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

All right. Ladies and gentlemen, welcome to the 2023 Annual General Meeting for Ava Risk Group Limited. My name is David Cronin. It's my privilege to serve you as Chairman of the Board of Ava. [ I am doing the slides ]. I declare that a quorum is present. Accordingly, I declare that the meeting is open. Thank you to everyone for attending in person and connected into the Lumi AGM technology and joining us today. The Lumi technology allows shareholders, proxyholders and guests to attend the meeting virtually. All attendees can watch a live webcast of the meeting. In addition, shareholders and proxies have the ability to ask questions and submit votes. [Operator Instructions] 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 will merge them together. For those shareholders attending in Melbourne today, should you wish to ask a question when invited to do so, please raise the voting card that you received at the time of registration, and 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 all of your questions. If this happens, we will answer them in due course via email or [ posting ] responses on our website. We will certainly give our best efforts to answer everyone's questions. Before proceeding with the business of the meeting, I would like to mention some procedural matters. For those of you attending at our Melbourne venue, you should have registered your attendance as you enter today. If any member or proxyholder has not registered their attendance at the door with our share registry, BoardRoom, we ask that you do so now. Staff from BoardRoom are happy to assist you. Visitors are also registered electronically on BoardRoom's meeting registration system. If any visitors have not registered their attendance, we ask that you please do so. And at this time, in respect to those around you, we kindly ask that you silence all 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 on all resolutions. Those shareholders attending at our Melbourne venue will have received a voting card on registering your attendance, which I will ask you to complete as each resolution is proposed. [ Calvin Kurtz ] of BoardRoom has been appointed as returning officer and will collect all votes at the end of the meeting. For those attending this meeting and voting on the Lumi technology, if you're eligible to vote at this meeting, a new polling icon will appear on your screen. 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 button as the vote is automatically recorded. You do, however, have the ability to change your vote up until the time I declare voting is closed. All right. So let me first introduce your directors in attendance. We have Mal Maginnis, who is an Executive Director, but also most importantly, our group Chief Executive Officer, joined us in January; Mark Stevens, who's been on the Board for a number of years, Nonexecutive Director; Mike McGeever, Nonexecutive Director, been on the Board for a number of years as well; and Neville Joyce, to Mike's right-hand side, he's the Group Chief Financial Officer. He's also the Joint Company Secretary. Kim Clark, who we have online, she's our Company Secretary. And in line with the Corporations Act, our auditor is present today from BDO, represented by Tim Fairclough. They will be available to take questions on the audit report later in the meeting, [ if so required ]. All right. I'll just spend some moments discussing our performance highlights for the year ending FY 2023 before introducing Mal, who will provide more detailed update of the company's operations including our plan to drive revenue growth and importantly, earnings over the coming years. During FY '23, Ava Group continued to build on 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 and by increasing market share and delivering adjacent applications using our existing intellectual property. I'm pleased to report to shareholders that significant progress has been made and accomplished during FY 2023. 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 [Audio Gap] to support its growth. And I don't think anyone that's been a shareholder for more than a few weeks would know that the company is not constrained [ by growth ] our products, our markets, the applications that we serve, but really important that we have an executive team that can enhance that growth and really drive revenue growth and earnings growth for shareholders and have that global experience this company definitely needs. Mal is a seasoned leader. He's got more than 35 years' experience leading both small and large technology groups in complex landscapes, selling to government, selling to business. And that's really important for our customer base and our team of sales executives. One of Mal's immediate priorities has been to reorient the business and to align the company's technology with customer solutions. I'll let Mal talk a lot about that and how he's realigned the business units. A lot of it was common sense, but really important. And it's really made a marked difference from the way that we manage the business, but also the visibility that we're getting into how the business is performing today, next quarter, the quarter after and how it's looking out 1 or 2 years. So that's been a real refreshing change. It's also included a rather big change in investment in our front-of-house staff. So sales -- this business has produced some world-leading technology across all 3 divisions. Sales is the bit that we've done okay at in the past but that we needed to do a much better job of, and that's -- we had a lot of work in the last 9 months, reorientating the front-of-house and the sales organization. Mal will shortly share what he achieved during FY '23, in his first six months during that period, but as importantly, his outlook for '24 and beyond. In August 2022, Ava Group acquired GJD to create the company's Illuminate segment. GJD is a leading [Audio Gap] specializing in illumination and detection applications. This acquisition provides the company with a complementary product and technology