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MEDIA/ASX RELEASE 17 August 2010
Advanced Braking Technology Raises $3 million in a Share Placement
Advanced Braking Technology Ltd (ASX:ABV) today announced it has secured commitments to raise $3 million at 1.6c per share in an oversubscribed share placement to sophisticated investors. The placement will be conducted in two tranches with 116 million shares issued in Tranche 1 under the Company’s 15% capacity. The balance of the shares will be
placed in a second tranche subject to shareholder approval at the company’s AGM to be held on 26 October 2010.
Funds received from the placement will be used to:
• fund product development to augment and stimulate additional growth in
the mining sector; • provide additional funding support for the garbage truck project; • purchase specialised test equipment; and • provide general working capital.
The garbage truck brake project, which has already achieved proof of concept by
demonstrating significant operating cost and efficiency benefits, has funding support for the remainder of its pre-production testing phase (see 30 July 2010 announcement). The garbage truck brake will launch a significant new market for
the company’s braking systems. The attached presentation provides further details regarding the company’s current activities and future prospects. The offer has been managed by Southern Cross Equities Ltd.
Background Information – Advanced Braking Technology Ltd (ASX: ABV)
Perth-based Advanced Braking Technology Ltd (ASX: ABV) is dedicated to innovative braking
systems. The Company’s key asset is the Sealed Integrated Braking System (SIBS™), a comprehensively patented Australian invention.
SIBS™ is a fully enclosed, single rotor, high speed wet brake. The brake rotor runs in a bath of oil
that serves to cool the brake and minimize wear at the braking interface. An innovative fail safe feature is incorporated into the rear axle brake. As a result, the brakes are virtually wear and
maintenance-free and may outlast the vehicles they are fitted to, unlike conventional drum and disc
brakes. SIBS™ brakes deliver unparalleled safety, improved productivity and lower operating costs, and are engineered to survive the world’s harshest conditions.
The proven technology is also environmentally friendly, eliminating brake dust emissions and noise and squealing, and provides a wide-range of benefits for on-road, off-road and industrial
applications in terms of safety, reliability, performance and adaptability.
ENDS Released by: On behalf of: Nicholas Read/Kate Bell Mr Ken Johnsen Read Corporate Chief Executive Telephone: (+61-8) 9388-1474 Advanced Braking Technology Ltd Telephone: (+61-8) 9273-4800
INVESTOR PRESENTATIONAugust 2010
Garbage Trucks
Light Vehicles
Service Trucks Concrete Trucks
Slide 2
Company Snapshot• An Australian innovation in vehicle braking• Worldwide patents• Proven in the harshest mining conditions• Delivers cost, safety and environmental
benefits• High value, high margin product• In-house, low cost manufacturer of products• Attractive value proposition to high volume
truck market
Slide 3
Overview of TechnologyPatented Sealed Integrated Braking System
Single rotor enclosed in an oil filled housing
Rear brake fitted with fail-safe feature
Slide 4
Mine Tough Credentials• Over a decade of mine service• Meets regulatory and mine company safety
standards• Delivers operational cost savings• Standard fitment on many mines• Used in harshest environments
– Canadian arctic– PNG Jungles – Australian deserts
Slide 5
ABT’s Product Applications
and GROWING!
Slide 6
Blue Chip Customers
Slide 7
Business Model• Engineered in Australia (Perth)• Manufactured in Thailand (wholly owned)• Direct sales in Australia• Resellers in Canada and South Africa• High value high margin products• Developer of ongoing new product
applications• Australian Registered Research Agency
Slide 8
Thai Production FacilityISO 9001-2000 Accredited
Slide 9
$-
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
$4,500
2006 2007 2008 2009 2010
Other Income
Sales - Engineering andFitting
Sales - Spares
Sales - Brakes
Current BusinessMining Sales $000’s
GFC
Steady growth and providing positive contribution to overall business
* Audit sign off pending
*
$000
’s
Slide 10
Overall Business
-$2,500
-$2,000
-$1,500
-$1,000
-$500
$-
$-$500
$1,000$1,500$2,000$2,500$3,000$3,500$4,000$4,500$5,000
2006 2007 2008 2009 2010
Other Income
Sales - Engineering and Fitting
Sales - Spares
Sales - Brakes
P & L
After Tax
$000’s
Total Income
$000’s
*
* Audit sign off pending
Slide 11
Current Business• Mining Sales side of the business provides
positive contribution• Current losses arise from development
activity in new product areas and additional support to truck project
• R&D cash grant of ~$300k p.a. • Non-cash component of losses ~$360k
– Depreciation and amortisation of IP
Slide 12
Growth StrategyBeyond Business As Usual
“Breaking into a Mainstream Market by leveraging off the mine tough heritage”
Slide 13
The Opportunity• Garbage truck brake development points to a
large opportunity in a mainstream market• The waste industry is “recession proof”• Technology established and proven in harsh
mining environment• Cost, safety and environmental benefits can
be delivered to a receptive marketplace• Opportunity for a market launch in 12-18
months
Slide 14
Garbage Truck Brake
• Waste industry confirms a need for improved braking solution
• Brake costs are up to $10k pa over 10 year truck life• Safety and reliability a key issue
• Elimination of noise and dust pollution a key driver• Expressions of interest for technical involvement in
the project and pre-release evaluation by customers
Slide 15
Waste Collection Market
Region New Truck Sales (annual)
Fleet Size(est.)
Australia 800 6,500 – 8,000
North America 20,000 ~ 200,000
Europe 6,000 ~ 60,000
Urban refuse collection is a major industry in North America, employing over 300,000 people. Its revenues approach US$50 billion p.a.
