available has been increased to 50% at threshold
performance and 75% at maximum for FY24, all equity-based,
with target at the mid-point of 62.5%. The at maximum
percentage increases to 100% from FY25 onwards.
The chart below sets out the percentage of at-risk remuneration
and percentage of equity-based remuneration for FY24.
Summary of KMP Remuneration Structure for
FY24
Executive KMP remuneration for FY24 at Codan is:
• Performance based
– The remuneration for the CEO is 47% performance related at
target and 55% performance related at maximum;
– The remuneration for other Executive KMP is 47% performance
related pay at target and 60% performance related at
maximum.
• and is equity focussed
– at target 41% of the CEO’s total remuneration is paid in equity, at
maximum 44% of the CEO’s total remuneration is paid in equity;
– at target 20% of other Executive KMP’s total remuneration is
paid in equity, at maximum 20% of other Executive KMP is paid
in equity.
• and multi-year focussed
– LTI performance is measured over a three-year period;
– Shares issued under the LTI scheme are subject to a further
two-year holding lock for Australian based Executive KMP;
– 10% good leaver holding provisions in place for all Executive
KMP.
CEO
At Target*
Fixed remuneration
53%
STI
13%
LTI
39%
Cash
Equity
At Maximum:
Fixed remuneration
45%
STI
22%
LTI
33%
Cash
Equity
Other Executive KMP
At Target*
STI
27%
LTI
20%
Fixed remuneration
53%
Cash
Equity
At Maximum:
Fixed remuneration
40%
STI
40%
LTI
20%
Cash
Equity
* While there has been no change from last year’s report to the entry point and
maximum levels of the FY24 LTI plan, or to the performance requirements of the FY24
LTI plan, the above tables have been updated to reflect a Target performance for the
LTI that is now defined to be the midpoint between the Threshold (entry) and Maximum
levels. These same tables in last year’s report used the entry level of the FY24 LTI plan
as Target.
Fixed Remuneration Review
The annual review of fixed remuneration for Executive KMP
was performed and certain changes were implemented with
effect from 1 January 2024. As noted previously the CEO’s fixed
remuneration was not increased during the year and this was also
the case for non-executive Director’s fees.
An external benchmark process that was approved by the
Remuneration and Nomination Committee was completed
during FY24 for all Executive KMP. The Chief Financial Officer had
an increase to fixed remuneration of 7.5%, reflecting a need to
adjust compared to market benchmarks. The United States based
executives that lead our Communications businesses had an
increase to their fixed remuneration of 3.5% which was in line with
market conditions. Given our executive that leads our Minelab
business was appointed to the role during FY24 there was no
further changes to his remuneration during FY24.
FY24 Short Term Incentive
The STI structure is focussed on those aspects of the Company’s
performance in the FY24 annual plan within the control of the
Executive KMP that will impact the value of the Company, being
growth in revenues, profitability, operating free cash flow, order
book (where applicable) and the achievement of sustainability
and safety targets. The key changes to the STI structure for FY24
versus the prior year are as follows:
DIRECTORS’ REPORT (continued)
REMUNERATION REPORT – AUDITED (continued)
CODAN LIMITED AND ITS CONTROLLED ENTITIES
CODAN LIMITED AND ITS CONTROLLED ENTITIES
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
REPORT OF OPERATIONS
ESG
LEADERSHIP
64 | CODAN | ANNUAL REPORT 2024
CODAN | ANNUAL REPORT 2024 | 65
• STI is a percentage of each Executive KMP’s fixed pay rather than a
percentage of an EBIT profit pool (FY23 and prior);
• A scorecard has been determined for each Executive KMP
with STI objectives set based on the financial and non-financial
performance of the business or group that the executive can
directly influence;
• A Codan Group EBIT metric (a higher weighting will apply to CEO
and CFO) is included in each KMP’s STI scorecard;
• STI for each Executive KMP is capped at a maximum of 100% of
fixed pay, (FY23 and prior STI’s were uncapped).
The framework for the FY24 STI plan is as follows:
Feature
Description
Purpose:
Motivate and reward Executive KMP for contributing to the delivery of annual business performance.
Value:
Target
CEO
25% of fixed pay
Other Executive KMP
50% of fixed pay
Maximum
CEO
50% of fixed pay
Other Executive KMP
100% of fixed pay
The CEO has lower STI and higher LTI than other Executive KMP to provide for better long-term
alignment with shareholders.
Eligibility:
All Executive KMP are eligible to participate in the STI plan. To be eligible for a payment executives must
be employed at the time of the STI payment. The Board will exercise discretion when paying an STI to
any Executive KMP who has been a “good leaver” during the year, with any payments likely to be made
on a pro-rata basis.
Delivery:
STI’s are paid in cash, other than 50% of any STI for the CEO which will be paid in equity. The CEO has the
option to have more than 50% of any STI paid in equity. For FY24 Executive KMP have the option to elect
to have up to 50% of cash STI paid in equity on the same terms as the CEO. Shares issued to Executive
KMP under the STI plan are restricted, with 90% restricted for a period of 1 year from issue date and 10%
restricted until 12 months after the cessation of employment with the Company. The number of shares
issued under the STI plan are calculated using the same share price that is used under the LTI plan. This is
as approved by shareholders at the Annual General Meeting. The share price used was $7.59.
Performance period:
1 year
Setting performance
objectives:
At the start of the financial year a scorecard of objectives is determined by the Board. For FY24 this was
done as set out below. At the end of the year the Board will undertake a rigorous assessment of actual
performance against each of the metrics. The Board has the discretion to increase or decrease the STI
allocated to any Executive KMP considering their individual performance, approach to business risks
and adherence to Codan values.
Codan’s performance against STI targets is disclosed retrospectively noting that the actual targets for
FY24 (and for each prospective year) are not disclosed as they are commercially sensitive.
Performance objectives:
Measure
Rationale
Measurement
Revenue
Financial metric focussed on growth
Revenue
Profitability
Financial metric that measures the
performance of the business
Group EBIT
Segment profit
Cash flow
Financial metric focussed on cash
generation
Operating and investing
cashflows
Order book
Financial metric that provides a lead
indicator of future performance
Contracted orders received from
customers
Sustainability and Safety
Codan is committed to providing a safe
work environment and operating in a
sustainable manner
Measures include performance
against agreed operational
objectives
Individual performance
objectives:
Each Executive KMP agreed an individual scorecard of performance objectives at the start of FY24
against which their performance will be assessed. Individual performance objectives are selected from
the above list, tailored to the specific responsibilities of the role. The weighting of financial performance
objectives (which includes growth in revenue, profitability, cash flow and order book) for each Executive
KMP was at least 80% of their STI for FY24.
Threshold, target and
maximum performance
objectives:
For each of the financial performance objectives the Board has set a minimum performance threshold
(usually between 80% and 90% of target levels), an on-target performance level (predominantly being
the year’s business plan) and a maximum level (typically 110% of the target performance level).
Feature
Description
Percentage of STI depends
on Actual Performance
Performance against STI objectives Percentage of STI Paid
Less than Threshold
0%
Equal to Threshold
50%
More than Threshold, less than Target
Pro-rated vesting from 50% to 100%
Target
100%
More than Target, less than Maximum
Pro-rated vesting from 100% to 200%
Maximum
200%
The above percentages are calculated against the Target STI amount which is 25% of fixed pay for the
CEO and 50% of fixed pay for Other Executive KMP.
FY24 Short Term Incentive Targets and Outcomes
Codan has achieved strong financial performance in FY24.
Revenues increased from $457 million to $551 million (growth
of 21%), EBIT increased 29% to $114 million and Net Profit after
Tax increased from $66 million to $81 million (growth of 24%).
Strong growth was achieved by both our Communications and
Metal Detection businesses. A leading indicator of growth is the
customer order book for our Communications business which
increased from $163 million to $197 million (growth of 21%).
Operationally, we have continued to progress our ESG initiatives
and have provided a safe workplace for our staff. Our cash
generation did not meet our targets and remains a key focus
for our Executive KMP going forward. Overall, the STI outcome
for our KMP is aligned with Codan’s financial and operational
outcomes. This is a pleasing result after FY23 when no STI’s
were paid to KMP. The CEO has elected to take 100% of his
FY24 STI in equity.
The FY24 STI performance measures for our KMP are disclosed below:
CEO & CFO
Weighting
Target
Actual Result
Performance
STI Outcome
Group EBIT
60%
$102 million
$108 million
134%
Cash Generation
25%
$73 million
$51 million
0%
Environmental, Social,
Governance and Safety
15%
Safety metrics and
ESG objectives
All metrics were
achieved
100%
100%
96%
Group EBIT is measured after the impact of finance charges on lease liabilities and before FY24 acquisitions and their related
integration costs. The improved financial performance across all Codan’s businesses resulted in this profitability measure increasing
from $87 million in FY23 to $108 million in FY24 an increase of 24%. The positive impact of acquisitions made and acquisition and
integration costs incurred in FY24 were removed from this profitability assessment for STI purposes. Cash generation for the Codan
group is measured by considering operating and investing activities (excluding acquisitions of subsidiaries) and the threshold of
this metric was not achieved in FY24, largely due to the timing of revenue transactions during the year. The Environmental, Social,
Governance and Safety objective related to understanding our carbon footprint and identifying opportunities for improvement and
the safety of our employees.
Communications
Weighting
Target
Actual Result
Performance
STI Outcome
Sales
20%
$302 million
$327 million
108%
Segment Result
40%
$81 million
$81 million
100%
Cash Generation
10%
$48 million
$34 million
0%
Order Book
10%
$180 million
$197 million
165%
Group EBIT
20%
$102 million
$108 million
134%
100%
118%
The above balanced scorecard details are for the Communications segment as a whole inclusive of FY24 acquisitions. The STI
performance measures for our KMP who lead this Segment are specific to the business performance for the portion of the business
that they lead. The financial targets for the Communications business are set and measured in United States dollars and the impact
of acquisitions made in the year were excluded from the results when assessing the KMP’s performance against each STI metric.
Therefore, the STI outcomes for each KMP may vary to the above disclosed results. The Communications business delivered a strong
result in FY24 with sales growth of 19%, profit growth of 19% and order book growth of 21% versus FY23.
DIRECTORS’ REPORT (continued)
REMUNERATION REPORT – AUDITED (continued)
FY24 Executive KMP Remuneration Changes and Outcomes (continued)
FY24 Short Term Incentive (continued)
CODAN LIMITED AND ITS CONTROLLED ENTITIES
CODAN LIMITED AND ITS CONTROLLED ENTITIES
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
REPORT OF OPERATIONS
ESG
LEADERSHIP
66 | CODAN | ANNUAL REPORT 2024
CODAN | ANNUAL REPORT 2024 | 67
Metal Detection
Weighting
Target
Actual Result
Performance
STI Outcome
Sales
20%
$196 million
$220 million
224%
Segment Result
40%
$66 million
$78 million
226%
Cash Generation
20%
$65 million
$78 million
235%
Group EBIT
20%
$102 million
$108 million
134%
100%
200%
The metal detection segment delivered a strong result in FY24 with sales growth of 25%, profit growth of 37% and excellent cash
generation versus FY23 and FY24 target.
Legend
Actual result was below threshold resulting in no STI payment on this metric
Actual result was above threshold but below target so STI outcome between 50% and 100%
Actual result was above target but below maximum so STI outcome between 100% and 200%
Actual result was above maximum so STI outcome at 200%
The following table provides the FY24 STI outcomes for KMP (for the period they were KMP):
KMP
STI at Target
$
STI at Maximum
$
STI Achieved
$
STI as a %
of Maximum
STI %
Not Achieved
A Ianniello
252,438
504,876
341,222
68%
32%
M Barton
207,107
414,214
227,905
55%
45%
B Harvey
203,058
406,117
406,117
100%
0%
S French
314,216
628,432
360,499
57%
43%
P Sangster
314,216
628,432
314,216
50%
50%
All STI payments to Executive KMP are subject to Board discretion so the above STI outcomes can vary to the results of the disclosed
STI performance measures. In FY24 the Board exercised discretion to increase STI payments where the performance and strategic
objectives that were delivered in the year were felt to exceed the outcome of the STI performance measures. In aggregate this amount
was less than $200k, of which the CEO was awarded an additional $100k to reflect the leadership, development and implementation of
Codan’s strategy including the acquisitions made during the FY24 year.
FY24 Long Term Incentive
The LTI incentive structure is focussed on long term performance
being delivered for shareholders with reference to growth in EPS,
and in FY24 the addition of a Relative Total Shareholder Return
(RTSR) metric, measured over a three-year period and is designed
to motivate superior performance and to retain Executive KMP.
The key changes to the LTI structure for FY24 versus the prior
year are as follows:
• Performance metrics: Historically Codan’s LTI plan had a single
financial metric, being the growth of EPS over a defined base level.
In FY24 a second LTI metric, RTSR, was added.
• EPS base year: The EPS used as the base for performance targets
has in recent years been based on an average of Codan’s results in
three prior years. The Board has determined that the immediately
preceding financial year’s EPS will be used as the base level for
setting EPS growth targets going forward.
• EPS growth expectations: The growth rates that were required
to achieve the performance hurdles were previously between 2%
and 8% per annum. The Board decided to significantly increase
the required EPS growth rates and have adjusted the FY24
performance hurdles to be between 8% and 13% per annum.
• EPS performance: The previous LTI plan used an aggregate target
over the 3-year period; the FY24 LTI plan is based on an EPS target
being met in the third year of the performance period using the
required EPS annual growth rate compounded over the three-year
measurement period.
The framework for the FY24 LTI plan, which was set out in the
FY23 remuneration report, is as follows:
Feature
Description
Purpose:
The purpose of the LTI plan is to focus the CEO and other Executive KMP on the creation of sustainable
long term shareholder value. It rewards executives for delivering long term earnings performance above
a minimum target and for creating value for shareholders with shareholder returns at above the 50th
percentile of a selected peer group of ASX listed companies.
It encourages Executive KMP to remain employed by Codan and aligns their interests with those of
shareholders.
Face value:
Threshold
CEO
50% of fixed pay
Other Executive KMP
25% of fixed pay
Target
CEO
62.5% of fixed pay
Other Executive KMP
37.5% of fixed pay
Maximum
CEO
75% of fixed pay
Other Executive KMP
50% of fixed pay
This represents the face value of the equity should all the performance targets be achieved. The value
ultimately received by executives will depend on the Codan share price at the time of vesting.
The CEO has a higher LTI incentive, 100% equity based, relative to other KMP to better align his financial
reward with shareholders. The maximum for the CEO will increase to 100% from FY25.
Eligibility:
All Executive KMP are eligible to participate in the LTI plan. To be eligible for a grant of performance
rights they must have been employed at the beginning of the performance period i.e. 1 July before the
grant of that year’s performance rights. The Board may exercise discretion for executives employed
after 1 July in a year and may consider issuing performance rights on a pro rata basis.
Instrument:
Performance rights
Performance period:
3 years, ending 30 June 2026
Number of performance
rights:
The number of rights granted is determined by dividing the relevant LTI percentage of the Executive
KMP’s fixed salary as of 1 July 2023 by the volume weighted average of the Company’s share price in the
five days after the release of the Codan group’s annual results for FY23 which was $7.59.
Summary of performance
conditions:
The LTI will be assessed against two independent performance metrics being EPS growth and RTSR.
EPS growth performance hurdle: 67% weighting
An EPS growth metric provides a clear line of sight between executive performance and Codan’s
financial performance over the long term. It is also well understood by the Codan executive team and
our shareholders. The Board may adjust the underlying NPAT used to measure performance against the
LTI plan where it deems it appropriate to do so, for example as a result of major transactions, such as an
acquisition or divestment, or other one-off type items.
To measure EPS, we will divide the Codan Group NPAT by the weighted average number of Codan
ordinary shares on issue during the financial year. To measure growth in EPS we compare the EPS in the
financial year immediately preceding the grant (FY23) with the EPS achieved in the measurement year,
being Year 3 (FY26). To set the FY26 target the Board has used the underlying EPS performance for
FY23 of 36.3 cents per share.
Performance rights would vest if the EPS achieved in the measurement year exceeds a threshold with all
rights vesting if a maximum EPS is achieved. The threshold, target and maximum EPS were calculated
by applying a compounding annual growth rate to a base EPS.
This is represented in the below table:
DIRECTORS’ REPORT (continued)
REMUNERATION REPORT – AUDITED (continued)
FY24 Executive KMP Remuneration Changes and Outcomes (continued)
FY24 Short Term Incentive Targets and Outcomes (continued)
CODAN LIMITED AND ITS CONTROLLED ENTITIES
CODAN LIMITED AND ITS CONTROLLED ENTITIES
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
REPORT OF OPERATIONS
ESG
LEADERSHIP
68 | CODAN | ANNUAL REPORT 2024
CODAN | ANNUAL REPORT 2024 | 69
Feature
Description
The vesting schedule of the rights subject to the EPS growth hurdle is as follows:
EPS annual compounding growth
Percentage of rights vested
Less than Threshold
0%
Threshold
50% of maximum
More than Threshold less than Maximum
Pro-rated from 50% to 100%
At or greater than Maximum
100% of maximum
For the CEO at Threshold 67% of the Maximum rights vest, with pro-rated vesting from 67% to 100% of
Maximum.
The Board retains full discretion to determine, amend and calculate the vesting outcomes.
RTSR performance hurdle: 33% weighting
This RTSR measure represents the relative change in the value of Codan’s share price over a period
including reinvested dividends, compared to the constituents of a peer group. The change is expressed
as a percentage on the opening value of the shares and then ranked as a percentile compared to the
peer group. The Board has chosen a RTSR measure as it provides an appropriate comparative measure
of shareholder return, reflecting an investor’s choice to invest in Codan versus another peer group
entity. Executive KMP will only derive value from the RTSR component of the LTI plan if Codan’s RTSR
performance is at least at the 50th percentile of companies in the peer comparison group measured
over the three-year period.
The vesting schedule of the rights subject to the RTSR hurdle is as follows:
RTSR
Percentage of rights vesting
Less than 50% Threshold percentile
0%
At 50% percentile Threshold
50% of maximum
More than Threshold less than 75% Maximum percentile
Pro-rated from 50% to 100%
At 75% Maximum percentile
100% of maximum
For the CEO at Threshold 67% of the Maximum rights vest, with pro-rated vesting from 67% to 100% of
Maximum.
For the FY24 rights grant the peer group of companies will be companies listed on the ASX within
50% and 200% of Codan’s 12-month average market capitalisation as at 30 June 2023, with industry
exclusions being any companies in the peer group from the Materials, Finance and Energy GICS sectors.
The Board can adjust the peer group constituents to take account of events that happen during the
performance period, for example, the impact of corporate activity such as takeovers, mergers or de-listings.
Conversion to shares:
If vested, each performance right is exercisable into one ordinary share in the Company, at nil exercise
price, and the Executive KMP has a twelve-month period following vesting to do this. Shares allocated
to Executive KMP upon exercise of the performance rights rank equally with all other ordinary shares
on issue. Where the shares are subject to further restrictions, they cannot be sold before the restriction
period ends. They may still be forfeited in certain circumstances.
Restriction periods:
Of the shares granted to Executive KMP, 90% remain restricted for a further two years after vesting
whereby Executive KMP are prohibited from trading the shares. This two-year restriction period does
not apply to our overseas based Executive KMP due to local taxation regulations.
The remaining 10% of shares are subject to a “good leaver” clause such that they remain at risk of forfeiture
at the Board’s discretion until twelve months after the Executive KMP leaves the employment of Codan.
Leaver provisions:
Performance rights vest subject to Board approval and the Executive KMP remaining an employee of
the Group on the vesting date. In certain circumstances the Board may exercise discretion and allow
a good leaver to retain their unvested performance rights in whole or part. If the Board does exercise
this discretion the Board will determine the conditions and timing of when that vesting may occur.
The Board generally would only exercise this discretion in circumstances such as permanent disability,
retirement and redundancy, consistent with the notion of a good leaver.
Feature
Description
Clawback provisions:
Any performance rights on issue to an Executive KMP will lapse immediately on termination of the
executive from the employment of Codan for reasons of misconduct.
Any shares issued to an Executive KMP under the LTI plan remain at risk of forfeiture while they remain
restricted. Forfeiture of the shares will occur if the Executive KMP:
• Perpetrates fraud,
• Acts dishonestly,
• Commits a breach of the executive’s obligations to Codan,
• Provides services to a competitor of Codan,
• Engages in activity that in the opinion of the Board is detrimental to Codan.
Other equity provisions:
Performance rights issued to Executive KMP carry:
• no voting or dividend entitlements,
• no entitlement to participate in new share issues other than bonus issues (when the Board may adjust
the number of rights in accordance with ASX Listing Rules to make sure that there is no advantage or
disadvantage to the executive),
• no automatic entitlement to shares in the event of a change in control event for Codan, with the Board to
exercise discretion in these circumstances.
Non-Executive Directors Fee Structure
Total remuneration for all non-executive directors, last voted upon
by shareholders at the 2010 AGM, is not to exceed $850,000 per
annum. Non-executive directors do not receive any performance-
related remuneration, nor are they issued options on securities.
Directors’ fees cover all main Board activities and membership
of committees. There were no changes to non-executive
director fees during FY24 other than the statutory change in
the superannuation rate of 0.5%. Codan has commenced a
benchmarking exercise on fees paid to non-executive directors,
with any adjustments to take effect from 1 July 2024.