footprint as well as an established go-to-market in Europe. Most people will recall [indiscernible]. We haven't really had much sales business there. We haven't really done any sales there. But after the acquisition of GJD, it gives us a sensible base of operations in Europe and the ability to leverage that, which Mal will talk to as well. We continue to invest in our technology and have built on the Aura platform, leveraging the machine learning capability that our company has developed in the recent years. In March 2023, our Detect segment launched Aura Ai-X at ISC West, the world's largest [ security ] 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. As you would have seen from our announcements, almost immediately [ from ] the launch, and obviously, we were working on this well before the launch, we had a customer of a rather large European border flipped to our -- what they were considering in our legacy technology to our Aura Ai-X and pay a lot more for because of its performance and its capabilities. And so that was fantastic not only from a financial perspective, but also from a validation of the technology. And since then, we've had many follow-on orders for that technology. And importantly, you've heard us talk about our ambitions to grow recurring revenue. Importantly, that product comes with the ability for every system that goes out to create a recurring revenue stream from customers on an annual basis. In our Access segment, we've completed critical product certifications with some of our key distribution partners. You're all aware that we have a strong relationship with dormakaba. And as announced, we announced a rather large stocking order, some follow-on orders from dormakaba, particularly in the important market of the U.S.A. That's seen a significant uplift in Access particularly in the first quarter, already achieving more than 60% of the prior year's -- the whole prior year's orders. So it's quite a positive. Small dollars at this point in time and should grow to much larger dollars, but quite a positive signal in terms of what could be achieved via that channel. The growing momentum in the business is best reflected by the increase in sales order intake and revenue. The company received sales orders of $30.9 million during FY 2023, an increase of 71% on the previous year, 36% if you excluded GJD. This has resulted in revenue of $28.6 million for FY 2023, 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 illumination (sic) [ Illuminate ] segment following the GJD acquisition. Despite the addition of the lower-margin Illuminate segment, consolidated gross margin was broadly maintained with prior year. [indiscernible] as everyone knows, we've got 3 segments. And one segment, the Detect segment, much higher gross margins than our Access segment and our Illuminate segment just because of the nature of business. But the Illuminate and Access segments also had much lower costs of going to market because they're through distribution. We sell through other people's sales forces. So when you look at the numbers, you always need to look at the composition of that makeup is. Quarter-by-quarter, half-by-half, sometimes it's a bit lumpy because the Detect segment is a project business. And so looking at that margin, looking out over the years, quite important [ KPI ] for the company to make sure we're maintaining 60% gross margin on [ a mix ] basis. Underlying EBITDA of $2 million is up 150% on the previous year. Underlying EBITDA excludes some one-off costs of about $0.9 million associated with the restructuring of the business during the second half. Underlying EBITDA margins of 7% was up 3% compared to the previous year. Importantly, we grew our contracted recurring revenue to $1.6 million. And that's one of the Board's key indicators that we're tracking with management, not only [ the actuals ], but the sales pipeline and how many orders have the ability to create recurring revenue and sales [indiscernible], which Mal will talk about a bit in his speech. But they've all got targets [ on the head ] for recurring revenue -- for generating recurring revenue, which is really positive. The Board remains optimistic about the future of the company. We have a proven track record of growth, as demonstrated by the 71% uplift in sales order intake in the year just ended. And we continue to maintain our strong gross margins and have a high-quality customer base across each of the operating segments. Our business model is highly scalable so that we can improve the EBITDA margins as we continue to grow. Most of you would have noticed that there's been a slight increase in operating costs in the business, reflective of our investment in sales [ resources ]. But importantly, as you would have seen from our [ 3-year ] plan, we [indiscernible] that, that cost base that we have is very scalable. So now the game is to really drive front of house and drive revenue with the top line to really leverage that cost base to generate higher EBITDA margins and net profits. We have put together an experienced leadership team, very well versed in leading international businesses. And we've also invested in upskilling our existing team. It's been fantastic having Mal and some guys that he's brought in and some other guys that we've recruited before Mal that Mal has worked with in the past, like Jim Viscardi, who've really taken some of those, I'll call it, less skilled sales professionals that were already part of our organization and really mentored them and upskilled them to be taking on larger projects and running harder and faster. So that's been quite refreshing. We also are forming stronger relationships with our customers and key partners, which you would have seen from the dormakaba. There's been a lot of hard work gone in to actually generate that sort of stocking order and sales order by working directly with their end customers and with the partners in that organization. It's now my pleasure to introduce Mal, who will address the company meeting with his impressions and aspirations for the company. Thanks. Mal?

