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

Ladies and gentlemen, welcome to the General Meeting of Ava Risk Group Limited. My name is David Cronin, and it's my privilege to serve you as Chairman of the Board. I declare that a quorum is present, and accordingly, I declare the meeting open. I would like to thank each of you for your attendance today via the Lumi Online technology. This 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 submit questions and votes. Questions can be submitted at any time. [Operator Instructions] Please note that while you can submit questions from now on, I 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 one topic, amalgamate it together. Finally, due to time constraints, we may run out of time to answer all of your questions. If this happens, we will answer them in due course via e-mail or on our website. In the event that I am disconnected from the meeting and cannot immediately rejoin due to technology failure, Mark Stevens will assume the role of Chair of this meeting. Voting today will be conducted by way of poll on all items of business. In order to provide you with enough time to vote, I will shortly open voting for all resolutions. At that time, if you're eligible to vote at this meeting, a new polling icon will appear. Selecting this icon will bring up a list of resolutions and present you with voting options. To cast your vote, simply select one of the options. There is no need to hit a submit or enter, as the vote is automatically recorded. You do, however, have the ability to change your vote up until the time that I declare voting is closed. Let me begin by introducing to each of your directors in attendance today. We have Robert Broomfield, Executive Director and Chief Executive Officer; and Mark Stevens Non-Executive Director; Michael McGeever, Non-Executive Director, sends his apologies. I would also like to introduce Neville Joyce, the Chief Financial Officer and Joint Company Secretary; and Kim Clark, the Joint Company Secretary, who are also in attendance. We will now proceed with the consideration of the reports followed by the formal resolutions and at it is customary, there will be time for shareholders to ask questions. We will now proceed with a discussion on the proposed resolutions, including questions from shareholders about each resolution. The Notice of Meeting dated March 14, 2022, was dispatched to all shareholders. I propose that with your agreement, the Notice of Meeting be taken as read. Shareholders who wish to inspect the Ava Risk Group register may contact our share registry, Boardroom Pty Limited. As I propose each resolution, the screen will reflect the total number of valid proxies for that item and the manner in which they have been directed. These figures will be as of closing time of receipt of proxies, which was 11:00 a.m. Australian Eastern Standard Time on April 20, 2022. These figures may be varied if the shareholder who submitted a proxy is attending the meeting and has revoked their proxy. We will now proceed with the business of the meeting. I will now also open the voting on all resolutions. Resolution 1, return of capital. I refer you to Resolution 1 of the Notice of Meeting in respect of the approval of a return of capital. Additional information in relation to this resolution is included within the explanatory memorandum accompanying the Notice of Meeting. The Ava Risk Group Board unanimously recommends that you vote in favor of this resolution. Have we received any written questions in respect to this item, Kim?

No, David, there are no written questions.

Okay. We did receive one question prior to the meeting via e-mail, and I'll address that also as we walk through. So in terms of the return of the capital, if there's no further discussion, I'll now propose the resolution. That for the purposes of section 256C of the Corporations Act and for all other purposes, subject to receipt by the company of a favorable class ruling and I'm pleased to announce that we have actually now received a draft ruling from the ATO. Prior to the record date and all other conditions outlined in the explanatory memorandum, approval is given for the ordinary share capital of the company to be reduced by approximately $7,565,874 by debiting the company's share capital account and such reduction of capital to be effected by the company paying to each registered holder of a fully paid ordinary share in the share capital of the company at 7:00 p.m. on the record date in accordance with the timetable contained in the explanatory memorandum, the amount of $0.03114 per fully ordinary share in the company held by that holder at that time as set out in the explanatory memorandum. Please submit your vote or mark your voting card in respect of this resolution. Votes and proxies received for and against these resolutions and at the proxies' discretion, including me as the Chairman to vote in accordance with my stated intentions in favor of this resolution, where 75,823,201 being 90.36% in favor. 6,683,084 being 7.96% open and 1,405,944 being 1.68% against. We'll now move on to Resolution 2, adoption of constitution. I refer you to Resolution 2 of the Notice of Meeting in respect of the adoption of the proposed constitution, the details of which are contained within the explanatory memorandum accompanying the Notice of Meeting, including the voting exclusions applicable to this resolution. We have received a question in respect of the adoption of the constitution by e-mail from a shareholder prior to the meeting, and I'll address that immediately. The constitution is a core governance document that governs the relationship between its company, its directors and its shareholders. Ava's constitution was adopted initially at the time of its IPO. The review of the constitution was triggered by recent amendments to the Corporations Act, which included, amongst other things, changes in relation to the company's ability to hold virtual meetings and the requirement for express permission to be included within the constitution for the company. Ava took the opportunity to undertake a detailed review and update the constitution at this time. The screen shows proxies received for and against this resolution and at the proxies' 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. Have we received any further written questions in respect to this item of business, Kim?

