Thanks Sam. Good morning and welcome everyone to Codan's FY 2025 Results Presentation. My name's Alf Ianniello and I'm Codan's Managing Director and CEO. Also joining me today is our CFO and Company Secretary Michael Barton. Before we proceed, please take note of our standard notice and disclaimer. Today's presentation will take us through some of our key result highlights detailing the performance of each of Codan's three business units. Unique to today's presentation, we want to highlight how our two communication businesses are increasingly working together. We walk through two case studies, one in defense and one in public safety, that bring to life the synergies across our ecosystems and show how we're converging into a single stronger communications platform.
We will also update you on our current strategy, reiterating some focus areas within each of our three business units before tying it all together with some summary comments and key themes for FY 2026. For many on today's call, the Building a Stronger Codan slide should be familiar. The Board and the Executive Team have spent significant time reviewing our businesses and refining our core organizational values, culture, and positive outlook. From this, our leadership team has collectively developed a laser-focused plan to build a stronger Codan which is underpinned by financial, operational, and strategic objectives. At its heart, Building a Stronger Codan is about sustainable growth, making prudent acquisitions, and developing ecosystems across our communication businesses and fundamentally continuing to invest in our people. Importantly, our diversification strategy is a key strength. We have great businesses serving very different markets.
Minelab remains an exceptional business while Communications is positioned for strong long-term growth. Fast forward to today. We believe our financial and operational results are a testament to our strategy. With our disciplined approach and a strengthened balance sheet, Codan is well positioned to pursue future opportunities from a position of confidence. As we look ahead, we remain committed to building a stronger Codan, investing in innovation and broadening our capabilities, and most importantly, delivering long-term value to our shareholders. FY 2025 was a year of strong performance for Codan and we are pleased to report that we achieved significant growth across the group. In an environment of ongoing global uncertainty, our teams executed on their plans with focus delivering improved revenue, earnings, and cash generation. At a group level, we delivered over $674 million of revenue, up 22% reflecting strong organic growth.
Together with the contribution from our Kägwerks acquisition, net profit after tax grew 27% to $103.5 million. As the slide illustrates, all profitability metrics increased year on year. Notably, this was after expensing some non-recurring acquisition due diligence costs which Michael Barton will touch upon on the following slide. Additionally, the Board declared annual dividends of $0.285 fully franked, also up 27% versus last year. I will now pass it over to Michael to run through the financials in more detail.
Thanks Alf. Good morning everyone and thanks again for taking the time to join our call today. As Alf touched upon, we're really proud of these financial results. They underscore our strong operational execution across each of our business segments. First, taking a look at the communications business, FY 2025 revenue grew by 26% to $413 million, and we delivered a segment profit of close to $108 million, which was up 34% on FY 2024. Within Minelab, revenues also grew double digit, up 16% to $255 million, and segment profit was 26% higher at $98 million. Group NPAT margins increased to above 15% from 14.8% in the prior year. The profitability metrics this year are after expensing around $5 million of pre-tax, non-recurring acquisition pursuit and due diligence costs. That includes our Kägwerks acquisition that we acquired in December and other opportunities we evaluated but chose not to pursue.
As we've said before, our M&A strategy is focused on complementary communications technology, particularly in North America and across unmanned systems, soldier systems, and the public safety sector. We take a disciplined approach. If due diligence doesn't stack up, valuations are stretched, or market conditions change, we're comfortable walking away. That's exactly what you saw this year. Prudent capital allocation with Codan only pursuing those acquisitions that are strategically aligned and which create long-term value. The increase in group expenses this year reflects the integration of acquired entities into the group's cost base and higher short-term incentives aligned with the improved performance. Also, we've continued to invest to ensure the successful integration of acquired companies and the implementation of core systems and processes that will provide future scalability.
