Alright, let's kick off. Good morning and welcome to HighCom's FY 2025 Unaudited Results Investor Presentation. For those who don't know, my name is Ben Harrison and I'm Chair of the Board. The results for the financial year are a real testament to the team who have been able to concentrate on managing operating costs, optimizing inventory, and importantly, recommissioning the XT clave. That investment has been material and really sets the business up for success in what is the world's largest armor market. I guess we're very excited about the work that the team's done and really how they've positioned the business leading into 2026, which really is, you know, very positive. The outlook remains positive, and you know, it'll provide management with the opportunity to lead the business towards future growth, market expansion, and importantly, EBITDA improvement. Next slide, please.
Just some important information there, which we'll encourage you to read offline. Just quickly on the agenda, we'll run through the results, the financial performance, cover obviously both divisions, being the armor division and the technology division. Talk about some strategic priorities, wrap up with conclusions, and a Q&A, noting that we have sent an email address with people to email in. We've actually got some questions here, which is great, so we can address those at the end of the presentation. Next slide. With us today are obviously our two presenters, in Todd Ashurst, who's the Group CEO. I won't read out his CV there. I'll let you read that again in your own time. We're also joined by Martyn Dominy who recently joined us as Group CFO as well. Again, I won't read his CV out, but Martyn, great to have you here, and Martyn will be running through some of the financial results as well.
Thank you.
Without further ado, I'll hand over to Todd. Thank you.
Thanks. I appreciate that. Ladies and gentlemen, since being appointed as the Group CEO in March 2025, the board and the executive level have led the business through a period of rapid transformation and change to move the company back towards profitability. The focus really had been on stabilization, efficiencies, and turnaround. That included a new executive team, myself and Martyn, being put together towards the end of the last financial year after my previous stint as COO of the company. We have reduced, we've concentrated on that reduction of operating costs and overheads. We've really tried to move that superseded inventory or impaired inventory and convert it to cash. We had a major win there because we've actually reduced our inventory from $17 million down to $14 million.
The efficiencies we've looked for are to make the business as a whole more agile and scalable and streamline a lot of processes, which has taken a fair amount of time and effort to actually uncover, change, reveal, implement, but that has been done successfully. Some of those examples include improved supply chain management planning, as well as an active product management strategy now that has been implemented already. The turnaround focus has been obviously, as mentioned by Ben, on the XT clave recommissioning. That has been completed. We have 10 new products under development already that are absolutely powering along in the development cycle. I recently returned from six weeks at our Columbus, Ohio facility, and it was very, very exciting to see the product development go from cycle to cycle.
We are producing some of the lightest products and the thinnest products out there as part of the new product range that will be state-of-the-art in the market. The organization has undergone a successful transformation. We have returned the group to positive EBITDA, which from our position in 2024 is a significant turnaround, and we have now positioned armor and technology for growth. I guess the key points I'd like to point out are the company revenue has grown by 6% since FY 2024. EBITDA was up $9.8 million to $200,000 or $0.2 million, and cash held as at 30 June was $5.8 million with no debt. Slide, please, Sharon. State of play of the business. Cash management, we still continue to actively manage our cash management and control expenses. That is done rigorously by Martyn and I, and we are all over our cash management very, very closely.
Excess inventory, again, we remain focused on clearing inventory levels, reducing them. We're getting rid of the excess and superseded inventory in older product models. With this financial for FY 2025, it did impact on our gross margins, but it did successfully reduce that impaired inventory holding. Supply chain reform, I've already mentioned, that has created efficiencies such as reducing our use of air freight and using sea freight where possible to actually gain some economies of scale there and doing larger bulk orders to save cash. XT clave recommissioning successfully turned on the 19th of June, immediately went into cycles of actual final trials and testing, and then we officially handed it over to the U.S., company on the 19th of July.
Overall, one of the biggest efforts for FY 2025 was that full business review that has been completed, and we're well and truly into execution and implementation at the moment. Major programs of work that we've done already mentioned is that that product range reduction improved our sales and marketing efforts, and I'll touch on that a little bit later. We've restructured the staff sales locations, and by that, we were fairly centric on the East Coast. We have now broadened ourselves across the United States, targeting basically where the largest markets are in the United States. We've also now got a different strategy in relation to our multi-channel revenue streams, including a revised partner program to encourage repeat sales. All these efforts combined with new product delivery will actually increase, is anticipated to increase gross margin in FY 2026.
