AVA RISK GROUP LIMITED — Investor Presentation 2020

Feb 24, 2020

Investor Presentation – 25 February 2020

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Forward Looking Statements

This presentation is given on behalf of Ava Risk Group Limited (AVA)

Information in this presentation is for general information purposes only, and is not an offer or invitation for subscription, purchase, or recommendation of securities in AVA. Certain statements in this document regarding the Company’s financial position, business strategy and objectives may contain forward-looking statements (rather than being based on historical or current facts).

Any forward-looking statements are based on the current beliefs of the Company’s management as well as assumptions made by, and information currently available to, the Company’s management. Forward-looking statements are inherently uncertain and must be read accordingly. There can be no assurance that the underlying assumptions will prove to be valid.

All data presented in this document reflects the current views of the Company with respect to future events. Forward-looking statements are subject to risks, uncertainties and assumptions relating to the operations, results of operations, growth strategy and liquidity of the Company. To the maximum extent permitted by law, the Company, its officers, employees and agents do not assume any obligation to release any updates or revisions to the information (including any forward looking statements) in this presentation to reflect any change to expectations or assumptions, and disclaim all responsibility and liability for any loss arising from reliance on this presentation or its content

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Company Overview

AVA Group is a diversified risk management technology and services company operating around the globe

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HY2020
Revenue Contribution
45% 45%
Services division AVA Global Logistics
10%
Future Fibre Technologies
Technology division
BQT Solutions
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Services Division – Ava Global Logistics

• Ava Global Logistics is a growing global provider of secure international logistics of high-risk valuables, precious metals and currency.

• Provides fully insured, door to door services, utilising a network of highly experienced security companies, freight forwarders, airlines and customs brokers, all operating under Ava’s strict risk management guidelines.

• Unique Partner model: ability to provide service in 100+ countries.

• Blue chip client base.

• Global footprint with offices in New York, London, Frankfurt, Dubai & Singapore.

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Technology Division – BQT Solutions

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• BQT’s secure, reliable smart reader and card systems, biometric solutions, electric locking, and access control products are utilised at over 3,500 sites in more than 50 countries.

• A leader in high security access control technology used in some of the most high security, critical applications in the world.

• Offers custom and “off the shelf” products to deliver market-wide access control security including military, critical infrastructure, commercial, industrial and residential applications.

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Technology Division – Future Fibre Technologies

• FFT is a global leader in fibre optic intrusion detection systems, with a track record of delivering highly intelligent, reliable, and award-winning intrusion detection solutions for the protection of critical sites and infrastructures.

• FFT’s advanced security systems detect and locate perimeter intrusions, oil and gas pipeline third-party interference and data network tapping and tampering.

• With more than 2,000 systems deployed across 70 countries, FFT has established a solid reputation for delivering advanced and cost effective intrusion detection solutions for the Transport, Government, Military, Oil & Gas and Utility sectors.

• FFT’s new Aura Ai platform uses the latest advanced optical signal processing algorithms, combined with artificial intelligence, to discriminate between intrusions, nuisance alarms and other causes of fence disturbance.

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Major Organizations All Around the World Depend on AVA

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H1 FY2020 Business Highlights

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Strong Revenue Gross Margin Operating Expenses Strong Order
Growth Improvement Reduced Backlog
• • • •
23% growth in sales Services Division Better working Technology Division
revenue vs pcp maintained its GM at capital management Backlog of A$16.7m
21%
• •
55% of revenue is Improving cost base •
Services Division
•
from the Technology Technology Division post restructuring
addressable client
Division increased its GM to
• Increased net spend increased to
72%
A$115m
operating cashflow
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H1 FY2020 Financial Summary

	H1	H1	YoY %
AUD$M#	FY2020	FY2019	Change
Sales Revenue	20.4	16.7	+23%	• Increasing Revenues
COGS	10.4	9.8	+7%
Gross Profit	10.0	6.9	+45%	• Increasing Margins
GP Margin (%)	49%	41%	+8%	• Reducing Costs
Operating Expenses	7.8	8.6	-10%
EBITDA*	2.2	(1.7)	+226%	• Producing Profits
Underlying EBITDA**	2.5	NA	NA

• Earnings before interest, taxes, depreciation and amortisation

• ** EBITDA excluding one-time corporate restructuring costs

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H1 FY2020 Financial Summary - Balance Sheet

AUD$M	31 Dec 2019	30 Jun 2019
Cash and cash equivalents	3.1	3.1
Receivables	7.5	5.0	• No external debt or borrowings.
Inventories	4.3	4.5
Intangibles	13.3	12.7	• Cash Balance of A$3.1m
Other assets	1.1	1.2
Total assets	29.3	26.5	• Sales Order Backlog of A$16.7m
Payables	5.7	4.8
Provisions	1.2	1.5
Lease liabilities	0.9	-
Total liabilities	7.8	6.3
Total equity	21.5	20.2

• Sales Order Backlog of A$16.7m

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H1 FY2020 Highlights

Ava Group (Technology Division + Services Division):

• H1 FY2020 revenues increased by 23% to A$20.4m compared to same time last year.

• Gross margins improved by 8% to 49% compared to 41% for the same time last year.

• EBITDA* of A$2.2m an increase of approximately A$3.9m compared to same time last year.

• Net operating cashflows were positive A$0.7m, an improvement of A$1.2m on the same time last year.