Thank you, David. Good morning, everyone. I'm delighted to be here [ for my first ] AGM and [indiscernible]. So I joined in January, and it was a lot of work for the first 6 months. I was [ counting it by the day at the start ] because there's a fair bit to do with the business, both meeting the customers, meeting the staff [ across 3 small ] businesses spread across New Zealand, Australia and the U.K. But I'm delighted with what I've seen, and I'll take you through what the actual plan is that we've come up with. So the first one is I changed what you were all used to, the company names: so BQT, GJD, FFT. When I spoke to customers [indiscernible] BQT, GJD, FFT, whatever it was, no one understood them. We sell into markets and customers. We explain [ to them ] what we do and how we do it and what solutions that provide to clients. So we renamed the business into Detect, which is based around our smart fiber system, but it's also other technologies that will [ bolt on ] to that smart fiber. You can't just sell smart fiber on its own. We then -- I then changed the BQT business fundamentally to Access, because that's what it does: It provides secure access to key points within a security system. And then Illuminate, the business we acquired in England, has a superb range of really smart perimeter systems, both illumination, [ PIR ] -- ANPR that support the cameras. And so again, I want the customers to understand what we are doing as a business. So we reorganized the business segments. I've got a head of each of those business segments who is responsible for manufacturing technology and supply to the clients. On top of that, I restructured the commercial group into a regional-based organization. There's no point selling to England from Melbourne. The customers want to see someone who is in United Kingdom, not referring them back to Melbourne. So we restructured the business into the regional groups, and that has given us the opportunity get closer to the main customer groups. And I've appointed all of the commercial team to sell all of Ava's products. They're not one group. We had an interesting challenge that we would send 2 salesmen to sell 2 different products at the same time. It was an old approach. So we are focused on as a team. We sell the technologies. Of course, every salesperson [ buying/selling metric ] but that's how we restructure. So the next thing is then going to our sales structure. Growth in sales order intake, key leading indicator of revenue was pleasing in FY '23. Order intake in Detect grew by nearly 55%, which was very pleasing to $20.7 million. Sales order intake in North America particularly represented 30% of this. In fact, the [indiscernible], the regions are showing a good split, not all dominated by one region, spread across the 4. But America is a particularly important one. Orders from Europe are increasing, of course, obviously on the back of the GJD Illuminate acquisition, but also due to Aura AI-X sales in Eastern Europe, [ apologies ], in a critical European border. The Detect segment was also able to fulfill its first order for our conveyor belt systems, which I think you've all heard a lot about. Now the integration of GJD was a big job from August last year. When I took over in January, there was still quite a bit to do with the integration of that, replacing some of the previous [indiscernible] and putting in place [indiscernible] the Illuminate business with the rest of the business. Now the Illuminate segment has had a difficult FY '23. The U.K. economy is quite depressed and has been difficult as they're struggling to out of COVID, struggling to come out of the Brexit impacts. It hasn't been an easy approach. But the positive thing is, we're past that. And the second positive thing I find, it gives me a base in U.K and Europe, which we didn't have previously in the business. The Access segment in FY '23 continued to have a challenging year as well, launching new product lines in March, and then also having to get those product lines certified and close the agreement with dormakaba. I'm pleased to say that this whole period, we released our trading period for Q1, and we've seen a tremendous growth in the Access business in Q1 to the point where the order intake in Q1 represented 70% of last year. So you can see the impact of the new product lines, the certification, and the success that we're having with a large partner in dormakaba. Now over the next few slides, I'll talk about why we're excited for the opportunities in front of the business going forward. And when I look across each of our operating segments, I can see clear catalysts for growth in all 3 of them. Now within Detect, the launch of Aura AI-X in March 2023 was a critical milestone in building our strong technology platform. Aura AI-X is a premium product. It is the base product that we're now selling. So I've simplified the sales approach and the product and technology approach that AI-X is our deep learning product that we have a series of opportunities with. But it is the core product that we sell to the market. So extremely well received in the market and provides an opportunity to develop long-term relationships with our customers, which will drive recurring revenue in the future. We are confident that AI-X will become a solution of choice. I'm absolutely confident it will become a solution of choice for the protection of critical infrastructure in various markets across the world. We also continue to focus on adapting our technology in relation to adjusting applications. We conducted a series of programs with key partners and hope to speak about sharing further news on this with you over the next few months. As I mentioned earlier, we've also done a lot of work over the past year on getting our Cobalt lock certified. There's a simple mantra used. If you've not certified the locks, you can't sell. So we got certified and we now can sell [indiscernible], so which is great. And the new Cobalt locks are outstanding top line product for the market. We've had tremendous success, as you've seen in the announcement, with dormakaba in North America. But I'd also remind you that we continue to sell into our normal previous baseline markets. They're still critical to us. And our focus is now working on further customers and partners in that space. Now the addition of Illuminate segment remains an important accelerator for growth of the company. The product offering is