Equally, sales and marketing expenses include greater investment in go-to-market customer-facing teams and initiatives aimed at delivering further growth across our key markets. We turn to our balance sheet. Net debt finished the year at $78 million, which was up $3 million on June last year, and that's after funding $36 million for acquisitions during the year. Importantly, our second half performance was strong. We reduced net debt by $46 million from December to June. This was driven by cash generation and disciplined working capital management. We took our net debt to EBITDA ratio to below 0.5 x. Net working capital reduced by $5 million. This reflects higher inventory to support our growth and also the addition of the Kägwerks business, and that was offset by an increase in our payables subsequent to year end.
Codan increased and extended its existing bank facility to $250 million from $170 million, and we have a further $150 million in accordion capacity available subject to bank approval. The facility now matures in September 2028. These facilities provide Codan with further financial flexibility to pursue future inorganic growth initiatives. We continue to assess acquisitions that enhance the quality and predictability of our revenues. We have a primary focus on opportunities in the communications markets that complement our technologies, accelerate our product roadmaps, or extend our customer portfolio, as well as providing longer term earnings visibility. As outlined, this slide illustrates the changes to our net debt position throughout the year, noting the key movements we've already touched on the previous slide. During the year, we have continued our engineering investment across our business units, investing a total of $69 million, approximately 10% of revenues.
In line with prior periods, our engineering spend is increasingly focused on communications and its key growth markets. Recent acquisitions, including Kägwerks, have added to this, with the Kägwerks engineering team contributing $4 million in the seven months to June 2025. We have a global team of highly skilled engineers and research scientists, and through product development we ensure our competitive position is maintained. Back to you, Alf, as we take a closer look at our three businesses.
Thanks Michael. We'll now move into the business unit summaries for any of you who are more recent to our story. Our communications business designs and manufactures mission critical communication solutions for global military, public safety, and commercial applications. In FY 2025, communications revenue grew 26% to $413.5 million, driven primarily by organic growth of 19%, well above our targeted 10% to 15% range. Revenue from defence customers now represents 38% of total communications revenue, and this vertical is a long term target market. Communications segment profit increased by 34% to $107.9 million, while segment profit margins excluding Kägwerks expanded to 27%, up from 25% in the prior corresponding period, reflecting operating leverage.
As the business continues to scale, the company remains focused on achieving additional operating leverage, targeting a 30% communications segment profit margin by the end of FY 2027 while we continue to invest in product development to support longer term growth. Lastly, our communications order book grew to $253 million as at 30th June 2025, up 28% versus 30th June 2024. This provides a great foundation heading into FY 2026. DTC , formerly Tactical Communications, delivered an exceptionally strong result in FY 2025, underpinned by growing global defence expenditure, particularly in unmanned systems and continued momentum in law enforcement verticals.
The business continues to benefit from its leading mesh radio technology and solutions, which offers robust, high performance communication in harsh and contested environments. Specifically, DTC 's compact, lightweight, and power efficient solutions remain well suited to mission critical uses, use cases where size, weight, and power are critical to operational performance. This is particularly relevant in unmanned systems, where DTC delivered approximately $100 million in revenue during FY 2025, more than doubling the prior year's result as global defence budgets increase. DTC's presence in the U.K., U.S., and Australia provides a strategic advantage in capturing long term communications programs across North America, the Five Eyes Alliances, and other NATO aligned markets. We have a strong pipeline of opportunities underpinning our continuing investment in the DTC platform. In December 2024, Codan acquired Kägwerks, a U.S. leader in operator worn communication systems.
Kägwerks provides a lightweight soldier worn neck work DOCK that integrates multiple tactical technologies into a single user friendly platform. This acquisition has strengthened Codan's position in the global military communications market by expanding its presence in the U.S. defence ecosystem, and it provides access to the funded Net Warrior program of record. Kägwerks delivered $24 million in revenue in our seven months of ownership during FY 2025. In the short term, revenue timing will depend on the Net Warrior program given the project-based nature of the business. Importantly, integration into DTC is progressing well. We've made new senior hires to strengthen the sales teams, which is enabling expansion into DTC's broader North American customer base and driving further adoption into international markets. Moving on to Zetron, Zetron, EMEA, and Asia Pacific performed strongly in FY 2025, delivering growth within our targeted 10% -1 5% range.