Slide 16
Opportunity • The Truck Brake has a target selling price of
$25,000 per truck• Sales in Australia to retro-fit represents a $25
million opportunity (at 30% of available market)• The Australian market alone represents a $10
million p.a. sales opportunity (at 50% penetration)• Australia is only 2% of the North American and
European market• Penetration in this market provides an entrée into
other “frequently stopping trucks” e.g. city buses
Slide 17
Brake Dust Emissions• A recent UK Government environmental study stated
ABT’s SIBS technology represented the “most promising abatement measures for the most polluting sectors”
• ABT’s SIBS technology was specifically identified as the enabling technology to achieve reductions in particulate matter caused by vehicle brake dust emissions
• It was estimated that 2.2 kilotonnes of PM2.5 particles would be emitted from vehicle brakes in the UK in 2020
• With a gradual introduction of SIBS into the vehicle fleet, it was estimated that by 2020 there could be a 0.4 kilotonne, or 18% reduction in PM2.5 emissions from vehicles in the fleet in the UK
Slide 18
Garbage Truck ProjectProof of Concept Sign Off in March 2010SIBS braking technology demonstrated on garbage trucks:
• Has the same brake feel/stopping character as dry brakes• Can be retrofitted to common garbage trucks without major
modifications• Gives extended brake service intervals and vehicle up-time• Provides an estimated 2.5 year payback on up-front cost• Reduces brake emissions (noise & airborne particles)• Demonstrates lower tyre wear• Meets safety and regulatory standards
Slide 19
Garbage Truck ProjectVehicle used to characterize typical use
City of Swan Garbage Truck SW 231
Slide 20
From Concept to RealityFront
Rear
Slide 21
First Test Truck
Slide 22
Brake Testing
Slide 23
Brake Testing 4 x 2
ST
D ST
D
AB
T AB
T
Improved Brake Performance
Slide 24
2nd Prototype VehicleABT Development Mule 2
Slide 25
6 x 4 Installation
Slide 26
Comparative Assessments
Brake feel assessed to equal or better in all areas
Slide 27
In-Service Trial at City of SwanLargest Local Authority in Metropolitan Perth @ 1,100km²
40,000 properties
Weekly refuse collection
2 weekly recycling collection
Slide 28
Time in service: 420 hoursDistance travelled: 8,100 km
19.28 km/hourPad Wear:(6mm wear limit per pad) 0.05mm average
0.11mm maximumFront Rear Tyre Wear: 33% average
38% maximumRear Rear Tyre Wear: 59% average
63% maximum
In-Service Trial - Results
Slide 29
Current Status• $2 million “Proof of Concept” Study completed
– Major project goals achieved and signed off by independent expert
• Key Performance Requirements met– Braking performance equal/better than OE– Brake Feel considered excellent
• Strong buy in from end users• Manufacturability and target costing confirmed
• Production Validation contract signed 30th July 2010
Slide 30
Proof of Concept• Key Achievements:
– 420 hrs of real world testing– Rig testing has validated other parts– Cooling Package developed– Core design ready for production release– 1% pad wear after 420hrs (average 60 microns)
(Note – standard brakes would be approx. 50% worn at 375hrs)
– 30% to 40% less tyre wear compared to truck on same rounds
– Operator feedback very positive
Slide 31
Value Proposition• 2.5 year payback on upfront cost of SIBS (not
including reduced tyre cost)
• Service interval extended from 3 months to at least 12 to 24 months
• Target incremental cost $25,000 per truck• Pre-assembled wheel ends will be supplied and
will be viable service exchange units • Safer and more reliable brake system• No brake squeal • No dust emissions
Slide 32
Next Steps• Production Validation – commenced Aug 2010• External funding support - $250k per quarter• 5 trucks will be put into service with fleet
operators to confirm real world service intervals and reliability
• Bench and other testing will validate other aspects
• 9 to 12 months fleet running will determine suitability for production release
• Initial sales could commence in 12 to 18 months• Targeting first retro-fit then new truck sales
Slide 33
Sales Potential(possible scenario)
GARBAGE TRUCK SALES AND PROFIT CONTRIBUTION
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
1 2 3 4 5
Years
AM
OU
NT
$,0
00's
SALES REVENUE
GROSS MARGIN AND CONTRIBUTION
Assumptions• based on current cost and sales price projections• maintenance savings and benefits proven in R&D project• production Thai facility• some retrofit of < 4 year old trucks• entering US and European markets in year 3
Slide 34
Short Term Outlook
• Mining sales expected to continue at historical growth rates
• Mining profits expected to grow • Company will support truck brake program
and other new product growth areas• Working capital required to secure future
potential
Use of Proceeds• $0.5 mill – working capital movement buffer
• $0.5 mill – mining product enhancements• $0.5 - $1.0 million additional funding for truck
brake development • $0.5 mill – working capital to support inventory
build for truck brake launch
• <$0.5 mill – specialised test equipment
Slide 36
ShareholdersSubstantial Holders
• Directors and Management 15.9%(David Slack 14%)
• Richard Palmer and related parties 8.6%• Other top 20 holders 33.2%
• Shares on issue 774 million
• Options • Employees (exercise price 1.5c to 7.5c) 20.2 million• Other (exercise price 5.2c to 6.2c) 20.0 million
Slide 37
CONCLUSION• ABT maintaining its presence in mining
sector and focusing on securing additional sales and expanded product range
• Opportunity now presents itself to leverage the proven technology into the much more lucrative truck market
• Additional investment in capturing this opportunity is warranted to secure the long term growth potential
Slide 38
www.advancedbraking.com
Email: [email protected]: +61 (0) 8 9273 4800Fax: +61 (0) 8 9201 9986