Service contracts
It is the group’s policy that service contracts for Executive KMP
are unlimited in term but capable of termination on three to six
months’ notice, and that the group retains the right to terminate
the contract immediately by making payment in lieu of notice.
The group has entered a service contract with each Executive KMP.
Executive KMP are also entitled to receive on termination of
employment their statutory entitlements of accrued annual and
long service leave with the Board to exercise discretion regarding
any entitlement to variable components of their remuneration.
Other transactions with key management
personnel
There have been no loans to key management personnel or their
related parties during the financial year.
From time to time, directors and Executive KMP, or their
personally related entities, may purchase goods from the group.
These purchases occur within a normal employee relationship and
are trivial in nature.
Director share ownership
The Directors’ Shareholding Policy requires directors to build
a minimum shareholding in the Company. For non-executive
directors, this minimum shareholding should equate to their
annual director fee and for executive directors their annual
fixed remuneration. Under the policy, directors have five years
to reach the minimum holding. All directors are in compliance
with the policy.
Remuneration Tables (Statutory Disclosures)
Corporate performance
As required by the Corporations Act 2001, the following
information is presented:
2024
2023
2022
2021
2020
Profit attributable to shareholders ($000)
$81,387
$67,774
$100,736
$90,351
$63,795
Dividends paid ($000)
$36,263
$43,480
$53,361
$38,809
$26,999
Share price at 30 June
$12.03
$8.03
$6.96
$18.03
$7.09
Increase(Decrease) in share price at 30 June
$4.00
$1.07
($11.07)
$10.94
$3.62
Earnings per share, fully diluted
44.8c
37.4c
55.6c
49.8c
35.3c
DIRECTORS’ REPORT (continued)
REMUNERATION REPORT – AUDITED (continued)
FY24 Executive KMP Remuneration Changes and Outcomes (continued)
FY24 Long Term Incentive (continued)
CODAN LIMITED AND ITS CONTROLLED ENTITIES
CODAN LIMITED AND ITS CONTROLLED ENTITIES
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
REPORT OF OPERATIONS
ESG
LEADERSHIP
70 | CODAN | ANNUAL REPORT 2024
CODAN | ANNUAL REPORT 2024 | 71
DIRECTORS’ REPORT (continued)
REMUNERATION REPORT – AUDITED (continued)
Remuneration Tables (Statutory Disclosures) (continued)
Salary and
fees
Short-term
incentives
Other
short-term
Post-employment
and superannuation
contributions
Other
long-term
Termination
benefits
Performance
rights
Total
Proportion of remuneration
performance related
Directors
Year
$
$
$
$
$
$
$
$
%
Non-Executive
Mr G Barclay*
2024
192,280
–
–
21,151
–
–
–
213,431
–
2023
136,199
–
–
14,301
–
–
–
150,500
–
Ms K Gramp
2024
104,880
–
–
11,537
–
–
–
116,417
–
2023
104,880
–
–
11,012
–
–
–
115,892
–
Ms S Adam-Gedge**
2024
96,141
–
–
10,575
–
–
–
106,716
–
2023
40,059
–
–
4,206
–
–
–
44,265
–
Mr H Mackay-Cruise**
2024
96,141
–
–
10,575
–
–
–
106,716
–
2023
32,047
–
–
3,365
–
–
–
35,412
–
Total non-executives’
remuneration
2024
489,442
–
–
53,838
–
–
–
543,280
–
2023
313,185
–
–
32,884
–
–
–
346,069
–
Executive Director
Mr A Ianniello
2024
973,242
341,222
–
27,500
24,791
–
126,083
1,492,838
31.3
2023
987,042
–
–
27,500
24,479
–
36,783
1,075,804
3.4
Total directors’
remuneration
2024
1,462,684
341,222
–
81,338
24,791
–
126,083
2,036,118
–
2023
1,300,227
–
–
60,384
24,479
–
36,783
1,421,873
–
* Graeme Barclay commenced his role as Chair on 1 February 2023.
** Sarah Adam-Gedge & Heith Mackay-Cruise commenced their roles as directors on 1 February 2023 and 1 March 2023 respectively.
Salary
and fees
Restated***
Short-term
incentives
Other
short-term*
Post-employment
and superannuation
contributions
Other
long-term
Termination
benefits
Performance
rights
Total
Restated***
Proportion of remuneration
performance related
Restated***
Executive officers
Year
$
$
$
$
$
$
$
$
%
Non-Executive
Mr M Barton
(Chief Financial Officer and
Company Secretary)
2024
370,229
227,905
–
27,500
24,362
–
38,529
688,525
38.7
2023
346,413
–
–
27,500
44,108
–
106,143
524,164
20.2
Mr P Charlesworth**
(Executive General Manager,
Minelab)
2024
102,979
113,458
–
6,850
2,699
–
11,404
237,390
52.6
2023
429,606
–
–
25,292
10,855
–
134,567
600,320
22.4
Mr B Harvey**
(Executive General Manager,
Minelab)
2024
416,322
406,117
39,837
13,854
–
–
36,989
913,119
48.5
Mr S French***
(Executive General Manager, Zetron)
2024
632,356
360,499
30,740
21,313
–
–
296,165
1,341,073
49.0
2023
553,393
–
26,577
15,597
–
–
202,770
798,337
25.4
Mr S Sangster***
(Executive General Manager, Tactical
Communications)
2024
659,994
314,216
–
15,711
–
–
291,725
1,281,646
47.3
2023
524,033
–
1,639
20,702
1,281
–
197,785
745,440
26.5
Total Executive KMP remuneration
2024
2,181,880
1,422,195
70,577
85,228
27,061
–
674,812
4,461,753
–
2023
1,853,445
–
28,216
89,091
56,244
–
641,265
2,668,261
–
* Other short-term benefits relate to costs incurred for arrangements made following the executives’ relocation from an overseas country to the location of their employment with Codan.
** Mr P Charlesworth retired as Executive General Manager, Minelab on 30 September 2023 and Mr B Harvey was appointed to this role on 1 October 2023.
*** As disclosed in the FY23 Remuneration Report, the executives leading our Communications business had their fixed salary increased to US$400,000 and this expense was included in
the FY23 financial statements. The amount reported in the FY23 Remuneration Report Tables did not incorporate the adjustment of US$48,690 for Mr S French and US$32,000 for
Mr S Sangster for the approved new fixed salary. The comparatives in the FY24 Remuneration Tables (Statutory Disclosures) have been restated to incorporate this adjustment.
Directors’ and Executive KMP remuneration
Details of the nature and amount of each major element of the remuneration paid or payable to each director of the Company and other
key management personnel of the group are:
CODAN LIMITED AND ITS CONTROLLED ENTITIES
CODAN LIMITED AND ITS CONTROLLED ENTITIES
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
REPORT OF OPERATIONS
ESG
LEADERSHIP
72 | CODAN | ANNUAL REPORT 2024
CODAN | ANNUAL REPORT 2024 | 73
Executive KMP outside of Australia are paid in their local currencies. The Australian dollar equivalents are calculated using average
exchange rates for the financial year.
The remuneration amounts disclosed above have been calculated based on the expense to the Company for the financial year.
Therefore, items such as performance rights, annual leave and long service leave taken and provided for have been included in the
calculations. As a result, the remuneration disclosed may not equal the salary package as agreed with the Executive KMP in any one year.
Other than performance rights, no options or shares were issued during the year as compensation for any key management personnel.
Movements in shares
The movement during the reporting period in the number of ordinary shares in Codan Limited, held directly, indirectly, or beneficially by
each key management person, including their related parties, is as follows:
Held at
1 July 2023
Received on
exercise of rights
Other
changes*
Held at
30 June 2024
Directors
Mr G Barclay
123,752
–
–
123,752
Mr A Ianniello
41,120
–
–
41,120
Ms K Gramp
28,000
–
–
28,000
Ms S Adam-Gedge
8,000
–
5,000
13,000
Mr H Mackay-Cruise
5,000
–
14,500
19,500
Executive KMP
Mr M Barton
204,075
14,641
(86,586)
132,130
Mr P Charlesworth**
493,982
18,102
–
512,084
Mr B Harvey**
6,490
–
(5,101)
1,389
Mr S French
38,426
17,788
4,270
60,484
Mr S Sangster
85,732
17,536
–
103,268
* Other changes represent shares that were purchased or sold during the year.
** Mr P Charlesworth retired as Executive General Manager, Minelab on 30 September 2023 and therefore his closing shareholder balance relates to this date and Mr B Harvey was
appointed to this role on 1 October 2023 and therefore his opening shareholding balance relates to this date.
Performance rights issued
Details of performance rights granted to Executive KMP during the year are as follows:
Number of
performance
rights granted
during year
Grant
date
Average fair value
per right at grant
date
($)
Exercise price
per right
($)
Vesting
date
Number of
rights vested
during year
Directors
Mr A Ianniello
99,809
25 October 2023
6.12
–
30 June 2026
–
Executive KMP
Mr M Barton
25,391
25 January 2024
5.80
–
30 June 2026
–
Mr B Harvey
35,579
25 January 2024
6.48
–
30 June 2026
–
Mr S A French
40,089
25 January 2024
6.48
–
30 June 2026
–
Mr S P Sangster
40,089
25 January 2024
6.48
–
30 June 2026
–
Details of vesting profiles of performance rights granted to KMP as at 30 June 2024 are detailed below:
Performance rights granted
Percentage
vested in year
Percentage
forfeited
in year
Financial years
in which shares
will be issued if
vesting achieved
Number
Date
Director
Mr A Ianniello
16,305
25 November 2022
–
–
2025
40,714
25 November 2022
–
–
2026
99,809
25 October 2023
–
–
2027
Executive KMP
Mr M Barton
14,641
13 November 2020
100
–
2024
10,124
6 December 2021
–
–
2025
25,889
17 February 2023
–
–
2026
25,391
25 January 2024
–
–
2027
Mr P D Charlesworth
18,102
13 November 2020
100
–
2024
13,774
6 December 2021
–
–
2025
30,496
17 February 2023
–
–
2026
Mr B Harvey
5,668
13 November 2020
100
–
2024
3,499
6 December 2021
–
–
2025
8,285
17 February 2023
–
–
2026
35,579
25 January 2024
–
–
2027
Mr S A French
17,788
13 November 2020
100
–
2024
12,688
6 December 2021
–
–
2025
116,254
17 February 2023
–
–
2026
37,500
17 February 2023
–
–
2028
40,089
25 January 2024
–
–
2027
Mr S P Sangster
17,536
13 November 2020
100
–
2024
12,126
6 December 2021
–
–
2025
119,426
17 February 2023
–
–
2026
37,500
17 February 2023
–
–
2028
40,089
25 January 2024
–
–
2027
Performance rights issued in financial year 2024
The Company issued 99,809 performance rights in relation to
the FY24 LTI plan to the Chief Executive Officer. For the EPS
growth performance hurdle, the fair value of the rights was on
average $6.74, based on the Black-Scholes formula. The model
inputs were the share price of $8.13, no exercise price, expected
volatility 49.5%, dividend yield 2.28%, a term of three years and a
risk-free rate of 4.63%. For the RTSR performance hurdle, the fair
value of the rights was on average $4.88, based on the Monte
Carlo simulation method. The model inputs were the share price
of $8.13, expected volatility 49.5%, dividend yield 2.28%, a risk-free
rate of 4.63%, performance period of 3 years ending 30 June
2026, volatility for each peer, historical returns for each peer and
vesting schedule applicable to the Chief Executive Officer.
The Company issued 141,148 performance rights in February 2024
to other Executive KMP. For the EPS growth performance hurdle,
the fair value of the rights was on average $7.25, based on the
Black-Scholes Formula. The model inputs were the share price
of $7.95, no exercise price, expected volatility 48.1%, dividend
yield 2.33%, a term of three years and a risk-free rate of 4.54%.
For the RTSR performance hurdle, the fair value of the rights was
on average $4.43, based on the Monte Carlo simulation method.
The model inputs were the share price of $7.95, expected volatility
48.1%, dividend yield 2.33%, a risk-free rate of 4.15%, performance
period of 3 years ending 30 June 2026, volatility for each peer,
historical returns for each peer and vesting schedule applicable
to other Executive KMP.
The performance rights become exercisable if certain
performance targets are achieved. These performance targets,
explained more fully earlier in the report, relate to growth of the
group’s earnings per share and a Relative Total Shareholder Return
metric, these are measured over a three-year performance period.
DIRECTORS’ REPORT (continued)
REMUNERATION REPORT – AUDITED (continued)
Remuneration Tables (Statutory Disclosures) (continued)
Directors’ and Executive KMP remuneration (continued)
CODAN LIMITED AND ITS CONTROLLED ENTITIES
CODAN LIMITED AND ITS CONTROLLED ENTITIES
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
REPORT OF OPERATIONS
ESG
LEADERSHIP
74 | CODAN | ANNUAL REPORT 2024
CODAN | ANNUAL REPORT 2024 | 75
Performance rights issued in financial year 2023
The Company issued 40,714 performance rights in relation to the
FY23 long term incentive plan and 16,305 performance rights in
relation to the FY22 plan in November 2022 to the Chief Executive
Officer. The FY22 issue was a pro rata issue given the Chief
Executive Officer commenced employment part way through
that year. The fair value of the rights was on average $3.24, based
on the Black-Scholes formula. The model inputs were the share
price of $3.98, no exercise price, expected volatility 53%, dividend
yield 7.04%, a term of three years for the FY23 issue and a term
of two years for the FY22 issue and a risk-free rate of 3.6%. The
Company issued 367,075 performance rights in February 2023 to
other Executive KMP. The fair value of the rights was on average
$4.62, based on the Black-Scholes Formula. The model inputs
were the share price of $5.48, no exercise price, expected volatility
53%, dividend yield 5.11%, a term of three years and a risk-free rate
of 3.6%.
The performance rights become exercisable if certain
performance thresholds in relation to growth of the group’s
earnings per share over a three-year period are achieved.
Performance rights issued in financial year 2022
The Company issued 48,712 performance rights in December
2021 to Executive KMP. The fair value of the rights was on average
$8.20 based on the Black-Scholes formula. The model inputs were
the share price of $9.11, no exercise price, expected volatility 45%,
dividend yield 3.0%, a term of three years and a risk-free rate of 1.6%.
The performance rights become exercisable if certain
performance thresholds in relation to growth of the group’s
earnings per share over a three-year period are achieved.
The FY22 LTI plan performance rights have fully vested following
the end of the three-year performance period on 30 June 2024
as the aggregate EPS achieved over the performance period was
136.9 cents, above the 133.7 cents required for 100% vesting of
performance rights to shares.
Movement in performance rights
The movements during the reporting period in the number of performance rights over ordinary shares in Codan Limited, held directly,
indirectly or beneficially by each key management person, including their related parties, is as follows:
Held at 1 July 2023
Issued
Vested
Lapsed
Held at 30 June 2024
Directors
Mr A Ianniello
57,019
99,809
–
–
156,828
Executive KMP
Mr M Barton
50,664
25,391
14,641
–
61,414
Mr P Charlesworth*
62,372
–
18,102
–
44,270
Mr B Harvey*
11,784
35,579
–
–
47,363
Mr S French
184,230
40,089
17,788
–
206,531
Mr S Sangster
186,588
40,089
17,536
–
209,141
* Mr P Charlesworth retired as Executive General Manager, Minelab on 30 September 2023 and therefore his closing shareholder balance relates to this date and Mr B Harvey was
appointed to this role on 1 October 2023 and therefore his opening shareholding balance relates to this date.
OPERATING AND FINANCIAL REVIEW
Codan is a technology company that provides robust technology
solutions that solve customers’ communications, safety,
security, and productivity problems in some of the harshest
environments around the world. Our customers include United
Nations organisations, security and military groups, government
departments, major corporates as well as individual consumers
and small-scale miners.
FY24 HIGHLIGHTS:
• Strong Group financial performance:
– Group revenue of $550.5 million, up 21% versus prior
corresponding period (“pcp”);
– Earnings before interest and tax of $113.9 million, up 29%
versus pcp; and
– Net profit after tax of $81.3 million, up 24% versus pcp.
• Strong Communications performance continues:
– Communications revenue of $326.9 million, up 19% versus pcp,
segment profit of $80.5 million, up 19% versus pcp; and
– Expanding communications orderbook of $197 million, up 21%
versus 30 June 2023.
• Strong metal detection performance:
– revenue of $219.9 million up 25% versus pcp, segment profit
$77.9 million, up 37% versus pcp; and
– All divisions growing versus pcp.
• Net debt of $75.4 million as at 30 June 2024, having funded $37.2
million for acquisitions and $36.3 million of dividends paid during
the year.
• Earnings per share of 45.0 cents, up 24% versus pcp.
• Annual dividend of 22.5 cents, fully franked (interim dividend
10.5 cents, final 12.0 cents) versus 18.5 cents in FY23.
Codan has delivered a strong FY24 result, with group revenues
up 21%, EBIT up 29% and NPAT up 24%. It is pleasing to see
the business deliver sustainable growth across the last three
consecutive halves. Our primary focus remains on strengthening
the business to achieve sustainable, profitable growth for the
future, reinforcing a stronger Codan.
Our Communications segment remains core to our future growth
and continues to perform strongly, with revenues up 19% versus
pcp. Communications continues to strengthen its position in the
market as a solutions provider, with the orderbook growing 21% to
$197 million versus 30 June 2023. The Zetron UK and Wave Central
businesses acquired during the reporting period are performing
well with integration activities now complete. Our strategy
remains to continue to invest in the Communications segment to
drive revenue growth, enhance predictability and capitalise on
opportunities in large addressable growth markets.
Our metal detection business also delivered a strong FY24,
with each of Minelab’s divisions delivering increased revenues,
collectively up 25% versus FY23. Our strategy remains to invest in
metal detection technologies and distribution channels, to drive
revenue growth and enhance financial returns.
Dividend
The Company announced a final dividend of 12.0 cents per share,
fully franked, bringing the full-year dividend to 22.5 cents. This
dividend has a record date of 4 September 2024 and will be paid
on 18 September 2024.
Financial performance and other matters
FY24
FY23
$m
% of sales
$m
% of sales
Revenue
Communications
326.9
59%
274.5
60%
Metal Detection
219.9
40%
176.1
39%
Other
3.7
1%
5.9
1%
Total revenue
550.5
100%
456.5
100%
Business performance
EBITDA
147.0
27%
116.8
26%
EBIT
113.9
21%
88.0
19%
Interest
(9.4)
(5.3)
Net profit before tax
104.5
19%
82.6
18%
Taxation
(23.2)
(17.1)
Underlying Net profit after tax
81.3
15%
65.5
14%
Non-recurring income/(expenses) after tax*:
Recognition/(derecognition) of tax losses previously not booked
–
2.2
Net profit after tax
81.3
67.7
Underlying earnings per share, basic
45.0 cents
36.3 cents
Statutory earnings per share, basic
45.0 cents
37.5 cents
Ordinary dividend per share
22.5 cents
18.5 cents
* Non-recurring income/(expenses) are considered to be outside of normal business activities of the group and for comparability reasons have been separately identified. Underlying profit
is a non-IFRS measure used by management of the Company to assess the operating performance of the business. The non-IFRS measures have not been subject to audit.
At a Group level year-on-year revenue grew 21%. This result reflects
strong organic growth, further supplemented by the businesses
acquired throughout the year.
Expenses increased during the year, primarily due to acquisitions,
higher variable remuneration linked to improved financial
performance and integration costs. Additionally, ongoing
investment was directed towards strengthening Codan’s people,
processes and systems that are required to deliver the Group’s
future strategic growth initiatives. During the year, the group’s
integration and acquisition related expenses were approximately
$2 million.
All profitability metrics increased versus FY23, with EBIT and NPAT
up 29% and 24% respectively. Pleasingly, the business delivered
organic EBIT growth of $22 million, up 24%.
Net Debt and Balance Sheet
Net debt increased $23.7 million during the year to $75.4
million as at 30 June 2024. This is after paying $37.2 million cash
consideration for acquisitions, investing $40.0 million into product
development as well as funding $36.3 million of dividends paid
during the year.
During FY24, the Group increased its existing bank facility to $170
million (from $140 million), with additional capacity available of
$150 million subject to bank approval. These facilities provide
the Company with the financial flexibility to support future
inorganic growth opportunities. Specifically, Codan continues
to seek acquisition opportunities which enhance the quality
of the Group’s revenues. The primary focus remains on key
Communications growth markets that will provide Codan with
increased future earnings visibility.
DIRECTORS’ REPORT (continued)
REMUNERATION REPORT – AUDITED (continued)
Remuneration Tables (Statutory Disclosures) (continued)
CODAN LIMITED AND ITS CONTROLLED ENTITIES
CODAN LIMITED AND ITS CONTROLLED ENTITIES
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
REPORT OF OPERATIONS
ESG
LEADERSHIP
76 | CODAN | ANNUAL REPORT 2024
CODAN | ANNUAL REPORT 2024 | 77
Performance by business unit
Communications (Tactical & Zetron)
Codan Communications designs and manufactures mission-
critical communication solutions for global military, public safety
and commercial applications. These solutions allow customers
to save lives, enhance security and productivity, and support
peacekeeping activities worldwide.
Codan Communications revenues increased 19% to $326.9 million
versus FY23, primarily attributed to Zetron’s strong organic
performance, bolstered by the acquisition of two high-quality
businesses during the period (Zetron UK and Wave Central).
Collectively, these acquisitions contributed revenues of $31 million
and the businesses remain on track to achieving their year two
investment objectives.
