Announcement PDF Global leader in smart security and sensing technologies H1 FY25 RESULTS AVA RISK GROUP 25 February 2025 INTRODUCTIONS David Cronin AGENDA 1 2 3 H1 FY25 Performance Highlights H1 FY25 Financial Overview Strategy & Outlook 3 H1 FY25 PERFORMANCE HIGHLIGHTS Mal Maginnis H1 FY25 FINANCIAL HIGHLIGHTS Significant progress in delivering on key growth metrics Revenue EBITDA1 Gross Margin $17.0m $1.7m 64% Up 20% on pcp Sales Opportunity Pipeline >$100m Expected close dates in calendar year 2025 Up $2.6m on pcp Up 3% on pcp Sales backlog Cash $7.6m $4.7m Up from $3.5m in pcp Well-funded for growth 1. EBITDA is profit / (loss) after tax adjusted for depreciation and amortisation, impairment of goodwill, finance expense and foreign exchange movements per Consolidated Statement of Comprehensive Income. • Revenue up 20% underpinned by improved Detect performance. Increased Detect revenue driving gross margin improvement • Strong sales order intake especially in Detect, with backlog and pipeline supporting H2 growth • EBITDA turnaround on reduced and scalable cost base, up $2.6m to positive $1.7m • Cash of $4.7m at 31 Dec 2024 plus $1.7m of receipts in January supports business expansion 5 H1 FY25 PERFORMANCE HIGHLIGHTS Progressing sales pipeline and partnerships, supported by scalable cost base ‘Dune Express’ conveyor belt, West Texas • • • • • Strong revenue and EBITDA growth following investment in commercial capability and technology Improved Detect performance underpinned by market leading fibre sensing technology, Aura Ai-X Recurring revenue up 20% to $2.4m (of revenue under contract) driven by deployment of Aura Ai-X systems Strong sales pipeline underpinned by growth in key industry verticals (border protection, airports and transportation) Partnerships in new verticals provide platform to leverage market-leading technology at low incremental cost • • • Atlas Energy Solutions installed Aura Ai-X in a covert buried configuration to protect the perimeter of the second largest conveyor belt in world. Known as the Dune Express, the massive conveyor belt starts ten miles northeast of the oil field outpost of Kermit in West Texas and extends west by northwest into New Mexico. Once operational, it will carry 13 million tonnes of sand along the entire length of the machine – 42 miles – each year. WA gas facility • • • Aura Ai-X was recently commissioned to protect one of the most advanced, integrated gas production facilities in the world. Located in Western Australia, Aura Ai-X was installed to replace legacy FFT Secure Fence and FFT Secure Zone controllers. The long-term client requested the upgrade to optimise overall system architecture, simplify the fibre optic cable infrastructure, and address intermittent electromagnetic interference affecting some legacy systems. 6 GLOBAL LEADER IN RISK MANAGEMENT TECHNOLOGIES Protecting high value assets and critical infrastructure globally DETECT ILLUMINATE ACCESS Fibre optic intrusion detection systems Security and intruder detection equipment High security access control technology • Perimeter intrusions • Telecommunication networks • Pipeline intrusion • Condition monitoring • Data network protection • Products, services and recurring revenue model • Outdoor security sensors • LoRa wireless system developed • Surveillance solutions • Video illuminators • Camera analytics • Off-the-shelf & custom products • • • • Access control readers High security locking Custom encryption Biometric solutions • Off-the-shelf & custom products. • Highly encrypted for security conscious end users. World-leading portfolio of complementary