Innovation
Leadership
Growth
Annual Report 2022
XTEK8s purpose
PROTECT THE FRONTLINE
PROTECTORS
Contents
About Us
Company Overview
Ballistics Division
Technology Division
Chairman9s Report & Financial Highlights
01
02
04
06
08
Group CEO9s Report & Operational Highlights
Board and Management
Directors9 Report
Financial Statements
Corporate Directory
10
12
14
21
78
XTEK Limited | Annual Report 2022
01
XTEK8s business
IS PROVIDING HIGH1QUALITY
SPECIALIST PRODUCTS AND
TAILORED SOLUTIONS TO
MILITARY, LAW ENFORCEMENT
AND GOVERNMENT AGENCIES
XTEK8s focus
IS ON GROWING ITS GLOBAL
SALES AND DISTRIBUTION
NETWORK IN NEW MARKETS
FOR ITS HIGH PERFORMANCE
BALLISTIC PRODUCTS AND
TECHNOLOGY SOLUTIONS
XTEK Limited | Annual Report 2022
02
XTEK Group
XTEK GROUP IS AN ASX LISTED
INTERNATIONAL DEFENCE
INDUSTRY COMPANY.
XTEK Limited | Annual Report 2022
03
THE GROUP OPERATES AS TWO DISTINCT DIVISIONS 3
BALLISTICS & TECHNOLOGY.
Ballistics Division (HighCom)
Technology Division
Focused on designing, manufacturing, and supplying global
military, law enforcement, and first responder customers
with world1class, advanced personal protection ballistic
products and solutions for:
" Body Armour
" Ballistic Helmets
" Composite Structures
Focused on manufacturing and supplying global Defence
and Security Agencies with world1leading Australian1made
and globally sourced:
" Systems 3 UAVs & UGVs solutions
" Sensors 3 Detection & Optical Payloads
" Software 3 3D Mapping & Modelling SW & Tactical
Situational Awareness SW
" Support 3 System Integration, Training,
& Service Support
XTEK Limited | Annual Report 2022
04
Ballistics
Division (HighCom)
Production facilities:
" Columbus Manufacturing Centre (CMC), OH, USA
" Adelaide Manufacturing Centre (AMC), SA, Australia
Focused on designing, manufacturing, and supplying global military, law enforcement,
and first responder customers with world1class, advanced personal protection
ballistic products and solutions for:
" Body Armour
" Ballistic Helmets
" Composite Structures
Columbus
Manufacturing
Centre
Adelaide
Manufacturing
Centre
XTEK Limited | Annual Report 2022
05
Revenue Attribution (A$m)
Ballistics Division (HighCom) contribution
of $47.0m (81%) of Group in FY22 vs
$16.1m (58%) in FY21
$47.0m
of Group in
FY22
1
$100m
global opportunity pipeline
$100m of international opportunities in various
stages of qualification in Europe, the USA,
the Asia Pacific, and other regions
XTEK Limited | Annual Report 2022
06
Technology
Division
Co1located with Corporate Headquarters in Canberra, ACT, Australia.
Focused on manufacturing and supplying global Defence and Security Agencies
with world1leading Australian1made and globally sourced:
" Systems 3 UAVs & UGVs solutions
" Sensors 3 Detection & Optical Payloads
" Software 3 3D Mapping & Modelling SW & Tactical Situational Awareness SW
" Support 3 System Integration, Training, & Service Support
Our world leading OEM systems partners
Revenue Attribution (A$m)
Technology Division contribution of
$11.1m (19%) of Group in FY22 vs
$12.1m (42%) in FY21
1
$11.1m
of Group in
FY22
XTEK Limited | Annual Report 2022
07
The Technology Division
has a pipeline of
opportunities exceeding
$30m for new systems
and new support contracts
across Australia and
New Zealand.
CHAIRMAN9S REPORT
XTEK Limited | Annual Report 2022
0
Dear
Shareholders,
I AM PLEASED TO PRESENT THE FY22 ANNUAL REPORT,
MY FIRST AS THE CHAIRMAN, ON BEHALF OF THE
BOARD OF DIRECTORS OF XTEK LIMITED ( 90
$
10,30,30
10,,23
10,30,30
10,,23
1,1
1,1
1,3
1,3
1,0,1
1,0,1
,
,
2,3
2,3
,
,
13,2
13,2
2022
Trade receivables
Total
2021
Trade receivables
Total
of all trade receivables at 30 June 2022 were received by 31 August 2022.
The Group does not hold any financial assets with terms that have been renegotiated, but which would otherwise be past due
or impaired.
The other classes of receivables do not contain impaired assets.
The carrying value of trade receivables is considered a reasonable approximation of fair value due to the short1term nature
of the balances.
The maximum exposure to credit risk at the reporting date is the fair value of each class of receivables in the financial statements.
14 Inventories
CURRENT
Work in progress
Products and spare parts
2022
$
2021
$
1,2,1
1,0,3
1,,
,02,3
1,1,312
10,3,212
During the 2022 financial year inventory write downs totalled $2.m which predominantly related to the Virolens stock
purchased in FY20121. (2021: nil).
Any expense would be included in the changes in inventories of finished goods and work in progress in the Statement of
Comprehensive Income.
15 Other Current Assets
CURRENT
Prepayments
Short1term loan
The accompanying notes form part of these financial statements.
2022
$
1,33,23
,00
1,30,23
2021
$
1,0
22,2
,12
Notes to the Financial Statements continued
16 Property, Plant and Equipment
PROPERTY, PLANT AND EQUIPMENT
Plant and equipment
At cost
Accumulated depreciation
Total plant and equipment
Office furniture and equipment
At cost
Accumulated depreciation
Total office furniture and equipment
Motor vehicles
At cost
Accumulated depreciation
Total motor vehicles
Demonstration equipment
At cost
Accumulated depreciation
Total demonstration equipment
Computer software
At cost
Accumulated depreciation
Total computer software
Leasehold improvements
At cost
Accumulated depreciation
Total leasehold improvements
UAS
At cost
Total UAS
Sub1total
Right of use, lease assets
At cost
Accumulated depreciation
Total right of use, lease assets
Total property, plant and equipment
The accompanying notes form part of these financial statements.
XTEK Limited | Annual Report 2022
43
2022
$
2021
$
11,22,3
,0,22
(2,11,1)
(1,31,)
,0,
,1,32
21,
,01
(0,2)
(2,1)
11,
22,203
13,020
(,21)
10,2
1,1
(,2)
2,23
21,
21,
(20,1)
(13,02)
3,0
,0
01,1
1,3
(31,1)
(20,2)
210,013
301,3
2,
00,3
(00,30)
(2,)
23,1
22,0
1,312
1,312
1,312
1,312
10,1,12
,1,22
3,1,02
3,03,0
(1,,0)
(0,30)
1,1,1
2,03,02
12,23,
11,,02
Notes to the Financial Statements continued
XTEK Limited | Annual Report 2022
44
(A) MOVEMENTS IN CARRYING AMOUNTS OF PROPERTY, PLANT AND EQUIPMENT
Movement in the carrying amounts for each class of property, plant and equipment between the beginning and the end of the
current financial year:
Year ended 30 June 2022
Balance at the beginning of year
Additions
Disposals
Depreciation expense
Transfer
Foreign exchange movement
Balance at the end of the year
Year ended 30 June 2022
Balance at the beginning of year
Additions
Disposals
Depreciation expense
Transfer
Foreign exchange movement
Balance at the end of the year
Year ended 30 June 2021
Balance at the beginning of year
Additions
Disposals
Depreciation expense
Revaluation
Plant and
Equipment
$
Office
Furniture
and
Equipment
$
,1,32
1,1,21
22,203
23,0
(2,1)
(20)
Motor
Vehicles
$
2,23
,12
3
Demon1
stration
Equipment
$
Computer
Software
$
,0
3
3
301,3
2,3
3
(0,330)
(11,22)
(,)
(21,1)
(11,1)
(2,22)
,2
,0,
3
2,22
11,
3
,0
10,2
3
3
3
3,131
3,0
210,013
Leasehold
Improvements
$
Right of Use,
Lease Assets
$
UAS
$
Total
$
22,0
1,21
3
(122,1)
3
,130
1,312
2,03,02
11,,02
3
3
3
3
3
121,23
1,,
3
(2,3)
(3,1)
(1,3,33)
3
3,3
(2,22)
1,0
23,1
1,312
1,1,1
12,23,
Office
Furniture
and
Equipment
$
23,0
,
3
Motor
Vehicles
$
2,20
3
3
Demon1
stration
Equipment
$
Computer
Software
$
3,
20,223
3
10,
21,
(,20)
(10,32)
(,)
(2,3)
(13,)
3
3
3
3
3
1,
3
Plant and
Equipment
$
1,21,23
,1,
(1,2)
(21,)
3
Foreign exchange movement
(2,2)
(,332)
Balance at the end of the year
,1,32
22,203
2,23
,0
301,3
The accompanying notes form part of these financial statements.
