2023
ANNUAL
REPORT
DETECT ACCESS ILLUMINATE
CORPORATE
INFORMATION
ABN 67 064 089 318
SHARE REGISTRY
DIRECTORS
David Cronin, Chairman and Non-Executive Director
Mark Stevens, Non-Executive Director
Mike McGeever, Non-Executive Director
Boardroom Pty Ltd Grosvenor Place, Level 12, 225 George Street,
Sydney, NSW 2000, Australia
Telephone (within Australia): 1300 737 760
Telephone (outside Australia): +61 2 9290 9600
Facsimile: +61 2 9279 0664
Malcolm Maginnis, Group Chief Executive Officer and Executive
Director (appointed on 9 January 2023)
STOCK EXCHANGE
Rob Broomfield, Group Chief Executive Officer and Executive
Director (resigned on 9 January 2023)
Ava Risk Group Limited shares are quoted on the Australian
Securities Exchange (ASX).
COMPANY SECRETARIES
Neville Joyce, Kim Clark
REGISTERED OFFICE & PRINCIPAL
PLACE OF BUSINESS
10 Hartnett Close, Mulgrave, Victoria 3170, Australia
Telephone: +61 3 9590 3100
Facsimile: +61 3 9560 8000
INVESTOR RELATIONS
Email: investor@theavagroup.com
ASX Code: AVA
BANKERS
Westpac Banking Corporation, 275 Kent Street,
Sydney, NSW 2000, Australia
AUDITORS
BDO Audit Pty Ltd, Tower 4/ 727 Collins St.
Docklands VIC 3008
WEBSITE
www.theavagroup.com
Information correct as at 28 August 2023.
TABLE OF
CONTENTS
CHAIRMAN’S REPORT
CHIEF EXECUTIVE OFFICER’S REPORT
DIRECTORS’ REPORT
AUDITOR’S INDEPENDENT DECLARATION
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
CONSOLIDATED STATEMENT OF CASH FLOWS
NOTES TO THE FINANCIAL STATEMENTS
DIRECTORS’ DECLARATION
INDEPENDENT AUDITOR’S REPORT
SHAREHOLDER INFORMATION
04
06
10
30
32
34
36
37
38
87
88
94
4 | AVA GROUP ANNUAL REPORT 2023
CHAIRMAN’S
REPORT
BUILDING A GLOBAL LEADER IN RISK MANAGEMENT TECHNOLOGIES
DEAR FELLOW SHAREHOLDERS AND ASSOCIATES
During FY2023 Ava Risk Group Limited (Ava Group / the Company) continued to build its position as a global leader in risk
management technology, protecting critical infrastructure and high value assets. The Company remains committed to its strategy
of growing revenue from its market leading technologies by increasing market share and developing adjacent applications. I am
pleased to report to shareholders the significant progress that has been accomplished during FY2023.
In January 2023 Mal Maginnis commenced as Group Chief Executive Officer following the retirement of Rob Broomfield. Mal’s
appointment reflects the Board’s commitment to ensuring that the Company has access to the skills and expertise to support its
growth ambitions. Mal is a seasoned leader of global technology-enabled businesses with more than 35 years of experience in
the defence, security, safety, and technology businesses. He has reoriented the business to align the Company’s technology with
customer solutions. In the accompanying CEO report, Mal sets out what has been achieved during FY2023, his first six months and
his outlook for FY2024 and beyond.
In August 2022, Ava Group acquired GJD Manufacturing Limited (“GJD”) to create the Company’s Illuminate segment. GJD is a
leading UK based technology supplier, specialising in illumination and detection applications. The acquisition provides the Company
with a complementary product and technology footprint as well as an established go-to-market capability in the UK and western
Europe.
The growing momentum within the business is best reflected by the increase in sales order intake and revenue. The Company
received sales orders of $30.9 million during FY2023, which is an increase of 71% on the previous year, a 36% increase when
the acquisition of GJD is excluded. This has resulted in revenue of $28.6 million for FY2023, an increase of 54% on the previous
year. The growth in both sales order intake and revenue is underpinned by growth in the Detect segment and the addition of the
Illuminate segment following the GJD acquisition.
We continue to invest in our technology and have built on the Aura platform, leveraging the machine learning capability that the
Company has developed in recent years. In March 2023 we launched Aura Ai-X at ISC West, the world’s largest security industry
trade show. Aura Ai-X is our latest generation, data driven intrusion detection system, which includes an embedded deep learning
engine that enhances system performance. Market interest in the platform has been immediate with an initial order received for
protection of a critical European border. Earlier in the year the Company received its first order for its conveyor belt application,
highlighting the opportunity to use our technology to support adjacent applications.
The Board is committed to conducting business in accordance with high governance standards. We continually review policies
and procedures to ensure that they fulfill Ava Group’s regulatory and compliance obligations. We also ensure that the Company’s
technology development roadmap is consistent with our strategic direction and meets market expectations.
Finally, I would like to thank you, our shareholders and associates, for your continued support and engagement with the Ava Group
as we build a world class risk management business. On behalf of my fellow Directors, I also thank the management team for their
hard work, dedication, and achievements throughout FY2023. In particular, I take this opportunity to thank Rob Broomfield for his
dedication to our business across multiple roles prior to his retirement in January 2023.
David L Cronin
Chairman
2023 ANNUAL REPORT
AVA GROUP
| 5
KEY ANNOUNCEMENTS
31 JULY 2022 | ACQUISITION
OF GJD
2 APRIL 2023 | US$1.5M
CONTRACT FOR NEW AURA Ai-X
Ava Group announces the acquisition of GJD - an award-
winning, UK-based security equipment designer and
manufacturer, specialising in security space detection and
intruder detection systems.
Ava Group announces that its Aura Ai-X fibre optic sensing
technology had been selected to protect a critical European
border. This contract marked the first sale of Aura Ai-X – latest
generation, data driven intrusion detection system.
GJD products include professional grade external detector
equipment as well as infrared and white-light LED illuminators
and Automatic Number Plate Recognition cameras and counts
some of the UK and Europe’s most security conscious end users
as customers. It also has a growing OEM sales channel across
multiple sectors, including well-known multinational engineering
and technology companies.
3 OCTOBER 2022 | APPOINTMENT
OF NEW CEO
Ava Group announces that Mal Maginnis will join the Company
as Chief Executive Officer. A seasoned leader of global
technology-enabled businesses with more than 35 years of
experience in the defence, security, safety and technology
industries, Mal most recently served as President of Rapiscan
Systems from July 2017 until September 2022.
“Having first met Mal more than 15 years ago, I am very confident
that he is the right leader to drive the growth phase of our business.
Exceptionally well-regarded within the industry, Mal’s extensive
technology, security and defence experience as well as his business
development skills will be most valuable in strengthening our
partnerships, developing new strategic alliances and expanding
our international sales presence. We believe his strong leadership
experience will greatly enhance and accelerate Ava’s growth
strategy.”
David Cronin,
Ava Group Chairman
Aura Ai-X has an embedded deep learning engine that enhances
system performance by referencing algorithm upgrades backed
by a global data library. With unrivalled performance and
exceptional event classification accuracy, Aura Ai-X delivers
high Probability of Detection (POD) combined with lowest
Nuisance Alarms Rate (NAR).
“Securing this contract is a vote of confidence in what we believe to
be the most advanced perimeter intrusion detection technology on
the market. We are confident that Aura Ai-X will fast become the
solution of choice for the smart protection of critical infrastructure
worldwide.”
Mal Maginnis,
Ava Group CEO
FY2023 | FOCUS ON NORTH
AMERICAN ENERGY SECTOR
During the year, Ava Group secured multiple contracts for the
supply and installation of its fibre optic intrusion detection at
energy facilities in North America. This included the protection
of further critical assets on a single site, where our advanced
sensing solution is being deployed to replace a competitor’s
technology. Further systems are also expected to be awarded
as part of the customer’s ongoing upgrade program. These
contract wins highlight the growing recognition of Ava Group’s
leading detection systems across the sector and provide further
validation of the Company’s stated strategy of targeting critical
energy assets and focusing on the North American market.
6 | AVA GROUP ANNUAL REPORT 2023
CHIEF EXECUTIVE
OFFICER’S REPORT
REVIEW OF OPERATIONS
I am pleased to have the opportunity to report to shareholders the significant progress that Ava Group has made towards becoming a
world leader in the provision of risk management technologies.
Ava Group has some of the most advanced detection sensing and access control technologies in the market. Upon joining the Ava
Group in January 2023, my immediate focus was to better align the technology with customer solutions. To this end, the Company has
been realigned into three operating segments:
Detect
Access
Manufactures and markets ‘smart’ fibre optic sensing systems for security and condition monitoring for a
range of applications including perimeters, pipelines, conveyors, power cables and data networks.
Specialist in the development, manufacture and supply of high security biometric readers, security access
control and electronic locking products.
Illuminate
Specialist in the development and manufacture of illuminators, ANPR cameras and perimeter detectors.
The organisation of the business segments with customer solutions has resulted in a renewed focus on our customer facing sales and
support capability. We have continued to invest heavily and ‘upskill’ these teams, reflecting their criticality to growing the business in
the future. The initial results from these changes are encouraging, with both sales order intake and revenue growing in the second half
of the year.
In reviewing FY2023 it is pleasing to highlight some significant milestones:
› Sales order intake grew to $30.9 million, up 71% on the previous year.
• Growth in Detect segment orders of 55% to $20.7 million.
• The addition of Illuminate orders of $6.3 million following the acquisition of GJD in August 2022.
• Access segment orders of $3.9 million.
› In line with increased sales order intake, revenue grew by more than 50% to $28.6 million. Resultant EBITDA of $1.3 million is up
61% on the prior year.
› Continued growth in the Detect segment in key geographies and industry verticals. Sales order intake in North America represented
34% of orders received, up 20% on the prior year, with additional orders received from the energy sector. Orders from Europe grew
significantly, notably including the first deployment of our Aura Ai-X system to the protection of a critical European border. The
Detect segment was also able to fulfill its first order for our conveyor belt solution, demonstrating the ability of our core technology
to be adapted to adjacent applications.
› The integration of GJD following its acquisition in August 2022 to create the Illuminate segment. Based in the UK, GJD provides
Ava Group with complementary illuminate and detection technologies while strengthening our presence in the UK and western
Europe. While the Illuminate segment has experienced challenging economic conditions in the UK during FY2023 which has
impacted domestic sales, we have already provided combined customer solutions across the Detect and Illuminate segments.
We are confident that this is an opportunity that we can further exploit to expand the market reach for the Illuminate segment.
2023 ANNUAL REPORT
AVA GROUP
| 7
› For the Access segment, FY2023 was a year of progressing compliance obligations in key distribution channels. The segment
recorded declining sales order intake and revenue during FY2023, however significant progress was made towards obtaining relevant
product certifications which will enable an acceleration of sales via this channel in FY2024. We retain a global framework agreement
for the supply of Access products to dormakaba International Holding GmbH, a global leader in security access control systems. It is
anticipated that final certifications will be obtained during Q1 FY2024.
› Development of Aura Ai-X continued during FY2023 and we launched this product in March 2023. Aura Ai-X is built on the
Company’s Aura platform and is the latest generation, data driven intrusion detection system. It has an embedded deep learning
engine that enhances system performance to improve the probability of detection while minimizing nuisance alarms. This product
was immediately successful in the market and was pivotal to winning a significant contract to protect a critical European border. It
also establishes a long term support arrangement and revenue stream with customers which gives them access to algorithms based
on our global data library.
FINANCIAL REVIEW
Revenue – continuing operations
EBITDA* - continuing operations
Profit / (loss) after tax – continuing operations
Profit / (loss) after tax – discontinued operations**
Profit / (loss) after tax
* EBITDA excluding unrealised foreign exchange variances
** Discontinued operations relate to the Services division divested during FY2022
A$m
FY2023
FY2022
Change
28.6
1.3
(1.1)
(1.1)
19.0
0.8
(0.7)
33.8
33.1
9.6
0.5
(0.4)
N/A
(34.2)
The consolidated loss after income tax attributable to the shareholders of Ava Group for the year ended 30 June 2023 was $1.1 million.
This is a decrease of $34.2 million compared to the previous financial year which included a profit from discontinued operations of
$33.8 million.
Revenue from continuing operations in FY2023 of $28.6 million was $9.6 million higher than the previous year (FY2022: $19.0 million),
reflecting revenue growth of more than 50%. The increase in revenue reflects revenue from the Illuminate segment of $6.3m following
the acquisition of GJD in August 2022, and increased Detect revenue of $3.8 million due to increased sales order intake.
Despite the addition of the lower margin Illuminate segment, consolidated gross margin was broadly maintained with the prior year
(FY2023: 64%, FY2022: 65%). Gross margin within the Detect and Access segments grew from the prior year reflecting careful supply
chain management including the forward buying of inventory to lock in prices and secure supply. Margin in the Illuminate segment at
48% is consistent with expectations within the distribution business but has the effect of slightly diluting consolidated gross margin.
Operating costs increased by $5.4 million on the prior year. The addition of the Illuminate segment during FY 2023 represented $2.9
million of the additional costs. The remaining movement is primarily driven by employee related costs associated with the significant
reorganisation of the business during the second half of FY2023. Some of these costs (approximately $0.7 million) are one-off in
nature and not expected to recur in the future, while some cost has been added to the business as we have ‘upskilled’ the sales and
business development teams. I am confident that the investment we have made in reorganising the business will deliver significant
benefit in FY2024 and beyond.
Resultant Group EBITDA of $1.3 million represents growth of 63% on FY2022 ($0.8 million). Excluding ‘one-off’ costs of $0.7 million
associated with the reorganisation of the business during H2, underlying EBITDA is $2.0 million, up 150% on FY2022. Net loss
from continuing operations of $1.1 million is $0.4 million higher than the previous year (FY2022: loss of $0.7 million) due to higher
depreciation and interest charges associated with the acquisition of GJD.
The Company had a cash balance of $5.5 million at 30 June 2023 (FY2022: $15.2 million). The movement is driven by the cash
paid (and overdraft acquired) for the GJD acquisition ($5.5 million) and continued technology investment in the Aura platform
($1.9m). Cash flow from operations was (-$2.2 million) for the year mainly driven by increased inventory during the first half of the
year to secure supply chains and lock in costs. Pleasingly, cash flow from operations during the second half of the year was positive,
notwithstanding some one-off costs attributable to organisational changes.
8 | AVA GROUP ANNUAL REPORT 2023
FY2023 HIGHLIGHTS
$
)
%
0
5
>
REVENUE*
P
U
$28.6M (
$
)
%
1
6
EBITDA**
P
U
$1.3M (
$
)
SALES ORDERS
%
1
7
P
U
$30.9M (
E
C
N
A
L
A
B
H
S
A
C
M
5
5
$
.
$
ACCESS
ILLUMINATE
DETECT
S
R
E
D
R
O
S
E
L
A
S
T
N
E
M
G
E
S
Y
B
S
R
E
D
O
S
E
L
A
S
I
N
O
G
E
R
Y
B
APAC
AMERICAS
EMEA
DETECT
ACCESS
ILLUMINATE
› Secured first deployment of
new Aura Ai-X to monitor
critical border in Europe.
› Continued to expand footprint
in North America with sales
order intake representing
34% of orders received.
› Fulfilled first order for
conveyor belt solution
demonstrating technology
adaption for adjacent
applications.
› Recorded highest annual
sales volume of YG80 Orca
lock including largest single
customer order.
› Released next generation
Cobalt Single (YD30S) and
Cobalt Double (YD30D).
› Successfully integrated GJD
to create new ILLUMINATE
segment.
› Leveraged channel
management and go-to-
market capabilities in UK and
Western Europe.
› Advanced key product
› Developed integrated
certifications – leading to
opportunities for nationwide
stocking of Cobalt locks
through major security
distributors.
customer solutions with fibre
optic sensing technology.
* Revenue from continuing operations.
** EBITDA excluding unrealised foreign exchange variances.
2023 ANNUAL REPORT
AVA GROUP
| 9
OUTLOOK
We are confident about delivering significant growth for Ava Group. Each of our operating segments has market leading technology
within our fibre sensing, access controls and illumination products. Catalysts for growth exist in each of the segments and we have
developed the organisational capability to execute our plans.
The Detect segment is well placed to accelerate growth. The Aura Ai-X product launched in March 2023 delivers unrivalled
performance by using an embedded deep learning engine to improve detection rates and reduce nuisance alarms. We believe this
solution will quickly become the solution of choice for the protection of critical infrastructure worldwide. The product has been
well received by the market and has already underpinned contract awards in Europe and Asia. We have a strong global pipeline
of opportunities that can be supported by this product. We also continue to expand the application of our products to pursue
opportunities in adjacent markets such as telecommunications.
While performance in the Access segment during FY2023 appeared slower than anticipated, we made significant progress towards
opening key distribution channels. It is expected that relevant certifications will be finalised in Q1 FY2024. This is a significant
milestone which will enable us to better exploit the global networks of our distribution partners. We remain very confident in the
quality of our partners and believe that this will drive significant growth across the segment.
The addition of the Illuminate segment remains an important accelerator of growth for the Company. The product offering is
complementary to our large scale solutions in the Detect segment, and its geographic location in the UK provides scale to the
Company’s presence in the UK and western Europe. While domestic economic conditions in the UK during FY2023 were challenging,
we are confident that we can rapidly grow export channels in the Illuminate segment, leveraging the Company’s existing strong position
in North America and Asia Pacific.
I look forward to updating you on progress throughout FY2024.
Mal Maginnis,
Chief Executive Officer
DIRECTORS’
REPORT
TABLE OF
CONTENTS
AUDITOR’S INDEPENDENT DECLARATION
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
CONSOLIDATED STATEMENT OF CASH FLOWS
NOTES TO THE FINANCIAL STATEMENTS
DIRECTORS’ DECLARATION
INDEPENDENT AUDITOR’S REPORT
SHAREHOLDER INFORMATION
30
32
34
36
37
38
87
88
94
12 | AVA GROUP ANNUAL REPORT 2023
DIRECTORS’
REPORT
The directors present their report together with the financial report of the Consolidated Entity (referred to hereafter as the “Group”
or “Consolidated Entity”) consisting of Ava Risk Group Limited (referred to hereafter as the “Company” or “Ava Risk Group”) and the
entities it controlled for the financial year ended 30 June 2023 and auditor’s report thereon.
Directors
The names of directors in office at any time during or since the end of the year are detailed in the table below.
The directors have been in office since the start of the year to the date of this report unless otherwise stated.
Information on Company Directors and Company Secretary
The qualifications, experience and special responsibilities of each person who has been a director of Ava Risk Group at any time since
1 July 2022 to the date of this report is provided below with details of the company secretaries as at the year end.
Name, qualifications, and independence
status
Experience, special responsibilities and other ASX directorships
David Cronin
Chairman of the Board
(Appointed 31 August 2018)
Non-Executive Director
(Appointed 10 April 2018)
Mike McGeever
Non-Executive Director
(Appointed 8 August 2018)
Mark Stevens
Non-Executive Director
(Appointed 11 March 2015)
Malcolm Maginnis
Group Chief Executive Officer
(Appointed 9 January 2023)
David has over 25 years professional experience and more than 15 years of international experience
at the director/chairman board level. David is presently the Managing Director of the investment
& consulting group Pierce Group Asia where he is responsible for its technology focused corporate
development and investment activities.
Previous to his role at Pierce Group Asia, David was an investment manager for the London listed
Guinness Peat Group PLC and Director of M&A for its technology focused division. Working for
several large financial and non- financial institutions, David has been involved in various advisory,
executive level and board positions with several early to mid-stage technology companies.
David has extensive knowledge of Ava Risk Group and the security markets that it services. He has
more than 10 years of board level experience within Ava Risk Group, having previously served as a
Director and Chairman of Ava Risk Group prior to its IPO.
Mr McGeever has over 35 years’ experience in the military, facilities and securities sectors. Prior to
his retirement in 2015, Mr McGeever was the Managing Director and founder of Transguard Group
LLC, a UAE based security and facilities management company and one of the largest security
companies in the world, employing 55,000 staff. Prior to that he held senior positions in a range of
security and facilities focused companies.
Mr McGeever has a Master of Business Administration from the University of Portsmouth (England).
With more than 30 years of experience in senior management roles with multi-national corporations,
Mark is a seasoned executive with broad experience in sales and general management in the
telecommunications and Information technology sector.
Mark has held senior positions with Nortel Networks Inc., Aircom International Limited, ECI Telecom
Ltd, Transmode Systems AB, and more recently Infinera Corporation. He has lived and worked in
Europe, the United States, Singapore and Australia. Mark holds a Master of Business Administration
from the University of Melbourne, a Bachelor of Engineering degree from Monash University and is a
Graduate Member of the Australian Institute of Company Directors.
