Global leader in smart security and sensing technologies AVA RISK GROUP 19-22 SEPTEMBER 2023 Introductions Mal Maginnis DEPTH OF LEADERSHIP TEAM Globally based team well versed in bringing technology solutions to the market Mal Maginnis Group CEO Neville Joyce Group CFO/Company Secretary Jim Viscardi Executive Vice President Global Security Dr. Rod Wilson Chief Technology Officer +35 years of experience in the defence, security, safety and technology industries. Attracted to AVA’s excellent core foundation technologies. Experienced financial and commercial executive with expertise across multiple sectors including energy, mining, technology and manufacturing. +25 years commercial experience in security, defense and technology industries. Experienced R&D leader with +25 years experience in high technology product development. Based in Singapore Based in Melbourne Based in United States Leads the definition of the product strategy for wider security markets. Based in United Kingdom 3 CORPORATE SNAPSHOT Key Metrics Top 20 Holdings (as of 02 August 2023) Market capitalisation (as at 15 September 2023) $46.0M Share price (as at 15 September 2023) $0.175 Shares outstanding Top 20 255.4 million 56.4% More than A$46m has been distributed to shareholders via special dividend and capital return since 2020. Hoklder Name BELL POTTER NOMINEES LTD <BB NOMINEES A/C> BNP PARIBAS NOMS PTY LTD <DRP> MR STEPHEN ROSS CAREW <BMS A/C> HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED BANNABY INVESTMENTS PTY LIMITED <BANNABY SUPER FUND A/C> VALWREN PTY LIMITED <WFIT A/C> VALWREN PTY LIMITED <SANDY FAMILY INVESTMENT A/C> DIXSON TRUST PTY LIMITED CITICORP NOMINEES PTY LIMITED MARK IAN TIBBENHAM CHAG PTY LTD MR DAVID MALCOLM SOUTH GOVINDARAJALOO NARASIMOOLOO BFA SUPER PTY LTD <GDN SUPER FUND A/C> MR ROBERT ANDREW BROOMFIELD CHERYL LEE TAPANES GOLDRUSH FUND PTY LTD <GOLDRUSH A/C> MR RUOBING ZHANG <ZHANG FAMILY A/C> DMX CAPITAL PARTNERS LIMITED MR ATHAR JAMEEL BHUTTO Securities 31,950,717 16,064,982 12,000,000 10,826,337 9,948,859 7,500,000 7,500,000 7,339,998 7,148,566 6,360,054 4,656,000 4,250,000 3,180,027 2,978,384 2,798,656 2,600,000 2,550,000 1,721,000 1,406,000 1,401,502 % 12.5% 6.3% 4.7% 4.2% 3.9% 2.9% 2.9% 2.9% 2.8% 2.5% 1.8% 1.7% 1.2% 1.2% 1.1% 1.0% 1.0% 0.7% 0.6% 0.5% 144,181,082 56.4% 4 AGENDA 1 2 3 FY23 Performance Overview FY23 Financials Strategy & Outlook 5 FY23 PERFORMANCE OVERVIEW Mal Maginnis GLOBAL LEADER IN RISK MANAGEMENT TECHNOLOGIES Protecting high value assets and critical infrastructure in +70 countries DETECT ACCESS ILLUMINATE Fibre optic sensing systems used for detection and monitoring High security access control technology Security and intruder detection equipment Access control readers High security locking Custom encryption Biometric solutions • Outdoor security sensors • Surveillance solutions • Video illuminators • Camera analytics • • • • Perimeter intrusions Pipeline intrusion Condition monitoring Data network protection • 2,500+ systems deployed • Products & services model • • • • • 3,500+ sites • Off-the-shelf & custom products • 60+ countries • Off-the-shelf & custom products Trusted by some of the world’s most discerning security conscious customers. 7 HIGH-QUALITY BASE OF END USERS Trusted by some of the world’s most discerning security conscious customers SAMPLE OF END USER CUSTOMERS 8 PARTNER RELATIONSHIPS EXPAND MARKET REACH Strong network of OEM and distributor relationships worldwide SAMPLE OF SYSTEM INTEGRATORS / DISTRIBUTORS 9 FY23 FINANCIAL HIGHLIGHTS Group Sales Group Revenue Up 71% on pcp Up 54% on pcp1 Underlying EBITDA $30.9m $28.6m $2.0m EBITDA margin Gross margin Recurring revenue In line with FY22 (65%) Confirmed revenue under contract 7% Up 3% on pcp 64% Up 150% on pcp2 $1.6m+ Strong balance sheet to support future growth 1. 2. Up 36% if the acquisition of GJD is excluded. Reported EBITDA of $1.3m, including one off expenses, up 63% on FY22 ($0.8m). Underlying EBITDA excludes ‘one-off’ costs of $0.7m during FY23 H2. 10 FY23 OPERATIONAL HIGHLIGHTS Growth through focus and investment on customer facing capability • • New CEO and a renewed focus and investment on customer facing sales and support capability (investment of additional opex of $0.9m consistent with our global growth strategy). Significant growth in both the Detect and Illuminate segments. • Development and launch of Aura AI-X – the latest generation, data driven intrusion detection system that. uses an embedded deep learning engine to improve system performance. • First sale of Aura AI-X to protect a critical European border. • Continued expansion in key geographies and industry verticals: • 81% growth in U.S. revenue including additional orders in the energy market; • 214% growth in Europe • Creation of Illuminate segment following acquisition of GJD in August 2022. GJD is a UKbased security technology supplier and provides a complementary product, technology and geographic footprint. • Significant progress on product certifications within the Access segment to open key high quality distribution channels. 