A Canberra-based homeland security specialist has gone against its own financial expectations and returned to profitability in FY2017, on the back of a strong second half and the government’s increase in defence spending.
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Xtek has posted a net profit after tax of $61,225, an marked improvement over its FY16 net loss of $1.5 million and a loss of $1.3 million in the first half of FY17, just one year after former Quickstep Holdings chief executive Philippe Odouard took the helm.
The profit comes after a successful capital raise of $3.1 million during June 2017 and on the back of increased sale of explosive ordnance disposal (EOD) equipment to state and federal government. This included the sale of unmanned ground vehicles, bomb detection and response equipment, and Tac2 Sniper Rifle Systems.
Most notably this year, Xtek signed the contract for the supply of the Small Unmanned Aerial Systems (SUAS) capability for the Australian Defence Force (ADF) as part of the government’s planned $101 million investment in this capability.
"The 2017 financial year has been a transformational one for XTEK, with a return to profitability, solid sales momentum, high revenue growth and a groundbreaking transaction in terms of the SUAS contract with the ADF," said Odouard.
"We look forward to a strong contract pipeline again in FY18 due to the continued opportunities presented by the increase in government spending on defence."
Xtek expects to generate revenue of up to $40 million from the acquisition of the systems over a three-year period and up to $9 million per annum through the provision of maintenance and support activities over a five to seven-year period for sustainment of the SUAS capability. This is in addition to the supply of SUAS, spare parts and maintenance worth $10 million over the past three years.
The company was also awarded a $1.7 million contract to supply a state police force with EOD robots, which will primarily be used for bomb disposal operations.
Xtek is now expecting a strong performance in FY18, with continued profit and revenue growth, based on delivery under recent contract wins and a strong pipeline of opportunities for both value added reseller and in-house manufactured product sales.
Xtek's XTclave and XTatlas technologies also achieved key milestones, with the capacity for commercialisation for unmanned aerial vehicle (UAV) operators across defence and security agencies. The company undertook significant XTclave development and testing work on advanced lightweight hard armour body plate solutions for defence applications during FY17.
In March 2017, Xtek announced it had successfully produced and tested polyethylene body armour plates that it believes to be approximately 30 per cent lighter than existing body armour plates and able to protect against bullets up to the 7.62x39mm mild steel core threat, which is typically fired from AK47 assault rifles.
As such, a commercial scale XTclave plant will be built in FY18 as it goes down the path of commercialisation.