Key highlights include a 10-year, $14 million nationwide public safety contract in Australasia alongside several smaller wins, such as ACOM adoption by a major U.K. airline and a Call Touch deployment on a key rail corridor linking London to South Wales. We are encouraged by Zetron's enhanced scale and presence within EMEA following the integration of acquired and legacy businesses within the United States market. While growing revenues versus FY 2024, growth was adversely impacted by ongoing government reviews and delays in funding for government-funded agency opportunities. This moderated our second half performance and near-term momentum. Despite this, Zetron recently secured a 10-year, $19 million contract with one of the largest utilities on the U.S. East Coast, servicing 3.3 million customers. Additionally, the business secured an $11 million ACOM system contract with a large Atlanta-based airline.
The business continues its focus on innovation and customer-driven solutions with ongoing R&D investment to deliver seamless, integrated user experiences. Again, for anyone new to the Codan story, Minelab is the world leader in the handheld metal detection industry for recreational gold prospecting and demining markets. During FY 2025, Minelab achieved full-year revenue of $254.8 million, up 16% versus FY 2024. Pleasingly, segment profit margin increased to 39%, up from 35%. Driven by the benefits of scale and supported by a revenue mix of higher margin products, particularly from a higher portion of gold detector products sold, Minelab Africa delivered a strong full year performance with revenue of approximately $115 million, up both year on year and half on half by 64% and 54% respectively. This result reflects demand from across the region excluding Sudan, and it's underpinned by further business development initiatives to grow our presence across new and existing markets.
While we haven't historically linked gold detector demand directly to gold price movements, we suspect the current elevated gold price is creating supportive demand in key artisanal markets. Minelab's rest of the world business maintained revenues versus the PCP, which we consider to be a great outcome in what remains quite a challenging consumer conditions. This performance reflects our focus on growing both physical and e-commerce channels and leveraging Minelab's leadership. Minelab continues to invest in growing market share through the ongoing investment in its product roadmaps, new technology platforms, and expansion of its retail footprint in the U.S. and Europe. These initiatives position us well for future growth with four new products scheduled for release in FY 2026. The moderation of humanitarian aid by the U.S. government administration resulted in lower sales on Minelab's countermine products in FY 2025.
In response, the business is undergoing a strategic shift to reposition towards more military based applications for which there is a growing need. The first of the new product launches, Minelab has recently soft launched the Gold Monster 2000 as illustrated on the slide. This new gold detector, retailing at approximately twice the price of the Gold Monster 1000, is positioned as a premium entry level product and will be released to customers in Q1 of FY 2026. As a result, we're expecting it to contribute to Minelab's growth in FY 2026. Before we move into the case studies, we just wanted to provide a bit of a background that as Codan has, through product development and acquisition, the public safety and the defence ecosystems have become quite relevant and our products within those acquisitions have become quite relevant to the point where they are fundamental to creating situational awareness.
As we move into each of the ecosystem diagrams, the Codan or DTC or Zetron products are highlighted in green. In the defence ecosystem, our software defined radio mesh products connect soldiers, uncrewed systems, sensors, vehicles, ships, and coalition partners. It is low latency, resilient, and if one link drops out, the network simply reroutes around it. Kägwerks brings that mesh right down to the operator. Radios and soldier worn devices are pulled straight into the picture when satellites are degraded or denied. HF keeps the traffic moving. HF is harder to jam across wide areas and works without fixed infrastructure, which makes it critical to carrying essential voice and tactical information traffic when the other communication paths are constrained.