11 STRONG TRACK RECORD OF GROWTH Growth through focus and investment on customer facing capability • Growth in sales orders to $30.9m, up 71% on the previous year, up 36% if the acquisition of GJD is excluded. Sales Orders Received (A$m) Total 18.0 • Detect order intake of $20.7m, up 55% on the prior year, including the first major order for Aura Ai-X in March 2023. 16.0 14.0 12.0 10.0 • Illuminate order intake of $6.3m for the eleven-month period since the acquisition of GJD, including the first combined solutions using both Detect and Illuminate technologies. 8.0 6.0 4.0 2.0 0.0 • Access order intake of $3.9m. Launched Cobalt 2 (advanced locking product) in April 2023, currently undertaking certifications with key distribution channels. H1 FY21 H2 FY21 H1 FY22 Access Detect H2 FY22 H1 FY23 H2 FY23 Illuminate ASX SMALL AND MID-CAP CONFERENCE 12 FY23 FINANCIAL HIGHLIGHTS Significant revenue growth delivering improved EBITDA performance • Revenue of $28.6m, up 54% on the prior year consistent with the growth from sales order intake. • Underlying EBITDA of $2.0m, up 150% which excludes ‘one-off’ costs of $0.7 during FY23 H2. Resultant EBITDA margin of 7%, up 3% on the prior year. • Maintained gross margin at 64% underpinned by improved Detect margins reflecting careful supply chain management. • Continued focus on growing recurring revenue via long term support contracts. An additional $0.4m of support contracts were sold in FY23 resulting in more than $1.6m of confirmed recurring revenue under contract. 1. EBITDA excludes foreign exchange variations. 13 FY23 FINANCIAL PERFORMANCE Neville Joyce GROUP FINANCIAL SUMMARY Expansion in EBITDA margins when ‘one-off’ costs are excluded $Am Revenue continuing operations FY23 FY22 Var 28.6 19.0 9.6 Gross Profit 18.2 12.3 5.9 Gross Margin 64% 65% (1%) 2.0 0.8 1.2 7% 4% 3% 1.3 0.8 0.5 (1.1) 33.1 (34.2) Underlying EBITDA1 continuing operations EBITDA Margin Reported EBITDA1 continuing operations Profit / (loss) after tax 1. EBITDA excludes unrealised foreign exchange variations. 2. Discontinued operations relate to the IVL division that was divested during FY22 • FY23 revenue growth of 54% driven by improved sales order intake in Detect and the addition of GJD. • Consolidated gross margins maintained at 64% (FY22: 65%) . Growth in Detect segment has largely offset the addition of the lower margin Illuminate segment. • Underlying EBITDA of $2.0m up 150% on the prior year. Proforma adjustment to remove ‘oneoff’ costs of $0.7m incurred during H2 associated with the realignment of the business. • Reported EBITDA of $1.3m, up 61% on the prior year inclusive of ‘one-off’ costs incurred during H2. • Group profit after tax at -$1.1 million, decrease from previous year which had included profit from discontinued operations of $33.8 million. 15 GROUP BALANCE SHEET Strong balance sheet to support future growth $A’000 30 Jun 2023 30 Jun 2022 GJD Acq Movement excl GJD acq Cash and cash equivalents 5.5 15.2 0.0 (9.7) Receivables 8.4 4.7 1.6 2.1 Inventories 7.5 3.3 2.1 2.1 Intangibles 13.6 6.0 6.5 1.1 Other assets 2.1 1.2 1.3 (0.4) TOTAL ASSETS 37.1 30.4 11.5 (4.8) Payables 2.9 2.8 0.6 (0.5) Provisions 1.5 1.4 0.0 0.1 Borrowings 2.5 - 2.9 (0.4) Other liabilities 0.9 0.3 0.5 0.1 TOTAL LIABILITIES 7.8 4.5 3.9 (0.6) TOTAL EQUITY 29.3 25.9 7.5 (4.1) • The balance sheet has been adjusted to remove the impact of the opening balances attributable to the GJD acquisition to determine the underlying movement. • Increased receivables balance is driven by an uplift in Q4 revenue in Detect, expected to be collected in Q1 FY24. • Increased inventory due to purchasing to secure supply chains and lock in pricing for critical components to support forward orders. • Borrowings relate to facilities in place at the acquisition of GJD. 16 GROUP CASH FLOW A$m Working Capital Movement (1.5) Development / Capital Expenditure (2.4) Acquisition of GJD (4.5) Repayment of Borrowings (0.9) Finance, Tax charges (0.7) Other (incl FX) 0.3 Movement in Cash (9.7) Opening Cash 15.2 Closing Cash 5.5 • Increase in working capital due to inventory increase to secure supply chain and pricing for critical components and higher receivables associated with Q4 FY23 Detect revenue. • Development expenditure relates primarily to development of the Aura platform supporting the Detect segment. • Acquisition of GJD reflects the cash component of the purchase consideration for GJD. • Repayment of borrowings relate to the facilities acquired with GJD and lease payments. 