These guys changed auditors last year. RSM, the new auditor, flagged inventory as a key audit matter. The previous auditor did not flag inventory. I think it's safe to assume that it was the auditor and not the board that drove the inventory impairment charge.

Sorry for you guys who lost on this.

The cornerstone of my thesis was Scott was a competent leader, that could be trusted. He has delivered a stunning rug pull - So I couldn't help myself..

13-Feb-2024: 12:40am: Yeah, that's not good at all for HighCom (HCL, formerly XTEK) @PortfolioPlus - sorry if you have any real money in this one - I still remember Metal Storm:

Australians unveil the fastest killing machine in history | The Independent | The Independent [30-Dec-1995]

Put your guns down: Queensland weapons manufacturer Metal Storm collapses into administration - SmartCompany [27-July-2012]

Metal Storm collapse will lead to damages lawsuit (afr.com) [11-Nov-2015]

I understand that there's a difference between companies that make protective gear for the military and drones, to those that produce weapons, but drones can be easily weaponised, and I have always avoided such companies - basically any company who designs and/or manufacturers equipment for the military that could be used to kill people is off limits for me, for two reasons; the first is a personal preference, some might call it a moral stance, which I won't elaborate on, and the second is because I have limited understanding about the dynamics within the relationships between Australia's and the USA's Departments of Defence, and their suppliers, but I have read and heard enough to know that money changes hands on multiple levels, and there are more interests at play than might be obvious intitially, so outcomes that seem to make the most sense are not necesarily going to be the ones that play out as you might expect.

Government Departments in general are usually fairly inefficient, wasteful and unpredictable, and none more so than Defence. Have a gander at this:

Australian Defence Force projects that are late and over budget (afr.com)

Australia’s 10 major defence projects that are late and over budget

Australia’s unique circumstances, including a vast continent and ocean to protect, often mean longer lead time for defence capabilities to be delivered.

By Andrew Tillett, Foreign affairs, defence correspondent, AFR, Feb 12, 2024 – 2.44pm.

Defence projects notoriously run late and over budget. But a new auditor-general’s report has revealed the 20 biggest acquisitions that the Australian Defence Force has underway are cumulatively more than 37 years behind schedule. The average delay is now 25 months, according to the report.

A delay is based on a project’s original Final Operational Capability (FOC) date – that is, when all the platforms or systems have been delivered, and they are ready for operation by their combat units.

Australia’s unique strategic circumstances – a vast continent and ocean to protect, long distance from potential adversaries – means off-the-shelf options often don’t suit our needs. That usually results in Australia writing its own specifications for equipment, which often means a longer lead time for these defence capabilities to be manufactured and delivered.

Here are 10 of the biggest projects that have been delayed, why Australia needs them, and how much the costs have blown out over time.

1. Hunter class frigates

What is it? Nine 10,000 tonne frigates designed to hunt submarines and conduct patrols in the Pacific and South China Sea. They will be the navy’s biggest ships.

Commissioned: 2018

Why was it commissioned? The navy had to replace its eight 1990s era Anzac frigates.

Do we still need it? The navy badly needs new frigates, but the Defence Strategic Review recommended warships be packed with missiles, putting the undergunned Hunter class in doubt. The number of ships is set to be reduced to six or even as few as three.

Cost: Originally $30 billion. Now $45 billion, and climbing.

Delivery date: No date set for final operational capability. First ship was originally meant to enter service late 2020s, now coming early 2031.

2. F-35 fighter jets

What is it? The F-35 is a long-range stealth fighter plane. Australia’s plan was to buy four squadrons – about 72 jets in total.

Commissioned: 2002

Why was it commissioned? The F-35 was intended to replace the air force’s ageing Hornet fighters and F-111 bombers. The F-35 is considered a fifth-generation fighter jet.

Do we still need it? An air force without fighter jets is unthinkable. But they are expensive to operate and maintain, and Defence has been criticised for not investing in cheaper drones.

Cost: Originally $14.2 billion. Now $16.5 billion.

Delivery date: Final Operational Capability was meant be achieved in December 2023, but now the Defence Department is hiding when that will be met.

3. Boxer 8x8 combat reconnaissance vehicles

What is it? 211 vehicles for the army to conduct reconnaissance patrols.

Commissioned: 2018.

Why was it commissioned? To replace the army’s ASLAV (Australian light armoured vehicles).

Do we still need it? The Defence Strategic Review diminished the role of armoured vehicles, but the army still needs them.

Cost: Originally $4 billion. Now $5.6 billion.

