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ORBITAL CORPORATION LIMITED
APPENDIX 4D
Company Details
Name of Entity: | Orbital Corporation Limited |
ABN: | 32 009 344 058 |
Reporting period: | Half Year ended 31 December 2021 |
Previous corresponding period: | Half Year ended 31 December 2020 |
Results for announcement to the market
A$'000 | ||||
Total revenue from continuing operations | Down | -53% | to | 8,889 |
Net loss from continuing operations after tax | Up | 31% | to | (5,080) |
Net loss for the period attributable to members | Up | 31% | to | (5,080) |
Net tangible assets per share | ||||
31 Dec 2021 | 30 June 2021 | |||
Net tangible assets per share (cents) | 6.07 | 6.90 | ||
Dividends |
There is no proposal to pay dividends for the half year ended 31 December 2021
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CORPORATE INFORMATION
ABN 32 009 344 058
REGISTERED AND PRINCIPAL OFFICE
4 Whipple Street
Balcatta, Western Australia 6021
Australia
CONTACT DETAILS
Australia
Telephone: 61 (08) 9441 2311
Facsimile: 61 (08) 9441 2111
USA
Address: 210 Wasco Loop, Hood River, OR 97031, USA
Telephone: +1 541.716.5930
INTERNET ADDRESS
http://www.orbitaluav.com
Email: contact@orbitalcorp.com.au
DIRECTORS
J.P. Welborn, Chairman
T.M. Alder, Managing Director and Chief Executive Officer
S.B. Gallagher
F.K. Abbott
COMPANY SECRETARY
D. Bonomini
SHARE REGISTRY
Link Market Services Limited
Level 12 QV1 Building
250 St Georges Terrace
Perth, Western Australia 6000
Telephone: 61 (08) 9211 6670
SHARE TRADING FACILITIES
Australian Stock Exchange Limited (Code "OEC")
AUDITORS
PricewaterhouseCoopers
125 St Georges Terrace
Perth, Western Australia 6000
I @OrbitalCorpASX
I OrbitalUAV
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31 December 2021
Half-Year Financial Report
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DIRECTORS' REPORT
FOR THE HALF-YEAR ENDED 31 DECEMBER 2021
Your Directors submit their report for the half-year ended 31 December 2021
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DIRECTORS
The following persons were Directors of the Company during the half-year ended 31 December 2021 and up to the date of this report.
Name | Information on Directors |
John Welborn | Chairman (Non-executive) |
Todd Alder | Managing Director and Chief Executive Officer |
Steve Gallagher | Non-Executive Director |
Kyle Abbott | Non-Executive Director |
REVIEW AND RESULTS OF OPERATIONS
Orbital UAV operates within the tactical unmanned aerial vehicle ('UAV') market. The Group provides world leading propulsion system solutions and flight critical components that deliver customers flight endurance, reliability and power-to-weight advantages.
Financial Review
The Group's consolidated revenue for the period was $8,889,000 (2020: $19,046,000) with a loss before income tax from continuing
operations of $1,010,000 (2020: loss of $2,603,000). This includes an unrealised foreign exchange gain of $490,000 (2020: unrealised foreign exchange loss of $2,366,000). The loss excluding income tax and unrealised foreign exchange from continuing operations for the period was $1,500,000 (2020: loss of $237,000).
At 31 December 2021, cash, term deposits and receivables were $7,570,000 (2020: $7,705,000). Deferred tax asset was nil (2020:
$4,070,000). Net cash used in operating activities during the period was $3,228,000 (cash used in the prior period 2020: $4,988,000).
Operational Review
Revenue of $8,889,000 for the half-year ended 31 December 2021 was comprised of sales income of established engine models under the Company's long term agreement ('LTA') with Insitu, a wholly owned subsidiary of the Boeing Company, and engineering services income from development programs across Orbital UAV's growing customer portfolio.
During the period, the Company completed the transition of new engine build production activities from its Hood River, Oregon facility to Balcatta, Western Australia. This move consolidates all new engine build production in Australia, providing opportunities to drive operational efficiencies across its established and future engine production lines.
Orbital UAV's Hood River facility remains strategically critical to the business and is the key interface with the Company's growing US customer base and broader US Defense network. Operationally, Hood River continues to provide maintenance, repair and overhaul capability with the capacity for expansion as production requirements demand.