17 FY2024 OUTLOOK AND FOCUS Mal Maginnis CLEAR PATH TO DELIVER GROWTH OVER THE NEXT THREE YEARS Revenue Range Gross Margin Op Cost Range EBITDA Margin Year 1 $36m - $45m 60% - 65% $18m - $21m circa 14% Year 2 $50m - $70m 60% - 65% $21m - $25m 20%+ Year 3 $70m - $100m 60% - 65% $24m - $30m 25%+ Projected Revenue Profile • Leverage the existing drivers of growth: • OEM / Distribution channels Access and Illuminate. • Geography and Programs across Detect • Recurring and OEM / Distribution revenue grow to 60% of Group revenue base. • Limited increase in operating costs in : • Service • Programs • Applications Access Illuminate Recurring Detect • AI and Deep Learning 19 STRONG GROWTH CATALYSTS IN EACH SEGMENT DETECT • Aura AI-X is the solution of choice for the protection of critical infrastructure worldwide. • Expand solutions to new applications and customers. • Cobalt 2 full release with final certification in Q1 FY24. ACCESS • Major channel network growth using the quality of our distribution partners. • Cross sell combined Illuminate and Detect solutions. ILLUMINATE • Expand product sales in North America and Asia Pacific via established channels. 20 DRIVING GROWTH – TECHNOLOGY DEVELOPMENT Detect - AI Deep Learning - Aura AI-X Deep Learning - Product of Choice Illuminate- LoRa D-Tect - D-Tect Laser integrated with Fibre - LoRa long range wireless integration Sep Access - Cobalt 2 and YG80 Orca - Cobalt 2 launched & fully certified - YG80 Orca Remote enabled certified - Dormakaba first major sales Ava Group - Integrate Group Products -FY24 integrate Ava Group product solutions 21 SENSING BEYOND SECURITY Building on success in existing deployments in multiple infrastructure types & across global smart cities • AI is critical to enhancing Detection and now offering Classification where creates value Buried Pipeline intrusion Conveyor belt monitoring Perimeter intrusion High security access control readers and locking • Existing commercial deployments renew and refresh to increase capability and integration. Add our new technologies to the solution • Unique and deep domain expertise, with proven success not aimless promises • Extension into new applications is underway with lead customers. They require solutions that detect, classify and accurately provide real-time ‘situational awareness” • Combine our core technologies inside a single solution Boat activity & anchor drops near sub-sea power cables Data fibre protection, seismic activity, manhole cover removal, road monitoring Rail threat detection Earthquake monitoring 22 DRIVING GROWTH – GLOBAL GEOGRAPHIC REACH AMERICAS Market & Customer Corrections Energy ESSA Integration Cross sell solutions expand into Europe MENA Applications Border protection Critical Infrastructure APAC Market Expansion Strong growth in Australia, India and Singapore 23 DRIVING GROWTH – EXPANDED COMMERCIAL CAPABILITY SALES • Restructured core team across all regions – successful recruitment of key resources. • Focus on customer network in each region. • Team bringing new clients and commercial networks. APPLICATIONS & PROGRAMS • Dedicated technology application team in each sales sector. • Dedicated program support for large opportunities. • Global links to share data and success. SERVICE • Investment in staff, training and regional support. • Integrating all three business segments in one system. 24 DRIVING GROWTH – FOCUS AND PRIORITIES Customer Outcomes Delivering Revenues Expanding Technology Reach 25 CLOSING Mal Maginnis COMPELLING CASE FOR INVESTMENT Leading technology with scalable model and organisational capability to support growth plans TRACK RECORD OF GROWTH AND RESULTS STRONG COMPETITIVE ADVANTAGES • • • • FY23 sales order intake up 71% High gross margins – circa 64% Trusted by blue chip and government customers HIGHLY SCALABLE MODEL • • • Blue chip customer base and long-term recurring revenue potential • • Defensible competitive position and investments in innovation including AI and deep learning Experienced leadership team Customer-centric focus with customised, flexible, and scalable solutions GLOBAL OPPORTUNITY • Efficient, scalable go-to-market strategies which include key distributor partners • Target revenue growth to $70 - $100m over next three years achieved with minimal cost increases • Well-placed to become a global leader in smart digitisation for security and asset protection, thousands of products installed in +70 countries Emerging global partnerships with large multinationals Existing global revenue base 27 QUESTIONS Investor enquiries: aabeyratne@citadelmagnus.com 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. 29