ASX BRIEFS

INTELLIGENT MONITORING GROUP LTD (IMB) - From Alarms to AI: How Intelligent Monitoring Group is Revolutionizing Security

• Andrew Musgrave

Share episode

Send us a text

The security landscape is rapidly evolving, and at the forefront of this transformation stands Intelligent Monitoring Group. Returning to our podcast, Managing Director Dennison Hambling reveals how this ASX-listed company has positioned itself as Australasia's largest security monitoring business, serving 200,000 customers through its renowned ADT brand and technical services division.

What truly captivates in this conversation is the company's remarkable financial turnaround. After completing what Dennison calls "the complete financial cleanup," the company delivered an eye-opening $17 million in net operating cash flow in Q4. This impressive figure finally makes visible what management has long promised – that beneath the transitional costs and acquisitions lies a business with powerful cash-generating capabilities and solid recurring revenue.

The technological evolution of security monitoring takes center stage with their ADT Guard service. Moving beyond traditional alarm systems that merely alert after a breach, this AI-powered video surveillance allows operators to actively monitor situations, speak directly to intruders, and make real-time threat assessments. With over 300 sites protected and 30+ criminal apprehensions directly attributed to the system, IMG isn't just monitoring security – they're actively deterring crime and reshaping what's possible in the industry.

Strategic acquisitions have consistently performed "to the upside", while the company's new market segmentation into direct, partnership, and wholesale channels brings clarity to their business model. Now entering a growth phase with strong financial foundations, IMG has launched a share buyback program while maintaining flexibility for future opportunities in this fragmented industry.

For anyone interested in security technology innovations or ASX investment opportunities with recurring revenue profiles, this conversation provides valuable insights into a company transforming its sector.

Andrew Musgrave Host

Welcome back to ASX Briefs, the podcast that brings you inside the minds of the leaders of ASX listed companies. And today we're joined again by Dennison Hambling, the Managing Director at Intelligent Monitoring Group, a technology enabled provider of critical security and monitoring services across Australia and New Zealand. Dennison, thanks for joining me again and welcome back to the ASX Briefs podcast. 

Dennison Hambling Guest

No worries, thank you, Andrew. 

Andrew Musgrave Host

Now, Dennison, we did speak last year, but it might be worth just recapping just to give us a quick overview of the company. 

Dennison Hambling Guest

Yep, sure IMG Group, or IMB ticker, is the largest we believe it's the largest security monitoring business in Australasia. We look after about 200,000 customers. That would be from homes through to businesses, primarily their security monitoring operations, so alarm systems. We're backed up now over the last year or two by an increasingly large technical services business, or TEX, that's spread from Cape York to Stewart Island. Probably most listeners will best know us through our brand, ADT. ADT is American District Telegraphy. That was founded in America in the 1880s. It's globally famous. We own essentially the rights to use that brand in Australasia and that's our direct business. 

Andrew Musgrave Host

Now let's touch on the latest quarterly. Q4 showed us $17 million in net operating cash flow, which is a huge number. So, what's behind such a strong finish to the year? 

Dennison Hambling Guest

Yeah look, it's the culmination of what we've been saying. 

So, we've been saying right through the journey I've been MD for three years now, as we've been building this that we are a strong cash flow business. 

We're underpinned by a really strong underlying recurring revenue base in our monitoring operation and the services servicing of the alarm systems, and so until now, though people haven't it hasn't really been apparent. We've been very busy. We've had M&A charges, we've refinanced our debt this year, which was a significant event, and we've also had to pay. We had to transition the ADT business off Johnson Controls, which is a large sum of money too. So, this is the first quarter people actually really get to see what we've been highlighting, but they haven't been able to see which was the strong cash flow. So, for us, you know, this quarter and this year marks the complete financial cleanup of our business. ADT is now running clean accounts, as is our whole group, and this quarter is the final part of the final part, which is now seeing the clean cash flows which, you know, I think would be fair to say, did you know, encourage people in terms of the strength of our business. 

Andrew Musgrave Host

You've also completed the acquisitions of DVL and Kobe during the year, so how have these integrations progressed and what do they contribute strategically to the company's future? 

Dennison Hambling Guest

Yeah, look, they've been fabulous since we bought ADT, you know, and before that too. But the acquisitions have all been around increasing our technical services base, our TEX and you know, growing the customer base with high quality, longstanding customers and looking to grow those relationships as our network has grown as well. Since that time, every acquisition we've made has performed to the upside. Being part of our group tends to unlock work and opportunity. Typically, they've been owned by private individuals or families who have been very happy at that scale and not really looked to grow them significantly from here. 

And now I think, if I could term it this way, we really came to say yes to customers. What can we do for you and how can we help? Whereas probably before the scale of most of these operations were at, they were a bit more happy to stay at that level. So, across the board, the acquisitions we bought have traded to the upside and our underlying business, I'm really happy to report, through the year prior to the acquisitions, has grown at 8.2% as well. So, you know, really encouraging results across the board. 

Andrew Musgrave Host

And you recently launched a new go-to-market strategy segmented into ADT Direct Signature and IMS Wholesale. So, what's the rationale behind this structure? 

Dennison Hambling Guest

Yeah, I just wanted to make sure as we go through look, because we have this structure. Yeah, I just wanted to make sure as we go through look, because we have essentially put the business together with a range of acquisitions around a really clear and common strategy. Though I wanted to make sure that it was very clear how our business worked, and it's been an evolution, but we've thought hard about it. So, to break it down, ADT is our direct-to-customer business. If you're you know again a household, residential property through to an enterprise or even a person in cases we monitor and look after people directly, you go to ADT. 