When is it now due to be delivered? Still on track for mid-2027.

4. MRH-90 Taipan helicopters

What is it? A multirole helicopter for the army that can carry troops, some equipment and assist with disaster relief operations.

Commissioned: 2004

Why was it commissioned? To replace the army’s Black Hawk helicopters.

Do we still need it? The army has decided to switch back to Black Hawks for its airlift needs after a litany of troubles with Taipans, including expensive flying hours, reliability woes and a doorway that was too small for troops to rappel out of while a gun was being fired.

Cost: Originally $3.5 billion. Now $3.7 billion.

Delivery date: Officially 110 months – nine years – behind reaching FOC. But the government cut its losses last year and permanently grounded the fleet following a fatal accident. It had already decided to retire the fleet a decade early and now the surviving 46 airframes are being broken up.

5. Arafura class offshore patrol vessels

What is it? Twelve new patrol boats to conduct constabulary operations for the navy, such as intercepting asylum seekers, stop drug smugglers or crack down on illegal foreign fishing.

Commissioned: 2017

Why was it commissioned? To replace the Armidale class patrol boats.

Do we still need it? Border protection is a vital task. But the Arafura class are probably overkill for that type of role, yet too small and lacks firepower to be useful in naval operations further afield. Issues including fire protection and the original gun didn’t work.

Cost: Originally $3 billion. Now $3.6 billion.

Delivery date: Final ship is still due to be operational by June 2030, but there are delays with the first three ships.

6. MQ-4C Triton drones

What is it? An unarmed long-range surveillance drone. Australia has ordered four, could get up to seven.

Commissioned: 2018

Why was it commissioned? To conduct long-range maritime patrols as an alternative to crewed flights.

Do we still need it? The seas still need watching, but unarmed drones are vulnerable to being shot down. Production of the Triton was slowed down due to the US Navy pausing funding for the project.

Cost: Originally $2 billion. Now $2.4 billion.

Delivery date: Originally 2025, now sometime in 2030-31.

7. Rheinmetall MAN military vehicles and Haulmark trailers

What is it? Thousands of new trucks and trailers for the army.

Commissioned: 2007

Why was it commissioned? To haul troops and equipment. But negotiations with the original bidder and the contract went back to tender, with Rheinmetall selected in 2011.

Do we still need it? Yes.

Cost: Originally $3.2 billion. Now $3.4 billion.

Delivery date? Achieved FOC in December but with heavy caveats. Some elements expected to take another 36 months to finalise.

8. Peregrine airborne intelligence, surveillance, reconnaissance and electronic warfare capability

What is it? Four heavily modified Gulfstream Peregrine jets that will conduct routine and rapid surveillance to warn of threats supporting F-35 fighter jet operations.

Commissioned: 2017

Why was it commissioned? Electronic warfare is a key part of the modern-day battlefield and achieving air superiority.

Do we still need it? Yes. However, the RAAF has opted for a “first-of-type” project, meaning it is highly developmental. The US has already delayed delivery of aircraft.

Cost: Originally $2.1 billion. Now $2.3 billion.

Delivery date: Defence is refusing to say. Significant engineering, integration and flight tests could delay the schedule further.

9. Main battle tank and combat engineering vehicles

What is it? 75 M1A2 Abrams battle tanks and 52 combat engineering vehicles to breach minefields, build temporary bridges and recover damaged vehicles.

When was it commissioned? 2021

Why did we commission it? They are an upgrade on the army’s existing M1A1 tanks.

Do we still need it? There are higher priorities. Australia has not sent tanks into combat since Vietnam, and the Defence Strategic Review believed the army needed to become more nimble for maritime operations.

Cost: Originally $2 billion. Now $2.2 billion.

Delivery date: Defence is refusing to say.

10. Civil military air traffic management system

What is it? Replacement air traffic control at 12 defence bases. It is designed to create an integrated civil and military air traffic control system.

When was it commissioned? 2014

Why did we commission it? The system, known as OneSky, is intended to manage 11 per cent of the world’s airspace, covering both commercial airlines and military flights.

Do we still need it? Air traffic is only getting busier, so it’s vital to have a full picture of the skies.

Cost: Originally $730 million. Now $1 billion.

Delivery date: Originally mid-2023, now 2028.

--- end of excerpt ---

Politics doesn't help instill confidence either...

Defence chief gagged over Labor tensions as Albanese backs Marles (afr.com) [09-Feb-2024]

Too old, too slow: Richard Marles’ mission to shakeup Defence (afr.com) [09-Feb-2024]

Excerpt:

But while the government stresses the need for faster procurement decisions to get new weapons sooner as part of efforts to muscle up against China, Defence is being shackled by the government’s unwillingness to cough up for a big short-term increase in its annual $52 billion budget.

