AVA Risk Group Limited (AVA.AX) Earnings Call Transcript & Summary

All right. Good morning, everybody. Ladies and gentlemen, welcome to the 2025 Annual General Meeting of Ava Risk Group. My name is David Cronin, and it's my privilege to serve you as the Chairman of the Ava Board. I declare that a quorum is present. Accordingly, I declare the meeting open. Thank you to everyone for attending in person and connected to the online AGM technology for joining us today. The online AGM technology allows shareholders, proxy holders and guests to attend the meeting virtually. All attendees can watch a live webcast of the meeting. In addition, shareholders and proxy holders have the ability to ask questions and submit votes. Questions can be submitted at any time. I'm going to have to run you through a lot of procedure, as everyone is aware, being an official Annual General Meeting. So please bear with me. To ask a written question, please select the messaging icon on your screen, and press the button to send. To ask a question verbally, click the request button to speak, and you will be prompted to confirm your name and enter the topic of your question, submit your details and select join queue to be connected. Please note that while you can submit questions or comments, we will not address them until the relevant time in the meeting. Please also note that your questions may be moderated or if we receive multiple questions on the same topic, we may address them together. For those shareholders attending at our Melbourne venue, should you wish to ask a question when invited to do so, please raise your voting card you received at the time of registration. We will ask that you state your name and, if applicable, the name of the shareholder that you represent. Finally, due to time constraints, we may run out of time to answer your questions. If this happens, we will answer them in due course via e-mail or posting responses on our website. We will certainly give our best efforts to answer everyone's questions today. Before proceeding with the business of the meeting, I'd like to mention some procedural matters. For those of you attending at our Melbourne venue, you should have registered your attendance as you entered the room today. If any member or proxy holder has not registered their attendance at the door, please see the staff from Boardroom so you can register your attendance now. Visitors are also to be registered electronically on Boardroom's meeting registration system. If any visitors have not registered their attendance, we ask that you please do so now. At this time, in respect of all of those around you, we ask that you silence your mobile phones. Voting today will be conducted by way of a poll on all items of business. In order to provide you with enough time to vote, I will shortly open voting for all resolutions. Those shareholders attending our Melbourne venue will have received a voting card and on the back of the voting card, you can record your votes. [ Melissa David ] of Boardroom has been appointed the returning officer today and will collect all votes at the end of the meeting. For those attending the meeting and voting on the online AGM technology, if you are eligible to vote at the meeting, the voting options will appear on your screen. To cast your vote, simply select one of the options. Your vote is automatically recorded. There is no need to press a submit or enter button. You can change your vote up until the time that I declare voting closed. Let me begin today by introducing each of your directors that are present. Mal Maginnis, Executive Director and CEO, who I think everyone in this room has met before; Mike McGeever, Non-Executive Director, been on the Board a number of years and has very good pedigree in the security and services space; Mark Stevens has great pedigree in the telecom space, an area that Avis is keenly going after at the moment and has been on the Board for a number of years. And down the end there, we've got Neville Joyce, our CFO; and commercial to our [indiscernible] now. I'd also like to welcome Kim Clark -- Kim Larkin, sorry, our joint Company Secretary, who's online on the online forum today. In line with the Corporations Act, our auditors, BDO, are present and represented by [indiscernible] and he will be able to take questions during the audit report later in the meeting, if so required. I'll start by updating shareholders on the progress made in FY 2025 in positioning our company as a global leader in sensing and risk management technology. I'll then let our Group CEO, Mal Maginnis, provide further insights into the company's performance and our plan to grow revenue and earnings. Technology is at the forefront of our growth strategy. You would have heard us talk a lot about our Detect segment. It represents more than 2/3 of the business. And importantly, it represents the most profitable segment of our business. The gross margins are extremely strong, our cost base is extremely stable and it's highly scalable. Our other 2 businesses have been a challenge, and we will talk more about them today. But we were very pleased in the Detect segment, and particularly our investment in Aura Ai-X that you'll all be aware that we've been making an investment over the last 3, 4 years, that's starting to pay off quite nicely for shareholders and for the business. We expanded Aura Ai-X applications to serve the telecommunication sector and develop solutions for shorter perimeter deployments in our traditional detection market. A highlight of this was a successful deployment finally of an Aura Ai-X system to Telstra for a subsea cable in Q4 FY '25, which demonstrates the significant opportunities we have in telecommunications. No great secret. There's an awful lot of fiber optic cable out there. We are experts in fiber optic sensing. We are the global leaders in fiber optic sensing, both above ground and below ground and now subsea. To get after that market, it's a very different market to the security market. The people are different. The buying behaviors are different. It takes time. And it has taken time for us to cement our position within Telstra. But we're pleased to provide shareholders an update, which Mal will talk more about where we are making decent inroads into important applications that are very scalable within that network. Financially, the company delivered a strong first half with revenue growth of 20%. The second half, however, was impacted by the deferral of a few major Detect segment orders. There were 3 large ones which we reported on, 1.5 of those, we're pleased have come in. One of them was delayed because of some retendering in India, and that's been retendered at a larger amount, and we're expecting to hear results of that within weeks. But disappointingly, that did impact our second half from a performance perspective. Total revenue grew to $31.7 million, which was up 5% year-on-year and that was really driven by the 15% increase in Detect. We didn't see the growth in Access and Illuminate, but we certainly saw acceptable growth in Detect. EBITDA improved materially to $2.1 million compared with $900,000 loss the year before. We've talked a lot about stable cost base, sweating the cost base, being able to grow with our strong gross margins without impacting costs on the bottom line so that we can start delivering EBITDA and net profit. We're starting to see that now as we reach that EBITDA breakeven point quite successfully and then power through that with the gross margins contributing to the bottom line. As revenues grow further, we do expect EBITDA margins to improve and while we will leverage our fixed cost base and our technology base. We did take an impairment charge of $5.6 million in FY '25, representing the remaining goodwill in the Illuminate sector. That really reflects a more conservative outlook on the growth in that sector. And as everyone is aware, it's appropriate that we look at the value on our balance sheet of those style of assets and be very brutally realistic about the recovery of those, so we don't present a position to shareholders that we think something is worth up here when actually it might take us 3 years to get back to that position. And so it's not taken lightly because we still believe in that business and it still has good technology and really good blue-chip customers, but Mal will give you a bit more of an update there on that business. Pleasingly, we entered the new financial year with a sales backlog of $6.4 million. Now this business primarily is a projects business, so backlog is key to us. It's about the only thing that we can sleep well at night on. Everything else is work in progress. Backlog, however, is in the bag, and it's a matter of timing for us to ship that out of or deliver the service. And so that's a key indicator for the business and a key indicator for how confident we are in providing forecast to the market going forward. $2.6 million of that represents recurring revenue. And those that have been -- and I think everyone in this room has been a shareholder for quite a few years, and we've been talking about the importance of increasing our recurring revenue. And when you look at $2.6 million, that's all from the Detect segment. And the Detect segment did less than $26 million last year. And so if we have $2.6 million, we're already above 10% in recurring revenue for that business. That's starting to become quite a healthy metric for that business. And certainly, in the sensing space and versus our competitors, it's been really pleasing to see that our clients, because of the technical performance and attributes of our system and the way the guys are selling that Atlas product, the recurring revenue service, our clients are all saying yes to it, which is actually in the security industry, they're used to buying a box, paying CapEx and calling you if something breaks. Now they're taking preventative measures to make sure that we can upgrade, keep the algorithms modern and keep servicing them. That's really a positive move to see that we haven't had any pushback under Mal's push there in the sales team. Importantly, the company was cash flow positive in FY 2025 and we'll be able to generate cash as revenue grows. FY 2026 will be a pivotal year in accelerating our growth. We built a market-leading technology platform strengthened by commercial capabilities. We've developed a robust sales pipeline, secured some really strong partners in key markets and Mal will talk -- give you some really good case studies about some blue-chip partners now that are delivering us repeat business, which is really important. So we don't have to reinvest in that sales cycle every -- for every dollar that we book. Our key priorities are to increase sales order intake, particularly in some strategic industry sectors and with some particular partners to grow sales order backlog, including recurring revenue and very importantly, maintaining the gross margin, 60% to 65%, and Mal will talk a bit more about the way we're seeing our margins, particularly in Detect. The Board remains committed to building a world-class technology business and look forward to updating on progress through FY 2026. And I'd now like to introduce Mal, who will provide further details. Thank you, Mal.