Despite delays due to customer-driven design changes, Orbital UAV continued to progress the third engine development program for Boeing- Insitu during the six months to 31 December 2021. In parallel, development programs for Lycoming/Textron Systems and a major Singapore customer were successfully progressed and remain on track.
WA Government Loan Milestones
As outlined in the 2021 Annual Report, Orbital UAV received formal confirmation of a Deed of Variation following the restructure of its $9.9M WA Government Loan.
The restructured loan agreement includes an extended repayment schedule and repayment offset options that are contingent on the Company achieving operational milestones aligned with its increasing engine business in Western Australia.
During the first half of financial year 2022 ('FY22'), Orbital UAV met the first operational milestones set out in the Deed, contributing to 'Other Income' of $2.1M.
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DIRECTORS' REPORT
FOR THE HALF-YEAR ENDED 31 DECEMBER 2021
New customer programs
In addition to Orbital UAV's existing production and development programs, Orbital UAV continued to increase its customer portfolio and product development contracts during the first half of FY22, with two new programs of work announced in October.
The first, an additional program with Textron Systems, is for the development of Orbital UAV upgrades to Textron Systems' current UAV engines for the Aerosonde® program. The upgrades are targeting increased take-off power and improved real-time engine health monitoring and diagnostics capability.
Subsequently, the Company announced a Memorandum of Understanding ('MoU') with Texas-based Skyways, an emerging leader in unmanned cargo transport. Under the terms of the MoU, Orbital UAV will deliver a pre-production, heavy fuel engine to Skyways for integration into the company's next generation unmanned air system. Delivery of the development engine is scheduled in the first quarter of 2022.
Renounceable Entitlement Offer
Orbital UAV's increasing customer base and program deliverables saw the Company launch a Renounceable Entitlement Offer in October to raise up to A$6.5M. Funds raised are to be directed towards:
- contracted engine development programs;
- enhancing the Company's Australian production facility capabilities;
- driving product research and development; and
- general working capital.
The Entitlement Offer was well supported by eligible shareholders, including major shareholders UIL Limited and First Sentier Investors and all of the Company's Directors.
COVID-19
Throughout the COVID-19 pandemic, Orbital UAV has continued to implement proactive and ongoing risk mitigation to ensure its people remain safe and well, and operations in Australia and the USA continue with minimal disruption.
Following the launch of the WA Government's Mandatory COVID-19 vaccination policy for WA workers in October 2021, Orbital UAV has implemented its own COVID-19 Vaccination Policy. The Policy ensures the Company will have the necessary information, processes and people in place to continue operations in the event of a lockdown.
Significant events occuring after the reporting period
In February 2022 Boeing-Insitu issued Orbital UAV with a Termination of Convenience for the third engine development program under the LTA. Under the contracted terms, a Termination of Convenience entitles Orbital UAV to a full reimbursement of all costs incurred on the program to date.
The review does not impact demand of the two existing engine models Orbital UAV has in production for Boeing-Insitu.
The attached report for the half-year ended 31 December 2021 contains an independent auditor's review report which includes a paragraph in regard to the existence of a material uncertainty that may cast significant doubt about the Group's ability to continue as a going concern.
Outlook
The restructure of the Company's WA Government loan and the successful completion of the Renounceable Entitlement Offer has strengthened Orbital UAV's balance sheet and provided funds to progress the Company's growth aspirations - specifically the near-term expansion of its engine production lines in Balcatta, Australia.
Following the termination of activities on the third Boeing-Insitu engine model, the Company has redeployed facility and personnel resources onto other existing engine programs, with the intention of accelerating their development.
At the same time, Orbital UAV remains committed to supporting Boeing-Insitu in its current and future requirements with the delivery of confirmed orders for two existing engine production models.
The Company has a growing portfolio of contracted and globally recognised customers. With an increasing pipeline of opportunities within both defence and commercial markets, Orbital UAV continues to build its revenue growth potential and enhance its reputation as a world leader in the design and delivery of UAV engines.
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Orbital Corporation Limited published this content on 24 February 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 24 February 2022 22:07:08 UTC.