In relation to our corporate snapshot, we're pleased to report that during the year, the share price ranged between $0.12 and $0.50, so a bit of a stark contrast. The market capitalization is currently at $45.1 million as at yesterday's date. EBITDA was up 9.8%, as I said, to $0.2 million. Cash balance closed at $5.8 million, nil debt, and we continue to hold debt facilities of $3.8 million as an entity at this stage. In relation to the key highlights, we're pleased to report that the group delivered revenue of $48 million, which represents 6% growth over FY 2024. The U.S., business alone grew by 10%, and the Australian technology business was flat. The timing of the Land 156 contract saw that revenue slip from financial year 2025 into financial year 2026.
Had the revenue actually been booked in late financial year 2025 as planned, the revenue growth for technology would have been 12%. The group's gross margin was 23% compared to 30% for the prior period. The lower gross margin was attributed to a number of factors, and these include sales to large volume partners that we have that had been heavily discounted to get the volume, plus lower prices to move previously impaired inventory. This did impact gross profit margins by 3%. FY 2025 has seen a marked improvement in turnaround and EBITDA performance, returning us to break even, which I'm exceptionally happy about. The two underlying business units, armor and technology, have both generated positive EBITDA contribution in FY 2025, which again is a very, very positive result. I'm now going to hand over to Martyn.
Thanks, Todd and Ben, and good morning everybody, and welcome to our webcast today. Look, behind Todd and myself and Ben and the board, there's a significant team that helped us put this together. I really want to acknowledge the team and say thank you for their efforts in helping us to pull these reports for the investors. Cash at the start of the year opened at $6.2 million and closed at $5.8 million. The cash waterfall shows that trade, receivables, and payables increased by $700,000. The sale of inventory was greater than inventory purchased by $3.5 million. I think that's a really important point to labor on and note that the efforts of the business really were to control inventory and control costs during the year.
We also made significant investment in relocating or continued relocation and recommissioning of the XT clave from Adelaide here in Australia across to the United States. We spent $2.9 million of very important capital investment to send that machine over there. Noting also that the investment and relocation of the machine is critical to the growth of the business and is the right strategic direction for the company to take. Next slide, please. Thank you. I'd just like to provide some analysis around the group overview. The business continues to operate two business units. The first one, there is HighCom Technology, which you'll all be familiar with. During the year, the business generated $13 million of revenue with a gross profit margin of 28%. This also resulted in an EBITDA contribution of $3.6 million or 27% to the business.
What we're seeing here is measurement of the business units in isolation and how they function and operate as a business. We haven't shown corporate costs allocated into the business units. We really want to demonstrate the success that these businesses are generating for the company overall. As Todd alluded to earlier, if the delivery of the Land 156 contract order had been booked in FY 2025, revenue would have been in excess of $15 million for the technology business unit. FY 2026 presents an opportunity for further growth into the existing client base, along with potential to expand out into new clients. With regards to the armor business, that generated $35 million of revenue. That's Australian dollars, with a gross profit margin of 21%. Written down inventory impacted gross profit margins in this business by circa 3%.
Excluding the impaired inventory sales, the gross margin would have been around 24% and EBITDA circa $1.7 million. This resulted in an EBITDA contribution of $1.3 million or 4%. FY 2026 presents the opportunity to increase our sales through the expansion of the XT clave commercialization, which will produce higher margin products. The financial performance of the two business units is actually now at a stage where EBITDA is sufficient to contribute to operating costs of the corporate side of the business. I think that's really important to understand that we've been able to take the business to break even level, and moving forward now, we would expect to see EBITDA improvements. The geographic split remains pretty much the same, sort of 67% across North America, 21% across Asia Pacific and Australia, and 12% across Europe. The segmentation revenue is sort of still 70%-30 %split, roughly.