David, we have. We have received a question in respect of a specific component of the constitution, which I'm happy to answer. But the questions come from a shareholder [indiscernible] Proprietary Limited, and asks why -- can the company explain why it's adopted a path which requires a resolution to be passed prior to a proportional takeover bid? Is this a regulatory requirement? And why does the continuation of this course need to be reviewed after 3 years? David, if you're happy, I'll respond to that.

Please do.

So the clause in the constitution protects the company and its shareholders against an off-market or hostile takeover, a proportional takeover in the usual course does not allow for a full exit of all shareholders. Therefore, the company believes it's appropriate to seek a shareholder vote in no circumstances. In respect to whether this is a regulatory requirement, it is optional for the company to include that provision in its constitution, but I just explained the rationale for doing so. And yes, the continuation of this course and the renewal every 3 years is a regulatory requirement under the Corporations Act. And we've gotten no other questions, David.

Thank you, Kim. I hope that answers your question. And if it doesn't, please feel free to contact the company or the Company Secretary for further clarification. If there's no further discussion, I'll now propose the resolution that with effect from the close of this meeting: The existing constitution of the company be repealed in its entirety in accordance with section 136(2) of the Corporations Act 2001 and the company adopts the constitution contained in the Appendix B as the constitution of the company in accordance with section 136(1)(b) of the Corporations Act 2001. Please submit your vote or mark your voting card in respect to these resolutions. [Voting]

Votes and proxies received for and against these resolutions and at the proxy's discretion, including me as Chairman to vote in accordance with my stated intentions in favor of this resolution were 67,512,689 being 81.41% in favor. 7,277,515 being 8.78% open and 8,139,199 being 9.18% against. Ladies and gentlemen, please ensure that you have cast your vote on all resolutions. I will now pause to allow you time to finalize these votes. [Voting]

David, while that's occurring, I have received 2 other questions, more general questions from shareholders. If you'd like to take those after the voting process.

Yes, sure. Why don't you read them out now, Kim, and we'll deal with them now while people can finalize their votes?

One of them is in relation to the capital return and investment in new technology from [ Gregory Clute ] and asks that we explain why we expect to return capital to shareholders instead of reinvestment in new technology or core business operations.

Yes. So it's a very good question and one that the Board and management reviewed quite closely then looking at our capital needs, and we determined that with the investment that's already gone into our intellectual property and our products and solutions that the investment that will need to go in, in the coming years will be quite modest compared to our excess capital or our cash at bank and our ability to generate cash. So when we look at our cash balance at the moment and post the cap -- proposed the capital return, we feel that we have more than enough to invest in our products, including some new products to continue growing our market share, but it's obviously something that we'll always review really on an annual or biannual basis, and we're actually going through a planning process for the next year. But we had last year already set a 3-year business plan, which included our growth aspirations and that included an amount of CapEx for investing in our products for our growth and the funding that we will be left with after the capital return, after the proposed capital return will be more than adequate to cater for that.

David, there's one other question from [ Stephanie Wright ] and asks what are the plans for the future in increasing revenue and making up for the majority of the sold business?

Yes. So obviously, now we're a technology division. So we can focus on our BQT and FFT divisions. We already have strategies that we've commenced execution in this current financial year around growing recurring revenues, distribution of our locking products and our reader products in large overseas markets. We also have our Aura IQ platform, which we did launch some time ago, but we've completed many proof-of-value trials that's a very large new market that we've successfully entered into and hope to bring shareholders some good news very shortly on some commercial deployments there. And those growth opportunities, along with our investment in sales resources in the Americas, in particular, Jim Viscardi, some of you may recall, joined us 6 months ago and to really produce more scalable results in the Americas, both North and South, but also copy that over to other areas in the world as part of our expansion proteges. So I think in terms of our growth to replace the revenues from the division that divested, we're well on track in our 3-year plan in that respect. We will be providing some updates to shareholders on our last quarter by the end of this month. And we'll also obviously provide year-end updates on how well our strategy is going in that respect. But it's fair to say that we're on track in terms of our internal aspirations and business plan, except for a slight delay in Aura IQ, which we've already disclosed to the market the reasons for that. But generally, we're quite pleased with our ability to generate new revenues to replace the divested business. Any further questions, Kim?

No other questions, David.

Okay. So Voting is now closed. We will publish final voting results with the ASX and on our website. That now concludes the formal part of the Ava Risk Group General Meeting, and I'd like to thank you all for your attendance and call the meeting to a close. Thank you, ladies and gentlemen.