Good morning, everyone. I think most of you know who I am. So I'll take you through the various slides, and I'll try to give you a little bit more color on just the slides give you, so it gives you a bit more understanding. So as you're aware, we run 3 divisions within the organization, which is the Detect, the Illuminate and Access. It's really important for everyone to understand the key parts of that. Detect is a program business. We don't sell single boxes. It's a program business. It requires getting specifications in with customers, getting them committed, doing the tender, winning the tender, negotiating the deal, closing the deal, delivering the deal and collecting the cash. It's a complex sale. The distribution businesses, Illuminate and Access, are fundamentally cash to order. So they do small orders rapidly with lots of big partners, system integrators and distribution people like ADI and dormakaba and work through those. So it's a very different model between the 2 distribution businesses and the Detect program business. And that programmatic issue is one of the challenges we face as a business because obviously, as you can see from the numbers, if we're $20-odd million as a tech business, a movement of $3 million in the last 2 months of the year has a significant impact on how we're going to deliver. So it's just something that I want people to keep in their mind. The next one is the best thing with the customers that we've achieved is this concept of sensing beyond security. If you look at things like fences, walls, ditches, et cetera, they're done. They only stop honest people. They don't stop anyone determined to get through it. What we are able to give our customers is sensing beyond security. So 24/7 live sensing for the customers, and that is becoming really attractive, and I'll talk on some of the case studies shortly about how attractive that's become to them because almost all our major clients have huge infrastructure, single point of failure, high risk if something goes wrong. And unfortunately, today, there are a lot of players who want to do something wrong. So sensing and preventing something occurring is a much smarter way than reacting after a blew up. That seems to be a dumb approach to security. So that's the key part that I want you to see here. We've modeled here an airport, and I'll talk a little bit about airports in a moment, but that is one of our really confident growth areas at the moment. Interestingly, airports, we are selling all 3 sectors into the airports and also into transportation. So when I talked about the programmatic business, the critical issue is pipeline. If I'm not feeding a pipeline, we can't deliver the orders that the investors expect us to. And so we manage the pipeline on 3 main categories of what we call commit, which is high probability, in progress and early stage. Now obviously, we work series of metrics to which one do we think is going to -- or how many of them will get into the year. But the high probability, our traditional numbers are very, very confident with those. And what that means is we submitted the tender, we've done the down select, we have been selected as a preferred tenderer, we are in the negotiations on contract, contract terms, payment terms. So it's more administrative at that point. Trust me, with some of the large companies in the world that can take a long time to get them to the endpoint. You might think of huge systems and we're so fast and slick now. Trust me, I think 30 years ago, we seem to do it very well with fax and paper, but they take a long time to get these big deals closed. The in progress are the ones where we know the customer well, we're involved with the customer, we submitted estimates and quotes or tenders, and we're waiting for the down-select decisions. And early stage is exactly what it means, early stage. The intention is that early stage would flow into in progress should flow into high probability. And obviously, we don't get 100% of early stage because they drop out, customers change their mind, they don't have a budget. Governments change their mind. They don't have budgets. Big corporations change their mind, they run out of capital. So suddenly they defer a year. This is what happens in the pipeline. The big issue for us in the pipeline is the success of the Aura Ai-X platform. Aura Ai-X, we launched for those just don't remember in March '23. So about 12 weeks after I arrived. And the reason we did that was because if you didn't have the deep learning model, you don't get the performance in detect and alarms. You get a lot of false alarms and that is fatal to a customer. If you think you're a security officer and you're getting 50 alarms a minute, what would you do? You'd turn it off because it's a nuisance. And so that's what we call the nuisance alarms. The deep learning has brought us to the point where very high detection capabilities and very low alarm rates. So that makes us very, very confident. And what we've been building with this program pipeline is repeat business with key large clients. It's easy for me to rush out and drop the price and try to get a one-off deal, but it's suicide if you can't repeat it. And the final part of it is getting what we call the Atlas program, recurring revenue with both deep learning improvement and service maintenance. As David mentioned at the top, we're now comfortably over 10%. When I started 3 years ago, we were at 0% in our recurring revenue. So again, this is building the capability in the program business. Some of our major clients, you've seen this type of thing before, which is really encouraging. And I can tell you on that, every single one of those clients has given us repeat business over the last 12 months and that was not what we were doing 2 years ago, 3 years ago. So I'm going to speak specifically about Detect driving growth. Detect is without doubt the key element in the business. It has the highest margin of the business, and it's growing consistently. And I see that growth continuing this year with no halt. So Detect is driving the core value in the business. It's not to downplay the other 2 businesses. They just don't have the margin or the scale that Detect potentially has. And the critical issues has been that advanced deep learning, the install and training, I talked there about SIL2 accreditation. I'll talk about metro and trains in a moment. Without that accreditation, you can't bid on them. Now that accreditation took us 12 months to get that. It's a hard work and you have to recertify continually. And we're now accredited and that means we can now bid on those big metro projects. And we've had some great success, which I'll talk about in a moment, on borders. I think everyone in the room understands that borders are a hot topic in every government at the moment. So Detect, a really strong position for us as a business. And also interesting, technically, we've now gone from Aura Ai-X single model, over the last 24 months, we've now released 6 additional models based on that platform, shorter version, buried version, phase version, an L Band version for the telcos, et cetera. All of this has been done within our current R&D budget, and it's pretty impressive for a small company to achieve that. So I want to talk a little bit about key sectors and opportunities -- key sectors and geographies. So I'm going to only concentrate on 3 at the moment because we've seen the major growth in these ones at the moment. That's not to ignore U.K. and Europe. U.K. and Europe has taken us a little bit longer to build the team and pipeline there. In Asia Pacific, we have had significant wins, and you've seen them announced in oil and gas, which continues. And in fact, we're doing major projects in PNG and Northwest Australia at the moment. And in Sydney Metro, which also included the new Western Sydney Airport extension, which we signed. As you know, we signed it late because unfortunately, it was slightly delayed into August. But that has been a huge business. If you look at it today, we're over $4.5 million in the Sydney Metro program. Now that didn't exist 8 months into my first year because we'd actually lost that project to a competitor. We recovered it and now it's been worth $4.5 million. We'll look forward to advising the investors later this year, I hope, of a further extension to that because we're in a very strong position with it. Interestingly, that has also started to extend into parts of Asia. One of the biggest investors in Australian Metro is MTR from Hong Kong. And they own part of the metro here in Melbourne, they also own part in Sydney. So we are now engaged with UGL with their investment partners on other metros, which come directly over the Sydney Metro project. North America, a vast market, which you all understand, huge government projects. We are involved everything from power station protection to large oil and gas plants, nuclear power plants, schools, all sorts of projects that are in a different style to what you see in Asia Pacific in the Americas. One point of just warning at the moment, the American shutdown is difficult to manage because many times, you're trying to close a deal and you now get an e-mail that says, there's no one home, please contact us when we reopen. So that's a little bit of a worry for me at the moment. But