Pleasingly, organic revenue growth from the Communications
segment exceeded the target 10 to 15% range, after normalising
for revenues from the large Communications project delivered in
FY23 (approximately $20 million).
Communications segment profit grew 19% and totalled
$80.5 million, which reflects a 25% segment profit margin.
During the year, Communications continued to invest in
strengthening business development and engineering teams to
deliver on strategic growth initiatives. While this has temporarily
impacted Communications’ operating leverage momentum,
it positively positions the business to deliver future growth.
The Company remains committed to achieving additional
operating leverage, targeting a 30% segment profit margin in
the Communications segment over the next two to three years.
Tactical Communications delivered a solid result with strong
growth in the unmanned systems and broadcast markets, which
more than offset the softness in HF due to geopolitical factors in
Africa. Some notable wins include a $8.5 million European-funded
unmanned military program, a $7.1 million South Korean military
MESH communications contract and several contract awards in
Broadcast for live event news coverage, college and professional
sports. Tactical continues to benefit from its leading MESH radio
technology, which demonstrates exceptional performance in
harsh and contested environments. Specifically, the business
excels in providing compact, lightweight and efficient solutions,
optimizing size, weight and power for a diverse set of customers.
Following Codan’s acquisition of Wave Central in December 2023,
the business integrated well and delivered results in line with
expectations during the first 7 months of ownership. Near-term,
the focus for Tactical Communications is to successfully complete
the development of our radio waveform and to be accepted
into longer-term defence-related communications programs in
North America.
Zetron outperformed expectations during the year as the
business continues to deliver revenue growth from its expanded
footprint. Zetron’s growth continues to be driven by customers
seeking to benefit from the integrated and complete command
and control solution which is offered across the public safety,
utilities and transport markets. Some notable wins include a
$10.0 million contract with one of the largest utilities providers in
the Midwest region of the US, a $3.5 million upgrade with Kitsap
County, a $2.0 million Queensland Rail project upgrade, the
renewal of a London Underground recurring services contract as
well as multiple awards in Iowa, North Carolina, Arizona, Missouri,
West Virginia and New Jersey. Zetron continues to invest in the
next generation of products and solutions, which will also be able
to serve the growing NG911 public safety market.
During the year, Zetron successfully completed the integration of
Zetron UK, with the business exceeding our year one acquisition
expectations. With the business now successfully integrated,
Zetron has shifted its focus towards executing its FY25 growth
plans, consistent with the previously announced investment
objective.
Communications’ orderbook grew to $197 million as at 30 June
2024 (+21% versus 30 June 2023). Pleasingly, this increase has been
achieved in both the newly acquired and existing businesses.
In summary, Communications remains well-positioned for growth,
having successfully integrated newly acquired businesses
in conjunction with investment in strengthening business
development and engineering teams. This continues to enhance
Codan’s Communications market position and will deliver
future growth opportunities. With approximately $120 million
of FY25 revenues secured in orderbook and a strong pipeline
of opportunities, Communications continues to target organic
revenue growth in the 10 to 15% range.
Metal Detection (Minelab)
Minelab is the world leader in the handheld metal detection
industry for the recreational, gold prospecting, demining
and military markets. Over the past 30 years Minelab has led
the category in innovation and has driven metal detection
performance to new levels of technological excellence.
Minelab’s revenue of $220 million for FY24 reflects a 25% increase
versus FY23, all achieved organically. As a result of enhanced
operating leverage, Minelab’s segment profit margin increased to
35% during the year, versus 32% in the prior year.
During FY24, rest of world performance benefited from full year
revenues driven by the release of the Manticore, Equinox 700|900
and X-Terra Pro products, alongside an expansion of retail channel
points of distribution across North America and Europe. While
sales softened in specific regions, such as Australia, the business
remains focused on sales growth via expansion of storefronts
with leading retailers, along with enhancing market position using
platforms such as Amazon and Minelab eCommerce channels.
These efforts are expected to support further growth into FY25
and beyond. Therefore, Minelab maintains its target of achieving
high single-digit revenue growth for our rest of world revenues.
Minelab Africa delivered an improved FY24 result, with revenues
of approximately $70 million, increasing half on half as well as
versus FY23. Despite the Sudan region of Northeast Africa
still being largely disrupted, it was pleasing to observe an
improvement in revenues in West Africa which have generally
returned to pre-covid levels. Additionally, as supply chains have
normalized, Minelab has successfully reduced inventory holdings
by approximately $15 million over the course of FY24.
Countermine continues to generate strong performance,
following the delivery of several Government contracts to
support humanitarian demining efforts in Ukraine. Countermine’s
established relationships with global NGOs supporting this
effort is underpinned by its proven track record of detector
performance.
As the market leader in hand-held metal detectors, Minelab
continues to invest in new product technologies along with
maintaining a significant focus on distribution channel expansion.
Collectively, these efforts position Minelab well for future growth.
Outlook
When considering the outlook for FY25:
• Communications continues to target organic revenue growth
in a 10 to 15% range;
• Minelab continues to target rest of world revenue growth at
high-single digits; and
• Codan is seeking acquisition opportunities which enhance the
quality of the Group’s revenues, focussing on its Communications
segment.
Codan will continue to deliver on its strategic growth plan, with
investment into developing next generation products and
solutions, expanding into new geographic markets, strengthening
global distribution channels and enhancing operational leverage
as revenues grow. These efforts aim to position Codan strongly for
sustained growth in FY25 and beyond, and ensuring Codan is well
positioned to capitalise on emerging opportunities.
The Board will provide a further business update at the Annual
General Meeting on 23 October 2024.
DIVIDENDS
Dividends paid or declared by the Company to members since the
end of the previous financial year were:
Cents
per
share
Total
amount
$000
Franked
Date of
payment
Declared and
paid during
the year ended
30 June 2024:
FY23 final
9.5
17,225
100%
8 Sept 2023
FY24 interim
10.5
19,038
100%
12 March
2024
Declared after
the end of the
year:
FY24 final
12.0
21,758
100% 18 Sept 2024
All dividends paid or declared by the Company since the end of
the previous financial year were fully franked.
EVENTS SUBSEQUENT TO REPORTING
DATE
Except for the declaration of the FY24 final dividend detailed in
note 5, there has not arisen in the interval between the end of the
financial year and the date of this report any item, transaction or
event of a material and unusual nature likely, in the opinion of the
directors of the Company, to affect significantly the operations of
the group, the results of those operations, or the state of affairs of
the group, in future financial years.
LIKELY DEVELOPMENTS
The group will continue with its strategy of continuing to invest in
new product development and to seek opportunities to further
strengthen profitability by expanding into related businesses
offering complementary products and technologies.
Further information about likely developments in the operations
of the group and the expected results of those operations
in future financial years has not been included in this report
because disclosure of the information would be likely to result in
unreasonable prejudice to the group.
DIRECTORS’ INTERESTS
The relevant interest of each director in the shares and
performance rights over ordinary shares issued by the Company
as notified by the directors to the Australian Securities Exchange
in accordance with S205G(1) of the Corporations Act 2001, at the
date of this report is as follows:
Ordinary
Shares
Performance
Rights
Mr A Ianniello
41,120
156,828
Mr G R C Barclay
123,752
–
Mr H Mackay-Cruise
19,500
–
Ms K J Gramp
28,000
–
Ms S Adam-Gedge
13,000
–
DIRECTORS’ REPORT (continued)
OPERATING AND FINANCIAL REVIEW (continued)
Financial performance and other matters (continued)
CODAN LIMITED AND ITS CONTROLLED ENTITIES
CODAN LIMITED AND ITS CONTROLLED ENTITIES
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
REPORT OF OPERATIONS
ESG
LEADERSHIP
78 | CODAN | ANNUAL REPORT 2024
CODAN | ANNUAL REPORT 2024 | 79
INDEMNIFICATION AND INSURANCE
OF OFFICERS
Indemnification
The Company has agreed to indemnify the current and former
directors and officers of the Company and certain controlled
entities against all liabilities to another person (other than the
Company or a related body corporate) that may arise from their
position as directors and secretaries of the Company and its
controlled entities, except where the liability arises out of conduct
involving a lack of good faith. The Deed of Access, Indemnity and
Insurance stipulates that the Company and certain controlled
entities will meet the full amount of any such liabilities, including
costs and expenses.
Insurance premiums
The directors have not included details of the nature of the
liabilities covered or the amount of the premium paid in respect
of the directors’ and officers’ liability and legal expenses insurance
contracts, as such disclosure is prohibited under the terms of the
contract.
PRINCIPAL ACTIVITIES
The principal activities of the consolidated entity during the
course of the financial year were the design, development,
manufacture and sale of communications equipment and
solutions and metal detection equipment.
ENVIRONMENTAL REGULATIONS
Codan’s operations are subject to environmental regulations
under the Commonwealth of Australia and State/Territory
legislation. The Board believes that Codan has adequate systems
in place to manage its environmental obligations and is not aware
of any breach of those environmental requirements as they apply
to Codan.
NON-AUDIT SERVICES
During the year, KPMG, the Company’s auditor, has performed
certain other services in addition to their statutory duties.
The Board has considered the non-audit services provided during
the year by the auditor and is satisfied that the provision of those
non-audit services during the year by the auditor is compatible
with, and did not compromise, the auditor independence
requirements of the Corporations Act 2001 for the following
reasons:
• all non-audit services were subject to the corporate governance
procedures adopted by the Company and have been reviewed by
the Audit and Risk Committee to ensure that they do not have an
impact on the integrity and objectivity of the auditor; and
• the non-audit services provided do not undermine the general
principles relating to auditor independence as set out in APES
110 Code of Ethics for Professional Accountants, as they did not
involve reviewing or auditing the auditor’s own work, acting in
a management or decision-making capacity for the Company,
acting as an advocate for the Company or jointly sharing risks
and rewards.
Refer page 81 for a copy of the auditor’s independence declaration
as required under Section 307C of the Corporations Act 2001.
Details of the amounts paid or payable to the auditor of the
Company, KPMG, and its related practices for audit and non-audit
services provided during the year are below.
Consolidated
2024
$
2023
$
STATUTORY AUDIT
Audit and review of financial reports
351,556
309,983
351,556
309,983
SERVICES OTHER THAN
STATUTORY AUDIT
Taxation advice and compliance
services
22,639
19,506
22,639
19,506
ROUNDING OFF
The Company is of a kind referred to in ASIC Legislative
Instrument 2016/191 dated 1 April 2016 and, in accordance with
that Legislative Instrument, amounts in the financial report and
directors’ report have been rounded off to the nearest thousand
dollars, unless otherwise stated.
This report is made with a resolution of the directors:
G R C Barclay
A Ianniello
Director
Director
Dated at Mawson Lakes
this 21st day of August 2024.
KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated
with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and
logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited
by a scheme approved under Professional Standards Legislation.
Lead Auditor’s Independence Declaration under
Section 307C of the Corporations Act 2001
To the Directors of Codan Limited
I declare that, to the best of my knowledge and belief, in relation to the audit of Codan Limited for the
financial year ended 30 June 2024 there have been:
i.
no contraventions of the auditor independence requirements as set out in the Corporations
Act 2001 in relation to the audit; and
ii.
no contraventions of any applicable code of professional conduct in relation to the audit.
KPMG
Julie Cleary
Partner
Sydney
21 August 2024
DIRECTORS’ REPORT (continued)
LEAD AUDITOR’S INDEPENDENCE DECLARATION
under Section 307c of the Corporations Act 2001
CODAN LIMITED AND ITS CONTROLLED ENTITIES
CODAN LIMITED AND ITS CONTROLLED ENTITIES
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
REPORT OF OPERATIONS
ESG
LEADERSHIP
80 | CODAN | ANNUAL REPORT 2024
CODAN | ANNUAL REPORT 2024 | 81
Consolidated
2024
2023
Note
$000
$000
CONTINUING OPERATIONS
Revenue
2
550,459
456,468
Cost of sales
(245,234)
(207,026)
Gross profit
305,225
249,442
Other income
4
1,180
1,225
Administrative expenses
(48,122)
(37,128)
Sales and marketing expenses
(106,680)
(89,691)
Engineering expenses
(35,982)
(30,855)
Net financing costs
3
(10,898)
(10,343)
Other expenses
4
(234)
(13)
Profit before tax
104,489
82,637
Income tax expense
7
(23,191)
(14,908)
Profit for the period
81,298
67,729
Attributable to:
Equity holders of the company
81,387
67,774
Non-controlling interests
(89)
(45)
81,298
67,729
EARNINGS PER SHARE FOR PROFIT ATTRIBUTABLE TO
THE ORDINARY EQUITY HOLDERS OF THE COMPANY:
Basic earnings per share
6
45.0 cents
37.5 cents
Diluted earnings per share
6
44.8 cents
37.4 cents
The consolidated income statement is to be read in conjunction with the notes to and forming part of the financial statements set out on pages 88 to 120.
Consolidated
2024
2023
Note
$000
$000
Profit for the period
81,298
67,729
Items that may be reclassified subsequently to profit or loss
Changes in fair value of cash flow hedges
1,723
2,026
less tax effect
(517)
(608)
Changes in fair value of cash flow hedges, net of income tax
20
1,206
1,418
Exchange differences on translation of foreign operations
20
(6,446)
11,972
Other comprehensive income/(loss) for the period, net of income tax
(5,240)
13,390
Total comprehensive income for the period
76,058
81,119
Attributable to:
Equity holders of the company
76,147
81,164
Non-controlling interests
(89)
(45)
76,058
81,119
The consolidated statement of comprehensive income is to be read in conjunction with the notes to and forming part of the financial statements set out on pages 88 to 120.
CONSOLIDATED INCOME STATEMENT
as at 30 June 2024
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 30 June 2024
CODAN LIMITED AND ITS CONTROLLED ENTITIES
CODAN LIMITED AND ITS CONTROLLED ENTITIES
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
REPORT OF OPERATIONS
ESG
LEADERSHIP
82 | CODAN | ANNUAL REPORT 2024
CODAN | ANNUAL REPORT 2024 | 83
Consolidated
2024
2023
Note
$000
$000
CURRENT ASSETS
Cash and cash equivalents
8
19,703
23,661
Trade and other receivables
11
93,883
71,019
Inventory
12
110,069
121,401
Current tax assets
7
1,465
359
Other assets
13
33,786
17,851
Total current assets
258,906
234,291
NON-CURRENT ASSETS
Property, plant and equipment
14
40,219
37,707
Right-of-use assets
31
34,369
38,555
Product development
15
129,425
108,174
Intangible assets
16
304,592
273,974
Other assets
1,200
600
Total non-current assets
509,805
459,010
Total assets
768,711
693,301
CURRENT LIABILITIES
Trade and other payables
17
126,428
110,827
Lease liabilities
31
6,689
5,988
Current tax payable
7
8,621
7,439
Provisions
18
13,663
14,107
Total current liabilities
155,401
138,361
NON-CURRENT LIABILITIES
Trade and other payables
17
19,196
16,977
Lease liabilities
31
39,232
44,023
Loans and borrowings
9
95,125
75,380
Deferred tax liabilities
7
8,250
7,317
Provisions
18
4,575
4,908
Total non-current liabilities
166,378
148,605
Total liabilities
321,779
286,966
Net assets
446,932
406,335
EQUITY
Share capital
19
50,319
49,196
Reserves
20
92,863
98,424
Retained earnings
303,750
258,715
Total equity
446,932
406,335
Total equity attributable to the equity holders of the company
447,386
406,700
Non-controlling interests
(454)
(365)
446,932
406,335
The consolidated balance sheet is to be read in conjunction with the notes to and forming part of the financial statements set out on pages 88 to 120.
Consolidated
Share
capital
Foreign
currency
translation
reserve
Hedging
reserve
Equity
based
payment
reserve
Profit
reserve
Retained
earnings*
Total
2024
$000
$000
$000
$000
$000
$000
$000
Balance as at 1 July 2023
49,196
38,458
(874)
1,859
58,981 258,715 406,335
Profit for the period
–
–
–
–
–
81,298
81,298
Performance rights expensed
–
–
–
802
–
–
802
Change in fair value of cash flow hedges
–
–
1,206
–
–
–
1,206
Exchange differences on translation of
foreign operations
–
(6,446)
–
–
–
–
(6,446)
49,196
32,012
332
2,661
58,981 340,013 483,195
Transactions with owners of the company
Dividends recognised during the period
–
–
–
–
– (36,263)
(36,263)
Allocation of Treasury Shares
1,123
–
–
(1,123)
–
–
–
1,123
–
–
(1,123)
– (36,263)
(36,263)
Balance at 30 June 2024
50,319
32,012
332
1,538
58,981 303,750 446,932
*The amounts in retained earnings includes the portion for non-controlling interests with an opening retained loss as at 1 July 2023 of $0.365 million, FY24 loss after tax of $0.089
million (FY23: $0.045 million loss) which results in a closing retained loss of $0.454 million as at 30 June 2024.
Consolidated
Share
capital
Foreign
currency
translation
reserve
Hedging
reserve
Equity
based
payment
reserve
Profit
reserve
Retained
earnings
Total
2023
$000
$000
$000
$000
$000
$000
$000
Balance as at 1 July 2022
47,059
26,486
(2,292)
3,256
58,981
234,466
367,956
Profit for the period
–
–
–
–
–
67,729
67,729
Performance rights expensed
–
–
–
740
–
–
740
Change in fair value of cash flow hedges
–
–
1,418
–
–
–
1,418
Exchange differences on translation of
foreign operations
–
11,972
–
–
–
–
11,972
47,059
38,458
(874)
3,996
58,981
302,195
449,815
Transactions with owners of the company
Dividends recognised during the period
–
–
–
–
–
(43,480)
(43,480)
Allocation of Treasury Shares
2,137
–
–
(2,137)
–
–
–
2,137
–
–
(2,137)
–
(43,480)
(43,480)
Balance at 30 June 2023
49,196
38,458
(874)
1,859
58,981
258,715
406,335
The consolidated statement of changes in equity is to be read in conjunction with the notes to and forming part of the financial statements set out on pages 88 to 120.
CONSOLIDATED BALANCE SHEET
for the year ended 30 June 2024
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 30 June 2024
CODAN LIMITED AND ITS CONTROLLED ENTITIES
CODAN LIMITED AND ITS CONTROLLED ENTITIES
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
REPORT OF OPERATIONS
ESG
LEADERSHIP
84 | CODAN | ANNUAL REPORT 2024
CODAN | ANNUAL REPORT 2024 | 85
Consolidated
2024
2023
Note
$000
$000
CASH FLOWS FROM OPERATING ACTIVITIES
Cash receipts from customers
534,752
455,328
Cash paid to suppliers and employees
(398,009)
(359,236)
Interest received
87
50
Interest paid
(7,532)
(4,103)
Finance charge on lease liabilities
31
(1,992)
(1,273)
Income taxes paid (net)
(20,856)
(10,889)
Net cash from operating activities
10
106,450
79,877
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of subsidiaries (net of cash acquired)
32
(37,236)
(6,494)
Proceeds from disposal of property, plant and equipment
58
11
Proceeds from sale of Tracking Solutions business
–
1,921
Payments for capitalised product development
15
(39,796)
(29,993)
Acquisition of property, plant and equipment
(10,122)
(18,038)
Acquisition of intangibles (computer software and licences)
(866)
(1,333)
Net cash used in investing activities
(87,962)
(53,926)
CASH FLOWS FROM FINANCING ACTIVITIES
Drawdowns of borrowings
9
71,000
57,880
Repayments of borrowings
9
(51,255)
(34,500)
Payment of lease liabilities (principal)
31
(5,913)
(5,355)
Dividends paid
5
(36,263)
(43,480)
Net cash provided by/(used in) financing activities
(22,431)
(25,455)
Net increase/(decrease) in cash held
(3,943)
496
Cash and cash equivalents at the beginning of the financial year
23,661
22,613
Effects of exchange rate fluctuations on cash held
(15)
552
Cash and cash equivalents at the end of the financial year
8
19,703
23,661
The consolidated statement of cash flows is to be read in conjunction with the notes to and forming part of the financial statements set out on pages 88 to 120.
