XTEK Ltd (ASX:XTE) is confident that once the corporate initiatives identified in its business review are fully implemented, the outlook for FY22 will be “much improved” with the potential to return to profitable trading.
The focus over FY22 will be on promoting and selling XTEK’s own uniquely developed products, which include ballistic armour and helmets, XTatlas software suite and its Sarbi sensors.
It also includes its high-end value-added reseller business, where market conditions indicate strong ongoing demand for explosive ordnance disposal robots, small unmanned aerial system (SUAS) and unmanned ground vehicle (UGVs), and Virolens.
The greater integration and collaboration between HighCom and the Adelaide Manufacturing Centre (AMC) will see increased responsiveness to meet global customer demand.
Further, the adoption of HighCom as the group’s global armour brand, to leverage the long history and proud heritage of HighCom, is seen as fundamentally important to growing revenues in FY2022 and beyond.
External review implementation
All recommendations of an external review are now being implemented, with the expectation of completion by the mid-second quarter of FY22.
The major initiatives include the appointment of Scott Basham as interim chief executive officer as well as the reorganisation of roles and responsibilities with Craig Schmidt becoming head of AMC.
It is also working on strengthening the relationships between AMC and HighCom Armor across product development and manufacturing.
Other initiatives include:
➢ The appointment of new dedicated international Business Development Manager for AMC products;
➢ Improved project management processes;
➢ Improved financial reporting and oversight; and
➢ Cost-cutting initiatives are underway and include changes at AMC.
HighCom Armor buy validated
The acquisition of HighCom Armor has been validated by its strong financial performance, despite global supply chain COVID-19 disruptions.
HighCom Armor continues to increase revenue and profitability with a pipeline of more than US$40 million of ballistic product opportunities for US customers, including the US military.
AMC products are now being delivered to HighCom Armor and sold into the US market.
There has been a significant increase in collaboration between HighCom and AMC staff, with improved market intelligence being provided to AMC for new product development.
Adelaide Manufacturing Centre
The $10 million-plus investment into XTEK’s ballistic armour and composites facility in Adelaide has created a world-class manufacturing, research and development, and prototyping capability.
AMC is now operational and functioning to produce armour plates, ballistic helmets and composite products for unique applications such as space vehicles.
New factory management have already implemented cost down/cost out reviews, and lean production processes, which will provide beneficial outcomes and ongoing operational savings.
Production at AMC is running at around 1,500 plates per month and increasing to meet demand of HighCom sales pipeline.
Tactical & Protection Systems
XTEK is currently responding to a significant RFT from the Australian Army (Project Land 154 Phase 4) for the replacement of its fleets of EOD robots, some of the tendered solutions are the current generation of the in-service platform.
Separately, XTEK had purchased a Milrem Robotics Themis UGV in the second half of FY21 and has subsequently undertaken demonstrations to the Australian Army.
XTEK continues to engage with Defence to support capability development assessments for Remote and Autonomous Systems, and their integration into future Land Warfare Capability.
The company continues to commercialise its suite of XTatlas software applications for 3D Mapping & Modelling (Scout) and Tactical Targeting (AirWolf) for sale to Defence Forces globally.
It continues to collaborate with the Australian Defence Industry and international partners to expand the integration of the XTatlas offerings, with initial sales made into Europe, New Zealand, and Australia, with interest in the Middle East.
SARBI chemical Sensor payload continues to be commercialised for sale, with strong interest from the Military and Law Enforcement markets in Australia and the US.
Pre-production units are being sent to Recon Robotics for integration into their ThrowBot2 robot for demonstration to US Military customers at upcoming trade shows and exhibitions.
Virolens progress
On its rapid non-invasive COVID-19 testing device, Virolens, XTEK is working towards sales commencing in the second half of FY22, subject to receipt of Australia’s Therapeutic Goods Administration (TGA) approval.