Notes to the Financial Statements continued
XTEK Limited | Annual Report 2022
45
Leasehold
Improvements
$
Right of Use,
Lease Assets
$
UAS
$
Total
$
30,1
33,
3
(10,)
3
(,)
22,0
1,312
2,22,3
,,000
3
3
3
3
3
13,3
,,20
3
(1,1)
(12,12)
(1,110,3)
3
1,
(100,0)
(13,3)
1,312
2,03,02
11,,02
2022
$
2021
$
30,
321,2
,0
(2,3)
3,23
(11,0)
3,0
32,
Patents
$
Certification
$
Total
$
321,2
2,
3
3
3,32
31,3
2,
(1,100)
3,0
0,32
Patents
$
Certification
$
32,
,
(1,100)
3,0
3,0
Total
$
22,1
,1
3
3
321,2
,3
300,012
3
(11,0)
(,1)
31,3
,1
(11,0)
(,1)
32,
Year ended 30 June 2021
Balance at the beginning of year
Additions
Disposals
Depreciation expense
Revaluation
Foreign exchange movement
Balance at the end of the year
17 Intangible Assets
Patent cost
Certifications
Ammortisation
Total Intangibles
(A) MOVEMENTS IN CARRYING AMOUNTS OF INTANGIBLE ASSETS
Year ended 30 June 2022
Balance at the beginning of the year
Additions
Ammortisation
Foreign exchange movement
Closing value at 30 June 2022
Year ended 30 June 2021
Balance at the beginning of the year
Additions
Ammortisation
Foreign exchange movement
Closing value at 30 June 2021
The accompanying notes form part of these financial statements.
XTEK Limited | Annual Report 2022
46
2022
$
2021
$
3,3,3
,32,11
2,212
0,03
1,333,1
3
20,
0,02
3,,
,1,
2022
$
2021
$
1,0,303
1,0,303
2,22,01
2,22,01
2022
$
13,0
13,0
2021
$
13,30
13,30
2022
$
2021
$
01,10
01,10
1,33,00
1,33,00
Notes to the Financial Statements continued
18 Trade and Other Payables/Borrowings
(A) TRADE AND OTHER PAYABLES 3 CURRENT
Current
Trade and other payables
GST payable
Lease liability: AASB1
Sundry payable and accrued expenses
(A) TRADE AND OTHER PAYABLES 3 NON1CURRENT
Non1Current
Lease liability: AASB 1
(B) BORROWINGS 3 CURRENT
Current
Bank loan 3 interest bearing (see note 21)
(B) BORROWINGS 3 NON1CURRENT
Non1current
Bank loan 3 interest bearing (see note 21)
The accompanying notes form part of these financial statements.
Notes to the Financial Statements continued
XTEK Limited | Annual Report 2022
47
19 Employee Benefits
Current liabilities
Annual leave provision
Long service leave
Non1current liabilities
Long service leave
Nature and timing of provisions
2022
$
2021
$
31,3
1,3
,0
2022
$
33,320
33,320
01,
1,32
,13
2021
$
3,0
3,0
Refer to Note 3 (n) for the relevant accounting policy and discussion of the significant estimations and assumptions applied
in the measurement of this provision.
20 Contract Liabilities
CURRENT
Customer deposits
Total
NON1CURRENT
Customer deposits
Total
2022
$
2,22
2,22
2022
$
1,1
1,1
2021
$
3,11
3,11
2021
$
1,0
1,0
21 Interest Bearing Liabilities
At 30 June 2022 the only borrowings of the Group were the Commonwealth Bank loan of $1,1,0. At 30 June 2021: $1,2,33.
(Subsequent to the end of the financial year, the Commonwealth Bank loan was paid out in full.)
During 2021122 FY, HighCom (US subsidiary) had two loan facilities with PNC Bank which were paid out in full in June 2022.
22 Issued Capital
100,20,2 (2021: 1,03,) Ordinary shares
Total
There were no options on issue at 30 June 2022 (30 June 2021: nil).
The accompanying notes form part of these financial statements.
2022
$
2021
$
2,01,01
,03,11
2,01,01
,03,11
Notes to the Financial Statements continued
XTEK Limited | Annual Report 2022
4
(A) MOVEMENT IN ORDINARY SHARES
Opening balance
Shares issued
2022
No.
2022
$
2021
No.
2021
$
1,03,
,03,11
3,1,20
33,1,2
2,3,
,1,
1,,30
12,11,
Transaction cost in relation to capital
3
(,2)
3
(,1)
Total
100,20,2
2,01,01
1,03,
,03,11
(B) EXPIRED OPTIONS AND SHARE PERFORMANCE RIGHTS
There were no options on issue at 30 June 2022 (30 June 2021: nil).
There were no share performance rights exercisable at the end of any prior year.
As at 30 June 2022 there were no unissued shares nor were there any at the end of any prior year.
(C) CAPITAL MANAGEMENT
When managing capital, management9s objective is to ensure the entity continues as a going concern as well as to maintain
optimal returns to shareholders and benefits for other stakeholders. Management also aims to maintain a capital structure
that ensures the lowest cost of capital available to the entity.
No dividends were declared on or before or subsequent to the end of the financial year.
23 Earnings Per Share
Basic earnings per share amounts are calculated by dividing net profit for the year attributable to ordinary equity holders of the
Company (after declaring interest on the convertible redeemable preference shares) by the weighted average number of ordinary
shares outstanding during the year.
Diluted earnings per share amounts are calculated by dividing the net profit attributable to ordinary equity holders of the
Company (after deducting interest on the convertible redeemable preference shares) by the weighted average number of ordinary
shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on the conversion
of all potential shares into ordinary shares.
Basic profit per share
Dilutive profit per share
RECONCILIATIONS OF EARNINGS USED IN CALCULATING BASIC AND DILUTED EARNINGS PER SHARE
(a) Reconciliation of earnings to profit or loss from continuing operations
Profit from continuing operations
2022
$
0.03
0.03
2021
$
(0.0)
(0.0)
2022
$
2021
$
,3,30
(3,,)
Earnings used in the calculation of dilutive EPS from continuing operations
,3,30
(3,,)
(b) Earnings used to calculate overall earnings per share
Earnings used to calculate overall earnings per share
The accompanying notes form part of these financial statements.
2022
$
2021
$
,3,30
(3,,)
Notes to the Financial Statements continued
XTEK Limited | Annual Report 2022
4
(c) Weighted average number of ordinary shares outstanding during the year used in calculating basic EPS
Weighted average number of ordinary shares outstanding during the year used
in calculating basic EPS
Weighted average number of ordinary shares outstanding during the year used
in calculating dilutive EPS
2022
$
2021
$
1,,03
,,1
1,,03
,,1
(d) Options and share performance right
Options and share performance rights granted to employees and Directors that are considered to be potential ordinary shares
would be included in the determination of diluted earnings per share, to the extent to which they are dilutive. As at reporting
date, no options or share performance rights have not been included in the determination of basic earnings per share.