Entity Name
Body corporate,
partnership or
trust
Place
incorporated /
formed
Percentage of
share capital
held directly or
indirectly by the
company in the
body corporate
Australian or
Foreign resident
Jurisdiction
of Foreign
Resident
Broadcast Wireless Systems Limited
Body Corporate
UK
100
Australian
n/a *
Codan (US) Inc
Body Corporate
USA
100
Australian
n/a *
Codan Defence Electronics Pty Ltd
Body Corporate
Australia
100
Australian
n/a
Codan Executive Share Plan Pty Ltd
Body Corporate
Australia
100
Australian
n/a
Codan Limited
Body Corporate
Australia
Parent
Australian
n/a
Codan Radio Communications ME DMCC
Body Corporate
UAE
100
Australian
n/a *
Codan Radio Communications Pty Ltd
Body Corporate
Australia
100
Australian
n/a
Codan UK Ltd
Body Corporate
UK
100
Australian
n/a *
Corp Ten International Inc
Body Corporate
USA
100
Foreign
USA
Daniels Electronics Ltd
Body Corporate
Canada
100
Australian
n/a *
Domo Broadcast Holdings LLC
Body Corporate
USA
100
Australian
n/a *
Domo Tactical Communications (DTC) Limited
Body Corporate
UK
100
Australian
n/a *
Domo Tactical Communications (DTC) Pte Limited
Body Corporate
Singapore
100
Australian
n/a *
DTC Communications Inc
Body Corporate
USA
100
Australian
n/a *
DTC Group Holdings LLC
Body Corporate
USA
100
Australian
n/a *
DTC International Holdings Ltd
Body Corporate
UK
100
Australian
n/a *
DTC North America Holdings LLC
Body Corporate
USA
100
Australian
n/a *
GeoConex LLC
Body Corporate
USA
100
Australian
n/a *
MEP Surveillance Midco Inc
Body Corporate
USA
100
Australian
n/a *
Minelab Americas Inc
Body Corporate
USA
100
Australian
n/a *
Minelab de Mexico SA de CV
Body Corporate
Mexico
100
Australian
n/a *
Minelab do Brasil Equipamentos Para Minercao Ltda Body Corporate
Brazil
100
Australian
n/a *
Minelab Electronics Pty Ltd
Body Corporate
Australia
100
Australian
n/a
Minelab India Private Limited
Body Corporate
India
100
Australian
n/a *
Minelab International Ltd
Body Corporate
Ireland
100
Australian
n/a *
Minelab MEA FZE
Body Corporate
UAE
100
Australian
n/a *
Minelab MEA General Trading LLC
Body Corporate
UAE
49
Australian
n/a *
Spectronic Denmark A/S
Body Corporate
Denmark
100
Australian
n/a *
Wave Central LLC
Body Corporate
USA
100
Australian
n/a *
Zetron Air Systems Pty Limited
Body Corporate
Australia
100
Australian
n/a
Zetron Australasia Pty Limited
Body Corporate
Australia
100
Australian
n/a
Zetron Eagle Limited
Body Corporate
UK
100
Australian
n/a *
Zetron Inc
Body Corporate
USA
100
Australian
n/a *
Zetron Limited
Body Corporate
UK
100
Australian
n/a *
Key Assumptions and Judgments
Determination of Tax Residency:
Section 295 (3A) of the Corporation Act 2001 requires that the tax residency of each entity which is included in the Consolidated Entity Disclosure Statement (CEDS) be disclosed. In the
context of an entity which was an Australian resident, “Australian resident” has the meaning provided in the Income Tax Assessment Act 1997. The determination of tax residency involves
judgment as the determination of tax residency is highly fact dependent and there are currently several different interpretations that could be adopted, and which could give rise to a
different conclusion on residency. In determining tax residency, the consolidated entity has applied the following interpretations:
• Australian tax residency
The consolidated entity has applied current legislation and judicial precedent, including having regard to the Commissioner of Taxation’s public guidance in Tax Ruling TR 2018/5.
• Foreign tax residency
The consolidated entity has applied current legislation and where available judicial precedent in the determination of foreign tax residency. Where necessary, the consolidated entity
has used independent tax advisers in foreign jurisdictions to assist in its determination of tax residency to ensure applicable foreign tax legislation has been complied with.
* These entities are also a tax resident in their respective countries of incorporation. However, they are assessed as an Australian resident under the Income Tax Assessment Act 1997
and therefore not classified as a foreign resident under that Act.
Branches (permanent establishments):
• Branches are not separate legal entities and therefore do not have separate tax residency.
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 30 June 2024
CONSOLIDATED ENTITY DISCLOSURE STATEMENT
for the year ended 30 June 2024
CODAN LIMITED AND ITS CONTROLLED ENTITIES
CODAN LIMITED AND ITS CONTROLLED ENTITIES
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
REPORT OF OPERATIONS
ESG
LEADERSHIP
86 | CODAN | ANNUAL REPORT 2024
CODAN | ANNUAL REPORT 2024 | 87
1.
MATERIAL ACCOUNTING POLICIES
Codan Limited (the “Company”) is a company domiciled in
Australia and is a for-profit entity. The consolidated financial
report of the Company as at and for the year ended 30 June 2024
comprises the Company and its subsidiaries (together referred to
as the “group” and individually as “group entities”). The financial
report was authorised for issue by the directors on 21 August
2024.
(a) Statement of compliance
The financial report is a general purpose financial report which
has been prepared in accordance with Australian Accounting
Standards (AASBs) adopted by the Australian Accounting
Standards Board (“AASB”) and the Corporations Act 2001.
The consolidated financial report of the group complies with
International Financial Reporting Standards (IFRSs) adopted by
the International Accounting Standards Board (“IASB”).
(b) Basis of preparation
The consolidated financial report is prepared in Australian dollars
(the Company’s functional currency and the functional currency
of the majority of the group) on the historical costs basis except
that derivative financial instruments are stated at their fair value.
The group is of a kind referred to in ASIC Corporations (Rounding
in Financial/Directors’ Reports) Instrument 2016/191 and, in
accordance with that Legislative Instrument, amounts in the
financial report have been rounded off to the nearest thousand
dollars, unless otherwise stated.
Use of estimates and judgments
The preparation of a financial report in conformity with Australian
Accounting Standards requires management to make judgments,
estimates and assumptions that affect the application of policies
and reported amounts of assets, liabilities, income and expenses.
These estimates and associated assumptions are based on
historical experience and various other factors that are believed
to be reasonable under the circumstances, the results of which
form the basis of making the judgments about carrying values
of assets and liabilities that are not readily apparent from other
sources. Actual results may differ from these estimates. Estimates
and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in
which the estimate is revised and in any future periods affected.
The estimates and judgments that have a significant risk of
causing a material adjustment to the carrying amounts of assets
within the next financial year relate to:
• impairment assessments of non-current assets, including product
development and goodwill (refer note 16).
• measurement of inventory net realisable value (refer note 1 (l))
• recognition of deferred tax assets: availability of future taxable
profit against which deductible temporary difference and tax
losses carried forward can be utilised (refer note 7)
• acquisition of subsidiary: fair value of the consideration transferred
(including contingent consideration) and fair value of the assets
acquired and liabilities assumed, measured on a provisional basis
(refer note 32).
Changes in material accounting policies
The accounting policies applied in these financial statements are
the same as those applied in the group’s consolidated financial
statements as at and for the year ended 30 June 2023.
The group also adopted Disclosure of Accounting Policies
(Amendments to IAS 1 and IFRS Practice Statement 2) from
1 July 2023. Although the amendments did not result in any
changes to the accounting policies themselves, they impacted
the accounting policy information disclosed in the financial
statements.
The amendments require the disclosure of ‘material’, rather
than ‘significant’, accounting policies. The amendments also
provide guidance on the application of materiality to disclosure
of accounting policies, assisting entities to provide useful,
entity-specific accounting policy information that users need to
understand other information in the financial statements.
Management reviewed the accounting policies and made updates
to the information disclosed in Note 1 Material accounting policies
(2023: Significant accounting policies) in certain instances in line
with the amendments.
The group has adopted Deferred Tax related to Assets and
Liabilities arising from a Single Transaction (Amendments to
IAS12) from 1 July 2023. The amendments narrow the scope of the
initial recognition exemption to exclude transactions that give
rise to equal and offsetting temporary differences - e.g. leases
and decommissioning liabilities. For leases and decommissioning
liabilities, an entity is required to recognise the associated
deferred tax assets and liabilities from the beginning of the
earliest comparative period presented, with any cumulative
effect recognised as an adjustment to retained earnings or other
components of equity at that date. For all other transactions, an
entity applies the amendments to transactions that occur on or
after the beginning of the earliest period presented.
Prior to the group adopting this amendment to IAS 12, the group
recognised a separate deferred tax asset in relation to its lease
liabilities and a deferred tax liability in relation to its right-of-use
assets (see Note 7) and these were offset in the statement of
financial position in accordance with paragraph 74 of IAS 12
resulting in a similar outcome as under the amendments. There
was no impact on the opening retained earnings as at 1 July 2023
as a result of the change.
(c) Basis of consolidation
Subsidiaries are entities controlled by the group. Control exists
when the group has the power, directly or indirectly, to govern
the financial and operating policies of an entity so as to obtain
benefits from its activities. In assessing control, potential
voting rights that currently are exercisable are taken into
account. The financial statements of subsidiaries are included
in the consolidated financial statements from the date control
commences until the date control ceases. The accounting policies
of subsidiaries have been changed when necessary to align them
with the policies adopted by the group.
Unrealised gains and losses and inter-entity balances resulting
from transactions with or between subsidiaries are eliminated in
full on consolidation.
Business combinations are accounted for using the acquisition
method as at the acquisition date, which is the date on which
control is transferred to the group. Transaction costs, other than
those associated with the issue of debt or equity securities that
the group incurs in connection with a business combination, are
expensed as incurred.
Upon the loss of control, the group derecognises the assets and
liabilities of the subsidiary, and non-controlling interests and the
other components of equity related to the subsidiary. Any surplus
or deficit arising on the loss of control is recognised in the income
statement.
Non-controlling interests are measured at their proportionate
share of the subsidiaries’ net assets.
Transaction costs that the group incurs in connection with a
business combination, such as mergers and acquisitions advisory
fees, legal fees, due diligence fees, and other professional and
consulting fees, are expensed as incurred.
(d) Revenue recognition
Revenues are recognised at the fair value of the consideration
received or receivable, net of the amount of value added tax (VAT)
payable to taxation authorities.
Sale of goods
Revenue from the sale of goods is measured at the fair value of
the consideration received or receivable (net of rebates, expected
returns, discounts and other allowances). Revenue is recognised
when performance obligations are satisfied and the significant
risks and expected returns of ownership pass to the customer,
recovery of the consideration is probable, the associated costs
and possible return of goods can be estimated reliably, there is
no continuing management involvement with the goods and the
amount of revenue can be measured reliably. For most goods
sold, there is one performance obligation, which is the delivery
of the goods to the customer. Control usually passes when the
goods are shipped to the customer with revenue recognised at
this point in time.
Communications solutions
Contract revenue from projects to install communications
solutions for our customers includes the initial amount agreed
in the contract, plus any variations in contract work, claims and
incentive payments, to the extent that it is probable that they
will result in revenue and can be measured reliably. As soon as the
outcome of a communications solution contract can be estimated
reliably, contract revenue is recognised over time in proportion
to the stage of completion of the contract as performance
obligations are satisfied. Contract expenses are recognised
as incurred unless they create an asset related to future
contract activity.
The stage of completion of a communications solutions contract
is assessed by reference to costs incurred comparing with total
estimated costs. When the outcome of a contract cannot be
estimated reliably, contract revenue is recognised only to the
extent of contract costs incurred that are likely to be recoverable.
An expected loss on a contract is recognised immediately in the
income statement.
In the event a communications solution contract and maintenance
service contract are provided under a single arrangement, then
the consideration is allocated based on their relative stand-alone
selling prices. The standalone selling price is determined based on
the list prices at which the group sells the solution and services in
separate transactions.
Maintenance and support services
Services provided to customers predominantly relate to
maintenance and support services which can include technical
support, preventative hardware maintenance and software
upgrades. Revenue from these services is recognised over time
throughout the life of the service contract which can have a multi-
year term.
Installation and training services can be provided to customers
in conjunction with the sale of goods and in these circumstances,
then the consideration is allocated based on their relative stand-
alone selling prices. The standalone selling price is determined
based on the list prices at which the group sells the goods
and services in separate transactions. The services revenue
is recognised at a point in time as performance obligations
are delivered.
(e) Net financing costs
Net financing costs include interest paid relating to borrowings,
interest received on funds invested, unwinding of discounts and
foreign exchange gains and losses. Qualifying assets are assets
that take more than 12 months to get ready for their intended use
or sale. In these circumstances, borrowing costs are capitalised to
the cost of the qualifying assets. Interest income and borrowing
costs are recognised in the income statement on an accruals basis,
using the effective-interest method. Foreign currency gains and
losses are reported on a net basis.
(f) Foreign currency
Foreign currency transactions are translated to Australian dollars
at the rates of exchange ruling at the dates of the transactions.
Monetary assets and liabilities denominated in foreign currencies
at the reporting date are translated to Australian dollars at the
foreign exchange rate ruling at that date. Foreign exchange
differences arising on translation are recognised in the income
statement, except for differences arising on the retranslation of
a financial liability designated as a hedge of a net investment in
a foreign operation, or qualifying cash flow hedges, which are
recognised in other comprehensive income and presented within
equity, to the extent that the hedge is effective.
Foreign operations
The assets and liabilities of foreign operations, including goodwill
and fair-value adjustments arising on acquisition, are translated
to Australian dollars at the foreign exchange rates ruling at the
reporting date. Equity items are translated at historical rates.
The income and expenses of foreign operations are translated
to Australian dollars at the foreign exchange rates ruling at the
dates of the transactions. Foreign exchange differences arising
on translation are taken directly to the foreign currency
translation reserve until the disposal, or partial disposal,
of the foreign operations.
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
for the year ended 30 June 2024
CODAN LIMITED AND ITS CONTROLLED ENTITIES
CODAN LIMITED AND ITS CONTROLLED ENTITIES
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
REPORT OF OPERATIONS
ESG
LEADERSHIP
88 | CODAN | ANNUAL REPORT 2024
CODAN | ANNUAL REPORT 2024 | 89
Foreign exchange gains and losses arising from a monetary item
receivable or payable to a foreign operation, the settlement of
which is neither planned nor likely in the foreseeable future, are
considered to form part of a net investment in a foreign operation
and on consolidation they are recognised in other comprehensive
income, and are presented within equity in the foreign currency
translation reserve.
Foreign currency differences arising on the retranslation of a
financial liability designated as a hedge of a net investment in a
foreign operation are recognised directly in other comprehensive
income to the extent that the hedge is effective and are
presented within equity in the hedging reserve. To the extent that
the hedge is ineffective, such differences are recognised in the
income statement. When the hedged part of a net investment
is disposed of, the associated cumulative amount in equity is
transferred to the income statement as an adjustment to the
income statement on disposal.
(g) Derivative financial instruments
The group has used derivative financial instruments to hedge
its exposure to foreign exchange and interest rate movements.
In accordance with its policy, the group does not hold derivative
financial instruments for trading purposes. However, derivatives
that do not qualify for hedge accounting are accounted for
as trading instruments. Derivative financial instruments are
recognised initially at fair value. Attributable transaction costs are
recognised in the income statement when incurred. Subsequent
to initial recognition, derivative financial instruments are stated
at fair value. The gain or loss on re-measurement to fair value
is recognised immediately in the income statement unless the
derivative qualifies for hedge accounting.
Hedging
On initial designation of the hedge, the group formally documents
the relationship between the hedging instrument and hedged
item, including the risk management objectives and strategy in
undertaking the hedge transaction, together with the methods
that will be used to assess the effectiveness of the hedging
relationship.
Where a derivative financial instrument is designated as a hedge
of the variability in cash flows of a highly probable forecast
transaction, the effective part of any gain or loss on the derivative
financial instrument is recognised directly in comprehensive
income and presented within equity. When the forecast
transaction subsequently results in the recognition of a financial
asset or liability, then the associated gains and losses that
were recognised directly in equity are reclassified into the
income statement.
If the hedge no longer meets the criteria for hedge accounting
or the hedging instrument is sold, expires, is terminated or is
exercised, then hedge accounting is discontinued prospectively.
When hedge accounting for cash flow hedges is discontinued,
the amount that has been accumulated in the hedging reserve
remains in equity until, for a hedge of a transaction resulting
in the recognition of a non-financial item, it is included in the
non-financial item’s cost on its initial recognition or, for other
cash flow hedges, it is reclassified to profit or loss in the same
period or periods as the hedged expected future cash flows
affect profit or loss. If the hedged future cash flows are no longer
expected to occur, then the amounts that have been accumulated
in the hedging reserve and the cost of hedging reserve are
immediately reclassified to profit or loss.
(h) Taxation
Income tax expense on the income statement comprises
a current and deferred tax expense. Income tax expense is
recognised in the income statement except to the extent
that it relates to items recognised directly in equity, or in other
comprehensive income.
Current tax expense is the expected tax payable on the taxable
income for the year using tax rates enacted or substantially
enacted at the reporting date, adjusted for any prior year under
or over provision. The movement in deferred tax assets and
liabilities results in a deferred tax expense, unless the movement
results from a business combination, in which case the tax entry
is recognised in goodwill, or a transaction has impacted equity,
in which case the tax entry is also reflected in equity.
Deferred tax assets and liabilities arise from temporary differences
between the carrying amount of assets and liabilities for financial
reporting purposes and the amounts used for taxation purposes.
Deferred tax assets and liabilities are offset if there is a legally
enforceable right to offset tax liabilities and assets, and they relate
to income taxes levied by the same tax authority on the same
taxable entity, or on different tax entities, but they intend to settle
the tax liabilities and assets on a net basis, or their tax assets and
liabilities will be realised simultaneously.
A deferred tax asset is recognised for unused tax losses, tax
credits and deductible temporary differences to the extent that
it is probable that future taxable profits will be available against
which the temporary difference can be utilised. Deferred tax
assets are reviewed at each reporting date and are reduced to
the extent that it is no longer probable that the related tax benefit
will be realised.
Tax consolidation
The Company is the head entity in the tax-consolidated
group comprising all the Australian wholly owned subsidiaries.
The Company recognises the current tax liability of the tax-
consolidated group. The tax-consolidated group has determined
that subsidiaries will account for deferred tax balances and
will make contributions to the head entity for the current tax
liabilities as if the subsidiary prepared its tax calculation on a
stand-alone basis.
The Company recognises deferred tax assets arising from unused
tax losses of the tax consolidated group to the extent that it is
probable that future taxable profits of the tax consolidated group
will be available against which the asset can be utilised.
Any subsequent period adjustments to deferred tax assets
arising from unused tax losses, as a result of revised assessments
of the probability of recoverability, are recognised by the head
entity only.
(i)
Value added tax (VAT)
Revenues, expenses and assets are recognised net of the
amount of VAT, except where the amount of VAT incurred is
not recoverable from the Australian Taxation Office (ATO). In
these circumstances, the VAT is recognised as part of the cost of
acquisition of the asset or is expensed. Receivables and payables
are stated with the amount of VAT included. The net amount
of VAT recoverable from, or payable to, the ATO is included as a
current asset or liability in the balance sheet.
Cash flows are included in the Consolidated Statement of Cash
Flows on a gross basis. The VAT components of cash flows arising
from investing and financing activities which are recovered from,
or payable to, the ATO are classified as operating cash flows.
(j)
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call
deposits with an original maturity of three months or less.
(k) Trade and other receivables
Trade debtors are to be settled within agreed trading terms,
typically less than 60 days, and are initially recognised at fair value
and then subsequently at amortised cost, less any expected
credit loss allowances. Under the “lifetime expected credit loss”
model, the allowance for credit losses is calculated by considering
on a discounted basis the cash shortfalls it would incur in various
default scenarios for prescribed future periods and multiplying
the shortfalls by the probability weighted outcomes. Significant
receivables are individually assessed. Non-significant receivables
are not individually assessed; instead, credit loss testing is
performed by considering the risk profile of that group of
receivables. All allowances for credit losses are recognised in
the income statement.
(l) Inventories
Raw materials and stores, work in progress and finished goods
are measured at the lower of cost (generally determined as
the average purchase price over a period of 6 months) and net
realisable value. Net realisable value represents the selling price
that could be achieved in the ordinary course of business, and
is calculated having regard to the quantity of stock on hand
in comparison to past usage. In the case of manufactured
inventories and work in progress, costs comprise direct materials,
direct labour, other direct variable costs and allocated factory
overheads necessary to bring the inventories to their present
location and condition.
(m) Project work in progress and
contract liabilities
Project work in progress represents the gross unbilled amount
expected to be collected from customers for project work
performed to date. It is measured at cost, plus profit recognised
to date, less progress billings and recognised losses. Cost includes
all expenditure related directly to specific projects. Project work in
progress is presented as part of other assets in the balance sheet
for all projects in which costs incurred, plus recognised profits,
exceed progress billings. Contract liabilities primarily relate to the
advance consideration received from customers for project work
to be performed or services to be rendered, for which revenue is
recognised over time. Contract liabilities are presented as part of
trade and other payables in the balance sheet.
(n) Intangible assets
Product development costs
Expenditure on research activities, undertaken with the
prospect of gaining new scientific or technical knowledge and
understanding, is recognised in the income statement as an
expense when incurred. Expenditure on development activities,
whereby research findings are applied to a plan or design for
the production of new or substantially improved products,
is capitalised only if development costs can be measured
reliably, the product is technically and commercially feasible,
future economic benefits are probable and the group intends
to, and has sufficient resources to, complete development
and to use or sell the asset. The expenditure capitalised has a
finite useful life and includes the cost of materials, direct labour
and an appropriate proportion of overheads that are directly
attributable to preparing the asset for its intended use, less
accumulated amortisation and accumulated impairment losses.
Other development expenditure is recognised in the income
statement when incurred.
Goodwill
All business combinations are accounted for by applying the
acquisition method, and goodwill may arise upon the acquisition
of subsidiaries. Goodwill is stated at cost, less any accumulated
impairment losses, and has an indefinite useful life. It is allocated
to cash-generating units or groups of cash-generating units and
is not amortised but is tested annually for impairment.
Measuring goodwill
The group measures goodwill as the fair value of the consideration
transferred including the recognised amount of any non-controlling
interest in the acquiree, as well as the fair value of any pre-existing
non-controlling interest, less the net recognised amount
(generally fair value) of the identifiable assets acquired (including
intangible assets) and liabilities assumed, all measured as of the
acquisition date.
Consideration transferred includes the fair values of the assets
transferred, liabilities incurred by the group to the previous
owners of the acquiree, and equity interests issued by the group.
