AVA RISK GROUP LIMITED — Interim / Quarterly Report 2021

Feb 25, 2021

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AVA RISK GROUP LIMITED ABN 67 064 089 318 AND CONTROLLED ENTITIES

HALF-YEAR INFORMATION FOR THE SIX MONTHS ENDED 31 DECEMBER 2020 PROVIDED TO THE ASX UNDER LISTING RULE 4.2A.3

This half-year financial report is to be read in conjunction with the financial report for the year ended 30 June 2020.

Rule 4.2A.3

Appendix 4D

Half Year Report for the six months to 31 December 2020

Name of entity Ava Risk Group Limited

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ABN or equivalent company reference: 67 064 089 318

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1. Reporting period

Report for the half year ended: 31 December 2020

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Previous corresponding periods:

Financial year ended 30 June 2020 Half-year ended 31 December 2019

2. Results for announcement to the market

Revenues from ordinary activities_(item 2.1) up Profit (loss) from ordinary activities after tax attributable to members (_item 2.2) up Net profit (loss) for the period attributable to members_(item 2.3)_ up	~~/down~~ 72% to 35,159,000 ~~/down~~ 1,071% to 11,028,000 ~~/down~~ 1,071% to 11,028,000

. Results for announcement to the market	. Results for announcement to the market	. Results for announcement to the market
Revenues from ordinary activities_(item 2.1) up~~/down~~ 72% to 35,159,000 Profit (loss) from ordinary activities after tax attributable to members (_item 2.2) up~~/down~~ 1,071% to 11,028,000 Net profit (loss) for the period attributable to members_(item 2.3)_ up~~/down~~ 1,071% to 11,028,000
Dividends(item 2.4)	Amount per security	Franked amount persecurity
Special dividend (23 October 2020) Special dividend (10 March 2021) Interim dividend Final dividend	1 ¢ 2 ¢ Nil ¢ Nil ¢	Nil ¢ Nil ¢ Nil ¢ Nil ¢
Previous corresponding period	Nil ¢	Nil ¢
Record date for determining entitlements to the dividend_(item 2.5)_	Special dividend – 24 September 2020 Special dividend – 10 February 2021
Brief explanation of any of the figures reported above necessary to enable the figures to be understood_(item 2.6)_: The special dividends reported above are unfranked.

3. Net tangible assets per security (item 3)

Net tangible asset backing per ordinary security	Current period	Previous corresponding period
	9.4 cents	3.5 cents

Rule 4.2A.3

4. Details of entities over which control has been gained or lost during the period: (item 4)

Control gained over entities

Name of entities (item 4.1)

Not applicable Date(s) of gain of control (item 4.2) Not applicable

Contribution to consolidated profit (loss) from ordinary activities after tax by the controlled entities since the date(s) in the current period on which control was acquired (item 4.3)

Profit (loss) from ordinary activities after tax of the controlled entities for the whole of the previous corresponding period (item 4.3)

$ Nil $ Nil

Loss of control of entities

Name of entities (item 4.1)

Future Fibre Technologies Europe AG Date(s) of loss of control (item 4.2) Company deregistered. Contribution to consolidated profit (loss) from ordinary $ 31,359 activities after tax by the controlled entities to the date(s) in the current period when control was lost (item 4.3). Profit (loss) from ordinary activities after tax of the ($1,419) controlled entities for the whole of the previous corresponding period (item 4.3)

Rule 4.2A.3

5. Dividends (item 5)

Special dividend

Interim dividend year ended 30 June 2020 Final dividend year ended 30 June 2020

Date of payment	Total amount of dividend
23 October 2020	$2,391,795
10 March 2021	$4,832,588
N/A	$ Nil
N/A	$ Nil

Amount per security

	Amount per security	Franked amount per security at % tax	Amount per security of foreign- sourced dividend
Total dividend: Current year (23 October 2020) Current year (10 March 2021)	1 ¢	Nil ¢	Nil ¢
	2 ¢	Nil ¢	Nil ¢
Previous year	Nil ¢	Nil ¢	Nil ¢