Mal has more than 35 years of experience in the defence, security, safety and technology industries.
Most recently, Mal served as President of Rapiscan Systems from July 2017 until September 2022 –
a US-headquartered global manufacturer of security equipment and systems.
Prior to joining Rapiscan, Mal was head of Iveagh Technology a technology development company
based in Singapore and part owner of SX Technologies, a Sydney-based detection company. He was
also President of Smiths Detection from 2011 to 2014. Mal is based in Singapore.
| 13
Robert is an experienced business executive with more than 30 years of management experience
including more than 25 years in senior positions within companies operating in the security industry.
Prior to joining Ava Risk Group, he was with Vision Systems Limited, where he served as the General
Manager of Asia Pacific for their Fire and Security systems. In addition to his international sales and
marketing success, Robert has extensive experience in operations management, including product
engineering, procurement, manufacturing and operations.
Robert has previously had 10 years’ experience with IBM in Australia and the United States.
Robert retired on 9 January 2023 and ceased to be a KMP on that date.
Robert Broomfield
(Appointed 8 August 2018,
resigned 9 January 2023)
Group Chief Executive Officer
(Appointed 10 July 2020)
Executive Director
(Appointed 27 February 2008)
Joint Company Secretaries
Neville Joyce
Appointed 3 November 2021
Neville is a highly experienced financial and commercial executive with proven expertise across multiple sectors including energy,
mining, technology and manufacturing. With extensive experience in leadership, management and strategic financial analysis, Neville
has held senior finance positions at Origin and Energy Australia including roles as Chief Financial Officer and Divisional Head of
Finance. Prior to joining Ava Group, Neville was Group Chief Financial Officer at Redflex Holdings Ltd from 2017 to 2021. Neville is a
CPA and holds a Bachelor of Business.
Kim Clark
Appointed 20 January 2017
Kim is an experienced business professional with 24 years’ experience in the banking and finance industries and 7 years as a Company
Secretary (in-house) of an ASX300 company. Her experience includes debt and capital raising, risk management, mergers and
acquisitions, compliance and governance. Kim currently acts as Company Secretary to various ASX listed and unlisted companies in
Australia and is the Head of Corporate Services for Boardroom Pty Limited’s Queensland office.
Directors’ Meetings
The number of meetings of the board of directors and of each board committee held during the financial year and the number of
meetings attended by each director are:
Board of Directors’ Meetings
Meetings of Audit & Risk Committee
(ARC)
Meetings of Remuneration &
Nomination Committee (REM)
Eligible to Attend
Attended
Eligible to Attend
Attended
Eligible to Attend
Attended
D Cronin
M Stevens
M McGeever
M Maginnis
R Broomfield
Committee Membership
12
12
12
6
6
12
12
12
6
6
5
5
5
-
-
5
5
5
-
-
1
1
1
-
-
1
1
1
-
-
As at the date of this report, the company had an Audit & Risk Committee, and a Remuneration & Nomination Committee of the Board
of Directors. Members acting on the committees of the Board during the year were:
Audit Committee
M Stevens (Chairman)
D Cronin
M McGeever
Remuneration & Nomination Committee
M McGeever (Chairman)
D Cronin
M Stevens
2023 ANNUAL REPORT AVA GROUP 14 | AVA GROUP ANNUAL REPORT 2023
DIRECTORS’
REPORT
Gender Diversity Policy
The Remuneration & Nomination Committee is responsible for setting the diversity policy of the Company.
The Committee has established a diversity policy for the Company, which is disclosed on the Company website. Measurable objectives
for achieving gender diversity have been set with the Company assessing annually both the objectives and the entity’s progress in
achieving them. The Company has set an objective to ensure that the representation of women across the business is 25%.
During the year ended 30 June 2023, women represented 27% of the business. Whilst Ava Risk Group particularly focuses on
narrowing the gap in gender representation across all levels, it strives for equal development opportunities for all employees,
irrespective of gender, cultural, physical capabilities, or other differences.
Directors’ Interests in shares or options
As at the date of this report, the interests of the directors in the shares and performance rights of Ava Risk Group are as detailed below:
D Cronin
M Stevens
M Mc Geever
M Maginnis
Principal Activities
Number of ordinary shares
33,519,937
1,218,396
6,005,000
10,000
The principal activities of the Consolidated Entity during the financial year were:
› the provision of security technology products for perimeter intrusion detection solutions;
› the development, manufacture and supply of high quality, high security card and biometric readers, electromechanical locks and
related electronic security products; and
› manufacture and supply of professional external security and intruder detection equipment including ANPR cameras, lighting
controllers and infrared and white-light LED Illuminators.
OPERATING AND FINANCIAL REVIEW
Highlights
FY2023 has highlighted some significant milestones:
› Sales order intake grew to $30.9 million, up 71% on the previous year.
• Growth in Detect segment orders of 55% to $20.7 million.
• The addition of Illuminate orders of $6.3 million following the acquisition of GJD in August 2022.
• Access segment order of $3.9 million, down 17% compared to the prior year.
| 15
Review of Financial Results
Revenue – continuing operations
EBITDA* - continuing operations
Profit / (loss) after tax – continuing operations
Profit / (loss) after tax – discontinued operations**
Profit / (loss) after tax
* EBITDA excluding unrealised foreign exchange variances
** Discontinued operations relate to the Services division divested during FY2022
A$m
FY2023
FY2022
Change
28.6
1.3
(1.1)
-
(1.1)
19.0
0.8
(0.7)
33.8
33.1
9.6
0.5
(0.4)
N/A
(34.2)
In line with increased sales order intake, revenue grew by more than 50% to $28.6 million. Resultant EBITDA of $1.3 million is up 61%
on the prior year.
The consolidated loss after income tax attributable to the shareholders of Ava Risk Group for the year ended 30 June 2023 was
$1.1 million. This is a decrease of $34.2 million compared to the previous financial year which included a profit from discontinued
operations of $33.8 million.
Revenue from continuing operations in FY2023 of $28.6 million was $9.6 million higher than the previous year (FY2022: $19.0 million),
reflecting revenue growth of more than 50%. The increase in revenue reflects revenue from the Illuminate segment of $6.3m following
the acquisition of GJD in August 2022, and increased Detect revenue of $3.8 million due to increased sales order intake.
Resultant Group EBITDA of $1.3 million represents growth of 63% on FY2022 ($0.8 million). Net loss from continuing operations of
$1.1 million is $0.4 million higher than the previous year (FY2022: loss of $0.7 million) due to higher depreciation and interest charges
associated with the acquisition of GJD.
The Company had a cash balance of $5.5 million at 30 June 2023 (FY2022: $15.2 million). The movement is driven by the cash paid
for the GJD acquisition ($5.5 million) and continued technology investment in the Aura platform ($1.9m). Cash flow from operations
was (-$2.2 million) for the year mainly driven by increased inventory during the first half of the year to secure supply chains and lock in
costs.
Operating Review
Sales order intake for Detect in North America represented 34% of orders received, up 20% on the prior year, with additional orders
received from the energy sector. Orders from Europe grew significantly, notably including the first deployment of our Aura Ai-X system
to the protection of a critical European border. The Detect segment was also able to fulfil its first order for our conveyor belt solution,
demonstrating the ability of our core technology to be adapted to adjacent applications.
Development of Aura Ai-X continued during FY2023 and we launched this product in March 2023. Aura Ai-X is built on the Company’s
Aura platform and is the latest generation, data-driven intrusion detection system. It has an embedded deep learning engine that
enhances system performance to improve the probability of detection while minimizing nuisance alarms. This product was immediately
successful in the market and was pivotal to winning a significant contract to protect a critical European border. It also establishes a
long-term support arrangement and revenue stream with customers which gives them access to algorithms based on our global data
library.
The integration of GJD following its acquisition in August 2022 provides Ava Risk Group with complimentary illuminate and detection
technologies while strengthening our presence in the UK and Western Europe. While the Illuminate segment has experienced
challenging economic conditions in the UK during FY2023, impacting domestic sales, we have already provided combined customer
solutions across the Detect and Illuminate segments. We are confident that this is an opportunity that we can further exploit to expand
the market reach for the Illuminate segment.
The Access segment, was a year of progressing compliance obligations in key distribution channels. The segment recorded declining
sales order intake and revenue during FY2023, however significant progress was made towards obtaining relevant product certifications
which will enable an acceleration of sales via this channel in FY2024. We retain a global framework agreement for the supply of Access
products to dormakaba International Holding GmbH, a global leader in security access control systems.
2023 ANNUAL REPORT AVA GROUP
16 | AVA GROUP ANNUAL REPORT 2023
DIRECTORS’
REPORT
Significant changes in the state of affairs
During the financial year the following events took place.
Acquisition of GJD
On 2 August 2022, the Group entered into a Sale and Purchase Agreement to acquire 100% of the shareholding of MTD Holdings
Limited, the parent company of GJD Manufacturing Limited (“GJD”).
GJD is a UK-based security equipment designer and manufacturer, specialising in intruder detection systems. Its products include
professional grade external detector equipment as well as infrared and white-light LED illuminators and Automatic Number Plate
Recognition cameras. GJD counts some of the UK and Europe’s most security conscious end users as customers and has a growing
OEM sales channel across multiple sectors, including well-known multinational engineering and technology companies.
The acquisition price of approximately $7,537,000 was funded in cash and in AVA shares. The cash consideration has been paid and
share consideration is based on the last share price on trading day before 1 August 2022. Refer to note 2 in the Financial Statements.
Likely developments
Likely development of the operations of the Group are encompassed in the Chief Executive Officer’s report.
Environmental regulation and performance
The Consolidated Entity’s operations are not subject to any significant environmental Commonwealth or State regulations or laws. The
Group has complied with all environmental regulations to which it is subject.
Dividends recommended or declared
During the financial year ended 30 June 2022; the following dividends were declared. There were no dividends proposed during the
financial year ended 30 June 2023.
Special dividend at the rate of 13 cents per share, paid on 10 March 2022
Share options granted to directors and executives
2023
$000
2022
$000
-
31,586
There were no options over unissued ordinary shares granted by Ava Risk Group during or since the financial year end to directors and
executives in office.
Shares under option
There are no unissued ordinary shares of Ava Risk Group under option at the date of this report.
| 17
Performance Rights Shares (PSRs)
During the year ended 30 June 2023, the following performance rights were issued to Executive KMP:
Malcolm Maginnis*
Neville Joyce
Jim Viscardi
Total
Grant date
9 Jan 2023
6 Sep 2022
6 Sep 2022
Number of PSRs issued
1,500,000
308,300
323,805
2,132,105
*The performance rights were granted (subject to shareholder approval) to Mal Maginnis as part of remuneration in three equal
tranches, vesting on 9 January 2024, 2025 and 2026, respectively, with vesting conditions based on Share price hurdles.
The performance rights were granted to Neville Joyce and Jim Viscardi as part of remuneration in two equal tranches, vesting on
31 August 2023 and 31 August 2024. The vesting conditions relating to continuity of employment and achievement of agreed
performance KPIs in FY 2022.
Unissued ordinary shares of Ava Risk Group under performance rights at the date of this report are as follows:
Date the Performance rights were granted
Number of unissued ordinary
shares under rights
Expiry date of the
performance rights
29/10/2020
30/10/2020
1/09/2021
1/09/2021
28/10/2021
28/10/2021
31/01/2022
31/01/2022
6/09/2022
6/09/2022
9/01/2023
9/01/2023
9/01/2023
Total
35,342
58,277
261,891
261,895
28,801
28,801
14,114
14,114
304,819
304,823
500,000
500,000
500,000
2,812,876
31/08/2023
31/08/2023
31/08/2023
31/08/2024
31/08/2023
31/08/2024
31/08/2023
31/08/2024
31/08/2024
31/08/2025
9/01/2024
9/01/2025
9/01/2026
No performance rights holder has any right under the performance rights to participate in any other share issue of the company.
Proceedings on behalf of the Consolidated Entity
No person has been granted leave of Court to bring proceedings against the Consolidated Entity.
Indemnification and Insurance of Directors and Officers
Ava Risk Group maintains a Directors and Officers insurance policy that, subject to some exceptions provides insurance cover to past,
present and future directors and officers of the Consolidated Entity and its subsidiaries. The Company has paid a premium for the
policy.
In addition, under the Constitution of the Company, and to the extent permitted by law, each director of the Company is indemnified by
the Company against liability incurred to another person (other than the Company or related body corporate) except where the liability
arises out of conduct involving a lack of good faith. Accordingly, each director is indemnified against any liability for costs and expenses
incurred by the director in defending proceedings, whether civil or criminal, in which judgement is given in favour of the director or in
which the director is acquitted, or in connection with an application in relation to such proceedings in which a court grants relief to the
officer under the Corporations Act 2001.
2023 ANNUAL REPORT AVA GROUP
18 | AVA GROUP ANNUAL REPORT 2023
DIRECTORS’
REPORT
Indemnification of auditors
To the extent permitted by law, the Company has agreed to indemnify its auditors BDO Australia, as part of the terms of its annual
engagement agreement against claims by third parties arising from the audit (for an unspecified amount). No payments have been
made to indemnify BDO during or since the financial year.
The Company has not otherwise during or since the financial year, indemnified or agreed to indemnify a director or auditor of the
Company or any related body corporate against a liability incurred as a director or auditor.
Rounding of amounts
In accordance with ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191, the amounts in the directors’
report and in the financial report have been rounded to the nearest one thousand dollars, or in certain cases, to the nearest dollar
(where indicated).
REMUNERATION REPORT (AUDITED)
The Directors present the Remuneration Report (the Report) for the Company and its controlled entities for the year ended 30 June
2023. This Report forms part of the Directors’ Report and has been audited in accordance with section 300A of the Corporations Act
2001.
The table below lists the Executives of the Company whose remuneration details are outlined in this Remuneration Report. These
Executives, together with the Directors, are defined as Key Management Personnel (KMP) under Australian Accounting Standards.
In this report Executive KMP (Executives) refers to the KMP other than the Non Executive Directors. Non Executive Directors have
oversight of the strategic direction of the Company but have no direct involvement in the day to day management of the business.
1. Details of key management personnel (KMP)
The table below lists the KMP of the Company whose remuneration details are outlined in this Remuneration Report.
(i) Non-Executive Directors
David Cronin
Chairman (Non-Executive) – appointed 31 August 2018
(Appointed as Non-Executive Director on 10 April 2018)
Mark Stevens
Non-Executive Director – appointed 11 March 2015
Mike McGeever
Non-Executive Director – appointed 8 August 2018
(ii) Executive Directors
Malcolm Maginnis
Group Chief Executive Officer (CEO) and Executive Director – appointed on 9 January 2023.
Robert Broomfield
(iii) Other KMPs
Group Chief Executive Officer (CEO) – appointed on 10 July 2020 and
Executive Director – appointed 27 February 2008.
Resigned and ceased to be a KMP on 9 January 2023.
Neville Joyce
Group Chief Financial Officer (CFO) and Company Secretary – appointed on 3 November 2021.
James Viscardi
Executive Vice President, Global Security – appointed on 1 July 2022.
| 19
2. Remuneration policies
The board policy for determining the nature and amount of remuneration of key management personnel is agreed by the Board of
Directors as a whole, after receiving recommendations from the Remuneration and Nomination Committee. The Remuneration and
Nomination Committee currently comprises three members of the Board of Directors. All members are Non-Executive Directors.
The Board or the Remuneration and Nomination Committee may engage external consultants to provide independent advice where
it considers it appropriate to ensure that the Company attracts and retains talented and motivated directors and employees who can
enhance Company performance through their contributions and leadership. During the year ended 30 June 2023 neither the Board nor
the Remuneration and Nomination Committee engaged any external consultants.
2.1 Non- Executive Director remuneration arrangements
The remuneration of Non-Executive Directors (NEDs) consists of directors’ fees, which includes attendance at Committee meetings.
NEDs do not receive retirement benefits other than compulsory superannuation scheme contributions.
Each NED, including the Chairman receives a base fee between $63,000 and $65,000 per annum exclusive of superannuation for being
a director of the Company.
As part of their remuneration NEDs may receive share options or performance rights in the Company and are encouraged to hold
shares in the Company. This is in line with the Company’s overall remuneration philosophy and aligns NEDs with shareholder interests.
The remuneration of NEDs for the year ended 30 June 2023 and 30 June 2022 is detailed on page 22 of this report.
The Company’s constitution and the ASX listing rules specify that the NED fee pool shall be determined from time to time by a general
meeting. The Company’s current aggregate fee pool is $250,000 per year.
2.2 Executive remuneration arrangements
For executives the Company provides a remuneration package that incorporates both cash-based remuneration and share-based
remuneration. The contracts for service between the Company and executives are on a continuing basis the terms of which are not
expected to change in the immediate future. Share-based remuneration is conditional upon continuing employment and achievement of
certain KPIs, thereby aligning executive and shareholder interests.
FIXED REMUNERATION
The level of fixed remuneration is set so as to provide a base level of remuneration, and is reviewed annually by the Remuneration
Committee to ensure that it is both appropriate to the position and is competitive in the market. Salary packages are subject to local
regulatory labour laws.
SHORT-TERM INCENTIVE (STI)
The objective of the STI program is to link the achievement of the Group’s annual operational targets with the remuneration received by
the executives charged with meeting those targets. The total potential STI available is set at a level that provides sufficient reward to the
Executive KMP for exceeding the operational targets and at such a level that the cost to the Group is reasonable in the circumstances.
Actual STI payments granted to each Executive KMP depend on the extent to which specific annual operational targets set at the
beginning of the financial year are met or exceeded. The CEO’s targets are set by the Remuneration and Nomination Committee. The
targets for all other executives are set by the CEO.
STI rewards are assessed annually by the Remuneration and Nomination Committee and are usually paid in cash and performance
rights. Achievement against individual targets are assessed on an individual basis. Vesting conditions are assessed on a case by case
basis.
2023 ANNUAL REPORT AVA GROUP 20 | AVA GROUP ANNUAL REPORT 2023
DIRECTORS’
REPORT
A summary of the measures and weightings are set out in the table below:
Executive
Group CEO
Group CFO
EVP (Global)
FY 2023 - Financial
performance conditions
Nil
Group revenue and EBITDA
Targets
Group revenue and EBITDA
Targets
Weighting
Non-financial performance conditions
Weighting
0%
80%
80%
Share Price Performance
Systems and policies improvements
Increased market share and new market
initiatives
100%
20%
20%
Performance targets are set for an annual period. If performance targets (financial and non-financial) are met for the annual period and
the Executive KMP remains employed on 31 August 2023, the Executive KMP will receive the cash component (typically 50% of total
STI). Subject to continued employment typically 50% of the performance rights (or 25% of the total STI) will vest on 31 August 2024
and 31 August 2025 respectively.
LONG-TERM INCENTIVE (LTI)
Long-term incentives are provided to certain employees through the issuance of performance rights. The performance rights are
designed to provide long-term incentives for employees to deliver long-term shareholder returns.
The performance rights are usually issued for nil or nominal consideration and are granted in accordance with the Company’s Employee
Equity Incentive Plan (EIP).
Performance rights are issued for a specified period and are convertible into ordinary shares. The Performance rights typically have zero
exercise price. The performance rights expire on the earlier of their expiry date or three months after termination of the employee’s
employment subject to Board’s discretion. Performance rights do not vest until any vesting or performance criteria set at granting have
been met in accordance with the terms and conditions of the EIP.
There are no voting or dividend rights attached to performance rights. Voting rights will attach to the ordinary shares when the
performance rights have been exercised. Unvested performance rights cannot be transferred and will not be quoted on the ASX.
| 21
3. Executive contractual arrangements
The Company has entered into service agreements with the following key management personnel:
Malcolm Maginnis
Contract of Employment
Group Chief Executive Officer
(Appointed 9 January 2023)
Malcolm Maginnis is employed by BQT Solutions (SEA) Pte. Limited (based in Singapore) as a permanent, full-
time employee.
His current base salary is SGD $330,000 (approx AUD $367,300). He has a notice period of 3 months.
Performance Conditions
The contract provides for the provision of performance rights as disclosed in Sections 4 and 5.
Robert Broomfield
Contract of Employment
Group Chief Executive Officer
& Executive Director
Appointed 10 July 2020,
Retired 9 January 2023.
Robert Broomfield was employed by Ava Risk Group as a permanent, full-time employee.
Mr Broomfield commenced his position with Ava Risk Group in July 2006. His base salary was AUD $330,000.
Neville Joyce
Contract of Employment
Group Chief Financial Officer
& Company Secretary
Appointed 3 November
Neville Joyce is employed by Ava Risk Group as a permanent, full-time employee.