Codan's strength is its ability to field sovereign multi waveform networks such as Mesh Ultra and Mesh UltraX that interoperate by design and keep working when conditions are at their worst. This positions us as the trusted backbone for our partners in the public safety area. Zetron offers mission critical communication solutions. Its dispatch, telephony, computer aided dispatch, and land mobile radio solutions enable critical communications around the world, from airports and train systems to police, fire, and ambulance services. Given the importance of uninterrupted communications, Zetron uses additional technologies to provide networks on demand for disaster recovery and tactical deployment. The same advantages DTC provides in the defence sector can also be applied to public safety, especially with the emergence of drones as first responders. When a disaster occurs, public wireless networks are often degraded or unavailable.
DTC radios can provide a deployable bridge back from the disaster area to the control room. Additionally, there are indoor areas with no satellite or wireless coverage. DTC solutions can provide the critical link right from the underground car park to the network outside. Combined, this allows both the control operator and the person in the field to be connected at any time. This crossover between DTC 's field networking and Zetron's control systems is a deliberate outcome of our acquisition strategy and product development strategy. We are not running separate businesses in silos. We are creating integrated, interoperable solutions that expand our addressable markets and deepen our customer relationships and positions.
Codan as a leader in both defence and public safety communications, the case studies highlight how our core technologies from DTC , Zetron, and Kägwerks work together in defence and public safety ecosystems. I'll now pass back over to Michael to take you through the strategy and ESG updates.
Thank you Alf. While this slide may look familiar, it is slightly different from what we've presented previously. Specifically, we focused on identifying where we've executed against our three key strategic pillars, investing in ourselves, strengthening our core business, and disciplined capital allocation, all of which drive long term value across the organization. We're providing specific FY 2025 achievements and I'll just mention a few of them. Firstly, we've recently appointed a new Group COO for Codan, Pieter Guichelaar, and we've welcomed him to our leadership team. We're excited with what Pieter can bring to Codan and he's already driving efforts to strengthen our operational execution and the alignment across our business units, also helping us build the scalability that we need for future growth. Under his leadership, we're investing further in IT and AI capabilities to improve efficiency, unlock insights, and support a more integrated Codan.
We've also expanded commercial capability across defense, unmanned, and public safety markets as well as strengthening our product suite, helping to secure a strong forward order book which includes $155 million of revenue that's scheduled for delivery in FY 2026. Lastly, we've acquired Kägwerks to further enhance our solutions offering and drive long term revenues through the Net Warrior program of record. Beyond this, we continue to seek strategically aligned opportunities while maintaining a strong balance sheet. Our near term objectives are focused on executing key initiatives across each business. In DTC , we're shifting to be a full solutions provider. We're launching a multi waveform radio in the second half of FY 2026 through our TrellisWare partnership and we're integrating Kägwerks to strengthen soldier systems and connected edge capabilities.
For Zetron, we're building market share in public safety and increasing the predictability of recurring revenues including the launch of our service based emergency response platform and a next generation CAD solution in the U.K. In Minelab, we'll release four next generation detectors across recreational, gold, and countermine markets and we'll expand our retail footprint in North America and Europe and continue to strengthen our e-commerce and channel engagement alongside delivering strong financial results. We continue to make meaningful contributions in our communities and to our sustainability agenda. On the social side, we've supported education, innovation, and community initiatives from long standing programs like our 36 years of Variety Bash sponsorship to expanding STEM opportunities, cultural scholarships, and global cleanup efforts. On climate, our priority has been building a strong system to measure and capture data across Scope 1, 2, and 3 emissions.
This ensures that when we set targets they're not just ambitious, but are also credible based on reliable and consistent information. We've made significant progress in this area and it positions us well to both set and track future climate targets with confidence. Alf will now close with our summary and outlook.