(e) Share Issuance
The issued capital of XTEK Ltd & controlled entities at 30 June 2022 comprised 100,20,2 (2021: 1,03,) fully paid Ordinary
Shares. There were no issued options as at 30 June 2022 (2021 nil).
24 Grants
(A) GOVERNMENT GRANTS
Government grants of $,21 were recognised in the 2022 financial year (FY21 3 $10,0).
In financial year 2022 a Centre for Defence Industry Capability grant of $, was received for works on assets (FY21 3 nil),
see the accounting policy for grants in Note 1 (u) above.
25 Cash Flow Information
(A) RECONCILIATION OF CASH FLOW FROM OPERATIONS WITH PROFIT/(LOSS) AFTER INCOME TAX.
Profit for the year
Adjustments for non1cash flow in profits:
Depreciation
Bonus issue of shares to employees
Finance cost on lease
Loss on sale of assets
Changes in assets and liabilities
(Increase) in trade debtors
Decrease/(Increase) in inventory
(Increase)/Decrease in prepayments and other
Increase/(Decrease) in trade and other payables
Increase/(Decrease) in deferred income
Increase/(Decrease) in employee provisions
Net cash flows from/(used in) operating activities
The accompanying notes form part of these financial statements.
2022
$
2021
$
,3,30
(3,,)
1,1,33
1,122,
,31
12,0
1,221
12,213
1,3
,1
(,,01)
13,21,02
(,0,)
(1,,21)
(,31)
1,110,3
3,00,3
(,3,3)
1,1
(1,,03)
(32,311)
2,21
2,,0
(2,13)
Notes to the Financial Statements continued
XTEK Limited | Annual Report 2022
50
(B) NON1CASH FINANCING AND INVESTING ACTIVITIES
In FY21122 no shares were issued to employees. As at 30 June 2022 , shares remain in escrow.
In FY20121 20,22 shares issued to employees. As at 30 June 2021 ,1 shares remain in escrow.
Shares that have vesting conditions are held in escrow and are allotted to the employee recipient after three years from the time
of granting or upon their leaving the employment of the Company.
26 Share1Based Payments
During the year ended 30 June 2022, no new ordinary shares were issued as part of staff incentive plans for employees
of the company (FY21 20,22 new ordinary shares).
Employee Share Ownership Plans
The Company provides benefits to employees (including key management personnel) in the form of share1based payments,
whereby employees render services in exchange for shares or rights over shares (8equity settled transactions9).
There are currently two plans in place:
(i) the XTEK Employee Incentive Plan; and
(ii) the Employee Tax Exempt Share Plan, which provides benefits to all eligible employees.
The cost of these equity settled transactions with employees is measured by reference to the fair value at the date at which
they were granted.
Share Options and Share Performance Rights
There were no unlisted options at 30 June 2022 (2021: nil). There were no options or share performance rights in the hands of
staff issued at the start of financial year 2022 or the prior year. There were no options or share performance rights in the hands
of staff exercisable at the end of the year or any prior year. As at 30 June 2021, there were no unissued shares.
Employee/Director Share Issue
The Board may approve a bonus comprising cash and fully paid ordinary shares separate from the LTIP 3 note 3(s).
No non1executive director bonus was paid in FY22 (FY21 3 nil).
Weighted Average Share Price
The weighted average market price at 30 June 2022 was 33. cents (2021: 0.0 cents).
27 Events Occurring After the Reporting Date
The financial report was authorised for issue on 30 September 2022 by the Board of Directors.
No matters or circumstances have arisen since the end of the financial year which significantly affected or could significantly
affect the operations of the Group, the results of those operations, or the state of affairs of the Group in future financial years.
The COVID11 outbreak has impacted the way of life in Australia. This has affected the ability of the Group to continue operations as
usual and has impacted on its operating results. In accordance with national guidelines, the Group has implemented remote working
arrangements in response to government requirements and to ensure the wellbeing and safety of all employees and visitors.
The Group has determined that there are no going concern risks arising from the impact of the COVID11 outbreak and has risk
mitigation strategies in place with regards to COVID11 outbreaks and other ongoing impacts The board members have determined
that the Company remains in a healthy position.
The accompanying notes form part of these financial statements.
Notes to the Financial Statements continued
XTEK Limited | Annual Report 2022
51
28 Related Parties
(A) THE GROUP9S MAIN RELATED PARTIES ARE AS FOLLOWS:
1. Entities
The Group is XTEK Limited and its wholly owned subsidiaries:
Simmersion Holdings Pty Ltd.
HighCom International, Inc (formerly XTEK, Inc) (registered in Delaware, USA) is the owner of HighCom Armor Solutions, Inc.
The financial details for the Parent entity are at Note 31.
2. Directors
Details of all Directors can be found in the Directors9 Report.
3. Key management personnel
Disclosures relating to key management personnel are set out in the remuneration report.
(B) TRANSACTIONS WITH RELATED PARTIES
Transactions between related parties, if they occur, are on normal commercial terms and conditions no more favourable than
those available to other parties unless otherwise stated.
The following transactions occurred with related parties.
In September 2021 an unsecured loan facility for $1,000,000 was established but not drawn. The firm paid $20,000
establishment fee to UDB Pty Ltd a company associated with Mr Uwe Boettcher, former Chairman of XTEK Ltd; and
In FY22 from March to June 2022, $0,13 was paid for advisory services to Arican Pty Ltd a company related to
Mr. Mark Stevens current Chairman of XTEK Ltd. Invoices were paid on seven day terms.
There were no related party transactions in the 2020121 year.
29 Financial Risk Management
The Group is exposed to a variety of financial risks through its use of financial instruments.
The Group8s overall risk management plan seeks to minimise potential adverse effects due to the unpredictability of financial markets.
The most significant financial risks to which the Group is exposed to are described below.
Specific risks
Liquidity risk
Credit risk
Market risk currency risk, interest rate risk and price risk
Financial instruments used
The principal categories of financial instrument used by the Group are described below.
Trade receivables
Cash at bank
Trade and other payables
The accompanying notes form part of these financial statements.
Notes to the Financial Statements continued
XTEK Limited | Annual Report 2022
52
Summary Table
Financial assets
Held at amortised cost
Cash and cash equivalents
Trade and other receivables
Total financial assets
Financial liabilities
Financial liabilities at fair value
Trade and other payables
Borrowings
Total financial liabilities
2022
$
2021
$
3,1,2
,01,223
10,,02
1,1,00
,,1
,2,230
3,3,3
,32,11
1,1,0
1,2,3
3,2,33
,2,2
The Group has not restated comparatives when initially applying AASB , the comparative information has been prepared under
AASB 13 Financial Instruments: Recognition and Measurement.
FINANCIAL RISK MANAGEMENT
Objectives, policies and processes
The Board of Directors has overall responsibility for the establishment of the Group9s financial risk management framework.
This includes the development of policies covering specific areas such as foreign exchange risk, interest rate risk, credit risk
and the use of derivatives.
Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group9s activities.
The day1to1day risk management is carried out by the Group9s finance function under policies and objectives which have been
approved by the Board of Directors. The Chief Financial Officer has been delegated the authority for designing and implementing
processes which follow the objectives and policies. This includes monitoring the levels of exposure to interest rate and foreign
exchange rate risk and assessment of market forecasts for interest rate and foreign exchange movements.
The Board of Directors receives monthly reports which provide details of the effectiveness of the processes and policies in place.
The XTEK Group does not engage in the trading of financial assets for speculative purposes. Mitigation strategies for specific risks
faced are described below.
Liquidity risk
Liquidity risk arises from the Group9s management of working capital and the finance charges and principal repayments on
its debt instruments. It is the risk that the Group could encounter difficulty in meeting its financial obligations as they fall due.
The Group9s policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities as and when they fall
due. The Group maintains cash and marketable securities to meet its liquidity requirements for up to 30day periods. Funding
for long1term liquidity needs is additionally secured by an adequate amount of committed credit facilities and the ability to sell
long1term financial assets.