Mr Joyce commenced his position with Ava Risk Group in November 2021 and is employed on a current base
salary of AUD $300,000.
2021
Performance Conditions
The contract provided for a bonus up to 24% of base salary, inclusive of superannuation, which is payable in half
in cash and half in performance rights upon meeting pre-defined KPI’s (as disclosed in Sections 4 and 5) by the
executive.
James Viscardi
Contract of Employment
Executive Vice President
Global Security
James Viscardi is employed by Future Fibre Technologies (US) Inc. as a permanent, full-time employee. Mr
Viscardi commenced employment in August 2021 as Vice President - Americas. He was appointed on 1 July 2022
as Executive Vice President Global Security. His base salary is USD$230,000 (approx. AUD $363,000).
Performance Conditions
The contract provided for a bonus up to 22% of base salary, which is payable in half in cash and half in
performance rights upon meeting pre-defined KPI’s (as disclosed in Sections 4 and 5) by the executive.
2023 ANNUAL REPORT AVA GROUP 22 | AVA GROUP ANNUAL REPORT 2023
DIRECTORS’
REPORT
Remuneration of Key Management Personnel
The table below shows the realised remuneration the Group's KMPs have received during FY2023
Note
Salary and Fees
Short-term
Cash Bonus
Other benefits(4)
Post employment benefit (5)
Long Service Leave
Payment expense
Total
Performance Related
Share-based
Non-Executive Directors
David Cronin
Mark Stevens
Mike McGeever
Sub-total Non-Executive Directors
Executive Directors and other KMPs
Malcolm Maginnis
Robert Broomfield
Neville Joyce
James Viscardi
Sub-total executive KMP
Totals
1
2
3
$
65,000
65,000
63,000
193,000
176,858
149,743
300,000
356,123
982,724
1,175,724
$
-
-
-
-
-
-
14,157
75,891
90,048
90,048
$
-
-
-
-
-
-
-
49,694
49,694
49,694
1 Appointed as Group Chief Executive Officer on 9 January 2023. 2 Retired on 9 January 2023. 3 Appointed as Executive Vice President Global Security on 1 July 2022. Short-term cash bonuses include
Sales Commissions. 4 Other benefits include Health Insurance. 5 Post Employment benefits include Pension and Superannuation benefits.
Remuneration of Key Management Personnel for the year ended 30 June 2022
The table below shows the realised remuneration the Group's KMPs have received during FY2022
Note
Salary and Fees
Short-term
Cash Bonus (2)
Post-employment
benefits (3)
Long Service Leave
Payment expense
Total
Performance Related
Share-based
Non-Executive Directors
David Cronin
Mark Stevens
Mike McGeever
Sub-total Non-Executive Directors
Executive Directors and other KMPs
Robert Broomfield
Neville Joyce
Sub-total executive KMP
Totals
1
2
$
65,000
65,000
63,000
193,000
289,551
200,000
489,551
682,551
$
-
-
-
-
17,820
40,800
58,620
58,620
$
6,500
6,500
-
13,000
23,568
22,500
46,068
59,068
1 Retired on 9 January 2023. 2 As part of the Employment contract, Neville Joyce received $30,000 at the end of the Probation period. 3 Post-employment benefits include Pension and
superannuation benefits.
$
-
-
-
-
23%
11%
9%
16%
-
-
$
-
6,825
6,825
13,650
4,412
10,748
32,458
11,667
59,285
72,935
$
-
-
-
-
-
19,165
19,165
19,165
$
-
-
-
-
-
-
$
2,519
4,997
7,516
7,516
45,676
45,676
45,676
137,028
27,795
5,220
33,015
170,043
54,476
19,273
17,418
5,849
97,016
97,016
$
-
$
117,176
117,176
108,676
343,028
377,899
268,520
646,419
989,447
$
71,825
71,825
63,000
206,650
235,745
182,283
369,030
499,225
1,286,283
1,492,933
$
39%
39%
42%
-
12%
17%
-
-
| 23
Remuneration of Key Management Personnel
The table below shows the realised remuneration the Group's KMPs have received during FY2023
Note
Salary and Fees
Other benefits(4)
Post employment benefit (5)
Long Service Leave
Short-term
Cash Bonus
Share-based
Payment expense
Total
Performance Related
$
6,825
6,825
-
13,650
4,412
10,748
32,458
11,667
59,285
72,935
$
-
-
-
-
-
2,519
4,997
-
7,516
7,516
$
-
54,476
19,273
17,418
5,849
97,016
97,016
$
71,825
71,825
63,000
206,650
235,745
182,283
369,030
499,225
1,286,283
1,492,933
$
-
-
-
-
23%
11%
9%
16%
-
-
Note
Salary and Fees
Short-term
Cash Bonus (2)
Post-employment
benefits (3)
Long Service Leave
Share-based
Payment expense
Total
Performance Related
$
-
-
-
-
19,165
-
19,165
19,165
$
$
45,676
45,676
45,676
137,028
27,795
5,220
33,015
170,043
117,176
117,176
108,676
343,028
377,899
268,520
646,419
989,447
$
39%
39%
42%
-
12%
17%
-
-
1 Appointed as Group Chief Executive Officer on 9 January 2023. 2 Retired on 9 January 2023. 3 Appointed as Executive Vice President Global Security on 1 July 2022. Short-term cash bonuses include
Sales Commissions. 4 Other benefits include Health Insurance. 5 Post Employment benefits include Pension and Superannuation benefits.
Remuneration of Key Management Personnel for the year ended 30 June 2022
The table below shows the realised remuneration the Group's KMPs have received during FY2022
Non-Executive Directors
David Cronin
Mark Stevens
Mike McGeever
Sub-total Non-Executive Directors
Executive Directors and other KMPs
Malcolm Maginnis
Robert Broomfield
Neville Joyce
James Viscardi
Sub-total executive KMP
Totals
Non-Executive Directors
David Cronin
Mark Stevens
Mike McGeever
Sub-total Non-Executive Directors
Executive Directors and other KMPs
Robert Broomfield
Neville Joyce
Sub-total executive KMP
Totals
superannuation benefits.
1
2
3
1
2
$
65,000
65,000
63,000
193,000
176,858
149,743
300,000
356,123
982,724
1,175,724
$
65,000
65,000
63,000
193,000
289,551
200,000
489,551
682,551
$
-
-
-
-
-
-
$
-
-
-
-
14,157
75,891
90,048
90,048
17,820
40,800
58,620
58,620
$
-
-
-
-
-
-
-
$
-
49,694
49,694
49,694
6,500
6,500
13,000
23,568
22,500
46,068
59,068
1 Retired on 9 January 2023. 2 As part of the Employment contract, Neville Joyce received $30,000 at the end of the Probation period. 3 Post-employment benefits include Pension and
2023 ANNUAL REPORT AVA GROUP
24 | AVA GROUP ANNUAL REPORT 2023
DIRECTORS’
REPORT
4. Relationship between remuneration and Company performance
4.1 Remuneration not dependent on satisfaction of performance condition
The board seeks to align remuneration policies to the long-term creation of wealth by the Company for shareholders.
4.2 Remuneration dependent on satisfaction of performance condition
A portion of the Executive Remuneration is based on attainment of performance conditions. Performance-based remuneration includes
short-term cash bonuses (STIs) and Performance Share Rights (PSRs). Short-term Performance- based remuneration granted to key
management personnel has regard to Company performance over a 12-month period.
The following table sets out the performance conditions used for performance-linked incentive payments:
Performance Metrics
FY 23 outcome
Financial
Group CFO
EVP (Global)
Non-Financial
Group CEO
Group CFO
EVP (Global)
Revenue Target
EBITDA Target
Revenue Target
EBITDA Target
Share Price Performance
Systems and policies improvements
Increased market share and new market initiatives
Partially met
Not met
Partially met
Not met
Unassessed
Fully met
Partially met
These performance conditions are selected to align the goals and incentives of the KMP with the creation of shareholder wealth
during the relevant period.
Quantitative financial performance conditions are assessed against the Consolidated Entity’s financial report for the year. Other
performance conditions are assessed by the CEO, or in the case of the CEO’s performance conditions, the Board giving consideration
to outcomes achieved, external influences and a range of other qualitative factors. These assessments ensure clearly defined and
objective assessment of financial and quantitative targets and promote fair and reasonable judgements in respect of qualitative
performance conditions.
| 25
4.3 Impact of Company's performance on shareholder wealth
The following table summarises Company performance and key performance indicators
Financial performance
2023
2022
2021
2020
2019
2018
Earnings
Revenue ($’000)
% increase/(decrease) in revenue
Profit/(loss) for the year ($’000)
% increase/(decrease) in profit before tax
Shareholder value
Share price
Change in share price (%)
Dividends to shareholders ($’000)
Return of capital ($'000)
KMP remuneration
28,637
51%
(1,054)
-103%
$0.20
11%
-
-
18,961
-71%
33,132
141%
$0.18
-53%
31,586
7,566
65,714
41%
13,749
178%
$0.38
145%
7,224
-
46,640
47%
4,947
205%
$0.16
3%
-
-
31,673
56%
20,275
52%
(4,729)
(4,241)
-12%
46%
$0.15
30%
-
-
$0.12
-18%
-
-
Total remuneration of KMP
$1,492,933
$14,882,3431
$3,598,456
$3,052,714
$1,808,625
$1,485,805
Total performance-based remuneration
$187,064
$13,587,2061
$1,629,373
$1,185,289
$91,676
$10,000
1 Includes KMPs which are not included in FY 2023 report.
5. Performance based rewards
5.1 Cash bonus
The following table sets out the terms and conditions of each grant of the performance-linked bonuses affecting
compensation in current and future years.
2023
Neville Joyce
James Viscardi
Maximum cash bonus $
Amount awarded $
% Achieved
70,875
77,773
14,157
15,555
20%
20%
The cash bonuses associated with the achievement of these awards relating to the financial year ending 30 June 2023 will be paid
during the financial year ending 30 June 2024.
2023 ANNUAL REPORT AVA GROUP 26 | AVA GROUP ANNUAL REPORT 2023
DIRECTORS’
REPORT
5.2 Performance rights awarded
The following table summarises the results of the performance rights awarded and allocated to Executive Directors during FY2023.
Number of
performance
rights awarded
Grant date
Fair value at
Grant date $
Vesting dates
Vesting
conditions
Number of
performance
rights allocated
based on FY 23
KPIs achieved
Malcolm Maginnis 1
500,000
9 Jan 2023
0.125
9 Jan 2024
Share price hurdle
Not Vested
500,000
9 Jan 2023
0.128
9 Jan 2025
Share price hurdle
Not Vested
Neville Joyce
123,320
6 Sep 2022
500,000
9 Jan 2023
0.127
0.230
31 Aug 2024
9 Jan 2026
Share price hurdle
Not Vested
123,320
6 Sep 2022
0.230
31 Aug 2025
FY 2023
Performance
KPI and continuity
of employment
30,830
30,830
6 Sep 2022
6 Sep 2022
0.107
0.108
31 Aug 2024
Share price hurdle
31 Aug 2025
Share price hurdle
James Viscardi
161,902
6 Sep 2022
0.230
31 Aug 2024
161,903
6 Sep 2022
0.230
31 Aug 2025
FY 2023
Performance
KPI and continuity
of employment
Total
2,132,105
1 The Performance Rights are subject to an approval during the FY2023 Annual General Meeting.
30,830
30,830
-
-
32,381
32,381
126,422
| 27
6. Key management personnel’s equity holdings
6.1 Number of Shares held by key management personnel:
As at end of June 2023, there were no Share Options held by any of the Key Management Personnel. (2022: nil).
On exercise of rights
Net change, other
Balance at End of Period
Note
Balance at beginning of
Period
1 July 2022
2023
Non-Executive
Directors
David Cronin
Mark Stevens
Mike McGeever
Sub-total
Executives
Malcolm Maginnis
Robert Broomfield
1
Neville Joyce
James Viscardi
Sub-total
Total
2022
Non-Executive
Directors
David Cronin
Mark Stevens
Mike McGeever
Sub-total
Executive
Robert Broomfield
1
Sub-total
Total
1 Resigned on 9 January 2023.
33,519,937
1,218,396
6,005,000
40,743,333
-
3,270,266
-
-
3,270,266
44,013,599
-
-
-
-
-
85,277
-
-
85,277
85,277
-
-
-
-
10,000
-
-
-
10,000
10,000
30 June 2023
33,519,937
1,218,396
6,005,000
40,743,333
10,000
3,355,543
-
-
3,365,543
44,108,876
32,663,070
1,218,396
6,005,000
39,886,466
3,107,359
3,107,359
42,993,825
-
-
-
-
162,907
162,907
162,907
30 June 2022
33,519,937
1,218,396
6,005,000
856,867
-
-
856,867
40,743,333
-
-
3,270,266
3,270,266
856,867
44,013,599
1 Resigned on 9 January 2023. Held the same balances disclosed at the date of resignation and at 30 June 2023.
On exercise of rights
Net change, other
Balance at End of Period
Note
Balance at beginning of
Period
1 July 2021
2023 ANNUAL REPORT AVA GROUP
28 | AVA GROUP ANNUAL REPORT 2023
DIRECTORS’
REPORT
6.2 Number of performance rights held by key management personnel
Balance at
beginning of
Period
Granted as
remuneration1
Exercised
Forfeited /
lapsed
Balance at end
of year
Fair value of
rights granted
during the year
2023
Note
1 July 2022
30 June 2023
200,000
200,000
200,000
600,000
178,221
28,228
-
-
-
-
-
308,300
-
323,805
-
-
-
-
(200,000)
(200,000)
(200,000)
(600,000)
-
-
-
-
(85,277)
-
-
-
(246,640)
(259,043)
92,944
89,888
64,762
$
-
-
-
-
-
63,356
74,475
Non-Executive Directors
David Cronin
Mark Stevens
Mike McGeever
Sub-total NEDs
Executive Directors
Robert Broomfield
2
Neville Joyce
Jim Viscardi
Sub-total
executive KMP
Totals
206,449
632,105
(85,277)
(505,683)
247,594
137,831
806,449
632,105
(85,277)
(1,105,683)
247,594
137,831
1
The performance rights were granted in two tranches, vesting on 31 August 2024 and 31 August 2025 with vesting conditions relating to continuity of employment.
2 Held the same balances disclosed at the date of resignation and at 30 June 2023.
| 29
Balance at
beginning of
Period
Granted as
remuneration 3
Exercised
Forfeited /
lapsed
Balance at end
of year
Fair value of
rights granted
during the year
2022
Note
1 July 2021
30 June 2022
$
Non-Executive Directors
David Cronin
Mark Stevens
Mike McGeever
Sub-total NEDs
Executive Directors
Robert Broomfield
Neville Joyce
Sub-total
executive KMP
Totals
-
-
-
-
200,000
200,000
200,000
600,000
-
-
-
-
-
-
-
-
200,000
200,000
200,000
57,220
57,220
57,220
600,000
171,660
283,526
167,939
(162,907)
(110,337)
-
67,854
-
(39,626)
178,221
28,228
283,526
235,793
(162,907)
(149,963)
206,449
75,607
35,109
110,716
283,526
835,793
(162,907)
(149,963)
806,449
282,376
3 The performance rights were granted in two tranches, vesting on 31 August 2023 and 31 August 2024 with vesting conditions relating to continuity of employment.
7. Other transactions with key management personnel
During the current and previous financial year, the Group transacted with related entities of directors, other than in their capacity as
director as follows:
The Consolidated Entity purchased consulting services from Pierce Asia Pty Ltd and Pierce Group Asia Pte Ltd, related entities through
Chairman and Non-Executive Director, David Cronin, for an amount of $282,000 (2022: $219,000). Accounts Payable balance at 30
June 2023 totals $17,270 (FY2022: $44,812). These arrangements were in the normal course of business and included amounts related
to the provision of consultancy and administration services, and general office expenses provided by the related entities for the benefit
of the Consolidated Entity.
During the year, there were no other transactions with directors or management personnel.
This concludes the Remuneration Report.
2023 ANNUAL REPORT AVA GROUP
30 | AVA GROUP ANNUAL REPORT 2023
AUDITOR’S
INDEPENDENCE
DECLARATION
Tel: +61 3 9603 1700
Fax: +61 3 9602 3870
www.bdo.com.au
Collins Square, Tower Four
Level 18, 727 Collins Street
Melbourne VIC 3008
GPO Box 5099 Melbourne VIC 3001
Australia
DECLARATION OF INDEPENDENCE BY TIM FAIRCLOUGH TO THE DIRECTORS OF AVA RISK GROUP
LIMITED
As lead auditor of Ava Risk Group Limited for the year ended 30 June 2023, I declare that, to the best
of my knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
2. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Ava Risk Group Limited and the entities it controlled during the period.
Tim Fairclough
Director
BDO Audit Pty Ltd
Melbourne, 28 August 2023
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO
Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members
of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent
member firms. Liability limited by a scheme approved under Professional Standards Legislation.
32 | AVA GROUP ANNUAL REPORT 2023
Consolidated Statement of
Comprehensive Income
For the year ended 30 June 2023
Continuing operations
Revenue from contracts with customers
Other income
Total Revenue and other income
Cost of raw materials and consumables used
Employee benefit expenses
Research and development
Advertising and marketing
Travel and entertainment
Facilities and costs
Compliance, legal, and administration
Reversal (Provision for) impairment of receivables
Depreciation and amortisation expenses
12,13,15
(2,068)
Finance expense
Foreign exchange gain (net)
Other expenses
Total expenses
Loss before income tax
Income tax expense
(Loss) for the year from continuing operations
Discontinued operations
Profit from discontinued operations, net of tax
(Loss) Profit for the year
(195)
156
(1,356)
(29,481)
(844)
(210)
(1,054)
-
(1,054)
5
27
Consolidated
Note
June 2023
June 2022
$'000
$'000
4a
4b
28,601
36
28,637
(10,393)
(10,487)
(1,767)
(620)
(923)
(695)
(1,157)
24
18,621
340
18,961
(6,629)
(6,357)
(1,759)
(386)
(346)
(454)
(1,262)
(64)
(1,689)
(27)
585
(931)
(19,319)
(358)
(304)
(662)
33,794
33,132
| 33
For the year ended 30 June 2023
(Continued)
Items that will not be reclassified subsequently to profit and loss
Exchange differences on translation of foreign operations
Exchange differences reclassified to profit or loss on disposal of discontinued
operation
Total other comprehensive income for the year
Total comprehensive income for the year
(Loss) Profit for the year attributable to:
Equity holders of the parent company
(Loss) Profit for the year to the equity holders of the Company relates to:
(Loss) for the year from continuing operations
Profit from discontinued operations, net of tax
(Loss) Profit for the year
Note
Consolidated
2023
$'000
1,021
-
1,021
(33)
June 2022
$'000
(296)
575
279
33,411
(1,054)
33,132
(1,054)
-
(1,054)
Cents
(662)
33,794
33,132
Cents
Total comprehensive income for the year attributable to:
Equity holders of the parent company
(33)
33,411
Earnings per share attributable to ordinary shareholders of AVA Risk Group
from continuing operations
Basic earnings (loss) per share
Diluted earnings (loss) per share
Earnings per share attributable to ordinary shareholders of AVA Risk Group
Basic (loss) profit per share
Diluted (loss) profit per share
20
20
20
20
Cents
(0.41)
(0.41)
(0.41)
(0.41)
Cents
(0.27)
(0.27)
13.63
13.46
The above Consolidated Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes.
2023 ANNUAL REPORT AVA GROUP 34 | AVA GROUP ANNUAL REPORT 2023
Consolidated Statement of
Financial Position
As at 30 June 2023
ASSETS
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Prepayments
Total Current Assets
Non-Current Assets
Plant and equipment
Intangible assets
Right of use assets
Deferred tax asset
Total Non-Current Assets
TOTAL ASSETS
LIABILITIES
Current Liabilities
Trade and other payables
Contract liabilities
Borrowings
Lease Liability
Provisions
Total Current Liabilities
Consolidated
Note
6,8
9
10
11
12
13
15
5
16
17
23
15
18
2023
$'000
5,517
8,388
7,464
670
22,039
1,114
13,584
263
75
15,036
37,075
2,671
278
1,999
171
1,408
6,527
2022
$'000
15,226
4,739
3,256
400
23,621
491
5,954
249
96
6,790
30,411
2,254
225
-
131
1,381
3,991
| 35
2022
$'000
47
-
153
272
-
472
4,463
25,948
50,793
(22,564)
(2,281)
25,948
Consolidated
Note
18
23
15
17
5
7
2023
$'000
59
542
118
429
146
1,294
7,821
29,254
53,831
(23,618)
(959)
29,254
As at 30 June 2023
(Continued)
Non-Current Liabilities
Provisions
Borrowings
Lease liabilities
Contract liabilities
Deferred tax liabilities
Total Non-Current Liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed Equity
Accumulated losses
Reserves
TOTAL EQUITY
The above Consolidated statement of Financial Position should be read in conjunction with the accompanying notes.