Total dividend on all securities

Ordinary securities_(each class separately) Preference securities(each class separately) Other equity instruments(each class_ separately) Total	Current period $A'000	Previous corresponding Period-$A'000
	2,392 Nil Nil	Nil Nil Nil
	2,392	Nil

6. Details of dividend or distribution reinvestment plans in operation are described below (item 6) :

N/A The last date(s) for receipt of election notices for N/A participation in the dividend or distribution reinvestment plan

Rule 4.2A.3

7. Details of associates and joint venture entities (item 7)

Name of associate or joint venture entity %Securities held

N/A N/A

Aggregate share of profits (losses) of associates and joint venture entities

Group’s share of associates’ and joint venture entities’: Profit (loss) from ordinary activities before tax Income tax on ordinary activities

Net profit (loss) from ordinary activities after tax Adjustments

Share of net profit (loss) of associates and joint venture entities

2020 $	2019 $
N/A	N/A
N/A	N/A
N/A	N/A

8. The financial information provided in the Appendix 4D is based on the half year condensed financial report (attached).

9. Independent review of the financial report (item 9)

(Select appropriate option)

The financial report has been independently reviewed. The financial report is not subject to a qualified independent review statement .

10. Matters relating to a qualified independent review statement

A description of the dispute or qualification in respect of the independent review of the halfyear financial report is provided below (item 9)

N/A

Intentionally left blank

Ava Risk Group Limited (A.C.N. 064 089 318) and controlled entities

CONDENSED FINANCIAL REPORT FOR THE HALF-YEAR ENDED 31 DECEMBER 2020

This half-year condensed financial report is to be read in conjunction with the financial report for the year ended 30 June 2020

Table of Contents

Directors’ Report ..................................................................................................................................... 1 Auditor’s Independence Declaration ....................................................................................................... 3 Interim Statement of Comprehensive Income......................................................................................... 4 Interim consolidated Statement of Financial Position ............................................................................. 5 Interim consolidated Statement of Changes in Equity ............................................................................ 6 Interim consolidated Statement of Cash Flows....................................................................................... 7 Notes to the Interim condensed consolidated half-year report ............................................................... 8 Directors’ Declaration ............................................................................................................................ 17 Independent auditor’s review report ...................................................................................................... 18

DIRECTORS’ REPORT

The directors present their report together with the condensed financial report of the consolidated entity consisting of Ava Risk Group Limited (the Company) and its controlled entities (the Group) for the half-year ended 31 December 2020 and independent review report thereon. This financial report has been prepared in accordance with AASB 134 Interim Financial Reporting .

Directors’ Names

The names of the directors in office at any time during or since the end of the half-year are:

Name	Period of Directorship
D Cronin (Chairman)	Appointed 10 April 2018
M Stevens (Non-Executive Director)	Appointed 11 March 2015
M McGeever (Non-Executive Director)	Appointed 8 August 2018
R Broomfield (Executive Director)	Appointed 27 February 2008
S Basham(Executive Director)	Resigned 9 July2020

The directors have been in office since the start of the financial period to the date of this report unless otherwise stated.

Review of operations

Highlights

• Revenue from ordinary activities of $35.159 million for the 6 months to 31 December 2020 (HY2021):

• 72% increase on HY2020 ($14.713 million) with revenues up by $9.243 million in the Services Division. Perimeter Security and Access Control contributed an additional $5.470m of sales revenue with strong revenues from the Indian Ministry of Defence Contract (MoD) and the Australian Department of Defence, despite Covid-19 delays to underlying sales;

• Licence fees from the Indian MOD project, have contributed $7.726 million of revenue and gross margin (HY2020: $1.343 million);

• 31 December 2020 sales orders backlog of $3.4 million (HY2020: $16.7 million), inclusive of the Indian MOD project.

Gross margin of 57% (HY2020: 49%) as a result of higher revenue margin in the International Valuable Logistics (Services) division and improved margins in the Technology division driven by favourable margin on the Indian MoD licence fee income.