I'd have to say at the moment, the team are getting good results. We obviously -- if we can't get federal government, we're moving on the state and the private to achieve that. In Middle East, we've had tremendous results in Dubai, in North Africa, in Kazakhstan, Azerbaijan, Armenia, and the huge project on the Western borders in Poland. And I'll talk a little bit about that case study. But that's, again, major issues, and we're being very successful in it. All of those reinforce our trusted position with key clients. I want to update you on Telstra. Telstra is complex. Australian Communications are complex. And you probably noticed that when you see all the debates and discussions going on in parliament with Optus and everyone. But we have had great success with Telstra. We have deployed a system on the subsea landing station, which is producing really interesting results. We've done great work on the exposed cable work and in general work with Telstra. Now it has been slower than I would have liked. But I'm afraid that's the scale of the business. It's a big business and it just takes time. But we are now well into that position with Telstra. We've got at the moment 3 units deployed with them gathering data and providing really good results. I'm hoping to be able to announce to you the extension of our supply agreement with Telstra, as many of you will know it is due in December for renewal. We're in the middle of that. It just takes some time to get it done. But I'm absolutely confident we'll be done. So I'll just talk about this one with critical European border, where we use the words critical European border, you can work out where it is because it's pretty obvious. We have had fabulous results in this. We have 2 different installations at the moment, and we've been successful in winning 2 others. These are both a buried system and a fiber operating on a large palisade fence. The ones who look, I can't do it in this one, unfortunately, it's PDF, but it is on the website and shows you the link. You'd be amazed to see what people do to try to get through these borders. So these are "refugees" with angle grinders, very upmarket refugees or technically skilled refugees. And that's what they're doing there. They're cutting through the Palisade fence. Now our system alerts the guards who get the alert and rush to the spot and as they actually come through as you see on the video and grab them. We also recently had a fabulous result, I'll speak in a moment about, where they dug under the fence, and we alerted to that. So this customer is extremely happy with how we're performing on the key borders. We see opportunities in Finland, Latvia, Lithuania, Estonia, Romania, Bulgaria, you get the picture, but it's a very, very strong issue. Interestingly, we've also had a lot of interest in Asia on the unmanned borders in certain regions. So I hope to be able to give you more advice on that in the coming year. Airports, you've seen this one before on Dubai. At the moment, we also have success in a group of Northern -- North African airports, which has been very encouraging. And we are in the discussion right now with 4 major Australian airports. As you know, the government mandated after the Avalon issue. They mandated that we will be starting trials with 2 of the airports in November, 2 more at the start of next year, and I'm anticipating getting deployments to commence in Q4 of this financial year. Airports have always focused on their internal security, what you will have to go through at the airport, baggage and check-in. I think their perimeters have been a little bit less intense, that has changed. Oil and gas, this is just a continuing success story for us. The Woodside site is enormous. We've got big deployments with Santos and Exxon and PNG and Gladstone. These are continuous repeat clients now. They were not repeat clients 3 years ago, but they are now consistently repeat clients. It's just another really strong area. Sydney Metro, this is just a wonderful project. As I said, we've now won 2 of the packages for Western Sydney extension. We hope to pick up an additional extension shortly. Very challenging project. So we're providing security on an unmanned Metro, so an automated metro that's operating on a brownfield railway extension. So very, very complex. We have to separate the new greenfield Metro from the brownfield railway and make sure that there's no access to that area. You imagine a pretty critical one to get the safety right. So a little bit of proof of results. So this was a great response from 2 of our clients only in the last month. The first one was again that Eastern European border, where our system detected people tunneling under the fence. The customer was delighted because he wasn't really certain that's what we could achieve. On the corrections when we have a tremendous capability with corrections in America, and I'm looking forward to giving you more advice to that as we close some of the deals that are slightly held up with the government shutdown. But we also had this great result about our system, which has just been deployed in one of the main prisons, detecting a breakout. And you've seen some of the noise in America with breakouts, which are embarrassing. And so that's directly e-mail directed from the client who was just delighted, which is also why we're being successful in repeating those sales. Trains and metros. I said I'm so delighted with this one. And UGL is our big partner. They actually ended up getting some of the rail industry standard safety awards in the meeting only held a month ago. And as I said, I see further work in Sydney, and we've just started our first discussions on work here in Melbourne, and we have ongoing discussions in several cities in Asia. So very, very confident with the way trains and metros. And just to remind you, that this did not exist as a market sector for us 2.5 years ago. So the summary of all this is that we have, in my view, a very strong growth outlook going forward. So we just did a trading update this morning and that is the performance during Q1 was very solid. And always remember, Q1 is our -- normally, our quietest trading quarter because of the Northern summer where we lose a lot of people for about 6 weeks, a lot of customers. So a solid order intake of $9 million. We did receive the order from Siemens, the one that was deferred, which is great, and we've actually already started delivering equipment into that project. We also have another sovereign border project, which was Latvia, and our sales order backlog has now grown to $7.5 million, and that includes $2.6 million of recurring. The sales opportunity pipeline remains extremely strong across all 4 of our regions. And I expect to see further growth with the order intake in the second quarter. We have provided revenue guidance for H1 in the range of $17 million to $18.2 million. Of course, that's dependent on the timing of particular orders. At the moment, I have good visibility of those, but things do change. But at the moment, we're driving to deliver those. So the focus in 2026 is to accelerate the revenue growth. I need to get that revenue, as we've suggested, higher obviously than last year because that will get us into the solid free cash flow position, which is where I want it. We want -- after successfully consolidating our business in FY '25, we saw that $3 million EBITDA turnaround. And that is a substantial turnaround for a $30 million business to go from an $800,000 loss to a $2.1 million EBITDA position. And I'm confident we've got the foundation for that growth. In Detect, I believe we will see further growth in Ai-X, and we're targeting 20 plus -- 20%-plus growth in Detect. Now that comes through and falls straight through to our operating position, our profit position. Access, we're focused on getting Access stable in America. We've had a strong position with dormakaba, but Access has been slow. The dormakaba position in America has not been a simple relationship and so our focus is to get that stable this year. In Australia and in the U.K., Access is doing extremely well. In fact, it's about 10% to 15% above average. So they've done solidly in Australia and U.K., but the U.S. remains challenging for us. And Illuminate, we have seen growth year-on-year. It is a tough business given the sheer scale that you need to put into it to get it there. We also had some really good success this year. We've actually sold about $200,000 worth of equipment into Ukraine for security of key infrastructure in tandem with our fiber. And we've also seen some very good results in America. We are linked with a company called Digital Watchdog, which is giving us a real access into the U.S. market. Illuminate will remain tough, but I remain confident that I can get it to the point of profitability going forward. At the moment, gross margins are going to remain stable, 60% to 65%, and I'm planning to get that a little better, I think, than that, but I'm very, very confident with that. And with targeted investments in our sales and project management, we should be able to deliver on that. And we anticipate EBITDA margins in the double digits for this year. I look forward to updating you on the progress and delivering our growth opportunities going forward. And with that, I should hand back to David.