2023 ANNUAL REPORT AVA GROUP
36 | AVA GROUP ANNUAL REPORT 2023
Consolidated Statement of
Changes in Equity
Share Capital
Share based
payment
Reserve
Foreign
Exchange
Translation
Reserve
Other Equity
Reserves
Accumulated
Losses
Total Equity
$’000
$’000
$’000
$’000
$’000
$’000
50,793
1,749
(983)
(3,047)
(22,564)
-
-
-
3,041
(3)
-
3,038
-
-
-
-
-
301
301
-
1,021
1,021
-
-
-
-
-
-
-
-
-
-
-
(1,054)
-
(1,054)
-
-
-
-
25,948
(1,054)
1,021
(33)
3,041
(3)
301
3,339
At 1 July 2022
Losses for the year
Other comprehensive income
Total comprehensive income for the
year
Transactions with owners in their
capacity as owners
Shares issued as part of business
combination (Note 2)
Share issue costs
Share based payments
Total transactions with owners in their
capacity as owners
Balance at 30 June 2023
53,831
2,050
38
(3,047)
(23,618)
29,254
At 1 July 2021
Profit for the year
Other comprehensive income
Total comprehensive income for the
year
Transactions with owners in their
capacity as owners
Share buy-back
Capital return
Dividends/distributions
Shares issued
Share issue costs
Share based payments
Total transactions with owners in their
capacity as owners
59,062
1,397
(1,262)
(3,047)
(24,110)
32,040
-
-
-
(1,329)
(7,566)
-
638
(12)
-
(8,269)
-
-
-
-
-
-
-
-
352
352
-
279
279
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
33,132
-
33,132
33,132
279
33,411
-
-
(1,329)
(7,566)
(31,586)
(31,586)
-
-
-
638
(12)
352
(31,586)
(39,503)
Balance at 30 June 2022
50,793
1,749
(983)
(3,047)
(22,564)
25,948
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
Consolidated Statement of
Cash Flows
Cash flow from operating activities
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Interest received
Tax paid
Finance costs
Lease interest paid
Consolidated
Note
2023
$'000
27,170
(28,628)
29
(558)
(175)
(20)
Net cash flows (used in) from operating activities
8
(2,182)
Cash flow from investing activities
Payment for intangible assets
Payment for plant and equipment
Purchase of business, net of cash acquired
Disposal of subsidiaries, net of cash and transaction costs
Net cash flows (used in) from investing activities
Cash flow from financing activities
Proceeds from share issue
Share issue costs
Repayment of borrowings
Share buy back
Capital return
Dividends paid
Payment of lease liabilities
Net cash flows (used in) financing activities
Net (decrease) in cash and cash equivalents
Net foreign exchange differences on cash
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of the period
(1,961)
(459)
(5,522)
-
(7,942)
-
(3)
(915)
-
-
(101)
(325)
(1,344)
(11,468)
129
15,226
3,887
2
27
21
15
8
2022
$'000
30,800
(28,154)
1
(135)
(5)
(22)
2,485
(1,126)
(270)
-
36,469
35,073
638
(12)
-
(1,329)
(7,566)
(31,232)
(226)
(39,727)
(2,169)
102
17,293
15,226
The above consolidated statement of cash flows includes Discontinued Operations (Refer to Note 27) and should be read in
conjunction with the accompanying notes.
38 | AVA GROUP ANNUAL REPORT 2023
Notes to the Financial
Statements
1. Statement of significant accounting policies
The following is a summary of significant accounting policies adopted by the Consolidated Entity in the preparation and presentation of
the financial report. The accounting policies have been consistently applied, unless otherwise stated.
1.1 Basis of preparation of the financial report
This is a general purpose financial report which has been prepared by a for profit entity in accordance with the requirements of
applicable Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (AASB) and the
Corporations Act 2001.
It covers Ava Risk Group and controlled entities as a Consolidated Entity. Ava Risk Group is a Company limited by shares, incorporated
and domiciled in Australia whose shares are publicly traded on the Australian Securities Exchange.
The financial report is presented in Australian dollars and all values are rounded to the nearest thousand dollars ($’000) unless
otherwise stated under the option available to the Company under ASIC Corporations (Rounding in Financial/Directors’ Reports)
Instrument 2016/191. The Company is an entity to which this legislative instrument applies.
The consolidated financial statements of Ava Risk Group for the year ended 30 June 2023 were authorised for issue in accordance with
a resolution of the directors on 28 August 2023.
Compliance with IFRS
The consolidated financial statements of Ava Risk Group also comply with the International Financial Reporting Standards (IFRS),
issued by the International Accounting Standards Board (IASB).
Historical Cost Convention
The financial report has been prepared under the historical cost convention.
Significant Accounting Estimates
The preparation of financial report requires the use of certain estimates and judgements in applying the Group’s accounting policies.
Those estimates and judgements significant to the financial report are disclosed in Note 1.5.
1.2 Going Concern
The financial report has been prepared on a going concern basis which assumes the Group will continue its operations and have
sufficient cash to pay its debts as and when they become payable for a period of at least 12 months from the date the financial report
was authorised for issue.
1.3 Principles of consolidation
The consolidated financial statements are those of the Consolidated Entity, comprising the financial statements of the parent entity and
of all entities which the parent entity controls. The group controls an entity when it is exposed, or has rights, to variable returns from its
involvement with the entity and has the ability to affect those returns through its power over the entity.
Business Combinations and goodwill
The Group accounts for business combinations using the acquisition method when control is transferred to the Group. The
consideration transferred in the acquisition is measured at fair value, as are the identifiable net assets acquired.
Acquisition costs are expensed as incurred, except if related to the issue of debt or equity securities.
| 39
The Group determines that it has acquired a business when the acquired set of activities and assets include an input and a substantive
process that together significantly contribute to the ability to create outputs. The Group recognises identifiable assets acquired and
liabilities assumed in a business combination regardless of whether they have previously been recognised in the acquiree’s financial
statements prior to the acquisition. Assets acquired and liabilities assumed are measured at their acquisition-date fair values.
Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Contingent
consideration classified as equity is not remeasured and its subsequent settlement is accounted for within equity. Contingent
consideration classified as an asset or liability that is a financial instrument and within the scope of AASB 9 Financial Instruments ,
is measured at fair value with the changes in fair value recognised in the statement of profit or loss in accordance with IFRS 9. Other
contingent consideration that is not within the scope of AASB 9 is measured at fair value at each reporting date with changes in fair
value recognised in profit or loss.
Goodwill is initially measured at cost (being the excess of the aggregate of the consideration transferred and the amount recognised
for non-controlling interests and any previous interest held over the net identifiable assets acquired and liabilities assumed). If the fair
value of the net assets acquired is in excess of the aggregate consideration transferred, the Group re-assesses whether it has correctly
identified all of the assets acquired and all of the liabilities assumed and reviews the procedures used to measure the amounts to
be recognised at the acquisition date. If the reassessment still results in an excess of the fair value of net assets acquired over the
aggregate consideration transferred, then the gain is recognised in profit or loss.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing,
goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash-generating units that
are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those
units.
Where goodwill has been allocated to a cash-generating unit (CGU) and part of the operation within that unit is disposed of, the
goodwill associated with the disposed operation is included in the carrying amount of the operation when determining the gain or loss
on disposal. Goodwill disposed in these circumstances is measured based on the relative values of the disposed operation and the
portion of the cash-generating unit retained.
Subsidiaries
The financial statements of subsidiaries are prepared for the same reporting period as the parent entity, using consistent accounting
policies. Adjustments are made to bring into line any dissimilar accounting policies, which may exist.
Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the consolidated entity only.
Supplementary information about the parent entity is disclosed in note 28.
Transactions eliminated on consolidation
All inter-company balances and transactions, including any unrealised profits or losses have been eliminated on consolidation.
Subsidiaries are consolidated from the date on which control is established and are de-recognised from the date that control ceases.
Equity interests in a subsidiary not attributable directly or indirectly to the Group are presented as non-controlling interests.
1.4 Summary of significant accounting policies
a) Revenue
The Group has three segments with the following main revenue streams:
Detect
Access
Manufactures and markets ‘smart’ fibre optic sensing systems for security and condition monitoring for a range of
applications including perimeters, pipelines, conveyors, power cables and data networks.
Specialist in the development, manufacture and supply of high security biometric readers, security access control and
electronic locking products.
Illuminate
Specialist in the development and manufacture of illuminators, ANPR cameras and perimeter detectors.
2023 ANNUAL REPORT AVA GROUP 40 | AVA GROUP ANNUAL REPORT 2023
Notes to the Financial
Statements
Sale of Goods
Access and Illuminate Product
The Group’s contracts with customers for the sale of equipment is one performance obligation. Revenue from sale of equipment is
recognised at the point in time when control of the equipment is transferred to the customer, which is on dispatch or on delivery,
dependent on the delivery terms.
Detect Product
Some contracts have multiple elements, such as hardware, software and rendered services.
When there is more than one performance obligation in the contract, revenue is allocated to each performance obligation on the basis
of relative standalone selling prices. Revenue from the sale of the equipment is recognised at a point in time, on dispatch or upon
delivery.
Warranty provisions
The Group generally provides warranties for general repairs of defects that existed at the time of sale, as required by law. As such,
most warranties are assurance-type warranties, which the Group accounts for under AASB 137 Provisions, Contingent Liabilities and
Contingent Assets.
However, in some contracts, the Group provides extended warranties. These warranties are service-type warranties and, therefore,
are accounted for as a separate performance obligation to which the Group allocates a portion of the revenue based on the relative
standalone selling price. Revenue is subsequently recognised over time based on the time elapsed.
Rendering of services
Perimeter Security Product
The Group’s Detect division provides installation services. These services are sold either separately or bundled together with the sale of
equipment to a customer. The installation services can be obtained from other providers and do not significantly customise or modify
the Perimeter security product. There are two performance obligations in a contract for bundled sales of equipment and installation
services, because the Group promises to transfer equipment and provide installation services are capable of being distinct and
separately identifiable.
Contract balances
The timing of revenue recognition may differ from the contract payment schedule, resulting in revenue that has been earned but not
billed. These amounts are included in contract assets. Amounts billed in accordance with contracts with customers, but not yet earned,
are recorded as contract liabilities. Contract liabilities are recognised as revenue when the Group performs under the contract.
Interest Income
Interest income is recognised when it becomes receivable on a proportionate basis taking into account the interest rates applicable to
the financial assets.
Other revenues
Other operating revenues are recognised as they are earned and goods or services provided.
(b) Foreign currency translations and balances Functional and presentation currency
The Group’s consolidated financial statements are presented in Australian Dollars (“AUD”), which is also the parent company’s
functional currency. For each entity, the Group determines the functional currency and items included in the financial statements are
measured using the functional currency. The Group uses the direct method of consolidation and on disposal of a foreign operation, the
gain or loss that is reclassified to profit or loss reflects the amount that arises from using this method.
| 41
Transactions and Balances
Transactions in foreign currencies are initially recorded by the Group’s entities at their respective functional currency spot rates at the
date the transaction first qualifies for recognition.
Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates of exchange at the
reporting date.
Differences arising on settlement of translation of monetary items are recognised in profit or loss with the exception of monetary
items that are designated as part of the hedge of the Group’s net investment in a foreign operation. These are recognised in Other
Comprehensive Income until the net investment is disposed of, at which time, the cumulative amount is reclassified to profit or loss. Tax
charges and credits attributable to exchange differences on those monetary items are also recognised in Other Comprehensive Income.
Foreign Subsidiaries
Entities that have a functional currency different to the presentation currency are translated as follows:
- Assets and liabilities are translated at the closing rate on reporting date;
- Income and expenses are translated at actual exchange rates or average exchange rates for the period, where appropriate; and
- All resulting exchange differences are recognised in other comprehensive income.
c) Income tax and other taxes
Income tax
The income tax expense or benefit is the tax payable on the current period’s taxable income based on the applicable income tax rate
for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax
losses.
Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to
the taxation authorities based on the current period’s taxable income. The tax rates and tax laws used to compute the amount are those
that are enacted or substantively enacted by the reporting date.
Deferred tax
Deferred tax is provided on all temporary differences at the reporting date between the tax bases of assets and liabilities and their
carrying amounts for financial reporting purposes.
Deferred tax liabilities are recognised for all taxable temporary differences except:
-
-
when the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is
not a business combination and that, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or
in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures,
when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will
not reverse in the foreseeable future.
Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses,
to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry
forward of unused tax credits and unused tax losses can be utilised, except:
-
-
When the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or
liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit
nor taxable profit or loss; or
In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures,
deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable
future and taxable profit will be available against which the temporary differences can be utilised.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable
that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets
are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow
the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised, or the
liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
2023 ANNUAL REPORT AVA GROUP 42 | AVA GROUP ANNUAL REPORT 2023
Notes to the Financial
Statements
Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against
current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority.
Tax benefits acquired as part of a business combination, but not satisfying the criteria for separate recognition at that date, would be
recognised subsequently if new information about facts and circumstances changed. The adjustment would either be treated as a
reduction to goodwill (as long as it does not exceed goodwill) if it was incurred during the measurement period or in profit or loss.
Indirect taxes
Goods and services tax (including other indirect taxes such as Value Added Tax in foreign jurisdictions) (GST): Revenues, expenses and
purchased assets are recognised net of the amount of GST except:
-
When the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is
recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and
- Receivables and payables, which are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the
consolidated statement of financial position.
Cash flows are presented in the consolidated statement of cash flows on a gross basis, except for the GST component of investing and
financing activities, which are disclosed as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.
d) Tax consolidation legislation
Ava Risk Group has implemented the tax consolidation legislation and has formed a tax consolidated group with the Australian entities,
FFT Mena Pty Ltd, MaxSec Group Pty Ltd, BQT Solutions (Australia) Pty Ltd, 4C Satellites Ltd and BQT Intelligent Security Systems Pty
Ltd, with Ava Risk Group Limited as the head entity.
e) Impairment of non-financial assets
The Group assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or
when annual impairment testing for an asset is required, the Group estimates the asset’s recoverable amount. Recoverable amount
is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from
other assets or groups of assets. If this is the case, recoverable amount is determined for the cash-generating unit to which the asset
belongs. An asset’s recoverable amount is the higher of an asset’s or the cash generating unit’s (CGU) fair value less costs of disposal
and its value in use. The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows
that are largely independent of those from other assets or groups of assets. When the carrying amount of an asset or CGU exceeds its
recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of
disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is
used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded companies or other available
fair value indicators.
The Group bases its impairment calculation on detailed budgets and forecast calculations, which are prepared separately for each of
the Group’s CGUs to which the individual assets are allocated. These budgets and forecast calculations generally cover a period of five
years. A long-term growth rate is calculated and applied to project future cash flows after the fifth year.
Impairment losses of continuing operations are recognised in the profit or loss in expense categories consistent with the function of the
impaired asset.
| 43
For assets excluding goodwill, an assessment is made at each reporting date to determine whether there is an indication that previously
recognised impairment losses no longer exist or have decreased. If such indication exists, the Group estimates the asset’s or CGU’s
recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to
determine the asset’s recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying
amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of
depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the profit or loss.
Goodwill is tested for impairment annually as at 30 June and when circumstances indicate that the carrying value may be impaired.
Impairment is determined for goodwill by assessing the recoverable amount of each CGU (or group of CGUs) to which the goodwill
relates. When the recoverable amount of the CGU is less than its carrying amount, an impairment loss is recognised. Impairment losses
relating to goodwill cannot be reversed in future periods.
Intangible assets with indefinite useful lives are tested for impairment annually as at 30 June at the CGU level, as appropriate, and
when circumstances indicate that the carrying value may be impaired.
f) Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand and short-term deposits with an original maturity of three months or less
that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
For the purposes of the consolidated statement of cash flows, cash and cash equivalents consist of cash and cash equivalents as
defined above, net of outstanding bank overdrafts. Bank overdrafts are included within interest-bearing loans and borrowings in current
liabilities on the balance sheet.
g) Inventories
Inventories are valued at the lower of average cost and net realisable value. The cost of manufactured products includes direct material,
direct labour and a proportion of manufacturing overheads based on normal operating capacities. Net realisable value is the estimated
selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the
sale.
h) Plant and equipment
Plant and equipment is stated at historical cost less accumulated depreciation and any accumulated impairment losses.
Depreciation is calculated on a straight line or diminishing balance basis over the estimated useful life of the specific assets as follows:
Plant and Equipment
Office furniture and equipment
Motor vehicles
Computer equipment
Production plant and equipment
Demonstration equipment
i) Leases
Years
2-10
5
2-10
2-10
2-5
The Group assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control
the use of an identified asset for a period of time in exchange for consideration.
Group as a lessee
The Group applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-
value assets. The Group recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the
underlying assets.
2023 ANNUAL REPORT AVA GROUP 44 | AVA GROUP ANNUAL REPORT 2023
Notes to the Financial
Statements
Right-of-use-assets
The Group recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available
for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any
remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs
incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are
depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets, as follows:
Right-of-use-assets
Office space and IT equipment
Motor vehicles
Years
3-5
3-5
If ownership of the leased asset transfers to the Group at the end of the lease term or the cost reflects the exercise of a purchase option,
depreciation is calculated using the estimated useful life of the asset.
The right-of-use assets are also subject to impairment. Refer to the accounting policies in section Impairment of non- financial assets.
LEASE LIABILITIES
At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease payments to
be made over the lease term. The lease payments include fixed payments (including in- substance fixed payments) less any lease
incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value
guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Group
and payments of penalties for terminating the lease, if the lease term reflects the Group exercising the option to terminate. Variable
lease payments that do not depend on an index or a rate are recognised as expenses (unless they are incurred to produce inventories)
in the period in which the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Group uses the lessee’s incremental borrowing rate at the lease commencement
date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease
liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount
of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to
future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of
an option to purchase the underlying asset.
The Group’s lease liabilities are included in Lease liabilities in the Statement of financial position (see Note 15).
Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition exemption to its short-term leases (i.e., those leases that have a lease term of
12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets
recognition exemption to leases that are considered to be low value. Lease payments on short- term leases and leases of low- value
assets are recognised as expense on a straight-line basis over the lease term.
j) Intangibles
Trademarks and Licences
Trademarks and Licences are recognised at cost of acquisition. Trademarks and Licences have a finite life and are amortised on a
systematic basis, matched to the future economic benefits over the life of the asset, less any impairment losses.
| 45
Research and Development
Expenditure on research activities is recognised as an expense when incurred;
Development expenditures on an individual project are recognised as an intangible asset when the Group can demonstrate:
- The technical feasibility of completing the intangible asset so that the asset will be available for use or sale
- Its intention to complete and its ability and intention to use or sell the asset
- How the asset will generate future economic benefits
- The availability of resources to complete the asset
- The ability to measure reliably the expenditure during development
Capitalised development expenditure is stated at cost less accumulated amortisation and accumulated impairment losses.
Amortisation is calculated using a straight-line method to allocate the cost of the intangible assets over their estimated useful lives.
Amortisation commences when the intangible asset is available for use between 5 and 10 years depending on the product type. During
the period of development, the asset is tested for impairment annually.
Patents
Patents are initially recognised at the cost on acquisition. Patents have a finite life and are amortised on a systematic basis matched to
the future economic benefits over the life of the asset, less any impairment losses. Amortisation of the patents commences on approval
of the patent and is matched to the timing of economic benefits flowing to the Company from the application of the technology.
Patents are reviewed for impairment at the end of the financial year and more frequently when an indication of impairment exists. Any
impairment charge is recorded separately. Patents are amortised over a period of 3-10 years.
Gains or losses arising from de-recognition of an intangible asset are measured as the difference between the net disposal proceeds and
the carrying amount of the asset and are recognised in the statement of other comprehensive income when the asset is derecognised.
k) Trade and other payables
Trade and other payables are carried at amortised cost and due to their short-term nature they are not discounted. They represent
liabilities for goods and services provided to the Group prior to the end of the financial year that are unpaid and arise when the Group
becomes obliged to make future payments in respect of the purchase of these goods and services. The amounts are unsecured and are
usually paid within terms negotiated with suppliers.
l) Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of
another entity.
2023 ANNUAL REPORT AVA GROUP 46 | AVA GROUP ANNUAL REPORT 2023
Notes to the Financial
Statements
FINANCIAL ASSETS
Initial Recognition and Measurement
Financial assets are classified, at initial recognition, as measured at amortised cost, fair value through other comprehensive income
(OCI), and fair value through profit or loss.