The Group manages its liquidity needs by carefully monitoring scheduled debt servicing payments for long1term financial liabilities
as well as cash1outflows due in day1to1day business.
The accompanying notes form part of these financial statements.
Notes to the Financial Statements continued
XTEK Limited | Annual Report 2022
53
Liquidity needs are monitored in various time bands, on a day1to1day and week1to1week basis, as well as on the basis of a rolling
30day projection. Long1term liquidity needs for a 10day and a 30day period are identified monthly.
At the reporting date, these reports indicate that the Group expected to have sufficient liquid resources to meet its obligations
under all reasonably expected circumstances and will not need to establish a financing facilities.
Financial guarantee liabilities are treated as payable on demand since the Group has no control over the timing of any potential
settlement of the liabilities.
The timing of cash flows presented in the table to settle financial liabilities reflects the earliest contractual settlement dates and
does not reflect management9s expectations that banking facilities will be rolled forward. The amounts disclosed in the table are
the undiscounted contracted cash flows and therefore the balances in the table may not equal the balances in the statement of
financial position due to the effect of discounting.
The Group9s liabilities have contractual maturities which are summarised below:
Trade payables
Total
Credit risk
Not > 1 month
Total
2022
$
2,,11
2,,11
2021
$
,231,00
,231,00
2022
$
2,,11
2,,11
2021
$
,231,00
,231,00
Credit risk arises from the financial assets of the Group, which comprise cash and cash equivalents and trade and other
receivables. The Group9s exposure to credit risk arises from the potential default of the counter party, with a maximum exposure
being equal to the carrying amount of these instruments. Exposure at statement of financial position date is addressed in each
applicable note.
The Group trades only with recognised, creditworthy third parties, and as such collateral is not requested nor is it the Group9s
policy to securitise its trade and other receivables. The Group minimises concentrations of credit risk in relation to trade and
other receivables by undertaking transactions with a large number of government entities.
It is the Group9s policy that all non1government customers who wish to trade on credit terms are subject to credit verification
procedures including an assessment of their financial position, past experience and industry reputation.
In addition, receivables balances are monitored on an ongoing basis with the result that the Group9s exposure to bad debts
is not significant.
Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in
market prices.
(i) Foreign exchange risk
The Group has transactional currency exposures. Such exposure arises from sales or purchases by the Group in currencies other
than the Group9s functional currency. Approximately (2021: 0) of the Group9s purchases are denominated in currencies
other than the functional currency of the Group, whilst of sales are denominated in the Group9s functional currency (2021: 1).
The following sensitivity analysis is based on the foreign currency risk exposures in the Statement of Financial Position as they
relate to the Parent Entity. Movements in the value of the assets of the foreign subsidiary have no immediate impact on the
profit/loss of the Group as variations in the exchange rate impact the foreign exchange reserve (see Note 30 (a) not the
Consolidated Statement of Profit or Loss and Other Comprehensive Income.
The accompanying notes form part of these financial statements.
Notes to the Financial Statements continued
XTEK Limited | Annual Report 2022
54
At 30 June 2022, had the Australian Dollar moved, with all other variables held constant, post1tax profit/(loss) would have been
affected as follows:
USD
Net results
EUR
Net results
GBP
Net results
NZD
Net results
Market risk
(i) Foreign exchange risk
2022
+10%
$
110%
$
2021
+10%
$
110%
$
31,1
(3,2)
20,30
(32,0)
,
(,1)
2,0
(32,3)
00
10
()
1,
(2,010)
(132)
1
(2)
Exposure to foreign exchange rates vary during the year depending on the volume of overseas trading transactions. Nonetheless,
the analysis table is considered to be representative of the Group9s exposure to foreign currency risk through the year.
In order to minimize XTEK9s exposure to currency fluctuation, the firm is increasingly negotiating with government customers for
them to accept invoices in the source currency of the manufacturer. This gives us a natural offset in the invoicing and cost base.
With the Group9s increased level of trade throughout North America and Europe
(ii) Interest rate risk
The Group9s exposure to market interest rates relates primarily to the cash at bank. At reporting date, the Company had financial
assets comprising cash and cash equivalents totalling $3,1,2 (2021: $,01,223) exposed to variable interest rate risk that
are not designated in cash flow hedges.
The following sensitivity analysis is based on the interest rate risk exposures in existence at reporting date. At 30 June 2022,
if interest rates had moved, as illustrated in the table below, with all other variables held constant, the post1tax net profit/(loss)
for the period and equity would have been affected as below.
The calculations are based on the financial instruments held at each reporting date. All other variables are held constant.
For cash held
Net results
Equity
For borrowings
Net results
Equity
2022
2021
+1.00%
$
31,
31,
11.00%
$
(31,)
(31,)
+1.00%
$
,012
,012
2022
2021
+1.00%
$
1,1
1,1
11.00%
$
(1,1)
(1,1)
+1.00%
$
1,23
1,23
10.01%
$
(0)
(0)
11.00%
$
(1,23)
(1,23)
The accompanying notes form part of these financial statements.
XTEK Limited | Annual Report 2022
55
Notes to the Financial Statements continued
30 Reserves and Retained (losses)/profits
EQUITY BASED PAYMENT RESERVE
Equity based payments reserve consists of:
premium paid on the purchase of Simmersion Holdings Pty Ltd during FY1;
share performance rights granted to Executives and Management during 200, and
options and share performance rights granted to Directors and Executives during 200 credited against equity during the year.
2022
$
1,2
3
1,2
2021
$
1,2
3
1,2
(3,22)
1,13
3,00
2,
(33,)
(3,22)
3,02
,30
1,2
2,221
,21
3,02
310,30
(332,0)
2022
$
2021
$
(23,2,)
(1,322,3)
,3,30
(3,,)
3
3
(1,,)
(23,2,)
(a) Movement in reserves
Capital reserve
Balance at the beginning of the year
Transfer to Retained Earnings
Balance Capital Reserve
Foreign Exchange Reserve
Balance at the beginning of the year
Creation on consolidation of subsidiaries
Balance Foreign Exchange Reserve
Equity Based Payment Reserve
Balance at the beginning of the year
Equity Based Payments
Balance Equity Based Payment Reserve
Balance at the end of the year
(b) Accumulated Losses
Movement in accumulated profit/(losses) were as follows:
Balance at the beginning of the year
Profit/(losses) for the year
Transfer to Retained Earnings
Balance at the end of the year
The accompanying notes form part of these financial statements.
Notes to the Financial Statements continued
XTEK Limited | Annual Report 2022
56
31 Parent Entity
The following information has been extracted from the books and records of the parent, XTEK Limited and has been prepared in
accordance with Accounting Standards.
The financial information for the parent entity, XTEK Limited has been prepared on the same basis as the consolidated financial
statements except as disclosed below.
Statement of Financial Position
Assets
Current assets
Non1current assets
Total Assets
Liabilities
Current liabilities
Non1current liabilities
Total Liabilities
Net Assets
Equity
Issued capital
Retained earnings
Reserves
Total Equity
Statement of Profit or Loss and Other Comprehensive Income
Total profit or loss for the year
Total comprehensive income
32 Contingencies
2022
$
2021
$
32,2,0
1,23,133
,3,
10,,
1,1,
2,1,
11,3,23
,1,0
1,,0
2,02,301
13,21,3
,3,1
2,0,1
20,,3
2,01,01
,03,11
(23,0,1)
(2,,102)
3,0
3,20
2,0,1
20,,3
0,
(,3,0)
0,
(,3,0)
There were no contingent liabilities at 30 June 2022 (At 30 June 2021 3 nil).
In the 2020 financial year the US subsidiary received a forgivable loan as part of the US Government9s COVID11 stimulus package.
It represented $3,0 worth of Other Income in the Group9s accounts for the 2020 financial year. The loan was subsequently
forgiven in the 2021 financial year.
33 Business Combination
There were no new business combinations in FY22 (FY21 3 nil).
