Sign of company, with navy south of island (9)
I believe the answer is:
capricorn
'sign' is the definition.
(a sign of the zodiac)
'company with navy south of island' is the wordplay.
'company' becomes 'co' (abbreviation).
'with' means one lot of letters go next to another.
'navy' becomes 'RN' (abbreviation for Royal Navy).
'south of' means one lot of letters go next to another.
'island' becomes 'capri' (Italian island).
'co' put next to 'rn' is 'corn'.
'corn' put after 'capri' is 'CAPRICORN'.
'of' acts as a link.
(Other definitions for capricorn that I've seen before include "7 [SIGN OF THE ZODIAC]" , "It's a Tropic, and the Sign of the Goat" , "Constellation known as The Goat" , "Goat star sign" , "Tropic - Zodiac sign" .)