Operating expenses excluding depreciation, amortisation and interest are $8.637 million (HY2020 $7.811 million).

• Net profit from ordinary activities up to $11.028 million (HY2020: $0.942 million) driven by:

• Increase of $4.020 million profit in Perimeter Security underpinned by the Indian MoD contract;

• Strong demand for International Valuable Logistics services in the first six months contributing to an increase of $3.320 million profit in the Services Division; and

• Access Control Solutions reporting a profit of $2.135 million as a result of 109% growth in revenue (HY2020: $0.611 million loss);

• The Board declared a Special dividend of $0.01 per share, paid on 23 October 2020.

• As at 31 December 2020, the balance sheet has net assets of $34.075 million (FY2020 $25.415 million) with no external debts or borrowings.

1

DIRECTORS’ REPORT

Events after the Balance sheet date

Dividends

On 29 January 2021, the Group announced a Special dividend of $0.02 per share on ordinary shares. The dividend has a record date of 10 February 2021 and will be paid on 10 March 2021.

Other than the changes noted above there has been no matter or circumstance, which has arisen since 31 December 2020 that has significantly affected or may significantly affect:

• a) the operations subsequent to 31 December 2020, of the consolidated entity, or

• b) the results of those operations, or

• c) the state of affairs, subsequent to 31 December 2020, of the consolidated entity.

Rounding of amounts

In accordance with ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191, the amounts in the directors’ report and in the financial report have been rounded to the nearest one thousand dollars, or in certain cases, to the nearest dollar (where indicated).

Auditor’s independence declaration

A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 in relation to the review for the half-year is provided with this report.

This report is made in accordance with a resolution of directors.

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David Cronin Chairman 26 February 2021

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AUDITOR’S INDEPENDENCE DECLARATION

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3

INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE HALF-YEAR ENDED 31 DECEMBER

Note Revenue and other income Revenue from contracts with customers 4 Other income 4 Less: Expenses Cost of raw materials and consumables used Employee benefit expenses Research and development Advertising and marketing Travel and entertainment Facilities and office Compliance, legal, and administration Provision for impairment of receivables Depreciation and amortisation expenses Finance costs Foreign exchange losses Other expenses Profit for the half-year before income tax Income tax expense Profit for the half-year Profit for the half-year attributable to: Equity holders of the parent company Other comprehensive income (loss) for the half-year, net of tax Items that may be reclassified subsequently to profit and loss Exchange differences on translation of foreign operations, net of tax Total comprehensive income for the half-year Total comprehensive income attributable to: Equity holders of the parent company Profit per share for loss attributable to the ordinary equity holders of the company: Basic earnings per share Diluted earnings per share	Consolidated 31 Dec 2020 31 Dec 2019 $'000 $'000 35,159 20,446 613 9
	35,772 20,455
	(14,973) (10,457) (5,812) (5,084) (594) (439) (71) (104) (104) (462) (268) (344) (643) (576) 133 (94) (1,089) (1,218) (24) (27) (891) (291) (387) (417)
	(24,723) (19,513)
	11,049 942 (21) -
	11,028 942
	11,028 942
	(947) 260
	10,081 1,202
	10,081 1,202
	Cents Cents 4.61 0.40 4.45 0.39

The accompanying notes form part of these condensed consolidated financial statements.

4

INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION

Note ASSETS Current Assets Cash and cash equivalents 7 Receivables Contract assets Inventories Other current assets Total Current Assets Non-Current Assets Plant and equipment Intangible assets Right of use assets Other non-current assets Total Non-Current Assets TOTAL ASSETS LIABILITIES Current Liabilities Payables Contract liabilities Lease liabilities Provisions Total Current Liabilities Non-Current Liabilities Provisions Lease liabilities Contract liabilities Total Non-Current Liabilities TOTAL LIABILITIES NET ASSETS EQUITY Contributed equity 8 Accumulated losses Reserves TOTAL EQUITY	Consolidated 31 Dec 2020 30 Jun 2020 $'000 $'000 13,398 7,703 8,851 5,970 4,450 2,451 3,686 3,931 413 272
	30,798 20,327
	592 644 10,940 12,043 435 654 7 12
	11,974 13,353
	42,772 33,680
	6,148 5,392 284 431 262 305 1,390 1,375
	8,084 7,503
	67 53 223 408 323 301
	613 762
	8,697 8,265
	34,075 25,415
	59,029 58,349 (21,999) (30,635) (2,955) (2,299)
	34,075 25,415

