XTEK Ltd (ASX:XTE) has continued to perform during FY20 despite COVID-19 challenges by targeting large orders for high-value soldier solutions and proprietary technologies.
In its latest annual report for the year ending June 30, chairman Uwe Boettcher said the company was well-positioned to continue expanding into key target markets globally.
XTEK's record FY20 revenues were underpinned by US ballistic sales, following the acquisition of US-based HighCom Armor Solutions Inc in September 2019, which places the business in a strong position to further commercialise the state-of-the-art XTclave™ process technology.
Strong position to capitalise on growth
Boettcher said the new financial year had seen the Canberra-based company carry out an oversubscribed capital raising, securing around $12 million in capital to drive further growth.
“The total proceeds from the placement and SPP will be used to execute XTEK’s international ballistic protection strategy and accelerate growth in other operations.
“XTEK plans to establish a US-based XTclave manufacturing capability, which will effectively double XTclave forecast revenue capacity from XTclave manufactured products to $80 million per annum and unlocks tendering for potentially lucrative US contracts that require locally made product.
“Increased sales and marketing resources will be deployed in the US and EU to handle the anticipated growth in demand.
“This places XTEK in a strong position to capitalise on expected growth, providing a clear pathway to achieving the company’s medium-long term target of $100 million per annum revenue.”
Promoting intelligence software
The company is a leading full-service supplier of SUAS, as evidenced by the attainment of an exclusive long-term ADF SUAS support services contract in September 2019 and further supply orders received.
These networks provide broad access to customer channels with potential to interface the XTatlas software with existing hardware.
Additionally, XTEK has joined with 16 companies in the Australian Government funded C4 EDGE Program that will provide XTEK with an opportunity to showcase the XTatlas software alongside other complementary systems and technology to the Australian Army.
XTEK will continue to leverage all channels to promote the actionable intelligence software and remains in active discussions and demonstrations with other potential customers.
Robust defence sector
The defence sector remains robust, with highly favourable global defence themes.
XTEK is servicing clients across key target markets including US, Europe and Australia – where spending budgets are typically uncorrelated with markets.
Defence spending remains at the forefront of the political landscape, with around 2% of global GDP attributed to military expenditure.
Expenditure is expected to continue growing at around 5% annually in XTEK’s key target markets, which support XTEK’s expectation for further international growth.