Thanks, Michael. Tying today's presentation together, the Group continues to deliver on the strategy of building a stronger Codan. Our strategic pillars, as outlined earlier, will continue to guide our focus moving forward. Looking ahead to FY 2026, our communications business continues to target long-term sales growth of 10% - 15% per year. As we've shown in FY 2024 and FY 2025, this range can be exceeded. With around $155 million of FY 2026 revenue already secured in the order book, increased defense spending, continued growth in unmanned systems, and a first full year of Kägwerks, we're well positioned to deliver growth in the 15% - 20% range in FY 2026. Minelab enters FY 2026 in a strong position, building on the momentum of excellent growth delivered in FY 2025. FY 2026 is shaping up to be an exciting year with four new product releases scheduled across the recreational, gold, and countermine product ranges.
These launches, combined with current favorable macroeconomic conditions in key regions such as West Africa, position the business to capture further demand and deliver continued growth. We believe Codan is well positioned for sustained growth and supported by current favorable market conditions for our defense-related communications products and our gold detectors. We expect to continue to grow the revenue and profitability of our high-performing businesses and deliver long-term value to shareholders. With a strong balance sheet and a disciplined approach to capital allocation, the Group remains well placed to execute on strategic acquisitions. The recently renewed $250 million debt facility provides increased flexibility and funding capacity to support future inorganic growth initiatives. We look forward to providing our next business update at the Annual General Meeting on 22nd October 2025. This draws us to an end of our presentation, and I'll pass back to Sam for Q & A.
Thank you.
Great. Thank you, Alf, and thank you, Mike. As a reminder, you may submit written questions via the Q&A function at the bottom of your screen. Alternatively, research analysts, if you'd like to ask a verbal question, you can raise your hand now and I'll endeavor to get to you shortly. A couple of pre-submitted questions. First, on communications margin, what's required to hit the 30% communications segment profit margin by the end of FY 2027, and is there upside or will you reinvest for growth above that level?
Yeah, good question. Thanks, Sam. I think it's a fine balance. I think what's required is our continual growth rates are required and we have, as mentioned in the presentation, we have a path forward on that. Also, the continual release of, you know, market leading products and, you know, these sound acquisitions we've made to create more platform and solution based offerings for our customers. We've had the 2% increase year on year and we're, you know, I think if you put acquisitions, products, product releases and continue organic growth, that will bait us well for the increase in margin.
Great, thank you. Just on unmanned, can you give us any color as to the composition of the $100 million you referenced? How has this strong growth in unmanned influenced your defence strategy, if at all, in FY 2026?
Yeah, the unmanned space, either air, ground or sea, is definitely an emerging space both in defense and public safety. It's a market that is growing at 30%, 30%, 35% CAGR globally away from what Codan is doing. When you look at our strategic intent, obviously it is influencing our product development roadmaps for DTC which is important in that the software defined radio programs. When we're looking at acquisition roadmaps, we are heavily focused in how we actually complement that unmanned space with our products and other products. It's definitely front of mind. Having a product as DTC has, has enabled us to double that revenue over the last 12 months.
Great, thank you. Just on comms, forward order book, while it was up 28% year on year, it's only modestly up versus December. How should we think about this?
Yeah, and order books are a point in time. If we actually did the order book five days later, we would have booked the $20 million order in the U.S. and that would have changed the metrics significantly. The order book struck on June 30th. When you look at the order book as said in the presentation, it gives us a lot of confidence going into FY 2026, it's a strong order book. A couple of days here or there, that number would have been far larger.
Great, thank you. We'll maybe move now to Mitch Sonnigan, Macquarie. Mitch, please unmute your line and go ahead.
Mitch, you're mute.
Hi, Alf.
Hi, Michael.
Thanks for taking the questions. Can you hear me all right this time?
Yes.
Yes, thank you.
Yeah, great.
Just following on from the unmanned, the revenue pretty much doubling or doubling year on year. Can you maybe just give any more color in terms of overall demand trends that you're seeing there? What visibility do you have looking into FY 2026 and maybe just any broader discussions you might be having outside of the existing customer base?
Thank you.