The accompanying notes form part of these condensed consolidated financial statements.

5

INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

At 1 July 2020 Profit for the year Other comprehensive loss Total comprehensive income (loss) for the year Transactions with owners in their capacity as owners Dividends/distributions Shares issued Share issue costs Share based payments Total transactions with owners in their capacity as owners Balance at 31 December 2020 At 1 July 2019 Effect of adoption of new accounting standards At 1 July 2019 (restated) Profit for the year Other comprehensive income Total comprehensive income for the half- year Transactions with owners in their capacity as owners Share-based payments Total transactions with owners in their capacity as owners Balance at 31 December 2019	Share Capital Share based payment Reserve Foreign Exchange Translation Reserve Other Equity Reserves Accumulated Losses Total attributable to owners of parent Non- controlling interest Total Equity $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 58,349 1,176 (428) (3,047) (30,635) 25,415 - 25,415 - - - - 11,028 11,028 - 11,028 - - (947) - - (947) - (947)
	- - (947) - 11,028 10,081 - 10,081
	- - - - (2,392) (2,392) - (2,392) 694 - - - - 694 - 694 (14) - - - - (14) - (14) - 291 - - - 291 - 291
	680 291 - - (2,392) (1,421) - (1,421)
	59,029 1,467 (1,375) (3,047) (21,999) 34,075 - 34,075
	58,226 1,014 (429) (3,047) (35,520) 20,244 - 20,244 - - - - (57) (57) - (57)
	58,226 1,014 (429) (3,047) (35,577) 20,187 - 20,187 - - - - 942 942 - 942 - - 260 - - 260 - 260
	- - 260 - 942 1,202 - 1,202
	- 81 - - - 81 - 81
	- 81 - - - 81 - 81
	58,226 1,095 (169) (3,047) (34,635) 21,470 - 21,470

The accompanying notes form part of these condensed consolidated financial statements.

6

NOTES TO THE INTERIM CONDENSED CONSOLIDATED HALFYEAR FINANCIAL REPORT

Note Cash flow from operating activities Receipts from customers Receipts from government grants Payments to suppliers and employees Interest received Tax paid Finance costs Net cash flows from operating activities Cash flow from investing activities Payment for intangible assets Payment for plant and equipment Net cash flows used in investing activities Cash flow from financing activities Proceeds from share issue Share issue expense Dividends paid Payment of lease liabilities Net cash flows used in financing activities Net increase in cash and cash equivalents Net foreign exchange differences on cash Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year 7	Consolidated 31 Dec 2020 31 Dec 2019 $’000 $’000 29,983 17,904 626 - (22,391) (17,199) - 6 (13) - (24) -
	8,181 711
	(459) (454) (61) (19)
	(520) (473)
	694 - (14) - (2,338) - (147) (169)
	(1,805) (169)
	5,856 69 (161) (27) 7,703 3,082
	13,398 3,124

The accompanying notes form part of these condensed consolidated financial statements.

7

NOTES TO THE INTERIM CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL REPORT

1. Corporate information

The consolidated financial statements of Ava Risk Group Limited and its subsidiaries (collectively, the Group) for the half-year ended 31 December 2020 were authorised for issue in accordance with a resolution of the directors on 26 February 2021. Ava Risk Group Limited (the parent) is a limited company incorporated and domiciled in Australia and whose shares are publicly traded. The registered office is located at 10 Hartnett Close, Mulgrave, Victoria 3170, Australia.