The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow characteristics and
the Group’s business model for managing, the Group initially measures a financial asset at its fair value plus, in the case of a financial
asset not at fair value through profit or loss, transaction costs. Trade receivables that do not contain a significant financing component
or for which the Group has applied the practical expedient are measured at the transaction price determined under AASB 15. Refer to
significant accounting policies in section 1.4 (a) Revenue.
In order for a financial asset to be classified and measured at amortised cost or fair value through OCI, it needs to give rise to cash flows
that are ‘solely payments of principal and interest (SPPI)’ on the principal amount outstanding. This assessment is referred to as the
SPPI test and is performed at an instrument level.
The Group’s business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows.
The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or
both.
Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the
market place (regular way trades) are recognised on the trade date, i.e., the date that the Group commits to purchase or sell the asset.
Subsequent Measurement
For purposes of subsequent measurement, financial assets are classified in four categories:
› Financial assets at amortised cost (debt instruments)
› Financial assets at fair value through OCI with recycling of cumulative gains and losses (debt instruments)
› Financial assets designated at fair value through OCI with no recycling of cumulative gains and losses upon derecognition (equity
instruments)
› Financial assets at fair value through profit or loss. The Group only holds financial assets at amortised cost.
Financial Assets at Amortised Cost (Debt Instruments)
This category is the most relevant to the Group. The Group measures financial assets at amortised cost if both of the following
conditions are met:
› The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash
flows; and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal
and interest on the principal amount outstanding.
› Financial assets at amortised cost are subsequently measured using the effective interest rate (EIR) method and are subject to
impairment. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired.
› The Group’s financial assets at amortised cost includes cash and cash equivalents, and trade receivables.
| 47
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised
(i.e. removed from the Group’s consolidated statement of financial position) when:
- The rights to receive cash flows from the asset have expired; or
-
The Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash
flows in full without material delay to a third party under a ‘pass-through’ arrangement and either (a) the Group has transferred
substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks
and rewards of the asset, but has transferred control of the asset.
When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it
evaluates if, and to what extent, it has retained the risks and rewards of ownership. When it has neither transferred nor retained
substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Group continues to recognise the
transferred asset to the extent of its continuing involvement.
In that case, the Group also recognises an associated liability. The transferred asset and the associated liability are measured on a basis
that reflects the rights and obligations that the Group has retained.
Impairment of financial assets
The Group recognises an allowance for expected credit losses (ECLs) for all debt instruments not held at fair value through profit or
loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows
that the Group expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will
include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.
For trade receivables and contract assets, the Group applies a simplified approach in calculating ECLs. Therefore, the Group does not
track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The Group has
established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the
debtors and the economic environment.
The Group considers a financial asset in default when contractual payments are 90 days past due. However, in certain cases, the Group
may also consider a financial asset to be in default when internal or external information indicates that the Group is unlikely to receive
the outstanding contractual amounts in full before taking into account any credit enhancements held by the Group. A financial asset is
written off when there is no reasonable expectation of recovering the contractual cash flows.
FINANCIAL LIABILITIES
Initial Recognition and Measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings or
payables.
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly
attributable transaction costs.
The Group’s financial liabilities include trade and other payables, lease liabilities, and loans and borrowings.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing
financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are
substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a
new liability. The difference in the respective carrying amounts is recognised in the profit or loss.
Offsetting of Financial Instruments
Financial assets and financial liabilities are offset and the net amount is reported in the consolidated statement of financial position if
there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise
the assets and settle the liabilities simultaneously.
2023 ANNUAL REPORT AVA GROUP 48 | AVA GROUP ANNUAL REPORT 2023
Notes to the Financial
Statements
m) Borrowing costs
Borrowing costs can include interest expense calculated using the effective interest method, finance charges in respect of lease
liabilities, and exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to
interest costs. Borrowing costs are expensed as incurred, except for borrowing costs incurred as part of the cost of the construction of a
qualifying asset which are capitalised until the asset is ready for its intended use or sale.
n) Provisions and employee benefits
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that
an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of
the amount of the obligation.
When the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is
recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented
in the statement of comprehensive income net of any reimbursement.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects the risks specific
to the liability.
Warranty Provisions
Provision is made for the estimated liability on all products and services still under warranty at balance date. This provision is estimated
having regard to prior service warranty experience. In calculating the liability at balance date, amounts were not discounted to their
present value as the effect of discounting was not material. In determining the level of provision required for warranties, the Group has
made judgements in respect of the expected performance and the costs of fulfilling the warranty. Historical experience and current
knowledge have been used in determining this provision. The initial estimate of warranty-related costs is revised annually.
Employee Entitlements
i.
Wages, salaries, annual leave, long service leave and personal leave expected to be settled within 12 months
Liabilities for wages and salaries, including non-monetary benefits, annual leave and any other employee benefits expected to be settled
within 12 months of the reporting date are recognised in respect of employees’ services up to the reporting date. They are measured at
the amounts expected to be paid when the liabilities are settled. Expenses for non- accumulating personal leave are recognised when
the leave is taken and are measured at the rates paid or payable.
ii. Long service leave and annual leave expected to be settled after 12 months.
The liability for long service leave and annual leave expected to be settled after 12 months is recognised and measured as the present
value of expected future payments to be made in respect of services provided by employees up to the reporting date using the
projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures, and
periods of service. Expected future payments are discounted using market yields at the reporting date on high quality corporate bonds
with terms to maturity and currencies that match, as closely as possible, the estimated future cash outflows.
iii. Short-term Incentive payments (STI’s)
The Consolidated Entity recognises a provision when an STI is payable, to the extent that it is probable, in accordance with the
employee’s contract of employment, and the amount can be reliably measured.
iv. Long-term Incentive payments (LTI’s)
The Consolidated Entity recognises a provision when an LTI is payable, to the extent that it is probable, in accordance with the
employee’s contract of employment, and the amount can be reliably measured.
| 49
v. Pensions and other post-employment benefits
The Company contributes to defined contribution superannuation/pension funds on behalf of employees in respect of employee
services rendered during the year. These superannuation/pension contributions are recognised as an expense in the same period when
the employee services are received. Generally, contributions are made at applicable local jurisdiction statutory rates where relevant.
vi. Termination benefits
Termination benefits are payable when employment of an employee or group of employees is terminated before the normal retirement
date, or when the entity provides termination benefits as a result of an offer made and accepted in order to encourage voluntary
redundancy.
The Consolidated Entity recognises a provision for termination benefits when the entity can no longer withdraw the offer of those
benefits, or if earlier, when the termination benefits are included in a formal restructuring plan that has been announced to those
affected by it.
o) Share-based payment transactions
Equity settled transactions
The Group provides benefits to its employees (including senior executives) in the form of share-based payments, whereby employees
render services in exchange for share options or performance rights (equity-settled transactions).
The cost of these equity-settled transactions with employees is measured by reference to the fair value of the equity instruments at the
date at which they are granted. The fair value is determined by using a Black-Scholes or Binomial valuation model.
In valuing equity-settled transactions, no account is taken of any vesting conditions, other than conditions linked to the price of the
shares of Ava Risk Group (market conditions) if applicable.
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the
performance and/or service conditions are fulfilled (the vesting period), ending on the date on which the relevant employees become
fully entitled to the award (the vesting date).
At each subsequent reporting date until vesting, the cumulative charge to the statement of comprehensive income is the product of:
(i) the grant date fair value of the award;
(ii) the current best estimate of the number of awards that will vest, taking into account such factors as the likelihood of employee
turnover during the vesting period and the likelihood of non-market performance conditions being met; and
(iii)
the expired portion of the vesting period.
The charge to the statement of comprehensive income for the period is the cumulative amount as calculated above less the amounts
already charged in previous periods. There is a corresponding entry to equity.
Until an award has vested, any amounts recorded are contingent and will be adjusted if more or fewer awards vest than were originally
anticipated to do so. Any award subject to a market condition is considered to vest irrespective of whether or not that market condition
is fulfilled, provided that all other conditions are satisfied. No expense is recognised for awards that do not ultimately vest, except for
awards where vesting is only conditional upon a market condition.
If the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been modified. An
additional expense is recognised for any modification that increases the total fair value of the share- based payment arrangement, or is
otherwise beneficial to the employee, as measured at the date of modification.
If an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for
the award is recognised immediately. However, if a new award is substituted for the cancelled award and designated as a replacement
award on the date that it is granted, the cancelled and new award are treated as if they were a modification of the original award, as
described in the previous paragraph.
p) Contributed equity
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity
as a deduction, net of tax, from the proceeds.
2023 ANNUAL REPORT AVA GROUP 50 | AVA GROUP ANNUAL REPORT 2023
Notes to the Financial
Statements
q) Earnings per share
Basic earnings per share is calculated by dividing:
-
the profit / loss attributable to owners of the Company, excluding any costs of servicing equity other than ordinary shares,
- by the weighted average number of ordinary shares outstanding during the financial year.
The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of diluted earnings per
share.
r) Parent entity financial information
The financial information for the parent entity, Ava Risk Group Limited, has been prepared on the same basis as the consolidated
financial statements, except Investments in subsidiaries. They are accounted for at cost less impairment charge in the financial
statements of Ava Risk Group Limited. Dividends received are recognised in the parent entity’s profit or loss.
s) Comparatives
Where necessary, comparative information has been reclassified and repositioned for consistency with current year disclosures.
1.5. Significant accounting judgements, estimates and assumptions
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of
future events that may have a material impact on the entity and that are believed to be reasonable under the circumstances.
a) Critical accounting estimates and assumptions
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom
equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next financial year are discussed below.
i) Impairment of tangible and intangible assets
The Group determines whether tangible and intangible assets are impaired at least on an annual basis by evaluating whether indicators
of impairment exist in relation to the continued use of the asset by the Consolidated Entity. Goodwill is tested for impairment on at
least an annual basis. Impairment triggers include declining product or manufacturing performance, technology changes, adverse
changes in the economic or political environment or future product expectations.
If an indicator of impairment exists, the Group estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher
of an asset’s fair value less costs of disposal and its value in use (“VIU”). The recoverable amount is determined for an individual asset,
unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets.
When the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its
recoverable amount.
Refer to note 14 for further details.
ii) Allowance for expected credit losses
The Group considers customers’ ability to pay including timing and the amount of payment. In considering ability to pay consideration
is given to macro-economic, and industry specific conditions, as well as any information known about specific customer risks and
judgement is exercised.
| 51
iii) Share-based payment transactions
The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments
at the date at which they are granted. The fair value is determined using a Black-Scholes or binomial valuation model, with the
assumptions detailed in Note 19.
iv) Capitalisation of Development Costs
Judgement is required using the criteria outlined in note 1.4(j), where expenditure meets the definition of development.
The Group capitalises costs for development projects. Initial capitalisation of costs is based on management’s judgement that
technological and economic feasibility is confirmed when the development project has reached a defined milestone according to an
established project management model. In determining the amounts to be capitalised, management makes assumptions regarding the
expected future cash generation of the project and the expected period of benefits.
Capitalised development costs have a finite life and are amortised on a systematic basis over the expected life of the asset and cease at
the earlier of the date that the asset is classified as held for sale and the date that the asset is derecognised. Costs capitalised include
direct payroll and payroll related costs of employees’ time spent on the development projects.
v) Leased assets and liabilities
The Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to
extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably
certain not to be exercised.
The Group has some lease contracts that include extension and termination options. The Group applies judgement in evaluating
whether it is reasonably certain whether or not to exercise the option to renew or terminate the lease. That is, it considers all relevant
factors that create an economic incentive for it to exercise either the renewal or termination.
After the commencement date, the Group reassesses the lease term if there is a significant event or change in circumstances that is
within its control and affects its ability to exercise or not to exercise the option to renew or to terminate (e.g. construction of significant
leasehold improvements or significant customisation to the leased asset).
The Group included the renewal period as part of the lease term for some office leases with shorter non-cancellable period (i.e., three
to five years). Furthermore, the periods covered by termination options are included as part of the lease term only when they are
reasonably certain to be exercised.
Refer to Note 15 for information on potential future rental payments relating to periods following the exercise date of extension and
termination options that are not included in the lease term.
vi) Leases - Estimating the incremental borrowing rate
The Group cannot readily determine the interest rate implicit in the lease, therefore, it uses its incremental borrowing rate (IBR) to
measure lease liabilities. The IBR is the rate of interest that the lessee would have to pay to borrow over a similar term, and with a
similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment.
The IBR therefore reflects what the lessee ‘would have to pay’, which requires estimation when no observable rates are available (such
as for subsidiaries that do not enter into financing transactions) or when they need to be adjusted to reflect the terms and conditions of
the lease. The Group estimates the IBR using observable inputs (such as market interest rates) when available and is required to make
certain entity-specific estimates (such as the subsidiary’s stand-alone credit rating).
vii) Inventory - estimating impairment of inventory
The provision for impairment of inventories assessment requires a degree of estimation and judgement. The level of the provision is
assessed by taking into account recent sales, the age of inventories, obsolete, slow moving inventories and other factors that affect
inventory obsolescence.
viii) Taxes
Deferred tax assets are recognised for unused tax losses to the extent that it is probable that taxable profit will be available against
which the losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that
can be recognised, based upon the likely timing and the level of future taxable profits, together with future tax planning strategies.
2023 ANNUAL REPORT AVA GROUP 52 | AVA GROUP ANNUAL REPORT 2023
Notes to the Financial
Statements
ix) Business Combinations
As discussed in note 1.3, business combinations are initially accounted for on a provisional basis. The fair value of assets acquired,
liabilities and contingent liabilities assumed are initially estimated by the consolidated entity taking into consideration all available
information at the reporting date. Fair value adjustments on the finalisation of the business combination accounting is retrospective,
where applicable, to the period the combination occurred and may have an impact on the assets and liabilities, depreciation and
amortisation reported.
1.6 New and amended standards
The Group is required to change some its accounting policies as the result of new or revised accounting standards which became
effective for the annual reporting period commencing 1 July 2022.
AASB 2020-3 Amendments to AASs – Annual Improvements 2018–2020 and Other Amendments
• Amendments to AASB 116, Property, Plant and Equipment: Proceeds before Intended Use
• Amendments to AASB 137, Onerous Contracts – Cost of Fulfilling a Contract
These amendments had no impact on the year-end consolidated financial statements of the Group as:
› The group, prior to the application of the amendments, did not have any onerous contracts; and
› There were no property, plant and equipment made available for use on or after the beginning of the earliest period presented.
The following forthcoming standards and amendments have not been early adopted. The Group, however does not expect to have a
material impact on the entity in the current or future reporting periods, or on foreseeable future transactions.
AASB 2020-1 Amendments to AASs – Classification of Liabilities as Current or Non- current
AASB 2021-2 Amendments to AASs – Disclosure of Accounting Policies and Definition of Accounting Estimates
• Amendments to AASB 7, AASB 101, AASB 134 and AASB Practice Statement 2
• Amendments to AASB 108
AASB 2021-5 Amendments to AASs – Deferred Tax related to Assets and Liabilities arising from a Single Transaction
AASB 2022-1 Amendments to AASs – Initial Application of AASB 17 and AASB 9 – Comparative Information
AASB 2022-6 Amendments to AASs – Non-current Liabilities with Covenants
AASB 2023-1 Amendments to AASs – Amendments to AASB 107 and AASB 7 – Disclosures of Supplier Finance Arrangements
AASB 2023-3 Amendments to Australian Accounting Standards – Disclosure of Non- current Liabilities with Covenants: Tier 2
| 53
2. Business Combination
Acquisition of GJD Manufacturing Limited (GJD)
On 2 August 2022, the Group acquired 100% of the voting shares of MTD Holdings Limited, a non-listed company which owns 100%
shares of GJD, based in the United Kingdom and specialising in security equipment design and manufacturing of insecurity space
detection and intruder detection systems. Its products include professional grade external detector equipment as well as infrared and
white-light LED illuminators and Automatic Number Plate Recognition cameras.
As at 2 August 2022
ASSETS
Cash and cash equivalents
Receivables
Inventories
Other current assets
Plant and equipment
Right of use assets
Total Assets
Liabilities
Payables
Borrowings
Provisions
Deferred Tax Liabilities
Lease liabilities
Total Liabilities
Total identifiable net assets at fair value
Goodwill recognised on acquisition
Purchase consideration transferred
$'000
19
1,629
2,065
462
598
254
5,027
(602)
(2,949)
(28)
(156)
(254)
(3,989)
1,038
6,499
7,537
The goodwill of $6,499,000 comprises the value of expected synergies arising from the acquisition. Goodwill is allocated entirely to the
Illuminate segment.
From the date of acquisition, GJD Limited contributed $6,291,000 of revenue and $450,000 loss before tax from continuing operations
of the Group. If the combination had taken place at the beginning of the year, revenue from continuing operations would have been
$7,035,000 and loss before tax from continuing operations for the Group would have been $57,000.
Purchase consideration
Shares issues, at fair value
Cash paid
Total consideration
$'000
3,041
4,496
7,537
The Company issued 11,807,894 ordinary shares as consideration for the 100% interest in MTD Holdings Limited. The fair value of the
shares is calculated with reference to the quoted price of the shares of the Company at the date of acquisition, which was $0.258 per
share. The fair value of the consideration given was therefore $3,041,000.
2023 ANNUAL REPORT AVA GROUP
54 | AVA GROUP ANNUAL REPORT 2023
Notes to the Financial
Statements
Borrowing facilities acquired
The Group acquired borrowings facilities. These facilities include fixed-term loan repayments and local and foreign-denominated
working capital facilities. The fixed-term loans have a maturity between 2 to 5 years, and the working capital facilities are payable on
demand.
Analysis of cashflows on acquisition
Cash paid
Net overdraft acquired with the subsidiary (included in cash flows from operating activities)
Net cash flow from acquisition
3. Segment information
(a) Description of segments
$'000
(4,496)
(1,026)
(5,522)
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The
chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments has
been identified as the Board of Directors of Ava Risk Group Limited.
The Group’s segments were based on three separately identifiable products.
The Group operates in Detect, Access, and Illuminate, which are its reportable segments. These divisions offer different products and
services and are managed separately because they require different technology and marketing strategies. The Illuminate segment was
acquired on 2 August 2022, refer to Note 2 Business Combination. The International Valuable Logistics (IVL) was sold in October 2021
and it is reported as a Discontinued Operations in the prior period.
The following summary describes the operations of each reportable segment:
Detect
Access
Manufactures and markets ‘smart’ fibre optic sensing systems for security and condition monitoring for a range of
applications including perimeters, pipelines, conveyors, power cables and data networks.
Specialises in the development, manufacture and supply of high security biometric readers, security access control and
electronic locking products.
Illuminate
Specialises in the development and manufacture of illuminators, ANPR cameras and perimeter detectors.
| 55
Access
Illuminate
Eliminations
Consolidated
$’000
$’000
$’000
$’000
Detect
$’000
18,457
(28)
10
2
3,853
6,291
117
19
5
-
-
-
18,441
3,994
6,291
1,603
(1,135)
(11)
2
(30)
429
(242)
(607)
(3)
5
(204)
(1,051)
3
(326)
(181)
-
25
(479)
-
(89)
-
-
(89)
47
-
-
-
-
47
28,601
-
29
7
28,637
1,411
(2,068)
(195)
7
(209)
(1,054)
Detect
Access
Eliminations
Total
Continuing
Operations
Discontinued
operations
(IVL)
Eliminations
Consolidated
$’000
$’000
$’000
$’000
$’000
$’000
$’000
External customers
14,105
215
323
1
4,516
150
16
-
-
18,621
11,075
(365)
-
-
-
339
1
75
-
-
-
(75)
-
-
29,696
-
339
1
14,644
4,682
(365)
18,961
11,150
(75)
30,036
360
(961)
1
(31)
(90)
(721)
1,004
(728)
-
(3)
(214)
59
-
-
-
-
-
-
1,364
(1,689)
1
(34)
(304)
(662)
1,940
(29)
-
7
(38)
1,880
-
-
-
-
-
-
3,304
(1,718)
1
(27)
(342)
1,218
1 Segment operating profit (loss) excludes the gain on sale of discontinued operation amounting to $31,914,000. Refer to note 27.