Consideration transferred also includes the fair value of any
contingent consideration and share-based payment awards
of the Company.
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
for the year ended 30 June 2024
1.
MATERIAL ACCOUNTING POLICIES (continued)
CODAN LIMITED AND ITS CONTROLLED ENTITIES
CODAN LIMITED AND ITS CONTROLLED ENTITIES
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
REPORT OF OPERATIONS
ESG
LEADERSHIP
90 | CODAN | ANNUAL REPORT 2024
CODAN | ANNUAL REPORT 2024 | 91
Licences and other intangible assets
Licences and other intangible assets that are acquired by the
group which have finite useful lives, are stated at cost, less
accumulated amortisation and accumulated impairment losses.
Expenditure on internally generated goodwill and brands is
recognised in the income statement as incurred.
Subsequent expenditure
Subsequent expenditure is capitalised only when it increases
the future economic benefits embodied in the specific asset to
which it relates. All other expenditure, including expenditure on
internally generated goodwill and brands, is recognised in the
income statement as incurred.
Amortisation
Amortisation is calculated on the cost of the asset, less its
residual value.
Amortisation is charged to the income statement on either a
straight-line or units of production basis. Intangible assets are
amortised over their estimated useful lives from the date that
they are available for use, but goodwill is only written down if
there is an impairment.
The estimated useful lives in the current and comparative
periods are as follows:
Straight-line
Units of production
Product
development,
licences and
intellectual property
2 - 15 years
5 - 10 years
Computer software
3 - 7 years
Brand names
20 years
Customer
relationships
5 years
Amortisation methods, useful lives and residual values are
reviewed at each reporting date.
(o) Assets held for sale
Non-current assets, or disposal groups comprising assets and
liabilities, are classified as held-for-sale if it is highly probable that
they will be recovered primarily through sale rather than through
continuing use. Such assets are generally measured at the lower
of their carrying amount and fair value less costs to sell.
Once classified as held-for-sale, intangible assets and property,
plant and equipment are no longer amortised or depreciated.
(p) Property, plant and equipment
Owned assets
Items of property, plant and equipment are measured at cost, less
accumulated depreciation and impairment losses. Cost includes
expenditures that are directly attributable to the acquisition of
the asset. The cost of self-constructed assets includes the cost of
materials, direct labour and any other costs directly attributable
to bringing the asset to a working condition for its intended use,
the costs of dismantling and removing the items and restoring the
site on which they are located, and capitalised borrowing costs.
Purchased software that is integral to the functionality of the
related equipment is capitalised as part of that equipment.
Gains and losses on disposal of an item of property, plant
and equipment are determined by comparing the proceeds
from disposal with the carrying amount of property, plant
and equipment and are recognised net within “other income”
or “other expenses” in the income statement.
Subsequent costs
The cost of replacing part of an item of property, plant and
equipment is recognised in the carrying amount of the item if it is
probable that the future economic benefits embodied within the
part will flow to the group and its cost can be measured reliably.
The carrying amount of the replaced part is derecognised.
The costs of the day-to-day servicing of property, plant and
equipment are recognised in the income statement as incurred.
Depreciation
Depreciation is calculated on the depreciable amount, which is the
cost of an asset, less its residual value.
Depreciation is charged to the income statement on property,
plant and equipment on a straight-line basis over the estimated
useful life of the assets. Capitalised leased assets are amortised on
a straight-line basis over the term of the relevant lease, or where it
is likely the group will obtain ownership of the asset, the life of the
asset. The main depreciation rates used for each class of asset for
current and comparative periods are as follows:
Right-of-use assets
7% to 25%
Leasehold property
6% to 10%
Plant and equipment
7% to 40%
Depreciation methods, useful lives and residual values are
reviewed at each reporting date.
(q) Impairment
The carrying amounts of the group’s assets, other than
inventories and deferred tax assets, are reviewed at each
reporting date to determine whether there is any indication
of impairment. A financial asset is considered to be impaired if
objective evidence indicates that one or more events have had
a negative effect on the estimated future cash flows of that
asset. If any such impairment exists, the asset’s recoverable
amount is estimated. For goodwill and intangible assets that
have an indefinite useful life or are not yet available for use,
the recoverable amount is estimated annually.
The recoverable amount of non-financial assets is the greater of
their fair value, less costs of disposal and value-in-use. In assessing
value-in-use, the estimated future cash flows are discounted to
their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and the
risks specific to the asset. For an asset that does not generate
largely independent cash inflows, the recoverable amount
is determined for the cash-generating unit to which the
asset belongs.
The group’s corporate assets do not generate separate cash
inflows. If there is an indication that a corporate asset may be
impaired, then the recoverable amount is determined for the
cash-generating units to which the corporate asset belongs.
An impairment loss is recognised whenever the carrying amount
of an asset exceeds its recoverable amount. A cash-generating
unit is the smallest identifiable asset group that generates cash
inflows that are largely independent from other assets or groups
of assets. Impairment losses are recognised in the income
statement. Impairment losses recognised in respect of cash-
generating units are allocated first to reduce the carrying amount
of any goodwill and then to reduce the carrying amount of the
other non-financial assets in the cash-generating unit on a
pro-rata basis.
An impairment loss in respect of goodwill is not reversed.
In respect of other assets, impairment losses recognised in prior
periods are assessed at each reporting date for any indications
that the loss has decreased or no longer exists. An impairment
loss is reversed if there has been a change in the estimate used
to determine the recoverable amount. An impairment loss is
reversed only to the extent that the asset’s carrying amount
does not exceed the carrying amount that would have been
determined, net of depreciation or amortisation, if no impairment
loss had been recognised.
(r) Payables
Liabilities are recognised for amounts to be paid in the future for
goods or services received. Trade accounts payable are normally
settled within 60 days.
(s) Interest bearing borrowings
Interest bearing borrowings are recognised initially at their fair
value, less attributable transaction costs. Subsequent to initial
recognition, interest-bearing borrowings are stated at amortised
cost, with any difference between cost and redemption value
being recognised in the income statement over the period of
the borrowings on an effective-interest basis.
(t) Employee benefits
Wages, salaries and annual leave
Liabilities for employee benefits for wages, salaries, incentives
and annual leave represent current obligations resulting from
employees’ services provided to the reporting date, calculated
at undiscounted amounts based on remuneration rates that
the group expects to pay as at the reporting date, including
related on-costs such as superannuation, workers’ compensation
insurance and payroll tax.
Long service leave
The provision for employee benefits for long service leave
represents the present value of the estimated future cash
outflows resulting from the employees’ services provided to the
reporting date. The provision is calculated using expected future
increases in wage and salary rates, including related on-costs,
and expected settlement dates based on turnover history, and
is discounted using high-quality corporate bond rates at the
reporting date which most closely match the terms of maturity
of the related liabilities.
Defined contribution superannuation plans
A defined contribution plan is a post-employment benefit plan
under which an entity pays fixed contributions into a separate
entity and will have no legal or constructive obligation to pay
further amounts. The group contributes to defined contribution
superannuation plans and these contributions are expensed
in the income statement as incurred.
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
for the year ended 30 June 2024
1.
MATERIAL ACCOUNTING POLICIES (continued)
CODAN LIMITED AND ITS CONTROLLED ENTITIES
CODAN LIMITED AND ITS CONTROLLED ENTITIES
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
REPORT OF OPERATIONS
ESG
LEADERSHIP
92 | CODAN | ANNUAL REPORT 2024
CODAN | ANNUAL REPORT 2024 | 93
(u) Provisions
A provision is recognised when there is a present legal or
constructive obligation as a result of a past event, it can be
estimated reliably and it is probable that a future sacrifice of
economic benefits will be required to settle the obligation.
Provisions are determined by discounting the expected future
cash flows required to settle the obligation at a pre-tax rate that
reflects the current market assessments of the time value of
money and the risks specific to the liability. The unwinding of the
discount is recognised as a finance cost.
Restructuring and employee termination
benefits
A provision for restructuring is recognised when the group has
approved a detailed and formal restructuring plan, and the
restructuring either has commenced or has been announced
publicly. Future operating costs are not provided for.
Warranty
A provision is made for the group’s estimated liability on all
products sold and still under warranty, and includes claims already
received. The estimate is based on the group’s warranty cost
experience over previous years.
(v) Leases
A lease arrangement is one that conveys the right to control the
use of an identified asset for a period of time in exchange for
consideration. The group does not recognise lease arrangements
in respect of intangible assets. The payments associated with
short-term lease arrangements and leases of low-value assets are
recognised on a straight-line basis in the Income Statement.
Short-term leases are leases with a lease term of 12 months or less.
The group applies the requirements of the leasing standard on
a lease-by-lease basis. The main type of leases of the group are
leases for offices, warehouses and manufacturing facilities. Some
property leases contain extension options exercisable by the
group. Where practicable, the group seeks to include extension
options in new leases to provide operational flexibility.
The extension options held are exercisable only by the group
and not by the lessors. The group assesses at the lease
commencement date whether it is reasonably certain to exercise
the options. The group reassesses whether it is reasonably certain
to exercise the options if there is a significant event or significant
changes in circumstances within its control.
Right-of-use assets
The group recognises a right-of-use asset and a lease liability
at the commencement date of the lease arrangement.
The right-of-use asset is initially measured at cost, which
comprises the initial amount of the lease liability adjusted for
any lease payments made at or before the commencement
date, plus any initial direct costs incurred and estimates of costs
to dismantle or remediate the underlying asset, less any lease
incentives received. Subsequent to initial recognition, the assets
are accounted for in accordance with the accounting policy
applicable to that asset. In addition, the right-of-use asset may be
adjusted periodically due to remeasurements of the lease liability.
Lease liabilities
The lease liability is initially measured at the present value of the
outstanding lease payments at the commencement date of
the arrangement, discounted using the borrowing rate implicit
in the lease or, if that rate cannot be readily determined, the
group’s incremental borrowing rate. Generally, the group uses its
incremental borrowing rate as the discount rate.
Some property leases contain extension options exercisable by
the group. The group assesses at lease commencement whether
it is reasonably certain to exercise the extension options.
The group reassesses whether it is reasonably certain to exercise
the options if there is a significant event or significant change in
circumstances within its control.
The lease liability is subsequently measured through increasing
the carrying amount to reflect interest on the lease liability, less
lease payments made. It is remeasured when there is a change in
future lease payments arising from a change in an index or rate or
if the group changes its assessment of whether it will exercise a
purchase, extension or termination option. When the lease liability
is remeasured in this way, a corresponding adjustment is made to
the carrying amount of the right-of-use asset, or is recorded in the
profit and loss if the carrying amount of the right-of-use asset has
been reduced to zero.
(w) Share capital - ordinary shares
Ordinary shares are classified as equity. Incremental costs directly
attributable to the issue of ordinary shares and share options are
recognised as a deduction from equity, net of any tax effects.
(x) Share-based payment
transactions
Share-based payments in which the group receives goods
or services as consideration for its own equity instruments
are accounted for as equity-settled share-based payment
transactions, regardless of how the equity instruments are
obtained from the group.
The grant-date fair value of share-based payment awards
granted to employees is recognised as an employee expense,
with a corresponding increase in equity, over the period that
the employees unconditionally become entitled to the awards.
The amount recognised as an expense is adjusted to reflect the
number of awards which vest.
(y) Future Australian Accounting
Standards requirements
A number of new standards are effective after 2024 and earlier
application is permitted; however, the group has not early
adopted the new or amended standards in preparing these
consolidated financial statements. The group does not expect
that these new accounting standards will have a material impact
on the consolidated financial statements.
AASB 18 Presentation and Disclosure in Financial Statements
AASB 18 was issued in June 2024 and replaces AASB 101
Presentation of Financial Statements. The new standard
introduces new requirements for the Income Statement,
including:
• new categories for the classification of income and expenses into
operating, investing and financing categories, and
• presentation of subtotals for “operating profit” and “profit before
financing and income taxes”.
Additional disclosure requirements are introduced for
management-defined performance measures and new principles
for aggregation and disaggregation of information in the notes
and the primary financial statements and the presentation of
interest and dividends in the statement of cash flows. The new
standard is effective for annual periods beginning on or after 1
January 2027 and will first apply to the Group for the financial year
ending 30 June 2028.
This new standard is not expected to have an impact on the
recognition and measurement of assets, liabilities, income
and expenses, however there will likely be changes in how the
Income Statement and Balance Sheet line items are presented
as well as some additional disclosures in the notes to the financial
statements. The Company is in the process of assessing the
impact of the new standard.
GROUP PERFORMANCE
2. SEGMENT ACTIVITIES
The group determines and presents operating segments based
on the information that is internally provided to the CEO, who is
the group’s chief operating decision-maker.
An operating segment is a component of the group that engages
in business activities from which it may earn revenues and incur
expenses. All operating segments’ results are regularly reviewed
by the group’s CEO, to make decisions about resources to be
allocated to the segments and assess their performance.
Segment results relate to the underlying operations of a segment
and are as reported to the CEO, and include the expense from
functions that are directly attributable to a segment as well as
those that can be allocated on a reasonable basis. Unallocated
items comprise mainly corporate assets (primarily cash balances),
corporate expenses, other income and expense, and income tax
assets and liabilities.
Segment capital expenditure is the total cost incurred during the
period to acquire property, plant and equipment, and intangible
assets other than goodwill.
The group’s primary format for segment reporting is based on
business segments.
Business segments
The group comprises three business segments.
The communications segment includes the design, development,
manufacture and marketing of communications equipment.
The metal detection segment includes the design, development,
manufacture and marketing of metal detection equipment.
The “Other” business segment relates to the Tracking Solutions
business that was sold on 1 July 2021 and the ongoing
manufacturing and sale of tracking products to Caterpillar Inc.
Two or more operating segments may be aggregated into
a single operating segment if they are similar in nature. The
Communications segment comprises of the following operating
segments: Tactical Communications and Zetron, which are
aggregated because they have similar economic characteristics
such as long-term average contribution margins, nature of
products, production process and regulatory environment,
type of customers and distribution methods.
Geographical areas
In presenting information on the basis of geographical areas,
segment revenue has been based on the geographic location
of the invoiced customer. Segment assets are based on the
geographic location of the assets. The group has manufacturing
and offices in Australia, Canada, Denmark, United Kingdom and
United States, with overseas representative offices in Brazil, India,
Ireland, Mexico, Singapore, and the United Arab Emirates.
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
for the year ended 30 June 2024
1.
MATERIAL ACCOUNTING POLICIES (continued)
CODAN LIMITED AND ITS CONTROLLED ENTITIES
CODAN LIMITED AND ITS CONTROLLED ENTITIES
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
REPORT OF OPERATIONS
ESG
LEADERSHIP
94 | CODAN | ANNUAL REPORT 2024
CODAN | ANNUAL REPORT 2024 | 95
Information about reportable
segments
Communications
Metal detection
Other
Consolidated
2024
2023
2024
2023
2024
2023
2024
2023
$000
$000
$000
$000
$000
$000
$000
$000
Revenue
Revenue recognised at a point in time
256,226 233,489 219,853 176,098
3,697
5,917 479,776 415,504
Revenue recognised over time
70,683
40,964
–
–
–
–
70,683
40,964
Total external segment revenue
326,909 274,453
219,853
176,098
3,697
5,917 550,459 456,468
Result
Segment result
80,506
67,701
77,920
56,798
336
538 158,762 125,037
Unallocated net financing costs
(8,905)
(9,069)
Unallocated income and expenses
(45,368)
(33,331)
Profit from operating activities
104,489
82,637
Income tax expense
(23,191)
(17,098)
Underlying net profit
81,298
65,539
Recognition/derecognition of tax
losses previously not booked
–
2,190
Statutory net profit
81,298
67,729
Non-cash items included above
Depreciation and amortisation
20,619
17,590
11,517
10,327
–
–
32,136
27,917
Unallocated depreciation and
amortisation
950
950
Total depreciation and
amortisation
33,086
28,867
Assets
Capital expenditure
33,887
40,284
14,350
12,653
–
–
48,237
52,937
Unallocated capital expenditure
2,492
1,912
Total capital expenditure
50,729
54,849
Segment assets
535,974 454,557 190,186 193,261
620
665 726,780 648,483
Unallocated corporate assets
41,931
44,818
Consolidated total assets
768,711 693,301
Revenue recognised at a point in time mainly relates to the sale of goods for Metal detection and Communications products. Revenue recognised over time relates to contract revenue
from projects to install communications solutions as well as maintenance and support service (the accounting policy is outlined in Note 1(d)).
The group derived its revenues from a number of countries. The significant country where revenue was 10% or more of total revenue was the United States of America totalling
$219.912 million (2023: $220.408 million).
The group’s non-current assets, excluding financial instruments and deferred tax assets, were located in various countries and countries where the value is 10% or more of the group’s
total non-current assets are deemed as significant. These countries are as follows: the United States of America $249.608 million (2023: $232.662 million), Australia $129.940 million
(2023: $130.526 million), Canada $67.747 million (2023: $70.577 million), and United Kingdom $58.120 million (2023: $21.715 million).
Consolidated
2024
2023
$000
$000
3. EXPENSES
Net financing costs:
Interest income
(87)
(50)
Net foreign exchange (gain)/loss
(187)
150
Interest expense
7,532
4,103
Finance charge on lease liabilities
1,992
1,273
Foreign currency hedge loss
1,648
4,867
10,898
10,343
Depreciation of:
Right-of-use assets
6,210
5,641
Leasehold property
1,708
970
Plant and equipment
5,320
4,903
13,238
11,514
Amortisation of:
Product development - straight-line
14,792
11,896
Product development - units of production
3,748
3,796
Intellectual property
30
285
Computer software
268
605
Licences
199
149
Customer Relationships
408
241
Brand names
403
381
19,848
17,353
Personnel expenses:
Wages and salaries
116,578
81,672
Other associated personnel expenses
14,517
14,845
Contributions to defined contribution superannuation plans
9,962
8,190
Long service leave expense
580
889
Annual leave expense
8,847
8,133
Performance rights plan
802
740
151,286
114,469
4. OTHER EXPENSES / INCOME
Other income:
Gain on sale of Tracking Solutions business
–
895
Other income
1,180
330
1,180
1,225
Other expenses:
Loss on sale of property, plant and equipment
234
13
234
13
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
for the year ended 30 June 2024
GROUP PERFORMANCE (continued)
2. SEGMENT ACTIVITIES (continued)
CODAN LIMITED AND ITS CONTROLLED ENTITIES
CODAN LIMITED AND ITS CONTROLLED ENTITIES
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
REPORT OF OPERATIONS
ESG
LEADERSHIP
96 | CODAN | ANNUAL REPORT 2024
CODAN | ANNUAL REPORT 2024 | 97
Consolidated
2024
2023
$000
$000
5. DIVIDENDS
Codan Limited has provided or paid for dividends as follows:
• ordinary final fully-franked dividend of 9.5 cents per ordinary share paid on
20 September 2023
17,225
• ordinary interim fully-franked dividend of 10.5 cents per ordinary share paid on
12 March 2024
19,038
• ordinary final fully-franked dividend of 15.0 cents per ordinary share paid on
7 September 2022
27,175
• ordinary interim fully-franked dividend of 9.0 cents per ordinary share paid on
10 March 2023
16,305
36,263
43,480
Since the end of the financial year, the directors declared a final ordinary fully franked dividend of 12.0 cents per share, payable on
18 September 2024. The financial impact of this final dividend of $21.758 million has not been brought to account in the group financial
statements for the year ended 30 June 2024 and will be recognised in subsequent financial reports.
Dividend franking account
Franking credits available to shareholders for subsequent financial years (30%)
49,403
56,198
The franking credits available are based on the balance of the dividend franking account at year-end, adjusted for the franking credits
that will arise from the payment of the current tax liability. The ability to utilise the franking account credits is dependent upon there
being sufficient available profits to declare dividends. Based upon the above declared dividend, the impact on the dividend franking
account of dividends proposed after the balance sheet date but not recognised as a liability is to reduce it by $9.325 million
(2023: $7.376 million).
6. EARNINGS PER SHARE
The group presents basic earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss
attributable to ordinary shareholders of the company by the weighted average number of ordinary shares outstanding during the
period. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number
of ordinary shares outstanding for the effects of all dilutive potential ordinary shares, which comprise performance rights granted
to employees.
Net profit used for the purpose of calculating basic and diluted earnings per share
81,387
67,774
The weighted average number of shares used as the denominator number for basic earnings per share was 181,044,967
(2023: 180,918,865). The movement in the year is as a consequence of the shares issued under the performance rights plan and
employee share plan.
The calculation of diluted earnings per share at 30 June 2024 was based on a weighted average number of ordinary shares outstanding,
after adjustment for the effects of all dilutive potential ordinary shares of 181,816,939 (2023: 181,396,268). The movement in the year
relates to the shares issued under the performance rights plan.
TAXATION
Consolidated
2024
2023
$000
$000
7.
INCOME TAX
A.
Income tax expense
Current tax expense:
Current tax paid or payable for the financial year
26,499
14,007
Adjustments for prior years
(5,580)
(1,953)
20,919
12,054
Deferred tax expense:
Origination and reversal of temporary differences
1,876
5,044
(Recognition)/derecognition of tax losses previously not booked
396
(2,190)
Total income tax expense in income statement
23,191
14,908
Reconciliation between tax expense and pre-tax net profit:
The prima facie income tax expense calculated at 30% on the profit from ordinary
activities
31,347
24,791
Decrease in income tax expense due to:
Additional deduction for research and development expenditure
(3,727)
(2,801)
Effect of tax rates in foreign jurisdictions
(2,792)
(2,125)
(Over)/under provision for taxation in previous years
(2,258)
(1,952)
Non-assessable amounts
–
(326)
Other deductible expenses
–
(937)
(Recognition)/derecognition of tax losses previously not booked
396
(2,190)
22,966
14,460
Increase in income tax expense due to:
Capital expenses relating to acquisitions and disposals
147
265
Non-deductible expenses
78
183
Income tax expense
23,191
14,908
B.