premium solutions and technologies Strong competitive position underpinned by Ava’s IP, OEM and distribution relationships, and wealth of data for machine learning Trusted by some of the world’s most discerning security conscious customers – commercial, industrial, military and government sectors Flexible commercial models with growing recurring revenues 7 SENSING BEYOND SECURITY Building on success in existing deployments in multiple infrastructure types USE OF SOLUTIONS FOR SENSING APPLICATIONS • Identifying and responding to a threat at the perimeter, or within a facility. • Managing personnel access to restricted areas. • Securing critical assets and buildings. Example of solutions at a correctional facility AVA RISK GROUP’S SOLUTIONS DETECT • Borders, Perimeters, Critical Infrastructure. • Data investigation on patterns of intrusion. • Data generation and analytics using existing fibre networks targeting telecommunications sector. ILLUMINATE • Supports Detect’s smaller physical sites, targeted customer designs, illuminate CCTV images, identifying activity. ACCESS • Protect key infrastructure assets and strengthen vulnerable access points. DETECT ILLUMINATE ACCESS 8 GO TO MARKET AND REVENUE MODEL PROVEN GO-TO-MARKET STRATEGIES WITH GLOBAL REACH DETECT ILLUMINATE PRODUCTS SERVICES SYSTEM INTEGRATORS ACCESS (INCLUDING OFF THE SHELF) DISTRIBUTORS CABLE STRUCTURE PROVIDERS END USERS MANUFACTURERS RECURRING SUBSCRIPTIONS GLOBAL PARTNER SECURITY NETWORK PRODUCTS • Project based revenue in Detect supporting system integrator solutions to end users • Key distributor relationships driving product sales in the Access and Illuminate segments SERVICES • Support for the installation and commissioning of Detect systems RECURRING SUBSCRIPTIONS • Multi-year support agreements providing access to machine learning algorithms and data libraries to improve Detect system performance ESTABLISHED GO TO MARKET THROUGH GLOBAL PARTNER NETWORK: • Mix of system integrators and direct distribution partners allows us to provide our solutions worldwide and in remote and challenging locations 1. Original Equipment Manufacturer 9 DRIVING GROWTH IN FY25 AND BEYOND Building on our market verticals and geographies with sophisticated global partners DETECT SALES OPPORTUNITY PIPELINE (A$M) Proven technology • Aura Ai-X • LoRa Connect wireless system • Cobalt YD30 series development • Growing recurring revenue via subscription Enhanced commercial capability with high profile, quality partners • Telstra • dormakaba • UGL • Other key partners • Siemens High Probability 8.5 In Progress 26.6 Early Stage 75.6 • Total Pipeline with expected close dates in calendar 2025 remains greater than $100m (excludes telco sector orders) • Opportunities across key geographies – APAC, Americas, Europe and Middle East. • Growth in recurring revenue of 20% to $2.4m ARR under contract • 10 opportunities > $1m ($27m of the pipeline) • Sell subscription contract with every sale of Aura Ai-X • Pipeline excludes Access / Illuminate, expected to deliver revenue of $12m - $15m in calendar 2025. 20% growth in annual recurring revenue: 10 HIGH QUALITY PARTNER AND END USER BASE Strong network of OEM and distributor relationships worldwide 11 H1 FY25 FINANCIAL PERFORMANCE Neville Joyce GROUP FINANCIAL SUMMARY H1 FY25 H1 FY24 Revenue 17.0 14.2 2.8 20% Gross Profit 11.0 8.6 2.4 28% Gross Margin 64% 61% 3% Underlying EBITDA1 1.7 (0.9) 2.6 EBITDA Margin 9.4% -7.0% 16% D&A (1.7) (1.1) (0.6) Finance/FX/Tax (0.1) (0.1) 0.0 - (2.3) 2.3 Loss after tax Var % 260% Revenue A$m $Am 18.0 9.8 16.0 9.6 14.0 9.4 12.0 9.2 Operating Costs A$m Strong revenue