All right. We will now proceed with the consideration of the financial and other reports followed by the formal resolutions, and as is customary, there will be time for shareholders to ask questions. The Notice of Meeting dated 25 September 2025 was dispatched to all shareholders. I propose that with your agreement that the Notice of Meeting be taken as read. Shareholders who wish to inspect the Ava Group -- Ava Risk Group register, may contact our share register to Boardroom Proprietary Limited. As I propose each resolution, the screen will affect the total number of valid proxies for that item and the manner in which they have been directed. These figures will be as at the closing time of receipt of proxies, which was 11:00 a.m. on 28 October 2025. These figures may be varied if a shareholder who submitted a proxy is attending the meeting and has revoked their proxy. We will now open -- proceed with the business of the meeting. I now open all resolutions for voting. Financial statements and reports. Item 1 on the agenda deals with the receipt and consideration of the financial report, the Directors' report and the auditor's report for the year ended 30 June 2025. No shareholder vote is required in relation to this item of business. However, shareholders now have the opportunity to ask questions or have discussion on these matters. Ava Risk Group's financial report, Directors' report and auditor's report for the year ended 30 June 2025 are incorporated into the 2025 annual report, which has been sent to all shareholders who have requested the report. There's also copies over here to my left. I would now encourage any shareholder who has a question on these reports to raise them now. There is also the -- this is also the appropriate time to raise any questions you may have of the auditor, which are relevant to the conduct of the audit and the preparation and content of the audit report. Kim, do we have any text or verbal questions received via the online platform?