Yeah, you know, when you look at unmanned, a lot of our unmanned solutions go into drone solutions. When we look at visibility, we have visibility probably out for H1 of order book. When you look at the diverse customers, one of the key aspects of unmanned for us is that our technology has been used in contested environments and it's worked. The ability for us to gain technical reputation, as I would say, to then push that into other markets has been probably one of the key positives from this. It's a growing market. We definitely got the right product. We have evolved the product from all the lessons learned we've had over the last 12 months. We are working with new partners globally. We have representation of sales across the globe for unmanned systems.
Yep, great.
Thanks, Alf.
Final question, which is just a sneaky two part there, but obviously with Africa doing very well in Minelab. Just keen to understand if that segment margin in the high 30% is what we should expect in FY 2026. And then just for Michael, just on the unallocated costs, they're up pretty materially. Obviously you talked some of that throughout the presentation, but it's keen to understand what we should be expecting FY 2026 as well. Thanks, guys. Congrats on the result.
No worries, Mitch. Yeah. On Minelab, the margin they achieved in FY 2025 was excellent in the high 30%. Some of that improvement does come from the gold detectors that we do sell into Africa. You're right, Mitch. We've had an uplift as a result of that mix in product. That continues. We'll continue to see Minelab post really strong margin results like they achieved in FY 2025. In terms of the administration costs, we've called out a higher level of due diligence, acquisition-related costs. We've had those costs in our last few years, given the acquisitions that we've made, and I think all those cost history is probably the best guide, Mitch, as to the cost base that we currently have in the organization. We'd expect those numbers to be consistent going forward, albeit we did call out that $5 million that's larger than what it's been historically.
There might be some normalization in relation to that component, but the rest of the costs, they're really the run rate going forward into FY 2026.
Thanks, Mitch. Next question comes from Elijah, Goldman Sachs. Please go ahead.
Yeah, I'll mute. Elijah. Yep.
Morning guys. Apologies for that. Congratulations on the result. Just a couple for me. Maybe just starting with Kägwerks. Can you sort of talk to, I guess if that original guidance for calendar year 2025 revenue of $49.57 million is in play and if that ties into the FY 2026 comms growth guidance.
Part A of that question, as mentioned in the presentation, the guidance for the first 12 months is heavily predicated on the release of orders by the Net Warrior program office, which we believe those orders will be seen in the next, you know, probably month or so, and then they'll provide a filled in schedule for the remainder of the financial year. That'll come down to whether we can actually ramp up the supply chain in a quick enough fashion to actually deliver and generate that range. We just need to review that over the next four weeks. In saying that, the orders are there, it's a timing issue for a release of orders. The second question about the guidance of 15%- 20% does include Kägwerks.
Thank you. I might just squeeze one in on just acquisitions. Balance sheet obviously very well set up, and you've talked to opportunities for a while. Can you maybe sort of talk to, I guess, what you're seeing on the ground, like is it quite harder with the valuation rate across the sector, and maybe talk to some of the opportunities you sort of walked away from.
Yeah, I think when you look at our acquisition strategies, you know, if you look at the Zetron sort of strategy, it's either we're increasing our seats, so looking at alternate Zetrons, or adding value to the seat, so looking for more bolt-ons. I guess that gives you a bit of color of things that we would be looking at in the Zetron space. When you're looking at DTC, you know, we were heavily focused on creating a presence in the defense market in the U.S., you know, that still remains an aim. We're heavily focused on looking at the appropriate integration solutions to our solutions for unmanned systems. That fundamentally paints a picture for the DTC world. On the question of things that we had looked at or looking at, they all are part of that sort of environment.
Perfect.
Appreciate the color. Thanks, guys.
Thank you.
Thanks, Elijah. Next question from Evan at UBS. Evan, please go ahead.
Yep, there we go.
Okay, just the three questions, if I can. DTC, on DTC. The first one, I'm just keen to hear your thoughts, Alf, just around the potential, I guess, changing competitive dynamics with Motorola coming into the market, taking over Silvus, especially, I guess, in relation to how, you know, a very U.S. recognized business has been perceived in the U.S., in the EU. Sorry, just how that's all playing out.