growth and stable operating base driving positive EBITDA result 55% • Strong revenue growth driven by improved Detect performance resulted in EBITDA turnaround • Gross margin within target range of 60%-64%: higher gross margin at consolidated level due to growth in higher-margin Detect revenue 10.0 H1 FY24 H2 FY24 Revenue H1 FY25 9.0 Op Costs • Earnings inflection point following investment in technology and commercial capability; strong leverage potential as revenue builds Target revenue range of $52m to $66m by FY26 with operating leverage, delivering EBITDA of $11m-$18m by FY26 • Increased D&A reflects additional amortisation charges attributable to revised amortisation period of five years vs 10 years in PCP • Reduced and stable operating cost base following completion of organisation restructure in FY24, with decreased operating costs of $0.3m YoY 1. EBITDA is profit / (loss) after tax adjusted for depreciation and amortisation, impairment of goodwill, finance expense and foreign exchange movements per Consolidated Statement of Comprehensive Income. 13 REVENUE PROFILE BY SEGMENT AND TYPE Solid platform following investments into commercial capability and technology REVENUE BY SEGMENT (A$m) 14.0 12.1 12.0 10.0 8.0 7.7 6.0 3.2 4.0 2.0 0.0 Detect 2.0 Access H1 FY24 3.2 2.9 Illuminate H1 FY25 REVENUE BY TYPE (A$m) 16.0 14.0 12.0 10.0 8.0 6.0 4.0 2.0 - Detect revenue up $4.4m • Average gross margin of 66%-70% • Driven by completion of several key contracts • Strong sales order intake Access revenue down $1.2m • Average gross margin 50%-55% • Initial Cobalt series stocking orders for dormakaba (US) in H1 FY24 • dormakaba distribution network key to segment growth Illuminate revenue down $0.3m • Average gross margin 45%-50% • Solutions complement Detect contracts 15.2 12.9 Recurring revenue up 80% • Sales order backlog of $7.6 million includes $2.4m in contacted annual recurring revenue 0.6 Product 0.9 Services H1 FY24 0.5 0.9 Recurring H1 FY25 14 GROUP BALANCE SHEET $Am Dec 24 Jun 24 Movement Cash and cash equivalents 4.7 5.1 (0.4) Receivables 9.7 9.0 0.7 Inventories 6.7 6.6 0.1 Intangibles 12.9 12.8 0.1 Other Assets 3.9 2.6 1.3 Total Assets 37.9 36.1 1.8 Payables 2.9 2.9 - Provisions 1.4 1.4 - Borrowings 2.1 2.2 (0.1) Other liabilities 2.8 1.7 1.1 Total Liabilities 9.2 8.2 1.0 Total Equity 28.7 27.9 0.8 • Lower cash balance and increase in receivables due to late Q2 shipments settled in January resulting in $1.7m cash in flow • Increase in other assets relates to insurance prepayments and additional right of use assets (associated with property lease renewals) • Increase in other liabilities due to additional right of use assets (associated with property lease renewals) • Borrowings related to working capital facilities and Covid-19 support loans in Illuminate 15 GROUP CASH FLOW $Am H1 FY25 H1 FY24 Var Working Capital movement 1.2 (1.1) 2.3 Development/Capital Expenditure (1.3) (1.4) 0.1 - (0.4) 0.4 Movement in Borrowings (0.1) (0.2) 0.1 Finance, Tax charges (0.1) (0.2) 0.1 Other (inc FX) 0.1 (0.3) 0.4 Movement in Cash (0.4) (3.6) 3.2 Opening Cash 5.1 5.5 (0.4) Closing Cash 4.7 1.9 2.8 Dividends Paid • Favourable working capital movement due to increased Detect revenue and collection of receivables relating to Q4 FY24 shipments • Working capital impacted by receipts attributable to late Q2 shipments received in January ($1.7m) • Cash flow positive for the period if include additional $1.7m receipts in January • Steady development expenditure driven largely by $1m investment in Aura Ai-X platform • Borrowings relate to working capital facilities and Covid-19 support