34 Statutory Information
The principal registered office and place of business, of the company is:
XTEK Limited
3 Faulding Street
Symonston ACT 20
The accompanying notes form part of these financial statements.
DIRECTORS9 DECLARATION
XTEK Limited | Annual Report 2022
57
In accordance with a resolution of the Directors of XTEK Limited, the Directors declare that:
1. The financial statements and notes are in accordance with the Corporations Act 2001 and:
(a) Comply with Australian Accounting Standards, which as stated in accounting policy Note 1 to the financial statements,
constitutes compliance with International Financial Reporting Standards (IFRS); and
(b) Give a true and fair view of the financial position as at 30 June 2022 and of the performance for the year ended on that
date for the consolidated group.
2.
In the Directors9 opinion there are reasonable grounds to believe that the Group will be able to pay its debts as and when they
fall due; and
3. The Directors have been given the declarations required by s 2A of the Corporations Act 2001 from the Managing Director
and Chief Financial Officer.
On behalf of the Board
Mark Stevens
Chairman
Dated this 30th day of September 2022
The accompanying notes form part of these financial statements.
INDEPENDENT AUDITOR9S REPORT
XTEK Limited | Annual Report 2022
5
The accompanying notes form part of these financial statements.
Independent Auditor9s Report continued
XTEK Limited | Annual Report 2022
5
The accompanying notes form part of these financial statements.
Independent Auditor9s Report continued
XTEK Limited | Annual Report 2022
60
The accompanying notes form part of these financial statements.
ADDITIONAL INFORMATION
XTEK Limited | Annual Report 2022
61
1. The following information set out below was applicable as at 28 September 2022.
2. Shareholding
(a) Distribution of Shareholders
Range
1 3 1,000
1,001 3 ,000
,001 3 10,000
10,001 3 100,000
100,001 and over
Rounding
Total
(b) Unmarketable Parcels
Minimum $ 00.00 parcel at $ 0.00 per unit
(c) Top Holders (Grouped) as of 27/09/2022
Total holders
331
2
30
1
12
Units
1,
1,3,2
2,1,
21,3,330
,30,1
% Units
0.1
1.3
2.0
21.
3.
0.00
2,108
100,620,244
100.00
Minimum
Parcel Size
1,02
Holders
333
Units
1,1
Rank
Name
Address
Units
% Units
1
2
3
10
11
12
13
1
MERRILL LYNCH (AUSTRALIA)
NOMINEES PTY LIMITED
LEVEL 1, 120 COLLINS STREET,
MELBOURNE VIC, 3000
10,2,03
10.
ACM AEPF PTY LTD
UDB PTY LIMITED
GPO BOX 011, BRISBANE QLD, 001
PO BOX 0, MANUKA ACT, 203
CITICORP NOMINEES PTY LIMITED
GPO BOX G, MELBOURNE VIC, 3001
JWT HOLDINGS PTY LIMITED
BNP PARIBAS NOMINEES PTY LTD
UNIT 10 GROUND FLOOR 0,
EASTLAKE PDE, KINGSTON ACT, 20
PO BOX R20, ROYAL EXCHANGE NSW, 122
FAIRLANE MANAGEMENT PTY LTD
PO BOX 12, CANBERRA CITY ACT, 201
ALTOR CAPITAL MANAGEMENT PTY LTD
GPO BOX 011, BRISBANE QLD, 001
ALL OTHERS PTY LTD
PO BOX , THREDBO NSW, 22
EMALYN HOLDINGS
1 DARLING POINT ROAD,
DARLING POINT NSW, 202
BAJKOR NOMINEES PTY LTD
HILLSYDE PARADE,
STRATHMORE VIC, 301
NETWEALTH INVESTMENTS LIMITED
C/3 CUSTODY DEPARTMENT, PO BOX 33,
SOUTH MELBOURNE VIC, 320
BISSAPP SOFTWARE PTY LTD
UNIT 2 3 BRADY RD,
BENTLEIGH EAST VIC, 31
MR IVAN SLAVICH
AKAME CIRCUIT, O'MALLEY ACT 20
,,3
,,10
3,12,13
2,2,01
2,10,3
2,0,0
1,1,21
1,,
1,,
1,0,3
1,3,0
1,12,31
2,0
.3
.
3.1
2.
2.0
2.0
1.
1.
1.
1.0
1.3
1.1
0.
Additional Information continued
XTEK Limited | Annual Report 2022
62
Rank
Name
Address
Units
% Units
1
1
1
1
1
20
BISSAPP SOFTWARE PTY LTD
UNIT 2, 3 BRADY ROAD,
BENTLEIGH EAST VIC, 31
ATECH GROUP PTY LIMITED
110 NORTH ISLAND LOOP ROAD,
UPPER ORARA NSW, 20
ESTATE LATE NICHOLAS HENRY WEBER
C/ 3 MS ANNE MCGRATH, RMB 2
MAJURA HOUSE, MAJURA ROAD
MAJURA ACT, 20
MR BERT VANGHEEL + MS GILLIAN
MAY HORNER
UNIT 130 ST KILDA ROAD,
MELBOURNE VIC, 300
DWKSJK PTY LTD
BUNDARRA TRADING COMPANY PTY LTD
PO BOX 2, KINGSTON NSW, 20
PO BOX 3003, BELLEVUE HILL NSW, 2023
Totals: Top 20 holders of ORDINARY FULLY PAID SHARES (Total)
Total Remaining Holders Balance
3,3
,
,0
31,
03,00
0,10
48,964,831
51,655,413
0.
0.
0.
0.3
0.0
0.
48.66
51.34
3. The name of the Company Secretary is Mr. Lawrence Gardiner.
4. The address of the Principal Registered Office of XTEK Limited in Australia is
3 Faulding Street, Symonston, ACT, 2609
Telephone +61 2 6163 5588.
CORPORATE GOVERNANCE STATEMENT
XTEK Limited | Annual Report 2022
63
XTEK Limited and controlled entities is committed to implementing the highest standards of corporate governance. In determining
what those high standards should involve, the Company has turned to the ASX Corporate Governance Council9s Corporate
Governance Principles and Recommendations. The Company9s approach to corporate governance is to have a set of values
and behaviours that underpin everyday activities, ensure transparency and fair dealing and protect security holder interests.
This approach includes a commitment to best practice governance standards, which XTEK sees as being in the best interests
of investors whilst ensuring full compliance with legal requirements.
The framework for XTEK9s Corporate Governance Statement follows the Australian Securities Exchange (ASX) Corporate
Governance Council9s eight principles and recommendations for Corporate Governance (th Edition) of 2 February 201.
Principle 1: Lay Solid Foundations for Management and Oversight
COUNCIL RECOMMENDATION 1.1: A LISTED ENTITY SHOULD DISCLOSE A BOARD CHARTER WHICH SETS OUT THE RESPECTIVE
ROLES AND RESPONSIBILITIES OF THE BOARD AND MANAGEMENT AND INCLUDES A DESCRIPTION OF THOSE MATTERS
EXPRESSLY RESERVED TO THE BOARD AND THOSE DELEGATED TO MANAGEMENT
The Board9s role is to govern the Company rather than to manage it. In governing the Company, the Directors must act in the
best interests of the Company as a whole. It is the role of senior management to manage the Company in accordance with the
direction and delegations of the Board and the responsibility of the Board to oversee the activities of management in carrying
out these delegated duties.
In carrying out its governance role, the main task of the Board is to drive the performance of the Company. The Board must
also ensure that the Company complies with all of its contractual, statutory and any other legal obligations, including the
requirements of any regulatory body. The Board has the final responsibility for the successful operations of the Company.
To assist the Board to carry out its functions, it has adopted a formal Charter that details functions and responsibilities of the
Board and areas of authority as delegated. The Board Charter is supplemented by the Company Code of Conduct that is available
to guide Non1Executive Directors, Executive Directors, Company Secretary, Chief Executive Officer, Chief Financial Officer and other
senior executives and employees in the performance of their roles.