Yeah, it's interesting. Obviously, Silvus is a major competitor to us in the software defined radio space or mesh network space. They actually, again, the addition of Silvus' to Motorola complements them as a solution provider, no different to us. If you look at Motorola and you look at the Codan Group today in comms, our offerings are very similar. Obviously, the scale's a little bit different and obviously they are a major player. We're still digesting that acquisition, Evan. We're still digesting whether it's a play for defense or it's a play for federal networks. Although that slide that we presented in the public ecosystem is quite busy, the addition of mesh networks in the public safety space gives you ability to put networks in without infrastructure.
Then with the emergence of drones as a first responder, which is an emerging theme as well, which we're well placed for, I think Motorola with their investment in Brink as well are pointing to that. We're digesting it. It's another competitive point we need to have a look at. I guess your point on Motorola being a large U.S. based organization, I guess we need to wait and see what impact that has in the EU. Technology is technology. The best technology usually wins irrespective of where it comes from. That's my personal view. It was an interesting acquisition, real expensive one for them, and it really just demonstrates that the technology is a good one, that mesh technology.
Yeah. Okay, good. Also interested, one more on Domo Tactical Communications. An update into how, you know, your medium term strategy of, I guess, embedding the broader Domo Tactical Communications business into the U.S. DoD or general defense budget programs is looking. Maybe if you can also touch on, you know, the TrellisWare product release and how that may help as well, please.
Yeah. If you look at the first, I guess the largest step forward we've done in the U.S. Defense has been through the Kägwerks acquisitions. Now, considering that the Kägwerks products do have mesh radios in them and they're agnostic, they're not always DTC. We're part of far more discussions for the next generation of comms than we've ever been. When I look at activity and I look at pipeline, it's the best we have seen in DTC. If you overlay the opportunity with a dual waveform radio with Trellis, I think that just further enhances the probability of win in some of those opportunities that we're discussing. We probably won't see a Trellis wear prototype until Q3, Q4 next year in this financial year, but the program is still moving forward.
Yeah, no, sounds pretty interesting there. Okay, just final one here on Zetron. Any perspectives you can give around just how you're feeling about the growth rate for Zetron in FY 2026? You have any comments around how that weighted pipeline for Zetron is also shaping up, I guess relative to this time last year as well? Noting that the comments you said around the U.S. too.
Yeah. So when you look at Zetron, Zetron's been a stunning acquisition for Codan and its growth in the first couple of years has been excessively high. It's really come back to market growth rates now, and that's fundamentally due to new administration and things from a momentum perspective. I think we'll have to break FY 2026 into a year of two halves. I perceive that the first half will be very similar to H2 FY 2025, and we'll have a pickup going through. Activity hasn't slowed, pipelines haven't slowed. It's just general timing and a level of, at times, bureaucracy that we've been caught in. On the flip side, what's been really pleasing is the growth in EMEA. EMEA, previously to the acquisition of Zetron or the NEC Group out of the U.K., has been quite slow.
The ability to sell some of our product from Zetron into those areas where we weren't present before is really pleasing. The 10% - 15% growth rates there are great. We'll still grow in Zetron. We just need to, you know, it will probably be a tale of two halves this year.
Yeah, okay.
Yep, sorry, thanks.
Thanks very much, Evan. Next question comes from Tom at Moelis. Tom, please go ahead.
Morning guys. Just checking you can hear me.
Yes, Tom.
Yeah, perfect. Thanks for taking my questions. Just to follow up on the margin profile side of it in the communications business, if we think about it, excess sort of one off costs, this 30% target end of FY 2027, should we be thinking or is there any reason that we should have some sort of investment into FY 2026 and sort of weight that margin expansion into 2027, or should it be fairly linear between where we are now point in time and where the target date is?
I would go linear from if you overlay investment ideas that we have. Brilliant.