(b) Reportable Segments
30 June 2023
Revenue and other
income
External customers
Intersegment revenue
Other income
Interest Income
Segment revenue and
other income
EBITDA
Depreciation and
amortisation
Finance costs
Interest Income
Income tax
Segment operating
profit (loss)
30 June 2022
Revenue and other
income
Intersegment revenue
Other income
Interest Income
Segment revenue and
other income
EBITDA
Depreciation and
amortisation
Interest Income
Finance costs
Income tax
Segment operating
profit/(loss)1
2023 ANNUAL REPORT AVA GROUP
56 | AVA GROUP ANNUAL REPORT 2023
Notes to the Financial
Statements
c) Geographic information
Revenue
Australia
APAC (excl Australia)
Europe
India
MENA
United States of America
Rest of world
Total external revenue by region
d) Non-current operating assets
Australia
United Kingdom
Rest of world
Total non-current assets by region
30 June 2023
Total
Continuing
$’000
3,083
3,066
12,532
210
667
5,932
3,111
28,601
Continuing
Discontinued
$’000
$’000
3,615
2,013
3,986
2,671
778
3,277
2,281
18,621
19
-
8,696
-
237
961
1,162
11,075
30 June 2022
Total
$’000
3,634
2,013
12,682
2,671
1,015
4,238
3,443
29,696
30 June 2023
30 June 2022
$’000
6,590
7,698
673
14,961
$’000
6,106
-
588
6,694
Non-current assets for this purpose consist of property, plant and equipment, right-of-use assets, and intangible assets.
e) Reconciliation of non-current assets
Non-current operating assets by region
Deferred tax assets
Total non-current assets
30 June 2023
30 June 2022
$’000
14,961
75
15,036
$’000
6,694
96
6,790
4. Revenue and other income
a) Revenue from contracts with customers
Revenue from sales of goods
Revenue from provision of services
Total revenue from contracts with customers – continuing operations
Revenue from provision of services - discontinued operations (note 27)
| 57
Consolidated
2023
$’000
26,132
2,469
28,601
-
2022
$’000
17,502
1,119
18,621
11,075
Total revenue from contracts with customers
28,601
29,696
(b) Other income
Interest
Other income
Total other income - continuing operations
Total other income
Total Revenues and other income
(c) Disaggregation of revenue
Timing of revenue recognition
Goods and Services transferred at a point in time
Services transferred over time
Total revenue form contracts with customers-continuing operations
Services transferred over time - Discontinued operations
Total revenue from contracts with customers
(d) Performance obligations
Consolidated
2023
$’000
29
7
36
36
2022
$’000
-
340
340
340
28,637
30,036
26,132
2,469
28,601
-
28,601
17,502
1,119
18,621
11,075
29,696
The Group hold contract liabilities in relation to services including extended warranty, support, commissioning and training which have
been invoiced in advance with the services yet to be provided. Refer to note 17.
2023 ANNUAL REPORT AVA GROUP 58 | AVA GROUP ANNUAL REPORT 2023
Notes to the Financial
Statements
5. Income tax and deferred tax
(a) Components of tax expense/(benefit):
Current tax
Deferred tax
Under provision in prior year
(b) Prima facie tax payable
The prima facie tax payable on profit/(loss) before income tax is reconciled to the income tax expense/
(benefit) as follows:
Accounting (loss) profit before tax arising from Continuing Operations
Profit before tax from Discontinued Operation
At the Group’s statutory income tax rate of 25% (2022: 30%)
Difference in tax rates in foreign subsidiaries
Tax effect of amounts which are not deductible in calculating taxable income
Non-assessable income
Recognition of previously unbooked temporary differences
Unbooked tax losses
Adjustments in respect of current income tax of previous years
Utilisation of carried forward tax losses / unbooked tax losses
Other
Income tax expense
Income tax expense reported in the statement of profit or loss
Income tax attributable to a discontinued operation
Income tax expense
Consolidated
2023
$’000
47
37
126
210
(844)
-
(844)
(211)
29
231
-
-
147
126
(303)
191
210
210
-
210
2022
$’000
284
(96)
154
342
(358)
33,832
33,474
10,042
(681)
106
(9,574)
(96)
521
154
(157)
27
342
304
38
342
(c) Deferred tax
Deferred tax relates to the following:
Losses available for offsetting against future taxable income
Accelerated depreciation for tax purposes
Temporary differences
Net Deferred tax (liabilities)/assets
| 59
2022
$’000
-
-
96
96
2023
$’000
15
(161)
75
(71)
Management assessed deferred tax assets and liabilities for the reporting period 30 June 2023 and their recoverability based on the
forecasted taxable profits. Tax losses in Australia can be carried forward indefinitely subject to the satisfaction of either the continuity of
ownership test or the alternative business continuity test. Management deemed it appropriate not to recognise any additional deferred
tax assets due to uncertainty on whether those assets would be utilised against future profits generated in Australia and in foreign
jurisdictions. Management will continue to assess this position each reporting period.
The Group has unutilised tax losses that arose in Australia of $8,743,000 (2022: $10,280,000). In addition, the Group has tax losses
totalling $9,398,000 (2022: $9,455,000) in respect of foreign subsidiaries. The Group is currently assessing the status of carried
forward losses with respect of its foreign subsidiaries.
6. Cash and short-term deposits
Cash at banks and on hand
Short-term deposits
Total cash and short-term deposits
Consolidated
2023
$’000
5,462
55
5,517
2022
$’000
15,226
-
15,226
Cash at banks earns interest at floating rates based on daily bank deposit rates. Short-term deposits are made for varying periods of
between one day and three months, depending on the immediate cash requirements of the Group, and earn interest at the respective
short-term deposit rates.
For the purpose of the statement of cash flows, cash and cash equivalents comprise the following:
Cash at banks and on hand
Short-term deposits
Bank overdrafts
Cash and cash equivalents
Bank overdrafts
5,462
55
5,517
(1,630)
3,887
15,226
-
15,226
-
15,226
Bank overdrafts relate to existing banking facilities that the acquired company, GJD uses for working capital. At 30 June 2023, the
Group had available $1,037,000 of undrawn committed facilities (2022: nil).
Cash balance held in Trust
The cash balance at 30 June 2023 includes an amount of $264,000 (2022: $354,000) which is held by the Share Registry in trust for
outstanding dividend payments (refer to note 21).
2023 ANNUAL REPORT AVA GROUP 60 | AVA GROUP ANNUAL REPORT 2023
Notes to the Financial
Statements
7. Contributed equity
(a) Ordinary shares
Ordinary share capital, issued and fully paid
(b) Movement in ordinary shares on issue
At 1 July 2022
Share issue:
On exercise of Performance Share Rights (note 19)
On acquisition of MTD Holdings Limited (note 2)
Share issue costs
At 30 June 2023
At 1 July 2021
Share buy-back
Share issue:
On exercise of Share options
On exercise of Performance Share Rights (note 19)
Capital return to shareholders
Share issue costs
At 30 June 2022
Options over ordinary shares
Consolidated
2023
$’000
53,831
53,831
2022
$’000
50,793
50,793
Number of shares
$’000
242,963,185
50,793
643,555
11,807,894
-
255,414,634
241,629,402
(2,950,000)
3,250,000
1,033,783
-
-
242,963,185
-
3,041
(3)
53,831
59,062
(1,329)
638
(7,566)
(12)
50,793
During the year ended 30 June 2022, 3,250,000 options were exercised at an average price of $0.20. There were no outstanding Share
options at 30 June 2022, nor 30 June 2023.
Terms and conditions of contributed equity
Ordinary shares have the right to receive dividends as declared and, in the event of winding up the Company, to participate in the
proceeds from the sale of all surplus assets in proportion to the number of and amounts paid up on shares held.
Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of the Company.
8. Reconcliation of cash and cash equivalents
Cash at bank and on hand (net of overdrafts)
(a) Reconciliation to Net Cash Flow from Operations
(Loss) Profit for the year after tax
Adjustment for non-cash income and expense items:
Depreciation and amortisation
Lease amortisation
Share-Based payments (equity settled)
Unrealised foreign exchange
Bad debts written off and provision for impairment of receivable
Impairment on inventory
Loss on disposal of fixed asset
Gain on Discontinued operations recognised in the income statement
Income tax accrued
Other
Changes in assets and liabilities
(Increase)/decrease in assets:
Trade and other receivables
Other assets
Inventories
Increase/(decrease) in liabilities:
Trade and other payables
Provisions
Net cash (used in) from operating activities
(b) Non-cash financing and investing activities
Share-based payments
| 61
Consolidated
2023
$’000
3,887
2022
$’000
15,226
Note
6
(1,054)
33,132
1,759
309
301
158
(24)
84
17
-
209
(142)
(1,456)
(349)
(2,143)
249
(100)
(2,182)
1,507
211
352
(132)
82
111
-
(32,846)
135
175
1,021
94
(130)
(1,222)
(5)
2,485
301
352
The Group’s exposure to interest rate risk is discussed in Note 23. The maximum exposure to credit risk at the end of the reporting
period is the carrying amount of each class of cash and cash equivalents and receivables mentioned above.
2023 ANNUAL REPORT AVA GROUP
62 | AVA GROUP ANNUAL REPORT 2023
Notes to the Financial
Statements
9. Trade and other receivables
Trade receivables - current (gross)
Provision for expected credit loss (a)
Trade receivables (net)
Security deposits and bonds
Other receivables (c)
Carrying amount of trade and other receivables
Movements in the expected credit loss provision were as follows:
At 1 July
Discontinued operations
Charge (reversal) for the year
Amounts written off
At 30 June
(a) Provision for impairment
Consolidated
2023
$’000
8,292
(159)
8,133
24
231
8,388
185
-
(24)
(2)
159
2022
$’000
4,762
(185)
4,577
68
94
4,739
187
(44)
64
(22)
185
In line with AASB 9 Financial Instruments, an expected credit loss assessment was performed as at 30 June 2023.
(b) Past due but not considered impaired
As at 30 June 2023, trade receivables past due but not considered impaired are: $3,771,000 (2022: $491,000). Contract assets are
unbilled receivables for services that have been delivered and are not past due.
Not past due
Past due 1 – 30 days
Past due 31-60 days
Past due 61-90 days
Past due more than 91 days
(c) Other receivables
Gross
2023
$’000
4,362
2,052
204
1,249
425
8,292
Impairment
2023
$’000
-
-
-
-
(159)
(159)
Gross
2022
$’000
4,086
392
73
11
200
4,762
Impairment
2022
$’000
-
-
-
-
(185)
(185)
These amounts related primarily to other indirect tax refunds due from various international tax jurisdictions and other sundry debtors.
10. Inventories
Raw materials and stores (at cost)
Work in progress (at cost)
Finished goods held for sale (at lower of cost and net realisable value)
Spares (at cost)
Total Inventories
| 63
Consolidated
2023
$’000
4,415
1,494
1,508
47
7,464
2022
$’000
1,597
737
877
45
3,256
During financial year ended 30 June 2023 $69,000 (2022: $86,000) was recognised as an impairment for inventories carried at net
realisable value. This is recognised in cost of raw materials and consumables used.
11. Prepayments
Current
Prepayments
Total Prepayments
Prepayments are not interest bearing.
Consolidated
2023
$’000
670
670
2022
$’000
400
400
2023 ANNUAL REPORT AVA GROUP 64 | AVA GROUP ANNUAL REPORT 2023
Notes to the Financial
Statements
12. Plant and equipment
Consolidated
$’000
$’000
$’000
$’000
$’000
$’000
Computer
equipment
Motor
vehicles
Plant and
equipment
Office
furniture and
equipment
Demon-
stration
equipment
Total
Year Ended 30 June 2023
Carrying amount at beginning of year
Additions
Disposals
Depreciation charge for the year
Additions through business combinations
(note 2)
Exchange adjustment
Carrying amount at end of year
At 30 June 2023
Cost
Accumulated depreciation and impairment
Net carrying amount
Year Ended 30 June 2022
Carrying amount at beginning of year
Additions
Disposals
Depreciation expense for the year1
Discontinued operations
Exchange adjustment
Carrying amount at end of year
At 30 June 2022
Cost
Accumulated depreciation and impairment
Net carrying amount
260
219
-
(259)
304
69
593
1,610
(1,017)
593
98
235
(6)
(68)
(5)
6
260
1,087
(827)
260
-
48
-
(6)
-
-
42
90
(48)
42
-
-
-
-
-
-
-
104
146
-
(179)
256
29
356
1,612
(1,256)
356
120
30
-
(48)
-
2
104
42
(42)
-
1,210
(1,106)
104
42
25
-
(28)
38
4
81
637
(556)
81
46
11
-
85
4
-
(48)
-
1
42
491
442
-
(520)
598
103
1,114
2,060
6,009
(2,018)
(4,895)
42
1,114
156
-
-
420
276
(6)
(20)
(63)
(199)
(1)
6
42
571
(529)
42
-
(8)
85
(6)
6
491
2,056
(1,971)
85
4,966
(4,475)
491
1 Depreciation expense for the year includes expense classified as Discontinued operation in the income statement.
| 65
13. Intangible Assets
(a) Reconciliation of carrying amounts
Goodwill
Trademarks
Develop-
ment costs
Patents
Total
Acquired
customer
lists /
contracts
Consolidated
$’000
$’000
$’000
$’000
$’000
$’000
Year ended 30 June 2023
Carrying amount at beginning of year
Additions
Disposals
Amortisation1
Additions through business combinations
(note 2)
Exchange adjustment
Carrying amount at end of year
At 30 June 2023
Cost (gross carrying amount)
Accumulated amortisation
Accumulated impairment charges
Net carrying amount
702
-
-
-
6,499
416
7,617
7,617
-
-
7,617
Year ended 30 June 2022
Carrying amount at beginning of year
5,018
Additions
Amortisation1
Discontinued operations
Exchange adjustment
Carrying amount at end of year
At 30 June 2022
Cost (gross carrying amount)
Accumulated amortisation
Accumulated impairment charges
Net carrying amount
-
-
(4,278)
(38)
702
702
-
-
702
332
-
(17)
(53)
-
-
4,557
1,949
-
(1,031)
-
9
266
12
-
(58)
-
1
262
5,484
221
10,634
(5,150)
-
5,484
4,359
1,107
(934)
-
25
2,506
(2,138)
(147)
221
317
19
(73)
-
3
4,557
266
861
(599)
-
262
821
-
(70)
(409)
(10)
332
878
(546)
-
332
1 Amortisation for the year includes expense classified as Discontinued operations in the income statement.
97
-
-
(97)
-
-
-
5,954
1,961
(17)
(1,239)
6,499
426
13,584
2,585
24,203
(2,585)
(10,472)
-
-
(147)
13,584
330
-
(231)
-
(2)
97
10,845
1,126
(1,308)
(4,687)
(22)
5,954
8,685
(4,128)
-
4,557
2,494
2,585
15,344
(2,081)
(2,488)
(9,243)
(147)
266
-
97
(147)
5,954
2023 ANNUAL REPORT AVA GROUP
66 | AVA GROUP ANNUAL REPORT 2023
Notes to the Financial
Statements
14. Carrying value of Goodwill
For assets excluding goodwill, an assessment is made each reporting period to determine whether there is an indicator of impairment.
Goodwill Allocation
At 1 July 2022
Additions through business combinations
(Note 2)
Impact of foreign currency
At 30 June 2023
Key assumptions and estimates
Illuminate
-
6,499
416
6,915
Access
702
-
-
702
Total
702
6,499
416
7,617
The recoverable amount of the cash-generating unit is determined based on value-in-use calculations, unless there is evidence to
support a higher fair value less cost of disposal.
The Group has three identifiable CGUs, Detect, Access and Illuminate.
Each CGU was tested for impairment in accordance with the Group’s accounting policies, using a value in use methodology. The
impacts of COVID19 on future cash flows was considered when determining inputs for the value-in-use calculations.
Key Assumptions
Description
Future cash flows
Value-in-use (“VIU”) calculations, inclusive of working capital movements and forecast capital expenditure based on finan-
cial projections approved by the Board for the three years, with detailed management forecasts used in years 4 – 5, then
reverting to a terminal value of 2%.
Discount rate:
A discount rate was applied to cash flow projection assessed to reflect the time value of money and the perceived risk
profile of the stage of the business.
Pre-tax discount rates: 22.6% (2022 - 17.93%)
Post-tax discount rates: 16.98% (2022 - 16.07%)
Revenue growth
Forecast growth in year 1 is based on Board approved budget, and detailed assessed conversion of known revenue opportu-
nities for the business. Years 4 – 5 assume growth is achieved within existing business markets and geographies, along with
expansion of the business into new markets and geographies.
Gross margins
Forecasting consistent gross margins over the life of the model relative to historic gross
Sensitivity analysis
The Directors have made judgements and estimates in respect of impairment testing of goodwill. Should these judgements and
estimates not occur the resulting goodwill or intangibles carrying amount may decrease. The sensitivities are as follows:
The recoverable amounts for the Access and Illuminate CGU’s would be impaired if the key assumptions were to change as follows:
› For Access, an impairment is indicated above a discount rate of 15.5%.
› For Illumination, an impairment is indicated above a discount rate of 15.0%.
If there are any negative changes in future reporting periods in the key assumptions on which the recoverable amount of goodwill is
based, this would result in an impairment charge for the Access and Illumination cash-generating units.
Management believes that other reasonable changes in the key assumptions on which the recoverable amount of the Detect cash-
generating unit is based would not cause the cash-generating unit’s carrying amount to exceed its recoverable amount.
| 67
15. Leases
Group as a lessee
The Group has lease contracts for office space, IT equipment and vehicles used in its operations. Leases of office space and IT
equipment generally have lease terms between 3 and 5 years, while motor vehicles generally have lease terms between 3 and 4 years.
The Group’s obligations under its leases are secured by the lessor’s title to the leased assets. Generally, the Group is restricted from
assigning and subleasing the leased assets. The Group also has certain leases of office space and IT equipment with lease terms
of 12 months or less and leases with low value. The Group applies the ‘short-term lease’ and ‘lease of low-value assets’ recognition
exemptions for these leases.
Consolidated amounts recognised in the statement of
financial position and profit or loss
As at 1 July 2022
Additions
Additions through business combinations (note 2)
Depreciation expense
Exchange adjustments
Interest expense
Payments
As at 30 June 2023
As at 1 July 2021
Additions
Depreciation expense1
Discontinued operations
Exchange adjustments
Interest expense
Payments
As at 30 June 2022
Office Space &
Equipment
$’000
249
-
254
(307)
28
-
-
223
374
120
(207)
(60)
22
-
-
249
The classification of lease liabilities is set out below:
Consolidated
Current
Non-Current
As at 30 June
1 Depreciation expense for the year includes expense classified as Discontinued operation in the income statement.
Right-of-use assets
Motor
Vehicles
$’000
-
41
-
(1)
-
-
-
40
11
-
(4)
(7)
-
-
-
-
Total
$’000
249
41
254
(309)
28
-
-
263
385
120
(211)
(67)
22
-
-
249
2023
$’000
171
118
289
Lease
liabilities
$’000
(284)
(41)
(254)
-
(15)
(20)
325
(289)
(430)
(120)
-
52
(12)
(27)
253
(284)
2022
$’000
131
153
284
2023 ANNUAL REPORT AVA GROUP
68 | AVA GROUP ANNUAL REPORT 2023
Notes to the Financial
Statements
The following are the amounts recognised in profit or loss:
Consolidated
Depreciation expense of right-of-use assets
Interest expense on lease liabilities
Expense relating to short term leases
Total amount recognised in profit and loss
2023
$’000
308
20
62
390
2022
$’000
211
27
91
329
The Group has several lease contracts that include extension and termination options. These options are negotiated by management to
provide flexibility in managing the leased-asset portfolio and align with the Group’s business needs. Management exercises significant
judgement in determining whether these extension and termination options are reasonably certain to be exercised (Refer Note 1.5 (v)).
There are no undiscounted potential future rental payments relating to periods following the exercise date of extension and termination
options that are not included in the lease term (2022 - nil).
16. Trade and other payables
Trade payables, accruals and other payables
Current
Trade payables
Accruals and other payables
Total Trade and Other Payables
Consolidated
2023
$’000
1,499
1,172
2,671
2022
$’000
786
1,468
2,254
Trade, accruals and other payables are non-interest bearing and normally settled on 14 – 60 day terms.
| 69
17. Contract liabilities
Contract liabilities relate to deferred revenue for customers that have been billed in advance but the service has yet to be provided.
The contract liability balance represents performance obligations which have yet to be met and therefore have not been recognised as
revenue during the year.
Contract liabilities
Balance at 1 July
Trade payables
Deferred during year
Recognised as revenue in the year
Balance at 30 June
Due within 1 year
Due after more than 1 year
Balance at 30 June
Consolidated
2023
$’000
497
530
(320)
707
278
429
707
2022
$’000
528
187
(218)
497
225
272
497
Revenue recognised of $320,000 (2022: $218,000) in the year represents performance obligations which have been met during the
financial year in relation to contract liabilities held at year-end.