Role of Chief Executive Officer
The Chief Executive Officer9s role is to develop and agree with the Board the corporate strategy and vision and to oversee
implementation of the strategy and management of the Company to achieve the agreed vision in accordance with the strategies,
policies and programs set by the Board.
Responsibilities include:
Formulating and reviewing, with the Board, the vision and strategy and developing actions and plans to achieve the vision
and implement the strategy. Reporting to the Board on the progress against those plans;
Appointing a management team and negotiating terms and conditions for approval by the Human Resource and Remuneration
Committee of the Board. Providing leadership to and overseeing the senior management team, ensuring employees are
properly instructed to achieve a safe workplace and ensuring compliance with laws and Company policies and that a high
level of ethical behaviour is practiced;
Reporting to the Board on various matters, including all matters requiring review or approval, significant changes to the
risk profile, certification to the Board on the fairness of the financial statements and adequacy of policies as regards risk
management, monthly reporting on performance of businesses and continual education of Directors of the Company, its
business environment and relevant changes of law;
Acting within delegated authority levels for capital expenditure, sale of assets, appointment and termination of executives; and
All other matters necessary for the day1to1day management of the Company and not reserved for the Board. Induction
procedures are in place to allow new executive management personnel to participate fully and actively in management
decision making at the earliest opportunity upon appointment. This induction process will take into account the individuals
knowledge of the Company and the homeland security industry. The induction program for senior executives is designed
to make available the Company9s financial position, strategies, operations and risk management policies. Also, the respective
rights, duties, responsibilities and roles of the Board and senior executives.
Corporate Governance Statement continued
XTEK Limited | Annual Report 2022
64
Responsibilities of the Board of Directors
In general, the Board is responsible for, and has the authority to determine, all matters relating to the policies, practices,
management and operations of the Company. It is required to do all things that may be necessary to be done in order to
carry out the objectives of the Company.
Without intending to limit this general role of the Board, the principal functions and responsibilities of the Board include
the following:
Leadership of the Organisation: overseeing the Company and establishing codes that reflect the values of the Company
and guide the conduct of the Board, management and employees;
Strategy Formulation: working with senior management to set and review the overall strategy and goals for the Company
and ensuring that there are policies in place to govern the operation of the Company;
Overseeing Planning Activities: overseeing the development of the Company9s strategic plan and approving that plan as well
as the annual and long1term budgets;
Shareholder Liaison: ensuring effective communications with shareholders through an appropriate communications policy
and promoting participation at general meetings of the Company;
Monitoring, Compliance and Risk Management: overseeing the Company9s risk management, compliance, control and
accountability systems and reviewing the effectiveness and directing the financial and operational performance of the Company;
Company Finances: approving expenses in excess of those approved under the Company authorisations process and approving
and monitoring acquisitions, divestitures and financial and other reporting;
Human Resources: appointing, and, where appropriate, removing the Chief Executive Officer, Company Secretary, Chief
Financial Officer (CFO) as well as reviewing the performance of the Chief Executive Officer and monitoring the performance
of senior management in their implementation of the Company9s strategy;
Ensuring the health, safety and well1being of Employees: in conjunction with the senior management team, developing,
overseeing and reviewing the effectiveness of the Company9s occupational health and safety systems to ensure the
well1being of all employees; and
Delegation of Authority: delegating appropriate powers to the Chief Executive Officer to ensure the effective day1to1day
management of the Company and establishing and determining the powers and functions of the Committees of the Board.
Whilst at all times the Board retains full responsibility for guiding and monitoring the Company, in discharging its stewardship
it makes use of sub1committees. Specialist committees are able to focus on a particular responsibility and provide informed
feedback to the Board. The Board has established the following Standing Committees, details of which are included later in
this Corporate Governance Statement:
Finance and Audit Committee
Human Resources and Remuneration Committee
Nomination Committee
Risk Management Committee
The Board is responsible for ensuring that management9s objectives and activities are aligned with the expectations and risks
identified by the Board. The Board has a number of mechanisms in place to ensure this is achieved including:
Board approval of strategic plans designed to meet stakeholders9 needs and manage business risk;
Reviewing, ratifying and monitoring systems of risk management and internal control, codes of conduct and legal compliance;
Ongoing development of strategic plans and approving initiatives and strategies designed to ensure the continued growth
and success of the entity; and
Implementation of budgets by management and monitoring progress against budget. This is achieved by the establishment
and reporting of both financial and non1financial key performance indicators.
Corporate Governance Statement continued
XTEK Limited | Annual Report 2022
65
Other matters expressly reserved for the Board of Directors
The following matters and responsibilities have been expressly reserved for the Board:
Approval of the annual and half1yearly financial reports;
Approving and monitoring the progress of major capital expenditure, capital management, and acquisitions and divestitures;
Reporting to security holders.
Ensuring that any significant corporate risks that arise are identified, assessed, appropriately managed and monitored;
Ensuring appropriate resources are available to senior executives; and
Full details of the Board9s role and responsibilities are contained in the Board Charter, a copy of which is contained on the
Company9s website at the Corporate Governance Section.
The Company complies with Recommendation 1.1.
COUNCIL RECOMMENDATION 1.2: A LISTED ENTITY SHOULD UNDERTAKE APPROPRIATE CHECKS BEFORE APPOINTING A
DIRECTOR OR SENIOR EXECUTIVE OR PUTTING SOMEONE FORWARD FOR ELECTION AS A DIRECTOR AND PROVIDE SECURITY
HOLDERS WITH ALL MATERIAL INFORMATION IN ITS POSSESSION RELEVANT TO A DECISION ON WHETHER OR NOT TO ELECT
OR RE1ELECT A DIRECTOR.
The Company has adopted a policy as developed by the Nomination Committee for the selection and appointment of Directors.
This policy defines procedural processes for the appointment of new Directors and the re1election of incumbent Directors. As part
of this process, the Company undertakes appropriate background checks on all candidates being considered for appointment.
Directors are appointed based on the specific governance skills required by the Company to fill Board vacancies when they arise.
The Company discloses all material information to security holders in its possession relevant to a decision on whether or not to
elect or re1elect a Director. This is achieved primarily through the release of information contained within the Notice of Annual
General Meeting of the Company covering motions on the election and re1election of Directors.
The Company complies with Recommendation 1.2.
COUNCIL RECOMMENDATION 1.3: A LISTED ENTITY SHOULD HAVE A WRITTEN AGREEMENT WITH EACH DIRECTOR AND SENIOR
EXECUTIVE SETTING OUT THE TERMS OF THEIR APPOINTMENT.
All new Directors and Senior Executives are provided with a letter of appointment and contractual agreements setting out terms
of the appointment, which include the Company9s expectations, their individual responsibilities, rights and terms and conditions
of their appointment. By way of induction, new Directors and Executives meet with the Chairman and Company Secretary upon
appointment. These briefings cover the operation of the Board and its Committees and financial, strategic, operations and risk
management issues.
The Company complies with Recommendation 1.3.
COUNCIL RECOMMENDATION 1.4: THE COMPANY SECRETARY OF A LISTED ENTITY SHOULD BE ACCOUNTABLE DIRECTLY
TO THE BOARD, THROUGH THE CHAIR, ON ALL MATTERS TO DO WITH THE PROPER FUNCTIONING OF THE BOARD.
The Board has designated the Company Secretary as the Officer responsible for oversighting all governance matters and
coordinating disclosure of information to the ASX as well as communicating with the ASX. The Company Secretary is responsible
for ensuring that all Company announcements are made in a timely manner and are factual and do not omit any material
information. In addition, the Company Secretary is also responsible for the following matters:
advising the Board and its Committees on all governance matters;
monitoring of Board policy and procedures to ensure compliance standards are met by the Company;
ensuring the business of the Board/Committee meetings are accurately recorded in official Minutes and disseminated
in a timely manner;
overseeing and coordinating information disclosure to the ASX, security holders, analysts, brokers, the media and the public;
advising Directors and staff on the Company9s governance and disclosure policies and raising awareness of the principles
underlying continuous disclosure; and
facilitating the induction and professional development of new Directors and Executives.
