ADVANCED BRAKING TECHNOLOGY LTD — AGM Information 2012

Oct 22, 2012

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23rd October 2012

AUSTRALIAN STOCK EXCHANGE LIMITED

Electronic Lodgement

AMENDED CEO & CFO PRESENTATION TO BE DELIVERED AT THE 2012 AGM

Appended are amended copies of the CEO’s and CFO’s presentations to be delivered to Shareholders at the Company’s 2012 Annual General Meeting to be held at 10.00am today.

Yours faithfully

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Clare Madelin Company Secretary

TAF-019 Rev.04

Annual General Meeting Presentation 23[rd] October 2012 Advanced Braking Technology | Microcap Conference Presentation

1. Chairman’s Address

2. Formal Business

3. CEO’s Report

4. CFO’s Report

5. Questions and Answers

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Mr David Humann Chairman

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Formal Business

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Accounts and Reports – receive and consider the financial report and the reports of the Directors and of the Auditor for the financial year ended 30 June 2012

PROXIES RECEIVED

	Resolution	For	Discretionary	Abstain	Against	Total
1	Adoption of Remuneration Report	189,430,928	**97,543,161 **	**180,534,387 **	107,318,522	574,826,998
2	Re-election of Mr David Humann	362,496,990	105,355,311	**0 **	106,974,697	574,826,998
3	Ratification of Prior Issue of Ordinary Shares	468,985,862	105,355,311	205,260	280,565	574,826,998

POLL (if required)

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Mr Ken Johnsen Chief Executive Officer

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Key milestones delivered in 2012

Mining

• Expand SIBS II features to all mining products

• Expand product range

Mining

• → Transition to the improved SIBS[®] II version of the light commercial vehicle brake across various Landcruiser models

• → Development of SIBS[®] II variant for Toyota Hilux and other similar sized vehicles

• Explore cost saving enhancements → Preparations for ANCAP 5 vehicles underway

• Expand service agent network →Modular EMMA hydraulic unit developed  Grow export sales →Service agent network doubled (3 to 6 agents) →11% growth in export sales

Garbage Truck Brake

• Prepare for garbage truck launch Garbage Truck Brake

• Achieve production ‘sign off’ for Garbage Truck Brake

Garbage Truck Brake

• → Extensive in-field and bench testing validates key features ahead of production decision

• → Development of ABS (anti-skid) version of the SIBS[®] Garbage Truck Brake

• → Confirmation of environmental benefits - significant reductions in dust particle and noise pollution

• → Formal approval for production go-ahead given

• by Board in July 2012

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• › ABT is a developer, manufacturer and worldwide distributor of its

award-winning, patented Sealed Integrated Braking System (SIBS[®] )

› SIBS[®] is a fail-safe, enclosed “wet” braking system for off-road and on-road applications

• › SIBS[®] technology is extensively proven and has been established in the mining industry over many years

ABT is a Listed Company on the ASX

	Share Price	$0.019
	Shares on Issue	1.1 billion
	Market Cap	$21 million
	52 Week High	0.026
	52 Week Low	0.013

• › ABT is now using its SIBS[®] technology to target full scale commercial roll out of its garbage truck brake product in CY2013

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Vision:

To be the industry leader in developing, manufacturing and distributing safe and efficient braking technology across multiple applications and sectors

Strategy:

• › Pursue robust growth through:

• Leveraging strong mining market positioning to provide funding for product and sector expansion

• Commercial roll-out of Garbage Truck Brake in Australia and other countries – North America and Europe

• Entry into other sectors using “frequently stopping trucks”

• Expand export sales into new markets

• Invest in research and development – focusing on upgrading and expanding product range to increase market share and expand into new industries

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• › Unique, proven and patent protected technology

• › Global market potential across multiple applications and sectors

• › Significant competitive advantages over alternative products

• › Compelling customer offering – “triple bottom line” benefits › Robust commercial model with attractive margins and high scalability

• › Strong Board and management with extensive technical and commercial expertise

• › Significant valuation upside potential

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Sealed Integrated Braking System (SIBS[®] )

• › Fully enclosed, single rotor, high speed wet brake

• › Incorporates fail-safe features

• › Designed for retro-fit or factory fit

• › Comprehensively patented Australian invention

• › Virtually wear and maintenance-free (unlike conventional drum and disc brakes)

• › Manufactured in Thailand, through wholly-owned subsidiary

Comprehensive Patent Protection

• › 61 international patents or patent applications

• › Average patent life of 12 years

• › New patents being lodged as developments continues

• › Trademark protection on various trademarks including “SIBS” and “ABT”

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• › Wet brake technology enables a cooler operating temperature , essential to longer lasting and safer braking systems