complementary to the large-scale solutions in Detect. And a lot of people don't probably see that, but the Illuminate products fit really well with the Detect product in large Linear protection. So if you were protecting a large critical infrastructure, you will have opportunities for Illuminate and Detect in a system type programs. Our technology across each access segment is well developed. This is one of the pleasing things for me when I came in, if the technology needs a lot of capital, a lot of work, that's a [indiscernible] and I would have been concerned in [ selling that ]. I didn't see that. I saw a technology that's extremely sound and good base. It needs to be leveraged, but it's a very good base. Our deep learning is the fundamental that all of you hear about AI. I'm here to tell you it is not only path forward, good physics with good deep-learning or other things such as machine learning or neural networks, that type of approach is the basis for future technology. Our market-leading locks are now fully certified. In Q1, we've seen the impact of that across the market. And Illuminate, I'm delighted that I launched a new product development in January, which was to give us a wireless capability, so that we could integrate the Illuminate business into other company's business platforms and also into our own platforms as a simple single system. That product has already -- is being launched at the moment, and we've already seen 3 major bids going in linked around the LoRa product. Now for product -- for company of our size, one thing that has really surprised me is our geographic reach. You don't normally see $28 million, $30 million businesses that are spread quite as closely as we are across the globe. That, of course, could be a risk for us, but I think it's an enormous strength. We have a great commercial team now in each region, and I can see the growth in each market segment in each region continuing. And as I said, what I'm really pleased, and I mentioned this at the earnings call, what I'm seeing is a nice spread across all 4 regions, which is much more to see. I don't like a business with 60% or 70% in one region and the rest are not really there. We're seeing good spread across the regions. And finally, I've invested in the commercial capability. It was no easy task to change 60% of the commercial team. And when I say that, it's not just the sales team. It's the sales, commercial, application, program delivery team complete across the globe. It was a very large program. It did have an impact on our cost base last year, a little bit into the start of this year, but we have done that now, and I can advise all of you that I am completed with my restructuring. I never want to do another HR job again. It's enough of it. But we've got it done in 6 months, which I think was a testament to the leadership group who really drove this to get it in and finish, which is great. I'd also say that it was important for the shareholders to understand, to sell a $2 million or $3 million program is very, very different to selling a $100,000 program. You need a much more sophisticated sales force, who can integrate with the customers, the system integrators, and make sure that our price is in the specification for the award. So what does all this mean? I've put this out before, I give a range. My time at this deal -- I put this out in the earnings call, to get us to $36 million to $45 million. Now why is the range broad. We are programmatic. You might have picked up some very good bookings in Q3 and Q4. It would be a bit of a tall order of we do deliver it in 4 weeks. We also have now built up some opportunities with customers where they will award this year, but they may not actually execute the program until '25. And that's just a natural part of infrastructure projects. But it's important that we get in and get order now. Certainly we've got that backlog that we program in our manufacturing or delivering our support and give us more consistency in the program business rather than what [ we'll see ] in the large lumps throughout the business. So $36 million to $45 million is my target for this year. That's what the whole team is working for, and that's what the aim is, and I'll probably speak to you next year and see how I go when I do this, I hope. All right. So just then finally, on -- so what does all this mean. So earlier in this week, we released our trading update for the first quarter of financial year 2024. Sales order intake for the quarter was $7.7 million, and that's an important number because it's a -- I want to intake that underpins the future revenue growth as much as the revenue is critical order intake drives the revenue. We completed the product certifications for our Cobalt locks in Access, which enabled or Coblat [ applies ] their first orders in America. Again, also tell you that on top of that, we were pleased to see orders coming out of other countries in dormakaba [indiscernible] Canada, France and Germany, which is also extremely pleasing. The Q1 orders for the Access segment already at 72% of last year's order intake at the end of Q1, which is great. So the tech business is more project-based. And whilst I would always have liked to see more opportunities closed in the quarter, I know that the expected close date for a number of reasons now moved into Q2. This is not unusual program business, customers say they need it done in August and then panic, panic, panic, and we don't get it closed into [indiscernible] time but remember, it is part of the program business. I am confident that we'll see a seen uplift in order intake for the tech in this coming quarter. We also provided revenue guidance for H1, which is in the range of 14.2 million to 15.2 million. While not providing specific guidance for the full year, I expect revenue in the second half to be substantively higher than the first half based on the strength of the opportunities and pipeline that is building. I'm excited by the opportunity ahead of us. We're committed to the challenge of growing revenue. I look forward to providing further updates to you as we progress on the journey. I've outlined. I would sort of complete or close my comments with 9 months. It's been a very busy 9 months. A pleasing thing for me. We've seen new clients coming, new customers come in. We've seen the pipeline developing. We've rebuilt the commercial team, and we've now got the foundation for growth. David?

