prize or some of those for, as a refresh, just, what is HighCom? We are an Australian-based global specialist defense company. We're involved in personnel protective systems. Now, people say, "Isn't that the wrong word? Shouldn't it be personal?" No, we're involved in protecting personnel, in this case, frontline and first responders. Our products are sold to governments, law enforcement, military, space, and the commercial sector. We've got two divisions. HighCom Armor. It designs, manufactures, and supplies advanced ballistic protection. That word "advanced" is important because that's where we play. The ballistics protection section is a large segment of the marketplace, but the advanced segment is actually a lot more focused and a lot more high value. We're focused on body armor, ballistic helmets, shields, and composite armors.
We do it for aligned military, law enforcement, and as I said, first responders. Our products are known for performance, and our new XTclave products are known for their lightweight, performance. Just as a piece to that, we had our SHOT Show presentations in Vegas recently, and the response to firstly our general product range was great to see. People like our armor because it doesn't fail. The users support it. Although in a lot of cases our products have been sold historically as a white label, in other words, people don't realize what it is, the users actually do. As I say, it was terrific response. Then when they picked up one of our light armor plates, the new ones out of the XTclave, they were all astounded.
That focus on product performance is critical to us, the lightweight armor coming out of the XTclave was critical as well. HighCom Technology is a specialist technology integrator, and that word "integrator" is really important. We supply and maintain small and medium uncrewed aerial systems, and then also the counter systems, plus program management, project engineering, system integration, and training. That last piece is particularly important because it provides annuity stream income out the back of the work we do, and we'll talk a little bit further about that later in the presentation. For technology, it's really important. It's been expanding its product range from small to now small and medium UAS, and we're currently looking at some heavy solutions as well.
The counter-UAS systems are really important and growing area of defense focus around the world as well. The business has had a tricky past over the last couple of years, but a lot of great work underneath all of that has been done in building the strategic foundations. To some extent, I sit here as the Executive Chairman with a lot of the heavy lifting having been done to get the foundational pieces in place. It's now a matter of how we focus those pieces and the strategic focus forward that will drive the future success. This differentiated product strategy is really important. We also have a refreshed management team in the U.S. We have a new president that's settling in well, and his team is strengthening as he goes forward.
They are really well and truly in execution mode now, which is great to see. As we say, a lot of the foundational work has been done. We've also got new pipelines to market, and we're strengthening the existing pipelines. I suppose it was another takeaway from SHOT Show. The support from our key customer group is spectacular, and I say that word on purpose. They really do like our teams, they like our products, and they like the way we come to market to support them. In a lot of cases, we go through distributors to market. Those distributors really appreciate the work that we do. Once again, as the new executive chairman, that was really reinforcing for me to see that. We have been hurt badly in the U.S. by the government slowdown in that first half.
It didn't just hurt us, it hurt our industry sector. Once again, all of our key customers are saying it's the worst they've seen. Certainly, it was tricky for the business to manage through that. Because basically the funding was shut down, the people that we deal with, our key government client customers, and law enforcement customers weren't getting paid, and in many cases went home, and they had no budget to spend. It's hurt that bit, and you've seen that in the results already announced. The delayed funding, though, was approved in December and was distributed back to these key customers again in January. They're all sort of regrouping and reestablishing themselves. They're putting the paperwork together to go back out to market.
We're told to expect that things will get back to more normal levels into Q4 of H2 FY 2026. We're also seeing signs of that out there in the marketplace with the levels of inquiry and bidding activity starting to grow commensurate with that expected recovery. The channel and product strategy, as I mentioned, is focused on delivering new product lines, adding capacity in terms of what we've got as a product suite to offer in the technology business, and improved product performance through that product differentiation and building out our annuity stream services. Differentiated products allow you to get better margins in the marketplace if you know how to work them, and that's what we're focused on doing.
As we've already mentioned to the market, previously, we're looking at 100%-150% uplift into H2 FY 2026 against H1 FY 2026, and looking for H2 to head to break even or slightly profitable. Now, there's a couple of riders there. You normally don't read the little bits down the bottom of the slides, but I think it's important that we do. The first two being the important ones. There is one large technology order that will fall or will be delivered in June. All the pieces of that delivery are in place. There don't appear to be any blockages in the system, but that still is very time-dependent. It's not a matter of time do we win the order or lose it's a matter of does it fall in June.