18. Provisions
Current
Employee entitlements – annual leave
Employee entitlements – long service leave
Provision for warranty claims
Total Current Provisions
Non-current
Employee entitlements – long service leave
Total Non-Current Provisions
Consolidated
2023
$’000
829
404
175
1,408
59
59
2022
$’000
741
393
247
1,381
47
47
2023 ANNUAL REPORT AVA GROUP 70 | AVA GROUP ANNUAL REPORT 2023
Notes to the Financial
Statements
(a) Movements in Warranty provisions
At 1 July
Arising during the year
Provision used during the year
Exchange adjustments
At 30 June
Current
Non-current
At 30 June
(b) Nature and timing of provisions
i. Warranty provision
Consolidated
2023
$’000
247
140
(213)
1
175
175
-
175
2022
$’000
242
49
(43)
(1)
247
247
-
247
Warranties include predominantly provision booked for probable claims by customers for product faults as well as provision for
claimable warranty for other goods and services sold by the Group.
ii. Employee Entitlements
Refer to Note 1.4 (n) for the relevant accounting policy and a discussion of the significant estimations and assumptions applied in
the measurement of long-service leave, which is part of this provision. This provision also includes provision booked for employees
who earn but are yet to use their vacation entitlements. This amount includes on-costs for pension and superannuation, worker’s
compensation insurance and payroll tax.
| 71
19. Share-based payments
The Group continued to offer Employee participation in share-based incentive schemes as part of the remuneration packages for the
employees (EP) and Key Management (KMPs) and the CEO of the Group.
No Share based payments have been issued between balance date and the date of this report.
(a) Expense arising from equity-settled share-based payment transactions
Performance Shares
(b) Performance rights held
Consolidated
2023
$’000
302
2022
$’000
352
During the year ended 30 June 2023, 3,915,841 performance rights were awarded (2022 - 1,837,129). The movements in Performance
Share Rights are noted below:
Financial instruments
Outstanding 1 July
Granted during the year
Forfeited during the year
Exercised during the year
Outstanding 30 June
(i) PSRs Granted
2023
Number
1,946,789
3,915,841
(2,406,200)
(643,554)
2,812,876
2023
WAEP
$nil
$nil
$nil
$nil
$nil
2022
Number
1,765,173
1,837,129
(857,248)
(798,265)
1,946,789
2022
WAEP
$nil
$nil
$nil
$nil
$nil
During the year ended 30 June 2023, the Company granted performance rights as part of remuneration to senior executives and key
employees. The fair value of the performance rights was based on a Black Scholes option pricing model.
Senior Executives and key employees were issued a total of 3,915,841 performance rights (2022 1,837,129). This includes 1,500,000
performance rights awarded to Mal Maginnis that are subject to shareholder approval. The performance rights have a nil exercise price
and are split into two equal tranches with multiple vesting dates. The vesting conditions of the performance rights are based on key
performance metrics and objectives being met.
2023 ANNUAL REPORT AVA GROUP
72 | AVA GROUP ANNUAL REPORT 2023
Notes to the Financial
Statements
(ii) PSRs Forfeited
Non-Executive Directors were issued a total of 600,000 performance rights on 28 October 2021. The fair value of each performance
rights was $0.29. The performance rights had a nil exercise price vesting on 5 October 2022 based on the Company’s Share Price
performance. As at 5 October 2022, however, they failed to vest based on the market condition and the expense was not reversed.
In addition, the key performance metrics and objectives of the Employee and KMP were not met and as a result, 1,806,200 PSRs
relating to FY 23 Grant were forfeited.
The table below provides a description of each of the plans
Plan
Type
Overview
Vesting conditions
Vesting period
Exercise period
Valuation method
Employee Plan (EP)
KMP Plan
CEO Plan
Long-Term incentive.
Long-Term incentive.
Long-Term incentive.
EP are based on personal
objectives for the Financial Year
and vest in two equal tranches.
KMP Plans are based on the
Group performance and personal
objectives.
The CEO Plan is based on Share
price performance over three
tranches.
Achievement of yearly objectives
and service conditions.
Achievement of yearly objectives,
Business performance and service
conditions.
Based on share price hurdles.
In two tranches 2 and 3 years.
In two tranches 2 and 3 years.
In three tranches.
At the end of each tranche.
At the end of each tranche.
At the end of each tranche.
Binomial.
Binomial.
Monte Carlo.
Option and performance rights pricing models
The fair value of the equity-settled share options or performance rights granted is estimated as at the date of grant using a Black-
Scholes model taking into account the terms and conditions upon which the options or performance rights were granted. The fair value
is derived from the Black-Scholes model using the closing share price of Ava Risk Group ordinary shares on grant date, Australian
Government long-term bond interest rates as published by the Reserve Bank of Australia as a proxy for the risk-free interest rate, having
regard for the bond maturity that is most closely aligned to the period of time remaining until the options/performance rights expiry
date, and the option/performance rights exercise prices and quantities as noted above. Historical price volatility was used to estimate
expected price volatility, over the expected life of the options and performance rights.
Plan
Grant date
Fair value
Employee Plan (EP)
KMP Plan
6 September 2022
6 September 2022
$0.23
$0.23
CEO Plan
9 January 2023
$0.125-$0.127
Vesting dates
15 August 2024, 15 August 2025
15 August 2024, 15 August 2025
9 January 2024, 2025, 2026
Share price at Grant date
AVA Share Price Hurdles
Expected volatility
Expected Dividend yield
Risk free Rate
$0.235
n/a
63%
n/a
$0.235
n/a
63%
n/a
3.25%, 3.41%
3.25%, 3.41%
$0.235
$0.282, $0.329, $0.376
65%
1.50%
3.28%
20. Earnings per share
The following reflects the income used in the basic and diluted loss per share computations:
(a) Profit used in calculating earnings per share
For basic and diluted loss per share:
Net loss after tax from continuing operations
Profit after tax from discontinued operations
Total
(b) Weighted average number of shares
| 73
Consolidated
2023
$’000
(1,054)
-
(1,054)
2023
Number
2022
$’000
(662)
33,794
33,132
2022
Number
Weighted average number of ordinary shares used as the denominator in calculating basic earnings per
share
254,959,125
243,062,589
Adjustments for calculation of diluted earnings per share
Dilutive share options / performance rights
3,637,186
3,031,866
Weighted average number of ordinary shares adjusted for the effect of dilution used as the denominator
in calculating diluted earnings per share
258,596,311
246,094,455
(c) i. Earnings per share from continuing operations
Basic loss earnings per share
Diluted loss earnings per share
ii. Earnings per share attributable to the shareholders of AVA Risk Group Limited
Basic (loss) profit per share
Diluted (loss) profit per share
2023
Cents
(0.41)
(0.41)
(0.41)
(0.41)
2022
Cents
(0.27)
(0.27)
13.63
13.46
Basic profit per share amounts are calculated by dividing net profit for the year attributable to ordinary equity holders of the parent by
the weighted average number of ordinary shares outstanding during the year.
Diluted profit per share amounts are calculated by dividing the net profit attributable to ordinary equity holders of the parent by the
weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that
would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.
For the purposes of calculating earnings per share, the effect of 3,637,186 dilutive share has been taken into account for the year ended
30 June 2023 (2022: 3,031,866). The Group’s only potential ordinary shares are shares awards granted to employees and KMP as
described in Note 19 Share-based payments.
2023 ANNUAL REPORT AVA GROUP
74 | AVA GROUP ANNUAL REPORT 2023
Notes to the Financial
Statements
21. Dividends
Special dividend at the rate of 13 cents per share, paid on 10 March 2022
Total dividends declared
As at 1 July
Dividends settled in cash
Amount owed to shareholders
22. Reserves
Share based payment Reserve
Consolidated
2022
$’000
31,586
31,586
-
(31,232)
354
2023
$’000
-
-
354
(101)
253
The share based payment reserve is used to record the value of share-based payments provided to employees and directors as part of
their remuneration and options or performance rights granted as part of other agreements.
Foreign exchange translation reserve
This reserve is used to record the unrealised exchange differences arising on translation of a foreign entity and is not distributable.
Other equity reserve
Other equity represents the difference between the fair value of ordinary shares issued to acquire non- controlling interest and the
initial value of non-controlling interests.
| 75
23. Financial Risk Management
(a) Capital Management
When managing capital, management’s objective is to ensure the Consolidated Entity continues to maintain optimal returns to
shareholders and benefits for other stakeholders. Management also aims to maintain a capital structure that ensures the lowest cost of
capital available to the entity.
The Group’s debt and capital includes ordinary share capital and financial liabilities, supported by financial assets.
Management adjusts the capital structure to take advantage of favourable costs of capital or high returns on assets. As the market is
constantly changing, management may change the amount of dividends to be paid to shareholders, return capital to shareholders, issue
new shares or sell assets to reduce debt.
Management monitor capital through the gearing ratio (net debt / total capital). Net debt is calculated as total borrowings (including
trade and other payables) as shown in the balance sheet less cash and cash equivalents. The gearing ratios based on continuing
operations at 30 June 2023 and 2022 were as follows:
Payables
Borrowings
Lease liabilities
Total borrowings
Less cash and cash equivalents 6
Net borrowings / (cash)
Total equity
Total capital
Gearing ratio
(b) Risk exposure and responses
2023
$’000
2,671
2,541
289
5,501
5,517
(16)
29,254
29,238
0%
Consolidated
2022
$’000
2,254
-
284
2,538
15,226
(12,688)
25,948
13,260
0%
The Group manages its exposure to key financial risks, including interest rate risk in accordance with the Group’s financial risk
management policy. The objective of the policy is to support the delivery of the Group’s financial targets whilst protecting future
financial security.
The main risks arising from the Group’s financial instruments are interest rate risk, currency risk, credit risk, and liquidity risk. The
Group uses different methods to measure and manage different types of risks to which it is exposed. These include monitoring levels
of exposure to interest rate risk and assessments of market forecasts for interest rate. Monitoring levels of exposure to various foreign
currencies and assessments of market forecasts for foreign currency exchange rates. Ageing analyses and monitoring of specific
credit allowances are undertaken to manage credit risk; liquidity risk is monitored through the development of future rolling cash flow
forecasts. The Board reviews and agrees policies for managing each of the risks as summarised below.
Primary responsibility for identification and control of financial risks rests with the Audit & Risk Committee under the authority of the
Board. The board reviews and agrees policies for managing each of the risks identified below, including hedging of foreign currency and
interest rate risk, credit allowances, and future cash flow forecast projections.
2023 ANNUAL REPORT AVA GROUP 76 | AVA GROUP ANNUAL REPORT 2023
Notes to the Financial
Statements
(i) Interest rate risk on interest-bearing loans and borrowings
The Group’s main interest rate risk relates primarily to the Group’s cash and cash equivalents held in interest bearing accounts. At
reporting date, the Group had the following mix of financial assets and liabilities exposed to Australian and United Kingdom interest
rate risk.
Current interest-bearing loans and borrowing
Lease Liabilities
Bank overdrafts
GBP 250,000 loan - White Oak
GBP 350,000 loan - HSBC
GBP 150,000 loan - Funding Circle
Total
Interest rate
Maturity
%
3.5-6.9%
8.50%
7.95%
3.99%
5.00%
2023
2024
2025
2025
2026
Non-current interest-bearing loans and borrowings
Lease Liabilities
3.5-6.9%
2023-2027
GBP 250,000 loan - White Oak
GBP 350,000 loan - HSBC
GBP 150,000 loan - Funding Circle
Total
7.95%
3.99%
5.00%
2025
2025
2026
2023
$’000
171
1,630
166
133
70
2,170
118
126
267
149
660
2022
$’000
132
-
-
-
-
132
153
-
-
-
153
The Group’s policy is to manage its finance costs using a mix of fixed and variable rate debt where possible.
Sensitivity analysis
The Group constantly analyses its interest rate exposure. Within this analysis consideration is given to potential renewals of existing
positions, alternative financing, and the mix of fixed and variable interest rates.
The following sensitivity analysis is based on the interest rate risk exposures in existence at the reporting date.
At 30 June 2023, and at 30 June 2022, if interest rates had moved, as illustrated in the table below, with all other variables held
constant, post tax profit / (losses) and equity would have been affected as follows:
Judgments of reasonably possible movements*:
Consolidated
+ 1% increase in interest rates
- 0.5% decrease in interest rate
Post Tax Profit
Higher/(Lower)
Equity
Higher/(Lower)
2023
$’000
(20)
10
2022
$’000
(2)
1
2023
$’000
(20)
10
2022
$’000
(2)
1
* A 1% increase and a 0.5% decrease is used and represents management’s assessment of the reasonably possible change in interest rates.
| 77
(ii) Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes
in foreign exchange rates. The Group’s exposure to the risk of changes in United States Dollar and British Pound (as a result of the
acquisition of GJD) exchange rates.
The Group’s exposure to foreign currency risk at the end of the reporting period, expressed in Australian dollars was as follows:
30 June 2023
Cash and cash equivalents
Trade receivables
Trade payables
Borrowings
Total exposure
30 June 2022
Cash and cash equivalents
Trade receivables
Trade payables
Borrowings
Total exposure
Foreign currency sensitivity
USD
$’000
3,817
5,903
(223)
-
9,497
6,790
3,114
(306)
-
9,598
GBP
$’000
235
664
(818)
(1,123)
(1,042)
-
-
-
-
-
Total
$’000
4,052
6,567
(1,041)
(1,123)
8,455
6,790
3,114
(306)
9,598
The following tables demonstrate the sensitivity to a reasonably possible change in the USD and GBP exchange rate with all other
variables held constant. The impact on the Group’s profit before tax is due to changes in the fair value of monetary assets and liabilities.
The Group’s exposure to foreign currency changes for all other currencies is not material.
% Change in rate
Effect on profit/(loss) before
tax
Effect on equity
USD and GBP
30 June 2023
30 June 2022
USD
GBP
USD
10%
-10%
10%
-10%
10%
-10%
$’000
665
(665)
(73)
73
672
(672)
$’000
665
(665)
(73)
73
672
(672)
2023 ANNUAL REPORT AVA GROUP
78 | AVA GROUP ANNUAL REPORT 2023
Notes to the Financial
Statements
(iii) Credit risk
Credit risk arises from the financial assets of the Group, which comprise cash and cash equivalents, trade and other receivables
(including contract assets). The Group’s exposure to credit risk arises from potential default of the counter party, with a maximum
exposure equal to the carrying amount of these instruments, net of any provisions for expected credit losses of those assets. Exposure
at balance date is addressed in each applicable note.
The Group does not hold any credit derivatives to offset its credit exposure.
The Group trades only with recognised, creditworthy third parties, and as such collateral is not requested nor is it the Group’s policy to
securitise its trade and other receivables.
It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures including an
assessment of their financial position, past experience and industry reputation.
In addition, receivable balances are monitored on an ongoing basis.
(iv) Liquidity risk
Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities. The Group
monitors its risk of a shortage of funds using cash flow forecasting and liquidity planning.
The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of variety of equity and debt
instruments.
The table below analyses the Group’s financial liabilities into relevant maturity groupings based on their contractual maturities for all
non-derivatives financial liabilities.
The amounts disclosed in the table are the contractual undiscounted cash flows. The remaining contractual maturities of the Group’s
financial liabilities are:
Financial liabilities
12 months or less1
1-5 years
Over 5 years
Total contractual cash flows
1 Includes lease liabilities, trade and other payables and borrowings.
Fair value
Consolidated
2022
$’000
2,385
153
-
2,538
2023
$’000
4,863
660
-
5,501
The fair value of financial assets and financial liabilities approximate their carrying amounts as disclosed in the consolidated statement
of financial position and notes to the consolidated financial statements.
| 79
24. Related party disclosure
(a) Subsidiaries
Name
Parent Entity
Country of
Incorporation
Principal Activity
2023
2022
% Equity Interest
Ava Risk Group Limited
Australia
Manufacture and sale of
security systems
100
100
Subsidiaries of Ava Risk Group Limited
FFT MENA Pty Ltd
Australia
Holding company
Future Fibre Technologies (US) Inc.
USA
Sales Support and other
MaxSec Group Pty Ltd
Australia
Access Control
Subsidiaries of FFT MENA Pty Ltd
Future Fibre Technologies MENA FZ-LLC (in
Liquidation)
U.A.E
Sales Support and other services
Future Fibre Technologies Europe Ltd
United Kingdom Sales Support and other services
FFT India Pvt Ltd
India
Sales Support and other services
Subsidiaries of MaxSec Group Pty Ltd
BQT Intelligent Security Systems Pty Ltd
4C Satellites Ltd
BQT Solutions (Australia) Pty Ltd
BQT Solutions (SEA) Pte Limited
Australia
Australia
Australia
Singapore
BQT Solutions (UK) Ltd
United Kingdom
Subsidiaries of BQT Solutions (SEA) Pte Limited
BQT Solutions (NZ) Ltd
MTD Holdings Limited
GJD Manufacturing Limited
New Zealand
United Kingdom
United Kingdom
Subsidiaries of BQT Solutions (UK) Ltd
Access Control
Access Control
Access Control
Access Control
Access Control
Access Control
Access Control
Access Control
100
100
100
100
100
100
60
60
100
100
100
100
100
100
100
100
100
100
100
100
60
60
100
100
100
100
-
-
BQT Solutions America Inc
USA
Access Control
100
100
Transactions between the Company and its subsidiaries principally arise from the granting of loans and the provision of sales support
and other services. All transactions undertaken during the financial year with subsidiaries are eliminated in the consolidated financial
statements.
(b) Ultimate parent
Ava Risk Group Limited is the ultimate Australian parent entity and the ultimate parent of the Group.
(c) Terms and conditions of transactions with related parties
Sales to and purchases from related parties are made in arm’s length transactions both at normal market prices and on normal
commercial terms unless otherwise stated.
2023 ANNUAL REPORT AVA GROUP 80 | AVA GROUP ANNUAL REPORT 2023
Notes to the Financial
Statements
25. Key Management Personnel
(a) Compensation for Key Management Personnel
Short-term employee benefits
Bonus on Sale of business
Post-employment and other long-term benefits
Share-based payments
Total compensation
(b) Loans to/from Key Management Personnel
Consolidated
2022
$
2023
$
1,315,466
1,540,447
-
12,977,845
80,451
97,016
105,663
258,388
1,492,933
14,882,343
There were no loans to directors or key management personnel during the year ending 30 June 2023 (2022: nil).
(c) Other transactions and balances with Key Management Personnel and their related parties
Directors
During the current and previous financial year, the Group transacted with related entities of directors, other than in their capacity as
director as follows:
The Consolidated Entity purchased consulting services from Pierce Asia Pty Ltd and Pierce Group Asia Pte Ltd, related entities through
Chairman and Non-Executive Director, David Cronin, for an amount of $282,000 (2022: $219,000). Accounts Payable balance at 30
June 2023 totals $17,270 (FY2022: $44,812). These arrangements were in the normal course of business and included amounts related
to the provision of consultancy and administration services, and general office expenses provided by the related entities for the benefit
of the Consolidated Entity.
There were no other transactions with other KMP during the year ended 30 June 2023 (FY2022: none).
(a) Recognised share-based payment expense
The expense recognised for employee and KMPs received during the year is shown in the table below:
Expenses arising from equity-settled share-based payment transactions:
As compensation for KMPs
As compensation to employees
Total share-based payments
2023
$’000
97,016
204,174
301,190
Consolidated
2022
$’000
258,388
93,123
351,511
| 81
(b) Types of share-based payments
FY 23 Grants
Senior Executive Grants
During the financial year ended 30 June 2023, the Company granted performance rights as part of remuneration to three senior
executives, Mal Maginnis, Neville Joyce and Jim Viscardi.
Number of
performance
rights awarded
Grant date
Fair value at
Grant date
$
Vesting Dates
Vesting conditions
FY 2023
Malcolm Maginnis*
Neville Joyce
James Viscardi
500,000
500,000
500,000
123,320
123,320
30,830
30,830
161,902
161,903
9 Jan 2023
9 Jan 2023
9 Jan 2023
6 Sep 2022
6 Sep 2022
6 Sep 2022
6 Sep 2022
6 Sep 2022
6 Sep 2022
0.125
0.128
0.127
0.230
0.230
0.107
0.108
0.230
0.230
9 Jan 2024
9 Jan 2025
9 Jan 2026
31 Aug 2024
31 Aug 2025
31 Aug 2024
31 Aug 2025
31 Aug 2024
31 Aug 2025
Share price hurdle
FY 2023 Performance KPI and
continuity of employment
Share price hurdle
FY 2023 Performance KPI and
continuity of employment
* Performance rights awarded to Malcolm Maginnis are subject to shareholder approval.
