Recent updates of IT Player, AVA Group

  • May 06, 2019 AEST
  • Team Kalkine
Recent updates of IT Player, AVA Group

AVA Risk Group Limited (ASX: AVA) is an ASX listed information technology company based in Victoria, Australia. The company provides risk management services and technologies like intrusion detection and location for perimeters etc. which is trusted by military clients, government clients amongst many others.

Investor presentation:

On 6th May 2019, the company released its investor presentation report, and some of the highlights are as follows:

  • The company is now providing services in 100+ countries through its unique partner model.
  • It has over 1,700 Future Fibre Technologies (FFT is one of its technology division) advanced security systems deployed in more than 65 countries.
  • The company has a strong backlog of purchase orders received in Q3, currently in excess of A$3.6 million.
  • Ava Group has achieved ongoing cost savings compared to 1H FY2019 of A$1.2M p.a.
  • The pipeline of potential new clients has increased, with annual addressable spend now greater than A$70 million.

On 3rd May 2019, the company announced that it has successfully completed the negotiations on a contract with its in-country manufacturing partner, SFO Technologies Private Limited (SFO) or the deployment of FFT’s SecureLink technology for a military secure data network project.

SFO has notified AVA that they have successfully completed the negotiations with the prime contractor and a formal PO will be issued to SFO in the upcoming week. AVA will now receive US$11.9 million (A$16.86 million) over the next 14 months period as the value of the licence fee has increased.

The company is expecting a revenue between US$0.35 million and US$1.0 million (A$0.5 million and A$1.5 million) in FY2019, with FY2020 revenue expectation between US$11.55 million and US$10.9 million (A$16.36 million and $15.4 million). All these expectations are based on current production and delivery schedules. Additional revenue of US$3.4 million (A$4.8 million) has been calculated after the initial 3-year warranty period from a subsequent 7-year spares and maintenance contract.

The contract will be highly profitable for Ava Group because of the licence fee nature of the project. With this project in hand, the company is expecting further opportunities in the secure data network market. According to the revised terms of the contract, Ava will be paid on 120-day terms (ex-works) and benefit from a bank guarantee which is equivalent to 200 units of product.

Key personnel’s statement:

Mr Scott Basham, Chief Executive of AVA, said that this completion of successful negotiation represents a major milestone for the Ava Group. It will lead to significant profits, and when combined with the company’s focused growth, it makes the company well positioned to capitalise the strong base of leading products for strong financial returns for its shareholder during FY2020 and ahead.

Highlights from March 2019 quarterly update:

Operational Updates:

On 30th April 2019, the company released March 2019 quarterly update wherein it reported;

  • Softer than expected booking of orders in H1 by the technology division which resulted in cash position tightening in Q3.
  • The strong backlog of purchase orders received in Q3, currently in excess of $3.6 million supports the future improvement in cash flow.
  • First orders for Aura IQ Product opens a new $300 million market.
  • Ava Group has achieved on-going cost savings compared to H1 FY2019 of $1.2 million p.a. due to restructuring in the management team.

Cashflow update:

During the period, the company reported net cash used in the operating activities at A$1.89 million, including A$6.17 million being incurred on product manufacturing and operating costs. It used a total of A$161,000 net cash in the investment activities in the quarter, and no indulgence had been made in financing activities.

At the end of the quarter, the company reported net cash of A$937,000. The company also estimated the cash outflow of A$8.7 million for the next month where A$5 million would be spent on product manufacturing and operating costs.

On 12th March 2019, the company announced that its International Valuables Logistics (IVL) division had received potential equity interest, and the company is now evaluating corporate actions.

Technical Outlook:

The stock of the company is currently trading at A$0.170 (as on 6 May 2019, 2:25 PM AEST), down by 5.556%.


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