And David, there are no questions in relation to the financial statements, but you have a couple of questions in relation to the CEO's address. Would you like to take those now?

Yes, absolutely. Thank you.

Okay. Questions are from a shareholder, [ Robin Zang ]. There are 3 questions. Management projected a 20% growth in 2026 considering the $3.9 million sales that were delayed from FY '25 to 2026, which takes over 60% of the 20% growth, does that mean that the FY '26 is expected to be in fact a flat year?

Do you want to deal with that now or do you want me to do that?

No, I can do it. Yes, with the delay if you look at the numbers, including the deferred one, it's -- we've estimated is 20%. On the basis that it is more of a likely that something [indiscernible] challenges near the end of the year, this has occurred. The actual growth year-on-year is about 20%. I would like to see it stronger than that [indiscernible] and applies those deals in the end of the year...

Thank you, Mal.

Second part of that question. [indiscernible] is expected to be as H1 FY '25 with the revenue [indiscernible] '25?

Kim, unfortunately, we can't understand you here in Melbourne.

[indiscernible] I will send a message. FY '26 result H1 is expected to be the same as H1 FY '25 even with the revenue delay from H2 FY '25. Is the 20% growth still achievable or should we expect a revenue down...

The guidance we've given is $17 million to $18 million. Remember that the comparative period in FY '25 was very strong, and that was primarily because we delivered 2 very large projects last year, Chile and the Polish border, which came up to over $4 million. So it was an extremely strong quarter. So strong quarter to this year or a strong half to this half, I'm still expecting to see us get growth into this half on a like-for-like basis. But the whole year, we're looking at a 20% growth.

And the third part of the question, management suggested that is up to [indiscernible] processes to decide any further revenue from this partnership is happening. And shareholders are sharing what management does [indiscernible] in FY '26.

I'm guessing that was a Telstra question. And at the moment, we have not factored in any specific major projects with Telstra in this coming financial year, although I do expect some success. But predicting it is extremely challenging. What we have achieved to date is an excellent relationship with them. We have achieved installations and results and it really comes down to just a time at which Telstra decides to go forward with the project. I hope that answered what it was.

So I think there was a materiality question as well. But I mean it's fair to say that the company's position hasn't changed in terms of the opportunity with Telstra. It's still very much a material aspect of growth for the business, and we see that going forward. And as Mal noted, the 20%-plus growth expected from this year isn't dependent on Telstra. You would have recalled in the previous years where we thought we had a bit more knowledge about the timing of the Telstra progress. We called out as a separate line item. We had a core business and then as a separate line item we called out adjacencies. We've acknowledged in the last few years that calling that out as a separate line item is difficult. And obviously, better that we call it out as we receive the POs from Telstra. So we don't call that in our core business at this point in time. Any more questions, Kim?

[indiscernible] no more questions.

Thank you. Any questions, Ian.

You said that we're turning into pivotal year of accelerating our growth, a pivotal year for accelerating our growth that's cut and pace from the previous couple of years. We've heard that before. We've seen very tepid sales growth. We have seen the bottom line going down. A discussion with Mike before last year's AGM was he said that the targets that were set were achievable, and you missed those by a mile. Can you talk about the short-term incentive and long-term incentive targets for the coming year? The last couple of years, we've seen them ratchet down as they haven't been achieved, so they've been made easier and still not achieved. What are the targets for the coming year?

