EOS Signs Conditional £370m Counter-Drone Contract

Electro Optic Systems (ASX:EOS) announced a conditional £370m (~A$700m) contract with the government of a Gulf Co-operation Council member state for a nation-wide counter-drone defence system, which the company says is the largest contract it has secured.

EOS will act as prime contractor and systems integrator, with the NiDAR command and control system acquired with MARSS at the core. The contract includes third-party electro-optical, radar and sonar sensors and initial supply of third-party effectors, including hard-kill interceptors and soft-kill jammers. EOS expects over 80% of revenue to be earned over the initial 12-24 months after the contract becomes unconditional, with approximately 20% of the value relating to ongoing support over four years. Performance cannot begin until conditions are met: a performance bond guarantee for 10% of the contract value (£37m), which EOS provided on 12 August 2026 backed by a £40.3m (~A$77.0m) cash security deposit; a £74m bank guarantee from EOS with an advance payment of the same amount from the customer; and export licences obtained within two months of receiving the necessary customer documentation. EOS expects the contract to be profitable and cashflow positive over its term, but flags a significant short-term working capital funding requirement that is expected to turn positive during mid-2027.

EOS says there is no guarantee if or when the conditions will be met. It also needs consents and further accommodation from WHSP and guarantee facility providers, and the customer has termination rights and capped and uncapped damages for non-performance. The customer is not named.