Currently, it appears as it will. Obviously, the timing of the recovery for the U.S. government shutdown, whereas our key clients are telling us clearly, that it's gonna come and we're seeing the market indicators that it's coming. The precise timing is something we don't control that, and we watch that carefully. The only other thing is the exchange rate. Once again, out of our control. Our budgets for this year are all based on $0.65, and we're running everything on that. As we know, the currency is currently $0.70 and north, and you'll see some of those impacts in the results we talk about. Next slide, please, Sharon. Just some highlights.
I need to reinforce that that XTclave technology is unique, it's patented, and it is producing ultra light, thin and strong ballistic products with complex curvatures. The complex curvatures are important because they open up other markets to us. We currently don't do a lot of work for support or reinforcement, ballistic reinforcement for vehicles, naval vessels or for aircraft, particularly helicopters. What we do with the lightweight and now complex curvatures means that we can. This gives us quite a significant technical advantage against others that don't have this technology. Also, because it's proprietary technology, it took us eight years, or probably more like 10 years to develop the technology. It's not something that someone can turn a new machine on or go down the road and buy this machine tomorrow. They can't.
We've got a unique advantage for some period into the future that we'll obviously work hard to protect. Our channel product and production. Our product production optimization is really important to us. The channel is us working more effectively with our current customer set. We'll talk later on about the fact that we've grown our channels to market. We will never try to replicate the major channels to market that our key customers have. Our four top customers have all got more than 50 salespeople out in the market. At a time, we have five in our system. Our five leverage their 50 by four clients, and that's the aim of this, is leveraging it without replicating it. We do not wish to build a large sales workforce. We're not built to be that sort of business.
What we do wanna do is leverage their position, and we're working with them as we do that and move from being a supplier to being partners in that process. Obviously the differentiated product value is really important, as we establish pricing structures and take them out into the market, and we'll talk further about that. Both businesses have really strong and respectful client relationships. It's actually great to watch, once again, coming in new. If we look at what we're doing in the U.S., that Cooperative Research and Development Agreement is really important for us, and we have research going on through the facility in Columbus on a regular basis. Not only does it help us develop new product and thinking about where the industry is going, it develops relationships that then set us up for future placement.
We're also now on key supply panels for the Department of Defense, positioning us as a trusted supplier, and I'll talk about them further later on. The integrated solutions offering is also important. I mentioned annuity stream earlier on in the previous slide. This idea of developing annuity stream revenues underneath product-based businesses is really important because it provides some longer term underpinning predictable earnings that allows you to basically structure the business in a more reliable way forward. We have avenues to grow those for both businesses actually, and we intend to pursue those forward. We do have a diversified global presence, so we've got concentrated presence obviously here in Canberra where I am, with a facility and an office. But we have a distributed team around the country. We also have a concentrated focus in Columbus, in Ohio.
From there, we leverage right across the Americas, north and south into Latin America. From Australia, we leverage into Asia, but particularly Europe as well. The business represents itself globally, but from a couple of concentrated locations. Importantly, we've also got our own direct-to-market e-commerce channels where people in the U.S. can buy our armor products online directly. The R&D pipeline is hugely valuable. Hugely valuable because I mentioned earlier that the technology for the XTclave differentiates it, and it does. As we develop new products, we develop new material science and mixes. Those products and material sciences become unique to us. Once again, we work to protect them through licensing and patenting to make sure that we maintain that advantage and make sure others can't catch up.
We're focused those new products and technology solutions towards tier one military and law enforcement buyers. As I say, the XTclave technology is unique in that and really allows us to do things that others can't. Down in the bottom for product differentiation, we now do have our first two XTclave products passed through independent testing to NIJ 7, which is the new standard in the U.S. for these products. Getting those first two through and independently tested is a very significant step, and they're now out for commercial sale, and we're basically fielding our first inquiries on those now, and the inquiry levels are very high. HighCom Technology is now on the CUAS panel for the Department of Defence.