The Group is principally engaged in:

• the provision of security technology products for perimeter intrusion detection solutions;

• the provision of security access control products; and

• the provision of international valuable logistics services.

2. Basis of preparation and changes to the Group’s accounting policies Report

(a) Basis of preparation

This condensed consolidated half-year financial report has been prepared in accordance with Australian Accounting Standard AASB 134 Interim Financial Reporting , as appropriate for for-profit entities, and the Corporations Act 2001 .

This condensed consolidated half-year financial report does not include all the notes of the type usually included in an annual financial report.

It is recommended that this half-year financial report be read in conjunction with the annual financial report for the year ended 30 June 2020 and any public announcements made by Ava Risk Group Limited during the half-year in accordance with any continuous disclosure obligations arising under the Corporations Act 2001 .

The half-year financial report was authorised for issue by the directors as at the date of the directors’ report.

(b) New standards, interpretation and amendments adopted by the Group

The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group’s annual consolidated financial statements for the year ended 30 June 2020. There are no new standards or interpretations that are not yet effective and that would be expected to have a material impact on the Group in the current or future reporting periods.

(c) Going concern

The financial statements have been prepared on the going concern basis which assumes the Group will have sufficient cash to pay its debts as and when they become payable for a period of at least 12 months from the date the financial report was authorised for issue.

For the period ended 31 December 2020, the Group recorded a net profit after tax of $11.028 million. The Group has a net asset position of $34.075 million at reporting date inclusive of cash reserves of $13.398 million with no external debt or borrowings.

8

NOTES TO THE INTERIM CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL REPORT

(d) Covid-19

Despite the global challenges that have come with COVID-19 pandemic, the Group has achieved a positive financial result. Management continues to assess and have a reasonable expectation that the Group has adequate resources to continue in operation for at least 12 months and that the going concern basis of accounting remains appropriate.

(e) Rounding amounts

In accordance with ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191, the amounts in the directors’ report and in the financial report have been rounded to the nearest one thousand dollars, or in certain cases, to the nearest dollar (where indicated).

(f) Critical accounting estimates and assumptions

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

Key assumptions and estimates

(i) Impairment of tangible and intangibles assets

The Group determines whether tangible and intangible assets are impaired at least on an annual basis by evaluating whether indicators of impairment exist in relation to the continued use of the asset by the consolidated entity.

Goodwill and indefinite lived intangibles are tested for impairment on at least an annual basis. Impairment triggers include market capitalisation deficiency relative to net assets, declining product or manufacturing performance, technology changes, adverse changes in the economic or political environment or future product expectations. If an indicator of impairment exists, the Group estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s fair value less costs of disposal and its value in use (“VIU”). The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets, in which case it is tested as part of the cash generating unit (CGU) to which it belongs. When the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

An assessment is made each reporting period to determine whether there is an indicator of impairment.

The recoverable amount of the cash-generating unit is determined based on value-in-use calculations, unless there is evidence to support a higher fair value less cost of disposal.

The Group has three identifiable CGUs:

• Perimeter security

• Access control solutions

• International valuable logistics

None of the CGUs had indicators of impairment and hence were not tested for impairment. No impairments were recognised for the period (2020: Nil).

(ii) Capitalisation of development costs

Judgement is required where expenditure meets the definition of development.

(iii) Amortisation of intangible assets

Judgement is required to assess the useful economic life of intangible assets. Intangible assets, including capitalised development costs that have a finite life are amortised on a systematic basis over the expected life of the asset and cease at the earlier of the date that the asset is classified as held for sale and the date that the asset is derecognised.

9

NOTES TO THE INTERIM CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL REPORT

3. Related party transactions

The Consolidated Entity purchased consulting services from Pierce Group Asia Pte Ltd a related entity through Chairman and Non-Executive Director, David Cronin, for $124,983 (HY2020: $151,616). Accounts payable balance at 31 December 2020 totals $46,500 (HY2020: $43,559). The terms of these arrangements were on an arm’s length basis in the normal course of business.

