Small Company Champion & Lemming Investors Research and Newsletter Updates

Saturday, 30 January 2021

AVA Risk Group - Sets Another Record Quarter!


AVA Risk Group (ASX AVA) - Appendix 4C market leader in risk management service, comprising world-leading technology divisions Future Fibre Technologies (FFT) and BQT Solutions (BQT), and international secure logistics services division Ava Global, is a market leader in the provision of risk management services and technologies provide an update on the key areas of activity for another record quarter ended 31 December 2020.

The quarter builds on its core strengths, increase its net cash position, and announces a Special Dividend of au$0.02c per share, paid on 11th March.

Ava has been a great multi-bag experience with an added bonus of paying a Special dividend. I first featured the company at au$0.12c.

As you can see from the chart cover 12 months, the shares touched au$0.80c, I expect this to be tested this year and beyond. I continue to hold my modest holding in my SIPP.

  • $4.4m positive operating cash flows for the quarter
  • Increased cash holdings, consolidated net cash position of $13.4m

Principal Activities
Ava Group is a security technology and services company that develops and commercialises a range of high-security perimeter and access control products to protect military, government, industrial and commercial critical assets and infrastructure. These products are sold through its Future Fibre Technologies (FFT) and BQT Solutions (BQT) brands. The company operates Ava Global, its international secure logistics division, delivering clients with reliable, secure delivery for banknotes, precious metals, and other valuables.
Ava group Achieves Record Result for H1 FY2021.  
On 14 January 2021, Ava Group announced its unaudited revenue and profit growth for the first half of FY2021:
  • Sales Revenues have increased by approximately 70% compared to the same period last year to be in excess of $35.0 million for the half-year.
  • EBITDA has improved by circa 450% compared to the same period last year, to exceed $12.0 million for the half-year.
  • All business units are profitable for the half-year.
Cash at the bank as at 31 December 2020 of $13.4 million.
Key areas of activity during the second quarter of the 2021 financial year related to:
  • Our strategies for delivering profitable growth and generating positive cashflow produced an increase of $1.8m in net cash holdings at 31 December 2020, after $2.3m in dividends to shareholders. This reflects continued revenue growth, customer cash collections, positive EBITDA performance, and our capital-light operating model.
  • During Q2 FY2021, we received a $2.6m payment relating to the IMOD contract for FFT’s data network security technology. The Company will receive additional IMOD payments of circa $3.8m in H2 FY2021 for amounts already invoiced. The total contract value for this project is estimated at US$11.9m (A$15.6m) inclusive of income tax credits. Having already recognised $4.8m in FY2020 and $3.6m of revenue in Q1 FY2021, the Company recognised a further $4.1m of revenue in Q2 FY2021. The revenues are income tax credits under the Australian Indian DTAA, which are also available to the company to offset income tax payable. To the end of December 2020, 1,400 units have been shipped to the end-user with another 500+ units completed awaiting shipment. We expect the balance of project deliveries to occur during H2 FY2021.  Ava Group holds a Bank Guarantee as security for ~US$2.1m (~A$2.9m), to cover payments when due.
  • Services Division saw the benefits of our strategy implemented in the past 12 months, including expanding our customer base and service offerings.
  • The business continued its COVID-19 safety measures, including supporting staff to work from home, reducing the need for people to come into our offices worldwide, based on local conditions. The health and safety of our staff and customers remain a paramount priority for the business.
  • The Company received circa $0.1m during Q2 FY2021 related to various global government initiatives to support businesses during these unusual times, down $0.3m from the previous quarter.
  • The Services Division continued to provide a full range of services to all of its customers, despite the continued reduction in air freight capacity worldwide due to COVID-19. These restrictions allowed Ava Global the opportunity to innovate and offer a range of bespoke cargo and charter aircraft solutions to ensure that it could continue to deliver currency, precious metals and other valuable goods for its customers.  Client activity has significantly increased during FY2021, with the addition of both new clients, several new contracts win, and a wider breadth of services are offered.  This has been ably facilitated thanks to the depth of skills and experience within the Services Division and further supported by 3 additional new hires in USA, Germany and Singapore.
  • For the Technology Division, both FFT and BQT continue their COVID-19 control measures to maintain production and order fulfilment.  Although the ability to deliver site services was restricted for FFT, we received initial orders for the multi-year Comprehensive Maintenance offering that includes remote monitoring. The FFT Aura IQ conveyor health monitoring solution “Proof of Value” Trials continued despite delays from COVID-19 travel restrictions during the quarter.  FFT successfully commissioned its latest Machine Learning configuration at two major high-security projects internationally and demonstrated increased levels of intrusion sensitivity along with significant reductions in nuisance alarms. During the quarter BQT successfully completed the current program order of readers for the contract from the Australian Department of Defence (DoD) under the larger Australian Government.
  • Operating cash outflows for the quarter of $11.6m was mostly comprised of product manufacturing and operating costs ($7.7m), staff costs ($3.0m), and administration and corporate costs ($0.6m).
  • During the quarter the Company made payments of approximately $201,000 to Directors and their associates. This includes all Executive Directors and Non-executive fees, salaries, cash bonuses, and consultancy and service fees paid to related or associated parties of Directors, including in respect of subsidiary operations whereby directors are related parties.
Commentary on Appendix 4C Cash Flow Report
The quarter's net operating cash flows were positive $4.4m an increase of $0.7m on the previous quarter, and a $4.6m improvement on the same time last year. This was due to an increase in cash collections from customers compared the prior quarter, up to $2.4m, and up to $7.4m at the same time last year. Operating costs were circa $2.2m higher than the prior quarter, and $2.9m higher than the same time last year driven by higher payments for product manufacturing and operating costs which increased $0.9m quarter on quarter and $2.2m compared to the same time last year as a result of increased sales.  The Group also continued developing the Aura Ai and Aura IQ platforms, continuing its R&D spending and intellectual property spending during the quarter, at a slightly higher level than the previous quarter.  
Cash receipts from customers in Q2 included $2.6m from the Indian MoD project.  This project's next payment is expected during March, being an amount of $1.9m (A$2.6m), in line with the 120 days project payment terms.
At 31 December 2020, the Company had $13.4m cash at bank.

