Ava Risk courts two central banks and restarts Indian MoD project

The COVID-19 pandemic has failed to slow down Ava Risk Group (ASX: AVA) after the company unveiled a major new contract with a central bank that is set to haul in around $2.1 million in revenue for the security risk management company.

As part of today’s announcement, Ava confirmed that it had also executed new service agreements with three commercial banks and one other central bank.

However, Ava did not reveal which central banks it has struck deals with or in which territories it will conduct its secure transportation services.

According to Ava, the newly signed agreements will boost its total addressable client spend in the last quarter of the current financial year to more than $145 million, an increase of 26% compared to the previous quarter.

Currently, Ava offers a range of complementary services in addition to secure logistics services including perimeter intrusion detection, pipelines and data networks, biometric and card access control as well as the storage of high-value assets.

“Whilst the last few months have presented significant logistical challenges, Ava has been able to offer its existing clients a range of new and bespoke solutions ensuring their business continuity, whilst also continuing to increase our addressable market through new client agreements,” Ava Global’s chief executive officer services division Chris Fergus said.

Mr Fergus added that over the past few months, the company’s reputation as an innovative and leading service provider has continued, with the focus amongst senior management now squarely on adding new customers and increasing its addressable client spend.

Market statistics show that the secure logistics services market generates around $1 billion every year as major companies and organisations expand demand for such services.

Importantly, the industry niche has undergone extensive change over the past year as a flurry of consolidation has tightened margins.

However, Mr Fergus said he was confident that the industry will continue to grow, and therefore, deliver additional customers for Ava.

Slow progress in India

A key project currently being progressed by Ava in India is the large-scale supply of FFT’s SecureLink technology to protect data communications cables for the Indian Ministry of Defence.

Earlier this week, Ava told the market that it had finally shipped 200 backlogged units to end-users which will unlock a $1.5 million cash sum, payable to Ava in September 2020. This is in addition to a $2.4 million contract signed with Australia’s MoD earlier this month which includes the supply of “high-security, custom-encrypted” systems.

The ongoing COVID-19 pandemic has had a significant effect on Ava’s operations in India, leading the company to declare that its activities had been “disrupted” by the nationwide restrictions imposed earlier this month.

According to Ava, these restrictions have delayed equipment production and essential factory acceptance testing of completed systems by Indian officials.

The restrictions also stalled forward deliveries of finished goods that were awaiting dispatch but were held in a warehouse belonging to Ava’s local manufacturing partner, SFO Technologies.

“News on the Indian Ministry of Defence project getting back underway is tremendously encouraging and reflects the importance of our systems to the end-user,” said Scott Basham, chief executive officer of Ava Risk.

“We know that our in-country partner SFO have been eager to come out of lockdown and get back to work on the project. So, hearing this confirmation from them, that the ‘January batch’ of systems, that had been delayed in their warehouse during the lockdown, has now been shipped, is fantastic,” he added.

Shares in Ava were up by more than 6% to $0.175 in morning trade.