• › System encloses key components – the single rotor, brake callipers and brake pads – within a casing containing the SIBS[®] cooling fluid

• › Cooling fluid is specifically formulated oil which controls the operating temperature of the system

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Prime Target Market – Waste Sector

Multiple customer “calls to action”:

• › Brakes are the second biggest expenditure after fuel for garbage truck fleet operators

• › Public desire for noise reduction

• › Global drive to reduce pollution

Australian market:

• › Dynamic, recession-proof industry

• › Annual growth rate of 5.4% (ABS, 2011)

Global growth potential:

• › Next targets:

• Expanding into North America and Europe

• Highest waste generating markets in the world (per capita)

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• › Multi year development program now complete

• › Commercial roll out set for CY2013

› Technical risk is very low:

• ABT has significant experience and expertise with the associated technology

• Long history of successful application

• Extensive and successful testing process

• › Targeted customers expressing significant demand interest

› Launch Strategy:

• Initial Sales into Australian retro-fit market – low barriers to entry

• Retro-fit facilitates rapid take up

• Australian OE – (new truck sales) will follow

• Export markets (retro-fit and OE) will follow after Australian launch

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Garbage Truck Revenue Potential
200,000
180,000
160,000
140,000
120,000
100,000 New Refuse Trucks
Installed Fleet
80,000
60,000
40,000
20,000
-
Australia Europe North Amercia
Australia
North America
Annual sales 800 trucks
Annual sales 20,000 trucks
Installed Fleet 8,000 trucks
Installed Fleet 200,000 trucks
25% share of retro-fit = $60 million revenue
25% share of retro-fit = $1.5 billion revenue
50% share new sales = $12 mill p.a.
50% share new sales = $300 mill p.a.
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Number of Garbage Trucks
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“Triple bottom line” benefits

› Financial Savings:

• Dramatically reduces frequency of brake overhauls from more than twice a year, to once every two years or longer

• Reduces annual operating costs by up to $15,000 per truck

• Customer payback on initial investment < 2 years

• Tyre wear 30% less

› Superior Operating Performance:

• Brakes are virtually wear and maintenance-free, unlike conventional drum and disc brakes

› Safety and Environmental Benefits:

• Total elimination of brake noise and dust emissions

• Provides consistent safer braking at all times

• Avoids need for regular checking and adjustment

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The City of Swan is evaluating 2 trucks fitted with SIBS

Its Mayor Mr Charlie Zannino stated in a press release last week :

Extract –

The trial has been so successful, the City is investigating the possibility of extending the use of the SIBS across other vehicles in the City fleet. After six months of the trial, the brake pads show very low rates of wear, which should result in greatly reduced brake service down time and costs for the vehicles.

The results indicated only minimal wear whereas a standard truck would be close to or past its wear limit at this point. …..”

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• › Significant product development investment – time and capital

• › Comprehensively patented technology for 10 years

• › No existing competition

• › Braking technology extensively proven in commercial application

• › ABT known as a reliable supplier in mining sector that provides quality, timely and reliable support

• › Brakes designed to be retro-fitted, significantly increasing the immediate potential market

• › Compelling proposition for Original Equipment take-up

• › Seamless compatibility with modern anti-skid systems (ABS)

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					12/13									13/14
	Oct	Nov	Dec	Jan	Feb	Mar		Apr	May	Jun	Jul	Aug	Sept	Oct	Nov	Dec
Frozen Design
First 10 sets under construction
First Truck Built
Subsequent/Sales Truck Builds
Monitoring of First Sales in the Field
Engangement with Waste Industry
Ramp up to Full Scale Production

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• › Penetration into the garbage truck market provides an entry point into other “frequently stopping vehicles”

› Buses – similar drivetrain to waste vehicles and can be easily adapted › Logging and similar heavy haulage trucks – with high brake demands › Military vehicles – used in harsh conditions and need low thermal signature

Buses Logging

Military

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Established Presence in Mining Sector

Australia:

• › Growing market share – currently 25%

• › Product improvement driving growth

• › SIBS[®] technology now standard in many vehicles, across many mining sites

• › Olympic Dam, Xstrata Zinc – George Fisher, BHP – Nickel West

• › SIBS[®] II currently ABT’s standard product offering for Landcruisers in Australia

• › Developed SIBS[®] II for Toyota Hilux and expanding to other similar vehicles

• › Compatible with ANCAP 5 safety rated vehicles

Export:

• › Representing 25% of total sales (average over last 3 years)

• › Strong foothold in South Africa and Canada

• › Expansion into new markets (e.g. USA, Central/West Africa, South America)

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› Proven success in the mining industry