Current tax liabilities / assets
Balance at the beginning of the year
(7,080)
(6,039)
Net foreign currency differences on translation of foreign entities
(13)
(125)
Income tax paid (net)
20,856
10,889
Adjustments from prior year
5,580
2,202
Current year’s income tax paid or payable on operating profit
(26,499)
(14,007)
(7,156)
(7,080)
Disclosed in balance sheet as:
Current tax asset
1,465
359
Current tax payable
(8,621)
(7,439)
(7,156)
(7,080)
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
for the year ended 30 June 2024
GROUP PERFORMANCE (continued)
CODAN LIMITED AND ITS CONTROLLED ENTITIES
CODAN LIMITED AND ITS CONTROLLED ENTITIES
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
REPORT OF OPERATIONS
ESG
LEADERSHIP
98 | CODAN | ANNUAL REPORT 2024
CODAN | ANNUAL REPORT 2024 | 99
Consolidated
2024
2023
$000
$000
C.
Deferred tax liabilities
Provision for deferred income tax comprises the estimated expense at the
applicable tax rate of the following items:
Expenditure currently tax deductible but deferred and amortised for accounting
(intangible assets)
31,006
26,468
Liabilities recognised from the identifiable intangible assets acquired from business
combination
(1,852)
(2,700)
Set-off of tax in relation to deferred tax assets:
Difference in depreciation of property, plant and equipment*
2,127
475
Payments for intellectual property not currently deductible
(2,025)
374
Provisions for employee benefits not currently deductible
(2,953)
(3,129)
Provisions and accruals not currently deductible
(5,255)
(5,705)
Deferred income
(6,357)
(1,342)
Sundry items
(147)
(971)
Carry forward overseas tax losses
(3,008)
(3,032)
Carry forward overseas R&D tax credits
(3,286)
(3,121)
8,250
7,317
*As at 30 June 2024, deferred tax asset for lease liability was $9.349 million (30 June 2023: $10.263 million), while the deferred tax
liability at 30 June 2024 for Right-of-Use asset was $7.969 million (30 June 2023: $8.893 million).
As at 30 June 2024 income tax losses of $10 million (2023: $13 million) and capital tax losses of $24 million (2023: $28 million) have not
been recognised as a deferred tax asset.
D.
Effective tax rates
2024
2023
Global operations - total consolidated tax expense
22%
18%
Australian operations - Australian company income tax expense
22%
20%
CASH MANAGEMENT
Consolidated
2024
2023
$000
$000
8. CASH AND CASH EQUIVALENTS
Cash on hand
266
96
Cash at bank
19,437
23,565
19,703
23,661
9. LOANS AND BORROWINGS
Non-Current
Cash advance
95,125
75,380
95,125
75,380
The group has access to the following lines of credit:
Total facilities available at balance date:
Multi-option facility
170,000
140,952
Commercial credit card
4,308
2,115
174,308
143,067
Facilities utilised at balance date:
Multi-option facility - cash advance
95,125
75,380
Multi-option facility - guarantees
2,539
2,271
Commercial credit card
880
570
98,544
78,221
Facilities not utilised at balance date:
Multi-option facility
72,336
63,301
Commercial credit card
3,428
1,545
75,764
64,846
In addition to these facilities, the group has cash at bank and short-term deposits of $19.703 million as set out in Note 8.
Bank Facilities
The multi-option facility has a number of components that are supported by interlocking guarantees between Codan Limited and its
subsidiaries and are subject to compliance with certain financial covenants.
The first multi-option facility is for $120 million and has a term of three years expiring in July 2026. The second facility is for $50 million
also expiring in July 2026. A third multi-option facility for $150 million may be available subject to financial institutions approval.
The total facility drawn down as at 30 June 2024 was $95.125 million.
Weighted average interest rates:
Cash at bank
1.43%
0.26%
Cash advance
6.06%
4.54%
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
for the year ended 30 June 2024
TAXATION (continued)
7.
INCOME TAX (continued)
CODAN LIMITED AND ITS CONTROLLED ENTITIES
CODAN LIMITED AND ITS CONTROLLED ENTITIES
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
REPORT OF OPERATIONS
ESG
LEADERSHIP
100 | CODAN | ANNUAL REPORT 2024
CODAN | ANNUAL REPORT 2024 | 101
Consolidated
2024
2023
$000
$000
10. NOTES TO THE STATEMENT OF CASH FLOWS
Reconciliation of profit after income tax to net cash provided by
operating activities
Profit after income tax
81,298
67,729
Add/(less) items classified as investing or financing activities:
Gain on sale of Tracking Solutions business
–
(895)
(Gain)/loss on sale of non-current assets
234
13
Add/(less) non-cash items:
Depreciation
13,238
11,514
Amortisation
19,848
17,353
Performance rights and employee share plan expensed
802
740
Increase/(decrease) in income taxes
2,335
4,019
Increase/(decrease) in net assets affected by foreign currency translation
(984)
73
Net cash from operating activities before changes in assets and liabilities
116,771
100,546
Change in assets and liabilities during the financial year:
Reduction/(increase) in receivables
(17,195)
(10,303)
Reduction/(increase) in inventories
15,971
(18,913)
Reduction/(increase) in other assets
(8,193)
1
Increase/(reduction) in trade and other payables
(127)
12,488
Increase/(reduction) in provisions
(777)
(3,942)
Net cash from operating activities
106,450
79,877
OPERATING ASSETS AND LIABILITIES
Consolidated
2024
2023
$000
$000
11. TRADE AND OTHER RECEIVABLES
Current
Trade receivables
91,620
71,978
Less: expected credit loss provision
(2,528)
(2,792)
Other debtors
4,791
1,833
93,883
71,019
12. INVENTORY
Raw materials
30,292
27,005
Work in progress
25,777
23,069
Finished goods
54,000
71,327
110,069
121,401
In FY24, inventories of $174.965 million (2023: $156.584 million) were recognised as
an expense and included in cost of sales.
Consolidated
2024
2023
$000
$000
13. OTHER ASSETS
Prepayments
10,931
10,153
Net foreign currency hedge receivable
472
–
Project work in progress
20,960
5,002
Other
1,423
2,696
33,786
17,851
14. PROPERTY, PLANT AND EQUIPMENT
Leasehold property at cost
23,926
21,068
Accumulated depreciation
(8,158)
(5,943)
15,768
15,125
Plant and equipment at cost
70,812
68,784
Accumulated depreciation
(50,585)
(47,932)
20,227
20,852
Capital work in progress at cost
4,224
1,730
Total property, plant and equipment
40,219
37,707
Reconciliations
Reconciliations of the carrying amounts for each class of property, plant and equipment
are set out below:
Leasehold property improvements
Carrying amount at beginning of year
15,125
610
Additions
2,770
15,115
Transfers
–
111
Disposals
(21)
(20)
Depreciation
(1,708)
(970)
Net foreign currency differences on translation of foreign entities
(398)
279
Carrying amount at end of year
15,768
15,125
Plant and equipment
Carrying amount at beginning of year
20,852
15,204
Acquisitions through entities acquired (net value)
225
16
Additions
4,463
7,832
Transfers
451
2,326
Disposals
(271)
(4)
Depreciation
(5,320)
(4,903)
Net foreign currency differences on translation of foreign entities
(173)
381
Carrying amount at end of year
20,227
20,852
Capital work in progress at cost
Carrying amount at beginning of year
1,730
3,918
Additions
2,889
720
Transfers
(451)
(2,802)
Net foreign currency differences on translation
56
(106)
Carrying amount at end of year
4,224
1,730
Total carrying amount at end of year
40,219
37,707
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
for the year ended 30 June 2024
CASH MANAGEMENT (continued)
OPERATING ASSETS AND LIABILITIES (continued)
CODAN LIMITED AND ITS CONTROLLED ENTITIES
CODAN LIMITED AND ITS CONTROLLED ENTITIES
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
REPORT OF OPERATIONS
ESG
LEADERSHIP
102 | CODAN | ANNUAL REPORT 2024
CODAN | ANNUAL REPORT 2024 | 103
Consolidated
2024
2023
$000
$000
15. PRODUCT DEVELOPMENT
Product development at cost
273,162
233,639
Accumulated amortisation and impairment losses
(143,737)
(125,465)
129,425
108,174
Reconciliation
Carrying amount at beginning of year
108,174
92,261
Acquisitions through entities acquired (net value)
1,029
231
Capitalised in current period
39,796
29,993
Amortisation
(18,540)
(15,692)
Net foreign currency differences on translation of foreign entities
(1,034)
1,381
129,425
108,174
16. INTANGIBLE ASSETS
Intellectual property at cost
22,019
22,065
Accumulated amortisation
(21,611)
(21,590)
408
475
Computer software at cost
16,114
16,994
Accumulated amortisation
(14,019)
(15,442)
2,095
1,552
Licences at cost
5,978
5,906
Accumulated amortisation
(5,478)
(5,262)
500
644
Brand names
8,232
7,848
Accumulated amortisation
(1,219)
(815)
7,013
7,033
Customer relationships
3,641
1,207
Accumulated amortisation
(921)
(513)
2,720
694
Goodwill
291,856
263,576
Total intangible assets
304,592
273,974
Reconciliations
Intellectual property
Carrying amount at beginning of year
475
806
Amortisation
(30)
(285)
Net foreign currency differences on translation of foreign entities
(37)
(46)
408
475
Computer software
Carrying amount at beginning of year
1,552
870
Additions
811
1,188
Transfers from capital work in progress
–
95
Amortisation
(268)
(605)
Net foreign currency differences on translation of foreign entities
–
4
2,095
1,552
Consolidated
2024
2023
$000
$000
Licences
Carrying amount at beginning of year
644
461
Additions
55
50
Transfers
–
270
Amortisation
(199)
(149)
Net foreign currency differences on translation of foreign entities
0
12
500
644
Brand names
Carrying amount at beginning of year
7,033
6,917
Acquisitions through entities acquired (net value)
378
216
Amortisation
(403)
(381)
Net foreign currency differences on translation of foreign entities
5
281
7,013
7,033
Customer Relationships
Carrying amount at beginning of year
694
900
Acquisitions through entities acquired (net value)
2,690
–
Amortisation
(408)
(241)
Net foreign currency differences on translation of foreign entities
(256)
35
2,720
694
Goodwill
Carrying amount at beginning of year
263,576
240,423
Acquisitions through entities acquired (net value)
31,810
15,391
Adjustment on prior year’s acquisitions
(2,860)
–
Net foreign currency differences on translation of foreign entities
(670)
7,762
291,856
263,576
The following divisions have significant carrying amounts of goodwill:
Tactical Communications*
133,716
123,307
Zetron**
104,063
86,192
Minelab
54,077
54,077
291,856
263,576
* Tactical Communications goodwill includes $10.202 million that relates to the Wave Central Acquisition (refer note 32).
** Zetron goodwill includes $21.608 million that relates to the Zetron Limited acquisition, and $12.531 million related to GeoConex (refer note 32).
Goodwill
The recoverable amount of cash generating units or groups of cash generating units has been determined using value-in-use
calculations. The approach to the value-in-use calculations for these units or groups of units is similar. The first year of the cash flow
forecasts is based on the oncoming year’s Board approved budgeted EBITDA, and cash flows are forecast for a five-year period.
The key assumption driving the value-in-use valuation is the level of sales, which is based on management assessment having regard to
the demand expected from customers, the global economy and the businesses’ competitive position. It was assumed that the revenue
would increase at a rate of 5% over the next four years. Other assumptions relate to the level of gross margins achieved on sales and the
level of expense required to run the business, these assumptions reflect past experience. A terminal value has been determined at the
conclusion of five years assuming a long-term growth rate of 3%. A pre-tax discount rate range of 12% to 15%, dependent on the size of
the cash generating unit (FY23: 12%), has been applied to the forecast cash flows. Management’s sensitivity analysis indicates that there
is not a reasonable possibility that changes in the assumptions used would result in an impairment in the cash-generating units.
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
for the year ended 30 June 2024
OPERATING ASSETS AND LIABILITIES (continued)
OPERATING ASSETS AND LIABILITIES (continued)
16. INTANGIBLE ASSETS (continued)
CODAN LIMITED AND ITS CONTROLLED ENTITIES
CODAN LIMITED AND ITS CONTROLLED ENTITIES
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
REPORT OF OPERATIONS
ESG
LEADERSHIP
104 | CODAN | ANNUAL REPORT 2024
CODAN | ANNUAL REPORT 2024 | 105
Consolidated
2024
2023
$000
$000
17. TRADE AND OTHER PAYABLES
Current
Trade payables
49,559
46,913
Other payables and accruals
47,188
35,607
Contract liabilities*
29,681
26,156
Net foreign currency hedge payable
–
2,151
126,428
110,827
Non-Current
Contract liabilities*
6,310
5,845
Other payables and accruals
12,886
11,132
19,196
16,977
*The revenue recognised in the current financial year that was included in the contract liability balance at the beginning
of the financial year is $26.156 million.
Non-current Other payables and accruals as at 30 June 2024 includes contingent
consideration, refer note 32 for more details.
18. PROVISIONS
Current
Employee benefits
10,319
10,086
Warranty repairs
3,344
3,990
Other
–
31
13,663
14,107
Reconciliation of warranty provision
Carrying amount at beginning of year
3,990
3,914
Provisions made
2,154
2,878
Payments made
(2,800)
(2,802)
3,344
3,990
Non-Current
Employee benefits
1,280
1,369
Other
3,295
3,539
4,575
4,908
CAPITAL MANAGEMENT
Consolidated
2024
2023
$000
$000
19. SHARE CAPITAL
Share capital
Opening balance (181,168,094 ordinary shares fully paid)
49,196
47,059
Issue of share capital through vested performance rights
1,123
2,137
Closing balance (181,316,113 ordinary shares fully paid)
50,319
49,196
Terms and conditions
Holders of ordinary shares are entitled to receive dividends as declared from time to
time and are entitled to one vote per share at shareholders’ meetings. In the winding up
of the company, ordinary shareholders rank after all creditors and are fully entitled to
any proceeds on liquidation.
20. RESERVES
Foreign currency translation reserve
32,012
38,458
Hedging reserve
332
(874)
Equity based payment reserve
1,538
1,859
Profit reserve
58,981
58,981
92,863
98,424
Foreign currency translation
The foreign currency translation reserve records the foreign currency differences
arising from the translation of foreign operations.
Balance at beginning of year
38,458
26,486
Net translation adjustment
(6,446)
11,972
Balance at end of year
32,012
38,458
Hedging reserve
The hedging reserve comprises the effective portion of the cumulative net
change in fair value of cash flow hedging instruments (net of tax) related
to hedged transactions that have not yet occurred.
Balance at beginning of year
(874)
(2,292)
Movement of hedging reserve
1,206
1,418
Balance at end of year
332
(874)
Equity based payment reserve
The equity based payment reserve comprises Codan Limited’s accumulated expenses
in relation to unvested performance rights.
Balance at beginning of year
1,859
3,256
Performance rights expensed
802
740
Performance rights vested
(1,123)
(2,137)
Balance at end of year
1,538
1,859
Profit reserve
The profit reserve comprises a portion of Codan Limited’s accumulated profits.
Balance at beginning of year
58,981
58,981
Balance at end of year
58,981
58,981
21. CAPITAL MANAGEMENT
The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future
development of the business. The Board of directors monitors the level of dividends paid to ordinary shareholders and the overall
return on capital.
The Board seeks to maintain a balance between the higher returns that might be possible with higher levels of borrowings,
and the advantages and security afforded by a sound capital position. This approach has not changed from previous years.
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
for the year ended 30 June 2024
OPERATING ASSETS AND LIABILITIES (continued)
CODAN LIMITED AND ITS CONTROLLED ENTITIES
CODAN LIMITED AND ITS CONTROLLED ENTITIES
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
REPORT OF OPERATIONS
ESG
LEADERSHIP
106 | CODAN | ANNUAL REPORT 2024
CODAN | ANNUAL REPORT 2024 | 107
22. GROUP ENTITIES
Interest held
Name
Country of
incorporation
Class of share
2024 %
2023 %
Parent Entity
Codan Limited
Australia
Ordinary
Controlled Entities
Broadcast Wireless Systems Limited
UK
Ordinary
100
100
Codan Defence Electronics Pty Ltd
Australia
Ordinary
100
100
Codan Executive Share Plan Pty Ltd
Australia
Ordinary
100
100
Codan Radio Communications ME DMCC
UAE
Ordinary
100
100
Codan Radio Communications Pty Ltd
Australia
Ordinary
100
100
Codan (UK) Limited
UK
Ordinary
100
100
Codan (US), Inc
USA
Ordinary
100
100
Corp Ten International, Inc.
USA
Ordinary
100
100
Daniels Electronics Ltd
Canada
Ordinary
100
100
Domo Broadcast Holdings LLC1
USA
Ordinary
100
–
Domo Tactical Communications (DTC) Limited
UK
Ordinary
100
100
Domo Tactical Communications (DTC) PTE limited
Singapore
Ordinary
100
100
DTC Communications, Inc
USA
Ordinary
100
100
DTC Group Holdings, LLC
USA
Ordinary
100
100
DTC International Holdings Ltd
UK
Ordinary
100
100
DTC North America Holdings, LLC
USA
Ordinary
100
100
GeoConex, LLC
USA
Ordinary
100
100
Just Detect Limited2
UK
Ordinary
–
100
MEP Surveillance Midco, Inc
USA
Ordinary
100
100
Minelab Americas, Inc
USA
Ordinary
100
100
Minelab de Mexico SA de CV
Mexico
Ordinary
100
100
Minelab do Brasil Equipamentos Para Mineração Ltda
Brazil
Ordinary
100
100
Minelab Electronics Pty Limited
Australia
Ordinary
100
100
Minelab India Private Limited
India
Ordinary
100
100
Minelab International Limited
Ireland
Ordinary
100
100
Minelab MEA FZE3
UAE
Ordinary
100
–
Minelab MEA General Trading LLC
UAE
Ordinary
49
49
Spectronic Denmark A/S
Denmark
Ordinary
100
100
Wave Central LLC4
USA
Ordinary
100
–
Zetron Air Systems Pty Ltd
Australia
Ordinary
100
100
Zetron Australasia Pty Ltd
Australia
Ordinary
100
100
Zetron Eagle Limited
UK
Ordinary
100
100
Zetron, Inc.
USA
Ordinary
100
100
Zetron Limited5
UK
Ordinary
100
–
1 Domo Broadcast Holdings LLC was established on 22 November 2023.
2 Just Detect Limited was deregistered by the group on 14 November 2023.
3 Minelab MEA FZE was established on 22 December 2023.
4 Wave Central LLC was acquired by the group on 1 December 2023. Refer to Note 32 for details.
5 Eagle NewCo Limited was acquired by the group on 2 August 2023. On 15 August 2023, Eagle NewCo Limited was renamed as Zetron Limited. Refer to Note 32 for details.
23. DEED OF CROSS GUARANTEE
Pursuant to ASIC Corporations (Wholly owned Companies) Instrument 2016/785, the wholly‑owned subsidiary listed below is relieved
from the Corporations Act 2001 requirements for preparation, audit and lodgement of financial and directors’ reports.
It is a condition of the Class Order that the company and its subsidiary enter into a Deed of Cross Guarantee. The effect of the Deed is
that the company guarantees to each creditor payment in full of any debt in the event of the winding up of the subsidiary under certain
provisions of the Corporations Act 2001. If a winding up occurs under the provisions of the Act, the company will only be liable in the
event that after six months any creditor has not been paid in full. The subsidiary has also given similar guarantees in the event that the
company is wound up.
Minelab Electronics Pty Limited is the only subsidiary subject to the Deed. Minelab Electronics Pty Limited became a party to the Deed
on 22 June 2009, by virtue of a Deed of Assumption. A summarised consolidated income statement and a consolidated balance sheet,
comprising the company and controlled entity which is a party to the Deed, after eliminating all transactions between the parties to
the Deed of Cross Guarantee, is set out as follows:
Consolidated
2024
2023
$000
$000
Summarised income statement and retained earnings
Revenue
116,229
129,993
Net finance costs
(7,662)
(9,830)
Other expenses
(60,104)
(81,080)
Profit before tax
48,463
39,083
Income tax expense
(11,921)
(7,747)
Profit after tax
36,542
31,336
Retained earnings at beginning of year
174,164
186,308
Retained earnings at end of year
174,443
174,164
Balance sheet
CURRENT ASSETS
Cash and cash equivalents
5,060
5,198
Trade and other receivables
81,069
58,858
Inventories
56,811
70,557
Other assets
2,056
3,160
Total current assets
144,996
137,773
NON-CURRENT ASSETS
Investments
202,387
202,387
Right-of-use assets
14,489
16,747
Property, plant and equipment
14,142
13,503
Product development
63,008
57,701
Intangible assets
54,452
54,796
Other assets
1,200
600
Total non-current assets
349,678
345,734
Total assets
494,674
483,507
CURRENT LIABILITIES
Trade and other payables
67,691
77,794
Current tax payable
2,469
–
Lease Liability
2,936
2,936
Provisions
8,586
8,804
Total current liabilities
81,682
89,534
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
for the year ended 30 June 2024
GROUP STRUCTURE
CODAN LIMITED AND ITS CONTROLLED ENTITIES
CODAN LIMITED AND ITS CONTROLLED ENTITIES
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
REPORT OF OPERATIONS
ESG
LEADERSHIP
108 | CODAN | ANNUAL REPORT 2024
CODAN | ANNUAL REPORT 2024 | 109
Consolidated
2024
2023
$000
$000
NON-CURRENT LIABILITIES
Loans and borrowings
95,125
75,380
Lease Liability
16,291
18,762
Deferred tax liabilities
12,599
8,969
Provisions
706
854
Total non-current liabilities
124,721
103,965
Total liabilities
206,403
193,499
Net assets
288,271
290,008
EQUITY
Share capital
50,319
49,196
Reserves
63,509
66,648
Retained earnings
174,443
174,164
Total equity
288,271
290,008
24. PARENT ENTITY DISCLOSURES
As at, and throughout, the financial year ending 30 June 2024, the parent company of the group was Codan Limited.
