Ann: XTEK recieves first commercial XTclave order, page-5

Further to above post, sitting in front of the computer with time to think due to enforced isolation I went back to the 27 February 1H FY20 results in view of the XTclave first commercial sale and found three points particularly encouraging.

First the 91% revenue increase would not include any commercial XTclave sales. The real significance of the purchase of XTclave product by an Australian police force is the signal it sends to other buyers. Typically defence and security buyers look to see if the home governments of vendors are backing their country's suppliers. If Australian government users buy that is a real boost for marketing internationally, even if the initial sale is modest.

Second we are starting to see numbers from the HighCom purchase. The 1H FY20 revenue only included one quarter of HighCom operations. Hypothetically if the first two quarter results were the same as Q2 ie revenue of A3.7m and net profit of A$0.3m the first half would have had revenue just over A$20m and a net loss just under A$2m. Given that XTE normally makes most of its revenue and goes into profit in 2H I am hoping this means a bigger full year profit, even allowing for the costs of integrating HighCom and without further XTclave sales.

Third management is starting to provide more useful data. It has adjusted the 1H FY20 bottom line for R&D and non-recurrent costs which shows that without these items the net loss would have been A$0.65m compared with A$1.0m the previous year. Now before our regular critic says, rightly, that the bottom line is what it is I say these numbers are helpful - assuming I am reading them right! Again hypothetically had there been two quarters of HighCom not the one the 1H FY20 net loss would have been about A$0.35m compared with A$1.0m without HighCom.

As always we have to wait for the full year results to see if XTE is at last delivering on its promise.