The management target...

The long-term incentives and short-term incentives for the management and Board.

So they're tied. I think it's in the annual report...

[indiscernible] and to share price with those targets?

Yes. Do we disclose those publicly, I don't think we do?

[indiscernible]

Okay. Can you say them to me now? I didn't see them in the notice.

Yes, $0.15.

So down from $0.24 last year. And EBITDA?

[indiscernible]

Okay. Well, what about the other long-term and short-term incentives?

[indiscernible]

Okay. So and that's entirely on share price?

[indiscernible]

Okay. Normally, you don't. You're missing it by a material amount, $2.1 EBITDA compared with a target of $7. Your reckon shareholders want to know because they do because you've been missing it by so much. And when I spoke to Mike last year, he said it was achievable, and you missed it by a mile.

And I think that's why when you look at the outcomes for the incentives that was [indiscernible]

Yes. So shareholders are interested to know what you're targeting this year, whether you're making it easier again, or what's the rationale between the remuneration? Who's on the Remuneration Committee? Would you like to speak to that? You spoke to me about it last year?

I spoke to you last year? I wasn't there last year.

I know, we spoke on the phone.

Okay. Well, there's different targets being set as Neville has just said, there's different targets being set for different reasons and different parts of the business, what we've done internally. But what we're doing on the sort of the macro level, we're all pretty much phased in the right direction, that basically the share prices, the trigger point on the PSR. Is it an easier? Of course, it's a lower price, but then it's a lower standing start. So is it double is basically, we don't -- nothing is seen unless we double the share price.

Next question. I don't think we're getting anywhere there. Next question, Illuminate and Access. They were downplayed in Mal's talk. The goodwill has been written off in the Illuminate. Are there any thoughts of disposing of those assets and concentrating on the main game?

Look, it's interesting, and it's certainly something that we talk about regularly because Detect is performing very well, as you saw. Great EBITDA, really good margins. And those 2 divisions, obviously, in their current financial performance are a little bit of a drag on the detect performance. That said, Mal also spoke about, we're finally seeing some cross-sell meaningful, not 5,000, 10,000, hundreds of thousands in cross-sell in the U.S., hundreds of thousands now in Poland with Illuminate. We've seen increased engagement now with our OEMs. We had someone join us and then go on maternity leave unfortunately, and she's just come back recently, and that's meant that, that division is sort of in the spotlight again and in performing -- it is challenging. Moving the needle in those distribution businesses is a lot more challenging than what the company believed a few years ago.

Access was a great wide hope with the new Maglock. And now we hear the relation with dormakaba is challenging and complex. Iif you've got cross-sell with Illuminate, I'm assuming there's not a lot of cross-sell with Access. Is that for the chopping block? These things are weighing down performance?

Yes...

They have been on an ongoing basis.

They definitely are. And -- but the promise of dormakaba in the U.S. still exists until it doesn't. And that will play out really in the next 6 to 9 months. And we've got some, I'll say, very firm lines in the sand with them and with the team that's leading that charge to really drive performance there and drive the cadence there. Mal mentioned that access in Australia and in the U.K. is actually doing quite well, and we're actually selling a lot of those locks, including to dormakaba. So in much smaller markets, we're making more money than we are in the U.S., which is a huge market, we should be making significantly more money. So it's quite frustrating in terms of that. The team does have a well-defined strategy, and we're tracking that progress in terms of customer visits, getting into specifications, getting into tenders, activity from a sales perspective. But I think it is fair to say that in this financial year, we'll make sure we look at that quite carefully because we don't want to go into another financial year where those businesses, both of them aren't contributing positively to our bottom line. So there's no doubt about that. Any more questions? Con?

Just on -- if we look at the '25 figures in Detect, $4.3 million or thereabouts, there was the services line around that in Detect, the rest was product. Can you guys provide a bit of color around what that services means?

Yes, I can. So services, depending on the customer, and how they want to do the service that's going to be everything from traditional service and maintenance breaks down we service up to a full support, which includes digital model updates every 3 months because as we learn more about each site, each site is absolutely unique. You saw the pictures of Poland, I can tell you that's somewhat different in its deep learning model to UGL Sydney Metro. There's a slight difference to the way those models work. The more data we get from the clients the better the performing the models are. So our service agreements do everything from parts and labor maintenance to digital upgrades to cybersecurity upgrades to system upgrades -- so that's -- it sort of moves across that whole remit. The good thing about it is every box we sell adds to that backlog.

So the -- it sort of starts after installation. Is that a fair...

Correct. Correct.

So installation includes services, if...

No, we don't put installation to service, it's part of the capital sale. So all of that services part is post acceptance by the customer. Now some of those lines are a bit blurry with some customers because the acceptance can take 12 months. So once we get it in store, we move to services.

Another question. Last year, this time, you provided that pipeline of in the Detect area, the pipeline of with the probability rating of the order stack. If we look back, so if you take those figures and look back what actually happened in FY '25, are there percentages that you guys can allude us to in terms of what actually happened there?

