XTEK Ltd (ASX:XTE) is poised to deliver a significantly stronger result in FY17, over the previous corresponding period, underpinned by orders in hand of $2 million.
The company expects to sign a number of new sales agreements in the coming months, including one for the support of existing Small Unmanned Aerial Systems (SUAS) used by the Australian Army.
XTEK is also diversifying its revenue and increasing margins through value adding and innovation.
Uwe Boettcher, chairman, commented:
"XTEK has a robust pipeline of contracts that should drive a big upswing in revenue from this financial year onwards and the company should see the benefits from our technology developments over the coming months.
"What’s more, the recent capital raise has bolstered our balance sheet.
"The capabilities of our board, with the appointment of Phillipe Odouard as a non-executive director, have been strengthened.
"His experience in negotiating complex contracts with global defence companies while he was the chief executive of Quickstep Holdings Limited will greatly assist XTEK in achieving its goal of becoming an exporter of its unique technology."
Australian Defence Force
XTEK was selected as the Preferred Tenderer in April 2016, for the Australian Defence Force Land 129 Phase 4 program, to supply and support a fleet of SUAS for the Australian Army.
Contract negotiations are underway and are expected to be finalised this financial year.
Although the value of the contracts will only be determined after further negotiations with Defence and after Government approval, they are expected to be worth many millions of dollars and will cover hardware sales and ongoing maintenance (through-life support) for the SUAS.
Maintenance contracts will provide recurring revenue.
Assuming the Land 129 Phase 4 contract is signed in the current financial year, revenue will significantly contribute to XTEK’s earnings from FY18 onwards.
The company is expecting to provide an update before the end of the calendar year on the commercialisation efforts for its two key technology developments – XTatlasTM and XTclaveTM.
XTEK will demonstrate XTatlasTM to potential technology partners and customers, including the Australian Defence Force, over the coming months.
The Australian launch of XTatlasTM will take place 6-8 September at Land Forces 16, the major land forces conference in Australia.
This will be followed by a launch in Europe in September and the USA after that.
Final testing results under the US government-funded Foreign Comparative Testing (FCT) program for body armour created in the XTclaveTM plant will be provided to the US Department of Defense in Q2 FY17.
XTEK noted that it is pleased with the results to date.
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