What we want to demonstrate here is to show that the business has been really diligently focused on reducing our operating costs in an effort to return the business to profitability. Cost reduction initiatives during the year have been embedded right across the entire business, and we're really pleased to report that employee costs have decreased by $1.7 million, and operating expenses have also been reduced by $2.7 million. Cost savings have also been identified in other categories, including consultants, IT, and travel. You'll notice in the reports that in FY 2025, there has been a reduction in research and development, but future costs in FY 2026 will increase to support the development of our new product ranges. The last note that I would make here is that the cost base is now stabilized to levels that will support the business moving forward to grow revenue and EBITDA.
We've really wanted to split out the EBITDA of the business units to indicate to the market and the investors how well the businesses are performing, particularly technology. They're doing exceptionally well, and the armor business is certainly on track to EBITDA improvement. Thanks, Todd. Back over to you.
Thanks, Martyn. Appreciate it. A quick overview of the two business units. We'll start with HighCom Armor. Obviously, you're well aware of the fact that what it does designs, manufactures, supplies, advanced personal protection, ballistic protection, such as body armor, ballistic helmets, shields, composite armor panels, and platform structures. Key customers are listed there on the slide. We have one center for manufacturing, and that is based in the U.S., in Columbus, Ohio. We also have a showroom there that supports the local region of Ohio, and our international sales are co-located here out of the head office in Canberra, along with group headquarters and technology. Next slide, please. The business has commenced to recruit sales staff organized across those five key geographic regions that I've talked about. We now have sales reps dispersed geographically across the United States, Virginia, Ohio itself, Florida, Texas, and California is a few weeks away from recruitment.
That actually places that dispersal of our sales team into the largest markets, individual markets across the United States. That's been a deliberate strategy, deliberate plotting of exactly where those largest markets are. Quite frankly, we're aggressively now going after them in FY 2026. The business remains focused on clearing the last remaining volumes of previously impaired or superseded stock. The U.S., military and agencies are eagerly awaiting the launch of the new products that have been developed in the XT clave. These new products will gradually be released in quarter two and quarter three of FY 2026. If I can say it, we are working very, very closely with the Department of Defence on actual paid research using the XT clave to develop potential solutions for them at the moment as well.
As we flag our half-yearly update, there's been ongoing industry-wide slowdown of sales across the United States that has impacted the entire body armor industry at the moment. That has basically been due to reduced funding from the current U.S., administration, and we're eagerly awaiting the next financial year, starting in America on 1 October, with the funding of the big beautiful build of the Trump administration. That is what we're expecting will start to change the marketplace moving forward. XT clave was successfully handed over to the U.S., team, as I said, on 19th, July. We already had a number of our new products that were under development that we were able to show the invited guests that we had attend. We had visitors there at the ribbon cutting ceremony from U.S., government, law enforcement, Ohio officials, etc.
It was fantastic to be able to get them to hold the new products that we are developing, and the excitement that we received was actually really, really pleasing. The XT clave remains under engineering control. Basically, most of the capacity of the clave at the moment is focused on our R&D efforts because we are absolutely smashing the timelines on the development of our new product range. Our new product range is vastly different from anything the company has sold before in America. It is absolutely a monumental step up. We are going to go to the top of the market with some of these new products. Some of our transformative initiatives have included production optimization, product refresh, sales diversification, as well as the XT clave already mentioned.
The optimization has been really, I've already touched on a number of these points, but we've concentrated hard on improving delivery timelines. Our factory had really been structured towards putting out product by the pallet. Our customer base is changing and evolving, and we are moving to change and evolve with our customer base by having the ability to ship pallets as well as do quick ship out the door as fast as possible. Our product refresh, we're moving towards a three-tier product portfolio, same protection levels, but three different price points based on raw materials used, production method used, and weight and thickness. These will be our icon, enhanced, and superior ranges. Of course, we focused on selling the superseded in-stock models through discounting to convert inventory to cash.
Our sales diversification I've already touched on, but I will also say during FY 2025, we established a partner B2B portal, which now allows our partners to actually buy straight and direct to office without involving a sales rep. They can do it electronically, which has actually streamlined and eased the method of procurement for our partners. We have a new website that's been developed and delivered, and we're looking towards moving into civilian sales sometime during quarter two of this financial year. The XTclave, as I've said, we've got 10 new departments. We've commenced work with the U.S. Department of Defence on next-generation armor using the technology, and that so far is actually going incredibly well, and they're very happy with the work that we've been doing together. Thank you. Next slide. Inventory management. Again, I view this as one of the big success stories of FY 2025.