Former army major-general Mick Ryan tells AFR Weekend there is a “mobilisation trinity” that Defence is failing to achieve – personnel, technology and industry, and new ideas.

‘Clearly’ behind the eight-ball

He says Defence chiefs cannot blame a tight labour market alone for personnel shortfalls and military life needs to be made more attractive, while “clearly we are well behind the eight-ball when it comes to deploying new weapons” such as loitering munitions and counter-drone technology.

He fears military chiefs are not paying close enough attention to the lessons from modern battles such as Ukraine.

“We’re not developing new warfighting ideas of how to blend old and new technology. For example, how do we blend Anzac frigates with unmanned submarines? What does deterrence look like for a middle power like Australia,” Ryan says.

While Afghanistan brought drone warfare to the fore, with expensive Predator drones firing $US150,000 Hellfire missiles to kill terrorists, Ukraine, Gaza and before that, the shortlived 2021 conflict in Azerbaijan have shown how it can be done on the cheap, using commercially available drones that can be bought at the equivalent of JB Hi-Fi.

Modern drone warfare can also help a smaller force level the playing field against a superior adversary.

SYPAQ chief engineer Ross Osborne, CEO Amanda Holt, managing director David Vicino and founder George Vicino with one of the company’s drones. Eamon Gallagher

In the early days of Vladimir Putin’s invasion, Ukrainian troops improvised, fitting explosives to commercial drones to launch kamikaze attacks against tanks.

Australian-made SYPAQ drones, which are made of cardboard and intended to be disposable, have also reportedly been modified by the Ukrainians to carry small bombs and attack targets in swarms, the idea being that even if some are shot down, enough will get through to cause damage.

Russian forces meanwhile have launched attacks against Ukrainian infrastructure such as the power grid using Iranian-devised Shahed drones. Leaked documents this week revealed each drone costs $US193,000 ($297,000). By contrast, an F-35 Joint Strike Fighter used by the RAAF costs about $US78 million per plane.

Special Ukraine branch

This week, Ukrainian President Volodymyr Zelensky announced the creation of a special branch of the armed forces dedicated to operating drones and pledged to produce a million drones in 2024.

Australia’s drone program remains very much an expensive work in progress. The government has committed to buying four (out of a possible seven) Triton drones for long-range maritime patrols and has two flagship drone programs in development: Ghost Bat for the RAAF and the navy’s Ghost Shark, an unmanned submarine.

Conroy announced on Friday another $399 million would be tipped into acquiring three more Ghost Bats, bringing the number to 11. The unmanned aircraft are designed to partner with fighter jets and be used as decoys or carry a weapons payload of their own.

AUKUS distortion

Conroy last month also issued $1.2 million of contracts to 11 drone companies to produce small prototypes for evaluation.

While drones represent the way of the future, the biggest equipment headache confronting defence is the navy.

The plan to acquire nuclear-powered submarines with its $368 billion pricetag is distorting the defence budget, with sources saying money is being cut from new projects and sustainment to help underpin AUKUS.

At the same time, the average age of the navy fleet is its highest since World War II. The backbone of the fleet, the Anzac frigates and Collins-class submarines, date back to the 1990s. They are becoming more and more expensive to operate, and yet more life needs to be squeezed out of them.

But the $45 billion Hunter-class frigates, intended to replace the Anzacs, are likely to be reduced from nine to six, or as few as three, amid design woes, budget blowouts and the realisation they are undergunned. The surface fleet review, expected to be released within the next fortnight, is tipped to recommend the navy acquire warships packed with missiles.

Having the shiniest weapons in the world, though, is pointless if the military lacks soldiers, sailors and aviators to operate them.

While the government has pledged to grow the number of uniformed personnel to 80,000 by 2040, the workforce is actually going backwards. The ADF in 2022-23 was 3400 people short of its 62,000 target.

--- end of excerpt ---

And in the USA you've got the GOP being more interested in stopping the Dem's from doing anything, than in what might be best for their own country, let alone the rest of the world.

Further Reading:

How the ‘AK-47 of Tehran’ changed warfare and set fire to the Middle East (afr.com) [05-Feb-2024]

Yeah, nah! Not for me.

Nice of HCL to drop that HighCom-Half-Year-Results-Guidance.PDF just after 4pm when the market had closed. They'll get smashed for sure this morning when the market opens.