Control rooms  |   Narrowband  |  2023-08-28

Codan Delivers a Stronger Second Haf - Supoprted by Zetron Double-digit Growth

Source: Codan Communications
Curated by: Gert Jan Wolf - Editor-in Chief for The Critical Communications Review

  • Group revenue $456.5m
  • Statutory NPAT $67.7m and underlying NPAT $65.5m; H2 FY23 underlying NPAT $34.7m
  • Ongoing strength in Communications businesses — FY23 Communications revenue up 14% versus FY22 to $274m; segment profit margins of 25% as a result of positive operating leverage; orderbook of $163m
  • Metal detection revenues up 38% in H2
  • Net debt of $52m, down from $61m as at Dec 2022
  • Statutory EPS of 37.5c and underlying EPS of 36.3c
  • Annual dividend of 18.5c, fully franked (interim 9.0c, final 9.5c)


Codan Limited (“ASX:CDA”, “Codan”, “Group” or “the Company”), the Australian-based technology company today announced its full year results for the period ending 30 June 2023 (“FY23”).

Chief Executive Officer, Alf Ianniello, said:

“In the face of uncertain regional geopolitical and challenging global macroeconomic factors, Codan has delivered a stronger second half result. Minelab delivered stronger second half performance with newly released recreational detectors delivering exceptional results, driving FY23 Rest of World1 revenue growth and Communications achieved 14% revenue growth year on year.

We continue to execute against our strategy of building a stronger Codan, by investing in innovative new product releases, initiatives to grow in new and adjacent markets as well as ongoing geographical expansion, primarily within developed markets.

The strong performance of both Tactical Communications and Zetron is most pleasing, they form an integral part of our overall strategy to improve the quality of our revenues and provide sustainable and profitable growth into the future.”


Communications (Tactical & Zetron)

Codan Communications designs and manufactures mission-critical communications equipment for global military, public safety, law enforcement, unmanned systems, broadcast and commercial applications. These solutions allow customers to save lives, enhance security and support peacekeeping activities worldwide.

Communications had an excellent year in FY23, with both Tactical Communications and Zetron achieving strong growth, with revenues increasing by 14% to $274 million and a segment profit margin of 25%, up from 21% in FY22.

Success across the Company’s Communications businesses reflects the strategic shift to enter large and growing addressable markets, namely military and law enforcement, public safety, unmanned systems and broadcast. This strategic shift has resulted in an increased portion of Communications revenues being derived from developed world markets and government customers which enhances the quality of our revenues and stability of the business.

Communications continues to invest in its technology platforms, further enhancing its value proposition to customers, positioning itself as a true end-to-end solutions provider. Throughout the year, considerable effort and investment was directed towards strengthening sales teams and ensuring resources and expertise are in place to aggressively pursue opportunities in key growth markets.

During the year, Tactical Communications released the Sentry Mesh 6161 radio, which is a compact and lightweight Software Defined Radio tailored for soldier systems and military modernisation programs. This increase in capability allows Tactical Communications to bid for significant longer-term military programs.

Tactical Communications achieved double-digit revenue growth in FY23, driven by particular strength in the unmanned systems, broadcast and law enforcement markets. Also contributing to this growth was $20 million in FY23 revenues relating to a large military communications project announced in October 2021. While a pleasing contribution to the FY23 result, management does not expect this revenue to be repeated in FY24.

Zetron also achieved double-digit revenue growth in FY23, as the US public safety market continues to grow and recognise the value of Zetron’s integrated command and control solutions. Zetron was successfully awarded business from an expanding mix of high-quality
enterprise and government customers throughout North America. Zetron’s long-term support contracts provide greater predictability of future revenues and these accounted for ~30% of Zetron’s FY23 revenues.

To supplement Communications organic growth initiatives, the Company has also pursued an inorganic growth strategy, as demonstrated in our recent GeoConex and Eagle NewCo (Eagle) acquisitions. Communications will continue to target strategically aligned businesses, to gain access to new technologies and markets to accelerate its growth trajectory.

The recent announcement of the acquisition of Eagle is consistent with Codan’s inorganic growth strategy to acquire technology and capability that accelerate growth, with this acquisition focused on our core public safety market. Eagle provides mission critical control room communication and workforce management solutions to over 100 emergency services and transport customers across the United Kingdom, Europe and the Middle East. Eagle’s solutions are currently used by more than two-thirds of police forces in the United Kingdom, as well as by major transportation hubs and airports (including Dubai International airport) and the London Underground.

As announced on 2 August, Eagle is expected to contribute only marginally to Codan’s FY24 profitability, with the acquisition being earnings per share accretive from year two.

This acquisition is strategically important for Zetron, the acquired technology is highly complementary and aligned with Zetron’s core command and control solutions portfolio. In addition, this will accelerate growth in Zetron by gaining access to the UK public safety market and provides a platform to address European opportunities.

Communications enters FY24 with an orderbook of $163 million, up 9% versus pcp and this continues to be a strong lead indicator of future revenues, underwriting the Company’s objective of growing revenues with greater predictability.

After normalising for the impact of the large Communications project delivered in FY23 (approximately $20 million), the Communications business (excluding Eagle) is targeting to deliver 10% to 15% revenue growth in FY24.