Company
2024
2023
$000
$000
Result of parent entity
Profit after tax for the period
31,622
35,160
Other comprehensive income/(loss)
1,022
3,434
Total comprehensive income for the period
32,644
38,594
Financial position of parent entity at year end
Current assets
155,363
150,144
Total assets
466,866
462,379
Current liabilities
67,806
78,691
Total liabilities
186,954
179,650
Total equity of the parent entity comprising:
Share capital
50,319
49,196
Reserves
62,761
62,060
Retained earnings
166,832
171,473
Total equity
279,912
282,729
As at 30 June 2024, Codan Limited entered into contracts to purchase plant and equipment for $0.385 million (2023: $0.467 million).
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
for the year ended 30 June 2024
GROUP STRUCTURE (continued)
OTHER NOTES
Consolidated
2024
2023
$
$
25. AUDITOR’S REMUNERATION
Audit services:
KPMG - audit and review of financial reports - Group
351,556
309,983
Other firms - audit and review of financial reports
402,037
285,925
Other Services
KPMG - taxation advice and compliance services
22,639
19,506
Other firms - taxation advice and compliance services
107,886
107,149
Other firms - other services
13,439
26,898
897,557
749,461
26. ADDITIONAL FINANCIAL INSTRUMENTS DISCLOSURE
Financial risk management
Overview
The group has exposure to the following risks from its use of
financial instruments:
• credit risk
• liquidity risk
• market risk
• operational risk.
This note presents information about the group’s exposure to
each of the above risks, its objectives, policies and processes for
measuring and managing risk, and its management of capital.
Further quantitative disclosures are included throughout these
consolidated financial statements.
The Board of directors has overall responsibility for the
establishment and oversight of the risk management framework.
The Audit and Risk Committee is responsible for developing and
monitoring risk management policies. The committee reports
regularly to the Board on its activities.
Risk management policies are established to identify and
analyse the risks faced by the group, to set appropriate risk limits
and controls, and to monitor risk and adherence to limits. Risk
management policies and systems are reviewed regularly to
reflect changes in market conditions and the group’s activities.
The group, through its training and management standards
and procedures, aims to develop a disciplined and constructive
control environment in which all employees understand their
roles and obligations. The Audit and Risk Committee oversees
how management monitors compliance with the group’s risk
management policies and procedures, and reviews the adequacy
of the risk framework in relation to the risks faced by the group.
(a) Credit risk
Credit risk is the risk of financial loss to the group if a customer or
counterparty to a financial instrument fails to meet its contractual
obligations, and arises principally from the group’s receivables
from customers and bank accounts.
The credit risk on the financial assets of the consolidated entity
is the carrying amount of the asset, net of any impairment losses
recognised. The group minimises concentration of credit risk by
undertaking transactions with a large number of customers in
various countries.
As at 30 June 2024, the customer with the group’s highest trade
and other receivable balance accounted for $4.1 million
(2023: $3.8 million).
Trade and other receivables
The group’s exposure to credit risk is influenced mainly by the
individual characteristics of each customer. The demographics
of the group’s customer base, including the default risk of the
industry and country in which customers operate, have less of an
influence on credit risk.
The group has established a credit policy under which new
customers are analysed for credit worthiness before the group’s
payment and delivery terms and conditions are offered.
Goods are sold subject to retention of title clauses, so that in
the event of non-payment the group may have a secured claim.
The group does not normally require collateral in respect of trade
and other receivables.
The group has established an allowance for expected credit
losses (ECL) based on the lifetime ECL approach that represents
its estimate of losses in respect of trade and other receivables.
The main components of this allowance are a specific loss
component that relates to individually significant exposures and
a collective loss component established for groups of similar
assets. In determining the lifetime ECL, management uses both
historical credit loss experience and forecasts of future economic
conditions for trade receivables. The need to consider forward-
looking information means that the group exercises judgement as
to how changes in macroeconomic factors will affect the ECL on
trade receivables.
Guarantees
Group policy is to provide financial guarantees only to wholly
owned subsidiaries.
CODAN LIMITED AND ITS CONTROLLED ENTITIES
CODAN LIMITED AND ITS CONTROLLED ENTITIES
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
REPORT OF OPERATIONS
ESG
LEADERSHIP
110 | CODAN | ANNUAL REPORT 2024
CODAN | ANNUAL REPORT 2024 | 111
(b) Liquidity risk
Liquidity risk is the risk that the group will not be able to meet its financial obligations as they fall due. The group’s approach to
managing liquidity is to ensure that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed
conditions and without incurring unacceptable losses or risking damage to the group’s reputation. Refer to note 9 for a summary of
banking facilities available.
The following are the contractual maturities of financial liabilities:
Carrying
Contractual
12 months
1-5 years
More than
amount
cash flows
or less
5 years
$000
$000
$000
$000
$000
30 June 2024
Non-derivative financial
liabilities
Trade and other payables
109,633
(109,633)
(96,747)
(12,886)
–
Lease liabilities
45,921
(52,019)
(6,689)
(28,666)
(16,664)
Cash advance
95,125
(106,660)
(5,767)
(100,892)
–
250,679
(268,312)
(109,203)
(142,444)
(16,664)
Derivative financial liabilities
Net foreign currency hedge
payables
–
–
–
–
–
–
–
–
–
–
30 June 2023
Non-derivative financial
liabilities
Trade and other payables
93,652
(93,652)
(82,520)
(11,132)
–
Lease liabilities
50,011
(61,902)
(5,988)
(32,813)
(23,101)
Cash advance
75,380
(78,802)
(3,422)
(75,380)
–
219,043
(234,356)
(91,930)
(119,325)
(23,101)
Derivative financial liabilities
Net foreign currency hedge
payables
2,151
(2,151)
(2,151)
–
–
2,151
(2,151)
(2,151)
–
–
(c) Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices, will affect the
group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and
control market risk exposures within acceptable parameters, while optimising the return.
The group enters into derivatives, and also incurs financial liabilities, in order to manage market risks. All such transactions are carried
out within the policy set by the Board. Generally, the group seeks to apply hedge accounting in order to manage volatility in the
income statement.
The net fair values of monetary financial assets and financial liabilities not readily traded in an organised financial market are determined
by valuing them at the present value of the contractual future cash flows on amounts due from customers (reduced for expected credit
losses), or due to suppliers. The carrying amount of financial assets and financial liabilities approximates their net fair values.
The carrying amount of the group’s financial assets represents the maximum credit exposure. The group’s maximum exposure to credit
risk at the reporting date was:
Consolidated
2024
2023
Note
$000
$000
Cash and cash equivalents
8
19,703
23,661
Trade and other receivables
11
93,883
71,019
The group’s gross trade receivables at the reporting date by geographic region was:
Australia/Oceania
4,877
4,583
Europe
22,556
12,590
Americas
49,519
44,653
Asia
10,193
4,732
Africa/Middle East
4,475
5,420
91,620
71,978
Impairment losses
The aging of the group’s trade receivables at the reporting date was:
Consolidated
Gross
Impairment
Gross
Impairment
2024
2024
2023
2023
$000
$000
$000
$000
Not past due
64,163
(870)
53,783
(1,061)
Past due 0-30 days
10,244
(17)
6,934
(48)
Past due 31-60 days
4,339
(7)
4,018
(28)
Past due 61-120 days
8,620
(14)
3,773
(26)
More than 120 days
4,254
(1,620)
3,470
(1,629)
91,620
(2,528)
71,978
(2,792)
Trade receivables have been reviewed, taking into consideration letters of credit held and the credit assessment of the individual
customers. The impairment recognised is considered appropriate for the credit risk remaining.
The movement in the allowance for impairment in respect of trade receivables during the year was as follows:
Consolidated
2024
2023
$000
$000
Balance at 1 July
2,792
2,950
Acquisition through entities acquired
–
235
Impairment loss/(reversal) recognised
(264)
(384)
Trade receivables written off to the allowance for impairment
–
(9)
Balance at 30 June
2,528
2,792
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
for the year ended 30 June 2024
OTHER NOTES (continued)
CODAN LIMITED AND ITS CONTROLLED ENTITIES
CODAN LIMITED AND ITS CONTROLLED ENTITIES
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
REPORT OF OPERATIONS
ESG
LEADERSHIP
112 | CODAN | ANNUAL REPORT 2024
CODAN | ANNUAL REPORT 2024 | 113
The group’s exposure to foreign currency risk (in AUD equivalent), after taking into account hedge transactions at reporting date,
was as follows:
Consolidated
EUR
USD
$000
$000
30 June 2024
Cash and cash equivalents
991
4,883
Trade receivables
7,284
18,496
Trade payables
(39)
(19,549)
Gross balance sheet exposure
8,236
3,830
Hedge transactions relating to balance sheet exposure
–
(3,019)
Net exposure at the reporting date
8,236
811
30 June 2023
Cash and cash equivalents
1,427
7,350
Trade receivables
4,529
20,588
Trade payables
(204)
(21,730)
Gross balance sheet exposure
5,752
6,208
Hedge transactions relating to balance sheet exposure
–
(3,017)
Net exposure at the reporting date
5,752
3,191
Sensitivity analysis
Given the foreign currency balances included in the balance sheet as at reporting date, if the Australian dollar at that date strengthened
by 10%, then the impact on profit and equity arising from the balance sheet exposure would be as follows:
Consolidated
Reserve
Profit/(loss)
credit/(debit)
before tax
$000
$000
2024
EUR
–
(749)
USD
(43)
(74)
(43)
(823)
2023
EUR
–
(523)
USD
196
(290)
196
(813)
A 10% weakening of the Australian dollar against the above currencies at 30 June would have had the equal but opposite effect on the
above currencies to the amounts shown above, on the basis that all other variables remain constant.
(d) Fair value hierarchy
The group’s financial instruments carried at fair value have been valued by using a “level 2” valuation method. Level 2 valuations are
obtained from inputs, other than quoted prices, that are observable for the asset or liability either directly or indirectly. At the end of the
current year, financial instruments valued at fair value were limited to net foreign currency hedge receivable of $0.472 million, for which
an independent valuation was obtained from the relevant banking institution.
Interest rate risk
Profile
At the reporting date, the interest rate profile of the group’s interest-bearing financial instruments was:
Consolidated
2024
2023
$000
$000
Fixed rate instruments
Financial assets
–
–
Financial liabilities
–
–
–
–
Variable rate instruments
Financial assets
19,703
23,661
Financial liabilities
(95,125)
(75,380)
(75,422)
(51,719)
Cash flow sensitivity
If interest rates varied by 100 basis points for the full financial year, then based on the balance of variable rate instruments held at the
reporting date, profit and equity would have been affected as shown below. This analysis assumes that all other variables, in particular
foreign currency rates, remain constant.
Profit/(loss) before tax
Reserve
100 bp
100 bp
100 bp
100 bp
increase
decrease
increase
decrease
$000
$000
$000
$000
30 June 2024
Variable rate instruments
(754)
754
–
–
30 June 2023
Variable rate instruments
(517)
517
–
–
Currency risk
The group is exposed to currency risk on sales, purchases and balance sheet accounts that are denominated in a currency other than
the respective functional currencies of group entities, primarily the Australian dollar (AUD). The currencies in which these transactions
are denominated are primarily USD and EUR.
The group enters into foreign currency hedging instruments or borrowings denominated in a foreign currency to hedge certain
anticipated highly probable sales denominated in foreign currency (principally in USD). The terms of these commitments are usually
less than 12 months. As at the reporting date, the group has entered into a number of forward exchange contracts which will limit the
foreign exchange risk on USD $18 million of FY25 cash flows. The average forward exchange contract rate is 1AUD:0.65USD.
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
for the year ended 30 June 2024
OTHER NOTES (continued)
CODAN LIMITED AND ITS CONTROLLED ENTITIES
CODAN LIMITED AND ITS CONTROLLED ENTITIES
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
REPORT OF OPERATIONS
ESG
LEADERSHIP
114 | CODAN | ANNUAL REPORT 2024
CODAN | ANNUAL REPORT 2024 | 115
Performance rights issued in financial year 2024
The company issued 99,809 performance rights in November 2023 to the Chief Executive Officer. For the EPS growth performance
hurdle, the fair value of the rights was on average $6.74, based on the Black-Scholes formula. The model inputs were the share price
of $8.13, no exercise price, expected volatility 49.5%, dividend yield 2.28%, a term of three years and a risk-free rate of 4.63%.
For the RTSR performance hurdle, the fair value of the rights was on average $4.88, based on the Monte Carlo simulation method.
The model inputs were the share price of $8.13, expected volatility 49.5%, dividend yield 2.28%, a risk-free rate of 4.63%, performance
period of 3 years ending 30 June 2026, volatility for each peer, historical returns for each peer and vesting schedule applicable to the
Chief Executive Officer.
The company issued 270,876 performance rights in February 2024 to certain employees. For the EPS Growth Performance Hurdle,
the fair value of the rights was on average $7.07, based on the Black-Scholes Formula. The model inputs were the share price of $7.95,
no exercise price, expected volatility 48.1%, dividend yield 2.33%, a term of three years and a risk-free rate of 4.15%. For the RTSR
performance hurdle, the fair value of the rights was on average $4.43, based on the Monte Carlo simulation method. The model inputs
were the share price of $7.95, expected volatility 48.1%, dividend yield 2.33%, a risk-free rate of 4.15%, performance period of 3 years
ending 30 June 2026, volatility for each peer, historical returns for each peer and vesting schedule applicable to other employees.
The performance rights become exercisable if certain performance thresholds such as growth of the group’s earnings per share
over a three-year period are achieved.
No performance rights have been issued since the end of the financial year.
28. KEY MANAGEMENT PERSONNEL DISCLOSURES
Transactions with key management personnel
(a) Loans to directors
There have been no loans to directors during the financial year.
(b) Key management personnel compensation
The key management personnel compensation included in “personnel expenses” (refer to note 3) is as follows:
Consolidated
2024
2023
$
$
Short-term employee benefits
5,478,558
3,204,970
Post-employment benefits
166,566
164,475
Share-based payments
800,895
678,048
Other long term benefits
51,852
80,723
6,497,871
4,128,216
(c) Key management personnel transactions
From time to time, directors and specified executives, or their related parties, purchase goods from the group. These purchases occur
within a normal employee relationship and are considered to be trivial in nature.
29. OTHER RELATED PARTIES
All transactions with non-key management personnel related parties are on normal terms and conditions.
Companies within the group purchase materials from other group companies. These transactions are on normal commercial terms.
Loans between entities in the wholly owned group are repayable at call and no interest is charged.
30. NET TANGIBLE ASSET PER SHARE
2024
2023
Net tangible asset per share
11.7 cents
17.4 cents
Net tangible asset per share (excluding right of use assets)
(7.3) cents
(3.9) cents
27. EMPLOYEE BENEFITS
Consolidated
2024
2023
$000
$000
Aggregate liability for employee benefits, including on-costs:
Current - short-term incentives and other accruals
11,979
7,765
Current - employee entitlements
10,319
10,086
Non-current - employee entitlements
1,280
1,369
23,578
19,220
The present values of employee entitlements not expected to be settled within 12 months of the reporting date have been calculated
using the following weighted averages:
Assumed rate of increase in wage and salary rates
3.00%
3.00%
Discount rate
5.47%
5.56%
Settlement term
10 years
10 years
Performance Rights Plan
At the 2004 AGM, shareholders approved the establishment of a Performance Rights Plan (Plan). The Plan is designed to provide
employees with an incentive to maximise the return to shareholders over the long term, and to assist in the attraction and retention of
key employees.
Performance rights issued in financial year 2022
The company issued 80,011 performance rights in November 2021 to certain employees. The fair value of the rights was on average
$8.20 based on the Black-Scholes formula. The model inputs were: the share price of $9.11, no exercise price, expected volatility 45%,
dividend yield 3.0%, a term of three years and a risk-free rate of 1.6%. Due to the departure of employees, 10,447 performance rights
have been cancelled. The total expense recognised as employee costs in FY24 in relation to performance rights issued was 0.135 million.
The performance rights become exercisable if certain performance thresholds such as growth of the group’s earnings per share over
a three-year period are achieved. The actual performance to 30 June have exceeded the performance target. Therefore, it is expected
that 69,564 shares will be issued to the relevant employees in FY25.
Performance rights issued in financial year 2023
The company issued 40,714 performance rights in relation to the FY23 long term incentive plan and 16,305 performance rights in
relation to the FY22 plan in November 2022 to the Chief Executive Officer. The FY22 issue was a pro rata issue given the Chief Executive
Officer commenced employment part way through that year. The fair value of the rights was on average $3.24, based on the Black-
Scholes formula. The model inputs were the share price of $3.98, no exercise price, expected volatility 53%, dividend yield 7.04%, a term
of three years for the FY23 issue and a term of two years for the FY22 issue and a risk-free rate of 3.6%. The performance rights become
exercisable if certain performance thresholds such as growth of the group’s earnings per share over a three-year period are achieved.
The actual performance to 30 June have exceeded the performance target for the FY22 issue. Therefore, it is expected that 16,305
shares will be issued to the Chief Executive Officer in FY25.
The company issued 463,746 performance rights in February 2023 to certain employees. The fair value of the rights was on average
$4.57, based on the Black-Scholes Formula. The model inputs were: the share price of $5.48, no exercise price, expected volatility 53%,
dividend yield 5.11%, a term of two years and a risk-free rate of 3.6%. Due to the departure of employees, 14,564 performance rights have
been cancelled. The total expense recognised as employee costs in FY24 in relation to performance rights issued was $0.245 million.
The performance rights become exercisable if certain performance thresholds such as growth of the group’s earnings per share over a
three-year period are achieved.
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
for the year ended 30 June 2024
OTHER NOTES (continued)
CODAN LIMITED AND ITS CONTROLLED ENTITIES
CODAN LIMITED AND ITS CONTROLLED ENTITIES
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
REPORT OF OPERATIONS
ESG
LEADERSHIP
116 | CODAN | ANNUAL REPORT 2024
CODAN | ANNUAL REPORT 2024 | 117
32. ACQUISITIONS OF SUBSIDIARIES
On 2 August 2023, Codan acquired all of the shares in Zetron Limited (also referred to as Zetron UK), a UK command and control
solutions business for an upfront cost of $22.359 million inclusive of $2.451 million in cash that was held by the business. This acquisition
is consistent with Codan’s growth strategy to acquire technology and capability that accelerate growth, with this acquisition focused
on the public safety market segment. Zetron Limited will be integrated into Codan’s Zetron business and will significantly strengthen
Zetron’s presence in the UK public safety market and provides a platform to further expand business across Europe and the Middle East.
From the acquisition date, Zetron Limited has been consolidated within the group’s results and has been reported in the
Communications segment in Note 2. The following summary provides current estimates of the major classes of consideration
transferred, the estimated fair value of assets acquired and liabilities assumed and the estimated goodwill at the acquisition date.
$000
Estimated fair value of consideration transferred
Cash paid
22,359
Acquiree’s cash balance at acquisition date
(2,451)
19,908
Estimated fair value of identifiable assets acquired and liabilities assumed, on a provisional basis
Total assets
13,623
Total liabilities
(15,323)
(1,700)
Estimated goodwill as a result of the acquisition
Estimated fair value of consideration transferred
19,908
Estimated fair value of identifiable assets acquired and liabilities assumed, on a provisional basis
1,700
21,608
The identification and fair value measurement of the assets and liabilities acquired are provisional and amendments may be made
to these figures up to 12 months following the date of acquisition if new information is obtained about facts and circumstances that
existed at the acquisition date and, if known, would have affected the measurement of the amounts recognised as of that date.
The goodwill is mainly attributable to the synergies that will be realised by incorporating Zetron Limited into Codan’s Communications
business, its strong position in the UK public safety market and customer loyalty. The goodwill is not expected to be deductible for
tax purposes.
On 1 December 2023, Codan acquired all of the shares Wave Central LLC (Wave Central), a leading North American systems integrator
of wireless broadcast solutions for an upfront cost of $11.717 million inclusive of $0.870 million in cash that was held by the business.