loans in the Illuminate segment 16 STRATEGY & OUTLOOK Mal Maginnis STRONG GROWTH CATALYSTS IN EACH SEGMENT Developing sales pipeline in key industry verticals and growing recurring revenue base DETECT ACCESS ILLUMINATE • Aura AI-X: solution of choice for protection of critical infrastructure worldwide • Added three new platforms to support growth • Expanding solutions to adjacent applications and customers • Growing demand for the Cobalt 2 locks via dormakaba’s distribution network • Release new Bluetooth YG80 large lock • Major channel network growth using the quality of our distribution partners • Cross sell combined Illuminate and Detect solutions • LoRa achieving market position with Detect • Expand product sales in North America and Asia Pacific via established channels 18 OPPORTUNITIES IN KEY VERTICALS Technology provides real world solutions across multiple sectors INFRASTRUCTURE GLOBAL BORDERS Ava Risk Group successfully completed a second major installation and support for 400km+ of a critical European border, buried with extremely challenging environmental conditions. • Replaced incumbent due to nuisance alarm rates (NAR) and lacking functionality. • Aura Ai-X reduced alarms substantially down to under 2 a day. The fence is currently operating at 96% probability of detection (POD) and 4% nuisance alarm rates. • Customer upgrading additional borders (replacing the incumbent competitor) with further orders expected. Aura Ai-X is being deployed in additional border sites globally, including Eastern Europe, Southeast Asia, Latin America and southern Africa. The current border pipeline is in excess of $12m for FY25 and FY26. MINING, OIL AND GAS TRANSPORT – METRO TRANSPORT – AIRPORTS Recently secured major upgrades to Oil and Gas facilities worldwide. These include new and upgrade installations with Aura Ai-X. Opportunity to support monitoring of Sydney Metro networks offers major new adjacency $7-8m+ in FY25, in addition to broader global opportunities. Airports perimeters present a major new adjacency for Ava, driven by growing activism and civil disobedience. • Australia – Woodside, Santos, Exxon, and others. Value YTD >1.5m, pipeline >3m plus recurring revenue. • Middle East – Qatar gas, Dubai, Hail and Ghasha, and others. Value YTD1.2m, pipeline >8m plus recurring revenue. • US – Atlas Sands – 80 kms buried system. Preventing access to critical delivery system. • Global major opportunities South Africa, LatAm in protecting critical infrastructure. YTD 0.5m, pipeline >3.5m Aura Ai-X has been proven as the most effective detection sensor coupled with low alarms and successful integration into total security systems Sydney Metro • City & Southwest line 3m+, installing • fallen object project – submitted 1m+ • West - bid 1.5m+ submitted • Western Sydney Airport – bid 3m+ submitted Global • Nepal enquiry – early stage. • Turkey – Istanbul – early stage. • Southeast Asia – various early stage. • Other, Australia – Metro trains Melbourne, Suburban Rail Loop, Queensland Rail various discussions linked to Sydney. Australia • Melbourne – March 2025 project kick off • Adelaide – FY26 • Brisbane, Gold Coast, Darwin part of the Melbourne Airport FIDS working group Global airports • Turkey Istanbul Extension – 0.5m incumbent. • Australia – Melbourne / Adelaide early stage. • France – Aeroports de Paris – various plus Lyon and global. • UK – Heathrow, Stansted, Edinburgh. • Vietnam – Long Thanh Airport. 