Alright, now we get on to the fun stuff. Please bear with me. We'll 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. Now they are submitting. We will now proceed with a discussion on the proposed resolutions, including questions from shareholders about each resolution. The notice of meeting dated 24 September 2023, was dispatched to all shareholders. I propose that, with your agreement, the notice of meeting be taken as read. Shareholders who wish to inspect Ava Risk Group's register may contact our share registry, Boardroom Proprietary 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 at the closing time of received proxies, which was 11 a.m. on 24 October 2023. These figures may be varied if a shareholder who submitted a proxy is attending the meeting and has revoked their proxy. We'll now proceed with the business of the meeting. I'll now also open voting on all resolutions. All right. Item 1 of 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 2023. No shareholder vote is required in relation to this item of business. However, shareholders now have the opportunity to ask questions or have a discussion on these matters. Ava Risk Group's financial report, directors' report and auditor's report for the year ending 30 June 2023 are incorporated in the 2023 annual report, which has been sent to all shareholders who have requested a copy of this report. I would encourage any shareholder who has a question on these reports to raise them now. There is also the appropriate time to raise any questions you have of the auditor, which are relevant to the conduct of the audit and the preparation and context of the audit report. Kim, do we have any text or verbal questions through the Lumi platform? Okay. No. All right. Do we have any questions from the floor? No. Okay. Thank you. As there are no further questions, I'd like to move to considering the formal motions of the meeting. I refer you to Resolution 1 of the notice of meeting in respect to the approval of the Remuneration Report of the company. This is a nonbinding resolution. The company's Remuneration Report is contained in the 2023 annual report and is also available on the Ava website. The screen shows proxies received for, against, and at the proxy's discretion, including me as Chairman to vote in accordance with my stated voting intention in favor of the resolution. I'd highlight that in accordance with the Corporations Act, no vote may be cast on this resolution by or behalf a member of the company's key management personnel or their closely related parties. I'll refer to these people collectively from now on as prohibited voters. A prohibited voter may direct proxies where they do so for another person who is not themselves as a prohibitive voter. As Chairman, I may also vote undirected proxies for a person that is not a prohibited voter in accordance with my stated voting intention to vote all available proxies in favor of this resolution. For the purposes of this resolution, I prohibited voter includes a member of the key management personnel named in the Remuneration Report. Before opening this to discussion, I would like to mention that in the interest of corporate governance, the Ava Risk Group Board have abstained from making a recommendation in relation to this resolution. Kim, do we have any verbal or text questions received by the Lumi platform? All right. Is there any questions of any shareholder in the Melbourne venue who wishes to make a comment or ask a question? No. Thank you. I now propose the resolution that the company adopt the Remuneration Report for the year ended 30 June 2023 in accordance with Section 250R(2) of the Corporations Act. Please submit your votes in respect of this resolution. [Voting]