Premium Research Service



Updates, new content and interviews will be sent to Premium & donor's first.

I realise it is human nature to push against the established norm - 2 years of free research. 
The site data suggest my research is valued by many, but few actually contributed in those 2 years. 
Each research report is carefully researched over many weeks. The content has proven very popular; indeed many readers have invested in the companies featured, many of which have proven to be a great success, including multi-baggers like; AVA Risk Management, OptiBiotix Health, PowerHouse Energy Group, SkinBioTherapeutics, Seeing Machines.

Those of you who have seen the value in work do thank you for your donation, whatever the amount is gratefully received. If you haven't already, please show your appreciation for the many hours of dedicated research, plus company updates and BOD interviews as well as the conduit between investors and BOD. 

Rainbow Chase - (£25 ANNUALLY UNTIL OPT-OUT)- The feature is designed to discover precommercial companies with exciting growth potential. These carry significant risk for failure, but also due to their nature have significant multi-bagger potential. PLEASE PAY HERE!
All existing features are covered by this level.

Zulu Growth - (£35 ANNUALLY UNTIL OPT-OUT) The focus will be on mid-cap companies, but not exclusively. These companies are less risky than Rainbow Chasing because they are carefully selected using specific filters designed to highlight companies that have demonstrated several specific growth indicators over a specific period. By their very nature, these companies are long term features. Zulu Growth offers visual aids for key data designed to offer an overview supporting the direction of travel a company is inPLEASE PAY HERE!

This being lemming investors and the sister service at Small Company Champions.

MULTI-BAG IT - (Rainbow Chaser + Zulu Growth for £50 ANNUAL UNTIL OPT-OUT) PLEASE PAY HERE!

Recently donated?
Don't worry. I very much appreciate those of you that have supported me. If you donated at the beginning of the year, you qualify as a Premium member (subject to Rainbow Chasing fee).

The donation link below is an addon. The monies collected from this will be donated to a chosen charity. This years charity will be the Salvation Army Failsworth Corp (my home church which has been hit badly due to Covid-19)


Some of the companies named may have retraced, some of them are set to go again. I leave it to the reader to decide when to buy and sell.

I am not authorised by the FCA I, therefore, cannot offer investment advice. The site and the content within are for research and reading material.

I will likely have a financial interest in some of the companies featured - you should assume I do.