19 CASE STUDY: ADJACENCIES – TELECOMMUNICATIONS Supporting telecommunications challenges • • • Technology demonstrated the superior ability of Aura Ai-X DAS technology in detecting events and providing appropriate classification and reporting. Illuminate products demonstrated an excellent capability in point and small site detection and sensing of interference. Protects the assets, the public and the network performance. Opportunities to deploy technology • • • • • • New Aura Ai-DX Platforms released Protection of data cabling via surface and subsea sensing Identifying exposed cabling due to environmental changes Intrusion events on major communication towers Access to critical assets Pit lid intrusion / lifting, cable tampering, digging 20 STRONG GROWTH OUTLOOK LEVERAGES EXISTING COST BASE Substantial opportunity remain in adjacent markets to drive growth though impact delayed to FY26 FY24 (A) $m Total FY25 (F) Low Core Revenue 37.0 Adjacencies • FY26 (F) High Low High 40.7 47.1 56.5 0.8 5.0 10.0 Total Revenue 30.2 37.0 41.5 52.1 66.5 Gross Profit 18.1 23.3 26.1 33.3 42.6 GM% 60% 63% 63% 64% 64% Opex 19.0 19.4 20.0 22.0 24.0 EBITDA (0.9) 3.9 6.1 11.3 18.6 -3% 11% 15% 22% 28% FX Movement (0.1) Impairment of Goodwill (1.5) D&A 2.5 3.5 3.5 3.8 3.8 EBIT (5.0) 0.4 2.6 7.5 14.8 Expected revenue growth of 20%+ in FY25 • • Adjacency revenues slower to materialise due to reliance on partners but remain an enormous growth opportunity • • Core business delivering to plan Continued progress and focus on adjacencies though meaningful revenue now likely in FY26 Focus on revenue growth across all business by leveraging strength of commercial teams and proven technology • Pipeline conversion in Detect and build momentum in adjacent markets (e.g. telcos) • Incorporate market-leading Illuminate and Access products with Detect fibre solutions • Expand OEM / distribution channels for broadening Access and Illuminate global reach • Leverage stable operating cost base as business scales to deliver sustainable growth in earnings • Cash flows and balance sheet provide funding to drive scalable global operation 21 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 • • • • H1 FY25 revenue growth of 20% High gross margins – circa 60% - 65% 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 range of $52m to $66m by FY26 with operating leverage • 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 22 CORPORATE SNAPSHOT Key Metrics Top 20 Holdings (as at 20 February 2025) Name Market capitalisation (as at 20 February 2025) $30.5M Share price (as at 20 February 2025) $0.105 Shares outstanding Top 20 Shareholders 290.5 million 52% Balance % BELL POTTER NOMINEES LTD <BB NOMINEES A/C> 31,950,717 11.00% BNP PARIBAS NOMS PTY LTD 16,122,524 5.55% MR STEPHEN ROSS CAREW <BMS A/C> 13,000,000 4.48% HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED 10,177,852 3.50% BANNABY INVESTMENTS PTY LIMITED <BANNABY SUPER FUND A/C> 9,948,859 3.43% DIXSON TRUST PTY LIMITED 9,032,306 3.11% VALWREN PTY LIMITED <WFIT A/C> 8,500,000 2.93% VALWREN PTY LIMITED <SANDY FAMILY INVESTMENT A/C> 6,500,000 2.24% CHAG PTY LTD 5,930,769 2.04% CITICORP NOMINEES PTY LIMITED 5,425,755 1.87% BNP PARIBAS NOMINEES PTY LTD <IB AU NOMS RETAILCLIENT> 4,741,665 1.63% BFA SUPER PTY LTD <GDN SUPERANNUATION FUND A/C> 4,612,850 1.59% MR DAVID MALCOLM SOUTH 4,250,000 1.46% MARK IAN TIBBENHAM 4,200,000 1.45% GOVINDARAJALOO NARASIMOOLOO 3,180,027 1.09% BFA SUPER PTY LTD <GDN SUPER FUND A/C> 3,000,000 1.03% GOLDRUSH FUND PTY LTD <GOLDRUSH A/C> 3,000,000 1.03% MR ROBERT ANDREW BROOMFIELD 2,944,807 1.01% MR ATHAR JAMEEL BHUTTO 2,677,777 0.92% CHERYL LEE TAPANES 2,600,000 0.90% 23 CLOSING Mal Maginnis QUESTIONS Investor enquiries: alexandra.abeyratne@sodali.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. 26