The Company complies with Recommendation 1..
Corporate Governance Statement continued
XTEK Limited | Annual Report 2022
66
COUNCIL RECOMMENDATION 1.5: A LISTED ENTITY SHOULD HAVE A DISCLOSABLE DIVERSITY POLICY WHICH INCLUDES
REQUIREMENTS TO SET MEASURABLE OBJECTIVES FOR ACHIEVING GENDER DIVERSITY.
The Company is committed to providing a safe working environment and equal employment opportunities for all Directors,
executives and employees at all levels within the Company. Whilst the Company is not subject to the provisions of The Workplace
Gender Equality Act, in that it employs less than 100 employees, it does recognise the importance of diversity within the workplace.
The Company operates as an equal opportunity Employer and selects personnel based upon the principle of the best person for
the role/job, irrespective of gender, age, sexual orientation, ethnicity, marital or family status and religious or cultural background.
The Company Code of Conduct defines that discrimination, harassment, vilification and victimisation cannot and will not be
tolerated. Recruitment and selection practices at all levels are appropriately structured to ensure all candidates are considered
and that no conscious or unconscious biases are applied against certain candidates. The Company is a small business enterprise
with less than 0 personnel overall (inclusive of the Board). None1the1less, the Company has successfully employed a number
of women to management roles in recent years.
Whilst the Company does not comply with Recommendation 1. fully, it nonetheless applies many of the core principles through
its Code of Conduct provisions.
COUNCIL RECOMMENDATION 1.6: A LISTED ENTITY SHOULD HAVE AND DISCLOSE A PROCESS FOR PERIODICALLY EVALUATING
THE BOARD, COMMITTEES AND INDIVIDUAL DIRECTORS AND DISCLOSE FOR THE REPORTING PERIOD WHETHER A
PERFORMANCE EVALUATION HAS BEEN UNDERTAKEN.
The Nomination Committee of the Board is responsible for the conduct of a performance review of the Board (both collectively and
individually) and the Chief Executive Officer. This is an annual evaluation process and is based on a number of goals for the Board
and the individual Directors that have been established in the preceding year. The goals are based on the role of the Board and
individual Directors as well as corporate objectives and any areas for improvement identified in previous reviews. The assessment
of the performance of individual Directors is undertaken by the Nomination Committee, with the Chairman meeting privately with
each Director, Company Secretary and the Chief Executive Officer to discuss their annual assessment. Performance assessments
were conducted during the FY22 reporting period, with the Chairman meeting with all Directors and the Company Secretary.
The Company complies with Recommendation 1..
COUNCIL RECOMMENDATION 1.7: A LISTED ENTITY SHOULD HAVE AND DISCLOSE A PROCESS FOR PERIODICALLY EVALUATING
THE PERFORMANCE OF ITS SENIOR EXECUTIVES AND DISCLOSE FOR THE REPORTING PERIOD WHETHER A PERFORMANCE
EVALUATION HAS BEEN UNDERTAKEN.
The performance of senior executives is reviewed regularly through the application of a Performance Appraisal Program (PAP)
that defines appropriate evaluation measures to be applied in the assessment process. Each year senior executives establish
a set of performance targets. These targets are aligned to overall business goals and the Company9s requirements. The PAP is
administered annually for all senior executives with the Chief Executive Officer being responsible for their individual assessment
and subsequent reporting of outcomes to the Board. The Board is responsible for the performance assessment of the Chief
Executive Officer, Company Secretary and the Chief Financial Officer in accordance with contractual performance measures
and deliverables. An informal review of the PAP outcomes for other senior executives and staff is carried out annually by the
Human Resource and Remuneration Committee. Performance assessment was conducted for all senior executives during the
FY22 reporting period. A statement outlining specific matters reserved for the Board and Executive Management are contained
in the Board Charter, a copy of which is posted on the Company9s website at the Corporate Governance Section.
The Company complies with Recommendation 1..
Principle 2: Structure of the board to add value
COUNCIL RECOMMENDATION 2.1: THE BOARD OF A LISTED ENTITY SHOULD HAVE A NOMINATION COMMITTEE
Nomination Committee
The role of the Nomination Committee is to help achieve a structured Board that adds value to the Company by ensuring an
appropriate mix of skills are present in Directors on the Board at all times. Under the Company9s Constitution, the Board shall
be comprised of not less than three and no more than twelve Directors, unless otherwise determined by a general meeting. In
consideration of the size of the Company and the Board, the Directors have resolved that the Nomination Committee shall comprise
a minimum of three members. Mr. Stevens is the current Chair, following the resignation of Mr. Boettcher in February 2022.
XTEK Limited | Annual Report 2022
67
Corporate Governance Statement continued
Role of Nomination Committee
The role of the Nomination Committee is to:
Identify, consider and select candidates with appropriate capabilities, to fill Board vacancies when they arise;
Review the structure, size and composition of the Board;
Undertake or arrange for annual performance evaluation of the Board, its committees and Directors; and
Review the:
Ensure that candidates have adequate time available to fulfil their role as a Director;
2 continuation of the Chairman after the initial term of appointment and subsequent re1appointments;
2 re1election of Directors who retire by rotation; and
2 membership of committees.
Director Selection and Appointment
The Board has adopted a policy as developed by the Nomination Committee for the selection and appointment of Directors.
This policy defines procedural processes for the appointment of Directors and the re1election of incumbent Directors. Directors
are appointed based on the specific governance skills required by the Company. Given the size of the Company and the business
that it operates, the Company aims at all times to have at least one Director with experience in the industry, appropriate to the
Company9s market. If the need for a new Board member is identified, the Nomination Committee, may initiate a search or
nominate eligible candidates, who are interviewed by the Chairman and considered by the Board. The Board then appoints
the most suitable candidate, who must stand for election at the next general meeting of security holders.
Access to independent Professional Advice
To ensure that Directors have access to independent expertise necessary to effectively carry out their role as a Director of the
Company, the Board has adopted a policy to allow Directors to seek independent professional advice at the Company9s expense,
up to specified limits, to assist them to carry out their responsibilities.
The Company complies with Recommendation 2.1.
COUNCIL RECOMMENDATION 2.2: A LISTED ENTITY SHOULD HAVE AND DISCLOSE A BOARD SKILLS MATRIX SETTING OUT
THE MIX OF SKILLS AND DIVERSITY THAT THE BOARD CURRENTLY HAS OR IS SEEKING TO ACHIEVE IN ITS MEMBERSHIP.
The current Board is comprised of six Directors who possess a wide range of background skills, expertise and knowledge deemed
appropriate for the Company9s industry type. The names of Directors in office and their term in office at the date of this statement
and their standing as Executive or Non1Executive and independence, are on the Board of Directors page of XTEK9s website.
The Company complies with Recommendation 2.2.
COUNCIL RECOMMENDATION 2.3: A LISTED ENTITY SHOULD DISCLOSE THE NAMES OF THE DIRECTORS CONSIDERED
BY THE BOARD TO BE INDEPENDENT, IF THEY HAVE A RELEVANT INTEREST AND THEIR LENGTH OF SERVICE.
The Board considers independent decision1making as critical to effective governance and to meet the ASX Corporate Governance
Council Recommendations. Independent Directors are identified by their profiles in the 2022 Annual Report. These profiles detail
the skills, experience, and expertise relevant to the position of Director, and the terms of office held by the Director and also the
status of each Director in relation to the criteria listed below. Unless otherwise stated, the Board does not consider a Director to
be an independent Director of the Company if the Director:
is a substantial shareholder of the Company or an officer of, or otherwise associated directly with, a substantial shareholder
of the Company;
is employed, or within the last three years, has been employed in an executive capacity by the Company, and there has not
been a period of at least three years between ceasing such employment and serving on the Board;
has within the last three years, been a principal of a material professional adviser or a material consultant to the Company,
or an employee materially associated with the service provided;
Corporate Governance Statement continued
XTEK Limited | Annual Report 2022
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is a material supplier or customer of the Company or another group m ember, or an officer of or otherwise associated directly
or indirectly with a material supplier or customer;
has a material contractual relationship with the Company other than as a Director of the Company;
has served on the Board for a period which could, or could reasonably be perceived to, materially interfere with the Director9s
ability to act in the best interests of the Company; and
is not free from any interest and any business or other relationship which could reasonably be perceived to materially interfere
with the Director9s ability to act in the best interests of the Company.