The fair value of each performance right was calculated using an option pricing model as discussed in note 19.
Non-Executive Directors Grants
During the financial year ended 30 June 2022, the Company granted performance rights as part of remuneration to three Non-
Executive directors David Cronin, Mark Stevens, and Michael McGeever.
The performance rights issued to the Non-Executive directors vest on 5 October 2022 subject to the Company’s market traded share
price being at least 49 cents or above across 30 consecutive days and subject to continuity of service with the Company. As at 5
October 2022, these rights did not meet the performance criteria and they were forfeited.
There were no Share options or Performance Rights Granted to Non-Executive Directors during the financial year ended 30 June 2023.
(c) Summaries of performance rights and share options granted
i. Share Options
Outstanding at the beginning of the year
Granted during the year
Exercised during the year
Forfeited, lapsed and other movements during the year
Outstanding Share Options
2023
Number
-
-
-
-
-
2022
Number
3,250,000
-
(5,449,938)
-
-
2023 ANNUAL REPORT AVA GROUP
82 | AVA GROUP ANNUAL REPORT 2023
Notes to the Financial
Statements
ii. Performance Share Rights
Outstanding at the beginning of the year
Granted during the year
Exercised during the year
Forfeited, lapsed and other movements during the year
Total share-based payments
2023
Number
806,449
632,105
(85,277)
(1,105,683)
247,594
2022
Number
283,526
835,793
(162,907)
(149,963)
806,449
26. Commitments, Contingent assets and liabilities
At 30 June 2023, the Group had commitments of $244,000 relating to the purchase of Fibre Optic cable with its main supplier
(FY 2022 $352,000).
27. Discontinued Operations
Sale of Ava Global DMCC (Ava Global), the Comany's International Valuables Logistics (IVL) division.
In October 2021, the Group sold its IVL division.
(a) Financial performance and cash flow information
Revenue from contracts with customers
Other income
Revenue and other income
Total Expenses
Profit before income tax for the period
Income tax expense
Profit from discontinued operations
Gain on sale of discontinued operations (see note (b))
Profit after tax for the period from discontinued operations
Consolidated
2022
$’000
11,075
-
11,075
(9,157)
1,918
(38)
1,880
31,914
33,794
The net cash flows generated by IVL, are as follows
Operating
Financing
Investing
Net cash inflow (outflow)
Earnings per share – discontinued operations
Basic earnings per share
Diluted earnings per share
(b) Details of the sale of the subsidiaries
Consideration
Performance plan paid to management and employees of Ava Global
Consideration received, paid in cash
Carrying amount of net assets sold
Transaction costs incurred
Gain on sale before reclassification of foreign currency reserve
Reclassification of foreign currency translation reserve
Gain on sale of discontinued operation
| 83
Consolidated
2022
$’000
947
(32)
(6)
909
Consolidated
cents
13.90
13.73
2022
$’000
62,187
(20,308)
41,879
(9,033)
(357)
32,489
(575)
31,914
2023 ANNUAL REPORT AVA GROUP 84 | AVA GROUP ANNUAL REPORT 2023
Notes to the Financial
Statements
(c) Carrying amounts of assets and liabilities sold
ASSETS
Current Assets
Cash and cash equivalents
Receivables
Inventories
Total Current Assets
Non-Current Assets
Plant and equipment
Intangible assets
Right of use assets
Total Non-Current Assets
TOTAL ASSETS
LIABILITIES
Current Liabilities
Payables
Tax liabilities
Other liabilities
TOTAL LIABILITIES
NET ASSETS
7-Oct-21
$’000
5,053
4,909
39
10,001
6
4,687
67
4,760
14,761
5,639
36
53
5,728
9,033
(d) Subsidiaries disposed
The IVL Segment comprised of the following entities:
Name
AVA Global DMCC
AVA Germany GmbH
AVA USA Inc
Country of
incorporation
% Equity
interest
U.A.E
Germany
USA
100
100
100
28. Parent Entity Information
(a) Summary financial information
The individual financial statements for the parent entity show the following aggregate amounts:
Ava Risk Group Limited:
Summarised statement of financial position
Assets
Current Assets
Non-Current Assets
Total Assets
Liabilities
Total Current Liabilities
Total Non-Current Liabilities
Total Liabilities
NET ASSETS
Equity
Contributed Equity
Accumulated losses
Reserves
TOTAL EQUITY
Ava Risk Group Limited:
Summarised statement of comprehensive income
(Loss) Profit for the year
Other comprehensive income for the year
Total comprehensive (loss) income of the parent entity
(b) Guarantees entered into by the parent entity
| 85
2022
$’000
13,421
14,573
27,994
5,755
444
6,199
21,795
50,794
(30,743)
1,744
21,795
2022
$’000
33,384
-
33,384
2023
$’000
9,422
17,569
26,991
3,404
59
3,463
23,528
50,791
(29,308)
2,045
23,528
2023
$’000
600
-
600
The parent entity has not provided any financial guarantees in respect of subsidiaries entities.
(c) Contingent liabilities of the parent entity
The parent entity did not have any contingent liabilities as at 30 June 2023 or 30 June 2022.
(d) Contractual commitments for the acquisition of property, plant or equipment
As at 30 June 2023, the parent entity had no contractual commitments for the acquisition of property, plant or equipment (30 June
2022: None).
2023 ANNUAL REPORT AVA GROUP
86 | AVA GROUP ANNUAL REPORT 2023
Notes to the Financial
Statements
29. Auditors Remuneration
Auditor’s renumeration
Amounts received or due and receivable by the company’s auditor for:
Audit Services - BDO Audit Pty Ltd
Audit or review of the financial statements
Audit Services - Ernst & Young
Audit or review of the financial statements
Audit or review of the financial statements of foreign entities
Other services
Fees for other services - BDO Audit Pty Ltd
Tax compliance
Fees for other services - Ernst & Young
Tax compliance
Auditor’s renumeration
Amounts received or due and receivable by foreign entities of BDO/Ernst & Young for:
- Audit and review of the financial statements
Consolidated
2023
$
217,500
-
-
6,042
2022
$
-
255,000
25,250
27,300
-
-
250,842
71,600
351,850
Consolidated
2023
$
-
-
2022
$
25,250
25,250
30. Subsequent events
No matter or circumstance has arisen since 30 June 2023 that has significantly affected, or may significantly affect the consolidated
entity’s operations, the results of those operations, or consolidated entity’s state of affairs in future financial years.
87 | AVA GROUP ANNUAL REPORT 2023
Directors’
Declaration
In accordance with a resolution of the directors of Ava Risk Group Limited, I state that:
1.
In the opinion of the directors
(a) the financial statements, notes and the additional disclosures included in the directors’ report designated as audited, of the
Company and of the Consolidated Entity are in accordance with the Corporations Act 2001, the Accounting Standards, the
Corporations Regulations 2001 and other mandatory professional reporting requirements including:
(i)
(ii)
giving a true and fair view of the Company’s and Consolidated Entity’s financial position as at 30 June 2023 and of their
performance for the year ended on that date; and
also comply with International Financial Reporting Standards as stated in Note 1.1 of the consolidated financial statements;
and
(b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.
2.
This declaration has been made after receiving the declarations required to be made by the chief executive officer and chief
financial officer to the directors in accordance with section 295A of the Corporations Act 2001 for the financial year ended 30 June
2023.
On behalf of the Board
David Cronin
Chairman
28 August 2023
INDEPENDENT
AUDITOR’S REPORT
Tel: +61 3 9603 1700
Fax: +61 3 9602 3870
www.bdo.com.au
Collins Square, Tower Four
Level 18, 727 Collins Street
Melbourne VIC 3008
GPO Box 5099 Melbourne VIC 3001
Australia
INDEPENDENT AUDITOR'S REPORT
To the members of Ava Risk Group Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Ava Risk Group Limited (the Company) and its subsidiaries (the
Group), which comprises the consolidated statement of financial position as at 30 June 2023, the
consolidated statement of profit or loss and other comprehensive income, the consolidated statement
of changes in equity and the consolidated statement of cash flows for the year then ended, and notes
to the financial report, including a summary of significant accounting policies and the directors’
declaration.
In our opinion the accompanying financial report of the Group, is in accordance with the Corporations
Act 2001, including:
(i) Giving a true and fair view of the Group’s financial position as at 30 June 2023 and of its financial
performance for the year ended on that date; and
(ii) Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the Financial
Report section of our report. We are independent of the Group in accordance with the Corporations
Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code)
that are relevant to our audit of the financial report in Australia. We have also fulfilled our other
ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current period. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters.
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO
Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of
BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member
firms. Liability limited by a scheme approved under Professional Standards Legislation.
Impairment of goodwill and other intangible assets
Revenue recognition
Key audit matter
How the matter was addressed in our audit
Key audit matter
How the matter was addressed in our audit
As disclosed in Note 13 and 14, at 30 June 2023
the Group has intangible assets related to
trademarks, patents, development costs and
goodwill.
Goodwill and other intangible assets are assessed
for impairment annually.
This is a key audit matter because the
impairment assessment process is complex and is
required to be carried out at the level of the
lowest identifiable cash generating units
(‘CGUs’). The assessment requires significant
judgement and includes assumptions that are
based on future operating results, discount rates
and the broader market conditions in which the
Group operates.
Our procedures included, but were not limited to:
As disclosed in Note 4, at 30 June 2023 the Group
Our procedures included, but were not limited to:
•
•
Obtaining an understanding of the process that
management undertook to perform the Group’s
impairment assessment;
Evaluating the level at which goodwill is monitored
for impairment, including the identification of CGUs;
In conjunction with our internal valuation specialists, we:
•
•
•
•
•
•
•
Evaluated the value-in-use models prepared by
management and validated the reasonableness of the
assumptions used to calculate the discount rate,
growth rates, terminal values, working capital values
and allocation of corporate costs compared to
historical performance and industry benchmarks to
ensure compliance with the relevant Accounting
Standards;
Agreed the forecasted cashflows for FY24 to the
latest Board approved budget;
Assessed historical forecasting accuracy;
Compared the market capitalisation of the Group to
the net assets;
Confirmed the integrity and mathematical accuracy
of the value-in-use discounted cashflows models;
Subjected the growth and discount rates assumptions
to sensitivity analysis to understand the change that
would be required for the goodwill and intangible
assets to be impaired, and assessed the likelihood of
such movement in those key assumptions arising; and
Assessed the appropriateness of the disclosures
included in Notes 13 and 14 to the financial report.
•
•
•
•
•
•
•
•
•
•
•
generates revenue from the sale of products and
provision of services, including commissioning and
technical services outside of warranty or under
extended warranty. Revenue is a key metric for
management to measure the performance of the
Group.
Each revenue stream has unique contracts with
performance obligations and recognition criteria
that requires assessment under the Accounting
Standards.
This is a key audit matter because the Group has
customer contracts which include multiple
promises and requires judgement to determine
whether these are distinct or bundled
performance obligations. Revenue recognition
was significant to our audit due to its complexity
and amount of audit attention required.
Obtained an understanding of the process undertaken
by management to account for the recognition of
revenue for each revenue stream;
Consulted with our internal accounting technical
team to assist in forming a view over the
appropriateness of the revenue recognition
accounting treatment adopted;
Validated the accuracy and occurrence of a sample of
revenue transactions to underlying evidence;
Recalculated a sample of contract liabilities based on
the terms set out in the customer contracts;
Performed cut-off procedures of transactions either
side of the end of the reporting period; and
Assessed the compliance of revenue disclosures in the
financial report to the relevant Accounting Standards.
Capitalisation of internally generated development costs
Key audit matter
How the matter was addressed in our audit
As disclosed in Note 13, the Group capitalised
Our procedures included, but were not limited to:
$1.5m of development costs in relation to fibre
intrusion product development projects.
Performed walkthrough procedures to understand the
process of capitalisation and the nature of costs
The Accounting Standards require development
incurred;
costs to be capitalised only under specific
circumstances, including:
For a sample of projects, we tested whether the
capitalised costs relate to a technologically feasible
It is technically feasible to complete the
product, assessed the future economic benefit to be
intangible asset;
generated by the product and the useful economic
•
•
•
•
•
There is clear intention to complete;
There are adequate technical, financial and
other resources to complete the asset;
Future economic benefits are probable; and
Expenditure can be measured reliably.
This is a key audit matter as significant
judgement is required to establish the point at
which capitalisation should commence, the
nature of costs to be capitalised, the point at
which capitalisation should cease and
amortisation should commence.
life assigned;
Tested a sample of labour costs capitalised to
underlying payroll records and timesheet entries;
Tested a sample of non-labour costs capitalised to
underlying evidence;
Recalculated the amortisation charge on a sample
basis to verify whether it was in accordance with the
useful economic life assigned by management and
that amortisation commenced from the start of its
useful life; and
•
Assessed the appropriateness of disclosures included
in the financial report with reference to the relevant
Accounting Standards.
Impairment of goodwill and other intangible assets
Revenue recognition
Key audit matter
How the matter was addressed in our audit
Key audit matter
How the matter was addressed in our audit
As disclosed in Note 13 and 14, at 30 June 2023
Our procedures included, but were not limited to:
the Group has intangible assets related to
trademarks, patents, development costs and
goodwill.
Goodwill and other intangible assets are assessed
for impairment annually.
This is a key audit matter because the
impairment assessment process is complex and is
Obtaining an understanding of the process that
management undertook to perform the Group’s
impairment assessment;
Evaluating the level at which goodwill is monitored
for impairment, including the identification of CGUs;
In conjunction with our internal valuation specialists, we:
required to be carried out at the level of the
Evaluated the value-in-use models prepared by
lowest identifiable cash generating units
(‘CGUs’). The assessment requires significant
judgement and includes assumptions that are
management and validated the reasonableness of the
assumptions used to calculate the discount rate,
growth rates, terminal values, working capital values
based on future operating results, discount rates
and allocation of corporate costs compared to
and the broader market conditions in which the
historical performance and industry benchmarks to
Group operates.
ensure compliance with the relevant Accounting
•
•
•
•
•
•
•
•
Standards;
Agreed the forecasted cashflows for FY24 to the
latest Board approved budget;
Assessed historical forecasting accuracy;
Compared the market capitalisation of the Group to
the net assets;
Confirmed the integrity and mathematical accuracy
of the value-in-use discounted cashflows models;
Subjected the growth and discount rates assumptions
to sensitivity analysis to understand the change that
would be required for the goodwill and intangible
assets to be impaired, and assessed the likelihood of
such movement in those key assumptions arising; and
•
Assessed the appropriateness of the disclosures
included in Notes 13 and 14 to the financial report.
As disclosed in Note 4, at 30 June 2023 the Group
generates revenue from the sale of products and
provision of services, including commissioning and
technical services outside of warranty or under
extended warranty. Revenue is a key metric for
management to measure the performance of the
Group.
Each revenue stream has unique contracts with
performance obligations and recognition criteria
that requires assessment under the Accounting
Standards.
This is a key audit matter because the Group has
customer contracts which include multiple
promises and requires judgement to determine
whether these are distinct or bundled
performance obligations. Revenue recognition
was significant to our audit due to its complexity
and amount of audit attention required.
Our procedures included, but were not limited to:
•
•
•
•
•
•
Obtained an understanding of the process undertaken
by management to account for the recognition of
revenue for each revenue stream;
Consulted with our internal accounting technical
team to assist in forming a view over the
appropriateness of the revenue recognition
accounting treatment adopted;
Validated the accuracy and occurrence of a sample of
revenue transactions to underlying evidence;
Recalculated a sample of contract liabilities based on
the terms set out in the customer contracts;
Performed cut-off procedures of transactions either
side of the end of the reporting period; and
Assessed the compliance of revenue disclosures in the
financial report to the relevant Accounting Standards.
Capitalisation of internally generated development costs
Key audit matter
How the matter was addressed in our audit
As disclosed in Note 13, the Group capitalised
$1.5m of development costs in relation to fibre
intrusion product development projects.
The Accounting Standards require development
costs to be capitalised only under specific
circumstances, including:
•
•
•
•
•
It is technically feasible to complete the
intangible asset;
There is clear intention to complete;
There are adequate technical, financial and
other resources to complete the asset;
Future economic benefits are probable; and
Expenditure can be measured reliably.
This is a key audit matter as significant
judgement is required to establish the point at
which capitalisation should commence, the
nature of costs to be capitalised, the point at
which capitalisation should cease and
amortisation should commence.
Our procedures included, but were not limited to:
•
•
•
•
•
•
Performed walkthrough procedures to understand the
process of capitalisation and the nature of costs
incurred;
For a sample of projects, we tested whether the
capitalised costs relate to a technologically feasible
product, assessed the future economic benefit to be
generated by the product and the useful economic
life assigned;
Tested a sample of labour costs capitalised to
underlying payroll records and timesheet entries;
Tested a sample of non-labour costs capitalised to
underlying evidence;
Recalculated the amortisation charge on a sample
basis to verify whether it was in accordance with the
useful economic life assigned by management and
that amortisation commenced from the start of its
useful life; and
Assessed the appropriateness of disclosures included
in the financial report with reference to the relevant
Accounting Standards.
Other information
The directors are responsible for the other information. The other information comprises the
information in the Group’s annual report for the year ended 30 June 2023, but does not include the
financial report and the auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf
This description forms part of our auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 18 to 29 of the directors’ report for the
year ended 30 June 2023.
In our opinion, the Remuneration Report of Ava Risk Group Limited, for the year ended 30 June 2023,
complies with section 300A of the Corporations Act 2001.
Other information
Responsibilities
The directors are responsible for the other information. The other information comprises the
information in the Group’s annual report for the year ended 30 June 2023, but does not include the
financial report and the auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with
Australian Auditing Standards.
form of assurance conclusion thereon.
BDO Audit Pty Ltd
Tim Fairclough
Director
Melbourne, 28 August 2023
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf
This description forms part of our auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 18 to 29 of the directors’ report for the
year ended 30 June 2023.
In our opinion, the Remuneration Report of Ava Risk Group Limited, for the year ended 30 June 2023,
complies with section 300A of the Corporations Act 2001.
94 | AVA GROUP ANNUAL REPORT 2023
94 | AVA GROUP ANNUAL REPORT 2023
Shareholder
Information
Distribution of equity securities (as at 02 August 2023)
ORDINARY SHARE CAPITAL
255,414,634 fully paid ordinary shares are held by 3,488 shareholders. All issued ordinary shares carry one voter per share and carry
the rights to dividends.
The number of shareholders, by size of holding, in each class are:
Size of shareholding
Number of holders
Ordinary shares held
% of issued share capital
1-1,000
1,001-5,000
5,001-10,000
10,001-100,000
100,001-9,999,999,999
Totals
344
1,192
579
1,138
235
3,488
173,530
3,419,947
4,636,934
36,167,432
211,016,791
0.070
1.340
1.820
14.160
82.620
255,414,634
100.000
The number of shareholders holding less than a marketable parcel of 2,500 shares (based on a the share price of $0.20 on 02 August
2023) is 881 and they hold 1,097,086 shares.
Substantial shareholders (as at 02 August 2023)
Name of Shareholder
Pandon Holdings Pte Limited
Valwren Pty Ltd
Fully paid ordinary shares
Number of shares
% of issued
share capital
32,463,070
14,133,800
46,596,870
12.71%
5.53%
18.24%
| 95
Twenty largest shareholders (as at 02 August 2023)
Name of Shareholder
Number of shares
% of issued
capital
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
BELL POTTER NOMINEES LTD
BNP PARIBAS NOMS PTY LTD
MR STEPHEN ROSS CAREW
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
BANNABY INVESTMENTS PTY LIMITED
VALWREN PTY LIMITED
VALWREN PTY LIMITED
DIXSON TRUST PTY LIMITED
CITICORP NOMINEES PTY LIMITED
MARK IAN TIBBENHAM
CHAG PTY LTD
MR DAVID MALCOLM SOUTH
GOVINDARAJALOO NARASIMOOLOO
BFA SUPER PTY LTD
MR ROBERT ANDREW BROOMFIELD
CHERYL LEE TAPANES
GOLDRUSH FUND PTY LTD
MR RUOBING ZHANG
DMX CAPITAL PARTNERS LIMITED
20
MR ATHAR JAMEEL BHUTTO
Voting Rights
All ordinary shares (whether fully paid or not) carry one vote per share without restriction.
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
144,181,082
12.51%
6.29%
4.70%
4.24%
3.90%
2.94%
2.94%
2.87%
2.80%
2.49%
1.82%
1.66%
1.25%
1.17%
1.10%
1.02%
1.00%
0.67%
0.55%
0.55%
56.4%
2023 ANNUAL REPORT AVA GROUP
DETECT ACCESS ILLUMINATE
www.theavagroup.com
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