XRG delivered its strongest half-year performance to date, with total revenue exceeding $10.4 million, representing 41% growth on the prior corresponding period, and EBITDA of $2.6 million, up 190%. This performance was driven by strong momentum in Operator XR, which continues to scale as the Group’s primary growth engine.

Operations Summary:

• Record half-year performance with revenue of $10.4m (+41% pcp) and EBITDA of $2.6m (+190% pcp).
• Operator XR now the core growth engine, combined with the associated grants, contributing 63% of Group revenue and driving global expansion.
• Strong commercial momentum, with 89 global agencies, $7.8m new sales TCV and $63m qualified pipeline.
• Rapid expansion of recurring revenue, with ARR reaching $6.2m from multi-year enterprise agreements.
• Platform and market expansion, including OP-2 rollout, Counter-UAS capability launch, and growing global distribution footprint.

Board and management continue to execute a strategic realignment to focus the business on Operator XR, driving operational scale, technology leadership and global market expansion. Operator XR revenue and grant funding contributed 63% of total revenue in 1H FY26, reflecting increasing adoption and growing demand for mission-critical immersive training solutions.

Commercial momentum remained strong during the period, with the Operator XR customer base expanding to 89 global agencies, representing 31% year-to-date growth. New sales total contract value reached $7.8 million, supported by a qualified sales pipeline of $63 million, up 107% year-to- date. Annual Recurring Revenue increased to $6.2 million, reflecting continued expansion of multi- year agreements and increasing software-driven revenue streams.

The OP-2 platform continues to drive adoption across defence and law enforcement customers, strengthening XRG’s position as a provider of mission-critical immersive training solutions. The Company also expanded its product capability with the launch of Counter-UAS simulation technology, extending the platform into priority defence and security applications, with early engagement from European stakeholders supporting future pipeline growth.

Global expansion initiatives continued to progress, including the first commercial sale into Japan through an APAC distribution partner and increasing engagement across Asia Pacific and European markets. The Entertainment division delivered a stable contribution to Group revenue, primarily through iFLY operations, while the Group continues to advance its strategic transition toward a focused Operator XR platform.

1H2026 Financial Performance Summary:

• Total Half Year Revenue $10.4m, up 41% on pcp
• EBITDA $2.6m, up 190% on pcp
• Net Cashflow from operations $3.1m
• Deferred Revenue $12.5m
• Annual Recurring Revenue $6.2m 

Total Income Growth

The Group achieved a total revenue for the period of $10.4m. The increase was mainly due to the growth in Operator XR, recognised revenue totalling $4.4m plus $2.1m in grants associated with Operator XR.

EBITDA

Reported EBITDA for the period was $2.6m, increasing by 190% on pcp. Driven mainly by an increase in recognised revenue to Operator XR. Expenses across the Entertainment facilities remains stable, however, Operator XR increased its sales and customer excellence capabilities in the US during the period, with further investment in marketing activities, generating a higher leads count. The Company also expanded its order fulfilment capacity through a larger manufacturing and logistics facility.

Revenue Pipeline

The deferred revenue of $12.5m represents cash received in advance, of which $6m is recognised within current liabilities. The revenue pipeline is made up of unrecognised revenue totalling $11.5m from Operator XR sales to date. The majority of Operator XR Revenue is recognised over the term of the contract on a monthly basis.

Core Operator XR business update

After a period of establishment, Operator XR is now the core growth asset for XRG, driving the Group’s strategic transformation toward a high-margin, technology-led enterprise. Operator XR has experienced rapid global expansion, growing to 89 customer agencies worldwide, gaining strong traction across US federal agencies, state and city police, sheriff departments, and defence organisations.

Operator XR’s growth continues to significantly outpace the legacy entertainment segment in both revenue growth and scalability:

• New Sales Total Contract Value (TCV) of $7.8m in 1H FY26, supporting a qualified pipeline of $63m
• Annual Recurring Revenue (ARR) increased to $6.2m, reflecting strong adoption of multi- year enterprise and subscription agreements
• Expanding global footprint across the United States, Europe and Asia Pacific, including first commercial sales through APAC distribution partners
• Expansion of platform capability through the OP-2 software release and launch of Counter- UAS simulation capability

XRG’s Board and management recognise the significant growth opportunity in the Operator XR business and are executing a strategic realignment to position Operator XR as the Group’s primary operating focus. This includes streamlining legacy entertainment operations, scaling global sales and distribution capability, and maximising long-term shareholder value.

XRG’s transition toward a scalable, software-driven technology platform supports its strategic objective of becoming a global leader in mission-critical simulation and immersive training solutions, establishing a strong foundation for sustainable growth and long-term profitability.

Strong positive operating cash generation

Net operating cash flow of $3.1m for the period reflects a step-change in the business’s cash generation as U.S. commercial momentum translates into faster, more predictable collections. As Operator XR scales, cash inflows are increasingly being driven by repeatable sales activity, improved billing and collections cadence, and tighter working capital control. This demonstrates the Company’s growing ability to fund continued expansion from operating cash while maintaining investment in Operator XR growth initiatives.

Legacy Entertainment business update

The Group commenced its strategic transformation in FY25, initiating a review of its legacy entertainment operations, including iFLY and FREAK Entertainment, as part of XRG’s transition toward Operator XR as its core growth platform. Corporate advisers remain appointed and continue to progress with the process.

This strategic realignment is intended to streamline non-core operations, reduce operational complexity and capital intensity, and strengthen organizational focus on the higher-margin, scalable Operator XR business. The Company expects this transition to enhance capital allocation discipline and maximise long-term shareholder value.

The Entertainment division continues to provide a stable contribution to revenue and cashflow during this transition, primarily through iFLY operations. FREAK Entertainment will be fully exited by the end of FY2026. The Company will continue to update the market as the review progresses.

Subsequent Events Post 31 December 2025

Events subsequent to the period, primarily related to Operator XR.

Since the 31 December 2025, reporting date, Operator XR has added an additional 11 customers, bringing the total number of customers world-wide to 100. The new customers are all US based Law Enforcement agencies except for one new customer in Japan.

In February 2026, Operator XR received a purchase order from its primary APAC Distributor for the sale of an OP-2 system to a government agency in Japan. Although the contract amount is immaterial, the strategic sale into the region is material and is expected to open new government orders within the region.

The Company has reduced its debt facility with Causeway by $500,000 since the reporting date, with the repayment funded from operational cash flows.

This directors’ report is signed in accordance with a resolution of the Board of Directors. On behalf of the Board of Directors.