That's a very significant appointment for us, given that we've moved from being a reseller to now being an integrator, and that's why we're on that panel. We've got our first tethered drone order. It's been received and we're now processing it through the business, and you saw that announced the other day. That's very important because we now can offer tethered drone solutions as well. Our refreshed AeroVironment agreement supports further product expansion into, as I said, medium and hopefully, ultimately, heavy platforms for drones. Next slide, please, Sharon. Here's a look at H1 update graphically. As we can see, the revenue at AUD 10.9 is lower than we would like it to be, all driven by the U.S. issues and the EBITDA loss at AUD 5.4 in the middle of the range that we showed the market, we'd guided to the market.
But really the driver here is all in the U.S. It's driven by that government shutdown. It was difficult, and, as I say, hurt the industry, not just us. There was some tariff-related uncertainty as well, which just generally upset the market, and upset markets are not aggressive normally in buying, and they weren't. We're not directly hit by those tariffs, as we've mentioned before, because many of our products, such as our ceramics, can, are not treated under the tariff regimes. They're treated separately because they're important for supply into defense. Couple of notes there that, in the impact for, the financial half that we've just reported is $686,000 charge for a tax expense related to 2022, 2023. In that sense it's abnormal, but it is in the numbers.
As we said, the EBITDA is in the mid-range, even though within that is a currency impact of AUD 232,000, rounding up there. That's, once again, we can't control currency. We can just manage it in terms of its impact. You can see there that hence why we landed at 5.4. Obviously, on a dollar for dollar currency basis, we would've been into the five ones and a bit at the lower end of the range. We've been told to prepare for the return to normal markets in the near to medium term, as I've mentioned, and we are. I've also mentioned that the government markets are now funded and the funds are in the hands of the end purchasers, which is great.
I've also mentioned to you about the forward guidance and the dependencies listed down the bottom. On the graph that's on the right-hand side, you'll see the orange bar, the two colors, the two slightly different orange colors. That represents the range from 100 to 150, if anybody's got any questions. Next slide, Sharon. Okay. The impact of the shutdown we've mentioned before, but it was significant and you can see it there graphically. It really highlights the kick. Once again, that's driven by armor. It's not driven by technology. Technology is performing well and truly to plan. Very happy with where that business is. Actually, we're happy with where the armor business is as well. It's just the market that's hurt us and we've had to hunker down. You can see the impacts on revenue, but also margin.
Once again, it's a volume-focused business. There are certain volumes we need to achieve to absorb the overheads. Once you get below those levels, it hurts. There was significant trimming in the U.S. business in the period to address that and corporately to address that. We intend to hold on to many of those gains and not let them grow back into the business. You can see the impact there. Then you can also see the divisional revenues Technology pretty well line ball with the previous period. The only difference there being timing on one big parts order. You can see the significant impact between 2024 and 2025 down bottom right there. We talked about the fact that we've been looking at call delivering cost reduction, and we have.
The other thing for our operation in the U.S., the facility has significant streamlining opportunities now that we've got the XTclave set up and basically placed in the right spot in the factory. We intend to work through them over FY 2027 in delivering those streamlined opportunities. That will reduce our cost base and our production cost base, and that will drop to margins as we get product out into the marketplace. We've talked about being focused on differentiation and execution, and we are now strengthening the delivery systems ready for the factory in particular to get busy. In the case of HighCom Technology, it's focused on extending its role as an integrator to a wider range of problems that they're solving for the customer set and hence a wider range of product offerings.
We're really in a good spot, as I mentioned earlier. The foundational work's done. In spite of some of the difficulties over the last few years, some really good work was done by prior teams to build those foundations. We're now in a position to start to leverage them as the market's returned. We've also mentioned those strong government relationships. This is a relationship driven business. We've got good, strong teams in both businesses. They're impressive. We've got good, strong relationships with clients that trust us. It sees the opportunities evolve from that. Next slide, please, Sharon. Inventory's been important. We'll probably stop reporting about this forward now that we've solved the in-inventory challenge that caused some issues in FY 2024. You'll see both inventory sets coming down, bar raw materials for the half.