Similarly, the Board has adopted a policy that the Chair should be an independent Director. Due to the resignation of Mr. Boettcher
and subsequent changes to the Board in February 2022, Mr. Stevens was appointed as a Director (Non1Executive) and Chairman of
the Company. The Company further recognises that Independent Directors are important in assuring shareholders that the Board
is properly fulfilling its role, therefore, in addition to being a Non1Executive Directors, Messrs. Fullerton, Harrison, Pyne and Stevens
also met the criteria for independence during the reporting period for FY22.
The Company complies with Recommendation 2.3.
COUNCIL RECOMMENDATION 2.4: A MAJORITY OF A BOARD OF A LISTED ENTITY SHOULD BE INDEPENDENT DIRECTORS
Under the Company9s Constitution, the Board is to be comprised of not less than three and no more than twelve Directors,
unless otherwise determined by a general meeting. The Board currently consists of six Non1executive Directors.
To add value to the Company, the Board has been formed so that it has effective composition, size and commitment to adequately
discharge its responsibilities and duties. The names of the Directors and their qualifications and experience are stated in their
Director Profiles that form part of the 2022 Annual Report along with the term of office held by each of the Directors. Directors
are appointed based on the specific governance skills required by the Company and on the independence of their decision1making
and judgment. The Company recognises the importance of Non1Executive Directors and the external perspective and advice that
Non1Executive Directors can offer. Messrs Boettcher, Fullerton, Harrison, Pyne, Smethurst and Stevens served as Non1Executive
Directors during the reporting period for FY22. The Company further recognises that Independent Directors are important in
assuring shareholders that the Board is properly fulfilling its role, therefore, in addition to being a Non1executive Director, Messrs.
Fullerton, Harrison, Pyne and Stevens also met the criteria for independence during the reporting period for FY22.
The Board has a specific Code of Conduct for Directors and Senior Management. As part of this, where any Director has a material
personal interest in a matter, the Director will not be permitted to be present during discussions or to vote on the matter. The
enforcement of this requirement should ensure that the interest of shareholders, as a whole, are pursued and not jeopardised
by a lack of a majority of independent Directors. The independence of Non1Executive Directors is assessed annually by the
Nomination Committee.
The Company complies with Recommendation 2..
COUNCIL RECOMMENDATION 2.5: THE CHAIRPERSON OF A LISTED ENTITY SHOULD BE AN INDEPENDENT DIRECTOR AND,
IN PARTICULAR SHOULD NOT BE THE SAME PERSON AS THE CHIEF EXECUTIVE OFFICER OF THE ENTITY.
Independence of Chairman
The Board recognises the importance of independence in decision1making, and following the resignation of Mr. Boettcher in
February 2022, the Board appointed Mr. Stevens, as a Director (Non1Executive) and Chairman of the Company. Mr. Stevens
is an independent Director and does not share the same duties as the Chief Executive Officer.
The Company complies with this independence requirement.
Roles of Chairman and Chief Executive Officer
The roles of Chairman and the Chief Executive Officer are not exercised by the same individual.
The Company complies with this independence requirement.
Corporate Governance Statement continued
XTEK Limited | Annual Report 2022
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COUNCIL RECOMMENDATION 2.6: A LISTED ENTITY SHOULD HAVE A PROGRAM FOR INDUCTING NEW DIRECTORS AND PROVIDE
APPROPRIATE PROFESSIONAL DEVELOPMENT OPPORTUNITIES FOR DIRECTORS TO DEVELOP AND MAINTAIN SKILLS AND
KNOWLEDGE NEEDED TO PERFORM THEIR ROLE AS DIRECTORS EFFECTIVELY.
The Board has designated the Company Secretary as the Officer responsible for facilitating the induction and professional
development of new Directors. By way of induction, new Directors meet with the Chairman and Company Secretary upon
appointment, whereby briefings are given on the operation of the Board and its Committees and financial, strategic, operations
and risk management issues applicable to the Company. The Company Secretary provides all new Directors with a comprehensive
induction package covering Company policies and procedures that are applicable to all Directors and employees. As part of their
ongoing professional development, new Directors may be required to complete a Company Directors Course as conducted by the
Australian Institute of Company Directors.
The Company complies with Recommendation 2..
Principle 3: Promote ethical and responsible decision1making
COUNCIL RECOMMENDATION 3.1 A LISTED ENTITY SHOULD ARTICULATE AND DISCLOSE ITS VALUES
The Company is committed to conducting all its business activities honestly with a high level of integrity, and in compliance with
all applicable laws, rules and regulations. The Board is dedicated to the ongoing maintenance of high ethical standards and has
established a Company Code of Conduct to guide compliance with legal and other obligations to all legitimate stakeholders.
These stakeholders include shareholders, employees, customers, government authorities, creditors and the community as whole.
All Directors, senior executives and employees are made aware of the existence of the Company Code of Conduct and are
requested to confirm they have read it.
The Company complies with Recommendation 3.1.
COUNCIL RECOMMENDATION 3.2: A LISTED ENTITY SHOULD HAVE AND DISCLOSE A CODE OF CONDUCT FOR ITS DIRECTORS,
SENIOR EXECUTIVES AND EMPLOYEES AND THAT THE BOARD IS INFORMED OF ANY MATERIAL BREACHES OF THAT CODE.
Company Code of Conduct
As part of its commitment to recognising the legitimate interests of stakeholders, the Company has established a Code of
Conduct that applies to all Directors, senior executives and employees.
The Company9s Code of Conduct gives guidance on the following:
Ethical Standards: All Directors, senior executives and employees are expected to act with the utmost honesty and integrity,
striving at all times to enhance the reputation and performance of the Company;
Responsibilities to Shareholders and the Financial Community Generally: The Company complies with the spirit as well as the
letter of all laws and regulations that govern shareholders9 rights. The Company has processes in place designed to ensure
the truthful and factual presentation of the Company9s financial position and prepares and maintains its accounts fairly
and accurately in accordance with the generally accepted accounting and financial reporting standards;
Responsibilities to Clients, Customers and Consumers: Each employee has an obligation to use their best efforts to deal
in a fair and responsible manner with each of the Company9s clients, customers and consumers. The Company for its part
is committed to providing clients, customers and consumers with fair value;
Employment Practices: The Company is committed to providing a safe workplace environment in which there is equal
opportunity for all employees at all levels of the Company. The Company does not tolerate the offering or acceptance
of bribes or the misuse of Company assets or resources;
Obligations Relative to Fair Trading and Dealing: The Company aims to conduct its business fairly and to compete ethically
and in accordance with relevant competition laws. The Company strives to deal fairly with the Company9s customers, suppliers,
competitors and other employees and encourages its employees to strive to do the same;
Responsibilities to the Community: As part of the community the Company:
2 is committed to conducting its business in accordance with applicable environmental laws and regulations and encourages
all employees to have regard for the environment when carrying out their jobs; and
2 encourages all employees to engage in activities beneficial to their local community;
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Responsibility to the Individual: The Company is committed to keeping private information from employees, clients, customers,
consumers and investors confidential and protected from uses other than those for which it was provided;
Conflicts of Interest: Employees and Directors must avoid conflicts as well as the appearance of conflicts between personal
interests and the interests of the Company;
How the Company Complies with Legislation: Within Australia, the Company strives to comply with the spirit and the letter
of all legislation affecting its operations. Outside Australia, the Company will abide by local laws in all countries in which
it operates. Where those laws are not as stringent as the Company9s operating policies, particularly in relation to the
environment, workplace practices, intellectual property and the giving of