› $1.33 million profit contribution in FY12

• › Over 400% growth in brake sales over the past 6 years

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7.0
6.0
5.0
4.0
Sales - Engineering and Fitting
Sales - Spares
3.0
Sales - Brakes
2.0
1.0
0.0
2006 2007 2008 2009 2010 2011 2012
$'s Million
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Growth set to continue

• › Ongoing industrialisation of emerging economies led by China and India

• › Strong growth in new mine development

• › Expansion into surface mines with safety and productivity focus

Increased Focus on Safety Regulations

• › WHS Act (Jan 12’) and pending MHS Act (Jan 13’) - greater focus on responsibility of mine holders/operators to ensure worker safety

• › “Uncontrolled vehicle movements” are a major problem for mine operators - results in fatalities and injuries on site

• › SIBS[®] brakes significantly improve safety for mine operators with a three-in-one service, park and fail-safe emergency brake

Growing Emphasis on Productivity

• › – Sector productivity has declined 50 per cent since 2001 (PWC Report 2012) many companies have renewed focus on improving mine productivity

• › SIBS[®] brakes increase productivity by reducing brake overhaul and therefore vehicle downtime on site

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Attractive business:

• › High margins similar to mining products

• › Highly scalable cost base with efficient fulfilment model

• Business model supports high long term RoI:

• › Benefits of offshore outsourced manufacturing

• › Low cost fulfilment model

• › Low capital intensity

Manufacturing Engineering, Sales & Assembly & Distribution Thailand Australia › Low cost › Proximity close to › Low capital customer market

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• › Main focus for FY13 is the commercial roll out of the Garbage Truck Brake

• All indicators suggest that there will be a strong demand

• A progressive and controlled launch is planned

• › Mining sales will continue to play an important role in the Company’s future, however external factors in mining make precise forecasts difficult

• › These external factors are resulting softer sales at this point in time.

• › a more Garbage Truck Brake sales are expected to provide reliable and consistent sales pattern

• › Export sales in mining will continue to grow through expansion into other countries, such as USA, Central/West Africa, South America

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Chief Financial Officer Clare Madelin

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• Total revenue +10% to $8 million

• Mining sales generated $1.33 million profit – with sales up by 3% to $6.3 million (sales for first three quarters up by 17%)

• Export sales +11%, represents c22% of total sales

• Overall net loss of $123k is attributed to the substantial investment in upgraded products

• Successful $2.1 million capital raising in April 2012

• Commercialisation Australia grant of $761,000 – in support of the Garbage Truck Brake development

• R&D Tax Incentive of $786,000

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Revenue Profit After Tax
$ millions $ millions
9.0 1.0
8.0
0.5
7.0
0.0
6.0
5.0 -0.5
4.0 -1.0
3.0
-1.5
2.0
-2.0
1.0
0.0 -2.5
05/06 06/07 07/08 08/09 09/10 10/11 11/12 05/06 06/07 07/08 08/09 09/10 10/11 11/12
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Profit and Loss	2012	2011
	$’000	$’000
Revenue
Revenue from trading activities	6,299	6,631
Revenue from other activities	1,669	607
Total Revenue	7,968	7,238
Cost of sales	(2,461)	(2,179)
Adjustment to prior period cost of sales	-	141
Other expenses	(6,882)	(5,540)
Overheads capitalised as Pre-production Activities	1,252	583
Total Expenses	(8,091)	(6,995)
Profit/ (loss) before tax	(123)	243
Income tax benefit (R&D tax rebate)	-	307
Profit / (loss) from continuing activities after tax	(123)	550

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Balance Sheet	Balance Sheet	Balance Sheet
	2012	2011
Cash and Cash equivalents	2,925	2,737
Trade and other Receivables	797	1,194
Other current assets	3,064	1,829
Total current assets	6,786	5,760
Trade and other Receivables	31	30
Property, plant and equipment	1,162	734
Intangibles	3,625	2,572
Total non-current assets	4,818	3,336
TOTAL ASSETS	11,604	9,096
Trade and other Payables	848	985
Interest bearingliabilities	89	102
Other Liabilities	540	179
Total current liabilities	1,477	1,266
Total non-current liabilities	479	133
TOTAL LIABILITIES	1,956	1,399
NET ASSETS	9,648	7,697
EQUITY
Issued Capital	45,153	43,115
Foreign Currency Reserve	(238)	(252)
Other Reserves	730	708
Accumulated losses	(35,997)	(35,874)
TOTAL EQUITY	9,648	7,697

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Questions?

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www.advancedbraking.com info.perth@advancedbraking.com Phone: +61 8 9273 4800 | Advanced Braking Technology | Microcap Conference Presentation