My second question is just on the Gold Monster 2000. Pretty clear it's twice the price. Just wanted to get a sense maybe using the 1000 as a proxy. What's the sort of ramp profile in volumes you guys would be looking at over, say, the next one, two, or three years?
I'll divert to Michael Barton. He's got far more history than me on the gold releases.
It's a high. It's a high. It's the highest volume gold machine that we sell, and into Africa we've sold, you know, 100,000 units- 200,000 units over what, it's probably been in market for 10 years I reckon. It's a significant step up in technology. Is it going to replace all the Gold Monsters that we've sold historically? No. Are we expecting to sell good volumes of that detector into Africa and into other artisanal mining areas? Yes, we think it's going to be a really strong performer for us.
Brilliant.
That's it for me. Thank you.
Great.
Thanks very much, Tom. Next question comes from Cameron at Canaccord. Please go ahead, Cameron.
Yeah, thanks very much. Morning guys.
Yep.
You've done well. You've ticked off most of the questions I actually had. There was one that was a follow on to Tom's on the Gold Monster. You've talked about the price increases roughly doubling. How do the costs compare for you guys?
Production costs? I think we'll see this detector continue to be a really high margin product for us, as all our gold machines are. It's in the same range, same range.
Of cost of production or same range.
Of margin, same range of margin that we make on our gold detectors.
Yep.
Okay, great. That's all for me, guys.
Thanks.
Thanks.
Great.
Thanks, Cameron. Next question is from Jason at Taylor Colson. Just back on the African business, broadly speaking, how much of that business is Gold Monster versus GPZ 7000 versus other products?
Yeah, so we have three core product ranges that we sell into Africa. The GPZ, top of the range, GPX, mid range, and then the Gold Monster. That's been the entry level. The proportions aren't exact, but they all represent a significant proportion. It's not quite a third, a third, a third, but they all represent a significant portion of that market. It's not one that dwarfs the others. Yeah, it's a major part of what we sell into Africa.
Okay, great. Another one from Jason. Capitalized product development costs have increased $90 million over the last four years. How should we think about the amortization step into FY 2026 given new detectors as well as the DTC and Zetron upgrades also slated for the year?
Yeah, I think you'll see the trend that we've had in the past continuing, perhaps a bit of acceleration on top of that. I think those costs went up about $4 million this year. We'd expect it to be slightly higher in FY 2026 and beyond. The growth in amortization, you're going to see that continue into FY 2026 and 2027.
Okay, great. Thank you. Just one more question here from Josh at Barrenjoey. Sorry. Can you talk through the expected remilitarization of European nations and NATO and your view on DTC 's positioning in those contracts? Are you investing in sales incrementally ahead of these opportunities, or is the sales team right sized, given the demand?
Yeah, good question. As mentioned in the commentary, DTC has a significant presence in Europe already. We are part of discussions with different defense departments across Europe at the moment. Do we think it's a tailwind? We do. Are we part of the right discussions? We are. The thing with defense, it's always long procurement cycles. I guess the key thing with all of this, we're well represented in Europe. We've got the right products and we're part of the dialogue. We believe that'll be a tailwind into the future, if it's FY 2026, FY 2027, FY 2028.
Great, thank you. That wraps up the Q & A session for today. Alf and Michael, I'll pass it back to you for any closing comments.
Thank you, Sam. Firstly, I'd like to take the opportunity to thank everyone for their interest today. I think today's presentation is a representation of the strong business that Codan is. It's a representation that we're executing our strategy well. We've been prudent in capital allocation and how we run the business. I think also the presentation today gives you a level of insight in our strategic directions, either being Minelab or our communications division. We thank you for your time. We also think that we provided some clarity on FY 2026. Like I said, we'll update the community at the AGM this year in October. Thank you very much for your time. Really appreciate it.
Great. Thanks very much for joining today's Codan FY 2025 results webinar. Enjoy the rest of your day. Thank you and goodbye.