Resolution 2 is the reelection of myself. So Mark, I better hand it to you to handle that.

So Resolution 2 is the reelection of Mr. David Cronin. Mr. Cronin retires in accordance with Rule 19.3 of the company's Constitution and Listing Rule 14.5. Mr. Cronin's biography is included within the explanatory memorandum accompanying the notice of meeting -- of the meeting. The screen shows proxies received for and against this resolution and at the proxy discretion, including to the Chairman to vote in favor of the resolution. The Ava Risk Group Board with Mr. Cronin abstaining, unanimously recommends you vote in favor of this resolution to approve the election of Mr. Cronin as a Director of the company. Kim, do we have any verbal or text questions from the Lumi Platform. Is any of the shareholders in our Melbourne venue wish to make a comment or ask a question? If there's no discussion -- further discussion, I now propose the resolution that Mr. David Cronin, who is retiring in accordance with clause 19.3 of the Constitution and Listing Rule 14.5, and who offers himself for reelection is reelected as a Director of the company. I'll now ask you to please submit your votes in respect of this resolution. And I'll now pass the chair back to Mr. Cronin. [Voting]

Thanks, Mark. All right. Resolution 3, election of Mr. Mal Maginnis as Director. I refer you to Resolution 3 of the notice of meeting in respect of the election of Mr. Malcolm Maginnis as a Director of the company. Mr. Maginnis retires in accordance with Rule 19.2 of the company's constitution and Listing Rule 14.4. Mr. Maginnis' biography is included within the explanatory memorandum accompanying the notice of the meeting. The screen shows proxies received for and against this resolution at the proxy's discretion, including to the Chairman, to vote in favor of the resolution. The Ava Risk Group Board, with Mr. Mal Maginnis abstaining, unanimously recommends that you vote in favor of this resolution to approve the election of Mr. Maginnis as a Director of the company. Kim, do we have any text or verbal questions in respect to this resolution? Any shareholder present in Melbourne wishes to make a comment or ask a question? No. Thank you. All right. If there is no further discussion, I now propose the resolution that Mr. Malcolm Maginnis, who having previously being appointed to fill a casual vacancy retires in accordance with Listing Rule 14.4 and clause 19.2 of the company's constitution and having consented to act and being eligible, be elected as a Director of the company. Please submit your votes in respect to this resolution. [Voting]

Okay. Resolution 4, approval of a 10% Placement Facility. I refer you to Resolution 4 of the notice of meeting in respect to the approval of the 10% Placement Facility. The terms and details of the allotment of these shares are contained within the explanatory memorandum accompanying the notice of meeting. The screen shows proxies received for and against this resolution and the proxy's discretion, including to the Chair to vote in favor of the resolution. The Ava Risk Group Board unanimously recommends that you vote in favor of this resolution. Kim, are there any verbal or text questions from the Lumi platform? Would anyone in Melbourne like to ask a question?