With the exception of the above, there have been no other related party transactions other than those between the Company and its subsidiaries during the half-year ended 31 December 2020.

4. Revenue and other income

Revenue from contracts with customers Revenue from sales of goods Revenue from licence fees Revenue from provision of services(1) Total revenue from contracts with customers Other income Interest Government Grants and incentives Other income Total other income Total Revenues and other income Timing of revenue recognition Goods transferred at a point in time Services transferred over time(1) Total revenue form contracts with customers	Consolidated 31 Dec 2020 31 Dec 2019 $'000 $'000 8,514 8,971 7,726 1,343 18,919 10,132
	35,159 20,446
	- 6 602 - 11 3
	613 9
	35,772 20,455
	16,240 10,314 18,919 10,132
	35,159 20,446

(1) Includes services revenues form Technology Division and Services Division.

10

NOTES TO THE INTERIM CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL REPORT

5. Segment information

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments has been identified as the Board of Directors of Ava Risk Group Limited.

The Group’s segments were based on three separately identifiable products.

The Group operates in perimeter security, access control solutions and international valuable logistics, which are its reportable segments. These divisions offer different products and services and are managed separately because they require different technology and marketing strategies.

The following summary describes the operations of each reportable segment:

Product type	Reportable segment	Operations
Technology	Perimeter Security	Global leader in fibre optic intrusion detection systems;
		perimeter intrusions, oil and gas pipeline third party
		interference and data network tapping and tampering.
	Access Control Systems	Providing secure, reliable smart card reader and card
		systems, biometric solutions, electric locking and access
		control products.
Services	International Valuable	Global provider of secure international logistics of high-risk
	Logistics	valuables, precious metals and currency.

Management have considered the geographical entity-wide disclosures required as per AASB 8 Operating Segments. Segment information for the reporting period is as follows:

(a) Reportable segments

(a)		Reportable segments
		31 Dec 2020		Perimeter Security		Access Control Solutions		International Valuable Logistics		Eliminations		Total
				$’000		$’000		$’000		$’000		$’000
		Revenue and other income
		External customers	12,477			4,265		18,417		-		35,159
		Intersegment revenue	151			107		150		(408)		-
			12,628			4,372		18,567		(408)		35,159
		Other income	498			38		77		-		613
		Interest Income	13			206		-		(219)		-
			511			244		77		(219)		613
		Segment revenue and other income	13,139			4,616		18,644		(627)		35,772
		Depreciation and amortisation expenses	(473)			(497)		(119)		-		(1,089)
		Finance costs	(20)			(17)		(206)		219		(24)
		Income tax	(21)			-		-		-		(21)
		EBITDA	5,971			2,443		3,748		-		12,162
		Segment operating profit	5,470			2,135		3,423		-		11,028

11

NOTES TO THE INTERIM CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL REPORT

TES TO THE INTERIM CONDENSED CONSOLIDATED HALF-YEAR ANCIAL REPORT	TES TO THE INTERIM CONDENSED CONSOLIDATED HALF-YEAR ANCIAL REPORT
31 Dec 2019 Perimeter Security Access Control Solutions International Valuable Logistics Eliminations Total
$’000 $’000 $’000 $’000 $’000
Revenue and other income
External customers	9,233 2,039 9,174 - 20,446
Intersegment revenue	519 - - (519) -
	9,752 2,039 9,174 (519) 20,446
Other income	3 - - - 3
Interest Income	54 6 - (54) 6
	57 6 - (54) 9
Segment revenue and other income	9,809 2,045 9,174 (573) 20,455
Depreciation and amortisation expenses	(525) (394) (299) - (1,218)
Finance costs	(20) (59) (2) 54 (27)
Income tax	- - - - -
EBITDA	1,941 (164) 404 - 2,181
Segment operating profit	1,450 (611) 103 - 942

Inter-segment revenues are eliminated upon consolidation and reflected in the ‘Eliminations’ column .

