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  • Advanced Braking Technology (ABV) has made significant progress in improving its financial position in H1 FY20
  • The first half of the 2020 financial year saw the company increase its operating sales by 32 per cent compared to the same period last year
  • ABV also repaid and converted its $2.25 million in significant debt to leave the company essentially debt-free
  • The company is now continuing discussions with Thales Australia for its breaking solution
  • ABV is in the gey this morning, with shares trading for 3.6 cents in a $13.64 million market cap

Advanced Braking Technology (ABV) has made significant progress in improving its financial position in H1 FY20.

Simultaneously, the company pursued opportunities that resulted in product, industry and customer diversification.

These achievements place ABV in a strong position that will allow it to implement its growth strategy which is expected to generate increased shareholder value.

Revenues and Cost Management

ABV achieved a strong sales result for Q2 FY20, with operating sales of $2.04 million which represents a 23 per cent increase over the corresponding Q2 FY19 period.

For the six-month period to December 2019, the operating sales revenue for H1 FY20 of $4.31 million represents a 32 per cent increase over the H1 FY19 result of $3.27 million.

Product sales margins for Q2 FY20 were 49 per cent, which is an improvement on both the Q1 FY20 margin of 47 per cent, and the full FY19 product margin of 46 per cent.

ABV was also able to achieve an unaudited positive EBITDA (earnings before interest, taxes, depreciation and amortisation) result of $317,000, and an undated, before tax, net loss of $6000 for the six-months period to December 31, 2019.

These results highlight that the company has been able to continue the strong financial turnaround that first began back in February 2019.

This has placed ABV in a solid financial position to allow it to capitalise on numerous growth opportunities.

Debt Management

During Q2 FY20, ABV was able to significantly reduce its debt level through the repayment and conversion of $2.25 million of borrowings.

During December 2019, the company repaid the R&D (research and development) prepayment loan facility of $620,000 to R&D Capital Partners, following the receipt of the ATO R&D tax incentive refund of approximately $689,000.

Throughout the quarter, ABV’s convertible notes totalling $1.631 million were extinguished by the conversion of $1.624 million through the issue of 81,243,334 shares at $0.02 per share.

The remaining $7000 notes were repaid to a note holder in cash.

With the repayment of the R&D prepayment loan facility and the extinguishment of the convertible notes the company is now debt-free, with the exception of minor equipment leases.

Electric Light Vehicle Trials

ABV has aligned itself with a number of providers of electric light vehicles to the global mining industry and its brakes are now installed on multiple electric vehicle platforms around the world.

As the electric light vehicle technology in the mining industry increases, ABV is well-positioned to participate in the growing market with multiple providers of electric light vehicle technology now incorporating the company’s brakes into their vehicle platforms.

The electric light vehicle market remains a key growth opportunity for ABV in FY20 and beyond as the technology starts becoming used more by the major miners in future years.

Civil Construction

In June 2019, ABV received an initial order for brakes from the Lendlease Samsung Bouygues Joint Venture which is involved in the WestConnex M4-M5 Link twin tunnel motorway project in New South Wales.

Since this initial order, ABV has received additional orders with the total number of kits supplied now exceeding the original demand forecast.

To date, orders have exceeded $650,000, which will be further increased by the ongoing supply of spares and consumables.

With future tunnelling projects already announced and infrastructure spend on the increase, ABV sees the civil construction industry as an exciting opportunity for growth.

Defence

In May 2019, ABV was selected to provide brake-related design and prototype development and testing services to Thales Australia, who has been contracted by the Commonwealth of Australia to supply 1100 Hawkei PMV-L vehicles as part of the LAND 121 Project.

The company has been working closely with Thales Australia during the design, prototype development and testing of a suitable braking solution for the Hawkei vehicle.

ABV is pleased to advise that field testing of the prototype is now complete and results to date have been positive, with final design approval now provided by Thales Australia.

The approved design includes background intellectual property developed by ABV.

Following the successful design and testing of a prototype (phase 1), ABV was invited to participate in the tender for the manufacture and supply of 1100 specialised hill-hold brake mechanisms that will be fitted to each Hawkei vehicle (phase 2).

Discussions between ABV and Thales Australia regarding different supply options for phase 2 are continuing.

Patent Portfolio Protection

As part of ABV’s strategy to continuously innovate and improve its product portfolio, the company has filed formal patent protection for its Terra Dura sealed disc brake technology.

ABV is already successfully using existing Terra Dura sealed brake technology within the mining industry.

The company believes that a sealed disc brake mechanism has a number of advantages over traditional disc brake mechanisms.

These include preventing the brake particle emissions being released into the atmosphere, protecting the internal environment from any external contaminants, providing an enclosed environment which improves brake management and reduces risks.

With this recent patent filing, ABV will now be looking to work with titter brake industry and transport professionals to develop solutions that will help create sustainable transport solutions of the future.

Terra Dura Market

The market for Terra Dura remains strong and ABV is confident that the product will be a material contributor to revenue growth in the future as the company finalises the development of the metal casing version and increase the vehicle types which can be fitted with Terra Dura.

The Australian Design Rules (ADR) approval process is about to begin on Terra Dura for the Toyota Hilux and is expected to end during February.

The ADR approval process will then be followed by Terra Dura for the Isuzu D-MAX.

Presently the Terra Dura market is limited to the Toyota Landcruiser, however, this will soon be increased to the Toyota Hilux and the Isuzu D-MAX.

This will represent a significant increase in the addressable market for Terra Dura both in Australia and major mining areas around the world.

In addition to mining, ABV believes that the sealed brake technology has the potential to contribute to the development of sustainable braking solutions for use in on-highway vehicles in markets where the environmental concerns regarding braking emissions are well understood.

Terra Dura also has the potential to decrease the total cost ownership for shared, electric, autonomous and commercial fleet operators that are developing sustainable transport solutions of the future.

These global markets will become a focus for ABV in FY20 and beyond.

“The company continues to make significant progress towards the implementation of its growth strategy. This has been greatly assisted by the recent repayment or conversion of debt, which means ABV is now debt-free,” CEO John Annand said.

“This, in conjunction with the company being able to achieve a positive EBITDA result for each of the last three quarters, now places the company in a much stronger financial position in which to pursue the numerous growth opportunities in front of it,” he added.

ABV is in the gey this morning, with shares trading for 3.6 cents in a $13.64 million market cap at 11:53 am AEST.

ABV by the numbers
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