Yes, I'm going to be a bit cautious here because if I was my opposition, I'm going to be looking at that really carefully. So I'm being a bit -- I'm going to be cautious here. As I said in my presentation, the top line high probability, we have an excellent delivery rate. The in progress, as I said, what that means is we haven't yet got the down-select, we haven't yet got into the contract negotiations. So the percentage success in that is less and could be anywhere between 30% and 60%. And in the early stage, you're talking very low numbers.

But that's -- I understand. But if you look historically about what happened in FY '25 and you look at your FY '26 stack without giving the detail, no one into the detail, what does that number come out to? If you do the weighted percentage based on what happened in FY '25?

It comes out -- so for example, on this year, that weighted average comes out very confidently in that 20% growth above the 20% growth. Now I'm being cautious so that we don't overpromise and under deliver. So my pipeline at the moment looks very strong compared to '24 and '25. This year's pipeline is much more solid. And the reason for that is the team have matured and the product has matured and we're getting much better feedback directly for customers now. Back in '24, the products were very new and very immature, and we were immature and how to present those. '25 was our first full effort, and I think we were optimistic.

I'll put it another way, Con. When you look back at the jobs that came in that we were talking about when we started the financial year, the guys got it wrong 25% from that stack. 20 of that percent from that 25% was those 3 big chunky orders that didn't come in Q4 that rolled forward into this financial year. So when you look back at that building up that stack and how the company forms its budget each year, same way we've done it this year a little bit different from the in progress, but that was the in hindsight miss to believe that those 3 big chunky orders would be in the second half when we said in the first half, so -- and then about 5% smaller orders that moved around, but they were mainly replaced by other orders. So it wasn't a material impact and that was the 20% miss on the revenue number, too, almost dollar for dollar.

The other question we've got, I think this -- I don't know if it's an audit or finance question, but there was about $450,000 of impairment on receivables. Again, I don't know it's an auditor question or someone or something for Neville, but what's the scenario there? Is it people not paying or challenging contracts? What's going on there?

So there's 3 things going on there, right? So 2 of them relate to 2 large contracts we've got UGL, which is the Western Sydney Metro and one with Fortis, which is delivery of some systems into PNG. So the majority of both of those deals actually recognized in FY '24, right? But the collections is tied to the prime contract, right, with either Fortis or UGL, getting their money from Sydney Metro. So when you look through the aging analysis of our receivables, you will see some stuff has moved to the right. It's primarily related to those 2 contracts. And that, in turn, feeds into doubtful debt provisioning. So even though it's called impairment of receivables, they haven't been written off, right? And we have no expectation of any of that stuff to be written off. The third item that's in there relates specifically to 1 contract in South America, where effectively, we've got security over that contract by way of the controller, but we're still waiting on final payment for it, and that's been fully provided for, right? So that really explains the uplift in the receivable impairment.

Okay. So we shouldn't be expecting a write-off of about $450,000 in the next year or so relating to what we're seeing there at the minute?

Correct. So the UGL and Fortis stuff in particular, there is no collection issues. And in fact, we've just received a sort of interim payment, if you like, from UGL under that contract. The one in South America, we continue to pursue that. But having said that, we still have control over that controller. And so in the event that we believe we were not going to get paid for that, we would recover that control and effectively resell or refurbish it and resell it.

Right. Just one other question around, again, I know it's sort of not under the auditors or directors' report specifically, but around new product development. Now I know that in the last few years, it was the main product, and then there was a -- I think you called it low-range product or lower or something. And then -- so the question I've got is these other offerings or products that are coming out, how does the margin compare to the original product? Is it about the same in terms of what we're earning or we're going a little bit down the margin stack because we have to use existing technology, I mean the development might be incremental, but the margin -- I don't know we maintain the margin...

I can tell you straight up, the margin has not gone down at all. In fact, in some of them, it's gone up. What we're doing is sweating the platform that we have because that reduces the amount of cost that we have to invest to develop a new product. What we're saying is the short, the buried, the phase, the L-band or all the margins remain with the original model. Some of the shorter ones are actually better. So we see no decline in that, and that's because we save some money in the bill of material and we also save money in just the sheer ability to reuse parts of the platform. It's a great effort by the R&D group. I mean we haven't increased our spend in R&D since I took over, yet we've converted almost 80% of the R&D spend now to purely product, commercial product delivery and only 20% is in sustaining and support. And I can tell you it was nothing like that 3 years ago. So that's been a really positive result. No change to the margins at all for each of the product lines.

Any other questions from anyone in Melbourne? Thank you. I'll now like to move on to consider the formal motions of the meeting. Here we go. I'll refer you to Resolution 1 of the Notice of Meeting in respect of the approval of the remuneration report of the company. This is a nonbinding resolution. The company's remuneration report is contained in the 2025 annual report and is also available on the company's website. The screen shows the proxies received for and against this resolution and the proxy's discussion including me as the Chairman to vote in accordance with my stated voting intention in favor of this resolution. I would highlight that in accordance with the Corporation Act. No votes may be cast on this resolution by or on behalf of a member of the company's key management personnel or the closely related parties. I'll refer to these people collectively from now on as prohibited voters. A prohibited voter may vote directed proxies where they do so for another person who is not themselves or a prohibited voter. As Chairman, I may also vote undirected proxies for a person that is not a prohibited voter in accordance with my stated voting intentions to vote all available proxies in favor of this resolution. For the purpose of this resolution, a prohibited voter includes a member of the key management personnel named in the remuneration report. Before opening this to discussion, I'd like to mention that in the interest of corporate governance, Ava Risk Group Board have abstained from making a recommendation in relation to this resolution. Kim, do we have any text or verbal questions on the online platform?