• Cash receipts from customers increased by A$1.1m on the same time last year.

• EBITDA = Earnings before Interest, Tax, Depreciation and Amortisation

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H1 FY2020 Highlights

Technology Division (FFT + BQT):

• Record revenues of A$11.3m

• EBITDA was A$1.8m

• Gross margins improving from 70% in H1 FY2019 to 72% in H1 FY2020

• Significant order backlog for technology products and services at 31 December 2019 of circa A$16.7m

Services Division (Ava Global):

• Record revenues of A$9.2m

• EBITDA was A$0.4m

• Gross margins steady at 21%

• Addressable client spend up to A$115m, with key wins in cash sector poised to drive growth in H2 FY2020

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Services Division Update

• Ava Global has recently been awarded preferred supplier status with Moneycorp Bank Ltd, to provide secure logistics and cash processing services, to and from New York, USA. Moneycorp expects that volumes will increase significantly over the coming months, which positions Ava Global well to benefit from this new arrangement.

• In addition, two (2) new service agreements have been executed with banks in the wholesale banknote sector, with other agreement negotiations at an advanced stage.

• As a result, the business is well placed to take a leading market position in the wholesale banknote market following the recent launch of US Federal Reserve FBICS program.

• These agreements increase the total addressable client spend for Ava Global in this sector to A$115m, with the business tracking towards ainin 30% of this market. g g

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Technology Division – BQT – New EU Master Distributor Agreement

• AVA’s BQT Solutions subsidiary has finalized negotiations for an expansion of it’s existing locking supply arrangements into Europe, with the signing of a new Master Distributor Agreement with a major global locking conglomerate.

• The first stocking orders have already been received against this new agreement throughout the course of February.

• The agreement is expected to deliver an additional 20% increase on our existing production levels across all locking products.

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Technology Division – BQT – YG80 Locking Update

• Sales of our award winning YG80 lock continue to increase, particularly in the US market through the distribution agreement with DormaKaba.

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• A major opportunity for Ava’s BQT Solutions to potentially supply

• ~100,000 units of our YG80 lock over a five-year period is ongoing.

• Latest advice to AVA from the conglomerate, is that the End User is still finalising selection of some of the other technologies included in the project. Consequently, finalisation of any agreement is still dependant upon successful quality, performance and integration tests being achieved, and then successful commercial negotiations being completed in due course.

• The conglomerate continues to strongly affirm that the YG-80 lock is the one and only locking solution being considered for this project.

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DormaKaba YG80 video : www.youtube.com/watch?v=58V1fj8W_oI

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Technology Division – FFT – India MoD Tranche 1 Update

The total contract value to Ava for this project is estimated at US$11.9m (A$18.0m). More than 400 of the first 600 units (~25% of project) have now been built by Ava’s in-country partner SFO:

• The first 200 units passed FAT and shipped in late Dec 2019.

• The second 200 units passed FAT in late Jan 2020 and are awaiting delivery to the End User.

• The last 200 units of this batch are being built now for completion in March 2020, with FAT and dispatch expected in the same month.

In H1 FY2020, Ava recognised ~ US$1.0m (~A$1.5m) of the order, being ~ US$0.9m (~A$1.3m) as top line sales revenue, and ~ US$0.1m (~A$0.2m) as an income tax credit.

Ava expects that more than half of this project will be recognised as revenue in FY2020.

SFO’s Bank Guarantee to Ava for ~ US$2.1m (~A$3.2m), to cover the 120 days payment terms remains in place. Ava expects additional revenue after the initial 3-year warranty period from a subsequent 7-year spares and maintenance contract, estimated value of US$3.4m (A$5.1m) .

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Technology Division – FFT – AURA IQ Update

The Technology Division launched its new Aura IQ conveyor belt health and assurance monitoring solution in Q1 FY2020. First customer orders have been received, and installations completed.

Significant interest in Aura IQ continues to grow, with the pipeline of qualified opportunities now totalling more than A$44m (US$29m) , spread across 16 countries and 5 industries (Coal, Bauxite, Iron Ore, Precious Metals, and Coal-fired Power Stations).

More than a third of these opportunities are preparing for “Proof of Value”( POV) Commercial Trials, with Ava having already completed POV Trials in Germany and Italy. A major POV is currently underway in India, and another POV is about to start in South Africa. Fully funded collaborative Operational Pilots at major mining sites in LATAM and Australia are progressing and will continue in CY2020.

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FY2020 Ava Group Outlook

Continued Strong Revenue Growth Forecast Following Record H1 FY2020 Performance. Clear Earnings & Opportunity Pipeline Visibility for H2 FY2020 and FY2021. Core Business Operationally Stable & Consistently Delivering on Commitments.

• Services Division continues to experience strong revenue growth across cash and precious metals sectors, while growing share of total addressable customer spend.

• Technology Division has a significant A$16.7m equipment, licensing and service backlog, with a strong pipeline of exciting opportunities over the near, medium and long term for both its core security offerings as well as its compellingly innovative Aura IQ conveyor health monitoring solution.

• Q3 FY2020 total revenue is forecast to be A$11m or more, including A$9m or more from the underlying business, and A$2m or more in licensing income from the Indian MoD project.

• Ava continues to maintain strong belief in achieving record revenues and profits for FY2020 and beyond.

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