That's our direct brand if you're in the industry and there's the very fragmented industry of over 2,000 independent security companies. 

We are the largest provider of wholesale monitoring services to the industry. We look after about 800 of the 2000 and then in the middle. So that's our IMS business and then in the middle we have a partnership business. We want to work even closer with, you know, selected members of the industry and we're giving them access to our buying power to try to also further leverage the growth and a bit more insight into what we're doing at a group level and provide some advantage. So, we have direct, partnered and wholesale ADT signature in IMS. It makes it clear for the market, it's clear internally and it's making life simpler and helping us lift our performance across the board again. 

Andrew Musgrave Host

And ADT Guard has already protected over 300 sites and directly led to more than 30 criminal apprehensions. So, what's driving the effectiveness of this service? 

 

 

Dennison Hambling Guest

This really best highlights what I've been talking about this industry. It's not been able to partly due to technology, but then also partly due to attitude to really evolve itself to provide the solutions customers have been looking for. And so here is an example of the old, traditional alarm system, which very few people really have in their houses anymore, primarily because they haven't felt that they work or there's any real point. ADT Guard is video based, and so it allows us to activate for the alarm. When the alarm goes off, the alarm is the camera. The camera goes off. It allows us to actively watch what's going on and make threat assessments and decisions on the fly. What does that mean? We're basically a camera as a security guard now, so it sits outside a property, it triggers the AI, the smarts that we're using trigger, and we're able to go straight to the police if we can verify there's a real event. And so, fundamentally, I think back in the day, people thought security alarms would protect the houses, and they do to a degree they still do. 

They let you know what's going on if something happens inside your house. Now we're able to actually sit outside the perimeter and deter, because we can talk back through the cameras and actually, you know, scare people off or alert them to the fact the police are on the way, and we're able to verify straight away and go to the police. So, it's a completely different proposition now than it was in the past and it's one that actually really works. So, we're really proud in this example of what we're doing. We're very much on a corporate mission to bring down crime rates and break and enter in such events in Australia, and the group feels fabulous about the results so far off a very limited amount of sites, I'd point out too and so, as we roll this out, we're going to have a meaningful impact on crime rates in Australia and excited about it. 

Andrew Musgrave Host

And now just touching on the financials with strong cash on hand and a $35 million acquisition facility, you're able to launch a share buyback. So, what drove that decision and how do you weigh it up against M&A or further in reinvestment.

Dennison Hambling Guest

Yeah, so there were a couple of things that led to the decision. 

Firstly, I'd just point out I mean this business was again put together by very investor-minded owners or principal owners. We're all owners in the business and so you know we are aware of the cost of capital and use of capital. Everything's always been weighed up against that. Now that we're generating real cash and the abnormals are starting to fade away, you know we are aware that if we continue down this route, we'll probably generate more cash than we actually need even to fulfill, you know, potentially M&A and strategic other uses. And so, you know we wanted to put in place the ability to buy back. 

I've always thought it was smart for a company in a position with strong cash and cash flows to have a buyback in place regardless. 

I just feel that I've lived long enough to see multiple market drawdowns and I'd want this business and, as a shareholder myself, to be in a position to be able to enter the market if we should ever see one of those events. So, we wanted to signal that we are moving into a phase where we're going to start to have the opportunity to really weigh up how we use the capital. I would add we haven't. We're also not those signalling that M&A is not part of the future. You know it's a very fragmented industry and we believe we've earned the right and proven an ability to add value strategically with M&A. And so, you know, we just wanted to put it openly into the pot now and over the next few months and, I guess, coming periods, as conditions change and opportunities change. It gives us a tool to start to, you know, find another way to get shareholders, you know, return their capital and get a return on their capital. 

Andrew Musgrave Host

Okay, Dennison, and now in closing, looking forward, what are the key milestones or inflection points you expect investors to watch out for in FY26? 

Dennison Hambling Guest

Yeah, look, we have now entered a new phase which is really all about growth, and its organic growth. 

It's, you know, we've put a platform in place that we believe is leading. 

We believe we have some compelling strategic advantages now, with a breadth of service that very few can offer and with a technology platform, you know, that, frankly, is leading the market, and so what we're now looking to do is accelerate organic growth, and that's low capital draw. It's good margin, low capital, and so for us, it's all about, you know, contract wins, building a pipeline, you know, winning customers, and how fast can we grow this business? I think the final question here for this business, which we will learn over the next year or two or three, is what is the growth rate, sustainable growth rate that we can hopefully achieve and move to, and I think that's what people now should be looking out for, and that's certainly what we've really, even looking backwards in our last six months a year, been focused on putting in a place to deliver. So, it's all about growth, it's all about cashflow and it's all about, essentially, how fast can we continue to build on what we believe now is a leading enterprise. 

Andrew Musgrave Host

Okay, Dennison. Well, thanks very much for your time today. It's been great to chat again, and we look forward to the next update from Intelligent Monitoring Group in the upcoming months. 

Dennison Hambling Guest

 No problem, thanks, Andrew, appreciate it. 

Andrew Musgrave Host

That concludes this episode of ASX Briefs. Don't forget to subscribe and we look forward to catching you on our next episode.