David, there are no questions at this time.

Thank you. Anyone in Melbourne like to ask a question? No? Thank you. If there's no further discussion, I propose the resolution that the company adopt the remuneration report for the year ended 30 June 2025 in accordance with Section 250R2 of the Corporations Act. Please submit your vote or mark your voting card in respect to this resolution. [Voting]

Resolution 2, I refer you to Resolution 2 of the Notice of Meeting in respect of the reelection of Mr. Mark Stevens. Mr. Stevens retires in accordance with Rule 19.3 of the company's constitution and Listing Rule 14.5. Mr. Stevens biography is included within the explanatory memorandum accompanying the Notice of Meeting. The screen shows proxies received for and against. This resolution and at the proxy's discretion, including to the Chairman to vote in favor of the resolution. The Ava Risk Group Board, with Mr. Steven abstaining, unanimously recommends that you vote in favor of this resolution to approve the election of Mr. Stevens as a Director of the company. Kim, do we have any text or verbal questions via the online platform?

David, there are no questions at this time.

Anyone like to ask a question in respect to this resolution? No? Thank you. Given there's no further discussion, I'll now propose the resolution that Mark Stevens, who is retiring in accordance with Rule 19.3 of the Constitution and Listing Rule 14.5 and who offers himself for reelection, is reelected as a Director of the company. Please submit your votes or mark your voting card in respect to this resolution. [Voting]

Resolution 3, approval of 10% placement facility. I refer to you to resolution 3 of the Notice of Meeting in respect of the approval of the 10% placement facility. The terms and details of this resolution are contained within the explanatory memorandum accompanying the Notice of Meeting. The screen shows the proxies received for and against this resolution and at the proxy's discretion, including to the Chairman to vote in favor of the resolution. The Ava Risk Group Board unanimously recommends that you vote in favor of this resolution. Kim, do we have any text or verbal questions received via the online platform?

David, there are no questions at this time.

Thank you. Anyone have a question in Melbourne? Thank you. If there's no further discussion, I now propose the resolution that for the purpose of listing Rule 7.1A and for all other purposes, shareholders approved the company having additional capacity to issue equity securities up to 10% of the issued capital of the company at the time of issue, calculated in accordance with the formula prescribed in Listing Rule 7.1A.2 over a 12-month period from the date of the Annual General Meeting at a price no less than the determinant pursuant to Listing Rule 7.1A3 and otherwise on the terms contained in the explanatory memorandum. Please submit your votes in respect to this resolution. [Voting]

Resolution 4, amendment to Constitution. I refer you to Resolution 4 of the Notice of Meeting in respect of the amendment of the constitution. The details are contained within the explanatory memorandum accompanying the Notice of Meeting. The screen shows the proxies received for and against this resolution and at the proxy's discussion, including the Chairman to vote in favor of the resolution. Kim, do we have any text or verbal questions received via the online platform?

David, there are no questions at this time.

Thank you. Anyone in Melbourne like to ask a question?

Just for my benefit, maybe on a simple, but can you maybe briefly describe what that resolution is?

Kim, do you want to deal with this Neville? Or do you want to deal with it, Kim?

I couldn't hear the question, David.

Just explaining from a layman's point of view around the 3-year change in terms of proportional takeover provisions.

Yes. So the provision in the constitution is only available for a 3-year period unless approved again by shareholders. In the case of Ava, the constitution was last put to shareholders in April 2022. So for that reason, it has had to put up as a change to the constitution not simply a renewal so that we can insert those provisions back in. Does that explain the question?

And I think [ Colin ] wants to know about from the proportional takeover rules what we're actually agreeing to that's different.

So what we're saying here is that with this provision in the constitution if the company receives a proportional takeover, it has to be put to shareholders before it can be accepted by the company or the directors. Without that provision in there, there is not the same requirement to put it to shareholders for approval.

All right. Any other questions in respect to this resolution? Thank you. I now propose the resolution that for the purposes of Section 1362 and 648G of the Corporations Act 2001 and for all other purposes approval is given for the company to amend its existing constitution by inserting a new Rule 15 which sets out the proportional takeover provisions to apply for a period of 3 years from the date of approval of this resolution. Please submit your votes or mark your voting card in respect to this resolution. [Voting]

All right. Ladies and gentlemen, please ensure that you have cast your votes on all resolutions. I'll now pause to allow you time to finalize those votes. For those of you in Melbourne, please place your voting cards in the poll box, which will be brought around by [ Alisa ]. All right, I now declare voting closed. We will publish the final results with the ASX on our website. This now concludes the formal part of the Ava Risk Group's Annual General Meeting. We invite questions for a final time. Anyone got any further questions in Melbourne? No? Kim, are there any other questions that we haven't addressed?

No, David, there are no questions.

Thank you. If there's any shareholders in Melbourne, please stay for refreshments afterwards, tea, coffee and some snacks, including sausage rolls and fruit to interact with the management and the Board as you see fit. Any one in Melbourne like to ask any questions or make any comments before we close the meeting? That now concludes the formal part of the Ava Risk Group's Annual General Meeting. Thank you all for your attendance and to everyone in Melbourne, thank you for making the effort to come in and see us in person and listen to the progress that the company has made and what our plans are for the future. Really appreciate you taking the time to do so. And thanks, everyone, online for taking the time out of your busy schedule to hear from the company, and thank you for your support as shareholders. I appreciate it. Thank you.