That went up because we continued to develop our new products through the XTclave in spite of the market conditions. A critical strategic decision was to continue developing it on the basis that when the market comes on, we need to be ready rather than still developing because we stopped just to save some cost. We believe it's the right decision, and that's playing out in the markets in real time now in the U.S. and I think proving out the fact that it is indeed a positive decision. Next slide, please, Sharon. This is just a little bit of education. Some of you have seen this before, but I think it's important. You know, question, why are we in North America with armor? Well, you can see why.
It's 67% of the global market. Next followed by Asia Pacific, we're not yet big in the Asia Pacific. I mean, our products are up there, our international sales are now led out of Australia. One of the reasons is the U.S. has got basically North America and Latin America covered. Australia is covering Australia, although it's a very small market, it's picking up Asia Pacific. We do have good solid representation in Europe, we're just starting to get some value out of that. You'll also see in the middle circle there, defense is the biggest circle. Historically, we've been bigger in law enforcement in the U.S. through our HighCom business, we're now growing our footprint in defense.
We've got some brilliant credentials in the business through board membership for the business over there with some very former high-ranking SOCOM officers, so special operations officers in there. Our president is former Green Beret at officer level and ex-Pentagon. The business is well connected to grow that space. Civil is a market that we're in, and it says for those that wanna pay premium price for good product, we're for that, we're not into the general market. We don't want our products on the shelves of the gun shops in the U.S. You can see by body type, by product type, body armor is the largest share, followed by helmets, followed by shields. Interestingly, we have differentiated products in body armor.
We also, courtesy of the XTclave, now have a differentiated product in helmets in that we can produce lighter helmets. They are really important. The weight on the head is really important to get as light as possible. As of a couple of weeks ago, we now have a unique shield solution coming through the XTclave, which once again has got better ballistics protection, but also, it's an integrated platform that's lighter. Really it's important to see that we've got differentiated products evolving right across that for that ballistics market. Next slide, please, Sharon. Just a couple of things, we've spoken about a bit of this already, but the XTclave is a unique unique thing, and our job is to leverage the value out of that on behalf of the shareholders.
It does allow us to produce differentiated products. We are. The drivers for the business, there are tailwinds in spite of what happened in the first half. There are now tailwinds in armor. We see, obviously courtesy of the activities in the U.S., a lot of activity for Homeland Security, and that drives demand for our products. We see a lot of uncertainty globally that drives demand for our products. We see some big requests coming out of Latin America most recently, driven by obviously activities into Venezuela recently. As I say, a lot of tailwinds in the market. The final tailwind we don't mention here is just the new standard NIJ 7. It is an industry that follows trends.
As one law enforcement agency gets NIJ 7, others then want the same because it provides better ballistic protection. We'll be working hard to continue to lead the certification into NIJ 7. HighCom Technology, really an integrator of counter and drone systems, really important. The integration of the sensor systems onto that and the software and control systems. Our partnership with AeroVironment is really high value, and we're learning to leverage that better and also to become a more important partner for AeroVironment. Obviously we've got project growth through our various projects. The drivers for this business really is the global focus on drones for warfare and counter-drone for protections of assets and people, and we're right in the center of that.
Then the big piece that's not mentioned on the slide is indeed the integrated control systems to control multiple drones and multiple counter-drone systems within the force. It's really driving, and that's, as we've mentioned there, the networked battlefield systems, but that becomes for us control systems, and we're deep into that as well. We're really looking at it. The one thing that we're also starting to expand is this cross-selling between the two businesses. They have operated largely as silos, yet there's huge cross-selling opportunities between both, and we're starting to do that now. Once again, you can see the divisional numbers down below. I won't go through those in detail. The revenue split in the middle of the slide is based on the original budget for the year.
They're gonna be a different split for the final figures, but the target split is what it was there at 73/27. Over time, I wanna balance that closer to 50/50, and in doing so, I wanna grow both, not hold one back to, for another to catch up, but I wanna grow both. The board and myself strongly believe, as does the management team, the chances to leverage our technology business and grow that quite significantly exists, and we intend to pursue that forward. Next slide, please, Sharon. Little bit for those that don't know, and once again, some have seen this slide, but starting on the left is the traditional body armor where you basically cook it up. If you wanna add ceramics, you've got to go through another process.