[indiscernible]

Yes. So you would have seen from previous years, we do this every year. And as a small cap company, I think our market cap is only around the $50 million. If we were to have great success in terms of timing of revenue orders, et cetera, our business does require working capital. So this would also give us the flexibility if we were able to generate significant revenues in a short period of time where they were turned into cash quickly to use that facility for that purpose. In respect of acquisitions, absolutely. So it's not something that we have to do today, but it's certainly something on our horizon, something that we do look at. And our ability to raise appropriate funds for potentially a size of acquisition that would fit nicely with this business. This placement facility would obviously enable the company to do that without having to come back to shareholders support further approvals. So working capital, potential acquisitions, it could be used for either, but we don't have any need for it as we sit here today.

But this also allows you to [indiscernible] the shareholders?

Absolutely. Myself included. Yes. Thank you for the question. Any further questions? All right. So if there's no other discussion on that proposed resolution, that pursuant to and in accordance with ASX 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 the ASX Listing Rule 7.1A.2 over a 12-month period from the date of the Annual General Meeting at a price no less than determined pursuant to ASX Listing Rule 7.1A.3. And on otherwise, the terms contained in the explanatory memorandum. Please submit your votes in respect to this resolution. [Voting]

Okay. Resolution 5, Approval of Equity Incentive Plan. I refer you to Resolution 5 of the notice of meeting in respect of the approval of the Equity Incentive Plan. The terms and details of the allotment of these shares are contained within the explanatory memorandum accompanying the notice of meeting. The screen shows proxies received for and against this resolution, and at the proxies discretion, including the Chairman to vote in favor of the resolution. In the interest of good corporate governance, the Ava Group Broad abstains from making a recommendation in respect to this resolution. Kim, do we have any verbal or text questions received by the Lumi platform? Okay. Would anyone in the Melbourne venue like to ask a question or raise any point of discussion? Thank you. I'll now propose the resolution that for the purpose of ASX Listing Rule 7.2, exception 13, and for all other purposes, the company's Equity Incentive Plan as described in the explanatory memorandum, be approved for the issue of securities under the company's Equity Incentive Plan. Please submit your votes to this resolution. [Voting]

Okay. We have a number of performance rights to directors here. I refer you to Resolution 6a to f at the notice of meeting in respect of the approval of the Issue of Performance Rights to Directors. The terms and details of the allotment of these shares are contained within the explanatory memorandum accompanying the notice of the meeting. The company notes the explanatory memorandum incorrectly reports Mr. Maginnis' remuneration twice within the second statement reporting remuneration of $65,000 per annum, which is actually Mark Stevens' remuneration. So we do apologize for that administrative error. The screen shows proxies received for and against this resolution and at the proxies' discretion, including to the Chairman to vote in favor of this resolution. In the interest of good corporate governance, the Ava Group Board abstains from making a recommendation in respect to this resolution. Kim, are there any text or verbal questions received by Lumi? Thank you. Would anyone in the Melbourne venue like to ask a question or have any discussion on the topic? Thank you. I now propose the resolution that pursuant to Section 208(1)(a) of the Corporations Act and Listing Rule 10.14, the members of the company approve the granting of Resolution a, 1 million performance rights to Mr. Malcolm Maginnis; b, 1.5 million performance rights to Mr. Malcolm Maginnis; c, 435,816 performance rights to Malcolm Maginnis, d, 200,000 performance rights to myself; e, 200,000 performance rights to Mr. Mark Stevens; f, 200,000 performance rights to Mr. Michael McGeever under the company's equity incentive plan on the terms outlined in the explanatory memorandum. Please submit your votes in respect to this resolution. [Voting]

Resolution 7, the Appointment of the Auditor. I refer you to resolution 7 of the notice of meeting in respect to the Appointment of the Auditor. The terms and details of the Appointment of the Auditor are contained 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 the Chairman's to vote in favor of the resolution. In the interest of good corporate governance, the Ava Group Board abstains from making a recommendation in respect to this resolution. Kim, are there any questions, verbal or text, received by the Lumi platform? Thank you. Is there anyone in the Melbourne venue who would like to ask a question or make any comments in respect to the Appointment of the Auditor? I now propose the resolution that for the purposes of Section 327C(2) of the Corporations Act 2001 and for all other purposes, BDO Audit Proprietary Limited of Level 18, 727 Collins Street, Melbourne, having consented in writing to act as auditors of the company be appointed auditors of the company. Please submit your votes in respect to this resolution. [Voting]