If certain gross margin targets are achieved over the three-year period after completion, additional earn-out payments of up to $12.101
million will be required. An estimated portion of this potential earn-out (contingent consideration) of $8.784 million has been recognised
as Trade and other payables in the group’s Consolidated Balance Sheet as at 30 June 2024. The acquisition of Wave Central is consistent
with Codan’s growth strategy to acquire complementary businesses and to leverage our radio and wireless technology to build
scale in the markets we target. Tactical Communications has a dominant presence in wireless camera links in the European broadcast
market and this acquisition will allow the business to leverage Wave Central’s strong reputation and market leading system integration
capability, to drive growth in North America. The combined strengths of Domo Broadcast and Wave Central will increase opportunities
in news coverage for live events, college and professional sports, film production and unmanned applications in the growing global
remote broadcast market.
From the acquisition date, Wave Central has been consolidated within the group’s results and has been reported in the Communications
segment in Note 2. The following summary provides current estimates of the major classes of consideration transferred, the estimated
fair value of assets acquired and liabilities assumed and the estimated goodwill at the acquisition date.
31. LEASES AND COMMITMENTS
Consolidated
2024
2023
$000
$000
Reconciliations
Right-of-use assets at cost
54,418
52,503
Accumulated depreciation
(20,049)
(13,948)
34,369
38,555
Right-of-use assets
Carrying amount at beginning of year
38,555
25,067
Additions
2,344
18,595
Depreciation
(6,210)
(5,641)
Net foreign currency differences on translation of foreign entities
(320)
534
Carrying amount at end of year
34,369
38,555
Lease Liabilities
Carrying amount at beginning of year
50,011
30,243
Additions
2,189
24,687
Finance charge on lease liabilities
1,992
1,273
Lease payments
(7,905)
(6,628)
Net foreign currency differences on translation
(366)
436
45,921
50,011
of which are:
Current lease liabilities
6,689
5,988
Non-current lease liabilities
39,232
44,023
Capital expenditure commitments
Aggregate amount of contracts for capital expenditure
Within one year
1,184
542
One year or later and no later than five years
–
–
1,184
542
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
for the year ended 30 June 2024
OTHER NOTES (continued)
CODAN LIMITED AND ITS CONTROLLED ENTITIES
CODAN LIMITED AND ITS CONTROLLED ENTITIES
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
REPORT OF OPERATIONS
ESG
LEADERSHIP
118 | CODAN | ANNUAL REPORT 2024
CODAN | ANNUAL REPORT 2024 | 119
1.
In the opinion of the directors of Codan Limited (“the Company”):
a) the consolidated financial statements and notes that are set out on pages 82–120 and the remuneration report
on pages 63–76 in the directors’ report, are in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the group’s financial position as at 30 June 2024 and of its performance for
the financial year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and
b) the consolidated entity disclosure statement as at 30 June 2024 set out on page 87 is true and correct; and
c) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due
and payable.
2. There are reasonable grounds to believe that the Company and the group entities identified in note 22 will be able to meet
any obligations or liabilities to which they are or may become subject to by virtue of the Deed of Cross Guarantee between
the Company and those group entities pursuant to ASIC Corporations (Wholly owned Companies) Instrument 2016/785.
3. The directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the Chief
Executive Officer and Chief Financial Officer for the financial year ended 30 June 2024.
4. The directors draw attention to note 1 of the consolidated financial statements, which includes a statement of compliance
with International Financial Reporting Standards.
Signed in accordance with a resolution of the directors:
Dated at Mawson Lakes this 21st day of August 2024.
G R C Barclay
A Ianniello
Director
Director
$000
Estimated fair value of consideration transferred
Cash paid
11,717
Contingent consideration
8,784
Acquiree’s cash balance at acquisition date
(870)
19,631
Estimated fair value of identifiable assets acquired and liabilities assumed, on a provisional basis
Total assets
12,265
Total liabilities
(2,836)
9,429
Estimated goodwill as a result of the acquisition
Estimated fair value of consideration transferred
19,631
Estimated fair value of identifiable assets acquired and liabilities assumed, on a provisional basis
(9,429)
10,202
The identification and fair value measurement of the assets and liabilities acquired are provisional and amendments may be made
to these figures up to 12 months following the date of acquisition if new information is obtained about facts and circumstances that
existed at the acquisition date and, if known, would have affected the measurement of the amounts recognised as of that date.
The goodwill is mainly attributable to the contingent consideration that will be paid as synergies are realised by incorporating
Wave Central into Tactical Communication’s business. The goodwill is expected to be deductible for tax purposes.
The company acquired all of the shares in US-based company, GeoConex, LLC (GeoConex) on 16 February 2023 and initially recognised
the acquired assets and liabilities of GeoConex at their provisional fair values as disclosed in the FY23 annual report. Subsequently the
company conducted detailed valuations of the assets and liabilities acquired as at the acquisition date which resulted in the following
adjustments:
Provisional fair value
recognised
Fair value
adjustment
Final
fair value
$000
$000
$000
Estimated fair value of consideration transferred
Cash paid
6,588
77
6,665
Holdback amount and future instalments
2,407
–
2,407
Contingent consideration
9,979
(3,838)
6,141
Acquiree’s cash balance at acquisition date
(94)
–
(94)
18,880
(3,761)
15,119
Estimated fair value of identifiable assets acquired and
liabilities assumed, on a provisional basis
Total assets
7,042
(901)
6,141
Total liabilities
(3,553)
–
(3,553)
3,489
(901)
2,588
Estimated goodwill as a result of the acquisition
Estimated fair value of consideration transferred
18,880
(3,761)
15,119
Estimated fair value of identifiable assets acquired and
liabilities assumed, on a provisional basis
(3,489)
901
(2,588)
15,391
(2,860)
12,531
33. SUBSEQUENT EVENTS
A final dividend was declared after the end of the financial year as disclosed in note 5.
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
for the year ended 30 June 2024
OTHER NOTES (continued)
32. ACQUISITIONS OF SUBSIDIARIES (continued)
DIRECTORS’ DECLARATION
This is the original version pf the Directors Declaration signed by the Directors on 21 August 2024. Page references should be read as follows to correct references now
that the financial statements have been presented in the context of the Annual Report in its entirety: 1a) the consolidated financial statements and notes are set out on
pages 82 to 120 as opposed to 32 to 70 outlined above and the Remuneration Report is set out on pages 63 to 76 as opposed to 5 to 23 outlined above.
1b) the consolidated entity disclosure statement as at 30 June 2024 is set out on page 87 as opposed to 37 outlined above.
CODAN LIMITED AND ITS CONTROLLED ENTITIES
CODAN LIMITED AND ITS CONTROLLED ENTITIES
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
REPORT OF OPERATIONS
ESG
LEADERSHIP
120 | CODAN | ANNUAL REPORT 2024
CODAN | ANNUAL REPORT 2024 | 121
Goodwill – Impairment Assessment ($291.9 million)
Refer to Note 16 to the Financial Report
The key audit matter
How the matter was addressed in our audit
A key audit matter for us was the Group’s
annual testing of goodwill for impairment,
given the size of the balance (being 38%
of total assets).
We focussed on the significant forward-
looking assumptions the Group applied in
the value in use models, including:
•
Forecast operating cashflows, growth
rates and terminal growth rates – the
Group’s models are sensitive to
changes in these assumptions,
reducing available headroom. This
drives additional audit effort specific
to their feasibility and consistency of
application to the strategy of the
business.
•
Discount rate – these are
complicated in nature and vary
according to the conditions and
environment the specific Cash
Generating Unit (CGU) is subject to
from time to time. The Group’s
modelling is sensitive to changes in
the discount rate.
The Group uses complex models to
perform their annual testing of goodwill
for impairment. The models are largely
manually developed, use adjusted
historical performance, and a range of
internal and external sources as inputs to
the assumptions. Complex modelling,
using forward-looking assumptions tend
to be prone to greater risk for potential
bias, error and inconsistent application.
These conditions necessitate additional
scrutiny by us, in particular to address the
objectivity of sources used for
assumptions, and their consistent
application.
We involved valuation specialists to
supplement our senior audit team
members in assessing this key audit
matter
Our procedures included:
•
We considered the Group’s determination of their CGUs based
on our understanding of the operations of the Group’s business,
the impact of acquisitions during the year, and, how
independent cash inflows were generated, against the
requirements of the accounting standards.
•
We considered the appropriateness of the value in use method
applied by the Group to perform the annual test of goodwill for
impairment against the requirements of the accounting
standards.
•
We assessed the integrity of the value in use models used,
including the accuracy of the underlying calculation formulas.
•
We compared the forecast cash flows contained in the value in
use models to Board approved forecasts.
•
We assessed the accuracy of previous Group performance
forecasts to inform our evaluation of forecasts incorporated in
the models.
•
We assessed the Group’s underlying methodology and
documentation for the allocation of corporate costs to the
forecast cash flows contained in the value in use model, for
consistency with our understanding of the business and the
criteria in the accounting standards.
•
We assessed the Group’s allocation of corporate assets to
CGUs for reasonableness and consistency based on the
requirements of the accounting standards.
•
We checked the consistency of the growth rates to the Group’s
stated plan and strategy, past performance of the Group, and
our experience regarding the feasibility of these in the industry
and economic environment in which they operate.
•
Working with our valuation specialists we independently
developed a discount rate range considered comparable using
publicly available market data for comparable entities, adjusted
by risk factors.
•
We assessed the Group’s composition of the assets and
liabilities in the CGUs’ carrying value for consistency with the
assumptions used in the forecast cash flows and the
requirements of the accounting standards.
•
We considered the sensitivity of the models by varying key
assumptions, such as forecast growth rates and discount rates,
within a reasonably possible range. We did this to assess the
models did not have a higher risk of impairment, to identify
those assumptions at higher risk of bias or inconsistency in
application and to focus our further procedures.
•
We assessed the disclosures in the financial report using our
understanding obtained from our testing and against the
requirements of the accounting standards.
INDEPENDENT AUDITOR’S REPORT
KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated
with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and
logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited
by a scheme approved under Professional Standards Legislation.
Independent Auditor’s Report
To the shareholders of Codan Limited
Report on the audit of the Financial Report
Opinion
We have audited the Financial Report of
Codan Limited (the Company).
In our opinion, the accompanying Financial
Report of the Company gives a true and fair
view, including of the Group’s financial position
as at 30 June 2024 and of its financial
performance for the year then ended, in
accordance with the Corporations Act 2001, in
compliance with Australian Accounting
Standards and the Corporations Regulations
2001.
The Financial Report comprises:
•
Consolidated balance sheet as at 30 June 2024;
•
Consolidated income statement, consolidated
statement of comprehensive income, consolidated
statement of changes in equity, and consolidated
statement of cash flows for the year then ended;
•
Consolidated entity disclosure statement and
accompanying basis of preparation as at 30 June
2024;
•
Notes, including material accounting policies; and
•
Directors’ Declaration.
The Group consists of the Company and the entities it
controlled at the year-end or from time to time during
the financial year.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Our responsibilities under those standards are further described in the Auditor’s responsibilities for the
audit of the Financial Report section of our report.
We are independent of the Group in accordance with the Corporations Act 2001 and the ethical
requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of
the Financial Report in Australia. We have fulfilled our other ethical responsibilities in accordance with
these requirements.
Key Audit Matters
The Key Audit Matters we identified are:
•
Goodwill – Impairment Assessment
•
Revenue recognised over time –
Communications
Key Audit Matters are those matters that, in our
professional judgement, were of most significance in our
audit of the Financial Report of the current period.
These matters were addressed in the context of our
audit of the Financial Report as a whole, and in forming
our opinion thereon, and we do not provide a separate
opinion on these matters.
CODAN LIMITED AND ITS CONTROLLED ENTITIES
CODAN LIMITED AND ITS CONTROLLED ENTITIES
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
REPORT OF OPERATIONS
ESG
LEADERSHIP
122 | CODAN | ANNUAL REPORT 2024
CODAN | ANNUAL REPORT 2024 | 123
Revenue recognised over time – Communications ($70.7 million)
Refer to Note 2 to the Financial Report
The key audit matter
How the matter was addressed in our audit
Communications revenue recognised over time
has two significant revenue streams:
•
Solutions (projects); and
•
Maintenance and support services.
Communications revenue recognised over time
was a key audit matter due to the significant
judgment we have applied in assessing the
recognition and measurement of revenue.
This was a result of:
•
Complexity and judgements involved
in applying the requirements of AASB
15 Revenue from Contracts with
Customers.
•
It is the Group’s policy to recognise
revenue from the sale of Solutions
(projects) on a percentage of
completion basis. This requires them
to estimate the project cost to
complete, as a component of the
measurement of the percentage of
completion. The estimation of cost to
complete is prone to greater risk of
bias, error and inconsistent
application given the scale,
complexity of projects and longer
timeframes over which the projects
lapse. Additional audit effort was
required to evaluate the Group’s
estimations of project cost to
complete, percentage of project
completion and therefore revenue
recognised.
We involved our senior audit team members in
assessing this key audit matter.
Our procedures included:
•
We considered the appropriateness of the revenue
recognition method applied by the Group against the
requirements of the accounting standards and our
understanding of the business and industry practice.
•
We inspected a sample of executed customer contracts to
understand the key terms of the arrangements and the
performance obligations.
•
We tested the accuracy of the underlying revenue data by
tracing a sample of the contractual revenue to signed
customer contracts.
•
We obtained an understanding of the Group processes
and controls over the preparation and oversight of
estimated cost to complete and the allocation of expenses
to projects.
•
We tested the accuracy of project related expenses by
tracing a sample of expenses to underlying documentation
such as invoices and payroll records.
•
We compared historical estimates of costs to complete to
actuals experienced to assess the Group’s historical ability
to forecast cost to complete, and therefore inform our
assessment of estimations in the current year.
•
We compared estimated costs to complete at 30 June
2024 for a sample of projects to the budget and
challenged management’s assumptions around project
status and estimation uncertainties.
•
We assessed the disclosures in the financial report using
our understanding obtained from our testing and against
the requirements of the accounting standards.
Other Information
Other Information is financial and non-financial information in Codan Limited’s annual report which is
provided in addition to the Financial Report and the Auditor's Report. The Directors are responsible for the
Other Information.
The Other Information we obtained prior to the date of this Auditor’s Report was the Directors’ report and
Remuneration Report. The Chairman’s Letter to Shareholders, CEO’s report, Environment, Social and
Governance report and ASX Additional information are expected to be made available to us after the date
of the Auditor's Report.
Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not and
will not express an audit opinion or any form of assurance conclusion thereon, with the exception of the
Remuneration Report and our related assurance opinion.
In connection with our audit of the Financial Report, our responsibility is to read the Other Information. In
doing so, we consider whether the Other Information is materially inconsistent with the Financial Report, or
our knowledge obtained in the audit, or otherwise appears to be materially misstated.
We are required to report if we conclude that there is a material misstatement of this Other Information and
based on the work we have performed on the Other Information that we obtained prior to the date of this
Auditor’s Report we have nothing to report.
Responsibilities of the Directors for the Financial Report
The Directors are responsible for:
•
preparing the Financial Report in accordance with the Corporations Act 2001, including giving a true
and fair view of the financial position and performance of the Group, and in compliance with
Australian Accounting Standards and the Corporations Regulations 2001
•
implementing necessary internal control to enable the preparation of a Financial Report in
accordance with the Corporations Act 2001, including giving a true and fair view of the financial
position and performance of the Group, and that is free from material misstatement, whether due to
fraud or error
•
assessing the Group and Company’s ability to continue as a going concern and whether the use of
the going concern basis of accounting is appropriate. This includes disclosing, as applicable, matters
related to going concern and using the going concern basis of accounting unless they either intend to
liquidate the Group and Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objective is:
•
to obtain reasonable assurance about whether the Financial Report as a whole is free from material
misstatement, whether due to fraud or error; and
•
to issue an Auditor’s Report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in
accordance with Australian Auditing Standards will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error. They are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of the Financial Report.
A further description of our responsibilities for the audit of the Financial Report is located at the Auditing
and Assurance Standards Board website at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of our
Auditor’s Report.
INDEPENDENT AUDITOR’S REPORT (continued)
CODAN LIMITED AND ITS CONTROLLED ENTITIES
CODAN LIMITED AND ITS CONTROLLED ENTITIES
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
REPORT OF OPERATIONS
ESG
LEADERSHIP
124 | CODAN | ANNUAL REPORT 2024
CODAN | ANNUAL REPORT 2024 | 125
INDEPENDENT AUDITOR’S REPORT (continued)
Report on the Remuneration Report
Opinion
In our opinion, the Remuneration
Report of Codan Limited for the
year ended 30 June 2024,
complies with Section 300A of the
Corporations Act 2001.
Directors’ responsibilities
The Directors of the Company are responsible for the preparation and
presentation of the Remuneration Report in accordance with Section
300A of the Corporations Act 2001.
Our responsibilities
We have audited the Remuneration Report included in pages 5 to 23
of the Directors’ report for the year ended 30 June 2024.
Our responsibility is to express an opinion on the Remuneration
Report, based on our audit conducted in accordance with Australian
Auditing Standards.
KPMG
Julie Cleary
Partner
Sydney
21 August 2024
This is the original version of the audit report over the financial statements signed by the Directors on 21 August 2024. Page references should be read as follows to
reflect the correct references now that the financial statements have been presented in the context of the Annual Report in its entirely.
The Remuneration Report is set out on pages 63 to 76 as opposed to pages 5 to 23 outlined above.
Additional information required by the Australian Stock Exchange Limited Listing Rules not disclosed elsewhere in this report
is set out below.
Shareholdings as at 22 August 2024
Substantial shareholders
The numbers of shares held by substantial shareholders and their associates are set out below:
Shareholder
Number of ordinary shares
P M Wall
34,808,151
Interests associated with Starform Pty Ltd, Dareel Pty Ltd and Pinara Group Pty Ltd
28,118,288
Distribution of equity security holders
Number of shares held
Number of equity security
holders Ordinary shares
Issued Capital %
1 - 1,000
5,251
1.1%
1,001 - 5,000
3,264
4.6%
5,001 - 10,000
878
3.7%
10,001 - 100,000
795
10.4%
100,001 and Over
70
80.2%
Total
10,258
100%
The number of shareholders holding less than a marketable parcel of ordinary shares is 314.
Securities exchange
The company is listed on the Australian Securities Exchange. The home exchange is Sydney.
Other securities on issue
The company has performance rights on issue in addition to ordinary shares.
The details of the securities held as at 22 August 2024 are as follows:
Class of security
Number of holders
Number of securities
Performance Rights
28
973,011
No voting rights attach to the above securities, however, any ordinary shares that are alloted to the holders of the securities upon
vesting or conversion of the above mentioned securities will have the same voting rights as all other ordinary Codan shares.
Other information
Codan Limited, incorporated and domiciled in Australia, is a publicly listed company limited by shares.
On-market buy-back
There is no current on-market buy-back.
ASX ADDITIONAL INFORMATION
CODAN | ANNUAL REPORT 2024 | 127
ADDITIONAL INFORMATION
REPORT OF OPERATIONS
ESG
LEADERSHIP
FINANCIAL STATEMENTS
CODAN LIMITED AND ITS CONTROLLED ENTITIES
126 | CODAN | ANNUAL REPORT 2024
Twenty largest shareholders
Name
Number of ordinary
shares held
Issued Capital %
P M Wall
34,808,151
19.2%
HSBC Custody Nominees (Australia) Limited
18,403,357
10.1%
Dareel Pty Ltd
18,013,512
9.9%
Citicorp Nominees Pty Limited
17,589,032
9.7%
J P Morgan Nominees Australia Limited
14,173,043
7.8%
Kynola Pty Ltd
6,627,548
3.7%
Starform Pty Ltd
6,404,224
3.5%
A Bettison
3,562,124
2.0%
National Nominees Limited
2,809,535
1.5%
M K and M C Heard
2,400,000
1.3%
J A Uhrig
1,400,048
0.8%
UBS Nominees Pty Ltd
1,178,445
0.6%
Rosevine Pty Ltd
1,107,254
0.6%
Cedara Pty Ltd
1,107,254
0.6%
G Bettison
1,024,000
0.6%
BNP Paribas Nominees Pty Ltd
883,161
0.5%
Buttonwood Nominees Pty Ltd
832,942
0.5%
Warren Glen Pty Ltd
800,000
0.4%
BNP Paribas Noms Pty Limited
769,716
0.4%
Pinara Group Pty Ltd
749,564
0.4%
Total
134,642,910
74.3%
Offices and officers
Company Secretary
Mr Michael Barton BA (ACC), CA
Mr Daniel Widera LLB/LP, Harvard PLD
Principal registered office
Technology Park
2 Second Avenue
Mawson Lakes, South Australia 5095
Telephone: (08) 8305 0311
Facsimile: (08) 8305 0411
Internet address: www.codan.com.au
Location of share registry
Computershare Investor Services Pty Limited
GPO Box 1903
Adelaide, South Australia 5001
Directors
Graeme Barclay
(Chair)
Alf Ianniello
(Managing Director and Chief Executive Officer)
Kathy Gramp
Sarah Adam-Gedge
Heith Mackay-Cruise
Company Secretary
Michael Barton / Daniel Widera
Principal registered office
Technology Park
2 Second Avenue
Mawson Lakes, South Australia 5095
Auditor
KPMG
151 Pirie Street
Adelaide, South Australia 5000
Location of share registry
Computershare Investor Services Pty Limited
GPO Box 1903
Adelaide, South Australia 5001
CORPORATE DIRECTORY
ASX ADDITIONAL INFORMATION (continued)
CODAN | ANNUAL REPORT 2024 | 129
128 | CODAN | ANNUAL REPORT 2024
ADDITIONAL INFORMATION
REPORT OF OPERATIONS
ESG
LEADERSHIP
FINANCIAL STATEMENTS
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