This is really for... It's heavy, it's thick, and it does provide protection, but it does it basically through bulk. Interesting fact is about 40% of the body armor in the Ukraine is ours through a couple of significant orders historically. Actually we've had another one recently as a top-up. It's more that it's the old school. In the middle is axial-press , and many manufacturers have got axial presses. I was actually speaking to one of the big manufacturers in Germany on the weekend, and they are all axial-press . The thing is that if you wanna add ceramics to it, you've got to go through another process on top of that and add an autoclave. We have ovens, we use presses, and we have autoclaves.
The game changer is to the right, which is the XTclave. It can do what the the mid-process requires two steps before it does it in one, and it can produce complex curvatures, and it produces better ballistics because it integrates the products better into one operating unit. Because it's a premium product, we start with it focused on special forces, specialized law enforcements, FBI, Secret Service, and they're all very keen to get a hold of it and use it. In some cases, they've already got it. We're also finding that now that law enforcement has felt it, they've realized the health benefits of it. It is really a health issue carrying this heavy weight, particularly on your chest and your back.
It is also an issue for female frontline defenders and fighters in that it doesn't suit them because it's not suited to their body form. We can produce and have produced now female form armor, and we're now heavily promoting that, particularly into LAPD as I speak. They're very important steps for the business that open up markets that others struggle to get into because complex curvature for us is straightforward and easy. Next slide. It's a little, please, Sharon. It's a little bit about the technology advantage. It really is this ability. It was two, actually. You'll see in that first bullet, it talks about the word solutions.
The team sees its job is to find out what problems our customers are solving and to work on integrated solutions, access the best technology and integrate it to work. They do a brilliant job at that. As I say, the fact they've got on that CUAS panel is really testament to the work they've been doing there. It really is important that that's how they think and operate. That's opening up great opportunity for them. What it's doing is allowing them to grow from being a reseller to an integrator. It's allowing them to produce growth and also better margins, which is really, really important. It's allowing them to build more annuity stream income underneath it. Also importantly, it allows them to have a controlled R&D cycle.
We don't have to spend big dollars on a new tech that may or may not fly. We choose the best. Our R&D is around the integration of those solutions. That's where we do our work, and we're very good at it, and that's actually a low-cost place to play. It's the same actually in our in our armor business. Our R&D cycle is down to about two weeks from when we decide to put together and design a new set of ballistic material combinations to by the time it's in our own range being ballistically tested. That's quite cheap and fast for R&D of what are high-value products. This technology business, once again, is a low R&D spend business because it doesn't have to be out on the bleeding edge trying to find new ideas.
It just needs to know where the new ideas are coming and to choose the best and put them together. Next slide, please, Sharon. Just the outlook. As we say, we're now past the shutdown. Money's back in the customer's hands. It's now a matter of how quickly they come back to market. They've told us to get ready, which we are. The shop is doing all of its production planning and its inventory planning. We're getting ready to run, and we're seeing the volumes of pricing and inquiries rising. It's now a matter of the precise timing of that. As I say, the Shot Show engagements with the client was seriously positive and material higher than the year before. Our stand was busy right up to closing.
We couldn't shut it down when other stands were shutting down 'cause we still had people coming by, which is a terrific outcome. The focus on channel product strategy, it really is delivering. As I said, we've now got five US geographies with people dedicated in the geography, leveraging out through our customers. They got the 50 that I mentioned before. That really is starting to bear fruit. We're also operating as partners, not suppliers. It's how do we work with our key customer set for them to get bigger product volumes through the market by them winning easily and us hence winning easily. Strong customer engagement we've mentioned. SHOT Show followed that up. We met with all of our key customers there.
Going to these shows is tenuous and difficult, but the value is all your clients are there, so you can do a hell of a lot of high-value networking quickly, which we were able to do, and we continue to select various trade shows during the year that allow us to do it. Then, as I say, the first two XTclave products are now in commercial sales, and it's really important that that's happened. The team is now focused on continuing that development of the new products into NIJ 7 certification and to other global certifications. We've talked about technology, but it is indeed becoming the trusted provider of integrated drone solutions. That technology integrator is a really important strategic change, and it is leveraging its partnerships better with its key partner network and expanding that network, which is important.