A concerted effort was made to control inventory and reduce the previously held impaired stock. This has resulted in the sale of that impaired and superseded inventory. However, I will note that the gross margin was impacted through this strategy, but it has successfully reduced inventory levels by $3 million. It is expected that there will still be some minor impacts to the gross profit for FY 2026 as the last of the superseded or impaired inventory is cleared during that time. Product review has reduced previous model range and raw material requirements. This has also made space for the 10 new products under development, including the new raw material that we need to stock. This will all be manufactured in the XTclave.
While inventory levels have been purposely reduced in FY 2025, I am highlighting that we will see an increase in raw materials in 2026 to support production growth of these new product lines. Next slide, please. HighCom Technology. As stated, co-located here with corporate headquarters in Canberra, the focus for us is quite simple across three areas: systems being small and medium UAS solutions, and sensor payloads representing AeroVironment as an exclusive reseller here in Australia and our region. Counter-UAS detectors and effectors, that is our exciting new branch that we're into. Of course, we're still providing support along systems integration, logistics, training, and support services with our current contract with the Department of Defence, focused on the AV product range that they currently hold. Next slide, please.
During FY 2025, HighCom successfully delivered a variety of engineering, maintenance, and logistics support services under those contracts I just mentioned with the Department of Defence for the SUAS products held, being the Puma, AE, and LE systems. At the end of the reporting period, Martyn's already touched on the $13 million in product and services revenue with the EBITDA contribution there. Exciting for us is in November last year, AeroVironment agreed to expand our product offering that we were offering to the region by including medium UAS systems, and we look forward to talking more and more to the customer base, particularly at the Indo-Pacific show that is occurring in Sydney in November. HighCom Technology business development continues to concentrate on sales and services to existing customers, as well as identifying those new opportunities and adjacencies that we are constantly on the lookout for. Next slide, please.
The big pivot for us during FY 2025 was Land 156. As per our May 2025 announcement, we were awarded a significant contract in counter-UAS. The Australian Defence Force committed a total contract value of $16.9 million across 11 vendors, four of which were Australian, and HighCom was one of those, securing $2.6 million. In essence, what Defence is seeking to do is test and evaluate a range of market offerings in counter-drone equipment, and these are designed for that detect and portable, you know, detect and defeat, helping personnel identify and neutralize unmanned threats in their environment. Our counter-UAS solution that we've put forward into Defence is for dismounted troops. It is combat-proven technology, and it actually provides real-time threat detection and engagement. These products were delivered in quarter one of financial year 2026 and will be part of Defence trials in quarter two of FY 2026.
For our strategy, our strategy has not changed. We remain committed to the strategy, both the executive and the board, which has actually enabled the turnaround in FY 2025. I will stress that as the global geopolitical environment remains unstable, the outlook for the defense sector actually remains buoyant and buoyant because there are lots of future growth opportunities. Global trends suggest that defense spending is increasing across the world, particularly in Western nations, which are the ones we want to target particularly, which further strengthens growth opportunities for HighCom down both pipelines of the business. In conclusion, FY 2025 has seen the business return to a break-even position compared to our large loss in FY 2024. While the second half of the year was down on the first half, we were impacted by margin of the sale of impaired inventory and the delayed timing of the Land 156 contract.
We have continued to focus on reducing operating costs and establishing the business for future growth, and major investment in the XTclave was also another significant achievement and output for FY 2025, as well as our continuing business development activities. All of these initiatives that we've done in FY 2025 will help drive revenue and EBITDA growth throughout FY 2026 and beyond. This is expected to occur without materially adding to operating costs now that we have baselined the business. This will be assisted by increasing margins from the XTclave product lines, which will have significantly different margins to other product lines already produced. FY 2025 has positioned HighCom to build on the hard work of the last 12 months to ensure that 2026 is a year of substantial financial improvement and growth, and I would like to thank everyone for their time. I will now pass back to our Chairman.