(b) Geographic information Australia APAC (excluding Australia) Europe India MENA United States of America Rest of world Total external revenue by region	Consolidated 31 Dec 2020 31 Dec 2019 $'000 $'000 4,719 1,952 82 789 15,488 8,506 8,144 2,385 687 1,356 2,560 5,160 3,479 298
	35,159 20,446

In the half-year ended 31 December 2020, three customers generated revenues representing 10% or more for the Group. (HY2020, no customers).

12

NOTES TO THE INTERIM CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL REPORT

(c) Non-current operating assets Australia United Arab Emirates Rest of world Total non-current assets by region (d) Reconciliation of non-current assets Non-current operating assets by region Customer contracts intangible assets(1) Other non-current assets Total non-current assets	Consolidated 31 Dec 2020 30 Jun 2020 $'000 $'000 9,584 10,193 1,337 1,681 1,046 1,225
	11,967 13,099
	11,967 13,099 - 242 7 12
	11,974 13,353

Non-current assets for this purpose consist of property, plant and equipment, right of use assets and intangible assets.

(1) Customer contracts of $242k have been excluded from the geographical split (Nil in 31 December 2020) as the asset is composed of customers from Australia and a variety of geographical regions.

6. Dividends

Cash dividends to the equity holders of the parent: Dividends on ordinary shares declared and paid: Special dividend: 1 cent per share paid on 23 October 2020	31 Dec 2020 31 Dec 2019 $'000 $'000 2,392 -

On 29 January 2021, the Group announced a Special dividend of $0.02 per share on ordinary shares. The proposed dividend of $4,832,588 is expected to be paid out on 10 March 2021 and was not recognised as a liability at period end (See note 12. Subsequent Events).

7. Cash and cash equivalents

Consolidated 31 Dec 2020 30 Jun 2020 $'000 $'000 Cash at bank and on hand 13,398 7,703

13

NOTES TO THE INTERIM CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL REPORT

8. Contributed equity

. Contributed equity
(a) Ordinary shares Ordinary share capital, issued and fully paid (b) Ordinary shares on issue At 1 July 2020 At 31 December 2020 (c) Movement in ordinary shares At 1 July 2020 Share issue Share issue costs At 31 December 2020	Consolidated 31 Dec 2020 30 Jun 2020 $'000 $'000 59,029 58,349
	Number of shares $'000 235,365,568 58,349 241,379,402 59,029
	235,365,568 58,349 6,013,834 694 - (14)
	241,379,402 59,029

During the half-year ended 31 December 2020, the Group issued 6,013,834 shares representing the equity-settled share-based payment transactions.

9. Contingencies

The Ava Global performance plan which previously expired on 1 February 2021 has been renegotiated and extended. It allows for senior employees of Ava Global to share in a pooled allocation of up to 32.7% of the equity exit value of Ava Global in excess of USD$5.3 million. In addition, the plan provides for a shared annual bonus pool of 32.7% of the net profits above USD$372,500 that the Ava Global business unit generates for its shareholders after allowing for deduction of the bonus pool amount itself, and any other expenses, costs or taxes. The incentives are payable in cash. The performance plan expires if the executive resigns or their employment is terminated by the Company on or before 30 June 2021. Otherwise, the performance plan terminates on 30 June 2021. Other than the changes noted above, there are no changes to the contingent liabilities disclosed in the 30 June 2020 financial statements.

10. Share-based payments

(a) Expense arising from equity-settled share-based payment transactions Performance rights Share options Total equity-settled share-based payment expense	Consolidated 31 Dec 2020 31 Dec 2019 $'000 $'000 203 81 88 -
	291 81

14

NOTES TO THE INTERIM CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL REPORT