As we've mentioned, we are on the panel now. We've got our tethered drone order, which is important, and we've got a wider range of representation of the AV product suite. Improved margins come from returning to the target volumes and continuing to grow, but through differentiated products as well, and also through streamlining our production processes, particularly in the US. As I say, we've already done the modeling to make sure that we don't grow overheads as we grow volume back. It's been a very healthy exercise to get squeezed. Now we're low, we've got plans on how we hold on to those levels and not let them grow in a linear sense as we go back up.
Not many of those costs need to grow in a linear sense either, so we will now, with these models, make sure we hold on to that. Future capacity, the XTclave has got huge capacity. It can run seven days a week, 24 hours a day with maintenance downtime every couple of weeks, and then if it majors every quarter. It says that's available for us to start to draw on alongside our existing capacity through our existing autoclave and our existing ovens and press programs. It says that we actually have really increased the capacity of the facility to meet the growth demands that we think are coming. The next point there about opportunities to outsource some selected secondary work streams.
What we do find as we look around the industry is there are some smaller suppliers that are focused on things like making carriers. We have a section in the factory that makes the armor carriers, basically the vest you put on. There are people that have fully automated that. They've invested the capital. They go from a digital drawing that then cuts the fabric, that then puts it together and sews it and glues it. Ours are still highly manual. We're gonna be working with them to see if it's more effective over time to work with them than for us to look at reestablishing a different process there, and in the process, avoid the capital spend. That's an area where we may well look to outsource.
There are other areas where we're looking to insource because it makes logical sense, and we'll work through those over the next period of time. Once again, that opens up further opportunities for both capacity, but also production efficiency and hence margin growth. Finally, guidance, as we mentioned. H2 is gonna be an uplift of AUD 100-AUD 150 on H1. That should return us to break even or slightly profitable on that half. There are those riders in the points down below. The one big shipment for technology, once again, we've said we think that's well in hand. Obviously the timing of the return to full volume from the U.S. government shutdown, there's no question it's coming back.
We've planned as we've been told by our clients, and we can see activity supporting that, but the final bit is still in the government's hands. Then obviously exchange rate will be what it'll be, but our plan for the year was on $0.65, so we run it at that, and we'll adjust the numbers up and down depending on how the currency moves forward from here. Next slide. This is just a couple of photos there from SHOT Show. You'll see on the left is the armor product just sitting there, and that's a mixture of heavy and light. Basically, we'd have people come up, and we'll start by giving them the heavy plate and, you know, they all respected it.
There's never been a pass through one of our plates when it was the ballistics aimed at it were the ones it was designed for. We have not had one. Then we give them the light plate, which does better again, but is also meeting those ballistics requirements, and they were all blown away. The one on the right, showing two things. You're seeing shields, and you're also seeing helmets. The helmets that aren't on the stands, the one in the middle there, that is a new XTclave lightweight helmet. Once again, huge response as people picked that up and realized how light that is on someone's head. Then the shields on the left, we didn't actually have an XTclave shield there for that thing, not in that display.
It's somewhere else on the stand. Same thing, we now have lightweight shields with better ballistic protection that we've been producing out of the XTclave, which will open up that market. They are heavy. They take a lot of energetic capacity from the frontline responder, it says if we can make that lighter to save their energy for the things they're trying to prevent, it's a far better outcome. The final piece there, it's actually behind. Chad, the guy on the right there with the bald head, Chad is our Vice President of Operations. He's been with the business for over 15 years in the U.S. He's part of the heart and soul. Behind him on the right, we had basically the lightweight female form-fit body armor in the carrier. First time that's been done.
Once again, the response to that was spectacular. Next slide. Okay, important info. Leave that for you to read when you get a copy of it. Then final slide. The closing slide. Okay. Look, thank you for that. We appreciate you dialing in. As I say, summary, foundation work's been done. We're now leveraging that foundation work. Shutdown in the U.S. didn't help us, but that's now passed, and we're now moving forward. We're looking at a very strong FY 2027 from here as the numbers currently shape up in terms of the forward profile for our pipeline, which is excellent. Thank you for your time.