Over to you, Ben. You're on mute.
Thanks, Todd, and thanks, Martyn, for the update. We might quickly just turn to some Q&A that we've received before we close out the investor presentation. There's a question here on tariff and tariff impacts, obviously widely reported around tariff impacts, particularly while manufacturing in the U.S. I'd be keen to get an answer there around tariff impacts.
Yeah, certainly. I'll take that one, Ben. There's been very minimal impact on the business in relation to tariffs, and that's primarily because most of our raw material is actually sourced domestically from the United States of America.
Thank you. There's also a couple of questions here around products and some reference to a recent podcast you did. I am just consolidating those questions, which would be more about some details on the 10 new products. What would be the likely release of those products?
Product development for a plate takes quite a long time from inception to completion. If you're doing it fast, it's normally about six months. Obviously, we started the process before the XTclave was turned back on again. That's probably why we're at such an early timeframe in our development now. In essence, we would start seeing, of the 10 new products in development at the moment, a release of one to two products at a time being drip fed out. They should all be out into the market by quarter three, or at least by the start of quarter three is what we're aiming for. Bearing in mind that before we release a product, we have all of the products independently tested to make sure that they are fit for purpose, that they maintain the quality standard that HighCom are known for, and that they will do their job.
We will independently test all our plates. We need to go through that process, but we already have some of our models out for independent testing already. We are well and truly down the track. To answer the question, hopefully, as we are into quarter three, those 10 products will be on the market.
Great. Thank you. There's a question here on impairment reversal. If there's any information in relation to impairment.
Yeah, look, I'm happy to take that one. What we've been doing, Todd and myself have both spent time on the ground in the U.S., in the factory. Todd in particular has been over there for extended periods, and we've worked very closely with the team over there to really look at the stock and analyze what we've got sitting on the shelf and what we can move out to the customers. We've put together some sales strategies and taken those products to market and offered those to our customers. As a result, those products have sold. They were previously impaired, so we've reversed that impairment, which has had a positive impact to EBITDA this year. We'll continue to make a concerted effort to move superseded old stock.
Another question around the use of turnaround. Obviously, it's been used in the document. What does it mean to management? Will they keep their foot on the pedal to keep pushing for cost savings?
Yes, if anyone knows me, yes. I don't give up and I don't stop. We are now actively across all areas of the business. We haven't just put in quick fixes. We put in long-term policy-driven fixes into the business, which actually have now given very clear left and right on how the business is to operate, function, expend money, and there are very clear processes for that to occur. I'm confident that we will not go back to the days of old based on all the work done by the executive team.
Okay, and there's just one last question here around the breakdown in the business units. Obviously, from what you presented, it appears that both the divisions are making positive EBITDA, and we probably touched on this, but our corporate costs are now covered.
Yeah, I'm happy to take that one. Look, they are. The purpose for breaking that out to show the market was that the two businesses are now at a point where they're, and I use this word quite a lot, they're washing their face. They're generating positive EBITDA, positive cash contribution. As those business units grow, it will be additive revenue and additive EBITDA to the business. We're very much at a break-even point right now. We've really gone through the business with quite an aggressive approach to cost reductions. You can see that noted in the four-year accounts that have come out this morning. There are categories that have reduced quite markedly, and I touched on that earlier. We will continue that program. We're running a very lean, agile business in terms of the back-of-house operations. We don't have a cast of thousands here assisting.
We are very much hands-on as executives. We rolled up the sleeves, although it doesn't look like it today with our suit and ties. When we're in the factory, we've very much got the sleeves rolled up, and we are really on the ground understanding their business and what's going on. That culture has been pushed significantly recently through the business to really get them on board. We've seen certainly a very big shift in the U.S., operation. They now understand the bigger picture, and we've helped them to educate them and take them along that journey so that we do keep costs on a minimal level. Yeah, we're very happy with the way things are going. Long way to go, but we're happy with what's happening at the moment.
Thank you. Okay, that ends the questions that we've received. We might call it a day there. Thank you very much for your attendance today, and thank you for all your support. We obviously look forward to keeping you updated on progress as we head into FY 2026. Thank you very much.
Thank you, everybody.
Thank you.
Good morning.