(b) Performance rights held

Performance rights held
Date granted Expiry date Exercise Price ($)	Balance at start of period Granted during the period Forfeited and other movements during the period Unvested and unexercisable balance at the end of the period
1/07/2018 1/07/2020 $0.00 1/07/2018 1/07/2021 $0.00 1/07/2018 1/07/2020 $0.00 1/07/2018 1/07/2021 $0.00 23/09/2019 31/08/2021 $0.00 23/09/2019 31/08/2022 $0.00 28/10/2019 31/08/2021 $0.00 28/10/2019 31/08/2022 $0.00 31/10/2019 31/08/2021 $0.00 31/10/2019 31/08/2022 $0.00 31/10/2019 1/09/2020 $0.00 29/10/2020 31/08/2022 $0.00 29/10/2020 31/08/2023 $0.00 30/10/2020 31/08/2022 $0.00 30/10/2020 31/08/2023 $0.00 Total	112,972 - (112,972) - 112,972 - - 112,972 84,176 - (84,176) - 84,176 - - 84,176 528,558 - (367,144) 161,414 528,561 - (367,146) 161,415 468,939 - (79,171) 389,768 468,942 - (79,173) 389,769 339,667 - (289,732) 49,935 339,669 - (289,734) 49,935 600,000 - (600,000) - - 176,709 - 176,709 - 176,710 - 176,710 - 426,059 - 426,059 - 426,059 - 426,059
	3,668,632 1,205,537 (2,269,248) 2,604,921

During the half-year ended 31 December 2020, the Company granted performance rights as part of remuneration to senior executives and key employees. The vesting conditions of the performance rights are based on key performance metrics and objectives being met. The fair value of the performance rights was based on a Black Scholes option pricing model.

CEO and Executive Director Robert Broomfield, was issued 353,419 performance rights, following approval of the shareholders at the AGM on 29 October 2020. The performance rights have a nil exercise price and are split into two equal tranches, one vesting on 31 August 2022, with the second vesting on 31 August 2023.

Senior management were issued a total of 852,118 performance rights. The performance rights have a nil exercise price and are split into two equal tranches, one vesting on 31 August 2022, with the second vesting on 31 August 2023.

The weighted average fair value of the performance rights granted during the six months ended 31 December 2020 was $0.65.

(c) Share options held

Outstanding at the beginning of the year Options granted during the period Options exercised during the period Forfeited during the period Outstanding and exercisable at the end of the period Weighted average exercise price	31 Dec 2020 30 Jun 2020 Number Number 8,200,000 11,325,000 500,000 - (5,199,938) - (62) (3,125,000)
	3,500,000 8,200,000
	$0.19 $0.16

During the six months ended 31 December 2020, the Company granted 500,000 options to the former CEO and Executive Director Scott Basham. The exercise price is $0.15. The fair value of the options was based on a Black Scholes option pricing model. The options are split into two equal tranches, one vesting

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NOTES TO THE INTERIM CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL REPORT

on 31 December 2020 and the second vesting on 30 June 2021. Both tranches have an expiry date of 31 December 2021.

11. Fair value of financial instruments

The carrying amounts and estimated fair values of the Group’s financial instruments recognised in the financial statements and notes to the condensed financial report are materially the same.

12. Subsequent events

Dividends

On 29 January 2021, the Group announced a Special dividend of $0.02 per share on ordinary shares. The dividend of $4,832,588 will be paid on 10 March 2021.

Other than the changes noted above there has been no matter or circumstance, which has arisen since 31 December 2020 that has significantly affected or may significantly affect:

• d) the operations subsequent to 31 December 2020, of the consolidated entity, or

• e) the results of those operations, or

• f) the state of affairs, subsequent to 31 December 2020, of the consolidated entity.

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DIRECTORS’ DECLARATION

In the Directors’ opinion:

• (a) The directors declare that the financial statements and notes set out on pages 4 to 16 are in accordance with the Corporations Act 2001 including :

(i) Complying with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 , and other mandatory professional reporting requirements; and

• (ii) Giving a true and fair view of the financial position of the consolidated entity as at 31 December 2020 and of its performance for the half-year ended on that date.

• (b) There are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

This declaration is made in accordance with a resolution of the directors.

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David Cronin Chairman

26 February 2021

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INDEPENDENT AUDITOR’S REVIEW

I

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INDEPENDENT AUDITOR’S REVIEW REPORT

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